Michigan Road Builders v. Millikan Court Opinion

    RECOMMENDED FOR FULL TEXT PUBLICATION 
See, Sixth Circuit Rule 24

No. 86-1239

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

M ichigan Road Builders 
Association, Inc., et al.,

Plaintiffs-Appellants,
v.

W illiam G. M illiken, ct al.,
Defendants-Appellees.

O n A ppeal from the 
United States District 
Court for the Eastern 
District of Michigan.

Decided and Filed November 25, 1987

Before: LIVELY, Chief Judge; ENGEL and
KRUPANSKY, Circuit Judges.

KRUPANSKY, Circuit Judge, delivered the opinion of the 
court, in which ENGEL, Circuit Judge, joined. LIVELY, 
Chief Judge, (pp. 28-34) delivered a separate dissenting opin­
ion.

KRUPANSKY, Circuit Judge. Plaintiffs-appellants Michi­
gan Road Builders Association, et al. (Michigan Road Build­
ers or plaintiffs) appealed from the district court’s order 
granting summary judgment in favor of the defen- 
dants-appellees, (defendants) in this civil rights action com­
menced for the purpose of challenging the constitutional

1



validity of 1980 Mich. Pub. Acts 428 (Public Act 428), Mich. 
Comp. Laws §450.771, el sec/.1 In particular, the Michigan 
Road Builders charge that Public Act 428 which “set aside” 
a portion of state contracts for minority owned businesses 
(MBEs) and woman owned businesses (WBEs) impinges 
upon the Equal Protection Clause of the Fourteenth Amend­
ment to the Constitution. Section 2 of Public Act 428, Mich. 
Comp. Laws §450.772 provides that after the 1984-85 fiscal 
year, each state department must award not less than 7% of 
its expenditures for construction, goods, and services to 
MBEs and not less than 5% to WBEs.2 Under Public Act 428,

2 Michigan Road Builders v. Milliken. el al. No. 86-1239

lPlaintifTs-appellants “are (1) several non-profit associations whose 
members arc, in general, construction firms, contractors and suppliers, 
who have done, or are doing business with the Slate of Michigan, and
(2) various profit corporations who have had, or seek, contracts with 
the State of Michigan.” Michigan Road Builders Ass'n v. Milliken, 571
F. Supp. 173, 174 (E.D. Mich. 1983). Dcfcndants-appcllccs arc William
G. Milliken, the former Governor of Michigan, the Michigan Depart­
ment of Management and Budget, Gerald H. Miller, the former Direc­
tor of the Michigan Department of Management and Budget, the Mich­
igan Department ofTransportalion, and John P. Woodford, the former 
Director of the Michigan Department ofTransportalion.

2Mich. Comp. Laws § 450.772 provides:
Sec. 2. (1) The construction, goods, and services procurement 
policy for each department shall provide for the following per­
centage of expenditures to be awarded to minority owned and 
women owned businesses by each department except as pro­
vided in subsection (6):

(a) For minority owned business, the goal for 1980-8 1 shall 
be 150% of the actual expenditures for 1979-80, the goal for 
1981-82 shall be 200% of the actual expenditures for 1980-81, 
the goal for 1982-83 shall be 200% of the actual expenditures 
for 1981-82, the goal for 1983-84 shall be 1 16% of the actual 
expenditures for 1982-83, and this level of efiort at not less 
than 7% of expenditures shall be maintained thereafter.

(b) For woman owned business, the goal for 1980-81 shall 
be 150% of the actual expenditures for 1979-80, the goal for

No. 86-1239 Michigan Road Builders v. Milliken, et al. 3

a “minority” is a “person who is black, hispanic, oriental, 
cskimo, or an American Indian,” Mich. Comp. Laws 
§ 450.771 (c), and a “minority owned business” is “a business 
enterprise of which more than 50% of the voting shares or 
interest in the business is owned, controlled, and operated 
by individuals who are members of a minority and with 
respect to which more than 50% of the net profit or loss attrib­
utable to the business accrues to shareholders who are mem­
bers of a minority.” Mich. Comp. Laws §450.771(0- A 
“woman owned business” is “a business of which more than

1981-82 shall be 200% of the actual expenditures for 1980-81, 
the goal for 1982-83 shall be 200% of the actual expenditures 
for 1981-82, the goal for 1983-84 shall be 200% of the actual 
expenditures for 1982-83, the goal for 1984-85 shall be 140% 
of the expenditures for 1983-84, and this level of effort at not 
less than 5% of expenditures shall be maintained thereafter.

(2) If the first year goals arc not achieved, the governor shall 
recommend to the legislature changes in programs to assist 
minority and woman owned businesses.

(3) Each department, to assist in meeting the construction, 
goods, and services procurement expenditures percentages set 
forth in subsection (1), shall include provisions for the acco­
modation of subcontracts and joint ventures. The provisions 
shall be established by the governor and shall require a bidder 
to indicate the extent of minority owned or women owned 
business participation.

(4) Only the portion of a prime contract that reflects minority 
owned or women owned business participation shall be con­
sidered in meeting the requirements of subsection (1).

(5) Minority owned or woman owned businesses shall com­
ply with the same requirements expected of other bidders 
including, but not limited to, being adequately bonded.

(6) If the bidders for any contract do not include a qualified 
minority owned and operated or woman owned and operated 
business, the contract shall be awarded to the lowest bidder 
otherwise qualified to perform the contract.



50% of the voting shares or interest in the business is owned, 
controlled, and operated by women and with respect to which 
more than 50% of the net profit or loss attributable to the 
business accrues to the women shareholders.” Mich. Comp. 
Laws §450.7710).

The Michigan Road Builders commenced the present 
action on July 8, 1981 in the United States District Court 
for the Eastern District of Michigan seeking declaratory and 
injunctive relief against the enforcement of the set-aside pro­
visions of Public Act 428. In particular, the plaintiffs charged 
that the set-aside provisions of Public Act 428 violated the 
Ecjual Protection Clause of the Fourteenth Amendment, as 
well as 42 U.S.C. §§§1981, 1983 and 2000d,3 by according

4 Michigan Road Builders v. Milliken, el at. No. 86-1239

342 U.S.C. § 1981 provides:

All persons within the jurisdiction of the United States shall have 
the same right in every State and Territory to make and enforce con­
tracts, to sue, be parties, give evidence, and to the full and equal benefit 
of all laws and proceedings for the security of persons and properly 
as is enjoyed by white citizens, and shall be subject to like punishment, 
pains, penalties, taxes, licenses, and exactions of every kind, and to 
no other.

42 U.S.C. § 1983 provides:

Every person who, under color of any statute, ordinance, 
regulation, custom, or usage, of any Stale or Territory or the 
District of Columbia, subjects, or causes to be subjected, any 
citizen of the United States or other person within the jurisdic­
tion thereof to the deprivation of any rights, privileges, or 
immunities secured by the Constitution and laws, shall be lia­
ble to the party injured in an action at law, suit in equity, or 
other proper proceeding for redress. For the purposes of this 
section, any Act of Congress applicable exclusively to the Dis­
trict of Columbia shall be considered to be a statute of the 
District of Columbia.

42 U.S.C. § 2000d provides:

No person in the United Slates shall, on the ground of race, 
color, or national origin, be excluded from participation in,

racial and ethnic minorities and women a preference in com­
peting for state expenditures. After discovery had been com­
pleted, the parties filed cross motions for summary judgment, 
and on August 12, 1983, the district court determined that 
Public Act 428 did not violate the Equal Protection Clause 
of the Fourteenth Amendment and granted defendants’ 
motion for summary judgment. Michigan Road Builders 
Ass'n v. Milliken, 571 F.Supp. 173 (E.D. Mich. 1983). Michi­
gan Road Builders appealed, and this court dismissed the 
appeal because the district court had not decided all of the 
claims against the Michigan Department of Transportation. 
Michigan Road Builders Ass’n v. Milliken, 742 F.2d 1456 (6th 
Cir. 1984). Thereafter, the district court entered an order dis­
posing of the remaining charges against the Department of 
Transportation, Michigan Road Builders Ass’n v. Milliken, 
654 F.Supp. 3 (E.D. Mich. 1986), and the Michigan Road 
Builders commenced this timely appeal. On appeal, the plain­
tiffs argued that the district court applied the incorrect legal 
standard to determine the constitutional validity of Public 
Act 428.

No. 86-1239 Michigan Road Builders v. Milliken, el al. 5

be denied the benefits of, or be subjected to discrimination 
under any program or activity receiving Federal financial 
assistance.

Because the protections afforded by these sections are coextensive with 
the protections afforded by the Equal Protection Clause of the Four­
teenth Amendment, Regents ofUniv. o f Calif, v. Dakke, 438 U.S. 265, 
287, 333, 98 S.Ct. 2733, 2746, 2770, 57 L.Ed.2d 750 (1978)(§ 1983 
and 2000d); Detroit Police Officers' Ass'n v. Young, 608 F.2d 671, 
691-92 (6th Cir. 1979) (§ 1981), cert, denied, 452 U.S. 938, 101 S.Ct. 
3079, 69 L.Ed.2d 951 (1981), this court need only analyze Public Act 
428 under Fourteenth Amendment equal protection standards. See 
Associated Gen. Contractors o f Cal. v. Citv & County o f San Francisco, 
813 F.2d 922, 928 n. 11 (9th Cir. 1987). Plaintiffs also alleged in their 
complaint that Public Act 428 violated Title VII of the Civil Rights 
Act of 1964, 42 U.S.C. § 2000c et seq. See Johnson v. Transportation 
Agency, 107 S.Ct. 1442, 1446 n.2, 94 L.Ed.2d 615 (1987)(suggcsting 
that Title VII analysis differs from constitutional equal protection anal­
ysis). They have abandoned this argument on appeal.



6 Michigan Road Builders v. Milliken, ct at. No. 86-1239

In addressing equal protection claims, the Supreme Court 
has employed differing levels of judicial review depending 
upon the type of imposed classification under constitutional 
attack.4 “Racial and ethnic distinctions of any sort arc inher­
ently suspect and thus call for the most exacting judicial 
examination.” Regents o f Univ. of Cal. v. Bakke. 438 U.S. 
265, 291,98 S.Ct. 2733, 2748, 57 L.Ed.2d 750 (1978)(plural- 
ity opinion)(concluding that state medical school’s admission 
program which reserved a specified number of student posi­
tions for racial and ethnic minority applicants violated the 
Equal Protection Clause). This “most exacting judicial 
examination” has been labeled by the Supreme Court as 
“strict scrutiny.” Id. at 287, 98 S.Ct. at 2747 (plurality opin­
ion).

When a classification denies an individual opportu­
nities or benefits enjoyed by others solely because 
of his race or ethnic background, it must be regarded 
as suspect.

4In considering equal protection claims, courts must first determine 
whether the governmental body imposing the classification at issue had 
authority to act to accomplish its purpose. Fullilove v. Klutznik, 448 
U.S. 448, 473, 100 S.Ct. 2758, 2772, 65 L.Ed.2d 902 (1980) (plurality 
opinion); Associated Gen. Contractors o f Cal., 813 F.2d at 928. In the 
case at bar, the state asserted, and the plaintifTs did not dispute, that 
Public Act 428 was designed to ameliorate the effects of past discrimi­
nation against minorities and women competing for contracts to supply 
the state with goods and services. It is beyond contention that a stale 
legislature has the prerogative and even the “constitutional duly to take 
affirmative steps to eliminate the continuing effects of past unconstitu­
tional discrimination.” Wyganl v. Jackson Bd. ofEduc.. 476 U.S. 267, 
106 S.Ct. 1842, 1856, 90 L.Ed.2d 260 (1986) (O’Connor, J„ concur- 
ring)(cmphasis in original); Ohio Contractors Ass'n v. Keip, 713 F.2d 
167, 172-73 (6th Cir. 1983); Associated Gen. Contractors o f Cal., 813 
F.2d at 929. Accordingly, it is not disputed that the Michigan legisla­
ture had jurisdiction to act for the purpose of ameliorating the effects 
of past discrimination.

No. 86-1239 Michigan Road Builders v. Milliken, ct al. 7

*  *  *

We have held that in “order to justify the use of 
a suspect classification, a Stale must show that its 
purpose or interest is both constitutionally permissi­
ble and substantial, and that its use of the classifica­
tion is ‘necessary . . .  to the accomplishment’ of its 
purpose or the safeguarding of its interest.”

*  *  *

Preferring members of any one group for no reason 
other than race or ethnic origin is discrimination for 
its own sake. This the Constitution forbids.

Id. at 305-07, 98 S.Ct. at 2756-57 (plurality opinion)(citations 
omitted).

In Fullilove v. Khtlznick, 448 U.S. 448, 100 S.Ct. 2758, 65 
L.Ed.2d 902 (1980), the Supreme Court probed a congres- 
sionally enacted affirmative action plan embodied in the Pub­
lic Works Employment Act of 1977, 42 U.S.C. § 6701 el seq. 
The constitutional attack in that case was lodged against the 
“Minority Business Enterprise” set aside provision of the act, 
§ 103(0(2), 42 U.S.C. § 6705(0(2), which required local gov­
ernmental units receiving funds under public works programs 
to use 10% of the funds to procure services or supplies from 
MBEs. The court determined that “Congress had abundant 
evidence from which it could conclude that minority busi­
nesses have been denied effective participation in public con­
tracting opportunities by procurement practices that perpetu­
ated the effects of prior discrimination,” id. at 477-78, 100 
S.Ct. at 2774, and that the set aside provision therein at issue 
was “narrowly tailored to the achievement of [the] goal” of 
ameliorating the effects of that past discrimination. Id. at 480, 
100 S.Ct. at 2776. Justice Powell, author of the Bakke 
opinion, concurred in the Court’s opinion and filed an opin­
ion in which he stated:



8 Michigan Road Builders v. Milliken, el al. No. 86-1239

Section 103(0(2) [of the Public Works Employment 
Act of 1977] employs a racial classification that is 
constitutionally prohibited unless it is a necessary 
means of advancing a compelling governmental 
interest.

★ ★ ★

The Equal Protection Clause, and the equal pro­
tection component of the Due Process Clause of the 
Fifth Amendment, demand that any governmental 
distinction among groups must be justifiable. Differ­
ent standards of review applied to different sorts of 
classifications simply illustrate the principle that 
some classifications are less likely to be legitimate 
than others. Racial classifications must be assessed 
under the most stringent level of review because 
immutable characteristics, which bear no relation 
to individual merit or need, are irrelevant to almost 
every governmental decision.

448 U.S. at 496, 100 S.Ct. at 2783-84 (Powell, J. concurring).
Subsequent to the Bakke and Fullilove decisions, this cir­

cuit considered constitutional attacks on state and local gov­
ernment mandated affirmative action plans. In assessing the 
constitutional validity of the affirmative action plans at issue 
in the post-Bakke and Fullilove cases, this circuit redefined 
the term “strict scrutiny” as it applied in affirmative action 
cases:

[T]he first stage in our approach to affirmative action 
programs entails an analysis of the need for such 
remedial measures — i.e., with the presence of a 
governmental interest in their implementation. It is 
uncontested that the government has a significant 
interest in ameliorating the disabling effects of iden­
tified discrimination.

No. 86-1239 Michigan Road Builders v. Milliken, cl al. 9

* * *

Once the governmental interest in some remedial 
action is thus established, we must proceed to deter­
mine whether the remedial measures employed arc 
reasonable.

Bratton v. City o f Detroit, 704 F.2d 878, 886-87 (6th Cir. 
1983) (footnote omitted), cert, denied, 464 U.S. 1040, 104 
S.Ct. 703, 79 L.Ed.2d 168 (1984). See also Detroit Police Offi­
cers' Ass'n v. Young, 608 F.2d 671 (6th Cir. 1979) (determin­
ing that no “direct showing of past intentional 
discrimination” by the governmental unit imposing the affir­
mative action plan was necessary and that the plan need only 
be a “reasonable” means of serving the governmental interest 
of eradicating the effects of past discrimination), cert, denied, 
452 U.S. 938, 101 S.Ct. 3079, 69 L.Ed.2d 951 (1981); Ohio 
Contractors Ass’n v. Keip, 713F.2d 167 (6th Cir. 1983) (where 
compelling interest of state in ameliorating the past effects 
of its prior discrimination was clear, the affirmative action 
plan adopted need only be “reasonably calculated” to serve 
that interest). In these decisions, this court essentially relaxed 
the strict scrutiny standard enunciated by the Supreme Court 
in Bakke and Fullilove. Thus, this circuit essentially required 
that affirmative action plans be a “reasonable” means of fur­
thering a “significant” governmental interest rather than a 
“narrowly tailored” or “necessary” means of furthering a 
“compelling” governmental interest.5

5WhiIc the distinction between the terms “significant” and 
“compelling” may be negligible, see Wygant v. Jackson Bd. o f Educ.. 
476 U.S. 267, 106 S.Ct. 1842, 1853, 90 L.Ed.2d 260 (1986) (O’Connor, 
J., concurring)(discussing distinction between terms “compelling” and 
“important”), as discussed below, it is clear that the district court in 
the case at bar considered the terms as having different meanings when 
it expressly refused to require defendants to demonstrate a 
“compelling” interest, but instead required them to demonstrate a 
“significant interest.” 571 F.Supp. at 176-77.



10 Michigan Road Builders v. Millikan, el al. No. 86-1239

In Wygant v. Jackson Bd. ofEduc., 746 F.2d 1 1 52 (6th Cir.
1984), this circuit again applied its relaxed standard of review 
to uphold an affirmative action layoff plan embodied in a col­
lective bargaining agreement between a public board of edu­
cation and a teachers’ union. In reversing the decision, the 
Supreme Court rejected the relaxed level of judicial scrutiny' 
imposed by this circuit in Wygant:

This Court has “consistently repudiated ‘[distinc­
tions between citizens solely because of their ances­
try’ as being ‘odious to a free people whose institu­
tions are founded upon the doctrine of equality.’ ”
. . . .  “Racial and ethnic distinctions of any sort arc 
inherently suspect and thus call for the most exact­
ing judicial examination.”

The Court has recognized that the level of scrutiny 
does not change merely because the challenged clas­
sification operates against a group that historically 
has not been subject to governmental discrimina­
tion. In this case, [the collective bargaining agree­
ment] operates against whites and in favor of certain 
minorities, and therefore constitutes a classification 
based on race. “Any preference based on racial or 
ethnic criteria must necessarily receive' a most 
searching examination to make sure that it docs not 
conflict with constitutional guarantees.” There are 
two prongs to this examination. First, any racial 
classification “must be justified by a compelling gov­
ernmental interest.” Second, the means chosen by 
the State to effectuate its purpose must be “narrowly 

: tailored to the achievement of that goal.” We must
decide whether the layoff provision is supported by 
a compelling state purpose and whether the means 
chosen to accomplish that purpose arc narrowly tai­
lored.

Wygant v. Jackson Bd. ofEduc., 476 U.S. 267, 106 S.Ct. 1 842, 
1846-47, 90 L.Ed.2d 260 (1986) (plurality opinion) (citations

omitted). Subsequent to rejecting the “compelling” nature of 
the governmental interests advanced by the board of educa­
tion in support of the constitutional validity of the layoff 
plan, which interests had been found to be “sufficiently 
important” by this circuit, 106 S.Ct. at 1847-49, the Court 
continued:

The Court of Appeals examined the means chosen 
to accomplish the Board’s race-conscious purposes 
under a test of “reasonableness.” That standard has 
no support in the decisions of this Court. As demon­
strated . . .  above, our decisions always have 
employed a more stringent standard — however 
articulated — to test the validity of the means cho­
sen by a state to accomplish its race-conscious 
purposes.6 Under strict scrutiny the means chosen 
to accomplish the State’s asserted purpose must be 
specifically and narrowly framed to accomplish that 
purpose. “Racial classifications are simply too perni­
cious to permit any but the most exact connection 
between justification and classification.”

The term “narrowly tailored,” so frequently 
used in our cases, has acquired a secondary mean­
ing. More specifically, . . .  the term may be used 
to require consideration whether lawful alterna­
tive and less restrictive means could have been 
used. Or . . .  the classification at issue must “fit” 
with greater precision than any alternative 
means. “[Courts] should give particularly intense 
scrutiny to whether a nonracial approach or a 
more narrowly tailored racial classification could 
promote the substantial interest about as well and 
at tolerable administrative expense.”

106 S.Ct. at 1849-50 (citations and footnote omitted). The 
Supreme Court left no doubt that the standard of judicial 
review previously employed by this circuit in racial and eth­
nic affirmative action cases was inappropriate.

No. 86-1239 Michigan Road Builders v. Milliken, el al. 11



In the case at bar, the district court, having issued its opin­
ion nearly three years before the Supreme Court reversed this 
circuit in Wygant, erroneously decided the constitutional 
validity of Public Act 428 under this circuit’s relaxed level 
of scrutiny:

“A different analysis must be made when the 
claimants are not members of a class historically 
subjected to discrimination.”

*  *  *

Having determined that the law of this Circuit 
requires that the State must demonstrate a signifi­
cant interest in ameliorating the past effects of pres­
ent discrimination rather than the “compelling 
interest" standard . . ., this Court must examine the 
record to assess the nature of the interest of the State 
in enacting [Public Act] 428.

*  *  *

Having determined that the State has established 
its interest in ameliorating the present effects of past 
discrimination, this Court must now determine 
whether [Public Act] 428 is a reasonable means of 
achieving that end.

571 F.Supp. at 176-77, 187 (quoting Bratton, 608 F.2d at 
697). The district court’s analysis represented an erroneous 
application of strict scrutiny as that term has been defined 
and employed by the Supreme Court. In Wygant, the 
Supreme Court expressly disapproved of the reasoning 
employed by the district court in this case. Although the dis­
trict court had properly analyzed the constitutional validity 
of Public Act 428 under the law of this circuit as enunciated 
in Bratton, Detroit Police Officers' Ass'n, and Ohio Contrac­
tors Ass'n when it issued its opinion in this case on August 
12, 1983, “an appellate court must apply the law in effect

12 Michigan Road Builders v. Milliken, ct al. No. 86-1239

at the time it renders its decision.” Thorpe v. Housing Auth. 
o f City o f Durham, 393 U.S. 268, 281, 89 S.Ct. 518, 526, 21 
L.Ed.2d 474 (1969) (footnote omitted). See also Gulf Offshore 
Co. v. Mobil Oil Corp., 453 U.S. 473, 486 n. 16, 101 S.Ct. 
2870, 2879 n. 16, 69 L.Ed.2d 784 (1981). Accordingly, in 
light of the Supreme Court’s mandate in Wygant, this court 
must abrogate the legal conclusions of the district court in 
the case at bar.

As indicated by the Supreme Court precedent already dis­
cussed, a more appropriate constit utional review of racial or 
ethnic classifications adopted by governmental bodies should 
be subjected to a two stage evaluation. First, a court must 
determine whether a “compelling” state interest supports the 
use of the racial or ethnic classification. If the court concludes 
that a compelling interest exists, it must then determine 
whether the challenged state action employing a racial or eth­
nic classification is “ narrowly tailored” or “necessary” to fur­
ther that interest.

A state “unquestionably has a compelling interest in reme­
dying past and present discrimination by a state actor.” 
United States v. Paradise, 107 S.Ct. 1053, 1065, 94 L.Ed.2d 
203 (1987) (citations omitted) (plurality opinion). Before a 
state may permissibly employ a racial or ethnic classification, 
however, it must make a finding based upon material factual 
evidence, that it has in the past discriminated against those 
classes it now favors. If the state had not engaged in discrimi­
nation against racial and ethnic minorities in awarding con­
tracts to supply the state with goods and services in the past, 
then it cannot assert in praesenli that it has a compelling 
interest in preferring MBEs in the award of such contracts.

[The Supreme Court] never has held that societal 
discrimination alone is sufficient to justify a racial 
classification. Rather, the Court has insisted upon 
some showing of prior discrimination by the govern­
mental unit involved before allowing limited use of

No. 86-1239 Michigan Road Builders v. Milliken, el al. 13



14 Michigan Road Builders v. MiUiken, el al. No. 86-1239

racial classifications in order to remedy such dis­
crimination.* * * [P]rior discrimination [is] the justi­
fication for, and the limitation on, a State’s adoption 
of race-based remedies.

★  ★  *

Societal discrimination, without more, is too 
amorphous a basis for imposing a racially classified 
remedy. * * * No one doubts that there has been 
serious racial discrimination in this country. But as 
the legal basis for imposing discriminatory legal 
remedies that work against innocent people, societal 
discrimination is insufficient and over expansive. In 
the absence of particularized findings, a court could 
uphold remedies that are ageless in their reach into 
the past, and timeless in their ability to affect the 
future.

*  *  *

[A State] must act in accordance with a “core pur­
pose of the Fourteenth Amendment” which is to “do 
away with all governmcntally imposed distinctions 
based on race.” * * * In particular, [a state] must 
ensure that, before it embarks on an affirmative 
action program, it has convincing evidence that 
remedial action is warranted. That is, it must have 
sufficient evidence to justify the conclusion that 
there has been prior discrimination.

Wygant, 106 S.Ct. at 1847-48 (citations omittcd)(some 
emphasis added). See also Bakke, 438 U.S. at 307, 98 S.Ct. 
at 2757 (“We have never approved a classification that aids 
persons perceived as members of relatively victimized groups 
at the expense of other innocent individuals in the absence 
of judicial, legislative, or administrative findings of constitu­
tional or statutory violations. After such findings have been 
made, the governmental interest in preferring members of

No. 86-1239 Michigan Road Builders v. MiUiken, el al. 15

the injured groups at the expense of others is substantial, 
since the legal rights of the victims must be vindicated.”) (ci­
tations omitted) (emphasis added); J. Edinger & Son, Inc. v. 
City of Louisville, 802 F.2d 213, 216 (6th Cir. 1986) (“[T]he 
city should be required to present evidence of invidious 
discrimination.”); South Fla. Chapter o f Associated Gen. Con­
tractors o f Am. v. Metropolitan Dade County, 723 F.2d 846, 
851-52 (11th Cir.) (“[Ajdcquate findings [must] have been 
made to ensure that the governmental body is remedying the 
present effects of past discrimination rather than advancing 
one racial or ethnic group’s interests over another___”) (em­
phasis in original), cert, denied, 469 U.S. 871, 105 S.Ct. 220, 
83 L.Ed.2d 150 (1984); Associated Gen. Contractors o f Cat., 
8 13 F.2d at 930 (“[S]tate and local governments [can] act only 
to correct their own past wrongdoing.. . , ”). More recently, 
the Fourth Circuit has slated:

[B]efore an asserted governmental interest in a racial 
preference can be accepted as “compelling,” there 
must be findings of prior discrimination. Findings 
of societal discrimination will not suffice; the find­
ings must concern “prior discrimination by the gov­
ernment unit involved."

*  *  *

For a locality to show that it enacted a racial prefer­
ence as a remedial measure, it must have had a firm 
basis for believing that such action was required 
based on prior discrimination by the locality itself.

*  *  *

Wygant... limit[s] racial preferences to what is nec­
essary to redress a practice of past wrongdoing.

J.A. Croson Co. v. City o f Richmond, 822 F.2d 1355, 1358, 
1360, 1362 (4th Cir. 1987)(citations omitted) (emphasis in 
original). Accordingly, in the instant case, this court must



determine whether the Stale of Michigan possessed a compel­
ling interest in purging the present effects of alleged past dis­
crimination by virtue of its past inequitable treatment ol 
MBEs. To accomplish this result, this court must decide 
whether the Michigan legislature, based upon the evidentiary 
factual record before it, “had a firm basis for believing that 
such action was required based on prior discrimination” by 
the state itself. J.A. Croson Co., 822 F.2d at 1360.6

An examination of the evidence asserlcdly relied upon by 
the defendants in this action as support for their contention 
that the Michigan legislature had a firm basis for concluding 
that the state had engaged in discrimination in awarding con­
tracts for goods and services clearly indicates that Michigan 
had not developed material evidence to support a conclusion 
that it had a compelling interest in adopting the racial and 
ethnic distinctions at issue in the case at bar. The defendants 
have relied upon certain conclusory historical resumes of 
unrelated legislative enactments and proposed enactments, 
executive reports, and a state funded private study conducted 
in 1974. This documentation is not reflective of discrimina­
tory action by the State of Michigan.7

16 Michigan Road Builders v. Millikcn, el al. No. 86-1239

6Bccause the factual record in this case is complete and this court’s 
only function is to determine whether the evidence presented to the 
district court satisfied a legal standard, remand is unnecessary. Bose 
Carp. v. Consumers Union o f U.S., Inc., 466 U.S. 485, 501, 104 S.Ct. 
1949, 1960, 80 L.Ed.2d 502 (1984).

7The defendants in this action have, as a defense, “admitted” that 
the State of Michigan had engaged in impermissible discrimination 
in the award of state contracts. See generally Appellee's Brief, pp. 29-32. 
This “admission” is of little relevance and docs not relieve this court 
of its duty to determine whether remedial legislation in the form of 
racial and ethnic classifications is, in fact, supported by a compelling 
interest in alleviating the present effects of past slate discrimination.
Wyganl. 106 S.Ct. at 1849 n. 5 (“Nor can the [state] unilaterally insu­
late itself from this key constitutional question by conceding that it 
has discriminated in the past, now that it is in its interest to make 
such a concession.”)

The defendants have directed this court’s attention to 
“executive memoranda”8 concerning proposed legislation 
considered by the Michigan legislature during 1971 and sub­
sequent years. The first of these memoranda concern House 
Bill (H.B.) 4394 (1971) which would have relaxed bonding 
requirements for state construction contracts. The memo­
randa conjectured a belief that the state’s stringent bonding 
requirements prohibited most small businesses from effec­
tively competing for such contracts. The proposed statute 
would have assertedly served the dual purpose of fostering 
the growth of small businesses in general and benefiting the 
state by increasing competition for state construction con­
tracts. Fostering the growth of MBEs in particular was not 
a concern or purpose expressed in the legislative history of 
H.B. 4394.

Senate Bill (S.B.) 885 (1975) would have set aside a per­
centage of state goods and services procurement contracts 
for small businesses. The asserted purpose of this proposed 
legislation was to foster the growth of small businesses in light 
of Michigan’s “sluggish economy.” Again, fostering the 
growth of MBEs was not a consideration for this proposed 
legislation.

S.B. 1461 (1976) and S.B. 10 (1977)9 would have also set 
aside an allotment of state contracts for small businesses. The 
executive memoranda commenting upon these enactments 
suggested that increasing the number of contracts awarded 
to small businesses would also increase the number of MBEs, 
which were predominantly small businesses, doing business 
with the state. In addition, S.B. 1461 included a provision

No. 86-1239 Michigan Road Builders v. Milliken, el al. 17

The executive memoranda which analyzed pending legislation 
were prepared for the Governor by each of the state’s various executive 
departments.

9S.B. 1461 and S.B. 10 were essentially identical and were introduced 
in successive sessions of the Michigan legislature. Neither proposal was 
enacted into law.



18 Michigan Road Builders v. Milliken, cl al. No. 86-1239

which would have set aside contracts for “socially or econom­
ically disadvantaged persons.” In testimony given before the 
Michigan Senate State Affairs Committee in support of S.B. 
1461, Norton L. Berman, Director of the OfTicc of Economic 
Expansion within the Department of Commerce, indicated 
that underrepresentation of MBEs in slate contracting 
resulted from factors other than discrimination by the State 
of Michigan:

Small and minority businesses traditionally have 
experienced problems in management, financing, 
and market development. These problems often­
times result from the inability of small businessmen 
to generate sufficient capital to meet their opera­
tional needs.

* * *

Through a series of public hearings and question­
naires sent to small and minority businesses, busi­
ness persons expressed their concerns in several 
areas, some of which were: complexity of procure­
ment procedures, information distributed of stale 
agencies was inadequate, contracts were too large, 
there was no requirement on the part of large con­
tractors to solicit bids from small and minority sub­
contractors, excessive delay in paying vendors, 
excessive pre-award costs and bonding requirements 
which small and minority businessmen could not 
meet.

* * *

[P]ast business patterns have resulted in under rep­
resentation of minorities in the business commu­
nity. Therefore, I feel the state is remiss if we do 
not do what we can to assure that minority business 
obtain an equitable share of state purchasing.

I am aware there arc those who view this legisla­
tion as preferential treatment and the distortion of 
the competitive spirit of purchasing. I agree that this 
might be considered so, but unorthodox methods 
are needed to create opportunities for a major seg­
ment of our society that can contribute more to eco­
nomic stability. With regards to competition, what 
we have now in many industries is competition 
among the small operators and domination by a few 
large firms. Large businesses often can sell at a con­
siderable lower price because of high volume of 
sales, more efficient distribution systems and more 
advertising and promotion. Small business cannot 
equitably compete because of these disadvantages 
of size.

As reflected in Berman’s testimony, the relative lack o 
MBEs doing business with the state was coupled with th< 
objective reality that most MBEs were small businesses 
Small businesses, as a result o f their size, were unable to effec 
tively compete for state contracts. Consequently, most MBEs 
as a result o f their size, were unable to effectively compeb 
for state contracts.

The legislative history of Public Act 428 itself offered m 
support for the contention that the State of Michigan inten 
tionally discriminated against MBEs. A House Legislativi 
Analysis of the bill attributed the scarcity of MBE contract 
with the state to the lack of minorities within the busines 
community as a result o f societal discrimination:

Statistical descriptions of the extent of participation 
in state programs by businesses controlled by 
women and minorities are varied and sometimes 
contradictory depending on the definitions used and 
the samples of state spending examined. These 
descriptions, however, all reveal that such busi­
nesses receive a disproportionately small share of

No. 86-1239 Michigan Road Builders v. Milliken, el al. 19



state spending for construction and goods and ser­
vices in relation to their proportion of the slate's 
population. That minorities and women have been 
systematically denied equal opportunity in this 
country is sad historical fact now generally accepted 
and widely recognized in legislation of the past two 
decades. In the interests of justice as well as the 
social and economic health of the slate, the legisla­
ture should do all that it can to ensure that busi­
nesses owned by minorities and women obtain their 
fair share of the state’s business.

★  * ★

The federal government and other stale govern­
ments are already proceeding in this direction as a 
remedy to the underrepresentation of minority and 
other segments of business in the business commu­
nity. The legal issues are difficult and outcomes of 
various litigations impossible to predict. In the 
meantime Michigan should continue to be a partici­
pant in the enactment of progressive legislation, 
which would in any case enhance the growth of these 
underrepresented sectors of the business commu­
nity, at least until the question of constitutionality 
is resolved.

Evidence of societal discrimination, however, is an insuffi­
cient basis for the employment of racial and ethnic distinc­
tions by state or local governments. Wygant, 106 S.Ct. at 
1848; J. Edinger & Son, Inc., 802 F.2d at 216-17.

The evidence consisting of executive action designed to 
increase small business and MBE participation was also 
insufficient to support a conclusion that the state had discrim­
inated against MBEs. In 1975, the Governor issued Executive 
Directive 1975-4 creating a task force to study small business 
oarticipation in state purchasing. After conducting two public

20 Michigan Road Builders v. Milliken. cl al. No. 86-1239

hearings wherein witnesses testified that small and minority 
businesses’ size and lack of expertise prohibited them from 
effectively competing for state purchasing contracts, the task 
force issued its report recommending the adoption of policies 
and procedures to aid small and minority businesses in the 
state procurement process.

In response to the task force's report, the Governor issued 
Executive Directive 1976-4 wherein he established the Small 
and Minority Business Procurement Council (Council) to 
oversee the declared “policy of tye [sic] executive branch 
agencies of the State of Michigan . . .  to aid, counsel, assist 
and protect the interests of small and minority business con­
cerns in order to preserve free competitive enterprise and to 
insure that a fair portion of the procurement of state agencies 
and agencies of the state be placed with small and minority 
business enterprises.” In 1977, the Council issued its first 
annual report in which it noted that the objectives establish­
ing small and minority business participation in state pur­
chasing had been achieved.

In 1975, the Governor also issued Executive Directive 
1975-6 wherein he commanded the Michigan Department 
of Civil Rights (MDCR) to assist the other state departments 
in developing and implementing standards and procedures 
to assure nondiscrimination in awarding state contracts. In 
1978, the MDCR issued a report in which it expressed con­
cern over limited compliance with Executive Directive 1975- 
6 because of the lack of adequate staff in some agencies and 
the inexperience of personnel in dealing with civil rights mat­
ters. The MDCR did not suggest that limited compliance with 
Executive Directive 1975-6 was the result of intentional dis­
crimination.

The evidence most heavily relied upon by the defendants 
in this action was the report of a 1974 state-commissioned 
study by Urban Markets Unlimited, Inc. (Urban Markets). 
The report, entitled “A Public Procurement Inventory on

No. 86-1239 Michigan Road Builders v. Milliken, el al. 21



22 Michigan Road Builders v. Milliken, el a/. No. 86-1239

Minority Vendors,” was prefaced with the rather dubious 
statement: “Minority-owned business enterprises arc often 
described as being synonymous with small business.”10 The 
report noted that there were 8,112 minority businesses in 
Michigan, but that in a small sampling of purchase contracts, 
only four did business with the state.11 The contracts sam­
pled, however, represented only approximately $21 million 
of state’s annual expenditures of over $437 million. The sam­
pling was necessarily small and of little value because, as the 
report noted, the state did not maintain data on minority 
procurement by state agencies.12

Because the statistical evidence was not probative of dis­
crimination, Urban Markets also circulated questionnaires 
to and conducted interviews of state officials responsible for 
purchasing goods and services for various state agencies and 
departments. Responses to Urban Markets’ inquiries dis­
closed that most state agencies did not actively seek new

10The report ofTcrs no evidence for this proposition. While it may 
well be true that most MBEs arc small businesses, the notion that the 
terms are synonymous is not persuasive. There arc, no doubt, a sub­
stantial number of non-minority small businesses, which, because of 
their size, also experience problems in effectively competing for stale 
contracts. This questionable proposition, upon which much of the 
report’s analysis is based, seriously undermines the validity of the con­
clusions reached by Urban Markets.

u As an indication that most MBEs were small businesses, Urban 
Markets reported that only 2,577 of Michigan’s 8,112 MBEs had paid 
employees, and all 8,112 businesses employed a total of only 10,958 
persons.

12Only 4 of 26 state agencies maintained data on purchases from 
MBEs. Indeed, one of the report’s recommendations was that the state 
“establish a means of collecting data on the quantity, types, and dollar 
amounts of purchases which the State expends with minority vendors.” 
The fact that the state admittedly kept no data on MBE participation 
in state contracts seriously undermined the defendants’ attempt to rely 
on the “statistical evidence" incorporated into the Urban Markets 
report as an indication of past state discrimination.

No. 86-1239 Michigan Road Builders v. Milliken, el al. 23

sources of supplies, but instead relied primarily upon 
“already established purchasing contracts” when filling new 
orders for goods and services. In particular, the study indi­
cated that only three state agencies were using minority busi­
ness directories to “actively seek-out” minority suppliers, and 
that some purchasing officials expressed unfavorable impres­
sions of the qualiP' and reliability of performance afforded 
by small and minority businesses. Significantly, Urban Mar­
kets did not conclude that state purchasing policies were dis­
criminatory, but rather “[m]ost agencies indicated that 
awards [were] based upon the lowest satisfactory bid.”

Most damaging to the defendants’ contention that the 
Michigan legislature was motivated by a compelling interest 
to eradicate the effects of past state discrimination when it 
enacted Public Act 428 were defendants’ responses to plain­
tiffs’ interrogatories in this action. Plaintiffs requested the 
defendants to identify the findings of past discrimination 
against each of the minority groups favored in Public Act 
428, and defendants responded to each interrogatory as fol­
lows:

(1) Upon information and belief, the Michigan Leg­
islature found that

(a) there had been a history of significant politi­
cal, economic, and cultural discrimination based 
upon race, ethnic origin, and sex in the United 
States, including Michigan; and

(b) among the racial and ethnic minorities who 
have been the victims of such discrimination are 
Eskimos, Hispanics, Orientals, Indians (Native 
Americans), Blacks; and

(c) Females have been the victims of discrimina­
tion based upon sex; and

(d) as a result of the discrimination described in 
1(a) above, racial and ethnic minorities and females 
have been subjected to economic disadvantages; and



24 Michigan Road Builders v. Mi/liken, el at. No. 86-1239

(e) amonglhe consequences of the discrimination 
described in 1 (a) and (d) above, has been an inability 
to compete on an equal competitive level for access 
to contracting opportunities with government, 
including but not limited to such opportunities with 
the State of Michigan; and

(f) as a result of competitive limitations imposed 
on racial and ethnic minorities and females because 
of the discrimination aforesaid, other persons not 
in those categories enjoy an artificial and unfair 
advantage in the competitive process; and

(g) the advantages resulting to persons not subject 
to discrimination based upon racial or ethnic con­
siderations or those of gender reduce competition 
for state contracts and thereby result in greater costs 
to the taxpayers for goods and services needed by 
the State of Michigan; and

(h) establishment of goals and timetables effect­
ing state procurement policies was the most effective 
feasible means available to remedy the present 
effects of the discriminatory history and conditions 
described in 1(a), (d), and (e) above; and

(i) increases in the number of businesses qualified 
to compete for state contracts will result in a cost 
benefit to the taxpayers.

In addition, the plaintiffs directed the defendants to identify 
documents supporting the legislature’s conclusion that the 
state had discriminated against minorities and women in the 
award of state contracts. In their answer, the defendants, 
other than referring to the evidence discussed above, again 
relied upon societal discrimination, referring generally to 
“the history of the western world for the past 2000 years.” 
Furthermore, the state again acknowledged that it did not 
maintain records concerning the number of MBEs which bid

on slate contracts and the number which were awarded state 
contracts.

After reviewing the record in its entirety as developed 
before the district court, this court concludes that the Michi­
gan legislature had little, if any, probative evidence before 
it that would warrant a finding that the State of Michigan 
had discriminated against MBEs in awarding state contracts 
for the purchase of goods and services. At best, the evidence 
suggested that societal discrimination had afforded the obsta­
cle to the development of MBEs in their business relationship 
with the State of Michigan. Consequently, relatively few 
MBEs exist,13 and those that do are generally small in size 
and have difficulty in competing for state contracts as a result 
o f their size. The evidence does not prove that the State of 
Michigan invidiously discriminated against racial and ethnic 
minorities in awarding state contracts. Accordingly, this 
court concludes that the state has not supported its conclu­
sion that it had a compelling interest in establishing the racial 
and ethnic classifications contained in Public Act 428, and 
those classifications are, therefore, constitutionally invalid.14

With regard to the preference accorded WBEs by Public

No. 86-1239 Michigan Road Builders v. Milliken, cl al. 25

13Bcrman testified in support of S.B. 1461 that minorities comprise 
13.73% of the general population of Michigan, but MBEs comprised 
only 5.85% of the businesses within the state.

14Thcrc is no proof to support preference for the groups listed in 
Public Act 428, i.c., persons who arc “black, hispanic, oriental, cskimo, 
or an American Indian.” Mich. Comp. Law § 450.771(c). In the 
answers to plaintiffs’ interrogatories, defendants admitted that they 
were “unaware” of how many MBEs in each of the above minority 
groups bid for and were awarded state contracts. A finding of “prior, 
purposeful discrimination against members of each of these [favored] 
minority groups” is required before state and local governments are 
permitted to remedy alleged discrimination by the enactment of laws 
embodying racial and ethnic distinctions. Wygant, 106 S.Ct. at 1852 
n. 13. See also J.A. Croson Co., 822 F.2d at 1361; Associated Gen. Con­
tractors o f Cal., 813 F.2d at 934.



26 Michigan Road Builders v. Millikan, cl al. No. 86-1239

Act 428, the Supreme Court has employed a less stringent 
standard of review or level of scrutiny for gender based classi­
fications:

Our decisions also establish that the party seeking 
to uphold a statute that classifies individuals on the 
basis of their gender must carry the burden of show­
ing an “exceedingly persuasive justification” for the 
classification. Kirchbcrg v. Feenstra, 450 U.S. 455,
461, 101 S.Cl. 1 195, 1199, 67 L.Ed.2d 428 (1981); 
Personnel Administrator o f Mass v. Feenev, 442 U.S.
256, 273, 99 S.Ct. 2282, 2293, 60 L.Ed.2d 870 
(1979). The burden is met only by showing at least 
that the classification serves “important governmen­
tal objectives and that the discriminatory means 
employed” are “substantially related to the achieve­
ment of those objectives.” Wengler v. Druggists 
Mutual Ins. Co., 446 U.S. 142, 150, 100 S.Ct. 1540, 
1545, 64 L.Ed.2d 107 (1980).

Mississippi Univ. for Women v. Ilogan 458 U.S. 718, 724, 
102 S.Ct. 3331,3336, 73 L.Ed.2d 1090 (1982)(footnotc omit­
ted). Although the Supreme Court has never expressly 
defined these terms, “substantially related to serve an impor­
tant governmental interest” is regarded as a less stringent 
judicial standard of review than “narrowly tailored to serve 
a compelling governmental interest.” Associated Gen. Con­
tractors of Cal., 813 F.2d at 939 (describing level of scrutiny 
for gender based classifications as “mid-level review”).

Even under this less stringent standard of review, the WBE 
preferences in Public Act 428 cannot withstand constitu­
tional attack since evidence of record that the state discrimi­
nated against women is nonexistent. Defendants’ reliance 
upon general assertions of societal discrimination are insuffi­
cient to satisfy their burden absent some indication that the 
“members of the gender benefited by the classification actu­
ally suffered] a disadvantage related to the classification.”

Mississippi Univ. for Women, 458 U.S. at 728, 102 S.Ct. a 
3338. Defendants presented no evidence that WBEs sufferei 
a disadvantage in compel' ng for state contracts. Accordingly 
Public Act 428’s gender-based classifications are als< 
invalid.15

For the foregoing reasons, this court concludes that Publi 
Act 428, Mich. Comp. Laws § 450.771 et seq., is unconstitu 
tional. Consequently, the judgment of the district court i 
REVERSED and the case is REMANDED for entry of judg 
ment in favor of the plaintiffs in accordance with this opir 
ion.

No. 86-1239 Michigan Raad Builders v. Milliken, cl al. 2'

15Becausc this court concludes that Michigan lacked a “compellinj 
interest to support the racial and ethnic distinctions, and r 
“important” interest to support the gender based distinction 
embodied in Public Act 428, this court does not address the sccor 
prong of the constitutional elimination, i.e., whether the means we 
“narrowly tailored” and “substantially related” to the achievement i 
its goal of eradicating the present effects of prior discrimination.



LIVELY, Chief Judge, dissenting. Because I disagree with 
both major premises of the majority opinion, I must respect­
fully dissent.

28 Michigan Road Builders v. Milliken, cl al. No. 86-1239

I.

The majority reads Wygant v. Jackson Board of Education, 
476 U.S. 267 (1986), as if it changed all the previously 
accepted standards for judging the validity of affirmative 
action programs of governments and governmental units. 
That is not a fair appraisal of the purport or effect of Wygant.

In Wygant itself the Court noted that it is necessary in some 
cases to take race into account, and emphasized the differ­
ence in consequences flowing from a program such as the one 
involved in this case and one that requires layoffs, as the plan 
in Wygant did. This emphasis was made by contrasting the 
minority set-aside program that the Court had approved in 
Fullilove v. Klutznick, 448 U.S. 448 (1980), with the plan 
under consideration in Wygant, which did require layoffs:

We have recognized, however, that in order to 
remedy the effects of prior discrimination, it may 
be necessary to take race into account. As part of 
this Nation’s dedication to eradicating racial dis­
crimination, innocent persons may be called upon 
to bear some of the burden of the remedy. “When 
effectuating a limited and properly tailored remedy 
to cure the effects of prior discrimination, such a 
‘sharing of the burden’ by innocent parties is not 
impermissible.” Id. [Fullilove, 448 U.S.] at 484, 100
S. Ct. at 2778, quoting Franks v. Bowman Transpor­
tation Co., 424 U.S. 747, 96 S. Ct. 1251,47 L.Ed.2d 
444 (1976). In Fullilove, the challenged statute 
required at least 10 percent of federal public works 
funds to be used in contracts with minority-owned 
business enterprises. This requirement was found to 
be within the remedial powers of Congress in part

because the “actual burden shouldered by nonmi­
nority firms is relatively light.” 448 U.S. at 484, 100 
S. Ct. at 2778.

Significantly, none of the cases discussed above 
involved layoffs. Here, by contrast, the means cho­
sen to achieve the Board’s asserted purposes is that 
of laying off nonminority teachers with greater 
seniority in order to retain minority teachers with 
less seniority. We have previously expressed con­
cern over the burden that a preferential layoffs 
scheme imposes on inn,.cent parties. See Firefighters 
v. Stotts, 467 U.S. 561, 574-576, 578-579, 104 S. Ct.
2576,____ ______ , 81 L.Ed.2d 483 (1984); see also
Weber, n. 9, supra this page, 443 U.S. at 208, 99 
S. Ct. at 2730 (“The p;an does not require the dis­
charge of white worker:; and their replacement with 
new black hirees”). In cases involving valid hiring 
goals, the burden to be borne by innocent individu­
als is diffused to a considerable extent among society 
generally. Though hiring goals may burden some 
innocent individuals, they simply do not impose the 
same kind of injury that layoffs impose. Denial of 
a future employment opportunity is not as intrusive 
as loss of an existing job.

106 S. Ct. at 1850-51 (foo.notes omitted).
The Michigan program is similar to the federal MBE pro­

gram in Fullilove. At most, nonminority owned businesses 
will be required to share the state’s contracts with minority 
owned businesses; no white owned business will be removed 
from a previously awarded contract. I believe this case is con­
trolled by Fullilove and Ohio Contractors Ass’n v. Keip, 713 
F.2d 167 (6th Cir. 1983), rather than by Wygant.

The Supreme Court has been unable to agree on the precise 
level of scrutiny required when considering race conscious 
programs to assist minorities. While there is a consensus that

No. 86-1239 Michigan Road Builders v. Milliken, el al. 29



race conscious programs demand an elevated level of scru­
tiny, the Court has not defined that level. This is clear from 
an examination of the plurality opinions from Regents of the 
University of California v. Bakke, 438 U.S. 265 (1978), to 
United States v. Paradise, _  U.S. 107 S. Ct. 1053 (1987). 
In fact a plurality of the Court in Paradise, a ease subsequent 
to Wygant, noted it has “yet to reach consensus on the appro­
priate constitutional analysis.” Id. at 1064.

Despite this uncertainty, at least two prerequisites for a 
constitutionally acceptable race conscious program arc 
clearly established. The program must be in response to a 
compelling state goal and it must be narrowly tailored to 
achieve that goal. The majority concedes, as it must, that the 
State of Michigan has a compelling interest in eliminating 
race and gender discrimination from its procedures for 
awarding public contracts. I believe the Michigan program 
also satisfies the second requirement in that it is narrowly 
tailored. Given the subject matter involved—public contract­
ing — it is hard to conceive of a difTcrcnt approach that would 
achieve the state’s legitimate goals in a less intrusive way. 
In my opinion the plan chosen by Michigan to correct a sys­
tem that virtually excluded minority contractors in the past 
“fits” the situation better than any alternative means. See 
Wygant, 106 S. Ct. at 1850 n. 6, where the Court discusses 
the meaning of “narrowly tailored,” and quotes Professor 
Ely’s definition: “the classification at issue must ‘fit’ with 
greater precision than any alternative means.”

II.

I also disagree with the majority’s conclusion that the State 
of Michigan did not develop material evidence that estab­
lished the existence of past discrimination or the need for 
a program to increase minority participation. An examina­
tion of the record totally refutes this conclusion. The district 
court found that the Michigan legislature considered the fol­
lowing evidence before finally adopting P.A. 428 in 1981:

30 Michigan Road Builders v. Milliken, cl a/. No. 86-1239
No. 86-1239 Michigan Roc;:! Builders v. Milliken, el at. 31

1. An Executive Memorandum concerning House 
Bill No. 4394 (1971). The bill was to help small busi­
nesses receive government contracts; MBEs consid­
ered to fall within the classification of a small busi­
ness. Bill and Memorandum indicate early concern 
for plight of minorities. 571 F. Supp. 178-79.

2. A study commissioned by the state in 1974 to 
explore the state’s procurement policies and its 
effects upon minorities (the Urban Markets Unlim­
ited Study). Report issued in 1974 examined the 
procurement opportunities that were available to 
minority businesses, concluding that opportunities 
were not great, and that purchasing agents expressed 
negative attitudes toward minority vendors. Id. at 
179-81.

3. Three Senate bills introduced in 1975-77 (Sen­
ate Bills 885 (1975), 1461 (1976), and 10 (1977)). 
These bills addressed set-asides for small businesses, 
but were also designed to address the problems fac­
ing minority businesses. Id. at 181.

4. Testimony of Nonon L. Berman, Director of 
Office of Economic Expansion, Michigan Depart­
ment of Commerce, concerning Senate Bill 1461 
and encouraging legislature to enact set-asides. Id. 
at 181-82.

5. The Governor’s Executive Directive 1975-4 
(1975), creating a Task Force on Small Business Par­
ticipation in State Purchasing. Directive empha­
sized minority businesses and the difficulty they 
have had getting into the mainstream of business. 
Id. at 182.

6. Two public hearings of the Task Force, where 
views were expressed concerning the difficulties of 
minority businesses. Id. at 183.



32 Michigan Road Builders v. Midi ken, el al. No. 86-1239

7. The Task Force’s Final Report (March 1976), 
recommending, inter alia, that goals be established 
for the participation of MBEs in state procurement.
Id. at 183.

8. The Governor’s Executive Directive 1976-4'
(1976), stating that it is the executive branch’s policy 
to ensure that MBEs get a fair portion of business 
with the state and creating the Small and Minority 
Business Procurement Council. Id. at 183.

9. The First Annual Report of the Council (1977), 
noting that the commitment for MBEs was reached 
in the first year. Id. at 183-84.

10. The Governor’s Executive Directive 1975-6 
(1975), directing the Michigan Department of Civil 
Rights to, inter alia, establish standards to assure 
non-discrimination in state contracting. Id. at 184.

11. The May 15, 1978 Report of the Department 
of Civil Rights, expressing concern over limited 
progress that had been made under Directive 
1975-6. Id. at 184.

12. Proposed House Bill 4335, initiated March 
15, 1979, which provided for MBE set-asides, and 
later, WBE set-asides. Id. at 184-85.

House Bill 4335 was adopted by the legislature two years 
after it was introduced, and became P.A. 428, the Act at issue 
in this case. The district court concluded that this evidence 
was sufficient for “the Legislature to make a finding of past 
intentional discrimination.” Id. at 187. This is a finding of 
fact that is fully supported by the record and is not clearly 
erroneous.

The majority’s conclusion that the evidence in this case 
at best suggested “that societal discrimination had afforded 
the obstacle to the development of MBEs in their business

No. 86-1239 Michigan Road Builders v. Milliken, el al. 33

relationship with the State of Michigan” has no support in 
the record. The Supreme Court has determined that societal 
discrimination in and of itself is not sufficient justification 
for enactment of an affirmative action plan. Wygant, 106 S. 
Ct. at 1847. As the Coun noted in Bakke, it has never 
“approved a classification that aids persons perceived as 
members of relatively victimized groups at the expense of 
other innocent individuals in the absence of judicial, legisla­
tive, or administrative findings of constitutional or statutory 
violations.” 438 U.S. at 307. Societal discrimination is best 
exemplified in Wygant. The school board extended preferen­
tial protection against layoffs to minority employees in'ordcr 
to provide minority students with minority role models. In 
holding this was an insufficient justification, the Court noted 
there must be some showing of prior discrimination by the 
governmental unit and that the plan must have a remedial 
purpose.

The legislative record in this case clearly shows that the 
plan enacted by the State of Michigan was not designed solely 
to aid persons perceived as members of “relatively victimized 
groups” or to create “role models” for minorities. As noted, 
the Michigan Legislature began in 1971 to review the prob­
lem of limited participation of minority and woman owned 
businesses in the state’s procurement of goods and services. 
The plan that was adopted approximately nine years later 
was the culmination of numerous studies, hearings and pro­
posals to rectify the situation. Any acceptable understanding 
of the concept of federalism; requires us to accord the same 
degree of deference to the findings of a state legislature follow­
ing years of study and investigation that we give to findings 
of Congress. The majority’s rejection of the legislative show­
ing of prior discrimination is improper, not only because it 
fails to give the deference that a federal court should give 
to a state legislature’s findings, but because the level of find­
ings which the majority would exact from the legislature has 
not heretofore been required.



The Supreme Court noted in FuUilovc that “Congress, of 
course, may legislate without compiling the kind o f ‘record’ 
appropriate with respect to judicial or administrative 
proceedings. 448 U.S. at 478. The Court determined that 
Congress had abundant evidence from which it could .con­

clude that minority businesses have been denied effective 
participation in public contracting opportunities by procure­
ment practices that perpetuated the effects of prior 
discrimination.” Id. at 477-78, There is sufficient evidence 
in the legislative record or Michigan Public Act 428 to sup­
port a determination that the state’s procurement practices 
did perpetuate the effects of prior discrimination, resulting 
in an extremely small percentage of contracts being awarded 
to minority and woman owned businesses.

As we stated in Ohio Contractors Ass'n v. Keip, 713 F.2d 
at 173:

The state has chosen to remedy the effects of its 
own past discriminatory practices by means of a pro­
gram which imposes relatively light burdens on the 
majority group which was in position to benefit from 
those practices.

(Emphasis in original). Michigan did the same thing for the 
same reasons.

Finally, in my opinion the majority places entirely too 
much emphasis on semantics. The district court’s use of 
‘ significant” as opposed to “compelling” in describing the 
state’s interest is immaterial, given that the state clearly did 
have a compelling interest in eliminating discriminatory 
practices from its contracting and procurement procedures. 
Although the district court referred to a “reasonableness” test 
in reviewing the means chosen by Michigan to deal with the 
state s interest, in actually testing the MBE program the dis­
trict judge expressly analyzed all of the factors that the plural­
ity of the Supreme Court analyzed in applying the “narrowly 
tailored” standard in Fullilove. 571 F. Supp. at 188.

34 Michigan Road Builders v. Mi/liken, cl al. No. 86-1239 No. 86-1239 Michigan Road Builders v. Milliken, el al. 3 

1 would affirm the judgment of the district court.