By Paul Emanuelli

This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.

In its June 2018 decision in Rochester City Lines Co. v. City of Rochester, the Minnesota Supreme Court overturned a lower court decision and distinguished allegations of bias in a bidding process from actual proof of bias. The case dealt with a Request for Proposals (RFP) for a municipal bus operations contract. The complainant, Rochester City Lines (RCL), was the incumbent services provider. It lost the bidding process and then brought a legal challenge where it claimed bias on the part of the government evaluators. While the complainant won its case at the lower court based on its bias allegations, and succeeded in having the resulting contract award invalidated, the Supreme Court reversed that decision due to lack of evidence:

The City’s appointed moderator, appellant Justin Templin (“the Moderator”), rejected RCL’s pre-bid protest. The for Proposals (“RFP”) appeared impermissibly biased against RCL, because five of the eight members of the 2016 proposal evaluation committee had served on the 2012 proposal evaluation committee, and RCL had previously accused the 2012 proposal evaluation committee of bias. Rochester City Lines Co. v. City of Rochester, 897 N.W.2d 792, 799−800 (Minn. 2017) (hereinafter “Rochester City Lines”). The court of appeals therefore declared the 2016 competitive-bidding process, and the resulting contract awarded to First Transit, invalid. Id. at 801. We reverse.

As the Supreme Court explained, mere allegations of bias were insufficient to justify the invalidation of a contract award. Complainants could not simply present their conjecture regarding potential bias as assertions of actual bias without offering any actual evidence of bias:

We have recognized that the appearance of bias and actual bias are separate legal concepts. See State v. Am. Fundamentalist Church (In re Collection of Delinquent Real Prop. Taxes), 530 N.W.2d 200, 206 (Minn. 1995) (acknowledging possibility that decision-maker could appear biased without actually being biased); State v. Moss, 269 N.W.2d 732, 734–35 (Minn. 1978) (limiting a defendant who untimely raised allegations that a district court judge was biased to presenting evidence of actual bias, rather than just appearance of bias); Wiedemann v. Wiedemann, 36 N.W.2d 810, 812 (Minn. 1949) (noting that a judge could be disqualified for appearance of bias even where no bias-in-fact existed). While we do not require participants in a quasi-judicial proceeding to frame the issue in precise legal terms, we do require “sufficient specificity to provide fair notice of the nature of the challenge.” Big Lake Ass’n v. Saint Louis Cty. Planning Comm’n, 761 N.W.2d 487, 491 (Minn. 2009). Put another way, the quasi-judicial decision-maker must be given “an opportunity to consider and address the issue,” or it will be forfeited. Id.
RCL’s allegations did not specifically articulate an appearance-of-bias claim. Instead, RCL asserted that the members of the committee were biased, that their bases for evaluation were pre-determined, that they were incapable of being fair and impartial, that they would violate their duty to be fair and impartial, and that allowing them to serve on the committee would be inherently unfair and would violate due process. The plain language RCL used did not complain of an appearance of bias with sufficient specificity to provide the Moderator with fair notice that he needed to consider whether the process appeared to be biased.
Moreover, RCL failed to properly raise an appearance-of-bias argument before the court of appeals. In its initial brief, RCL complained again that the five overlapping members between the 2012 and 2016 RFP evaluation committees were biased, and would be unable to be fair and impartial. Additionally, RCL’s initial brief before the court of appeals referenced the “admitted bias . . . of the evaluation committee members,” and noted that the Moderator did not deny that those committee members were biased. These arguments also assert only actual bias. RCL did raise the appearance of bias in its reply brief, but litigants cannot raise new arguments in reply briefs. See Minn. R. App. P. 128.02, subd. 4 (limiting reply brief to new matter raised in respondent’s brief); see also State v. Ali, 895 N.W.2d 237, 247 n.9 (Minn. 2017) (holding that, where the State did not raise argument in its response brief, defendant could not raise it for the first time in his reply brief). Thus, RCL also failed to properly raise this argument before the court of appeals. RCL therefore forfeited any appearance-of-bias argument.

The Supreme Court reversed the Court of Appeal’s decision that had previously voided the original contract award and directed the parties to return to that lower court to pursue their arguments based on considerations of actual evidence.

As this case illustrates, the integrity of the bidding process requires that complainants produce proof of their claims since granting remedies to those who fail to prove their cases can prejudice the rights of bidders who were rightfully awarded a tendered contract.