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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Weed v. Bachner Company Inc. (5/14/2010) sp-6475
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
| JAMES WEED, JURANDA FAITH | ) |
| MADSON a/k/a JAN MADSON, | ) |
| BRUCE SENKOW, and JOHN | ) |
| BENNETT, individually, | ) |
| ) Supreme Court No. S- 13284 | |
| Petitioners, | ) |
| ) Superior Court No. | |
| v. | ) 4FA-04-266 CI |
| ) | |
| BACHNER COMPANY INC., and | ) |
| BOWERS INVESTMENT | ) |
| COMPANY, | ) O P I N I O N |
| ) | |
| Respondents. | ) No. 6475 - May 14, 2010 |
| ) | |
Petition for Review from the Superior Court
of the State of Alaska, Fourth Judicial
District, Fairbanks, Mark I. Wood, Judge.
Appearances: Janell M. Hafner, Assistant
Attorney General and Richard A. Svobodny,
Acting Attorney General, Juneau, for
Petitioners. Michael C. Kramer, Borgeson &
Burns, P.C., Fairbanks, for Respondents.
Before: Carpeneti, Chief Justice, Fabe, and
Christen, Justices. [Eastaugh and Winfree,
Justices, not participating.]
CARPENETI, Chief Justice.
FABE, Justice, concurring.
I. INTRODUCTION
The sole question in this case is whether state
procurement officials are entitled to absolute immunity or
qualified immunity for common law claims arising from the bid
evaluation process. In this case, a disappointed bidder sued the
procurement officials individually after the administrative
hearing officer in the bid protest proceeding found serious
improprieties in the bid evaluation process. The officials moved
for dismissal on the ground that they were absolutely immune.
The superior court held that they were protected instead by only
qualified immunity, which applies only to actions taken in good
faith. Because the complaint alleged bad faith, the court
further held that most of the causes of action could go forward.
We accepted the officials petition for review. Applying our
three-factor test, we conclude that the officials are entitled
only to qualified immunity, and therefore affirm the decision of
the superior court.
II. FACTS AND PROCEEDINGS
This is the second time this matter comes before us.1
Bachner Company and Bowers Investment Company (Bachner) were
unsuccessful bidders on a state contract ultimately awarded to
McKinley Development.2 Bachner filed bid protests alleging
irregularities in the bid scoring process.3 The hearing officer
who heard the matter found grave deficiencies in four of the five
evaluations by procurement officials (the petitioners here) in
the bid award process, and ultimately awarded Bachner its bid
preparation costs.4 Bachner appealed that decision to the
superior court, arguing that the hearing officer should have
ordered the bids re-scored or re-opened.5 Bachner was successful
in the superior court, but we reversed that court and affirmed
the hearing officers recommendation.6
Before we had decided that appeal, Bachner sued the
four procurement officials as individuals. The complaint alleged
that the procurement officials failed to follow required
procedure for scoring bids. It claimed that: (1) Senkow and
Bennet favored McKinleys bid because of McKinleys site location,
which was not one of the exclusive criteria they were permitted
to consider; (2) Madson advised Senkow and Bennet they could not
consider the location, but they did not lower their scores; (3)
Weed intentionally lowered his score on Bachners bid in order to
counteract what he perceived as favoritism of that bid by another
officer; and (4) after Bachner filed its protest, Madson
intentionally misstated that time constraints prevented the state
from postponing award of the contract while the protest was
pending. Bachner stated two causes of action arising from these
alleged facts: the state tort claim of intentional interference
with prospective economic opportunity and a federal tort claim
under 42 U.S.C. section 1983. The defendant procurement
officials then moved to dismiss on the pleadings.
Superior Court Judge Mark I. Wood granted dismissal of
Bachners section 1983 action, but refused to dismiss Bachners
claim under state tort law. Judge Wood specifically rejected the
defendant procurement officials claims that their actions were
protected by absolute immunity. The court held that the
defendants were protected only by qualified immunity, and that
certain alleged actions, if true, would fall outside the scope of
that immunity. The procurement officials petitioned for
discretionary review to address whether they are entitled to
absolute immunity, and we granted that petition.
III. STANDARD OF REVIEW
The applicability and scope of official immunity is a
question of law, which we review de novo.7
IV. DISCUSSION
This case presents a single, discrete question: Are the
procurement officials entitled to absolute or qualified immunity
for allegedly tortious conduct arising out of actions they took
in the course of the bid evaluation process? This is the first
time we have ever directly addressed this question.8 Bachner did
not cross-appeal the superior courts holding that the procurement
officers are protected by official immunity9 the only question
is whether that immunity is qualified or absolute. If the
immunity is qualified, Bachner will be able to proceed with its
claims that the procurement officers acted maliciously and in bad
faith.10
In Aspen Exploration Corp. v. Sheffield,11 we first set
out a three-factor test for determining whether an official is
entitled to absolute or qualified immunity. The three factors we
consider are: (1) the nature and importance of the official
function to government administration; (2) the likelihood that
the official will frequently be accused of wrongful motives in
performing this function, and how easily the officer can defend
against those accusations; and (3) the availability of other
relief to an injured party.12 We have applied this three-factor
test in several contexts, holding that the governor is entitled
to absolute immunity when supervising permitting decisions,13
while social workers14 and state troopers15 are entitled only to
qualified immunity for their actions. Applying this same three-
factor test to the present context, we conclude that the
procurement officers in this case are entitled to qualified
immunity.16
Under a rule of qualified immunity, a public official
is shielded from liability . . . when discretionary acts within
the scope of the officials authority are done in good faith and
are not malicious or corrupt. In other words, malice, bad faith
or corrupt motive transforms an otherwise immune act into one
from which liability may ensue. 17 As we stated in Aspen
Exploration, the purpose of qualified immunity is to protect the
honest officer who tries to do his duty while ensuring that
official immunity [does] not become a cloak for malicious,
corrupt, and otherwise outrageous conduct on the part of those
guilty of intentional abuse of power with which they are
entrusted by the people.18
1. Nature and importance of the function
The first factor is: The nature and importance of the
function that the officer performed to the administration of
government (i.e. the importance to the public that this function
be performed; that it be performed correctly; that it be
performed according to the best judgment of the officer
unimpaired by extraneous matters) . . . .19 The procurement
officials argue that their functions play a critical role in
ensuring the state receives needed services and products across a
range of departments and agencies at a reasonable cost. They
compare the importance of their functions to the governors
function in rejecting the oil companys permit in Aspen
Exploration. In Aspen Exploration, we found the governors
function sufficiently important to support absolute immunity.20
The procurement officials argue that, although any individual
officers function may seem unimportant, in the aggregate they are
essential to the smooth administration of government.
Bachner responds that the importance of the bidding
process is the prevention of fraud, collusion, favoritism and
improvidence in the awarding of public contracts, and therefore,
this first factor weighs against absolute immunity. Bachner also
distinguishes this case from Aspen Exploration, pointing out that
governors and others in high state office are traditionally
protected by absolute immunity, unlike lower-level officials.
As to this first factor, we find Bachners argument more
persuasive. We agree that this case is distinct from Aspen
Exploration: Although the oil company in that case challenged the
governors instruction to the commissioner to reject the companys
permit application, we considered the function at issue to be the
governors supervision of his subordinates.21 We observed that the
governor, as an elected official, has great responsibility to
supervise unelected subordinates.22 We also noted that these
concerns are particularly important where the states natural
resources are concerned.23 Consequently, our discussion of this
factor in Aspen Exploration does not favor absolute immunity in
the present case.
We also agree with Bachner that an important purpose of
the bidding process is to create transparency in the states
procurement system, and to avoid awarding contracts based on
improper considerations,24 and that this purpose weighs in favor
of applying qualified immunity to procurement officers. Finally,
we conclude that the highly restricted nature of a procurement
officers discretion also makes this factor weigh in favor of
qualified immunity. Unlike the governors function in supervising
his or her subordinates which requires that the governors
discretion and judgment remain largely unfettered the role of a
procurement officer in selecting bids involves a brand of
discretion that is extraordinarily limited: Procurement officers
are only allowed to consider those factors that the Procurement
Code specifically lays out.25 We conclude that these statutory
limitations on the officials discretion also weigh in favor of
qualified immunity. Although we are sympathetic to the officials
argument that the smooth functioning of the procurement decision-
making process is important to the efficient administration of
government, we believe that the other considerations discussed
here tip the balance in favor of qualified immunity.
2. Likelihood of litigation and burden of
defense
The next factor we consider is: The likelihood that the
officer will be subjected to frequent accusations of wrongful
motives and how easily the officer can defend against these
allegations . . . .26 The procurement officials argue that
awarding a contested bid always results in dissatisfied bidders
who will be invited to sue the officials personally unless they
are absolutely immune. They point out that disappointed bidders
frequently file bid protests. They argue that the competitive
nature and large sums of money at issue in the procurement
process make this outcome inevitable. They also argue that
defending such actions will be expensive and time-consuming
because of the subjective nature of the decisions and the lack of
clear tort principles applicable to them. Bachner responds that
defending against this kind of litigation will not be nearly as
burdensome as the officials argue. It argues that the bid
protest process will both screen out frivolous suits, and give
officials notice and a preliminary opportunity to prepare their
defenses.
Although it might sound intuitively correct that
qualified immunity would increase the likelihood of tort suits in
this context, as the officials argue, intuition alone is not
sufficient: In evaluating this factor in the past, we have
required empirical evidence that frequent suits are likely. In
Aspen Exploration, we noted that it would seem that the very
nature of [the governors] high office would make the governor a
ready target for numerous lawsuits.27 However, we went on to
observe that, in fact, Aspen Exploration was the first personal
tort suit against the governor to reach this court, stating:
Neither party points to any trend, past or present, indicating
that governors in general have been the target of a
disproportionate number of lawsuits and our own research fails to
denote any such phenomena.28 We concluded that in the absence of
hard evidence showing that numerous suits were likely, the first
prong of this factor the likelihood of frequent litigation
would weigh in favor of qualified immunity.29
In Smith v. Stafford,30 we took the same approach. In
an appeal from a personal tort suit against the social workers
who had handled the plaintiffs daughters Child in Need of Aid
(CINA) proceeding, we concluded that this factor favored
qualified immunity because there was no evidence that under
qualified immunity social workers would be subjected to frequent
lawsuits.31 We noted that, despite the highly emotional nature of
CINA proceedings, the level of emotion involved does not
necessarily translate into a high number of lawsuits against
social workers.32 Concluding that this factor favored qualified
immunity, we stated: Historically, these types of suits have been
relatively rare, and [the social workers] present no empirical
evidence that more lawsuits [would] result . . . .33
Similarly, the procurement officials here do not offer
any empirical evidence in support of their argument. And our
independent research suggests that these types of suits are
infrequent: Although this court often sees appeals from
administrative bid protests,34 we have only seen one tort suit
against an individual procurement officer.35 Because arguments
based solely on intuition are unpersuasive in this context and
the empirical evidence actually suggests that frequent suits are
unlikely, we conclude that the first prong of this factor favors
qualified immunity.
We are similarly unpersuaded by the officials argument
with respect to this factors second prong: the ease with which
the officials will be able to defend themselves against suits of
this kind. We agree with Bachners argument that most, if not
all, unsuccessful bidders who file a tort suit will also file an
administrative bid protest, and therefore, the officers will
first be required to defend their subjective decision in that
context. It is likely that much of the civil trial will involve
the claims and defenses made in the administrative protest,
substantially easing the officers burden of preparing a defense
for the purpose of litigation. While we see some force in the
officials argument that such lawsuits would turn largely on
questions of fact, and therefore, require expensive presentation
of the issues to a jury, we do not think that this alone tips the
balance in favor of absolute immunity. In light of the foregoing
discussion, we conclude that this second factor also favors
qualified immunity.
3. Availability of alternative relief
Finally, we consider: The availability to the injured
party of other remedies or other forms of relief (i.e. whether
the injured party can obtain some other kind of judicial review
of the correctness or validity of the officers action).36 The
procurement officials argue that the availability of other
avenues of relief the bid protest process, criminal law, and the
Alaska Executive Branch Ethics Act cause this factor to weigh in
favor of absolute immunity.
As to the bid protest process, the procurement
officials argue that it constitutes a comprehensive alternative
remedy. The officials assert that the bid protest process
provides for a hearing before an administrative law judge, who
will fashion an appropriate remedy depending on the nature of the
impropriety.37 These could include awarding the disappointed
bidder bid preparation costs, re-scoring of the bids, or even
issuing a new request for bids. Further contributing to the
comprehensiveness of this remedy, these proceedings are subject
to appeal and judicial review.38
Bachner responds that bid preparation costs can be a
pittance when compared to the damages available in tort, and that
the prospect of receiving bid preparation costs alone will not
sufficiently incentivize disappointed bidders to engage in the
protest process. It urges us to adopt the superior courts view
that [n]othing in the current system holds [procurement
officials] accountable for their performance of their duties.
The superior court considered it necessary to the fairness and
accountability of the system to afford procurement officials
immunity only for those actions taken in good faith i.e.,
qualified immunity.
Here, we think that the procurement officials have the
better argument. In Aspen Exploration, we concluded that a
similar administrative process was an adequate alternative remedy
for purposes of this factor.39 Although the hearing officer may
not award money damages greater than bid preparation costs, the
hearing officer may fashion an appropriate remedy, including
sending the bids back for re-scoring or re-opening the bidding
process.40 These are much more comprehensive remedies than are
available in a civil suit. Although in this case the hearing
officer awarded Bachner only its bid preparation costs, Bachner
had its chance at greater remedies.41 The bid protest process is
comprehensive, and reflects the legislatures scheme for
redressing injury in the procurement process. Thus, we conclude
that this factor favors absolute immunity.
As to the role that criminal law and the Alaska
Executive Branch Ethics Act42 play in providing an alternative
avenue of relief, we are not persuaded of their relevance. As
the procurement officials argue, both criminal law and the Ethics
Act provide additional checks on impropriety in procurement,43 but
this does not speak to the availability of relief and judicial
review to the injured party, which is what this factor concerns.
Furthermore, both criminal law and the Ethics Act apply to all
executive officials,44 so if we did consider them adequate
alternative remedies, this factor would always weigh in favor of
finding executive officials absolutely immune. For this reason,
it adds little to the analysis. Regardless, because we think the
bid protest process does provide an adequate alternative remedy
for disappointed bidders, we conclude that this factor weighs in
favor of absolute immunity.
4. Balancing the factors
Weighing these factors together, we agree with the
superior courts conclusion that the procurement officials are
entitled only to qualified immunity. Although the final factor
suggests that procurement officers should be absolutely immune,
the first two factors tip the balance in favor of qualified
immunity. This is not a situation where unfettered discretion is
crucial to the best interests of the public; indeed, the
procurement officers discretion is designed to be highly
restricted. Moreover, there is no evidence that procurement
officials are often sued in tort, and the bid protest process
makes it likely that the officials will be well-prepared to
defend suits when they do arise. Finally, as we have noted
before, we have generally extended absolute immunity only to the
highest levels of government officials, and afforded only
qualified immunity to lower-level officials.45 Thus, we conclude
that, in defending against common law claims arising out of
actions taken in the bidding process, procurement officers are
entitled only to qualified immunity.
We take this opportunity to reiterate that qualified
immunity still provides the officials with substantial protection
from liability. Qualified immunity protects an official who has
merely acted negligently, and it might even protect an official
for liability arising out of a knowing violation where that
official lacked the requisite degree of bad faith. The standard
is similar to the one our legislature has articulated in the
punitive damages context: For an official with qualified immunity
to be held liable, his conduct must have been outrageous or
evidenced reckless indifference to the interest of another
person.46 Thus, qualified immunity still affords officials, like
the procurement officers, substantial protection from liability
for actions taken within the scope of their authority.
V. CONCLUSION
After applying the three-factor test, we conclude that
qualified immunity is appropriate, and AFFIRM the superior courts
conclusion.
FABE, Justice, concurring.
I agree with the courts conclusion that procurement
officials are entitled only to qualified immunity. I write
separately to express my view that the exclusive remedy provision
of the procurement code may bar lawsuits such as this one. Under
the exclusive remedy provision, the procurement code and its
implementing regulations provide the exclusive procedure for
asserting a claim against an agency arising in relation to a
procurement.1 Claims against procurement officials in their
individual capacity for performing usual and proper duties might
fairly be characterized as claim[s] against an agency, even where
bad faith is alleged; they would thus be barred by the exclusive
remedy provision.2 In this lawsuit, Bachners allegations of
misconduct improperly scoring proposals, improperly overseeing
the scoring process, and improperly deciding to proceed with a
contract award all relate to the usual and proper duties of
procurement officials.3 However, the case is before us on a
limited petition for review. We are not presented with the
question of the scope of the exclusive remedy provision, nor
asked to decide whether it bars this lawsuit. Therefore, I
concur with the courts opinion.
_______________________________
1 See State, Dept of Admin. v. Bachner Co., 167 P.3d 58
(Alaska 2007).
2 Id. at 59-60.
3 Id. at 60.
4 Id.
5 Id.
6 Id. at 62.
7 Aspen Exploration Corp. v. Sheffield, 739 P.2d 150, 154
(Alaska 1987).
8 In J&S Servs. v. Tomter, 139 P.3d 544, 549 (Alaska
2006), we did briefly address this question in dicta,
hypothesizing that it was likely that a thorough analysis would
lead us to conclude that procurement officials were entitled to
absolute immunity. However, we explicitly declined to resolve
the issue. Id.
9 Official immunity applies to official, discretionary
actions within the scope of the officials authority. Smith v.
Stafford, 189 P.3d 1065, 1072 (Alaska 2008).
10 Aspen Exploration Corp., 739 P.2d at 158 (Under the
rule of qualified immunity, a public official is shielded from
liability only when discretionary acts within the scope of the
officials authority are done in good faith and are not malicious
or corrupt.).
11 739 P.2d 150 (Alaska 1987).
12 Id. at 159-60.
13 Id. at 162 (but granting only qualified immunity for
defamatory statements).
14 Smith, 189 P.3d at 1073.
15 Prentzel v. State, Dept of Pub. Safety, 169 P.3d 573,
584-85 (Alaska 2007).
16 This petition does not present the question whether the
exclusive remedy provision of the procurement code bars claims
against procurement officials in their individual capacity.
17 Aspen Exploration Corp. v. Sheffield, 739 P.2d 150, 158
(Alaska 1987) (quoting Shellburne, Inc. v. Roberts, 238 A.2d 331,
338 (Del. 1968)) (internal citation omitted).
18 Id. at 158 (quoting W. Prosser, Handbook of the Law of
Torts, 132 at 989 (4th ed. 1971)) (internal quotation marks
omitted).
19 Aspen Exploration, 739 P.2d at 159-60.
20 Id. at 160.
21 Id.
22 Id.
23 Id.
24 See McBirney & Assocs. v. State, 753 P.2d 1132, 1135-36
(Alaska 1988) (The purposes of competitive bidding are to prevent
fraud, collusion, favoritism, and improvidence in the
administration of public business, as well as to insure that the
[state] receives the best work or supplies at the most reasonable
prices practicable. (quoting Gostovich v. City of West Richland,
452 P.2d 737, 740 (Wash. 1969))) (brackets in original).
25 AS 36.30.250.
26 Aspen Exploration Corp. v. Sheffield, 739 P.2d 150, 160
(Alaska 1987).
27 Id. at 161.
28 Id.
29 Id.
30 189 P.3d 1065 (Alaska 2008).
31 Id. at 1073.
32 Id.
33 Id.
34 See, e.g., Lakloey, Inc. v. Univ. of Alaska, 141 P.3d
317 (Alaska 2006); Kila, Inc. v. State, Dept of Admin., 876 P.2d
1102 (Alaska 1994); Bowers Office Prods., Inc. v. Univ. of
Alaska, 755 P.2d 1095 (Alaska 1988).
35 See J&S Servs. v. Tomter, 139 P.3d 544 (Alaska 2006).
36 Aspen Exploration Corp. v. Sheffield, 739 P.2d 150, 160
(Alaska 1987).
37 AS 36.30.585.
38 In fact, we have previously affirmed the hearing
officers decision to award Bachner its bid preparation costs.
State, Dept of Admin. v. Bachner Co., 167 P.3d 58 (Alaska 2007).
39 Aspen Exploration, 739 at 161-62.
40 AS 36.30.585; Bachner, 167 P.3d at 60.
41 Bachner, 167 P.3d at 60.
42 AS 39.52.010 et seq.
43 See id.
44 See AS 39.52.910.
45 Smith v. Stafford, 189 P.3d 1065, 1073 (Alaska 2008).
46 AS 09.17.020 provides:
(b) The fact finder may make an award of
punitive damages only if the plaintiff proves
by clear and convincing evidence that the
defendants conduct
(1) was outrageous, including acts done with malice or
bad motives; or
(2) evidenced reckless indifference to the interest of
another person.
1 AS 36.30.690.
2 See J & S Servs., Inc. v. Tomter, 139 P.3d 544, 548
(Alaska 2006) (suggesting that claims against . . . a procurement
officer acting within the course and scope of his duties would
appear to be barred by the exclusive remedy provision).
3 These allegations are distinguishable from those in J &
S Services, where we held that the exclusive remedy provision did
not necessarily bar a lawsuit against a procurement official in
his individual capacity. Id. at 547, 549, 552. There, the
procurement official was alleged to have actively assisted the
winning bidder (a company formed by one of his friends) and made
arrangements to receive kickbacks from the winning bidder.
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