World Fuel Servs. v. City of Chi.
| Decision Date | 19 April 2021 |
| Docket Number | Case No. 20-cv-07836 |
| Parties | WORLD FUEL SERVICES, INC., Plaintiff, v. CITY OF CHICAGO, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
This case arises out of defendant City of Chicago's rejection of plaintiff World Fuel Services, Inc.'s 2020 bid for a fuel contract. Plaintiff World Fuel Services, Inc. ("World Fuel") sued defendant City of Chicago ("City") for injunctive and declaratory relief from the alleged wrongful denial. Before the Court is plaintiff's motion for preliminary injunction. After considering the parties' briefing, exhibits, and oral arguments, plaintiff's motion for a preliminary injunction [6] is denied.
Defendant contracts with fuel suppliers to procure four types of fuel. The fuel is used for various essential operations such as emergency services, streets and sanitation, airport operations, backup generators for City buildings and O'Hare runway lights, other City vehicles and equipment used for water, sewer, street, lighting, and traffic control, and utility repairs. Plaintiff supplied fuel to defendant from 2009 to January 31, 2021, when its 2009 contracts expired (after multiple renewals by defendant). On February 7, 2020, the City's Department of Procurement Services ("DPS") solicited bids for 2021 fuel contracts. The solicitation required bidders make good faith efforts to have 25% Minority Business Enterprise ("MBE") participation in the contracts. Bidders could satisfy the good faith requirement through one of three ways: (1) submit a plan identifying the participating MBE, (2) request to waive or reduce the MBE goal, or (3) a combination of a plan and waiver request. To satisfy the first method, the plan must use a MBE performing in its certified area of specialty and a Commercially Useful Function ("CUF"). A CUF is defined as:
responsibility for the execution of a distinct element of the work of the contract, which is carried out by actually performing, managing, and supervising the work involved, evidencing the responsibilities and risks of a business owner such as negotiating the terms of (sub)contracts, taking on a financial risk commensurate with the contract or its subcontract, responsibility for acquiring the appropriate lines of credit and/or loans, or fulfilling responsibilities as a joint venture partner as described in the joint venture agreement. (Compl. Ex. 2, pg. 2.)
On March 12, 2020, plaintiff submitted a bid proposing subcontractor Petromex, Inc. ("Petromex") as a MBE performing a CUF. Another bidder, Colonial, proposed subcontractor Black Dog Petroleum LLC ("Black Dog") as a MBE performing a CUF. During DPS's review of plaintiff's bid, it discovered that Petromex did not own the tanker trucks used to transport the fuel and were not delivering the fuel. DPS learned that Petromex intended to use a sub-subcontractor firm to transport and deliver the fuel, even though plaintiff had not disclosed the sub-subcontractor in their plan as was required. DPS further discovered that unbeknownst to the defendant, plaintiff had also used an undisclosed sub-subcontractor for transporting and delivering the fuel in the initial 2009 contracts. Defendant informed plaintiff on March 30, 2020 that since Petromex did not own or lease the transporting trucks and was not unloading the fuel itself, it did not perform a CUF. Defendant instructed plaintiff to either find a replacement MBE or submit a waiver request. After much discussion between the parties and plaintiff threatening legal action in an April 21, 2020 letter, defendant rejected plaintiff's bid as non-responsive on May 8, 2020. Defendant awarded the 2021 fuel contracts to Colonial on May 21, 2020, before the close of pre-award protests on May 22, 2020. Plaintiff filed two pre-award protests on May 22, 2020 and two post-award protests on June 5, 2020, all of which were denied.
Since budget submissions for the following year are due each July, defendant immediately began working with the winning bidder, Colonial, on hedging agreements. Under these agreements, defendant commits to buying a specific amount of fuel from the supplier at a fixed price sometime in the future. Executing these agreements assists defendant in predicting fuel costs for the next year. On June 25, 2020, defendant executed hedges with Colonial for around 70% of its predicted fuel needs for February to December 2021 (plaintiff's contract expired January 31, 2021, so defendant obtained fuel from plaintiff until then). Defendant planned, as usual, to obtain the remaining 30% of fuel for 2021 through spot purchases (purchasing fuel at market price separately from the hedged amounts). Defendant also executed two more hedges with Colonial: one on November 10, 2020 for around 40% of predicted fuel needs for 2022 and another on February 9, 2021 for around 20% of predicted fuel needs for 2022. Plaintiff filed a complaint on December 31, 2020 challenging the City's denial of its bid and a motion for a temporary restraining order and/or preliminary injunction on January 27, 2021. The Court heard oral argument on the TRO motion on January 29, 2021. The same day, the Court denied the TRO motion and continued the preliminary injunction motion.
A preliminary injunction is "an extraordinary remedy [that is] never awarded as of right." Benisek v. Lamone, ___ U.S.___, 138 S. Ct. 1942, 1943 (2018) (quoting Winter v. Natural Res. Def. Counsel, Inc. 555 U.S. 7, 24 (2008)). A plaintiff seeking a preliminary injunction must first establish that he is likely to succeed on the merits, that there is no adequate remedy at law, and that he is likely to suffer irreparable harm absent preliminary relief. Glossip v. Gross, 576 U.S. 863, 135 S.Ct. 2726, 2736, 192 L.Ed 761 (2015); GEFT Outdoors, LLC v. City of Westfield, 922 F.3d 357, 364 (7th Cir. 2019). For the likelihood of success on the merits element, the plaintiff must demonstrate "some" likelihood of success, not simply a "better than negligible" chance of success. Mays v. Dart, 974 F.3d 810, 822 (7th Cir. 2020). "If the plaintiff fails to meet any of these threshold requirements, thecourt 'must deny the injunction.'" GEFT Outdoors, 922 F.3d at 364 (citation omitted). If the plaintiff meets the threshold requirements, the court then balances the harm to plaintiff if the injunction is denied with the harm to the defendant if an injunction is granted. Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the United States of America, Inc., 549 F.3d 1079, 1086 (7th Cir. 2008). Ultimately, the moving party bears the burden of persuasion "by a clear showing." Goodman v. Illinois Dep't of Fin. & Prof. Regulation, 430 F.3d 432, 437 (7th Cir. 2005).
The Court must first determine the type of injunction sought. Defendant argues that plaintiff seeks a mandatory injunction, which is an injunction requiring an affirmative act by the defendant and is sparingly issued. See Mays, 974 F.3d at 818. Plaintiff suggests that the injunction is not mandatory but seeks to restore the status quo, which is the last uncontested status before the dispute. See Empire Indus. Inc. v. Winslyn Indus., LLC, 327 F. Supp. 3d 1101, 1108 (N.D. Ill. 2018) (Kennelly, J.). Plaintiff claims that the status quo would be the time before the defendant wrongfully awarded the 2020 contracts to Colonial. Defendant disputes plaintiff's interpretation of the status quo, but fails to specifically argue what it believes the status quo to be.
Even so, the requested relief appears to require several affirmative acts by the defendant, which indicates a mandatory injunction. Plaintiff seeks an injunction that would (1) nullify the 2020 contracts and (2) either award contracts to plaintiff or require defendant re-bid the contracts. If the contracts were awarded to plaintiff, the parties would have to redraft the language of the contracts and execute hedging agreements or rely on daily spot purchases. If the defendant must re-bid the contracts, it would need to review the submitted bids and decide on a winning bidder. The defendant would also need to alter its bidding process by changing how it determines whether an MBE performs a CUF. The injunction would not simply prohibit defendant from buying fuel fromColonial; it would require defendant to affirmatively act to change its bidding process and either draw up agreements with plaintiff, exercise emergency contracting authority, or re-bid the entire contract. Further, the injunction would give plaintiff the final relief it seeks in its complaint of voiding the 2020 contracts. An injunction that gives plaintiff much of the relief it seeks is disfavored and puts a higher burden on the plaintiff. See Money v. Pritzker, 453 F. Supp. 3d 1103, 117 (N.D. Ill. 2020) (Dow, J.).
The Court next addresses whether plaintiff has met the threshold requirements of a preliminary injunction. Plaintiff relies heavily on Keefe-Shea Joint Venture v. City of Evanston, 332 Ill. App. 3d 163, 773 N.E.2d 1155 (1st Dist. 2002), an Illinois appellate court case, for most of its arguments. First, it argues that under Keefe-Shea, violating the right to a fair bidding process is an irreparable injury for which there is no adequate remedy. The complaint makes no mention of the Illinois law or statute defendant supposedly violated and the claims upon which plaintiff seeks declaratory and injunctive relief. Keefe-Shea is distinguishable and plaintiff fails to meet its burden under controlling federal law.
The Court agrees with defendant's arguments distinguishing Keefe-Shea. First, the losing bidder for the building construction contract in Keefe-Shea argued that the irreparable harm was that the plaintiff could not receive the contract if the winning bidder began work on the project. While plaintiff likely would not be able to obtain fuel contracts for this...
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