Antitrust Law Daily Monopolization claim fails; ‘sabotage’ claims did not plead anticompetitive conduct
Tuesday, August 6, 2019

Monopolization claim fails; ‘sabotage’ claims did not plead anticompetitive conduct

By Nicole D. Prysby, J.D.

A temporary staff agency’s monopolization claim failed because it alleged only that the procurement manager it contracted with sabotaged its ability to perform under the contract. As the procurement manager was a direct competitor, it was not required to deal with the plaintiff.

A temporary staffing agency’s monopolization claim failed because the defendant (a procurement manager and competitor to the plaintiff) was not required to deal with the plaintiff, held a federal district court in Illinois. The plaintiff alleged that the procurement manager terminated the parties’ contract after a billing dispute arose. Claims that the procurement manager terminated the contract or sabotaged the plaintiff’s ability to perform under it might be actionable under contract law but not under antitrust law. And even if the defendant’s refusal to deal with a competitor could give rise to antitrust liability, the claim would fail because the plaintiff alleged only injury to itself, not competition in general. Claims that procurement manager’s actions were motivated by the fact that the plaintiff’s workers are of African-American descent also failed, because the allegations support an inference that the procurement manager’s goal was to avoid paying the plaintiff, not that its actions were racially motivated (Labor One, Inc. v. Staff Management Solutions, LLC, August 5, 2019, Pallmeyer, R.).

Alleged monopolization and civil rights claims. Labor One, Inc., contracted with Staff Management Solutions, LLC, and provided temporary employees to Staff Management’s clients, including Aramark Services, Inc. Staff Management also provided its own temporary workers to clients. Under the contract between Labor One and Staff Management, Staff Management received a fee in connection with temporary employees that Staff Management procured for Aramark at its McCormick Place location. Labor One used workers from its Community First Program, and most of the workers were African-American. The contract required Staff Management to use a Vendor Managed System (VMS) to enter its billing hours for temporary labor services. Billing issues arose when Labor One encountered technical difficulties using the VMS. After the billing issues arose, Staff Management began raising concerns about the labor provided by Labor One. In a meeting, Staff Management asked Labor One to "stop providing ‘those people’"—meaning workers from the Community First Program—to Aramark at McCormick Place. Staff Management tried to force Labor One to instead hire temporary workers from Staff Management’s parent company or transition Labor One’s temporary workers to Staff Management’s preferred vendor list. In May 2017, Staff Management terminated the contract with Labor One, claiming that the termination was due to Labor One’s failure to enter time correctly in the VMS system. Labor One brought claims under the Sherman Act (15 U.S.C. § 2) and the Civil Rights Act (42 U.S.C. § 1981).

Antitrust claim fails. Labor One’s monopolization claim failed because its complaint essentially alleged only that Staff Management terminated the contract or sabotaged Labor One’s ability to perform under it, and antitrust laws do not require Staff Management to deal with a competitor. Accordingly, Labor One’s allegations that Staff Management terminated or otherwise sabotaged the parties’ contract—whether by delaying payments, souring Aramark on Labor One’s temporary employees, or imposing disruptive screening requirements—did not plead anticompetitive conduct. In addition, Labor One actually participated in the relevant market (providing Aramark with temporary employees for McCormick Place) through its contract with Staff Management. Labor One’s remedy, if any, was for harm allegedly caused by Staff Management arises under contract law. Finally, the court concluded that even if this was the rare case in which refusal to deal with a competitor could give rise to antitrust liability, Labor One’s claim would fail because it did not plausibly plead the existence of an antitrust injury. Labor One alleged that Staff Management’s conduct increased labor costs, but it made no factual allegations about the actual cost of temporary laborers at McCormick Place. And, there was evidence that companies other than Labor One and Staff Management supply temporary employees in the market. The injuries alleged by Labor One were merely injuries to itself as a competitor, not to competition in general.

Civil Right Act claim fails. Labor One claimed that Staff Management violated 42 U.S.C. § 1981 in that Staff Management’s actions were motivated by the fact that Labor One has a workforce of minority-based temporary workers of African-American descent under its Community First Program. But the court found that Labor One failed to explain how any of Staff Management’s actions impeded Labor One’s own right to enter into employment agreements with its workers. Also, the allegations offered no plausible basis for a conclusion that Staff Management acted with an intent to discriminate based on race. Staff Management’s only stated reason for terminating the contract was Labor One’s failure to enter time correctly in the VMS system. On its face, that reason is unrelated to race. Labor One also complained that Staff Management questioned the honesty of its workers, but admitted that occurred only after Labor One complained to Aramark of not being paid for six months. In short, Labor One did not offered any basis for the conclusion that Staff Management’s conduct, including its decision to terminate the contract, was racially motivated; to the contrary, Labor One’s allegations instead support the inference that Staff Management’s goal was to avoid paying Labor One amounts to which Labor One was entitled.

The case number is No. 1:17-cv-07580.

Attorneys: Frank J. Del Medico (Law Offices of Frank J. Del Medico) for Labor One, Inc. Christopher Ray Hughes (Leech Tishman Fuscaldo & Lampl, LLC) for Staff Management Solutions, LLC, Aramark Services, Inc. and Aramark Food and Support Services, Inc.

Companies: Labor One, Inc.; Staff Management Solutions, LLC; Aramark Services, Inc.; Aramark Food and Support Services, Inc.

MainStory: TopStory Antitrust IllinoisNews

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