676 799 FEDERAL REPORTER, 3d SERIES

676 799 FEDERAL REPORTER, 3d SERIES

comply with that agreement. In fact, theproper inference from the Department’sletter is that, since § 682.405 does notgrant the guarantor the same discretion as§ 682.410(b)(5)(ii)(D) does, the guarantormust charge collection costs on rehabilitat-ed loans.

To accept the Department’s extraordi-nary position requires us to hold that asingle letter to an assistant vice presidentof one guaranty agency explaining thatthe agency has the discretion not tocharge collection costs under a repaymentagreement constitutes sufficient notice forthe rule that all agencies are prohibitedfrom charging costs on rehabilitatedloans. That is hardly the kind of ‘‘fairwarning’’ required of the Department, es-pecially since Bible seeks to ‘‘invoke the[Department’s] interpretation of ambigu-ous regulations to impose potentially mas-sive liability on [USA Funds] for conductthat occurred well before that interpreta-tion was announced.’’ Christopher v.SmithKline Beecham Corp., ––– U.S.––––, 132 S.Ct. 2156, 2167, 183 L.Ed.2d153 (2012) (quotation marks omitted).

The Department’s recent July 10, 2015,letter purporting to ‘‘restate and clarifythe rules’’ (provided to the court by theDepartment as a ‘‘citation of additionalauthority’’) is nothing short of an admis-sion that the Department’s rule is entirelynew. Ultimately, the Department is notinterpreting the regulations. Instead,

What [the Department] claims for itselfhere is not the power to make politicaljudgments in implementing Congress’policies, nor even the power to maketradeoffs between competing policygoals set by Congress. It is the powerto decide—without any particular fideli-ty to the text—which policy goals [theDepartment] wishes to pursue.

Michigan v. E.P.A., ––– U.S. ––––, 135S.Ct. 2699, 2713, 192 L.Ed.2d 674 (2015)

(Thomas, J., concurring) (citation omitted).This raises serious constitutional ques-tions.

The Department’s interpretation is notentitled to deference. Furthermore, evenif the Department truly interpreted thestatutes and regulations prior to theevents of this case as it claims, we cannotapply the interpretation to USA Funds.To subject USA Funds—indeed, an entireindustry—to RICO liability based on arule that was never enforced—and onlyrecently announced—is manifestly unjust.

For all of these reasons, I respectfullydissent.

,

DUNNET BAY CONSTRUCTIONCOMPANY, an Illinois Corpo-

ration, Plaintiff–Appellant,

v.

Erica J. BORGGREN, in her officialcapacity as Acting Secretary for theIllinois Department of Transporta-tion, et al., Defendants–Appellees.

No. 14–1493.

United States Court of Appeals,Seventh Circuit.

Argued Dec. 12, 2014.

Decided Aug. 19, 2015.

Background: General highway construc-tion company brought action against Illi-nois Department of Transportation (IDOT)and its Secretary of Transportation in offi-cial capacity, alleging IDOT’s disadvan-taged business enterprise (DBE) programunconstitutionally discriminated on basis ofrace in award of federal-aid highway con-

677DUNNET BAY CONST. CO. v. BORGGRENCite as 799 F.3d 676 (7th Cir. 2015)

struction contracts. The United States Dis-trict Court for the Central District of Illi-nois, Richard Mills, J., 2014 WL 552213,entered summary judgment for defen-dants. Company appealed.

Holdings: The Court of Appeals, Tinder,Circuit Judge, held that:

(1) company lacked Article III standing toassert claim that DBE program violat-ed its right to equal protection, and

(2) DBE program did not result in unlaw-ful race discrimination, in violation ofEqual Protection Clause, in connectionwith award of contract for highwayresurfacing project.

Affirmed.

1. Federal Courts O3604(4), 3675Court of Appeals reviews a district

court’s ruling on cross-motions for sum-mary judgment de novo, construing allreasonable inferences from the record infavor of the party against whom the mo-tion under consideration is made.

2. Federal Civil Procedure O103.2, 103.3Article III standing has three ele-

ments: (1) an ‘‘injury in fact,’’ that is, aninvasion of a legally protected interestwhich is concrete and particularized andactual or imminent; (2) a causal connectionbetween the injury and the challenged con-duct, meaning that the injury is fairlytraceable to the challenged conduct; and(3) a likelihood that the injury will beredressed by a favorable decision.U.S.C.A. Const. Art. 3, § 2, cl. 1.

3. Federal Civil Procedure O103.4Prudential limitations to standing in-

clude that when an asserted harm is ageneralized grievance shared in substan-tially equal measure by all or a large classof citizens, that harm alone normally doesnot warrant exercise of jurisdiction; anoth-er limitation is that a litigant generally

must assert his own legal rights and inter-ests, and cannot assert the legal rights orinterests of third parties.

4. Federal Civil Procedure O103.2

In contrast with constitutional limita-tions on standing, prudential limitationsare not jurisdictional and may be disre-garded in certain situations. U.S.C.A.Const. Art. 3, § 2, cl. 1.

5. Federal Civil Procedure O103.2A litigant may forfeit prudential

standing arguments by failing to presentthem in the district court.

6. Federal Civil Procedure O103.2A party invoking federal jurisdiction

bears the burden of establishing the ele-ments of standing, and each element mustbe supported with the manner and degreeof evidence required at the successivestages of the litigation.

7. Federal Courts O2080At the summary-judgment stage, the

plaintiff can no longer rest on mere allega-tions, but must set forth by affidavit orother evidence specific facts invoking fed-eral jurisdiction.

8. Constitutional Law O925General highway construction compa-

ny did not sustain ‘‘injury in fact’’ on basisthat Illinois Department of Transporta-tion’s (IDOT) disadvantaged business en-terprise (DBE) program, which requiredat least ten percent of funds for IDOTprojects to be expended to businessesowned and controlled by socially and eco-nomically disadvantaged individuals in or-der to receive federal-aid funds, preventedcompany from competing on equal footingwith DBE contractors and prevented itfrom being awarded a contract for high-way resurfacing project, and, thus, compa-ny lacked Article III standing to assertclaim that DBE program violated its right


to equal protection; DBE program did notexclude company from competition for anycontract, as all contractors were able tobid on all contracts, subject to DBE goalsor good faith efforts to satisfy those goals,company was not treated less favorablythan any other contractor because of therace of its owners, and company would nothave been awarded contract but for itsfailure to meet DBE goal or demonstrategood faith efforts to meet goal. U.S.C.A.Const. Art. 3, § 2, cl. 1; U.S.C.A. Const.Amend. 14.

9. Constitutional Law O925General highway construction compa-

ny did not sustain ‘‘injury in fact’’ on basisthat it was forced to participate in discrim-inatory scheme, the Illinois Department ofTransportation’s (IDOT) disadvantagedbusiness enterprise (DBE) program, whichrequired at least ten percent of funds forIDOT projects to be expended to busi-nesses owned and controlled by sociallyand economically disadvantaged individu-als in order to receive federal-aid funds,and was required to consider race in sub-contracting as part of bid for highwayresurfacing project, and thus, companylacked Article III standing to assert claimthat DBE program violated its right toequal protection; the race of company’sowners was not deciding factor in award ofcontract, as company’s size created barrierto its receipt of any advantages given toDBEs. U.S.C.A. Const. Art. 3, § 2, cl. 1;U.S.C.A. Const.Amend. 14.

10. Constitutional Law O925Decision by Illinois Department of

Transportation (IDOT) to re-let contractfor highway resurfacing project did notredress any injury sustained by generalhighway construction company due toIDOT’s disadvantaged business enterprise(DBE) program, which required at leastten percent of funds for IDOT projects tobe expended to businesses owned and con-

trolled by socially and economically disad-vantaged individuals in order to receivefederal-aid funds, and, thus, companylacked Article III standing to assert claimthat DBE program violated its right toequal protection; in second letting, compa-ny satisfied DBE goals, but its bid was notthe lowest, as other companies submittedlower bids and met the DBE participationgoals. U.S.C.A. Const. Art. 3, § 2, cl. 1;U.S.C.A. Const.Amend. 14.

11. Constitutional Law O3040, 3054

Equal Protection Clause prohibits in-tentional and arbitrary discrimination.U.S.C.A. Const.Amend. 14.

12. Constitutional Law O3040

To establish liability for an equal pro-tection violation, a plaintiff must establishthat the defendant acted with a discrimina-tory purpose and discriminated againsthim because of his membership in an iden-tifiable group. U.S.C.A. Const.Amend. 14.


Under strict scrutiny for equal protec-tion claim, a government program thatuses racial classifications must be narrowlytailored to serve a compelling governmen-tal interest. U.S.C.A. Const.Amend. 14.


A state is insulated from a constitu-tional challenge, under Equal ProtectionClause, as to whether its program is nar-rowly tailored to achieve a compelling gov-ernmental interest, absent a showing thatthe state exceeded its federal authority.U.S.C.A. Const.Amend. 14.

15. Constitutional Law O3218, 3677

Highways O113(1)

Public Contracts O129

Illinois Department of Transporta-tion’s (IDOT) disadvantaged business en-terprise (DBE) program, which required


at least ten percent of funds for IDOTprojects to be expended to businessesowned and controlled by socially and eco-nomically disadvantaged individuals in or-der to receive federal-aid funds, did notresult in unlawful race discrimination inviolation of Equal Protection Clause inconnection with award of contract for high-way resurfacing project; IDOT’s methodol-ogy in establishing its statewide DBE goaland approving individual contract goals forproject were approved by Federal High-way Administration (FHWA), requests forwaivers from DBE compliance for projectswere not forbidden, but were subjected tohigh-level review and would not be grantedunless shown to be appropriate, and IDOTdetermined company failed to documentgood faith efforts to comply with DBEgoals. U.S.C.A. Const.Amend. 14; 49C.F.R. § 26.53.

Edward R. Gower, Attorney, Hinshaw &Culbertson, Springfield, IL, for Plaintiff–Appellant.

Mary Ellen Welsh, Attorney, Office ofthe Attorney General, Chicago, IL, RalphW. Kasarda, Attorney, Pacific Legal Foun-dation, Sacramento, CA, for Defendants–Appellees.

Before ROVNER, WILLIAMS, andTINDER, Circuit Judges.

TINDER, Circuit Judge.

Plaintiff–Appellant Dunnet Bay Con-struction Company sued Defendants–Ap-pellees Illinois Department of Transporta-tion (IDOT) and its then-Secretary ofTransportation Gary Hannig in his officialcapacity, alleging that IDOT’s Disadvan-taged Business Enterprise (DBE) Pro-gram discriminates on the basis of race.The district court granted summary judg-

ment to Defendants, concluding that Dun-net Bay lacked standing to raise an equalprotection challenge based on race andthat the DBE Program survived the con-stitutional and other challenges. DunnetBay appeals. For the reasons that follow,we affirm.

I. BACKGROUND

Dunnet Bay is a corporation that en-gages in general highway construction. Itis prequalified to bid and work on IDOTprojects and competes for federally assist-ed highway construction contracts award-ed by IDOT. Dunnet Bay is owned andcontrolled by two white males. Between2007 and 2009, its average annual grossreceipts were over $52 million.

IDOT is the agency of the State ofIllinois responsible for administering,building, operating, and maintaining thestate highway system. It also is responsi-ble for administering federally fundedhighway construction contracts in accor-dance with federal and state law, includingthe regulations promulgated by the U.S.Department of Transportation (USDOT),see 49 C.F.R. Part 26. IDOT administersa small business initiative program, whichreserves certain work on contracts forsmall business enterprises. Gary Hannigwas the Secretary of IDOT from February2009 through the end of June 2011.

In order to receive federal-aid funds forhighway contracts, IDOT must have a‘‘disadvantaged business enterprise’’ par-ticipation program that complies with fed-eral regulations. The Transportation Eq-uity Act for the 21st Century (‘‘TEA–21’’),Pub.L. No. 105–178, 112 Stat. 107 (1998),as amended by the Safe, Accountable,Flexible, Efficient Transportation EquityAct: A Legacy for Users, 23 U.S.C. § 101Note, Pub.L. No. 109–59, 119 Stat. 1144(2005), and the governing regulations re-quire state recipients of federal-aid funds


for highway contracts like IDOT to submitto the United States Department of Trans-portation (USDOT) a written plan thatdemonstrates, inter alia, that they are notdiscriminating against minorities and wom-en in the award of contracts. Section1101(b) of the TEA–21 provides that ‘‘notless than 10 percent of the amounts madeavailable for any program under TTT

[TEA–21] shall be expended with smallbusiness concerns owned and controlled bysocially and economically disadvantaged in-dividuals.’’ A DBE is defined as a for-profit small business concern that is atleast 51% owned and controlled by one ormore socially and economically disadvan-taged individuals. 49 C.F.R. § 26.5. Thereis a rebuttable presumption that womenand members of racial minority groups aresocially and economically disadvantaged,id., but an individual owner of any race orgender may qualify as ‘‘socially and eco-nomically disadvantaged.’’ See id. Underthe applicable regulation, ‘‘a firm is not aneligible DBE in any Federal fiscal year ifthe firm (including its affiliates) has hadaverage annual gross receipts TTT over thefirm’s previous three fiscal years, in excessof $22.41 million.’’ 49 C.F.R. § 26.65(b)(2009).

States must set an overall goal for DBEparticipation in federally assisted con-tracts. 49 C.F.R. § 26.45(a). That goal‘‘must be based on demonstrable evidenceof the availability of ready, willing and ableDBEs relative to all businesses ready, will-ing and able to participate on [federal]-assisted contracts’’ and ‘‘must reflect [thestate’s] determination of the level of DBEparticipation [one] would expect absent theeffects of discrimination.’’ Id. § 26.45(b).A state is not permitted to use quotas forDBEs but may use set-aside contracts forDBEs in limited circumstances. Id.§ 26.43. A state ‘‘must meet the maximumfeasible portion of’’ its overall DBE partic-ipation goal through race-neutral means,

using contract goals to meet any portionthat is not projected to be met with race-neutral means. Id. § 26.51(a), (d). Insetting specific contract goals, a stateshould consider such factors as ‘‘the typeof work involved, the location of the workand the availability of DBEs for the workof the particular contract.’’ Id.§ 26.51(e)(2).

Under the regulations, a contract maybe awarded to a bidder who demonstratesthat it has obtained enough DBE partic-ipation to meet the DBE contract goal, ordemonstrates that it made adequate goodfaith efforts to meet the goal even if it didnot meet the goal, id. § 26.53(a), whichmeans that it ‘‘took all necessary and rea-sonable steps to achieve a DBE goal TTT

which, by their scope, intensity, and appro-priateness to the objective, could reason-ably be expected to obtain sufficient DBEparticipation, even if they were not fullysuccessful.’’ 49 C.F.R. Pt. 26, App. A, § I.If a bidder demonstrates that it made ade-quate good faith efforts, it must not bedenied award of the contract on theground that it failed to meet the goal. Id.§ 25.53(a)(2). If the apparent successfulbidder fails to either meet the DBE con-tract goal or demonstrate good faith ef-forts, the state ‘‘must, before awarding thecontract, provide the [bidder] an opportu-nity for administrative reconsideration.’’Id. § 26.53(d). If the state determinesthat the apparent successful bidder failedto show good faith efforts, the state mustsend the bidder a written explanation ofthe basis for the finding. Id. § 26.53(d)(4).

IDOT administers the DBE program inIllinois. IDOT prepared and submitted toUSDOT for approval a DBE programgoverning federally funded highway con-struction contracts. IDOT established astatewide aspirational goal for DBE par-ticipation of 22.77%. IDOT typicallyachieved somewhere between 10% and


14% DBE participation. For fiscal year2009, IDOT attained 11.15% minority par-ticipation on all construction projects.For fiscal year 2010, IDOT projected thatit would achieve 4.12% DBE participationthrough race-neutral means, leaving18.65% DBE participation to be met byusing contract goals. The Federal High-way Administration (FHWA) expressedconcern about states not reaching theirDBE goals and indicated to IDOT that itwould like to see the DBE participationopportunities increased.

IDOT has five regions that are subdivid-ed into a total of nine districts. Eachdistrict is headed by a district engineerwho is responsible for the highways in hisor her district. The district engineers re-port to the regional engineers who reportto the Director of Highways/Chief Engi-neer. A district engineer and equal em-ployment opportunity (EEO) officer revieweach construction contract to decidewhether the contract presents DBE partic-ipation opportunities. At all relevanttimes, Christine Reed was IDOT’s Di-rector of Highways/Chief Engineer andwas responsible for goal setting. Reedreviewed recommendations for contractgoals and small business initiatives. Con-tracts had been withdrawn from biddingby Secretary Hannig’s predecessor to re-view DBE goals. After the goals werereviewed, the contracts were re-advertisedwith higher DBE goals.

Under IDOT’s DBE program, if a bid-der fails to meet the DBE contract goal,then it may request a modification of thegoal, and provide documentation of itsgood faith efforts to meet the goal. Theserequests for modification are also knownas ‘‘waivers.’’ Historically, IDOT hasgranted goal modification requests. Incalendar year 2007, it granted 57 of 63 pre-award goal modification requests; the sixother bidders ultimately met the contract

goal with post-bid assistance from IDOT.In calendar year 2008, IDOT granted 50 of55 pre-award goal modification requests;the other five bidders ultimately met theDBE goal. And in calendar year 2009,IDOT granted 32 of 58 goal modificationrequests; the other contractors ultimatelymet the goals. In calendar year 2010,IDOT received 35 goal modification re-quests; it granted 21 of them and deniedthe rest.

Secretary Hannig became IDOT’s Sec-retary in February 2009. He named Wil-liam Grunloh his Chief of Staff. From thebeginning of his term, Secretary Hannigtold Reed that he wanted IDOT to make a‘‘very strong effort’’ in setting and at-tempting to achieve DBE goals. As withprior IDOT Secretaries, Secretary Hannigwas concerned about increasing DBE par-ticipation in federal contracts. Indeed, hisfirst directive to IDOT’s entire staff was toincrease participation for minority compa-nies. In a March 2009 meeting with Reed,Secretary Hannig made it ‘‘very clear thatwaivers would not be a part of a commonpractice of his administration.’’ As a re-sult, Reed told the regional engineers that‘‘the Secretary was not interested in enter-taining waivers as part of his administra-tion’’ and told a contracting organizationthat ‘‘request[s] for waivers would beclosely scrutinized and would be very diffi-cult to get.’’ In an April meeting aboutDBE participation for a bridge project,Secretary Hannig was ‘‘very adamant thatwaivers were not going to be an acceptablepart of his administration unless [theywere] absolutely positively appropriate.’’

IDOT’s Director of the Office of Busi-ness and Workforce Diversity (OBWD)Larry Parrish, who recommended whetherwaiver requests were granted or deniedand sought approval of his recommenda-tion from Secretary Hannig, advised CarolLyle, IDOT’s Deputy Director of OBWD,


that he was under pressure not to forwardwaiver requests.

From time to time, Reed had discussionsabout DBE goals with Kristi Lafleur, theDeputy Chief of Staff in the Governor’sOffice who was responsible for oversight ofIDOT and Darryl Harris, the Governor’sDirector of Diversity Enhancement. InSeptember 2009, Lafleur emailed Secre-tary Hannig that ‘‘[w]e need an action planfrom [IDOT] on increasing the DBE num-bers’’ and ‘‘we need an overhaul for theprogram and need to announce a new pro-gram.’’ Secretary Hannig responded that‘‘an overhaul of this program is in order’’but ‘‘[t]he federal guidelines make the pro-gram goals and not set asides.’’ Beginningwith his appointment in November 2009 asDirector of Diversity Enhancement, Harrismade it clear to Secretary Hannig, Reed,and other IDOT personnel that DBE par-ticipation was a top priority and that goalmodifications were not favored.

In early December 2009, IDOT soughtbids for a highway resurfacing project fora portion of Interstate 290, known as theEisenhower Expressway. There werefour federally funded contracts for con-struction work on the Eisenhower, one ofwhich was Contract No. 60I57, the con-tract at issue in this case. Henry Gray, acivil engineer and EEO Officer for District1, set the DBE goals for the contracts.He set DBE participation goals of 8% forthree of the four contracts, including Con-tract No. 60I57; the goal for the fourthcontract was set at 10%.

In mid-December Secretary Hannig or-dered the withdrawal of the invitation forbids for the Eisenhower projects. Beforedoing so, he had been advised that theGovernor’s Office wanted a weighted aver-age DBE participation goal of 20% for

those projects. Secretary Hannig wroteReed and Grunloh that ‘‘we need to get the[E]isenhower up to 20% minority partic-ipation’’ and back on schedule.1 SecretaryHannig and Reed were comfortable thatthe goal could be met within the law.Reed advised Secretary Hannig that thecontract goals were ‘‘relatively low’’ andthere was opportunity to increase thegoals under federal law. IDOT expandedthe scope of the projects and itemsdeemed eligible for DBE consideration—by expanding the geographic areas to de-termine DBE eligibility and by addingpavement patching, landscaping, and otherwork originally reserved for small businessinitiatives to the existing DBE goals.These efforts increased the weighted aver-age of the projects to 20%. IDOT issued arevised invitation for bids for a January2010 letting with a new DBE participationgoal on Contract No. 60I57 of 22%.

Earlier in 2009, IDOT had sought ap-proval from USDOT to use ‘‘split goals’’ ona Mississippi River Bridge Project. US-DOT rules do not allow ‘‘split goals’’—separate goals for minorities and women.On December 14, Harris sent the Gover-nor’s Chief of Staff and others an emailindicating that the Federation of WomenContractors was ‘‘willing[ ] to drop [its]opposition to split goals’’ on the project ifIDOT implements a ‘‘no waiver policy’’ likethat of the Capital Development Board.Harris testified that he never agreed tohave IDOT implement a no-waiver policy,but rather agreed to ‘‘bring it up for con-sideration.’’

On December 23, Secretary Hannig helda mandatory meeting with Grunloh, Reed,Parrish, and IDOT’s Chief Counsel EllenSchanzle–Haskins, as well as with some

1. There is no ‘‘minority participation’’ goal,and, as noted, DBE status is not limited to

any particular minority group.


regional engineers and district EEO offi-cers—the persons responsible for settingcontract goals in their respective districts.Secretary Hannig made it clear that thestaff needed to be more aggressive in set-ting DBE goals, that is, they needed toincrease the goals. He expressed his con-cern about waivers and goal modifications,explaining that he did not want to have todecide between goal attainment and waiv-ers and modifications. IDOT’s RegionalEngineer for the Metra East area, MaryLamie, testified that the Secretary re-peated several times that there would beno DBE waivers. However, she also saidthat based on the context of the meeting,she was ‘‘left with the impression thatSecretary Hannig wasn’t saying no waiversunder any circumstances will ever be is-sued’’ but that requests for ‘‘waivers weregoing to be reviewed’’ at a high level, and‘‘we needed to make sure that the appro-priate documentation was provided’’ in or-der for a waiver to be issued.

The FHWA approved the methodologyIDOT used to establish its statewide over-all DBE goal of 22.77%. The FHWA re-viewed and approved the individual con-tract goals for work on the Eisenhowerprojects for IDOT’s January 15, 2010, bidletting. It also approved the IDOT DBEprogram amendment that required con-tractors to submit with their bids theirDBE utilization plans and documentationof good faith efforts to meet DBE goals.

On January 6, 2010, IDOT held an infor-mational meeting for general contractorsand DBE firms regarding the January 15,2010 bid letting. IDOT discussed changes

in its DBE contracting procedures andrequirements. The District 8 (MetraEast) EEO Officer Lee Coleman statedthat Secretary Hannig had told him thatno waivers would be granted with respectto DBE contract goals for the letting.However, IDOT’s Director of HighwaysReed told Secretary Hannig that a no-waiver policy was not possible because itviolated the law. Secretary Hannig toldHarris that a no-waiver policy was notallowed under federal law. The Secretaryalso advised the Governor’s Chief Operat-ing Officer Jack Lavin that IDOT wasdoing its best to follow the law and did notappreciate Harris trying to interject him-self into IDOT’s business.

IDOT has a ‘‘Bidders’ List,’’ also knownas the ‘‘For Bid List of Bidders’’ and ‘‘ForBid List,’’ which identifies all approved,prequalified general contractors for eachitem on a letting. DBEs rely on the ForBid List so they know to which contractorsto submit subcontracting quotes. DBEstypically will not submit subcontractingquotes to general contractors who are noton the For Bid List. On January 14, IDOTissued the final For Bid List, identifyingthe authorized bidders on each project inthe January 15 letting. IDOT inadver-tently left Dunnet Bay off the For BidList.

On January 15, Dunnet Bay submittedto IDOT a bid of $10,548,873.98 for Con-tract No. 60I57, which was the lowest bidon the contract. Dunnet Bay’s bid was0.73% under the engineer’s estimate but16% over the program estimate, exceedingthe latter estimate by about $1.3 million.2

2. The engineer’s estimate is calculated by therelevant district engineer; it is a detailedanalysis of the average cost of each work itemand the total expenses. The program esti-mate is set by IDOT and used to allocateavailable funds for the fiscal year. A bid iscompared to the engineer’s estimate to deter-

mine whether or not it is within the awarda-ble range. The program estimate is used todetermine whether there is money in IDOT’sbudget to pay for the project. Reed statedthat bids are measured against both the engi-neer’s estimate (to determine if the bid isreasonable) and against the program estimate


Dunnet Bay submitted its DBE utilizationplan, noting that it had planned to meetthe DBE goal of 22%, but identified only$871,582.55 of subcontracting or 8.26% ofits bid for DBE participation.3 Three oth-er bids were submitted; each of them metthe DBE goal. The regional engineer forDistrict 1 advised Director Reed that Dun-net Bay’s bid was within the awardablerange.

Dunnet Bay requested a goal modifica-tion, also known as a waiver, based on itsgood faith efforts to obtain the DBE goal.In December 2009, Dunnet Bay had at-tended a symposium where it met someDBEs. Beginning on January 4, 2010,Dunnet Bay faxed DBE subcontractors in-vitations to submit quotes and followed-upabout a week later with telephone calls.Dunnet Bay solicited 796 companies, 453 ofwhich were DBEs. It had contacted DBEnetworking organizations such as theBlack Contractors United, Chicago Minori-ty Business Development Council, andChicago Urban League, and advertisedsubcontracting opportunities on its web-site. In addition, Dunnet Bay’s presidentattended a mandatory pre-bid meeting,which provided DBEs an opportunity tonetwork with prime contractors interestedin bidding on the Eisenhower project.Dunnet Bay’s efforts were essentially thesame that it had made in the past and hadproven successful in meeting DBE goals.Dunnet Bay was not among those contrac-tors who often sought goal modificationrequests. In fact, Dunnet Bay met thegoal for 8 of the 9 bids in the January 15,2010 letting. However, despite utilizingIDOT’s supportive services in the past,Dunnet Bay did not contact supportive

services in connection with the Eisenhowerproject. Its president offered the explana-tion that supportive services were not of‘‘any help.’’

DBE subcontractors submitted to Dun-net Bay post-bid quotes that would haveenabled it to meet the DBE participationgoal. At least one of the subcontractorsindicated that its quote would have beensubmitted earlier had it known that Dun-net Bay was bidding on the project, that is,had IDOT not left Dunnet Bay off the ForBid List.

An interview of Darryl Harris was pub-lished in the January 2010 issue of CapitalCity Courier. (Governor Quinn was facinga formidable challenger in the Democraticprimary election to be held on February 2,2010.) In the interview, Harris discussedthe DBE program on the Eisenhower pro-jects:

I can tell you one of the greatest suc-cesses that we have so far is that wehave a project in the Chicago area calledthe Eisenhower Highway Project, whichis a $90 billion dollar project. Tradition-ally, goals in the past were set around 6or 8 percent. This administration cango on record that our goal is 20 percent,with one stage of that project being 30percent for minority-owned businesses.Already you can see that the Governoris committed to providing opportunitiesfor minorities and womenTTTT

The Governor remains steadfast on a no-waiver policy. This has been a practice inC.D.B. [Capital Development Board] forseveral years. So, now we’re encouragingthe Department of Transportation to alsohave a no waiver policy.

(to ensure there is enough money in the bud-get).

3. Prior to 2010, a successful low bidder wasrequired to submit its DBE utilization planwithin 7 days after the letting. Effective with

the January 15, 2010 letting, contractors wererequired to submit their DBE utilization plansand documentation of good faith efforts withtheir bids.


[O]ur no-waiver policy is just that. Youhave to meet it. When we put goals ona project, we strongly encourage thatthose goal[s] are being met.

The article was not well-received byIDOT. Secretary Hannig was upset thatHarris would make such statements thatwere contrary to federal law. Hannig hadadvised Harris that a ‘‘no waiver’’ policywas not allowed under federal law and thatIDOT would not implement a policy ‘‘thatwas clearly in violation of the federallaws.’’ The article drew objection fromthe Illinois Road & Builders Associationwho wrote Governor Quinn, requesting‘‘complete repudiation’’ of Harris’s state-ments about a ‘‘no-waiver policy.’’ Secre-tary Hannig and IDOT’s Chief Counselresponded by indicating that IDOT doesnot violate federal law and regulations, andthat IDOT has granted and does grantwaivers where appropriate.

In an email dated January 20, 2010,from Secretary Hannig to Harris and cop-ied to Lafleur in the Governor’s Office,Hannig advised of the results of the bid-ding on Contract No. 60I57:

The fourth project has 4 bidders. Thelow bidder is over budget but close indollar amounts but is the only bidder tomiss the DBE goals. Under our rulessince the lowest bidder is close to ourpre-bid estimate, he would normally begiven the award if he could show a goodfaith effort to meet the DBE goals andwas granted a waiver by I.D.O.T. IfI.D.O.T. rules he did not make a goodfaith effort I.D.O.T. could award thecontract to the next lowest bidder orrebid the project.

Secretary Hannig testified that the emailwas mistaken because the low bidderwould not normally be awarded the con-tract because the bid was over IDOT’sestimate. He explained, ‘‘We would haveto take a look at it, and there could be

some circumstances where it would be ac-cepted.’’ IDOT Chief Counsel Schanzle–Haskins stated that ‘‘[IDOT] would notnormally award a contract that was [$1.3million] over the program estimate’’; in-stead, it ‘‘normally would reject the bid.’’

IDOT held a series of meetings to de-cide whether to award the Eisenhowercontracts. Three of the bids were ‘‘wayover’’ the program estimates. It was dis-cussed that Dunnet Bay as the low bidderwas over the program estimate, but withinthe awardable range. Secretary Hannig ex-pressed concern about the race, gender,and ethnicity of the DBEs on the Eisen-hower projects. Harris expressed concernthat there were not enough African Ameri-can subcontractors on the DBE list. Reedmade recommendations to Secretary Han-nig regarding whether to rebid contracts,and he followed her recommendations torebid contracts for financial concerns.Reed recommended to Secretary Hannigthat Contract No. 60I57 be rebid becausethe low bidder was 16% over the projectestimate and was left off the For BiddersList.

In a letter dated January 22, 2010,IDOT advised Dunnet Bay that it hadmade a ‘‘preliminary determination’’ thatDunnet Bay had not made good faith ef-forts to meet the DBE goal. DunnetBay’s good faith efforts were not consid-ered at that time, however. Rather, wherethe bidder failed to meet the DBE goaldespite documentation of good faith ef-forts, IDOT initially rejected the bid andall bids as nonresponsive. According toCarol Lyle, IDOT had decided to prelimi-narily reject any bid that did not meet theDBE goal and allow the contractor to seeka reconsideration hearing. A reconsidera-tion hearing was set for January 25 toallow Dunnet Bay to provide documenta-tion of its good faith efforts.


Secretary Hannig appointed IDOT Chiefof Staff Grunloh, a former DemocraticState Representative, to serve as reconsid-eration officer. As noted, Grunloh had par-ticipated in the December 23 meetingwhere Secretary Hannig made it clear hewanted aggressive DBE goal setting andexpressed concern about goal modificationrequests. Dunnet Bay’s reconsiderationhearing was Grunloh’s first as a hearingofficer. Before the hearing, Lyle briefedGrunloh on the issues relevant to the re-consideration hearing, provided him with acopy of the applicable federal regulationsand standards, including the good faitheffort standards in Appendix A to Part 26of the Code of Federal Regulations, andadvised him of the resources that wereavailable to assist contractors in meetingDBE goals.

Grunloh, Lyle, Dunnet Bay’s owner andpresident Tod Faerber, and Dunnet Bayemployee Sarah Rose attended the recon-sideration hearing. Dunnet Bay presentedevidence of its good faith efforts. Howev-er, Faerber admitted that they had notused IDOT’s supportive services. DunnetBay argued that it would have met thecontract’s DBE goal but for IDOT’s errorin leaving it off the For Bid List, whichimpacted the DBEs’ submission of timelysubcontracting quotes to Dunnet Bay.

After the reconsideration hearing, Faer-ber met with Lyle and Grunloh. Lyleinitially believed that Dunnet Bay haddemonstrated sufficient good faith efforts.She testified, however, that a major reasonfor this belief was because Dunnet Bayhad been left off the For Bid List. Lylesubsequently expressed the opinion thatDunnet Bay could have done more to dem-onstrate good faith efforts, namely, by con-tacting supportive services as well asIDOT’s Bureau of Small Business Enter-prises and the district EEO officer.

Faerber also met with Secretary Hannigto express serious concern about his abilityto get a fair hearing given the DarrylHarris article, which ‘‘seemed to implythat waivers were not going to be grant-ed.’’ The Secretary responded that heunderstood, but he was under pressurefrom Harris not to grant waivers. Faer-ber candidly testified that Secretary Han-nig did not indicate whether or not IDOTwould grant waivers.

Grunloh decided that Dunnet Bay’s re-consideration request should be denied,having concluded that it had not demon-strated good faith efforts to obtain DBEparticipation. Although Grunloh preparedno contemporaneous writing of his reason-ing, he summarized his reasons as follows:(1) Dunnet Bay did not utilize IDOT’ssupportive services, and (2) the second,third, and fourth next lowest bidders wereable to meet the 22% goal.

Grunloh also recommended to SecretaryHannig that the contract be rebid insteadof awarded to the second lowest bidderbecause the low bidder (Dunnet Bay) hadnot been included on the final For BidList. Similarly, Chief Counsel Schanzle–Haskins advised Secretary Hannig thatIDOT ‘‘screwed up’’ by leaving DunnetBay off the bidders list, and so, in fairness,IDOT should not award the contract to thesecond lowest bidder. Because the lowbidder was 16% over the project estimateand was left off the Final For Bid List,Secretary Hannig decided not to award thecontract to the second lowest bidder andre-let Contract No. 60I57.

On February 2, Secretary Hannig con-tacted Faerber by telephone and advisedthat IDOT was not going to grant DunnetBay a waiver for the project and its bidwas going to be rejected because it did notmeet the DBE goal. Hannig explainedthat IDOT ‘‘felt bad’’ because Dunnet Baywas left off the For Bid List, and IDOT


was going to rebid the project rather thanaward it to the second lowest bidder. Sec-retary Hannig sent Dunnet Bay a letterdated February 2, 2010, stating that its bidwas ‘‘considered non-responsive and ishereby rejected.’’ Secretary Hannig testi-fied that Dunnet Bay’s bid was rejectedbecause it did not meet the DBA goal, butit ‘‘could have been rejected because [it]was too high’’; however, IDOT neverreached the question of whether or not itshould award the contract based on theamount. Secretary Hannig explained thathad Dunnet Bay met the DBE goal, thenext question would have been whetherthe bid was appropriate, and Reed hadrecommended that IDOT rebid the con-tract.

Four separate Eisenhower Expresswayprojects were advertised for bids for theJanuary 15, 2010 bid letting. IDOT grant-ed one of four goal modifications requestedfrom that bid letting. (ReconsiderationHearing Officer Grunloh granted modifica-tion of the DBE participation goal onMarch 4, 2010.) Only one of the fourprojects was awarded; the other three,including Contract No. 60I57, were unac-ceptable to IDOT and were rebundled andre-advertised for bids for a February 2010special letting. The re-bids were ‘‘muchmore competitive.’’ Although DunnetBay’s bid was lower than its first bid, itwas not the lowest bid; it was the thirdout of five bidders.

On February 26, 2010, Dunnet Bay suedIDOT and Secretary Hannig in his officialcapacity, asserting race discrimination andequal protection claims under 42 U.S.C.§§ 1981 and 1983; Title VI of the CivilRights Act of 1964, 42 U.S.C. § 2000d;and Section 5 of the Illinois Civil RightsAct of 2003, 740 ILCS 23/1–5. DunnetBay sought damages as well as a declara-tory judgment that the DBE Program isunconstitutional and injunctive relief

against its enforcement. Dunnet Baysought summary judgment as to liability,contending that the Defendants exceededthe authority granted to them in the feder-al rules regarding DBE programs, so thatthe DBE Program was not insulated fromconstitutional attack and could not with-stand strict scrutiny. Defendants alsosought summary judgment, arguing thatthe DBE program was not subject to at-tack, that Dunnet Bay was not subjectedto intentional race discrimination, and thatDunnet Bay lacked standing to raise anequal protection challenge based uponrace.

In a comprehensive and well-writtenopinion, the district court granted the De-fendants’ motion and denied Dunnet Bay’smotion. The court concluded ‘‘that Dun-net Bay lacks Article III standing to raisean equal protection challenge because ithas not suffered a ‘particularized’ injurythat was caused by IDOT. Dunnet Baywas not deprived of the ability to competeon an equal basis.’’ Dunnet Bay Constr.Co. v. Hannig, 3:10–cv–3051, 2014 WL552213, at 30 (C.D.Ill. Feb. 12, 2014). Thecourt also determined that Dunnet Bay,which does not qualify as a small business,lacks prudential ‘‘standing to vindicate therights of a (hypothetical) white-ownedsmall business.’’ Id.

Even if Dunnet Bay had standing tobring an equal protection claim, the courtconcluded that the Defendants were enti-tled to summary judgment. Id. It statedthat to establish an equal protection viola-tion, IDOT would have to show that it wastreated less favorably than another simi-larly situated entity. The court found thatonly speculation could resolve whetherDunnet Bay or any other contractor wouldhave been awarded the Contract but forIDOT’s DBE Program. It reasoned thatno one could know what the second lowestbidder’s bid would have been if it had not


met the 22% goal or what Dunnet Bay’sbid would have been had it met the 22%goal, or whether Dunnet Bay would havebeen awarded the contract had it demon-strated adequate good faith efforts be-cause its bid was over the program esti-mate. And because Dunnet Bay was heldto the same standards as every other bid-der, the court concluded that Dunnet Baycould not establish that it was the victim ofracial discrimination. Id. at *31.

Moreover, the court determined thatIDOT had not exceeded its federal authori-ty under the federal rules and that DunnetBay’s challenge to the DBE program failsunder Northern Contracting, Inc. v. Illi-nois, 473 F.3d 715, 721 (7th Cir.2007),which insulates a state DBE program froma constitutional attack absent a showingthat the state exceeded its federal authori-ty. Id. at *26–*29. The court determinedthat there was no reasonable basis to findthat IDOT exceeded its federal authorityby (1) setting the 22% DBE goal on theEisenhower Contract; (2) imposing a ‘‘nowaiver’’ policy by refusing to grant waiversof DBE goals, given that a waiver wasgranted in connection with the January 15,2010 letting at issue and waivers weregranted before and after that letting; (3)denying Dunnet Bay’s waiver request ini-tially and on reconsideration upon findingthat it did not make adequate good faithefforts; and (4) omitting from its denialletter the reasons why its good faith ef-forts were inadequate, given that the‘‘technical’’ violation did not prejudice Dun-net Bay. Furthermore, because IDOT re-bid the project, the court concluded that areconsideration hearing was not required,and because the contract was not awardedto the next lowest bidder, it decided theclaim was moot. Id. at *29. Dunnet Bayappeals from the district court’s judgment.

II. DISCUSSION

[1] Dunnet Bay contends that it wasdenied a state highway construction con-

tract because of race discrimination inIDOT’s DBE Program. We review thedistrict court’s ruling on the cross-motionsfor summary judgment de novo, construingall reasonable inferences from the recordin favor of the party against whom themotion under consideration is made.Tompkins v. Cent. Laborers’ PensionFund, 712 F.3d 995, 999 (7th Cir.2013).

A. Dunnet Bay’s Standing to Raisean Equal Protection Claim

The first issue we address is whetherDunnet Bay has standing to challengeIDOT’s DBE Program on the ground thatit discriminates on the basis of race in theaward of highway construction contracts.In other words, is Dunnet Bay a properplaintiff to challenge the DBE program onthe basis of alleged race discrimination?If Dunnet Bay lacks standing, then we lackjurisdiction to consider the merits of theequal protection claim. Steel Co. v. Citi-zens for a Better Env’t, 523 U.S. 83, 94,118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).

[2] Standing arises under Article III’s‘‘case or controversy’’ requirement. SeeLujan v. Defenders of Wildlife, 504 U.S.555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351(1992). Article III standing has three ele-ments: (1) an ‘‘injury in fact,’’ that is, ‘‘aninvasion of a legally protected interestwhich is TTT concrete and particularized,and TTT actual or imminent’’; (2) a causalconnection between the injury and thechallenged conduct, meaning that the inju-ry is ‘‘fairly traceable’’ to the challengedconduct; and (3) a likelihood ‘‘that theinjury will be redressed by a favorabledecision.’’ Lujan, 504 U.S. at 560–61, 112S.Ct. 2130 (citations and internal quotationmarks omitted). These are the constitu-tional minimum requirements for standing.See id. at 560, 112 S.Ct. 2130.

[3–5] There are also prudential limita-tions on standing. Lujan, 504 U.S. at 560,

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112 S.Ct. 2130; Warth v. Seldin, 422 U.S.490, 498–99, 95 S.Ct. 2197, 45 L.Ed.2d 343(1975). One of these limitations is that‘‘when the asserted harm is a ‘generalizedgrievance’ shared in substantially equalmeasure by all or a large class of citizens,that harm alone normally does not warrantexercise of jurisdiction.’’ Warth, 422 U.S.at 499, 95 S.Ct. 2197. Another prudentiallimitation is that a litigant ‘‘generally mustassert his own legal rights and interests’’and cannot assert ‘‘the legal rights or in-terests of third parties.’’ Id. In contrastwith constitutional limitations on standing,prudential limitations are not jurisdictionaland may be disregarded in certain situa-tions. Id. at 500–01, 95 S.Ct. 2197 (recog-nizing that as long as constitutional stand-ing is satisfied, a party ‘‘may have standingto seek relief on the basis of the legalrights and interests of others’’). In addi-tion, a litigant may forfeit prudentialstanding arguments by failing to presentthem in the district court. See Bd. ofEduc. of Oak Park & River Forest HighSch. Dist. No. 200 v. Kelly E., 207 F.3d931, 934 (7th Cir.2000) (stating that ‘‘pru-dential considerations TTT are forfeited ifnot presented in a timely fashion’’).

[6, 7] ‘‘The party invoking federal ju-risdiction bears the burden of establishing[the standing] elements[,] TTT [and] eachelement must be supported TTT with themanner and degree of evidence requiredat the successive stages of the litigation.’’Edgewood Manor Apart. Homes, LLC v.RSUI Indem. Co., 733 F.3d 761, 771 (7thCir.2013) (quoting Lujan, 504 U.S. at 561,112 S.Ct. 2130 (citations omitted)). ‘‘Atthe summary-judgment stage, ‘the plaintiffcan no longer rest on TTT mere allega-tions, but must set forth by affidavit orother evidence specific facts.’ ’’ Id. (quot-ing Lujan, 504 U.S. at 561, 112 S.Ct. 2130(internal quotation marks and citationsomitted)). Thus, because the district

court decided that Dunnet Bay lackedstanding at the summary judgment stage,mere allegations of standing are notenough; Dunnet Bay must present evi-dence to establish the elements of stand-ing.

Dunnet Bay contends that it has stand-ing because it has suffered an injury infact. First, it asserts that IDOT’s race-conscious DBE program prevented it fromcompeting on equal footing with DBE con-tractors and prevented it from beingawarded the contract. Dunnet Bay alsoclaims that it was injured because theDBE program forced it to participate in adiscriminatory scheme.

The Supreme Court addressed standingto raise an equal protection challenge torace-conscious government contractingprograms in Northeastern Fla. Chapter,Associated General Contractors of Amer-ica v. Jacksonville, 508 U.S. 656, 113 S.Ct.2297, 124 L.Ed.2d 586 (1993), and Ada-rand Constructors, Inc. v. Pena, 515 U.S.200, 115 S.Ct. 2097, 132 L.Ed.2d 158(1995). In Northeastern Florida, an asso-ciation of contractors challenged a Jack-sonville, Florida ordinance setting aside10% of city contracts for businesses thatwere minority- or women-owned. Once aproject was earmarked for minority busi-ness enterprise bidding, it was ‘‘deemedreserved for minority business enterprisesonly’’ and non-minority business enterpris-es could not even bid on the project. 508U.S. at 658, 113 S.Ct. 2297. The Courtconcluded:

When the government erects a barrierthat makes it more difficult for membersof one group to obtain a benefit than itis for members of another group, amember of the former group seeking tochallenge the barrier need not allegethat he would have obtained the benefitbut for the barrier in order to establishstanding. The ‘‘injury in fact’’ in an


equal protection case of this variety isthe denial of equal treatment resultingfrom the imposition of the barrier, notthe ultimate inability to obtain the bene-fit.

Id. at 666, 113 S.Ct. 2297. The Court heldthat ‘‘in the context of a challenge to a set-aside program, the ‘injury in fact’ is theinability to compete on an equal footing inthe bidding process, not the loss of a con-tract.’’ Id. Therefore, to establish stand-ing to challenge a set-aside program, aplaintiff ‘‘need only demonstrate that it isable and ready to bid on contracts and thata discriminatory policy prevents it fromdoing so on an equal basis.’’ Id.; seeGratz v. Bollinger, 539 U.S. 244, 262, 123S.Ct. 2411, 156 L.Ed.2d 257 (2003) (holdingthat Caucasian applicant for university ad-mission had standing to seek prospectiverelief challenging university’s use of racein its admissions policy where he was de-nied admission but a minority applicantwith his qualifications would have beenadmitted and applicant was ‘‘able andready’’ to apply as a transfer student if theuniversity stopped using race in its admis-sions policy).

In Adarand, the Court addressedwhether a subcontractor had standing toraise an equal protection challenge to alaw that gave general contractors a directfinancial incentive to hire subcontractorscontrolled by ‘‘socially and economicallydisadvantaged individuals.’’ 515 U.S. at204, 115 S.Ct. 2097. The plaintiff submit-ted the low bid but was not awarded thesubcontract and submitted evidence thatthe general contractor would have accept-ed its bid, but for the subcontractor com-pensation clause that provided it additionalpayment for hiring the disadvantaged sub-contractor. Id. at 205, 115 S.Ct. 2097.The plaintiff also established that it oftencompeted for contracts against companiescertified as small disadvantaged busi-nesses. Id. at 212, 115 S.Ct. 2097. The

Court held that the plaintiff had standingto seek forward-looking relief because the‘‘discriminatory classification prevent[s]the plaintiff from competing on equal foot-ing.’’ Id. at 211, 115 S.Ct. 2097 (citingNortheastern Fla., 508 U.S. at 667, 113S.Ct. 2297). In other words, because thesubcontractor compensation clause madethe plaintiff more expensive to hire, itcould not compete on equal footing withsubcontractors considered disadvantagedbecause of their race. See Regents ofUniv. of Cal. v. Bakke, 438 U.S. 265, 280–81 n. 14, 98 S.Ct. 2733, 57 L.Ed.2d 750(1978) (holding white medical school appli-cant had standing to challenge school’sadmissions program which reserved a pre-scribed number of positions in the class fordisadvantaged minorities because the ‘‘in-jury’’ was the school’s ‘‘decision not topermit [him] to compete for all 100 placesin the class, simply because of his race’’);Alliant Energy Corp. v. Bie, 277 F.3d 916,920–21 (7th Cir.2002) (stating that ‘‘[a]statute that deprives a firm of an opportu-nity to compete for business gives standingto sue’’).

[8] In arguing that it was unable tocompete on equal footing with DBE con-tractors, Dunnet Bay asserts that it‘‘need only show that it was excludedfrom competition and consideration for agovernment benefit because of race-basedmeasures.’’ Yet Dunnet Bay has not es-tablished that it was excluded from com-petition or otherwise disadvantaged be-cause of race-based measures. First, incontrast with Northeastern Florida, noth-ing in IDOT’s DBE program excludedDunnet Bay from competition for anycontract. IDOT’s DBE program is not a‘‘set aside program like Jacksonville’s’’ inwhich non-minority owned businessescould not even bid on certain contracts.Under IDOT’s DBE program, all con-tractors—minority and non-minority con-


tractors alike—can bid on all contracts,subject to the DBE goals or good faithefforts to satisfy those goals.

Further, Jacksonville’s ordinance fa-vored ‘‘minority business enterprises,’’ de-fined as a business with minority or femaleownership. IDOT’s DBE program is de-signed to increase the participation of so-cially and economically disadvantagedbusinesses in construction contracts, see N.Contracting, 473 F.3d at 720–24 (holdingIDOT’s DBE program constitutional), andtherefore addresses a broader category ofdisadvantaged businesses than that ad-dressed in Jacksonville’s ordinance. Theabsence of complete exclusion from compe-tition for certain projects with minority- orwomen-owned businesses also distin-guishes some of the other authorities citedby Dunnet Bay and amici: Eng’g Contrac-tors Ass’n of S. Fla. Inc. v. Metro. DadeCnty., 122 F.3d 895, 905–06 (11th Cir.1997)(holding trade associations whose membersregularly performed work for county hadstanding to challenge county’s affirmativeaction program that allowed contracts tobe set aside for bidding only among minor-ity and women business enterprise pro-grams); Coral Constr. Co. v. King Cnty.,941 F.2d 910, 929–30 (9th Cir.1991) (hold-ing contractor had standing to challengecounty’s minority- and women-owned busi-ness enterprise program where a set-asidemethod applied under which a contractorhad to use minority- or women-ownedbusinesses for a certain percentage ofwork on the contract).

And unlike in Adarand, where the chal-lenged law explicitly favored minority-owned subcontractors by providing a di-rect financial incentive to contractors tohire them, Dunnet Bay has not alleged, letalone produced evidence to show, that itwas treated less favorably than any othercontractor because of the race of its own-ers. The lack of an explicit preference for

minority-owned businesses distinguishesother authorities cited by Dunnet Bay. SeeBras v. Cal. Pub. Utils. Comm’n, 59 F.3d869, 871 (9th Cir.1995) (public utility pro-vided a pre-qualification preference to mi-nority- and women-owned businesses andplaintiff lost opportunity to negotiate withutility because race and gender were con-sidered); Associated Gen. Contractors ofCal., Inc. v. Coalition for Econ. Equity,950 F.2d 1401, 1404 (9th Cir.1991) (ordi-nance gave 5% bid preference to minority-and women-owned businesses for publiccontracts); see also Coral Constr., 941F.2d at 914, 930 (holding contractor hadstanding to challenge program that gaveminority- and women-owned businesses apreference for public contracts if their bidwas within 5% of the lowest bid). UnderIDOT’s DBE program, all contractors aretreated alike and subject to the samerules.

Still other authorities cited by DunnetBay or amici are inapposite because thecontractors’ standing was based in part onthe fact that they lost an award of a con-tract for failing to meet the disadvantagebusiness enterprise goal or failing to showgood faith efforts, despite being the lowbidders on the contract, and the secondlowest bidder was awarded the contract.See Safeco Ins. Co. of Am. v. City ofWhite House, Tenn., 191 F.3d 675, 689(6th Cir.1999) (holding contractor and itsinsurer had standing to challenge the con-stitutionality of EPA regulations imposinga racial preference on minority subcon-tracts where the alleged failure to complywith the regulations resulted in the loss ofa contract which was awarded to the sec-ond lowest bidder and the regulationsplaced white subcontractors at a competi-tive disadvantage); Monterey Mech. Co. v.Wilson, 125 F.3d 702, 704 (9th Cir.1997)(noting that plaintiff submitted the lowestbid but did not get the contract since its‘‘bid was disqualified because [it] did not


comply with a state statute’’ and the sec-ond lowest bidder won the contract); Con-crete Works of Colo., Inc. v. City & Cnty.of Denver, 36 F.3d 1513, 1518 & n. 5 (10thCir.1994) (holding contractor demonstrat-ed injury in fact where it ‘‘submitted bidson three projects and the [o]rdinance pre-vented it from competing on an equal ba-sis with minority and women-owned primecontractors’’ and noting that the plaintiffsubmitted the lowest bid on one projectbut its bid was not accepted because of itsfailure to meet the minority-businesses en-terprise goals or good faith requirementsand the bid was awarded to the secondlowest bidder); Contractors Ass’n of E.Pa., Inc. v. City of Phila., 6 F.3d 990, 994–96 (3d Cir.1993) (concluding that associa-tions of contractors had standing to chal-lenge city ordinance creating contractpreferences for businesses owned by mi-norities, women, and disabled personswhere association members presented evi-dence they were denied contracts for fail-ure to meet the DBE goals despite beinglow bidders); but see W.H. Scott Constr.Co. v. City of Jackson, Miss., 199 F.3d206, 214–15 (5th Cir.1999) (holding thatnon-minority contractor had standing tobring an equal protection challenge tocity’s minority participation program be-cause non-minority contractors were at acompetitive disadvantage with minoritycontractors who could satisfy the minority-participation goals with their own work,but relying on Monterey Mechanical andConcrete Works ).

In contrast with these cases where theplaintiffs had standing, Dunnet Bay cannotestablish that it would have been awardedthe contract on the Eisenhower project butfor its failure to meet the DBE goal ordemonstrate good faith efforts. The evi-dence, even when viewed in the light mostfavorable to Dunnet Bay, demonstratesthat although Dunnet Bay’s bid was reject-ed for failing to meet the DBE goal, its bid

was 16% or about $1.3 million over theprogram estimate, and Director Reed rec-ommended that IDOT rebid the contractbecause the low bid was 16% over theproject estimate and Dunnet Bay had beenleft off the For Bidders List. The evidencefurther establishes that Secretary Hannigalways followed Reed’s recommendationsto rebid contracts for financial concerns.Indeed, the Secretary decided to rebid thecontract because the low bidder was 16%over the project estimate and was left offthe final For Bid List.

Moreover, even assuming that DunnetBay could establish that it was excludedfrom competition with DBEs or that itwas disadvantaged as compared to DBEs,it cannot show that any difference intreatment was because of race. The reg-ulations define a DBE as ‘‘a for-profitsmall business concern’’ that is owned orcontrolled ‘‘by one or more individualswho are both socially and economicallydisadvantaged.’’ 49 C.F.R. § 26.5 (2009).‘‘Socially and economically disadvantaged’’individuals include women, ‘‘Black Ameri-cans,’’ ‘‘Hispanic Americans,’’ and others.Id. And an individual in any racial groupor gender may qualify as ‘‘socially andeconomically disadvantaged.’’ See id.However, ‘‘a firm is not an eligible DBEin any Federal fiscal year if the firm (in-cluding its affiliates) has had average an-nual gross receipts TTT over the firm’sprevious three fiscal years, in excess of$22.41 million.’’ 49 C.F.R. § 26.65(b)(2009). For the three years preceding2010, the year it bid on the Eisenhowerproject, Dunnet Bay’s average gross re-ceipts were over $52 million. Therefore,Dunnet Bay’s size makes it ineligible toqualify as a DBE, regardless of the raceof its owners. Thus, even if a DBE gen-eral contractor can count its own workforce toward meeting the DBE partic-ipation goal without subcontracting any


work on the project, whereas a non-DBEgeneral contractor cannot, Dunnet Bayhas not shown that any additional costs orburdens that it would incur are because ofrace. The additional costs and burdensare equally attributable to Dunnet Bay’ssize.

To put it differently, Dunnet Bay hasnot established that the denial of equaltreatment resulted from the imposition ofa racial barrier. Accordingly, this case isunlike those relied on by Dunnet Baywhere the plaintiff established that thedifference in treatment and any additionalcosts and burdens imposed on it were be-cause of race (or gender). For example, inMonterey Mechanical, the challenged ordi-nance provided that ‘‘contracts awarded byTTT [the state] for construction TTT shallhave statewide participation goals of notless than 15 percent for minority businessenterprises [and] not less than 5 percentfor women business enterprises’’ 125 F.3dat 704 (citing Cal. Pub. Contract Code§ 10115(c)). The court concluded that thecontractor was at a competitive disadvan-tage with minority- and women-owned con-tractors who could use their own worktoward the participation goals and be ex-cused from subcontracting the good faithrequirements. Id. at 706–07. Race (orgender) alone was the barrier to equalcompetition. Id.

[9] As for its second alleged injury,Dunnet Bay argues that it was forced toparticipate in a discriminatory scheme andwas required to consider race in subcon-tracting. In Monterey Mechanical, thecourt held that ‘‘[a] person required by thegovernment to discriminate by ethnicity orsex against others has standing to chal-lenge the validity of the requirement, eventhough the government does not discrimi-nate against him.’’ Id. at 707. This hold-ing was followed in Safeco Insurance Co.,191 F.3d at 689, and Lutheran Church–

Missouri Synod v. FCC, 141 F.3d 344, 350(D.C.Cir.) (noting that ‘‘forced discrimina-tion may itself be an injury’’), reh’g denied,154 F.3d 487 (D.C.Cir.1998), but the lattercourt couched the issue in terms of third-party standing. It seems that MontereyMechanical collapsed third-party standinginto Article III standing. And in each ofthese cases—Monterey Mechanical, Safe-co Insurance Co., and Lutheran Church–Missouri Synod—the plaintiffs alreadyhad established injury in fact, that is, suf-fered another direct harm because of thechallenged statute or regulation. SeeSafeco Ins. Co., 191 F.3d at 689 (failure tocomply with regulations resulted in theloss of a contract and institution of thelawsuit); Lutheran Church–Mo. Synod,141 F.3d at 348–49 (FCC order found thatchurch violated EEO regulations and im-posed a fine and reporting requirements);Monterey Mech., 125 F.3d at 704 (plaintiffsubmitted the low bid but did not get thejob because of its failure to comply with astate statute). As discussed above, wherethe plaintiff has established injury in fact,it may assert third-party rights.

Neither we nor the Supreme Court hasadopted Monterey Mechanical’s broadview of standing. We recognize that theCourt has held that ‘‘one form of injuryunder the Equal Protection Clause is be-ing forced to compete in a race-based sys-tem that may prejudice the plaintiff.’’Parents Involved in Cmty. Schs. v. SeattleSch. Dist. No. 1, 551 U.S. 701, 719, 127S.Ct. 2738, 168 L.Ed.2d 508 (2007) (citingAdarand and Northeastern Fla.). Howev-er, the injuries asserted in Parents In-volved were the denial of assignment to acertain public high school based on raceand the interest ‘‘in not being forced tocompete for seats at certain high schools ina system that uses race as a decidingfactor in many of its admissions decisions.’’Id. The plaintiffs’ children were competing


with minorities for assignment to highschool, and race was used as a tiebreakerto make assignments to more popularschools. Parents Involved, 551 U.S. at711–12, 127 S.Ct. 2738. In other words,race often was the determinative factor inthe assignment decisions. Similarly, non-minority contractors were precluded fromcompeting at all for certain projects underthe Jacksonville ordinance in NortheasternFlorida, and in Adarand, the governmentgave general contractors a financial incen-tive to hire minority-owned businesses.Thus, as in Parents Involved, the race ofthe plaintiffs in Northeastern Florida andAdarand was the deciding factor. In con-trast, the race of Dunnet Bay’s owners wasnot the deciding factor because DunnetBay’s size created a barrier to its receiptof any advantages given DBEs.

Furthermore, we agree with amicusNAACP Legal Defense & EducationalFund, Inc. that Monterey Mechanical’sbroad view of standing goes against theestablished principle that ‘‘a plaintiff rais-ing only a generally available grievanceabout government—claiming only harm toevery citizen’s interest in proper applica-tion of the Constitution and laws’’ does notsatisfy Article III’s requirement that theinjury be concrete and particularized. SeeLujan, 504 U.S. at 573–74, 112 S.Ct. 2130;see also Lance v. Coffman, 549 U.S. 437,439, 127 S.Ct. 1194, 167 L.Ed.2d 29 (2007)(‘‘Our refusal to serve as a forum for gen-eralized grievances has a lengthy pedi-gree.’’); Allen v. Wright, 468 U.S. 737, 755,104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) (stat-ing that racial discrimination ‘‘is sufficientin some circumstances to support stand-ing’’ but only those ‘‘who are personallydenied equal treatment by the challengeddiscriminatory conduct’’ have Article IIIstanding) (quotation omitted). Broadlyspeaking, not every contractor has ‘‘stand-ing to challenge every affirmative-actionprogram on the basis of a personal right to

a government that does not deny equalprotection of the laws.’’ Valley ForgeChristian Coll. v. Ams. United for Separa-tion of Church & State, Inc., 454 U.S. 464,489 n. 26, 102 S.Ct. 752, 70 L.Ed.2d 700(1982). Dunnet Bay’s claimed injury ofbeing forced to participate in a discrimina-tory scheme amounts to ‘‘a challenge tothe state’s application of a federally man-dated program,’’ which we have deter-mined ‘‘must be limited to the question ofwhether the state exceeded its authority.’’N. Contracting, 473 F.3d at 720–21 (hold-ing that IDOT may rely on federal govern-ment’s compelling interest in remedyingpast discrimination in construction projectsand that IDOT’s DBE program is narrow-ly tailored to achieve this interest as IDOTdid not exceed its authority). Dunnet Baywas not denied equal treatment because ofracial discrimination; any difference intreatment is equally attributable to Dun-net Bay’s size.

Although Dunnet Bay suggests that thesecond and third standing elements (causa-tion and redressability) are not at issue, asthe party invoking federal court jurisdic-tion, it bears the burden of establishing allthree elements of standing. See Edge-wood Manor Apart. Homes, 733 F.3d at771. Amicus Pacific Legal Foundationsuggests that since Dunnet Bay sufferedan injury in fact under the DBE program,which we reiterate Dunnet Bay has notestablished, it necessarily established cau-sation and redressability. Amicus citesNortheastern Florida, where causationand redressability followed from theCourt’s definition of ‘‘injury in fact.’’ 508U.S. at 666 n. 5, 113 S.Ct. 2297. Althoughthat was true in the context of the set-aside program where causation and re-dressability were readily apparent, theCourt did not hold that these other ele-ments are always collapsed into an injuryin fact.


Dunnet Bay has not established causa-tion or redressability. It failed to demon-strate that the DBE program caused itany injury during the first letting process.Although Dunnet Bay submitted the lowbid in the first letting, its bid was 16%over the project estimate. Although IDOTrejected its bid because it did not meet theDBE goal, IDOT never reached the ques-tion of whether the bid was appropriate.The evidence establishes that Reed recom-mended to Secretary Hannig that IDOTrebid Contract No. 60I57 because the lowbidder was 16% over the project estimateand was left off the For Bidders List, andthat the Secretary always followed her rec-ommendations to rebid contracts for finan-cial concerns. Accordingly, IDOT did notaward the contract to anyone under thefirst letting and re-let the contract. Dun-net Bay suffered no injury because of theDBE program in the first letting. Cf.Texas v. Lesage, 528 U.S. 18, 21, 120 S.Ct.467, 145 L.Ed.2d 347 (1999) (‘‘[W]here aplaintiff challenges a discrete governmen-tal decision as being based on an imper-missible criterion and it is undisputed thatthe government would have made thesame decision regardless, there is no cog-nizable injury.’’).

[10] Even assuming that Dunnet Baycould establish that the DBE programcaused it an injury in the first letting, itcannot establish redressability: IDOT’sdecision to re-let the contract redressedany injury. As for the second letting, theevidence does not establish that the DBEprogram caused Dunnet Bay any injury.In the second letting, Dunnet Bay satisfiedthe DBE goals, but its bid was not thelowest; other contractors submitted lowerbids and met the DBE participation goals.

Therefore, Dunnet Bay was not awardedthe contract.

Moreover, prudential limitations pre-clude Dunnet Bay from bringing its claim.A litigant ‘‘generally must assert his ownlegal rights and interests, and cannot resthis claim to relief on the legal rights orinterests of third parties.’’ Warth, 422U.S. at 499, 95 S.Ct. 2197.4 Dunnet Bayacknowledges that before a litigant may bepermitted to assert another’s rights to es-tablish a claim, he must satisfy Article IIIstanding requirements. See Craig v. Bor-en, 429 U.S. 190, 194, 97 S.Ct. 451, 50L.Ed.2d 397 (1976) (‘‘[W]e conclude thatappellant TTT has established independent-ly her claim to assert jus tertii standing.The operation of [the challenged statutes]plainly has inflicted ‘injury in fact’ uponappellant sufficient TTT to satisfy the con-stitutionally based standing requirementsimposed by Art. III.’’); Barrows v. Jack-son, 346 U.S. 249, 255–56, 73 S.Ct. 1031, 97L.Ed. 1586 (1953) (stating that ‘‘a personcannot challenge the constitutionality of astatute unless he shows that he himself isinjured by its operation’’ but ‘‘this principlehas no application to the instant case inwhich respondent has been sued for dam-ages TTT and TTT a judgment against re-spondent would constitute a direct TTT in-jury to her’’); Lutheran Church–Mo.Synod, 141 F.3d at 349–50 (allowing theplaintiff to raise an equal protection chal-lenge although it had not suffered an equalprotection injury where it was harmed bythe FCC’s order finding it in violation ofequal employment opportunity regula-tions); Apter v. Richardson, 510 F.2d 351,354 (7th Cir.1975) (stating ‘‘[t]he fact thatthe alleged wrong may also have injuredthird parties does not deprive plaintiff ofstanding so long as she as well is injured

4. Although IDOT has a good argument thatDunnet Bay forfeited its prudential standingarguments for failing to raise them in the

district court in response to its summary judg-ment motion, we address prudential limita-tions on standing.


in fact.’’); see also Warth, 422 U.S. at 501,95 S.Ct. 2197 (stating that as long as con-stitutional standing is satisfied, a party‘‘may have standing to seek relief on thebasis of the legal rights and interests ofothers’’). In challenging the DBE pro-gram, Dunnet Bay is attempting to assertthe equal protection rights of a non-minor-ity-owned small business.

City of Chicago v. Morales, 527 U.S. 41,119 S.Ct. 1849, 144 L.Ed.2d 67 (1999), alsocited by Dunnet Bay, is inapposite. Inthat case, the Supreme Court was asked toreview the Illinois Supreme Court’s deter-mination that a Chicago gang ordinancewas unconstitutionally vague. As theCourt explained, ‘‘[w]hen a state court hasreached the merits of a constitutionalclaim, invoking prudential limitations onthe respondent’s assertion of jus tertiiwould serve no functional purpose’’ and‘‘state courts need not apply prudentialnotions of standing created by this Court.’’Id. at 55 n. 22, 119 S.Ct. 1849. Dunnet Baydoes not ask us to review a state court’sdecision as to the constitutionality of theDBE program.

A party is exempt from the prudentiallimitation on asserting a third party’srights, Dunnet Bay argues, ‘‘where thelimitation’s purpose is outweighed by theneed to protect fundamental rights.’’ ButBarrows, which was cited for this proposi-tion, does not help Dunnet Bay. Barrowswas a state court action to enforce a racial-ly restrictive covenant, and the defendantwas permitted to assert the equal protec-tion rights of others in her defense againstenforcement. Dunnet Bay is not defend-ing against a state enforcement proceed-ing, seeking to raise the rights of others inits own defense. And as noted, the Bar-rows defendant had been sued for dam-ages and thus could establish her owninjury. Moreover, the Court concludedthat the prudential limitation on standing

was outweighed and the defendant shouldbe allowed to assert the rights of othersgiven the ‘‘unique situation’’ and ‘‘peculiarcircumstances’’ presented where ‘‘the ac-tion of the state court TTT might result in adenial of constitutional rights and TTT itwould be difficult if not impossible for thepersons whose rights are asserted to pres-ent their grievance before any court.’’Barrows, 346 U.S. at 257, 73 S.Ct. 1031.

But here there is no allegation, let aloneevidence, that a non-minority-owned smallbusiness could not challenge IDOT’s DBEprogram on equal protection grounds. Be-cause Dunnet Bay has failed to identify aninjury in fact that is fairly traceable to thechallenged DBE program, it lacks ArticleIII standing. And because Dunnet Bayhas not established Article III standing, itcannot raise an equal protection challengeto the DBE program based on the rightsof a non-minority small business.

B. Whether Dunnet Bay Has Suffi-cient Evidence that IDOT’s Im-plementation of the DBE Pro-gram Constitutes Unlawful RaceDiscrimination

[11] In the alternative, even if DunnetBay has standing to raise an equal protec-tion claim, IDOT is entitled to summaryjudgment. The Equal Protection Clauseof the Fourteenth Amendment prohibitsintentional and arbitrary discrimination.Vill. of Willowbrook v. Olech, 528 U.S. 562,564, 120 S.Ct. 1073, 145 L.Ed.2d 1060(2000). Thus, to establish an equal protec-tion claim under the Fourteenth Amend-ment, Dunnet Bay must show that IDOT‘‘acted with discriminatory intent.’’Franklin v. City of Evanston, 384 F.3d838, 846 (7th Cir.2004).

[12] Racial discrimination by a recipi-ent of federal funds that violates the EqualProtection Clause also violates Title VIand § 1981. Gratz, 539 U.S. at 275–76 &


n. 23, 123 S.Ct. 2411. These statutes re-quire proof that the plaintiff was treateddifferently because of race. 42 U.S.C.§ 1981 (providing all persons the samerights to contract and benefit of laws ‘‘as isenjoyed by white citizens’’); id. § 2000d(prohibiting discrimination ‘‘on the groundof race’’ in programs receiving federal as-sistance). Title VI prohibits only inten-tional discrimination. See Alexander v.Sandoval, 532 U.S. 275, 281, 121 S.Ct.1511, 149 L.Ed.2d 517 (2001). To establishliability for an equal protection violation, aplaintiff must establish that the defendantacted with a discriminatory purpose anddiscriminated against him because of hismembership in an identifiable group. Na-bozny v. Podlesny, 92 F.3d 446, 453 (7thCir.1996). Section 5 of the Illinois CivilRights Act of 2003 was not intended tocreate new rights but merely created anew venue—state court—for discrimina-tion claims under federal law. Ill. NativeAm. Bar Ass’n v. Univ. of Ill., 368 Ill.App.3d 321, 305 Ill.Dec. 655, 856 N.E.2d460, 467 (2006).

[13, 14] Because IDOT’s DBE pro-gram employs racial classifications, we ap-ply strict scrutiny in addressing DunnetBay’s constitutional challenge. AdarandConstructors, 515 U.S. at 235, 115 S.Ct.2097 (‘‘Federal racial classifications, likethose of a State, must serve a compellinggovernmental interest, and must be nar-rowly tailored to further that interest.’’);N. Contracting, 473 F.3d at 720. Understrict scrutiny, ‘‘a government programthat uses racial classifications must be nar-rowly tailored to serve a compelling gov-ernmental interest.’’ N. Contracting, 473F.3d at 720. In implementing its DBEprogram, IDOT may properly rely on ‘‘thefederal government’s compelling interestin remedying the effects of past discrimi-nation in the national construction mar-ket.’’ Id. at 720. ‘‘[A] state is insulated

from [a constitutional challenge as towhether its program is narrowly tailoredto achieve this compelling interest], absenta showing that the state exceeded its fed-eral authority.’’ Id. at 721; see also Mil-waukee Cnty. Pavers Ass’n v. Fiedler, 922F.2d 419, 423 (7th Cir.1991) (‘‘Insofar asthe state is merely complying with federallaw it is acting as the agent of the federalgovernment and is no more subject tobeing enjoined on equal protection groundsthan the federal civil servants who draftedthe regulationsTTTT If the state does exact-ly what the statute expects it to do TTT wedo not see how the state can be thought tohave violated the Constitution.’’). Thus,the issue is whether IDOT exceeded itsauthority under federal law.

[15] Dunnet Bay contends that IDOTexceeded its federal authority by effective-ly creating racial quotas by designing theEisenhower project to meet a pre-deter-mined DBE goal and eliminating waivers.If the DBE program were effectively aquota, it would be unconstitutional andviolate the regulations. See City of Rich-mond v. J.A. Croson Co., 488 U.S. 469,507, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989)(‘‘[T]he 30% quota cannot be said to benarrowly tailored to any goal, except per-haps outright racial balancing.’’); 49C.F.R. § 26.43(a) (prohibiting quotas forDBEs). More specifically, Dunnet Bay as-serts that IDOT exceeded its authority by:(1) setting the Contract’s DBE partic-ipation goal at 22% without the requiredanalysis, (2) implementing a ‘‘no-waiver’’policy, (3) preliminarily denying its goalmodification request without assessing itsgood faith efforts, (4) denying it a mean-ingful reconsideration hearing, (5) deter-mining that its good faith efforts wereinadequate, and (6) providing no written orother explanation of the basis for its good-faith-efforts determination.


In challenging the DBE contract goal,Dunnet Bay asserts that the issue ‘‘is notwhether a 20% goal could have been legiti-mately derived’’ but instead argues thatthe DBE contract goal was ‘‘arbitrary’’ andthat IDOT ‘‘manipulated the process tojustify’’ a preordained goal. Dunnet Bay’sreal complaint about the contract goal set-ting is that there were political motivationsin resetting the DBE participation goal.But Dunnet Bay has not identified anyregulation or other authority that suggeststhat the political motivations matter, pro-vided IDOT did not exceed its federal au-thority in setting the contract goal. Moreto the point, Dunnet Bay does not actuallychallenge how IDOT went about setting itsDBE goal for the contract. In its reply,Dunnet Bay argues that the factors setforth in the regulation to be used to deter-mine contract goals were not used butwere applied to justify a pre-ordained goal.Yet Dunnet Bay points to no evidence toshow that IDOT failed to comply with theapplicable regulation providing only gener-al guidance on contract goal setting, 49C.F.R. § 26.51(e)(2) (stating that a con-tract goal ‘‘depend[s] on such factors asthe type of work involved, the location ofthe work, and the availability of DBEs forthe work of the particular contract’’).

FHWA approved IDOT’s methodologyto establish its statewide DBE goal of22.77% and approved the individual con-tract goals for the Eisenhower project forthe January 15, 2010 bid letting. DunnetBay has not identified any part of theregulations that IDOT allegedly violatedby reevaluating and then increasing itsDBE contract goal, by expanding the geo-graphic area used to determine DBE avail-ability, by adding pavement patching andlandscaping work into the contract goal, byincluding items that had been set aside forsmall business enterprises, or by any othermeans by which it increased the DBEcontract goal. Indeed, as the district court

concluded, ‘‘because the federal regula-tions do not specify a procedure for arriv-ing at contract goals, it is not apparenthow IDOT could have exceeded its federalauthority,’’ Dunnet Bay Constr. Co., 2014WL 552213, at *26; and this challenge isunavailing.

Next, Dunnet Bay asserts that IDOThad a ‘‘no-waiver’’ policy. Despite state-ments regarding a no-waiver policy andpressure from the Governor’s office, in-cluding from Harris, Dunnet Bay did notpresent sufficient evidence to raise a rea-sonable inference that IDOT had actuallyimplemented a no-waiver policy. There isevidence that IDOT’s District 8 EEO Offi-cer Coleman advised contractors at a pre-letting meeting that Secretary Hannig saidthat no DBE waivers would be granted forthe January 15, 2010 letting. However,IDOT did not have a no-waiver policy;instead, the undisputed evidence showsthat it was IDOT’s and Secretary Hannig’spolicy that requests for waivers would besubjected to high-level review and wouldnot be granted unless shown to be appro-priate. IDOT’s Director of HighwaysReed told Secretary Hannig that a no-waiver policy was not possible because itviolated the law. The Secretary told Har-ris that IDOT would follow the law. So,too, IDOT’s Regional Engineer for the Me-tra East area Lamie testified that althoughSecretary Hannig said that there would beno DBE waivers, in context he was not‘‘saying no waivers under any circum-stances will ever be issued’’ but that waiv-er requests would be reviewed at a highlevel and had to be supported by appropri-ate documentation. Significantly, evensince Secretary Hannig took over, IDOTgranted waivers. In 2009, it granted 32 of58 requested waivers, and the other 26contractors ultimately met contract goals;in 2010, IDOT granted 21 of 35 requestedwaivers, that is, 60% of the waiver re-


quests. IDOT even granted a waiver inconnection with the January 15 letting—the one at issue here—albeit after thislawsuit was filed. IDOT’s unbroken rec-ord of granting waivers refutes any sug-gestion of a no-waiver policy. Dunnet Bayhas failed to raise a reasonable inferencethat IDOT implemented a no-waiver poli-cy.

Dunnet Bay also challenges IDOT’s re-jection of its bid without determiningwhether it had made good faith efforts tomeet the DBE goal and contests whetherIDOT’s reconsideration of its bid wasmeaningful in violation of 49 C.F.R.§ 26.53. As an initial matter, the regula-tion provides that ‘‘[i]f the bidder/offerordoes document adequate good faith efforts,you must not deny award of the contracton the basis that the bidder/offeror failedto meet the goal.’’ Id. § 26.53(a)(2).IDOT ultimately determined that DunnetBay failed to document adequate goodfaith efforts; thus this provision was inap-plicable and did not prevent IDOT fromrejecting Dunnet Bay’s bid.

Dunnet Bay asserts that reconsiderationhearing officer Grunloh ‘‘was not an inde-pendent official with no role in the originaldetermination,’’ but it has offered no evi-dence to establish that Grunloh took anypart in the initial determination that Dun-net Bay failed to make the DBE goal ormake adequate good faith efforts. See id.§ 26.53(d)(2). Nor has Dunnet Bay notshown that Grunloh, even if part of the‘‘political leadership’’ and involved in pre-letting discouragement of waivers, was ine-ligible to serve as the reconsideration offi-cial.

Furthermore, Dunnet Bay argues that itmade good faith efforts to meet the DBEgoal and that the reasons given for IDOT’sdecision that it did not make adequategood faith efforts ‘‘do not hold up.’’ Dun-net Bay focuses on its efforts in attending

a pre-bid meeting, advertising with DBEnetworking organizations, soliciting DBEsby fax, telephoning DBEs, and postingsubcontracting opportunities on its ownwebsite. In total, Dunnet Bay solicited796 companies for subcontracting work,453 of which were DBEs.

A bidder ‘‘must show that it took allnecessary and reasonable steps to achievea DBE goal TTT which TTT could reason-ably be expected to obtain sufficient DBEparticipation, even if they were not fullysuccessful.’’ 49 C.F.R. Pt. 26, Appendix A,§ I. The regulations provide guidance forstate recipients in deciding whether a bid-der that did not meet a contract goal hasdemonstrated good faith efforts to meetthe goal, instructing recipients to consider‘‘the quality, quantity, and intensity of thedifferent kinds of efforts that the bidderhas made.’’ Id., § II. State recipients areprovided a non-mandatory, non-exclusive,and non-exhaustive list of actions to beconsidered in determining whether a bid-der made good faith efforts, including thefollowing: (1) ‘‘Soliciting through all rea-sonable and available means (e.g. attend-ance at pre-bid meetings, advertisingand/or written notices) the interest of allcertified DBEs who have the capability toperform the work of the contract TTT [and]taking appropriate steps to follow up initialsolicitations’’; (2) ‘‘Selecting portions ofthe work to be performed by DBEs inorder to increase the likelihood that theDBE goals will be achieved’’; (3) ‘‘Provid-ing interested DBEs with adequate infor-mation about the plans, specifications, andrequirements of the contract’’; (4) ‘‘Mak-ing efforts to assist interested DBEs inobtaining bonding, lines of credit, or insur-ance as required by the recipient or con-tractor’’; (5) ‘‘Making efforts to assist in-terested DBEs in obtaining necessaryequipment, supplies, materials, or relatedassistance or services’’; and (6) ‘‘Effective-


ly using the services of available minori-ty/women community organizations; mi-nority/women contractors’ groups; local,state, and Federal minority/women busi-ness assistance offices; and other organi-zations as allowed on a case-by-case basisto provide assistance in the recruitmentand placement of DBEs.’’ Id., § IV, A–Cand F–H. Further, the regulations instructthat ‘‘[i]n determining whether a bidderhas made good faith efforts, you may takeinto account the performance of other bid-ders in meeting the contract.’’ Id. § V.The regulation gives an example: ‘‘[W]henthe apparent successful bidder fails tomeet the contract goal, but others meet it,you may reasonably raise the question ofwhether, with additional efforts, the appar-ent successful bidder could have met thegoal.’’ Id.

Reconsideration officer Grunloh’s deter-mination that Dunnet Bay failed to showgood faith efforts is well-supported in therecord. Grunloh testified that the reasonshe determined Dunnet Bay failed to makegood faith efforts were because it did notutilize IDOT’s supportive services, and be-cause the 2nd, 3rd, and 4th bidders all metthe goal, whereas Dunnet Bay did not evencome close. Grunloh also explained thatDunnet Bay’s efforts were lacking withrespect to the following areas included inthe Appendix’s list: conducting market re-search and soliciting through all reason-able and available means the interest of allcertified DBEs; providing interestedDBEs with adequate information about thecontract; making efforts to assist interest-ed DBEs in obtaining bonding, lines ofcredit, etc.; making efforts to assist inter-ested DBEs in obtaining necessary equip-ment, supplies, etc.; and effectively usingservices of various minority organizationsto provide assistance in recruitment andplacement of DBEs.

The performance of other bidders inmeeting the contract goal is listed in theregulation as a consideration when decid-ing whether a bidder has made good faithefforts to obtain DBE participation goals,see 49 C.F.R. Pt. 26, App. A, § V, and wasa proper consideration. Dunnet Bay ar-gues that this factor should not be consid-ered because IDOT left it off the For BidList. While it is true that Dunnet Bay wasleft off the For Bid List, the fact thatother bidders met the goal shows that thegoal was attainable. Dunnet Bay also ar-gues that IDOT had not previously consid-ered contacting supportive services as nec-essary to establishing good faith, and thatin Dunnet Bay’s experience, supportiveservices were not helpful. However, uti-lization of supportive services is nonethe-less a proper consideration under the reg-ulation.

Dunnet Bay asserts that it employed thesame efforts for the Eisenhower projectthat it successfully employed on other pro-jects. Dunnet Bay is not among thosecontractors who often seek goal modifica-tion. The fact that its efforts failed tosecure the DBE participation goal maysuggest that it was hindered by its omis-sion from the For Bid List. But the rebid-ding of the contract remedied that over-sight.

Dunnet Bay also points out that Lylethought it had demonstrated good faithefforts. Given the discretion in determin-ing whether a contractor made good faithefforts, the fact that Lyle disagreed withGrunloh and initially thought Dunnet Bayshowed good faith efforts does not raise agenuine issue of fact as to Grunloh’s deci-sion. In any event, Lyle subsequently ex-pressed the view that Dunnet Bay couldhave done more to demonstrate good faithefforts, namely, by contacting supportiveservices as well as IDOT’s Bureau of Small

701IN RE SOUTHWEST AIRLINES VOUCHER LITIGATIONCite as 799 F.3d 701 (7th Cir. 2015)

Business Enterprises and the district EEOofficer.

Finally, it is true that IDOT failed toprovide Dunnet Bay with ‘‘a written deci-sion on reconsideration’’ explaining why itfound that Dunnet Bay did not make ade-quate good faith efforts to meet the DBEcontract goal. 49 C.F.R. § 26.53(d)(4).However, this did not harm Dunnet Baybecause IDOT did not award the contractbased upon the January 15, 2010 bid let-ting. IDOT decided to re-let the contractinstead; and Dunnet Bay’s second bid metthe DBE goal, but it was not the lowestbid.

III. CONCLUSION

We AFFIRM the district court’s judgment.

,

In re SOUTHWEST AIRLINESVOUCHER LITIGATION

Adam J. Levitt and Herbert C. Malone,individually and on behalf of all oth-ers similarly situated, Plaintiffs–Ap-pellees/Cross–Appellants,

v.

Southwest Airlines Company,Defendant–Appellee/Cross–

Appellee.

Appeals of Gregory Markow and AlisonPaul, Objectors–Appellants/Cross–

Appellees.

Nos. 13–3264, 13–3462, 14–2591,14–2602 and 14–2495.

United States Court of Appeals,Seventh Circuit.

Argued Feb. 11, 2015.

Decided Aug. 20, 2015.

Background: Airline passengers broughtclass action claims of breach of contract,

unjust enrichment, and violations of stateconsumer fraud laws against airline, chal-lenging airline’s refusal to honor certainin-flight drink vouchers issued to passen-gers. The United States District Court forthe Northern District of Illinois, MatthewF. Kennelly, J., 2013 WL 4510197, certifiedthe class and approved a class action set-tlement, and awarded attorneys’ fees, 2013WL 5497275 and 2014 WL 2809016. Objec-tors appealed.

Holdings: The Court of Appeals, Hamil-ton, Circuit Judge, held that:

(1) the class action settlement was subjectto ‘‘coupon settlement’’ provisions ofthe Class Action Fairness Act (CAFA);

(2) ‘‘coupon settlement’’ provisions of theCAFA permit use of the lodestarmethod to calculate attorney fees;

(3) the District Court did not abuse itsdiscretion in approving the class actionsettlement;

(4) failure of one lead plaintiff and classcounsel to disclose potential conflict ofinterest warranted elimination of in-centive award and $15,000 reduction inattorneys’ fee award to class counsel.

Affirmed.

1. Compromise and Settlement O61

A class action settlement of airlinepassengers breach of contract claimsagainst airline for refusing to honor cer-tain in-flight drink vouchers issued to cus-tomers was subject to ‘‘coupon settlement’’provisions of the Class Action Fairness Act(CAFA), where the relief offered to classmember was replacement vouchers forfree drinks on flights. 28 U.S.C.A. § 1712.

2. Federal Courts O3574

The proper interpretation of a statuteis a question of law that the Court ofAppeals reviews de novo.

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