CORAL CONSTRUCTION, INC. v. City and County of San Francisco

235 P.3d 947, 50 Cal. 4th 315, 113 Cal. Rptr. 3d 279
CourtCalifornia Supreme Court
DecidedAugust 2, 2010
DocketS152934
StatusPublished
Cited by111 cases

This text of 235 P.3d 947 (CORAL CONSTRUCTION, INC. v. City and County of San Francisco) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CORAL CONSTRUCTION, INC. v. City and County of San Francisco, 235 P.3d 947, 50 Cal. 4th 315, 113 Cal. Rptr. 3d 279 (Cal. 2010).

Opinions

Opinion

WERDEGAR, J.

Article I, section 31 of the California Constitution (section 31) forbids a city awarding public contracts to discriminate or grant preferential treatment based on race or gender. (See generally Hi-Voltage Wire Works, Inc. v. City of San Jose (2000) 24 Cal.4th 537 [101 Cal.Rptr.2d 653, 12 P.3d 1068] (Hi-Voltage).) Here, a city whose public contracting laws expressly violate section 31 challenges its validity under the so-called political structure doctrine, a judicial interpretation of the federal equal protection clause. (U.S. Const., 14th Amend.; see generally Washington v. Seattle School Dist. No. 1 (1982) 458 U.S. 457 [73 L.Ed.2d 896, 102 S.Ct. 3187] (Seattle) and Hunter v. Erickson (1969) 393 U.S. 385 [21 L.Ed.2d 616, 89 S.Ct. 557] (Hunter).) We conclude section 31 does not violate the political structure doctrine.

I. Background

For the last 26 years, defendant City and County of San Francisco (City) has preferentially awarded public contracts to minority-owned business enterprises (MBE’s) and women-owned business enterprises (WBE’s). The City’s Board of Supervisors (Board) has mandated these preferences in a series of ordinances adopted over time, justifying each with legislative findings purporting to show continuing discrimination by the City against MBE’s and WBE’s. The details of the program have evolved, partly in response to changes in the law governing the validity of such preferences. Plaintiffs Coral Construction, Inc. (Coral), and Schram Construction, Inc. (Schram), challenge the 2003 version of the ordinance1 as unconstitutional under section 31.

The City’s first MBE/WBE ordinance, adopted in 1984, set aside specified percentages of public contracting dollars for MBE’s and WBE’s. The ordinance also gave bid discounts, which required the City’s contracting authorities to treat bids by MBE’s and WBE’s as if they were lower than they in fact were. Both the set-asides and the bid discounts afforded MBE’s and WBE’s a competitive advantage over other bidders.

In 1989, the United States Court of Appeals for the Ninth Circuit held the City’s 1984 ordinance violated the federal equal protection clause (U.S. [321]*321Const., 14th Amend.) in giving preferences based on race, and that it also violated the City’s own charter in several respects. (Associated General Contractors of California v. City & County of San Francisco (9th Cir. 1987) 813 F.2d 922, 944.) Shortly thereafter, the United States Supreme Court determined that Richmond, Virginia’s MBE set-asides violated equal protection. (Richmond v. J. A. Croson Co. (1989) 488 U.S. 469, 498-506 [102 L.Ed.2d 854, 109 S.Ct. 706] (Croson).) The legislative findings supporting Richmond’s program did not show the requisite “ ‘strong basis in evidence for [the city’s] conclusion that remedial action was necessary.’ ” (Id., at p. 500, quoting Wygant v. Jackson Board of Education (1986) 476 U.S. 267, 277 [90 L.Ed.2d 260, 106 S.Ct. 1842] (plur. opn. of Powell, J.).) Four justices suggested, however, that in “the extreme case” not presented in Croson, “some form of narrowly tailored racial preference might be necessary” as a remedy “to break down patterns of deliberate exclusion.” (Croson, at p. 509 (plur. opn. of O’Connor, J.).)

Responding to these judicial decisions, San Francisco’s Board in 1989 passed a new ordinance eliminating set-asides but retaining bid discounts and other preferences for MBE’s and WBE’s. When an organization of businesses sued to enjoin the ordinance’s enforcement, the City argued the equal protection clause required preferences as a remedy for discrimination. The federal district court declined to issue interim relief because the plaintiffs had failed to demonstrate a sufficient likelihood of success on the merits. {Associated General Contractors v. San Francisco (N.D.Cal. 1990) 748 F.Supp. 1443, 1456.) The Ninth Circuit affirmed. (Associated General Contractors of California v. Coalition (9th Cir. 1991) 950 F.2d 1401, 1418.)

The voters approved Proposition 209 at the November 1996 general election, thus adding section 31 to article I of the state Constitution. Section 31 declares that the state, including its political subdivisions, “shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.” (§31, subd. (a).) The next year, the Ninth Circuit held section 31 did not violate the federal equal protection clause, as interpreted in the political structure cases (e.g., Seattle, supra, 458 U.S. 457 & Hunter, supra, 393 U.S. 385), and vacated a preliminary injunction against section 31’s enforcement issued by the district court. (Coalition for Economic Equity v. Wilson (9th Cir. 1997) 122 F.3d 692, 711 (Wilson), vacating judg. in (N.D.Cal. 1996) 946 F.Supp. 1480.)

At the time the voters adopted section 31, the MBE/WBE ordinance then in effect was set to expire on October 31, 1998. Before the ordinance expired, the City’s Board and its Human Rights Commission (HRC) conducted investigations for the stated purpose of “gauging] the effectiveness of the [322]*322prior [MBEAVBE] Ordinances . . . and to assess the need for further and continuing action.” (S.F. Admin. Code, former § 12D.A.2.)2 The Board found that MBE’s and WBE’s were receiving a smaller share of City contracts than would be expected based on their availability, and that “[t]his poor utilization [could not] be attributed to chance” and was, instead, “due to discrimination by the City and discrimination in the private market.” (S.F. Admin. Code, former § 12D.A.2.2.) In legislative findings setting out the basis for this conclusion, the Board cited its own statistical studies, similar studies by other governmental entities in the San Francisco Bay Area, testimony and oral histories recounting anecdotes of discrimination, “social science materials concerning discrimination against women and minorities in the Bay Area and in public contracting,” and data showing that “the decision makers in the City contracting process—the City department heads and general and deputy managers—have been and continue to be overwhelmingly Caucasian males” operating under an “ ‘old boy network.’ ” (S.F. Admin. Code, former § 12.D.A.2 (findings 1, 15).)

Based on these findings, the Board in 1998 adopted a new ordinance preserving bid discounts for MBE’s and WBE’s, and requiring prime contractors either to use MBE and WBE subcontractors at levels set by the HRC or to make good faith efforts to do so through preferential outreach efforts targeted at such businesses. (S.F. Admin. Code, former §§ 12D.A.4, 12D.A.5, 12D.A.17.)

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Cite This Page — Counsel Stack

Bluebook (online)
235 P.3d 947, 50 Cal. 4th 315, 113 Cal. Rptr. 3d 279, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coral-construction-inc-v-city-and-county-of-san-francisco-cal-2010.