Contractors: A Lesson on Being Friendly

I know.

You’re just trying to be friendly.

Don’t.

Particularly when you’re a contractor bidding on a public works project.

Those dinners at swanky restaurants, tickets to The Jersey Boys, and all expense paid trips to the Napa Valley have a way of appearing less “friendly” in hindsight, and more like bribery, or as they say, “pay to play.”

In Sweetwater Union High School District v. Gilbane Building Company, California Court of Appeals for the Fourth District, Case No. D067383 (February 24, 2016), three contractors, Gilbane Building Company (“Gilbane”), The Seville Group, Inc. (“Seville”) and Gilbane/SGI Joint Venture (“Gilbane/SGI”) (collectively “Contractors”) were sued by the Sweetwater Union School District (“District”) to void their contracts with the District and for disgorgement of all monies paid to them under Government Code section 1090 after it was discovered that the Contractors had engaged in a “pay to play” scheme involving several officials of the District.

The “Pay to Play” Scheme

In November 2006, District voters approved Proposition O, which authorized up to $644 million in bond sales for the renovation and construction of schools in the District. The District issued a request for proposals that initially included a “no contact” clause prohibiting bidders and District officials from having any contact with each other during the bidding process. However, the District’s superintendent, Dr. Jesus Gandara, had the “no contact” clause removed.

Seven proposals were received by the District and the District appointed a screening committee to review the bids. The screening committee determined that all seven bids met the requirements of the request for proposals. The District then appointed an interview committee which narrowed the seven bidders to three finalists. Finally, the District appointed a final review committee, which included Gandara, who determined Gilbane/SGI to be the “top applicant.”

In May 2007, the District’s Board of Trustees, which included Pearl Quinones, Arlie Ricasa and Greg Sandoval, approved an “Interim Program Management Agreement” with Gilbane/SGI. That same month, Gilbane/SGI was contracted to take over and complete project management services on projects that had been funded through another initiative, Proposition BB. Quinones, Ricasa and Sandoval participated in this decision as well.

Sometime later, a criminal investigation was launched into the relationships between the Contractors and certain officials of the District. The investigation led to the filing of criminal charges against Henry Amigable, Gilbane’s Program Director, Rene Flores, Seville’s Chief Executive Officer, and District officials Gander, Quinones, Picasa, Sandoval and others.

The charges, which were extensive, included claims that Gander invited contractors to a “money tree” event for his daughter’s bridal shower, that Sandoval asked a contractor to sponsor his daughter in a Miss South County pageant and that Seville even helped write the request for proposals and interview questions.

The District’s lawsuit against the Contractors further alleged:

• “Numerous dinners at expensive restaurants”;
• “Tickets to the theater and sporting events, including Charger games and to the The Jersey Boys”;
• “Hotel accommodations, food, and tickets to the Rose Bowl in Pasadena”;
• “Airfare, hotel accommodations, wine tasting, and a hot air balloon ride in Napa Valley”; and
• “Monetary contributions to beauty pageants, charities, and campaigns on behalf of District officials.”

In short, Sweetwater-Gate wasn’t pretty.

The Contractors’ Response

In response to the District’s complaint, Gilbane and Gilbane/SGI filed an anti-SLAPP motion. The acronym “SLAPP” stands for “Strategic Lawsuit Against Public Participation,” and it’s a special motion filed by a defendant against an allegedly malicious or frivolous lawsuit that seeks to chill freedom of speech (i.e., the SLAPP lawsuit). Thus, an anti-SLAPP motion is intended to defeat a SLAPP lawsuit, get it?

Here, Gilbane and Gilbane/SGI, in their anti-SLAPP motion, argued that the District’s complaint “arose” from their “rights of free expression and petition,” specifically, that the allegations of the complaint “rested on claims that employees of defendants had made political contributions, charitable donations, and provided gifts to political officials, and that this conduct constitutes political expression and petitioning, which is protected by the First Amendment.”

Really?

Conclusion

Well there’s not much to say. The trial court denied the Contractors’ anti-SLAPP motion and the Court of Appeals for the Fourth District agreed, although if you’re interested, the Fourth District’s opinion has some interesting (and, perhaps, even surprising) commentary on whether what the Contractors did was technically “illegal” or not.

So, in short, there’s “friendly” and then there’s “friennndly.” It behooves you to know the distinction as a public works contractor.