     Case: 13-20753    Document: 00513046886     Page: 1   Date Filed: 05/18/2015




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                    United States Court of Appeals
                                                                             Fifth Circuit

                                                                           FILED
                                  No. 13-20753                         May 18, 2015
                                                                      Lyle W. Cayce
                                                                           Clerk
THE GIL RAMIREZ GROUP, L.L.C.; GIL RAMIREZ, JR.,

                                                  Plaintiffs - Appellants
v.

HOUSTON INDEPENDENT SCHOOL DISTRICT;
LAWRENCE MARSHALL; EVA JACKSON; RHJ-JOC, INCORPORATED;
FORT BEND MECHANICAL, LIMITED; MARSHALL & ASSOCIATES;
JOYCE MOSS CLAY; JM CLAY AND ASSOCIATES;
FBM MANAGEMENT, L.L.C.; DAVID L. MEDFORD,

                                                  Defendants - Appellees


                Appeals from the United States District Court
                     for the Southern District of Texas


Before REAVLEY, JONES, and ELROD, Circuit Judges.
EDITH H. JONES, Circuit Judge:
      This case, involving multiple causes of action based on allegations of
bribery to procure construction contracts, was filed against Houston
Independent School District (“HISD” or “the District”), former trustee
Lawrence Marshall and his consulting company, alleged coconspirator Joyce
Moss Clay and her consulting company, and two of the plaintiff’s competitors
(RHJ-JOC and Fort Bend Mechanical), and their respective owners.                   The
district court ably resolved most of these kaleidoscopic claims against Plaintiff-
Appellants Gil Ramirez, Jr. and the Gil Ramirez Group, L.L.C. (collectively
“GRG”), but we conclude GRG has met its summary judgment burden with
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                                      No. 13-20753
respect to its RICO claims (against all defendants except HISD) and has
sufficiently supported those elements of its claims for tortious interference
with business relations that the district court ruled on. For those claims, we
reverse and remand for further proceedings. This decision requires resolving
two novel issues in this circuit—whether HISD is a proper RICO defendant (it
is not), and whether Appellee Marshall, a former elected HISD trustee, may
invoke state sovereign immunity principles against the state law claims (he
cannot).
                                   BACKGROUND 1
       Defendant Houston Independent School District is one of the largest
school districts in the nation, serving over 200,000 students. A nine-member
Board of Trustees governs the district; the administrative staff is led by the
Superintendent.       The District procures some construction and facilities
services through a job-order contract (“JOC”) program. Under this program,
the District periodically solicits requests for proposals (“RFPs”), following
which a committee of HISD administrators (the “selection committee”)
evaluates vendors’ bids against predetermined criteria and selects as many
qualifying vendors as current needs require. The single most important factor
in the selection process is the vendor’s pricing coefficient—a percentile that
reflects the difference between the standard price set in a pricing manual and
the price a contractor agrees to charge. Pricing coefficients are assigned for
several categories of work and are combined to determine the vendor’s
weighted average. The selection committee forwards its recommendations to
the Board of Trustees, which then votes on whether to offer JOC contracts to
the suggested vendors.



       1 For purposes of reviewing the pretrial orders on appeal, the evidence is recited in
the light most favorable to Appellants.

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                                 No. 13-20753
      HISD outsourced the assignment and management of JOC projects to
several independent project managers, each of which covered specific facilities.
The District would inform the relevant project manager of its need and the
project manager would solicit cost estimates from the JOC vendors, evaluate
the estimates, assign the jobs, and manage their progress.
      Ramirez alleges that he and his company GRG were punished for
refusing to participate in the corruption of municipal authorities. Defendant
Lawrence Marshall, for many years an administrator at HISD until he was
elected Trustee in 1997, masterminded questionable business arrangements in
which he served as a paid consultant for several organizations that did
business with the District.     When the District explicitly prohibited that
conduct, those companies hired Marshall’s business associate Joyce Moss Clay
(together with her company, “Clay”), whose company began paying Marshall a
share of its consulting fees.
      Ramirez and Marshall crossed paths during an RFP initiated in May
2008 (the “2008 RFP”) to expand the HISD’s contractor capacity and increase
vendor diversity.    GRG bid in this RFP along with ten other companies,
including Defendants Fort Bend Mechanical (“FBM”) and RHJ-JOC (“RHJ”)
(collectively, with their owners, the “vendor defendants”).        The vendor
defendants both hired Clay as a consultant, in RHJ’s case “to provide moral
support.” RHJ paid Clay over $2,000 per month for several years, but neither
RHJ nor Clay could explain what work Clay actually performed. FBM’s owner
Pete Medford avers that he wanted to make donations to specific schools and
hired Clay to help him negotiate the rules and regulations governing those
donations. Clay’s explanation for forwarding Marshall 65% of her consulting
fees is that he was her “mentor.”




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       Once the initial bids were in, an employee in HISD’s procurement
department (who also served on the selection committee) advised several
companies to reallocate their pricing coefficients.            No bidding vendor was
permitted to change its overall coefficient; such a change would have given that
vendor an unfair advantage. 2           On its first cut, the selection committee
recommended approving the two companies with the lowest overall price: RHJ
and Kellogg Brown & Root Services, Inc. (“KBR”). GRG ranked ninth and the
selection committee summarily eliminated it along with several other
companies. Senior HISD administrators reviewed the proposal and, based on
an internal policy, disqualified RHJ because of a then-pending lawsuit between
the vendor and another school district.
       Left with only one proposed vendor, HISD Superintendent Dr. Abelardo
Saavedra and Chief Business Operations Officer Richard Lindsay unilaterally
added four vendors to the list that went before the Board of Trustees: FBM for
its HVAC expertise, and the other three, including GRG, to increase JOC
“diversity.” The Board approved this slate of five vendors, only one of which
(KBR) had the approval of the selection committee. It is noteworthy that the
selection committee passed over GRG, and HISD administrators added the
company solely for diversity reasons. 3 Shortly after learning that it was not
among HISD’s selected JOC group, RHJ fired Clay.
       GRG and the other contractors executed one-year contracts, renewable
at HISD’s sole discretion, thus constituting the 2009 JOC program. When the



       2 GRG alleges that even this communication was improper; the District maintains
that reapportioning coefficients could not improve a vendor’s score.

       3 Lindsay testified that the District’s goals in the 2008 RFP were, among others, “to
diversify the available skillsets of JOC vendors” and “to increase the number of minority-
owned businesses within the JOC program.” Lindsay recommended adding FBM for the
former kind of diversity and the other three companies for the latter.

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District began assigning projects the following summer, GRG received more
project funds than any other vendor. GRG maintains that it was a JOC vendor
par excellence, completing jobs properly, ahead of schedule, and under budget.
Appellees dispute this. The District reports that it “experienced a number of
performance issues with GRG . . .               including false starts on construction
projects, failure to obtain proper bonding and insurance, and failure to timely
submit documents required under” the JOC program.
       Marshall became president of the Board of Trustees in January 2009.
The next month, Superintendent Saavedra announced his resignation,
effective at the end of August of that year. In August, Saavedra recommended
that the Board reconsider RHJ because its lawsuit with the other school
district was over. The Board agreed and added RHJ to the approved JOC list.
Saavedra testified that he was “very hesitant” to recommend RHJ for approval
and that Marshall was putting “tremendous pressure” on other senior
administrators. 4 He also testified that he had lost Marshall’s support by
disqualifying RHJ earlier in the process.
       According to GRG, the trouble began after August 2009. Once RHJ was
in the mix, GRG saw a sharp decline in the volume of JOC work it received,
though it continued to receive assignments until its contract expired. Ramirez
testified that Ricardo Aguirre, a janitorial services consultant and mutual
associate of Marshall and Ramirez’s father, visited Ramirez’s office. Aguirre



       4  GRG also argues that there is evidence suggesting that RHJ was supposed to
supplant GRG. The only evidence to which it directs us is the former procurement manager’s
obscure reference to “substitut[ing] a supplier,” but the context suggests he is referring to the
improprieties with the 2008 vendor recommendations, not RHJ’s later addition. GRG also
identifies an email from an internal auditor referring to GRG’s JOC proposal and
admonishing “the replacement JOC contractor to do their own scope and proposal.” The
evidence also shows, however, that the program manager that handled GRG’s contract
testified that he never heard anyone refer to RHJ as a replacement contractor. The agenda
item by which the Board approved the addition says it is “to supplement” the JOC program.

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told Ramirez that GRG would need to hire Clay as Marshall’s “bag lady” in
order to protect its JOC business. 5 GRG suggests that Ramirez’s expression of
disapproval to Aguirre was the triggering event for the decrease in GRG’s JOC
assignments.
         In the February before the election, FBM paid for Marshall to attend the
Super Bowl in Tampa, Florida. Medford admitted on tape that he had given
Marshall approximately $150,000 since 2008.                   When Marshall faced a
reelection contest in autumn 2009, the owners of RHJ and FBM donated to
Marshall’s campaign, in amounts totaling over $50,000.                     GRG did not
contribute to Marshall’s reelection campaign or otherwise support him, but
there is no indication that Marshall or anyone else asked GRG or Ramirez to
do so.
         Also in August 2009, a District internal auditor noticed the non-
recommended vendors on the Board of Trustees meeting agenda.                             He
investigated     the    2008    procurement       process,    concluding      that    HISD
administrators failed to follow proper procedure and that the final JOC
configuration did not provide the best value for the District.                  His report
recommended voiding the contracts for noncompliance with state law. GRG
attacks this report as a “smokescreen to enable Marshall and allied board
members to steer more of the JOC work to his favored contractors.” GRG
asserts that an independent agency gave HISD’s auditors low marks in a
general review, and that the audit did not result in changes to future RFPs. 6




         When asked whether he was involved in bribery schemes involving Marshall,
         5

Aguirre invoked his Fifth Amendment right against self-incrimination.

       GRG identifies no specific defects within the report, the purpose of which was to urge
         6

conformity to established procedures, not to change them.

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      In January 2010, based on the auditor’s report, the District’s Inspector
General brought the 2008 noncompliance to the Board’s attention and
intimated that the conduct might be criminal. Presumably because the initial
contract terms for the 2008 JOC vendors were at an end, the business
administrator recommended rebidding the entire JOC program. Just a few
days before the meeting at which the Board was scheduled to vote on renewal
of the JOC contracts, the new Superintendent Terry Grier removed the matter
from the agenda. Superintendent Grier later called for Lindsay’s resignation
when Lindsay was unable to explain his conduct in the 2008 RFP. Because the
Board did not renew any contracts, most of the 2008 JOC contracts expired by
February 2010; RHJ’s contract remained in force until October 1, 2010, since
it started much later than the others. All vendors had to bid in the 2010 RFP
if they wanted to continue to be part of the JOC program.
      The 2010 RFP selection process evaluated vendors’ bids according to a
pre-established set of criteria that, as in the 2008 RFP, was mostly a function
of price. This time, the selection committee recommended KBR, RHJ, FBM,
and Jamail & Smith, the last of which had been a JOC participant since before
the 2008 expansion RFP. RHJ rehired Clay two days after its selection. The
committee did not recommend GRG, which ranked tenth out of thirteen
bidders because as in the previous RFP, its work was not competitively priced.
The Board approved the selection committee’s slate of vendors. GRG alleges,
not without dispute by the Appellees, that the ranking system and selection
process were pretextual.
      Ramirez and GRG sued in December 2010, alleging that their refusal to
bribe Marshall harmed their business, both in the reduction in assignments
under the 2008 JOC and in GRG’s nonselection under the 2010 RFP. GRG
brought an array of federal and state law claims against the various


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defendants. Against HISD, plaintiffs alleged 1) violations of the Racketeer
Influenced Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq.;
2) infringement of their First and Fourteenth Amendment rights (through
42 U.S.C. § 1983); and 3) state law claims for breach of contract, estoppel, and
civil conspiracy. Against Marshall and Clay (and their respective consulting
companies), GRG alleged the same RICO violations, in addition to tortious
interference with prospective contract, tortious interference with existing
contract, and civil conspiracy (but not the estoppel or breach of contract
claims). The vendor defendants were also named in the RICO and tortious
interference claims. Extensive discovery was conducted.
      The District, Marshall, and Clay moved for summary judgment on all
claims. The District also moved to dismiss the RICO and state law tort claims
under Fed. Rules of Civ. Pro. 12(b)(6) and 12(c). The district court granted
these motions in its Memorandum and Order of November 18, 2013. The
district court first dismissed the state law claims against Marshall as barred
by the election of remedies provision of the Texas Tort Claims Act, Tex. Civ.
Prac. & Rem. Code § 101.106. It then held that GRG was not a proper RICO
plaintiff; that GRG could not make out any constitutional violations, even if it
could overcome various immunity obstacles; and that HISD and Clay were
entitled to summary judgment or dismissal on the state law claims. The
district court dismissed the civil conspiracy charges because it had resolved the
underlying tort claims, leaving no illegal conduct for a conspiracy.       After
additional briefing, the district court granted summary judgment for the
vendor defendants. Final judgment was entered on December 13, 2013. GRG
timely appealed.




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                          STANDARDS OF REVIEW
      The district court dismissed the state law claims against Marshall under
Fed. R. Civ. Pro. 12(b)(6) and 12(c). We review both types of motion de novo.
Jebaco, Inc. v. Harrah’s Operating Co., Inc., 587 F.3d 314, 318 (5th Cir. 2009).
“To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead enough
facts ‘to state a claim to relief that is plausible on its face.’” Bustos v. Martini
Club Inc., 599 F.3d 458, 461 (5th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S.
662, 129 S. Ct. 1937, 1949 (2009)).
      The district court disposed of the other claims on summary judgment.
“This court reviews the district court’s grant of summary judgment de novo,
applying the same standards as the district court.”          Depree v. Saunders,
588 F.3d 282, 286 (5th Cir. 2009). “Summary judgment is proper when no issue
of material fact exists and the moving party is entitled to judgment as a matter
of law.” Cronn v. Buffington, 150 F.3d 538, 541 (5th Cir. 1998). “The standard
of review is not merely whether there is a sufficient factual dispute to permit
the case to go forward, but whether a rational trier of fact could find for the
non-moving party based upon the record evidence before the court.” James ex
rel. James v. Sadler, 909 F.2d 834, 837 (5th Cir. 1990) (citing Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356
(1986)).
      For Rule 12 and summary judgment alike, we view the facts and
inferences in the light most favorable to the non-movant. Cronn, 150 F.3d at
541; Jebaco, 587 F.3d at 318.




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                                       No. 13-20753
                                     DISCUSSION
        In this appeal, Appellants challenge the district court’s adverse
judgment on all but one of their claims. 7 We address each cause of action in
turn.
   I.       Racketeer Influenced and Corrupt Organizations Act
        GRG sued all defendants under §§ 1962(c) and (d) of RICO, which
prohibit, respectively, participation in a racketeering enterprise or conspiring
to do the same. In the district court, HISD objected that it was not a proper
RICO defendant because as a municipal corporation it cannot form the mens
rea of any of RICO’s predicate offenses and is not susceptible to RICO’s treble
damages, which the District characterizes as “punitive.”                    Several other
arguments were raised by HISD and other defendants, but the court found
instead that GRG failed to assert or prove a cognizable RICO claim. We
disagree in part. Our precedent requires a RICO plaintiff to show a “conclusive
financial loss” and not harm to “mere expectancy” or “intangible” interests.
Price v. Pinnacle Brands, Inc., 138 F.3d 602, 607 (5th Cir. 1998) (per curiam).
GRG has created a genuine issue of material fact on this issue. Appellants
may not, however, sue HISD for RICO violations, because the District is
immune from treble damages.
        A. Ramirez and GRG as Plaintiffs
        1. The Standard
        RICO’s civil provision creates a cause of action for “any person injured in
his business or property by reason of a violation” of any of the statute’s
prohibited activities. 18 U.S.C. § 1964. At issue here is the injury requirement.
The plaintiff’s injury must be “conclusive” and cannot be “speculative.” In re



        7GRG has not briefed and has therefore waived its claim for tortious interference with
an existing contract.

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                                       No. 13-20753
Taxable Mun. Bond Sec. Litig., 51 F3d 518, 523 (5th Cir. 1995). “Injury to mere
expectancy interests or to an ‘intangible property interest’ is not sufficient to
confer RICO standing.”          Pinnacle Brands, 138 F.3d at 607 (quoting In re
Taxable Mun. Bond Sec. Litig., 51 F.3d at 523). 8 The district court held that
GRG’s alleged injuries were uncertain and intangible because JOC job
assignments and contract renewal were at the sole discretion of HISD. “Thus,”
the district court concluded, “any injury can only be the loss of an expectation
interest and therefore speculative[.]”
       Appellants contend that they were not required to demonstrate legal
entitlement to JOC assignments or job orders, but only the fact of loss. That
is, although HISD could stop assigning GRG jobs and end the business
relationships, it would not have done so but for the alleged corruption. The
district court appears to have interpreted GRG as showing only that HISD
might have continued favoring GRG.
       GRG is correct that a RICO plaintiff need not demonstrate legal
entitlement, a point the Supreme Court made clear in Bridge v. Phoenix Bond
& Indemnity Co., 553 U.S. 639, 128 S. Ct. 2131 (2008). The plaintiffs in Bridge
were “regular participants in Cook County’s tax sales[,]” in which bids often
ended in a tie. Id. at 643, 128 S. Ct. at 2135. The county would then allocate
the auctioned property on a rotational basis. Id. at 642, 128 S. Ct. at 2135. In
order to make this process fair, each bidder was permitted only one
simultaneous bid. Id. at 643, 128 S. Ct. at 2135. The plaintiffs alleged that a



       8 Following Pinnacle Brands, 138 F.3d at 606, the district court referred to this as
“RICO Act standing.” Although whether a legislative enactment authorizes a plaintiff to sue
is sometimes referred to as “statutory standing,” courts should avoid using that term. See
Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1387-88 & n.4 (2014)
(“statutory standing” is a misleading label “since ‘the absence of a valid . . . cause of action
does not implicate subject-matter jurisdiction’”) (quoting Verizon Md., Inc. v. Pub. Serv.
Comm’n of Md., 535 U.S. 635, 642-43, 122 S. Ct. 1753, 1758 (2002)).

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competing corporate bidder had arranged for false-flag bidders to channel
additional allocations. Id. The Bridge plaintiffs had no legal entitlement to
the subject matter of the auction. Nevertheless, the Supreme Court held that
“[a]s a result of petitioners’ fraud, respondents lost valuable liens they
otherwise would have been awarded.” Id. at 649, 128 S. Ct. at 2139. Because
the fact of loss was certain, the plaintiffs could state a RICO claim.
      Although the vagueness of terms like “expectancy” may have created
some confusion, the context of our cases makes clear that the test is a factual
one. In Pinnacle Brands, for instance, plaintiffs complained that the random
inclusion of valuable “chase” cards in packs of baseball cards constituted
“illegal gambling.” 138 F.3d at 605. This court held that the plaintiffs could
not show injury under RICO because they suffered no harm to a property
interest; the card packs they bought were exactly what they bargained for. Id.
at 607. Pinnacle Brands thus stands for the unremarkable proposition that a
RICO plaintiff must demonstrate harm.           The court’s rejection of “mere
expectancy interests” appears to have been directed at the notion that the
plaintiff was injured by not having any luck in drawing a chase card. See id.
That is, damage to a plaintiff’s subjective expectations cannot form the basis
of a RICO claim.
      Likewise, in In re Taxable Municipal Bond Securities Litigation, the
plaintiff (for himself and others similarly situated) claimed that corruption in
a state-authorized municipal bond program injured certain farmers and
ranchers who might have applied for loans under that program. 51 F.3d at
521-22. The loans under the program were loans of last resort, unavailable to
those who could obtain other credit. Id. at 522. At least some of the farmers
and ranchers had pursued and secured other loans with higher interest rates,
which disqualified them for loans under the bond program. Id. The court held


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that the farmers and ranchers “have suffered no injury from not receiving what
they were ineligible to receive.” Id. at 522. The court further held that the
plaintiff had not demonstrated detrimental reliance, and that a lost
opportunity to obtain a loan was too speculative. Id. at 522-523. Importantly,
the plaintiff “ha[d] not alleged lost profits” or “that [the farmers and ranchers]
ha[d] ever lost money as a result of the RICO scheme.” Id. at 523. GRG alleges
both. Accord Tel-Instrument Elecs. Corp. v. Teledyne Indus., Inc., No. 90-1549,
1991 WL 87194 (4th Cir. May 28, 1991). 9
       The rule that emerges from these cases is that loss of a legal entitlement
is sufficient but not invariably necessary to sustain a RICO claim. A plaintiff
need not show that the other party would have been obliged to confer a benefit,
only that the other party would have conferred the benefit.                         That HISD
retained discretion to award fewer contracts, or no contracts at all, does not
prohibit GRG from demonstrating that but for corruption, it would have
continued to receive awards.
       2. The Evidence
       The standard now clarified, it remains to determine whether GRG has
marshaled competent summary judgment evidence that its business was
injured. The proof covers two periods of time, differentiated by GRG’s status
as a JOC contractor in 2009 and its subsequent failure to be chosen in the 2010
RFP process.
       The district court acknowledged that evidence of factual loss might be
sufficient, but found that GRG had not met this burden with respect to the



       9 Marshall cites this case for the proposition that “the denial of a government contract
that plaintiff expected to receive, but for a competitor’s alleged bribery of public officials, did
not give rise to a cognizable RICO injury.” What he fails to mention in his brief is that our
sister court explicitly found that the plaintiff “would not have been awarded the [government]
contract regardless.” Id. at *2.

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contract renewal. GRG points to evidence that several Board members and a
high-level administrator led Ramirez to believe that GRG’s contract was on the
verge of renewal. As the district court noted, “[t]hese assurances [] were made
before it was revealed to the HISD Board’s audit committee that the same high-
level administrator had bypassed the JOC contract procurement process
unilaterally to award GRG with a contract in the first place.” GRG challenges
that audit of the 2008 RFP as improperly motivated, but does not undermine
the fact that the initial RFP was tainted nor does it allege that re-bidding the
program was the wrong course of action. GRG also faults the District’s decision
to select only four JOC vendors. Even viewed in the light most favorable to
GRG, however, none of this evidence shows that GRG would have been chosen
in the 2010 RFP but for corruption. Indeed, GRG’s tenth-place ranking was so
low that even if HISD had selected seven vendors and eliminated the vendor
defendants, GRG still would not have been selected. 10 In short, GRG has not
adduced sufficient evidence to overcome summary judgment as to its
nonselection in the 2010 RFP.
       The sudden decline in JOC assignments in 2009, however, is another
matter. The District assigned GRG more work than any other contractor in
the initial honeymoon period of the 2009 JOC program, and GRG won 42 of the
64 projects it “bid on” in 2009. The confluence of events in August 2009—
Superintendent Saavedra’s testimony that his resignation was driven by his
dispute with Marshall, RHJ’s latter-day and questionable addition to the JOC




       10 After oral argument, Appellants called to our attention an internal audit HISD
released on March 10, 2015. While it may be true that “this report contradicts HISD’s
position in this case that their re-bid of JOC contracts cleaned up the demonstrated
favoritism shown in 2008,” GRG still does not challenge the facts that the 2010 re-bid was an
appropriate response, or that GRG would not have been selected.

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                                       No. 13-20753
program, the drop-off in assignments to GRG—would allow a jury to infer that
undue influence on and by Marshall harmed GRG’s business.
       Appellees offer plausible explanations why GRG’s assignments dropped
off, but none of these positively displaces the possible inference of corrupt
influence. For example, vendors not alleged to have bribed Marshall continued
to receive work after RHJ entered the picture. But GRG has produced evidence
suggesting that Marshall’s preferred vendor RHJ was displacing GRG after
Ramirez spurned Marshall. Further, Appellees’ expert noted that if GRG had
continued to receive work at the same rate as it did the first two months, it
would have been awarded over 100% of all JOC expenditures. But the drop off
in total JOC volume may itself have been part of the alleged scheme. These
are matters for the factfinder. We hold only that the evidence creates a fact
issue as to the cause of the loss of GRG’s JOC assignments.
       Appellees urge many other grounds for affirming summary judgment on
the RICO claims. “Although this court may decide a case on any ground that
was presented to the trial court, we are not required to do so.” Breaux v.
Dilsaver, 254 F.3d 533, 538 (5th Cir. 2001).               Because the issues require
consideration of a voluminous record, “we decline to decide these complex
issues as they are better addressed by the district court in the first instance.”
Lone Star Nat’l Bank, N.A. v. Heartland Payment Sys., Inc., 729 F.3d 421, 427
(5th Cir. 2013). 11


       11By noting two particular issues that will be pertinent on remand, we do not presume
to eliminate others raised by the Appellees. First, RICO claims require showing that the
unlawful behavior proximately caused the plaintiff’s injuries. Holmes v. Sec. Investor Prot.
Corp., 503 U.S. 258, 268, 112 S. Ct. 1311, 1317 (1992). A threat to a finding of proximate
cause here may lie in HISD’s use of third-party project managers to administer its JOC
assignments. The factfinder will have to determine whether GRG’s injury “flows” from the
RICO violations. Khurana v. Innovative Health Care Sys., Inc., 130 F.3d 143, 150 (5th Cir.
1997), abrogated on other grounds by Beck v. Prupis, 529 U.S. 494, 120 S. Ct. 1608 (2000).
Second, the permissible scope and extent of damages is also a matter for the district court to
determine on remand. GRG’s expert estimates the company lost 18 jobs—JOC assignments

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                                      No. 13-20753
       B. HISD as a Defendant
       HISD contends that school districts are not proper RICO defendants for
two reasons. First, RICO requires demonstrating an underlying criminal act,
which entails a mens rea requirement that a governmental entity cannot form.
Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397, 404
(9th Cir. 1991); see also Pedrina v. Chun, 97 F.3d 1296, 1300 (9th Cir. 1996)
(reaffirming Lancaster). 12       Second, municipal entities enjoy common law
immunity from punitive damages, and, whatever else it is, RICO’s treble-
damages provision is at least partially punitive. Genty v. Resolution Trust
Corp., 937 F.2d 899, 908 (3d Cir. 1991). These reasons have proven persuasive
to other courts. 13 We agree with these holdings.


GRG would have received but for Marshall’s improper influence—totaling $177,307. Based
on the same data, a defense expert calculated the range of damages between $16,776.76 and
$145,032.96. The defendants also challenge the reliability and thus admissibility of GRG’s
expert report.

       12 Several district courts in this circuit have also recognized “strong authority that
governmental entities, such as counties or government agencies, cannot be proper RICO
defendants.” Dale v. Mo. Governor Jay Nixon’s Office, No. CIV.A. C-11-114, 2011 WL
1810321, at *3 (S.D. Tex. May 10, 2011); see also Nationwide Pub. Ins. Adjusters Inc. v.
Edcouch-Elsa I.S.D., 913 F. Supp. 2d 305, 308 (S.D. Tex. 2012); Dammon v. Folse, 846 F.
Supp. 36, 38 (E.D. La. 1994); La. Power & Light Co. v. United Gas Pipe Line Co., 642 F. Supp.
781, 806 (E.D. La. 1986).

       13Either of these theories—the inability to form a mens rea or immunity from punitive
damages—might suffice to remove HISD from RICO’s ambit in this case. There are also
sound policy reasons for this conclusion:
      [T]he . . . theories for refusing to hold a municipal entity liable under RICO are
      not mutually exclusive—indeed, it can be said that they are two sides of the
      same concept. In an abstract but doctrinal sense, a corporation in and of itself
      cannot form mens rea. Similarly, a corporation, that is, the institutional
      construct itself, cannot be deterred; deterrence can only be achieved by
      targeting the behavior of the people who determine corporate conduct. Thus,
      if punitive damages would not operate to encourage innocent and essentially
      powerless taxpayers to prevent RICO’s condemned activity by municipal
      officials, short of the election process, it would seem inappropriate to hold the
      municipal corporation liable.
Dammon, 846 F. Supp. at 38.


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                                       No. 13-20753
       A particularly good reason for rejecting governmental RICO liability
stems from judicial reluctance to impose punitive damages on the public fisc.
The Supreme Court has held that a municipality’s liability for § 1983 damages
does not thereby subject it to punitive damages, from which government
entities were historically immune. City of Newport v. Fact Concerts, Inc.,
453 U.S. 247, 263, 101 S. Ct. 2748, 2758 (1981). City of Newport emphasized
that because a public entity itself “can have no malice independent of the
malice of its officials,” 453 U.S. at 267, 101 S. Ct. at 2760, punishment by
punitive damages would be inequitably assessed against the public. Moreover,
“the deterrence rationale of § 1983 does not justify making punitive damages
available against municipalities.” Id. at 268, 101 S. Ct. at 2160. 14
       City of Newport held that, to overcome municipal immunity from
punitive damages, Congress must clearly express its intention. Id. at 263,
101 S. Ct. at 2749. No such clear intent to overcome governmental immunity
appears in the RICO provision for treble damages.
       GRG, however, fastens hope on the Supreme Court’s ambiguity about
treble damages, “which have a compensatory side, serving remedial purposes
in addition to punitive objectives.” Cook Cnty., Ill. v. U.S. ex rel. Chandler,
538 U.S. 119, 130, 123 S. Ct. 1239, 1246 (2003). The Supreme Court locates
“different statutory treble-damages provisions on different points along the
spectrum between purely compensatory and strictly punitive awards.”
PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401, 405, 123 S. Ct. 1531, 1535



       14  When the Supreme Court held that municipal entities were liable under federal
antitrust law, it “understandably [left] open the question whether municipalities may be
liable for treble damages[.]” Cmty. Commc’ns Co. v. City of Boulder, Colo., 455 U.S. 40, 65,
102 S. Ct. 835, 848 (1982) (Rehnquist, J., dissenting). Before there was occasion for the high
court to resolve that question, Congress exempted governmental units from all monetary
damages. Local Government Antitrust Act of 1984, Pub. L. No. 98-544, 98 Stat. 2750 (1984),
codified at 15 U.S.C. §§ 34-36

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                                      No. 13-20753
(2003). Treble damages provisions designedly go well beyond the amount of
actual harm, but the Supreme Court has “repeatedly acknowledged that the
treble-damages provision contained in RICO itself is remedial in nature.”
PacifiCare, 538 U.S. at 406, 123 S. Ct. at 1535.
       The Court’s ambivalence about punitive damages complicates analysis
here, but we believe PacifiCare cannot salvage a claim against HISD. First,
the Supreme Court’s characterization of RICO treble damages as “remedial” in
PacifiCare cannot substitute for an express Congressional abrogation of
municipal      immunity      from     treble     damages,     which,     whatever       the
characterization, exceed actual provable damages. To hold otherwise would
mock City of Newport. Second, nothing in PacifiCare contravenes the Court’s
earlier holdings that treble-damages provisions serve both compensatory and
punitive functions. See Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220,
240, 107 S. Ct. 2332, 2345 (1987); accord Genty, 937 F. 2d at 910 (“there is
convincing authority that Congress authorized civil RICO’s powerful treble
damages provision to serve a punitive purpose”). 15 Third, the narrow question
posed in PacifiCare was whether an arbitration agreement’s ban on punitive
damages included RICO treble damages. The Court refused to interpret the
private parties’ agreement, holding that threshold duty for an arbitrator.
PacifiCare has no bearing on the liability of governmental entity defendants
for treble damages under RICO.
       For these reasons, we conclude that GRG cannot proceed against HISD
under RICO’s mandatory treble damage provision. Because Congress wrote no


       15Albeit in non-precedential opinions, the Third Circuit has continued to apply Genty
since PacifiCare was decided. Tengood v. City of Philadelphia, 529 F. App’x 204, 209 n.4
(3d Cir. 2013) (unpublished) (rejecting argument that PacifiCare abrogated Genty);
Heinemeyer v. Twp. of Scotch Plains, 198 F. App’x 254, 256 (3d Cir. 2006); Kadonsky v. New
Jersey, 188 F. App’x 81, 85 (3d Cir. 2006). See also Cranberry Promenade, Inc. v. Cranberry
Twp., No. CIV. A. 09-1242, 2010 WL 653915, at *4 (W.D. Pa. Feb. 22, 2010).

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                                     No. 13-20753
single-damage alternative, and we lack power to revise federal statutes,
Appellants fail to state a cognizable RICO claim against HISD. See Cullen v.
Margiotta, 811 F.2d 698, 713 (2d Cir. 1987) (“civil RICO requires that a
successful plaintiff be awarded treble damages”).
   II.     State Law Claims
   A. Breach of Contract and Estoppel Theories
         GRG appeals the district court’s summary judgment rejecting its state
law claims against HISD for breach of contract and estoppel. GRG’s breach of
contract argument relies on an implied duty of good faith, which, as the district
court noted, Texas law rejects except in the context of special relationships.
See Hall v. Resolution Trust Corp., 958 F.2d 75, 79 (5th Cir. 1992); see also City
of Midland v. O’Bryant, 18 S.W.3d 209, 215 (Tex. 2000). The case that GRG
cites to the contrary is inapposite, as the court relied expressly on the Texas
Uniform Commercial Code, which imposes a duty of good faith in contracts for
sales of goods, a condition plainly not met here. See Mailing & Shipping Sys.,
Inc., v. Neopost USA, Inc., 937 F. Supp. 2d 879 (W.D. Tex. 2013). Indeed,
Neopost admonished that there is no general duty of good faith in contracts in
Texas. Id. at 889.
         GRG also argues that “HISD breached its promise to GRG to permit GRG
to seek JOC projects[.]” However, it cites neither a contractual provision nor
other evidence of a promise. Consequently, GRG identifies no obligation that
HISD failed to perform. 16
         GRG’s promissory estoppel and quasi estoppel claims fare no better. The
district court held that the promissory estoppel claim failed because the JOC
contract covered the subjects of dispute, and that the quasi estoppel claim



   16 HISD urges several grounds to reject the contract claim other than those on which the
district court relied. We need not and do not address these arguments.

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                                      No. 13-20753
failed because GRG did not create a genuine, material fact issue on the
elements of that claim. Both of these holdings are correct.
       Promissory estoppel “may be asserted by a plaintiff as an affirmative
ground for relief.” Fertic v. Spencer, 247 S.W.3d 242, 250 (Tex. App. 2007). To
succeed on a promissory estoppel cause of action, a plaintiff must show: “(1) a
promise, (2) foreseeability of reliance thereon by the promisor, and
(3) substantial reliance by the promisee to his detriment.” English v. Fischer,
660 S.W.2d 521, 524 (Tex. 1983). This cause of action, however, “presumes no
contract exists[.]”     Subaru of Am., Inc. v. David McDavid Nissan, Inc.,
84 S.W.3d 212, 226 (Tex. 2002). “If . . . a valid contract between the parties
covers the alleged promise, the plaintiff cannot recover for the promise under
promissory estoppel.” Fertic, 247 S.W.3d at 250. GRG’s JOC contract here
covered both the terms for the assignment of JOC work and the parties’ rights
in renewal. By its terms, the contract did not oblige HISD to assign JOC work,
and the contract was renewable for successive years at HISD’s sole discretion.
Promissory estoppel is utterly displaced. 17
       Quasi estoppel, on the other hand, is not a freestanding cause of action
but a procedural device or affirmative defense. See Deutsche Bank Nat’l Trust
Co. v. Stockdick Land Co., 367 S.W.3d 308, 311 (Tex. App. 2012). “Unlike
equitable estoppel, quasi estoppel requires no showing of a false representation
or detrimental reliance” but describes “certain legal bars, such as ratification,
election, acquiescence or acceptance of benefits.” Steubner Realty 19, Ltd. v.
Cravens Rd. 88, Ltd., 817 S.W.2d 160, 164 (Tex. App. 1991) (citing 31 C.J.S.



       17GRG argues that the district court dismissed its estoppel claims “on the basis that
GRG had a contract with HISD. But if the Court holds that no contract claim is stated, it
should necessarily reinstate GRG’s estoppel and quasi-estoppel claims.” However, it is the
existence of a contract that makes estoppel inappropriate, not the viability of any contract
claim. Further, GRG pressed only quasi-estoppel in its reply brief.

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                                       No. 13-20753
Estoppel § 107 (1964)). “This concept was developed to prevent a party from
retaining a benefit by asserting a position to the disadvantage of another and
then asserting a right which is inconsistent with that previous position.”
Stimpson v. Plano Indep. Sch. Dist., 743 S.W.2d 944, 946 (Tex. App. 1987, writ
denied).
       GRG cannot prevail on quasi-estoppel either. Quasi-estoppel “requires
(1) a previous action and (2) a subsequent inconsistent action which is thereby
sought to be estopped.”           Mulvey v. Mobil Producing Tex. & N.M Inc.,
147 S.W.3d 594, 607 (Tex. App. 2004). GRG argues that HISD should be
“estopped to deny GRG’s rights consistent with the parties’ contractual
relationships” and it accurately recites the elements of quasi-estoppel. GRG
does not, however, identify HISD’s prior inconsistent action or the alleged
benefit that it received at GRG’s expense. Its reply brief refers to “the promise
relevant to the quasi-estoppel claim,” but, as just discussed, quasi-estoppel
needs no promise.          The district court found that “HISD did not take
inconsistent positions[;] it merely acted according to the JOC contract.” Even
if GRG’s expectations were defeated by a bribery scheme, HISD’s contract is
not inconsistent with its actions regarding GRG. 18


       18 In affirming these conclusions, we, like the district court, reserve judgment on
whether public entities like HISD can be held liable at all under theories of estoppel. Texas
law generally immunizes municipalities from estoppel for governmental (as opposed to
proprietary) functions, but the decisions seem to be split over whether a school district ever
exercises proprietary functions. Compare S.W. ex rel. A.W. v. Arlington Indep. Sch. Dist.,
435 S.W.3d 414, 421 & n.10 (Tex. App. 2014), with Galveston Indep. Sch. Dist. v. Clear Lake
Rehab. Hosp., L.L.C., 324 S.W.3d 802, 809 (Tex. App. 2010). And while Texas courts have
contemplated exceptions in certain extreme cases, see Bowman v. Lumberton Indep. Sch.
Dist., 801 S.W.2d 883, 888 (Tex. 1990); City of Hutchins v. Prasifka, 450 S.W.2d 829, 835-36
(Tex. 1970), we decline to explore the scope of these exceptions except to note that the cases
address estoppel to deny agency, normally in the employment context. See, e.g., Hudspeth v.
Chapel Hill I.S.D., No. 03-06-00243-CV, 2007 WL 1647818, at *4 (Tex. App. June 8, 2007);
La Villa Indep. Sch. Dist. v. Gomez Garza Design, Inc., 79 S.W.3d 217, 221 (Tex. App. 2002)
(finding agency authority by estoppel); Bowman, 801 S.W.2d at 888. It is unhelpful to talk
about “estoppel” simpliciter when the different types of estoppel implicate different analyses.

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                                  No. 13-20753
   B. Tortious Interference with Prospective Business Relations
      GRG brought tortious interference with prospective business relations
claims against Marshall, Clay, and the vendor defendants and appeals the
district court’s rejection of those claims. We hold, contrary to the district court,
that Marshall is not entitled to dismissal on state law grounds, nor is summary
judgment appropriate for these defendants.
   1. Election of Remedies for Claims Against Marshall
      Marshall contends that he is immune from GRG’s state law claims for
tor tortious interference and conspiracy for two reasons. First, he argues that
(a) the Texas Tort Claims Act (“TTCA”) requires an election of remedies where
a plaintiff has sued both a governmental entity and its employee and (b) that
he is an “employee” of HISD under a statutory definition, Tex. Educ. Code
§ 22.051(a)(5), and therefore falls within the protection of the election of
remedies provision of the TTCA. Second, Marshall argues that he is separately
entitled to professional immunity under the Texas Education Code § 22.0511.
The district court granted summary judgment in Marshall’s favor on the first
basis. We disagree with that conclusion and also find Marshall ineligible for
the professional immunity provision.
      The TTCA waives the state’s immunity from suit in certain
circumstances. Importantly for present purposes, the TTCA also covers all tort
theories that may be alleged against a governmental entity whether or not it
waives that immunity.         Mission Consol. Indep. Sch. Dist. v. Garcia,
253 S.W.3d 653, 658 (Tex. 2008). Further, “[i]f a suit is filed under this chapter
against both a governmental unit and any of its employees, the employees shall
immediately be dismissed on the filing of a motion by the governmental unit.”
Tex. Civ. Prac. & Rem. Code § 101.106(e). The state supreme court interpreted
this language to mean that “if a plaintiff brings virtually any state common


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                                 No. 13-20753
law tort claim against both a governmental unit and its employees, § 101.106(e)
will allow the employee defendants to be dismissed if the governmental unit so
moves.”   Bustos v. Martini Club, Inc., 599 F.3d 458, 463 (citing Garcia,
253 S.W.3d at 658). In Bustos, this court held that where state law claims
against the municipality based on negligent hiring and supervision were joined
with claims against police officer defendants for excessive force, the claims
against the city were “rooted in the same alleged common law violations.” Id.
at 464. Accordingly, the court was bound to grant the city’s motion to dismiss
the officers pursuant to § 101.106(e).
      In this case, the district court assumed that Marshall was an HISD
employee and, based on TTCA § 101.106(e) and Bustos, granted HISD’s motion
to dismiss both state law conspiracy claims filed against HISD and Marshall
and the tortious interference claims brought against Marshall alone. The court
concluded that the tortious interference claims were “rooted in the same
alleged common law violations” as the global conspiracy claims. Why HISD
would have wanted to shield Marshall from GRG’s suit in this fashion, given
the seriousness of the allegations and the state of proof, is unclear.
Nevertheless, in this posture it becomes critical to determine whether
Marshall was an “employee” of HISD who could be statutorily shielded.
Because we conclude that he was not, there is no need to reach the question
whether Bustos compels the dismissal of claims brought against Marshall but
not HISD.
      The TTCA defines an employee as “a person, including an officer or
agent, who is in the paid service of a governmental unit by competent
authority” but excludes “a person who performs tasks the details of which the
governmental unit does not have the legal right to control.” Tex. Civ. Prac. &
Rem. Code § 101.001(2). Marshall, an elected school board trustee, was neither


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                                    No. 13-20753
in HISD’s paid service nor did the District have any right to control him. He
is not an employee under the TTCA.
      To overcome this deficiency, Marshall asserts that he was an “employee”
pursuant to the recent decision of the Texas Supreme Court in Franka v.
Velasquez, 332 S.W.3d 367 (Tex. 2011).           One defendant in Franka was a
medical resident who did not fit TTCA’s definition of employee, because she
“was not both paid by and subject to the legal control of the same governmental
unit[.]” Franka, 332 S.W.3d at 373. The court deemed her an employee under
the TTCA, however, pursuant to a provision of the Texas Health and Safety
Code, which designated medical residents as employees “for purposes of
determining liability[.]” Id. at 374. Marshall analogizes his position to that of
the medical resident in Franka. Provisions of the Texas Education Code define
a school board trustee as an employee, Tex. Educ. Code § 22.051, 19 and grant
immunity to “employees” for “any act that is incident to or within the scope of
the duties of the employee’s position . . . and that involves the exercise of
judgment or discretion[.]” Tex. Educ. Code § 22.0511(a). On the basis of this
analogy, Marshall urges us to rely on the Education Code’s definition of
employee.
      But even if some “employees” under these Education Code provisions
might fall within the scope of Franka, Marshall does not. The same Education
Code provision limits personal liability “for any act that is incident to or within
the scope of the duties of the employee’s position of employment and that
involves the exercise of judgment or discretion on the part of the employee[.]”
Tex. Educ. Code § 22.0511 (emphasis added). Marshall is not alleged to have



      19 The statute defines a “professional employee of a school district” to include “a
member of the board of trustees of an independent school district[.]” Tex. Educ. Code
§ 22.051(a)(5).

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                                 No. 13-20753
been acting “within the scope” of his duties. To the contrary, bribery and
peddling influence are not within the scope of a trustee’s duty.        He was
allegedly defiling his position and wholly outside the legitimate scope of a
trustee’s duties if he accepted bribes in exchange for advancing the interests of
certain contractors.    Marshall’s rationalization that getting involved with
contracting and procurement decisions is “minimally” within the scope of his
duties, particularly when he served as HISD Board President in 2009, cannot
stand against GRG’s detailed evidence of the pay-to-play scheme. Marshall is
not entitled to immunity under the TTCA or the Education Code.
   2. Tortious Interference with Prospective Business Relations
      Next to consider is whether summary judgment was appropriate on
GRG’s claim for tortious interference with prospective business relations
against Marshall, the vendor defendants and Clay. GRG contends that there
was a reasonable probability that it would have entered into additional
contracts with HISD and that Marshall, Clay, and the vendor defendants
“intentionally interfered with the relationship.”
      The Texas Supreme Court has recently defined the elements of tortious
interference with prospective business relations.      The common law cause
requires that
      (1) there was a reasonable probability that the plaintiff would have
      entered into a business relationship with a third party; (2) the
      defendant either acted with a conscious desire to prevent the
      relationship from occurring or knew the interference was certain
      or substantially certain to occur as a result of the conduct; (3) the
      defendant's conduct was independently tortious or unlawful;
      (4) the interference proximately caused the plaintiff injury; and
      (5) the plaintiff suffered actual damage or loss as a result.

Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 (Tex.
2013). The second element in this list—the requisite mental state—was the


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                                 No. 13-20753
deciding factor for the district court, which found that any bribery on the part
of competing vendors did not have as its object the interference with GRG’s
status as a JOC contractor. The district court relied on Bradford v. Vento, in
which the Texas Supreme Court adopted the explanation of the Second
Restatement of Torts that when a defendant “had no desire to effectuate the
interference by his action but knew that it would be a mere incidental result of
conduct he was engaging in for another purpose, the interference may be found
to be not improper.” 48 S.W.3d 749, 757 (quoting RESTATEMENT (SECOND) OF
TORTS § 766B cmt. d (1979)).
      Bradford is distinguishable on its facts.     The plaintiff in Bradford
claimed he had bought a particular store from its previous owner.            The
defendant mall administrator had allegedly interfered with the plaintiff’s sales
by stating, in response to a police inquiry, that the previous owner still owned
the store. Bradford, 48 S.W.3d at 754-55. The Texas Supreme Court found
that “the interference was at most only an incidental result of Bradford’s
legitimate conduct.” Id. at 758. Bradford dealt with statements made in good
faith, whereas these defendants’ actions hardly occurred in good faith.
      GRG bolsters its argument by citing Strickland v. Joeris, an unpublished
Texas court of appeals case. No. 04-11-00626-CV, 2012 WL 6013423 (Tex. App.
Nov. 30, 2012) (mem. op.) (unpublished). The plaintiff in Strickland contended
he was fired because of a dispute he had with one of the firm’s largest clients
over a transaction unrelated to the firm’s business. Shortly after the dispute,
the client called the firm and complained about the employee. The plaintiff
introduced evidence that the client “made it clear” that the plaintiff’s dispute
“could possibly jeopardize all current and future work.” Id. at *4. The court
held that this was sufficient to create a triable fact issue as to whether the
client intended to jeopardize the employee’s future with the firm. Id. GRG


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                                       No. 13-20753
contends that the evidence here likewise supports the inference that its
competitors “instructed Marshall to get rid of GRG[.]”
          In Strickland, the defendant actually made statements to a party in the
business relationship about the plaintiff, and circumstantial evidence strongly
supported an inference that the statement was designed to harm the
plaintiff. 20    In contrast, there is in this case no direct evidence of
communications between any vendor defendant and any HISD official on the
subject of GRG. The nature of the alleged bribery scheme, however, was to fix
the contracting process in favor of the vendor defendants. Where only a limited
number of JOC contractors would be selected, all of the participants in the
scheme “knew the interference was substantially certain to occur as a result of
the conduct.” See Coinmach Corp., 417 S.W.3d at 923. This reasoning would
apply to GRG’s claim as regards the decrease in projects under the 2009
contract and the non-renewal of GRG’s JOC contract in the 2010 RFP
process. 21 That this one element of the claim survives summary judgment does
not, of course, resolve questions concerning the other elements on which the
court did not rule.
   III.     Civil Conspiracy Claims
       Our partial reinstatement of the RICO claim and the claim for
interference with prospective business relations requires reinstatement of the




       20  See also Lee v. Levi Strauss & Co., 897 S.W.2d 501 (Tex. App. 1995), in which a
letter from the defendant led the plaintiff’s employer to believe he had to fire the plaintiff.
Id. at 504-05.
        21 Appellees strenuously contend that GRG’s claim also fails for lack of evidence that

it would have become a JOC contractor following the 2010 RFP. This contention was not
addressed by the district court, and we do not address it either. Assessing the “likelihood” of
“prospective business relations” under Texas law suggests different considerations than the
RICO inquiry we discussed earlier herein, which is whether HISD “would have” entered into
a 2010 JOC arrangement with GRG.


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                                    No. 13-20753
civil conspiracy claim against the defendants targeted thereby (except HISD)
pending further developments on remand.
   IV.     Constitutional Claims
      GRG and Ramirez brought equal protection, First Amendment, and due
process claims under the Civil Rights Act, 42 U.S.C. § 1983 against HISD and
Marshall. The First Amendment claim fails for essentially the reasons stated
by the district court: Appellants did not “speak” or intend to convey a particular
message, and no one would have “reasonably apprehended” that they so
intended, when they refused to pay bribes to Marshall. See Cabrol v. Town of
Youngsville, 106 F.3d 101, 108 (5th Cir. 1997). The due process claim fares no
better.    GRG identifies no constitutionally protected liberty or property
interest. See Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 92 S. Ct. 2701
(1972).
      GRG’s equal protection claim also lacks support. 22 The Equal Protection
Clause forbids state actors from treating similarly situated individuals
differently for a discriminatory purpose and without a rational basis. GRG
argues that the zero-sum nature of the JOC program meant that Marshall and
HISD knew that favoring bribers would harm those who refused to bribe, and
that a plaintiff must only “show that the decisionmakers were aware” of
potential harm to disfavored individuals. “‘Discriminatory purpose,’ however,
implies more than intent as volition or intent as awareness of consequences.”
Pers. Adm’r of Mass. v. Feeney, 442 U.S. 256, 279, 99 S. Ct. 2282, 2296 (1979).
The district court concluded that GRG failed to demonstrate that Marshall or
HISD discriminated against GRG “because of” and not “in spite of” its refusal
to pay bribes.    See id. (equal protection claim requires showing that “the



      22At the outset, we reject HISD’s unpalatable argument that there was no disparate
treatment since all vendors were given an opportunity to bribe a trustee.

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                                   No. 13-20753
decisionmaker . . . selected or reaffirmed a particular course of action at least
in part ‘because of,’ not merely ‘in spite of,’ its adverse effects”). Nothing in the
record suggests that Marshall or any of his collaborators acted to harm non-
bribers.   See SECSYS, LLC v. Vigil, 666 F.3d 678, 687 (10th Cir. 2012)
(rejecting equal protection claim arising out of pay-off scheme involving state
contracts when harm was “at most a foreseen (but unintended) side effect”).
That Marshall may have perverted HISD’s procurement processes to cause
HISD to discriminate in favor of RHJ and FBM is not sufficient to show that
GRG was discriminated against. See Club Italia Soccer & Sports Org., Inc. v.
Charter Twp. of Shelby, Mich., 470 F.3d 286, 299 (6th Cir. 2006) (rejecting
equal protection claim when one vendor “was treated beneficially, but no party
was discriminated against”).
      Further, an equal protection claim depends on either identifying a class,
Washington v. Davis, 426 U.S. 229, 240 (1976), or showing that the aggrieved
party is a “class of one,” Village of Willowbrook v. Olech, 528 U.S. 562, 564,
120 S. Ct. 1073, 1074 (2000). Ramirez does not claim that he was discriminated
against on the basis of his membership in any particular class and therefore
must rely on the class of one theory. However, the class-of-one rationale does
not apply to “forms of state action . . . which by their nature involve
discretionary decision-making based on a vast array of subjective,
individualized assessments.” Engquist v. Oregon Dep’t of Agr., 553 U.S. 591,
603, 128 S. Ct. 2146, 2154 (2008).        Engquist held that the discretionary-
decision-making “principle applies most clearly in the employment context, for
employment decisions are quite often subjective and individualized, resting on
a wide array of factors that are difficult to articulate and quantify.” Id. at 604,
128 S. Ct. at 2154; see also Harris v. Quinn, 134 S. Ct. 2618, 2653 (2014) (“the
government has wider constitutional latitude when it is acting as employer


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    Case: 13-20753      Document: 00513046886        Page: 30    Date Filed: 05/18/2015



                                    No. 13-20753
than as sovereign”). HISD calls our attention to the “obvious parallels between
government employees and government contractors.”                    Engquist is not
dispositive of GRG’s class of one theory but cuts against it. In any event, even
if GRG’s dealings with HISD fall within a class of one for equal protection
purposes, the absence of discriminatory intent dooms its claim.
      For the foregoing reasons, GRG cannot sustain its constitutional
claims. 23
                                   CONCLUSION
      The district court commendably dealt with novel claims in this troubling
case with a long and complex record. Based on the foregoing discussion, we
AFFIRM the judgment dismissing HISD from liability for RICO and federal
constitutional violations and state law claims. We AFFIRM the judgment
dismissing Marshall from liability for constitutional violations. We REVERSE
and REMAND, for further proceedings consistent herewith, the summary
judgment dismissing the RICO claims against the (non-HISD) Appellees
insofar as they allege injury covering the remainder of the 2009 JOC contract
period.    We REVERSE and REMAND for further proceedings consistent
herewith the summary judgment dismissing the claim against the (non-HISD)
Appellees for tortious interference with prospective business relations and the
civil conspiracy claims.
           AFFIRMED IN PART, REVERSED and REMANDED IN PART.




      23We do not reach HISD’s assertion that these § 1983 claims do not justify imposing
municipal liability.

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