IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
September 28, 2012
MBR CONSTRUCTION SERVICES, INC., PLAINTIFF
CITY OF READING; HIRNEISEN ELECTRIC, INC., INDEPENDENCE LIGHTING, INC., DEFENDANTS
The opinion of the court was delivered by: James Knoll Gardner United States District Judge
The matter before the court is Defendant City of Reading's Motion to Dismiss the Complaint, which motion was filed December 19, 2011. *fn1 On January 16, 2012 plaintiff filed its Response to Motion to Dismiss. *fn2
For the following reasons, the City's motion to dismiss is granted in part and denied in part.
Specifically, the City's motion to dismiss is granted to the extent it seeks dismissal of Counts I, II, IV, and V. Counts I and IV are dismissed with prejudice. Counts II and V are dismissed without prejudice to file an amended complaint concerning those counts.
The City's motion to dismiss is denied to the extent that it seeks dismissal of Count III.
Jurisdiction in this case is contested. However, plaintiff alleges jurisdiction pursuant to 28 U.S.C. § 1331, which provides district courts with original jurisdiction of all civil actions "arising under the Constitution, laws, or treaties of the United States.
Venue is proper pursuant to 28 U.S.C. § 1391 because the parties reside within this judicial district and because a substantial part of the events giving rise to plaintiff's claims allegedly occurred within this judicial district.
On November 18, 2011 plaintiff MBR Construction Services Inc. filed a five-count Verified Complaint against defendants City of Reading; Hirneisen Electronic, Inc.; and Independence Lighting, Inc. *fn3
Also on November 18, 2011 plaintiff filed its Motion for Preliminary Injunction and Temporary Restraining Order of Plaintiff, MBR Construction Services, Inc.
A two-day hearing was scheduled for January 9 and 10, 2012 on plaintiff's motion for a preliminary injunction and temporary restraining order. However, on December 29, 2011 plaintiff filed a notice to withdraw its motion. *fn4 By Order dated and filed December 29, 2011 I approved the notice to withdraw and cancelled the January 9 and 10, 2012 hearing.
On December 19, 2011 defendant City of Reading filed the within motion to dismiss plaintiff's complaint. Also on December 19, 2011 defendant Hirneisen Electric, Inc. filed an answer to plaintiff's complaint. *fn5 On December 21, 2011 defendant Independence Lighting, Inc. filed its answer. *fn6
STANDARD OF REVIEW
Defendant City of Reading ("the City") seeks dismissal of plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
The City contends that this court lacks subject matter jurisdiction because plaintiff's two federal claims fail to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). Accordingly, the City's motion pursuant to Rule 12(b)(1) is premised upon dismissal of plaintiff's two federal claims pursuant to Rule 12(b)(6).
However, the "failure to state a claim upon which relief can be granted does not mean that federal question jurisdiction is lacking." The Pitt News v. Fisher, 215 F.3d 354, 360 (3d Cir. 2000).
Rather, pursuant to 28 U.S.C. § 1367(a), a district court "shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution."
Further, 28 U.S.C. § 1367(c) provides that the "district court may decline to exercise supplemental jurisdiction over a claim under subsection (a) if...the district court has dismissed all claims over which it has original jurisdiction" (emphasis added). Accordingly, this court's power to decline to exercise supplemental jurisdiction is discretionary, not mandatory.
Here, the City does not contend that plaintiff's state-law claims are unrelated to its federal claims. Nor does the City contend that the court lacks subject matter jurisdiction to decide plaintiff's claim brought pursuant to 42 U.S.C. § 1983. *fn7
Therefore, plaintiff has asserted claims "arising under" the Constitution and federal law. Accordingly, Rule 12(b)(1) does not provide a basis for the relief sought by the City, and I need not elaborate further on the standard of review for a motion to dismiss under Rule 12(b)(1). Because Rule 12(b)(1) does not provide a basis for the relief requested by the City, I deny the City's motion to the extent that it seeks dismissal of plaintiff's complaint for lack of subject matter jurisdiction. *fn8
Although Rule 12(b)(1) does not provide a basis for dismissal of plaintiff's complaint, the City also contends that each Count in plaintiff's complaint fails to state a claim upon which relief can be granted and therefore dismissal is warranted pursuant to Rule 12(b)(6).
A claim may be dismissed under Federal Rule of Civil Procedure 12(b)(6) for "failure to state a claim upon which relief can be granted." A Rule 12(b)(6) motion requires the court to examine the sufficiency of the complaint. Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 102, 2 L.Ed.2d 80, 84 (1957) (abrogated in other respects by Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
Generally, in ruling on a motion to dismiss, the court relies on the complaint, attached exhibits, and matters of public record, including other judicial proceedings. Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2008).
Except as provided in Federal Rule of Civil Procedure 9, a complaint is sufficient if it complies with Rule 8(a)(2), which requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Rule 8(a)(2) "[does] not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. at 1974, 167 L.Ed.2d at 949. *fn9
In determining whether a plaintiff's complaint is sufficient, the court must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading, the plaintiff may be entitled to relief." Fowler, 578 F.3d at 210 (quoting Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).
Although "conclusory or bare-bones allegations" will not survive a motion to dismiss, Fowler, 578 F.3d at 210, a complaint may not be dismissed "merely because it appears unlikely that the plaintiff can prove those facts or will ultimately prevail on the merits." Phillips, 515 F.3d at 231. Nonetheless, to survive a 12(b)(6) motion, the complaint must provide "enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s]." Id. (quoting Twombly, 550 U.S. at 556, 127 S.Ct. at 1965, 167 L.Ed.2d at 940) (internal quotation omitted).
The court is required to conduct a two-part analysis when considering a Rule 12(b)(6) motion. First, the factual matters averred in the complaint, and any attached exhibits, should be separated from legal conclusions asserted therein. Fowler, 578 F.3d at 210. Any facts pled must be taken as true, and any legal conclusions asserted may be disregarded. Id. at 210-211.
Second, the court must determine whether those factual matters averred are sufficient to show that the plaintiff has a "plausible claim for relief." Id. at 211 (quoting Iqbal, 556 U.S. at 679, 129 S.Ct. at 1950, 178 L.Ed.2d at 884).
Ultimately, this two-part analysis is "context-specific" and requires the court to draw on "its judicial experience and common sense" to determine if the facts pled in the complaint have "nudged [plaintiff's] claims" over the line from "[merely] conceivable [or possible] to plausible."
Iqbal,556 U.S. at 680, 129 S.Ct. at 1950-1951, 178 L.Ed.2d at 884-885 (internal quotations omitted).
A well-pleaded complaint may not be dismissed simply because "it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely." Twombly, 550 U.S. at 556, 127 S.Ct. at 1965, 167 L.Ed.2d at 940-941.
Based upon the averments in plaintiff's Verified Complaint, which I must accept as true under the applicable standard of review discussed above, the pertinent facts are as follows.
On April 19, 2011 defendant City of Reading opened bidding for a public contract for the LED Street Lighting Retrofit ("Project"). The City's solicitation of bids required that all the contractors exclusively use "Leotek Green Cobra GCA1 Series" lighting fixture ("Leotek Fixture") as a component of the Project. Defendant Independence Lighting, Inc. is the only distributor in the area that provides Leotek Fixture. *fn10
Plaintiff asked the City if an alternate or equal product could be used. The City responded by issuing Addendum No. 1 to its bid solicitation, which stated that "NO IT MUST BE THE SAME STREET LIGHT AS PER THE SPECIFICATIONS." *fn11
At the bid opening, defendant Hirneisen Electric, Inc. submitted the low bid with a total price of $526,000.00. Plaintiff was the second lowest bidder with a price of $718,000.00. *fn12
Plaintiff's bid was based in substantial part on the cost of the Leotek Fixture lighting package materials. Independence Lighting, the sole local distributor of the Leotek Fixture, priced the lighting package materials to plaintiff at $658,880.00. Hence, the price quoted for lighting package materials provided to plaintiff by Independence Lighting exceeded Hirneisen's entire bid. *fn13
On April 20, 2011 plaintiff submitted a formal notice of bid protest to the City. Plaintiff contended that a Pennsylvania public entity could not specify a single source provider for a given product unless it had a legitimate reason for doing so. *fn14
Further, plaintiff contended that the City's decision not to allow an alternate or equal lighting fixture provided defendant Hirneisen Electric with an unfair competitive advantage and de facto awarded defendant Independence Lighting the decision of which contractor would be awarded the Project because Independence Lighting controlled the price it quoted to each bidder and did not provide each contractor with the same price. *fn15
On May 3, 2011 the City responded to plaintiff's bid protest. The City stated that it had found merit in plaintiff's protest and would conduct a re-bidding on the Project. Accordingly, the City issued re-bid documents and scheduled the second bid opening for June 16, 2011. *fn16
The re-bid documents permitted bidders to utilize the Leotek Fixture or a Visionare-ELE-1 lighting fixture ("Visionare Fixture"). However, both the Leotek Fixture and Visionare Fixture were only available from a single distributor, Independence Lighting. *fn17
Plaintiff submitted three alternate lighting fixtures *fn18 that were equal to the Leotek Fixture and Visionare Fixture. Each of the alternate lighting fixtures proposed by plaintiff were more energy efficient than the Leotek Fixture and had more lumens *fn19 than the Visionare Fixture. However, the City rejected plaintiff's proposed alternates without explanation. *fn20
On June 14, 2011 plaintiff sent the City a letter explaining that the Leotek Fixture and Visionare Fixture were only available from Independent Lighting and that therefore the re-bid was defective for the same reasons as the original bid. However, the City did not respond to plaintiff's June 14, 2011 letter. *fn21
On June 16, 2011 the City opened the re-bid for the Project. This time, plaintiff was the lowest bidder with a price of $575,000.00 and Hirneisen Electric was the second lowest bidder with a price of $595,000.00. *fn22
Although plaintiff was the lowest bidder, the City did not award the Project to plaintiff. Plaintiff made numerous phone calls to the City between June 16, 2011 and October 31, 2011 to inquire about the status of the Project. The City informed plaintiff that it was waiting for approval from the Pennsylvania Department of Transportation and that the award of the contract was in the hands of the City Solicitor. *fn23
However, on November 1, 2011 plaintiff learned that Hirneisen Electric had commenced work on the project. Through a review of publically available meeting minutes of Reading City Council, plaintiff discovered that Reading had awarded Hirneisen Electric the Project on June 13, 2011--three days before the City opened the re-bid for the Project. *fn24
On November 3, 2011 plaintiff sent a letter requesting an explanation for why the City awarded Hirneisen Electric the Project instead of plaintiff. Additionally, plaintiff called the City Solicitor and purchasing coordinator in an attempt to obtain an explanation. *fn25
The City failed to respond, and plaintiff again sent a letter on November 9, 2011 requesting an explanation from the City. The City again did not respond, and on November 18, 2011 plaintiff filed the within Verified Complaint. *fn26
CONTENTIONS OF THE PARTIES
Contentions of the City of Reading The City contends that each of plaintiff's claims fails to state a claim upon which relief may be granted.
Concerning Count I, the City contends that plaintiff's claim for injunctive relief fails because plaintiff did not plead irreparable harm.
With respect to Count II, the City contends that plaintiff's claim under the Sherman Act fails because plaintiff did not allege the market within which the anti-competitive behavior allegedly occurred, and because plaintiff did not allege sufficient facts to show bid rigging. Additionally, the City contends that a municipality's use of a sole source provider does not violate the Sherman Act. *fn27
Concerning Count III, the City contends that plaintiff failed to allege the particularized facts required by Rule 9(b) of the Federal Rules of Civil Procedure, to show the existence of fraud.
Concerning Count IV, the City contends that plaintiff has failed to state a procedural due process claim because plaintiff did not have a protected property right in obtaining the contract for the Project.
Finally, concerning Count V, the City contends that plaintiff's claim for civil conspiracy fails because plaintiff does not allege that two or more people conspired to commit an unlawful act or performed overt acts in furtherance of a conspiracy. Further, the City contends that plaintiff's civil conspiracy claim is not plausible because the parties have no motive to enter such a conspiracy. *fn28
Contentions of Plaintiff
Plaintiff disputes each of the City's contentions. However, concerning Count I, plaintiff acknowledges that its claim for injunctive relief, which sought to enjoin defendants from executing the Project, is moot because the work on the Project has been completed by Hirneisen Electric. *fn29
Accordingly, I dismiss Count I of plaintiff's complaint as unopposed. *fn30
Concerning plaintiff's claim under the Sherman Act in Count II, plaintiff contends that it did not bring its claim as a "disappointed bidder", but even if plaintiff were considered a disappointed bidder, it has standing to bring the claim because it is a taxpayer within Berks County, Pennsylvania.
Moreover, plaintiff contends that pleading the relevant market was
not necessary to establish an antitrust violation because plaintiff
alleged price fixing and therefore established a per se
violation under the Sherman Act.
With respect to Count III, plaintiff contends that it has pled fraud with sufficient particularity. Specifically, plaintiff asserts that its allegations that the City stated it was waiting on approval from the Pennsylvania Department of Transportation to award the contract, when actually, the Project had already been awarded to Hirneisen Electric is sufficient to state a fraud claim.
Concerning Count IV, plaintiff concedes that it does not have a property interest in the contract awarded to Hirneisen Electric. However, plaintiff contends that it has stated a viable procedural due process claim because it had an interest in receiving notice that the City awarded the contract to Hirneisen Electric. Plaintiff contends that, as a taxpayer in Berks County, Pennsylvania, it had a right to protest the contract being awarded to Hirneisen Electric.
Finally, with respect to Count V, plaintiff contends it has stated a viable claim for civil conspiracy because it has alleged that defendants entered into an illegal bid-rigging and price-fixing agreement. Moreover, plaintiff contends that motive is not an element of a civil conspiracy claim under Pennsylvania law; and that, regardless, defendants shared a common purpose for their price fixing agreement.
Because I have dismissed Count I of plaintiff's Complaint as unopposed, I only address Counts II through V.
Count II of the complaint asserts a claim for violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.
The Sherman Act provides that "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefore in any district court of the United States in the district in which the defendant resides". 15 U.S.C. § 15.
A claim under the Sherman Act may only be brought by a plaintiff with standing to sue. In determining whether a particular plaintiff has standing to sue under the antitrust laws, the United States Court of Appeals for the Third Circuit weighs the following factors: (1) the causal connection between the antitrust violation and the harm to the plaintiff and the intent of the defendant to cause that harm; (2) whether the plaintiff's alleged injury is the type for which the antitrust laws were intended to provide redress; (3) the directness of the injury; (4) the existence of more direct victims of the alleged antitrust violations; and (5) the potential for duplicative recovery or complex apportionment of damages. 2660 Woodley Road Joint Venture v. ITT Sheraton Corporation, 369 F.3d 732, 740-41 (3d Cir. 2004).
The City contends that plaintiff has not alleged it suffered an antitrust injury because it does not have standing to enforce compliance with the requirement that public contracts be awarded to the lowest responsible bidder. Specifically, plaintiff has not alleged that it was a taxpayer in the City of Reading, and pursuant to Pennsylvania public bidding laws, only tax payers have standing to challenge the award of a public contract. *fn31
However, Count II of the Verified Complaint does not assert a claim for violations of Pennsylvania's public bidding laws. Rather it asserts a claim that defendants violated Section 1 of the Sherman Act. *fn32 Therefore, the cases cited by defendant which analyze Pennsylvania public bidding procedures are not applicable to this issue.
Moreover, the City does not otherwise offer any authority for its contention that plaintiff does not have standing to bring a claim under federal antitrust laws. *fn33
Accordingly, as briefed, defendant's contention that plaintiff lacks antitrust standing does not warrant dismissal.
Although a lack of standing does not provide a basis for dismissal of plaintiff's complaint, I still must determine whether plaintiff has otherwise stated a viable claim under the Sherman Act.
Section 1 of the Sherman Act provides that "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal." 15 U.S.C. § 1.
From the inception of the Sherman Act, courts have interpreted Section 1 to prohibit "only unreasonable restraints of trade." Business Electonics Corp. v. Sharp Electronics Corp., 485 U.S. 717, 723, 108 S.Ct. 1515, 1519, 99 L.Ed.2d 808, 816 (1988). In determining whether a particular restraint of trade is unreasonable, courts generally apply a "case-by-case" application of the "rule of reason". Under a rule of reason analysis, a factfinder weighs all of the circumstances to consider whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition. Id.
However, certain categories of agreements are considered "per se" unreasonable. A restraint on trade will be considered per se illegal if it is "manifestly anticompetitive" and "would always or almost always tend to restrict competition and decrease output". Id.
The "most important per se categories are naked horizontal price-fixing, market allocation, and output restrictions." The Stop & Shop Supermarket Company v. Blue Cross & Blue Shield of Rhode Island, 373 F.3d 57, 61 (1st Cir. 2004). "Bid rigging" among competing bidders to control the bid level likewise constitutes a per se illegal restraint of trade. MHB Distributors, Inc. v. Park Hannifin Corporation, 800 F.Supp 1265, 1268 (E.D.Pa. 1992) (Pollak, J.).
In contrast, vertical restraints on trade are governed by the rule of reason. Leegin Creative Leather Products, Inc. v. PSKS, Inc. 551 U.S. 877, 882, 127 S.Ct. 2705, 2710, 168 L.Ed.2d 623, 631 (2007).
Here, the alleged conspiracy between the City, Hirneisen Electric, and Independence Lighting plainly involves a vertical restraint. None of the parties are direct competitors of each other. Indeed, plaintiff concedes that "this case involves a vertical restraint because the conspiracy is between a buyer (the City), and two sellers (Hirneisen and Independence)." *fn34
Nevertheless, plaintiff contends that the alleged conspiracy between defendants constitutes a per se illegal restraint of trade because the "vertical restraint of trade involved price fixing". *fn35
In arguing for an application of the per se rule, plaintiff attempts to distinguish this case from Expert Masonry, Inc. v. Boone County, Kentucky, 440 F.3d 336, (6th Cir. 2006).
In Expert Masonry, Inc., a plaintiff alleged that a municipality and a contractor conspired to award a public contract to the contractor, despite plaintiff submitting a better bid for the contract. The United States Court of Appeals for the Sixth Circuit held that because the alleged restraint on trade was vertical (the municipality and the contractor were not direct competitors), the agreement would be analyzed under the rule of reason. Id. at 345.
However, the Sixth Circuit also noted that the vertical agreement between the city and the contractor did not involve "vertical price fixing of minimum prices". The court stated that those agreements remained "illegal per se." Id. (internal quotations omitted).
Plaintiff's attempt to distinguish this case from Expert Masonry, Inc. suffers from two flaws. First, like the plaintiff in Expert Masonry, Inc., here, plaintiff does not allege that the conspiracy between defendants involved minimum price maintenance. *fn36
Second, and more importantly, subsequent to the Expert Masonry, Inc. decision, the United States Supreme Court has squarely held that "vertical price restraints are to be judged by the rule of reason." Leegin Creative Leather Products, Inc. 551 U.S. at 882, 127 S.Ct. at 2710, 168 L.Ed.2d at 631 (2007).
Therefore, even if plaintiff had alleged that the conspiracy between defendants involved vertical price fixing, the restraint of trade would still be analyzed under the rule of reason.
Plaintiff does not appear to contend that its claim survives under a rule of reason analysis. Indeed, plaintiff tacitly admitted that its complaint does not adequately plead a violation of the Sherman Act, when analyzing the restraint of trade under the rule of reason. *fn37
Therefore, because a rule of reason analysis is appropriate for analyzing the alleged restraint on trade, and because plaintiff does not contend its claim survives under a rule of reason analysis, I grant defendant's motion to dismiss Count II of plaintiff's complaint. However, I dismiss Count II without prejudice for plaintiff to amend Count II in order to state a viable claim under the Sherman Act as analyzed under the rule of reason. *fn38
Count III asserts a state law claim for fraud under Pennsylvania law.
In Pennsylvania, a claim for fraud requires a plaintiff to allege the following elements with particularity: (1) a misrepresentation; (2) a fraudulent utterence of it; (3) the maker's intent that the recipient would be induced to thereby act; (4) the recipient's justifiable reliance on the misrepresentation; and (5) damage to the recipient proximately caused. Sevin v. Kelshaw, 417 Pa.Super. 1, 9, 611 A.2d 1232, 1236 (Pa.Super. 1992).
The City contends that plaintiff's fraud claim fails because it is not alleged with sufficient particularity. Moreover, the City contends that plaintiff's allegations are conclusory as demonstrated by the City's attached Exhibits to the within motion as well as all of the defendants' responses to plaintiff's motion for a preliminary injunction.
However, because this is a motion to dismiss, I decline to consider the attached Exhibits to the City's motion. *fn39
Additionally, I conclude that plaintiff's allegations are sufficient to state a claim for fraud.
The complaint alleges numerous misrepresentations made by the City. Specifically, plaintiff alleges that it made numerous phone calls to the City between June 16, 2011 and October 31, 2011 to inquire about the status of its bid. Each time, the City informed plaintiff that it was still waiting for approval from the Pennsylvania Department of Transportation. *fn40
However, the City's representation to plaintiff was false because Hirneisen had already been awarded the contract for the Project. Plaintiff further alleges that the City had knowledge that the contract was awarded to Hirneisen Electric when it made the false representation plaintiff. *fn41
Additionally, plaintiff alleges that it relied upon the City's misrepresentation because plaintiff withheld filing a second bid protest and a motion for a preliminary injunction to prevent the Project from being awarded to Hirneisen Electric. Accordingly, plaintiff contends that it suffered damages resulting from the City's misrepresentation because it was not awarded the contract for the Project. *fn42
Therefore, accepting plaintiff's allegations as true, as I am required to do under the applicable standard of review, I conclude that plaintiff has stated a viable claim for fraud. Accordingly, defendant's motion to dismiss is denied to the extent it seeks dismissal of Count III.
In Count IV, plaintiff brings a claim pursuant to 42 U.S.C. § 1983, which asserts that the City violated plaintiff's procedural due process rights under the United States Constitution.
To establish a procedural due process claim under Section 1983, a plaintiff must prove (1) a deprivation of an individual interest encompassed by the Fourteenth Amendment's protection of life, liberty or property, and (2) that the procedures available did not provide due process of law. Hill v. Borough of Kutztown, 455 F.3d 225, 233-234 (3d Cir. 2006).
However, procedural due process does not protect every benefit. Instead, a person must have a legitimate claim of entitlement to the benefit. Entitlements are not established by the Constitution. Rather, they are created and defined by existing rules or understandings that stem from an independent source, such as state law. Town of Castle Rock, Colorado v. Gonzales, 545 U.S. 748, 756, 125 S.Ct. 2796, 2803, 162 L.Ed.2d 658, 668 (2005)(internal citation omitted).
Here, plaintiff contends that it was deprived of a property interest protected by the Fourteenth Amendment when the City failed to notify plaintiff that it had awarded the Project to Hirneisen Electric. Such notification would have enabled plaintiff, as a taxpayer *fn43 , to protest the award. *fn44
Accordingly, plaintiff argues that, by fraudulently concealing its award of the Project contract to Hirneisen Electric, the City deprived plaintiff of its right to challenge the award of the contract.
In conceding that it does not have a property interest in the contract itself, plaintiff appears to recognize that Pennsylvania's competitive bidding statutes "are for the benefit of the public only and do not give a low bidder standing to challenge a municipality's failure to award a contract in accordance with the statute. Independent Enterprises Inc. v. Lozecki, 103 F.3d 1165, 1178 (3d Cir. 1997).
However, Pennsylvania bidding statutes do provide taxpayers with a cause of action to challenge a municipality's unlawful award of a contract. Five Star Parking v. Philadelphia Parking Authority, 1987 U.S.Dist. LEXIS 5431 at *7 (E.D.Pa. June 19, 1987) (Pollak, J.).
Although taxpayers have standing to challenge a public contract, this does not create a federal property interest. This is because "the violation of a law is not, ipso facto, a deprivation of due process to all persons affected.... The due process clause is a narrow, personalized guarantee which only protects against the deprivation of one's own liberty and property ". ARA Services, Inc. v. The School District of Philadelphia, 590 F.Supp. 622, 627 (E.D.Pa. June 22, 1984) (Broderick, J.) (emphasis in original) (quoting Three Rivers Cablevision v. City of Pittsburgh, 502 F.Supp. 1118, 1128 (W.D.Pa. 1980)).
Therefore, a plaintiff's "status as a taxpayer is insufficient 'to vest in him any constitutionally-protected property interest under the due process clause.'" ARA Services, Inc. 590 F.Supp. at 627 (quoting Three Rivers Cablevision, 502 F.Supp. at 1132).
Accordingly, the City's failure to provide notice to plaintiff after awarding the Project to Hirneisen Electric did not deprive plaintiff of a property interest. Because plaintiff has failed to allege deprivation of a protected property interest, I grant defendant's motion to the extent that it seeks dismissal of Count IV. Accordingly, I dismiss Count IV with prejudice. *fn45
In Count V, plaintiff brings a claim for civil conspiracy under Pennsylvania law.
In Pennsylvania, to state a cause of action for civil conspiracy, the following elements are required: (1) a combination of two or more persons acting with a common purpose to do an unlawful act or to do a lawful act by unlawful means or for an unlawful purpose; (2) an overt act done in pursuance of the common purpose; and (3) actual legal damage. General Refractories Company v. Fireman's Fund Insurance Company, 337 F.3d 297, 313 (3d Cir. 2003); see Strickland v. University of Scranton, 700 A.2d 979, 987-988 (Pa.Super. 1997).
Absent a civil cause of action for a particular act, there can be no cause of action for civil conspiracy." Nix v. Temple University, 408 Pa.Super 369, 379, 596 A.2d 1132, 1137 (Pa.Super.Ct. 1991).
Here, plaintiff alleges that defendants "engaged in a price fixing conspiracy in violation of the Sherman Act and Pennsylvania state law in order for the City to provide business to Independence Lighting, award the project to Hirneisen Electric, and deprive [plaintiff] of being awarded the Project even though it was the low bidder." *fn46
However, as explained above, plaintiff has not stated a claim under the Sherman Act because it has not sufficiently alleged that defendants' conduct constituted a per se illegal restraint on trade. Nor do plaintiff's allegations state a claim that defendants' conduct violated the Sherman Act as analyzed under the rule of reason.
Additionally, although plaintiff states a viable fraud claim, it's fraud claim is brought only against the City. Plaintiff does not allege that the City and the other defendants conspired to engage in the fraudulent conduct described in the complaint. Therefore, plaintiff's fraud claim cannot serve as the basis for a civil conspiracy claim.
Therefore, because plaintiff's civil conspiracy claim is premised on its claim under the Sherman Act, and plaintiff has failed to state a claim under the Sherman Act, I grant defendant's motion to dismiss Count V of plaintiff's complaint.
However, because I have given plaintiff leave to amend Count II, I likewise dismiss Count V without prejudice for plaintiff to file an amended complaint in accordance with this Opinion. *fn47
For all of the foregoing reasons, the City's motion to dismiss is granted in part and denied in part.
Specifically, Count I of plaintiff's complaint is dismissed with prejudice as unopposed. Additionally the City's motion is granted to the extent it seeks dismissal of plaintiff's procedural due process claim (Count IV) with prejudice.
The City's motion to dismiss is also granted to the extent it seeks dismissal of Counts II and V. However, I dismiss Counts II and V without prejudice for plaintiff to file an amended complaint in accordance with this Opinion. *fn48
Finally, the City's motion is denied to the extent it seeks dismissal of Count III.
I give plaintiff until October 29, 2012 to file an amended complaint in accordance with this Opinion. In the event plaintiff does not file an amended complaint on or before October 29, 2012, I give the City until November 19, 2012 to file an answer to Count III of the Verified Complaint.