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

• Decision Date: 25 November 1985
• Docket Number: Nos. 85-1002,s. 85-1002
• Citation: 779 F.2d 181
• Parties: 38 Empl. Prac. Dec. P 35,760, 54 USLW 2356, 33 Cont.Cas.Fed. (CCH) 74,135 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. (L), 85-1041.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 181

779 F.2d 181

38 Empl. Prac. Dec. P 35,760, 54 USLW 2356,

33 Cont.Cas.Fed. (CCH) 74,135

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(L), 85-1041.

United States Court of Appeals Fourth Circuit.

Argued July 17, 1985.

Decided Nov. 25, 1985.

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, Washington, D.C., for amicus curiae.

Before HALL, SPROUSE, and WILKINSON, Circuit Judges.

SPROUSE, Circuit Judge:

In its action in the district court for an injunction, declaratory relief and damages, J.A. Croson Company (Croson), challenged the Minority Business Utilization Plan of the City of Richmond. ¹ The court ruled in favor of the City declaring the Plan valid and Croson brought this appeal. ² The City of Richmond appeals the district court's denial of its motion for attorneys' fees. We affirm the district court's judgment in its entirety.

I.

The dispute arose from the application of Richmond's Minority Business Utilization Plan (the Plan) to Croson's bid on a proposed city contract to install plumbing fixtures at the City Jail. Croson, an Ohio mechanical, plumbing, and heating contractor with a Richmond branch, was the only bidder, but City officials refused to award it the contract since it did not obtain the services of a minority subcontractor as required by the Plan. After the City nullified Croson's bid and reopened the bidding, Croson filed this action for injunction, declaratory relief, and damages. It asked primarily that the Plan be declared void under Virginia statutory and constitutional law as well as under the fourteenth amendment to the United States Constitution. The trial court denied cross-motions for summary judgment, and after a bench trial ruled that the Plan was valid.

II.

The Richmond Council adopted the Plan on April 11, 1983. Richmond Va.Code Ch. 24.1, Art. I(F) (Part B) (27.10) (27.20) and Art. VIII-A. It acted in response to information presented at a public hearing held that day which, among other things, indicated that, although minority groups made up 50% of the City's population, only 0.67% of the city's construction contracts for the five-year period from 1978-1983 were awarded to minority businesses. Simply stated, the Plan requires all contractors to whom the city awards construction contracts to subcontract at least 30% of the dollar amount of the contract to minority business enterprises (MBEs) unless the requirement is waived. Richmond, Va.Code Ch. 24.1, Art. VIII-A(A), (B). ³ The Plan is expressly remedial in nature and was "enacted for the purpose of promoting wider participation by minority business enterprises in the construction of public projects." Richmond, Va.Code Ch. 24.1, Art. VIII-A(C). It automatically expires on June 30, 1988, approximately five years after its effective date. Id.

Five months after enacting the Plan, the City issued an invitation to bid on the contract for the installation of plumbing fixtures at the City Jail involved in this dispute. The specifications defined fixtures manufactured by either Acorn Engineering Company or Bradley Manufacturing Company as suitable for the project. Croson, a non-MBE plumbing contractor, received the bid documents on September 30, 1983 and submitted its bid on October 12. After receiving the documents, Eugene Bonn, Croson's regional manager in Richmond, determined that the 30% MBE requirement on this project could only be met if an MBE was utilized as a supplier furnishing either the Acorn or Bradley plumbing fixtures.

Bonn telephoned either five or six MBEs on September 30 to obtain quotes on the fixtures. ⁴ There is a dispute as to the date Bonn first contacted Continental Metal Hose, the only one of these MBEs located in Richmond. Bonn testified that he contacted Melvin Brown, the president of Continental, on September 30. Brown, however, claimed that he was not contacted until October 12, 1983--the last day on which bids could be submitted.

On the morning of October 12, Bonn made a second brief round of telephone calls to MBEs, including a call to Brown of Continental. Brown informed him that Continental wished to participate in the project. Brown then contacted two sources of Bradley fixtures, Ferguson Plumbing Supply and W.G. Leseman. Ferguson informed Brown that the company had already provided a direct quote to Croson for the fixtures and consequently would not provide a quote to Brown. Leseman told Brown that it was not allowed to quote to unknown suppliers until the supplier had undergone a credit investigation taking at least thirty days.

On October 13, City officials opened the sealed bids, which revealed Croson as the only bidder. Its bid of $126,530 included a quote from a non-minority firm for the plumbing fixtures. That same day, Brown had detailed to Bonn his problems in obtaining a quote for the required fixtures, but Bonn encouraged him to continue his efforts. Although aware of Brown's continuing interest in supplying the fixtures, Bonn submitted a request for waiver of the 30% MBE requirement to the City on October 19, 1983. In his waiver request, Bonn indicated that Continental was "unqualified" and that the other MBEs contacted were either "non-responsive" or "unable to quote."

On October 27, 1983, Brown learned of Croson's request for waiver and telephoned an agent of Acorn, one of the two fixture manufacturers named in the bid specifications. The agent provided Brown with a quote on October 31, which Brown supplied to Bonn shortly thereafter.

Brown also informed the Director of Purchasing for the Department of General Services on October 27 that Continental could provide the required fixtures. Subsequently, the contract officer responsible for ruling on Croson's waiver request recommended that the request be disapproved because an MBE was available.

The City, by letter dated November 2, 1983, informed Croson that the Human Relations Commission had "withheld approval" of the waiver request. Croson was given ten days to submit a completed Commitment Form evidencing his compliance with the minority set-aside provision. He was advised that if he failed to submit the Form his bid would be considered non-responsive.

Rather than supplying a completed Commitment Form, Bonn again requested a waiver on November 8, 1983. He argued that Continental was not qualified; that its quotation was substantially higher than any other quotation and was submitted twenty-one days after the bid date. Eight days later, Bonn documented the additional costs that would result should Continental provide the fixtures. He concluded that, if he were required to subcontract with Continental, the contract price must be increased by $7,663.16. The Department of General Services denied Croson's request to raise the contract price, as well as its renewed request for a waiver. On November 18, the City informed Croson by letter that it had decided to rebid the project and invited Croson to submit a new bid.

Three weeks later, Croson wrote to the Department of General Services requesting a review. The City rejected the request for review on the ground that the decision to rebid the project was not appealable. ⁵ Croson then filed this suit.

The district court in a well-written decision made comprehensive findings, reviewed both Virginia and Federal law and concluded that the Plan was valid. Croson does not pursue all of the arguments it raised below, but on this appeal, as at trial, it argues that: (1) under state law the City was without power to adopt the Plan, (2) the Plan is contrary to the public policy of Virginia, (3) the Plan violates the Virginia constitutional proscription against discrimination on the basis of race, color, or national origin, Va. Const. Art. I, Sec. 11, and (4) the Plan violates the equal protection clause of the fourteenth amendment of the federal Constitution.

Affirmative action legislation creating minority set-aside plans and designed to ameliorate the effects of past discrimination in public construction contracts have been tested and approved in a number of state and federal decisions. Fullilove v. Klutznick, 448 U.S. 448, 100 S.Ct. 2758, 65 L.Ed.2d 902 (1980); South Florida Chapter of the Associated Gen. Contractors of America, Inc. v. Metropolitan Dade County, Florida, 723 F.2d 846 (11th Cir.), cert. denied, --- U.S. ----, 105 S.Ct. 220, 83 L.Ed.2d 150 (1984); Ohio Contractors Ass'n v. Keip, 713 F.2d 167 (6th Cir.1983); Schmidt v. Oakland Unified School Dist., 662 F.2d 550 (9th Cir.1981), vacated on other grounds, 457 U.S. 594, 102 S.Ct. 2612, 73 L.Ed.2d 245 (1982); Southwest Washington Chapter, Nat'l Elec. Contractors Ass'n. v. Pierce County, 100 Wash.2d 109, 667 P.2d 1092 (1983); contra Arrington v. Associated Gen. Contractors of America, 403 So.2d 893 (Ala.1981), cert. denied, 455 U.S. 913, 102 S.Ct. 1265, 71 L.Ed.2d 453 (1982). Because set-asides may be constitutionally permissible but are not constitutionally mandated, state and local programs must, of course, be permitted under state law. South Florida, 723 F.2d at 852; Schmidt, 662 F.2d at 558; Southwest Washington Chapter, 667 P.2d at 1100. We look first then to the issues of Virginia law raised by Croson both as they relate to pendent questions and as critical components of the test derived from Fullilove. We then examine the Richmond Plan under the Fullilove standards to determine if it survives scrutiny under the equal protection clause of the fourteenth amendment.

III.

Croson contends that the City of Richmond had no power to enact the plan--that it was ultra vires. It urges that the scope of...