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Judge tosses General Iron owner’s lawsuit attempting to force city to give it a permit

A federal judge rejected an argument that a Southeast Side car shredder has a constitutional right to immediately operate while a permit decision is still being made.

Reserve Management Group sued the city last month in federal court, seeking more than $100 million and requesting that a judge order the city to issue an operating permit.
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A federal judge tossed out a lawsuit brought against the city by the owner of a controversial car-shredding operation that wants to operate on the city’s Southeast Side

Judge Robert Dow Jr. rejected the company’s claim that its constitutional rights are being violated because Mayor Lori Lightfoot’s administration is delaying a permit decision while environmental studies are conducted. The other arguments in the dispute are better suited for a state court, Dow wrote Tuesday.

The owner of General Iron, which is trying to force the city to issue an operating permit allowing it to open a relocated, renamed scrap-metal operation, filed suit last month seeking more than $100 million in damages due to the permit delay. The company also asked a judge to order the Lightfoot administration to issue the permit immediately.

Part of the argument for filing in federal court is that the company accuses the city of violating its constitutional rights as a landowner. Reserve Management Group acquired General Iron in Lincoln Park in 2019 and built a new $80 million shredding facility at its longtime property along the Calumet River at East 116th Street. By failing to issue a permit to the new Southeast Side business, rebranded as Southside Recycling, the city “has effectively taken the value of RMG’s property without just compensation,” the company said in its complaint.

Citing a recent Supreme Court case, Dow noted on Tuesday that the process hasn’t been finalized. Indeed, Lightfoot has said the application for the permit is on hold at the request of the U.S. Environmental Protection Agency, which has called for additional Southeast Side pollution studies to be conducted to determine the cumulative impact to residents’ health.

“Until the government makes up its mind, a court will be hard pressed to determine whether the plaintiff has suffered a constitutional violation,” Dow wrote, quoting the recent Supreme Court case.

The company says it has been strung along by city officials who it says initially encouraged the move to the South Side.

“Southside Recycling will immediately seek a prompt ruling in state court ordering the city to issue the permit, based on the city’s broken promises and the fact that we have met every requirement imposed by the city’s own rules,” RMG said in a statement.

In a filing earlier this month, city lawyers mocked RMG’s claims related to the land rights issue, calling it the “jurisprudential equivalent of a cloud of shredder fluff,” a reference to so-called auto fluff, a byproduct of car-shredding.

“The decision to dismiss acknowledged the appropriateness of the City’s choice to cooperate with the EPA’s request for additional analysis,” the city law department said in a statement.

Previously, city lawyers said in court filings that RMG had not shown irreparable harm, an argument the company made as it sought a judge’s order. “It has not sufficiently shown that such damage, if proven, could not later be redressed by payment of compensatory damages,” city attorneys wrote.

Contributing: Jon Seidel

Brett Chase’s reporting on the environment and public health is made possible by a grant from The Chicago Community Trust.