Downtown Auto Parks, Inc. v. City of Milwaukee

• Decision Date: 23 July 1991
• Docket Number: No. 90-3832,90-3832
• Parties: DOWNTOWN AUTO PARKS, INC., Plaintiff-Appellant, v. CITY OF MILWAUKEE and William R. Drew, Commissioner of the Department of City Development, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 705

938 F.2d 705

DOWNTOWN AUTO PARKS, INC., Plaintiff-Appellant, v. CITY OF MILWAUKEE and William R. Drew, Commissioner of the

Department of City Development, Defendants-Appellees.

No. 90-3832.

United States Court of Appeals, Seventh Circuit.

Argued May 6, 1991.

Decided July 23, 1991.

William A. Jennaro, Steven L. Nelson, Cook & Franke, Milwaukee, Wis., for plaintiff-appellant.

Rudolph M. Konrad, Office of City Atty., Milwaukee, Wis., for defendants-appellees.

Before CUMMINGS and EASTERBROOK, Circuit Judges, and WILL, Senior District Judge. ^*

CUMMINGS, Circuit Judge.

Plaintiff Downtown Auto Parks brought this suit for damages pursuant to 42 U.S.C. Sec. 1983 alleging inter alia that defendants infringed plaintiff's First and Fourteenth Amendment rights by refusing to renew two parking lot leases. On defendant's motion for summary judgment, the district court dismissed the complaint. We affirm the dismissal.

Plaintiff Downtown Auto Parks operates parking facilities. The City of Milwaukee ("City") leased the McArthur Square and Milwaukee Area Technical College ("MATC") parking structures to Downtown Auto Park's predecessor company on July 31, 1982. Wis.Stat. Sec. 66.079 requires the City to lease its revenue-producing parking lots to private persons, unless it cannot obtain reasonable terms and conditions. The pertinent portion of the statute provides:

66.079. Parking Systems. (1) * * * If, in first class cities, a charge is made for parking privileges in a parking system or parking lot and attendants are employed there, the parking system or parking lot shall be leased to private persons. No leasing is required if the 1st class city cannot obtain reasonable terms and conditions.

Wis.Stat. Sec. 66.079 (1985-1986). In 1984 the City renewed the initial two-year leases with Downtown Auto Parks for another two-year term. In January 1986, with the expiration of the second term approaching in July 1986, the Milwaukee Parking Commission recommended that the McArthur Square and MATC leases be extended again until July 31, 1988.

Subsequent to the Parking Commission's favorable recommendation, Downtown Auto Parks learned that the City was lobbying to have the Wisconsin state legislature revise Section 66.079 of the Wisconsin statutes to allow the City to retain companies to manage the lots without leasing them. Downtown Auto Parks lobbied against that change and the City's effort ultimately was defeated. ¹ On May 23, 1986, the Department of City Development, at the direction of defendant William R. Drew, its Commissioner, notified Downtown Auto Parks that the City had rejected the Parking Commission's recommendation and would not be granting renewal of the leases expiring on July 31, 1986. The City instead adopted a resolution authorizing the hiring of System Parking, Inc. as a management agent for the lots and stating that a management contract was necessary because reasonable lease terms could not be obtained.

Downtown Auto Parks brought suit against Drew and the City in the Circuit Court of Milwaukee County, claiming that defendants had deprived plaintiff of its due process, equal protection, and free speech rights by failing to renew the leases for the lots. Downtown Auto Parks alleged in addition that the City's conduct violated Wisconsin state statutes and the Milwaukee city charter.

The case was removed to the Eastern District of Wisconsin, and defendants filed a motion for summary judgment on the ground that the complaint failed to state any viable federal constitutional claims. The district court granted that motion and filed a supporting opinion. Judge Evans first ruled that plaintiff had not been deprived of property without due process of law in contravention of the Fourteenth Amendment since it did not have a property interest in the extension of the leases. There being no prior agreement to extend the leases, no property was taken away. As to plaintiff's claim that the City's refusal to extend the leases violated the First Amendment, the district judge relied on LaFalce v. Houston, 712 F.2d 292 (7th Cir.1983), certiorari denied, 464 U.S. 1044, 104 S.Ct. 712, 79 L.Ed.2d 175 (1984), and Triad Assoc., Inc. v. Chicago Housing Authority, 892 F.2d 583 (7th Cir.1989), certiorari denied, --- U.S. ----, 111 S.Ct. 129, 112 L.Ed.2d 97 (1990), holding that independent contractors such as plaintiff enjoy no First Amendment protection from a city's use of political criteria in awarding public contracts. Judge Evans found in addition that the equal protection claim was insufficiently articulated to withstand summary judgment. Plaintiff appealed, seeking review only of the district court's findings with respect to the plaintiff's First and Fourteenth Amendment claims. ² Finding the district court's assessment of the claims to be correct, we affirm.

Appellate Jurisdiction

At the oral argument, we questioned whether this Court had jurisdiction over the appeal. Judge Evans granted defendants' motion for summary judgment as to all federal claims, but simultaneously remanded the pendent state claims to the Milwaukee County Circuit Court for further proceedings, raising a question about finality. Subsequently both parties have informed us ³ that this Court has jurisdiction to hear the appeal of the portion of the judgment dismissing plaintiff's federal claims. ⁴ The precise proposition is supported by Briggs v. American Air Filter Co., 630 F.2d 414, 416 n. 1 (5th Cir.1980) (entry of summary judgment appealable despite the remand of other claims to state court). In Allen v. Ferguson, 791 F.2d 611 (7th Cir.1986), this Court cited Briggs and held that an order logically preceding the remand and necessitating a remand to state court of the remainder of the case is reviewable. Id. at 613-614 (order dismissing defendant whose diverse citizenship formed basis for federal jurisdiction reviewable); see also Waco v. United States Fidelity & Guaranty Co., 293 U.S. 140, 55 S.Ct. 6, 79 L.Ed. 244 (1934) (same). Therefore we have jurisdiction here.

First Amendment Claim

The theory of the plaintiff's First Amendment claim is that it lost the two parking facility operations in 1986 because of its lobbying efforts and that this "retaliatory discharge" violated the First Amendment. See Perry v. Sindermann, 408 U.S. 593, 597, 92 S.Ct. 2694, 2697, 33 L.Ed.2d 570 (government may not deny benefit to a person on a basis that infringes his or her constitutionally protected interests).

The adjudicated cases in this Circuit do not extend First Amendment protection to independent contractors whose bids for public contracts are rejected on the basis of their political views. We examined a similar problem in LaFalce v. Houston, 712 F.2d 292 (7th Cir.1983), certiorari denied, 464 U.S. 1044, 104 S.Ct. 712, 79 L.Ed.2d 175 (1984), a case which involved a company's bid to install and maintain benches along Springfield city streets. The company alleged that Springfield had hired a competitor sign company simply because it was a political supporter of the mayor. We held that the First Amendment does not forbid a city from using political criteria in awarding public contracts to independent contractors. While recognizing that certain public employees are protected from retaliatory employment decisions, see Elrod v. Burns, 427 U.S. 347, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976); Branti v. Finkel, 445 U.S. 507, 100 S.Ct. 1287, 63 L.Ed.2d 574 (1980), a panel of this Court drew a distinction between independent contractors and public employees. The panel surmised that independent contractors generally tend to be less dependent on government jobs than are public employees. LaFalce, 712 F.2d at 294. It also noted that firms having extensive government business are often "political hermaphrodites" having extensive connections to both major parties to protect themselves. Id. In this scenario of cultivated political neutrality, a judicial rule imposing political impartiality would have little effect. Id. Finally, the Court was swayed by a practical consideration: a rule upholding a company's First Amendment right to have its bid considered without regard to politics would "invite every disappointed bidder for a public contract to bring a federal suit against the government purchaser." Id. Seven years after LaFalce, we reaffirmed its holding in Triad Assoc., Inc. v. Chicago Housing Authority, 892 F.2d 583 (7th Cir.1989), certiorari denied, --- U.S. ----, 111 S.Ct. 129, 112 L.Ed.2d 97 (1990).

Under LaFalce and Triad, the First Amendment did not forbid Milwaukee from considering plaintiff's adverse lobbying efforts in refusing to extend its leases. Pressed to distinguish its case from this Circuit's precedents, Downtown Auto Parks argues that it was not involved in a bidding situation, insisting that it had an existing lease which was terminated.

Plaintiff's characterization is clearly incorrect even if we assume that plaintiff is drawing a distinction relevant to First Amendment analysis. The City chose not to extend Downtown Auto Parks' lease beyond the lease term, which ended in July 1986. It did not breach any contract with Downtown Auto Parks or deprive it of an existing benefit. Upon expiration of Downtown Auto Parks' leases, the City was free to consider leasing to any company that would supply reasonable terms, see Wis.Stat. Sec. 66.079. The statute requires the City to lease lots if it can find reasonable terms, but does not force it to lease to any particular party. The City's refusal to renew Downtown Auto Parks' lease a second time was thus a refusal of one possible bid. This case falls squarely under the holdings of LaFalce and Triad. ⁵

A more pertinent objection to application of LaFalce and Triad is that the recent Supreme Court case Rutan v. Republican Party of Illinois, --- U.S. ----, 110 S.Ct. 2729, 111 L.Ed.2d 52 (1990), has cast doubt on the validity of the reasoning in those cases. Rutan significantly extended First Amendment...