Geyer Signal v. Minnesota Department of Transportation

The Situation

In February 2011,  Minnesota-based highway construction contractor Geyer Signal Inc. filed suit against the Minnesota Department of Transportation (Mn/DOT), challenging the constitutionality of the  United States Department of Transportation’s (USDOT) Disadvantaged Business Enterprise (DBE) Program and its implementation by Mn/DOT. The DBE Program encourages recipients of federal transportation funds to make good faith efforts to subcontract with small businesses owned by minorities, women, and other socially and economically disadvantaged individuals.

NERA's Role

The US government and USDOT intervened in the case. NERA was retained on their behalf by the US Department of Justice to examine evidence of disparities and discrimination in the construction sector and other industries involved in public sector procurement. In his expert report, NERA Senior Vice President Dr. Jon Wainwright reviewed and analyzed the findings from 95 disparity studies conducted since 2000 by 127 different public agencies from across the US since, including 21 he authored himself. Among other findings, Dr. Wainwright demonstrated that the large majority of those studies showed evidence consistent with the continuing prevalence of discrimination against minority- and women-owned businesses in construction and construction-related public contracting.

Dr. Wainwright also presented the results of several econometric analyses demonstrating that minorities and women form businesses at disproportionately lower rates and their businesses earn statistically less than businesses owned by similarly situated non-minority men. He additionally concluded that there is a consistent and statistically significant adverse disparity between the availability of minority- and women-owned businesses throughout the US and their corresponding share of overall business sales and receipts. Finally, Dr. Wainwright presented evidence showing that such businesses are more likely to be denied access to commercial loans and other lines of credit when compared to non-minority male-owned firms with similar balance sheets and credit histories.

The Result

On 31 March 2014, Judge John R. Tunheim of the US District Court for the District of Minnesota dismissed the plaintiffs' case in its entirety, concluding that they had "raised no genuine issue of material fact with respect to the constitutionality of the DBE Program facially or as applied," while repeatedly citing NERA's expert report. The plaintiffs appealed the ruling to the Seventh Circuit but dropped their appeal in June 2014.