63 N.E.3d 1097
Mass.2016Background
- In 2009 DMH awarded five-year contracts to private providers for services formerly performed by DMH case managers; DMH treated them as not subject to the Pacheco Law and did not follow its review procedures.
- SEIU notified the Auditor and Attorney General; the Auditor concluded the contracts privatized state services and should have been reviewed, but the Attorney General took no action.
- SEIU sued in 2012 seeking a declaratory judgment that the 2009 contracts were invalid under G. L. c. 7, § 54; the Supreme Judicial Court previously held SEIU had standing and remanded for joinder of necessary parties (SEIU I).
- While litigation proceeded, DMH exercised contractual one-year renewal options; after SEIU I the trial court dismissed the amended complaint as moot and because § 53 excludes renewals from the definition of "privatization contract."
- The SJC addressed whether (1) noncompliant privatization contracts are void ab initio under § 54, and (2) whether § 53 immunizes renewal contracts made pursuant to void predecessor contracts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are noncompliant privatization contracts void? | §54 renders any privatization contract made without required procedures invalid and therefore void ab initio. | The contracts might be invalid but should not be retroactively voided as to third parties or ongoing effects. | Void: §54's language and statutory purpose make noncompliant privatization contracts invalid and void to effectuate the statute. |
| Do renewals made pursuant to void predecessor contracts remain valid? | Renewals derive from an invalid contract and thus cannot be sustained; they are void if traced to the void original. | §53 excludes subsequent agreements (including renewals) from the definition of privatization contracts; thus renewals are immune from challenge under Pacheco Law. | Renewals are not immunized: renewals entered pursuant to a contract later declared void may be set aside; §53 does not shield renewals from consequences of predecessor invalidity. |
| Does §53 create a blanket immunity for "subsequent agreements" from any challenge? | No — §53 exempts subsequent agreements from Pacheco review but does not bar other contract-based or ultra vires challenges. | Yes — §53 removes subsequent agreements from Pacheco scrutiny and thus protects them from collateral attack based on predecessor noncompliance. | No blanket immunity: §53 exempts renewals from Pacheco procedural requirements but does not preclude setting them aside when they rest on a void antecedent. |
| Is the case moot given the 2009 contracts expired and renewals were later exercised? | The controversy is live because a declaration that the 2009 contracts are void could nullify the renewals and provide relief; SEIU challenged the originals before expiration. | Moot: the initial contracts expired and §53 protects renewals, so no live dispute remains. | Not moot: the union has a cognizable interest; timely challenge to initial contracts can render successor renewals void — case remanded for expedited proceedings. |
Key Cases Cited
- Service Employees Int'l Union, Local 509 v. Department of Mental Health, 469 Mass. 323 (2014) (held union had standing to challenge agency's unilateral refusal to treat contracts as privatization contracts)
- Massachusetts Bay Transp. Auth. v. Auditor of the Commonwealth, 430 Mass. 783 (2000) (discusses Auditor's review power and need for prompt adjudication under Pacheco-like framework)
- Massachusetts Mun. Wholesale Elec. Co. v. Danvers, 411 Mass. 39 (1991) (analyzes when statutory violations render public contracts void ab initio and limits on retroactive voiding)
- Phipps Prods. Corp. v. Massachusetts Bay Transp. Auth., 387 Mass. 687 (1982) (voiding public contracts that fail to meet statutory bidding requirements to effectuate public policy)
- Winslow v. Baltimore & Ohio R.R. Co., 188 U.S. 646 (1903) (authority recognizing that void antecedent contracts cannot give rise to enforceable renewal rights)
- Commonwealth v. Mogelinski, 473 Mass. 164 (2015) (statutory construction principles: interpret statutes to effectuate legislative purpose)