Independent Enterprises Inc. v. Pittsburgh Water and Sewer Authority

• Decision Date: 09 January 1997
• Docket Number: No. 96-3009,96-3009
• Parties: INDEPENDENT ENTERPRISES INC.; Thomas Lozecki, Appellants, v. PITTSBURGH WATER AND SEWER AUTHORITY; City of Pittsburgh.
• Court: U.S. Court of Appeals — Third Circuit

Page 1165

103 F.3d 1165

INDEPENDENT ENTERPRISES INC.; Thomas Lozecki, Appellants, v. PITTSBURGH WATER AND SEWER AUTHORITY; City of Pittsburgh.

No. 96-3009.

United States Court of Appeals Third Circuit.

Argued July 25, 1996.

Decided Jan. 9, 1997.

Alan S. Miller (argued), Picadio, McCall, Kane & Norton, Pittsburgh, PA, for Appellants.

Kimberly A. Brown (argued), Stacey L. Jarrell, Thorp, Reed & Armstrong, Pittsburgh, PA, and Craig E. Frischman, Kapetan, Meyers, Rosen, Louik & Raizman, Pittsburgh, PA, for Appellee Pittsburgh Water and Sewer Authority.

Virginia S. Scott (argued), City of Pittsburgh Department of Law, Pittsburgh, PA, for Appellee City of Pittsburgh.

Before: BECKER, STAPLETON and MICHEL, ^* Circuit Judges.

OPINION OF THE COURT

STAPLETON, Circuit Judge:

We here review the district court's dismissal under Fed.R.Civ.P. 12(b)(6) of a multiple-count complaint brought against the City of Pittsburgh (the "City") and the Pittsburgh Water & Sewer Authority (the "Authority") by Independent Enterprises Inc. ("Independent"), a construction company, and Thomas Lozecki, a City taxpayer and Authority ratepayer. ¹ The claims asserted in the complaint include a civil contempt of court claim, an equal protection claim and procedural and substantive due process claims brought under 42 U.S.C. § 1983, and pendent state law claims. All of these claims arose in the context of the Authority's failure to award Independent three Authority contracts on which Independent had submitted the lowest bids.

I. The Facts

Because the district court dismissed Independent's claims pursuant to a motion to dismiss under Fed R.Civ.P. 12(b)(6), we accept as true all factual allegations in Independent's complaint and all reasonable inferences therefrom. ² Nami v. Fauver, 82 F.3d 63, 65 (3d Cir.1996); Spence v. Straw, 54 F.3d 196, 197 (3d Cir.1995).

In 1986, Independent sued the City and Authority in the United States District Court for the Western District of Pennsylvania after the City declared that Independent was "noncompetent" to bid on any projects in which it had an interest and the Authority consequently rejected a low bid by Independent. In settlement of that suit, the parties agreed to a consent decree that was ultimately entered by the court. The consent decree provided that Independent could not be "debarred" from bidding on City contracts based on any past performance, and that if the City or Authority wanted to "disqualify" Independent from City or Authority work because of problems with future performances, it would first have to conduct a hearing under the Pennsylvania Local Agency Law. Between the issuance of the consent decree and the solicitation of bids for the 1995 contracts at issue here, Independent satisfactorily performed "numerous" contracts for both the City and Authority.

In May 1995, the Authority solicited bids for two projects, the "Annual Water Line Contract" and the "Grandview Avenue Project." Independent submitted bids for both projects. In accordance with the Authority's "MBE/WBE Utilization Requirements," each of Independent's bids included a list of minority- and women-owned business enterprises ("MBE/WBEs") that Independent intended to use as subcontractors if awarded the contract. One of the MBEs Independent listed was Whaley & Sons, a firm that Independent claims was certified by the Authority as an approved MBE/WBE vendor. Independent's bids were the lowest for both projects, and an independent consultant recommended that the Authority award both contracts to Independent.

Before the Authority made a decision about awarding the contracts, the City's Deputy Mayor of Government Operations, Salvatore Sirabella, issued a memorandum (the "Sirabella memorandum") to the Authority's Executive Director. In the memorandum Sirabella expressed concern about the cost over-run on a recent Authority project that had been completed by Independent, and directed the Authority to "temporarily halt awarding any contracts to Independent...." App. at 87. Shortly after receiving the Sirabella memorandum, the governing body of the Authority (the "Board") decided that Whaley & Sons was an unacceptable MBE subcontractor and resolved to reject Independent's bids for both the Water Line Contract and the Grandview Avenue Project "for failure to meet the MBE/WBE requirements of the specifications." Auth.Res. 67 & 68, App. at 197-98. The Board then awarded the two contracts to the next lowest bidders. About a month later, the contracts with those bidders were rescinded, all bids were rejected, and the Authority resolved to readvertise both the Water Line and Grandview Avenue projects.

In June, 1995, Independent submitted a bid to the Authority for the "Annual Sewer Improvement Contract." Again, Independent's was the lowest responsible bid. And again, despite its low bid, Independent was not awarded the contract. There was apparently some communication between the attorney for the Authority and Independent regarding the absence of a Power of Attorney form in Independent's bid package, but ultimately the Authority did not reject Independent's bid on that basis. Instead, the Authority's Board simply rejected all of the Sewer Improvement Contract bids without explanation and readvertised the project.

In response to the Authority's failure to award it the Water Line Contract, the Grandview Avenue Project, and the Sewer Improvement Contract, Independent filed this suit. Its complaint alleged that: (1) the Authority and City violated the terms of the consent decree by "disqualifying" Independent from Authority and City contracts; (2) the Authority's MBE/WBE Utilization Requirements discriminate against Independent and other construction companies on the basis of race, ethnicity, national origin, and/or sex, thereby denying them the equal protection of the laws; and (3) the Authority's and the City's disqualification of Independent, and the Authority's resulting refusal to award it the Water Line Contract, the Grandview Avenue Project, and the Sewer Improvement Contract, deprived Independent of property without procedural and substantive due process.

The district court dismissed all of Independent's federal claims. First, the court dismissed the § 1983 claims against the Authority on the ground that the Authority is not a "person" within the meaning of § 1983. The district court then dismissed the civil contempt claim on the ground that Independent had not been "debarred" from bidding on City or Authority contracts.

Turning to Independent's procedural due process claim, the district court held that "Pennsylvania provides a judicial procedure for unsuccessful bidders to challenge whether a local contracting authority has violated a bidder's rights under the Municipal Authority Act." Op. at 7. In the court's view, an adequate post-deprivation procedure thus existed to satisfy the demands of the Due Process Clause. The court dismissed Independent's substantive due process claims because it found that Independent had not alleged facts showing that the City had deprived it of a protected property interest.

With respect to the equal protection claim, the court held that Independent lacked standing because the complaint failed to allege a causal connection between the MBE/WBE requirements and the injury Independent had suffered from the rejection of its bids. ³

We will affirm the dismissal of Independent's due process claims. We will reverse the judgment of the district court, however, and remand for further proceedings on Independent's civil contempt and equal protection claims.

II. The Civil Contempt Claim

In Count I of its complaint, Independent alleges that the Authority and City are in civil contempt of court because their disqualification of Independent pursuant to the Sirabella memorandum and the Authority's resulting rejection of Independent's three low bids violated the terms of the 1986 consent decree. The district court dismissed the contempt claim because it found that the facts alleged did not show a violation of the terms of the consent decree. We disagree.

The 1986 consent decree provided in part:

2. Independent shall not be debarred from bidding on any City of Pittsburgh Contract based on past conduct or performance.

3. Independent, City and Authority shall act in a cooperative manner on all contracts. Independent shall:

(a) cooperate with inspectors at job site; and

(b) cooperate with consultants and officials of the City and Authority in regard to problems that occur at the job site and administrative matters; and

(c) move quickly to resolve any disputes with adjoining property owners as a result of their work.

4. If, because of problems with future performances, the City or Authority desire to disqualify Independent from City or Authority work, a hearing shall be held prior to disqualification under the Pennsylvania Local Agency Law, and Independent shall have all rights afforded thereunder.

App. at 138-39.

At the time the consent decree was entered, the Pittsburgh Code contained a provision entitled "Debarment from Bidding On and Participating in City Contracts." § 161.22. This provision states that any person or enterprise that had committed an "offense," as defined therein, will not be allowed to bid and will not be "a responsible bidder on any city contract." "Offense" is defined in a non-exclusive list to include sixteen different categories of conduct ranging from fraud in connection with the obtaining or performance of a contract to the following:

(10) Willful or material failure to perform the terms of a contract or agreement in accordance with specifications or within contractual time limits;

(11) A record of failure to perform or of unsatisfactory performance in accordance with the terms of one or more contracts, provided that the failure or unsatisfactory performance was within a reasonable period of time preceding the determination to debar and was caused by acts within the control of...