FLETCHER, Circuit Judge:
We confront once again the tension between the efforts of the City and County of San Francisco ("the City") to ameliorate the effects of past discrimination in City contracting processes on disadvantaged groups and the constraints imposed by the Fourteenth Amendment's guarantee of equal treatment to all citizens, as well as other provisions of state and federal law. Appellant, Associated General Contractors of California, Inc. ("AGCC"), appeals the district court's denial of its motion for a preliminary injunction enjoining the enforcement of San Francisco's Minority/Woman/Local Business Utilization Ordinance — II, No. 175-89 ("1989 Ordinance") insofar as it applies to prime construction contracts. 748 F.Supp. 1443. We affirm.
The challenge to San Francisco's use of racial and gender preferences to remedy discrimination in city contracting dates back more than seven years. In April 1984, the San Francisco Board of Supervisors (the "Board") passed the Minority/Women/Local Business Utilization Ordinance, No. 139-84 ("1984 Ordinance"), which required the City to set aside designated percentages of its contracting dollars to minority-owned business enterprises ("MBEs") and women-owned business enterprises ("WBEs"). In addition, the 1984 Ordinance required that MBEs, WBEs and locall-owned business enterprises ("LBEs") receive a five percent bidding preference to be taken into account when the City calculated the low bid on city contracts.
AGCC, an organization of contractors engaged in the building and construction industry, which has a substantial number of members who are not within the classes granted preferences by the 1984 Ordinance,
Shortly after our decision in AGCC I, the Supreme Court considered a similar minority set-aside plan in City of Richmond v. J.A. Croson Co., 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989). In that decision, a deeply divided Supreme Court struck down the racial set-aside plan adopted by the city of Richmond, Virginia.
Rather than providing the set-asides mandated by the 1984 Ordinance, the 1989 Ordinance gives bid preferences to prime contractors who are members of groups found disadvantaged by previous bidding practices. Specifically, the Ordinance provides a five percent bid preference for LBEs, WBEs, and MBEs. Because the WBE and MBE preferences are treated cumulatively with the LBE preferences under the ordinance, local MBEs and WBEs become eligible for a ten percent total bid preference, representing the cumulative total of the five percent preference given LBEs and the 5% preference given MBEs and WBEs. § 12D.8(B)(2). The Ordinance defines "MBE" as an economically disadvantaged business that is owned and controlled by one or more minority persons. § 12D.5. "Minority" is defined to include Asians, Blacks, and Latinos. "WBE" is defined as an economically disadvantaged business that is owned and controlled by one or more women. "Economically disadvantaged", insofar as the term applies to public works construction contracts, is defined as a business whose average gross annual receipts in the three fiscal years immediately preceding its application for certification as a MBE do not exceed fourteen million dollars. The Ordinance allows non-MBEs and non-WBEs to benefit from the bid preferences given these groups by extending a five percent preference to those who engage in a joint venture with a local MBE or WBE provided the MBE's or WBE's participation is between 35% and 51%. § 12D.8(B)(2). Those who engage in a joint venture with a local MBE or WBE whose participation is 51% or more, receive
Subsequent to the passage of the 1989 Ordinance, the Board enacted Ordinance No. 424-89, which raised the threshold for competitive bidding for city contracts previously set at $50,000 by section 7.200 of the San Francisco City Charter, to $10,000,000 ("the competitive bidding threshold ordinance"). Ordinance No. 424-89 was enacted pursuant to an amendment to the city charter passed the prior year, by which the electorate authorized the Board of Supervisors to increase or decrease the competitive bidding threshold. After the implementation of the new bid threshold ordinance, contracts valued at over $10,000,000 would still be subject to the city charter's "lowest reliable and responsible bidder" requirement. Contracts below that level presumably would be subject to the new bid preference system.
Soon after the effective dates of the 1989 Ordinance and the competitive bidding threshold ordinance, AGCC filed this action and sought a preliminary injunction. The motion for preliminary injunction challenges both the constitutionality of the MBE provisions of the 1989 Ordinance insofar as they pertain to public works construction contracts and the validity under state law of the competitive bidding threshold ordinance.
Because the grant or denial of a preliminary injunction lies within the discretion of the district court, our review of the denial of a preliminary injunction is limited. Johnson Controls, Inc. v. Phoenix Control Sys., 886 F.2d 1173, 1174 (9th Cir.1989); Big Country Foods, Inc. v. Board of Educ., 868 F.2d 1085, 1087 (9th Cir.1989). We will reverse the denial of a preliminary injunction only if the district court abused its discretion or relied on an erroneous legal premise or clearly erroneous findings of fact. Johnson Controls, 886 F.2d at 1174; Sports Form, Inc. v. United Press Int'l, Inc., 686 F.2d 750, 752 (9th Cir.1982). We review de novo the correctness of the legal standards employed by the district court in evaluating the plaintiff's likelihood of success on the merits.
I. AGCC's STANDING TO PURSUE THIS ACTION
As an initial matter, Appellees-Intervenors The Coalition for Economic Equity, et al. ("Intervenors"), argue that this case fails to present a case or controversy for Article III purposes because AGCC lacks standing to sue on behalf of its members. This issue was not raised below. However, because a "threshold question in every federal case" is "whether the plaintiff has made out a `case or controversy' between himself and the defendant within the meaning of Article III," Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975), this issue must be resolved before we may review the district court's denial of the motion for preliminary injunction. See also Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 1848, 23 L.Ed.2d 404 (1969) (opinion of Marshall, J.) (standing issue governs appellate jurisdiction as well as trial court jurisdiction).
In order for an organization to have representational standing to sue on behalf of its members, it must meet the three-pronged test set out by the Supreme Court in Hunt v. Washington Apple Advertising Comm'n, 432 U.S. 333, 97 S.Ct. 2434, 53
The Intervenors argue that no AGCC member would have standing individually to bring these claims because no member has asserted a sufficient risk of injury. The Intervenors point out that the record evidence indicating that any of AGCC's members will suffer injury stemming from the 1989 Ordinance is limited to a declaration from one AGCC member stating that the ordinance has discouraged him from bidding on San Francisco contracts and AGCC's more general assertions that the ordinance could cause its members to lose contracts for which they are bidding.
It has long been "established principle that to entitle a private individual to invoke the judicial power to determine the validity of executive or legislative action he must show that he has sustained or is immediately in danger of sustaining a direct injury as the result of that action...." Ex parte Levitt, 302 U.S. 633, 634, 58 S.Ct. 1, 1, 82 L.Ed. 493 (1937). This requirement is necessary to ensure that federal courts reserve their judicial power for "`concrete legal issues, presented in actual cases, not abstractions.'" United Public Workers v. Mitchell, 330 U.S. 75, 89, 67 S.Ct. 556, 564, 91 L.Ed. 754 (1947) (quoting Electric Bond & Share Co. v. Securities & Exchange Comm'n, 303 U.S. 419, 443, 58 S.Ct. 678, 687, 82 L.Ed. 936 (1938)). To meet this requirement, "[a] hypothetical threat is not enough." United Pub. Workers, 330 U.S. at 90.
A long line of Supreme Court cases delineate the type of injury or risk of injury deemed so remote or hypothetical as to be insufficient to confer standing. In Laird v. Tatum, 408 U.S. 1, 92 S.Ct. 2318, 33 L.Ed.2d 154 (1972), for example, the Supreme Court held that no case or controversy existed on respondent's challenge to the Department of the Army's program involving surveillance of civilian political activities. Respondents in that case admitted that there was no indication that the Army had the respondents' political activities under surveillance or that it contemplated such surveillance in the foreseeable future; they claimed, however, that the knowledge that the Army might do so "chilled" their political expression. The Court noted that, while it had previously found a case or controversy to exist merely from the chilling effect of governmental regulations,
Id. at 11, 13-14, 92 S.Ct. at 2324-25, 2325-26 (emphasis in original). Similarly, in United Public Workers v. Mitchell, 330 U.S. 75, 67 S.Ct. 556, 91 L.Ed. 754 (1947), the Supreme Court found no case or controversy presented where plaintiffs sought an injunction to prohibit the government from enforcing the Hatch Act's bar on political activity by government employees, 18 U.S.C. § 61h, but had neither yet violated the act by participating in political activity nor asserted firm plans to do so in the future. Id. at 86-91, 67 S.Ct. at 562-65; see also, e.g., City of Los Angeles v. Lyons, 461 U.S. 95, 101-05, 103 S.Ct. 1660, 1664-67, 75 L.Ed.2d 675 (1983) (plaintiff previously subjected to police stranglehold lacked standing to seek injunctive relief because no showing that he was likely to be exposed to future police brutality); O'Shea v. Littleton, 414 U.S. 488, 497, 94 S.Ct. 669, 676-77, 38 L.Ed.2d 674 (1974) (plaintiffs challenging alleged discriminatory bail-setting, jury selection, and sentencing lacked standing to seek injunction because no showing that they were likely to be arrested and subjected to the challenged practices); Golden v. Zwickler, 394 U.S. 103, 108-09, 89 S.Ct. 956, 959-60, 22 L.Ed.2d 113 (1969) (plaintiff previously convicted for distributing anonymous handbills in past election campaign but whose being subjected to statute in future was "most unlikely" lacked standing to seek declaratory relief for future campaigns).
We believe that the injury asserted here is sufficient to confer standing on AGCC. In all cases in which the Supreme Court denied standing because the injury was too speculative there was either little indication in the record that the plaintiffs had firm intentions to take action that would trigger the challenged governmental action, or little indication in the record that, even if plaintiffs did take such action, they would be subjected to the challenged governmental action. Here, by contrast, the record indicates that AGCC members have firm intentions to bid for San Francisco city contracts, and that the application of the ordinance to such city bids is compulsory in nature. See Coral Const. Co. v. King County, 941 F.2d 910, 929-30 (9th Cir. 1991). The mere fact that AGCC members cannot play on an even field against MBEs subjects them to a legally cognizable injury: "[a]s a result of the objectively unequal bidding process under the preference method of awarding contracts, an injury results not only when [a non-MBE] actually loses a bid, but every time the company simply places a bid." Id. at 930. Moreover, the chill alleged by AGCC to result from the ordinance, because the ordinance is compulsory in nature, must also be deemed a legally cognizable injury. Cf. Del Percio v. Thornsley, 877 F.2d 785, 787 (9th Cir.1989) (plaintiff's "generalized claim that [challenged] statute's very existence has an inhibiting effect on her exercise of her right[s]", in absence of likelihood that statute will be applied to plaintiff, insufficient to confer standing). Accordingly, we find that AGCC meets the first prong of the Hunt test.
In a post-argument submission to this court, the Intervenors call to our attention Maryland Highways Contractors Association v. Maryland, 933 F.2d 1246 (4th Cir.), cert. denied ___ U.S. ___, 112 S.Ct. 373, 116 L.Ed.2d 325 (1991), in which the United States Court of Appeals for the Fourth Circuit dismissed a similar action for lack of standing. In that case, the court found that an association of contractors seeking to challenge a minority business enterprise statute lacked standing to bring suit on behalf of its members, among other reasons, on the basis of a different interpretation of Hunt's third prong than that previously used by our circuit. According to the Fourth Circuit, "[t]his prong is not met when conflicts of interest among members of the association require that the members must join the suit individually in order to protect their own interests." Id. at 1252. The Fourth Circuit denied standing on the ground that
Id. at 1253; see also Associated Gen. Contractors v. Otter Tail Power Co., 611 F.2d 684, 691 (8th Cir.1979) (denying organization representational standing because organization's members' "status and interests are too diverse and the possibilities of conflict too obvious to make the association an appropriate vehicle to litigate the claims of its members").
We reject the invitation to expand our interpretation of Hunt's third prong to require that no actual or potential conflict exist between the organization's members for several reasons. First, we do not believe that the Supreme Court intended this requirement to be included in Hunt's third prong. In Hunt, the Supreme Court found that the Washington Apple Advertising Commission, a Washington state agency formed to promote apple sales, had standing to contest a North Carolina law restricting the labeling of containers in which apples were shipped. The Court found the third prong of the test met simply because "neither the interstate commerce claim nor the request for declaratory and injunctive relief requires individualized proof and both are thus properly resolved in a group context." 432 U.S. at 344, 97 S.Ct. at 2442. The Court never inquired into whether the apple growers and dealers represented by the Commission would unanimously agree to the position taken by the Commission in the suit. Similarly, in UAW v. Brock, 477 U.S. 274, 106 S.Ct. 2523, 91 L.Ed.2d 228 (1986), the Supreme Court found that a
In addition, we believe that the Supreme Court implicitly decided the issue of whether unanimity of membership should be required for standing in UAW v. Brock. In that case, the Secretary urged that the Hunt test be overruled and that, instead, the Court apply the rules for class actions set out in Federal Rule of Civil Procedure Rule 23 on the ground that only the class action rules "contain special safeguards to ensure that the diverse interests of class members are properly represented by the named plaintiff seeking to bring a case on their behalf ... [while] [n]o such adequacy of representation ... is guaranteed by the approach this Court has taken to associational standing." Id. at 288-89, 106 S.Ct. at 2531-32. The Court rejected the Secretary's argument based on its recognition of the special advantages derived from allowing associations to bring suit, advantages which provide benefits "both to the individuals represented and to the judicial system as a whole." Id. at 289, 106 S.Ct. at 2532. According to the court, "[w]hile a class action creates an ad hoc union of injured plaintiffs who may be linked only by their common claims, an association suing to vindicate the interests of its members can draw upon a pre-existing reservoir of expertise and capital." Id. The Court stated that it was not "prepared to dismiss out of hand the Secretary's concern that associations allowed to proceed under Hunt will not always be able to represent adequately the interests of all their injured members," but concluded that the proper remedy in such a situation would be to deny claim preclusion against members of "an association ... deficient in this regard" or to adopt some other remedy short of requiring unanimity. Id. at 290, 106 S.Ct. at 2533. While the Court did not explicitly rule that it would impose no requirement of unanimity on organizations seeking associational standing, its statements in Brock clearly counsel against imposition of such a standard.
Furthermore, as a matter of policy, we reject the suggestion that unanimity of membership be required in organizations seeking standing. Most organizations are formed with far broader purposes than could be represented by a single piece of legislation or other policy challenged. Unanimous opinions within an organization's membership will be few and far between with regard to most issues controversial enough to engender litigation. To insist that there be neither conflict nor potential for conflict on any issue litigated would, in effect, lead to the eradication of associational standing in most suits. Such a rule would disserve the public interest, which frequently would not be represented but for these suits.
Accordingly, we conclude that an organization's internal conflicts properly should be resolved through its own internal procedures, not through limitations on standing. Our ruling should not be deemed to allow the silencing of dissenters' voices within an organization: the interests of these dissenters should be taken into account either through liberal approval of their intervention in the lawsuit or, as the Brock Court suggested, through refusal to preclude subsequent claims by dissenting members. Accord National Maritime Union v. Commander, Military Sealift Command, 824 F.2d 1228, 1231-34 (D.C.Cir. 1987); cf. Gillis v. Dep't of Health & Human Servs., 759 F.2d 565, 572-73 (6th Cir.1985). However, so long as the position taken in litigation has the clear mandate of the association represented, standing should not be denied.
II. THE MOTION FOR PRELIMINARY INJUNCTION
We next consider whether the district court properly denied AGCC's motion for preliminary injunction. To obtain a preliminary injunction, the moving party must demonstrate either a combination of probable success on the merits and the possibility of irreparable injury or that serious questions are raised and the balance of hardships tips sharply in his favor. William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 526 F.2d 86, 88 (9th Cir.1975) (emphasis in original). "These formulations are not different tests but represent two points on a sliding scale in which the degree of irreparable harm increases as the probability of success on the merits decreases." Big Country Foods, 868 F.2d at 1088. Under either formulation of the test, the party seeking the injunction must demonstrate that it will be exposed to some significant risk of irreparable injury. Caribbean Marine Servs. Co. v. Baldrige, 844 F.2d 668 (9th Cir.1988). A plaintiff must do more than merely allege imminent harm sufficient to establish standing, he or she must demonstrate immediate threatened injury as a prerequisite to preliminary injunctive relief. Los Angeles Memorial Coliseum Comm'n v. National Football League, 634 F.2d 1197, 1201 (9th Cir.1980). Here, AGCC charges that the district court should have entered a preliminary injunction on both its charter claim and its equal protection claim. We analyze each claim separately.
A. AGCC's Charter Claim
Prior to the passage of the 1989 Ordinance, City Charter § 7.200 provided:
In 1986, by vote, the City's residents amended the section to add the following language:
On the basis of the amended provision, the Board enacted the bidding threshold ordinance, which raised the competitive bidding threshold from $50,000 to $10,000,000, thereby allowing the bid preference system established in the 1989 Ordinance to become effective for bids under $10,000,000.
AGCC argues that both the bidding threshold ordinance and the amendment to section 7.200 violate the California constitution, which mandates that all amendments to city charters be made by vote of the city's residents. The court below denied AGCC's motion for preliminary injunction on the charter claim based on its finding that AGCC had failed to demonstrate a sufficient risk of irreparable injury. The court found that, as a factual matter, an insufficient risk of injury was presented because no AGCC member asserted denial of a contract due to the MBE provisions and only one member asserted that he was deterred from bidding by the Ordinance. It also found that any injury suffered by AGCC's members would be pecuniary and redressable at law. Because of its finding on the issue of irreparable injury, the district court did not consider the likelihood that AGCC would prevail on the merits of its charter claim. On appeal, AGCC challenges the district court's conclusion.
1. Possibility of irreparable injury
AGCC argues that the district court erred in concluding that it failed to demonstrate a sufficient possibility of irreparable injury. According to AGCC, as a factual matter, it had demonstrated far more than a slight possibility that its members would suffer injury. AGCC also contends that the district court erred as a matter of law in determining that any injury suffered could be compensated by money damages and was therefore not irreparable.
We need not determine whether any injury suffered would be irreparable. We determine only that, if any irreparable injury
2. Likelihood of success on the merits
The basic outlines of California law on the issue of charter amendments are clear. California Constitution article XI, section 3, provides that a county or city may adopt a charter by majority vote of its electorate voting on the question and amend the charter in the same manner. According to the Supreme Court of California, this procedure "is exclusive and controlling, and any charter provision in conflict therewith is invalid." Uhl v. Collins, 217 Cal. 1, 17 P.2d 99 (1932); see also Alexander v. Mitchell, 119 Cal.App.2d 816, 260 P.2d 261, 264 (1953). Thus, in Montgomery v. Board of Administration, 34 Cal.App.2d 514, 93 P.2d 1046 (1939), the Supreme Court of California stated that San Diego's city council had no power to pass ordinances that conflicted with the city's charter, despite provisions in the charter that allowed the Board to "establish such rules and regulations as it may deem proper." According to the court, "[i]f section 146 of the charter must be construed as giving authority to the city council of San Diego by ordinance to add or subtract from the charter provisions or make regulations ... inconsistent with the clear provisions of that document, it must be held to be unconstitutional as attempting to permit the amendment of the charter in an unauthorized manner." Id. 93 P.2d at 1049.
Despite this clear dictate of California law, application of the principle to the case at hand produces no clear results. While California law emphatically prohibits the Board from amending the charter, it does not provide guidance to aid in our determination of whether the bidding threshold ordinance challenged here should be deemed such an unlawful amendment to a charter. Left to predict how California would determine this issue, however, we conclude that while AGCC may have raised serious questions on the merits, it has not demonstrated probable success on them. In requiring that all amendments to a city charter be by vote of the people, California intended to ensure that the ultimate power to govern remained in the hands of its citizens. We are not convinced that the actions taken by the electorate and the Board implicate this concern. At argument, AGCC's counsel conceded that if the City had passed a charter amendment repealing the previous $50,000 bidding threshold and stating that Board could set a new bidding threshold within a particular range, the amendment would be legitimate. Although the charter amendment passed was less specific, it clearly was intended to accomplish exactly that.
B. AGCC's Constitutional Claims
AGCC also contends that the preferences given to MBEs
1. Possibility of irreparable injury
We have stated that "[a]n alleged constitutional infringement will often alone constitute irreparable harm." Goldie's Bookstore v. Superior Ct., 739 P.2d 466, 472 (9th Cir.1984). In this case, we need not determine whether AGCC's allegations would be entitled to such a presumption of harm.
2. Likelihood of success on the merits
A city may use "some form of narrowly tailored racial preference" where such a measure is "necessary to break down patterns of deliberate exclusion." Croson, 488 U.S. at 509, 109 S.Ct. at 729 (plurality). Indeed, "[t]he remedy for intentional discrimination often calls for race-specific relief," Coral Const. 941 F.2d at 921. However, "[a] race-conscious remedy without a race-based injury is constitutionally infirm." Id. To "smoke out" illegitimate uses of race, the Supreme Court has directed that strict scrutiny be applied to all race-conscious programs. Croson, 488 U.S. at 493, 109 S.Ct. at 721. To survive this test, a municipality's classifications based on race must serve a compelling state interest and must be narrowly tailored to further that interest. Wygant v. Jackson Board of Education, 476 U.S. 267,
A. Compelling state interest
In Croson, a majority of the Supreme Court delineated the scope of discrimination that a race-conscious remedy could properly seek to redress. According to the Court, a municipality has a compelling interest in redressing, not only discrimination committed by the municipality, itself, but also discrimination committed by private parties within the municipality's legislative jurisdiction, so long as the municipality in some way perpetuated the discrimination to be remedied by the program. See 488 U.S. at 491-92, 109 S.Ct. at 719-20 (Rehnquist, C.J., White, J., O'Connor, J.); Id. at 537-38, 109 S.Ct. at 744-45 (Brennan, Marshall, Blackmun). To satisfy this requirement, "the governmental actor need not be an active perpetrator of such discrimination; passive participation will satisfy this subpart of strict scrutiny review." Coral Const., 941 F.2d at 916 (citation omitted). In addition, the "[m]ere infusion of tax dollars into a discriminatory industry may be sufficient governmental involvement to satisfy this prong." Id.
In applying these guidelines to the race-conscious ordinance at issue in Croson, the Supreme Court found that Richmond's factual predicate fell short of its constitutional mark. According to the Court, the city's mere recitation of a remedial basis for its racial classifications was entitled to little or no weight. 488 U.S. at 500, 109 S.Ct. at 724. Furthermore, the Court criticized allegations of proponents of the legislation that discrimination existed in the construction industry as conclusory, unrelated to the Richmond construction industry, and to have little probative value. Id. at 498, 109 S.Ct. at 723. The Court also faulted the city's assertions that it had a compelling interest based on the disparity in the percentage of contracts awarded to minority-owned businesses and the percentage of minorities in the city as a whole. Id. at 501-02, 109 S.Ct. at 725-26. According to the Court, "[w]hen special qualifications are required to fill particular jobs, comparisons to the general population (rather than to the smaller group of individuals who possess the necessary qualification) may have little probative value." Id. at 501, 109 S.Ct. at 725 (quoting Hazelwood School Dist. v. United States, 433 U.S. 299, 308 n. 13, 97 S.Ct. 2736, 2742 n. 13, 53 L.Ed.2d 768 (1977)). Finally, the Court rejected the city's attempts to bolster the ordinance's factual predicate based on Congress' finding of discrimination in the construction industry. The Court stressed that for the constraints of the equal protection clause to remain effective, states and local agencies must use their own factfinding processes to establish the presence of discrimination in their own bailiwicks. Id. 488 U.S. at 504, 109 S.Ct. at 726-27. Because Richmond offered no further justification for its assertions of past discrimination, the Court held that Richmond's plan lacked the required "`strong basis in evidence for [the council's] conclusion that remedial action was necessary.'" Id. at 500, 109 S.Ct. at 724 (majority opinion) (quoting Wygant v. Jackson Bd. of Educ., 476 U.S. 267, 277, 106 S.Ct. 1842, 1848-49, 90 L.Ed.2d 260 (1986) (plurality opinion)).
Our decision in AGCC I provides further direction in our assessment of the factual predicate necessary to justify San Francisco's race-conscious remedy.
Measuring the 1989 Ordinance against these principles, we believe that AGCC has failed to demonstrate that it is sufficiently likely to prevail on the merits of its constitutional claim to warrant the issuance of a preliminary injunction. In contrast to the "mere recitation of a `benign' or legitimate purpose" criticized in Croson, 488 U.S. at 500, 109 S.Ct. at 724, the record in this case discloses that the Board made detailed findings of prior discrimination in construction and building within the City's borders. Based on testimony taken at more than ten public hearings and on numerous written submissions from the public, the Board found that City departments continued to discriminate against MBEs and WBEs and continued to operate under the "old boy network" in awarding contracts, thereby disadvantaging MBEs and WBEs. 1989 Ordinance Ch. 12D.2. Furthermore, it found that large statistical disparities existed between the percentage of contracts awarded to MBEs and the percentage of available MBEs. Id. According to the Board's findings, "[t]he disparity cannot be attributed to chance.... [T]he Board finds that the results can only be attributed to discriminatory procurement practices...." Id. The Board also found "discrimination in the private sector against MBEs and WBEs that is manifested in and exacerbated by the City's procurement practices."
The City's findings appear supported by the record. A study commissioned by the City and prepared by BPA Economics, Inc., indicates the existence of large disparities between the award of city contracts to available non-minority businesses and to MBEs. Using the City and County of San Francisco as the "relevant market," the study compared the number of available MBE prime construction contractors in San Francisco with the amount of contract dollars awarded by the City to San Franciscobased MBEs for the 1987-88 fiscal year. It found that available MBEs received far fewer city contracts in proportion to their numbers than their available non-minority counterparts. Specifically, the study found that with respect to prime construction contracting, the disparities between the number of available Asian, Black, and Hispanic owned locally based firms and the number of contracts awarded to such firms was statistically significant and supported an inference of discrimination. For example, in prime contracting for construction, although MBE availability was 49.5%, MBE dollar participation was only 11.1%; in prime contracting for equipment and supplies, although MBE availability was 36%, MBE dollar participation was only 17%; and in prime contracting for general services, MBE availability was 49% although MBE dollar participation was only 6.2%. In our recent decision, Coral Const., we emphasized that such statistical disparities are "an invaluable tool" in demonstrating the discrimination necessary to establish a compelling interest. Coral Const., 941 F.2d at 918; see also Croson, 488 U.S. at 509, 109 S.Ct. at 729 (plurality) ("[W]here there is a significant statistical disparity between the number of qualified minority contractors willing and able to perform a particular service and the number of such contractors actually engaged by the locality or the locality's prime contractors, an
Moreover, the record documents a vast number of individual accounts of discrimination, which bring "the cold numbers convincingly to life." Coral Const., 941 F.2d at 919 (quoting Int'l Bhd. of Teamsters v. United States, 431 U.S. 324, 339, 97 S.Ct. 1843, 1856, 52 L.Ed.2d 396 (1976)). These accounts include numerous reports of MBEs being denied contracts despite being the low bidder, MBEs being told they were not qualified although they were later found qualified when evaluated by outside parties, MBEs being refused work even after they were awarded the contracts as low bidder, and MBEs being harassed by City personnel to discourage them from bidding on city contracts. On appeal, the City points to numerous individual accounts of discrimination to substantiate its findings that discrimination exists in the City's procurement processes, that an "old boy network" still exists, and that racial discrimination is still prevalent within the San Francisco construction industry. Such a "combination of convincing anecdotal and statistical evidence is potent." Coral Const., 941 F.2d at 919; see also Croson, 488 U.S. at 509, 109 S.Ct. at 729, ("[E]vidence of a pattern of individual discriminatory acts can, if supported by appropriate statistical proof, lend support to a local government's determination that broader remedial relief is justified.").
AGCC challenges specific pieces of evidence proffered by San Francisco to justify the 1989 Ordinance. It argues first that the results of the BPA study, which the Board relied on heavily to support its findings of discrimination, were skewed to underrepresent the amount of contract dollars awarded to minorities. As support, AGCC points to statistics presented in the City's Budget Analysis of March 17, 1989, that indicate that MBEs received 36.7% of prime contract dollars awarded in fiscal year 1987-88, a far higher percentage than reflected in the BPA study. Data used in the City's Budget Analysis were also used to calculate the BPA statistics. The City argues that the disparity in the results of the two studies stems from refinements made to the relevant data in the BPA study in order to tailor the data more closely to the 1989 Ordinance's scope. For example, the City contends that BPA limited the data to contracts awarded to MBEs in the City and County area and verified particular data used in the City's Budget Analysis before including it in the BPA study. AGCC responds that refinements made to the data in the BPA study are improper, but it specifically faults only one refinement: the alleged exclusion of all Public Works construction contracts of less than $250,000 from the data. AGCC argues this exclusion would result in undercounting MBEs, which would presumably be newer, smaller, and more apt to bid for smaller contracts. The City, however, points to evidence within the record indicating that BPA in fact included the lower-priced contracts within the BPA data. Because AGCC raises no other specific contention regarding the inaccuracy of the BPA study, and because of evidence in the record contradicting BPA's assertion regarding the inclusion of lower-priced contracts, we conclude that the district court's finding that the BPA statistics were reliable was not clearly erroneous.
AGCC also argues that the statistics relied upon by the City to demonstrate discrimination in its contracting processes fail to meet the standards we established in AGCC I because they consider only MBEs located within San Francisco. Again, AGCC fails to demonstrate a substantial likelihood of success on the merits of this issue. In AGCC I, we faulted the City for failing to determine whether its past actions had visited racial discrimination on MBEs outside of its borders because the scheme adopted by the 1984 Ordinance allowed non-resident MBEs to obtain benefits. 813 F.2d at 933-34. In contrast to the 1984 Ordinance, the 1989 Ordinance applies only to resident MBEs. The City therefore appears appropriately to have confined its study to the city limits in order to focus on those whom the preference scheme targeted.
Furthermore, AGCC contends that the City's findings of discrimination fail to rise
B. Narrowly Tailored
To survive strict scrutiny, not only must a race-conscious remedy serve a compelling state interest, it must be narrowly tailored to redress the consequences of discrimination. Croson, 488 U.S. at 507-08, 109 S.Ct. at 728-29. In Coral Construction, we isolated three characteristics identified by the Croson court as indicative of narrow tailoring. First, "an MBE program should be instituted either after, or in conjunction with, race neutral means of increasing minority business participation in public contracting." 941 F.2d at 922. Second, the plan should avoid the use "of rigid numerical quotas." Id. According to the Supreme Court, systems that permit waiver in appropriate cases and therefore require some individualized consideration of the applicants pose a lesser danger of offending the Constitution. Croson, 488 U.S. at 507-08, 109 S.Ct. at 728-29. Mechanisms that introduce flexibility into the system also prevent the imposition of a disproportionate burden on a few individuals and guard against the unfair exploitation of these plans, two circumstances we cautioned against in AGCC I. AGCC I, 813 F.2d at 936. Third, "an MBE program must be limited in its effective scope to the boundaries of the enacting jurisdiction." Coral Const., 941 F.2d at 922.
AGCC argues that the Ordinance does not possess the first indicium of narrow tailoring; according to AGCC the City improperly
The 1989 Ordinance at issue in this case also appears to possess the requisite flexibility necessary to withstand a motion for preliminary injunction. Rather than the rigid quota system found faulty in Croson, the City has adopted a more modest system, that of bid preferences. As we noted in AGCC I, the advantages provided by such preferences "are relatively slight[;] ... there are no goals, quotas, or setasides." 813 F.2d at 943; see also Coral Const., 941 F.2d at 924 ("The percentage preference method ... is simply not a quota."). Moreover, the plan remedies only specifically identified discrimination: the City provides preferences only to those minority groups found to have previously received a lower percentage of specific types of contracts than their availability to perform such work would suggest.
In addition, the burdens of the bid preferences on those not entitled to them appear relatively light and well distributed. During the first six months the 1989 Ordinance was in effect, 92.7% of all construction
That the 1989 Ordinance is "limited in its geographical scope to the boundaries of the enacting jurisdiction," Coral Const., 941 F.2d at 925, also increases its likelihood of being sustained on the merits. Unlike the 1984 Ordinance, and the program considered in Coral Const., San Francisco has carefully limited the 1989 ordinance to benefit only those MBEs located within the City's borders. The Ordinance therefore redresses only the effects of discrimination within the City's own legislative jurisdiction. Based on the likelihood that, in ruling on the merits, the district court could find all three circumstances associated with narrow tailoring present, we do not find the district court abused its discretion in determining AGCC would not likely succeed with respect to this claim.
The district court did not abuse its discretion in denying AGCC's request for a preliminary injunction enjoining enforcement of the bid preference ordinance pending decision on the merits. On its charter claims, AGCC at most raises serious questions, but fails to demonstrate that the balance of hardships tips sharply in its favor. On its constitutional claims, AGCC fails to demonstrate a sufficient likelihood of success on the merits.
O'SCANNLAIN, Circuit Judge, specially concurring:
While I agree with my colleagues that the district court properly denied AGCC's request for preliminary injunctive relief, I cannot concur in their analytical approach.
I am unable to accept the assertion that AGCC has not demonstrated probable success on the charter amendment issue. As the opinion acknowledges, ante at 1411, California law is clear. A vote of the people, as provided in the California Constitution, is the sole and exclusive means of amending a city charter. Uhl v. Collins, 217 Cal. 1, 17 P.2d 99 (1932). The California courts jealously guard the people's right of initiative as enumerated in the constitution; the California Supreme Court has stated that it is "required to resolve any reasonable doubts in favor of the exercise of this precious right." Brosnahan v. Brown, 32 Cal.3d 236, 186 Cal.Rptr. 30, 32, 651 P.2d 274, 276 (1982). See also Amador Valley Joint Union High School Dist. v. State Bd. of Equalization, 22 Cal.3d 208, 149 Cal.Rptr. 239, 259-60, 583 P.2d 1281, 1302 (1978).
The majority can point to no instance in which the constitutional requirement has not been rigidly applied. Policy arguments against its imposition in this circumstance, see ante at 1411, cannot overcome the "clear dictate of California law," ante at 1411. I am persuaded that AGCC has demonstrated
Accordingly, I must go on to reach the question of whether AGCC has shown a possibility of irreparable harm justifying the issuance of a preliminary injunction. I conclude that it has not. AGCC's members will be harmed by the allegedly invalid charter amendment only if they are denied contracts valued at over $50,000 but less than $10,000,000 due to the bid preferences for MBEs and WBEs. The sole evidence of injury to AGCC members in the record is the declaration of Paul Hodgson. Although Mr. Hodgson declares that his firm has been discouraged from bidding on city contracts by the 1989 Ordinance, he does not mention the size of the contracts his firm would otherwise have sought. Thus, there is no evidence in the record that any AGCC member has lost a bid due to the charter amendment, or has even been discouraged from bidding by that amendment. I must therefore conclude that AGCC has not met its burden of "demonstrat[ing] immediate threatened injury" rather than simply alleging speculative harm.
Although I agree with the majority that AGCC has not shown a likelihood of success on the merits of its equal protection claim, I write separately to emphasize the limited nature of appellate review of the grant or denial of a preliminary injunction. Detailed consideration of the merits of AGCC's constitutional claim is neither necessary nor appropriate in this context. The issue is not the constitutionality of the 1989 Ordinance, but simply whether AGCC has shown a sufficient probability of success on the merits to justify preliminary relief.
Although I do not necessarily disagree with it, the detailed discussion of the statistical evidence presented to the district court, see ante at 1414-15, as well as much of the discussion of whether the 1989 Ordinance meets the requirements of Croson, is inappropriate. Because the Ordinance reasonably appears to comply with Croson, the district court did not abuse its discretion in refusing to grant a preliminary injunction. This court need not say more. Our decision on this narrow issue today should not be regarded as determinative of the ultimate resolution of the dispute. See Big Country Foods, 868 F.2d at 1087.
Section 1981 provides in pertinent part: "All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts ... as is enjoyed by white citizens...." This section prohibits discrimination against nonminorities as well as minorities. McDonald v. Santa Fe Trail Transp. Co., 427 U.S. 273, 295, 96 S.Ct. 2574, 2585, 49 L.Ed.2d 493 (1976). We have previously noted that "[i]t is not entirely clear whether ... section 1981 gives protections beyond those provided by the fourteenth amendment." AGCC I, 813 F.2d at 928 n. 11. We do not address the issue on appeal, however, as AGCC confines its legal argument to the scope of the equal protection clause. See Brady v. Gebbie, 859 F.2d 1543, 1557 (9th Cir.1988), cert. denied, 489 U.S. 1100, 109 S.Ct. 1577, 103 L.Ed.2d 943 (refusing to consider argument not sufficiently argued in appellate brief); Northwest Acceptance Corp. v. Lynnwood Equipment Inc., 841 F.2d 918, 924 (9th Cir.1988) (same).
We also find AGCC unlikely to prevail on its contention that the remedy encompassed within the 1989 Ordinance is not sufficiently tailored to the discrimination found by the Board because it does not individually remedy each type of discrimination suffered. For example, AGCC argues that the bid preference is not narrowly tailored to remedy injuries suffered by those who have been the low bidder on contracts but were still not awarded contracts by City officials. Race-conscious plans, by their nature, are not tailored to remedy individual injuries suffered by individual victims. Here, the City has found that continued discrimination places MBEs at a competitive disadvantage and seeks to counteract this situation by providing MBEs with a counterbalancing advantage. We find this nexus between violation and remedy to be close enough to warrant affirmance of the district court's denial of the motion for preliminary injunction.