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24 HOUR FUEL OIL CORP.

October 24, 1995

24 HOUR FUEL OIL CORP., Plaintiff, against THE LONG ISLAND RAIL ROAD COMPANY and THE METROPOLITAN TRANSPORTATION AUTHORITY, Defendants.


The opinion of the court was delivered by: TRAGER

 TRAGER, District Judge:

 This action is before the court on plaintiff's, 24 Hour Fuel Oil Corp.'s (24 Hour), motion for summary judgment and defendants', Long Island Rail Road's (LIRR) and Metropolitan Transportation Authority's (MTA), cross-motion for summary judgment. The plaintiff requests summary judgment and a permanent injunction to reinstate the award of its first contract bid because plaintiff was the lowest possible bidder in that process and that process was valid and fair. Defendants contend that the MTA is a separate legal entity from the LIRR, and consequently, MTA is wrongly named in this action, and should be dismissed. Further, LIRR claims that there is no federal jurisdiction in this case because no federal question exists. In addition, defendants maintain that plaintiff has not exhausted all of its administrative remedies and in fact has a moot claim since plaintiff was awarded the contract in the second round of bids. Although the court finds no merit to this mootness defense, the court concludes that plaintiff has failed to plead a valid cause of action.

 Background

 LIRR's inquiry required using the low rack price posted in Platt's on May 17, 1995 and requests a mix of diesel fuels and kerosene. Id. at PP 29-30. In LIRR's 3(g) Statement, it explains that prior to opening the bids, LIRR did not know if the rack postings were anything but reliable and reflective of the conditions in the marketplace." Def.'s 3(g) Stmt. at P 11. On May 17, 1995, Platt only posted one vendor's price for kerosene, RAD's. Id. at P 33. Prior to the opening of the bids, no objections were made by any bidders regarding the posting specifications. Id. at P 51. However, after the bids were open, a representative of Coastal Oil called LIRR and complained that there was only one posting in Platt's rack price list and informed LIRR of an alternative listing, the barge posting. According to Sam Yakobowicz, president and owner of 24 Hour: "Coastal, by running to the LIRR, has taken the term 'sore loser' to new heights." Id. at PP 52-54.

 In response to plaintiff's allegations that Coastal Oil was acting inappropriately in calling LIRR and informing it of the peculiarity in the listing, LIRR explained that it is not uncommon for bidders to request information about the bid and that during these calls LIRR often learns information they otherwise would not know. Sparks Aff. at PP 25-6.

 In the inquiry, LIRR had set forth a specific formula to determine the lowest bid. Id. at P 16. Six companies bid for LIRR's Inquiry. 24 Hour posted the lowest bid, $ 120,000.00 lower than the nearest competitor. Id. at PP 39-42. Instead of accepting 24 Hour's bid, LIRR canceled the inquiry and called for a re-bid. Id. at PP 44-46. LIRR insists that it never officially calculated the bids to determine a single bid number because it had been decided that the contract was not going to be awarded. Sparks Tr. at 155-56.

 According to Michael Sparks, the manager of procurement-equipment for the LIRR, upon learning that only one company's price was listed in Platt's from Mr. Joe Colonel, at Coastal Oil, and confirmed by, Keller, an editor at Platt's:

 
the LIRR determined that it was in our best interest and the public interest to utilize a posting that was not subject to information provided by a single supplier. Obviously, with only a single company supplying key posting information, the possibility that uncontrolled price swings could occur is very real. Sparks Aff. at PP 23-25.

 24 Hour points out that no one told Sparks that Platt's Tank Car posting for #1 diesel fuel, Metro N.Y., was "no longer representative of the market place." Levine's Aff. at P 17.

 Sparks then spoke with his supervisor, Mr. Garrison, expressing his concerns about the inquiry and prepared spread sheets with the price of #1 and #2 diesel fuels based on the low posted prices for both rack and barge. Upon reviewing these charts with Mr. Garrison, they agreed that LIRR should reject the bids and re-bid using the barge postings. Sparks Tr. at 96. Plaintiff objects to the accuracy of the charts claiming that because 24 Hour was able to lower the price through certain calculations, the spread sheets cannot be relied upon. Levine's Aff. at P 50.

 Sparks further stated: "If LIRR did not re-bid the fuel contract, RAD Oil [the company whose price was listed in Platt's] would be in a position to unduly control the price paid for #1 diesel locomotive fuel by the LIRR for the next three years. There also would be the potential for collusion between suppliers." Sparks Aff. at P 31.

 On August 11, 1995, LIRR extended the 1992 contract under "all of the original contract terms." Yakobowicz's Aff. at P 69. Then, according to 24 Hour, on August 22, 1995, LIRR awarded the 1995 contract to it but back dated the contract to August 13, 1995 and required the "spot price" to be used based on NY/Boston barge. Id. at P 70. However, LIRR claims that the back dating of the contract was simply an error, explaining that the second page of the Purchase Order awarding the bid has been corrected. It had erroneously stated, "Performance Period is for 36 months from August 13, 1995" when it was intended to become effective on the date of the award which was August 22, 1995. Sparks Aff. at PP 66-67.

 Plaintiff requests the re-bid award be vacated and the first bid be reinstated. Levine's Aff. at P 55. 24 Hour claims that it cannot be awarded monetary compensation because the price of the oil cannot accurately be determined. Plaintiff also claims that the ...


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