Supreme Court Rejects Minority Set-Aside Law

Ending a closely watched, eight-year legal battle over affirmative action, the Supreme Court on Tuesday turned down Philadelphia’s plea to preserve a city law that set aside one-fourth of its public works spending for businesses owned by blacks or women.

The Philadelphia case has drawn attention as a test of whether minority set-aside programs can survive, despite past high court rulings calling them “highly suspect.” Rather than abandon their program, Philadelphia city officials defended it at every step in the courts.

The outcome, along with recent rulings striking down similar programs in Columbus, Ohio, and Miami, shows how minority set-aside programs are being slowly but steadily dismantled by adverse court rulings.

The high court’s action Tuesday has no direct bearing on the fate of California’s Prop. 209, the anti-affirmative action measure that has been blocked by a federal judge in San Francisco. But the court’s conservative majority of late has consistently rejected the use of “racial classifications” by the government.

“This is the end of the public works set-aside program here,” said attorney Jack Widman, who represented the coalition of white contractors that in 1989 sued Philadelphia over the program. The case, (Philadelphia vs. Contractors Assn. of Eastern Pennsylvania, 96-899), bounced back and forth between a federal district judge and a court of appeals three separate times.

But minority owners of small businesses said that a judge’s order, which has barred the city from enforcing the program for two years, has left many of them struggling and unable to compete with bigger firms.

“It’s had a tremendous impact. Some of these businesses have already gone under,” said Carole Robinson, an African American businesswoman whose Philadelphia firm supplies construction materials. “And, unfortunately, it’s going on all across the country,” she added.

Widman noted, however, that major contractors with Philadelphia’s city government still must comply with an executive order issued by the mayor, which obliges them to solicit bids from minority firms and keep records on who their subcontractors are.

During the 1980s, many city and county governments enacted “minority enterprise” laws to ensure that small businesses owned by minorities or women would get a share of public contracting dollars. Typically, these ordinances guaranteed that a minimum percentage of government work would be “set aside” for “disadvantaged business enterprises,” defined as those owned by African Americans, Latinos, Asians or women.

Congress had taken the same approach in 1977 in a huge federal public works law that was later upheld by the Supreme Court.

But the tide turned against these set-aside programs on Jan. 22, 1989, when the justices struck down a Richmond, Va., law that reserved 30% of contracting dollars for minority firms. A white contractor, the J. A. Croson Co., had sued after it lost a city job installing plumbing fixtures because it failed to employ a minority subcontractor.

Siding with the white contractor, Justice Sandra Day O’Connor said that discrimination against whites by city and state officials thereafter would be held to the same strict standard as discrimination against blacks. “The guarantee of equal protection [of the law] cannot mean one thing when applied to one individual and something else when applied to a person of another color,” she wrote.

City and state programs that steer contracts or other benefits based on race are “highly suspect,” she said, and are presumed to be unconstitutional.

While many legal experts pronounced the 1989 ruling in the Richmond case to be the death knell for minority contracting laws, many big city officials refused to give up. Their lawyers seized on a passage of O’Connor’s opinion that left the door ajar.

If city officials had “evidence that nonminority contractors were systematically excluding minority businesses from subcontracting opportunities,” they could take steps to end this “discriminatory exclusion,” she wrote. A “significant statistical disparity” between the number of qualified minority contractors in the area and the percentage of work they received would be a strong indicator of discrimination, she added.

Seeking to prove discrimination through statistics, many cities paid consultants to conduct so-called “Croson studies” to defend their set-aside programs.

However, while many municipalities have invested hundreds of thousands of dollars in such studies, their results often have not held up in court.

Philadelphia’s law was challenged as unconstitutional by a coalition of white contractors in April 1989, only weeks after the high court’s ruling in the Richmond case. After a series of preliminary skirmishes, U.S. District Judge Louis C. Bechtle decided to examine the evidence of discrimination against minority firms in a nine-day trial.

One key statistic stood out: Less than 1% of the 8,050 construction firms in the greater Philadelphia area were owned by blacks. While city officials said that this low number showed the need for the program, the judge concluded that the paucity of minority entrepreneurs, not discrimination, explained why few city contracts were won by black-owned companies.

In 1995 the judge struck down the Philadelphia program, saying that the city’s set-aside law “was motivated by racial and gender politics and not the remediation of any special identified discrimination in the Philadelphia construction industry.”

As originally enacted in 1982, the Philadelphia ordinance reserved 15% of city business for firms owned by blacks, Latinos and Asians and another 10% for firms headed by women. In a series of rulings, all parts of the law were invalidated as unconstitutional.

Nonetheless, city officials last year took the issue again to the U.S. Court of Appeals, which affirmed the judge’s order.