Hennepin County District Court

File No. 97156

Gregg J. Cavanagh, Leonard, Street and Deinard, Suite 2300, 150 South Fifth Street, Minneapolis, MN 55402 (for appellants)

James E. Knutson, Stephen M. Knutson, Michelle D. Kenney, Knutson, Flynn, Deans & Olsen, P.A., 1900 Minnesota World Trade Center, 30 East Seventh Street, St. Paul, MN 55101 (for respondents Independent School District No. 276, et al.)

Thomas F. Surprenant, 5900 Rowland Road, Minnetonka, MN 55343 (for respondent Stahl Construction)

Considered and decided by Peterson, Presiding Judge, Davies, Judge, and Forsberg, Judge.

Appellants Minnesota Chapter of Associated Builders and Contractors, Inc., and others, brought this action for declaratory and injunctive relief against respondents Board of Education of Minnetonka, Independent School District No. 276, and others. Their complaint alleged that respondents were about to violate Minnesota competitive bidding statutes by requiring successful bidders on certain construction projects to sign a project labor agreement and become union members. See Minn. Stat. §§ 123.37, 471.345 (1996) (competitive bidding statutes provide that construction contracts in excess of $25,000 be awarded to "lowest responsible bidder").

Respondents moved to dismiss the complaint for lack of subject matter jurisdiction, arguing that appellants' remedy was limited to review by writ of certiorari. The district court agreed, and dismissed the complaint.

Appellants filed both this direct appeal and a certiorari appeal. On May 27, 1997, this court concluded that certiorari was not available and discharged the writ. In a subsequently issued special term opinion, this court concluded that (1) certiorari is available only to review decisions that are quasi-judicial in nature, (2) not all school district decisions are quasi-judicial, and (3) because the decision challenged here was not quasi-judicial, certiorari was not a proper remedy in this case. See Minnesota Chapter of Assoc. Builders & Contractors, Inc. v. Board of Educ. of Minnetonka Indep. Sch. Dist. No. 276, No. C9-97-619 (Minn. App. Aug. 19, 1997), review denied (Minn. Aug. 26, 1997).

James E. Knutson, Stephen M. Knutson, Michelle D. Kenney, Knutson, Flynn, Deans & Olsen, P.A., 1900 Minnesota World Trade Center, 30 East Seventh Street, St. Paul, MN 55101 (for respondents Independent School District No. 276, et al.)

Thomas F. Surprenant, 5900 Rowland Road, Minnetonka, MN 55343 (for respondent Stahl Construction)

Considered and decided by Peterson, Presiding Judge, Davies, Judge, and Forsberg, Judge.

Appellants Minnesota Chapter of Associated Builders and Contractors, Inc., and others, brought this action for declaratory and injunctive relief against respondents Board of Education of Minnetonka, Independent School District No. 276, and others. Their complaint alleged that respondents were about to violate Minnesota competitive bidding statutes by requiring successful bidders on certain construction projects to sign a project labor agreement and become union members. See Minn. Stat. §§ 123.37, 471.345 (1996) (competitive bidding statutes provide that construction contracts in excess of $25,000 be awarded to "lowest responsible bidder").

Respondents moved to dismiss the complaint for lack of subject matter jurisdiction, arguing that appellants' remedy was limited to review by writ of certiorari. The district court agreed, and dismissed the complaint.

Appellants filed both this direct appeal and a certiorari appeal. On May 27, 1997, this court concluded that certiorari was not available and discharged the writ. In a subsequently issued special term opinion, this court concluded that (1) certiorari is available only to review decisions that are quasi-judicial in nature, (2) not all school district decisions are quasi-judicial, and (3) because the decision challenged here was not quasi-judicial, certiorari was not a proper remedy in this case. See Minnesota Chapter of Assoc. Builders & Contractors, Inc. v. Board of Educ. of Minnetonka Indep. Sch. Dist. No. 276, No. C9-97-619 (Minn. App. Aug. 19, 1997), review denied (Minn. Aug. 26, 1997).

Standing requires that a plaintiff has a sufficient stake in a justiciable controversy to seek relief from a court. Sierra Club v. Morton, 405 U.S. 727, 731-32, 92 S. Ct. 1361, 1364-65 (1972). A plaintiff who has suffered some "injury-in-fact" acquires standing. Snyder's Drug Stores, Inc. v. Minnesota State Bd. of Pharmacy, 301 Minn. 28, 32, 221 N.W.2d 162, 165 (1974).

Economic injury "or the potential for economic injury" is sufficient to confer standing. Byrd v. Independent Sch. Dist. No. 194, 495 N.W.2d 226, 230-31 (Minn. App. 1993), review denied (Minn. Apr. 20, 1993). But a plaintiff must "possess a bona fide legal interest which has been, or * * * is about to be, affected in a prejudicial manner." Rocco Altobelli, Inc. v. State, 524 N.W.2d 30, 34 (Minn. App. 1994) (citation omitted). That interest must be direct and must differ "in character from the interest of the citizenry in general." Id. And a plaintiff must be attempting to do "more than vindicate [its] own value preference through the judicial process." Sierra Club, 405 U.S. at 740, 92 S. Ct. at 1369 (footnote omitted).

This case was brought by the following plaintiffs/appellants: (1) the Minnesota Chapter of Associated Builders and Contractors, Inc. (ABC); (2) four ABC, non-union members: General Sprinkler Corporation, Ebert & Hinson Fire Protection, Inc., Willmar Electric Service, and Protouch Painting, Inc.; and (3) two individuals: George W. Hawkins, a resident taxpayer who is also ABC's executive director; and Blaine Johnson, a resident taxpayer who is owner and president of Midwest Asphalt Corporation, an ABC member and union contractor.

1. Taxpayers' Standing

The competitive bidding statutes require school districts to award their construction contracts to the "lowest responsible bidder." Minn. Stat. §§ 123.37, 471.345 (1996). A principal purpose of this requirement is to ensure that taxpayers receive maximum benefit for their tax dollars. See Byrd, 495 N.W.2d at 231 (taxpayers have standing to prevent an illegal expenditure of tax money). A necessary corollary to this requirement is that the bidding process be open to all responsible bidders. Foley Bros., Inc. v. Marshall, 266 Minn. 259, 264, 123 N.W.2d 387, 391 (1963) (to conform to competitive bidding laws, specifications must be drawn to give all bidders equal opportunity without granting advantage to one of placing others at disadvantage); Coller v. City of St. Paul, 223 Minn. 376, 384, 26 N.W.2d 835, 840 (1947) (competitive bidding statute requires, as necessary corollaries, that plans and specifications be framed to permit free and open bidding by all interested parties).

As resident taxpayers, appellants Hawkins and Johnson "have a real and definite interest in preventing an illegal expenditure of tax money." Byrd, 495 N.W.2d at 231. Even if their motivations for bringing this suit are related to their businesses, those motivations are irrelevant when determining whether they have standing as taxpayers. Id. Thus, because Hawkins and Johnson will be negatively affected or injured by respondents' alleged failure to follow the competitive bidding statutes, they have standing to bring this suit.

2. Standing of Association and its Members

The complaint and affidavits submitted by appellants establish: (1) ABC is a Minnesota nonprofit organization composed of 370 member firms, of which approximately 300 are contractors and the rest are suppliers or other associates; (2) many ABC members, including the four contractors named here, routinely bid and perform work on projects like the ones involved here; (3) although some ABC members are signatories to collective bargaining agreements, many are not, including the four contractors named here; (4) many ABC non-union members desired to bid on the project but would not agree to become union members to work on this project; (5) one of ABC's fundamental tenets is that contractors be permitted to perform public or private work based on merit, not on union or non-union status; (6) ABC non-union members were "effectively precluded" from bidding or working on respondents' projects because the project bid specifications required successful bidders to sign the project labor agreement and become union members; and (7) one of ABC's members, Midwest Asphalt, is a union contractor, did bid on the project, and was awarded a contract.

Respondents argue that these facts merely illustrate that ABC members who chose not to bid made an individual decision and that any contractor, whether a member of a union or not, was eligible to bid. However, any bidding by a non-union contractor would have been costly and futile: if one of these contractors had bid the job with the qualification that it would not sign the agreement, then the bid would have been rejected as nonresponsive and the contractor would have incurred the costs of bidding in vain; if one of these contractors had bid the job without a qualification, was the low bidder, and then declined to sign the agreement, its bid bond might have been at risk. In either case, the contractor would have gone to substantial effort and cost to determine what it already knew: that respondents would not award a contract unless the successful bidder signed the project labor agreement. Cf. Dynalantic Corp. v. Department of Defense, 115 F.3d 1012, 1016 (D.C. Cir. 1997) (injury sufficient to show standing when defense contractor has shown it is able and willing to bid on contracts, but prevented from doing so on equal basis by policy which contractor challenges as discriminatory and unconstitutional).

Thus, the four named ABC member contractors have standing to bring this suit. Respondents' requirement that successful bidders sign the project labor agreement directly injured these members by denying them any meaningful opportunity to bid or compete for project contracts. And this injury is logically related to appellants' claim that respondents' actions violate the competitive bidding statutes by restricting the bidding process to union members or those willing to become union members.

An association or organization may derive standing from the interests its members have in a controversy. No Power Line, Inc. v. Minnesota Environmental Quality Council, 311 Minn. 330, 334, 250 N.W.2d 158, 160 (1976). Standing is shown when (1) an association's members would otherwise have standing to sue in their own right; (2) the interests sought to be protected are germane to the association's purpose; and (3) the relief sought seeks a declaration, injunction, or other prospective relief that will inure to the benefit of association members actually injured. Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 339, 343, 97 S. Ct. 2434, 2441 (1977). Thus, ABC also has standing as an association: the four named ABC members have standing to bring this suit in their own right; the interests sought to be protected are germane to ABC's purposes of representing contractors and suppliers and of permitting work to be performed based on merit, not on union or non-union status; and the relief sought here is prospective relief that will benefit ABC members who effectively were denied the opportunity to bid on respondents' projects.

The district court's dismissal of appellants' complaint for lack of subject matter jurisdiction is reversed.

Reversed; motion to supplement record denied.

[ Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

1] Respondent school district also argues that dismissal is proper because the 60-day time limit for obtaining a writ of certiorari has long expired. As appellants note, however, this issue is not relevant unless we decide to reverse our special term opinion and conclude that certiorari was the only remedy available to appellants.