City Wins Legal Battle to Make Car Wash Industry Fairer for Workers and Consumers

February 11, 2019

Car Wash Owners Discontinue Case After Appellate Court Sends Matter Back to Lower Court for Further Proceedings

The New York City Law Department announced today that the Association of Car Wash Owners has discontinued its legal challenge to the Car Wash Accountability Law. The measure, signed into law by Mayor de Blasio in 2015, requires car wash operators to be licensed, keep proper records, carry proper insurance, and comply with important environmental, public health, and workplace regulations. The lawsuit largely focused on the measure’s requirement that car wash operators maintain a surety bond to provide a source of funds from which to satisfy judgments for wage theft, consumer claims, and obligations to the City. A lesser bond is required for car washes that are subject to a monitoring agreement or collective bargaining agreement setting forth certain terms. The Association of Car Wash Owners alleged that the law forced businesses to unionize in violation of federal labor law. The City argued that the costs to obtain either the higher or the lower bond were modest, and thus the law’s bond provision was not coercive. Instead, the bond provision afforded needed protections to a particularly vulnerable workforce. 

U.S. District Court Judge Alvin Hellerstein largely upheld the law, but struck the lesser bond amount. In December 2018, the U.S. Court of Appeals for the Second Circuit remanded the matter to the district court for further investigation of the merits, requiring the Owners to substantiate their claims of unreasonable costs associated with maintaining the surety bond. As the City was preparing for discovery, the Owners signed a stipulation of discontinuance with prejudice.

“This is a big victory for car wash employees, the environment and consumers. The Council was proud to be part of the defense of this law, and I thank my colleagues and former Speaker Melissa Mark-Viverito for never giving up,” said Speaker Corey Johnson 

“We are pleased that plaintiffs have chosen to discontinue their challenge to a law intended to guarantee full and timely payment of wages earned by hardworking car wash employees,” said a Law Department spokesman. 

The case: Association of Car Wash Owners Inc. et al. v. City of New York; U.S. District Court for the Southern District of New York, 15 Civ. 8157. 

Stephen Kitzinger and Jeffrey Dantowitz of the Law Department’s General Litigation Division and Ingrid Gustafson and Richard Dearing of the Appeals Division handled the case on behalf of the City Council and the Department of Consumer Affairs.  Former Corporation Counsel Michael Cardozo of Proskauer Rose represented the Association of Car Wash Owners.

Contact: Nick Paolucci / 212-356-4000