3 R Health Care Products, Inc. v. Cardinal Health 110, LLC, and the Department of Central Management Services

Summary

The Illinois Appellate Court affirmed dismissal of 3R Health Care Products’ breach-of-contract and declaratory-judgment claims arising from Cardinal Health’s state pharmaceutical-supply contract and DBE waiver. The court held that 3R was not a party or intended third-party beneficiary of the contract and therefore lacked a legal interest to challenge it. The court reversed dismissal of the tortious-interference claim, concluding that the alleged mandatory good-faith DBE consideration requirement and 3R’s alleged status as the only qualified subcontractor were sufficient to plead a business expectancy.

Holdings

1. The BEP Act mandates a bidder's good-faith effort to secure DBE participation, but it does not mandate ultimate DBE participation when the statutory waiver requirements are satisfied.
2. 3 R was not an intended third-party beneficiary of the contract between Cardinal and the State and therefore lacked standing to sue for breach of that contract.
3. 3 R lacked standing to seek a declaration invalidating the Cardinal-State contract or its DBE waiver because it had no tangible legal interest in the contract.
4. The complaint adequately pleaded a reasonable business expectancy supporting a tortious-interference claim.
5. Dismissal with prejudice was proper because the contract and declaratory-judgment counts failed as a matter of law, not merely because of inadequate factual detail.

Questions Presented

1. Whether 3 R was an intended third-party beneficiary of the contract between Cardinal and the Department of Central Management Services and therefore could sue for breach of that contract.
2. Whether 3 R had a legal interest sufficient to seek a declaration that the Cardinal-State contract and DBE waiver were invalid.
3. Whether the complaint adequately pleaded a reasonable business expectancy and the other elements of tortious interference with business expectancy.
4. Whether the contract and declaratory-judgment counts were properly dismissed with prejudice rather than without prejudice.
5. Whether the Business Enterprise for Minorities, Women, and Persons with Disabilities Act requires actual DBE participation or instead requires only a good-faith effort to secure DBE participation subject to waiver.

Disposition

reversed_and_remanded