In re NJ Transit

• Decision Date: 29 July 2022
• Docket Number: DOCKET NO. A-2598-21
• Citation: 473 N.J.Super. 261,280 A.3d 313
• Parties: In the MATTER OF NJ TRANSIT Award of Contracts No. 21-048A and No. 21-048B to Orange, Newark, Elizabeth Bus, Inc., I/P/A Coach USA, LLC.
• Court: New Jersey Superior Court — Appellate Division

473 N.J.Super. 261

280 A.3d 313

In the MATTER OF NJ TRANSIT Award of Contracts No. 21-048A and No. 21-048B to Orange, Newark, Elizabeth Bus, Inc., I/P/A Coach USA, LLC.

DOCKET NO. A-2598-21

Superior Court of New Jersey, Appellate Division.

Argued May 31, 2022

Decided July 29, 2022

Matthew Lakind, Morristown, argued the cause for appellant Academy Express, LLC (Tesser & Cohen, attorneys; Lee Tesser and Matthew Lakind, on the briefs).

Jennifer Borek, Jersey City, argued the cause for respondent NJ Transit (Genova Burns LLC, attorneys; Jennifer Borek, of counsel and on the brief; Victor Andreou, on the brief).

Maeve E. Cannon, Lawrenceville, argued the cause for respondent Orange, Newark, Elizabeth Bus Inc. (Stevens & Lee, attorneys; Maeve E. Cannon, of counsel and on the brief; Michael A. Cedrone, on the brief).

Before Judges Messano, Accurso and Enright.

The opinion of the court was delivered by

ACCURSO, J.A.D.

We granted Academy Express LLC's application to file an emergent motion to stay New Jersey Transit's award or execution of Contract No. 21-048A (Hudson County bus routes 2, 84 and 88) pending Academy Express's appeal of NJ Transit's decision to award the contract to Orange, Newark, Elizabeth Bus Inc. (ONE Bus), and permitted ONE Bus to intervene as an interested party, entering a temporary stay pursuant to Rule 2:9-8 pending our disposition of the motion. Having now considered the parties’ briefs and listened to oral argument — and without prejudice to the merits panel's ultimate disposition of the matter — we deny the motion and dissolve our temporary stay.¹ Reviewing the facts presented in the submissions on the emergent application through the prism of the Crowe ² factors, we conclude Academy Express has not demonstrated a reasonable probability of success on the merits of its appeal. See Garden State Equal. v. Dow, 216 N.J. 314, 320, 79 A.3d 1036 (2013) (application for a stay requires consideration of the soundness of the ruling and the effect of a stay on the parties and the public).

The essential facts are not disputed. In September 2021, NJ Transit issued a request for proposals from qualified carriers to provide regular route local bus services in the Hudson and North Hudson County areas via two, three-year contracts: Contract No. 21-048A (Hudson County routes 2, 84 and 88) and Contract No. 21-048B (North Hudson routes 22, 23, 86 and 89). In accord with N.J.S.A. 27:25-11(c)(2), NJ Transit declared its intention to execute an agreement with the carrier whose proposal was "the most advantageous, ... price and other factors considered." At the time NJ Transit issued the RFP, ONE Bus was operating Hudson and North Hudson local bus routes 2, 22, 23 and 88 pursuant to an emergency contract and NJ Transit was operating routes 84, 86 and 89 itself due to Transit's decision not to renew its existing contract with an Academy Express affiliate, No. 22 Hillside, LLC, which had operated the routes.

Submitted proposals were to be evaluated by a Technical Evaluation Committee whose "recommendation to award" was to "be made based on technical and cost evaluation scores as well as comparison to the benchmark cost submitted by NJ Transit Bus Operations." Although the committee's recommendation to award would be made to the proposer with the highest total combined score who submitted the lowest cost bid, the RFP made clear NJ Transit "reserve[d] the right to reject any and all Proposal(s) in accordance with applicable law," and that "[t]he award of the Contract [was] subject to the approval of the NJ Transit Board of Directors."

NJ Transit received only two proposals for each contract — from Academy Express and ONE Bus. Although the Technical Evaluation Committee ranked ONE Bus's proposal slightly higher on the technical evaluation scores, Academy Express's lower bid on both contracts resulted in higher scores on the cost evaluation, yielding Academy Express a higher combined score and ranking for both contracts as follows:

Contract No. 21-48A	Costs	Differential	Costs score	Tech. score	Combined score	Ranking
Academy Express	$77,704,216.80	$0.00	100	85.20	185.20	1
ONE Bus	$86,436,316.22	$8,732,099.42	88.76	92.60	181.36	2

Contract No. 21-48B	Costs	Differential	Costs score	Tech. score	Combined score	Ranking
Academy Express	$47,284,321.07	$0.00	100	85.20	185.20	1
ONE Bus	$53,800,351.30	$6,516,030.23	86.22	92.60	178.82	2

On February 15, 2022, NJ Transit issued a "Notice of Intent to Award" both contracts to Academy Express. The Notice advised it was "subject to the full execution of a written contract," which itself was subject to "passage through Board Approval and the New Jersey Governor veto period." NJ Transit expressly reserved the right to cancel the Notice of Intent at any time prior to the execution of the written contract.

On March 4, 2022, ONE Bus submitted a request for reconsideration, and shortly thereafter a supplemental request following its receipt of the Technical Evaluation Committee's scoring sheet pursuant to an OPRA request, arguing the Technical Evaluation Committee had "grossly misjudged its evaluation" of Academy Express's "experience and qualifications" and "operations" components by failing to account for the "massive fraud" the Attorney General alleged Academy companies had perpetrated against NJ Transit in a recently settled qui tam action.

Specifically, in March 2017, a former No. 22 Hillside employee filed a complaint under seal against Academy Express and several of its affiliated companies and officers pursuant to the qui tam provisions of the New Jersey False Claims Act, N.J.S.A. 2A:32C-1 to -18. Following an investigation into the relator's allegations, the Attorney General filed a complaint in intervention in November 2020 against Academy Bus LLC and its affiliated companies, No. 22 Hillside, Academy Lines, LLC, and Academy Express, movant here.³

In addition to the corporate defendants, the complaint named Academy officer defendants Thomas F.X. Scullin, Vice President and Chief Operating Officer of each of the Academy affiliates; Frank DiPalma, Controller for each of the Academy affiliates; Antonio Luna, a former assistant manager at No. 22 Hillside and current dispatcher for the Academy affiliates; and Edward Rosario, general manager of No. 22 Hillside. The Attorney General maintained that although each of the Academy corporate affiliate defendants served "different parts of the Academy operation, at all relevant times defendants Number 22 Hillside, LLC, ... Academy Lines, LLC, Academy Express, LLC, and Academy Bus, LLC, functioned as one operation, all managed by the Academy officer defendants, among others, shifting drivers and buses from one company to the other to maximize Academy's profits overall."

The Attorney General alleged Academy Bus, its officers, employees and affiliated companies had engaged in a "massive," "multi-year, multi-million dollar fraud" against NJ Transit through No. 22 Hillside's operation of Hudson bus routes 2, 10, 22, 22X, 23, 88 and 119. Under its contract with NJ Transit, No. 22 Hillside was required to submit detailed monthly reports to NJ Transit about the number of miles and hours it operated the bus line as well as all "missed trips." The Attorney General alleged that from April 2012 to December 2018, Academy defrauded NJ Transit "out of more than $15 million," by "systematically, knowingly, and deliberately" underreporting the number of missed bus trips to avoid paying thousands of missed trip fees and overcharged NJ Transit for hours and miles not actually driven. The Attorney General alleged that in 2016 alone, Academy defrauded NJ Transit out of more than $3.6 million by "deliberately fail[ing] to report more than 12,000 missed trips, averaging over 1,000 unreported missed trips each month." From September to November 2016, Academy failed to report "more than 3,500 missed bus trips, an average of more than 40 bus trips a day."

The Attorney General claimed "[i]nternal Academy documents and sworn testimony show[ed] that Academy's exceedingly high number of actual [m]issed [t]rips most months resulted from Academy's deliberate decision to divert its short supply of bus drivers away from the bus lines it operated for New Jersey Transit in favor of higher paying contracts." The complaint alleged Academy's officers "were aware of, and directed, the shifting of bus drivers from New Jersey Transit runs to Academy's other operations, including higher-paying private charter trips, to the detriment of New Jersey Transit and its customers." The Attorney General alleged "Academy's fraud" not only caused harm to NJ Transit and New Jersey taxpayers, but also "caused the riding public to suffer because Academy missed tens of thousands of bus trips on busy Hudson and South Hudson service area bus lines."

ONE Bus contended a review of the Technical Evaluation Committee's score sheet made clear the Committee had not taken the qui tam action into account in assessing Academy Express's technical scores, notwithstanding they "directly related to the RFP's Services." ONE Bus claimed that "[i]f appropriately considered, the litigation should have substantially reduced points" to Academy Express in the categories of "legal proceedings, experience, and personnel." ONE Bus concluded its supplemental request for reconsideration of Academy Express's scores by rhetorically asking, "If a lawsuit that alleges a massive fraud with considerable evidence committed by a proposer on the very same services as the RFP still results in an ‘excellent’ score, what does it take for a proposer to only achieve ‘good’ or ‘poor’?"⁴

Five days before NJ Transit issued its Notice of Intent to award the contract to Academy Express, the Academy companies settled the qui tam action by agreeing to pay the State $20.5 million over nine years, which sum would include individual contributions by Scullin of $150,000 and contributions by Rosario and Luna of $50,000 each. The settlement agreement provides it was "neither an admission of liability by...