Opinion
No. C 99-4646 MMC
March 12, 2002
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT; VACATING HEARING
Before the Court is defendant City of Berkeley's ("the City") motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiff Hillside Drilling, Inc. ("Hillside") has filed opposition, to which the City has replied. Having considered the papers submitted in support of and in opposition to the motion, the Court deems the motion appropriate for decision on said submissions, VACATES the hearing scheduled for March 1, 2001, and rules as follows.
The claims against the three individual defendants have been dismissed with prejudice. (See Stipulation for Dismissal and Order Thereon, filed January 9, 2002.) The City is the sole remaining defendant.
BACKGROUND
Hillside challenges the City's decision not to accept its bid to perform repair work on Wildcat Canyon Road ("the Wildcat Canyon project").
As a prerequisite to receiving federal highway funds for City projects, such as the Wildcat Canyon project, the City entered into a Master Agreement with the State of California, under which agreement the City agreed to comply with 49 C.F.R. Part 23, entitled "Participation in Minority Business Enterprise in [United States] Department of Transportation Programs." (See Order Denying Defendants' Motion to Compel Joinder, filed March 24, 2000, at 3:9-13.) The agreement with the State required the City to implement a Disadvantaged Business Enterprises ("DBE") program. (See id. at 3:13-22.) On August 14, 1998, the State of California Department of Transportation ("Caltrans") approved the City's DBE program, finding it met the requirements of 49 C.F.R. Part 23. (See Woo Decl. Ex. 5 [Egeberg Supp. Decl. Ex. J at 2].)
A more detailed discussion of the requirements of 49 C.F.R. Part 23 is set forth in the Court's order of March 24, 2000.
Under the City's DBE program, contractors bidding on City projects "must submit" a "`DBE Utilization Report' . . . to demonstrate expected participation by DBEs." (See Gorski Decl. Ex. E [Emeziem Dep. Ex. 4 at 10].) In that report, for each DBE to be utilized on the project, a bidding contractor provides the DBE's name and address, its date of certification as a DBE, the nature of the DBE's participation, and the dollar value of the participation. (See Gorski Decl. Ex. E [Emeziem Dep. Ex. 4 at 14].) In conjunction with the report, a bidding contractor is also required to "provide proof of M/W/DBE status by attaching a copy of [the DBE] certification" to the report. (See id.)
A DBE certification is a document issued by Caltrans, indicating a contractor "is in good standing with Caltrans and is on the Caltrans DBE certification list." (See Woo Decl. Ex. 10 [Silveira Dep. at 54:15-19].) Federal regulations require that recipients of federal transportation funds, such as a Caltrans, certify the eligibility of DBEs. See 49 C.F.R. § 23.45(f)(1) (1998).
"M/W/DBE" refers to "Minority/Women/Disadvantaged Enterprise." (See id.)
In November 1998, the City, issued specifications for the Wildcat Canyon project. (See Woo Decl. Ex. 2 [Egeberg Decl. Ex. G].) In a section entitled "Submission of DBE Information, Award, and Execution of Contract," the specifications state, in bold capitalized letters: "DBE information along with copies of Caltrans certifications shall be submitted with the proposal." (See Woo Decl. Ex. 2 [Egeberg Decl. Ex. G at 3-1.01A].) The bidder's DBE information must "establish that the DBE goal will be met or that a good faith effort to meet the goal has been made." (See id.) The DBE participation goal for the Wildcat Canyon project was 20%. (See Silveira Decl. Ex. D [Silveira Dep. Ex. 8 at 2-1.03].)
Before that date, the City Council had accepted federal funds for the project. (See Woo Decl. Ex. 3 [Kelly Decl. Ex. C at 35].)
On November 19, 1998, the City received eight bids for the Wildcat Canyon project, including a bid from Hillside. (See Pajoohandeh Decl. at ¶ 2.) Hillside's bid was the second lowest. (See id.) With its bid, Hillside submitted a completed "Bidder-DBE-Information" form setting forth the names of four DBEs Hillside proposed to use on the project, and stating that Hillside proposed to subcontract 18% of the contract to the four DBEs. (See Gorski Decl. Ex. F [Pajoohandeh Decl. Ex. 20].) Hillside, however, did not submit DBE certifications with its bid. (See Woo Decl. Ex. 10 [Silveira Dep. at 58:18-20].) The lowest bid, submitted by Condon-Johnson, Inc., also did not include DBE certifications. (See Pajoohandeh Decl. at ¶ 2.) The third lowest bid, submitted by Trinet Construction, Inc. ("Trinet"), did include DBE certifications. (See Woo Decl. Ex. 6 at 5:7-9.)
In mid-December 1998, Jack Pajoohandeh ("Pajoohandeh"), the City's project manager for the Wildcat Canyon project, prepared a "City Manager report and proposed resolution for adoption by the City Council," stating therein that the bids of the lowest and second lowest contractors were "non-responsive, because their submittals lacked the Disadvantaged Business Enterprise (DBE) documentations," and recommending that the City Council accept Trinet's bid. (See Pajoohandeh Decl. at ¶ 3.)
Pajoohandeh is one of several project managers employed by the City. (See Gorski Decl. Ex. F [Pajoohandeh Dep. at 17:8-17].)
On January 11, 1999, Sean Silveira ("Silveira"), project manager for Hillside, received a call from a representative of Trinet, who asked if Hillside was available to perform subcontracting work for Trinet on the Wildcat Canyon project. (See Silveira Decl. Ex. D at 74:3-9.) Silveira then phoned Pajoohandeh, who told Silveira that Hillside's bid had been rejected because Hillside didn't meet the "quota" of 20%, whereas Trinet had "made the quota" (see id. Ex. D at 74:10-21); in response to Silveira's question as to whether "they had taken a look at the good faith effort," Pajoohandeh stated that "it didn't matter about the good faith effort, that you had to get 20 percent." (See id. Ex. D at 75:8-12.
Silveira's description of his conversation with Pajoohandeh is disputed. For purposes of the instant motion, however, these facts are taken as true.
Silveira then sent Pajoohandeh a letter dated January 12, 1999, in which Silveira stated that the letter was "to confirm our telephone conversation of Monday 1/11/99," wherein "[y]ou stated [Hillside's] bid was rejected because Hillside Drilling did not meet the 20% DBE goal for this project." (See Gorski Decl. Ex. E [Emeziem Decl. Ex. 8].) Pajoohandeh received the letter, and does not recall "doing anything" in response. (See id. Ex. F [Pajoohandeh Dep. at 42:3-25].)
On January 12, 1999, the City Council unanimously adopted a resolution stating that the lowest and second lowest bids for the Wildcat Canyon project were "nonresponsive," and accepting the third lowest bid, offered by Trinet, which the City Council stated was "the lowest responsive and responsible bid." (See Woo Decl. Ex. 3 [Kelly Decl. Ex. C.].) In adopting the resolution, the City Council acted on the written recommendation of Andreas Campos-Kreutzer ("Campos-Kreutzer"), Director of Public Works, who stated in his recommendation that the bids of the lowest and second lowest bidders were "non-responsive, because their submittals lacked the Disadvantaged Business Enterprise (DBE) documentations, required with their bids, and their bids were rejected." (See id.)
The Berkeley Municipal Code provides that the City Council is the only entity with the authority to approve a contract for a public works contract in excess of $25,000. See Berkeley Municipal Code § 7.18.010 (Woo Decl. Ex. 3 [Kelly Decl. Ex. B].)
It appears that the recommendation signed by Campos-Kreutzer, and presented to the City Council, was based on the above-referenced draft prepared by Pajoohandeh in December 1998.
In addition to the contract in question, the City awarded nineteen contracts in excess of $200,000 on bids submitted prior to December 31, 1998, on federally-funded projects. (See Woo Decl. Ex. 6 at 10:21-39:6.) of those contracts, seventeen were awarded to the contractor who was the "lowest responsive bidder" (see Emeziem Decl. at ¶ 7; Woo Decl. Ex. 6), i.e., the lowest of the bidders whose "proposal complie[d] with all the requirements prescribed" by the specifications. (See e.g., Silveira Decl. Ex. B at 8.) The remaining two contracts were awarded to the sole bidder, even though the sole bidder did not submit all the required documentation with its bid. (See Emeziem Decl. at ¶ 8; Woo Decl. Ex. 6.)
LEGAL STANDARD
Rule 56(c) of the Federal Rules of Civil Procedure provides that a court may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
The Supreme Court's 1986 "trilogy" of Celotex Corp. v. Catrett, 477 U.S. 317 (1986), Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986), and Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986), requires that a party seeking summary judgment show the absence of a genuine issue of material fact. Once the moving party has done so, the nonmoving party must "go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" See Celotex, 477 U.S. at 324 (quoting Rule 56 (c)). "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Liberty Lobby, 477 U.S. at 249-50 (citations omitted). When determining whether there is a genuine issue for trial, "inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion." See Matsushita, 475 U.S. at 587 (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).
DISCUSSION
In its Second Amended Complaint ("SAC"), Hillside alleges that the actual reason the City rejected its bid for the Wildcat Canyon project was the City's policy of employing unconstitutional "quotas." Hillside alleges that the City has two such policies: (1) a requirement that contractors meet the DBE goal before a bid will be accepted for a federally-funded project; and (2) a requirement that contractors comply with Berkeley Municipal Code § 13.26.050, which requires contractors bidding for any work to provide certain information concerning the percentage of women and minorities in their workforce.
A. DBE Goal
Hillside alleges that contrary to the City's stated requirement that contractors demonstrate eligibility by either meeting the DBE goal or setting forth their good faith efforts to do so, the City "has a mandated quota program." (See SAC at ¶ 30.) Specifically, Hillside alleges the City's program "mandates that all Contractors contract out 20% of the work to Minority and/or Women owned businesses" (see id.), and that the City "mandated a 20% quota for the instant project." (See id. at ¶ 32.) Hillside further alleges that, although it submitted "adequate and timely documentation of its good faith efforts to meet the quota," the City rejected its bid "exclusively on the determination that Hillside Drilling failed to comply with the 20% DBE quota." (See id. at ¶ 48.) Accordingly to Hillside, the City's rejection of its bid for that reason violated 42 U.S.C. § 1983 by depriving Hillside of equal protection and also violated Article I, § 31(e), of the California Constitution. (See id. at ¶¶ 55, 59, 95.)
A municipality may not require that general contractors subcontract a specific percentage of a contract to DBEs in the absence of a compelling government interest and a showing that such a quota program is narrowly tailored to remedy effects of past discrimination. See City of Richmond v. J.A. Croson Co., 488 U.S. 469, 505-06 (1989).
In its motion, the City does not argue that it has a compelling interest in requiring that a specific percentage of contracts be subcontracted to DBEs. Rather, the City argues that Hillside lacks evidence that the City has such a requirement, and that Hillside lacks evidence that its bid was rejected for failure to comply with the 20% DBE goal.
As evidence to prove that its bid was denied because of Hillside's failure to meet a required "quota," Hillside relies on Pajoohandeh's statement to Silveira that Hillside's bid was rejected because Hillside did not meet the "quota" of 20% (see Silveira Decl. Ex. D at 74:10-21), as well as Pajoohandeh's failure to respond to Silveira's letter "confirming" that conversation. See Rose v. Hunter, 155 Cal.App.2d 319, 325 (1957) (holding failure to reply to a letter containing statement against recipient's interest can be construed as an admission by recipient). In response, the City argues that evidence as to what Pajoohandeh may have said is not evidence that the City itself violated Hillside's constitutional rights.
Additionally, Hillside argues that it was not required to submit DBE certifications with its bid. As noted above, however, both the City's DBE program and the specifications for the Wildcat Canyon project required the certifications to be submitted with the bid.
Hillside, "assuming arguendo" such a requirement existed, next argues that the City should not have included the requirement in its DBE program or the specifications because compliance is a "virtual impossibility." (See Pl.'s Opp. at 8:23-26.) This argument likewise is unpersuasive. First, the majority of successful bidders on this and other federally-funded projects did in fact submit the certifications with their bids. (See Discussion, infra, at 9:5-7.) Second, Hillside does not argue that the certification requirement violates either § 1983 or the California Constitution. Lastly, Hillside's only remaining claim is that the City's requirements are unconstitutional as applied. (See Order Denying In Part Defs.' Mot. to Dismiss, filed October 3, 2000, at 2:1-3.)
A municipality can be held liable under 42 U.S.C. § 1983 for actions that result in the deprivation of a plaintiffs federal constitutional rights. See Monell v. Dep't of Social Servs., 436 U.S. 658, 690 (1978). A municipality, however, cannot be held liable on a respondeat superior theory. See id. at 691. Rather, the plaintiff must show that an unconstitutional act of an employee of the municipality was "undertaken pursuant to official policy or custom." See Hopper v. City of Pasco, 241 F.3d 1067, 1082 (9th Cir.) (citing Monell, 435 U.S. at 690-91), cert. denied, 122 S.Ct. 346 (2001).
A plaintiff may establish a policy or custom, within the meaning ofMonell, in three ways:
First, the plaintiff may prove that a city employee committed the alleged constitutional violation pursuant to a formal government policy or a longstanding practice or custom which constitutes the standard operating procedure of the local government entity. Second, the plaintiff may establish that the individual who committed the constitutional tort was an official with final policy-making authority and that the challenged action itself thus constituted an act of official government policy. Third, the plaintiff may prove that an official with final policy-making authority ratified a subordinate's unconstitutional decision or action and the basis for it.Id. at 1083 (internal quotations and citations omitted).
Here, Hillside does not argue that Pajoohandeh himself is an official with final policy-making authority. Nor can Hillside establish a claim under the theory that the City Council ratified Pajoohandeh's decision to reject Hillside's bid on the basis of non-compliance with the "quota;" as set forth in its resolution passed January 12, 1999, the City rejected Hillside's bid on the basis that the bid was "non responsive." (See Woo Decl. Ex. 3 [Kelly Decl. Ex. C].) Thus, Hillside can prevail only by showing that a triable issue of fact exists as to whether Pajoohandeh was acting pursuant to a "longstanding practice or custom which constitutes the standard operating procedure of the local government entity." See Hopper, 241 F.3d at 1083.
Hillside does not contend that the City has a "formal government policy" that contractors must subcontract 20% of the contract to DBEs. Rather, Hillside alleges there is an unwritten policy or custom.
In that respect, Hillside relies on an analysis of other federally-funded construction projects for which the City accepted bids between 1987 and 1998. In particular, Hillside first notes that the City set a DBE goal for 17 of the 19 federally-funded construction projects for which contracts were awarded during that time period. Hillside next notes that sixteen of the successful bidders met the goal, and only one relied on a good faith effort to comply with the goal. (See Silveira Decl. Ex. D [Silveira Dep. Ex. 5].) Hillside argues these statistics demonstrate that, in practice, the City requires contractors to meet the DBE goal. The Court disagrees. Hillside's evidence also shows that, of the 17 contracts, 15 were awarded to the lowest responsive bidder, including a bidder who did not meet the DBE goal but instead showed a good faith effort to do so. Hillside fails to cite any instance where the City accepted a bid of a contractor who met the DBE goal, while rejecting a lower responsive bid of a contractor who established a good faith effort to meet the DBE goal.
One of the remaining two projects was awarded on an "emergency" basis and the other was not designated a "Caltrans project." (See Woo Decl. Ex. 6 at 12, 21-22.)
As noted above, a "responsive bidder" is one whose proposal complies with all the requirements prescribed by the specifications which, in this instance, included a requirement that DBE certifications be submitted with the proposal.
The remaining two projects were awarded to the sole bidder, even though the sole bid, in each instance, was not responsive. (See Emeziem Decl. at ¶ 8; Woo Decl. Ex. 6 at 10:22-11:28, 13:10-14:14.) Hillside argues that both of those bidders were themselves DBEs and that the City's decision to award the contract is evidence that the City gives "preferential treatment" to DBEs. (See Pl.'s Opp. at 10:23-24.) As the City points out, however, had it failed to award the contract to the sole bidder, the City risked losing the federal funding available for those projects. (See Emeziem Decl. at ¶ 8.) Hillside offers no evidence to the contrary, nor does Hillside point to any instance where the City received a sole bid from a non-DBE contractor and rejected that bid because it was non-responsive.
In sum, Hillside has offered evidence that the City awards bids to the lowest responsive bidder, which is the outcome required by law. See Berkeley City Charter, Art. XI, § 67(a) (Woo Decl. Ex. 3 [Kelly Decl. Ex. A].) The fact that the majority of the contractors who submitted the lowest responsive bids met the applicable DBE goal, rather than showing a good faith effort to do so, is insufficient to create a triable issue of fact that the City has a policy of requiring contractors to meet the applicable DBE goal rather than allowing them the alternative of showing a good faith effort.
Accordingly, the City is entitled to summary judgment on Hillside's claim that the City's DBE program violated § 1983.
2. State Constitution
The California Constitution provides that "[t]he state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of . . . public contracting." See Cal. Const. Art. I, § 31(a). The provision, however is subject to the following exception: "Nothing in this section shall be interpreted as prohibiting action which must be taken to establish or maintain eligibility for any federal programs, where ineligibility would result in a loss of federal funds to the state." See Cal. Const. Art. I, § 31(e).
For the purposes of Article I, § 31, the word "state" includes cities. See Cal. Const. Art. I, § 31(f).
The City argues that the City's DBE program complies with federal regulations requiring the City to maintain such a program, and, accordingly, that the exception precludes Hillside's claim under Article I. In response, Hillside asserts that because the City is not entitled to summary judgment on Hillside's claim that the City's DBE program, as applied, violates § 1983, the City is not entitled to summary judgment on Hillside's state law claim. For the reasons stated above, however, Hillside has failed to offer evidence that the City violated § 1983. In the absence of any evidence that the City violated the federal regulations governing eligibility for federal highway funds, the City is entitled to rely on the exception set forth in Art. I, § 31(e).
Accordingly, the City is entitled to summary judgment on Hillside's claim that the City's DBE program violated Art. I, § 31(a), of the California Constitution.
B. Section 13.26.050
Pursuant to Berkeley Municipal Code § 13.26.050, the City requires that bidding contractors submit either a "completed workforce composition form and a separate workplace analysis by job craft" or a "covenant by the bidder that under any contract with the City of Berkeley, it will employ minorities and women in each craft in numbers equal to the percentage of minorities and women available in each craft in the County of Alameda." See Berkeley Municipal Code § 13.26.050(C).
In its SAC, Hillside alleges that § 13.26.050 is unconstitutional, that the City applied § 13.26.050 to the Wildcat Canyon project, and that as a result of such application Hillside suffered damage because it "refuses to discriminate in selecting sub-contractors, and will continue to accept only the low qualified bids submitted by sub-contractors." (See SAC at ¶¶ 108-09.) Hillside alleges that application of § 13.26.050 to City projects violates the state and federal constitutions. (See id. at ¶¶ 93-95, 109.)
A contractor has standing to challenge a public entity's bidding requirements on equal protection grounds where that contractor can establish that "it is able and ready to bid on contracts and that a discriminatory policy prevents it from doing so on an equal basis." See Northeastern Florida Chapter of the Associated General Contractors v. City of Jacksonville, 508 U.S. 656, 666 (1993).
The City argues that because Hillside lacks evidence that § 13.26.050 was applied to the Wildcat Canyon project, Hillside cannot show "that a discriminatory policy prevent[ed] it from [bidding] on an equal basis" with contractors who had shown compliance with § 13.26.050.See id. The City relies on the declaration of Kenneth Emeziem, the person responsible for implementing and maintaining the City's DBE program, who states that the City applies § 13.26.050 "only to non-federally funded projects," and not to federally funded projects such as the Wildcat Canyon project. (See Emeziem Decl. at ¶ 6.)
Additionally, the Court notes that there is no reference to § 13.26.050 in the excerpts from the specifications for the Wildcat Canyon project provided by the parties. (See Woo Decl. Ex. 2 [Egeberg Decl. Ex. G]; Silveira Decl. Ex. D [Silveira Dep. Ex. 8].)
In opposition, Hillside offers no evidence that § 13.26.050 was applied to the Wildcat Canyon project. Indeed, Silveira testified at his deposition that he was aware of no instance in which the City rejected any bidder for failure to comply with § 13.26.050. (See Woo Decl. Ex. 10 [Silveira Dep. 101:3-12].) In the absence of any evidence that Hillside has been injured by application of § 13.26.050, Hillside lacks standing to challenge the constitutionality of its application.
Accordingly, the City is entitled to summary judgment on Hillside's claim that § 13.26.050 is unconstitutional.
CONCLUSION
For the reasons stated above, the City's motion for summary judgment is hereby GRANTED.
The Clerk shall close the file and terminate any pending motions.