School nursing vendor OK to continue lawsuit vs Chicago Public Schools, rival over employee poaching

By Scott Holland | Oct 12, 2017

A school nursing services vendor will be allowed to continue a small portion of its action against the Chicago Public Schools, although a federal judge agreed to dismiss part of the complaint.

A school nursing services vendor will be allowed to continue a small portion of its action against the Chicago Public Schools, although a federal judge agreed to dismiss part of the complaint.

In an opinion issued Sept. 30 in Chicago, U.S. District Judge Edmond E. Chang allowed parts of an amended complaint to survive, a change from his June 28, 2016, dismissal of the entire first edition of the action filed by New York-based ATC Healthcare Services, which accused CPS and its new health care staffing agency, RCM Technologies, of attempting to poach ATC nurses.

ATC said the school district and RCM, which is also based in New York, conspired for RCM to take over the nurse staffing contract for CPS, and then to take the nurses ATC used to staff Chicago schools by tricking them into reporting to RCM while still ATC employees. ATC amended its complaint to bring allegations under only the Illinois Uniform Deceptive Trade Practices Act, the Consumer Fraud Act and economic advantage claims.

As in the original matter, CPS and RCM filed a joint motion to dismiss all the claims, but Chang allowed a claim for tortious interference with economic advantage to continue.

ATC said RCM and CPS interfered by enticing nurses to leave the company. In the 2016 dismissal, Chang said ATC sufficiently demonstrated a reasonable expectation of a valid business relationship with the nurses and that RCM and CPS were aware of that expectation. However, the complaint failed at the time because ATC didn’t allege any nurses left for employment with RCM because of the solicitations.

In the amended complaint, ATC said “dozens of employees actually terminated their employment,” but RCM and CPS argued ATC still could not demonstrate the situation left ATC unable to fill contracts with other clients. But Chang said that argument from the defendants fails, because “Illinois courts have held that maliciously inducing at-will employees to leave their employment states a cause of action for the claim without discussing, at the pleading stage, the downstream effects of damages.”

RCM and CPS further tried to argue ATC didn’t allege active recruitment of its employees, but Chang referenced accusations of “false representations” and “intentional acts” that comprise a plausible claim. He also said the argument ATC did not overcome competitor’s privilege fails because that concept is an affirmative defense, according to the Illinois Supreme Court’s 2007 opinion in General Motors Corp. v. State Motor Vehicle Review Board.

Chang, however, agreed to dismiss the remaining claims. RCM and CPS said the Uniform Deceptive Trade Practices Act requires ATC to allege it is likely to suffer future harm absent an injunction. ATC didn’t respond to this argument, and even if ATC had responded, Chang said he would have agreed with the underlying point about failure to allege future harm.

ATC brought its Consumer Fraud Act complaint against RCM only. Chang said he initially dismissed the claim for failing to show a connection between the alleged wrongful acts and consumer protection concerns, while also explaining the amended complaint didn’t correct the flaw. Fundamentally, none of the involved parties are consumers in the eyes of the law, so they are not entitled to protections under those laws, he said.

Chang’s dismissals of those aspects now are with prejudice. For the tortious interference claim, an Oct. 12 status hearing was scheduled, to be followed with discovery.

ATC is represented in the action by attorneys Brian W. Coffman and Lance D. Northcutt, both of Chicago.

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

CPS is represented by attorneys from CPS’ Law Department.

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Chicago Public Schools Hinshaw & Culbertson LLP U.S. District Court for the Northern District of Illinois

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