Gil Ramirez Grp., L. L.C. v. Hous. Indep. Sch. Dist.

• Decision Date: 18 May 2015
• Docket Number: No. 13–20753.,13–20753.
• Citation: 786 F.3d 400
• Parties: The GIL RAMIREZ GROUP, L.L.C.; Gil Ramirez, Jr., Plaintiffs–Appellants v. HOUSTON INDEPENDENT SCHOOL DISTRICT; Lawrence Marshall; Eva Jackson; RHJ–JOC, Incorporated; Fort Bend Mechanical, Limited; Marshall & Associates; Joyce Moss Clay; JM Clay and Associates; FBM Management, L.L.C. ; David L. Medford, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

786 F.3d 400

The GIL RAMIREZ GROUP, L.L.C.; Gil Ramirez, Jr., Plaintiffs–Appellants

v.HOUSTON INDEPENDENT SCHOOL DISTRICT; Lawrence Marshall; Eva Jackson; RHJ–JOC, Incorporated; Fort Bend Mechanical, Limited; Marshall & Associates; Joyce Moss Clay; JM Clay and Associates; FBM Management, L.L.C. ; David L. Medford, Defendants–Appellees.

No. 13–20753.

United States Court of Appeals, Fifth Circuit.

May 18, 2015.

Chad Wilson Dunn, Esq. (argued), Brazil & Dunn, Martin Jonathan Siegel, Law Office of Martin J. Siegel, P.C., Houston, TX, for Plaintiffs–Appellants.

Arturo Garcia Michel (argued), John M. Hopkins, Esq., Brandon Scott Winchester, Thompson & Horton, L.L.P., Houston, TX, for Defendant–Appellee Houston Independent School District.

Richard Alan Morris, Paul A. Lamp, Nicholas Jordan Wagoner, Rogers, Morris & Grover, L.L.P., Houston, TX, for Defendant–Appellee Lawrence Marshall.

Michael John Stanley, Stanley, Frank & Rose, L.L.P., Houston, TX, for Defendants–Appellees Eva Jackson and RHJ–JOC, Incorporated.

Brooks T. Harrison, Pasadena, TX, Michael T. McGann, Houston, TX, for Defendants–Appellees Fort Bend Mechanical, Limited, FBM Management, L.L.C. and David L. Medford.

Richard Alan Morris (argued), Paul A. Lamp, Rogers, Morris & Grover, L.L.P., Houston, TX, for Defendant–Appellee Marshall & Associates.

Wendle Van Smith, Anderson & Smith, P.C., Houston, TX for Defendants–Appellees Joyce Moss Clay and JM Clay and Associates.

Appeals from the United States District Court for the Southern District of Texas.

Before REAVLEY, JONES, and ELROD, Circuit Judges.

Opinion

EDITH H. JONES, Circuit Judge:

This case, involving multiple causes of action based on allegations of bribery to procure construction contracts, was filed against Houston Independent School District (“HISD” or “the District”), former trustee Lawrence Marshall and his consulting company, alleged coconspirator Joyce Moss Clay and her consulting company, and two of the plaintiff's competitors (RHJ–JOC and Fort Bend Mechanical), and their respective owners. The district court ably resolved most of these kaleidoscopic claims against Plaintiff–Appellants Gil Ramirez, Jr. and the Gil Ramirez Group, L.L.C. (collectively “GRG”), but we conclude GRG has met its summary judgment burden with respect to its RICO claims (against all defendants except HISD) and has sufficiently supported those elements of its claims for tortious interference with business relations that the district court ruled on. For those claims, we reverse and remand for further proceedings. This decision requires resolving two novel issues in this circuit—whether HISD is a proper RICO defendant (it is not), and whether Appellee Marshall, a former elected HISD trustee, may invoke state sovereign immunity principles against the state law claims (he cannot).

BACKGROUND¹

Defendant Houston Independent School District is one of the largest school districts in the nation, serving over 200,000 students. A nine-member Board of Trustees governs the district; the administrative staff is led by the Superintendent. The District procures some construction and facilities services through a job-order contract (“JOC”) program. Under this program, the District periodically solicits requests for proposals (“RFPs”), following which a committee of HISD administrators (the “selection committee”) evaluates vendors' bids against predetermined criteria and selects as many qualifying vendors as current needs require. The single most important factor in the selection process is the vendor's pricing coefficient—a percentile that reflects the difference between the standard price set in a pricing manual and the price a contractor agrees to charge. Pricing coefficients are assigned for several categories of work and are combined to determine the vendor's weighted average. The selection committee forwards its recommendations to the Board of Trustees, which then votes on whether to offer JOC contracts to the suggested vendors.

HISD outsourced the assignment and management of JOC projects to several independent project managers, each of which covered specific facilities. The District would inform the relevant project manager of its need and the project manager would solicit cost estimates from the JOC vendors, evaluate the estimates, assign the jobs, and manage their progress.

Ramirez alleges that he and his company GRG were punished for refusing to participate in the corruption of municipal authorities. Defendant Lawrence Marshall, for many years an administrator at HISD until he was elected Trustee in 1997, masterminded questionable business arrangements in which he served as a paid consultant for several organizations that did business with the District. When the District explicitly prohibited that conduct, those companies hired Marshall's business associate Joyce Moss Clay (together with her company, “Clay”), whose company began paying Marshall a share of its consulting fees.

Ramirez and Marshall crossed paths during an RFP initiated in May 2008 (the “2008 RFP”) to expand the HISD's contractor capacity and increase vendor diversity. GRG bid in this RFP along with ten other companies, including Defendants Fort Bend Mechanical (“FBM”) and RHJ–JOC (“RHJ”) (collectively, with their owners, the “vendor defendants”). The vendor defendants both hired Clay as a consultant, in RHJ's case “to provide moral support.” RHJ paid Clay over $2,000 per month for several years, but neither RHJ nor Clay could explain what work Clay actually performed. FBM's owner Pete Medford avers that he wanted to make donations to specific schools and hired Clay to help him negotiate the rules and regulations governing those donations. Clay's explanation for forwarding Marshall 65% of her consulting fees is that he was her “mentor.”

Once the initial bids were in, an employee in HISD's procurement department (who also served on the selection committee) advised several companies to reallocate their pricing coefficients. No bidding vendor was permitted to change its overall coefficient; such a change would have given that vendor an unfair advantage.² On its first cut, the selection committee recommended approving the two companies with the lowest overall price: RHJ and Kellogg Brown & Root Services, Inc. (“KBR”). GRG ranked ninth and the selection committee summarily eliminated it along with several other companies. Senior HISD administrators reviewed the proposal and, based on an internal policy, disqualified RHJ because of a then-pending lawsuit between the vendor and another school district.

Left with only one proposed vendor, HISD Superintendent Dr. Abelardo Saavedra and Chief Business Operations Officer Richard Lindsay unilaterally added four vendors to the list that went before the Board of Trustees: FBM for its HVAC expertise, and the other three, including GRG, to increase JOC “diversity.” The Board approved this slate of five vendors, only one of which (KBR) had the approval of the selection committee. It is noteworthy that the selection committee passed over GRG, and HISD administrators added the company solely for diversity reasons.³ Shortly after learning that it was not among HISD's selected JOC group, RHJ fired Clay.

GRG and the other contractors executed one-year contracts, renewable at HISD's sole discretion, thus constituting the 2009 JOC program. When the District began assigning projects the following summer, GRG received more project funds than any other vendor. GRG maintains that it was a JOC vendor par excellence, completing jobs properly, ahead of schedule, and under budget. Appellees dispute this. The District reports that it “experienced a number of performance issues with GRG ... including false starts on construction projects, failure to obtain proper bonding and insurance, and failure to timely submit documents required under” the JOC program.

Marshall became president of the Board of Trustees in January 2009. The next month, Superintendent Saavedra announced his resignation, effective at the end of August of that year. In August, Saavedra recommended that the Board reconsider RHJ because its lawsuit with the other school district was over. The Board agreed and added RHJ to the approved JOC list. Saavedra testified that he was “very hesitant” to recommend RHJ for approval and that Marshall was putting “tremendous pressure” on other senior administrators.⁴ He also testified that he had lost Marshall's support by disqualifying RHJ earlier in the process.

According to GRG, the trouble began after August 2009. Once RHJ was in the mix, GRG saw a sharp decline in the volume of JOC work it received, though it continued to receive assignments until its contract expired. Ramirez testified that Ricardo Aguirre, a janitorial services consultant and mutual associate of Marshall and Ramirez's father, visited Ramirez's office. Aguirre told Ramirez that GRG would need to hire Clay as Marshall's “bag lady” in order to protect its JOC business.⁵ GRG suggests that Ramirez's expression of disapproval to Aguirre was the triggering event for the decrease in GRG's JOC assignments.

In the February before the election, FBM paid for Marshall to attend the Super Bowl in Tampa, Florida. Medford admitted on tape that he had given Marshall approximately $150,000 since 2008. When Marshall faced a reelection contest in autumn 2009, the owners of RHJ and FBM donated to Marshall's campaign, in amounts totaling over $50,000. GRG did not contribute to Marshall's reelection campaign or otherwise support him, but there is no indication that Marshall or anyone else asked GRG or Ramirez to do so.

Also in August 2009, a District internal auditor noticed the non-recommended vendors on the Board of Trustees meeting agenda. He investigated the 2008 procurement process, concluding that HISD administrators failed to follow proper procedure and that the final JOC configuration did not provide the best value for the District. His report recommended voiding the contracts for noncompliance with state...