County’s Decision To Purchase Advertising Not Specified In The Advertising Contract Is Within The County’s Discretion And Not Subject To Judicial Review

In Daily Journal Corporation v. County of Los Angeles, (— Cal.Rptr.3d —, Cal.App. 2 Dist., Apr. 15, 2009), a California Court of Appeal considered a newspaper’s challenge to a contract between a county and a competing newspaper for advertising, on the grounds that the county had improperly awarded the contract and had committed “waste,” by purchasing advertising in newspapers with larger circulations than specified by the contract.

The court ruled that such negotiated decisions with a party that has been awarded a contract fall well within the county’s allowable discretion, do not violate the bid solicitation, and do not fall within the parameters of a taxpayer claim for waste.

Facts

In 2004, Metropolitan News Corporation (“MNC”) and Daily Journal Corporation (“DJC”) submitted bids to provide advertising services to Los Angeles County (“County”) for the placement of legal notices. The County’s bid invitation solicited quotes for advertising rates at newspapers with circulations of 125,000 or fewer. It made no reference to newspapers with larger circulations. The County awarded the bid to MNC. Subsequently, it agreed to purchase ads from MNC in newspapers with circulations greater than 125,000 at separately negotiated rates.

DJC filed suit alleging that the County improperly awarded the bid to MNC because it purchased advertising at large circulation papers without seeking bids for that purpose. It also alleged government waste and sought to have the bid award voided and the return of MNC’s advertising revenue to the County. The trial court dismissed the action, and DJC appealed.

Decision

Government Code section 25502 outlines the procedure for counties to solicit bids for advertising and, as the court noted, “Nothing in that statute specifies a particular bidding procedure or compels the solicitation of bids in any particular manner.” Therefore, the fact that the County’s solicitation requested rates for newspapers with circulations less than 125,000 did not prevent it from subsequently purchasing advertising in larger papers, the court found.

The court further held that DJC’s challenge to the 2004 contract became moot in 2008 when that contract ended; the fact that the County’s conduct pursuant to that contract may theoretically affect future contracts is irrelevant. “It is well settled that an appellate court will only decide actual controversies and that a live appeal may be rendered moot by events occurring after the notice of appeal was filed,” the court said.

As to DJC’s claim of waste, Code of Civil Procedure Section 526(a) gives taxpayers standing to sue a government for waste “only if a government body has a duty to act and does not do so. If it has discretion and chooses not to act, the courts may not interfere with that decision,” the court said, citing California Assn. for Safety Education v. Brown (1994) 30 Cal.App.4th 1264. In the absence of any allegation of fraud or collusion, the court added, the County’s decision in this case was “purely a matter of the County’s discretion and is therefore not subject to a claim for waste or an action in mandate.”

The appeal was dismissed.

Questions

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