Coral Const. Co. v. King County

Decision Date08 August 1991
Docket NumberNo. 90-35066,90-35066
Citation941 F.2d 910
Parties57 Empl. Prac. Dec. P 41,056 CORAL CONSTRUCTION COMPANY, an Oregon corporation; Oregon Columbia Chapter of the Associated General Contractors of America, Inc., an Oregon non-profit corporation, Plaintiffs-Appellants, v. KING COUNTY, a legal subdivision of the State of Washington, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

John F. Bradach, Charles F. Adams, Stoel, Rives, Boley, Jones & Grey, Portland, Ore., for plaintiffs-appellants.

Jack G. Johnson, Deputy Pros. Atty., King County, Seattle, Wash., for defendant-appellee.

Patricia S. Rose, Martha E. Raymond, Seattle, Wash., Samuel L. Walters, Baltimore, Md., for amici curiae Northwest Women's Law Center and N.A.A.C.P.

William Bradford Reynolds, Thomas G. Olp, Ross & Hardies, Washington, D.C., for amici curiae Associated General Contractors of America, Inc.

Ronald A. Zumbrun, John H. Findley, Sacramento, Cal., for amici curiae Pacific Legal Foundation.

Appeal from the United States District Court for the Western District of Washington.

Before SKOPIL, O'SCANNLAIN and FERNANDEZ, Circuit Judges.

O'SCANNLAIN, Circuit Judge:

We must decide whether King County's Minority- and Women-Owned Business Enterprise set-aside program for public contract awards violates the equal protection clause of the fourteenth amendment.

I

In 1981, King County, Washington (which encompasses the city of Seattle) implemented a program establishing a preference for the use of minority-owned businesses (MBEs) and women-owned businesses (WBEs) 1 in letting county contracts or subcontracts. 2 See King County, Wash., Code ch. 4.18. Following the Supreme Court's decision in City of Richmond v. J.A. Croson Co., 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989), King County amended the MWBE program in an effort to comply with the dictates of Croson. See King County, Wash., Ordinance 8937 (May 1, 1989). It is under this amended version of the ordinance that the events at issue here transpired. 3

Under the County's program as amended, a "minority business" is one certified by the State of Washington as being legitimately owned and controlled by a minority person or persons. King County, Wash., Code §§ 4.18.010(S). The term "minority" includes blacks, Hispanics, Asian-Americans, American Indians, and Alaskan natives. Id. at § 4.18.010(T). A "women's business" similarly must be certified by the state. Id. at § 4.18.010(HH).

The MWBE program provides two methods by which MWBEs may receive preferences in bidding on county contracts. For county contracts of $10,000 or less, the "percentage preference method" gives a contract bidder who is an MWBE or will use MWBEs on the project a preference if its bid is within five percent of the lowest bid. See id. at § 4.18.060(A)(1). For county contracts of more than $10,000, the "subcontractor set-aside method" applies, under which the successful contractor must use MWBEs for a prescribed percentage of the work performed on the contract. See id. at § 4.18.060(A)(2). The actual percentages of required MWBE participation are individually determined on an ad hoc basis, according to the availability of qualified MWBEs. See id. at § 4.18.060(A)(2)(a).

The program permits a reduction in the amount of set-aside levels for a given contract if it is not feasible to meet higher levels, qualified MWBEs are unavailable, or MWBE price quotes are not competitive. See id. at § 4.18.060(B). Likewise, the percentage preference method can be used for county contracts exceeding $10,000 if this alternative is a "more feasible method of achieving" the MWBE utilization goal. Id. at § 4.18.060(C). Finally, in certain circumstances, all or portions of the MWBE program may be waived entirely. See id. at § 4.18.070(A) (waiver available where a non-MWBE is the sole source of a good or service, where no MWBE is available or competitively priced, and where the contract is awarded to certain governments or non-profit groups).

On September 28, 1989, bids were opened for a county contract to install guardrails along various county roads. Coral Construction Company ("Coral Construction"), an Oregon firm with a branch office in King County, was the low bidder at $178,100. However, utilizing the "percentage preference method," the County awarded the contract to Dirt & Aggregate Interchange, Inc. ("Dirt & Aggregate"), an Oregon-based MBE which submitted a bid of $185,153.50. Thereafter, Coral Construction and the Oregon-Columbia chapter of the Associated General Contractors of America, Inc. ("OCAGC"), brought this suit in the United States District Court for the Western District of Washington, alleging that King County's MWBE program, on its face and as applied to Coral Construction, violated the Constitution's equal protection clause and federal civil rights statutes, 42 U.S.C. §§ 1981 & 1983. Plaintiffs requested damages, injunctive and declaratory relief, and attorney's fees.

In the district court, both sides filed cross-motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, each asserting that no disputed facts existed. On December 4, 1989, the district court granted King County's motion for summary judgment and denied the motion of Coral Construction and OCAGC. See Coral Construction Co. v. King County, 729 F.Supp. 734 (W.D.Wash.1989). The court concluded that King County's MWBE program was constitutional because the County had compiled a sufficient record of redressable discrimination against minorities and women, and had narrowly tailored its remedial measures.

Notwithstanding its victory in the district court, King County amended its MWBE program yet again. See King County, Wash., Ordinance 9609 (August 29, 1990). Specifically, the amendments, enacted on August 29, 1990, incorporated two consultant reports into the record underlying the MWBE program. The first study, prepared by Perkins Coie (and hereinafter referred to as the Perkins Coie Consultant Study), documents through statistics and anecdotal evidence the impact of discrimination in the local construction, architecture, and engineering fields. The second study, conducted by the Washington Consultant Group, focused on discrimination in the local goods and services industries. The two studies cost approximately $411,000 and were paid for by several local agencies. King County contributed $95,000.

The mechanics of the MWBE program were also altered by the August 29, 1990 amendments. The "percentage preference" method for allocating set-asides was modified; rather than using a fixed five-percent preference, a flexible-percentage preference was employed, the percentage to be determined on a case-by-case basis. In addition, under the amended version of the program, all prime contractors, even those that are themselves women- or minority-owned, are required to employ minority- and women-owned subcontractors, unless the prime contractor itself will perform twenty-five percent or more of the contract. Finally, the new ordinance requires the County's Office of Civil Rights and Compliance to monitor the effects of the MWBE program to ensure that it does not disproportionately favor a particular racial or ethnic group, and that it does not remain in force longer than is necessary to offset the effects of prior discrimination.

Coral Construction and OCAGC 4 appeal the district court's grant of summary judgment for King County. King County has moved for partial dismissal of this appeal, asserting that the plaintiffs' request for injunctive and declaratory relief is now moot as a result of the August 1990 amendments.

The district court had subject matter jurisdiction to hear this matter under 28 U.S.C. §§ 1331, 1343(a)(3), and 1343(a)(4). This court has jurisdiction under 28 U.S.C. § 1291. We review a grant of summary judgment de novo. See Columbia Pictures Indus. v. Professional Real Estate Investors, Inc., 866 F.2d 278, 279 (9th Cir.1989).

II

We begin by examining the minority set-aside (MBE) component of King County's program. Coral Construction seeks damages, as well as injunctive and declaratory relief. To determine if Coral Construction is entitled to damages, we must review the ordinance as it existed at the time of Coral Construction's purported injury. Accordingly, we review the MBE program as amended on May 1, 1989, but prior to the August 29, 1990 amendments, for all purposes.

A

In Croson, the Supreme Court definitively decided that a governmental actor's use of racial classifications, including classifications that appear to be facially benign, are subject to strict judicial scrutiny. Croson, 488 U.S. at 493, 109 S.Ct. at 720 (plurality); id. at 520, 109 S.Ct. at 735 (Scalia, J., concurring); 5 see also Cone Corp. v. Hillsborough County, 908 F.2d 908, 913 (11th Cir.) (hereinafter Hillsborough County) ("When reviewing the constitutionality of [an MBE], courts apply strict scrutiny," citing Croson), cert. denied, --- U.S. ----, 111 S.Ct. 516, 112 L.Ed.2d 528 (1990). Such strict scrutiny, in turn, has two elements: for an affirmative action program to survive such scrutiny, there must be a compelling governmental interest in employing a racial classification, and the classification must be narrowly tailored to achieve the compelling interest. Croson, 488 U.S. at 493-94, 109 S.Ct. at 720; see also Wygant v. Jackson Bd. of Educ., 476 U.S. 267, 274, 106 S.Ct. 1842, 1847, 90 L.Ed.2d 260 (1986) (plurality).

The Croson Court applied the strict scrutiny test to an MBE program very similar in purpose to that enacted by King County. Thus, the conclusions in Croson are dispositive as to many aspects of the King County program. There are, however, important substantive differences between the two programs. The Croson Court ruled upon a minority set-aside program that expired by its own terms months before its constitutionality was even argued in the Supreme Court. As a...

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