THE RICHMOND PLAN

On April 11, 1983, the Richmond City Council adopted a Minority Business Utilization Plan (the Plan).  The Plan required its prime contractors in the construction industry to subcontract at least 30 percent of the dollar amount of a contract to one or more Minority Business Enterprises (MBE).  The Plan defined an MBE as "[a] business at least fifty-one (51) percent of which is owned and controlled . . . by minority group members."  "Minority group members" were defined as "[c]itizens of the United States who are Blacks, Spanish-speaking, Orientals, Indians, Eskimos, or Aleuts." 

A qualified MBE from anywhere in the United States could qualify for the 30 percent set-aside.  The Plan was described as "remedial" in nature "for the purpose of promoting wider participation by minority business enterprises in the construction of public projects."  The Plan expired on June 30, 1988 and was in effect for approximately five years.  Under the Plan, regulations provided that

No partial or complete waiver of the foregoing [set-aside] requirement shall be granted by the city other than in exceptional circumstances.  To justify a waiver, it must be shown that every feasible attempt has been made to comply, and it must be demonstrated that sufficient, relevant, qualified Minority Business Enterprises . . . are unavailable or unwilling to participate in the contract to enable meeting the MBE goal.

Within 10 days of the opening of the bids, the low responsive bidder was required to submit a "Minority Business Utilization Plan Commitment Form" naming the MBEs to be used on the contract and the percentage of the total contract price awarded to minority firms.  The commitment form or a request for a waiver was verified to determine that the MBEs named in the commitment form were in fact minority-owned.  Richmond's Director of General Services  made the final determination on compliance with the set-aside provisions or the propriety of granting a waiver.  There was no direct administrative appeal from the Director's denial of a waiver.  Once a contract had been awarded to another firm, a bidder denied an award for failure to comply with the MBE requirements had a general right of protest under the Richmond procurement policies.

The Plan was adopted after a public hearing.  Proponents of the set-aside provision relied on a study which indicated that, while the general population of Richmond was 50 percent black, only 0.67 percent of the city's prime construction contracts had been awarded to minority businesses in the 5-year period from 1978 to 1983.  It was also established that a variety of contractors' associations had virtually no minority businesses within their membership.  The city's legal counsel indicated his view that the ordinance was constitutional under this Court's decision in Fullilove v. Klutznick, 448 U.S. 448 (1980).  Additionally, one City Councilperson said:

“There is some information, however, that I want to make sure that we put in the record.  I have been practicing law in this community since 1961, and I am familiar with the practices in the construction industry in this area, in the State, and around the nation.  And I can say without equivocation that the general conduct of the construction industry in this area, and the State, and around the nation, is one in which race discrimination and exclusion on the basis of race is widespread.”

However, there was no direct evidence of race discrimination on the part of the city in letting contracts, or any evidence that the city's prime contractors had discriminated against minority-owned subcontractors in the record.

Representatives of various contractors' associations questioned whether there were enough MBEs in the Richmond area to satisfy the set-aside requirement.  One individual noted that only 4.7 percent of all construction firms in the United States were minority-owned, and that 41 percent of these were located in California, New York, Illinois, Florida, and Hawaii.  He predicted that the ordinance would lead to a windfall for the few minority firms in Richmond.  Another Councilperson indicated that many local labor jobs, held by both blacks and whites, would be lost because the ordinance put no geographic limit on the MBEs eligible for the set-aside.

Application of The Plan  

On September 6, 1983, Richmond issued an invitation to bid for the installation of stainless steel urinals and water closets in the city jail.  Products of two manufacturers were specified.  On September 30, 1983, the J. A. Croson Company (Croson), a mechanical plumbing and heating contractor, received the bid forms.  Croson determined that, to meet the 30 percent set-aside requirement, a minority contractor would have to supply the fixtures since the fixtures amounted to 75 percent of the total contract price.

On September 30, Croson contacted five or six MBEs that were potential suppliers of the fixtures.  No MBE expressed interest in the project.  On October 12, 1983, the day the bids were due, Croson again telephoned a group of MBEs.  This time, a local MBE indicated that it wished to participate in the project.  The local MBE then contacted two sources of the specified fixtures to obtain a price quotation.  One supplier--not an MBE--had already made a quotation directly to Croson and refused to quote the same fixtures to the local MBE.  The local MBE also contacted an agent of one of the two manufacturers of the specified fixtures.  The agent was not familiar with the local MBE and indicated that a credit check was required which would take at least 30 days to complete.  On October 13, 1983, the sealed bids were opened and Croson was the only bidder with a bid of $126,530.  Croson and the local MBE met personally at the bid opening and the local MBE told Croson about its difficulty in obtaining credit approval.

By October 19, 1983, Croson had not received a bid from the local MBE and it requested a waiver of the set-aside.  Croson's waiver request indicated that the local MBE was "unqualified," and that other MBEs contacted had been unresponsive or unable to quote.  Upon learning of Croson's waiver request, the local MBE contacted one of the fixture manufacturers specified by the city in its solicitation.   Based upon these discussions, the local MBE subsequently submitted a bid to Croson which was $6,183.29 higher than the price Croson had included for the fixtures in its bid.  This was a 7% increase over the market price for the fixtures.  With added bonding and insurance, using the local MBE would have raised the cost of the project by $7,663.16.  On the same day that the local MBE contacted the manufacturer, it also called city procurement officials and told them that it could supply the fixtures specified in the city jail contract.  On November 2, 1983, the city denied Croson's waiver request, gave Croson 10 days to submit an MBE Utilization Commitment Form, and warned that failure to do so could result in its bid's being considered unresponsive.

Croson wrote the city on November 8, 1983 noting that the local MBE was not an authorized supplier of the fixtures and that the local MBE’s quotation was subject to credit approval, and in any case was substantially higher than any other quotation Croson had received.  Finally, Croson noted that the local MBE’s bid had been submitted 21 days after the prime bids were due.  In a second letter, Croson laid out the additional costs that using Continental to supply the fixtures would entail, and asked that it be allowed to raise the overall contract price accordingly.  The city denied Croson's request for a waiver, denied its request that the contract price be raised, and informed Croson that the project would be rebid.  On December 9, 1983, counsel for Croson wrote the city asking for a review of the waiver denial.  The city's attorney responded that the city had elected to rebid the project and that there is no appeal of such a decision.

THE ISSUE

Was the Richmond Plan unconstitutional under the Fourteenth Amendment's Equal Protection Clause. 

THE JUDGMENT

The Richmond Plan violated the constitution because it was not justified by a compelling interest and the 30 percent set-aside was not narrowly tailored to accomplish a remedial purpose.

THE COURT OPINION

The opinion was a majority opinion covering the standard of review to apply to state and local programs.  However, there were two other significant opinions.  Justice Kennedy expressed his concern that the federal government and state and local governments would be treated differently under equal protection issues.  Justices Marshall, Brennan, and Blackmun continued to stress their application of intermediate scrutiny. 

Justice O'Connor announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I, III-B, and IV.  Justice O'Connor's opinion was joined by the justices as shown in the table below.  Justice Scalia concurred in the judgment but did not join the opinion.  

The description on the Parts is based on an analysis of the case.  The Court did not provide a clear format in the case. 

Federal and State Authority to Remediate Race-Based Discrimination

In distinguishing among the authorities of federal, state, and local governments, these justices said

“Congress, unlike any State or political subdivision, has a specific constitutional mandate to enforce the dictates of the Fourteenth Amendment.  The power to ‘enforce’ may at times also include the power to define situations which Congress determines threaten principles of equality, and to adopt prophylactic rules to deal with those situations.  See Katzenbach v. Morgan, 384 U. S., at 651 ("Correctly viewed, § 5 is a positive grant of legislative power authorizing Congress to exercise its discretion in determining whether and what legislation is needed to secure the guarantees of the Fourteenth Amendment").  See also South Carolina v. Katzenbach, 383 U.S. 301, 326 (1966) (similar interpretation of congressional power under § 2 of the Fifteenth Amendment).  The Civil War Amendments themselves worked a dramatic change in the balance between congressional and state power over matters of race.  Speaking of the Thirteenth and Fourteenth Amendments in Ex parte Virginia, 100 U.S. 339, 345 (1880), the Court stated: 'They were intended to be, what they really are, limitations of the powers of the States and enlargements of the power of Congress.'"  

The Justices further explained

"That Congress may identify and redress the effects of society-wide discrimination does not mean that, a fortiori, the States and their political subdivisions are free to decide that such remedies are appropriate.  Section 1 of the Fourteenth Amendment is an explicit constraint on state power, and the States must undertake any remedial efforts in accordance with that provision.  To hold otherwise would be to cede control over the content of the Equal Protection Clause to the 50 state legislatures and their myriad political subdivisions.  The mere recitation of a benign or compensatory purpose for the use of a racial classification would essentially entitle the States to exercise the full power of Congress under § 5 of the Fourteenth Amendment and insulate any racial classification from judicial scrutiny under § 1.  We believe that such a result would be contrary to the intentions of the Framers of the Fourteenth Amendment, who desired to place clear limits on the States' use of race as a criterion for legislative action, and to have the federal courts enforce those limitations.”

After comparing the federal and state authorities, the Court then defined the authority of the states and local governments.  It explained that

“It would seem equally clear, however, that a state or local subdivision (if delegated the authority from the State) has the authority to eradicate the effects of private discrimination within its own legislative jurisdiction."

"As a matter of state law, the city of Richmond has legislative authority over its procurement policies, and can use its spending powers to remedy private discrimination if it identifies that discrimination with the particularity required by the Fourteenth Amendment."

"Thus, if the city could show that it had essentially become a ‘passive participant’ in a system of racial exclusion practiced by elements of the local construction industry, we think it clear that the city could take affirmative steps to dismantle such a system.  It 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.  Cf. Norwood v. Harrison, 413 U.S. 455, 465 (1973).  ("Racial discrimination in state-operated schools is barred by the Constitution, and [i]t is also axiomatic that a state may not induce, encourage or promote private persons to accomplish what it is constitutionally forbidden to accomplish").

Standard of Scrutiny To Apply

Justice O'Connor, C. J. Rehnquist, Justice White, and Justice Kennedy noted that the rights created by the equal protection clause of the Fourteenth amendment are guaranteed to the individual and that they are personal rights.  They reaffirmed their view expressed in Wygant that the standard of review under the equal protection clause is not dependent on the race of those burdened or benefited by a classification.

Additionally, they said that absent a searching judicial inquiry into the justification for race-based measures, there is simply no way to tell whether a classification is benign, remedial, or whether it is motivated by illegitimate notions of racial inferiority or racial politics.  They explained that the purpose of "strict scrutiny" is to 

"'smoke out' illegitimate uses of race by assuring that the legislative body is pursuing a goal important enough to warrant use of a highly suspect tool.  The test also ensures that the means chosen 'fit' this compelling goal so closely that there is little or no possibility that the motive for the classification was illegitimate racial prejudice or stereotype."

Lack of a Compelling Interest

The Court said that none of the evidence presented by the city pointed to any identified discrimination in the Richmond construction industry.  As a result, Richmond failed to demonstrate a compelling interest in apportioning public contracting opportunities on the basis of race.  Specifically, the Court noted that 

• The mere recitation of a benign or legitimate purpose for a racial classification is entitled to little or no weight.  Racial classifications are suspect and that means that simple legislative assurances of good intention is not acceptable.
  
  
• General statements of government sponsors are of little value in establishing identified discrimination.  When a legislative body chooses to employ a suspect classification, it cannot rest upon a generalized assertion as to the classification's relevance to its goals.  
  
  
• Reliance on the disparity between the number of prime contracts awarded to minority firms and the minority population in Richmond was faulty.  Where special qualifications are necessary, the relevant statistical pool for purposes of demonstrating discriminatory exclusion must be the number of minorities qualified to undertake the particular task.  Richmond did not know how many MBEs in the relevant market were qualified to undertake prime or subcontracting work in public construction contracts.  Additionally, Richmond did not know what percentage of total city construction dollars minority firms received as subcontractors on its prime contracts.
  
  
• The mere fact that black membership in trade associations is low, standing alone, cannot establish that discrimination exists.  For low minority membership in these associations to be relevant, the city would have to link it to the number of local MBEs eligible for membership.  If the statistical disparity between eligible MBEs and MBE membership were great enough, an inference of discriminatory exclusion could arise.
  
  
• Findings by the U. S. Congress, on a nation-wide basis, that show that "societal discrimination" exists are not enough to show that discrimination exists in a local area.  While the states 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. 

Narrow Tailoring

The Court noted that it was almost impossible to assess whether the Richmond Plan was narrowly tailored to remedy prior discrimination because it was not linked to identified discrimination in any way.  As a result, it limited its review to two observations.  These included (1) consideration of race-neutral remedies and (2) establishment of the 30 percent firm quota.

In regard to race-neutral remedies, the court said that man of the barriers to minority participation that Richmond said existed appeared to be race-neutral.  The Court found no evidence that Richmond considered any alternatives to a race-based quota.

In regard to the 30 percent quota, the Court had difficulty seeing the need for a rigid numerical quota.  The Court pointed to a more flexible system used in the program under review in Fullilove.  That program allowed for a waiver of the set-aside provision where an MBE's higher price was not attributable to the effects of past discrimination.  The Court noted that such programs are less problematic from an equal protection standpoint because they treat all candidates individually, rather than making the color of an applicant's skin the relevant consideration.  In contract, the Richmond Plan's waiver system focused solely on the availability of MBE's; there was no inquiry into whether or not the particular MBE seeking a racial preference had suffered from the effects of past discrimination by the city or its prime contractors.

The Court concluded that under the Richmond Plan a successful Black, Hispanic, or Asian entrepreneur from anywhere in the country enjoyed an absolute preference over other citizens based solely on their race.  They pointed to this as making it obvious that the program was not narrowly tailored to remedy the effects of prior discrimination.

Conclusion

In concluding the opinion, Justice O'Connor, C. J. Rehnquist, Justice White, and Justice Kennedy noted that nothing they said precluded a state or local entity from taking action to rectify the effects of identified discrimination within their jurisdiction.  After repeating much of its position in the earlier parts of the opinion, the Justices concluded that

"Because the city of Richmond has failed to identify the need for remedial action in the awarding of its public construction contracts, its treatment of its citizens on a racial basis violates the dictates of the Equal Protection Clause."

Additional Concurring Opinions

Justice Stevens

Justice Stevens pointed to his opinion in Wygant where he discussed a program's impact on the future.  He said

“A central purpose of the Fourteenth Amendment is to further the national goal of equal opportunity for all our citizens.  In order to achieve that goal, we must learn from our past mistakes, but I believe the Constitution requires us to evaluate our policy decisions -- including those that govern the relationships among different racial and ethnic groups -- primarily by studying their probable impact on the future.  I therefore do not agree with the premise that seems to underlie today's decision, as well as the decision in Wygant v. Jackson Board of Education, 476 U.S. 267 (1986), that a governmental decision that rests on a racial classification is never permissible except as a remedy for a past wrong.  See ante at 493-494.  I do, however, agree with the Court's explanation of why the Richmond ordinance cannot be justified as a remedy for past discrimination, and therefore join Parts I, III-B, and IV of its opinion.”

Justice Kennedy

In his opinion, Justice Kennedy did not join Justice O'Connnor in her opinion in regard to its Part II.  He explained that

“With the acknowledgment that the summary in Part II is both precise and fair, I must decline to join it.  The process by which a law that is an equal protection violation when enacted by a State becomes transformed to an equal protection guarantee when enacted by Congress poses a difficult proposition for me; but as it is not before us, any reconsideration of that issue must await some further case.  For purposes of the ordinance challenged here, it suffices to say that 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.”  

“The moral imperative of racial neutrality is the driving force of the Equal Protection Clause.  Justice Scalia's opinion underscores that proposition, quite properly in my view.  The rule suggested in his opinion, which would strike down all preferences which are not necessary remedies to victims of unlawful discrimination, would serve important structural goals, as it would eliminate the necessity for courts to pass upon each racial preference that is enacted.  Structural protections may be necessities if moral imperatives are to be obeyed.  His opinion would make it crystal clear to the political branches, at least those of the States, that legislation must be based on criteria other than race.”

“Nevertheless, given that a rule of automatic invalidity for racial preferences in almost every case would be a significant break with our precedents that require a case-by-case test, I am not convinced we need adopt it at this point.”

Justice Kennedy did express his support for the use of strict scrutiny by stating

"I am confident that, in application, the strict scrutiny standard will operate in a manner generally consistent with the imperative of race neutrality, because it forbids the use even of narrowly drawn racial classifications except as a last resort."

Justice Scalia

In agreeing that strict scrutiny should be applied to all governmental classification by race, Justice Scalia took exception to a part of Justice O'Connor's opinion.  He said

“I do not agree, however, with Justice O'Connor’s dictum suggesting that, despite the Fourteenth Amendment, state and local governments may in some circumstances discriminate on the basis of race in order (in a broad sense) to ameliorate the effects of past discrimination.'  

Justice Scalia pointed out that, in past decisions, the Court approved the use of racial classifications by the federal government to remedy the effects of past discrimination.  However, he explained that he did not believe that the Court "must or should extend those holdings to the States.”  He said that 

“In my view, there is only one circumstance in which the States may act by race to 'undo the effects of past discrimination:' where that is necessary to eliminate their own maintenance of a system of unlawful racial classification.  If, for example, a state agency has a discriminatory pay scale compensating black employees in all positions at 20% less than their nonblack counterparts, it may assuredly promulgate an order raising the salaries of 'all black employees' to eliminate the differential. Cf. Bazemore v. Friday, 478 U.S. 385, 395-396 (1986).”

He explained his position that other remedies can be used to undo the effects of past discrimination.  In explaining such remedies in regard to state contracting he said states

“may adopt a preference for small businesses, or even for new businesses -- which would make it easier for those previously excluded by discrimination to enter the field.  Such programs may well have racially disproportionate impact, but they are not based on race.  And, of course, a State may 'undo the effects of past discrimination' in the sense of giving the identified victim of state discrimination that which it wrongfully denied him -- for example, giving to a previously rejected black applicant the job that, by reason of discrimination, had been awarded to a white applicant, even if this means terminating the latter's employment.  In such a context, the white jobholder is not being selected for disadvantageous treatment because of his race, but because he was wrongfully awarded a job to which another is entitled.  That is worlds apart from the system here, in which those to be disadvantaged are identified solely by race.”

 Dissenting Opinions

Justice Marshall, Brennan and Blackmun

Justice Marshall filed a dissenting opinion in which Justices Brennan and Blackmun joined.  Justice Marshall pointed to the evidence presented in the case and said that

"These are precisely the types of statistical and testimonial evidence which, until today, this Court had credited in cases approving of race-conscious measures designed to remedy past discrimination."

The justices also expressed their view about the standard of scrutiny to apply to race-conscious classifications designed to further remedial goals.  He used the standard stated as those that "must serve important governmental objectives and must be substantially related to achievement of those objectives." 

In regard to important governmental objectives, he said Richmond had two powerful interests:  (1) eradicating the effects of past racial discrimination and (2) preventing the city's own spending decisions from reinforcing and perpetuating the exclusionary effects of past discrimination.

They concluded that Richmond offered satisfactory proof of the discrimination also pointing out that evidence should be viewed as working together and reinforcing or contradicting each other.  The evidence provided by Richmond and supported by studies of the U. S. Congress provided sufficient evidence of past discrimination.

The justices also noted that the remedy is "substantially related to the interests it seeks to serve."  He compared it to the program discussed in Fullilove and noted that is was strikingly similar to that program.  Her noted that the Richmond Plan was limited in its duration of time, contained a waiver provision, had a minimal impact on innocent third parties, and operates prospectively.