United States Department of Transportation (USDOT) regulations (49 C.F.R. Part 26) require that recipients of federal transit funds establish overall goals for Disadvantaged Business Enterprise (DBE) participation in federally funded contracts. New Jersey Transit Corporation (NJ Transit), the third largest recipient of federal transit funds in the United States, established its annual federal DBE goals of 17 to 28 percent from 2002 to 2010, relying upon the innovative methodology of Humphrey School economist Samuel L. Myers, Jr.
GEOD Corporation, a closely held and privately owned company specializing in aerial photography, topological mapping, surveying, and photogrammetric services represented by the Atlantic Legal Foundation alleged that NJ Transit discriminated against white-male owned firms through its use of aggressive DBE goals. The foundation further argued that implementation policies for these goals did not result in a narrowly tailored affirmative action program and, thus, violated the equal protection clause of the 14th Amendment of the United States Constitution.
In a stunning rejection of this as-applied constitutional challenge to NJ Transit's affirmative action program for DBEs, the Honorable Susan D. Wigenton, United States District Judge. ruled on October 19, 2010, that the statistical evidence and empirical analysis produced by the University of Minnesota research team provided the requisite proof for NJ Transit's DBE program to be implemented in accordance with the federal regulations and that the agency's program satisfied the multi-pronged strict scrutiny test.
The key issues in the case were whether NJ Transit's DBE program determined the amount of racial discrimination to be corrected by its affirmative action program and then implemented the program while maximizing race-neutral alternatives to race-conscious goals. Myers led a Humphrey School research team that conducted NJ Transit's 2002 disparity study and the organization's DBE goals reports for the past decade.
The District Court ruling is one of first impression in the District of New Jersey. Only a few Circuit Courts have ruled on the issue and currently are split. Wigenton's opinion bridged the split in the Circuit Courts by adopting the majority opinion and ruling that NJ Transit also would have won under the minority analysis. The Court found that Myers' goal setting supported NJ Transit's program and rejected the opinion of the plaintiff's expert--Dr. John Lunn of Hope College--that better alternative analysis to quantify racial discrimination existed.
Myers found in his analysis, for example, that although Asian American firms face higher utilization rates relative to non-DBEs, they receive lower contract amounts than similarly situated firms, a stronger measure of discrimination than simply the disparities between availability and utilization. The full opinion can be found here.
The Atlantic Legal Foundation can still appeal the determination to the Third Circuit Court of Appeals.