# Appendix — City of Cincinnati, Ohio v. Cleveland Construction Construction Construction, Inc. (No. 07-113) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_1241%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 2007 ## Text APPENDIX A SUPREME COURT OF OHIO 2007-0114 [Filed May 2, 2007] Cleveland Construction, Inc. Appellant/Cross-Appellee, V. City of Cincinnati, et al Appellees/Cross-Appellants. ) ) ) ) ) ) ) ) Hamilton App. Nos. C-050749, C-050779, and C-050888, 2006 Ohio 6452, 864 N.E.2d 116. Cleveland Constr., Inc. v. City of Cincinnati, 2006 Ohio 6452, 864 N.E.2d 116, 2006 Ohio App. LEXIS 6410 (Ohio Ct. App., Hamilton County, 2006) JUDGES: O’Donnell, J., would accept the appeal. Lanzinger, J., would accept the appeal. Pfeifer and Cupp, JJ., dissent. OPINION: APPEAL ACCEPTED FOR REVIEW 2a Discretionary appeal accepted on Proposition of Law Nos. J and Ill. O’Donnell, J., would accept the appeal on Proposition of Law No. I only. Lanzinger, J., would accept the appeal on Proposition of Law No. III only. Pfeifer and Cupp, JJ., dissent. APPENDIX B IN THE SUPREME COURT OF OHIO CASE NO. 07-0114 APPEAL NO. C050749, APPEAL NO. C050779 APPEAL NO. C050888 (Consolidated) [Filed January 22, 2007] CITY OF CINCINNATI Defendant-Appellant Vv. CLEVELAND CONSTRUCTION, INC. Plaintiff-Appellee i i i i i ed COURT OF APPEALS FIRST APPELLATE DISTRICT CASE NO. A-0402638 MEMORANDUM IN SUPPORT OF JURISDICTION OF DEFENDANT-APPELLANT CITY OF CINCINNATI 4a JULIA L. MCNEIL (0043535) City Solicitor RICHARD GANULIN (0025642C) MARY FRANCES CLARK (0077497) Assistant City Solicitors CITY OF CINCINNATI 801 Plum Street, Room 214 Cincinnati, Ohio 45202 Telephone: (513) 352-3329 Facsimile: (513) 352-1515 richard.ganulin @cincinnati-oh.gov mary .clark @ cincinnati-oh.gov Attorneys for Defendant-Appellant City of Cincinnati W. KELLY LUNDRIGAN (0059211) GARY E. POWELL (0037546) MANLEY BURKE 225 West Court Street Cincinnati, Ohio 45202 Telephone: (513) 721-5525 Facsimile: (513) 721-4268 wk].@manleyburke.com gpowell@manleyburke.com Attorneys for Plaintiff-Appellee Cleveland Construction, Inc. kok ok & TABLE OF CONTENTS EXPLANATION OF WHY THIS CASE IS A CASE OF PUBLIC AND GREAT GENERAL INTEREST STATEMENT OF THE CASE AND FACTS .. ARGUMENT IN SUPPORT OF PROPOSITIONS OF LAW Proposition of Law No. I Under Ohio law, a disappointed bidder for a City of Cincinnati public contract does not have a constitutionally protected property interest in that contract Proposition of Law No. 2 To prove a deprivation of its right to procedural due process, a disappointed bidder with a constitutionally protected property interest in a public contract must establish that the government entity did not provide sufficient notice and opportunity to be heard Proposition of Law No. 3 A disappointed bidder for a public contract in Ohio cannot recover lost-profit damages in a 42 U.S.C. 1983 action alleging a deprivation of procedural due process 6a Proposition of Law No. 4 A plaintiff does not have standing to seek an injunction against file operation of a municipal corporation unless the plaintiff pleads and proves a concrete and imminent injury in fact Proposition of Law No. 5 A subcontracting outreach program is not impermissibly race-based or gender-based when all bidders have an equal opportunity to comply with the subcontracting outreach program and the program does not create a preference * KK KK APPENDIX C IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO APPEAL NO. C-050749, C-050779, C-050888 [Filed January 18, 2007] CLEVELAND CONSTRUCTION, INC. Appellant/Cross-Appellee, CITY OF CINCINNATI, et al. Appellees/Cross-Appellants. ) ) ) VS. ) ) ) ) ) ENTRY GRANTING MOTION TO STRIKE APPLICATION FOR RECONSIDERATION This cause came on to be considered upon the application of the appellees/cross-appellants for reconsideration, the motion of the appellant/cross-appellee to strike the application as untimely filed, and the response of appellees/cross- appellants to the motion to strike. The Court finds that the motion to strike the application for reconsideration is well taken and is hereby granted. To The Clerk: Enter Upon the Journal of the Court on Jan 18 2007_ per order of the Court. By: /s/ (Copies sent to all counsel) Acting Presiding Judge APPENDIX D IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO APPEAL NOS. C-050749, C-050779, C-050888 TRIAL NO. A-0402638 [Filed December 8, 2006] CLEVELAND CONSTRUCTION, INC., Plaintiff-Appellant/ Cross-Appellee, VS. CITY OF CINCINNATI, Defendant-Appellee/ Cross-Appellant, and TIMOTHY RIORDAN, BERNADINE FRANKLIN, NATE MULLANEY ALICIA TOWNSEND, KATHI RANFORD, and VALLEY INTERIOR SYSTEMS, INC., Defendants-Appellees. JUDGMENT ENTRY This cause was heard upon the appeal, the record, the briefs, and arguments. The judgment of the trial court is affirmed in part, reversed in part, and cause remanded for the reasons set forth in the Opinion filed this date. Further, the court holds that there were reasonable grounds for this appeal, allows no penalty and orders that costs are taxed under App. R. 24. The court further orders that 1) a copy of this Judgment with a copy of the Opinion attached constitutes the mandate, and a) the mandate be sent to the trial court for execution under App. R. 27. To The Clerk: Enter upon the Journal of the Court on December 8, 2006 per Order of the Court. By: /s/Hildebrandt Presiding Judge APPENDIX E IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO APPEAL NOS. C-050749, C-050779, C-050888 TRIAL NO. A-0402638 [Filed December 8, 2006] CLEVELAND CONSTRUCTION, INC., Plaintiff-Appellant/ Cross-Appellee, vs. CITY OF CINCINNATI, Defendant-Appellee/ Cross-Appellant, and TIMOTHY RIORDAN, BERNADINE FRANKLIN, NATE MULLANEY, ALICIA TOWNSEND, KATHI RANFORD, and VALLEY INTERIOR SYSTEMS, INC., Defendants-Appellees. —— Civil Appeals From: Hamilton County Court of Common Pleas. Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause Remanded. Date of Judgment Entry on Appeal: December 8, 2006 SYLVIA SIEVE HENDON, Judge. OPINION {41} This case arose from the city of Cincinnati’s rejection of a bid by Cleveland Construction Co. for drywall work on the expansion and renovation of the Cincinnati Convention Center. At the heart of the dispute was the city’s implementation of its small business enterprise (SBE) program. {€2} Cincinnati Municipal Code (CMC) 321-37 required the city to award a construction contract to the lowest and best bidder. The ordinance set forth a non-exhaustive list of factors that the city purchasing agent could consider in determining the lowest and best bid. One of the factors that could be considered was a contractor’s compliance with the rules and 13a regulations of the city’s SBE Subcontracting Outreach Program.’ {43} Where a lowest-and-best determination was based primarily on the contractor’s subcontracting-outreach compliance, the ordinance had a built-in cap. The contract award could be made, “subject to the following limitation: the bid could not exceed an otherwise qualified bid by ten (10%) percent or Fifty Thousand Dollars ($50,000.00), whichever is lower.” The cap was apparently intended to strike a balance between the city’s efforts to include small businesses in public contracts and the city’s interest in protecting its taxpayers from excessive costs. {44} On December 23, 2003, the city issued an invitation to bid on the Cincinnati Convention Center Expansion and Renovation Project, entitled “Bid Package C/TC-09A Drywall.” The city required bidders to show that they had made a good-faith effort to obtain the participation of SBEs on the project. For the drywall-contract bids, the city established a mandatory SBE-participation goal of 35%. Bidders were notified that their failure to meet the SBE- participation goal could cause a bid to be rejected as nonresponsive. The city received bids until February 5, 2004. {(5} On February 11, 2004, Kathi Ranford, a contract compliance officer, reported to Bernadine Franklin, the city’s purchasing agent, that none of the three bidders for the project’s drywall contract had complied with the 35% SBE- participation requirement. According to Ranford, Cleveland ' CMC 321-37(c)(4). ? CMC 321-37(c). l4a had submitted a bid with 3% SBE participation, Valley Interior Systems had submitted a bid with 34% SBE participation, and Kite, Inc. , had submitted a bid with no SBE participation. In that round of bidding, Cleveland’s bid had been the lowest-dollar bid. {{6} Because none of the bidders had achieved the full 35% SBE-participation goal, the city conducted an emergency rebidding for the drywall contract. On February 24, 2004, Ranford notified Franklin that Cleveland had submitted a re- bid for $8,889,000, with 10% SBE participation, and that Valley had submitted a re-bid for $10,135,022, with 40% SBE participation. {€7} The city’s office of contract compliance deemed Cleveland’s bid to be unacceptable due to its failure to achieve 35% SBE participation. In all other respects, however, Cleveland’s bid had been found acceptable according to the city’s purchasing division. {48} Following a review of the acceptability of the bids, Franklin issued a recommendation to Timothy Riordan, an assistant city manager, that the drywall contract be awarded to Valley. Franklin’s recommendation stated, “Pursuant to Section 321-37 of the Municipal Code, the bid submitted by [Valley] has been determined to be the lowest and best bid.” {€9} Valley’s new bid exceeded Cleveland’s new bid by $1,246,022, well over the $50,000 or 10% cap in CMC 321- 37. Nonetheless, on March 3, 2004, the city awarded the drywall contract to Valley and instructed Valley to commence work under the terms of the contract. 15a Cleveland Files Suit {410} Three weeks later, on March 30, 2004, Cleveland brought an action for injunctive relief and damages against the city, several city employees, and Valley. Cleveland asked the court to restrain the city and Valley from proceeding on the drywall contract and to order the city to award the contract to Cleveland. {411} In addition, Cleveland sought declarations by the court that (1) the city’s award of the contract violated CMC 321-37; (2) the city’s drywall contract with Valley was void; (3) the city’s SBE program was unconstitutional and in violation of Section 1983, Title 42, U.S.Code; (4) the city had deprived Cleveland of a property interest; (5) Cleveland was the lowest and best bidder; and (6) the city’s delegation of discretion to its purchasing agent under the SBE subcontracting-outreach program was void. {412} Finally, Cleveland sought compensatory and punitive damages, as well as attorney fees and costs. {413} The trial court denied Cleveland’s motion for a temporary restraining order. Later, upon moiion, the trial court dismissed the city employees from the action. {414} In June 2005, the case proceeded to a jury trial. At the close of Cleveland’s case, the trial court directed a verdict in favor of the city and Valley on Cleveland’s claims for lost profits. Cleveland’s remaining claims for injunctive and declaratory relief and attorney fees were tried to the bench, by agreement of the parties. {415} At the conclusion of the trial, the court found that the city had violated CMC 321-37 by awarding the drywall 16a contract to Valley rather than to Cleveland. As a result, the court held, the city had abused its discretion in a manner that had denied Cleveland the contract in violation of its federally protected due-process rights and in violation of Section 1983. {416} The court held that the city’s SBE program rules and guidelines created race- and gender-based classifications that rendered the program facially unconstitutional. The court further found that the city had pressured and encouraged bidders, including Cleveland, to draw upon race- and gender- based classifications, in violation of Cleveland’s rights under Section 1983. But the court held that Cleveland had failed to establish that the denial of the drywall contract was the result of the race- and gender-based classifications; rather, it held that the denial had been the result of the city’s preference for small businesses. {417} The court rendered a declaratory judgment that precludes the city from awarding future contracts to a bidder that exceeds the cap set forth in CMC 321-37 if the bid selection is based primarily on the bidders’ compliance with the SBE subcontracting-outreach program. {418} The court permanently enjoined the city from maintaining or applying race-or gender-based classifications in its SBE rules and guidelines, absent a formal determination that such race-based provisions were narrowly tailored and necessary to fulfill compelling governmental interests, or that such gender-based provisions were substantially related to genuine and important governmental objectives. {419} Finally, the court entered judgment in favor of Cleveland as the prevailing party, and against the city, for Cleveland’s reasonable attorney fees and costs pursuant to 17a Section 1988, Title 42, U.S. Code. The court also entered judgment in favor of Valley. {420} On appeal, Cleveland argues that the trial court erred by (J) directing a verdict in favor of the city on Cleveland’s damage claims; (2) refusing to declare Valley’s drywall contract to be void or to prohibit performance under the contract; (3) ruling that Cleveland could not elicit testimony from Valley’s subcontractors with respect to post- contract events; (4) denying Cleveland’s motion for a new trial; (5) granting the motions to dismiss individual city employees; and (6) making findings concerning causation of damages. {21} In its cross-appeal, the city argues that the trial court (1) erred by applying CMC 321-37; (2) lacked jurisdiction over Cleveland’s claims for injunctive relief; (3) erred by concluding that the city had deprived Cleveland of its right to procedural due process; (4) erred by ruling that portions of the city’s SBE program created constitutionally impermissible race- and gender-based classifications; and (5) erred by awarding attorney fees to Cleveland. We first address the city’s assignments of error. The Application of CMC 321-37 {422} In its first assignment of error, the city argues that the trial court erred by applying CMC 321-37 in its analysis of Cleveland’s claims. The city contends that Franklin had not applied the provisions of CMC 321-37 in her review of bids for the project because the ordinance had not been in place at the time the project’s “procurement process” was planned. {423} The record reflects that CMC 321-37 had been adopted in specific contemplation of the convention center 18a project. By its terms, the ordinance had been enacted as an emergency measure due to the city’s “immediate need to proceed with the bidding of the Convention Center and major development projects.” The ordinance specifically applied to the award of construction contracts that exceeded $100,000. And the ordinance had gone into effect before the project’s bid solicitation, and well before the award of the drywall contract. So Franklin’s selection of the lowest and best bidder was subject to CMC 321-37. {924} The city argues that “[e]ven though Valley’s bid was $1.2 million more than Cleveland’s, the project was well within the budget.” This argument fails to take into account that “among the purposes of competitive bidding legislation are the protection of the taxpayer [and the] prevention of excessive costs.”* The fact that the project was under budget was of questionable relevance and was certainly not dispositive of the legality of the bid-selection process. {425} The city argues that even if Franklin had applied CMC 321-37 to the drywall-contract bids, the ordinance’s cap would not have come into play because Cleveland’s bid was not an “otherwise qualified” bid. But the city acknowledges in its brief that “[t}he trial evidence established that Cleveland lost because its ¢rywall bid failed to reserve at least 35% of the work for small business enterprises as the bid documents required.” In other words, but for its SBE noncompliance, Cleveland’s bid was qualified. Where the sole reason that Cleveland’s bid was rejected was its noncompliance with the SBE subcontracting-outreach program, Cleveland was an “otherwise qualified” bidder. Under these circumstances, * Danis Clarkco Landfill Co. v. Clark Cty. Solid Waste Mgmt Dist., 73 Ohio St.3d 590, 602, 1995 Ohio 301, 653 N.E.2d 646. 19a Valley’s SBE-compliant bid could not have exceeded Cleveland’s bid by the $50,000 or 10% cap. {426} Accordingly, we hold that the trial court properly considered and applied CMC 321-37. We overrule the city’s first assignment of error. Cleveland’s Standing {427} In its second assignment of error, the city argues that the trial court lacked jurisdiction over Cleveland’s claims for injunctive relief. The city contends that the possibility that Cleveland might bid on a city contract in the future did not create a risk that it would again be subject to a deprivation of rights. {428} In Ohio, it is well established that standing to challenge the constitutionality of a legislative enactment exists where a litigant “has suffered or is threatened with direct and concrete injury in a manner or degree different from that suffered by the public in general, that the law in question has caused the injury, and that the relief requested will redress the injury.” * {429} In the context of a constitutional challenge to a set- aside program, the “injury in fact” is the inability to compete on an equal footing in the bidding process, and not necessarily the loss of a contract. So to establish standing, a party challenging a set-aside program need only demonstrate that it * State ex rel. Ohio Acad. of Trial Lawyers v. Sheward, 86 Ohio Si.3d 451, 469-470, 1999 Ohio 123, 715 N.E.2d 1062. 20a is able and ready to bid on contracts and that a discriminatory policy prevents it from doing so on an equal basis.” {430} At trial, the city specifically stipulated that Cleveland intended and was able to bid on future city construction projects. And the city’s discriminatory policies would have affected Cleveland’s ability to compete fairly. So Cleveland had sufficient standing to seek injunctive relief against the city. We overrule the city’s second assignment of error. Deprivation of a Property Interest {431} Inits third assignment of error, the city argues that the trial court erred by concluding that the city had deprived Cleveland of a right to procedural due process. {€32} One of the proscriptions of the Fourteenth Amendment is the deprivation of a person’s property interests without due process of law.° In a due-process challenge based upon such a deprivation, we must first determine whether a protected property interest was at stake. {933} Property interests “are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law-rules or understandings that secure certain benefits and that support > Northeastern Fla. Chapter of Associated Gen. Contractors of Am. v. Jacksonville (1993), 508 U.S. 656, 666, 113 S. Ct. 2297, 124 L. Ed. 2d 586. ° Bd. of Regents v. Roth (1972), 408 U.S. 564, 569-570, 92 S. Ct. 270i, 33 L. Ed. 2d 548. 2la claims of entitlement to those benefits.”’ A person has a property interest in a benefit, such as a public contract, if the person has a legitimate claim of entitlement to it.* A person’s unilateral expectation of a benefit is not enough.’ {434} The Sixth Circuit Court of Appeals has held that a disappointed bidder may establish a legitimate claim of entitlement to a public contract in one of two ways. A bidder can either show that it actually was awarded the contract and then deprived of it, or that the government abused its limited discretion in awarding the contract to another bidder.’ {435} Generally, municipalities are vested with broad discretion in matters related to public contracts. But that discretion is not limitless.'' For example, a municipality “may by its actions commit itself to follow rules it has itself established.” !” {436} In the context of lowest-and-best-bidder determinations, Ohio courts are reluctant to substitute their ” Id. at 577, 92 S. Ct. 2701. ® Cleveland Constr. v. Ohio Dept. of Admin. Servs., GSA (1997), 121 Ohio App. 3d 372, 394, 700 N.E.2d 54. ° Roth, supra, at 577, 92 S. Ct. 2701. '© United of Omaha Life Ins. Co. v. Solomon (C.A.6, 1992), 960 F.2d 31, 34; Enertech Elec. v. Mahoning County Commrs. (C.A.6, 1996), 85 F.3d 257, 260. '' Danis, supra, at 604, 1995 Ohio 301, 653 N.E.2d 646. '2 Id. at 603, 1995 Ohio 301, 653 N.E.2d 646. 22a judgment for that of city officials.’? But where city officials abuse the discretion vested in them, courts will intervene.” An abuse of discretion “connotes more than an error of law or of judgment; it implies an unreasonable, arbitrary, or unconscionable attitude. * * * ‘Arbitrary’ means ‘without adequate determining principle; * * * not governed by any fixed rules or standard .’ * * * ‘Unreasonable’ means ‘irrational.’”! {437} In this case, the city had established a “fixed rule” with respect to the award of a contract based primarily upon the bidder’s subcontracting-outreach program compliance. In that instance, CMC 321-37 required the city to apply the ordinance’s cap. {9438} But, here, the evidence demonstrated that the city had arbitrarily ignored the cap in awarding the contract to Valley. Thus, we agree with the trial court that the city’s failure to follow the directive of its own ordinance constituted an abuse of discretion that resulted in a deprivation of Cleveland’s property interest in the contract award. We overrule the city’s third assignment of error. SBE Program Provisions Were Facially Unconstitutional {439} In its fourth assignment of error, the city argues that the trial court erred by ruling that elements of the rules '5 See Cedar Bay Constr., Inc. vy. Fremont (1990), 50 Ohio St.3d 19, 552 N.E.2d 202. '* Id. at 21-22, 552 N.E.2d 202. '? Dayton, ex rel. Scandrick v. McGee (1981), 67 Ohio St.2d 356, 359, 423 N.E.2d 1095 (emphasis added). 23a and guidelines in the city’s SBE program created constitutionally impermissible race- and gender-based classifications. The city contends that the program was a lawful “outreach” program that encouraged contractors to use “good faith efforts” to promote opportunities for minorities and females. {440} The Fourteenth Amendment requires strict scrutiny of all race-based action by state and local governments."° Racial classifications must serve a compelling government interest and must be narrowly tailored to further that interest.'’ Gender-based classifications, by contrast, require an “exceedingly persuasive” justification.” {441} At trial, the city did not put forth any argument or evidence to demonstrate that its SBE program could withstand such heightened scrutiny. Instead, the city relied on its assertion that increased scrutiny should not apply in the first instance because its SBE program created neither race- nor gender-based classifications. {442} On appeal, the city acknowledges that it had predetermined estimates of the availability of minorities and females for each trade represented in the convention center project. But the city argues that its availability estimates were '© Richmond v. J.A. Croson Co. (1989), 488 U.S. 469, 109 S. Ct. 706, 102 L.. Ed. 2d 854. '7 Adarand Constructors v. Pena (1995), 515 U.S. 200, 235, 115 S. Ct. 2097, 132 L. Ed. 2d 158. '§ United States v. Virginia (1996), 518 U.S. 515, 533, 116 S. Ct. 2264, 135 L. Ed. 2d 735: 24a for informational purposes only, and that bidders were required to do nothing in response. {443} Racial or gender classifications may arise from a regulation’s strict requirements, such as mandated quotas or set-asides. But rigid mandates are not a prerequisite to a finding of a racial classification. '? Where regulations pressure or encourage contractors to hire minority subcontractors, courts must apply strict scrutiny.” {944} For example, in Adarand Constructors v. Pena,”’ the United States Supreme Court considered federal regulations that provided financial incentives to bidding contractors to hire minority subcontractors. The regulations did not require contractors to use minority subcontractors. But contractors would receive additional compensation if they did so. The court held that, to the extent that the regulations provided incentives to contractors to use race-based classifications, the regulations were subject to strict scrutiny.” {445} In determining whether strict scrutiny must be applied to the city’s SBE program, we must look behind its ostensibly neutral labels such as “outreach program” and “participation goals.” The program’s rules and guidelines '° Bras v. Calif. Pub. Utils. Comm. (C.A.9, 1995), 59 F.3d 869. 0 See Lutheran Church-Missouri Synod v. FCC (C.A.D.C., 1998), 332 U.S. App. D.C. 165, 154 F.3d 487; Monterey Mechanical Co. v. Wilson (C.A.9, 1997), 125 F.3d 702; Safeco Ins. Co. of America v. White House (C.A.6, 1999), 191 F.3d 675. 71 (1995), 515 U.S. 200, 115 S. Ct. 2097, 132 L. Ed. 2d 158. ? Id. at 224, 115 S. Ct. 2097. 25a “are not immunized from scrutiny because they purport to establish ‘goals’ rather than “quotas.’[Courts] look to the economic realities of the program rather than the label attached to it.” {446} Under the city’s SBE rules and guidelines, all bidders were required to use “good faith efforts” to promote opportunities for minority- and women-owned businesses (MBEs and WBEs) to the extent of their availability as determined by the city. With respect to the drywall portion of the project, the city estimated that the availability of MBEs was 13.09%, and that it was 1.05% for WBEs. {447} Bidders were required to provide detailed descriptions of the techniques used to obtain participation of MBEs and WBEs. The city would then evaluate each bidder’s documented efforts to achieve participation of MBEs and WBEs. If that review determined that a bid’s utilization percentage for MBEs and WBEs was lower than the estimated availability for those groups, the bid would be flagged for a discrimination investigation. {448} Where the city’s SBE program required documentation of a bidder’s specific efforts to achieve the participation of minority subcontractors to the extent of their availability as predetermined by the city, the program undeniably pressured bidders to implement racial preferences.’ Therefore, the program’s rules must be subject to strict scrutiny. To the extent that the rules pressured bidders to hire women-owned subcontractors, the city was > Bras, supra, at 874. ** Safeco Inc., supra, at 692, citing Lutheran, supra, at 491. 26a required to demonstrate an “exceedingly persuasive” justification for the differential treatment. {449} Given that the city effectively conceded that it could not justify race- or gender-based classifications under either standard of heightened scrutiny, the trial court properly determined that those elements of the program that caused bidders to use racial- or gender-based preferences were unconstitutionally impermissible. Award of Attorney Fees {450} In its fifth assignment of error, the city argues that the trial court erred by awarding attorney fees to Cleveland. The city contends that Cleveland was not entitled to the award because it was not a prevailing party. {4513} A “prevailing party” is one who “succeed[s] on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit.” To be a “prevailing party,” there must have been “a court-ordered ‘change [in] the legal relationship’” between the parties.”° In this regard, a declaratory judgment may serve as the basis for an award of attorney fees.” > Hensley v. Eckerhart (1983), 461 U.S. 424, 433, 103 S. Ct. 1933, 76 L. Ed. 2d 40. 6 Buckhannon Bd. v. W. Va. Dept. of Health & Human Res. (2001), 532 U.S. 598, 604, 121 S. Ct. 1835, 149 L. Ed. 2d 855. 2? Hewitt v. Helms (1987), 482 U.S. 755, 761, 107 S. Ct. 2672, 96 L. Ed. 2d 654. 27a {452} But the entry of a declaratory judgment in a party’s favor does not automatically render that party a prevailing party under Section 1988.”* “In all civil litigation, the judicial decree is not the end but the means. At the end of the rainbow lies not a judgment, but some action (or cessation of action) by the defendant that the judgment produces-the payment of damages, or some specific performance, or the termination of some conduct. Redress is sought through the court, but from the defendant. This is no less true of a declaratory judgment suit than of any other action. The real value of the judicial pronouncement - what makes it a proper judicial resolution of a ‘case or controversy’ rather than an advisory opinion - is in the settling of some dispute which affects the behavior of the defendant towards the plaintiff .” (Emphasis in original.)” {453} We hold that the trial court did not abuse its discretion in ordering attorney fees. Cleveland successfully challenged the unconstitutional race- and gender-based provisions of the city’s SBE program. As a result, the city will no longer be permitted to apply those provisions against Cleveland or other bidders on city contracts. In that regard, Cleveland was a prevailing party because the judgment had a. distinct effect on the city’s behavior. Accordingly, we overrule the city’s fifth assignment of error. Directed Verdict {954} In its complaint, Cleveland sought damages for the loss of profits that it would have realized had it been awarded *8 Rhodes v. Stewart (1988), 488 U.S. 1, 109 S. Ct 202, 102 L. Ed. 2d 1. *? Hewitt, supra, at 761, 107 S. Ct. 2672 28a the drywall contract. Cleveland now argues in its first assignment of error that the trial court erred by directing a verdict in favor of the city on its lost-profits claim. {455} In considering a motion for a directed verdict, a trial court must construe the evidence most strongly in favor of the party against whom the motion is made.” In doing so, if the court “finds that upon any determinative issue reasonable minds could come to but one conclusion upon the evidence submitted and that conclusion is adverse to such party, the court shall sustain the motion and direct a verdict for the moving party as to that issue.”* {456} “A motion for directed verdict * * * does not present factual issues, but a question of law, even though in deciding such a motion, it is necessary to review and consider the evidence.”*” Because a question of law is presented, we apply a de novo standard of review to a directed verdict.® {457} Cleveland acknowledges that the Ohio Supreme Court’s recent decision in Fairlawn v. Cementech™ resolves *® Civ.R. 5O(A)(4). 3! Civ.R. SO(A)(4). Goodyear Tire & Rubber Co. v. Aetna Cas. & Sur. Co., 95 Ohio St.3d 512, 2002 Ohio 2842, 769 N.E.2d 835, “4, quoting O’Day v. Webb (1972), 29 Ohio St.2d 215, 280 N.E.2d 896, paragraph three of the syllabus. 3 Cleveland Elec. Illum. Co. v. Pub. Util. Comm., 76 Ohio St.3d 521, 523, 1996 Ohio 298, 668 N.E.2d 889. * 109 Ohio St.3d 475, 2006 Ohio 2991, 849 N.E.2d 24. 29a its claim for damages under state law. In Cementech, the court held that when a municipality violates competitive- bidding laws in awarding a competitively bid project, a disappointed bidder cannot recover its lost profits as damages. {458} But in addition to its claim for damages under state law, Cleveland sought damages under federal law, Section 1983, Title 42, U.S.Code, for the city’s deprivation of its property interest in the drywall contract. Under Section 1983, a party who has been deprived of a federal right under the color of state law may seek relief through “an action at law, Suit in equity, or other proper proceeding for redress.” {459} The basic purpose of a Section 1983 damage award is to compensate persons for injuries caused by the deprivation of constitutional rights.” For this reason, no compensatory damages may be awarded in a Section 1983 suit without proof of actual injury. The level of a person’s compensatory damages under Section 1983 is ordinarily determined according to principles derived from the common law of torts.*’ {460} In Adarand Constructors v. Pena,*® the United States Supreme Court considered whether a rejected bidder had standing to seek injunctive relief against future application *® Carey v. Piphus (1978), 435 U.S. 247, 253-254, 98 S. Ct. 1042, 55 L. Ed. 2d 252. °° Memphis Community Sch. Dist. v. Stachura (1986), 477 U.S. 299, 306, 106 S. Ct. 2537, 91 L. Ed. 2d 249. *” Id. at 306-307, 106 S. Ct. 2537. ** (1995), 515 U.S. 200, 115 S. Ct. 2097, 132 L. Ed. 2d 158. 30a of a minority set-aside program. In doing so, the Court presumed that the rejected bidder was entitled to seek damages for the lost contract: {461} “Adarand, in addition to its general prayer for ‘such other and further relief as to the Court seems just and equitable,’ specifically seeks declaratory and injunctive relief against any future use of subcontractor compensation classes. * * * Before reaching the merits of Adarand’s challenge, we must consider whether Adarand has standing to seek forward- looking relief. Adarand’s allegation that it has lost a contract in the past because of a subcontractor compensation clause of course entitles it to seek damages for the loss of that contract [.]” (Emphasis added.) {462} Those damages may include a disappointed bidder’s lost profits.” In W.H. Scott Constr. Co., Inc. v. Jackson,“ the Fifth Circuit Court of Appeals considered an equal-protection challenge to a policy encouraging minority participation in city construction projects. The court upheld an award of lost profits to a rejected bidder who had sought damages from the city under Section 1983. {463} Similarly, in Hershell Gill Consulting Engineers, Inc. v. Miami-Dade Cty., Fla.,*' the court held that a county was liable to the plaintiffs under Section 1983 for any compensatory damages resulting from its unconstitutional affirmative-action programs. The court held that the plaintiffs’ 9 See Flores v. Pierce (C.A.9, 1980), 617 F.2d 1386, 1392; Chalmers v. Los Angeles (C.A.9, 1985), 762 F.2d 753. “” (C.A.5, 1999), 199 F.3d 206. “ (S.D.Fla.2004), 333 F. Supp. 2d 1305. 3la damages could include their lost profits, but that the plaintiffs in that case had failed to prove that any actual losses had resulted from the unconstitutional programs.* {464} In this case, the trial court concluded that Cleveland’s failure to adduce evidence concerning the degree of completion of the drywall contract precluded Cleveland from proceeding on its claim for money damages. The court reasoned that Cleveland’s damages were speculative, not due to a failure of proof as to Cleveland’s anticipated profits, but due to the court’s misapprehension that Cleveland’s damage claim was wholly dependent on its claim for injunctive relief. {465} Certainly, the status of the drywall project would have been relevant to a determination of any injunctive relief the court may have awarded, but that evidence was not critical to Cleveland’s claim for Section 1983 damages. In effect, the trial court’s entry of a directed verdict on the damage claim precluded Cleveland from seeking redress, even though Cleveland could have waited to file suit until the drywall contract had been completed. The issuance of a directed verdict on the issue of Section 1983 damages before the contract’s completion had the absurd result of denying redress because of Cleveland’s diligence in asserting its claims. {466} We recognize that a plaintiff seeking redress under Section 1983 is required to mitigate its damages.*’ But once the plaintiff has presented evidence of damages, the defendant has the burden of establishing the plaintiffs failure ** Id. at 1339. * Meyers v. Cincinnati (C.A.6, 1994), 14 F.3d 1115, 1119. 32a to properly mitigate damages.“ So once Cleveland presented evidence of damages, the burden of proof on the issue of mitigation was on the city. {467} Because a jury could have concluded that Cleveland had established all the elements of its Section 1983 claim for damages, we hold that a directed verdict in favor of the city was unwarranted. Consequently, we sustain Cleveland’s first assignment of error in part, reverse the entry of the directed verdict on the Section 1983 damage claim, and remand the case for a new trial on the issues of liability and damages with respect to Cleveland’s lost-profits claim under Section 1983. {468} Because Cleveland’s fourth and sixth assignments of error relate to the trial court’s dismissal of its damage claims, we address the assignments out of order. Cleveland argues that the trial court erred by denying its motion for a new trial, given the court’s erroneous dismissal of its damage claim under Section 1983. Cleveland also contends that the trial court erred by making “a finding that, essentially, amount[ed] to a directed verdict on the issue of proximate causation of Cleveland’s damages in addition to that given at trial.” For the reasons set forth in our disposition of Cleveland’s first assignment of error, we sustain the fourth and sixth assignments of error. The Denial of Injunctive Relief {469} In its second assignment of error, Cleveland argues that the trial court erred by refusing to declare the drywall * Id., citing Rasimas v. Michigan Dept. of Mental Health (C.A.6, 1983), 714 F.2d 614. 33a contract unenforceable and by failing to enjoin performance of the contract. Cleveland contends that the trial court should have enjoined performance of the contract despite the fact that substantial work had been completed on the project. {470} An appellate court need not consider an issue where the court becomes aware of an intervening event that has rendered the issue moot.* The duty of an appellate court is to decide actual controversies between parties and to render judgments that may be carried into effect.“ “Thus, when circumstances prevent an appellate court from granting relief in a case, the mootness doctrine precludes consideration of those issues.”*’ For example, in the context of appeals involving construction projects, Ohio courts have held that an appeal is rendered moot where the appellant fails to obtain a stay of execution of the trial court’s judgment and construction commences.“ {{71} In this case, there is no dispute that the convention center project, which was substantially completed at the time *° Cincinnati Gas & Elec. Co. v. PUC of Ohio, 103 Ohio St.3d 398, 2004 Ohio 5466, 816 N.E.2d 238, at 415, citing Miner v. Witt (1910), 82 Ohio St. 237, 238, 92 N.E. 21, 8 Ohio L. Rep. 71. “© Miner, supra, at 238, 92 N.E. 21. *’ Schwab v. Lattimore, 166 Ohio App. 3d 12, 2006 Ohio 1372, 848 N.E.2d 912, at 410. ** Schuster v. Avon Lake, 9" Dist. No. 03CA008271, 2003 Ohio 6587, at 43; Pinkney v. Southwick Invs., L.L.C., 8" Dist. Nos. 85074 and 85075, 2005 Ohio 4167; Bd. of Commrs. v. Saunders, 2” Dist. No. 18592, 2001 Ohio 1710; Smola v. Legeza, 11" Dist. No. 2004-A-0038, 2005 Ohio 7059; Redmon v. City Council, 10" Dist. No. OSAP-466, 2006 Ohio 2199. 34a that the trial court denied the injunction, is now completed in its entirety. At no point in the proceedings did Cleveland obtain a stay of the trial court’s denial of its request for a temporary restraining order. In fact, as the trial court pointed out, Cleveland did not pursue preliminary injunctive relief for an entire year. Instead, Cleveland acceded to several continuances. In denying Cleveland’s motion for a preliminary injunction, the trial court noted the following: {472} “The court at this time will deny Cleveland’s motion for injunctive relief pending trial. The parties’ desires with regard to the scheduling of this case have been solicited on a regular basis. After the action was removed to and returned from federal court, Cleveland opted not to seek a prompt hearing on [a] preliminary injunction, but sought rather to engage in the extended discovery reflected in the voluminous materials relating to the summary judgment motions. Cleveland then waited to the final day of the dispositive motion period - almost one year after the action was filed and roughly three months prior to the scheduled June 20, 2005 trial date - to pursue its preliminary injunction request.” {473} At this point, we can not render a judgment that could be carried into effect with respect to the performance of the drywall contract. Even if we concluded (which we expressly do not) that the trial court had erred in failing to enjoin the contract’s performance, our opinion would only be advisory in nature. Consequently, we decline to address the assignment of error on its merits. Evidentiary Rulings {974} In its third assignment of error, Cleveland argues that the trial court erred by ruling that it could not elicit 35a testimony from Valley’s subcontractors about events that had occurred after the city had awarded the contract to Valley. In support of its argument, Cleveland directs us to its examination of one of Valley’s subcontractors, Marti Stouffer-Heis, owner of MS Construction Consultants. {{75} “Relevant evidence” is defined by Evid.R. 401 as “evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Evid.R. 402 provides that relevant evidence is admissible, subject to enumerated exceptions, and that evidence that is not relevant is not admissible. Although the terms of Evid.R. 402 are mandatory, a trial court is vested with broad discretion in determining whether evidence is relevant.” A reviewing court is, therefore, limited to a determination of whether the trial court abused its discretion in admitting or excluding the disputed evidence.” {476} Cleveland’s attorney attempted to elicit testimony from Stouffer-Heis about the city’s post-award enforcement of its SBE program. Counsel asked whether Stouffer-Heis had been able to perform trer described “[ljogistics, project coordination” tasks at the construction site, and whether the city had performed amy imvestigation upon submission of her request to be certified as an SBE supplier. {477} The trial court indicated that it would allow testimony by a subcontractor with respect co the current status ® See Cincinnati v. Banks (2001), 143 Ohio App. 3d 272, 287, 757 N.E.2d 1205: Siuda v. Howard, i“ Dist. Nos. C-000656 and C- 000687, 2002 Ohio 2292, €25. © See Banks, supra. 36a of the uncompleted project. And the court expressly permitted counsel to question Stouffer-Heis about whether she had been certified as an SBE supplier prior to the contract award. But the court instructed counsel to otherwise restrict his questioning to matters that had occurred prior to the contract award to Valley, because Cleveland’s complaint had been predicated on the rejection of its bid. {478} We find no abuse of discretion by the trial court in ruling that testimony related to post-award program enforcement was irrelevant and inadmissible. We overrule Cleveland’s third assignment of error. Dismissal of City Employees {479} In its fifth assignment of error, Cleveland argues that the trial court erred when it granted the individual defendants’ motion to dismiss. The trial court dismissed Cleveland’s claims against city employees Riordan, Franklin, Mullaney, Townsend, and Ranford in their “personal and individual capacities,” on the basis of qualified immunity. Cleveland had also sued the employees in their “official capacities.” Because the trial court did not explicitly dismiss the claims against the employees in their official capacities, we treat the official-capacity claims as claims against the city.” {480} The doctrine of qualified immunity generally shields public officials performing discretionary functions from liability for civil damages to the extent that their conduct >' See Asher Investments, inc. v. Cincinnati (1997), 122 Ohio App. 3d 126, 137, 701 N.E.2¢ 400; Norwell v. Cincinnati (1999), 133 Ohio App. 3d 790, 729 N.E.2d 1223. 37a does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.” {481} The doctrine recognizes the strong public interest in protecting public officials from the costs of defending against claims. A public official’s entitlement to avoid the burdens of litigation “is an immunity from suit rather than a mere defense to liability; and like an absolute immunity, it is effectively lost if a case is erroneously permitted to go to trial.”°? To this end, a ruling on the issue of qualified immunity should be made as early as possible in the proceedings, before the commencement of discovery.” “[A] quick resolution of a qualified immunity claim is essential.” {{82} “Where a defendant official is entitled to qualified immunity, the plaintiff must plead facts which, if true, describe a violation of a clearly established statutory or constitutional right of which a reasonable public official, under an objective standard, would have known. The failure to so plead precludes a plaintiff from proceeding further, even from engaging in discovery, since the plaintiff has failed to * Harlow v. Fitzgerald (1982), 457 U.S. 800, 818, 102 S. Ct. 2727, 73 L. Ed. 2d 396. 3 Mitchell v. Forsyth (1985), 472 U.S. 511, 526, 105 S. Ct. 2806, 86 L. Ed. 2d 411. 4 Id. ** Will v. Hallock (2006), 546 U.S. 345, 126 S. Ct. 952, 960, 163 L. Ed. 2d 836. 38a allege acts that are outside the scope of the defendant’s immunity.”*° {483} In this case, Cleveland alleged that the city employees had violated its rights to due process and equal protection by failing to apply the cap in CMC 321-37 and by rejecting its bid as nonresponsive after applying provisions of a race-conscious program. These allegations were insufficient as a matter of law to describe a violation of a clearly established constitutional right. As demonstrated by the complex nature of the issues already discussed, the individual defendants could not have reasonably known that their actions were unconstitutional. Accordingly, we overrule Cleveland’s fifth assignment of error. Conclusion In conclusion, we reverse the trial court’s entry of a directed verdict on Cleveland’s claim for lost profits under Section 1983. We remand the cause for a new trial on the issues of liability and damages under Section 1983. In all other respects, the trial court’s judgment is affirmed. Judgment accordingly. HILDEBRANDT, P.J., and PAINTER, J., concur. *© Salt Lick Bancorp v. FDIC (May 30, 2006), C.A.6 Ne. 05-5291, __ F.3d ___, 187 Fed. Appx. 428, citing Kennedy v. Cleveland (C.A.6, 1986), 797 F.2d 297, 299. APPENDIX F COMMON PLEAS COURT HAMILTON COUNTY, OHIO CASE NO: A0402638 [October 7, 2005] Cleveland Construction, Inc., Plaintiff, City of Cincinnati, et al., Defendants. ) ) ) ) ) ) ) ) ENTRY DENYING PLAINTIFF’S MOTION FOR A NEW TRIAL This matter comes before the court on Plaintiff's motion for a new trial based on Plaintiff's position that “the Court’s ruling dismissing Cleveland’s damage remedy [relating to claimed lost profits and uncertain bid preparation costs] was error....” Plaintiff's motion for a new trial at 5. Plaintiff's position here clearly is not precluded by Plaintiff's earlier observation (in the fee award context) that: “As the Court (and the City) realize, cases where lost profits have been awarded in competitive bidding scenarios involving equal protection challenges are practically nonexistent. Most cases involving successful equal protection challenges to programs 40a such as the one at issue here result in relief of exactly the same nature as that granted here.” Reply Memorandum in Support of Motion of Plaintiff for Award of Attorney Fees and Costs (August 22, 2005) at 7. Nonetheless, for reasons already set forth by the court, including those discussed in the court’s post-trial entry of July 13, 2005, the court does not find Plaintiff's argument here well taken. The motion is denied. SO ORDERED. Judge Nelson, Judge Kelly Lundrigan, 225 West Court Street, Cincinnati, OH 45202 Leonard Weakley, Jr., One West Fourth Street, Suite 900, Cincinnati, OH David Barth, 537 East Pete Rose Way, Suite 400, Cincinnati, OH 45202 APPENDIX G COURT OF COMMON PLEAS HAMILTON COUNTY, OHIO Case No. A0402638 [Filed August 29, 2005] Cleveland Construction, Plaintiff, City of Cincinnati, et al., Defendants. ) ) ) ) ) ) ) ) FINAL JUDGMENT ENTRY This final judgment entry is based on and incorporates in full the court’s post-trial entry of July 13, 2005. As set forth in that prior entry, the court finds and adjudges that: 1) Defendant the City of Cincinnati (“the City”) violated the requirements of Cincinnati Municipal Code Section 321-37 (“Bid; Award to Lowest and Best”) in awarding the Convention Center drywall contract at issue to Defendant Valley Interior Systems, Inc. (“Valley”) rather than to Plaintiff Cleveland 42a Construction, Inc. (“Cleveland Construction”) when the award was “based primarily upon” compliance with the City’s Subcontracting Outreach Program and Valley’s bid exceeded Cleveland Construction’s by $1,246,022.00. That additional cost exceeded the $50,000 cap established by Code Section 321-37, and the City acknowledged that Cleveland Construction was otherwise qualified to perform the work. In making its award, the City abused its discretion in a manner that harmed the public and denied Cleveland Construction the contract in violation of Cleveland Construction’s federally protected due process rights and in violation of 42 U.S.C. Section 1983. The City’s Small Business Enterprise program Rules and Guidelines as in effect at the time of contract award and trial create race and gender based classifications for which the City claims no compelling governmental! interest and offers no basis to satisfy any appropriate intermediate scrutiny review. The program is to that extent unconstitutional on its face. Further, in the process of soliciting bids in this matter, the City did pressure and encourage bidders, including Plaintiff, to draw upon race and sex-based classifications that the City concedes could not withstand the heightened level of review that the court finds mandated by governing law. The City in that regard violated Cleveland Construction’s rights under 42 U.S.C. Section 1983. However, Cleveland Construction failed to establish that the City’s race and sex based classifications (as opposed to the City’s small business preference) resulted in the loss of the contract at issuc. 43a Further, the court enters a declaratory judgment, in favor of Cleveland Construction and against the City, that City Code Section 321-37(c) in its current form provides, among other things, that where the City elects to enter into a construction contract on the basis of the “lowest and best” bid, and where that selection is based primarily upon the City’s determination of the bidders’ relative compliance with the City’s SBE Subcontracting Outreach Program rules and regulations, the City may not award the contract to a bidder whose bid amount exceeds an otherwise qualified bid by ten percent or fifty thousand dollars. The court also enters a declaratory judgment, in favor of Cleveland Construction and against the City, that the City’s SBE Rules and Guidelines as of the date of trial, and as promulgated by the City as official policy pursuant to City ordinance, contain race and sex based classifications that violate the equal protection clause of the United States Constitution. The court also enters judginent against the City by permanent injunction prohibiting the City from maintaining or applying any iteration of the SBE Rules and Guidelines provisions specified at pages 13-14 of the court’s July 13, 2005 post-trial entry, or any substantially comparable provisions making race or gender based classifications through similar formulations, absent a formal, public determination by the City establishing that such provisions are, in the case of racial classifications, narrowly tailored to advance a compelling goverrtmental interest, or, in the case of gender classifications, substantially related to genuine and important governmental objectives. The court notes that the City acknowledged during this litigation that it was not in a position to make such showings. For the reasons set forth in its July 13, 2005 entry, the court does not enjoin drywall 44a work (well under progress at this stage) with regard to the Convention Center project. The court also enters judgment in favor of Cleveland Construction, as the prevailing party and against the City, for its reasonable attorney fees and costs pursuant to 42 U.S.C. Section 1988, in the amount of $433,290.00. In arriving at that figure, the court has declined to award fees for certain preliminary and post-trial activities and for certain matters relating to potential expert witness testimony on matters not directly relevant to the issues presented to the court. The court has reviewed Cleveland Construction’s fee application in light of prevailing standards (see, e.g., Grycza v. Steger [6" Dist. App. 1994], 97 Ohio App. 3d 82, 84 [“ordinarily a prevailing plaintiff should recover its attorneys fees”]; Buckhannon Bd. and Care Home, Inc. v. W. Va. Dept Health and Human Resources [2001], 532 U.S. 598; Morscott, Inc. v. City of Cleveland [6" Cir. 1991 ], 936 F.2d 271 [absent special circumstances, trial court “’must’” award fees to the prevailing plaintiff]), and with regard for the degree of success obtained through judicially enforceable remedies that alter the contemplated future legal relationship of the parties. The court does not find the City’s memorandum in opposition to any fee award persuasive (including the City’s less than full account of its shifting positions on whether its own Rules and Guidelines even had been formally promulgated, cf. City’s May 11, 2005 brief at 13 arguing that the Rules and Guidelines as attached to Cleveland Construction’s amended complaint “do not have the force of law” and are not “official policy” - a matter of significance to both prongs of Plaintiff's action). Cow costs as recorded by the Clerk of Courts are asses. te the Defendants to be shared equally between them. Although Valley’s legal arguments did not prevail to the (very 45a considerable) extent that they mirrored the arguments of the City on those issues as to which the court awards judgment to Plaintiff Cleveland Construction against the City, the court awards no separate relief against Valley and enters judgment for Valley to that effect for the reasons stated in the July 13, 2005 post-trial entry. This is a final order and there is no just cause for delay. The Clerk of Courts is directed to serve notice of this final judgment upon the parties in accordance with the civil rules. SO ORDERED /s/ Fred Nelson Judge cc: Kelly Lundrigan, 225 West Court Street, Cincinnati, OH 45202 (fax: 721-4268) Leonard Weakley, Jr., One West Fourth Street, Suite 900, Cincinnati, OH 45202 (fax: 381-9206) David Barth, 537 East Pete Rose Way, Suite 400, Cincinnati, OH 45202 (fax: 852-8222) 46a APPENDIX H COURT OF COMMON PLEAS HAMILTON COUNTY, OHIO CASE NO.: A040263 [Filed August 19, 2005] CLEVELAND CONSTRUCTION, INC., Plaintiff, -: CITY OF CINCINNATI, et al., Defendants. AGREED ENTRY It is agreed by counsel for the City and Cleveland Construction Company that the hearing scheduled for August 19, 2005 at 1:30 p.m. for Cleveland’s Motion for legal fees is hereby moved to a report hearing on August 26, 2005 at 2:30 p.m. as counsel has agreed to submit the issue on briefs to the Court. All other agreements and prior Orders or Entries stay in effect. Counsel for Cleveland Construction Company will submit its Reply Brief on or before August 22, 2005. /s/ Judge Nelson HAVE SEEN: Julia L. McNeil, Esq. #0043535 City Solicitor /s/ Leonard A. Weakley, Jr., Esq. #0000152 Christopher J. Aluotto, Esq. #0059555 Attorneys for the City of Cincinnati RENDIGS, FRY, KIELY AND DENNIS LLP One West Fourth Street, Suite 900 Cincinnati, Ohio 45202 Phone: 513-381-9269 / Fax: 513-381-9206 E-mail: lweakley@rendigs.com cja@rendigs.com and Julie F. Bissinger, Esq. #0012055 Chief Counsel Trial Attorneys for the City of Cincinnati Assistant City Solicitor Room 214, City Hall 801 Pium Street Cincinnati, Ohio 45202 Phone: 513-352-3346 /s/ [Per Telephone Authorization of 8/19/05} Kelly M. Lundrigan, Esq. Manley Burke 225 West Court Street Cincinnati, Ohie 45202-1098 Copies Sent to: Kelly M. Lundrigan, Esq. Manley Burke 225 West Court Street Cincinnati, Ohio 45202-1098 Julie F. Bissinger, Esq. Chief Counsel Room 214, City Hall 801 Plum Street Cincinnati, Ohio 45202 Julia LaRita McNeil, Esq. Assistant City Solicitor Room 214, City Hall 801 Plum Street Cincinnati, Ohio 45202 Fred A. Ungerman, Jr., Esq. Coolidge Wall Womsley & Lombard 33 W. First Street Suite 600 Dayton, Ohio 45402 David L. Barth, Esq. Cors & Bassett, LLC 537 East Pete Rose Way, Suite 400 Cincinnati, Ohio 45202 APPENDIX I IN THE COURT OF COMMON PLEAS HAMILTON COUNTY, OHIO Case No. A0402638 [Filed August 11, 2005] Cleveland Construction, Inc., Plaintiff, V. City of Cincinnati, et al, Defendants. ) ) ) ) ) ) ) ) ENTRY The Plaintiff issued a subpoena to Rendigs, Fry, Kiely & Dennis, L.L.P for billing records related to this litigation. The City of Cincinnati filed a Motion to Quash the subpoena. The Court, after carefully considering the matter, and after hearing arguments from counsel, made on August 4, 2005, grants the City of Cincinnati’s Motion to Quash as expressed on the record of the hearing. | /s/ Date Judge Nelson HAVE SEEN: Robert E. Manley (0000849) W. Kelly Lundrigan (0059211) Gary E. Powell (0037546) MANLEY BURKE A LEGAL PROFESSIONAL ASSOCIATION 225 W. Court Street Cincinnati, Ohio 45202 Attorneys for Cleveland Construction, Inc. Leonard A. Weakley, Jr. (0000152) Rendigs, Fry, Kiely & Dennis, L.L.P. One West Fourth Street, Suite 900 Cincinnati, Ohio 45202 Attorney for City of Cincinnati APPENDIX J COURT OF COMMON PLEAS HAMILTON COUNTY, OHIO Case No. A0402638 [Filed July 20, 2005] Cleveland Construction, Inc., Plaintiff, City of Cincinnati, et al, Defendants. ) ) ) ¥. ) ) ) ) ) ENTRY By agreement of the parties, a hearing on attorneys fees in this matter is established for August 9, 2005 at 3:00 p.m.. The parties request and agree that a final judgment entry be deferred until a result is reached on fees after that hearing. Plaintiff will file its Application for fees and costs by July 29, 2005, and serve Defendants in person or by telefax by that date. The City agrees to observe and abide by the injunctive restraint indicated in the Court’s post-trial entry of July 13, 2005 pending final judgment entry. The fee hearing relates to a determination of Plaintiff's fees to be paid by the City. 52a /s/ Judge Fred Nelson Attorney (0059211) /s/Leonard A. Weakley, Jr. atty for the City of Cincinnati Attorney /s/David L. Barth tty for Defendant Valley Interior Systems, Inc. APPENDIX K COMMON PLEAS COURT HAMILTON COUNTY, OHIO CASE NO: A0402638 [Filed July 13, 2005] Cleveland Construction, Inc., Plaintiff, V. City of Cincinnati, et al., Defendants ) ) ) ) ) ) ) ) ENTRY This matter proceeded to a trial on the merits of Plaintiff's case combined with an evidentiary hearing on Plaintiffs Motion for Preliminary Injunction pursuant to Civil Rule 65(B)(2) and under a schedule referenced in the court’s May 13, 2005 Entry Denying Defendants’ Motions for Summary Judgment and Denying Plaintiff's Motion for Partial Summary Judgment and [preliminary] Injunctive Relief {SJ Entry}. That prior entry sets forth in some detail the legal context of this action, which arises from a dispute relating to drywall work for the expansion and renovation of Cincinnati’s Convention Center. A jury was impaneled to address certain issues in the case. after the court granted the motion of Defendant, the City 54a of Cincinnati, for a directed verdict with regard to Plaintiff, Cleveland Construction, Inc.’s, claim for lost profits, as referenced below, the parties agreed that the litigation should proceed as a trial to the court and the jury was discharged by the consent of all sides (a matter as to which Plaintiff subsequently took some issue). The trial now has concluded, and the court has heard the evidence and counsels’ closing arguments and also has reviewed the final materials presented in writing. I. The City violated its Code requirement, that a determination to award a City contract primarily on the basis of compliance with the City’s Subcontractor Outreach Program (designed to favor subcontracting to small businesses), not cost taxpayers more than $50,000 .00 beyond the amount submitted in a lower and otherwise qualified bid. The evidence is clear and the parties agree that in the determinative second round of bidding to perform the drywall work, the bid submitted by Plaintiff Cleveland Construction, Inc. (“Cleveland,” or “Plaintiff’) was lower by $1,246,022.00, than the bid submitted by Defendant, Valley Interior Systems, Inc (“Valley”) Nonetheless, Defendant City of Cincinnati (“the City”) awarded the drywall contract to Valley as the “lowest and best” bidder, because Valley agreed to subcontract at least 35% of the work to small business enterprises (“SBEs”) while Cleveland did not. Defendants have maintained throughout this litigation that Plaintiff Cleveland was excluded from contract consideration because it failed to meet the City’s SBE requirement. The evidence provides no indication of other infirmities in Cleveland’s bid or capacity to perform the work, and the City previously had conceded that Cleveland was otherwise qualified to perform the work, see SJ Entry at 10. The court finds that the City’s 35% SBE requirement was the only 55a reason that the City awarded the contract to Valley rather than to Cleveland, despite the one and a quarter million dollar difference between the bids. The City’s Code section 321-37, “Bid, Award to Lowest and Best,” provides in part: “(a) Selection of Lowest and Best in Award of City Contracts. Except where otherwise provided by ordinance, the city purchasing agent shall award a contract to the lowest and best bidder ... (c) Factors to be Considered Other factors that the city purchasing agent may consider in determining the lowest and best bid include, but are not limited to [prior performance, prevailing wage history, compliance with nondiscrimination rules, and] (4) Information concerning compliance with the ‘SBE Subcontracting Outreach Program’ rules and regulations issued by the city manager pursuant to section 323-31 In the event that the selection of the lowest and best bidder is based primarily upon factors 3 or 4 above, the contract award may be made subject to the following limitation: the bid may not exceed an otherwise qualified bid by ten (10%) percent or Fifty Thousand Dollars ($50,000.00), whichever is lower,” (emphasis added). As the court noted in its SJ Entry, the language of 321-37 establishes that “information concerning compliance” with the City’s SBE Subcontracting Outreach Program rules and regulations is a “[f]actor” that “may” be considered as the City determines the lowest and best bid. If the lowest and best bid is indeed selected “based primarily” on that factor, the City may proceed to award the contract “subject to the 56a following limitation: the bid may not exceed an otherwise qualified bid by ten (10%) percent or Fifty Thousand Dollars ($50,000.00), whichever is lower,” 321-37(c)(4). In that context, the phrase “otherwise qualified bid” can reasonably be read only to mean a bid that is qualified except that it is not in “compliance” with the SBE Subcontracting Outreach Program “factor”. The bid not selected “primarily” because of the SBE Subcontracting Outreach Program factor must “otherwise” be qualified in order to trigger the required calculation with regard to whether the contract award may be made as selected on that basis. As the court also observed in its SJ Entry at 15, the City Administration, through then Assistant City Manager Rashid Young, advised Cincinnati City Council’s Law and Public Safety Committee prior to enactment of this 10%/$50,000.00 cap that, “[w]hat this ordinance allows us to do is be clear about when it is appropriate to award a bid to a SBE compliant [bidder] if they are not the lowest. This ordinance would allow us to award a bid if the bid is $50,000.00 or less difference away from the lowest bid. We had an example where the SBE-compliant bidder was some nine hundred thousand dollars in excess of the lowest bid, and it doesn’t make a lot of sense to spend nine hundred thousand dollars more to comply with the regulations of SBE.” This explanation of a taxpayer protection rationale for the cap is fully consistent with the Code language that Cincinnati Council promptly adopted. The 321-37(c) cap protecting Cincinnati taxpayers from having to pay more than $50,000.00 extra (extra, that is, beyond the amount established by a lower and otherwise qualified bid) for the benefit of SBE Subcontracting Outreach Program compliance was adopted in specific contemplation of the Convention Center project; it took effect only months before the contract at issue was awarded. See Plaintiff's trial S7a exhibit 13-A (noting that “this ordinance is an emergency measure. The reason for the emergency is the immediate need to proceed with the bidding of the Convention Center and major development projects, which may be impacted by Section 321-37 of the Cincinnati Municipal Code.”) The court parsed the language of 321-37 at some length in its SJ Entry (pages 10-23), and incorporates here that Statutory construction. As earlier observed, the cap applies specifically (and exclusively) to instances where a higher bid is accepted because of “information concerning compliance with ‘SBE Subcontractor Outreach Program rules,’ issued pursuant to 323-31 [‘Subcontracting Outreach Program’}” Code 321-37(c). (The Code’s reference to program “rules” rather than to the program itself reflects a rather unusual drafting approach through which City Council adopted its Subcontracting Outreach Program simply by reference to a consultant’s recommendations and through authorization of administratively promulgated rules in the absence of any further legislative definition of the Program Code 323-31.) Until the eve of trial, the City had maintained that, despite the clear instruction of Code Section 323-31 requiring that the “City Manager shall issue rules and regulations to carry out the meaning and purpose of the Subcontracting Outreach Program,” the City had not formally promulgated its Small Business Enterprise Program Rules and Guidelines containing Subcontracting Outreach Program rules. See, e.g., City’s March 11, 2005 Memo Opposing Plaintiff's MSJ at 13. At trial, however, the City stipulated that the Small Business Enterprise Program Rules and Guidelines introduced as Plaintiffs exhibit 17 are what they purport to be and were, in fact, adopted as of April 1, 2003. Those Rules and Guidelines set forth at pages 4-22 the “Components of the [City’s] SBE 58a Program,” including (at 9-14) the “Subcontracting Outreach Program”. As established by the City, the “Subcontracting Outreach Program applies to City-funded construction contracts of $100,000.00 or more,” /d. at 9. Further, the “Subcontracting Outreach Program requires bidders to make subcontracting opportunities available to a broad base of qualified subcontractors and achieve a minimum of 20% (which may be higher for construction of buildings) SBE subcontractor participation. 7o be eligible for award of this project, the SBE bidder must subcontract a minimum percentage of its bid to qualified available SBE subcontractors,” Id. (emphasis added). See also Plaintiffs trial ex. 5, the “legislative recommendation” that City Council adopted by reference in establishing the SBE Subcontractor Outreach Program and in authorizing promulgation of rules and regulations therefore (“Failure to comply with the City’s Subcontracting Outreach Program will cause a bid to be rejected Terms and conditions of this Subcontracting Outreach Program apply to City-funded construction projects of $100,000.00 or more”). Thus, the Subcontracting Outreach Program is a subset of the City’s broader Smail Business Enterprise Program, it applies to all City construction projects costing $100,000.00 or more, and it incorporates requirements that a certain “minimum percentage” of a bid go to qualified SBEs. With regard to covered projects, the Subcontracting Outreach Program establishes mechanisms for assuring a more firm particularized, and project-specific SBE requirement than the aspirational city-wide annual “goal” of 30% SBE participation set forth at Section 323-7 of the Code. See also, e.g., trial testimony of City consultant Rodney Strong (mandatory aspect of Subcontracting Outreach Program minimum percentage requirements). 59a Having considered all of the evidence adduced, the court finds by clear and convincing evidence that the award of the contract at issue here was “based primarily” upon “information concerning compliance with the ‘SBE Subcontracting Outreach Program’ rules and regulations issued pursuant to section 323-31.” Valley won the contract on re-bid because it exceeded the 35% SBE participation figure that the City established for this project under the SBE Subcontracting Outreach Program, while Cleveland did not. Plaintiff's trial exhibit 32, for example, is a City bid document issued to the bidders on this projeci and setting forth the applicable “SUBCONTRACTING OUTREACH PROGRAM SUMMARY.” That program summary prominently featured the “SBE Goals Per Trade Contract Cincinnati Convention Center,” establishing that “All bidders are required to meet the goal stated for the individual trade contract Drywall 35%.” The Subcontracting Outreach Program, to the extent of its legislative formulation, was in place at the time of bid solicitation and the contract award (and was to be applied to construction contracts of $100,000.00 or more). See also, e.g., Riordan trial testimony and Plaintiff's trial ex. 56 (1/21/03 memo contemplating application to Convention Center project of legislation containing Subcontracting Outreach Program authority). In place later, but also in effect by the time of bid solicitation and award, was the $50,000.00 taxpayer protection cap on the amount that the program could cost the City on any one contract -- and that limitation was part of a package enacted specifically in contemplation of the Convention Center project. That the cap was not in place during initial planning stages of the project does not obviate iis mandate once enacted. Thus, the court finds that the City did violate a specific prohibition of its own municipal Code in awarding the drywall 60a contract to Valley as the “lowest and best bidder” over Cleveland in order to favor small business enterprise subcontracting despite the additional cost to taxpayers of some $1,246,022.00 (an excess expenditure of $1,196,022.00 beyond what the 321-37 cap permits). Cincinnati’s local rules limit the discretion of contracting officials in awarding such contracts where the officials purport to be determining the “lowest and best” bid. Where the City publicly determines that a lowest and best bid is not “in the best interest of the city,” it may reject such a bid for that reason, see e.g., Code 321-67, but the law requires that it do so plainly and openly (and for some legitimate, non-arbitrary reason, see City of Dayton, ex rel Scandrick v. McGee [1981], 67 Ohio St 2d 356). Where no such other rationale exists and the City purports to award a contract on the basis of the “lowest and best” bid, it is constrained by the standards it has established at 321-37, including the cost cap for awards where the lowest and best determination is based primarily on Subcontracting Outreach Program rules. In determining whether the City abused its discretion under Ohio law and deprived Plaintiff Cleveland of a constitutionally protected property interest without due process of law by awarding the contract in a manner contrary to governing Code, the court refers to its discussion of the applicable legal standards from its SJ Entry: “‘The meaning of the term ‘abuse of discretion’ ... connotes more than an error of law or judgment, it implies an unreasonable, arbitrary or unconscionable attitude.’ ‘Arbitrary’ means ‘without adequate determining principle, *** not governed by any fixed rules or standard’. ‘Unreasonable’ means ‘irrational’” Cedar Bay Construction, Inc. v. City of Fremont et al., 50 Ohio St. 3d 19, 22, citations omitted. Moreover, “courts in this state should be reluctant to substitute their judgment for that of city officials in determining which party 6la is the ‘lowest and best bidder.’ [I]n the absence of evidence to the contrary, public officers {and] administrative officers, within the limits of the jurisdiction conferred by law, will be presumed not to have acted illegally.” /d. at 21. Discretion for determining the lowest and best bid “‘is not vested in the courts and the courts cannot interfere in the exercise of this discretion unless it clearly appears that the city authorities in whom such discretion has been vested are abusing the discretion.’” Jd. at 21 (citation omitted). See also, e.g., Greater Cincinnati Plumbing Contractors’ Association v. City of Blue Ash (1* Dist. 1995), 106 Ohio App. 3d 608, 613-14 (a charter city’s discretion in accepting lowest and best bid “is similar to the discretion provided under general state law {citing R.C.735.05], “Competitive bidding provides for ‘open and honest competition in bidding for public contracts and [saves] the public harmless, as well as bidders themselves, from any kind of favoritism or fraud in its varied forms’”). For a property interest in the award of a public contract to inhere, “one must have more than a unilateral expectation, rather, one must instead have a legitimate claim of entitlement to such a contract.” Cleveland Construction, Inc. v. Ohio Department of Administrative Services (10" Dist. 1997), 121 Ohio App. 3d 372, 394. Thus, “a disappointed bidder to a government contract may establish a legitimate claim of. entitlement protected by due process by showing that local rules limited the discretion of officials as to whom the contract should be awarded,” and that discretion was abused in depriving the bidder of the award, /d. at 394-95 (no abuse of discretion found), see also, e.g., Enertech Electrical, Inc. v. Mahoning Co Commissioners (6" Cir. 1996), 85 F.3d 257, 260. (“A constitutionally protected property interest in a publicly bid contract can be demonstrated [if a bidder can show] that, under state law, the County had limited discretion, which it abused, in awarding the contract’, no 62a abuse of discretion found), Peterson Enterprises, Inc. v. Ohio Department of Mental Retardation (6" Cir. 1989), 890 F.2d 416 (“if the board had limited discretion under local rules as to whom should be awarded the contract, then Plaintiff might have a protected property interest in the award if he were the beneficiary of the state law mandate,” no property interest where state guidelines were nonexhaustive), cf. United of Omaha Life Ins. Co. v. Solomon (6" Cir. 1992), 960 F.2d 31, 34 (“Michigan law neither requires that the lowest bidder be awarded a state contract nor creates a property interest in disappointed bidders on state contracts”), Cementech, Inc. v. City of Fairlawn (Ohio 9" Dist. App.), 2005 WL 844948 (disappointed bidder whom jury found had submitted lowest and best bid may qualify for money damages when project is already complete), but see, Miami Valley Contractors, Inc. v. Montgomery Co. (2™ Dist. App.), 1996 WL 303591(“as best we can determine, this jurisdiction has never recognized a constitutionally protected property interest of a disappointed bidder on a public works project”), Miami Valley Contractors, Inc. v. Oak Hill (4" Dist. App. 1996), 108 Chio App. 3d 745, 752 (no abuse of discretion found, “we can find no suppce’ for the proposition that a second- or third-place finisher in a lowest and best bidder determination acquires a constitutionally protected property right”). Having heard the evidence at trial, the court finds that the City did abuse its discretion in a manner that harmed the public and denied Cleveland the contract award, and that Cleveland did have a “legitimate claim of entitlement” sufficiently clear under the Code (with its 321-37 cost cap) to establish a due process violation. The City established a “fixed rule,” in the language of Cedar Bay, that it then ignored when it awarded the contract to Valley based primarily on SBE attainment, despite the City Code’s instruction that such SBE requirements should not cost the 63a taxpayers more than $50,000 per contract. Cf. Greater Cincinnati Plumbing Contractors’ Ass'n. v. City of Blue Ash (i* Dist. App. 1995), 106 Oh» App. 3d 608, 614 (“Competitive bidding provides ior ‘open and honest competition in bidding for public contracts and [saves] the public harmless, as well as bidders themselves, from any kind of favoritism or fraud in its various forms’,” quoting Cedar Bay), »