United States District Court, E.D. Pennsylvania
July 20, 2004.
ALLIED PAINTING INC.,
DELAWARE RIVER PORT AUTHORITY OF PENNSYLVANIA AND NEW JERSEY.
The opinion of the court was delivered by: MARY A. McLAUGHLIN, District Judge
MEMORANDUM AND ORDER
This dispute arises from the decision by the Delaware River
Port Authority of Pennsylvania and New Jersey ("DRPA") not to
award a contract to paint the Walt Whitman Bridge to the lowest
bidder, Allied Painting, Inc. ("Allied"). Allied claims that DRPA
violated its procedural and substantive due process rights and
that the decision not to award Allied the contract was arbitrary
The defendant filed the present motion to dismiss, arguing that
Allied has no property interest entitled to either procedural or
substantive due process protection, and procurement decisions of
DRPA are not subject to arbitrary and capricious review and, even
if they are, Allied fails to allege facts supporting such a
The Court will grant DRPA's motion to dismiss both the
procedural and substantive due process claims. The Court will deny, without prejudice, DRPA's motion to dismiss the arbitrary
and capricious claim. DRPA may renew its argument that DRPA's
procurement decisions are not subject to arbitrary and capricious
review at the summary judgment stage.
Allied is a New Jersey corporation engaged in the painting of
buildings and other structures.*fn1 DRPA is a bi-state
agency created by an interstate compact for the purpose of
building and maintaining bridges and ports between Pennsylvania
and New Jersey. Compl. ¶¶ 1-2.
In the fall of 2003, DRPA issued an invitation to interested
parties to bid on a contract for the painting of the Walt Whitman
Bridge. Allied submitted its bid on December 9, 2003, before the
deadline for submission. Along with its bid, Allied presented to
DRPA a security deposit of $500,000.00. Id. ¶¶ 9, 27. When the proposals were opened publicly, Allied's bid was found
to be the lowest. Allied's bid was complete and satisfied the
requirements of the contract offered by DRPA. Since the time of
the opening of the bids, Allied has presented a performance bond
for the remaining value of its bid as required by DRPA. Allied
has previously performed as a subcontractor in the painting of
the Walt Whitman Bridge. Id. ¶¶ 14-16, 24, 27.
On December 19, 2003, representatives of DRPA met with
officials from Allied to discuss the proposal. At this meeting
representatives of DRPA raised concerns that they had with
Allied's ability to perform the contract for the price included
in their bid. In response, Allied explained how it planned to
perform the contract at the price included in the bid and realize
a net profit. Id. ¶¶ 30-31.
DRPA also raised concerns it had with Allied's bonding company.
In response, Allied indicated that it was prepared to provide a
performance bond from another company. DRPA never requested or
compelled Allied to provide the bond from a different source.
Id. ¶¶ 32, 33.
On or about December 24, 2003, Allied orally confirmed to DRPA
that it was satisfied with its original bid and could do the work
for the amount proposed. Subsequently, around January 13, 2004,
the Vice President of Allied contacted the Chief Engineer of DRPA and was told that, in the Chief's view, there
was no reason not to award the contract to Allied. Id. ¶¶
On February 18, 2004, DRPA awarded the contract to another
bidder, Jupiter Painting Contracting Co., Inc. ("Jupiter").
Jupiter's bid was in excess of the bid submitted by Allied. Id.
The Court will discuss in turn the plaintiff's procedural due
process claim, substantive due process claim, and arbitrary and
A. Procedural Due Process
The threshold question in a procedural due process claim is
whether there has been a deprivation of an interest in life,
liberty, or property. Dugan v. Slater, 252 F.3d 670, 676 (3d
Cir. 2001); Alvin v. Suzuki, 227 F.3d 107, 116 (3d Cir. 2000).
If a deprivation of an interest is found, the second step is to
decide if due process was afforded. Ransom v. Marrazzo,
848 F.2d 398, 409 (3d Cir. 1988). In the case at hand, Allied alleges
that it had a property interest in being awarded the contract for
which it was the low bidder.
In order to have a property interest worthy of procedural due
process protection, a party must have a "legitimate claim of entitlement" created by an "independent
source such as state law." Board of Regents v. Roth,
408 U.S. 564, 576-78 (1972).
The Court of Appeals for the Third Circuit has previously
considered the applicability of procedural due process to
government procurement decisions. Indep. Enters. v. Pittsburgh
Water and Sewer Auth., 103 F.3d 1165, 1178 (3d Cir. 1997). In
Indep. Enters., the Court found that the plaintiff, a
corporation which was not awarded three contracts offered by the
Pittsburgh Water and Sewer Authority despite being the low
bidder, was not entitled to procedural due process protection. In
so finding, the Court of Appeals looked to Pennsylvania law to
see if it created a legitimate claim of entitlement to the
contracts for the low bidder. Once the Court of Appeals
determined that no such entitlement was created, and thus no
property interest existed, the procedural due process claim was
dismissed. Id. at 1177-79.
Here, given DRPA's unique position as a bi-state agency, the
Court will consider whether Pennsylvania or New Jersey law
creates a legitimate claim of entitlement in receiving a public
contract for which a party is the low bidder.
The Court of Appeals has held that under Pennsylvania law a
bidder on a government contract does not acquire an enforceable
right until they have been awarded the contract. Id. at 1178; see, e.g., R.S. Noonan, Inc. v. Sch. Dist. of the
City of York, 162 A.2d 623, 625 (Pa. 1960).
An examination of New Jersey law reveals that the nonacceptance
of the lowest bid, entered in response to an advertisement for
bids by the State, cannot be the basis of a claim brought by the
disappointed bidder. Commercial Clean Corp. v. Sullivan,
222 A.2d 4, 7 (N.J. 1966). Based on Indep. Enters. and Commercial
Clean, the Court concludes that neither Pennsylvania nor New
Jersey state law creates a property interest in a government
contract for the low bidder.
Because both states' law fails to create a property interest in
a contract for the low bidder, there is no source for Allied's
claim of entitlement. The procedural due process claim,
therefore, is dismissed.
B. Substantive Due Process
Allied also claims that its failure to be awarded the contract
constituted a violation of substantive due process. In Indep.
Enters., the Court of Appeals addressed the applicability of
substantive due process to government procurement decisions. The
Court of Appeals started its analysis by stating that only
fundamental property interests should receive substantive due
process protection. Indep. Enters., 103 F.3d at 1179. The Court
stated that ownership has been recognized as a property interest worthy of substantive due process protection, but prompt
compensation for providing professional services to the state and
entitlements to water and sewer services have been found not to
be worthy of substantive due process protection. Id. at 1180
In finding that the plaintiff had failed to state a substantive
due process claim, the Court of Appeals stated that it had "no
difficulty" in finding that the alleged property interest
asserted by the plaintiff was not the type of fundamental
interest subject to substantive due process protection. Because
the alleged property interest in Index. Enters. was identical
to the alleged property interest asserted in the case at hand,
this Court finds that Allied fails to state a substantive due
C. Arbitrary and Capricious Claim
Allied's final claim that DRPA's decision was arbitrary and
capricious presents a more difficult question. It is clear that a
federal agency's procurement decision may be reviewed under an
arbitrary and capricious standard. See Princeton Combustion
Research Labs., Inc. v. McCarthy, 674 F.2d 1016, 1021 (3d Cir.
1982). It is unclear, however, if DRPA, as a bi-state agency
created by an interstate compact, is a federal or quasifederal
agency subject to federal administrative law. See William S. Morrow, The Case for an Interstate Compact APA, 29
Admin. & Reg. L. News 12 (2004). If DRPA is not a quasi-federal
or federal agency, the question becomes whether DRPA as a bistate
agency is subject to the administrative laws of Pennsylvania and
New Jersey. Compare Del. River Port Auth. v. Fraternal Order
of Police, 135 F. Supp.2d 596 (E.D. Pa. 2001) (holding that new
duties could not be imposed on DRPA unless both Pennsylvania and
New Jersey's legislatures express specific intent to do so),
with Moore v. Del. River Port Auth., 80 F. Supp.2d 264
(D.N.J. 1999) (holding that substantially similar laws of
Pennsylvania and New Jersey could be applied to DRPA without the
legislatures' express intent).
Because this matter may be resolved without reaching this
unsettled question of law, the Court will allow Allied's
arbitrary and capricious claim to stand pending the outcome of
An appropriate Order follows. ORDER
AND NOW, this 19th day of July 2004, upon consideration of the
defendant's Motion to Dismiss (Docket No. 6), the plaintiff's
response thereto, and the defendant's reply, and following oral
argument held on July 2, 2004, IT IS HEREBY ORDERED that the
motion is GRANTED IN PART, and DENIED IN PART without prejudice,
for the reasons set forth in a memorandum of today's date.