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Goldberg Kohn Representing Southside Recycling in $100M Lawsuit Against the City of Chicago

Litigation seeks a court order directing the city to issue a final permit allowing metal recycling facility to open new southeast side location

May 18, 2021

Southside Recycling, which has constructed the most environmentally conscious metal recycling facility in the country on the city’s Southeast Side, filed a federal lawsuit on Monday, May 17th seeking a court order directing the City of Chicago to issue a final permit.

The lawsuit asserts that the city has wrongfully failed to issue the last permit needed for the facility to begin operating, despite acknowledging for months that Southside Recycling has satisfied all the requirements. The Chicago Department of Public Health (CDPH) Large Recycling Facility permit is the last step in an extensive two-year zoning, rulemaking, and state and municipal permitting process. Goldberg Kohn is representing Southside Recycling in the litigation with GK principal David Chizewer as lead attorney.

In addition to court orders mandating issuance of the permit and barring the city from interfering with Southside Recycling’s lawful use of its property, the lawsuit requests damages in excess of $100 million from the city.

Not only have Southside Recycling and its parent company, Reserve Management Group (RMG), met all city requirements and guidelines, but they also relied on a September 2019 written contract in which the city promised to “reasonably cooperate with RMG in achieving the efficient and expeditious transition” to the new location, “including reasonable assistance with the processing and review of license and permit applications.”

RMG relied on the city’s promise in that agreement when it built the unparalleled new $80 million facility on its expansive 175-acre property along the Calumet River, located at 11600 South Burley Ave. RMG also relied on the promises contained in the agreement with the city when it permanently ceased operations at its profitable former facility on the city’s North Side at the end of 2020. Since then, however, the city has repeatedly violated the September 2019 agreement as well as its own rules and guidelines, according to the lawsuit.

Southside Recycling and RMG Investment Group, LLC filed the lawsuit in U.S. District Court in Chicago against the City of Chicago and Dr. Allison Arwady, Commissioner of the Department of Public Health. It seeks a court order directing Dr. Arwady to issue the final permit and alleges that the city broke its agreement with RMG and violated the company’s constitutional rights by taking private property, meaning depriving the company of its use, without just compensation.

“When we announced this project nearly three years ago, we accepted many business risks, but we knew that we would make the necessary investment to design and build a facility that complies with all city, state, and federal standards to protect public health and the environment, and we’ve done that,” said Steve Joseph, CEO of RMG. “But one risk that we did not take was that the city would cast aside its rules and agreement and suspend the permit review, without any legal justification, after we met every requirement. We regret filing this lawsuit, but we are left with no choice to protect our business, employees, suppliers, and customers.”

The suit alleges that, under Illinois law, if a business satisfies permitting requirements, it is entitled to the permit and a government agency must issue it. A business that has spent $80 million to build the most environmentally conscious metal recycling plant in the country must be able to rely on government agencies following their own laws, regulations, and agreements.

The suit has been covered widely in the regional and national news media, with the following articles being published:

General Iron's owner sues city over permit holdup, seeks more than $100 million -- Chicago Sun-Times

General Iron owner hits city with $100 million lawsuit -- Crain's Chicago Business

Company formerly known as General Iron claims city violated contract, sues for $100M -- WGN-TV

Metal shredding firm sues Chicago over operating permit -- Associated Press

Attorneys At Law

55 East Monroe Street
Suite 3300
Chicago, Illinois 60603-5792
Tel: 312.201.4000
Fax: 312.332.2196
Email: info@goldbergkohn.com

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