Opinion
Civil No. 03-3104 (JRT/JSM)
March 4, 2004
Jack D. Elmquist, ELMQUIST LAW OFFICE, Minneapolis, MN, and Thomas F. Surprenant, PLAINTIFF CONSTRUCTION COMPANY, St. Louis Park, MN, for plaintiff
Jeffery S. Thompson and Michele M. Owen, St. Paul, MN, for defendants
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS
Plaintiff Stahl Construction Co. brings this action against the State of Minnesota, the Minnesota Department of Administration and the Commissioner of Administration, Brian Lamb, (collectively, "defendants") challenging both the constitutionality of a Minnesota statute, and the actions of the Commissioner in implementing the statute. Plaintiff alleges that the challenged statute and regulation, Minn. Stat. § 16C.16, subds. 5 and 6, and Minn. R. 1230.1820, subp. 1 (2001), creates a preferential and discriminatory system for awarding construction bids for state contracts. Plaintiff claims that the statute and its implementation violate plaintiff's constitutional right to be free from race and gender discrimination, and the right to equal protection under the laws. Plaintiff also alleges violations of the state competitive bidding laws. Defendants move to dismiss on the pleadings, arguing that the Eleventh Amendment bars plaintiff's claims, and that his §§ 1981 and 1983 claims cannot survive because the state is not a "person." Defendants also argue that plaintiff does not have standing to bring any of the claims. For the reasons discussed below, the Court grants in part and denies in part defendants' motion.
BACKGROUND
In March, 2003, the state requested bids for a contract to construct additional housing at the Minnesota Correctional Facility at Lino Lakes ("MCF-Lino Lakes"). The project manual (included in the request for bids) required 3% of the subcontractors involved in the project to be minority-owned or women-owned businesses. This requirement is referred to as the "Targeted Group Program" ("TGP" or "the Program"). The project manual indicates that if a bidder fails to follow the Targeted Group Requirement, a penalty of up to 6%, but not more than $60,000, will be added to the bid. The Program provides that prime contractors can seek a waiver of the 3% requirement.
Plaintiff is a prime contractor who bid on the MCF-Lino Lakes project. Plaintiff alleges that its bid was the low bid until a $60,000 penalty was added to the bid. This penalty was added because plaintiff did not name in its bid which minority-owned or women-owned subcontractors would participate in the project, and also did not seek a waiver. Instead, plaintiff wrote that compliance with the Targeted Group Program would be satisfied by subcontractors "TBA." The MCF-Lino Lakes project was awarded to another contractor.
The Minnesota statutes and rules establishing the Targeted Group Program include Minn. Stat. § 16C.16, subds. 5 and 6, and Minn. R. 1230.1820, subp. 1 (2001). Section 16C.16, subd. 5 requires the Commissioner of Administration to designate businesses that are majority owned and operated by women, persons with substantial physical disability, or specific minorities as Targeted Group Businesses within purchasing categories as determined by the Commissioner. Subdivision 6, "Purchasing methods," empowers the Commissioner to set goals that require the prime contractor to subcontract a portion of the contract to Targeted Group businesses. This subdivision also mandates that the Commissioner establish a procedure for granting waivers if the Targeted Group businesses are not reasonably available.
Plaintiff emphasizes that it has successfully bid on state projects in the past and will bid on projects in the future. Plaintiff argues that section 16C.16 is unconstitutional and violates equal protection. Plaintiff also alleges violations of state competitive bidding laws. Plaintiff seeks a declaratory judgment that the Program violates § 1981 and the Equal Protection Clause, and seeks an injunction prohibiting future use of the Program by the state. In addition, plaintiff seeks monetary damages. In the alternative, plaintiff seeks retroactive injunctive relief. Plaintiff characterizes the declaratory judgment and the prospective injunctive relief as "the main" relief sought.
ANALYSIS
I. Standard of ReviewOn a motion to dismiss under Rule 12(b)(6), the Court must assume that all well-pleaded factual allegations in the complaint are true and draw all reasonable inferences from the complaint most favorably to the non-moving party. Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). The Court grants a motion to dismiss only if "it appears beyond a reasonable doubt that plaintiff can prove no set of facts in support of a claim entitling [plaintiff] to relief." Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001) (citing Breedlove v. Earthgrains Baking, 140 F.3d 797, 799 (8th Cir. 1998)); Helleloid v. Indep. Sch. Dist. No. 361, 149 F. Supp.2d 863, 866-67 (D. Minn. 2001)).
"Nevertheless, dismissal under Rule 12(b)(6) serves to eliminate actions which are fatally flawed in their legal premises and deigned to fail, thereby sparing litigants the burden of unnecessary pretrial and trial activity." Young, 244 F.3d at 627 (citing Neitzke v. Williams, 490 U.S. 319, 326-27 (1989)). "To avoid dismissal, a complaint must allege facts sufficient to state a claim as a matter of law and not merely legal conclusions." Id. (citing Springdale Educ. Ass'n v. Springdale Sch. Dist., 133 F.3d 649, 651 (8th Cir. 1998)).
II. Eleventh Amendment
The doctrine of sovereign immunity, embodied in the Eleventh Amendment, protects states and state officials from liability in actions seeking monetary damages when those damages would be paid from the state treasury. U.S. Const. amend. XI; Hans v. Louisiana, 134 U.S. 1, 15 (1890) (states immune from suits by own citizens). A state or state official may be held liable if the state has waived its immunity or if Congress has abrogated that immunity. Alden v. Maine, 527 U.S. 706, 756 (1999); Edelman v. Jordan, 415 U.S. 651, 673 (1974). Further, lawsuits against state officials in their official capacity may be maintained in certain exceptional circumstances. Ex Parte Young, 209 U.S. 123 (1908). Here, defendants argue that the state has not waived its sovereign immunity, that Congress has not lawfully abrogated the state's immunity, and none of the exceptions permitting actions against a state official are applicable.
Courts will find that a state has waived its Eleventh Amendment immunity only when the waiver is clear and express. Edelman v. Jordan, 415 U.S. 651, 673 (1974). Even a waiver of immunity in a state's own courts, without more, will not be interpreted as a waiver of sovereign immunity in the federal courts. Penhurst State Sch. Hosp. v. Halderman, 465 U.S. 89, 99 n. 9 (1984). The Congress has the power to abrogate a state's sovereign immunity. Nevada Dept. of Human Resources v. Hibbs, 123 S.Ct. 1972, 1976, 538 U.S. 721 (noting that Congress may abrogate state's sovereign immunity if Congress "makes its intention to abrogate unmistakably clear in the language of the statute and acts pursuant to a valid exercise of its power under § 5 of the Fourteenth Amendment."). The Court cannot find, and plaintiff has not presented, any evidence that the State of Minnesota has waived its Eleventh Amendment immunity with respect to §§ 1981 or 1983 claims. Additionally, in enacting §§ 1981 and 1983, Congress did not make a clear statement of intent to abrogate states' Eleventh Amendment immunity. See, e.g., Quern v. Jordan, 440 U.S. 332, 345 (1979). As against the State (including the State of Minnesota and the Minnesota Department of Administration), therefore, all of plaintiffs claims are barred.
The " Ex Parte Young" exception allows claims to be maintained against state officials, in their official capacity, regardless of the state's sovereign immunity. 209 U.S. 123 (1908). In Ex Parte Young, the Supreme Court "held that a federal court has jurisdiction in a suit against a state officer to enjoin official actions violating federal law, even though the State itself may be immune. Under Young, `a federal court, consistent with the Eleventh Amendment, may enjoin state officials to conform their future conduct to the requirements of federal law.'" Seminole Tribe of Florida v. Florida, 517 U.S. 44, 169 (1996) (Souter, J. dissenting) (quoting Quern v. Jordan, 440 U.S. 332, 337 (1979)). In this case, however, plaintiff brings claims for monetary relief, as well as for retrospective injunctive relief. Such claims do not fall under the Ex Parte Young exception, and therefore are also barred.
The declaratory judgment request and the request for prospective injunctive relief are not barred as to defendant Lamb.
III. "Persons"
There is no doubt that a state is not a "person" for purposes of §§ 1981 and 1983. While state officials acting in official capacity may be sued for prospective relief, Murphy v. Arkansas, 127 F.3d 750, 754 (8th Cir. 1997), monetary claims cannot stand against state officials in their official capacities. On the other hand, plaintiffs may seek damages under § 1981 through § 1983 against the state officials in their personal capacities. See Egerdahl v. Hibbing Comty. College, 72 F.3d 615, 619 (8th Cir. 1995); Bankhead v. Arkansas Dept. of Human Services, 264 F. Supp.2d 805, 821 (E.D. Ark. 2003).
Plaintiff argues that defendant Lamb has been sued in his "personal" as well as official capacity, and that therefore plaintiff's claims against Lamb, including those seeking monetary damages, should be allowed to proceed. However, the Eighth Circuit requires that a plaintiff "who wishes to sue a state official in his personal capacity must so specify in [the] complaint." Egerdahl, 72 F.3d at 619 (emphasis added). "Neither a cryptic hint in a plaintiff's complaint nor a statement made in response to a motion to dismiss is sufficient." Id. at 620. The plaintiff in Egerdahl did not indicate in the complaint, or in the amended complaint, in what capacity she sued the individual defendants. The district court refused to allow plaintiff to amend her complaint for a second time and did not allow the action to proceed against the state officials in their personal capacities.
The complaint here specifically states that Lamb is being sued in his "official" capacity. Plaintiff argues that the state is on notice that Lamb is being sued in his personal capacity as well, because the complaint alleges that Lamb violated "clearly established constitutional rights." As the complaint reads, however, it is clear that Lamb is being sued only in his official capacity. Given the Eighth Circuit's precise directive in Egerdahl, it would be inappropriate to determine that Lamb is being sued in his personal capacity as well. Therefore the Court cannot allow plaintiff's claims for monetary relief against defendant Lamb to proceed.
Plaintiff has not filed an amended complaint and has not requested permission to do so.
IV. Minnesota Competitive Bidding Laws
It is well established that a federal court cannot exercise supplemental jurisdiction over an official-capacity claim based on state law, even if the claim is solely for prospective injunctive relief. Penhurst State Sch. Hosp. v. Halderman, 465 U.S. 89, 106 (1984). Similarly, the Supreme Court has not extended the Ex Parte Young doctrine to cover official-capacity lawsuits alleging that the officer violated state law. 465 U.S. at 106. Plaintiff's state law claims alleging that competitive bidding laws were violated are barred by sovereign immunity and must therefore be dismissed
V. Standing
A. Article III
As the United States Supreme Court consistently articulates, to establish standing, a federal plaintiff must demonstrate "that he has suffered `injury in fact,' that the injury is `fairly traceable' to the actions of the defendant, and that the injury will likely be redressed by a favorable decision" on the merits. Bennett v. Spear, 520 U.S. 154, 162 (1997); see also Clinton v. City of New York, 524 U.S. 417, 430 n. 15 (1998); Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) ("Over the years, our cases have established that the irreducible constitutional minimum of standing contains three elements[:]. . . injury in fact . . . fairly traceable to [the]. . . defendant . . . that will be `redressed by a favorable decision.'" (citations omitted).
The defendants identify a number of alleged problems with plaintiffs standing. First, defendants argue that discrimination against subcontractors cannot amount to a violation of plaintiffs equal protection rights because plaintiff is not a subcontractor. Next, defendants argue that the alleged injury is not caused by the Program. Defendants argue that plaintiff lost out on the contract because of bidding irregularities, and those irregularities would not be cured by eliminating the Program. Defendants also argue that plaintiff has not established an imminent future injury because plaintiff has not averred that plaintiff will bid on another contract in the reasonably foreseeable future. Plaintiff has not identified an eligible Targeted Group Business prime contractor who might possibly bid against him. Finally, defendants argue that removal of the race and gender preferences will not redress plaintiff's complaint, because the disability preference would remain.
Defendants suggest that to establish standing, plaintiff would have to allege that (1) plaintiff will compete against a prime contractor owned by a member of another racial or general classification and classified as a Targeted Group Business in the near future; and (2) that the other prime contractor would have an advantage over plaintiff because the Program favors the Targeted Group Business-prime contractor on the basis of that racial or gender classification. Defendants glean these "requirements" for standing from Adarand Contructors v. Pena, 515 U.S. 200, 212 ("Because the evidence in this case indicates that the [the state] is likely to let contracts involving guardrail work that contain a subcontractor compensation clause at least once per year in Colorado, that Adarand is very likely to bid on each such contract, and that Adarand often must compete for such contracts against small disadvantaged businesses, we are satisfied that Adarand has standing to bring this lawsuit.").
Defendants raise only one prudential standing issue — that is, the defendants complain that plaintiff cannot assert the equal protection rights of third parties. The state argues that plaintiff is complaining about discrimination against subcontractors; and because plaintiff is a prime contractor, plaintiff cannot complain about the process.
The Court finds that plaintiff has satisfied the standing requirements. As an initial matter, plaintiff indicates that it has bid on state jobs successfully in the past and will do so again. Defendants will almost certainly continue to build things and to rely on the well-established bidding process to complete those projects. There is no evidence before the Court that there are no women or minority owned prime contractors, or that there is no likelihood that a woman or minority owned prime contractor will bid against plaintiff in the reasonably foreseeable future. Plaintiff's allegations therefore satisfy the Article III standing requirements.
In addition, the Court is not persuaded that plaintiff has no standing to complain about the equal protection violation plaintiff is (allegedly) forced to perpetuate to win a state contract. Plaintiff has alleged that it is able and ready to bid on contracts (and in fact has done so), and plaintiff alleges that the Target Program is a discriminatory policy that prevents plaintiff from bidding on an equal basis. See, e.g., Northeastern Fla. Chapter of the Associated Gen. Contractors of Am. v. City of Jacksonville, 508 U.S. 656, 666 (1993) ("To establish standing . . . a party challenging a set-aside program . . . need only demonstrate that it is able and ready to bid on contracts and that a discriminatory policy prevents its from doing so on an equal basis."); see also City of Richmond v. J. A. Croson Co., 488 U.S. 469, 485 (1989) (allowing a white contractor to challenge minority set-aside program).
It is clear, even at this early state, that plaintiff is not simply a "concerned onlooker" as the state suggests. Plaintiff does not assert a "generalized grievance" and the Court finds the "generalized grievance" cases inapposite. See, e.g., Carroll v. Nakatani, 342 F.3d 934 (9th Cir. 2003) (granting summary judgment for state of Hawaii because plaintiffs did not have standing where non-native Hawaiians brought actions challenging provision of Hawaii Constitution that created agencies providing special benefits to native Hawaiians). Therefore, the Court finds that plaintiff has satisfied the requirements for standing, and plaintiff's claim against Lamb for prospective injunctive relief and for declaratory relief can go forward.
ORDER
Based upon the foregoing memorandum, the submissions of the parties, the arguments of counsel and the entire file and proceedings herein, IT IS HEREBY ORDERED that defendant' motion to dismiss [Docket No. 4] is GRANTED in part and DENIED in part as follows.
1. The State of Minnesota and the Department of Administration are DISMISSED as defendants in this matter;
2. Defendants' motion is GRANTED to the extent it seeks to dismiss claims for monetary and retroactive injunctive relief;
3. Defendants' motion to dismiss plaintiff's state law claims is GRANTED. Count III of the complaint [Docket No. 1] is DISMISSED WITH PREJUDICE.
4. Defendants' motion is DENIED in all other respects.