Rochester City Lines Co. v. City of Rochester

• Decision Date: 15 May 2017
• Docket Number: A16-1515
• Citation: 897 N.W.2d 792
• Parties: ROCHESTER CITY LINES CO., Relator, v. CITY OF ROCHESTER, et al., Respondents, First Transit, Inc., Respondent.
• Court: Minnesota Court of Appeals

897 N.W.2d 792

ROCHESTER CITY LINES CO., Relator,

v. CITY OF ROCHESTER, et al., Respondents,First Transit, Inc., Respondent.

A16-1515

Court of Appeals of Minnesota.

Filed May 15, 2017

Gary A. Van Cleve, Rob A. Stefonowicz, Bryan J. Huntington, Larkin Hoffman Daly & Lindgren Ltd., Minneapolis, Minnesota; and Steven A. Diaz (pro hac vice), Law Office of Steven A. Diaz, Washington, D.C. (for relator).

John M. Baker, Monte A. Mills, Katherine M. Swenson, Greene Espel PLLP, Minneapolis, Minnesota (for respondents City of Rochester and Justin L. Templin).

Charles K. Maier, Richard C. Landon, Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, Minnesota (for respondent First Transit).

Considered and decided by Kirk, Presiding Judge; Schellhas, Judge; and Bratvold, Judge.

OPINION

SCHELLHAS, Judge

On this certiorari appeal, relator challenges the denial of its protest to a request for proposals for the operation of municipal public transit services. Because the request for proposals includes a provision that creates an impermissible appearance of bias, we reverse.

FACTS

For decades, relator Rochester City Lines Co. (RCL) operated fixed-route public transit services in respondent City of Rochester under a series of noncompetitive contracts with the city. In 2011, the Federal Transit Administration (FTA) informed the city that, to continue to receive federal funding for public transit, the city must use a competitive bidding process to award future contracts for the operation of its public transit services.

The city accordingly issued a request for proposals (RFP) to operate its fixed-route public transit services for the period from July 1, 2012, to December 31, 2016 (2012 RFP). RCL and respondent First Transit Inc. (First Transit) were among the four companies that submitted proposals in response to the 2012 RFP. In February 2012, while the city was still receiving proposals, RCL sued the city in connection with the 2012 RFP (2012 RFP litigation). In April 2012, pending the 2012 RFP litigation, the city awarded the 2012 contract to First Transit. In June 2012, RCL amended its complaint in the 2012 RFP litigation, adding First Transit as a named defendant and adding a Griswold claim against the city.¹ In July 2012, First Transit began operating fixed-route public transit services in the city under the 2012 contract.

In June 2013, the district court entered summary judgment against RCL on each of its claims in the 2012 RFP litigation. This court affirmed. Rochester City Lines, Co. v. City of Rochester , 846 N.W.2d 444, 449 (Minn. App. 2014), review granted (Minn. June 17, 2014). On August 19, 2015, the supreme court affirmed in part, reversed in part, and remanded for further proceedings on RCL's Griswold claim. Rochester City Lines, Co. v. City of Rochester , 868 N.W.2d 655, 665 (Minn. 2015) (RCL I ), cert. denied , ––– U.S. ––––, 136 S.Ct. 849, 193 L.Ed.2d 720 (2016). RCL's Griswold claim is scheduled for court trial on May 22, 2017.

On June 21, 2016, as the 2012 contract neared its end, the city issued an RFP to operate its fixed-route and paratransit public transit services for the period from January 1, 2017, to December 31, 2021 (2016 RFP). The 2016 RFP provides a process by which a potential bidder may raise "protests of or relating to" the 2016 RFP prior to submitting a proposal (pre-bid protest). The 2016 RFP also names respondent Justin L. Templin, whom the city appointed as Special Assistant City Attorney, as the "Moderator of the RFP process" (the moderator) and establishes that the moderator is authorized to make "the final decision ... at the City level" on any pre-bid protest. An August 18, 2016 addendum to the 2016 RFP² names each of the city's four public-transit administrators as members of the committee tasked with evaluating proposals received in response to the 2016 RFP (2016 evaluation committee). Five of the eight members of the 2016 evaluation committee previously served as members of the committee that evaluated proposals received in response to the 2012 RFP (2012 evaluation committee).

On August 22, 2016, RCL brought to the moderator a pre-bid protest, challenging several provisions of the 2016 RFP and requesting relief in the form of revisions to the RFP and debarment of First Transit.³ The moderator denied RCL's protest on August 26. The 2016 evaluation committee then began its evaluation of the four proposals received in response to the 2016 RFP, including bids by RCL and First Transit. On September 22, RCL petitioned this court for a writ of certiorari, naming the city and the moderator in his official capacity as respondents (city respondents) and seeking review of the moderator's denial of its pre-bid protest. First Transit later intervened in this certiorari appeal as an additional respondent, indicating to this court that the city awarded the 2016 contract to First Transit on November 7.

ISSUE

Did the moderator commit reversible error by denying RCL's pre-bid protest to the 2016 RFP?

ANALYSIS

The 2016 RFP promises a best-value competitive bidding process consistent with relevant FTA guidelines. "Best-value bidding, as described by the FTA, is a procedure by which the award of a government contract depends on which proposal represents the best value based on an analysis of the tradeoff of qualitative technical factors and price or cost factors." RCL I , 868 N.W.2d at 658 (quotation omitted).

Like any competitive bidding process, best-value bidding must "provide a fair process and incorporate sufficient controls to safeguard against abuses." Id. at 660 (citing Griswold , 242 Minn. at 536, 65 N.W.2d at 652 ). In other words, best-value bidding may not be pursued " ‘in an unreasonable, arbitrary, or capricious manner,’ " id. at 659 (quoting Griswold , 242 Minn. at 535, 65 N.W.2d at 652 ), that represents "an exercise of the [municipality]'s ‘will’ rather than its ‘judgment,’ " id. at 660 (quoting Markwardt v. State, Water Res. Bd. , 254 N.W.2d 371, 374 (Minn. 1977) ). A municipality's adoption or use of "any procedure that ‘emasculates the safeguards of competitive bidding’ invalidates the process and [any] contract" awarded through that process. Id. (quoting Griswold , 242 Minn. at 536, 65 N.W.2d at 652 ).

In regard to RCL's pre-bid protest, the moderator therefore was faced with the question whether any challenged provision of the 2016 RFP renders the 2016 RFP process unreasonable, arbitrary, or capricious by undermining the procedural fairness required of a best-value competitive bidding process. The moderator answered that question in the negative and rejected each of RCL's protest claims. As acknowledged by RCL in its certiorari petition, the moderator's denial of RCL's pre-bid protest to the 2016 RFP was a quasi-judicial decision. See id. at 657–58, 662–63 (concluding that city's denial of RCL's pre-bid protest to 2012 RFP was quasi-judicial decision); see also Minn. Ctr. for Envtl. Advocacy v. Metro. Council , 587 N.W.2d 838, 842 (Minn. 1999) (identifying as "indicia of quasi-judicial actions ... (1) investigation into a disputed claim and weighing of evidentiary facts; (2) application of those facts to a prescribed standard; and (3) a binding decision regarding the disputed claim").

"We review a quasi-judicial decision rendered by a city under a limited and nonintrusive standard of review." Sawh v. City of Lino Lakes , 823 N.W.2d 627, 635 (Minn. 2012) (quotation omitted); see also Gustafson v. Comm'r of Human Servs. , 884 N.W.2d 674, 686 (Minn. App. 2016) (stating that certiorari review of quasi-judicial decision "seeks to ‘minimize the judicial intrusion into administrative decision-making’ and to ‘avoid usurpation of the executive body's administrative prerogatives' " (quoting Tischer v. Housing & Redevelopment Auth. , 693 N.W.2d 426, 429 (Minn. 2005) )). "Under that standard, we may not substitute our own findings of fact for those of a city, or engage in a de novo review of conflicting evidence." Sawh , 823 N.W.2d at 635 ; see also Staeheli v. City of St. Paul , 732 N.W.2d 298, 303 (Minn. App. 2007) (stating that "reviewing court ... will not retry facts or make credibility determinations"). "Instead, we must uphold a city's decision if the city has explained how it derived its conclusion and the city's conclusion is reasonable on the basis of the record." Sawh , 823 N.W.2d at 635 (quotation omitted).

We consider first RCL's challenge to the moderator's rejection of its protest claim that the 2016 evaluation committee is not fair and impartial because five of the eight members of the 2016 evaluation committee were also members of the 2012 evaluation committee. According to RCL, each member of the 2012 evaluation committee was "tainted by participation in an evaluation process that the evidence shows relied upon a collusive agreement between the City and First Transit to rig the proposal evaluation process, with respect to interviews and scoring." Citing Griswold , RCL argues that the city's inclusion of five of these "tainted" individuals (holdover members) on the 2016 evaluation committee undermined the fairness and impartiality of that committee and renders the 2016 RFP process "inherently unfair."

To the extent that RCL asks us to conclude that the 2012 RFP process was infected by the city's bias against RCL and/or favoritism towards First Transit, we expressly decline to do so. See Sawh , 823 N.W.2d at 635 (stating that "we may not substitute our own findings of fact for those of a city, or engage in a de novo review of conflicting evidence"). We reject RCL's assertions in briefing and at argument before this court that the issue of bias or favoritism in the 2012 RFP process is "undisputed" in the ongoing 2012 RFP litigation. The supreme court did not resolve that issue in RCL I ; it merely concluded that "the evidence in the record does not exclude the possibility that bias against RCL, or favoritism toward First Transit, improperly influenced the City's bidding process," and it...