DFS Guam L.P. v. A.B. Won Pat Int'l Airport Auth., (2020)

2020 Guam 14

DFS GUAM L.P., Plaintiff-Appellee/Cross-Appellant, v. THE A.B. WON PAT INTERNATIONAL AIRPORT AUTHORITY, GUAM, Defendant-Appellant/Cross-Appellee.

Supreme Court Case No.: CVA18-022

SUPREME COURT OF GUAM

Argued and submitted: July 9, 2019

August 11, 2020

Superior Court Case No.: CV0943-14

(consolidated with CV0094-15 and CV0198-15)

OPINION

Appeal from the Superior Court of Guam

Argued and submitted on July 9, 2019

Hagåtña, Guam

Appearing for Defendant-Appellant/

Cross-Appellee:

Kathleen V. Fisher, Esq. (argued)

Jay D. Trickett, Esq.

Genevieve P. Rapadas, Esq.

Calvo Fisher & Jacob LLP

259 Martyr St., Ste. 100

Hagåtña, GU 96910

Appearing for Plaintiff-Appellee/

Cross-Appellant:

Jay P. Srinivasan, Esq. (argued)

Maurice M. Suh, Esq.

Gibson, Dunn & Crutcher LLP

333 S. Grand Ave.

Los Angeles, CA 90071

G. Patrick Civille, Esq.

Joyce C.H. Tang, Esq.

Civille & Tang, PLLC

330 Hernan Cortez Ave., Ste. 200

Hagåtña, GU 96910

Jehan'Ad G. Martinez, Esq.

William J. Blair, Esq.

Blair Sterling Johnson & Martinez, PC

DNA Bldg.

238 Archbishop F.C. Flores St., Ste. 1008

Hagåtña, GU 96910 BEFORE: KATHERINE A. MARAMAN, Chief Justice; F. PHILIP CARBULLIDO, Associate Justice; JOSEPH N. CAMACHO, Justice Pro Tempore.¹

MARAMAN, C.J.:

[1] Defendant-Appellant/Cross-Appellee A.B. Won Pat International Airport Authority, Guam ("GIAA") appeals, and Plaintiff-Appellee/Cross-Appellant DFS Guam L.P. ("DFS") cross-appeals, from the entry of an amended final judgment. The consolidated case on appeal consists of three separate procurement protest appeals, each of which is set forth in a separate complaint, along with a petition for a writ of mandate that was separately consolidated into the lead case, Superior Court Case No. CV0943-14. For the reasons discussed below, we vacate the amended judgment and remand with directions.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. GIAA Issues an RFP for Airport Concessions and DFS Protests

[2] In 2001, GIAA—the governmental agency overseeing the operation of the A.B. Won Pat International Airport ("the airport")—issued a request for proposal ("RFP") to operate a specialty retail concession at the airport. After the completion of the RFP process, DFS became the exclusive retail concessionaire for GIAA in November 2002. Retail concessions at the airport expanded on at least two occasions over the next decade, but DFS remained the sole specialty retail concessionaire for GIAA, as DFS was the sole proposer for subsequent RFPs issued by GIAA during this period. This exclusive relationship was not to last.

[3] On July 19, 2012, GIAA issued a new RFP for the specialty retail concessions at the airport. Four companies submitted bids in response: DFS, Lotte Duty Free Guam LLC ("Lotte"), Shilla Duty Free, and JR/Duty Free.

[4] After GIAA issued this RFP, Jeju Air made its inaugural flight from South Korea to Guam. As part of the ceremonial and promotional activities associated with this event, the Guam Visitor's Bureau ("GVB") organized a delegation (hereinafter, "GVB Delegation") to go to South Korea. The GVB Delegation included two members of the GIAA Board of Directors—Francisco Santos and Rosalynda Tolan. Shortly after this trip, on October 1, 2012, DFS Vice President of Travel Industry Marketing Tak Takano spoke with a GVB employee, who informed Takano that the GVB Delegation had visited the Lotte department store in Seoul, met the president of Lotte, and received discounts and gifts from Lotte. This conversation was memorialized in a recording made by Takano.

[5] In a letter dated October 30, 2012, but that was not faxed until November 7, 2012 (hereinafter, "October 30 Letter"), DFS wrote to GIAA Executive Manager Charles Ada in order "to raise concerns that DFS ha[d] over some recent activities . . . which we feel may have been in contravention [of] the procedures stipulated under the RFP as well as violative of the spirit of the Guam procurement laws." See Record on Appeal ("RA"), tab 152 (Decl. Charles H. Ada II Supp. GIAA's Mot. Summ. J. ("Ada Decl."), Aug 28, 2015), Ex. B at 2 (Letter from Lamonte "Jim" Beighley to Charles Ada, Oct. 30, 2012). DFS twice referred to this as a "letter of concern." Id. at 2-3. The record does not indicate any action that was taken in response to the October 30 Letter. And despite the October 30 Letter, the RFP bids continued to be evaluated by an evaluation committee formed by GIAA.

[6] On March 28, 2013, the board of directors of GIAA held a regular meeting, during which they discussed the RFP. Representatives from both DFS and Lotte were present at this meeting. According to the minutes of that board meeting:

Chairman Santos disclosed for the record that there have been some media reports relating to the trip to Korea for the inaugural flight of Jeju Air in September 2012, that both the Chairman and Director Tolan attended. Although there were statements of supposed gifts received by the Chairman and Director, he stated that he did not believe there were any ethical violations. However, to avoid the appearance of any wrong doing [sic], and to maintain the publics' [sic] confidence and integrity of the solicitation process, the Chairman chose to abstain from participating in any discussions or votes relating to this particular RFP. The Chairman requested the item be chaired by Vice Chair [Jesus Q.] Torres. At this time, Director Tolan also chose to abstain and removed herself from any discussion or vote on this item. As there were no objections from the members, the meeting proceeded with Vice Chair Torres presiding.

Id., Ex. C at 2 (Mins. GIAA Bd. Dirs. Regular Mtg., Mar. 28, 2013). Executive Manager Ada then presented the full board with an overview of the RFP and bidding process. The minutes reflect that Ada told the board that "[t]o maintain the confidentiality requirement of the procurement law, each of the proposers were randomly assigned a letter designation." Id. The proposers' random letters were designated "in the order of how the proposals were received." Id. at 3. Several directors questioned the use of random letter designations; Vice Chairman Torres, for example, "stated that the Airport has never done this before, and found the process to be questionable." Id. After these questions were raised, the board tabled discussion and a vote on the RFP in order to provide legal counsel an opportunity to review the issues raised.

[7] The day following this meeting, DFS sent an email to Frank Taitano, its single point of contact in the procurement process, to seek clarification on how the random letter designations were assigned. GIAA responded by letter, explaining the process.

[8] DFS sent a follow-up letter on April 11, 2013 (hereinafter, "April 11 Letter"). DFS stated its belief that no investigation was conducted in response to the October 30 Letter and challenged the integrity of the procurement process, as well as Lotte's bid. DFS then requested an investigation, stating:

We believe that it is of the utmost importance for the Board of Directors of GIAA to insist that a very thorough investigation is conducted as to what exactly transpired during the GVB [Delegation] Korea trip. The nature and value of the gifts, the circumstances under which they were given and how they were selected by various members of the delegation are important elements to consider. It is also important to ascertain what knowledge Lotte actually had of the delegation members, when they had that knowledge, and how they chose to act subsequently.

. . . . We believe that the process of the RFP must continue to move forward. There are several important steps ahead that must be followed. As the process moves forward, however, the directors who are ultimately responsible for the outcome must ensure that this investigation into what transpired is, and has been, conducted thoroughly and that as a body the board is informed of all of the relevant facts, particularly in light of the statements which have been just made during and subsequent to the last board meeting.

Id., Ex. F at 3-4 (Letter from Beighley to Taitano, Apr. 11, 2013).

[9] A day later, the board of directors of GIAA convened a special meeting that both DFS and Lotte attended. At this special meeting, the board of directors unanimously approved the evaluation committee's recommendation that GIAA enter contract negotiations for specialty retail concessions with "Proposer 'A,'" who was then revealed by the Executive Manager to be Lotte. See id., Ex. G at 2 (Mins. GIAA Bd. Dirs. Special Mtg., Apr. 12, 2013). The evaluation committee had ranked DFS's proposal in third place. The April 11 Letter was not discussed at this meeting.

[10] Following the award of the RFP to Lotte, legal counsel for DFS sent a formal procurement protest to Executive Manager Ada ("April 23 Letter"). This letter stated that it was part of DFS's "continued protest of the process leading up to, and the April 12, 2013 decision, of [GIAA] to approve the recommendations of the GIAA evaluation committee ranking Lotte . . . as the 'most qualified proposer' pursuant to RFP No. GIAA 010-FY12 . . . ." Id., Ex. H. at 1 (Letter from Att'y William J. Blair to Ada, Apr. 23, 2013). The letter continued:

As you are aware, we have been protesting the actions related to the selection of Lotte since our October 30, 2012 letter, in which we specifically stated that facts related to the RFP No. GIAA 010-FY12 'have been in contravention [of] the procedures stipulated under the RFP.' Your failure to respond to our October 30 letter, as well as a follow-up letter on April 11, 2013 letter [sic], culminates in this correspondence. The Proposal Protest is made pursuant to 5 GCA Guam Government Operations, Article 9, Section 5425 et seq. and RFP No. GIAA 010- FY12, and incorporates the relevant provisions of 5 GCA Ethics and Government Employees, Article 11 and 4 GCA Standards of Conduct for Elected Officers, Appointed Officers, and Public Employees of the Government of Guam, Article 2.

Id. (first alteration in original) (citations...