J.A. Croson Co. v. City of Richmond

• Citation: 822 F.2d 1355
• Decision Date: 09 July 1987
• Docket Number: Nos. 85-1002,85-1041,s. 85-1002
• Parties: 43 Empl. Prac. Dec. P 37,215, 56 USLW 2050, 34 Cont.Cas.Fed. (CCH) 75,331 J.A. CROSON COMPANY, Appellant, v. CITY OF RICHMOND, Appellee, Associated General Contractors of America, Amicus Curiae. J.A. CROSON COMPANY, Appellee, v. CITY OF RICHMOND, Appellant, Associated General Contractors of America, Amicus Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1355

822 F.2d 1355

43 Empl. Prac. Dec. P 37,215, 56 USLW 2050,

34 Cont.Cas.Fed. (CCH) 75,331

J.A. CROSON COMPANY, Appellant, v. CITY OF RICHMOND, Appellee, Associated General Contractors of America, Amicus Curiae.

J.A. CROSON COMPANY, Appellee, v. CITY OF RICHMOND, Appellant, Associated General Contractors of America, Amicus Curiae.

Nos. 85-1002, 85-1041.

United States Court of Appeals, Fourth Circuit.

July 9, 1987.

Rehearing and Rehearing En Banc Denied Sept. 18, 1987.

Walter H. Ryland (Williams, Mullen & Christian, Richmond, Va., on brief), for appellant/cross-appellee.

Reginald M. Barley, Sr. Asst. City Atty. (Michael L. Sarahan, Asst. City Atty., Richmond, Va., on brief), for appellee/cross-appellant.

Michael E. Kennedy, McLean, Va., for amicus curiae.

Before HALL, SPROUSE, and WILKINSON, Circuit Judges.

WILKINSON, Circuit Judge:

This case is now before us on remand from the Supreme Court. It involves a challenge to the Minority Business Utilization Plan enacted by the City Council of Richmond, Virginia. The plan requires contractors on city construction projects to subcontract at least thirty percent of the dollar value of the contract to minority-owned business enterprises (MBE's) unless the city waives the requirement. This court earlier upheld the plan under Virginia law and the federal Constitution.

The Supreme Court granted certiorari, vacated the judgment, and remanded the case for consideration in light of Wygant v. Jackson Board of Education, 476 U.S. 267, 106 S.Ct. 1842, 90 L.Ed.2d 260 (1986). We now hold that the Richmond plan is invalid under the Equal Protection Clause of the Fourteenth Amendment.

I.

The Minority Business Utilization Plan, enacted in April of 1983, sets aside part of the city's construction expenditures for minority-owned businesses. The plan terminates in 1988, at which time the City Council can renew it or allow it to lapse. Under the plan, the prime contractor must subcontract at least thirty percent of the dollar value of the contract to firms that are at least one-half minority owned. Every construction contract includes provisions setting out the MBE requirement and the procedures for complying with it. The contract provisions state that if a contractor fails to meet the MBE requirement, the contract "shall be suspended or terminated unless a waiver is granted." They further state that the city will not waive the requirement "other than in exceptional circumstances." Only non-minority prime contractors must comply with the plan provisions.

In September of 1983, the city invited bids for the installation of stainless steel urinals and water closets at the City Jail. The J.A. Croson Co., which is not itself an MBE, was the only bidder on the contract. After Croson submitted its bid for the project, it requested a waiver of the MBE requirement. Croson contended that it was unable to locate any minority subcontractors, except one that it considered unqualified. The city refused to grant a waiver. Croson then informed the city that if it were required to use the unqualified contractor, the cost of the project would rise by $7,663.16, and the contract price would have to rise accordingly. The city again turned Croson down, stating that the minority contractor was qualified and that the fixed price bid could not be increased.

Shortly thereafter, the city informed Croson that it had decided to re-bid the project. Croson was invited to submit a new bid. Croson then sued in federal district court, arguing that the plan's racial set-aside was contrary to Virginia law governing competitive bid procedures and that it violated the federal Constitution. Croson brought its federal claims under 42 U.S.C. Secs. 1981 and 1983.

The district court ruled that the plan was consistent with both Virginia law and federal law. A divided panel of this court affirmed. J.A. Croson Co. v. City of Richmond, 779 F.2d 181 (4th Cir.1985). After this court announced its decision, the Supreme Court decided Wygant v. Jackson Board of Education, 476 U.S. 267, 106 S.Ct. 1842, 90 L.Ed.2d 260 (1986). The Supreme Court granted certiorari in the Croson case and remanded it to us for further consideration in light of Wygant. See --- U.S. ----, 106 S.Ct. 3327, 92 L.Ed.2d 733 (1986).

Wygant involved a challenge to a preferential layoff provision in a collective bargaining agreement for school teachers. The agreement stated that if the Board of Education needed to lay off any teachers, those with the most seniority would be protected, "except that at no time will there be a greater percentage of minority personnel laid off than the current percentage of minority personnel employed at the time of the layoff." 106 S.Ct. at 1845. The Court held this provision unconstitutional, principally because the racial preference was not justified by adequate findings of prior discrimination and because it was not narrowly tailored to its asserted remedial purpose.

After reconsidering our decision in light of Wyqant, we conclude that we must invalidate the racial preference in the Richmond plan. The very infirmities which marked the preferential provision in Wygant are present in this case.

II.

Because the views of the majority in Wygant were expressed in a plurality opinion and two concurrences, the boundaries of Wygant will no doubt be a matter of dispute. ¹ There should be no dispute, however, about the core of its holding: To show that a plan is justified by a compelling governmental interest, a municipality that wishes to employ a racial preference cannot rest on broad-brush assumptions of historical discrimination. Yet that is exactly what the Richmond City Council did in this case. If this plan is held to be valid then local governments will be free to adopt sweeping racial preferences at their pleasure, whether those preferences are legitimate remedial measures or bald dispensations of public funds and employment based on the politics of race. It is precisely to guard against this latter abuse that the Wygant requirement of particularized findings is essential.

A.

According to the Wygant plurality, before an asserted governmental interest in a racial preference can be accepted as "compelling," there must be findings of prior discrimination. Findings of societal discrimination will not suffice; the findings must concern "prior discrimination by the government unit involved " (emphasis added). Wygant, 106 S.Ct. at 1847. Moreover, if this finding is to be drawn from mere statistical evidence, that evidence cannot just show a disparity between the percentage of minorities in some activity (e.g., employment in public schools or awarding of public contracts) and the percentage of minorities in the community. It must instead focus on the population that is relevant for comparative purposes, such as the percentage of minorities in the local labor force or the construction business. Id. at 1847-48; see also Johnson v. Transportation Agency, Santa Clara County, --- U.S. ----, 107 S.Ct. 1442, 1452, 94 L.Ed.2d 615 (1987); Hazelwood School District v. United States, 433 U.S. 299, 308 & n. 13, 97 S.Ct. 2736, 2742 & n. 13, 53 L.Ed.2d 768 (1977). ²

The Supreme Court in United States v. Paradise, --- U.S. ----, 107 S.Ct. 1053, 94 L.Ed.2d 203 (1987) and Local 28 of Sheet Metal Workers v. EEOC, --- U.S. ----, 106 S.Ct. 3019, 92 L.Ed.2d 344 (1986), reemphasized this need for a suitable basis for remedial action. In both of these cases, the Court upheld race-conscious relief imposed by district courts where the offending institutions had a history of discriminatory conduct. In Paradise, for example, the Court reviewed that institutional history in painstaking detail, noted the "four decades" during which blacks had suffered total exclusion from all positions in the Alabama Department of Public Safety, and concluded that the "pervasive, systematic, and obstinate discriminatory conduct of the Department" justified the race-conscious relief ordered by the district court. 107 S.Ct. at 1065 (opinion of Brennan, J.). While Wygant involved voluntary action and Paradise and Sheet Metal Workers involved court-ordered remedies, there was in all those cases a substantial basis for believing that remedial action was required.

Here, by contrast, proceedings before the City Council failed to establish the basis for remedial action. The debate, at the very end of a five-hour council meeting, revealed no record of prior discrimination by the city in awarding public contracts, aside from some conclusory and highly general statements made by a member of the public, a City Council member who supported the plan, and the City Manager. The member of the public who testified about discrimination was not even involved in the construction industry. The City Manager's comments mainly had to do with the city of Pittsburgh. Such meager evidence is not a sufficient finding of prior discrimination. The proceedings betray the very casualness about the use of racial distinctions in public enactments that Wygant warned against.

The only other evidence purporting to show discrimination in the assignment of contracts compared the percentage of minority contracts with the total number of minority residents in the community. Statistical records were said to indicate that minorities comprised 50% of Richmond's population but that minority-owned firms had received only 0.67% of the dollar value of Richmond's prime contracts. General population statistics suggest, if anything, more of a political than a remedial basis for the racial preference. According to the plurality in Wygant, this is exactly the kind of evidence that will not pass muster.

The appropriate comparison is between the number of minority contracts and the number of minority contractors, taking into account other relevant variables such as experience and specialties. Showing that a small fraction of city contracts went to minority firms, therefore, does not itself demonstrate...