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L&M Bus Corp. v. Board of Education of City School District of City of New York

United States District Court, E.D. New York

April 5, 2018

L&M BUS CORP. et al., Plaintiffs,



         Before the court is an application for a temporary restraining order ("TRO") and preliminary injunction by Plaintiffs L&M Bus Corp.; B&F Skilled Inc.; Happy Child Transportations LLC; Happy Day Transit Inc.; Iridium Services Corp.; Penny Transportation, Inc.; Selby Transportation Corp.; Smart Pick, Inc.; GVC Ltd.; Lessel Transportation Corp.; Mar-Can Transport Co.; Phillip Bus Corp.; 21st Avenue Transportation, Co.; Y&M Transit Corp.; Van Trans LLC; Alina Services Corp.; and Montauk Student Transport LLC (collectively, "Plaintiffs" or the "Bus Companies"). (Compl. (Dkt. 1); Mem. of Law in Supp. of Mot. for TRO and Prelim. Inj. ("Mem.") (Dkt. 3).) Plaintiffs are bus companies who contract with Defendant New York City Department of Education ("Defendant" or the "DOE") for school-bus routes. (Compl. ¶ 4.)

         This matter concerns the bidding process for bid No. B3182, entitled "Transportation Services for Students with Disabilities and Their Non-Disabled Peers" ("B3182"). (Id. ¶ 1.) As a requirement of bidding, contractors must agree that, if they are awarded the contract, they will abide by the terms of contract Serial No. B3182 (the "Contract"). (Id. ¶ 2.) The DOE has stated that the period during which they will accept bids for B3182 (the "Bidding Process") concludes on April 6, 2018. (Id. ¶ 48.) The Bus Companies seek a judgment from this court (1) declaring that the Contract violates the National Labor Relations Act ("NLRA"), 29 U.S.C. § 151 et seq., and the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., and (2) enjoining the DOE from moving forward with the Bidding Process until the alleged deformities in the Contract are fixed. (Id. ¶¶ 2-3.)

         For the reasons that follow, the application for a TRO is DENIED. The court reserves judgment on the application for a preliminary injunction.

         I. BACKGROUND

         A. Facts

         On December 29, 2017, the DOE opened the bidding process for B3182. (Compl. ¶ 40.) Through B3182, DOE is seeking 1600 vehicles to provide transportation services for students in kindergarten through twelfth grade, beginning on or about September 1, 2018, for a term of five years. (Id. ¶ 42.) Contractors seeking to bid on B3182 must, among other requirements, agree to abide by the terms of the Contract if they are successful. (Id. ¶ 40.) According to the Bus Companies, the DOE issued the Contract pursuant to its authority under state law to "approve, " N.Y. Educ. Law § 2590-g(1)(g), and "[d]evelop, " id. § 2590-h(36), a procurement policy for the New York City School District. (Compl. ¶ 41.) The only portion of the Contract tinder dispute in this matter is Section 4.5, which sets forth a No. of employment requirements for winning contractors. (See id. ¶¶ 49-78; Amendment No. 2 to the Contract (Dkt. 1 at ECF p.34).)[1] The requirements in Section 4.5 fall into two categories: those arguably preempted by the NLRA; and those arguably preempted by ERISA. The court provides an overview of these provisions but does not otherwise discuss any facts that are not necessary for or relevant to this memorandum and order.

         Section 4.5.1 mandates the creation of "Experienced School Bus Worker Lists" (the "ESBW Lists") from which the winning contractors and their subcontractors must fill "all positions for drivers and attendants who provide services in connection with a School Age Bus Contract awarded pursuant to" B3182 until the relevant ESBW List is exhausted. (Compl. ¶¶ 56, 60 (quoting Section 4.5.1).) The Bus Companies claim that Section 4.5.1 would require them to fire all employees who "currently work on routes that are encompassed by the B3182 RFB" and replace them with employees hired from the ESBW Lists. (Id. ¶¶ 61-62.) In addition, the Bus Companies point out that "employees, based on their position on the ESBW Lists, [would] choose their employers, " and that contractors would "have no right to refuse to hire an individual as an employee once selected by an individual." (Id. ¶¶ 63-64). Section 4.5.4 states that "[n]othing herein shall be interpreted to require any contractor or subcontractor to enter into a collective bargaining agreement with any union, nor shall it prohibit any contractor or subcontractor from entering into a collective bargaining agreement with any union." (Section 4.5.4.)

         Section 4.5.2 requires the contractor or subcontractor to pay employees hired from the ESBW Lists "based upon the highest wage scale pursuant to which such ESBW Hiree was paid for work performed ... in connection with a School Age Bus Contract [or] Subcontract since June 30, 2010." (Compl. ¶ 66; Section 4.5.2.) "Contractors and subcontractors may pay a wage higher than previously paid, but not one lower than the employees' prior wages." (Compl. ¶ 66.) Section 4.5.3 additionally requires that the contractor or subcontractor "contribute at least $l, 252.48/month towards health and welfare benefits on behalf of each employee who elects family benefit coverage and $780.77/month for employees who select individual coverage." (Id. ¶ 67.) These amounts are "based on the amount that an employer must contribute for health insurance coverage under" the collective bargaining agreement of Local 1181 of the Amalgamated Transit Union. (Id. ¶ 68.) If a contractor is able to provide health benefits for less than the contractually required amount, the contractor is still required to "use the excess funds 'to provide additional or improved health/welfare benefits.'" (Id. ¶ 69 (quoting Second Amended Round 1 Questions & Answers ("Round 1 Q&As") (Dkt. 1 at ECF p.41) ¶ 115).) Section 4.5.4 requires a contractor or subcontractor to contribute to the pension fund or plan that the hiree most recently participated in unless the hiree affirmatively opts out of the prior plan. (Id. ¶ 70.) The contractor or subcontractor's contribution is calculated using "the majority of employees of equivalent seniority in the job function for which the ESBW hiree was hired ... participating in such Prior Plan." (Id. ¶ 72 (quoting Section 4.5.4).) Section 4.5.4 also requires the contractor or subcontractor to "enter into a participation agreement" with the prior plan which "imposes no greater obligations than those imposed on a majority of the other contributing employees in such Prior Plan." (Section 4.5.4; see Compl. ¶ 73.)

         Following the opening of the Bidding Process on December 29, 2017, the DOE held a pre-bid conference on January 19, 2018, at which contractors who were interested in bidding could ask questions of the DOE. (Compl. ¶ 43.) The DOE has also answered three rounds of questions submitted by the contractors, and variously amended the terms of the Contract and extended the bid submission dates. (Id. ¶¶ 45-48; see Round 1 Q&As; Amended Questions & Answers-Round 2 (Dkt. 1 at ECF p.89); Questions & Answers-Round 3 (Dkt. 1 at ECF p. 104).) The final deadline for submission of bids is April 6, 2018. (Compl. ¶ 48.) The DOE intends to publicly read the submitted bids on April 9, 2018. (Id.)

         B. Procedural History

         The Bus Companies filed the instant action on March 29, 2018. (Compl.; Mem.) At that time, the Bus Companies noted that it was not necessary for the court to issue a ruling on the application for a TRO before April 6, 2018. (Mar. 29, 2018, Def. Letter (Dkt. 9).) The DOE submitted a response memorandum of law on April 2, 2018. (Def. Opp'n (Dkt. 12).) The court held a show-cause hearing on April 3, 2018, at which counsel for both sides appeared.


         A TRO "is an 'extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion.'" Free Country Ltd v. Drennen, 235. F.Supp.3d 559, 565 (S.D.N.Y. 2016) (Rakoff, J.) (quoting JBR. Inc. v. Keurig Green Mountain. Inc.,618 Fed.Appx. 31, 33 (2d Cir. 2015)). "The standards for granting a temporary restraining order and preliminary injunction are the same." J.Z. v. N.Y.C. Dep't of Educ.,281 F.Supp.3d 352, 359 (S.D.N.Y. 2017). A party seeking a TRO, like a party seeking a preliminary injunction, "must generally show a likelihood of success on the merits, a likelihood of irreparable harm in the absence of preliminary relief, that the balance of equities tips in the party's favor, ...

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