Worldwide Parking, Inc. v. New Orleans City

United States Court of Appeals
Fifth Circuit
FILED
February 17, 2005
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk
No. 04-30507
WORLDWIDE PARKING, INC.,
Plaintiff-Appellant,
versus
NEW ORLEANS CITY,
Defendant-Appellee,
STANDARD MUNICIPAL PARKING JOINT VENTURE,
Intervenor-Appellee.
Appeal from the United States District Court for
the Eastern District of Louisiana
(USDC No. 2:04-CV-1134-T)
_________________________________________________________
Before REAVLEY, HIGGINBOTHAM and DeMOSS, Circuit Judges.
REAVLEY, Circuit Judge:*
Worldwide Parking Inc. (“Worldwide”) appeals the district court’s dismissal
of its complaint for lack of subject matter jurisdiction. This court has jurisdiction
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
under 28 U.S.C. § 1291. See In re Transtexas Gas Corp., 303 F.3d 571, 576-77
(5th Cir. 2002) (stating that this court has inherent jurisdiction to determine its own
jurisdiction as well as that of the district court). We reverse.
I. Background
In 2003, the City of New Orleans (“the City”) initiated a “Request for
Proposals” (“RFP”) for the provision of parking meter equipment and service,
wishing to upgrade its parking to multi-space, electronic meters. Four companies,
including Worldwide and Standard Municipal Parking Joint Venture (“Standard”),
bid in response to the RFP. The City awarded the contract to Standard.
Worldwide brought suit against the City in April 2004 in federal court. In its
complaint, Worldwide alleged that the City violated its due process rights under the
federal Constitution when it failed to award the contract to Worldwide as required
by Louisiana’s Public Bid Law and the City’s Home Rule Charter, asserting federal
jurisdiction under 28 U.S.C. § 1331. In May 2004, the district court concluded sua
sponte in a hearing on Worldwide’s request for a preliminary injunction that
Worldwide did not have a protectible property interest in the contract, because the
contract called for professional services and was thus not subject to the Public Bid
2
Law or the Charter. Consequently, the court dismissed for want of subject matter
jurisdiction.1
II. Standard of Review
Worldwide asserts that the district court erred in dismissing for lack of
subject matter jurisdiction, because the fact issues determinative of jurisdiction are
intertwined with the merits of its due process claim. We review de novo “whether
the district court had discretion to resolve disputed facts dispositive of subject
matter jurisdiction[.]”2 Montez v. Dep’t of the Navy, 392 F.3d 147, 149 (5th Cir.
2004).
III. Dismissal for Lack of Subject Matter Jurisdiction Was Improper
1
Worldwide also asserted two supplemental state claims which the district court
declined to entertain after finding federal question jurisdiction lacking.
2
The parties dispute the applicable standard of review. Worldwide contends that
our review is de novo, accepting all facts pleaded in the complaint as true. The City
contends that we review the district court’s dismissal de novo, but its resolution of factual
issues on which it based the dismissal for clear error. Neither standard is on point.
Where, as here, factual issues dispositive of jurisdiction may be intertwined with the
merits, we are not called upon initially to review the district court’s findings of fact.
Rather, we must first determine the legal issue of whether the district court had discretion
to make those findings in its determination that subject matter jurisdiction was lacking.
Only if the district court had such discretion must we then subject its findings to review.
Because we conclude that the district court lacked that discretion in the present case, we
need not review its factual findings.
3
The Louisiana Public Bid Law requires that political subdivisions award
contracts for public works or purchases of supplies or materials to the lowest
responsible bidder. LA. REV. STAT. ANN. § 38:2212 (West Supp. 2004). The
Public Bid Law does not apply to contracts for services. Wallace Stevens, Inc. v.
Lafourche Parish Hosp. Dist. No. 3, 323 So. 2d 794, 796 (La. 1975); La. Atty. Gen.
Op. No. 1999-280 (2000). The City Charter contains a similar requirement, but
exempts only contracts for professional services. City of New Orleans Home Rule
Charter § 6-308(5) (1996), available at http://www.new-
orleans.la.us/home/cityInformation/charter.php (last visited Feb. 15, 2005); New
Orleans Rosenbush Claims Serv., Inc. v. City of New Orleans, 653 So. 2d 538, 546
(La. 1995). Courts have held that these provisions create a property interest in the
lowest responsible bidder protected by due process. Nolan Contracting, Inc. v.
Reg’l Transit Auth., 651 F. Supp. 23, 26 (E.D. La. 1986); Williams v. Bd. of
Supervisors, 388 So. 2d 438, 441 (La. Ct. App. 1980).
The parking meter contract at issue here called for both services and
equipment. In determining whether the Public Bid Law applies in such cases,
Louisiana courts have looked to whether the bulk of the contract concerns services
or equipment. Rosenbush, 653 So. 2d at 546-47; La. Atty. Gen. Op. No. 1999-280
(2000). In cases involving the City Charter, courts have looked to whether the bulk
4
of services to be provided are professional or not. Council of New Orleans v.
Morial, 390 So. 2d 1361, 1363-65 (La. Ct. App. 1980).
Worldwide asserts that it was the lowest responsible bidder for the parking
meter contract and that the bulk of the contract called for equipment and non-
professional services, making it subject to the Public Bid Law and City Charter.3 If
these factual assertions are true, Worldwide has stated a viable constitutional claim
and the district court had federal question jurisdiction. If either of these assertions is
not true, Worldwide’s constitutional claim fails, leaving no basis for federal question
jurisdiction.
Consequently, we are faced with the situation where “the challenge to the
court’s jurisdiction is also a challenge to the existence of a federal cause of
action”—in other words, where factual issues determinative of jurisdiction are
intertwined with or identical to factual issues determinative of the merits.
3
The City, in addition to contesting Worldwide’s characterization of the contract
as mostly for equipment and non-professional services, asserts that the Public Bid Law
and Charter do not apply, because the City let out the contract pursuant to an RFP rather
than a solicitation for bids. We reject this argument, because it would allow the City to
circumvent the requirements of the Public Bid Law and Charter simply by characterizing
a solicitation as an RFP. The material question is not what label the City attaches to its
solicitation, but whether the subject matter of the solicitation falls within the requirements
of the Public Bid Law and the Charter. Cf. Rosenbush, 653 So. 2d at 545 (noting that
“[t]he Public Bid Law was enacted . . . to prevent public officials from awarding
contracts on the basis of favoritism or possibly exorbitant and extortionate prices,” and
thus rejecting the City’s attempt to circumvent the Public Bid Law’s requirement that the
City provide just cause for rejecting a bid by reserving a right to reject in its bid
proposal).
5
Williamson v. Tucker, 645 F.2d 404, 415 (5th Cir. 1981); see Clark v. Tarrant
County, Texas, 798 F.2d 736, 742 (5th Cir. 1986) (“The questions of subject matter
jurisdiction and the merits will normally be considered intertwined where the [same]
statute provides both the basis of federal court subject matter jurisdiction and the
cause of action.”). The district court’s resolution of the factual issue of whether the
contract called for mostly professional services precluded federal jurisdiction
because it doomed Worldwide’s federal claim on the merits. In such a case, the rule
of Bell v. Hood requires the district court to assume jurisdiction and decide the case
on the merits. 327 U.S. 678, 682 (1946); Montez, 392 F.3d at 150; Eubanks v.
McCotter, 802 F.2d 790, 792-93 (5th Cir. 1986); Williamson, 645 F.2d at 416
(“[A]s a general rule a claim cannot be dismissed for lack of subject matter
jurisdiction because of the absence of a federal cause of action.”).4
4
The court in Williamson noted that the rule of Bell provides more protection to a
plaintiff who is really facing a challenge to the validity of her claim disguised as a
jurisdictional challenge, because
the defendant is forced to proceed under Rule 12(b)(6) (for failure to state a claim
upon which relief can be granted) or Rule 56 (summary judgment)—both of which
place greater restrictions on the district court’s discretion. The court must take the
plaintiff’s allegations as true when a Rule 12(b)(6) motion is raised, and in addition
must determine that no genuine issue of material fact exists when a Rule 56 motion
is granted. . . . [A] Rule 12(b)(1) motion[, on the other hand,] can be based on the
court’s resolution of disputed facts in the record.
645 F.2d at 415-416. This protection is especially necessary where, as here, the
defendant has not moved for dismissal under Rule 12(b)(1), but the district court sua
sponte dismisses for lack of subject matter jurisdiction based on its resolution of disputed
facts determinative of the merits, without providing the plaintiff with any notice of its
intention to do so.
6
In Bell, the Supreme Court recognized two narrow exceptions to that general
rule, allowing jurisdictional dismissal if the federal claim: (1) “clearly appears to be
immaterial or frivolous and made solely for the purpose of obtaining jurisdiction;” or
(2) is “wholly insubstantial and frivolous.” 327 U.S. at 682-83; Williamson, 645
F.2d at 415. Neither exception applies here. Because courts have held that the
Public Bid Law creates a protectible property interest in the lowest responsible
bidder5, we cannot say that Worldwide’s due process claim is immaterial,
insubstantial, or frivolous. See Williamson, 645 F.2d at 416 (stating that the Bell
exceptions apply “only where the plaintiff’s claim ‘has no plausible foundation’ or
‘is clearly foreclosed by a prior Supreme Court decision.’” (quoting Bell v. Health-
Mor, Inc., 549 F.2d 342, 344 (5th Cir. 1977)).
IV. Conclusion
The district court erred in dismissing Worldwide’s complaint for lack of
subject matter jurisdiction based on its resolution of disputed facts determinative of
both subject matter jurisdiction and the merits.
REVERSED and REMANDED.
5
Nolan Contracting, 651 F. Supp. at 26; Williams, 388 So. 2d at 441.
7