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Coral Construction, Inc. v. City and County of San Francisco

August 2, 2010

CORAL CONSTRUCTION, INC., PLAINTIFF AND RESPONDENT,
v.
CITY AND COUNTY OF SAN FRANCISCO ET AL., DEFENDANTS AND APPELLANTS.
SCHRAM CONSTRUCTION, INC., PLAINTIFF AND RESPONDENT,
v.
CITY AND COUNTY OF SAN FRANCISCO ET AL., DEFENDANTS AND APPELLANTS.



Ct.App. 1/4 A107803 (San Francisco County Super. Ct. Nos. 319549 & 421249), James L. Warren.

The opinion of the court was delivered by: 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 (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 (Seattle) and Hunter v. Erickson (1969) 393 U.S. 385 (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 ordinance*fn1 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. Const., 14th Amend.) in giving preferences based on race, and that it also violated the City's own charter in several respects. (Assoc. Gen. Contr. of Cal. v. City & County of S.F. (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 (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 (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 Gen. Contractors of Cal. 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, and 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 "gaug[ing] the effectiveness of the prior [MBE/WBE] Ordinances... and to assess the need for further and continuing action." (S.F. Admin. Code, former § 12D.A.2.)*fn2 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.)

In 2000, while San Francisco's 1998 ordinance was still in effect, we held that section 31 invalidated the City of San Jose's public contracting program because it mandated participation goals for, and preferential outreach efforts directed to, MBE's and WBE's. (Hi-Voltage, supra, 24 Cal.4th 537, 562-565.) Section 31 does not tolerate, we explained, race- and gender-conscious preferences the equal protection clause does not require but merely permits. (See Hi-Voltage, at p. 567.) Like the plurality in Croson, supra, 488 U.S. 469, however, we held out the possibility that the federal equal protection clause might sometimes require race-conscious remedies to remedy intentional discrimination. (Hi-Voltage, at p. 568 ["Where the state or a political subdivision has intentionally discriminated, use of a race-conscious or race-specific remedy necessarily follows as the only, or at least the most likely, means of rectifying the resulting injury."]; see Croson, at p. 509 (plur. opn. of O'Connor, J.).)

In 2001, plaintiff Coral commenced the action now before us in the San Francisco Superior Court, seeking declaratory and injunctive relief against the 1998 ordinance. The ordinance was set to expire in 2003. (S.F. Admin. Code, former § 12D.A.21.) Before it expired, and while plaintiff's action proceeded in the superior court, the City conducted additional investigations to determine whether discrimination against MBE's and WBE's continued. Finding that such discrimination did continue, the Board in 2003 reenacted the 1998 ordinance without substantial change. (See S.F. Admin. Code, § 12D.A.2.8.) From that point on, the action proceeded as a challenge to the 2003 ordinance.

In legislative findings accompanying the 2003 ordinance, the Board once again relied on statistical studies showing that MBE's and WBE's were underutilized, both in San Francisco and the surrounding area, on testimony and oral histories recounting anecdotes of discrimination, and on social science materials. (S.F. Admin. Code, § 12D.A.2.) Based on this information, the Board found that "the race- and gender-conscious remedial programs authorized by [the MBE/WBE] Ordinance continue to be necessary to remedy discrimination against minority- and women-owned businesses in City prime contracting and subcontracting." (S.F. Admin. Code, § 12D.A.2.8.) The Board also found "that the City... is actively discriminating against women and minority groups in its contracting, and is passively participating in discrimination in the private sector." (Ibid.) In conclusion, the Board found "that the evidence before it establishes that the City's current contracting practices are in violation of federal law and that, as a result, [the] ordinance continues to be required by federal law to bring the City into compliance with federal civil rights laws in its contracting practices." (Ibid.)

More specifically, the Board found that "the following discriminatory practices [identified by the HRC in 1998 were still] at work in City contracting: (1) listing [MBE's and WBE's] as subcontractors but never using the listed [MBE and WBE] subcontracting firms, (2) the use of additional nonminority, male subcontractors never listed on the relevant HRC forms, and (3) the creation of fraudulent joint ventures involving minority- or women-owned and majority, men-owned firms." (S.F. Admin. Code, § 12D.A.2.7.) The Board also noted the HRC in 2003 "ha[d] encountered... additional discriminatory practices in City contracting," including: "(1) attempts by City personnel to improperly influence contract selection panels to ensure that MBEs/WBEs do not obtain City prime contracts; (2) attempts by City personnel to blame MBEs/WBEs unjustifiably for project delays; (3) the imposition of unnecessary minimum requirements on City contracts that act as a barrier to MBEs/WBEs; (4) the failure by City departments to submit draft requests for proposals to HRC with sufficient time to permit the HRC to ensure that adequate MBE/WBE subcontracting goals have been set; (5) attempts by City departments to circumvent the requirements of [the 1998] ordinance by extending or modifying existing contracts rather than putting new contracts out to bid; (6) the failure by City departments to comply with the prompt payment provisions of this ordinance which ensure that MBEs/WBEs do not suffer unnecessary financial hardships; and (7) resistance by City prime contractors to provid[ing] the City with required subcontractor payment information, making it difficult for the City to ensure that MBE/WBE subcontractors receive prompt payment for their work on City contracts." (Ibid.)

The City's 2003 statistical studies showed that MBE's and WBE's continued "to receive a smaller share of certain types of contracts for the purchases of goods and services by the City than would be expected" based on their availability. (S.F. Admin. Code, § 12.D.A.2.3.) The studies also showed, however, that MBE's and WBE's received a larger share of other types of contracts. To note just a few examples, the City used African-American MBE's at 10 times, and WBE's at more than three times, the expected rate for professional services subcontracts, and used Latino MBE's at more than twice the expected rate for construction prime and subcontracts. (S.F. Admin. Code, §§ 12D.A.2.4, 12D.A.2.5.) The Board explained its overuse of MBE's and WBE's as "attributable to the fact that the City has remedial contracting programs in place," and found that to discontinue the use of preferences would cause MBE and WBE utilization rates to "plummet." (Id., § 12D.A.2.4.) In comparison, non-MBE/WBE firms were slightly overused in most areas of City contracting, significantly overused in a few areas, and substantially overused only in prime contracts for architecture and engineering (by 40 percent) and prime and subcontracts for telecommunications (by 10 and 23 percent, respectively).

In contrast to 1998, the Board in 2003 no longer found that decisionmakers in the City's contracting process were overwhelmingly Caucasian males. (Compare S.F. Admin. Code, former § 12D.A.2.1 with id., present § 12D.A.2 [deleting the prior finding].) The Board noted, however, that "[m]inorities and women [had] report[ed] that project managers in many City Departments continue to operate under an 'old boy network['] in awarding City prime contracts." (Id., § 12.DA.2.6.)

The operative provisions of the 2003 ordinance give bid discounts that range from 5 to 10 percent, depending on the level of MBE/WBE participation. (S.F. Admin. Code, § 12D.A.9.2.) For each proposed prime contract, the director of the HRC sets MBE/WBE participation goals based on the availability of MBE/WBE subcontractors and the extent of subcontracting opportunities available. (Id., § 12D.A.17(C).) Prospective prime contractors must demonstrate in their bids that they have made good-faith efforts to use MBE/WBE subcontractors, and must also identify the particular MBE/WBE subcontractors to be employed and the dollar value of their participation. (Id., § 12D.A.17(D).) The director may waive the MBE/WBE subcontracting goals only on a showing that subcontracting is infeasible given the project's requirements, that MBE/WBE subcontractors are unavailable, or that the available MBE's/WBE's "have given price quotes that exceed competitive levels beyond amounts that can be attributed to cover costs inflated by the present effects of discrimination." (Id., § 12D.A.17(G)3; see also id., § 12D.A.17(G)1, 2.) Bids that do not satisfy these requirements, or that do not meet the Director's MBE/WBE participation goals, "shall be declared non-responsive." (Id., § 12D.A.17(D).)

The 2003 ordinance defines "minority," and thus the groups whose businesses are entitled to be certified as MBE's, to include "African Americans (defined as persons whose ancestry is from any of the Black racial groups of Africa or the Caribbean); Arab Americans (defined as persons whose ancestry is from an Arabic speaking country that is a current or former member of the League of Arab States); Asian Americans (defined as persons with Chinese, Japanese, Korean, Pacific Islander, Samoan, Filipino, Asian Indian, and Southeast Asian Ancestry); Iranian Americans (defined as persons whose ancestry is from the country of Iran); Latino Americans (defined as persons with Mexican, Puerto Rican, Cuban, Central American or South American ancestry[; p]ersons with European Spanish ancestry are not included as Latino Americans...); and Native Americans (defined as any person whose ancestry is from any of the original peoples of North America, and who maintains cultural identification through tribal affiliation or community recognition[)]." (S.F. Admin. Code, § 12D.A.5.)

Finally, the 2003 ordinance declares as a matter of policy that "[t]he City will continue to rely on the relationship between the percentages of MBEs/WBEs in the relevant sector of the San Francisco business community and their respective shares of City contract dollars as a measure of the effectiveness of this ordinance in remedying the effects of the aforementioned discrimination." (S.F. Admin. Code, § 12D.A.3.)

After the City adopted the 2003 ordinance, plaintiff Schram commenced a separate action challenging its validity under section 31 and seeking declaratory and injunctive relief. Schram and the City filed cross-motions for summary judgment. When briefing on the motions in Shram was complete, the parties to Coral joined in the motions, and all parties in both cases stipulated that no further briefing or record submissions would be necessary to permit the court to issue rulings on summary judgment in both cases. In view of the stipulation, the superior court consolidated Shram and Coral for all purposes.

The superior court granted plaintiffs' motion and denied the City's. Relying on Hi-Voltage, supra, 24 Cal.4th 537, the court held the 2003 ordinance violated section 31. Relying on the Ninth Circuit's decision in Wilson, supra, 122 F.3d 692, the court held section 31 did not violate the political structure doctrine. Finally, the court concluded the ordinance was not required to avoid a loss of federal funds and was, thus, not exempt from section 31 on that basis. (See § 31, subd. (e).*fn3 ) As relief, the court entered a permanent injunction prohibiting the City from enforcing the 2003 ordinance or any similar program in the future. The Court of Appeal affirmed in part, reversed in part, and remanded for adjudication of the City's claim that the federal equal protection clause required the ordinance. We granted review.*fn4

II. DISCUSSION

A. The Political Structure Doctrine

We first address the City's argument that section 31 violates the political structure doctrine -- an aspect of federal equal protection articulated in Seattle, supra, 458 U.S. 457, and Hunter, supra, 393 U.S. 385. The City raised this issue in its cross-motion for summary judgment as a ground for judgment in its favor. Accordingly, the City's burden is to show "that there is no triable issue as to any material fact and that [it] is entitled to judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).) We review the matter de novo because it comes to us as a ruling on a motion for summary judgment. (Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 67-68.) We requested briefing on the issue,*fn5 and now hold that section 31 does not violate equal protection.

To determine whether California's section 31 is consistent with the federal equal protection clause (U.S. Const., 14th Amend.) we must first make clear what the state provision means. As the Legislative Analyst explained in the official ballot pamphlet presenting the proposed measure to the voters, section 31 was intended to "eliminate state and local government affirmative action programs in the areas of public employment, public education, and public contracting to the extent these programs involve 'preferential treatment' based on race, sex, color, ethnicity, or national origin. The specific programs affected by the measure, however,... depend on such factors as (1) court rulings on what types of activities are considered 'preferential treatment'[*fn6 ] and (2) whether federal law requires the continuation of certain programs." (Ballot Pamp., Gen. Elec. (Nov. 5, 1996) analysis of Prop. 209 by Legis. Analyst, p. 30.) Section 31's ban on preferences includes certain exceptions. The provision does not affect "bona fide qualifications based on sex" (§ 31, subd. (c)), existing court orders or consent decrees (id., subd. (d)), and actions which must be taken to avoid a loss of federal funds to the state (id., subd. (e)). (See Ballot Pamp., supra, analysis of Prop. 209, p. 30.)

Most importantly for present purposes, section 31 prohibits race- and gender-conscious programs the federal equal protection clause permits but does not require. As we explained in Hi-Voltage, supra, 24 Cal.4th 537, 567, "[e]qual protection allows discrimination and preferential treatment whenever a court determines they are justified by a compelling state interest and are narrowly tailored to address an identified remedial need." In contrast, "section 31 categorically prohibits discrimination and preferential treatment. Its literal language admits no 'compelling state interest' exception [and] we find nothing to suggest the voters intended to include one sub silentio." (Ibid.) Section 31 poses no obstacle, however, to race- or gender-conscious measures required by federal law or the federal Constitution. This is the inescapable effect of the supremacy clause (U.S. Const., art. VI, § 2), which section 31 implicitly acknowledges in a savings clause.*fn7

Addressing an identical challenge to section 31, the Ninth Circuit in Wilson, supra, 122 F.3d 692, 701, observed that, "[a]s a matter of 'conventional' equal protection analysis, there is simply no doubt that [section 31] is constitutional." The clause provides that "[n]o state shall... deny to any person within its jurisdiction the equal protection of the laws." (U.S. Const., 14th Amend., § 1.) "A core purpose" of the clause is to "do away with all governmentally imposed discrimination based on race" (Palmore v. Sidoti (1984) 466 U.S. 429, 432, fn. omitted), thus ultimately helping to create "a political system in which race no longer matters" (Shaw v. Reno (1993) 509 U.S. 630, 657). To further this goal, the clause renders racial classifications presumptively invalid, regardless of purported motivation (Nevada Dept. of Human Resources v. Hibbs (2003) 538 U.S. 721, 736; Personnel Administrator of Mass. v. Feeney (1979) 442 U.S. 256, 272), and tolerates them only when narrowly tailored to serve compelling governmental interests (Adarand Constructors, Inc. v. Pena (1995) 515 U.S. 200, 224, 226-227 (Adarand)). Section 31 is consistent with equal protection, under this analysis, because "[a] law that prohibits the State from classifying individuals by race or gender a fortiori does not classify individuals by race or gender" (Wilson, at p. 702), and because the federal Constitution does not oblige the state to permit racial classifications the federal Constitution itself does not require. "That the Constitution permits the rare race-based or gender-based preference hardly implies that the state cannot ban them altogether." (Id., at p. 708.)

To argue that section 31 violates equal protection, the City invokes the rarely used political structure doctrine. The doctrine has its origin in Hunter, supra, 393 U.S. 385, and Seattle, supra, 458 U.S. 457, and its parameters necessarily emerge from those decisions.

In Hunter, supra, 393 U.S. 385, a realtor in Akron, Ohio refused to show homes to an African-American prospective buyer. When the buyer sued to compel the city to enforce its fair housing ordinance, the city's voters repealed the ordinance and amended the city charter to require a referendum before any new ordinance on the same subject could take effect. (Id., at pp. 386-387.) The high court held the charter amendment violated equal protection. While the provision "declare[d] no right to discriminate in housing" (id., at p. 389), it still contained "an explicitly racial classification," in the sense that it "treat[ed] racial housing matters differently from other racial and housing matters" (ibid.). "The automatic referendum system [did] not," for example, "reach housing discrimination on sexual or political grounds, or against those with children or dogs, nor [did] it affect tenants seeking more heat or better maintenance from landlords, nor those seeking rent control, urban renewal, public housing, or new building codes." (Id., at p. 391.) The referendum system placed a burden only on the minority, the court explained, because "[t]he majority needs no protection against discrimination and if it did, a referendum might be bothersome but no more than that." (Ibid.) While the city might properly have changed the existing ordinance by "majority vote at [a] town meeting" (id., at p. 392), the city "instead chose[] a more complex system. Having done so," the court concluded, "the [city] may no more disadvantage any particular group by making it more difficult to enact legislation in its behalf than it may dilute any person's vote or give any group a smaller representation than another of comparable size." (Id., at pp. 392-393.)

In Seattle, supra, 458 U.S. 457, the governing board of a Washington public school district voluntarily adopted a plan to end de facto racial segregation by busing pupils to reduce racial imbalance in individual schools. (Id., at pp. 460-461.) The state's voters responded by amending the state's constitution to prohibit busing for the purpose of desegregation, while still allowing busing for most of the other reasons for which pupils were already being transported (e.g., to provide special education and reduce overcrowding). (Id., at pp. 461-463, 471.) Relying on Hunter, supra, 393 U.S. 385, the high court held the state constitutional provision violated equal protection. The state provision, the court explained, "remove[d] the authority to address a racial problem -- and only a racial problem -- from the existing decisionmaking body, in such a way as to burden minority interests." (Seattle, at p. 474.) The provision burdened minority interests by "lodging decisionmaking authority over the question at a new and remote level of government." (Id., at p. 483.) As a result, "[t]hose favoring the elimination of de facto school segregation now must seek relief from the state legislature, or from the statewide electorate," while "authority over all other student assignment decisions, as well as over most other areas of educational policy, remains vested in the local school board." (Id., at p. 474.)

The "political structure" doctrine that emerges from these decisions is perhaps best summarized in the Seattle majority's statement that "the Fourteenth Amendment... reaches 'a political structure that treats all individuals as equals,'... yet more subtly distorts governmental processes in such a way as to place special burdens on the ability of minority groups to achieve beneficial legislation." (Seattle, supra, 458 U.S. 457, 467, quoting Mobile v. Bolden (1980) 446 U.S. 55, 84 (conc. opn. of Stevens, J.).) The City argues this doctrine straightforwardly invalidates section 31 because that provision uses the racial (or gender-based) nature of an issue (i.e., preferences) to structure governmental decisionmaking, in the sense that groups that seek race- or gender-based preferences in public contracting, employment and education must first overcome the obstacle of amending the state Constitution, while groups that seek preferences on other bases (e.g., disability or veteran status) need not. Although superficially appealing, the City's argument is not ultimately persuasive. The United States Courts of Appeals for the Sixth and Ninth Circuits have concluded the political structure doctrine does not invalidate state laws that broadly forbid preferences and discrimination based on race, gender and other similar classifications. (See Wilson, supra, 122 F.3d 692, 708-709; Coalition to Defend Affirmative Action v. Granholm (6th Cir. 2006) 473 F.3d 237, 251 (Granholm).) While the lower federal courts' decisions do not bind us, we give them "great weight" when they reflect a consensus, as they do here. (Barrett v. Rosenthal (2006) 40 Cal.4th 33, 58; Etcheverry v. Tri-Ag Service, Inc. (2000) 22 Cal.4th 316, 320-321.) Here, exercising our independent judgment on the matter, we conclude the Sixth and Ninth Circuits' decisions are correct on this point.

In Wilson, supra, 122 F.3d 692, as previously noted, the Ninth Circuit rejected the City's argument that section 31 violates the political structure doctrine -- the same argument the City now repeats in this court. In rejecting the argument, the Ninth Circuit observed that "[i]mpediments to preferential treatment do not deny equal protection. It is one thing to say that individuals have equal protection rights against political obstructions to equal treatment; it is quite another to say that individuals have equal protection rights against political obstructions to preferential treatment. While the [federal] Constitution protects against obstructions to equal treatment, it erects obstructions to preferential treatment by its own terms." (Wilson, at p. 708, fn. omitted.) "That the Constitution permits the rare race-based or gender-based preference hardly implies that the state cannot ban them altogether." (Ibid.) The Sixth Circuit in Granholm relied in part on the same reasoning in declining to issue preliminary injunctive relief against a provision of the Michigan Constitution (id., art. I, § 26) identical to California's section 31. (Granholm, supra, 473 F.3d 237, 251 [impediments to preferential treatment do not deny equal protection, citing Wilson, at p. 708].)*fn8

The City perceives no important difference between initiatives obstructing equal treatment and initiatives banning preferences, describing both as "plac[ing] special burdens on the ability of minority groups to achieve beneficial legislation." (Seattle, supra, 458 U.S. 457, 467.) We do not think, however, that the term "beneficial legislation" can bear the weight the City would place upon it. Nothing in Hunter, supra, 393 U.S. 385, or Seattle supports extending the political structure doctrine to protect race- or gender-based preferences that equal protection does not require.

The ordinance repealed by Akron's voters in Hunter, supra, 393 U.S. 385, merely required equal treatment in the sale and lease of real property. (See id., at p. 386.) The initiative repealing the ordinance had no apparent consequence but to perpetuate the unequal treatment of minorities by depriving them of the benefit of plainly constitutional legislation. (Cf. Reitman v. Mulkey (1967) 387 U.S. 369, affg. Mulkey v. Reitman (1966) 64 Cal.2d 529.) In no sense did the case concern preferences, and it therefore offers the City's position no support.

Relying instead on Seattle, supra, 458 U.S. 457, the City contends the local pupil transportation programs involved in that case were "designed to move many students from schools nearest their homes in order to address 'racial imbalances' in the schools [and thus] can only be described as providing affirmative, race-conscious relief." This characterization of Seattle is accurate, but only so far as it goes. In arguing that Seattle protects presumptively unconstitutional racial preferences, the City reads the decision without regard to its historical context and thus unjustifiably extends its holding. Today the race-conscious pupil assignment programs repealed by Washington's voters would be presumptively unconstitutional and, thus, subject to strict scrutiny. (See Parents Involved in Community Schools v. Seattle School Dist. No. 1 (2007) 551 U.S. 701, 720 (Parents Involved).) But at the time Seattle was decided, the high court's prior decisions indicated that the assignment of pupils by ratios to achieve racial balance fell "within the broad discretionary powers of school authorities" to formulate "educational policy" and to "prepare students to live in a pluralistic society...." (Swann v. Board of Education (1971) 402 U.S. 1, 16; see also North Carolina State Board of Education v. Swann (1971) 402 U.S. 43, 45.) Although the dissent in Seattle argued that race-conscious pupil-assignment policies were "presumptively invalid" and required an "extraordinary justification" (see Seattle, at p. 492, fn. 6 (dis. opn. of Powell, J.)), the majority did not address the argument.*fn9 Nor does anything in Seattle suggest the high court understood the pupil assignment policies in question as providing unequal preferences, as opposed simply to " 'equal educational opportunity' " (Seattle, at p. 479, italics added, quoting Citizens Against Mandatory Bussing v. Palmason (Wn. 1972) 495 P.2d 657, 663) in the plain, immediate sense of sending pupils of different races to the same schools. Accordingly, Seattle cannot fairly be read as holding that the political structure doctrine protects presumptively unconstitutional racial preferences, as opposed to programs intended to bring about immediate equal treatment. "Even a state law that does restructure the political process can only deny equal protection if it burdens an individual's right to equal treatment." (Wilson, supra, 122 F.3d 692, 707.)*fn10

Instead of burdening the right to equal treatment, section 31 directly serves the principle that "all governmental use of race must have a logical end point." (Grutter v. Bollinger (2003) 539 U.S. 306, 342; see also Parents Involved, supra, 551 U.S 701, 760.) As noted, a "core purpose" of the equal protection clause is to "do away with all governmentally imposed discrimination based on race" (Palmore v. Sidoti, supra, 466 U.S. 429, 432, fn. omitted), ultimately creating "a political system in which race no longer matters" (Shaw v. Reno, supra, 509 U.S. 630, 657). Racial preferences are presumptively unconstitutional (Nevada Dept. of Human Res. v. Hibbs, supra, 538 U.S. 721, 736) and tolerated only when narrowly tailored to serve compelling governmental interests (Adarand, supra, 515 U.S. 200, 224, 226-227). The requirement that such preferences withstand strict scrutiny "reflects that racial classifications, however compelling their goals, are potentially so dangerous that they may be employed no more broadly than the interest demands. Enshrining a permanent justification for racial preferences would offend this fundamental equal protection principle." (Grutter v. Bollinger, supra, at p. 342.)*fn11 Accordingly, even in the rare case in which racial preferences are required by equal protection as a remedy for discrimination, the governmental body adopting such remedies must undertake an extraordinary burden of justification "to assure all citizens that the deviation from the norm of equal treatment of all racial and ethnic groups is a temporary matter, a measure taken in the service of the goal of equality itself." (Croson, supra, 488 U.S. 469, 510.) In contrast, a generally applicable rule forbidding preferences and discrimination not required by equal protection, such as section 31, does not logically require the same justification.*fn12

For all of these reasons, we conclude the political structure doctrine does not invalidate section 31.

B. The Federal Funding Exception

The City next contends the 2003 ordinance is unaffected by section 31 because the ordinance falls within the exception set out in subdivision (e): "Nothing in this section shall be interpreted as prohibiting action which must be taken to establish or maintain eligibility for any federal program, where ineligibility would result in a loss of federal funds to the State." (§ 31, subd. (e).) The City, which receives federal funds for a variety of projects, argues it is compelled to enforce the 2003 ordinance by specific federal regulations imposing affirmative action obligations on cities that receive funds. We asked the parties to brief the issue*fn13 and now hold, as did the lower courts, that the City's argument lacks merit.

The City invokes the federal funding exception (§ 31, subd. (e)) not as a basis for its own motion for summary judgment but, rather, as an argument against plaintiffs' motion. Accordingly, the City's burden is to show that a triable issue of fact exists. (Code Civ. Proc., § 437c, subd. (c); see Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.) The superior court did not mention the federal funding argument in its written ruling granting plaintiffs' motion. The Court of Appeal, however, discussed and rejected the argument, concluding that the relevant federal regulations do not require racial preferences and that the City has not, in any event, made a sufficient factual showing of past discrimination to trigger any obligation under the regulations. Of these two grounds, we find the first dispositive and thus do not reach the second.*fn14

The City's argument begins with the Civil Rights Act of 1964, title VI, which provides that "[n]o person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance." (42 U.S.C. § 2000d.) Title VI also authorizes and directs "[e]ach Federal department and agency which is empowered to extend Federal financial assistance to any program or activity... to effectuate the provisions of section 2000d of this title with respect to such program or activity by issuing rules, regulations, or orders of general applicability which shall be consistent with the achievement of the objectives of the statute authorizing the financial assistance in connection with which the action is taken." (42 U.S.C. § 2000d-1.) Exercising this rulemaking authority, the Environmental Protection Agency and the Secretary of Transportation have issued regulations forbidding discrimination in the projects they fund and requiring "affirmative action" in specified circumstances. (40 C.F.R. § 7.35(a)(7) (2010) [environmental protection];*fn15 49 C.F.R. § 21.5(b)(7) (2009) [transportation].*fn16 ) In neither regulation, however, is the term "affirmative action" defined. (Cf. 40 C.F.R. § 7.25 (2010) [environmental protection; definitions]; 49 C.F.R. § 21.23 (2009) [transportation; definitions].)

The City contends these regulations compelled it to adopt the 2003 ordinance to avoid a loss of federal funding. We do not agree. Although the regulations use the broad, undefined term "affirmative action," no intention to require racial preferences emerges from their plain language. The Environmental Protection Agency's regulation requires a recipient of federal funds who has "previously discriminated" to "take affirmative action to provide remedies to those who have been injured by the discrimination." (40 C.F.R. § 7.35(a)(7) (2010), italics added.) In this context, the term "affirmative action" clearly refers not to race-based remedies but, rather, to actions taken to benefit the specific victims of past discrimination. The regulation thus cannot logically mandate an ordinance like the City's, which confers preferences on bidders based on race without regard to specific instances of past discrimination. The Secretary of Transportation's regulation more broadly requires the recipients of federal funds to take "affirmative action to ensure that no person is excluded from participation" in a federally funded program "[e]ven in the absence of prior discriminatory practice or usage...." (49 C.F.R. § 21.5(b)(7) (2009).) The regulation also mentions race-based remedies but is on this point expressly permissive, stating that it "does not prohibit the consideration of race... to overcome the consequences" of past discrimination. (Ibid., italics added.) The unmistakable import of this language is not that race-based remedies are required, but simply that they are permitted, so far as the Secretary is concerned, if no other law precludes them. That the Secretary has no objection to race-based remedies does not establish the federal compulsion required to exempt the City's 2003 ordinance from section 31.

For these reasons, we find no merit in the argument that the federal funding exception (§ 31, subd. (e)) exempts the 2003 ordinance from section 31's general prohibition of racial preferences. No triable issue of fact exists on this point to preclude summary judgment for plaintiffs.

C. The Federal Compulsion Argument

Finally, the City contends the federal equal protection clause (U.S. Const., 14th Amend.) requires the 2003 ordinance as a remedy for the City's own discrimination. Although the superior court granted summary judgment for plaintiffs, the court did not meaningfully address the City's federal compulsion argument. The Court of Appeal reversed the superior court's decision to this extent and remanded the case "for the limited purpose of adjudicating this issue." Plaintiffs petitioned for review, and we directed the parties to brief the question.*fn17 We hold the Court of Appeal ruled correctly and affirm its judgment remanding for further proceedings.

Plaintiffs assert two procedural objections to remanding for further proceedings. Both lack merit. First, plaintiffs suggest the City failed to carry its burden in the superior court and is merely seeking a second, undeserved chance to do so. Plaintiffs mischaracterize the procedural posture. Because the City raised the federal compulsion theory as an argument against plaintiffs' motion for summary judgment, the City's burden was to show that triable issues of fact exist. (Code Civ. Proc., § 437c, subd. (c); see Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th 826, 849.) All parties have stipulated that no additional briefing or record submissions are necessary; the City seeks only a hearing in the superior court to determine whether it has carried its burden. Second, plaintiffs contend the City did not properly plead its federal compulsion theory. To the extent the City was required to plead the theory, the City did so by alleging in its answer as an affirmative defense that plaintiff Schram's complaint "is barred on the ground that the federal Constitution preempts the application of Proposition 209 [i.e., section 31] to invalidate the Ordinance." Plaintiffs never objected in the lower courts that the City's pleading was insufficient to preserve the issue. Instead, plaintiffs responded on the merits, thus waiving the objection. (Neverkovec v. Fredericks (1999) 74 Cal.App.4th 337, 346, fn. 5.)

Certainly we have the power to decide the federal compulsion issue in the first instance. We owe the superior court no deference in reviewing its ruling on a motion for summary judgment; the standard of review is de novo. (Johnson v. City of Loma Linda, supra, 24 Cal.4th 61, 67-68.) Furthermore, "[i]t is axiomatic that we review the trial court's rulings and not its reasoning." (People v. Mason (1991) 52 Cal.3d 909, 944.) Thus, a reviewing court may affirm a trial court's decision granting summary judgment for an erroneous reason. (D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 18-19.) In this case, however, we see no detriment and some benefit in affording the City the hearing in the superior court to which all litigants are entitled as a matter of course. (Code Civ. Proc., § 437c, subd. (a).) Unlike the political structure and federal funding issues, which we may resolve as questions of law, the federal compulsion claim is largely factual and depends on the evidence supporting the Board's decision to adopt race-conscious legislation. When the government seeks to defend actions based on race as remedial, there must be " 'a strong basis in evidence for its conclusion that remedial action was necessary.' " (Croson, supra, 488 U.S. 469, 500; quoting Wygant v. Jackson Board of Education, supra, 476 U.S. 267, 277 (plur. opn. of Powell, J.).) We expect the superior court's assessment of the record will assist the reviewing courts, if necessary, in determining whether a strong basis in the evidence does in fact support the City's decision to adopt the 2003 ordinance.*fn18

We offer the following comments to assist the superior court in resolving the federal compulsion issue on remand: While the parties have not brought to our attention any decision ordering a governmental entity to adopt race-conscious public contracting policies under the compulsion of the federal equal protection clause, the relevant decisions hold open the possibility that race-conscious measures might be required as a remedy for purposeful discrimination in public contracting. (Hi-Voltage, supra, 24 Cal.4th 537, 568 ["Where the state or a political subdivision has intentionally discriminated, use of a race-conscious or race-specific remedy necessarily follows as the only, or at least the most likely, means of rectifying the resulting injury." ]; see also Croson, supra, 488 U.S. 469, 509 (plur. opn. of O'Connor, J.) ["In the extreme case, some form of narrowly tailored racial preferences might be necessary to break down patterns of deliberate exclusion."].)

All racial classifications, even those contained in ostensibly remedial laws, must survive strict scrutiny. (Parents Involved, supra, 551 U.S. 701, 720; Adarand, supra, 515 U.S. 200, 226-227.) This is because " ' "racial classifications are simply too pernicious to permit any but the most exact connection between justification and classification." ' " (Parents Involved, at p. 720, quoting Gratz v. Bollinger (2003) 539 U.S. 244, 270.) Under the strict scrutiny test, "such classifications are constitutional only if they are narrowly tailored measures that further compelling governmental interests." (Adarand, at p. 227.) The only possibly compelling governmental interest implicated by the facts of this case is the interest in providing a remedy for purposeful discrimination. (See Croson, supra, 488 U.S. 469, 500; see also id., at p. 509 (plur. opn. of O'Connor, J.); Hi-Voltage, supra, 24 Cal.4th 537, 568.)*fn19 In any event, proof of ...


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