L&M Bus Corp. et al v. Board of Education of the City School District of the City of New York
MEMORANDUM AND ORDER, For the foregoing reasons, the Bus Companies' motion for a temporary restraining order (Dkt. 1) is DENIED. The parties are reminded that the DOE's supplemental memorandum in opposition is due on April 10, 2018, and th at the Bus Companies' reply memorandum, if any, is due on April 13, 2018. The court will permit the Bus Companies to submit a reply memorandum of up to fifteen pages in length, not including appendices or attachments. Cf Indiv. R. III(C). So Ordered by Judge Nicholas G. Garaufis on 4/5/2018. (Lee, Tiffeny)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
L&M BUS CORP. et al..
MEMORANDUM & ORDER
BOARD OF EDUCATION OF THE CITY SCHOOL
DISTRICT OF THE CITY OF NEW YORK d/b/a NEW
YORK CITY DEPARTMENT OF EDUCATION,
NICHOLAS G. GARAUFIS,United States District Judge.
Before the court is an application for a temporary restraining order("TRO")and
preliminary injunction by Plaintiffs L&M Bus Corp.; B&F Skilled Inc.; Happy Child
Transportations LLC; Happy Day Transit Inc.; Iridium Services Corp.; Penny Transportation,
Inc.; Selby Transportation Corp.; Smart Pick, Inc.; GVC Ltd.; Lessel Transportation Corp.; MarCan Transport Co.; Phillip Bus Corp.; 21st Avenue Transportation, Co.; Y&M Transit Corp.;
Van Trans LLC; Alina Services Corp.; and Montauk Student Transport LLC (collectively,
"Plaintiffs" or the "Bus Companies"). (Compl.(Dkt. 1); Mem. of Law in Supp. of Mot. for TRO
and Prelim. Inj.("Mem.")(Dkt. 3).) Plaintiffs are bus companies who contract with Defendant
New York City Department of Education ("Defendant" or the "DOE")for school-bus routes.
This matter concerns the bidding process for bid number B3182, entitled "Transportation
Services for Students with Disabilities and Their Non-Disabled Peers"("B3182"). (Id 11.) As
a requirement of bidding, contractors must agree that, ifthey are awarded the contract, they will
abide by the terms of contract Serial No. B3182(the "Contract"). (Id 12.) The DOE has stated
that the period during which they will accept bids for B3182(the "Bidding Process") concludes
on April 6,2018. (Id K 48.) The Bus Companies seek ajudgment from this court(1)declaring
that the Contract violates the National Labor Relations Act("NLRA"),29 U.S.C. § 151 et seq.,
and the Employee Retirement Income Security Act("ERISA")» 29 U.S.C. § 1001 et seq., and(2)
enjoining the DOE from moving forward with the Bidding Process until the alleged deformities
in the Contract are fixed. (Id
For the reasons that follow, the application for a TRO is DENIED. The court reserves
judgment on the application for a preliminary injunction.
On December 29,2017,the DOE opened the bidding process for B3182. (Compl.140.)
Through B3182,DOE is seeking 1600 vehicles to provide transportation services for students in
kindergarten through twelfth grade, beginning on or about September 1, 2018,for a term offive
years. (Id ^ 42.) Contractors seeking to bid on B3182 must, among other requirements, agree to
abide by the terms ofthe Contract ifthey are successful. (Id ^ 40.) According to the Bus
Companies,the DOE issued the Contract pursuant to its authority under state law to "approve,"
N.Y. Educ. Law § 2590-g(l)(g), and "[djevelop," id § 2590-h(36), a procurement policy for the
New York City School District. (Compl.141.) The only portion ofthe Contract under dispute
in this matter is Section 4.5, which sets forth a number of employment requirements for winning
contractors. (See id. H 49-78; Amendment No.2 to the Contract(Dkt. 1 at ECF p.34).)' The
requirements in Section 4.5 fall into two categories: those arguably preempted by the NLRA;and
those arguably preempted by ERISA. The court provides an overview ofthese provisions but
The fiill text of Section 4.5 is set forth in the second amendment to the Contract, with the exception ofthe deletion
ofone paragraph as noted in the third amendment to the Contract. (See Amendment No.2 to the Contract;
Amendment No.3 to the Contract(Dkt. 1 at ECF p.40).) Accordingly, all citations in this memorandum and order
to provisions of Section 4.5 refer to the provisions ofthe section as contained in the second amendment.
does not otherwise discuss any facts that are not necessary for or relevant to this memorandum
Section 4.5.1 mandates the creation of"Experienced School Bus Worker Lists"(the
"ESBW Lists") from which the winning contractors and their subcontractors must fill "all
positions for drivers and attendants who provide services in connection with a School Age Bus
Contract awarded pursuant to" B3182 until the relevant ESBW List is exhausted. (Compl. UK 56,
60(quoting Section 4.5.1).) The Bus Companies claim that Section 4.5.1 would require them to
fire all employees who "currently work on routes that are encompassed by the B3182 RPB" and
replace them with employees hired from the ESBW Lists. (Id K161-62.) In addition, the Bus
Companies point out that "employees, based on their position on the ESBW Lists,[would]
choose their employers," and that contractors would "have no right to refuse to hire an individual
as an employee once selected by an individual." (Id KK 63-64). Section 4.5.4 states that
"[njothing herein shall be interpreted to require any contractor or subcontractor to enter into a
collective bargaining agreement with any union, nor shall it prohibit any contractor or
subcontractor from entering into a collective bargaining agreement with any union." (Section
Section 4.5.2 requires the contractor or subcontractor to pay employees hired from the
ESBW Lists "based upon the highest wage scale pursuant to which such ESBW Hiree was paid
for work performed ... in connection with a School Age Bus Contract [or] Subcontract since
June 30, 2010." (Compl. K 66; Section 4.5.2.) "Contractors and subcontractors may pay a wage
higher than previously paid, but not one lower than the employees' prior wages." (Compl. K 66.)
Section 4.5.3 additionally requires that the contractor or subcontractor "contribute at least
$l,252.48/month towards health and welfare benefits on behalf ofeach employee who elects
family benefit coverage and $780.77/month for employees who select individual coverage." (Id
H 67.) These amounts are "based on the amount that an employer must contribute for health
insurance coverage under" the collective bargaining agreement of Local 1181 ofthe
Amalgamated Transit Union. (Id K 68.) If a contractor is able to provide health benefits for less
than the contractually required amount, the contractor is still required to "use the excess funds 'to
provide additional or improved health/welfare benefits.'" (Id 69(quoting Second Amended
Round 1 Questions & Answers("Round 1 Q&As")
(Dkt. 1 at ECF p.41)^ 115).) Section 4.5.4
requires a contractor or subcontractor to contribute to the pension fund or plan that the hiree most
recently participated in unless the hiree affirmatively opts out of the prior plan. (Id 170.) The
contractor or subcontractor's contribution is calculated using "the majority of employees of
equivalent seniority in the job function for which the ESBW hiree was hired ... participating in
such Prior Plan." (Id f 72(quoting Section 4.5.4).) Section 4.5.4 also requires the contractor or
subcontractor to "enter into a participation agreement" with the prior plan which "imposes no
greater obligations than those imposed on a majority ofthe other contributing employees in such
Prior Plan." (Section 4.5.4; see Compl.^ 73.)
Following the opening ofthe Bidding Process on December 29, 2017,the DOE held a
pre-bid conference on January 19,2018, at which contractors who were interested in bidding
could ask questions ofthe DOE. (Compl.^ 43.) The DOE has also answered three rounds of
questions submitted by the contractors, and variously amended the terms ofthe Contract and
extended the bid submission dates. (Id
^Round 1 Q&As; Amended Questions &
Answers-Round 2(Dkt. 1 at ECF p.89); Questions & Answers-Round 3(Dkt. 1 at ECF p.104).)
The final deadline for submission of bids is April 6, 2018. (Compl.^ 48.) The DOE intends to
publicly read the submitted bids on April 9, 2018. Qd)
The Bus Companies filed the instant action on March 29, 2018. (CompL; Mem.) At that
time, the Bus Companies noted that it was not necessary for the court to issue a ruling on the
application for a TRO before April 6,2018. (Mar. 29,2018, Def. Letter(Dkt. 9).) The DOE
submitted a response memorandum oflaw on April 2,2018. (Def. Opp'n (Dkt. 12).) The court
held a show-cause hearing on April 3,2018, at which coimsel for both sides appeared.
A TRO "is an 'extraordinary and drastic remedy, one that should not be granted unless
the movant, by a clear showing, carries the burden ofpersuasion.'" Free Country Ltd v.
Drennen. 235. F. Supp. 3d 559,565(S.D.N.Y. 2016)(Rakoff, J.)(quoting JBR. Inc. v. Keurig
Green Mountain. Inc.. 618 F. App'x 31,33(2d Cir. 2015)). "The standards for granting a
temporary restraining order and preliminary injunction are the same." J.Z. v. N.Y.C. Dep't of
Educ., 281 F. Supp. 3d 352, 359(S.D.N.Y. 2017). A party seeking a TRO,like a party seeking a
preliminary injunction,"must generally show a likelihood ofsuccess on the merits, a likelihood
ofirreparable harm in the absence of preliminary relief, that the balance ofequities tips in the
party's favor, and that an injunction is in the public interest." ACLU v. Clapper. 804 F.3d 617,
622(2d Cir. 2015)(citing Winter v. Nat. Res. Def. Council. Inc.. 555 U.S. 7,20(2008)).
"[A]finding of irreparable harm is the most important and first element that a court must
find to support issuance ofa TRO—^more important even than a likelihood of success on the
merits." Gramercv Warehouse Funding I LLC v. Colfm JIH Funding LLC.No. ll-CV-9715
(KBF),2012 WL 75431, at *5(S.D.N.Y. Jan. 6, 2012): see Rodriguez v. DeBuono. 175 F.3d
227,233-34(2d Cir. 1999)(per curiam). "To satisfy the irreparable harm requirement. Plaintiffs
must demonstrate that absent a[TRO]they will suffer an injury that is neither remote nor
speculative, but actual and imminent, and one that cannot be remedied if a court waits imtil the
end of trial to resolve the harm." Grand River Enter. Six Nations. Ltd. v. Prvor. 481 F.3d 60,66
(2d Cir. 2007). The alleged injury must be "so serious that 'a monetary award caimot be
adequate compensation.'" Estee Lauder Cos. v. Batra. 430 F. Supp. 2d 158,174(S.D.N.Y.
2006)(quoting Citibank. N.A. v. Citvtrust. 756 F.2d 273,275(2d Cir. 1985)).
The court declines to categorically state, as the DOE would have it, that"no harm
whatsoever could even possibly result from the mere receipt and opening of bids." (Def. Opp'n
at 9.) Because, however, the court finds that the Bus Companies have not alleged any
sufficiently irreparable immediate harms at this stage in the litigation, the court DENIES the Bus
Companies' application for a TRO. The court does not reach the question of whether the Bus
Companies have satisfied their burden under any ofthe other TRO requirements.
The Bus Companies enumerate three main irreparable harms that will supposedly befall
them if the court does not enjoin the Bidding Process by April 6,2018. First, they claim that
"entering into the contract will force Plaintiffs to make monetary contributions to plans or fimds
that are likely unrecoverable." (Mem. at 25.) Under this argument, entering into the Contract
will require the Bus Companies "to make contributions to employees' prior pension plan or
fimd" but that they will be "likely unable to recover any ofthe money that was paid into the
funds" if Section 4.5 is found invalid. (Id. at 27.) While monetary damages generally cannot
form the basis ofirreparable harm, monetary losses that are both imminent and unrecoverable
may be sufficient to make such a showing.
Batalla Vidal v. Nielsen. 279 F. Supp. 3d 401,
434-35 (E.D.N.Y. 2018). Here, however, as the DOE points out, there is a statutory method
pursuant to which the Bus Companies "could recover any contributions made to a pension plan if
the [c]ourt were to later invalidate the EPFs contained in a hypothetical contract." (PI. Opp'n at
10.) The Bus Companies' claim that they "may be unable to meet" the legal standard for
restitution plainly does not rise to the level necessary to show irreparable harm in the absence of
injunctive relief. (See Mem. at 27(emphasis added).)
Second,the Bus Companies state that they face irreparable harm if a TRO is not granted
"because they will be exposed to legal liability." (Mem. at 25.) They conjecture that, ifthey are
successful in bidding on the Contract, they may have to "fire their own employees," something
which could expose the Bus Companies to suit for wrongful termination. (Id.) As of the
issuance ofthis memorandum and order, the Bidding Process remains open; none ofthe Bus
Companies have been awarded,let alone submitted a bid for, a bus contract under B3182. The
Bus Companies do not allege with any specificity how future legal liability will arise—nor, at
this point, could they possibly do so. The court reserves the question of whether legal liability
under the Contract may be sufficiently imminent at some later point in this process, but declines
to find imminent injury at the current remote juncture.
Third, the Bus Companies allege an irreparable "loss ofgoodwill" because, if their bids
are successful,"they will be forced to fire their current employees to hire drivers from the ESBW
Lists" and the Bus Companies "will lose the goodwill they have established with their
employees." (Mem. at 26.) While that course of events may yet occur, this threat is "doubtful"
where, as here, bidding has not yet closed and no contracts are close to being awarded.
Dohertv Assocs.. Inc. v. Saban Entm't. Inc.. 60 F.3d 27,38(2d Cir. 1995). While the Second
Circuit has recognized that a "speculative" loss of goodwill can sometimes constitute a
sufficiently irreparable harm,that line of precedent does not apply here because the Bus
Companies do not allege that, absent the EPFs,they would undoubtedly continue servicing these
routes for the following school year.
Reuters Ltd. v. United Press Inst'l. 903 F.2d 904,908
(2d Cir. 1990). The court also agrees with the DOE that the Bus Companies have failed to
explain how any ofthese speculative actions would actually cause them to lose goodwill with
their employees. (Def. Opp'n at 15.) For substantially the same reasons that the court does not
find the possibility of legal liability to be sufficiently imminent to constitute an irreparable harm,
the court also rejects the Bus Companies' claim based on the distant prospect of lost goodwill.
The Bus Companies allude to three other supposedly irreparable harms. In their
memorandum,they state that they will suffer irreparable harm by being "forced to create a
complex administrative scheme to implement the requirements of Sections 4.5.3 and 4.5.4,
which cannot be easily unwound." (Mem. at 27.) The Bus Companies' argument on this point
seems to go more to the likelihood of success regarding their ERISA preemption claim;
otherwise, there is nothing to distinguish this alleged harm from the ones that the court states
above are too remote. (See id. at 27-28.) Additionally, the Bus Companies aver irreparable
harm on the basis that, ifthey succeed in their bids, they will have to enter into "illegal
contracts." (Id at 28-29.) Although this claim is similar to the earlier claim offuture legal
liability, it is distinct because it turns on the nature ofthe contract itself rather than the
consequences ofentering into that contract. The Bus Companies' sole citation on this point is
Glenwood Bridge. Inc. v. Citv of Minneapolis, 940 F.2d 367(8th Cir. 1991). (Mem. at 29.) In
that case, the Eighth Circuit entered a preliminary injunction to protect the plaintiffs "interest in
participating in a legal bidding process" and to ensure "that the contract awarded will be a legal
one." Glenwood Bridge. 940 F.2d at 372. There, however,the terms ofthe allegedly unlawful
contract actually precluded the plaintiffs bid.
id at 368. Here, while the alleged illegality
ofthe contract may be relevant at a future point in this litigation, there is nothing to suggest that
the Contract is actively impeding the Bus Companies from submitting bids.^
Finally, the Bus Companies stated during the April 3, 2018, show-cause hearing that,
without immediate injunctive relief, their bids will be publicly revealed on April 9, 2018,
something that would put them at a competitive disadvantage if the court ultimately decides that
the Contract is preempted and has to be rewritten and rebid. rSee Apr. 3, 2018, Hrg. Tr.(Dkt.
No, pending)4:14-24.) Ironically, this is the Bus Companies' strongest argument for why
injunctive relief is uniquely proper before the close ofthe Bidding Process, and the court regrets
that it does not have the benefit of briefing on this issue. (Cf id. 25:22-25 (stating that this
allegation was "found nowhere in the papers").) Nevertheless, the court does not believe that
this threat of harm is sufficiently serious such that injunctive relief is necessary.
Distribs.. LLC v. Citv of New York. No.03-CV-2772(LTS),2003 WL 21437054, at *7
(S.D.N.Y. June 23,2003)(stating that the plaintiff had not demonstrated irreparable harm "by
reason ofthe terms of its bid being disclosed when all ofthe bids are opened and the winning
(low)bidder announced"). As one court has pointed out, government actors must sometimes
rebid contracts and take other corrective action after the terms ofthe bids have been opened. See
Svs. Application & Techs.. Inc. v. United States. 100 Fed. Cl. 687, 721 n.23 (2011).
Furthermore, any allegation that the disclosure of this information will put the Bus Companies at
a "competitive disadvantage" is not substantiated due to the fact that^companies who bid on
the Contract will have their bids disclosed, and that there is nothing to suggest that the bids will
contain trade secrets or other confidential material. The threat of disclosure ofthe Bus
^ The DOE is also correct that the Eighth Circuit reached its conclusion without any citation to legal precedent, and
that no court in the Second Circuit has ever used this case to stand for the Bus Companies' intended proposition.
(Def. Opp'n at 13.)
Companies' bids, while imminent, is not the kind ofirreparable harm that necessitates the
"extraordinary" remedy of a TRO.
At this point, the court does not believe that the Bus Companies have alleged irreparable
harm warranting injunctive relief. While the court denies the TRO,it reserves decision on the
preliminary injunction. It may well be that the Bus Companies' current allegations of harm will
become sufficient to sustain their action at a future point in time—^be it after the bids are opened,
after the contracts are awarded, after the awards have been approved by the Panel for
Educational Policy, or at some other juncture. (See Hamamgian Decl. in Supp. ofDef. Opp'n
(Dkt. 13)HI 13-18.) It is incumbent on the Bus Companies,in their forthcoming reply brief, to
define for this court what that fliture point is, why the harm will be irreparable absent injunctive
relief, and whether the other preliminary injunction factors are also met.
For the foregoing reasons, the Bus Companies' motion for a temporary restraining order
(Dkt. 1)is DENIED. The parties are reminded that the DOE's supplemental memorandum in
opposition is due on April 10, 2018, and that the Bus Companies' reply memorandum,if any, is
due on April 13, 2018. The court will permit the Bus Companies to submit a reply memorandum
of up to fifteen pages in length, not including appendices or attachments. Cf Indiv. R. III(C).
s/Nicholas G. Garaufis
Dated: Brooklyn, New York
April 5" ,2018
NICHOLAS G. GARAUFI:
United States District Judge
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