Unisys Corp. v. Department of Labor

• Decision Date: 31 December 1991
• Docket Number: No. 14330,14330
• Citation: 220 Conn. 689,600 A.2d 1019
• Court: Connecticut Supreme Court
• Parties: UNISYS CORPORATION v. DEPARTMENT OF LABOR et al.

Page 1019

600 A.2d 1019

220 Conn. 689

UNISYS CORPORATION v. DEPARTMENT OF LABOR et al.

No. 14330.

Supreme Court of Connecticut.

Argued Oct. 2, 1991.

Decided Dec. 31, 1991.

William J. Egan, with whom, on the brief, was Thomas R. Legenhausen, New Haven, for appellant (plaintiff).

Richard Blumenthal, Atty. Gen., and Thomas Yasensky, Asst. Atty. Gen., with whom, on the brief, was Susan I. Hellerman, Asst. Atty. Gen., for appellees (named defendant et al.)

J. Charles Mokriski, with whom was Antonio B. Braz, Hartford, for appellee (defendant Intern. Business Machines Corp.).

Before PETERS, C.J., and CALLAHAN, GLASS, BORDEN and BERDON, JJ.

BERDON, Associate Justice.

The principal issue in this case is whether the plaintiff, Unisys Corporation, is entitled to an evidentiary hearing to determine whether it has standing to enjoin the state from awarding a purchase contract. The plaintiff appeals from the trial court's decision granting the defendants' motion to dismiss. We reverse and remand for further proceedings.

The relevant facts are as follows. The defendant department of administrative services, on behalf of the named defendant, the department of labor (collectively hereinafter referred to as the state), issued two requests for proposals (RFPs) for the purchase of computer equipment, software and services. ¹ The plaintiff alleges in its complaint that the RFPs were not based upon competitive bidding as required by General Statutes § 4a-57 ² and that it was prevented from submitting a bid because the RFPs requested "single source" specifications--that is, the RFPs' specifications were limited to the make, model number and particular equipment and software available only from International Business Machines Corporation (IBM), which was also made a party defendant in this action. The plaintiff further alleges in its complaint that it manufactures and supplies computer equipment and software equivalent to that of IBM, that it currently supplies the state with computer equipment and software, that the RFPs do "not permit proposals based upon equivalent computer equipment or software made by other manufacturers" and, therefore, that it did not submit a bid. The plaintiff also alleges that the state engaged in acts of favoritism to IBM that undermined the object and integrity of the competitive bidding process. Specifically, the plaintiff alleges that the state drafted the RFPs in reliance on information it received from IBM so that it would favor IBM over other vendors. Further, the plaintiff alleges that the state provided information to IBM that was relevant to the RFPs, but that information was not provided to other vendors who received the RFPs.

On the basis of these allegations, the plaintiff sought injunctive relief to prevent the state from either opening and examining proposals submitted in response to the RFPs or entering into a contract based on the RFPs. The plaintiff also requested "further relief as is just and proper."

The trial court, O'Neill, J., granted the defendants' motion to dismiss the complaint ³ on the grounds that the plaintiff was not aggrieved in a contested case and had "never [been] in a contested case," and that the plaintiff had not exhausted its administrative remedies under the Uniform Administrative Procedure Act, General Statutes § 4-166 et seq. In essence, the trial court found that the plaintiff lacked standing because it had not submitted a bid pursuant to the RFPs. The trial court also found that there were no facts to support "favoritism" as alleged in the second count of the complaint. The trial court did not address the taxpayer's standing issue raised by the plaintiff, or the state's claim of sovereign immunity. The plaintiff appealed to the Appellate Court, and we transferred the appeal to this court in accordance with Practice Book § 4023. We conclude that the plaintiff should have been given an evidentiary hearing to afford it the opportunity to prove that it does have standing. Accordingly, we reverse the judgment of dismissal and remand the case for further proceedings.

It is a basic principle of law that a plaintiff must have standing for the court to have jurisdiction. " 'Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy.' " Ardmare Construction Co. v. Freedman, 191 Conn. 497, 501, 467 A.2d 674 (1983), quoting Hiland v. Ives, 28 Conn.Sup. 243, 245, 257 A.2d 822 (1966). "Standing is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticiable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented.... These two objectives are ordinarily held to have been met when a complainant makes a colorable claim of direct injury he has suffered or is likely to suffer, in an individual or representative capacity. Such a 'personal stake in the outcome of the controversy'; Shaskan v. Waltham Industries Corporation, 168 Conn. 43, 49, 357 A.2d 472 (1975) ... provides the requisite assurance of 'concrete adverseness' and diligent advocacy." (Citations omitted in part.) Maloney v. Pac, 183 Conn. 313, 320-21, 439 A.2d 349 (1981).

The plaintiff maintains that, in this case, it has sufficiently alleged standing in its pleadings on one of two grounds, either as a potential competitor aggrieved by irregularities in the bidding process, or as a taxpayer. It seeks the opportunity to establish such standing at an evidentiary hearing. We agree that such a hearing should be held.

The plaintiff's standing as a competitor injured by the bidding process flows from our holding in Ardmare Construction Co. v. Freedman, supra, 191 Conn. at 503, 467 A.2d 674, where we held that the decision to reject a bid or to award a contract is not a contested case under the Uniform Administrative Procedure Act and, therefore, does not permit a challenge to the state's decision by way of an administrative appeal. Nevertheless, we went on to reaffirm our holding in Spiniello Construction Co. v. Manchester, 189 Conn. 539, 544, 456 A.2d 1199 (1983), that the "[c]ourts will intervene ... where fraud, corruption or favoritism has influenced the conduct of the bidding officials or when the very object and integrity of the competitive bidding process is defeated by the conduct of [the] ... officials." Ardmare Construction Co. v. Freedman, supra, 191 Conn. at 504-505, 467 A.2d 674.

Although in Spiniello the plaintiff who sought the injunction was a bidder, in Ardmare we did not tailor the remedy solely to that class of persons. Indeed, we quoted with approval from Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859, 864 (D.C.Cir.1970), the following: " '[T]he public interest in preventing the granting of contracts through arbitrary or capricious action can properly be vindicated through a suit brought by one who suffers injury as a result of the illegal activity, but the suit itself is brought in the public interest by one acting essentially as a "private attorney general." ' " (Emphasis added.) Ardmare Construction Co. v. Freedman, supra, 191 Conn. at 504, 467 A.2d 674. In Ardmare Construction Co., we pointed out that the scope of our holding in Spiniello was "to strike the proper balance between fulfilling the purposes of the competitive bidding statutes and preventing frequent litigation that might result in extensive delay in the commencement and completion of government projects to the detriment of the public." Ardmare Construction Co. v. Freedman, supra, at 505, 467 A.2d 674. In the present case, if the plaintiff establishes that it would have submitted a bid if not for the single source specifications, its status would, for purposes of standing, be the equivalent of one who had submitted a bid. ⁴ See Gerzof v. Sweeney, 16 N.Y.2d 206, 211 N.E.2d 826, 264 N.Y.S.2d 376 (1965); 10 E. McQuillin, Municipal Corporations (3d Ed.Rev.1990) § 29.49.

The plaintiff also claims it has standing because it is a taxpayer. See Ardmare Construction Co. v. Freedman, supra, 191 Conn. at 505 n. 12, 467 A.2d 674; Austin v. Housing Authority, 143 Conn. 338, 122 A.2d 399 (1956). The plaintiff, however, merely alleges in its complaint and in the affidavit of Robens that it is a federal and state taxpayer, but fails to allege in what manner it is harmed as a taxpayer. "A taxpayer is not entitled to an injunction restraining such illegal conduct as the plaintiff claims unless he has suffered a pecuniary or other direct loss in that capacity." Cassidy v. Waterbury, 130 Conn. 237, 245, 33 A.2d 142 (1943). Therefore, we do not reach this issue of whether it could have standing as a federal or state taxpayer.

Accordingly, we conclude that the plaintiff in this case would have standing if it is able to prove that it would have submitted a bid on the RFPs but for the single source specifications, that its equipment and software is equivalent to that specified in the RFPs and that the restrictions of the single source specifications undermined the object and integrity of the competitive bidding process, or that there was proof of favoritism.

With respect to this issue of standing--that is bidder injury--questions of fact were raised and the trial court should have allowed an evidentiary hearing. "When issues of fact are necessary to the determination of a court's jurisdiction, due process requires that a trial-like hearing be held, in which an opportunity is provided to present evidence and to cross-examine adverse witnesses. The trial court erred in not holding such a hearing."...