Federal judge affirms arbitration stay in racial bias lawsuit vs Chicago over waste hauling contracts

By Glenn Minnis | Jul 26, 2017

A Chicago federal court judge has denied a local trash hauling company’s request to rescind a previously imposed stay on arbitration in a dispute with the city and its primary waste hauling vendors over service contracts.

Linda and Jesse McGee filed suit on behalf of Linda Construction Inc., naming the city, Teamsters Local 731 and several of their competitors as defendants in its original six-count, 2015 filing that sought $24 million in damages and a request for a court order allowing the company to bid for a Chicago waste hauling contract.

In the suit, the plaintiffs pointedly accused all the defendants of racial discrimination that hampered the minority-owned company’s ability to compete for the city’s garbage hauling business. In the most recent litigation, only Republic Services Procurement Inc. was officially named as a defendant.

In rendering his latest ruling, U.S. District Court Judge Harry D. Leinenweber found that “LCI has waived its right to arbitration and no ground exists to allow it to rescind that waiver.”

In late 2015, the plaintiffs and owners of LCI formally filed suit alleging discrimination, conspiracy, violation of equal protection, breach of contract and interference with a contract. The complaint also specifically charged that the defendants used a three-year “probationary period” LCI was under with the city to sabotage LCI and prevent it from meeting the requirements of the probationary test.”

LCI first landed its probationary contract with the city in 2010, when it was hired by Republic subsidiary Allied Waste Management in a joint venture where Allied was pegged to serve as a “mentor” for the African-American-owned company.

As part of its filing, LCI stressed that its business was the only minority-owned one associated with the city for such work and, up until then, had been completely shut out of the loop. The suit further alleges that over time, and in effort to satisfy diversity-related guidelines, city officials routinely steered related business to front companies for white-owned businesses.

The partnership between LCI and Allied was for three years and held the caveat that LCI would be allowed to officially bid on its own waste hauling contract if all should go according to plan.

During earlier proceedings, the court had ruled that LCI had not offered nearly enough evidence to back its raced-based assertions. Even so, LCI listed a litany of alleged transgressions that included directing an insurer to acquire coverage for LCI’s trucks, which would have prevented the company from being able to cross state lines into Missouri, where landfills are located. LCI also alleged that its drivers were misled to believe one to 1.5 loads delivered per day was sufficient, when the contract called for a minimum of 2.5, and that the loading of LCI trucks with waste to be hauled was intentionally delayed.

“The factual findings upon which the Court premises its legal conclusion of waiver is reviewed only for clear error,” the judge said. “A review for ‘clear error’ means that the Court’s decision will be upheld unless the court of appeals reaches a firm and definite conviction that the Court made a mistake.”

In all, attorneys for LCI claimed to have filed more than two dozen complaints with City Hall over a 16-month period, all of which were allegedly ignored, leading to the company to lose an estimated $14 million in potential income.

LCI was represented in the proceedings by Palos Heights-based attorney Maurice James Salem of the Law Offices of Salem & Associates.

In-house counsel from the Department of Law served as counsel for the city, while all the private defendants were represented by the tandem of Reed Smith LLP, of Chicago, and Hesik-Prybylo, of Oak Park. 

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City of Chicago Hesik-Prybylo Law Offices of Salem & Associates Reed Smith LLP

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