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Staten Island Bus, Inc. v. The New York City Dept. of Education

Supreme Court of New York, New York County

August 9, 2013

In the Matter of the Application of STATEN ISLAND BUS, INC., Lonero Transit, Inc., and Pioneer Transportation Corp., Petitioners, For a Judgment under Article 78 of the Civil Practice Law and Rules,
The NEW YORK CITY DEPARTMENT OF EDUCATION, Respondent, and Local 1181-1061, Amalgamated Transit Union, AFL-CIO, Intervenor-Respondent.

Ganfer & Shore, LLP, New York City (Steven J. Shore, Ira Brad Matetsky and William D. McCracken of counsel), for petitioners.

Michael A. Cardozo, Corporation Counsel, New York City (Nancy F. Brodie, Michael S. Adler and Margaret DeVoe of counsel), for New York City Department of Education, respondent.

Meyer, Suozzi, English & Klein P.C., New York City (Richard N. Ginsberg, Richard A. Brook and Robert Marinovic of counsel), for Local 1181-1061, Amalgamated Transit Union, AFL-CIO, intervenor-respondent.


Petitioners in this Article 78 proceeding are private bus contractors that have long contracted with the City to transport New York City Public School children to and from school. They challenge a Request for Bids issued by respondent Department

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of Education in December 2012 (" the December RFB" ), and the subsequent award of school bus contracts pursuant to the December RFB.

Petitioners assert that their existing contracts for other school bus routes— routes not covered by the December RFB— obligate them to submit bids for the December RFB containing various labor provisions that favor unionized school bus drivers, dispatchers, mechanics, and chaperones. Petitioners assert that the necessary inclusion of these provisions, called " Employee Protection Provisions" (" EPPs" ) embeds a cost in petitioners' bids that places them at a competitive disadvantage with respect to other bidders who are not bound by these EPPs.

EPPs have long been required by the DOE— and its predecessor the Board of Education— in bidding out school bus contracts. However, the continued viability of EPPs was cast in doubt by the Court of Appeals' recent decision in L & M Bus Corp. v. New York City Dep't of Educ., 17 N.Y.3d 149, 927 N.Y.S.2d 311, 950 N.E.2d 915. Petitioners argue that the EPPs are unlawful under the L & M decision.

In their reply papers petitioners articulate a second argument: that the December RFB was fatally ambiguous because it did not make it sufficiently clear that EPP provisions in existing contracts are not to be included in any bid for the routes covered by the RFB.

As their requested relief, petitioners first sought a declaration that the EPPs in their existing contracts are unlawful. In the petition, they sought the removal of the EPPs from their existing contracts, contracts which will last until 2015. At oral argument and in their latter papers, petitioners changed their request for relief: they now seek a declaration " modifying" or " amending" the EPPs in petitioners' existing contracts to make it clear that the EPPs do not apply to any bid they make on a new RFB. They also seek preliminary and permanent injunctive relief preventing DOE from proceeding with any contracts awarded pursuant to the December 2012 RFB.

In response, the DOE asserts that it omitted any requirement for EPPs in the December RFB because of the Court of Appeals' decision in L & M . However DOE contends that the L & M court did not find that EPPs were per se illegal. Rather, respondents argue that the L & M Court held that the EPPs at issue in that case ran afoul of New York State's bidding laws because they could not pass a heightened scrutiny test that would show that the EPPs were designed to protect the public fisc, " encourage robust competition," or prevent favoritism.

For the December RFB, the DOE made a determination that an EPP provision would not pass heightened scrutiny. However, the DOE does not take the position that L & M voids EPP provisions in existing contracts. DOE notes that the court in L & M was looking at an RFB for new bus routes, not in existing contracts, and so that case provides no authority for disturbing the existing contracts.

Intervenor Local 1181-1061, Amalgamated Transit Union, AFL-CIO (" Local 1181" ) asserts that it is the largest union representing the drivers, mechanics and matrons/escorts employed by petitioners and other school bus companies that contract with DOE. Local 1181 claims that it is a third party beneficiary of the petitioners' contracts with DOE. It opposes petitioners' attempt to excise EPPs from existing contracts.


DOE's authority to provide bus transportation to New York City public school students is set forth in various state and federal statutes. There are two general

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categories of school bus service: 1) " Special Busing," for children with disabilities and 2) " General Busing" for students who do not have disabilities and for students with disabilities ...

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