Milliken v. Michigan Road Builders Association, Inc. Jurisdictional Statement and Appendix
Public Court Documents
January 1, 1987
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IN THE SUPREME COURT
OF THE UNITED STATES
October Term, 1987
WILLIAM G. MILLIKEN, et al,
Appellants,
v.
MICHIGAN ROAD RUILDERS
ASSOCIATION INC., et al,
Appellees.
On Appeal from the United States
Court of Appeals for the Sixth Circuit
JURISDICTIONAL STATEMENT
AND APPENDIX
FRANK J. KELLEY
Attorney General
Louis J. Caruso
Solicitor General
Counsel of Record
Brent E. Simmons
Assistant Attorney General
525 West Ottawa Street
Lansing, Michigan 48913
(517) 373-6434
Attorneys for Appellants
PRINTED BY SPEAKER-HINES AND THOMAS, INC., LANSING, MICHIGAN— 1988
1
QUESTIONS PRESENTED
I
WHETHER THE SIXTH CIRCUIT S FINDING THAT
THE STATE OF MICHIGAN FAILED TO “PROVE”
IT HAD INVIDIOUSLY DISCRIMINATED AGAINST
MINORITIES AND WOMEN IN STATE CONTRACT
ING, CONFLICTS WITH THIS COURT’S “SUFFIC
IEN T E V ID E N C E ’’ STANDARD UNDER THE
EQUAL PROTECTION CLAUSE IN JUSTIFYING A
REMEDIAL, AFFIRMATIVE ACTION PROGRAM
EMPLOYING RACIAL, ETHNIC AND GENDER
CLASSIFICATIONS.
H
W H ETH ER A STATE MUST MAKE SEPARATE
FINDINGS OF DISCRIMINATION AGAINST DIS
TINCT RACIAL AND ETHNIC GROUPS REFORE
EACH SUCH GROUP MAY RE INCLUDED IN A
REMEDIAL, AFFIRMATIVE ACTION PROGRAM
EMPLOYING RACIAL AND ETHNIC
CLASSIFICATIONS.
11
PARTIES
The parties before the United States Court of Appeals
for the Sixth Circuit were:
Plaintiffs
1. Michigan Road Builders Association Inc., a Michigan
corporation
2. Michigan Chapter Associated General Contractors of
America, Inc., a Michigan corporation
3. Michigan State Chamber of Commerce, a Michigan
corporation
4. Michigan Asphalt Paving Association, Inc., a Michigan
corporation
5. Michigan Concrete Paving Association, a Michigan
corporation
6. Michigan Mineral Resources Association, Inc., a
Michigan corporation
7. Michigan Ready Mixed Concrete Association, a Mich
igan corporation
8. Michigan Chapter National Electrical Contractors As
sociation, Inc,, a Michigan corporation
9. Michigan Plumbing & Mechanical Contractors Asso
ciation, Inc., a Michigan corporation
10. Michigan Chapter Sheet Metal and Air Conditioning
Contractors National Association, a Michigan
corporation
11. Ajax Paving Industries, Inc., a Michigan corporation
12. Argersinger-Morse Construction Company, a Michi
gan corporation
13. Bacco Construction Company, a Michigan
corporation
14. Bemis & Son, Inc., a Michigan corporation
15. Brown Brothers, Inc., a Michigan corporation
16. C-Way Construction Company, a Michigan
corporation
17. Central Paving Company, a Michigan corporation
18. Cunningham-Gooding, a Michigan corporation
19. Edison Company, L.W., a Michigan corporation
20. Eisenhour Construction Company, Inc., a Michigan
corporation
21. Forsbert, Inc., T.A., a Michigan corporation
22. Gilliland Construction Company, a Michigan
corporation
23. H ebert Construction Company, a Michigan
corporation
23. Hicks Company, a Michigan corporation
24. Kegle Construction Company, a Michigan
corporation
26. Lamb Company, L.W., a Michigan corporation
27. MacLean Construction Company, a Michigan
corporation
28. Midwest Bridge Company, a Michigan corporation
29. Molesworth Contracting Company, a Michigan
corporation
30. Reith-Riley Construction Company, Inc., a Michigan
corporation
31. Sargent Inc., B.H., a Michigan corporation
32. Schworm, Inc., a Michigan corporation
33. Snowden, Inc., a Michigan corporation
iii
IV
34. Spartan Asphalt Paving Company, a Michigan
corporation
35. Toebe Construction Company, Walter, a Michigan
corporation
36. Yerington Company, John G., a Michigan coiporation
Defendants
1. William G. Milliken, as Governor of the State of
Michigan
2. Department of Management and Budget of the State
of Michigan
3. Gerald H. Miller, as Director of the Department of
Management and Budget
4. Department of Transportation of the State of
Michigan
5. John P. Woodford, as Director of the Department of
Transportation
V
TABLE OF CONTENTS
QUESTIONS PRESENTED........................................... i
PARTIES.............................................................................. ii
TABLE OF AUTHORITIES........................................... vii
OPINIONS BELO W .................................................... 1
JU RISD ICTIO N ................................................................ 2
CONSTITUTIONAL AND STATUTORY PROVI
SIONS INVOLVED........................................................... 2
STATEMENT OF THE C A SE ....................................... 3
A. Statutory Background........................................... 4
B. Proceedings Below................................................ 9
THE QUESTIONS ARE SUBSTANTIAL..................... 12
I. THE SIXTH CIRCUIT ERRONEOUSLY
CONSTRUES THE CONSTITUTIONAL
STANDARDS UNDER WYGANT AS FAR
MORE STRINGENT THAN THOSE UN
DER FULLILOVE ................................................ 13
A. Wygant Does Not Require States To
Prove Themselves Guilty of Invidious
Discrimination.............................................. 14
B. The District Court’s Finding That There
Was Sufficient Evidence Of Prior Dis
crimination Was Not Clearly Erroneous
Under Wygant................................................ 17
C. The State Was Not Required To Make
Separate Findings Of Discrimination
Against Distinct Racial And Ethnic
Groups Under Wygant................................ 18
Page
VI
II. THIS CASE PRESENTS SIMILAR ISSUES
AND ISSUES IN ADDITION TO THOSE
PRESENTLY PENDING BEFO R E THE
COURT ON APPEAL IN CITY OF
RICHMOND V JA CROSON COMPANY,
NO. 87-998.............................................................. 20
CONCLUSION.................................................................. 24
APPENDIX
1. Michigan Road Builders Association, Inc v Milli-
ken, 834 F2d 583 (CA 6, 1 9 8 7 )........................ 2a
2. Michigan Road Builders Assocation, Inc v Milli-
ken, 654 F Supp 3 (ED Mich, 1 9 8 6 )................ 37a
3. United States Court of Appeals for the Sixth
Circuit Order Denying Petition for Rehearing,
Filed February 23, 1988....................................... 44a
4. Michigan Road Builders Association, Inc v Milli-
ken, 571 F Supp 173 (ED Mich 1983).............. 45a
5. United States Court of Appeals for the Sixth
Circuit Unpublished Order of Dismissal for
Lack of Jurisdiction, Filed August 24, 1984 . . 83a
6. Notice of Appeal Filed May 3, 1988, in the
United States Court of Appeals for the Sixth
Circuit....................................................................... 84a
7. U.S. Const, amend XIV, § 1 ................................85a
8. Michigan Public Acts 1980, No. 428; MCL
450.771 et seq; MSA 3.540(51) et seq ...................86a
Page
TABLE OF AUTHORITIES
Cases Pages
Anderson v City o f Bessemer City, NC,
470 US 564 (1 9 8 5 ) ..................................................... 18
Associated General Contractors o f California v
City and County o f San Francisco,
813 F2d 922 (CA 9, 1 9 8 7 ) ................ .. .10, 13, 21-22
Fullilove v Klutznick,
448 US 448 (1980 ).........................................9, 12, 15, 19
JA Croson Co v City o f Richmond,
822 F2d 1355 (CA 4, 1 9 8 7 )....................................... 20
J Edinger {? Son v City o f Louisville,
802 F2d 213 (CA 6, 1 9 8 6 )......................................... 9
Johnson v Transportation Agency, Santa Clara County,
107 S Ct 1442 (1987)................................................14, 16
Local 28 o f Sheet Metal Workers v EEOC,
106 S Ct 3019 (1 9 8 6 ).................................................. 19
Maine v Taylor,
106 S Ct 2440 (1986 ).................................................. 18
Mississippi University fo r Women v Hogan,
458 US 718 (1 9 8 2 ) ....................................................... 21
Ohio Contractors Association v Keip,
713 F2d 167 (CA 6, 1 9 8 3 ).......................................13, 19
Regents o f the University o f California v Bakke,
438 US 265 (1 9 7 8 ) ......... .. . .'................ .................... 19
South Florida Chapter o f the Associated
General Contractors o f America v
Metropolitan Dade County, Fla,
723 F2d 846 (CA 11, 1984), cert den, 469
US 871 (1984)................................................................ 13
V lll
Southwest Washington Chapter, National Electrical
Contractors Association v Pierce County,
100 Wash 2d 109; 667 P2d 1092 (1 9 8 3 )................ 13
United States v Paradise,
107 S Ct 1053 (1 9 8 7 ).................................................. 11
Wygant v Jackson Board o f Education,
106 S Ct 1842 (1986).................................. 11, 13, 14, 15
Constitutional Provisions and Statutes
U.S. Const, Amendment XIV, § 1 .....................................2, 9
28 USC § 1254(2).............................................................. 2
28 USC § 2 1 01 (c).............................................................. 2
42 USC § 1 9 8 1 ................................................................ 2, 3, 9
42 USC § 1983 . ........ .....................................................2, 3, 9
42 USC § 2000d ..............................................................2, 3, 9
42 USC § 2 0 0 0 e ..............................................................2, 3, 9
1980 PA 428, MCL 450.771 et seq;
MSA 3.540(51) et seq...................................................... passim
1976 PA 453, § 209, MCL 37.2209;
MSA 3.548(209).................................................................. 23
1975 PA 165, MCL 125.1221 et seq;
MSA 3.540(3) et s e q ......................................................... 4
1972 PA 351, MCL 129.1201 et seq;
MSA 5.2321(1) et s e q ....................................................... 3
1955 PA 251 . .
Page
23
Other Authorities
Executive Order No 10479.............................................. 23
Executive Order No 10557.............................................. 23
Executive Order No 11246.............................................. 23
Supreme Court Rule 37.3 ............................. 23
41 CFR Part 6 0 .................................................................. 23
Michigan House Resolution No. 361,
1978 Journal of the House 543, 702 ........................... 7, 17
//
JURISDICTIONAL STATEMENT
Appellants, William G. Milliken, et al, (hereinafter “the
State of Michigan”) appeal from the November 25, 1987
judgment of the United States Court of Appeals for the
Sixth Circuit, which held that Michigan’s Public Act 428
of 1980 is unconstitutional under the Equal Protection
Clause of the Fourteenth Amendment. Public Act 428
provides that 7 % of all state government expenditures for
the procurement of goods, services and construction shall
be awarded to minority owned businesses and 5% to
women owned businesses.
OPINIONS BELOW
The November 25, 1987 opinion of the Sixth Circuit in
Michigan Road Builders Association, Inc, et al v William G.
Milliken, et al, is reported at 834 F2d 583 (CA 6, 1987).
App. 2a. The February 23, 1988 order of the Sixth Circuit
denying the Petition for Rehearing and Suggestion for Re
hearing En Banc appears at App. 44a.
The February 10, 1986 opinion and order of the Dis
trict Court is reported at 654 F Supp 3 (ED Mich, 1986)
and appears at App. 37a.
The August 24, 1984 order of the Sixth Circuit dismiss
ing the first appeal for lack of jurisdiction is reported at
742 F2d 1456 (CA 6, 1984) and appears at App. 83a.
The August 12, 1983 opinion and order of the District
Court is reported at 571 F Supp 173 (ED Mich, 1983) and
appears at App. 45a.
— 2 —
JURISDICTION
Appellees, the Michigan Road Builders Association,
Inc., et al, filed suit in federal district court in July 1981,
alleging that Public Act 428, on its face, violates their fed
eral constitutional and civil rights under the Fourteenth
Amendment and 42 USC §§ 1981, 1983, 2000d and
2000e.
The decision of the Sixth Circuit declaring Michigan’s
Public Act 428 of 1980 unconstitutional, reversing the dis
trict court’s ruling and remanding for entry of judgment in
favor of Respondents, was issed on November 25, 1987.
(App. 2a). The State of Michigan’s petition for rehearing
and suggestion for rehearing en banc, timely filed on De
cember 9, 1987, was denied on February 23, 1988.
(App. 44a).
The notice of appeal was filed in the United States
Court of Appeals for the Sixth Circuit on May 3 ,
1988. (App. 84a).
This appeal has been docketed within 90 days of the
denial of rehearing below. 28 USC § 2101(c).
The jurisdiction of the Court is invoked pursuant to
28 USC § 1254(2).
~~ CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
This appeal involves: (1) the Equal Protection Clause
of the Fourteenth Amendment to the United States
Constitution (App. 85a); and (2) Michigan’s Public Act 428
— 3 —
of 1980, MCL 450.771 et seq; MSA 3.540(51) et seq
(App. 86a).111
STATEMENT OF THE CASE
“A state legislature has the prerogative and even the
constitutional duty to take affirmative steps to eliminate
the continuing effects of past unconstitutional discrimina
tion.”121 In this case, it is not disputed “that Public Act 428
(of 1980) was designed to ameliorate the effects of past
discrimination against minorities and women competing
for contracts to supply the state with goods and services.”131
During the early 1970’s, the State of Michigan recog
nized the underutilization of minority and women owned
business in state contracting. District Court opinion at
178 (App. 55a-56a). The state first attempted to address
the problem by easing bonding requirements on small
construction projects. See Public Act 351 of 1972, MCL
129.201 et seq-, MSA 5.2321(1) et seq-, see also District
Court opinion at 178 (App. 56a). The state also created a
Division of Minority Business Enterprise to provide mana-
[i]
Appellees also filed suit under federal civil rights statutes, 42 USC
§§ 1981, 1983, 2000d and 2000e. Noting that the Appellees had aban
doned their claim under 42 USC § 2000e et seq on appeal, and that the
protections afforded by the other statutes were “coextensive” with the
Fourteenth Amendment, the Sixth Circuit analyzed Public Act 428 only
under Fourteenth Amendment equal protection standards. 834 F2d at
585 n 3 (App. 5a).
PI
Michigan Road Builders Association, Inc, et al v Milliken, et al, 834 F2d
583, 586, n.4 (CA 6, 1987), citing Wygant v Jackson Board o f Education,
476 US 267 (O’Connor, J. concurring). (Emphasis in the original)
(App. 6a).
[3]
Icl.
— 4
gerial and financial assistance to minority business. See
Public Act 165 of 1975, MCL 125.1221 et seq; MSA
3.540(31) et seq. Later the State adopted a modest, non
binding goal of one percent minority business participa
tion in state contracting, which it failed to meet. Infra
at 7.
None of these measures corrected the under represen
tation of minority and women owned businesses in state
contracting.
A. Statutory Background
A 1974 study commissioned by the State of Michigan™
found that out of 437 million dollars in state contracts for
goods and services, only an estimated $225,000—or
0.05% of the total—had been awarded to minority owned
businesses.™ Yet, based on 1969 U. S. Economic Census
data, there were more than 8,000 minority owned busi
nesses in Michigan, with gross receipts of nearly $320 mil
lion and distributed over more than 50 construction, man-
[4]
“A Public Procurement Inventory on Minority Vendors State of Michi
gan,” by Urban Markets Unlimited, Milwaukee, Wisconsin, July 1974. See
District Court opinion at 179-181 (App. 56a-62a).
[5]
The “Urban Markets Study” defined a minority owned business enter
prise as “a business in which one or more minority persons own or control
at least 50 percent of a given enterprise. Such persons include Black
Americans, American Indians, Spanish-Americans, Oriental-Americans,
Eskimos, and Aleuts.” P. iv (footnote).
ufacturing, sales and service categories which matched
state purchasing requirements.161
The 1974 study also included a survey of state purchas
ing officials, which revealed “unfounded negative atti
tudes” against minority vendors.m The study noted that
there was “a sizeable number of competent minority busi
nesses in the State” and that “to rationalize that the lack
of success in minority procurement is based upon minori
ties incompetency and non-responsiveness is not sup
ported by the evidence.181
The study also noted that state agencies did not actively
seek new sources of vendors, and that “the key to pur
chasing success with minority vendors is the will to do
business.” The study concluded with the finding that
“State procurement practices are not equitable in the treat
ment o f minority vendors.” (Emphasis in the original.)191
In 1976 it was reported that minorities represented
about 14% of the total population of Michigan, and owned
— 5 —
[6]
According to 1977 U.S. Economic Census data, the number of minority
owned businesses in Michigan increased to 10,840 with gross receipts of
nearly $580 million. There were twice as many women owned businesses
(21,727), with gross receipts of nearly $1.5 billion. See 1977 Survey of
Minority Owned Business Enterprise (Table 2b) and 1977 Economic Cen
sus Women Owned Businesses (Table 2), Selected Statistics by Geographic
Division, State and Industry Division (Michigan), U. S, Bureau of the
Census.
[7]
District Court opinion at 179 (App. 57a).
[8]
Id., at 181 (App. 61a).
[9]
Id. (App. 62a).
6
about 6% of the businesses in the five major industrial
sectors.1101
Although nearly 6% of all businesses in the State were
minority owned and nearly 12% were women owned,
each group received only one percent or less of annual
state contracting expenditures.1111
In 1975 a committee of representatives from the Gover
nor’s office, the Office of Economic Expansion and the
Department of Management and Budget (DMB) met to
make recommendations to the Governor on how “to re
move the inequities faced by minorities in receiving state
contracts/'1121
A Small Business Task Force was created and public
hearings were held in December 1975. The Task Force
found that “the participation of minority business in state
procurement is minimal” and that “purchase patterns of
state procurement appear to be of longstanding and diffi
cult for small and minority business enterprise to influ
ence.”1131
(10]
“Testimony Given Before Senate State Affairs Committee on Senate Bill
No. 1461.” Record Exhibit 19A(26); Court of Appeals opinion at 594 n.13
(App. 26a).
[11]
Legislative Analyses, Record Exhibits 19A(17), 19A(18), 19A(20), 49.
[12]
Record Exhibit 19A(26), supra, n. 10.
[13]
“Task Force on Small Business Participation in State Purchasing—Final
Report,” March 1976. Record Exhibit 19(C); see also District Court opin
ion at 183 (App. 67a).
— 7-
The report also found that “the state does not appear to
adequately require contractors, intending to subcontract,
to solicit bids from small and minority subcontractors.”1141
In 1977, the Small and Minority Business Procurement
Council reported that “Of this $356 million available for
procurement expenditure in 1976-77, departments
planned to spend $81 million (23 percent) with small, non
minority business firms and $4 million (1 percent) with
minority-owned businesses”.[15! (Emphasis added). By the
end of the fiscal year, however, the dollar goal for non
minority small businesses had been exceeded by nearly
$12.8 million, while actual expenditures for small
minority-owned businesses fe ll short by $230,580.1161
Between 1975 and 1977, the Michigan Senate consid
ered three separate set aside bills—SB 885 in 1975, SB
1461 in 1976 and SB 10 in 1977. While extensively ana
lyzed and debated, none of those earlier set aside pro
posals were enacted. See Court of Appeals opinion at 591
n.9 (App. 18a).
On March 6, 1978, the Michigan House adopted House
Resolution No. 361, which created a special committee
“to monitor and investigate affirmative action programs in
State government.” 1978 Journal of the House 543, 702.
Resolution No. 361 declared, in part:
Whereas, Recent statistics show that. . . some State
departments and agencies have been uncooperative 14 15 16
[14]
Id.
[15]
“Small & Minority Business Procurement Council, First Annual Re
port” (Fiscal Year 1976-77). Record Exhibit 19(D).
[16]
Id. Contrary to the Court of Appeals’ finding, therefore, MBEs were
unable to compete for state contracts for reasons other than their size. See
App 20a. Race was the only remaining factor.
— 8-
in complying with equal opportunity laws in the pur
chase of services; and
* * *
Whereas, in falling short of its responsibilities, State
government is setting a poor example for local gov
ernments and private employers who have been less
than diligent in implementing affirmative action pro
grams. Indeed, Michigan’s record in pursuing affirma
tive action goals in State hiring and purchase of serv
ices is intolerable and should be scrutinized by the
Michigan Legislature . . . .
In May 1978, the Michigan Department of Civil Rights
found that employee status reports submitted by state
contractors “have consistently shown minorities and
women to be excluded, underemployed or concentrated
in stereotyped positions.1[17]
In March 1979 Michigan House Bill 4335 was intro
duced and finally passed both houses of the legislature in
December 1980, after more than a year and a half of de
bate and amendments. It was signed by the Governor on
January 13, 1981 as Public Act 428.
The Act incorporates phased-in goals of up to 7% of all
state contracting expenditures to be awarded to minority
owned businesses and 5% to women owned businesses.1181
Significantly, the 7 % and 5 % goals were in line with the
proportions of minority and women owned businesses in 17 18
[17]
“A Report to the Governor on Implementation of Executive Directive
1975-76,” May 15, 1978 Michigan Department of Civil Rights. Record
Exhibit 19E at 9.
[18]
See District Court opinion at 184 n.5 (App. 70a).
— 9
the state. They were not based on the proportions of mi
norities (about 14%) and women (about half) in the gen
eral population. Compare J Edinger Lr Son v City o f Louis
ville, 802 F2d 213 (CA 6, 1986).
While the Michigan legislature was also mindful of the
Supreme Court’s decision in Fidlilove v Klutznick, 448 US
448 (1980), it did not adopt proform a the federal 10% set
aside for minority owned business approved in that
decision.1191
B. Proceedings Below
Plaintiffs filed suit for declaratory and injunctive relief
in July 1981, alleging that Public Act 428, on its face,
violates the Equal Protection Clause of the Fourteenth
Amendment and federal civil rights statutes, including 42
USC §§ 1981, 1983, 2000d and 2000e. The State of Mich
igan denied the allegations.
Cross motions for summary judgment were filed in No
vember 1981. On August 12, 1983, the District Court is
sued a memorandum opinion and order denying plaintiffs’
motion for summary judgment and granting defendants’
motion for summary judgment. (App. 45a). Plaintiffs
appealed.
On August 24, 1984, the Sixth Circuit granted the de
fendants’ motion to dismiss the appeal for lack of jurisdic
tion on grounds that the District Court had not resolved
plaintiffs’ claims against the Michigan Department of
Transportation (MDOT). (App. 83a).
See Record Exhibits 19A(17) and 49, supra, n. 11.
[19]
— 1 0 —
On remand, the District Court held in February 1986
that Public Act 428 authorized MDOT to use set asides on
exclusively state funded contracts. (App. 37a). Plaintiffs
again appealed.
The cause was argued on May 4, 1987. Supplemental
briefs were subsequently filed in light of the Ninth Cir
cuit’s decision in Associated General Contractors v City
and County o f San Francisco, 813 F2d 922 (CA 9, 1987).
In a divided opinion dated November 25, 1987, Sixth
Circuit Judges Krupansky and Engel reversed the District
Court and ruled that Public Act 428 is unconstitutional.
Chief Judge Lively dissented, viewing the Act as constitu
tional and voting to affirm the District Court’s decision.
(App. 2a).
The State of Michigan’s Petition for Rehearing and Sug
gestion for Rehearing En Ranc was denied on February
23, 1988. (App. 44a).
The Sixth Circuit’s majority opinion found that the Dis
trict Court erroneously held that the State of Michigan
was only required to show a “significant” rather than a
“compelling” governmental interest in enacting Public
Act 428,'201
The majority also found that the state could not “admit”
prior discrimination1211 and that it had relied upon “certain
conclusionary historical resumes of unrelated legislative
enactments, proposed enactments, executive reports and a
state funded private study,” which were not “probative of
[20]
Court of Appeals opinion at 587 (n. 5), 588 (App. 10a, 12a).
[21]
Id., at 590-1, n. 7 (App. 17a).
1 1 -
discrimination.”1221 The majority specifically found that
“(t)he evidence does not prove that the State of Michigan
invidiously discriminated against racial and ethnic minori
ties in awarding state contracts.”1231 (Emphasis added).
The majority opinion also held that “(a) finding of prior
purposeful discrimination against members of each of
these favored minority groups is required before state and
local governments are permitted to remedy alleged dis
crimination by the enactment of laws embodying racial
and ethnic distinctions,” citing Wygant, 106 S Ct at 1852
n. 13l24] (Emphasis added).
In his dissent, Chief Judge Lively notes that the Su
preme Court has “yet to reach a consensus on the appro
priate constitutional analysis” in affirmative action cases.1251
He adds, nevertheless, that “(t)he majority concedes, as it
must, that the State of Michigan has a compelling interest
in eliminating race and gender discrimination from its
procedures for awarding public contracts.”1261 (Emphasis
added).
The dissent further notes that the “evidence was suffic
ient for the Legislature to make a finding of past inten
tional discrimination,” and that that finding of fact by the
[22 ]
Id., at 590, 593, 594 (App. 17a, 23a, 26a).
[23]
Id., at 594 (App. 26a).
[24]
Id., at 594-5 n. 14 (App. 27a).
[25]
Id., at 596 (App. 31a), citing United States v Paradise, 107 S Ct 1053,
1064 (1987).
[26]
Id.
—12
District Court was not clearly erroneous.1271 In addition,
the dissent continues, the majority failed “to give the def
erence that a federal court should give to a state legisla
ture’s findings” and that the level of findings required by
the majority “has not heretofore been required.”1281
THE QUESTIONS ARE SUBSTANTIAL
At issue in this case is the constitutionality of a reme
dial, affirmative action state statute which employs racial
and gender classifications.
Although this Court has yet to reach consensus on the
appropriate constitutional analysis under the Equal Pro
tection Clause in such cases, the State of Mcihigan—like
many other state and local governments—relied on the
court’s plurality and concurring opinions in Fullilove v
Klutznickp9] in both structuring and enacting Public Act
428 of 1980,[301 following nearly a decade of experimenta
tion, extensive study and exhaustive debate.1311
State and lower federal courts have also relied upon
Fullilove in upholding the constitutionality of voluntary af
firmative action programs of state and local govern- 27 28 29 30 31
[27]
Id., at 597-8 (App. 34a).
[28]
Id.
[29]
448 US 448 (1980).
[30]
See Michigan House and Senate legislative analyses citing Fullilove as
authority for passage of Public Act 428, Record Exhibits 19A(17) and 49.
[31]
See District Court opinion at 174, 178-184 (App. 47a, 55a-69a).
13
ments,1321 including the U. S. District Court in this easel331
In Wygant v Jackson Board o f Education,m this Court
also followed Fullilove in its several opinions.1351 Thus, Wy
gant did not change “all the previously accepted standards
for judging the validity of affirmative action programs of
governments and governmental units.”1361
I. THE SIXTH CIRCUIT ERRONEOUSLY CON
STRUES THE CONSTITUTIONAL STANDARDS
UNDER WYGANT AS EAR MORE STRINGENT
THAN THOSE UNDER FULLILOVE.
In 1983, the Sixth Circuit upheld the State of Ohio’s
minority business enterprise (MBE) “set aside” in state
contracting on the basis of Fullilove. See Ohio Contractors
Association v Keip, 713 F2d 167 (CA 6, 1983). In this case, 32 33 34 35 36
[32]
See e.g., Southwest Washington Chapter, Nat’l Electric Contractors Assoc
v Fierce County, 100 Wash 2d 109; 667 P2d 1092, 1098-1100 (1983);
Associated General Contractors o f Cal, Inc. v City and County o f San
Francisco, 619 F Supp 334, 339 (ND Cal 1985), a f f d in part rev’d in part
813 F2d 922 (1987); South Florida Chapter, Associated Gen’l Contractors v
Metropolitan Dade County, 723 F2d 846, 850-2 (CA 11, 1984), cert den
469 US 871 (1984); Ohio Contractors Ass’n v Keip, 713 F2d 167, 170
(CA 6, 1983).
[33]
District Court opinion at 175-6, 187-190 (App. 49a-53a, 75a-82a).
[34]
476 US 267; 106 S Ct 1842 (1986).
[35]
Id., 106 S Ct at 1846 (Powell, J., for the Court), 1852 (O’Connor, J.,
concurring)
[36]
Court of Appeals opinion at 595 (Lively, C.J., dissenting) (App. 29a).
— 14
however, the Sixth Circuit rejects Michigan’s very similar
set aside program,11371 primarily on the basis of Wygant.m
A. Wygant Does Not Require States To Prove Them
selves Guilty of Indivious Discrimination.
The Sixth Circuit’s majority opinion holds that the
Michigan legislature was required to “prove that the State
of Michigan invidiously discriminated against racial and
ethnic minorities in awarding state contracts.” (Emphasis
added). Court of Appeals opinion at 594 (App. 26a). The
majority found that “the Michigan legislature had little, if
any, probative evidence before it that would warrant a find
ing” that the State had discriminated in awarding con
tracts. Id.
The majority opinion completely ignores the finding of
the Urban Markets study that minority vendors were not
equitibly treated in state procurement, and the statistical
disparities between the percentages of minority and
women owned businesses in the State and the low propor
tion of contracts they received.
“While employers must have a firm basis for concluding
that remedial action is necessary, neither Wygant nor We
ber places a burden on employers to prove that they actu
ally discriminated against women or minorities.” Johnson v 37
[37]
Michigan relied on a “backdrop” of historical evidence of prior discrim
ination similar to Ohio’s in enacting Public Act 428, including executive
orders, task force reports, special studies, legislative hearings, investiga
tions and resolutions, and public hearings. Compare Statutory Back
ground, supra, and District Court opinion at 178-184 (App. 55a-69a) with
Ohio Contractors, 713 F2d at 170-1.
Court of Appeals opinion at 588-9 (App. 10a-13a).
[38]
15—
Transportation Agency, Santa Clara County, 107 S Ct
1442, 1463 (1987) (O’Connor, J., concurring). (Emphasis
added).
A challenge to an affirmative action plan does not auto
matically impose upon a public agency “the burden of
convincing the court of its liability for prior unlawful dis
crimination.” Id., citing Wygant, 106 S Ct at 1856. “(N)or
does it mean that the court must make an actual finding of
prior discrimination based on the employer’s proof before
the employer’s affirmative action plan will be upheld.” Id.
The Sixth Circuit thus errs in holding that Michigan was
required to “prove” it had discriminated before enacting
Public Act 428. Moreover, the Sixth Circuit also errs in
applying judicial standards of review to a legislative deter
mination. See Fullilove, 448 US at 478 (Burger, C.J.) and
448 US at 502-3 (Powell, J., concurring).
The State need only have “sufficient evidence to justify
the conclusion that there has been prior discrimination,”
or “a firm basis for believing that remedial action is re
quired.” Wygant v Jackson Board o f Education, 106 S Ct
1842, 1848 (1986) (Powell, J.) and 106 S Ct at 1853
(O’Connor, J., concurring). That standard was followed by
the district court in this case. (App. 75a).
Evidence of a long history of marked disparity in the
percentage of public contracts awarded to minority busi
ness enterprises will support a legislative determination
that remedial action is warranted. See Fidlilove, supra, 448
US at 477-8 (Burger, C.J.). Statistical disparities sufficient
to support a prima facie case of discrimination, would also
lend a compelling basis for a voluntary affirmative action
16
program “to remedy apparent prior discrimination.” See
Wygant, 106 S Ct at 1856 (O’Connor, J., concurring).1391
The evidence in this case established that there had
long been a substantial disparity between the percentages
of minority and women owned businesses in the State and
the percentage of State contracting expenditures they re
ceived. But the evidence also established a firm basis for
believing that state contracting officials had “unfounded
negative attitudes” against minority contractors and that
prime contractors on state projects discriminated against
minorities and women in the awarding of subcontracts.
In reviewing the evidence, the Sixth Circuit concluded
that the State of Michigan was “admitting” prior discrimi
nation, and then rejected that “admission” as having little
relevance. Court of Appeals’ opinion at 590-1, n. 7 (App.
17a). The State, however, made no such admission. The
evidence of “apparent prior discrimination”1401 before the
Sixth Circuit was offered to establish the State’s firm basis
for believing that remedial action was necessary, and not
as an “admission.”
To require states to “prove” that they had in fact dis
criminated would be at odds with this Court’s and Con
gress’ emphasis on voluntary remedial efforts to eliminate
all vestiges of discrimination. Wygant, 106 S Ct at 1855
(O’Connor, J., concurring). Voluntary compliance by the
[39]
A six-member majority of the Court appears to support the prima fac ie
standard in constitutional cases. See Johnson v Transportation Agency,
Santa Clara County, 107 S Ct 1442, 1452 (1987). Five of the six Justices,
however, would apply the less stringent “manifest imbalance” standard in
Title VII challenges to voluntary affirmative action plans. Id.
[40]
Wygant, 106 S Ct at 1856 (O’Connor, J., concurring).
- 1 7 -
State is “doubly important” because of the example it sets
“and because remediation of governmental discrimination
is of unique importance.” Id.
The Michigan legislature recognized its responsibilities
to set such an example and to take remedial action. See
House Resolution No. 361, supra at 7.
B. The District Court’s Finding That There Was Suffi
cient Evidence of Prior Discrimination Is Not
Clearly Erroneous Under Wyant.
It was the responsibility of the District Court to make a
“factual determination” that the State had a sufficient ba
sis in evidence for the conclusion that remedial action was
necessary. Wygant, 106 S Ct at 1848 (Powell, J.). The Dis
trict Court found that “there was sufficient evidence be
fore the Legislature to make a finding of past intentional
discrimination.” (App. 75a). That finding of fact was not
“clearly erroneous.” (App. 34a, Lively, C.J., dissenting).
The District Court also found that the Michigan legisla
ture had relied on far more than simply evidence of “soci
etal” discrimination. District Court opinion at 185 (App.
72a). The Sixth Circuit’s finding that “at best, the evi
dence suggested that societal discrimination had afforded
the obstacle” to MBEs, ignores much of the record evi
dence. See Court of Appeals opinion at 594 (App. 26a); see
also dissenting opinion at 598 (App. 34a).
Furthermore, the District Court did not commit revers
ible error in holding that the State must demonstrate a
“significant” rather than a “compelling” governmental in
terest in remedying the effects of past discrimination. See
App. 10a, n. 5. This Court has agreed that “whatever the
formulation employed, remedying past or present racial
— 1 8 -
discrimination by a state actor is a sufficiently weighty
state interest to warrant the remedial use of a carefully
constructed affirmative action program.” Wygant, 106 S Ct
at 1853 (O’Connor, J., concurring).
The Sixth Circuit therefore erred in reversing the Dis
trict Court and in holding that it “must decide whether
the Michigan legislature . . . had a firm basis for believing
that such action was required based on prior discrimina
tion by the state itself.” (App. 16a).[41]
C. The State Was Not Required To Make Separate
Findings Of Discrimination Against Distinct Racial
And Ethnic Groups Under Wygant.
The Sixth Circuit also held that separate findings of
prior, purposeful discrimination against distinct racial and
ethnic groups are required, citing Wygant, 106 S Ct at
1852 n 13, JA Croson Co and Associated General Contrac
tors o f California. (App. 27a, n. 14).
Only three Justices in Wygant joined in the view that
separate findings for each racial or ethnic group are re
quired. Justice O’Connor did not join in that part (IV) of
the Court’s plurality opinion. See Wygant, 106 S Ct at
1844.
[41]
“(T)he empirical component of (strict) scrutiny, like any other form of
factfinding, is the basic responsibility of district courts, rather than appel
late courts.” Maine v Taylor,____ U S _____, 106 S Ct 2440, 2451 (1986).
“(A)ppellate Courts are not to decide factual questions de novo, reversing
any findings they would have made differently.” Id. Moreover, “(w)here
there are two permissible views of the evidence, the factfinder’s choice
between them cannot be clearly erroneous.” Anderson v City o f Bessemer
City, NC, 470 US 564, 574 (1985). (Emphasis added).
19
On the other hand, at least four Justices have previously
expressed the view that for race conscious relief “it is
enough that each recipient is within a general class o f per
sons likely to have been the victims of discrimination,”
Regents o f the University o f California v Bakke, 438 US
265, 363 (1978) (Brennan, J., joined by White, Marshall
and Blackmun, J.J., concurring in the judgment, dissent
ing in part). The Sixth Circuit had also adopted that posi
tion in Ohio Contractors Ass’n, 713 F2d at 174.
In Local 28 o f Sheet Metal Workers v EEOC, 106 S Ct
3019, 3054 (1986), six members of this Court agreed that,
in appropriate circumstances, preferential relief may ben
efit individuals who are not actual victims of discrimina
tion. Moreover, the court noted that the purpose of affirm
ative action is to “ dismantle p rior p a ttern s” of
discrimination and to prevent future discrimination. 106
C St at 3049.
In this case, the Michigan legislature was empowered to
act on the assumption that the “prior pattern” in state
contracting was to give preference to white male contrac
tors to the virtual exclusion of non-white males—i.e. mi
norities and women. See Fullilove, 448 US at 484-5
(Burger, C.J.) In light of the evidence, minorities and
women constituted the general classes of persons most
likely to have been discriminated against in state
contracting.
Public Act 428 was designed to overcome long-
established and continuing patterns of procurement which
favored white male contractors with whom the State had
always done business. See Small Business Task Force find
ings, supra, at 6. Those patterns appeared to be rooted in
and were a continuation of prior discrimination.
—20
II. THIS CASE PRESENTS SIMILAR ISSUES AND
ISSUES IN ADDITION TO THOSE PRESENTLY
PENDING REFORE THE COURT ON APPEAL
IN CITY OF RICHMOND V JA CROSON COM
PANY, NO. 87-998.
On February 22, 1988, this Court noted probable juris
diction in the case of City o f Richmond v JA Croson Com
pany, No. 87-998, on appeal from the Fourth Circuit. See
56 USLW 3568.
Similar to the action taken by the Sixth Circuit in this
case, the Fourth Circuit originally affirmed a district court
ruling upholding the City of Richmond’s Minority Busi
ness Utilization Plan on the basis of Fullilove. See JA Cro
son Co v City o f Richmond, 779 F2d 181 (CA 4, 1985).
This Court granted certiorari, vacated the decision and
remanded for reconsideration in light of Wygant. 106 S Ct
3327 (1986). On remand, the Fourth Circuit concluded
that the plan is unconstitutional under Wygant.
Both Croson and this case involve the substantial ques
tion of whether Wygant imposes more stringent constitu
tional standards on states and cities in remedying the ef
fects of past discrimination, than on the federal
government under Fullilove. See also Brief of National
League of Cities, US Conference of Mayors, National As
sociation of Counties, and International City Management
Association As Amici Curiae in Support of Appellant, in
the Croson appeal.
While there are significant factual differences, the two
cases also involve distinct constitutional issues which war
rant plenary review by the Court.
First, the Fourth and Sixth Circuits applied different
—21
standards in considering the evidence of prior discrimina
tion underlying the two enactments.
The Sixth Circuit held on the basis of Wygant that the
State was required to prove it had invidiously discrimi
nated against minorities and women in State contracting,
and found that the State’s evidence was not “probative” of
discrimination. The Fourth Circuit, on the other hand,
stated that the Richmond City Council should not be held
to as high a standard in its factfinding as a federal district
court, noting that “legislative findings are different from
judicial ones” and that the City Council “need not have
produced formal, contemporaneous findings, so long as it
had a firm basis for believing that remedial action is re
quired.” JA Croson, supra, 822 F2d at 1359.
The two standards clearly conflict.
Second, the remedial objectives of the two laws differ.
Public Act 428 was designed to remedy past discrimina
tion by state contracting officials and prime contractors in
state contracting. The Richmond ordinance, on the other
hand, was in response to prior discrimination by the local
construction industry, which restricted development of lo
cal minority owned business. Apparently recognizing that
city contracting could actually perpetuate the effects of
that prior discrimination, the Richmond City Council
adopted a remedial goal which would stimulate growth
and development of minority business in the local
industry.
Third, the Michigan statute also includes a separate pro
vision for women, which involves a different analysis un
der the Fourteenth Amendment. See Mississippi Univer
sity fo r Women v Hogan, 458 US 718, 724 (1982). That
issue is not addressed in Croson; however, it was ad
dressed by the Ninth Circuit in Associated General Con
— 22-
tractors o f California v City and County o f San Francisco,
813 F2d 922, 939-942 (CA 9, 1987).
In that case, the Ninth Circuit voided the minority busi
ness enterprise provision under the Fourteenth Amend
ment, but upheld the women business provision under the
intermediate standard of review. In this case, the Sixth
Circuit voided both provisions.
The Sixth Circuit notes that the Supreme Court has
never defined the “substantially related to serve an impor
tant governmental interest” standard. (App. 28a). In void
ing both provisions of Public Act 428, the Court of Ap
peals’ analyses makes no more than a semantic distinction
between a “compelling interest” for racial classifications
and an “important interest” for gender classifications. Id.
This Court’s review of the appropriate standard for gender
based remedial programs is therefore warranted.
Fourth, Croson involves a local ordinance, while this
case involves a state statute. The Ninth Circuit has held
that there are differences in the scope of authority of state
and local governments to adopt remedial, affirmative
action programs. Assoc Gen’l Contractors o f California, su
pra, 813 F2d at 930. Although questionable, assuming ar
guendo that the Ninth Circuit’s view is correct, a decision
in Croson may not be fully applicable to the State of Mich
igan or dispositive of the issues in this case, given the dif
ferent levels of government involved.
Fifth, Richmond’s ordinance focuses on discrimination
by prime contractors against minority subcontractors.
Michigan’s statute, on the other hand, seeks to remedy
discrimination both by State contracting officials as welll
as by prime contractors on state contracts.
— 23
In Croson, the Fourth Circuit holds that the City must
establish a basis for believing that it itself had discrimi
nated. 822 F2d at 1360. In the case of subcontracts, how
ever, that focus is misplaced, since the issue is discrimina
tion by prime contractors and contracting associations
against minority contractors as subcontractors, and not
discrimination by the governmental actor.
Although the State may not be the actual discriminating
party itself in refusing to award subcontracts to minority
and women owned businesses, it clearly has an affirmative
duty to prohibit and remedy such discrimination by prime
contractors on government contracts.1421
The additional constitutional issues raised in this case
warrant plenary review by the Court. Should the Court
note probable jurisdiction in this case, argument could be
combined with that in Croson pursuant to Supreme Court
Rule 37.3.
[42]
Government policy barring employment discrimination by government
contractors has been in place since the mid-1950’s. See Exec Order No
10479, 3 CFR 961 (1949-53); Exec Order No 10557, 3 CFR 203 (1954-
58); and Exec Order 11246, 3 CFR 339 (1964-65). See also Michigan’s
Public Act 251 of 1955 and Sec 209 of the Elliott-Larsen Civil Rights Act
of 1976, MCL 37.2209; MSA 3.548(209).
Both federal and state governments have also instituted administrative
enforcement programs to insure “contract compliance” with equal em
ployment opportunity. See 41 CFR Part 60 (Office of Federal Contract
Compliance). The Michigan State Administrative Board, by resolution
dated April 16, 1968, requires bidders on state contracts to demonstrate
compliance with equal employment opportunity requirements prior to be
ing awarded a contract.
- 2 4 -
CONCLUSION
For the aforementioned reasons, the Court should note
probable jurisdiction of this appeal and schedule the case
for plenary consideration.
Respectfully submitted,
FRANK J. KELLEY
Attorney General
Louis J. Caruso
Solicitor General
Counsel of Record
Rrent E. Simmons
Assistant Attorney General
525 West Ottawa Street
Lansing, Michigan 48913
(517) 373-6434
Attorneys for Appellants
APPENDIX
la
TABLE OF CONTENTS
Page
1. Michigan Road Builders Association, Inc v Milliken,
834 F2d 583 (CA 6, 1987)......................................... 2a
2. Michigan Road Builders Association, Inc v Milliken,
654 F Supp 3 (ED Mich, 1986)................................ 37a
3. United States Court of Appeals for the Sixth Cir
cuit Order Denying Petition for Rehearing, Filed
February 23, 1988 ....................................................... 44a
4. M ichigan R oad Builders A ssociation , Inc v
Milliken, 571 F Supp 173 (ED Mich 1983).......... 45a
5. United States Court of Appeals for the Sixth Cir
cuit Unpublished Order of Dismissal for Lack of
Jurisdiction, Filed August 24, 1984......................... 83a
6. Notice of Appeal Filed May 3, 1988, in the United
States Court of Appeals for the Sixth Circuit . . . . 84a
7. U. S. Const, amend XIV, § 1 .................................... 85a
8. Michigan Public Acts 1980, No. 428; MCL
450.771 et seq; MSA 3.540(51) et s e q .....................86a
2a
[583] MICHIGAN ROAD BUILDERS
ASSOCIATION, INC., et al.,
Plaintiffs-Appellants,
v.
William G. Milliken, et al.,
Defendants-Appellees.
No. 86-1239.
United States Court of Appeals,
Sixth Circuit.
Argued May 4, 1987.
Decided Nov. 25, 1987.
* * *
[584]
* * *
Before LIVELY, Chief Judge, and ENGEL and
KRUPANSKY, Circuit Judges.
KRUPANSKY, Circuit Judge.
Plaintiffs-appellants Michigan Road Builders Associa
tion, et al. (Michigan Road Builders or plaintiffs) appealed
from the district court’s order granting summary judgment
in favor of the defendants-appellees, (defendants) in this
civil rights action commenced for the purpose of challeng
ing the constitutional validity of 1980 Mich.Pub.Acts 428
(Public Act 428), Mich.Comp.Laws § 450.771, et s e q In
Hi
Plaintiffs-appellants “are (1) several non-profit associations whose members are,
in general, construction firms, contractors and suppliers, who have done, or are
doing business with the State of Michigan, and (2) various profit corporations who
have had, or seek contracts with the State of Michigan.” Michigan Road Builders
Ass’n v. Milliken, 571 F.Supp. 173, 174 (E.D. Mich.1983). Defendants-appellees are
William G. Milliken, the former Governor of Michigan, the Michigan Department of
Management and Budget, Gerald H. Miller, the former Director of the Michigan
Department of Management and Budget, the Michigan Department of Transporta
tion, and John P. Woodford, the former Director of the Michigan Department of
Transportation.
3a
particular, the Michigan Road Builders charge that Public
Act 428 which “set aside” a portion of state contracts for
minority owned businesses (MBEs) and woman owned
businesses (WBEs) impinges upon the Equal Protection
Clause of the Fourteenth Amendment to the Constitution.
Section 2 of Public Act 428, Mich.Comp.Laws § 450.772
provides that after the 1984-85 fiscal year, each state de
partment must award not less than 7% of its expenditures
for construction, goods, and services to MBEs and not less
than 5% to WBEs.* 2 Under Public Act [585] 428, a “mi
nority” is a “person who is black, hispanic, oriental, es-
kimo, or an American Indian.” Mich.Comp.Laws
[2]
Mich.Comp.Laws § 450.772 provides: Sec. 2. (1) The construction, goods, and
services procurement policy for each department shall provide for the following
percentage of expenditures to be awarded to minority owned and women owned
businesses by each department except as provided in subsection (6):
(a) for minority owned business, the goal for 1980-81 shall be 150% of the actual
expenditures for 1979-80, the goal for 1981-82 shall be 200% of the actual expendi
tures for 1980-81, the goal for 1982-83 shall be 200% of the actual expenditures for
1981-82, the goal for 1983-84 shall be 116% of the actual expenditures for 1982-83,
and this level of effort at not less than 7% of expenditures shall be maintained
thereafter.
(b) For woman owned business, the goal for 1980-81 shall be 150% of the actual
expenditures for 1979-80, the goal for 1981-82 shall be 200% of the actual expendi
tures for 1980-81, the goal for 1982-83 shall be 200% of the actual expenditures for
1981-82, the goal for 1983-84 shall be 200% of the actual expenditures for 1982-83,
the goal for 1984-85 shall be 140% of the expenditures for 1983-84, and this level
of effort at not less than 5% of expenditures shall be maintained thereafter.
(2) If the first year goals are not achieved, the governor shall recommend to the
legislature changes in programs to assist minority and woman owned businesses.
(3) Each department, to assist in meeting the construction, goods, and services
procurement expenditures percentages set forth in subsection (1), shall include
provisions for the accomodation of subcontracts and joint ventures. The provisions
shall be established by the governor and shall require a bidder to indicate the
extent of minority owned or women owned business participation.
(4) Only the portion of a prime contract that reflects minority owned or women
owned business participation shall be considered in meeting the requirements of
subsection (1).
4a
§ 450.771(e), and a “minority owned business” is “a busi
ness enterprise of which more than 50% of the voting
shares or interest in the business is owned, controlled, and
operated by individuals who are members of a minority
and with respect to which more than 50% of the net profit
or loss attributable to the business accrues to shareholders
who are members of a minority.” Mich.Comp.Laws
§ 450.771(1). A “woman owned business” is “a business of
which more than 50% of the voting shares or interest in
the business is owned, controlled, and operated by women
and with respect to which more than 50 % of the net profit
or loss attributable to the business accrues to the women
shareholders.” Mich.Comp.Laws § 450.7710).
The Michigan Road Builders commenced the present
action on July 8, 1981 in the United States District Court
for the Eastern District of Michigan seeking declaratory
and injunctive relief against the enforcement of the set-
aside provisions of Public Act 428. In particular, the plain
tiffs charged that the set-aside provisions of Public Act
428 violated the Equal Protection Clause of the Four
teenth Amendment, as well as 42 U.S.C. §§ 1981, 1983
(5) Minority owned or woman owned businesses shall comply with the same
requirements expected of other bidders including,, but not limited to, being ade
quately bonded.
(6) If the bidders for any contract do not include a qualified minority owned and
operated or woman owned and operated business, the contract shall be awarded to
the lowest bidder otherwise qualified to perform the contract.
5a
and 2000d,3 by according racial and ethnic minorities and
women a preference in competing for state expenditures.
After dis- [586] covery had been completed, the parties
filed cross motions for summary judgment, and on August 12,
1983, the district court determined that Public Act 428
[3]
42 U.S.C. § 1981 provides:
All persons within the jurisdiction of the United States shall have the same
right in every State and Territory to make and enforce contracts, to sue, be
parties, give evidence, and to the full and equal benefit of all laws and proceed
ings for the security of persons and property as is enjoyed by white citizens,
and shall be subject to like punishment, pains, penalties, taxes, licenses, and
exactions of every kind, and to no other.
42 U.S.C. § 1983 provides:
Every person who, under color of any statute, ordinance, regulation, custom,
or usage, of any State or Territory or the District of Columbia, subjects, or
causes to be subjected, any citizen of the United States or other person within
the jurisdiction thereof to the deprivation of any rights, privileges, or immuni
ties secured by the Constitution and laws, shall be liable to the party injured in
an action at law, suit in equity, or other proper proceeding for redress. For the
purposes of this section, any Act of Congress applicable exclusively to the
District of Columbia shall be considered to be a statute of the District of
Columbia.
42 U.S.C. § 2000d provides:
No person in the United States shall, on the ground of race, color, or national
origin, be excluded from participation in, be denied the benefits of, or be
subjected to discrimination under any program or activity receiving Federal
financial assistance.
Because the protections afforded by these sections are coextensive with the protec
tions afforded by the Equal Protection Clause of the Fourteenth Amendment, Re
gents ofUniv. o f Calif, v. Bakke, 438 U.S. 265, 287, 333, 98 S.Ct. 2733, 2746, 2770,
57 L.Ed.2d 750 (1978), (§ 1983 and 2000d); Detroit Police Officers’ Ass’n v. Young,
608 F.2d 671, 691-92 (6th Cir.1979) (§ 1981), cert, denied, 452 U.S. 938, 101 S.Ct.
3079, 69 L.Ed.2d 951 (1981), this court need only analyze Public Act 428 under
Fourteenth Amendment equal protection standards. See Associated Gen. Contrac
tors o f Cal. v. City 6- County o f San Francisco, 813 F.2d 922, 928 n. 11 (9th
Cir.1987). Plaintiffs also alleged in their complaint that Public Act 428 violated Title
VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. See Johnson v. Trans
portation Agency,______ U.S. :_______, 107 S.Ct. 1442, 1446 n. 2, 94 L.Ed.2d 615
(1987) (suggesting that Title VII analysis differs from constitutional equal protection
analysis). They have abandoned this argument on appeal.
6a
did not violate the Equal Protection Clause of the
Fourteenth Amendment and granted defendants’ motion
for summary judgment. Michigan Road Builders Ass’n v.
Milliken, 571 F.Supp. 173 (E.D.Mich.1983). Michigan
Road Builders appealed, and this court dismissed the ap
peal because the district court had not decided all of the
claims against the Michigan Department of Transporta
tion. Michigan Road Builders Ass’n v. Milliken, 742 F.2d
1456 (6th Cir.1984). Thereafter, the district court entered
an order disposing of the remaining charges against the
Department of Transportation, Michigan Road Builders
Ass’n v. Milliken, 654 F.Supp. 3 (E.D.Mich.1986), and the
Michigan Road Builders commenced this timely appeal.
On appeal, the plaintiffs argued that the district court ap
plied the incorrect legal standard to determine the consti
tutional validity of Public Act 428.
In addressing equal protection claims, the Supreme
Court has employed differing levels of judicial review de
pending upon the type of imposed classification under
constitutional attack.4 “Racial and ethnic distinctions of
[41
In considering equal protection claims, courts must first determine whether the
governmental body imposing the classification at issue had authority to act to ac
complish its purpose. Fullilove v. Klutznik, 448 U.S. 448, 473, 100 S.Ct. 2758, 2772,
65 L,Ed.2d 902 (1980) (plurality opinion); Associated Gen. Contractors o f C a l, 813
F.2d at 928. In the case at bar, the state asserted, and the plaintiffs did not dispute,
that Public Act 428 was designed to ameliorate the effects of past discrimination
against minorities and women competing for contracts to supply the state with
goods and services. It is beyond contention that a state legislature has the preroga
tive and even the “constitutional duty to take affirmative steps to eliminate the
continuing effects of past unconstitutional discrimination.” Wygant v. Jackson Bd, o f
Educ., 476 U.S. 267, 106 S.Ct. 1842, 1856, 90 L.Ed.2d 260 (1986) (O'Connor, J„
concurring) (emphasis in original); Ohio Contractors Ass’n v. Keip, 713 F.2d 167,
172-73 (6th Cir.1983); Associated Gen. Contractors o f Cal. 813 F.2d at 929. Accord
ingly, it is not disputed that the Michigan legislature had jurisdiction to act for the
purpose of ameliorating the effects of past discrimination.
7a
any sort are inherently suspect and thus call for the most
exacting judicial examination,” Regents o f Univ. o f Cal. v.
Bakke, 438 U.S. 265, 291, 98 S.Ct. 2733, 2748, 57 L.Ed.2d
750 (1978) (plurality opinion) (concluding that state medi
cal school’s admission program which reserved a specified
number of student positions for racial and ethnic minority
applicants violated the Equal Protection Clause). This
“most exacting judicial examination” has been labeled by
the Supreme Court as “strict scrutiny.” Id. at 287, 98
S.Ct. at 2747 (plurality opinion).
When a classification denies an individual opportuni
ties or benefits enjoyed by others solely because of
his race or ethnic background, it must be regarded as
suspect.
* * *
We have held that in “order to justify the use of a
suspect classification, a State must show that its pur
pose or interest is both constitutionally permissible
and substantial, and that its use of the classification is
‘necessary . . . to the accomplishment’ of its purpose
or the safeguarding of its interest.”
* * *
Preferring members of any one group for no reason
other than race or ethnic origin is discrimination for
its own sake. This the Constitution forbids.
Id. at 305-07, 98 S.Ct. at 2756-57 (plurality opinion) (cita
tions omitted).
In Fullilove v. Klutznick, 448 U.S. 448, 100 S.Ct. 2758,
65 L.Ed.2d 902 (1980), the Supreme Court probed a con-
gressionally enacted affirmative action plan embodied in
the Public Works Employment Act of 1977, 42 U.S.C.
8a
§ 6701 et seq. The constitutional attack in that case was
lodged against the “Minority Business Enterprise” set
aside provision of the act, § 103(f)(2), 42 U.S.C.
§ 6705(f)(2), which required local governmental units re
ceiving funds under public works programs to use 10% of
the funds to procure services or supplies from MBEs. The
court determined that “Congress had abundant evidence
from which it could conclude that minority businesses
have been denied effective participation in public con-
[587] tracting opportunities by procurement practices that
perpetuated the effects of prior discrimination.” id. at
477-78, 100 S.Ct. at 2774, and that the set aside provision
therein at issue was “narrowly tailored to the achievement
of [the] goal” of ameliorating the effects of that past dis
crimination. Id. at 480, 100 S.Ct. at 2776. Justice Powell,
author of the Bakke opinion, concurred in the Court’s
opinion and filed an opinion in which he stated:
Section 103(f)(2) [of the Public Works Employment
Act of 1977] employs a racial classification that is con
stitutionally prohibited unless it is a necessary means
of advancing a compelling governmental interest.
* * *
The Equal Protection Clause, and the equal pro
tection component of the Due Process Clause of the
Fifth Amendment, demand that any governmental
distinction among groups must be justifiable. Differ
ent standards of review applied to different sorts of
classifications simply illustrate the principle that
some classifications are less likely to be legitimate
than others. Racial classifications must be assessed
under the most stringent level of review because im
mutable characteristics, which bear no relation to in
dividual merit or need, are irrelevant to almost every
governmental decision.
9a
448 U.S. at 496, 100 S.Ct. at 2783-84 (Powell, J. concur
ring).
Subsequent to the Bakke and Fullilove decisions, this
circuit considered constitutional attacks on state and local
government mandated affirmative action plans. In assess
ing the constitutional validity of the affirmative action
plans at issue in the post-Bakke and Fullilove cases, this
circuit redefined the term “strict scrutiny” as it applied in
affirmative action cases:
[T]he first stage in our approach to affirmative action
programs entails an analysis of the need for such re
medial measures—i.e., with the presence of a govern
mental interest in their implementation. It is uncon
tested that the government has a significant interest
in ameliorating the disabling effects of identified
discrimination.
* * *
Once the governmental interest in some remedial
action is thus established, we must proceed to deter
mine whether the remedial measures employed are
reasonable.
Bratton v. City o f Detroit, 704 F.2d 878, 886-87 (6th
Cir.1983) (footnote omitted), cert, denied, 464 U.S. 1040,
104 S.Ct. 703, 79 L.Ed.2d 168 (1984). See also Detroit
Police Officers’ Ass’n v. Young, 608 F.2d 671 (6th Cir.1979)
(determining that no “direct showing of past intentional
discrimination” by the governmental unit imposing the af
firmative action plan was necessary and that the plan need
only be a “reasonable” means of serving the governmental
interest of eradicating the effects of past discrimination),
cert, denied, 452 U.S. 938, 101 S.Ct. 3079, 69 L.Ed.2d
951 (1981); Ohio Contractors Ass’n v. Keip, 713 F.2d 167
10a
(6th Cir.1983) (where compelling interest of state in ame
liorating the past effects of its prior discrimination was
clear, the affirmative action plan adopted need only be
“reasonably calculated” to serve that interest). In these
decisions, this court essentially relaxed the strict scrutiny
standard enunciated by the Supreme Court in Bakke and
Fullilove. Thus, this circuit essentially required that affirm
ative action plans be a “reasonable” means of furthering a
“significant” governmental interest rather than a “nar
rowly tailored” or “necessary” means of furthering a
“compelling” governmental interest.5
In Wygant v. Jackson Bd. o f Educ., 746 F.2d 1152 (6th
Cir.1984), this circuit again [588] applied its relaxed stand
ard of review to uphold an affirmative action layoff plan
embodied in a collective bargaining agreement between a
public board of education and a teachers’ union. In re
versing the decision, the Supreme Court rejected the re
laxed level of judicial scrutiny imposed by this circuit in
Wygant:
This Court has “consistently repudiated ‘[distinc
tions between citizens solely because of their ances
try’ as being ‘odious to a free people whose institu
tions are founded upon the doctrine of
equality.’ ” . . . . “Racial and ethnic distinctions of any
sort are inherently suspect and thus call for the most
exacting judicial examination.”
[5]
While the distinction between the terms “significant" and "compelling” may be
negligible, see Wygant v. Jackson Bd. o f Educ., 476 U.S. 267, 106 S.Ct. 1842, 1853,
90 L.Ed.2d 260 (1986) (O’Connor, J., concurring) (discussing distinction between
terms “compelling” and “important”), as discussed below, it is clear that the dis
trict court in the case at bar considered the terms as having different meanings
when it expressly refused to require defendants to demonstrate a “compelling”
interest, but instead required them to demonstrate a “significant interest.” 571
F.Supp. at 176-77.
11a
The Court has recognized that the level of scrutiny
does not change merely because that challenged
classification operates against a group that historically
has not been subject to governmental discrimination.
In this case, [the collective bargaining agreement] op
erates against whites and in favor of certain minori
ties, and therefore constitutes a classification based
on race. “Any preference based on racial or ethnic
criteria must necessarily receive a most searching ex
amination to make sure that it does not conflict with
constitutional guarantees.” There are two prongs to
this examination. First, any racial classification “must
be justified by a compelling governmental interest.”
Second, the means chosen by the State to effectuate
its purpose must be “narrowly tailored to the
achievement of that goal.” We must decide whether
the layoff provision is supported by a compelling state
purpose and whether the means chosen to accom
plish that purpose are narrowly tailored.
Wygant v. Jackson Bel. o f Educ., 476 U.S. 267, 106 S.Ct.
1842, 1846-47, 90 L.Ed.2d 260 (1986) (plurality opinion)
(citations omitted). Subsequent to rejecting the “compel
ling” nature of the governmental interests advanced by
the board of education in support of the constitutional
validity of the layoff plan, which interests had been found
to be “sufficiently important” by this circuit, 106 S.Ct at
1847-49, the Court continued:
The Court of Appeals examined the means chosen
to accomplish the Board’s race-conscious purposes
under a test of “reasonableness.” That standard has
no support in the decisions of this Court. As demon
strated . . . above, our decisions always have em
ployed a more stringent standard—however
articulated—to test the validity of the means chosen
12a
by a state to accomplish its race-conscious purposes.6
Under strict scrutiny the means chosen to accomplish
the State’s asserted purpose must be specifically and
narrowly framed to accomplish that purpose. “Racial
classifications are simply too pernicious to permit any
but the most exact connection between justification
and classification.”
[R]
The term “narrowly tailored,” so frequently used in our cases, has acquired
a secondary meaning. More specifically, . . . the term may be used to require
consideration whether lawful alternative and less restrictive means could
have been used. Or . . . the classification at issue must “fit” with greater
precision than any alternative means. “[Courts] should give particularly in
tense scrutiny to whether a nonracial approach or a more narrowly tailored
racial classification could promote the substantial interest about as well and
at tolerable administrative expense.”
106 S.Ct. at 1849-50 (citations and footnote omitted). The
Supreme Court left no doubt that the standard of judicial
review previously employed by this circuit in racial and
ethnic affirmative action cases was inappropriate.
In the case at bar, the district court, having issued its
opinion nearly three years before the Supreme Court re
versed this circuit in Wygant, erroneously decided the
constitutional validity of Public Act 428 under this cir
cuit’s relaxed level of scrutiny:
“A different analysis must be made when the
claimants are not members of a class historically sub
jected to discrimination.”
* * *
Having determined that the law of this Circuit re
quires that the State must demonstrate a significant
interest in ameliorating the past effects o f present dis
crimination rather than the “compel- [589] ing inter
est” standard . . this Court must examine the record
13a
to assess the nature of the interest of the State in
enacting [Public Act] 428.
* * *
Having determined that the State has established
its interest in ameliorating the present effects of past
discrimination, this Court must now determine
whether [Public Act] 428 is a reasonable means o f
achieving that end.
571 F.Supp. at 176-77, 187 (quoting Bratton, 704 F.2d at
887). The district court’s analysis represented an errone
ous application of strict scrutiny as that term has been
defined and employed by the Supreme Court. In Wygant,
the Supreme Court expressly disapproved of the reasoning
employed by the district court in this case. Although the
district court had properly analyzed the constitutional va
lidity of Public Act 428 under the law of this circuit as
enunciated in Bratton, Detroit Police Officers’ Ass’n, and
Ohio Contractors Ass’n when it issued its opinion in this
case on August 12, 1983, “an appellate court must apply
the law in effect at the time it renders its decision.” Thorpe
v. Housing Auth. o f City o f Durham, 393 U.S. 268, 281, 89
S.Ct. 518, 526, 21 L.Ed.2d 474 (1969) (footnote omitted).
See also Gulf Offshore Co. v. Mobile Oil Corp, 453 U.S.
473, 486 n. 16, 101 S.Ct. 2870, 2879 n. 16, 69 L.Ed.2d
784 (1981). Accordingly, in light of the Supreme Court’s
mandate in Wygant, this court must abrogate the legal
conclusions of the district court in the case at bar.
As indicated by the Supreme Court precedent al
ready discussed, a more appropriate constitutional review
of racial or ethnic classifications adopted by governmental
bodies should be subjected to a two stage evaluation.
First, a court must determine whether a “compelling”
state interest supports the use of the racial or ethnic classi
14a
fication. If the court concludes that a compelling interest
exists, it must then determine whether the challenged
state action employing a racial or ethnic classification is
“narrowly tailored” or “necessary” to further that interest.
A state “unquestionably has a compelling interest in
remedying past and present discrimination by a state
actor.” United States v. Paradise, ____ U.S. ____ , 107
S.Ct. 1053, 1065, 94 L.Ed.2d 203 (1987) (citations omit
ted) (plurality opinion). Before a state may permissibly
employ a racial or ethnic classification, however, it must
make a finding based upon material factual evidence, that
it has in the past discriminated against those classes it now
favors. If the state had not engaged in discrimination
against racial and ethnic minorities in awarding contracts
to supply the state with goods and services in the past,
then it cannot assert in praesenti that it has a compelling
interest in preferring MBEs in the award of such
contracts.
[The Supreme Court] never has held that societal dis
crimination alone is sufficient to justify a racial classi
fication. Bather, the Court has insisted upon some
showing of prior discrimination hy the governmental
unit involved before allowing limited use of racial
classifications in order to remedy such discrimination.
* * * [Pjrior discrimination [is] the justification for,
and the limitation on, a State’s adoption of race-based
remedies.
* * *
Societal discrimination, without more, is too amor
phous a basis for imposing a racially classified rem
edy. * * * No one doubts that there has been serious
racial discrimination in this country. But as the legal
basis for imposing discriminatory legal remedies that
15a
work against innocent people, societal discrimination
is insufficient and over expansive. In the absence of
particularized findings, a court could uphold reme
dies that are ageless in their reach into the past, and
timeless in their ability to affect the future.
* * *
[A State] must act in accordance with a “core purpose
of the Fourteenth Amendment” which is to “do away
with all governmentally imposed distinctions based
on race.” * * * In particular, [a state] must ensure
that, before it embarks on an affirmative action pro
gram, [590] it has convincing evidence that remedial
action is warranted. That is, it must have sufficient
evidence to justify the conclusion that there has been
prior discrimination.
Wygant, 106 S.Ct. at 1847-48 (citations omitted) (some
emphasis added). See also Bakke, 438 U.S. at 307, 98 S.Ct.
at 2757 (“We have never approved a classification that
aids persons perceived as members of relatively victimized
groups at the expense of other innocent individuals in the
absence o f judicial, legislative, or administrative findings o f
constitutional or statutory violations. After such findings
have been made, the governmental interest in preferring
members of the injured groups at the expense of others is
substantial, since the legal rights of the victims must be
vindicated.”) (citations omitted) (emphasis added); J.
Edinger i? Son, Inc. v. City o f Louisville, 802 F.2d 213, 216
(6th Cir.1986) (“[T]he city should be required to present
evidence of invidious discrimination.”); South Fla. Chapter
o f Associated Gen. Contractors o f Am. v. Metropolitan
Dade County, 723 F.2d 846, 851-52 (11th Cir.) (“[Ade
quate findings [must] have been made to ensure that the
governmental body is remedying the present effects of past
discrimination rather than advancing one racial or ethnic
16a
group’s interests over another. . . .”) (emphasis in original),
cert, denied, 469 U.S. 871, 105 S.Ct. 220, 83 L.Ed.2d 150
(1984); Associated Gen. Contractors o f Cal., 813 F.2d at
930 (“[S]tate and local governments [can] act only to cor
rect their own past wrongdoing. . . .”). More recently, the
Fourth Circuit has stated:
[B]efore an asserted governmental interest in a racial
preference can be accepted as “compelling,” there
must be findings of prior discrimination. Findings of
societal discrimination will not suffice; the findings
must concern “prior discrimination by the govern
ment unit involved.”
sfr: Jjc
For a locality to show that it enacted a racial prefer
ence as a remedial measure, it must have had a firm
basis for believing that such action was required
based on prior discrimination by the locality itself.
* * *
Wygant. . . limit[s] racial preferences to what is nec
essary to redress a practice of past wrongdoing.
J.A. Croson Co. v. City o f Richmond, 822 F.2d 1355, 1358,
1360, 1362 (4th Cir.1987) (citations omitted) (emphasis in
original). Accordingly, in the instant case, this court must
determine whether the State of Michigan possessed a
compelling interest in purging the present effects of al
leged past discrimination by virtue of its past inequitable
treatment of MBEs. To accomplish this result, this court
must decide whether the Michigan legislature, based upon
the evidentiary factual record before it, “had a firm basis
for believing that such action was required based on prior
17a
discrimination” by the state itself. J.A. Croson Co., 822
F.2d at 1360.6
An examination of the evidence assertedly relied upon
by the defendants in this action as support for their con
tention that the Michigan legislature had a firm basis for
concluding that the state had engaged in discrimination in
awarding contracts for goods and services clearly indicates
that Michigan had not developed material evidence to
support a conclusion that it had a compelling interest in
adopting the racial and ethnic distinctions at issue in the
case at bar. The defendants have relied upon certain con-
elusory historical resumes of unrelated legislative enact
ments and proposed enactments, executive reports, and a
state funded private study conducted in 1974. This docu
mentation is not reflective of discriminatory action by the
State of Michigan.7
[591] The defendants have directed this court’s atten
tion to “executive memoranda”8 concerning proposed leg
[6]
Because the factual record in this case is complete and this court’s only function
is to determine whether the evidence presented to the district court satisfied a legal
standard, remand is unnecessary. Bose Corp. v. Consumers Union o f U.S. Inc., 466
U.S. 485, 501, 104 S.Ct. 1949, 1960, 80 L.Ed.2d 502 (1984).
[7]
The defendants in this action have, as a defense, “admitted” that the State of
Michigan had engaged in impermissible discrimination in the award of state con
tracts. See generally Appellee’s B rief pp. 29-32. This “admission” is of little rele
vance and does not relieve this court of its duty to determine whether remedial
legislation in the form of racial and ethnic classifications is, in fact, supported by a
compelling interest in alleviating the present effects of past state discrimination.
Wygant, 106 S.Ct. at 1849 n. 5 (“Nor can the [state] unilaterally insulate itself from
this key constitutional question by conceding that it has discriminated in the past,
now that it is in its interest to make such a concession”)
[«]
The “executive memoranda” which analyzed pending legislation were prepared
for the Governor by each of the state’s various executive departments.
18a
islation considered by the Michigan legislature during
1971 and subsequent years. The first of these memoranda
concern House Bill (H.B.) 4394 (1971) which would have
relaxed bonding requirements for state construction con
tracts. The memoranda conjectured a belief that the
state’s stringent bonding requirements prohibited most
small businesses from effectively competing for such con
tracts. The proposed statute would have assertedlv served
the dual purpose of fostering the growth of small busi
nesses in general and benefiting the state by increasing
competition for state construction contracts. Fostering
the growth of MBEs in particular was not a concern or
purpose expressed in the legislative history of H.B. 4394.
Senate Bill (S.B.) 885 (1975) would have set aside a per
centage of state goods and services procurement contracts
for small businesses. The asserted purpose of this pro
posed legislation was to foster the growth of small busi
nesses in light of Michigan’s “sluggish economy.” Again,
fostering the growth of MBEs was not a consideration for
this proposed legislation.
S.B. 1461 (1976) and S.B. 10 (1977)9 would have also set
aside an allotment of state contracts for small businesses.
The executive memoranda commenting upon these enact
ments suggested that increasing the number of contracts
awarded to small businesses would also increase the num
ber of MBEs, which were predominantly small businesses,
doing business with the state. In addition, S.B. 1461 in
cluded a provision which would have set aside contracts
for “socially or economically disadvantaged persons.” In
testimony given before the Michigan Senate State Affairs
Committee in support of S.B. 1461, Norton L. Berman,
[9]
S.B. 1461 and S.B. 10 were essentially identical and were introduced in succes
sive sessions of the Michigan legislature. Neither proposal was enacted into law.
19a
Director of the Office of Economic Expansion within the
Department of Commerce, indicated that underrepresen
tation of MBEs in state contracting resulted from factors
other than discrimination by the State of Michigan:
Small and minority businesses traditionally have
experienced problems in management, financing, and
market development. These problems oftentimes
result from the inability of small businessmen to gen
erate sufficient capital to meet their operational
needs.
* * *
Through a series of public hearings and question
naires sent to small and minority businesses, business
persons expressed their concerns in several areas,
some of which were: complexity of procurement pro
cedures, information distributed of state agencies was
inadequate, contracts were too large, there was no
requirement on the part of large contractors to solicit
bids from small and minority subcontractors, exces
sive delay in paying vendors, excessive pre-award
costs and bonding requirements which small and mi
nority businessmen could not meet.
* * *
[P]ast business patterns have resulted in under repre
sentation of minorities in the business community.
Therefore, I feel the state is remiss if we do not do
what we can to assure that minority business obtain
an equitable share of state purchasing.
I am aware there are those who view this legisla
tion as preferential treatment and the distortion of
the competitive spirit of purchasing. I agree that this
might be considered so, but unorthodox methods are
needed to create opportunities [592] for a major seg
ment of our society that can contribute more to eco
20a
nomic stability. With regards to competition, what
we have now in many industries is competition
among the small operators and domination by a few
large firms. Large businesses often can sell at a con
siderable lower price because of high volume of sales,
more efficient distribution systems and more adver
tising and promotion. Small business cannot equita
bly compete because of these disadvantages of size.
As reflected in Berman’s testimony, the relative lack of
MBEs doing business with the state was coupled with the
objective reality that most MBEs were small businesses.
Small businesses, as a result o f their size, were unable to
effectively compete for state contracts. Consequently,
most MBEs, as a result o f their size, were unable to effec
tively compete for state contracts.
The legislative history of Public Act 428 itself offered no
support for the contention that the State of Michigan in
tentionally discriminated against MBEs. A House Legisla
tive Analysis of the bill attributed the scarcity ol MBE
contracts with the state to the lack of minorities within the
business community as a result o f societal discrimination:
Statistical descriptions of the extent of participation
in state programs by businesses controlled by women
and minorities are varied and sometimes contradic
tory depending on the definitions used and the sam
ples of state spending examined. These descriptions,
however, all reveal that such businesses receive a dis
proportionately small share of state spending for con
struction and goods and services in relation to their
proportion of the state’s population. That minorities
and women have been systematically denied equal
opportunity in this country is sad historical fact now
generally accepted and widely recognized in legisla
21a
tion of the past two decades. In the interests of jus
tice as well as the social and economic health of the
state, the legislature should do all that it can to en
sure that businesses owned by minorities and women
obtain their fair share of the state’s business.
* * *
The federal government and other state governments
are already proceeding in this direction as a remedy
to the under representation of minority and other
segments of business in the business community. The
legal issues are difficult and outcomes of various liti
gations impossible to predict. In the meantime Mich
igan should continue to be a participant in the enact
ment of progressive legislation, which would in any
case enhance the growth of these underrepresented
sectors of the business community, at least until the
question of constitutionality is resolved.
Evidence of societal discrimination, however, is an insuffi
cient basis for the employment of racial and ethnic dis
tinctions by state of local governments. Wygant, 106 S.Ct.
at 1848; J. Edinger ir Son, Inc., 802 F.2d at 216-17.
The evidence consisting of executive action designed to
increase small business and MBE participation was also
insufficient to support a conclusion that the state had dis
criminated against MBEs. In 1975, the Governor issued
Executive Directive 1975-4 creating a task force to study
small business participation in state purchasing. After
conducting two public hearings wherein witnesses testi
fied that small and minority businesses’ size and lack of
expertise prohibited them from effectively competing for
state purchasing contracts, the task force issued its report
recommending the adoption of policies and procedures to
aid small and minority businesses in the state procure
ment process.
22a
In response to the task force’s report, the Governor is
sued Executive Directive 1976-4 wherein he established
the Small and Minority Business Procurement Council
(Council) to oversee the declared “policy of tye [sic] exec
utive branch agencies of the State of Michigan . . . to aid,
counsel, assist and protect the interests of small and mi
nority business concerns in order to preserve free compet
itive enterprise and to [593] insure that a fair portion ol
the procurement of state agencies and agencies of the
state be placed with small and minority business enter
prises.” In 1977, the Council issued its first annual report
in which it noted that the objectives establishing small and
minority business participation in state purchasing had
been achieved.
In 1975, the Governor also issued Executive Directive
1975-6 wherein he commanded the Michigan Department
of Civil Rights (MDCR) to assist the other state depart
ments in developing and implementing standards and pro
cedures to assure nondiscrimination in awarding state
contracts. In 1978, the MDCR issued a report in which it
expressed concern over limited compliance with Execu
tive Directive 1975-6 because of the lack of adequate staff
in some agencies and the inexperience of personnel in
dealing with civil rights matters. The MDCR did not sug
gest that limited compliance with Executive Directive
1975-6 was the result of intentional discrimination.
The evidence most heavily relied upon by the defend
ants in this action was the report of a 1974 state-
commissioned study by Urban Markets Unlimited, Inc.
(Urban Markets). The report, entitled “A Public Procure
ment Inventory on Minority Vendors,” was prefaced with
the rather dubious statement: “Minority-owned business
enterprises are often described as being synonymous with
23a
small business.”10 The report noted that there were 8,112
minority businesses in Michigan, but that in a small sam
pling of purchase contracts, only four did business with
the state.11 The contracts sampled, however, represented
only approximately $21 million of state’s annual expendi
tures of over $437 million. The sampling was necessarily
small and of little value because, as the report noted, the
state did not maintain data on minority procurement by
state agencies.12
Because the statistical evidence was not probative of
discrimination, Urban Markets also circulated question
naires to and conducted interviews of state officials re
sponsible for purchasing goods and services for various
state agencies and departments. Responses to Urban Mar
kets’ inquiries disclosed that most state agencies did not
actively seek new sources of supplies, but instead relied
[10]
The report offers no evidence for this proposition. While it may well be true that
most MBEs are small businesses, the notion that the terms are synonymous is not
persuasive. There are, no doubt, a substantial number of non-minority small busi
nesses, which, because of their size, also experience problems in effectively compet
ing for state contracts. This questionable proposition, upon which much of the
report’s analysis is based, seriously undermines the validity of the conclusions
reached by Urban Markets.
[11]
As an indication that most MBEs were small businesses, Urban Markets reported
that only 2,577 of Michigan’s 8,112 MBEs had paid employees and all 8,112 busi
nesses employed a total of only 10,958 persons.
[12]
Only 4 of 26 state agencies maintained data on purchases from MBEs. Indeed,
one of the report’s recommendations was that the state “establish a means of col
lecting data on the quantity, types, and dollar amounts of purchases which the State
expends with minority vendors.” The fact that the state admittedly kept no data on
MBE participation in state contracts seriously undermined the defendants’ attempt
to rely on the “statistical evidence” incorporated into the Urban Markets report as
an indication of past state discrimination.
24a
primarily upon “already established purchasing contracts”
when filling new orders for goods and services. In partic
ular, the study indicated that only three state agencies
were using minority business directories to “actively seek-
out” minority suppliers, and that some purchasing officials
expressed unfavorable impressions of the quality and relia
bility of performance afforded by small and minority busi
nesses. Significantly, Urban Markets did not conclude that
state purchasing policies were discriminatory, but rather
“[m]ost agencies indicated that awards [were] based upon
the lowest satisfactory bid.”
Most damaging to the defendants’ contention that Mich
igan legislature was motivated by a compelling interest to
eradicate the effects of past state discrimination when it
enacted Public Act 428 were defendants’ responses to
plaintiffs’ interrogatories in this action. Plaintiffs re
quested the defendants to identify the findings of [594]
past discrimination against each of the minority groups
favored in Public Act 428, and defendants responded to
each interrogatory as follows:
(1) Upon information and belief, the Michigan Legis
lature found that
(a) there had been a history of significant political,
economic, and cultural discrimination based upon
race, ethnic origin, and sex in the United States, in
cluding Michigan; and
(b) among the racial and ethnic minorities who
have been the victims of such discrimination are Es
kimos, Hispanics, Orientals, Indians (Native Ameri
cans), Blacks; and
(c) Females have been the victims of discrimination
based upon sex; and
25a
(d) as a result of the discrimination described in
1(a) above, racial and ethnic minorities and females
have been subjected to economic disadvantages; and
(e) among the consequences of the discrimination
described in 1(a) and (d) above, has been an inability
to compete on an equal competitive level for access
to contracting opportunities with government, in
cluding but not limited to such opportunities with the
State of Michigan; and
(f) as a result of competitive limitations imposed on
racial and ethnic minorities and females because of
the discrimination aforesaid, other persons not in
those categories enjoy an artificial and unfair advan
tage in the competitive process; and
(g) the advantages resulting to persons not subject
to discrimination based upon racial or ethnic consid
erations or those of gender reduce competition for
state contracts and thereby result in greater costs to
the taxpayers for goods and services needed by the
State of Michigan; and
(h) establishment of goals and timetables effecting
state procurement policies was the most effective fea
sible means available to remedy the present effects of
the discriminatory history and conditions described
in (l)a, (d), and (e) above; and
(i) increases in the number of businesses qualified
to compete for state contracts will result in a cost
benefit to the taxpayers.
In addition, the plaintiffs directed the defendants to iden
tify documents supporting the legislature’s conclusion that
26a
the state had discriminated against minorities and women
in the award of state contracts. In their answer, the de
fendants, other than referring to the evidence discussed
above, again relied upon societal discrimination, referring
generally to “the history of the western world for the past
2000 years.” Furthermore, the state again acknowledged
that it did not maintain records concerning the number of
MBEs which bid on state contracts and the number which
were awarded state contracts.
After reviewing the record in its entirety as developed
before the district court, this court concludes that the
Michigan legislature had little, if any, probative evidence
before it that would warrant a finding that the State of
Michigan had discriminated against MBEs in awarding
state contracts for the purchase of goods and services. At
best, the evidence suggested that societal discrimination
had afforded the obstacle to the development of MBEs in
their business relationship with the State of Michigan.
Consequently, relatively few MBEs exist,13 and those that
do are generally small in size and have difficulty in com
peting for state contracts as a result o f their size. The
evidence does not prove that the State of Michigan invidi
ously discriminated against racial and ethnic minorities in
awarding state contracts. Accordingly, this court con
cludes that the state has not supported its conclusion that
it had a compelling interest in establishing the racial and
ethnic classifications contained in Public Act 428, and
[13]
Berman testified in support of S.B. 1461 that minorities comprise 13.73% of the
general population of Michigan, but MBEs comprised only 5.85% of the businesses
within the state.
27a
those classifications are, therefore, constitutionally in
valid.14
[595] With regard to the preference accorded WBEs
by Public Act 428, the Supreme Court has employed a
less stringent standard of review or level of scrutiny for
gender based classifications:
Our decisions also establish that the party seeking to
uphold a statute that classifies individuals on the basis
of their gender must carry the burden of showing an
“exeedingly persuasive justification” for the classifi
cation. Kirchberg v. Feenstra, 450 U.S. 455, 461, 101
S.Ct. 1195, 1199, 67 L.Ed.2d 428 (1981); Personnel
Administrator o f Mass. v. Feeney, 442 U.S. 256, 273,
99 S.Ct. 2282, 2293, 60 L.Ed.2d 870 (1979). The
burden is met only by showing at least that the classi
fication serves “important governmental objectives
and that the discriminatory means employed” are
“substantially related to the achievement of those ob
jectives.” Wengler v. Druggists Mutual Ins. Co., 446
U.S. 142, 150 100 S.Ct. 1540, 1545, 64 L.Ed.2d 107
(1980).
Mississippi Univ. fo r Women v. Flogan 458 U.S. 718, 724,
102 S.Ct. 3331, 3336, 73 L.Ed.2d 1090 (1982) (footnote
[M ]
There is no proof to support preference for the groups listed in Public Act 428,
i.e., persons who are “black, hispanic, oriental, eskimo, or an American Indian.”
Mich.Comp.Law § 450.771(e). In the answers to plaintiffs’ interrogatories, defend
ants admitted that they were “unaware” of how many MBEs in each of the above
minority groups bid for and were awarded state contracts. A finding of “prior,
purposeful discrimination against members of each of these [favored] minority
groups” is required before state and local governments are permitted to remedy
alleged discrimination by the enactment of laws embodying racial and ethnic dis
tinctions. Wygant, 106 S.Ct. at 1852 n. 13. See also J.A. Croson Co., 822 F.2d at
1361; Associated Gen. Contractors o f Cal., 813 F.2d at 934.
28a
omitted). Although the Supreme Court has never ex
pressly defined these terms, “substantially related to serve
an important governmental interest” is regarded as a less
stringent judicial standard of review than “narrowly tai
lored to serve a compelling governmental interest.” Asso
ciated Gen. Contractors o f Cal., 813 F.2d at 939 (describ
ing level of scrutiny for gender based classifications as
“mid-level review”).
Even under the less stringent standard of review, the
WBE preferences in Public Act 428 cannot withstand
constitutional attack since evidence of record that the
state discriminated against women is non-existent. De
fendants’ reliance upon general assertions of societal dis
crimination are insufficient to satisfy their burden absent
some indication that the “members of the gender bene
fited by the classification actually suffer[ed] a disadvantage
related to the classification.” Mississippi Univ. fo r Women,
458 U.S. at 728, 102 S.Ct at 3338. Defendants presented
no evidence that WBEs suffered a disadvantage in com
peting for state contracts. Accordingly, Public Act 428’s
gender-based classifications are also invalid.15
For the foregoing reasons, this court concludes that
Public Act 428, Mich.Comp.Laws § 450.771 et seq., is un
constitutional. Consequently, the judgment of the district
court is REVERSED and the case is REMANDED for
entry of judgment in favor of the plaintiffs in accordance
with this opinion.
[15]
Because this court concludes that Michigan lacked a “compelling” interest to
support the racial and ethnic distinctions, and an “important” interest to support
the gender based distinctions, embodied in Public Act 428, this court does not
address the second prong of the constitutional examination, i.e., whether the means
were “narrowly tailored” and “substantially related” to the achievement of its goal
of eradicating the present effects of prior discrimination.
29a
LIVELY, Chief Judge, dissenting.
Because I disagree with both major premises of the ma
jority opinion, I must respectfully dissent.
I.
The majority reads Wygant v. Jackson Board o f Educa
tion, 476 U.S. 267, 106 S.Ct. 1842, 90 L.Ed.2d 260
(1986), as if it changed all the previously accepted stand
ards forjudging the validity of affirmative action programs
of governments and governmental units. That is not a fair
appraisal of the purport or effect of Wygant.
In Wygant itself the Court noted that it is necessary in
some cases to take race into account, and emphasized the
difference in [596] consequences flowing from a program
such as the one involved in this case and one that requires
layoffs, as the plan in Wygant did. This emphasis was
made by contrasting the minority set-aside program that
the Court had approved in Fullilove v. Klutznick, 448 U.S.
448, 100 S.Ct. 2758, 65 L.Ed.2d 902 (1980), with the plan
under consideration in Wygant, which did require layoffs:
We have recognized, however, that in order to rem
edy the effects of prior discrimination, it may be nec
essary to take race into account. As part of this Na
tion’s dedication to eradicating racial discrimination,
innocent persons may be called upon to bear some of
the burden of the remedy. “When effectuating a lim
ited and properly tailored remedy to cure the effects
of prior discrimination, such a ‘sharing of the burden’
by innocent parties is not impermissible.” Id. [Fulli
love, 448 U.S.] at 484, 100 S.Ct. at 2778, quoting
Franks v. Bowman Transportation Co., 424 U.S. 747,
96 S.Ct. 1251, 47 L.Ed.2d 444 (1976). In Fullilove,
30a
the challenged statute required at least 10 percent of
federal public works funds to be used in contracts
with minority-owned business enterprises. This re
quirement was found to be within the remedial
powers of Congress in part because the “actual bur
den shouldered by nonminority firms is relatively
light.” 448 U.S. at 484, 100 S.Ct. at 2778.
Significantly, none of the cases discussed above in
volved layoffs. Here, by contrast, the means chosen to
achieve the Board’s asserted purposes is that of laying
off nonminority teachers with greater seniority in or
der to retain minority teachers with less seniority. We
have previously expressed concern over the burden
that a preferential layoffs scheme imposes on inno
cent parties. See Firefighters v. Stotts, 467 U.S. 561,
574-576, 578-579, 104 S.Ct. 2576 [2585-2586, 2587-
2588], 81 L.Ed.2d 483 (1984); see also [Steelworkers
v.] Weber, n. 9, supra this page, 443 U.S. [193] at 208,
99 S.Ct. [2721] at 2730 [61 L.Ed.2d 480 (1979)]
(“The plan does not require the discharge of white
workers and their replacement with new black
hirees”). In cases involving valid hiring goals, the
burden to be borne by innocent individuals is dif
fused to a considerable extent among society gener
ally. Though hiring goals may burden some innocent
individuals, they simply do not impose the same kind
of injury that layoffs impose. Denial of a future em
ployment opportunity is not as intrusive as loss of an
existing job.
106 S.Ct. at 1850-51 (footnotes omitted).
The Michigan program is similar to the federal MBE
program in Fullilove. At most, nonminority owned busi
nesses will be required to share the state’s contracts with
31a
minority owned businesses; no white owned business will
be removed from a previously awarded contract. I believe
this case is controlled by Fullilove and Ohio Contractors
Ass’n v. Keip, 713 F.2d 167 (6th Cir.1983), rather than by
Wygant.
The Supreme Court has been unable to agree on the
precise level of scrutiny required when considering race
conscious programs to assist minorities. While there is a
consensus that race conscious programs demand an ele
vated level of scrutiny, the Court has not defined that
level. This is clear from an examination of the plurality
opinions from Regents o f the University o f California v.
Bakke, 438 U.S. 265, 98 S.Ct. 2733, 57 L.Ed.2d 750
(1978), to United States v. Paradise,____ U .S ._____ , 107
S.Ct. 1053, 94 L.Ed.2d 203 (1987). In fact a plurality of
the Court in Paradise, a case subsequent to Wygant, noted
it has “yet to reach consensus on the appropriate constitu
tional analysis.” Id. 107 S.Ct. at 1064.
Despite this uncertainty, at least two prerequisites for a
constitutionally acceptable race conscious program are
clearly established. The program must be in response to a
compelling state goal and it must be narrowly tailored to
achieve that goal. The majority concedes, as it must, that
the State of Michigan has a compelling interest in elimi
nating race and gender discrimination from its procedures
for awarding public contracts. I believe the Michigan pro
gram also satisfies the second requirement in that it is
narrowly tailored. Given the [597] subject matter
involved—public contracting—it is hard to conceive of a
different approach that would achieve the state’s legiti
mate goals in a less intrusive way. In my opinion the plan
chosen by Michigan to correct a system that virtually ex
cluded minority contractors in the past “fits” the situation
better than any alternative means. See Wygant, 106 S.Ct.
32a
at 1850 n. 6, where the Court discusses the meaning of
“narrowly tailored,” and quotes Professor Ely’s definition:
“the classification at issue must ‘fit’ with greater precision
than any alternative means.”
II.
I also disagree with the majority’s conclusion that the
State of Michigan did not develop material evidence that
established the existence of past discrimination or the
need for a program to increase minority participation. An
examination of the record totally refutes this conclusion.
The district court found that the Michigan legislature con
sidered the following evidence before finally adopting P.A.
428 in 1981:
1. An Executive Memorandum concerning blouse
Bill No. 4394 (1971). The bill was to help small busi
nesses receive government contracts; MBEs consid
ered to fall within the classification of a small busi
ness. Bill and Memorandum indicate early concern
for plight of minorities. 571 F.Supp. 178-79.
2. A study commissioned by the state in 1974 to
explore the state’s procurement policies and its ef
fects upon minorities (the Urban Markets Unlimited
Study). Report issued in 1974 examined the procure
ment opportunities that were available to minority
businesses, concluding that opportunities were not
great, and that purchasing agents expressed negative
attitudes toward minority vendors. Id. at 179-81.
3. Three Senate Bills introduced in 1975-77 (Sen
ate Bills 885 (1975), 1461 (1976), and 10 (1977)).
These bills addressed set-asides for small businesses,
but were also designed to address the problems fac
ing minority businesses. Id. at 181.
33a
4. Testimony of Norton L, Berman, Director of Of
fice of Economic Expansion, Michigan Department of
Commerce, concerning Senate Bill 1461 and encour
aging legislature to enact set-asides. Id. at 181-82.
5. The Governor’s Executive Directive 1975-4
(1975) , creating a Task Force on Small Business Par
ticipation in State Purchasing. Directive emphasized
minority businesses and the difficulty they have had
getting into the mainstream of business. Id. at 182.
6. Two public hearings of the Task Force, where
views were expressed concerning the difficulties of
minority businesses. Id. at 183.
7. The Task Force’s Final Report (March 1976),
recommending, inter alia, that goals be established
for the participation of MBEs in state procurement.
Id at 183.
8. The Governor’s Executive Directive 1976-4
(1976) , stating that it is the executive branch’s policy
to ensure that MBEs get a fair portion of business
with the state and creating the Small and Minority
Business Procurement Council. Id. at 183.
9. The First Annual Report of the Council (1977),
noting that the commitment for MBEs was reached in
the first year. Id. at 183-184.
10. The Governor’s Executive Directive 1975-6
(1975), directing the Michigan Department of Civil
Rights to, inter alia, establish standards to assure non
discrimination in state contracting. Id. at 184.
11. The May 15, 1978 Report of the Department
of Civil Rights, expressing concern over limited pro
gress that had been made under Directive 1975-6.
Id. at 184.
34a
12. Proposed House Bill 4335, initiated March 15,
1979, which provided for MBE set-asides, and later, .
WBE set-asides. Id, at 184-85.
House Bill 4335 was adopted by the legislature two
years after it was introduced and became P.A. 428, the Act
at issue in this case. The district court concluded that
[598] this evidence was sufficient for “the Legislature to
make a finding of past intentional discrimination.” Id. at
187. This is a finding of fact that is fully supported by the
record and is not clearly erroneous.
The majority’s conclusion that the evidence in this case
at best suggested “that societal discrimination had af
forded the obstacle to the development of MBEs in their
business relationship with the State of Michigan” has no
support in the record. The Supreme Court has deter
mined that societal discrimination in and of itself is not
sufficient justification for enactment of an affirmative
action plan. Wygant, 106 S.Ct. at 1847. As the Court
noted in Bakke, it has never “approved a classification that
aids persons perceived as members of relatively victimized
groups at the expense of other innocent individuals in the
absence of judicial, legislative, or administrative findings
of constitutional or statutory violations.” 438 U.S. at 307,
98 S.Ct. at 2757. Societal discrimination is best exempli
fied in Wygant. The school board extended preferential
protection against layoffs to minority employees in order
to provide minority students with minority role models. In
holding this was an insufficient justification, the Court
noted there must be some showing of prior discrimination
by the governmental unit and that the plan must have a
remedial purpose.
The legislative record in this case clearly shows that the
plan enacted by the State of Michigan was not designed
35a
solely to aid persons perceived as members of “relatively
victimized groups” or to create “role models” for minori
ties. As noted, the Michigan Legislature began in 1971 to
review the problem of limited participation of minority
and woman owned businesses in the state’s procurement
of goods and services. The plan that was adopted approxi
mately nine years later was the culmination of numerous
studies, hearings and proposals to rectify the situation.
Any acceptable understanding of the concept of federal
ism requires us to accord the same degree of deference to
the findings of a state legislature following years of study
and investigation that we give to findings of Congress. The
majority’s rejection of the legislative showing of prior dis
crimination is improper, not only because it fails to give
the deference that a federal court should give to a state
legislature’s findings, but because the level of findings
which the majority would exact from the legislature has
not heretofore been required.
The Supreme Court noted in Fullilove that “Congress,
of course, may legislate without compiling the kind of ‘re
cord’ appropriate with respect to judicial or administrative
proceedings.” 448 U.S. at 478, fOO S.Ct. at 2774. The
Court determined that “Congress had abundant evidence
from which it could conclude that minority businesses
have been denied effective participation in public con
tracting opportunities by procurement practices that per
petuated the effects of prior discrimination.” Id. at 477-
78, 100 S.Ct. at 2774. There is sufficient evidence in the
legislative record of Michigan Public Act 428 to support a
determination that the state’s procurement practices did
perpetuate the effects of prior discrimination, resulting in
an extremely small percentage of contracts being awarded
to minority and woman owned businesses.
As we stated in Ohio Contractors Ass’n v. Keip, 713 F.2d
at 173:
36a
The state has chosen to remedy the effects of its
own past discriminatory practices by means of a pro
gram which imposes relatively light burdens on the
majority group which was in position to benefit from
those practices.
(Emphasis in original). Michigan did the same thing for
the same reasons.
Finally, in my opinion the majority places entirely too
much emphasis on semantics. The district court’s use of
“significant” as opposed to “compelling” in describing the
state’s interest is immaterial, given that the state clearly
did have a compelling interest in eliminating discrimina
tory practices from its contracting and procurement pro
cedures. Although the district court referred to a “reason
ableness” test in reviewing the means chosen by Michigan
Jto deal with the state’s interest, in actually testing the
MBE program the district judge ex- [599] pressly analyzed
all of the factors that the plurality of the Supreme Court
analyzed in applying the “narrowly tailored” standard in
Fullilove. 571 F.Supp. at 188.
I would affirm the judgment of the district court.
jfc
37a
[3] MICHIGAN ROAD BUILDERS ASSOCIATION INC.,
a Michigan Corporation,
et al. Plaintiffs,
v.
William G. MILLIKEN, as Governor of
the State of Michigan, et al.
Defendants.
No. 81-72258.
United States District Court,
E.D. Michigan, S.D.
Feb. 10, 1986.
* * *
[4] MEMORANDUM OPINION AND ORDER GRANT
ING DEFENDANTS’ MOTION FOR SUMMARY
JUDGMENT
JULIAN ABELE COOK, Jr„ District Judge.
This action was originally filed in July, 1981 by several
non-profit associations and for-profit corporations, who
have or are doing business or seeking contracts with the
State of Michigan. In their original Complaint, Plaintiffs
(hereinafter collectively referred to as “the Michigan Road
Builders”) alleged that their constitutional and civil rights
had been violated by the enactment and enforcement of
Michigan’s Public Act 1980, No. 428 (“PA. 428”). M.C.L.
§ 450.771 et seq.; M.S.A. § 3.540(51) et seq. Defendants,
the former Governor of Michigan and various State offi
cials, agencies and departments (“the State of Michigan”),
denied those allegations claiming that PA. 428 was consti
tutional and consistent with the laws of the United States.
38a
On March 26, 1982, the Michigan Road Builders filed
an Amended Complaint further alleging that the State of
Michigan, and in particular the Michigan Department of
Transportation (MDOT), “wholly apart from P.A. 1980,
No. 428, and without legislative authorization, has determined
that exclusively state discretionary funds may be voluntar
ily set aside by State departments for the procurement of
goods, services and construction from minority-owned and
woman-owned businesses.” Amended Complaint, paras 7,
12 and 13.
Motions for Summary Judgment were filed by both
sides in November, 1981. On August 12, 1983 this Court
issued a Memorandum Opinion and Order Denying Plain
tiffs’ Motion for Summary Judgment and Granting De
fendants’ Motion for Summary Judgment. Michigan Road
Builders Association, Inc. v. Milliken, 571 F.Supp. 173
(E.D.Mich.1983).1 The Court found that “P.A. 428 is con
stitutionally permissible and is not violative of the Equal
Protection Clause of the Fourteenth Amendment,” and
that furthermore the Act “does not violate 42 U.S.C. sec
tion 1981, 42 U.S.C. section 1983, 42 U.S.C. section
2000d, 42 U.S.C. section 2000e”. 571 F.Supp. at 190.
Judgment for the State of Michigan was entered on
August 12, 1983.
Plaintiffs appealed that Judgment to the U.S. Court of
Appeals for the Sixth Circuit. On September 17, 1984,
the Sixth Circuit dismissed the appeal for lack of jurisdic
tion. Michigan Road Builders Assoc., Inc., v. Milliken, 742
F.2d 1456 (6th Cir 1984). In its Order of dismissal, the
Sixth Circuit stated that the district court had not decided
the claims against MDOT. It further stated that since not
[i]
The Department of Transportation is mistakenly identified as the Department of
Treasury in this Court’s Opinion of August 12, 1983.
39a
all claims had been decided by this Court, and since no
Rule 54(b) certification had been granted, it was without
jurisdiction to review the August 12, 1983 decision.
It appears that while the Judgment of August 12, 1983
disposed of Plaintiffs’ constitutional and federal statutory
claims, as set out in the original Complaint, that decision
left unresolved certain claims set out in the Amended
Complaint. Specifically, whether the State of Michigan
and MDOT have implemented voluntary programs, with
out legislative approval and apart from P.A. 428, for the
setting aside of exclusively State discretionary funds for
the procurement of goods, services, and construction from
minority-owned and woman-owned businesses. Further,
Defendants [5] contended that the August 12, 1983 Opin
ion and Judgment left unresolved the issue of whether
Plaintiffs lacked standing to bring this action.
On October 23, 1984, a status conference was held to
discuss disposition of the remaining issues. Counsel for
the Michigan Road Builders and the State of Michigan
appeared. At that time, Plaintiffs’ counsel indicated that
her clients no longer wished to pursue those claims and
that they were willing to stipulate to a dismissal. Counsel
for the State indicated its willingness to enter into a stipu
lation of dismissal. The Court then directed Plaintiffs’
counsel to prepare the necessary papers.
No stipulation was ever prepared. On August 2, 1985,
nine months after the status conference, the State of
Michigan filed a Motion for Summary Judgment on the
remaining claims, along with two supporting Affidavits,
exhibits from the present stipulated record and additional
public documents from state agencies. Plaintiffs filed a re
sponse on January 24, 1986 and a hearing was held on
January 27, 1986.
40a
Upon a review of the record, Affidavits and statements
of counsel in the present case, the Court determines that
there are no genuine issues as to any material fact on the
remaining issues and claims. The State of Michigan is
entitled to judgment as a matter of law, in accordance
with Fed.R.Civ.P. 56(c). The Court bases its ruling upon
the following undisputed facts and conclusions of law.
As reflected in the careful wording of their Amended
Complaint, Plaintiffs do not dispute that PA. 428 autho
rizes the use of set asides “by requiring that certain per
centages of state expenditures be awarded to minority and
woman-owned businesses”. Amended Complaint, para. 9.
(Emphasis added). Indeed, both the plain language of the
statute and its legislative history indicate that PA. 428 au
thorizes the use of set asides. The statute expressly states
that “each department shall provide for the following per
centage of expenditures to be awarded to minority owned
and woman owned businesses. . . M.C.L. § 450.772(1);
M.S.A. § 3.540(52)(1) (emphasis added). The legislative
analysis of both the Michigan House and the Senate refer
to the measure as a “set aside program.” Defendants’ Ex
hibits 19A(17); 49.
Plaintiffs’ assertion, on the other hand, is that the state
has voluntarily set aside exclusively state discretionary
funds “wholly apart from P.A.1980, No. 428, and without
legislative authorization.” Amended Complaint, paras. 7,
12 and 13. In their First Amended Complaint, Plaintiffs
rely upon Defendants’ Exhibit 46G in supporting its claim
against MDOT. Plaintiffs have offered no other evidence
against other state agencies, departments or officials in
support of their claims that those agencies have also set
aside state discretionary funds without legislative authori
zation. See Amended Complaint, paragraph 12.
41a
Exhibit 46G is entitled “Michigan Department of Trans
portation, the Expanded Minority Business Enterprise
(MBE) and Woman Business Enterprise (WBE) Program
Procedures”, and is dated February 18, 1981. The Ex
panded Program Procedures were apparently promul
gated, in part, in response to federal regulations by the
U.S. Department of Transportation, published on
March 31, 1980. See 49 CFR Part 23.
The Court notes that the November 16, 1981 Affidavit
of Ho-Lum Wong, acting liaison officer for MDOT, states
that:
“MDOT has never implemented any bid procedure
requiring or permitting set aside for females or mi
norities as a result of 1980 PA 428, or any administra
tive policies issued pursuant thereto.”
(Affidavit, paragraph 7)
However, Mr. Wong also states that Exhibit 46G is
MDOT’s governing policy (paragraph 5). As stated on
page 1 of the document:
“In addition to the procedures as outlined in this pro
gram, the Department (of Transportation) will adhere
to all current Federal and State laws, regulations and
orders concerning Minority Business Enterprises and
Woman Business Enter- [6] prises as related to the
Department’s program.” (emphasis added).
Thus, the Expanded Program Procedures were subject
to state, as well as federal, laws and regulations, despite
Mr. Wong’s statement that MDOT had not implemented
procedures pursuant to PA. 428. It is not disputed, how
ever, that MDOT did, in fact, have a set-aside program in
operation.
42a
Since P.A. 428 was effective January 13, 1981, a month
prior to the effective date of the Expanded Program Pro
cedures, it is clear that P.A. 428 provided legislative au
thority for the kind of set-aside program established by
MDOT in Defendant’s Exhibit 46G. Plaintiffs do not dis
pute that the Expanded Program Procedures and P.A. 428
provided authority for MDOT’s set-aside program as of
February 18, 1981, and the Court so finds.
Defendant Exhibit 46G has been superseded by
MDOT’s “Disadvantaged Business Enterprise (DBE), Mi
nority Business Enterprise (MBE), and Woman Business
Enterprise (WBE) Program Procedures”, dated June 27,
1984. See Defendant’s Exhibit 55. That policy statement
expressly cites P.A. 428 as MDOT’s program authority for
attaining the minority- and woman-owned business pro
curement goals required for 100 percent State funded
projects. Defendant’s Exhibit 55, pp. 1 and 8. In addi
tion, Mr. Larry L. Leatherwood, Liaison Officer for
MDOT’s Office of Small Business Liaison, states in his
Affidavit accompanying the State’s Motion for Summary
Judgment that: “Since at least January 1984 MDOT has
recognized that the standards and requirements of 1980
P.A. 428 do apply to its set aside program involving 100%
State funded contracts”. Def. Exhibit 56, p. 2.
Plaintiffs have offered no controverting affidavits or evi
dence, as required under FRCP 56(e), in response to Ex
hibits 55 and 56, which were offered in support of the
State’s Motion for Summary Judgment. Accordingly, the
Court finds that MDOT’s set aside program is both autho
rized by and is pursuant to P.A. 428. Furthermore, since
Plaintiffs have offered no evidence to support their allega
tions with regard to other State agencies, the Court also
concludes that in this case no violation of P.A. 428 has
been shown in the operation of set aside programs by
other State agencies, departments or officials.
43a
Summary Judgment shall therefore be entered in favor
of Defendants and against Plaintiffs on the remaining
claims set out in the Amended Complaint.
Before concluding this matter, the Court notes that on
July 12, 1983, a month prior to this Court’s original Au
gust 12, 1983 decision, the Sixth Circuit upheld the con
stitutionality of the set aside provisions of the Ohio minor
ity business enterprise statute in Ohio Contractors
Association v. Keip, 713 F.2d 167 (6th Cir.1983). This
Court has reviewed that decision, as well as the Eleventh
Circuit’s decision in South Florida Chapter o f Associated
General Contractors o f America, Inc. v. Metropolitan Dade
County, Florida, 723 F.2d 846 (11th Cir.1984), cert. den.
469 U.S. 871, 105 S.Ct. 220, 83 L.Ed.2d 150.
The Court further finds that its August 12, 1983 deci
sion is consistent with the standards set forth in the Sixth
Circuits’ Opinion in Ohio Contractors, and therefore it re
affirms its decision upholding the constitutionality and va
lidity of P.A. 428. The Court finds that the plaintiffs had
standing to assert their claims regarding the constitution
ality and validity of P.A. 428.
SO ORDERED.
44a
FILED—FEB 23, 1988
JOHN P. HERMAN, CLERK
No. 86-1239
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
MICHIGAN ROAD BUILDERS
ASSOCIATION, INC.,
A MICHIGAN CORPORATION,
ET AL.,
Plaintiffs-Appellants,
V. ORDER
WILLIAM G. MILLIKEN,
AS GOVERNOR OF THE STATE
OF MICHIGAN, ET AL.,
Defendants-Appellees.
BEFORE: LIVELY, Chief Judge, ENGEL and KRU-
PANSKY, Circuit Judges
The Court having received a petition for rehearing en
banc, and the petition having been circulated not only to
the original panel members but also to all other active
judges of this Court, and less than a majority of the judges
having favored the suggestion, the petition for rehearing
has been referred to the original hearing panel.
The panel has further reviewed the petition for rehear
ing and concludes that the issues raised in the petition
were fully considered upon the original submission and
decision of the case. Accordingly, the petition is denied.
ENTERED BY ORDER OF THE COURT
John P. Hehman Is/
John P. Hehman, Clerk
45a
[173] MICHIGAN ROAD BUILDERS
ASSOCIATION, INC.,
a Michigan corporation,
et al, Plaintiffs,
v.
William G. MILLIKEN, as Governor of
the State of Michigan, et al.,
Defendants.
Civ. A. No. 81-72258.
United States District Court,
E.D. Michigan, S.D.
Aug. 12, 1983.
* * *
[174] MEMORANDUM OPINION AND ORDER DENY
ING PLAINTIFFS’ MOTION FOR SUMMARY JUDG
MENT AND GRANTING DEFENDANTS’ MOTION
FOR SUMMARY JUDGMENT.
JULIAN ABELE COOK, Jr„ District Judge.
Plaintiffs are (1) several non-profit associations whose
members are, in general, construction firms, contractors
and suppliers, who have done, or are doing business with
the State of Michigan, and (2) various profit corporations
who have had, or seek, contracts with the State of Michi
gan. Defendant, William G. Milliken, is the former Gover
nor of the State of Michigan. Defendant, The Department
of Management and Budget of the State of Michigan, is a
unit within State Government whose responsibilities in
clude the procurement of supplies and services for the
State. Defendant, Gerald H. Miller, is the former chief
administrative officer of the State Department of Manage
ment and Budget. Defendant, The Department of Trea
46a
sury, is a State governmental unit whose jurisdiction in
cludes the construction and maintenance of
State-controlled highways, streets and passageways. De
fendant, John P. Woodford, is the former chief administra
tive officer for The Department of Treasury. The individ
ual Defendants held their respective positions during all
times that are relevant to the issues which are presently
pending before this Court.
Jurisdiction in this matter is based on the Fourteenth
Amendment to the United States Constitution; 42 U.S.C.
§ 1981, 42 U.S.C. § 1983, 42 U.S.C. § 2000d, 42 U.S.C.
§ 2000e et seq. and arises under 28 U.S.C. § 1331 and 28
U.S.C. § 1343.
Plaintiffs filed this action, seeking declaratory and in
junctive relief against the Defendants. In their Com
plaint, they allege that their constitutional and civil rights
had been violated by the enactment and enforcement of
P.A. 1980, No. 428, M.C.L.A. § 450.771 et seq. [PA. 428],
At the same time, Plaintiffs filed a Motion for Preliminary
Injunction, in which they asked this Court to enjoin the
State from enforcing P.A. 428.
Thereafter, the Defendants filed an Answer to the Com
plaint, asserting, in part, that P.A. 428 is consistent with
the Constitution and laws of the United States. After a
hearing on Plaintiffs’ Motion for Preliminary Injunction,
the Court issued an Order Denying Plaintiffs’ Motion for
Preliminary Injunction because of their failure to satisfy
the minimum standards of Mason County Medical Associa
tion v. Knebel, 563 F.2d 256 (6th Cir.1977).
This matter is now before the Court on the Motions for
Summary Judgment, which have been filed by the respec
tive parties to this action.
47a
The Michigan Legislature enacted P.A. 428, which be
came effective on January 13, 1981. This Act represented
the culmination of approximately nine years of effort by
the legislative and executive branches of the State Gov
ernment to increase the participation of minority and
woman owned businesses in the procurement of goods,
services and construction by the State. Section 450.772(2)
of P.A. 428 establishes a procurement policy which sets
interim and [175] expenditures goals of each department
for minority and woman owned business as follows:
(a) For minority owned business, the goal for 1980-
81 shall be 150% of the actual expenditures for 1979-
80, the goal for 1981-82 shall be 200% of the actual
expenditures for 1980-81, the goal for 1982-83 shall
be 200% of the actual expenditures for 1981-82, the
goal for 1983-84 shall be 116% of the actual expendi
tures for 1982-83, and this level of effort at not
less than 7% of expenditures shall be maintained
thereafter.
(b) For woman owned business, the goal for 1980-
81 shall be 150% of the actual expenditures for 1979-
80, the goal for 1981-82 shall be 200% of the actual
expenditures for 1980-81, the goal for 1982-83 shall
be 200% of the actual expenditures for 1981-82, the
goal for 1983-84 shall be 200% of the actual expendi
tures for 1982-83, the goal for 1984-85 shall be 140%
of the expenditures for 1983-84, and this level of ef
fort at not less than 5% of expenditures shall be
maintained thereafter.
A minority is defined as “a person who is black, his-
panic, oriental, eskimo, or an American Indian who is not
less than lU quantum Indian blood as certified by the per
son’s tribal association and verified by the Indian affairs
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commission,” M.C.L.A. § 450.771(e). A minority owned
business is one in which more than fifty percent of the
voting shares or interest in the business is owned, con
trolled or operated by a defined minority and more than
fifty percent of the net profit or loss of the business ac
crues to those shareholders, M.C.L.A. § 450.771(f). A
woman owned business is similarly defined, see M.C.L.A.
§ 450.7710). Awards can only be made to qualified minor
ity and woman owned businesses. Thus, all minority and
woman owned businesses, to whom contracts are
awarded, must “comply with the same requirements ex
pected of other bidders, including but not limited to, be
ing adequately bonded.” M.C.L.A. § 450.772(5).
Plaintiffs argue that P.A. 428 violates the Equal Protec
tion Clause of the Fourteenth Amendment, as well as 42
U.S.C. §§ 1981 and 1983. Plaintiffs do not contend that
they have been (1) subjected to discrimination in the
award of any particular contract or (2) denied the opportu
nity to bid on any contract because of P.A. 428. Rather,
they assert that the Act is unconstitutional on its face. In
their view, P.A. 428 creates an unlawful “set aside” (based
on impermissible classifications by race and sex) that can
not withstand constitutional scrutiny because (1) the State
cannot demonstrate a compelling interest in establishing
such classifications, and (2) even if the State can establish
a compelling interest, the selected remedy is not properly
tailored to accomplish that interest.
The Defendants contend that P.A. 428 is remedial legis
lation which is designed to remedy the present effects of
past discrimination. They also assert that the Act does not
create an unlawful “set aside” on the basis of race or sex
because it (1) merely establishes goals and affirmative
practices in the State’s procurement policy and proce
dures, and (2) even if the Act is deemed to create a “set
49a
aside,” it is a lawful affirmative action program that does
not violate the Equal Protection Clause of the Fourteenth
Amendment or 42 U.S.C. §§ 1981 and 1983.
Interestingly, each party relies upon Fullilove v.
Klutznick, 448 U.S. 448, 100 S.Ct. 2758, 65 L.Ed.2d 902
(1979) in support of their respective positions.
In Fullilove, the Supreme Court examined and evalu
ated a constitutional challenge to the Minority Business
Enterprise provision of the Public Works Employment Act
of 1977 [MBE], § 106(f)(2), 42 U.S.C. § 6701 et seq. In a
plurality decision, the Court determined that the MBE
was constitutional notwithstanding its mandate that “at
least 10% of [any grant for local public works projects]
shall be expended for minority businesses.”
In its ruling, it is clear that the Fullilove Court adhered
to its earlier stance that “racial classifications are not per
se invalid under [the Equal Protection Clause of] the
Fourteenth Amendment,” Fullilove, at 517, [176] 100 S.Ct.
at 2794 (Marshall, J. concurring); Regents o f University o f
California v. Bakke, 438 U.S. 265, 356, 98 S.Ct. 2733,
2781, 57 L.Ed.2d 750 (1978). Although the Court merely
concluded that Congress had the power to implement the
MBE under Section 5 of the Fourteenth Amendment and
Art. 1, Section 8 of the Commerce Clause, it does not
appear that the Supreme Court retreated from its earlier
pronouncements that affirmative action programs are sub
ject to “strict scrutiny,” Fullilove 448 U.S, at 519, 100 S.Ct.
at 2795 (Marshall, J., concurring). Moreover, in light of
the Sixth Circuit’s recent opinion in Bratton et al. v. City
o f Detroit et al., 704 F.2d 878 (6th Cir.1983), this Court
determines that the proper standard of review in the in
stant cause must be one of strict scrutiny.
50a
Where the claim of racial discrimination is made by the
white majority, strict scrutiny is more than a generic term.
Its qualities are not immutable. Thus, in an affirmative
action case (such as the one presented here) strict scrutiny
must not be applied in a manner in which it is “strict in
theory, but fatal in fact.” Regents o f University o f Califor
nia v.Bakke, 438 U.S. at 361-62, 98 S.Ct. at 2784; Fullilove
v. Klutznick, 448 U.S. at 507, 100 S.Ct. at 2789, (Powell,
J„ concurring), 448 U.S. at 519, 100 S.Ct. at 2795 (Mar
shall, J., concurring).
“A different analysis must be made when the claimants
are not members of a class historically subjected to dis
crimination. When claims are brought by members of a
group formerly subjected to discrimination the case moves
with the grain of the Constitution and rational policy. A
suit which seeks to prevent public action designed to al
leviate the effects of past discrimination moves against the
grain. . . .” Bratton at 886, citing Detroit Police Officers v.
Young, 608 F.2d at 671, 697 (6th Cir.1979). Thus, this
Court must examine Fullilove and the appropriate cases of
the Sixth Circuit to determine the precise meaning of
strict scrutiny within the context of legislative enactments
which are alleged to favor a minority class of citizens over
the dominate majority.
In Fullilove, Powell, J. stated that a racial classification is
constitutionally prohibited “unless it is a necessary means
of advancing a compelling governmental interest,” 448
U.S. at 496, 100 S.Ct. at 2783. Unlike the traditional anal
ysis, which requires that the means chosen must be abso
lutely necessary, he concluded that “the means selected
by Congress [or a body with authority to act] need only be
equitable and reasonably necessary to redress” an identi
fied discrimination, at 510, 100 S.Ct. at 2791.
51a
Justice Marshall adhered to his earlier position in Bakke,
stating that . . the proper inquiry is whether racial clas
sifications designed to further remedial purposes serves
important governmental objectives and are substantially
related to achievement of those objectives.” Fidlilove, at
519, 100 S.Ct. at 2795.
In Bratton, supra, the Sixth Circuit held that the stand
ard of inquiry for the voluntary affirmative action plans of
a public employer is whether the chosen remedial mea
sures are reasonable in light of the significant governmen
tal interest “in ameliorating the disabling effects of identi
fied discrimination,” at 886. Although the decision was
rendered in the context of public employment, the Brat
ton Court indicated that Justice Marshall’s opinion in Ful-
lilove “clearly affirms the analysis generally relied upon”
in the Sixth Circuit’s initial affirmative action opinion in
Detroit Police Officers Association v. Young, 608 F.2d 671,
and reaffirmed in Bratton, at 885.
This Court is persuaded that the opinions of Justices
Powell and Marshall are so closely aligned to the rule of
the Sixth Circuit that this Court should not, and indeed,
cannot deviate from the law of this Circuit. Thus, this
Court believes that the Bratton standard should be ap
plied to the instant cause.
Having determined that the law of this Circuit requires
that the State must demonstrate a significant interest in
ameliorating the past effects of present discrimination
rather than the “compelling interest” standard which has
been advanced by the Plain- [177] tiffs, this Court must
examine the record to assess the nature of the interest of
the State in enacting PA. 428. Plaintiffs assert that the
Act embodies a preference solely on the basis of race and
sex. They contend that the only purpose of this Act is to
52a
foster minority and woman owned businesses and, thus, it
was not designed to remedy anything. Plaintiffs strongly
argue that P.A. 428 was not designed to remedy the
present effects of past discrimination because the findings
by the State are inadequate to establish the existence of
past discrimination in the multitude of areas which are
covered by the Act. Moreover, they say that there have
been no specific findings of unlawful discrimination
against any of the preferred classes in P.A. 428.
In response, the Defendants say that the Act does not
create set asides, preferences, or quotas but merely estab
lishes “goals” and “levels of effort” which would afford a
greater opportunity for minorities and women to partici
pate in State procurement activities. Notwithstanding,
they contend that even if these goals are construed to be
set asides or preferences, its finding of past impairment
upon, and historical discrimination against, the classes,
who are identified in P.A. 428, are sufficient to justify the
use of racial and ethnic criteria by the Legislature as a
means of remedying the present effects of past
discrimination.
This Court has been called upon to determine whether
P.A. 428, as written, comports with the Equal Protection
requirements of the Constitution. This Court declines to
designate P.A. 428 as a “goal” or “set aside” legislation.
However, it is clear that the Act does provide a procure
ment mechanism which must be viewed as giving defer
ence, if not preference, to minorities and women. Thus,
this Court will examine P.A. 428 in the most stringent
light, and will consider it as a “set aside” enactment for
the singular purpose of evaluating these Motions for Sum
mary Judgment.
In Fullilove, Justice Powell articulated two require
53a
ments for the establishment of “permissible remedial
action.” “First, the governmental body that attempts to
impose a race-conscious remedy must have the authority
to act in response to identified discrimination (citations
omitted). Second, the governmental body must make
findings that demonstrate the existence of illegal discrimi
nation.” 448 U.S. at 498, 100 S.Ct. at 2784.
Plaintiffs do not argue that the Michigan Legislature is
an inappropriate authority to enact the race and sex con
scious remedy which is embodied in P.A. 428. However,
they do assert that the findings of the Legislature are in
adequate to justify such a remedy. The degree of findings
which are necessary to support a race or sex conscious
remedy depends upon the body establishing such a rem
edy, see Fullilove v. Klutznick, supra: regents o f University
o f California v. Bakke, supra.
Here, Plaintiffs contend that the Defendants failed to
make specific findings of past discrimination. In support
of its position, they rely upon Central Alabama Paving, Inc.
v. James, 499 F.Supp 629 (M.D.Ala. 1980).
This Court notes that in Central Alabama Paving, the
findings were made by an administrative body. The Su
preme Court has never required the same degree of speci
ficity for a legislative determination of past racial discrimi
nation as that required for an administrative body or the
judiciary branch of government. As Justice Powell noted
in Fullilove “[t]he degree of specificity required in findings
of discrimination and the breadth of discretion in the
choice of remedies may vary with the nature and authority
of a governmental body,” note 14 at 515-16, 100 S.Ct. at
2794.
In Fullilove, the Petitioner contended that the legisla
54a
tive record must be treated “as the complete record of
congressional decision-making” underlying its enactment
of the MBE. Justice Powell indicated that such a require
ment would be an unwarranted constraint upon the legis
lative process. Congress need not make “specific factual
findings with respect to each legislative action,” at 503,
100 S.Ct. at 2787. “Rather, [the Court] may examine the
total contemporary record of congressional action deal-
[178] ing with the problems of racial discrimination
against minority business enterprises,” id.
In Bratton, the Sixth Circuit reaffirmed the position ar
ticulated in Young and enumerated the type of evidence
which is “necessary to justify a finding of prior overt dis
crimination,” stating:
Where consistent practices have resulted in a signifi
cant disparate impact among races, the discrimina
tory intent may be established by any evidence which
logically supports the inference that state action or
policies were adopted for invidious purposes. Such
“logical” evidence includes the statistics of racial im
pact, the historical background of the decision which
led to such impact, the contemporaneous statements
of the members of the decision-making body, and the
presence of actions from which disparate impact is
foreseeable,” at 888.1
The Bratton and Young decisions appear to reject the ar
gument that has been advanced by the Plaintiffs. Thus,
[i]
As noted earlier, Bratton was decided in the context of public employment. None
theless, as noted above, Fullilove does not mandate that a more stringent test be
applied to an attack on a legislative enactment that is designed to ameliorate the
present effects of past discrimination.
55a
their reliance upon Central Alabama Paving appears to
have been misplaced.
This Court is not faced with a Congressional finding,
but with a finding of a State legislature whose elected rep
resentatives, like those of Congress, are called upon to set
policy “rather than to apply settled principles of law.” Its
role is “representative rather than impartial,” Fullilove 448
U.S. at 502, 100 S.Ct. at 2787. In addition, the Constitu
tion imposes upon States a duty to eliminate the present
effects of past discrimination, Detroit Police Officers Asso
ciation v. Young, 608 F.2d 671 (6th Cir.1979). Moreover,
the Legislature need not make specific findings of past
discrimination, Valentine v. Smith, 654 F.2d 503 (8th
Cir.1981).
This Court is of the opinion that the Defendants’ evi
dence of a prior discrimination need not exceed that level
which is articulated in Bratton. In fact, inasmuch as the
Legislature is the ultimate policy-making body of the State
and the nature of the decision-making process in the legis
lative setting is analogous to that of Congress, it may rely
upon any evidence which logically supports the inference
of prior discrimination. Thus, this Court concludes that
the findings which are required of the Michigan Legisla
ture need not rise to the level of those which are required
of judicial or administrative bodies.
The Court must examine the record to determine
whether the Michigan Legislature’s decision was based
upon evidence from which it could logically infer that mi
norities and women were discriminated against prior to
the enactment of P.A. 428.
The history of P.A. 428 reflects that, as early as 1971,
the State began to recognize the problems of women and
56a
minorities in securing more than a miniscule portion of
the millions of dollars in contracts awarded annually by
various agencies within the State. This recognition was
reflected in an Executive Memoranda concerning House
Bill No. 4394 (1971). The primary thrust of this proposed
legislation was to “liberalize the bonding requirements for
government construction projects” which, in turn, would
increase the amount of small business participation in gov
ernment contracts and procurements. It was thought that
this legislation would ultimately benefit minority busi
nesses, who would normally fall within the classification of
“a small business.”
House Bill 4394, which was designed to amend existing
legislation would have (1) increased the exemption for
bonding requirements for contractors seeking work on
public buildings from $5,000 to $25,000, (2) allowed small
businesses to file an acceptable letter of credit in lieu of
posting a performance or payment bond, and (3) required
a bond of only 25% of the total contract amount rather
than 50% under existing legislation. A governmental
analysis of this Bill indicated that it would benefit the
State, as well as the small business [179] community. The
infusion of small business into the State procurement
process would increase the number of contractors who
could bid on a project, which would ultimately result in an
increase in competition and a sizeable savings for the
State.
The concern of the State for the plight of small and
minority owned businesses did not cease with the pro
posed legislation. In 1974, it commissioned a study by
Urban Markets Unlimited [Urban Market], a Wisconsin
based firm, to explore the State’s procurement policies
and its effects upon minorities. Urban Market’s report, A
Public Procurement Inventory on Minority Vendors, which
57a
was issued in July 1974 contained startling revelations
concerning the participation of minorities in the State’s
procurement of goods and services. It also disclosed cer
tain unfounded negative attitudes toward minority con
tractors by those departments who had been charged with
the responsibility of awarding an enormous variety of
contracts.
The report initially noted the substantial increase in
government purchases from 1961 to 1971. The total pur
chases by state, local and federal government, throughout
the entire nation in 1971, exceeded 108 Billion Dollars
which represented a 91% increase over a ten year span.
At the time of the report, Michigan expended $437 Mil
lion annually on goods and services. These purchases
ranged from construction and maintenance of highways
and buildings to food products, napkins and paper. They
covered all aspects of construction, industrial, commercial
and service markets (Ex. 19B, p. vii).
The Report then stated that minority owned businesses,
which are often described as being synonymous with small
business, have demonstrated a genuine potential for sub
stantial growth in all segments of the economy. These
enterprises have expanded into “contract construction,
electronic manufacturing, banking and insurance, con
sumable product distribution, building and grounds main
tenance, metal fabricating, publishing, entertainment,
food processing and cosmetics manufacturing” (Ex. 19B,
p. iiii). A survey of “The Top 100” Black businesses indi
cated that their growth compares favorably with that of
the “Fortune 500” companies. Thus, minority owned
businesses represented, and continue to represent, a via
ble and expanding segment of the American economy.
Against this background, the Report examined the pro
58a
curement opportunities that were available to minority
businesses in Michigan. From the outset, it appeared that
the record of the State in this area was less than glowing.
At the time of the Report, there were over 8,000 minority
firms in the State of Michigan with gross receipts of $319
Million. Nearly 75% of these firms were located within
the metropolitan Detroit area. A sampling of 1665 pur
chasing documents (representing expenditures of over
$21 Million) revealed that only four minority firms had
done business with the State. These purchases totaled a
mere $155.00 or 0.0007% of $21,338,823.00 in State ex
penditures (Ex. 19B, p. 23). Despite this dismal perform
ance, a majority of the State agencies who were sampled
“felt [that] the State’s purchasing system was equitable to
all vendors” (Ex. 19B, p. 22).
The Report next focused on the procurement practices
and policies of twenty-six State agencies regarding minor
ity vendors. The most utilized method for purchasing was
the Request for Quotation [RFQ] whereas the least uti
lized means was advertising. Vendors were solicited to bid
on a project or commodity through the RFQ. Only ap
proved vendors were permitted to bid on State contracts.
Those vendors, who expressed a desire to bid on State
contracts, were required to seek approval from the Pur
chasing Division of the Department of Management and
Budget. Applications were made available by mail. This
Department was charged with determining the qualifica
tion and reliability of a prospective vendor primarily on
the basis of the information that was contained in the ap
plication. The approved vendors were then placed on an
active bidders’ list by commodity area. It is from this list
that the agencies selected vendors to receive a RFQ.
[180] However, an Auditor General’s report revealed
that (1) several applications were neither available nor on
59a
file and, therefore, could not be verified against the ven
dors who had been listed on the bidders list, and (2) many
vendor applications had been lost, discarded, misfiled or
sent to the State Records and Publications Center. The
Auditor General also noted that the standard procedure
for approving vendors had not been observed in many
cases. Rather, “reliable and approved vendors [were] solic
ited from various sources” such as (1) the Thomas Regis
ter of American Manufacturers, (2) yellow pages of city
telephone directories, (3) personal visits by vendors and
their salesmen who carried credentials which had been
deemed to be satisfactory by staff members, and (4) bid
opening lists on bulletin boards of the Purchasing
Division.
There is nothing to indicate that the selected vendors
were required to provide the financial and other pertinent
information which was required in the standard applica
tion. In addition, there is no indication that an evaluation
of the qualifications or reliability of the approved vendors
was undertaken before they were placed on the active bid
ders’ list. The Report notes “(i)f the explanation given the
Auditor General’s Office . . . is appropriate, it means that
the division has wide discretionary authority in approving
vendors for the bidders’ list. This could have important
ramifications on approval of minority vendors for the bid
ders’ list” (Ex. 19R, p. 51).
Although the Report does not attempt to articulate or
identify the nature and extent of these ramifications, it
does contain insightful information concerning the prac
tices and policies of State purchase authorities toward mi
norities. Only three of the twenty-six agencies had any
official policy toward minorities. Only five of the agencies
maintained sources for minority vendors or actively
sought minority vendors. Nevertheless, twenty-two of the
60a
agencies indicated a willingness to utilize minority direc
tories.2 Yet, there is no indication that these agencies con
sulted the State’s Directory of Minority Businesses3 in or
der to identify minority vendors and include them on the
active bidders’ list under the informal procedure de
scribed in the Auditor General’s Report. Urban Market
also reported that the attitudes of the twenty-six agencies’
purchasing agents toward minority businesses strongly
demonstrated their collective unwillingness to deal with
minority vendors.
Urban Market also reported that a majority of the pur
chasing agents within the surveyed agencies expressed
negative attitudes toward minority vendors. They believed
that minority vendors were (1) non-competitive, (2) lacked
an established “track record,” and (3) provided poor serv
ice and delivery, even though they had not had any actual
experience with minority vendors. The available data in
the Report does not support these perceptions. The Re
port concluded that there was substantial evidence to in
dicate that minority firms in Michigan are as competent,
or in some instances, more competent than non-minority
firms. A nationwide survey of private industry purchasing
managers, who actually did business with minority firms,
found that seventy-four percent of the purchasing agents
felt that minority firms performed as well as non-minority
firms, seven percent felt that minority firms performed
better than non-minority firms, and only nineteen percent
felt that minority firms performed worse than non
minority firms. This performance profile covered four ma-
[2 ]
Two agencies expressed an unwillingness to use minority directories. The reply of
the remaining two agencies is cataloged as “other response.”
(3)
Three agencies did indicate that they consulted minority directories when select
ing vendors to receive RFQ.
61a
jor categories: (1) supplies and services, (2) parts and
components, (3) raw materials, and (4) tools and equip
ment. In addition, minority firms in Michigan operate in a
broad spectrum of the industrial market.
In 1974, six of the “Top 100” Black Enterprises were
located in Michigan. Further, the United States Depart
ment of [181] Commerce publication “Minority Owned
Businesses: 1969” indicated that there were 8,112 minor
ity firms doing business in Michigan. Over half of those
firms had the potential to supply a wide range of industrial
markets.4 “The resultfs] of the ‘Purchasing’ survey and
other private industry experience appears to dispel some
of the commonly held assumptions that minority firms are
incompetent, do not exist to any degree in the industrial
materials supply area and are not competitive” (Ex. 19B,
p. 74).
Finally, the Report made it clear that the negative atti
tude of State purchasing authorities toward minority ven
dors would cripple any steps toward achieving equity in
the State’s purchasing policies. “To rationalize that the
lack of success in minority procurement is based upon
minorities incompetency and non-responsiveness is not
supported by the evidence. Continuing to do so will
maintain the ‘status quo’ and void the State of an opportu-
[4]
In addition to the information actually compiled by the State, there was also
available statistical information compiled by the Census Bureau of the United States
Department of Commerce. The Economic Census of 1977 contained statistics on
the number of businesses owned by Black, Asian-Americans, American Indians,
Spanish Americans and Women in Michigan, as well as the other forty-nine states.
For example, the census showed 8,498 Black owned businesses in Michigan with
gross receipts of $449,303,000 Dollars. In addition, the areas of such businesses
were broken down into nine categories; (1) construction, (2) manufacturing, (3)
transportation and public utilities, (4) wholesale trade, (5) retail trade, (6) finance,
insurance and real estate, and (7) selected services.
62a
nity to increase its competitive sources of supply and the
economic development of a sizeable portion of the State’s
population” (Exhibit 19B, p. 75).
Based on their study, Urban Markets reported that (1)
“the States purchasing practices are not equitable in the
treatment of minorities,” and (2) the State does not ac
tively seek new sources of vendors and this does not com
port with its stated policy to “[e]ncourage by every legiti
mate means, actual and vigorous competition for State
business.” The Report, in concluding that the State could
not hope to achieve equity in its treatment of minority
business unless it exhibited the “will to do business,”
stated that “those who have achieved success in this area
all have definitive policies which include at least the fol
lowing ingredients: (a) a declaration of intent to do busi
ness, (b) actively encourages and seeks business and (c) a
mechanism for insuring reasonable compliance with the
stated policy. It is inconceivable that the State can in
crease minority procurement without a policy to that ef
fect” id.
The publication and dissemination of the Report
spawned legislative and executive action. In June of 1975,
the State Senate introduced Senate Bill 885, which was
designed to establish a “set aside” program for small busi
nesses. This Bill was followed by Senate Bill 1461 (1976)
and Senate Bill 10 (1977). Each of these Bills addressed a
set aside for small businesses. Although none of the Bills
expressly sanctioned a set aside for minority businesses,
their legislative history and analysis indicate that they
were designed, in part, to address the perceived problems
which faced minority businesses. Senate Bill 1461 specifi
cally attempted to set aside contracts for “socially or eco
nomically disadvantaged persons.” The Department of
Commerce recommended that the proposed legislation be
63a
amended to read: “Minority Business Enterprise means a
business enterprise that is owned or controlled solely by 1
or more socially or economically disadvantaged persons.
The disadvantage may arise from cultural, social, chronic
economic circumstances or background, or other similar
cause” (Ex. 19A, p. 3).
Norton L. Berman [Berman], Director of the Office of
Economic Expansion, Michigan Department of Com
merce, in testimony before the Senate State Affairs Com
mittee regarding enactment of Senate Bill f46 f, reported
that voluntary efforts by the State were under way to assist
minority firms in securing State contracts. Nonetheless,
he encouraged the Legislature to enact the set aside legis
lation. Berman stated, in part:
Since the beginning of our efforts to involve minori
ties in State procurement, [182] considerable discus
sion has occurred and volunteer efforts put forth to
develop programs within the State Departments to
involve minority businesses. We are happy to see
these efforts, but remain concerned that until there is
a statute mandating these efforts, there is a danger
these efforts will not be ongoing. I am aware there
are those who view this legislation as preferential
treatment and the distortion of the competitive spiri t
of purchasing. I agree that this might be considered
so, but unorthodox methods are needed to create op
portunities for a major segment of our society that
can contribute more to our economic stability. With
regards to competition, what we have now in many
industries is competition among the small operators
and domination by a few large firms. Large busi
nesses often can sell at a considerable lower price
because of high volume sales, more efficient distribu
tion systems and more advertising and promotion.
64a
Small businesses cannot equitably compete because
of these disadvantages of size (Ex. 19A(26) pp. 5-6).
Berman’s testimony included specific references to the
efforts of other States in fostering or encouraging small
and minority business participation through legislative en
actment or executive order. Particular reference was
made to the results in Minnesota after it had enacted legis
lation which was similar to Senate Bill 1461. After only
one year of operation under the statute, Minnesota ex
ceeded the legislative mandate of a 10% set aside for
small and minority businesses by 24%, In addition, it
added 170 new vendors to its bidders’ list, of which 60
were small businesses and 110 were socially or economi
cally disadvantaged vendors. Berman noted that Minneso
ta’s Director of Purchasing had not perceived any problem
with the program.
Senate Bill 1461 did not go without criticism. Its most
notable critic was the Department of Management and
Budget [DMB] which considered the Bill to be costly and
abhorred the percentage goals as arbitrary and possibly
unworkable. It felt that socially and economically disad
vantaged firms would not be able to furnish 10% of the
State’s procurements. Moreover, DMB adhered to its ear
lier position that the State’s procurement policies had
been grounded on a tradition of competition and “pro
duced honest and efficient practices.” It recommended
that the State need only provide assistance and encourage
ment to small and minority firms by providing information
and technical assistance (Ex. 19A(7)). The comments of
the Department reflected upon its earlier position that
small and minority businesses failed to fully participate in
the State’s procurement because of their own incompe
tence and inadequacies. This attitude persisted even in
the face of a comprehensive study which revealed that
65a
such attitudes were unfounded. Neither Senate Bill 1461
nor Senate Bill 10 were adopted by the Legislature.
In the midst of this legislative action, the Governor
mounted a program of his own. On July 28, 1975, he
issued Executive Directive 1975-4 (Ex. 19D) which cre
ated a Task Force on Small Business Participation in State
Purchasing [Task Force]. The Directive reiterated the
State’s policy of encouraging “full participation by all
facets of the business community, large and small.” None
theless, it recognized that despite this policy “there [was]
a need to take further steps to ensure full participation in
state purchasing by small businesses.” In addition, it
placed particular emphasis on minority businesses who
have “historically had greater difficulty getting into the
mainstream of our American business enterprise system.”
The Task Force was directed to (1) review existing rules
and regulations of state purchasing to determine “whether
impediments may exist,” that prevent small businesses
from fully participating in State procurement, (2) review
state law regarding procurement procedures and deter
mine necessary and appropriate measures to enhance
small business opportunities, and (3) consult public and
private agencies, organizations and individuals. The Gov
ernor specifically directed the Department of Manage
ment [183] and Budget to cooperate with the Task Force
in (1) identifying the percentage of state contracts
awarded to small businesses, (2) appraise the methods
used to notify prospective bidders of the availability of
state contracts, (3) analyze present procedures to deter
mine whether smaller awards would increase participa
tion, and (4) propose modifications in procedure to ac
complish the goals of the Directive.
In furtherance of its mandate, the Task Force con
66a
ducted two public hearings in order to obtain an input
from the business community and to obtain their percep
tions of State procurement policies. The attendees ex
pressed the following views:
(a) State government appears to have a large and
complex procurement structure with few unifying
forces and few common policies and procedures.
(b) Procedures for dissemination of procurement in
formation to small and minority business enterprises
are inadequate.
(c) Because of their limited resources, small and mi
nority business persons require more time between
the advertising and the opening of bids in which to
prepare their bid documents than that provided by
current state procurement procedures.
(d) In some instances, procurement specifications ap
pear unnecessarily narrow, i.e., specifying branded
items which may be unavailable to them.
(e) State purchases and contracts, in many cases, are
too large for small and minority businesses to
accommodate.
(f) The State does not require contractors to solicit
bids from small and minority subcontractors.
(g) Because of their limited financial resources, small
and minority business enterprises require more
prompt payment of invoices than the method which
is provided by current state procurem ent
procedures.
67a
(h) The necessity of investing funds prior to the
award of bids or contracts creates a hardship for small
and minority business enterprises.
(i) Because of their limited resources and experience,
small and minority business enterprises are fre
quently unable to meet state bonding and prequalifi
cation requirements.
(j) Small and minority business persons lack expertise
in estimating and bidding.
Pursuant to the Directive, the Task Force issued its Fi
nal Report in March 1976, which contained numerous
recommendations to accomplish the goals of the Execu
tive Directive. Among these recommendations were pro
visions that each State agency (1) adopt formal plans and
procedures to implement the State’s small and minority
business procurement policy, (2) establish goals for partici
pation of small and minority businesses, (3) create a Small/
Minority Business Procurement Council to (a) monitor the
State’s procurement efforts in this area, and (b) develop
guidelines to streamline state procurement procedures in
a manner which addresses the concerns expressed by
small and minority businesses.
As a result of the Task Force’s findings, the Governor
issued Executive Directive 1976-4 on September 21,
1976. This Directive stated, in part, “the policy of the
executive branch agencies of the State of Michigan shall
be to aid, counsel, assist and protect the interests of small
and minority business concerns in order to preserve free
competitive enterprise and to insure that a fair proportion
of the procurement of state agencies and agencies of the
state be placed with small and minority business enter
prises” (Ex. 19D, p. 8). To this end, the Governor estab
68a
lished the Small and Minority Business Procurement
Council, and directed each State agency to cooperate with
the Council so that the objectives of the policy might be
achieved. The Governor also directed the Council to sub
mit an annual report, which would evaluate the imple
mentation of the small and minority business procurement
policy.
In 1977, the Council issued its First Annual Report.
The total State agency commitment for fiscal year 1976-77
to small [184] businesses was set at 23% while that set for
minority businesses was 1 %. At the end of the fiscal year,
the commitment for minority businesses had been
reached and the commitment for small businesses was ex
ceeded by 30%. The Task Force noted “[tjhere is little
doubt that the imminence of Senate Bill Number 10 had a
stimulating effect upon departments, especially during the
latter part of fiscal year 1977” (p. 2). (Senate Bill 10 pro
posed a “set aside” for small and minority businesses).
On December 6, 1975, the Governor issued Executive
Directive 1975-6 “Civil Rights Compliance in State and
Federal Contracts” (Ex. 19E), and directed the Michigan
Department of Civil Rights to:
(1) Establish standards and procedures for assuring
non-discrimination in the provision of state pro
grams, services and funds which are available di
rectly or indirectly through the State of
Michigan.
(2) Provide state departments, agencies and institu
tions with assistance in developing their internal
procedures for requiring compliance with non
discrimination requirements consistent with the
statewide standards and procedures.
69a
(3) Monitor and review the procedures adopted by
departments, and agencies to assure compliance
with the standards established by the Directive.
(4) Review state laws that establish programs and
services and report to the Governor, executive or
administrative action that might be appropriate to
encourage non-discriminatory applications of
those programs consistent with the objectives of
the Directive.
(5) Provide an annual report to the Governor with
respect to compliance by state agencies with the
policies established by the Directive.
On May 15, 1978, the Department of Civil Rights
[MCRC] issued a Report, which expressed concern over
the limited progress that had been made in implementing
Executive Directive 1975-6 because of (1) the lack of
availability of staff in some agencies, (2) the inexperience
of personnel in dealing with civil rights matters, and (3)
the intense involvement of the MCRC staff in evaluating
and assisting in every review. Particular concern was ex
pressed about some departments who, after making a
commitment to comply with the Executive Directive
1975-6, “subjected the process to repeated delays result
ing in little or no implementation. Two of the depart
ments with the largest grant programs, both in terms of
numbers and monetary value, raised legal questions that
have severely limited implementation.”
All of this information was available to the Legislature
on March 15, 1979 when the House initiated House Bill
4335. The original House Bill 4335 proposed a set aside
of 20% of state contracts, 13% for small businesses and
7% for minority businesses. In February 1980, the pro
70a
posed set aside provision for small businesses was dropped
and a 5% set aside section for women was added. In its
final form, the absolute set aside language was removed
from the Bill. Instead, the proposed legislation provided
for a gradual attainment of ultimate percentages ol con
tracts for minority and woman owned businesses. This
was to be accomplished by increasing the percentage ol
actual expenditures to these businesses over a four year
period in the case of minorities and a five year period in
the case of woman owned businesses.5
DMB initially expressed concern that the absolute set
asides could not be attained. The gradual implementation
in the final draft appears to have been addressed to these
concerns. By and large, however, the [185] executive de
partments supported the Bill as a means of increasing the
participation of women and minorities in the activities of
State government. Each analysis of the Bill reiterates this
theme and the reasons in favor of legislative adoption of it:
Statistical descriptions of the extent of participation
in state programs by businesses controlled by women
and minorities are varied and sometimes contradic
tory depending on the definitions used and the sam-
[5]
The following chart shows the gradual increase in the percentage of expenditures
designated for minority and woman owned businesses.
MINORITY FEMALE
% of prior % of % of prior % of
year base year base
1979-80 Est. 1.0 .25
1980-81 150 1.5 150 .375
1981-82 200 3.0 200 .750
1982-83 200 6.0 200 1.5
1983-84 116 7.0 200 3.0
1984-85 140 5.0
71a
pies of state spending examined. These descriptions,
however, all reveal that such businesses receive a dis
proportionately small share of state spending for con
struction and goods and services in relation to their
proportion of the state’s population. That minorities
and women have been systematically denied equal
opportunity in this country is sad historical fact now
generally accepted and widely recognized in legisla
tion of the past two decades. In the interests of jus
tice as well as the social and economic health of the
state, the legislature should do all that it can to en
sure that businesses owned by minorities and women
obtain their fair share of the state’s business. (Ex.
19A(17), p. 2).
House Bill 4335 was finally adopted by the Legislature
two years after its initiation and became Public Act 1980,
No. 428, which took immediate effect on January 13,
1981.
Plaintiffs say that this record does not support a finding
of past discrimination. In particular, they argue that the
record merely sets forth “the history of the western world
for the past 200 years, laws in this country that have im
posed inferior status on minorities and women, the statu
tory scheme upheld in Fullilove, various exhibits discus
sing PA. 428 and similar Acts proposed but not passed;
and various exhibits demonstrating the low dollar percent
age of state contracts obtained by minority owned busi
nesses.’’ Moreover, they assert that the record reveals that
the lack of participation by minorities has nothing to do
with discrimination but is attributable to the complexity of
the procurement procedures by the State and the lack of
resources available to small and minority businesses.
They further contend that, in the face of this evidence, the
State has attempted to “magically” transform a mere sta
72a
tistical disparity into a finding of past intentional discrimi
nation.
This Court must reject Plaintiffs’ contentions that the
Legislature findings were unrelated to the conditions
within the State. The evidence before the Legislature
amounted to much more than a general assertion of past
discrimination against minorities and women in this coun
try over the “past 200 years.” As the record clearly indi
cates, much of the evidence, which was relied upon by the
Legislature prior to the adoption of P.A. 428, was specifi
cally addressed to the plight of minority businesses within
the State.
Next, Plaintiffs strenuously contend that the Legislature
cannot rely on statistical evidence alone to support a find
ing of past discrimination, particularly where there is evi
dence to support a contrary result. Statistical evidence
alone may, in some circumstances, demonstrate a constitu
tional violation, Detroit Police Officers Assn. v. Young, su
pra, 608 F.2d 671, 686.
Even though a limited survey of small and minority
businesses supports the belief that the State’s complex
purchasing procedures contributes to minority businesses’
inability to participate fully in State procurements, those
perceptions do not negate the unmistakable conclusions
which are drawn from the statistical evidence. The testi
mony of Berman before the Senate shows that the Execu
tive Branch had taken steps to assist small and minority
businesses in dealing with the complexities of State pro
curement prior to the introduction of Senate Bill 1461.
The Office of Economic Expansion [OEE] through its Di
vision of Minority Business Enterprise and Small Business
Developm ent [DMBE], provided assistance in
“management/administrative training programs, problem
73a
solving with governmental regulatory agencies, and finan
cial resource development” (p. 2) prior to the enactment
of P.A. 428. Moreover, while it appears that the Senate
procurement policies ad- [186] versely affected small and
minority businesses, the impact upon the minority busi
ness community was more severe and persistent.
A comprehensive study, A Public Procurement Inventory
o f Minority Vendors, showed that State purchasing agents
harbored unfounded negative attitudes toward minority
businesses which hampered efforts to increase minority
participation in State procurement. The 1978 MCRC Re
port demonstrated that, even after Executive action to
correct a “statistical” imbalance had been implemented,
these attitudes had not lessened and threatened to further
hamper Executive efforts in this area. Following the issu
ance of Executive Directive 1975-4, small business partic
ipation reached 26% of all State procurement for the
1976 fiscal year. In that same year, minority businesses
obtained only 1% of all State contracts. During the same
period of time, there were over 8,000 minority businesses
in the State, whose activities span a wide range of goods
and services and at least six of those businesses are among
the Top 100 Rlack businesses in the country. Under these
circumstances, an inference of discrimination can hardly
be termed “magical.”
Plaintiffs next contend that (1) the actions of the Michi
gan Legislature were not the same as those of Congress
when it decided to adopt the MBE statute, and (2) the
Michigan Legislature merely refers to the Fullilove deci
sion to support its actions. The record before this Court
demonstrates that the actions of the Michigan Legislature
virtually paralleled that of Congress. In Fullilove, the Su
preme Court noted that Congress first attempted to ad
dress the under-participation of minorities through § 8(a)
74a
of the Senate Small Business Act, Public Law 85-536.
Under the Act, the Small Business Administration [SBA]
was permitted to assist small businesses in contracting to
furnish goods and services to the Federal Government. In
1968, the President directed the SBA to develop a pro
gram to assist small businesses who were owned or con
trolled by “socially or economically disadvantaged [per
sons] to achieve a competitive position in the economy.” In
a 1975 Report, the House Subcommittee on SBA Over
sight and Minority Enterprise expressed its disappoint
ment in the limited effectiveness of § 8(a) of the Small
Business Act. It noted that minorities received only
0.65% of Government contracts. The General Accounting
Office and the United States Commission on Civil Rights
also expressed dissatisfaction with the limited success of
§ 8(a). In addition, the Congress had a report from the
Office of Minority Business Enterprise [OMBE] which
concluded “that OMBE efforts were ‘totally inadequate’
to achieve its policy of increasing opportunities for sub
contracting by minority businesses on public contracts.
OMBE efforts were hampered by a glaring lack of specific
objectives which each prime contractor should be re
quired to achieve by a ‘lack o f enforcement provisions’ and
by a ‘lack o f any meaningful monitoring system,’ ” Fullilove
at 467, 100 S.Ct. at 2769 (emphasis added), citing
H.R.Rep. No. 94-468, 1975.
In the present case, the State initiated a similar small
business “set aside” act (Senate Bill 1461). The Senate
then introduced Senate Bill 10 which included particular
assistance for businesses that were owned or controlled by
“socially and economically disadvantaged” persons. The
definition of such persons is essentially the same as that
which had been promulgated by the SBA in connection
with §8(a). The initiation of these Bills in the Legislature
was accompanied by Executive action. The Reports from
75a
the MCRC, Small Business Task Force, and the Small and
Minority Business Procurement Council all reached the
same basic conclusions as those that were submitted by
various commissions to Congress on the effectiveness of
§ 8(a). Each of these Reports noted that executive pro
grams had been hampered by bureaucratic recalcitrance.
One study noted that the impetus toward even limited
success was caused by the imminence of set aside legisla
tion (Senate Bill fO).
Plaintiffs seems to suggest that this Court should re
quire the State to trace the exact legislative and executive
steps which had [187] been taken by the Federal Govern
ment in Fullilove and hold that the State cannot rely on
the experience of the Federal Government. In view of
this record, Plaintiffs’ position would appear to be unten
able. Although the Michigan Legislature did not pass Sen
ate Bills 1461 or 10, the State should not be required to
retrace the unsuccessful path of the Federal Government
because (1) the Michigan Legislature could take notice of
the Federal Government’s admitted failure in assisting mi
norities through § 8(a) of the SBA, and (2) on the basis of
various reports, studies and executive actions, it was ap
parent that the bureaucracy’s intransigence required spe
cific enforeable legislation. The record in this case is but
a microcosm of the national record before Congress when
it passed the MBE.
For this reason and the reasons previously cited, this
Court must reject Plaintiffs’ contentions. This Court finds
that there was sufficient evidence before the Legislature
to make a finding of past intentional discrimination.
Having determined that the State has established its
interest in ameliorating the present effects of past discrim
ination, this Court must now determine whether PA. 428
76a
is a reasonable means of achieving that end. In consider
ing this question, the Court must examine (1) whether any
group or individual is stigmatized by the implementation
of the Act, and (2) whether the race and sex classifications
have been reasonably drawn in light of the Act’s objec
tives. Bratton, supra, at 887. A party who attacks a race
or sex conscious remedy must demonstrate that it mani
fests a “constitutionally impermissible stigma,” Bratton,
supra, at 891. To determine whether a remedy lacks the
indicia which is associated with an “impermissible
stigma,” Courts have looked to (1) whether the beneficia
ries (minorities or women) of the remedy are qualified for
the position thus granted, Bratton, supra, at 891; Valentine
v. Smith, supra, at 511, (2) the actual burden shouldered
by the white majority, in light of the scope of the program,
Fullilove, supra 448 U.S. at 484, 100 S.Ct. at 2777.
The record before this Court demonstrates that P.A.
428 provides adequate safeguards to assure that those per
sons who are granted awards under its provisions are as
qualified as their majority counterparts. In addition, the
program does not force an undue burden upon the major
ity contractors. Section 2 Paragraph (5) of the Act,
M.C.L.A. § 450.772(5) provides that “minority and
woman owned businesses shall comply with the same re
quirements expected of other bidders including but not
limited to being adequately bonded.” Under these cir
cumstances no stigma attaches to either class.
This Court must also consider the burdens that have
been placed upon the white majority in connection with
the implementation of P.A. 428. In Michigan, procure
ment exceeds over 437 million dollars per year. The ulti
mate percentages set aside for minority and woman
owned businesses is 7% and 5% respectively. Under the
Federal MBE, 10% of all contracts were set aside for mi
77a
norities alone. Justice Burger found that the MBE’s 10%
set aside resulted in a relatively light burden for non
minority firms in light of the scope of program “as com
pared with overall construction contracting opportunities”
in the public and private sectors, Fullilove at 484, 100
S.Ct. at 2777.6
Here, too, the burden upon non-minority firms is light
compared to their overall contracting opportunities. This
is particularly true because the non-minority firms attack a
set aside which addresses all segments of the State’s pro
curement activities, not just the highway and building
construction. The overall opportunities for the State and
private sectors are enormous. Under these circumstances,
it is not unreasonable for these non-minority contractors
to “share the burden” of ameliorating the present [188]
effects of post discrimination, Fullilove at 484, 100 S.Ct. at
2778.
Finally, this Court must address the reasonableness of
the Act. “This test encompasses a variety of consider
ations which may vary given the nature of the preference
plan to be considered and the circumstances surrounding
its implementation,” Bratton at 892. No one characteristic
is determinative of what is constitutionally reasonable, id.
In Fullilove, the Supreme Court enumerated the charac
teristics of the MBE which made it constitutionally per
missible: (1) the program was a strictly remedial measure,
(2) it functioned prospectively, (3) the plan was open only
to qualified, bona fide MBE’s, (4) technical assistance is
provided as needed, (5) the 10% set aside may be waived
if qualified, bona fide MBE’s are not available, (6) there
See note 72 at 484, 100 S.Ct. at 2778. The Commerce Department estimated
that over 170 Billion Dollars was spent on construction in the United States in
1977.
78a
was an administrative mechanism, including a complaint
procedure to ensure that only bona fide MBE’s are en
compassed and to prevent unjust participation by those
who have not suffered from prior discrimination, and (7)
the program was appropriately limited in extent and
duration.
Public Act 428 contains all of these characteristics. As
discussed in detail earlier, the Act is strictly a remedial
measure that is designed to ameliorate the present effects
of past discrimination. The Act functions prospectively
and it clearly requires all minority and women vendors to
meet the same qualifications as their majority counter
parts. Next, technical assistance is provided through the
OEE. In addition, P.A. 464, M.C.L.A. § 450.781 et seq.,
establishes a Small Business Development Program to
provide small businesses with information, managerial,
and technical assistance, and to assist the Legislature in
developing and strengthening small businesses within the
State.
Although P.A. 428 does not contain a mechanism for an
administrative waiver, it does specifically provide that if no
qualified minority or woman owned businesses are availa
ble to bid upon a contract, the contract will go to a major
ity business, M.C.L.A. § 450.772(6). Next, pursuant to
P.A. 428, administrative procedures have been promul
gated by the Office of Human Resource Policy and Special
Projects to implement the Act.
Among these procedures is a mechanism for “Verifica
tion of Status.” All applicants, who seek to claim the sta
tus of a minority or woman owned business, must submit a
verification form containing: (1) the legal, financial and
operating interests of the business, and (2) an attestation
to the accuracy of the information. If any contracting de
79a
partment has good reason to believe that a person does
not meet the standard for a minority or woman owned
business, it may request (1) additional information of the
applicant, (2) an investigation by the Department of Civil
Rights or (3) action by the Attorney General if it appears
that a person has misrepresented his or her status.
These administrative procedures also contain a com
plaint mechanism, whereby any business or firm, which
has submitted a bid and been denied a contract, “may file
a complaint with the Department of Civil Rights, alleging
that the denial was unfair and that the unfairness resulted
from the administration of [RA. 428].” The Procedures
also include an appeals process.7
Finally, Section 3 of the Act, M.C.L.A. § 450.773 re
quires the Governor to submit a [189] semi-annual report
to the Legislature which will detail the results of the
State’s procurement policy and the actual number and
dollar volume of contracts that have been awarded to mi
nority and woman owned businesses during the reported
period.
P.A. 428 itself requires that a person certify his or her status: A person who
wishes to be certified as a minority owned or woman owned business shall complete
a sworn affidavit that the person is a minority owned or woman owned business and
is prepared to bid on state contracts. All ownership interests in the business shall
be specifically identified in the affidavit. The affidavit shall be filed with the gover
nor or a department designated by the governor.
The Act also provides for penalties for anyone who fradulently procures a contract:
“A person who knowingly violates or conspires to violate this act, or who knowingly
and fradulently procures or attempts to procure a contract with this state as a
minority owned or woman owned business is guilty of a felony, punishable by im
prisonment for not more than 2 years, or a fine of not less than $5,000.00 or both. A
person who violates this act shall be barred from obtaining future contracts with the
state.”
80a
Plaintiffs contend that P.A. 428 does not comport with
the tenets of Fullilove because the remedy is improperly
tailored to its objectives. Specifically, they contend that
the Act does not (1) insure that only those businesses
which have suffered from prior discrimination will receive
the benefit of the set aside, or (2) have a termination
point. Plaintiffs argue that Fullilove makes it clear that
these characteristics are essential to a finding of
constitutionality.
A careful reading of Fullilove discloses that Plaintiffs’
interpretation is in error. It is true that Chief Justice
Burger noted that the administrative mechanism of the
MBE contained provisions “to prevent unjust participa
tion in the program by those minority firms whose access
to public contracting opportunities is not impaired by the
effects of prior discrimination,” at 482, 100 S.Ct. at 2776.
This passage cites pages 471-472, 100 S.Ct. at 2771 of the
opinion, which referred to regulations that specifically de
fine “minority” and to a complaint procedure which is
almost identical to that in the Michigan Administrative
Procedures.8 Contrary to the argument of the Plaintiffs,
the Fullilove Court did not enunciate a standard which
requires that persons who seek the benefits of the MBE
must show that they were actually the victims of past
discrimination.
The sections referred to are in the Appendix of Chief Justice Burger’s opinion at
494-495, 100 S.Ct. at 2782-83, and reads as follows:
1 3. The EDA Technical Bulletin, at 1, provides the following definitions:
“a) Negro—an individual of the black race of African origin.
“b) Spanish-speaking—An individual of a Spanish-speaking culture and ori
gin or parentage.
“c) Oriental—An individual of a culture, origin or parentage traceable to the
areas south of the Soviet Union, East of Iran, inclusive of islands adjacent
81a
It is also true that Justice Burger found it significant
that the MBE was of limited duration, but the full passage
of the notation reveals the true significance of that
provision:
The MBE provision may be viewed as a pilot project,
appropriately limited in extent and duration, and sub
ject to re-assessment and re-evaluation by Congress
prior to any extension or re-enactment. Miscarriages
of administration could have only a transitory eco
nomic impact on businesses not encompassed by the
program, and would not be irremediable.
At 489, 100 S.Ct. at 2780.
Nowhere in the Supreme Court’s opinion is there a state
ment which requires that a remedial act be of limited du
ration. The concern expressed by the Chief Justice was
thereto, and out to the Pacific including but not limited to Indonesia, Indo
china, Malaysia, Hawaii and the Philippines.
“d) Indian—An individual having origins in any of the original people of
North American and who is recognized as an Indian by either a tribe, tribal
organization or a suitable authority in the community. (A suitable authority in
the community may be: education institutions, religious organizations, or state
agencies.)
“e) Eskimo—An individual having origins in any of the original peoples of
Alaska.
“f) Aleut—An individual having origins in any of the original peoples of the
Aleutian Islands.”
f 4. The EDA Technical Bulletin, at 19, provides in relevant part:
“Any person or organization with information indicating unjust participation by
an enterprise or individuals in the MBE program or who believes that the MBE
participation requirement is being improperly applied should contact the ap
propriate EDA grantee and provide a detailed statement of the basis for the
complaint.
“Upon receipt of a complaint, the grantee should attempt to resolve the issues
in dispute. In the event the grantee requires assistance in reaching a determi
nation, the grantee should contact the Civil Rights Specialist in the appropriate
Regional Office. “If the complainant believes that the grantee has not satisfac
torily resolved the issues raised in his complaint, he may personally contact the
EDA Regional Office.”
82a
that Congress, by limiting the duration of the Act, would
have an opportunity to assess its progress. If the Act had
achieved its objectives, then Congress would not need
[190] take any further action. If the Act did not achieve its
intended objective, then Congress could reenact it. The
essence of the durational limitation was to provide for “re
assessment and re-evaluation” of the Act.
Although P.A. 428 does not contain a termination date,
it does require the Governor to give semi-annual reports
to the Legislature on the progress, if any, that has been
made toward achieving its objectives. In this way, the
Legislature can reassess and re-evaluate the Act every six
months. Because of this safeguard, the absence of a termi
nation date does not render the Act unconstitutional. P.A.
428 fully comports with the spirit and the language of
Fullilove.
For all the foregoing reasons, this Court finds that P.A.
428 is constitutionally permissible and is not violative of
the Equal Protection Clause of the Fourteenth Amend
ment. The Court also determines that the Act does not
violate 42 U.S.C. § 1981, 42 U.S.C. § 1983, 42 U.S.C. §
2000d, or 42 U.S.C. § 2000e. see Bratton, supra. The
Court finds that Plaintiffs’ attack upon P.A. 428 is without
merit. Thus, the Court denies Plaintiffs’ Motion for Sum
mary Judgment and grants Defendants’ Motion for Sum
mary Judgment.
SO ORDERED.
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* * *
[NOT RECOMMENDED FOR FULL-TEXT PUBLICA
TION Sixth Circuit Rule 24 limits citation to specific situ
ations. Please see Rule 24 before citing in a proceeding in a
court in the Sixth Circuit. If cited, a copy must be served
on other parties and the Court. This notice is to be promi
nently displayed i f this decision is reproduced.]
FILED—AUG 24, 1984
JOHN P. HEHMAN, CLERK
No. 83-1630
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
MICHIGAN ROAD BUILDERS
ASSOCIATION, ET AL.,
Plaintiffs-Appellants,
V.
WILLIAM G. MILLIKEN, ET AL.,
Defendants-Appellees.
ORDER
BEFORE: ENGEL, MERRITT, and KENNEDY, Circuit
Judges
This matter is before the Court upon consideration of
the appellees’ motion to dismiss the appeal for lack of ju
risdiction. The appellants have failed to file a response to
the motion. However, the appellants’ reply brief filed in
the appeal addresses the jurisdictional problem.
Upon review of the record it appears that the district
court did not decide the claims against the Michigan De
partment of Transportation. Since not all the claims have
been decided by the district court and the court did not
84a
grant a Rule 54(b), Federal Rules of Civil Procedure, this
Court does not have jurisdiction to review the August 16,
1983 opinion and the August 12, 1983 judgment of the
district court. Oak Construction v. Huron Cement Com
pany, 475 F.2d 1220; Hardin v. M/V Ben Candies, 549 F.2d
395 (5th Cir. 1977); Estate o f Burks v. Boss, 418 F.2d 913
(6th Cir. 1969).
It is therefore ORDERED that the motion to dismiss be
granted and the appeal be and hereby is dismissed.
ENTERED BY ORDER OF THE COURT
John P. Hehman Isi
Clerk
FILED—MAY 3, 1988
JOHN P. HEHMAN, CLERK
No. 86-1239
In The
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
MICHIGAN ROAD BUILDERS ASSOCIATION, INC.,
et al,
Plaintiffs-Appellants,
WILLIAM G. MILLIKEN, et al,
Defendants-Appellees.
NOTICE OF APPEAL
Pursuant to U.S. Supreme Court Rule 10, notice is
hereby given that Defendants-Appellees (the State of
85a
Michigan) appeal to the United States Supreme Court
from the November 25, 1987 final judgment in this action,
and upon the denial of the petition for rehearing by order
dated February 23, 1988. Appeal is taken pursuant to 28
use § 1254(2).
Respectfully submitted,
FRANK J. KELLEY
Attorney General
Louis J. Caruso
Solicitor General
Rrent E. Simmons
Assistant Attorney General
525 West Ottawa Street
Lansing, Michigan 48913
(517) 373-6434
CONSTITUTION OF THE UNITED STATES
AMENDMENT XIV.
§ 1. Citizenship rights not to be abridged by states.
Section 1. All persons born or naturalized in the United
States, and subject to the jurisdiction thereof, are citizens
of the United States and of the State wherein they reside.
No State shall make or enforce any law which shall
abridge the privileges or immunities of citizens of the
United States; nor shall any State deprive any person of
life, liberty, or property, without due process of law; nor
deny to any person within its jurisdiction the equal protec
tion of the laws.
86a
PUBLIC ACTS 1980-No. 428
[No. 428]
AN ACT to provide for the designation of state procure
ments of goods, services, and construction for minority
owned and woman owned businesses; to provide powers
and duties of the governor; to prescribe powers and duties
of certain state departments and agencies; and to provide
penalties.
The People o f the State o f Michigan enact:
450.771 Definitions [M.S.A. 3.540(51)]
Sec. 1. As used in this act:
(a) “Controlled” means exercising the power to make
policy decisions in a business.
(b) “Department” means a principal department of the
executive branch of the state government.
(c) “Expenditures” means payments and contracts for
goods, services, and construction which may be acquired
competitively and are not regulated by separate authority,
and, where the department acts as the sole or primary
contracting officer and has selective discretion as to the
supplier, vendor, or contractor.
(d) “Joint venture” means an agreement that combines
2 or more businesses for specified purposes involving 1 or
more minority owned or woman owned businesses and 1
or more businesses other than a minority owned or
woman owned business.
(e) “Minority” means a person who is black, hispanic,
oriental, eskimo, or an American Indian who is not less
87a
than 1/4 quantum Indian blood as certified by the persons’
tribal association and verified by the Indian affairs
commission.
(f) “Minority owned business” means a business enter
prise of which more than 50% of the voting shares or
interest in the business is owned, controlled, and operated
by individuals who are members of a minority and with
respect to which more than 50% of the net profit or loss
attributable to the business accrues to shareholders who
are members of a minority.
(g) “Operated” means the activity of being involved in
the day to day management of a business.
(h) “Person” means an individual, sole proprietorship,
partnership, association, or corporation.
(i) “Subcontract” means an agreement to share a prime
contract between a prime contractor, who is not a minor
ity owned business or a woman owned business, and a
minority owned or woman owned business.
(j) “Woman owned business” means a business of which
more than 50% of the voting shares or interest in the
business is owned, controlled, and operated by women
and with respect to which more than 50% of the net profit
or loss attributable to the business accrues to the women
shareholders.
450.772 Construction, goods, and services procurement
policy; minority owned and woman owned businesses;
provisions; program changes; portion of prime contract
reflecting minority owned or woman owned business
participation; bidder requirements; contract award.
[M.S.A. 3.540(52)]
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Sec. 2 (1) The construction, goods, and services pro
curement policy for each department shall provide for the
following percentage of expenditures to be awarded to mi
nority owned and woman owned businesses by each de
partment except as provided in subsection (6):
(a) For minority owned business, the goal for 1980-81
shall be 150% of the actual expenditures for 1979-80, the
goal for 1981-82 shall be 200% of the actual expenditures
for 1980-81, the goal for 1982-83 shall be 200% of the
actual expenditures for 1981-82, the goal for 1983-84 shall
be 116% of the actual expenditures for 1982-83, and this
level of effort at not less than 7% of expenditures shall be
maintained thereafter.
(b) For woman owned business, the goal for 1980-81
shall be 150% of the actual expenditures for 1979-80, the
goal for 1981-82 shall be 200% of the actual expenditures
for 1980-81, the goal for 1982-83 shall be 200% of the
actual expenditures for 1981-82, the goal for 1983-84 shall
be 200% of the actual expenditures for 1982-83, the goal
for 1984-85 shall be 140% of the expenditures for 1983-
84, and this level of effort at not less than 5% of expendi
tures shall be maintained thereafter.
(2) If the first year goals are not achieved, the governor
shall recommend to the legislature changes in programs to
assist minority and woman owned businesses.
(3) Each department, to assist in meeting the construc
tion, goods, and services procurement expenditures per
centages set forth in subsection (1), shall include provi
sions for the accommodation of subcontracts and joint
ventures. The provisions shall be established by the gover
nor and shall require a bidder to indicate the extent of
minority owned or woman owned business participation.
89a
(4) Only the portion of a prime contract that reflects
minority owned or woman owned business participation
shall be considered in meeting the requirements of sub
section (1).
(5) Minority owned or woman owned businesses shall
comply with the same requirements expected of other
bidders including, but not limited to, being adequately
bonded.
(6) If the bidders for any contract do not include a qual
ified minority owned and operated or woman owned and
operated business, the contract shall be awarded to the
lowest bidder otherwise qualified to perform the
contract.
450.773 Establishing procurement policy for meeting pro
jected goals; report; staff. [M.S.A. 3.540(53)]
Sec. 3 (1) The governor shall establish a procurement
policy for each executive department to implement and
establish the method of meeting the projected goals estab
lished in section 2.
(2) The governor shall submit a report to the legislature
every 3 months during the first year of operation and
every 6 months during succeeding years. The report shall
detail the results of the governor’s procurement policy in
cluding the specific contracts awarded by each depart
ment and the type of business engaged in by the person
awarded the contract.
(3) Appropriate staff to implement the governor’s policy
shall be provided by the department of management and
budget.
90a
450.774 Certification as minority owned or woman owned
business; affidavit; filing. [M.S.A. 3.540(54)]
Sec. 4. A person who wishes to be certified as a minor
ity owned or woman owned business shall complete a
sworn affidavit that the person is a minority owned or
woman owned business and is prepared to bid on state
contracts. All ownership interests in the business shall be
specifically identified in the affidavit. The affidavit shall
be filed with the governor or a department designated by
the governor.
450.775 Violating or conspiring to violate act; fraudu
lent procurement of contract; felony; penalty; barring
violator from obtaining future contracts. [M.S.A.
3.540(55)]
Sec. 5. A person who knowingly violates or conspires to
violate this act, or who knowingly and fradulently pro
cures or attempts to procure a contract with this state as a
minority owned or woman owned business is guilty of a
felony, punishable by imprisonment for not more than 2
years, or a fine of not less than $5,000.00, or both. A
person who violates this act shall be barred from obtaining
future contracts with the state.
450.776 Minority owned or woman owned business as
prime contractor. [M.S.A. 3.540(56)]
Sec. 6. If a minority owned or woman owned business
receives a contract, the minority owned or woman owned
business shall be the prime contractor through its
duration.
This act is ordered to take immediate effect.
Approved January 13, 1981.