DocketNumber: C.A. No. PC 07-0296
Judges: <bold><underline>INDEGLIA, J.</underline></bold>
Filed Date: 3/1/2007
Status: Precedential
Modified Date: 7/6/2016
The current tow list policies and procedures have been the subject of extreme public scrutiny throughout their existence. Allegedly, past mayoral administrations demanded campaign contributions from towing companies in order to maintain a position on the tow list. Some time in 2003, in an attempt to purge the tow list of corruption, Cicilline caused the Providence Police Department ("PPD") and the necessary City boards to promulgate a Request for Proposal ("2003 RFP"). According to Defendants, the 2003 RFP was a "comprehensive set of regulations and procedures designed to make the bidding procedure more transparent and the City's regulation of the process more effective." (Defs' Memo. 2.) Pursuant to this 2003 RFP, the City of Providence was to *Page 3 be divided into four (4) separate zones, and through a bid process, the City would select two (2) tow companies to operate in each zone. The 2003 RFP would effectively end the relationship between the City of Providence and approximately half of the tow companies on the old tow list, at least until the time came to renew contracts made pursuant to the RFP. The 2003 RFP mandated that the eight (8) towing companies enter into contracts with the City of Providence, through which the tow companies would agree to remit certain monies to the City of Providence. The contracts would call for the tow companies to agree to remit, at a minimum, twenty percent (20%) of the tow fee and ten percent (10%) of the storage fee, to the City for each and every tow. According to Defendants, this revenue "was intended to compensate the City for the considerable expenses connected with implementing the RFP as well as the City's significant role in keeping the City's streets free of various obstacles." (Def's Memo. 2.)
In April 2003, a few months following the promulgation of the 2003 RFP, a group of tow companies and the Rhode Island Public Towing Association (also herein named as a Plaintiff) filed suit to enjoin the implementation of the 2003 RFP. The Defendants agreed in 2003 to halt the implementation of the 2003 RFP until Plaintiffs' suit was decided by this Court. The 2003 complaint contained four (4) main arguments: (1) the City of Providence was without the legislative power to create the relationships and contracts with towing companies contemplated by the RFP; (2) the 2003 RFP was preempted by the various delineated ratemaking powers of the PUC; (3) the revenue-generating fees contained in the contracts pursuant to the 2003 RFP constituted a confiscatory taking in violation of the United States Constitution; and (4) the revenue-generating *Page 4 fees contained in the contracts pursuant to the 2003 RFP constituted an illegal tax.
On July 7, 2003, Plaintiffs' motion for a declaratory judgment and its request for a permanent injunction on its complaint were denied by a Justice of the Superior Court. Plaintiffs appealed this ruling, and on November 17, 2006, the Supreme Court stated:
"During the course of oral argument, it was disclosed that an amended Request for Proposals (RFPs) had been issued by the defendants. Because this appeal was based on an RFP that is no longer in effect, we deem this appeal non-justiciable. We therefore dismiss the appeal on mootness grounds; but do so without prejudice to the plaintiff raising a new challenge to the modified RFP and contracts." Rhode Island Public Towing Association, Inc. et al. v. David N. Cicilline et al., No. 2005-373-A. (R.I., filed Nov. 17, 2006) (Order).
Following the dismissal of the 2003 lawsuit and prior to the Supreme Court's ruling on appeal, Defendants implemented the 2006 version of the RFP ("2006 RFP"), which is the subject of the instant matter. Parenthetically, this Court notes that while Defendants believe the 2006 RFP is virtually the same in all material respects to the 2003 RFP, Plaintiffs vehemently deny this. It does not appear that the Supreme Court made any judgment with regard to the differences between the 2003 and 2006 RFPs. Its ruling is confined to the statement that the 2003 RFP was "no longer in effect" at the time of judgment. As noted above, Defendants, as part of their argument in the instant matter, contend that the 2003 and 2006 RFPs are materially identical.
Pursuant to the 2006 RFP, tow companies were required to submit their bids by June 26, 2006. The bid period was extended by the City to July 24, 2006, and on that date all of the submitted bids were opened. Seventeen (17) bids in all were submitted to the City. On or about December 19, 2006, following an examination of the bids and after the Supreme Court decision on the 2003 RFP, a recommendation was made to the Board *Page 5 of Contract and Supply. The recommendation listed the eight (8) towing companies, two (2) for each of the four (4) zones, that had been selected out of the seventeen (17) original bidders. On December 26, 2006, the Board of Contract and Supply accepted the recommendation. Currently, Defendants are preparing contracts which mirror the requirements of the 2006 RFP.
On January 22, 2007, Plaintiffs filed their Verified Complaint for Declaratory Judgment and Injunctive Relief. The Verified Complaint and accompanying memorandum delineate several bases upon which Plaintiffs request this Court declare the 2006 RFP to be invalid and enjoin Defendants implementation of it. Defendants challenge the bid process as a grant of illegal franchises; the "referral fee" as a usurping of the PUC's ratemaking authority; the "referral fee" as an illegal tax; the RFP as an unlawful confiscatory taking and denial of certain Constitutional rights; and the RFP process as "secret," "non-public," and "arbitrary and capricious." Further, at oral argument, both parties waived certain claims in the interest of moving the case to a speedy resolution. Defendants waived any rights to a claim or defense pursuant to G.L. 1956 §
In Rhode Island, "[t]he law of the case doctrine provides that, after a judge has decided [a] . . . `matter . . . a second judge, confronted at a later stage of the suit with the same question in the identical matter, should refrain from disturbing the first ruling.'" Balletta v.McHale,
Applying the law of the case doctrine to the within matter, Defendants request that this Court find that the judgment in the 2003 lawsuit serves as the law of this case. In the 2003 case1 — actually argued on July 7, 2005 — the attorney for the Plaintiffs outlined the "four allegations" made in that suit, three of which are essentially repeated in this action. (Tr. 7-8.) "[A]llegations . . . that an illegal franchise is created by this contract; that it is a violation of the PUC regulations for the City to drive [sic] revenues from the towing fees; and . . . [that] the fee that's generated, to the extent that it would be in excess of any cost recoupment, is an indirect and illegal tax . . ." were all made in the 2003 lawsuit, and are all effectively repeated in front of this Court. (Id.) This Court in 2003 "reviewed the pleadings, [did its] own research, [and] heard the argument" before concluding "that the plaintiffs . . . failed to sustain the various burdens imposed upon them by law and which would entitle them to relief." (Tr. 26.) For that reason, this Court denied relief on the complaint for a declaratory judgment and injunctive relief. (Id.) Accordingly, the law of the case doctrine could prevent this Court from now re-hearing the same issues that have already been addressed.Balletta,
Nevertheless, this Court will not dismiss Plaintiffs' Verified Complaint for Declaratory Judgment and Injunctive Relief on these grounds. While it is true that the record in this matter has not expanded by any significant measure, the position of the parties in front of this Court is markedly different than it was in the 2003 case. As the parties are currently situated — with the bidding process over and the City currently drawing contracts — it would be unfair to characterize the within action as containing the "same questions" as the 2003 lawsuit. Balletta,
Under §
"[n]o common carrier of property by motor vehicle shall charge or demand or collect or receive a greater or less compensation for transportation or any service in connection therewith between points enumerated in the tariff than the rates and charges specified in the filed tariffs in effect at that time; and no carrier shall refund or remit in any manner or by any device, directly or indirectly, or through any other person, any portion of the rates or charges so specified, or extend to any person any privileges or facilities for transportation in intrastate commerce, except such as are specified in its tariffs." Id.
Section
Given the foregoing, this Court is reminded of the basic tenets of Rhode Island preemption law. It is clear in Rhode Island that when a "municipal ordinance [is] in direct and material conflict with a state law of general character or state wide concern [that it] is invalid, and that whether the two so conflict depends on what the Legislature intended when it enacted the statute." Town of Glocester v. R.I. SolidWaste Management Corp.,
While it is abundantly clear, as Plaintiff asserts, that the PUC regulates tow operators — mainly through the granting of certificates of public convenience and necessity — it is equally clear that the PUC has never sought to regulate or administer tow lists. The Towing Storage Act enunciates its purpose to be an assurance to owners of *Page 11
non-consensually towed vehicles of a fair and reasonable process guaranteed by a set of strict procedures and uniform tow rates. Section
Plaintiffs further contend that the "referral fee" provisions of the 2006 RFP purports to set rates or, at least alter the rates, mandated by the PUC pursuant to their statutory power in G.L. 1956 §
It is clear from the plain language in the statute that the Legislature's mandate concerning the rates charged and prohibition of rebates or remissions is in reference to the transaction between the tow company and the customer. Further, as mentioned above, §
Section
"Any town or city, by vote of the town council or city council, may pass ordinances or make contracts to be executed by its proper officers, *Page 13 granting rights and franchises in, over, or under the streets and highways in the town or city to the corporations, as are provided for in section
39-17-2 , and for the purposes and upon the conditions specified in this chapter."
Specifically, §
In order for this Court to declare the 2006 RFP to be violative of §
While the Rhode Island Supreme Court has never directly addressed whether placement on a tow list or contracting to tow for a city or town rises to the level of a constitutionally protected right, several federal courts have. In Piecknick v. Commonwealth of Pennsylvania,
"The crucial question in assessing whether there is a property right in such a list is `whether any state decisional law, statute, or regulation having the force of law authorized or mandated creation of the entitlement that plaintiffs claim.' As there is no Rhode Island decisional law, statute or regulation affording [the tow company] such an entitlement, this Court finds that [the tow company] did not have a constitutionally protected property right in remaining on the tow lists." Sterry Street Auto Sales v. Pare, No. 04-5086,
2005 WL 524806 at *3 (R.I.Super. Mar. 3, 2005) (quoting Morley's Auto Body, Inc.,70 F.3d at 1214 ).
In the instant matter, it is unnecessary to determine whether the Legislature contemplated the list of activities in §
The Supreme Court of Rhode Island has long recognized the "distinction between a tax — which is primarily a revenue-raising measure — and a licensing fee — which is primarily a regulatory imposition." Kent CountyWater Authority v. State (Department of Health),
"`[a]ll regulatory fees are necessarily aimed at raising `revenue' to defray the cost of the regulatory program in question, but that fact does not automatically render those fees `taxes'. . . . If regulation is the primary purpose of the fee measure, the mere fact that the measure also generates revenue does not make the imposition a tax.'" Kent County Water Authority,
723 A.2d at 1135 (quoting Sinclair Paint Co. v. State Board of Equalization,937 P.2d 1350 ,1358 (Cal. 1997) (emphasis in original)).
Plaintiffs' argument that the referral fee imposed by the 2006 RFP represents an illegal tax is unavailing. This Court notes initially that the referral fee paid by the towing companies to the City cannot and will not affect the tow and storage rates charged to the owner of the towed vehicle. As discussed above, those rates are set by the PUC and must be imposed unaltered and uniformly by all towing companies. Section
In the face of this burden and the clear rule from Kent County WaterAuthority — that fees charged to offset costs incurred in connection with a regulatory program are not a tax — Plaintiffs have presented no evidence to this Court that the referral fee does not exist to offset costs. In fact, it was a Defendant, Alan Sepe, who testified that the referral fee percentages in the 2006 RFP actually came about after comparing the number of tows in the City and the towing company revenue derived from those tows with the cost to the *Page 17
City, which includes the payment of and for police, dispatchers, clerks, and other such municipal services. Mr. Sepe testified that the referral fee was not intended to generate extra revenue for the City, but instead existed as a necessary remuneration. Despite Mr. Sepe's testimony that the referral fee money most likely would be deposited into the City's general treasury, that fact alone, despite Plaintiffs' contention, "does not ipso facto convert them into taxes." Kent County WaterAuthority,
The breadth of discretion allowed the awarding authority in a public bid process is well settled in Rhode Island:
*Page 18"[T]he hurdle to overcome in overturning a decision made by the awarding authority in the public bid process is very high indeed. `It is well settled that, in reviewing the bidding process, the Judiciary will interfere with the award of a state or municipal contract only in the event that the awarding authority has `acted corruptly or in bad faith, or so unreasonably or so arbitrarily as to be guilty of a palpable abuse of discretion.''" Blue
Cross Blue Shield of Rhode Island v. Najarian,
865 A.2d 1077 ,1081 (R.I. 2005) (citations omitted).
Stated differently, "[w]hen officials in charge of awarding a public work's contract have acted fairly and honestly with reasonable exercise of a sound discretion, their actions shall not be interfered with by the courts," and further, this exercise of discretion "shall be entitled to a presumption of correctness" Id. (citation omitted). Courts have been advised to "exercise great care before issuing an injunction vacating an award of either a state or municipal contract," because "government by injunction save in the most compelling and unusual circumstances is to be strictly avoided." Id. at 1084 (quoting Truck Away of Rhode Island,Inc. v. Macera Bros. of Cranston,
Plaintiffs' contention that the bid process and the discretion exercised by Defendants throughout the bid process amounted to an abuse of discretion is unsupported by the evidence before this Court. It is the Plaintiffs' burden to show that Mr. Sepe, as they allege, or any other Defendant, exercised his or its discretion so as to be violative of the standard set in Blue Cross Blue Shield of Rhode Island.Id. at 1081-84. Plaintiffs complaint is particularly devoid of any specific actions which would tend to show a "palpable abuse of discretion." Id. Further, as Defendants note in their memorandum, Plaintiffs filed no formal, specific complaints concerning the bid process with the appropriate city officials or the City Solicitor prior to instituting this lawsuit.
Contrary to the Plaintiffs' bald assertion that the bid process and procedure was "arbitrary and capricious and a clear abuse of discretion," there is an overwhelming *Page 19 amount of evidence before this Court, primarily through Mr. Sepe's testimony, that shows Defendants exercised their discretion well within the wide boundary set by Blue Cross Blue Shield of Rhode Island. Mr. Sepe testified that prior to the final version of the 2006 RFP, there was extensive research on how other cities dealt with their towing companies. Further, Mr. Sepe indicated that the PPD was an active voice in the construction of the 2006 RFP. He added that the PPD's insight and knowledge of the non-consensual towing business in the City of Providence was a driving force in the creation of the 2006 RFP. Mr. Sepe also noted that the act of dividing the City of Providence into four (4) zones was not a unique idea, and in fact, had been observed as successful in other cities. He also alluded to the creation of a board, which was charged with the task of oversight and review of the RFP. Also, in terms of how towing companies were actually selected, this Court notes that the 2006 RFP contains various qualitative criteria, such as square footage of the storage facility and reputation in the community. Lastly, the Mr. Sepe testified research by the PPD on the bidding companies was performed independently from the persons charged with selecting the eight (8) winning bids.
In light of the abundance of evidence showing the exercise of sound discretion, and the dearth of evidence showing a palpable abuse of discretion, this Court finds the bid process and procedure involved with the 2006 RFP easily satisfies the requirements of Blue Cross BlueShield of Rhode Island. The evidence does not show that in the bid process and procedure the City's conduct amounted to acts of bad faith or corruption, or that it was so unreasonable or arbitrary so as to amount to a palpable abuse of discretion. Blue Cross Blue Shield ofRhode Island. Id. at 1081. *Page 20
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