The California Supreme Court overturns the decision of the California Court of Appeals.

Do unsuccessful bidders on a public works contract have a cause of action against the successful bidder if that bidder does not pay its workers at the local prevailing wage rate?

That was the issue addressed by the California Court of Appeals and then by the California Supreme Court in Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. An article by Garret Murai in California Construction Law Blog discusses this case.

“Between 2009 and 2012, American Asphalt South, Inc. was awarded 23 public works contracts totaling more than $14.6 million throughout Los Angeles, Orange, San Bernardino and San Diego counties. Roy Allan Slurry, and another unsuccessful bidder, sued American Asphalt alleging intentional interference with prospective advantages.”

The California Court of Appeals ruled in favor of Roy Allan Slurry. “An actionable economic expectancy arises once the public agency awards a contract to an unlawful bidder, thereby signaling that the contract would have gone to the second lowest qualifying bidder.’’

The California Supreme Court disagreed. The Court explained that one of the elements of intentional interference with prospective advantage is “the existence…of an economic relationship that contains the probability of future economic benefit to the plaintiff.”

In a public bid, public agencies must “award contracts to the lowest responsible bidder, or not at all, and thus there is no ‘existing’ economic relationship between bidders and a public entity.”

This decision, according to Mr. Murai, differs from rulings in non-public bid tort actions where there is certainty concerning both the amount of the loss and that the loss would, in fact, be incurred.

Source—

California Supreme Court Finds that When it Comes to Intentional Interference Claims, Public Works Projects are Just Different, Special Even, Garret Murai, California Construction Law Blog, April 18, 2017.