Jana-Rock Const. v. Ny State Dept. of Econ. Dev.

• Citation: 438 F.3d 195
• Decision Date: 21 February 2006
• Docket Number: Docket No. 04-6328.
• Parties: JANA-ROCK CONSTRUCTION, INC. and Rocco Luiere, Jr., Plaintiffs-Appellants, v. NEW YORK STATE DEPARTMENT OF ECONOMIC DEVELOPMENT, Division of Minority & Women's Business Development, and Jorge I. Vidro, as Director of the Division of Minority & Women's Business Development, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

438 F.3d 195

JANA-ROCK CONSTRUCTION, INC. and Rocco Luiere, Jr., Plaintiffs-Appellants, v. NEW YORK STATE DEPARTMENT OF ECONOMIC DEVELOPMENT, Division of Minority & Women's Business Development, and Jorge I. Vidro, as Director of the Division of Minority & Women's Business Development, Defendants-Appellees.

Docket No. 04-6328.

United States Court of Appeals, Second Circuit.

Argued: October 20, 2005.

Decided: February 21, 2006.

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Vic J. Kopnitsky, Jr., Menter, Rudin & Trivelpiece, P.C., Syracuse, NY, for Plaintiffs-Appellants.

Michelle Aronowitz, Deputy Solicitor General (Eliot Spitzer, Attorney General for the State of New York, Caitlin J. Halligan, Solicitor General, Robert H. Easton, Deputy Solicitor General, and Benjamin N. Gutman and Ann P. Zybert, Assistant Solicitors General, of counsel), New York NY, for Defendants-Appellees.

Before: OAKES, JACOBS, and SACK, Circuit Judges.

SACK, Circuit Judge.

Rocco Luiere, Jr., "the son of a Spanish mother whose parents were born in Spain," owns seventy-five percent of the shares in Jana-Rock Construction, Inc. See Compl. ¶¶ 3, 4. Luiere and Jana-Rock bring a challenge under the Equal Protection Clause of the Fourteenth Amendment to New York Executive Law Article 15-A, New York's "affirmative action" statute for minority-owned businesses, because the law does not include in its definition of "Hispanic" people of Spanish or Portuguese descent unless they also come from Latin America. The plaintiffs allege that by distinguishing among different subclasses of Hispanics, Article 15-A contains an explicit classification on the basis of national origin that should be subjected to strict scrutiny, and that under strict scrutiny New York's definition of "Hispanic" would fail. Applying rational basis review rather than strict scrutiny, the district court (Neal P. McCurn, Judge) entered judgment in favor of the defendants and dismissed the complaint.

When a plaintiff challenges "racial classifications, imposed by whatever federal, state, or local governmental actor, [the classifications] must be analyzed by a reviewing court under strict scrutiny. In other words, such classifications are constitutional only if they are narrowly tailored measures that further compelling governmental interests." Adarand Contructors, Inc. v. Peña, 515 U.S. 200, 227, 115 S.Ct. 2097, 132 L.Ed.2d 158 (1995).¹ "[T]he purpose of strict scrutiny is to `smoke out' illegitimate uses of race by assuring that the legislative body is pursuing a goal important enough to warrant use of a highly suspect tool." City of Richmond v. J.A. Croson Co., 488 U.S. 469, 493, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989) (plurality opinion).

But once the government has shown that its decision to resort to explicit racial classifications survives strict scrutiny by being narrowly tailored to achieve a compelling interest, its program is no longer presumptively suspect. We do not think that it is appropriate automatically to apply strict scrutiny a second time in determining whether an otherwise valid affirmative action program is underinclusive for having excluded a particular plaintiff. In order to trigger strict scrutiny, such a plaintiff — like other plaintiffs with equal-protection claims — must demonstrate that his or her exclusion was motivated by a discriminatory purpose. Because the plaintiffs do not otherwise challenge the constitutional propriety of New York's race-based affirmative action program, and because Luiere and Jana-Rock cannot show that New York adopted its chosen definition of "Hispanic" for a discriminatory purpose or that its definition lacks a rational basis, we agree with the district court's judgment for the defendants and affirm.

BACKGROUND

The United States Department of Transportation (USDOT) and New York State each has its own affirmative action program for minority-owned businesses. The federal and state programs have different definitions of the term "Hispanic."

USDOT's program has been in effect since the Surface Transportation Assistance Act of 1982, Pub.L. No. 97-424, 86 Stat.2097 (1983). Congress has re-authorized the set-aside program several times under several different names. See Harrison & Burrowes Bridge Constructors, Inc. v. Cuomo (Harrison & Burrowes II), 981 F.2d 50, 53-54 (2d Cir.1992) (recounting legislative history through 1992); W. States Paving Co. v. Wash. State Dep't of Trans., 407 F.3d 983, 988 (9th Cir.2005) (recounting legislative history through 2004), petition for cert. filed, 74 U.S.L.W. 3308 (Nov. 7, 2005) (No. 05-591). It was most recently re-authorized by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, Pub.L. No. 109-59, 119 Stat. 1144 (2005).

The USDOT program incorporates by reference the Small Business Act's definition of disadvantaged business enterprise (DBE), which creates a presumption of DBE status for "Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and other minorities." 15 U.S.C. § 637(d)(3)(C). The USDOT has implemented regulations which, inter alia, define the term "Hispanic Americans" as "persons of Mexican, Puerto Rican, Cuban, Dominican, Central or South American, or other Spanish or Portuguese culture or origin, regardless of race." 49 C.F.R. § 26.5.

The USDOT's decision to include "other Spanish or Portuguese culture or origin" in the definition of "Hispanic" represents a careful policy choice. Initially, DOT had excluded persons of Spanish or Portuguese descent from the definition. The Department later revised its definition to include persons of Spanish or Portuguese origin, however, after receiving comments and a petition for rulemaking from the Hispanic American Contractors Association of McLean, Virginia. See Request for Comment on Petition to Amend 49 C.F.R. Part 23, 46 Fed.Reg. 969 (Jan. 5, 1981) (requesting comments in response to the petition); Definition of "Hispanic" in Department of Transportation Minority Business Enterprise Regulation, 46 Fed.Reg. 60458 (Dec. 10, 1981) (issuing a final rule amending the definition of "Hispanic").

After the Supreme Court's 1995 decision in Adarand Constructors, which held that federal affirmative action programs must satisfy strict scrutiny, the DOT revisited the issue. The department ultimately concluded: "We recognize that the inclusion of persons of European Spanish and Portuguese origin is controversial, but, absent legislative direction to the contrary, we believe it is necessary to leave the definition unchanged." Participation by Disadvantaged Business Enterprise in Department of Transportation Programs, 62 Fed. Reg. 29548, 29550 (May 30, 1997).

Although the DBE set-aside program is federal, "[t]he states become involved because[, inter alia, state] recipients of federal funds . . . must comply with USDOT regulations concerning minority business participation." Harrison & Burrowes II, 981 F.2d at 54. "[A] state recipient must establish annual overall minority enterprise participation goals on projects receiving federal funds and must ensure that at least ten percent of monies expended on federally-assisted projects go to such enterprises, absent a waiver from the Secretary of Transportation." Id. (citations omitted). The New York State Department of Transportation (N.Y.DOT) is responsible for ensuring compliance with the federal program and certifying minority-owned businesses for this purpose. See N.Y. High. Law § 85; N.Y. Transp. Law § 428(1); N.Y. Comp.Codes R. & Regs. tit. 17, pt. 35.

In 1987, Jana-Rock sought DBE certification from NYDOT by submitting an application to New York State's "Minority and Women-Owned Business Enterprise Certification Program." In an undated letter, the NYDOT responded, informing Jana-Rock that it had been certified as "a Minority Owned Business." The current director of New York State's Division of Minority and Women's Business Development, Jorge Vidró, has submitted an affidavit stating, upon information and belief, that although the 1987 certification was silent on the matter, it was intended to be effective exclusively for the federal set-aside programs. See Affidavit of Jorge Vidró (dated Aug. 11, 2004) (Vidró Aff.), ¶¶ 7, 8, 15.

New York State also has a separate minority-owned business program of its own. It was originally created by Executive Order in 1983 and was later enacted by the state legislature as a state statute that became effective in 1988. N.Y. Exec. L., art. 15-A. The state program, under Article 15-A, includes in its definition of minorities "Hispanic persons of Mexican, Puerto Rican, Dominican, Cuban, Central or South American of either Indian or Hispanic origin, regardless of race." N.Y. Exec. L. § 310(8)(b).² Unlike the federal USDOT definition, it does not include all persons from, or descendants of persons from, Spain or Portugal.

On May 11, 1989, some two years after Jana-Rock had received its undated NYDOT certification, Luiere received a letter from the New York Governor's State Office of Minority and Women's Business Development (OMWBD) stating that Jana-Rock had been certified as a state "Minority Business or Women's Enterprise." This certification was apparently based on Luiere's application to the NYDOT to become a DBE for purposes of the federal program. But while Luiere qualified as a Hispanic for purposes of the federal program, his business did not qualify as a minority business enterprise (MBE) under the state definition of Hispanic. According to Vidró's affidavit, this error resulted from Article 15-A's transfer of responsibility for certifying state MBEs from the NYDOT to the newly created state OMWBD. In that connection, NYDOT was responsible for forwarding to the OMWBD a list of all of the businesses that qualified for certification under the state program. Vidró's affidavit stated that, to the best of his knowledge, NYDOT erroneously included...