Control Data Corp. v. Controlling Bd. of Ohio

• Citation: 474 N.E.2d 336,16 Ohio App.3d 30,16 OBR 32
• Parties: , 16 O.B.R. 32 CONTROL DATA CORPORATION et al., Appellants and Cross-Appellees, v. CONTROLLING BOARD OF OHIO et al., Appellees and Cross-Appellants.
• Decision Date: 22 December 1983
• Court: United States Court of Appeals (Ohio)

Page 30

16 Ohio App.3d 30

474 N.E.2d 336, 16 O.B.R. 32

CONTROL DATA CORPORATION et al., Appellants and Cross-Appellees, v. CONTROLLING BOARD OF OHIO et al., Appellees and Cross-Appellants.

Court of Appeals of Ohio, Tenth District, Franklin County.

Dec. 22, 1983.

Syllabus by the Court

1. A corporation has standing to bring a suit against the State Controlling Board and the Ohio Lottery Commission for declaratory and injunctive relief if there is a justiciable controversy affecting it as a prospective or disappointed bidder seeking to enjoin the award and execution of a contract for the purchase of computerized on-line wagering systems.

2. Dissenting members of the Controlling Board do not have the necessary standing, as legislators, to challenge the actions of the State Lottery Commission and the majority of the Controlling Board in the approval and execution of a contract between the lottery commission and a supplier of operational equipment and related personal services; nor do they have standing as taxpayers to challenge such actions when the funds expended for the contract were not allocated from the state General Revenue Fund and they did not claim to be in a special class from whom the funds were collected. (R.C. 3770.06, construed.)

3. R.C. 127.16(A)(3)(a) allows the Controlling Board, upon request by a state agency, to waive the competitive bidding requirements specified by law for a state agency's purchase of equipment, materials, or supplies, whose costs will amount to more than $5,000, if it determines that an emergency or sufficient economic reason exists.

4. Pursuant to R.C. 127.13, the Controlling Board has the authority to adopt procedural rules for conducting the business of the board; however, R.C. 127.13 does not set forth the context of those procedures or require strict compliance, it merely establishes the authority of the board to dictate the procedures it sees fit to follow. In order to prevail, an aggrieved party must be able to demonstrate either that the procedural defects that occurred were so substantial that the basic integrity of the Controlling Board and its operations were threatened or that the defects were of such a nature that the party was prejudicially affected.

5. Following the repeal of R.C. 127.161 effective November 15, 1981, the criteria established by the Controlling Board for the purchase of professional or technical services by a state agency are no longer required to be strictly complied with.

Bricker & Eckler, Russell Leach, Thomas E. Workman and Danny L. Cvetanovich, Columbus, for appellants and cross-appellees.

Anthony J. Celebrezze, Jr., Atty. Gen., and Colleen K. Nissl, Asst. Atty. Gen., for appellee and cross-appellant Controlling Bd.

Vorys, Sater, Seymour & Pease, Edgar A. Strause and George Jenkins, Columbus, for appellee and cross-appellant General Instruments Corp.

STRAUSBAUGH, Judge.

This is an appeal by the plaintiffs, Control Data Corporation, William F. Bowen, Robert E. Netzley, and Thomas A. Van Meter, from a decision of the Court of Common Pleas of Franklin County refusing to grant the plaintiffs' request for declaratory and injunctive relief, and a cross-appeal by the defendants, the Ohio State Lottery Commission and its director, Edwin C. Taylor, the Ohio Department of Administrative Services and its director, William D. Keip, the Controlling Board of the state of Ohio and four of its members, George E. Lord, Stanley J. Aronoff, Cliff Skeen and William E. Hinig, and General Instrument Corporation, from the trial court's finding that the plaintiffs had standing to seek such relief. This dispute centers around a contract executed between the lottery commission and General Instrument Corporation for the purchase of computer equipment and for personal services needed for its maintenance and operations.

The plaintiff Control Data Corporation (hereinafter referred to as "CDC") is a Delaware corporation and is licensed to do business in the state of Ohio. CDC participates in the manufacturing, selling, leasing, operating and servicing of computerized on-line wagering systems. The plaintiffs Bowen, Netzley and Van Meter are citizens of the state of Ohio, duly elected members of the Ohio General Assembly and members of the Controlling Board.

On May 20, 1982 the State Lottery Commission submitted a request to waive the competitive bidding requirements for the purchase of computer equipment and to approve a contract with General Instrument Corporation (hereinafter referred to as "GIC") for the purchase and maintenance of the existing computer system which, at the time, was being leased from GIC. On June 22, 1982 the lottery commission's request was considered by the Controlling Board; however, the meeting ended in a three-to-three tie (with one member missing) and no approval was given. Van Meter, Bowen, and Netzley voted to deny the request. Immediately after the meeting, the lottery commission submitted an invitation to bid "(ITB") to the Department of Administrative Services ("DAS"), which was distributed on June 25, 1982. DAS then scheduled and conducted a pre-bid conference with prospective bidders in Columbus on July 15, 1982. Based upon the lottery commission's ITB, all the vendors present at the pre-bid conference agreed that it would not be possible to bid upon and install a new system before the expiration of the contract with GIC. The lottery commission then decided to again submit its request to the Controlling Board.

On July 20, 1982 the lottery commission requested that the president of the Controlling Board, George E. Lord, place the lottery commission's request on the agenda for the Controlling Board's July 21 meeting. At the July 21 meeting, the request was reconsidered and passed by a vote of four to three. Once again, Van Meter, Bowen, and Netzley voted against the request. Later that day, the lottery director and GIC executed the contract.

On July 23, 1982 the plaintiffs brought an action against the state defendants asking that the contract between the State Lottery Commission and GIC be declared void, that the parties involved be enjoined from performing the contract, and that all state agencies involved in the contract negotiations and approval be enjoined from ignoring the law as it applies to their procedures. In addition, the plaintiffs brought a motion for a temporary restraining order and a motion for a preliminary injunction. Two days later, the plaintiffs amended their complaint to include GIC as a defendant. The plaintiffs based their lawsuit on the grounds that the defendants had failed to abide by the procedural requirements necessary for the waiver of competitive bidding and the approval of the contract with GIC, that the lottery commission abused its discretion in deciding to submit the request to the Controlling Board, and that the Controlling Board had abused its discretion in approving the lottery commission's request.

On the same day that the complaint was filed, the trial court issued a temporary restraining order, scheduled a hearing on August 6, 1982 for plaintiffs' motion for a preliminary injunction, and consolidated the trial on the merits with the hearing. At the end of the proceedings on August 6, 1982 the trial court rescheduled the trial to resume on August 13, 1982. The trial was resumed and completed on August 13, 1982. A decision was rendered on August 24, 1982 in favor of the defendants with the trial court setting forth specific findings of fact and conclusions of law. Its judgment entry was filed on September 7, 1982, and on September 8, 1982 the trial court filed another entry correcting a mistake made in its previous decision. From this decision, both sides now appeal.

The plaintiffs raise the following seven assignments of error:

"1. The trial court's judgment is against the manifest weight of the evidence adduced at the trial of this case.

"2. The trial court's second conclusion of law, contained in its Decision, filed August 24, 1982--upon which its judgment in this case is based--is erroneous.

"3. The trial court's third conclusion of law is erroneous.

"4. The trial court's fourth conclusion of law is erroneous.

"5. The trial court's fifth conclusion of law is erroneous.

"6. The trial court's sixth conclusion of law is erroneous.

"7. The trial court's seventh conclusion of law is erroneous."

On cross-appeal, the defendants raise the following single assignment of error:

"The trial court erred in holding that appellants maintained the requisite standing to bring this action."

In its first conclusion of law, the trial court stated:

"1. Plaintiffs have standing to bring this action."

The defendants in their cross-appeal cite this determination of the trial court as their single assignment of error. They contend that neither CDC nor the three dissenting members of the Controlling Board have the necessary standing to challenge the actions of the lottery commission and the Controlling Board in the approval and execution of the lottery commission's new contract with GIC. The plaintiff CDC claims standing, both as a prospective bidder and as a taxpayer, while the three dissenting members of the Controlling Board, Van Meter, Bowen, and Netzley, claim standing in their capacity as legislators and as taxpayers.

As stated by this court in C.E. Angles, Inc. v. Evans (Dec. 14, 1982), No. 82AP-635, unreported:

"The common law doctrine of standing to sue involves a determination of whether a party has a sufficient stake in the outcome of a justiciable controversy to obtain a judicial resolution of that controversy. * * * " Id. at 2.

With this basic rule in mind, two separate determinations must be made in regard to a plaintiff's standing. First, a justiciable controversy must exist, and, second, the plaintiff must have a sufficient stake in its outcome. As a prospective bidder, CDC claims that, as a result of the Controlling Board's approval of the lottery commission's ...