Hinesburg Sand & Gravel Co., Inc. v. State

Hinesburg Sand & Gravel Co. v. State  (95-572); 166 Vt. 337; 693 A.2d 1045

[Filed 28-Mar-1997]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                                 No. 95-572


Hinesburg Sand & Gravel Co., Inc.                 Supreme Court

                                                  On Appeal from
     v.                                           Chittenden Superior Court

State of Vermont                                  May Term, 1996


Linda Levitt, J.

       Robert F. O'Neill, Norman Williams, and Eric B. Fitzpatrick of Gravel
  & Shea, Burlington, for plaintiff-appellant

       Jeffrey L. Amestoy, Attorney General, Montpelier, and John K.
  Dunleavy, Assistant Attorney General, Montpelier, for defendant-appellee


PRESENT:  Allen, C.J.,(FN1) Gibson, Dooley, Morse and Johnson, JJ.



       DOOLEY, J.   Plaintiff Hinesburg Sand and Gravel Company appeals a
  decision of the Chittenden Superior Court, which dismissed its civil rights
  action against defendants State of Vermont and Patrick Garahan, Secretary
  of the Agency of Transportation,(FN2) concluding that plaintiff lacked
  standing to bring the action.  We affirm.

       Plaintiff supplies crushed and uncrushed gravel for use as a sub-base
  material to builders of state and local roads who bid on road projects in
  accordance with state bid specifications. Gravel is the result of natural
  forces and consists of varying sizes of loose rock.  It is different from
  stone, which must be blasted out of the earth at quarries or from ledges
  cut along the path of a new highway.  Prior to 1989, the Vermont Agency of
  Transportation (Agency) considered stone and crushed gravel to be
  equivalent products and so treated them in its bid specifications. In 1989,
  it adopted a policy of not allowing crushed gravel to be used in areas
  where stone is

 

  available.

       The Agency enjoys broad discretion to award highway-construction
  contracts "on terms as it deems to be in the best interest of the state." 
  19 V.S.A. § 10(1).  It is authorized to award contracts on behalf of
  municipalities, and in such cases, "[a]ll work shall be done to the
  satisfaction of and in accordance with the requirements of the [A]gency." 
  Id. § 309(b).

       This case began as a dispute over the bid specifications on a project
  to widen Dorset Street in South Burlington.  Plaintiff alleges that the
  state's policy has cost it sales and profits because it sells only crushed
  gravel and has been prevented from seeking subcontracts on state highway
  projects in the Chittenden County area, where crushed stone is available. 
  The Agency asserts that crushed stone is stronger than crushed gravel, and
  is therefore a preferable sub-base material.  Claiming that the Agency's
  preference for stone over gravel "lacks any legitimate rational basis,"
  plaintiff sought relief under the Civil Rights Act, 42 U.S.C. § 1983,(FN3)
  asserting that defendant's policy violates the Equal Protection Clause of
  the Fourteenth Amendment.

       The superior court concluded that, because plaintiff was merely a
  potential supplier to prospective bidders, it had no standing under the
  Equal Protection Clause to challenge the Agency's policy.  The court also
  determined that plaintiff had no legally protected property or liberty
  interest under the Due Process Clause.  Plaintiff appeals the court's
  conclusion with respect to the Equal Protection Clause.

       We hold that Hinesburg Sand and Gravel lacks standing to assert an
  equal protection claim because its interest in competing on an equal basis
  with suppliers of crushed stone is neither a legally protected interest
  guaranteed by the Equal Protection Clause nor is it within the "zone of
  interests" protected by 42 U.S.C. § 1983.  Furthermore, we hold that even
  if plaintiff

 

  had standing to bring this action, it has failed to state a cause of action
  under 42 U.S.C. § 1983.

       In one of its most important decisions on standing, Perkins v. Lukens
  Steel Co., 310 U.S. 113 (1940), the United States Supreme Court analyzed
  the type of interest plaintiff claims here and found it inadequate to
  confer standing.  In Lukens Steel, the Court held that bidders under the
  Public Contracts Act of 1936 did not have standing to challenge the
  Secretary of Labor's interpretation of that statute because they had failed
  to establish a legal interest that was protected at common law, id. at 129,
  or that entitled them to relief under a relevant statute.  Id. at 125-26. 
  It further held that Congress, in enacting the procurement statute, did not
  intend to confer standing on bidders to bring such a challenge.  Id. at
  128.  Combining doctrines of standing and judicial restraint, the Court
  reaffirmed "the traditional principle of leaving purchases necessary to the
  operation of our Government to administration by the executive branch of
  Government, with adequate range of discretion free from vexatious and
  dilatory restraints at the suits of prospective or potential sellers."  Id.
  at 127.

       We emphasize that plaintiff in this case does not even have the
  interest of the plaintiff in Lukens Steel.  This plaintiff is not a bidder
  or a prospective bidder.  At best, plaintiff has a hope that if the bid
  specifications are changed, it might enter into a subcontract with a
  company that might obtain a primary contract from defendant in the future. 
  Standing law has evolved since Lukens Steel, and that evolution has often
  liberalized standing requirements.  It has not, however, liberalized them
  sufficiently to allow this claim.

       The doctrine of standing is "`an essential and unchanging part of the
  case-or-controversy requirement of Article III,'" Associated Gen.
  Contractors v. City of Jacksonville, 508 U.S. 656, 663 (1993) (quoting
  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)).  Article III
  embodies various doctrines, including standing, mootness, ripeness and
  political question, that help define and limit the role of courts in a
  democratic society.  Allen v. Wright, 468 U.S. 737, 750 (1984).  One of the
  "passive virtues" of the standing doctrine is to promote judicial restraint
  by limiting the occasions for judicial intervention into the political
  process.  See generally A. Bickel, The Least Dangerous Branch 111-98 (2d
  ed. Yale Univ. Press 1986) (1962).  Standing

 

  doctrine is fundamentally rooted in respect for the separation of powers of
  the independent branches of government.  Allen, 468 U.S.  at 752.

       Standing embodies a core constitutional component and a prudential
  component of self-imposed judicial limits.  Id. at 751.  To establish
  standing in an action brought under the Equal Protection Clause, plaintiff
  must at an irreducible minimum demonstrate the following constitutional
  elements: (1) injury in fact, (2) causation, and (3) redressability.  See,
  e.g., Associated Gen. Contractors, 508 U.S.  at 663-64.  The prudential
  elements of standing include the general prohibition on a litigant's
  raising another person's legal rights, the rule against adjudication of
  generalized grievances, and "the requirement that a plaintiff's complaint
  fall within the zone of interests protected by the law invoked."  Allen,
  468 U.S.  at 751; see also Air Courier Conference of America v. American
  Postal Workers Union, 498 U.S. 517, 524-25 (1991) (employees of Postal
  Service lacked standing because they were not within zone of interests of
  statutes creating national postal monopoly).

       Injury in fact is defined as the "`invasion of a legally protected
  interest.'" Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097, 2104
  (1995) (quoting Lujan, 504 U.S. at 560). Determining whether plaintiff has
  suffered an invasion of a legally protected interest requires inquiry into
  the substance of plaintiff's claim.  For example, in International Primate
  Protection League v. Administrators of Tulane Educ. Fund, 500 U.S. 72
  (1991), a state court action challenging research on monkeys was removed to
  federal court, where the defendants argued that the plaintiffs had no
  standing to bring the controversy before the court.  The United States
  Supreme Court held that the plaintiffs had standing to challenge removal of
  their case from state to federal court, even though they might have lacked
  standing to have the federal courts adjudicate the merits of their claims. 
  Id. at 76-78.  "Standing does not refer simply to a party's capacity to
  appear in court.  Rather, standing is gauged by the specific common-law,
  statutory or constitutional claims that a party presents." Id. at 77; see
  also W. Fletcher, The Structure of Standing, 98 Yale L.J. 221, 229 (1988)
  (standing "should be seen as a question of substantive law, answerable by
  reference to the statutory and constitutional provision whose protection is

 

  invoked").

       The zone-of-interests test similarly requires us to examine the
  substance of plaintiff's claim.  As originally formulated in Association of
  Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150 (1970),
  the test is "whether the interest sought to be protected by the complainant
  is arguably within the zone of interests to be protected or regulated by
  the statute or constitutional guarantee in question."  Id. at 153 (emphasis
  added).  Although the United States Supreme Court has not expressly applied
  the zone-of-interests test to an equal protection claim, its application is
  appropriate unless Congress has manifested a contrary intent.  See Bennett
  v. Spear, No. 95-813, slip op. at 7 (U.S. Mar. 19, 1997) (zone-of-interests
  test is among standing requirements of general application); Adams v.
  Watson, 10 F.3d 915, 918 n.7 (1st Cir. 1993) (applying zone-of-interests
  test to Commerce Clause); Peoples Gas, Light & Coke Co. v. United States
  Postal Serv., 658 F.2d 1182, 1195 n.10 (7th Cir. 1981) (duty to apply
  zone-of-interests test is nondiscretionary).  We therefore turn to the
  substance of plaintiff's claim to resolve the issue of standing.

       Plaintiff argues that the suppliers of crushed gravel have a right to
  compete on an equal footing with suppliers of crushed stone, and that the
  Agency of Transportation cannot prefer crushed stone over crushed gravel in
  its purchasing decisions.  In essence, plaintiff urges that crushed gravel
  has a right under the Equal Protection Clause to be treated the same as
  crushed stone.  We decline to recognize equal protection rights for gravel. 
  Persons, not things, have equal protection rights.(FN4)   Because plaintiff
  does not have a legally protected right to sell crushed gravel as if it
  were crushed stone, its claim fails to assert injury in fact.

       This action is a routine procurement dispute dressed up as a civil
  rights claim.  We doubt that the drafters of the Civil Rights Act, writing
  in the wake of the Civil War, intended to extend the benefits of 42 U.S.C.
  § 1983 to suppliers whose discrimination claim is based solely on the
  state's preference for one product over another.  See generally Monroe v.
  Pape, 365 U.S. 167,

 

  170-187 (1961) (history of Civil Rights Act).  We therefore hold that this
  claim is not within the zone of interests of 42 U.S.C. § 1983.

       Our conclusion is reached with a firm belief that this is an area
  where we must defer to an independent and separate branch of government as
  explained in Lukens Steel.  When acting as a market participant, the
  government should "enjoy[] the unrestricted power to produce its own
  supplies, to determine those with whom it will deal, and to fix the terms
  and conditions upon which it will make needed purchases."  Id. at 127; see
  also Reeves, Inc. v. Stake, 447 U.S. 429, 439 (1980) (when acting in
  proprietary role, state should share private sector's freedom from legal
  restraints).  Procurement laws are for the benefit of the state, not
  prospective bidders.  See Lukens Steel, 310 U.S.  at 126; Sowell's Meats &
  Servs., Inc. v. McSwain, 788 F.2d 226, 228 (4th Cir. 1986).  Thus, "no one
  has a `right' to sell to the government that which the government does not
  wish to buy."  Coyne-Delany Co. v. Capital Dev. Bd., 616 F.2d 341, 342 (7th
  Cir. 1980).

       Because of the uniqueness of plaintiff's claim, we have been unable to
  find decisions on potential bidders' standing to bring equal protection
  claims that are exactly on point.  We believe our analysis is consistent
  with the holding of the majority of courts that disappointed bidders lack
  standing to challenge bidding procedures under the Due Process Clause. 
  See, e.g., Buckley Constr., Inc. v. Shawnee Civic & Cultural Dev. Auth.,
  933 F.2d 853, 857-59 (10th Cir. 1991); Sowell's Meats, 788 F.2d  at 228; L &
  H Sanitation, Inc. v. Lake City Sanitation, Inc., 769 F.2d 517, 524 (8th
  Cir. 1985); Grand Canyon Pipelines, Inc. v. City of Tempe, 816 P.2d 247,
  250-51 (Ariz. Ct. App. 1991); Polyvend, Inc. v. Puckorius, 395 N.E.2d 1376, 1380 (Ill. 1979), appeal dismissed, 444 U.S. 1062 (1980); Rice v.
  Scott County Sch. Dist., 526 N.E.2d 1193, 1197 (Ind. Ct. App. 1988); Teton
  Plumbing & Heating, Inc. v. Board of Trustees, 763 P.2d 843, 850-51 (Wyo.
  1988).

       We also find persuasive the decisions holding that claims of potential
  suppliers are too speculative to confer standing.  See T & S Products, Inc.
  v. United States Postal Serv., 68 F.3d 510, 513 (D.C. Cir. 1995) (potential
  supplier of packaging products lacks standing to challenge

 

  Postal Service purchasing decision); Energy Transp. Group, Inc. v. Maritime
  Admin., 956 F.2d 1206, 1215 (D.C. Cir. 1992) (potential competitive harm
  too speculative for injury in fact where bidder did not operate in
  geographic area specified in contract).  We need not decide whether
  plaintiff, a potential subcontractor to a bidder, would have standing
  because its interest is even further removed than that of a potential
  supplier.

       Plaintiff's answer to the weaknesses in its standing appears to be
  that the United States Supreme Court has recently given standing to all
  equal protection claims in procurement disputes.  It relies on two recent
  reverse discrimination decisions to support its standing argument: Adarand,
  115 S. Ct.  at 2097, and Associated Gen. Contractors, 508 U.S.  at 656. In
  both of these cases, the Court held that white plaintiffs suffered harm to
  their opportunity to compete for federal contracts because of minority
  set-asides.  The plaintiffs' injury in fact was their inability to compete
  on an equal footing because of their race.  Adarand, 115 S. Ct.  at 2105;
  Associated Gen. Contractors, 508 U.S.  at 667.  The right to compete equally
  for government contracts, free of racial quotas, was specifically
  recognized in City of Richmond v. J.A. Croson Co., 488 U.S. 469, 493 (1989)
  ("The [set-aside program] denies certain citizens the opportunity to
  compete for a fixed percentage of public contracts based solely upon their
  race.") (emphasis added).  The Court did not hold that injury to
  opportunity to compete was a protected legal right in other types of cases. 
  Nor did it hold that standing exists where the alleged discrimination
  involves the items to be purchased, rather than the racial status of the
  prospective government supplier.  Instead, the Court's holdings were
  narrowly written to apply only to "cases of this kind."  Adarand, 115 S. Ct.  at 2105.

       It is a huge leap to hold that decisions that find standing to
  challenge race-based preferences, a traditional civil rights concern,
  provide standing to any potential government supplier who attempts to turn
  a procurement dispute into an equal protection challenge.  Neither Adarand
  nor Associated Gen. Contractors requires that step, and we decline to take
  it.

       Although we affirm the dismissal based on lack of standing, we add
  that we do not believe the claim has merit under the Equal Protection
  Clause.  Like the Tenth Circuit Court of

 

  Appeals,  "[w]e are aware of no authority `holding or suggesting that the
  exercise by a state of a consumer's choice between competing products
  denies the disappointed supplier equal protection of the laws.'"  Curtis
  Ambulance of Fla., Inc. v. Board of County Comm'rs, 811 F.2d 1371, 1385
  (10th Cir. 1987) (quoting Coyne-Delany, 616 F.2d at 343); see also Robert
  K. Bell Enters. v. Tulsa County Fairgrounds Trust Auth., 695 P.2d 513, 519
  (Okla. 1985) (no equal protection claim where government granted better
  contract terms to plaintiff's competitor).

       Even if plaintiff's gravel-versus-stone discrimination claim fit
  properly under the Fourteenth Amendment, we would hold that defendant has
  an important interest in making purchasing decisions without the
  second-guessing of the judicial branch.  While the state is at liberty to
  establish an administrative or judicial process to resolve procurement
  disputes, in the absence of such a process we do not believe the
  Constitution should be interpreted to create a right to sell to the
  government that which it does not want to buy.  See Coyne-Delany, 616 F.2d 
  at 342.

       No one can claim that procurement decisions are perfect.  More
  information and more analysis would no doubt lead to better product
  choices.  In the real world, however, the transactional costs of acquiring
  and analyzing information may quickly overwhelm any gains in efficiency. 
  The government has a legitimate interest in making procurement decisions
  free from continuous litigation by suppliers who claim to have a better
  product.  The judiciary cannot become the "Consumer Reports" of the
  procurement business, enforcing product choices on a reluctant executive
  branch.  We therefore defer to the discretion of the executive branch and
  hold that plaintiff neither has standing, nor an interest protected by the
  Fourteenth Amendment, to bring this action.


       Affirmed.

                              FOR THE COURT:


                              _______________________________________
                              Associate Justice



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                                  Footnotes



FN1.  Chief Justice Allen sat for oral argument but did not
  participate in this decision.

FN2.  Plaintiff amended its complaint at the merits hearing to add
  defendant Patrick Garahan in his official capacity as Secretary of the
  Agency of Transportation.

FN3.  42 U.S.C. § 1983 provides: "Every person who, under color of any
  statute, ordinance, regulation, custom, or usage, of any State or Territory
  or the District of Columbia, subjects, or causes to be subjected, any
  citizen of the United States or other person within the jurisdiction
  thereof to the deprivation of any rights, privileges, or immunities secured
  by the Constitution and laws, shall be liable to the party injured in an
  action at law, suit in equity, or other proper proceeding for redress." 
  Defendant claims that plaintiff must exhaust administrative remedies before
  it can bring this action.  The superior court did not rule on this
  argument, and in light of our disposition, we do not reach it.

FN4.  The Equal Protection Clause states: "No State shall . . . deny
  to any person within its jurisdiction the equal protection of the laws." 
  U.S. Const. amend. XIV, § 1 (emphasis added).