Rosenbaums Order's

CITY HALL SCOOP

Case 0:06-cv-02860-JMR-FLN Document 78 Filed 12/13/2007 Page 1 of 17

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

06-CV-2860(JMR/FLN)

Michael Thomas, Brian )

Conover, and Frederick Newell

vs. 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 &

1Because this is a motion for summary judgment, the facts are

taken in the light most favorable to plaintiffs

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

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.

2

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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

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.

3

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

accepted.

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

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

accepted.

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,

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

business.

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

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.

3

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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

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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

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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