The opinion
NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS APR 16 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
GRADETECH, INC., a California No. 20-15812
corporation; SAM RIVINIUS, an individual,
D.C. No. 5:19-cv-06157-NC
Plaintiffs-Appellees,
v. MEMORANDUM*
CITY OF SAN JOSE, a public entity,
Defendant,
and
JIM ORTBAL, as an individual and in his
official capacity as the City's Hearing
Officer on Gradetech's protest of the City's
2019 Minor Street Projects disqualification
decision; DAVID FRENCH, in his
individual capacity; CHRIS
MASTRODICASA, in his individual
capacity; MATTHEW CANO, in his
individual capacity; MATTHEW LOESCH,
in his individual capacity,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of California
Nathanael M. Cousins, Magistrate Judge, Presiding
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Argued and Submitted March 12, 2021
San Francisco, California
Before: WALLACE, GOULD, and FRIEDLAND, Circuit Judges.
Defendants-Appellants Jim Ortbal, David French, Chris Mastrodicasa,
Matthew Cano, and Matthew Loesch—all employees of the City of San Jose (the
City) (collectively, the Employees)—appeal from the district court’s order denying
the Employees’ qualified immunity defense to Plaintiffs-Appellees Sam Rivinius
and Gradetech, Inc.’s (collectively, Gradetech) claims of First Amendment
retaliation and violation of substantive due process. We have jurisdiction pursuant
to 28 U.S.C. § 1291. See Mitchell v. Forsyth, 472 U.S. 511, 530 (1985). We
reverse and remand, with instructions to grant leave to amend Gradetech’s first
amended complaint (FAC).
Under the Supreme Court’s two-prong qualified immunity analysis, we
consider whether (1) the facts “[t]aken in the light most favorable to the party
asserting the injury . . . show [that] the [officials’] conduct violated a constitutional
right”; and (2) the asserted right was clearly established at the time of the alleged
violation. Saucier v. Katz, 533 U.S. 194, 201 (2001). When reviewing the district
court’s denial of the Employees’ motion to dismiss based on qualified immunity de
novo, we must “accept as true all well-pleaded allegations of material fact” from
the FAC and “construe them in the light most favorable” to Gradetech. Padilla v.
Yoo, 678 F.3d 748, 757 (9th Cir. 2012) (citation omitted). However, we need not
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accept as true allegations that are vague, conclusory, or “naked assertions devoid
of further factual enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(cleaned up).
1. The FAC as it stands does not plausibly plead a claim of First Amendment
retaliation under the first prong of the qualified immunity inquiry. To bring a
claim of First Amendment retaliation, a government contractor must first show that
“it engaged in expressive conduct that addressed a matter of public concern.”
Alpha Energy Savers, Inc. v. Hansen, 381 F.3d 917, 923 (9th Cir. 2004).
The district court acknowledged that the majority of Gradetech’s alleged
speech “related only to the financial and managerial dispute between the [City and
Gradetech],” which is a private matter that does not constitute matters of public
concern, but the court pointed out that Gradetech also allegedly warned the City
about “safety concerns,” warnings which the City “rebuffed.” Although threats to
public safety are “inherently of interest to the public,” Clairmont v. Sound Mental
Health, 632 F.3d 1091, 1104 (9th Cir. 2011) (citation omitted), we cannot
determine from these barebones allegations alone whether Gradetech voiced a
bona fide concern about public safety or whether, for example, it expressed
concerns about the safety of its employees. The facts underlying the safety
allegations, if properly pled, may establish that Gradetech spoke on a matter of
public concern, but the FAC does not contain sufficient factual enhancement from
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which we can reach that conclusion. See Iqbal, 556 U.S. at 678. We thus reverse
the district court’s denial of the Employees’ motion to dismiss with respect to
Gradetech’s claim of First Amendment retaliation. Because the deficiencies of the
FAC may be cured by amendment with respect to the First Amendment retaliation
claim, we instruct the district court to grant the motion with leave to amend. See
Pena v. Gardner, 976 F.2d 469, 472 (9th Cir. 1992).
2. With respect to Gradetech’s substantive due process claim, we reverse
under the second prong of the qualified immunity analysis because Gradetech did
not show that the asserted substantive due process right was clearly established.
See Pearson v. Callahan, 555 U.S. 223, 236 (2009). Gradetech took the position
both in its briefing opposing the motion to dismiss in the district court and in its
brief on appeal to our court that it was pursuing only a substantive due process
claim, not a procedural due process claim. To plead a substantive due process
claim, Gradetech must plausibly allege “that the [Employees] deprived [it] of [its]
rights under the contracts in a way that ‘shocks the conscience’ or ‘interferes with
rights implicit in the concept of ordered liberty.’” Matsuda v. City & County of
Honolulu, 512 F.3d 1148, 1156 (9th Cir. 2008) (citation omitted).
The district court defined the asserted right too broadly when it concluded
that “government employers . . . must not deprive contractors of their fundamental
right to property in contracts,” because “the clearly established law at issue ‘must
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be “particularized” to the facts of the case.’” Foster v. City of Indio, 908 F.3d
1204, 1210 (9th Cir. 2018) (quoting White v. Pauly, 137 S. Ct. 548, 552 (2017)
(per curiam)). Here, Gradetech did not identify any case that has held that a
violation of an alleged contractual interest—including a prospective contractual
interest—was so shocking to the conscience as to violate substantive due process.
In the primary case cited by Gradetech, we in fact expressly declined to address
this issue. See Matsuda, 512 F.3d at 1156. Because qualified immunity precludes
Gradetech’s substantive due process claim against the Employees, we reverse the
district court’s order denying the Employees’ motion to dismiss with respect to this
claim. Given the lack of clearly established law that could overcome the
Employees’ qualified immunity with respect to a substantive due process claim,
amendment could not cure the defects in that claim.
On remand, the district court may determine whether Gradetech should be
permitted leave to amend to pursue new claims not discussed herein.
REVERSED and REMANDED.
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