Opinion ID: 2424301
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Heading Rank: 2

Heading: The Court of Special Appeals's Decision

Text: In a 102-page reported opinion, a panel of the Court of Special Appeals concluded ultimately that the Circuit Court erred. Md. Transp. Auth. Police Lodge # 34 of FOP, Inc. v. Md. Transp. Auth., 195 Md. App. 124, 5 A.3d 1174 (2010). The intermediate appellate court began its opinion with a review of the formation, statutory authorization, and operations of the MdTA. Md. Transp. Auth., 195 Md.App. at 134, 5 A.3d at 1179. This prefatory foray was understandablethe Court of Special Appeals grounded significant portions of its later analysis on the notion that the MdTA has been ceded by the General Assembly a unique degree of independence and power, perhaps unprecedented among State agencies. Then, the panel of the intermediate appellate court examined each of the MdTA's arguments against the enforceability of the Agreement and the sustainability of a promissory estoppel claim. Although we shall reverse the Court of Special Appeals's judgment solely on the ground of the collective bargaining laws (as explained infra), we shall summarize, for contextual purposes, the intermediate appellate court's expansive treatment of the parties' arguments and counter-arguments.
As it did before the Court of Special Appeals, the MdTA argues that `no action will lie upon a contract, whether written or verbal, where such a contract is vague or uncertain in its essential terms.' Brief of Petitioner at 16 (quoting Robinson v. Gardiner, 196 Md. 213, 217, 76 A.2d 354, 356 (1950)). [T]he one page memo, which contains no fixed type, quantity, or price terms concerning a multi-year take-home car program, the MdTA continues, [is] not clear and definite enough to constitute an enforceable contract. The FOP maintains that the parties incorporated by reference the 400-page Notebook, which provides all of the necessary essential terms, including: [R]esearch on [THV] programs and their implementation, the cost of losing police officers each year, research on the need for retention of police officers, a breakdown of the cost to fund the program, research on the need of the MdTA to have its police officers respond more quickly and efficiently in certain events, and more. Quoting the principle that `courts are reluctant to reject an agreement, regularly and fairly made,' the intermediate appellate court held the one-page Memorandum, standing alone, sufficiently expresses, with definiteness and certainty, the nature and extent of the parties' obligations. Md. Transp. Auth., 195 Md. App. at 160, 161, 5 A.3d at 1195 (quoting Quillen v. Kelley, 216 Md. 396, 407, 140 A.2d 517, 523 (1958)). Even if the Agreement... contained insufficient detail to be enforceable, the court explained in reasoning in the alternative, the Agreement's reference to the `[N]otebook,' and its explicit indication that `the [THV] program will be essentially the program outlined in the notebook,' make clear that the `[N]otebook' was incorporated by reference into the Agreement, and provided the details of the program that the MdTA was agreeing to implement. Md. Transp. Auth., 195 Md.App. at 162, 5 A.3d at 1196.

The MdTA contends that the Agreement constituted a contract[] under which one party [would] obtain[] compensation for using personal influence over legislators, or legislation, to benefit another, in violation of Maryland law. Stated another way, the MdTA posits that the Agreement is improper because it (1) calls for the use of personal influence rather than persuasive facts and arguments, see Wildey v. Collier, 7 Md. 273, 279 (1854), and (2) is dependent upon the defeat of legislation. See Md.Code (1984, 2009 Repl.Vol., 2010 Supp.), State Government Article (S.G.), § 15-713(1)(i) (A regulated lobbyist may not ... be engaged for lobbying purposes for compensation that is dependent in any manner on ... the enactment or defeat of legislation....). The FOP retorts that the Agreement only required that ... FOP members present the legislators with factual information explaining their preference for the [take-home vehicle p]rogram over collective bargaining. Moreover, the FOP disputes the characterization of the Agreement as contingent on the defeat of legislation. The FOP argues that [t]he Agreement states [only] that the FOP will ` ask sponsors to withdraw the collective bargaining bills.' (Emphasis added.) It does not require that the FOP `defeat[]' the bills ... or ... that the two bills not be passed. After a survey of relevant Maryland law and treatises, the Court of Special Appeals determined that whether ... contracts contemplate[] improper influence upon State officials is a question of fact.... Md. Transp. Auth., 195 Md.App. at 170, 5 A.3d at 1200; see id. (stating that the Court of Appeals in Frenkil v. Hagan, 146 Md. 94, 105, 125 A. 909, 913 (1924), remanded for an evidentiary determination of whether the contracting parties expected to advocate to exert improper `political influence'). In the present case, the intermediate appellate panel concluded that the FOP's uncontroverted affidavits ... describ[ed] advocacy that, on its face, was above-board. Md. Transp. Auth., 195 Md.App. at 171, 5 A.3d at 1201. With respect to the contingent-agreement argument, the Court of Special Appeals held that the Agreement did not represent a prohibited arrangement under S.G., § 15-713(1)(i). Md. Transp. Auth., 195 Md.App. at 172, 5 A.3d at 1202. The panel stressed that Maryland caselaw is concerned with contingent financial incentive[s], and the present Agreement involves only public policy compromises.... Id. To describe the trade-offs struck in the course of lawmaking as `compensation' on a `contingency basis,' the Court of Special Appeals concluded, is to stretch the meaning of those terms beyond their breaking point. Md. Transp. Auth., 195 Md.App. at 172-73, 5 A.3d at 1202. Thus, as neither the [FOP nor] its members [were] ... disinterested parties hired to represent others' interest without any personal stake in the outcome, the statute governing lobbyists is inapplicable. Md. Transp. Auth., 195 Md.App. at 172, 5 A.3d at 1202 (emphasis added) (internal quotation marks omitted). But see S.G., § 15-701(a)(1)(ii) (defining regulated lobbyist as an entity that, for the purpose of influencing any legislative action ...[,] communicates with an official or employee of the Legislative Branch ... and ... earns at least $5,000 compensation for all such communication and activities); Brief of Respondent at 17, 19 (describing the multimillion dollar THV program, which required the FOP's promise to communicate with two legislators, as a benefit for all MdTA police officers).
The MdTA alleges further that, in forming the Agreement, the Secretary of the Authority ... exceeded ... legislatively granted powers, and[,] therefore[,] the ... resulting contract is [(1)] unenforceable as ultra vires and [(2)] barred by sovereign immunity. Although the Legislature invested in the MdTA extraordinary power to set and collect public tolls, the MdTA posits, the General Assembly expressed no intent to permit [the MdTA] to... use those same funds to influence ... lawmaking.... The MdTA continues that [t]here is every reason to infer that the [L]egislature had no such intent, as [t]he risk of conflict and abuse is self-evident when, as here, a public entity seeks (directly or indirectly) to lobby the very elected [L]egislature responsible for establishing its existence and powers. Consequently, in entering the Agreement, the MdTA exceeded its power, i.e., acted outside the scope of its authority, thereby rendering the contract ultra vires, as well as barred by sovereign immunity. See S.G., § 12-201(a) ([T]he State, its officers, and its units may not raise the defense of sovereign immunity in a contract action, in a court of the State, based on a written contract that an official or employee executed for the State or [one] of its units while the official or employee was acting within the scope of [ his/her ] authority .... (emphasis added)). In riposte, the FOP asserts that the MdTA possesses a unique and vast amount of autonomy with respect to use of its funds. As such, the MdTA enjoyed necessarily the authority to enter into this contract. Moreover, in drafting this agreement, the MdTA was not hiring private lobbyists, but rather promoting the recruit[ment] and retain[ment of] qualified police officers, a strong and presumably proper interest to the MdTA.... As further indication that the MdTA was not hiring private lobbyists, the FOP reiterates that no money [was] paid to the FOP or its members; rather the benefit was to the MdTA Police Force as a whole. The Court of Special Appeals agreed with the FOP that the THV program was not an elaborate means of compensating the [FOP] for advocating the agency's position to the Legislature. Md Transp. Auth., 195 Md.App. at 184-85, 5 A.3d at 1209 (footnote omitted). Therefore, the intermediate appellate court concluded the Agreement ... is [not] an ultra vires hiring of lobbyists, beyond the scope of the agency's enumerated powers. Md. Transp. Auth., 195 Md.App. at 185, 5 A.3d at 1209. In emphasizing the word agency's, the intermediate appellate panel seemed to suggest that the FOP was advocating its own position by seeking withdrawal of the collective bargaining bills. But see Brief of Respondents at 5 (For approximately three years, the FOP had been seeking collective bargaining by attempting to introduce legislation providing for collective bargaining.). With respect to the doctrine of sovereign immunity, the Court of Special Appeals determined that the State has waived [such] ... immunity under limited circumstances in regard to claims based on written contracts, as in the present case. Md. Transp. Auth., 195 Md.App. at 156, 5 A.3d at 1193 (citing Magnetti v. Univ. of Md., 402 Md. 548, 560-62, 562 n. 6 937 A.2d 219, 226, 227 n. 6 (2007)). Having decided that the MdTA was not hiring lobbyists via the Agreement, the intermediate appellate court did not consider further the MdTA's contention that the doctrine applies nevertheless to ultra vires written contracts. See id.
The MdTA proffers that the Agreement is a procurement contract, be it either for vehicles or lobbying services. In either case, it did not comport with relevant procurement laws, or so the MdTA avers, and is therefore unenforceable. The FOP argues (as it did before the Court of Special Appeals) that the Agreement, which involves the procurement of only vehicles (not services), is exempt from State procurement law. The FOP points out that procurement includes `the process of ... obtaining services' (supposedly like lobbying), but not capital expenditures, which are exempt from ordinary procurement rules. Brief of Respondent at 23 (emphasis added) (quoting Md.Code (2001, 2009 Repl.Vol., 2010 Supp.), State Finance and Procurement Article (S.F.P.), § 11-101(m)). The Court of Special Appeals agreed that procurement includes the process of obtaining services, i.e., the process of obtaining the labor, time, or effort of a contractor. Md. Transp. Auth., 195 Md. App. at 175-76, 5 A.3d at 1204 (quoting S.F.P., § 11-101(m)(1), (w)(1)(ii)). The intermediate appellate court noted, however, that the FOP overlooked S.F.P., § 11-101(m), which states that procurement includes also `the process of ... obtaining supplies....' Md. Transp. Auth., 195 Md.App. at 175, 5 A.3d at 1204. The term supplies may refer to tangible personal property, presumably including vehicles. Md. Transp. Auth., 195 Md.App. at 175-76, 5 A.3d at 1204 (quoting S.F.P. 11-101(w)(1)(ii)). The intermediate appellate court explained also that the statute excepts the MdTA in some, but not all, respects. Md. Transp. Auth., 195 Md.App. at 177, 5 A.3d at 1204 (quoting S.F.P. § 12-101(a), which states that [t]his section does not apply to capital expenditures by the ... [MdTA], in connection with State roads, bridges, or highways....). As a result, it concluded that, unless exempted expressly, the Legislature intended for the procurement laws to apply to the MdTA. Id. Nevertheless, our intermediate appellate brethren concluded that this particular agreement was not a procurement contract, making inapposite (1) State procurement laws, as well as (2) administrative law principles, which otherwise would require that the dispute be heard first by the relevant agency, the Board of Contract Appeals, before recourse to the courts. Md. Transp. Auth., 195 Md.App. at 181, 5 A.3d at 1207. The Court of Special Appeals granted that the Board of Contract Appeals is not `palpably without jurisdiction' over a `contract for the procurement of ... services to be rendered to the State,' even if that contract may not technically be a `procurement contract.' Md. Transp. Auth., 195 Md.App. at 182-83, 5 A.3d at 1208 (quoting State v. Md. State Bd. of Contract Appeals and Law Offices of Peter G. Angelos, P.C., 364 Md. 446, 458, 773 A.2d 504, 511 (2001)). It determined, however, that [t]he Agreement is not a procurement contract for vehicles ... because it is not an agreement between the MdTA and the supplier of the vehicles to the agency. Md. Transp. Auth., 195 Md. App. at 184, 5 A.3d at 1208. Nor is the Agreement a procurement contract for lobbying services, the intermediate appellate court resolved, as the [FOP was not] advocating for the agency's position to the Legislature. Md. Transp. Auth., 195 Md. App. at 184-85, 5 A.3d at 1209. To conclude, the Court of Special Appeals emphasized that the Agreement did not create a buyer-seller relationship with a State agency. Md. Transp. Auth., 195 Md.App. at 185, 5 A.3d at 1209. Therefore, whether the Agreement was a procurement contract is not `reasonably debatable,' and the Board of Contract Appeals is palpably without jurisdiction.... Md. Transp. Auth, 195 Md.App. at 183, 185, 5 A.3d at 1208-09; see Md. Transp. Auth., 195 Md. App. at 183, 5 A.3d at 1208 (stating that  Angelos ... teaches ... courts [to] defer to an agency to make its own jurisdictional determination in the first instance, if the question on which jurisdiction turns is `reasonably debatable').
The MdTA charges also that the purported contract was a collective bargaining agreement that was noncompliant with relevant law. The MdTA points out that Md.Code (1993, 2009 Repl.Vol., 2010 Supp.), State Personnel and Pensions (S.P.P.), § 3-503(a) defines collective bargaining as includ[ing] all matters relating to wages, hours, and other terms and conditions of employment, and that the FOP concedes freely that the Agreement concerned a benefit of employmenttake-home vehicles. As the Agreement involves matters associated with collective bargaining, the MdTA posits that the parties should have complied with, but did not, Title 3 of the S.P.P., which governs the process of collective bargaining. The MdTA suggests a number of statutory preconditions, required before any agreement involving matters of collective bargainingthat is, wages, hours, and other terms and conditions of employmentbecomes enforceable. They include (1) the employees have the right to bargain collectively, (2) the employees elected an exclusive representative, (3) the election was certified by the State Labor Relations Board, (4) the agreement was reduced to a memorandum of understanding signed by the Governor or his/her designee, and (5) the agreement was ratified by a majority of the employees in the bargaining unit. The FOP concedes that the Agreement did not comport with the collective bargaining statute, arguing instead that compliance was unnecessary. [T]he Agreement is not a collective bargaining agreement, but rather a simple contract, according to the FOP. The MdTA is assuming that collective bargaining is the sole manner in which to contract; however, [n]othing in the statute or [caselaw] excludes the ability to enter into a simple contract absent the availability of collective bargaining. The Court of Special Appeals held that the Agreement was not subject to the [preconditions/] requirements related to collective bargaining agreements. Md. Transp. Auth., 195 Md.App. at 187, 5 A.3d at 1210. The intermediate appellate court devoted over twenty pages of its opinion to a detailed examination of nine opinions of this Court. Md. Trans. Auth., 195 Md.App. at 185-208, 5 A.3d at 1209-23. It relied, however, in large part upon a few key statements in McCulloch v. Glendening, 347 Md. 272, 701 A.2d 99 (1997); see Md. Transp. Auth., 195 Md. App. at 203-04, 5 A.3d at 1220. In McCulloch, we reiterated that, `absent express legislative authority, a government agency cannot enter into binding arbitration or binding collective bargaining agreements establishing wages, hours, pension rights, or working conditions for public employees.' McCulloch, 347 Md. at 275-76, 701 A.2d at 100 (quoting Office and Prof'l Employees Int'l Union, Local 2 v. Mass Transit Admin., 295 Md. 88, 97, 453 A.2d 1191, 1195 (1982)). [T]he purpose of the rule, we continued, is `to insure that a governmental agency does not, without authority, abdicate or bargain away its statutory discretion.' McCulloch, 347 Md. at 276, 701 A.2d at 100 (quoting Montgomery County Educ. Ass'n v. Bd. of Educ. of Montgomery County, 311 Md. 303, 313, 534 A.2d 980, 984-85 (1987)). Therefore, not all collective bargaining agreements to which the State or a governmental agency is a party require prior express legislative approval.... McCulloch, 347 Md. at 275, 701 A.2d at 100. [I]t is only those that contain a binding arbitration clause or are otherwise binding upon and enforceable against the State. Id. (citations omitted). Without stating as much, the Court of Special Appeals seemed to reach two alternate conclusions. First, it decided that the Legislature authorized expressly the MdTA to enter into collective bargaining agreements. See Md. Transp. Auth., 195 Md.App. at 204, 5 A.3d at 1220 ([T]he Agreement [does not] violate the agency's enabling legislation by purporting to arrogate to the MdTA power that it does not have. (citation omitted)). The intermediate appellate court recognized that, in 2006, the General Assembly had not granted expressly the MdTA or its employees the right to bargain collectively. It concluded, however, that, by virtue of its plenary authority over its own budget, the MdTA occupies the same position as the Governor and General Assembly in McCulloch  and, as such, possesse[d] the discretionary authority to ... enter into an agreement with its employees, [like the present one].... Md. Transp. Auth., 195 Md.App. at 207, 5 A.3d at 1222. In so holding, the intermediate appellate panel leaned heavily upon the following analysis: [T]he agency is empowered to make any contracts and agreements necessary or incidental to the exercise of its powers and performance of its duties. [Transp., § 4-205(c)(1)]. The statutory scheme by which the MdTA exists also grants plenary authority to the agency over its own finances. It funds its operations out of the toll revenues that it collects, and those revenues are not subject to supervision or regulation by any instrumentality, agency, or unit of State or local government. [Transp., § 4-312(c)(1)]. And, unlike most agencies of State government, the MdTA has the independent authority to employ and fix the compensation of ... any ... employees that it considers necessary to exercise its powers and perform its duties. [Transp., § 4-205(d)(1)]. Like all other expenditures of the agency, compensation of its employees comes from the agency's toll revenues. See [Transp., § 4-205(d)(2)]. As we indicated, the Court of Appeals reviewed the predecessor scheme in Wyatt v. State Roads Commission [, 175 Md. 258, 1 A.2d 619 (1938)] and upheld the agency's fiscal structure, determining that the agency's funds were not moneys of the State subject to control by the Comptroller and Treasurer. The MdTA's budget is merely reported to the General Assembly. See [Transp., §§ 4-205(d)(1), 4-210]; see also 70 Op. Att'y Gen. 229 (1985). Neither the Governor nor the General Assembly exercises ultimate discretion over the agency's operational expenditures or the compensation of its employees. [ But see Transp., § 4-203(a) (The [MdTA] is entitled to the staff provided in the State budget.).] Moreover, when the MdTA entered into the Agreement, it did not incur a debt against the treasury of the State. Md. Transp. Auth., 195 Md.App. at 204-05, 5 A.3d at 1220-21 (footnote omitted). Earlier in its opinion, the Court of Special Appeals mentioned also that the MdTA enjoys a `catch-all' grant of authority, empowering it to `do anything else necessary or convenient to carry out the powers granted' to it by statute. Md. Transp. Auth., 195 Md.App. at 141, 5 A.3d at 1183-84 (quoting Trans., § 4-205(g)). Second, the intermediate appellate court decided, seemingly in the alternative, that explicit legislative authorization was unnecessary. See McCulloch, 347 Md. at 275, 701 A.2d at 100 ([N]ot all collective bargaining agreements to which the State or a governmental agency is a party require prior express legislative approval; it is only those that contain a binding arbitration clause or are otherwise binding upon and enforceable against the State. (citations omitted)). Thus, the Agreement here did not bargain away the MdTA's statutory discretion, or attempt to delegate to a third party the discretion of the MdTA or any other State body. Indeed, the Agreement does not delegate any decision making power to an arbitrator or any other third party.... [T]he only obligation the Agreement placed on the [MdTA] was to fund and implement the [THV] program. The Agreement was signed by the [MdTA's] Executive Secretary and was subsequently ratified unanimously by the [MdTA]. The Agreement presents no danger of any party, other than the MdTA itself, controlling the [MdTA's] purse strings. Md. Transp. Auth., 195 Md.App. at 203-04, 5 A.3d at 1220 (footnote omitted). We granted the MdTA's petition for writ of certiorari, Maryland Transportation Authority v. Maryland Transportation Authority Police Lodge #34 of the Fraternal Order of Police, 417 Md. 500, 10 A.3d 1180 (2011).