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EEL River Disposal and Resource Recovery, Inc. v. County of Humboldt

California Court of Appeals, First District, Second Division

November 5, 2013

EEL RIVER DISPOSAL AND RESOURCE RECOVERY, INC., Plaintiff and Appellant,
v.
COUNTY OF HUMBOLDT, Defendant and Respondent; JOSH McKNIGHT, Real Party in Interest and Respondent.

Superior Court Humboldt County Super. Ct. No. CV110352 Hon. Dale A. Reinholsten, Judge

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COUNSEL

Harland Law Firm and Allison G. Jackson for Plaintiff and Appellant.

Wendy B. Chaitin, County Counsel , and Jefferson Billingsley, Deputy County Counsel, for Defendant and Respondent.

No Appearance for Real Party in Interest.

OPINION

Kline, P.J.

Appellant Eel River Disposal and Resources Recovery Inc., the lowest bidder on an exclusive franchise to collect and dispose of solid waste, seeks to compel Humboldt County (the County), by writ of mandate, to vacate its award of the franchise to real party in interest, Tom’s Trash. Appellant contends the award was unlawful because bids were not evaluated pursuant to the “lowest responsible bidder” requirement implicit in the phrase “competitive bidding” as used in the governing county ordinance and related statutes. Rejecting that argument, the trial court denied relief. We shall reverse the ruling.

FACTS AND PROCEEDINGS BELOW

In 2008, the County enacted ordinance No. 2396, which amended Section 521-6, subdivision (a)(1) and (2), of the Humboldt County Code (Humboldt Code section 521-6), pertaining to the granting of franchises and permits for the right to collect solid waste or source-separated materials within the

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County. Humboldt Code section 521-6, subdivision (a)(1) and (2), which is set forth in its entirety in the margin below, [1] provides that the board of supervisors (Board “may grant partially or wholly exclusive franchises, either with or without competitive bidding, ” but that “[b]efore granting an exclusive franchise without competitive bidding, the Board shall make specific findings as to why the public health, safety and well-being are best served by proceeding without competitive bidding.”

Since 1973, the County had awarded an exclusive franchise to collect solid waste in the Willow Creek area to Tom’s Trash. However, on September 21, 2010, after determining that the company was delinquent in remitting franchise fees and otherwise not in compliance with the terms of its contract with the County, the Board refused to extend Tom Trash’s contract, which expired on December 31, 2010. On September 21, 2010, the Board directed the Public Works Department (PWD) “to competitively bid a new solid waste collection franchise in the Willow Creek Area.”

Because the process of soliciting and evaluating bids for such a franchise was expected to take several months, and in order to provide for continuous solid waste collection and disposal in the Willow Creek area during that period, the Board approved entering into a “short-term” or interim franchise on the basis of competitive bids. After the solicitation by the PWD of such bids, the Board granted the six-month interim franchise to appellant. The interim franchise expired on June 30, 2011.

The legal confusion in this case began with two reports to the Board from the Director of the PWD recommending that the Board take specified actions necessary to solicit and evaluate bids for a new long-term franchise. The first

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report, dated March 3, 2011, recommended that at its next meeting on March 22 the Board authorize the PWD to issue a request for proposal (RFP) for an exclusive franchise for a service period of 10 years commencing July 1, 2011, with the possibility of a five-year extension. The report stated that proposals “will be evaluated based on a number of factors, ” specifically including “responsiveness to the RFP, company qualifications and comparable experience, financial creditworthiness, acceptance of the franchise terms, and the company’s proposed management plan. Service rates will receive a factor of 65% in the evaluation criteria.” The report went on to explain that “[b]ecause the evaluation considers criteria beyond strictly pricing, the process is not then a ‘competitive bid, ’ and certain findings in accordance with Humboldt Code section 521-6[, subdivision] (a)(2) will need to be made at a public hearing noticed in accordance with Government Code Section 6066 before the exclusive franchise can be granted.”

Finally, the March 3 report stated that the findings required by subdivision (a)(2) of Humboldt Code section 521-6—namely, “why the public health, safety and well being are best served by proceeding without competitive bidding” —were “appropriate, and recommended” because “the proper collection and disposal of solid waste has environmental, health and safety consequences for residents of this county and, as such, should only be performed by a firm that has demonstrated experience, capability and capacity to handle such a responsibility.” The Board never made the findings required by Humboldt Code section 521-6, subdivision (a)(2), in order to proceed “without competitive bidding” because it ultimately decided to employ a competitive bidding process.

The RFP for an exclusive franchise for the collection of solid waste in the Willow Creek area was approved by the Board on March 22. It identified six criteria to be considered by the review committee, specified the weight to be given each criterion, and stated that the scoring of individual bids “will reflect the extent to which the criteria are fulfilled relative to other proposals.” The criteria and corresponding weights assigned to each are as follows: “Responsiveness to RFP 5%; [¶] Company qualifications and comparable experience 10%; [¶] Financial creditworthiness 5%; [¶] Acceptance of RFP and franchise terms (evaluation of exceptions) 5%; [¶] Evaluation of management plan 10%; [¶] [and] Service rates 65%.”

The second report from the Director of the PWD, which was made on May 13, 2011, after the sealed bids were opened, informed the Board that the four proposals received by the review committee had been evaluated and scored, and appellant had received the highest total score on the criteria listed in the RFP. On that basis, the report recommended that at its next meeting on May 24 the Board award appellant the 10-year exclusive franchise.

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The Director’s May 13 report also addressed the statements in his March 3 report that, because the process of evaluating bids “considers criteria beyond strictly pricing, ” it is not “competitive bidding, ” and therefore the findings required by Humboldt Code section 521-6, subdivision (a)(2), would need to be made at a noticed public hearing. The Director stated that his earlier statement “directly contradicts the intent of Section 521-6(a)(2) and staff is returning to the Board to clarify and correct that statement. The RFP process used by the department for this exclusive franchise was a competitive bid as detailed below. Consequently, findings are not necessary.” (Italics added.) The process employed was “competitive bidding, ” the Director explained, because the evaluation of the four proposals by the review committee “was based on a number of factors including responsiveness to the RFP, company qualifications and comparable experience, financial creditworthiness, acceptance of the franchise terms, and the company’s proposed management plan... [and] [s]ervice rates received a factor of 65% in the evaluation criteria.”

The May 13 report stated that appellant proposed the lowest service rate, the criterion weighted most heavily, and scored highest or tied for highest on each of the five other criteria, although the scores were very close. Blue Lake Garbage’s score was second, and Humboldt Sanitation & Recycling Co. and Tom’s Trash tied for last.

Finally, under the heading “ALTERNATIVES TO STAFF RECOMMENDATIONS, ” the May 13 report stated: “The Board could [at its May 24 hearing] choose not to award the exclusive franchise to Eel River Disposal and Resource Recovery, Inc. If the Board so chooses, they [sic] can evaluate the proposals on the same basis as the evaluation criteria outlined in the RFP and award the exclusive franchise to one of the other companies.”

A day or two before the May 24 Board meeting, Supervisor Ryan Sundberg, whose district included the Willow Creek area, distributed packets to other members of the Board containing 14 letters from residents of his district supporting award of the franchise to Tom’s Trash.

At the commencement of the Board hearing on award of the franchise, the Director made the case for awarding the franchise to appellant, emphasizing that in the minds of the three members of the review committee (himself and two other employees of the PWD) the company “hit all the buttons.” It not only “ scored 100% on the evaluated criteria identified in the RFP, ” but also offered “the lowest cost to the community and a reasonable cost for adding curb-side recycling availability to the community and even with the curb-side recycling, they are still the lowest cost provider.”

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Supervisor Sundberg then moved to award the franchise to Tom’s Trash. The motion was seconded, and the Board heard brief statements from the owner and an employee of Tom’s Trash and several residents of the Willow Creek area urging award of the franchise to Tom’s Trash, and the owner and an employee of appellant urging award of the franchise to appellant. The gravamen of the testimony in favor of Tom’s Trash was that its earlier loss of the franchise for failure to remit franchise fees resulted from the negligence and criminal conduct of a former bookkeeper and this was no longer a problem, residents of the Willow Creek area had long had and still wanted a locally-based service provider who knew customers personally and employed local residents, residents were very satisfied with the service provided by Tom’s Trash, and the service provided by appellant during the interim period in which it served the area was deficient in several ways. The owner and operations manager of appellant testified that the company was based in Humboldt County and had for 27 years provided residents of towns in the county “impeccable service, ” had “never heard” the “allegations” made at the hearing or received any complaints; it also provided certain free services for residents, and would continue to respond positively for requests for special assistance from seniors and others in need.

At the close of testimony, County Counsel pointed out that the purpose of the noticed hearing was to vote on the six “recommendations” made to the Board by the Director. [2] Because the purpose of Supervisor Sundberg’s motion was to reject the Director’s third recommendation to award the franchise to appellant, and award it instead to Tom’s Trash, County Counsel suggested the motion be amended to clarify this intention. She also suggested that recommendations Nos. 4, 5, and 6 should also be modified to effectuate the intention to reject the Director’s proposal to award the exclusive franchise to

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appellant and award it instead to Tom’s Trash. County Counsel recommended that the motion also be amended to include a statement that the Board has evaluated the criteria outlined in the RFP and finds it is “in the best interests of the County to award the exclusive franchise to Tom’s Trash.” At the June 27 hearing in the Humboldt County Superior Court, county counsel explained the gist of the foregoing suggestions: “Look[, ] if you are going to award it to Tom’s Trash, include in the motion that you’ve evaluated the criterion [sic], you find it is in the best interest of the County. And also recommendations four, five and six on the Board report, you do have to put Tom’s [Trash] in instead of [appellant][;] otherwise the Board would have awarded it to Tom’s [Trash] and told the chair and the public works director to go ahead and sign the contract with [appellant].”

Supervisor Sundberg, and Supervisor Clendenen, who seconded the motion, agreed to the modifications suggested by county counsel, and the motion passed by a vote of four to one.

Although Supervisor Sundberg’s motion was orally amended by the statement that the Board had evaluated the criteria outlined in the RFP and found that award of the franchise to Tom’s Trash was in the best interests of the County, the Board made no changes in the PWD review committee’s scoring of bidders relative to the criteria specified in the Board-approved RFP. The County admits that, as alleged in the petition, a “substantial reason” for awarding the exclusive franchise to Tom’s Trash “was that Tom’s was a local employer in Willow Creek and that [appellant] was not.” The four supervisors who voted to pass Supervisor Sundberg’s motion at the May 24, 2011 hearing all indicated the view that local ownership of Tom’s Trash and its employment of several local residents outweighed the fact it was not the lowest bidder, and this was the chief reason they voted for the motion.

On June 8, 2011, appellant filed a verified petition for writ of mandate and complaint for declaratory relief (Code Civ. Proc., §§ 1085, 1060) in the superior court seeking a peremptory writ mandating that the County (1) award the exclusive franchise at issue “to the entity scoring the highest under the criteria under the RFP process in the competitive process established [by Humboldt Code section 521-6]” and (2) “immediately vacate its vote awarding the [franchise] to Tom’s Trash, an entity which did not receive the highest score in the competitive bid RFP process.” The complaint alleged that, having elected to proceed by a competitive bid process, Humboldt Code section 521-6 imposed upon the County a legal duty to award the exclusive franchise to the lowest responsible bidder, and the County represented that it would discharge that duty pursuant to the process and evaluative criteria set forth in the RFP. The complaint sought a declaration to that effect under Code of Civil Procedure section 526, subdivision (a), as well as a declaration that the vote

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awarding the franchise to Tom’s Trash, taken after not complying with the competitive bidding process mandated by Humboldt code section 521-6 and specified in the RFP, was “null and void.” Finally, the complaint sought recovery of costs and reasonable attorney fees incurred in the action, and such other relief as the court deemed just and proper.

On April 18, 2012, after conducting a hearing, the superior court issued a nine-page order denying appellant’s request for writ of mandate and declaratory relief. On May 3, 2012, the court entered judgment denying the ...


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