Case Number: BC555067    Hearing Date: September 04, 2014    Dept: 82

Skanska-Traylor-Shea, a California joint venture,
v.
Los Angeles County Metropolitan Transportation Authority; and Does 1 to 50, inclusive.

Tentative Decision on OSC re PI: Denied

Plaintiff Skanska-Taylor-Shea (“STS”) moves to enjoin Defendant Los Angeles County Metropolitan Transportation Authority (“Metro”) from releasing STS’s alleged confidential, proprietary, and/or trade secret information contained in proposals provided by STS to Metro. The Court renders the following decision:

Statement of the Case

On September 27, 2012, the Board of Directors (“Board”) of Metro authorized the use of a design-build process to complete the final design and construction of the Westside (Purple Line) Subway Extension Project, Section 1 — Design/Build (“Project”). Accordingly, Metro solicited proposals (“Proposal”) for a contract for the 3.92 mile dual track heavy rail system with three new stations as part of the Los Angeles County Metropolitan Transportation Authority Measure R Program. (Zweighaft Decl., ¶3).

Metro’s Board authorized the procurement under Public Contract Code section 20209.5, et seq., which allows for the negotiation and award of a design-build contract to a responsible proposer whose proposal is determined to be the best value to Metro. (Zweighaft Decl., ¶4). The procurement of proposals for the Project was to be governed in part by Metro’s Procurement Policy Manual dated March 1, 2006 (“Policy Manual”). Chapter 8.9 of the Policy Manual, entitled, “Disclosure and Use of Information Before Award” provides, in part, “[a]fter receipt of proposals, the information contained in them and the number or identity of offerors shall not be made available to the public,” and “[p]roposals will not be released to a person or organization that has or may have a current or prospective business interest.” Metro’s Proposal Evaluation Team Guide states, “The disclosure of the [] proposal information can result in special appeals or protests that could delay the program and embarrass Metro, not only in the selection under consideration, but also in future Metro dealings with the industry.” (Zweighaft Decl., ¶5).

Metro issued a Request for Qualifications (“RFQ”) for the Project on or about November 30, 2012. It then issued a Request for Proposals (“RFP”) on or about May 22, 2013, which was revised from time to time. In addition to Metro’s Policy Manual 8.9, pursuant to the RFP, Proposals for RFP C1045 were agreed to be held strictly confidential by Metro and the proposers during the RFP process. (Zweighaft Decl., ¶¶6-7).

According to STS, the RFP provides that all confidential, trade secret, or proprietary information or financial records in the proposal shall be handled in accordance with the General Conditions of the Contract. STS also claims that the RFP provides that the proposers are required to execute a non-disclosure agreement. Furthermore, STS states that Metro’s own Proposal Evaluation Team Guide expressly provides that the security of the evaluation procedures is of extreme importance, and that the disclosure of the “proposal information can result in special appeals or protests.” “The unauthorized disclosure of… proposal information will be investigated and violations will be processed in accordance with applicable Metro regulations.” (Zweighaft Decl., ¶8). However, the RFP also provides that “[r]esponses to this RFP must be subject to the provisions of the California Public Records Act . . . .” (White Decl., ¶2, Exhibit A, p.2).

STS’s Proposal and Best and Final Offer (“BAFO”) were prepared over several months and includes unique and proprietary design criteria, pricing schemes developed for this Project, and STS’s confidential and proprietary design and proposal strategy for this Project. STS has not authorized the release of this information and has specifically demanded that its trade secret, confidential, and/or proprietary information not be produced to any third parties. (Zweighaft Decl., ¶9).

Proposals were due from pre-qualified proposers on or about January 30, 2014. STS was one of three pre-qualified proposers for the RFP who submitted proposals. The joint ventures known as “WTP” (comprised of Salini Impregilo S.p.A., Samsung E&C America, Inc., and Salini ISA) and “DAS” (comprised of Dragados USA, Astaldi Construction Corp., and Southland Contracting) also pre-qualified for the RFP. STS submitted a timely, responsive proposal (“Proposal”) to the RFP for the Project on or about January 30, 2014. WTP and DAS also submitted proposals to the RFP. (Zweighaft Decl., ¶¶10-11).

On or about May 2, 2014, Metro issued amendment 6 to the RFP, requesting each proposer’s BAFO on or before May 30, 2014. STS submitted a timely and responsive BAFO. WTP and DAS also submitted BAFOs. (Zweighaft Decl., ¶12).

Between May 30, 2014, and July 17, 2014, Metro’s staff reviewed the proposals and BAFOs of the three proposers to the RFP. On or about July 7, 2014, Metro issued its Agenda Item 56 Recommendation, as amended twice subsequently (“Item 56 Recommendation”), to Metro’s Board recommending that the Board authorize Metro to award the Contract No. C1045 to STS. The Item 56 Recommendation was addressed at the Metro Board meeting of July 24, 2014. Metro’s staff’s Item 56 Recommendation was based on an Evaluation Criteria Summary (“Rating Summary”) that compared and rated the proposals and BAFOs of WTP, STS, and DAS. As set forth in the Rating Summary and the Item 56 Recommendation, Metro’s staff concluded STS scored highest overall. (Zweighaft Decl., ¶¶13-14). Bruce Warrensford, Director of Contract Administration for Metro, declares that on July 7, 2014, Metro concluded negotiations with the proposers by issuing its notice of intent to award the Project to STS. (Warrensfeld Decl., ¶8).

On or about July, 22, 2014, and as later supplemented, WTP served Metro with a protest pursuant to Metro’s protest procedure objecting to Metro’s award of the Contract to STS. DAS also submitted a protest to Metro on or about July 22, 2014. (Zweighaft Decl., ¶15).

Metro notified STS that it had received a California Public Records Act request to obtain a copy of the proposal STS submitted in response to the RFP for the Project. Metro further notified STS of its imminent intent to release STS’s proposal unless STS obtained a court order precluding Metro from releasing the documents. STS responded that it would not object to the release of the proposal to other bidders, provided that all bidders’ proposals were simultaneously released to the other bidders. (Zweighaft Decl., ¶¶16-17).

On August 15, 2014, Metro notified STS that it had attempted to release STS’s Proposal that day, but had been unable to do so because of the “voluminous nature of the proposals” and that it intended to produce the proposals to the other bidders “by the middle of next week.” Metro also informed STS that “WTP has obtained a temporary restraining order enjoining MTA from releasing WTP’s Proposal.” Accordingly, Metro states that it will not release WTP’s proposal to STS at this time. (Zweighaft Decl., ¶18).

To date, STS does not have copies of WTP’s or DAS’s proposals. STS claims its Proposal to the RFP and BAFO for the Project contain proprietary, confidential and trade secret information which was provided to Metro in reliance upon the confidentiality provision of the RFP and Policy Manual. (Zweighaft Decl., ¶¶19-20).

Procedural History

On August 19, 2014, Plaintiff Skanska-Traylor-Shea filed a complaint for declaratory relief and injunctive relief against Defendant Los Angeles County Metropolitan Transportation Authority.

That same day, Plaintiff filed an Ex Parte Application for Issuance of Order to Show Cause and Temporary Restraining Order. The Court granted the ex parte application, ordering a TRO and ordering Defendant to appear on September 4, 2014 to show cause why it should not be enjoined from releasing Plaintiff’s confidential, proprietary and/or trade secret information.

Also on that same day, Plaintiff filed a notice of related case with respect to Westside Transit Partners v. LA County Metro Trans. Authority (BC554488).

On August 21, 2014, the Court granted the unopposed ex parte application of Dragados Astaldi Southland (“DAS”), a joint venture, for leave to intervene in the action. It also allowed DAS to file on or before August 27, 2014 a memorandum of points and authorities in opposition to the application of STS to enjoining production by Metro of the records which are the subject of STS’s application and Complaint in this action.

On August 22, 2014, DAS filed a Complaint in Intervention pursuant to CCP § 387 stating a cause of action for declaratory relief.

On August 27, 2014, Metro and DAS filed oppositions.

On August 29, 2014, STS filed a reply.

The matter was argued and submitted on September 4, 2014.

Summary of Applicable Law

The purpose of a preliminary injunction is to preserve the status quo pending a decision on the merits. Major v. Miraverde Homeowners Ass’n. (1992) 7 Cal.App.4th 618, 623. A plaintiff seeking injunctive relief must show the absence of an adequate damages remedy at law. CCP §526(a)(4). In determining whether to issue a preliminary injunction, the trial court is to consider the likelihood that the plaintiff will prevail on the merits at trial and to weigh the interim harm to the plaintiff if the injunction is denied against the harm to the defendant if the injunction is granted. King v. Meese (1987) 43 Cal. 3d 1217, 1226. A party seeking an injunction must demonstrate a reasonable probability of success on the merits. IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 73-74. “In seeking a preliminary injunction, [the party seeking the injunction] bore the burden of demonstrating both likely success on the merits and the occurrence of irreparable harm.” Savage v. Trammell Crow Co. (1990) 223 Cal.App.3d 1562, 1571; Citizens for Better Streets v. Board of Sup’rs of City and County (2004) 117 Cal.App.4th 1, 6.

Analysis

Plaintiff asserts it is likely to prevail on the merits of its claims for declaratory relief and injunctive relief because the Proposal and BAFO were submitted with an expectation of confidentiality under state law and Metro’s own policies. (Ex Parte Application, p.8).

Pub. Contr. Code § 20209.7(d)(2) and (e)(2) states, in relevant part:

“Design-build projects shall progress in a three-step process, as follows: . . . . (d) . . . . (2) Each RFP shall invite interested parties to submit competitive sealed proposals in the manner prescribed by the contracting agency. . . . (e) . . . . (2) The information required pursuant to this subdivision shall be verified under oath by the entity and its members in the manner in which civil pleadings in civil actions are verified. Information that is not a public record pursuant to the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) shall not be open to public inspection.”

(emphasis added). A “public record” is defined, in relevant part, as “. . . any writing containing information relating to the conduct of the public’s business prepared, owned, used, or retained by any state or local agency regardless of physical form or characteristics. . . .” (Gov. Code § 6252(e)). Pursuant to the California Public Records Act (“CPRA”):

“Except with respect to public records exempt from disclosure by express provisions of law, each state or local agency, upon a request for a copy of records that reasonably describes an identifiable record or records, shall make the records promptly available to any person upon payment of fees covering direct costs of duplication, or a statutory fee if applicable. Upon request, an exact copy shall be provided unless impracticable to do so.”

(Gov. Code, § 6253(b)). But, under Gov. Code § 6255(a): “The agency shall justify withholding any record by demonstrating that the record in question is exempt under express provisions of this chapter or that on the facts of the particular case the public interest served by not disclosing the record clearly outweighs the public interest served by disclosure of the record.” “The burden of proof is on the proponent of nondisclosure, who must demonstrate a ‘clear overbalance’ on the side of confidentiality.” California State University v. Superior Court (2001) 90 Cal.App.4th 810, 831.

Here, Metro notified STS that it had received a CPRA request to obtain a copy of the proposal STS submitted in response to the RFP for the Project. Metro further notified STS of its intent to release STS’s proposal unless STS obtained a court order precluding Metro from releasing the documents. (Zweighaft Decl., ¶¶16-17).

STS argues that the Gov. Code § 6255(a) exception applies here, citing Michaelis, Montanari & Johnson v. Superior Court (2006) 38 Cal.4th 1065, 1074. In Michaelis, the California Supreme Court held that a public agency could properly refuse to disclose bidding proposals submitted in response to the agency’s request for proposals for a public-works project until after the completion of negotiations relating to those proposals. Michaelis, supra, 38 Cal.4th at pp. 1072-1075. The Supreme Court reasoned that pre-negotiation disclosure could significantly impair the agency’s ability to select and negotiate with potential contractors and could discourage contractors from submitting proposals for fear that competing contractors might steal their creative ideas, causing bidding contractors to submit inferior proposals to the ultimate detriment of the public’s interest. Id. at pp.1071, 1074-105. With these possible impacts in mind, the Supreme Court determined that the public’s interest would be best served by delaying disclosure of the proposals until after the completion of the negotiation process. Id. at p. 1075. “Essentially, the court ruled that premature disclosure would reveal specific, confidential details of the competing proposals to the other proposers, thereby potentially impairing the city’s negotiation and selection processes” and, the court ultimately concluded that “ . . . the proposals submitted to the city were, during the negotiation process, exempt under Government Code section 6255 from the disclosure requirements of the Act . . . .” Id. at pp. 1074, 1077. Here, unlike Michaelis, Metro concluded negotiations with the proposers by issuing its notice of intent to award Contract No. C1045 to STS on July 7, 2014. (Warrensfeld Decl., ¶8). Indeed, the Metro Procurement Policy Manual defines “Negotiation” as “a procedure that includes the receipt of proposals from offerors. It permits bargaining, and usually affords offerors an opportunity to revise their offer before award of a contract.” (Thiel Decl., ¶4, Exhibit 4, p.A-6).

On Reply, STS argues that there is ambiguity to Metro’s position because of its prior representations. (Reply, pp.2-3). For example, with respect to another project (C0980), Metro staff issued its recommendation on April 17, 2014 (Thiel Decl., ¶2, Exhibit 1) and the Board approved it on April 24, 2014 (Thiel Decl., ¶3, Exhibit 2), but, over a month later, Metro stated in a letter that “. . . this contract has not yet been fully executed and awarded” and denied STS’s records request (Thiel Decl., ¶5, Exhibit 3). With respect to the Project at issue here, Metro sent a similar letter to DAS on July 25, 2014, stating that the “[STS] Joint Venture DBE Contracting Plan is part of the proposal submitted to [Metro] in response to RFP No. C1045. Therefore, it is exempt from disclosure as this contract has not yet been fully executed and awarded.” (White Decl., ¶10, Exhibit J). In addition, STS points to Metro Procurement Policy Manual sections 8.18-8.20 (Thiel Decl., ¶5, Exhibit 4, pp.8-14 to 8-16), arguing that “it would appear that a contract is not ‘awarded’ until after it is negotiated and approved and, up until that time, Metro’s policy is not to disclose the relative merits or technical standing of the proposers” (Reply, p.4). Finally, STS argues that DAS and WTP have asked that negotiations remain open (Thiel Decl., ¶¶6-7, Exhibits 6-7), but that “Metro has not yet responded to DAS’s or WTP’s requests” (Reply, p.5). Despite these arguments, Metro has completed negotiations with the proposers by issuing its notice of intent to award Contract No. C1045 to STS on July 7, 2014. (Warrensfeld Decl., ¶8). Again, on July 24, 2014, the Metro Board voted to approve the award of the project to STS (White Decl., ¶¶12-14, Exhibit K). The Court is also not convinced that negotiations will reopen. Therefore, the proposals are not exempt from disclosure under Gov. Code § 6255(a).

In addition, Chapter 8.9 of Metro’s Policy Manual, entitled, “Disclosure and Use of Information Before Award” provides, in part, “[a]fter receipt of proposals, the information contained in them and the number or identity of offerors shall not be made available to the public or to anyone in the MTA not required to have access to the information in the performance of his or her duties” and “[p]roposals will not be released to a person or organization that has or may have a current or prospective business interest.” (Zweighaft Decl., ¶5; Thiel Decl., ¶5, Exhibit 4, p.8-8). Metro’s Proposal Evaluation Team Guide states, “The disclosure of the [] proposal information can result in special appeals or protests that could delay the program and embarrass Metro, not only in the selection under consideration, but also in future Metro dealings with the industry.” (Zweighaft Decl., ¶5). However, as pointed out by Metro, the section of the Policy Manual cited by STS is entitled, in part, “Before Award” and, although that phrase is not defined, this section applies up to the time that Metro issues its Notice of Intent to Award (Warrensfeld Decl., ¶7), which was issued on July 7, 2014. (Warrensfeld Decl., ¶8).

Finally, STS has not shown that it will suffer irreparable harm unless the injunction is used. Certainly, STS submits a declaration from Peter Zweighaft, Assistant General Counsel for STS, where he declares that “STS’s Proposal to the RFP and BAFO for the Project contain proprietary, confidential and trade secret information which was provided to Metro in reliance upon confidentiality provision of the RFP and Policy Manual.” (Zweighaft Decl., ¶20). However, Zweighaft’s declaration, without more, is insufficient to show that the Proposal or BAFO actually contain trade secret information. In addition, section 20.8 of Metro’s Procurement Policy Manual states: “. . . the bidder or offeror shall conspicuously mark each separate sheet containing proprietary or confidential information . . . .” (White Decl., ¶3, Exhibit B, p.20-7). Here, STS does not point to what part of its Proposal or BAFO contains proprietary or confidential information, or why it could not redact proprietary or confidential information as allowed by section 20.8.

Disposition

Plaintiff’s request for injunctive relief is DENIED because it has not shown a likelihood of success on the merits or irreparable harm. The temporary restraining order is dissolved and the order to show cause is discharged.

IT IS SO ORDERED.