T & S Service Associates, Inc. v. Crenson

• Decision Date: 17 December 1981
• Docket Number: Nos. 81-1177,81-1243,s. 81-1177
• Citation: 666 F.2d 722
• Parties: T & S SERVICE ASSOCIATES, INC., et al., Plaintiffs, Appellees, v. John CRENSON, et al., Defendants, Appellants. T & S SERVICE ASSOCIATES, INC., and Robert L. Thomas, Plaintiffs, Appellants, v. John CRENSON, et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 722

666 F.2d 722

T & S SERVICE ASSOCIATES, INC., et al., Plaintiffs, Appellees, v. John CRENSON, et al., Defendants, Appellants.

T & S SERVICE ASSOCIATES, INC., and Robert L. Thomas, Plaintiffs, Appellants, v. John CRENSON, et al., Defendants, Appellees.

Nos. 81-1177, 81-1243.

United States Court of Appeals First Circuit.

Argued Sept. 17, 1981.

Decided Dec. 17, 1981.

Michael P. DeFanti, Providence, R. I., with whom Stephen A. Finn and Hinckley, Allen, Salisbury & Parsons, Providence, R. I., were on brief, for T & S Service Associates, Inc., et al.

Edward L. Gerstein, Providence, R. I., with whom Walter R. Stone and Stone, Clifton & Clifton, Providence, R. I., were on brief, for John Crenson, et al.

Before COFFIN, Chief Judge, CAMPBELL, Circuit Judge, MURRAY, Senior District Judge. ^*

COFFIN, Chief Judge.

T & S Service Associates, Inc., a minority-owned food catering service, brought suit in federal district court against the School Committee of the Town of Barrington, Rhode Island (hereinafter "Committee") and the Barrington School Superintendent, alleging that the defendants had discriminated against T & S on account of race in the awarding of federally funded school lunch contracts. The district court, 505 F.Supp. 938, after a hearing, denied plaintiff's motion for a preliminary injunction. The parties then agreed to submit the case to the court, sitting without a jury, on the basis of the transcript of the preliminary injunction hearing held some three years previously. The court held that the defendants had violated 42 U.S.C. § 1981, awarded T & S $22,787 in compensatory damages, and declined to assess punitive damages. The defendants (hereinafter "appellants") now appeal, arguing that the district court erred in finding them guilty of discrimination. T & S also appeals from the court's denial of punitive damages.

On July 1, 1977, the Barrington School Department solicited bids for a private food service contractor as a result of its earlier decision to withdraw from the state-managed school lunch program. Five bids were received. The bids were initially examined and screened by defendant superintendent and the assistant superintendent, who had prepared the bid specifications. In a memorandum to the Committee, the superintendent recommended that the contract be awarded to Servomation because Servomation was the lowest bidder and it met all qualifications. T & S was found to be unqualified since its bid failed to meet five requirements stated in the bid specifications. The Committee subsequently awarded the contract to Servomation.

By early August, however, the Committee learned that two different types of bids had been received. ¹ Moreover, they realized that the meal price quoted by Servomation was artificially low because it did not include substantial federal meal subsidies. In spite of this knowledge, the Committee decided to go ahead with Servomation, though the duration of the contract was reduced from three years, as stated in the bid specifications, to one year.

I. LIABILITY

T & S argues that the appellants intentionally discriminated against it throughout the entire bidding process. While lacking explicit proof of discrimination, T & S urges, and the district court found, that discrimination can be inferred from appellants' conduct. The evidence is undisputed that school administrators visited the operations of three or four of the bidders; T & S was never visited. Moreover, T & S alleges that its bid met all of the bid specifications and that it was in fact the lowest bidder. Since the Committee had learned by early August that Servomation was not actually the low bidder, its decision to go forward with Servomation instead of contacting T & S is, according to T & S, further proof of discrimination.

In McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), and subsequent cases, the Supreme Court set forth a methodology for evaluating evidence in cases alleging purposeful discrimination where direct proof of intent is lacking. "First, the plaintiff has the burden of proving by the preponderance of the evidence a prima facie case of discrimination. Second, if the plaintiff succeeds in proving the prima facie case, the burden shifts to the defendant 'to articulate some legitimate, nondiscriminatory reason for the employee's rejection.' ... Third, should the defendant carry this burden, the plaintiff must then have an opportunity to prove by a preponderance of the evidence that the legitimate reasons offered by the defendant were not its true reasons, but were a pretext for discrimination." Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 252-53, 101 S.Ct. 1089, 1093-94, 67 L.Ed.2d 207 (1981), quoting McDonnell Douglas, 411 U.S. at 802, 93 S.Ct. at 1824. Though developed in the context of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., this procedural technique "is merely a sensible, orderly way to evaluate the evidence in light of common experience as it bears on the critical question of discrimination." Furnco Construction Corp. v. Waters, 438 U.S. 567, 577, 98 S.Ct. 2943, 2949, 57 L.Ed.2d 957 (1978). We therefore agree with the district court that the McDonnell Douglas principles are applicable to a claim of intentional discrimination under 42 U.S.C. § 1981. ² See, e.g., Banerjee v. Board of Trustees of Smith College, 648 F.2d 61, 62-63 & n.1 (1st Cir. 1981); Hudson v. International Business Machines Corp., 620 F.2d 351, 354 (2d Cir. 1980); cf. Loeb v. Textron, Inc., 600 F.2d 1003, 1014-15 (1st Cir. 1979) (applying McDonnell Douglas methodology to alleged violation of the Age Discrimination in Employment Act since "McDonnell Douglas meets a problem of proof that may be present in any case where motivation is in issue, but does not alter the traditional burdens of proof in civil litigation, and is not intended to deflect the factfinder from the central issue of whether the employer was motivated by discriminatory factors").

We are unable to agree, however, with the district court's application of McDonnell Douglas to the facts of this case. The elements of a prima facie case of discrimination in the context of a public bidding decision necessarily differ from the elements described in McDonnell Douglas, where the issue was discrimination in the hire of individual employees. ³ A public bid offering, unlike the usual employment decision, typically finds the employer seeking only a single contractor out of a rather limited pool of companies which submit proposals. When the employer selects a bid, his search ends. In addition, the very concrete element of price plays a large role in the selection process-and this is a factor controlled by the contractor.

In the public bidding situation, the fact that a qualified minority firm's bid was rejected would not in our view support an inference that it was more likely than not that the employer's decision was based on discriminatory criterion. See Furnco Construction Corp. v. Waters, supra, 438 U.S. at 576, 98 S.Ct. at 2949. If the minority firm's bid is no more qualified than the accepted bid, and offers no price or other significant advantages to the employer, then the employer's decision to reject the minority bid would not create an inference of discrimination. See Burdine, supra, 450 U.S. at 258-59, 101 S.Ct. at 1096-97. On the other hand, to require the minority bidder to show in every case that its bid was the lowest one would preclude a qualified minority bidder with a slightly higher bid price but with superior credentials from meeting the prima facie case, even if it would likely have been chosen in the absence of discrimination.

Accordingly, modifying the McDonnell Douglas guidelines to fit this situation, we believe that the present plaintiff, T & S, would prove its prima facie case by showing, by a preponderance of the evidence, that (i) T & S is a minority-owned firm; (ii) T & S's bid met the specifications required of those competing for the contract; (iii) the T & S bid was significantly more advantageous to the Committee than the bid actually awarded, whether in terms of price or some other relevant factor; ⁴ and (iv) the Committee selected another contractor.

In order to guide the district court on remand, we note several additional problems with the court's analysis. First, we are troubled by the court's finding that the T & S bid met all the bid specifications. Second, after concluding that T & S had demonstrated a prima facie case, the court apparently imposed a burden of persuasion, rather than a burden of production, on appellants to articulate a legitimate nondiscriminatory reason for rejecting the T & S bid. Finally, the court's discussion of T & S's burden of showing that the reasons articulated by appellants were actually a pretext for discrimination was confusing and inadequate.

In the first stage of the McDonnell Douglas inquiry a plaintiff has the burden of proving by a preponderance of the evidence a prima facie case of discrimination. While direct proof of discrimination is not required a plaintiff must prove at least "that his rejection did not result from the two most common legitimate reasons on which an employer might rely to reject a job applicant: an absolute or relative lack of qualifications or the absence of a vacancy in the job sought." International Bhd. of Teamsters v. United States, 431 U.S. 324, 358 n.44, 98 S.Ct. 1843, 1866 n.44, 52 L.Ed.2d 396 (1977). In this case, the superintendent stated in a memorandum to the Committee that the T & S bid was deficient in five ways. The district court disagreed and found T & S fully qualified under the bid specifications.

While recognizing that the district court's factual findings cannot be set aside unless "clearly erroneous", Fed.R.Civ.P. 52(a), we are particularly troubled by the court's finding that the T & S bid complied with the specification stating that the successful bidder ...