Ashbritt, Inc. v. Ghilarducci

Background

AshBritt, Inc., identified in the complaint as a Florida corporation engaged in disaster-recovery and response services, sued Mark Ghilarducci and Ken DaRosa. The complaint asserted claims under 42 U.S.C. § 1983, alleging violations of AshBritt’s First Amendment rights, California procurement law, and Federal Rule of Civil Procedure 57.

The complaint alleged that CalRecycle engaged AshBritt to perform cleanup services in Lake County in 2015. During a conference call, AshBritt’s chairman, Randy Perkins, criticized how the state paid contractors. AshBritt alleged that Ghilarducci later said he would ensure, to the best of his ability, that AshBritt would not work in California. AshBritt further alleged that CalRecycle rejected all of its later bids for debris-removal projects.

In 2020, CalRecycle issued an invitation for bids on a Butte County tree-removal, transportation, and disposal project. The invitation contained a “California Only Restriction” limiting eligibility to specified local or California-based businesses. AshBritt alleged that it would have bid and performed the work but for that restriction and that the restriction was intended to exclude it.

Rulings

Defendants moved to dismiss on three grounds: lack of Article III standing, Eleventh Amendment protection against the declaratory-relief claims, and failure to state a First Amendment retaliation claim.

Standing. The court denied the motion to dismiss for lack of standing. It concluded that AshBritt adequately alleged an injury even though it did not submit a bid. The alleged restriction made an application futile because it expressly limited eligibility. The court also found that AshBritt adequately alleged competitor standing by claiming that it was able and ready to bid and would have done so absent the restriction. The court explained that standing did not require AshBritt to show that it would have won the contract.

Eleventh Amendment. The court dismissed the second and third claims for declaratory relief as barred by the Eleventh Amendment. The second claim sought declaratory relief based on the alleged First Amendment violation. Because the bid deadline had passed and the complaint did not plausibly allege an ongoing federal-law violation, the court concluded that the exception allowing certain prospective claims against state officials did not apply. The court granted leave to amend that claim only if AshBritt could, in good faith, plead facts supporting an ongoing violation.

The third claim sought declaratory relief under California procurement law and decisional law. The court held that the exception for prospective claims against state officials does not apply to state-law claims. It therefore dismissed the third claim and denied leave to amend it.

First Amendment retaliation. The court granted the motion to dismiss the First Amendment retaliation claim for failure to state a claim, with leave to amend. The court accepted that criticizing the state’s contractor-payment practices was constitutionally protected activity. However, AshBritt did not plausibly allege that the 2015 criticism caused the California-only restriction five years later. Its allegations about rejected bids on other projects did not identify facts showing that those rejections were retaliatory, and the complaint did not adequately connect DaRosa to the alleged protected activity or retaliation.

The court also held that AshBritt had not plausibly alleged an injury proximately caused by retaliation. Although the complaint alleged financial loss, it did not allege facts showing that AshBritt would have received the contract absent the alleged retaliatory motive. The court distinguished the jurisdictional standing inquiry from the separate question whether the complaint adequately pleaded the merits of a retaliation claim.

Disposition

The court vacated the scheduled oral argument and ruled on the written submissions. It granted in part and denied in part Defendants’ motion to dismiss. AshBritt’s first claim for damages based on its First Amendment rights was dismissed for failure to state a claim, with leave to amend. Its second and third claims for declaratory relief were dismissed as barred by the Eleventh Amendment; leave to amend was granted as to the second claim and denied as to the third. Any amended complaint was due January 7, 2021.