24 Hour Fuel Oil Corp. v. Long Island R. Co., Civ. A. No. CV-95-2703 (DGT).

• Decision Date: 24 October 1995
• Docket Number: Civ. A. No. CV-95-2703 (DGT).
• Citation: 903 F. Supp. 393
• Parties: 24 HOUR FUEL OIL CORP., Plaintiff, v. The LONG ISLAND RAIL ROAD COMPANY and The Metropolitan Transportation Authority, Defendants.
• Court: U.S. District Court — Eastern District of New York

903 F. Supp. 393

24 HOUR FUEL OIL CORP., Plaintiff, v. The LONG ISLAND RAIL ROAD COMPANY and The Metropolitan Transportation Authority, Defendants.

Civ. A. No. CV-95-2703 (DGT).

United States District Court, E.D. New York.

October 24, 1995.

Carl S. Levine & Associates, P.C., Roslyn, NY, for Plaintiff.

Long Island Rail Road, Jamiaca, NY, for Defendant.

MEMORANDUM AND ORDER

TRAGER, District Judge:

This action is before the court on plaintiff's, 24 Hour Fuel Oil Corp.'s (24 Hour), motion for summary judgment and defendants', Long Island Rail Road's (LIRR) and Metropolitan Transportation Authority's (MTA), cross-motion for summary judgment. The plaintiff requests summary judgment and a permanent injunction to reinstate the award of its first contract bid because plaintiff was the lowest possible bidder in that process and that process was valid and fair. Defendants contend that the MTA is a separate legal entity from the LIRR, and consequently, MTA is wrongly named in this action, and should be dismissed. Further, LIRR claims that there is no federal jurisdiction in this case because no federal question exists. In addition, defendants maintain that plaintiff has not exhausted all of its administrative remedies and in fact has a moot claim since plaintiff was awarded the contract in the second round of bids. Although the court finds no merit to this mootness defense, the court concludes that plaintiff has failed to plead a valid cause of action.

Background

In May 1995, plaintiff, 24 Hour received an invitation to bid on supplying LIRR with diesel fuel for a three year period referred to as Inquiry ME39-6396. To ensure all bidders would bid on a level playing field, the inquiry required that the basis for the price quote was Platt's Oilgram Price Report. Yakobowicz's Aff. at ¶¶ 3-6. In every city, Platt's solicits different vendors and makes an editorial decision whether or not to include a price received. Id. at ¶¶ 9-10. Platt's prices are reported on various bases. The "U.S. Tank Car Truck Transport" or "rack" posting is a listing of the highest and lowest prices charged by the vendors at bulk storage terminals. The "spot" or "barge" basis reports the highest and lowest prices charged to buy the product in a particular harbor. Id. at ¶¶ 13-15.

LIRR's inquiry required using the low rack price posted in Platt's on May 17, 1995 and requests a mix of diesel fuels and kerosene. Id. at ¶¶ 29-30. In LIRR's 3(g) Statement, it explains that prior to opening the bids, LIRR did not know if the rack postings were "anything but reliable and reflective of the conditions in the marketplace." Def.'s 3(g) Stmt. at ¶ 11. On May 17, 1995, Platt only posted one vendor's price for kerosene, RAD's. Id. at ¶ 33. Prior to the opening of the bids, no objections were made by any bidders regarding the posting specifications. Id. at ¶ 51. However, after the bids were open, a representative of Coastal Oil called LIRR and complained that there was only one posting in Platt's rack price list and informed LIRR of an alternative listing, the barge posting. According to Sam Yakobowicz, president and owner of 24 Hour: "Coastal, by running to the LIRR, has taken the term `sore loser' to new heights." Id. at ¶¶ 52-54.

In response to plaintiff's allegations that Coastal Oil was acting inappropriately in calling LIRR and informing it of the peculiarity in the listing, LIRR explained that it is not uncommon for bidders to request information about the bid and that during these calls LIRR often learns information they otherwise would not know. Sparks Aff. at ¶¶ 25-6.

In the inquiry, LIRR had set forth a specific formula to determine the lowest bid. Id. at ¶ 16. Six companies bid for LIRR's Inquiry. 24 Hour posted the lowest bid, $120,000.00 lower than the nearest competitor. Id. at ¶¶ 39-42. Instead of accepting 24 Hour's bid, LIRR canceled the inquiry and called for a re-bid. Id. at ¶¶ 44-46. LIRR insists that it never officially calculated the bids to determine a single bid number because it had been decided that the contract was not going to be awarded. Sparks Tr. at 155-56.

According to Michael Sparks, the manager of procurement-equipment for the LIRR, upon learning that only one company's price was listed in Platt's from Mr. Joe Colonel, at Coastal Oil, and confirmed by, Keller, an editor at Platt's:

the LIRR determined that it was in our best interest and the public interest to utilize a posting that was not subject to information provided by a single supplier. Obviously, with only a single company supplying key posting information, the possibility that uncontrolled price swings could occur is very real. Sparks Aff. at ¶¶ 23-25.

24 Hour points out that no one told Sparks that Platt's Tank Car posting for # 1 diesel fuel, Metro N.Y., was "no longer representative of the market place." Levine's Aff. at ¶ 17.

Sparks then spoke with his supervisor, Mr. Garrison, expressing his concerns about the inquiry and prepared spread sheets with the price of # 1 and # 2 diesel fuels based on the low posted prices for both rack and barge. Upon reviewing these charts with Mr. Garrison, they agreed that LIRR should reject the bids and re-bid using the barge postings. Sparks Tr. at 96. Plaintiff objects to the accuracy of the charts claiming that because 24 Hour was able to lower the price through certain calculations, the spread sheets cannot be relied upon. Levine's Aff. at ¶ 50.

Sparks further stated: "If LIRR did not re-bid the fuel contract, RAD Oil the company whose price was listed in Platt's would be in a position to unduly control the price paid for # 1 diesel locomotive fuel by the LIRR for the next three years. There also would be the potential for collusion between suppliers." Sparks Aff. at ¶ 31.

Upon receipt of the second invitation to bid, 24 Hour contacted LIRR to determine why the first bid was refused. On June 30, LIRR received a timely bid protest on behalf of 24 Hour Fuel Oil Corp, Sparks Aff. at ¶ 52, contending that LIRR's decision to cancel the first bid and re-bid was "arbitrary and unlawful." Yakobowicz's Aff. at ¶ 3. The LIRR denied the protest by letter dated July 14, 1995. Sparks Aff. at ¶ 55. On July 26, 1995, 24 Hour appealed LIRR's denial of its bid protest. Id. at ¶ 61. LIRR responded to plaintiff's appeal on August 8, 1995 refusing to rescind the prior rejection of plaintiff's protest. Id. at ¶ 64.

On August 11, 1995, LIRR extended the 1992 contract under "all of the original contract terms." Yakobowicz's Aff. at ¶ 69. Then, according to 24 Hour, on August 22, 1995, LIRR awarded the 1995 contract to it but back dated the contract to August 13, 1995 and required the "spot price" to be used based on NY/Boston barge. Id. at ¶ 70. However, LIRR claims that the back dating of the contract was simply an error, explaining that the second page of the Purchase Order awarding the bid has been corrected. It had erroneously stated, "Performance Period is for 36 months from August 13, 1995" when it was intended to become effective on the date of the award which was August 22, 1995. Sparks Aff. at ¶¶ 66-67.

Plaintiff requests the re-bid award be vacated and the first bid be reinstated. Levine's Aff. at ¶ 55. 24 Hour claims that it cannot be awarded monetary compensation because the price of the oil cannot accurately be determined. Plaintiff also claims that the re-bid violated LIRR's own protest procedures. Id. at ¶¶ 56-58.

Thus, two related questions must be addressed — whether federal question jurisdiction exists and whether 24 Hour's assertions provide a claim upon which relief can be granted. Only if a federal claim exists would the court have to consider whether a permanent injunction is appropriate in this action.

Discussion

(1)

Plaintiff claims that the issue of whether there is subject matter jurisdiction has already been decided, and, consequently, did not reply to defendant's assertions that federal question jurisdiction does not exist in this instance. See Pl.'s Reply Memo. at 9-11. A court's determination that it has subject matter jurisdiction is res judicata of the issue, but only if the jurisdictional question actually was litigated and expressly decided. Stoll v. Gottlieb, 305 U.S. 165, 59 S.Ct. 134, 83 L.Ed. 104 (1938); Clapp v. C.I.R., 875 F.2d 1396 (9th Cir.1989) (finding that the right to appeal based on lack of subject matter jurisdiction is not waived after a court enters judgment pursuant to a stipulated settlement, even though the right to appeal the settlement was not reserved); In the Matter of the Trimble Co., 479 F.2d 103 (3d Cir. 1973). Although the matter of federal jurisdiction was briefed in the defendant's opposition memorandum to the plaintiff's request for a preliminary injunction, and the plaintiff's reply memorandum responded to the jurisdictional question, the issue was not expressly decided when the Court denied the preliminary injunction. In fact, at the July 19, 1995 conference, the Court said: "At least for now, I will say there is federal jurisdiction." Tr. at 30. This certainly is not a final decision on the matter.

Federal question jurisdiction is based on 28 U.S.C. § 1331 which states that "district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treatises of the United States." For purposes of the matter at issue, a case arises under federal law if from the face of the complaint it is apparent that the plaintiff's cause of action was created by federal law or if a federal law that creates a cause of action is an essential element of plaintiff's claim.¹See generally Louisville & Nashville Railroad v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908); Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); Verlinden v. Central Bank of Nigeria, 461 U.S. 480, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983).

Here, 24 Hour's complaint alleges that federal question jurisdiction...