Concrete Works of Colo. v. City & County, Denver

• Decision Date: 07 March 2000
• Docket Number: No. CIV. A. 92-M-21.,CIV. A. 92-M-21.
• Citation: 86 F.Supp.2d 1042
• Parties: CONCRETE WORKS OF COLORADO, INC., Plaintiff, v. The CITY AND COUNTY OF DENVER, COLORADO, Defendant.
• Court: U.S. District Court — District of Colorado

86 F.Supp.2d 1042

CONCRETE WORKS OF COLORADO, INC., Plaintiff, v. The CITY AND COUNTY OF DENVER, COLORADO, Defendant.

No. CIV. A. 92-M-21.

United States District Court, D. Colorado.

March 7, 2000.

Todd Welch, J. Scott Detamore, Mountain States Legal Foundation, Denver, CO, for plaintiff.

Norman R. Bangeman, Denver City Attorney's Office, Denver, CO, for defendant.

MEMORANDUM OPINION AND ORDER

MATSCH, Chief Judge.

Marc Lenart, a Caucasian man, is the principal owner and operator of Concrete Works of Colorado, Inc. ("CWC"), a Colorado corporation, with its principal office in Brighton, Colorado. CWC does concrete construction work on roads, bridges and sidewalks and has submitted bids for contracts with the City and County of Denver ("City" or "Denver") as a prime contractor on City contracts. On January 6, 1992, CWC filed this civil action, claiming the loss of three City contracts because CWC failed to comply with Ordinance No. 513 ("Ord. No. 513" or "1990 Ordinance"), enacted on September 4, 1990, requiring bidders on City construction contracts to use City certified minority business enterprises ("MBEs") and City certified woman-owned business enterprises ("WBEs") as suppliers or subcontractors according to project goals setting minimum percentage participation of firms fitting these categories.¹ CWC asserted that requiring it to use such race and gender based preferences as a condition of doing business with the City violated the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution.

Based on the City's submission of statistical and anecdotal evidence in support of the ordinance, Judge Sherman G. Finesilver granted summary judgment for the City. Concrete Works of Colorado, Inc. v. City and County of Denver, 823 F.Supp. 821 (D.Colo.1993). The Tenth Circuit Court of Appeals reversed, finding that because of unresolved factual questions about the accuracy of Denver's public and private discrimination data, it could not be said, under summary judgment standards, that the City had satisfied the compelling governmental interest prong of City of Richmond v. J.A. Croson Co., 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989), by demonstrating a "strong basis in evidence" that its race and gender conscious contract program was necessary to remedy past and present discrimination in the construction industry within its local area. Concrete Works of Colorado, Inc. v. City and County of Denver, 36 F.3d 1513, 1530-31 (1994). The court remanded the case with directions to permit the parties "to develop a factual record to support their competing interpretations of the empirical data." Id. at 1531.

After remand and during further pleading and discovery, Denver passed two additional ordinances, Ordinance No. 304, Series of 1996 ("Ord. No. 304" or "1996 Ordinance") and Ordinance No. 948, Series of 1998, ("Ord. No. 948" or "1998 Ordinance"). These ordinances amended the goals program established in Ord. No. 513, based largely on consultants' reports evaluating additional empirical data and legal advice.

A complete bench trial was held in February and June 1999 on the validity of the three ordinances, reserving the question of remedy if the plaintiff prevails. Because of the large volume of evidence and the complexity of the legal and factual issues, the court's compliance with Fed.R.Civ.P. 52(a) is in the form of this memorandum opinion.

The burden of persuasion on the plaintiff's claims that these three ordinances deny CWC and other non-preferred businesses equal protection of the law is on the plaintiff. It is the City's responsibility to show a "strong basis in evidence" supporting the stated governmental purpose that goals are necessary to prevent the City from actively or passively participating in discriminatory exclusion of the preferred groups from the local construction industry, and to demonstrate that the ordinances are narrowly tailored to accomplish that purpose. Accordingly, the order of presenting evidence at trial was reversed.

Denver's showing was (1) by direct evidence of past discriminatory conduct by employees of City agencies, (2) by commissioned studies done before and after the filing of this lawsuit, demonstrating statistical disparities and concluding that both race and gender discrimination have disadvantaged firms owned by identified racial and ethnic groups and by women trying to compete for business in the construction industry operating in the Denver geographical market and (3) by the testimony of witnesses relating their perceptions of racial and gender discrimination from their personal experiences in this industry. The extensive evidentiary record presented at the trial included a historical review of Denver's contracting practices before the enactment of Ord. No. 513 in 1990. A summary of that history sets the context for the legislation challenged in this case.

Responding to complaints of lack of access to publicly funded construction work from people and groups identifying themselves as racial and ethnic minorities in the early 1970's, Denver created an "Affirmative Action Office" within the Department of Public Works ("DPW"), the agency responsible for most of the City's construction contracting. A voluntary goals program to increase utilization of minority contractors in City projects, referred to as the Denver Construction Affirmative Action Program, or DCAAP, was authorized by a City Council Resolution, dated November 7, 1977. (Ex. A-3).

Federal agencies began to influence City policy during 1977. The United States Department of Housing and Urban Development ("HUD") gave Denver officials a preliminary draft report of its investigation, informing them that Denver was not in compliance with Section 109 of the 1974 Housing and Community Development Act, because the City was not taking reasonable actions to overcome what HUD believed to be conditions limiting participation by minority contractors in the benefits of the Community Development Block Grant Program (CDBG). (Ex. A-4).

In 1978, the United States General Accounting Office ("GAO") issued a preliminary report of its findings of racial discrimination by the DPW in several federally funded programs. (Exhibit A-8). The City's first response was to raise the minimum value of contracts requiring prequalification from $25,000 to $100,000, and then to $500,000 thereby reducing the effects of its prequalification policy on small firms.

The GAO final report in 1978 concluded, in pertinent part, that minority contractors in Denver "may not have been provided with the full range of opportunities required by Federal affirmative action mandates," because Denver's DPW showed "a lack of a strong commitment to affirmative action objectives." (Exhibit A-8, p. 1). The GAO reported that from July 1, 1975 to December 31, 1977 DPW awarded approximately $55.5 million in federally funded construction contracts and that "less than 5 percent of the total amount was awarded to minority contractors...." Id. at 5.

In 1979, the U.S. Department of Transportation ("DOT") threatened to stop federal funding of work at Stapleton International Airport if the City did not establish an affirmative action program to increase utilization of minority firms. (Ex. A-11). That threat was made explicit in a letter to then Mayor McNichols, dated August 7, 1979, from the Acting Director of the office of Civil Rights for DOT. (Ex. A-13).

The City reacted to that letter by filing suit in this court to enjoin withholding of federal funds. That action was settled in February 1980 by Denver's adoption of an affirmative action goals program for City contracts for work financed by DOT funds. (Ex. A-18, pp. A-19—A-21). Under further pressure from federal government officials, the City expanded its goals program to include all construction projects at Stapleton Airport, regardless of the source of funding. (Ex. A-24).

Complaints about underutilization of minority firms on City contracts and increasing demands for an ordinance to establish participation goals for all City construction contracting were heard at a public hearing in 1983. Contractors appearing as witnesses at that hearing said that racial discrimination pervaded the construction industry in the Denver Metropolitan Statistical Area ("MSA"), an area consisting of six contiguous counties with Denver as the core city and county. (Ex. B-4).

The City Council enacted Ordinance No. 246, Series of 1983, (Ex. B-6), setting a goal of 25% participation by MBEs in all City construction projects managed by DPW. Construction contracting by other City departments, including General Services, (amounting to approximately one-third of total City contract dollars related to construction) was not included in that goals program.

Ordinance No. 246 was expressly limited to a 5-year term. Near the expiration date, some City officials expressed their concerns that "underutilization" of minority contractors would result if the ordinance expired. They cited the National Western Complex and Denver Art Museum projects as examples of such underutilization in construction work that was not covered by the goals program.

DPW addressed those concerns by distributing questionnaires to contractors, asking about discrimination related issues in March 1988. (Ex. B-21). The Acting Deputy Manager of Public Works conducted several days of hearings on the effectiveness and necessity of continuing the goals program and prepared a written report concluding that construction contractors were continuing to use discriminatory practices and that the City should continue to use a goals program as a remedy for that discrimination. (Ex. B-22).

On May 31 and June 13, 1988, the City Council conducted public hearings on a proposal to enact a replacement ordinance. (Ex. B-23). After making legislative findings that discrimination continued to be a barrier in the construction industry, the City enacted Ordinance No. 424...