Chicago Studio Rental, Inc. v. Illinois Department of Commerce and Economic Opportunity

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

CHICAGO STUDIO RENTAL INC., and )

CHICAGO STUDIO REAL ESTATE )

HOLDINGS, LLC )

)

Plaintiffs, )

) No. 15 C 4099

v. )

) Judge Sara L. Ellis

ILLINOIS DEPARTMENT OF COMMERCE )

AND ECONOMIC OPPORTUNITY, )

ILLINOIS FILM OFFICE, and )

BETSY STEINBERG, in her individual )

and official capacity, )

)

Defendants. )

OPINION AND ORDER

Plaintiffs Chicago Studio Rental Incorporated and Chicago Studio Real Estate Holdings,

LLC, collectively doing business as Chicago Studio City (“CSC”), have one live claim against

Defendant Betsy Steinberg (“Steinberg”), the former Managing Director of the Illinois Film

Office (“IFO”), in her individual capacity. CSC alleges that Steinberg violated its right to equal

protection of the laws under the Fourteenth Amendment to the Constitution by favoring CSC’s

competitor, Cinespace Chicago, and discriminating against CSC with no rational basis.

Steinberg now moves for summary judgment on this claim. Because Steinberg’s actions were

rationally related to the legitimate government purpose of promoting and growing the film

production industry in Illinois, CSC’s class of one claim fails and the Court grants Steinberg’s

motion for summary judgment on that claim.

BACKGROUND1

CSC has been operating a movie soundstage in Chicago for over 50 years. John

Crededio, Sr. is the Chief Operating Officer, John Crededio, Jr. is the President, and Joseph

Crededio is the Vice President and Treasurer. Cinespace is a competitor of CSC in Chicago. It

opened in 2009 and began hosting film productions in 2011. Alex Pissios is the President of

Cinespace.

CSC has four stages totaling 62,000 square feet. Cinespace had 0 square feet of stage

space in 2009, by the end of 2012 it had ten stages and 600,000 square feet, and today has 30

stages and approximately 1.5 million square feet. The competitors’ facilities are different in

many other respects as well. CSC does not have built-in air conditioning for its sets but requires

production companies to pay to bring in industry standard portable air conditioning units. All

stages at Cinespace have air conditioning. CSC requires production companies to use its in-

house equipment rental company; whereas, Cinespace allows production companies to use any

rental company. CSC does not have scene docks for unloading large trailers inside the studio;

Cinespace does have scene docks.

Steinberg was the Managing Director of the IFO from January 2007 through January

2015. Her main objective as Managing Director of the IFO was to promote and grow the film

and television industry in Illinois. From 2009 to 2014, the approximate film production gross

revenues for the State of Illinois grew from $104 million in 2009 to $358 million in 2013, with a

drop to $279 million in 2014. The estimated number of jobs created in Illinois by the film

industry grew from 7,082 in 2009 to a peak of 15,627 in 2013.

1 The facts in this section are derived from the parties’ Joint Statement of Undisputed Material Facts.

Doc. 79. The Court includes in this background section only those portions of the statements of fact that

are appropriately presented, supported, and relevant to resolution of the pending motion for summary

judgment. All facts are taken in the light most favorable to CSC.

In her role as Managing Director, Steinberg had no authority to award grants and no

decisional role in the determination of who received grants from the State of Illinois. Steinberg

did have decision-making authority with respect to awarding tax credits for film productions.

However, determining whether a production satisfied the objective requirements of the Illinois

Film Production Services Tax Credit Act was the extent of her authority. She had no power to

award or deny a tax credit on any other basis or to determine or negotiate the amount of tax

credits. No one has ever said that Steinberg threatened to withhold tax credits if they filmed at

CSC or offered to approve tax credits if they filmed at Cinespace.

Between 2009 and 2015, Cinespace applied for and received several grants from Illinois

and the Illinois Department of Commerce and Economic Opportunity (“DCEO”). In total,

Cinespace received $23.3 million in grants, $10 million of which Cinespace returned to the State.

IFO and Steinberg did not have decision-making authority in the grant making process; however,

the DCEO Director did ask Steinberg to collect information regarding the Chicago film industry

in relation to a grant application from Cinespace. Such consultations with industry experts were

common practice for the DCEO Director in his grant review process.

Steinberg informed CSC of at least one grant opportunity and forwarded the application

for that grant to CSC. Steinberg also provided CSC with the name of an individual at the State

of Illinois who could help CSC with any questions it may have about the grant. CSC applied for

the grant but ultimately the State provided no funds for that grant program. Between 2008 and

2014, CSC did not receive any grant money from the State.

During the relevant period, numerous film and television productions considered filming

in Illinois. Some ultimately did film all or part of their productions in Illinois at either CSC or

Cinespace, but many elected to film elsewhere or not at all.

In 2011, Fox Television filmed a pilot of a television show called The Playboy Club at

CSC and then filmed the series at Cinespace. The network cancelled the series after five

episodes. Cinespace did not request any assistance from Steinberg in contracting with Fox

Television to film the series at Cinespace.

In 2012, Warner Brothers was considering filming its movie Jupiter Ascending in

Chicago. The Wachowskis of The Matrix fame, wrote, directed, and produced the movie. The

production required approximately ten or more stages. A Warner Brothers representative, Bill

Bowling, came to Chicago to try to negotiate a deal for production of the movie. Bowling met

with both CSC and Cinespace. He also met with representatives from the Mayor of Chicago’s

office and the Governor’s office. The IFO, the Chicago Film Office, the City of Chicago, and

Illinois came together on a proposal which included up to $4.3 million in state aid to Cinespace

to lower cost of the production. Steinberg transmitted this proposal to Warner Brothers. Warner

Brothers decided to shoot the movie primarily in London because the cost of doing so was

approximately $20 million lower than filming in Chicago.

Both CSC and Cinespace attempted to get the television show Empire to use their

facilities. Fox Studios, the producer of Empire, chose to produce the show at Cinespace after

receiving bids from both facilities. Fox Studios has produced Empire at Cinespace since 2014

and has occupied approximately 250,000 square feet and used five or six stages. Lionsgate,

another film studio, was considering filming the movie Divergent in Chicago. Lionsgate

required 200,000 square feet of space for its production. It is not clear from the record if

Lionsgate filmed Divergent at Cinespace.

Steinberg provided information to CSC whenever they reached out to her regarding film

producers and directors, but CSC rarely, if ever, requested assistance from Steinberg in

marketing CSC. Cinespace, on the other hand, routinely reached out to Steinberg and the IFO

for help with marketing and procuring work.

LEGAL STANDARD

Summary judgment obviates the need for a trial where there is no genuine issue as to any

material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56.

To determine whether a genuine issue of fact exists, the Court must pierce the pleadings and

assess the proof as presented in depositions, answers to interrogatories, admissions, and

affidavits that are part of the record. Fed. R. Civ. P. 56 & advisory committee’s notes. The party

seeking summary judgment bears the initial burden of proving that no genuine issue of material

fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265

(1986). In response, the non-moving party cannot rest on mere pleadings alone but must use the

evidentiary tools listed above to identify specific material facts that demonstrate a genuine issue

for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). Although a

bare contention that an issue of fact exists is insufficient to create a factual dispute, Bellaver v.

Quanex Corp., 200 F.3d 485, 492 (7th Cir. 2000), the Court must construe all facts in a light

most favorable to the non-moving party and draw all reasonable inferences in that party’s favor.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).

ANALYSIS

I. Plaintiffs’ Statement of Additional Facts

As an initial matter the Court addresses CSC’s Statement of Additional Facts (“PSAF”).

After the submission of the parties’ Joint Statement of Undisputed Material Facts (“JSUMF”),

CSC filed a motion for leave to file “more than 40 Separately Numbered Statements of Facts.”

Doc. 84. At the hearing on this motion the Court repeatedly informed CSC that it is only

permitted to file statements of fact that are disputed outside of the JSUMF. After counsel for

CSC acknowledged that the proposed additional facts are all disputed, the Court granted CSC’s

motion and allowed CSC to file a statement of at most 50 disputed facts.

CSC attached its statement of additional facts to its response to Steinberg’s motion for

summary judgment. However, this statement failed to comply with the Court’s order that the

statements be disputed; furthermore, it was a blatant attempt to get around the Court’s limitation

on the number of permitted additional facts by including multiple statements of fact under one

numbered paragraph. The additional facts are almost entirely quotes and characterizations of

emails sent by various individuals involved in this case. There is no dispute that these emails

were sent or that they said what CSC contends they said. This Court’s summary judgment

procedures require undisputed facts to be included in the parties’ joint statement. The Court’s

procedures are not advisory. See Sweatt v. Union Pac. R.R. Co., 796 F.3d 701, 711–12 (7th Cir.

2015) (affirming this Court's summary judgment case management procedures as conforming to

Local Rule 56.1); Ciomber v. Coop. Plus, Inc., 527 F.3d 635, 643 (7th Cir. 2008) (district court

does not abuse its discretion “when it opts to disregard facts presented in a manner that does not

follow [Local Rule 56.1’s] instructions”). For this reason alone, the Court can and does strike

the PSAF.

Additionally, the PSAF contains well more than 50 facts. Although it is difficult to say

where one fact ends and another begins when a paragraph is dealing with closely related ideas,

there are numerous examples in the PSAF of a single numbered paragraph including numerous

facts that are in no way related. For example, paragraph 6 states, “On July 16, 2010, Steinberg

made a reservation at the ROOF for Pissios and the Transformers Crew. On July 26, 2010,

Pissios asks Steinberg for the best contact to call regarding Vince Vaughn’s movie Old St. Louis

and Steinberg provides Pissios with Vaughn’s email address.” Doc. 89-1 ⁋ 6 (citations omitted).

There is no relationship between these two statements that could reasonably be construed as

making them a single fact. Similarly, paragraph 9 deals with communications regarding The

Playboy Club television show and a potential partnership between Cinespace and Columbia

College. Other than these communications occurring on the same day, they are completely

unrelated. Paragraph 12 references communication about Vince Vaughn’s production company,

Iron Man 3, and a letter Pissios sent to Governor Quinn regarding grant funds. Again, there is no

common thread with these facts. Paragraph 20 discusses communications regarding both the use

of an Oval Office set and the movie Noah. There are numerous other examples of unrelated

communications jammed together under single paragraphs in an attempt to circumvent the

Court’s order allowing CSC to file at most 50 additional facts. Such blatant disregard for the

Court’s order is an independent basis upon which to strike the PSAF.

Finally, even if the Court were to consider the facts in the PSAF when deciding this

motion, it would not change the outcome. The PSAF does nothing to undermine the conclusion

that Steinberg had a rational basis for taking the actions she did with regard to promoting

Cinespace with film and television producers seeking studio space. See infra.

II. Class-of-One Claim

CSC’s one remaining claim against Steinberg is for violation of its Fourteenth

Amendment right to equal protection under the law. CSC asserts a class-of-one equal protection

claim against Steinberg, arguing that she intentionally steered business to CSC’s competitor

Cinespace to the detriment of CSC and helped Cinespace obtain state grant funds without doing

the same for CSC. Steinberg now moves for summary judgment on this claim, arguing that CSC

has not identified a suitable comparator that was treated more favorably, that CSC has not shown

that Steinberg steered business away from CSC, and that even if Steinberg had done so, there is a

rational basis for her actions and no evidence of hostile intent or animus. The Court agrees and

finds that even if Steinberg did steer business to Cinespace, she had a rational basis for doing so.

A class-of-one plaintiff must prove that it has been intentionally treated differently from

others similarly situated, and that there is no rational basis for the difference in treatment. Fares

Pawn, LLC v. Indiana Dep’t of Fin. Institutions, 755 F.3d 839, 844 (7th Cir. 2014) (citing

Village of Willowbrook v. Olech, 528 U.S. 562, 564, 120 S. Ct. 1073, 145 L. Ed. 2d 1060

(2000)). And, if the court “can come up with a rational basis for the challenged action, that will

be the end of the matter—animus or no.” Fares Pawn, 755 F.3d at 844. Therefore, because the

existence of a rational basis defeats a class-of-one claim even where there is evidence of hostile

intent or animus, and as explained below, there was a rational basis for Steinberg’s actions, the

Court does not need to address whether Cinespace is in fact a comparator or whether animus

permeated Steinberg’s actions.

CSC asserts that Steinberg violated its right to equal protection when she steered movie

and television producers to Cinespace and did not do the same for CSC. In its response to the

motion for summary judgment, CSC includes a nearly page-long, single-spaced paragraph which

it argues shows the occasions on which Steinberg “steered, promoted and marketed Cinespace

through the [IFO].” These allegations broadly fall into three categories: Steinberg helping

Cinespace network with film and television producers, Steinberg promoting Cinespace’s facility

with film and television producers, and Steinberg informing Cinespace of potential film

production opportunities. In none of these emails is there any indication that Steinberg is acting

to undermine CSC or that her motivation is anything other than bringing film productions to

Illinois.

A rational basis exists if the action has a rational relationship to a legitimate government

interest. Smith v. City of Chicago, 457 F.3d 643, 652 (7th Cir. 2006). In her role as Managing

Director of the IFO, Steinberg’s mission was to promote and grow the film and television

industry in Illinois. There is no dispute that growing the film and television industry in Illinois is

a legitimate government interest. In her role, Steinberg often met with studio executives and

promoted the benefits of shooting at Cinespace. It is undisputed that Cinespace is a considerably

larger facility than CSC (1.5 million square feet versus 65,000 square feet). Additionally, the

two facilities have other differences such as the ability to load trucks directly into sound stages,

availability of air conditioning, ability to choose rental companies, and others. It is entirely

reasonable that when promoting Illinois as a location for filming, Steinberg would evaluate

which of the two studios was the better option for a particular project and push that option in

discussions with film and television executives. She also could have a taken a more passive

approach and simply informed executives that there are two studios in Chicago and left it at that,

but it is not irrational for her to understand her mandate as encouraging her to make efforts to

actively engage in the studio marketing process.

It is also undisputed that CSC did not regularly ask Steinberg for industry contacts or

marketing assistance, while Cinespace reached out to her regularly. It is entirely rational for

Steinberg to engage more frequently with the party that reaches out to her seeking assistance. It

is undisputed that when CSC reached out to Steinberg, she provided them with assistance and

contacts. Therefore, it is reasonable to conclude that had CSC been as aggressive in its efforts to

work with Steinberg, she would have provided them with similar industry contacts and

marketing assistance. CSC has not provided any evidence to contradict this conclusion.

CSC counters that to the extent Cinespace provides advantages as a filming location,

CSC’s disadvantage is a direct result of Cinespace receiving substantial state grant funds. This

may well be true, but it does not implicate Steinberg. Beyond encouraging Cinespace to pursue

state funds and providing market information to the DCEO, she had no role in the grant making

process, and certainly had no authority to award or deny grants. In her role as Managing

Director of IFO, the State tasked her with promoting the state’s film industry as it existed, not as

perhaps it would be in a world where grants were awarded in a way CSC views as more

equitable.

Finally, CSC makes a rather convoluted argument about Steinberg demonstrating

illegitimate animus toward CSC and preferential treatment to Cinespace in the grant making

process. CSC asks the Court to take judicial notice of an indictment filed in a case against John

Coli, Sr., a former officer of various Teamster Union organizations. That case deals with a

payment Coli received from an unnamed Illinois company that CSC states is Cinespace. CSC

then, through use of rhetorical questions, implies that Steinberg was somehow tied to these

payments, though it is entirely unclear how. See Doc. 89 at 15 (“Who else received cash

payments from Cinespace? Why would Cinespace make such cash payments? On March 6,

2014, why did Shelia Chernis inform Steinberg of the FOIA request the same day she received it

from the Better Government Association about her emails with CSC and Cinespace and tell

Steinberg that she would put it through the next day?”). This sort of innuendo and mudslinging

is not sufficient to establish animus and is wholly inappropriate in a legal brief. The undisputed

facts, on the other hand, establish that Steinberg had no role in the decision-making process

regarding the grants and there is absolutely no evidence that she, at any time, took payments

from Cinespace. Therefore, this argument, in addition to being inappropriate based on the

evidence in the record, does nothing to prove CSC’s case.

Because Steinberg’s efforts to promote Cinespace to film producers had a rational

relationship to the state’s interest in growing its film production industry, even if Steinberg had

some animus towards CSC or actively steered business to Cinespace and away from CSC, CSC’s

class-of-one claim still fails. Therefore, the Court grants Stemnberg’s motion for summary

judgment.

CONCLUSION

For the foregoing reasons, the Court grants Steinberg’s motion for summary judgment

and terminates her as a defendant in this case.

Dated: September 7, 2018 oy

SARA L. ELLIS

United States District Judge

1]