Assoc General Contractors of Ohio v. Drabik

• Decision Date: 28 January 2000
• Docket Number: No. 98-4393,98-4393
• Citation: 214 F.3d 730
• Parties: (6th Cir. 2000) Associated General Contractors of Ohio, Inc.; Associated General Contractors of Northwest Ohio, Inc., Plaintiffs-Appellees, v. Sandra A. Drabik, Director, Department of Administrative Services; Reginald Wilkinson, Director of Rehabilitation and Correction, Defendants-Appellants. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 730

214 F.3d 730 (6th Cir. 2000)

Associated General Contractors of Ohio, Inc.; Associated General Contractors of Northwest Ohio, Inc., Plaintiffs-Appellees, v. Sandra A. Drabik, Director, Department of Administrative Services; Reginald Wilkinson, Director of Rehabilitation and Correction, Defendants-Appellants.

No. 98-4393

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: January 28, 2000

Decided and Filed: June 1, 2000

Appeal from the United States District Court for the Southern District of Ohio at Columbus. No. 98-00943--James L. Graham, District Judge. [Copyrighted Material Omitted] Kevin R. McDermott, SCHOTTENSTEIN, ZOX & DUNN, Columbus, Ohio, for Appellees.

Judith L. French, Karen L. Killian, OFFICE OF THE ATTORNEY GENERAL OF OHIO, Columbus, Ohio, for Appellants.

James L. Hardiman, HARDIMAN, BUCHANAN, HOWLAND & TRIVERS, Cleveland, Ohio, Michele R. Comer, Cleveland, Ohio, Norman C. Amaker, LOYOLA UNIVERSITY OF CHICAGO SCHOOL OF LAW, Chicago, Illinois, Vincene Verdun, OHIO STATE COLLEGE OF LAW, Columbus, Ohio, for Amici Curiae.

Before: KENNEDY, RYAN, and BOGGS, Circuit Judges.

OPINION

BOGGS, Circuit Judge.

Associated General Contractors of Ohio, and Associated General Contractors of Northwest Ohio ("Plaintiffs-Appellees"), representing Ohio building contractors, sued to stop the award of a construction contract for the Toledo Correctional Facility to a minority-owned business ("MBE"), in a bidding process from which non-minority-owned firms were statutorily excluded under Ohio's Minority Business Enterprise Act ("MBEA"). Plaintiffs-Appellees claimed the MBEA is unconstitutional, in that it violates the Fourteenth Amendment's Equal Protection Clause. The district court agreed, and permanently enjoined the state from awarding any construction contracts thereunder. Defendant-Appellant Sandra Drabik, Director of the Ohio Department of Administrative Services ("DAS"), which coordinates and manages state construction projects, and other Defendants-Appellants, appeal the district court's order. We affirm.

I

Ohio passed the Minority Business Enterprise Act ("MBEA") in 1980. This legislation set aside five percent, by value, of all state construction projects for bidding by certified MBEs exclusively. O.R.C. § 123.151(C)(1). Other provisions govern subcontracting to MBEs of work awarded under this scheme. Ohio defines an MBE as a venture owned and controlled, to the extent of fifty-one percent, for at least one year previous, by "members of one of the following economically disadvantaged groups: Blacks, American Indians, Hispanics, and Orientals." O.R.C. § 122.71(E). Other provisions establish procedures for certification and listing as an MBE; in what follows, "MBE" will be understood to refer to such officially certified businesses. As of October 1998, DAS maintained a list of 1,180 MBEs.

Pursuant to the MBEA, DAS decided to set aside, for MBEs only, bidding for construction of the Toledo Correctional Facility's Administration Building, which represents twenty percent of the total project's value of $50 million. Non-MBEs, many of whom are members of the plaintiff trade associations, will thus be excluded on racial grounds from bidding on that aspect of the project, and will be restricted in their participation as subcontractors. MBEs are, of course, free to bid on, and participate fully in, non-set-aside as well as set-aside contracts.

This court ruled in 1983 that the MBEA was constitutional, see Ohio Contractors Ass'n v. Keip, 713 F.2d 167 (6th Cir. 1983), overruling Judge Kinneary's judgment in the district court that Ohio's scheme was unconstitutional on its face, see Ohio Contractors Ass'n v. Keip, No. C-2-82-446 (S.D. Oh. Dec. 15, 1982). Subsequently, the Supreme Court, in two landmark decisions, explained and applied at length the criteria of strict scrutiny under which such racially preferential set-asides were to be evaluated. See City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989); Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995). This court had already, in Michigan Road Builders Ass'n v. Milliken, 834 F.2d 583 (6th Cir. 1987), taken note of the trend developing both in the Supreme Court and Circuit Courts (which was to culminate in Croson and Adarand) to apply the Equal Protection Clause strictly to racial discrimination in government contracting. Michigan Road Builders departed from the more relaxed treatment that Keip had accorded to equal protection challenges to state contracting disputes. See id. at 598 (Lively, C.J., dissenting). Croson also noted that same evolution in this Circuit. See 488 U.S. at 477.

Ohio's MBEA was passed after many years, during the 1970s, of executive and administrative agency task force consideration of complaints regarding, and statistics concerning, minority group participation in state construction contracts. These, and the legislative hearings and debates that immediately preceded passage of the MBEA, are detailed by Judge Kinneary in his 1982 decision striking down that act.

In the light of Croson and Adarand, the district court in this case returned to the prescient standards under which the MBEA had been invalidated in 1982. Reviewing the evidence, Judge Graham, at the close of a hearing held on October 26, 1998 to consider the state's request for a six- month continuance (which was denied), cites Judge Kinneary's 1982 analysis, which anticipated that of Croson, with complete approval. Judge Graham found the MBEA patently unconstitutional: "I am mindful of the fact that it is certainly unusual for a court to declare a state statute which has such far-reaching effects unconstitutional from the bench, but I cannot imagine any clearer case than this for the unconstitutionality of the state statute."

The district court also referred to a 1997 ruling from the Ohio Court of Appeals on the MBEA. In that case, a business owner of Lebanese descent, who was denied certification as an MBE on the grounds he was not an Oriental, claimed his right to equal protection was violated by the MBEA as applied to him. The Court of Appeals affirmed the trial court's ruling that the MBEA's per-se race classification is unconstitutional. That ruling has since been overturned by the Ohio Supreme Court, which, in a lengthy review of minority set-aside jurisprudence, concluded that the MBEA was constitutional. See Ritchey Produce Co. v. State of Ohio Dep't of Administrative Services, 1997 WL 629965 (Ohio App. 10 Dist. Oct. 7, 1997), rev'd, 85 Ohio St. 3d 194, 707 N.E.2d 871 (1999). At the time of the district court's ruling, Ritchey was still pending in the Ohio Supreme Court. Hence, Ohio argued that the district court should have abstained from making a decision. A motion to that effect was filed with the district court, which denied it after an extensive consideration of abstention doctrine. This appeal also argues that the district court's denial of the abstention motion was error.

II

A

"The constitutionality of a statute is a question of law, reviewable de novo." Hadix v. Johnson, 144 F.3d 925, 938 (6th Cir. 1998) (citing United States v. Brown, 25 F.3d 307, 308 (6th Cir), cert. denied, 513 U.S. 1045 (1994)).

Croson reaffirmed the "strict scrutiny" standard of review adopted by the Court for preferential programs based on racial or ethnic criteria in Wygant v. Jackson Bd. of Educ., 476 U.S. 267, 274 (1986). See Croson, 488 U.S. at 494. This requires that such a program be "narrowly tailored" to satisfy a "compelling governmental interest." 476 U.S. at 274 (quoting Fullilove v. Klutznik, 448 U.S. 448, 480 (1980) ("narrowly tailored"); Pallmore v. Sidoti, 466 U.S. 429, 432 (1984) ("compelling governmental interest")). Adarand reiterated this standard for "all racial classifications imposed by whatever federal, state, or local governmental actor . . . ." See 515 U.S. at 227.

In discussing this issue, it is important to identify precisely the compelling state interest that might be able to overcome the general presumption against racial classification. It is clear that a government "has a compelling interest in assuring that public dollars . . . do not serve to finance the evil of private prejudice." Croson, 488 U.S. at 492. However, statistical disparity in the proportion of contracts awarded to a particular group, standing alone, does not demonstrate such an evil. It is an unfortunate aspect of reality that there is never more than 100% of anything; thus, raising the percentage allocated to some portion of the total population necessarily means a corresponding reduction in what is available to other portions.

There is no question that remedying the effects of past discrimination constitutes a compelling governmental interest. See Croson, 488 U.S. at 503; United Black Firefighters Ass'n v. City of Akron, 976 F.2d 999, 1010-11 (6th Cir. 1992). However, to make this showing, a state cannot rely on mere speculation, or legislative pronouncements, of past discrimination. Rather, the Supreme Court has told us that the state bears the burden of demonstrating a "strong basis in evidence for its conclusion that remedial action was necessary" by proving either that the state itself discriminated in the past or was a passive participant in private industry's discriminatory practices. Croson, 488 U.S. at 486-92, 500.

Thus, the linchpin of the Croson analysis, for present purposes, is not simply its mandating of strict scrutiny, the requirement that a program be narrowly tailored to achieve a compelling government interest, but above all its holding that governments must "identify discrimination with some specificity before they may use race-conscious relief;" explicit "findings of a constitutional or statutory violation must be made." 488 U.S. at 497.

In ruling against the State of Ohio in 1982, Judge Kinneary had held that the evidence presented by state studies from the middle and latter 1970s was inadequate to support a conclusion of specific...