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A.L.L. Construction, LLC v. Metropolitan St. Louis Sewer District

United States District Court, E.D. Missouri, Eastern Division

April 5, 2018

A.L.L. CONSTRUCTION, LLC, Plaintiff,
v.
METROPOLITAN ST. LOUIS SEWER DISTRICT; JAMES FAUL, RUBY BONNER, RONALD BOBO, MICHAEL YATES, and JAMES I. SINGER, in their individual capacities as members of the Board of Trustees of the Metropolitan St. Louis Sewer District; and BATES UTILITY CO., INC., Defendants.

          MEMORANDUM AND ORDER

          AUDREY G. FLEISSIG UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on the motions of Defendants Metropolitan St. Louis Sewer District (“MSD”) and the five members of MSD's Board of Trustees (“Trustees”) named as Defendants in their individual capacities, [1] to dismiss Plaintiff ALL Construction, LLC's (“ALL”) amended complaint for lack of standing and failure to state a claim. ECF Nos. 10 & 12. On December 14, 2017, the Court held these motions in abeyance subject to ALL filing the amended complaint now under consideration. After ALL filed the amended complaint, the Court permitted the parties to supplement their briefs in support of and opposition to the motions to dismiss. For the following reasons, the motions will be granted in part and denied in part.

         Newly-named Defendant, Bates Utility Co., Inc. (“Bates”), has separately moved to dismiss the amended complaint for failure to state a claim. ECF No. 46. For the reasons set forth below, the Court will deny Bates's motion.

         BACKGROUND

         The facts alleged in the complaint have been described in detail in the Court's December 14, 2017 Memorandum and Order (ECF No. 29) but will be recounted here as necessary to address the complaint's amendment. ALL is a construction company that aids in the construction of sewer systems and has worked as a general contractor or subcontractor for MSD for approximately 20 years.

         MSD has a policy providing that a bidder on non-building construction projects exceeding $50, 000 must utilize a Minority Business Enterprise (“MBE”) on at least 17% of the project. A bidder who fails to achieve this percentage of MBE participation will have its bid rejected as nonresponsive unless the bidder can demonstrate a good faith effort to achieve the MBE goal. ALL qualifies as an MBE under MSD's policy in that its owner, Anton Lumpkins, is African American.

         ALL has worked as an MBE subcontractor for general contractors that frequently do business with MSD, including Bates. ALL was awarded MSD's “Minority Contractor of the Year” in 2000. Beginning in 2016, Bates included ALL as a subcontractor on several projects for MSD in order to satisfy MSD's MBE requirements. However, according to the amended complaint, a Chief Estimator and Project Manager at Bates at some point expressed his “distaste” for MSD's MBE requirements, and “Bates' agents explicitly stated [their] hostility towards programs designed to benefit African-Americans and other racial minorities.” ECF No. 35 ¶¶ 20, 104. Then, “beginning in early 2016, Bates used ALL on bids to meet MSD's MBE participation requirements so that it would be awarded MSD projects but did not actually use ALL on these projects, ” at times not even calling ALL to the job site. Id. ¶¶ 24, 27. ALL alleges, “[u]pon information and belief[, ] Bates, a white-owned company, was either pocketing the money it represented to MSD it had earmarked for its MBE subcontractors, including ALL[, ] or used other white-owned companies to perform this work . . . .” Id. ¶ 27.

         ALL contacted MSD staff to complain about Bates's non-compliance with MSD's MBE participation requirements. ALL believed that it was not the only MBE that was being “exploited” by Bates on MSD projects and that other MBEs were being listed on bids to meet MSD's MBE participation requirements and then not being used on the projects. Id. ¶ 32.

         On or about April 14, 2016, Lumpkins spoke at a public meeting of MSD's Board of Trustees. Lumpkins told the Board about the issues that he and other minority subcontractors were having with Bates. Specifically, Lumpkins told the Board that Bates was using ALL and other MBEs in bids to achieve MSD's diversity requirements while excluding them from performing work on projects. After Lumpkins informed the Board of Bates's noncompliance with the MBE requirement, the Board did not approve the award of a project to Bates and ultimately suspended Bates from bidding on any projects as a general contractor for one year.

         ALL alleges that, notwithstanding this suspension, MSD permitted Bates to continue to present change orders on MSD projects listing ALL as an MBE. ALL alleges that the “Trustees were aware that Bates continued to use ALL as an MBE contractor on its bid forms and change-order forms submitted to MSD, even though ALL was not performing the actual work, and nonetheless continued to approve such bids and change-orders, effectively turning a blind eye to Bates' discrimination against ALL, despite MSD's minority participation requirements.” Id. ¶ 48.

         A few days after the April 14, 2016 meeting, “MSD staff began contacting ALL complaining about various issues with ALL's work, ” and “[w]hen ALL demanded proof of alleged deficiencies in its work, MSD refused to provide any evidence of same.” Id. ¶ 41. On June 19, 2016, Lumpkins “again went to the Trustees . . . informing [them] of the retaliation ALL had experienced for his complaints about Bates. Lumpkins notified the Trustees that MSD staff had begun citing ALL for deficient work while refusing to provide any evidence.” Id. ¶ 43. The Trustees “took no action” in response to Lumpkin's complaints, and on June 19, 2016, “ALL was removed from the Small Contractor Program.”[2] Id. ¶¶ 44-45. ALL alleges that “[t]he Trustees were notified and/or consulted regarding MSD's staff's intention to remove ALL from the Small Contractor Program, and tacitly approved, consented to, and/or ratified the [action].” Id. ¶ 46.

         ALL further alleges, as it did in the original complaint, that Defendants retaliated against it by requiring that a general contractor, Jay Dee and Frontier-Kemper (“Jay Dee”), remove ALL as a subcontractor from an MSD project known as the “Deer Creek Project.” Jay Dee had included ALL as a subcontractor in its bid for the project, and MSD's professional staff issued a notice of award to Jay Dee after determining that Jay Dee's was the lowest and best bid. However, a competitor of Jay Dee protested the staff's decision because of Jay Dee's inclusion of ALL as a subcontractor. The competitor alleged that ALL was unqualified to perform the work.

         ALL alleges that, on December 8, 2017, the Trustees “voted against introducing the ordinance that would have approved MSD's professional staff's award of the bid to Jay Dee.” Id. ¶ 63. The five Trustees who voted not to approve the award of the contract to Jay Dee are the five Trustees named as Defendants in this case. ALL alleges that the Trustees swore in affidavits[3] that the reason they voted against approving the award of the Deer Creek Project contract to Jay Dee was because of Jay Dee's inclusion of ALL as a subcontractor, and that one Trustee “even stated that he objected to ALL because of the Bates matter.” Id. ¶¶ 64-65. Jay Dee subsequently removed ALL as a subcontractor, but Jay Dee was still not awarded the Deer Creek Project contract.

         ALL alleges that the Trustees made statements in sworn affidavits suggesting that Jay Dee was not awarded the contract because Jay Dee had originally included ALL on its bid. According to ALL, “the MSD Board of Trustees has rarely-if ever-refused to ratify a notice of award to a contractor recommended by its professional staff of engineers, ” and in the last five years, the Trustees have ratified every single notice of award given by MSD's professional staff for projects in excess of $10 million with the “lone exception of Jay Dee and the Deer Creek Project.” Id. ¶¶ 61-62.

         ALL asserts claims against the Trustees and MSD for First Amendment retaliation (Count I), and against the Trustees, MSD, and Bates for violation of 42 U.S.C. § 1981 (Count II). ALL alleges that the Trustees are the final policy-makers for MSD.

         DISCUSSION

         On a motion to dismiss for lack of standing or for failure to state a claim, the reviewing court accepts the plaintiff's factual allegations as true and draws all reasonable inferences in favor of the nonmoving party. Torti v. Hoag, 868 F.3d 666, 671 (8th Cir. 2017) (failure to state a claim); E.L. by White v. Voluntary Interdistrict Choice Corp., 864 F.3d 932, 935 (8th Cir. 2017) (standing). But “[c]ourts are not bound to accept as true a legal conclusion couched as a factual ...


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