Northwest Infrastructure LLC v. City of Portland

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

PORTLAND DIVISION

NORTHWEST INFRASTRUCTURE

LLC,

Case No. 3:21-cv-00843-MO

Plaintiff,

OPINION AND ORDER

Vv.

CITY OF PORTLAND, et al.,

Defendants.

MOSMAN, J.,

This matter comes before me on two motions to dismiss: one from Prosper Portland [ECF

the other from the City of Portland [ECF 13]. For the reasons given below, I GRANT Prosper

Portland’s motion to dismiss and DENY the City’s motion as moot.

BACKGROUND

Plaintiff Northwest Infrastructure LLC is an Oregon company that provides general

contracting services. Starks Decl. [ECF 2] Ex. 1 [hereinafter Compl.] 4 6. It brings this action

alleging defendants unlawfully interfered with its bid on a government contract. /d. ] 59-118.

Among those defendants is the Portland Development Commission, also known as Prosper

Portland, a government agency that oversees public bidding on behalf of the city of Portland,

Oregon. Also listed as defendants are the City of Portland, four named Prosper employees, and

five unnamed Prosper employees.

1—OPINION & ORDER

Northwest Infrastructure’s allegations stem from a request for proposals (“RFP”) issued by

Prosper in February 2020. Compl. 4 16. This RFP solicited bids from public contractors on a

contract (“the Contract”) to demolish United States Postal Service facilities and treat surrounding

soil that had been contaminated. /d. After the deadline for submissions passed, Prosper assembled

an evaluation committee to determine which company would receive the Contract. Jd. JJ 18, 24.

This evaluation committee awarded the Contract to NW Demolition, one of Northwest

Infrastructure’s competitors. /d. § 24. However, upon discovering NW Demolition’s bid was based

in part on incorrect information, Prosper convened a second evaluation committee. /d. { 27. The

second evaluation committee conducted a thorough selection process, requesting new proposals

from NW Demolition and Northwest Infrastructure, interviewing representatives from each

contractor, and holding multiple committee meetings. /d. {J 29-33. The committee translated its

findings into scores for the two bidders: NW Demolition received a score of 614 and Northwest

Infrastructure received a score of 615. Jd. ¥ 34.

Now months into its decision-making process, the second evaluation committee sent an

email informing the bidders that the committee would reconvene to “rediscuss” the project given

the proximity in scores. /d. J 38. Despite reconvening, the second evaluation committee’s scores

remained unchanged. /d. § 41. Shortly thereafter, Prosper disbanded the second evaluation

committee and formed a third evaluation committee. /d. § 42. This evaluation committee decided

to award the Contract to NW Demolition. /d. § 44. However, following challenges from Northwest

Infrastructure, Prosper decided to cancel the RFP entirely, awarding the contract to neither bidder.

Id. ¥§ 51-55.

Northwest Infrastructure alleges six claims for relief arising from Defendants’ participation

in the decision to award the Contract to NW Demolition. /d. 59-118. The claims are as follows:

2 —OPINION & ORDER

(1) a 42 U.S.C. § 1983 substantive due process claim; (2) a § 1983 procedural due process claim;

(3) arace-based § 1983 equal protection claim; (4) a “class-of-one” § 1983 equal protection claim;

(5) a 42 U.S.C. § 1981 claim; and (6) an intentional interference with economic relations claim.

Claim One through Claim Five are against the City and Prosper (jointly, “Municipal Defendants”).

Claim Six is against Daniel Spero, Nick Joanna, Kimberly Branam, Elise Hendrickson, and Does

1-5 Gointly, “Individual Defendants”).

Prosper and Individual Defendants move to dismiss all claims. Prosper Mot. to Dismiss

[ECF 7] at 8. The City joins this motion, but also moves to dismiss itself from the case on separate

grounds. Portland Mot. to Dismiss [ECF 13] at 3.

LEGAL STANDARD

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure

to state a claim, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a

claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A pleading that offers only “labels

and conclusions” or “‘naked assertion[s]’ devoid of ‘further factual enhancement’” will not

suffice. /d. (quoting Twombly, 550 U.S. at 555, 557). While the plaintiff does not need to make

detailed factual allegations at the pleading stage, the allegations must be sufficiently specific to

give the defendant “fair notice” of the claim and the grounds on which it rests. Erickson v. Pardus,

551 U.S. 89, 93 (2007) (per curiam) (citing Twombly, 550 U.S. at 555).

DISCUSSION

I. Consideration of External Documents

As a preliminary matter, Prosper asks that I consider two external documents in evaluating

its motion to dismiss: the RFP it issued in February 2020, Starks Decl. [ECF 8] Ex. A [hereinafter

3 — OPINION & ORDER

“RFP” and relevant sections from the Local Contracting Review Board Administrative Rules

(“LCRB”), Starks Decl. [ECF 8] Ex. B [hereinafter “LCRB”].

Generally, review on a motion to dismiss is limited to the complaint itself. Ifa court relies

on materials outside the pleadings to make its ruling, it must treat the motion as one for summary

judgment. Fed. R. Civ. P. 12(d); United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). But

the court may “consider certain materials—documents attached to the complaint, documents ~

incorporated by reference in the complaint, or matters of judicial notice—without converting the

motion to dismiss into a motion for summary judgment.” Jd. at 908-09; see also Durning v. First

Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987).

A document is incorporated by reference if the complaint “refers extensively to the

document or the document forms the basis of the plaintiff's claims.” Ritchie, 342 F.3d at 908. And

courts may take judicial notice of facts that are “not subject to reasonable dispute,” including “the

records and reports of administrative bodies.” /d. at 908 (internal quotations omitted).

The complaint references the RFP repeatedly. See, e.g, Compl. J] 4-5, 11, 16-21, 23-25,

4546, 55-56, 70, 82-83, 90, 101-02, 116. The LCRB is mentioned but a couple of times. Id. JJ

17, 53. However, as an administrative record, the content of the LCRB is not currently in dispute.

Indeed, Northwest Infrastructure does not object to my consideration of them for the purposes of

this motion. Pl.’s Resp. to Prosper Mot. to Dismiss [ECF 9] at 2. As such, I may consider both

the RFP and LCRB for the purposes of this motion.

1. Though it does not challenge the LCRB’s authenticity for the purposes of this motion,

Northwest Infrastructure reserves its right to challenge the application and validity of the copy of

the LCRB provided by Prosper following discovery. Resp. to Prosper Mot. to Dismiss [ECF 9] at

2.

—OPINION & ORDER

IL. Claims One and Two: The Due Process Claims

Prosper argues Northwest Infrastructure’s due process claims should be dismissed because

Northwest Infrastructure did not have a constitutionally protected interest in the Contract it bid on.

Prosper Mot. to Dismiss [ECF 7] at 11-20. Prosper also contends that dismissal of the procedural

due process claim is appropriate because Northwest Infrastructure does not allege it was deprived

of its ability to protest Prosper’s decision not to award it the Contract. Jd. at 20-21. Because I find

that Northwest Infrastructure did not have a protected property interest in the Contract, I need not

address Prosper’s procedural argument.

A. Public Contracts as Protected Property Interests

A successful claim under the Due Process Clause of the Fourteenth Amendment must

allege the plaintiff was deprived of a constitutionally protected interest Brewster v. Bd. of Educ.

of Lynwood Unified Sch. Dist., 149 F.3d 971, 982 (9th Cir. 1998); Nunez v. City of Los Angeles,

147 F.3d 867, 874 (9th Cir. 1998). Prosper argues that federal and Oregon law preclude an

unsuccessful bidder from acquiring a protected property in a public contract. Prosper Mot. to

Dismiss [ECF 7] at 13-20. In turn, Northwest Infrastructure contends it has alleged a sufficient

“reasonable expectation of entitlement.” Pl.’s Resp. to Prosper Mot. to Dismiss [ECF 9] at 9

(quoting Wedges/Ledges of Cal. Inc. v. City of Phx., 24 F.3d 56, 62 (9th Cir. 1994)). I agree with

Prosper.

Property interests originate not from the Constitution itself, but from “an independent

source such as state law.” Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972). Whether

a state law creates a protected property interest depends on the level of deference that law gives to

the decisionmaker in determining who receives the government benefit. Doyle v. City of Medford,

606 F.3d 667, 672 (9th Cir. 2010) (citing Jacobson v. Hannifin, 627 F.2d 177, 180 (9th Cir. 1980)).

5 — OPINION & ORDER

No entitlement exists when the decisionmaker has broad authority in deciding whether to dole out

a benefit. Allen v. City of Beverly Hills, 911 F.2d 367, 370 (9th Cir. 1990). But an entitlement may

exist if the statute contains “particularized standards or criteria.” Doyle, 606 F.3d at 673 (internal

quotations omitted).

B. Prosper’s Discretion in Awarding the Contract

The Oregon Public Contracting Code expresses broad goals and criteria in evaluating bids.

For example, the Code emphasizes the need to “promote efficient use of state and local government

resources” and “allow impartial and open competition.” ORS 279A.015. These subjective

standards are not the kind of “particularized standards or criteria” that form the basis of an

entitlement. Doyle, 606 F.3d at 673 (internal quotations omitted).

Likewise, the RFP gave significant discretion to Prosper in determining whether to award

the Contract. The RFP explains that Prosper would award the Contract to the “highest-ranked

responsive and responsible proposer” based on scores in several subjective categories, such as

work experience and references. RFP at 21—22. Critically, the RFP allowed Prosper to modify

significant aspects of the selection process, empowering Prosper to request additional proposals,

interviews, and modify scores it had given previously. /d. Prosper even had authority to modify or

even cancel the RFP itself. Jd. at 11 (“Prosper Portland, in its sole discretion, reserves the right to

modify any matter contained in this RFP; cancel or suspend this RFP or reject any or all proposals

received in response to this RFP....”). Accordingly, the RFP did little to constrain Prosper’s

discretion in deciding to whom it should award the Contract, indicating no entitlement exists.

Allen, 911 F.2d at 370.

6 — OPINION & ORDER □

C. Prosper’s Discretion After Determining the Highest-Ranked Responsive and

Responsible Proposer

Northwest Infrastructure argues that Oregon law and the RFP deprived Prosper of its

discretion after the second selection committee gave Northwest Infrastructure the highest bidding

score. Pl.’s Resp. to Prosper Mot. to Dismiss [ECF 9] at 11. Under ORS 279€.410(8), a contracting

agency must award a government contract to “the responsible proposer whose proposal is

determined in writing to be the most advantageous to the contracting agency.” The RFP contains

a similar provision, stating that Prosper would “award the Contract to the highest-ranked

responsive and responsible proposer.” RFP at 22. In Northwest Infrastructure’s interpretation, once

Prosper determined that Northwest Infrastructure was responsive, responsible, and the highest-

ranked proposer, Prosper’s discretion vanished, and awarding the contract to Northwest

Infrastructure became mandatory. Pl.’s Resp. to Prosper Mot. to Dismiss [ECF 9] at 12.

To support its position, Northwest Infrastructure cites to Pataula Elec. Membership Corp.

y. Whitworth, 951 F.2d 1238 (11th Cir. 1992). In Pataula, the Eleventh Circuit held that a bidder

had a protected interest in a Georgia public works contract after the relevant state agency

determined it was the “lowest responsible bidder.” Jd. at 1242. There, the relevant state law

required the agency to award the contract to whichever entity it determined was the lowest

responsible bidder. Jd. Pursuant to that law, the Eleventh Circuit found that the lowest responsible

bidder determination conferred a protected property interest upon that bidder. Jd. at 1242-43.

However, Pataula’s scope is limited. In Circa Ltd. y. City of Miami, 79 F.3d 1057, 1061—

62 (11th Cir. 1996), the Eleventh Circuit refused to apply Pataula when the contracting agency

retained discretion to reject “any proposal” and “refuse to execute any contract at all” after making

its initial evaluations. Thus, Pataula is merely an application of the general rule in identifying

7—OPINION & ORDER

protected property interests: there, Georgia law cabined the state agency’s discretion, so the bidder

acquired a protected property interest. See Doyle, 606 F.3d at 673. But when a government

decisionmaker retains its broad authority—as the Miami contracting commission did in Circa after

it received scoring recommendations—there is no protected property interest. See Allen, 911 F.2d

at 370.

The RFP framework here echoes Circa, not Pataula. Here, Prosper maintained significant

discretion after the second evaluation committee assigned its scores. Under the RFP, Prosper could

still modify its evaluations, reject proposals, or cancel the RFP in its entirety, even after settling

on scores for the proposals. RFP at 11-12. And though Oregon law generally requires a contracting

agency to award public contracts to the highest-scoring proposer, ORS 279C.410(8), it allows

contracting agencies to modify that standard in their requests for proposals, ORS 279C.410(5).

Even mote, after officially announcing the highest-ranked proposer, Oregon law gives contracting

agencies discretion to terminate negotiations upon finding that “an impasse has been reached in

negotiations.” Jd. At bottom, the second evaluation committee’s assignment of scores did little to

reduce Prosper’s broad discretion under Oregon law and the RFP.

Because I find that neither Oregon law nor the RFP imposed significant restrictions on

Prosper’s decision-making, Northwest Infrastructure cannot show a protected property interest in

the Contract. Accordingly, I DISMISS Northwest Infrastructure’s Due Process claims with

prejudice.

WI. Claim Four: The Class of One Claim

Northwest Infrastructure’s fourth claim alleges Prosper discriminated against it as a class

of one. Compl. J] 87-94. Under this theory of equal protection, an individual acting under color

of law cannot treat individuals differently without a rational basis for doing so. Village of

8 — OPINION & ORDER

Willowbrook v. Olech, 528 U.S. 562, 564 (2000). Prosper moves to dismiss on several grounds,

including that class-of-one claims should fail as a matter of law in the context of public contract

bidding under Engquist v. Or. Dep’t of Agric., 553 U.S. 591 (2008). Northwest Infrastructure

argues Prosper misunderstands Engquist. Though I decline to make a categorical rule that class-

of-one claims cannot survive in the public contracting context, I agree with Prosper that Engquist

precludes a class-of-one claim in this case.

A. Engquist and Its Progeny

In Engquist, the Supreme Court concluded that “the class-of-one theory of equal protection

does not apply in the public employment context.” 553 U.S. at 598. The Court drew a distinction

between state action that involved merely the enforcement of objective standards and acts “which

by their nature involve discretionary decisionmaking based on a vast array of subjective,

individualized assessments.” Jd. at 603. The former, the Court explained, are classifications that

are expected to apply “‘without respect to persons.’” Jd. at 602 (quoting 28 U.S.C. § 453). But in

the latter category, disparate treatment is expected because “treating like individuals differently is

an accepted consequence of the discretion granted.” Jd. at 603. With this background in mind, the

Court determined that the state’s role as an employer fell into the latter category. Jd. at 604-06.

Specifically, the Court found employment decisions to be “often subjective and individualized,

resting on a wide array of factors that are difficult to articulate and quantify.” Jd. at 604.

Following the rationale of Engquist, several circuit courts have dismissed class-of-one

claims in contexts where the state actor has broad discretion. See Caesars Mass. Mgmt. Co. v.

Crosby, 778 F.3d 327 (1st Cir. 2015) (casino licensing); Flowers v. City of Minneapolis, 558 F.3d

794 (8th Cir. 2009) (police investigative decisions); United States v. Moore, 543 F.3d 891, 901

(7th Cir. 2008) (prosecutorial discretion); Douglas Asphalt Co. v. Qore, Inc., 541 F.3d 1269 (11th

OPINION & ORDER

Cir. 2008) (public contracting). In addressing the same question presented by this case, the

Eleventh Circuit noted “‘obvious’ similarities between government employees and government

contractors,” namely that “‘absent contractual, statutory, or constitutional restriction, the

government is entitled to terminate [employees and contractors] for no reason at all.’” Douglas

Asphalt, 541 F.3d at 1274 (quoting Bd. of Cnty. Comm’rs v. Umbehr, 518 U.S. 668, 674 (1996)).

When declining to extend the Engquist rationale to new settings, circuit courts generally

do so only after finding “objective constraints” limited state action in that context. Hanes v. Zurick,

578 F.3d 491, 495 (7th Cir. 2009) (police investigative decisions); see also Analytical Diagnostic

Labs, Inc. v. Kusel, 626 F.3d 135, 142-43 (2d Cir. 2010) (clinical laboratory licensing); but see

Franks v. Rubitschun, 312 F. App’x 764, 766 n.3 (6th Cir. 2009) (finding Engquist unlikely to

apply outside the context of public employment).

Though the circuit courts have interpreted Engquist with varying degrees of stringency,

compare Flowers, 558 F.3d 794 (finding Engquist precludes class-of-one claims based on police

investigatory decisions), with Hanes, 578 F.3d 491 (finding Engquist does not preclude class-of-

one claims based on police investigatory decisions), the cases form a spectrum when read together.

In a given context, the more discretion the government has, the less appropriate a class-of-one

claim will be. Conversely, when government discretion is constrained by law, a class-of-one claim

is more fitting.

B. Whether the RFP Precludes a Class-of-One Claim

With this sliding scale in mind, I am reluctant to hold—as the Eleventh Circuit did in

Douglas Asphalt—that class-of-one claims are unrecognizable in the public contracting context as

a matter of law. However, given the immense discretion Oregon law and the RFP gave to Prosper,

I find a class-of-one claim inappropriate here. Indeed, the RFP required Prosper to award the

10 — OPINION & ORDER

Contract “based on a vast array of subjective, individualized assessments,” such as the quality of

each bidder’s references, interview performance, and commitment to diversity. Engquist, 553 U.S.

at 603; RFP at 21-22. Moreover, in the same way the State of Oregon had discretion to terminate

its employees at will in Engquist, Prosper had the ability to terminate the RFP whenever it wanted.

Engquist, 553 U.S. at 606; RFP at 11-12. Though some public contracting regimes may limit

government discretion in such a way as to allow the formation of a class of one, this is not one of

them.

Northwest Infrastructure asserts that Prosper lost its discretion when the second evaluation

committee awarded Northwest Infrastructure with the highest score. Pl.’s Resp. to Def.’s Mot. to

Dismiss [ECF 9] at 30—31. In Northwest Infrastructure’s view, the RFP obligated Prosper to award

it the Contract as the highest-ranked proposer. See RFP at 22. Yet, as I explained previously,

Prosper had significant discretion in its operation of the RFP and maintained that discretion after

the second evaluation committee calculated its scores. See ORS 279C.410(5); RFP at 11-12, □□□

22.

I find that a class-of-one claim is a “poor fit” for the facts of this case. Engquist, 553 U.S.

at 605. As a result, 1 DISMISS Northwest Infrastructure’s class-of-one claim with prejudice.

IV. Claim Three: The § 1983 Racial Discrimination Claim

Prosper moves to dismiss Northwest Infrastructure’s 42 U.S.C. § 1983 equal protection

race discrimination claim. Prosper claims that Northwest Infrastructure has failed to allege proof

of discriminatory intent and that its claim therefore cannot stand. Prosper Mot. to Dismiss [ECF

7 at 21. Northwest Infrastructure asserts it has alleged sufficient proof to withstand a motion to

dismiss. Pl.’s Resp. to Prosper Mot. to Dismiss [ECF 9] at 21~25. I agree with Prosper.

11— OPINION & ORDER

To state a claim of disparate treatment—be it under the equal protection clause, Title VIL,

or § 1981—~a plaintiff must allege the defendant acted with discriminatory intent. Gay v. Waiters’

& Dairy Lunchmen’s Union, Loc. No. 30, 694 F.2d 531, 537 (9th Cir. 1982); Flores v. Pierce, 617

F.2d 1386, 1389 (9th Cir. 1980). A successful discrimination action must demonstrate a prima

facie case under the burden-shifting test established by McDonnell Douglas Corp. v. Green, 411

U.S. 792 (1973). But because McDonnell Douglas dictates an “evidentiary standard, not a pleading

requirement,” a plaintiff need not meet the McDonnell Douglas burden-shifting test at the motion-

to-dismiss stage. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 510 (2002) (“The prima facie case

under McDonnell Douglas...is an evidentiary standard, not a pleading requirement.”); Austin v.

Univ. of Or., 925 F.3d 1133, 1136-37 (9th Cir. 2019). Instead, a plaintiff need only make

“sufficient, nonconclusory allegations plausibly linking” the adverse action taken by defendant to

the plaintiff's protected class. Austin, 925 F.3d at 1138. Yet, as a “tool to assist plaintiffs,” I find

McDonnell Douglas helpful in determining whether Northwest Infrastructure has met its burden

to allege discriminatory intent. Costa v. Desert Palace, Inc., 299 F.3d 838, 855 (9th Cir. 2002) (en

banc), aff'd, 539 U.S. 90 (2003); see also PI.’s Resp. to Prosper Mot. to Dismiss [ECF 9] at 21-25

(asserting the complaint alleges facts that could support an inference of discrimination under

McDonnell Douglas).

Translating the McDonnell Douglas framework to the context of public contracting, a

bidder may establish a prima facie case of discrimination by showing (1) that it is owned by an

individual or group of a protected class; (2) it placed a qualifying bid on a public contract; (3) its

bid fit the decisionmaker’s criteria for selection better than the bid actually awarded the contract;

and (4) the decisionmaker awarded the contract to a different bidder owned by an individual or

group not of the plaintiffs protected class. See T & S Serv. Assocs., Inc. v. Crenson, 666 F.2d 722,

12 — OPINION & ORDER

725 (1st Cir. 1981) (crafting a modified McDonnell Douglas framework for the public bidding

context); see also Tex. Dep’t of Cmty. Affs. v. Burdine, 450 U.S. 248, 258-59 (1981) (holding a

Title VII defendant need not show it hired an individual more qualified than the plaintiff).

The complaint meets the first two elements. It alleges that Northwest Infrastructure has

been certified as a minority business, Compl. 4 6, and that Northwest Infrastructure made a

qualifying proposal under the RFP. Jd. 4 4, 27.

As to the third element, the complaint alleges that Northwest Infrastructure’s proposal fit

the RFP evaluation criteria better than NW Demolition’s because it received a higher score from

the second evaluation committee. Jd. 34. Though Northwest Infrastructure’s score was only one

point higher than NW Demolition’s, that single point nevertheless indicates that Northwest

Infrastructure’s proposal better fit the selection criteria than NW Demolition’s. In a discrimination

action, ““[t]he question is not whether [the plaintiff] in the abstract had better qualifications than

the other candidates,’” but rather “‘[t]he question is whether the other candidates are more

qualified with respect to the criteria that [the defendant] actually employs.’” Coleman v. Quaker

Oats Co., 232 F.3d 1271, 1285 (9th Cir. 2000) (quoting Cotton v. City of Alameda, 812 F.2d 1245,

1249 (9th Cir. 1987)). As alleged in the complaint, the proposal submitted by Northwest

Infrastructure met Prosper’s criteria better than any other proposal. Accordingly, the complaint has

met the third element of the McDonnell Douglas framework.

However, the complaint crumbles at the fourth element. The complaint alleges Northwest

Infrastructure’s primary competition—N W Demolition—lacked certification demonstrating it was

a “small and disadvantaged minority business.” Compl. § 25. But it does not allege that NW

Demolition was a white-owned business, or of any other class different from its own.

13 OPINION & ORDER

Prosper contends that Northwest Infrastructure also fails to meet this fourth element

because Prosper canceled the Contract before awarding it to NW Demolition. Reply to Prosper

Mot. to Dismiss [ECF 14] at 14-15. But the complaint alleges that Prosper canceled the Contract

in fear that it would have to award the Contract to Northwest Infrastructure if the administrative

challenges it mounted were successful. Compl. 55-56. Such a remedial measure would itself

support an inference of discrimination, indicating that Prosper would rather cancel the contract

entirely than award it to Northwest Infrastructure.

Nevertheless, because Northwest Infrastructure has failed to allege that NW Demolition is

not of its protected class, I find Northwest Infrastructure has not pled facts giving rise to an

inference of discrimination under an adapted McDonnell Douglas framework.

Nor do I find that Northwest Infrastructure has alleged facts that would support an

inference of discrimination through other means. Northwest Infrastructure contends that it has

done so, listing off several ways in which Prosper appeared to favor NW Demolition. Pl.’s Resp.

to Prosper Mot. to Dismiss [ECF 9] at 23—24. But it fails to point to any facts that would indicate

that race was the reason for such disparate treatment. Instead, Northwest Infrastructure points to a

quote from Kelly Haines, a member of the second evaluation committee who believes Prosper

acted with racial bias against Northwest Infrastructure. Compl. § 40. Yet this statement alone

cannot support an inference of discrimination—a witness’s subjective commentary on facts is not

itself a factual allegation.

Because Northwest Infrastructure has failed to make any nonconclusory allegations to

support an inference of discrimination, I DISMISS its § 1983 racial discrimination claim. But

because I find that Northwest Infrastructure could support such an inference with a clearer

allegation that NW Demolition was not of its protected class, the dismissal is without prejudice.

14— OPINION & ORDER

V. Claim Five: The § 1981 Claim

Northwest Infrastructure brings a claim under 42 U.S.C. § 1981, alleging Prosper impaired

its right to contract on the basis of race. Compl. {[] 95—110. However, like a § 1983 action, a § 1981

action, requires the plaintiff to establish an inference of intentional discrimination. Indeed, actions

brought under § 1981, § 1983, and Title VII all follow the same standards to prove intentional

discrimination. Gay, 694 F.2d at 537 (9th Cir. 1982); Cota v. Tucson Police Dep’t, 783 F. Supp.

458, 471 (D. Ariz. 1992). As such, my finding that Northwest Infrastructure had not alleged

intentional discrimination to support its § 1983 race discrimination claim precludes a finding of

intentional discrimination for its § 1981 claim. Consequently, I DISMISS Northwest

Infrastructure’s § 1981 claim without prejudice.

VI. Claim Six: The Intentional Interference Claim

Northwest Infrastructure’s final claim is that Individual Defendants intentionally interfered

with its contract with Prosper. Compl. 111-118. Under Oregon common law, a claim for

intentional interference with economic relations must allege “(1) the existence of a professional or

business relationship..., (2) intentional interference with that relationship, (3) by a third party, (4)

accomplished through improper means or for an improper purpose, (5) a causal effect between the

interference and damage to the economic relationship, and (6) damages.” McGanty v. Staudenraus,

901 P.2d 841, 844 (Or. 1995). Prosper moves to dismiss, contending Northwest Infrastructure has

failed to meet the third McGanty element, among others. Prosper Mot. to Dismiss [ECF 7] at 33—

38. Again, Prosper has the better argument.

The third element of an intentional interference with economic relations requires the

plaintiff to show that the alleged interference was perpetrated “by a third party.” McGanty, 901

P.2d at 844. When a plaintiff alleges defendants interfered with a contract between the defendants’

15—OPINION & ORDER

employer and the plaintiff, the defendants do not constitute a third party if their allegedly tortious

actions were within “the course and scope” of their employment. Jd. at 845-47.

Individual Defendants are all Prosper employees.2 Compl. §§ 10-14. Northwest

Infrastructure argues that Individual Defendants’ actions against it were not within the course and

scope of their employment because they “were motivated by the improper purpose of

discriminating against Northwest Infrastructure” rather than an “intention to serve their employer.”

Resp. to Prosper Mot. to Dismiss [ECF 9] at 32 (citing Compl. 113, 115).

Yet despite these bare conclusions, the complaint contains no allegations that could support

an inference that any of the Individual Defendants acted with an improper motive, let alone that

such animus was their sole motivation. See Boers v. Payline Sys., Inc., 918 P.2d 432, 435 (Or.

1996) (finding that corporate agents do not act within the scope of employment if their “sole

purpose is one that is not for the benefit of the corporation” (emphasis added)). Therefore, the

complaint fails to allege that Individual Defendants were third parties to a contract between

Northwest Infrastructure and Prosper. Accordingly, I DISMISS Northwest Infrastructure’s

intentional interference with economic relations claim without prejudice.

VU. City of Portland’s Motion to Dismiss

The City of Portland moves to dismiss itself from the case, arguing it was not involved in

any of the disputed facts. Portland Mot. to Dismiss [ECF 13] at 3. Northwest Infrastructure asserts

the City is liable under Monell v. Department of Social Services of City of New York, 436 U.S. 658

(1978). Pl.’s Resp. to Portland Mot. to Dismiss [ECF 18] at 3. Under Monell, a municipal entity

2. Northwest Infrastructure says that the Doe Defendants are entirely unknown and may be

individual or corporate entities. Compl. □ 14. However, because the Doe Defendants are listed as

defendants for only the intentional interference with economic relations claim, I consider them as

part of the Individual Defendants.

16 —OPINION & ORDER

may be held liable for a constitutional violation when it directs or ratifies an unconstitutional

action. Jd. at 690. Though such a theory may apply to the City, the complaint does not allege that

the City directed Prosper to discriminate against Northwest Infrastructure, or even that it approved

of such discrimination after-the-fact. See generally, Compl. Without more specific allegations

against the City, the complaint does not support a Monell claim. My granting of Prosper’s motion

to dismiss technically moots the City’s motion, but I instruct Northwest Infrastructure that any

future pleading must contain more specific allegations against the City or else it will be dismissed

as a defendant.

CONCLUSION

For the reasons given above, I GRANT Defendant Prosper Portland’s Motion to Dismiss

[ECF 7] and DISMISS Claims One, Two, and Four from Plaintiff Northwest Infrastructure LLC’s

complaint with prejudice. I DISMISS Claims Three, Five, and Six with leave to amend. I DENY

the City of Portland’s Motion to Dismiss [ECF 13] as moot. Northwest Infrastructure’s deadline

to file an amended complaint is January 12, 2022.

IT IS SO ORDERED.

DATED this day of December, 2021.

MAW (Me Wee

MICHAEL W. MOSMAN

United States District Judge

17—OPINION & ORDER