Lawsuit Factsheet

FACT SHEET: LAWSUIT

An “Article 78” proceeding permits a court to review a proceeding to determine whether a decision was affected by an error of law or was arbitrary and capricious or an abuse of discretion.

The New York Court of Appeals has defined an arbitrary and capricious action as one without sound basis in reason and generally taken without regard to the facts. The courts’ standard of review is whether an administrative determination has a rational basis.

The Parks Department acted in an arbitrary and capricious manner
by failing to adhere to its own rules and regulations.

Under the law, when an administrative agency fails to conform to its own rules and regulations, it acts arbitrarily and capriciously.

In its Request for Proposals (RFP), the Parks Department laid out the rules that proposals must meet and the guidelines that proposals should follow in order to be considered, as well as the rules and guidelines upon which the Parks Department would select the winning bid. In selecting the Milkshake Co. as the winning bid, the Parks Department failed to follow its own rules.

The RFP states that the deadline for proposals is Tuesday, December 20, 2005 at 3:00 PM, after which no proposals will be accepted and that failure to comply results in the automatic disqualification of a submission from further consideration.

The Milkshake Co. violated the RFP submission requirements by submitting additional materials after December 20, 2005, and according to the Parks Department’s own rules should have been automatically disqualified from further consideration.

A comparison of the four proposals in response to the RFP shows that the Milkshake Co.
has little operating experience,
no experience as a city concessionaire,
a proposed capital investment lacking detail and support,
unprofessional submitted designs,
inadequate financial capability to meet its own stated capital needs.

The only apparent justification for selecting Milkshake Co. is its significantly larger and unsupported fee offer. (continued on page 2)

The Parks Department violated its own rules and guidelines laid down in the RFP by awarding the concession license to Milkshake Co. based solely on its fee offer.

The Parks Department acted in an arbitrary and capricious manner, amounting to an abuse of its discretion, by failing to follow its own rules in accepting Milkshake Co.’s submission and in selecting Milkshake Co. as the winning bid.

The Parks Department acted in an arbitrary and capricious manner
based upon a review of the factual record

The Parks Department’s award of the concession license to Milkshake Co. appears arbitrary and capricious because the factual record does not provide a rational basis for its selection of Milkshake Co. as the winning bid.

Milkshake Co.’s proposal failed to adequately meet the RFP’s criteria:
its owners and operators have limited experience in the concession business,
no prior working relationship with City agencies,
its previous and sole other location failed,
its design proposal lacks detail with regard to timing and dimensions,
it estimates costs for improvements and renovations at $75,000 while its financials show it only has $40,000 cash on hand,
it failed to provide a detailed pro-forma income and expense projection for each year of operation.

Milkshake Co.’s proposed license fee was significantly higher than the other three applicants, but this fee is based on sales vague and unrealistic estimates. Its first and only other location did $200,000 in gross revenues while its bid reflects an estimated $600,000 in sales its first year of operation – a 300% increase.

Based upon Milkshake Co.’s inexperience, poor track record, vague statements regarding revenue and its overall proposal, Friends believes Milkshake Co. will be unable to meet its sales projections and become a sustainable business in the Plaza concession.

Friends requests the Court: annul the award of the concession license to Milkshake Co.; award the concession to Dag Park, or alternatively remit the matter to the Parks Department to reconsider the remaining three proposals for the concession license; order the Parks Department to enforce and utilize its own guidelines outlined in the RFP, consider the desires of the community and make the decision process transparent; maintain the status quo allowing the The Patio Café to continue operating its license during the pendency of this proceeding; and stay enforcement of the Parks Department’s award of the concession to Milkshake Co. pending the outcome of this proceeding.