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CURB MOBILITY, LLC, Petitioner, v. METROPOLITAN TRANSPORTATION AUTHORITY, Respondent.
Petitioner's motion seeking a Preliminary Injunction is decided as follows:
Petitioner, Curb Mobility, LLC (“Curb”) commenced the instant action by filing a Petition on May 19, 2021, seeking pursuant to CPLR Article 78 a judgment vacating, annulling, reversing, voiding, and setting aside the order of the Metropolitan Transportation Authority (“MTA”) dated May 4, 2021, making a finding of Non-Responsibility concerning Curb (the “Order”). On May 20, 2021, Petitioner filed the instant Order to Show Cause, seeking the above relief and an Order pursuant to CPLR 6301 and 6311 preliminarily enjoining respondents from enforcing its May 4, 2021 Determination of Non-Responsibility concerning petitioner; excluding petitioner from partaking in the RFP process; and terminating, or refusing to renew, any contracts with petitioner on the basis of the Determination. On May 26, 2021, this Court signed the instant Order to Show Cause, granting the above interim relief pending the determination of the instant motion.
In a Report of the Office of Inspector General, dated March 31, 2021, entitled NYCT Executive's Disclosure of Confidential Information to Vendor During Procurement Process MTA/OIG No.2021-02, the essential facts of the improprieties at the heart of this case were described as follows: In June 2018, NYC Transit hired Alexander Elegudin (“Elegudin”) in the Department of Systemwide Accessibility, to recommend ways to better serve the disabled community.
On April 17, 2020, the NYCTA issued RFP 310504 (the “First RFP”), inviting potential providers to submit proposals for three-year contracts to provide Paratransit services within the City of New York. The NYC Transit Procurement Department appointed a Procurement Staff Analyst as the designated point of contact (“Designated Contact”), to be the only NYC Transit employee that bidders were permitted to contact with questions or other issues relative to the procurement during the restricted period. proposers entered contract and price negotiations with NYC Transit's Legal Department and Cost-Price Unit. By July 29, 2020, the remaining proposers submitted interim price proposals to the Selection Committee, and their BAFO (best and final offer), by August 19, 2020. All Selection Committee members signed a confidentiality agreement that prohibited each member from discussing or revealing any information concerning the selection proceedings to anyone who was not also participating in the selection. Elegudin was a technical advisor to the Selection Committee, and also signed a confidentiality agreement. At the Selection Committee meeting held on August 27, 2020, each committee member presented their recommendations of the four companies that should be awarded a contract. At approximately 11:00 a.m., the Director texted Elegudin and told him that Curb Mobility's proposal was “totally shitting the bed,” its presentation was sub-par, and its proposal had the highest prices. In response, Elegudin asked if Curb Mobility would get a “BAFO chance,” or an opportunity to submit a revised BAFO. The Director replied that “BAFO is done. This is the final pricing. It almost feels like [Curb Mobility doesn't] want a renewal.” Within an hour, Elegudin emailed several senior NYC Transit employees, asking to reopen the RFP, and permit bidders to resubmit BAFO's.
Elegudin, also called Jason Gross (“Gross”), Vice President of Mobile at Curb Mobility. Gross began to text and call the NYC Transit Designated Contact and Elegudin. The Designated Contact told the Selection Committee (while the Selection Committee meeting was still ongoing) that Gross seemed anxious to speak with her and excused herself to take his call. Gross asked the Designated Contact for permission to resubmit Curb Mobility's BAFO. He claimed that he was on vacation when he discovered Curb Mobility submitted incorrect pricing figures in its BAFO. Concerned by the coincidental timing of Gross's call to the Designated Contact, the Director texted Elegudin to ask if he had called Gross after she and Elegudin's text conversation about Curb Mobility. Elegudin denied having contacted Gross.
As part of its investigation, the OIG interviewed Gross. Gross told the OIG he did not understand how Curb Mobility's BAFO pricing was high because he had adjusted prices downward in response to the above-described NYC Transit cost/price analyst's comment. Gross claimed he panicked when he realized he might have mistakenly submitted incorrect and high price numbers within the BAFO and subsequently called Amos Tamam (“Tamam”) Curb's CEO. Gross next contacted the Designated Contact and told her that he may have made a pricing mistake when he submitted the Curb Mobility BAFO, asking permission to resubmit a corrected BAFO. Gross did not tell the Designated Contact that Elegudin had called him. Gross next called Elegudin telling him that he had spoken to the Designated Contact. Thereafter, Gross emailed Curb's Pricing Specialist and stated he discovered the BAFO submission error while he “had been looking at the file.” Lying to the pricing specialist because it was Elegudin's call, not Gross's review of the file, that brought Gross's mistake to light. Gross admitted that he never reported Elegudin's initial August 27, 2020 phone call nor their subsequent RFP related conversations to the Designated Contact nor anyone else at the MTA. He acknowledged that “I know that I am only supposed to speak with Procurement.” As a result of the OIG investigation, Curb Mobility advised it has taken remedial action, including hiring outside counsel to conduct an internal investigation, updating its Code of Ethics, creating mandatory training modules to prevent improper conduct, and instituting new policies about appropriate behavior and reporting requirements in governmental procurements. Based upon the above investigation, the OIG found that Curb had violated § 2.01 of the MTA Vendor Code of Ethics and § 1-n of the New York State Lobbying Law, recommending a responsibility hearing.
Prior to the issuing of the OIG report, Curb was provided a draft version of the report and was given two days to provide comments. Curb requested several additions including (1) adding Curb's remedial measures in response to the events investigated; (2) noting that no personnel at Curb knew Gross continued to communicate with Elegudin after the initial August 27th call and that Gross failed to disclose those subsequent communications; (3) including Curb's documentation in support of its claim that it submitted the BAFO with an input mistake; (4) removing any references to potential violations of the MTA Vendor Code of Ethics and New York State Lobbying Law; and (5) removing any reference to a Responsibility Hearing. Several of these recommendations were incorporated into the final report however no fact changes were requested.
On April 9, 2021, the NYCTA sent a letter to Curb providing notice that it would be holding a Responsibility Hearing relating to RFP 310504. Said notice specifically stated that “It is evident that if these matters are true, that NYS guidance requires a determination of Not Responsible upon the finding that a violation of the impermissible standard occured [sic] during the restricted period and such violation was ‘knowing and willful.’ ”
On April 14, 2021, Kennith Norman (“Hearing Officer”) held the Responsibility Hearing. At the Responsibility Hearing, counsel for Curb and representatives of Curb repeatedly admitted that the findings of the OIG report were true and that the communications in question were inappropriate. At the conclusion of the Hearing, Mr. Tamam stated, “We take the fault — I take the fault.”
On May 3, 2021, the Hearing Officer issued an internal memorandum detailing his findings that Gross engaged in impermissible contact with a NYCTA employee who was not the POC, and “that Gross's contacts and subsequent actions were knowing and deliberate attempts to interfere in the procurement process and produce a favorable outcome for Curb.” While the Hearing Officer found Curb's remedial measures implemented after the subject improprieties to be sincere and credible, Curb made several impermissible contacts with Elegudin and those contacts and subsequent actions were knowing and willful, requiring a finding of “Non-Responsibility.”
The Court further notes that within Curbs interaction with the OIG and the Responsibility Hearing they admitted that the improper communications were not disclosed, admitted that they were told to resubmit a new BAFO but ultimately refused to do so, admitted that Mr. Gross had further contact with Elegudin on September 1st and 2nd and admitted that their internal oversight on ethical issues were lacking.
Petitioner now seeks CPLR Article 78 review the Determination of Non-Responsibility and a Temporary Restraining Order.
A preliminary injunction is appropriate when the party seeking injunctive relief establishes: (1) likelihood of ultimate success on the merits; (2) irreparable injury if the injunction is not granted; and (3) a balancing of the equities in its favor. See Four Times Square Assocs., L.L.C. v. Cigna Investments, Inc., 306 A.D.2d 4, 5, 764 N.Y.S.2d 1 (1st Dep't 2003) (citing Grant Co. v. Srogi, 52 N.Y.2d 496, 517, 438 N.Y.S.2d 761, 420 N.E.2d 953 (1981)); CPLR §§ 6301, 6311. The elements to be satisfied must be demonstrated by clear and convincing evidence. Liotta v. Mattone, 71 A.D.3d 741, 900 N.Y.S.2d 62 (2nd Dep't, 2010). However, the moving party is only required to make a prima facie showing of its entitlement to a preliminary injunction, not prove the entirety of its case on the merits. The decision to grant a motion for a preliminary injunction “is committed to the sound discretion of the trial court.” NY Cnty. Lawyers’ Ass'n v. State, 192 Misc. 2d 424, 428-29, 745 N.Y.S.2d 376 (Sup. Ct. N.Y. Cnty. 2002); see also Terrell v. Terrell, 279 A.D.2d 301, 304, 719 N.Y.S.2d 41 (1st Dep't 2001).
The standard of review in a CPLR Article 78 proceeding challenging an agency's designation of non-responsibility is limited to the question of “whether [the] determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious.” DeFoe Corp. v. New York City Dep't of Transp., 87 N.Y.2d 754, 760, 642 N.Y.S.2d 588, 665 N.E.2d 158 (1996) (quoting CPLR § 7803(3)). The challenged designation must be sustained if there was a rational basis for the designation. See Pell v. Bd. of Educ. Of Union Free Sch. Dist. No. 1 of the Towns of Scarsdale and Mamaroneck, Westchester Cty., 34 N.Y.2d 222, 231, 356 N.Y.S.2d 833, 313 N.E.2d 321 (1974). The court may not substitute its judgment for that of the administrative officer. See Gillen v. Smithtown Library Bd. of Trustees, 254 A.D.2d 486, 486, 679 N.Y.S.2d 634 (2d Dep't 1998).
Petitioners do not deny any of the above findings but argue that the MTA's Determination was arbitrary and capricious and lacked any evidentiary support. Petitioners argue that the MTA decided not to take any meaningful disciplinary action against either of its senior-level MTA employees at fault and instead summarily determined that Curb had violated the MTA Vendor Code of Ethics and the New York Lobbying Laws. Any disciplinary action imposed or not imposed by the MTA against its employees is not relevant to whether the finding of Non-Responsibility was arbitrary and capricious. Petitioners also contend that the tone of the April 9, 2021 letter scheduling the Responsibility Hearing and the subsequent hearing conveyed that the MTA did not conduct the hearing impartially. Petitioners specifically cite the questions “What internal weaknesses led to the violation of the NYSPLL [New York State Procurement Lobbying Law]” and “What internal weaknesses led to the violations of the MTA Vendor Code of Ethics”; and the MTA asked Curb to “Detail what Curb Mobility has and will do to mitigate the unethical conduct” as evidence of Respondent's failure to afford them due process. Petitioner further argues that punishing Curb is an intentional strategy for the MTA to divert publicity from the unethical conduct of senior MTA employees Elegudin and the Director and that The MTA never made any findings of fact and never provided a written statement of reasons to explain or justify this decision and that the sanction is draconian.
A review of the April 9, 2021 letter and the hearing transcript reveals the above arguments to be without merit. It is undisputed that Curb violated the Procurement Lobbying Law and the MTA Code of Vendor Ethics. Petitioners were given a full and fair opportunity to contest the MTA's findings. The evidence, including Gross's own admissions, establishes that Gross: (i) had multiple communications with someone other than the POC; (ii) understood those communications were improper at the time they were made; (iii) asked Elegudin whether he should tell the POC that his pricing submission was a mistake; (iv) failed to tell the POC about his communications with Elegudin; (v) lied to the POC by suggesting he realized he had submitted incorrect pricing for the procurement on his own rather than through the illegal and confidential information he obtained from Elegudin; and (vi) lied to Curb's Mobility Pricing Specialist that he had discovered the pricing “mistake” by “looking at the file,” rather than from Elegudin's illegal communication.
One could argue that although Curb had readily acknowledged that they and their employees had acted improperly same did not rise to the level of requiring the implementation of such a draconian penalty. Although the Court is sympathetic to such an argument there is an equal or even stronger argument to be made that the procurement lobbying law in conjunction with other ethics related laws and policies were put in place for the purpose of eliminating improper lobbying activities and to ensure public confidence that Government agencies and private entities are acting above board at all times. This is a critical element of the entire procurement and RFP process utilized by numerous government agencies and sending a message that the rules must be followed and improper conduct by others reported promptly is at the very least a rational position.
The MTA determined that Curb violated the procurement lobbying law and as a result of same they are required to issue a finding of non-responsibility. Pursuant to NY State Fin. Law § 139-j(2), Every governmental entity that undertakes a governmental procurement shall: a. at the same time that a restricted period is imposed, designate, with regard to each governmental procurement, a person or persons who are knowledgeable about the procurement and who may be contacted by offerers relative to the governmental procurement. Pursuant to NY State Fin. Law § 139-j(3), Each offerer that contacts a governmental entity about a governmental procurement shall only make permissible contacts with respect to the governmental procurement, which shall mean that the offerer: a. shall contact only the person or persons who may be contacted by offerers as designated by the governmental entity pursuant to paragraph a of subdivision two of this section relative to the governmental procurement. Pursuant to NY State Fin. Law § 139-j(10)(b), A finding that an offerer has knowingly and willfully violated the provisions of subdivision three of this section shall result in a determination of non-responsibility for such offerer, and such offerer and its subsidiaries, and any related or successor entity with substantially similar function, management, board of directors, officers and shareholders (hereinafter, for the purposes of this paragraph “offerer”), shall not be awarded the procurement contract, unless the governmental entity finds that the award of the procurement contract to the offerer is necessary to protect public property or public health or safety, and that the offerer is the only source capable of supplying the required article of procurement within the necessary timeframe, provided, that the governmental entity shall include in the procurement record a statement describing the basis for such a finding.
As such, not only was this determination rational, it was mandatory based upon Petitioner's admissions and the express requirements of the Procurement Lobbying Law. As Petitioner has not established a likelihood of success on the merits, the Court will not evaluate the branches of irreparable harm and balancing of the equities.
ORDERED that the Temporary Restraining Order issued upon signing of the instant Order to Show Cause is VACATED and it is further
ORDERED that the instant motion is DENIED in its entirety.
Laurence L. Love, J.
Response sent, thank you
Docket No: 154893/2021
Decided: July 14, 2021
Court: Supreme Court, New York County, New York.
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