Contractors Ass'n v. City of Philadelphia

• Decision Date: 05 April 1990
• Docket Number: Civ. A. No. 89-2737.
• Court: U.S. District Court — Eastern District of Pennsylvania
• Parties: CONTRACTORS ASSOCIATION OF EASTERN PENNSYLVANIA, INC., General Building Contractors Association, Inc., Associated Master Painters & Decorators of Philadelphia, Inc., Employing Bricklayers Association of Delaware Valley, Inc., Interior Finish Contractors Association of Eastern Pennsylvania, Inc., National Electrical Contractors Association, Inc., Roofing and Sheet Metal Contractors Association of Delaware Valley, Inc., and Subcontractors Association of Delaware Valley, Inc., Plaintiffs, v. CITY OF PHILADELPHIA, Elizabeth Reveal, as Director of Finance for the City of Philadelphia, and Curtis Jones, Jr., as Director of the Minority Business Enterprise Council, Defendants, and United Minority Enterprise Associates, Inc., Intervening Defendant.

735 F. Supp. 1274

CONTRACTORS ASSOCIATION OF EASTERN PENNSYLVANIA, INC., General Building Contractors Association, Inc., Associated Master Painters & Decorators of Philadelphia, Inc., Employing Bricklayers Association of Delaware Valley, Inc., Interior Finish Contractors Association of Eastern Pennsylvania, Inc., National Electrical Contractors Association, Inc., Roofing and Sheet Metal Contractors Association of Delaware Valley, Inc., and Subcontractors Association of Delaware Valley, Inc., Plaintiffs, v. CITY OF PHILADELPHIA, Elizabeth Reveal, as Director of Finance for the City of Philadelphia, and Curtis Jones, Jr., as Director of the Minority Business Enterprise Council, Defendants, and United Minority Enterprise Associates, Inc., Intervening Defendant.

Civ. A. No. 89-2737.

United States District Court, E.D. Pennsylvania.

April 5, 1990.

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John J. McAleese, Jr., Thomas J. McGoldrick and John H. Widman, King of Prussia, Pa., for plaintiffs.

Carl Vance Johnson Norman, President/CEO, MIS-ATSE Financial Corp., Philadelphia, Pa., amicus-curiae.

Charisse R. Lillie, Philadelphia, Pa., for Redevelopment Authority of the City of Philadelphia.

Seymour Kurland, Charles W. Bowser, Luther E. Weaver, III and James P. Cousounis, Baskin Flaherty Elliott & Mannino, P.C., Philadelphia, Pa., and Charles C. Hileman and Richard S. Mailman, Wyncote, Pa., for defendants.

Robert T. Vance, Jr., Philadelphia, Pa., for United Minority Enterprise Associates, Inc.

Carl E. Singley, Philadelphia, Pa., for Philadelphia Urban Coalition Philadelphia Urban League Minority Enterprise Development Committee.

MEMORANDUM AND ORDER

BECHTLE, Chief Judge.

Presently before the court are cross-motions for summary judgment on the question of whether the city of Philadelphia's minority, female and handicapped set-aside program is valid in light of the decision of the United States Supreme Court in City of Richmond v. J.A. Croson Co., 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989).

I. INTRODUCTION

On April 14, 1989, nine incorporated associations of construction contractors that have participated as general contractors or subcontractors on city of Philadelphia construction projects instituted this action against the city of Philadelphia, Elizabeth Reveal, Director of Finance for the city of Philadelphia, and Curtis Jones, Jr., Director of the Minority Business Enterprise Council to have Chapter 17-500 of the Philadelphia Code (hereinafter "the Ordinance") and the Minority Business Enterprise Council (hereinafter "MBEC") regulations declared invalid. The United Minority Enterprise Associates, Inc. intervened in this litigation as a defendant. For the reasons discussed below, the court finds that the Ordinance violates the Equal Protection Clause of the Fourteenth Amendment of the Constitution of the United States, and will accordingly grant plaintiff's cross-motion for summary judgment.

In the amended complaint the plaintiffs allege that the Ordinance imposes upon covered city contracts classifications based on race, ethnicity, gender and handicap in violation of the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution (Count I); title 42 U.S.C. § 1983 (Count II); title 42 U.S.C. § 1981 (Count III); article I, § 26 of the Pennsylvania Constitution (Count IV); article I, § 28 of the Pennsylvania Constitution (Count V). Plaintiffs claim that these classifications based on race and ethnicity do not withstand the strict scrutiny test announced by the Supreme Court in City of Richmond v. J.A. Croson Co., supra, and that the gender- and handicap-based classifications violate the lesser standards of review articulated by the Supreme Court. Plaintiffs also allege that the Ordinance violates title 73 P.S. § 1622 of the Pennsylvania Code, which requires the city to accept the lowest responsible bid in city contract awards, as the Ordinance requires the rejection of a bid submitted by the lowest responsible bidder on a covered contract exceeding $50,000.00 for the construction, reconstruction, alteration or repair of any public building, public work or other public improvement for noncompliance with the requirements of the Ordinance and the MBEC regulations (Count VI). Finally, Count VII alleges that the Ordinance violates § 8-200 of the Philadelphia Home Rule Charter, insofar as it requires the rejection of a bid submitted by the lowest responsible bidder on a covered contract exceeding $2,000 for noncompliance with the requirements of the Ordinance.

Defendants respond that the plaintiff contractors' associations lack standing to pursue their federal equal protection and civil rights claims (Counts I through III) and that they fail to allege facts sufficient to establish that the Ordinance deprived them of their constitutional rights.

To resolve the issues presented in the parties' cross-motions this opinion will recount the stipulated facts (part I), set forth the standard for summary judgment (part II, section A), address the standing issue (part II, section B), discuss the standard with which affirmative action programs must comply as set forth in Croson (part II, section C), and analyze the merits of plaintiffs' claims by examining whether the Philadelphia city council has met its burden under Croson (part II, section D).

II. UNDISPUTED FACTS

The parties submit that the material facts that form the basis for this litigation are not in dispute. The undisputed facts are as follows.

On May 13, 1982, the Philadelphia city council passed over Mayor Green's veto Bill No. 1174-A ("an ordinance amending Title 17 of the Philadelphia Code by adding Chapter 17-400, establishing goals for the participation of Minority and Female Owned Businesses hereinafter "MBE" and "FBE" in the awarding of city contracts including but not limited to supplies and services, equipment, materials and public works construction; establishing a Minority Business Enterprise Council; providing procedures and penalties to monitor and enforce compliance"). As stated in the preamble, one of the goals of the Ordinance, is "to encourage participation in the awarding of city contracts for supplies and services, equipment, materials and public works construction regardless of race, color, sex, religion, national origin, or ancestry." The preamble also states that the most important intent and purpose of the Ordinance is "the Economic Development of the minority and female owned business community through a `sheltered market' process." Among the stated reasons for the Ordinance is "a pattern of past and present racial, sexual and economic discrimination" in the awarding of contracts with the city of Philadelphia. Preamble, Bill No. 1174-A.

The Ordinance provided that it "shall be applied to all City Contracts and all City ... Departments, Agencies, Authorities, Commissions and Councils." § 17-402. The Ordinance established the following MBE and FBE participation goals:

(a) Fifteen percent (15%) City Contract participation for MBEs; and

(b) Ten percent (10%) City Contract participation for FBEs.

The above stated percentages relate to the total dollar amount of City Contracts during each of the City of Philadelphia's Fiscal Years.

§ 17-403.

The Ordinance defines "MBE" as:

(a) A sole proprietorship where the sole proprietor is a minority person; or

(b) A business corporation where 51% of the interest in such corporation are beneficially owned by minority person(s) and minorities occupy the majority of management and Board positions and control all decisions concerning the corporation; or

(c) A partnership where 51% of the partnership interest in such partnership are beneficially owned by minority person(s) and minorities occupy the majority of management and partnership positions and control all decisions concerning the partnership; or

(d) Any other business or professional entity where 51% of the interest are beneficially owned by minority person(s) and minorities occupy the majority of management and Board positions and control all decisions concerning the entity.

§ 17-401(1).

Under the Ordinance, the term "minority person" includes "Black Americans; Hispanic Americans; Native Americans (American Indians, Eskimos, Aleuts, or Native Hawaiians); Asian Pacific Americans ..." § 17-401(5). The definition of "FBE" is the same as that of "MBE", except that it replaces all references to minority person(s) or minorities with woman or women. § 17-401(2).

The Ordinance also created a Minority Business Enterprise Council (MBEC) to help implement, monitor and enforce its goals. Under the Ordinance, the MBEC is, inter alia, required to devise a certification procedure to assure that businesses taking advantage of the Ordinance are legitimate MBEs or FBEs. § 17-404(a). The MBEC was also given the responsibility of ascertaining the total number of MBEs and FBEs in the Philadelphia area. § 17-404(b). In addition, the MBEC was also required to devise policies, regulations and procedures for assuring the participation of MBEs and FBEs in various city contracts. § 17-404(e).

On November 4, 1982, Mayor Green approved Bill No. 1477 (an Ordinance amending Chapter 17-400 by renumbering it to Chapter 17-500 et seq., and by making certain additions and deletions). The amended Ordinance set forth a revised definition of "minority persons":

"A person who is a citizen or lawful permanent resident of the United States and who is:

(a) Black (a person having origins in any of the black racial groups in Africa);

(b) Hispanic (a person of Spanish or Portuguese culture with origins in Mexico, South or Central America, or the Caribbean Islands, regardless of race);

(c) Asian American (a person having origins in any of the original peoples of the Far East, Southeast Asia, the Indian Subcontinent or the Pacific Islands); or

(d) American Indian or Alaskan Native (a person having origins in any of the original peoples of

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