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Court Rules Commissioners Abused Discretion in Rejecting Low Bid for Ballpark Painting Contract

2008-1478.  State ex rel. Associated Builders & Contrs. of Cent. Ohio v. Franklin Cty. Bd. of Commrs., Slip Opinion No. 2010-Ohio-1199.
Franklin App. No. 08AP-301, 2008-Ohio-2870.  Judgment of the court of appeals reversed, and cause remanded to the trial court.
Moyer, C.J., and Lundberg Stratton, O'Connor, O'Donnell, and Cupp, JJ., concur.
Pfeifer and Lanzinger, JJ., dissent.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2010/2010-Ohio-1199.pdf

Video clip View oral argument video of this case.

(March 25, 2010) The Supreme Court of Ohio ruled today that the Franklin County Board of Commissioners failed to properly exercise its discretion when it disqualified the low bid for painting services during construction of  Columbus’s Huntington Park baseball stadium. Based on that holding, the Court remanded a lawsuit filed against the commissioners by the disappointed bidder to the Franklin County Court of Common Pleas for further proceedings.

In its decision, the Court also held that a bid evaluation policy adopted by a board of county commissioners is not the equivalent of a municipal ordinance, and therefore is not subject to state/local preemption analysis under the “home rule” provision of the Ohio Constitution.

The Court’s 5-2 decision, authored by  Justice Robert R. Cupp, reversed rulings by the Franklin County Court of Common Pleas and 10th District Court of Appeals.

Ohio Revised Code Chapter 4115, referred to as the state’s “Prevailing Wage Law,” requires that workers on government construction projects must be paid at the prevailing wage for local union workers doing similar jobs. The statute establishes procedural guidelines for the Ohio Department of Commerce to receive and process complaints against contractors for allegedly failing to pay prevailing wages on state, county or local public works projects; and authorizes the department to debar (disqualify) a contractor from bidding on government projects anywhere in the state for a specified time period if the company is found to have intentionally violated prevailing wage requirements.

In this case, the low bid submitted for painting services at Huntington Park, a new county-owned baseball stadium then being constructed in downtown Columbus, was ruled ineligible for consideration by the Franklin County Board of Commissioners because the contractor submitting the bid, The Painting Company, had entered into a number of settlements with the Department of Commerce during the preceding 10 year period to resolve complaints alleging prevailing wage underpayments on public works projects. In declining to consider The Painting Company’s bid, the commissioners cited a local resolution they had adopted specifying that in order to bid on any county-funded construction project, a contractor must certify that it had not been found by the state to have committed three violations of the prevailing wage statute in any two-year period during the preceding 10 years.

Interpreting The Painting Company’s settlement agreements with the commerce department as prevailing wage “violations,” the county commissioners ruled that the company was barred from receiving the Huntington Park contract, and awarded the contract to the only other bidder.

The Painting Company appealed the commissioners’ action to the Franklin County Court of Common Pleas and then to the 10th District Court of Appeals. Both courts ruled that the commissioners had authority to set relevant criteria that vendors must meet in order to bid on county projects, and held that the commissioners had not abused their discretion in rejecting The Painting Company’s bid based on the company’s failure to meet the county’s standard regarding past prevailing wage compliance. The Painting Company, supported by the Associated Builders & Contractors trade association (ABC), sought and was granted Supreme Court review of the 10th District’s ruling.

Writing for the majority in today’s decision, Justice Cupp agreed with the lower court rulings that the commissioners had authority to adopt reasonable standards for accepting bids on county-funded public works projects.  However, after reviewing the record in this case it was determined that the commissioners acted outside the range of sound discretion in identifying The Painting Company’s prior prevailing wage complaint settlements with the department of commerce as “violations” that rendered the company ineligible to bid on the Huntington Park project. 

He wrote: “The board’s rejection of The Painting Company’s bid is not consistent with the term ‘violated’ as used in Section  Section, for instance, does not require disclosure of information pertaining to instances of noncompliance with the prevailing-wage laws.  Rather, it requires disclosure of information when the bidder ‘violated’ those laws. Moreover, the disclosure requirement is further limited to violations found by the state ‘after all appeals.’  There is no evidence that The Painting Company has violated the prevailing-wage laws within the meaning of Section or the prevailing-wage statutes because after all appeals, the director never found under R.C. 4115.13 that The Painting Company violated the prevailing wage laws.” 

“The Painting Company is not included on the secretary of state’s listing of contractors and subcontractors who are debarred from public works projects, as set forth in R.C. 4115.13 and 4115.133. Moreover, in the settlement agreement, The Painting Company was permitted to expressly disclaim, without any contradiction by the department, any liability or wrongdoing in connection with wage underpayments. ... (W)ithout  debarment or a finding by the state (after all appeals) of a prevailing-wage violation, the settlement agreement cannot evidence prevailing-wage violations within the meaning of the prevailing-wage statutes for purposes of Section  ... Based on the foregoing, the board misapplied Section of the evaluation criteria to the bid submitted by The Painting Company.” 

“The Painting Company has also demonstrated with clear and convincing evidence that the board failed to exercise sound discretion because in erroneously disqualifying The Painting Company’s bid, it relied on a mistaken application of a single criterion without considering any of the remaining criteria.  The Painting Company was the lowest bidder on the project by a significant amount. The Painting Company also has a record of successful performance in projects similar to the Huntington Park project. And the Huntington Park construction manager and the board’s own representative recommended that The Painting Company receive the contract. Nevertheless, these recommendations were apparently dismissed by the board in determining that The Painting Company was ineligible to bid on the Huntington Park project. ... From all appearances, the board relied on its misapplication of Section as a sole gate-keeping criterion rather than considering its evaluation criteria as a whole when it disqualified the bid submitted by The Painting Company for the Huntington Park project.  This departure constituted an abuse of discretion.”

The majority opinion was joined by Chief Justice Thomas J. Moyer and Justices Evelyn Lundberg Stratton, Maureen O’Connor and Terrence O’Donnell.

Justice Paul E. Pfeifer entered a dissent, joined by Justice Judith Ann Lanzinger, in which he wrote that although the majority acknowledges that the commissioners have broad discretion in evaluating bids,“(W)hen the majority opinion discusses how the Franklin County Board of Commissioners wielded its discretion, it does not address the widely-known abuse-of-discretion standard, which states that ‘[t]he term “abuse of discretion” connotes more than an error of law or of judgment; it implies that the court’s attitude is unreasonable, arbitrary or unconscionable.’” 

In this case, the majority opinion is reversing the considered judgments of the Franklin County Board of Commissioners, the trial judge, and the judges of the Tenth District Court of Appeals.  In doing so, it invents a definition of ‘violation’ in the prevailing-wage context without recourse to case law, statutes, administrative codes, or even a dictionary. And it substitutes its definition of ‘violation’ for the definition used by the Franklin County Board of Commissioners without explaining how the commissioners abused their discretion.  Even if I accept the majority opinion’s definition of ‘violation,’ ... I cannot conclude that in adopting a different definition, the commissioners acted unreasonably, arbitrarily, or unconscionably.”

Nick A. Soulas, 614.462.3520, for the Franklin County Board of Commissioners.

Michael F. Copley, 614.853.3790, for Associated Builders & Contractors and The Painting Company.

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