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Feb. 24, 2026 Get Citation Alerts Download PDF Add Note

Illinois Network of Charter Schools, et al. v. Kwame Raoul, in his official capacity as the Attorney General for the State of Illinois, et al.

District Court, N.D. Illinois

• Citations: None known
• Docket Number: 1:24-cv-05057

• Precedential Status: Unknown Status

• Opinion

• Authorities (47)

• Cited By (0)

• Summaries (0)

• Similar Cases (20.2K)

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Trial Court Document

UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

ILLINOIS NETWORK OF CHARTER )

SCHOOLS, et al., )

)

Plaintiffs, ) Case No. 1:24-cv-05057

)

v. ) Judge John Robert Blakey

)

KWAME RAOUL, in his official )

capacity as the Attorney General for )

the State of Illinois, et al., )

)

Defendants. )

          MEMORANDUM OPINION AND ORDER                               
Plaintiffs Illinois Network of Charter Schools (INCS), Intrinsic Schools, and 

The Montessori Network d/b/a The Montessori School of Englewood (TMSOE)
(collectively “Plaintiffs”) claim that enforcement of Illinois Public Act 103-0416,
mandating the inclusion of a “union neutrality clause” in every charter and charter
renewal, violates federal and Illinois law. See [1]. Plaintiffs argue that: the National
Labor Board Relations Act (NLRA) preempts the law (Count I); the law violates their
First Amendment rights (Count II); and the law constitutes an impermissible taking
under the Fifth Amendment (Count III). Plaintiffs seek preliminary injunctive relief
to stay the enforcement of Illinois Public Act 103-0416 based upon Counts I and II,
see [6].

For the reasons stated below, the Court denies Plaintiffs’ motion for
preliminary relief, [6].

I. Background

The Illinois Charter Schools Law regulates charter schools in Illinois. 105 ILL.
COMP. STAT. 5/27A-1 et seq. Under the law, “a proposal to establish a charter school

may be initiated by individuals or organizations that will have majority
representation on the board of directors or other governing body of the corporation or
other discrete legal entity” operating the proposed charter school. Id. § 27A-7(b). The
individuals or organizations “may be school teachers, school administrators, local
school councils, colleges or universities or their faculty members, public community
colleges or their instructors or other representatives, corporations, or other entities

or their representatives.” Id. These individuals or organization must submit a
proposal “to the local school board and State Board,” acting as authorizers, “for
certification under Section 27A-6 of this Code in the form of a proposed contract.” Id.
§ 27A-7(a); id. § 27A-7.10. If the authorizer accepts the proposal, the parties create
an agreement, called a “charter.” Id. § 27A-6(a). Any charter school agreement
imposes several requirements for the administration and operation of charter schools,
including compliance with health and safety guidelines, certain board membership

procedures, and financial recordkeeping. See 105 ILL. COMP. STAT. 5/27A-5(c)–(d). In
exchange, the charter school receives funding from its authorizer. 105 ILL. COMP.
STAT. 5/27A-5(h). While the law considers charter schools part of the public school
system, a charter school “shall be organized and operated as a nonprofit corporation
or other discrete, legal, nonprofit entity authorized under the laws of the State of
Illinois.” 105 ILL. COMP. STAT. 5/27A-5(a), (c).

The Illinois Educational Labor Relations Act (IELRA) governs labor relations
for all public schools in the state. In 2009, the State Assembly passed Illinois Public
Act 096-0104, explicitly including charter schools within the scope of the IELRA,

following a state court decision holding the opposite. See 105 ILL. COMP. STAT. 5/27A-
5(g); Northern Kane Educational Corp. v. Cambridge Lakes Education Ass'n, IEA-
NEA, 914 N.E.2d 1286, 1291 (Ill. App. Ct. 2009).

In 2023, the State Assembly passed Illinois Public Act 103-0416, amending 105
ILL. COMP. STAT. 5/27A-6, to include a requirement that all new charters or charter
renewals contain a “union neutrality clause” within the charter agreement. See 105

ILL. COMP. STAT. 5/27A-6. According to the law, a charter school must “be neutral
regarding the unionization of any of its employees, such that the charter school will
not at any time express a position on the matter of whether its employees will be
unionized.” 105 ILL. COMP. STAT. 5/27A-3. The school may not “express a position on
the matter of whether its employees will be unionized” or “threaten, intimidate,
discriminate against, retaliate against, or take any adverse action based on their
decision to support or oppose union representation.” Id. The school must also permit

labor organization representatives onto school property, and the law requires votes
for union recognition by a majority card check procedure verified by a neutral third-
party arbitrator. Id. Plaintiffs in this case consist of a charter school network and charter schools:
INCS, Intrinsic Schools, and TMSOE.1 [19] at 3–4. INCS, the umbrella organization

1 The amended complaint, filed after the parties briefed Plaintiffs’ preliminary injunction motion, also
names the following Plaintiffs: Namaste Charter School, Inc.; Chicago Charter School Foundation
for all Illinois charter schools, represents 134 charter schools, serving over 60,000
students in Illinois. [20] ¶ 2. Intrinsic Schools operates two charter schools within
the city of Chicago, one authorized by CPS and another by the Illinois State Board of

Education. [21] ¶ 2. Intrinsic’s board has full independence from the government
and full control over hiring decisions. Id. ¶ 5. When the State Board of Education
renewed Intrinsic’s charter in summer 2024, the renewed charter contained the
aforementioned union neutrality clause. Id. ¶ 7–9. Likewise, TMSOE operated under
a similar governance structure and was asked to sign a charter renewal agreement
containing a union neutrality clause in March 2024. See [22].

On June 18, 2024, Plaintiffs filed their complaint against the Illinois Attorney 

General in his official capacity, the Illinois State Board of Education, (“State
Defendants”), and The Board of Education of the City of Chicago (collectively,
“Defendants”). Plaintiffs seek a declaration that Illinois Public Act 103-0416—the
act amending the Illinois Charter School Law to require that charter renewal
agreements contain a “union neutrality clause”—remains invalid based upon NLRA
preemption, the First Amendment, and the Fifth Amendment.2 Along with their

complaint, Plaintiffs filed a motion for a preliminary injunction to prevent the
enforcement of the Act pending a decision on the merits.

d/b/a Chicago International Charter School; Noble Network of Charter Schools; Great Lakes Academy
Charter School; Perspectives Charter School; Catalyst Schools; and Erie Elementary Charter School.

See [56].

2 In their amended complaint, Plaintiffs allege that the illegality of the Act includes the Board of
Education for the City of Chicago’s implementation of the Act by way of a Resolution, passed May 29,
2025. See [56] ¶¶ 10–11 & n.1.

II. Legal Standard

A preliminary injunction constitutes “an extraordinary remedy” reserved for
exceptional cases. Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008); Girl

Scouts of Manitou Council, Inc. v. Girl Scouts of the United States of Am., Inc., 549
F.3d 1079, 1085 (7th Cir. 2008). A party seeking a preliminary injunction must
establish it has a likelihood of success upon the merits, Adkins v. Nestle Purina
PetCare Co., 779 F.3d 481, 483 (7th Cir. 2015), that it has no adequate remedy at law,
and that it will suffer irreparable harm if the court denies a preliminary injunction,
Stiller, Inc. v. Steak N Shake Enters., Inc., 695 F.3d 676, 678 (7th Cir. 2012); see also

Wis. Right to Life, Inc. v. Barland, 751 F.3d 804, 830 (7th Cir. 2014).

Following the Supreme Court’s twin decisions in Winter v. Natural Resources
Defense Council, Inc., 555 U.S. 7 (2008) and Nken v. Holder, 556 U.S. 418 (2009), the
Seventh Circuit retired the previous “better than negligible” standard, adopting
instead a “strong” showing standard. See Ill. Republican Party v. Pritzker, 973 F.3d
760, 762–63 (7th Cir. 2020) (“We note this to remind both the district courts and
ourselves that the ‘better than negligible’ standard was retired by the Supreme

Court.”); Mays v. Dart, 974 F.3d 810, 821 (7th Cir. 2020) (explaining that the “better
than negligible” standard “is not the proper standard to apply when evaluating the
likelihood of success on the merits in a preliminary injunction motion”). This
modification remains only a change in degree and not kind; a plaintiff must still
demonstrate that the claim has “some chance” of success, but “better than negligible”
will not do. Ill. Republican Party, 973 F.3d at 762.

If the moving party shows a likelihood of success on the merits, the Court then
“must consider the irreparable harm that the nonmoving party will suffer if
preliminary relief is granted, balancing such harm against the irreparable harm the

moving party will suffer if relief is denied.” Stuller, 695 F.3d at 678 (quoting Ty, Inc.
v. Jones Grp., Inc., 237 F.3d 891, 895 (7th Cir. 2001)). To do so, the Court considers
the public interest in granting or denying the injunction, using a “sliding scale
approach” to weigh these considerations. Id.; Christian Legal Soc’y v. Walker, 453
F.3d 853, 859 (7th Cir. 2006).

In First Amendment cases, a likelihood of success suffices to meet the standard

for a preliminary injunction. Higher Soc’y of Ind. v. Tippecanoe County, Ind., 858
F.3d 1113, 1116 (7th Cir. 2017). The loss of First Amendment freedoms, even for
minimal periods of time, constitutes an irreparable injury, and protecting such
freedoms thus always serves the public interest. Id.; Korte v. Sebelius, 735 F.3d 654,
666 (7th Cir. 2013). If Plaintiffs demonstrate that they are likely to succeed on the
First Amendment claim pled in Count II, then “the analysis begins and ends with the
likelihood of success on the merits.” Korte v. Sebelius, 735 F.3d at 666.

III. Analysis

A. Likelihood of Success: Supremacy Clause

Plaintiffs argue that the NLRA, a federal law that contains numerous
provisions governing the labor relations of employers, preempts the IELRA. While
the NLRA “contains no express preemption provision,” the federal law may
nonetheless preempt a state law where “the NLRA prevents a State from regulating
within a protected zone, whether it be a zone protected and reserved for market
freedom,” known as Machinists preemption, or “for NLRB jurisdiction,” known as
Garmon preemption. Building. & Construction Trades Council of the Metropolitan

District v. Associated Builders and Contractors of Massachusetts/Rhode Island, 507
U.S. 218, 226–27 (1993) (“Boston Harbor”) (first citing San Diego Bldg. Trades
Council, Millmen's Union, Local 2020 v. Garmon, 359 U.S. 236 (U.S. 1959); and then
citing Lodge 76, Intern. Ass'n of Machinists and Aerospace Workers, AFL-CIO v.
Wisconsin Employment Relations Commission, 427 U.S. 132 (1976)); see also id. at
224–26 (discussing Garmon and Machinists preemption).

Defendants argue that preemption does not apply because Plaintiffs constitute 

political subdivisions and that, even if preemption does apply, the State, acting as a
market participant, may nonetheless permissibly impose otherwise preempted
contractual restrictions. The Court considers each argument in turn.

1. Political Subdivision

Defendants first argue that preemption does not apply here because Plaintiffs
fall outside the reach of the NLRA as a political subdivision. The NLRA defines

employers as “any person acting as an agent of an employer, directly or indirectly,
but shall not include the United States or any wholly owned Government
corporation,” or “any State or political subdivision thereof.” 29 U.S.C. § 152 (2). In
interpreting the NLRA, the National Labor Relations Board defines a political
subdivision as an entity: “(1) created directly by the state, so as to constitute
departments or administrative arms of the government, or (2) administered by
individuals who are responsible to public officials or to the general electorate.” NLRB
v. National Gas Utility District of Hawkins County, 402 U.S. 600, 604–05 (1971).3

The Supreme Court has utilized this test and considered additional factors, such as

whether the entity has the power of eminent domain, tax exempt status, an ability to
issue tax-exempt bonds, and whether its records were subject to public records laws. Id. at 606–07; Austin Developmental Center, Inc., 606 F.2d at 789.

An entity’s close relationship with the state does not necessarily make that
entity a political subdivision. For example, a state-funded mental healthcare facility
did not qualify as a political subdivision even though the state created, funded, and

operated the facility on state property. NLRB v. Parents & Friends of the Specialized
Living Center, 879 F.2d 1442 (7th Cir. 1989). Factors weighing against classification
as a political subdivision included the fact that a non-profit corporation managed the
facility through a license with the state, the state had “no authority to hire or fire”
the entity’s “directors or executive director,” and the board of directors were “chosen
by its corporate members, not by the state or general public.” Id. at 1448–49. Though
the services the facility provided remained “essential to the execution of the SLC Act,”

(legislation related to the facility), the court noted that the entity did not act “as an
arm of the state by providing its services.” Id. at 1448; see also id. at 1449 (“If a not-

3 Because the Supreme Court and Seventh Circuit have relied upon this test, this Court may continue
to do so as well, despite the parties’ arguments regarding the lack of Chevron deference. See Hawkins,
402 U.S. at 604–05; NLRB v. Austin Developmental Center, Inc., 606 F.2d 785, 789 (7th Cir. 1979).

Loper Bright does “not call into question prior cases that relied on the Chevron framework. The
holdings of those cases that specific agency actions are lawful” remain “subject to statutory stare
decisis despite our change in interpretive methodology.” Loper Bright Enters. v. Raimondo, 603 U.S.
369, 412 (2024). Since Defendants have presented no other authority compelling the Court to
disregard Hawkins, that case and its progeny remain binding today.

for-profit corporation operates a hospital pursuant to a contract with the state as
opposed to a statutory duty, the employer is ‘not transformed into a political
subdivision of the State.’”) (quoting Truman Medical Center, Inc. v. NLRB, [641 F.2d

570, 572](https://www.courtlistener.com/opinion/387270/truman-medical-center-incorporated-v-national-labor-relations-board/#572) (8th Cir. 1981)).

Likewise, a state-funded zoo did not constitute a political subdivision where
state officials “deliberately designed” the zoo “as a private entity to be operated
independently of” state institutions. Brock v. Chicago Zoological Society, 820 F.2d
909, 911 (7th Cir. 1987). Decisive factors included the entity’s “corporate structure,
its resulting independence” for “operations and maintenance, and the indisputably

private nature of its employment relationships.” Id. at 912–13.

In contrast, a national gas utility district constituted a political subdivision
where the state essentially controlled the entity. Hawkins, 402 U.S. at 609. The
Court recognized the extent of the state’s control since the district operated as a
nonprofit, public officials appointed the district’s board, board members remained
subject to the state’s “General Ouster Law” for removal, the district’s records were
public, a statute named the district a “municipality,” and the district possessed

powers of eminent domain, tax exempt status, and the ability to issue tax-exempt
bonds. Hawkins, 402 U.S. at 609. The Fifth Circuit, applying Hawkins’ framework,
determined that Louisiana charter schools did not qualify as political subdivisions.

Voices for International Business & Education, Inc. v. NLRB, 905 F.3d 770 (5th Cir.
2018). In so doing, the court emphasized that “there is no way for the public to select
the board members who set policy for” the charter school and thus concluded that the
charter school “is ‘not administered by individuals who are responsible to public
officials or to the general electorate.’” Id. at 775. Since the court determined that the
authority for the government to remove Board members for cause remains different

from the authority to remove-and-replace for policy reasons, the public did not control
the administration of the organization without that ability to replace board members. Id. at 774.

Illinois charter schools similarly fail the Hawkins test. First, the charter, an
agreement between an independent nonprofit and the state, creates a charter school,
a process that mirrors the license granted by the state to the mental health facility

in Parents and Friends of Specialized Living Center. As noted in that case, the use of
a state law to approve the receipt of state funds by a private entity differs from a
statute creating the entity itself. See Parents and Friends of Specialized Living
Center, 879 F.2d at 1448. Consequently, Illinois charter schools do not constitute
departments or administrative arms of the government.

Nor are Illinois charter schools “administered by individuals who are
responsible to public officials or to the general electorate.” Id. A board of directors,

or equivalent governing body, administers the charter school. Illinois law imposes
two requirements on the board of directors or government body: (1) the charter
school’s governing body must include at least one parent or guardian of a currently
enrolled student, selected by the board, governing body, parent teacher organization,
or equivalent; and (2) board members must complete some hours of professional
development leadership training. 105 ILL. COMP. STAT. 5/27A-5(c)–(c-5). Beyond
these requirements, Illinois law does not mandate the selection or removal process
for board members. This structure parallels the state-entity relationships in Brock
and Voices, where the State had minimal, if any, involvement in board decisions and

the entities did not constitute political subdivisions. Indeed, Graham v. Board of
Education of the City of Chicago explicitly states that “what distinguishes charter
schools from ordinary public schools in Illinois is that they are not administratively
parts of the school district.” 8 F.4th at 629. The State does not determine board
membership of a charter school at all, and the general electorate likewise does not
have a mandated role. In short, charter schools in Illinois are not “administered by

individuals responsible to public officials or the general electorate.” Hawkins, 402
U.S. at 605.

Further, while the State does exercise a certain amount of control over charter
schools through various statutory requirements, like compliance with health and
safety guidelines, certain board membership procedures, reporting requirements, and
curriculum, this level of control resembles contracting conditions, not a political
subdivision. Unlike the entity in Hawkins, the state does control board membership,

subject members to a removal law, or impart state powers like eminent domain or an
ability to issue tax-exempt bonds; all factors that contributed to the political
subdivision finding in Hawkins. Given the characteristics of Illinois charter schools,
the schools do not constitute political subdivisions under the NLRA and consequently
fall within the “employer” definition of the NLRA. As a result, this theory to avoid
preemption fails.

2. Market Participant Exception

Next, the State Defendants argue that, even if Illinois charter schools meet the
“employer” definition within the NLRA, the schools act as state contractors, and, as

a result, the State, by acting as a market participant, may permissibly impose
contractual restrictions otherwise preempted by federal law. Since “pre-emption
doctrines apply only to state regulation,” where a state acts merely as a market
participant, “the State is not subject to pre-emption by the NLRA.” Boston Harbor, 507 U.S. at 227 (emphasis in original); see also Lavin, 431 F.3d at 1006 (“A city or
state acting as proprietor, however, is a market participant rather than a market

regulator.”). Courts distinguish “between government as regulator and government
as proprietor,” as the NLRA does not prohibit “all legitimate state activity that affects
labor.” Boston Harbor, 507 U.S. at 227. Where the state “is not functioning as a
private purchaser of services,” however, and the state action is “tantamount to
regulation,” NLRA preemption applies. Boston Harbor, 507 U.S. at 229 (quoting
Wisconsin Department of Industry, Labor & Human Relations v. Gould Inc., 475 U.S.
282, 291 (1986).

Proprietary state action should only bind the contracting parties and serve a 

market participant interest, such as cost savings. See Lavin, 431 F.3d at 1006; cf.
Metropolitan Milwaukee Ass’n of Commerce v. Milwaukee County, 431 F.3d at 277
(“The state has the same interest as any other purchaser in imposing conditions in
contracts with its sellers that will benefit the state in its capacity as a buyer, as
distinct from enforcing or modifying the NLRA.”). In contrast, state action that binds
noncontractors, controls conduct unrelated to the state contract, or fails to serve a
market-participant interest suggests a concealed attempt at regulation. See
Metropolitan Milwaukee Ass’n of Commerce, 431 F.3d at 279, 281–82.

Plaintiffs argue that the State does not act as a proprietor since the charter 

school authorizers, not the state, impose the contract requirements. [41] at 10–11. A
similar situation existed in Lavin, where Illinois placed conditions on subsidies for
renewable-fuels plants but did not actually act as a proprietor since the private
renewable-funds “project’s owner, not the state, is its proprietor.” Lavin, 431 F.3d at
1006. Despite this conclusion, the market exception did apply to the state action

“because Illinois has limited its condition to the project financed by the subsidy”;
therefore, it did not engage in “regulation” under Boston Harbor, and federal
preemption did not apply. Id. at 1007. In this case, it thus remains immaterial
whether the State itself functions as the proprietor, the key issue depends upon
whether or not the State acts as a market participant.

Here, the State passed a law governing all charter contracts, rather than
independently negotiating for the provision in certain specific charters. Even if the

State is not a proprietor, it acts as a market participant by mandating an additional
condition in the agreement between charter schools and authorizers. The union
neutrality clause only restricts charter school managers while talking to teachers,
donors, and other community members—expected functions of the charter school
within its contract. The law does not impose requirements on noncontractors or
implicate conduct unrelated to the charter. Like Lavin, the State does not seek to
regulate education or labor generally, rather, the law manages the State’s specific
charter contracts in the world of education and labor. See Boston Harbor, 507 U.S.
at 227.

Through the charter school law, the State seeks to prevent labor discord, a 

proper state proprietary interest. Indeed, Boston Harbor recognized such a
proprietary interest in a law imposing union conditions motivated to “maintain
worksite harmony, labor-management peace, and overall stability throughout the
duration of the project.” 507 U.S. at 221; see also Colfax Corp. v. Illinois State Toll
Highway Authority, 79 F.3d 631, 634 (7th Cir. 1996). Likewise, the Third Circuit

recognized union neutrality clauses as an acceptable condition of state funding to
promote labor peace. Hotel Employees & Restaurant Employees Union v. Sage
Hospitality Resources, LLC, 390 F.3d 206, 218 (3d Cir. 2004). In that case, since the
city was an investor in a project, requiring the contracting company to sign the union
neutrality agreement served the proprietary interest of protecting the city’s
investment. Id.; see also [34] at 13 (citing cases in other circuits following same rule
regarding conditions on performance duties by state contractors).

Plaintiffs argue that the Act conceals its true regulatory interest given the 

comments made by Representative Guzzardi—the Act’s sponsor—on the House Floor
regarding the implications of the bill on charter schools’ speech and charter school
teachers. [41] at 12–13 (citing [41-1] at 17). These comments alone, however, do not
change the Court’s analysis, as “federal preemption doctrine evaluates what
legislation does, not why legislators voted for it or what political coalition led to its
enactment.” Lavin, 431 F.3d at 1007 (emphasis in original). As discussed, the law
serves the proprietary interests of the State by promoting labor peace through a union
neutrality agreement, a proper proprietary interest.4 Consequently, the law reflects

proper proprietary state action, not regulation.

For the reasons stated above, IELRA and the union neutrality clause it
requires constitute acceptable conditions of state funding that satisfy the market
participant exception to the preemption doctrine. The record, thus, undermines this
preemption theory as well.

B. Likelihood of Success: Freedom of Speech

     1.   Standing                                                   
Defendants argue that Plaintiffs lack standing to pursue their claim because 

they have not demonstrated sufficiently concrete and particularized harm under the
First Amendment. Article III of the Constitution limits “federal judicial power to
certain ‘cases’ and ‘controversies.’” Silha v. ACT, Inc., 807 F.3d 169, 172–73 (7th Cir.
2015) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 559−60 (1992)). A
plaintiff must show that: (1) he has suffered an “injury in fact” that is concrete and

particularized and actual or imminent, not conjectural or hypothetical; (2) the injury
is fairly traceable to the challenged action of the defendant; and (3) it is likely, as
opposed to merely speculative, that the injury will be redressed by a favorable

4 Additionally, even if they were relevant, Representative Guzzardi’s comments also suggest an
additional proprietary motivation: avoiding NLRB-imposed fines—Representative Guzzardi cites one
Illinois charter school fined $250,000 for firing teachers after they joined a union. [41-1] at 16. Clearly,
the state would have a proprietary interest in ensuring that state funds allocated to charter schools
promote education, not pay such fines.

decision. Id. at 173 (quoting Friends of the Earth, Inc. v. Laidlaw Environmental
Services (TOC), Inc., 528 U.S. 167, 180−81 (2000); Lujan, 504 U.S. at 560−61). The
party invoking federal jurisdiction bears the burden of establishing the elements of

Article III standing. Lujan, 504 U.S. at 561.

Chilled speech constitutes an injury supporting standing. Bell v. Keating, 697
F.3d 445, 453 (7th Cir. 2012). The “chilling effect” on the plaintiff’s speech must be
“objectively reasonable,” result in self-censorship by the plaintiff, and “affect the
plaintiff in a personal and individual way.” Speech First, Inc. v. Killeen, 968 F.3d
628, 638–39 (7th Cir. 2020) (first citing Bell, 697 F.3d at 454; and then citing Spokeo,

Inc. v. Robins, 578 U.S. 330, 339 (2016)).

Here, the union neutrality law requires Plaintiffs to choose between signing a
charter agreement that forbids them from expressing “a position on the matter of
whether its employees will be unionized” and securing public funding for their
organization. 105 ILL. COMP. STAT. 5/27A-3. Plaintiffs communicate with their
employees about various issues at their schools, including unionization, but the union
neutrality clause would prevent certain communication. If Plaintiffs sign the new

agreements, there exists an objective fear that a contract violation—speaking about
unions—would jeopardize future funding, thus having a “chilling effect” on Plaintiffs’
speech. Without doubt, such repercussions constitute concrete and particularized
harm. See Speech First, 968 F.3d at 638–39.

Plaintiffs accordingly have standing to sue under their First Amendment
claim.

2. Political Subdivision

Political subdivisions “cannot challenge a state statute on federal
constitutional grounds.” Village of Arlington Heights v. Regional Transportation

Authority, 653 F.2d 1149, 1151 & n.7 (7th Cir. 1981) (quoting Appling County v.
Municipal Electric Authority, 621 F.2d 1301, 1308 (5th Cir. 1980)); see also Ysursa v.
Pocatello Education Ass’n, 555 U.S. 353, 363 (2009). Though Illinois charter schools
do not constitute political subdivisions for purposes of the NLRA, the same need not
be true within the First Amendment context. Plaintiffs rely on the Hawkins analysis
to argue that charter schools are not political subdivisions for First Amendment

purposes, but the Supreme Court and Seventh Circuit have only applied Hawkins’
political subdivision test to cases pertaining to the NLRA, OSHA, and ERISA. See
e.g., Parents & Friends of the Specialized Living Ctr., 879 F.2d at 1448; Brock v.
Chicago Zoological Soc., 820 F.2d at 910; Shannon v. Shannon, 965 F.2d 542, 547 (7th Cir. 1992). In a First Amendment case, the Supreme Court defined “state
political subdivisions” as “merely departments of the State” and “a subordinate unit
of government created by the State to carry out delegated governmental functions.”

Ysursa, 555 U.S. at 362–63 (quoting Trenton v. New Jersey, 262 U.S. 182, 187 (1923)).

Compared to the NLRA Hawkins test, this definition does not expand the scope of
entities that qualify as political subdivisions; if anything, this definition views
political subdivisions more narrowly. Therefore, if Illinois’ charter schools do not
constitute political subdivisions under the NLRA, it remains unlikely that they would
qualify as political subdivisions in the First Amendment context.

Defendants rely upon Nampa Classical Academy v. Goesling, where the Ninth
Circuit ruled that Idaho’s charter schools constituted political subdivisions for First
Amendment purposes. 447 F. App'x 776, 778 (9th Cir. 2011). Just a year earlier,

however, the Ninth Circuit held that Arizona charter schools were not political
subdivisions in the § 1983 context, noting that an entity may qualify as a political
subdivision “for some purposes but still function as a private actor in other respects.”

Caviness v. Horizon Community Learning Center, Inc., 590 F.3d 806, 814 (9th Cir.
2010). In both cases, the Ninth Circuit analyzed the extent to which a state
supervised and controlled schools in the relevant context. See id. at 808–10

(describing Arizona charter school law); Nampa Classical Academy, 447 F. App’x 776,
777–78 (describing the same for Idaho).

Neither case binds this Court, and, given the different state outcomes, the
cases suggest that any analysis for political subdivisions depends upon the specific
factual context of the state and its charter school laws. As described here, boards of
directors or other governing bodies manage Illinois charter schools. Although Illinois
law imposes some requirements on these governing bodies, the State does not have a

direct role in appointing, removing, or otherwise regulating members. See 105 ILL.
COMP. STAT. 5/27A-5(c)–(c-5). Additionally, the State itself does not create a charter
school; rather, a statute permits “authorizers” to contract with the proposed charter
schools and the agreement or “charter” between the parties acts as the basis for the
school’s existence. Id. § 27A-6(a). Based upon this structure, the charter schools are
not “merely departments of the State”; nor are they “a subordinate unit of government
created by the State to carry out delegated governmental functions.” Ysursa, 555
U.S. at 362–63 (quoting Trenton, 262 U.S. at 187). The Seventh Circuit acknowledged
this separation in stating that Illinois’ charter schools “are not administratively parts

of the school district.” Graham v. Board of Education, 8 F.4th 625, 629 (7th Cir. 2021)
(emphasis in original)5; see also Board of Education v. Illinois State Charter School
Comm’n, 97 N.E.3d 85, 89 (Ill. App. Ct. 2018) (“A charter school is a tuition-free public
school supported by public funds but operated by a nonprofit entity independent from
the school district in which it operates.”) (first citing 105 ILL. COMP. STAT. 5/27A-5(a),
(e); and then citing Comprehensive Community Solutions, Inc. v. Rockford School

District No. 205, 837 N.E.2d 1 (2005)). And, while Illinois law imposes some speech
requirements on charter schools, see e.g., 105 ILL. COMP. STAT. 5/27A-5(g) (reporting
and bully prevention requirements), these conditions resemble typical contracting
clauses and do not exert such control over the schools to create a “subordinate unit of
government.”

Given the charter schools’ independence from the State, even within the First
Amendment context, Illinois charter schools do not constitute political subdivisions

and may challenge the Illinois law on constitutional grounds.

5 This case held that Illinois charter schools were “governmental under ERISA,” where a
“governmental plan” under ERISA included “a plan established or maintained for its employees by the
Government of the United States, by the government of any State or political subdivision thereof, or
by any agency or instrumentality of any of the foregoing.” Graham v. Board v. Education, 8 F.4th 625,
628–29 (7th Cir. 2021). The Seventh Circuit’s holding that Illinois charter schools are “governmental”
does not necessarily signify that the charter schools are political subdivisions for First Amendment
purposes given the different contexts and definitions. Graham sought to answer whether charter
schools were “governmental” based upon a statutory definition; here, the Court must determine
whether charter schools constitute political subdivisions in First Amendment common law.
3. First Amendment Claim

Plaintiffs claim that the union neutrality clause violates the charter schools’
constitutionally protected right to free speech. Defendants respond that the law

merely places constitutional conditions on program funding.

While “government suppression of protected activity” violates the First
Amendment, “denial of a subsidy” does not necessarily constitute an unconstitutional
effort to “suppress.” Camelot Banquet Rooms, Inc. v. United States Small Business
Administration, 24 F.4th 640, 646 (7th Cir. 2022) (emphasis in original); see also
Regan v. Taxation With Representation, 461 U.S. 540, 549 (1983) (“A legislature’s

decision not to subsidize the exercise of a fundamental right” does not infringe the
right). Consequently, the “Government can, without violating the Constitution,
selectively fund a program to encourage certain activities it believes to be in the
public interest, without at the same time funding an alternative program which seeks
to deal with the problem in another way.” Rust v. Sullivan, 500 U.S. 173, 193 (1991).

Here, Illinois does not seek to generally suppress speech related to unions,
rather, the charter schools’ funding remains conditioned upon the acceptance of the

union neutrality clause. In this way, the State “has simply chosen not to subsidize”
speech by the charter schools related to unions. Camelot, 24 F.4th at 646.
Most importantly, the law also does not implicate any viewpoint-based
discrimination, as the law prevents speech related to unions “without reference to
whatever viewpoint that speaker may hold.” Wisconsin Education Ass’n Council v.
Walker, 705 F.3d 640, 651–52 (7th Cir. 2013). Therefore, by refusing to grant a
charter (and the related funding) to charter schools that do not accept the union
neutrality clause, the law does not violate the First Amendment. See Camelot, 24
F.4th at 646 (“The Supreme Court has never struck down a denial of subsidy on this

ground—it surely requires something more, like viewpoint discrimination, than
denial of the subsidy itself.”) (citing Wisconsin Education Ass’n Council, 705 F.3d at
650–52, 664–70).

Additionally, the union neutrality law constitutes an otherwise permissible
condition on funding. Illinois, “in the exercise of its powers, generally may attach
conditions to the receipt of its funds by others.” In re County Collector of Cook County, 774 N.E.2d 832, 846 (Ill. App. Ct. 2002); see also South Dakota v. Dole, 483 U.S. 203 (1987). Constitutional conditions “define the limits of the government spending
program” or “specify the activities Congress wants to subsidize,” while
unconstitutional conditions “seek to leverage funding to regulate speech outside the
contours of the program itself.” Agency for International Development v. Alliance for
Open Society International, Inc., 570 U.S. 205, 214–15 (2013). For example, Congress
may prohibit using funds “to promote legalization of prostitution or human

trafficking,” but cannot require recipients to “adopt a policy” taking a position on the
issue (i.e. “‘explicitly opposing prostitution and sex trafficking.’”). Camelot, 24 F.4th
at 650 (discussing Agency for International Development, 570 U.S. at 210). The court
specifically noted that “by demanding that funding recipients adopt—as their own—
the Government’s view on” prostitution and sex trafficking, issues of public concern,
“the condition by its very nature affected ‘protected conduct outside the scope of the
federally funded program.’” Id. (quoting Rust, 500 U.S. at 197). On the other hand,
when Congress limited Ҥ 501(c)(3) status to organizations that did not attempt to
influence legislation, Congress had merely ‘chose[n] not to subsidize lobbying’” and

such exclusion was permissible. Agency for Intern. Development, 570 U.S. at 215 (quoting Regan, 461 U.S. at 544) (alteration in original). Conversely, Congress could
not condition “federal financial assistance to noncommercial broadcast television and
radio stations that prohibited all editorializing, including with private funds” since
the condition used “federal funding to regulate the stations’ speech outside the scope
of the program.” Id. at 215–16 (citing FCC v. League of Women Voters of California, 468 U.S. 364, 399–401 (1984)).

Here, Illinois’ condition on charter school funds falls more in line with the
permitted conditions in Agency for International Development and Regan, where
Congress provided funds with a condition that the recipient refrain from certain types
of speech or conduct related to the funded programming. The limitation on charter
schools’ speech reflects the State’s desire to not fund charter schools that express
opinions on the issue of unions. See Camelot, 24 F.4th at 651 (“Congress ‘has not

infringed any First Amendment rights or regulated any First Amendment activity’
by excluding prurient businesses from receiving Program funding.” (quoting Regan, 461 U.S. at 546)). Unlike the prohibited condition in Agency for International
Development, the Illinois law does not require the schools to express the government’s
view on unions; charter schools simply cannot express a view on the issue.

Furthermore, Plaintiffs do not allege that the restriction affects the use of
private funds or restricts the speech of actors outside the charter school program (i.e.,
persons speaking in their individual compacity remain free to express their opinions
on the matter). The affected speakers (agents of charter schools themselves) certainly
fall within the scope of the government spending program, unlike the affected
speakers in League of Women Voters, which included any broadcast programming
regardless of its funding. Therefore, Illinois’ law mandating the inclusion of a union
neutrality clause in school charters does not “seek to leverage funding to regulate
speech outside the contours of the program itself,” and qualifies as a constitutional
condition on funding. See Agency for International Development, 570 U.S. at 214-15.
This finding undermines Plaintiff's likelihood of success as to Count IT.®
IV. Conclusion
For the foregoing reasons, the Court denies Plaintiffs’ preliminary injunction
motion [6].
Dated: February 24, 2026

                                Entered: 

                                John Robert Blakey 7 
                                United States District Judge 

6 Because Plaintiffs have failed to show a likelihood of success on the merits of their preemption and
First Amendment claims, this Court need not address the State Defendants’ Eleventh Amendment
argument. Likewise, the Court need not consider whether Plaintiffs have met the other requirements
for a preliminary injunction.

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