By: Eric Gleysteen
In Carnell Construction Corporation v. Danville Redevelopment and Housing Authority,[1] the U.S. Court of Appeals for the Fourth Circuit held that a certified minority-owned construction company can acquire racial identity and therefore has standing to raise race discrimination claims under Title VI of the 1964 Civil Rights Act.
Title VI prohibits discrimination against persons on the basis of race, color, and national origin in programs and activities receiving federal financial assistance. The Carnell Construction Company entered into a contract with a public housing authority to clear a construction site, but after a time the relationship became rocky and eventually both parties brought claims against the other for breach of the contract. Additionally, the Carnell Construction Company, an African-American-owned business entity properly certified as such, raised the claim that it had been the victim of racial discrimination. In determining whether Carnell Construction Corporation had standing to raise race discrimination claims under Title VI, the Fourth Circuit emphasized that the test is not whether the injured party was the intended beneficiary of the federal funds (i.e. not whether the injured party was seeking to reside in the public housing to be erected on the construction site), but whether the party was participating or seeking to participate in federally funded activity. The court accordingly found that by submitting a successful bid proposal, entering into a federally funded contract with the Danville Housing Authority, and performing under that contract for nearly a year, the Carnell Construction Company satisfied this participating-or-seeking-to-participate test.
The court also specifically addressed what it referred to as mere surplusage from the Supreme Court, which in a 1977 case[2] directly stated that a corporation has no identity and cannot be the direct target of race discrimination. The court in Carnell noted that the Supreme Court had no need to address the question of whether a corporation could have standing to bring a racial discrimination claim at that time since there had been in the case an African-American individual that had demonstrated standing to bring the action. The court in Carnell concludes on that basis that the opinion from the Supreme Court was mere dicta and not binding as to whether a corporation could have racial identity and standing to bring a racial discrimination claim.
The ruling in Carnell that a corporation can have racial identity and standing to bring a racial discrimination claim, and the inclusiveness of the participating-or-seeking-to-participate test there introduced, could have far reaching consequences. Consider, for example, a government agency that seeks to do background checks before giving a contract affecting national security to a certified Muslim-owned business entity or that seeks to document eligibility to work in the country before giving a construction contract to a certified Hispanic owned business entity. Carnell indicates that whatever measures were applied to one group would have to be applied to all, or to none, if discrimination claims are to be totally avoided.
Finally, Carnell is of interest as part of the patchwork of a much larger conversation that is being had about what kind of rights and characteristics corporate entities ought to have under our Constitution. The U.S. Supreme Court is expected to hear oral argument on March 25 regarding Sebelius v. Hobby Lobby Stores, Inc.[3] and Contestoga Wood Specialties Corp. v. Sebelius[4] to establish whether the Religious Freedom Restoration Act permits corporate business entities to deny contraceptive health care coverage to employees on the basis of religious convictions and views possessed by the owners of the corporate entity. In view of Carnell, the recent holding in Citizens Untied v. Federal Election Commission[5] protecting through freedom of speech the rights of corporations to make contributions to political campaigns, and these upcoming developments, the role that the corporation plays in this our legal framework has become highly charged and certainl
[1] 13-1143, 2014 WL 868620 (4th Cir. Mar. 6, 2014).
[2] Vill. Of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252 (1977).
[3] 82 U.S.L.W. 3328 (U.S. Nov 26, 2013) (No. 13-356).
[4] 82 U.S.L.W. 3328 (U.S. Nov 26, 2013) (No. 13-354).
[5] 558 U.S. 310 (2010).
