Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-01316/USCOURTS-caed-2_05-cv-01316-3/pdf.json

Parties Involved:
American Medical Response, Inc.
Counter Defendant
City of Stockton
Counter Claimant

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 Related cross-motions for summary judgment are also 1

pending before the court. Given the County’s bid deadline, the

court has given priority to the motion for preliminary injunction

and will resolve the other motions in due course. 

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

AMERICAN MEDICAL RESPONSE, INC. 

Plaintiff, CIV-S-05-1316 DFL PAN 

v. MEMORANDUM OF OPINION 

AND ORDER

CITY OF STOCKTON,

Defendant.

_________________________________/

CITY OF STOCKTON,

Counterclaimant,

v.

AMERICAN MEDICAL RESPONSE, INC.

Counterdefendant.

_________________________________/

Defendant City of Stockton seeks a preliminary injunction

prohibiting American Medical Response, Inc. from bidding on an

ambulance service contract for the County of San Joaquin. For

the reasons discussed below, the motion is DENIED.1

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I.

The following facts are not in dispute. American Medical

Response, Inc. (“AMR”) is a large corporation that has provided

emergency and non-emergency ambulance service throughout the

nation. It has provided these services in San Joaquin County for

approximately twelve years. (Opp’n at 2.) Starting in 2002, the

City of Stockton (“City”), through its fire department, began

providing emergency ambulance service in and around the City as

well. (Id.) Until recently, the ambulance market in the County

was competitive and non-exclusive, with multiple service

providers operating in Stockton, Lodi, and Tracy. (Id. at 3.) 

However, in January 2003, the County Emergency Medical Services

Agency (“EMS Agency”) decided to establish exclusive operating

areas (“EOAs”) in which one or more providers would bid for the

exclusive right to provide emergency services within the EOA. 

(Id. at 4.) In July 2004, the County Board of Supervisors

adopted the EMS Agency’s plan to award exclusive contracts for

the following three zones: (1) the City of Stockton and

surrounding area (the “Stockton Zone”); (2) the City of Lodi (the

“Lodi Zone”); and (3) the City of Tracy. (Id.; Rishwain Decl.

Ex. 4.) 

In early 2003, AMR and the City began to discuss

collaborating on a joint bid proposal to respond to the County’s

anticipated Request for Proposals (“RFP”) for the Stockton Zone. 

(Mot. at 5.) In June 2003, the City, AMR, and a third smaller

company, A-1 Ambulance Service (“A-1”), signed a Memorandum of

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 A-1 went out of business in 2004; therefore, it is not 2

party to this action. (Mot. at 8.) 

3

Understanding stating their intent to submit a joint bid for the

Stockton Zone (“2003 MOU”). (Rishwain Decl. Ex. 2.) Following 2

the execution of the 2003 MOU, representatives of AMR and the

City met periodically to discuss plans for their joint bid. 

(Mot. at 6-7.) In July 2004, the City of Lodi also agreed to

participate in a joint bid for the Stockton and Lodi Zones, and

all three parties executed a Joint Venture Agreement (the “JVA”). 

(Mot. at 7; Rishwain Decl. Ex. 3.) The JVA largely incorporated

language from the 2003 MOU and included a statement that the

parties would “jointly submit a response to the [County RFP] for

the award of exclusive rights to emergency and non-emergency

ambulance transportation within [the Stockton and Lodi Zones] . .

. .” (Rishwain Decl. Ex. 3.) Most notably for this motion, § 4

of the JVA also provided as follows:

If any party withdraws from the joint venture prior to

an award of contract from the [County] or accepts an

offer from another bidder to compete for the same

service area, that party will be precluded from bidding

in the [County] RFP for ambulance service. 

(Id.) 

Throughout 2004, AMR, the City, and Lodi representatives

continued to meet and discuss the terms of a bid and of their

business relationship. (Mot. at 7-8, 11; Opp’n at 8.) They

began negotiating both a limited liability company agreement and

an operating agreement. (Id.) In 2005, the parties began

meeting in earnest to finalize these agreements and their plans

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for a joint bid. (Mot. at 11-12; Opp’n at 9.) However, at this

point, the relationship between AMR and the City began to break

down. The reasons for the unraveling of the joint venture are 

disputed as between AMR and the City. On June 23, 2005, AMR’s

regional Chief Executive Officer, Louis Meyer, informed City

Manager, Mark Lewis, that AMR was discontinuing further

negotiations and whatever relationship had formed between the

City and AMR. (Mot. at 12.) Meyer further explained that AMR

intended to submit its own bid. (Opp’n at 11.) The City

disapproved of AMR’s withdrawal and informed AMR that § 4 of the

JVA precluded AMR from submitting its own bid. (Mot. at 13.) 

The County issued the RFP in July 2005, and the bids are due

by September 22, 2005. (Rishwain Decl. Ex. 4.) The RFP

contemplates the award of a five-year exclusive contract for

emergency ambulance service in the Stockton Zone. (Id.) The

City has now joined with Rural Metro Corporation and intends to

submit a joint bid. (Opp’n at 12.) AMR intends to submit a solo

bid. (Id. at 13.) The City asserts that AMR should be stopped

from doing so and brings the present motion for preliminary

injunction. 

II.

The traditional four part test for granting a preliminary

injunction looks to whether the movant has shown: (1) a strong

likelihood of success on the merits; (2) irreparable injury if

the injunction is not granted; (3) a balance of hardships in the

movant’s favor; and (4) the public interest favors granting the

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injunction in cases affecting the public interest. See Los

Angeles Mem’l Coliseum Comm’n v. Nat’l Football League, 634 F.2d

1197, 1200 (9th Cir. 1980). In the Ninth Circuit, the moving

party can meet its burden by making “a clear showing of either

(1) a combination of probable success on the merits and a

possibility of irreparable injury, or (2) that its claims raise

serious questions as to the merits and that the balance of

hardships tips in its favor.” Conn. Gen. Life Ins. Co. v. New

Images of Beverly Hills, 321 F.3d 878, 881 (9th Cir. 2003). 

“These two formulations represent two points on a sliding scale

in which the required degree of irreparable harm increases as the

probability of success decreases.” Taylor By and Through Taylor

v. Honig, 910 F.2d 627, 631 (9th Cir. 1990). The burden on the

City “is a heavy one where, as here, granting the preliminary

injunction will give [the City] substantially the relief it would

obtain after a trial on the merits.” Dakota Indus., Inc. v. Ever

Best Ltd., 944 F.2d 438, 440 (8th Cir. 1991) (citations omitted);

see also Tanner Motor Livery, Ltd. v. Avis, Inc., 316 F.2d 804,

808 (9th Cir. 1963) (“[I]t is not usually proper to grant the

moving party the full relief to which he might be entitled if

successful at the conclusion of a trial.”) The court finds that

while the City raises serious questions, it has not shown

irreparable injury, probable success on the merits, or that the

balance of the hardships tip in its favor. 

(A) Irreparable Injury

Irreparable injury is injury that cannot be adequately

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redressed by a legal or equitable remedy following trial. 

Campbell Soup Co. v. ConAgra, Inc., 977 F.2d 86, 91 (3d Cir.

1992). The City argues that if AMR is allowed to bid, it will

suffer irreparable harm because: (i) its confidential information

will be used by AMR to gain competitive advantage; (ii) measuring

any potential monetary damages would be too complex; and (iii) it

cannot recover its intangible losses through monetary damages. 

(Mot. at 9-11, 23-25; Reply at 21-23.) 

The City has failed to show irreparable injury. First, the

City does not make a convincing case that AMR possesses the

City’s confidential information or that the information, if any,

will be of any significant use to AMR during the bid process. 

Much of the information is already in the public record. 

Moreover, given that the City has a new bidding partner, it is

not clear that the information, even if confidential, can be of

any competitive use to AMR. In addition, if AMR does make use of

confidential information in the bidding process, and thereby

obtains the award of the ambulance contract from the County, the

City may be entitled to damages. 

Second, the City’s argument that its damages will be

difficult to compute is also not persuasive. Since the City

intends to bid with another partner, it may win the contract. In

that case, its reliance damages and any damages for the breach of

fiduciary duty claim will be determinable. The same damages may

be provable in the event that neither the City nor AMR is the

successful bidder. If the City loses the contract to AMR, the

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calculation of damages for both claims, including any recovery of

lost profits on the County contract, will still be calculable. A

determination of potential lost profits may be challenging, but

it is not so difficult as to warrant injunctive relief. 

Finally, the City’s potential losses are not intangible, as

it does not stand to lose goodwill or similar kinds of injury

that courts have found irreparable. See Rent-A-Center, Inc. v.

Canyon Television and Appliance Rental, Inc., 944 F.2d 597, 603

(9th Cir. 1991)(finding irreparable harm where probable loss of

goodwill and damage to ongoing recruitment). The City’s claim

that it will lose the ability to provide ambulance services to

its own residents if the injunction is not issued does not

present a significant intangible interest for two reasons. 

First, an injunction against AMR does not guarantee that the City

either will or will not be awarded the ambulance contract by the

County. And second, under state law, the County has the

authority to create exclusive operating areas. See Cal. Health &

Safety Code §§ 1797.85, 1797.224. The City’s intangible interest

in serving its residents is not an interest recognized in this

legislative scheme. 

Moreover, the City concedes that if AMR had remained in the

joint venture, it could have bid separately without violating the

JVA. (City Opp’n to AMR Mot. for Summ. J. at 27.) This

concession shows that when the City entered into the JVA, it

contemplated the possibility that AMR would make its own

competing bid. Therefore, it is difficult to see how AMR’s bid

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in these circumstances will cause the City irreparable harm. 

(B) Likelihood of Success on the Merits

The City has failed to show probable success on the merits. 

The City relies on its breach of contract and breach of fiduciary

duty claims against AMR. However, these claims depend on the

resolution of complex factual issues, and at this juncture the

court is not in a position to predict how they will be resolved. 

With respect to the breach of contract claim, each party

asserts that the other negotiated in bad faith. The City argues

that when AMR requested concessions, the City complied. The City

appears to have conceded on some major negotiation points,

including its willingness to lower its own internal budget and to

forego receipt of first responder fees. (Mot. at 13-14.) On the

other hand, AMR asserts that the City’s bad faith negotiating

made it impossible to resolve critical issues. AMR argues that

the City would take one position on an outstanding issue, and

then renege on the agreement later. (Opp’n at 11.) It appears

that on at least one occasion, the City and AMR agreed to keep

user fees minimal, only to have the City change its position. 

(Meyer Dep. at 27-28.) Ultimately, the resolution of the

parties’ alleged bad faith hinges on questions of fact and issues

of credibility. Therefore, it is not clear whether a finder of

fact would infer bad faith from AMR’s failure to continue

negotiations or, alternatively, from the City’s alleged failure

to take a consistent position in the negotiations. 

Similarly, the breach of fiduciary duty claim turns on

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issues of fact. As discussed above, the City’s allegation that

AMR will use its confidential information in the bidding process

is heavily disputed. Without resolving the merits of this claim,

a review of the record reveals that at least some of this

information is public. For example, the City’s response time

standards, dispatch and communication information, and employee

safety programs are public or were disclosed to parties other

than AMR. (Rodriguez Dep. at 23-25, 74; Hafey Dep. at 110.) In

contrast, it appears that AMR may have insight into non-public

information regarding the City’s budget. (Confidential

Supplemental Mot. at 2.) However, the importance of this

information is unclear, particularly given that the City has a

new bidding partner. A finder of fact must resolve these issues,

and the City has not made such a showing that the court can

predict an outcome in its favor.

In addition, the City’s argument that Leff v Gunter, 33

Cal.3d 508 (1983), guarantees its success on the merits is not

persuasive for the simple reason that in Leff the court had a

fully developed record and a jury finding that the defendant had

breached its fiduciary duty to the joint venture. Here, the

unraveling of the joint venture is the subject of dispute and it

is not clear whether AMR’s participation in the bid will violate

any fiduciary duty. Therefore, the court would have to speculate

on the critical facts that had already been determined in Leff by

jury trial. 

Finally, AMR asserts antitrust defenses to the City’s claims

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that also raise serious questions on the merits. It is at least

open to question whether the joint venturers ever intended any

integration of their operations. Without such integration, the

JVA could be viewed as an anti-competitive division of the market

between competitors and, therefore, unenforceable.

In short, while the City has raised serious questions

concerning AMR’s breach of the JVA and associated fiduciary

duties, and may prevail on these claims, it has not demonstrated

a likelihood of success on the merits. 

(C) The Balance of Hardships

The balance of hardships does not tip in favor of the City. 

“The basic function of a preliminary injunction is to preserve

the status quo pending a determination of the action on the

merits.” Chalk v. United States Dist. Court Cent. Dist. of Cal.,

840 F.2d 701, 704 (9th Cir. 1988). In this case, if AMR is

prohibited from bidding and ultimately prevails in trial against

the City, it cannot force the County to retroactively consider

its bid. The City, on the other hand, will be able to

participate in the RFP either way and can still recover from AMR

to the extent it prevails at trial. Therefore, the best way to

preserve the status quo pending resolution on the merits is to

allow AMR to bid.

 (D) Public Interest

The denial of the preliminary injunction is further

supported by the public interest. “The less certain the district

court is of the likelihood of success on the merits, the more

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plaintiffs must convince the district court that the public

interest and balance of hardships tip in their favor.” Southwest

Voter Registration Educ. Project v. Shelley, 344 F.3d 914, 918

(9th Cir. 2003) (en banc). Relying on Leff, the City

argues that the “enforcement of the fiduciary obligations between

partners is of no less . . . importance” than the encouragement

of a competitive bidding process on public projects. 33 Cal.3d

at 518. However, as discussed above, the court in Leff had

before it a jury finding that the defendant had breached its

fiduciary duties. The issue was whether a damage award should be

sustained, not whether an imminent bidding process should be

disrupted by entry of a preliminary injunction on disputed facts. 

There is no question that were the injunction to issue

forbidding AMR’s bid, the competitiveness of the County’s bidding

process could be significantly affected. AMR has provided

ambulance service in the Stockton Zone for a number of years and

is the primary provider of ambulance services in Stockton.

(Gillis Dep. at 12-13.) In the circumstances here, the certain

damage to the public interest in the competitiveness of the

County’s bidding process were the injunction to issue prevails

over the possibility that AMR may gain some unfair advantage in

the bidding process from breaching a fiduciary duty were the

injunction denied. 

III.

The City has raised serious questions, but has failed to

show probable success on the merits, irreparable injury, or that

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the balance of hardships tips in its favor. In such a situation,

it is in the public interest to permit AMR to bid so that the

competitiveness of the County’s bidding process is not harmed.

The City’s motion for a preliminary injunction is DENIED.

IT IS SO ORDERED. 

Dated: September 16, 2005

DAVID F. LEVI

United States District Judge

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