L. Feriozzi Concrete Company v. Casino Reinvestment Development Authority Brief of Respondents
Public Court Documents
September 21, 2000
Cite this item
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Brief Collection, LDF Court Filings. L. Feriozzi Concrete Company v. Casino Reinvestment Development Authority Brief of Respondents, 2000. 701c1a96-b19a-ee11-be36-6045bdeb8873. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/9a11d2f1-3310-4b0e-b980-25f55c02483e/l-feriozzi-concrete-company-v-casino-reinvestment-development-authority-brief-of-respondents. Accessed August 19, 2025.
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SUPERIOR COURT OF NEW JERSEY
APPELLA TE DIVISION
L. FERIOZZI CONCRETE COMPANY,
INC., a New Jersey Corporation, and
CONCETTA FERIOZZI,
Plaintiffs/Respondents,
CASINO REINVESTMENT DEVELOPMENT
AUTHORITY and JAMES B. KENNEDY,
Executive Director of the CASINO
REINVESTMENT DEVELOPMENT
AUTHORITY
Defendants/Appellants
DOCKET NO. A-005057-99T5
Civil Action
ON APPEAL FROM:
SUPERIOR COURT OF NEW JERSEY
ATLANTIC COUNTY-LAW DIVISION
DOCKET NO. ATL-L-2003-99
SAT BELOW:
HON. MICHAEL WINKELSTEIN, A.J.S.C.
BRIEF OF RESPONDENTS
PERSKIE NEHMAD & PERILLO, P.C.
1125 Atlantic Ave,, Suite 711
Atlantic City. NJ 08401
(609) 348-1177
Salvatore Perillo, Esquire
Attorneys for Respondents
On the Brief
Salvatore Perillo, Esquire
Steven J. Brog, Esquire
TABLE OF CONTENTS
PRELIMINARY STATEMENT ...................................................................................................
FACTUAL AND LEGISLATIVE BACKGROUND.................................................................
LEGAL ARGUMENT.....................................................................................................................
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...............................................................................
A. Standard of Review...................................................................................................................
B. The Burden in the Present Case to Justify Disparate Treatment Based Upon Gender
Or Race is on CRD A ..................................................... -.........................................................
C. The CRDA’s 20 Percent Set-Aside Statute is Unconstitutional Because CRD A Cannot
Demonstrate By Substantial Evidence That This Legislation was Necessary to Remedy
Past Identified Discrimination..................................................... ..........................................
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 the Regulations Use Overly Broad
and Inconsistent Definitions of a Minority.....................................................................
B. Utilizes Rigid Numerical Quotas.....................................................................................
C. The CRDA Set-Aside Program Fails to Utilize Race-Neutral Alternatives...............
D. The Set-Aside Statute and Regulations do Note Have any Sunset Provision or Any
Requirement for Periodic Evaluation.............................................................................
POINT III - Good Faith Efforts and Goals are as Constitutionally
Defective as Quotas..........................................................................................
POINT IV - The Trial Court Property Decided Both the Compelling Interest Issue
and the Narrow Tailoring Issue......................................................................
CONCLUSION.......................................................................................................................
35
35
38
.39
.44
.45
.48
.64
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TABLE OF AUTHORITIES
Cases
Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097, 2113, 132 L. Ed. 2d 158 (1995)............ 16, 20, 44
Adarand Constructors, Inc. v. Pena, 965 F. Supp. 1556 (U.S.D.C. Col. 1997)....................................... 37
Adkins v. Children’s Hospital, 261 U.S. 394, 544 (1923)...........................................................................62
Allen v. County School Board, 207 F. Supp. 349 (E.D. Va. 1962)(LDF Brief, p. 23 )............................ 29
American Manufacturers Mutual Insurance Company v. Sullivan, 526 U.S. 40, 62 (1999)................ 62
Ashwander v. TVA, 297 U.S. 288, 347 (1936)....................................................................................... 53, 57
Associated General Contractors o f California, Inc. v. Coalition fo r Economic Equity,
950 F.2d 1401, 1417 (9th Cir. 1991)........................................................................................................... 39
Associated General Contractors v. City and County o f San Francisco,
813 F.2d 922, 930 (9th Cir. 1987).........................................................................................................22, 23
Associated General Contractors v. Coalition for Economic Equity,
950, F. 2d. 1401, 1414 (9th Cir. 1991)........................................................................................................47
Associated General Contractors v. Drabik, 214 F.3d 730 (6th Cir. 2000).........................................22, 34
Associated Utility Contractors ofM.D. v. Mayor, 83 F. Supp. 2d. 613 (D. Md. 2000)..........................34
Association fo r Fairness in Business v. State, 82 F. Supp. 2d 361, 370 (D.C.N.J. 2000)................32, 37
Brunet v. City o f Columbus, 1 F.3d 390, 404 (6th Cir. 1993)......................................................................25
Bush v. Vera, 517 U.S. 952, 979 (1996)..........................................................................................50, 51, 52
City o f Chicago v. International College o f Surgeons, 522 U.S. 156, 188 (1997)............................53, 55
City o f Richmond v. J.A. Croson Co., 488 U.S. 469, 108 S. Ct. 706, 728, 102 L. Ed. 2d. 854 (1989)
................................................ ........5,6, 7, 10, 11, 17, 19 ,30 ,31 ,33 ,35 ,38 ,39 , 42, 43,44, 48,49, 50
Concrete General, Inc. v. Washington Suburban Sanitary Commission, 779 F. Supp.
370 (D. Md. 1991)........................................................................................................................... 25,59,61
Concrete Works o f Colorado, Inc. v. City and County o f Denver,
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86 F. Supp. 2d. 1042 (D. Colo. 2000)................................................................................................... 34, 38
Cone Corp. v. Hillsborough County, 908 F. 2d 908 (11th Cir. 1990)........................................................ 43
Contractors Ass ’n o f Eastern Pa. v. City o f Philadelphia, 893 F. Supp. 419 (E.D. Pa, 1995).............. 38
Contractors Assoc, v. City o f Philadelphia, 6 F.3d 990, 996 (3d Cir. 1993)
............................................................................................................ 20, 30, 31,40, 43, 48, 49, 53, 57, 59
Coral Construction Co. v. King County, 941 F.2d. 910, 916 (U.S.C.A. 9th Cir. 1991).....................31, 38
Donadio v. Cunningham, 58 N.J. 309, 325-26 (1971)......................................................................... 53, 58
Edward J. DeBartolo Corp. v. Florida G ulf Coast Building & Construction Trades Council,
485 U.S. 568, 575 (1998).......................................................................................................... 50, 52, 53, 54
Eisenberg v. Montgomery County Public Schools, 197 F.3d 123, 131 (4th Cir. 1999).....................59, 60
Engineering Contractors Ass ’n o f South Florida v. Metropolitan Dade County,
122 F. 3d 895 (11th Cir.1997).........................................................................................................41, 42, 43
F. Buddie Contracting Ltd. v. Cuyahonga Community College District, 31 F. Supp. 2d 571,
580 (N.D. Ohio 1998)............................................................................................................................ 22, 24
FCC v. Beach Communications, Inc., 508 U.S. 307, 314 (1993)............................................................. 62
Fullilove v. Klutznick, 448 U.S. 448, 100 S. Ct. 2758 67 L. Ed.2d 902 (1980).......................... 18, 37, 44
Gautreaux v. Chicago Housing Authority, 503 F.2d. 930 (7th Cir. 1974)................................................ 28
Grobart v. Grobart, 5 N.J. 161, 165 (1950)..........................................................................................53, 59
Hall v. St. Helena Parish School Board, 197 F. Supp. 649, 658 (E.D. La.).......................................27, 28
Haney v. County Board o f Education, 410 F. 2d 920 (8th Cir. 1969) (LDF Brief, p. 29)................. 28, 29
Hiller v. County o f Suffolk, 977 F. Supp. 202, 206 (E.D.N.Y. 1997)................................................. 59, 61
Hopwood v. State o f Texas, 78 F. 3rd 932, 952 (5th Cir. 1996).........................................21, 22, 30, 35, 38
Houston Contractors Association v. Metropolitan Transit Authority,
993 F. Supp. 545 (S.D. Tx. 1997)............................................................................................................... 25
Kane v. Freeman, 1997 WL 158315 (M.D. Fla. 1997)...............................................................................25
Maryland Troopers Ass ’n v. Evans, 993 F. 2d, 1072, 1079 (4th Cir. 1993)......................................... . 18
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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)..........19, 22, 23, 46,
O ’Keefe v. Passaic Valley Water Commission, 132 N.J. 234, 240-41 (1993)....................................53,
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 Court1 331 U.S. 549,568 (1947).........................................................53, 56,
Shaw v. Hunt, 116 S. Ct. 1894, 135 L. Ed. 2d. 207 (1996).............................................. 33, 34, 50, 51,
Sherman v. Citibank, N.A., 143 N.J. 35, 65 (1995).....................................................................................
State v. Salerno, 27 N.J. 289 (1958).......................................................................................................53,
The University o f California Regents v. Bakke, 438 U.S. 265, 310, 98 S. Ct. 2733,
57 L. Ed. 2d. 750 (1978)............................................................................................................................
Three Affiliated Tribes v. Wold Engineering, 467 U.S. 138, 157-58 (1984)..................................... 53,
Tuttle v. Arlington County School Board, 195 F.3d 698, 705 (4th Cir. 1999)................................... 59,
United States v. Raines, 362 U.S. 17, 21 (1960).................................................................................. 53,
Weinberger v. Wiesenfeld, 420 U.S. 636, 648, 95 S. Ct. 1225, 43 L. Ed. 2d. 514 (1975).....................
Williams v. Babbitt, 115 F.3d 657, 665 (9th Cir. 1997)........................................................................59,
Wygant v. Jackson Board o f Education, 476 U.S. 267, 277, 106 S. Ct. 1842, 90 L. Ed. 2d.
260(1986)................................................................................................................................... 18, 19, 30,
.22
47
58
,25
29
62
52
32
59
18
54
60
55
19
60
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Statutes
N.J.A.C. 12:10A-1......................................................................................................................................32,33
N.J.A.C. 12A:10A-1.2........................................................................................................................................6
N.J.A.C. 12A:10A-4.1(d)(2).............................................................................................................................. 4
N.J.A.C. 12A:10A-4.2........................................................................................................................................4
N.J.A.C. 12A:10A-4.3....................................................................................................................................... 4
N.J.A.C. 12A: 11-1.2......................................................................................................................................... 13
N.J.A.C. 12A-11-1.2.........................................................................................................................................36
N.J.A.C. 17:14..................................................................................................................... 4, 6, 11,12, 13,36
N.J.A.C. 17:14.4.3..............................................................................................................................................4
N.J.A.C. 17:14-1.................................................................. 12, 13,32,33
N.J.A.C. 17:14-1, e tseq ..................................................................................................................................... 4
N.J.A.C. 17:14-1.2........................................... 6, 12, 13,36
N.J.A.C. 17:14-4.1............................................................................................................................................. 4
N.J.A.C. 19:65-1.1............................................................................ 10,21,30
N.J.A.C. 19:65-1.1, et. seq ...............................................................................................................................10
N.J.A.C. 19:65-4.1....................................................................................................................................11, 12
N.J.A.C. 19:65-4.1(a).............................................................................................................................. 11, 12
N.J.A.C. 19:65-4.1..................................................................................................................................... 32,33
N.J.S.A. 12A:10A-1........................................................................................................................................... 4
N.J.S.A. 2A:44-143 ................ 40
N.J.S.A. 5:12-153.............................................................................................................................................. 7
N.J.S.A. 5:12-160.......................... 7
N.J.S.A. 5:12-161.............................................................................................................................................. 7
N.J.S.A. 5:12-181................................................................. ....................................................8, 9, 10, 13, 36
N.J.S.A. 5:12-181fbJ........................................................................................................................... 16,21,32
N JJvA , 5:12-181(b)(1)..........................................................................................................8, 13, 16,21,32
R I S A 5:12-181(b)(2).....................................................................................................................................9
N.J.S.A. 52:27-21.26.......................................................................................................................................36
N.J.S.A. 52:27H-21.26..............................................................................................................................13,36
N.J.S.A. 52:32-17............. .............................................................................................................2, 11,32, 33
N.J.S.A. 52:32-17. e tse q ........................................................................................................................... 2, 11
N.J.S.A. 52:32-18....................................................................................................................................... 3,30
N.J.S.A. 52:32-19.................................................... 3,6, 11, 13,36
N JR A , 52:32-19(g)........................................................................................................................6, 11, 13,36
N A S A 52:32-19(h).......................................................................................................................................... 3
N.J.S.A. 52:32-21 .......................................................................................................................................3,45
N.J.S.A. 52:32-25.......................................................................................................................................4, 45
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TABLE OF APPENDIX
Excepts from the Deposition Transcript
of Yvonne Bonitto-Dogget..................
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(Pa-1 to 12)
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 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.
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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 o f substantive areas. None of these statutes
and regulations can withstand a strict scrutiny test.
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 bring minorities and women into the mainstream of our society and our economy.
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. (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 o f 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. 52:32-19Qri.
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
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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 o f 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 o f 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 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 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.
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As a result of the Supreme Court’s decision in City o f 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 o f 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 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 Commission Report was based solely upon a study of
State government purchasing and contracting history in general.1 * * * 5 As a result, the Study Commission
Report does not provide the empirical evidence which is constitutionally required to allow the program
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 3 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 o f New Jersey Procurement Data in
Light o f 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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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 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 o f 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, 6
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unconstitutional definition o f minority and the State Set-Aside Regulations which 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, Hispanies 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.
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: 7
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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 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: 8
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(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.
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 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.
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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, CRD A 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 NJ.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 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 o f 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.
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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 CRD A, 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 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
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Portuguese, American-Indians and Alaskan natives was unconstitutional, the State minority
certification process still recognizes these groups as minorities.
The CRD A 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.
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
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(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 o f 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 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.
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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 lA years.
Deposition o f 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 o f Casino Licensees or applicants
for funding in any of their purchasing or contracting practices. Deposition o f Yvonne Bonitto-Doggett,
Page 10, Lines 16 to Page 11, Line 17. (Pa-3,4). Ms. Doggett testified that CRDA accepts as MBE’s,
companies and persons who have been certified by the Commerce Commission. Deposition o f Yvonne
Bonitto-Doggett Page 52, Line 3 to Line 7 (Pa-10).
In 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 o f 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 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 o f 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 o f Yvonne
Bonitto-Doggett, Page 25, Line 17 (Pa-9).
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Ms. Bonitto-Doggett testified that other than the Set-Aside Program, the only other steps that
CRDA has taken to increase MBE participation consist o f talking to the MBE/WBE community,
participating in conferences and pre-id 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 o f 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
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.
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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 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.
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Ed.2d 902 (1980) [BJecause 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 reasons for any such classification be clearly identified and
unquestionably legitimate.” 488 U.S. 469,505, 109 S. Ct. 706, 728.
First, CRD A 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 o f those who are burdened or benefited by the particular classification.
Wygant v. Jackson Board o f 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. “[Tjhe 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 desire to never repeat it, and find a legal order in which distinctions
based on race shall have no place.” Maryland 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 o f 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
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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 o f 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. “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 Assoc, o f 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
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classification subjecting that person to unequal treatment under the
strictest judicial scrutiny.” Adarand, 115 S. Ct. at 2111.
The Third Circuit has concluded that the plaintifTs theory o f their case determines who has the
burden. If “ .. .the plaintiff s theory of constitutional invalidity is that, although the [government] may
have been thinking o f 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 o f 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 set-aside in the present case is
constitutionally lacking in a number of respects.
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
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which requires a combined 20 percent set-aside. See, N.J.S.A. 5:12-181(b)(l). 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 bom because of the casino industry which did not come 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 o f past wrongs at that school.” Hopwood v. State o f 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 racial
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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.l 15 S. Ct. 2038, 2048 (1995). CRDA is a “singular government unit”.
In Point II o f 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 o f San Francisco, 813 F.2d 922, 930 (9th 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 Facility. There, a general contractors association brought an 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 o f 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
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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 of 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 its set aside goals.
Significantly, the University replied that there was no such study. On this basis the Court went no
further in terms o f 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 o f 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 o f 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
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in its remedies to activities within that department alone.” In Associated, 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% 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 o f 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
projects. Significantly, the United States District Court for the Eastern District of Ohio held that the
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
o f 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 o f 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
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On the other hand, it seems apparent to this Court that CCC
should no more be required to remedy the discriminatory
practices o f 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).
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 o f 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
program by an arm o f the State, CCC, without a showing o f
discrimination by that particularized entity.
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set aside plan at issue was unconstitutional, the Court gave the following analysis:
“FDOT does not claim that it has evidence of intentional
discrimination in the letting of contracts either by the
centra] 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 o f a disparity between the
proportion of minorities awarded FDOT 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 o f 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 CRD A, as opposed to the State of New Jersey, has engaged in discrimination, because in a
converse situation the State could avoid constitutional responsibilities by creating subdivisions with no
prior history o f 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
regarding the existence o f past and/or continuing discrimination by the FDOT. In concluding that the
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education and housing, where the state was indifferent to or even encouraged the discriminatory
policies in question. All o f 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.), a ffd .,
368 U.S. 515 (1962) (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 o f 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 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....
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. . . 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.
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 o f 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 o f 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. 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:
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“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.
Haneyjs 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 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
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the set-aside provisions in 1992, five years after Croson, disavowed any evidence o f any history of
discrimination on the part of anyone. See, N.J.A.C. 19:65-1.1 (purposes and objectives of CRD A); 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 o f 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 a rationale for affirmative
action. Hopwood, supra at 950; Croson, supra 488 U.S. at 507. Race-based preferences cannot be
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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 CRD A, 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 dofoes] not assume engagement in unlawful discrimination by
an applicant, contractor or 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.
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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 o f discrimination in the casino
industry cannot be derived from the founding of this program.” Association fo r 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 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
etseq., 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 for 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 imposing on casino licensees and applicants for CRDA funding an MBE/WBE
requirement. See, Deposition o f Yvonne Bonitto-Doggett, Page 69, Line 24 (Pa ). There is nothing
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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 reiving 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 NEED
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 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 476 U.S. at
277. The Supreme Court in Shaw explains that “. . . a racial classification cannot withstand strict
scrutiny based upon speculation about what ‘may have motivated the legislature. To be a compelling
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interest, the State must show that the alleged objective was the legislature’s ‘actual purpose’ for the
discriminatory classification.. . and the legislature must have a strong basis in evidence to support that
justification before it implements the classification.” Shaw, supra 116 S. Ct. at 1903.
Most recently, the holding of Shaw has been applied by the Sixth Circuit Court of Appeals, the
United States District o f 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 o f Ohio v. Drabik, 214 Fed. 3rd. 730 (6th
Cir. 2000); Associated Utility Contractors o f M.D. v. Mayor, 83 F. Supp. 2d. 613 (D. Md. 2000);
Concrete Works o f Colorado, Inc. v. City and County o f Denver, 86 F. Supp. 2d. 1042 (D. Colo. 2000).
The State Study Commission Report, as a post enactment study, is legally and constitutionally
worthless.
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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 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, 78F.3 at 951.
CRDA is forced to concede that under Croson and its progeny the use of over-inclusive
definitions o f 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. Ail 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 o f 1993 cites all
of these Statutes as authority for the Governor’s directive. AH 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 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
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Commission, CRD A accepts them as an MBE for the purposes of the CRDA Set-Aside Program.
Deposition o f 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:
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-
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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 the Courts throughout
this country on numerous occasions. In Contractors Ass ’n o f Eastern Pa. v. City o f 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 o f 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.
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.
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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 o f 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 or 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 obtain windfalls.” Associated General Contractors o f 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,
CRD A, 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 means
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 as lack of capital and
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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-L.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.” In 1996, the
limit was raised to $200,000. There is no 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.
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CRDA by way o f 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.
*> 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.
❖ Stepped Sheltered Markets providing increasing degrees of competition as firms
mature. Study Commission Report, Id.
♦> 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 standard. See, Engineering Contractors Ass ’n o f South Florida
v. Metropolitan Dade County, 122 F. 3rd 895 (11th Cir.1997); Contractors, supra 91 F. 3rd 586 at 608.
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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 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,
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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 o f the City to
utilize alternatives to race based quotas. “The City could have lowered administrative barriers to entry,
instituted a training and financial assistance program and carried forward the OMO’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 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.
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D THE SET-ASIDE STATUTE AND REGULATIONS DO NOT HAVE ANY SUNSET
PROVISION OR ANY REQUIREMENT FOR PERIODIC EVALUATION.
One o f 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 m
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, “at 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.
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
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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” 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
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make any solicitation if they kept the work and did not subcontract it, . . a Court might well find that
the scheme ldiscriminate[d] against MBE’s and WBE’s and continued to operate under ‘the old boy
network’ in awarding contractors.” Monterey, supra at p. 7 citing Associated General Contractors v.
Coalition fo r 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 o f 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.
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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 o f the strict scrutiny test. This 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 assertion of the LDF in the present case, the Third Circuit did examine the compelling
aeed issue and concluded that:
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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 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
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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 G ulf Coast Building & Construction Trades
Council, 485 U.S. 568, 575 (1998). These cases are easily distinguished 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.
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The Court then completed its analysis by focusing on whether the new districts were narrowly tailored
to meet that interest:
“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 14
Amendment and the VRA.” 517 U.S. at 990.
In Shaw v. Hunt, supra, the United States Supreme Court was again asked 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.
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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 o f 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.
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 o f 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:
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“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 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 o f Chicago v. International College o f Surgeons, 522
U.S. 156, 188 (1997); United States v. Raines, 362 U.S. 17, 21 (1960); Rescue Army v. Municipal
Court, 331 U.S. 549,568 (1947); Ashwander v. TV A, 297 U.S. 288, 347 (1936); Contractors Assoc, v.
City o f 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 Grobartv. Grobart, 5 N.J. 161, 165
(1950).
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In the case at bar, the only issue in the case is the issue o f 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 o f whether it meets the narrow tailoring prong.
City o f 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 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 Fifth Amendment and therefore unconstitutional. The United States
Supreme Court reversed, holding that the District Court should only have considered whether the
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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 o f 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 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.
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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 TV A was invalid, because it was beyond
the constitutional power o f the federal government. The plaintiffs also challenged the validity of the
act creating the TV A, and other actions of the federal government. Although the United States
Supreme Court held that the question to be determined was the validity of the TV A agreement in
question, it did engage in an extensive constitutional analysis regarding TV A 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 o f the City o f 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 principal, when a court determines the
legislature intended the challenged sections of a statute to
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operate independently of the unchallenged section, and
finds these sections can so operate, it will consider only the
challenged sections, leaving the remainder o f 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 wras 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 plaintiffs 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 o f 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 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
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basis...quite apart from the...matter o f 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 o f 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 none of
these cases involve set-asides for women or minorities. The cases cited are: Contractors Association
v. City o f Philadelphia, 91 F.3rd 586, 605 (3rd Cir. 1986); Eisenberg v. Montgomery County Public
Schools, 197 F.3rd 123, 131 (4th 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 o f 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:
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“Whether this record provides a strong basis in evidence
for an inference o f 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
make it. Even assuming that the record presents an
adequately firm basis for that inference, the judgment o f the
district court must be affirmed because Chapter 17-500 is
clearly not narrowly tailored to remedy that
discrimination.” 91 F.3ri* 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 o f 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 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 o f its
analysis that Congress has a compelling interest in giving economic assistance to Native Americans.
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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 o f narrow tailoring.
Hiller v. County o f 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 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 o f 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 o f the factual dispute which precluded summary judgment. In the present case, there
was no factual dispute concerning the record advanced to support the claimed compelling interest.
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Next the LDF cites the case o f 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 o f the entire case and the other o f 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 o f 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
Amy, 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 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.
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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.
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CONCLUSION
For all o f the above reasons, it is respectfully submitted that the decision o f Judge Winkelstein
should be affirmed in its entirety.
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SUPERIOR COURT OF NEW JERSEY
LAW DIVISION - ATLANTIC COUNTS
DOCKET NO. ATL-L-2003-99
L. FERIOZZI CONCRETE COMPANY,
INC., a New Jersey Corporation,
and CONCETTA FERIOZZI,
Plaintiffs
vs .
CASINO REINVESTMENT DEVELOPMENT
AUTHORITY and JAMES B. KENNEDY,
Executive Director of the Casino
Reinvestment Development Authority,
Defendants
Wednesday - August 4, 1999
Oral sworn deposition of YVONNE
BONITTO-DOGGETT, 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:
C S R ASSOCIATES Certified Shorthand Reporters
1442 New Road
Northfield, New Jersey 08225
(509)641-7117 Fax:(609)641-7640E-mail:csr@csrcourtreporters.com
ORIGJNA
Pa- l
mailto:csr@csrcourtreporters.com
Yvonne Bonitto-Doggett (By Mr. Perillo)
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1 those instructions?
CRDA?
A.
Q .
A.
Q-
No
Yvonne, how long have you been with
Six and a half years.
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 acting public agency compliance officer.
Q. And Susan told us that's known as the
PACO?
A. PACO.
Q. How long have you been the acting PACO?
A. The end of 1997.
Q. And why is it that you're actingT
A. Well, we had originally had a staff
member who was PACO, and she asked to be relieved
of her duty through a period of time. And I
assumed it -- I was asked to assume it and I
assumed 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 Bonitto-Doggett (By Mr. Perillo)
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
any evidence 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
seen any evidence of any discriminatio
part of CRDA at any time in the past i
purchasing practices?
A . No .
Q. Since you've been with CRDA
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 (By 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 . No .
Q. And then, finally, have
evidence of any discrimination si
with CRDA on the part of any appl
funding?
A .
Q •
seen any
the part
A .
Repeat that again, plea
Since you've been with
evidence of any acts of
of applicants for CRDA f
No .
you seen any
nee you've been
icants for CRDA
se .
CRDA have you
discrimination onj
unding?
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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Yvonne Bonitto-Doggett (By Mr. Perillo)
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Q. Who else, other than you, participates
in that decision-making process?
A. Maybe the project officers.
Anybody else?
Our in-house counsel, our director.
Anybody else?
Not that I can think of.
Does the board participate in that
Q .
A.
Q .
A .
Q .
decision?
MR. McAULEY: On an individual
contract ?
MR. PERILLO: Yes.
THE WITNESS: 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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Yvonne Bonitto-Doggett (By Mr. Perillo)
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Q. What do you anticipate the dollar volume
of contracts to be that CRDA will award in 1999?
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
math is right, is about 2.8 million?
A. Yes. You're doing the math.
Q. The anticipated need to meet the seven
percent goal, was that a prime consideration in
setting 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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Yvonne Bonitto-Doggett {By Mr. Perillo)
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where would the need to meet the goal criteria be
in that ranking?
MR. McAULEY: 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. Um-hum.
Q. Could you explain what you meant by
that ?
A. If there is a dete rmination or a des
to set a goal as a set-aside in a contract we
would be looking at availabi lity of entrep rene
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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except for the 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
t imes ?
A . Yes .
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. McAULEY: 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 Bonitto-Doggett (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
MBE 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?
your mind?
A. Absolutely.
Q. Okay. Let's now turn t
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 Bonitto-Doggett (By Mr. Perillo)
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Commerce, now the commission, and if they meet the
audit criteria they are given a number.
Q. And if they are certified by the
Department of Commerce or, now the commission,
CRDA will accept that certification and consider
that firm as either an MBE or a WBE?
The next exhibit, P-2, is a portion of
A. Yes.
Q . The next
the submission that
1998 Set-Aside Plan
A . Yes.
Q • And if we
refers to the three
goals ? (Indicating
A. Yes .
Q - And I'll :
through the 1998 pi
to the 20 percent.
A. Correct.
Q • Was the f
percent in the 1999
A. Yes .
MR. McAULEY: Again, you're talking
about the retail and entertainment?
MR. PERILLO: Yes.
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Yvonne Bonitto-Doggett (By Mr. Perillo)
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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 . Yes.
Q. If you take a look at P-27, which is the
fourth quarter report, on Page 2 of the
construction contract schedule you're listing
Network as a small business. Do you see that?
(Indicating. )
A . Um-hum. Yes .
Q. They should be carried as an MBE, 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
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64
MBE/WBE participation? >■> . %
A. What we do is talk to the AMWBE
community. We participate in conferences, in our
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
million annual dollars that are given to the
authority 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
commitment to the New Jersey Development Authority
for Small Businesses, Minorities and Women, and we
provide 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
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