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In re Application of Staten Island Bus, Inc.

Sup Ct, 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,
v.
THE NEW YORK CITY DEPARTMENT OF EDUCATION, Respondent, For a Judgment under Article 78 of the Civil Practice Law and Rules, and LOCAL 1181-1061, AMALGAMATED TRANSIT UNION, AFL-CIO, Intervenor-Respondent. Index No. 100304/13

Unpublished Opinion

Peter H. Moulton, Justice.

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 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). 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.

BACKGROUND

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 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 who do not require special modes of transportation.

The inclusion of EPPs in their present form in school bus contracts began in the wake of a 1979 strike by Local 1181. The strike was precipitated by DOE's removal of two provisions that had favored workers from a bid solicitation that year. First, prior to 1979 the DOE's school bus contracts contained some version of the following provision:

employees of private bus companies who lose their jobs as a result of the loss of the contact by a previous contractor must be given priority in hiring according ...

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