Court Opinion

ID: 5125332
Source: CourtListenerOpinion
Date Created: 2021-11-11 21:01:01.773771+00
Date Added: 2024-06-11T08:22:49.584188
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

DEPAUL INDUSTRIES, an Oregon              No. 20-35598
non-profit corporation,
                   Plaintiff-Appellee,       D.C. No.
                                          6:18-cv-00320-
                  v.                           MC

BENJAMIN JAMES MILLER, personally
and in his official capacity as             OPINION
Assistant City Attorney for the City
of Eugene,
                 Defendant-Appellant,

                 and

CITY OF EUGENE, a municipal
corporation; JOHN RUIZ, in his
official capacity as the City Manager
of the City of Eugene; LAVENA
NOHRENBERG, in her official
capacity as Customer Experience
Manager of the City of Eugene
Public Library; CLAYTON STILWELL,
in his official capacity as Purchasing
Analyst for the Finance Department
of the City of Eugene,
                            Defendants.
2               DEPAUL INDUSTRIES V. MILLER

       Appeal from the United States District Court
                 for the District of Oregon
       Michael J. McShane, District Judge, Presiding

            Argued and Submitted August 9, 2021
                    Seattle, Washington

                   Filed September 28, 2021

        Before: Carlos T. Bea, Daniel A. Bress, and
           Lawrence VanDyke, Circuit Judges.

                  Opinion by Judge VanDyke

                          SUMMARY *

                           Civil Rights

    The panel reversed the district court’s order denying, on
summary judgment, qualified immunity to Benjamin Miller,
an assistant city attorney for the City of Eugene, Oregon, in
an action brought pursuant to 42 U.S.C. § 1983 alleging that
Miller violated plaintiff’s due process rights when he
advised the City not to renew plaintiff’s contracts with the
City.

    Plaintiff, DePaul Industries, is a qualified nonprofit
agency for individuals with disabilities (QRF) under an
Oregon law that requires cities to contract with QRFs in
certain circumstances. DePaul alleged that it held a clearly

    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
              DEPAUL INDUSTRIES V. MILLER                   3

established constitutionally protected property interest in
two 12-month security-service contracts with the City. But
in 2016, the City decided to modify its security services by
requiring that the security service employees be armed and
decided not to renew the contracts.

    The panel held that no court has considered DePaul’s
novel argument that the Oregon QRF statute created a
protected property interest in city contracts. Nor does the
QRF statute on its face definitively resolve this question in
DePaul’s favor. DePaul had not provided any precedent
addressing Oregon’s QRF statute or anything closely
related. While a case need not be “directly on point” to put
the statutory or constitutional question beyond debate, all of
the cases relied on by DePaul and the district court were too
far from “on point.” There was no precedent clear enough
that every reasonable official would interpret the QRF
statute as creating a protected property interest in DePaul’s
annual contracts with the City. DePaul also pointed to no
Oregon cases considering whether the QRF statute allows
the City to end a contract if it seeks new services, such as
armed security. DePaul’s asserted interest was thus not
clearly established, and Miller was entitled to qualified
immunity.

                        COUNSEL

Robert A. Koch (argued), Christopher J. Pallanch, and
Stephanie J. Grant, Tonkon Corp LLP, Portland, Oregon, for
Defendant-Appellant.

Thomas M. Christ (argued) and Drew L. Eyman, Sussman
Shank LLP, Portland, Oregon, for Plaintiff-Appellee.
4                 DEPAUL INDUSTRIES V. MILLER

                               OPINION

VANDYKE, Circuit Judge:

    Benjamin Miller, an assistant city attorney for the City
of Eugene, Oregon (the City), files this interlocutory appeal
from the district court’s denial of his motion for summary
judgment. He seeks qualified immunity from due process
claims brought by DePaul Industries. In this case, we must
decide whether DePaul, a qualified nonprofit agency for
individuals with disabilities (QRF) under Oregon law, held
a clearly established constitutionally protected property
interest in two 12-month contracts with the City. If DePaul
held no clearly established interest, then Miller could not
have violated it when advising the City not to renew
DePaul’s contracts, and he is entitled to qualified immunity
as a matter of law.

    No court has considered DePaul’s novel argument that
the Oregon QRF statute created a protected property interest
in city contracts. Nor does the QRF statute on its face
definitively resolve this question in DePaul’s favor.
DePaul’s asserted interest was thus not clearly established. 1
Miller is entitled to qualified immunity, and we reverse the
district court’s denial of summary judgment as to him.

                          BACKGROUND

    In the early 2000s, the City began contracting for
security services with DePaul Industries. DePaul is
classified as a “qualified nonprofit agency for individuals

    1
       We do not reach the question of whether DePaul had a
constitutionally protected property interest in its contracts with the City.
Instead, our analysis is limited to whether any such interest was clearly
established at the time of the alleged violation.
              DEPAUL INDUSTRIES V. MILLER                    5

with disabilities” or “QRF” under an Oregon law that
requires cities to contract with QRFs in certain
circumstances. Or. Rev. Stat. §§ 279.835(5), 279.850(1)(a).
For more than a decade, DePaul staffed the City’s public
library and eleven of its parking garages with unarmed
security guards. Every twelve months, the City reviewed
DePaul’s contracts for the library and parking garages and
renewed the contracts for the coming year. But in 2016, the
City decided to modify its security services by requiring that
the security service employees be armed and decided not to
renew the contracts. At the time, DePaul was the only QRF
certified by the Oregon Department of Administrative
Services to provide unarmed security services in the county
where the City is located.

I. The City Considers Whether to Renew DePaul’s
   Library Contract.

    The City’s 2016 contract-review process began with a
review of DePaul’s library security services. In response to
alarming increases in drug and alcohol use, disruptive
conduct, and threatening behavior from library patrons, the
library convened a safety committee. Committee members
expressed concerns about the skill level, training, and
professionalism of DePaul security guards, as well as a
general desire for guards to be armed in the future. The
committee began to consider whether the City should seek
better-trained contractors licensed to provide armed security
services for the library. Later, the committee learned that the
City’s performing arts center was planning to seek a bid for
armed security services. DePaul acknowledges it was not
qualified to provide armed services.

    On March 11, 2016, the committee advised the library’s
leadership team to recommend that the City solicit new bids
for armed security services at the library. Later that month,
6              DEPAUL INDUSTRIES V. MILLER

the City informed DePaul that it would soon solicit security
services for the both the library and the performing arts
center. This combined solicitation would request “high
quality uniformed armed and unarmed Security Officer
Services.” During the evaluation and solicitation process,
DePaul continued to provide security services under the two
active City contracts.

II. The Parties Dispute DePaul’s Indemnification
    Obligations under the Existing Parking Garage
    Contract.

    On February 16, 2016, a DePaul parking garage security
guard sued the City for retaliation, claiming that the City,
through DePaul, reduced his hours in response to protected
political speech. Assistant city attorney Benjamin Miller,
who handled this litigation for the City, identified an
indemnification provision in the City’s parking garage
contract with DePaul that required DePaul to defend the City
from claims “arising out of or in any way related to
performance of the Services or other actions or failure to act
by [DePaul] or [DePaul’s] employees.”

     On March 3, 2016, Miller sent a letter to DePaul’s
President and CEO stating “the City’s position that . . .
DePaul is legally obligated to defend and indemnify the City
. . . with respect to [the security guard’s] complaint.”
DePaul disagreed. On May 31, 2016, shortly after the City
published its solicitation for security services at the library,
DePaul informed Miller that it would not indemnify the City
in the lawsuit because the employee was “seek[ing] to hold
the City liable for its own alleged conduct.” But Miller
believed that DePaul had breached the parking garage
security contract by declining to indemnify the City against
this suit.
              DEPAUL INDUSTRIES V. MILLER                   7

    Miller informed the City Attorney of DePaul’s actions
and later noted that the City “ha[s] a current cont[r]act with
[DePaul] that is being renegotiated. I don’t know why it is
being renewed if this is their position.” Asked for his
recommendation on how to secure indemnification, Miller
shared his opinion that “stopping contract negotiations and
getting the principals together may go further for getting
DePaul to cooperate.”

    The same week, DePaul’s President and CEO personally
received notice of the library’s solicitation for security
services. DePaul did not contact the City to discuss the
solicitation, and it did not submit a bid, but several other
security service providers did.

III.   The City Chooses Not to Renew DePaul’s Library
       and Parking Garage Contracts.

    On June 10, 2016, DePaul filed for Chapter 11
bankruptcy. On June 21, 2016, a City purchasing analyst
and the City’s parking operations supervisor discussed
adding parking garage security to the eventual consolidated
contract for the library and performing arts center. This was
possible because the scope of the library solicitation
included any other facilities “covered by a resulting
Contract.” The purchasing analyst concluded that the
parking garages could be added to the library and performing
arts center contract, and impressed upon the parking
operations supervisor the importance of “hav[ing] all the
performance-issue related documentation as you move away
from the DePaul contract,” given the QRF law.

    On June 23, 2016, the City announced its intent to award
the library and performing arts center contract to Advanced
Security, Inc. On June 28, 2016, a city employee informed
DePaul that the City was “working to consolidate all of its
8             DEPAUL INDUSTRIES V. MILLER

security services under one contract” and would “be ending
the [parking garage security services] contract” with DePaul.
The City and Advanced Security, a non-QRF contractor,
amended their contract—which went into effect on August
1, 2016—to cover the additional parking garages.

IV.    DePaul Sues the City and Miller.

    On February 8, 2017, DePaul filed a lawsuit against the
City, Miller in his personal and official capacities, and other
City officials in their official capacities. In the operative
complaint, DePaul alleges that the defendants:

       bypassed the QRF mandate, concocted and
       ratified an RFP [Request For Proposal]
       process that essentially disqualified [DePaul]
       from the Library Contract by the addition of
       an unnecessary requirement for “armed”
       security, and then deprived [DePaul] of the
       Parking Garage Contract as well, in
       retaliation for [DePaul]’s refusal to succumb
       to the City’s wrongful demand for
       contractual indemnity for the City’s own
       conduct which deprived [the DePaul
       employee who filed a lawsuit against the
       City] of his First Amendment rights.

    DePaul brought seven claims for relief against Miller in
his personal capacity, including—as relevant to this
appeal—a claim for violating its federal substantive and
procedural due process rights under 42 U.S.C. § 1983.
Miller moved for summary judgment, arguing in relevant
part that he is entitled to qualified immunity as to the due
process claims.
              DEPAUL INDUSTRIES V. MILLER                   9

     After quoting at length from emails between City
employees (which Miller maintains are privileged and that
the district court should not have required to be disclosed),
the district court determined that “[a] reasonable jury could
infer from this evidence that the City decided it no longer
wanted to contract with [DePaul,] then crafted a pretext, and
Mr. Miller engaged in clearly arbitrary and unreasonable
government conduct to that end.” The district court
concluded that Miller was not entitled to qualified immunity
because DePaul had a clearly established property interest in
its contracts with the City, and a reasonable jury could infer
that Miller participated in the deprivation of this interest.
Accordingly, the court denied his motion for summary
judgment on the due process claims. Miller then filed this
interlocutory appeal.

                STANDARD OF REVIEW

    “When evaluating a denial of summary judgment on the
issue of qualified immunity, our review is limited to the
purely legal issue whether the facts alleged . . . support a
claim of clearly established law.” Alston v. Read, 663 F.3d
1094, 1098 (9th Cir. 2011) (internal quotation marks
omitted) (alteration in original). We review this legal issue
de novo. Hardwick v. County of Orange, 844 F.3d 1112,
1115 (9th Cir. 2017). In the qualified immunity context, “we
lack[] jurisdiction over an interlocutory appeal challenging
the sufficiency of the evidence.” Alston, 663 F.3d at 1098
(internal quotation marks omitted) (alteration in original).
But we may exercise appellate jurisdiction under 28 U.S.C.
§ 1291 over an interlocutory appeal to consider “the purely
legal issue” of whether Miller violated DePaul’s “clearly
established federal rights.” Id.
10             DEPAUL INDUSTRIES V. MILLER

                       DISCUSSION

    Miller is entitled to qualified immunity unless he
violated a clearly established statutory or constitutional
right. Miller could not do so here because DePaul’s claimed
constitutionally protected property interest was not clearly
established.

I. When a Constitutionally Protected Property Interest
   is Clearly Established.

    “Qualified immunity shields government officials from
civil damages liability unless the official violated a statutory
or constitutional right that was clearly established at the time
of the challenged conduct.” Reichle v. Howards, 566 U.S.
658, 664 (2012). Constitutionally protected property
“interests are created and their dimensions are defined by
existing rules or understandings that stem from an
independent source such as state law.” United States v.
Guillen-Cervantes, 748 F.3d 870, 872 (9th Cir. 2014)
(internal quotation marks omitted). “This typically requires
an individual to demonstrate that an existing law, rule, or
understanding makes the conferral of a benefit mandatory.”
Id. (internal quotation marks omitted).

    “To be clearly established, a legal principle must have a
sufficiently clear foundation in then-existing precedent. The
rule must be settled law, which means it is dictated by
controlling authority or a robust consensus of cases of
persuasive authority.” District of Columbia v. Wesby, 138 S.
Ct. 577, 589–90 (2018) (internal citations and quotation
marks omitted). When a rule is merely “suggested” by
precedent it is not clearly established. Id. at 590. Rather,
“[t]he precedent must be clear enough that every reasonable
official would interpret it to establish the particular rule the
plaintiff seeks to apply. Otherwise, the rule is not one that
              DEPAUL INDUSTRIES V. MILLER                   11

every reasonable official would know.” Id. (internal
citations and quotation marks omitted). “[R]easonableness
is judged against the backdrop of the law at the time of the
conduct,” Brosseau v. Haugen, 543 U.S. 194, 198 (2004),
and “a case directly on point” is not required, “but existing
precedent must have placed the statutory or constitutional
question beyond debate.” Ashcroft v. al-Kidd, 563 U.S. 731,
741 (2011).

II. DePaul’s Asserted Interest          Was    Not    Clearly
    Established.

    DePaul’s due process claims against Miller can succeed
only if the protected property interest DePaul asserts was
clearly established when it was allegedly violated. But the
QRF statute is not clear about whether it creates a protected
property interest in annually renewable city contracts. Nor
has any Oregon court considered this question. The two
cases cited by the district court did not involve QRFs at all.
Therefore, even if those cases were precedential (which, as
discussed below, they are not), they could not clearly
establish a protected property interest in DePaul’s QRF
contracts with the City. Without more, we cannot say that
DePaul’s alleged property interest in its contracts has been
“placed . . . beyond debate.” Ashcroft, 563 U.S. at 741.

    DePaul’s arguments to the contrary are unpersuasive.
DePaul asserts that it held a “de facto entitlement” that gives
rise to a protected property interest in its contracts with the
City because: first, DePaul was the only QRF providing
unarmed security services in the area and by Oregon statute
public agencies are required to purchase goods and services
from a “QRF” when a QRF meets the agency’s procurement
requirements, see Or. Rev. Stat. §§ 279.835(5),
279.850(1)(a); and second, DePaul had a long-standing
contractual relationship with the City. But DePaul cannot
12            DEPAUL INDUSTRIES V. MILLER

construct a clearly established interest on its own.     We
reverse the district court for three reasons.

    First, the QRF statute does not clearly confer on DePaul
a property interest in its contracts with the City. The QRF
statute states, in relevant part:

       [A] public agency that intends to procure a
       product or service on the procurement list
       that    the      Oregon      Department      of
       Administrative Services established under
       ORS 279.845 shall, in accordance with the
       department’s rules, procure the product or
       service at the price the department establishes
       from a qualified nonprofit agency for
       individuals with disabilities, provided that
       the product or service is of the appropriate
       specifications and is available within the
       period the public agency requires.

Or. Rev. Stat. § 279.850(1)(a). Various Oregon regulations
expand on the statute, for example, by preventing agencies
from “develop[ing] specifications that inhibit or tend to
discourage” contracting with QRF providers, Or. Admin. R.
125-055-0010(1)(a), and urging agencies to “keep in mind
the purpose of the law: to encourage and assist Individuals
with Disabilities to achieve maximum personal
independence in their communities through productive,
gainful employment by assuring an expanded and constant
market for [QRF] products and services,” Or. Admin. R.
125-055-0010(3).

    The interpretation of the QRF statute is ultimately a
matter for the Oregon state courts. But it is enough for
present purposes that the statute and accompanying
regulations do not unambiguously create the property
                 DEPAUL INDUSTRIES V. MILLER                          13

interest that DePaul claims, and so they cannot, without
more, provide a clearly established right in DePaul’s favor
for purposes of qualified immunity. 2

     Second, DePaul points to no case authority for its claim
here: that the QRF statute created a protected property
interest in DePaul’s annual contracts with the City. For
purposes of qualified immunity, “the clearly established law
at issue must be particularized to the facts of the case.” Perez
v. City of Roseville, 926 F.3d 511, 519 (9th Cir. 2019). The
particular issue here, whether the Oregon QRF statute
required the City to continue contracting with DePaul, is an
unanswered question of state law.

    DePaul points to no Oregon cases considering when, if
ever, contracting with a QRF is mandatory. See BWK, Inc.
v. Dep’t of Admin. Servs., 218 P.3d 156, 161 (Or. Ct. App.
2009) (noting in passing that the QRF statute “requires
public agencies to purchase products and services from
certain nonprofit providers,” but providing the full text of the
statute and referring to this statutory scheme as a “preference
and exemption from competitive bidding” (emphases
added)); see also Doyle v. City of Medford, 606 F.3d 667,
671 (9th Cir. 2010) (looking first to how much discretion a
local government has in issuing a statutory benefit to
determine whether individuals had a property interest in that
benefit, and, finding no Oregon courts construing the statute,
certifying the question to the Oregon Supreme Court).

   DePaul also points to no Oregon cases considering
whether the QRF statute allows the City to end a contract if

    2
      DePaul also ignores the fact that the City sought armed security
services and specifically solicited DePaul, who neglected to apply for the
new contract.
14               DEPAUL INDUSTRIES V. MILLER

it seeks new services, such as armed security. And DePaul
points to no Oregon cases considering whether a long-
standing contract with the only qualified QRF in a particular
area creates a protected property interest. Compare with
Perez, 926 F.3d at 519 (“The contours of a right must be
‘sufficiently definite that any reasonable official in the
defendant’s shoes would have understood that he was
violating it.’” (quoting Kisela v. Hughes, 138 S. Ct. 1148,
1153 (2018)). These questions are fundamental to DePaul’s
claim that the statute and its long-standing contract “gave
DePaul . . . a property interest for due process purposes.” 3
But they remain unanswered—far from clearly
established—and no reasonable official could be expected to
know otherwise.

    Third, the district court primarily relied on two District
of Oregon cases to conclude DePaul’s interest was clearly
established—one decided in 2009 (Grabhorn), and the other
decided in 2010 (David Hill). But our precedent dictates that
Grabhorn and David Hill could not clearly establish a
protected property interest in DePaul’s contracts with the
City because these cases do not even consider the Oregon
QRF statute.       In Grabhorn, the court recognized a
constitutionally protected property interest in the plaintiff’s
status as a city-designated waste facility. Grabhorn, Inc. v.

     3
       DePaul cites two Ninth Circuit cases, Shanks v. Dressel, 540 F.3d
1082 (9th Cir. 2008) and Del Monte Dunes at Monterey, Ltd. v. City of
Monterey, 920 F.2d 1496 (9th Cir. 1990), to support its assertion that
“[i]t was clearly established by 2016 that due process prevents
government officials from depriving someone of a property interest for
made-up and retaliatory reasons and thus denying them fair notice and
an opportunity to be heard.” But the separate threshold question here is
whether DePaul had a clearly established property interest in the first
place, not what actions due process demands or prevents once a property
interest has been established.
               DEPAUL INDUSTRIES V. MILLER                     15

Metro. Serv. Dist., 624 F. Supp. 2d 1280, 1286–88 (D. Or.
2009). And in David Hill, the district court recognized a
constitutionally protected property interest in a binding
preliminary plat approval that the plaintiff received from a
city. David Hill Dev., LLC v. City of Forest Grove, 688 F.
Supp. 2d 1193, 1218–19 (D. Or. 2010). Neither case even
mentions the QRF statute. So, even if the cases were binding
precedent, neither is sufficient to “place[] the statutory or
constitutional question” about whether the QRF statute
created a protected property interest “beyond debate.” White
v. Pauly, 137 S. Ct. 548, 551 (2017) (quoting Mullenix v.
Luna, 577 U.S. 7, 12 (2015)).

    We have explained that “[w]e have been somewhat
hesitant to rely on district court decisions” as clearly
establishing law for purposes of qualified immunity. Evans
v. Skolnik, 997 F.3d 1060, 1067 (9th Cir. 2021). “[A]s the
Supreme Court has pointed out, district court decisions—
unlike those from the courts of appeals—do not necessarily
settle constitutional standards, because a decision of a
federal district court judge is not binding precedent in either
a different judicial district, the same judicial district, or even
upon the same judge in a different case.” Id. (alterations and
internal quotation marks omitted); see also S.B. v. County of
San Diego, 864 F.3d 1010, 1016 (9th Cir. 2017) (rejecting
the argument that one published and one unpublished district
court decision, both factually distinguishable, constituted
clearly established law); Marsh v. County of San Diego,
680 F.3d 1148, 1159 (9th Cir. 2012) (rejecting the argument
that a published federal district court and a published lower
state court decision clearly established a right). This case
validates our hesitancy to rely on district court decisions for
the qualified immunity analysis.
16            DEPAUL INDUSTRIES V. MILLER

    In sum, DePaul has not provided any precedent
addressing Oregon’s QRF statute or anything closely
related. While a case need not be “directly on point” to put
“the statutory or constitutional question beyond debate,”
Ashcroft, 563 U.S. at 741, all of the cases relied on by
DePaul and the district court are too far from “on point.”
There is simply no precedent “clear enough that every
reasonable official would interpret it to establish the
particular rule the plaintiff seeks to apply.” Wesby, 138 S.
Ct. at 590.

    We hesitate to opine further about the meaning of
Oregon’s QRF statute without additional guidance from
Oregon courts. But we need not do so to resolve Miller’s
appeal. As Miller observes, “until the district court’s orders
in this case, no court had ever interpreted Oregon’s QRF
statute to create a protected property interest.” Given the
dearth of law on this issue, we conclude that the property
right asserted by DePaul was not clearly established at the
time of the alleged violation.

                      CONCLUSION

    Miller is entitled to qualified immunity if his conduct did
not violate DePaul’s clearly established statutory or
constitutional rights. The district court found DePaul had a
constitutionally protected property interest in its contracts
with the City. But because this interest was not clearly
established law at the time of Miller’s alleged violation, the
district court erred by denying Miller qualified immunity on
DePaul’s due process claims.

    The judgment of the district court denying Miller’s
motion for partial summary judgment on DePaul’s due
process claims is REVERSED AND REMANDED with
instructions to dismiss those claims.