Court Opinion

ID: 9467936
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:00:03.775128+00
Date Added: 2024-06-11T17:40:35.972299
License: Public Domain

KEITH, Circuit Judge,
dissenting.
I agree with the majority opinion that Owen of Georgia does have standing to contest the award of the contract to Pidgeon-Thomas. However, I respectfully dissent from the opinion in so far as it holds that Shelby County’s rejection of the bid made by Owen of Georgia was a violation of the Shelby County Restructure Act (“Act”).
The court misconstrues the “good cause” provision of subparagraph 10(b) of the Act. It contends that the “good cause” provision refers only to the factors specifically enumerated in subparagraph 10(b) or to factors like the enumerated ones. The majority bases this interpretation of the Act on the ejusdem generis rule of statutory construction. Under that rule, where general language follows an enumeration of specific categories, the general language is to be construed as applying only to things in the same general class as those specifically enumerated. But ejusdem generis is not applicable here. The doctrine only applies “where there is some repugnance or incompatibility between the specific and general expressions” in a statute. State v. Holman, 3 McCord 306, 307 (S.C.1825). See also Villanova v. American Federation of Musicians, Local 16, 123 NJ.Super. 57, 301 A.2d 467, 468 (1973); Cheatham v. Wisconsin, 85 Wis.2d 112, 270 N.W.2d 194, 198 (1978); 2A Sutherland, Statutory Construction, (4th ed. C. Sands 1973) § 47.17 (ejusdem generis does not apply where there is no inconsistency between specific factors and those based upon general statutory language).1 There is no “repugnance or incompatibility” *1097between the enumerated factors in the Restructure Act and the factors considered by Shelby, County under the “good cause” provision. It is clear that taking into consideration the fact that Pidgeon-Thomas is a local concern and that it employed a larger number of minorities than Owen of Georgia is not inconsistent or incompatible with also taking into account financial responsibility and quality of goods. The two additional factors considered by the County do not conflict with the specifically enumerated ones. Therefore, there is no “repugnance or incompatibility” that would allow this court to apply ejusdem generis. Since the doctrine is not applicable the majority has no basis for concluding that the county’s actions were outside the scope of the Act.
However, even if a conflict exists and ejusdem generis is deemed applicable, the doctrine does not prohibit Shelby County’s use of the “good cause” provision which resulted in awarding the contract to Pidgeon-Thomas.
The majority asserts that ejusdem generis requires this court to hold that a bid may be rejected for “good cause” only if the rejection is for some reason which goes to the “heart of the contract”. The majority concludes that the reasons cited by the county — that Pidgeon-Thomas employs a higher proportion of minorities than the appellant, and that Pidgeon-Thomas is a local concern — do not go to the heart of the contract, and, thus, do not constitute “good cause” for rejecting Owen’s bid.
The court’s invocation of ejusdem generis and its reliance solely on cases brought pursuant to federal question jurisdiction cannot be countenanced given this court’s duty to apply Tennessee law in diversity cases.2 Even if ejusdem generis is applicable here as a general principle of law, the rule must be applied in a manner consistent with other laws of Tennessee. The court is bound to decide this case as the Tennessee Supreme Court would decide it. In determining how the highest Tennessee court would have ruled, the court’s construction of Shelby County’s bidding statute should have been governed by: (1) Tennessee statutory construction rules, (2) provisions of the Restructure Act granting broad authority to local governments and (3) decisions of states which have bidding statutes similar to the one at issue here. If the Court had properly considered these factors, along with the ejusdem generis rule, it would have reached a contrary result.3
*1098I
Tennessee rules of statutory construction require a broad reading of the “good cause” provision. Under Tennessee law, this court must construe the statute so that no part is inoperative, superfluous, void or insignificant. In re Gasteigner, 471 F.Supp. 13 (D.C.Tenn.1977). However, if we adopt the majority’s view that “good cause” can only include factors like those enumerated, i. e. like inferior quality or non-conforming goods, the provision here becomes superfluous. The enumerated factors specifically address any conceivable problem relating to inferior quality or otherwise non-conforming goods. The enumerated factors require that a municipal contract must be awarded only after the municipality takes “into consideration the qualities of the articles to be supplied, their conformity to the requirements of the county government, and the delivery terms.” In my view the majority has added no content whatsoever to the “good cause” provision when it concludes that bids may also be rejected for reasons “like” the goods of the lowest bidder are non-conforming or are of inferior quality. It suggests no examples of “good cause” which are not already listed in the statute because under its analysis there are none.4 Simply stated, the majority opinion reads the words “good cause” out of the statute. Therefore, the majority opinion renders the “good cause” provision superfluous and inoperative in violation of Tennessee rules on statutory construction. Invocation of the general principle of ejusdem generis cannot justify this result, since “where the particular words of a statute exhaust a genus, there is nothing ejusdem generis left and in such a case we must give the general words a meaning outside the class indicated by the particular words.” National Bank of Commerce v. Estate of Ripley, 161 Mo. 126, 132, 61 S.W. 587, 588 (1901). See also Sutherland, supra at § 47.21 and cases cited therein.
II
Not only has the court failed to properly apply Tennessee statutory construction rules, it has failed to take into consideration Shelby County’s authority under the Restructure Act. The Act, consistent with the Tennessee rules, also requires that this court give content to the “good cause” provision. In addition, the Act requires that we broadly construe the provision. Section 1.01 reads in relevant part: “Powers and Functions ... It is the intent of this Chapter that the limitations on the powers of county government shall be strictly construed, and that grants of power to county government shall be liberally construed. The majority ignores Section 1.01. Instead of liberally construing the grant of authority in the “good cause” provision, it gives the “good cause” provision the narrowest possible construction by concluding that rejection of the lowest bid for “good cause” is allowed only when the lowest bidder fails to meet an enumerated prerequisite or when the bidder fails to meet a prerequisite “like” an enumerated one. This is inconsistent with a correct application of ejusdem generis. See note 3 supra.
Of course the “good cause” provision cannot be interpreted so as to be without limi*1099tation. For instance, the provision must, like the other provisions, be interpreted so that no other provision becomes superfluous. In my view, the “good cause” provision is properly interpreted if it is read to allow rejection for any reason that does not involve fraud, nepotism, bribery, bad faith, etc., so long as the “good cause” is consistent with the enumerated factors. The reasons proffered by Shelby County are “good cause” within the meaning of the Act for accepting Pidgeon-Thomas’ bid, since those reasons do not make superfluous the other requirements dealing with financial responsibility and quality of the goods. As mentioned above, the enumerated factors require that any bid accepted must come from a financially responsible bidder and be for goods or services of the highest quality for the price offered that the County can procure. Pidgeon-Thomas’ bid met these criteria and, in addition, it was an attractive bid for the other reasons given by Shelby County. Therefore, I would uphold the County’s action as consistent with the statutory scheme of the Restructure Act.
Ill
There are no Tennessee bidding cases which outline the parameters of the authority granted to localities under the “good cause” provision. But the Court should have looked to the bidding statutes of other states for guidance. Had the majority reviewed the case law of this circuit and the case law of states within the circuit, it would have discovered that Shelby County’s use of the “good cause” provision to promote minority employment and local enterprise is consistent with the uses permitted in other jurisdictions under similar competitive bidding statutes.
Competitive bidding statutes are of two kinds: (1) discretionary — :which includes grants of authority allowing the lowest bid to be rejected for some reason other than those specifically listed in the particular statute, and (2) mandatory — which requires that the locality accept the lowest bid. See United States Wood Preserving Company v. Sundmaker, 186 F. 678 (6th Cir. 1911) (construing Ohio law); Bancamerica-Blair Corporation v. State Highway Commission, 265 Ky. 100, 95 S.W.2d 1068 (1936) (citing with approval United States Wood Preserving Co. v. Sundmaker, supra); Weber v. City of Philadelphia, 437 Pa. 179, 262 A.2d 297 (1970). When a statute allows a locality to reject any and all bids, the courts have not reversed the decision to reopen bidding or to grant contracts to other than the lowest bidders in the absence of proof of fraud, collusion, bad faith or arbitrary action. Id. Apparently the majority agrees with Owen of Georgia’s contention that these cases are distinguishable from the instant one because the “good cause” provision here is not a similar grant of discretionary authority. But if the “good cause” provision is not a grant of discretionary power to the county, I am at a loss to determine what the provision could mean since, as the county correctly notes, the provision must be interpreted under Tennessee law as making some substantive contribution to the statutory scheme. The language of the statutory provisions at issue in the above-cited cases vary slightly from the wording of the “good cause” provision here, but the Tennessee provision, like those statutes, is clearly of the type which allows the locality considerable discretion in awarding contracts to one other than the lowest bidder.
In Sundmaker, for instance, the applicable statute instructed the locality to “make written contract with the lowest and best bidder after advertisement...” The complainant’s bid was rejected because the oil it proposed to use did not contain the largest possible amount of anthracene and anthracene oil. The lowest bidder alleged that it should have been awarded the contract, since the advertisement did not make award of the bid contingent upon the amount of the anthracene in the oil. The second lowest bidder received the contract because its oil contained more of the substances. This circuit held that “where authority is given by statute to a Board to let a contract to the lowest and best bidder, discretion is hereby conferred which the courts will not undertake control.” 186 F. at 683. In response to a charge by the *1100complainant that the Board abused its discretion, this court held that it would find an abuse of discretion only where there was fraudulent intent on the part of the Board. The court refused to hold that failure to indicate on the bid advertisement that only the bid with the largest amount of anthracene and anthracene oil would be accepted was fraudulent and thus consisted of an abuse of discretion.
Contrary to the majority’s assertion, discretionary competitive bidding statutes do employ a concept of “relative superiority.” Implicit in this court’s adoption of the abuse of discretion standard of review in Sundmaker is the recognition that what is relatively superior, i. e. what goes to the heart of a locality’s bargain, is a matter on which each locality is best qualified to make the ultimate determination. If the majority opinion had been faithful to the Sundmaker analysis, it would not have concluded that it was improper for Shelby County to add the additional factors after bidding had ended. The court in Sundmaker clearly allowed the lowest bid to be rejected for a reason not indicated in the advertisement. A locality cannot be expected to know all the important considerations which would affect its bargain at the time bidding commences. The “good cause” provision is included in the Restructure Act to give the county the needed flexibility to consider factors not foreseen when the statute was enacted.
Sundmaker’s deference to local actions pursuant to authority granted under state bidding statutes is not abberational. See Bancamerica-Blair Corporation v. State Highway Commission, supra. Bancamerica-Blair involved a Kentucky statute which authorized the Kentucky Highway Commission to accept the “lowest and best bid” if from a financially responsible bidder, and stated that the Commission could reject “any and all bids made either for materials for construction or for the bonds or any one or more of them.” 95 S.W.2d at 1070. There, the Defendant Commission issued, sold and delivered 4V2 percent Revenue bonds in an amount in excess of $5,000,000 par value. This issue was refunded by four percent bonds, of which $5,465,000 par value were outstanding. The State Highway Commission advertised for sealed bids for the purchase of a new issue of refunding bonds in the amount of $5,465,000, with an interest rate not to exceed SV2 percent. Bancamerica-Blair and Blyth & Co. submitted proposals to the Commission. The premium that Bancamerica-Blair agreed to pay was $2,185.50 more than Blyth & Co. agreed to pay. Bancamerica expressly stated that although it would pay the cost of printing the indentures, it would not pay for furnishing, engraving or lithographing the bonds. The differences between the two bids were in the higher premium agreed to be paid by Bancamerica and the provision in the Bancamerica bid concerning cost. When the bids were opened, the Commission indicated to Blyth that the company had not stated its position on the cost issue. Blyth stated, over objection by Bancamerica to this oral modification, that it had previously paid the cost and would do so in this contract. Blyth was awarded the contract as the “highest and best” bidder.
The court held that the Kentucky statute gave the Commission discretionary authority to reject Bancamerica’s bid “with or without cause.” Id. The court further held that whether the price offered by Bancamerica was actually lower than Blyth’s was irrelevant. It reasoned that even if the Commission had mistakenly concluded that Blyth’s bid was lower, the Commission did not act fraudulently, in bad faith, or collusively. Relying on Sundmaker, the court refused to annul the award of the contract without proof of fraud.
Weber, supra, like Bancamerica-Blair and Sundmaker, also supports the proposition that the “good cause” provision here is a grant of discretionary authority which permits any municipal action that does not constitute an abuse of discretion. In Weber the provision at issue allowed the city to “reject all bids if it shall deem it in the interest of the city to do so. Otherwise, the contract shall be awarded to the lowest responsible bidder ...” 262 A.2d at 297. The city rejected all seven bids submitted for the operation of a “General Concession” *1101at the Philadelphia sports stadium because the city’s original specifications did not provide for joint operation of the “General Concessions” with a Stadium Club. After it sent out the invitation to bid, the City concluded that such a joinder was in its best economic interest. The court first noted that the following principles, which stem from judicial respect for the doctrine of separation of powers in government, are guideposts: (1) it is to be presumed that municipal officers properly act for the public good; and (2) courts will not sit in review of municipal actions involving discretion in the absence of proof of fraud, collusion, bad faith or arbitrary action. The court held that the clause gave the city a right to reject “any and all bids”, and that discretionary authority would not be interfered with by the courts without evidence that the city acted arbitrarily, capriciously, or in bad faith. Id. at 302.
If clauses like “a city may reject any and all bids,” and a city must accept the bid of the “lowest and best bidder” allow localities to reject bids for the various reasons listed in Bancamerica, Weber and Sundmaker, then it follows that the “good cause” provision in this case can only be construed in a manner that would at least allow an equivalent amount of discretion here.5 If there were any doubts about this, Tennessee rules of statutory construction, which do not permit any provisions to be interpreted so as to make it superfluous, and Section 1.01 of the Shelby County Restructure Act, which states that grants of power to the County shall be liberally construed, make clear that the “good cause” provision is a grant of discretionary authority to the county. As the court noted in Sundmaker, this grant of authority should not be curtailed unless an abuse of discretion has occurred.
IV
The “good cause” provision makes the Restructure Act a discretionary competitive bidding statute; therefore we should affirm the district court’s decision. The two reasons given by Shelby County for accepting the bid of Pidgeon-Thomas over the lower bidder, Owen of Georgia, clearly do not approach an abuse of discretion under the tests adopted by this court and by other jurisdictions within this Circuit which have similar competitive bidding schemes and statutory construction rules.
The first reason given by Shelby County for the acceptance of Pidgeon-Thomas’ bid was that Pidgeon-Thomas employed a significantly higher proportion of minorities than did Owen of Georgia. The Mayor and the Shelby County Quarterly Court were both committed to an affirmative action program, which included participation by minorities in the construction of the Criminal Justice Complex. The importance of a strong affirmative action program is reflected in a resolution of the Shelby County Quarterly Court adopted September 1976, and signed shortly thereafter by the May- or.6 Pursuant to the resolution, and Section VII of the Act, all bidders were required to submit reports to the county concerning minority employment in their businesses. Because of the obvious importance of the affirmative action policy initiated in the Quarterly Court’s resolution, the Mayor had “good cause” for awarding the contract to Pidgeon-Thomas instead of Owen of Georgia.7 The Quarterly Court did not act arbi*1102trarily when it approved the award. Moreover, the fact that Shelby County did not announce its intention to take into consideration qualitative differences in affirmative action plans should not be sufficient to annul the award. As indicated in the cases discussed above, such non-disclosure is permissible, with or without cause, where the statute allows for rejection of any and all bids. While I am not certain that Tennessee would adopt a rule that a bid can be denied without cause, it is clear that we need not reach that question because “good cause” has been shown here.
Shelby County provided an important additional reason for its decision to give the bid to Pidgeon-Thomas. The County had a policy of encouraging, as much as possible, participation by local firms in the construction of the Criminal Justice Complex. This policy was part of an attempt to lessen the severe unemployment in Shelby County at the time the bids were issued. The Mayor was of the opinion that awarding the bid to a local concern which employed a considerable number of minority employees would be particularly advantageous, since unemployment among minorities in Shelby County is disproportionately high.
It is of significance that prior to the approval of this contract by the Shelby County Quarterly Court, Pidgeon-Thomas voluntarily agreed to reduce its bid to a figure exactly identical to Owen’s bid. The majority contends that the paramount public interest here is having the project completed at the lowest cost. The bid was awarded in a manner consistent with that interest. Also, the bid went to PidgeonThomas, the bidder with the best record of minority employment, and one which is a local concern as well. It is difficult to argue that an aggressive affirmative action program and a municipal policy encouraging the employment of local contractors are against the public interest.8 It is even more difficult to argue that these considerations by Shelby County constituted fraud, bad faith or arbitrary and capricious action.
V
In conclusion, I think that the Shelby County government has behaved responsibly and in the public interest. The majority’s strained construction of the statute in question is an attempt to substitute its judgment for that of the county, and will only trigger additional litigation by disgruntled bidders. It is unfortunate that the Tennessee Supreme Court is not bound by the judgment of this Court. I cannot agree that the county’s reasons are not “good cause” as intended by the Restructure Act. Accordingly, I would hold that Shelby County’s award of the contract to Pidgeon-Thomas did not violate the Act.

. The Court cites to two Tennessee cases which apply ejusdem generis: City of Knoxville v. Brown, 195 Tenn. 501, 260 S.W.2d 264 (1953); Third National Bank v. Impac Limited, Inc., 432 U.S. 312, 97 S.Ct. 2307, 53 L.Ed.2d 368 (1977) (construing Tennessee law). Those cases involved individual interpretations of general language which were patently incompatible with the specific language of the statutes in question.
In City of Knoxville, for example, the Tennessee Supreme Court held that Brown violated a city zoning ordinance by using his yard for removal of parts from automobiles and trucks. The city ordinance zoned the area, which included Brown’s residence, for one-family dwellings. The ordinance limited land-use to eight enumerated purposes. The “catch-all” provision allowed used “customarily incident to any of the above uses when situated in the same dwelling ...” 260 S.W.2d at 266.
Brown argued that his use was permitted under the general provision. The court, applying ejusdem generis, concluded that Brown’s use was incompatible with the specific uses of the property since his use made the land unfit for residential purposes. City of Knoxville is inapposite here. As the Court noted in City of *1097Knoxville, no “stretch of the imagination” was required to conclude that a junk yard was a prohibited use in an area zoned for one-family dwellings only. Id. at 267. The court further stated that the specific language defined the content of the general language. Id. In the present case, the court acknowledges that the “good cause” provisions is separate from the enumerated factors. The facts in City of Knoxville ate sufficiently different from those in the case at bar to make that case of little precedential value here. City of Knoxville is only of aid insofar as it holds that ejusdem generis will be applied by Tennessee courts when the doctrine is deemed applicable.
Third National Bank, supra, is also of questionable applicability here. The majority cites it for “the familiar principle that words grouped in a list should be given related meaning.” In Third National Bank, the statute prohibited any attachment, injunction or execution from being issued against a national bank or its property before final judgment in any state or local court. The court held, without reference to ejusdem generis, that the legislative intent was to prevent only prejudgment seizure of bank property by creditors, and not to apply to a mortgagor-debtor’s action seeking a preliminary injunction to protect its real property from wrongful foreclosure.

. Two Tennessee cases are cited by the court. But see note 1, supra for an analysis of their limited applicability to the facts presented here.

. Ejusdem generis cannot be applied in a vacuum. See Sutherland, supra at § 47.22. In order “[T]o ascertain the meaning of the words of a statute they may be submitted to the test of all appropriate cases of statutory construction, of which the rule of ejusdem generis is only one.” Helvening v. Stockholms Enskilda Bank, 293 U.S. 84, 89, 55 S.Ct. 50, 52, 79 L.Ed. 211 (1934). As the court stated in Ailor v. Tillery, 7 Tenn.App. 679, 683 (1927):
The doctrine of ejusdem generis, however, is only a rule of construction, to be applied as an aid to ascertaining the legislative intent and does not control where it clearly appears from the statute as a whole that no such limitation was intended. Nor does it apply where the specific words of a statute signify subjects greatly different from one another .... nor when the general words must bear a *1098different meaning from the specific words or be meaningless.
More recently, the New Hampshire Supreme Court opined in State v. Small, 99 N.H. 349, 111 A.2d 201, 202 (1955):
It is well established that the rule of ejusdem generis is neither final nor exclusive and is always subject to the qualification that general words will not be used in a restrictive sense if the act as a whole indicates a different legislative purpose in view of the objective to be obtained.
See also Mosby v. Wayne County Civil Service Commission, 360 Mich. 186, 103 N.W.2d 462 (1960); Mills v. City of Barbourville, 273 Ky. 490, 117 S.W.2d 187 (1938); Utica State Savings Bank v. Village of Oak Park, 279 Mich. 568, 273 N.W. 271 (1937), and Woodworth v. State, 26 Ohio St. 196 (1875).

. In a belated attempt to buttress its interpretation of the statute, the majority states that “poor workmanship on a previous job is one example” of “good cause”. While I agree that poor workmanship can be considered good cause under the Act, I disagree that only the majority — not the Mayor and Shelby County Quarterly Court — can determine what constitutes good cause.

. The majority argues that the clause, “lowest and best bidder”, at issue in Bancamerica-Blair, supra, indicates a grant of discretionary authority, but that the clause in the present case does not indicate a similar grant of authority. This contention flies in the face of any common-sense interpretation of the words, “any bid may be rejected for good cause,” used in the clause at issue here.

. Resolution of Shelby County Quarterly Court Setting Goals for the Participation of Minority Contractors in Construction of the Criminal Justice Complex, Adopted September 13, 1976, and dated September 19, 1976.

. The majority’s reliance on Associated General Contractors of California v. San Francisco Unified School District, 616 F.2d 1381 (9th Cir. 1980); Funderberg Builders v. Abbeville City Memorial Hospital, 467 F.Supp. 821 (D.S.C. 1979); Ingelwood-Los Angeles County Civic Center Authority v. Superior Court, 7 Cal.3d 861, 103 Cal.Rptr. 689, 500 P.2d 601 (1972); Commonwealth v. Gill, 5 Mass.App. 337, 363 N.E.2d 267 (1970), to establish the impropriety *1102of Shelby County’s consideration of the minority employment records of its bidders is misplaced. None of the statutes in these cases contain a “good cause” provision or a similar provision granting discretionary authority to the localities. Thus, the interpretations of those statutes provide no guidance for interpreting the discretionary provision in the Restructure Act.

. The majority argues that my interpretation of the Act would allow Shelby County to accept a bid that was 25% higher than the lowest bid, and that such an act by the County would not be in the public interest. Again, the court is substituting its uninformed judgment as to what is financially desirable for the judgment of the Mayor and Quarterly Court who address the problems and needs of the County on a daily basis. It may be that awarding the bid to a contractor who is charging 25% more than the next lowest bidder is in the public interest. For example, if the bidders are otherwise equal and one is a local concern with considerable minority participation in a county with a sizeable minority population, the higher cost to the county on the contract may be obliterated by the increase in local business activity and employment.