Judge Stephen I. Goorvitch, Case Number: 24STCP02977, Date: 2025-01-24 Tentative Ruling

Judge: Stephen I. Goorvitch, Case: 24STCP02977, Date: 2025-01-24 Tentative Ruling

Petitioner Jobs to Move America (“Petitioner”) filed this petition for writ of mandate and declaratory relief against the Los Angeles County Metropolitan Transportation Authority (“Metro”). Petitioner alleges that Metro did not award a public contract correctly and seeks a writ to require the contract to be re-bid. Metro demurs arguing: (1) Petitioner has no standing; (2) The petition is untimely; (3) The petition is barred by the doctrine of laches; and (4) The petition is barred by the doctrine of equitable estoppel. Metro also moves to strike certain factual allegations in the petition. The demurrer is overruled, and the motion to strike is denied.

Metro is responsible for Los Angeles County’s vast public transit system, oversees the project, which serves over 10 million people across 1,400 square miles. (Pet. ¶ 4.) On January 25, 2025, Metro awarded Contract HR 5000 (the “Contract”) to Hyundai Rotem (“Hyundai”) for the manufacture and delivery of 182 heavy rail vehicles for $663,688,303, with an option for 50 additional vehicles for $66,368,830, totaling $730,057,133. (Pet. ¶ 24; Def. RJN Exh. 2.) The contract is funded in part by a Full Funding Grant Agreement” (“FFGA”) between Metro and the U.S. Department of Transportation, Federal Transit Administration. (Def. RJN Exh. 6.) Defendant must achieve minimum service levels by 2026 (PLE 2) and 2028 (PLE 3) to avoid repayment obligations. (Def. RJN Exhs. 6 & 7.)

Petitioner, a non-profit organization, aims to ensure public transportation funding generates good jobs, benefits disadvantaged communities, and promotes transparency in contract awards. (Pet. ¶ 3.) Petitioner designed and co-drafted the U.S. Employment Plan (the “USEP”), a tool to create jobs, and collaborated with Metro. (Pet. ¶¶ 8-11.) Metro included a USEP component in the Contract. (Pet. ¶ 11.) On December 1, 2022, Metro adopted the current version of the Manufacturing Careers Policy (the “MCP”), which requires bidders to disclose workforce commitments, including wages, benefits, hiring disadvantaged workers, and workforce training. (Def. RJN Exh. 3, §§2.4.3.1, 2.4.3.4, 2.4.3.8.)

The HR5000 Request for Proposals (RFP)—issued four days before the MCP’s adoption—evaluated USEP commitments based on a “total dollar commitment” that included undefined categories like U.S. facility investments, contrary to the MCP’s focus on wages and benefits. (Pet. ¶ 21.) Hyundai, Hitachi Rail, and Stadler Rail submitted bids, and Metro awarded the Contract to Hyundai on January 25, 2024, even though Hyundai failed to submit required Labor Value Forms until months later. (Pet. ¶¶ 23-25, 36.)

Petitioner made requests under the California Public Records Act, which revealed discrepancies in Metro’s scoring of bids, including violations of MCP requirements, failure to assess job quality, and improper credit for facility investments. (Pet. ¶¶ 29-31.) Metro’s staff acknowledged the scoring issues and modified the contract to address MCP compliance, but Petitioner deemed the modifications inadequate and demanded a rebid. (Pet. ¶¶ 30-33.) This petition followed.

A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (Code Civil Proc. § 430.30, subd. (a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “We assume the truth of the allegations in the complaint, but do not assume the truth of contentions, deductions, or conclusions of law.” (California Logistics, Inc. v. State (2008) 161 Cal.App.4th 242, 247.) The allegations in the petition must be liberally construed in favor of Petitioner on demurrer. (See Mobil Oil Corp. v Exxon Corp. (1986) 177 Cal.App.3d 942, 947.) “A demurrer must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Upon motion, the court may “strike out any irrelevant, false, or improper matter inserted in any pleading” or “[s]trike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc. § 436.) As with a demurrer, “[t]he grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc. § 437.)

Metro seeks judicial notice of eleven exhibits. Petitioner does not oppose the request as it relates to Exhibit 1 through Exhibit 9, and Exhibit 11. The court takes judicial notice of these exhibits under Evidence Code section 452(c). The court denies Metro’s request to take judicial notice of Exhibit 10, which is an email chain, because it does not fall under any provision of Evidence Code section 452. Metro argues that the court should take judicial notice because Exhibit 10 “is incorporated by reference in the Petition and may be property considered by this Court on Metro’s Demurrer to the Petition.” Metro’s counsel cites no authority in support of this argument. Even if the court took judicial notice of the email exchange, the court could not consider the truth of its contents or necessarily adopt Metro’s interpretation.

Petitioner requests judicial notice of six documents. The court need not consider these documents in order to rule on the pending motions. Therefore, the request for judicial notice is denied. (See Code Civ. Proc. § 437c(q).)

The court finds that Petitioner has standing. “A petitioner is beneficially interested if he or she has some special interest to be served or some particular right to be preserved or protected over and above the interest held in common with the public at large.” (Rialto Citizens for Responsible Growth v. City of Rialto (2012) 208 Cal. App. 4th 899, 913.) “One who is in fact adversely affected by governmental action should have standing to challenge that action if it is judicially reviewable.” (Carsten v. Psychology Examining Com. (1980) 27 Cal.3d 793, 796-97.) Nevertheless, a petitioner who is not beneficially interested in a writ may have “citizen standing” or “public interest standing” to file a petition under the “public interest exception” to the beneficial interest requirement. (Rialto, supra, 208 Cal.App.4th at 913-914.)

Petitioner has established a beneficial interest. Petitioner’s unique role as the creator of the USEP, co-drafter of the MCP, and enforcer of compliance measures establishes a “special interest” distinct from the general public. Although Metro argues that Petitioner challenges the validity of the Contract, Petitioner’s involvement in developing and enforcing policies directly tied to the Contract reflects an interest in ensuring compliance with competitive bidding laws. Plaintiff has also established public interest standing. Requiring public agencies to comply with bidding laws—which were enacted for the benefit of the public—is a sufficient interest to support public interest standing. (See Marshall v. Pasadena Unified School District (2004) 119 Cal.App.4th 1241; see also Kajima/Ray Wilson v. Los Angeles County Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 318.) Therefore, the demurrer is overruled on this basis.[1]

Metro argues that this action is governed by the 60-day statute of limitations under Code of Civil Procedure section 860, et seq. These statutes govern challenges to “bonds, warrants, contracts, obligations, and evidences of indebtedness,” i.e., public finance instruments. (Code Civ. Proc. § 864; see also Gov. Code § 53511.) Although the statute references government contracts, “only contracts that somehow relate to government indebtedness are subject to validation . . . .” (Davis v. Fresno Unified School Dist. (2023) 14 Cal.5th 671, 689.) “A local agency contract is subject to validation under [Government Code] section 53511 if it is inextricably bound up with government indebtedness or with debt financing guaranteed by the agency.” (Id. at 678.)

Metro does not demonstrate that the FFGAs are subject to Government Code section 53511. They appear to be standard grant contracts rather than “evidences of indebtedness.”

[T]he [United States] Government has determined to enter into this Agreement and to support final design and construction of the Project up to a Maximum Federal New Starts Financial Contribution of $1,187,000,000 in capital New Starts funds subject to all terms and conditions set forth in this Agreement.

(Metro RJN Exh. 6, at 1.) The FFGAs are funded by grants, not loans or bonds, and do not depend directly upon debt financing. Although the FFGAs contain routine provisions of recission in the event of an unwaived default, such provisions do not transform the FFGAs into debt instruments. In making this argument, Metro relies on speculative future events, such as potential delays, defaults, and the FTA’s hypothetical invocation of contract remedies. Simply, Metro does not establish that the FFGAs are subject to validation or reverse validation actions under Government Code section 53511. The court need not reach Petitioner’s argument that only 36 of the 182 light-rail vehicles in the Contract are related to funding through the FFGAs. Therefore, the demurrer is overruled.

Metro argues that the petition is barred under the doctrine of laches due to its unreasonable delay in filing the lawsuit and the resulting prejudice to Defendant. A claim is barred under laches when the plaintiff delays unreasonably in bringing their case, especially when they are on notice of the issue, and the delay causes harm to the defendant. (See Stafford v. Ballinger (1962) 199 Cal.App.2d 289, 296; City of Hesperia v. Lake Arrowhead Cmty. Servs. Dist. (2023) 93 Cal.App.5th 489, 515.) Metro argues that Petitioner had sufficient knowledge to bring this challenge on January 25, 2024, and certainly no later than April 2024. The court cannot resolve this issue on demurrer. Petitioner alleges that Metro did not comply with its CPRA request until April 2024, which is when Petitioner allegedly discovered the issue. Although the petition was not filed until September 2024, on its face, this is not a substantial amount of time. The court cannot consider the reasons for this delay at this stage (though Petitioner argues that the delay was at Metro’s request in order to engage in settlement discussions). Nor can the court evaluate the merits of Metro’s prejudice argument at the pleading stage. Therefore, the demurrer is overruled without prejudice to raising this issue at the merits stage.

Finally, Metro argues that this petition should be dismissed under the doctrine of equitable estoppel. The doctrine applies when: (1) The party to be estopped knows the facts;

(2) Their conduct reasonably leads the other party to act; (3) The other party is ignorant of the true facts; and (4) They rely on the conduct to their detriment. (McGlynn v. State of California (2018) 21 Cal.App.5th 548, 561.) Metro argues that Petitioner knew of the alleged deficiencies no later than April 2024 but engaged in discussions with Metro, giving the impression that it sought modifications rather than a rebid. The court cannot resolve this issue on demurrer. Indeed, Metro relies on communications between the parties which are not suitable for judicial notice. Even if the court considers these communications, Metro does not brief the issue whether it is appropriate to find equitable estoppel based upon settlement communications. Therefore, the demurrer is overruled without prejudice to raising this issue at the merits stage.

Metro moves to strike three paragraphs in the petition, arguing that “these allegations are irrelevant and improper because they plead facts which will not affect Plaintiff’s right to relief and are an improper attempt to taint Metro by suggesting it did something wrong in connection with that separate, unrelated matter.” A motion to strike does not create a “procedural line item veto” for civil defendants. (See PHI II, Inc. v. Superior Court (1995) 33 Cal.App.4th1680, 1682-1683.) Even assuming the truth of Metro’s argument, since this is a bench trial, the court will not be influenced by suggestions that Metro “did something wrong” in connection with a separate, unrelated matter. Therefore, the motion to strike is denied.

4. The opening brief shall be filed and served at least 60 days in advance of trial. The opposition brief shall be filed and served at least 30 days in advance of trial. The reply brief shall be filed and served at least 15 days in advance of trial. The administrative record shall be lodged on a thumb-drive at least 15 days in advance of trial.

[1] Metro argues that Petitioner cannot assert a declaratory relief claim based upon public interest standing citing Hector F. v. El Centro Elementary School Dist. (2014) 227 Cal.App.4th 331, 342. The court did not actually reach that issue. (Id. at 342 fn. 1.) Although the declaratory relief claim appears to be duplicative of the writ of mandate claim, Metro did not demur on this basis.