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Maricopa County v. Office Depot, Inc.

United States District Court, D. Arizona

November 21, 2014

MARICOPA COUNTY, a political subdivision of the State of Arizona, Plaintiff,
v.
OFFICE DEPOT, INC., a Delaware corporation, Defendant.

ORDER

H. RUSSEL HOLLAND, District Judge.

Motion to Dismiss

Defendant moves to dismiss[1] plaintiff's complaint. This motion is opposed.[2] Oral argument was requested and has been heard.

Background

Plaintiff is Maricopa County. Defendant is Office Depot, Inc.

This case involves plaintiff's purchase of office supplies from defendant via the U.S. Communities program. "U.S. Communities Government Purchasing Alliance... is a nonprofit organization designed to assist government agencies and educational institutions in making purchases of products and services."[3] " U.S. Communities... sponsors a variety of procurement contracts, known as master contracts', by which state and local public agencies and entities may purchase goods and services."[4] "U.S. Communities selects lead' public agencies to competitively solicit and enter into master contracts with various suppliers[.]"[5] Other public agencies, known as "participating public agencies", can then "piggyback" on the master contracts and "mak[e] purchases based on the relevant terms, conditions and pricing of the master contract."[6]

The County of Los Angeles "acted as a lead public agency" and entered into two Master Agreements with defendant, one in 2001 and one in 2006, [7] referred to herein collectively as the Master Agreement.[8] The Master Agreement defines the County of Los Angeles as the "COUNTY" and Office Depot as the "VENDOR."[9] The Master Agreement contained a "Most Favored Public Entity" clause (Section 23) which provided that

VENDOR represents that the price charged to COUNTY in this Agreement do not exceed existing selling prices to other customers for the same or substantially similar items or services for comparable quantities under similar terms and conditions.
If VENDOR's prices decline, or should VENDOR, at any time during the term of this Master Agreement, provide the same goods or services under similar quantity and delivery conditions to the State of California or any county, municipality or district of the State at prices below those set forth in the Master Agreement, then such lower prices shall be immediately extended to COUNTY. [10]

The Master Agreement also contained a piggybacking clause (Section 36), which provided:

The COUNTY has designated U.S. Communities Purchasing and Finance Agency... as the agency to provide administrative services related to purchases by other governmental entities (Participating Public Agencies) under this Agreement. At COUNTY's sole discretion and option, and upon VENDOR entering into the requisite U.S. Communities Administration Agreement, Participating Public Agencies may acquire items listed in this Agreement. Such acquisition(s) shall be at prices stated in this Agreement, or lower.[11]

The Master Agreement incorporated by reference Exhibits B and C to the agreement, which were Los Angeles County's Request for Proposal (RFP) and defendant's response to the RFP.[12] The RFP included the terms and conditions that would apply to all awards from the RFP. One such term was a "Most Favored Customer" clause which provided that "Vendor represents that the prices charged County in this Purchase Order do not exceed existing selling prices to other customers for the same or substantially similar items or services for comparable quantities under similar terms and conditions."[13] The RFP also required that the

proposer agrees, for the period any agreement formulated from this inquiry, that discounts quoted from price lists are minimum and that prices proposed for core list items are firm through March 4, 2007 except paper.... If prices decline or should vendor at any time during the life of said agreement sell the same materials or service under similar quantity and delivery conditions to the State of California, or any county, municipality or legal district of the State of California at prices below those quoted herein, such lower prices shall be immediately extended to the County of Los Angeles.[14]

One of the attachments to the RFP was an explanation of the commitments that a supplier which enters into an Administration Agreement with U.S. Communities must make. One of those commitments ...


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