Cornelius v. Los Angeles County Metropolitan Transportation Authority (49 Cal. App. 4th 1761, 1996)

Opinion

VOGEL (C. S.), P. J.

Introduction

This lawsuit involves a constitutional challenge to an affirmative action program implemented by the Los Angeles County Metropolitan Transportation Authority. Relying upon recent precedent from the United States Supreme Court, the trial court found that the individual initiating the lawsuit had standing to raise the constitutional claim and that the challenged program did not pass constitutional muster. The court entered an injunction barring further implementation of the program and awarded the plaintiff attorney fees. We issued a writ of supersedeas to stay enforcement of the injunction pending resolution of this appeal. We now reverse because we find that the plaintiff lacked standing, either as an individual injured by the program or as a taxpayer, to challenge the program.

Factual and Procedural Background

The lawsuit was initiated by Michael Cornelius (Cornelius), a licensed engineer. The defendants are the Los Angeles County Metropolitan Transportation Authority and its chief executive officer (collectively MTA). The action challenges the Disadvantaged Business Enterprise Program (DBE program), a program with which MTA must comply in order to receive federal fimds.

The DBE Program

A DBE is defined as a small business concern at least 51 percent owned and controlled by one or more socially and economically disadvantaged persons. Racial minorities and women are rebuttably presumed to be socially and economically disadvantaged.

Federal regulations mandate that at least 10 percent of the MTA contracts be awarded to DBF’s. The regulations also require the MTA to establish goals for DBE participation on specific prime contracts that have subcontracting opportunities. A prime contractor who is unable to meet a contract goal is still eligible to be awarded the prime contract if it can show good faith efforts to meet the goal.

Factual Background to This Case

The trial court’s ruling arose in context of a summary judgment proceeding. The issues were defined by Cornelius’s third amended complaint. However, some background information is helpful to understand the problem raised by the question of standing.

Cornelius, a licensed engineer, had worked for Wagner Construction (Wagner). Wagner was a subcontractor on a bid submitted by PCL Construction Services, Inc. (PCL) to build the Metro Red Line Station at Hollywood Boulevard and Western Avenue. PCL submitted the lowest bid. However, MTA did not award the bid to PCL because PCL had not achieved the required DBE commitment and had not established good faith efforts to meet that goal. Accordingly, MTA awarded the job to the second lowest bidder.

Thereafter, PCL filed suit against MTA, contending the DBE program was unconstitutional. However, for reasons not stated in the record, PCL dismissed its action several days before a scheduled hearing.

Three weeks later, Cornelius filed the present action for injunctive relief raising the same grounds as PCL.

While the case was pending in the trial court, the United States Supreme Court rendered its opinion in Adarand Constructors, Inc. v. Pena (1995) 515 U.S__[132 L.Ed.2d 158, 115 S.Ct. 2097] (Adarand) in which it definitively resolved the standard by which courts would evaluate federal programs designed to help racial minorities. Essentially adopting the standard set forth earlier in Richmond v. J. A. Croson Co. (1989) 488 U.S. 469 [102 L.Ed.2d 854, 109 S.Ct. 706] to evaluate equivalent state programs, the court held that the program will be subject to strict judicial scrutiny; that the government must demonstrate a compelling interest for the program (e.g., a pattern of past discrimination); and that the program must be narrowly tailored. The Adarand court did not pass on the program in issue in that case but, recognizing that its decision “alter[ed] the playing field in some important respect,” remanded the case for further proceedings.

In this case, MTA’s efforts to defend the DBE program as implemented by it were unsuccessful. The trial court found that some of MTA’s evidence was a study done after the challenged program had been initiated and therefore could not be used to justify it. The court also found the remaining evidence was merely anecdotal and insufficient and that Cornelius’s objections to the evidence were “rightful” because the evidence was “responsive to Cornelius’s discovery taken long before these summary judgment motions were filed, yet [MTA] failed to produce them or even acknowledge their existence.”

In August 1995, the trial court ultimately issued the following injunction: “1. Defendant Los Angeles County Metropolitan Transit Authority’s Disadvantaged Business Enterprise program is unconstitutional, and is a violation of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution, and Article I, Section 7(b), of the California Constitution. m 2. [MTA is ] permanently enjoined and restrained from any and all of the following acts: [U a. Administering, enforcing, soliciting bids, or allocating any funds under the Disadvantaged Business Enterprise program. This injunction does not preclude allocating funds or paying obligations under contracts entered prior to the effective date of this injunction, [fj b. Awarding or disbursing public contracts pursuant to the DBE program, including contracts currently pending award now. No contractor shall be required to be certified under the DBE program.”

In a subsequent hearing, the trial court awarded Cornelius $97,230.50 in attorney fees. (Code Civ. Proc., § 1021.5.)

MTA filed a notice of appeal and a petition for a writ of supersedeas to stay enforcement of the trial court’s injunction. MTA urged that compliance with the judgment would result in the loss of $60 million in federal funds because it could no longer meet federal DBE requirements. After receiving thorough briefing from the parties, this division issued the writ of supersedeas in December 1995. (The California Supreme Court rebuffed Cornelius’s attempt to overturn the decision to issue the writ.)

On this appeal, MTA contends that Cornelius lacks standing; that the trial court’s decision on the merits was incorrect; and that the trial court abused its discretion in awarding attorney fees to Cornelius. To support its contention that the DBE program does not violate equal protection, MTA has tendered a study adopted by the MTA in April 1996—eight months after the trial court granted summary judgment—which it urges contains “the firm basis in evidence” to show a compelling state interest for the DBE program. Citing Code of Civil Procedure section 909 and rule 23 of the California Rules of Court, MTA requests this court to make the requisite factual determinations. Additionally, the Department of Transportation, pursuant to this court’s request, has submitted an extensive and thorough brief on the merits.

Discussion

In the trial court, Cornelius alleged two separate grounds of standing. The first was that he was an individual directly injured by the program he was attacking. The second was that he had standing, pursuant to Code of Civil Procedure section 526a, as a taxpayer. Each ground will be analyzed separately.

A. Standing as an Injured Party

Facts

To establish that he had been injured by the MTA’s contracting policies, Cornelius submitted a declaration which alleged that he was a licensed civil engineer who has “been an employer, employee, subcontractor, businessman, and taxpayer.” He further alleged: “I was the vice president of operations at Wagner Construction until January, 1994, a general contractor specializing in bulk-heading, under-pitting, [caisson] drilling, piling, and sheeting. Wagner Construction specialized in public contracting work, specifically of the type administered by the Los Angeles County Metropolitan Transportation Authority. [BD 5.1 was an independent contractor from January to August, 1994, again specializing in public contracting work, specifically of the type administered by the Los Angeles County Metropolitan Transportation Authority. [f] 6. I am now employed as a civil engineer at Malcolm Drilling, specializing in underground earth retaining systems, specifically on contracts of the type administered by MTA. [<¡D 7. I am fully capable of bidding on MTA projects. I am fully capable of performing work on MTA projects. I wish to compete equally for MTA contracts in the future. In competing for MTA contracts, I desire MTA to consider my qualifications as an engineer, not my race or gender. [H 8. My firm, Malcolm Drilling, is fully capable of bidding on MTA projects. My firm is fully capable of performing work on MTA projects. My firm wishes to bid on MTA projects now and in the future. [^D 9. . . . [M]y firms have bid on MTA contracts in the past. [IB 10. In my former consulting status, I was fully capable of performing work on MTA projects. My former clients wished to bid on MTA projects but could not compete equally because of the DBE program. [BQ 11. My former firm, Wagner Construction, was fully capable of bidding on MTA projects. My former firm, Wagner Construction, was fully capable of performing work on MTA projects. My former firm, Wagner Construction, wished to bid on MTA projects but could not compete equally because of the DBE program. [SB 12. I cannot compete equally for MTA projects because of MTA’s disadvantaged business program (DBE), which discriminates against citizens based on their race and gender. Neither I nor my firm is certified by MTA as a DBE. Under MTA rules, I will never be able to compete for MTA projects.”

The other evidence offered by Cornelius was his deposition testimony that Wagner Construction had “bid on every single subway station that they have on the red line.”

At various times during the summary judgment litigation, Cornelius attempted to rely upon the allegations in his verified complaints to establish standing. That approach was, of course, improper. “It is generally understood . . . that a party cannot rely on the allegations of his own pleadings, even if verified, to make or supplement the evidentiary showing required in the summary judgment context. [Citations.]” (College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 720, fn. 7 [34 Cal.Rptr.2d 898, 882 P.2d 894].)

Case Law on Standing

In Northeastern Fla. Chapter Associated Gen. Contractors of America v. Jacksonville (1993) 508 U.S. 656 [124 L.Ed.2d 586, 113 S.Ct. 2297], the United States Supreme Court addressed the issue of the standing of an association of contractors to challenge a local ordinance according preferential treatment to some minority-owned businesses in the award of city contracts. Reviewing precedent on the issue, the court distilled the following principle: “When the government erects a barrier that makes it more difficult for members of one group to obtain a benefit than it is for members of another group, a member of the former group seeking to challenge the barrier need not allege that he would have obtained the benefit but for the barrier in order to establish standing. The ‘injury in fact’ in an equal protection case of this variety is the denial of equal treatment resulting from the imposition of the barrier, not the ultimate inability to obtain the benefit. .. . [I]n the context of a challenge to a set-aside program, the ‘injury in fact’ is the inability to compete on an equal footing in the bidding process, not the loss of a contract. ... To establish standing, therefore, a party challenging a set-aside program . . . need only demonstrate that it is able and ready to bid on contracts and that a discriminatory policy prevents it from doing so on an equal basis.” (Id. at p. 666 [124 L.Ed.2d at pp. 597-598, 113 S.Ct. at p. 2303], fn. omitted.)

Two years later, in Adarand, the United States Supreme Court directly addressed the issue of an individual contractor's standing to mount a constitutional challenge to a federal program. When a party, such as Cornelius, seeks “forward-looking-relief’—a permanent injunction prohibiting further implementation of the challenged program—the party is required to show “ ‘an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.’ ” (515 U.S. at p. _ [132 L.Ed.2d at p. 171,115 S.Ct. at p. 2104], quoting from Los Angeles v. Lyons (1983) 461 U.S. 95, 105 [75 L.Ed.2d 675, 686, 103 S.Ct. 1660].)

The element of concrete and particularized injury is satisfied by Cornelius’s claim that the DBE program denies equal protection of the law. (Adarand, supra, 515 U.S. at p__[132 L.Ed.2d at pp. 170-171, 115 S.Ct. at p. 2104].)

The element of an actual or imminent injury is, for reasons we shall explain, lacking in this case. That element does not require a showing that Cornelius either has been or will be a low bidder on a government contract. (Adarand, supra, 515 U.S. at p__[132 L.Ed.2d at pp. 171-172, 115 S.Ct. at p. 2105].) Instead, it requires a showing that the injury is “certainly impending.” (Ibid.) In Adarand, the court found that standing had been established based upon the following facts. There, the plaintiff (Adarand) was a Colorado subcontractor who submitted the low bid for the guardrail portion of a federal highway construction project. The general contractor awarded the bid to another subcontractor (Gonzales) solely because the general contractor received additional compensation from the federal government for hiring a subcontractor who, pursuant to the challenged statute, was presumed to be socially and economically disadvantaged. The court held that the dispositive inquiry was “whether Adarand has made an adequate showing that sometime in the relatively near future it will bid on another government contract that offers financial incentives to a prime contractor for hiring disadvantaged subcontractors.” (Ibid.) The facts marshaled by Adarand to make that showing included deposition testimony from its general manager that Adarand bid on every guardrail project in Colorado and documentary evidence that the federal government, on an average yearly basis, let one and a half road contracts which included guardrail work between 1983 and 1990. The court concluded: “Because the evidence in this case indicates that the [federal government] is likely to let contracts involving guardrail work that contain [the challenged] subcontractor compensation clause at least once per year in Colorado, that Adarand is very likely to bid on each such contract, and that Adarand often must compete for such contracts against small disadvantaged businesses, we are satisfied that Adarand has standing to bring this lawsuit.” (Ibid., italics added.)

The Trial Court’s Ruling

The trial court granted summary judgment to Cornelius. On the issue of standing, it ruled: “Plaintiff has put forth sufficient facts to show he has suffered and will suffer injury in fact as a result of the DBE program. [<]Q According to plaintiff’s declaration under penalty of perjury, he was vice president of operations at Wagner Construction until January, 1994. Wagner specialized in the kind of public contracting work administered by MTA. As plaintiff stated in his deposition of April 29, 1994, Wagner has bid on every subway station on the Red Line. [H Defendant makes much of the fact that plaintiff and Wagner are not one and the same. This is inconsequential, however, inasmuch as plaintiff obviously held a significant position at Wagner and would suffer individually if Wagner suffered as an entity. [