Groves v. Department of Corrections
295 Mich. App. 1
| Mich. Ct. App. | 2011Background
- DTMB issued an RFP for installation and maintenance of inmate telephone systems at DOC facilities; the state would administer the contract and monitor inmate use but not pay the ITS provider directly.
- Seven bidders, including Securus Technologies, Inc. and PCS, submitted timely bids.
- A committee would select the best value based on technical merit and price.
- Plaintiffs allege PCS altered its pricing after the deadline without a like opportunity for others and challenge various bid-evaluation errors.
- PCS won the contract; plaintiffs filed suit seeking to nullify the contract and require a rebid.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs have standing to challenge the bidding process | Securus claims statutory and common-law standing to enforce bidding. | State argues disappointed bidders lack standing to challenge discretionary awards; no cognizable injury. | No standing; lack of cognizable injury; extraordinary public-interest grounds insufficient. |
| Whether plaintiffs stated a fraud claim regarding bidding | Plaintiffs allege fraud by the state in the bidding process. | Allegations do not show a culpable state of mind or cognizable injury. | Fraud claim fails; no particularized allegations of intent or injury. |
| Whether plaintiffs have standing under MCR 2.605 to seek declaratory relief | Declaration needed to guide future conduct and preserve rights. | No actual controversy since contract already awarded and no future injury. | No actual controversy; declaratory judgment standing denied. |
| Whether plaintiffs have standing under MCL 600.2041(3) to enjoin expenditure of state funds | Action prevents illegal expenditure or tests constitutionality. | Even if successful, expenditures would be necessary regardless of bidder. | No standing under 600.2041(3). |
| Whether the Fair and Just Treatment Clause was violated | Bidding process constituted an unfair investigation under Const 1963, art 1, §17. | Process involved gathering and evaluating information, not an 'investigation.' | No violation; case closely aligns with Carmacks and Messenger; no investigation. |
Key Cases Cited
- Lansing Sch Ed Ass’n v. Lansing Bd of Ed, 487 Mich 349 (2010) (standing and declaratory-judgment framework; LSEA cited for 2.605 standing principles)
- Waterford Sch Dist v State Bd of Ed, 98 Mich App 658 (1980) (standing requires cognizable injury distinct from public at large)
- Talbot Paving Co v Detroit, 109 Mich 657 (1896) (disappointed bidders generally have no standing to challenge bids)
- Rayford v Detroit, 132 Mich App 248 (1984) (limited standing of disappointed bidders; public-interest constraints)
- Great Lakes Heating, Cooling, Refrigeration & Sheet Metal Corp v Troy Sch Dist, 197 Mich App 312 (1992) (standing to review bids limited; only fraud/illegality exceptions)
- Hord v Environmental Research Institute of Mich (After Remand), 463 Mich 399 (2000) (fraud requires specific intent; injury required)
- Carmacks Collision, Inc v Detroit, 262 Mich App 207 (2004) (investigation concept under Fair and Just Treatment Clause; passive info gathering not an investigation)
- Messenger v Dep’t of Consumer & Indus Servs, 238 Mich App 524 (1999) (definition of investigation; supports Carmacks interpretation)
- House Speaker v Governor, 443 Mich 560 (1993) (expenditure/agency creation context for standing under 600.2041(3))
- Berghage v Grand Rapids, 261 Mich 176 (1933) (early taxpayer-standing cases; later narrowed)
- Lasky v City of Bad Axe, 352 Mich 272 (1958) (public-benefit rationale for bidding processes)