Court Opinion

ID: 9947073
Source: CourtListenerOpinion
Date Created: 2024-03-01 23:00:46.109837+00
Date Added: 2024-06-11T14:25:46.334673
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 22-3108
SUZY MARTIN,
                                                  Plaintiff-Appellant,
                                 v.

SUSAN HALING, et al.,
                                               Defendants-Appellees.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
            No. 21-cv-05494 — Gary Feinerman, Judge.
                     ____________________

    ARGUED DECEMBER 6, 2023 — DECIDED MARCH 1, 2024
                ____________________

   Before FLAUM, EASTERBROOK, and BRENNAN, Circuit Judges.
    FLAUM, Circuit Judge. Suzy Martin alleges that she was de-
prived of her occupational liberty after an Illinois agency re-
ported that she engaged in an illegal kickback scheme. Alt-
hough the report precipitated a sharp decline in her com-
pany’s revenue, the district court dismissed Martin’s com-
plaint. Since Martin’s company stayed afloat and in the same
line of business after the report’s publication, we affirm.
2                                                  No. 22-3108

                       I.   Background

    Suzy Martin is the owner and president of Smart Elevators
Co., a Chicago-area elevator service and repair company. She
is both a woman and a minority, so the company is a certified
minority- and woman-owned business in both the State of Il-
linois and the City of Chicago. These certifications allow
Smart Elevators to take advantage of special procurement
rules when seeking work with either the State or the City. As
a result, historically, most of Smart Elevators’s business came
from the State and City. By contrast, only about 20 percent of
the company’s revenue came from private sector clients.
    Smart Elevators’s customer portfolio changed when a
whistleblower complaint jeopardized its working relation-
ships with both the State and City. The complaint alleged that
Martin and Smart Elevators engaged in a bribery and kick-
back scheme with a University of Illinois Chicago employee.
The Office of the Executive Inspector General for the Agencies
of the Illinois Governor (OEIG) reacted by launching an in-
vestigation into the allegations, which the agency suspended
after it referred the matter to the United States Attorney’s Of-
fice.
   Before the federal investigation concluded, OEIG discov-
ered that Smart Elevators had submitted a new bid to the Uni-
versity. OEIG and Illinois’s Executive Ethics Commission re-
sponded to the bid by sending the University a report so it
could make an “informed decision in its procurement pro-
cess.” The report concluded that Martin, Smart Elevators, and
the University employee engaged in a kickback scheme that
violated Illinois ethics law and University policy. It also rec-
ommended that the University terminate its existing contracts
No. 22-3108                                                                 3

with Martin and Smart Elevators and bar them both from fu-
ture work.
   About a year after OEIG privately issued its report to the
University, federal prosecutors indicted Martin on four brib-
ery charges. After the indictment but before Martin’s trial, the
Executive Ethics Commission publicly disclosed the OEIG re-
port. Even though a jury acquitted Martin in federal court, the
Executive Ethics Commission and OEIG never rescinded the
report.
    The State and City ceased doing business with Martin and
Smart Elevators in response to the report.1 The company con-
sequently lost millions of dollars in preexisting and potential
contracts, eliminating most of its business. According to Mar-
tin, she and Smart Elevators also lost the ability to utilize the
procurement rules favoring women- and minority-owned
businesses since the City and State were no longer viable cli-
ents.
   To save Smart Elevators, Martin changed its business
model by focusing on private sector work, utilizing new geo-
graphic markets, and expanding the scope of the company’s
work. Martin’s efforts succeeded: Smart Elevators remains in
operation, and she is still its owner and president.
    In the OEIG report’s aftermath, Martin sued several State
and City entities and officials under 42 U.S.C. § 1983, bringing
“stigma-plus” procedural due process claims under the

    1 Additional State and City agencies that contracted with Smart Ele-

vators prior to the report’s publication included: University of Illinois Chi-
cago, Chicago Housing Authority, and Chicago Public Schools.
4                                                    No. 22-3108

Fourteenth Amendment. The district court dismissed her
amended complaint with prejudice. This appeal followed.

                        II.   Discussion

    “This court reviews de novo the grant of a motion to dis-
miss under Federal Rule of Civil Procedure 12(b)(6).” Mal-
hotra v. Univ. of Ill. at Urbana-Champaign, 77 F.4th 532, 535 (7th
Cir. 2023). We take the facts in Martin’s complaint “as true
and view them in the light most favorable to [her].” Muskegan
Hotels, LLC v. Patel, 986 F.3d 692, 695 (7th Cir. 2021).
    To sufficiently plead a procedural due process violation, a
plaintiff must allege the “deprivation of a protected interest”
and “insufficient procedural protections surrounding that
deprivation.” Michalowicz v. Village of Bedford Park, 528 F.3d
530, 534 (7th Cir. 2008). This appeal focuses on whether Mar-
tin has sufficiently alleged a deprivation of her occupational
liberty rights under a “stigma-plus” theory of harm. See Doe
v. Purdue Univ., 928 F.3d 652, 661–62 (7th Cir. 2019).
     A stigma-plus deprivation involves “an injury to [a plain-
tiff’s] reputation” plus “a change in legal status.” Hinkle v.
White, 793 F.3d 764, 768 (7th Cir. 2015) (citation and internal
quotation marks omitted) (explaining that a deprivation of oc-
cupational liberty constitutes a change of legal status). It re-
quires Martin to show that “(1) the defendant[s] made stig-
matizing comments about h[er]; (2) those comments were
publicly disclosed; and (3) [s]he suffered a tangible loss of
other employment opportunities as a result of the public dis-
closure.” Palka v. Shelton, 623 F.3d 447, 454 (7th Cir. 2010) (ci-
tation omitted). We can resolve this appeal by answering
whether Martin sufficiently pleaded a tangible loss, so we
start there.
No. 22-3108                                                       5

   A. Martin’s Occupation
   How we define Martin’s occupation is central to answer-
ing whether she has pleaded a tangible loss of other employ-
ment opportunities. Defendants frame Martin’s occupation
broadly as encompassing the “elevator service and repair
business.” Martin, on the other hand, asks us to circumscribe
her occupation to State- or City-facing elevator work due to
the procurement policies favoring minority- and women-
owned businesses.
    The Fourteenth Amendment ensures a person’s liberty “to
pursue a calling or occupation, … not the right to a specific
job.” Abcarian v. McDonald, 617 F.3d 931, 941 (7th Cir. 2010)
(citation and internal quotation marks omitted). “An occupa-
tion entails the performance of a discrete set of professional
responsibilities that can be meaningfully distinguished from
those of other occupations in a field.” Biggs v. Chi. Bd. of Educ.,
82 F.4th 554, 561 (7th Cir. 2023). A job, on the other hand, en-
compasses work for “a particular employer or customer or at
a particular level of prestige or authority.” Id.; see also Wroblew-
ski v. City of Washburn, 965 F.2d 452, 455–56 (7th Cir. 1992)
(performing work at a city’s marina is not an “occupation”
that could establish a liberty deprivation).
    To that end, we have explained that “being a police officer
is an occupation,” but holding a specific position within law
enforcement management—such as Chief of Police or police
lieutenant—is “a particular rank or job in the police force.”
Hinkle, 793 F.3d at 767 (citation and internal quotation marks
omitted). Similarly, “being a psychologist is an occupation;
being a member of a hospital’s medical staff is not.” Ill. Psych.
Ass’n v. Falk, 818 F.2d 1337, 1344 (7th Cir. 1987). Still, the oc-
cupation-job distinction requires us to consider the nature of
6                                                          No. 22-3108

any expertise or training required to pursue a chosen line of
work. Biggs, 82 F.4th at 561. For instance, in Biggs, we elected
to define a plaintiff’s occupation as “school administration”
instead of the broader “field of education” because the plain-
tiff “ha[d] obtained special education, training, and licensure
in school administration.” Id.
    Martin’s occupation is operating an elevator service and
repair business. While the State and City have preferential
procurement rules that favor her, Biggs makes clear that a
plaintiff does not have a constitutional right to work for a par-
ticular customer or at “a particular level of prestige or author-
ity.” Id.; see Chi. United Indus., Ltd. v. City of Chicago, 669 F.3d
847, 849–51 (7th Cir. 2012) (rejecting stigma-plus claim
brought by minority-owned business’s principal owners who
sought to utilize Chicago policies favorable to minority- and
women-owned businesses). 2 Moreover, Martin never limited
her work to solely State and City clients: Around 20 percent
of Smart Elevators’s business came from private clients even
before OEIG’s investigation began. We decline to limit her oc-
cupation as encompassing only elevator service and repair
work with the State or City.

    2 In Chicago United Industries, Ltd., we held that a minority business

certification is a property interest that can lead to a viable due process
claim when the government “de facto revo[kes]” the certification by “de-
stroy[ing] [its] value.” 669 F.3d at 851 (citation and internal quotation
marks omitted). We explained that public entities may nonetheless “cur-
tail [their] business with [a] company” when they have probable cause to
believe the company violated the law. Id. at 851–52. Martin has not argued
that the State or City effectively deprived her of her minority- or woman-
owned business certifications, nor has she argued that the State or City’s
beliefs that she violated state law were groundless. See id. at 852.
No. 22-3108                                                     7

   B. Loss of Employment Activities
    We next consider whether Martin “suffered a tangible loss
of other employment opportunities” because of the OEIG re-
port. Palka, 623 F.3d at 454. For her claims to advance, she
must show that her “good name, reputation, honor or integ-
rity” were “called into question” in a sufficiently severe way
so as to “make[] it virtually impossible for” her to run an ele-
vator service and repair business. Abcarian, 617 F.3d at 941
(quoting Townsend v. Vallas, 256 F.3d 661, 670 (7th Cir. 2001)).
This standard presents a high bar: “[R]educed economic re-
turns and diminished prestige” are insufficient to establish an
occupational liberty deprivation absent “permanent exclu-
sion from or protracted interruption of employment.” Chi.
United, 669 F.3d at 850.
    Martin’s biggest hurdle is that she still owns and operates
Smart Elevators. Her “employment by the company was
never interrupted[;] … [she] simply cannot have been denied
h[er] liberty to pursue a particular occupation when [s]he ad-
mittedly continues to hold a job—the same job—in that very
occupation.” Id. at 851 (citing Abcarian, 617 F.3d at 941
(“[Plaintiff] cannot meet this burden for a simple and benign
reason: [H]e still has his job in his chosen profession!”)).
    Martin sees things differently. Despite still being in busi-
ness, she asserts that her exclusion from State and City con-
tracts is sufficient to support her stigma-plus claim. True
enough, the Supreme Court has indicated there may be a dep-
rivation if a state defendant “invoke[d] … regulations to bar
[a plaintiff] from all other public employment.” Bd. of Regents
of State Colls. v. Roth, 408 U.S. 564, 573 (1972). But Martin does
not allege that the OEIG report itself explicitly bars her from
any public employment, let alone all public employment. See
8                                                  No. 22-3108

Purdue Univ., 928 F.3d at 662–63 (holding that it was an “offi-
cial determination of guilt, not the preceding charges or ac-
companying rumors, that allegedly deprived [plaintiff] of his
occupational liberty”). To the extent she is effectively barred
from contracting with certain State and City entities, she can
still pursue other avenues of public employment with the fed-
eral government and other cities, municipalities, and coun-
ties. See Webster v. Redmond, 599 F.2d 793, 798 (7th Cir. 1979)
(no deprivation where defendant’s action did not “bar him
from continued employment with the [Chicago Board of Ed-
ucation], let alone from the rest of the public educational sys-
tem”).
    Indeed, as her complaint illustrates, the Department of
Justice awarded Smart Elevators a contract in 2021, and, in
2019, the Department of the Navy ended a suspension it had
placed on Martin and the company. Beyond federal contracts,
Martin has also rebuilt Smart Elevators’s business profile by
expanding her already-existing private client base and
providing services out-of-state. See Wrobleski, 965 F.2d at 455–
56 (no deprivation even though plaintiff had to leave home
state to find work). With no liberty deprivation, Martin can-
not sustain a stigma-plus claim. The district court appropri-
ately granted defendants’ motion to dismiss.

                      III.   Conclusion

   For the foregoing reasons, we AFFIRM the district court’s
entry of judgment in favor of defendants.
No. 22-3108                                                    9

    EASTERBROOK, Circuit Judge, concurring. Suzy Martin con-
tends that the Due Process Clause of the Fourteenth Amend-
ment entitles her to notice and an opportunity for a hearing
before being charged with a crime. My colleagues reply that
her loss from the bribery-and-kickback charges—leveled by
both a state inspector general and a federal grand jury—was
not severe enough to activate a ”stigma plus” escape hatch
from Paul v. Davis, 424 U.S. 693 (1976), which holds that defa-
mation generally does not violate the Due Process Clause. See
also Codd v. Velger, 429 U.S. 624 (1977).
    I do not disagree with my colleagues’ analysis but think it
unnecessary. A formal charge of crime need not be preceded
by hearings. Instead a charge sets the stage for a hearing, such
as the trial at which Martin was acquitted. The Constitution
provides for notice and an opportunity for a hearing. The for-
mal charge is notice, and the hearing follows.
    Neither the inspector general’s report nor the indictment
prohibited any unit of federal, state, or local government from
awarding a contract to Martin or her firm. The report and in-
dictment accused her of bad conduct, to be sure, but that just
put the process in motion. A hope to be awarded a contract is
not a property interest for due process purposes, and a poor
reputation is not a loss of liberty. The Constitution and federal
statutes entitled Martin to a trial on the indictment, and stat-
utes or rules may have entitled her to hearings before being
debarred from doing business with particular agencies. See,
e.g., 30 ILCS 500/50-65; Ill. Admin. Code Title 44 §4.5560; Chi-
cago Board of Education Policy 401.6 (Debarment) §4.5. But
nothing requires a pre-charge hearing.
   Debarment is a legal inability to receive a contract; a legal
disability differs from any agency’s unwillingness to contract
10                                                  No. 22-3108

with a particular person at a particular time. If ability to be
considered for a contract (the absence of debarment) is a prop-
erty interest, the Constitution may require the offer of a hear-
ing. But it is the debarment that is the focus of the hearing.
The model of notice and an opportunity to be heard supposes
that the notice identifies a serious charge that warrants a hear-
ing to determine its truth; for the hearing to precede the
charge is to get things backward.
    Think of the many charges that are made without oppor-
tunities for adversarial hearings. A civil complaint may allege
grievous misconduct, and a credible allegation may injure the
defendant’s business prospects. If the EEOC accuses a firm of
mistreating female workers, or the Department of Justice ac-
cuses a firm of violating the antitrust laws, millions of dollars
in shareholders’ equity may evaporate. Yet a pre-complaint
hearing is unnecessary, and the complaint’s allegations enjoy
an absolute privilege against civil liability. Restatement (Sec-
ond) of Torts §586.
    An internal report at a college may charge a tenured
teacher with sexual assault and propose that the teacher be
fired. The FTC may file a complaint charging the respondent
with defrauding thousands of consumers, and the SEC may
file a complaint charging a broker with defrauding investors
out of multiple millions. Investors will lose immediately. See
Sam Peltzman, The Effects of FTC Advertising Regulation, 24 J.L.
& Econ. 403 (1981). Yet the financial and reputational damage,
and the need to pay lawyers to defend against the accusations,
are not the sort of injury that occasion a judicial intervention.
FTC v. Standard Oil Co. of California, 449 U.S. 232 (1980).
  An agency’s inspector general or the Comptroller General
may accuse a federal contractor of fraud or other misconduct.
No. 22-3108                                                   11

A federal prosecutor may file a criminal complaint and call a
press conference. A grand jury may return an indictment
charging a defendant with a kickback scheme (as Martin was
charged)—or with premeditated murder. These, and more,
may cause reputational loss, but all the Constitution requires
is an offer of a hearing before the final decision. A person
taken into custody following a prosecutorial charge of felony
gets a hearing within 48 hours, but a person charged in an in-
dictment must wait for the trial. Compare County of Riverside
v. McLaughlin, 500 U.S. 44 (1991), with Gerstein v. Pugh, 420
U.S. 103 (1975). See also Fed. R. Crim. P. 5.1(a)(2) (no prelimi-
nary hearing for an indicted defendant).
   Martin’s federal indictment was followed by a trial. That
was the process due for a criminal charge, even though the
indictment was issued ex parte. A proposal to debar Martin
from doing business may have required a hearing as a matter
of due process or state law. But a formal charge of criminal
misconduct, whether by an inspector general or a grand jury,
need not be preceded by an adversarial hearing just because
the charge itself affects someone’s reputation.
    Today’s decision resolves the issues as the parties pre-
sented them. That’s appropriate, if not essential. See United
States v. Sineneng-Smith, 140 S. Ct. 1575 (2020). Still, by ad-
dressing the parties’ dispute as they framed it, the court has
not established that the parties framed it the right way. They
did not.