Two Houston landscaping companies owned by a white couple have filed a federal lawsuit against the city and a city-affiliated management district, claiming their longstanding programs that require some government contacts to be awarded to minority-owned businesses amount to racial discrimination and are unconstitutional.
The lawsuit on behalf of Landscape Consultants of Texas and Metropolitan Landscape Management, which are owned by Jerry and Theresa Thompson, was filed Tuesday in United States District Court by the Pacific Legal Foundation. It alleges the city's Minority Business Enterprise program and a similar program implemented by the Midtown Management District, which has leadership appointed by the Houston mayor and city council, have negatively impacted the companies and violate the equal protection clause of the U.S. Constitution's Fourteenth Amendment.
"Contracts should be awarded to the companies that can do the best jobs for the best price," said Pacific Legal Foundation attorney Erin Wilcox, whose organization is representing the Houston businesses free of charge. "The skin color of their owners should really not play any kind of role. All that does is violate people's equal protection rights and possibly drive up the cost for taxpayers."
The office of Houston Mayor Sylvester Turner did not immediately respond to a request for comment Thursday. Neither did a spokesperson for the Midtown Management District.
The lawsuit comes on the heels of a U.S. Supreme Court ruling in June that struck down affirmative action admissions policies at Harvard University and the University of North Carolina, which like colleges all over the country had used them to prevent racial discrimination and ensure their campuses include Black, Hispanic and other minority students. The Texas Legislature this year passed a law effectively banning diversity, equity and inclusion initiatives at all public colleges and universities in the state.
Wilcox said the local landscaping companies' lawsuit "would have happened anyway" but acknowledged the Supreme Court ruling pushed the issue toward the forefront, saying it "put the focus on kind of rooting out racial discrimination in all the places that it exists still. Certainly one of those areas is public contracting, like in Houston." She said she and her foundation, which she described as libertarian in philosophy and in favor of free-market policies, are prepared to take the case to the Supreme Court.
"This is an important issue not just in Texas, but it's happening all over the country," she said. "It's an issue that really has not been considered by federal courts for several decades. It's probably an issue whose time has come. There could be potential for this to be a really precedent-setting case."
Houston's Minority Business Enterprise program is part of a 1984 city ordinance that aims to promote equal opportunities for and to stimulate the growth of local small businesses and those owned by ethnic minorities and women. The federal lawsuit is not challenging the initiatives to promote small businesses and women-owned businesses in the city.
Houston's program is intended to be remedial in nature and reviewed at least once every five years, according to the ordinance. Wilcox said the city has not reviewed the policy since 2006, although the lawsuit says the city "recently engaged a consulting firm to provide a new disparity study."
"We don't even know if there's discrimination happening," Wilcox said. "I think the city's baseline is it has to prove that's happening before it can ever treat people differently based on their race. That's kind of the foundation of what it means to have equal protection."
Based on a report released by the city, it awarded more than $2 billion in total for construction, professional services and goods and services contracts during the fiscal year 2022. About a third of that amount went to small businesses or minority- or women-owned businesses. Minority-owned businesses received nearly 14 percent of construction contracts and 24.4 percent of professional services contracts.
The lawsuit says Metropolitan Landscape Management lost out on a 2022 contract worth $350,000 because it is not considered a minority- or women-owned business. It also says Landscape Consultants of Texas currently has a five-year, $1.3 million contract with the city and is required to subcontract 11 percent of that value, or $143,000, to a minority-owned business. The suit also claims that minority-owned businesses are not subject to the same kind of subcontracting rule.
The Houston businesses together employ about 50 people, the majority of whom are Hispanic, according to the Pacific Legal Foundation. Wilcox said that makes the city's program "hypocritical."
"These are difficult policies to challenge," she said. "You're going up against a powerful city or powerful state, and these are people's livelihoods. ... (The Thompsons) feel like this is what they have to do to make sure their company has a future and make sure their kids can run this company in the future."