The opinion of the court was delivered by: Kaplan, District Judge.
Empire Transit Mix, Inc. ("Empire") brings this action for an
injunction compelling the City of New York (the "City") to revoke
its prohibition on allowing plaintiff to supply concrete to
contractors working on City construction projects. The matter is
before the Court on Empire's motion for
a preliminary injunction and the defendants' motion to dismiss.
Empire is a New York corporation in the business of supplying
transit-mix concrete to construction projects.*fn1 Approximately
forty percent of its gross sales comes from contractors working
under contract with the City on various City projects.*fn2 Of
special pertinence to the present dispute are several City
construction projects for the City's Departments of Parks &
Recreation (the "DPR") and Design & Construction (the
"DDC").*fn3
On or about October 3, 1997, Empire entered into an arrangement
with Excel Group, Inc. ("Excel"), a subcontractor*fn4 on the
DPR's Foley Square reconstruction project, to supply transit-mix
concrete for installation. On January 20, 1999, it entered into
an arrangement with Cobar Industries, Inc., also a subcontractor,
to do the same on the DPR's City Hall Park project.*fn5 Empire
alleges also that at the end of March it was supplying concrete
to contractors on three DDC projects — a Fire Department
building,*fn6 the reconstruction of McGuiness Boulevard,*fn7
and the construction of sanitary sewers on Parsons
Boulevard.*fn8
Defendants allege that some time in March 1999, the City
obtained "significant negative information" concerning
Empire*fn9 through its Vendor Information Exchange System
database ("VENDEX").*fn10 This information appears to have been
the subject of an article that was being prepared by the New
York Times regarding Empire's alleged affiliation with the
Laquila Construction Company, a firm with a somewhat checkered
past.*fn11
Plaintiff claims that on or about March 19, 1999 the DPR
directed the prime contractor on the City Hall Park project to
stop using Empire concrete and to submit two new concrete
suppliers for DPR approval.*fn12 Three days later, the DPR
allegedly gave the same message to the prime contractor on the
Foley Square project.*fn13 At a March 23 meeting, the DPR
informed Empire that the Mayor's Office had directed that Empire
be removed as a concrete supplier on the City Hall and Foley
Square projects because of the above mentioned New York Times
article which appeared that day.*fn14
On March 30, Empire sought a temporary restraining order from
this Court enjoining the City from continuing the ban on Empire's
participation in City projects, claiming that defendants' de
facto debarment of Empire from supplying concrete on those
projects without a pre-deprivation hearing violated its rights to
due process and equal protection of the laws.*fn17 This Court
denied a temporary restraining order and scheduled a hearing on
the motion for a preliminary injunction for April 7.
The Preliminary Injunction Standard
"In order to justify the award of a preliminary injunction, the
moving party must first demonstrate that it is likely to suffer
irreparable harm in the absence of the requested relief."*fn18
The threat of irreparable injury must be imminent or certain, not
a matter of speculation.*fn19 Once the likelihood of irreparable
harm has been demonstrated, a movant ordinarily is entitled to
relief if it demonstrates "either (1) `a likelihood of success on
the merits' or (2) `sufficiently serious questions going to the
merits to make them a fair ground for litigation and a balance of
hardships tipping decidedly' in the movant's favor."*fn20 Where,
however, a movant seeks to enjoin "government action taken in the
public interest pursuant to a statutory or regulatory scheme," it
may succeed only by demonstrating a likelihood of success on the
merits in addition to irreparable harm.*fn21
While it perhaps is arguable that Empire is subject to the
heightened standard applicable where a litigant seeks to enjoin
certain types of governmental action, the City does not so
assert.*fn22 Rather, it assumes that the motion is governed by
the usual two pronged standard applicable in this Circuit. The
Court therefore proceeds on that basis.
As the Court held in denying Empire's application for a
temporary restraining order, it plainly has an adequate remedy at
law with respect to the loss of sales on its existing
arrangements. The contractors or subcontractors with whom it was
dealing, given the City's action, will purchase concrete from
other suppliers. The amount of sales thus diverted from Empire
will be determinable to the last cubic yard. In consequence, the
economic loss to Empire as a result of the City's action, should
it ultimately be held unlawful, will be readily determinable. But
the arrangements in respect of existing contracts are not the
whole story.
The City's action probably will prevent contractors from
considering Empire in sourcing their concrete requirements on
future City contracts. As one could not determine the extent to
which Empire would have obtained such supply contracts, absent
the City's recent action, proof of a damage claim with respect to
such lost business would be impossible. Moreover, in view of
Empire's unrebutted claim that forty percent of its gross sales
have been on City construction projects, the likelihood
o ...