NYC-Owned Grocery Plan Challenged In Court

NEW YORK CITY— A coalition of New York grocers sued Mayor Zohran Mamdani’s administration Monday, arguing that the City’s plan to open five publicly owned supermarkets could put immigrant and minority-owned businesses at an unfair competitive disadvantage.

The Multicultural Business Coalition filed two lawsuits in New York State Supreme Court.

One seeks class-action status for hundreds of business owners from groups that the complaint describes as having faced historical discrimination. The other challenges the City’s authority and planning process for the grocery program.

The lawsuits could force the administration to defend a centerpiece of Mamdani’s affordability agenda before the first City-owned supermarket opens.

Mamdani has defended the program as a way to reduce grocery costs for New Yorkers and rejected the argument that five City-owned stores would destroy competition.

“I’m confident in both the legality of this — that it will stand up in court — and the importance of delivering it,” Mamdani said at a news conference Monday.

He noted that the City has more than 1,000 grocery stores and argued that five municipal supermarkets would not fundamentally alter the market.

During a recent tour of the La Marqueta site, an EDC official raised the possibility of grants for nearby businesses concerned about competition.

The agency later clarified that grants were not under consideration.

An EDC spokesman said the agency was instead evaluating existing programs that could help local grocers.

“We are looking at the potential for tax abatement, incentives and zoning benefits through existing city programs to ensure that the city is doing everything in our power to alleviate cost pressures for small businesses across the city,” the spokesman said.

The City plans to spend $70 million to build five stores, one in each borough, by 2029.

The stores are expected to offer basic groceries at discounts of about 30 percent.

City Hall has projected that the savings could amount to about $90 a month, or $1,000 a year, for shoppers.

The coalition argues that City officials failed to adequately study how the supermarkets would affect existing stores before choosing their locations.

“There is no extant evidence that the respondents have undertaken any studies and or serious analysis before its current arbitrary site selection,” according to the coalition’s filing.

The lawsuit asks the court to require the City to conduct an economic analysis before proceeding.

Why Does The Complaint Compare The Plan To Walmart?

The second lawsuit compares the City-owned stores with Walmart, the national discount retailer that has repeatedly faced resistance from New York politicians and labor groups seeking to protect small businesses.

The filing argues that City-owned stores offering discounts of about 30 percent could create a similar competitive threat, while receiving public support that independent grocers cannot match.

The complaint describes the program as “allowing Walmart to operate deep discount business, while bringing ‘affordability.’”

It argues that the program “would eliminate an untold amount of opportunity for minority businesses and small business at large.”

How Does The Lawsuit Claim The Grocery Plan Violates Civil Rights?

The class-action complaint argues that the program could violate state civil rights protections and the equal protection clause of the New York Constitution.

At La Marqueta in East Harlem, the first Manhattan location announced by the administration, the coalition points to nearby Hispanic- and Korean-owned supermarkets that would compete with the City-backed store.

The complaint argues that those businesses would struggle to match the City’s planned discounts, particularly because the City would subsidize the supermarket’s operating costs through the Economic Development Corp.

The complaint seeks to represent hundreds of owners who belong to groups it describes as historically discriminated against.

The coalition has not yet identified the individual store owners who would serve as the first named plaintiffs.

President Kenneth Roldan told the Post that the group expects to introduce them at a news conference later this week and amend the filings.

Where Will The City-Owned Stores Open?

The City has announced two locations.

The first store is planned for the Hunts Point neighborhood in the Bronx, at The Peninsula, the former Spofford Juvenile Detention Center.

The second will be at La Marqueta in East Harlem.

The City has not announced locations in Brooklyn, Queens or Staten Island.

The administration intends to open all five stores by 2029.

The coalition wants the City to stop the rollout until it completes the studies it argues should have preceded the site selections.