Bellows v. Amoco Oil Co.

• Decision Date: 16 July 1997
• Docket Number: No. 96-40051,96-40051
• Citation: 118 F.3d 268
• Parties: 73 Empl. Prac. Dec. P 45,335 Martin BELLOWS, Individually and on Behalf of Phillips Industrial Constructors, Inc., Plaintiff-Appellee, v. AMOCO OIL COMPANY; et al., Defendants, Amoco Oil Company, Texas City Refinery, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 268

118 F.3d 268

73 Empl. Prac. Dec. P 45,335

Martin BELLOWS, Individually and on Behalf of Phillips Industrial Constructors, Inc., Plaintiff-Appellee, v. AMOCO OIL COMPANY; et al., Defendants Amoco Oil Company, Texas City Refinery, Defendant-Appellant.

No. 96-40051.

United States Court of Appeals Fifth Circuit.

July 16, 1997.

Terry Lou Weir, Anthony P. Griffin, Anthony P. Griffin, Inc., Galveston, TX, for Plaintiff-Appellee.

Jeffrey S. Heller, Gregory Eugenio Alvarez, Amoco Corporation, Houston, TX, Thomas James Piskorski, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, for Defendant-Appellant.

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

Before GARWOOD, WIENER and DEMOSS, Circuit Judges.

GARWOOD, Circuit Judge:

Plaintiffs Martin J. Bellow ¹ (Bellow) and Phillips Industrial Constructors, Inc. (PICI), a Texas corporation, brought this lawsuit against defendant Amoco Oil Company, Texas City refinery (Amoco), alleging that Amoco discriminated against them on the basis of their race by terminating, modifying, or changing their right to contract in violation of 42 U.S.C. § 1981. A jury returned a verdict in favor of Bellow, awarding him $50,000 in "subjective damages" and $225,000 in punitive damages. We reverse.

Facts and Proceedings Below

Bellow, an African-American, began working in the construction business in 1970, working primarily in Texas City, Texas, and the surrounding Gulf Coast area specializing in civil construction and equipment operations. In 1974, Bellow met Harold Phillips (Phillips), a Caucasian, while they both worked for the same construction company. They instantly became friends, and over the next several years Bellow and Phillips continued to work together, first at the M.W. Kellogg Company, then at Byrd Construction, and later at Callie Construction.

In the summer of 1978, Phillips left Callie Construction and, with his wife, formed his own construction firm, PICI, a corporation organized under Texas law. During the first six months of its operation, PICI had difficulty obtaining construction work. ² In early 1979, Phillips learned that Amoco was seeking qualified minority-owned construction firms to perform maintenance and construction work at its Texas City refinery. To take advantage of this opportunity, Phillips approached Bellow in March 1979 and offered him a 51% ownership interest in PICI. Bellow accepted the offer and became the president of PICI, while Phillips became PICI's vice-president and general manager, owning 49% of the corporation's stock. ³ On March 3, 1979, Bellow and Phillips wrote a letter to Amoco informing it of PICI's new status as a minority-owned construction firm. Soon thereafter, PICI began receiving general maintenance and construction work from Amoco.

Beginning in 1979, and lasting throughout the 1980s, PICI's business relationship with Amoco flourished. During this time, almost all of PICI's business involved work from Amoco's refinery. PICI performed a variety of civil construction and related maintenance work for Amoco, producing several millions of dollars in annual gross revenues for PICI (the amended complaint alleges that PICI's gross receipts from the Amoco refinery totaled over 32 million dollars from January 1985 through June 1994). Bellow worked primarily in the field as a superintendent overseeing the work of PICI crews at the refinery, while Phillips was responsible mainly for the day-to-day administrative duties at the office.

PICI's decade of prosperity came to an end, however. Sometime during the mid-1980s, Amoco began reevaluating its use of contractors and suppliers at the Texas City refinery. At one point, over 3,000 contractors and suppliers performed work for the refinery. In an effort to improve its monitoring of contractors and increase its efficiency, Amoco decided to reduce the number of contractors through "contract consolidation." Under this consolidation process, Amoco decided to use a single, primary contractor to perform most of the construction and related maintenance work that its own personnel could not handle. ⁴ In 1989, Amoco began informing its construction contractors, including PICI, that it would begin using Brown & Root Industrial Services (BRIS) as its primary outside maintenance contractor. ⁵ Under its new contract consolidation policy, construction jobs would first be assigned to Amoco personnel. If Amoco personnel were unavailable, the job would be assigned to BRIS. If BRIS did not have the personnel available or lacked the expertise for a particular job, Amoco's Contracts group would either bid the job to outside contractors ⁶ or hire a contractor under a cost-plus contract. ⁷

Beginning in 1990, PICI and other general maintenance contractors experienced a dramatic decline in their general maintenance work. ⁸ Because Amoco personnel and BRIS consumed the bulk of Amoco's maintenance jobs, little work was left over for PICI and other maintenance contractors. In 1991, PICI's work load decreased even further when Amoco decided not to renew PICI's service agreements--the primary source of PICI's work. ⁹ From 1991 to 1994, PICI performed whatever cost-plus work it could obtain. PICI was invited to bid on several jobs when it did not have any cost-plus contract work in the refinery; however, PICI was rarely a successful bidder, as its bids were usually too high. PICI's annual gross revenues from Amoco work dropped from approximately $3.5 million in 1990 to $209,537 in 1994 and $0 for the first half of 1995. ¹⁰

At around the same time that Amoco implemented its new contract consolidation policy, Bellow started to notice that Amoco was treating him in a manner which he believed to be discriminatory. Specifically, Bellow believed that Jerry Jordan (Jordan), an Amoco employee who worked as a supervisor both with the Contracts group and the PS & C group, was on a mission to "run him out of the refinery" solely because Bellow was African-American. ¹¹ The specific incidents of racial discrimination attributed to Jordan include the following: (1) in 1989, Jordan told Phillips that he believed Bellow made too much money as a field superintendent; (2) in 1989, Bellow learned from Phillips, who in turn had been so informed by Albert De Los Santos (De Los Santos), another Amoco contractor, that Jordan had told De Los Santos "Albert, whenever you drive a white Cadillac or a Lincoln [like Bellow's wife], I'll stop doing business with you because you done made too much money"; (3) in 1990, when Bellow complained to Jordan about racist comments made by Sherman McNown (McNown), an Amoco Turnaround Superintendent, Jordan told Bellow that he could not do anything because he (Jordan) was prejudiced against African-Americans; ¹² (4) between 1991 and 1994, when Jordan was supervisor of the PS & C group, Emmanuel Moore (Moore), a contracts specialist with the Amoco purchasing department, received complaints from Amoco job representatives that Jordan was treating PICI differently because of Bellow's race; (5) in 1993, Jordan told Melvin Hagler (Hagler), an Amoco job representative, at a job representatives meeting to make sure PICI workers left the refinery as soon as they finished their jobs; (6) in 1993 or 1994, Hagler told Bellow that Jordan did not like him and that "Jerry is going to get you"; (7) in 1994, Hagler told Bellow that he overheard Jordan telling another job representative, Howard Luster (Luster), that he (Jordan) would "run [Bellow's] nigger ass off"; and (8) on March 17, 1994, Jordan canceled a job that had been assigned to PICI earlier that morning. ¹³

On September 7, 1994, Bellow filed this lawsuit, "individually and on behalf of" PICI, in the district court below asserting claims against Amoco and Jordan under 42 U.S.C. §§ 1981 and 1985(3), ¹⁴ as well as under Texas law for tortious interference with the right to contract and intentional infliction of emotional distress. On January 11, 1995, an amended complaint was filed adding PICI as a separate plaintiff, so that the plaintiffs became Bellow and PICI, ¹⁵ and adding Sherman McNown, Dewey Bailey, and Larry Blow ¹⁶ as defendants. Under their section 1981 claims, plaintiffs Bellow and PICI alleged that Amoco modified, changed, or terminated PICI's contracts with Amoco and Bellow's contract with PICI. Bellow never contracted with Amoco personally, and he did not bring a section 1981 claim against Amoco for interference with his contractual rights with Amoco.

Thereafter, and before the case was submitted to the jury, the court dismissed plaintiffs' section 1985(3) claims, their section 1981 claims against the individual defendants, and their state law claims against all defendants. The only claims submitted to the jury were plaintiffs' section 1981 claims against Amoco. The jury found that Amoco did not discriminate against PICI on the basis of its race by interfering with its right to contract with Amoco. The jury did find, however, that Amoco discriminated against Bellow because of his race "in terminating, modifying or changing Martin Bellow's right to contract with Phillips Industrial Constructors, Inc.," and awarded Bellow $50,000 in "subjective damages" and $225,000 in punitive damages. ¹⁷ Amoco timely filed its notice of appeal to this Court. ¹⁸

Discussion

I.

On appeal, Amoco contends that the district court erred in denying Amoco's motion for judgment as a matter of law because Bellow never had a contract with PICI and, therefore, Amoco could not have possibly interfered with Bellow's right to contract with PICI; even if Bellow did have a contract with PICI, there is no evidence that Amoco terminated, modified, or changed that contract; and the evidence is insufficient to support the jury's conclusion that Amoco intentionally discriminated against Bellow on the basis of his race. Amoco also argues that the evidence does not sufficiently support the $50,000 in "subjective damages" and $225,000 in...