Buckley Const., Inc. v. Shawnee Civic & Cultural Development Authority

• Decision Date: 14 May 1991
• Docket Number: No. 90-6158,90-6158
• Parties: 1991-1 Trade Cases 69,435 BUCKLEY CONSTRUCTION, INC., Plaintiff-Appellant, v. SHAWNEE CIVIC & CULTURAL DEVELOPMENT AUTHORITY; Charles T. Henry; James Bradshaw; Dr. Joe Taron; Clarke A. Bohan; Jim R. Hudgens, Defendants-Appellees, and Cecil Bernard, doing business as B & B Builders, Defendant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 853

933 F.2d 853

1991-1 Trade Cases 69,435

BUCKLEY CONSTRUCTION, INC., Plaintiff-Appellant, v. SHAWNEE CIVIC & CULTURAL DEVELOPMENT AUTHORITY; Charles T Henry; James Bradshaw; Dr. Joe Taron; Clarke A Bohan; Jim R. Hudgens, Defendants-Appellees and Cecil Bernard, doing business as B & B Builders, Defendant.

No. 90-6158.

United States Court of Appeals Tenth Circuit.

May 14, 1991.

Clyde A. Lewis, Oklahoma City, Okl., for plaintiff-appellant.

Mack J. Morgan III of Crowe & Dunlevy, Oklahoma City, Okl., for defendants-appellees.

Randy Parsons and J. David Cawthon, Shawnee, Okl., for defendant.

Before ANDERSON and TACHA, Circuit Judges, and KANE, ^* District Judge.

KANE, Senior District Judge.

Plaintiff Buckley Construction, Inc. filed this civil action against defendants Shawnee Civic & Cultural Development Authority (the Authority), its trustees, and B & B Builders alleging, inter alia, that they conspired against the company in failing to award it a construction contract. The district court dismissed all claims pursuant to Fed.R.Civ.P. 12(b)(6). We affirm. ¹

I.

The Authority is a public trust created pursuant to Oklahoma statute. See Okla.Stat. tit. 60, Sec. 176 (1981). One of its purposes is to coordinate bidding on construction projects for the City of Shawnee, Oklahoma. In this capacity, the Authority is governed by the provisions of the Oklahoma Public Competitive Bidding Act of 1974 (OPCBA). See Okla.Stat. tit. 61, Secs. 101-136 (1981).

In late 1988 and early 1989, the Authority placed advertisements in several trade magazines soliciting bids for construction of the "Heart of Oklahoma Exposition Center Phase 1." In response, Buckley Construction submitted a low bid of $815,237. B & B Builders submitted the second lowest bid of $819,000.

On April 12, 1989, Buckley Construction representatives attended a meeting with the project architect, exposition manager, Authority chairman and Shawnee city manager. After discussing the company's qualifications, these individuals told Buckley representatives they would recommend to the Authority that Buckley Construction be awarded the contract.

Later that month, the Authority awarded the contract to B & B Builders, the second lowest bidder. Buckley representatives were told the rejection was not due to any negative aspects of the Buckley bid, but that B & B Builders received the contract because the Authority "knew what kind of contractor he [sic] was." Rec. Vol. I, doc. 1 at 14, p 34. This lawsuit followed.

In the complaint, Buckley stated seven causes of action. They included: 1) restraint of trade under section 1 of the Sherman Antitrust Act, 15 U.S.C. Sec. 1; 2) monopoly under section 2 of the Sherman Act, 15 U.S.C. Sec. 2; 3) procedural due process and equal protection violations brought pursuant to 42 U.S.C. Sec. 1983; and 4) four state law causes of action for fraud, deceit, conspiracy, and promissory estoppel.

The Authority filed two different motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). The district court granted both motions, thus dismissing all claims against the Authority. ² B & B Builders then filed a motion to dismiss all claims based on the court's previous rulings. That motion was likewise granted.

II.

We review the sufficiency of a complaint de novo and apply the same standard as the district court. Morgan v. City of Rawlins, 792 F.2d 975, 978 (10th Cir.1986). "[W]e must take as true all well-pleaded allegations in the plaintiff's complaint...." Curtis Ambulance of Fla., Inc. v. Board of County Comm'rs, 811 F.2d 1371, 1374 (10th Cir.1987). A complaint cannot be dismissed unless it appears beyond all doubt the plaintiff cannot prove any facts entitling him to relief. Id. at 1375 (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974)).

III. Antitrust Claims

Generally, a state's anticompetitive actions are immune from civil antitrust laws. Parker v. Brown, 317 U.S. 341, 350-52, 63 S.Ct. 307, 313-14, 87 L.Ed. 315 (1943). "In creating this immunity, the Supreme Court recognized that the free market principles espoused in the Sherman Antitrust Act end where countervailing principles of federalism and respect for state sovereignty begin." Traweek v. City & County of San Francisco, 920 F.2d 589, 591 (9th Cir.1990) (citing Parker, 317 U.S. at 350-51, 63 S.Ct. at 313-14). Under certain circumstances, this immunity also applies to municipalities. See Community Communications Co. v. City of Boulder, 455 U.S. 40, 51, 102 S.Ct. 835, 840, 70 L.Ed.2d 810 (1982).

In order to qualify for Parker-type immunity, a municipality must demonstrate its anticompetitive activities "were authorized by the State 'pursuant to state policy to displace competition with regulation or monopoly public service.' " Town of Hallie v. City of Eau Claire, 471 U.S. 34, 39, 105 S.Ct. 1713, 1716, 85 L.Ed.2d 24 (1985) (quoting City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 413, 98 S.Ct. 1123, 1137, 55 L.Ed.2d 364 (1978)). Specifically, the municipality has the burden of showing the state policy under which it acted was "clearly articulated and affirmatively expressed." Lafayette, 435 U.S. at 410, 98 S.Ct. at 1135. A state policy meets these requirements when the empowering statute shows the anticompetitive action was contemplated. Jacobs, Visconsi & Jacobs Co. v. City of Lawrence, 927 F.2d 1111, 1120 (10th Cir.1991).

This court has adopted a two-part test for evaluating municipal state action immunity. "First, the state legislature must have authorized the action under challenge. Second, the legislature must have intended to displace competition with regulation." Id. (citing Oberndorf v. City & County of Denver, 900 F.2d 1434, 1438 (10th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 129, 112 L.Ed.2d 97 (1990)). Here, the challenged activity is the selection of a contractor other than that which submitted the lowest bid. This selection was made pursuant to the express policies found in the OPCBA. The act clearly contemplates anticompetitive activity. See Mercy-Peninsula Ambulance, Inc. v. San Mateo County, 791 F.2d 755, 756-58 (9th Cir.1986) (competitive bidding procedure which excluded some ambulance service providers had anticompetitive effect which was contemplated under statute). Moreover, not only does the statute mandate that contracts be awarded to the contractor determined to be the lowest responsible bidder, it also gives the public agency discretion to reject any or all bids if it determines that is in the best interest of the State of Oklahoma. See Okla.Stat. tit. 61, Secs. 103, 119 (1981). The Authority acted within the scope of the public bidding statute when it awarded the project to a contractor who did not submit the lowest bid. Thus, the state action doctrine applies, rendering the Authority immune from suit. ³

While acknowledging application of the OPCBA as a clear expression of state policy, Buckley asserts the Authority was not acting pursuant to the statute when it awarded this contract to B & B Builders. Instead, Buckley contends the Authority was acting in contravention of legislative goals. In essence, Buckley asserts that awarding a contract based on past affiliation with a contractor constitutes an abuse of the OPCBA and, therefore, the Authority was not acting pursuant to state policy as the Lafayette decision requires.

Once a municipality establishes it is entitled to state action immunity, the subjective motivation of the actors involved in the decisionmaking process should not come into play. See City of Columbia v. Omni Outdoor Advertising, Inc., --- U.S. ----, ---- - ----, 111 S.Ct. 1344, 1346-47, 113 L.Ed.2d 382 (1991) (holding there is no conspiracy exception to the state action doctrine); Traweek, 920 F.2d at 592-93; Hancock Indus. v. Schaeffer, 811 F.2d 225, 234 (3rd Cir.1987); see also Consolidated Television Cable Serv., Inc. v. City of Frankfort, 857 F.2d 354, 361-62 (6th Cir.1988) (misapplication of otherwise clearly expressed state law does not result in denial of immunity), cert. denied, 489 U.S. 1082, 109 S.Ct. 1537, 103 L.Ed.2d 842 (1989). The availability of the immunity must be determined by looking to the objective standards which the Parker decision sets forth. Llewellyn v. Crothers, 765 F.2d 769, 774 (9th Cir.1985). This approach preserves the federalism principles which are the heart of the state action doctrine. Id.; cf. Lease Lights, Inc. v. Public Serv. Co. of Okla., 849 F.2d 1330, 1334 (10th Cir.1988) ("The constitutional invalidity of the attempted state regulation is not an appropriate basis for disregarding state action immunity."), cert. denied, 488 U.S. 1019, 109 S.Ct. 817, 102 L.Ed.2d 807 (1989).

State laws intended to displace the antitrust laws may delegate to public agencies or officials the power to act, decide, or regulate in order to achieve anticompetitive results. Of course, state law "authorizes" only agency decisions that are substantively and procedurally correct. Errors of fact, law or judgment by the agency are not "authorized," and state tribunals will normally reverse erroneous acts or decisions. If the antitrust court demands unqualified "authority" in this sense, it will inevitably become the standard reviewer of governmental agencies whenever it is alleged that the agency, though possessing the power to engage in the challenged conduct, has exercised its power erroneously.

Llewellyn, 765 F.2d at 1334 (quoting Areeda, Antitrust Immunity for "State Action" After Lafayette, 95 Harv.L.Rev. 435, 449-50 (1981)); see also City of Columbia, 59 U.S.L.W. at 4263 (court rejecting any interpretation of the Sherman Act which allows plaintiffs to look behind the actions of state sovereigns). Any such abuses of state policy should be left for state courts to correct. Llewellyn, 765 F.2d at 774.

In this case, it is clear the state legislature authorized the Authority to solicit bids and make a determination as to which contractor was best for...