Pacific Legal Foundation Sues Sacramento Municipal Utility District for Violating Antibias Initiative — Proposition 209

Business Wire, June 20, 2000

Assignment Editors/Legal & Government Writers

SACRAMENTO, Calif.--(BUSINESS WIRE)--June 20, 2000

A public contracting program that gives special preferences to minority- and women-owned businesses seeking contracts with the Sacramento Municipal Utility District is unconstitutional and violates Proposition 209, according to a lawsuit filed today by the Sacramento-based Pacific Legal Foundation.

Enacted by California voters in November, 1996, Proposition 209 prohibits state and local government agencies from discriminating against or granting preferential treatment to anyone based on race and gender in public contracting. Challenged in PLF's lawsuit is SMUD's "Equal Business Opportunity Program," which gives preference to minority-owned prime contractors by calculating their bids as being 5% lower than what they actually are. In addition, PLF charges that prime contractors are forced to discriminate in favor of minority subcontractors by SMUD's race-based quotas and recruitment requirements.

PLF sued on behalf of United Utilities, Inc., and C & C Construction, Inc., two firms that have been subjected to unequal treatment under SMUD's policies. "SMUD's public contracting program hurts everyone involved@the utility customers, prime contractors, and minority-owned firms," said PLF attorney Stephen McCutcheon. "Ratepayers get burned when the lowest qualified bidders are rejected and those higher costs are passed on to them. Prime contractors are discriminated against by SMUD, and then are forced to discriminate against others when seeking subcontractors. Minority-owned subcontractors are encouraged by SMUD to bid on jobs for which they may not have the skills or funds to complete, thus compromising public safety and increasing costs." (A copy of PLF's complaint against SMUD can be downloaded from PLF's web site at www.pacificlegal.org)

As this lawsuit against SMUD moves forward, Pacific Legal Foundation is investigating discriminatory policies in other municipal utility agencies in California. Moreover, PLF is preparing to argue before the California Supreme Court in a key test-case on behalf of another contractor who filed suit against the city of San Jose in September 1997 (Hi-Voltage Wire Works, Inc. v. City of San Jose). In that case, the state high court is reviewing PLF's successful challenge to a city's failure to comply with Proposition 209 since the measure was upheld by the U.S. Ninth Circuit Court of Appeals in April, 1997. PLF also is challenging discriminatory public contracting and employment programs in San Francisco@Taber v. City and County of San Francisco and Cheresnik v. City and County of San Francisco. PLF is supporting in court measures similar to Proposition 209 in Texas and in Florida.

Pacific Legal Foundation is a public interest, nonprofit organization dedicated to litigating nationwide in defense of private property rights, individual and economic freedoms, and limited government. PLF has opposed race and gender preferences, quotas, and set-asides in government employment, education, and contracting for more than 27 years.