Ibarra Consulting Eng'rs Inc. v. Jacobs Eng'g Grp. Inc.

579 F.Supp.3d 850

IBARRA CONSULTING ENGINEERS INC. and Raquel Ibarra, Plaintiffs,

v.JACOBS ENGINEERING GROUP INC., Defendant.

Civil Action No. 3:21-CV-1227-X

United States District Court, N.D. Texas, Dallas Division.

Signed January 10, 2022

Robert Notzon, Law Office of Robert S. Notzon, Austin, TX, Jason C.N. Smith, Law Offices of Jason Smith, Fort Worth, TX, for Plaintiffs.

John M. Barcus, Jeffrey Leslie, Ogletree Deakins Nash Smoak & Stewart PC, Dallas, TX, Shafeeqa W. Giarratani, Ogletree Deakins Nash Smoak & Stewart, PC, Austin, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

BRANTLEY STARR, UNITED STATES DISTRICT JUDGE

Before the Court is the plaintiffs' motion to remand. [Doc. No. 7.] For the following reasons, the Court DENIES the motion. In accordance with the Court's prior Order [Doc. No. 11], the plaintiffs have 21 days to respond to the defendant's motion for summary judgment.

I. Background

Plaintiff Raquel Ibarra is Hispanic and the president and owner of Plaintiff Ibarra Consulting Engineers. Defendant Jacobs Engineering Group, Inc. is an international professional-services firm that provides consulting and project delivery for government and private entities, including in the transportation infrastructure industry. In 2015, Ibarra Consulting Engineers and Jacobs created a Joint Venture to participate in a federal program called the Disadvantaged Business Enterprise program.

The Federal Highway Administration is an agency within the United States Department of Transportation that "supports State and local governments in the design, construction, and maintenance of the Nation's highway system," including by providing "financial and technical assistance to State and local governments ...."¹ Another thing that the Federal Highway Administration does is help administer the Disadvantaged Business Enterprise program. The Program "is a legislatively mandated federal Department of Transportation program that applies to federal-aid highway dollars expended on federally assisted contracts issued" by state transportation agencies to qualifying small businesses.² For our purposes, it suffices to say: state agency + transportation contract + Disadvantaged Business Enterprise recipients + federal dollars = the Program applies.

The Program "ensures that federally assisted contracts for highway, transit and aviation projects are made available for small business concerns owned and controlled by socially and economically disadvantaged individuals."³ The Code of Federal Regulations guides the implementation of the Program.⁴ The Program's objectives include ensuring "nondiscrimination in the award and administration of DOT-assisted contracts in the Department's highway, transit, and airport financial assistance programs" and creating "a level playing field on which [Disadvantaged Business Enterprises] can compete fairly for DOT-assisted contracts ...."⁵

Back to this case. Ibarra Consulting Engineers (the Disadvantaged Business Enterprise) and Jacobs had formed a Joint Venture. The Joint Venture, under the auspices of the Disadvantaged Business Enterprise program, in turn entered into an engineering contract with the Texas Department of Transportation.⁶ The contract required the Joint Venture to make a "good faith effort" to meet the total Disadvantaged Business Enterprise participation goal of 11.7%.⁷ In addition to the total "goal," the Joint Venture also "commit[ted]" to assigning 10% of the contract work to Ibarra Consulting Engineers alone, and 28.7% of the work to the Disadvantaged Business Enterprises together.⁸ (There were other firms involved, but none of them matter here.) Under the contract, Jacobs played a large role in receiving work assignments from the Texas Department of Transportation and divvying them up between the Joint Venture members.⁹ Finally, the parties were obliged to "not discriminate on the basis of race, color, national origin, or sex in the performance of this contract" and to "carry out applicable requirements of 49 CFR Part 26 in the award and administration of DOT assisted contracts."¹⁰

Eventually, Ibarra Consulting Engineers "became convinced" that Jacobs was "shorting work" to it and "actively removing work" from it "because [Ibarra Consulting Engineers] was a minority-owned business."¹¹ Ibarra complained to the Texas Department of Transportation.¹² Jacobs and the other Joint Venture members became dissatisfied with Ibarra and voted to remove Ibarra from the Joint Venture.¹³

Ibarra sued Jacobs in state court and asserted various causes of action, including racial discrimination and retaliation claims under 42 U.S.C. § 1981. In a prior iteration of this case, Jacobs removed to the Northern District of Texas.¹⁴ Judge Sam Cummings granted summary judgment to Jacobs on the § 1981 claims, declined to exercise supplemental jurisdiction over the state-law claims, and remanded those claims to state court.¹⁵ Judge Cummings noted that Ibarra's § 1981 allegations were "simply a repackaging of the alleged breach of contract claims asserting that a minimum 10% of invoicing was not allotted to" Ibarra.¹⁶

Once the case was back in state court, the plaintiffs filed an amended petition.

They deleted the § 1981 claim, maintained the breach of contract claim, kept the breach of contract language that Judge Cummings had characterized as a "repackaging" of the § 1981 claim, and expanded the breach of contract allegations by asserting for the first time that Jacobs had "failed to make good faith efforts to ensure that Ibarra" received adequate work assignments as "required" by 49 C.F.R. § 26.¹⁷ The plaintiffs alleged that Jacobs had "retaliated" against, "disparately treated," and "threatened" them—which is, as the plaintiffs explained, "forbid[den]" by 49 C.F.R. § 26.¹⁸

Jacobs removed to this Court, asserting federal jurisdiction under 28 U.S.C. § 1331, and moved for summary judgment.¹⁹ The plaintiffs move to remand to state court and argue that Jacobs has not established federal jurisdiction, as is Jacobs's burden.²⁰

II. Governing Law

Title 28 U.S.C. § 1331 provides that district courts have jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." Under this provision, federal courts have jurisdiction (even over suits with only a state-law cause of action) when the case presents a federal question that is "(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disturbing the federal-state balance approved by Congress."²¹

"Jurisdiction is proper" over cases meeting these requirements "because there is a serious federal interest in claiming the advantages thought to be inherent in a federal forum, which can be vindicated without disruption of Congress's intended division of labor between state and federal courts."²² This "captures the commonsense notion that a federal court ought to be able to hear claims recognized under state law that nonetheless turn on substantial questions of federal law, and thus justify resort to the experience, solicitude, and hope of uniformity that a federal forum offers on federal issues ...."²³

III. Analysis

In this case, the parties disagree on three of the four elements that Jacobs must establish for federal jurisdiction under § 1331.

A. Federal Issue Necessarily Raised

The plaintiffs contend that a federal issue is not necessarily raised by their breach of contract claim because there is no federal cause of action and because they present alternative bases of recovery. Jacobs argues that a federal issue is necessarily raised by the plaintiffs' breach of contract claim because, although the plaintiffs seek various forms of relief and multiple bases of recovery, some of the allegations are based solely upon alleged nonconformity with a federal law: the Disadvantaged Business Enterprise program and the attendant regulations of 49 C.F.R. § 26.

For a case to "arise under" federal law, it need not assert a federal cause of action, but lacking one is "relevant to" the determination of whether federal jurisdiction exists.²⁴ Even without a federal cause of action here, the Court finds that a federal issue is necessarily raised.

We start with the text of the plaintiffs' complaint,²⁵ which repeatedly alleges that Jacobs failed to fulfill its duties under the Program. As just a few examples: the plaintiffs state that the Texas Department of Transportation contract "requires that" 49 C.F.R. § 26 "be complied with."²⁶ The plaintiffs allege that Jacobs "violated" § 26 by failing to process the plaintiffs' invoices and failing to make a good faith effort.²⁷ They allege that Jacobs racially discriminated against them and retaliated against them in violation of § 26.²⁸ And they allege that § 26 provided them a right to "complain" to the Texas Department of Transportation—which is what they allege Jacobs used a basis for voting them out of the Joint Venture.²⁹ Finally, the plaintiffs identified specific Program regulations that Jacobs allegedly failed to follow.³⁰

The plaintiffs are unequivocally claiming that Jacobs breached duties placed upon it by the federal Program. Necessarily raised by the plaintiffs' allegations are issues about "the contours of the defendant's federal duty ..., the scope of that duty, and whether the defendant's actions amounted to a breach of that duty."³¹ Sure, the plaintiffs assert that the contract (in addition to § 26) requires Jacobs to, for example, provide them 10% of the contract work. But that doesn't mean that a federal issue isn't necessarily raised.

As the Fifth Circuit explained in Board of Commissioners of the Southeast Louisiana Flood Protection Auth. – East v. Tennessee Gas Pipeline Co., L.L.C. :

The Board's negligence claim in fact requests relief for multiple distinct injuries and refers to multiple sources of law that might establish a duty of care, and it is not the case that just because some of these sources are drawn from state

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