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Fariello Bus Service, LLC v. Old Bridge Board of Education

2011 WL 2470630 (U.S. Dist. Ct. D. N.J. 2011) (Unpublished)

PUBLIC BIDDING — New Jersey law does not permit the recovery of monetary damages by unsuccessful public bidders and New Jersey law does not create a property interest, for due process purposes, with respect to unaccepted bids.

A school board advertised for bids for student transportation services. The contract specifications were provided to all bidders. They specifically required all bidders to submit copies of valid and existing registrations for all vehicles to be used. The specifications said if this information was not provided, a bidder would be deemed unresponsive and the bid would be rejected. A bidder submitted current registrations of vehicles owned by a third-party, a purchase agreement between the bidder and that third-party to purchase those vehicles, and a copy of the deposit check for the purchase. Even though the bidder submitted the lowest bid, the board informed the bidder that its bid had been disqualified because the bid did not conform to specifications, as the bidder did not own the vehicles it intended to use. The bidder requested a hearing, which was denied. Thereafter, the bidder filed suit against the board in the New Jersey Superior Court, claiming that the board violated the provisions of the New Jersey Public School Contract Law (PSCL). The bidder moved for equitable relief to reinstate its bid and to award the contract to it; however, a New Jersey state court denied the request. The bidder then amended its complaint to add defendants and assert three additional causes of action. In the amended complaint, it alleged that the board violated the bidder’s procedural due process rights under the Fourteenth Amendment; that certain defendants defamed the bidder; and that the board’s law firm breached its duty to inform the board of all applicable law. The board and other defendants removed the matter to the United States District Court, asserting federal jurisdiction. All defendants then moved to dismiss the bidder’s claims; the Court dismissed all claims except for two counts against the board. Then, the board moved for summary judgment on those remaining counts.

The Court noted that to support a claim under Section 1983 for deprivation of procedural due process rights, a plaintiff must allege both that it was deprived of an individual interest that is encompassed within the Fourteenth Amendment’s protection of life, liberty, or property, and that the available procedures did not provide due process of law. The bidder cited no case law with respect to whether New Jersey’s public bidding laws could create a property interest in unsuccessful bidders under the Due Process Clause. Instead, the bidder relied solely on general procedural due process principles to support its argument. Likewise, the board cited no case law on this legal question, but relied on the line of New Jersey state court decisions that New Jersey bidding laws are for the benefit of the public, and an unsuccessful bidder cannot bring damage claims pursuant to the PSCL. The Court considered a Third Circuit decision applying Pennsylvania law to be both persuasive and equally applicable here. Similar to Pennsylvania law, New Jersey law requires public contracts to be awarded to the lowest responsible bidder. Due to the substantial similarities between the statutory scheme and purpose of both Pennsylvania and New Jersey public bidding laws, pursuant to the aforementioned precedent, the Court held that New Jersey law does not create a property interest under the Due Process Clause for the lowest responsible bidder prior to the acceptance of its bid. Here, the bid was never accepted, and as such, the bidder failed to establish a cognizable Section 1983 claim.

The Court then considered the bidder’s claim that the board had violated provisions of the PSCL when it failed to award the contract to the bidder. However, even if the argument had merit, the Court was left with no room to grant relief to the bidder. The Court had already noted that New Jersey law does not permit the recovery of monetary damages by unsuccessful bidders, so the bidder was barred from monetary relief. Further, the bidder had already exhausted all chances for equitable relief in state court. Even if some equitable relief with regard to the contract was not barred by res judicata, it was no longer viable because the performance period for the contract had passed. Thus, the remaining complaint was also dismissed.

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