Van-Go Transport Co. v. New York City Bd. of Educ.

• Decision Date: 19 May 1999
• Docket Number: No. CIV A 95-CV-2660 (DGT).,CIV A 95-CV-2660 (DGT).
• Citation: 53 F.Supp.2d 278
• Parties: VAN-GO TRANSPORT CO., INC., Sterling Coach Corp., Celebrity Transit Corp., Paul Dachs and C. Isaac Dachs, Plaintiffs, v. NEW YORK CITY BOARD OF EDUCATION, New York City, Kevin F. Gill, and Richard W. Scarpa, Defendants.
• Court: U.S. District Court — Eastern District of New York

53 F.Supp.2d 278

VAN-GO TRANSPORT CO., INC., Sterling Coach Corp., Celebrity Transit Corp., Paul Dachs and C. Isaac Dachs, Plaintiffs, v. NEW YORK CITY BOARD OF EDUCATION, New York City, Kevin F. Gill, and Richard W. Scarpa, Defendants.

No. CIV A 95-CV-2660 (DGT).

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

May 19, 1999.

COPYRIGHT MATERIAL OMITTED

Robert J. Jossen, Swidler Berlin Shereff Friedman, LLP, New York City, for Plaintiffs.

Michael D. Hess, Corporation Counsel of the City of New York by Jonathan S. Becker & Susan M. Shapiro, New York City, for Defendants.

MEMORANDUM AND ORDER

TRAGER, District Judge.

At its core, this case is about the clash between an employer's right, under federal law, to replace striking workers, and a local governmental policy, adopted allegedly for public safety reasons, that would effectively nullify that right. The precise issue is whether the state action at issue, refusing to conditionally certify workers who would act as strike replacements, was pre-empted by federal labor law.

Background

Plaintiffs, Paul and Isaac Dachs, are the principals of plaintiffs Van-Go, Sterling Coach and Celebrity Transit, corporations in the business of providing bus or van transportation services. In September 1988, Van-Go entered into a two year contract with the New York City Board of Education ("BOE" or "Board") that was later extended through June 30, 1996. Under the terms of that contract, Van-Go was to provide severely disabled students, who lived in buildings without elevators and who could not walk, with transportation services. The contract called for the students to be carried from their apartments by two escorts to a Van-Go van where a driver would be waiting to take them to school.

Van-Go Drivers and escorts were required to be "certified" pursuant to Articles 40 and 41 of the Van-Go/BOE contract. Langford Dep., at Exh.B. Before employees could be approved for certification, they were required to undergo a background check, mental fitness report, drug test, training course, and most relevant here, submit a "fingerprint record." Id. The term "fingerprint record" is not defined in the contract. The certification process often took three to six months to complete, primarily because of the length of time it took to obtain an FBI evaluation of a fingerprint record. See Angela Gill Dep., p. 93; Langford Dep., p. 335. Plaintiffs allege that, because of the length of time required by this last step in the certification process, BOE adopted a "uniform practice and policy" of conditionally certifying new employees. Compl., ¶ 18. Conditional certifications were approvals granted to employees who had satisfied all of the BOE's other certification requirements, but were awaiting the processing of their fingerprint reports by the FBI. The Van-Go/BOE contract also required Van-Go to supply "sufficient, qualified and approved personnel to enable the Contractor to dispatch substitute escorts promptly if, when and where necessary to ensure continuous, uninterrupted and punctual service in each and every instance." Extension and Second Amendment of Contract, § (D) at 10.¹

In March 1994, Van-Go learned that Local 1181 planned to initiate a strike against it in early April 1994, and notified BOE of the pending strike by letter dated March 16, 1994. At first, BOE conditionally certified potential replacement workers, but then, Kevin F. Gill, Director of the BOE Office of Pupil Transportation ("OPT"), on behalf of BOE informed Van-Go by letter dated April 7, 1994, that it would not conditionally approve employees "`to act as strike breakers.'" Pl.App. in Opp. to Mot. for Sum. J. ("Pl.App."), at Exh.40. Prior to the situation at issue, no request for consideration of conditional certifications had ever been refused. Nor was there any written policy then in effect purporting to limit the number or percentage of an OPT contractor's workers that could be conditionally certified. In July 1995, BOE enunciated by letter a policy limiting to 20% the percentage of an OPT contractor's workforce that could be conditionally certified. See Def. Rule 56.1 Statement, p. 34 n. 19. Richard Langford, Deputy Director for Contractual and Regulatory Affairs of the OPT, at his deposition testified that the 20% policy had been in effect prior to April 7, 1994. See Langford Dep., pp. 392-95. However, no such policy was mentioned in the April 7 Gill letter.

On June 27, 1994, Local 1181 initiated a strike against Van-Go. As a result of the strike, Van-Go was unable to perform its obligations under the contract and was defaulted by Gill on behalf of the BOE. The default was upheld following an administrative review. See Ltr. to Gill from Arthur H. Avedon, Administrator, dated 7/1/94.²

Plaintiffs then brought suit on June 30, 1995, alleging five causes of action. Plaintiffs brought two counts under 42 U.S.C. § 1983, alleging violations of federal labor law and due process. Plaintiffs also alleged several violations of state law: breach of contract, breach of duty of good faith and fair dealing, and defamation. Plaintiffs sought damages, a declaratory judgment and a permanent injunction.

In 1995, defendants moved to dismiss portions of plaintiffs' complaint for failure to state a claim upon which relief can be granted on the grounds that: (1) the complaint fails to state a claim against defendant New York City and defendant Scarpa; (2) the claim for defamation fails to state a claim; and (3) damages in the form of lost profits and to compel the award of contracts are unavailable as a matter of law. At a motion hearing on April 16, 1996, defendants' motion was denied as to plaintiffs' claims against defendants Scarpa and New York City; plaintiffs' claims for contract and lost profits damages were limited to Van-Go, as a matter of law; and decision on defendants' motion for dismissal of the defamation claims was reserved.

Both parties subsequently submitted supplemental materials in support of and in opposition to defendants' motion to dismiss the defamation claims. Because both parties submitted materials beyond the complaint, the remaining part of the motion was converted into a motion for summary judgment. Upon notice to the parties of the conversion, and additional oral argument, this remaining portion of the motion was granted in part and denied in part on February 6, 1997. See Van-Go I, 971 F.Supp. 90 (E.D.N.Y.1997). Following the completion of discovery, defendants moved for summary judgment on all of plaintiffs' remaining claims.

Discussion

(1)

BOE first argues that Van-Go's breach of contract and federal § 1983 claims are barred by a six-month contractual limitations provision contained in the Van-Go/ BOE contract, and that, therefore, defendants' motion for summary judgment should be granted as to each of these claims.³ Van-Go contends that the contractual limitations provision at issue bars neither its state nor its federal claims. That provision states:

No action ... shall be maintained by the Contractor [Van-Go], ... against the Board on any claim arising out of this Contract ... unless such action shall be commenced within six (6) months after the date of filing of the voucher for final payment hereunder or within six (6) months of the required completion date for the services performed hereunder, whichever is sooner.

Van-Go/BOE Contract, ¶ 22. A voucher is a BOE record created by BOE's Finance Department for each payment made to a vendor.

Here, the latter clause of the contractual provision is not at issue. The complaint was filed in June of 1995, one year before the June 30, 1996 "completion date" for the contract, and, thus, well within six months of the required contractual "completion date." Defendants contend, however, that the first clause bars plaintiffs from any recovery. Specifically, BOE asserts that the complaint was filed more than six months after the "final payment" under the contract was made. The term "final payment," however, is not defined anywhere in the contract. BOE maintains that the "final payment" was a $161,937 payment made by BOE to Van-Go on a voucher dated August 1, 1994. BOE asserts that since this action was commenced by Van-Go on June 30, 1995, more than six months after the August 1994 payment was made, all of plaintiffs' state and federal claims arising out of the termination of the contract are untimely.

Plaintiffs argue that the breach of contract and § 1983 claims are not time barred by the contractual limitations period because the August 1994 payment of $161,937 did not constitute the "final payment" under the contract. Rather, Van-Go asserts that the "final payment" under the contract was a payment of $320,378 made by BOE to Van-Go in August 1995. Van-Go maintains that since the complaint in this action was filed in June 1995, three months before the August 1995 payment was made, its claims are not time barred by the contractual limitation period.

BOE does not dispute that an additional payment was made to Van-Go in August 1995, but rather contends that the 1995 payment was a "cost justification payment" and not a "final payment" within the meaning of the Van-Go/BOE contract. BOE asserts that the cost justification payment was a retroactive payment of monies owed to Van-Go due to an increase in Van-Go's operating costs from 1990 to 1994. BOE maintains that this retroactive payment does not extend the contractual limitations period and, as such, Van-Go's breach of contract and § 1983 claims are time barred.

As this recitation of the parties' contending positions makes evident, there exists at least a question of material fact as to what constitutes a "final payment" under the contractual limitations period set forth in the Van-Go/BOE employment contract. It seems more likely that the parties would have intended that the last payment received by Van-Go under the Van-Go/BOE contract would constitute the "final payment" under that contract. If BOE had intended...