CASE 11.1: Minority Set-Asides

Richmond, Virginia, the former capital of the Confederacy, is not the sort of place one would normally associate with controversial efforts at affirmative action. But aware of its legacy of racial discrimination and wanting to do something about it, the Richmond City Council adopted what it called the Minority Business Utilization Plan—a plan that eventually brought it before the U.S. Supreme Court.

The plan, which the council adopted by a 5-to-2 vote after a public hearing, required contractors to whom the city awarded 447448construction contracts to subcontract at least 30 percent of the dollar amount of their contracts to Minority Business Enterprises (MBEs). A business was defined as an MBE if minority group members controlled at least 51 percent of it, and a minority-owned business from anywhere in the United States could qualify as an MBE subcontractor. (The 30 percent set-aside did not apply to construction contracts awarded to minority contractors in the first place.)

Proponents of the set-aside provision relied on a study that indicated that whereas the general population of Richmond was 50 percent African American, only 0.67 percent of the city’s construction contracts had been awarded to minority businesses. Council member Marsh, a proponent of the ordinance, made the following statement:

• 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 … is one in which race discrimination and exclusion on the basis of race is widespread.

Opponents questioned both the wisdom and the legality of the ordinance. They argued that the disparity between minorities in the population of Richmond and the low number of contracts awarded to MBEs did not prove racial discrimination in the construction industry. They also questioned whether there were enough MBEs in the Richmond area to satisfy the 30 percent requirement.

The city’s plan was in effect for five years. During that time, it was challenged in the courts. A federal district court upheld the set-aside ordinance, stating that the city council’s “findings [were] sufficient to ensure that, in adopting the Plan, it was remedying the present effects of past discrimination in the construction industry.” However, the case was appealed to the Supreme Court, which ruled in City of Richmond v. Croson that the Richmond plan was in violation of the equal protection clause of the Fourteenth Amendment.⁶⁹ In delivering the opinion of the majority of the Court, Justice Sandra Day O’Connor argued that Richmond had not supported its plan with sufficient evidence of past discrimination in the city’s construction industry:

• A generalized assertion that there has been past discrimination in an entire industry provides no guidance for a legislative body to determine the precise scope of the injury it seeks to remedy. It “has no logical stopping point.” … “Relief” for such an ill-defined wrong could extend until the percentage of public contracts awarded to MBEs in Richmond mirrored the percentage of minorities in the population as a whole. [The City of Richmond] argues that it is attempting to remedy various forms of past discrimination that are alleged to be responsible for the small number of minority businesses in the local contracting industry.… While there is no doubt that the sorry history of both private and public discrimination in this country has contributed to a lack of opportunities for black entrepreneurs, this observation, standing alone, cannot justify a rigid quota in the awarding of public contracts in Richmond, Virginia. Like the claim that discrimination in primary and secondary schooling justifies a rigid racial preference in medical school admissions, an amorphous claim that there has been past discrimination cannot justify the use of an unyielding racial quota. It is sheer speculation how many minority firms there would be in Richmond absent past societal discrimination, just as it was sheer speculation how many minority medical students would have been admitted to the medical school at Davis absent past discrimination in educational opportunities. Defining these sorts of injuries as “identified discrimination” would give local governments license to create a patchwork of racial preferences based on statistical generalizations about any particular field of endeavor. These defects are readily apparent in this case. The 30% quota cannot in any realistic 448449sense be tied to any injury suffered by anyone.… In sum, none of the evidence presented by the city points to any identified discrimination in the Richmond construction industry. We, therefore, hold that the city has failed to demonstrate a compelling interest in apportioning public contracting opportunities on the basis of race. To accept Richmond’s claim that past societal discrimination alone can serve as the basis for rigid racial preference would be to open the door to competing claims for “remedial relief” for every disadvantaged group. The dream of a Nation of equal citizens in a society where race is irrelevant to personal opportunity and achievement would be lost in a mosaic of shifting preferences based on inherently unmeasurable claims of past wrongs.… We think such a result would be contrary to both the letter and spirit of a constitutional provision whose central command is equality.

But the Court’s decision was not unanimous, and Justice Thurgood Marshall was joined by Justices William Brennan and Harry Blackmun in dissenting vigorously to the opinion of the majority. Justice Marshall wrote:

• The essence of the majority’s position is that Richmond has failed to … prove that past discrimination has impeded minorities from joining or participating fully in Richmond’s construction contracting industry. I find deep irony in second-guessing Richmond’s judgment on this point. As much as any municipality in the United States, Richmond knows what racial discrimination is; a century of decisions by this and other federal courts has richly documented the city’s disgraceful history of public and private racial discrimination. In any event, the Richmond City Council has supported its determination that minorities have been wrongly excluded from local construction contracting. Its proof includes statistics showing that minority-owned businesses have received virtually no city contracting dollars; … testimony by municipal officials that discrimination has been widespread in the local construction industry; and … federal studies … which showed that pervasive discrimination in the Nation’s tight-knit construction industry had operated to exclude minorities from public contracting. These are precisely the types of statistical and testimonial evidence which, until today, this Court has credited in cases approving of race-conscious measures designed to remedy past discrimination.

 

5.

In light of the fact that no federal statute specifically bars racial discrimination in private domestic commercial transactions between two business firms, and given the evidence that racism is an obstacle to African-American business success,⁷⁰ what obligation, if any, does state, local, or federal government have to assist minority-owned companies?