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RESOURCE N.E. OF LONG ISLAND v. TOWN OF BABYLON
January 3, 2000
RESOURCE N.E. OF LONG ISLAND, INC., PLAINTIFF,
TOWN OF BABYLON, RICHARD H. SCHAFFER, INDIVIDUALLY AND AS SUPERVISOR OF THE TOWN OF BABYLON, DOUGLAS JACOB, INDIVIDUALLY AND AS COMPTROLLER, SOLID WASTE ADMINISTRATOR AND/OR FINANCE DIRECTOR OF THE TOWN OF BABYLON, AND RONALD KLUESENER, INDIVIDUALLY AND AS COMMISSIONER OF ENVIRONMENTAL CONTROL FOR THE TOWN OF BABYLON, DEFENDANTS.
The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM OF DECISION AND ORDER
This case involves allegations of fraud and bribery under the
Civil RICO Act and Section 1983, brought by dissatisfied bidders
on a garbage hauling contract against the Town of Babylon ("the
Town") and the Town officers who awarded the contract. Presently
before the Court are the Defendants' motions to dismiss the
Amended Complaint under Rule 12(b)(6) and Plaintiffs' Verifacts
Group, Inc. and Verifacts, Inc. (collectively "Verifacts")
motions for this Court to reconsider its earlier dismissal of
This is the second time this case has been before this Court,
and the factual background of the dispute that has been
extensively described in Resource N.E. of Long Island, Inc. v.
Town of Babylon, 28 F. Supp.2d 786 (E.D.N.Y. 1998) is deemed
incorporated in this decision. Briefly, the Plaintiffs allege
that the competitive bidding held by the Town of Babylon to award
a commercial garbage hauling contract was actually rigged, and
that Plaintiff ReSource N.E. of Long Island, Inc. ("ReSource"),
the alleged low bidder on the contract, was passed over in favor
of a company that had secretly made several bribes to Town
officials. ReSource's Amended Complaint alleges four causes of
action: a claim under the Civil RICO Act, 18 U.S.C. § 1961, based
on predicate acts of bribery and mail fraud; a claim that the
Defendants participated in a RICO conspiracy; Section 1983 claims
that the town deprived ReSource of property without due process
of law and in violation of its right to equal protection; and a
claim of common law fraud against the Defendants based on their
false statements regarding the fairness of the bidding process.
The Defendant Town of Babylon moves to dismiss the complaint
against it pursuant to Rules 8, 9, and 12(b)(6). It contends that
the Amended Complaint is needlessly redundant and prolix in
violation of Rule 8, despite this Court's prior dismissal of the
complaint with leave to replead. The Town also contests
ReSource's standing to sue as an unsuccessful bidder under
Section 1983, denying that ReSource has a property interest
resulting from its bid and arguing that ReSource fails to allege
violations of the Equal Protection and Due Process clauses of the
Constitution. The Town further states that those same arguments
warrant dismissing ReSource's claim that the Town conspired to
violate ReSource's civil rights under Section 1983. The Town's
motion also seeks dismissal of the common law fraud claim on the
grounds that it fails to describe the alleged fraudulent
statements and the speaker of them with the particularity
required by Rule 9(b). Finally, the Town challenges the claims
under RICO and the request for punitive damages against the Town
officials in their official capacities.
Defendant Richard Schaffer, Supervisor of the Town of Babylon,
moves separately to dismiss the complaint against him under Rules
9(b) and 12(b)(6). Schaffer contends that ReSource's RICO and
RICO conspiracy claims should be dismissed, since they fail to
plead predicate acts of mail fraud with the specificity required
by Rule 9(b), because the allegations of mail fraud rely on
mailings to persons other than ReSource, and because the
allegations of predicate acts of bribery are not adequately pled.
Schaffer also seeks dismissal of the RICO claims on the basis
that the Amended Complaint fails to allege a "pattern of
racketeering activity," in that the alleged predicate acts are
not related or
continuous, and because the Amended Complaint does not
sufficiently allege a RICO "enterprise." Finally, Schaffer claims
that, to the extent a Section 1983 violation is alleged, he is
protected by the doctrine of qualified immunity.
Defendants Kluesener and Jacob also move to dismiss the Amended
Complaint against themselves, relying on the arguments put
forward by the Town and Schaffer.
In ruling on a motion under Fed. R.Civ.P. 12(b), the court is
to look only to the allegations of the complaint and any
documents attached to or incorporated by reference in the
complaint, Newman & Schwartz v. Asplundh Tree Expert Co.,
102 F.3d 660, 662 (2d Cir. 1996); to assume all well-pleaded factual
allegations to be true; and to view all reasonable inferences
that can be drawn from such allegations and documents in the
light most favorable to the plaintiff. Dangler v. New York City
Off Track Betting Corp., 193 F.3d 130, 1999 WL 742403 (2d Cir.
1999). A complaint may not be dismissed under Rule 12(b)(6)
unless it "appears beyond doubt that the plaintiff can prove no
set of facts in support of his claim which would entitle him to
relief." Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996),
citing Allen v. WestPoint- Pepperell, Inc., 945 F.2d 40, 44 (2d
Cir. 1991). The issue to be considered by the Court is not
whether a plaintiff will ultimately prevail, but merely whether
the claimant is entitled to offer evidence to support the claims.
Id.,citing Villager Pond, Inc. v. Town of Darien, 56 F.3d 375,
378 (2d Cir. 1995).
A. As to compliance with Rule 8
The Town first moves for dismissal of the Amended Complaint on
the grounds that it violates Rule 8, which states that a pleading
shall contain "a short and plant statement of the claim showing
that the pleader is entitled to relief," Fed.R.Civ.P. 8(a)(2),
and that directs that "each averment of a pleading shall be
simple, concise, and direct." Fed.R.Civ.P. 8(e); Resource N.E.
of Long Island, Inc. v. Town of Babylon, 28 F. Supp.2d 786, 794
(E.D.N.Y. 1998); Salahuddin v. Cuomo, 861 F.2d 40, 42 (2d Cir.
1988). Because the purpose of Rule 8 is to ensure that the courts
and adverse parties can understand a claim and frame a response
to it, id., dismissal of a complaint for noncompliance with
Rule 8 is usually reserved for cases in which the complaint is
"so confused, ambiguous, vague, or otherwise unintelligible that
its true substance, if any, is well disguised." Simmons v.
Abruzzo, 49 F.3d 83, 86-87 (2d Cir. 1995).
This Court previously dismissed the Plaintiff's original
97-page, 442-paragraph complaint, finding in "excessively long
winded and redundant." Resource, 28 F. Supp.2d at 795.
Resource's Amended Complaint weighs in at 49 pages and 215
paragraphs, although it incorporates by reference an additional
35 pages of questionably relevant indictments. Taken as a whole,
the Amended Complaint is still needlessly prolix and somewhat
redundant, but is not so opaque as to defy understanding or
prevent the Defendants from answering. The causes of action are
sufficiently delineated and describe the alleged unlawful acts
and the Defendants responsible for them with enough particularity
that those Defendants can formulate a response to them.
Therefore, the Town's motion to dismiss the entire Amended
Complaint on the basis of noncompliance with Rule 8 is denied.
B. As to Resource's Section 1983 claims
ReSource alleges in its Amended Complaint that the Town's
failure to select it for the garbage hauling contract, even
though it was the lowest bidder, constituted a deprivation of
ReSource's constitutional rights to due process and equal
(i) As to the claim for violation of due process
In order to state a claim under Section 1983 for violation of
due process, a plaintiff must first show that a government entity
deprived it of a right secured by the constitution or by law.
Finley v. Giacobbe, 79 F.3d 1285, 1286 (2d Cir. 1996), citing
Gomez v. Toledo, 446 U.S. 635, 640, 100 S.Ct. 1920, 64 L.Ed.2d
572 (1980). A plaintiff must have a property interest in a
benefit that is "more than an abstract need or desire for [the
benefit . . . The plaintiff] must, instead, have a legitimate
claim of entitlement to it" under state or federal law in order
to state a Section 1983 claim. Id.,citing Board of Regents v.
Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972).
Here, ReSource's Section 1983 claim is based on an argument
that, by being the lowest bidder on the hauling contract, it has
obtained a property right to have the contract awarded to it.
However, New York law is clear that the lowest bidder on a public
works contract does not obtain a vested interest in a public
works contract. Impact Shipping, Inc. v. City of N.Y., 1997 WL
297039 (S.D.N.Y. 1997) citing Conduit & Foundation Corp. v.
Metropolitan Transp. Authority, 66 N.Y.2d 144, 495 N.Y.S.2d 340,
485 N.E.2d 1005 (1985). This is especially true where the
contract is awarded pursuant to a state statute like the one
here, N.Y.Gen.Mun.L. § 102-w, which, as ReSource acknowledges,
does not simply require the contract to be automatically awarded
to the lowest bidder, but vests discretion in the Town to
exercise its discretion in selecting the most beneficial bid.
When official action is discretionary, "one's interest in a
favorable decision does not rise to the level of a property right
entitled to procedural due process protection." Walentas v.
Lipper, 862 F.2d 414, 419 (2d Cir. 1988), cert. denied,
490 U.S. 1021, 109 S.Ct. 1747, 104 L.Ed.2d 183 (1989) quoting RR
Village Ass'n, Inc. v. Denver Sewer Corp., 826 F.2d 1197, 1202
(2d Cir. 1987); see also Transcontrol Corp. v. Metropolitan
Tran. Auth., 1987 WL 12090 (S.D.N.Y. 1987) (holding that rules
and regulations requiring Transportation Authority to award
contract to lowest responsible bidder contemplated exercise of
discretion and thus did not confer protected property interest on
the low bidder).
While ReSource acknowledges that the Town had the statutorily
granted discretion to subjectively evaluate the bids, it
nevertheless argues that the Town abused that discretion, and
that, absent such abuse, ReSource would certainly have been
awarded the contract. Citing Sullivan v. Town of Salem,
805 F.2d 81 (2d Cir. 1986) (claim of entitlement exists where, absent
the alleged denial of due process, there is a certainty that the
benefit would have been granted to the plaintiff). Both premises
of this argument are flawed. Although ReSource alleges that the
Town acted arbitrarily in selecting BSSCI, the New York State
Supreme Court in Matter of Resource, N.E. of Long Island, Index
No. 95-01795 (Sup.Ct. Suffolk County 1996) found in an Article 78
proceeding that the Town's evaluation of the bids was not
arbitrary or capricious and that the award of the contract to
BSSCI was supported by facts in the record. ReSource's failure to
appeal this decision prevents it from contending here that the
Town's decision was arbitrary. While this Court previously held
that the issues in the Article 78 case and the broad issues in
the instant case were not sufficiently similar to apply
collateral estoppel principles, see 28 F. Supp.2d at 792,
ReSource's argument here that the Town's decision was arbitrary
is precisely the issue that the state court ruled on, and
ReSource is estopped from contending otherwise.