A federal judge has refused, for now, to step into a dispute between the city of Chicago and a fuel seller, who has accused the city of violating its bid processes when awarding a fuel supply contract to a more expensive rival that is working with a trucking firm named in one of Illinois’ biggest recent political scandals.
On Jan. 29, U.S. District Judge Sharon Johnson Coleman refused to grant a temporary restraining order requested by World Fuel Services in its legal fight with City Hall.
In her ruling, Judge Coleman said she did not believe World Fuel has, for now, not brought enough evidence to the table to “justify the ‘extraordinary remedy’” of such a restraining order. The judge further noted granting a TRO at this time would essentially force the city of Chicago to pay two fuel suppliers for the same, singular amount of fuel.
The case pulled into Chicago federal court on Dec. 31, when World Fuel filed suit.
The dispute centers on the city’s decision in 2020 to award a bid, worth more than $91 million, to Colonial Oil Industries, of Savannah, Ga., to supply gasoline and diesel fuel for the city’s vehicle fleet.
In its complaint, Miami, Fla.-based World Fuel said it had supplied fuel to the city for the previous 11 years.
World Fuel accused the city of violating its competitive bid process when it transferred that work to Colonial.
World Fuel asserted it had bid about $3.75 million less than Colonial, but was disqualified from the bid process, in part, because the city asserted World Fuel did not meet its minority-owned business requirements.
Under city ordinances, City Hall is required to give at least 25% of its spending on contract services to “minority business enterprises,” or MBEs.
The requirement has sparked creativity among prospective city vendors and contractors, as they seek to qualify for city business under the rules. Often, the qualification process involves the use of subcontractor companies owned by racial or ethnic minorities, or women.
In this case, World Fuel proposed to contract with fuel trucking firm Petromex, of suburban Midlothian, to transport the fuel for the city’s use from various regional fuel hubs. According to Petromex’s website, the company boasts of being a “certified MBE/DBE fuel supply firm since 1990.”
In its complaint, World Fuel says the city has also qualified Petromex as an MBE under its bidding rules for decades.
However, in this case, World Fuel said the city informed World Fuel its use of Petromex as a fuel hauler was insufficient to allow World Fuel to qualify under the MBE quota rules.
World Fuel said it filed a bid protest, but the city still awarded the bid to Colonial.
In its complaint, World Fuel also noted the city’s award to Colonial places it in business with Black Dog Trucking. Based in suburban Lyons, Black Dog has been linked in federal court documents to the federal investigation of former Illinois State Sen. Martin Sandoval.
Sandoval, a formerly powerful Democratic state senator, pleaded guilty in January 2020 to federal charges in connection with an alleged scheme under which Sandoval accepted thousands of dollars in bribes from embattled red light camera vendor SafeSpeed to protect its interests in Springfield and elsewhere in Illinois.
Sandoval died of COVID-19 in December 2020.
Former Illinois State Representative Luis Arroyo, who is also a Democrat, also pleaded guilty to a charge of bribery, as well.
World Fuel’s complaint noted that Amit Gauri, owner of Black Dog Trucking, had admitted in bankruptcy filings to have “met with Sandoval and… Arroyo … to discuss issues related to minority-owned business contracts.”
Subpoenas from federal investigators also sought information concerning Gauri and his company, listed in the court documents under the name of Black Dog Petroleum.
In the complaint, World Fuel alleged one of its former executives, identified as Tim Crowe, said in a sworn declaration that he was allegedly contacted in 2019 by Gauri, who allegedly told Crowe he “would ‘speak favorably about [World Fuel] to Mayor Lori Lightfoot if Black Dog [] was included on [World Fuel’s] City fuel contract bid.’”
“According to Crowe, Gauri was implying that ‘he could influence the City and that [World Fuel] would not be found to be a qualified bidder unless it agreed to use Black Dog [] in its bid,’” World Fuel alleged in its complaint.
“…What Gauri had implied to World Fuel in 2019—that the City would decide that World Fuel was not qualified unless it subcontracted with Black Dog—came true in 2020 when the City used the same rationale put forward by Gauri about not owning trucks to reject World Fuel’s low bids so that it could spend an additional $3.75 million to award the contracts to the bidder, Colonial, whose bids used Black Dog,” World Fuel alleged in its complaint.
“World Fuel does not know what caused the City to invoke Gauri’s reasoning when rejecting World Fuel’s bids. What is clear, however, is that the City’s decision was wrong, the City violated World Fuel’s right to participate in a fair bidding process, and the City’s decision will impose an additional $3.75 million in costs upon the taxpaying public,” World Fuel said.
Despite the expansive allegations, the complaint lists only one defendant, the city of Chicago. Neither Gauri nor Black Dog are named as defendants.
Judge Coleman did not believe World Fuel’s allegations and assertions were sufficient to award it immediate relief in the form of a temporary restraining order.
Judge Coleman said she was willing to entertain more evidence in coming hearings, particularly as World Fuel continues to press for an injunction to force the city to purchase its fuel from World Fuel.
But for now, to grant the TRO, would compel the city to meet its existing contractual obligations with Colonial, and pay World Fuel, as well. Compared to what she viewed as World Fuel’s likelihood of success in its claims, the judge said she could not enter such an order.
“Imposing a requirement on the City to pay for not one, but two fuel suppliers would cost the City and taxpayers millions of dollars,” Coleman wrote in her Jan. 29 order.
World Fuel is represented in its lawsuit by attorneys Christopher J. Esbrook and Stephen R. Brown , of Esbrook Law LLC, of Chicago.