A Summit County judge recently sided with Karvo Co., a Stow asphalt company, in its dispute with the Ohio Department of Transportation (ODOT).
Summit County Common Pleas Judge Paul Gallagher, as one of his last actions before retiring Dec. 31, reversed the ODOT director’s decision to suspend Karvo for just over six months. Gallagher also ordered ODOT to reinstate Karvo’s certificate of qualification and to eliminate any references to the company’s suspension.
ODOT claimed Karvo failed to comply with state requirements to hire economically disadvantaged subcontractors. Karvo, however, denied the allegation and sued.
Karvo leaders hailed Gallagher’s Dec. 20 ruling as a victory.
“We are gratified that the Summit County Common Pleas Court recently ruled in Karvo Companies’ favor in our lawsuit against the Ohio Department of Transportation, upholding Karvo’s business practices and the reputation we’ve worked tirelessly to build up and maintain over the years,” George Karvounides, Karvo’s CEO, said in a prepared statement.
ODOT officials are deciding how to proceed in light of Gallagher’s 32-page decision.
“We are reviewing our legal options right now,” Matt Bruning, an ODOT spokesman, said on Monday.
Karvo sued ODOT in February, appealing an administrative order that month by ODOT Director Jerry Wray that revoked Karvo’s certificate of qualification for six months and nine days. Companies are required to have this certificate to bid on state projects. Wray made the order retroactive to Sept. 22, which was when the agency first issued a revocation notice and Karvo became ineligible to be awarded state work.
ODOT claimed Karvo failed to meet the state agency’s requirements for the Disadvantaged Business Enterprise and Encouraging Diversity, Growth & Equity programs, which aim to support small and economically disadvantaged businesses.
The company appealed ODOT’s decision and a hearing was held, with the hearing officer siding with ODOT. Karvo then filed its lawsuit.
Karvo was founded more than 30 years ago by a Greek immigrant family, growing to the point that it had 300 employees and generated more than $85 million in gross revenue annually.
Karvounides compared ODOT’s suspension to a “death sentence” because the company relies so much on contracts for state projects. He said the company missed out on numerous projects and lost several employees who left to find other work.
In April, Gallagher suspended Wray’s administrative order pending the outcome of the lawsuit. This meant Karvo could bid on state projects again.
In his December decision, Gallagher said ODOT should have allowed Karvo to have a hearing sooner in the process than it was granted. He said the agency shouldn’t have introduced evidence on Karvo projects during the hearing that weren’t included in a letter sent to the company in September 2017. The company mentioned 15 projects in its letter but presented evidence on another 60 projects, according to court records.
Gallagher said Karvo provided additional documentation to ODOT on many of the projects the agency questioned, but ODOT didn’t respond about whether this documentation was sufficient.
“There is no reliable, probative, or substantial evidence to support” ODOT’s allegations, Gallagher said repeatedly in his ruling.
Gallagher declined to address Karvo’s claim that the Ohio Administrative Code is unconstitutionally vague on the required threshold for ODOT’s goals. The company argues the code permits ODOT to revoke a certificate of qualification for failure to meet Disadvantaged Business Enterprise and Encouraging Diversity, Growth & Equity program goals absent a “good faith effort,” but it is unclear what evidence equates to a “good faith effort.”
Karvounides said the company has and will continue to use economically disadvantaged businesses. He thanked employees, friends and colleagues who stood by the company during this challenging period.
“We appreciate our long and successful partnership with ODOT and, while we had to fight these false allegations to defend our company and our name, we look forward to continuing the important repaving and roadway work we do together with ODOT and numerous Ohio communities,” Karvounides said.
Jud Scheaf, one of Karvo’s Columbus attorneys, said Gallagher “got it right” and his decision supported what Karvo has been saying.
“The harm to Karvo’s reputation was enormous,” he said. “We are delighted to take this first step in correcting that.”
Stephanie Warsmith can be reached at 330-996-3705, email@example.com and on Twitter: @swarsmithabj.