White Lodging Services Corporation et al v. Snipes et al
Filing
15
ORDER DENYING Defendants Snipes & City of Austin's 6 Motion to Dismiss; GRANTING Workers Defense Project and Save our Springs Alliance 11 Motion for Leave to File Amicus Brief; DISMISSING as MOOT Defendants' 12 Motion for Extension of Deadlines; DISMISSING as Moot Joint 13 Motion for Extension of Time to File Discovery Plan and Proposed Scheduling Order. Signed by Judge Sam Sparks. (klw)
__
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
2OU APR 16
PH 1:59
CL
WEST
WHITELODGDGSERVICESCORPORATION
AND AUSTIN 18 HOTEL, LLC,
Plaintiff,
Case No. A-13-CA-825-SS
-vs-
ANTHONY SNIPES AND THE CITY OF
AUSTIN, TEXAS,
Defendant.
ORDER
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and
specifically Defendants Anthony Snipes and the City of Austin's Motion to Dismiss [#6], Plaintiffs
White Lodging Services Corporation and Austin 18, Hotel, LLC's Response [#9], and Defendants'
Reply [#10]; Motion for Leave to File Amicus Brief by Workers Defense Project and Save Our
Springs Alliance [#11]; Defendants' Unopposed Motion to Extend Deadlines for Rule 26(f)
Conference and Proposed Scheduling Order [#12]; and Joint Motion for Extension of Time to File
Discovery Plan and Proposed Scheduling Order [#13]. Having reviewed the documents, the relevant
law, and the file as a whole, the Court now enters the following opinion and orders DENYING the
motion to dismiss.
Background
The dispute in this case centers around the construction of a hotel in downtown Austin.
Plaintiffs White Lodging Services Corporation and Austin 18 Hotel, LLC are the developers of the
new convention hotel. In short, Plaintiffs are at loggerheads with the Defendant City of Austin (the
City) over the alleged rescindment of fee exceptions granted to Plaintiffs to construct the hotel, and
the enforcement of conditions placed on those fee exceptions requiring Plaintiffs to comply with
"prevailing wage policy" during construction of the project.
In 2011, the City and Plaintiffs engaged in a series of discussions concerning economic
incentives the City would be willing to provide in order to induce Plaintiffs to develop a new
convention hotel in downtown Austin. These conversations culminated in the Austin City Council
passing an ordinance on June 29, 2011 (the Fee Waiver Ordinance), which provided $3.8 million in
conditional permit and right-of-way fee waivers to Plaintiffs for the construction of a new downtown
convention hotel.
See
Compl. [#1-1], Ex. A (Fee Waiver Ordinance).
According to Plaintiffs, during the June 29, 2011, meeting, Austin City Councilman Mike
Martinez introduced an amendment to the ordinance, which made compliance with the City's
"prevailing wage policy" an additional condition for Plaintiffs receiving fee waivers. Plaintiffs
objected to inclusion of this amendment, but the ordinance passed over this objection. After the
meeting, Plaintiffs' representative, Deno Yiankes, asked Martinez for guidance on how to comply
with the City's "prevailing wage policy," and Martinez responded by directing Yiankes to Assistant
City Manager Rudy Garza, who was in charge of the City's contract management department, for
directions on how to comply.
Plaintiffs claim they subsequently learned, through communications with Garza and their
own investigation, that the City had no existing "prevailing wage policy" for privately funded
construction projects. According to Plaintiffs, while there is a wage policy in place for federally
funded projects, which includes a specific process for obtaining a "Wage and Hour Division Letter"
from the U.S. Department of Labor and a defined method for appeals, there was no similar policy
-2-
in place for privately funded projects. Because there was no City policy in place governing the
calculation, application, appeal, and enforcement of prevailing wage rates with respect to privately
funded projects, Plaintiffs assert they relied on Garzaat the direction of Councilman Martinezto
provide guidance on the City's "prevailing wage policy" applicable to the project.
Prior to construction, Plaintiffs provided Garza with proposed wages for different
classifications of contractors' employees on the project. Plaintiffs represent their proposed rates
would mean most individual trades would be paid a higher hourly rate on the project than the latest
published prevailing wage rates for these trades on federally funded projects, but some trades would
be paid a lower rate. According to Plaintiffs, if the City had adopted a prevailing wage policy
requiring Plaintiffs to pay the latest published prevailing wage rates on a federally funded project,
then the increase in construction costs would have far exceeded the value of the fee waivers offered
by the City for construction of the hotel.
Garza allegedly approved Plaintiffs' proposed wage schedule, and Plaintiffs commenced
design and construction of the hotel. Plaintiffs claim they would not have done so absent Garza' s
approval and assurances. Soon thereafter, Garza apparently retired as Assistant City Manager, and
Defendant Anthony Snipes replaced him. Snipes allegedly reviewed Garza's position on the City's
prevailing wage policy concerning the hotel project and rejected it. Snipes advised Plaintiffs of a
new policy that would allegedly negate the entire value of the fee waivers Plaintiffs previously
negotiated with the City. Plaintiffs represent that by the time Snipes informed them of these new
wage requirements, they had already relied to their detriment on Garza' s assurances regarding the
City's wage policy by entering contracts with building contractors and beginning construction of the
-3-
hotel. According to Plaintiffs, Snipes has refused to honor Garza' s prior position and demanded they
pay "back wages" in compliance with wage rates different from those previously approved by Garza.
Furthermore, Plaintiffs claim Snipes and the City have retroactively revoked the fee waivers
and demanded payment of previously waived fees. It is unclear to the Court whether the City is
demanding payment of the previously waived fees because it believes Plaintiffs have not complied
with the conditions of the Fee Waiver Ordinance by paying "prevailing wage rates" or if the alleged
revocation of the fee waivers is independent of the "prevailing wage policy" dispute.
Based on this series of events, Plaintiffs filed a lawsuit against the City. First, Plaintiffs
claim the City has revoked vested benefits without due process. According to Plaintiffs, the City,
at the time it passed the Fee Waiver Ordinance requiring compliance with "the City's prevailing
wage policy," did not have a "prevailing wage policy" for privately funded projects, and the City,
to date, has yet to provide Plaintiffs any rules, regulations, or written procedures which describe such
a policy, including any exceptions, allowed adjustments, enforcement policies, hearing procedures,
or appeal rights. In addition, Plaintiffs complain the City has now revoked the fee waivers they
relied upon when contracting for construction of the hotel and have done so without any
constitutionally adequate administrative hearing or right of administrative appeal.
In addition to complaining of the revocation of the fee waivers, Plaintiffs resist the City's
attempts to now collect those fees on the ground they are unconstitutional exactions. Plaintiffs claim
to be the tenant/lessee for the real property on which they are constructing the hotel, and as lessee
claim to have vested property rights in the real property, including any right, title, or interest of the
fee owner of the property to the use of the abutting public right-of-ways during the term of the lease.
This vested property right, according to Plaintiffs, allows them to temporarily encroach on the right-
of-way for the purpose of construction access and staging. While Plaintiffs acknowledge the City
may reasonably regulate this right-of-way to protect public health, safety, and welfare under its
police power, Plaintiffs complains these feeswhich would amount to several million dollarsare
excessive, unreasonable, arbitrary, and not justified by any legitimate exercise of police power.
Specifically, Plaintiffs have asserted four basic causes of action seeking declaratory and
injunctive relief on each. First, Plaintiffs claim the City has violated or will violate their rights to
procedural due process under the Fifth and Fourteenth Amendments of the U.S. Constitution and 42
U.S.C.
§
1983. Specifically, Plaintiffs want to prohibit the City from (1) revoking the fee waivers
and retroactively changing the City's "prevailing wage policy", and (2) revoking the fee waivers
absent the publication of and adherence to written procedures which provide constitutionally
adequate notice, opportunity to be heard before an impartial tribunal, and adequate appeal
procedures.
Second, Plaintiffs claim the City has violated or will violate their rights to substantive due
process under the Fifth and Fourteenth Amendments of the U.S. Constitution and 42 U.S.C.
§
1983.
Specifically, Plaintiffs claim the right-of-way fees sought by the City are arbitrary and unreasonable,
and have no substantial relation to the public health, safety, morals, or general welfare.
Third, Plaintiffs claim the City has violated or will violate their rights under the Fifth and
Fourteenth Amendments of the U.S. Constitution and 42 U.S.C.
§
1983 because the fees it seeks to
collect are unconstitutional exactions as a condition of Plaintiffs exercising their vested property
rights with respect to reasonable construction access and staging on the right-of-way abutting their
property.
-5-
Fourth, Plaintiffs claim the City has committed or will commit ultra vires acts because the
right-of-way fees are not authorized by the Austin City Charter or Austin City Ordinances, and/or
are prohibited by the Texas Constitution.
The City disputes Plaintiffs' claims and has moved to dismiss them based on Rules 12(b)(1)
and 12(b)(6). The City seeks dismissal on a variety of grounds but does not clearly segregate its
12(b)(1) arguments from its 12(b)(6) arguments. The Court has done its best to divide the City's
arguments into the two categories. First, the City challenges jurisdiction, arguing the claims are not
ripe for review, Plaintiffs lack standing, the City and Snipes are immune from liability, and the Court
should decline to exercise jurisdiction based on the Pullman abstention doctrine. Second, the City
contends Plaintiffs have failed to state a procedural due process claim because they were given due
process via a public hearing on August 8, 2013. Plaintiffs have responded, the City has replied, and
the motion is ripe for the Court's review.
Analysis
I.
Rule 12(b)(1)
A.
Legal Standard
Because federal courts have limited jurisdiction, a court must dismiss any case if it lacks
subj ect-matter jurisdiction over the claims. FED. R. Civ. P. 12(b)(1); Owen Equip. & Erection Co.
v. Kroger,
437 U.S. 365, 374(1978). A party seeking to invoke federal jurisdiction bears the burden
of demonstrating the exercise of that jurisdiction is proper. Rivera-Sanchez v. Reno, 198 F.3d 545,
546 (5th Cir. 1999). The court "must presume that a suit lies outside [its] limited jurisdiction, and
the burden of establishing federal jurisdiction rests on the party seeking the federal forum." Howery
v.
Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001). A facial attack on a complaint requires the
court to evaluate whether the plaintiff has sufficiently alleged a basis of subject matter jurisdiction,
and the allegations in the complaint are to be taken as true; however, "a factual attack challenges the
existence of subject-matterjurisdiction in fact, irrespective of the pleadings, and matters outside the
pleadings, such as testimony and affidavits, may be considered." Menchaca
v.
Chrysler Credit
Corp., 613 F.2d 507, 511 (5th Cir. 1980).
B.
Application
1.
Ripeness
The City argues, because Plaintiffs have not paid any amount of the right-of-way fees they
assert the City is trying to collect, the claims, at least to the extent they challenge the collection of
these fees, are not ripe for review.
Article III ofthe United States Constitution limits federal courts to deciding only actual cases
or controversies. U.S. CONST. art. III,
§
2. Courts have therefore developed the justiciability
doctrines of standing, mootness, political question, and ripeness, which "all originate in Article III's
'case' or 'controversy' language." DaimlerChrysler Corp.
v.
Cuno, 547 U.S. 332, 352 (2006).
Specifically, the ripeness doctrine also is drawn "from prudential reasons for refusing to exercise
jurisdiction." Nat'lParkHospitalityAss 'n v. Dep 't oflnterior, 538 U.S. 803, 808 (2003) (quoting
Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993)). The basic rationale of the ripeness
doctrine "is to prevent the courts, through avoidance of premature adjudication, from entangling
themselves in abstract disagreements." Abbott Labs.
v.
Gardner, 387 U.S. 136, 148 (1967).
"A court should dismiss a case for lack of 'ripeness' when the case is abstract or
hypothetical." New Orleans Pub. Serv., Inc. v. Council ofNew Orleans, 833 F.2d 583, 586 (5th Cir.
1987). "The key considerations are 'the fitness of the issues for judicial decision and the hardship
-7-
to the parties of withholding court consideration." Id. (quotingAbbottLabs., 387 U.S. at 149). "A
case is generally ripe if any remaining questions are purely legal ones; conversely, a case is not ripe
if further factual development is required." Id. at 587. "However, 'even where an issue presents
purely legal questions, the plaintiff must show some hardship in order to establish ripeness."
Choice Inc.
Inc.
v.
of Tex.
v.
Greenstein, 691 F.3d 710, 715 (5th Cir. 2012) (quoting Cent. &S.W. Servs.,
EPA, 220 F.3d 683, 690 (5th Cir. 2000)).
In this case, the Court concludes Plaintiffs have sufficiently alleged an imminent injury
despite the fact they have apparently not paid any of the disputed right-of-way fees. The events
described in the complaint and the City's attempts to collect these fees are not abstract or
hypothetical. Indeed, Plaintiffs have alleged Defendant Snipes and the City have retroactively
revoked the fee waivers and are demanding Plaintiffs pay these fees. The City has not denied this
allegation. Apparently, the parties have agreed the City would not halt the construction of the hotel
by prohibiting the use of the right-of-way despite Plaintiffs' refusal to pay the right-of-way fees. See
Defs.' Mot. Dismiss [#6], at 2 n.1. The parties also agreed to Plaintiffs depositing the amount of
money owed in disputed fees into the registry of the Court, or into some other interest-bearing
escrow account, although it is unclear if this has actually occurred. Id. Nevertheless, it illustrates
the City's intent to collect these fees and the imminence of injury Plaintiffs face if these fees are
unconstitutional as
alleged.1
'The City indicates Plaintiffs have been, and perhaps still are, occupying the right-of-way under a temporary
use of right-of-way permit, and although Plaintiffs have not paid for this permit, the City has not instituted any
enforcement actions against Plaintiffs as permitted by the Austin City Code. See Defs.' Mot. Dismiss [#6], at 3.
Plaintiffs are not required to pay the fees before challenging them as unconstitutional, and
seeking declaratory and injunctive relief. Plaintiffs' claims regarding the City's collection of rightof-way fees previously waived are ripe for review.
2.
Standing
The City also contends Plaintiffs lack standing to challenge the right-of-way fees. The
standing requirements of Article III simply require the following:
"First, the plaintiff must have suffered an 'injury in fact'an invasion of a legally
protected interest which is (a) concrete and particularized, and (b) 'actual or
imminent, not "conjectural or hypothetical." Second, there must be a causal
connection between the injury and the conduct complained ofthe injury has to be
'fairly. . . trace[able] to the challenged action of the defendant, and not ... thEe] result
[of] the independent action of some third party not before the court.' Third, it must
be 'likely,' as opposed to merely 'speculative,' that the injury will be 'redressed by
a favorable decision."
United States v. Windsor, 133 S. Ct. 2675, 2685-86 (2013) (quoting Lujan v. Defenders of Wildlife,
504 U.S. 555, 560-61 (1992)).
a.
The Parties' Respective Rights in the Streets of Austin
The City's standing arguments essentially challenge whether Plaintiffs have a "legally
protected interest" at stake in the property, which would give them standing to challenge the fees.
But in characterizing Plaintiffs' complaint, the City sets up strawman contentions, which do not
accurately represent Plaintiffs' position.
In particular, the City understands Plaintiffs to be
"challeng[ing] the City's authority to charge them any amount (a single cent) for encroachment upon
and temporary use of the City's right-of-way in the public streets of the City of Austin." See Defs.'
Mot. Dismiss [#6], at 1. Under this view, the City seems to think Plaintiffs are arguing the City has
either no property interests or inferior property interests to those of Plaintiffs. Plaintiffs, however,
are not contending the City has no rights in the public streets, nor are they contending the City has
no right to exact fees. To the contrary, Plaintiffs acknowledge in their complaint that the City may
charge fees under its police power.
See
Compl. [#1], ¶ 24 (conceding Plaintiffs' property right
allowing them to temporarily encroach on the right-of-way for the purpose of construction access
and staging is "subject to reasonable police power regulations to protect public health, safety and
welfare"). Plaintiffs are not challenging the City's authority to charge them any amount at all, but
rather are alleging the fees the City seeks to collect in this case are "excessive, unreasonable,
arbitrary and not justified by any legitimate exercise of police power." Id., ¶ 24. Moreover,
Plaintiffs are challenging the collection of fees in this case on the additional ground the City
previously waived these fees and has now revoked the waiver without due process.2
Having clarified the actual dispute at issue, the parties do not appear to disagree that owners
of property abutting streets in Austin have fee title to the center of the street subject to the
reservations, rights, privileges, and easements of the City. Moreover, the parties do not seem to
dispute that abutting owners have a right to reasonable and necessary use of the right-of-way for
temporary storage of building materials during construction. Finally, the parties do not seem to
2Concerning what process exists for the granting of fee waivers and their revocation, the Court is unclear.
Furthermore, the Court is not sure whether any process or state remedies were pursued by Plaintiffs prior to filing this
lawsuit. The City requests the Court decline to exercise jurisdiction and allow a state court to preside over an inverse
condemnation proceeding. See Defs.' Mot. Dismiss [#6], at 13. Alternatively, the City indicates it would be willing to
provide a method for Plaintiffs to make arguments and offer evidence in an administrative proceeding before the City.
Id. at 13-14. Plaintiffs counter that § 1983 plaintiffs are not generally required to exhaust state judicial or administrative
remedies, any exhaustion requirement is left to this Court's discretion, and the "denial ofjust compensation" requirement
has been held inapplicable to injunctive and declaratory claims concerning purely monetary exactions. See Pls.' Resp.
[#9], at 6-7. Based on the parties' briefing, the Court cannot discern what process exists and whether it has been
exhausted. Moreover, the Court notes generally exhaustion of state remedies is not required for § 1983 litigation. See
Monroe v. Pape, 365 U.S. 167, 183 (1961) (finding exhaustion of state judicial remedies unnecessary); McNeese v. Bd.
of Educ., 373 U.S. 668, 671 (1963) (finding exhaustion of state administrative remedies unnecessary). For now, the
Court finds Plaintiffs' allegation that the fees were revoked without due process sufficient to withstand the City's motion
to dismiss.
-10-
dispute the City has some degree of authority to charge fees for temporary use of the right-of-way.
Where the parties diverge is over whether the fees at issue in this care fall within this authority. The
Court does not decide that issue at this time, but merely finds property owners do have standing to
challenge temporary use of right-of-way fees imposed by the City.
b.
Whether Tenants have Standing
The next question becomes whether Plaintiffs, as the lessee of the property, "stand in the
shoes" of the property owners and hold the same right to challenge these fees. The City suggests
there is at least an "issue of whether Plaintiffs, who are admittedly the 'developer' and 'tenant' of
the private property abutting city streets possess standing to bring any claim based on real property
interests [held by the property owner]." Defs.' Mot. Dismiss [#6], at 5. Plaintiffs respond that
leasehold interests have been recognized as a protected property right under the Constitution. See
Alamo Land & Cattle Co., Inc.
v.
Arizona, 424 U.S. 295, 303 (1976). Plaintiffs also contend Texas
law recognizes leasehold interests as constitutionally protected property rights. See, e.g., State v.
Cent. Expressway SignAssocs., 302 S.W.3d 866, 873 (Tex. 2009);Motiva Enters., LLCv. McCrabb,
248 S.W.3d 211, 214 (Tex.
App.Houston [1st Dist.] 2007, pet. denied).
In their complaint, Plaintiffs allege Austin 18 Hotel is the tenant under a 99-year ground lease
of real property abutting the right-of-ways in question, and as lessee it holds "any right, title or
interest of the fee owner of the property to the use of the abutting public right-of-ways during the
terms of the lease." Compl. [#1], ¶ 21. The Court concludes Plaintiffs' allegations are sufficient to
place them in the shoes of the property owners and to withstand the City's suggestion there maybe
an issue of standing because Plaintiffs are the lessee, not the actual property owner. The City is
seeking these fees from the Plaintiffs, and the Plaintiffs stand to suffer injury in the form of these
-11-
fees and potential delays to their construction project. As such, Plaintiffs have standing to oppose
these fees.
c.
Whether Property Owners with Subservient Rights have Standing
The City also contends the Plaintiffs do not have standing because property owner's rights
in abutting streets are "subservient" to the City's rights as holder of a public easement in the streets.
See Defs.' Mot. Dismiss [#6], at 11. Taking this proposition as true, the Court fails to see how
having a "subservient" right equals a lack of standing. Certainly the City is not suggesting it can
charge whatever fee it pleases, and the property owner with a "subservient" right has no standing to
oppose said fee. The Court rejects this argument.
In sum, Plaintiffs' allegations sufficiently establish they have standing to challenge the fees
the City is purporting to collect.
3.
Immunity
The City argues it and Defendant Snipes are immune from suit and liability because
"[g]enerally, cities are immune from suit for their governmental functions." See Defs.' Mot. Dismiss
[#6], at 7-8 (citing Tooke
v.
City
of Mexia, 197 S.W.3d 325, 343 (Tex. 2006)). The Court fails to
see how Tooke is applicable and supplies a basis for invoking immunity in this case considering it
involved the City of Mexia' s use of immunity in a breach of contract case brought against it in state
court. Tooke, 197 S.W.3d at 329. The Supreme Court of Texas explained in Tooke that when a
governmental unit enters into a contract, it waives immunity from liability, but it does not waive
immunity from suit. Id. at 332.
This case, however, is not a breach of contract claim brought in state court but rather is
essentially a constitutional and
§
1983 claim brought in federal court. Qualified immunity is not
-12-
available in
§
1983 cases against municipalities and against individuals where injunctive relief is
sought instead of or in addition to damages. See Pearson v. Callahan, 555 U.S. 223, 242 (2009)
(citing Cnty. of Sacramento v. Lewis, 523 U.S. 833, 841 n.5 (1998)).
Therefore, the City fails to explain why it is entitled to an immunity defense, and the Court
denies this ground for dismissing the
4.
case.3
Pullman Abstention
The City alternatively requests the Court decline to exercise jurisdiction under the Pullman
abstention doctrine. Where state law is uncertain and a clarification of state law might make a
federal court's determination of a constitutional question unnecessary, the federal court should
abstain until the state court has had an opportunity to resolve the uncertainty as to the state law. R.R.
Comm 'n of Tex. v. Pullman Co., 312 U.S. 496, 500-01 (1941). Abstention is the exception, not the
rule. See Cob. River Water Conservation Dist.
v.
United States, 424 U.S. 800, 813 (1976).
In the instant case, the City contends this case would require the Court to make preliminary
determinations of state law before reaching any of Plaintiffs' constitutional claims, and Plaintiffs'
constitutional claims present unique questions involving state law. The Court declines to apply the
Pullman doctrine in this case. First, as described above in Part B(II)(a), the Court does not think the
parties disagree as to the state law issues in this case as much as the City suggests. Second, the mere
fact the Court may have to make determinations of state lawa task the federal courts engage in
routinelydoes not mean the Court should abstain from handling a case. The Court does not think
3me City also references the Texas Tort Claims Act to suggest it has not waived immunity in this case, but
Plaintiffs have not asserted any tort actions in their complaint.
-13-
this case represents the sort of exceptional circumstances where Pullman abstention would be
appropriate, and the Court denies the City's request.
II.
Rule 12(b)(6)
A.
Legal Standard
Federal Rule of Civil Procedure 8(a)(2) requires a complaint contain "a short and plain
statement of the claim showing that the pleader is entitled to relief."
FED.
R.
Civ. P.
8(a)(2). A
motion under Federal Rule of Civil Procedure 12(b)(6) asks a court to dismiss a complaint for
"failure to state a claim upon which relief can be granted."
FED.
R. CIV. P. 12(b)(6). In deciding a
motion to dismiss under 1 2(b)(6), a court generally accepts as true all factual allegations contained
within the complaint. Leatherman
v.
Tarrant Cnty. Narcotics Intelligence & Coordination Unit, 507
U.s. 163, 164 (1993). However, a court is notbound to accept legal conclusions couched as factual
allegations. Papasan
v.
A/lain, 478 U.S. 265, 286 (1986). Although all reasonable inferences will
be resolved in favor of the plaintiff, the plaintiff must plead "specific facts, not mere conclusory
allegations." Tuchman
v.
DSC Commc 'ns Corp., 14 F.3d 1061, 1067 (5th Cir. 1994). The plaintiff
must plead sufficient facts to state a claim for relief that is facially plausible. Ashcroft v. Iqba/, 556
U.S. 662, 678 (2009); Bell Atl. Corp.
v.
Twombly, 550 U.S. 544, 570 (2007). "A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. Although
a plaintiff's factual allegations need not establish the defendant is probably liable, theymust establish
more than a "sheer possibility" that a defendant has acted unlawfully. Id. Determining plausibility
is a "context-specific task," that must be performed in light of a court's "judicial experience and
-14-
common sense." Id. at 679. In deciding a motion to dismiss, courts may consider the complaint,
as well as other sources courts ordinarily examine when ruling on Rule 1 2(b)(6) motions to dismiss,
such as documents incorporated into the complaint by reference, and matters of which a court may
take judicial notice.
B.
Tellabs, Inc.
v.
Makor Issues
& Rights, Ltd.,
551
U.S. 308, 322 (2007).
Application
As noted above, the City did not clearly separate its 12(b)(1) arguments from its 12(b)(6)
arguments, and some of them overlap. Consequently, some of the 1 2(b)(6) arguments have already
been addressed above, but the Court here addresses the City's contention that Plaintiffs' procedural
due process claim fails because they received such process in the form of a public hearing on August
8, 2013.
The City contends the temporary use of right-of-way fees and the City's interpretation of the
Fee Waiver Ordinance from June 29, 2011, was the subject of a public hearing on August 8, 2013,
at which Plaintiffs' corporate representative and lawyer each spoke on behalf of Plaintiffs' position.
Plaintiffs contend this meeting did not satisfy procedural due process and did not negate Plaintiffs'
allegation there is a lack of written policies or procedures to administer the fee waiver ordinance and
a lack of a constitutionally adequate administrative hearing or right of appeal with respect to the
revocation of such waivers. According to Plaintiffs, the hearing on August 8, 2013, merely
considered an ordinance to amend the Fee Waiver Ordinance to provide greater clarity, and the City
Council did not consider the revocation of Plaintiffs' past fee waivers under the Fee Waiver
Ordinance.
At this stage, the Court finds sufficient Plaintiffs' allegation there is no established process
in place for revoking fee waivers and for retroactively changing the "prevailing wage policy" as
-15-
Plaintiffs allege. The Court does not decide today whether the meeting on August 8, 2013, satisfied
due process requirements.
III.
Motion for Leave to File Amicus Brief by Workers Defense Project and Save Our
Springs Alliance
The Workers Defense Project and the Save Our Springs Alliance filed a motion for leave to
file an amicus brief in this case in support of the City. Plaintiffs have not filed any response in
opposition to this motion. Because the Court sees no reason to deny this motion for leave, it is
GRANTED. The Court has reviewed and considered the amicus brief in issuing this order.
IV.
Motions for Extension of Time
During the pendency ofthe motion to dismiss, the parties have been negotiating the proposed
scheduling order and discovery plan. The City originally filed an Unopposed Motion to Extend
Deadlines for Rule 26(f) Conference and Proposed Scheduling Order [#12], requesting ten days
following the City's deadline for filing an answer following the Court's ruling on their motion to
dismiss.
The parties later filed a Joint Motion for Extension of Time to File Discovery Plan and
Proposed Scheduling Order [#13], in which they informed the Court they conducted their Rule 26(f)
on March 19, 2014. They requested additional time to file the proposed discovery plan and
scheduling order, and on April 9, 2014, they filed their proposed scheduling order and discovery
plan.
Since the parties already conducted the Rule 26(f) Conference and submitted a proposed
discovery plan and scheduling order, there is no longer any need for any extensions of time for these
matters. Therefore, the Court DISMISSES AS MOOT both motions.
-16-
Conclusion
Having read the parties' pleadings and briefs, the Court is not entirely clear on the nature of
this case but concludes dismissal is inappropriate at this stage of the litigation. In sum, it appears
the City offered Plaintiffs a $3.8 million incentive to construct a downtown hotel with the condition,
among others, Plaintiffs pay workers on the project in compliance with the City's "prevailing wage
policy." V/hat seemed like a good deal for all turned sour when the parties realized there was no
such policy in place. Plaintiffs feel they are paying more-than-fair wages in compliance with the Fee
Waiver Ordinance and consistent with their negotiations with City officials. The City apparently
disagrees and seeks payment of the fees. Plaintiffs resist the City's attempts to retroactively alter the
meaning of its "prevailing wage policy" and collect fees without due process. Moreover, Plaintiffs
challenge the fees on substantive due process grounds. The Court finds Plaintiffs' allegations are
sufficient to survive the Rule 12 stage, and DENIES the City's motion to dismiss.
Accordingly,
IT IS ORDERED that Defendants Anthony Snipes and the City of Austin's Motion
to Dismiss [#6] is DENIED;
IT IS FURTHER ORDERED that the Motion for Leave to File Amicus Brief by
Workers Defense Project and Save Our Springs Alliance [#11] is GRANTED;
IT IS FURTHER ORDERED that Defendants' Unopposed Motion to Extend
Deadlines for Rule 26(f) Conference and Proposed Scheduling Order [#12] is DISMISSED
AS MOOT;
-17-
IT IS FINALLY ORDERED that the Joint Motion for Extension
of Time to File
Discovery Plan and Proposed Scheduling Order [#13] is DISMISSED AS MOOT.
SIGNED this the
/Thay of April 2014.
UNITED STATES DWRICT JUDGE
825 mtd ordjtwfnn
18
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?