An Opinion About Stays From Judge Accurso

In re New Jersey Transit Award of Contracts No. 21-048A and 21-048B, 473 N.J. Super. 261 (App. Div. 2022). Published opinions from appellate courts about stays are relatively rare. Today, however, the Appellate Division, speaking through Judge Accurso, produced such an opinion.

The context was a bidding competition for certain bus routes that unfolded before New Jersey Transit (“NJT”), which had issued a request for proposal (“RFP”) and was statutorily empowered to award the two contracts at issue. There were only two bidders: Academy Express, LLC and Orange, Newark, Elizabeth Bus Inc. (“ONE Bus”). When the RFP was issued, ONE Bus was operating one of the sets of routes under an emergency contract and NJT was operating the other group of routes itself after deciding not to renew a contract with an affiliate of Academy Express, which had operated those routes.

The bidding process involved an initial evaluation and recommendation by NJT’s Technical Evaluation Committee (“TEC”). The TEC’s recommendation was to be “based on technical and cost evaluation scores as well as comparison to the benchmark cost submitted by NJ Transit Bus Operations.” But the RFP stated that NJT “reserve[d] the right to reject any and all Proposal(s) in accordance with applicable law,” and that “[t]he award of the Contract [was] subject to the approval of the NJ Transit Board of Directors.”

ONE Bus scored highest on the technical evaluation score, but Academy Express’s lower bid won it the highest score on the cost evaluation and resulted in Academy Express having the highest score overall. NJT then issued a “Notice of Intent to Award” both contracts to Academy Express, though that Notice was subject to full execution of a written contract and other conditions, and could be cancelled by NJT at any time before execution of a written contract.

ONE Bus sought reconsideration. That application focused on the fact that Academy Express and related Academy entities, including the affiliate that had previously operated the group of routes over which NJT took direct control (as described above), had recently settled a qui tam action brought by the Attorney General against those entities. Judge Accurso provided a detailed account of that qui tam case, but the short of it is that the Academy entities and certain of their officers and employees were alleged to have defrauded NJT in various ways.

Five days before NJT issued the “Notice of Intent to Award,” the qui tam case was settled. There was no admission of liability, but the Academy entities agreed to pay the State of New Jersey $20.5 million over nine years, and three charged officers or employees had to pay between $50,000 and $150,000 each. Other non-monetary relief was imposed as well, including a monitor to oversee the conduct of the Academy entities.

When the award of the contracts at issue came before the NJT Board, the Board voted unanimously to award the contracts to ONE Bus and against awarding them to Academy Express. “The Board members set forth their reasons for voting to deny the contracts, including concerns about Academy’s moral integrity and ethics and concerns that the protections contemplated in the very recent settlement agreement were not in place at the time of the award. Several acknowledged their responsibility as Board members under N.J.S.A. 27:25-4.1(b)(1) to apply their independent judgment in the best interests of NJ Transit, expressing the view that Academy was not a ‘responsible bidder’ under the bidding statutes”

Academy Express sought reconsideration and requested a stay of the award to ONE Bus. NJT was unpersuaded and denied a stay, finding no irreparable harm to Academy Express if the contract award went forward. Academy Express appealed to the Appellate Division and sought a stay pending appeal. After granting a temporary stay to allow a panel to consider the request, the Appellate Division denied a stay on June 15, 2022, providing an accompanying statement of reasons and stating that a formal opinion would follow. Today’s ruling is that opinion.

Judge Accurso began by reciting the “well established” criteria for a stay. “The party seeking the stay must establish by clear and convincing evidence that (1) relief is needed to prevent irreparable harm; (2) the applicant’s claim rests on settled law and has a reasonable probability of succeeding on the merits; and (3) balancing the ‘relative hardships to the parties reveals that greater harm would occur if a stay is not granted than if it were.'” She cited several Supreme Court cases, including Crowe v. DeGioia, 90 N.J. 126 (1982), and Garden State Equality v. Dow, 216 N.J. 314 (2013). But because this case was of “significant public importance,” the public interest was to be considered as well.

The request for a stay foundered on the need to show a reasonable likelihoofd of success on the merits. Review of NJT’s action was under the deferential arbitrary, capricious, and unreasonable standard. By statute, NJT’s Board had to consider broader criteria than did the TEC. And, by regulation, the Board could consider any factor it “deems to be in the public interest.” As a result, Judge Accurso said, “NJ Transit could certainly consider the qui tam action and determine it was in the public interest to reject a proposal from a carrier that had only weeks before entered into a multi-million-dollar settlement with the State in a massive fraud case involving the same routes covered by these contracts.”

Finally, “[t]here is no irreparable harm to a disappointed bidder in not staying the award of a contract the bidder cannot show a reasonable likelihood of having been entitled to win.” The panel dissolved the temporary stay and directed that a merits briefing schedule be issued.