Depaul Industries v. Benjamin Miller

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DEPAUL INDUSTRIES, an Oregon No. 20-35598

non-profit corporation,

Plaintiff-Appellee, D.C. No.

6:18-cv-00320-

v. MC

BENJAMIN JAMES MILLER, personally

and in his official capacity as OPINION

Assistant City Attorney for the City

of Eugene,

Defendant-Appellant,

and

CITY OF EUGENE, a municipal

corporation; JOHN RUIZ, in his

official capacity as the City Manager

of the City of Eugene; LAVENA

NOHRENBERG, in her official

capacity as Customer Experience

Manager of the City of Eugene

Public Library; CLAYTON STILWELL,

in his official capacity as Purchasing

Analyst for the Finance Department

of the City of Eugene,

Defendants.

2 DEPAUL INDUSTRIES V. MILLER

Appeal from the United States District Court

for the District of Oregon

Michael J. McShane, District Judge, Presiding

Argued and Submitted August 9, 2021

Seattle, Washington

Filed September 28, 2021

Before: Carlos T. Bea, Daniel A. Bress, and

Lawrence VanDyke, Circuit Judges.

Opinion by Judge VanDyke

SUMMARY *

Civil Rights

The panel reversed the district court’s order denying, on

summary judgment, qualified immunity to Benjamin Miller,

an assistant city attorney for the City of Eugene, Oregon, in

an action brought pursuant to 42 U.S.C. § 1983 alleging that

Miller violated plaintiff’s due process rights when he

advised the City not to renew plaintiff’s contracts with the

City.

Plaintiff, DePaul Industries, is a qualified nonprofit

agency for individuals with disabilities (QRF) under an

Oregon law that requires cities to contract with QRFs in

certain circumstances. DePaul alleged that it held a clearly

*

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

DEPAUL INDUSTRIES V. MILLER 3

established constitutionally protected property interest in

two 12-month security-service contracts with the City. But

in 2016, the City decided to modify its security services by

requiring that the security service employees be armed and

decided not to renew the contracts.

The panel held that no court has considered DePaul’s

novel argument that the Oregon QRF statute created a

protected property interest in city contracts. Nor does the

QRF statute on its face definitively resolve this question in

DePaul’s favor. DePaul had not provided any precedent

addressing Oregon’s QRF statute or anything closely

related. While a case need not be “directly on point” to put

the statutory or constitutional question beyond debate, all of

the cases relied on by DePaul and the district court were too

far from “on point.” There was no precedent clear enough

that every reasonable official would interpret the QRF

statute as creating a protected property interest in DePaul’s

annual contracts with the City. DePaul also pointed to no

Oregon cases considering whether the QRF statute allows

the City to end a contract if it seeks new services, such as

armed security. DePaul’s asserted interest was thus not

clearly established, and Miller was entitled to qualified

immunity.

COUNSEL

Robert A. Koch (argued), Christopher J. Pallanch, and

Stephanie J. Grant, Tonkon Corp LLP, Portland, Oregon, for

Defendant-Appellant.

Thomas M. Christ (argued) and Drew L. Eyman, Sussman

Shank LLP, Portland, Oregon, for Plaintiff-Appellee.

4 DEPAUL INDUSTRIES V. MILLER

OPINION

VANDYKE, Circuit Judge:

Benjamin Miller, an assistant city attorney for the City

of Eugene, Oregon (the City), files this interlocutory appeal

from the district court’s denial of his motion for summary

judgment. He seeks qualified immunity from due process

claims brought by DePaul Industries. In this case, we must

decide whether DePaul, a qualified nonprofit agency for

individuals with disabilities (QRF) under Oregon law, held

a clearly established constitutionally protected property

interest in two 12-month contracts with the City. If DePaul

held no clearly established interest, then Miller could not

have violated it when advising the City not to renew

DePaul’s contracts, and he is entitled to qualified immunity

as a matter of law.

No court has considered DePaul’s novel argument that

the Oregon QRF statute created a protected property interest

in city contracts. Nor does the QRF statute on its face

definitively resolve this question in DePaul’s favor.

DePaul’s asserted interest was thus not clearly established. 1

Miller is entitled to qualified immunity, and we reverse the

district court’s denial of summary judgment as to him.

BACKGROUND

In the early 2000s, the City began contracting for

security services with DePaul Industries. DePaul is

classified as a “qualified nonprofit agency for individuals

1

We do not reach the question of whether DePaul had a

constitutionally protected property interest in its contracts with the City.

Instead, our analysis is limited to whether any such interest was clearly

established at the time of the alleged violation.

DEPAUL INDUSTRIES V. MILLER 5

with disabilities” or “QRF” under an Oregon law that

requires cities to contract with QRFs in certain

circumstances. Or. Rev. Stat. §§ 279.835(5), 279.850(1)(a).

For more than a decade, DePaul staffed the City’s public

library and eleven of its parking garages with unarmed

security guards. Every twelve months, the City reviewed

DePaul’s contracts for the library and parking garages and

renewed the contracts for the coming year. But in 2016, the

City decided to modify its security services by requiring that

the security service employees be armed and decided not to

renew the contracts. At the time, DePaul was the only QRF

certified by the Oregon Department of Administrative

Services to provide unarmed security services in the county

where the City is located.

I. The City Considers Whether to Renew DePaul’s

Library Contract.

The City’s 2016 contract-review process began with a

review of DePaul’s library security services. In response to

alarming increases in drug and alcohol use, disruptive

conduct, and threatening behavior from library patrons, the

library convened a safety committee. Committee members

expressed concerns about the skill level, training, and

professionalism of DePaul security guards, as well as a

general desire for guards to be armed in the future. The

committee began to consider whether the City should seek

better-trained contractors licensed to provide armed security

services for the library. Later, the committee learned that the

City’s performing arts center was planning to seek a bid for

armed security services. DePaul acknowledges it was not

qualified to provide armed services.

On March 11, 2016, the committee advised the library’s

leadership team to recommend that the City solicit new bids

for armed security services at the library. Later that month,

6 DEPAUL INDUSTRIES V. MILLER

the City informed DePaul that it would soon solicit security

services for the both the library and the performing arts

center. This combined solicitation would request “high

quality uniformed armed and unarmed Security Officer

Services.” During the evaluation and solicitation process,

DePaul continued to provide security services under the two

active City contracts.

II. The Parties Dispute DePaul’s Indemnification

Obligations under the Existing Parking Garage

Contract.

On February 16, 2016, a DePaul parking garage security

guard sued the City for retaliation, claiming that the City,

through DePaul, reduced his hours in response to protected

political speech. Assistant city attorney Benjamin Miller,

who handled this litigation for the City, identified an

indemnification provision in the City’s parking garage

contract with DePaul that required DePaul to defend the City

from claims “arising out of or in any way related to

performance of the Services or other actions or failure to act

by [DePaul] or [DePaul’s] employees.”

On March 3, 2016, Miller sent a letter to DePaul’s

President and CEO stating “the City’s position that . . .

DePaul is legally obligated to defend and indemnify the City

. . . with respect to [the security guard’s] complaint.”

DePaul disagreed. On May 31, 2016, shortly after the City

published its solicitation for security services at the library,

DePaul informed Miller that it would not indemnify the City

in the lawsuit because the employee was “seek[ing] to hold

the City liable for its own alleged conduct.” But Miller

believed that DePaul had breached the parking garage

security contract by declining to indemnify the City against

this suit.

DEPAUL INDUSTRIES V. MILLER 7

Miller informed the City Attorney of DePaul’s actions

and later noted that the City “ha[s] a current cont[r]act with

[DePaul] that is being renegotiated. I don’t know why it is

being renewed if this is their position.” Asked for his

recommendation on how to secure indemnification, Miller

shared his opinion that “stopping contract negotiations and

getting the principals together may go further for getting

DePaul to cooperate.”

The same week, DePaul’s President and CEO personally

received notice of the library’s solicitation for security

services. DePaul did not contact the City to discuss the

solicitation, and it did not submit a bid, but several other

security service providers did.

III. The City Chooses Not to Renew DePaul’s Library

and Parking Garage Contracts.

On June 10, 2016, DePaul filed for Chapter 11

bankruptcy. On June 21, 2016, a City purchasing analyst

and the City’s parking operations supervisor discussed

adding parking garage security to the eventual consolidated

contract for the library and performing arts center. This was

possible because the scope of the library solicitation

included any other facilities “covered by a resulting

Contract.” The purchasing analyst concluded that the

parking garages could be added to the library and performing

arts center contract, and impressed upon the parking

operations supervisor the importance of “hav[ing] all the

performance-issue related documentation as you move away

from the DePaul contract,” given the QRF law.

On June 23, 2016, the City announced its intent to award

the library and performing arts center contract to Advanced

Security, Inc. On June 28, 2016, a city employee informed

DePaul that the City was “working to consolidate all of its

8 DEPAUL INDUSTRIES V. MILLER

security services under one contract” and would “be ending

the [parking garage security services] contract” with DePaul.

The City and Advanced Security, a non-QRF contractor,

amended their contract—which went into effect on August

1, 2016—to cover the additional parking garages.

IV. DePaul Sues the City and Miller.

On February 8, 2017, DePaul filed a lawsuit against the

City, Miller in his personal and official capacities, and other

City officials in their official capacities. In the operative

complaint, DePaul alleges that the defendants:

bypassed the QRF mandate, concocted and

ratified an RFP [Request For Proposal]

process that essentially disqualified [DePaul]

from the Library Contract by the addition of

an unnecessary requirement for “armed”

security, and then deprived [DePaul] of the

Parking Garage Contract as well, in

retaliation for [DePaul]’s refusal to succumb

to the City’s wrongful demand for

contractual indemnity for the City’s own

conduct which deprived [the DePaul

employee who filed a lawsuit against the

City] of his First Amendment rights.

DePaul brought seven claims for relief against Miller in

his personal capacity, including—as relevant to this

appeal—a claim for violating its federal substantive and

procedural due process rights under 42 U.S.C. § 1983.

Miller moved for summary judgment, arguing in relevant

part that he is entitled to qualified immunity as to the due

process claims.

DEPAUL INDUSTRIES V. MILLER 9

After quoting at length from emails between City

employees (which Miller maintains are privileged and that

the district court should not have required to be disclosed),

the district court determined that “[a] reasonable jury could

infer from this evidence that the City decided it no longer

wanted to contract with [DePaul,] then crafted a pretext, and

Mr. Miller engaged in clearly arbitrary and unreasonable

government conduct to that end.” The district court

concluded that Miller was not entitled to qualified immunity

because DePaul had a clearly established property interest in

its contracts with the City, and a reasonable jury could infer

that Miller participated in the deprivation of this interest.

Accordingly, the court denied his motion for summary

judgment on the due process claims. Miller then filed this

interlocutory appeal.

STANDARD OF REVIEW

“When evaluating a denial of summary judgment on the

issue of qualified immunity, our review is limited to the

purely legal issue whether the facts alleged . . . support a

claim of clearly established law.” Alston v. Read, 663 F.3d

1094, 1098 (9th Cir. 2011) (internal quotation marks

omitted) (alteration in original). We review this legal issue

de novo. Hardwick v. County of Orange, 844 F.3d 1112,

1115 (9th Cir. 2017). In the qualified immunity context, “we

lack[] jurisdiction over an interlocutory appeal challenging

the sufficiency of the evidence.” Alston, 663 F.3d at 1098

(internal quotation marks omitted) (alteration in original).

But we may exercise appellate jurisdiction under 28 U.S.C.

§ 1291 over an interlocutory appeal to consider “the purely

legal issue” of whether Miller violated DePaul’s “clearly

established federal rights.” Id.

10 DEPAUL INDUSTRIES V. MILLER

DISCUSSION

Miller is entitled to qualified immunity unless he

violated a clearly established statutory or constitutional

right. Miller could not do so here because DePaul’s claimed

constitutionally protected property interest was not clearly

established.

I. When a Constitutionally Protected Property Interest

is Clearly Established.

“Qualified immunity shields government officials from

civil damages liability unless the official violated a statutory

or constitutional right that was clearly established at the time

of the challenged conduct.” Reichle v. Howards, 566 U.S.

658, 664 (2012). Constitutionally protected property

“interests are created and their dimensions are defined by

existing rules or understandings that stem from an

independent source such as state law.” United States v.

Guillen-Cervantes, 748 F.3d 870, 872 (9th Cir. 2014)

(internal quotation marks omitted). “This typically requires

an individual to demonstrate that an existing law, rule, or

understanding makes the conferral of a benefit mandatory.”

Id. (internal quotation marks omitted).

“To be clearly established, a legal principle must have a

sufficiently clear foundation in then-existing precedent. The

rule must be settled law, which means it is dictated by

controlling authority or a robust consensus of cases of

persuasive authority.” District of Columbia v. Wesby, 138 S.

Ct. 577, 589–90 (2018) (internal citations and quotation

marks omitted). When a rule is merely “suggested” by

precedent it is not clearly established. Id. at 590. Rather,

“[t]he precedent must be clear enough that every reasonable

official would interpret it to establish the particular rule the

plaintiff seeks to apply. Otherwise, the rule is not one that

DEPAUL INDUSTRIES V. MILLER 11

every reasonable official would know.” Id. (internal

citations and quotation marks omitted). “[R]easonableness

is judged against the backdrop of the law at the time of the

conduct,” Brosseau v. Haugen, 543 U.S. 194, 198 (2004),

and “a case directly on point” is not required, “but existing

precedent must have placed the statutory or constitutional

question beyond debate.” Ashcroft v. al-Kidd, 563 U.S. 731,

741 (2011).

II. DePaul’s Asserted Interest Was Not Clearly

Established.

DePaul’s due process claims against Miller can succeed

only if the protected property interest DePaul asserts was

clearly established when it was allegedly violated. But the

QRF statute is not clear about whether it creates a protected

property interest in annually renewable city contracts. Nor

has any Oregon court considered this question. The two

cases cited by the district court did not involve QRFs at all.

Therefore, even if those cases were precedential (which, as

discussed below, they are not), they could not clearly

establish a protected property interest in DePaul’s QRF

contracts with the City. Without more, we cannot say that

DePaul’s alleged property interest in its contracts has been

“placed . . . beyond debate.” Ashcroft, 563 U.S. at 741.

DePaul’s arguments to the contrary are unpersuasive.

DePaul asserts that it held a “de facto entitlement” that gives

rise to a protected property interest in its contracts with the

City because: first, DePaul was the only QRF providing

unarmed security services in the area and by Oregon statute

public agencies are required to purchase goods and services

from a “QRF” when a QRF meets the agency’s procurement

requirements, see Or. Rev. Stat. §§ 279.835(5),

279.850(1)(a); and second, DePaul had a long-standing

contractual relationship with the City. But DePaul cannot

12 DEPAUL INDUSTRIES V. MILLER

construct a clearly established interest on its own. We

reverse the district court for three reasons.

First, the QRF statute does not clearly confer on DePaul

a property interest in its contracts with the City. The QRF

statute states, in relevant part:

[A] public agency that intends to procure a

product or service on the procurement list

that the Oregon Department of

Administrative Services established under

ORS 279.845 shall, in accordance with the

department’s rules, procure the product or

service at the price the department establishes

from a qualified nonprofit agency for

individuals with disabilities, provided that

the product or service is of the appropriate

specifications and is available within the

period the public agency requires.

Or. Rev. Stat. § 279.850(1)(a). Various Oregon regulations

expand on the statute, for example, by preventing agencies

from “develop[ing] specifications that inhibit or tend to

discourage” contracting with QRF providers, Or. Admin. R.

125-055-0010(1)(a), and urging agencies to “keep in mind

the purpose of the law: to encourage and assist Individuals

with Disabilities to achieve maximum personal

independence in their communities through productive,

gainful employment by assuring an expanded and constant

market for [QRF] products and services,” Or. Admin. R.

125-055-0010(3).

The interpretation of the QRF statute is ultimately a

matter for the Oregon state courts. But it is enough for

present purposes that the statute and accompanying

regulations do not unambiguously create the property

DEPAUL INDUSTRIES V. MILLER 13

interest that DePaul claims, and so they cannot, without

more, provide a clearly established right in DePaul’s favor

for purposes of qualified immunity. 2

Second, DePaul points to no case authority for its claim

here: that the QRF statute created a protected property

interest in DePaul’s annual contracts with the City. For

purposes of qualified immunity, “the clearly established law

at issue must be particularized to the facts of the case.” Perez

v. City of Roseville, 926 F.3d 511, 519 (9th Cir. 2019). The

particular issue here, whether the Oregon QRF statute

required the City to continue contracting with DePaul, is an

unanswered question of state law.

DePaul points to no Oregon cases considering when, if

ever, contracting with a QRF is mandatory. See BWK, Inc.

v. Dep’t of Admin. Servs., 218 P.3d 156, 161 (Or. Ct. App.

2009) (noting in passing that the QRF statute “requires

public agencies to purchase products and services from

certain nonprofit providers,” but providing the full text of the

statute and referring to this statutory scheme as a “preference

and exemption from competitive bidding” (emphases

added)); see also Doyle v. City of Medford, 606 F.3d 667,

671 (9th Cir. 2010) (looking first to how much discretion a

local government has in issuing a statutory benefit to

determine whether individuals had a property interest in that

benefit, and, finding no Oregon courts construing the statute,

certifying the question to the Oregon Supreme Court).

DePaul also points to no Oregon cases considering

whether the QRF statute allows the City to end a contract if

2

DePaul also ignores the fact that the City sought armed security

services and specifically solicited DePaul, who neglected to apply for the

new contract.

14 DEPAUL INDUSTRIES V. MILLER

it seeks new services, such as armed security. And DePaul

points to no Oregon cases considering whether a long-

standing contract with the only qualified QRF in a particular

area creates a protected property interest. Compare with

Perez, 926 F.3d at 519 (“The contours of a right must be

‘sufficiently definite that any reasonable official in the

defendant’s shoes would have understood that he was

violating it.’” (quoting Kisela v. Hughes, 138 S. Ct. 1148,

1153 (2018)). These questions are fundamental to DePaul’s

claim that the statute and its long-standing contract “gave

DePaul . . . a property interest for due process purposes.” 3

But they remain unanswered—far from clearly

established—and no reasonable official could be expected to

know otherwise.

Third, the district court primarily relied on two District

of Oregon cases to conclude DePaul’s interest was clearly

established—one decided in 2009 (Grabhorn), and the other

decided in 2010 (David Hill). But our precedent dictates that

Grabhorn and David Hill could not clearly establish a

protected property interest in DePaul’s contracts with the

City because these cases do not even consider the Oregon

QRF statute. In Grabhorn, the court recognized a

constitutionally protected property interest in the plaintiff’s

status as a city-designated waste facility. Grabhorn, Inc. v.

3

DePaul cites two Ninth Circuit cases, Shanks v. Dressel, 540 F.3d

1082 (9th Cir. 2008) and Del Monte Dunes at Monterey, Ltd. v. City of

Monterey, 920 F.2d 1496 (9th Cir. 1990), to support its assertion that

“[i]t was clearly established by 2016 that due process prevents

government officials from depriving someone of a property interest for

made-up and retaliatory reasons and thus denying them fair notice and

an opportunity to be heard.” But the separate threshold question here is

whether DePaul had a clearly established property interest in the first

place, not what actions due process demands or prevents once a property

interest has been established.

DEPAUL INDUSTRIES V. MILLER 15

Metro. Serv. Dist., 624 F. Supp. 2d 1280, 1286–88 (D. Or.

2009). And in David Hill, the district court recognized a

constitutionally protected property interest in a binding

preliminary plat approval that the plaintiff received from a

city. David Hill Dev., LLC v. City of Forest Grove, 688 F.

Supp. 2d 1193, 1218–19 (D. Or. 2010). Neither case even

mentions the QRF statute. So, even if the cases were binding

precedent, neither is sufficient to “place[] the statutory or

constitutional question” about whether the QRF statute

created a protected property interest “beyond debate.” White

v. Pauly, 137 S. Ct. 548, 551 (2017) (quoting Mullenix v.

Luna, 577 U.S. 7, 12 (2015)).

We have explained that “[w]e have been somewhat

hesitant to rely on district court decisions” as clearly

establishing law for purposes of qualified immunity. Evans

v. Skolnik, 997 F.3d 1060, 1067 (9th Cir. 2021). “[A]s the

Supreme Court has pointed out, district court decisions—

unlike those from the courts of appeals—do not necessarily

settle constitutional standards, because a decision of a

federal district court judge is not binding precedent in either

a different judicial district, the same judicial district, or even

upon the same judge in a different case.” Id. (alterations and

internal quotation marks omitted); see also S.B. v. County of

San Diego, 864 F.3d 1010, 1016 (9th Cir. 2017) (rejecting

the argument that one published and one unpublished district

court decision, both factually distinguishable, constituted

clearly established law); Marsh v. County of San Diego,

680 F.3d 1148, 1159 (9th Cir. 2012) (rejecting the argument

that a published federal district court and a published lower

state court decision clearly established a right). This case

validates our hesitancy to rely on district court decisions for

the qualified immunity analysis.

16 DEPAUL INDUSTRIES V. MILLER

In sum, DePaul has not provided any precedent

addressing Oregon’s QRF statute or anything closely

related. While a case need not be “directly on point” to put

“the statutory or constitutional question beyond debate,”

Ashcroft, 563 U.S. at 741, all of the cases relied on by

DePaul and the district court are too far from “on point.”

There is simply no precedent “clear enough that every

reasonable official would interpret it to establish the

particular rule the plaintiff seeks to apply.” Wesby, 138 S.

Ct. at 590.

We hesitate to opine further about the meaning of

Oregon’s QRF statute without additional guidance from

Oregon courts. But we need not do so to resolve Miller’s

appeal. As Miller observes, “until the district court’s orders

in this case, no court had ever interpreted Oregon’s QRF

statute to create a protected property interest.” Given the

dearth of law on this issue, we conclude that the property

right asserted by DePaul was not clearly established at the

time of the alleged violation.

CONCLUSION

Miller is entitled to qualified immunity if his conduct did

not violate DePaul’s clearly established statutory or

constitutional rights. The district court found DePaul had a

constitutionally protected property interest in its contracts

with the City. But because this interest was not clearly

established law at the time of Miller’s alleged violation, the

district court erred by denying Miller qualified immunity on

DePaul’s due process claims.

The judgment of the district court denying Miller’s

motion for partial summary judgment on DePaul’s due

process claims is REVERSED AND REMANDED with

instructions to dismiss those claims.