Lawsuit alleging bid rigging at San Diego fairgrounds settles

A lawsuit against the agency that runs the annual San Diego County Fair alleging bid rigging and other irregularities in an attempt to award a contract to run the fair’s midway has settled nearly three years after it was filed.

The lawsuit from Talley Amusements, a company that provides rides and games to fairs and carnivals around the country, had nearly derailed the 2022 fair when a San Diego Superior Court judge issued an injunction against the district.

The settlement agreement reached March 22 gives Talley 17 rides and games slots on the midway for the next five years, as well as $500,000. 

The Texas-based Talley had filed suit over the awarding of a contract to be the master operator of the midway in 2021 to another carnival company. Initially the suit alleged errors in the scoring of the contract proposals, but the case soon ballooned into allegations of bid rigging and manipulating scores.

In early 2022, two former district employees testified in depositions that CEO Carlene Moore ordered changes to scoring sheets which showed Talley had won the 2021 contract. 

The changes ended up making the other carnival company, RCS, the winner of the potentially lucrative deal. 

The district has defended Moore and vigorously disputed the accusations as the lawsuit has progressed over the years. The suit has turned on finer points of law — like which state contracting regulations govern the operations of agricultural districts, and immunity of public employees in these kinds of suits.

The district has also argued that the contract for the 2021 fair that is at the center of the dispute was never in effect. That’s because just days after Talley filed a formal protest, the district canceled the deal.

That year, because of the COVID-19 pandemic, the district instead put on a scaled-down fair called “Homegrown Fun,” which had a much smaller midway.

After Homegrown Fun was over the district issued another contract solicitation for the 2022 fair. RCS, the sole bidder, won.

Talley then contended the district had changed some key bid requirements that effectively meant only RCS could meet them, which it alleged was a form of bid rigging. The company also argued it was the rightful winner of the 2021 contract — and should have the business for 2022.

All this ended up in front of San Diego Superior Court Judge Kenneth Medel, who in April 2022 — fewer than 10 weeks before that year’s fair — slapped an injunction on the district prohibiting from putting the contract in effect. Medel said then that there was “at least the appearance of favoritism” in the contract scoring.

The district warned Medel’s injunction might result in canceling the fair, though the 2022 fair eventually went on when a deal between Talley and the district was worked out. 

The fair went off without a hitch last year and is on schedule again this year. In a statement Tristan Hallman, chief communications officer for the district, said settling the case gives “significant cost savings over continued litigation.” 

“This agreement allows both parties to produce a successful Fair this summer,” he said in a statement. 

John Moot, the lawyer for Talley, welcomed the end of the lawsuit and said it vindicated his client’s initial position. 

“It accomplished one of its major goals, to prevent a master carnival contract being awarded to someone who did not have the actual, highest scoring proposal,” he wrote in an email. 

Since 1936, the district has owned and operated the Del Mar Fairgrounds. It’s governed by a nine-member board appointed by the governor, and primarily funded by revenues generated by events, the largest being the county fair.

The contract dispute played out against a backdrop of massive financial struggles for the district, which runs the Del Mar Fairgrounds and hosts the annual thoroughbred horseracing meet. The pandemic devastated the organization, which saw revenues plummet 90% in 2020 and triggered layoffs of nearly 100 employees.

The settlement also ends an effort the district began as early as 2019 to change how the midway was run. For decades the fair ran an “independent” midway, in which games and rides were put on by multiple operators, each with a contract with the district.

Instead the district tried to move to a master operator model, in which a contract is inked with one company that then runs the midway. But because of the controversy over the contract awards, the district never achieved that.

This year, as in previous years, the fair will feature an independent midway.