October 28, 1993
DISTRICT OF COLUMBIA, APPELLANT
GROUP INSURANCE ADMINISTRATION, APPELLEE. QUALITY DENTAL PLANS, INC., APPELLANT V. GROUP INSURANCE ADMINISTRATION, APPELLEE
Appeal from the Superior Court of the District of Columbia; (Hon. Stephen F. Eilperin, Trial Judge)
Before Ferren and Sullivan, Association Judges, and Pryor, Senior Judge.
The opinion of the court was delivered by: Ferren
FERREN, Associate Judge: The District of Columbia and Quality Dental Plans, Inc. (QDP) appeal from a trial court order, issued in favor of appellee Group Insurance Administration, Inc. (GIA), that preliminarily enjoined the District and QDP from performing a contract under which QDP was to administer the District's dental and vision care benefits program for non-union employees. The District also appeals the trial court's order holding it in contempt and assessing fines for failure to comply with this injunction.
Because the preliminary injunction has since expired, appellants' direct challenge to the injunction is moot. Nevertheless, we examine the injunction's validity in the course of considering whether the trial court abused its discretion in holding the District in contempt. In doing so, we must determine whether the Superior Court has the authority to order emergency relief forcing the rebidding of a public contract while the underlying bid protest is still pending before the Contract Appeals Board (CAB or Board). Although we conclude that the Superior Court has this authority, this is an extraordinary power that should only be exercised in rare instances. The particular circumstances of this case did not warrant such extraordinary action. Accordingly, having determined that the underlying injunction was invalid, we reverse and remand this case for vacation of the civil contempt order against the District.
I. FACTUAL AND PROCEDURAL HISTORY
A. The Contract Award Process
Since 1985, the District of Columbia government has provided dental and vision care benefits to all non-union employees. The District awarded the first contract to administer this program to GIA. On October 7, 1991, near the expiration of this first contract, the District issued a request for proposals (RFP) from qualified minority contractors *fn1 for a new one-year contract to administer the benefits program during calendar year 1992. The proposed contract also provided renewal options for four one-year extensions. The deadline for the submissions was November 12, 1991.
Only two firms bid on the contract: GIA and QDP. A four-person committee, headed by the District Controller, evaluated GIA's and QDP's proposals, rating them on a 110-point scale that took into account company and staff qualifications, proposed service, quality of oral presentation, and contract price. The Committee gave GIA and QDP substantially similar ratings for their qualifications, proposed services, and oral presentations. There was, however, a significant difference between the two firms' price proposals. QDP offered a price of $2.00 per participant for the first year of operation, while GIA's proposed price was $3.35 per participant. The evaluation committee recommended that the District award the contract to QDP. As a result, on January 7, 1992, the District entered into a letter agreement with QDP, authorizing QDP to begin service in accord with the terms of its proposal and providing for the parties to enter into a definitive contract within 183 days. On the same day, the District notified GIA that it had not been selected.
B. GIA'S Bid Protest and Suit for Injunctive Relief
Ten days later, on January 17, 1992, GIA filed a bid protest with the CAB requesting the Board to cancel the District's contract with QDP. The protest alleged that: QDP lacked the required expertise to perform the contract; the District had failed to apply the evaluation criteria properly; QDP had a potential conflict of interest because it was also a provider of dental services; QDP intended to subcontract most of its vision services to non-minority businesses; the District had ignored GIA's proposed 20 percent discount and therefore had misinterpreted GIA's actual price proposal.
On January 27, 1992, GIA filed an amended protest containing the additional claim that QDP was not a "responsible contractor" within the meaning of 27 DCMR § 2200.1 (1988) because QDP's Vice President, Thomas A. Parnham, had recently pled guilty to charges of conspiracy and failing to maintain proper records as required by the Employee Retirement Income Security Act, in violation of 18 U.S.C. § 371 (1988) and 29 U.S.C. §§ 1027, 1131 (1988). *fn2 Consequently, GIA alleged, the District's contract with QDP violated the District's own requirement that "the contracting officer shall . . . award contracts only to responsible contractors." 27 DCMR § 2200.1.
The District responded with an agency report to the CAB in which the District denied all of GIA's allegations and moved the Board to dismiss as untimely GIA's claim in its amended protest that QDP was not a responsible contractor. In an amended report, the District subsequently withdrew its motion to dismiss and submitted an affidavit from the District Controller stating that he had not become aware of Parnham's convictions until January 24, 1992, after he had entered into the letter agreement with QDP. The Controller averred that he had reviewed the government's statement of fact in support of Parnham's guilty pleas and had discussed the situation with QDP's president (Dr. Milton Bernard), Parnham, and Parnham's attorney. After this review, the Controller said, he had concluded that Parnham's guilty plea should not be imputed to QDP and that QDP remained a responsible contractor. In reaching this Conclusion, the Controller had taken into account the following facts: (1) the convictions were for misdemeanors, not felonies; (2) the misdemeanors only involved a failure to disclose information; (3) Parnham had not been involved in taking or accepting illegally obtained funds; and (4) the convicting court had specifically informed Parnham that the convictions did not bar him from continuing with QDP in an administrative position.
While GIA's bid protest was pending before the CAB, GIA also filed a complaint in the Superior Court on February 13, 1992, requesting declaratory and injunctive relief, including a temporary restraining order, against the District. This complaint repeated most of the allegations set forth in GIA's bid protest to the CAB. In response, the District asserted that the trial court lacked jurisdiction to hear the complaint because GIA had failed to exhaust its administrative remedies in failing to wait for the CAB to render a decision on its bid protest. The District also claimed that, even if the court had jurisdiction to hear the case, GIA had failed to make the required showing of irreparable harm. Additionally, the District submitted the same affidavit from the Controller that it had filed with the CAB. QDP joined the District and moved for leave to intervene.
After a hearing, the trial court denied GIA's request for a temporary restraining order on February 28, 1992. Expressing his reluctance to interfere with the administrative process, the trial Judge ruled that GIA should instead seek a stay of the contract from the CAB.
GIA then filed with the CAB an emergency motion for a stay of the contract. In an opinion issued on March 25, 1992, the CAB concluded that under D.C. Code § 1-1189.8 (e) (1992) it had no authority to stay performance of a contract pending its decision on a bid protest. See 39 D.C. Reg. 4491, 4497, 4503 (1992).
Armed with the Board's decision, GIA returned to the trial court two days later. This time, the trial court concluded that GIA had exhausted its administrative remedies when the CAB denied GIA's request for a stay. Accordingly, the trial court agreed to hold a hearing on GIA's motion for a preliminary injunction to halt performance of QDP's contract with the District.
Testimony and evidence submitted at the hearing disclosed that Parnham had entered his guilty pleas in July 1991 and that Dr. Bernard, QDP's president, had known of this fact at that time. After reviewing the government's statement of facts in the case against Parnham, however, Dr. Bernard had concluded that Parnham's involvement "had been limited in duration and scope" and that Parnham could "continue to perform his duties on behalf of Quality Dental and conduct himself with honesty and integrity." Accordingly, Parnham had participated fully in developing QDP's proposal to the District -- a proposal in which he was named as a principal of QDP.
On April 1, 1992, the trial court issued an order enjoining the District and QDP from taking any further steps to implement the contract between them "except for transitioning to an emergency procurement pending the Contract Appeals Board's final decision." In reaching this decision, the trial court relied on the following findings of fact and Conclusions of law.
First, the trial court concluded that, under 27 DCMR §§ 2200.3 and 2200.4 (1988), as well as under paragraphs 35 (3), 37 (1) and (2), and 38 (2) of the District's RFP, QDP was obliged to disclose the fact of Parnham's convictions. The failure to reveal this information, the court said, cast doubt not only on Parnham's integrity but also on QDP's as well. Accordingly, the court concluded that there was a substantial likelihood that GIA would succeed in its protest to the CAB.
Second, the court found that the harm faced by GIA was comparable to the harm that QDP would suffer if enjoined from performing the contract. Absent an injunction, GIA would be forced to wait until the CAB rendered a decision, which would lead to a probable delay of about a year. As a result, GIA would lose 50 percent of its then-annual revenue and might be forced to lay off as many as four employees. On the other hand, an injunction would hurt QDP financially and force it to lay off a number of employees, but it would not threaten QDP's existence.
Third, the trial court found that the public interest overwhelmingly favored the granting of an injunction, so as to send a strong message that companies seeking to do business with the District could not profit from misrepresenting their qualifications.
Finally, the court determined that, given the CAB's disclaimer of authority to issue injunctive relief while an appeal was pending before it, GIA had exhausted its administrative remedies and had no adequate remedy available to it at law.
Both the District and QDP appealed from the trial court's order (Nos. 92-CV-437 & 92-CV-477).
C. The Contempt Proceeding
After the trial court issued the injunction, the District moved for reconsideration. In denying that motion on May 13, 1992, the trial court also ordered that, "if the District does not take immediate steps to effect an emergency procurement, this Court will set the matter down for a show cause hearing why the District should not be held in contempt." On May 29, the District issued a new emergency RFP to administer its dental and vision care employee benefit program, and on June 26 the District selected Dental Providers, Inc. as the new program administrator. In the interim, however, GIA had petitioned the trial court on June 10 to issue an order to show cause why the District should not be held in contempt for failure to follow the trial court's order.
At a hearing on GIA's petition on June 19, Lorenzo McQueen, a manager in the District Controller's office, testified that the District had delayed in issuing a new RFP because it wanted to rewrite some of the specifications and to contact potential applicants who might be willing to bid on a short term contract. Seven vendors had submitted proposals, and the review committee had made a recommendation on June 17. At the time of the hearing, McQueen was conducting a background check on the winning provider.
Later, at a hearing on July 13, the District Controller corroborated much of McQueen's testimony. In particular, the Controller said that he had felt it was important, for the sake of potential bidders, to incorporate into the new RFP a statement of the situation under which this RFP was being issued. The Controller also admitted, however, that even though the District's original letter agreement with QDP had expired as of July 12 (the 183 days had run), he had signed a contract extension permitting QDP to continue to administer the District's benefit plan, so as to allow the new administrator, Dental Providers, sufficient time to gear up its operation.
On July 22, 1992, the trial court issued an order holding the District in civil contempt for failure to comply with its injunction. The trial court found, first, that the District was still using QDP's services as of July 13, 1992, notwithstanding the injunction. Second, the court found that the District could have completed the emergency procurement process and installed a new benefits administrator by May 22. Finally, the court concluded that the District had failed to demonstrate either of the two recognized defenses to civil contempt, i.e., substantial compliance or inability to comply. The court ordered the District to pay the sum of $1,500 per day to GIA for each day that the District had continued to use QDP's services between May 22 and July 13, or a total of $78,000. The court also ordered the District to pay GIA $2,000 for each day after July 13 that the District continued to use QDP. Finally, the court required the District to pay GIA's attorney fees incurred in connection with the motion for order to show cause.
The District also appeals from this order (No. 92-CV-942).
D. The Contract Appeals Board Decision
On September 2, 1992, the CAB issued a decision denying GIA's bid protest in all respects. See 40 D.C. Reg. 4485 (1992). The Board reached the following Conclusions: (1) the District's review committee had not misapplied the RFP's criteria in evaluating GIA's and QDP's proposals; (2) GIA's conflict of interest claims were too speculative to justify disturbing a contract award; (3) GIA's allegation that QDP was planning to subcontract administration of vision care benefits was unsupported by the evidence; (4) GIA's proposed 20 percent discount did not conform to the RFP's request for a single fixed price, and thus the committee did nothing unreasonable in refusing to give it full consideration; and (5) the Controller's determination that QDP was responsible was entitled to deference, absent evidence that procuring officials had a specific, malicious intent to harm GIA. See id. at 4508-19.
GIA has since filed an action in Superior Court for review of the CAB decision. That decision is not before us in this appeal.
II. THE ISSUES ON APPEAL
Because of the peculiar procedural posture of this case, we begin our analysis by asking what issues are properly before us on appeal.
Ordinarily, this court has jurisdiction to hear an appeal from the grant of a preliminary injunction. *fn3 See D.C. Code § 11-721 (a)(2)(A) (1989); Wieck v. Sterenbuch, 350 A.2d 384, 386 n.1 (D.C. 1976). In this case, however, the CAB's decision denying GIA's bid protest on September 2, 1992, apparently terminated the effective period of the trial court's injunction, insofar as the court's order directed the District to take steps to rebid the contract only "pending the Contract Appeals Board's final decision." Consequently, appellants' challenge to the preliminary injunction has become moot. See, e.g., Certified Grocers of Ill. v. Produce Employees Union, Local 703, 816 F.2d 329, 330-32 (7th Cir. 1987) (where preliminary injunction lasted only until arbitrator's decision, decision rendered appeal of injunction moot); Kitlutsisti v. Arco Alaska, Inc., 782 F.2d 800, 801 (9th Cir. 1986) (appeal from preliminary injunction prohibiting drilling unless permitted by Environmental Protection Agency rendered moot by issuance of permit); see generally Vaughn v. United States, 579 A.2d 170, 175 n.7 (D.C. 1990). Although we, unlike the federal courts, are not bound by the "case or controversy" requirement of Article III of the Constitution, we have adopted this requirement for prudential reasons, and therefore we will not normally decide questions that have become moot. See Atchison v. District of Columbia, 585 A.2d 150, 153 (D.C. 1991); Banks v. Ferrell, 411 A.2d 54, 55-56 (D.C. 1979). Accordingly, we dismiss the appeals in Nos. 92-CV-437 and 92-CV-477.
That is not to say, however, that this case as a whole has become moot. The District's liability for the contempt fines it was ordered to pay to GIA, the point at issue in No. 92-CV-942, remains a live controversy between the District and GIA. *fn4 See University of Texas v. Camenisch, 451 U.S. 390, 393-94, 68 L. Ed. 2d 175, 101 S. Ct. 1830 (1981). Furthermore, in reviewing the trial court's civil contempt order, we may properly consider the validity of the underlying injunction. "The purposes of civil contempt orders are to coerce compliance with the underlying order and/or to compensate the complainant for loss sustained by disobedience. Accordingly, civil contempt may be defended on the ground that the underlying order was erroneously issued." Blocksom & Co. v. Marshall, 582 F.2d 1122, 1124 (7th Cir. 1978). *fn5
In this case, the District contends that the trial court's contempt order was in error because the underlying injunction was invalid. Specifically, the District argues that (1) the trial court lacked authority to issue the injunction, and (2) even if the trial court had the authority to award such relief, it abused its discretion in doing so in the particular circumstances of this case. In addition, the District contends that, in any event, the trial court's award of compensatory damages to GIA was not supported by any evidence of actual losses.
III. THE TRIAL COURT'S AUTHORITY TO GRANT PRELIMINARY RELIEF
The District argues, first, that the trial court lacked authority to issue the injunction while GIA's bid protest was still pending before the CAB. Essentially, the District's argument has three themes. One theme involves subject matter jurisdiction: the District argues that, until the CAB rendered a decision on GIA's bid protest, the trial court lacked jurisdiction to hear GIA's suit for injunctive relief because the applicable statute designates the CAB as the exclusive hearing tribunal for bid protests. *fn6 A second theme raises the issue of standing: the District asserts that GIA had no right to sue for any relief other than the remedies expressly provided by statute. The third theme concerns the doctrine of exhaustion of administrative remedies: the District argues that the court should not have acted on GIA's behalf because GIA had not yet exhausted its administrative remedies. Although the District tends to interweave these three themes in its argument, we distinguish them and consider them one at a time for the sake of clarity.
A. The Superior Court's Subject Matter Jurisdiction
In 1985, the Council of the District of Columbia established the CAB in its present form under the District of Columbia Procurement Practices Act, D.C. Code §§ 1-1181.1 to 1-1192.6 (1992 & Supp. 1993). *fn7 D.C. Code § 1-1189.3 (1992) sets forth the CAB's jurisdiction over bid protests as follows:
The Board shall be the exclusive hearing tribunal for, and shall have jurisdiction to review and determine de novo:
(1) Any protest of a solicitation or award of a contract addressed to the Board by any actual or prospective bidder or offeror, or a contractor who is aggrieved in connection with the solicitation or award of a contract . . . .
(Emphasis added.) The District argues that this statute "gives the CAB the exclusive jurisdiction to hear and resolve protests" and that the Superior Court accordingly has jurisdiction to intervene only after the CAB has rendered a decision. GIA responds that, notwithstanding the statutory language, the Superior Court's general equity jurisdiction gave the court authority to hear GIA's claims even though GIA's protest was still pending before the CAB.
For reasons that will become evident momentarily, we begin our analysis by considering the nature and sources of the Superior Court's subject matter jurisdiction. In 1970, Congress passed the District of Columbia Court Reorganization Act, Pub. L. No. 91-358, 84 Stat. 473 (1971), which conferred upon our "local courts . . . powers analogous to those of state courts" and gave "the Superior Court plenary jurisdiction over civil matters brought in the District of Columbia" via D.C. Code § 11-921 (1989). Reichman v. Franklin Simon Corp., 392 A.2d 9, 12 (D.C. 1978). Thus, "as presently constituted, the Superior Court is no longer a court of limited jurisdiction, but a court of general jurisdiction with the power to adjudicate any civil action at law or in equity involving local law." Andrade v. Jackson, 401 A.2d 990, 992 (D.C. 1979) (emphasis in original).
Only Congress has the authority to alter this grant of general jurisdiction to the Superior Court. D.C. Code § 1-233 (a)(4) (1992) specifically prohibits the Council of the District of Columbia from enacting "any act, resolution, or rule . . . relating to organization and jurisdiction of the District of Columbia courts." Thus, the Council may not expand or reduce the jurisdiction of the local courts. See Jones & Artis Constr. Co. v. Contract Appeals Board, 549 A.2d 315, 318 (D.C. 1988); Capitol Hill Restoration Soc'y v. Moore, 410 A.2d 184, 188 (D.C. 1979); Columbia Realty Venture v. District of Columbia Hous. Rent Comm'n, 350 A.2d 120, 124 (D.C. 1975).
The Procurement Practices Act was enacted by the Council, not initiated by Congress. *fn8 The Act therefore lacked the authority to alter the existing jurisdiction of the Superior Court. Consequently, before examining D.C. Code § 1-1189.3, which governs the CAB's authority over bid protests, we must first consider whether, as part of its general equity jurisdiction and entirely apart from the commands and implications of § 1-1189.3, the Superior Court may hear a suit for injunctive relief in relation to a bid protest, even though the underlying protest is still pending before the appropriate agency review board.
"This court has held that [D.C. Code] § 11-921 (a)(6) permits a party 'aggrieved' by a decision of a District of Columbia agency to initiate an appropriate action in the Superior Court for equitable relief, unless this court has jurisdiction under the DCAPA [District of Columbia Administrative Procedure Act, D.C. Code §§ 1-1501 to 1-1511 (1992)] to consider a direct appeal." Speyer v. Barry, 588 A.2d 1147, 1159-60 (D.C. 1991); see also Capitol Hill Restoration Soc'y, 410 A.2d at 188; Columbia Realty, 350 A.2d at 123. D.C. Code § 1-1510 (a) allows the District of Columbia Court of Appeals to hear a direct appeal from an agency decision only in a "contested case," i.e., "a proceeding in which 'the legal rights, duties, or privileges of specific parties are required by law. . ., or by constitutional right,' to be determined after a trial-type hearing." Jones & Artis, 549 A.2d at 318 (quoting D.C. Code § 1-1502 (8)). Because a bid protest is not a contested case within the meaning of the DCAPA, a disappointed bidder seeking relief from a decision on a bid protest by the CAB must resort in the first instance to the Superior Court. See id.; Network Technical Servs. v. District of Columbia Data Co., 464 A.2d 133, 136 (D.C. 1983).
Citing Jones & Artis, the District concedes in its brief that the Superior Court has the authority to review the CAB's final decision on a bid protest. The District contends, however, that the trial court "has no authority to interfere with a pending administrative proceeding other than its authority under the All Writs Act, 28 U.S.C. § 1651, to preserve its jurisdiction." The qualification in the District's argument is highly significant, for, indeed, the All Writs Act does provide the Superior Court with jurisdictional authority, albeit in rare circumstances, to issue emergency relief pending the resolution of agency proceedings.
The All Writs Act provides that "all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." 28 U.S.C. § 1651 (a) (1988). In FTC v. Dean Foods Co., 384 U.S. 597, 603-05, 16 L. Ed. 2d 802, 86 S. Ct. 1738 (1966), the Supreme Court held that this act empowered a federal court of appeals to issue a preliminary injunction to prevent a merger until the Federal Trade Commission had determined its legality. Exercise of the power to issue writs in aid of jurisdiction, the court said, "'is in the nature of appellate jurisdiction' . . . and extends to the potential jurisdiction of the appellate court where an appeal is not then pending but may be later perfected." Id. at 603 (quoting Ex parte Crane, 30 U.S. 190, 193, 8 L. Ed. 92 (5 Pet.) (1832) and citing Ex parte Bradstreet, 32 U.S. 634, 8 L. Ed. 810 (7 Pet.) (1833)). Furthermore, the Court observed, the power to issue preliminary relief also covers cases involving administrative agencies:
decisions of this Court "have recognized a limited judicial power to preserve the court's jurisdiction or maintain the status quo by injunction pending review of an agency's action through the prescribed statutory channels. . . . Such power has been deemed merely incidental to the courts' jurisdiction to review final agency action . . . ."
Id. at 604 (quoting Arrow Transp. Co. v. Southern Ry. Co., 372 U.S. 658, 671, 10 L. Ed. 2d 52, 83 S. Ct. 984 n.22 (1963)).
We recently recognized this doctrine in the context of appellate court review of contested cases in Capitol Hill Hosp. v. District of Columbia State Health Planning & Dev. Agency, 600 A.2d 793 (D.C. 1991). Citing Dean Foods, we observed that, in a contested case over which we would eventually have direct reviewing authority, we would also have the authority to issue emergency relief to preserve the status quo while administrative review is still pending. See id. at 799. As with federal courts, the source of our authority to issue temporary relief pending administrative review in such a case is the All Writs Act. See id.; cf. Morrow v. District of Columbia, 135 U.S. App. D.C. 160, 167, 417 F.2d 728, 735 (1969) (holding that District of Columbia Court of Appeals, as then constituted, had power to issue extraordinary writs in aid of jurisdiction under All Writs Act).
Because the District of Columbia Superior Court, like this court, was created by Congress, it follows that the All Writs Act applies equally to the Superior Court. See Christian v. United States, 394 A.2d 1, 43-44 (D.C. 1978), cert. denied, 442 U.S. 944 (1979). Therefore, like this court, the Superior Court must also have the power to issue emergency relief pending the completion of administrative proceedings in cases where, in the first instance, review would lie in the Superior Court. *fn9 Thus, because the Superior Court has jurisdiction to review the CAB's decisions in bid protests, as the District concedes, the Superior Court also possesses the power under the All Writs Act to issue temporary relief to a disappointed bidder even though the CAB has not yet issued a decision.
Nothing in the Procurement Practices Act can affect this power because, as we have already noted, the Council, in adopting the Act, lacked authority to alter the jurisdiction of the Superior Court as Congress defined it. *fn10 With this said, however, we also note that we see no necessary inconsistency between D.C. Code § 1-1189.3 and the Superior Court's authority to issue emergency relief pending the outcome of CAB proceedings.
In concluding as we do that the Superior Court has the power to issue emergency relief by virtue of its jurisdiction to review CAB decisions, we do not question the CAB's role as "exclusive hearing tribunal" for all bid protests. We recognize that, in so designating the CAB, the Council apparently rejected other procurement schemes that allow a disappointed bidder to resort to the trial court either instead of, or in addition to, seeking administrative review. *fn11 We also appreciate that CAB members have "experience in the areas of procurement and contract law," D.C. Code § 1-1189.2 (b) (1992), which gives them particular expertise in compiling and interpreting the voluminous and highly technical factual records that are typically involved in a public procurement dispute.
Accordingly, we do not hold that the Superior Court's power to grant emergency relief gives it the authority to function as a competitor of the CAB or to ignore the CAB's findings. Nothing in this opinion is intended to authorize the Superior Court as an alternative hearing tribunal. On the contrary, the Superior Court still owes the CAB deference as the primary fact-finder. See D.C. Code § 1-1189.8 (d) (1992) ("A determination of an issue of fact by the Board [in a bid protest] shall be final and conclusive unless arbitrary, capricious, fraudulent, or clearly erroneous."); see also Kegley v. District of Columbia, 440 A.2d 1013, 1018 (D.C. 1982) (where review of administrative proceeding properly lies in Superior Court, Superior Court must apply same standard of review as Court of Appeals would apply to review of contested case under DCAPA). Furthermore, as we set forth in detail in Part IV.A., the circumstances in which the Superior Court is entitled to exercise its jurisdiction to issue temporary relief pending the completion of agency proceedings will be extremely rare.
In another argument against the trial court's authority to issue the preliminary injunction, the District cites Perkins v. Lukens Steel, 310 U.S. 113, 84 L. Ed. 1108, 60 S. Ct. 869 (1940), for the proposition that "it is a basic principle of government contract law that an unsuccessful bidder has no right to challenge a government contract other than the rights given . . . by statute." Thus, the District argues, GIA may not resort to any forum other than the CAB in the first instance, nor may GIA sue for preliminary relief, because such relief is not available from the CAB under its governing statutes. See D.C. Code §§ 1-1189.3, - 1189.8 (e)(1) (1992). *fn12 We reject this argument.
In citing Lukens Steel, the District is apparently attempting to revive the old notion that a party has standing to sue for relief from an adverse administrative decision only where the agency has invaded a specific legal right, either founded in common law or specifically conferred by statute, that belongs to that party. *fn13 But that is no longer the Supreme Court's test for standing to challenge an administrative agency's decision, nor is it ours.
In Association of Data Processing Serv. Orgs., Inc. v. Camp (ADAPSO), 397 U.S. 150, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970), the Supreme Court specifically rejected the legal interest test as a condition of standing to sue for relief from agency action, stating that the legal interest test "goes to the merits," id. at 153, and is "a matter quite distinct from the problem of standing," id. at 153 n.1. Instead, the Court announced a broader test for standing. As summarized and adopted by this court in Lee v. District of Columbia Bd. of Appeals & Review, 423 A.2d 210 (D.C. 1980), the ADAPSO test requires that
in order to seek review of an administrative agency's decision, (1) the petitioner must allege that the challenged action has caused him injury in fact; (2) the interest sought to be protected by the petitioner must be arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question; and (3) there must be no clear legislative intent to withhold judicial review either from the class of persons or in the type of case involved.
Lee, 423 A.2d at 216 (citing ADAPSO, 397 U.S. at 152, 153, 156); see also Dupont Circle Citizens Ass'n v. Barry, 455 A.2d 417, 421 (D.C. 1983); Basiliko v. District of Columbia, 283 A.2d 816, 818 (1971). For example, using this test in ADAPSO the Supreme Court held that a data processors association had standing to challenge a ruling by the Comptroller of the Currency that banks could make data processing services available to other banks and bank customers. See ADAPSO, 397 U.S. at 158. Such a party would have lacked standing under the old legal interest test. See id. at 153.
In subsequent cases, the Supreme Court added further refinements to this test for standing, which we have also incorporated into our own caselaw. Thus, we have said the plaintiff must also show "that the injury fairly can be traced to the challenged action, and that it is likely to be redressed by a favorable decision." Speyer, 588 A.2d at 1160 (quoting Community Credit Union v. Federal Express Servs. Corp., 534 A.2d 331, 333 (D.C. 1987)); see Valley Forge Christian College v. Americans United for Separation of Church & State, 454 U.S. 464, 472, 70 L. Ed. 2d 700, 102 S. Ct. 752 (1982); Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 38, 41-42, 96 S. Ct. 1917, 48 L. Ed. 2d 450 (1976). Furthermore, "a plaintiff may assert only its own legal rights may not attempt to litigate generalized grievances." Speyer, 588 A.2d at 1160 (quoting Community Credit Union, 534 A.2d at 33); see Valley Forge, 454 U.S. at 474-75. *fn14
Applying these standards, the federal courts have typically held that disappointed bidders for a contract with the federal government have standing to sue for relief. *fn15 We see no reason to treat GIA differently under our own local law.
First, GIA had unquestionably suffered injury in fact. Having lost a substantial contract that it otherwise stood a fair chance of winning, GIA claimed that it faced "loss of key employees; threat to the viability of the company; and loss of marketplace credibility." "The unsuccessful bidder meets the 'injury in fact' prong of the test because 'the economic injury he [or she] suffers . . . is manifest. No serious doubt exists that a disappointed bidder suffers economic loss by virtue of his [or her] inability to obtain the contract at issue."' Choctaw Mfg. v. United States, 761 F.2d 609, 616 (11th Cir. 1985) (quoting Hayes Int'l Corp. v. McLucas, 509 F.2d 247, 255, 96 S. Ct. 123, 46 L. Ed. 2d 92 (5th Cir.), cert. denied, 423 U.S. 864 (1975)) (brackets omitted).
Second, that injury was fairly traceable to the District's alleged breach of its own procedures and regulations in (1) initially awarding the benefits administration contract to QDP and (2) continuing the contract with QDP after learning of Parnham's convictions. Of course, GIA was not entitled to this contract. But it was entitled to a fair award process. "Doing business with the Government has become an import ant part of American economic life; arbitrary deprivation of government contracts on non-discretionary grounds is a serious wrong. . . ." B.K. Instrument, Inc. v. United States, 715 F.2d 713, 719 (2d Cir. 1983). Thus, a "disappointed bidder need demonstrate only that if its bid had been fairly and honestly considered, 'there was substantial chance that would receive an award . . . .'" CACI, Inc.--Fed. v. United States, 719 F.2d 1567, 1574 (Fed. Cir. 1983) (quoting Morgan Business Assocs. v. United States, 619 F.2d 892, 895, 223 Ct. Cl. 325 (Ct. Cl. 1980)). As the previous administrator and only other bidder, GIA had a substantial chance of winning the new benefits administration contract. See id. at 1575 (disappointed bidder that was one of six companies qualified to submit final offer had standing to challenge award).
Third, the claimed injury could be redressed by court action. "An injunction barring the award would correct this alleged injury since it would require the government . . . to repeat the bidding process under circumstances that would eliminate the alleged taint of the prior proceedings." Id.
Fourth, GIA sought to safeguard interests that were "arguably within the zone of interests to be protected or regulated by the statute . . . in question." Lee, 423 A.2d at 416. D.C. Code § 1-1181.1 (b)(1992) specifies that the Procurement Practices Act supports the following purposes among others:
(2) To foster effective and equitably broad-based competition in the District of Columbia . . .;
(4) To provide for increased public confidence in the procedures followed in public procurement;
(7) To insure the fair and equitable treatment of all persons who deal with the procurement system of the District government;
(11) To provide safeguards for the maintenance of a procurement system of quality and integrity
In claiming that the District (1) had failed to follow proper procedures in evaluating its proposals and (2) had awarded the contract to a service provider that did not meet the District's standards for integrity, GIA was seeking to protect interests in fair competition and integrity that lie at the heart of the Procurement Practices Act.
Fifth, no argument can be made that GIA was merely raising a generalized grievance or seeking to vindicate the rights of third parties. While a disappointed bidder's challenge to the government's procurement process also serves the public interest in fair and efficient government, the bidder's grievance is also particularized, insofar as the bidder is seeking a procurement contract.
Finally, we discern "no clear legislative intent to withhold judicial review" from bid protestors. Lee, 423 A.2d at 416. Indeed, as we noted above in Part III.A., the District concedes that GIA is entitled to judicial review.
We therefore conclude that GIA had standing to seek relief in the Superior Court. In doing so, we reject the District's claim that GIA has no right to pursue relief in the Superior Court until after the CAB has issued a decision. A disappointed bidder who has shown standing has the right to avail himself or herself of the Superior Court's review jurisdiction, which also includes, for reasons we have already set forth in Part III.A., the jurisdiction to hear claims for interim relief before the CAB has rendered a decision.
We also reject, for similar reasons, the District's claim that D.C. Code § 1-1189.8 (e)(1), see (supra) note 12, limits GIA's right to interim relief in the trial court. We recognize, as the District points out and as the CAB held in an earlier decision issued in this case, see (supra) note 12, that § 1-1189.8 (e)(1) appears to prohibit the CAB from enjoining a contract award.
But that fact has no bearing on GIA's standing to seek relief in the Superior Court. It can hardly be said that § 1-1189.8 indicates any intent to withhold judicial review as a whole; it pertains solely to the availability of a particular remedy from the CAB. Nor can it be argued that § 1-1189.8 limits the availability of a preliminary injunction from the Superior Court. As we have already demonstrated in Part III.A., the power to grant interim relief is incidental to the Superior Court's review jurisdiction and cannot be overridden by the Procurement Practices Act. Therefore, where a disappointed bidder such as GIA can demonstrate standing, it can sue for emergency relief in the Superior Court regardless of the CAB's apparent incapacity to issue such relief.
C. Exhaustion of Remedies
Finally, the District argues that the trial court lacked authority to issue a preliminary injunction because GIA had not exhausted its remedies. We disagree.
It is a "well-established doctrine that where a statute provides an administrative forum to resolve disputes, 'no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted.'" Dano Resource Recovery, Inc. v. District of Columbia, 566 A.2d 483, 485 (D.C. 1989) (quoting McKart v. United States, 395 U.S. 185, 193, 23 L. Ed. 2d 194, 89 S. Ct. 1657 (1969)) (further citation and internal quotation marks omitted); see also Bender v. District of Columbia Dep't of Employment Servs., 562 A.2d 1205, 1207-08 (D.C. 1989) and authorities cited therein. As the Supreme Court observed in McKart, there are sound policy grounds for adhering to this doctrine:
The reasons for making such procedures exclusive, and for the judicial application of the exhaustion doctrine in cases where the statutory requirement of exclusivity is not so explicit, are not difficult to understand. A primary purpose is, of course, the avoidance of premature interruption of the administrative process. The agency, like a trial court, is created for the purpose of applying a statute in the first instance. Accordingly, it is normally desirable to let the agency develop the necessary factual background upon which decisions should be based. And since agency decisions are frequently of a discretionary nature or frequently require expertise, the agency should be given the first chance to exercise that discretion or to apply that expertise. And of course it is generally more efficient for the administrative process to go forward without interruption than it is to permit the parties to seek aid from the courts at various intermediate stages.
McKart, 395 U.S. at 193-94; see also McCarthy v. Madigan, 117 L. Ed. 2d 291, 112 S. Ct. 1081, 1086-87 (1992); Dano Resource Recovery, 566 A.2d at 485; Bender, 562 A.2d at 1208.
Unlike jurisdiction and standing, however, exhaustion of remedies is a "flexible doctrine," National Treasury Employees Union v. King, 295 U.S. App. D.C. 153, 156, 961 F.2d 240, 243 (1992), subject to "a number of interrelated exceptions," including "inadequate remedy, unavailable remedy, and futility," Dano Resource Recovery, 566 A.2d at 486.
Both the inadequacy and unavailability exceptions are relevant in a case such as this where the movant alleges imminent danger of irreparable harm and seeks emergency relief not available from the administrative forum. *fn16 "'Administrative remedies need not be pursued if the litigant's interests in immediate judicial review outweigh the government's interests in the efficiency or administrative autonomy that the exhaustion doctrine is designed to further.'" McCarthy, 112 S. Ct. at 1087 (quoting West v. Bergland, 611 F.2d 710, 715 (8th Cir. 1979), cert. denied, 449 U.S. 821, 66 L. Ed. 2d 23, 101 S. Ct. 79 (1980)). In particular, the Supreme Court observed in McCarthy that the interests of a party in obtaining prompt judicial review may weigh heavily against requiring administrative exhaustion in situations where, even though "the administrative decisionmaking schedule is otherwise reasonable and definite, a particular plaintiff may suffer irreparable harm if unable to secure immediate judicial consideration of his [or her] claim." 112 S. Ct. at 1087; see also 5 JACOB A. STEIN, ET AL., ADMINISTRATIVE LAW, § 49.02 , at 49-50 (1993). For instance, in Bowen v. City of N. Y., 476 U.S. 467, 106 S. Ct. 2022, 90 L. Ed. 2d 462 (1986), the Supreme Court held that a federal district court did not err in allowing persons who had not exhausted their administrative remedies to challenge the denial of disability benefits to them. Otherwise, the Court observed, "the claimants in this case would be irreparably injured were the exhaustion requirement now enforced against them." Id. at 483.
For this reason, we are unwilling to say, as a rule of general application, that a disappointed bidder who alleges irreparable harm as the result of improper agency action must nevertheless always await the CAB's decision before seeking relief in the trial court. Of course, the protestor must still show that he or she is entitled to such extraordinary relief in the individual case. We now turn to that inquiry.
IV. WAS GIA ENTITLED TO A PRELIMINARY INJUNCTION?
Thus far we have considered only the trial court's general authority to issue a preliminary injunction to a disappointed bidder on a District contract pending the completion of the bidder's protest to the CAB. We now consider the more particular question whether, on the facts of this case, GIA was entitled to such relief. *fn17
A. Standard for Granting Preliminary Injunctive Relief
"The decision to grant or deny preliminary injunctive relief is committed to the sound discretion of the trial court." Stamenich v. Markovic, 462 A.2d 452, 456 (D.C. 1983). In exercising its discretion, however, the trial court must consider the following criteria:
A preliminary injunction is an extraordinary remedy, and the trial court's power to issue it should be exercised only after careful deliberation has persuaded it of the necessity for the relief. A proper exercise of discretion requires the trial court to consider whether the moving party has clearly demonstrated (1) that there is a substantial likelihood he [or she] will prevail on the merits; (2) that he [or she] is in danger of suffering irreparable harm during the pendency of the action; (3) that more harm will result to him [or her] from the denial of the injunction than will result to the defendant from its grant; and, in appropriate cases, (4) that the public interest will not be disserved by the issuance of the requested order.
Wieck, 350 A.2d at 387.
The trial court must be especially careful where, as here, the requested relief would enjoin agency action pending the outcome of administrative review. "The circumstances that will justify . . . interference with non-final agency action must be truly extraordinary. Public Util. Comm'r of Or. v. Bonneville Power Admin., 767 F.2d 622, 630 (9th Cir. 1985). In such a case the trial court must bear in mind that it is acting in a field that is normally confided to the agency's expertise and must "give serious weight to the obviously disruptive effect which the grant of the temporary relief . . . likely to have on the administrative process." Sampson v. Murray, 415 U.S. 61, 83, 39 L. Ed. 2d 166, 94 S. Ct. 937 (1974). Moreover, as the United States Court of Appeals for the District of Columbia Circuit has observed,
In the field of government procurement the courts must be sedulous to heed the admonition that their authority to vacate and enjoin action that is illegal must be exercised with restraint lest the courts fall into the error of supposing that they may revise "action simply because happen to think it ill-considered, or to represent the less appealing alternative solution available."
M. Steinthal & Co. v. Seamans, 147 U.S. App. D.C. 221, 230-31, 455 F.2d 1289, 1298-99 (1971) (quoting Calcutta E. Coast of India & E. Pakistan/USA Conference v. Federal Maritime Comm'n, 130 U.S. App. D.C. 261, 264, 399 F.2d 994, 997 (1968)); see Sea-Land Serv., Inc. v. Brown, 600 F.2d 429, 434-35 (3d Cir. 1979). B. Review of the Trial Court's Analysis
In reviewing the trial court's exercise of discretion, "our role . . . is not to resolve the merits of the underlying dispute between the litigants," except insofar as "the action of the trial court turns on a question of law or statutory interpretation." Don't Tear It Down, Inc. v. District of Columbia, 395 A.2d 388, 390, 391 (D.C. 1978). In undertaking our review, we must
(1) examine the trial court's findings and Conclusions to see if they are sufficiently supported by the record; (2) assure that the trial court's analysis reflects a resolution of all the issues which necessarily underlie the issuance of an injunction; and (3) inquire into any other claims of an abuse of discretion by the trial court.
Id. at 390-91 (quoting Wieck, 350 A.2d at 387) (brackets omitted). In this case, we conclude that the trial court's analysis was flawed in several respects. 1. Irreparable Harm
Most strikingly, the trial court failed to make any finding that GIA would suffer irreparable harm absent an injunction. This is a serious omission. *fn18 In determining whether to grant a motion for a preliminary injunction, "the most important inquiry is that concerning irreparable injury . . . because the primary justification for the issuance of a preliminary injunction 'is always to prevent irreparable injury so as to preserve the court's ability to render a meaningful decision on the merits.'" Wieck, 350 A.2d at 387-88 (quoting Canal Auth. v. Callaway, 489 F.2d 567, 576 (5th Cir. 1974)). The necessity for specific and extensive findings on this point becomes all the greater where, as here, the trial court is being asked to interfere with government action pending agency review.
In the course of discussing the comparative harm to GIA and to QDP, the trial Judge did mention that GIA faced a loss of 50 percent of its revenue and might be forced to lay off as many as four employees. But the trial court did not determine whether such a loss would be "irreparable." Nor can we say on this record, as a matter of law, that GIA necessarily faced irreparable harm.
First, it is not clear that the potential loss in revenue faced by GIA would translate into an equally serious loss in profits. See Big Country Foods v. Board of Educ. of Anchorage Sch. Dist., 868 F.2d 1085, 1088 (9th Cir. 1989) (loss of income, without any demonstration of lost profits, insufficient to show irreparable harm).
Second, assuming that the loss of the benefits administration contract would reduce GIA's profits, that alone would not have been sufficient to show irreparable harm. "Economic loss does not, in and of itself, constitute irreparable harm," unless the "loss threatens the very existence of the movant's business." Wisconsin Gas Co. v. FERC, 244 U.S. App. D.C. 349, 354, 758 F.2d 669, 674 (1985); see also Sampson, 415 U.S. at 91-92 (loss of income and damaged reputation fall far short of showing of irreparable injury required to justify temporary injunction reinstating employee). Thus, courts have denied injunctive relief to bid protestors who cannot show any potential injury more serious than mere pecuniary loss. See Cunningham v. Adams, 808 F.2d 815, 822 (11th Cir. 1987) (lost profits and loss of airport concession insufficient to show irreparable harm); Vikonics, Inc. v. United States, 749 F. Supp. 315, 319 (D.D.C. 1990) (drop in stock value, alleged difficulty in raising capital, and potential drop in bond rating insufficient to show irreparable harm); M.C. Thomas Constr. Co. v. St. Louis, 679 F. Supp. 908, 909 (E.D. Mo. 1988) (fact that contract would improve company's financial position insufficient to show irreparable harm). In this case, while the trial Judge stated that GIA might be forced to lay off employees, he never suggested that GIA's existence was endangered. *fn19
Third, while the trial Judge stated generally that GIA had no adequate legal or administrative remedies, he did not specifically consider whether the remedies that the CAB could have ordered might have provided adequate compensation for GIA's harms. For example, counsel for the District suggested that, although the CAB could not award interim relief, once it had made its findings the CAB could require the District to restart the entire contract, including the base year.
2. Balancing the Harms to the Parties
As we noted above, before awarding injunctive relief the trial court must determine that more harm will result to the movant from the denial of the injunction than will result to the nonmoving parties from its grant. That was not the case here, however. Comparing the possible effects of an injunction on QDP with the harm that GIA might suffer in the absence of an injunction, the trial court found only that "neither party will be harmed appreciably more than the other by the court's decision." Furthermore, the trial court should have added into this calculus not only the extra time and effort that would be expended by the District in rebidding the contract, but also the substantial confusion and claim-processing delays that the District's employees would suffer as a result of this process. See Amalgamated Transit Union v. Donovan, 554 F. Supp. 589, 599 (D.D.C. 1982) (court must consider harm not only to party opposing injunctive relief but also to those parties not before court who may be interested in proceedings). The trial court acknowledged these problems in considering the "public interest" test but failed to consider them in balancing the equities between the parties. When one adds these factors to what was, in the trial court's view, a fairly even situation, it becomes apparent that in reality the harm the injunction was likely to impose upon QDP, the District, and the District's employees in processing their claims significantly outweighed the potential harm faced by GIA in the absence of an injunction.
3. Likelihood of Success
The trial court concluded that there was a substantial likelihood that GIA would succeed in its protest before the CAB. In the end, however, the CAB rejected GIA's bid protest. Of course, we will not Judge the trial court's determination by hindsight. Nor do we assume that the CAB's decision was necessarily correct, since GIA's appeal of that decision is still pending. We note the contrasting results, however, because they highlight the difficulty that a court faces in predicting a party's likelihood of success on the merits in an administrative forum, where the issues are often technical and the standards for judgment specialized.
In this case, for instance, it is apparent that the trial court gave little weight to the contracting officer's determination, after reviewing Parnham's convictions, that QDP was still a responsible contractor. By contrast, the CAB, applying its own established precedents, gave that determination considerable deference:
This Board will not reverse an affirmative determination of responsibility, which is largely a business judgment, unless the protestor shows possible fraud or bad faith on the party of procurement officials, or that the solicitation contains definitive responsibility criteria which have not been met.
40 D.C. Reg. at 4518.
Where a trial court is attempting to predict the outcome of an administrative review, it is incumbent upon the court to familiarize itself with the applicable criteria used by the review board. The parties also have a responsibility to aid the court in this task. While we do not suggest that the court is absolutely obliged to adhere to those criteria if it truly believes them to be wrong, it should generally defer to an administrative review board's expertise in developing agency review procedures and standards, leaving challenges to those procedures and standards to be dealt with on direct appeal.
4. The Public Interest
The trial court concluded that the public interest overwhelmingly favored issuing an injunction, in order to send "a message to all companies that seek to contract with the District of Columbia that they can not profit from their misrepresentations -- that any contract won through those methods is as fragile and ephemeral as the cherry blossoms of April."
We appreciate the trial court's efforts to do Justice and its strong concern that QDP may have profited from deceit. But the court must also bear in mind that a preliminary injunction is an extraordinary remedy, especially where, as here, it interferes in a case that is already before another tribunal. In such circumstances the trial court must exercise restraint and should generally refrain from granting emergency relief unless the potential harm to the movant is great and the likelihood of success on the merits particularly strong. As we noted above, the primary goal of a preliminary injunction is to prevent irreparable harm to the movant. A preliminary injunction is ill-suited to serve punitive ends.
Accordingly, we conclude that the trial court abused its discretion in issuing the injunction in this case.
Because the injunction in this case was erroneously issued, the civil contempt order requiring the District to pay fines to GIA cannot stand. *fn20 See (supra) note 5 and accompanying text. Accordingly, we reverse and remand this case for vacation of the contempt order.