Clean Up America v. City of L.A. CA2/8

Filed 3/6/23 Clean Up America v. City of L.A. CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
CLEAN UP AMERICA, INC., et B308572
al.,
Plaintiffs and Appellants, Los Angeles County
Super. Ct. No. 18STCV04176
v.
CITY OF LOS ANGELES,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Holly J. Fujie, Judge. Affirmed.
Law Office of Gronemeier & Hickambottom, Dale L.
Gronemeier and Elbie J. Hickambottom, Jr., for Plaintiffs and
Appellants.
Michael N. Feuer, City Attorney, Scott Marcus, Chief
Assistant City Attorney, Blithe S. Bock, Managing Assistant City
Attorney and Sara Ugaz, Deputy City Attorney, for Defendant
and Respondent.
_______________________
Appellant Clean up America, Inc. (CUA) is a licensed
construction and demolition waste hauler/processor. It is a
disadvantaged business enterprise (DBE) because its majority
owner, appellant Deontay Potter, is African-American.
Appellants (CUA collectively) entered into a contract with
respondent City of Los Angeles (City) to collect, haul away, and
recycle construction debris. The City stopped sending CUA
projects under the contract when it learned CUA had violated
state and local laws designed to protect public safety and the
environment and had failed to correct the violations. CUA then
filed a civil action against the City alleging racial discrimination
and denial of equal protection in violation of Article I, sections 7
and 8 of the California Constitution. The trial court granted
summary judgment in favor of the City and against appellants.
We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
I. The Allegations of the Second Amended Complaint
On August 19, 2019, CUA filed it operative second
amended complaint (SAC) against the City. In August 2013,
CUA was the winning bid on a request for proposal issued by the
City for collecting, hauling, and recycling construction debris. In
January 2015, CUA was awarded a Department of General
Services contract, effective December 2015. In March 2015, a
City employee, Martina White, told Potter that “higher-ups”
within the City, specifically one Kelly Cooper, did not want CUA
to be awarded the contract. CUA understood this to mean it was
not welcome because Potter was African-American.
Thereafter, City staff allegedly administered the contract to
CUA’s detriment, applying arbitrary standards to CUA that were
not applied to other trash contractors which were not African-
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American or Black owned and operated. In particular, the City
“unreasonably scrutinized CUA’s performance of its contractual
obligations, particularly concerning the submission of dump
tickets and recycling reports.” The City would “often delay and/or
deny payment of CUA’s invoices based on a strict requirement
regarding the submission of the said dump tickets and recycling
reports as well as a number of other minor issues.” Even after
CUA made requested additions or edits to its submissions for
payment, the City would unreasonably delay its review and
approval of the invoices and related submissions. The
unreasonable delays or denial of payment “resulted in extreme
financial burden on CUA. This affected CUA’s ability to
maintain optimal labor force necessary to perform the task of
manually sorting and recycling tons of construction debris.
Additionally, the amount of administrative time that CUA staff
had to devote to follow-up responses to its invoices and
concomitant documentation, i.e., recycling reports and dump
tickets, adversely impacted its ability to perform core operations
of the business.”
On May 16, 2016, 16 months after awarding the contract to
CUA, the City allegedly rescinded the contract and replaced CUA
with Arrow Disposal Services. CUA learned later that Arrow had
been found to be “directly flouting the rules and regulations” for
handling construction debris, was given a “meaningless $1,000.00
fine[,] and allowed to keep operating.” In addition, in February
2017 the City audited the hauling records of Arrow and
discovered it had failed to submit required recycle reports from
January 2014 through December 2016 and had grossly
underrepresented the amount of waste it had hauled to avoid
payment of taxes. Further it had dumped waste in county
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landfills instead of at certified recycling centers. Despite this and
other violations, Arrow was promptly paid its invoices.
When CUA spoke to the City about payment delays,
Martina White told them to contact “Auntie Maxine,” referring to
Congresswoman Maxine Waters “who is a well known champion
of racial equality and the fight against discrimination.” CUA
understood this to mean that the City harbored racial resentment
against it. Finally, as evidence of the City’s racial bias against it,
CUA alleged that in a separate civil dispute between CUA and
Arrow Disposal Services, Kirk Tahmizian, Arrow’s owner,
“referred to Potter as a nigger.”
The SAC alleged the City harbored racial animus toward
CUA, the only black-owned certified construction debris
contractor in the City of Los Angeles, as evidenced by 1) Martina
White’s advice to see “Auntie Maxine” and her revelation that the
“higher-ups” in the City did not want CUA to have the trash
debris contract; 2) the fact that the City did business with Arrow,
whose owner Kirk Tahmizian was openly racist; 3) the imposition
of more onerous performance standards on CUA and not on non-
black-owned contractors and the delays in payment until such
standards were fulfilled; and 4) the imposition of these standards,
knowing they increased operating costs for CUA and ultimately
resulted in loss of its certification because it could no longer
afford to process the construction debris hauled to its facilities.
In sum, the SAC pled that a discriminatory animus existed
based on the comments of Martina White about the City “higher-
ups” and “Auntie Maxine,” the obstacles appellants encountered
in securing payment for invoices compared to their peers, and the
rescission of the contract with respect to appellants despite
similar behavior by Arrow. The SAC alleged there was a causal
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link between the discriminatory animus and the rescission of the
contract and the replacement of CUA with Arrow.
II. Summary Judgment Proceedings
On January 24, 2020, the City filed a motion for summary
judgment. It was accompanied by a separate statement of
undisputed facts and four declarations with attached exhibits.
The City countered the allegations of the SAC with these
undisputed material facts.
A. The Initial Contract With CUA
In 2013 CUA was awarded a construction debris disposal
contract, which took effect on December 9, 2015. During the
relevant time period, CUA operated its own processing facility for
the construction debris it hauled. The contract required CUA to
observe and comply with all Federal, State, and local laws which
in any manner affecting those engaged or employed on the work,
the material of the work or the conduct of the work. CUA was
required to obtain and pay for all permits necessary for the
performance of the work; CUA agreed that payments would be
withheld absent its compliance with LA City business tax
requirements. The city had sole discretion to terminate the
contract for any reason or no reason at all without cause.
B. Violations of State and Local Law
The City presented the testimony of Environmental Affairs
Officer David Thompson, who serves as program manager for the
City’s Local Enforcement Agency (LEA) which inspects all solid
waste facilities to make sure they are properly established,
operated, and managed in a manner that protects public health
and the environment. Before winning the hauling and disposal
bid in 2013, CUA had operated a registered and solid waste
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processing facility since 2012. Such facilities are inspected
monthly. During 2014 and from January through June 2015,
monthly inspections discovered violations. In particular the July
14, 2015, inspection documented two areas of concern: the
amount of debris stored at CUA’s facility and the stability of the
piles of stored debris. In August 2015, the monthly inspection
documented unprocessed storage of debris and unstable debris
piles. CUA submitted an Action Plan to reduce the amount of
debris at its processing facility and to hire additional staff to
function as a second shift. In September 2015 the monthly
inspection documented continued violations. In October 2015,
there were again documented violations demonstrating CUA’s
ongoing failure to address previously identified violations and
compliance issues. In November 2015, the violations had not
been addressed through the Action Plan. On December 15, 2015,
shortly after the contract became effective, the monthly
inspection again documented continuing violations and
noncompliance with the August 2015 Action Plan. The City
issued a formal Notice and Order dated December 22, 2015. On
February12, 2016, CUA and the LEA entered into a stipulated
agreement for compliance with state minimum standards. CUA
stipulated that the facility was in violation of applicable
regulations. From March 2016 through October 2016, the City
inspected the processing facility and contemplated issuing a
cease and desist order so that CUA would not be able to bring
waste to the facility until the violations were corrected.
Eventually a fire ignited spontaneously in the unstable pile of
debris at CUA’s processing facility. It smoldered for six weeks
while City firefighters tried to extinguish it safely without
bringing down the pile itself. In October 2016, the City served a
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cease and desist order recounting the history of inspections and
violations culminating with the December 22, 2015 Notice and
Order. The October 2016 Cease and Desist order called on CUA
to immediately stop accepting incoming material and pay an
administrative penalty of $840,000 to the City for 168 days of
violating the stipulated agreement between March 16, 2016 and
August 31, 2016.
Thus, before the effective date of the hauling and disposal
contract, the City had been inspecting CUA’s debris processing
facilities and discovered numerous regulatory violations that
needed to be corrected. After the contract took effect, and after
notice to CUA to resolve the violations, the City issued a cease
and desist order which prevented CUA from taking debris it had
collected to its own processing facilities.
On top of what was happening at the processing facility,
CUA committed a contractual violation with its very first project
when it delivered bins to a City worksite that were damaged and
already partially filled with debris from another project. Had the
error not been caught, the City would have been overcharged for
construction waste it had not generated.
C. Payments
The contract became effective on December 9, 2015.
Standard payment terms were net 30 days. During the period
January 2016 through November 2016, CUA invoiced the City for
73 debris hauls, for a total amount paid to CUA of $22,320.51.
Although the City continued to find violations, it issued its first
notice to proceed under the contract on December 17, 2015. CUA
submitted its first invoices on January 20, 2016. The City paid
the invoices in full on February 18, 2016.
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Martina White, the City analysist managing CUA’s
contract, became concerned that CUA’s performance did not
improve over time after the delivery of the first partially filled
bins. She determined to engage a second waste hauler, Arrow
Disposal, to ensure that the construction waste was timely
hauled away and disposed of properly. Arrow was engaged in
April 2016 to provide hauling services alongside CUA. It was the
normal practice to contract with more than one construction
waste hauler at any given time. CUA continued to receive
hauling projects up through August 2016.
Before it would pay invoices, the City required all debris
haulers, including CUA and Arrow, to provide receipts (or dump
tickets) for dumps of debris loads larger than six tons. Debris
loads in excess of six tons required receipts because debris
haulers were paid a flat fee for the first six tons and charged an
excess fee for the weight above six tons. The City Controller’s
office would not process an invoice for payment without a receipt
confirming the weight of debris in excess of six tons. Most of
CUA’s invoices were paid within 30 days. Those invoices paid
after 30 days were paid within 60 days except the last invoice
submitted in August 2016, which was paid in November 2016.
White reviewed all payments to Arrow and to CUA and
determined that none were unreasonably delayed. She prepared
spreadsheets showing CUA and Arrow’s payments, which
followed the same timeline, that is, between 30 and 60 days after
date of submission.
D. Continuing Violations
Because CUA was not remedying the continuing violations
found during the monthly inspections, CUA and the City entered
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into a stipulated compliance agreement on February 12, 2016 by
which CUA admitted its regulatory violations.
Work continued. By March, CUA was in violation of the
stipulated agreement and the City notified CUA that it could not
accept incoming trash debris until its processing facility achieved
full compliance. By June 2016, City inspectors recommended
that CUA cease accepting incoming debris into its processing
facility. In August 2016, CUA submitted its last payment
invoice. In October 2016, the City issued a cease and desist order
because of continuing violations of state minimum standards at
the processing facility and fined CUA $840,000 for violating the
stipulated agreement between March 16, 2016 and August 31,
2016.
After April 2016, both CUA and Arrow were assigned trash
hauling duties. Each was required to submit a fiscal year-end
recycle report to the City’s Department of Sanitation. Failure to
submit the report did not constitute cause to withhold any
payment due to a vendor. CUA submitted the year end report for
2015. Arrow submitted recycle reports for fiscal years 2017 and
2018.
E. Facts of Alleged Racial Bias
The third-party vendor who made the overtly racist remark
about Potter was not an employee of the City. Martina White
also submitted a declaration stating that when she told Potter to
contact “Auntie Maxine,” she saw CUA struggling to comply with
the contract. She knew Congresswoman Waters was aware of
government grants that assisted black-owned businesses which,
like CUA, appeared to need help. That was the sole reason she
referred CUA to Congresswoman Waters. White declared she
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had not observed racial animus toward CUA by any supervisors
she worked with.
F. Facts Presented in Response to Motion for Summary
Judgment
In opposition to the City’s motion, appellants presented the
Declaration of Deontay Potter, which set out these facts.
1. CUA was awarded the contract in 2013, but it did not
go into effect until December 2015. A two-year
waiting period in his experience is not customary.
2. City employee Martina White told him in 2015 that
the “higher ups” did not want the contract awarded to
CUA.
3. After a minor issue that was brought to his attention
early on in the contract period, there were no
significant or material issues with CUA’s
performance under the contract in that CUA never
received any write up or documented notice of breach
or non-performance.
4. In April 2016, the City contracted with Arrow on a
second contract. CUA still remained the primary
vendor between the two companies. Arrow’s pricing
was higher than CUA’s pricing.
5. As primary vendor, CUA had the right of first refusal
of construction debris hauling jobs, yet the vast
majority of all construction debris hauling jobs that
arose went to Arrow after April 2016.
6. After April 25, 2016, 52 requests for service were
directed to Arrow and 6 were directed to CUA. None
of the 52 requests were offered to CUA first as the
primary vendor. The 52 requests handled by Arrow
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cost 50 percent more than they would have had CUA
performed them.
7. In June 2016, the City demanded specific recycle
reports and did not pay CUA’s final August 2016
invoice until November 2016. It delayed processing
the final invoice while it required the recycle reports
documents and information.
8. Arrow was not required to, and did not, submit
recycle reports for work performed in 2016.
9. For the periods of May 1 through May 31, 2016, and
August 11 through August 30 2016, Arrow illegally
dumped 10 loads of construction debris waste and
was fined $1,000 for only one violation instead of the
“appropriate amount” of $43,000.
10. The City’s failure to appropriately fine Arrow was a
blatant act of discriminatory treatment. Its
intentional exemption of Arrow from submitting
recycle reports for 2016 was to facilitate a
competitive advantage for Arrow.
11. The City eventually did a full audit of Arrow for the
period of services rendered from January 1, 2014
through December 31 2016 and discovered it had
unlawfully disposed of thousands of tons of
constructive debris waste and yet it was fined a mere
$1,000. It also owed over $500,000 in unpaid fees for
underreported waste it hauled and revenues it
generated. It was allowed to pay the outstanding
fees over time.
12. Martina White’s testimony is not creditable because
she was caught in a lie at her deposition.
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G. The Grant of Summary Judgment
The trial court granted summary judgment in favor of
respondent City and against CUA. In doing so, the trial court
found “Plaintiffs have conceded to the arguments of Moving
Defendant. The legal analysis section of Plaintiffs’ opposition is
void of any citations to legal authority. . . . Plaintiffs’ opposition
also fails to cite to any evidence.” The trial court noted that
plaintiffs cited to only one case, McDonnell Douglas Corp. v.
Green (1973) 411 U.S. 792, for the proposition that the evidence
plaintiffs presented in opposition to the summary judgment
motion shifted the burden of proof to the City, a burden plaintiffs
contended the City did not adequately shoulder. The trial court
found plaintiffs provided no legal analysis demonstrating why
McDonnell Douglas, a Title VII action involving an employee and
private employer, applied to racial discrimination allegations in
the context of a contract between a private vendor and a
government entity. Finding plaintiffs’ opposition provided “no
reasoned rebuttal argument to the arguments advanced” by the
City, the trial court concluded CUA had conceded the City’s
arguments and granted summary judgment in favor of the City.
This appeal followed.
DISCUSSION
Appellants Failed to Raise a Triable Issue of Material Fact
in Opposition to Summary Judgment and the City Showed It Was
Entitled to Judgment as a Matter of Law.
I. Standard of Review
“[F]rom commencement to conclusion, the party moving for
summary judgment bears the burden of persuasion that there is
no triable issue of material fact and that he is entitled to
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judgment as a matter of law.” (Aguilar v. Atlantic Richfield Co.
(2001) 25 Cal.4th 826, 850. (Aguilar).) “[T]he party moving for
summary judgment bears an initial burden of production to make
a prima facie showing of the nonexistence of any triable issue of
material fact; if he carries his burden of production, he causes a
shift, and the opposing party is then subjected to a burden of
production of his own to make a prima facie showing of the
existence of a triable issue of material fact.” (Ibid.)
When the moving party is a defendant, it must show that
the plaintiff cannot establish at least one element of the cause of
action. (Aguilar, supra, 25 Cal.4th at p. 853.) “The defendant
has shown that the plaintiff cannot establish at least one element
of the cause of action by showing that the plaintiff does not
possess, and cannot reasonably obtain, needed evidence.” (Id. at
p. 854.) The defendant must “present evidence, and not simply
point out that the plaintiff does not possess, and cannot
reasonably obtain, needed evidence.” (Ibid., fn. omitted.) Thus,
“the defendant must ‘support[]’ the ‘motion’ with evidence
including ‘affidavits, declarations, admissions, answers to
interrogatories, depositions, and matters of which judicial notice’
must or may ‘be taken.’ (Code Civ. Proc., § 437c, subd. (b).) The
defendant may, but need not, present evidence that conclusively
negates an element of the plaintiff's cause of action. The
defendant may also present evidence that the plaintiff does not
possess, and cannot reasonably obtain, needed evidence—as
through admissions by the plaintiff following extensive discovery
to the effect that he has discovered nothing.” (Aguilar, at p. 855.)
“Supporting and opposing affidavits or declarations. . .shall
set forth admissible evidence.” (Code Civ. Proc., § 437c,
subd. (d).) “Matters which would be excluded under the rules of
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evidence if proffered by a witness in a trial as hearsay,
conclusions or impermissible opinion, must the disregarded in
supporting affidavits.” (Hayman v. Block (1986) 176 Cal.App.3d
629, 639.)
Ordinarily, we review a trial court’s rule on evidentiary
objections for an abuse of discretion. There is a split of authority
on evidentiary objections made in connection with a motion for
summary judgment, however. The Sixth District Court of
Appeal, and to a more limited degree the First District Court of
Appeal, have held that some or all written evidentiary objections
should be reviewed de novo. (Pipitone v. Williams (2016)
244 Cal.App.4th 1437, 1450–1451; Strobel v. Johnson & Johnson
(2021) 70 Cal.App.5th 796, 816–817.) We agree with the majority
of courts which have held that the abuse of discretion standard
applies.1
1 See, e.g., Schmidt v. Citibank, N.A. (2018) 28 Cal.App.5th
1109, 1118; Butte Fire Cases (2018) 24 Cal.App.5th 1150, 1169;
Duarte v. Pacific Specialty Ins. Co. (2017) 13 Cal.App.5th 45, 52;
O'Neal v. Stanislaus County Employees’ Retirement Assn. (2017)
8 Cal.App.5th 1184, 1198–1199; Ryder v. Lightstorm
Entertainment, Inc. (2016) 246 Cal.App.4th 1064, 1072; Jones v.
Wachovia Bank (2014) 230 Cal.App.4th 935, 951; Serri v. Santa
Clara University. (2014) 226 Cal.App.4th 830, 852; Ahn v. Kumho
Tire U.S.A., Inc. (2014) 223 Cal.App.4th 133, 143–144; Garrett v.
Howmedica Osteonics Corp. (2013) 214 Cal.App.4th 173, 181;
cf. Howard Entertainment, Inc. v. Kudrow (2012) 208 Cal.App.4th
1102, 1122–1123 (conc. opn. of Turner, P. J.) (Howard) [listing
13 decisions and stating the “unanimous” decisions from 2006 to
2012 apply abuse of discretion standard].
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II. Applicable Law
Article I, Section 7, of the California Constitution states
“[a] person may not be deprived of life, liberty, or property
without due process of law.” (Cal. Const., art. I, §7, subd. (a).)
This does not protect all conceivable property interests but
instead only those property interests or benefits that are
conferred by statute. (Ryan v. California Interscholastic
Federation-San Diego Section (2001) 94 Cal.App.4th 1048, 1071;
Schultz v. Regents of University of California (1984) 160
Cal.App.3d 768, 786.) For its part, Article I, section 8 states “[a]
person may not be disqualified from entering or pursuing a
business, profession, vocation, or employment because of sex,
race, creed, color, or national or ethnic origin.” (Cal. Const., art.
I, §8.) If CUA’s cause of action for racial discrimination and
equal protection violations is considered a disparate treatment
claim, the elements of such a claim, expressed in an employer-
employee context are: 1) the employee’s membership in a
classification protected by the statute; 2) discriminatory animus
on the part of the employer toward members of that
classification; 3) an action by the employer adverse to the
employee’s interests; 4) a causal link between the discriminatory
animus and the adverse action; 5) damage to the employee; and
6) a causal link between the adverse action and the damage.
(McCaskey v. California State Auto. Assn. (2010) 189 Cal.App.4th
947, 979; Guz v. Bechtel National, Inc. (2000) 24 Cal.4th
317, 360.)
“Unequal treatment which results simply from laxity of
enforcement or which reflects a nonarbitrary basis for selective
enforcement of a statute does not deny equal protection and is not
constitutionally prohibited discriminatory enforcement.”
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(Baluyut v. Superior Court (1996) 12 Cal.4th 826, 832.) Unequal
application of a statute or rule to persons entitled to be treated
alike is not a denial of equal protection “unless there is shown to
be present in it an element of intentional or purposeful
discrimination.” (Snowden v. Hughes (1944) 321 U.S. 1, 8.) What
the equal protection guarantee prohibits is state officials
“purposefully and intentionally singling out individuals for
disparate treatment on an invidiously discriminatory basis.”
(Murgia v. Municipal Court (1975) 15 Cal.3d 286, 297.)
III. Analysis
We agree with the trial court that CUA did not properly
rebut the evidence presented by the City and create a triable
issue of material fact. CUA did not refute the City’s
nondiscriminatory reasons to stop assigning hauling and
recycling projects exclusively to CUA. CUA did not deny the
regulatory and statutory violations it committed with respect to
its waste processing plant. CUA did not dispute the issuance of a
cease and desist order which prohibited it from using its own
facilities to process the construction debris it had contracted to
haul away and recycle under the contract. CUA did not dispute
that the City had a right to contract with a secondary vendor in
addition to CUA to haul and dispose of construction debris. CUA
did not dispute that the City paid all invoices except the last one
within 30 to 60 days of submission. (DuPont Merck
Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th 562,
566 [“By failing to argue the contrary, plaintiffs concede this
issue”].)
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Significantly CUA did not dispute Martina White’s
nondiscriminatory reason for referring CUA to Congresswoman
Waters except to accuse White of lying. It also relied solely on its
own “understanding” that when White said the “higher-ups” did
not want CUA to win the contract, White was referring to racial
bias by City officials. And it inexplicably imputed to the City the
racial bias demonstrated by one of the City’s third party vendors.
In sum, where the City refuted the unsubstantiated
allegations of the SAC, CUA did not offer anything other than
Potter’s personal opinions, perceptions and understandings, from
which not even an inference arises that the City’s decisions were
actually made on the prohibited basis of race. (Serri v. Santa
Clara University, supra, 226 Cal.App.4th at p. 862 [“ ‘substantial
responsive evidence’ ” must be produced demonstrating the
existence of a material triable controversy as to pretext or
discriminatory animus].)2 Assuming, as CUA contends, that the
McDonnell Douglas burden-shifting analysis applies in this
contractual context, we find the City adequately shifted the
burden of producing evidence when it put forward non-
discriminatory reasons for declining to assign more waste
hauling projects to CUA. When the burden then shifted to CUA,
it failed to rebut the City’s evidence with non-speculative
evidence of its own.
2 Even if we considered the evidence CUA offered which the
trial court ruled inadmissible, our conclusion would not change.
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DISPOSITION
The judgment is affirmed. Respondent City of Los Angeles
shall recover costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
STRATTON, P. J.
We concur:
WILEY, J.
HARUTUNIAN, J.*
* Judge of the San Diego Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.
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