PLF Wins Landmark Court Ruling

Pacific Legal Foundation, Jul. 27

San Francisco,CA: The Pacific Legal Foundation today won a landmark legal victory on behalf of race and sex equality for all Californians. The state trial court has ruled in the consolidated cases of Schram Construction, Inc. v. City and County of San Francisco and Coral Construction, Inc. v. City and County of San Francisco that San Francisco’s public contracting program granting preferences to minority- and women-owned businesses violates the California Constitution.

PLF filed the Coral Construction lawsuit in September, 2000, and the Schram Construction suit in June 2003. These lawsuits challenge San Francisco’s public contracting program that calculates bids submitted by minority- and women-owned businesses at 10 percent lower than the bid price. Bidders must also show that they will use a certain percentage of minority and women subcontractors to work on the project, as well as requires City agencies to give special notice to minority- and women-owned businesses of upcoming bidding opportunities.

“The voters of California spoke loudly to end racially-driven programs and policies like those used in San Francisco. I am heartened that the court saw the issues clearly and handed down this victory for equality,” said PLF attorney Sharon Browne, representing Schram Construction. “We’re pleased with the Court’s decision to enforce Proposition 209 against the City’s entrenched discriminatory program,” said Browne. “This decision was a straight forward application of Proposition 209 to the same type of government preference program that the California Supreme Court ruled violated Proposition 209 back in 2000.”

“San Francisco officials have defied the California constitution ever since Prop 209 was passed eight years ago. With this decision, City officials will have to end these discriminatory program,” added John Findley, the PLF attorney representing Coral Construction.

Since 1984, San Francisco has been enforcing a series of public contracting ordinances that grant preferential treatment to minority- and women-owned businesses. Proposition 209, the California Civil Rights Initiative enacted in November 1996, amended the California Constitution to make it illegal for state and local governments to “discriminate against, or grant preferential treatment to, any individuals or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public contracting.” Although San Francisco’s public contracting program was set to expire in June 2003, the San Francisco Board of Supervisors extended its illegal race- and sex-based public contracting program to 2008.

Richard D. Schram is the president and sole owner of Schram Construction. Since 1998, Schram Construction has been bidding on San Francisco’s public works contracts. Coral Construction is headquartered in Oregon and performs a large percentage of its work in California as a specialty highway contractor.

PLF has been the primary enforcer of Proposition 209 since its passage. In 2000, PLF won a landmark victory against the city of San Jose in Hi-Voltage Wire Works, Inc. v. City of San Jose, the first Proposition 209 enforcement case to reach the California Supreme Court.

Under its own local ordinance, the City of San Jose required bidders for city contracts to either hire minority or women subcontractors or engage in “outreach” to minority- and women-owned subcontractors, exclusively. Hi-Voltage intended to perform all of the work itself rather than subcontract, and its bid was rejected even though it had the lowest bid price. In a resounding, unanimous judgment, the state Supreme Court struck down the San Jose affirmative action program, setting a clear legal precedent that the state constitution makes it unlawful for state and local governments to favor one group over another in public contracting.

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