Chicago United Industries, Ltd. v. City of Chicago
669 F.3d 847
7th Cir.2012Background
- CUI and its principals sued the City of Chicago and two officials for constitutional and contract claims arising from a five‑month period of reduced purchases and an eight‑day debarment.
- The City had certified CUI as an MBE, but later suspected CUI was a broker, potentially ineligible for MBE bidding.
- During March–August 2005 the City curtailed purchases from CUI from about $1 million per month to $190k per month, causing substantial losses.
- The City issued notices of possible decertification and debarment, then formally debarred CUI for three years, which was briefly stayed by a preliminary injunction.
- CUI alleged the City violated due process and breached contracts by reducing orders and not renewing contracts; the district court granted summary judgment for the City, and this appeal followed.
- The court ultimately held the City’s actions did not violate due process, did not constitute a breach of contract, and affirmed judgment for the defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the eight‑day debarment violated due process | Loera/Massarella claimed deprivation of occupational liberty | City argues temporary, lawful curtailment not due process violation | No due process violation; temporary curtailment did not destroy property rights |
| Whether MBE certification is property for due process purposes | CUI argues MBE status is a durable property right | Certification is a contingent opportunity, not property | MBE certification is property; diminution without destruction not a due process defect |
| Whether City’s actions were retaliatory under First Amendment | CUI contends actions were in retaliation for lawsuit | Actions were not retaliatory; were ongoing regulatory steps | No First Amendment retaliation; actions were continuation of initial period of treatment |
| Whether there was a breach of contract by reduced purchases/ nonrenewals | CUI asserts breaches via reduced orders and nonrenewals | Changes in requirements must be in good faith and not a breach | No breach; reductions were in good faith or not proven as bad faith breaches |
| Whether City’s contract‑related conduct violated Illinois law | CUI cites alleged breach of requirements contracts | Evidence insufficient to prove bad faith or breach under Illinois law | No breach; City acted within contractual and law bounds |
Key Cases Cited
- Reed v. Village of Shorewood, 704 F.2d 943 (7th Cir. 1983) (property interest in issued certificate can be protected by due process)
- Baja Contractors, Inc. v. City of Chicago, 830 F.2d 667 (7th Cir. 1987) (MBE certification as property right when revocation requires cause)
- Board of Regents v. Roth, 408 U.S. 564 (U.S. 1972) (defined property interest with legitimate entitlement)
- Parrett v. City of Connersville, 737 F.2d 690 (7th Cir. 1984) (constructive discharge concepts in due process)
- Munson v. Friske, 754 F.2d 683 (7th Cir. 1985) (liberty interests and employment protections)
- Empire Gas Corp. v. American Bakeries Co., 840 F.2d 1333 (7th Cir. 1988) (contractual change protections under Illinois law)
- Reed v. Village of Shorewood, 704 F.2d 943 (7th Cir. 1983) (property is secure and durable under state law)
- Zeidler v. A&W Restaurants, Inc., 301 F.3d 572 (7th Cir. 2002) (bad faith reduction in requirements contracts)