Busing the Homeless | Nursing Working Mothers | LLC Dissolution

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Homeless School Children Do Not Require Special Busing Skills

Homeless School Children Do Not Require Special Busing SkillsGenerally, New York law requires all public contracts to be competitively bid pursuant to General Municipal Law § 103. This means that a local government must award a public contract to the lowest responsible bidder. Only two exceptions exist to this rule: (1) if a statute specifically exempts a service from being competitively bid; or (2) if the contract calls for “professional” services or services that require “special skills.” Services that fall within one of the two exceptions are generally solicited pursuant to a Request for Proposal (RFP), which does not require the government to accept the lowest bid. Instead, a contract is awarded based on a number of criteria, only one of which includes cost.

In Matter of Acme Bus Corp. v. County of Suffolk (23129/2013), our firm successfully represented a school bus operator in a hybrid Article 78 proceeding that challenged Suffolk County’s authority to award to a competitor a contract for transportation services for homeless school-age children pursuant to an RFP. We argued that the transportation which must be competitively bid. In opposition, Suffolk County argued that the transportation of homeless children is a “specialized service” given “‘the age or disability of the child’, the fact that ‘high school students may be on the same bus as elementary students’ as well as the fact that the ‘disruption in transportation services rendered to homeless children will have an adverse impact upon the educational opportunities of homeless children and interfere with [the Department of Social Services’] efforts to break the cycle of poverty and homelessness.’” The Supreme Court disagreed, siding with Acme Bus.

Focusing on the absence of special skill requirements contained in the RFP, the Supreme Court held as follows:

[W]hile it may be true that the transportation of homeless children indeed requires some specialized services and that the County is required to provide them in its transportation contracts, the RFP at issue wholly fails to identify any of the special skills, professional services, training or special equipment that the County believes a contractor must provide.

Since there are no specialized skills, equipment, personnel, training or other professional skills requirements identified in the County’s RFP, the Court is constrained to find that the County was required to use competitive bidding for the subject transportation contract rather than an RFP.

Consequently, the Supreme Court granted Acme Bus’ petition, enjoined Suffolk County from awarding a contract for the transportation of homeless school children pursuant to an RFP, and directed the County to advertise and award such contract to the lowest responsible bidder pursuant to General Municipal Law § 103.

A Nursing Mother’s FLSA Rights

A Nursing Mother’s FLSA RightsIn Lico v. TD Bank, a federal Court recently denied an employer’s motion to dismiss a complaint pursuant to the Fair Labor Standards Act (“FLSA”). The plaintiff’s claims arise from her employment as a bank teller and customer service representative at a branch of TD Bank in 2012, upon her return from maternity leave. She alleged that TD Bank failed to provide her with an adequate space to express breast milk and did not permit her to take necessary lactation breaks during her work day. Additionally, she alleged that she was terminated because she made efforts to exercise her rights under the FLSA as a nursing mother.

According to the complaint, the Branch Assistant Manager informed Lico that she was permitted to take only two daily breaks to express milk, and that she was required to take her lactation breaks in the restroom. Lico objected to using the restroom, which she felt was unsanitary, and the manager directed her to use the mailroom instead. The mailroom had no lock on its door, and she objected to using the mailroom as a lactation room, because it did not afford her any privacy. The manager then directed her to use the safe-deposit room to express milk. She alleged that neither the restroom, the mailroom, nor the safe-deposit room were sanitary, private, or otherwise adequate spaces for lactation breaks.

She further alleged that during this time period, almost every time she asked her manager for permission to take a nursing break, she was denied permission and instructed to perform additional assignments. At times, she was forced to wait as a long as five or six hours to express milk. She alleges that the inability to take nursing breaks caused painful breast engorgement, and on several occasions, her breast milk leaked out through her clothing in front of customers and coworkers. At some point, she began arriving late to work, traveling home during work, and leaving work early, so that she could nurse her child at home, instead of pumping breast milk at work. This caused her to miss work time, and on May 23, 2012, the bank terminated her for “attendance issues.”

TD Bank moved to dismiss those causes of action in the complaint which assert claims under §207(r) of the FLSA. The Court noted that the section provides, in relevant part:

(1) An employer shall provide —

(A) a reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth each time such employee has need to express the milk; and

(B) a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.

Here, TD Bank did not argue that the complaint failed to plausibly allege a violation of §207(r). Instead, it argued that §207(r) is not “privately enforceable.”

Generally when enforcing a statutory or Constitutional law, a court must first determine if the law which creates rights also allows private parties (as opposed to the government) to bring a lawsuit to enforce those rights – not all do. To find such a “private right” either the law must expressly so provide or a court may find an “implied cause of action.” Implied causes of action arising under the Constitution of the United States are treated differently from those based on statutes.

In support of its argument, the Bank cited a 2012 Iowa federal court’s decision in Salz v. Casey’s Marketing Co., which dismissed a claim under §207(r). The federal Court here in New York however concluded that Salz does not stand for the proposition that an individual cannot bring suit for a violation of §207(r), or that there can never be a private action under §207(r). “As the court in Salz observed, §207(r) must be read in conjunction with the penalty provision of the FLSA, which states, in relevant part:

(b) Any employer who violates the provisions of section 6 or section 7 of this act shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages….An action to recover the liability prescribed in either of the preceding sentences may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated….The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.

29 U.S.C. §216(b). Thus, the penalty provision explicitly provides a private right of action for all violations of Section Seven, which obviously includes §207(r). The entitlement to a private right of action could not be more clearly stated in the provision.” Thus, the Court didn’t even have to find an “implied cause of action.”

At the same time, however, §216(b) limits the remedies available for violations of §207(r), in that it only permits recovery of lost wages and overtime, liquidated damages, attorneys’ fees, and costs. The ruling in Salz is not to the contrary; in that case, the plaintiff claimed that her workplace did not provide a space for her that was compliant with §207(r), but she did not claim any lost wages caused by the violation. The Court observed that ‘[s]ince employers are not required to compensate employees for time spent express milking, and Section 216(b) provides that enforcement of Section 207 is limited to unpaid wages, there does not appear to be a manner of enforcing the express breast milk provisions.’ Salz, 2012 U.S. Dist. LEXIS 100399, at *7. In making this observation, the Court did not determine that §207(r) was not privately enforceable as a matter of law. Instead, the court noted an enforcement paradox: recovery under the statute is limited to lost wages, but an employer is not required to compensate nursing mothers for lactation breaks. As a result, it will often be the case that a violation of §207(r) will not be enforceable, because it does not cause lost wages.”

“The Court held that this “interpretation does not mean that the statute is not privately enforceable as a matter of law.” If, for example, “an employee needed to take longer breaks in order to travel to appropriate areas to take a nursing break, and was docked pay as a result, those lost wages would be compensable in a private lawsuit.”

Based on this legal analysis, the Court recognized that in several sections of the complaint, Lico alleged that she missed additional time at work which is compensable because she was forced to travel home in order to express milk. In her initial disclosures, she specifically sought compensation for 40.35 hours of wages lost “specifically because of Defendants’ failure to comply with 29 U.S.C. 207(r) and discriminatory practices.” Based upon the allegations in the complaint, the Court concluded that Lico had plausibly alleged a claim of compensable damages, consistent with the remedies permitted under §216(b), and denied the Bank’s motion in its entirety.

LLC Dissolution? Not So Fast!

LLC Dissolution? Not So Fast!In Koch v. HC Hospitality Partners, LLC, petitioners Daniel and Derek Koch sought judicial dissolution and appointment of a receiver alleging that the respondents were operating the company without petitioners’ involvement, despite them each owning 25 percent of the company, utilizing company income to pay personal obligations, and failing to pay company debts. The remaining 50% owners-respondents moved for dismissal of the petition. They alleged the Koch brothers engaged in acts violating their obligations under their operating and consulting agreements, bringing a separate action against the Koch brothers for breach of the agreements.

According to the petition, the limited liability company Dual Group Hospitality LLC (“DGH”) was formed on October 10, 2012 for the purpose of owning and operating certain restaurants, bars, and other venues, including a brunch series named “Day and Night at Highline Ballroom.”

DGH’s operating agreement provided that management and control of the business and affairs of the company were vested exclusively in the Managers, with the exception of certain “major decisions,” which required the approval of all of the members of the company. It defined “major decisions” as including, among other things, any decisions to renew, terminate or modify certain consulting agreements entered into by the company. The consulting agreements provided that the Koch brothers were responsible for “overseeing, managing, and conducting” the negotiation of contracts on the company’s behalf. They were also responsible for overseeing certain operations and employees, and providing information and feedback in connection with marketing opportunities, growth opportunities, product quality, customer service, and team development. Apparently, this all did not run too smoothly.

Respondents claimed the Koch brothers engaged in a series of acts which violated their operating agreement and consulting agreements. Specifically, in October 2013, they allegedly formed a competing company named “Day & Night Entertainment LLC” for the purpose of engaging in direct competition.

On October 22, 2013, the respondents brought an earlier separate action against the brothers, asserting causes of action for breaches of the operating and consulting agreements, and permanent injunctive relief. In February 2014, the Koch brothers filed this petition, seeking judicial dissolution of DGH and appointment of a receiver.

In New York, one may seek a forced judicial dissolution of a limited liability company under Limited Liability Company Law §702, which provides:

On application by or for a member, the Supreme Court in the judicial district in which the office of the limited liability company is located may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.

The Court noted that the “‘appropriateness of an order for dissolution of [a] limited liability company is vested in the sound discretion of the court hearing the petition.’ *** It is well established that dissolution of a limited liability company is a drastic remedy.”

“A party seeking dissolution ‘must establish, in the context of the terms of the operating agreement or articles of incorporation, that (1) the management of the entity is unable or unwilling to reasonably permit or promote the stated purpose of the entity to be realized or achieved, or (2) continuing the entity is financially unfeasible.’”

On respondent’s motion to dismiss the petition, the Court concluded, at this juncture, neither side adequately demonstrated if the management of the company was unable or unwilling to reasonably allow its stated purpose to be realized or if continuing operation of the company was financially unfeasible, noting the parties sharply dispute these issues. The Court found that since there has been no discovery thus far in the proceeding, it was premature to determine if dissolution was appropriate. Therefore, the Court denied respondents’ motion to dismiss the petition, directing them to answer it, but staying the petition pending completion of discovery in the other action that was brought first.

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