Lead Opinion
Opinion
Following the rejection of its protest to the award of a public contract to real party in interest Sharp Electronics Corp. (Sharp), plaintiff Imagistics International, Inc. (Imagistics), filed the present petition for a peremptory writ of mandate directing defendant Department of General Services (DGS) to accept its protest, or for a declaration that the award of the contract to Sharp was void. In bifurcated proceedings, the trial court first found that the standard of strict compliance was appropriate for the procedures for filing a protest, which plaintiff Imagistics had not satisfied. In its subsequent order, it did not find any basis for excusing plaintiff Imagistics from exhausting this administrative remedy.
Plaintiff Imagistics promptly appealed. It renews its arguments here, as well as invoking new ones for the first time.
Background
In March 2005, defendant DGS solicited proposals for the purchase of photocopiers and related support services. The value of the contract approximated $37.5 million. -
The bidding process had two phases. The first solicited responses to technical and administrative specifications of the proposal. Bidders that
The solicitation included a notification that the DGS would be conducting it under the auspices of an alternate procedure in which unsuccessful bidders must submit any protests to binding arbitration. (Pub. Contract Code, § 12125 et seq.)
While plaintiff Imagistics submitted the lowest bid in the reverse auction, real party in interest Sharp’s bid had a higher score in the first phase. As a result, its overall score was higher, and defendant DGS issued its notice of intent to award the contract to Sharp. Plaintiff Imagistics sent its notice of intent to protest the award on June 23, 2005. In its response to plaintiff, defendant DGS reiterated the need to file a “Detailed Written Statement of Protest” (SOP) no later than 5:00 p.m. on July 5, 2005, along with a filing fee and a deposit for estimated arbitration costs.
Under the pertinent regulations, “A protest is filed by the submission of: the [SOP] and any exhibits specified in section 1412\ a check . . . for the OAH filing fee of $50; and the arbitration deposit... to the Coordinator by [5:00 p.m. (see Cal. Code Regs., tit. 1, § 1402, subd. (c))] on the 7th working day after the time ... for written Notice of Intent to Protest .... A [protesting party] who fails to comply with this subsection waives [its] right to protest.” (Cal. Code Regs., tit. 1, § 1408, subd. (a).) “. . . If the [SOP] is sent to the [DGS] by [fax], [the protesting party] must ■ • . [1] • ■ ■ HO (2) Remit the required deposit and filing fee to [the] Coordinator by any reasonable means. If sending via carrier, the postmark date . . . shall be used to determine timeliness.” (Id., § 1408, subd. (b).) In the provisions governing the format and contents of the SOP, the material portions of the solicitation must be included as exhibits, the length is limited to 50 typed pages “excluding exhibits,” and “[a]ny exhibits submitted shall be paginated.” (Id., § 1412, subds. (b)(1), (2), (c), (d).) Failure to comply with these provisions forfeits the right to protest. (Id., § 1412, subd. (g).)
Plaintiff’s attorney sent an associate and an assistant to the offices of defendant DGS at 4:50 p.m. on July 5 to hand deliver the SOP with its
Shortly before 7:00 p.m. that evening, defendant DGS received a fax from plaintiff’s attorney that was a copy of a coyer letter for the check for the fee and deposit. On the next day (July 6), defendant DGS received the original and the check in an envelope postmarked July 5. Defendant DGS returned the check the same day, stating that the late submission of payment did not meet filing requirements. Plaintiff’s attorney also sent a letter on July 6 to the DGS attorney in response to the July 5 faxed notice that its protest was considered terminated. This letter was replete with criticisms: chiding the DGS attorney for failing to accept the check because this was a reasonable means of delivering payment to the Coordinator when filing by fax, pointing out that DGS employees were still at work after 5:00 p.m. (an assertion overlooking the deadline as defined in the regulations), and complaining of the “brusk [sz'c] and inappropriate handling of this matter.” Defendant DGS awarded the contract to real party in interest Sharp on July 7.
On July 11, plaintiff filed the present petition with a supporting memorandum of points and authorities. At the initial hearing in this matter two days later, the trial court issued an order bifurcating the issues, with the matter of the timeliness of plaintiff’s protest to be considered first. It directed the responding parties to file briefs by 10:30 a.m. on July 22 for the July 29 hearing.
Defendant DGS and real party in interest Sharp filed answers responding to allegations involving these issues on July 22, along with their opposition
As noted at the outset, the superior court concluded that strict compliance with requirements for filing a protest was necessary in the context of awards of major contracts subject to the alternative protest procedure. In doing so, it cited policy statements in attachments to defendant DOS’s declarations, therefore implicitly overruling plaintiff Imagistics’s objection to the answer.
Real party in interest Sharp filed its supplementary answer to plaintiff Imagistics’s remaining allegations on August 10, 2005. Plaintiff filed a memorandum of points and authorities on the remaining issues, raising the issue yet again of the failure of defendant DGS to answer the remaining allegations. Defendant DGS eventually filed its answer and opposition brief in mid-September, along with additional declarations. It asserted that its answer was not due until the hearing noticed for October 14.
At the hearing, the court framed the threshold issue as whether a bidder could simply evade the need to exhaust the administrative remedy for protesting bids through the device of calling itself a taxpayer and bringing an action in that capacity to determine whether the award of a contract was a waste of public funds. In rejecting this argument, the court stated that it would have needed to resolve this issue of law regardless of whether defendant DGS had filed a timely answer, and therefore did not expressly resolve whether or not the answer was timely. The court rejected other
Discussion
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Citing the unquestioned" principle that a failure to answer a writ petition admits the truth of its allegations (Reis v. Biggs Unified School Dist. (2005)
Plaintiff Imagistics is incorrect. Even if the time to answer had expired, a trial court has discretion to decide whether to strike a late-filed answer. (Cuddahy v. Gragg (1920)
II
Plaintiff Imagistics contends that it strictly complied with the regulations governing a bid protest under a “reasonable reading” of them. In the alternative, it argues that it substantially complied with the regulations without providing any analysis of the superior court’s reasoning in favor of strict compliance. (Independent Roofing Contractors v. California Apprenticeship Council (2003)
A
Taking up the latter issue first, the regulation does not grant the protest Coordinator any discretion to accept a late filing; rather, it specifically calls for forfeiture of a protest for noncompliance. Under these circumstances, the doctrine of substantial compliance is inapplicable, as a court does not have the power to' issue a writ of mandate to accept a late filing. (Barnes v. Wong (1995)
B
Plaintiff Imagistics does not appear to argue that it satisfied the requirements for personal delivery of its SOP, other thari through a belated invocation of Government Code section 11002 (after it had filed its opening brief). This statute provides, in pertinent part, “If a remittance to cover a payment required by law to be made to the state or to a state agency on or before a specified date is sent through the . . . mail . . . , it shall be deemed received on the date shown by the cancellation mark stamped upon the envelope containing the remittance . . . .” Even if we were to exercise our discretion to allow plaintiff Imagistics to raise a legal argument for the first time on appeal to obtain a reversal (see 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 398, p. 450), the statute does not add anything to the analysis. It neither expressly nor through any reasonable implication creates some bifurcated procedure for filing under which an agency is obligated to accept documents in person for filing on the final day that are unaccompanied by a required fee, so long as the fee is separately mailed that day. It is not as if plaintiff Imagistics were attempting to assert the timeliness of a protest mailed with all necessary documents and fees on July 5, 2005.
This leaves what the trial court found to be a tenable but ultimately unacceptable argument based on the imprecise wording of the protest provisions. As noted above, the regulation that governs the content and format of an SOP distinguishes between the SOP itself and any exhibits. (Cal. Code Regs., tit. 1, § 1412.) The subdivision generally prescribing the time to file explicitly refers both to the SOP and its exhibits (Cal. Code Regs., tit. 1, § 1408, subd. (a)), but the subdivision governing fax filings mentions only the SOP (id., § 1408, subd. (b)). From this plaintiff Imagistics derives an intent to permit fax filings without exhibits (given the legibility issues that often arise with faxed documents) at the party’s risk of the matter being decided in the absence of the supporting evidence. Given that the entire purpose of the alternate protest procedure is to filter out frivolous protests expeditiously, and that the Coordinator must make a preliminary determination that a protest is frivolous by five working days after receipt (Cal. Code Regs., tit. 1, §1414, subd. (b)), we cannot discern any rational basis for allowing those who choose to fax their protest to file exhibits at some unspecified future time. This would either delay the determination of the Coordinator or require a determination without all the pertinent evidence. Finally, an SOP without
Finally, plaintiff contends in cursory manner that defendant DGS was not prejudiced from the failure to fax the exhibits, because “DGS was in possession of all the exhibits prior to the deadline as a result of hand delivery.” Plaintiff Imagistics fails to supply any authority for considering an absence of prejudice in the context of strict compliance. Moreover, this assertion disregards the massive number of contracts and proposals that defendant DGS administers,
Ill
Plaintiff Imagistics suggests two established bases excuse it as an unsuccessful bidder from the need to exhaust the administrative protest remedy.. It relies on the doctrine of futility, and on purported ways in which the administrative procedures violate due process.
A
The entirety of plaintiff’s argument on futility claims that “historical statistics demonstrate the [alternate protest procedure] is effectively a sham and resort to it is ineluctably an exercise in futility.” This exception, however, “is a very narrow one.” (County of Contra Costa v. State of California (1986) 177 Cal.App.3d 62, 77 [
If an administrative remedy fails to satisfy the standards of due process, the exhaustion requirement is excused. (Bockover v. Perko (1994)
Plaintiff first contends that it violates due process for the regulations to specify the same limited judicial review of protest arbitration that applies to contractual arbitration awards. (Cal. Code Regs., tit. 1, § 1438.) It argues that its situation is akin to Bay scene Resident Negotiators v. Bayscene Mobilehome Park (1993)
Plaintiff next asserts that the administrative remedy violates due process because the protest Coordinator
Citing Mercuro v. Superior Court (2002)
This leaves plaintiff Imagistics’s claim that the administrative remedy violates the federal supremacy clause (U.S. Const., art. IV) because it transgresses provisions of an international trade treaty known as the World
IV
Finally, plaintiff Imagistics appears to contend that it has a cumulative remedy in its capacity as a taxpayer to challenge an award of a contract as invalid, pursuant to Code of Civil Procedure section 526a.
Taxpayer actions, and so-called citizen actions involve closely related concepts of standing.. “The chief difference is [that] a taxpayer suit; seeks preventative relief . . . , while a citizen suit seeks affirmative relief . . . .” (Connerly v. State Personnel Bd. (2001)
Neither party has directed us to any authority discussing whether a bidder on a public contract can simply switch hats to a “concerned taxpayer” to challenge the award of the contract to another party, nor have we been able to find any. If we consider the factors in the authority just cited, it ill behooves us to endorse plaintiff’s assertion of this right. Plaintiff has not produced any evidence of its advocacy against waste in the award of public contracts of that it purports to represent any such individuals, we do not discern any obstacles to an ordinary disinterested taxpayer bringing an action to prevent the improper award of a public contract, and allowing plaintiff to proceed on this basis would clearly undermine the legislative policy in setting up the administrative remedy. We therefore conclude that plaintiff Imagistics does not have standing to void the award to real party in interest Sharp.
To the extent its brief seems to suggest that it seeks as a taxpayer to correct the constitutional defects it has asserted are present in the protest arbitration procedure, its petition does not include any allegations specifically establishing the manner in which these result in an illegal expenditure or an injury to the public fisc. The petition therefore fails to establish the standing of plaintiff Imagistics as a taxpayer in this respect as well. (Waste Management, supra,
Disposition
The judgment is affirmed. The requests for judicial notice are denied.
Nicholson, J., concurred.
Notes
Pursuing reversal on a basis that might have been timely resolved in the trial court is a disapproved tactic that wastes the resources of the litigants and this court, and we generally do not permit it. (E.g., Baxter Healthcare Corp. v. Denton (2004)
Hereafter, undesignated section references are to the Public Contract Code.
At some point after she returned to the office, the second assistant e-mailed a copy of the SOP with exhibits to this DGS attorney.
A remark may refer to the objection: “The Court recognizes substantial compliance^] however, in the context of the filing of the opposition and properly considers] that.” Moreover, later in the hearing the court stated, “[t]here were other arguments made by the petitioner [that] were equally strained, which I’ve rejected obviously in denying the writ.”
In an exhibit to one of defendant DOS’s declarations, its director responded to a legislative inquiry on behalf of a bidder that was two minutes late; he noted the need to apply strictly objective standards “across a system that conducts thousands of procurements annually.”
For this reason, we deny plaintiff’s September 2006 request for judicial notice. We also deny respondent’s August 2006 request to take judicial notice of legislative materials, as they are unnecessary for our resolution of the appeal.
In a tangential argument, plaintiff Imagistics suggests it violates due process for the regulations to allow the Coordinator to make a preliminary determination that a protest is frivolous, which triggers the need for a bond of at least 10 percent of the contract (forfeited if the protest arbitrator finds the protest is indeed frivolous). (Cal. Code Regs., tit. 1, § 1418.) Plaintiff does not suggest how this circumstance differs from the requirement that an appellant post a bond to stay the effect of a money judgment (Grant v. Superior Court (1990)
In another tangential argument, plaintiff Imagistics asserts (based solely on the declaration of its attorney in support of its final reply brief) that the OAH hearing officers refuse to abide by the ethical standards for neutral contractual arbitrators that appear in the California Rules of Court. Even if we assume counsel’s declaration proves this fact, it is irrelevant. Standard 1(a) of the Ethics Standards for Neutral Arbitrators in Contractual Arbitration expressly recites, “These standards are adopted under the authority of Code of Civil Procedure section 1281.85 .....” These standards therefore apply to contractual arbitrators. Protest arbitration, by contrast, is within the plenary authority of defendant DGS to define as it sees fit. (Pub. Contract Code, § 12126, subd. (c)(4) [“Arbitration, as defined and established by the [DGS], shall be the resolution tool”].) The regulations incorporate only the grounds for actual or perceived bias appearing in Code of Civil Procedure section 170.1. (Cal. Code Regs., tit. 1, § 1422, subd. (b).) Therefore, the ethical standards do not apply to protest arbitrators.
This argument is not presented clearly in any heading in the opening brief as required. (Smith v. City of Napa (2004)
Plaintiff’s sole authority is our opinion in Pozar v. Department of Transportation (1983)
Cornelius v. Los Angeles County etc. Authority (1996)
Concurrence Opinion
I concur in Justice Davis’s opinion. I write separately to comment that this case shows why every lawyer in California should have a sign posted in his or her office which says “Never do anything on the last day or at the last moment.'’'’ Plaintiff’s machinations in this lawsuit and the convoluted legal and constitutional arguments advanced were only necessary because plaintiff’s attorney waited to file a bid protest until five minutes before the deadline and failed to include a check for the required fees in the filing, an easy mistake to make but one easily correctable if the filing was not made at the last moment.
On May 4, 2007, the opinion was modified to read as printed above. Appellant’s petition for review by the Supreme Court was denied July 11, 2007, S152676.
