Gil Ramirez Group, L.L.C. v. Houston Independent School District
2015 U.S. App. LEXIS 8171
5th Cir.2015Background
- GRG (Gil Ramirez Jr. and his company) bid for Job-Order Contracts (JOC) with Houston Independent School District (HISD) in a 2008 RFP expansion; GRG initially received many assignments under the 2009 JOC but later saw a sharp decline after alleged pay-to-play activity involving Trustee Lawrence Marshall and consultant Joyce Moss Clay.
- Marshall, an elected HISD trustee, allegedly received payments routed through Clay from competitor vendors (RHJ and Fort Bend Mechanical) who obtained preferential treatment; GRG refused to participate in this scheme and claims that refusal cost it business.
- HISD administrators altered the selection process in 2008 (adding vendors for diversity); an internal audit later found procedural noncompliance, prompting a 2010 rebid in which GRG was not selected.
- GRG sued under federal RICO (§§1962(c),(d)), 42 U.S.C. §1983 (First, Fourteenth Amendments), and several Texas state-law claims (breach, estoppel, tortious interference, civil conspiracy) against HISD, Marshall, Clay, and vendor defendants; district court dismissed most claims on Rule 12 and summary judgment.
- On appeal, the Fifth Circuit affirmed dismissal of RICO and constitutional claims as to HISD, reversed summary judgment on RICO (against non-HISD defendants) for injuries during the remainder of the 2009 contract period, and reversed as to tortious interference and conspiracy (non-HISD defendants); the court held Marshall not immune under TTCA/Education Code for the alleged conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| RICO injury/standing (did GRG show a "conclusive" injury) | GRG: loss of concrete business (drop in 2009 assignments) is a certain, provable injury caused by corruption | Defs: JOC awards and renewals discretionary; loss is speculative/expectancy only | Held: Triable issue as to loss of 2009 assignments supports RICO claim against non-HISD defendants; 2010 nonselection insufficiently supported by GRG |
| Whether HISD is a proper RICO defendant (treble damages / mens rea) | GRG: RICO treble damages have remedial components; municipal liability available | HISD: municipal entity cannot form mens rea and is immune from punitive damages; treble damages are punitive and exceed immunity limits | Held: HISD cannot be sued under RICO here because RICO’s mandatory treble damages would expose the public fisc and Congress did not abrogate municipal immunity; HISD dismissed from RICO claim |
| Whether Marshall (former trustee) is protected by TTCA/Education Code (election of remedies / immunity) | GRG: Marshall acted outside official duties (bribery), thus not entitled to TTCA or Education Code immunity | Marshall: is an "employee" for TTCA/Education Code purposes, so TTCA §101.106(e) requires dismissal and Education Code §22.0511 provides immunity for acts within scope | Held: Marshall is not an HISD employee under TTCA definition for these acts and alleged bribery falls outside the scope of protected Education Code acts; Marshall not entitled to dismissal/immunity on state-law claims |
| Tortious interference with prospective relations (intent and independent tort) | GRG: reasonable probability of continued JOC business; defendants knowingly caused interference as part of pay-to-play scheme | Defs: any harm to GRG was incidental to legitimate conduct; no direct evidence targeting GRG | Held: Sufficient evidence that scheme made interference substantially certain—triable issue survives summary judgment as to interference and related conspiracy (non-HISD defendants) |
Key Cases Cited
- Price v. Pinnacle Brands, Inc., 138 F.3d 602 (5th Cir.) (RICO plaintiff must show concrete, not mere expectancy, injury)
- In re Taxable Mun. Bond Sec. Litig., 51 F.3d 518 (5th Cir.) (lost opportunity to obtain ineligible municipal loans is speculative for RICO injury)
- Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (Sup. Ct.) (no legal entitlement required; plaintiffs may recover for concrete lost awards caused by fraud)
- City of Newport v. Fact Concerts, Inc., 453 U.S. 247 (Sup. Ct.) (municipal immunity from punitive damages; punitive awards against municipalities are disfavored)
- PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401 (Sup. Ct.) (treble damages have remedial and punitive aspects; interpretive limits on punitiveness)
- Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909 (Tex.) (elements of tortious interference with prospective business relations)