Van-Go Transport v. New York City Bd. of Educ.
| Decision Date | 30 July 1997 |
| Docket Number | Civil Action No. CV-95-2660(DGT). |
| Citation | 971 F.Supp. 90 |
| 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 |
Elliot J. Mandel, Kaufman, Naness, Schneider & Rosensweig, P.C., Jericho, NY, Robert J. Jossen, Shereff, Friedman, Hoffman & Goodman, LLP, New York City, for Plaintiffs.
Paul Crotty, Corporation Counsel of City of New York by Susan M. Shapiro, New York City, for Defendants.
Among other issues, this case raises an interesting and somewhat novel defamation question. In an age of increasingly efficient information collection, the case highlights the conflict between the justifiable goal of more efficient government and a person's interest in his reputation, that "plant of tender growth, [whose] bloom, once lost, is not easily restored." Karlin v. Culkin, 248 N.Y. 465, 478, 162 N.E. 487 (N.Y.1928) (Cardozo, C.J.). Specifically, the case presents the question whether, under New York State law, the traditional rule that consent to publication bars a defamation claim should be applied where to bid on government contracts a person must place defamatory material into New York City's computerized procurement system. I conclude that the New York Court of Appeals would hold that an action for defamation should lie where a plaintiff has no realistic alternative but to submit the defamatory material.
Plaintiffs are three corporations (Van-Go, Sterling Coach, and Celebrity Transit), all in the business of providing bus or van transportation, and Paul and Isaac Dachs, their two principals. Van-Go had a two year contract with the Board of Education ("BOE" or "Board") from September 1988 that had repeatedly been extended through June 30, 1996, providing transportation for severely disabled pupils in vans with a driver and two escorts. This contract required Van-Go's drivers to carry the pupils from their residences. See Compl. ¶¶ 14-15.
The events leading to this lawsuit apparently resulted from a labor dispute. In 1993, Van-Go was not organized by Local 1181-1061, Amalgamated Transit Union, AFLCIO ("Local 1181"), the primary union representing bus drivers for the BOE; instead, it paid lower wages and was organized by District 6 International Union of Industrial, Service, Transport and Health Employees ("District 6"), whose contract expired on March 31, 1994. See Compl. ¶ 25. In October or November 1993 paid organizers from Local 1181 began organizing Van-Go employees. See Compl. ¶ 26. At the same time, District 6 filed a still-unresolved unfair labor practices complaint against Van-Go, blocking any change in union representation. See Compl. ¶ 27.
In late January or early February 1994, the BOE's Executive Director of Operational Support Services Kevin Gill placed Van-Go's contract out for re-bid "in anticipation of the successful organization of Van-Go by Local 1181 and what seems to be an inevitable job action as a result." Defs.' Ex. D, undated Ltr. from Kevin Gill ("Gill Ltr."). The letter states: "The President of Van-Go has informed us that he will not be able to pay the wages typically demanded by Local 1181 under the current terms of his Board contract." Id.
The contract between Van-Go and the BOE also required that Van-Go's employees be approved pursuant to a background check, mental fitness report, drug test, and training course. Plaintiffs assert that this process often took six months to a year. See Compl. ¶ 17. The contract between Van-Go and the BOE included a clause stating: "The Contractor must have 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." Defs.' Ex. A "Extension and Second Amendment of Contract," § (D) at 10. Plaintiffs allege that it was the BOE's "uniform practice and policy to approve conditionally new employees...." Compl. ¶ 18. Plaintiffs state that the BOE has no policy limiting the number of conditional employee approvals, see Compl. ¶ 21, and had previously "certified conditionally drivers in excess of the number needed for regular service...." Compl. ¶ 23.
Van-Go learned that Local 1181 planned to initiate a strike against it around April 4, 1994; it notified the BOE by letter dated March 16, 1994. See Compl. ¶¶ 29-30. The BOE certified potential replacement workers as it had in the past. See Compl. ¶¶ 32-33. Plaintiffs allege that Local 1181 called off the strike because the BOE had conditionally certified replacement workers. See Compl. ¶ 35.
The complaint further alleges that Gill discussed Van-Go's attempts to obtain replacement workers with representatives of Local 1181. See Compl. ¶ 37. Gill, on behalf of the BOE, informed Van-Go by letter dated April 7, 1994, that it would not conditionally approve employees "`to act as strike breakers....'" Compl. ¶ 38. Plaintiffs contend that Gill's act was a deviation from its long-standing practice of conditional certification, and that as a result, Van-Go was unable to obtain replacement employees. See Compl. ¶¶ 38-42. Gill's action was appealable to the Chancellor, who acts through a Board of Review, which has the power to review Gill's decision as well as contractor qualifications. See Defs.'s Mot., Aff. of Richard Langford, Deputy Dir. of Contractual and Regulatory Affairs dated Sept. 15, 1995 ¶¶ 9-13, 21-23. Van-Go did appeal to the Board of Review, but no hearing was ever held. See Compl. ¶ 45.
Plaintiffs allege that Local 1181 initiated a strike against Van-Go on June 27, 1994, pursuant to an "arrangement" with the BOE whereby the BOE would refuse to certify conditional replacements and the union would not strike until a time that "would not interfere unduly with the school calendar." Compl. ¶¶ 47-48. As a result of the strike, Van-Go was unable to perform under the contract and was defaulted by the Board of Review on June 30, 1994. See Defs.' Ex. C., Ltr. to Gill from Arthur H. Avedon, Administrator dated July 1, 1994.
Subsequently, Celebrity and Sterling, the sister companies of Van-Go, submitted proposals for the Van-Go contract. Sterling was the apparent low bidder for contract number 7200, and Celebrity was the apparent low bidder for contract number 7291. See Defs.' Ex. E, Ltr. from Gill to Paul Dachs dated July 27, 1994. In both cases, the BOE, acting through Gill, requested "written assurance and a plan" that would describe how the companies would fulfill their contracts given Van-Go's labor problems. Compl. ¶¶ 55-58, Defs's Ex. E. At the time the bids were submitted, Sterling had no employees. See Defs.' Ex. H, Test. of Paul Dachs at Board of Review Hr'g November 9, 1994, at 5. Plaintiffs assert that this request was an additional requirement not in the bid materials, not ordinary practice, and that other contractors were not subjected to this requirement. See Compl. ¶ 57. By letter dated August 4, 1994, Celebrity and Sterling provided a plan to Gill proposing that replacement workers be used in the event of a strike. See Compl. ¶ 59.
On August 23, 1994, the BOE informed Celebrity and Sterling that it was awarding the contracts to other contractors because their refusal to perform without conditional certification of workers constituted a "qualification [conditional submission] of the bid." Compl. ¶ 60; Defs.' Ex. F, Ltr. from Richard W. Scarpa, Acting Director of Purchasing to Paul Dachs dated August 23, 1994 ("Scarpa Ltr."). This letter also stated that the BOE had received allegations of criminal activity, specifically, "the possibility of criminal activity constituting the offer of gratuities to government officials," which provided another ground for refusal to award the bid. Scarpa Ltr. Plaintiffs allege that this statement was false, and made with knowledge of its falsity, or with reckless disregard for its accuracy. See Compl. ¶ 62.
Plaintiffs appealed to the Board of Review on August 29, 1994. See Compl. ¶ 64. On October 14, 1994, plaintiffs requested that the BOE produce the names of the persons who were the sources of the allegations concerning gratuities. The BOE refused to provide these names, but also stated that no testimony concerning gratuities would be permitted at the hearing. See Compl. ¶¶ 64-66; Defs.' Ex. G. No testimony regarding the allegations was presented at the hearing; plaintiffs allege this lack of testimony was due to defendants' knowledge that the accusations were false. The Board of Review, finding that Sterling and Celebrity submitted "qualified" bids, denied the appeal on November 23, 1994, and issued a formal decision on April 26, 1995. See Compl. ¶¶ 67-69; Defs.' Ex. H.
Plaintiffs further allege that the BOE's acts were taken on behalf of Local 1181; that the false allegations regarding gratuities have been entered into the City's procurement system, resulting in their reappearance for every City bid; that the Department of Transportation delayed in awarding a contract to Celebrity because of the allegations; and that the plaintiffs have had no opportunity to refute the allegations of gratuities. See Compl. ¶¶ 70-73.
Plaintiffs brought suit in this court on June 30, 1995. Their complaint alleged five causes of action. Two counts were brought under 42 U.S.C. § 1983, alleging violations of federal labor law and due process.1 Plaintiffs also pled several state law claims: breach of contract, breach of duty of good faith and fair dealing, and defamation. Plaintiffs seek damages, a declaratory judgment and a permanent injunction.
In 1995, the defendants moved to dismiss portions of the plaintiffs' complaint for failure to state a claim. At a motion hearing on April 16, 1996, the City's motion to...
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