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12/31/97 L. B. FOSTER COMPANY v. SOUTHEASTERN

December 31, 1997

L. B. FOSTER COMPANY, APPELLANT
v.
SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY



Appealed From No. 1164 December Term, 1996. Common Pleas Court of the County of Philadlephia. Judge COHEN.

Before: Honorable James Gardner Colins, President Judge, Honorable Joseph T. Doyle, Judge, Honorable Bernard L. McGINLEY, Judge, Honorable Doris A. Smith, Judge, Honorable Rochelle S. Friedman, Judge, Honorable Jim Flaherty, Judge. Opinion BY Judge Flaherty.

The opinion of the court was delivered by: Flaherty

OPINION BY

JUDGE FLAHERTY

FILED: December 31, 1997

L.B. Foster Company (Foster) appeals from an order of the Court of Common Pleas of Philadelphia County (trial court) denying Foster's request for a preliminary injunction to prohibit Southeastern Pennsylvania Transportation Authority (SEPTA) from awarding a contract to a competitive bidder, Progress Rail Services (Progress), on the grounds that Progress' bid did not comply with the Pennsylvania "Buy American Act," *fn1 (the State Act) because a majority of the steel contained in its bid was produced in a foreign country, even though those steel products were available from American producers. We vacate and remand.

On January 30, 1996, SEPTA advertised for bids on a contract for public works to supply girder rail switches, crossings and accessories, designated as Sealed Bid Number 03056 (the bid request). The bid request called for bidders to furnish all special trackwork, i.e., rails, castings, and accessories, including, switches with switch machines, manual switches and switch heaters, to provide a complete layout for installation at two sites in Philadelphia. This public works project was assisted with Federal Transit Administration funds.

SEPTA sent a bid package out to all prospective bidders. The bid package included, inter alia, Instructions to Bidders, contract specifications, contract compliance requirements and a "Steel Products Certificate" and a "Buy America Certificate." The Steel Products Certificate was included pursuant to the State Act. The State Act provides that public agencies which seek bids for contracts on public works require that the bidders certify that the steel products used on such public works be steel made in the United States as defined in the State Act. 73 P.S. §§ 1884 and 1886. The State Act essentially requires that to qualify as domestic steel products, the product must contain at least 75% domestic steel. 73 P.S. § 1886 (the definition of "steel products").

The Buy America Certificate was included pursuant to the Federal Transit Administration Buy America Requirements as set forth in the Surface Transportation Assistance Act of 1982, as amended, 49 U.S.C. § 5323(j) (the Federal Act) and in the regulations set forth in 49 C.F.R. § 661. The Federal Act essentially requires that 100% of the steel, iron and manufactured goods in a project supported by Federal Transit Authority funds be produced in the United States. 49 U.S.C. § 5323 (j)(1). The Buy America Certificate requires that bidders certify that either they can comply with the Federal Act's requirements or that they are seeking a waiver from those requirements. Article 11 of SEPTA's Instructions to Bidders informed prospective bidders that the bid package submitted by the prospective bidder to SEPTA must include (1) a signed bid proposal form, (2) a signed Steel Products Certificate, and (3) a signed Buy America Certificate. Thus, the bidders had to certify that they met both the requirements of the State Act and the Federal Act or that they sought a waiver from the requirements of the Federal Act.

A total of five bidders responded to SEPTA. The bid opening was October 1, 1996. SEPTA determined that the lowest bidder was non-responsive to the contract specifications. The next lowest bidder was Progress Rail. Foster was the next lowest bidder. None of the bidders were able to execute the Buy America Certificate. Thus, all the bidders sought a waiver of the Federal Act's requirements.

The record indicates that Foster's bid included roughly 95% by cost domestic steel in its proposal. The other 5% by cost was foreign steel comprising girder rails specified by SEPTA in its bid request. These particular girder rails were not produced domestically and therefore could only be obtained from foreign sources. In contrast, Progress Rail's bid, in addition to the foreign-sourced girder rail, also indicated that Progress Rail proposed to procure the castings required by the SEPTA contract - which represents the largest of the contract components in terms of cost - from a foreign source. Foster avers that no more than 20% of the steel by cost proposed to be used by Progress Rail in its contract is domestically produced.

On or about November 1, 1996, SEPTA announced its intention to award the contract to Progress Rail. On November 7, 1996, Foster wrote to SEPTA, protesting the award of the contract to Progress Rail, asserting inter alia, that Progress Rail's bid did not comply with the State Act. After an exchange of letters between Foster and SEPTA proved fruitless, Foster filed for a preliminary injunction in the trial court.

In order for a court to properly grant a preliminary injunction, it must analyze the following factors: (1) that relief is necessary to prevent immediate and irreparable harm which cannot be compensated by damages; (2) that greater injury will occur from refusing the injunction than from granting it; (3) that the injunction will restore the parties to the status quo as it existed immediately before the alleged wrongful conduct; (4) that the alleged wrong is manifest, and the injunction is reasonably suited to abate it; and (5) that the plaintiff's right to relief is clear. Lewis v. City of Harrisburg, 158 Pa. Commw. 318, 631 A.2d 807 (Pa. Commw. 1993). In denying Foster's request for a preliminary injunction, the trial court below concluded "one of the requirements for injunctive relief is that the petitioner's right to ultimate relief must be clear, and here petitioner's right is at best dubious." (Trial Court slip op. at 5.) Thus, the trial court concluded that Foster's interpretation of the State Act as prohibiting the contract from being awarded to a bidder whose bid contains steel products from a foreign source where those steel products are available domestically is dubious.

Only if it is plain that no grounds exist to support the decree of the lower court or that the rule of law relied upon was palpably erroneous or misapplied, will an appellate court interfere with the decision of the Chancellor. Lewis, 631 A.2d at 810, quoting, Roberts v. Board of Directors of School District of Scranton, 462 Pa. 464, 469, 341 A.2d 475, 478 (1978)(emphasis added). We are aware of our Supreme Court's guidance that an appellate court does not inquire into the merits of the controversy upon review of a trial court's Disposition of a preliminary injunction motion. Nevertheless, given that the lower court decided this motion upon the question of whether Foster's right to relief was clear, the threshold question is whether the trial court's Conclusion that the State Act would not clearly provide a right to relief, presents a question of law for this court, as the trial court's Disposition hinges upon an interpretation of the State Act. See Lewis, 631 A.2d at 810, citing, Riverside School Board v. Kobeski, 146 Pa. Commw. 106, 604 A.2d 1173, (Pa. Commw. 1992) ("Because one of the elements which the moving party must establish is that 'his right to relief is clear,' it is necessary that the moving party be able to show that he has a reasonable likelihood of success on the merits. It is thus entirely proper for a court to consider testimony going to the merits to this extent....) See also Philadelphia Suburban Corp. v. Board of Finance and Revenue, 535 Pa. 298, ...


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