Because the contracts were terminable at will, Blackout could not get damages for breach—and at all events such a suit would belong in state court even if the firm asserted that breach of contract deprived it of a property interest. See, e.g., Mid-American Waste Systems, Inc. v. Gary, 49 F.3d 286 (7th Cir. 1995); cf. Simmons v. Gillespie, 712 F.3d 1041 (7th Cir. 2013). Illinois law allows judicial review of public bodies’ debarment decisions, see Arroyo v. Chicago Transit Authority, 394 Ill. App. 3d 822, 827 (2009), but Blackout did not avail itself of that opportunity. Nor did it use the law of libel, even though it insists that every public announcement of debarment is defamatory. The CTA announced the debarment without giving a public reason. During the litigation, the reason came out: Blackout had hired Michael Ferro, who was under debarment at the CTA. The CTA viewed this as a stratagem to evade its decision about Ferro. Blackout contends that it did not know of Ferro’s debarment. The CTA’s decision to employ a strict-liability or nofault approach to derivative debarment may be harsh but would not be defamatory. But one way or the other defamation is a state-law issue that was never presented to the state judiciary.
Having foregone their opportunity to litigate statutory and common-law claims in state court, Blackout and its two owner-managers filed this suit in federal court under 42 U.S.C. §1983, contending that the CTA had deprived it of “occupational liberty” without due process of law. The theory of such a suit, based on Wisconsin v. Constantineau, 400 U.S. 433 (1971), as limited by Paul v. Davis, 424 U.S. 693 (1976), is that, even though defamation affects neither “liberty” nor “property” for the purpose of the fourteenth amendment, and even though Blackout lacked a property right in the at-will contract, defamation that substantially limits one’s ability to pursue the common callings of life is a deprivation of liberty. The year’s debarment has ended, but the case is not moot because plaintiffs seek damages.
Judge(s): Frank Easterbrook
Jurisdiction: U.S. Court of Appeals, Seventh Circuit
Related Categories: Construction , Government / Politics
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