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Tremont Public Advisors, LLC v. Connecticut Resources Recovery Authority

Supreme Court of Connecticut

November 12, 2019

TREMONT PUBLIC ADVISORS, LLC
v.
CONNECTICUT RESOURCES RECOVERY AUTHORITY

         Argued January 14, 2019.

Page 954

[Copyrighted Material Omitted]

Page 955

          Appeal from Superior Court in the judicial district of Hartford, where the court, Peck, J.

          Michael C. Harrington, with whom, on the brief, were Melissa A. Federico and Sarah Gruber, for the appellant-cross appellee (plaintiff).

          Matthew C. Welnicki, for the appellee-cross appellant (defendant).

          Judges: Robinson, C. J., and McDonald, Mullins, Kahn and Ecker, Js. In this opinion the other justices concurred.

          OPINION

Page 956

          ROBINSON, C. J.

          [333 Conn. 674] Procedural History

          The primary issue that we must resolve in this appeal is whether allegations that a quasipublic agency engaged in a sham competitive bidding procedure and awarded a contract to a preselected entity for corrupt reasons and in violation of a competitive bidding statute are sufficient to support a claim that the agency violated the Connecticut Antitrust Act, General Statutes § 35-24 et seq. (antitrust act). The [333 Conn. 675] plaintiff, Tremont Public Advisors, LLC, is a public affairs firm. The defendant, the Connecticut Resources Recovery Authority, is a quasi-public agency responsible for providing solid waste disposal and recycling services to numerous municipalities in this state pursuant to the Connecticut Solid Waste Management Services Act, General Statutes § 22a-257 et seq.[1] In 2011, the defendant issued a request for proposals for the provision of municipal government liaison services (liaison services). The plaintiff submitted a proposal that complied with the request for proposals, but the defendant awarded the liaison services contract to the law firm of Brown Rudnick, LLP (Brown Rudnick), whose proposal was noncompliant. Thereafter, the plaintiff brought this action alleging that the defendant's request for proposals was a sham and that the defendant had violated General Statutes § 22a-268,[2]  

Page 957

[333 Conn. 676] which, according to the plaintiff, mandates a competitive bidding procedure for the liaison services contract. The plaintiff further alleged that the defendant's conduct excluded competitors for the liaison services contract in violation of the antitrust act. The defendant filed a motion to dismiss the second substituted complaint, claiming, inter alia, that the plaintiff lacked standing to bring the antitrust claim. The defendant also filed a motion to strike, claiming that, even if the plaintiff had standing, it had not adequately alleged that the defendant's conduct had an adverse effect on competition as a whole in the relevant market, proof of which is required to establish a violation of the antitrust act, but had alleged only that it had an adverse effect on the plaintiff itself. The trial court denied the motion to dismiss but granted the motion to strike and rendered judgment in favor of the defendant. This appeal by the plaintiff and cross appeal by the defendant followed.[3] We conclude that the plaintiff lacked standing to bring this action because it did not adequately allege an antitrust injury, and, therefore, the trial court improperly denied the defendant's motion to dismiss the second substituted complaint. Accordingly, we affirm the judgment in favor of the defendant.

          The record reveals the following facts that are undisputed or that the plaintiff has alleged, which we assume [333 Conn. 677] to be true for purposes of reviewing the trial court's denial of the defendant's motion to dismiss. See, e.g., Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007). The plaintiff is a public affairs firm located in Hartford, and the defendant is a quasipublic agency responsible for implementing the statutory solid waste management plan and providing solid waste disposal and recycling services to numerous municipalities in the state. The defendant is empowered to enter into contracts with private entities " to carry out the business, design, operating, management, marketing, planning and research and development functions of the authority . . . ." General Statutes § 22a-268. Section 22a-268 requires the defendant to engage in open and competitive bidding for its contracts with outside vendors. General Statutes § 22a-268 (" [s]uch contracts shall be entered into either on a competitive negotiation or competitive bidding basis" ). In addition, the defendant's own procurement policies require it to select the bidder who

Page 958

submits the most responsive qualified bid or proposal and not to award contracts to entities in which a public official has an interest.

          For several years prior to 2011, the defendant contracted with Brown Rudnick to provide liaison services with Connecticut municipalities. On May 26, 2006, the defendant awarded a one year liaison services contract to Brown Rudnick without seeking competitive bids for the provision of the services. On May 21, 2007, the defendant's president informed Brown Rudnick by e-mail that renewal of the contract " 'should not be an issue but we will have to go through the motions of [c]ommittee approval and [b]oard [a]pproval.'" Several days later, on May 24, 2007, the defendant's president sent another e-mail to Brown Rudnick stating that the defendant would have to issue a request for proposals for liaison services in order to " 'help [the defendant] defend [its] choice.'" The e-mail also stated that Brown [333 Conn. 678] Rudnick would receive a package that it was to " 'respond to as [it had] in the past'" and that the defendant would extend Brown Rudnick's existing contract on a month-to-month basis until a new one was put into effect. On May 31, 2007, the defendant extended Brown Rudnick's contract to June 30, 2007. The defendant later extended the contract to September 30, 2007, and, still later, to September 30, 2008. After the contract expired, the defendant continued to pay Brown Rudnick pursuant to the contract terms.

          On August 18, 2009, an official employed by the defendant informed another of the defendant's officials by e-mail that the defendant intended to award the liaison services contract to Brown Rudnick, but, in order to create the impression of propriety, Brown Rudnick wanted to be interviewed so that the defendant could say that it had " 'check[ed] the box.'" On November 1, 2009, the defendant awarded a one year liaison services contract to Brown Rudnick. On October 25, 2010, the defendant extended the contract to October 31, 2011. On May 23, 2011, the defendant issued a request for proposals for the provision of liaison services for the period of November 1, 2011, through June 30, 2014. The plaintiff submitted a proposal that complied with all of the requirements of the request for proposals. Brown Rudnick also submitted a proposal, which was non-compliant because it failed to propose an hourly fee. On June 28, 2011, Paul Non-nenmacher, the defendant's director of public affairs, sent an e-mail to Ronald E. Gingerich, the defendant's manager of development, environmental compliance and information technology, reporting that he had completed his evaluation of the responses to the request for proposals. Gingerich responded that he would draft a memorandum to the defendant's board of directors regarding the evaluation. The next day, June 29, 2011, Gingerich sent an e-mail to Matthew Hennessy, the plaintiff's managing director, [333 Conn. 679] in response to an inquiry from Hennessy about the status of the defendant's interviews with selected proposers. In that e-mail, Gingerich indicated that the defendant had been " delayed in initiating the review of the proposals" and that " [n]o interviews [of the firms that submitted proposals] are scheduled." No interviews were ever conducted.

          On September 12, 2011, the defendant informed the plaintiff that the liaison services contract had been awarded to Brown Rudnick. On September 15, 2011, two officials employed by the defendant, one of whom had been appointed by a partner at Brown Rudnick while acting in his capacity as an elected state official, voted to recommend to the defendant's board of directors that Brown Rudnick be awarded the contract.

Page 959

          Although the board of directors was prepared to vote on awarding the liaison services contract to Brown Rudnick at its September 29, 2011 meeting, the defendant ultimately bypassed its board of directors and extended the preexisting contract with Brown Rudnick for another year, up to October 31, 2012. In October, 2012, the defendant incorporated the liaison services contract into its general legal services contract with Brown Rudnick.

          Thereafter, the plaintiff brought this action against the defendant, alleging that the defendant had evaluated the bids to provide liaison services in a biased manner so as to ensure that Brown Rudnick was selected, that the public bidding process for the liaison services contract was a sham and that the award of the contract to Brown Rudnick without a legitimate public bidding process violated § 22a-268 and the defendant's own procurement policies. The plaintiff further alleged that the defendant awarded the liaison services contract to Brown Rudnick because Brown Rudnick carried out lobbying activities on behalf of the defendant in violation [333 Conn. 680] of General Statutes § 1-101bb.[4] The plaintiff claimed in count one of the complaint that this conduct deprived the plaintiff and others of an opportunity to compete for the liaison services contract in violation of the anti-trust act.[5]

          The defendant moved to dismiss the complaint on the grounds that (1) under General Statutes § 35-31 (b),[6] the antitrust act did not apply to its conduct in entering into the liaison services contract with Brown Rudnick because it was acting pursuant to its statutory obligations as set forth in § 22a-268, and (2) the plaintiff lacked standing because it had not alleged that it had suffered an antitrust injury or that it was an efficient enforcer of the antitrust laws.[7] The defendant also filed a motion [333 Conn. 681] to strike the complaint, contending that the plaintiff had failed to plead sufficient anticompetitive acts, a relevant

Page 960

market or harm to the relevant market, but had pleaded harm only to an individual competitor.

          Relying on Cheryl Terry Enterprises, Ltd. v. Hartford, 270 Conn. 619, 632, 854 A.2d 1066 (2004), in which this court held that the plaintiff had standing to bring an antitrust action against the defendant arising from the violation of a competitive bidding law, the trial court denied the defendant's motion to dismiss the antitrust claim. The court granted the defendant's motion to strike, however, on the ground that the plaintiff had not sufficiently pleaded injury to competition as a whole in the relevant market. Specifically, the court concluded that the plaintiff's conclusory allegations— namely, that, " [o]ver the years, [the defendant] has not considered any . . . bidder other than Brown Rudnick for its [liaison services] contract, which has resulted in the elimination of any competition," and that, " [n]ot only was [the plaintiff] irreparably damaged, but the general public was damaged by [the defendant's] anticompetitive actions" — failed to sufficiently allege injury to competition as a whole in the relevant market and therefore were insufficient to support its antitrust claim.

          Thereafter, the plaintiff filed a substituted complaint in which it again alleged that the defendant had violated the antitrust act.[8] The defendant again filed motions to [333 Conn. 682] dismiss and to strike the substituted complaint, in which it incorporated the arguments that it had made in the previous motions to dismiss and to strike. The trial court again denied the motion to dismiss and granted the motion to strike on the grounds that the plaintiff's new allegations also did not " sufficiently allege an increase in prices and/or a reduction in output" as the result of the ...


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