Opposition Brief — City of Cincinnati, Ohio v. Cleveland Construction Construction Construction, Inc. (No. 07-113)

G J OFFICE OF THE CLERK |

No. 07-113

Bun the

Supreme Court of the United States

CITY OF CINCINNATI,

Petitioner,

Vv.

CLEVELAND CONSTRUCTION, INC.,

Respondent.

On Petition for a Writ of Certiorari to the

Ohio Court of Appeals, First Appellate District

BRIEF IN OPPOSITION

W. Ket_y LunpRIGAN

Counsel of Record

Gary E. PoWELL

ELIZABETH L. Hutton

MANLEY BURKE LPA

225 West Court STREET

Cincinnati, OH 45202

(513) 721-5525

(513) 721-4268 Fax

wkl@manleyburke.com

Counsel for Respondent

Secker Gallagher - Cincinnati, OH - Washington, D.C. - 800.890.5001

7

s

STATEMENT PURSUANT TO RULE 29.6

There are no parties to the proceedings other than those

listed in the caption. Respondent, Cleveland Construction

Company, Inc., has no parent corporation and no publicly-

held company owns 10% or more of its stock.

il

TABLE OF CONTENTS

STATEMENT PURSUANT TO RULE 29.6

TABLE OF AUTHORITIES

SUMMARY OF REASONS TO DENY

THE PETITION

A. The Current Controversy

B. The City of Cincinnati’s Small Business Enterprise

Program

. The SBE Rules and Guidelines

. The Bid Documents

E. The Cincinnati Convention Center Project

F. Proceedings Below

REASONS FOR DENYING THE PETITION

I. This Court Has No Jurisdiction Under 28 U.S.C.

§1257 To Grant this Petition Because There Has Not

Been a Final Appealable Judgment ............ 14

il

Il. The Petition Should be Demied Because the Lower

Courts’ Decisions are in Harmony with Long Standing

Jurisprudence that Government Programs __ that

Encourage and Pressure Discrimination Based on

Race are Subject to Strict Scrutiny

A. Petitioner’s Characterization of its SBE Program

is not Controlling

. The Lower Courts’ Determinations that the City’s

SBE Program Encourages and _ Pressures

Discrimination Based on Race, Triggering Strict

Scrutiny, are Consistent with this Court’s Decision

in Adarand Constructors v. Pena

. The Lower Courts’ Determinations that the City’s

SBE Program Encourages and Pressures Bidders

to Discriminate Based on Race are Consistent with

the Jurisprudence of other Federal Courts

. The Lower Courts’ Decisions Are Consistent with this

Court’s Holding in Parents Involved in Community

Schools v. Seattle School District No. 1

CONCLUSION

APPENDIX

Appendix A: Cincinnati Convention Center Expansion

and Renovation Availability Estimation Sheet

Appendix B: City of Cincinnati Subcontracting

Outreach Program Summary

iv

Appendix C: City of Cincinnati Small Business

Division Office of Contract Compliance Rules and

Guidelines

Appendix D: City of Cincinnati project forms .... 26b

Appendix E: Construction Bid Document

Vv

TABLE OF AUTHORITIES

Cases

Adarand Constructors v. Pena,

515 U.S. 200 (1995) passim

American Const. Co. v. Jacksonville, T. & K.W. Ry.,

148 U.S. 372 (1893)

Bras v. Calif. Pub. Util. Comm..,

59 F.3d 869 (9th Cir.1995)

Bruce v. Tobin,

245 U.S. 18 (1917)

Cox Broadcasting Corp. v. Cohn.,

420 U.S. 469 (1975)

Florida v. Thomas,

532 U.S. 774 (2001)

Flynt v. Ohio,

451 U.S. 619 (1981)

Grutter v. Bollinger,

539 U.S. 306 (2003)

Jefferson v. City of Tarrant, Ala.,

522 U.S. 75 (1997)

Johnson v. California,

543 U.S. 499 (2005)

vi

Lutheran Church-Missouri Synod v. FCC,

141 F.3d 344 (D.C. Cir. 1998), reh’g en banc denied,

154 F.3d 487 (D.C. Cir. 1998)

Martinez v. International Banking Corp.,

220 U.S. 214 (1911)

Mississippi Central R. Co. v. Smith,

295 U.S. 718 (1935)

Monterey Mechanical v. Wilson,

125 F.3d 702 (9th Cir. 1997)

Palmore v United States,

411 U.S. 389 (1973)

Parents Involved in Community Schools v. Seattle School

District No. 1,

ee Do i a's ow 9 bee «RR 27

Radio Station WOW, Inc. v. Johnson,

326 U.S. 120 (1945)

Republic Natural Gas Co. v. Oklahoma,

334 U.S. 62 (1948)

Safeco Ins. Co. of America v. City of White House, Tenn.,

191 F.3d 675 (6th Cir. 1999) 21, 26, 27

Statutes and Codes

28 U.S.C. §1257

Cincinnati Municipal Code Chapter 323

SBE Program’s Rules and Guidelines

]

BRIEF IN OPPOSITION

SUMMARY OF REASONS TO DENY THE PETITION

Petitioner City of Cincinnati (the “City”) has invoked 28

U.S.C. §1257 as the basis for this Court’s appellate

jurisdiction. However, this Court does not have jurisdiction

because there is no final appealable judgment. As a result,

this Petition is not ripe for review.

On December 8, 2006, the Court of Appeals for the First

Appellate District, Hamilton County, Ohio (“First District

Court of Appeals”) rendered a judgment finding that the

City’s Small Business Enterprise program (“SBE Program”)

indisputably encouraged and pressured bidders for public

contracts to discriminate on the basis of race and gender and

was subject to heightened scrutiny. The City submitted a

petition for writ of certiorari to the Supreme Court of Ohio on

five issues, including the First District Court of Appeals’

finding that the City had violated Respondent Cleveland

Construction’s (“Cleveland”) 14° Amendment equal

protection rights.

The Supreme Court of Ohio accepted two issues for

review. The first issue involves whether a disappointed bidder

can have a constitutionally-protected property interest in a

publicly bid contract to which due process protections apply.

The second issue involves whether a disappointed bidder may

recover damages under 42 U.S.C. §1983 for a constitutional

violation where state law would deny a damages remedy to

such a bidder. Obviously, both issues present significant

federal law and constitutional issues. The Supreme Court of

Ohio denied discretionary review of the equal protection issue

that the City has prematurely presented to this Court. The

appeal to the Supreme Court of Ohio is pending.

2

While there are four exceptions to the firmly established

final judgment rule which permit the invocation of this

Court’s appellate jurisdiction despite the fact that proceedings

are still ongoing in the state courts, none of those four apply

to this case. The two issues currently being considered by the

Supreme Court of Ohio are of such federal and constitutional

relevance that they will likely be appealed to this Court,

presenting the potentia! for piecemeal review.

If this Court determines that the case is ripe for review,

the Petition still must be denied. The City has

mischaracterized its SBE Program as a “discretionary, non

mandatory municipal outreach/tracking program.”' In reality,

the SBE Program is infused with race and gender-conscious

provisions. The City conceded that it lacked a proper

evidentiary basis to establish any compelling interest in

remedying past discrimination.” The decisions of the trial

court and the First District Court of Appeals are soundly

supported by the facts and are consistent with prevailing

jurisprudence, including that of this Court.

The Court should therefore deny the City of Cincinnati’s

Petition because this case does not qualify for, or merit,

review.

' Petitioner’s Br. at 17, et seq.

) *_* *. *

* Petitioner’s Br. at 12.

3

STATEMENT OF THE CASE

A. The Current Controversy

In response to a solicitation of bids, Cleveland

Construction submitted the lowest bid for the drywall work in

the City of Cincinnati’s Convention Center Expansion and

Renovation Project. The City conceded that Cleveland’s bid

fully complied with all bid requirements, except for the fact

that Cleveland did not subcontract out at least thirty-five

percent of its work to small business enterprises (“SBEs”), as

required by the SBE Program’s Subcontracting Outreach

Program. The City awarded the contract to the second lowest

bidder, whose bid was more than $1.2 million higher than

Cleveland’s.

Cleveland sued and claimed, among other things, that the

City’s SBE Program was unconstitutional because it

encouraged and pressured contractors to subcontract with

minority and female-owned firms. As part of the bid

documents, the City informed bidders that they “should be

able to include minority and female firms at the level of

availability”? as determined by the City. For the drywall

contract, the City calculated the minority business enterprise

(“MBE”) availability to be 13.09 percent and the women’s

business enterprise (“WBE”) availability at 1.05 percent. The

SBE Program required all bidders to document their efforts to

meet the availability estimate for MBEs and WBEs and

cautioned all bidders that if they “failed to achieve levels of

minority Or women business enterprise participation as might

be reasonable on the basis of objective data regarding

availability and capacity of such businesses, the bidder shall

* App. 2b.

4

be subject to an inquiry by the Office of Contract

Compliance.”*

B. The City of Cincinnati’s Small Business Enterprise

Program

In 1999, the City adopted the SBE Program to replace its

Equal Business Opportunity Program. The Equal Business

Opportunity Program included a minority set aside and was

struck down as unconstitutional because the City lacked

evidentiary findings that would justify a race conscious

program.

The SBE Program’s purpose, but not its substance, is set

forth in Chapter 323 of the Cincinnati Municipal Code

(“CMC”). CMC §323-7, entitled “Program Goals,” explicitly

states that the SBE Program contains a specific participation

goal for MBEs and for WBEs, in addition to an overall

participation goal for small businesses. CMC §323-7

designates a 30% participation goal for small business

enterprises for construction supplies, services, and

professional services. It also establishes MBE and WBE

annual participation goals of 30% construction, 15%

supplies/services, and 10% professional service. To carry out

the meaning and purpose of the SBE Program, CMC §323-7

empowered the City Manager to issue and enforce rules and

regulations.

The SBE Program’s Rules and Guidelines provided the

substance of the SBE Program requirements that applied to

bidders on the Convention Center Project, and which both the

trial court and the First District Court of Appeals found

* App. 10b.

5

indisputably encouraged and pressured Cleveland to

discriminate on the basis of race and gender in violation of

Cleveland’s 14" Amendment equal protection rights. The City

did not include any of the provisions of the Rules and

Guidelines in its Petition nor did it discuss any of the parts of

the SBE Program declared unconstitutional by the lower

courts.

In 2002, as the City prepared to renovate and expand the

Cincinnati Convention Center, City Council hired a consultant

to conduct a disparity study to determine if the City had the

factual predicate that would enable it to reconfigure its SBE

Program to be race or gender-conscious. After conducting the

disparity study, the consultant determined that it did not. The

consultant presented the results of his disparity study, as well

as proposed revisions to the SBE Program, to City Council.

Under political pressure from the Vice Mayor to make the

program more aggressive, and more likely to induce

contractors to subcontract with MBEs and WBEs on City

projects, the consultant developed a “Non-Discrimination

Program” and a “Subcontracting Outreach Program” to

incorporate into the SBE Program. These revisions were

ultimately adopted by City Council and codified in CMC

Chapter 323 by reference.

The Subcontracting Outreach Program (“SOP”) is

contained in CMC §323-31 and is a subset of the SBE

Program. The SOP applies to all City-funded construction

contracts of $100,000 or more and requires bidders to make

a good faith effort to subcontract a pre-determined percentage

of its work to small, minority and women-owned businesses.°

It is undisputed that Cleveland’s failure to meet these

> App. 12b-13b.

6

subcontracting percentages as part of the SBE Program for the

Convention Center Project was the basis upon which the City

awarded the contract to a bidder who was 1.2 Million Dollars

higher in price, but who met the SBE percentages for the

pioject.

C. The SBE Rules and Guidelines

The SBE Program’s Rules and Guidelines promulgated by

the City pursuant to CMC §323-31 explicitly state that the

purpose of the SBE program is:

to ensure that all bidders, vendors, and contractors

. .. doing business with the City provide to businesses

owned and controlled by racial minorities and ethnic

minorities and women, opportunities to participate, fo

the extent of their availability, on contracts which are

paid in whole or in part with monetary appropriations

from the City of Cincinnati.®

The Rules and Guidelines are rife with additional race and

gender-conscious provisions, none of which were discussed

or acknowledged in the City’s Petition, including the

following:

* “In order to be considered as responsive, all

bidders/proposers are required to use good faith

efforts to promote opportunities for Minority and

Women Business Enterprises to participate in and

compete for, to the extent of their availability,

contracting, subcontracting, and purchasing

opportunities. Prior to the award of any contract

” App. 7b (emphasis added).

7

related to construction services or professional

services, the City shall evaluate each bidder’s

documented efforts to achieve participation of minority

and women business enterprise firms.”’

* “Upon its successful implementation, the Non-

Discrimination Program [a component of the SBE

Program] will result in utilization of minority and

women-owned firms to the extent of their

{governmentally specified] availability... .

~&

* “The City of Cincinnati, or its designated agent, will

evaluate efforts made by bidders to promote

opportunities for minority and women-owned firms

(MBE/WBE) to compete for business as

subcontractors and/or material or equipment suppliers

at the time of bidding. ... If the evaluation determines

that a bidder has failed to achieve levels of minority

and women business enterprise participation as might

be reasonable on the basis of objective data regarding

availability and capacity of such business, the bidder

Shall be subject to an inquiry by the Office of Contract

Compliance.”?

* “Bidders or Offerors [operating under the

Subcontracting Outreach Program] should be able to

include the participation of minority and female firms

’ App. 8b-9b (emphasis added).

* App. 10b (emphasis added).

* App. 1Ob (emphasis added).

8

at the levels of availability determined in the City of

Cincinnati Disparity Study.

» 10

* “The SBDOCC [Small Business Division Office of

Contract Compliance] will maintain a database to

assist bidders in identifying minority and women

business enterprises with capabilities commensurate

with general contracting requirements. ... The list

prepared from the database specifies which firms the

City has determined to meet the requirements

necessary for designation as minority and women

business enterprises. ”"”

* “Contractors are required to maintain

documentation regarding the utilization of minority

and women business enterprises, and all other

pertinent records, during the performance of award of

their contract.”

One of the most significant race and gender-conscious

provisions contained in the Rules and Guidelines is the good

faith effort requirement that bidders:

provide a detailed description of the techniques used

to obtain participation of minority and women-owned

business enterprises, including segmenting of the work

into 2 or smaller units (areas for subcontracting),

attending pre-bid conferences, soliciting specific

minority and women-owned firms, soliciting trade

10

App. 13b (emphasis added).

' App. 11b.

'* App. 11b (emphasis added).

9

associations that focus on minority and women-owned

businesses, advertising efforts, and other methods

used."

Further, “[bjidders are required to show that they’ve made a

good faith effort to get the maximum practical participation

of minority and women-owned businesses on this project.” "

To prove that the bidders made the requisite “good faith

efforts” to solicit MBEs and WBEs, bidders were required to

submit Form 2007 “Statement of Good Faith Efforts”’’ with

their bids containing detailed descriptions of the techniques

used to obtain the maximum practical participation of MBEs

and WBEs. A failure to achieve participation by the estimated

availability of MBEs and WBEs as calculated by the City,

which for the drywall contract was 13.09% MBEs and 1.05%

WBEs, would trigger an investigative inquiry. Specifically,

the Rules and Guidelines state:

If the bidder’s utilization is the same as or greater than

the actual availability percentage, then the city can

accept the bidder’s utilization as being in compliance

with the program. The burden is on the bidder to

explain the low utilization percentage. \f the contract

administrator determines that the contractor under-

utilized minority and/or women-owned businesses

based on the actual availability percentage, and that

the bidder's good faith efforts were inadequate and

there is no legitimate explanation for the under-

'’ App. 15b (emphasis added).

'* App. 18b (emphasis added)

'S App. 35b-36b.

10

utilization, then the matter is turned over to the

investigative unit for a discrimination investigation."®

The discrimination investigation could involve local, state, or

federal agencies charged with investigating and resolving civil

rights violations or enforcing laws relating to discriminatory

treatment. Those accused of discrimination must defend

themselves against each allegation with specificity and

particularity.'’

D. The Bid Documents

While the Rules and Guidelines contain explicit race and

gender-based preferences, the bid documents circulated to

bidders for the convention center project, including

Cleveland, did as weil. The bid package included a

Subcontracting Outreach Program Summary.'* The Summary

listed the SBE goals per trade contract, which for the drywall

contract was 35%.” Bidders also received an “Availability

Estimation Sheet” listing the availability percentage for MBEs

and WBEs for each project. Bidders were told that they

“should be able to include minority and female firms at the

level of availability inticated.””° The availability estimate for

the drywall project listed MBE availability at 13.09% and

. 15b (emphasis added).

. 19b-25b.

. 2b-5Sb.

. 3b.

. 2b (emphasis added).

Item Description: CINCINNATI CONVENTION CENTER

EXPANSION AND RENOVATION

Date Issued: December 23, 2003

AVAILABILITY ESTIMATION SHEET

VAILABILITY ESTIMATION - Subcontractor Outreach Program (CMC 323-31)

The preliminary availability estimate for this project is:

The preiiminary availability estimate for this project is:

Sommodity Code 093-01 Description TC-01B General Trades 11.26 % Minority 3.37 % Female

Commodity Code 0839-01-01 Description TC-01C Interior Remediation 13,09 % Minority 1.05 % Female

cammodity Code 098-01

Commodity Code 099-01

Description

Description

TC-O2E Temporary Conditions 11.26 % Minority _3.97 % Female

TC-02F Selective Demolition 11.26 % Minority 3.57 % Female

commodity Code 0399-01-01 Description TC-04A Masonry 13.09 % Minority 1.05 % Female

Corhmoadity Code 099-01-01_ Description TC-O6A Millwork 13.09 % Minority 1.05 % Female

Sammodity Code 0939-01-01 Description TC-O8A Doors, Frames & Hardware 13.09% Minority 1.05 % Female

Commodity Code 150-55

Description

Commodity Code 099-01-01 Description

~ammodity Code 910-09 __ Description

Commodity Code 0938-01

Description

commodity Code 165-00 Description

TC-O8B Overhead Doors 25.0% Minority 0.00 % Female

TC-09A Drywall 13.09 % Minority 1.05 % Femaie~

TC-08C Soft Floors 13.33 % Minority 0.00 % Female

TC-10A Specialties 11.26 % Minority 3.37 % Female

TC-41A Food Service Equipment _ 6.90 % Minority_0.00 % Femate

Commodity Code 098-09 _ _— Description TC-14A Elevators & Escalators 21.43 % Minority 0.00 % Female

Sommodity Code 099-07__—s- Description TC-15B HVAC 14.29 % Minority 1.59 % Female

Commodity Code 099-05 _ _ Description TC-15C Plumbing 16.07 % Minority 0.00 % Female

‘Dommodity Code 0939-03-01 Description TC-15D Fire Protection 19.23 % Minority. 5.77 % Female

Commodity Code 099-03 _ Description TC-16A Electrical 18.42 % Minority 7.89 % Femalo

Commodity Code 099-03

__ Description

VOLUME 1 - BID OCOCUMENT - As past of the bid submission, the bidder must return Volurne 1 - Bid

Document with all pages intact, along with two (2) photocopies of ali pages inciuded in Voiume 1.

the hid

AVA ARILITY ESTIMATION SPFET

1]

WBE availability at 1.05%.”' Page two of the Legal Notice

directly following the Availability Estimation states in item (b)

that, “Failure of a bidder to comply with these requirements

(Equal Employment Opportunity and Small Business

Enterprise Program) at the time of the bid may be cause for

rejection of the bid.””

Bidders also received a “Subcontractor Utilization Plan”

requiring them to identify the ownership status of each

subcontractor, specifically total MBE, total WBE, total SBE,

and total White percentages,” a “Covenant of Non-

Discrimination Policy,” and a “Solicitation Certification

Form” which detailed solicitations made by the bidder to

subcontractors and required them to indicate the type of

ownership of each.”

E. The Cincinnati Convention Center Project

On December 23, 2003, the City issued an invitation to

bid on the drywall portion of the Cincinnati Convention

Center project. Cleveland was the lowest bidder in the initia!

round of bidding. However, all bids were rejected because

none of the bidders met the 35% SBE participation goal for

the drywall portion of the convention center project. The City

conducted an emergency re-bid, in which Cleveland was

*! App.

22 App.

3 App. °

** App. 26b-27b.

> App. 28b.

12

again the lowest bidder. However, its bid only contained 10%

SBE participation, whereas a competitor, Valley Interior

Systems, Inc. (“Valley”), achieved 40% SBE subcontractor

participation, all of which were MBEs and/or WBEs.

Although its bid exceeded Cleveland’s by $1,246,022, the

City awarded the drywall contract to Valley solely because it

met the SBE participation goal. The City acknowledged that

Cleveland’s bid was acceptable in all other respects and it was

otherwise qualified and able to perform the work.”° On March

30, 2004, Cleveland brought an action against the City for,

among other things, violating its 14° Amendment equal

protection rights through the imposition and application of its

SBE Program.

F. Proceedings Below

After a trial on the merits, the trial court found that the

SBE Program Rules and Guidelines created race and gender-

based classifications and were unconstitutional! on their face

and as applied.”’ The trial court stated that in the process of

soliciting bids for the drywall contract, the City pressured and

encouraged bidders, including Cleveland, to draw upon race

and sex-based classifications that the City concedes could not

withstand the requisite heightened standard of review.

Specifically, the trial! court found that eight provisions of the

SBE Program’s Rules and Guidelines indisputably pressured

and encouraged contractors to recruit and_ utilize

subcontractors based on race and/or gender in violation of

Cleveland's rights under 42 U.S.C. §1983.” The trial court

*° Petitioner's App.

2? Petitioner's App. 53a. ef seq.

I /

*® Petitioner's App. 662-69a.

13

found in favor of Cleveland and permanently enjoined the

City from applying the race and gender-based classifications

in the Rules and Guidelines absent a formal determination that

a race-based program was narrowly tailored to fulfill a

compelling governmental interest or that a gender-based

program was substantially related to genuine and important

governmental interests.””

Both Cleveland and the City appealed to the First District

Court of Appeals. The City argued, among others, that the

trial court erred by concluding that the SBE Program

contained impermissible race and gender-based classifications,

contending, as it does here, that the program was a lawful

outreach program that merely encouraged contractors to use

good faith efforts to provide subcontracting opportunities for

MBEs and WBEs. However, the First District Court of

Appeals affirmed the decision of the trial court, conciuding:

Where the city’s SBE Program required

documentation of a bidder’s specific efforts to achieve

the participation of minority subcontractors to the

extent of their availability as predetermined by the

city, the program undeniably pressured bidders to

implement racial preferences. Therefore, the

program’s rules must be subject to strict scrutiny.”

It also found that to the extent that the City’s program

pressured bidders to hire women-owned subcontractors, the

City was required to demonstrate an exceedingly persuasive

* Petitioner's App. 41a 45a.

Ww : . a

Peutioner’s App. 25a.

14

justification.*’ The City conceded that it could not withstand

either level of heightened scrutiny.”

The City filed a notice of appeal and a memorandum in

support of jurisdiction with the Supreme Court of Ohio.

Among its five issues presented for review was a challenge to

the determinations that the SBE program contained race and

gender-based preferences and was subject to heightened

scrutiny. The Supreme Court of Ohio declined to exercise

jurisdiction over this issue. However, it did exercise

jurisdiction over two other issues presented for review, both

of which present significant federal law and constitutional

questions and are still pending.»

REASONS FOR DENYING THE PETITION

I. This Court Has No Jurisdiction Under 28 U.S.C. §1257

To Grant this Petition Because There Has Not Been a

Final Appealable Judgment

This Court may not exercise appellate jurisdiction except

as explicitly permitted by Congress.” In its Petition, the City

*' Petitioner’s App. 25a-26a.

t

* Petitioner’s App. 26a.

** Petitioner’s App. la-2a.

* American Const. Co. v. Jacksonville, T. & K.W. Ry., 148 U.S.

372, 378 (1893) (“This court, therefore, as it has always held, can

exercise no appellate jurisdiction, except in the cases, and in the

manner and form, defined and prescribed by congress.”).

15

premises this Court’s jurisdiction on 28 U.S.C. §1257(a),

which states:

Final judgments or decrees rendered by the highest

court of a State in which a decision could be had, may

be reviewed by the Supreme Court by writ of

certiorari where the validity of a treaty or statute of

the United States is drawn in question or where the

validity of a statute of any State is drawn in question

on the ground of its being repugnant to the

Constitution, treaties, or laws of the United States, or

where any title, right, privilege, or immunity is

specially set up or claimed under the Constitution or

the treaties or statutes of, or any commission held or

authority exercised under, the United States.

28 U.S.C. §1257 grants to this Court jurisdiction only

over appeals in which there has been a final judgment. This

Court has explained that:

This provision establishes a firm final judgment rule.

To be reviewable by this Court, a state-court judgment

must be final ‘in two senses: it must be subject to no

further review or correction in any other state

tribunal; it must also be final as an effective

determination of the litigation and not of merely

interlocutory or intermediate steps therein. It must be

the final word of a final court.’ Market Street R. Co.

v. Railroad Comm'n of Cal., 324 U.S. 548, 551, 65

S.Ct. 770, 773, 89 L.Ed. 1171 (1945). As we have

recognized, the finality rule ‘is not one of those

technicalities to be easily scorned. It is an important

factor in the smooth working of our federal system.’

16

Radio Station WOW, Inc. v. Johnson, 326 U.S. 120,

124, 65 S.Ct. 1475, 1478, 89 L.Ed. 569 (1945).*”

This Court elaborated, “in general, the final judgment rule

has been interpreted ‘to preclude reviewability . . . where

anything further remains to be determined by a state court, no

matter how dissociated from the only federal issue that has

finally been adjudicated by the highest court of the state.’”*®

There is no final judgment even if all that remains to be

decided are “a few loose ends.””’

While an order from the highest court of the State, tn this

case, the Supreme Court of Ohio, denying discretionary

review is a final judgment that may be appealed to this Court,

the Supreme Court of Ohio granted discretionary review of

two of the five issues presented by the City and both issues

involve significant federal questions. Specifically, the

Supreme Court of Ohio accepted for review 1) whether, under

Cincinnati’s specific public bidding laws, a disappointed

bidder for a City contract may have a constitutionally

Jefferson v. City of Tarrant, Ala., 522 U.S. 75, 80-81 (1997)

(ernphasis added).

Flynt v. Ohio, 451 U.S. 619, 620 (1981) (quoting Radio Station

WOW, Inc. v. Johnson, 326 U.S. 120, 124 (1945)).

’ Republic Natural Gas Co. v. Oklahoma, 334 U.S. 62 (1948)

(citing Bruce v. Tobin, 245 U.S. 18 (1917); Martinez v.

International Banking Corp., 220 U.S. 214, 223 (1911); Mississippi

Central R. Co. v. Smith, 295 U.S. 718 (1935)) (“Thus, the

requirement of finality has not been met merely because the major

issues in a case have been decided and only a few loose ends remain

to be tied up-for example, where liability has been determined and

all that needs to be adjudicated is the amount of damages.”).

17

protected property interest in that contract and 2) whether a

disappointed bidder may recover lost profit damages in a 42

U.S.C. $1983 action upon proving a constitutional violation.

Thus, while the Supreme Court of Ohio denied

discretionary review of the equal protection issue now

presented to this Court, there are still ongoing proceedings in

the Supreme Court of Ohio involving significant federal

constitutional questions that are likely to be appealed to this

Court at a later date. Therefore, there has not been a “final

judgment” within the meaning of 28 U.S.C. §1257.

Jurisdictional statutes like 28 U.S.C. §1257 must be

Strictly construed so as to give effect to the wishes of

Congress.” Strictly construing 28 U.S.C. §1257 so as to give

effect to the wishes of Congress leads to the definitive

conclusion that this Petition is not ripe for review and this

Court does not have jurisdiction.

While there is a firm final judgment rule, there are four

narrow exceptions articulated in Cox Broadcasting Corp. v.

Cohn.” However, none of these exceptions apply here.

The first exception involves cases in which there are

further proceedings in the state courts but where the federal

issue is conclusive or the outcome of further proceedings is

preordained.“” That is not the case here as the federal

constitutional issue of whether Cleveland’s constitutional due

process rights have beer. violated by deprivation of the

*’ Palmore v United States, 411 U.S. 389. 396 (1973).

* 420 U.S. 469 (1975).

* Id. at 479.

18

contract, and whether Cleveland is legally entitled pursuant to

42 U.S.C. §1983 to seek damages in the form of lost profits,

has not and will not be conclusively determined by the

outcome of any decision by the Supreme Court of Ohio. In

the event of an unfavorable decision in the Supreme Court of

Ohio, Cleveland could, and would, seek review by this Court.

The outcome of the proceedings remaining in the Supreme

Court of Ohio is not preordained but remains uncertain. This

first exception simply does not apply.

The second exception applies to cases in which the federal

issue, finally decided by the highest court in the state, will

survive and require decision regardless of the outcome of

future state court proceedings.*' While this would seem to

apply to the issue presented in the Petition, there is a

qualification that there may not be other issues pending below

that could also require review by this Court at a later date.”

This caveat prevents piecemeal review:

We observed in Cox that in most, if not all, of the

cases falling within the four exceptions, not only was

there a final judgment on the federal issue for

purposes of state-court proceedings, but also there

were no other federal issues to be resolved. There was

thus no probability of piecemeai review with respect

to federal issues.*’

*' Id. at 480.

* Id. at 477 (“in most, if not all, of the cases in these categories

excemiions to final judgment rule], these additional proceedings [in

sia’¢ cewrt] would not require the decision of other federai questions

that might also require review by the Court at a later date. . .”)

* Flynt v. Ohio, supra note 36, at 621 (emphasis added).

19

Similarly, in Florida v. Thomas, this Court reiterated that:

We have also noted that we treat state-court judgments

in this category [the second exception] as final on the

assumption that “the federal questions that could come

here have been adjudicated by the State court,” and

the state proceedings to take place on remand “could

not remotely give rise to a federal question . . . that

may later come here.”“

The two issues currently on appeal to the Supreme Court of

Ohio are significant federal issues that could be appealed to

this Court at a future date. Thus, this second exception to the

final judgment rule does not apply.

The third exception involves situations where the federal

claim has been finally adjudicated and there are further

proceedings in state court on the merits, but in which later

review of the federal issue cannot be had, regardless of the

outcome of the case.* This exception does not apply to the

case at bar because there is no impediment to this Court’s

consideration of the issue presented in this Petition at a later

date.

The fourth and final exception involves those situations

where the federal issue has been finally decided at the state

court level and further proceedings are pending in which the

party seeking review might prevail on the merits on

nonfederal grounds, rendering unnecessary review of the

federal issue by this Court, and where reversal of the state

* 532 U.S. 774, 778 (2001).

*’ Cox Broadcasting Corp. v. Cohn, supra note 39, at 481.

20

court on the federal issue would preclude further litigation on

the relevant cause of action rather than merely controlling the

nature and character of the proceedings still to come.“ This

does not apply to the issue presented in the Petition because

the issues pending in the Supreme Court of Ohio are federal

issues and reversal of the state court on the issue presented in

the Petition would not affect the outstanding issues in state

court.

This Court must deny the Petition because it does not have

appellate jurisdiction over this case pursuant to 28 U.S.C.

§1257.

Il. The Petition Should be Denied Because the Lower

Courts’ Decisions are in Harmony with Long Standing

Jurisprudence that Government Programs that

Encourage and Pressure Discrimination Based on Race

are Subject to Strict Scrutiny

A. Petitioner’s Characterization of its SBE Program is

not Controlling

Despite Petitioner’s characterization of its SBE program

as a mere outreach or tracking program, the triai court and

the First District Court of Appeals correctly found that the

SBE Program is race and gender-conscious and cannot

withstand heightened scrutiny. While the City describes its

program as a “discretionary, non-mandatory municipal

outreach/tracking program designed to promote equal

opportunities for minority-owned and women-owned

* Id. at 482.

21

businesses,”*’ the City completely ignores the provisions the

lower courts found objectionable and which Cleveland cited

previously herein. The City’s characterization of its SBE

Program is not controlling for the purposes of determining

whether it contains race or gender-based classifications

triggering heightened scrutiny. This is amply supported by

prevailing jurisprudence.

As the Ninth Circuit opined, a program like the City’s

SBE Program is, “not immunized from scrutiny because [it]

purports to establish ‘goals’ rather than ‘quotas.’ We look to

the economic realities of the program rather than to the label

attached to it.”** The Sixth Circuit agreed, finding that,

“although explicit racial preferences must withstand strict

scrutiny, the government may not avoid searching review

merely by invoking the phrase ‘good-faith effort to solicit.’”*?

Further, the Sixth Circuit noted that, “where ‘outreach’

requirements operate as a sub rosa racial preference-that is,

where their administration ‘indisputably pressures’ contractors

to hire minority subcontractors-courts must apply strict

scrutiny.”~?

While the City has attempted to mask the true character of

its SBE Program by describing it as “outreach” or “for

tracking purposes only,” that does not change its true nature,

*” Petitioner’s Br. at 17.

“8 Bras v. California Public Util. Com’n, 59 F.3d 869, 874 (9" Cir.

1995).

” Safeco Ins. Co. of America v. City of White House, Tenn., 191

F.3d 675, 691 (6" Cir. 1999).

® Id. at 692.

22

which is a program des.gned to coerce contractors into

subcontracting with MBEs and WBEs to the extent of their

availability as calculated by the City or lose the contract and

risk a discrimination investigation and sanctions.

B. The Lower Courts’ Determinations that the City’s

SBE Program Encourages and Pressures

Discrimination Based on Race, Triggering Strict

Scrutiny, are Consistent with this Court’s Decision

in Adarand Constructors v. Pena

The findings of the trial court and the First District Court

of Appeals that the SBE Program contained provisions that

encourage and pressure bidders to discriminate on the basis of

race, triggering heightened scrutiny, are consistent with this

Court’s decision in Adarand Constructors v. Pena.*' In

Adarand, a subcontractor that was not awarded the guardrail

portion of a federal highway contract due to a compensation

clause that provided financial incentives to a prime contractor

in return for hiring disadvantaged subcontractors asserted

violations of the Fifth Amendment’s Equal Protection Clause.

This Court held, “any person, of whatever race, has the right

to demand that any governmental actor subject to the

Constitution justify any racial classification subjecting that

person to unequal treatment under the strictest judicial

scrutiny.”°* The Court went on to say, “When race-based

action is necessary to further a compelling interest, such

action is within constitutional constraints if it satisfies the

‘narrow tailoring’ test this Court has set out in previous

*' 515 U.S. 200 (1995); see also Grutter v. Bollinger, 539 U.S.

306, 326 (2003).

% Adarand Constructors, 515 U.S. at 223.

23

cases.”*? The Court ultimately held that to the extent

regulations provide incentives to contractors to use race-based

classifications, those regulations are subject to strict

scrutiny.

The City tries to differentiate its SBE Program from that

at issue in Adarand by pointing out that whereas the

challenged regulations in Adarand provided a financial

incentive to bidders to grant a preference to disadvantaged

subcontractors, that is not the case with the SBE Program.

However, the City misstates this Court’s holding. First,

Adarand does not stand for the proposition that only programs

providing financial incentives are subject to strict scrutiny.

Rather, it stands for the general rule that any race-based

classification resulting in disparate treatment, including

financial or other incentives, is subject to strict judicial

scrutiny. Second, the financial incentive is present in the

City’s SBE Program as well. The financial incentive is the

ultimate award of the contract and the avoidance of a time-

consuming discrimination investigation and possible sanctions.

If bidders want to maximize their chances of winning a public

contract, they must retain the maximum practical participation

of MBEs and WBEs as subcontractors as calculated by the

City. If they do not, they risk losing the contract entirely.

This is a financial incentive to discriminate on the basis of

race and, as dictated by Adarand, triggers strict scrutiny.

** Id. at 237.

4 Id. at 224.

24

C. The Lower Courts’ Determinations that the City’s

SBE Program Encourages and Pressures Bidders to

Discriminate Based on Race are Consistent with the

Jurisprudence of other Federal Courts

In its Petition, the City attempts to argue that its SBE

Program is merely an outreach or tracking program that does

not encourage or pressure bidders to discriminate and thus is

distinguishable from those programs ultimately held

unconstitutional by other federal courts.*° Again, however, in

attempting to distinguish the City’s SBE Program from those

discussed in the cases, the City failed to discuss the specific

provisions the lower courts found objectionable. A realistic

examination of the City’s SBE Program demonstrates that the

trial court and First District Court of Appeals correctly found

that where the City’s program required documentation of a

bidder’s specific efforts to achieve participation of minority

subcontractors to the extent of their availability as calculated

by the City or risk a discrimination investigation and

sanctions, the SBE Program was not a mere outreach

program, but rather a program that undeniably pressured

bidders to implement racial preferences and is thus subject to

strict scrutiny.

In Lutheran Church-Missouri Synod v. FCC,* the United

States Circuit Court for the District of Columbia found that

indisputable pressure to discriminate on the basis of race,

even if discrimination is not mandatory, is enough to trigger

Strict scrutiny. Citing Adarand, the court found that it was not

** Petitioner's Br. at 17, ef seq.

© 141 F.3d 344 (D.C. Cir. 1998), reh'g en banc denied, 154 F.3d

487 (D.C. Cir. 1998).

25

necessary that the racial preferences be mandatory to trigger

strict scrutiny, stating “the Supreme Court treated the

regulations as a racial classification and did not even pause to

consider the suggestion that the absence of a compelled racial

preference makes strict scrutiny inapposite.”°’ Indisputable

pressure, even if discrimination is not compelled, is sufficient.

While the discrimination in Lutheran was not mandatory,

the City’s stated policy underlying the SBE Program to

provide MBEs opportunities to participate to the extent of

their availability, by its plain language, is intended to ensure,

not just suggest, that minorities be provided with

opportunities sufficient to ensure their participation to the

extent of their availability as calculated by the City. At the

very least, the SBE Program indisputably pressures bidders to

discriminate, if not compels them to do so.

In Monterey Mechanical v. Wilson, the Ninth Circuit

found that a statute requiring general contractors to

subcontract specified percentages of work to minority,

women, and disabled veteran-owned subcontractors, or to

demonstrate good faith efforts to do so, triggered strict

scrutiny. The court found that, “though worded in terms of

goals and good faith, the statute imposes mandatory

requirements with concreteness. The scheme requires the bid

solicitation in the context of requiring ‘good faith efforts to

meet [percentage] goals.’”°’ The court ultimately found that

“the statute does not require set-asides, but it encourages

them. A bidder can avoid disqualification by seeing to it that

*” Lutheran Church-Missouri Synod, 154 F.3d at 491.

© 125 F.3d 702 (9" Cir. 1997).

9 Id. at 71i.

26

23% of the work goes to the designated classes, or showing

that it tried to bring about that result.” As such, the statute

was race-conscious.

Similarly, the SBE Program contains a multitude of race-

conscious provisions that encourage and pressure prime

contractors to include a certain percentage of MBE and WBE

subcontractor participation in their bids. The program

provides benefits for those bidders who include MBEs at their

estimated level of availability. Conversely, the program

imposes burdens upon bidders who do not meet the

subcontracting goals, or demonstrate good faith efforts to do

so, including disqualification and potential investigations and

sanctions to bidders who do not meet the specified MBE and

WBE availability estimates.

And in Safeco Insurance Company of America v. City of

White House, Tennessee,™ the Sixth Circuit held that even if

a regulation does not explicitly impose a specific numerical

quota, but instead only requires “good faith efforts” to meet

that goal, that alone would not insulate the regulation from

strict scrutiny.®' In that case, the Sixth Circuit found that the

EPA’s stated policy of awarding a “fair share” of sub-

agreements to MBEs “implies that the outcome must meet an

implicit goal —- a goal derivable from one’s calculation of ‘fair

share,’ but almost certainly non-zero.””

191 F.3d 675 (6" Cir. 1999).

*" Id. at 689, 691.

* Id. at 690. See also Bras v. Calif. Pub. Util. Comm., 59 F.3d

869 (9" Cir. 1995) (Rigid mandates are not a prerequisite to finding

a racia! classification).

27

The same is true of the City’s SBE Program. The Rules

and Guidelines use the word “ensure” to indicate explicitly,

or at least implicitly, that bidders are required to utilize MBEs

and WBEs to the extent of their availability as calculated by

the City. The fact that the City calculates MBE and WBE

availability and then presents an “Availability Estimation” in

the bid documents strongly implies that the City has

established a goal that should be met and _ requires

documentation of good faith efforts to meet that goal. As was

the case with the challenged regulation in Safeco, a “good

faith” requirement to meet those goals is enough to trigger

Strict scrutiny.

Ill. The Lower Courts’ Decisions Are Consistent with this

Court’s Holding in Parents Involved in Community

Schools v. Seattle School District No. 1

Petitioner asserts that this case should be reexamined in

light of this Court’s recent decision in Parents Involved in

Community Schools v. Seattle School District No. 1°

(“Community Schools”). However, the holding in Community

Schools, in fact, supports Cleveland’s position that the

racially-conscious components of the SBE Program are

subject to strict scrutiny. Community Schools reaffirmed that,

“It is well established that when the government distributes

burdens or benefits on the basis of individual racial

classifications, that action is reviewed under strict scrutiny”™

and that “this Court has recently reiterated, however, that ‘all

racial classifications [imposed by government] ... must be

® 127 S.Ct. 2738 (2007).

** Id. at 2751 (citing Johnson v. California, 543 U.S. 499, 505-506

(2005); Grutter v. Bollinger, 539 U.S. 306, 326 (2003); Adarand

Constructors v. Pena, 515 U.S. 200, 224 (1995)).

28

analyzed by a reviewing court under strict scrutiny.’”® The

SBE Program distributes burdens and benefits on the basis of

compliance with the race-conscious components of the Rules

and Guidelines, namely the MBE and WBE availability

estimates, and as such, the courts must apply strict scrutiny.

While the City cites Justice Kennedy’s concurring

opinion, which suggests that tracking the achievement of

students from major racial and ethnic groups may not trigger

strict scrutiny, as demonstrated by the Rules and Guidelines,

the SBE Program is not merely a tracking program.

Community Schools does not erode the reality that the City’s

SBE Program contains race-conscious provisions without the

proper factual predicate to withstand strict scrutiny and, as

such, is illegal.

CONCLUSION

For the foregoing reasons, the Petition for Writ of

Certiorari should be denied.

®° fd. at 2764 (quoting Johnson v. California, 543 U.S. 499, 505-

506 (2005); citing Grutter vy. Bollinger, 539 U.S. 306, 326 (2003);

Adarand Constructors v. Pena, 515 U.S. 200, 224 (i995)).

29

Respectfully submitted,

W. Kelly Lundrigan (0059211)

Counsel of Record

Gary E. Powell (0037546)

Elizabeth L. Hutton (081187)

Manley Burke LPA

225 West Court Street

Cincinnati, OH 45202

($13) 721-5525

Fax (513) 721-4268

wki@manleyburke.com

Attorneys for Respondent