JMA: Aesha Mahmoud
(562) 269-9193
amahmoud@jobstomoveamerica.org
LOS ANGELES, September 16, 2024 – Jobs to Move America (JMA), a national public interest organization, has filed a lawsuit against the Los Angeles County Metropolitan Transportation Authority (“LA Metro”) for violating state and federal open bidding laws. JMA seeks a court order requiring LA Metro to rebid a $730 million railcar contract awarded in 2024 to Hyundai Rotem, a subsidiary of the Hyundai Motor Company, in compliance with state and federal competitive bidding laws and LA Metro’s Manufacturing Careers Policy (MCP).
At the center of the lawsuit is LA Metro’s actions to permit Hyundai Rotem to alter its proposal in a closed-door process after failing to require Hyundai to respond to the original RFP properly and to follow the MCP during its evaluation and award process. In the contract, Hyundai Rotem committed to manufacture and deliver new railcars to meet the LA transportation system’s expanded needs before the 2028 Olympics in Los Angeles. Hyundai Rotem was awarded the contract despite submitting incomplete and non-compliant documents required under the Request for Proposals (RFP) and the MCP, which sets clear standards for contractors regarding workforce composition, wages, benefits, and outreach to disadvantaged workers.
“The Los Angeles County Metropolitan Transportation Authority has an obligation to ensure that public dollars are spent in ways that benefit workers and communities,” said Madeline Janis, Co-Executive Director of Jobs to Move America. “LA Metro has undermined public trust by failing to allow all bidders to properly compete over the public benefits they can provide, and rewarded a company that failed to meet the standards intended to create good American manufacturing jobs.”
Violations of Competitive Bidding Laws
State and federal competitive bidding laws are designed to ensure fair and open competition in the award of public contracts. Public agencies must advertise all criteria and explain the award process in advance, and give all bidders an equal chance to respond. In addition, LA Metro’s MCP, adopted on December 1, 2022, applies to all transit bus and railcar purchases over $50 million and requires bidders to provide detailed workforce commitments, including the number of
employees, minimum wage, benefits, and training commitments if the bidder is successful in winning the contract. Through a California Public Records Request, JMA uncovered that Hyundai Rotem’s original proposal–which resulted in the contract award– failed to provide the necessary documentation required by the Request for Proposals (RFP), such as specific commitments to new jobs, specific wages, benefits, training, and commitments to hiring disadvantaged workers in the manufacturing of the new railcars. Additionally, the RFP did not properly include all MCP requirements. When JMA apprised LA Metro of these failures, LA Metro improperly allowed Hyundai–and only Hyundai– to resubmit portions of their proposal to comply with the RFP and the MCP—an opportunity not extended to the two other bidders. JMA contends that these revisions allowed Hyundai to unfairly alter its bid and gain an illegal competitive advantage over other bidders, Stadler and Hitachi, who were not given similar opportunities.
Hyundai Rotem was able to substantially redo their proposal and indicated that it would seek a future increase in the contract price, which was already higher than the prices Stadler and Hitachi proposed. Moreover, Hyundai Rotem’s revised proposal included a caveat indicating that it did not believe that it was required to comply with any of the specific job, wage, and hiring commitments in the new documents. JMA contends that these revisions were simply a sham, intended to retain the lucrative contract without committing to any of the requirements in the MCP.
U.S. Department of Labor Investigating Allegations of Child Labor at Hyundai
The lawsuit comes on the heels of a lawsuit filed in May 2024 by the U.S. Department of Labor against Hyundai Motor Manufacturing Alabama (HMMA), another Hyundai Motor Corporation subsidiary. The complaint alleges illegal employment of minors at a Hyundai supplier which put Hyundai in violation of the Fair Labor Standards Act’s “hot goods” provision. Despite initially pledging to cut ties with suppliers found employing minors, Hyundai later resumed partnerships with suppliers that claimed to have taken corrective actions.
Additionally, Hyundai Motor America and Kia America, two subsidiaries of Hyundai Motor Corporation, faced a class action lawsuit due to the absence of anti-theft devices in roughly 9 million Hyundai and Kia vehicles from 2011-2022. The companies reached a settlement that included up to $200 million in relief payments to Hyundai and Kia owners.
Call for Accountability
Jobs to Move America’s lawsuit does not seek monetary damages. Rather, as a public interest organization, JMA seeks a court order requiring LA Metro to rebid the railcar contract in compliance with state and federal law requiring fair and open bidding procedures and with the MCP. “The Manufacturing Careers Policy was designed to ensure that public contracts create jobs that uplift communities, not runaway corporate profits without benefits to the communities paying for them,” said Janis. “We are taking legal action to ensure that LA Metro upholds its commitments and sets a higher standard for both ethical and labor practices in public procurement.”