L. Feriozzi Concrete Company v. Casino Reinvestment Development Authority Brief and Appendix of Respondents
Public Court Documents
October 10, 2001
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Brief Collection, LDF Court Filings. L. Feriozzi Concrete Company v. Casino Reinvestment Development Authority Brief and Appendix of Respondents, 2001. 571c1a96-b19a-ee11-be36-6045bdeb8873. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/94bf3a12-1c6f-4875-919e-80940701219e/l-feriozzi-concrete-company-v-casino-reinvestment-development-authority-brief-and-appendix-of-respondents. Accessed April 28, 2025.
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
L. FERIOSZI CONCRETE COMPANY,
INC., a New Jersey Corporation,
and CONCETTA FERIOZZI,
Plaintiffs/Respondents,
v .
CASINO REINVESTMENT DEVELOPMENT
AUTHORITY and JAMES B. KENNEDY,
Executive Director of the CASINO
REINVESTMENT DEVELOPMENT
AUTHORITY
Defendants/Appeid ants
DOCKET NO. A-005057-99T5
Civil Action
ON APPEAL FROM
SUPERIOR COURT OF NEW JER
ATLANTIC COUNTY-LAW DIVIS
DOCKET NO. ATL-L-2003-99
S Y Y
ION
SAT BELOW:
HON. MICHAEL WINKELSTEIN, A J D C
BRIEF AND APPENDIX OF RESPONDENTS
PER3KIE NEHMAD & PERILLO, P.C.
1125 Atlantic Ave., Suite 711
Atlantic City, NJ 08401
(60S) 348-1177
Salvatore Perillo, Esquire
Attorneys for Respondents
On the Brief
Salvatore Perillo, Esquire
Steven J. Brog, Esquire
TABLE OF CONTENTS
PROCEDURAL-HISTORY.................................................1
PRELIMINARY STATEMENT ................ ............................1
FACTUAL AND LEGISLATIVE BACKGROUND ............................ 2
LEGAL ARGUMENT........................ ............................. 22
POINT I - The 20 Percent Requirement in N .J.S.A. 5:12-18(b)(1),
the 7 Percent/3 Percent Requirement in N .J .S .A ,
52:32-17 to 31 and the Regulations Promulgated
Thereunder are Unconstitutional ..........................22
A. Standard of Review............................................. 22
B. The Burden in the Present Case to Justify Disparate
Treatment Based Upon Gender Or Race is on CRDA.............. 27
C. The CRDA's 20 Percent Set-Aside Statute is
Unconstitutional Because CRDA Cannot Demonstrate
By Substantial Evidence That This Legislation was
Necessary to Remedy Past Identified Discrimination .......... 28
POINT II - The CRDA Statute and Regulations and the State
Set-Aside Statute and Regulations are Not Narrowly
Tailored as Required by Our Constitution ............. 49
A. The CRDA Statute, the Set-Aside Statute and the
Regulations Use Overly Broad and Inconsistent
Definitions of a Minority.................................. . . 49
B. Utilizes Rigid Numerical Quotas .............................. 55
C. The CRDA Set-Aside Program Fails to Utilize
Race-Neutral Alternatives ...................................... 56
D. The Set-Aside Statute and Regulations do Note Have
Any Sunset Provision or Any Requirement for
Periodic Evaluation ........................................... 53
POINT III - Good Faith Efforts and Goals are as
Constitutionally Defective as Quotas ................ 64
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POINT IV - The Trial Court Properly Decided Both the
Compelling Interest Issue and the
■■ Narrow Tailoring Issue................................ 67
CONCLUSION......................................................... 8 9
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TABLE OF CITATIONS
Cases
Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097,
2113, 132 L. Ed. 2d 158 (1995) . ............................. 23,27,53
Adarand Constructors, Inc, v. Pena, 965 F. Supp. 1556
(U.S.D.C. Col. 1997)........................................... 52,53
Adkins v. Children's Hospital, 261 U.S. 394, 544 (1923) ........... 89
Allen v. County School Board, 207 F. Supp. 349
(E.D. Va. 1962) (LDF Brief, p. 2 3 ) ................................ 41
American Manufacturers Mutual Insurance Company v. Sullivan,
526 U.S. 40, 62 (1999) ........................................... 88
Ashwander v. TVA, 297 U.S. 288, 347 (1936).................. 75,80,81
Associated General Contractors of California, Inc, v. Coalition
for Economic Equity, 950 F.2d 1401, 1417 (9th Cir. 1991) ....... 56
Associated General Contractors v. City and County of San
Francisco, 813 F.2d 922, 930 (9th Cir. 1987)................. 31, 33
Associated General Contractors v. Coalition for Economic Equity,
950, F. 2d. 1401, 1414 (9th Cir. 1991) ............... ........... 67
Associated General Contractors v. Drabik, 214 F.3d 730
(6th Cir. 2000) ............................................. 31,32,49
Associated Utility Contractors of M.D. v. Mayor, 83 F. Supp.
2d. 613 (D. Md. 2000)............................................. 49
Association for Fairness in Business v. State,
82 F. Supp. 2d 361, 370 (D.C.N.J. 2000).... ................... 45,53
Brunet v. City of Columbus, 1 F.3d 390, 404 (6th Cir. 1993) ...... 36
Bush v. Vera, 517 U.S. 952, 979 (1996)................... 70,71,72,73
City of Chicago v. International College of Surgeons,
522 U.S. 156, 188 (1997) ....................................... 75,77
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City of Richmond v. J.A. Croson Co., 488 U.S. 469,
108 S. Ct. 706, 728, 102 L. Ed. 2d. 854 (1989)........... 7,8,9, 10,
15,23,24,26,42,43,44
48,50, 55,56, 61, 62,
63,68,70
Concrete General, Inc, v. Washington Suburban Sanitary
Commission, 779 F. Supp. 370 (D. Md. 1991) ............. 36,83,84,87
Concrete Works of Colorado, Inc, v. City and County of Denver,
86 F. Supp. 2d. 1042 (D. Colo. 2000).......................... 49, 54
Cone Corp. v. Hillsborough County, 908 F. 2d 908 (11th Cir. 1990) . 62
Contractors Ass'n of Eastern Pa. v. City of Philadelphia,
893 F. Supp. 419 (E.D. Pa. 1995) .................. ............... 54
Contractors Assoc, v. City of Philadelphia, 6 F.3d 990, 996
(3d Cir. 1993) ................................... 28,43,44,57,61,62,
68,69,76,81,83,84
Coral Construction Co. v. King County, 941 F.2d. 910, 916
(U.S.C.A. 9th Cir. 1991) ........................ ............... 45,55
Donadio v. Cunningham, 58 N.J. 309, 325-26 (1971) ............... 76, 82
Edward J. DeBartolo Corp. v. Florida Gulf Coast Building
& Construction Trades Council, 485 U.S. 568, 575
(1998) ................................................ 70,73,74,75,76
Eisenberg v, Montgomery County Public Schools,
197 F. 3d 123, 131 (4th Cir. 1999) ............................. 84,85
Engineering Contractors Ass'n of South Florida v. Metropolitan
Dade County, 122 F. 3d 895 (11th Cir.1997)................... 60,61
F. Buddie Contracting Ltd, v. Cuyahonga Community College
District, 31 F. Supp. 2d 571, 580 (N.D. Ohio 1998)........... 31, 34
FCC v. Beach Communications, Inc., 508 U.S. 307, 314 (1993) ... 88,89
Fullilove v. Klutznick, 448 U.S. 448, 100 S. Ct. 2758
67 L. Ed.2d 902 (1980) ..................................... 24,53,63
Gautreaux v. Chicago Housing Authority, 503 F.2d. 930
(7th Cir. 1974) ................................................... 40
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Grobart v. Grobart, 5 N.J. 161, 165 (1950)...................... 76,
Hall v. St. Helena Parish School Board, 197 F. Supp. 649,
658 (E.D. La.).................................................. 38,
Haney v. County Board of Education, 410 F. 2d 920
(8th Cir. 1969) 40,
Hiller v. County of Suffolk, 977 F. Supp. 202, 206
(E.D.N.Y. 1997) .... ........................................... 84,
Hopwood v. State of Texas, 78 F. 3rd 932, 952
(5th Cir. 1996) ...................................... 30,31,44,50,
Houston Contractors Association v. Metropolitan Transit
Authority, 993 F. Supp. 545 (S.D. Tx. 1997) ..........
Kane v. Freeman, 1997 WL 158315 (M.D. Fla. 1997) ..............
Maryland Troopers Ass'n v. Evans, 993 F. 2d, 1072, 1079
(4th Cir, 1993) ................................. .............
Missouri v. Jenkins, U.S.115 S. Ct. 2038, 2048 (1995) ........
Monterey Mechanical Co. v. Wilson, 125 F. 3rd 702, 710, 713-15
(9th Cir. 1997) ................................... 27,31,32,65,66,
O'Keefe v. Passaic Valley Water Commission,
132 N.J. 234, 240-41 (1993) .................................... 76,
Phillips & Jordan, Inc, v. Watts, 13 F- Supp.2d 1308
(N.D. Fla. 1998) ..................................................
Poindexter v. Louisiana Financial Assistance Commission,
258 F. Supp. 158 (E.D. La. 1966) .................................
Rescue Army v. Municipal Court, 331 U.S. 549,568 (1947) .... 75,79,
Shaw v. Hunt, 116 S. Ct. 1894, 135 L. Ed. 2d. 207
(1996) . ................................................... 48,49,70,
Sherman v. Citibank, N.A., 143 N.J. 35, 65 (1995) .................
State v. Salerno, 27 N.J. 289 (1958)............................ 76,
v
83
40
41
86
54
36
36
26
31
67
82
36
41
88
73
46
83
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The University of California Regents v. Bakke, 438 U.S. 265,
310, 98 S. Ct. 2733, 57 L r Ed. 2d. 750 (1978)................... 26
Three Affiliated Tribes v. Wold Engineering, 467 U.S. 138,
157-58 (1984) ................................................... 75,76
Tuttle v. Arlington County School Board, 195 F.3d 698, 705
(4th Cir. 1999)................................................. 84,85
United States v. Raines, 362 U.S. 17, 21 (1960)................ 75,78
Weinberger v. Wiesenfeld, 420 U.S. 636, 648, 95 S. Ct. 1225,
43 L. Ed. 2d. 514 (1975).......................................... 26
Williams v. Babbitt, 115 F.3d 657, 665 (9th Cir. 1997) ........ 84,86
Wygant v. Jackson Board of Education, 476 U.S. 267, 277,
106 S. Ct. 1842, 90 L. Ed. 2d. 260 (1986).............. 25,27,42,50
Statutes
N. J.A.C. 12 :10A-1................................................. 46,47
N.J.A.C. 12A:10A-1.2 ................................................. 9
N. J.A.C. 12A: 10A-4.1 (d) (2) .............................................6
N.J.A.C. 12A:10A-4.2 ................................................. 6
N.J.A.C. 12A:10A-4.3 ................................................. 7
N.J.A.C. 12A:11-1.2 .............................................. 18,19
N.J.A.C. 12A-11-1. 2 .................. 52
N.J.A.C. 17:14 ....................................... 5,6,9,16,17,19,51
N.J.A.C. 17:14.4.3 .................................................... 7
N.J.A.C. 17:14-1 ........................................... 17,19,46,47
N .J.A.C. 17:14-1, et seq...............................................5
N.J.A.C. 17:14-1.2 .......................................... 9,17,19,51
N.J.A.C. 17:14-4.1 .................................................... 6
N.J.A.C. 19:65-1.1 ............................................ 14,29,42
N.J.A.C. 19:65-1.1, et. s e q .......................................... 14
N.J.A.C, 19:65-4.1 ............................................... 16,17
N.J.A.C. 19:65-4.1(a) ............................................ 16,17
N. J.A.C. 19:65-4.1............................................. 45,46, 47
N.J.S.A. 12A:10A-1 ................................... 5
N.J.S.A. 2A:44-143 .................................................. 57
N. J.S.A. 5:12-153................................ H
N. J.S.A. 5:12-160.......... 11
N. J.S.A. 5:12-161.....................................................11
N.J.S.A. 5:12-181 ................................... 11,13,14,15,19,51
N.J.S.A. 5:12-181(b) ...... ................................... 22,29, 46
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N.J.S.A. 5:12-181(b) (1)................................ 11,19,22,29, 46
N.J.S.A. 5:12-181 (b) (2)... 13
N.J.S.A. 52:27-21.26 ................................................ 51
N.J.S.A. 52:27H-21.26.............. 18,19,51,52
N.J.S.A. 52:32-17 ........................................... 3,16, 46,47
N.J.S.A. 52:32-17, e t s e q .. .......................................3,16
' N.J.S.A. 52:32-18 ................................................. 4,43
N.J.S.A. 52:32-19 ........................................ 4,9,16,19,51
N.J.S.A. 52:32-19(g) ....................................... 9,16,19,51
N.J.S.A. 52:32-19(h) ................................................. 4
N.J.S.A. 52:32-21 ................ ................................. 5,64
N.J.S.A. 52:32-25 .................................................. 5, 65
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TABLE OF APPENDIX
Excepts from the Deposition Transcript
of Yvonne Bonitto-Dogget ............ (Pa-1 to 12)
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PROCEDURAL HISTORY
Respondents concur with the Procedural History submitted by
the Casino Reinvestment Development Authority.
PRELIMINARY STATEMENT
In this action, the Plaintiffs challenge a contradictory
and conflicting set of statutes and regulations mandating that
the Casino Reinvestment Development Authority ("CRDA")
discriminate on racial, ethnic and sexual grounds in the
awarding of not only contracts awarded by CRDA but also with
regard to the contracts awarded by casino licensees and
recipients of CRDA funding across the State. CRDA's Set-Aside
Program is constitutionally unsupportable because:
• CRDA is ignoring the 20% set-aside mandated by its own
enabling legislation because it recognizes that its
statute is fatally, constitutionally infirm.
• CRDA is relying improperly instead on the Small
Business Set-Aside Act which by its terms is limited
to "public procurement and construction contracts" to
impose set asides on contracts awarded by casino
licensees and applicants for CRDA funding.
• The Small Business Set-Aside was not enacted to remedy
past discrimination by the State but rather for social
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purposes. This is the kind of social engineering
which has been soundly rejected as unconstitutional.
• There is absolutely no evidence of any discrimination
on the part of CRDA, contractors doing business with
CRDA, casino licenses or recipients of CRDA funding.
In fact, CRDA has found that there has been no history
of discrimination.
• CRDA is utilizing over inclusive, contradictory
definitions of a "minority".
• CRDA has failed to utilize non race based
alternatives.
These legal and constitutional flaws taken individually are
each sufficient to invalidate the statutes and regulations which
contain them.
FACTUAL AND LEGISLATIVE BACKGROUND
The Minority Business Enterprise (MBE) and Women's Business
Enterprise (WBE) requirements that CRDA is imposing in the
present case are the product of a hodgepodge of laws and
regulations that CRDA is relying upon in some cases and ignoring
in other cases. The laws and regulations are contradictory and
inconsistent in a number of substantive areas. None of these
statutes and regulations can withstand a strict scrutiny test.
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SMALL BUSINESS SET-ASIDE ACT AND THE REGULATIONS
ADOPTED PURSUANT THERETO
In 1983, the Legislature adopted N .J.S.A. 52:32-17, et seq.
which was known as the "Small Business Set-Aside Act". The
Small Business Set-Aside Act established as a goal that
contracting agencies of the State of New Jersey set-aside at
least 15 percent of their contracts for small business
enterprises ("SBE's").
The Small Business Set-Aside Act was amended in 1985
through the passage of Chapter 384 of the Public Laws of 1985
(Senate Bill No. 1776) (the "Set-Aside Act"). Chapter 384
amended the Small Business Set-Aside Act to incorporate set-
asides for MBE's and WBE's in addition to the set-aside for
small businesses. Senate No. 1776 as originally adopted
established a goal of 15 percent for MBE's, 10 percent for WBE's
and 15 percent for SBE's. As Senate Bill No. 1776 (2nd OCR) was
finally adopted, the MBE goals were set at 7 percent and the WBE
goals were set at 3 percent. The SBA goal remained at 15
percent. On June 27, 1985, Governor Kean conditionally vetoed
Senate Bill No. 1776 recommending some technical changes in the
legislation. Senate Bill No. 1776 was subsequently adopted and
signed into law by Governor Kean on December 18, 1985.
The Governor's news release makes it clear that the
Governor viewed Senate Bill No. 1776 as social legislation "to
3
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bring minorities and women into the mainstream of our society
and our economy. . . ." (Pa-255). The Governor's view was
consistent with the specific legislative findings and
declarations contained in the Set-Aside Act.
There is absolutely nothing in the Set-Aside Act to
indicate that it was intended to remedy past discrimination of
the part of the State. To the contrary, the Legislative
Declarations in the Set-Aside Act evidence social goals rather
than any remedial role. The Legislative Declarations indicate
that the "existence of a strong and healthy free enterprise
system is directly related to the well-being and competitive
strength of small business, female business and minority
business concerns. . . N .J .S .A . 52:32-18. The sole purpose
of the Set-Aside Act as articulated by the Legislature, the
Governor and the Legislative history was to encourage the growth
and development of MBE's, WBE's and SBE's. This is precisely
the kind of social objective that our Courts have indicated
cannot be the basis for a constitutionally sustainable racial
set-aside program.
The Set-Aside Act defines a "minority business" as one
which is owned and controlled by persons who are "black,
Hispanic, Portuguese, Asian-American, American Indian or Alaskan
Natives." N.J.S.A. 52:32-19(h).
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The Set-Aside Act establishes a goal for state contracting
agencies- to award "at least" 15 percent of their "public
procurement and construction" contracts for small businesses,
"at least" 7 percent of their "public procurement and
construction" contracts for minority businesses and "at least" 3
percent of their "public procurement and construction" contracts
for female businesses. N .J.S.A. 52:32-21. The Set-Aside Act
allows these goals to be attained either by the direct
designation of prime contracts for small businesses, minority
businesses and female businesses, or by requiring a portion of a
prime contract to be subcontracted to a small business, minority
business or female business. Id.
Although its objective is stated as a goal, it is clear
that the Set-Aside Act contemplates set -asides. For example,
the Set-Aside Act provides that bids for set-aside contracts
from non-small business bidders, non-MBE's or non-WBE's "shall
be rejected". N .J.S.A. 52:32-25. The same is true where a
portion of a contract has been designated as a set-aside. Id.
The Set-Aside Act has been implemented through companion
regulations adopted by the State Department of the Treasury
(N .J.A.C. 17:14-1, et seq.) and the Commerce and Economic Growth
Commission (N.J.S.A. 12A:10A-1, et seq.) (collectively referred
to as the "Set-Aside Regulations"). The Set-Aside Regulations
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require each state contracting agency to establish and
administer a "Set-Aside Program" which provides for at least 7
percent . of the dollar value of its "public procurement and
construction" contracts and of all subcontracts to be awarded to
eligible MBE's and 3 percent to be awarded to WBE's. The Set-
Aside Regulations allow a state contracting agency either to
set-aside a contract in its entirety or to require a contractor
to set-aside the portion of their subcontracts. N .J .A .C .
12A:10A-4.2; N.J.A.C. 17:14-4.1.
The Set-Aside Regulations require a bidder to "certify
that it will comply with New Jersey Laws pertaining to set-aside
contracts and is aware that it is subject to criminal and civil
penalties, including debarment, in the event of non-compliance."
N.J.A.C. 12A:10A-4 .1(d) (2) ; N.J.A.C. 17:14-4.1(d) (2) . The Set-
Aside Regulations require a bidder to establish a good faith
effort to solicit an award of subcontracts to WBE's and MBE's.
A good faith effort consists of attempting to locate qualified
potential MBE's and WBE's, requesting a list of MBE's and WBE's,
keeping a record of its efforts, including the names of
businesses contacted and the means and results of such contacts,
attempting to contact all potential subcontractors on the same
day and use similar methods to contact them, provide all
potential subcontractors with detailed information regarding
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specifications and attempt, wherever possible, to negotiate with
potential subcontractors which submitted higher than acceptable
price quotes. N .J.A.C. 12A:10A-4.3; N .J.A.C. 17:14.4.3. The
Set-Aside Regulations require the bidders to maintain adequate
records to document their efforts. Id.
As a result of the Supreme Court's decision in City of
Richmond v. J.A. Croson Co., 488 U.S. 469, 108 S. Ct. 706, 728,
102 L. Ed. 2d. 854 (1989), Governor Kean suspended the State MBE
Set-Aside Program and appointed the "State of New Jersey
Governor's Study Commission on Discrimination of Public Works
Procurement and Construction Contracts" to perform a study to
investigate the nature and scope of any discriminatory practices
in state public contracting in New Jersey.
On March 5, 1993, Governor Florio issued Executive Order No.
84 which re-established a 7% MBE and a 3%WBE set-aside for State
purchasing programs and for State agencies and Commissions. The
Governor's Executive Order was based upon the Final Report of
the Governor's Study Commission on Discrimination in Public
Works Procurement and Construction Contracts which was issued on * 7
February 22, 1993 ("Study Commission Report"). The Study
Commission Report did not study CRDA construction contracts,
applicants for CRDA financing, the Casino industry or
contractors contracting with casinos or CRDA. The Study
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Commission Report was based solely upon a study of State
government purchasing and contracting history in general.1 * * * * * * 8 As a
result, the Study Commission Report does not provide the
empirical evidence which is constitutionally required to allow
the program in the present case to meet the strict scrutiny
test. The Study Commission Report treated all State agencies as
a homogenous group.
The Study Commission Report properly points out that the
definition of "minority" that the State was using at the time
was over inclusive and, therefore, unconstitutional in light of
the Supreme Court's decision in Croson. In response to a public
comment concerning the proposed regulations it was stated:
The Governor's Study Commission on
Discrimination in Public Works
1 The Study Commission Report was based upon an "Anecdotal Study"
which consisted of uncorroborated, unconfirmed testimony which
was in many cases hearsay. Our Courts have held that anecdotal
testimony cannot be the basis to support an MBE/WBE program.
Contractor's, 6 F 3rd at 995. The Study Commission Report was
also based upon a statistical study performed by Dr. Timothy
Bates entitled Availability, Utilization and Disparity: An
Analysis of New Jersey Procurement Data in Light of Minority and
Women-Owned Business Availability, March 1992 ("Bates Study").
The Bates Study compared the list of bidders on the Bid lists of
the State with 1982 Census Data for small business MBE/WBE's in
New Jersey and metropolitan New York and Philadelphia. The
Bates Study is a superficial disparity study which ignored the
size and qualifications of MBE/WBE's, made no attempt to perform
an industry by industry analysis, and did not limit itself to
the jurisdiction of State of New Jersey. In addition, because
the Bates Study focused exclusively on State bid lists for State
contracts, it ignored completely CRDA construction contracts and
the casino industry.
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Procurement and Construction
Contracts (Study Commission) only
found evidence of discrimination in
public contracting - against African
Americans, Hispanics and Asian
American owned firms and women
owned firms of all races and
ethnicity. Based on the lack of
sufficient data at this time, the
Commission did not find evidence of
discrimination against the other
groups listed in the definition of
the term "minority business," that
is, Portuguese, Native American and
Alaskan native owned firms. City
of Richmond v. Croson Co., 488 U.S.
469 (1989) requires that these
rules be narrowly tailored to
address the discrimination revealed
by the Study Commission's study to
be constitutionally valid. [27
N.J.R. 135 (a)].
As a result of the Study Commission Report, the State Set-
Aside Regulations were changed to redefine a minority to exclude
American Indians, Alaskan Natives and Portuguese. See, N .J.A.C.
17:14-1.2 and N.J.A.C. 12A:10A-1.2. The problem is that the
Set-Aside Act was not amended. The Set-Aside Act still defines
a minority business as "a business which has its principle place
of business in the State, is independently owned and operated
and at least 51% of which is owned and controlled by persons who
are Black, Hispanic, Portuguese, Asian-American, American Indian
or Alaskan Natives." N.J.S.A. 52:32-19(g). As a result, the
Set-Aside Act still has an over inclusive, unconstitutional
definition of minority and the State Set-Aside Regulations which
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cite as their authority the Set-Aside Act employee a definition
which is.. contrary to the Act.
The varying definitions of what constitutes a minority
also undermines the statistical basis for the Study Commission
Report. The Study Commission Report surveys "MBE's" in the
1980s and treats MBE's as a generic category. It is clear that
during the 1980s, the State was using a definition of MBE's
which included categories (i.e. Alaskans, American Indians,
Portuguese, etc.) which are now excluded under some State
regulations. In addition, the Study Commission Report utilized
federal data without indicating what definition of MBE the
Federal agency was using. Most significantly, there is no break
down in the State Commission Report of the three categories of
MBE's. There is no way of knowing whether there are significant
statistical differences among Blacks, Hispanics and Asian
Americans either as a percentage of the relative contracting
community or as a percentage of those receiving State contracts.
The Study Commission Report admits that Croson appears to
require separate analysis for each minority group to be
included. (Da-59). Nevertheless, the Study Commission Report
fails to include any such analysis.
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CRDA STATUTE AND REGULATIONS
CRDA was created in 1984 "...to address the pressing social
and economic needs of the residents of the City of Atlantic City
and the State of New Jersey by providing eligible projects in
which (casino) licensees shall invest...." N , J. S . A. 5:12-160. CRDA
was given broad powers to achieve its purposes. N .J.S.A. 5:12-
161. CRDA is governed by its own independent Board. N.J.S.A.
5:12-153.
In 1984, as part of the bill creating CRDA, the Legislature
included a section which provided that:
The authority (CRDA) shall ensure that
minority or women''s businesses which are in
the construction industry or related
industries or services, including suppliers
of materials and professional construction
engineering and design services, shall
receive at least 20 percent of the total
expenditures on the total number of eligible
projects financed each year by the
authority. A business shall be deemed a
minority or women's business if it meets the
definition of that term in Section 2 of P.L.
1984 c ............. (C.........) (now pending
before the Legislature as Assembly Committee
substitute for Assembly Bill No. 1828 of
1984). The authority shall, in providing
financing for eligible projects, impose such
conditions as necessary to effectuate this
20 percent requirement. N.J.S.A. 5:12-
181(b)(1).
The statute goes on to provide that:
The primary obligation for carrying out the
20 percent minority and women's business
set-aside rests with the borrowers of the
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proceeds of bonds of the Casino Reinvestment
Development Authority or the licensees, in
the case of a direct investment. Nothing
contained herein, however, shall relieve the
Casino Reinvestment Development Authority
from the obligation of enforcing the
requirement of the 20 percent set-aside for
minority and women's businesses. The
borrower or licensee and those of its
contractors which will make subcontracts or
purchase substantial supplies from or seek
engineering or design services from other
firms must seek out all available minority
and women's businesses and make every effort
to use as many of them as possible on the
project, in order to satisfy the set-aside
requirement. Id.
CRDA's Set-Aside Statute incorporates by reference the
definition of a minority contained in Assembly Bill No. 1828 of
1984 which was then pending before the Legislature. Assembly
Bill No. 1828 of 1984 was never enacted into law. See
Governor's Reconsideration and Recommendations Statement to
Assembly, No. 1825—L. 1985, c. 80, Historical Note to N.J.S.A.
17:31-9. In any event, the definition of "minority' contained
in Assembly Bill No. 1828 of 1984 included:
(1) Black, which is a person having origins in
any of the black racial groups in Africa; or
(2) Hispanic, which is a person of Spanish or
Portuguese culture, with origins in Mexico,
South or Central America, or the Caribbean
Islands, regardless of race; or
(3) Asian-American, which is a person having
origins in any of the original peoples of
the Far East, Southeast Asia, Indian
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subcontinent, Hawaii, or the Pacific
Islands; or
(4) American-Indian or Alaskan native, which is
a person having origins in any of the
originals peoples of North America.
The statute further provides that CRDA "will require
borrowers, licensees and prime contractors to engage minority
and women's businesses from as wide a market area as is
economically feasible." N .J.S.A, 5:12-181(b)(2). The statute
contains a provision which requires borrowers, licensees and
prime contractors to use minority and women's businesses with
less experience than available non-minority enterprises and they
are expected to provide technical assistance to minority and
women's businesses as needed. Id. The statute goes on to
provide that CRDA may waive up to 10 percent of the 20 percent
set-aside requirement if the borrower of the proceeds of CRDA
bonds or a licensee in the case of a direct investment,
"demonstrates at a public hearing of the authority that there
are no sufficient, relevant, or qualified minority and women's
business enterprises whose market areas include the project
location to justify a waiver." The statute provides that CRDA
"shall only approve a waiver under exceptional circumstances."
Id. . The statute also provides that the Authority may waive
bonding requirements in order to facilitate the use of such a
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business if the business has been rejected by two surety
companies authorized to do business in the state. Id.
On June 6, 1986, CRDA adopted regulations which mirrored
its Set-Aside Statute and imposed a 20 percent MBE set-aside on
contractors, casino licensees and applicants for funding. See,
N,J.A.C. 19:65-1.1, et. seq. (18 N.J.R. 852(a)). CRDA's
regulations, pursuant to the Sunset requirements of Executive
Order No. 66 (1978), expired on July 7, 1991.
Effective October 5, 1992, CRDA readopted its regulations
"with amendments designed to bring the authority's rules of
targeting into accord with analogous targeting recently adopted
by the State of New Jersey, Department of the Treasury, and the
requirements of Federal Law. . . . " 24 N.J.R. 1692(b), 24
N.J.R. 3535(a). The summary section of the 1992 Rule Adoption
indicates that:
These provisions are patterned after rule
recently adopted by the State of New Jersey,
Department of the Treasury. They depart from
the provisions of N.J.S.A. 5:12-181, in the
sense that (sic) provisions required
mandatory "set-asides" for minority and
women's businesses, whereas these proposed
amendments established targets for
applicants and contractors in the awarding
of subcontracts to minority and women's
businesses, together with a procedure
pursuant to which the Authority reviews
whether the targets are being satisfied and
whether the applicant, contractor, or
subcontractor has engaged in unlawful race
or sex discrimination. Remedies are provided
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in the event such unlawful discrimination is
demonstrated. This modification is made on
the advice of counsel that the imposition of
mandatory "set-asides" as required by
N.J.S.A. 5:12-181 and formerly required by
this subchapter lack the evidentiary
predicate necessary to establish a
compelling state interest in eradicating
prior discrimination and were not a
sufficiently narrowly tailored remedy for
actual identified discrimination as required
by the United States Supreme Court in City
of Richmond v. J.A. Croson Co., 488 U.S.
469, 109 S. Ct. 706, 102 L. Ed. 854 (1989).
The amended provisions do not seek to remedy
past discrimination and do not assume
engagement in unlawful discrimination by an
applicant, contractor or subcontractor. Id.
(Emphasis added).
The readopted regulations continued to contain a 20 percent
requirement.
It is significant that these post-Croson, post-Executive
Order regulations not only failed to claim any remedial role in
remedying past discrimination but specifically disavowed any
history of discrimination by CRDA, applicants for CRDA
financing, contractors or subcontractors.
In 1997, CRDA amended its set-aside regulations to reduce
the MBE requirement from 20 percent to 7 percent. See, 29
N.J.R. 3708(a); 29 N.J.R. 4562(b). The 1997 regulations
represent CRDA's current regulations.
CRDA's current regulations are inconsistent with CRDA's
statute. CRDA's regulations establish a 7 percent MBE and 3
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percent WBE requirement, while CRDA's statute requires a 20
percent combined WBE/MBE set-aside. CRDA's regulations require
CRDA in connection with approved projects financed by CRDA and
casino licensees in the case of direct investments to "make a
good faith effort to ensure that 7 percent of such contracts and
subcontracts are awarded to eligible minority businesses and 3
percent of such contracts and subcontracts are awarded to
eligible female businesses in accordance with and pursuant to
the Set-Aside Act for Small Businesses, Female Businesses and
Minority Businesses as set forth in N.J.S.A. 52:32-17, et seq. ;
Executive Order No. 84 (1993); and the Rules jointly promulgated
by the Department of Commerce and Economic Development and the
Department of the Treasury as set forth in N .J.A.C. 17:14 as
amended or supplemented." N .J.A.C. 19:65-4.1 (a) .
The statute referred to in N .J.A.C. 19:65-4.1, N .J.S.A.
52:32-17, et seq. defines "minority business" as meaning "A
business which has its principal place of business in the State,
is independently owned and operated and at least 51 percent of
which is owned and controlled by persons who are Black,
Hispanic, Portuguese, Asian-American, American-Indian or Alaskan
natives." N.J.S.A. 52:32-19(g). Notwithstanding the admonition
of the Study Commission Report that the inclusion of Portuguese,
American-Indians and Alaskan natives was unconstitutional, the
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State minority certification process still recognizes these
groups as minorities.
The CRDA regulation also incorporates by reference the
rules jointly promulgated by the Department of Commerce and
Economic Development and the Department of Treasury as set forth
in N.J.A.C. 17:14 as amended or supplemented. (See N.J.A.C.
19:65-4.1(a)). The Department of Treasury Regulations define
minority business as one being at least 51 percent owned and
controlled by persons who are "African-Americans, Latinos or
Asian-Americans. . . ." N.J.A.C. 17:14-1.2. An African-
American is defined as "a person having origins in any of the
black racial groups of Africa". A Latino is defined as "a
person of Mexican, Puerto Rican, Cuban, Central or South
American, Caribbean Island or other Spanish culture or origin,
regardless of race." An Asian-American is defined as "a person
having origins in any of the original people of the Far East,
Southeast Asia, and Indian subcontinent, Hawaii or the Pacific
Islands." N.J.A.C. 17:14-1.2. As a result, an "Asian-American"
does not have to be an American and still includes Hawaiian,
Samoans, Tahitians and persons from the Pacific Islands, even
though there is no evidence of their presence in New Jersey in
statistically significant numbers, let alone any evidence of
past discrimination by the State against these groups.
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Complicating matters is the fact that the determination as
to whether a firm qualifies as an MBE firm is accomplished
through a Certification process which is administered by the
Department of Commerce and Economic Development. The enabling
Legislation for that process defines a minority as a person who
is:
(1) Black, which is a person having origins in
any of the black racial groups in Africa; or
(2) Hispanic, which is a person of Spanish or
Portuguese culture, with origins in Mexico,
South or Central America, or the Caribbean
Islands, regardless of race; or
(3) Asian-American, which is a person having
origins in any of the original peoples of
the Far East, Southeast Asia, Indian
subcontinent, Hawaii, or the Pacific
Islands; or
(4) American-Indian or Alaskan native, which is
a person having origins in any of the
originals peoples of North America.
N .J.S.A. 52:27H-21.26 (emphasis added).
The regulations which were adopted by the Department of
Commerce and Economic Development to implement N .J.S.A. 52:27H-
21.26 mirror the statute and use the same definition of
"minority", i.e., including Portuguese, Hawaiian, Samoans,
American-Indians and Alaskans. See, N.J.A.C. 12A:11-1.2.
In light of the above, CRDA's Set-Aside Statute and CRDA's
Set-Aside Regulations use multiple, different, inconsistent
definitions of a "minority business". Pursuant to one
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definition, a "Latino" is a 'minority" and does not include
Portuguese but does include Mexicans, Cubans and persons of
"other Spanish culture or origin, regardless of race" . See,
N.J.A.C. 17:14-1.2. A "Latino" includes persons of Spanish
culture or origin without any geographic limitation, i.e. a
Spaniard from Madrid is a "Latino". Id. Pursuant to another
definition, a "Hispanic" is a "minority" and includes
Portuguese. See, N.J.S.A. 52:27H-21.26. Under this definition,
a Spaniard from Madrid is not a "Hispanic". Id. Pursuant to
three statutory definitions which are. still on the books, a
minority still includes American Indians and Alaskan natives.
See, N.J.S.A. 52:27H-21.26; N.J.S.A. 5:12-181(b) (1); N.J.S.A.
52:32-19(g). Yet, pursuant to two regulations that CRDA
currently operates under, a minority does not include American
Indians and Alaskan natives. See, N .J.A.C. 12A:11-1.2; N .J.A.C.
17:14-1.2. Under all definitions, an "Asian-American" does not
have to be an American to qualify as a minority and includes
Samoans, Tahitians and Hawaiians.
CIVIL RIGHTS GARDEN PROJECT
Yvonne Bonitto-Doggett testified that she has been CRDA's
acting Public Agency Compliance Officer ("PACO") since 1997 and
has been with CRDA as Deputy Director for the last 6 H years.
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Deposition of Yvonne Bonitto-Doggett, Page 6, Lines 3 through
15. (Pa-2) .
Since Ms. Doggett has been with CRDA she has not seen any
evidence of any discrimination on the part of CRDA, its
contractors or subcontractors, on the part of Casino Licensees
or applicants for funding in any of their purchasing or
contracting practices. Deposition of Yvonne Bonitto-Doggett,
Page 10, Lines 16 to Page 11, Line 27. (Pa-3,4). Ms. Doggett
testified that CRDA accepts as MBE's, companies and persons who
have been certified by the Commerce Commission. Deposition of
Yvonne Bonitto-Doggett Page 52, Line 3 to Line 7 (Pa-10).
Xn the spring of 1999, CRDA went out to bid for the
Virginia Avenue Road Reconstruction Project, and later went out
to bid for the Civil Rights Garden Project. Ms. Bonitto-Doggett
has testified that since 1993 these two contracts represent the
only times that CRDA has departed from the 7 percent goal, with
the exception of some selected contracts which were awarded as
pure set-aside contracts, i.e. only MBE's and in some cases,
WBE's could submit proposals. Deposition of Yvonne Bonitto-
Doggett, Page 18, Line 25 (Pa-5) . Ms. Bonitto-Doggett has
testified that the decision to incorporate a 30 percent set-
aside for the 30 percent MBE set-aside for the Civil Rights
Garden Project was based upon three considerations: (a) the
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availability of MBE subcontractors, (b) a perceived need to
increase. MBE participation in order to meet the 7 percent annual
goal, and (c) the fact that it was a Civil Rights Garden
Project. Deposition of Yvonne Bonitto-Doggett, Page 22, Line 9
to Page 24, Line 13 (Pa-6 to 8). Ms. Bonitto-Doggett .testified
that all three of these factors weighed evenly in her mind and
that the ultimate decision to incorporate the 30 percent was
hers alone. Deposition of Yvonne Bonitto-Doggett, Page 25, Line
17 (Pa-9).
Ms. Bonitto-Doggett testified that other than the Set-Aside
Program, the only other steps that CRDA has taken to increase
MBE participation consist of talking to the MBE/WBE community,
participating in conferences and pre-bid conferences and CRDA
providing, as required by State law, 1.2 million dollars to the
New Jersey Development Authority for Small Businesses,
Minorities and Women. Deposition of Yvonne Bonitto-Doggett,
Page 63, Line 23 to Page 64, Line 21 (Pa-11,12).
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LEGAL ARGUMENT
POINT I
THE 20 PERCENT REQUIREMENT IN
N.J.S.A. 5:12-181(b)(1), THE 7
PERCENT/ 3 PERCENT REQUIREMENT IN
N.J.S.A. 52:32-17 TO 31 AND THE
REGULATIONS PROMULGATED THEREUNDER
ARE UNCONSTITUTIONAL.
A. STANDARD OF REVIEW
The Equal Protection Clause of the Fourteenth Amendment
provides that "no State shall...deny to any person within its
jurisdiction the equal protection of the laws" U.S. Const.
Amend. XIV, Sec. 5. The Plaintiffs' claim also arises under
the Fifth Amendment to the Constitution which provides that "No
person shall...be deprived of life, liberty or property, without
due process of law." U.S. Const. Amend. V. The interpretation
and application of these two Constitutional Amendments to
governmental racial classifications has led the Supreme Court to
conclude that:
A free people whose institutions are founded
upon the doctrine of equality, should
tolerate no retreat from the principle that
government may treat people differently
because of their race only for the most
compelling reasons. Accordingly, we hold
today that all racial classifications,
imposed by whatever federal, state or local
governmental actor, must be analyzed by a
reviewing Court under strict scrutiny. In
other words, such classifications are
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constitutional only if they are narrowly
tailored measures that further compelling
governmental interests. Adarand
Constructors, Inc. v. Pena, 115 S. Ct. 2097,
2113, 132 L. Ed. 2d 158 (1995).
Under a strict scrutiny standard, racial classifications in
order to be constitutional, must meet a two prong test: (1) they
must further a compelling governmental interests and (2) the
classifications must be narrowly tailored measure. Id.
CRDA's MBE scheme in the present case is subject to "strict
scrutiny" because it discriminates against individuals based
upon race and ethnic origin. The application of the strict
scrutiny test as it applies to a minority set-aside plan was
dealt with by the United States Supreme Court in Croson, supra.
Croson involved an MBE set-aside plan requiring that non-
minority owned prime contractors subcontract at least 30% of the
dollar value of publicly awarded contracts to MBE's. The
Richmond Plan defined an MBE as a "business at least 51% of
which is owned and controlled...by minority group members."
Croson, 488 U.S. at 477, 478. Minority group members were
defined as citizens of the United States who are Blacks,
Spanish-speaking, Oriental, Indian, Eskimo or Aleuts. Although
the Richmond Plan declared that it was "remedial" in nature,
there was no direct evidence that the City had discriminated on
the basis of race in letting contracts or that its prime
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contractors had discriminated against minority subcontractors.
Id.
The United States Supreme Court held that the Richmond Plan
was unconstitutional. The Court found that the City of Richmond
had not demonstrated a compelling governmental interest that
would justify apportioning public contracting opportunities on
the basis of race. Id at 505. The Court found that conclusory
evidence that although the City's population was 50% black, only
6.7% of its prime construction contracts had been awarded to
minority businesses in recent years and that a variety of local
contractors associations had virtually no MBE members, failed to
contain the kind of empirical evidence that the Court required
to demonstrate that there was racial discrimination in the
construction industry in that jurisdiction.
The holding of Croson is straightforward. In order for a
race based plan to withstand the "strict scrutiny" test, the
local government must identify a pattern of prior discrimination
with some specificity. As Justice Stevens observed in Fullilove
v. Klutznick, 448 U.S. 448, 100 S. Ct. 2758 67 L. Ed.2d 902
(1980) " [B]ecause racial characteristics so seldom provide a
relevant basis for disparate treatment, and because
classifications based upon race are potentially so harmful to
the entire body politic, it is especially important that the
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reasons for any such classification be clearly identified and
unquestionably legitimate." 488 U.S. 469, 505, 109 S. Ct. 706,
728.
First, CRDA must satisfy the compelling interest prong of
the strict scrutiny test. In the present case, CRDA's statute
requires a 20 percent MBE set-aside and the State Set-Aside Act
requires a 7 percent/ 3 percent MBE/WBE set-aside. By requiring
a set-aside for MBE's, CRDA has discriminated against "non
minorities". Essential to the understanding of this case is the
fact that "non-minorities" are entitled to the same
constitutional protection as are minorities. The standard of
review is not dependent upon the race of those who are burdened
or benefited by the particular classification. Wygant v.
Jackson Board of Education, 476 U.S. 267, 277, 106 S. Ct. 1842,
90 L. Ed. 2d. 260 (1986) . The Fifth Amendment and the Equal
Protection Clause of the Fourteenth Amendment coupled with the
compelling interest test protect all individuals, non-minorities
as well as minorities, whites as well as blacks, Hindus as well
as Asians, and New Jersey natives as well as Alaskan natives.
"[T]he case against race-based preferences does not rest on
the sterile assumption that American society is untouched or
unaffected by the tragic oppression of its past. Rather, it is
the very enormity of that tragedy that lends resolve to the
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desire to never repeat it, and find a legal order in which
distinctions based on race shall have no place." Ma.ryla.nd
Troopers Ass'n v. Evans, 993 F. 2d, 1072, 1079 (4th Cir. 1993).
A compelling interest cannot be demonstrated by societal
discrimination or general population statistical studies alone;
it must be proven by particularized findings and not mere
speculation. The University of California Regents v. Bakke, 438
U.S. 265, 310, 98 S. Ct. 2733, 57 L. Ed. 2d. 750 (1978). Strict
scrutiny's compelling government interest requirement was
designed "to 'smoke out' illegitimate uses of race by assuring
that the legislative body is pursuing a goal important enough to
warrant use of a highly suspect tool." Croson, 488 U.S. 493,
109 S. Ct. 721 (plurality opinion of O'Connor, J. ) The mere
recitation of a benign purpose is not a shield which protects
against a strict scrutiny inquiry as to the actual purposes
underlying a race-based legislative scheme. Weinberger v.
Wiesenfeld, 420 U.S. 636, 648, 95 S. Ct. 1225, 43 L. Ed. 2d. 514
(1975). "[WJhile the State's and their subdivisions may take
remedial action when they possess evidence that their own
spending practices are exacerbating a pattern of prior
discrimination, they must identify that discrimination, public
or private, with some specificity before they may use race
conscious relief. Croson, 488 U.S. at 504, 109 S. Ct. at 727.
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strict"It necessarily follows that a Court cannot conduct the
scrutiny review required by Croson without first identifying
with specificity the discrimination allegedly giving rise to the
compelling State interest." Contractors Assoc. of Eastern
Pennsylvania, Inc. v. Philadelphia, 91 F. 3rd 586, 599 (U.S.C.A.
3rd Cir., 1996) .
Secondly, the means chosen by the public entity to carry out
its remedial purpose must be narrowly tailored to the
achievement of that remedial purpose. Wygant, 476 U.S. 277.
For the reasons which follow, CRDA has not and cannot meet
the strict scrutiny standards in the present case with regard to
its MBE Set-Aside Statute.
B. THE BURDEN IN THE PRESENT CASE TO JUSTIFY DISPARATE
TREATMENT BASED UPON GENDER OR RACE IS ON CRDA.
CRDA, as the proponent of racial or gender based
disparate treatment bears the burden of constitutionally
justifying its action. Monterey Mechanical Co. v. Wilson
125 F. 3rd 702, 710, 713-15 (9th Cir. 1997).
Our Supreme Court has held that:
[A]ny person of whatever race has the right
to demand that any governmental actor
subject to the Constitution justify any
racial classification subjecting that person
to unequal treatment under the strictest
judicial scrutiny." Adarand, 115 S. Ct. at
2111 .
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plaintiff's theoryThe Third Circuit has concluded that the
of their case determines who has the burden. If "...the
plaintiff's theory of constitutional invalidity is that,
although the [government] may have been thinking of past
discrimination and a remedy therefor, its conclusions with
respect to the existence of discrimination and the necessity of
the remedy chosen have no strong basis in evidence" the burden
is on the government to come forth with evidence of facts to
support its conclusions. Contractors, 91 F. 3rd at 597 The
proponents of the plan "have the burden of coming forward with
evidence providing a firm basis for inferring that the
legislatively identified discrimination in fact exists or
existed. . . . " Id. Only then does the burden shift to the
plaintiff to persuade the Court that those facts are not
accurate. Id.
In light of the above, the burden to demonstrate a
compelling need for the Set-Aside Statutes clearly rests on
CRDA.
C- THE CRDA'S 20 PERCENT SET-ASIDE STATUTE IS
UNCONSTITUTIONAL BECAUSE CRDA CANNOT DEMONSTRATE BY
SUBSTANTIAL EVIDENCE THAT THIS LEGISLATION WAS
NECESSARY TO REMEDY PAST IDENTIFIED DISCRIMINATION.
The factual predicate for CRDA's statutory 20 percent MBE
3et-aside in the present case is constitutionally lacking in a
number of respects.
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CRDA IS THE APPROPRIATE UNIT OF GOVERNMENT
Judge Winkelstein correctly found that the proper
governmental unit in the present case for the purposes of a
compelling need analysis is CRDA. Any reference to other state
agencies as a basis to justify the CRDA Set-Aside Program in the
present case is inappropriate.
CRDA is a distinct State Agency which has been given in
1984 by the Legislature, the year after the Legislature adopted
the State Set-Aside Statute, its own distinctive MBE/WBE Program
which requires a combined 20 percent set-aside. See, N.J.S,A.
5:12-181(b) (1) . In 1986, after the Legislature adopted the Set-
Aside Statute, CRDA adopted its own distinctive regulations
which impose a set-aside not only on contractors doing business
with CRDA but also on casino licensees doing direct investments
and recipients of CRDA funding and contractors and
subcontractors doing business with them. See, N .J.A.C. 19:65-
1-1 et seq. CRDA's Set-Aside Regulations rely exclusively on
CRDA's statute (N.J.S.A. 5:12-181(b) (1)) and not the State Set-
Aside Statute as authority for their promulgation. It is clear
that the Legislature and CRDA have treated CRDA as a distinctive
entity for the purposes of MBE/WBE set-asides. Given the fact
that CRDA did not come into existence until 1984, the fact that
crDA was born because of the casino industry which did not come
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into existence until 1978, it is understandable why CRDA
received this distinctive treatment.
CRDA argues that notwithstanding the relative youth of CRDA
and the casino industry and the unique purpose that CRDA serves,
the compelling need analysis has to be done on a statewide
basis. The Courts in the school admission cases have rejected
this blanket approach. In the school admission cases, our
Courts have held that evidence of past discrimination in public
education in the State of Texas could not justify race based
preferences in law school admissions unless there was present
evidence of past discrimination in the Law School. "The fact
that the law school ultimately may be subject to the directives
of others, such as the Board of Regents, the University
President or the Legislature, does not change the fact that the
relevant putative discriminator in this case is still the law
school. In order for any of these entities to direct a racial
preference program at the laws school, it must be because of
past wrongs at that school." Hopwood v. State of Texas, 78 F.
3rd 932, 952 (5th Cir. 1996) . Even if we were to assume arguendo
that other State agencies such as the Division of Purchase and
Property had participated in discriminatory practices, that
evidence would not justify a racial preference program for the
CRDA. "Strict scrutiny is meant to ensure that the purpose of
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racial preference is remedial. Yet, when one state act begins
to justify racial preferences based upon the actions of other
state agencies, the remedial actor's competence to determine the
existence and scope of the harm - and the appropriate reach of
the remedy — is called into question. The school desegregation
cases, for example, concentrate on school districts - singular
government units - and the use of inter-district remedies is
strictly limited." Hopwood, supra at 951 citing Missouri v.
Jenkins, U.S.115 S. Ct. 2038, 2048 (1995) . CRDA is a "singular
government unit".
In Point II of its Brief, the LDF argues that it is the
State of New Jersey, not the CRDA, which is the relevant
governmental unit for purposes of determining whether the Set
Aside Act serves a compelling state interest. In support of its
argument, the LDF cites the following cases: Associated General
Contractors v. Drabik, 214 F.3d 730 (6th Cir. 2000); Monterey,
supra; Associated General Contractors v. City and County of San
Francisco, 813 F.2d 922, 930 (9 th Cir. 1987), and F. Buddie
Contracting Ltd. v. Cuyahonga Community College District, 31 F.
Supp. 2d 571, 580 (N.D. Ohio 1998).
These cases are easily distinguished.
Associated General Contractors v. Drabik, supra (LDF Brief,
P* 19) , involved construction of the Toledo Correctional
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Facility. anThere, a general contractors association brought
action seeking a declaratory judgment that Ohio's Minority
Business Enterprise Act (which mandated set-asides on racial and
gender bases, similar to the Set-Aside Act in the case at bar)
was unconstitutional. The lawsuit was commenced against the
director of the Ohio Department of Administrative Services,
which was in charge of state construction projects. There was
no dispute that the project was a state project. The Court
there never faced the issue of whether the relevant governmental
unit was the State or a separate agency or department of the
state, such as the Department of Administrative Services. It is
also interesting to note that in Associated, the Court held the
subject Act unconstitutional on the ground that it failed to
meet both the compelling state interest and strict scrutiny
tests. The Court gave a detailed analysis on both counts.
Monterey Mechanical Co., supra (LDF Brief, p. 19), involved
a construction project at California Polytechnic State
University. There, the plaintiff contractor's bid was
disqualified due to the fact that the contractor failed to
comply with a state statute requiring that certain percentages
°f the work be subcontracted to minorities, women, etc. Upon
being disqualified, the contractor requested that it be supplied
with whatever disparity study the University had used to justify
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its set aside goals. Significantly, the University replied that
there was no such study. On this basis the Court went no
further in terms of determining whether it was the State or the
University which was the relevant governmental unit for purposes
of the strict scrutiny analysis:
'...the University...offered no evidence
whatsoever that the University or the State
had previously discriminated, actively or
passively, against the groups benefited by
the Statute. They never proposed to offer
evidence of past discrimination in any form
at any time. There are legislative
findings, but they do not say that
California State University or the
California state government, has in the past
actively or passively discriminated against
the benefited groups.... There are no
legislative findings, and no fact findings
by the district court, of past
discrimination against the benefited groups
by the State or the University." 125 F.3d
at 713 (emphasis added).
This analysis certainly does not support LDF's position that
this Court should look to the actions of state of New Jersey as
a whole, rather than the CRDA, in addressing with the issue of
past discrimination.
With respect to Associated General Contractors v. City and
County of San Francisco, supra (LDF Brief, pp. 19-20), the LDF
refers this Court to footnote 13 of that case which states that:
'if a particular department is found to have acted in a racially
discriminatory fashion, the City is not limited in its remedies
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In Associated,to activities within that department alone."
suit was brought against the city and county. There, the
ordinance in question was a city ordinance requiring each city
department to set aside 10% of its purchasing dollars for MBE's
and 2-s for WBE's. There was no issue or even allegation that it
was a particular city agency or department, as opposed to the
city itself, which had engaged in past discriminatory conduct.
The language cited by the LDF, put simply, is that where the
city finds that one of its departments has discriminated, the
city can do whatever is necessary to remedy the discrimination
being perpetrated by the subject department, as well as other
city departments. The Court did not hold that where a city
agency discriminates, the inquiry for constitutional purposes
should be whether there was past discrimination by the city or
some broader governmental unit.
Significantly, in Buddie Contracting, Ltd., supra (LDF
Brief, p. 20), the Court was faced with the issue of whether the
local community college or the state was the relevant
governmental entity with respect to past discrimination
justifying the college's affirmative action program for
construction proj ects. Significantly, the United States
district Court for the Eastern District of Ohio held that the
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relevant governmental entity was the college, not the state.
That Court's analysis on this issue is instructive:
"As a preliminary matter this Court must
consider the issue of what governmental
entity is to be looked to for evidence of
past discrimination - The State of Ohio or
[Cuyahoga Community College] itself.
Although it is well-established that the
past discrimination which establishes the
compelling interest in affirmative action
must have been by a governmental entity
seeking to employ the affirmative action
plan, it is not entirely clear to this Court
that this means that a history of
discrimination in the area of public
construction contracts by the State of Ohio
might not be sufficient to justify the use
of a set aside program by an arm of the
State, CCC, without a showing of
discrimination by that particularized
entity.
On the other hand, it seems apparent to this
Court that CCC should no more be required to
remedy the discriminatory practices of other
departments of the state then should a
municipal fire department be required to
remedy discriminatory hiring practices of a
police department in the same municipality.
Similarly, an MBE could not sue CCC for
discriminatory contracting customs of the
Ohio Department of Transportation. Allowing
an arm of the State which has not been found
to have discriminated in the past to remedy
a history of discrimination by the State
itself would be tantamount to requiring it
to remedy broad societal discrimination,
which would be an exercise in the tail
wagging the dog.
This Court, therefore, concludes that the
relevant governmental entity is CCC...." 31
F. Supp. 2d at 580 (emphasis added).
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Starting on page 20 .of its Brief, the LDF goes on to cite
numerous other cases wherein a particular state agency, as
opposed to the State itself, was determined to be the relevant
governmental unit for purposes of constitutional analysis. See
Phillips & Jordan, Inc. v. Watts, 13 F.Supp.2d 1308 (N.D. Fla.
1998); Houston Contractors Association v. Metropolitan Transit
Authority, 993 F. Supp. 545 (S.D. Tx. 1997); Concrete General,
Inc. v. Washington Suburban Sanitary Commission, 779 F. Supp.
370 (D. Md. 1991); Brunet v. City of Columbus, 1 F.3d 390, 404
(6th Cir. 1993); Kane v. Freeman, 1997 WL 158315 (M.D. Fla.
1997) .
In Phillips & Jordan, Inc. , supra, for example, the issue
was whether an affirmative action program administered by the
Florida Department of Transportation ("FDOT") was
constitutional. There, the FDOT routinely awarded construction
contracts, and the Court focused only on activities of the FDOT,
not of the state at large, in determining whether there was past
discrimination sufficient to justify the FDOT's set aside
Program. In fact, the FDOT hired a consultant to conduct a
study regarding the existence of past and/or continuing
discrimination by the FDOT. In concluding that the set aside
Plan at issue was unconstitutional, the Court gave the following
analysis:
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"FOOT does not claim that it has evidence of
intentional discrimination in the letting of
contracts either by the central office or by
any of the district offices. Instead, the
essence of FDOT's claim is that: (1) MGT's
[the consultant which did the discrimination
study] two-year study provides evidence of a
disparity between the proportion of
minorities awarded FOOT road maintenance
contracts and the proportion of minorities
supposedly willing and able to do road
maintenance work; (2) FDOT did not itself
engage in any racial or ethnic
discrimination; so (3} FDOT must have been a
passive participant in somebody else's
discriminatory practices. FDOT suggests
that bonding companies, or maybe financial
institutions, or possibly prime contractors,
or maybe suppliers, contributed to a lack of
business opportunities for black and
Hispanic-owned firms, a lack of opportunity
that in turn contributed to a statistical
disparity in the award of road maintenance
contracts....
In this case, it is agreed that FDOT did not
discriminate against minority contractors
bidding on road maintenance contracts....
FDOT has presented no evidence to establish
who, if anyone, in fact engaged in
discriminatory acts against blacks and
Hispanic-owned businesses.... Under City of
Richmond, that is not enough!" 13 F Supp.
2d. at 1313-1314.
There is no analysis, or even mention, of
discrimination by the State.
The LDF goes on to argue on page 22 of its Brief that it
would be inappropriate to consider whether CRDA, as opposed to
the State of New Jersey, has engaged in discrimination, because
in a converse situation the State could avoid constitutional
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responsibilities by creating subdivisions with no prior history
of discrimination. However, the cases cited by the NAACP in
support of this proposition involved blatant state wide
discrimination in the turbulent 1960's and 1970's in areas such
as education and housing, where the state was indifferent to or
even encouraged the discriminatory policies in question. All of
the cases cited by LDF here are inappropriate.
For example, Hall v. St. Helena Parish School Board, 197 F.
Supp. 649, 658 (E.D. La.), aff'd., 368 U .S. 515 (19621l (LDF
Brief, p. 22), involved the enactment of a state statute which
authorized a local school board to close its school system, and
lease all of the school board's buildings and equipment to
alleged private schools, which intended to allow whites only to
enroll. Curiously, the enactment of this statute followed a
ruling by the United States District Court for the Eastern
District of Louisiana which restrained and enjoined the public
school board from continuing the practice of rational
segregation. The school board argued that when it chose to
close all of its schools, it dealt impartially with everyone
within its jurisdiction, and therefore could not be accused of
discriminating. The District Court rejected this argument, and
stated very clearly that this series of events was a rouse by
the state in an attempt to continue its practice of racial
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segregation. The Court went on to hold that the school board's
action had to be considered in the context of a state wide,
centrally administered system of public institutions. The
District Court held:
"Undeterred by the failure of its prior
efforts, the Louisiana Legislature continues
to press its fight for racial segregation in
the public schools of the state. Today we
consider its current segregation
legislation, the keystone of which, the
local option law, is under attack in these
proceedings. . . .
There can be no doubt about the character
of education in Louisiana as a state, and
not a local, function. The Louisiana public
school system is administered on a statewide
basis, financed out of funds collected on a
statewide basis, under the control and
supervision of public officials exercising
statewide authority under the Louisiana
constitution and appropriate state
legislation....
Public education is declared by the
[state] constitution to be an affair of the
state . . . ." (emphasis added) 197 F. Supp.
at 650-651, 657.
The concerns of the Court there have nothing to do with the
issues in the case at bar. In any event, unlike the Louisiana
Public school district, CRDA is not administered on a statewide
basis, does not collect funds from the state at large, and is not
under the day to day supervision of public officials exercising
statewide authority. CRDA is administered by its own Board and
collects money only from Casinos.
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Gautreaux v. Chicago Housing Authority, 503 F.2d. 930 (7th
Cir. 1974), also cited by the LDF (LDF Brief, p. 22), is
similarly inappropriate. Gautreaux involved a claim of racial
discrimination against African American tenants in Chicago
public housing projects. The complaint there alleged that the
Chicago Housing Authority had improperly segregated races when
giving tenant assignments. The Circuit Court ultimately
concluded that any remedial plan, to be effective, must be on a
suburban or metropolitan area basis, as opposed to a city-only
basis, because "a prima facie showing had been made that this
segregation had discriminatory effects throughout the
metropolitan area." 503 F.2d at 936. The concern of the Court
in Gautreaux was obviously different than the concerns in this
case, and there is nothing in the holding in that case which
supports LDF's argument that it is the State as opposed to CRDA
which is the relevant governmental unit for purposes of
constitutional analysis.
Haney v. County Board of Education, 410 F. 2d 920 (8th Cir.
1969) (LDF Brief, p. 29), like Hall, supra, involved school
segregation and discrimination by the state, with the local
school board defendants simply carrying out state directives.
There, the state redrew its school districts such that there were
entire districts of whites and entire districts of minorities.
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The Circuit Court of Appeals, in overturning the District Court,
held that the state was required to create districts which would
carry out the state and federally mandated policy of school
integration:
"We cannot accept the district court's
reasoning. The actions of either a local
school board, white or black, or the state
legislature are subservient to the equal
protection clause of the Constitution of the
United States.
The contention that the school districts
herein involved are not segregated as a
matter of law in untenable. The short and
quick answer to the argument that they were
created for purposes other than racial
separation by the Initiated Act of 1948 is
that it patently overlooks then existing
state law requiring segregation of public
schools. . . .
'The situation here is in no different
posture because the members of the School
Board and the Superintendent of Schools are
local officials; from the point of view of
the Fourteenth Amendment, they stand in this
litigation as agents of the State.' " 410
F .2d at 923, 925.
Haney is wholly inapplicable to the case at bar. Obviously, in
the case at bar, the State did not create the CRDA in order to
carry out a policy of discrimination.
Poindexter v. Louisiana Financial Assistance Commission,
258 F. Supp. 158 (E.D. La. 1966) (LDF Brief, p. 23) and Allen v.
County School Board, 207 F. Supp. 349 (E.D. Va. 1962)(LDF Brief,
P- 23) also involved school board segregation and
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discrimination, and the court analyses in those cases are
likewise wholly inapplicable to the case at bar.
None of the cases cited by the LDF justify disturbing Judge
Winkelstein's conclusion that given CRDA's history, its unique
set-aside legislation and its unprecedented imposition of set-
asides on casinos and applicants for CRDA funding, CRDA is the
appropriate unit of government for the purposes of a compelling
interest analysis.
NO FINDING OF PAST GOVERNMENTAL DISCRIMINATION
There is also nothing in CRDA's regulations or this record
to support any claim that CRDA is attempting in its Set-Aside
Program to remediate past governmental discrimination. CRDA's
regulations recite benevolent social and economic development
purposes and CRDA's readoption of the set-aside provisions in
1992, five years after Croson, disavowed any evidence of any
history of discrimination on the part of anyone. See, N.J.A.C.
19:65-1.1 (purposes and objectives of CRDA); 24 N .J.R. 1692(b);
24 N-J-R. 3535 (a) .
To sustain its burden CRDA must demonstrate a "...showing of
prior discrimination by the governmental unit involved".
wygant, 476 U.S. at 274, 106 S. Ct. at 1847. There is
absolutely nothing in the CRDA Set-Aside Statute that makes any
finding of past discrimination on the part of CRDA or the State
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of New Jersey. In all of the set-aside cases, the Legislative
Body adopting the Set-Aside Program makes some Legislative
finding with regard to the purpose of the program, i.e. to
remedy past discrimination. See, Croson, supra at 488 U.S. 469,
476, 109 S. Ct. 706, 713 ("The (Richmond) Plan declared it was
'remedial' in nature...."); Contractors, 91 F. 3rd at 597
("Legislatively identified discrimination...."). In the present
case not only do we have the absence of any Legislative finding
of an intent to remediate past discrimination, we have a
specific Legislative declaration that the only stated purpose of
the Set-Aside Program is to encourage MBE, WBE and SBE
participation in State contracts. See, N ■J.S.A. 52:32-18. CRDA
and the State cannot use an after action study such as the State
Study Commission Report to retroactively create a Legislative
intent to take remedial action when there is no evidence that
was the intention of the Legislature. As a matter of common
sense, there could not have been any finding by the Legislature
of any discrimination on the part of CRDA when it adopted the
Set-Aside Statute in 1984 because the Set-Aside Statute was
adopted as part of the Legislation creating CRDA.
If CRDA attempts to justify its set-aside based upon
societal goals, it will have failed to meet its burden. Our
Court's have consistently rejected "societal discrimination" as
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a rationale for affirmative action. Hopwood, supra at 950;
Croson, supra 488 U.S. at 507. "Race-based preferences cannot be
justified by reference to past 'societal' discrimination in
which the municipality played no material role." Contractors,
supra 91 F. 3d at 595.
NO EVIDENCE OF PAST DISCRIMINATION BY
THE CASINO OR CONSTRUCTION INDUSTRY
CRDA's statute and regulations impose a set-aside
requirement not only on contractors entering into construction
contracts and contracts for materials, services and supplies
with CRDA, but also on contractors and subcontractors entering
into contracts with casinos making a direct investment and also
on contractors and subcontractors entering into contracts with
applicants who receive CRDA funding. This unprecedented attempt
to apply set-asides beyond direct contracts with CRDA flies in
the face of federal cases in this area and is unconstitutional
on its face.
In the present case there is no claim that the casino
industry or the construction industry doing business with CRDA
has ever practiced racial exclusion. In fact, in 1992, after
Croson, CRDA made an affirmative finding, in its set-aside
regulations, that its set-aside program does " . . . not seek to
remedy past discrimination and do[oes] not assume engagement in
unlawful discrimination by an applicant, contractor or
44
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subcontractor." 24 N -J-R. 1692(b). (Emphasis added). The
Constitution requires that "a Set-Aside Program is valid only if
actual, identifiable discrimination has occurred within the
local industry affected by the program." Coral Construction Co.
v. King County, 941 F.2d. 910, 916 (U.S.C.A. 9th Cir. 1991)
(emphasis added) There is absolutely no evidence to support
such a finding in the present case. Likewise, the Legislature
could not have found any history of discrimination on the part
of the Casino industry because that industry was in its infancy
in the early 1980's. In fact, the Casino Control Commission had
previously found that the casino industry had entered into a
voluntary agreement to set-aside 15 percent of their contracts
for MBE's in 1981 and had engaged in "generalized good faith
attempts" to encourage minority business participation.
N. J.A .C . 19:65-4.1. Recently, Judge Orlafsky enjoined the Set-
Aside Program established by the Casino Control Commission
because he concluded that "Evidence of discrimination in the
casino industry cannot be derived from the founding of this
program." Association for Fairness in Business v. State, 82 F.
Supp. 2d 361, 370 (D.C.N.J. 2000).
Finally, the only evidence CRDA relies upon is the Study
Commission Report that recommended and the State implemented a 7
Percent goal statewide. Although CRDA's current regulations
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incorporate that 7 percent goal, it is clear that the 20 percent
requirement contained in N.J.S.A, 5:12-181(b)(1) cannot be
constitutionally sustained.
CRDA CANNOT IGNORE ITS ENABLING LEGISLATION
CRDA attempts to argue that it no longer operates its MBE
program pursuant to its enabling legislation. (Db-10) . This
position is factually and legally incorrect.
CRDA cannot ignore its heritage, its statutory mandate and
turn its back on its enabling legislation. It is basic that an
administrative agency can only promulgate regulations which are
consistent with its Statute and cannot give a Statute any
greater effect than is permitted by the statutory language.
Sherman v. Citibank, N.A., 143 N.J. 35, 65 (1995).
In the present case, CRDA's Set-Aside Regulations claim as
their sole authority the CRDA enabling legislation (N.J.S.A.
5:12-181 (b) ) and not as CRDA suggests in its Brief, N.J.S.A.
52:32-17 et seq. , Executive Order No. 84 (1993), N.J.A.C.
12:10A-1 et seq. or N.J.A.C. 17:14-1 et seq. None of these
provisions are cited by CRDA in its regulation as the authority
f°r the promulgation of its MBE regulations. See N .J.A.C .
19:65-4.1.
It is clear that CRDA has not ignored its enabling
legislation. In depositions, Ms. Doggett indicated that CRDA is
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imposing on casino licensees and applicants for CRDA funding an
MBE/WBE requirement. See, Deposition of Yvonne Bonitto-Doggett,
Page 69, Line 24 (Pa ). There is nothing contained in N.J.S.A.
52:32-17 et seq., Executive Order No. 84 (1993;, N.J.A.C.
12:10A-1 et seq. or N .J.A.C. 17:14-1 et seq. authorizing such a
program. In fact, the Governor's Executive Order is, by its
terms, limited to "public procurement and construction
contracts". The State Set-Aside Act and Regulations are
likewise limited to "public procurement and construction
contracts". The sole authorization for the Set-Aside Program for
casino licensees and applicants is N.J.S.A. 5:12-181 (B) and
N.J.A.C. 19:65-4.1. CRDA's 1999 Set-Aside Plan refers to a goal
to "Establish an overall level of M/WBE participation of 20
percent." (Da-302). The 20 percent requirement can only come
from one place, N.J.S.A. 5:12-181 (B). In promulgating its
regulations and in administering its MBE Program CRDA is today
is relying on N.J.S.A . 5:12-181(B). Clearly CRDA is utilizing
N-J.S.A. 5:12-181 (B) .
POST-ENACTMENT EVIDENCE CANNOT BE USED TO
RETROACTIVELY ESTABLISH A COMPELLING NeId
CRDA relies exclusively on the State Study Commission
Report which was issued in 1993 to support the State Set-Aside
Program adopted ten years earlier. This kind of post-enactment
evidence is no longer valid as a basis to justify legislative
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action taken years earlier in light of the Supreme Court's
decision, in Shaw v. Hunt, 116 S. Ct. 1894, 135 L. Ed. 2d. 207
(1996) .
The Supreme Court has now made it clear that before a
government can take any remedial action by way of set-asides,
"they must identify that discrimination, public or private, with
some specificity before they may use race conscious relief."
Shaw, supra at 116 S. Ct. 1895 citing Croson, supra at 504
(emphasis original). The Supreme Court in Shaw reaffirmed that
"the institution that makes the racial distinction must have a
'strong basis in evidence' to conclude that remedial action was
necessary, 'before it embarks on an affirmative action
program.'" Id. citing Croson, supra 47 6 U.S. at 277. The
Supreme Court in Shaw explains that . . a racial
classification cannot withstand strict scrutiny based upon
speculation abou.t what 'may have motivated' the legislature. To
be a compelling interest, the State must show that the alleged
objective was the legislature's 'actual purpose' for the
discriminatory classification. . . and the legislature must have
̂strong basis in evidence to support that justification before
)
it implements the classification." Shaw, supra 116 S. Ct. at
1903 .
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Most recently, the holding of Shaw has been applied by the
Sixth Circuit Court of Appeals, the United States District of
Maryland and the United States District Court of Colorado as
requiring pre-enactment evidence and rejecting any claim
justification for a compelling need based upon post-enactment
evidence. See, Associated General Contractors of Ohio v.
Drabik, 214 Fed. 3rd. 730 (6th Cir. 2000); Associated Utility
Contractors of M.D. v. Mayor, 83 F. Supp. 2d. 613 (D. Md. 2000);
Concrete Works of Colorado, Inc. v. City and County of Denver,
86 F. Supp. 2d. 1042 (D. Colo. 2000).
The State Study Commission Report, as a post enactment
study, is legally and constitutionally worthless.
POINT II
THE CRDA STATUTE AND REGULATIONS
AND THE STATE SET-ASIDE STATUTE AND
REGULATIONS ARE NOT NARROWLY
TAILORED AS REQUIRED BY OUR
CONSTITUTION
A. THE CRDA STATUTE, THE SET-ASIDE STATUTE AND REGULATIONS USE
OVERLY BROAD AND INCONSISTENT DEFINITIONS OF A MINORITY.
Our Courts have made it clear that even if the government
can demonstrate a "compelling need" sufficient to justify a Set-
Aside Program, the second prong of the strict scrutiny test,
narrow tailoring, must still be met. The means chosen by the
Public entity to carry out its remedial purpose must be narrowly
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tailored to the achievement of that remedial purpose. Wygant,
476 U.S.; 277.
The Supreme Court has made it clear in Croson, supra that
the use of overly inclusive definitions of what constitutes a
minority can be fatal. In Croson, Richmond applied its Set-
Aside Program to Spanish speaking people, Orientals, Indians,
Eskimos and Aleuts even though there was no evidence of past
discrimination. The Court asked, "If the 30% set-aside was
'narrowly tailored' to compensate black contractors for past
discrimination, one may legitimately ask why they are forced to
share this 'remedial relief' with an Aleut citizen who moves to
Richmond tomorrow?" Croson, supra, 488 U.S. at 505. As the
Court pointed out in Croson, supra "the random inclusion of
racial groups that, as a practical matter, may never have
suffered from discrimination in the construction industry in
Richmond, suggests that perhaps the city's purpose was not in
fact, to remedy past discrimination." Croson, supra, 488 U.S.
at 506. "A broad program that sweeps in all minorities with a
remedy that is in no way related to past harms cannot survive
constitutional scrutiny." Hopwood, 78 F. 3rd at 951.
CRDA is forced to concede that under Croson and its progeny
the use of over-inclusive definitions of what constitutes a
minority can be constitutionally fatal. (Db-43). Although not
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conceded, CRDA also has to admit that every State Statute in New
Jersey utilizes a definition of minority which includes
categories for which there is no basis. See, N.J.S.A. 5:12-
181(B)(1)/ N.J.S.A. 52:27H-21.26/ and N.J.S.A. 52:32-19(g) all
of which still include as a minority American Indians and
Alaskan Natives. All of the various State regulations dealing
with MBE Set-Aside Programs, claim as their authority one or
more of these Statutes. The Governor's Executive Order No. 84
of 1993 cites all of these Statutes as authority for the
Governor's directive. All of the State Statutes dealing with
MBE Programs include within the definition of a minority,
Portuguese. See, N.J.S.A. 52:27H-21.26/ N.J.S.A. 5:12-181(B)
which incorporates the definition of "minority" contained in
Assembly Bill No. 1828 of 1984; N.J.S.A. 52:32-19(g)/ N.J.S.A.
52:27-21.26. As we noted earlier the various State Statutes and
Regulations use inconsistent definitions of Hispanics and
Latinos. Under one definition a Spaniard from Madrid is not a
"Hispanic" and under another definition a person of Spanish
culture is a "Latino" regardless of where they are from. See,
N. J. S.A. 52:27H-21.26/ and N.J.A.C. 17:14-1.2. All of the
Statutes and Regulations include as minorities Hawaiians and
persons from the Pacific Islands such as Somoans and Tahitians,
even though there is no evidence of their presence in New Jersey
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in statistically significant numbers, let alone any evidence of
any past discrimination by the State against these groups.
Most significantly, the New Jersey Commerce and Economic
Growth Commission (formerly the Commerce Department) still
utilizes in their Statute and their Regulations a definition of
a "minority" which includes Portuguese, Hawaiians, Samoans,
American Indians and Alaskans. See, N.J.S.A. 52:27H-21.26;
N. J, A .C . 12A-11-1.2. The Commerce Commission MBE Certification
process is used as a litmus test by public agencies to determine
who is and who is not an MBE. Yvonne Bonitto-Doggett in her
deposition testified that if a potential MBE is certified by the
Commerce Commission, CRDA accepts them as an MBE for the
purposes of the CRDA Set-Aside Program. Deposition of Yvonne
Bonitto-Doggett Page 52, Line 1. (Pa-10).
In Adarand Constructors, Inc. v. Pena, 965 F. Supp. 1556
(U.S.D.C. Col. 1997), the District Court, after remand by the
United States Supreme Court, granted Adarand summary judgment
finding that federal highway Set-Aside regulations were not
narrowly tailored. One of the main deficiencies in the Federal
regulations were inconsistent definitions of what constituted a
minority in the regulations and definitions in the regulations
which were inconsistent with the Federal statute. The District
Court concluded:
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The inconsistencies between these statutes
and regulations and the resultant
uncertainty as to who may or may not
participate in the race-based SCC program
preclude a finding of narrow tailoring. As
discussed in relation to the different forms
which have been used in the certifying
process, without a well defined set of
consistent definitions, the SCC program
cannot provide the 'reasonable assurance
that the application of racial or ethnic
criteria will be limited to accomplishing
the remedial objectives of Congress and that
misapplication of the program will be
promptly and adequately remedied
administratively." Adarand, supra at p.
1581 citing Fullilove, supra, 448 U.S. at
487, 100 S. Ct. 2779 (emphasis added).
In a similar context, when faced with the same patchwork of
inconsistent, unsupportable definitions of a minority, Judge
Orlofsky concluded that the inclusion by the Casino Control
Commission of Alaskans and Hawaiians "may indicate that racial
and ethnic groups were added to the list of the Set-Aside
Programs without much attention to whether their inclusion was
justified by evidence of past or current discrimination."
Association for Fairness, supra at 370.
The Set-Aside Statutes and Regulations are also fatally
flawed because they treat all minority and ethnic groups the
same. A Tahitian contractor from Nebraska counts the same as an
African-American contractor from Atlantic City for the purposes
of meeting the MBE set-aside goals. This is the same kind of
senseless, illogical process that has been uniformly rejected by
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the Courts throughout this country on numerous occasions. In
Contractors Ass'n of Eastern Pa. v. City of Philadelphia, 893 F.
Supp. 419 (E.D. Pa. 1995) (Contractors II), the District Court
noted that it invalidated the 15 percent preference for MBE's
because it was shared by a "amalgam of minorities" including
Hispanics, American Indians, Aleuts, Eskimos, Asians and Native
Hawaiians. Contractors II, supra 893 F. Supp. 455. "A broad
program that sweeps in all minorities with a remedy that is in
no way related to past harms cannot survive constitutional
scrutiny." Hopwood v. State of Texas, 78 F. 3rd 932, 951 (5th
Cir. 1996). "Accordingly, one group is defined by race, another
by culture, another by country of origin and another by blood.
While all of these classifications may be considered immutable
in that they are not within an individual's control, the
aggregation of them as equally victimized by discrimination and
equally entitled to the preferential remedies is particularly
problematic for Fourteenth Amendment Equality Analysis."
Concrete Works, supra 86 F. Supp. 2d. at 1069. "It is contrary
to common sense to believe that racial prejudice effects all
racial and ethic groups equally or that all of those who are
certified will be free from bias or prejudice against other
racial and ethnic groups." Concrete Works, supra at 1077.
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On a definitional basis alone, the New Jersey Set-Aside
Statutes and regulations cannot meet their burden of
demonstrating that they are narrowly tailored to remedy past
discrimination.
B. UTILIZES RIGID NUMERICAL QUOTAS.
One of the characteristics that are constitutionally
required in order for an MBE Set-Aside plan to meet the narrow
tailoring test is that the plan avoid the use "of rigid
numerical quotas." Coral Construction, 941 F.2d at 922/ Croson,
supra at 488 U.S. at 507-08, 109 S. Ct. at 728-29.
For example, the San Francisco Plan survived a preliminary
injunction application because the City only provides a
"preference" to minority group contractors who have previously
received a lower percentage of specific types of contracts that
their availability to perform such work would suggest. "For
example, Black-owned medical service firms do not receive
preferences because they have not been disadvantaged in past
years with respect to the award of these contracts. For the
same reasons, San Francisco's program does not provide a bid
preference for Asian or Latino-owned architectural/engineering
°r computer system firms. In addition, since the Ordinance
confines the preference to those who are economically
disadvantaged, MBE's are prevented from using the preferences to
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obtain windfalls." Associated General Contractors of
California, Inc. v. Coalition for Economic Equity, 950 F.2d
1401, 1417 (9th Cir. 1991) .
The New Jersey Set-Aside plans by comparison all utilize
rigid numerical quotas. A Pakistani counts the same as a
Hispanic from Nebraska who counts the same as an African
American from Atlantic City. The problem with rigid numerical
quotas is that they fail to recognize the disparate effects of
past discrimination. It is inconceivable that all the varied
minorities included in the definition of a minority could have
equally been the victims of past discrimination by the State,
CRDA, Casino licensees or applicants for CRDA financing. In
addition, by treating all minorities the same, even MBE firms
that are not economically disadvantaged, some MBE's can realize
a windfall.
C. THE CRDA SET-ASIDE PROGRAM FAILS TO UTILIZE RACE-NEUTRAL
ALTERNATIVES.
The Court in Croson emphasizes that in assessing whether or
not an MBE plan is narrowly tailored, there must be evidence
that the government has considered and is utilizing race neutral
®eans to increase minority business participation. Croson,
supra 488 U.S. at 507, 109 S. Ct. at 729. The Court in Croson
identified eliminating barriers to minority participation such
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as lack of capital and bonding requirements and simplifying the
bidding procedures as ways of increasing minority participation.
Id.; Contractors, supra 91 F. 3rd. 586 at 608.
In the present case, there is no evidence that CRDA
considered anything other than set-asides. The record indicates
that CRDA has used set-asides from the first day that CRDA was
created. Yvonne Doggett, the Acting PACO and a former CRDA
Board Member, testified that other than set-asides, the only
other steps that she is award of that CRDA takes to encourage
minority participation is networking through business
organizations to inform MBE's of CRDA's Set-Aside Program.
CRDA, points to the amendment to N .J.S.A. 2A:44-143 which
increased the discretion that the State and State Agencies have
to waive bonding requirements for construction contracts of less
than $200,000. The waiver provision is limited to construction
contracts. Moreover, the Set-Aside Programs in the present case
are not limited to construction contracts. The Assembly State
Operations and Personnel Committee Statement to Senate No. 3193-
1-1991, c. 454 indicates that the motivation of the Legislature
when the waiver provision was initially established for
contracts of less than $100,000 was solely to "...make it easier
for small firms to compete for State construction contracts."
fn 1996, the limit was raised to $200,000. There is no
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indication in the Legislative History that the increase was as a
result of a desire on the part of the Legislature to create non
race based alternatives to set-asides. In any event, there is
no evidence that CRDA has ever utilized that discretion for
construction contracts of less than $200,000.
Based upon the record in this case, it appears that New
Jersey, at the state level, has, at best, authorized only one
non race-based alternative, the waiving of bonding requirements
for construction contracts only and limited to contracts of less
than $200,000. This is hardly sufficient to satisfy the narrow
tailoring requirement of the strict scrutiny standard.
CRDA by way of response points to the conclusory statement
in the Study Commission Report that race and gender neutral
remedies have been tried and failed. See, Db-31; Study
Commission Report, Da-126. The fact is that the State Study
Commission recommended a number race neutral remedies which,
seven years latter, have not been implemented by the State or
CRDA. The Study Commission recommended:
*♦* An Oversight Committee. Study Commission Report, Da-
136.
*** An Oversight Agency which would review, modify,
approve and monitor purchasing plans. Id.
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v Enforce anti-discrimination laws and sanction
contractors. Study Commission Report, Da-138.
*** Promote low cost Bonding. Study Commission Report, Da-
139.
❖ Eliminate discrimination in bonding. Study Commission
Report, Da-140.
❖ Prompt payments by the State to Prime Contractors and
of Prime Contractors to Subcontractors should be
required and enforced. Study Commission Report, Da-
142.
*t* Stepped Sheltered Markets providing increasing degrees
of competition as firms mature. Study Commission
Report, Id.
*1* Bid Preferences as opposed to set-asides. Study
Commission Report, Id.
❖ Amend the State Anti-Redlining Statute. Study
Commission Report, Id.
There is no evidence that any of these programs have been
implemented.
There are a number of reported decisions where the Court's
have rejected multiple race based alternatives as being
inadequate. Our research does not disclose any case where a
single race neutral alternative satisfied the strict scrutiny
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standard. See, Engineering Contractors Ass'n of South Florida
v. Metropolitan Dade County, 122 F. 3rd 895 (11th Cir.1997);
Contractors, supra 91 F. 3rd 586 at 608.
The State and CRDA's lip service to race based alternatives
stands in stark, contrast to the efforts of other governments who
took many more steps and still had their programs invalidated
for a lack of narrow tailoring. For example, in Engineering
Contractors, supra the Dade County MBE/WBE program required that
to be eligible an MBE/WBE must be located in Dade County and
must not exceed the size limits for a small business concern as
defined by the SBA. If it exceeds the size limit, it must
demonstrate that it continues to experience the kind of racial
discrimination addressed by the program. The program only
applied to certain classes of construction contracts. The
construction contracts are limited to three categories, general
building construction, heavy construction and specialty trade
construction. Once a contract is determined to be subject to a
Participation goal, it is then submitted to a review committee
for determination as to whether a contract measure should be
aPPlied. There are five different contract measures ranging
from set-asides to bid preferences to goals to selection factors
based on things other than price. The program is reviewed
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annually and a survey is conducted every five years. Nothing
like that has been attempted in the present case.
The Dade County program was initially upheld by the Federal
Courts in 1984 prior to Croson. After Croson and a four day
trial, the District Court threw out both the MBE and the WBE
components because of the lack of a compelling interest and the
lack of a narrowly tailored remedy.
The Circuit Court of Appeals in affirming the District
Court pointed out that our Supreme Court has held that "If a
race neutral remedy is sufficient to cure a race-problem, then a
race conscious remedy can never be narrowly tailored to that
problem." See Croson 488 U.S. at 507, 109, Supreme Ct. at 729.
The Court of Appeals observed that "Supreme Court decisions
teach that a race-conscious remedy is not merely one of many
equally acceptable medications the government may use to treat a
race-based problem. Instead, it is the strongest medicines with
many potentially harmful side-effects, that must be reserved for
those severe cases that are highly resistant to conventional
treatment." Engineering Contractors, supra.
Likewise, in Contractors, supra the Third Circuit affirmed
the District Court's judgment invalidating the Philadelphia Set-
Aside Program as a result of the failure on the part of the City
to utilize alternatives to race based quotas. "The City could
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have lowered administrative barriers to entry, instituted a
training- and financial assistance program and carried forward
the 0M0's Certification of Minority Contractor Qualifications."
Contractors 91 F. 3rd. 586 at 608.
In Cone Corp. v. Hillsborough County, 908 F. 2d 908 (11th
Cir. 1990),. the Court of Appeals reversed the granting of a
preliminary injunction be the District Court because the
Hillsborough MBE Program was "vastly different in critical
areas" from the Richmond Plan. Cone, supra at 917. Hillsborough
County incorporated all of the race neutral measures that the
Court in Croson recommended. CRDA relies on Cone, supra but has
not acted like Hillsborough. In the present case, CRDA
incorporates none of the measures utilized by Hillsborough.
CRDA assumes in the present case that only quotas will work.
This is a conclusion that it is not entitled to. "Here as in
Croson "[T]o a large extent, the set-aside of subcontracting
dollars seems to rest on the unsupported assumption that white
contractors simply will not hire minority firms. Contractors,
91 F. 3rd 586, 606 citing Croson 488 U.S. at 502, 109 S. Ct. at
726.
In all of the cases where programs were invalidated as a
result of the failure of the government to employ non race based
quota alternatives none presented the weak case we find here
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where virtually nothing has been explored except for set-asides.
Based upon this dismal record, Judge Winkelstein had no choice
but to find that the CRDA/State Program should also be found to
be invalidated and unconstitutional.
D. THE SET-ASIDE STATUTE AND REGULATIONS DO NOT HAVE ANY
SUNSET PROVISION OR ANY REQUIREMENT FOR PERIODIC
EVALUATION.
One of the features that the Courts look to, to see whether
a Set-Aside Program is narrowly tailored is whether the program
contains a sunset provision and a requirement for periodic
review of its necessity. "Whether the program was appropriately
limited such that it 'will not last longer than the
discriminatory effect it is designed to eliminate' ". Adarand
515 U.S. 200, 115 Sup. Ct. at 2118 quoting Fullilove 48, U.S. at
513, 100 Sup. Ct. at 2792-93.
In the present case, the Set-Aside Statute and regulations
have neither. The Set-Aside Program in New Jersey has been in
effect since 1984 for CRDA and since 1985 for the State. Other
that the suspension of the State Program for four years because
of Croson all of these programs have operated continuously. The
absence of any requirement for periodic review and the absence
of a sunset clause all are evidence of the fact that there is no
intention to narrowly tailor these programs.
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POINT III
GOOD FAITH EFFORTS AND GOALS ARE AS
CONSTITUTIONALLY DEFECTIVE AS
QUOTAS
CRDA attempts to argue that their program can survive
constitutional challenge because it employs "goals" rather than
quotas. This defense is factually and legally unsupportable.
The reality is, in the present case, that although styled
as goals and good faith efforts, the State Set-Aside act and
Regulations constitute a rigid program which carries dire and
even disastrous consequences for any party found to have
violated it.
Although phrased in terms of a "good faith effort", a close
reading of the statute and regulations clearly indicates that
they are mandatory and discriminatory. The Set-Aside Act
establishes a goal for state contracting agencies to award "at
least" 15 percent of their contracts for small businesses, au
least" 7 percent of their contracts for minority businesses and
"at least" 3 percent of their contracts for female businesses.
N.J.S.A. 52:32-21. The Set-Aside Act allows these goals to be
attained either by the direct designation of prime contracts for
small businesses, minority businesses and female businesses, or
by requiring a portion of a prime contract to be subcontracted
to a small business, minority business or female business. Id.
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Although its objective is stated as a goal, it is clear
that the Set-Aside Act contemplates set -asides. For example,
the Set-Aside Act provides that bids for set-aside contracts
from non-small business bidders, non-MBE's or non-WBE's "shall
be rejected". N.J.S.A. 52:32-25. The same is true where a
portion of a contract has been designated as a set-aside. Id.
It is clear that the State Set-Aside Plan and regulations speak
in terms of goals but carry the hammer of quotas.
The fact is that as a general proposition,
constitutionally, goals and good faith efforts suffer from the
same legal shortcomings that quotas do. Other governments have
attempted to defend their programs on the basis that they
require only good faith attempts to satisfy goals and do not
impose rigid quotas This argument has been roundly rejected by
the Courts.
For example, in Monterey, supra, the State University
argued, convincingly, that their statute did not impose rigid
quotas. The 9th Circuit accepted that argument but found it to
be constitutionally meaningless. The Court pointed out:
But the question we are considering in this
section of our opinion is whether the statue
classifies, that is whether it treats people
differently by ethnicity or sex, not whether
the purpose of the classification is
attractive. The statute treats contractors
differently according to their ethnicity and
sex, with respect to the "good faith"
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requirement. It does not say that all
contractors must assure that the opportunity
to bid is advertised to all prospective
subcontractors, including minority owned and
women owned firms. Only those firms not
minority or women owned must advertise to
those respective groups, and only minority
and women owned firms are entitled to
receive the bid solicitation. A firm which
is both minority and women owned, and keeps
at least a fifth of the work, does not have
to solicit any bids from firms identified by
ethnicity and sex. If a minority and women
owned firm does solicit bids from
subcontractors, the firm is free under the
statute before to exclude non-minority, non
women owned firms from solicitation.
Monterey, supra at p. 7.
The court in Monterey, supra recognized that:
...though worded in terms of goals and good
faith, the statute imposes mandatory
requirements with concreteness. The scheme
requires the bid solicitation in the context
of requiring "good faith efforts to meet
[percentage] goals." It requires
distribution of information only to members
of designated groups, without any
requirement or condition that persons in
other groups receive the same information.
The outreach the statute requires is
not from all equally, or to all equally."
Id.
The Court in Monterey, supra drew the analogy that if a
statute required the solicitation of subcontract bids only to
white male owned firms, and did not require that white male
owned firms make any solicitation if they kept the work and did
not subcontract it, ". . . a Court might well find that the
scheme 'discriminate[d] against MBEfs and WBE/s and continued to
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operate under 'the old boy network' in awarding contractors."
Monterey, supra at p. 7 citing Associated General Contractors v.
Coalition for Economic Equity, 950, F. 2d. 1401, 1414 (9th Cir.
1991) . The 9th Circuit in Monterey, supra indicated that if
faced with such a statute, they would certainly conclude that
the statute classified by ethnicity and sex. Id. The Court in
Monterey also pointed out that the statutory scheme in
California imposed higher compliance expenses on some firms as
opposed to others according to ethnicity and sex.
Based upon all of these factors, the Court in Monterey
concluded that the admittedly "good faith" requirement and the
absence of quotas did not insulate the statutory scheme in
California from constitutional attack, the scheme in New Jersey
suffers from the same shortcomings and more. New Jersey uses
quotas that it attempts to disguise as goals. Either way they
are unconstitutional.
POINT IV
THE TRIAL COURT PROPERLY DECIDED
BOTH THE COMPELLING INTEREST ISSUE
AND THE NARROW TAILORING ISSUE
The NAACP Legal Defense and Education Fund (LDF) in its
Brief argues that the Trial Court erred in deciding both prongs
of the strict scrutiny test and should have only decided the
narrow tailoring prong of the strict scrutiny test. This
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argument ignores the logical and legal reality that in order to
determine whether a program is narrowly tailored, a Court must
examine and determine what the compelling interest is that the
government is purportedly attempting to address.
In order for a Court to resolve the strict scrutiny issue
"It necessarily follows that a Court cannot conduct the strict
scrutiny review required by Croson without first identifying
with specificity the discrimination allegedly giving rise to the
compelling state interest." Contractors, supra 91 F. 3rd. at
599. It also follows that a Court cannot determine whether a
program is narrowly tailored to address the discrimination
allegedly giving rise to the compelling state interest without
also determining what the nature of the discrimination is. As a
result, the analysis that was applied by Judge Winkelstein in
the present was not only appropriate, but also necessary.
Courts have followed this approach in numerous other cases.
For example, in Contractors, supra, the Third Circuit was called
upon to review the decision of the District Court that the
Philadelphia MBE Program was not narrowly tailored to serve a
compelling State interest. In affirming that result, the Third
Circuit, of necessity, had to examine the record with regard to
the compelling need which was alleged in order to evaluate the
remedy provided for in the MBE Program. Contrary to the
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assertion of the LDF in the present case, the Third Circuit did
examine the compelling need issue and concluded that:
The city's affirmative action program has
been substantially circumscribed by judicial
decrees in this case. The preferences for
women and non-black minorities have been
stricken. Still, however, the remedy
provided by the program substantially
exceeds the limited justification that the
record provides. The program provided race-
based preferences for blacks in the market
for subcontracts where there is no strong
basis in the evidence for concluding that
discrimination occurred. It authorizes a 15
percent set-aside applicable to all prime
city contracts for black contractors when
there is no basis in the record for
believing that such a set-aside of that
magnitude is necessary to remedy
discrimination by the city in that market. .
a city may adopt race-based preferences only
when there is a 'strong basis in evidence
for its conclusion that [the] remedial
action was necessary.' Only when such a
basis exists is there sufficient assurance
that the racial classification is not
'merely the product of unthinking
stereotypes or a form of racial politics.'
That assurance is lacking here and
accordingly the race-based preferences
provided by Chapter 17-500 cannot stand.
Contractors supra at 609 (citations omitted)
(emphasis added).
In Engineering Contractor's Association v. Metropolitan
Dade County, 123 F. 3rd. 895 (11th Cir. 1997), the Eleventh
Circuit affirmed the decision of the District Court holding
three MBE's Programs unconstitutional and permanently enjoining
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their operation. The Eleventh Circuit conducted an exhaustive
review of the record with regard to the compelling need issue
finding that the government failed to sustain its burden and
then proceeded to also analyze the program based upon a narrow
tailoring analysis.
Perhaps the best example of the duel prong strict scrutiny
test is the Supreme Court's decision in Croson, supra. The
Supreme Court upheld the decision of the Court of Appeals that
the Richman Plan failed to demonstrate a compelling need while
at the same time suffering from a lack of narrow tailoring. In
applying this analysis, the majority in Croson concluded that ".
. . it is almost impossible to assess whether the Richman Plan
is narrowly tailored to remedy prior discrimination since it is
not linked to identify discrimination in any way." Croson,
supra 488 U.S. at 507. Notwithstanding that deficiency, the
Supreme Court then proceeded to analyze the Richman Plan with
regard to the narrow tailoring test.
None of the cases cited by the LDF contradict this
analysis.
The LDF cites Bush v. Vera, 517 U.S. 952, 979 (1996); Shaw
v. Hunt, 517 U.S. 899, 911 (1996) and Edward J. DeBartolo Corp.
v. Florida Gulf Coast Building & Construction Trades Council,
485 U.S. 568, 575 (1998). These cases are easily distinguished
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from the case at bar. First of all, none of these cases
involves, a set-aside program. Moreover, in each of these cases,
the United States Supreme Court elected to "assume" that a
specific compelling state interest was involved. The Supreme
Court did not hold, as suggested by the LDF, that it was
precluded from considering the issue of whether there was a
compelling state interest at stake where the Court concluded
that there was a lack of narrow tailoring.
Bush, supra, involved a constitutional challenge to the
establishment of three new congressional districts in the State
of Texas. The new districts were created pursuant to the Voting
Rights Act of 1965 ("VRA") . Section 2(a) of the VRA prohibits
the imposition of any electoral practice or procedure that
"results in a denial or abridgment of the right of any citizen
to vote on account of race or color." 517 U.S. at 976.
With respect to compelling state interest, the Supreme
Court held:
"As we have done in each of our previous
cases in which this argument has been raised
as a defense to charges of racial
gerrymandering, we assume without deciding
that compliance with the results test, as
interpreted by our precedents, can be a
compelling state interest." 517 U.S. at
977.
The Court then completed its analysis by focusing on whether the
new districts were narrowly tailored to meet that interest:
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"We have, however, already found that all
three districts are bizarrely shaped and far
from compact, and that those characteristics
are predominantly attributable to
gerrymandering that was racially motivated
and/or achieved by the use of race as a
proxy....
These characteristics defeat any claim that
the districts are narrowly tailored to serve
the State's interest in avoiding liability
under §2___ " 517 U.S. at 979.
In Bush, the Court's holding was limited to the VRA, and
the Court identified the compelling state interest at stake as
the drawing of congressional districts in a manner which did not
discriminate based upon race. Again, the Court did not
articulate a requirement that where a matter can be decided
based upon lack of narrow tailoring that the Court need not
decide whether a compelling state interest is present.
It is interesting to note that in Bush, Justice O'Connor
wrote a separate concurring opinion in which she specifically
held that compliance with the results test of §2(b) of the VRA
was a "compelling state interest"
"...this Court has thus far assumed without
deciding that compliance with the results
test of VRA §2(b) is a compelling state
interest....Although that assumption is not
determinative of the Court's decisions
today, I believe that State and lower courts
are entitled to more definite guidance as
they toil with the twin demands of the 14th
Amendment and the VRA." 517 U.S. at 990.
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In Shaw v. Hunt, supra, the United States Supreme Court was
again as-ked to look at the creation of a congressional district,
this time in North Carolina. In this case, the Supreme Court
reversed the District Court, and found the district at issue to
be unconstitutional. Again, the VRA was at issue.
The Court again assumed that compliance with Section 2 of
the VRA could be a compelling interest and held that the
creation of the district in question was not narrowly tailored
to the asserted end:
"We assume, arguendo, for the purpose of
resolving this suit, that compliance with §2
could be a compelling interest.... We hold
that even with the benefit of these
assumptions, the North Carolina plan does
not survive strict scrutiny because the
remedy - the creation of District 12 - is
not narrowly tailored to the asserted end."
517 U.S. at 915.
Again, the Court did not articulate a requirement that where a
matter can be decided based upon lack of narrow tailoring that
the Court need not decide whether a compelling state interest is
present.
Edward J. DeBartolo Corp., supra, involved the issue of
whether hand billing activities at a shopping mall violated
federal labor laws and the First Amendment. Like Bush and Shaw,
DeBartolo did not involve a set-aside statute.
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In DeBartolo, a construction company used non-union labor
in connection with the construction of a department store for a
tenant at a mall owned by DeBartolo. The union distributed
handbills at the mall which urged customers not to shop at any
of the mall's stores until DeBartolo promised that all mall
construction would be done by contractors paying fair wages.
DeBartolo alleged that the union had committed an unfair labor
practice in violation of §8(b)(4) of the National Labor
Relations Act ("NLRA"), which made it an unfair labor practice
to "threaten" or "coerce" any person "to cease doing business
with another." The case ultimately made its way to the United
States Supreme Court. The Supreme Court held that the Union
could distribute the handbills, because the wording of the
statute did not prohibit that activity. Having reached this
result, the Court declined to engage in an analysis of whether
the handbilling was protected by the First Amendment. The Court
held:
"Another rule of statutory construction,
however, is pertinent here: where an
otherwise acceptable construction of a
statute would raise constitutional problems,
the Court will construe the statute to avoid
such problems unless such construction is
plainly contrary to the intent of
Congress... 'the elementary rule is that
every reasonable construction must be
resorted to, in order to save the statute
from unconstitutionality.' This approach
not only reflects the prudential concern
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that constitutional concerns not be
needlessly confronted, but also recognizes
that Congress, like this Court, is bound by
and swears an oath to uphold the
Constitution. The Courts will not lightly
assume that Congress intended to infringe
constitutionally protected liberties or
usurp power constitutionally forbidden it."
485 U.S. at 575.
DeBartolo stands for the proposition that where the Court can
decide a case without addressing constitutional issues, it
should do so. It does not stand for the proposition urged by
the LDF that once the Court determines that there is a
constitutional issue, the Court is obliged to limit its
constitutional analysis. In the case at bar, the only issue is
whether the Set Aside Act is constitutional. There is no way
for the Court to avoid a constitutional analysis.
Next the LDF goes on to state that the Court should only
reach constitutional issues which are properly before it and
which that are necessary to the adjudication of the specific
dispute. LDF Brief, p 8. In support of this proposition, the
LDF cites the following cases: Three Affiliated Tribes v. Wold
Engineering, 467 U.S. 138, 157-58 (1984); City of Chicago v.
International College of Surgeons, 522 U.S. 156, 188 (1997);
United States v. Raines, 362 U.S. 17, 21 (1960); Rescue Army v.
Municipal Courts 331 U.S. 549,568 (1947); Ashwander v. TVA, 297
U.S. 288, 347 (1936) ; Contractors Assoc. v. City of
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Philadelphia, 6 F.3rd 990, 996 (3rd Cir. 1993); O'Keefe v. Passaic
Valley Water Commission, 132 N.J. 234, 240-41 (1993); Donadio v.
Cunningham, 58 N.J. 309, 325-26 (1971); State v. Zucconi, 50
: N.J. 361, 364 (1967); State v. Salerno, 27 N.J. 289 (1958), and
Grohart v. Grobart, 5 N.J. 161, 165 (1950).
For the most part, the issue in these cases, like in
DeBartolo, supra is whether the Court should address a
constitutional issue raised by one of the parties, when the case
can be decided on non-constitutional grounds. None of these
cases address the issue of whether the Court can or should
address the compelling state interest prong of the strict
scrutiny test where it concludes that there is a lack of narrow
tailoring.
In Three Affiliated Tribes, supra, an Indian Tribe
commenced an action in State court against World Engineering, a
non-Indian company, for negligence and breach of contract in
connection with the construction of a water supply system on
Indian land. Wold Engineering moved to dismiss the lawsuit on
the ground that a North Dakota statute precluded state court
jurisdiction of Indian claims. On appeal to the United States
Supreme Court from the North Dakota Supreme Court, the Tribe
argued that the statute in question precluded only those claims
involving Indian lands, and not claims by Indian tribes for
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breach of contract and the like against non-Indians. The Tribe
also argued that to prohibit such a suit would deny the Tribe
equal access to the courts in violation of the Equal Protection
Clause of 14th Amendment.
The United States Supreme Court held that the North Dakota
Supreme Court's interpretation of the statute in question rested
on its misconception of federal law regarding jurisdiction of
Indian claims, and that the matter should be remanded to the
State Supreme Court for additional consideration. In its
ruling, the United States Supreme Court noted that if the North
Dakota Supreme Court reinterpreted the statute to permit the
Tribe to maintain its claim in State Court, then there would be
no need to address the issue of whether the failure to afford
the Tribe jurisdiction in State Court constituted a violation of
the United States Constitution.
In the case at bar, the only issue in the case is the issue
of whether the Set Aside Act is constitutional. The analysis
involves consideration of whether the Act meets the compelling
interest prong of the strict scrutiny test as well as
consideration of whether it meets the narrow tailoring prong.
City of Chicago, supra, likewise did not involve any strict
scrutiny analysis. Rather, it involved the issue of whether the
Federal Court had jurisdiction of an action which the
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petitioners sought to remove from State Court. There, the
United States Supreme Court focused on the principals of Federal
subject matter and pendant jurisdiction. The majority opinion
did not discuss the issue for which it is cited by the NAACP,
i.e., whether the Court should reach a constitutional issue in
advance of the necessity of deciding it. Rather, a terse
statement to this effect is set forth in the dissenting opinion
in the context of criticizing the District Court's handling of
certain constitutional questions below:
"As a rule, potentially dispositive state-
law challenges, not ultimate constitutional
questions, should be cleared first." 522
U.S. at 188.
United States v. Raines, supra, involved an action by the
United States seeking to enjoin certain public officials from
engaging in practices designed to discourage minorities from
voting. Again, there is no strict scrutiny analysis. Again,
the Court's concern was to avoid constitutional issues by
deciding the case on a non-constitutional ground - a concern
which is not present in the case at bar. The case involved a
federal law which precluded any person from engaging in any
practice which would deprive another person of the right to
vote. The District Court held that since this prohibition
applied to private actors, as well as to those acting on behalf
of the State, it was beyond the scope permissible under the
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Fifth Amendment and therefore unconstitutional. The United
States Supreme Court reversed, holding that the District Court
should only have considered whether the statute was applicable
in that case, i.e. to actions by state officials, and should not
have engaged in the additional constitution analysis regarding
private actors. To that end, the Supreme Court held:
"This court, as is the case with all federal
courts, 'has no jurisdiction to pronounce
any statute, either of a state or of the
United States, void, because irreconcilable
with the constitution, except as it is
called upon to adjudge the legal rights of
litigants in actual controversies....
Accordingly, if the complaint here called
for an application of the statute clearly
constitutional under the Fifteenth
Amendment, that should have been an end to
the question of constitutionality." 362
U.S. at 21, 25.
Rescue Army, supra, involved a proceeding by the Rescue
Army (a religious organization) against the Municipal Court of
the City of Los Angeles seeking to prohibit the Municipal Court
from trying one of the Army's members for violating a city
ordinance prohibiting solicitation of donations. The Rescue
Army urged that soliciting donations for charity was part of its
religion, and that the ordinances prohibiting such solicitation
were in violation of the First and Fourteenth Amendments to the
United States Constitution. The specific relief sought was a
writ prohibiting the Municipal Court from bringing criminal
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charges against the Army representative for violating the
ordinance. The United States Supreme Court upheld the State
Court's refusal to issue the writ. Although the Rescue Army
urged the United States Supreme Court to look at the
constitutional issues involved in the underlying ordinance, the
Supreme Court refused to do so, on the ground that:
"Here relief is neither sought nor needed
beyond adjudication of the jurisdictional
issue. The suit seeks only, in substance, a
judicial declaration that jurisdiction does
not exist in the Municipal Court." 331 U.S.
at 574.
The Supreme Court then went on to reiterate its policy of not
giving advisory opinions on constitutional issues. The Court
also noted that the constitutional issues there might ultimately
be addressed after a final judgment in the Municipal Court.
Ashwander v. TV A, supra, was a 1936 United States Supreme
Court case. That case involved the purchase by the Tennessee
Valley Authority from the Alabama Power Company of certain
transmission lines extending from the Wilson Dam. The
plaintiffs, shareholders of the Power Company, feeling that the
Power Company had undersold its resources, commenced a
derivative suit seeking a declaratory judgment that the
agreement with the TVA was invalid, because it was beyond the
constitutional power of the federal government. The plaintiffs
also challenged the validity of the act creating the TVA, and
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other actions of the federal government. Although the United
States Supreme Court held that the question to be determined was
the validity of the TVA agreement in question, it did engage in
an extensive constitutional analysis regarding TVA activities.
The portion of this case cited by the NAACP (LDF Brief, p. 8) is
part of a separate concurring opinion in the case, wherein
Justice Brandeis stated with respect to constitutional analysis:
"...if a case can be decided on either of
two grounds, one involving a constitutional
question, the other a question of statutory
construction or general law, the Court will
decide only the latter...." 297 U .S . at 347.
This statement is brilliant in its simplicity in terms of
stating the rule of law. The LDF has twisted this rule of law
and cites Ashwander and the other cases cited above for the
unsupported proposition that where a constitutional issue
requires analysis of two sub-issues, the Court should only
analyze one of the sub-issues where that is all that is needed
to render a finding that the statute in question is
unconstitutional. None of the cases cited by the LDF so holds.
In the section of Contractors Association of the City of
Philadelphia, supra, cited by the LDF, the Third Circuit Court
of Appeals, addressing a standing issue, held:
"Courts considering constitutional
challenges to statutes often analyze
standing problems in terms of the
severability doctrine. Under this
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principal, when a court determines the
legislature intended the challenged sections
of a statute to operate independently of the
unchallenged section, . and finds these
sections can so operate, it will consider
only the challenged sections, leaving the
remainder of the statute intact." 6 F. 3rd
at 996.
In the case at bar, Feriozzi is challenging the entire Set-Aside
Act, and there is no issue regarding standing.
O'Keefe, supra, is a New Jersey case. There, the plaintiff
was an unsuccessful applicant for a water meter reading job.
The plaintiff brought suit alleging that defendant water
commission did not hire the plaintiff due to the plaintiff's
refusal to take a pre-employment drug test. The Superior Court,
Chancery Division, Passaic County, following a bench trial,
declared the drug testing policy unconstitutional, but found
that the applicant was not hired for other reasons. The
Appellate Division affirmed, and the Supreme Court of New Jersey
affirmed the Appellate Division on the ground that the record
below supported a finding that the refusal to hire the plaintiff
was for reasons unrelated to his refusal to take a drug test,
and was proper. The Supreme Court went on to state that given
this finding, it was unnecessary to reach the issue of whether
the Commission's drug testing policy was unconstitutional.
Similarly, in Donadio, supra, the Supreme Court of New
Jersey was called upon to decide the validity of a building
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permit. One of the issues raised by the plaintiff was whether
the zoning ordinance in question was constitutional. The Court
was able to resolve the issues in the case without reaching the
constitutional issue. The Court held:
"It is thoroughly established that a
building permit may not be denied simply
because the ultimate actual use might be in
violation of the ordinance so long as the
application does not demonstrate such. If
later the actual use does suggest a
violation, the matter may then be determined
and any appropriate relief ordered.... This
case, therefore, was properly determinable
at the appellate level on this basis... quite
apart from the...matter of the ordinance's
constitutionality...." 58 N.J. at 326.
The same procedure was followed in Grobart, supra (where
the New Jersey Supreme Court refrained from considering whether
the "Heart Balm Act" was unconstitutional where it was able to
dispose of the case without reaching that issue) as well as in
Zucconi and Salerno, supra (two criminal cases where the New
Jersey Supreme Court declined to address constitutional
challenges to certain criminal statutes where it could dispose
of the issues on non-constitutional grounds).
Beginning at page 9 of their Brief, the LDF finally cites
cases which involve a strict scrutiny analysis. However, with
the exception of Contractors, supra and Concrete General, supra
tone of these cases involve set-asides for women or minorities.
The cases cited are: Contractors Association v. City of
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Philadelphia, 91 F.3rd 586, 605 (3rd Cir. 1986); Eisenberg v.
Montgomery County Public Schools, 197 F. 3rd 123, 131 (4 Cir.
1999); Tuttle v. Arlington County School Board, 195 F.3rd 698,
705 (4th Cir. 1999); Williams v. Babbitt, 115 F.3rd 657, 665 (9th
Cir. 1997); Hiller v. County of Suffolk, 977 F. Supp. 202, 206
(E.D.N.Y. 1997), and Concrete General, Inc. v. Washington
Suburban Sanitary Commission, 779 F. Supp. 370 (D. Md. 1991).
Contractors, supra, which was cited above in support of
Feriozzi's position that the Court can conduct both a compelling
state interest and narrow tailoring analysis, involved a
Philadelphia ordinance which created set asides for minority,
women and handicapped subcontractors on city public works
contracts. There, the Court, after an extensive review of the
evidence offered to demonstrate past discrimination by the City,
felt that it simply could not decide the issue of whether there
had in fact been discrimination in the prime contract market,
and declined to make any finding on this issue. However, since
the Court could conclude that the ordinance was clearly not
narrowly tailored, it affirmed the District Court's finding that
the ordinance was unconstitutional:
"Whether this record provides a strong basis
in evidence for an inference of
discrimination in the prime contract market
is a close call. In the final analysis,
however, it is a call that we find
unnecessary to make, and we chose not to
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make it. Even assuming that the record
presents an adequately firm basis for that
inference, the judgment of the district
court must be affirmed .because Chapter 17-
500 is clearly not narrowly tailored to
remedy that discrimination." 91 F.3rd at
605.
As we have noted above, the LDF has incorrectly cited this case
in support of the proposition that a Court should not address the
compelling state interest prong of the strict scrutiny test where
it can find a lack of narrow tailoring. The Third Circuit made
no such finding.
In Eisenberg v. Montgomery County, supra, the Court stated
that it would assume that racial/ethnic diversity was a
compelling state interest in connection with a student transfer
program, and ruled that the program was unconstitutional on the
ground that it was not narrowly tailored. The Court did not
state that it was making the assumption regarding the compelling
state interest because it was constrained to do so by any
analytical policy. Nor did the Court state that it should
refrain from addressing constitutional issues where possible.
In Tuttle v. Arlington County School Board, supra, the
United States Court of Appeals for the Fourth Circuit likewise
refrained from deciding whether diversity is a compelling state
interest, but did not hold that it was required by any rule of
law to so refrain. There, the Court resolved that it would wait
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until the Supreme Court provided some guidance as to whether
diversity may be a compelling state interest, thereby
contemplating that the issue would be addressed in the future.
If Courts were supposed to refrain from a compelling state
interest analysis, then presumably the Fourth Circuit would have
said so, rather than look for guidance on the issue.
In Williams v. Babbitt, supra, the Ninth Circuit Court of
Appeals assumed for purposes of its analysis that Congress has a
compelling interest in giving economic assistance to Native
Americans. In a footnote to the statement regarding the Court's
assumption, the Court noted that it has found in cases involving
Native Americans that: "we have little doubt that the government
has compelling interests when it comes to dealing with Indians."
This statement would be unnecessary if the Court was required to
refrain from considering the issue where it found lack of narrow
tailoring.
Hiller v. County of Suffolk, supra, involved an
affirmative action program in connection with the hiring of
police officers. There, the Court did consider whether the
program was justified by a compelling state interest, and
specifically found that the stated purpose of "achieving
diversity is not a sufficiently compelling state interest." 977
F. Supp. at 206. Having made this finding, the Court went on to
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hold: "Here, however, it is not necessary for the Court to find
a showing of past discrimination sufficient to satisfy a
compelling governmental interest because the Cadet program in
not narrowly tailored." 977 F. Supp. at 206. The Court did not
hold that it was impermissible to find a showing of past
discrimination where it also found that the program in question
was not narrowly tailored.
As mentioned, Concrete General, Inc. v. Washington Suburban
Sanitary Commission involved a set aside program similar to the
one in the case at bar. There, the Court engaged in an
extensive analysis of both the compelling state interest and
narrow tailoring test. With respect to the compelling state
interest test, the Court concluded that there were issues of
fact which precluded the Court from ruling. However, the Court
did find that the program was not narrowly tailored, and struck
down the subject set aside on that basis. Under the LDF's
theory, the Court should have refrained from discussing
compelling state interest once it was able to reach the
conclusion that the program was not narrowly tailored. The
Court did not do so. The Court did not decide the compelling
interest issue solely because of the factual dispute which
precluded summary judgment. In the present case, there was no
87
LAW OFFICES • PERSK1E, NEHMAD S PERILLO • A PROFESSIONAL CORPOFIAVON
1125 ATLANTIC AVENUE • SUITE 711 • ATLANTIC CITY, NEW JERSEY 08401
factual dispute concerning the record advanced to support the
claimed compelling interest.
Next the LDF cites the case of American Manufacturers
Mutual Insurance Company v. Sullivan, 526 U.S. 40, 62 (1999)
for the proposition that "when a case presents two
constitutional questions, one of which disposes of the entire
case and the other of which does not, resolution of the case-
dispositive question should suffice." LDF Brief, p. 11.
American Manufacturers is easily distinguished from the case at
bar. In the first place, American Manufacturers involved an
allegation that the Pennsylvania Workers' Compensation Act was
unconstitutional on the ground that it failed to require that
certain notices be given. Second, the proposition for which the
LDF has cited the case is set forth in a concurring opinion, and
is not part of the holding of the case. Third, in the case at
bar there is only one constitutional question, i.e. whether the
Set-Aside Act is constitutional under a strict scrutiny
analysis.
The LDF cites FCC v. Beach Communications, Inc., 508 U.S.
307, 314 (1993) and Rescue Army, supra, for the proposition that
the Court should exercise judicial restraint on the assumption
that improvident actions will eventually be rectified by the
democratic process. LDF Brief, p. 12. Rescue Army is discussed
88
LAW OFFICES • PERSKIE, NEHMAD & PERILLO • A PROFESSIONAL CORPORAVON
1125 ATLANTIC AVENUE • SUITE 711 • ATLANTIC CITY, NEW JERSEY 08401
above, and for the reasons previously stated is wholly
distinguishable from the case at bar.
FCC is also distinguishable. FCC involved a challenge by
certain satellite operators to certain provisions in the Cable
Communications Policy Act. The case did not involve any strict
scrutiny analysis. The same is true with respect to Adkins v.
Children's Hospital, 261 U.S. 394, 544 (1923), cited on page 13
of LDF's Brief. There, the Court simply stated that Courts
should be circumspect when passing upon the constitutionality of
an act of Congress. That case involved a challenge to minimum
wage legislation. The minimum wage statutes were upheld.
Judge Winkelstein had no choice. He had to examine what
the State's purported compelling interest was before proceeding
to examine narrow tailoring. The Set-Aside Program fails the
test on both prongs.
CONCLUSION
For all of the above reasons, it is respectfully submitted
that the decision of Judge Winkelstein should be affirmed in
its entirety.
LAW OFFICES • PERSK1E, NEHMAD & PERILLO • A PROFESSIONAL CORPORATION
1125 ATLANTIC AVENUE • SUITE 711 • ATLANTIC CITY, NEW JERSEY 08401
SUPERIOR COURT OP NEW JERSEY LAW DIVISION - ATLANTIC COUNT DOCKET NO. ATL-L-200 3-99
L. FERIOZZI CONCRETE COMPANY,INC., a New Jersey Corporation, and CONCETTA FERIOZZI,
Plaintiffs
vs .
CASINO REINVESTMENT DEVELOPMENT
A U T H O R I T Y and JAMES B. KENNEDY,
Executive Director of the Casino
Reinvestment Development Authority,
Defendants
Wednesday - August 4, 1999
ORIGINS
Oral sworn deposition of YVONNE
B O N I T T O - D Q G G E T T , taken in the offices of CASINO
REINVESTMENT DEVELOPMENT AUTHORITY, 1014 Atlantic
Avenue, Atlantic City, New Jersey, before Maryann
Weyhmiller, a NJ Certified Shorthand Reporter,
Registered Professional Reporter, and Notary Public
of the State of New Jersey, on the above date,
commencing at 12:47 p.m., there being present:
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those instructions?
A. 35To.
Q.
CRDA?
A. Six and a half years.
Q. And what has your title been during that
time?
A. Deputy director. I've also been -- I
continue to be assistant secretary of the board
and a c t i n g public agency compliance officer.
q . And Susan told us that's known as the
PACO?
A. PACO.
A. Well, we had originally had a staff
m e m b e r who was PACO, and she asked to be relieved
of her duty through a period of time. And I
a s s umed it -- I was asked to assume it and I
a s s umed the period. And I guess I use "acting" by
my own terminology.
Q. Who was the PACO before you?
A. Patricia Chandler.
Q. Does she still work for the Authority?
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Yvonne Bonifcfco-Daggett (By Mr. BertXlo)
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A. I really can’t recall. I do recall ^
there may have been instances where it was found
in other authorities, but I can't be specific to
our authority.
Q. Do you know whether the commission found
svidence of discrimination on the part of
casino licensees and their purchasing practices?
A. No.
Q. Do you know whether that issue was
examined by the commission or its staff?
A. No .
MR. McAULEY: No, you're not aware?
THE WITNESS: No, I'm not aware.
Yes, I'm not aware.
BY MR.' PERILLO:
Q. Since you've been with CRDA have you
seen any evidence of any discrimination on the
part of CRDA at any time in the past in its
p u r c h a s i n g practices?
A. No.
Q. Since you've been with CRDA have you
seen any evidence of any discrimination on the
part of any casino licensees in their purchasing
practices?
A. No.
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Yvonne Bonitto-Doggett CBy Mr. Perillo)
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Q. Since you've been with. CRDA have you
seen any evidence of any discrimination on the
part of contractors doing business with CRDA?
A. No.
Q. Have you seen any evidence since you've
been with CRDA of any acts of discrimination on
the part of subcontractors employed by contractors
doing business with CRDA?
A. N o .
Q. And then, finally, have you seen any
evidence of any discrimination since you've been
wit h CRDA on the part of any applicants for CRDA
funding?
A. Repeat that again, please.
Q. Since you've been with C3|pA have you
seen any evidence of any acts of discrimination onj
the part of applicants for CRDA funding?
A. N o .
Q. What are the current MBE/WBE/SBE goals
of CRDA?
A. Seven, three and fifteen.
Q. Was there a time when CRDA utilized
different goals other than those?
A. Yes.
Q. When was that?
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q . who else, other than, you, participates
in that decision-making process?
A_ Maybe the project officers.
Q. Anybody else?
A. Our in-house counsel, our director.
Q. Anybody else?
A. Not that I can think of.
Q. Does the bo a r d participate in that
decision?
MR. M c A U L E Y : On an individual
MR. P E R I L L O : Yes .
THE W I T N E S S : No .
BY MR. PERILLO:
Q. How many project officers does CRDA have
now?
A. Oh, my. We have -- excuse me a minute.
In senior staff we have three. We have, I
believe, approximately seven or eight.
Q. Let's now turn to what I'm calling the
goal contracts. Have there been any instances in
the case of goal contracts where CRDA has set a
goal of other than seven, three and fifteen?
A. The only ones that I am familiar with
would be -- two by classification or designation.
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YVomte Bonicco-Doggrecc: u*y nr.
Q. What do you. anticipate the dollar volume
of contracts to be that. CRDA will award in 19 99?
A. I don't: have that information readily
available to share with you.
Q. Is it tens of millions?
A. In construction projects?
Q. Yes.
A. Rephrase your question, please.
Q. What do you anticipate the doll
of construction projects to be that CRDA will
award in 1999?
A. Approximately 40 million dollars.
Q. So seven percent of 40 million, if my
ma t h is right, is about 2.8 million?
A. Yes. You're doing the math.
Q. The anticipated need to meet the seven
p e r cent goal, was that a prime consideration in
s e t t i n g the 30 percent goal for the Civil Rights
project?
A. Another consideration was the type of
project it was and the type of work that was to be
provided and the availability of contractors.
Q. If you had to take those criteria -- and
I think you've listed four -- and you had to rank
them in terms of figuring into this decision,
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where would the need to meet the goal criteria be
in that ranking?
. MR. McAULBY: Objection as to form.
You can answer.
THE WITNESS: I would say it was a
primary consideration.
BY MR. PERILLO:
Q. The next criteria you talked about was
the opportunity and availability of MBE
contractors?
A. Urn-hum.
Q. Could you explain what you meant by
that?
A. If there is a determination or a desire
to set a goal as a set-aside in a contract we
would be looking at availability of entrepreneurs
or enterprises to be able to contract with at the
time. At the same time we would be affording an
opportunity to comply with the state laws as it
relates to the set-aside rules.
Q. What was there about the Civil Rights
Garden project that created different
opportunities or different availability than other
CRDA projects?
A. There really isn't any difference,
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Ivonaft sooxc.bu*uu^^aww 73
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except for tlie type of project it was as it
relates to the civil rights movement and the
significance; of that particular project to the
Atlantic City community.
Q. And that was the final consideration
that you've given, which you've mentioned a couple
times?
A . Y e s .
Q. And that is the type of project?
A. Yes. ^
Q. And we all recognize that. Was that a
major consideration in utilizing the 30 percent
set-aside?
MR. M c A U L E Y : Objection as to form.
You can say "major'' versus something else.
I'm not sure what --
MR. PERILLO: Let me withdraw that
question.
BY MR. PERILLO:
Q. Let me go back to the, ranking approach I
tried to utilize last time. As I understand your
answers to the last series of questions, you've
indicated that there were basically -- now it
appears, three categories of considerations went
into the utilization of the 30 percent.
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Yvonne Banifcta-Boggefcfc (By Mr. Perillo)
25
The first dealt with the need to meet
your seven percent goal, the second dealt with
what you call the opportunity and availability of
MBS contractors, and the third dealt with what I'm
calling generally the type of project that it was.
Have I fairly characterized the three groups of
considerations?
A. Yes.
Q. If you had to rank these groups in terms
of reaching the 30 percent decision where would
the type of project rank relative to the other two
considerations?
A. They would be equally important.
Q. So all three criteria weighed equally in
your mind?
A. Absolutely.
Q. Okay. Let's now turn to the Virginia
Avenue project. Actually, let's just go back to
the Civil Rights for a minute. Why was the 30
percent selected? Why wasn't it 20 percent or 40
percent?
A. That was presented to me.
Q. By who?
A. Susan Ney.
Q. And do you know what she utilized to
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Yvonne Bonifcto-Doggett (By Mr. Perilia)
S3
Set-Aside Report;
P-25, eight pages, 1998 2nd Quarter
Set-Aside Report;
P-26, five pages, 1998 3rd Quarter
Set-Aside Report;
P-27, five pages, 1998 4th Quarter
Set-Aside Report; were marked for
identification. )
BY MR. PERILLO:
Q. We have now marked P-23 through P-27,
the statistical compilation and the four quarterly-
reports for 1998; is that correct? (Indicating.)
A . Y e s .
Q. If you take a look at P-27, which is the
fourth quarter report, on Page 2 of the
constr u c t i o n contract schedule you're listing
N e t w o r k as a small business. Do you see that?
(I n d i c a t i n g .)
A. Um-hum. Yes.
Q. They should be carried as an M B E , should
they not?
A. Yes. Yes.
Q. Other than including the goals and the
set-asides in the various contracts that CRDA
awards, has CRDA taken any other steps to increase
Yvonne Bonitto-Doggett (By Mr. Perillo)
64
MBE/WBE participation?
A. What we do is talk to the AMWBE
community. We participate in conferences,
prebid conferences. We talk about participation.
Through our association with the New Jersey
Development Authority for Small Businesses,
Minorities and Women we participate in the growth
of minority and women businesses through 1.2
m i l l i o n annual dollars that are given to the
a u t h o r i t y for its actions, its activities.
Q. I'm sorry. What's the 1.2 million? Who
gives that and what do they do with it?
A. As part of the CRDA act we have a
com m i t m e n t to the New Jersey Development A u thority
for Small Businesses, Minorities and Women, and we
p r o v i d e them 1.2 million dollars a year for their
activities. It's written into the CRDA act and
it's our obligation to do that.
Q. Anything else?
A. That I can readily share with you today,
no .
Q. Has CRDA modified its bonding
requirements on any contracts to increase MBE or
WBE participation?
A. It has in the past. I don't have that