Sys Contr Corp v. Orleans Parish Sch

• Court: Court of Appeals for the Fifth Circuit
• Decided: August 24, 1998
• Docket: 97-30479
• Status: Published

Opinion

Revised, August 17, 1998

UNITED STATES COURT OF APPEALS For the Fifth Circuit

No. 97-30479

SYSTEMS CONTRACTORS CORPORATION, Plaintiff-Appellee,

VERSUS

ORLEANS PARISH SCHOOL BOARD, ET AL, Defendants, KENNETH J. DUCOTE, Defendant-Appellant.

Appeal from the United States District Court For the Eastern District of Louisiana August 12, 1998 Before WISDOM, KING, and DAVIS, Circuit Judges.

WISDOM, Senior Circuit Judge:

Dr. Kenneth J. Ducote, the Director of Facility Planning for the Orleans Parish School Board,

appeals from the district court’s denial of his motion for summary judgment based upon qualified

immunity in this 42 U.S.C. § 1983 suit arising out of the School Board’s disqualification of Systems

Contractors Corp.’s (Systems) bid to do electrical work at the Robert E. Lee Elementary School.

We find that Systems failed to allege the violation of a constitutional right under current law.

Accordingly, we hold that Ducote was entitled to summary judgment on his qualified immunity

defense. We reverse the decision of the district court.

I.

In 1993, the School Board issued a request for proposals for electrical and intercom work to

be performed at the Robert E. Lee Elementary School. Systems submitted the only bid in response

to this advertisement. As part of the completed questionnaire Systems was required to submit,

Systems denied t hat it had ever failed to complete a contract that had been awarded to it. The School Board received reports from the U.S. Navy, the Jefferson Parish School Board, and the

Orleans Parish Levee Board questioning Systems’ ability to perform services adequately under

contracts similar to the one upon which Systems bid. The School Board also experienced problems

with prior projects that the Board awarded to Systems. As a result, the School Board initiated

proceedings to disqualify Systems’ bid on the Robert E. Lee project and sought to bar Systems from

bidding upon future projects.1

Ducote was responsible for the initial evaluation of Systems’ bid. He instituted the Claims

Board proceedings under which Systems was disqualified. Alvi Anderson-Mogilles was appointed

as the hearing officer. Ducote submitted, in writing, the reasons to disqualify Systems, along with

supporting documentation. He also presented the School Board’s position to Mogilles at a hearing.

Systems’ representatives also presented their position and supporting documentation to Mogilles at

this hearing. The documentation presented by both sides is included in the record on appeal, but no

transcript of the hearing was made. After the hearing, Mogilles recommended the disqualification of

Systems’ bid as well as temporary debarment of Systems’ right to bid on future contracts advertised

by the School Board.2

The School Board was scheduled to hear the issue of the ratification of Mogilles’s decision

at its meeting on December 13, 1993. Before this meeting, however, Systems entered into settlement

negotiations with the School Board. The issue of the ratification was postponed. After settlement

talks failed, the issue was rescheduled for the School Board’s meeting of May 16, 1994. Systems

received written notice of this meeting. The School Board postponed, once again, its consideration

of this issue until June 13, 1994, when the School Board heard from Ducote and Systems’

1 Under Louisiana’s bid law, government projects are awarded to the lowest responsible bidder. La. R.S. § 38:2212(A). The lowest bid may be rejected if that bidder is found to be “irresponsible”. La. R.S. § 38:2212(J). Before disqualification can occur, the governmental body seeking the disqualification must give written notice, including the reasons for the disqualification, to the bidder, and the bidder must have an opportunity to refute those charges at an informal hearing. La. R.S. § 38:2212(J). 2 In its brief, Systems argues that Ducote was also a member of the hearing panel that decided Systems’ fate.

2 representatives. Then the School Board approved Mogilles’s recommendation.

Systems filed this 42 U.S.C. § 1983 suit in the district court alleging that the School Board,

its individual members, Mogilles, and Ducote violated Systems’ substantive and procedural due

process rights. On February 16, 1996, the defendants filed a motion for summary judgment. The

district court denied that motion with respect to the School Board and the defendants in their official

capacities and granted the motion with respect to the Board members, Mogilles, and Ducote in their

individual capacities. On October 2, 1997, Systems moved the district court to reconsider its decision

which was based on qualified immunity. On April 10, 1997, the district court reaffirmed its decision

with respect to all of the named defendants except Ducote. Because Ducote was aware of the

procedural due process requirements articulated by the Louisiana Supreme Court in Haughton

Elevator Division v. State,3 the district court found that an issue of fact regarding the objective

reasonableness of Ducote’s actions precluded summary judgment.4 Ducote appeals. Ducote does not

challenge the district court's finding that genuine issues of fact prevented the court from granting

summary judgment on the objective reasonableness of his actions. Instead, Ducote argues that the

district court erred in relying upon Haughton when determining whether Systems alleged the violation

of a constitutional right under current law and when determining what was the clearly established law

at the time Ducote acted.

II.

A district court’s decision denying summary judgment based upon the defense of qualified

immunity is immediately appealable under the collateral order doctrine to the extent that the decision

is based upon conclusions of law.5 When a district court’s denial is based upon the existence of a

3 367 So.2d 1161 (La. 1979). 4 The district court found that no issue of fact existed regarding the objective reasonableness of the other individual defendants' actions. They were shielded from liability because they had relied upon the legal interpretations of the School Board’s attorney when deciding how to proceed. 5 Petta v. Rivera, 1998 WL 303902, *2 (5th Cir. 1998).

3 genuine issue of fact, however, the district court’s decision is not immediately appealable.6 To

deprive this Court of jurisdiction to hear this appeal, the disputes of fact must be central to the issue

of qualified immunity.7 In the present case, Ducote challenges the district court’s denial of summary

judgment, arguing that the district court erred in relying upon the Louisiana Supreme Court’s

Haughton decision.8 This is purely a legal question. We have jurisdiction to hear Ducote’s appeal.

Our review of the district court’s denial of summary judgment based on qualified immunity is de

novo.9

III.

Government officials performing discretionary functions enjoy the protection of qualified

immunity in § 1983 cases.10 Officials are immune if their actions are “objectively reasonable” in the

light of “clearly established law” at the time their actions are taken.11 In Siegert v. Gilley, the

Supreme Court established a two-step analysis for qualified immunity cases.12 First, we determine

whether the plaintiff alleged the violation of a clearly established constitutional right under currently

applicable law.13 Then, we determine whether the defendant’s actions were objectively reasonable

in the light of the clearly established law at the time the defendant acted.14 We do not reach Siegert’s

6 Id. 7 Wren v. Towe, 130 F.3d 1154, 1157-8 (5th Cir. 1997). 8 After finding that the Haughton rules were applicable to this case, the district court denied Ducote’s motion for summary judgment because it found that there was a material dispute of fact regarding the objective reasonableness of Ducote’s actions. In this appeal, Ducote challenges the district court’s reliance upon Haughton. He does not argue that his actions were objectively reasonable. As a result, only the district court’s legal analysis is before us. 9 Wren, 130 F.3d. at 1158. 10 Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982). 11 Id. 12 Siegert v. Gilley, 114 L.Ed.2d 277, 287 (1991). 13 Rankin v. Klevenhagen, 5 F.3d 103, 106 (5th Cir. 1993). 14 Id. at 105.

4 second prong unless the first prong is satisfied.15

Systems alleges a violation of its right to procedural due process when the School Board

disqualified its bid on the Robert E. Lee Elementary School project and temporarily barred Systems

from bidding on future school board projects. Systems alleges the deprivation of both a protected

property interest and a protected liberty interest.16 Some level of procedural due process was

required. The question is, how much process was due.

In Mathews v. Eldridge, the Supreme Court adopted a balancing test for procedural due

process.17 At a minimum, notice and a hearing are required before an individual may be deprived of

his property or liberty interests.18 But, “[d]ue pro cess is flexible and calls for such procedural

protections as the particular situation demands.”19 Under the test articulated in Mathews v. Eldridge,

the specific process due in a particular situation is found by balancing three factors: (1) the private

interest that will be affected by the official's actions, (2) the risk of an erroneous deprivation of that

private interest and the probable value, if any, that additional procedural protections would provide,

and (3) the interest that the government seeks to achieve.20

The parties agree that notice and an opportunity to be heard were required before the School

Board could disqualify Systems’ bid and bar Systems from bidding on future projects. The parties

also agree that Systems was given written notice and an opportunity to be heard in this case. Systems

argues that it was denied procedural due process, however, because it was not notified of the School

15 See County of Sacremento v. Lewis, 118 S.Ct. 1708, 1714 n.5 (1998). 16 To determine whether Systems had a property interest in the Robert E. Lee Elementary School contract and a liberty interest in bidding on future School Board contracts, we look to state law. Board of Regents v. Roth, 408 U.S. 564, 577 (1972). In Haughton, the Louisiana Supreme Court found that these interests were protected under the Due Process Clause of the Fourteenth Amendment. 367 So. 2d at 1165. 17 424 U.S. 319 (1976). 18 Id. at 333. 19 Id. at 334. 20 Id. at 335.

5 Board’s decision to disqualify its bid before that bid was awarded to another contractor and because

no transcript of Systems’ hearing before the Claims Board was kept. Systems relies upon the

Louisiana Supreme Court’s decision in Haughton Elevator Division v. State, a decision addressing

the same bid laws at issue in this case.21

In Haughton, the Louisiana Supreme Court concluded that, before a bidder could be

disqualified as “irresponsible” in a case like the present one, four procedural steps must be followed:

(1) the bidder must be given formal written notice that the School Board is considering disqualifying

the bidder; (2) the bidder must be given an opportunity to respond to the charges i n writing, and,

where feasible, an opportunity to meet with the Board to discuss the charges; (3) the bidder must be

given formal written notice that he has been disqualified before the project is awarded; and (4) the

records of the disqualification hearing must be preserved so that the bidder can receive an appropriate

judicial review of that decision if so desired.22

Before today, this Court has not considered whether the two additional requirements of

Haughton are required by the U.S. Constitution. Today, we hold that they are not.23 To reach this

conclusion we have considered the treatment of individuals in analogous positions, and we have

balanced the interests discussed by the Supreme Court in Mathews.

After an extensive search of federal case-law for decisions setting the procedural due process

requirements for disqualifying and barring bidders on governmental contracts, we have found few

cases on point. This issue has been raised many times, but, unlike Louisiana, many states do not

recognize a protected property interest in government contracts until those contracts are actually

21 367 So.2d 1161 (La. 1979). 22 Id. at 1166. 23 Although state court’s have the authority to decide issues of federal constitutional law, state court decisions are not binding upon the federal courts. See Grantham v. Avondale Insus. Inc, 964 F.2d 471, 473 (5th Cir. 1992). Accordingly, we are not bound by Haughton’s interpretation of the procedural due process clause.

6 awarded.24 Rutigliano Paper Stock v. U.S. General Services Administration25 is helpful.. In that

case, involving a bidder suspended from bidding on contracts with the federal government, the district

court found that a bidder had a protected liberty interest in bidding on future contracts.26 That

protected interest was a significant one. The government also had significant interests in ensuring that

its contracts were completed and in avoiding the burdens of a full-blown trial in every case.27 After

balancing these interests, the court concluded that procedural due process was satisfied by notice and

an opportunity to be heard.28 The interests involved in the current case are the same as those at issue

in Rutigliano.

In many respects, the position of Systems is also similar to that of a government employee.

The interest of Systems in the Robert E. Lee Elementary School Project is both a financial interest

and an interest in its professional reputation, much like an emplo yee’s interest in continued

employment. When Systems’ bid was disqualified, Systems lost a source of income as well as the

benefits to its reputation from completing a successful project. When an employee is terminated, the

employee loses a source of income plus the experience gained from working. It is well-settled that,

before termination, government employees are entitled to notice and a hearing.29 The parties admit

that these two requirements are met.

We reject Systems’ argument that procedural due process was not satisfied in this case in that

24 See, e.g. Independent Enterprises, Inc. v. Pittsburgh Water and Sewer Authority, 103 F.3d 1165, 1178 (3d Cir. 1997); Buckley Const., Inc. v. Shawnee Civic & Cultural Development Authority, 933 F.3d 853, 857-9 (10th Cir. 1991); Hanten v. The School District of Riverview Gardens, 1998 WL 313543 (E.D.Mo. 1998). 25 967 F.Supp 757 (S.D.N.Y. 1997). 26 Rutigliano Paper Stock v. U.S. Gen. Services Adm., 967 F.Supp 757, 764-6 (S.D.N.Y. 1997). 27 Id. 28 Id. at 766. 29 Fowler v. Smith, 68 F.3d 124, 127 (5th Cir. 1995); Williams v. Texas Tech Univ. Health Science Ctr., 6 F.3d 290, 293 (5th Cir. 1993); White v. South Park Ind. School Dist., 693 F.2d 1163, 1166-7 (5th Cir. 1982).

7 the School Board failed to keep a transcript of the proceedings. Although it would be wise to keep

a transcript in most cases, we find that no transcript was required. A transcript would not lessen the

probability of an erroneous deprivation of Systems’ property and liberty interests. The bulk of the

evidence in this case is documentary evidence that is in the record and available for review in any

post-deprivation proceedings.30

IV.

Louisiana’s post-deprivation remedies are adequate to protect Systems and other bidders from

any erroneous or arbitrary deprivations of their liberty and property interests. Louisiana law provides

for a cause of action to enjoin a governmental body from executing a contract with other bidders.31

The law also allows for a previously awarded contract to be set aside in some circumstances.32

Finally, the Louisiana Supreme Court has not foreclosed the possibility of a suit for damages,

provided, of course, that the aggrieved bidder timely pursued his or her other available avenues of

relief.33 In these circumstances, then, we conclude that no additional pre-deprivation procedures were

required to satisfy due process.

Systems’ final argument, that it was denied its procedural due process rights because Ducote

30 The reason given to support Haughton’s due process requirement for keeping “records” was to provide “the basis for any subsequent judicial review which might be sought by the bidder”. Haughton Elevator Div. v. State, 367 So.2d 1161, 1166 (La. 1979). 31 La. R.S. 38:2220. In relevant part, that statute provides:

“The district attorney in whose district a violation of this Part occurs, the attorney general, or any interested party may bring suit in the district court through summary proceeding to enjoin the award of a contract or to seek other appropriate injunctive relief to prevent the award of a contract which would be in violation of this Part, or through ordinary proceeding to seek appropriate remedy to nullify a contract entered into in violation of this Part.”

La. R.S. 38:2220(B). In some circumstances, the statute also provides for civil penalties against members of governmental bodies that violate the public bid laws. La. R.S. 38:2220 (C). 32 La. R.S. 38:2220(B). 33 See Airline Const. Co. v. Ascension Parish School Bd., 568 So.2d 1029 (La. 1990). See also MBA Medical, Inc. v. Jefferson Parish Hosp., 707 So.2d 467 (La.Ct.App. 1998); Webb Const., Inc. v. City of Shreveport, 665 So.2d 653 (La.Ct.App. 1995).

8 acted as an investigator, a prosecutor, and a judge in the disqualification of Systems, is without merit

even if we accept Systems’ position that Ducote was part of the Claims Board. The Orleans Parish

School Board reviewed the Claims Board’s recommendation. Before accepting the Claims Board’s

recommendation, the School Board gave Systems an opportunity to present its case directly to the

Board. Finally, as previously discussed, Louisiana law provides an adequate post-deprivation remedy

before an impartial adjudicator. In these circumstances, no procedural due process violation has

occurred.34

V.

For the foregoing reasons, the judgment of the district court is REVERSED.

34 See Schaper v. City of Huntsville, 813 F.2d 709, 714-6 (5th Cir. 1987); Davis v. Mann, 721 F.Supp 796, 801 (S.D.Miss. 1988). Systems’ reliance upon Valley v. Rapides Parish School Board, 118 F.3d 1047 (5th Cir. 1997), is misplaced. In Valley, we found that an impartial decision-maker was required in a predeprivation hearing when the school board’s actions would result in irreparable injury. The evidence in Valley showed that the discharge of the school superintendent for incompetence and inefficiency would inflict an injury upon the superintendent that could not be remedied by a monetary award. Id. at 1056-7. In the present case, there is no evidence of irreparable injury. Louisiana law protected Systems’ interests adequately.