Franklin Cnty. Sheriff's Office v. St. Albans City Police Dep't

• Decision Date: 03 August 2012
• Docket Number: No. 11–266.,11–266.
• Citation: 58 A.3d 207,2012 VT 62
• Court: Vermont Supreme Court
• Parties: FRANKLIN COUNTY SHERIFF'S OFFICE v. ST. ALBANS CITY POLICE DEPARTMENT.

58 A.3d 207

2012 VT 62

FRANKLIN COUNTY SHERIFF'S OFFICE

v.ST. ALBANS CITY POLICE DEPARTMENT.

No. 11–266.

Supreme Court of Vermont.

Aug. 3, 2012.

Pietro J. Lynn and Sean M. Toohey of Lynn, Lynn & Blackman, P.C., Burlington, for Plaintiff–Appellant.

Geoffrey H. Hand and Rebecca E. Boucher of Dunkiel Saunders Elliott Raubvogel & Hand PLLC, Burlington, for Defendant–Appellee.

James W. Barlow, Montpelier, for Amicus Curiae Vermont League of Cities and Towns.

Present: REIBER, C.J., SKOGLUND, BURGESS and ROBINSON, JJ., and KUPERSMITH, Supr. J., Specially Assigned.

REIBER, C.J.

¶ 1. In this predatory pricing suit, the Franklin County Sheriff's Office appeals the trial court's judgment in favor of the St. Albans City Police Department. The Sheriff's Office contends that the City Police Department engaged in an unfair method of competition with the intent to harm competition under the Vermont Consumer Fraud Act's (VCFA) predatory pricing provision, 9 V.S.A. § 2461c. Specifically, the Sheriff's Office argues that the City Police Department submitted an “artificially low” bid in response to the Town of St. Albans's request for proposals for law enforcement services. We affirm.

¶ 2. The City Police Department is a municipal police department located in the City of St. Albans. It handles law enforcement duties within the City and provides dispatch services to emergency response organizations in three counties. The Sheriff's Office provides a wide variety of law enforcement services to local municipalities. For the past twenty-five years, the Sheriff's Office has provided law enforcement services to the Town of St. Albans.

¶ 3. In 2007, the Town requested proposals for the provision of law enforcement services to the Town for a three-year contract. The City Police Department's bid of $766,532.25 for the first year included the hiring of six new police officers and one-and-a-half dispatchers to provide the Town with services twenty-four hours a day, seven days a week. The Sheriff's Office's bid was lower, however, and its bid was accepted.

¶ 4. In October 2010, in anticipation of the expiration of the Sheriff's Office's contract, the Town again requested proposals for law enforcement services for a three-year contract. The Sheriff's Office's first-year bid was $642,652.97, which included services for twenty-four hours a day, seven days a week. The City Police Department's first-year bid was $486,850.99. Its proposal included staffing the combined service areas of the City and Town with between three and six patrol cars. The City Police Department also proposed hiring three fulltime officers and reassigning a fourth to cover the Town for 120 hours per week. The Department proposed using officers who already worked in the City to supply the additional forty-eight hours, so as to meet the contract's requirement of police coverage twenty-four hours a day, seven days a week. The Town selectboard considered both proposals and in an open meeting voted to award the contract to the City Police Department. The three-year term began July 1, 2011.

¶ 5. The Sheriff's Office sued the City Police Department, alleging that the Department violated the VCFA. Specifically, the Sheriff's Office claimed that the Department engaged in predatory pricing by intentionally pricing its law enforcement services in a way that would harm competition under 9 V.S.A. § 2461c. The Sheriff's Office requested an injunction and damages. The City Police Department opposed the injunction on the grounds that the claim did not meet the elements of the VCFA, the Sheriff's Office did not have standing, and the state-action immunity doctrine barred suit against the Department.

¶ 6. The trial court denied the injunction in an order dated April 27, 2011, in which the court made preliminary findings of fact and conclusions of law. The Sheriff's Office filed a motion for interlocutory appeal. While that motion was pending, the parties filed a joint stipulation and motion for entry of final judgment, stating that the court could enter a final decision based on the findings of fact and conclusions of law in the court's April 27 order. The court entered judgment for the City Police Department, making its April 27 order the final decision on the merits.

¶ 7. The court rejected the City Police Department's argument that the Sheriff's Office lacked standing. The court acknowledged that the statutes authorizing municipalities to enter into agreements for police services do not require a bidding process. The court concluded, however, that the Sheriff's Office acquired a legally protected interest in competing for the contract when the Town opened the procurement process for bidding. It reasoned that the VCFA applies to all activities in commerce, that the provision of police services falls within the definition of commerce, and that an alternative conclusion would “suggest that even egregious antitrust violations (e.g., price fixing) would be acceptable in what purported to be a competitive bidding process.” The court also rejected the City Police Department's argument that the suit was barred by the state-action immunity doctrine, reasoning that the City Police Department was not eligible for immunity, having entered the market as a seller.

¶ 8. On the merits, however, the court agreed with the City Police Department. The court concluded that the City Police Department's conduct did not violate the VCFA because there was no intent to harm competition. The court found three legitimate reasons for the reduction between the City Police Department's 2007 and 2010 bids: (1) by 2010, the Department was fully staffed and did not have to hire and train as many new officers as it would have in 2007; (2) the Department was able to perform a better analysis of its costs and capacities by 2010 due to an additional qualified accountant in the finance office; and (3) the Department based its bid on using service zones and a cover car.¹ The court found that the use of the current City Police Department employees to concurrently provide forty-eight hours of coverage to the Town per week would not require the City to pay them overtime. Rather, the court found that police officers are generally not fully occupied during their shifts, and that “combining services for the Town and City allows both municipalities to benefit from using these existing services more efficiently.” The court also found that the contract does not require the City or its taxpayers to subsidize the Town because the City would pay its officers the same compensation regardless of whether some of its officers provide coverage to the Town. Ultimately, the court held that the City Police Department did not engage in unfair conduct by taking advantage of efficiencies made possible by geography. The court concluded that the Sheriff's Office had not proven that the City Police Department acted with any intent to harm competition, a prerequisite to a predatory pricing claim. 9 V.S.A. § 2461c. The Sheriff's Office appeals this decision.

¶ 9. The Sheriff's Office argues on appeal that the City Police Department acted unfairly by “supplementing its bid with existing, dedicated resources” and had an intent to harm competition. The Sheriff's Office also argues that the City Police Department subsidized its bid by using City police officers to deliver some Town law enforcement services, and that the court's finding to the contrary is clearly erroneous. The City Police Department contends that the elements of a VCFA claim are not present, that the Sheriff's Office does not have standing, and that its claims are barred by the state-action immunity doctrine.

¶ 10. We will uphold the trial court's findings unless clearly erroneous. V.R.C.P. 52(a)(2). Our review of the court's legal conclusions is de novo. Charbonneau v. Gorczyk, 2003 VT 105, ¶ 2, 176 Vt. 140, 838 A.2d 117.

¶ 11. Because it is a threshold requirement, we first address the question of standing. Vermont courts are limited to deciding actual cases or controversies. In re Constitutionality of House Bill 88, 115 Vt. 524, 529, 64 A.2d 169, 172 (1949) (“The judicial power, as conferred by the Constitution of this State upon this Court, is the same as that given to the Federal Supreme Court by the United States Constitution; that is, ‘the right to determine actual controversies arising between adverse litigants, duly instituted in courts of proper jurisdiction.’ ” (quoting Muskrat v. United States, 219 U.S. 346, 361, 31 S.Ct. 250, 55 L.Ed. 246 (1911))). An element of the case-or-controversy requirement is that a plaintiff must have standing—that is, “must have suffered a particular injury that is attributable to the defendant and that can be redressed by a court of law.” Parker v. Town of Milton, 169 Vt. 74, 77, 726 A.2d 477, 480 (1998). To bring a case, a plaintiff must show “(1) injury in fact, (2) causation, and (3) redressability.” Id.²

¶ 12. Standing also embodies “a prudential component of self-imposed judicial limits.” Hinesburg Sand & Gravel Co. v. State, 166 Vt. 337, 341, 693 A.2d 1045, 1048 (1997). Under the principles of prudential standing, a plaintiff's complaint must “ ‘fall within the zone of interests protected by the law invoked,’ ” which requires inquiry into the substance of a plaintiff's claim. Id. (quoting Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984)).

¶ 13. We begin by examining the injury-in-fact element of constitutional standing—the only element at issue. The City Police Department argues that the Sheriff's Office has not suffered an injury in fact. The Sheriff's Office claims injury because it lost the bid due to the City Police Department's artificially low bid. The Sheriff's Office contends that it was unable to compete on equal ground with the City Police Department for the present contract, and that, going forward, it will not be able to compete with the City Police Department for future contracts. The...