H.B. Rowe Company v. Tippet Brief of Amicus Curiae

    No. 09-1050

UNITED STATES COURT OF APPEALS 
FOR THE FOURTH CIRCUIT

H.B. ROWE COMPANY, INC. 
Plaintiff-Appellant,

v.

W. LYNDO TIPPETT, et al., 
Defendants-Appellees.

Appeal from the United States District Court 
for the Eastern District of North Carolina 

Raleigh Division

BRIEF OF AMICUS CURIAE NAACP LEGAL 
DEFENSE & EDUCATIONAL FUND, INC. 

IN SUPPORT OF RESPONDENTS

Josh u a  C ivin *
NAACP L egal  D efen se  &  

E d u ca tio n a l  F u n d , In c . 
1444 I Street, NW, 10th Floor 
Washington, DC 20005 
(202)682-1300 
(212) 682-1312 (fax)

* Counsel of Record 

August 20, 2009

Jo h n  P a y t o n , 
Director-Counsel 

D e b o P. A d eg bile  
M a tth e w  C o la n g elo  
Joy  M illig a n  
NAACP L egal  D efen se  &  

E d u c a tio n a l  F u n d , In c . 
99 Hudson Street, 16th Floor 
New York, NY 10013 
(212) 965-2200 
(212) 226-7592 (fax)



UNITED STATES COURT OF APPEALS 
FOR THE FOURTH CIRCUIT

No. 09-1050 Caption: H.B. Rowe Company, Inc, v. W. Lyndo Tippett, et al.

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0

□

(s) Joshua Civin

Attorney for NAACP Legal Defense & Educational Fund, Inc.

Dated: 8/20/2009



Certificate of Service

I hereby certify that on August 20, 2009, the foregoing Brief of Amicus

Curiae NAACP Legal Defense & Educational Fund in Support of Respondents

was, pursuant to Fourth Circuit Rule 31(c), filed by first-class mail prepaid with

the Clerk of the Court and that copies of the same were served using the CM/ECF

system and by first-class mail prepaid on the following attorneys of record:

Kevin Van Parsons 
Smith, Parsons & Vickstrom, PLLC 
6060 Piedmont Drive South 
Charlotte, North Carolina 28287

James S. Burling 
Sharon L. Browne 
Ralph W. Kasarda 
Pacific Legal Foundation 
3900 Lennane Drive, Suite 200 
Sacramento, California 95834

Counsel for Plaintiff-Appellant

Christopher G. Browning, Jr.
John F. Maddrey
Tiare B. Smiley
Elizabeth Leonard McKay
North Carolina Department of Justice
Post Office Box 629
Raleigh, North Carolina 27602-0629

Counsel for Defendants-Appellees

/s/ Joshua Civin 
Joshua Civin
Counsel for NAACP Legal Defense & 
Educational Fund, Inc.



UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT 
DISCLOSURE OF CORPORATE AFFILIATIONS AND OTHER INTERESTS

Only one form needs to be completed for a party even if the party is represented by more than 
one attorney. Disclosures must be filed on behalf of aR parties to a civil, agency, bankruptcy or 
mandamus case. Corporate defendants in a criminal or post-conviction case and corporate amici 
curiae are required to file disclosure statements. Counsel has a continuing duty to update this 
information.

No. 09-1050 Caption: H.B. ROWE COMPANY, INC, v. W. LYNDO TIPPETT, et al. 

Pursuant to FRAP 26.1 and Local Rule 26.1,

NAACP Legal Defense Fund, Inc, w h 0 js ________ amicus________ ; makes the following disclosure:
(name of party/amicus) (appellant/appellee/amicus)

1. Is party/amicus a publicly held corporation or other publicly held entity? Q  YES [/iNO
2. Does party/amicus have any parent corporations? Q  YES [~7~lNO

If yes, identify all parent corporations, including grandparent and great-grandparent 
corporations:

3. Is 10% or more of the stock of a party/amicus owned by a publicly held corporation or
other publicly held entity? f~l YESf/lNO
If yes, identify all such owners:

4. Is there any other publicly held corporation or other publicly held entity that has a direct 
financial interest in the outcome of the litigation (Local Rule 26.1(b))? I lYESl~/lNO 
If yes, identify entity and nature of interest:

5. Is party a trade association? (amici curiae do not complete this question) Q  YESl INO 
If yes, identify any publicly held member whose stock or equity value could be affected 
substantially by the outcome of the proceeding or whose claims the trade association is 
pursuing in a representative capacity, or state that there is no such member:

6. Does this case arise out of a bankruptcy proceeding? | lYESf / l NQ
If yes, identify any trustee and the members of any creditors’ committee:

CERTIFICATE OF SERVICE
**************************

I certify that on this date I served this document on all parties as follows:
K e v in  V an  P a rson s  
S m ith , P a rso n s  & V ic k s tro m , P L L C  
6 0 6 0  P ie d m o n t D riv e  S o u th  
C ha rlo tte , N orth C a ro lin a  2 8 2 8 7

J a m e s  S. B u rlin g  
S h a ro n  L. B ro w n e  
R a lp h  W. K a sa rd a  '  
P a c ific  L eg a l F o u n d a tio n  
3 9 0 0  L e n n a n e  D rive , S u ite  200  
S a cra m e n to , C a lifo rn ia  9 5 8 3 4

Christopher G. Browning, Jr.
John F. Maddrey
Tiare B. Smiley
Elizabeth Leonard McKay
North Carolina Department of Justice
Post Office Box 629
Raleigh, North Carolina 27602-0629

Is/ Joshua Civin 8/20/2009
(signature) (date)



TABLE OF CONTENTS

Corporate Disclosure Statement..................................................................................i

Table of Contents........................................................................................................ ii

Table of Authorities................................................................................................... iv

Interest of Amicus Curiae........................................................................................... 1

Introduction.................................................................................................................. 1

Summary of the Argument..........................................................................................3

Argument...................................................................................................................... 5

I. North Carolina has a compelling interest in counteracting the effects
of racially exclusive social networks that limit opportunities for 
minority-owned businesses in the state’s construction industry.................... 5

A. The 2004 Disparity Study revealed that racially exclusive social 
networks have contributed significantly to the under-utilization
of minority firms in North Carolina’s construction industry............... 5

B. Further evidence of discrimination in North Carolina’s
construction industry was publicly available when the General 
Assembly considered reauthorization of the MBE Program.............10

II. A public entity may rely on a well-designed disparity study to justify a 
race-conscious contracting program under the Fourteenth Amendment.... 15

A. A disparity study satisfies constitutional strict scrutiny where, 
as here, it takes into account whether firms are ready, willing,
and able to perform the work in question.......................................... 15

B. Many of the capacity-related factors that H.B. Rowe suggests
disparity studies should be required to analyze are themselves 
tainted by racial discrimination........................................................... 19

ii



III. The MBE Program is narrowly tailored to address the discrimination
faced by minority construction firm s...........................................................23

IV. H.B. Rowe has the ultimate burden of persuading the district court
that the MBE Program is unconstitutional—a burden it failed to carry..... 25

Conclusion............................................................................................................... 29

Certificate of Compliance with Type-Volume Limitations, Typeface Requirements, 
and Type-Style Requirements

Certificate of Service

ill



TABLE OF A U TH O RITIES

Cases

Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995)..........................  1-2, 3, 25

Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 
(10th Cir. 2000)............................................................................... 6, 17, 23, 26-27

Associated General Contractors o f California v. Coalition for 
Economic Equity, 950 F.2d 1401 (9th Cir. 1991)................................................ 17

City o f Richmond v. J.A. Croson Co., 488 U.S. 469 (1989)............................passim

Concrete Works o f Colorado, Inc. v. City & County o f Denver,
321 F.3d 950 (10th Cir. 2003)...............................................  17, 21, 23, 27, 28, 29

Contractors Ass ’n o f Eastern Pennsylvania, Inc. v. City o f 
Philadelphia, 91 F.3d 586 (3d Cir. 1996).............................................................19

Contractors Ass ’n o f Eastern Pennsylvania v. City o f Philadelphia,
6 F.3d 990 (3d Cir. 1993)....................................................................  17, 27-28, 29

Coral Construction Co. v. King County, 941 F.2d 910 (9th Cir. 1991)................. 28

Corbett v. North Carolina Division o f Motor Vehicles, 660 S.E.2d 233 
(N.C. Ct. App. 2008), petition for discretionary review denied, 615 
S.E.2d 41 (N.C. 2009)............................................................................................14

Dynalantic Corp. v. U.S. Department o f Defense, 503 F. Supp. 2d 262 
(D.D.C. 2007)........................................................................................ .1

Engineering Contractors Ass ’n o f South Florida, Inc. v. Metropolitan 
Dade County, 122 F.3d 895 (11th Cir. 1997)....................................................... 29

Grutter v. Bollinger, 539 U.S. 306 (2003)............................................................... 12

Isaac v. North Carolina Department o f Transportation, 192 F. App’x
197 (4th Cir. 2006) (per curiam).......................................................................... 14

Johnson v. California, 543 U.S. 499 (2005)......................................................28, 29

Johnson v. Transportation Agency, Santa Clara County, 480 U.S. 616 
(1987)...................................................................................................................... 26

IV



Lanier v. Weaver Cooke Construction, LLC, No. 1:04-CV-00757,
2006 WL 13197 (M.D.N.C. Jan. 3, 2006)....................................................... 11-12

Maryland Troopers A ss’n, Inc. v. Evans, 993 F.2d 1072 
(4th Cir. 1993).........................................................................................9-10, 16-17

North Carolina Department o f Transportation v. Crest Street
Community Council, Inc., 479 U.S. 6 (1986)....................................................... 15

Northern Contracting, Inc. v. Illinois, 473 F.3d 715 (7th Cir. 2007)......................17

Norwood v. Harrison, 413 U.S. 455 (1973).............................................................10

Parents Involved in Community Schools v. Seattle School District 
No. 1, 551 U.S. 701 (2007)..................................................................24-25,28, 29

Perry v. North Carolina Department o f Transportation,
No. 07 OSP 0362, 2008 WL 5726394 (N.C. Office of Admin.
Hearings Dec. 16, 2008)......................................................................................... 14

Podberesky v. Kirwan, 38 F.3d 147 (4th Cir.), amended by 46 F.3d 5 
(4th Cir. 1994)...........................................................................................................1

Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 
(2000)................................................................................................................. 28-29

Sherbrooke Turf Inc. v. Minnesota Department o f Transportation,
345 F.3d 964 (8th Cir. 2003) .........................................................................  17, 29

Tennessee v. Lane, 541 U.S. 509 (2004) ........................................................... 10-11

Western States Paving Co., Inc. v. Washington Department o f 
Transportation, 407 F.3d 983 (9th Cir. 2005)....................................................... 17

Wygant v. Jackson Board o f Education, 476 U.S. 267 (1986)..................  16, 26, 28

Statutes, Regulations, and Legislative Materials

N.C. Gen. Stat. § 136-28.4...........................................................................................2

19AN.C. Admin. Code § 2D. 1110 (2009)...............................................................24

N.C. Gen. Assem., J. Res. 2007-21 ...........................................................................13

v



N.C. Gen. Assem., J. Res. 2007-67 .......................................................................... 13

N.C. Gen. Assem., J. Res. 2008-16 ...........................................................................13

49 C.F.R. pt. 26 ...........................................................................................................24

144 Cong. Rec. 2791 (1998).....................................................................................6-7

Business Start Up Hurdles in Under-Served Communities: Hearing 
Before the Senate Committee on Small Business &
Entrepreneurship, 110th Cong. (2008), available at
http://sbc.senate.gov/hearings/20080911 .cfm.......................................................22

The Department o f Transportation’s Disadvantaged Business 
Enterprise Program: Hearing Before the House Committee on
Transportation and Infrastructure, 110th Cong. (2009), available at 
http://www.gpo.gov/fdsys/pkg/CHRG-l lOhhrgl 1048413/
pdf/CHRG-11 Ohhrgl 1048413 .pdf ...............................................................19, 20-21, 22-23

Rules

Federal Rule of Appellate Procedure 29(a)................................................................1

Other Authorities

Lloyd Blanchard et al., Do Lenders Discriminate Against Minority 
and Woman Entrepreneurs? 63 J. Urb. Econ. 467 (2008)................................... 22

David Blanchflower, Minority Self-Employment in the United States 
and the Impact o f Affirmative Action Programs, 5 Ann. Fin. 361 
(2009)...................................................................................................... 7, 19-20,22

David Blanchflower et al., Discrimination in the Small-Business 
Credit Market, 85 Rev. Econ. & Stat. 930 (2003)............................................... 22

Lynn Bonner, Feds Find Lapses at DOT, News & Observer (Raleigh,
N.C.), Sept. 3, 2004, at B5.............................................................................. 13, 14

Ken Cavalluzzo et al., Competition, Small Business Financing, and 
Discrimination, 75 J. Bus. 641 (2002)..................................................................22

vi

http://www.gpo.gov/fdsys/pkg/CHRG-l


Corporation for Enterprise Development, North Carolina: 2007-08 
Assets & Opportunity Scorecard (2008), available at 
http://www.cfed.org/imageManager/scorecard/ 2007/
states_2007/northcarolina_state_page.pdf............................................................ 22

Docket, Lanier v. Weaver Cooke Construction, LLC, No. 1:04-CV- 
00757 (M.D.N.C.).................................................................................................. 12

Caren Grown & Timothy Bates, Commercial Bank Lending Practices 
and the Development o f Black Owned Construction Companies, 14
J. Urb. Aff. 25 (1992)........................................................................................... 23

North Carolina Advisory Committee to the U.S. Commission on Civil 
Rights, Equal Protection o f the Laws in North Carolina (1962), 
available at http://www.law.umaryland.edu/marshall/usccr/ 
documents/cr 12n81c.pdf........................................................................................ 15

Mosi Secret, UNC’s Black Contractors Allege Bias: Pay for State 
Construction Projects Bogs Down in Disputes, Indep. Wkly.
(Durham, N.C.), Dec. 12, 2007..............................................................................12

Donald Tomaskovic-Devey et al., Documenting Desegregation:
Segregation in American Workplaces by Race, Ethnicity, and Sex,
1966-2003, 71 Am. Soc. Rev. 565 (2006).............................................................. 7

Roger Waldinger & Thomas Bailey, The Continuing Significance o f 
Race: Racial Conflict and Racial Discrimination in Construction,
19 Pol. & Soc’y 292 (1991)......................................................................................7

Andrea Weigl, Jury Finds Bias in Noose Incident, News & Observer 
(Raleigh, N.C.), May 19, 2005, at B 1 ....................................................................14

Sacoby Wilson et al., Community-Driven Environmental Protection:
Reducing the P.A.I.N. o f the Built Environment in Low-Income 
African-American Communities in North Carolina, 3 Soc. Just.
Context 41 (2007-2008)..................................................................................  14-15

vii

http://www.cfed.org/imageManager/scorecard/
http://www.law.umaryland.edu/marshall/usccr/


INTEREST OF AMICUS CURIAE1

The NAACP Legal Defense & Educational Fund, Inc. (LDF), a non-profit 

legal corporation established under the laws of the state of New York, has worked 

for more than six decades to assist African Americans and other people of color to 

secure their civil and constitutional rights. LDF has appeared as counsel of record 

or amicus curiae in numerous cases involving racial discrimination before the 

Supreme Court and other federal courts, including significant litigation defending 

the constitutionality of appropriately tailored race-conscious government programs 

that redress patterns of racial inequality and exclusion in contracting, education, 

and other contexts. See, e.g., Adarand Constructors, Inc. v. Pena, 515 U.S. 200 

(1995); City o f Richmond v. J.A. Croson Co., 488 U.S. 469 (1989); Podberesky v. 

Kirwan, 38 F.3d 147 (4th Cir.), amended by 46 F.3d 5 (4th Cir. 1994); Dynalantic 

Corp. v. U.S. D ep’t ofDef., 503 F. Supp. 2d 262 (D.D.C. 2007).

INTRODUCTION

As a nation, we have made progress in breaking down barriers to equal 

opportunity for all citizens; however, “[t]he unhappy persistence of both the 

practice and the lingering effects of racial discrimination against minority groups 

in this country is an unfortunate reality,” and the Supreme Court has made clear

1 Pursuant to Federal Rule of Appellate Procedure 29(a), all parties have 
consented to the filing of this amicus brief.

1



that “government is not disqualified from acting in response to it.” Adarand 

Constructors, Inc. v. Pena, 515 U.S. 200, 237 (1995). The history of our nation, 

like that of North Carolina, is sufficiently nuanced that we can simultaneously 

acknowledge and embrace progress even as we address the remaining challenges.

After thoroughly reviewing the evidence, including a 2004 research study 

(the “2004 Disparity Study”), the North Carolina General Assembly determined 

that race-conscious remedial measures are still necessary to address discrimination 

that has impeded minority-owned businesses from bidding and contracting for 

state-funded road construction projects. See N.C. Gen. Stat. § 136-28.4 (2009). 

As the record in this case underscores, the Minority Business Enterprise (MBE) 

Program that the General Assembly enacted in 2006—and that the district court 

upheld—is extremely limited in scope.2 State law requires the North Carolina 

Department of Transportation (NCDOT) to establish project-specific goals for 

prime contractors’ utilization of minority subcontractors. These are not quotas. 

NCDOT can waive the goals for a prime contractor who demonstrates good-faith, 

albeit unsuccessful, efforts to recruit minority-owned subcontractors.

2 This brief focuses on the MBE Program, which is subject to a higher level of 
constitutional scrutiny than North Carolina’s Women Business Enterprise (WBE) 
Program, which the district court also upheld. J.A. 529-30. Often referred to 
collectively as the M/WBE Program, these initiatives apply to construction projects 
that are exclusively state-funded. Federally-funded projects are subject to separate 
race- and gender-conscious requirements not at issue here. J.A. 515-16, 518-19.

2



The record here bears out the pragmatic flexibility of the MBE Program. 

Significantly, neither H.B. Rowe nor the winning bidder fulfilled the goal that 

NCDOT set for minority subcontractor utilization on a road project in Iredell 

County. NCDOT rejected H.B. Rowe’s proposal because, unlike the winning 

bidder, H.B. Rowe failed to demonstrate the requisite good-faith efforts to recruit 

minority subcontractors.

SUMMARY OF THE ARGUMENT

The U.S. Constitution does not require North Carolina to award a contract to 

a company that refuses even to engage in targeted outreach to minority businesses, 

where, after careful study, the General Assembly made a policy judgment that 

historical and ongoing discrimination affects access to equal opportunity in the 

state’s construction industry. Under the Fourteenth Amendment, “the State has the 

power to eradicate racial discrimination and its effects in both the public and 

private sectors, and the absolute duty to do so where those wrongs were caused 

intentionally by the State itself.” City o f Richmond v. J.A. Croson Co., 488 U.S. 

469, 518 (1989) (Kennedy, J., concurring in part and concurring in the judgment). 

In this context, North Carolina’s race-conscious remedial measures are lawful 

provided they meet strict scrutiny—that is, they must be narrowly tailored to 

further a compelling government interest. Adarand, 515 U.S. at 227.

3



I. The district court properly relied on the 2004 Disparity Study in 

concluding that North Carolina demonstrated a compelling interest in remedying 

“the lingering effects of racial discrimination” in the state’s construction industry. 

J.A. 528-29. The 2004 Disparity Study revealed gross statistical disparities in the 

utilization of minority subcontractors both on NCDOT projects and in the private 

sector. Surveys of NCDOT contractors included in the 2004 Disparity Study—as 

well as other evidence readily accessible to the General Assembly prior to its 2006 

reauthorization of the MBE Program—indicated that one key reason why these 

substantial disparities persist is that informal, racially exclusive social networks 

severely limit access to economic opportunities for minority firms.

II. H.B. Rowe contends that the 2004 Disparity Study is methodologically 

flawed because it failed to account for every conceivable factor that may have 

provided a “race neutral” explanation for the under-utilization of minority firms. 

But the 2004 Disparity Study did address numerous factors, including size and 

experience, that may have affected a firm’s capacity to perform contracts. 

Moreover, as social science research confirms, an exclusive focus on a firm’s 

current capacity under-estimates the true magnitude of discrimination because it 

ignores barriers to minority business formation and development.

III. H.B. Rowe’s challenge to the district court’s ruling that the MBE 

Program is narrowly tailored is significantly flawed. NCDOT’s policy of waiving

4



the project-specific goals for prime contractors who demonstrate good-faith efforts 

to recruit minority subcontractors substantially reduces any burdens that the MBE 

Program may impose on non-minority contractors. Contrary to H.B. Rowe’s 

assertion, the targeted outreach required by the good-faith efforts provisions serves 

only to expand the pool of subcontractors and does not independently warrant strict 

scrutiny analysis. While these good-faith efforts may be “race conscious,” they do 

not compel allocation of contracts or other benefits based on race.

IV. As the party challenging the constitutionality of the MBE program,

H. B. Rowe bears the ultimate burden of proof. H.B. Rowe cannot carry this 

burden with unsupported criticisms of North Carolina’s statistical analysis, 

particularly in light of the state’s strong evidentiary showing.

ARGUMENT

I. North Carolina has a compelling interest in counteracting the effects of 
racially exclusive social networks that limit opportunities for minority- 
owned businesses in the state’s construction industry.

A. The 2004 Disparity Study revealed that racially exclusive social 
networks have contributed significantly to the under-utilization of 
minority firms in North Carolina’s construction industry.

Severe obstacles to fair competition have made it more difficult to eradicate

discrimination in the construction industry than in many other sectors of the

economy. The 2004 Disparity Study revealed that minority firms in North

Carolina, and especially those operated by African Americans, continue to face

5



those obstacles. Such evidence provides a firm basis of support for the General 

Assembly’s conclusion that race-conscious measures are necessary to prevent 

North Carolina from acting as a ‘“passive participant’ in a system of racial 

exclusion practiced by elements of the local construction industry.” Croson, 488 

U.S. at 492 (O’Connor, J., joined by Rehnquist, C.J., and White, J., concurring).

1. Traditionally in North Carolina and throughout the country, the primary 

method of filling jobs and awarding contracts in the construction industry has been 

word-of-mouth dissemination of information through racially exclusive informal 

social and familial networks; as a result, minority entrepreneurs have been severely 

limited in their opportunities to start up and develop successful construction firms. 

See Adarand Constructors, Inc. v. Slater, 228 F.3d 1147, 1168 (10th Cir. 2000) 

(summarizing congressional hearings and other evidence “demonstrating] that 

prime contractors in the construction industry often refuse to employ minority 

subcontractors due to ‘old boy’ networks—based on a familial history of 

participation in the subcontracting market—from which minority firms have 

traditionally been excluded”); see also 144 Cong. Rec. 2791 (1998) (statement of 

Sen. Lautenberg) (“Transportation construction has historically relied on the old 

boy network, which until the last decade, was almost exclusively a white, old boy 

network. . . . This is an industry that relies heavily on business friendships and

6



relationships established decades, sometimes generations, ago—years before 

minority-owned firms were even permitted to compete.”).

The construction industry’s extensive reliance on informal social networks 

“not only creates natural barriers to outsider groups but it also thwarts public 

policies designed to counter discrimination.” Roger Waldinger & Thomas Bailey, 

The Continuing Significance o f Race: Racial Conflict and Racial Discrimination in 

Construction, 19 Pol. & Soc’y 291, 293 (1991). In recent years, racial disparities 

in business ownership rates in the construction industry nationwide remain 

“strikingly high” in comparison to other industries. David Blanchflower, Minority 

Self-Employment in the United States and the Impact o f Affirmative Action 

Programs, 5 Ann. Fin. 361, 361 (2009) [hereinafter Blanchflower, Minority Self- 

Employment]', see also Donald Tomaskovic-Devey et al., Documenting 

Desegregation: Segregation in American Workplaces by Race, Ethnicity, and Sex, 

1966-2003, 71 Am. Soc. Rev. 565, 573-74 (2006) (noting that desegregation of 

construction workplaces stalled in the 1980s, and there is evidence of resegregation 

more recently).

2. The 2004 Disparity Study indicated that minority-owned firms in North 

Carolina, like their peers elsewhere in the nation, continue to be adversely affected 3

3 Indeed, as the district court recognized during the trial proceedings in this 
case, “it’s no secret that in the ’50s, ’60s, ’70s, at least in that time frame, . . .  the 
highway construction companies that were being awarded bids [were] a fairly 
closed circle of contractors” in North Carolina. Trial Tr. 217.

7



by the racially segregated networks that dominate construction contracting. In a 

survey of NCDOT contractors, 65% of minority and women business enterprise 

(M/WBE) owners who responded, including 78% of African-American 

respondents, indicated that “an informal network of prime [contractors] and 

subcontractors” existed in North Carolina road construction contracting. Ex. Vol. 

2, pp. 537-38. Even 47% of white male respondents acknowledged that such a 

network existed. Id.

This informal network disparately impacts opportunities for African- 

American contractors in particular: 72% of African-American contractors 

perceived that M/WBE firms were adversely affected by this informal network. Id. 

Underscoring the continued importance of North Carolina’s MBE and WBE 

Programs, 80% of African-American respondents and even 33% of white male 

respondents agreed with this statement: “Some nonminority firms change their 

bidding procedures when not required to hire M/WBEs.” Id.

Moreover, 60% of African-American indicated that prime contractors 

sometimes included M/WBE subcontractors in bid proposals and then dropped 

them after winning the contract. Id. And 75% of African-American respondents 

also reported that, in their experience, contract specifications were written to limit 

competition. Id. Even 41% of white male respondents concurred. Id.

8



These survey responses echoed comments made in the focus groups and

personal interviews conducted as part of the 2004 Disparity Study. One African-

American contractor explained that the North Carolina construction industry

remains dominated by a “good old boy network.” Ex. Vol. 2, p. 527. Another

African-American subcontractor elaborated:

[F]rom what we see in the districts or in the areas we’re 
in, small white contractors are getting all the work. And 
that goes back to the good old boy thing. . . . They just 
pick up the phone and call their buddies, the ones that 
they go deer hunting with every Saturday morning. . . .
And so, we find ourselves out of that market completely.

Ex. Vol. 2, p. 532; see also id. (Prime contractors “use ones they are familiar

with.”). Due to the persistence of this “good old boy network,” minority

contractors feared retaliation if they voiced complaints to NCDOT about disparate

treatment in bidding and contracting. See Ex. Vol. 2, p. 531.

This significant anecdotal evidence, together with the gross statistical 

disparities identified in the 2004 Disparity Study, strongly supports the finding that 

informal, racially exclusionary business networks dominate the construction 

industry in North Carolina and significantly limit competition from minority firms. 

Because the 2004 Disparity Study established a link between the anecdotal 

evidence of the construction industry’s heavy reliance on informal social 

connections and the statistical evidence of under-utilization of minority firms, it is 

consistent with this Court’s directive in Maryland Troopers Ass’n, Inc. v. Evans,

9



993 F.2d 1072, 1077 (4th Cir. 1993) (requiring a connection between “evidence of 

cronyism” and racial discrimination for the former to provide a strong basis in 

evidence that race-conscious remedial measures are necessary).

As the district court concluded, North Carolina has a compelling interest in 

ensuring that NCDOT’s road construction contracting does not perpetuate the 

lingering discrimination in the state’s construction industry. J.A 528-29. Indeed, 

“[i]t is beyond dispute that any public entity, state or federal, has a compelling 

interest in assuring that public dollars, drawn from the tax contributions of all 

citizens, do not serve to finance the evil of private prejudice.” Croson, 488 U.S. at 

492 (O’Connor, J., joined by Rehnquist, C.J., and White, J., concurring); Norwood 

v. Harrison, 413 U.S. 455, 463 (1973) (“That the Constitution may compel 

toleration of private discrimination in some circumstances does not mean that it 

requires state support for such discrimination.”).

B. Further evidence of discrimination in North Carolina’s 
construction industry was publicly available when the General 
Assembly considered reauthorization of the MBE Program.

During the period in which the General Assembly was reviewing the 2004 

Disparity Study and considering whether to reauthorize the MBE Program, 

legislators had ready access to material from an array of administrative 

proceedings, court cases, and federal investigations that provided further evidence 

of discrimination in North Carolina’s construction industry. See Tennessee v.

10



Lane, 541 U.S. 509, 524-25 (2004) (cataloguing pre-enactment cases that 

addressed relevant discrimination and were part of the historical “backdrop” for 

legislative action).

1. In 1999, African-American subcontractors filed a lawsuit alleging, inter 

alia, that “Caucasian prime contractors engage in a pattern and practice of 

subcontracting almost exclusively with Caucasian subcontractors. When African- 

American subcontractors do receive work from Caucasian primes, . . .  the 

Caucasian prime contractors intentionally discriminate against the African- 

American subs.” Ex. Vol. 1, p. 120 (Waden v. N.C. Dep’t ofTransp., No. 1:99- 

CV-650, slip. op. at 4 (M.D.N.C. Mar. 27, 2001)). In a 2001 order, the federal 

district court allowed some of the subcontractors’ claims to proceed to trial, Ex. 

Vol. 1, p. 119 {Waden, slip. op. at 3), and the case subsequently settled. See 

Appellees’ Br. 29.

In addition, shortly before the General Assembly reauthorized the MBE 

Program in 2006, another federal district court denied a prime construction 

contractor’s motion to dismiss an African-American subcontractor’s claim of 

intentional discrimination, reasoning that: “Plaintiff alleges white contractors who 

fell behind were not fired while Plaintiff, a black contractor, was fired when he fell 

behind schedule. . . .  If true and supported by evidence, this allegation may 

reasonably show an intent to discriminate in violation of § 1981.” Lanier v.

11



Weaver Cooke Constr., LLC, No. l:04-CV-00757, 2006 WL 13197, at *2 

(M.D.N.C. Jan. 3, 2006) (emphasis omitted). Thereafter, this case also settled. See 

Docket, Lanier v. Weaver Cooke Constr., LLC, No. l:04-CV-00757 (M.D.N.C.).

The 2004 Disparity Study and cases like Waden and Lanier do not portray a 

new phenomenon in the North Carolina construction industry. Prior disparity 

studies commissioned by NCDOT and issued in 1993 and 1998 similarly reflect 

the adverse impacts of racially exclusive social networks on minority firms’ 

contracting opportunities in the public and private sector of the state’s construction 

industry. See J.A. 523-24.4

2. The General Assembly’s reauthorization of the MBE program in 2006 

occurred in a context where publicly available evidence indicated that racial 

discrimination was not exclusively limited to the private sector of the North 

Carolina construction industry. See Grutter v. Bollinger, 539 U.S. 306, 327 (2003) 

(holding that “[c]ontext matters” in constitutional strict scrutiny review). At the 

time of the General Assembly’s reauthorization proceedings, it appeared that 

NCDOT—like other public entities in North Carolina and elsewhere—was still

4 A little over a year after the General Assembly’s 2006 reauthorization of the 
MBE Program, African-American subcontractors again voiced complaints about a 
“culture of racism in the [North Carolina] construction industry,” and recounted 
allegations of payment disputes with and disparate treatment by prime contractors 
on construction projects for the state university system. See Mosi Secret, UNC’s 
Black Contractors Allege Bias: Pay for State Construction Projects Bogs Down in 
Disputes, Indep. Wkly. (Durham, N.C.), Dec. 12, 2007.

12



struggling to eradicate fully the vestiges of racial discrimination in agency 

decision-making in areas that affect or are related to road construction.5

In the same year in which the 2004 Disparity Study was published and 

submitted to the General Assembly, the U.S. Department of Transportation’s 

Federal Highway Administration (FHWA) reviewed NCDOT’s compliance with 

federal equal opportunity requirements in response to complaints about 

employment discrimination against African Americans. See Lynn Bonner, Feds 

Find Lapses at DOT, News & Observer (Raleigh, N.C.), Sept. 3, 2004, at B5. 

After interviewing more than 350 employees in a wide array of the agency’s 

divisions, FHWA determined that “[m]ost of the employees felt that there was 

discrimination and unfairness within NCDOT, due to the ‘good ole boy’ network, 

favoritism, politics, etc.” Id. In addition, FHWA found that NCDOT was not 

administering its equal opportunity program consistently with federal 

requirements, and that “many employees fear ‘retaliation’” if they complain of 

discrimination, and therefore avoid using NCDOT’s internal agency complaint 

procedures. Id.

The complaints that triggered FHWA’s investigation included those 

contained in a federal suit filed by seven African-American NCDOT mechanics

5 The General Assembly has subsequently acknowledged the state’s own role in 
the nation’s long history of racial discrimination against African Americans and 
other minorities. See N.C. Gen. Assem., J. Res. 2007-21, 2007-67, and 2008-16.

13



during the same period. Id. In 2005, a jury found that the mechanics’ coworkers 

created a racially hostile environment by hanging a noose in the depot where they 

worked; nevertheless, the jury concluded that NCDOT was not liable because the 

mechanics did not report the incident prior to filing their claim, and their 

supervisors were otherwise unaware of it. See Isaac v. N.C. Dep’t o f Transp., 192 

F. App’x 197 (4th Cir. 2006) (per curiam) (upholding trial court’s verdict); Andrea 

Weigl, Jury Finds Bias in Noose Incident, News & Observer (Raleigh, N.C.), May 

19, 2005, at B l. Upon learning of the jury’s verdict, NCDOT’s personnel director 

acknowledged that the agency must “work harder” to make employees more 

comfortable about filing discrimination complaints. Id.6

Over the decades, African-American communities have also protested the 

racially discriminatory impact of NCDOT highway construction on their 

neighborhoods. See, e.g., Sacoby Wilson et al., Community-Driven Environmental 

Protection: Reducing the P.A.I.N. o f the Built Environment in Low-Income

6 NCDOT undertook reforms in response to the FHWA investigation, but 
discrimination persists in agency workplaces. See, e.g., Corbett v. N.C. Div. o f 
Motor Vehicles, 660 S.E.2d 233 (N.C. Ct. App. 2008), petition for discretionary 
review denied, 675 S.E.2d 41 (N.C. 2009) (upholding trial court’s finding that 
NCDOT’s Division of Motor Vehicles engaged in racial discrimination against 
African-American employees who sought public office); Perry v. N.C. Dep’t o f 
Transp., No. 07 OSP 0362, 2008 WL 5726394 (N.C. Office of Admin. Hearings, 
Dec. 16, 2008) (finding that NCDOT discriminated against an African-American 
temporary road maintenance worker, based in part on evidence that his supervisor 
had never hired any African-American temporary workers for permanent jobs in 
the seven years prior to this case).

14



African-American Communities in North Carolina, 3 Soc. Just. Context 41, 46-47 

(2007-2008) (chronicling a 1990s challenge to the impact of a NCDOT highway 

project on minority communities in Mebane, North Carolina); N.C. Dep’t o f 

Transp. v. Crest St. Cmty. Council, Inc., 479 U.S. 6, 8-9 (1986) (determining the 

propriety of an attorney’s fees award to community groups whose complaint 

triggered a federal investigation that found “reasonable cause” to believe that a 

NCDOT highway project “would constitute a prima facie violation of Title VI” 

because it disproportionately displaced an African-American neighborhood in 

Durham, North Carolina); N.C. Advisory Comm, to the U.S. Comrn’n on Civil 

Rights, Equal Protection o f the Laws in North Carolina 175 (1962).

North Carolina’s struggles to eradicate the vestiges of racial discrimination 

within state agency decision-making on issues related to road construction 

reinforce the conclusion that the General Assembly acted well within its 

constitutional powers by reauthorizing the MBE Program in 2006.

II. A public entity may rely on a well-designed disparity study to justify a
race-conscious contracting program under the Fourteenth Amendment.

A. A disparity study satisfies constitutional strict scrutiny where, as 
here, it takes into account whether firms are ready, willing, and 
able to perform the work in question.

H.B. Rowe argues that disparity studies “cannot account for all 

nondiscriminatory factors which may account for the disparity,” and, thus, can

15



never satisfy the compelling interest requirement of constitutional strict scrutiny. 

Appellant’s Br. 13; see also id. at 37-38. This wholesale assault on disparity 

studies is legally unsustainable and inapplicable to the facts of this case.

1. A public entity need not prove that it was an active or passive participant 

in discrimination to justify race-conscious remedial measures. See Wygant v. 

Jackson Bd. o f Educ., 476 U.S. 267, 277-78 (1986) (plurality opinion); id. at 290 

(O’Connor, J., concurring). Rather, a public entity need only demonstrate a 

‘“ strong basis in evidence for its conclusion that remedial action was necessary.’” 

Croson, 488 U.S. at 500 (quoting Wygant, 476 U.S. at 277 (plurality opinion)). 

Croson indicated that a properly conceived disparity study could satisfy this 

strong-basis-in-evidence standard: “Where there is a significant statistical disparity 

between the number of qualified minority contractors willing and able to perform a 

particular service and the number of such contractors actually engaged by the 

locality or the locality’s prime contractors, an inference of discriminatory 

exclusion could arise.” Id. at 509 (plurality opinion).

Following Croson, no Court of Appeals has prohibited a public entity from 

using studies that reveal gross statistical disparities to justify race-conscious 

remedial measures, especially where, as here, the statistical analysis is 

accompanied by significant corroborative evidence as discussed in Part I supra. 

C f Maryland Troopers A ss’n, 993 F.2d at 1078 (rejecting race-conscious measures

16



based on a record that “discloses no such ‘gross statistical disparity,’ corroborated 

by no such anecdotal evidence”). H.B. Rowe fails to acknowledge that several 

courts have found disparity studies to be critical in assessing the constitutionality 

of minority contracting programs. See, e.g., Concrete Works o f Colo., Inc. v. City 

& County o f Denver, 321 F.3d 950, 962-69, 974-89 (10th Cir. 2003) (relying on 

disparity studies as key evidentiary support in upholding Denver’s race-conscious 

remedial measures for construction contracting that are similar in many respects to 

NCDOT’s MBE Program); Contractors A ss’n o f E. Pa. v. City o f Philadelphia, 

6 F.3d 990, 1004-05 (3d Cir. 1993) (relying on disparity studies to reverse 

summary judgment for contractors challenging a race-conscious municipal 

program); Associated Gen. Contractors o f Cal. v. Coal, for Econ. Equity, 950 F.2d 

1401, 1414 (9th Cir. 1991) (“[Statistical disparities are an invaluable tool in 

demonstrating the discrimination necessary to establish a compelling interest.” 

(internal quotation marks and citation omitted)).

2. H.B. Rowe’s criticisms also overlook the fact that the 2004 Disparity 

Study did carefully account for factors other than racial discrimination that might 7

7 Relying on numerous state and local disparity studies introduced into the 
congressional record, every Court of Appeals that has considered the issue has held 
that Congress had a compelling interest in enacting the race-conscious provisions 
of the U.S. Department of Transportation’s disadvantaged business program for 
federally-funded road construction programs. See N. Contracting, Inc. v. Illinois, 
473 F.3d 715, 720-21 (7th Cir. 2007); W. States Paving Co. v. Wash. Dep’t o f 
Transp., 407 F.3d 983, 991-93 (9th Cir. 2005); Sherbrooke Turf, Inc. v. Minn. 
D ep’t o f Transp., 345 F.3d 964, 970 (8th Cir. 2003); Adarand, 228 F.3d at 1155.

17



have affected the availability and relative capacity of contractors to undertake 

particular projects.

In the 2004 Disparity Study’s public sector analysis, the only firms 

considered available to conduct subcontract work on centrally-let NCDOT 

construction projects were those that had either actually performed such work 

during the study period or were registered as subcontractors in NCDOT vendor 

databases. Ex. Vol. 2, pp. 361-62. Moreover, the 2004 Disparity Study directly 

addressed the question whether “some M/WBE firms counted as ‘available’ to 

conduct business do not, in reality, have the organizational capacity or resources to 

fulfill the conditions of larger dollar contracts.” Ex. Vol. 2, p. 440. Using gross 

revenues as a measure of firm capacity, the 2004 Disparity Study concluded that 

the exclusion of African-American subcontractors from NCDOT contracting 

opportunities— except possibly on the very largest contracts—was “not a function 

of capacity.” Ex. Vol. 2, p. 440, 445.

The 2004 Disparity Study’s private sector analysis was even more 

sophisticated: It used regression analysis to consider the “effect on reported 

company earnings of variables representing firm capacity, managerial ability and 

experience.” Ex. Vol. 2, p. 593. The analysis revealed that “for African 

Americans, in particular, the disparity in firm revenue was not due to capacity- 

related or managerial characteristics alone.” Id.

18



These results are consistent with leading research from across the country. 

In recent testimony before the Committee on Transportation and Infrastructure of 

the U.S. House of Representatives, Dr. Jon Wainwright, an economist and noted 

expert on disparity studies, summarized research demonstrating “results consistent 

with business discrimination” even after controlling for capacity-related factors. 

The Department o f Transportation’s Disadvantaged Business Enterprise Program: 

Hearing Before the H. Comm, on Transp. and Infrastructure, 110th Cong. 377 

(2009) [hereinafter Disadvantaged Business Enterprise Program] (written 

response of Dr. Jon Wainwright).

B. Many of the capacity-related factors that H.B. Rowe suggests 
disparity studies should be required to analyze are themselves 
tainted by racial discrimination.

There are sound reasons for rejecting H.B. Rowe’s contention that North 

Carolina should be required to control more aggressively for capacity-related 

factors than it did in its 2004 Disparity Study. See Appellant’s Br. 37-39; c f 

Contractors Ass ’n o f E. Pa., Inc. v. City o f Philadelphia, 91 F.3d 586, 603 (3d Cir. 

1996) (“An analysis is not devoid of probative value simply because it may 

theoretically be possible to adopt a more refined approach.”).

First, in dynamic business environments, and especially in the construction 

industry, a firm’s capacity is “highly elastic.” Disadvantaged Business Enterprise 

Program, at 377 (written response of Dr. Jon Wainwright). “[I]t is well-known

19



that small construction companies can expand rapidly as demand changes by hiring 

workers and renting equipment and making use of sub-contractors.” Blanchflower,

Minority Self-Employment, at 367.

Second, any attempt at measuring the degree of marketplace discrimination 

through comparison of minority firms’ current capacity to their current utilization 

under-estimates the true magnitude of discrimination because it ignores significant 

barriers to the formation and development of minority businesses. In other words, 

“focusing on the ‘capacity’ of businesses in terms of employment, revenue, 

bonding limits, number of trucks, and so forth is simply wrong as a matter of 

economics,” because “most, if not all, identifiable indicators of capacity are 

themselves impacted by discrimination.” Disadvantaged Business Enterprise 

Program, at 376, 378 (written response of Dr. Jon Wainwright). The following 

example illustrates this point:

Suppose that racial discrimination was ingrained in a 
state’s highway construction market. As a result, few 
minority construction employees are given the 
opportunity to gain managerial experience in the 
business; minorities who do end up starting construction 
firms are denied the opportunity to work as 
subcontractors for non-minority prime contractors; and 
non-minority prime contractors place pressure on unions 
not to work with minority firms and on bonding 
companies and banks to prevent minority-owned 
construction firms from securing bonding and capital. In 
this example, discrimination has essentially prevented the 
emergence of a minority highway construction industry 
with ‘capacity.’ Those minority firms that exist at all

20



will be smaller and have lower revenues and employees 
than firms that are not subject to the same discrimination.

In this situation, excluding firms from an availability 
measure based on their ‘capacity’ in a discriminatory 
market would preclude a government agency from doing 
anything to rectify the continuing support of a clearly 
discriminatory system with public dollars.

Id. at 376.

For these reasons, the Tenth Circuit in Concrete Works credited Denver’s 

evidence and argument that “a firm’s size does not affect its qualifications, 

willingness, or ability to perform construction services and that the smaller size 

and lesser experience of [minority- and women-owned business enterprises] are, 

themselves, the result of industry discrimination.” 321 F.3d at 982. As explained 

in Part 11(A) supra, North Carolina’s 2004 Disparity Study contained similar 

evidence that capacity-related factors do not provide “race-neutral” explanations 

for the under-utilization of minority subcontractors evident in both the public and 

private sector analyses. Moreover, the 2004 Disparity Study relied on Concrete 

Works in concluding that “[i]t is a common practice among construction companies 

of all sizes to routinely vary the size of their employment ranks depending on the 

type of project being undertaken.” Ex. Vol. 1, p. 298 (citing Concrete Works, 321 

F.3d at 981).

It is well documented that discriminatory barriers to business formation and 

development have artificially depressed the capacity of minority-owned

21



contractors. Such barriers appear particularly severe in North Carolina, which 

ranks twenty-ninth among the states in terms of African-American business 

ownership, and forty-eighth in Hispanic business ownership. See Corp. for Enter. 

Dev., North Carolina: 2007-08 Assets & Opportunity Scorecard (2008); see also 

Ex. Vol. 2, pp. 574-83; Ex. Vol. 4, pp. 962-63 (finding evidence of significant 

earnings disparities for minority construction firms compared with similarly 

situated non-minority firms in North Carolina). In addition to the persistence of 

racially exclusive informal networks described in Part I supra, other discriminatory 

barriers to fair competition impede the formation and development of minority 

businesses, and therefore adversely affect their capacity. For instance, recent 

studies demonstrate that minority entrepreneurs suffer significant disparate 

treatment from commercial lenders—even after controlling for a range of factors 

such as firm size and creditworthiness.8

There is no evidence that lending discrimination has decreased in the past 

two decades, or that it is significantly different in different regions or industries. 

See Disadvantaged Business Enterprise Program, at 330 (statement of Dr. Jon
o

See, e.g., Blanchflower, Minority Self-Employment, at 386-92; Lloyd 
Blanchard et ah, Do Lenders Discriminate Against Minority and Woman 
Entrepreneurs? 63 J. Urb. Econ. 467, 492-93 (2008); Business Start Up Hurdles in 
Under-Served Communities: Hearing Before the S. Comm, on Small Bus. & 
Entrepreneurship, 110th Cong. (2008) (testimony of Dr. Jon Wainwright); David 
Blanchflower et al., Discrimination in the Small-Business Credit Market, 85 Rev. 
Econ. & Stat. 930, 942-43 (2003); Ken Cavalluzzo et ah, Competition, Small 
Business Financing, and Discrimination, 75 J. Bus. 641, 676-77 (2002).

22



Wainwright). If anything, lending discrimination is more pronounced in the 

construction industry. See Caren Grown & Timothy Bates, Commercial Bank 

Lending Practices and the Development o f Black Owned Construction Companies, 

14 J. Urb. Aff. 25, 34 (1992) (finding that non-minority construction firms 

received 50 times as many loan dollars as comparable black-owned firms with the 

same equity). As North Carolina’s expert explained, see Ex. Vol. 4, pp. 1074-75, 

such research substantiates the anecdotal evidence of lending discrimination 

included in the 2004 Disparity Study. Ex. Vol. 2, pp. 518-20.

Not only does this research indicate the methodological flaws that would 

arise if disparity studies were required to control for capacity-related factors that 

are themselves tainted by discrimination, but the Tenth Circuit has also held that 

such evidence of lending discrimination and other discriminatory barriers to 

business formation and development is “legally relevant” to a public entity’s 

“burden of demonstrating a strong basis in evidence to support its conclusion that 

remedial legislation was necessary.” Concrete Works, 321 F.3d at 979-80; see also 

Adarand, 228 F.3d at 1167-68.

III. The MBE Program is narrowly tailored to address the discrimination
faced by minority construction firms.

H.B. Rowe contends that the MBE Program cannot be narrowly tailored 

because, among other reasons, it “only contains race-conscious measures” and

23



even the good-faith effort requirements impose “obligations” on prime contractors 

to deal with minority subcontractors “in a preferential way.” Appellant’s Br. 41- 

42. This claim mischaracterizes North Carolina’s MBE Program.

The good-faith efforts that prime contractors must demonstrate if they fail to 

meet the project-specific goals include, inter alia, attendance at pre-bid meetings 

scheduled by NCDOT with minority contractors, written notice to and follow-up 

with minority contractors, good-faith negotiation with interested minority 

subcontractors, and assistance to minority firms in obtaining any required 

insurance. See 19A N.C. Admin. Code § 2D. 1110 (2009) (incorporating 49 C.F.R. 

pt. 26, subpt. C & appx. A). These requirements may be “race-conscious,” but 

they would not have independently triggered constitutional strict scrutiny if they 

were the sole obligations that the MBE Program imposed. These requirements 

merely involve targeted outreach to expand the pool of potential subcontractors, 

see J.A. 111 (describing the M/WBE Program as an “outreach program”), and in 

no way prohibit prime contractors from recruiting or contracting with non-minority 

firms.

The MBE Program’s good-faith requirements are, thus, functionally quite 

similar to “recruiting students and faculty in a targeted fashion,” which Justice 

Kennedy listed among the “mechanisms” that he deems “race conscious” but that 

“do not lead to different treatment based on a classification that tells each student

24



he or she is to be defined by race, so it is unlikely any of them would demand strict 

scrutiny to be found permissible.” Parents Involved in Cmty. Schs. v. Seattle Sch. 

Dist. No. 1, 551 U.S. 701, 789 (2007) (Kennedy, J., concurring in part and 

concurring in the judgment). Strict scrutiny does not apply to such “race-conscious 

measures to address [a] problem in a general way,” id. at 788-89, and that do not 

involve the allocation of specific benefits to particular individuals or any other 

“dispositions based on race.” Adarand, 515 U.S. at 239 (Scalia, J., concurring in 

part and concurring in the judgment).

The targeted outreach required by the MBE Program does not impose 

significant burdens on non-minority firms because it simply ensures equal 

opportunity by transmitting information on subcontracting opportunities to those 

who have traditionally been shut out by the racially exclusive social networks 

discussed in Part I supra. Given the historical and ongoing discrimination in the 

state’s construction industry, North Carolina legislators should not be prohibited 

from taking steps to ensure, at the very least, that minority subcontractors receive 

adequate notice, as well as adequate consideration, of their bids.

IV. H.B. Rowe has the ultimate burden of persuading the district court that
the MBE Program is unconstitutional—a burden it failed to carry.

Contrary to H.B. Rowe’s assertions, the district court properly allocated the 

burden of proof. Cf. Appellant’s Br. 52-55. Because North Carolina is defending

25



race-conscious remedial measures that triggered strict scrutiny, the district court 

correctly required the state to make an evidentiary showing sufficient to 

demonstrate a “strong basis in evidence” that it had a compelling interest in 

remedying the effects of past and present discrimination, and that its MBE 

Program was narrowly tailored to meet that compelling interest. See Croson, 488 

U.S. at 500-01; Wygant, 476 U.S. at 274, 277-78 (plurality opinion). If North 

Carolina satisfies these requirements, H.B. Rowe acknowledges that it retains the 

ultimate burden of persuading the district court that NCDOT’s MBE Program is 

unconstitutional. Appellant’s Br. 53. Yet H.B. Rowe misapprehends the scope of 

this legal obligation.

It is well established that a plaintiff challenging race-conscious government 

action can satisfy its ultimate burden of persuasion only if it convinces the court 

that the public entity’s “evidence did not support an inference of prior 

discrimination and thus a remedial purpose, or that the plan instituted on the basis 

of this evidence was not sufficiently ‘narrowly tailored.’” Wygant, 476 U.S. at 

292-93 (O’Connor, J., concurring in part and concurring in the judgment); see also 

id. at 277-78 (plurality opinion); Johnson v. Transp. Agency, Santa Clara County, 

480 U.S. 616, 626 (1987) (affirming Wygant’s holding).

H.B. Rowe failed to meet this rebuttal burden. H.B. Rowe’s “general 

criticism of disparity studies, as opposed to particular evidence undermining the

26



reliability of the particular disparity studies [in this case] . . .  is of little persuasive 

value.” Adarand, 228 F.3d at 1173 n.14. To the extent that H.B. Rowe makes 

specific criticisms of the 2004 Disparity Study, they largely amount to conjecture, 

unsupported by credible and particularized evidence, that “merely nip[s] at the 

edges” of the state’s well-founded evidence of racial discrimination. Concrete 

Works, 321 F.3dat991.

For instance, H.B. Rowe provided no evidence—much less contrasting 

statistical data—to support its expert’s hypothesis that, if North Carolina had more 

rigorously controlled for capacity-related factors, it may have accounted for the 

statistically significant under-utilization of minority subcontractors in the public 

and private sectors; nor did H.B. Rowe prove that those factors were, in fact, “race 

neutral” in the face of record evidence that revenues of North Carolina minority 

firms are adversely impacted by discrimination.9 C f Contractors Ass ’n o f E. Pa., 

6 F.3d at 1007 (explaining that a plaintiff challenging race-conscious government 

measures could meet its rebuttal burden by “proving a ‘neutral explanation’ for the 

disparity, ‘showing the [government’s] statistics are flawed, . . . demonstrating that

9 North Carolina has acknowledged flaws in the disparity analysis of NCDOT 
divisionally-let contracts, but such flaws did not undermine the statistically 
significant evidence of racially disparities in centrally-let contracts. Appellees’ Br. 
26-27. Centrally-let contracts constitute the overwhelming majority of NCDOT 
road construction projects, id., and, thus, provide ample, unrebutted support for the 
district court’s conclusion that the state satisfied its burden of demonstrating a 
strong basis in evidence that race-conscious remedial measures were necessary. 
J.A. 528-29.

27



the disparities shown by the statistics are not significant or actionable, . . .  or 

presenting contrasting statistical data.”’ (quoting Coral Constr. Co. v. King 

County, 941 F.2d 910, 921 (9th Cir. 1991))); accord Concrete Works, 321 F.3d at 

959.

H.B. Rowe essentially argues that it should not be required to substantiate 

any of its mere conjectures and, instead, it is incumbent upon North Carolina to 

refute them. Appellant’s Br. 52-55. In support of this burden allocation, H.B. 

Rowe relies on a single sentence in Justice O’Connor’s majority opinion in 

Johnson v. California, 543 U.S. 499, 505 (2005) (“Under strict scrutiny, the 

government has the burden of proving that racial classifications are narrowly 

tailored measures that further compelling governmental interests.”) (internal 

citation and quotation marks omitted), as well as a quotation of that sentence in 

Justice Kennedy’s concurrence in Parents Involved, 551 U.S. at 783 (Kennedy, J., 

concurring in part and concurring in the judgment). See Appellant’s Br. 53, 55.

There is no basis to conclude that Justice O’Connor intended that single 

sentence in Johnson to transform sub silentio the well-settled allocation of burdens 

that she had a leading role in formulating for constitutional challenges to race­

conscious government action. See Wygant, 476 U.S. at 292-93 (O’Connor, J., 

concurring in part and concurring in the judgment); cf. Shalala v. III. Council on 

Long Term Care, Inc., 529 U.S. 1, 18 (2000) (“This Court does not normally

28



overturn, or so dramatically limit, earlier authority sub silentio”). Indeed, an 

explanatory footnote in Johnson clarifies that the government entity defending 

race-conscious measures has the burden of production, but plaintiffs retain the 

ultimate burden of persuasion, see Johnson, 543 U.S. at 506 n.l (“We put the 

burden on state actors to demonstrate that their race-based policies are justified.”), 

and the plurality in Parents Involved reaffirms this approach by quoting this 

footnote passage. See Parents Involved, 551 U.S. at 744 (plurality opinion).

Moreover, numerous Courts of Appeals have concluded that, once the 

government actor meets its burden of production, the plaintiff must rebut the 

evidentiary showing with more than mere conjecture. See, e.g., Sherbrooke Turf, 

Inc. v. Minn. D ep’t o f Transp., 345 F.3d 964, 970 (8th Cir. 2003); Concrete Works, 

321 F.3d at 991; Eng’g Contractors A ss’n o f S. Fla. Inc. v. Metro. Dade County, 

122 F.3d 895, 916-17 (11th Cir. 1997); Contractors Ass’n o f E. Pa., 6 F.3d at 

1006-07. The district court therefore properly allocated to H.B. Rowe the ultimate 

burden of proof, and correctly held that H.B. Rowe’s speculations were insufficient 

to meet that burden.

CONCLUSION

For the reasons set forth above and in the Appellees’ Brief, the order and 

judgment of the district court should be affirmed.

29



Dated: August 20, 2009 Respectfully submitted,

NAACP LEGAL DEFENSE & 
EDUCATIONAL FUND, INC.

By:_ /s/ Joshua Civin________
John Payton, Director-Counsel 
Debo P. Adegbile 
Matthew Colangelo 
Joy Milligan
99 Hudson Street, 16th Floor 
New York, NY 10013 
(212) 965-2200 
(212) 226-7592 (fax)

Joshua Civin
1444 I Street, NW, 10th Floor 
Washington, DC 20005 
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jcivin@naacpldf.org

30

mailto:jcivin@naacpldf.org


UNITED STATES COURT OF APPEALS 
FOR THE FOURTH CIRCUIT

No. 09-1050 Caption: H.B, Rowe Company, Inc, v. W. Lyndo Tippett, et al.

CERTIFICATE OF COMPLIANCE WITH RULE 28.1(e) or 32(a)
Certificate of Compliance With Type-Volume Limitation,

Typeface Requirements, and Type Style Requirements

1. This brief complies with the type-volume limitation of Fed. R. App. P. 28.1(e)(2) or 
32(a)(7)(B) because:

[Appellant’s Opening Brief, Appellee's Response Brief, and Appellant’s Response/Reply Brief may 
not exceed 14,000 words or 1,300 lines; Appellee's Opening/Response Brief may not exceed 16,500 
words or 1,500 lines; any Reply or Amicus Brief may not exceed 7,000 words or 650 lines; line count 
may be used only with monospaced type]

this brief contains 6,708________ [slate the number of] words, excluding the parts
of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii), or

this brief uses a monospaced typeface and contains___________ [state the number
o f  lines of text, excluding the parts of the brief exempted by Fed. R. App. P. 
32(a)(7)(B)(iii).

0

□

2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type 
style requirements of Fed. R. App. P. 32(a)(6) because:

[ 14-point font must be used with proportional typeface, such as Times New Roman or CG Times; 
] 2-point font must be used with monospaced typeface, such as Courier or Courier New]

0 this brief has been prepared in a proportionally spaced typeface using Mlcrosoft 0ffice 
2QQ3 [state name and version o f word processing program] in Times New Roman
1 4 - p o in t  fo n t [state font size and name o f the type style]; or

□ this brief has been prepared in a monospaced typeface using_________________
______[state name and version o f word processing program] w ith____________
_________________ [state number o f characters per inch and name o f type style].

(s) Joshua Civin

Attorney for NAACP Legal Defense & Educational Fund, Inc.

Dated: 8/20/2009



Certificate of Service

I hereby certify that on August 20, 2009, the foregoing Brief of Amicus

Curiae NAACP Legal Defense & Educational Fund in Support of Respondents

was, pursuant to Fourth Circuit Rule 31(c), filed by first-class mail prepaid with

the Clerk of the Court and that copies of the same were served using the CM/ECF

system and by first-class mail prepaid on the following attorneys of record:

Kevin Van Parsons 
Smith, Parsons & Vickstrom, PLLC 
6060 Piedmont Drive South 
Charlotte, North Carolina 28287

James S. Burling 
Sharon L. Browne 
Ralph W. Kasarda 
Pacific Legal Foundation 
3900 Lennane Drive, Suite 200 
Sacramento, California 95834

Counsel for Plaintiff-Appellant

Christopher G. Browning, Jr.
John F. Maddrey
Tiare B. Smiley
Elizabeth Leonard McKay
North Carolina Department of Justice
Post Office Box 629
Raleigh, North Carolina 27602-0629

Counsel for Defendants-Appellees

/s/ Joshua Civ in 
Joshua Civin
Counsel for NAACP Legal Defense & 
Educational Fund, Inc.