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M.K. Weeden Construction, Inc. v. State

United States District Court, Ninth Circuit

September 4, 2013

M.K. WEEDEN CONSTRUCTION, INC., Plaintiff,
v.
STATE OF MONTANA, MONTANA DEPARTMENT OF TRANSPORTATION COMMISSION, and its commissioners KEVIN HOWLETT, RICK GRIFFITH, JOHN COBB, CAROL LAMBERT, and BARB SKELTON, MONTANA DEPARTMENT OF TRANSPORTATION, MIKE TOOLEY, in his capacity as Director of the Montana Department of Transportation, and JOHN DOES 1-5, Defendants.

OPINION & ORDER

CHARLES C. LOVELL, District Judge.

Before the Court is an Application for Temporary Restraining Order and Preliminary Injunction (ECF No. 1) filed by Plaintiff M.K. Weeden Construction, Inc. ("Weeden") on August 15, 2013. Also before the Court is a Motion to Intervene (ECF No. 7) filed by M. A. DeAtley Construction, Inc. ("DeAtley"), which motion is opposed by Plaintiff Weeden.

Background

On June 27, 2013, the Montana Department of Transportation ("MDT") advertised for bids on the Arrow Creek Slide Project (the "Project"). The Project will utilize federal funding to correct two large slides that are causing damage to Montana Highway 80 (about 20 miles north of Stanford, Montana) and posing a risk of harm to motorists on the highway. (ECF No. 15, Aff. of Kloberdanz, ¶ 7.) The two slides are currently moving at the rate of 1 to 2 inches per month, and, if the Project is not undertaken soon, these ongoing changes to the highway may require a redesign of the Project at significant cost to MDT. (ECF No. 15 ¶¶ 5, 9.) MDT desires to undertake this Project this Fall while weather is still favorable. Delay of this project through winter and spring of - will increasingly diminish highway safety and may ultimately disrupt the highway for use by the public.

This federal-aid highway project is estimated to cost approximately $14 to $15 million. Because federal funding is being utilized for the Project, the requirements of the United States Department of Transportation ("USDOT") apply. The USDOT's Disadvantaged Business Enterprise Program ("DBE"), recently reauthorized by the Moving Ahead for Progress in the 21st Century Act, Public Law 112-141 ("MAP-21"), is one of the federal requirements applicable to the use of federal highway funds. The DBE Program requires states receiving federal highway funding to set goals for the use of disadvantaged business enterprises as participants in federal highway projects. MDT established an overall goal of 5.83% DBE participation in Montana's highway construction projects. (ECF No. 13, Aff. of McCubbins, ¶ 10.) That goal was approved by the United States Department of Transportation in April 2011. (ECF No. 13, ¶ 11.) In order to meet its overall goal, MDT establishes DBE subcontractor goals for federal-aid projects. On the Arrow Creek Slide Project, MDT established a DBE goal of 2%.

Thus, in submitting a bid on the Arrow Creek Slide Project, a bidder must demonstrate that 2% of the contract amount will be performed by one or more DBE subcontractors. Plaintiff Weeden was the low bidder with a bid of $14, 770, 163.01. (ECF No. 2, ¶ 13.) However, Weeden's bid did not meet the 2% DBE requirement. Weeden concedes that its bid relied upon only 1.87% DBE subcontractors. (ECF No. 2, ¶ 14.) MDT notes that Weeden's bid actually identified only 0.81% DBE subcontractors. (ECF No. 12, ¶ 15.)[1]

Both USDOT and MDT allow a good faith exception to the DBE requirement for bidders that show they have attempted in good faith to meet the goal but could not do so. (ECF No. 13, ¶ 16.) The federal government has provided guidance as to what is a good faith effort. See 49 C.F.R. Part 26, Appendix A. MDT has also provided detailed guidance to contractors regarding what is a good faith effort to meet the DBE goal. (ECF No. 13, Exhibit A, pp. 9-11.)

Weeden was the only bidder who did not meet the 2% DBE goal. The other five bidders not only met, but also exceeded the goal, significantly, with bids ranging from 2.19% DBE participation to 6.98% DBE participation. (ECF No. 13, Affidavit of McCubbins, ¶ 20.)

Weeden attempted to utilize the good faith exception to the DBE requirement. MDT's DBE Participation Review Committee considered Weeden's good faith documentation on July 30, 2013, and found that Weeden's bid was non-compliant as to the DBE requirement and failed to demonstrate good faith effort to solicit DBE subcontractor participation in the contract. (ECF No. 13, Aff. McCubbins, Exhibit B, p. 12.) Weeden appealed that decision to the MDT DBE Review Board and appeared before the board at a hearing on August 12 and 15, 2013. The DBE Review Board affirmed the committee decision finding that Weeden's bid was not in compliance with the contract DBE goal and finding that Weeden had failed to make a good faith effort to comply with that goal. (ECF No. 13, Exhibit C, p. 13.) Specifically, the DBE Review Board found that Weeden had received a DBE bid for traffic control, but Weeden decided to perform that work itself in order to lower its bid amount. (ECF No. 13, p. 13, ¶ 2.) Additionally, the DBE Review Board found that Weeden's mass emailing to 158 DBE subcontractors without any follow up was a pro forma effort not credited by the Review Board (or by federal guidance) as an active and aggressive effort to obtain DBE participation. (ECF No. 13, p. 14, ¶ 4.)

Proposed Intervenor DeAtley contends that it submitted the lowest responsive bid of $15, 552, 004.46. (ECF No. 7-2, Affidavit of Scott Palmer, ¶ 12.) DeAtley's bid exceeded the 2% DBE goal. DeAtley claims that its DBE utilization was approximately 3.3%. (ECF No. 7-3, Exhibit A, Aff. of Palmer.)

The Application for Temporary Restraining Order/Preliminary Injunction

Plaintiff Weeden now seeks an injunction against Defendant MDT to prevent MDT from letting the contract to another bidder (presumably, but not necessarily, to Intervenor DeAtley Construction). Plaintiff Weeden claims in Count 1 of its Complaint that MDT's DBE program violates the Equal Protection Clause of the U.S. Constitution and the Montana Constitution. Plaintiff asserts that there is no supporting evidence of discrimination in the Montana highway construction industry, and therefore there is no government interest that would justify favoring DBE entities. Plaintiff Weeden claims in Count 2 of its Complaint that its right to Due Process under the U.S. Constitution and the Montana Constitution has been violated. Specifically, Plaintiff Weeden claims that MDT did not provide reasonable notice of the good faith effort requirements. Weeden also complains that it was not given notice of DeAtley's July 30, 2013, letter to MDT that challenged the responsiveness of Weeden's bid based on MDT's 2% DBE requirement. Plaintiff Weeden concludes that it has a constitutionally protected property interest in an award of the contract for the Arrow Creek Slide Project.

Legal Standard for Injunction

As the parties agree, the legal standard for issuance of an injunction is whether (1) the applicant is likely to succeed on the merits of its claims, (2) it is likely to suffer irreparable harm absent preliminary relief, (3) the balance of the equities tips in its favor, and (4) an injunction is in the public interest. Winter v. Nat'l Res. Def. Council, 555 U.S. 7, 129 S.Ct. 365, 374 (2008). The Ninth Circuit has allowed an alternative "sliding scale" test such that "serious questions going to the merits and a balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest." Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011) (internal marks removed). However, ...


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