Braunstein v. Ariz. Dep't of Transp.
| Decision Date | 27 June 2012 |
| Docket Number | Nos. 10–16564,10–17193.,s. 10–16564 |
| Citation | 2012 Daily Journal D.A.R. 8903,683 F.3d 1177,12 Cal. Daily Op. Serv. 7285,115 Fair Empl.Prac.Cas. (BNA) 481 |
| Parties | Paul BRAUNSTEIN, DBA Baseplans USA, Plaintiff–Appellant, v. ARIZONA DEPARTMENT OF TRANSPORTATION; Victor Mendez; Lisa Wormington; Susan Tellez; State of Arizona, Defendants–Appellees. Paul Braunstein, DBA Baseplans USA, Plaintiff, and Gary E. Lofland; Paul S. Gerding, Jr., counsel for plaintiff, Appellants, v. Arizona Department of Transportation; Victor Mendez; Lisa Wormington; Susan Tellez; State of Arizona, Defendants–Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
OPINION TEXT STARTS HERE
Paul S. Gerding, Kutak Rock LLP, Scottsdale, AZ, and Gary Edward Lofland, Lofland & Associates, Yakima, WA, for the appellant.
Melissa Alice Parham, Kelly Y. Schwab, Michelle Hibbert Swann, Curtis Goodwin Sullivan Udall & Schwab PLC, Phoenix, AZ, and Kiersten A. Murphy, Kevin E. O'Malley, Gallagher & Kennedy, P.A., Phoenix, AZ, for the appellees.
Appeal from the United States District Court for the District of Arizona, John W. Sedwick, District Judge, Presiding. D.C. No. 2:06–cv–02726–JWS.
Before: PROCTER HUG, JR., ANDREW J. KLEINFELD, and WILLIAM A. FLETCHER, Circuit Judges.
Plaintiff Paul Braunstein seeks damages based on Arizona's use of an affirmative action program in its award of a 2005 transportation engineering contract. We affirm the district court's holding that Braunstein lacks Article III standing.
Braunstein owns and operates BasePlans, a small engineering and land surveying firm in Arizona that previously performed work for the Arizona Department of Transportation (“the Department”). The Department is a state agency responsible for the planning, design, repair, and construction of roads in Arizona. Beginning in 2003, Braunstein filed three lawsuits against the Department and its employees challenging their refusal to award him additional work. He filed the first two suits in state court alleging, inter alia, breach of contract, conspiracy, and antitrust violations. In 2006, Braunstein filed the present lawsuit in federal court, alleging that the Department's race- and gender-conscious affirmative action program violated his right to equal protection.
In 1995, the Department hired the engineering firm DMJM Harris, Inc. (“DMJM”), as its prime contractor for the Maricopa County regional freeway system. Initially, the Department itself hired other firms, including BasePlans, on an as-needed basis to locate subsurface utilities that might need to be relocated during freeway construction. In 2001, the Department opted for a new contracting system under which the prime contractor, rather than the Department, selected and contracted with other firms for the utility location work. DMJM chose Aztec Technical Services (“Aztec”) as its utility subcontractor, and the Department modified its contract with DMJM accordingly.
In March 2003, Braunstein sued the Department, a Department official, DMJM, and Aztec in Arizona state court, alleging that they secretly and improperly conspired to divert utility location work to Aztec. Braunstein alleged breach of contract by the Department and intentional interference with business expectancy by the other defendants. In June 2004, the court granted summary judgment in favor of DMJM and Aztec. The court found, among other things, that DMJM did not ask BasePlans to submit a subcontracting proposal because it had experienced problems with BasePlans on prior projects. In December 2004, Braunstein settled his breach of contract claim with the Department and dismissed his claims against the Department official.
In November 2004, the Department solicited bids for a new engineering and design contract to replace DMJM's 1995 contract. Six firms bid on the prime contract. Braunstein did not bid on the contract because he could not satisfy a Department requirement that prime contractors be able to complete 50 percent of the contract work themselves. Instead, Braunstein contacted the bidding firms to ask about subcontracting for the utility location work. All six firms rejected Braunstein's overtures, and Braunstein did not submit a quote or subcontracting bid to any of them. None of the prime bids submitted to the Department identified BasePlans as a chosen utility location subcontractor.
United States Department of Transportation regulations require that states receiving federal highway funds maintain a Disadvantaged Business Enterprise (“DBE”) program. 49 C.F.R. § 26.21. To qualify as a DBE, a “for-profit small business” must be “at least 51 percent owned by one or more individuals who are both socially and economically disadvantaged.” Id. § 26.5. The regulations presume that women, Black Americans, Hispanic Americans, Native Americans, Asian–Pacific Americans, Subcontinent Asian Americans, and certain other ethnic minorities are socially and economically disadvantaged. Id. § 26.67(a)(1). The presumption of disadvantage is rebutted when an individual has a personal net worth above a specified amount. Id. § 26.67(b)(1).
The Department reviewed the prime contract bids and scored them on a 100–point scale. Under the Department's system, a bidding prime contractor would receive a maximum of 5 points for DBE participation if (1) it was a DBE itself; (2) it committed to hiring DBE subcontractors to perform at least 6 percent of the contract work; or (3) it demonstrated a “good faith effort” to achieve the 6 percent goal but was unable to do so for reasons beyond its control. The Department required that contracting firms adhere to their DBE participation commitments and file monthly DBE compliance reports.
All six firms that bid on the 2005 prime contract received the maximum 5 points for DBE participation. No bidding firm was itself a DBE, but all six committed to hiring DBE subcontractors to perform at least 6 percent of the work. Only one of the six bidding firms selected a DBE as its desired utility location subcontractor. Three of the bidding firms, including DMJM, selected Aztec to perform the utility location work. Aztec was not a DBE.
DMJM won the bid for the 2005 contract. The contract was for one year, but the Department indicated that it expected to renew the contract annually for 20 years. The Department would decide whether to renew it based on DMJM's performance. DMJM's use of DBE subcontractors in future years would not factor into the Department's renewal decision.
In May 2005, Braunstein filed a second lawsuit in Arizona state court against the Department and Department officials, alleging conspiracy and violation of antitrust, public records, and conflict of interest laws. The Superior Court dismissed all of Braunstein's claims, and the Court of Appeals affirmed. The state courts concluded that Braunstein lacked standing to bring the claims under state law because he had not bid on the challenged contract.
Also in May 2005, we decided Western States Paving Co. v. Washington State Department of Transportation, 407 F.3d 983 (9th Cir.2005). We upheld against a facial challenge the federal DBE program at the national level as a narrowly tailored means of remedying race- and sex-based discrimination in the transportation contracting industry. Id. at 995. However, we held that states, to survive an as-applied challenge to their own DBE programs, must produce evidence of discrimination against particular groups within particular state industries to demonstrate that their DBE programs are narrowly tailored to achieve Congress's compelling remedial interest. Id. at 995–99. We struck down the Washington Department of Transportation's DBE program as unconstitutional because the record was “devoid of any evidence” of discrimination in the state's transportation contracting industry. Id. at 1002. In January 2006, the Arizona Department of Transportation suspended its DBE program in light of Western States.
In November 2006, Braunstein brought this suit in federal court against the Department, the state of Arizona, and three named Department employees (the “Named Defendants”) in their official and individual capacities. Braunstein's federal suit challenged Arizona's DBE program as violating the Equal Protection Clause of the Fourteenth Amendment and Title VI of the Civil Rights Act. Title VI provides that no person shall be subjected to discrimination under “any program or activity receiving Federal financial assistance.” 42 U.S.C. § 2000d. The attorney who litigated Western States represents Braunstein in this suit.
Braunstein alleged that the Department violated his right to equal protection by using race and gender preferences in its solicitation and award of the 2005 contract. He alleged that these preferences prevented him, as a non-minority business owner, from competing for subcontracting work on an equal basis. Braunstein sought: (1) declaratory relief that the DBE program is unconstitutional; (2) damages based on 42 U.S.C. §§ 1981, 1983, and 2000d; and (3) an injunction prohibiting Defendants from implementing the DBE program.
In September 2007, the district court dismissed the §§ 1981 and 1983 claims against the state, the Department, and the Named Defendants in their official capacities because of sovereign immunity under the Eleventh Amendment. The court found that Braunstein alleged sufficient injury to survive a motion to dismiss for lack of standing, but warned that “[t]his is not to say that after appropriate discovery a motion for summary judgment would not succeed.” In May 2008, the district court dismissed the § 2000d damages claims against the Named Defendants because that provision does not provide for monetary relief against individual defendants.
In May 2010, after the parties had finished discovery and filed cross motions for summary judgment, the district court dismissed as moot Braunstein's claims for injunctive and declaratory relief...
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