LEGAL ISSUES


ation. Against these facts, the Court held that submitting a bid to a public entity does not create an existing relationship, but rather the mere hope of one and a desire for future benefit.


Extensive Regulation Under Current Law


In reaching this conclusion, the


Supreme Court was also cognizant of the extensive regulation to which public works contractors and awarding agencies are already subject under existing law. Te Court observed that competitive bidding is already “governed by an extensive statutory scheme” that already provides disap- pointed bidders with the means to challenge the perceived wrongful award of a public works contract. For similar reasons, the Court


rejected the competitors’ arguments that such lawsuits were needed to deter prevailing wage violations. Te area is already extensively regulated, and the aggrieved employees have an arsenal of contractual and statutory devices at their disposal that may be employed in aid of their prevailing wage rights. Significantly, none of these statutory schemes contemplated a private right of action by a disap- pointed bidder.


Big Decision for Public Works Contractors


Tis is a tremendously important


decision not only for contractors who bid on public works projects in California, but also for the public agencies who award these contracts and the citizens of California who ultimately pay for them. Competitive bidding only serves its intended purpose if it is open and bidders are not deterred from competing. Te Supreme Court was deeply troubled by the public policy implications of expanding tort liability to cover tortious interference claims in the public works context, and this concern appears to have affected the Court’s holding as much as its legal analysis. Opening the door to frivolous


www.AGC-CA.org


litigation by second-lowest bidders had the potential to deter respon- sible bidders from participating in the process, thus undermining the Legislature’s goal of “stimulating competition in a manner conducive to sound fiscal practices” and exposing bidders, the awarding entity, and the public to various forms of collateral damage. As the Court recognized, these consequences do not justify the


recognition of what amounts to an unnecessary tort remedy. 


Mary A. Salamone and Dan J. Bulfer are with Atkinson, Andelson, Loya, Ruud & Romo (AALRR). AALRR represented the prevailing party before the California Supreme Court. For more information, please visit their website at www.aalrr.com.


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