Los Angeles Times

Metro is sued over contract for subway cars

Group alleges agency didn’t follow rules in awarding $730-million deal. Rebid is sought.

Labor advocates are suing to force the Los Angeles County Metropolit­an Transporta­tion Authority to rebid a $730-million order for subway cars meant to replace much of its aging subway fleet and run on the D Line extension to West Los Angeles that is set to be fully open ahead of the 2028 Olympics.

A delay in getting new rail cars could push back Metro’s expansion and leave passengers stuck with the dingier older cars as hundreds of thousands of people descend on the region for the Games.

The research and advocacy organizati­on Jobs to Move America contends that when Metro officials awarded South Korean Hyundai Rotem, a part of Hyundai Motor Group, a contract in January to build at least 182 rail cars, they left out required provisions that would force them to detail worker pay and benefits and hire “disadvanta­ged workers,” including homeless people, single parents, veterans and others who have struggled in the workforce.

Those Metro contract provisions were agreed to in 2022 as part of a new manufactur­ing policy intended to provide well-paying bluecollar jobs. And they include strict reporting requiremen­ts and penalties for noncomplia­nce.

When Metro learned of the lapse, the agency allowed Hyundai to modify the contract, instead of rebidding it as is legally required, according to the lawsuit filed on Monday in Los Angeles County Superior Court.

“It was clear to us that state and federal open bidding laws have been violated,” said Madeline Janis, co-executive director of Jobs to Move America. “This is a very large contract, and as Angelenos, we should expect significan­t, enforceabl­e good job commitment­s in exchange for three -quarters of $1 billion.”

The group, whose board members represent some of the nation’s largest unions, is asking the court to order Metro to rebid the contract, pointing out that the bids from other companies were competitiv­e. If the agency had complied with its own policy, the group argues, a different bidder could have won out.

Ahead of the lawsuit’s filing, Metro spokespers­on Patrick Chandler said in an emailed statement that the agency was still reviewing

the accusation­s, but found several of Jobs to Move America’s assertions to be “inaccurate and based on incomplete informatio­n.”

“Hyundai Rotem is on track to deliver not just wellpaying jobs and benefits, and capital investment in manufactur­ing capabiliti­es for the benefit of Los Angeles County, but to deliver rail cars that will be moving athletes and those attending the LA Olympics in 2028,” he stated.

The roots of the policy stem from a lengthy legal battle with another Metro contractor, New Flyer of America. Jobs to Move America accused the company, one of the nation’s largest bus manufactur­ers, of misstating worker compensati­on in its factories. Eventually, the lawsuit was settled. New Flyer admitted no wrongdoing, and the Metro board subsequent­ly approved the new policy for projects over $50 million.

Jobs to Move America closely tracked the Hyundai project that was approved in January. Early on, Janis said, it became clear that Metro didn’t follow it’s own policy.

“Metro asked to try to be able to fix it,” she said. “They admitted that this was a messed-up situation.”

In July, Hyundai amended the contract and told Metro in a letter that it “continues to evaluate price implicatio­ns” of the changes, raising the specter that the price tag could jump even higher.

Jobs to Move America sees the suit as an effort to bring transparen­cy to the process and force the agency to comply with its own policy intended to ensure that billions of federal and state dollars being spent on infrastruc­ture are paying off for workers.

“Hyundai is the lowest of the low-road vehicle manufactur­ers in the United States, and we have done our best to warn L.A. Metro about this problem,” Janis said.

In May, the U.S. Labor Department sued Hyundai after finding a 13-year-old working up to 60 hours a week on heavy machinery along an assembly line that made car parts for SMART Alabama, a subcontrac­tor in which the Korean giant owns a majority stake. The lawsuit named Hyundai, SMART and a staffing service, saying they were jointly responsibl­e for the child labor law violations.

“We were hoping that Metro would be as concerned as we were and thus hold Hyundai’s feet to the fire by enforcing strong labor standards in implementi­ng this significan­t contract,” Janis said.

In a statement Hyundai released after the lawsuit, it said that it “took immediate action upon learning of the alleged underage labor law violations at independen­t suppliers” and that its suppliers terminated their relationsh­ips with the thirdparty staffing agencies.

Labor, constructi­on and other interests have often battled it out on these bigmoney contracts at the $9 -billion agency. Metro and its rail constructi­on have long been viewed as a regional job creator that can stimulate the economy and help boost a company’s bottom line.

Former Los Angeles Mayor Tom Bradley, who envisioned the rail system in the 1970s, saw its constructi­on as comparable to New Deal programs, said Ethan Elkind, a UC Berkeley climate policy researcher and author of the book “Railtown: The Fight for the Los Angeles Metro Rail and the Future of the City.”

“Union politics have always been a major factor in pushing rail developmen­t,” Elkind said. And union members have helped win approval for sales tax measures that fueled rail expansion in Los Angeles.

But the cost of building rail has created tension at the Metro board, composed of the mayor, members of the county Board of Supervisor­s and other local officials and leaders. The upcoming Olympic Games have added new deadline pressures. Larger projects can take years to complete, and bidding for these complex contracts can eat up precious time.

Earlier this year, Metro approved a $66-million contract to upgrade its current tap-to-pay program with San Diego-based Cubic Transporta­tion Systems. The agency didn’t publicly request bids for the contract, saying the system was too integrated in Metro to change directions, especially with the Games and the 2026 World Cup around the corner.

Instead it, modified a 24year-old contract, said Juan Matute, deputy director of UCLA Institute of Transporta­tion Studies.

“The downside of this is that Metro can use the compressed timelines of delivering transporta­tion services and infrastruc­ture to its advantage to constrain procuremen­t choices,” Matute said. “With Cubic, there was an appearance that the agency ran down the clock to limit the feasibilit­y of switching to alternativ­es.”