RICHARD H. KYLE, District Judge.
This action arises out of Minnesota State Project No. 8214-114 (the "Project") for the design and construction of the "approach" (described in more detail below) to the future bridge connecting Oak Park Heights, Minnesota, to St. Joseph, Wisconsin,
Congress has established a national goal that at least ten percent of federal highway funds be spent with DBEs. See Surface Transportation Assistance Act of 1982, Pub. L. No. 97-424, § 105(f), 96 Stat. 2097, 2100 (1983); Transportation Equity Act for the 21st Century, Pub. L. No. 105-178, § 1101(b)(1), 112 Stat. 107, 113 (1998). This goal was intended to remedy "decades" of "race discrimination in government highway contracting [and] barriers to the formation of minority-owned construction businesses." Sherbrooke Turf, Inc. v. Minn. Dep't of Transp., 345 F.3d 964, 970 (8th Cir.2003).
Pursuant to these congressional directives, the United States Department of Transportation ("DOT") has issued regulations, found in Part 26 of Title 49 of the Code of Federal Regulations, that are intended to help achieve that goal. One such regulation requires recipients of federal highway funds to "set an overall goal for DBE [subcontractor] participation in... DOT-assisted contracts." 49 C.F.R. § 26.45(a)(1). Such a contract goal may not be a rigid quota. 49 C.F.R. § 26.43(a). Instead, the recipient must ensure that the primary (main) contractor awarded a DOT-assisted contract has either (1) met the goal for DBE subcontractor participation or (2) if unsuccessful in doing so, has made a good-faith effort to achieve it. 49 C.F.R. § 26.53(a). Determining whether
The Project here involves, inter alia, grading, surfacing, and other road work to build the "approach to the new St. Croix River Crossing," including the construction of a new interchange at the intersection of Minnesota Highways 36 and 95 in Oak Park Heights. (Eastburn Aff. Ex. 1 § 1.2.) The Project is partially federally funded (id. § 1.1) and, hence, subject to the legal requirements set forth above. MNDOT set a goal for the Project at 16.7% participation by DBE subcontractors. (Id. § 1.8.)
McCrossan is a highway contractor that "routinely performs work on large projects for the State of Minnesota and its political subdivisions." (McCrossan Aff. ¶ 2.) In late 2012, it responded to MNDOT's "request for qualifications," asking contractors to advise MNDOT of their interest in participating in the Project. (Id. ¶ 5.) From those responses, MNDOT would then compile a "shortlist" of contractors that would be asked to submit proposals to undertake the Project, from which the winning contractor would be selected. (Eastburn Aff. Ex. 1 § 1.3.) Three contractors ultimately made the "shortlist": McCrossan, Ames/Lunda, and a joint venture between Hoffman Construction Company and Shafer Contracting Company ("Hoffman/Shafer"). (Id. Ex. 2.)
All three contractors then submitted proposals for the design and construction of the approach, per requirements contained in a MNDOT document entitled "Instructions to Proposers" (the "Instructions"). (Id. Ex. 1.) Several provisions of the Instructions have critical importance here. First, the Instructions provided that proposals would be evaluated, among other things, on whether they "meet the requirements of the DBE federal regulations at 49 C.F.R. Part 26." (Id. § 5.3.2; accord id. § 4.4.4 (incorporating DBE and good-faith-effort standards from 49 C.F.R. Part 26).) Second, they provided that a contractor's DBE commitments and good-faith efforts had to be established and documented at the time the contractor's proposal was submitted to MNDOT. (Id. §§ 4.4.1.2-.7.)
The Instructions also spelled-out the process by which MNDOT would select the winning proposal. Each was to be given a "technical score" — a number between zero and 100 — based on its conformity with the Project's specifications and the ability to address potential areas of concern, such as mitigation of environmental hazards and maintenance of traffic flow during construction. (Id. §§ 4.2.4, 5.3.) Each proposal's overall cost would then be divided by its "technical score" to calculate an "adjusted score," the lowest of which would represent the "best value" among the proposals. (Id. § 5.5.) "Unless all Proposals [we]re rejected or MNDOT otherwise elect[ed] not to award the [c]ontract," the Instructions provided that MNDOT would select "the responsive and responsible [contractor] with the lowest adjusted score." (Id.)
McCrossan's proposal received the highest technical score and had the lowest overall cost by more than $5 million. (Id. Ex. 3.) Accordingly, it had (by far) the best overall "adjusted score." However, its proposal indicated that it had secured only 10.69% participation by DBE subcontractors, well below the 16.7% goal.
Having rejected McCrossan's proposal, MNDOT selected the contractor with the next best adjusted score, Ames/Lunda, to complete the Project.
McCrossan challenged MNDOT's decision and asked it to reconsider. (Id. Ex. 6.) It argued, among other things, that MNDOT had acted "contrary to federal regulations" because "the DBE program
A three-member panel — a MNDOT district engineer, MNDOT's director of employee and corporate services, and an attorney serving as MNDOT's director of contract management — held a reconsideration hearing on March 19, 2013, at which McCrossan was represented by counsel. (Id.) Shortly thereafter, the panel issued a comprehensive, 11-page decision denying relief and concluding that McCrossan had "not demonstrated adequate good faith efforts to recruit DBE commitment." (Id. at 11.) The panel expressly rejected, as having "no support ... in the federal regulations," McCrossan's argument that different standards should apply to design-build projects than design-bid-build projects, and it pointed out that in any event, McCrossan had "failed to provide any specific evidence or examples of how the design-build process affected [its] ability to subcontract with [] DBEs." (Id.) The panel also agreed with the earlier determination that McCrossan had not shown good-faith efforts to recruit DBE subcontractors, based on the factors set forth in Appendix A to Part 26. (Id. at 6-10.)
McCrossan then filed a "protest," arguing that the panel's decision was "rife with errors and arbitrary and capricious conclusions and reasoning." (Id. Ex. 7 at 13.) The "protest official" designated in the Instructions rejected it. That determination was adopted by Charles Zelle, MNDOT's Commissioner, in a final decision dated April 12, 2013. (Id. Ex. 8.)
On April 17, 2013, McCrossan filed a Petition for a writ of certiorari with the Minnesota Court of Appeals, seeking further review of MNDOT's decision. (Id. Ex. 10.)
McCrossan commenced the instant action against MNDOT and Commissioner Zelle on April 22, 2013.
The Supreme Court recently emphasized that injunctive relief "is an extraordinary remedy never awarded as a matter of right." Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). This Court must consider four factors to determine whether relief is warranted here: (1) McCrossan's likelihood of success on the merits; (2) the threat of irreparable harm in the absence of injunctive relief; (3) the balance between that harm and the harm injunctive relief would cause Defendants; and (4) the public interest. Dataphase Sys., Inc. v. CL Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc).
McCrossan's Motion will be denied because it has failed to demonstrate either irreparable harm absent injunctive relief or that it is likely to succeed on the merits.
The Court begins it analysis with irreparable harm, as "[t]he basis of injunctive relief in the federal courts has always been irreparable harm and the inadequacy of legal remedies." Bandag, Inc. v. Jack's
While the Court appreciates its brevity, McCrossan's one-paragraph argument on irreparable harm is unavailing. It asserts that it
(Pl. Mem. at 7 (internal quotation marks omitted).) In support, it cites United Technologies Communications Co. v. Washington County Board, 624 F.Supp. 185, 188 (D.Minn. 1985) (Rosenbaum, J.), which held that an unfair bidding process for public contracts automatically "raises a significant threat of irreparable injury," for which the "only true remedy" is injunctive relief.
In the undersigned's view, however, it is not enough for a plaintiff simply to point to a "tainted" bidding process and claim irreparable harm. United Technologies cited no authority for this "unique" proposition, which several federal courts have questioned. See Big Country Foods, Inc. v. Bd. of Educ. of Anchorage Sch. Dist., 868 F.2d 1085, 1088 (9th Cir.1989); Advanced Seal Tech., Inc. v. Perry, 873 F.Supp. 1144, 1149-50 (N.D.Ill.1995); see also Lametti & Sons, Inc. v. City of Davenport, Iowa, 432 F.Supp. 713, 715 (S.D.Iowa 1977) (noting that "the integrity of the competitive bidding system [can] be adequately protected by a damage action"). Several Minnesota cases, too, have rejected the notion that a party automatically suffers irreparable injury by losing "its chance to participate in an untainted [bidding] process." Dakota Barge Servs., Inc. v. St. Paul Port Auth., No. C3-96-1853, 1997 WL 10882, at *3 (Minn.Ct.App. Jan. 14, 1997); accord, e.g., Queen City Constr., Inc. v. City of Rochester, 604 N.W.2d 368, 372-73 (Minn.Ct.App.1999) (disagreeing that "the loss of the meaningful opportunity to bid on [a] contract is sufficient hardship to justify an injunction"); Am. Iron & Supply Co. v. Cnty. of Hennepin, No. C0-96-2278, 1997 WL 396226, at *2 (Minn.Ct.App. July 15, 1997) ("[L]ost opportunity does not present an irreparable harm in this context.") (internal quotation marks omitted).
At least two sound reasons support this conclusion. First, as stated in Superior Services, Inc. v. Dalton, 851 F.Supp. 381, 387 (S.D.Cal.1994), while "certain courts
Second, under the logic espoused in United Technologies, "every bid protest would involve an irreparable injury." OAO Corp. v. United States, 49 Fed.Cl. 478, 480 (2001) (emphasis added); accord San Diego Beverage, 997 F.Supp. at 1347. That is simply not the law. In eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392-93, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006), the Supreme Court overturned a long line of cases granting injunctions as a matter of course upon a showing of patent infringement — that is, based on a presumption (rather than a showing) of irreparable harm due to the nature of the claim itself. Although eBay was a patent case, its holding has been extended to other types of actions. See, e.g., Salinger v. Colting, 607 F.3d 68, 77 (2d Cir.2010) (copyright infringement); Byrd v. Aaron's, Inc., C.A. No. 11-101, 2011 WL 2672009, at *8 & n. 6 (W.D.Pa. June 16, 2011) (Wiretap Act), adopted, 2011 WL 2672204 (W.D.Pa. July 8, 2011). Notably, eBay rejected the application of categorical rules in injunction cases and instructed lower courts to consider "traditional equitable principles" when deciding whether to grant relief. 547 U.S. at 391-94, 126 S.Ct. 1837; see also WPIX, Inc. v. ivi, Inc., 691 F.3d 275, 285 (2d Cir.2012) ("[C]ourts may no longer simply presume irreparable harm; rather, plaintiffs must demonstrate that, on the facts of the case, the failure to issue an injunction would actually cause irreparable harm."). The Court perceives no obvious reason why eBay should not extend to this case — the Court need not, and should not, presume irreparable harm to McCrossan simply because it may have been involved in a "flawed" MNDOT bidding process.
Because McCrossan has offered no other irreparable-harm argument, the Court's analysis could end here. See Gelco Corp., 811 F.2d at 420. But even if the Court were to consider "traditional equitable principles," it would still find irreparable harm lacking.
As in OAO Corp., McCrossan's (purported) losses here are "primarily monetary": it has missed out on a contract that was awarded to a different contractor. 49 Fed.Cl. at 480. Yet, it has long been held that losses compensable in money damages are not irreparable. E.g., Watkins, 346 F.3d at 846; Gelco, 811 F.2d at 420; Sierra Military Health Servs., Inc. v. United States, 58 Fed.Cl. 573, 582 (2003) (finding no irreparable harm where it was "clear that most of plaintiffs alleged harms result not from a lack of opportunity to compete for the contract, but from loss of the actual contract"). Perhaps more importantly, it is not clear that missing out on the contract actually damaged McCrossan at all — that it would have profited on the contract is unsupported in the record and inherently conjectural.
In addition, the issue at this juncture is not whether McCrossan has been irreparably harmed, but rather whether "the injunctive relief sought is necessary to prevent irreparable harm." Taxpayers' Choice Volunteer Comm. v. Roseau Cnty. Bd. of Comm'rs, 903 F.Supp. 1301, 1308 (D.Minn. 1995) (Kyle, J.) (emphases in original). It is not. If McCrossan were to prevail on its claims, the Ames/Lunda contract would be declared void. See, e.g., Rochon Corp. v. City of St. Paul, 814 N.W.2d 365, 369 (Minn.Ct.App.2012). Assuming the Project were not yet complete at that time — and the Court perceives no reason why this action cannot be resolved before the Project's expected completion date, which is nearly two years away
Lastly, the Court finds it noteworthy that McCrossan could have sought from the Minnesota Court of Appeals the same injunctive relief it seeks here. Indeed, it filed its action in that court before commencing the instant action, yet it opted not to seek any preliminary relief there. This belies its argument that irreparable harm is imminent.
Though McCrossan's failure to establish irreparable harm suffices to deny relief, the Court will also address its likelihood of success — or, more accurately, the lack thereof.
In order to demonstrate a likelihood of success, McCrossan must show that it has a "fair chance of prevailing" on its claims. Planned Parenthood, 530 F.3d at 732. The question is not whether it has "prove[d] a greater than fifty percent likelihood" that it will succeed, PCTV Gold, Inc. v. SpeedNet, LLC, 508 F.3d 1137, 1143 (8th Cir.2007), but rather whether any of its claims provide a "fair ground for litigation,"
First, McCrossan appears to have waived its claims. Its contentions center on MNDOT's "error" in using the guidance contained in 49 C.F.R. Part 26, in particular Appendix A to that Part, which it believes was inapplicable to the Project. It asserts that MNDOT "ignored the fact that this was a design-build project" rather than a "design-bid-build project," and it claims that the DBE goals and good-faith efforts requirements in Part 26 cannot be applied to design-build projects. (Pl. Mem. at 10-14.) And it believes that the regulations "are not designed for application at the time of proposal in the design-build context," at which point it is (purportedly) "impossible" to comply with the DBE requirements. (Id. at 12 (emphasis added).)
Second, McCrossan's argument finds no support in challenged regulations themselves. Indeed, the opposite is true: the regulations clearly required MNDOT to establish a DBE participation goal for the Project, see 49 C.F.R. § 26.45(a)(1) ("[Y]ou must set an overall goal for DBE participation in your DOT-assisted contracts."), and Appendix A to Part 26 expressly provides that "[i]n any situation in which [a recipient of federal highway funds has] established a contract goal, part 26 requires [it] to use the good faith efforts mechanism of this part," 49 C.F.R. pt. 26 app. A § II (emphases added). In other words, the regulations facially apply to all projects, whether design-bid-build or design-build; nothing indicates that they cannot or should not apply to design-build projects, as McCrossan contends.
McCrossan points to 49 C.F.R. § 26.53(e) to support its argument. (Pl. Mem. at 11.) True, that regulation provides "[i]n a `design-build' ... contracting situation, a recipient [of federal funds] may establish a goal for the project. The master contractor then establishes contract goals, as appropriate for the subcontracts it [awards]." But a close reading of the regulation reveals that it does not preclude recipients of federal funds from utilizing the "standard" methods to determine DBE participation or good-faith efforts. Indeed,
Perhaps most damning to McCrossan's argument, however, is the fact that both Ames/Lunda and Hoffman/Shafer were able to submit proposals meeting MNDOT's 16.7% goal for DBE participation. If MNDOT had erred in applying the Part 26 regulations at the time of proposal because, as a design-build project, McCrossan could not "state definitively what the `work of the contract' is that DBEs and non-DBEs will [] perform[]" (Pl. Mem. at 12), then it should have been equally "impossible" for the remaining contractors to hit MNDOT's target at that time. The fact that they did so is telling. Equally telling is the fact that McCrossan had no difficulty "solicit[ing] and obtain[ing] detailed bids" from DBE subcontractors, as indicated by its "preparation and submittal of a proposal for the Project calculated to the exact dollar: $52,326,236.00." (Ames/Lunda Mem. at 2.) And this makes eminent sense. McCrossan's bid encompassed both the design and construction of the approach — who better than McCrossan would know precisely what subcontracting was necessary to complete its very own proposal?
Third, McCrossan's remaining contentions are unconvincing. It argues, for example, that MNDOT impermissibly imposed a de facto 16.7% quota, asserting that a MNDOT official, Andrea Robinson, informed it the 16.7% goal "need[ed] to be met" in order for it to be awarded the contract. (Pl. Mem. at 14; McCrossan Aff. ¶ 7.) But even if this statement had in fact been made (which Robinson denies), documents in the record seriously undermine McCrossan's argument. It appears quite clear that MNDOT did not reject the proposal because McCrossan failed to meet the DBE goal, but rather because it failed to make (and document) good-faith efforts to achieve that goal. (See Eastburn Aff. Ex. 5 at 6-11; id. Ex. 6 at 2-11.) Indeed, McCrossan asserted this same "quota" argument at the reconsideration hearing and the panel rejected it, because the record established that MNDOT had disavowed McCrossan's proposal due to its "fail[ure] to make adequate good faith efforts." (Id. Ex. 6 at 6.) That conclusion finds ample support in the documents before the Court.
McCrossan also argues that even if applicable to the Project, MNDOT misinterpreted the factors in Appendix A to Part 26 when evaluating the extent of its good-faith efforts. MNDOT determined, for instance, that McCrossan had not engaged in good-faith efforts because it rejected several DBE subcontractors solely based on price, without negotiating for more competitive bids.
McCrossan next argues that requiring negotiation with subcontractors before submitting a design-build proposal "ignores the practical realities of bidding," because subcontractors "have the incentive to submit their bids very close to the deadline," making it difficult for prime contractors to negotiate before their submissions are due. (Pl. Mem. at 15.) Of course, neither Ames/Lunda nor Hoffman/Shafer appear to have encountered such difficulty. And nothing in the record suggests that a prime contractor cannot require subcontractors to submit bids far enough in advance to leave time for negotiation before the prime contractor's proposal is to be submitted.
Finally, McCrossan argues that application of Part 26's good-faith-efforts factors was not narrowly tailored to meet a compelling government interest and, hence, violated its Fourteenth Amendment rights. (Pl. Mem. at 17-18.) But as noted above, the regulations expressly provide that MNDOT was required to set a DBE goal for the Project and was required to use "the good faith efforts mechanism" in Part 26's Appendix. In doing so, MNDOT was simply complying with the mandates of federal law, which have previously withstood strict scrutiny review. See Sherbrooke Turf, 345 F.3d at 972 ("[W]e conclude that the DOT regulations, on their face, satisfy the Supreme Court's narrow tailoring requirements."); see also H.B. Rowe Co. v. Tippett, 615 F.3d 233, 236 n. 1 (4th Cir. 2010) ("Federal courts of appeal have uniformly upheld the federal DBE program against equal-protection challenges.").
In any event, the Court struggles to comprehend how McCrossan's equal-protection rights were violated when all three "shortlisted" contractors were subjected to the same DBE and good-faith efforts requirements in the regulations. There is no allegation that use of the Part 26 factors adversely impacted DBE participation in the Project or the contractors bidding to obtain it. Nor has McCrossan offered any evidence to show that the factors made it more difficult to obtain DBE subcontractors. (See Eastburn Aff. Ex. 6 at 5 ("[McCrossan] failed to provide any specific evidence or examples of how the design-build process affected [its] ability to subcontract with the DBEs.").) All three contractors were operating on a level playing field, and two met the Project's goal while McCrossan did not; there is simply no suggestion in the record that MNDOT's actions benefitted one contractor over another.
The remaining Dataphase factors — namely, (1) the balance between the harm
As already discussed, the Court perceives little harm in denying relief to McCrossan, but granting relief would potentially subject MNDOT to significant financial penalties pursuant to the terms of its contract with Ames/Lunda. (Chiglo Aff. ¶¶ 4-8.) Any such penalties would be borne by the Minnesota fisc and, hence, the state's residents (taxpayers). Further, delay occasioned by injunctive relief could result in cancellation of the contract, requiring the entire process to begin anew. (Id. ¶¶ 7-8.) And, quite obviously, an injunction would only further postpone construction of the bridge over the St. Croix River, badly needed infrastructure that took more than a decade of wrangling before finally receiving federal approval and funding. While the Court recognizes the public's interest in a fair bidding process, the equities here do not tip in favor of relief.
Furthermore, the undersigned is loath to interfere in government contracting and procurement. As noted previously by this Court's most well-known jurist, "given the complexity of procurement decisions, the lack of expertise possessed by the courts,... and the potential confusion, inefficiency, delay, and increased expense that can result," courts should hesitate to get in the middle of public-contract disputes. Onan Corp. v. United States, 476 F.Supp. 428, 432 (D.Minn.1979) (Devitt, C.J.); accord, e.g., Smith & Wesson, Div. of Bangor Punta Corp. v. United States, 782 F.2d 1074, 1081-82 (1st Cir.1986) (noting the "strong public interest in an orderly, efficient, expeditious government procurement process"; "It would be intolerable for any frustrated bidder to render uncertain for a prolonged period of time government contracts which are vital to the functions performed by the sovereign.") (internal quotation marks and citation omitted).
Moreover, the Court's reluctance to inject itself into the middle of this dispute raises another issue: abstention. MNDOT argues, and Ames/Lunda "suggests," that the Court should abstain from hearing this matter in light of the pending action before the Minnesota Court of Appeals. (MNDOT Mem. at 6-8; Ames/Lunda Mem. at 21-22.) Each points to Colorado River Water Conservation District v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), where the Supreme Court held that a federal district court may abstain from exercising jurisdiction over a federal case in favor of concurrent and parallel state proceedings, if doing so would serve the interests of "wise judicial administration, giving regard to the conservation of judicial resources." McCrossan contends that Colorado River abstention is inappropriate because this action and the action before the Minnesota Court of Appeals are not "parallel," a prerequisite to the application of Colorado River, as the scope of the proceeding here exceeds that in state court.
But in the Court's view, it makes no difference whether the two proceedings are parallel, because abstention is justified under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). There, the Supreme Court held that a federal court may abstain over an action where the pendency of a similar action in state court implicates concerns of federal-state comity. Id. at 44-45, 91 S.Ct. 746. Abstention under Younger is appropriate where (1) there is an ongoing state judicial proceeding, which (2) implicates important state interests, and (3) the state proceeding affords an adequate opportunity to raise the federal questions presented. Cedar Rapids Cellular Tel., L.P. v. Miller,
Here, there can be no dispute that the first factor (an ongoing state judicial proceeding) has been met.
At bottom, "interests of comity and federalism support federal abstention" where, as here, "state judicial review of the [state agency's] order has not yet been completed." Sprint Commc'ns, 690 F.3d at 867 (affirming Younger abstention over action challenging decision by Iowa Utilities Board, as plaintiff had also filed petition for review in Iowa state court asserting that the decision violated federal law). Accordingly, the Court will abstain from hearing this action under Younger.
Based on the foregoing, and all the files, records, and proceedings herein,