Reddick Management Corp. et al v. Omaha, City of et al

Filing 28

MEMORANDUM AND ORDER - IT IS HEREBY ORDERED: The plaintiffs' motions for a temporary restraining order and preliminary injunction (Filing Nos. 6 and 9 ) are denied. The defendant's objections to the plaintiffs' submissions (Filing No. 24 ) are overruled as moot. Ordered by Senior Judge Joseph F. Bataillon. (TCL) Modified on 4/22/2016 to change restriction per JFB chambers (TCL).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
REDDICK MANAGEMENT CORP., AND
KEVIN REDDICK, Individually and in his
Official Capacity as Owner of Reddick
Management Corp.;
Plaintiffs,

8:16CV99
MEMORANDUM AND ORDER

vs.
CITY OF OMAHA, NEBRASKA, PAUL
KRATZ, in his Official Capacity; MICHELLE
PETERS, in her Individual and Official
Capacities; and BROOK BENCH, in his
Individual and Official Capacities;
Defendants.

This matter is before the court on the plaintiffs' motions for a temporary restraining
order and preliminary injunction, Filing Nos. 6 and 9, and on defendants' (collectively, "the
City of Omaha" or "the City") objections to the plaintiffs' submissions, Filing No. 24. This is
an action for deprivation of constitutional rights under 42 U.S.C. § 1983. It arises out of a
public bidding process through which the defendants solicited bids for the demolition of the
Omaha Civic Auditorium.

Plaintiffs assert that their rights to due process and equal

protection, as guaranteed by the 14th Amendment, have been violated by defendant City of
Omaha's failure to follow the Small and Emerging Businesses ("SEB") ordinance, Omaha,
Neb., Mun. Code § 10, Division 5.1 The court held a hearing on the motion on March 23,
2016.
I.

1

FACTS

See Hearing Exhibit ("Hr'g Ex.") 101, Certified copy of Omaha Municipal Code, Division 5, Small and
Emerging Business Program.

In 2008, the State of Nebraska passed a constitutional amendment that prohibited
any state agency or political subdivision from giving preference to anyone based on race,
gender, or national origin. See Neb. Const. Art. I, § 30. Prior thereto, the Omaha Municipal
Code required the City to give certain priorities to minority- and women-owned businesses.
See

Omaha,

Neb.,

Mun.

Code

§

10-200.3,

Editor's

note,

https://www.municode.com/library/ne/omaha/codes/code_of_ordinances?.2 Thereafter, the
Code was amended to state that “commencing January 1, 2010, the city shall make every
good-faith effort feasible to utilize small and emerging small businesses in all city contracts.”
Id., § 10-200.3(a).
Prior to soliciting bids, the public works department and the department soliciting the
bid are required to "work with the purchasing agent to determine if the bid or any portion of
the bid may be completed by a certified small business or emerging small business," but
may recommend that "small or emerging small businesses not be utilized on a bid if it is
determined that there are not sufficient small or emerging small businesses available to
respond to the bid or that have the capacity and capability to provide the supplies,
materials, technical, professional or other services." Id., § 10-200.3(d). Further, the Code
states:
Provided that an adequate number of certified entities are available, the
solicitation or request for proposal will give priority to certified Tier I and/or
Tier II small businesses and/or emerging small businesses. "Priorities" are set
forth as follows: if there is an adequate number of qualified and certified
[emerging small businesses (ESBs)], first priority shall be given to Tier I
ESBs; if not, then the next priority will be given Tier II ESBs; if there are not
an adequate number of ESBs, then priority shall go to Tier I small businesses
and then to Tier II small businesses.

2

Ordinance No. 38563, § 16, adopted Nov. 3, 2009, repealed the former § 10-200.3 which pertained
to appeals and derived from § 10-200.3 of the 1980 Code; Ordinance No. 35344, § 1, adopted Set. 26, 2000;
and Ordinance No. 37101, § 2, adopted Aug. 9, 2005. Editors note to § 10-200.3.

2

Id., § 10-200.3(d). Under the ordinance, "the mayor shall establish an overall goal and subgoals as necessary for the utilization of small and/or emerging business in all city
contracts." Id., § 10-200.3(b). The Code also states:
If the public works department and the architect/design professional
designing the project determine that that the project or portions of the project
are appropriate for small or emerging small businesses either as a prime
contractor or a subcontractor, then such determinations shall be made a part
of the bid specifications, and bidders not adhering to the requirements set
forth in the bid specifications will be deemed non-responsive.
Id., § 10-200.3(f).
In their complaint, the plaintiffs allege that plaintiff Reddick Management Company
("RMC"), doing business as Husker Tree and Landscaping, is a Tier I emerging small
business, and is properly listed as such with defendant City of Omaha. RMC is owned by
Kevin Reddick, who is an African American. The plaintiffs allege that on November 12,
2015, the Park Planning Division of the Parks Department invited bids for the demolition of
the Civic Auditorium.

They allege that defendant Brook Bench, acting in his official

capacity, in consultation with defendant Michelle Peters, determined that the bids need not
conform to the requirements of § 10-200.3. They assert that defendant Peters did not
provide any official recommendation from defendant Bench that § 10-200.3 be set aside
pursuant to subpart (d) when questioned about the bidding process by the City Council on
January 26, 2016.
Plaintiffs further allege that the Parks Department subsequently received multiple
bids, including bids from Anderson Excavating, an Omaha-based company, for $3,448,000,
and DeNovo Constructors, Inc., an Illinois-based company, for $3,105,743. DeNovo, as the
apparent low bidder on the project, received a recommendation from the Mayor that the City
Council should award DeNovo the contract to demolish the Civic Auditorium. Plaintiffs

3

allege that after receiving the Mayor's recommendation to award the contract to DeNovo,
the City Council, acting in its official capacity on behalf of
Defendant City of Omaha, allowed DeNovo to revise and clarify its bid to nominally include
small and emerging small businesses as subcontractors.
The plaintiffs also allege that at a City council hearing on February 2, 2016, the City
Council heard from representatives of DeNovo as well as New Horizons, LLC, an asbestosabatement contractor that is classified as a SEB Tier II small business. They contend New
Horizons stated there were approximately ten businesses in Nebraska that could do
abatement work required of the project and that around five or six of these businesses were
local, meaning in and around Omaha. They next allege that at the meeting, the City
Council indicated that, because an estimated 25% of the project would be potentially
handled by SEBs, rather than the 14% that is typically required under § 10-200.3, the
Council's concerns about the handling of the project were alleviated. 3
Husker Tree & Landscaping is a purported subcontractor of one of the proffered
bidders, Anderson Excavating (“Anderson”). Anderson was not the low bidder and therefore
not recommended or approved to perform the job.
The City essentially accedes to the plaintiffs' recitation of facts, but contends that, in
awarding the contract, the City exercised the discretion it was entitled to exercise under the
ordinance. It argues that the ordinance requires the City only to make a good-faith effort to
use small businesses as contractors and the policy is not mandatory. It also contends the
plaintiffs lack standing.

3

The plaintiffs have submitted transcripts of the City Council meetings, Filing No. 22, and the
defendants have objected to the plaintiffs' submissions, stating, inter alia, that the transcripts are uncertified
and incomplete. See Filing No. 24. The court has reviewed the submissions, but because the court has not
relied on them in making its determination, the court will overrule the City's objections as moot.

4

II.

LAW

A preliminary injunction is an extraordinary remedy and the burden of establishing
the propriety of an injunction is on the movant.

Roudachevski v. All-American Care

Centers, Inc., 648 F.3d 701, 705 (8th Cir. 2011). When evaluating whether to issue a
preliminary injunction, a district court must consider four factors: (1) the threat of irreparable
harm to the movant; (2) the state of the balance between this harm and the injury that
granting the injunction will inflict on other parties; (3) the probability that the movant will
succeed on the merits; and (4) the public interest. Dataphase Sys., Inc. v. C L Sys., Inc.,
640 F.2d 109, 114 (8th Cir. 1981) (en banc). No single factor is determinative, although the
failure to demonstrate the threat of irreparable harm is, by itself, a sufficient ground upon
which to deny a preliminary injunction. See Adam-Mellang v. Apartment Search, Inc., 96
F.3d 297, 299 (8th Cir. 1996); see also Modern Computer Sys., Inc. v. Modern Banking
Sys., Inc., 871 F.2d 734, 738 (8th Cir. 1989) (en banc).
A showing of irreparable harm does not automatically mandate a ruling in the
plaintiff's favor; the court must proceed to balance the harm to the defendant in granting the
injunction. Hill v. Xyquad, Inc., 939 F.2d 627, 630-31 (8th Cir. 1991). The burden on a
movant to demonstrate that a preliminary injunction is warranted is heavier when granting
the preliminary injunction will in effect give the movant substantially the relief it would obtain
after a trial on the merits. Calvin Klein Cosmetics Corp. v. Lenox Lab., 815 F.2d 500, 503
(8th Cir. 1987).
Success on the merits has been referred to as the most important of the four factors,
but it is insufficient on its own. Roudachevski, 648 F.3d at 706. Even when a plaintiff has a
strong claim on the merits, preliminary injunctive relief is improper absent a showing of a
threat of irreparable harm. Id.; Bandag, Inc. v. Jack's Tire & Oil, Inc., 190 F.3d 924, 926
5

(8th Cir. 1999) ("The basis of injunctive relief in the federal courts has always been
irreparable harm and inadequacy of legal remedies)." The threat of irreparable harm is a
necessity in proving the propriety of preliminary injunctive relief.

Id.

"To succeed in

demonstrating a threat of irreparable harm, 'a party must show that the harm is certain and
great and of such imminence that there is a clear and present need for equitable relief.'" Id.
(quoting Iowa Utils. Bd. v. Fed. Commc’ns Comm’n, 109 F.3d 418, 425 (8th Cir. 1996)).4
“Standing is a ‘threshold inquiry’ and ‘jurisdictional prerequisite that must be resolved
before reaching the merits of a suit’”. Medalie v. Bayer Corp., 510 F.3d 828, 829 (8th Cir.
“To show standing under Article III of the U.S. Constitution, a plaintiff must

2007).

demonstrate (1) injury in fact, (2) a causal connection between that injury and the
challenged conduct, and (3) the likelihood that a favorable decision by the court will redress
the alleged injury.” Iowa League of Cities v. E.P.A., 711 F.3d 844, 869 (8th Cir. 2013)
(quoting Young Am. Corp. v. Affiliated Computer Servs. (ACS), Inc., 424 F.3d 840, 843 (8th
Cir. 2005). An injury in fact “is one that is (a) concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical.” Jones v. Gale, 470 F.3d 1261, 1265 (8th Cir.
2006). If a plaintiff does not have Article III standing to sue, the court does not have subject
matter jurisdiction over the suit. Iowa League, 711 F.3d at 869.
“[A]n invasion of a legally protected interest” is an injury sufficient for the purposes of
standing when it is “concrete and particularized” and “actual or imminent, not conjectural or
hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). “By particularized,

4

Examples of irreparable injury include extraordinary litigation expense, continued subjection to a
challenged regulation due to unreasonable administrative delay in responding to the challenge, loss of First
Amendment freedoms, and the immediate destruction or loss of the very substantive right that the individual
seeks to protect. West v. Bergland, 611 F.2d 710, 718 (8th Cir. 1979) (internal citations and parentheticals
omitted).

6

we mean that the injury must affect the plaintiff in a personal and individual way.” Id. at 560
n. 1.

“At the pleading stage, general factual allegations of injury resulting from the

defendant's conduct may suffice, for on a motion to dismiss we presume that general
allegations embrace those specific facts that are necessary to support the claim.” Id. at
561. A contingent liability can present a sufficient injury for Article III standing. See Clinton
v. City of New York, 524 U.S. 417, 432 (1998) (holding that denial of a “statutory bargaining
chip” can “inflict[ ] a sufficient likelihood of economic injury to establish standing”); Lac Du
Flambeau Band of Lake Superior Chippewa Indians v. Norton, 422 F.3d 490, 498 (7th Cir.
2005) (“[T]he present impact of a future though uncertain harm may establish injury in fact
for standing purposes.”); Walters v. Edgar, 163 F.3d 430, 434 (7th Cir. 1998) (“A
probabilistic harm, if nontrivial, can support standing.”); see also Jones, 470 F.3d at 1267
(feedlot owner had standing to challenge constitutionality of law that would prevent him from
entering into certain contracts with out-of-state corporations; even though he had not
entered into such a contract, the law negatively affected his “ability to earn income, borrow,
and plan for [his] financial future”).
“The Equal Protection Clause of the Fourteenth Amendment commands that no
state shall ‘deny to any person within its jurisdiction the equal protection of the laws,’ which
is essentially a direction that all persons similarly situated should be treated alike.” City of
Cleburne v. Cleburne Living Ctr., Inc., 473 U.S. 432, 439 (1985). In order to state an equal
protection violation, the plaintiff must generally prove purposeful, invidious, intentional
discrimination on the basis of the plaintiff's membership in a suspect class.

Foster v.

Wyrick, 823 F.2d 218, 221 (8th Cir. 1987).
To state a claim under the Fourteenth Amendment Due Process Clause, a plaintiffs
must allege that he or she was deprived of a protected interest without due process of law.
7

Demien Construction Co. v. O’Fallon Fire Protection District, 812 F.3d 654, 658 (8th Cir.
2016); Barnes v. City of Omaha, 574 F.3d 1003, 1005-06 (8th Cir. 2009).

“Protected

interests under the Due Process Clause are those to which a person holds a ‘legitimate
claim of entitlement,’ and stem from ‘independent source[s] such as state law.’”

Id.,

(quoting Board of Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972)). Generally, an
unsuccessful bidder obtains no property right in the award of a construction contract.
Higgins Elec., Inc. v. O'Fallon Fire Prot. Dist., No. 15-1222, 2016 WL 690849, at *4 (8th Cir.
Feb. 22, 2016) (applying Missouri law); see Day v. City of Beatrice, 101 N.W.2d 481 (Neb.
1960) (stating that “[o]rdinarily an unsuccessful bidder for public work has acquired no legal
right to protect, either in law or equity, since the letting of contracts to the lowest bidder is
regarded as being for the benefit of the public and not for individual bidders.”).
III.

DISCUSSION

As a threshold matter, the court finds the plaintiffs have alleged a sufficient injury to
confer jurisdiction on the court at this stage of the proceedings. They have alleged that they
are covered under the ordinance, and the City has not challenged that contention. They
allege that, as a certified small and/or an emerging business, RMC is entitled to certain
procedures by virtue of the ordinance and they allege those procedures have not been
followed. The allegations amount to an "invasion of a legally protected interest,"—that is,
the plaintiffs' purported interest, on their own behalf and on behalf of others affected, in the
City following the procedures under the ordinance. At this point, the court is not prepared to
state that the plaintiffs lack standing. The case is essentially at the pleading stage; as the
case progresses, the plaintiffs will be required to address injury, causation, and
redressability of harm to establish standing.

8

With respect to injunctive relief, the court finds the plaintiffs have not shown they are
entitled to that extraordinary remedy.

They have not established that they will suffer

irreparable injury as a result of the City's action. The plaintiffs contend that the irreparable
harm they will suffer is "losing out on a very big project." If the plaintiffs prove up on their
claims of deprivation of Constitutional rights, there is an adequate remedy at law for the
deprivation—money damages.

The plaintiffs claimed injury can be compensated by a

damages award that is ascertainable and can be reduced to a certain dollar amount. The
plaintiffs would be entitled to money damages to the extent they could be proved, in addition
to nominal damages and attorneys' fees to vindicate their Constitutional rights.
Although, in some circumstances, a colorable claim of the deprivation of a
constitutional right can be considered to amount to an irreparable injury, the plaintiffs have
not presented a colorable Constitutional violation.

They have not shown any equal

protection violation, in that they have made no showing they were treated differently than
other contractors or subcontractors. Also, the plaintiffs have not established that they had
any property interest of which they were deprived without due process. The present facts
do not indicate the sort of situation that calls for extraordinary relief.
In light of this finding, the court need not address the other Dataphase factors, but
notes for the record that the balance of harms favors the City. The City argues that an
injunction would cause a costly delay and would be detrimental to the City. The City would
likely face a breach of contract action from the contractor awarded the bid if it were to re-bid
the contract. Also, as noted above, the plaintiffs cannot establish a probability of success
on the merits in that it is not likely that they can show a colorable Constitutional violation.
Last, the court finds that the public interest weighs in favor of proceeding with the timely
demolition of the Civic auditorium.
9

Accordingly, the court finds the plaintiff's motions for a temporary restraining order
and preliminary injunction should be denied.
IT IS HEREBY ORDERED:
1.

The plaintiffs' motions for a temporary restraining order and preliminary

injunction (Filing Nos. 6 and 9) are denied.
2.

The defendant's objections to the plaintiffs' submissions (Filing No. 24) are

overruled as moot.
Dated this 22nd day of April, 2016.
BY THE COURT:
s/ Joseph F. Bataillon
Senior United States District Judge

10