A Chicago federal judge has again rejected an attempt by a former tenant of a Loop high rise to lead a racketeering class action lawsuit against commercial real estate management giant Jones Lang LaSalle, saying there isn’t evidence to back the tenant’s claims JLL conspired with unions to force tenants in 20 JLL-managed Chicago buildings to exclusively use expensive union contractors and movers when renovating or relocating offices.
On April 5, U.S. District Judge Matthew Kennelly denied the request from plaintiff Wacker Drive Executive Suits (WDES) to turn their antitrust lawsuit against JLL into a class action, potentially on behalf of thousands of tenants in nearly two dozen downtown Chicago office buildings managed by JLL.
In the ruling, Judge Kennelly said all involved in the case agree tenants, like WDES, in many JLL buildings were forbidden in many instances from using non-union labor for their renovation and relocation work.
James Zouras
| Stephan Zouras LLP
The judge said his ruling did not address whether WDES itself may have suffered from a forbidden arrangement – a so-called illegal “hot cargo agreement” - between JLL and at least two unions to enforce union-only rules.
But such building rules are not enough to help WDES supports its claim that tenants across 20 buildings all suffered the same costs and damages as claimed by WDES. The judge said it appears likely that individual building owners set the union-only rules. If that is the case, the judge said, JLL, as the hired building management company, then merely executes those rules.
“… WDES had to show that the individualized building inquiries for class members - such as whether the decision to require union contractors or movers in each particular building was based on an overall agreement between JLL and (the unions) - could be meaningfully resolved through common questions,” Kennelly wrote.
“… Even if every single piece of evidence offered by WDES is taken as true, WDES’s evidence is too weak to raise a reasonable inference that all tenant contractor or mover labor decisions are the result of two overall agreements.”
WDES filed suit against JLL three years ago. The lawsuit specifically accused JLL of violating the federal Racketeer Influenced and Corrupt Organizations (RICO) Act and other laws.
WDES asserted JLL has allowed at least two union locals, identified as Teamsters Local 705 and International Union of Operating Engineers Local 399, to block non-union contractors from working inside JLL-managed buildings in Chicago since at least 2014.
The unions were not named as defendants in the lawsuit.
WDES was a tenant from 2005-2017 in a 31-story office high rise at 125 S. Wacker Drive, at the corner of Wacker Drive and Adams Street, which was managed by JLL.
WDES asserted the agreement constituted a kind of kickback by JLL to the unionized contractors who otherwise may not get hired by the tenants.
JLL has failed to get the case dismissed, to this point.
However, the management company has steadfastly maintained no such illegal RICO conspiracy or hot cargo agreements with the unions exist. Rather, the company said, any union-only building rules were enforced by JLL at the bidding of the building owners for whom JLL works.
WDES has in turn disputed JLL’s assertions. The plaintiffs say JLL grants union representatives access to the buildings to ensure non-union contractors are not allowed to work, or at least not allowed to work without harassment and threats directed toward building owners, managers and tenants.
After 10 more months of discovery, Kennelly said the proof presented by WDES of union-only building rules isn’t enough to demonstrate an overarching conspiracy between JLL and the unions, sufficient to support the class action sought by WDES.
The judge further noted WDES has failed to this point to provide evidence to support its claims union-only rules forced all tenants at all 20 buildings to overpay for the work.
The judge said there is, at this point, no “workable way” to measure the damages sustained by tenants across all 20 buildings.
The judge said his ruling did not apply to WDES’ individual claims, which the company will be allowed to continue to press against JLL, if it desires.
WDES has been represented in the action by attorneys James B. Zouras, Ryan F. Stephan and Anna Ceragioli, of the firm of Stephan Zouras, of Chicago; Howard W. Foster and Matthew A. Galin, of Foster P.C., of Chicago; and Aaron R. Walner, of The Walner Law Firm, of Northbrook.
JLL has been represented by attorneys Scott T. Schutte, Philip A. Miscimarra, Stephanie L. Sweitzer, Kevin F. Gaffney, Heather J. Nelson and Elizabeth K. Philipp, of the firm of Morgan Lewis Bockius, of Chicago.