Converse Const. Co., Inc. v. Mass. Bay Transp. Auth., Civ. A. No. 95-11372-MLW.

• Decision Date: 13 September 1995
• Docket Number: Civ. A. No. 95-11372-MLW.
• Citation: 899 F. Supp. 753
• Parties: CONVERSE CONSTRUCTION COMPANY, INC., Plaintiff, v. MASSACHUSETTS BAY TRANSPORTATION AUTHORITY, et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

899 F. Supp. 753

CONVERSE CONSTRUCTION COMPANY, INC., Plaintiff, v. MASSACHUSETTS BAY TRANSPORTATION AUTHORITY, et al., Defendants.

Civ. A. No. 95-11372-MLW.

United States District Court, D. Massachusetts.

August 15, 1995.

Order Dismissing Case September 13, 1995.

COPYRIGHT MATERIAL OMITTED

Michael Savage, Office of Michael Savage, Scituate, MA, Jack E. Robinson, Stamford, CT, for Converse Construction Company, Inc.

Jonathan P. Feltner, Boston, MA, Mary Logalel, MBTA Law Department, Boston, MA, for Massachusetts Bay Transportation Authority.

Susan M. Poswistilo, United States Attorney's Office, Boston, MA, Richard S. Ugelow, U.S. Dept. of Justice, Washington, DC, for Federico F. Pena.

Richard C. Heidlage, Heidlage & Reece, Boston, MA, Stanley Silas, Massachusetts Port Authority, Boston, MA, for Mass Port Authority.

Steven H. Wright, Chin, Wright & Branson, P.C., Boston, MA, for Massachusetts Turnpike Authority.

John W. Bishop, Jr., Massachusetts Water Resources Authority, Boston, MA, for Mass Water Resource.

John E. Bowman, Attorney General's Office, Boston, MA, Catherine C. Ziehl, Assistant Attorney General, Boston, MA, for Massachusetts Highway Department, State Office of Minority and Women Business Assistance.

Ozell Hudson, Jr., Lawyers' Committee for Civil Rights, Boston, MA, for Atlantic Masonry Co.

MEMORANDUM AND ORDER

WOLF, District Judge.

Attached is a memorandum based upon the transcript of the decision rendered orally on August 4, 1995, denying plaintiff Converse Construction Company, Inc.'s ("Converse") motion for preliminary injunction concerning certain public contracts scheduled to be awarded by the Massachusetts Highway Department ("MHD"). This memorandum adds citations, deletes some colloquy, and clarifies some language. The court recommends this memorandum as the most accurate and complete statement of the reasons for the decision concerning the Massachusetts Highway Department contracts rendered on August 4, 1995.

The transcripts of the lengthy August 2, 1995 hearing and the August 4, 1995 proceedings are also being prepared and may be acquired from the court reporter.

* * *

I. Introduction

With regard to the motion for preliminary injunction, I am going to address now in considerable detail only the Massachusetts Highway Department contracts that were discussed on August 2, 1995. The first contract is denominated C12A3 and concerns work relating to Massachusetts Avenue. Bids are scheduled to be opened today, August 4, 1995. It is a $180,000,000 contract.

The second contract immediately at issue is the Massachusetts Highway Department's contract denominated CO9B3. It is a $110,000,000 contract relating to the Fort Point Channel that is due to be opened August 15, 1995.

Later today I will separately and much more briefly address the motion to reconsider the denial of the preliminary injunction concerning the Massachusetts Bay Transportation Authority's ("MBTA") Green Line contract for $91,000,000 that was opened after I denied the motion for preliminary injunction on June 27, 1995, and which will be awarded on August 9, 1995.

The two Massachusetts Highway Department contracts to be opened or awarded imminently must be addressed today. Each of them relates to the Central Artery and Harbor Tunnel ("CA/T") project.

The plaintiff has requested a preliminary injunction regarding other possible contracts by the Massachusetts Highway Department, the MBTA, and contracts which may be issued by the Massachusetts Port Authority ("Massport"), the Massachusetts Turnpike Authority ("MTA") and the Massachusetts Water Resources Authority ("MWRA").

The plaintiff in its memoranda claims that all of those entities use what the plaintiff calls the "Mass. Plan" to set aside a percentage of public construction contracts for minority and women business enterprises, and that such set-asides violate the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution. However, it clearly emerged at the August 4, 1995 hearing that there is no single "Mass. Plan" applicable to all of the defendants or to all of the contracts whose award plaintiff seeks to enjoin or alter.

Rather, the various defendants have different programs. Some of the agencies may also use different standards at different times depending on whether federal funds are involved in the contract at issue. Factual distinctions with regard to defendants, programs, and contracts may be material to whether the plaintiff is entitled to a preliminary injunction regarding any particular contract.

The plaintiff has not addressed all of the relevant facts in its submissions. Therefore, I will rule now only on the two imminent Massachusetts Highway Department contracts. I will rule later today on the MBTA Green Line contract. These were the matters that were discussed at length at the hearing on August 2, 1995.

Following my decisions today, I will meet with the parties and discuss the scheduling of any possible further hearings regarding other contracts, and also will discuss the disposition of the motion to enjoin the operation of the Massachusetts State Office of Minority and Women Business Assistance ("SOMWBA").

I will say at the outset, to alleviate any avoidable suspense, that the motion for a preliminary injunction regarding the opening of bids and award of Massachusetts Highway Department contracts C12A3 regarding Massachusetts Avenue and CO9B3 regarding the Fort Point Channel is being denied. In addition, I have decided to deny again the motion to enjoin the award of the Green Line contract by the MBTA.

I am deciding this matter orally because it is urgent. The Massachusetts Highway Department has delayed the Massachusetts Avenue contract bid opening by two weeks in order to permit the briefing and hearing that has been essential to an informed decision. The evidence persuades me, however, that each week of delay costs about $118,000 concerning that project. It also imposes delay and additional costs on related aspects of the CA/T project. Such delays are not only costly, they also inconvenience people who depend on the Greater Boston transportation system, which is disrupted during this period of construction.

As I hope the degree of detail of this decision will reveal, the fact that it is being announced orally should not suggest that it has been reached casually.

II. Findings of Fact

I find the following facts to have been proven by the evidence.

Converse Construction Company is a steel contractor. Converse claims to be a minority-owned business—that is a business at least 51 percent owned and actually controlled by Jack E. Robinson, an African American.

Until September 1993, SOMWBA had certified Converse as a Disadvantaged Business Enterprise ("DBE") under federal law and as a Minority Business Enterprise ("MBE") under state law. As a certified DBE, Converse was eligible to benefit from federal programs that seek to assure that at least ten percent of the federally funded construction projects go to DBEs as prime contractors or subcontractors. As a certified MBE, Converse was eligible to benefit from the various set-aside programs established by Massachusetts law for certain state-funded contracts.

While it was a beneficiary of these programs, Converse received public contracts and subcontracts worth many millions of dollars. For example, Converse received about $13,000,000 worth of public contracts from the MWRA alone. As a beneficiary of federal and state DBE and MBE programs, Converse built its business considerably. Converse now claims to be the twenty-sixth largest specialty contractor in New England and the lowest cost steel contractor, minority or non-minority, in Massachusetts.¹

The Massachusetts Highway Department relies on SOMWBA to determine which entities qualify as DBEs under federal law and as MBEs under state law. The federal standards applied by SOMWBA are contained in 49 C.F.R., Part 23. The Massachusetts Highway Department uses different standards for its affirmative action program on contracts which are funded solely with state funds. As I will discuss in more detail later, federal law requires that federal standards be used with regard to all contracts which are funded in part with federal funds.²

Officials of the Massachusetts Highway Department and SOMWBA are aware that they have distinct obligations under federal and state law. This understanding is manifest in the affidavits of Patricia O'Brien, the Director of the Massachusetts Highway Department Office of Civil Rights, and of Brian Price, the general counsel of SOMWBA.³ In addition, SOMWBA prepares and maintains separate directories of companies certified as DBEs under federal law and as MBEs or Women's Business Enterprises ("WBE") under state law. The same organization may qualify as a DBE under federal law and as an MBE under state law, as Converse did until September 1993.

In September 1993, SOMWBA determined that Converse was not truly owned and controlled by Jack E. Robinson, or any other African American. Rather, SOMWBA decided that Robinson was merely a "straw" or a "front" for white male investors. Federal law requires that an enterprise be really, substantially, and continuously owned by minorities to be eligible for the benefits provided to MBEs under the federal affirmative action program at issue in this case.⁴ Massachusetts law requires that minorities own 51 percent of a company, and truly control it, to benefit from a state MBE program.⁵ In addition, under Massachusetts law, a company is ineligible if found to have been established solely to take advantage of a special program to benefit minorities.⁶

Recognizing the distinction between federal and state programs, SOMWBA sent Converse two letters on September 30, 1993. The first letter informed Converse that it was decertified as an MBE under state law and could challenge that decision in the manner provided by Massachusetts law.⁷ The second letter...