Flint Electric Membership Corp. v. Whitworth

United States Court of Appeals,

Eleventh Circuit.

Nos. 94-9199, 94-9227.

FLINT ELECTRIC MEMBERSHIP CORPORATION, Plaintiff-Appellee,

v.

Bobby WHITWORTH, Individually and in his official capacity as

Department of Corrections Commissioner, Clyde Stovall, Individually

and in his official capacity as Assistant Commissioner of

Department of Corrections, Defendants-Appellants,

Georgia Power Company, Defendant.

PATAULA ELECTRIC MEMBERSHIP CORPORATION, Plaintiff-Appellee,

v.

Bobby WHITWORTH, Individually and in his official capacity as

Department of Corrections Commissioner, Clyde Stovall, Individually

and in his official capacity as Assistant Commissioner of

Department of Corrections, David C. Evans, Individually,

Defendants-Appellants,

Georgia Power Company, Defendant.

Nov. 15, 1995.

Appeals from the United States District Court for the Northern

District of Georgia. (Nos. 1:90-CV-1550-HTW and 1:90-CV-1675-HTW),

Horace T. Ward, Judge.

Before BARKETT, Circuit Judge, and HENDERSON and CLARK, Senior

Circuit Judges.

PER CURIAM:

Bobby Whitworth, Clyde Stovall and David C. Evans, officials

of the Georgia Department of Corrections (the "DOC"),1 appeal from

orders entered in the United States District Court for the Northern

1

Whitworth is identified in the record as either the

Commissioner or the Deputy Commissioner of the DOC during the

relevant time frame and Evans as his predecessor in the office of

Commissioner. Stovall is described as the Assistant Commissioner

or the Director of Facilities Development and Maintenance for the

DOC. They shall be referred to collectively as the "DOC

officials" or "defendants."

District of Georgia denying their motions for summary judgment

asserting qualified immunity from 42 U.S.C. § 1983 damages. For

the reasons stated below, we reverse the denial of qualified

immunity and remand the case to the district court for further

proceedings consistent with this opinion.

I. BACKGROUND

These appeals arose out of separate lawsuits brought by Flint

Electric Membership Corporation and Pataula Electric Membership

Corporation (the "EMCs"), against the DOC officials2 and Georgia

Power Company ("Georgia Power"). The substantially identical

amended complaints alleged that, under Georgia's State Purchasing

Act and as "lowest responsible bidders," the EMCs were entitled to

receive licenses to supply certain electrical services to the DOC,

which were awarded instead to Georgia Power in contravention of the

state statute. Counts One and Two contended that by entering into

the contracts with Georgia Power, the DOC defendants violated the

EMCs' substantive and procedural due process rights, giving rise to

§ 1983 claims for injunctive relief and damages. Count Three

asserted a state law cause of action based upon the same

allegations. The district court initially dismissed the actions on

the pleadings for failure to state a claim under § 1983, finding

that the EMCs had no federally protected property interest in the

contracts. In an earlier appeal from that decision a panel of this

court reversed, holding that Georgia law requires electrical

service contracts with the state to be awarded to the lowest

2

Whitworth and Stovall were named as defendants in both

actions. Evans was sued solely by Pataula Electric Membership

Corporation.

responsible bidder "whenever possible." Pataula Elec. Membership

Corp. v. Whitworth, 951 F.2d 1238, 1241-42 (11th Cir.), cert.

denied, --- U.S. ----, 113 S.Ct. 302, 121 L.Ed.2d 225 (1992). The

court explained that competitive bidding for electrical service is

not possible in most cases because the Georgia Territorial Electric

Service Act allows only one electricity supplier to provide service

in a particular locality. Id. at 1241 n. 3. Here, however, more

than one provider was eligible to furnish this service. The court

consequently held that "there [was] no impediment to competitive

bidding, [and] the State Purchasing Act and relevant rules

mandate[d] competitive bidding." Id. at 1242. The court found

further that, "[a]t a minimum, then, plaintiffs state[d] a

cognizable [due process] claim by alleging that defendants abused

their discretion by arbitrarily ignoring competitive bidding

requirements." Id. at 1243. The court concluded that the DOC

officials should have known they were required to follow

competitive bidding procedures under clearly established state law,

thus, they were not entitled to qualified immunity from § 1983

monetary liability. Id. at 1244.

On remand, the parties proceeded with discovery. Thereafter,

Georgia Power and the DOC defendants filed motions for summary

judgment. The motions addressed the merits of the actions and, in

addition, the DOC officials again asserted a qualified immunity

defense. The district court denied all the motions. The DOC

officials then filed the current appeals, which have been

consolidated for our review.

II. DISCUSSION

Although final orders have not been entered in these cases,

we have jurisdiction to review the district court's denial of the

motions for summary judgment grounded on qualified immunity.

Mitchell v. Forsyth, 472 U.S. 511, 530, 105 S.Ct. 2806, 2817, 86

L.Ed.2d 411, 427 (1985). Our consideration of this issue is de

novo. Elder v. Holloway, 510 U.S. ----, ----, 114 S.Ct. 1019,

1023, 127 L.Ed.2d 344, 351 (1994). This court's prior decision

that the DOC defendants were not entitled to qualified immunity

from § 1983 damages is binding here as the law of the case unless

(1) new and substantially different evidence material to the issue

has been presented; (2) controlling authority has been rendered

which is contrary to the law of the previous decision; or (3) the

earlier ruling was clearly erroneous and would work a manifest

injustice if implemented. United States v. White, 846 F.2d 678,

685 (11th Cir.), cert. denied, 488 U.S. 984, 109 S.Ct. 537, 102

L.Ed.2d 568 (1988).

The main thrust of the current appeal is the defendants'

insistence that, contrary to this court's earlier observation that

there was no impediment to competitive bidding, later discovery

revealed that it was impossible to determine a "lowest responsible

bidder" because neither the EMCs nor Georgia Power could guarantee

a fixed rate for electrical service over the life of the contracts.

They also maintain that the EMCs failed to adhere to competitive

bidding procedures. They claim that now it is clear that the EMCs

did not in fact have a property right in the contracts because

competitive bidding was either impossible and/or did not take place

due to the EMCs' own failure to follow the competitive bidding

rules. They postulate that, in the absence of a property interest,

they are entitled to qualified immunity.

In keeping with the district court's decision, we must reject

these arguments. The record shows that the EMCs had sufficient

awareness of the competitive bidding procedures to form a valid

expectation of entitlement to the contracts if they submitted the

lowest bids. See Board of Regents v. Roth, 408 U.S. 564, 577, 92

S.Ct. 2701, 2709, 33 L.Ed.2d 548, 561 (1972). The record also

supports the district court's finding that the EMCs were the

"lowest responsible bidders." The appellants have offered no legal

authority for their suggestion that the prospect of a subsequent

rate increase rendered competitive bidding impossible.

Furthermore, there is undisputed evidence that the EMCs have

refrained from retail rate increases in the past despite rises in

wholesale costs. The consultant employed by the DOC to analyze and

evaluate the bids specifically found that Georgia Power had

historically promulgated greater rate increases than the EMCs and

that, over the long run, their rates would probably "approach each

other." For this reason, the consultant viewed the rate increase

issue as an insignificant factor in determining cost over the life

of the contracts. By contrast, in choosing the EMCs, the DOC stood

to realize definite and substantial savings in the shorter term,

both in the rates charged and the cost of leasing equipment.

Consequently, this court's earlier decision that the EMCs were

vested with a property right in the contracts remains the law of

the case.3

Even though the EMCs' rights to a property interest in the

contracts remain, we nevertheless hold that because of a change in

the law governing the viability of their due process claims, the

defendants are now entitled to qualified immunity from § 1983

damages. In McKinney v. Pate, 20 F.3d 1550 (11th Cir.1994) (en

banc), cert. denied, --- U.S. ----, 115 S.Ct. 898, 130 L.Ed.2d 783

(1995), decided after the prior appeal in these cases, the court

held that § 1983 substantive due process claims arising from

nonlegislative deprivations of state-created property interests are

no longer cognizable in this circuit. Id. at 1560.4 It has also

become evident, in light of McKinney, that the EMCs' procedural due

process claims are not ripe for review. In McKinney the court

observed that, unlike the deprivation of a right provided by

substantive federal law, which gives rise to a § 1983 lawsuit as

soon as the wrongful action is taken,

a procedural due process violation is not complete "unless and

until the State fails to provide due process." In other

words, the state may cure a procedural deprivation by

providing a later procedural remedy; only when the state

refuses to provide a process sufficient to remedy the

procedural deprivation does a constitutional violation

actionable under section 1983 arise.

3

We stress that the underlying finding that the EMCs were

the lowest responsible bidders does not involve a factual

dispute. The appellants do not contest the accuracy of the

consultant's cost assessments. They urge simply that a future

rate hike by any of the bidders would introduce an unknown

element into the formula. Given the consultant's reasoned

rejection of this factor as an obstacle to determining long-term

costs, it was not impossible for the appellants to reach a

competitive bidding decision.

4

The alleged deprivations at issue here plainly stem from

non-legislative acts, see McKinney, 20 F.3d at 1557 n. 9, and

involve a state-created property right.

Id. at 1557 (quoting Zinermon v. Burch, 494 U.S. 113, 126, 110

S.Ct. 975, 983, 108 L.Ed.2d 100, 114 (1990)). Thus, even when a

plaintiff has "suffered a procedural deprivation at the hands of

[the state], he has not suffered a violation of his procedural due

process rights unless and until the State ... refuses to make

available a means to remedy the deprivation." Id. at 1563.

The Supreme Court of Georgia has held that "[w]hen, as here,

a governmental entity has frustrated the bid process and awarded

the contract to an unqualified bidder, the injured low bidder may

bring an action for appropriate relief." City of Atlanta v. J.A.

Jones Constr. Co., 260 Ga. 658, 659, 398 S.E.2d 369, 370 (1990),

cert. denied, 500 U.S. 928, 111 S.Ct. 2042, 114 L.Ed.2d 126 (1991).

One vehicle for bringing such an action in state court is O.C.G.A.

§ 50-5-79, through which contracts made in violation of the State

Purchasing Act may be declared void. 5 See also Amdahl Corp. v.

Georgia Dep't of Admin. Servs., 260 Ga. 690, 695-97, 398 S.E.2d

5

Section 50-5-79 provides:

Whenever any department, institution, or agency of

the state government required by this part and the

rules and regulations adopted pursuant to this part

applying to the purchase of supplies, materials, or

equipment through the Department of Administrative

Services shall contract for the purchase of such

supplies, materials, or equipment contrary to this part

or the rules and regulations made pursuant to this

part, such contract shall be void and of no effect. If

any official of such department, institution, or agency

willfully purchases or causes to be purchased any

supplies, materials, or equipment contrary to this part

or the rules and regulations made pursuant to this

part, such official shall be personally liable for the

cost thereof; and, if such supplies, materials, or

equipment are so unlawfully purchased and paid for out

of the state funds, the amount thereof may be recovered

in the name of the state in an appropriate action

instituted therefor.

540, 544-46 (1990) (frustrated bidders who allege violations of

state procurement laws may seek equitable relief and damages

limited to the recovery of bid preparation costs under general

principles of law); Hilton Constr. Co., Inc. v. Rockdale County

Bd. of Educ., 245 Ga. 533, 540, 266 S.E.2d 157, 162-63 (1980) (low

bidder had right to damages and/or injunctive relief, to be

determined by the trial court on remand).

The EMCs could have filed actions in state court pursuant to

O.C.G.A. § 50-5-79 for the purpose of rescinding the contracts with

Georgia Power and/or to recover their bid preparation costs.6

Because they failed to do so, and because the rule of law announced

in McKinney must be applied retroactively, McKinney, 20 F.3d at

1566, their § 1983 procedural due process claims are not

actionable.7

6

By this statement, we do not intend to imply that this was

the sole course of action available to the EMCs under Georgia

law. We point out only that the state provided an adequate

process for redressing the EMCs' complaints.

7

Although the effect of McKinney on the EMCs' due process

claims was not resolved in the district court, we have the

authority to address this pure question of law on appeal. See

Skinner v. City of Miami, Fla., 62 F.3d 344, 347-48 (11th

Cir.1995) (following McKinney to hold that the complaint failed

to state a constitutional claim even though the issue was not

raised by the defendant in the district court or on appeal);

Narey v. Dean, 32 F.3d 1521, 1526-28 (11th Cir.1994) (recognizing

for the first time on appeal that the plaintiff's substantive and

procedural due process claims were eviscerated in light of

McKinney ); see also Plaut v. Spendthrift Farm, Inc., 514 U.S. -

---, ----, 115 S.Ct. 1447, 1450, 131 L.Ed.2d 328, 339 (1995) (a

new rule of federal law applied to the parties in the case

announcing the rule must be utilized in all cases pending on

direct review) (citing James B. Beam Distilling Co. v. Georgia,

501 U.S. 529, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991)). We note

that the McKinney decision was issued after the motions for

summary judgment and supporting briefs were filed, but before the

district court entered its orders. It would have behooved the

defendants to file supplemental briefs bringing McKinney to the

In Siegert v. Gilley, 500 U.S. 226, 111 S.Ct. 1789, 114

L.Ed.2d 277 (1991), the Supreme Court observed that a "necessary

concomitant" to the decision of whether a defendant is entitled to

qualified immunity, "is the determination of whether the plaintiff

has asserted a violation of a constitutional right at all." Id. at

232, 111 S.Ct. at 1793, 114 L.Ed.2d at 287. The complaints in the

present cases state neither substantive nor procedural due process

claims. Consequently, we must reverse the district court's denial

of qualified immunity from § 1983 damages.

Even though no federal rights remain to be determined in

these cases, the EMCs may be permitted to pursue the state law

cause of action raised in Count Three of their amended complaints

in the federal forum. The decision of whether to dismiss a

complaint still containing state law issues after all federal

causes evaporate is within the district court's sound discretion.

See 28 U.S.C. § 1367(c); McCoy v. Webster, 47 F.3d 404, 408 (11th

Cir.1995). These actions present the unusual circumstance that, at

the time the complaints were filed, it was common practice in this

district court's attention after that decision was published. In

its orders denying the motions for summary judgment, the district

court astutely invited them to do so. They chose instead to

immediately appeal the district court's rulings on the qualified

immunity issue. Perhaps they feared that the time for appeal

would expire during the pendency of supplemental pleadings.

However, the question of qualified immunity could have been

preserved for review, with the benefit of a full exploration of

the McKinney issues in the district court, and this appeal

possibly avoided, if the defendants had served timely

Fed.R.Civ.P. 59 motions to alter or amend the district court's

denials of summary judgment in view of McKinney. See

Fed.R.App.P. 4(a)(4)(C) (tolling the time for appeal during the

pendency of a timely Rule 59 motion). At the oral argument

before this court, the parties were directed to and did address

the effect of McKinney on the due process claims.

circuit to bring § 1983 lawsuits in federal court asserting

substantive and procedural due process claims arising from the

deprivation of state-created property rights, without resorting to

remedies made available by the state. In addition, we have held on

occasion that it may be an abuse of discretion to dismiss an

outstanding state law cause of action after the statute of

limitations has expired. See McCoy, 47 F.3d at 408 n. 4. The

district court should consider these factors in the exercise of its

discretion and in reaching its decision.

III. CONCLUSION

In accordance with the foregoing, we AFFIRM the district

court's finding that the EMCs were vested with a state-created

property right in the electrical service contracts as "lowest

responsible bidders." We REVERSE the district court's denial of

qualified immunity from § 1983 damages and REMAND the case to the

district court for further proceedings with respect to the state

law cause of action alleged in Count Three of the amended

complaints.8

8

In addition to the qualified immunity issue, the defendants

urge us to review those portions of district court's orders

denying summary judgment on the merits, which are relevant to the

§ 1983 claims lodged against them in their official capacities.

See Lassiter v. Alabama A & M Univ., 28 F.3d 1146, 1149 n. 2

(11th Cir.1994) (observing that the qualified immunity defense

extends solely to § 1983 complaints for damages against state

actors in their individual capacities). They maintain that we

may do so by exercising pendent appellate jurisdiction in a

manner consistent with Swint v. Chambers County Comm'n, 514 U.S.

----, ----, 115 S.Ct. 1203, 1212, 131 L.Ed.2d 60, 74-75 (1995)

(leaving open the possibility of exercising pendent appellate

jurisdiction in appropriate circumstances). Because of our

holding that the complaints fail to allege a § 1983 cause of

action of any sort, we find it unnecessary to address this

contention.