JLPR LLC v. Procurement Policy Bd.

• Decision Date: 13 May 2021
• Docket Number: No. 20190798-CA,20190798-CA
• Court: Utah Court of Appeals
• Parties: JLPR LLC, Petitioner, v. PROCUREMENT POLICY BOARD, Department of Agriculture and Food, and Division of Purchasing and General Services, Respondents.

492 P.3d 784

JLPR LLC, Petitioner,

v.PROCUREMENT POLICY BOARD, Department of Agriculture and Food, and Division of Purchasing and General Services, Respondents.

No. 20190798-CA

Court of Appeals of Utah.

Filed May 13, 2021

Jason M. Kerr and Steven W. Garff, Salt Lake City, Attorneys for Petitioner

Sean D. Reyes, Paul H. Tonks, and Brent Burnett, Salt Lake City, Attorneys for Respondents

Judge Ryan M. Harris authored this Opinion, in which Judge Jill M. Pohlman and Senior Judge Kate Appleby concurred.¹

Opinion

HARRIS, Judge:

¶1 After a law was passed legalizing medical marijuana in Utah, the Utah Department of Agriculture and Food (UDAF) invited applications for a limited number of medical cannabis cultivator licenses. JLPR LLC (JLPR) applied for one of the licenses, but UDAF awarded the licenses to others. JLPR appealed UDAF's decision first to a protest officer (Officer), and next to the Utah Procurement Policy Board (Board), each of which rejected JLPR's appeal. JLPR now seeks judicial review of the Board's decision, and after review we decline to disturb it.

BACKGROUND

¶2 In November 2018, Utah voters approved a citizen initiative legalizing medical marijuana. In a special legislative session held just a few weeks after the election, the Utah Legislature "replaced the initiative with its own statute." See Grant v. Herbert , 2019 UT 42, ¶ 1, 449 P.3d 122. The new law, known as the Utah Medical Cannabis Act (the Act), included details for implementing a medical marijuana market in Utah. See Act of Dec. 3, 2018, ch. 1, §§ 1–141, 2018 Utah Laws 3rd Spec. Sess. 3, 3–89. The Act authorized UDAF to issue as many as ten licenses to businesses wishing "to operate a cannabis cultivation facility." See Utah Code Ann. § 4-41a-205(1) (LexisNexis Supp. 2019). As originally enacted, the Act also provided that the process of awarding licenses would be governed by the Utah Procurement Code, id. § 4-41a-201(2)(a), and that UDAF's "authority to issue a license under this section [was] plenary and ... not subject to review," other than as provided in the procurement code, id . § 4-41a-201(12).

¶3 At some point in late May or early June 2019, UDAF issued a Request for Proposals (RFP) seeking applications from vendors interested in obtaining a medical cannabis business license. If applicants demonstrated that they met certain threshold requirements set forth in the Act, see id. § 4-41a-201(2)(b), they advanced to a "technical criteria evaluation stage" in which they were evaluated by a six-member UDAF evaluation committee (Committee) based on additional criteria. These additional criteria are also set forth in the Act, and include an applicant's business experience, the soundness of its "operating plan," an applicant's "positive connections to the local community," and its demonstrated ability to "reduce the cost [of the product] to patients." See id. § 4-41a-205(3). Applications were due by July 1, 2019.

¶4 When the RFP was first released, it indicated that each applicant needed to be "a resident of the State of Utah." But in late June 2019, shortly before the July 1 deadline, UDAF changed that requirement and indicated that it would accept applications from individuals and entities that were not Utah residents.

¶5 JLPR is a Utah-based limited liability company with four members, all of whom are Utah residents. JLPR was aware of the initial requirement that license applicants be Utah residents, and asserts that it "carefully structured" the formation of its entity "around this requirement." JLPR's four members collectively had "over 150 years of successful business experience and expertise" in various endeavors, including "a large brine shrimp operation on the Great Salt Lake," a "large scale ranching" operation in south-central Utah, a "Utah based railroad," and other "restaurant and hospitality businesses in Utah." JLPR purported to be financially sound, with "significant earned capital" and the ability to "fully self-finance all cannabis operations," including cultivation. On or about July 1, 2019, JLPR submitted a timely application for one of the available cannabis business licenses.

¶6 Over the ensuing weeks, the Committee analyzed the eighty-one applications that had been timely submitted, including JLPR's. Three of the applications were rejected for failing to meet the minimum statutory requirements, and an additional forty-five of them failed to "meet the required minimum technical scores" as outlined in the RFP. The remaining thirty-three applications that met all minimum thresholds, including JLPR's, were then evaluated more closely by the Committee, which met to "discuss[ ]" those applications and to "determine who was the most qualified based on the contents of their submission as outlined in [the] RFP." The Committee conducted its evaluation entirely on the applicants’ written submissions; it did not provide applicants the opportunity to interview with or otherwise appear in person before the Committee.

¶7 On July 19, 2019, UDAF announced that it had awarded cannabis licenses to eight businesses, four of which were Utah-based businesses and four of which were not. JLPR was not chosen to receive a license. According to UDAF's "Award Justification Statement," "[t]he proposals with the highest total scores received the awards," and JLPR did not have one of the eight highest total scores.

¶8 JLPR appealed the denial of its application by filing a "formal protest" letter with the Officer, according to the requirements set forth in the procurement code. See Utah Code Ann. § 63G-6a-1602(1), (2) (LexisNexis Supp. 2019). In its three-page protest letter, which was submitted without any attachments or exhibits, JLPR challenged UDAF's decision on four grounds. First, it took aim at the RFP process itself, asserting that it was "rushed and incomplete," and had therefore been "unduly restrictive" and "anticompetitive." In particular, it criticized UDAF for allowing applicants "less than a month" to submit "complete application[s]," and for not conducting "interviews, phone calls or other methods" whereby the Committee "could really get to know the applicants." And it complained about the criteria change "at the very end of the process" that allowed non-residents to apply. Second, JLPR claimed that there had been "bias" on the part of the Committee, although the only bias it identified was a "bias toward out-of-state applicants." Third, it alleged that UDAF had failed to "correctly apply or calculate the scoring criteria," and asserted that this was evidenced by "[s]coring inconsistencies" among the six members of the Committee. Finally, it claimed that the Committee made "[e]rrors," asserting generally that JLPR was "the ideal candidate" for a cannabis license and should have received more points than those who were ultimately awarded licenses. As its requested remedy, JLPR asked "to schedule a mutually convenient time to discuss its scores and the unique abilities and qualifications of its members" and "to provide supplement[al] information."

¶9 Less than a week later, after reviewing JLPR's protest letter, the RFP, the "contents of the solicitation file," and various statutory provisions and administrative rules, the Officer rejected JLPR's protest. He dismissed JLPR's challenge to the particulars of the RFP process on timeliness grounds, determining that, under the procurement code, any challenges to the bid process must be filed prior to the application deadline. (Citing id. § 63G-6a-1602(2).) And he dismissed the remainder of JLPR's challenges for lack of evidence. Specifically, he determined that JLPR failed to provide "any facts or evidence that demonstrate a bias." He also determined that JLPR had not submitted any evidence of scoring inconsistencies, noting that "it is common for evaluators to not have the exact same score for each criterion because of their independent judgment." And he determined that, under the procurement code, "a protestor cannot claim it should have received more points or a competitor should have received fewer points." (Citing Utah Admin. Code R33-16-101a.)

¶10 One week after that, JLPR appealed the Officer's decision to the Board. JLPR's initial submission to the Board was a four-page letter similar to the one it had previously submitted to the Officer; in the letter, it made the same four arguments, and again did not attach any exhibits or other evidence. Just over a month later, after learning the identities of the three Board members appointed to the administrative appeals panel, JLPR submitted a second letter addressed to those members individually, again without attachments or exhibits. In this second appeal letter, JLPR again touted its business experience and connection to the community, and asserted that it should have been awarded a license. This time, however, JLPR noted that, since the licenses had been awarded, it had "engaged in initial and somewhat considerable due diligence into each of the permitted licensees," and hinted that it had found "significant conflicts of interest and political ties" that it believed had "driven many if not all of the selection outcomes," and asserted that "the selection process was based upon who you are and who you know rather than if you are truly capable and qualified" to run a cannabis business. But JLPR provided no specific information to support these allegations, stating merely that it was "prepared if needed to disclose all the information [it had] discovered thus far."² And once again, JLPR indicated that its requested remedy was "a meeting with the appropriate decision maker(s), including, but not limited to ... the Lieutenant Governor, the Governor, Bi-Partisan State Senators, Representatives, Legislators, Oversight Committees and the Attorney General to discuss [its] qualifications" for a cannabis license. At the end of the letter, JLPR indicated that it had blind-copied the letter to unnamed "[p]otential [i]nterested [p]arties" who in its "opin...