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Monday, July 16, 2007

Ind. Decisions - Court of Appeals rules on closing of Fort Wayne Disabilities Center; finds associational standing

Anita Stuller, et al v. Mitchell Daniels, Jr., et al, a 27-page opinion, involves the now-closed Fort Wayne Disability Center. The plaintiffs, an employee of the Center, and AFSCME, the labor union representing various employees of the Center, filed a Verified Complaint Seeking Emergency Preliminary Injunction and Permanent Injunction, seeking preliminary injunctive relief preventing the FSSA from transitioning the Center’s operation from the State to a private contractor without first complying with the public bidding procedures promulgated in I.C. § 5-23 et seq. The trial court denied the request for preliminary injunction.

[See this Dec. 23, 2005, ILB entry quoting from a story in the Fort Wayne Journal Gazette that began: "The takeover of the Fort Wayne State Developmental Center on Jan. 1 is no longer in jeopardy after an Allen Superior Court judge on Thursday refused to grant a preliminary injunction preventing it." The ILB attempted unsuccessfully at the time to obtain a copy of the lower court ruling.]

In today's ruling on the interlocutory appeal, Judge Riley writes:

[The FSSA] failed to follow the public bidding process as required for Public-Private Agreements, enacted in Ind. Code § 5-23-5-1. We reverse and remand with instructions.

Issues. The Appellants raise two issues on interlocutory appeal, which we consolidate and restate as the following single issue: Whether the trial court abused its discretion in denying Appellants’ request for preliminary injunctive relief. The FSSA raises one issue, which we restate as follows: Whether Appellants have standing to challenge the FSSA’s action. * * *

I. Standing. We proceed by first addressing the FSSA’s issue as it casts the threshold question of standing before this court. The standing requirement mandates that courts act in real cases, and eschew action when called upon to engage in abstract speculation. In other words, standing focuses generally upon the question whether the complaining party is the proper person to invoke the court’s power. State ex. Rel. Indiana State Bd. of Tax Com’rs v. Indiana Chamber of Commerce, Inc., 712 N.E.2d 992, 996 (Ind. Ct. App. 1999). The doctrine remains a significant restraint on the ability of Indiana courts to act, as it denies the courts any jurisdiction absent an actual injured party participating in the case. * * *

A. Stuller’s Standing. The public standing doctrine, which applies in cases where public rather than private rights are at issue and in cases which involve the enforcement of a public rather than a private right, continues to be a viable exception to the general standing requirement. * * *

Here, Stuller, a citizen, seeks to enjoin the FSSA from transitioning the Center’s operation from the State to a private contractor without first complying with the public bidding procedures promulgated in I.C. § 5-23 et seq. In other words, Stuller is proceeding to enforce a public duty, common to and benefiting the whole community. As she has an interest in common with other citizens in the execution of the law, she is not required to establish a special individualized interest in the matter. Therefore, we find that Stuller has public standing to bring the instant litigation.

B. AFSCME’s Standing. Relying on our recent opinion in Save the Valley, Inc. v. Indiana-Kentucky Elec. Corp, 820 N.E.2d 677 (Ind. Ct. App. 2005), reh’g granted on other grounds by 824 N.E.2d 776, trans. denied, FSSA argues that the AFSCME has standing to bring an action in a representational capacity only if specific members of the group have standing in their own right. Asserting that the members lack standing in their own right, the FSSA maintains that, as a result, the AFSCME cannot have standing either.

In Save the Valley, we were faced with the question of associational standing under the Administrative Orders and Procedures Act (AOPA). In our analysis of the issue, we referenced our Supreme Court’s decision in Hunt v. Washington State Apple Advertising Comm’n, 432 U.S. 333, 344, 97 S.Ct. 2434, 2442, 53 L.Ed.2d 383 (1977) as standing for the proposition that:

An association has standing to sue on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.
* * * Focusing on Hunt’s first requirement, we conclude that AFSCME’s members have standing to appear in their own right because they were aggrieved by the FSSA’s refusal to follow the public bidding proceedings of I.C.§ 5-23 et seq. and instead award the contract to Liberty. * * * Thus, it is undeniable that AFSCME’s members have a personal stake in the outcome of this litigation as it directly affects their pecuniary situation.

We find Hunt’s two remaining elements to be satisfied as well. * * *

II. Preliminary Injunction. Appellants contend that the trial court clearly abused its discretion by denying their Verified Compliant seeking an emergency preliminary injunction. Specifically, they assert that they satisfied the four-prong test for granting injunctive relief, i.e., (1) they are reasonably likely to succeed on the merits of the underlying claim as the FSSA violated the mandated public bidding process enacted in I.C. § 5-23 et seq.; (2) they suffered irreparable harm per se; (3) Appellants’ incurred injury outweighs the FSSA’s harm; and (4) the injunction served the public interest as it would increase transparency in the State’s award of government contracts. * * *

Accordingly, based on the evidence before us, we conclude that the agreement is properly characterized as a public-private agreement, subject to the mandatory public bidding process enacted in I.C. § 5-23-5 et seq. Thus, we find that the trial court misapplied the law by relying on I.C. § 5-22-6-1, authorizing the FSSA to use any procedure it deems appropriate to acquire Liberty’s services. .... Therefore, we hold that Appellants showed a reasonable likelihood of success at trial by presenting a prima facie case on the merits. * * *

I.C. § 5-23 et seq. places certain constraints on the way the government may award its public-private agreements. An abandonment of these requirements would result in a situation where the government is encouraged to grant part of its public duties to private entities without any inquiry from the public. In the instant case, while the government provided the funds, set programmatic goals and requirements, its private partner, Liberty, gained effective control over patients, which were in a relation of dependence in a social welfare program. While we do not object to the government turning to private companies in a desire to minimize costs and to enhance efficiency and flexibility, public oversight is nevertheless statutorily mandated for contracts falling within the realm of I.C. § 5-23 et seq.

Based on these observations, we cannot say that the public interest is disserved by the issuance of an injunction that requires only that the FSSA complies with the clear dictates of the law by submitting the agreement to a public bidding procedure to ensure public scrutiny. Thus, we conclude that the trial court’s decision is against the logic and effect of the facts and circumstances.

III. Concluding Remarks and Instruction. Concluding that Appellants satisfy the four-prong test for a preliminary injunction, we reverse the trial court’s decision and remand the case back to the trial court. As we reviewed a record frozen in time, we first request the trial court to conduct a status hearing and then order the trial court to establish an appropriate remedy in line with this court’s holding. Accordingly, we authorize the trial court to take all necessary means to effectuate today’s holding in a manner that recognizes the practical difficulties of managing an ongoing facility while at the same time ensuring the care and safety of the patients. * * *

BARNES, J., and CRONE, J., concur.

Posted by Marcia Oddi on July 16, 2007 11:13 AM
Posted to Ind. App.Ct. Decisions