Midwest Fence Corp. v. United States Department of Transportation, et. al. Case No. 10 C 5627 (N.D. Ill. March. 24, 2015)
Almost two years
after the Ninth
Circuit Court of
Appeals in Assoc.
General Contractor’s v. Cal.
Dep’t of Transportation upheld
Caltrans DBE outreach program, on March 25, 2015 United States District Court in Chicago Judge
Harry Leinenweber granted summary judgment in favor of the United States
Department of Transportation, (“USDOT”) the Illinois Department of
Transportation (“IDOT”) and the Illinois State Tollway Highway Authority (the
“Tollway”).
Midwest Fence
Corp is a
non-DBE fencing and
guardrail contractor. Midwest brought a
constitutional challenge to the federal
and Illinois Disadvantaged Business Enterprise
programs. Midwest’s complaint
alleged that the
DBE programs violated the
Equal Protection clause
of the U.S.
Constitution, the Civil Rights Act of 1866, The Civil Rights Act of 1964
and the Illinois Civil Rights Act of 2003.
Specifically, Midwest asked
the court to
declare the federal
DBE program unconstitutional on
its face, that
the program lacked
congressional authorization
and that the
authorizing statute is
unconstitutional. Additionally,
Midwest challenged Illinois application
of the federal
DBE program as unconstitutional.
On summary judgment
the court found
that the federal
DBE program was constitutional and
Illinois application of
the DBE program
was constitutional. At the
heart of the
case was the
validity of the
disparity studies used
to substantiate the DBE
programs. The court
took judicial notice
of the evidence
presented to Congress in
support of the
federal program’s reauthorization including
the statistical and anecdotal
evidence. The defendants
also presented an
expert report that considered
ninety five disparity
and availability studies
concerning women and minority
owned businesses. The ninety five reports examined the procurement of over
one hundred public
agencies in thirty
two states. 66%
of those studies indicated that
DBEs were significantly
underutilized relative to
their availability. Ultimately
the Defendants argued that the disparities showed by the various studies were
not attributed to factors other than race and sex and were consistent with the
presence of discrimination in
construction and construction
related professional
services.
Midwest argued that
the Defendant’s evidence
was flawed because
the expert failed to account for
capacity when measuring availability.
According to Midwest the
failure to account
for capacity skews
the results of
availability and disparity studies. In support of its position
Midwest pointed to the Rothe Development
case where the Federal
Circuit rejected a set of
disparity studies that
failed to account for capacity.
The court rejected Midwest’s argument by distinguishing
Rothe case one where the evidence
used to support
the government’s compelling
interest only included studies from one state, two counties
and three cities. Midwest also
argued that the
DBE programs unduly
burden predominantly majority-owned subcontractors that
are small and
specialized in trades
where DBEs tend to
operate. The Court
disagreed, reaffirming long-standing
precedent that some “sharing of the burden” of affirmative action
programs among majority- owned businesses is constitutionally permissible.
In the end
the court found
that the federal
and state DBE
programs were constitutional and
that Midwest failed to present any affirmative evidence to rebut the disparity
study evidence presented by the Defendants.
From The Small Business Sub-Committee Report
Trenton
H. Cotney
Florida
Bar Certified Construction Lawyer
Trent
Cotney, P.A.
407
N. Howard Avenue
Suite
100
Tampa,
FL 33606
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