810 F.3d 1161
10th Cir.2016Background
- KDOT maintains technical "preapproved" lists of quarries whose aggregates meet its Standard Specifications for FHWA-funded on-grade concrete projects; inclusion requires passing specified freeze–thaw tests and other sampling procedures.
- Martin Marietta operated two Kansas quarries (Ottawa and Sunflower) that historically supplied KDOT projects; KDOT removed Ottawa from a stop‑gap Approved List in Oct. 2010 based on observed D‑cracking and declined to place Sunflower on the stricter January 2013 Prequalified List after it failed a new 660‑cycle freeze–thaw test.
- Martin Marietta sought pre‑ and post‑deprivation hearings from KDOT and then sued in federal court raising multiple claims including Fourteenth Amendment procedural‑due‑process claims asserting (1) a property interest in remaining on the Approved/Prequalified lists and (2) a liberty interest in reputation.
- The district court dismissed Martin Marietta’s due‑process (and other) claims on the pleadings; Martin Marietta appealed only the procedural‑due‑process claims to the Tenth Circuit against state officials in their individual capacities.
- The Tenth Circuit affirms dismissal, holding Martin Marietta failed plausibly to allege a constitutionally protected property interest in list inclusion (or supply entitlement) and failed the stigma‑plus test for a liberty‑based reputational interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Martin Marietta had a protected property interest in inclusion/retention on KDOT’s preapproved lists | Inclusion on the preapproved/Prequalified lists (governed by objective Standard Specifications) creates a legitimate entitlement to remain on the list and to the procedures that attend removal | KDOT retained sufficient discretion; lists and specs are for KDOT/contractor benefit, suppliers are not parties to the contract, and prequalification does not guarantee any sale or acceptance—so no entitlement | No property interest plausibly alleged: supplier status is not a guaranteed outcome, suppliers are not in privity with KDOT contract, and KDOT retains discretion to inspect/reject materials |
| Whether Martin Marietta had a protected property interest to compel hearings after (a) Ottawa’s removal under the stop‑gap measure and (b) Sunflower’s exclusion under the 2013 test | Denial of pre/post deprivation hearings violated due process because Martin Marietta had an entitlement to list status | Even assuming removal/exclusion occurred, absence of a protected property interest means no due‑process violation | No protected property interest → no procedural due process violation; hearings not required under the Fourteenth Amendment |
| Whether KDOT’s public statements or dissemination about quarry test results gave rise to a protected liberty interest (stigma‑plus) | KDOT’s communications branded Martin Marietta’s materials as untrustworthy, causing contractors to refuse business and producing substantial economic harm | KDOT published truthful test results; statements were not false or defamatory; alleged economic injuries insufficient for the ‘‘plus’’ element | No actionable defamation and no sufficient non‑reputational legal change or significant business impairment → stigma‑plus not satisfied |
| Whether regulatory change / FHWA approval issues created an entitlement | Martin Marietta argued some standards (stop‑gap) lacked proper FHWA approval so KDOT acted beyond authority, supporting entitlement | Defendants: KDOT empowered to adopt/adjust standards under state law; FHWA concerns do not create a private entitlement for suppliers | Court declines to consider on appeal (not preserved) and alternatively rejects as creating any supplier entitlement |
Key Cases Cited
- Bd. of Regents of State Colls. v. Roth, 408 U.S. 564 (1972) (property interest inquiry requires a legitimate claim of entitlement defined by independent sources)
- Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (1985) (purpose of pre‑deprivation process and scope of procedural due process)
- Olim v. Wakinekona, 461 U.S. 238 (1983) (process protects substantive entitlement; no property in procedure itself)
- Town of Castle Rock v. Gonzales, 545 U.S. 748 (2005) (benefit is not a protected entitlement if government may grant or deny it in discretion)
- Brown v. Eppler, 725 F.3d 1221 (10th Cir. 2013) (agency rules that compel particular relief can create a protected property interest)
- Teigen v. Renfrew, 511 F.3d 1072 (10th Cir. 2007) (distinguishing process as a vehicle from substantive entitlement; no due‑process claim where only procedural opportunity asserted)
- Perkins v. Lukens Steel Co., 310 U.S. 113 (1940) (courts defer to government procurement discretion; no general right to sell to the government)
- Crown Point I, LLC v. Intermountain Rural Elec. Ass’n, 319 F.3d 1211 (10th Cir. 2003) (property interest exists only if governing procedures require a particular outcome)