Ohio Contractors Ass'n v. Keip

• Decision Date: 07 September 1983
• Docket Number: No. 82-3822,82-3822
• Citation: 713 F.2d 167
• Parties: 32 Empl. Prac. Dec. P 33,717, 31 Cont.Cas.Fed. (CCH) P 71,345 OHIO CONTRACTORS ASSOCIATION, et al., Plaintiffs-Appellees, v. William KEIP, et al., Defendants-Appellants, and National Association of Minority Contractors, et al., Intervening Defendants- Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 167

713 F.2d 167

32 Empl. Prac. Dec. P 33,717, 31 Cont.Cas.Fed.

(CCH) P 71,345

OHIO CONTRACTORS ASSOCIATION, et al., Plaintiffs-Appellees, v. William KEIP, et al., Defendants-Appellants and National Association of Minority Contractors, et al Intervening Defendants- Appellants.

No. 82-3822.

United States Court of Appeals Sixth Circuit.

Argued March 8, 1983.

Decided July 12, 1983.

Rehearing Denied Sept. 7, 1983.

Robert B. McAlister (argued), Thomas L. Long, Alexander, Ebinger, Fisher, McAlister & Lawrence, Jessie C. Roberson, Columbus, Ohio, for Keip, et al.

Samuel H. Porter (argued), Fred G. Pressley, Jr., Jacquelin Davis Keister, Porter, Wright, Morris & Arthur, Columbus, Ohio, for National Ass'n of Minority Contractors, et al.

John C. Elam (argued), Tom Ridgley, Columbus, Ohio, for plaintiffs-appellees.

James H. Banks, David M. Bidwell, Banks, Bidwell Co., L.P.A., J. Statler Beachler, Columbus, Ohio, for amicus curiae NAACP.

Susan W. Wanat, John M. Cannon, Mid-America Legal Foundation, Chicago, Ill., for amicus curiae Mid-America Legal Foundation and Committee on Academic Nondiscrimination and Integrity.

Before LIVELY and ENGEL, Circuit Judges, and SWYGERT, Senior Circuit Judge. ^*

LIVELY, Circuit Judge.

This appeal concerns the validity of an Ohio law which requires state officials to set aside designated percentages of state contracts for bidding by minority business enterprises only. The statute also requires contractors awarded state contracts to purchase a designated percentage of goods and services from minority businesses and to award a designated percentage of subcontracts to such businesses. An association of contractors and several individual white contractors brought this action seeking a declaratory judgment that the statute is void and unenforceable and an injunction to prevent its enforcement. The district court found that the statute violates the equal protection clause of the Fourteenth Amendment and granted a permanent injunction. The defendants, state officials charged with enforcement of the law, appealed. After the district court denied a stay pending appeal this court granted a stay and expedited the appeal.

I.

The Ohio General Assembly passed and the Governor signed a "minority business enterprise" (MBE) act in November 1980. The act requires the defendant director of the department of administrative services to select from the state construction contracts to be awarded "a number of contracts The MBE act contains provisions for waiver and modification of the set-aside provisions on application of a contractor who, after good faith effort, is unable to comply. The act's definition of minority business enterprise is--

                whose aggregate value is approximately five per cent of the total estimated value of contracts to be awarded in the current fiscal year.   The director shall set aside the contracts so selected for bidding by minority business enterprises only."   Ohio Revised Code (ORC) § 123.151(C)(1).   The act also requires every contractor awarded a contract to make "every effort to ensure that certified minority business subcontractors and materialmen participate in the contract."   ORC § 123.151(C)(2)(a).   Each state contract must contain a provision that "the contractor, to the extent that it subcontracts work, will award subcontracts totaling no less than five percent of the total value of the contract to [certified] minority businesses ... and that the total value of both the materials purchased from [certified] minority businesses ... and of the subcontracts awarded, to the extent that it subcontracts work, to such minority businesses will equal at least seven percent of the total value of the contract...."  ORC § 123.151(C)(2)(b).   Approximately fifteen percent of the estimated total value of all state contracts for purchases of equipment, materials, supplies or contracts for the purchase of insurance is required to be selected and set aside for bidding by minority business enterprises only.   ORC § 125.081(A).
                

an individual, partnership, corporation, or joint venture of any kind that is owned and controlled by United States citizens, residents of Ohio, who are members of one of the following economically disadvantaged groups: Blacks, American Indians, Hispanics, and Orientals.

ORC § 122.71(E)(1). Any person who misrepresents himself as eligible under this definition for the purpose of obtaining benefits under the MBE act is declared guilty of theft by deception.

In their complaint, filed April 30, 1982, the plaintiffs sought a declaration that specified provisions of the Ohio MBE act, contained in ORC §§ 122.71, 123.151 and 125.081 "are unconstitutional and null and void on their face" for violation of the Fourteenth Amendment, Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d, and 42 U.S.C. §§ 1981 and 1983. The district judge conducted a bench trial at which he heard testimony and received a large number of documents as exhibits. The district court concluded that the Ohio MBE act violates the equal protection clause of the Fourteenth Amendment and that the statutory provisions relied upon by the plaintiffs contain guarantees which are coextensive with the equal protection clause, thus dispensing with the need for separate treatment of the statute-based claims. Though the district court discussed the standards by which a race-related remedy is to be tested, it concluded that even if the state interest addressed in the Ohio MBE act was clearly identified and was of sufficient importance to justify use of a race-conscious remedy, the act is constitutionally defective because of the means chosen by the legislature to deal with the problem. The district court identified features of the Ohio MBE act which it found deficient as follows: (1) it has no durational limitation; (2) it imposes an "undue burden" on non-minority contractors; (3) it permits "unjust participation" by minority contractors who have suffered no economic disadvantage on account of race; and (4) there are less intrusive means available for obtaining the results sought by the act.

Though the district court concluded that it was not necessary to determine whether the Ohio legislature had identified a compelling state interest in enacting the MBE act, its opinion dealt extensively with this issue, and the parties have done the same. The district court found "scant support" for the remedy chosen either in the statement of purpose contained in the bill which finally became the MBE act or in the legislative history. The district court also stated that the General Assembly made no findings that the numerical imbalance which existed

                between construction contracts awarded to white and minority contractors "resulted from unlawful discrimination by state officials in the contract awarding process."   The parties have argued both issues on appeal:  the existence of a compelling governmental interest and the choice of an appropriate means of satisfying a legitimate and important state purpose.
                

II.

A.

The defendants (state officials) and intervening defendants (minority contractors) have filed separate briefs. They will be referred to in this opinion collectively as defendants. The primary argument of the defendants is that this case is controlled by the decision of the Supreme Court in Fullilove v. Klutznick, 448 U.S. 448, 100 S.Ct. 2758, 65 L.Ed.2d 902 (1980), and that the district court misapplied Fullilove. In Fullilove the Supreme Court found a federal law which established a preference for minority contractors to be a constitutional exercise of congressional authority. The statute challenged in Fullilove required local governmental units which received funds under a public works program to use 10% of the funds to procure services or supplies from businesses owned and controlled by members of statutorily defined minority groups. The federal act which contained this MBE provision was an appropriation measure with a life span of two years. The plaintiffs in Fullilove contended that the MBE provisions of the act were unconstitutional on their face.

The plaintiffs agree that this appeal is controlled by Fullilove and argue that the district court interpreted Fullilove correctly, particularly when it is read with Justice Powell's opinion in Regents of the University of California v. Bakke, 438 U.S. 265, 98 S.Ct. 2733, 57 L.Ed.2d 750 (1978). Neither Fullilove nor Bakke produced a majority opinion from the Supreme Court and we depend on the several plurality opinions for guidance.

B.

The opinion of Chief Justice Burger (concurred in by Justices White and Powell) in Fullilove found authority for Congress to adopt legislation earmarking a portion of funds appropriated for public works to be spent with minority business enterprises on the basis of a "backdrop" which made members aware of the problem and the reasons for the legislation. 448 U.S. at 467, 100 S.Ct. at 2769. This "backdrop" included committee reports compiled in connection with other legislation, a report of the U.S. Civil Rights Commission and reports of the operations of an agency of the Department of Commerce established pursuant to executive orders. With this background the Court found it "inconceivable that Members of both Houses were not fully aware of the objectives of the MBE provision and of the reasons prompting its enactment." Id.

The Chief Justice also made it clear that Congress is not required to state its "findings" in a preamble or compile a "record" comparable to that made in judicial or administrative proceedings in order to legislate on a subject within its purview. Id. at 478, 100 S.Ct. at 2774. Justices White and Powell concurred in the Burger opinion, and there is no indication that the other Justices who concurred in the result would have declined to join in the portion of the opinion dealing with the importance of background or the need for findings.

We believe the district court took too...