Appeals court rules in favor of Baldor
Appeals court rules in favor of Baldor
The tide has turned in the produce industry's Bronx turf battle.
On Nov. 9, a five-judge panel in the New York Supreme Court Appellate Division, First Judicial Department, reversed a May 15 decision in favor of the Hunts Point Terminal Produce Cooperative Association. Inc.
In the spring, New York state Supreme Court Judge Lucy Billings ruled in no uncertain terms that in the fall of 2005, New York City was unfair in putting out a bid for the warehouse property next to the Hunts Point market. This fall, the Appellate Court was equally thorough in contradicting the findings of Judge Billings.
Matthew D'Arrigo, co-president of the Hunts Point Cooperative, said Nov. 13, "We lost on the appeal and today will be filing a request for an appeal." This was to be in the New York state Court of Appeals in Manhattan.
The centerpiece of the dispute is a 185,000-square-foot refrigerated, vacant warehouse that is across the street from the Hunts Point market. The market has worked for years with the New York City Economic Development Commission to find a way to rebuild and expand New York's produce market. Hunts Point operators believe acquisition of the adjacent warehouse, on 16 acres, would be ideal for their needs.
After the Great Atlantic & Pacific Tea Co. Inc. in Montvale, NJ, vacated that Bronx warehouse in July 2005, New York City put the A&P property up for bid. The bid was won by Baldor Specialty Foods Inc., which is located nearby in the Bronx. Baldor wanted the A&P property to expand its own operating quarters. Judge Billings supported Hunts Point claims that the EDC planned to rush the bidding process and gave Baldor advantages to win that bid. Hunts Point attorneys had argued that the city had political motives for moving the Bronx Terminal Market into the facility that still houses Baldor. The Bronx Terminal Market was razed to make way for building a new Yankee Stadium.
But in its Nov. 9 decision, the Appellate Court released a document indicating: "[W]e reverse the judgment of Supreme Court, reinstate the determination of EDC and vacate the injunction."
The November decision noted that EDC is not a governmental agency but rather a not-for-profit development corporation, working on contract subject to "the direction and control" of the city's deputy mayor for economic development and rebuilding in cooperation with the Department of Small Business Services. EDC services include the management and development of the city's wholesale food markets; leasing city-owned property; and recommending the terms of leases to the deputy mayor. Thus, "the city's public market property is not subject to municipal public bidding requirements. Indeed, disposition of the property at issue is exempted from the operation."
"Thus," Appellate Judge James Catterson wrote in the recent decision, "neither EDC nor the city were required by law to conduct any competitive bidding process for Hunts Point. Standing for the cooperative premised on an alleged absence of competitive bidding does not bring the cooperative within a relevant 'zone of interest' for standing because the process at issue is wholly exempt from competitive bidding by law."
Other notes from Judge Catterson were:
" "EDC was not even required to utilize a request for proposal in order to lease the property at Hunts Point Market. We find nothing in the RFP process in this case that was either hidden or biased in favor of Baldor."
" "Not only has the cooperative failed to allege that there is a relevant zone of statutory interest at issue, it has not sufficiently alleged injury in fact. Mere competitive injury does not suffice as injury."
" He also wrote that because Hunts Point referred to reworking the street between the market and the A&P warehouse, calculations of the cost of the project were imprecise.
" "Finally, even if we were to conclude that the cooperative had the necessary standing to challenge the EDC's designation, the result would nonetheless be the same. The above analysis of the merits and liabilities of the respective proposals demonstrates that the EDC did not act in an arbitrary and capricious manner in selecting Baldor, that there was ample evidence from which the EDC could conclude that Baldor submitted the superior proposal; and that the cooperative's proposal fell far short in comparison."
"We are very disappointed at overturning the victory," Mr. D'Arrigo said. "We are going to appeal. We feel the reasoning the appellate court gave for overturning the decision is incorrect and didn't get to the true facts of the case. It is a setback. We're in the final match here."
Cynthia Arato of the Manhattan firm Gibson, Dunn & Crutcher LLP, which represents the cooperative, didn't return calls from The Produce News by press time (Nov. 16).
Baldor Chief Executive Officer Kevin Murphy told The Produce News Nov. 13, "We're thrilled with the decisions. We had the highest offer, the highest bid. We create the most jobs and, at the end of the day, the best economic return for the city of New York. We looked at this as an effort by the New York Hunts Point market to block competition of any kind" by keeping Baldor from operating across the street from the market. Blocking competition "is not fair in the U.S."
Baldor attorney Peter Johnson Jr. of the Wall Street firm Leahey & Johnson PC said Nov. 13, "I think the Appellate Division got it absolutely right. They found that Baldor's bid was superior and the process was straightforward and found no favoritism toward Baldor. This was done on its merits. It is exciting for Baldor and Baldor employees."
Mr. Johnson noted that 15 to 20 Baldor employees traveled to the Madison Avenue courtroom "on their own time because they were interested. They were delighted by Baldor's success. It is a big turnaround from Judge Billings' decision. The key point in the turnaround was that the EDC didn't act in an arbitrary or unfair way in selecting [the winning bid] and there was more than ample evidence that Baldor was selected because of a superior proposal." The Appellate Division also concluded that the market "didn't have the standing or the right to bring the proceeding." The attorney also said the appeals judges did not find that the Hunts Point operators "had actually suffered an injustice as a result of the decision. They said [Judge Billings'] court had failed on that."
Furthermore, he said, the appellate court "contradicted each and every finding of Judge Billings and showed Baldor had a superior bid in terms of what they were willing to pay and how many jobs they were willing to create for the community."
Mr. Johnson added, "So on every count and in every way it rebuffed and overturned the lower court decision. It disagreed with the lower court on every facet of the decision."
Mr. Johnson said that "the co-op tried to assert and prove some conspiracy at the highest level of city government. There is no evidence of the vicious allegations and harsh language they used."
Mr. Murphy noted that a story in the Nov. 13 issue of the New York Law Journal reported, "Although the court found that the city would have won on its own merits, the 25-page decision turned on standing, or more specifically, the cooperative's lack thereof."
As to Hunts Point's concern that Baldor would openly compete against the Hunts Point market and its union labor, Mr. Murphy said: "We're a foodservice supplier, not a wholesale supplier, no matter what anyone says. Our competition is Sysco and U.S. Foodservice. We don't compete with Hunts Point or Philly or Boston. We opened across the street in Chelsea [Massachusetts, facing the New England Produce Center] in foodservice. We don't have any problem up there."
Mr. Murphy continued, "We feel it's over," but he acknowledged the pending appeal from the market. With the Nov. 9 reversal, "there are significant factors involved. The city is out $1 million in lost rent and we had over $1 million in legal fees."
On Nov. 9, a five-judge panel in the New York Supreme Court Appellate Division, First Judicial Department, reversed a May 15 decision in favor of the Hunts Point Terminal Produce Cooperative Association. Inc.
In the spring, New York state Supreme Court Judge Lucy Billings ruled in no uncertain terms that in the fall of 2005, New York City was unfair in putting out a bid for the warehouse property next to the Hunts Point market. This fall, the Appellate Court was equally thorough in contradicting the findings of Judge Billings.
Matthew D'Arrigo, co-president of the Hunts Point Cooperative, said Nov. 13, "We lost on the appeal and today will be filing a request for an appeal." This was to be in the New York state Court of Appeals in Manhattan.
The centerpiece of the dispute is a 185,000-square-foot refrigerated, vacant warehouse that is across the street from the Hunts Point market. The market has worked for years with the New York City Economic Development Commission to find a way to rebuild and expand New York's produce market. Hunts Point operators believe acquisition of the adjacent warehouse, on 16 acres, would be ideal for their needs.
After the Great Atlantic & Pacific Tea Co. Inc. in Montvale, NJ, vacated that Bronx warehouse in July 2005, New York City put the A&P property up for bid. The bid was won by Baldor Specialty Foods Inc., which is located nearby in the Bronx. Baldor wanted the A&P property to expand its own operating quarters. Judge Billings supported Hunts Point claims that the EDC planned to rush the bidding process and gave Baldor advantages to win that bid. Hunts Point attorneys had argued that the city had political motives for moving the Bronx Terminal Market into the facility that still houses Baldor. The Bronx Terminal Market was razed to make way for building a new Yankee Stadium.
But in its Nov. 9 decision, the Appellate Court released a document indicating: "[W]e reverse the judgment of Supreme Court, reinstate the determination of EDC and vacate the injunction."
The November decision noted that EDC is not a governmental agency but rather a not-for-profit development corporation, working on contract subject to "the direction and control" of the city's deputy mayor for economic development and rebuilding in cooperation with the Department of Small Business Services. EDC services include the management and development of the city's wholesale food markets; leasing city-owned property; and recommending the terms of leases to the deputy mayor. Thus, "the city's public market property is not subject to municipal public bidding requirements. Indeed, disposition of the property at issue is exempted from the operation."
"Thus," Appellate Judge James Catterson wrote in the recent decision, "neither EDC nor the city were required by law to conduct any competitive bidding process for Hunts Point. Standing for the cooperative premised on an alleged absence of competitive bidding does not bring the cooperative within a relevant 'zone of interest' for standing because the process at issue is wholly exempt from competitive bidding by law."
Other notes from Judge Catterson were:
" "EDC was not even required to utilize a request for proposal in order to lease the property at Hunts Point Market. We find nothing in the RFP process in this case that was either hidden or biased in favor of Baldor."
" "Not only has the cooperative failed to allege that there is a relevant zone of statutory interest at issue, it has not sufficiently alleged injury in fact. Mere competitive injury does not suffice as injury."
" He also wrote that because Hunts Point referred to reworking the street between the market and the A&P warehouse, calculations of the cost of the project were imprecise.
" "Finally, even if we were to conclude that the cooperative had the necessary standing to challenge the EDC's designation, the result would nonetheless be the same. The above analysis of the merits and liabilities of the respective proposals demonstrates that the EDC did not act in an arbitrary and capricious manner in selecting Baldor, that there was ample evidence from which the EDC could conclude that Baldor submitted the superior proposal; and that the cooperative's proposal fell far short in comparison."
"We are very disappointed at overturning the victory," Mr. D'Arrigo said. "We are going to appeal. We feel the reasoning the appellate court gave for overturning the decision is incorrect and didn't get to the true facts of the case. It is a setback. We're in the final match here."
Cynthia Arato of the Manhattan firm Gibson, Dunn & Crutcher LLP, which represents the cooperative, didn't return calls from The Produce News by press time (Nov. 16).
Baldor Chief Executive Officer Kevin Murphy told The Produce News Nov. 13, "We're thrilled with the decisions. We had the highest offer, the highest bid. We create the most jobs and, at the end of the day, the best economic return for the city of New York. We looked at this as an effort by the New York Hunts Point market to block competition of any kind" by keeping Baldor from operating across the street from the market. Blocking competition "is not fair in the U.S."
Baldor attorney Peter Johnson Jr. of the Wall Street firm Leahey & Johnson PC said Nov. 13, "I think the Appellate Division got it absolutely right. They found that Baldor's bid was superior and the process was straightforward and found no favoritism toward Baldor. This was done on its merits. It is exciting for Baldor and Baldor employees."
Mr. Johnson noted that 15 to 20 Baldor employees traveled to the Madison Avenue courtroom "on their own time because they were interested. They were delighted by Baldor's success. It is a big turnaround from Judge Billings' decision. The key point in the turnaround was that the EDC didn't act in an arbitrary or unfair way in selecting [the winning bid] and there was more than ample evidence that Baldor was selected because of a superior proposal." The Appellate Division also concluded that the market "didn't have the standing or the right to bring the proceeding." The attorney also said the appeals judges did not find that the Hunts Point operators "had actually suffered an injustice as a result of the decision. They said [Judge Billings'] court had failed on that."
Furthermore, he said, the appellate court "contradicted each and every finding of Judge Billings and showed Baldor had a superior bid in terms of what they were willing to pay and how many jobs they were willing to create for the community."
Mr. Johnson added, "So on every count and in every way it rebuffed and overturned the lower court decision. It disagreed with the lower court on every facet of the decision."
Mr. Johnson said that "the co-op tried to assert and prove some conspiracy at the highest level of city government. There is no evidence of the vicious allegations and harsh language they used."
Mr. Murphy noted that a story in the Nov. 13 issue of the New York Law Journal reported, "Although the court found that the city would have won on its own merits, the 25-page decision turned on standing, or more specifically, the cooperative's lack thereof."
As to Hunts Point's concern that Baldor would openly compete against the Hunts Point market and its union labor, Mr. Murphy said: "We're a foodservice supplier, not a wholesale supplier, no matter what anyone says. Our competition is Sysco and U.S. Foodservice. We don't compete with Hunts Point or Philly or Boston. We opened across the street in Chelsea [Massachusetts, facing the New England Produce Center] in foodservice. We don't have any problem up there."
Mr. Murphy continued, "We feel it's over," but he acknowledged the pending appeal from the market. With the Nov. 9 reversal, "there are significant factors involved. The city is out $1 million in lost rent and we had over $1 million in legal fees."
