228 F.3d 1147 (10th Cir. 2000), 97-1304, Adarand Constructors v Slater

Docket Nº:97-1304
Citation:228 F.3d 1147
Party Name:ADARAND CONSTRUCTORS, INC., a Colorado corporation, Plaintiff - Appellee, v. RODNEY E. SLATER, Secretary of the Department of Transportation; KENNETH R. WYKLE, Administrator of the Federal Highway Administration; VINCENT F. SCHIMMOLLER, Administrator of Region VIII of the Federal Highway Administration; LARRY C. SMITH, Engineer of the Central Feder
Case Date:September 25, 2000
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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228 F.3d 1147 (10th Cir. 2000)

ADARAND CONSTRUCTORS, INC., a Colorado corporation, Plaintiff - Appellee,


RODNEY E. SLATER, Secretary of the Department of Transportation; KENNETH R. WYKLE, Administrator of the Federal Highway Administration; VINCENT F. SCHIMMOLLER, Administrator of Region VIII of the Federal Highway Administration; LARRY C. SMITH, Engineer of the Central Federal Lands Highway Division, Defendants - Appellants,


No. 97-1304

United States Court of Appeals, Tenth Circuit

September 25, 2000

Appeal from the United States District Court for the District of Colorado (D.C. No. 90-K-1413)

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Leslie A. Simon, Attorney, United States Department of Justice, (Nancy E. McFadden, General Counsel, Paul M. Geier, Assistant General Counsel for Litigation, Edward V.A. Kussy, Acting Chief Counsel, Federal Highway Administration, Sara McAndrew, Trial Attorney, Peter S. Smith, Trial Attorney, of the United States Department of Transportation, Washington, D.C.; Isabelle Katz Pinzler, Acting Assistant Attorney General, William R.

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Yeomans, Acting Deputy Assistant Attorney General, Bill Lann Lee, Acting Deputy Assistant Attorney General, Thomas E. Perez, Deputy Assistant Attorney General, Mark L. Gross, Attorney, Louis E. Peraertz, Attorney, of the United States Department of Justice, Washington, D.C., with her on the briefs), for Defendants - Appellants.

William Perry Pendley (Todd S. Welch and J. Scott Detamore, with him on the briefs), Mountain States Legal Foundation,Denver, Colorado, for Plaintiff - Appellee.

Robin L. Rivett, Sharon L. Browne, and Stephen R. McCutcheon, Jr., for Pacific Legal Foundation, Sacramento, California, filed an amicus curiae brief.

Julian A. Gross and William C. McNeill III, Legal Aid Society of San Francisco, for the Employment Law Center, San Francisco, California, and Franklin M. Lee and Tracie Anita Watkins for the Minority Business Enterprise Legal Defense and Education Fund, Inc., Washington, D.C., filed an amicus curiae brief.

Michael E. Kennedy, General Counsel for Associated General Contractors of America, Inc., and John G. Roberts, Jr., David G. Leitch, and H. Christopher Bartolomucci of Hogan & Hartson, L.L.P., Washington, D.C., filed an amicus curiae brief for Associated General Contractors of America, Inc.

Before LUCERO, Circuit Judge, McKAY, Senior Circuit Judge, and MURPHY, Circuit Judge.


LUCERO, Circuit Judge.

Following the Supreme Court's vacation of our dismissal on mootness grounds, we address the merits of this appeal, namely, the federal government's challenge to the district court's grant of summary judgment to plaintiff-appellee Adarand Constructors, Inc. In so doing, we must resolve the constitutionality of the use in federal subcontracting procurement of the Subcontractor Compensation Clause ("SCC"), which employs race-conscious presumptions designed to favor minority enterprises and other "disadvantaged business enterprises" ("DBEs"). Our evaluation of the SCC program utilizes the "strict scrutiny" standard of constitutional review enunciated by the Supreme Court in an earlier decision in this case, Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995) ("Adarand III").

In his concurring opinion in Adarand III, Justice Scalia succinctly articulated this Nation's guiding aspiration: "In the eyes of government, we are just one race here. It is American." Id. at 239 (Scalia, J., concurring in part and concurring in the judgment). Until that future day when national aspiration and national reality converge, the Court has made clear that under certain circumstances the federal government may use race-conscious means to remedy the effects of historical and present-day racial discrimination. Inherently, we resolve whether the two branches of the government--the Legislative and the Executive--that have chosen to hasten that future day have met the constitutional standards enunciated by the third branch. Since the district court last considered this case, and after lengthy congressional hearings in response to the Adarand III decision, the federal government has significantly changed the way in which it implements the challenged race-conscious programs in highway construction contracting. It is ultimately our considered judgment that the SCC program and the DBE certification programs as currently structured, though not as they were structured in 1997 when the district court last rendered judgment, pass constitutional muster: They are narrowly tailored to serve a compelling governmental interest. Thus, exercising jurisdiction pursuant to 28 U.S.C. § 1291, we reverse the judgment of the district court below.


The Supreme Court has characterized the facts of this case as "fairly straightforward,"

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Adarand III, 515 U.S. at 206, summarizing the relevant facts as follows:

In 1989, the Central Federal Lands Highway Division (CFLHD), which is part of the United States Department of Transportation (DOT), awarded the prime contract for a highway construction project in Colorado to Mountain Gravel & Construction Company. Mountain Gravel then solicited bids from subcontractors for the guardrail portion of the contract. Adarand, a Colorado-based highway construction company specializing in guardrail work, submitted the low bid. Gonzales Construction Company also submitted a bid.

Id. at 205. At the time, Gonzales was certified as a small business owned and controlled by socially and economically disadvantaged individuals, while Adarand was not. See id. This litigation centers around the SCC, a clause which was included in CFLHD's prime contract with Mountain Gravel. The SCC provided "that Mountain Gravel would receive additional compensation if it hired subcontractors certified as small businesses controlled by 'socially and economically disadvantaged individuals.'" Id. (citation omitted).

Adarand submitted an affidavit stating that but for the additional compensation Mountain Gravel obtained by hiring Gonzales, a certified business, it would have hired Adarand for the guardrail work. See id. Adarand sued, arguing that the use of a race-conscious presumption in determining who is a socially and economically disadvantaged individual for purposes of the SCC violated its Fifth Amendment equal protection rights. See id. at 205-06.

In Adarand Constructors, Inc. v. Skinner, 790 F.Supp. 240 (D. Colo. 1992) ("Adarand I"), the district court addressed Adarand's challenge to "the DBE program as administered by the CFLHD within Colorado." Id. at 241 (footnote omitted). Without focusing specifically on the SCC and its operation, the court in Adarand I upheld as constitutional, under intermediate scrutiny, statutory provisions defining DBEs and setting goals for DBE participation in government contracting. See id. at 241, 244-45 (relying on Fullilove v. Klutznick, 448 U.S. 448, 480 (1980); Metro Broadcasting, Inc. v. FCC, 497 U.S. 547, 598-601 (1990)).

In Adarand Constructors, Inc. v. Pena, 16 F.3d 1537, 1539 (10th Cir. 1994) ("Adarand II"), this Court affirmed the district court's judgment on different grounds. We concluded that Adarand had standing to challenge the SCC program as it pertains to minority business enterprises but not women-owned business enterprises and addressed our inquiry to the SCC as a program implemented pursuant to § 502 of the Small Business Act of 1958 ("SBA"), Pub. L. No. 85-536, 72 Stat. 384 (codified as amended, 15 U.S.C. § 631 et seq.). See Adarand II, 16 F.3d at 1543 (citing 15 U.S.C. § 644(g)). Like the district court, we relied on Metro Broadcasting, 497 U.S. at 565, applying intermediate scrutiny to the SCC and holding "the SCC program . . . constitutional because it is narrowly tailored to achieve its significant governmental purpose of providing subcontracting opportunities for small [DBEs], as required under section 502 of the [SBA]." Adarand II, 16 F.3d at 1547.

The Supreme Court reversed. It overruled Metro Broadcasting and cast doubt on Fullilove insofar as that case might be read to apply less than strict scrutiny to federal programs involving racial classifications. See Adarand III, 515 U.S. at 227, 235.1

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On remand, the district court held the SCC program unconstitutional, finding it insufficiently narrowly tailored to further a compelling interest because the program was both over- and under-inclusive, including minority individuals who were not in fact disadvantaged and excluding non-minority individuals who were disadvantaged. See Adarand Constructors, Inc. v. Pena, 965 F.Supp. 1556 (D. Colo. 1997) ("Adarand IV"). With regard to the Court's pronouncement in Adarand III that strict scrutiny is not "fatal in fact," the district court found it "difficult to envisage a race-based classification" that would ever be narrowly tailored, thereby effectively pronouncing strict scrutiny fatal in fact. Id. at 1580. The district court granted summary judgment to Adarand.

Following Adarand IV, we considered the government's contention that subsequent events had rendered the case moot. See Adarand Constructors, Inc. v. Slater, 169 F.3d 1292 (10th Cir. 1999) ("Adarand V"). Specifically, because Adarand applied for and was granted DBE certification by the Colorado Department of Transportation ("CDOT"), we concluded that Adarand could no longer...

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