Thursday, June 11, 2015
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S.C. to Decide if Company Can Sue Rival Over Prevailing Wages
By KENNETH OFGANG, Staff Writer
The state Supreme Court agreed yesterday to decide whether a construction company can sue a competitor whose violations of the prevailing wage law allegedly enabled it to submit lower bids and thereby gain contracts that would otherwise have gone to the plaintiff.
The justices, at their weekly conference in San Francisco, unanimously granted review of the ruling of Div. Eight of this district’s Court of Appeal in Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2015) 234 Cal. App. 4th 748.
The Court of Appeal, in a 2-1 decision, overturned a Riverside Superior Court judge’s ruling dismissing the suit by Roy Allan Slurry Seal, Inc. and Doug Martin Contracting, Inc. against American Asphalt South, Inc. The suit is one of five that the plaintiffs have filed, claiming that American Asphalt interfered with prospective economic advantage by unfairly underbidding on 23 contracts with Riverside County and with 16 cities in that county and in Los Angeles, San Bernardino, Orange and San Diego counties.
The complaints also included claims for predatory pricing under the Unfair Practices Act, and sought injunctive relief under the Unfair Competition Law, but the Court of Appeal said those claims were correctly dismissed and the plaintiffs did not seek review.
The successful bids on the contracts totaled $14.6 million. The plaintiffs claimed that if the difference between the wages required by Labor Code §§1770 and 1771, and those actually paid by the defendant, were added to the defendant’s bids, each of the contracts would have gone to one of the plaintiffs, rather than to the defendant.
The defendant demurred to all of the complaints, producing conflicting rulings. A Los Angeles Superior Court judge allowed the intentional-interference and predatory pricing claims to go forward, Riverside Judge Robert Oberholzer sustained the demurrer in its entirety, and a San Diego judge said the plaintiffs could proceed on all three causes of action.
Consolidated Appeals
The plaintiffs appealed Oberholzer’s ruling, and the Supreme Court then ordered that all of the suits be coordinated in Los Angeles Superior Court, and that all appeals be heard in this district.
Justice Laurence Rubin, writing for the Court of Appeal, said the plaintiffs’ allegations satisfied the essential elements of the intentional-interference tort, including the requirement that there be an economic relationship between the plaintiff and a third party that makes it reasonably probable the plaintiff will gain some future economic benefit.
Rubin explained that the Allan and Martin companies pled the requisite relationship by alleging that they were the lawful and second-lowest bidders, and thus had a relationship with the contracting public entities that created a probability that they would get the contracts and earn a profit. He rejected the defendant’s contention that a losing bidder cannot sue for intentional interference because the contracting process does not create an economic relationship between the government and an unsuccessful bidder or a reasonable probability of a contract being awarded.
Korea Supply Cited
The jurist cited Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, which allowed an action by the agent for the losing bidder on a Republic of Korea defense contract. The agent alleged that Lockheed Martin violated the Foreign Corrupt Practices Act by providing bribes and sexual favors to South Korean officials, and thus procured a contract that would have gone to the plaintiff’s principal had it been awarded on the merits, thereby depriving the plaintiff of a multimillion dollar commission.
Justice Madeleine Flier concurred in the opinion, while Justice Elizabeth Grimes dissented.
Grimes argued that there is no “existing economic relationship” between a bidder and the public entity soliciting its bid, and that even if there is one, it cannot be said that there is a probability of future economic benefit to any particular bidder on any particular contract.
In other conference action, the justices:
•Left standing a First District ruling that has affirmed the dismissal of a disbarred lawyer’s defamation suit against the State Bar, based on the anti-SLAPP statute.
Div. Four said Patrick A. Missud’s complaint, in which he claimed to have been libeled by the publication of a State Bar Court opinion recommending his disbarment, arose from protected activity in connection with an official proceeding, and that he failed to show a likelihood that he would prevail.
Missud was disbarred earlier this year, in large part due to vexatious litigation in which he represented himself against various defendants involved in the sale of a Nevada home that he bought in 2004, two years after being admitted in California.
Missud’s Superior Court complaint sought $192 million in damages and equitable relief, including the dissolution of the State Bar. But the Court of Appeal held in an unpublished opinion in Missud v. State Bar of California, A141459 that the suit was correctly dismissed.
None of the court’s justices voted to grant review. Missud, oddly, requested that the Court of Appeal’s ruling against him be published, but the high court denied that request as well.
•Declined to review a ruling by this district’s Div. Eight that federal law bars cable subscribers from suing over exclusive rights deals with professional sports teams, the costs of which are passed on to all customers—including those who don’t watch the games—in the form of higher charges.
Upholding a ruling by Los Angeles Superior Court Judge Amy Hogue, the panel held, in an opinion by Rubin, that a putative class action brought by Time Warner Cable subscribers is preempted by the Cable Television Consumer Protection and Competition Act of 1992 and its implementing regulations.
The plaintiffs sued TWC, along with the Los Angeles Dodgers and Los Angeles Lakers, claiming that the defendants’ rights deals violate the Unfair Competition Law by fostering a monopoly in which TWC acts as both programmer and distributor, creates new channels to carry the games, and forces all subscribers to pay increased charges rather than offer the channels on an “a la carte” basis to those willing to pay for the programming.
The case is Fischer v. Time Warner Cable Inc. (2015) 234 Cal. App. 4th 784.
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