Fullilove v. Klutznick (Supreme Court Drama)
Petitioner: H. Earl Fullilove and others
Respondent: Philip M. Klutznick, U.S. Secretary of Commerce
Petitioner's Claim: That a provision in the law requiring that 10 percent of all federal funds for local public works projects go to minority-owned businesses violates the U.S. Constitution.
Chief Lawyers for Petitioner: Robert G. Benisch and Robert J. Hickey
Chief Lawyers for Respondent: Drew S. Days III
Justices for the Court: Harry A. Blackmun, William J. Brennan, Jr., Warren E. Burger, Thurgood Marshall, Lewis F. Powell, Byron R. White
Justices Dissenting: William H. Rehnquist, John Paul Stevens, Potter Stewart
Date of Decision: July 2, 1980
Decision: Affirmed lower court rulings rejecting the petitioners' claim that minority "set-asides" were unconstitutional.
Significance: The decision clarified the Court's position on the constitutionality of minority set-aside programs. Plus many state and local governments adopted set-aside programs for minority-owned businesses.
Congress had long struggled with the fact that when various government agencies, including state and local governments, contracted for construction of public works projects rarely did they contract with minority-owned businesses. Public works projects are projects that receive money from the federal government for such things as construction of schools, courthouses, post offices, roads, bridges, dams, power projects, water systems, and waste treatment plants. Federal money received by governmental agencies to pay for the projects almost never reached minority business enterprises (companies).
According to Representative Mitchell of Maryland, speaking on the floor of the House of Representatives on February 23, 1977, " . . . every agency of the Government has tried to figure out a way to avoid doing this very thing. Believe me, these bureaucracies can come up with 10,000 ways to avoid doing it."
Minority Business Enterprise Provision
Representative Mitchell pointed out that in 1976 less than one percent of federal funds for these projects found their way to minority companies, yet minorities made up 15-18 percent of the general population. Representative Mitchell's efforts ended with passage of the Public Works Employment Act of 1977. The act authorized an additional $4 billion for federal grants [money from the federal government for projects] to be awarded by the Secretary of Commerce to state and local governments for use in local public works projects. But there was a "catch" to these dollars. The catch was a section of the act, Section 103 (f) (2) called the "minority business enterprise" or MBE provision. The MBE provision required that,
. . . no grant shall be made under the Act for any local public works project unless the applicant gives satisfactory assurance to the secretary [of Commerce] that at least 10 per cent of the amount of each grant shall be expended [spent] for [services from] minority business enterprises.
So 10 percent of the federal grant money provided for each project had to go to minority-owned businesses. This forced governments to contract with those businesses for at least some work on each project. Minority group members were defined as citizens of the United States who are "Negroes, Spanish-speaking, Orientals, Indians, Eskimos, and Aleuts."
Public Works Employment Act Challenged
Signed into law by President Jimmy Carter in May of 1977, the Public Works Employment Act was an affirmative action plan designed to increase opportunities for businesses owned by groups traditionally discriminated against in U.S. history. This plan was a "set-aside" program, that is, 10 percent of federal grant money directed to public works projects had to be "set-aside" and awarded to MBE's. This was the first federal law, since the mid-1800s, to establish a specific class of persons based on race to which special treatment was to be given.
As expected after only six months the act was challenged in court. H. Earl Fullilove and several associations of non-minority construction contractors filed suit against Philip M. Klutznick, U.S. Secretary of Commerce. They complained the 10 percent MBE requirement had hurt their companies incomes because of lost businessusiness which now went to the MBEs. They charged the MBE provision was unconstitutional (the law did not follow the intent of the U.S. Constitution) because it violated the Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution and also the equal protection promised under the Due Process Clause of the Fifth Amendment. The Equal Protection Clause guarantees that no person or class of persons will be denied the same protection of the laws enjoyed by other persons or classes in similar circumstances in their lives, liberty, property, and pursuit of happiness. Due process is also a constitutional guarantee that before the government acts to take away a person's life, liberty, or property fair legal proceedings must take place. They demanded that no more federal monies be given to minority contractors pending the outcome of their lawsuit.
First the district court and then the U.S. Court of Appeals for the Second Circuit ruled against Fullilove and affirmed (supported) the MBE program as constitutional. The court of appeals cited the many years of governmental attempts to remedy (fix) past racial and ethnic (groups of various races) discrimination. The Court found it "difficult to imagine" any other purpose for the MBE provision.
Fullilove's group appealed to their last avenue of hope, the U.S. Supreme Court who agreed to hear the case.
Congress Need Not Be Color-Blind
On July 2, 1980, the U.S. Supreme Court issued its 6-3 plurality ruling (a majority agrees on the decision but for different reasons). The justices again affirmed the constitutionality of the Public Works Employment Act and rejected Fullilove's claims. Chief Justice Warren Burger wrote that Congress had frequently used the Spending Power provision of Article I of the Constitution to hold back federal money until "governments or private parties [agreed] to cooperate voluntarily with federal policy." The Spending Power provision, the Court recognized, allowed Congress to "provide for the . . . general Welfare" and the MBE provision does that. Furthermore Justice Burger commented that in attempting to right past discrimination, Congress need not act in a wholly "color-blind" fashion. The set-asides were a "reasonably necessary means of furthering the compelling [important] governmental interest in redressing [to make up for] the discrimination, that affects minority contractors." Even though groups were receiving preferential treatment under the law, the Equal Protection Clause was not violated because the preferential treatment was necessary to boost the opportunities of those groups.
Chief Justice Burger also wrote that Due Process was not violated. While Congress, in debating passage of the act, had not actually held hearings on set-asides, they nevertheless had acted in a knowledgeable and reasonable manner to correct long recognized discrimination practices in the construction industry. Yet another reason for the plurality ruling was the MBE, when highly scrutinized (examined by the Court), still passed as constitutional.
Burger concluded simply with, "The MBE provision of the Public Works Employment Act of 1977 does not violate the [U.S.] Constitution."
The act was reasonably debated then well written, had the honest and important goal to right past discriminations, and Congress had the constitutional power to enforce the set-asides.
Because of Fullilove, many state and local governments adopted set-aside programs for minority owned businesses. Some withstood court tests while less flexible ones did not. By the late 1980s the Court had reinforced its position in upholding affirmative action in three cases, Local Number 28 of the Sheet Metal Workers' International v. Equal Employment Opportunity Commission (1986); Local Number 93, International Association of Firefighters, AFL-CIO C.L.C. v. City of Cleveland, et al. (1986); and, Johnson v. Transportation Agency (1987).
Fullilove, along with University of California v. Bakke (1978) and United Steelworkers of America v. Weber (1979), all tested the problem of "reverse discrimination." Reverse discrimination is discrimination against a group not historically discriminated against as white males. With all three cases, the Court showed a tendency to protect affirmative action even at the expense of what appeared to be injustice to equally qualified white contractors, students or workers.
Suggestions for further reading
Mills, Nicolaus, ed. Debating Affirmative Action: Race, Gender, Ethnicity, and the Politics of Inclusion. New York: Dell Publishing, 1994.
Minority Business Development Agency. [Online] Website: http://www.mbda.gov (Accessed on July 31, 2000).
McWhiter, Darien A. The End of Affirmative Action: Where Do We Go From Here? New York: Carol Publishing Group, 1996.
Zelnick, Bob. Backfire: A Reporter's Look at Affirmative Action. Washington, DC: Regnery Publishing, Inc., 1996.