The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
STARFISH TRANSPORTATION,
INC., an Illinois
Corporation; and STEVEN
CORDELL, an Individual,
Plaintiffs,
Case No. 22 C 6501
v.
Judge Harry D. Leinenweber
THE BOARD OF EDUCTION OF THE
CITY OF CHICAGO; PATRICIA
HERNANDEZ, in her position
as Acting Chief Procurement
Officer; and CHARLES
MAYFIELD, in his position as
Chief Operating Officer,
Defendants.
MEMORANDUM OPINION AND ORDER
I. BACKGROUND
Plaintiff Starfish Transportation, Inc.’s (“Starfish”) owner,
Steven Cordell (“Cordell”) is a convicted felon and fraudster. He
pled guilty to a 2007 indictment charging him with fraudulently
obtaining $2 million of Chicago Public Schools (“CPS”) checks made
payable to his employer and converting them to his own use. He
also pled guilty to a 2008 indictment in which he was charged with
check kiting involving more than $220,000. Furthermore, Cordell
failed to appear as required for each of these criminal proceedings
and was charged with the crime of bond jumping. He eventually
reached a plea agreement with the State of Illinois and pled guilty
to the 2007 case and was sentenced to four (4) years in prison of
which he served approximately one half. The record does not
mention any restitution.
Prior and after his conviction Cordell has been involved in
the “yellow bus” transportation business for private secular and
parochial schools. He also has provided limited service to CPS
for such things as field trips and after school programs but never
for regular school busing. Starfish post-conviction continued to
bid on CPS transportation contracts but has never been successful.
In March 2017, Starfish filed an unsuccessful bid protest with
CPS. At no time between 2016 and 2022 did CPS commence debarment
proceedings against Starfish.
In 2022, the CPS requested proposals for student
transportation services for a period of 1 year with two option
periods of 1 year each. On April 25, 2022, Starfish submitted a
proposal. In May 2022, CPS responded by letter to Starfish
describing Starfish as a “qualified prospective contractor” and
requested additional information about the number of buses it owned
and of ability to utilize radio and GPS. Starfish timely
responded.
In July 2022, CPS’s Assistant General Counsel sent a proposed
contract to Starfish requesting that it sign a PDF version. A
week later Starfish returned the signed contract to CPS. However,
on July 12, 2022, CPS informed Starfish that it would not be moving
forward with the contract. On July 26, 2022, Starfish filed a
bid protest with CPS.
On September 20, 2022, CPS’s acting Chief Procurement Officer
(“CPO”) executed and mailed to Starfish a Notice of Proposed
Debarment (“NPD”) which would prevent Starfish from being eligible
to bid on CPS transportation matters. While CPS was considering
debarment, it sought interim constraints which would terminate all
existing contracts with Starfish and would bar it from being hired
or employed by CPS. On September 30, 2022, Starfish timely filed
a brief accompanied by exhibits opposing the NPD, which it
supplemented on November 14, 2022, with an additional brief and
argument.
On October 12, 2022, the CPO had a telephone conference with
Starfish’s attorney explaining the CPS’s reasoning for the interim
restraints and proposed debarment: the fraud conviction and
Cordell’s bond jumping. “The bottom line” as described by the CPO
was that “he [Cordell] defrauded us.”
On November 18, 2022, CPS instituted interim debarment
measures which included prohibiting Starfish from “working on CPS
property.” Starfish contends that the prohibition on working on
CPS premises prevented it from fulfilling its charter school busing
contracts and would have the effect of putting Starfish out of
business.
II. DISCUSSION
In response to the imposition of the interim restraints and
contract withdrawal, Starfish filed this five-count civil
complaint alleging violations of Section 1983. To wit, 42 U.S.C.
§ 1983 provides as follows:
Every person who, under color of any statute, ordinance,
regulation, custom, or usage, of any State or Territory
or the District of Columbia, subjects, or causes to be
subjected, any citizen of the United States or other
person within the jurisdiction thereof to the
deprivation of any rights, privileges, or immunities
secured by the Constitution and laws, shall be liable to
the party injured in an action at law, suit in equity,
or other proper proceeding for redress . . .
Count I claims that preventing Starfish from entering CPS property
to carry out its private contracts, constitutes a procedural due
process violation because it deprives Starfish of a property
interest. Count II claims that the alleged rescinding of the 2022
busing contract constituted a procedural due process violation.
Count III claims that the interim restrictions and the attempted
debarment were in retaliation for Starfish’s 2017 bid protest,
violating Starfish’s First Amendment rights. Counts IV and V claim
that CPS has no statutory or other authority to debar Starfish or
to impose the interim measures to barring Starfish from servicing
third parties. The CPS has moved to dismiss each of the counts.
A. Count I
Plaintiff contends that it has been denied procedural due
process because its contracts with third parties require it to
enter onto CPS property, presumably to pick up and drop of
students. The Seventh Circuit has said that to demonstrate a
procedural due process violation of a property interest, a
plaintiff must have a protected property interest of which he is
deprived. The problem with Starfish’s claim is that it has no
claim of right to the entry onto CPS’s premises, and without a
claim of right there can be no property interest. Plaintiff cites
a fragmented opinion of the Supreme Court holding that an employer
had a property interest arising from a collective bargaining
agreement giving it the right to discharge an employee for cause.
The Court held in Brock v. Roadway Express, 481 U.S.252 (1987),
that this interest prevented the Secretary of Labor from ordering
a reinstatement of the discharged employee under a federal law
protecting whistleblowers, without providing notice and the right
to a hearing. Thus, a federal agency used a federal law that
affected private contractual rights. Here as Plaintiff concedes,
it has no contractual or legal right to enter onto CPS property.
Instead, it cites what it calls “incidental” right to access. Such
would not be a property right protected by the right to due
process.
In any event Plaintiff was granted procedural due process in
the CPS debarment process. The Chief Procurement Officer gave
Starfish notice of the proposed interim constraints and gave
Starfish the right to comment. Starfish took full advantage and
filed multiple written legal briefs that included letters of
recommendation from Plaintiff’s clients. These procedures thus
included notice and an opportunity to be heard which is all of the
process that is due. Blackout Sealcoating, Inc., v. Peterson, 733
F3d 688,691 (7th Cir. 2018). The Motion to Dismiss Count I is
granted.
B. Count II
Count II is based on Plaintiff’s allegation that CPS “rewarded
and then revoked” its busing contract with Starfish. Because the
contract had been awarded to Starfish, a protectable interest was
created that could not be revoked without due process. However,
Starfish was not awarded a contract by CPS. CPS sent it a proposed
contract for review and signature that was to be returned to CPS
for acceptance. It was withdrawn by CPS prior to acceptance. As
CPS argues there is no constitutional right to receive a public
contract, except under specific statutory directives not present
here. Without a constitutional right to receive a contract there
is no prospective property interest. Kim Construction Co. v.
Village of Mundelein, 14 F.3d 1243 (7th Cir. 1994). There being
no property interest in a contract prior to award, the Motion to
Dismiss Count II is granted.
C. Count III
Count III alleges a claim of retaliation for the exercise of
First Amendment rights. Specifically, Starfish, in 2017, filed a
bid protest for CPS’s refusal to award it a busing contract.
However, a First Amendment retaliation claim must involve “a matter
of public interest.” Rather, in making a bid protest to CPS,
Starfish was expressing a private grievance. Starfish felt that
it should have been awarded a public contract. A bid protest is
not public speech because Starfish’s motive was to obtain a
contract that was awarded to someone else. There are no allegations
that the CPS was accepting bribes or committing other wrongful
conduct in awarding the contract. The bid protest was not
successful. The Supreme Court has defined a matter of public
interest or concern as something “newsworthy,” i.e., a matter of
general interest and of value and concern to the public at the
time of publication. City of San Diego v. Roe, 543 U.S. 77, 83-
84 (2004). A protest about a lost bid is not such a matter of
public interest. Since the bid protest did not involve a matter
of public interest, there is no need to decide whether the proposed
debarring was in retaliation. Therefore, the Motion to Dismiss
Count III is granted.
D. Counts IV and V
These two counts are related. CPS filed debarment proceedings
against Starfish to prevent it from bidding on future CPS contracts
(Count IV) and adopted interim restraints, which among other
things, interfered with Starfish’s ability to meet its other
contractual obligations (Count V). Starfish contends that both of
these actions were done without authorization of state law. These
two claims are therefore brought pursuant to the Court’s
supplemental jurisdiction. However, as this Court previously
held in denying a preliminary injunction:
CPS also has the right to control access to its
property. Various portions of the school code allow the
board to restrict access to students, employees, or
other individuals. 105 ILCS 5/10-22.6, 105 ILCS 5/10-
20.83, 105 ILCS 5/11-9.3. Plaintiffs admit that CPS may
restrict who enters its property but argue that when
schools are open to the public, select individuals
cannot be singled out for exclusion without a rational
reason. The Seventh Circuit has recognized that the
general rule is that members of the public have no
constitutional right of access to public schools.
Vukadinovich v. Board of School Trustees of Michigan
City Area Schools, 978 F.2d 403, 409 (7th Cir. 1992).
Further, here, the board has provided a rational reason
to bar Plaintiffs entry. Plaintiff Cordell is a
convicted felon.
Oral ruling February 22, 2023.
The Court has also found that the CPS has the right to control
access to its property. 105 ILCS 5/10-22.6, 5/10-20.83, and 5/11-
9.3. Plaintiff claims however that CPS must have a rational reason
to prevent access to it. Starfish’s owner is a convicted felon
and one of his victims was the CPS. This is a rational reason to
exclude Starfish as a CPS contractor. For these reasons Counts IV
and V are dismissed.
III. CONCLUSION
Starfish (Cordell) points out that his crimes were committed
more than five years prior to the withdrawal of the busing contract
and the imposition of the interim restraints and that he has not
been in trouble since and has proved that he is rehabilitated. He
contends that the debarment harms the public by removing a
competitive bidder from the bidding process and will have the
unfortunate effect of putting Starfish out of business. He points
out the callousness of the CPS when its procurement officer stated
that the CPS did not dispute or care that Plaintiff had been
rehabilitated but since he defrauded the CPS, he would never do
business with it again. While there is some merit in Starfish’s
position regarding competition and reason to question CPS’s
position on rehabilitation, neither one offends the Constitution.
For the reasons stated herein, Defendants’ Motion to Dismiss
Counts I, II, III, IV, and V is granted.
IT IS SO ORDERED. ~ )
«Harry D. Leinenweber, Judge
United States District Court
Dated: 7/19/2023
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