A Chicago-based, minority-owned petroleum and equipment
supplier has spearheaded a class action against the city of Chicago, accusing
City Hall of improperly applying rules that force minority-owned subcontractors
into arbitration over contract disputes, effectively blocking them from suing
general contractors who may have failed to sufficiently utilize the minority-owned
subcontractors, as required by city ordinance.
On Feb. 8, DWJ Petroleum, which according to its website,
has locations in Chicago and suburban Bloomingdale, filed suit in Cook County
Circuit Court against the city and landscaping contracting firm, Jaclynn Inc.,
which does business as Gilio Landscape Contractors.
DWJ’s website promotes the business as a certified “minority
business enterprise” (MBE), and touts a long list of services, focused
primarily on the supply of blades and other cutting implements, as well as
petroleum products, for use by contractors.
The lawsuit centers on the city’s involvement in a dispute
between DWJ and Gilio over Gilio’s alleged failure to allow DWJ to work to
fulfill a purported a commitment made in 2006 to hire and employ DWJ made in a
contract Gilio received from the city for weed trimming work. The commitment
was allegedly made to allow Gilio to satisfy the city’s rules requiring a
certain percentage of projects to go to businesses owned by minorities and
DWJ’s lawsuit said the city sent a letter in January 2017
affirming the city’s belief Gilio had fallen short of its commitment to utilize
DWJ under the terms of its contract with the city. According to the complaint,
Gilio allegedly had agreed to pay DWJ nearly $440,000 for its services.
However, the letter also informed DWJ it had just 15 days to
notify the city if it wished to press any claims against Gilio, and also
notified DWJ that under city rules, those claims must be submitted to binding
arbitration, at the initial expense of DWJ. If the subcontractor doesn’t act
within 15 days, the city would consider the matter closed.
DWJ alleged there is “no formal rule or regulation that
imposes the 15 day time limit” and the city’s “special conditions” requiring
arbitration violate the city’s Municipal Code. The lawsuit said DWJ believes
the code calls for contractors, not their subs, to bear burden of pressing for –
and paying for – arbitration in disputes with the minority-owned
The lawsuit said DWJ believes such letters and demands are
typical of those received by all minority- and women-owned businesses involved
in similar disputes with city contractors.
“The purposes of the Special Conditions and the arbitrary 15
day time-frame is to subvert MBE/WBE’s ability to bring their rightful claims,”
the lawsuit asserts.
The lawsuit asks the court to order the city to change all
existing contracts involving MBE or WBE subcontractors to eliminate the “special
conditions” requiring arbitration, and to wipe out the “arbitrary time-frames”
giving the subcontractors just 15 days to decide whether to pay for
arbitration, or allow the matter to be closed.
The lawsuit seeks to expand the action to include
potentially all MBE and WBE subcontractors who had received similar letters and
arbitration demands from the city.
DWJ is represented in the matter by attorneys with the Ayres
Law Offices, of Chicago.