Matter of Staten Is. Bus, Inc. v Board of Educ. of the City Sch. Dist. of the City of N.Y.
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Matter of Staten Is. Bus, Inc. v Board of Educ. of the City Sch. Dist. of the City of N.Y. 2014 NY Slip Op 30208(U) January 16, 2014 Sup Ct, New York County Docket Number: 100798/13 Judge: Peter H. Moulton Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. SCANNED ON 1/27/2014 [* 1] / .[' Notice .. ( J) z 0 ·.. J.. of Moti.orilOrder to.stfi:>,~ ¢.tau~e; ~. Affida\:/lts --EihibL~1~t:> ""··. '-'~.:·,:, 1{::1-:~,~ PARERS.NUMBERED ·. .i I ""}7\: >." ¢ '," j I v I ' . · ¢. <';; I I ¢ ·. . Answerin~ Afti~avits - E~fljbJ!~1··c..c·/~.-~<_·-'----,--~---'~~_:~~~ Replyi~g A ffid!'lvitl) ~-~~"-+--'-"-~---c--,.-'--~-=-c,~-'-cc-~~~ "· . a···· ¢·v~~·.···. (J) Cross-Motion: a: Upon the foregoin!J paper~, ft is ord~red that this motion .- ,.· ._ <t w CJ wz / r;· u·. ·~ ~·o :::> ;U. Q ··~~~,Q_ LL ..., 6 I- w 0 .:I: IJJ l- a: a:· a: w 0 .. LL LL w a: > ...I ...I :::> LL 1- u w c.. (J) w a: (J) w (J) <t -() 2 0 l- o ~(l.__Y-'----- Dated: ------'---\ (_.._b +---') 1 2! l~N!~~:~:~:~~~!f:JI! FINAL DISPOSITION Check if appropriate: 0 DO NOT POST Ch eck one: [] 0 REFERENCE [* 2] Supreme Court: New York County Part 57 --------------------------------------x In the Matter of the Application of STATEN ISLAND BUS, INC., LONERO TRANSIT, INC., and PIONEER TRANSPORTATION CORP., Petitioners, For a Judgment under Article 78 of the Civil Practice Law and Rules, -against- Index No. 100798/13 BOARD OF EDUCATION OF THE CITY SCHOOL DISTRICT OF THE CITY OF NEW YORK, also known as THE NEW YORK CITY DEPARTMENT OF EDUCATION, and LOCAL 1181-1061, AMALGAMATED TRANSIT UNION, AFL-CIO Respondents. --------------------------------------x Peter H. Moulton, Justice Motion sequence numbers 02 and 03 are consolidated for disposition. Petitioners in this Article 7 8 proceeding are private bus contractors that have long contracted with the City to transport New York City Public School children to and from school. They challenge a Request for Bids on various school bus routes issued by respondent Department of Education ("DOE") on April 29, 2013 ("the April RFB"). In an earlier case (referred to herein as "Staten Island Bus [* 3] 1") 1 the same petitioners challenged a DOE Request for Bids for school bus routes issued in December 2012 ("the December RFB") . Petitioners asserted arguments in Staten Island Bus identical to arguments raised in this proceeding. dated August 9, ("August 2013 9th decision"), 2 I that are In a decision familiarity with which is assumed, the court rejected all of petitioners' arguments, and dismissed the petition in Staten Island Bus I. Currently before the court is 1) DOE's motion to dismiss the petition and 2) petitioners' request for a preliminary injunction. DOE's motion to dismiss argues that petitioners' challenge to the April RFB should have been brought within Staten Island Bus I, and that this case constitutes "claim splitting." DOE also argues that since there is another action pending between the two parties the instant action should be dismissed pursuant to CPLR 3211 (a) (4). That latter argument has lost its viability with the dismissal of Staten Island Bus I: there is no longer another action pending. Finally, DOE argues that petitioners have failed to state a cause of action. The preliminary injunction sought by petitioners prevent the DOE from soliciting, pursuant 1 2 to the April RFB. The accepting, seeks to or opening any bids court previously twice denied Index Number 100304/13. Staten Island Bus, 41 Misc3d 836. Inc. v New York City Dep't of Education, 2 [* 4] petitioners' requests for a Temporary Restraining Order seeking to postpone the opening of bids pursuant to the April RFB. were scheduled to be opened The bids late July 2013, which would appear to moot petitioners' request for a preliminary injunction. event petitioners have failed to demonstrate a In any likelihood of success on the merits that could warrant a preliminary injunction. As discussed below, for the most disposed of by the court's August 1. The August making at 9th st 9th part this proceeding is decision in Staten Island Bus decision collaterally estops petitioners from one argument herein. It provides authority for the rejection of a second argument. persuasive As discussed below, however, there is one argument unique to this action, not raised in Staten Island Bus I. The court finds that this argument may constitute a potential cause of action, motion to and it survives the smiss. BACKGROUND DOE's authority to provide bus transportation to New York C public school students is set forth in va statutes. Transit largest The Union, union matrons/escorts other respondent, AFL-CIO ("Local 1181") representing employed by Local the 1181 1061, asserts drivers, petitioners companies that contract wirh DOE. 3 ous state and federal and that Amalgamated it is mechanics other school the and bus [* 5] Petitioners' fundamental claim herein mirrors their main claim in Staten Island Bus I. Petitioners assert that their existing contracts for other school bus routes - routes not covered by the April RFB obligate them to submit bids for the April RFB containing various labor provisions that favor unionized school bus drivers, dispatchers, mechanics, and chaperones. Petitioners assert that the necessary inclusion of these provisions, "Employee Protection Provisions" ("EPPs") embeds a called cost in petitioners' bids that places them at a competitive disadvantage with respect to other bidders who are not bound by these EPPs. An understanding of that claim requires some brief recitation of the recent history of school bus contracting in New York City. The inclusion of EPPs in their present form in school bus contracts began in the wake of a 1979 strike by Local 1181. The strike was precipitated by DOE's removal of two provisions that had favored workers from a bid solicitation that year. First, prior to 1979 the DOE's school bus contracts contained some version of the following provision: employees of private bus companies who lose their jobs as a result of the loss of the contact by a previous contractor must be given priority in hiring according to seniority by any replacement contractor. The second labor-friendly provision that was omitted from the 1979 bid solicitation was a their employees' requirement that bus companies pay wages and benefits at a rate tied to the rates 4 [* 6] afforded New York City Transit Authority workers. The strike lasted three months. It was concluded by a stipulation of settlement negotiated in part by Milton Mollen, then the Presiding Justice of the Second Department. The "Mollen Agreement" as it came to be known, essentially restored the first of the two provisions that DOE had sought to exclude from the RFB. The EPPs that became standard in the industry as a result of the Mollen Agreement. The Mollen Agreement established two "industry- wide Master Seniority Lists," one list for drivers, mechanics and dispatchers, and the second list for chaperones/escorts. If any employee becomes unemployed because her employer loses its contract with DOE, then the employee's name gets listed on the appropriate master list ranked by her seniority. Bus companies seeking to hire must hire their employees from these seniority lists. With a few exceptions, since 1979 the DOE has negotiated extensions of school bus contracts, rather than putting them up for bid. The bus companies performing pursuant to the extensions would change from time to time, but remained fairly stable. EPPs were included in all extensions of contracts. This regime was altered when responsibility for school bus contracts for pre-Kindergarten ("EI") students was Transportation to DOE. When it came time to ("Pre-K") transferred from and Early Intervention the Department of The DOT contracts had not included EPPs. rebid these 5 Pre-K and EI contracts, DOE [* 7] included the EPP requirement in its requests for bids. The EPPs in the Pre-K and EI RFBs were challenged by certain school bus companies, which alleged that the provisions were anticompetit and contracting laws. ruling was therefore The t upheld in in violation of the state's public al court agreed with petitioners, and its the First Department and in the Court Appeals in L & M Bus Corp. v New York City Dep't of Educ. of (17 NY3d 14 9) . The Court of Appeals found in L & M that bidders on the RFB would inflate their labor costs in submitting bids because they did not know the wage rates of persons they would be forced to hire from the Master Lists. The court noted that General Municipal Law § 103 mandates that "all contracts for public work ... be awarded to the lowest responsible bidder." per 12.§. unlawful. The Court did not find EPPs Rather, the court held that since the EPPs have an anti-competitive effect they must pass a heightened scrutiny test that demonstrates the EPPs serve some other important public purpose. The Court of Appeals looked at DOE's justi cations for the EPPs and found that they did not satisfy the heightened scrutiny test. The Court found that it was "questionable" that EPPs were necessary to avert labor unrest as the Pre-K and EI contractors were not unionized and, under the DOT regime, the workforce had not benefitted from EPPs. The court also found that there were other, 6 [* 8] less costly, means to ensure an experienced workforce. In the wake of L & M tor the December and April RFBs the DOE determined that an EPP provision would not pass heightened scrutiny. In Staten Island Bus I petitioners first sought a declaration that the EPPs in their existing contracts were unlawful. pet In the ion, they sought the removal of the EPPs from their existing contracts, contracts which will last until 2015. At oral argument and in their latter papers, petitioners changed their request for relief: instead of excision of the EPPs from their existing contracts, they sought a declaration "modifying" or "amending" the EPPs in petitioners' existing contracts to make it clear that the EPPs do not apply to any bid they make on a new RFB. sought preliminary and permanent injunctive rel They also f preventing DOE from proceeding with any contracts awarded pursuant to the December 2012 RFB. In the August 9th decision, the court rejected these arguments and dismissed the petition. DISCUSSION Pet ioners' first theory herein is that the EPP provisions in their existing contracts require that they include EPPs in any contracts they enter into with the DOE thereafter, at least during the life of the existing contracts. 7 Because the EPPs require a [* 9] more expensive work force, this would place petitioners' bids at a competitive disadvantage with respect to new contractors who are not bound by EPPS. In the August was without merit. gth decision the court found that this argument By their terms, the EPPs existing contracts do not apply to new contracts. The EPP provisions of the existing contracts relied on by petitioners in advancing this argument state in relevant part as follows: There shall be established two industry-wide Master Seniority Lists. One list shall be composed of all operators (drivers) mechanics, and dispatchers and the other list shall be composed of escorts (matrons-attendants) who were employed as of June 30, 2010, under a contract between their employers and the [DOE] for the transportation of school children in the City of New York, who are furloughed or become unemployed as a result of loss of contract or any part thereof by their employers, or as the result of a reduction in service directed by the Board during the term of the contract, in accordance with their date of entry into the industry ... Any existing contractor shall give priority in employment in September 2010 or therea er on the basis of position on the Master Seniority list of any additional or replacement operators, mechanics and dispatchers . . . . Petitioners interpret these portions of the EPPs in their existing contracts as binding them, during the life of the existing contracts, to hire off the Master List for any bus contract with the DOE, not just the existing contract. 8 Their existing contracts [* 10] do not expire until June 30, 2015. Accordingly, petitioners contend that they would have been bound to the EPPS bidding on the April RFB, which meant that their bids would be too high -in comparison to the bids of vendors who are not bound to EPPs. For this reason they did not bother to bid on the April RFB. This rea As argument r" hinges on the meaning of the words "or the words "or the second paragraph quoted above. discussed in the August gth decision thereafter" do not impose EPPs on petitioners in future contracts. The phrase says nothing about future contracts with the DOE. Any attempt run to make EPPs apply to future contracts would athwart the public policy that governmental entities must be free to enter into contracts that address the changing needs of the public, factors. the availability of public funds, and a host of other As the Court of Appeals stated in Varsity Transit Inc. v Saporita (48 NY2d 767, 768): [T]he inclusion of certain requirements in bid specifications contained in or public contracts does not comprise an implied representation that simi r requirements will be mandated with respect to subsequent contracts. The possibility that the needs and requirements of a municipality must change so as to render use ss investments made the hope t those requirements would remain constant is a normal risk of doing bus ss which may not be shifted to the municipality by application an estoppel theory ... For this reason the court declined to award 9 titioners any [* 11] declaratory relief in the August 9th decision. There was no need to clarify that the EPPs did not apply to the December RFB. The existing contracts are clear and do not require modification. That holding is equally true with respect to the April RFB. Both elements necessary for collateral estoppel are present here: 1) the issue in question was presented and decided in Staten Island Bus I, and 2) petitioners had a full and fair opportunity to contest the issue in that earlier case. AD2d 119.) (See In re Hoffman, 287 Accordingly, the court's August 9th decision in Staten Island Bus I controls, and any claim that the EPPs in existing contracts require bidders to include EPPs in bids for future DOE contracts is denied on collateral estoppel grounds. Petitioners' second theory of liability is that the April RFB itself is ambiguous regarding the inclusion or exclusion of EPPs. In the August 9th decision the court noted that petitioners made this same claim with respect to the December RFB, but only at the eleventh hour. Because this theory was not contained in the petition in Staten Island Bus I, and was raised for the first time in petitioners' not be reply in that case, the court held that it could considered by Martinez, the 17 AD3d 683.) court. However, (hg_._ Stoves & Stone the court also stated in the August 9th decision: Even were the court to consider this argument, it is without merit. There is nothing in the December RFB that requires bids include EPPs. There is nothing in the December RFB that 10 Ltd v [* 12] states that existing contracts' EPPs must apply to new contracts that do not contain such provisions. Finally, the December RFB contained a merger clause that made it clear that the written contract constitutes the "whole agreement of the parties," and it incorporates no other contract by reference. In the instant petition, petitioners now squarely place this argument before the court. They argue that the April RFB was fatally ambiguous because it did not make suf f i ently clear that EPP provisions in existing contracts are not to be included in any bid for the routes covered by the RFB. This argument August 9th remains unconvincing. decision could be The passage from the interpreted as dicta, which would therefore not provide a basis for collateral estoppel. 3 therefore adopts it as the holding herein. The court For the reasons stated above, the court rejects the argument that April RFB is ambiguous on the question of EPPs. Petitioners' final argument, which was not asserted in Staten Island Bus I, is contained in two repetitive paragraphs at the end of the petition. Petitioners state that they were discouraged from bidding on the April RFB because the bid was many months removed from the time of performance. As mentioned above, the April RFB 3 It might also qualify as an alternate holding, which might provide a basis for collateral estoppel. (See Malloy v Trombley, 50 NY2d 46.) It is not necessary to parse the difference between and alternate holding here. The court simply adopts the reasoning of the August decision, which rests on a st ghtforward reading of the RFB. 11 [* 13] concerns work for the 2014-15 school year. commence until September 2014. This work will not According to petitioners, this is too far in advance for petitioners to "intelligently formulate a bid." The petition continues: Contractors need to assess the cost of vehicles, facilities, and other equipment to formulate a realistic competitive price. A lead time of more than one year before the contract is to take effect leaves too much uncertainty in future market conditions to enable contractors to do so. Petition <JI 52. Respondents point out that this argument would appear to be contradicted by petitioners' repeated statement that labor costs are the only material variable that differentiates one contractor's costs from another. failure to 4 Respondents also fault this claim for its state any predicate facts tending to show that the alleged uncertainty of future costs would deter bidders. In response, petitioners attempt to amplify this claim with the affidavit of Arthur Avedon, a former Chief Administrator of the DOE's Board of Review, which he avers was the body that adjudicated contractor disputes for DOE. Avedon states in his affidavit that the long lag time between the submission of bids for the April RFB and the performance of the contract is "unprecedented." He opines that the risk that contractor costs will go up substantially 4 See gg Affidavit of Jerome L. Dente in Support of Petitioners' Motion for Injunctive Relief, dated June 20, 2013, <JI 19. 12 in [* 14] the 14 month time between bid and rf ormance will discourage some contractors from bidding, and will cause others to raise their bid amounts in order to build in a "cushion" for unexpected cost increases. It is unclear if pet ioners have standing to raise this argument because it is unclear whether they are at any greater disadvantage in bidding than any other contractor. that all contractors would costs. ce this same uncertainty concerning Therefore petitioners, and all school bus contractors, would be bidding on a level playing field. Petitioners do not spell out how this would be arbitrary and capri not clear if pet It would appear ous. It is so ioners seek to demonstrate some violation of General Municipal Law ~ 103 with this argument. In its motion to dismiss, DOE argues via a rmations of counsel that RFBs for City contracts often contain a lag time of fourteen months or more. It is unclear whether this assertion includes school bus contracts. Counsel also argue that the lag time is needed because it is necessary to nail down contractors for the 2014-15 school year before DOE can seek bids for the brief summer session that precedes the 2014-15 school year. According to DOE's counsel, companies might be reluctant to commit themselves to investments, such as buss es and fa li ties, necessary for the summer work until they know they have a longer lasting contract for the entire school year. 13 [* 15] None of these arguments have been fleshed out in the parties' papers. Indeed, respondents rely on affirmations of counsel, rather than on affidavits from persons with personal knowledge of the facts that underpin respondents' arguments. On a motion to dismiss a pleading for legal insufficiency, the court must accept the facts alleged as true and determine simply whether the facts alleged fit within any cognizable legal theory. (Morone v Morone, 50 NY2d 481, 484.) On a motion to dismiss, a court may consider facts alleged in an affidavit as a supplement to the pleading. 665.) (Ackerman v 305 East 40th Owners Corp., 189 AD2d Avedon's affidavit sufficiently amplifies the petition to survive dismissal on this claim. Accordingly, the motion to dismiss this claim is denied. The DOE may answer the petition within 20 days of service of this order with notice of entry. Local 1181 has already answered the petition, but it may submit supplemental papers as the issues in this case have been narrowed by this decision and order. Any supplemental papers by Local 1181 shall be served within 20 days of service of this order with notice of entry. Petitioners may serve reply papers within 20 days after service of the City's Answer and supporting papers and service of any supplemental papers from Local 1181. As this remaining claim could not have been included in Staten Island Bus I, the motion to dismiss on the basis that petitioners 14 [* 16] split their claims is denied. Pet moot. ioners motion for a preliminary unction is denied as Even if the relief sought were not moot, petitioners have failed to demonstrate a likelihood of success on the merits. 1010 Tenants Corp. v Hubshman, 26 Misc3d 1207[A] (Gische, (&.g J, New York County Supreme Court 2009.) CONCLUSION For the reasons stated, respondent DOE's motion to dismiss the claim that EPPs in pet sting contracts ioners' require the inclusion of EPPs in any bid made on subsequent DOE contracts, is granted. Petitioners' second claim, based on the alleged ambiguity in the April RFB, In all other respects, is also dismissed. the motion to dismiss is denied. unction is denied. Petitioners' motion for a preliminary Final dispos on of ition the submission of the parties as set forth cision and order of the ab~. shall abide further This constitutes the cou~.\ \... ~ _1t-.\\'1- 1 iru\&c ~, ~~~\($ r-Q\)~\' DATE: January 16, 2014 -' ~-.,..:.~ - - - - - - - - ..... _A_"'7_. ;;...----/_.· J.S.C. HON. Pt:TER H. iViOULTON J.S.C. 15
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