Issue.  Did a city ordinance that required prime contractors to subcontract at least 30% of the dollar amount of the contract to Minority Business Enterprises violate the Equal Protection Clause?

Background.  Richmond enacted an ordinance, based on a federal law that was upheld by the Supreme Court in Fullilove, that required all city contractors to subcontract at least 30% of the dollar amount of the contract to Minority Business Enterprises.  Minority Business Enterprises are businesses at least 51% of which is owned and/or controlled by minority group members (Blacks, Spanish-speakers, Orientals, Indians, Eskimos or Aluets).  Further, these Minority Business Enterprises can be from anywhere, not just Richmond.

A white sub-contractor challenged the law on Equal Protection grounds.  The City countered that the ordinance was basically the same as a federal law that was upheld.  Further, the ordinance was enacted to remedy racial discrimination in the construction industry that was pervasive and historic.  The District Court upheld the Plan.  But, the Court of Appeals struck it down and the Supreme Court affirmed the Court of Appeals decision.

Court's Analysis.  The Court (not a majority) explained why a similar federal law was upheld but not this city ordinance.  Justice O'Connor explained that Congress, under Section 5 of the 14th Amendment, has a specific constitutional mandate to remedy past racial discrimination.  States and their subdivisions do not enjoy such latitude.  The 14th Amendment demonstrates a distrust of allowing States to make racial distinctions.

Still, States can remedy past and current racial discrimination as long as they can identify the discrimination and narrowly tailor a law to remedy that discrimination.  Richmond provided no such evidence in this case and its law was not narrowly tailored to address incidents of racial discrimination.

Richmond has not demonstrated how it reached the 30% figure.  Is there evidence that 30% of sub-contractors would be Minority Business Enterprises absent discrimination?  Possibly there are other reasons - lack of financing, for example - why there are so few Minority Business Enterprises.  Richmond cannot assume that the number of Minority Business Enterprises would mirror the number of black residents.

Additionally, if Richmond was attempting to address past racial discrimination, why include Eskimos and Aluets since there is no evidence of discrimination against such groups in Richmond.  Further, how can allowing outside Minority Business Enterprises to sub-contract address discrimination in Richmond.

Finally, "benign" racial classifications are of little importance.  Racial discrimination is racial discrimination, no matter against who, for Equal Protection purposes.  Richmond's plan was not narrowly tailored to address a specific problem with discrimination in the construction industry.  Therefore, the plan fails Equal Protection scrutiny.