Global Tel*Link Corp. v. Wash. State Dep't of Corr.

521 P.3d 250

GLOBAL TEL*LINK CORP. d/b/a ViaPath Technologies, Appellant,

v.Washington State DEPARTMENT OF CORRECTIONS, Securus Technologies, Inc., Respondent-Intervenor.

No. 56661-3-II

Court of Appeals of Washington, Division 2.

Filed December 6, 2022

Brian William Esler, Drew Fitzgerald Duggan, Miller Nash LLP, 2801 Alaskan Way Ste. 300, Pier 70, Seattle, WA, 98121-1128, for Appellant.

Timothy Norman Lang, Office of the Attorney General, 1125 Washington St. Se., Olympia, WA, 98501-2283, Alan David Schuchman, Amy Yoon, Cairncross & Hempelmann P.S., 524 2nd Ave. Ste. 500, Seattle, WA, 98104-2323, Aaron Edward Millstein, Thomas Harding Wolfendale, Raina Vaile Wagner, Emaan Reza Jaberi, K&L Gates LLP, 925 4th Ave. Ste. 2900, Seattle, WA, 98104-1158, for Respondent-Intervenor.

PUBLISHED OPINION

Maxa, J.

¶1 Global Tel*Link Corporation (GTL) appeals the trial court's grant of Securus Technologies, Inc.’s (Securus) motion to dismiss under CR 12(b)(6) based on waiver and laches. GTL had filed suit to challenge the Department of Corrections’ (DOC) incarcerated individual technology services (IITS) procurement process as violating Washington's statutory competitive solicitation requirements.

¶2 Since 2006, GTL has provided telephone, internet, and related services to incarcerated individuals in Washington under a contract with DOC. In August 2019, DOC issued a "procurement notice" stating that DOC was seeking a qualified vendor to provide IITS to incarcerated individuals and requesting interested vendors to submit certain materials. GTL submitted a response to the notice and a further response in phase 2 of the process.

¶3 In December, DOC notified GTL that it did not select GTL to move on to the next stage of the IITS client services procurement process. In March 2020 and April 2021, GTL sent DOC formal complaints stating that the procurement notice and procedures did not comply with Washington's procurement law. In response, DOC explained that it issued the IITS procurement process under the "client services" exception to the requirement of competitive solicitation.

¶4 On January 12, 2022, DOC sent an email to GTL stating that DOC had selected Securus as its IITS vendor. On January 14, GTL filed suit against DOC, seeking declaratory and injunctive relief. Securus subsequently intervened as a defendant. GTL sought an injunction to prevent execution of the contract.

¶5 Before the scheduled injunction hearing, the trial court granted Securus's motion to dismiss under CR 12(b)(6) based on waiver and laches. GTL appealed, and then filed a motion with this court requesting a stay of the execution of the DOC/Securus contract. A commissioner of this court denied the stay. DOC and Securus executed the IITS contract on April 12.

¶6 We hold that under settled Washington law, this appeal became moot once DOC and Securus executed the IITS contract. Accordingly, we dismiss GTL's appeal.¹

FACTS

Procurement Process

¶7 At the time the complaint was filed, GTL provided telephone, internet, and related services to individuals in DOC custody in Washington. Since 2006, GTL had provided these services under a contract with DOC.

¶8 In July 2019, DOC issued a three-page "procurement notice" for IITS to solicit proposals from interested parties. The notice stated that DOC was "seeking a qualified vendor to provide comprehensive ... IITS[ ] to incarcerated individuals and their friends and families." Clerk's Papers (CP) at 15. The notice stated in detail the services to be provided. However, the notice did not identify the criteria and manner that DOC would use in evaluating vendors or any protest procedures.

¶9 In August, GTL submitted a 141-page offer in response to the procurement notice. Three other vendors submitted responses, including Securus. GTL later provided a further response and a demonstration of some of its offered products. In December, DOC sent an email to GTL stating that DOC selected Securus and another vendor to move forward to the next stage of the procurement process.

¶10 In March 2020, GTL sent a written complaint to DOC that identified multiple issues with the procurement process and contended that the process violated Washington public contracting law. DOC replied that the IITS procurement procedure was "issued under the client services exception to competitive solicitations" under RCW 39.26.125(6). CP at 23. As a result, client services were not subject to the same requirements as the competitive solicitation procurements.

¶11 In April 2021, GTL sent DOC a letter again notifying DOC that its procurement process violated Washington procurement statutes. In response, DOC stated that GTL's bid had not been rejected, although GTL was not the frontrunner in the process.

¶12 On January 12, 2022, DOC sent GTL an email stating that DOC had selected Securus as the IITS vendor after more than two years of work.

Trial Court Proceedings

¶13 On January 14, GTL filed a complaint against DOC. GTL sought a declaration that the IITS procurement procedure violated chapter 39.26 RCW and that any contract issued under the procurement was void, and an order enjoining DOC from proceeding with the IITS contract. Securus later intervened as a defendant.

¶14 Four days after filing the complaint, GTL filed a motion for a temporary restraining order to prevent DOC from entering into a contract with Securus. A preliminary injunction hearing was scheduled in March.

¶15 However, before the injunction hearing Securus filed a CR 12(b)(6) motion to dismiss based on the doctrines of waiver and laches, which was scheduled before the preliminary injunction hearing. The trial court granted the motion and dismissed GTL's complaint with prejudice.

Appeal and Execution of Contract

¶16 GTL promptly appealed to this court, and filed a motion for an emergency stay to prevent DOC and Securus from executing their contract while the issue was on appeal. GTL argued that a stay was needed because execution of the contract would moot its appeal. On April 12, the commissioner of this court denied the emergency stay following an analysis under RAP 8.1(b)(3), but did accelerate the appeal.

¶17 GTL did not move to modify the commissioner's ruling. That same day, DOC and Securus executed the IITS contract.

¶18 During this entire period, GTL continued to provide telephone services under its contract with DOC.

¶19 Securus and DOC then filed a motion to dismiss GTL's appeal as moot because DOC and Securus already had executed the IITS contract. The commissioner denied the motion without prejudice to Securus and DOC raising the issue in merits briefing.

¶20 GTL appeals the trial court's grant of Securus's CR 12(b)(6) motion to dismiss.

ANALYSIS

¶21 GTL argues that it can pursue its appeal even though DOC and Securus now have executed the IITS contract because it has continued standing. Securus and DOC argue that the appeal is moot because DOC has executed its contract with Securus and therefore that GTL no longer has a cause of action. The parties dispute whether Washington law establishes that an unsuccessful public contract bidder's claim is moot once the contract is executed. We agree with Securus and DOC.

A. LEGAL PRINCIPLES

¶22 The general rule is that when a court no longer can provide meaningful relief, the case is moot. Gonzales v. Inslee , 21 Wash. App. 2d 110, 124, 504 P.3d 890 (2022).

¶23 In Peerless Food Products, Inc. v. State , the Supreme Court held that an unsuccessful bidder for a public contract does not have a cause of action for damages against the public agency even if rejection of the bid was wrongful. 119 Wash.2d 584, 590-91, 597, 835 P.2d 1012 (1992). "The policy consideration for the general rule disallowing damages actions for nonaward of public contracts is protection of the public treasury before protection of bidders." Id. at 591, 835 P.2d 1012. This policy prevents the public from paying both for the excessive public contract awarded to another bidder and for the lost profits of the unsuccessful bidder. Id.

¶24 The court noted that unsuccessful bidders can pursue the remedy of injunctive relief to enjoin the performance of the contract at issue. Id. at 596-97, 835 P.2d 1012. The court stated, "Bidders who are mistakenly or wrongfully denied contracts have every incentive under our current rule to move quickly in seeking an injunction. If a protest is a prerequisite to court action, then bidders may seek temporary restraint on performance of the contract in question." Id. at 596, 835 P.2d 1012.

¶25 In Dick Enterprises, Inc. v. King County , Division One of this court addressed whether the public policy stated in Peerless also applied to preclude a claim for injunctive relief once the public contract is signed. 83 Wash. App. 566, 568-72, 922 P.2d 184 (1996). The court stated,

No case has addressed whether the policy of protecting the public treasury permits a bidder to sue to stop performance once a contract is signed. Bidder injunctions against performance of public contracts would adversely affect the public interest by increasing expense to the taxpayers.

We therefore hold that the purposes of the competitive bidding laws are best carried out by restricting such suits to plaintiffs with taxpayer standing.

Id. at 569-70, 922 P.2d 184.

¶26 Elaborating on the fact that not recognizing lawsuits by unsuccessful bidders would avoid increased public expense, the court noted that "the costs of rebidding and delay would in many cases far outweigh the financial harm caused by a fraudulent or collusive agreement." Id. at 570, 922 P.2d 184. The court stated,

Even where an illegal contract increases expense to the public, bidder injunctions against performance are not the proper way to vindicate public rights. Private suits are motivated by the bidder's desire to rebid and improve its chances to obtain an award. The best way to ensure that lawsuits are brought in the public interest is to restrict standing to those whose rights are at stake – the taxpayers.

Id.

¶27 The court explained...