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NERA's Role in Builders Association of Greater Chicago v. City of Chicago, 298 F.Supp.2d 725 (N.D. Ill. 2003)
Economic Advice in Litigation

The Situation

The Builders Association of Greater Chicago sued the City of Chicago over the constitutionality of its 1990 ordinance that established construction contract set-asides and subcontracting goals for minority- and woman-owned businesses. NERA was retained by Chicago to provide expert research and trial testimony to document the City's compelling interest in continuing its race-based remedial program.

NERA's Role

NERA provided expert research and trial testimony concerning discrimination against minorities and women in the Chicago construction industry. Using Federal Reserve System data, NERA provided an econometric analysis of access to credit and found that minority-owned firms were substantially more likely to be denied credit than other groups. NERA also found that when minorities were able to obtain loans, they were required to pay higher interest rates on average than whites. When the plaintiff's expert employed an alternative methodology, the results not only confirmed the findings regarding minorities but indicated that women-owned firms were discriminated against in the credit market as well.

The Result

The NERA testimony was part of the mosaic of proof that convinced the court that the City retains a compelling interest in ensuring that its construction contracting not return to "near white male monopoly." In December 2003, the U.S. district court held that while the City did not meet the "narrow tailoring" requirement for its minority program, the evidence provided by NERA experts and others was sufficiently strong to support the City's compelling interest claim. In an unprecedented order, the court allowed the City six months to craft a revised M/WBE program to meet the constitutional requirement of narrow tailoring. The ruling was a victory for the City and a new program was created and implemented, with additional guidance by NERA, in May 2004.