A federal judge has agreed to dismiss a lawsuit brought against the Chicago Public Schools by a school nursing contractor who accused the city’s school district of helping a competitor poach their employees after CPS awarded a new contract for its special needs school nursing services. But the judge left the door open for the plaintiffs to rewrite their complaint and resume their lawsuit, if they could.

In the case, New York-based ATC Healthcare Services accused CPS and its new health care staffing agency, RCM Technologies, also based in New York, of attempting to poach ATC nurses. The suit charged the defendants with violating Illinois’ deceptive practices law, as well as interfering with potential economic advantage, fraud and breach of contract.

According to court documents, ATC has provided nurses to work with CPS students with special needs or disabilities since 2006. In 2014, CPS solicited new bids for those services. ATC bid, as did about 10 other firms, including RCM Technologies.

In June 2015, CPS’ board of education approved RCM’s bid. ATC, which had provided a list of nurses along with their assignments and contact information at the district’s request, says it contacted CPS asking “why CPS decided to change the students’ caregivers when ATC had a strong track record of success.” It claims the board then used the information ATC had provided to “help RCM take over ATC’s nurses for the current school year.”

According to court documents, RCM began contacting and recruiting ATC nurses who worked at CPS schools even before ATC’s contract with the district was up. ATC claims some employees were simply told RCM would be “taking over” their contracts.

“According to ATC, all of these efforts were a ruse designed by RCM to create the false impression that ATC’s nurses were now required to report to RCM, despite the fact that they were still ATC employees,” Judge Edmond E. Chang wrote.

In his dismissal, Chang wrote that ATC’s claims do not meet the legal standard of the laws it cites in its complaint. Deceptive trade practices require a defendant to misrepresent the facts in an effort to disparage another or to create a likelihood of confusion, neither of which the judge found. He also found RCM did not violate the Consumer Fraud and Deceptive Business Practices Act, as there is no allegation the company attempted to deceive any consumers – neither students, CPS nor the general marketplace.

The judge said ATC had sufficiently alleged two of the four elements required for tortious interference with prospective economic advantage, but failed to show any evidence that it suffered any actual damage from RCM’s or CPS’ conduct. RCM’s right to attempt to hire its competitor’s employees is actually protected by competitor’s privilege, he wrote. He added that non-compete clauses in the nurses’ contracts with ATC are invalid and can’t be used to support any breach of contract argument.

The judge said he would allow ATC to file an amended complaint. A status hearing has been set for July 13. The court encouraged the parties to negotiate a settlement to resolve the dispute, if possible.

ATC was represented in the action by attorneys with the firm of Querrey & Harrow, of Chicago, and attorney Lance D. Northcutt, also of Chicago.

RCM was represented by the firm of Hinshaw & Culbertson, of Chicago.

The Chicago Board of Education and CPS were represented by attorneys from CPS’ Law Department.

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