Rochester City Lines Co. v. City of Rochester, A16-1515

• Decision Date: 20 June 2018
• Docket Number: A16-1515
• Citation: Rochester City Lines Co. v. City of Rochester, 913 N.W.2d 443 (Minn. 2018)
• Parties: ROCHESTER CITY LINES CO., Respondent, v. CITY OF ROCHESTER, et al, Appellants, First Transit, Inc., Appellant.
• Court: Minnesota Supreme Court

913 N.W.2d 443

ROCHESTER CITY LINES CO., Respondent,

v.CITY OF ROCHESTER, et al, Appellants,First Transit, Inc., Appellant.

A16-1515

Supreme Court of Minnesota.

Filed: June 20, 2018

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

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

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

Susan L. Naughton, League of Minnesota Cities, Saint Paul, Minnesota, for amicus curiae League of Minnesota Cities.

Mathew A. Ferche, Assistant Attorney General, Saint Paul, Minnesota, for amici curiae Commissioner of Minnesota Department of Administration and Commissioner of Minnesota Department of Transportation.

Dean B. Thomson, Jeffrey A. Wieland, Sara E. Porter, Fabyanske, Westra, Hart & Thomson, P.A., Minneapolis, Minnesota, for amicus curiae Associated General Contractors of Minnesota.

OPINION

McKeig, Justice.

Appellant City of Rochester ("the City") owns a fleet of buses, which have been operated by appellant First Transit, Inc. ("First Transit") since 2012. Until 2012, however, these buses were operated by respondent Rochester City Lines Company ("RCL"). After the contract was awarded to First Transit, RCL challenged the City’s competitive bidding process, which we addressed in Rochester City Lines, Co. v. City of Rochester (RCL I ), 868 N.W.2d 655 (Minn. 2015), cert. denied , ––– U.S. ––––, 136 S.Ct. 849, 193 L.Ed.2d 720 (2016). RCL has now also challenged the City’s 2016 competitive-bidding process, which, like the 2012 process, resulted in the bus-operation contract being awarded to First Transit.

The City’s appointed moderator, appellant Justin Templin ("the Moderator"), rejected RCL’s pre-bid protest. The court of appeals, however, held that the City’s Request for Proposals ("RFP") appeared impermissibly biased against RCL, because five of the eight members of the 2016 proposal evaluation committee had served on the 2012 proposal evaluation committee, and RCL had previously accused the 2012 proposal evaluation committee of bias. Rochester City Lines Co. v. City of Rochester , 897 N.W.2d 792, 799–800 (Minn.App. 2017) (hereinafter " Rochester City Lines "). The court of appeals therefore declared the 2016 competitive-bidding process, and the resulting contract awarded to First Transit, invalid. Id. at 801. We reverse.

FACTS

A. The 2012 RFP¹

In 2011, the Federal Transit Administration, which provided and continues to provide grant funding for the City’s bus-operation contract, directed the City to award bus-operation contracts via a competitive-bidding process. The City issued an RFP in December 2011 stating that it would use a "best value" bidding process. RCL filed a pre-bid protest of the 2012 RFP with the Rochester City Attorney. RCL also commenced a lawsuit in Olmsted County District Court on February 15, 2012, in an effort to obtain a temporary injunction against the City. Both RCL’s pre-bid protest and injunction request were denied, and on April 2, 2012, the City awarded the four-year bus-operation contract to First Transit.

Three days after First Transit was selected, RCL filed a post-bid protest, which was also denied. RCL then amended its district court complaint to include various new defendants and claims, and sought a declaratory judgment that the bidding process was unlawful. The district court granted summary judgment in favor of the City and First Transit, and the court of appeals affirmed. We granted review as to RCL’s bid-protest claims, and reversed the court of appeals, on the grounds that "two procedural irregularities raise[d] the specter of pervasive bias against RCL" in the 2012 RFP evaluation process: (1) whether First Transit gained an unfair advantage when the 2012 RFP evaluation committee considered the answers of two of RCL’s managers, who First Transit had listed as its prospective management personnel, in scoring both RCL and First Transit’s interviews; and (2) whether RCL was unfairly disadvantaged when two city employees withdrew, without notice and on advice from the Rochester City Attorney, from serving as references for RCL. RCL I , 868 N.W.2d at 664–65. We thus remanded the 2012 RFP litigation for further proceedings. Id. at 665.

On remand, the district court found that there was no evidence that RCL had been unfairly disadvantaged, or that First Transit had gained an unfair advantage by having two of RCL’s managers’ answers included in First Transit’s score. The district court also found that RCL’s proposal was scored higher than it deserved, despite the withdrawal of its two references. The district court further found that there was no collusion between First Transit and the City, or any misconduct in the 2012 RFP process. RCL’s appeal of that decision is currently pending before the court of appeals. Rochester City Lines Co. v. City of Rochester, et al. , No. A17-1944 (Minn. App. filed Dec. 6, 2017).

B. The 2016 RFP

While the 2012 RFP litigation was being considered on remand, the City issued a new RFP for a bus-operation contract from January 1, 2017 to December 31, 2021 ("the 2016 RFP"). In response to the issues that we identified in RCL I , the City hired the Moderator as outside counsel to facilitate the process, including all bid-protest procedures. The City also prohibited individuals from appearing at interviews for more than one proposal unless they were a current employee of the bidder or had a written agreement to accept employment with the bidder pending the contract award, and noted that each interview would be scored separately. And at a July 6, 2016 pre-bid informational presentation, the Moderator also informed prospective bidders, including RCL, that members of the 2016 RFP evaluation committee could not serve as references. The Moderator further explained that, while the evaluation committee had not been finalized, it would include four of the City’s employees—the director of public works, the transit and parking manager, the transit and parking assistant, and the transit planner. All four of these employees served on the 2012 RFP evaluation committee. On August 18, 2016, the Moderator announced that the City’s finance director and three outside observers would be the other four members of the 2016 RFP evaluation committee. One of the three outside observers also had served on the 2012 RFP evaluation committee.

Four days later, RCL submitted a pre-bid protest, alleging: (1) unfair deprivation of references and ability to compete; (2) unfair diminution of reference weight; (3) unfair competition regarding First Transit; (4) unfair composition of the evaluation committee; (5) unfair pre-submission protest procedure; (6) unfair reliance on revoked guidance; and (7) unfair opportunities for certain businesses. Among its requests for relief, RCL requested that the 2016 RFP evaluation committee be re-formed to exclude anyone who had served on the 2012 RFP evaluation committee, because the members who had been on the 2012 RFP evaluation committee were allegedly biased against RCL.

The Moderator denied RCL’s request for relief. Among his findings, the Moderator noted that RCL I did not find any bias on the part of any individual involved in the 2012 RFP, and also highlighted that the issues raised by RCL I regarding the evaluation committee’s interview process and references were specifically addressed by the 2016 RFP. The Moderator therefore concluded that no remedial action was required regarding the composition of the 2016 RFP evaluation committee.

RCL sought certiorari review. In the opening brief to the court of appeals, RCL reasserted the arguments from its pre-bid protest. In the reply brief, however, RCL reframed its argument, asserting that, "at the very least, the 2016 contract award suffers from an objectively reasonable perception of bias."

The court of appeals acknowledged that RCL had not presented any evidence that any of the 2016 RFP evaluation committee members were actually biased against RCL. Rochester City Lines , 897 N.W.2d at 796–97. However, the court of appeals interpreted RCL’s pre-bid protest to include an appearance of bias claim, and held that the Moderator erred by failing to consider that claim in his response. Id. at 799–800. The court of appeals therefore reversed the Moderator’s decision and invalidated both the City’s 2016 RFP process and First Transit’s contract from 2017 to 2022. Id. at 801. We granted petitions for further review from the City, the Moderator, and First Transit.

ANALYSIS

We review the Moderator’s resolution of RCL’s bid protest "under a limited and nonintrusive standard" because it is a quasi-judicial decision. Sawh v. City of Lino Lakes , 823 N.W.2d 627, 635 (Minn. 2012) (internal quotation marks omitted). We cannot substitute our own findings of fact, and we do not review conflicting evidence de novo . Id.

I.

In RCL I , RCL claimed that the terms of the 2012 RFP were excessive and unreasonable. 868 N.W.2d at 661–62. We held that RCL had forfeited this claim "by failing to raise it in accordance with the pre-bid protest procedures outlined in the RFP." Id. at 662. Specifically, we deemed the argument forfeited because "[n]owhere in the documents submitted to the City prior to the bidding did RCL object to any of the contractor qualifications as unreasonable or excessive." Id. Similarly, the City argues in this case that RCL’s pre-bid protest did not raise an appearance-of-bias argument, and that RCL therefore forfeited this claim. We agree.

The 2016 RFP permitted written pre-bid protests "regarding any aspect of the RFP document, attached materials[,] and City selection criteria and procedures," provided that such protests were "specific and cite[d...