Jm Martinac Shipbuilding Corpo v. State of Washington

FILED
JAN 29 2010
NOT FOR PUBLICATION
MOLLY C. DWYER, CLERK
U.S . CO U RT OF AP PE A LS
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JM MARTINAC SHIPBUILDING No. 08-35754
CORPORATION,
D.C. No. 2:06-cv-01544-JCC
Plaintiff - Appellant,
*
v. MEMORANDUM
THE STATE OF WASHINGTON, by and
through its DEPARTMENT OF
TRANSPORTATION; DOUGLAS B.
MacDONALD, Secretary of
Transportation, in his individual capacity;
W. MICHAEL ANDERSON, Acting
Assistant Secretary and Executive
Director, WSF, in his individual capacity;
SAMUEL J. KUNTZ, Chief Financial
Officer, WSF, in his individual capacity;
and LAURENS ZUIDWEG, Director of
Vessel Engineering, WSF, in his
individual capacity,
Defendants - Appellees.
Appeal from the United States District Court
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
1
for the Western District of Washington
John C. Coughenour, District Judge, Presiding
Argued and Submitted October 13, 2009
Seattle, Washington
Before: CUDAHY, ** Senior Circuit Judge, and RAWLINSON and
CALLAHAN, Circuit Judges.
This action involves claims for relief that arise out of purported government
misconduct and Martinac's failed bid to construct car ferries for Washington
State's Department of Transportation (WSDOT) pursuant to Substitute House Bill
(SHB) 1680. JM Martinac Shipbuilding Corporation (Martinac) challenges the
district court's order dismissing all of its claims against WSDOT and several of its
officials. We hold that the district court properly dismissed most of Martinac's
claims, but that it erred in holding that Martinac's defamation and commercial
disparagement claims (defamation claims) could not be subject to tolling pursuant
to the discovery rule. On remand, the district court should allow discovery to
determine whether the discovery rule applies to Martinac's defamation claims and
** The Honorable Richard D. Cudahy, Senior United States Circuit
Judge for the Seventh Circuit, sitting by designation.
2
whether they may proceed based on actionable statements not protected by any
governmental privilege. 1
1. The present action is not moot because Martinac seeµs damages for past
conduct. Sisµiyou Reg'l Educ. Project v. U.S. Forest Serv., 565 F.3d 545, 559 (9th
Cir. 2009) (internal citations omitted). Barring several exceptions not applicable
here, even if a governing body repeals or amends the legislation about which the
plaintiff complains, his action for damages for past conduct remains a live
controversy. See, e.g. Parents Involved in Cmty. Schs. v. Seattle Sch. Dist. 1, 551
U.S. 701, 719-20 (2007).
2. Martinac's freestanding RICO claims fail because it did not adequately plead
RICO standing. 'Without a harm to a specific business or property interest - a
categorical inquiry typically determined by reference to state law - there is no
injury to business or property within the meaning of RICO.' See 18 U.S.C. y
1964(c); Canyon County v. Syngenta Seeds, Inc., 519 F.3d 975 (9th Cir. 2008)
1
Because the RICO claims may survive based on injury related to the
defamation claims, the district court may decide whether RICO claims may
proceed on this basis and decline to exercise supplemental jurisdiction if they may
not. Alternatively, it should retain jurisdiction and maµe further findings on the
defamation claims before addressing the possible surviving RICO claims.
3
(quoting Diaz v. Gates, 420 F.3d 897, 900 (9th Cir. 2005) (en banc), cert. denied,
546 U.S. 1311 (2006)). Washington does not allow suits for bid preparation costs
for disgruntled bidders, and, therefore, Martinac has no RICO standing as
determined by reference to state law. Peerless Food Products, Inc. v. Washington,
835 P.2d 1012, 1018-19 (Wash. 1992) (en banc); see also Bellingham Am. Pub.
Co. v. Bellingham Pub. Co., 258 P. 836, 837 (Wash. 1927).
3. The district court also properly dismissed as precluded Martinac's RICO and
common law claims based on Appellees' actions upheld as proper by a state court.
See, e.g., Rains v. Washington, 674 P.2d 165, 169 (Wash. 1983) (en banc). To the
extent the challenged actions pre-date SHB 1680 or were not addressed in the state
court ruling, they are not barred by collateral estoppel.
4. In Washington, defamation claims are subject to a two-year statute of
limitations.2 Wash. Rev. Code y 4.16.100(1). Martinac seeµs to toll the statute of
limitations through equitable tolling and the discovery rule. The district court
properly determined that equitable tolling does not apply. Washington courts have
not yet applied equitable tolling to defamation claims, and Martinac does not allege
2
Neither party nor the district court made a meaningful distinction between
the commercial disparagement and defamation claims, and this Memorandum will
treat them identically.
4
that Appellees concealed their allegedly defamatory statements or lulled Martinac
into failing to timely file its claims. See, e.g., Thompson v. Wilson, 175 P.3d 1149,
1154 (Wash. Ct. App. 2008).
The district court improperly concluded that the discovery rule does not
apply. The discovery rule may apply to Martinac's claims because it is unclear
whether Martinac could have immediately µnown of the cause of its injuries. See
Matter of Estates of Hibbard, 826 P.2d 690, 696 (Wash. 1992) (en banc); see also
Kittinger v. Boeing Co., 585 P.2d 812, 814-15 (Wash. Ct. App. 1978) (applying the
discovery rule to a libel claim). Given that there is no indication that Martinac
participated in the meetings or chains of correspondence in which the allegedly
defamatory statements were made, and neither party contends that transcripts of the
meetings or copies of the letters or reports were available to Martinac, it is unclear
when Martinac learned of its injury. What a person should have µnown at the time
is a question of fact, with the burden on the defendant. See, e.g., August v. U.S.
Bancorp, 190 P.3d 86, 93 (Wash. Ct. App. 2008) (citing Mayer v. City of Seattle,
10 P.3d 408, 413 (Wash. Ct. App. 2000)).
Because the district court found the claims time barred, it did not address
Appellees' argument that the contested statements are absolutely privileged. See
5
Liberty Banµ of Seattle, Inc. v. Henderson, 878 P.2d 1259, 1269 (Wash. Ct. App.
1994). Washington provides absolute immunity for high-ranµing officials who
maµe statements that have 'more than a tenuous relation to his or her official
capacity.' Aitµen v. Reed, 949 P.2d 441, 449 (Wash. Ct. App. 1998); Stidham v.
Wash., 637 P.2d 970, 972-73 (Wash. Ct. App. 1981). The existence of an absolute
privilege is a question of law for the court. Liberty Banµ, 878 P.2d at 1269. Inferior
state officers are protected only by qualified privilege, and the plaintiff may show
that the speaµer lost his privilege through abuse. See Wood v. Battle Ground Sch.
Dist., 27 P.3d 1208, 1220 (Wash. Ct. App. 2001). A privilege is abused if the
speaµer µnows that the statement is false or shows recµless disregard for its truth or
falsity - i.e., actual malice. See id. Martinac concedes that MacDonald and
Anderson, the ex-Secretary of Transportation and Washington State Ferries ex-
Executive Director, respectively, were senior government officials entitled to
absolute immunity for statements more than tenuously related to their official
capacity, but contends that Zuidweg, Director of Vessel Engineering and Kuntz,
Chief Financial Officer, are not.
Most of the allegedly defamatory statements that Martinac identifies include
statements to the legislature, the Governor, and a legislative delegation. These
6
statements by MacDonald are absolutely privileged. See, e.g., W ASH. R EV. C ODE
yy 47.01.101, 47.56.030 In addition, at least two statements appear to be non-
actionable opinions: MacDonald's characterization of the Martinac proposal in his
questions and Zuidweg's claim that he did not µnow enough about the proposal to
answer questions. In contrast, MacDonald's statements made outside the 2003
meeting purportedly involved union representatives and unµnown people in an
informal setting, rather than in the course of a formal meeting with members of the
Washington state government to whom MacDonald is statutorily required to report.
We cannot conclude as a matter of law that these statements made in an informal
setting are protected by an absolute privilege as more than tenuously connected to
his official duties. The district court's decision on the defamation claims are
remanded to allow further fact-finding pursuant to the discovery rule (depending
on its choice as to the RICO claims as specified in footnote 1).
5. The district court properly dismissed Martinac's claims for intentional and
wrongful interference with prospective economic advantage and civil conspiracy to
commit the same. As discussed above, because Martinac cannot seeµ money
damages for its bid preparation costs under Peerless, its wrongful interference
claims were properly dismissed. See, e.g., See Pac. Nw. Shooting Parµ Ass'n v.
7
City of Sequim, 144 P.3d 276, 281 n.2 (Wash. 2006) (listing the elements of
wrongful interference).
6. The district court properly dismissed Martinac's fraud claims and properly
exercised its discretion to decline to retain jurisdiction over them. Even if the
Peerless line of cases did not bar Martinac from collecting damages related to the
SHB 1680 bid process and bidding activities undertaµen prior to SHB 1680ùs
enactment, Martinac's fraud claims fail because Martinac does not adequately
plead reliance. Kirµham v. Smith, 23 P.3d 10, 13 (Wash. Ct. App. 2001) (listing the
elements of fraud). Specifically, at no point does Martinac plead that it developed
its 130-car ferry based on WSDOT's representations. In addition, the district court
did not abuse its discretion in declining to retain any fraud claims that might be
properly repleaded. A district court may properly decline supplemental jurisdiction
once it has dismissed all claims over which it had original jurisdiction (here, the
RICO claims). See 28 U.S.C. y 1367; Dream Palace v. County of Maricopa, 384
F.3d 990, 1022 (9th Cir. 2004). If, however, Martinac does have viable defamation
claims, the district court should consider whether these allow standing for RICO
purposes and whether this holding changes the district court's discretionary
determination regarding Martinac's request to replead the fraud claims.
8
7. The district court properly dismissed Martinac's negligence claims for failure to
plead that Appellees' actions created a special relationship with Martinac. See
Babcocµ v. Mason County Fire Dist. No. 6, 30 P.3d 1261, 1267, 1269-70 (Wash.
2001) (en banc).
AFFIRMED as to all claims except the defamation claims which are
REVERSED AND REMANDED for further proceedings consistent with this
memorandum.
9
FILED
JM Martinac Shipbuilding Corp. v. Washington, No. 08-35754 JAN 29 2010
CALLAHAN, CIRCUIT JUDGE, concurring and dissenting: MOLLY C. DWYER, CLERK
U.S . CO UR T OF AP PE A LS
I concur in the majority opinion to the extent that it affirms the district
court's Rule 12(b)(6) dismissal of Martinac's complaint for failure to state a claim.
I dissent from the majority's remand to the district court of Martinac's defamation
and commercial disparagement claims (the 'defamation claims.')
As to the defamation claims, I part company with the majority where it
remands Martinac's defamation claims to the district court to determine whether
the discovery rule saves the claims from the two-year statute-of-limitations.1 See
W ASH. R EV. C ODE y 4.16.100(1). I would hold that we need not resolve the
applicability of the discovery rule to the defamation claims, because all of the
alleged statements in issue are either privileged or non-actionable opinions. See
Corbally v. Kennewicµ Sch. Dist., 973 P.2d 1074, 1077 (Wash. Ct. App. 1999)
(non-actionable opinions); Aitµen v. Reed, 949 P.2d 441, 449 (Wash. Ct. App.
1998) (absolute privilege).
The majority opinion identifies only one set of statements as not being
privileged as a matter of law - Defendant MacDonald's statements made during
1
I agree with the majority that equitable tolling is inapplicable because
Martinac does not allege that Defendants acted with bad faith, acted deceptively, or
offered false assurances that allowed the statute of limitations to lapse. See
Thompson v. Wilson, 175 P.3d 1149, 1154 (Wash. Ct. App. 2008).
and outside of a 2003 meeting with Governor Gary Locµe and representatives of
labor unions. On remand, then, the district court need only determine whether the
discovery rule applies to Defendant MacDonald's statements made at the 2003
meeting.
I would hold that MacDonald's statements at the 2003 meeting are
privileged. To receive absolute immunity under Washington law, a government
official (1) must be within the class of officials absolutely entitled to publish
defamatory matter; and (2) his or her statements must have more than a tenuous
relation to the individual's official capacity. Liberty Banµ of Seattle, Inc. v.
Henderson, 878 P.2d 1259, 1268-69 (Wash. Ct. App. 1994). The majority agrees
that MacDonald is a 'senior government official entitled to absolute immunity for
statements tenuously related to [his] official capacity.' Majority Opinion at 8. Our
difference, then, concerns whether MacDonald's statements at the 2003 meeting
were unrelated to his official capacity.
Martinac's allegations in the Complaint show that MacDonald's alleged
statements are related to his position. MacDonald, as Secretary of Transportation,
is authorized to advise the governor and legislature with respect to matters under
his department's jurisdiction. W ASH. R EV. C ODE y 47.01.101. Accordingly, when
MacDonald met with the governor to discuss the failure of Referendum 51
(concerning a proposed transportation plan), Compl. j 67, the meeting had more
than a tenuous relation to MacDonald's official capacity, even if representatives of
labor unions and others were involved. MacDonald's immunity also extends to his
comments to the governor about Martinac, and other aspects of his department's
ferry procurement worµ. The majority cites no authority for its implication that the
presence of union officials or other third parties deprives a state official's statement
of its immunity under Washington law, and I µnow of no such authority.2
Accordingly, I would hold that third parties' presence is irrelevant, and
MacDonald's statements made at the 2003 meeting are absolutely privileged.
Since I would affirm the district court in its entirety, I dissent from the
majority's remand of Martinac's defamation claims.
2
To rule that an official's statements are not privileged if made in the
presence of anyone other than parties to whom the official has the duty to report
seems impractical. For instance, if the Secretary of Transportation addressed the
Washington legislature about his department's worµ, all members of the public
would have to leave the chambers in order for the Secretary to retain his absolute
privilege against defamation liability.