Dag Petroleum Suppliers, L.L.C. v. BP P.L.C. ( 2008 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-2070
DAG PETROLEUM SUPPLIERS, L.L.C.,
Plaintiff - Appellant,
versus
BP P.L.C.; BP PRODUCTS NORTH AMERICA,
INCORPORATED,
Defendant - Appellees.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. James C. Cacheris, Senior
District Judge. (1:05-cv-01323)
Argued: December 5, 2007 Decided: January 23, 2008
Before TRAXLER, DUNCAN, Circuit Judges; and James P. JONES, Chief
United States District Judge for the Western District of Virginia,
sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: Roy Theodore Englert, Jr., ROBBINS, RUSSELL, ENGLERT,
ORSECK, UNTEREINER & SAUBER, L.L.P., Washington, D.C., for
Appellant. Richard Cartier Godfrey, KIRKLAND & ELLIS, L.L.P.,
Chicago, Illinois, for Appellee. ON BRIEF: Michael Joseph, Patrick
O. Cavanaugh, William R. Martin, Alex Blanton, BLANK ROME, L.L.P.,
Washington, D.C.; Geoffrey P. Gitner, Washington, D.C.; Noah A.
Messing, ROBBINS, RUSSELL, ENGLERT, ORSECK, UNTEREINER & SAUBER,
L.L.P., Washington, D.C., for Appellant. Craig C. Reilly,
RICHARDS, MCGETTIGAN, REILLY & WEST, P.C., Alexandria, Virginia;
Andrew B. Bloomer, Donna M. Welch, Matthew T. Regan, KIRKLAND &
ELLIS, L.L.P., Chicago, Illinois, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
DAG Petroleum Suppliers, L.L.C. (“DAG”) and its Chairman and
majority owner, Eyob “Joe” Mamo (“Mamo”), an African American,
allege that BP Products North America Inc. (“BPPNA”) and its parent
company, BP P.L.C., (collectively “BP”) discriminated against DAG
on account of Mamo’s race when BPPNA, after conducting a lengthy
auction, selected two non-minority owned businesses to purchase 182
of its “BP” gasoline service stations in the Washington and
Baltimore metropolitan areas. DAG further claims that its
elimination from the auction was the culmination of an elaborate
business conspiracy between BP and Eastern Petroleum Corporation
(“Eastern”), one of the winning bidders, aimed at injuring DAG by
denying it the “once-in-a-lifetime opportunity” to acquire a large
number of valuable stations in its home territory. The district
court granted summary judgment in favor of BP on both DAG’s
discrimination claims under 42 U.S.C. §§ 1981 and 1982 and its
business conspiracy claim under Virginia Code §§ 18.2-499 -
18.2-500. For the reasons that follow, we affirm.
I
As we are reviewing a grant of summary judgment, we recite the
facts in the light most favorable to DAG. See Williams v. Staples,
Inc., 372 F.3d 662, 667 (4th Cir. 2004). In March 2005, BPPNA
released a Confidential Information Memorandum (“CIM”) to a select
3
group of petroleum jobbers,1 inviting them to participate in an
auction to purchase a number of its service stations. DAG was
among the invitees.
The CIM grouped the service stations into seven packages
labeled A through G, and encouraged each invited company to submit
a first-round bid on one, all, or any combination of the packages
that the company desired to purchase. The CIM also required each
bid to include or comment upon several different items. Among
these mandatory items were (1) the cash price offered, (2) the
number of gallons of petroleum that the bidder was willing to
commit to purchasing from BPPNA going forward, if any (the “volume
commitment”), and (3) any material concerns that the bidder had
with the commercial terms set forth in the prospective Sale and
Purchase Contract Term Sheet. The CIM further informed the
invitees that the existing dealer-operator of each auctioned
service station “w[ould] be given a first right of refusal to
purchase BP[PNA]’s interest in that site on the same basis as
BP[PNA] would be willing to accept for that site within the
[auction] process.” J.A. 821. BPPNA also “expressly reserve[d]
the right, at any time and in any respect, and without giving
reasons therefor, to amend or terminate these procedures, to
terminate discussions with any or all interested parties, to reject
1
Petroleum jobbers, or marketers, essentially act as middlemen
between companies who refine petroleum products and those that
process or market such products at retail.
4
any or all proposals, or to negotiate with any party with respect
to a transaction.” J.A. 822.
After evaluating the first-round bids and “other commercial
factors,” BPPNA selected thirteen companies for the final bidding
round to be conducted in June 2005. J.A. 822. The finalist-
companies most relevant to this appeal are DAG--the only minority-
owned auction participant2--and Eastern.
DAG submitted its “final” bid on June 20, 2005. This bid
offered $86.9 million for packages A through D, $93.8 million for
A through E, and $117 million for A through G. J.A. 1088. It also
included a non-solicited bid, offering more cash if BPPNA would
forego the dealer-operator right of first refusal. J.A. 1090.
Eastern submitted its final bid on June 21, 2005. The bid
included a separate cash offer for each package A through G, and an
offer for the entire group of packages--adding a 10% premium to the
sum of the individual offers if Eastern were awarded the entire
group. Totaling the pertinent bids, Eastern offered $99.8 million
for packages A through D, $112.6 million for packages A through E,
and $167.9 million for packages A through G--including the 10%
premium. J.A. 864-65. As to the volume commitment, Eastern
indicated that it “ha[d] committed to 10 additional BP stations
[over the following two years] that [we]re projected to deliver
2
At the time of the auction DAG was the only African-American
owned petroleum jobber in the United States.
5
more than 30 million gallons annually and plan[ned] to develop at
least 5 new BP stations annually thereafter.” J.A. 865. Eastern
emphasized its “significant historical investments in BP branded
development projects” and the success it had in the past as a BPPNA
“jobber.” J.A. 865. Of noted importance to BPPNA, Eastern’s bid
also included a plan for facilitating the dealer-operators’ rights
of first refusal in which Eastern would assist any dealer-operator
who chose to exercise such right in obtaining financing.
According to BPPNA, and undisputed by DAG, on approximately
June 27, 2005, BPPNA informed Eastern of its advancement to the
“final negotiating round” (subsequent to the “final bidding
round”). BPPNA also indicated that it was considering selling the
Washington group (packages A through D) and the Baltimore group
(packages E through G) to separate bidders. The following day,
Eastern informed BPPNA that it intended to negotiate only for the
Washington group. The contents of Eastern’s offer at that time are
disputed. Although BPPNA contends that Eastern then agreed to
maintain the 10% price premium, setting its cash offer to $110.8
million for A through D and $125.1 million for A through E, and
made an oral commitment to purchasing 90 million gallons of
petroleum volume over the next five years, we are obliged to accept
DAG’s claim that the 10% premium for packages A through D and A
through E and the 90 million gallon volume commitment were not
agreed to by Eastern on this date or any date prior to DAG’s final
6
elimination from the auction.3
The following week, BPPNA informed DAG that it had been
eliminated from further participation in the auction on the ground
that its June 20th bid offered far less economic and strategic
value than Eastern’s bid. BPPNA nevertheless allowed DAG to submit
an additional “final” bid for consideration on July 6, 2005. In
the July 6th bid, DAG increased its cash offer to $110 million for
packages A through D, $118.5 million for A through E, and $150
million for A through G, and no longer opposed the dealer-operator
right of first refusal. DAG also committed to the purchase of a
volume of 17.2 million gallons of petroleum. DAG supplemented its
bid with an unsolicited offer to contribute additional capital to
equipment improvements at the stations and to assist BPPNA with
environmental clean-up going forward.
On July 13, 2005, BPPNA informed DAG and Mamo that it still
considered DAG’s bid inferior to at least one other company’s offer
and that, therefore, DAG had again been eliminated from the
auction. Mamo then requested a third opportunity to submit a
3
In support of this claim, DAG points to the lack of any
documentation “memorializing” these figures and also cites an
internal BPPNA document created on July 15th which lists Eastern's
cash bid as only $112.6 million for packages A through E, the price
without the “premium.” J.A. 859. This same document, however,
lists another bidder, “Alliance,” not DAG or Eastern, as the “Top
Bidder,” and memorializes Eastern’s 90 million gallon volume
commitment. Id. DAG also points to a July 12th document from
Eastern's bankers to Eastern referencing the $112.6 million bid
amount. J.A. 914. We analyze DAG’s claim accepting its version of
the facts as true.
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“final” bid, and on July 15th informed BPPNA by phone that DAG was
willing to raise its offer to $117 million for packages A through
D, and to $127.1 million for packages A through E. This bid, if
accepted, would have slightly exceeded the cash amount of Eastern’s
final bid, including the 10% premium. BPPNA, however, declined to
consider DAG’s bid, purportedly because the bidding rounds had
already ended, the bid was not in writing, it did not comment on
each of the required items, and it was not submitted to the BPPNA
project manager as specified in the CIM.
BPPNA then began negotiations with Eastern for packages A
through D and a portion of E, and instructed two other companies,
Carroll Independent Fuel Company (“Carroll”) and Lehigh Gas
Corporation (“Lehigh”), to provide their best, final offers for
packages E through G. BPPNA eventually entered into Purchase and
Sale Agreements with Eastern and Carroll, selling the Washington
group and a portion of package E to Eastern and the remainder of
the Baltimore group to Carroll, for a cash amount totaling $156.8
million. Eastern’s 10% price premium is reflected in this purchase
price. BPPNA and Eastern also entered into separate supply
contracts in which Eastern committed to purchase 101 million
gallons of petroleum from BPPNA.
Mamo and DAG subsequently brought suit against BP in the
United States District Court for the Eastern District of Virginia,
alleging that DAG’s elimination from the auction was the result of
8
race discrimination, in violation of 42 U.S.C. §§ 1981 and 1982.
After discovery, DAG amended its complaint to include a business
conspiracy claim under Virginia Code §§ 18.2-499 - 18.2-500.
The district court granted summary judgment in favor of BP on
all counts.4 The court first rejected DAG's discrimination claims
finding that DAG failed to show, as both § 1981 and § 1982 require,
that BPPNA's proferred reasons for rejecting its bid were a pretext
for race discrimination. Specifically, the court found that (1)
“BPPNA offered the contract to a more lucrative, more advantageous
offer than DAG's Final Bid”; (2) “DAG provide[d] no evidence of
BPPNA's alleged bad-faith manipulation of Eastern's bid”; and (3)
“DAG provide[d] no evidence of racial animus or any evidence at all
that BPPNA's decision was motivated by the race of DAG's CEO.”
J.A. 472. Next, the district court granted summary judgment on
DAG's business conspiracy claim, finding that DAG “provided no
evidence of an agreement or an intent to injure, both of which are
required to establish a business conspiracy” under Virginia law.
J.A. 478. DAG filed a timely appeal.
4
The court first granted summary judgment on DAG’s claims
against BPPNA. Then, since “DAG's claims of discrimination and
conspiracy against BP p.l.c. [we]re derived solely from BPPNA's
relationship to BP p.l.c. as its parent corporation,” the district
court found that summary judgment was also proper for the same
claims of discrimination and conspiracy against BP p.l.c. J.A.
479. We, too, find DAG’s claims against BP p.l.c. to be contingent
on BPPNA’s liability. Therefore, we will analyze these claims
simultaneously and refer to BPPNA and BP p.l.c. collectively
throughout our analysis as “BP.”
9
II
DAG first asserts that summary judgment was inappropriate on
its race discrimination claims because genuine issues of material
fact exist as to whether BP, in eliminating DAG from the auction
and instead selling the service stations to non-minority owned
companies, interfered with DAG's right to contract and right to
purchase property in violation of 42 U.S.C. §§ 1981 and 1982.
We review the district court’s grant of summary judgment de
novo, drawing all reasonable inferences in favor of DAG, the
non-moving party. See Williams, 372 F.3d at 667. Summary judgment
is appropriate when the evidence demonstrates that no genuine issue
of material fact exists and that the moving party is entitled to
judgment as a matter of law. See Fed. R. Civ. P. 56(c). A genuine
issue does not exist unless there is sufficient evidence on which
a reasonable jury could return a verdict in favor of the non-moving
party. Cox v. County of Prince William, 249 F.3d 295, 299 (4th
Cir. 2001). If, therefore, the evidence favoring the non-moving
party is “merely colorable, or is not significantly probative,
summary judgment may be [properly] granted.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249-50 (1986).
Section 1981, in relevant part, grants all persons within the
jurisdiction of the United States “the same right . . . to make and
enforce contracts . . . as is enjoyed by white citizens.” 42
U.S.C. § 1981 (a). Section 1982 likewise prohibits race
10
discrimination in the purchase and sale of goods by providing that
“[a]ll citizens . . . shall have the same right, . . . as is
enjoyed by white citizens to inherit, purchase, lease, sell, hold,
and convey real and personal property.” 42 U.S.C. § 1982. To
succeed on a claim under either section, a plaintiff must
demonstrate that the defendant intended to discriminate on the
basis of race. See Denny v. Elizabeth Arden Salons, Inc., 456 F.3d
427, 434 (4th Cir. 2006). Where, as here, the plaintiff is unable
to present direct evidence of discriminatory intent, its claims are
subject to the burden-shifting McDonnell Douglas analytical
framework. See Williams, 372 F.3d at 667; McDonnell Douglas Corp.
v. Green, 411 U.S. 792, 802-5 (1973).
Under this framework, to avert summary judgment, a plaintiff
must first establish a prima facie case of discrimination. Id.If the plaintiff can so establish, the burden shifts to the
defendant to articulate a legitimate, non-discriminatory reason for
its actions. Hawkins v. PepsiCo, Inc., 203 F.3d 274, 278 (4th Cir.
2000). Once the defendant has done so, the plaintiff must then
offer sufficient evidence upon which a reasonable jury could find,
by a preponderance of the evidence, that the defendant's proffered
reason was not its true reason, but was instead a pretext for race
discrimination. Reeves v. Sanderson Plumbing Prods., Inc., 530
U.S. 133, 143 (2000). If the plaintiff can satisfy this burden by
proving the defendant’s stated reason unworthy of credence, summary
11
judgment is inappropriate as the trier of fact may then properly
infer the ultimate fact of intentional discrimination. Id. at 147.
A
We now apply the McDonnell Douglas framework to DAG’s claims
to assess the propriety of the district court’s grant of summary
judgment. First, we determine whether DAG has established a prima
facie case of discrimination.
The Fourth Circuit has not yet had an opportunity to determine
the proper elements of a prima facie case in the public bidding
context. Heeding the Supreme Court’s admonition in Texas Dep’t of
Cmty. Affairs v. Burdine that demonstrating a prima facie case
should “not [be] onerous,” 450 U.S. 248, 253 (1981), the district
court applied the four-part test developed by the Eleventh Circuit
in Brown v. American Honda Motor Co., 939 F.2d 946, 949 (11th Cir.
1991). The American Honda test requires the plaintiff to
demonstrate that: (1) it is a member of a protected class; (2) it
submitted a bid which met the requirements for the available
contract; (3) the bid was ultimately rejected; and (4) the contract
was awarded to an individual or entity who is not a member of a
protected class. Id. This test closely comports with the prima
facie test regularly applied by this court in other causes of
action alleging discrimination in the purchase of goods or
services. See e.g., Williams, 372 F.3d at 667 (requiring the
12
plaintiff to establish, when alleging discrimination by a chain of
retail stores, that: “(1) he is a member of a protected class; (2)
he sought to enter into a contractual relationship with the
defendant; (3) he met the defendant's ordinary requirements to pay
for and to receive goods or services ordinarily provided by the
defendant to other similarly situated customers; and (4) he was
denied the opportunity to contract for goods or services that was
otherwise afforded to white customers.”). Despite this congruity
and the Supreme Court’s guidance, BP urges us to adopt the more
burdensome test set out by the First Circuit in T&S Services
Associates, Inc. v. Crenson, 666 F.2d 722, 725 (1st Cir. 1981),
which differs from the American Honda test by requiring the
plaintiff to demonstrate, under the third prong, that its bid was
“significantly more advantageous” than the bid that was ultimately
selected. Id.Because, as we will discuss infra, DAG’s discrimination claims
clearly fail under the final step of the McDonnell Douglas
framework, we leave it to another day to determine the proper
contours of a prima facie case in the bidding context. Instead, we
assume, as the district court found, that DAG has established such
a case, and proceed to the next phase of the analysis.
13
B
Assuming that DAG has made out a prima facie case and
therefore established a “legally mandatory, rebuttable presumption”
of unlawful discrimination, the burden shifts to BP to assert a
nondiscriminatory explanation for DAG’s elimination from the
auction. See Lettieri v. Equant Inc., 478 F.3d 640, 648 (4th Cir.
2007) (internal quotations omitted). BP has met this burden by
proffering evidence that it eliminated DAG in favor of other
companies whose bids offered BP more economic and strategic value.
Specifically, BP asserts that (1) the cash amount offered by the
other companies was substantially higher than that offered by DAG;
(2) the volume of petroleum which DAG would commit to purchasing
was significantly less than the volume commitment of those selected
for final negotiation; (3) Eastern, the company to which BP
afforded the Washington group, was already in a similar
relationship with BP as an existing “jobber”; and (4) DAG opposed
the right of first refusal that BP required be included in the
contract, while the winning bidders, Eastern and Carroll, offered
plans to facilitate this right.
14
C
DAG acknowledges, as it must, that with these reasons BP has
successfully caused the burden to shift back to DAG, such that DAG
must now show that BP’s proffered explanation is a pretext for race
discrimination. As DAG also recognizes, in this context,
“[p]retext is a lie” or cover-up, not merely a mistake. Price v.
Thompson, 380 F.3d 209, 214 n.1 (4th Cir. 2001) (internal
quotations omitted). Therefore, evidence that BP “erroneously or
even purposely misapplied [its own] policy,” will not suffice to
overcome summary judgment. See Dugan v. Albemarle County School
Bd., 293 F.3d 716, 722 (4th Cir. 2002). Neither will unsupported
“assertions of discrimination in and of themselves [be sufficient]
to counter unrebutted evidence of legitimate, nondiscriminatory
reasons” for BP’s decision to choose other bidders. Id. Rather,
DAG must show that BP fabricated its stated reason to establish
pretext.
DAG fails to carry its burden. Instead, in an effort to
survive summary judgment, DAG attempts to create several factual
disputes concerning the terms of the winning bids, and also to urge
that “[a] jury could conclude that DAG's bid was superior to the
winning bid.” Appellant's Br. at 21. In particular, DAG contends
that a jury could deduce that its July 6th bid was the most
lucrative offer on the table when it was eliminated from the
auction on July 13th, if the jury found that (1) Eastern did not
15
offer the 10% premium which DAG admits that Eastern ultimately
paid; (2) Eastern did not offer the volume commitment which was
also included in the eventual agreement; and (3) BP improperly
afforded DAG little or no credit for its unilateral offer to
replace old equipment and assist BP with environmental clean-up.
DAG also asserts that a jury could conclude that BP improperly
ignored DAG’s July 15th bid. This bid, too, DAG contends, could be
found higher than that which Eastern and Carroll ultimately paid if
the trier of fact, again, excludes Eastern's 10% premium, does not
consider or value Eastern's volume commitment, and subtracts $10.5
million from Eastern's bid for an insurance subsidy that DAG claims
BP paid Eastern in a “side deal.”
DAG’s labyrinthine argument misconceives both the standard for
summary judgment and the burden it carries under step three of the
McDonnell Douglas framework. DAG’s argument is comprised solely of
inferential leaps and speculative conclusions as to what a jury
might find. “Mere speculation,” however, cannot create a genuine
factual dispute, nor can “the building of one inference upon
another.” Cox, 249 F.3d at 300.
DAG’s argument is further unavailing because an alleged
factual dispute cannot “defeat a properly supported motion for
summary judgment, unless the disputed fact is one that might affect
the outcome of the litigation.” JKC Holding Co. LLC v. Wash.
Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001). Even if
16
a jury were to view DAG’s bid as superior, this would suggest
nothing more than the possibility that BP made an unsound business
decision. A showing of pretext, as DAG recognizes, requires more.
As we have previously concluded, it is not within our province to
decide whether the decisions of companies like BP are “wise, fair,
or even correct,” so long as they are predicated on non-
discriminatory reasons. Dugan, 293 F.3d at 722 (quoting DeJarnette
v. Corning Inc., 133 F.3d 293, 299 (4th Cir. 1998)). DAG must
provide sufficient evidence for a jury to find not that DAG’s bid
could be considered superior, but that BP did conclude as much and
rejected DAG's bid nonetheless. See id. The collage of
evidentiary pieces that DAG has assembled in support of its claim,
even when viewed in the light most favorable to it, fail to make
this showing. As no reasonable jury could conclude on the record
before us that BP’s legitimate reasons for eliminating DAG from the
auction were a pretext for race discrimination, summary judgment
against DAG on its claims under § 1981 and § 1982 was proper.
III
DAG also contends that summary judgment should have been
denied on its claim against BP under the Virginia Business
Conspiracy Act. See Va. Code Ann. §§ 18.2-499 - 18.2-500. In
pertinent part, section 18.2-499 permits recovery where “[a]ny two
or more persons . . . combine, associate, agree, mutually undertake
17
or concert together for the purpose of (i) willfully and
maliciously injuring another in his reputation, trade, business or
profession by any means whatever.” Section 18.2-500 provides civil
damages for such action. In order to sustain a claim under these
sections, DAG must prove by clear and convincing evidence that: (1)
BP agreed or conspired with another party or parties; (2) the
conspirators acted with legal malice, that is, acted intentionally,
purposefully, and without lawful justification; and (3) the
intentional actions of the conspirators proximately caused injury
to DAG. See Simmons v. Miller, 544 S.E.2d 666, 676-77 (Va. 2001).
DAG alleges, in essence, that rather than simply exercising
its right to sell the service stations to Eastern or any other
company in the first instance, BP set out to injure DAG by inviting
it to participate in a fraudulent auction, feigning the acceptance
and consideration of several of its bids, and advancing it to the
final bidding rounds before unfairly eliminating it from the
concocted auction. In the course of so doing, according to DAG, BP
conspired with Eastern to leak insider information to Eastern and
manipulate its bid in several respects, all in an effort to ensure
that Eastern’s bid looked superior to DAG’s so that DAG’s
elimination could appear justified. This claim, too, is completely
devoid of coherent evidentiary support. DAG fails to present any
evidence either of a conspiracy between BP and Eastern or legal
malice on behalf of either company. Therefore, any injury that DAG
18
may have suffered is not actionable under the Virginia Business
Conspiracy Act.
IV
For the foregoing reasons, the judgment of the district court
is
AFFIRMED.
19