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 ...