MONTANA CONTRACTORS'ASS'N v. Sec. of Commerce

• Citation: 439 F. Supp. 1331
• Decision Date: 07 November 1977
• Docket Number: No. CV 77-62-M.,CV 77-62-M.
• Parties: MONTANA CONTRACTORS' ASSOCIATION, a Montana non-profit Corporation, and Lloyd C. Lockrem, Inc., a Montana Corporation, Plaintiffs, and Donna Higgins, d/b/a Higgins & Co., Intervenor, v. The SECRETARY OF COMMERCE OF the UNITED STATES, the Montana State District Officer of the Montana Economic Development Administration, and the City of Kalispell, Defendants.
• Court: U.S. District Court — District of Montana

439 F. Supp. 1331

MONTANA CONTRACTORS' ASSOCIATION, a Montana non-profit Corporation, and Lloyd C. Lockrem, Inc., a Montana Corporation, Plaintiffs, and Donna Higgins, d/b/a Higgins & Co., Intervenor, v. The SECRETARY OF COMMERCE OF the UNITED STATES, the Montana State District Officer of the Montana Economic Development Administration, and the City of Kalispell, Defendants.

No. CV 77-62-M.

United States District Court, D. Montana, Missoula Division.

November 7, 1977.

Poore, McKensie, Roth, Robischon & Robinson, Butte, Mont., for plaintiffs and intervenor.

Gerald Hartman, Dept. of Justice Employment Security Civ. Rights Div. Washington, D. C., for Secretary of Commerce.

Murray, Donahue & Kaufman, Kalispell, Mont., for the City of Kalispell.

OPINION

RUSSELL E. SMITH, Chief Judge.

The Montana Contractors' Association and one of its members, Lloyd C. Lockrem, Inc., a contractor, bring this action for injunctive relief. Donna Higgins, a woman and the sole proprietor of Higgins & Co., has intervened on behalf of the plaintiffs. The case is now before the court on an application for a preliminary injunction.

The Public Works Employment Act of 1977 (Pub.L.95-28, 91 Stat. 116) became law on May 13, 1977. It amended the Local Public Works Capital Development and Investment Act of 1976, 42 U.S.C. §§ 6701-35. The 1977 Act appropriated an additional $4,000,000,000 for public works projects. Section 103(f)(2) of the Act provides:

Except to the extent that the Secretary determines otherwise, no grant shall be made under this chapter for any local public works project unless the applicant gives satisfactory assurance to the Secretary that at least 10 per centum of the amount of each grant shall be expended for minority business enterprises. For purposes of this paragraph, the term "minority business enterprise" means a business at least 50 per centum of which is owned by minority group members or, in case of a publicly owned business, at least 51 per centum of the stock of which is owned by minority group members. For the purposes of the preceding sentence, minority group members are citizens of the United States who are Negroes, Spanish-speaking, Orientals, Indians, Eskimos, and Aleuts.

The purposes of the 1976 Act were stated to be: (1) to alleviate the problem of national unemployment; and (2) to stimulate the national economy by assisting state and local governments to build badly-needed public facilities. House Report No. 94-1077, 94th Cong., 2d Sess. at 2 (1976). The bill is designed to inject money immediately into the economy, and to that end Congress required that the Secretary act on each application for a grant within 60 days after receipt of the application. On failure to do so, the application is automatically deemed approved. 42 U.S.C. § 6706. The Act also provides that the grantee be required to assure the Secretary that on-site labor could begin within 90 days of project approval. 42 U.S.C. § 6705(d).

The Economic Development Administration (EDA) approved a grant to the City of Kalispell for the purpose of construction of a storm sewer. The grant was conditioned on the compliance with the Minority Business Enterprise (MBE) requirements, and the City was advised that there could be no waiver of those requirements prior to the opening of the bids. Plaintiff Lockrem wanted to bid on the project but, after due diligence, was unable to find an MBE contractor to whom a subcontract might be let. He asked the EDA whether there could be a waiver of the requirement under the guidelines and was advised that only a grantee could request a waiver.

Plaintiffs claim that the requirement for MBE participation in the amount of 10% of each grant discriminates against nonminority enterprises on the basis of race alone and does for that reason deny to them the equal protection of the laws.¹ The Act does discriminate, and the discrimination is based on race alone. Plaintiff Lockrem did lose an opportunity to participate equally in bidding. Members of the plaintiff association have lost and will lose subcontracts because the MBE requirement will force prime contractors to grant subcontracts to MBE contractors even though their bids are higher than those made by nonminority contractors. Non-MBE contractors will be inconvenienced otherwise in bidding on these public works contracts because of the MBE requirements expressed in the Act and the guidelines.² The question which remains is: May the Congress, to accomplish what it deems to be a desirable social purpose, make discrimination based on race alone? I do not reach that question.

I deal here with an application for temporary injunctive relief, a form of relief equitable in nature, not afforded as a matter of right but addressed to the discretion of the court.

The award of an interlocutory injunction by courts of equity has never been regarded as strictly a matter of right, even though irreparable injury may otherwise result to the plaintiff. Compare Scripps-Howard Radio v. Federal Communications Comm'n, 316 U.S. 4, 10, 62 S.Ct. 875, 86 L.Ed. 1229 and cases cited. Even in suits in which only private interests are involved the award is a matter of sound judicial discretion, in the exercise of which the court balances the conveniences of the parties and possible injuries to them according as they may be affected by the granting or withholding of the injunction.

— Yakus v. United States, 321 U.S. 414, 440, 64 S.Ct. 660, 674, 88 L.Ed. 834 (1944). Where, as here, public interests are involved, the court has an even broader discretion.

But where an injunction is asked which will adversely affect a public interest for whose impairment, even temporarily, an injunction bond cannot compensate, the court may in the public interest withhold relief until a final determination of the rights of the parties, though the postponement may be burdensome to the plaintiff. Virginian Ry. Co. v. United States, 272 U.S. 658, 672-3, 47 S.Ct. 222, 71 L.Ed. 463; Petroleum Exploration Co. v. Public Service Comm'n, 304 U.S. 209, 222-3, 58 S.Ct. 834, 82 L.Ed. 1294; Dryfoos v. Edwards, 2 Cir., 284 F. 596, 603, affirmed, 251 U.S. 146, 40 S.Ct. 106, 64 L.Ed. 194; see Beaumont, S. L. & W. Ry. Co. v. United States, 282 U.S. 74, 91, 92, 51 S.Ct. 1, 75 L.Ed. 221. Compare Wisconsin v. Illinois, 278 U.S. 367, 418-21, 49 S.Ct. 163, 73 L.Ed. 426. This is but another application of the principle, declared in Virginian Ry. Co. v. System Federation, 300 U.S. 515, 552, 57 L.Ed. 592, 81 L.Ed. 789, that "Courts of equity may, and frequently do, go much further both to give and withhold relief in furtherance of the public interest than they are accustomed to go when only private interests are involved." (Footnote omitted.)

— Yakus v. United States, 321 U.S. 414, 440-41, 64 S.Ct. 660, 675, 88 L.Ed.2d 834 (1944).

One factor to be considered in the balancing is the applicant's probability of ultimate success. 7 Moore's Federal Practice ¶ 65.04, at 65-39 (2d ed. 1975).

There is no doubt but that the plaintiffs lose something by reason of the MBE requirement. A generation ago, when Mr. Justice Harlan's oft-quoted statement "our Constitution is color-blind" was regarded as a verity, and when it was thought that individuals should, in law, be judged and treated as individuals without consideration of race or color, plaintiffs' chance to succeed in this case would have appeared quite certain. That certainty no longer exists. In DeFunis v. Odegaard, 82 Wash.2d 11, 507 P.2d 1169 (1973), with two judges dissenting, a form of inverse discrimination was approved in a controversy over law school admissions. Mr. Justice Douglas, in his dissent in DeFunis v. Odegaard, 416 U.S. 312, 94 S.Ct. 1704, 40 L.Ed.2d 164 (1974), disagreed with the majority in the Washington case. In Bakke v. Regents of the University of California, 18 Cal.3d 34, 132 Cal.Rptr. 680, 553 P.2d 1152 (1976), the Supreme Court of California, with one judge dissenting, disapproved a form of inverse discrimination dealing with medical school admissions. The Supreme Court granted certiorari (429 U.S. 1090, 97 S.Ct. 1098, 51 L.Ed.2d 535), indicating that at least four members of the Supreme Court recognized a substantial problem. The extent of controversy is indicated by Mr. Justice Brennan in his dissent in DeFunis: "Few constitutional questions in recent history have stirred as much debate . . .."³ What...