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Thursday, December 27, 2007

Saint Paul / Minority Contractor Suit Update

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Blogger Bob said...

There maybe copy errors.

Michael Thomas, Brian )
Conover, and Frederick Newell )
v. ) ORDER
City of Saint Paul )
This matter is before the Court on defendant’s motion for
summary judgment pursuant to Rule 56 of the Federal Rules of Civil
Procedure (“Fed. R. Civ. P.”). Plaintiffs, African-American
business owners, claim defendant, City of Saint Paul, discriminated
against them in awarding publicly-funded contracts. All parties
agree plaintiffs are African-American, and defendant is a duly
organized Minnesota city. For the reasons set forth herein,
defendant’s motion for summary judgment is granted.
I. Background1
A. The Parties
Defendant, City of St. Paul (“the City”), has adopted a Vendor
Outreach Program (“VOP”) designed to assist minority and other
small business owners in competing for City contracts. Plaintiffs,
at all relevant times, were VOP-certified minority business owners.
Each contends the City engaged in racially discriminatory illegal
conduct when awarding contracts for publicly-funded projects.
1. Michael Thomas
Plaintiff Michael Thomas owns Cornerstone Community Realty &
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 1 of 17
2Thomas’s allegations concerning the Housing 5000 projects are
problematic. Housing 5000 is a project of the Saint Paul Housing
and Redevelopment Authority (“HRA”), not defendant. As an
independent government agency, it is neither an arm nor an alterego
of the City of St. Paul. Thus, it is the HRA which rejected
the team’s bid.
Mortgage Services. According to the complaint, his business is one
of the City’s few – if not the only – African-American owned,
certified minority real estate disposition service. He contends
the City consistently denied him opportunities to work on publiclyfunded
projects because of his race. As evidence of his claim, he
cites (1) the City’s failure to invite him to bid on projects
related to the “Housing 5000 initiative”;2 (2) the City’s failure
to award him contracts for the same; and (3) the fact that
independent developers have not contracted with his company.
The City contends Thomas was provided opportunities to bid for
City work, pointing to an occasion when he was part of a team of
qualified builders and developers who entered a competitive bid for
the “Phalen Village Project.” Ultimately, Thomas’s bid was
rejected, and the contract was awarded to a Caucasian-owned
On another occasion, Thomas bid on, and the City was set to
award him, a contract to market certain housing units for $40,000.
The City, however, in an attempt to broaden the contract
awards to more VOP-covered businesses, divided the project into
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 2 of 17
3In 2004, Conover submitted bids on at least 22 different
projects, including: (a) St. Paul Site F Demo Phase 1 & 2, A-23783-
3; (b) St. Paul Highway 5, A-23847-3; (c) Upper Landing Park, A-
23978-31; (d) Roselawns, A-24016-3 e; (e) Phalen Park Pathway, A-
24103-3; (f) Riverview Busyway, A-24102-3; (g) St. Paul Library
Outreach; (h) Paul Wellstone Center; (I) St. Paul River Bluff
Village, A-241733; (j) St. Paul McDonough Phase II, 04096; (k)
University and Dale Red, A-24262-3; (l) Elmcrest Park Utility and
Street, 04-20; (m) McCarron’s Campus Road, A-23965-3; (n) South St.
Paul Street Reconstruction, 2004-001D; (o) Phalen Blvd Phase II, A-
23955-3; (p) St. Paul Kellogg Blvd, A-23974-3; (q) West St. Paul
Street Reconstruction, 041; ® St. Paul major sewer repairs, A-
24016-3; (s) St. Paul Water Service, A-23961-1; (t) North St. Paul
Charles St. & Centennial Drive, 6211-82; (u) Ruth Residential
Paving, A-24089-3; and (v) North St. Paul, 04-01.
separate contracts, each set at $10,000. The City’s terms also
required VOP contractors to obtain insurance, accept payment on a
reimbursement basis (up to 90 days), and accept payment of the
contract over a period of 12 months. Thomas declined the work,
because “the terms of this contract simply did not make good
business sense” for him.
2. Brian Conover
Plaintiff Brian Conover owns Abel Trucking. Conover claims he
submitted subcontracting bids to provide trucking services on 22
projects to various independent developers.3 None of the bids were
According to Conover, the independent developers awarded each
subcontract to Caucasians, whose bids were no more competitive than
his. Notwithstanding this contention, and after years of
discovery, he offers no admissible evidence to support his claim.
He has not identified the subcontractors whose bids were accepted,
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 3 of 17
nor has he offered any comparison showing the accepted bid and the
bid he submitted.
Conover also complains that, on other occasions, he received
bidding invitations only a day before the bid was due. He
maintains this practice created a barrier to competitive bidding,
because it did not allow him adequate time to prepare a fairly
competitive bid for the project. Once again, however, he fails to
identify even one particular project to which he had only a single
day to bid, and does not identify any person, of any race or
background, similarly situated, who was afforded a longer period of
time in which to submit a bid.
As proof of discrimination, he simply offers the independent
developers’ refusal to use his company; their failure to offer him
any justification for their decision; and the City’s failure to
enforce the VOP.
3. Frederick Newell
Plaintiff Frederick Newell owns Newell Abatement Services,
Inc.; Lead Investigative Services, Inc.; and Nails Construction
Company. He claims he submitted numerous bids on the City’s open
competition projects, all of which were rejected.
Thereafter, he repeatedly contacted various Housing and
Redevelopment Authority (“HRA”) officials and Department of
Planning and Economic Development (“PED”) officials to complain
that he did not get these jobs. Providing no specifics, he states
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 4 of 17
the PED “provided a variety of excuses” about why he did not
receive the work. As evidence of discrimination, Newell cites the
HRA’s and the PED’s failure to provide adequate explanations for
his rejected bids, and their failure to liberally construe the
mandates of the VOP in order to further the objective of providing
economic opportunities to VOP-protected entities.
B. The VOP
1. Sec. 84.01. Declaration of Policy and Purpose
In the mid-1990s, two studies - but no judicial decision -
found indications that the City of St. Paul, Minnesota,
discriminated against women and minorities in its contracting
programs. The City attempted to remedy this discrimination and
prevent it in the future by creating the VOP. The program was
designed to assist contractors providing goods and services to the
City with access to its publicly-funded projects.
The City adopted a policy to “promote increased participation
by qualified, minority-owned, women-owned, and economically
disadvantaged small businesses in public contracting that is
comparable to their availability in the Saint Paul marketplace.”
(City of St. Paul, Minn., Administrative Code ch. 84.)
Under the VOP, the City sets annual benchmarks or levels of
participation for the targeted groups. At the same time, the VOP
expressly prohibits quotas. VOP benchmark levels are established,
and participation of eligible businesses is reviewed every three
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 5 of 17
years in an effort to ensure (1) that the program seeks no more
than to remedy the effects of past discrimination and prevent
future discrimination, and becomes neither a quota program, nor cap
participation of qualified businesses. The VOP’s provisions apply
to all contracts entered into or awarded, including prime and
vendor contracts. Importantly, however, the VOP program applies
only to the City of St. Paul; it does not refer to, or bind, any
other governmental agency.
2. Sec. 84.08. Prime Contract Requirements
The VOP imposes various “good faith” requirements on prime
contractors who bid for City projects. In particular, § 84.08
requires, among other things, that when a prime contractor rejects
a bid from a VOP-certified business, the contractor must give the
City its complete basis for the rejection, and evidence that the
rejection was justified.
3. Sec. 84.09. Vendor Contract Requirements
The VOP further imposes obligations on the City with respect
to vendor contracts. The City’s contract manager must seek, where
possible and lawful, to award a portion of vendor contracts to VOPcertified
businesses. The contract manager must solicit these bids
by phone, advertisement in a local paper, or other means prior to
opening bid. Where applicable, the contract manager may assist
interested VOP participants in obtaining bonds, lines of credit, or
insurance required to perform under the contract. The VOP,
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 6 of 17
however, recognizes that these obligations must be performed in a
manner consistent with other laws relating to competitive bidding
and awards of contracts to the lowest bidder.
The contract manager also documents for the City those VOP
bids which are rejected, including the complete basis for the
rejection and evidence that the rejection was justified. (City of
St. Paul, Minn., Administrative Code ch. 84.) The VOP does not
require the City to provide these reports to the public or
disappointed bidders. The VOP ordinance provides that when the
contract manager engages in “one or more” of the above possible
outreach efforts, he or she is in compliance with the mandates of
the ordinance. Id.
4. Sec. 84.10. Monitoring and Reporting
The VOP ordinance requires monitoring and reporting, under
which city officials are authorized to conduct reasonable
inspections in order to verify a business owner’s continued
eligibility. VOP participants must permit access to any relevant
records. In turn, the City’s participating departments must
prepare and submit reports to the mayor and city council regarding
the annual levels of participation and other information gathered
about the VOP. The ordinance contains no provision requiring the
City to give either its documentation or contractor reports to
rejected VOP bidders.
C. Other Legally Distinct Entities and Programs
The HRA is a legally distinct public entity which undertakes
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 7 of 17
housing, commercial, and business development activities. Minn.
Stat. Ann. §§ 469.001 - 469.047 (2007). It is authorized to
acquire real estate, housing and commercial loans and grants, and
issue certain bonds. Nearly all the activities of the City’s PED
are authorized by the HRA. The PED Director is the Executive
Director of the HRA -- its sole employee, and the City Council
serves as the HRA Board of Commissioners.
II. Analysis
Plaintiffs contend the City discriminated against them on the
basis of their race. They further claim the City’s failure to
enforce the VOP violated the Equal Protection Clause of the
Fourteenth Amendment of the United States Constitution; the Civil
Rights Act of 1866, 42 U.S.C. § 1981; the Civil Rights Act of 1871,
42 U.S.C. § 1983; the Civil Rights Act of 1964, 42 U.S.C. § 2000d;
and the Minnesota Human Rights Act, Chapter 363A.17. The City
seeks summary judgment. The Court finds the City is entitled to
summary judgment because plaintiffs lack standing to bring these
claims and no genuine issues of material fact remain.
A. Summary Judgment Standard
Summary judgment is appropriate when the evidence, viewed in
the light most favorable to the nonmoving party, presents no
genuine issue of material fact. Fed. R. Civ. P. 56; Celotex Corp.
v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby,
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 8 of 17
Inc., 477 U.S. 242, 246 (1986). The party opposing summary
judgment may not rest upon the allegations in its pleadings, but
must produce significant probative evidence demonstrating a genuine
issue for trial. See Anderson, 477 U.S. at 248-49; see also
Hartnagel v. Norman, 953 F.2d 394, 395-96 (8th Cir. 1992). “[T]he
mere existence of some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine issue of
material fact.” Anderson, 477 U.S. at 247-48 (emphasis omitted).
B. Standing
The burden of establishing Article III standing always lies
with the party invoking federal jurisdiction. See Warth v. Seldin,
422 U.S. 490, 498 (1975). To sustain this burden, plaintiffs must
prove a “personal injury fairly traceable to the defendant’s
allegedly unlawful conduct and likely to be redressed by the
requested relief.” Dep’t of Commerce v. United States House of
Representatives, 525 U.S. 316, 329 (1999). The “injury” required
in this type of equal protection case is the inability to compete
on an equal footing in the bidding process, not the loss of
contract. Ne. Florida Chapter of the Associated Gen. Contractors
of America v. City of Jacksonville, 508 U.S. 656, 666 (1993). To
establish standing, therefore, plaintiffs must demonstrate both
their ability and readiness to bid on contracts, and further, that
the City’s discriminatory policy prevented them from doing so on an
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 9 of 17
4This case is the second iteration of essentially the same
lawsuit. A thematically identical case, with many of the same
plaintiffs, was previously filed as Thomas et al. v. City of St.
Paul et al., Court File No. 04-CV-5101(JMR/FLN). The case was
pending for approximately 10 months. Defendant made multiple
efforts to dismiss that suit based on various procedural defects,
as well as lack of standing. In order to elide the many collateral
defects in the prior filing, the Court allowed it to be dismissed
and refiled. The present matter is the refiled action.
equal basis. Id.
The Court finds that, after years of trying,4 plaintiffs are
simply unable to show an Associated Gen. Contractors injury, and
therefore lack standing to pursue this claim. There is no question
plaintiffs did not obtain contracts or subcontracts with the City.
But they entirely fail to show they were deprived of an opportunity
to compete, or that their inability to obtain even one contract
resulted from an act of discrimination. Further, they fail to show
any instance in which their race was a determinant in the denial of
any contract. As a result, plaintiffs have failed to demonstrate
defendant engaged in discriminatory conduct or policy which
prevented them from competing. Thus, they have no standing to
raise their claims.
In the absence of any showing of intentional discrimination
based on race, the mere fact that the City did not award any
contracts to plaintiffs does not furnish the causal nexus necessary
to establish standing. The law does not require the City to
voluntarily adopt aggressive race-based affirmative action programs
in order to award specific groups publicly-funded contracts. See
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 10 of 17
generally, City of Richmond v. Croson, 488 U.S. 469 (1989).
Rather, the City must provide all eligible contractors an equal
opportunity to compete. Because plaintiffs are unable to show they
were denied an opportunity to compete, no redressable harm exists.
Plaintiffs’ remaining allegations do not present harms which
can be redressed here. They complain that the City or its prime
contractors failed to give them an explanation for their rejected
bids. But there is no provision of law requiring the City, its
officials, or general contractors to do so. The VOP requires City
monitoring and recordkeeping of its VOP activities in order to
provide reports to St. Paul’s mayor and city council. It does not,
however, require any such notice to rejected bidders or interested
third parties. Plaintiffs ask the Court to find the City’s failure
to liberally construe and enforce the VOP to be the legal
equivalent of unlawful conduct. The Court must decline this
In order to find discrimination, the law requires the showing
of an illegal policy or an illegal act. See Gratz v. Bollinger,
539 U.S. 244, 261 (2003). Here, plaintiffs have failed to show a
violation of the VOP ordinance, or any illegal policy or action on
the part of the City. Any alleged shortcomings in the City’s VOP
efforts, even if true, are not justiciable issues. Plaintiffs must
identify to the Court a discriminatory policy in effect. For
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 11 of 17
example, even assuming the City failed to give Conover more than
one day’s notice to enter a bid, such a failure is not, per se,
illegal. More importantly, Conover offers no evidence that anyone
else of any other race received an earlier notice, or that he was
given this allegedly tardy notice as a result of his race. Even if
the City’s VOP practices are not ideal, that does not make them
unlawful. Therefore, the Court is without authority to penalize
the City for such failed attempts.
Similarly, Conover may not have been hired as a subcontractor
to work for prime contractors receiving City contracts. But these
were independent developers, and the City is not required to defend
the alleged bad acts of others. Consequently, plaintiffs lack
standing for failing to show personal injury fairly traceable to
the City’s alleged unlawful conduct likely to be redressed by the
requested relief.
Beyond this, plaintiffs have failed to recognize that they
chose the City of St. Paul as the defendant in this case. In many
of the instances where illegal action is claimed, the purportedly
offending party is not the defendant. By way of example, Thomas
complains of failure to receive contracts for Housing 5000 and
certain independent developer projects. But he does not allege,
let alone prove, that the City controls either. The HRA is legally
distinct from the City and not under the City’s control; therefore,
any of its alleged wrongful acts cannot be imputed to the City of
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 12 of 17
St. Paul.
C. Plaintiffs’ Claims
Even assuming plaintiffs possess standing, they fail to adduce
material facts which demonstrate a need for trial on the merits for
any of their claims. This is true primarily because each theory of
recovery is viable only if the City intentionally treated
plaintiffs unfavorably because of their race. See Guardians Ass’n
v. Civil Serv. Comm’n, 463 U.S. 582 (1983); Williams v. City of
Sioux Falls, 846 F.2d 509, 511 (8th Cir. 1988). The Court
addresses each claim separately.
1. Fourteenth Amendment Equal Protection Claim
Plaintiffs claim the City intentionally deprived them of equal
protection of the law on the basis of their race by failing to
enforce the provisions of the VOP, in light of its knowledge that
minority businesses have historically been subject to
discrimination. Plaintiffs further contend the City’s failure to
enforce the VOP prevented them from obtaining city contracts in the
same manner as Caucasian business owners. Their contentions fail.
To establish a prima facie violation of the equal protection
clause on the basis of discrimination, there must be state action.
To support the claim, plaintiffs must offer facts and evidence that
constitute “[p]roof of racially discriminatory intent or purpose.”
Village of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S.
252, 265 (1977); accord Foster v. Wyrick, 823 F.2d 218, 221 (8th
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 13 of 17
Cir. 1987). Here, plaintiffs have failed to allege any single
instance showing the City intentionally rejected VOP bids based on
their race.
Plaintiffs offer no evidence of a specific time when any one
of them submitted the lowest bid for a contract or subcontract
which might have entitled them to an award of the City’s contract.
Further, they offer no evidence showing any case where their bids
were rejected on the basis of race. The alleged failure to place
minority contractors in a preferred position, without more, is
simply insufficient to support a finding that the City failed to
treat them equally based upon their race. City of Sioux Falls, 846
F.2d at 512.
1. Sec. 1981 Claim
This failure to produce facts necessitating a trial on the
merits applies equally to plaintiffs’ § 1981 claim. Racial
discrimination in the making and enforcement of contracts is
prohibited under 42 U.S.C. § 1981. To establish a prima facie case
under this statute plaintiffs must show that (1) they are members
of a racial minority; (2) the City intended to discriminate against
them on the basis of their race; and (3) the discrimination
concerned a subject recited in § 1981. Williams v. Lindenwood
Univ., 288 F.3d 349, 355 (8th Cir. 2002). Plaintiffs, as African-
Americans, are certainly members of a protected class. But again,
there is no need for a trial on the merits, because they fail to
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 14 of 17
establish the requisite prima facie case by adducing any facts
showing the City intentionally rejected their bids due to race.
3. 42 U.S.C. § 2000d Claim
Plaintiffs’ § 2000d claim is not dissimilar. Section 2000d
prohibits discrimination on the basis of race, color, or national
origin in connection with a program or activity that receives
federal financial assistance. To establish the elements of a prima
facie case under Title VI, plaintiffs must demonstrate that their
race, color, or national origin motivated the City’s discriminatory
conduct. Thomson by and through Buckhanon v. Bd. of Special School
Dist. No. 1, 144 F.3d 574, 581 (8th Cir. 1998).
As noted, there is a paucity of evidence that the City
intentionally discriminated against these plaintiffs. After years
of discovery, they offer no evidence suggesting the City’s possible
motive. And, significantly, plaintiffs have not presented any
evidence which shows even a slight connection between the City’s
bid rejections and plaintiffs’ race, color, or national origin.
Consequently, plaintiffs’ 42 U.S.C. § 2000d claims fail as a matter
of law.
4. Sec. 1983 Claims
Plaintiffs’ dependent § 1983 claims fall because they have not
offered a single instance showing the City deprived them of their
rights. Section 1983 provides that, any person, who under color of
state law deprives another individual of federally protected
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 15 of 17
rights, is subject to personal liability. The statute, itself,
creates no substantive rights; it simply provides remedies for
deprivations of rights established elsewhere. City of Oklahoma
City v. Tuttle, 471 U.S. 808 (1985). Accordingly, plaintiffs do
not present a viable claim under § 1983. Absent a showing of an
instance where plaintiffs’ rights have been denied, no § 1983
action can be maintained.
5. Minnesota Human Rights Act Claim
The Minnesota Human Rights Act (“MHRA”) provides a cause of
action when a party “discriminate[s] against any person in the
access to, admission to, full utilization of, or benefit from any
public service because of race. . . .” Minn. Stat. § 363.A12
(2004). Here again, a showing of the fact of discrimination is the
sine qua non. To maintain a discrimination case under the MHRA, a
complainant must establish a prima facie case of discrimination.
See Texas Dep’t of Community Affairs v. Burdine, 450 U.S. 248, 252-
53 (1981). Plaintiffs must produce evidence of a discriminatory
motive. Sigurdson v. Isanti County, 386 N.W.2d 715, 720 (Minn.
Plaintiffs claim they were denied access to benefits by virtue
of the City’s rejection of their bids. The City denies its actions
constitute racial discrimination under the Act because plaintiffs
were not treated differently from others similarly situated.
The significant question for purposes of the Act, however,
Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 16 of 17
is whether the City’s actions were racially motivated.
Plaintiffs have failed to show that they were.
III. Conclusion
For the foregoing reasons, defendant’s motion is granted.
Dated: December 12, 2007
s/ James M. Rosenbaum
United States Chief District Judge

5:22 AM  
Anonymous Anonymous said...

it just shows if your not white or friends of someone at city hall,
to bad so sad.
they wouldn't count you as a person or a company with standing.

7:44 AM  

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