Labor advocates sue Metro over $730-million contract to build subway cars. Will it hurt Olympic planning?

Labor advocates are suing to force the Los Angeles County Metropolitan Transportation Authority to rebid a $730-million order of 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 upon in 2022 as part of a new manufacturing policy intended to provide well-paying blue collar 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 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 well-paying 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. 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 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 third-party staffing agencies.

Labor, construction and other interests have often battled it out on these big-money 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 tensions 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 24-year-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.”