United States District Court, E.D. Wisconsin
COMSYS, INC. and KATHRYNE L. MCAULIFFE, Plaintiffs,
THE CITY OF KENOSHA WISCONSIN, THE CITY OF KENOSHA WATER UTILITY, FRANK PACETTI, EDWARD ST. PETER, MERRIL A. KERKMAN, JR., KEITH G. BOSMAN, ERIC J. HAUGAARD, RHONDA JENKINS, JAN MICHALSKI, ROCCO L. LaMACCHIA, SR., DAVE PAFF, KURT WICKLUND, KEITH W. ROSENBERG, ANTHONY KENNEDY, SCOTT N. GORDON, CURT WILSON, DANIEL L. PROZANSKI, JR., JACK ROSE and ROBERT C. JOHNSON, Defendants.
STADTMUELLER U.S. DISTRICT JUDGE.
3, 2016, Comsys, Inc. and Kathryne McAuliffe (collectively,
“the plaintiffs”) filed this lawsuit against The
City of Kenosha, The City of Kenosha Water Utility, and
seventeen (17) government officials (collectively, “the
defendants”) under 42 U.S.C. §§ 1983, 1985,
1986 and 1988 seeking damages to remedy various First,
Fourth, and Fifth Amendment violations. (See
generally Docket #1; see also Docket #31 at
¶¶ 1, 122-269 (amended complaint)). Pursuant to
this Court's supplemental jurisdiction, the plaintiffs
also seek damages for violations of Wisconsin law.
(See Docket #31 at ¶¶ 4, 270 -326). The
allegations underlying both the federal and state law claims
concern certain information technology (“IT”)
service contracts that The City of Kenosha (“the
City”) and The City of Kenosha Water Utility
(“the Water Utility”) entered into with Comsys,
Inc. from approximately 1987 until 2015. (Docket #31 at
¶¶ 32-42). According to the amended complaint, the
events that led up to-and ultimately culminated in-the
termination of these IT service contracts involved a complex
conspiracy among the various government officials that are
named in this lawsuit, including the mayor, the city
administrator, the general manger of the Water Utility, the
City's director of IT, and thirteen (13) Alderpersons.
(Docket #31 at ¶¶ 32-121).
to Federal Rule of Civil Procedure 12(b)(6), the defendants
filed a motion to dismiss the amended complaint in its
entirety. (Docket #37). That motion is now fully briefed and
ripe for adjudication. (Docket #38, #39, #40). For the
reasons stated herein, and as more fully described below, the
Court will grant the defendants' motion in part, and deny
it in part.
delving into the legal issues underlying the defendants'
motion, the Court will first provide an overview of: (1) the
parties to this litigation; and (2) the factual background of
Inc. (“Comsys”) is a private, for-profit
Wisconsin corporation based in Racine. (Docket #31 at ¶
6). Comsys is engaged in computer facilities management
throughout the southeastern section of the State. (Docket #31
at ¶ 6). Kathryne McAuliffe (“McAuliffe”)-an
adult female citizen who also resides in Racine-is
Comsys' sole shareholder. (Docket #31 at ¶¶
case, the plaintiffs are suing two municipal entities: the
City and the Water Utility. (Docket #31 at ¶¶ 8-9).
The City is a municipal, political subdivision of the State
of Wisconsin, duly organized and operating under the laws of
the State. (Docket #31 at ¶ 8). The Water Utility is
likewise a municipal, political subdivision of the State of
Wisconsin, duly organized and operating pursuant to Wis.Stat.
§ 66.068. (Docket #31 at ¶ 9).
plaintiffs have also named as defendants:
1. Keith G. Bosman (“Mayor Bosman”)-an adult
citizen and resident of the City and County of Kenosha-who at
all times relevant, was elected and employed as the mayor of
2. Frank Pacetti (“Pacetti”)-an adult citizen and
resident of the City and County of Kenosha-who at all times
relevant was employed as the city administrator for the City;
3. Edward St. Peter (“General Manager St.
Peter”)-an adult citizen and resident of the City and
County of Kenosha-who at all times relevant was employed as
the general manager for the Water Utility;
4. Merril A. Kerkman, Jr. (“Kerkman”)-an adult
citizen and resident of the County of Kenosha-who, prior to
May 1, 2014, was an employee of Comsys, and, from May 1,
2014, to the present, has been employed as the City's
director of IT.
(Docket #31 at ¶¶ 10-13).
named in this action are thirteen (13) individuals who, at
all times relevant, were elected and employed as Alderpersons
for the City: (1) Eric J. Hauggard; (2) Rhonda Jenkins; (3)
Jan Michalski; (4) Scott N. Gordon; (5) Rocco J. LaMacchia,
Sr.; (6) Dave Paff; (7) Kurt Wicklund; (8) Keith W.
Rosenberg; (9) Anthony Kennedy; (10); Curt Wilson; (11)
Daniel J. Prozanski, Jr.; (12) Jack Rose; and (13) Robert C.
Johnson. (Docket #31 at ¶¶ 14-26). In addition to
their roles as Alderpersons, Eric J. Hauggard, Rhonda
Jenkins, Jan Michalski, and Scott N. Gordon also served, in
various capacities, on the Board of Water Commissioners for
the Water Utility. (Docket #31 at ¶¶ 14-16, 22).
For the sake of clarity, the thirteen (13) Alderpersons named
in this suit will be collectively referenced hereinafter as
the “Alderperson defendants, ” and the four (4)
Alderpersons who also served on the Board of Water
Commissioners will be collectively referenced hereinafter as
the “Commissioner defendants.”
the amended complaint spans over eighty (80) pages and
asserts nineteen (19) federal and state law counts against
the defendants, the Court will attempt to overview only those
pertinent facts to the defendants' motion. (Docket #31).
Beginning in 1987, Comsys began performing IT services for
the City and the Water Utility as an independent computer
facilities management provider. (Docket #31 at ¶¶
32-33). In that role, Comsys performed various functions such
as furnishing professional/technical assistance in connection
with IT management, information system administration, and
programming support services. (Docket #31 at ¶¶
32-33). During this working relationship, Comsys entered into
various IT service contracts with both the City and the Water
Utility. (Docket #31 at ¶¶ at 37-43).
about March 8, 1988, Comsys hired Kerkman as an employee, and
from January 1, 2013, until March 31, 2014, Kerkman served as
the company's Chief Information Officer. (Docket #31 at
¶ 34). As an employee of Comsys, Kerkman signed a
contract which governed various areas, including, but not
limited to, confidentiality, trade secrets, non-disclosure,
non-competition, and “corporate opportunities.”
(Docket #31 at ¶¶ 45-51).
core of this law suit, the amended complaint alleges that
Kerkman and Pacetti conspired to misappropriate Comsys'
goodwill, confidential information, trade secrets, and
employees. (Docket #31 at ¶ 60). More specifically, the
plaintiffs allege that sometime in or around July of 2013,
Kerkman began soliciting Pacetti to: (1) create a director of
IT position for the City; and (2) hire Kerkman to fill that
role. (Docket #31 at ¶¶ 58, 60). To that end,
Kerkman allegedly obtained unlawful access to Comsys' and
McAuliffe's confidential and proprietary business data,
personal information, and trade secrets either by unlawfully
access Comsys' and McAuliffe's email
accounts/archives or by modifying certain server settings to
covertly route Comsys' emails to Pacetti and/or Kerkman.
(See Docket #31 at ¶¶ 61-62).
the City did not formally create the director of IT position
until late November or early December 2013, on September 24,
2013, Pacetti allegedly informed McAuliffe that he planned to
create and offer the position to Kerkman, and that Kerkman
would accept the City's offer. (Docket #31 at
¶¶ at 66, 69). Unbeknownst to the plaintiffs,
during the process of creating this new, in-house IT
department, Pacetti allegedly relied on information that
Kerkman unlawfully obtained from the plaintiffs'
confidential business and personal data and emails. (Docket
#31 at ¶ 69).
light of the City's purported creation of an in-house IT
department, Pacetti informed McAuliffe that the City wanted
to reduce Comsys' service fees. (Docket #31 at ¶
66). Ultimately, however, the parties could not agree on a
modified contract price. (Docket #31 at ¶¶ 66-67).
spring of 2014, while the City's Deputy Police Chief,
Daniel Miskinis (“Miskinis”), conducted “an
administrative spot check for purposes of ensuring
compliance” with Police Department e-mail
“archiving” protocols, “it was discovered
that archives containing e-mails of both Deputy Chief
Miskinis and Chief Morrissey were being maintained on [the
City's email server], contrary to protocol.”
(Docket #31 at ¶¶ 77, 79). As part of this
investigation, the police interviewed McAuliffe on numerous
occasions. (Docket #31 at ¶¶ 79, 82). Ultimately,
the investigation led Miskinis to conclude that, on various
occasions in 2013-2014, Kerkman had wrongfully accessed
Comsys' employee emails, tax documents, and salary
information. (Docket #31 at ¶¶ 80-82, 89).
Pacetti learned of the Miskinis investigation, Pacetti asked
to meet with McAuliffe, wherein he expressed disappointment
with her having “initiated” the investigation.
(Docket #31 at ¶ 85). Pacetti then allegedly threatened
McAuliffe by telling her “it would not be good”
for the plaintiffs if the Kenosha Police Department pursued
the allegations of criminal conduct against Kerkman. (Docket
#31 at ¶ 85). At a second meeting, the plaintiffs allege
that Pacetti threatened he would terminate Comsys' IT
service contracts if McAuliffe continued engaging with law
enforcement on the basis of Kerkman's allegedly criminal
activities. (Docket #31 at ¶ 90).
not until March 31, 2014, following the Miskinis
investigation, that Comsys formally terminated Kerkman due to
his allegedly unlawful access to McAuliffe's and other
employees' email archives. (Docket #31 at ¶ 91). A
few weeks later, the City formally hired Kerkman as the
director of IT. (Docket #31 at ¶ 92).
1, 2014, the plaintiffs filed a criminal complaint against
Kerkman. (Docket #31 at ¶ 93). In connection with that
complaint, the Racine County Sheriff's Department
executed a search warrant on the City's computer servers
on May 27, 2014; this search, according to the plaintiffs,
set off a chain of retaliatory acts directed towards
McAuliffe and Comsys. (Docket #31 at ¶ 97). First,
McAuliffe allegedly received an email from Pacetti and
General Manager St. Peter stating that “[e]ffective
immediately… all…Comsys system access
privileges to all City of Kenosha and Kenosha Water Utility
computer systems [were] temporarily disabled.” (Docket
#31 at ¶ 98). In addition, both Mayor Bosman and General
Manager St. Peter called special meetings of the Common
Council and the Board of Water Commissioners “[t]o
consider the service and lease agreements between the City
and COMSYS, Inc.” (Docket #31 at ¶¶ 99-100).
The plaintiffs further claim that Mayor Bosman and Pacetti
personally contacted some of the Alderperson defendants to
advocate for the termination of Comsys' contracts.
(Docket #31 at ¶ 101).
2, 2014-the day that the City Council and the Board of Water
Commissioners were set to conduct special meetings to discuss
Comsys' situation-Comsys' legal counsel emailed a
letter and supporting documents to the City Attorney
outlining Kerkman's and Pacetti's allegedly unlawful
conspiracy to misappropriate Comsys' goodwill,
confidential information, trade secrets, and employees.
(Docket #31 at ¶ 104). Nonetheless, after deliberating
in closed sessions, both the City and the Water Utility voted
to terminate Comsys' IT service contracts. (Docket #31 at
to the contracts' termination, the plaintiffs allege that
Comsys had never been notified of any compliance issues; in
fact, the plaintiffs allege that Comsys had even received a
letter from the City Attorney praising its excellent working
relationship with the City. (Docket #31 at ¶ 102).
Further, the amended complaint alleges that at no time in the
three years prior to the contracts' termination did the
Common Council discuss, budget for, commission studies for,
or otherwise formally contemplate the creation of an in-house
IT Department. (Docket #31 at ¶ 103). David Bogdala-an
Alderman who participated in the City's June 2, 2014,
special meeting-allegedly informed the press that the call to
terminate Comsys' contracts “had everything to do
with [the plaintiffs' criminal] investigation.”
(Docket #31 at ¶ 109).
the plaintiffs allege that the Water Utility: (1) began to
“unilaterally and improperly” shift Comsys'
billed hours between itself and the City; and (2) hired two
Comsys employees, in violation of their employee contracts.
(Docket #31 at ¶¶ 110-117). None of the defendants
have allegedly investigated Comsys' claims or, at any
time, attempted to stop the termination of Comsys'
contracts or disciplined Kerkman or Pacetti. (Docket #31 at
result of the aforementioned conduct, Comsys claims to have
sustained injury and damages including, but not limited to:
(1) a loss of substantial business revenue and profit; (2) a
loss of valuable confidential and proprietary business
information and trade secrets; and (3) a material loss of
business reputation and goodwill value. (Docket #31 at ¶
119). In addition, McAuliffe claims to have been harmed by:
(1) a loss of stock value in Comsys; (2) a material loss of
professional reputation; and (3) severe emotional distress.
(Docket #31 at ¶ 120). Further, the plaintiffs claim
that the City and the Water Utility have terminated their
relationships with a woman-owned business enterprise in favor
creating an all-male in-house IT department. (Docket #31 at
¶ 121). Collectively, these harms form the basis of the
plaintiffs' nineteen (19) count complaint. (See
generally Docket #31).
motion to dismiss pursuant to [Rule] 12(b)(6) challenges the
viability of a complaint by arguing that it fails to state a
claim upon which relief may be granted.” Camasta v.
Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th
Cir. 2014). “To survive a motion to dismiss under Rule
12(b)(6), a plaintiff must state enough facts that, when
accepted as true, ‘state a claim for relief that is
plausible on its face.'” Spierer v.
Rossman, 798 F.3d 502, 510 (7th Cir. 2015) (citing
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” McCauley v. City of
Chicago, 671 F.3d 611, 615 (7th Cir. 2011) (citing
Ashcroft v. Iqbal, 556 U.S. 662 (2009)). The Court
must “tak[e] all factual allegations as true and draw
all reasonable inferences in favor of the plaintiffs.”
Pugh v. Tribune Co., 521 F.3d 686, 692 (7th Cir.
defendants argue that dismissal of the amended complaint is
proper under Rule 12(b)(6) for six reasons. They argue that:
1. The official capacity claims against individually named
defendants are redundant;
2. The doctrine of absolute legislative immunity bars all
claims against the Alderperson and Water ...