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NORTHLAND EQUITIES, INC. v. GATEWAY CTR. CORP.

November 29, 1977

NORTHLAND EQUITIES, INC., Plaintiff,
v.
GATEWAY CENTER CORPORATION, Matthew B. Weinstein, Herbert A. Fogel, Richard L. Klaus, Rosemont Construction Company, First Pennsylvania Banking and Trust Company, Provident National Bank, Obermayer, Maxwell, Rebmann & Hippel, Esqs., Nowicki & Polillo, a partnership, University City Science Center, Wolf, Block, Schorr & Solis-Cohen, Esqs., Randall Whaley, Robert L. Kunzig, Arthur F. Sampson, Hart T. Mankin, Hugh Brister, Paul Cupp, Gustave Amsterdam, Isadore M. Scott, Bruce M. Baldwin, Clarence Dockens, Fred T. Corletto and Damon Childs, Defendants



The opinion of the court was delivered by: MEHRTENS

 MEHRTENS, Senior District Judge.

 Motion for Summary Judgment has been filed by the defendants on all issues in this case. As to three issues -- (1) the procurement statutes claims, (2) the general antitrust claims and (3) the claim for lost profits -- summary judgment is granted. As to the remaining issues, summary judgment is denied.

 On September 30, 1970, the General Services Administration issued a written Solicitation for Offers, No. Neg (70)-63, seeking offers to supply office space for certain socio-economic agencies at a single location in Philadelphia. A total of five bidders responded to the solicitation, which contained five specified conditions. Three of the five offers were deemed responsive: Plaintiff's, Defendant Gateway Center Corporation's and that of John Merriam. On February 18, 1971, the award was made to defendant Gateway.

 Plaintiff filed this action alleging, inter alia, that defendant Gateway received the government lease under circumstances violating certain federal statutes and regulations relating to the federal procurement process. 41 U.S.C. § 253; 41 U.S.C. § 11, P.L. No. 91-556, 84 Stat. 1442; P.L. No. 92-313, 40 U.S.C. § 606; 41 C.F.R. § 1-1.403; 4 C.F.R. § 20.1-.12; and the Antitrust Laws of the United States. (Because the procurement was to be "negotiated," 41 U.S.C. § 252(c)(10) is the proper procurement statute involved, rather than 41 U.S.C. § 253 cited by plaintiff, which applies to advertised bids.)

 The Procurement Statutes Claims

 Claiming to have been damaged by the award of the lease to Gateway, the plaintiff, an unsuccessful bidder, asserts a purported federal cause of action for recovery of damages and lost profits under the procurement provisions. Plaintiff's effort appears to be unique. There are cases under other theories of action (e.g. implied contract theory) in which standing to bring suit has been allowed. See Keco Industries Inc. v. United States, 428 F.2d 1233, 192 Ct.Cl. 773 (1970). There are, however, no reported cases under the instant circumstances.

 Defendants assert, and this court finds, that the federal procurement statutes and regulations, while providing several other remedies, do not confer a private cause of action for damages. Neither the statutes nor the regulations grant an unsuccessful bidder a statutory cause of action to recover potential lost profits or other damages. In deciding if such a remedy is to be implied, looking to those situations in which private actions have been allowed is helpful -- securities protection for investors and actions against narcotic agents based on the Fourth Amendment. Applying the standards for implying a private action in Cort v. Ash, 422 U.S. 66, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975), infra, and considering the circumstances in the past allowances of private remedies, it appears that congressional policy would not support the damage action in this case.

 This case presents a two-fold problem -- whether plaintiff has standing in the Article III sense; and whether plaintiff has a substantial legal claim cognizable in a federal court.

 It is not sufficient to merely hold, for example, that the plaintiff has standing to sue, because that holding may, in effect, say only that plaintiff has in fact been injured by the defendant. Rather, the court must at some point, if the result is to conform to the tests fashioned by the Supreme Court (See Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 90 S. Ct. 827, 25 L. Ed. 2d 184 (1970)), also hold that the plaintiff is protected by the statutes in question, as illuminated by their legislative history, and that the statutes permit plaintiff to seek damages. Plaintiff must demonstrate that it has a cause of action to redress such injury -- a right, enforceable in the federal courts, to collect damages. (See Merriam v. Kunzig, 476 F.2d 1233 (3rd Cir.) cert. denied, 414 U.S. 911, 94 S. Ct. 233, 38 L. Ed. 2d 149 (1973) Adams, J., dissenting).

 In Merriam, supra, a case involving another losing bidder in this same controversy, the Third Circuit Court of Appeals held that an unsuccessful bidder had "standing" to seek judicial review of a government contract award. (The court combined its discussion of standing and whether plaintiff had a legal claim under the general heading of "standing.") In reaching this conclusion, the court applied the standing test developed under the Administrative Procedure Act, 5 U.S.C. § 500 et seq., for review of agency action. This test is applicable when a plaintiff seeks review of administrative action, not when relief is sought against private persons, or even quasi-public corporations. Nat'l R.R. Passenger Corp. v. Nat'l Ass'n of R.R. Passengers, 414 U.S. 453, 455-56, 94 S. Ct. 690, 38 L. Ed. 2d 646 (1974). The standards for creation of an implied damage remedy are more stringent than the test applied in Merriam, supra, for standing to challenge administrative action.

 In Cort v. Ash, supra, the Supreme Court applied the following four-part test in determining whether a private remedy is implicit in a statute not expressly providing one:

 
1. Is the plaintiff one of the class for whose "especial" benefit the statute was enacted?
 
2. Is there any indication of legislative intent, explicit or implicit, either to create such ...

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