A legal dust-up over the award of a municipal waste collection service contract. Ho-hum. Oh, wait a minute! This time it’s different. The challenge is spearheaded not by a losing bidder, but by local citizens who rallied around their current service provider.
Since the mid-1990s, Harbaugh Trucking, Inc. (Harbaugh) served as the one-and-only residential and commercial garbage hauler for the borough of Meyersdale, Pa., located about 80 miles southeast of Pittsburgh. Well before late 2014, when Harbaugh’s last contract was set to expire, the borough issued a request for proposals (RFP) seeking bids for borough-wide waste collection and disposal for the period from November 1, 2014, through October 31, 2017.
Among other specifics, including plans, procedures, schedules, rates, qualifications statements, and various documents, the RFP required all costs to be "itemized to include an explanation of all fees and costs" and reserved the borough's right "to reject any or all of the bids received and to waive informalities and minor irregularities in proposals received." The RFP also stated that "[t]he award will be made to the responsible and qualified offeror whose proposal, conforming to the invitation, will be most advantageous ... in price for the services and other factors considered."
Although the RFP acknowledged that Harbaugh’s services had been "satisfactory,” it noted that the borough council believed that "an open and competitive bidding process from various vendors [was] indicated," with the goal to "provide Meyersdale residents and businesses with high quality, cost effective refuse services."
The borough received five bids, including one from Harbaugh and another from Burgmeier Hauling. The borough rejected Harbaugh's bid as not complying with the RFP as it did not include proper pricing or an itemized explanation of all fees and costs, did not state disposal rates for the container sizes requested in the RFP, and included disposal services that the RFP did not request. Local officials determined Burgmeier to be the lowest responsible bidder and awarded it the contract.
In September 2014, Harold Lindeman, along with other taxpayer residents of the borough, filed a petition with the Court of Common Pleas of Somerset County seeking a preliminary injunction to prevent the borough from signing a contract with Burgmeier. Simply stated, the plaintiffs alleged that Burgmeier was not the lowest responsible bidder. The borough responded by denying this allegation. Both sides then stipulated that the facts necessary to decide the case could be found in the RFP and in the respective bids of Harbaugh and Burgmeier. The trial judge accepted the stipulation and directed the parties to file their respective briefs.
After reviewing the parties’ respective arguments, the trial court granted the plaintiffs’ petition. He further directed the borough to terminate its contract with Burgmeier and to accept Harbaugh’s bid. Accompanying his order was an opinion setting forth the legal standard relative to municipal contracts and then addressing the substantive issues regarding the bids of Harbaugh and Burgmeier.
Under Pennsylvania law, contracts must be awarded to the "lowest qualified and responsible bidder,” but the question of who is the lowest responsible bidder does not necessarily mean the one whose bid on its face is lowest in dollars, but includes “financial responsibility, also integrity, efficiency, industry, experience, promptness and ability to successfully carry out the particular undertaking.” Municipal officials may award a contract to a higher bidder if, within their discretion and after a careful inquiry, a significant reason exists for doing so.
The trial court concluded that Harbaugh was a qualified and responsible bidder and, after reviewing the bids and conducting its own mathematical calculations, that Burgmeier's bid would cost borough residents and businesses at least $100,000 more than Harbaugh's bid over the term of the contract. In addition, the judge concluded that Harbaugh substantially complied with the RFP, while Burgmeier’s bid fell short on properly documenting access to approved state-licensed waste facilities.
The borough filed a motion for reconsideration, reiterating that Harbaugh was not the lowest responsible bidder because of its nonconforming bid but also acknowledging the flaw in Burgmeier's bid as noted by the trial judge. As the borough saw it, local officials should be allowed to reject all bids and re-bid the contract. Lindeman and the other co-plaintiffs filed an opposition to the Borough's motion on procedural grounds and simultaneously filed an answer denying the allegations in the motion. While the motion was pending, however, the borough filed a notice of appeal.
On appeal, the borough argued that the trial court erred by concluding that Harbaugh was the lowest responsible bidder, by determining that the borough did not have the right to reject any and all bids, and by expanding the scope of the RFP from a curb side residential and business service to include demolition removal and other services not solicited in the RFP. A three-judge panel of an intermediate appellate court agreed that the trial judge was wrong, but for different reasons.
Appeals courts tend to be highly deferential when they review a decision to grant or deny an injunction. The lower court ruling will generally be upheld where even the slimmest of grounds exist. But where a rule of law is palpably misapplied, appellate judges can undo the error by setting aside the deficient ruling, returning the case to the lower court, and issuing an opinion that ideally provides the trial judge with a legal road map.
As noted above, the plaintiffs initiated this matter by attempting to block the borough from entering into a contract with Burgmeier. A court may grant a preliminary injunction only where the requesting party can prove each and every prerequisite: (1) the injunction is necessary to prevent immediate and irreparable harm that cannot be adequately compensated by damages; (2) greater injury would result from refusing an injunction than from granting it and, particularly where a governmental authority is involved, the injunction would not adversely affect the public interest; (3) the injunction will restore the parties to their status as it existed immediately prior to the alleged wrongful conduct; and (4) the party seeking the injunction is likely to prevail on the merits. After a preliminary injunction is awarded or denied, the case proceeds for a final hearing on the merits. However, the standards for a preliminary injunction and permanent relief vary considerably.
The appellate panel criticized the lower court for ignoring this distinction, noting that the trial judge neither addressed the key elements for a preliminary injunction nor explained how the plaintiffs satisfied these elements. Instead, the trial court’s analysis began by reciting the law on awarding municipal contracts and ended by addressing the merits of the Harbaugh and Burgmeier bids. Under Pennsylvania law, a court may not treat a hearing for a preliminary injunction as a final hearing and as a basis for a permanent injunction, unless the parties agree. But the parties’ stipulation merely addressed the controlling facts and said nothing about combining the proceedings.
By directing the borough to terminate its contract with Burgmeier and to accept Harbaugh's bid, the trial judge effectively granted permanent injunctive relief. “[His] complete lack of analysis of the necessary elements relative to preliminary injunctive relief precludes this Court from conducting any meaningful review of the trial court's decision,” the appellate panel said, overturning the lower court decision and sending the case back so that the trial judge could make the appropriate findings on the requisite elements for a preliminary injunction.
On the next go-round, after the legal niceties are observed, it’s likely the local residents will get and keep the result they sought. All well and good that justice is served, but at what price? More time. More expense. More uncertainty.
Lindeman v. Borough of Meyersdale, 2063 C.D. 2014, Pa.Commw., Dec. 30, 2015.
Barry Shanoff is a Bethesda, Md., attorney and general counsel of the Solid Waste Association of North America.