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Friday, March 29, 2024

Judge says Chicago residents can't sue private firm over 75-year Chicago parking meter lease

Lawsuits
Chicago city hall

Chicago City Hall | Jonathan Bilyk

A federal judge slammed the brakes on an antitrust lawsuit challenging the city of Chicago’s 2008 parking meter lease agreement.

Micah Utericht and Johan Kaderbek — originally joined by a third plaintiff who since has moved away — sued Chicago Parking Meters LLC, alleging a 75-year lease under which CPM has exclusive rights to operate and collect money from city parking meters, violates the federal Sherman Antitrust Act, as well as the Illinois Consumer Fraud Act. They sought both class certification and an injunction keeping CPM from enforcing its least absent modifications. 

But in an opinion issued Jan. 24, Judge Matthew Kennelly granted CPM’s motion to dismiss.

CPM paid the city $1.1 billion in 2008 for the rights to operate some 36,000 metered parking spaces in business zones. Although the city has “reserved powers” over the spaces, according to Kennelly, it can only exercise those rights by paying the full value of the contract. He cited as an example a limit on the city’s authority to “reduce rates, use peak pricing, remove meters to reduce congestion, put in 'drop off' zones and eliminate safety hazards in high crash areas, without a determination and possible arbitration of the compensation due to CPM.”

Utericht and Kaderbek, who wanted the class to include all city residents who use parking meters, said the high expense to the city for making any changes makes officials reluctant to act, establishing “de facto exclusive control over the metered parking system.” They alleged two antitrust violations: CPM doubled parking fees since taking over, making Chicago second only to New York as the most expensive city for parking; and the loss of participation in active regulation of public streets. The state law unfair practices claim alleges the lease stunts development of alternative transportation, like bike and bus lanes, because the city can’t eliminate metered spaces without financial penalty.

Kennelly said the increased fees for parking meters is an obvious financial injury. But “the more difficult question is whether the plaintiffs have met the other two elements of standing: causation and redressability.” Despite the allegations of de facto control by CPM, Kennelly continued, “it is undisputed that CPM cannot directly change the rates.”

The injuries, Kennelly said, are tied to CPM only through the city’s actions and decisions, and the city is not a named defendant. He pointed to two U.S. Supreme Court opinions: a 2019 decision in Department of Commerce v. New York concerning a citizenship question on U.S., Census forms, and 2021's California v. Texas, a challenge to the Affordable Care Act’s individual mandate.

In Department of Commerce, Kennelly wrote, the court said states had standing based not on speculation, but “the predictable effect of government action on the decisions of third parties.” But in California, the court said “neither logic nor intuition” supported a “causal” argument individuals wouldn’t enroll in state-operated health care programs because the mandate wasn’t enforceable.

Utericht and Kaderbek “plausibly allege” their requested injunction would decrease parking meter rates, Kennelly said, citing data from other cities that have lower rates or use off-peak pricing. He also said the men effectively alleged CPM holds a monopoly over parking meters.

However, “the state action immunity doctrine shields state action from federal antitrust liability” when a lawsuit challenges something that is clearly state policy, Kennelly wrote. A city doesn’t need to show state policy compels its action, he continued, only that said policy makes the action a predictable outcome.

Because the Illinois Municipal Code allows any municipality to not only operate but to “enter into contracts dealing in any manner with” parking meters, a city reaching an exclusive lease is a foreseeable result of the state law, and therefore the contract can’t be subject to antitrust litigation.

Although the plaintiffs said the state law only allows a municipality to lease meter rights for advertising, Kennelly said their reading “is contrary to the text of the code and state-law principles of statutory interpretation.” Because he dismissed the federal claims, with prejudice, Kennelly declined to exercise supplemental jurisdiction over the ICFA claim.

Plaintiffs are represented in the action by attorneys Thomas H. Geoghegan, Michael P. Persoon and Will Bloom, of the firm of Despres, Schwartz & Geoghegan, of Chicago, and attorneys Stuart J. Chanen  and Ariel Olstein, of Chanen & Olstein, of Lincolnwood. 

CPM is represented by attorneys Dan K. Webb, Robert Y. Sperling, Joseph L. Motto and Conor Reidy, of Winston & Strawn, of Chicago.

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