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Laidlaw Transit Inc. v Anchorage School District (08/12/2005) sp-5931
Laidlaw Transit Inc. v Anchorage School District (08/12/2005) sp-5931
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| LAIDLAW TRANSIT, INC.,
| ) |
|
| ) Supreme Court No. S-
10796 |
|
Appellant, | ) |
|
| ) Superior Court
No. |
|
v. | ) 3AN-01-4545
CI |
|
| ) |
|
ANCHORAGE SCHOOL DISTRICT | ) O P I N I O
N |
|
and FIRST STUDENT, INC., | ) |
|
| ) |
|
Appellees. | ) [No. 5931 -
August 12, 2005] |
|
| ) |
|
|
|
|
Appeal from the
Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Peter A.
Michalski, Judge.
Appearances: Sean Halloran, Hartig Rhodes
Hoge & Lekisch P.C., Anchorage, for
Appellant. Andrena L. Stone and Saul R.
Friedman, Jermain Dunnagan & Owens, P.C.,
Anchorage, for Appellee Anchorage School
District. Stephen H. Hutchings and Tina M.
Grovier, Birch, Horton, Bittner and Cherot,
Anchorage, for Appellee First Student, Inc .
Before: Bryner, Chief Justice, Matthews,
Eastaugh, and Carpeneti, Justices. [Fabe,
Justice, not participating.]
BRYNER, Chief Justice.
I. INTRODUCTION
Laidlaw Transit and First Student both bid on the
Anchorage School Districts pupil transportation contract for 2001-
2006. The district deemed both bids responsive and awarded the
contract to First Student, finding the award to be in the
districts best interests. Laidlaw sued the district and First
Student, seeking to overturn the award, alleging fraud,
miscalculation of the value of its proposal, violation of its
right to procedural due process, and other errors. The superior
court converted the suit to an administrative appeal, declined to
hold an evidentiary hearing, and affirmed the boards decision.
Laidlaw appeals, claiming that the superior court erred in
treating its suit as an administrative appeal, in denying a trial
de novo, and in affirming the contract award to First Student.
We affirm the award, concluding that (1) Laidlaws superior court
action was properly treated as an administrative appeal, (2) its
claims of fraud and miscalculation were barred by its failure to
exhaust available administrative remedies, (3) a trial de novo
was unnecessary because the school districts proceedings complied
with due process, and (4) the districts bid-responsiveness
determinations and best-interests findings comply with applicable
law and are rationally grounded.
II. FACTS AND PROCEEDINGS
The background facts of the case are largely
undisputed. Anchorage School District began soliciting bids for
a new pupil transportation contract in October 2000. Laidlaw
Transit, Inc., held the then-existing contract, which was to
expire June 30, 2001, and had provided some or all of the
districts pupil transportation for the previous twenty years.
The district and the Alaska Department of Education were
concerned about lack of competition for pupil transportation
contracts, so the district coordinated with the Fairbanks and
Matanuska-Susitna Borough school districts to issue Requests for
Proposals at the same time, hoping to attract more proposers. In
response to its Request for Proposals (RFP), the district
received five bids, including bids from Laidlaw and First
Student, Inc.
The district certified all the proposals as responsive
to the RFP. Laidlaw submitted the low bid, offering a total
daily rate of $50,465.42. First Students proposal fell within
five percent of Laidlaws. The Department of Educations
regulations allowed the district to select a proposal other than
the low proposal if the other proposal fell within five percent
of the low proposal, the proposer offered to match the low
proposal, and the district found that awarding the contract to
that proposer would be in the districts best interest.1 First
Student offered to match Laidlaws proposal.
The districts staff recommended that the school board
award the contract to First Student. At its meeting on January
22, 2001, the Anchorage School Board considered the proposals
from Laidlaw and First Student. District staff spoke in support
of its recommendation of First Student. Executives from First
Student spoke in support of their proposal. Laidlaw executives
and a Laidlaw driver spoke in support of Laidlaws proposal. The
board asked questions of several of the speakers. At the close
of the meeting, the board voted to award the contract to First
Student.
After reviewing First Students proposal and supporting
documents, Laidlaw notified the school board that it had elected
not to file a petition for reconsideration. Instead, the company
filed an original civil action in superior court challenging the
districts determinations that First Students proposal was
responsive to the RFP and was in the districts best interests.
Laidlaws complaint further alleged fraud by district staff and
First Student, defamation and slander by First Student, and
breach of contract by the district. Laidlaw asked the court to
enjoin or invalidate the districts contract with First Student,
to award the contract to Laidlaw, and, in addition, to award
Laidlaw bid preparation costs, contract damages, and attorneys
fees. Laidlaw also advanced independent claims for interference
with economic advantage and restraint of trade.
On the motion of the district and First Student, and
over Laidlaws opposition, the superior court converted the case
into an administrative appeal, treating it as a matter calling
for review of the districts responsiveness and best-interest
determinations, based on the agency record. The court called for
the parties to brief these issues and stayed Laidlaws separate
claims pending resolution of the appeal.
The superior court affirmed the districts decision and
awarded attorneys fees to the district and First Student.
Laidlaw appeals.
III. DISCUSSION
A. Conversion to Administrative Appeal/Denial of Trial
DeNovo
Asserting that the school boards decision did not
amount to an agency proceeding and that, even if it did, it
failed to comport with the requirements of due process, Laidlaw
initially argues that the superior court erred in converting the
case to an administrative appeal and/or in denying Laidlaw a
trial de novo.
Whether Laidlaws superior court action qualifies as a
case reviewable in superior court as an appeal is a question of
law that we decide independently.2 Questions of constitutional
compliance are also subject to independent review.3
1. Conversion to administrative appeal
Laidlaw notes that an agencys action is subject to
review in the superior court if it is an adjudicative proceeding.4
Citing Hickel v. Halford,5 it contends that the district did not
conduct an adjudicative proceeding, so the action Laidlaw filed
in superior court should not have been converted to an
administrative appeal.
In Hickel, we cited three common attributes of
administrative proceedings:
1. A dispute must exist.
2. A document reflecting the fact of the
dispute which serves a function similar to
that of a complaint in a civil action, or an
accusation or statement of issues under the
Administrative Procedure Act, AS 44.62.360,
370, must be served by one party on the other
party.
3. The document must set in motion
mechanisms prescribed by statute or
regulation under which the dispute will
ultimately be resolved.[6]
Laidlaw asserts without explanation that the districts actions
fail each of these standards.
But the accuracy of this assertion is debatable. In
Hickel, we cited the Blacks Law Dictionary definition of dispute,
which reads, in part: a conflict or controversy; a conflict of
claims or rights; an assertion of a right, claim, or demand on
one side, met by contrary claims or allegations on the other.7
Here, the districts staff decided to recommend that the board
award the contract to First Student. Because Laidlaw sought the
award itself, a dispute existed; the first Hickel factor was thus
met. The second factor a formal, complaint-like document
reflecting the conflict might be viewed as having been met when
the district faxed Laidlaw its formal notice of intent to award
the contract to First Student. And finally, this notice arguably
triggered a formal mechanism for resolving the dispute prescribed
by the controlling regulation then in effect, 4 AAC 27.085.8
This provision required the board to determine if awarding the
contract to First Student instead of Laidlaw was in the districts
best interest; it further granted Laidlaw the right to seek
reconsideration in the event of an adverse decision.9
In other cases, we have also noted that an
administrative action is adjudicatory when it relates to an
individual and results in a record capable of appellate review.10
Here, the board based its approval of the districts intent to
award the contract to First Student instead of Laidlaw on an
extensive documentary record submitted by First Student, Laidlaw,
and the districts staff; and the boards hearing on the issue was
recorded and transcribed, thus generating a record capable of
meaningful review on appeal. Under this view and the Hickel
factors, the boards decision awarding the contract to First
Student might be considered to be an administrative adjudication
reviewable by the superior court under the formal standards
governing administrative appeals.11
Alternatively, and perhaps more plausibly, the best-
interest hearing before the board might be viewed as an executive
or legislative action rather than an adjudicative determination.
This view conforms to the structure and basic purpose of the
boards best-interest determination. The relevant state
regulation, 4 AAC 27.085, adopted an orderly and expeditious
process for awarding transportation contracts through evaluation
of written offers responding to an RFP. The process was
essentially executive, not adjudicative: its basic goal was
simply to select a winning offer of a contract, not to resolve
disputes among competing holders of vested contract rights.
This alternative view of the best-interest
determination as a non-adjudicative function also comports with
the treatment commonly given to similar determinations in
analogous administrative settings. A good illustration may be
found in the state procurement code.12 Under the code,
purchase/award decisions are made by the procurement officer
based on a most advantageous determination that is much like the
school boards best-interest determination here.13 Only after the
procurement officer makes the most-advantageous determination
does the administrative adjudication process begin: interested
parties may protest the award; the procurement officer issues a
written decision on the protest; and the aggrieved party may then
appeal to the commissioner.14 If genuine issues of fact are
raised, either the commissioner or a hearing officer must decide
them after holding a hearing.15 The commissioners decision may
then be appealed to the superior court.16
The state regulations governing school bus contracts
defined a similar adjudicative process in 4 AAC 27.085(g), which
gave disappointed bidders the right to petition for
reconsideration of the school boards best-interest determination.
As we more fully explain below in discussing Laidlaws due process
claim, while subsection .085(g) limited the right of
reconsideration to claims alleging fraud, duress, or
calculational error, these limitations seem closely tailored to
fit the limited scope of a disappointed bidders interests in
receiving a given award.
On balance, then, we agree with Laidlaws assertion that
the school boards best-interest hearing was not an adjudicative
proceeding, and its best-interest finding does not constitute a
formal adjudication. Yet it hardly follows that the boards best-
interest determination is not subject to an administrative
appeal. As mentioned above and more fully described below in our
discussion of Laidlaws due process claim, 4 AAC 27.085(g)
established a formal adjudicative process for administrative
review of the boards best-interest determination. More
important, even in the absence of subsection .085(g), Laidlaws
superior court action challenging the boards best-interest
determination would still properly be characterized as an
administrative appeal.
Laidlaw starts from the mistaken premise that an
agencys actions can give rise to an administrative appeal in the
superior court only if the agency takes those actions in a formal
administrative proceeding. But our cases uniformly point to the
opposite conclusion. We have frequently emphasized that,
[h]owever denominated, a claim is functionally an administrative
appeal if it requires the court to consider the propriety of an
[administrative] determination.17 To be sure, the technical
requirements that formally govern administrative appeals attach
only when cases arise from administrative adjudications.18 But we
have nonetheless traditionally reviewed a wide variety of non-
adjudicative administrative and executive actions under the same
narrow and deferential standards that apply in administrative
appeals.19 In such cases, although the applicable procedures are
sometimes improvised, the superior court typically bases its
ruling on the administrative record; the court usually confines
its consideration to asking whether the agency has taken a hard
look at the disputed issue, whether it has decided the case on a
rational basis; or whether its decision was arbitrary and
capricious; and the court often issues its decision in the form
of a declaratory or summary judgment.20
Here, Laidlaws action requested the superior court to
issue an order voiding First Students contract and directing the
district to award it to Laidlaw instead. The superior court could
not have considered granting this relief unless it first
determined that the district erred in its decision to award the
contract to First Student. Even though the board entered its
decision in a non-adjudicative proceeding, then, the superior
court accurately characterized Laidlaws action as a challenge to
the boards decision, and on that basis properly converted it to
an administrative appeal, rather than treating it as a fresh
superior court action.
2. Denial of trial de novo
Laidlaw nonetheless contends that the superior court
erred in failing to conduct a trial de novo because, in Laidlaws
view, the boards proceedings denied Laidlaw due process. As
Laidlaw correctly notes, our case law indicates that when an
administrative proceeding fails to conform to the minimum
requirements of procedural due process, the superior court may
not review the case on the agency record but must instead remand
for a new agency hearing or grant a trial de novo as needed to
cure the procedural defect.21 But here, Laidlaw fails to convince
us that any of the deficiencies it asserts amounted to a
violation of its right to procedural due process.
a. Due process rights of disappointed bidder
We reject at the outset Laidlaws position that its
status as a disappointed bidder entitled it to the entire panoply
of formal procedural safeguards that attach when a proceeding
concerns a vested property interest.22 Laidlaw cites Aloha Lumber
Corporation v. University of Alaska23 for this proposition. But
Laidlaw misreads that decision. In Aloha Lumber, we expressly
assumed that a vested interest existed, merely holding that no
due process violation had been shown in any event.24 In sharp
contrast to Aloha Lumbers arguendo assumption, we have generally
recognized that rights do not arise under a public contract until
a bid is accepted.25 In King v. Alaska State Housing Authority,
for example, we specifically held that a responsive bidder on an
RFP lacked any vested right to claim a preference if the winning
bidders contract was ultimately declared void.26 And though we
recognized that the state owed all bidders a fair and honest
consideration of their proposals, we expressly ruled that, even
if the state failed to meet this obligation, strong public
interests precluded the disappointed bidder from claiming
anything more than the reasonable costs incurred in preparing the
unsuccessful bid.27
Laidlaw attempts to distinguish its situation by
claiming that the district had no discretion not to award the
contract to Laidlaw if First Students bid proved fraudulent or
non-responsive. In support of this claim, Laidlaw cites 4 AAC
27.085(f)(1), which stated that the district
shall offer the contract either (A) to the
proposer whose responsive proposal contains
the lowest dollar amount; or (B) to a
proposer whose responsive proposal is within
five percent of the responsive proposal with
the lowest dollar amount if the proposer
agrees to match the responsive proposal with
the lowest dollar amount and the board
determines that the offer to other than the
low proposer is in the best interest of the
district.[28]
Laidlaw argues that this language made it mandatory for
the district to award it the contract, thus effectively giving
Laidlaw, as the low bidder, a vested interest in the contract if
the district erred awarding it to First Student.
But this argument fails, since 4 AAC 27.085(f)(2) the
paragraph of the regulation that immediately followed the one
cited by Laidlaw expressly empowered the district to reject all
responsive proposals if, in its judgment, the proposals are too
costly.29 Because paragraph (f)(2) granted comprehensive
discretion not to award the contract to any bidder, paragraph
(f)(1) cannot properly be read as having created a property
interest.30
Under King, then, Laidlaws position as a disappointed
bidder and current incumbent gave it no special hold on the pupil
transportation contract and no right to claim the full array of
procedural protections surrounding vested property interests.
This is not to say that Laidlaw had no right at all to
procedural due process. We have held that the Alaska
Constitutions due process clause must be flexibly applied by
balancing three factors:
the private interest affected by the official
action; the risk of an erroneous deprivation
of such interest through the procedures used
and the probable value, if any, of additional
or substitute procedural safeguards; and
finally, the governments interest, including
the fiscal and administrative burdens that
additional or substitute procedural
requirements would entail.[31]
In keeping with this flexible standard, we noted in Frontier
Saloon, Inc. v. Alcoholic Beverage Control Board that due process
does not require a full-scale hearing in every situation to which
due process applies.32
More specifically, regarding administrative matters, we
observed in Hickel v. Halford that
minimal due process requirements do define
necessary requirements of all adjudicatory
proceedings. Without providing at least
notice and the opportunity to participate to
those who might be affected, no
administrative action can either resolve the
dispute to the satisfaction of all of the
parties or be considered final despite later
objections.[33]
Hickel sets the baseline for the minimum procedural
rights due in adjudicative proceedings. But as we have already
determined above, the school bus award process was not an
adjudicative proceeding. The detailed provisions of 4 AAC 27.085
defined limited procedural rights for disappointed bidders like
Laidlaw. We must look to those sources for guidance in
determining whether the district denied Laidlaw its due process
rights. In interpreting 4 AAC 27.085, we must also be mindful of
its structure and basic purpose.
As already noted, the regulations provisions described
an orderly and expeditious process for awarding transportation
contracts through evaluation of written offers responding to an
RFP. The regulations basic goal was simply to select a winning
offer of a contract, not to resolve disputes among competing
holders of vested contract rights. And as a matter of public
policy, the need for efficiency in government commands that the
process be able to function quickly and dependably. Given its
structure and purpose, then, we think that 4 AAC 27.085
permissibly defined a non-adversarial, document-based selection
process in which the trappings of formal evidentiary hearings had
minor significance.
b. Due process requirement for school board best-
interests hearing
With these principles in mind, we turn to Laidlaws
specific due process contentions. Laidlaw argues initially that
because the district did not send out its memorandum recommending
the award to First Student until after the close of business on
the Friday before the boards Monday meeting, Laidlaw received
insufficient notice of the issues needing to be addressed at the
meeting. Laidlaw further asserts that the district intentionally
delayed release of the information to Laidlaw.
The district acknowledges that its RFP expressly
entitled all responsive bidders to receive notice of its
recommendations as far in advance of the board hearing as
possible. But the record indicates that, as required, the
district conscientiously did try to provide Laidlaw the earliest
notice possible. On the morning of Friday, January 19, 2001,
immediately after reaching its decision to recommend that the
contract be awarded to First Student, the district informed
Laidlaw by fax of its intent to present its recommendation at the
board meeting, which had already been scheduled for the evening
of Monday, January 22, 2001. The district finalized the
memorandum supporting its recommendation, and faxed it to Laidlaw
when it was completed at 6:04 p.m. on Friday, January 19. As the
district and First Student point out, this notice enabled Laidlaw
to appear at the Monday meeting and speak meaningfully in support
of its own proposal.
Citing Fairbanks North Star Borough Assessors Office v.
Golden Heart Utilities, Inc.,34 the district and First Student
assert that Laidlaw had adequate notice under the requirements of
due process. In Golden Heart we found that receipt of an agencys
position memorandum on the Friday before a Monday board of
assessment hearing gave the taxpayer, Golden Heart, adequate
notice under due process.35 Similarly, the RFP in this case
required the district to provide notice of its intent to award
the contract only as far in advance as possible. And here, as in
Golden Heart, the record indicates that Laidlaw understood, and
adequately addressed, the districts position at the hearing.36
Laidlaws attorney wrote and delivered a letter to the
school board members in advance of the meeting, addressing many
of the issues raised in the districts memorandum: liquidated
damages, labor relations, and First Students ability to provide
sufficient equipment. Laidlaw was able to fly at least two
executives to Anchorage for the meeting, and it was able to
notify several local employees who were present at the meeting.
Seven speakers represented Laidlaw at the board meeting; they
further addressed the concerns the district raised in its
memorandum, such as communication difficulties, liquidated
damages, bus size, and drivers attendance at training and safety
meetings. We find no indication that Laidlaw was substantially
hampered in preparing its presentation.
These circumstances are readily distinguishable from
the ones that recently led us to find a due process violation in
State, Department of Natural Resources v. Greenpeace, Inc.37
There, Greenpeace had appealed DNRs decision to issue a water use
permit to BP Exploration (Alaska) (BPXA); under applicable law,
the appeal entitled Greenpeace to a mandatory stay of the permit.
BPXA filed an expedited motion requesting DNR to lift the stay;
it then left Greenpeaces attorney a telephone message informing
him that an opposition was due the following day. The attorney
was out of town and failed to receive the message until he
returned several days later. By then, DNR had already lifted the
stay.38 In concluding that the one-day notice violated
Greenpeaces right to due process, we emphasized the importance of
the stay and its mandatory nature, the serious and irreparable
harm potentially threatened by lifting the stay, the absence of
any clear need for emergency action, and the fact that the
truncated period for response completely deprived Greenpeace of
an opportunity to respond before DNR acted on BPXAs motion and
lifted the stay, which left Greenpeace with no adequate recourse.39
Here, by contrast, the school boards hearing was not a
formal adjudicative proceeding, the fact that the board would be
required to decide the best-interest issue was well understood,
and the date of the school board meeting had been scheduled in
advance. More important, the record establishes that the three-
day notice actually given sufficed to enable Laidlaw to submit a
cogent and well-prepared response to the district staffs
recommendations. Additionally, the boards best-interest
determination had no immediate or irreparable impact; to the
contrary, 4 AAC 27.085(g) expressly entitled Laidlaw to petition
for reconsideration and provided for an automatic stay of the
award pending a ruling on the petition.
Moreover, the record fails to support Laidlaws
assertion that the district intentionally delayed releasing its
intent-to-bid memorandum to Laidlaw. It shows that the district
faxed the memorandum to all the proposers at approximately the
same time on January 19. The record also indicates that as late
as January 17, First Student continued to provide the district
with supplemental information regarding its ability to provide
the required buses and its position on labor unions. The
affidavit of Steve Kalmes, the districts Director of
Transportation, states that Superintendent of Schools Carol
Comeau did not make her determination regarding which company to
recommend the award to until January 18, 2001. The record as a
whole thus supports an inference that the district did not
intentionally delay release of its bid recommendation to Laidlaw.
Considering the totality of these circumstances, we
conclude that Laidlaw has failed to establish that the three-day
notice at issue here violated its right to due process.
Laidlaw alternatively contends that its due process
rights were violated by the manner in which the board conducted
its meeting. In asserting this contention, Laidlaw complains
that the district failed to give Laidlaw a copy of First Students
proposal in advance of the meeting, that Laidlaw was not allowed
to call or cross-examine witnesses, and that some of the speakers
who favored Laidlaw were limited to three-minute presentations.
But Laidlaw builds this claim on a premise that we have
already rejected: its assumption that the conduct of an
adjudicatory hearing must be consistent with the essentials of a
fair trial. 40 As we have indicated, the boards hearing was not
an adjudicatory proceeding; and even if it had been, because the
hearing was not meant to resolve competing property interests,
due process would not have automatically entitled Laidlaw to the
trappings of a formal trial. As First Student correctly
observes, and as we have previously held, due process does not
require a full-scale hearing in every situation to which due
process applies.41 Here, while the board did not model its
meeting on a trial, the procedures actually used provided Laidlaw
with an adequate opportunity to argue its position. Although the
district did not give Laidlaw a copy of First Students proposal
until after the board meeting, the districts memorandum gave
Laidlaw ample notice of the arguments that the district intended
to make in support of an award to First Student. Furthermore,
the districts actions accorded with 4 AAC 27.085(i), which did
not require the district to send non-winning bidders copies of
its recommended proposal, but merely required it to make all
proposals available for public inspection during business hours.42
Notably, Laidlaw has not alleged that the district failed to make
First Students proposal available for inspection.
Although Laidlaw insists that the school board erred by
denying cross-examination and limiting testimony, 4 AAC 27.085
did not require the board to grant cross-examination or to hear
unlimited testimony in deciding whether the districts best
interests would be served by awarding the contract to First
Student; indeed, the regulation does not appear to have
envisioned any formal evidentiary presentation during a board
hearing on the best-interest issue.43
Despite the absence of any provision requiring a trial-
like hearing on the best-interest issue, the board in fact did
allow two senior Laidlaw representatives unlimited time to speak,
and permitted other witnesses to make three-minute presentations.44
And Laidlaw fails to identify any specific prejudice resulting
from the procedures used during the boards best-interests
hearing. In short, we find no procedural deficiencies in the
January board hearing that would have compelled the superior
court to grant Laidlaw a trial de novo on appeal.
c. Due process rights on
reconsideration/exhaustion of administrative
remedies
Since our conclusion above focuses mainly on Laidlaws
procedural rights at the January 22 hearing, it only resolves
Laidlaws procedural due process claim insofar as the claim
relates to matters finally resolved at that hearing primarily,
whether the districts best interest would be served by awarding
the pupil transportation contract to First Student. In ruling
that Laidlaw received fair treatment at the hearing, then, we
have not considered whether Laidlaw possessed, or might have been
denied, additional procedural rights after the hearing concluded.
In particular, we note that 4 AAC 27.085(g) expressly
identified two situations in which disappointed bidders were
granted the right to receive reconsideration of a boards decision
awarding a contract:
Within five working days following the
district school boards offering a contract, a
proposer whose responsive proposal was not
accepted may petition the board, in writing,
for reconsideration of its action. Petitions
for reconsideration are limited to the
following grounds, which must be specified:
(1) fraud or duress by the district school
board or a proposer; or (2) error of the
district school board in calculating dollar
amounts. The aggrieved proposer shall deliver
the petition to all other proposers. The
district school board shall decide the scope
and form the reconsideration will take,
except that all responsive proposers must be
given the opportunity to be heard on the
petition. [45]
Though confined to petitions alleging fraud, duress, or
miscalculation of dollar values, subsection .085(g) appears to
have provided for reconsideration as a matter of course on these
issues; moreover, the subsection expressly gave the board wide
latitude to decide the scope and form the reconsideration will
take and granted all responsive proposers a right to be heard.46
If a petition advanced disputed factual allegations of material
fraud or miscalculation, fundamental fairness might require a
formal evidentiary hearing to resolve the dispute; the provisions
of the regulation seem broad enough to allow appointment of a
hearing officer.
Here, the central theme of Laidlaws administrative
appeal to the superior court was its allegation of fraud and
collusion between First Student and the school districts staff;
and secondary arguments supporting this claim essentially
asserted that the board miscalculated the true value of Laidlaws
proposal. In both these respects, Laidlaws administrative appeal
fell squarely within the ambit of subsection .085(g). Thus, had
Laidlaw raised these claims in a timely petition for
reconsideration, the board may well have provided the more formal
evidentiary process that Laidlaw now claims it was
constitutionally due.
Yet the record establishes that Laidlaw consciously
decided to forgo reconsideration. The deadline for Laidlaw to
petition for reconsideration of the boards Monday, January 22
contract award would have been Monday, January 29. The day after
the board meeting, Tuesday, January 23, Laidlaw contacted the
district and requested a copy of First Students bid proposal.
The district supplied a copy to Laidlaw the following day. On
Thursday, January 25, Laidlaw contacted the district and asked
for copies of all supporting information submitted by First
Student. On Friday, January 26, having not yet received these
supplemental documents, Laidlaws attorneys informed the district
that Laidlaw was prepared to file a superior court complaint
challenging the boards decision and an emergency motion for a
temporary restraining order seeking to stay the award of the
contract to First Student. In response, the district gave
Laidlaw copies of all the requested documents on Saturday,
January 27.
In a letter faxed to the districts counsel early
January 29 the deadline for filing Laidlaws counsel confirmed
that the documents had been received at noon Saturday, had been
promptly shipped to Seattle for review by Laidlaw officials, and
that [a] final determination on whether or not Laidlaw wants
reconsideration by the Board will be made this afternoon. By the
end of the day, Laidlaw chose not to seek reconsideration,
electing instead to file its superior court complaint three days
later on February 1.
Laidlaw now contends that it did not have a fair
opportunity to file for reconsideration. First, Laidlaw asserts
that filing a petition on January 29 would have been futile
because the district had already forwarded the proposed contract
to the Commissioner of Education for approval on January 23.
Referring to 4 AAC 27.085(h), Laidlaw argues that by sending the
proposed contract on January 23, the district made plain that it
had already concluded any board actions on petitions for
reconsideration by proposers.
Laidlaws argument bends the regulations language. As
already indicated, 4 AAC 27.085(g), required the board to accept
and decide any properly framed petition for reconsideration filed
within five working days of a decision awarding a contract for
transportation of pupils. The regulations next subsection,
.085(h), specified that, following any board actions on petitions
for reconsideration by proposers, the district school board shall
forward a copy of the proposed contract, successful proposal, and
minutes containing board actions to the commissioner. The plain
language of these provisions gave Laidlaw five days to file a
petition for reconsideration; and nothing in these provisions
suggests that the school board could have circumvented the
required process for reconsideration by simply forwarding its
paperwork to the commissioner prematurely. Nor does Laidlaw
point to any special circumstances in the present case creating a
reasonable inference that the boards early communication to the
commissioner was meant to supplant or override subsection
.085(g)s provisions allowing reconsideration. To the contrary,
Laidlaws own correspondence to the district on January 29 evinces
its awareness that it still had the right to petition.
Laidlaw next asserts that the districts delay in
forwarding it copies of First Students bid materials prevented
Laidlaw from discovering First Students misrepresentations before
the deadline for reconsideration. The superior court found that
the districts delivery of the bid materials on Saturday,
January 27 allowed Laidlaw enough time to decide by January 29
whether to file for reconsideration. The superior courts finding
is not clearly erroneous. As the court pointed out, 4 AAC 27.085
merely require[d] that [the district] make the proposals public
during normal business hours . . . . It [did] not make any
mention of when the proposal must be made available to a
disappointed bidder. Laidlaw has alleged neither that the
district failed to make the proposals available for inspection by
the public nor that Laidlaw unsuccessfully attempted to inspect
the bid materials at the districts offices. Moreover, as
previously indicated, Laidlaws attorney acknowledged receiving
First Students bid materials on January 27 and failed to express
any doubt as to Laidlaws ability to make an informed decision on
reconsideration by the deadline on January 29.
Last, Laidlaw suggests that it could not have sought
reconsideration because it alleged fraud by the districts staff,
whereas subsection .085(g) only allowed reconsideration based on
fraud by school board members and the successful proposer. But
Laidlaw overlooks that its superior court complaint did allege
precisely what subsection .085(g) allowed it to allege as a
ground for reconsideration: fraud by First Student acting in
collusion with the districts staff.
We thus conclude that Laidlaw has failed to demonstrate
that its decision to forgo reconsideration was grounded on
futility or inadequate notice. We further conclude that Laidlaws
conscious choice to bypass reconsideration precludes it from
claiming that a trial de novo was necessary on appeal to the
superior court because the board had denied Laidlaw a full
hearing on the issues of fraud and proper valuation of its
proposal procedural rights that Laidlaw might have received on
reconsideration.
Our decision on this point accords with the decision
reached by the superior court. After considering the totality of
the circumstances, the superior court ruled that Laidlaws failure
to seek reconsideration amounted to an unexcused failure to
exhaust its administrative remedies.47
Laidlaw disputes the courts finding that exhaustion of
remedies was required.48 But insofar as Laidlaws superior court
action raised issues within the scope of subsection .085(g)s
provision for reconsideration, we disagree. As to those points
falling outside the subsections sphere, on the other hand, we
note that the superior court fully addressed and resolved
Laidlaws administrative appeal on its merits. Given these
circumstances, we hold that the superior court did not abuse its
discretion in converting Laidlaws complaint to an administrative
appeal and denying its request for de novo proceedings.
B. Merits of Laidlaws Administrative Appeal
Laidlaw next challenges several aspects of the boards
and superior courts rulings on the merits of its claims,
contending that the board erred in finding First Students
proposal responsive, that the record fails to support the boards
award of the contract to First Student, and that the board erred
in basing its best-interests determination on factors not
included in the RFP.
1. Responsiveness of First Students proposal
At the time of its decision, the school board could
offer the pupil transportation contract only to a responsive
proposer.49 4 AAC 27.085(e)(2) required the district to certify a
proposal as nonresponsive if: (A) it does not materially conform
to the request for proposals; or (B) it contains a material
alteration or erasure which has not been initialed by the
proposer; or (C) the proposer omits or is unwilling to provide
services specified in the request for proposals.50 The districts
RFP further provided that the district shall certify a proposal
as nonresponsive if, among other requirements, [t]he proposer
fails to include with its proposal a signed acknowledgment of
receipt of any addendum(s) to this Request for Proposal issued by
the District. Laidlaw argues that First Students proposal was
not responsive to the RFP.
We have held that a variance from the requirements of
an RFP will render a proposal nonresponsive only if that variance
is material.51 A variance is considered material if it gives one
bidder a substantial advantage over other bidders and thereby
restricts or stifles competition. 52 Laidlaw cites a New Jersey
Supreme Court case for the proposition that [t]he materiality of
a particular specification is to be determined as a matter of
law. 53 But that case is inapposite, for we have consistently
recognized that we must review an agencys determination of
responsiveness under the reasonable basis standard.54 As we said
in applying the reasonable basis standard in State v. Bowers
Office Products, the question is not the proper legal definition
of the terms non-responsive or material, but an application of
legal concepts to facts, based on the nature of the business
being conducted.55
Laidlaw initially claims that First Students proposal
was automatically nonresponsive because First Student failed to
acknowledge an addendum to the RFP. Shortly before the proposal
deadline, Laidlaw asked the district to clarify whether the cost
of mid-day transportation for kindergarten and gifted students
should be treated the same or differently in the proposal. The
district responded by issuing Addendum 5 to the RFP, which
stated:
The District has divided mid day work into
two categories, routes that will be paid
based on an hourly rate and routes that are
included in the daily rate. Mid day
kindergarten routes and routes serving the
Martin Luther King Career Center will be paid
on an hourly rate. All other mid day routes
are to be included in the daily rate.
Laidlaw was the only one of the five proposers who returned a
signed acknowledgment of receipt of Addendum 5.
Laidlaw argues that First Students proposal was
nonresponsive for failure to acknowledge Addendum 5. In order to
determine whether First Students failure to acknowledge
Addendum 5 was a material omission rendering the proposal
nonresponsive, the proper inquiry is whether the omission gave
First Student a substantial advantage over the other proposers.56
The record here shows that the district had a
reasonable basis for concluding that First Students failure to
return Addendum 5 did not give it a substantial advantage over
the other proposers. As the district and First Student point
out, Addendum 5 restates language that was already in the RFP.
An underlined paragraph in the RFP independently provided, in
relevant part:
Mid day kindergarten routes and routes
serving the M.L. King Career Center are not
eligible for reimbursement from the Alaska
Department of Education and Early
Development. These routes cannot be included
in the daily bus rate. The contractor shall
be reimbursed for these routes on an hourly
basis.
The record indicates that no proposer other than Laidlaw
expressed uncertainty about this requirement before the district
issued Addendum 5, and only Laidlaw returned an acknowledgment of
the addendum. First Students proposal properly included hourly
rates for mid-day kindergarten and Career Center routes in its
proposal; it thus derived no substantial advantage over Laidlaw
through its failure to acknowledge Addendum 5.
Laidlaw relies on the RFPs language providing that the
district shall certify a proposal as nonresponsive if it does not
acknowledge an addendum. But this language cannot reasonably be
construed as precluding the district from applying the
conventional standard of materiality to relax an unduly harsh
application of the acknowledgment requirement. Under the
circumstances presented here, rigid enforcement of this
requirement would have elevated form over substance, frustrating
the districts and the regulations clear intent to create a
competitive bidding process for pupil transportation. In Kelly
v. Zamarello, where an agency found a bid nonresponsive, we said:
A decision rejecting a bid for nonresponsiveness has application
beyond the instant case, going to the integrity of the entire
competitive bidding process.57 Here, strict enforcement of the
RFPs requirement to acknowledge each addendum would have
undermined the competitive bidding process by placing the
district in the position it sought to avoid, that of having no
opportunity to compare multiple responsive bids.
Laidlaw next claims that First Students proposal was
nonresponsive because it failed to include the signature of an
authorized corporate officer. The RFP required that all
proposals be signed by an individual authorized to bind the
corporation. Further, all proposals were required to include a
certified corporate resolution stating the names of the
individuals authorized to bind the corporation. First Students
corporate resolution stated that E. Bruce Lyskawa, Carey Paster,
and Steve Hebborn were authorized the bind the corporation.
Although none of these individuals personally signed First
Students proposal, Lyskawa gave approval for his name to be
signed by John BeGasse, First Students Business Development
Manager, who inserted his own initials, J.B., after Lyskawas
name.
Laidlaw asserts that because none of the individuals
authorized to bind First Student actually signed the proposal, it
was nonresponsive to the RFP. The superior court disagreed,
accepting First Students argument that Lyskawa had authorized
BeGasse to sign Lyskawas name, which in turn bound First Student
to the terms of its proposal. The courts finding was supported
by BeGasses affidavit, verifying that Lyskawa had authorized him
to sign Lyskawas name because there was insufficient time for
BeGasse to forward the proposal to Lyskawa for his personal
signature before the deadline. Moreover, Lyskawa ratified
BeGasses action by testifying on behalf of First Student at the
board meeting.
In Bruton v. Automatic Welding & Supply Corporation, we
observed that an agents
authority to do an act can be created by
written or spoken words or other conduct of
the principal which, reasonably interpreted,
causes the agent to believe that the
principal desires him so to act on the
principals account.[58]
Laidlaw cites no convincing authority establishing that BeGasse
lacked sufficient authority to bind First Student by signing
Lyskawas name with his express approval. Under these
circumstances, we conclude that the district had a rational basis
for concluding that First Students proposal was responsive
despite the fact that BeGasse signed the proposal on Lyskawas
behalf.
Laidlaw claims that First Students proposal was
nonresponsive to the RFP for several additional reasons.
Specifically, Laidlaw alleges that First Student failed to
certify that it was able to supply adequate facilities for
Anchorage operations, that it did not submit the names and
resumes of its Anchorage management team, that it did not supply
sample driver route notebooks, and that it failed to submit a
benefit scale for drivers and attendants. Laidlaws reply brief
also accuses First Student of failing to provide adequate
financial data. According to Laidlaw, the RFP required First
Student to supply all this information.
The district and First Student acknowledge that some of
this information was omitted from First Students proposal, but
they insist that none of the omissions were material. The
district and First Student further argue that the RFPs
requirements pertaining to some of the alleged omissions were
more flexible than Laidlaw admits. To illustrate this point, the
district and First Student note that under the strict standard
Laidlaw now seeks to apply, its own proposal would have contained
omissions making it nonresponsive. Regarding other alleged
omissions, First Student contends that Laidlaws strict test would
have made it nearly impossible for any proposer other than the
incumbent to provide proof of existing facilities or driver route
manuals for Anchorage.
We find Laidlaws arguments to be unpersuasive. In our
view, the district had a reasonable basis for concluding that
First Students information about facilities materially complied
with the RFP. The RFP required only that the proposer supply a
letter of intent from a recognized third party certifying that
arrangements have been made for the purchase, lease or rent of
necessary vehicles and/or facilities and that necessary financing
is available, and that such vehicles and/or facilities will be
available in time to provide the services required by the
contract. First Student supplied a letter from Bond, Stephens &
Johnson, a commercial real estate service, certifying that First
Student had identified locations in Anchorage and Eagle River in
which to locate facilities. Although the letter did not discuss
financing, the district could reasonably have concluded that
First Students proposal was sufficiently responsive as to
facilities.59
First Student also provided a sample driver handbook.
It did not prepare a handbook specific to Anchorage, but provided
its national handbook. First Student explained in its proposal
that it would develop specific policies for Anchorage if it were
awarded the contract. Again, the district could reasonably have
concluded that First Students proposal was sufficiently
responsive to the RFPs request for driver handbooks.
First Students proposal further stated that it would
provide a three-percent increase over the then-existing pay
scale. First Student went on to explain that it could not be
more specific about wages because of ongoing salary negotiations
and pending changes to Alaskas minimum wage laws. Under the
circumstances, the district could reasonably have concluded that
First Students information about benefits was sufficiently
responsive to the RFP.
First Student provided financial data for its parent
company, First Group, but not separate data for First Student,
Inc. Laidlaw cites Matter of Alpha Q, Inc., a Comptroller
General opinion holding that parent company data is informational
and has no bearing on the bids responsiveness.60 But Laidlaw
quotes Alpha Q out of context. There, the unsuccessful bidder
was challenging the Army procurement officers finding of
responsiveness as to a successful bid that included the bidding
companys financial data, but omitted its parent companys data.61
Reviewing the Armys decision under the reasonable basis standard,
the Comptroller General found that omitting the parents
information did not render the proposal nonresponsive.62 Alpha Q
neither explicitly nor implicitly addresses the converse
situation at issue here, where the district relied on the
financial status of First Students corporate parent as a
sufficient basis to find that First Student was financially
sound. Here, reviewing the districts decision under the same
deferential standard applied in Alpha Q, there was unquestionably
a reasonable basis for the finding of financial health.
In summary, the district could properly find that First
Students proposal was responsive to the RFP.
2. Best-interest finding
Because Laidlaw was the low proposer and First Student
offered to match Laidlaws bid, the board was permitted to award
the contract to First Student only if it found that doing so
would be in the best interest of the district.63 Laidlaw claims
that the boards best-interest finding was not supported by the
record, was not based on the evaluation factors set out in the
RFP, was impermissibly based on factors not in the RFP, and was
the product of misrepresentation and favoritism. The parties
agree that we review the districts best-interest finding only to
determine whether it has a reasonable basis in the record.64 But
Laidlaws claim that the board was required to base its best-
interest finding on factors set out in the RFP presents a
question of law that we review de novo.65
4 AAC 27.085 did not specify what factors the board
should consider in making its best-interest finding.66 But the
boards discretion is generally constrained by our cases
recognizing that an agency has a basic duty to consider all bids
honestly and fairly.67 Laidlaw claims that Alaska case law also
requires an agency to consider only those factors set out in the
RFP; because the RFP in the present case did not list past
performance as a qualifying factor, Laidlaw reasons that the
board had no authority to consider it in finding that the
districts best interest would be served by awarding the contract
to First Student.
But the cases Laidlaw cites do not support such a
blanket rule. Laidlaw cites Aloha Lumber68 for the proposition
that past experience with the contracting agency under different
contracts . . . is irrelevant if it is not identified by the RFP
as a factor for evaluation. Laidlaw misconstrues our ruling in
Aloha Lumber, which addressed a question of responsiveness, not
one of best interests. Aloha Lumber claimed that its proposal
should have been found responsive despite being incomplete
because the RFPs requirements did not take into account Aloha
Lumbers experience in other bidding processes.69 We found that
Alohas experience in a prior RFP involving a different timber
sale is irrelevant to determining responsiveness under this
timber sale RFP.70 It is not clear why Laidlaw would read this
language regarding responsiveness to support its contention that
the district was not permitted to consider past performance in
deciding which responsive proposal would serve the districts best
interest.
Laidlaws reliance on State, Department of Education v.
Nickerson is also misplaced, because the disappointed proposer
there claimed violation of a statute requiring the state to
follow the evaluation criteria published in its RFP.71 Here,
although 4 AAC 27.085 expressly provided that the RFP must
contain the criteria the district school board will apply in
determining certification of proposals72 the regulation used the
words certification and certify exclusively in reference to the
responsiveness determination, not the best-interest
determination.73 By contrast, in explaining the process for
choosing among responsive proposers, the regulation made no
reference to the RFP. Under 4 AAC 27.085(f), the only factors
the board was required to consider were price and the best
interest of the district:
[T]he district . . . shall offer the contract
either (A) to the proposer whose responsive
proposal contains the lowest dollar amount;
or (B) to a proposer whose responsive
proposal is within five percent of the
responsive proposal with the lowest dollar
amount if the proposer agrees to match the
responsive proposal with the lowest dollar
amount and the board determines that the
offer to other than the low proposer is in
the best interest of the district.[74]
Laidlaw has not alleged that the district impermissibly
considered factors not mentioned in the RFP when certifying
proposals as responsive. And we find no support for Laidlaws
contention that the board could only consider the same factors
when making its best-interest determination. Indeed, the
fundamental difference between a proposals responsiveness, a
technical matter, and its ability to serve the districts best
interest, a policy matter, suggests the need for a different
evaluative framework. While the factors listed for determining
responsiveness were undoubtedly germane to the districts best
interest, we conclude that those factors did not preclude the
board from considering any other factors it deemed appropriate to
ensure that all responsive proposals obtained fair and honest
consideration.75
Laidlaw next alleges that the districts bid process
was tainted by misrepresentation and favoritism. We require[] a
disappointed bidder to meet a high standard of proof in order to
recover for breach of an agencys implied promise to consider bids
honestly and fairly.76 Laidlaw fires a barrage of unsubstantiated
assertions accusing the districts staff of falsely criticizing
Laidlaws past performance. With the exception of the driver wage
scale, Laidlaw has failed to identify anything in the record
suggesting that the districts statements concerning Laidlaw were
inaccurate. And even assuming that the disputed statements by
district staff were incorrect, Laidlaw fails to advance any
support for its contention that the inaccuracies reflected
collusion between the district and First Student or intentional
falsehood by either party.
The cases Laidlaw cites to support its claims of
collusion and fraud involved proven instances of covert
negotiations between an agency and a favored proposer.77 Courts
understandably condemn private negotiations of this kind because
they create the appearance of impropriety and seriously undermine
the competitive bidding process. But here Laidlaw fails even to
allege any specific instance of covert negotiations or collusion
between the district and First Student. Similarly, we find no
specific description or offer of evidence in the record
supporting Laidlaws conclusory and self-serving claim that the
district never had any intent to award a contract to any proposer
other than First Student, regardless of which proposer was the
lowest price responsive and responsible proposer. These claims
therefore appear wholly meritless.
In any event, as previously mentioned, because Laidlaw
passed up the opportunity to raise these claims on
reconsideration, thereby allowing First Students contract to
attain final approval, the only remedy available to Laidlaw at
this late juncture if it managed to prove fraud and collusion
would be bid preparation costs.78
Laidlaw further asserts that the boards best-interest
finding lacks any rational basis. After the board voted to award
the contract to First Student, the board president said:
[T]he Board has found [by] 6 to 0 vote that
giving the contract to First Student was in
the best interest of the District in the
areas that new equipment will be provided,
larger capacity buses and a better working
relationship with employees and facilities
[will be] provided to them.
Laidlaw challenges these reasons as unsupported in the record.
But the board heard positive and negative testimony
concerning both Laidlaw and First Student. On the issue of
management relations with employees, Laidlaw informed the board
that First Students drivers had been involved in a two-week
strike in Providence, Rhode Island, over health benefits; yet
First Students Vice President for Human Resources addressed this
issue in his oral presentation, apparently to the boards
satisfaction. District staff further reported that the Seattle,
Washington and Charleston, South Carolina school districts were
very pleased with First Student and its treatment of employees,
although Minneapolis reported some problems. As to Laidlaws
relations, the board heard testimony from district staff that
drivers who had worked both for Laidlaw and for the district were
less satisfied with Laidlaw. District staff also reported that
Laidlaws employees were upset when Laidlaw located a facility for
drivers in a former fish processing plant that still smelled of
fish. Of the two Laidlaw drivers who spoke at the meeting, one
supported the Laidlaw proposal, and the other simply asked the
district to choose a company that would treat the drivers with
dignity and respect. Given the totality of this evidence, the
board had a rational basis for finding that First Student would
have a better working relationship with employees than Laidlaw.
With regard to facilities, district staff raised
criticisms of Laidlaws past provision of various facilities.
They were particularly critical of a facility that formerly
housed a fish processing plant, a facility that lacked electrical
outlets for the buses to plug into during the winter, and a
facility that generated complaints about diesel fumes because it
was too near a residential area. The staff also expressed
displeasure about a terminal in South Anchorage that was not
ready in time for the school year. By contrast, First Student
told the board that it had a short list of sites and would select
them in consultation with the district. Given this evidence, we
think that the boards preference for First Student was rationally
based.
Laidlaw also challenges the boards determination that
the new, higher capacity buses proposed by First Student were in
its best interest. But the board received a vast amount of
competing evidence and testimony about passenger buses. First
Student proposed to offer all new buses, while the average age of
Laidlaws buses would be 3.56 years. First Student also offered
to provide buses that would seat 84 students rather than 72. A
Laidlaw representative told the board that 84-passenger buses
would be difficult to handle on some routes. Two members of the
board raised concerns about 84-passenger buses, but the district
responded by indicating that higher capacity buses would allow
for growth without hiring more drivers and were likely to
decrease discipline problems. Laidlaw now asserts that its
proposal provided for larger special education buses than First
Students proposal. Yet even if true, this assertion would not
have undercut the existence of a rational basis for the boards
finding that the buses proposed by First Student for regular
routes were in the districts best interest.
In summary, we have previously deferred to an agencys
or districts oversight in analogous contexts.79 In light of the
broad discretion afforded to the district by 4 AAC 27.085(f)(1),
and the existence of substantial record evidence supporting the
boards statement explaining its finding, we conclude that the
district had a reasonable basis to find that awarding the pupil
transportation contract to First Student was in the districts
best interest.
C. Attorneys Fees
The district and First Student requested twenty percent
of their actual attorneys fees incurred before conversion of the
civil case to an administrative appeal, and forty percent of
their actual fees incurred after conversion. The superior court
awarded nothing for fees incurred before conversion but awarded
each appellee twenty percent of their fees incurred after
conversion. The award totaled $5,537.20 for the district and
$9,966.20 for First Student.
Laidlaw challenges these awards as excessive and
unsupported. It claims that the work was duplicative and
wasteful, and that the appellees claimed an unreasonable number
of hours. It further claims that First Students billing
statements are too heavily redacted to substantiate its claimed
fees.
We review a trial courts award of attorneys fees for
abuse of discretion80 and will not overturn the award unless it
is manifestly unreasonable.81 Alaska Appellate Rule 508 is the
appropriate authority for an award of fees in an appeal from an
administrative decision.82 The rule gives the appellate court
broad discretion to allow attorneys fees in an amount to be
determined by the court.83 In Rosen v. State Board of Public
Accountancy, we offered this guidance to superior courts sitting
as intermediate courts of appeal:
The extent to which litigants have been
involved in prior administrative proceedings,
and the cost thereof, as well as the nature
of judicial review and its cost, are factors
which a trial court may wish to consider in
determining the application of Appellate Rule
508(e). Likewise, the importance to the
litigants of rights asserted is a factor to
be considered.[84]
Although the superior court did not explain its
attorneys fees award,85 the court awarded substantially less than
the district and First Student requested, suggesting that it
considered the Rosen factors or made an equivalent analysis.
Moreover, the court could properly have relied on uncontradicted
affidavits from counsel for the district and First Student
averring that [a]ll attorney fees incurred by [the appellees]
were reasonable and necessary. Finally, we think that, barring
any particularized reason to question specific entries, First
Students redacted billing statements were sufficiently clear to
support its request.86 Our review of the record reveals no abuse
of discretion.
IV. CONCLUSION
The superior court properly converted Laidlaws civil
action to an administrative appeal and was not required to grant
Laidlaws request for a trial de novo to resolve the appeal; the
Anchorage School Board had a reasonable basis for finding that
First Students proposal was responsive and that the school
districts best interest would be served by awarding the pupil
transportation contract to First Student; and the superior court
did not abuse its discretion in awarding attorneys fees to the
district and First Student. Accordingly, we AFFIRM the superior
courts judgment.
_______________________________
1 See 4 Alaska Administrative Code (AAC) 27.085(f)(1)(B)
(repealed 6/4/2004, Reg. 170).
2 See Brandon v. State, Dept of Corr., 938 P.2d 1029,
1031-32 (Alaska 1997) (exercising independent judgment to
determine whether prisoner classification hearing is an
adjudicative proceeding).
3 Id. at 1031.
4 See, e.g., Kilmer v. Dillingham City Sch. Dist., 932
P.2d 757, 762 (Alaska 1997).
5 872 P.2d 171 (Alaska 1994).
6 Id. at 175.
7 Id. at 178 n.11 (quoting Blacks Law Dictionary 472 (6th
ed. 1990)).
8 4 AAC 27.085, the regulation governing pupil
transportation contracts in effect at the time that the district
awarded First Student the transportation contract, was repealed
in 2004, apparently because of significant amendments in state
law governing funding of transportation contracts. See AS
14.09.010, as amended by ch. 54 1, SLA 2003; Regulation repealed
6/4/2004, Reg. 170. As of the publication date of this opinion,
it does not appear a replacement regulation has been adopted.
Because this case is controlled by provisions of the repealed
regulation, this opinion discusses that regulation as if it
remained in effect.
9 See 4 AAC 27.085(f)(1) & (g) (repealed 6/4/2004, Reg.
170).
10 See Brandon, 938 P.2d at 1032-33.
11 See Alaska R. App. P. 602.
12 See AS 36.30.550-.699.
13 See AS 36.30.250.
14 See AS 36.30.560-.680.
15 See AS 36.30.670.
16 See AS 36.30.685.
17 Haynes v. State, Commercial Fisheries Entry Commn, 746
P.2d 892, 893 (Alaska 1987); see also Kleven v. Yukon-Koyokuk
Sch. Dist., 853 P.2d 518, 524 (Alaska 1993); Owsichek v. State,
Guide Licensing & Control Bd., 627 P.2d 616, 620 (Alaska 1981).
18 See Alaska R. App. P. 602.
19 See, e.g., Southeast Alaska Conservation Council, Inc.
v. State, 665 P.2d 544, 548 (Alaska 1983); Moore v. State, 553
P.2d 8, 31-33 (Alaska 1976).
20 Southeast Alaska Conservation Council, Inc., 665 P.2d
at 548-49.
21 See Aloha Lumber Corp. v. Univ. of Alaska, 994 P.2d
991, 998 n.14 (Alaska 1999); State v. Lundgren Pac. Constr. Co.,
Inc., 603 P.2d 889, 895 (Alaska 1979).
22 See, e.g., Chijide v. Maniilaq Assn of Kotzebue,
Alaska, 972 P.2d 167, 171-72 (Alaska 1999) (referring to due
process protections that apply only when an individual has a
life, liberty, or property interest to protect).
23 994 P.2d 991.
24 Id. at 998-99.
25 Earthmovers of Fairbanks, Inc. v. State, Dept of
Transp. & Pub. Facilities, 765 P.2d 1360, 1364 (Alaska 1988)
(citing Beirne v. Alaska State Hous. Auth., 454 P.2d 262, 264
(Alaska 1969)).
26 633 P.2d 256, 259-60 & 263 n.8 (Alaska 1981); cf.
Associated Builders & Contractors, Inc. v. City of Seward, 966
F.2d 492, 499 (9th Cir. 1992) (wishful bidders . . . have no
constitutionally protected property interest in [a public
contract]).
27 King, 633 P.2d at 260.
28 4 AAC 27.085(f)(1) (repealed 6/4/2004, Reg. 170).
29 4 AAC 27.085(f)(2) (repealed 6/4/2004, Reg. 170).
30 Laidlaw further argues that it had a property interest
in having $56,603 deducted from its bid. When Laidlaw and the
district negotiated revisions to their existing contract in
February 1999, Laidlaw offered to refund that amount to the
district if Laidlaw were awarded the districts next
transportation contract, provided that this amount is considered
in the bid evaluation as a reduction in our proposed costs under
the contract proposal for the 2001-2002 school year. But as the
superior court essentially recognized in rejecting this argument
below, Laidlaws agreement vested it with a contractual right
under its prior contract, and that right could have had no effect
on Laidlaws rights in relation to the district or the other
bidders under the current RFP.
31 Midgett v. Cook Inlet Pre-Trial Facility, 53 P.3d 1105,
1111 (Alaska 2002) (adopting test articulated in Mathews v.
Eldridge, 424 U.S. 319, 335 (1976)).
32 524 P.2d 657, 661 (Alaska 1974).
33 872 P.2d at 179-80.
34 13 P.3d 263 (Alaska 2000).
35 Id. at 274.
36 See id.
37 96 P.3d 1056 (Alaska 2004).
38 Id. at 1059.
39 Id. at 1065-66.
40 Laidlaw wrongly cites Balough v. Fairbanks N. Star
Borough, 995 P.2d 245, 266 (Alaska 2000) for this proposition.
41 Frontier Saloon, Inc., 524 P.2d at 661; see also Stacy
& Witbeck, Inc. v. City & County of San Francisco, 44 Cal. Rptr.
2d 472, 479 (Cal. App. 1995) (holding that due process does not
invariably require the full panoply of judicial trial procedures,
such as cross-examination).
42 4 AAC 27.085(i) (repealed 6/4/2004, Reg. 170) read:
All proposals with the names of the proposers
and the amounts of the proposals, together
with all documents submitted to the school
district board for consideration in awarding
the contract, must be kept on file by the
district for at least three years after the
close of the school year to which they
relate. These records must be open to public
inspection during normal business hours.
43 See 4 AAC 27.085(e) & (f) (repealed 6/4/2004, Reg.
170). The absence of any provision for an evidentiary hearing at
the best-interest stage appears eminently sensible when we
consider that the regulation as a whole called for all relevant
information to be submitted by bidders before the district made
its final determination on a proposals responsiveness and that
subsection .085(g) defined a reconsideration right that included
a formal adjudicatory process.
44 The record fails to support Laidlaws contention that
this arrangement deviated from the boards usual practice in
awarding pupil transportation contracts. When one board member
noted that the boards policy normally allows for a bid protest
even before the board has made a final decision, and requested
that Laidlaws representatives be given an extended time to speak
beyond the five minutes or three minutes as typically [the
boards] procedures would outline for public comments, the
districts counsel correctly pointed out that 4 AAC 27.085
specifies the procedures for awarding pupil transportation
contracts. See 4 AAC 27.085(a) (repealed 6/4/2004, Reg. 170)
(All contracts for pupil transportation awarded by a district
school board must be based on the competitive proposal process
specified in this section.).
45 4 AAC 27.085(g) (repealed 6/4/2004, Reg. 170).
46 Id.
47 The doctrine of exhaustion of remedies requires a court
to decide the following: (1) is exhaustion of remedies required;
(2) did the complainant exhaust those remedies; and (3) is the
failure to exhaust remedies excused? Eufemio v. Kodiak Island
Hosp., 837 P.2d 95, 98-99 (Alaska 1992).
48 Laidlaw bases its contention that exhaustion was not
required primarily on the United States Supreme Courts decision
in Darby v. Cisneros, 509 U.S. 137 (1993). But as First Student
points out, Darby only governs cases to which the federal
Administrative Procedure Act applies. See id. at 153-54 (Of
course, the exhaustion doctrine continues to apply as a matter of
judicial discretion in cases not governed by the [Administrative
Procedure Act].). We note that Laidlaw does not raise any
further challenge to the superior courts determination that it
was required to exhaust its remedies, except by contending that 4
AAC 27.085(g) was optional because its language was permissive,
providing only that a litigant may petition for reconsideration.
But it seems obvious that the permissive phrasing was simply
designed to allow litigants the right to waive their procedural
right: Laidlaw cites no statute, regulation, or rule providing
that a litigant must file an appeal.
49 See 4 AAC 27.085(f)(1) (repealed 6/4/2004, Reg. 170)
([T]he district school board shall offer the contract only to a
proposer whose proposal has been certified as responsive under 4
AAC 27.085(e).).
50 Further, the district could have certified a proposal
as nonresponsive if (A) the proposer failed to render
substantial performance of a pupil transportation contract with
any school district in the state within the previous three years;
or (B) the district cannot assure itself that the proposer will
provide the specified service. 4 AAC 27.085(e)(3) (repealed
6/4/2004, Reg. 170).
51 See King v. Alaska State Hous. Auth. (King I), 512 P.2d
887, 892 (Alaska 1973); see also Gunderson v. Univ. of Alaska,
Fairbanks, 922 P.2d 229, 235 (Alaska 1996); cf. 4 AAC
27.085(e)(2)(A).
52 McBirney & Assocs. v. State, 753 P.2d 1132, 1136
(Alaska 1988) (quoting Chris Berg, Inc. v. State, Dept of Transp.
& Pub. Facilities, 680 P.2d 93, 94 (Alaska 1984)).
53 George Harms Constr. Co., Inc. v. Borough of Lincoln
Park, 391 A.2d 960, 965 (N.J. 1978).
54 See Gunderson, 922 P.2d at 233; State, Dept of Admin.
v. Bowers Office Prods., 621 P.2d 11, 13 (Alaska 1980); Kelly v.
Zamarello, 486 P.2d 906, 917 (Alaska 1971).
55 621 P.2d at 13 n.4.
56 See Lower Kuskokwim Sch. Dist. v. Found. Svcs., Inc.,
909 P.2d 1383, 1386-87 (Alaska 1996).
57 486 P.2d at 917.
58 513 P.2d 1122, 1125 (Alaska 1973) (quoting Restatement
(Second) of Agency 26 (1958)); see also Sea Lion Corp. v. Air
Logistics of Alaska, Inc., 787 P.2d 109, 117-19 (Alaska 1990)
(quoting Bruton, 513 P.2d at 1127) (finding doctrine of
ratification by silence to be applicable when two characteristics
are met: (1) the act to be ratified must be done by someone who
held himself out to the third party as an agent for the
principal, as BeGasse did by signing Lyskawas name; and (2) the
principal must then have failed to act in response under
circumstances which according to the ordinary experience and
habits of men, one would naturally be expected to speak if he did
not consent . . . . ).
59 Cf. H.V. Collins Co. v. Tarro, 696 A.2d 289, 305 (R.I.
1997) (finding bid responsive despite omission of some documents
[g]iven the overall comprehensiveness of [the successful
proposers] bid and the absence of any evidence that the school
committee acted in a corrupt manner or in bad faith).
60 Citing Matter of Alpha Q, Inc., 1989 WL 241317 *2
(Comp. Gen. 1989).
61 Id.
62 Id.
63 4 AAC 27.085(f)(1)(B) (repealed 6/4/2004, Reg. 170).
64 See King, 633 P.2d at 263.
65 See State, Dept of Educ. v. Nickerson, 711 P.2d 1165,
1169 (Alaska 1985).
66 See 4 AAC 27.085(f)(1) (repealed 6/4/2004, Reg. 170).
67 See King, 633 P.2d at 261.
68 994 P.2d 991 (Alaska 1999).
69 See id. at 997.
70 Id.
71 711 P.2d at 1169.
72 4 AAC 27.085(a)(2) (repealed 6/4/2004, Reg. 170)
(emphasis added).
73 4 AAC 27.085(e)(1) (repealed 6/4/2004, Reg. 170)
(Proposals must be reviewed by the district for conformity with
the request for proposals, including proposal specifications,
terms of delivery of transportation services, and other
conditions imposed by the request for proposals. Following that
review, the district shall certify each proposal as either
responsive or nonresponsive.).
74 4 AAC 27.085(f)(1) (repealed 6/4/2004, Reg. 170)
(emphasis added).
75 Fairbanks N. Star Borough Sch. Dist. v. Bowers Office
Prods., Inc., 851 P.2d 56, 58 (Alaska 1992) (holding that a
government agency which solicits bids for goods or services has
an implied contractual duty to fairly and honestly consider
bids).
76 Id. at 59 (citing King, 633 P.2d at 263).
77 See Paul Wholesale, B.V./HOLS Trading, GMBH, J.V. v.
State, Dept of Transp. & Pub. Facilities, 908 P.2d 994, 1000
(Alaska 1995); Dick Fischer Dev. No. 2, Inc. v. Dept of Admin.,
838 P.2d 263, 267 (Alaska 1992); McBirney & Assocs., 753 P.2d at
1138.
78 See Dick Fischer Dev. No. 2, Inc., 838 P.2d at 266;
King, 633 P.2d at 263.
79 Lower Kuskokwim Sch. Dist., 909 P.2d at 1389 (citing
Fairbanks N. Star Borough Sch. Dist., 851 P.2d at 59-60); see
also State v. Northern Bus Co., Inc., 693 P.2d 319, 322 (Alaska
1984).
80 See United Servs. Auto. Assn v. Pruitt ex rel. Pruitt,
38 P.3d 528, 531 (Alaska 2001).
81 See D.H. Blattner & Sons, Inc. v. N.M. Rothschild &
Sons, Ltd., 55 P.3d 37, 56 (Alaska 2002).
82 Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478,
480 n.3 (Alaska 1984).
83 Appellate Rule 508(e).
84 Rosen, 689 P.2d at 482-83.
85 Superior courts presiding over an administrative appeal
need not justify a decision to award attorneys fees. See id. at
480.
86 Cf. Gonzalez v. Safeway Stores, Inc., 882 P.2d 389, 399
(Alaska 1994) (holding that redacted billings are sufficient
documentation of services performed under Hayes v. Xerox Corp.,
718 P.2d 929, 939 (Alaska 1986)).
