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City Hall violates code by forcing snubbed minority subs into quick arbitration, class action says

By Jonathan Bilyk | Feb 10, 2017

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 women.

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 subcontractors.

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. 

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Organizations in this Story

Ayres Law Offices City of Chicago