EMPIRE TRANSIT MIX, INC. v. GIULIANI

The opinion of the court was delivered by: Kaplan, District Judge.

MEMORANDUM OPINION

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.

Facts

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 24, Empire was notified by the DDC that it no longer would permit Empire concrete on its construction projects.*fn15 It allegedly directed the prime contractors on its contracts to cease using Empire as a supplier shortly thereafter.*fn16

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.

Discussion

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.

Irreparable Injury

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 ...