Ray Baillie Trash Hauling, Inc. v. Kleppe

• Decision Date: 18 June 1973
• Docket Number: No. 72-1163.,72-1163.
• Citation: Ray Baillie Trash Hauling, Inc. v. Kleppe, 477 F.2d 696 (5th Cir. 1973)
• Parties: RAY BAILLIE TRASH HAULING, INC., et al., Plaintiffs-Appellees, v. Thomas S. KLEPPE, Administrator, Small Business Administration, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

477 F.2d 696 (1973)

RAY BAILLIE TRASH HAULING, INC., et al., Plaintiffs-Appellees, v. Thomas S. KLEPPE, Administrator, Small Business Administration, et al., Defendants-Appellants.

No. 72-1163.

United States Court of Appeals, Fifth Circuit.

April 18, 1973.

Rehearing and Rehearing Denied June 18, 1973.

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Robert W. Rust, U. S. Atty., Chief, Civil Div., Clemens Hagglund, Asst. U. S. Atty., Miami, Fla., John N. Mitchell, U. S. Atty. Gen., Dept. of Justice, Thomas S. Kleppe, Administrator, S. B. A., Walter H. Fleischer, Joseph B. Scott, Dept. of Justice, Washington, D. C., for defendants-appellants.

Alexander Boskoff, Washington, D. C., Bernard Jaffe, Miami, Fla., for plaintiffs-appellees.

Before WISDOM, THORNBERRY and GODBOLD, Circuit Judges.

Rehearing and Rehearing En Banc Denied June 18, 1973.

WISDOM, Circuit Judge:

On reconsideration sua sponte, we withdraw our opinion dated January 5, 1973 and issue the following opinion.

* * *

In this case the plaintiffs attack the Small Business Administration's program for awarding government procurement contracts to small business concerns owned by "socially or economically disadvantaged persons." 13 C.F.R. § 124.8-1(c). The district court held that the section 8(a) program is not authorized by statute and denies due process and equal protection in violation of the Fifth and Fourteenth Amendments. We reverse.

I.

The plaintiffs-appellees, Ray Baillie Trash Hauling, Inc., Leonard Santo, d/b/a L & J Waste Service, and C. Lewis Jones, d/b/a Southern Florida Sanitation Company of Dade County, Inc., are engaged in the business of collecting and hauling refuse to disposal sites. They qualify as small business concerns under both the Small Business Act, 15 U.S.C. § 631 et seq.,¹ and the applicable regulations of the Small Business Administration. All American Waste, Inc., named as a defendant, is a black-owned firm that competes with the plaintiffs in the business of collecting and hauling refuse and also qualifies as a small business concern. The dispute in the present case relates to a contract for the collection and removal of refuse from Homestead Air Force Base in Homestead, Florida. In 1968 and 1969, the Small Business Administration and the Department of the Air Force, pursuant to a joint program,² set aside the contracts for placement with small business concerns. The Air Force awarded the contracts after formal advertising and competitive bidding restricted to small business concerns. Jones and Santo successfully bid for the contract in 1968 and 1969 respectively.³

In 1970, the Small Business Administration promulgated new regulations establishing a "section 8(a) program" providing for assistance to small business concerns owned by disadvantaged persons. 13 C.F.R. § 124.8-1. As part of the program, the SBA secured a prime contract from the Air Force for the collection and removal of refuse from the Homestead base for a two year period commencing July 1, 1970. The SBA then negotiated a similar subcontract with All American for the performance of the services in the prime contract between the SBA and the Air Force for a one year period commencing July 1, 1970 at $65,000.⁴

Upon being advised that the SBA intended to enter into a second subcontract with All American for the performance of the prime contract services at Homestead for the fiscal year 1971, the plaintiffs demanded an opportunity to compete for the contract. They did not apply for participation in the program and they did not contend that they were eligible. The SBA rejected the demand and later executed the second subcontract with All American. On June 29, 1971, the plaintiffs commenced the present action for injunctive and declaratory relief in the District Court for the Southern District of Florida. The defendants were the Administrator of the Small Business Administration, the Secretary of the Department of the Air Force, the Contracting Officer assigned to Homestead Air Force Base, and All American Waste, Inc. In the complaint, the plaintiffs sought a permanent injunction enjoining the SBA from letting the Homestead contract under the section 8(a) program without competitive bidding. At the same time, they filed a motion for a temporary restraining order and a preliminary injunction.

With the consent of the parties, the district court issued an order directing that the second subcontract be held in abeyance for thirty days and that the prior contract with All American be extended until further order. Later orders of the court extended this period until judgment on the merits.

On October 29, 1971, the district court entered its judgment. 334 F.Supp. 194. The court found that the SBA's section 8(a) program, providing for assistance to small business concerns owned by disadvantaged persons, was not authorized by the Small Business Act and violated the federal statutes requiring competitive bidding in government procurement. The court also found that the primary criterion for the program was race, color, and ethnic origin, that whites were ineligible for program benefits except on a token basis, and that the plaintiffs, as "non-minority" owned firms, were denied due process and equal protection of the laws. The court concluded that the subcontract awarded to All American was illegal and ordered that the Homestead contract be awarded as soon as possible on the basis of the maximum competitive bidding practicable among the plaintiffs and other similarly situated small business concerns. The defendants appealed.

II.

At the outset, we must confront two questions relating to our ability to hear and decide the merits of the parties' contentions: first, whether the present case is moot; and second, whether the plaintiffs have standing to litigate the issues raised in their complaint.

The question of mootness arises from the fact that All American did not satisfactorily perform its responsibilities under the contract. The Air Force terminated the contract with All American on October 1, 1971, and has since negotiated a refuse contract, under 10 U.S.C. § 2304 (a) (2), with one of the plaintiffs for the duration of the fiscal year 1972. A case is not moot, however, if there is a reasonable expectation that the act complained of will be repeated. United States v. W. T. Grant Co., 1953, 345 U.S. 629, 73 S.Ct. 894, 97 L.Ed. 1303. The Court has been advised that the SBA intends to continue its section 8(a) program, including future awards of the Homestead contract. We conclude, therefore, that a real controversy exists and that the appeal may proceed. See also, American Bible Society v. Blount, 3 Cir. 1971, 446 F.2d 588; Atlantic Richfield Co. v. Oil, Chemical and Atomic Workers International Union, AFL-CIO, 7 Cir. 1971, 447 F.2d 945.

The question of the plaintiffs' standing is considerably more difficult. In general, to have standing to litigate, a party must show that he has incurred, or is in immediate danger of incurring, some direct and personal injury resulting from the violation of a constitutional or statutory right designed to protect that party. Moose Lodge No. 107 v. Irvis, 1972, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627; Sierra Club v. Morton, 1972, 405 U.S. 727, 92 S.Ct. 1361, 31 L. Ed.2d 636; Laird v. Tatum, 1972, 408 U.S. 1, 92 S.Ct. 2318, 33 L.Ed.2d 154; Association of Data Processing Organizations, Inc. v. Camp, 1970, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184; Barlow v. Collins, 1970, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192. To be sure, even a slight injury may suffice in some circumstances. See Flast v. Cohen, 1968, 392 U.S. 83, 88 S.Ct. 1942, 20 L.Ed.2d 947. Yet the fundamental principle remains inviolate: one who has no personal stake in the outcome of the controversy always lacks standing.

In the case at bar, the plaintiffs challenge the SBA's section 8(a) program on two separate grounds. First, the plaintiffs contend that the SBA lacked the statutory and constitutional authority to establish its section 8(a) program. Second, assuming there is authority for establishing the section 8(a) program, the plaintiffs contend that the SBA has administered the program in an unconstitutional manner by discriminating on the basis of race, color, or ethnic origin.

Turning to the first of these issues, we conclude the plaintiffs have standing to litigate the question of the statutory and constitutional authority for establishing the section 8(a) program. The plaintiffs allege not only that they have been injured by the SBA's action removing government procurement contracts from competitive bidding, but also that the section 8(a) program enabled All American to receive a premium price above that which would have prevailed under competitive bidding and that All American has since used this premium to submit low bids for private commercial contracts, thus causing the plaintiffs to lose some of their customers to All American. In these circumstances, the injury to the plaintiffs is manifest. Moreover, as small business concerns, the plaintiffs are arguably within the zone of interests intended to be protected by the Small Business Act. See Association of Data Processing Organizations, Inc. v. Camp, supra. We therefore find that the plaintiffs have standing to litigate the first issue. For the present, we pretermit the question of the plaintiffs' standing to litigate the issue of the SBA's alleged discrimination in administering the section 8(a) program.

III.

As stated in the regulations promulgated by the SBA, the purpose of the section 8(a) program is "to assist small business concerns owned by disadvantaged persons to become self-sufficient, viable businesses capable of competing effectively in the market place." 13 C. F.R. § 124.8-1(b).⁵ Authority for the program is derived from section 8(a) of the Small Business Act, 15 U.S.C. § 637(a),⁶ empowering the SBA to enter into all types of contracts (including contracts for supplies,...