United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
D. LEINENWEBER, JUDGE.
Plaintiff Linda Construction, Inc. (“LCI”) has
waived its right to arbitration and no ground exists to allow
it to rescind that waiver, LCI's Motion to Lift the
Court's previously imposed stay on arbitration [ECF No.
194] is denied.
case has had a tortured procedural history. Back in 2015, LCI
brought a six-count Complaint against a number of Defendants.
Among those sued were the City of Chicago, multiple corporate
entities - including Republic Services, Inc.
(“Republic”) and Allied Waste Transportation,
Inc. (“Allied”) - and individual employees of the
municipality and corporations. None of these Defendants is
the one entity that still remains in the case: Republic
Services Procurement, Inc. (“RSPI”). Indeed, LCI
did not even mentioned RSPI in its original Complaint.
causes of action brought in the original Complaint fell into
two categories: those alleging violations of LCI's civil
rights and those stating claims in contract. The contract
that LCI relied on to plead its case at this point was an
agreement between the City of the Chicago and Allied - what
the Court in its previous opinion called the Main Contract.
See, Linda Constr. Inc. v. Allied Waste
Indus., No. 15 C 8714, 2017 U.S. Dist. LEXIS 48367, at
*5-7 (N.D. Ill. Mar. 31, 2017). A specific provision to that
Contract is the fodder for the current Motion. Section 5.9 of
the Main Contract contains the following arbitration clause:
In the event a contractor has not complied with the
contractual MBEs/WBEs percentage in its Schedule D,
underutilization of MBEs/WBEs shall entitle the affected
MBE/WBE to recover from the contractor damages suffered by
such entity as a result of being underutilized; provided,
however, that this provision shall not apply to the extent
such utilization occurs pursuant to a waiver or substitution
approved by the City. The Ordinance and contracts subject
thereto provide that any disputes between the contractor and
such affected MBEs/WBEs regarding damages shall be resolved
by binding arbitration before an independent arbitrator other
than the City, with reasonable expenses, including
attorney's fees, being recoverable by a prevailing
MBE/WBE in accordance with these regulations.
ECF No. 149, Ex. C (Main Contract).
after it filed the lawsuit in federal district court, LCI
went on the offensive by bringing a Motion for a Preliminary
Injunction. See, ECF Nos. 17-19. Defendants opposed
the injunction and simultaneously moved to dismiss the
Complaint for failure to state a claim. The parties fully
briefed both sets of motions and appeared before the Court
multiple times to air their disputes.
March 15, 2016, the Court issued its ruling, handing down an
all-around loss to LCI. Not only did the Court deny the
company an injunction, it also dismissed the Complaint in its
entirety. See, Linda Constr. Inc. v. City of Chi.,
No. 15 C 8714, 2016 U.S. Dist. LEXIS 33376, at *25-26 (N.D.
Ill. Mar. 15, 2016). In particular, the Court found that LCI
was neither a signatory to, nor a third-party beneficiary of,
the Main Contract and so did not have standing to sue under
that Contract. Id. at *21-22. It thus dismissed the
contract claims with prejudice. Id. at *25.
then amended its Complaint. Surprisingly, the First Amended
Complaint looked remarkably like the original, just-dismissed
Complaint. Compare, ECF No. 1 (Original Compl.),
with ECF No. 65 (First Am. Compl.). However, LCI
attached to this Amended Complaint a contract between it and
RSPI - what the parties sometimes call the Services Agreement
and what the Court referred to as the Transport Agreement in
its last opinion. See, Linda Constr., 2017 U.S.
Dist. LEXIS 48367, at *3.
thing to keep in mind is that the Transport/Services
Agreement and the Main Contract are two distinct legal
documents. See, Id. at *38-39 (listing the
differences between the two contracts). The parties to the
Main Contract are the City of Chicago and Allied, which was
at some point bought by Republic. The parties to the
Transport Agreement, on the other hand, are LCI and RSPI.
RSPI is not the same entity as Republic or Allied, however
much LCI seems to treat them as fungible.
First Amended Complaint, LCI continued to assert a breach of
contract count against Republic and Allied (but not RSPI).
However, LCI now relied on the Transport Agreement for this
claim. See, ECF No. 65 at 5. The litigation on the
contractual dispute thus proceeded apace despite language
from the Transport Agreement mandating arbitration.
See, ECF No. 65, Ex. E, at 6 (“Any disputes
under the Services [or Transport] Agreement . . . that are
not resolved by negotiation between the parties shall be
resolved by binding arbitration.”). (Technically, this
arbitration provision comes from an amendment to the
Transport Agreement. However, the parties treat the original
contract and its amendments as one integrated document, and
the Court does the same, referring to them collectively as
the Transport Agreement.)
again moved to dismiss the Complaint. Just eight days before
the motions became fully briefed, LCI dismissed its contract
claim without prejudice. See, ECF No. 92. On June 6,
2016, 257 days after bringing suit in federal court, LCI
tendered a demand to Republic and Allied for arbitration of
the contract claim, “citing the Services [or Transport]
Agreement between LCI and RSPI as the source of [its] right
to arbitration.” ECF No. 104 at 3.
and Allied responded by asking the Court to stay LCI's
demand for arbitration. See generally, ECF Nos. 103
(Mot. to Enjoin or Stay Arbitration) and 104 (Mem. in Support
of Mot.). Defendants argued that LCI had waived its right to
arbitrate by litigating the breach of contract claim in a
judicial forum. See, ECF No. 104 at 4-7. As
Defendants stated, LCI and its owners' “demand to
arbitrate their breach of contract claim is pure
gamesmanship” as they had shown “no intent to
arbitrate . . . until they feared that their claim would be
dismissed, for the second time, for failure to state a
claim.” Id. at 5. Defendants also recited the
time and money they have expended in responding to LCI's
lawsuit. These included “hundreds of hours ...