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Decision No. 14,533

Appeal of AMERICAN QUALITY BEVERAGES from action of the Board of Education of the Baldwinsville Central School District regarding an exclusive pouring rights contract.

Appeal of AMERICAN QUALITY BEVERAGES, TOM'S VENDING COMPANY and KATHLEEN HAINES from action of the Board of Education of the City School District of the City of Syracuse regarding an exclusive pouring rights contract.

Decision No. 14,533

(January 20, 2001)

Ross E. Getman, Esq., attorney for petitioners

Ferrera, Fiorenza, Larrison, Barrett & Reitz, P.C., attorneys for respondents, Benjamin Ferrera and Norman H. Gross, Esqs., of counsel

Green, Hershdorfer & Sharpe, attorneys for Coca-Cola Bottling Company, Inc., Ronald V. Sharpe, Esq., of counsel

Regina Allegretti-Davenport, Esq., attorney for The Pepsi Bottling Co.

MILLS, Commissioner.--Petitioners appeal the decisions by the Board of Education of the Baldwinsville Central School District ("respondent Baldwinsville") and the Board of Education of the City School District of the City of Syracuse ("respondent Syracuse") to enter into exclusive pouring rights contracts. Because the appeals involve a common petitioner and raise common issues of law, the appeals are consolidated for decision. The appeals must be dismissed.

Petitioner American Quality Beverages ("AQB") is a Syracuse-area manufacturer of a beverage called Z'lectra. In Appeal No. 1, AQB challenges a decision by respondent Baldwinsville dated June 19, 2000, to enter into an exclusive pouring rights contract with Coca-Cola Bottling Company of New York, Inc., d/b/a Coca-Cola Bottling Company of Syracuse ("Coca-Cola"). The record indicates that AQB had installed vending machines at various schools including Baldwinsville, and has been asked to remove its machines due to the anticipated execution of the exclusive pouring rights contract.

In Appeal No. 2, AQB and two other petitioners challenge a resolution by respondent Syracuse dated August 16, 2000, to enter into an exclusive pouring rights contract with Pepsi-Cola Bottling Company of Syracuse, Inc. ("Pepsi"). One of the additional petitioners in Appeal No. 2 is Tom's Vending Company, a small distributor of beverages that has machines throughout respondent Syracuse’s schools. The third petitioner, Kathleen Haines, is a taxpayer and resident of respondent Syracuse’s district, and the parent of several children who attend the Syracuse schools.

Petitioners challenge the exclusive pouring rights contracts on a number of grounds. Petitioners contend that school boards have no statutory authority to enter into such contracts; that Education Law "414 requires that such commercial use of school property must be non-exclusive; that respondents’ actions violate the competitive bidding mandates of General Municipal Law "103, especially with respect to non-vended beverages; that the contracts violate Article VIII, Section 1 of the New York State Constitution; that the contracts violate 7 C.F.R. "3015.181(a)(2) which prohibits school district officers from soliciting gratuities or things of monetary value in exchange for a contract; that lighted panels on the vending machines will violate 8 NYCRR Part 23; and that an agreement that provides a financial incentive to promote the sale of soda to students violates 8 NYCRR "135.2(a).

Respondents in both appeals assert that they have statutory authority to enter into such contracts, and that the contemplated exclusive pouring rights contracts do not violate any constitutional, statutory or regulatory provisions. Respondents also raise a number of procedural objections. Respondents contend that the appeals are premature, because no contracts have actually been executed or approved in final form by respondents; that petitioners are seeking an advisory opinion; that the business entity petitioners lack standing to maintain these appeals; and that the petitions fail to state clear and concise statements of petitioners' claims.

The appeals must be dismissed at this time because they are premature. No final contracts have been executed by either school district. The Commissioner will not render advisory opinions or decide issues that have not yet become justiciable (Appeal of Lilly, 39 Ed Dept Rep 601, Decision No. 14,324).

In Appeal No. 1, respondent Baldwinsville claims that the June 19, 2000 resolution approved only "certain terms and conditions" for an agreement with Coca-Cola. Since the adoption of the resolution, respondent asserts that no official action has been taken to approve an agreement with Coca-Cola or to execute such an agreement. Respondent provided a copy of the minutes of the June 19, 2000 meeting, which refer to presentation of "an overview of the pouring rights agreement," and a vote for approval of the "contract for exclusive pouring rights with Coca-Cola ... as per enclosure 6c." Although respondent did not provide a copy of a document expressly identified as "enclosure 6c," petitioner contends that the copy of a draft agreement attached as an exhibit to respondent's answer is in fact a copy of "enclosure 6c." Respondent expressly avers, however, that no final contract has yet been approved or executed by respondent. Additionally, it is not clear whether the draft agreement attached to the answer is in its final form, has been reviewed and approved by Coca-Cola, or will constitute the final agreement to be executed by the parties. Until there is a final, executed contract, an appeal of the content of the contract is premature.

As to Appeal No. 2, respondent Syracuse asserts that the parties have not yet completed drafting an agreement, and there is thus no final, approved and executed contract. Respondent claims that the only action it has taken with regard to the contract is passing a resolution on August 16, 2000 to award a vending contract to Pepsi subject to the preparation of a mutually agreeable contract. Petitioners' challenge to this contract is therefore similarly premature.

Although these two appeals must be dismissed as premature, it may be helpful to review the application of General Municipal Law "103 to the type of contract at issue. I recently addressed such contracts in Appeal of Citizens for Responsible Fiscal and Educational Policy, et al., 40 Ed Dept Rep ___, Decision No. 14,489 ("Citizens"). I noted in Citizens that, although a "vending" contract is not subject to the competitive bidding requirements of the General Municipal Law ("GML"), a contract that contemplates the purchase of beverage products (e.g., for use in the district's school nutrition program) in excess of $10,000 must comply with the competitive bidding requirements of GML "103 for that portion of the contract.

Although respondents in these two appeals refer to the subject contracts as "exclusive vending contracts," if the final, executed contracts provide for the purchase of beverage products, then the contracts also constitute "purchase contracts" within the meaning of GML "103. Respondents should ensure that the procedures it uses to finalize any such contracts comply with the mandates of GML "103. Respondents should also ensure that the final contracts comply with the directives set forth in Citizens.