Bethany Krajelis May 16, 2014, 11:24am

A Chicago attorney who used to represent retirement programs for employees of Pace Suburban Bus Service could face sanctions after a federal judge threw out his whistleblower and First Amendment claims against a former Regional Transportation Authority executive and a life insurance company that acted as trustee for the plans.

On May 9, U.S. District Judge Rebecca R. Pallmeyer ruled in favor of former RTA Executive Director Joseph Costello and Principal Life Insurance Co. in dismissing the complaint lawyer Francis Foster brought against them.

In her order dismissing the case, Pallmeyer gave Foster until May 23 to respond to Costello's request for sanctions that alleges the attorney's suit was frivolous and tried to relitigate a case he had already settled with Pace over his termination as representative of the retirement plans.

The dismissal follows more than a year of litigation involving Foster, Costello and Principal, and builds on years of legal wrangling that also involved the RTA and Pace.

The litigation arose in 2011 after Pace, acting on the advice of its counsel, terminated Foster’s role in representing certain retirement plans for mass transit workers in the Chicago area.

In 2011, Foster had written to the Pace board, notifying members he believed they were underfunding the pension plans and may be in violation of the state pension code. While Pace ultimately acted on his recommendations, the exchange between Foster and the board apparently angered the board, which Foster claims believed he had overstepped his bounds in raising the matter and meddled in the agency’s pending collective bargaining with unionized employees.

The board then moved to terminate Pace’s contract with Foster’s then-Chicago law firm, Mullen & Foster, of Chicago.

Foster disputed the board's authority to do so, however, saying he believed Pace’s union employees needed to sign off on the termination for it to be legal.

He also asserted the termination was “retaliatory” under the RTA's Whistleblower Policy because his actions attempted to shed light on the potential pension problems. Foster also demanded the RTA and Principal intervene, to no avail.

In December 2011, he sued Pace, and the bus agency settled the case confidentially in October 2012, according to the recent ruling.

However, in April 2013, Foster filed suit against Costello, individually, and Principal, alleging they effectively conspired to violate his First Amendment rights by failing to intervene in his dispute with Pace.

In response, Costello and Principal asked Chicago's federal court to dismiss the complaint, arguing Foster lacked standing to bring the case; failed to state an enforceable claim; and filed the suit too late, beyond the statute of limitations.

Pallmeyer agreed that Foster’s claims against Costello and Principal did not hold up.

She said Foster had “not alleged any facts that show that Costello participated, acquiesced, or otherwise caused his termination from the Pace Plans or RTA Plan.”

While Foster alleged Costello’s failure to act on Foster’s contentions regarding the pension plans may have violated state law, Pallmeyer said those allegations did not support his contention that Costello “also participated in violating plaintiff’s First Amendment rights, or caused his retaliatory termination.”

“Plaintiff’s attempts to allege wrongdoing, by providing a laundry list of potentially inculpatory conduct without alleging any supporting facts, are insufficient under the plausibility pleading standards,” Pallmeyer wrote.

Further, the judge noted the suit against Costello bears the marks of an attempt by Foster to reintroduce his claims in court against Pace and potentially the RTA, even though “presumably the settlement agreement Foster signed in settling the litigation against Pace bars him from pursuing any action directly against the RTA or against Costello in his official capacity as RTA director.”

Regarding Foster’s complaint against Principal, Pallmeyer determined Foster also could not sue the insurance company, as his allegations in that complaint stem directly from his complaint against Pace, which had already been settled.

“Plaintiff cannot re-litigate Pace’s liability here by suing Principal,” Pallmeyer wrote.

Pallmeyer continued proceedings on Costello’s motion for sanctions, pending a response from Foster.

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