Angel Ortiz v. Jerre Riggle

NOT RECOMMENDED FOR PUBLICATION
File Name: 17a0069n.06

No. 16-3465 FILED
Jan 26, 2017
DEBORAH S. HUNT, Clerk
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

ANGEL ORTIZ )
)
Plaintiff, )
)
AO CONSTRUCTION AND RESTORATION, INC. ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
Plaintiff-Appellant, ) COURT FOR THE
) NORTHERN DISTRICT OF
v. ) OHIO
)
JERRE RIGGLE; BRICKLAYERS LOCAL NO. 8 )
)
Defendants-Appellees. )

BEFORE: GIBBONS, ROGERS, and McKEAGUE, Circuit Judges.

ROGERS, Circuit Judge. When Jerre Riggle, an agent of a bricklayers’ union,

investigated Angel Ortiz and his construction company for performing union work with the

company’s nonunion alter egos, which Ortiz and his wife owned as well, Ortiz felt that Riggle

and the labor union had discriminated against him because of his Hispanic race. Ortiz and his

construction company therefore sued Riggle and the labor union, alleging that they had violated

his equal contractual rights as procured under the union’s collective bargaining agreement and as

guaranteed by 42 U.S.C. § 1981. The district court granted summary judgment to the defendants

because Riggle, even if he had made the discriminatory statements that plaintiffs claimed he had

made, was not involved in deciding to pursue the alleged adverse contractual treatment, an audit

of the company by the agency administering the union’s fringe benefit fund. On appeal, the
No. 16-3465, Ortiz v. Riggle

construction company’s only properly raised argument is that Riggle’s alter-ego investigation

itself—as opposed to its alleged connection to the audit—violated the company’s equal

contractual rights. That argument fails because Riggle has shown a nondiscriminatory reason for

conducting the investigation and because, in any event, the investigation did not infringe any of

the company’s rights under § 1981.

AO Construction & Restoration is an Ohio corporation. Angel Ortiz is AO’s sole owner

and operator. Ortiz was born in Puerto Rico. In addition to AO, Ortiz and his wife own two

other companies: Chimney & Fireplace Restoration, and AO Rentals. Many AO employees are

Latin Americans.

Bricklayers Local No. 8 is an Ohio labor union. Jerre Riggle was an employee of an

umbrella organization and was assigned to be the business agent to Local 8. As the business

agent to Local 8, Riggle enforced the terms of Local 8’s collective bargaining agreement, the

CBA, against Local 8’s member-employers. As a part of the CBA, an agency—the Mahoning

Trumbull and Shenango Valley Central Administrative Agency—collected fringe benefits from

the member-employers and administered the fringe-benefits fund on the employees’ behalf.

The district court took pains to understand AO’s claim in this case. AO sued Riggle—

and Local 8 under a theory of vicarious liability—for “falsely accusing AO of failing to make

proper fringe benefit contributions, and attempting to subject AO to an unnecessary and

unwarranted fringe benefit audit” in violation of its equal contract rights guaranteed by 42 U.S.C.

§ 1981.1 In the amended complaint, AO alleged that Riggle called AO’s employees “dumb

Mexicans” and “dirty Mexicans.” The district court noted that AO’s case for intentional

1
In the original complaint, Ortiz—not AO—sued Riggle and Local 8 under § 1981. But because Ortiz was not a
party to the collective bargaining agreement between AO and Local 8, the defendants moved to dismiss for failure to
state a claim upon which relief could be granted. With the district court’s permission, AO filed the amended
complaint, in which AO is the sole plaintiff.

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discrimination, which is an element of a § 1981 claim, rested on Riggle’s alleged racially

discriminatory statements against Ortiz and his employees, which AO argued was direct

evidence of intentional discrimination. But the court struggled to discern just what AO argued

Riggle did to it that violated its equal contractual rights under § 1981. In AO’s brief opposing

the defendants’ summary judgment motion, AO argued “that Riggle maliciously and

discriminatorily initiated the alter ego audit process,” “that Riggle singled out AO for the alter

ego audit,” and “that AO was audited for having created potential alter ego companies.”

AO cited, without explanation, Riggle’s deposition testimony that he investigated whether

AO performed union work disguised as its nonunion alter egos, that he conducted the

investigation as the business agent to Local 8, and that he did so alone. Given the paucity of

explanation, the district court construed the complained-of adverse action, in light of the

amended complaint, to be “falsely accusing AO of failing to make proper fringe benefit

contributions, and attempting to subject AO to an unnecessary and unwarranted fringe benefit

audit.”

Thus having construed AO’s claim, the district court concluded that AO had not shown

intentional discrimination, without which a § 1981 claim cannot stand, because Riggle was not

involved in deciding to audit AO’s contributions to the fringe-benefit fund. The court reasoned:

While the offensive comments attributed to Defendant Riggle, if true, are
very troubling to this court and should be to the Agency and the Union,
there is no evidence before the court that [Riggle] was a final decisionmaker
in respect to the Agency determination to pursue fringe benefit audits
generally or its determination that it would assess contributions against
[AO] based on a determination it had alter egos. This is especially so in
light of the undisputed evidence that the Agency is responsible for
collecting contributions on behalf of the fund, and that it made the ultimate
decision to subject [AO], along with twenty-seven other contributing
employers, to a fringe benefit audit. Neither [AO] or [Riggle and Local 8]
put forth any evidence on who the final decision-maker was relative to

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determining whether fringe benefits would ultimately be pursued against
[AO] based on alter ego status.

Because Riggle was not shown to be a decisionmaker for the Agency’s subjecting AO to a fringe

benefit audit or for the Agency’s assessing fees, if any, based on Riggle’s alter-ego investigation,

the district court concluded that AO had failed to prove intentional discrimination based on

Riggle’s alleged remarks. It therefore granted summary judgment to the defendants.2

On appeal, AO argues only that Riggle’s alter-ego investigation itself infringed its

contractual rights under the CBA in violation of § 1981. AO therefore no longer pursues

damages arising from the Agency’s fringe-benefit audit.3 Its only remaining argument is that

Riggle’s initiation of the alter-ego investigation itself—and not any resulting fees assessed by the

Agency—was discriminatory in violation of AO’s contractual rights. Riggle has stated that he

was the one who initiated that investigation. Nevertheless, the argument fails because Riggle has

shown a nondiscriminatory reason for conducting the alter-ego investigation and because, in any

event, the investigation did not infringe AO’s contractual rights.

Assuming without deciding that AO has properly presented direct evidence of Riggle’s

intentional discrimination, the record indicates that Riggle would have conducted the alter-ego

2
While not directly at issue in this appeal, in a related suit that the district court consolidated with this suit, AO also
sued the Mahoning Trumbull and Shenango Valley Central Administrative Agency, which was responsible for
collecting employees’ fringe benefits from member-employers to the CBA. Pleading that the Agency had charged
fees to AO for allowing AO’s alleged nonmember alter egos— Chimney & Fireplace and AO Rentals, the two
companies owned by Ortiz and his wife—to do union work covered by Local 8’s CBA, AO sought declaratory
judgment that AO Rentals and Chimney & Fire Restoration were not its alter egos. In its answer, the Agency filed a
counterclaim, seeking unpaid contributions for covered work from AO; the Agency also filed a third-party
complaint against Chimney & Fireplace and AO Rentals for the contributions. In that suit, the district court entered
a consent judgment. Under that judgment, AO agreed to pay at least $30,000 to the Agency, and also affirmed that,
under the CBA, its employees would not perform covered work for other companies. Chimney & Fireplace also
agreed not to perform commercial work covered by the CBA. The Agency, in turn, agreed to drop its claims that
Chimney & Fireplace and AO Rentals are AO’s alter egos under the CBA. Again, that consent judgment is not at
issue on this appeal.
3
See, e.g., AO Br. at 3(“The challenged conduct here is the commencement and pursuit of an alter ego
investigation.”); id. at 16–17 (“The trial court’s approach erroneously failed to consider Riggle’s instigation of and
participation in the alter ego investigation of AO as events separate and apart from the fringe benefits audit.”); id. at
21 (“[T]he trial court did not examine whether Riggle’s instigation and pursuit of the alter ego investigation,
independent of the fringe benefits audit, fell within Section 1981(b)’s description of actionable conduct.”).

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investigation even if he had not been motivated by discriminatory animus. When a plaintiff in a

§ 1981 case presents direct evidence of discrimination, the burden of persuasion shifts to the

defendant to prove that the adverse action would have occurred even if the defendant had not

been motivated by discrimination. See, e.g., Johnson v. Univ. of Cincinnati, 215 F.3d 561, 572–

73 (6th Cir. 2000). Here, Riggle has met that burden because he harbored well-founded

suspicions that AO was performing union work through its nonunion alter egos. Riggle had seen

that the same truck would be labeled as an AO truck one day, then as a Chimney & Fireplace

truck the next day, and so on, back and forth; he had noticed that AO and Chimney & Fireplace

shared the same phone number and address; and he had observed that, at a single construction

site contracted to AO, there were various employees wearing AO t-shirts, AO Rentals t-shirts,

and Chimney & Fireplace t-shirts. With that evidence, Riggle has rebutted AO’s claim of his

intentional discrimination by showing nondiscriminatory reasons for his investigation. Without

intentional discrimination, a § 1981 claim fails. Amini v. Oberlin College, 440 F.3d 350, 358

(6th Cir. 2006).

In any event, Riggle’s alter-ego investigation did not infringe AO’s rights under § 1981.

That provision protects the right to “make and enforce” contracts, including a contracting party’s

right to “the enjoyment of all benefits, privileges, terms, and conditions of the contractual

relationship.” 42 U.S.C. § 1981. To argue that Riggle’s alter-ego investigation infringed upon

its § 1981 rights, AO asserts only, without citation, that “non-Hispanic [CBA] signatories [we]re

immune from alter ego investigations by Riggle,” presumably suggesting that it is a privilege of

the CBA that its signatories are free from alter-ego investigations. AO Br. at 21. AO offers no

evidence to support that suggestion. Furthermore, while Riggle stated in deposition that his only

alter-ego investigation was of AO, Riggle also explained that he had investigated other member-

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employers for other violations of the CBA. He explained that his investigation of a refractory

company in Cleveland resulted in a $4,000 fine, that he also investigated a company called

Lencyk for violating the CBA, that he investigated another company called Coates for failing to

pay overtime and fringe benefits, and that he investigated yet another company called Gibson.

Riggle’s many investigations support a conclusion that the CBA’s member-employers were not

privileged to be free from investigations into violations of the CBA. Because AO has not raised

any genuine issue that Riggle’s alter-ego investigation violated its privilege under the CBA,

AO’s § 1981 claim fails.

In its reply brief, AO appears to revert to the argument that it made below and that the

district court rejected: that the Agency’s audit of whether AO had paid its fair share of

contributions was the discriminatory act. Thus AO, after focusing solely on Riggle’s alter-ego

investigation in its opening brief, speaks again of an alter ego “audit” in its reply brief. If in its

reply brief AO is raising a separate claim that Riggle’s discriminatory alter-ego investigation

triggered the Agency’s assessment of additional fees on AO—which AO appears to be raising

using a “cat’s paw” theory of liability for the first time—the claim is doubly forfeited. First, AO

did not make this argument to the district court. “Where . . . a litigant has failed to clearly raise

an argument in the district court, we have concluded that the argument is forfeited.” In re

Anheuser–Busch Beer Labeling Marketing & Sales Practices Litig., 633 F. App’x 515, 529 (6th

Cir. 2016). Second, AO did not make the argument in its opening brief. “[A]s a ‘matter of

litigation fairness,’ we have considered arguments raised for the first time in reply briefs to be

forfeited, since ‘the [opposing] party ordinarily has no right to respond to the reply.’” Id.

(quoting Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 553 (6th Cir. 2008)).

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We affirm the district court’s judgment.4

4
We do not reach Local 8’s alleged vicarious liability for Riggle’s actions because Riggle is not liable.

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