Mountain West Holding Co. v. State of Montana

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAY 16 2017
MOLLY C. DWYER, CLERK
FOR THE NINTH CIRCUIT U.S. COURT OF APPEALS

MOUNTAIN WEST HOLDING CO., INC., No. 14-36097

Plaintiff-Appellant, D.C. No. 1:13-cv-00049-DLC

v.
MEMORANDUM *
THE STATE OF MONTANA; et al.,

Defendants-Appellees,

and

PATTI MCCUBBINS, MDT's Civil Rights
Bureau Chief and DBE Liaison Officer;
named only in her official capacity,

Defendant.

MOUNTAIN WEST HOLDING CO., INC., No. 15-35003

Plaintiff-Appellee, D.C. No. 1:13-cv-00049-DLC

v.

THE STATE OF MONTANA; et al.,

Defendants-Appellants,

and

*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
PATTI MCCUBBINS, MDT's Civil Rights
Bureau Chief and DBE Liaison Officer;
named only in her official capacity,

Defendant.

Appeal from the United States District Court
for the District of Montana
Dana L. Christensen, Chief Judge, Presiding

Argued and Submitted March 10, 2017
Portland, Oregon

Before: LEAVY and FRIEDLAND, Circuit Judges, and BENITEZ,** District
Judge.

Montana and its state Department of Transportation receive federal funds for

transportation projects. As a condition of accepting those dollars, the State must

set up a program to avoid discrimination against “small business concerns owned

and controlled by socially and economically disadvantaged individuals.” See

Moving Ahead for Progress in the 21st Century Act, Pub. L. No. 112–141,

§ 1101(b)(3), 126 Stat. 405, 415 (2012). Federal law and regulations require states

to presume that women and certain racial and ethnic minorities are economically

and socially disadvantaged and authorizes states to set race- and gender-conscious

contract goals in certain circumstances. See W. States Paving Co. v. Wash. State

**
The Honorable Roger T. Benitez, United States District Judge for the
Southern District of California, sitting by designation.

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Dep’t of Transp., 407 F.3d 983, 988-90 (9th Cir. 2005). These preferred

contractors are commonly referred to as disadvantaged business enterprises or

“DBEs.”

Mountain West Holding Company installs signs, guardrails, and concrete

barriers on highways in Montana. It competes to win subcontracts from prime

contractors who have contracted with the State. It is not owned and controlled by

women or minorities. Some of its competitors are. In this case it claims that

Montana’s DBE goal-setting program unconstitutionally required prime

contractors to give preference to these minority or female-owned competitors,

which Mountain West argues was a violation of 42 U.S.C. § 1983 and Title VI of

the Civil Rights Act of 1964, 42 U.S.C. § 2000d, et seq.

The district court granted summary judgment to the State, and Mountain

West appealed. Montana also appealed the district court’s threshold determination

that Mountain West had a private right of action under Title VI, and it appealed the

district court’s denial of the State’s motion to strike an expert report submitted in

support of Mountain West’s motion.

We dismiss Mountain West’s appeal as moot to the extent Mountain West

pursues equitable remedies, affirm the district court’s determination that Mountain

West has a private right to enforce Title VI, affirm the district court’s decision to

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consider the disputed expert report, and reverse the order granting summary

judgment to the State.

I. Mootness

Montana does not currently employ gender- or race-conscious goals, and the

data it relied upon as justification for its previous goals are now several years old.

Mountain West’s claims for injunctive and declaratory relief are therefore moot.

See, e.g., Los Angeles County v. Davis, 440 U.S. 625, 631-34 (1979); Ctr. For

Biological Diversity v. Lohn, 511 F.3d 960, 963-64 (9th Cir. 2007).

Mountain West’s Title VI claim is not moot, however. A plaintiff may seek

damages to remedy violations of Title VI, see 42 U.S.C. § 2000d-7(a)(1)-(2);

Alexander v. Sandoval, 532 U.S. 275, 279 (2001), and Mountain West has sought

damages. Claims for damages do not become moot even if changes to a

challenged program make claims for prospective relief moot. See, e.g., Memphis

Light, Gas & Water Div. v. Craft, 436 U.S. 1, 8-9 (1978).

The appeal is therefore dismissed with respect to Mountain West’s claims

for injunctive and declaratory relief; only the claim for damages under Title VI

remains.1

1
We grant Montana’s motion to amend the caption because the Defendants whose
presence in the caption was contested could only be sued for equitable relief, see
Papasan v. Allain, 478 U.S. 265, 278 (1986), and the equitable relief claims must
be dismissed as moot.

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II. Private Rights of Action under Title VI

Reviewing de novo, we conclude for the reasons in the district court’s order

that Mountain West may state a private claim for damages against Montana under

Title VI. See Sandoval, 532 U.S. at 279-80; Cholla Ready Mix, Inc. v. Civish, 382

F.3d 969, 977-78 (9th Cir. 2004); Thinket Ink Info. Res., Inc. v. Sun Microsystems,

Inc., 368 F.3d 1053, 1060 (9th Cir. 2004).

III. The Expert Report of George R. LaNoue

Montana argues that the district court incorrectly admitted the report of

Mountain West’s expert witness, George R. LaNoue, Ph.D. Evidentiary decisions

such as this one are reviewed for an abuse of discretion, even in the context of

summary judgment. School Dist. No. 1J, Multnomah Cty. v. ACandS, Inc., 5 F.3d

1255, 1261 (9th Cir. 1993). A ruling can be reversed only if it was “manifestly

erroneous and prejudicial.” Orr v. Bank of Am., NT & SA, 285 F.3d 764, 773 (9th

Cir. 2002).

We affirm the district court’s decision to consider the report. Although the

report was authenticated after it was filed, the district court made a reasonable

decision to admit and consider it, and it seems Mountain West suffered no

prejudice as a result.

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IV. Discrimination Under Title VI

The district court granted summary judgment to Montana on Mountain

West’s claims for discrimination under Title VI. We review that decision de novo,

applying the same legal standard as the district court. Animal Legal Def. Fund v.

U.S. Food & Drug Admin., 836 F.3d 987, 988-89 (9th Cir. 2016) (en banc) (per

curiam). Evidence is viewed in the light most favorable to the non-moving party.

Id. Simultaneous cross-motions are considered independently under the same

standard. See, e.g., Tulalip Tribes of Wash. v. Washington, 783 F.3d 1151, 1156

(9th Cir. 2015).

Montana does not dispute that its program took race into account.

Classifications based on race are permissible “only if they are narrowly tailored

measures that further compelling governmental interests.” W. States Paving, 407

F.3d at 990 (quoting Adarand Constructors, Inc. v. Peña, 515 U.S. 200, 227

(1995)).2 Montana bears the burden to justify any racial classifications. Id. In an

as-applied challenge to a state’s DBE contracting program, “(1) the state must

establish the presence of discrimination within its transportation contracting

2
As in Western States Paving, we apply here the same test to claims of
unconstitutional discrimination and discrimination in violation of Title VI. See
407 F.3d at 987; see also Sandoval, 532 U.S. at 281 (noting that Title VI
“proscribes only those racial classifications that would violate the Equal Protection
Clause of the Fifth Amendment” (citation and quotation marks omitted)).

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industry, and (2) the remedial program must be ‘limited to those minority groups

that have actually suffered discrimination.’” Assoc. Gen. Contractors of Am. v.

Cal. Dep’t of Transp., 713 F.3d 1187, 1196 (9th Cir. 2013) (quoting W. States

Paving, 407 F.3d at 997-99). Discrimination may be inferred from “a significant

statistical disparity between the number of qualified minority contractors willing

and able to perform a particular service and the number of such contractors

actually engaged by the locality or the locality’s prime contractors.” City of

Richmond v. J.A. Croson Co., 488 U.S. 469, 509 (1989).

Here, the district court held that Montana had satisfied its burden. In

reaching this conclusion, the district court relied on three types of evidence offered

by Montana. First, it cited a study prepared by the D. Wilson Consulting Group

(“Wilson”), which reported disparities in professional services contract awards in

Montana. Second, the district court noted that participation by DBEs declined

after Montana abandoned race-conscious goals in the years following our decision

in Western States Paving, 407 F.3d 983. Third, the district court cited anecdotes of

a “good ol’ boys” network within the State’s contracting industry. We hold that

summary judgment was improper in light of genuine disputes of material fact as to

the Wilson study’s analysis, and because the second two categories of evidence

were insufficient to prove a history of discrimination.

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A. The Wilson Study

Through his expert report and deposition, LeNoue testified that the Wilson

firm relied on several questionable assumptions and an opaque methodology to

conclude that professional services contracts were awarded on a discriminatory

basis. See Thomas v. Newton Int’l Enters., 42 F.3d 1266, 1270 (9th Cir. 1994)

(explaining that conflicting expert testimony is itself “sufficient to create a genuine

issue of disputed fact sufficient to defeat a summary judgment motion”). A few

examples illustrate the areas in which there are disputes of fact as to whether the

Wilson study sufficiently supported Montana’s actions:

1. Our cases require states to ascertain whether lower-than-expected

DBE participation is attributable to factors other than race or gender. W. States

Paving, 407 F.3d at 1000-01. LeNoue argues that the Wilson study did not explain

whether or how Wilson accounted for a given firm’s size, age, geography, or other

similar factors. The Wilson report’s authors were unable to explain their analysis

in depositions for this case. Indeed, even Montana appears to have questioned the

validity of Wilson’s statistical results.

2. Wilson relied on a telephone survey of a sample of Montana

contractors. LeNoue argued that (a) it is unclear how Wilson selected that sample,

(b) only a small percentage of surveyed contractors responded to questions, and

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(c) it is unclear whether responsive contractors were representative of

nonresponsive contractors.

3. Wilson relied on very small sample sizes but did no tests for statistical

significance, and Wilson admitted that “some of the population samples were very

small and the result may not be significant statistically.”

4. LaNoue argued that Wilson gave equal weight to professional services

contracts and construction contracts, but professional services contracts composed

less than ten percent of total contract volume in the State’s transportation

contracting industry.

5. LaNoue argued that Montana incorrectly compared the proportion of

available subcontractors to the proportion of prime contract dollars awarded. The

district court did not address this criticism or explain why Wilson’s comparison

was appropriate.

B. The Post-2005 Decline in Participation by DBEs

We are likewise unable to affirm the district court’s order in reliance on the

decrease in DBE participation after 2005. In Western States Paving, we held that a

decline in DBE participation after race- and gender- based preferences are halted is

not necessarily evidence of discrimination against DBEs. See 407 F.3d at 999 (“If

[minority groups have not suffered from discrimination], then the DBE program

provides minorities who have not encountered discriminatory barriers with an

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unconstitutional competitive advantage at the expense of both non-minorities and

any minority groups that have actually been targeted for discrimination.”); id. at

1001 (“The disparity between the proportion of DBE performance on contracts that

include affirmative action components and on those without such provisions does

not provide any evidence of discrimination against DBEs.”); see also U.S. Dep’t of

Transp., Western States Paving Co. Case Q&A (Dec. 16, 2014) (“In calculating

availability of DBEs, [a state’s] study should not rely on numbers that may have

been inflated by race-conscious programs that may not have been narrowly

tailored.”).

C. Anecdotal Evidence of Discrimination

Without a statistical basis, the State cannot rely on anecdotal evidence alone.

Coral Const. Co. v. King Cty., 941 F.2d 910, 919 (9th Cir. 1991) (“While

anecdotal evidence may suffice to prove individual claims of discrimination,

rarely, if ever, can such evidence show a systemic pattern of discrimination

necessary for the adoption of an affirmative action plan.”); see also Croson, 488

U.S. at 509 (“[E]vidence of a pattern of individual discriminatory acts can, if

supported by appropriate statistical proof, lend support to a local government’s

determination that broader remedial relief is justified.”).

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 * * *

In sum, because we must view the record in the light most favorable to

Mountain West’s case, we conclude that it provides an inadequate basis for

summary judgment in Montana’s favor.

V. Conclusion

We reverse and remand for the district court to conduct whatever further

proceedings it considers most appropriate, including trial or the resumption of

pretrial litigation. See Fed. R. Civ. P. 16(b)(4) (allowing modification of a

scheduling order for good cause); Butler v. San Diego Dist. Attorney’s Office, 370

F.3d 956, 964 (9th Cir. 2004) (noting that a district court had discretion to reopen

discovery on remand given this court’s clarifications on appeal).

DISMISSED in part, REVERSED in part, and REMANDED.

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