Under 21, Catholic Home Bureau for Dependent Children v. City of New York

OPINION OF THE COURT

The question on this appeal is whether the Mayor of the City of New York has the authority to promulgate an Executive Order prohibiting employment discrimination by city contractors on the basis of “sexual orientation or affectional preference.” The Appellate Division held that the Mayor had this power. We disagree and hold that because of the separation of powers delineated in the City Charter, the Mayor has no authority to initiate such a policy.

I.

On April 25, 1980, the Mayor of the City of New York issued Executive Order No. 50 “to ensure compliance with the equal employment opportunity requirements of City, State and Federal law in City contracting” (Executive Order No. 50 § 1). The Executive Order applies to virtually every contract with the city, and requires that those entering into such contracts agree to ensure “equal employment opportunity” in all of their employment decisions. “Equal employment opportunity,” as defined in section 3 (i) of the order, includes not discriminating on the basis of “sexual orientation or affectional preference,” terms which all parties agree refer to a person being homosexual or bisexual rather than heterosexual. The order provides that the Mayor’s Bureau of Labor Services has the responsibility to implement, monitor compliance with, and enforce these equal employment requirements.

Pursuant to this grant of authority, the Bureau of Labor Services promulgated regulations, effective January 21, 1982, which require that specific language implementing Executive Order No. 50 be inserted into contracts with the city. In the required language, a contractor agrees, among other things, not to discriminate in any employment decision on the basis of “sexual orientation or affectional preference” and to state that condition in all solicitations or advertisements for employees.

Agudath Israel and the Salvation Army, the plaintiffs in two of three actions consolidated on appeal, are not-for-profit religious and charitable corporations. Both have annual contracts with the city, pursuant to which they provide social services

Of course, the pattern of government established for New York City by the City Charter is not identical to that of the United States or the State of New York. Still, the City Charter does provide for distinct legislative and executive branches: the City Council “shall be vested with the legislative power of the city, and shall be the local legislative body of the city” (New York City Charter, ch 2, § 21), while the Mayor “shall be the chief executive officer of the city” (id., ch 1, § 3). Thus, our prior decisions have held that, no matter how well-intentioned his actions may be, the Mayor may not unlawfully infringe upon the legislative powers reserved to the City Council (see, Subcontractors Trade Assn. v Koch, supra; Matter of Fullilove o Beame, 48 NY2d 376 ; Matter of Broidrick o Lindsay, 39 NY2d 641 ).

The authority conferred upon the Mayor, as chief executive officer, does, of course, include the power to enforce and implement legislative enactments (Subcontractors Trade Assn. v Koch, 62 NY2d, at p 427, supra). Indeed, if the City Council were to enact valid legislation proscribing discrimination by city contractors, or employers within the city generally, on the basis of “sexual orientation or affectional preference,” the Mayor would have the duty to enforce it. The City Council, however, has never enacted any such law despite the introduction of bills which would have done so. The New York City Human Rights Act, in defining the types of “unlawful discriminatory practices” which an employer may not engage in, contains no reference to “sexual orientation or affectional preference,” or to any similar classifications (Administrative Code of City of New York § Bl-7.0). Similarly, Administrative Code § 343-8.0, which restricts discriminatory employment practices by many city contractors, contains no such classification.

In Matter of Broidrick v Lindsay ( 39 NY2d 641 , supra) and Matter of Fullilove v Beame ( 48 NY2d 376 , supra), we held that attempts by the Mayor of New York City to mandate some type of affirmative action in employment decisions by city contractors were impermissible infringements upon the legislative power because they utilized a remedial device which, rather than implementing a legislative policy, enacted a new policy not embraced by the City Council. Defendants rely on language in Broidrick and. Fullilove approving executive action which “ ‘only would enlarge the pool of persons eligible for employment based on discrimination-free merit selection’ ” (Matter of Fullilove v Beame, 48 NY2d, at p 379, supra; Matter of Broidrick v Lindsay, 39 NY2d, at p 649, supra). This statement, however, was not intended to authorize the executive to enact his own views of what persons should be protected from employment discrimination without regard to the laws enacted by the Legislature. Rather, approval of enlarging the pool of employees was in reference to an executive implementing appropriate remedial relief to enforce a legislative policy.

Two other decisions from this court further explicate this distinction. In Rapp v Carey ( 44 NY2d 157 ), we invalidated a Governor’s Executive Order requiring a broad range of State employees within the executive branch, including many not subject to removal by the Governor, to file financial disclosure statements and to abstain from various political and business activities not otherwise prohibited. We held that the order in question went beyond the powers of the Governor, including the power to implement legislation, and unlawfully “assume[d] the power of the Legislature to set State policy in an area of concededly increasing public concern” (id., 44 NY2d, at p 160). Most recently, in Subcontractors Trade Assn. v Koch (supra), we held that the Mayor of New York City did not have the authority to mandate that at least 10% of all construction contracts awarded by the city be given to “locally based enterprises,” as such an order went beyond the Mayor’s “function of implementing general Charter-conferred powers” {id., 62 NY2d, at p 429). Of particular relevance here is our recognition in Subcontractors that “the general power to enter into contracts which is bestowed upon the executive branch of government ordinarily cannot serve as a basis for creating a remedial plan for which the executive never received a grant of legislative power” {id., at p 428).

The prohibitions in the 14th Amendment are directed at the “State,” and they “ ‘erect no shield against merely private conduct, however discriminatory or wrongful’ ” (Blum v Yaretsky, 457 US 991 ,1002, quoting Shelley v Kraemer, 334 US 1 ,13; see, Jackson v Metropolitan Edison Co., 419 US 345 , 349). In order for a court to conclude that there is “State action,” thus making equal protection requirements applicable, the alleged discriminatory conduct of a private employer must be “fairly attributable to the State” (Lugar v Edmondson Oil Co., 457 US 922 , 937; see, Matter of Wilson, 59 NY2d 461 , 476).

The Supreme Court has yet to formulate a single test which can be employed to determine whether there is the requisite degree of State involvement (see, Reitman v Mulkey, 387 US 369 , 378), and all the facts and circumstances of a particular case must be considered (Burton v Wilmington Parking Auth., 365 US 715 , 722). It is clear, however, that the mere fact that a private entity contracts with the government (see, e.g., Blum v Yaretsky, supra), is regulated by the government (see, e.g., Jackson v Metropolitan Edison Co., 419 US 345 , supra), or performs a function also performed by the government (see, e.g., Rendell-Baker v Kohn, 457 US 830 ), is not enough by itself to treat it as a State actor. Rather, there must be some basis for finding that the State is “responsible” for the private conduct (Blum v Yaretsky, 457 US, at p 1004, supra), either because it maintains such a close relationship with the private actor that it can be viewed as a joint participant in all decisions of the latter (see, Burton v Wilmington Parking Auth., 365 US 715 , supra), because it allows the private actor to perform a function traditionally the exclusive prerogative of the State (see, e.g., Evans v Newton, 382 US 296 ), or because it requires or otherwise encourages the challenged conduct of the private actor (see, e.g., Peterson v City of Greenville, 373 US 244 ).

There are no facts or circumstances pointed to by defendants or otherwise apparent which could make the city responsible for the employment decisions of the plaintiffs or of city contractors

Thus, Executive Order No. 50, in prohibiting discrimination by city contractors on the basis of “sexual orientation or affectional preference,” is not prohibiting conduct covered by the 14th Amendment. The defendants contend, however, that even if the employment decisions of organizations contracting with the city are not State action, the city itself would be in violation of the 14th Amendment if it contracts with an entity which discriminates on the basis of “sexual orientation or affectional preference,” and the Mayor, therefore, is fulfilling his duty to prevent this violation. This contention is superficially appealing, but cannot withstand closer analysis.

Neither this court nor the Supreme Court has ever held that the government may have no contacts with a private entity which discriminates or otherwise acts in a manner in which the government itself could not. Furthermore, while there is a distinction between seeking to hold a private actor responsible under the 14th Amendment for discriminatory conduct and seeking to enjoin governmental involvement with that actor (Blum v Yaretsky, 457 US, at pp 1003-1004, supra; Note, State Action: Theories For Applying Constitutional Restrictions To Private Activity, 74 Colum L Rev 656 , 698-699), the considerations of State action applicable to the former are also relevant to the latter (Blum v Yaretsky, 457 US, at p 1004, supra).

Defendants rely heavily on the Supreme Court’s decision in Norwood v Harrison ( 413 US 455 ), in which the court enjoined the State of Mississippi from lending textbooks to private schools with racially discriminatory admissions policies. The court concluded that, although the textbook lending program

There are several crucial distinctions between Norwood and this case. To begin, the Supreme Court found that the State’s action in Norwood was effectively promoting the discrimination by the private actors (see, Gilmore v City of Montgomery, 417 US 556 , 568-569). In contrast, there is no evidence that the city, by contracting for goods or services with a private organization, would be promoting any discriminatory acts by that organization (c f. Novack, Rotunda & Young, Constitutional Law, at 520 [2d ed]). Additionally, while the State in Norwood was gratuitously providing aid to the private entities, the city, in entering into contracts, is purchasing items it requires or fulfilling obligations it has, thus further negating any assertion that it is promoting the discriminatory acts.

Perhaps the most significant distinction between Norwood and this case is that the former involved governmental entanglement in racial discrimination. The Supreme Court has consistently recognized that the central purpose underlying the equal protection clause was to prevent governmental conduct discriminating on the basis of race, and that any such discrimination is subject to the most exacting scrutiny (see, e.g., Palmore v Sidoti, 466 US 429 , 104 S Ct 1879 , 1881-1882; Washington v Davis, 426 US 229 , 239). Consequently, it has become apparent that where racial discrimination by a private actor is involved, a lesser degree of State involvement than would otherwise be required will support a finding of “State action” (see, Adickes v Kress & Co., 398 US 144 , 190-191 [Brennan, J., concurring in part, dissenting in part]; Taylor v Consolidated Edison Co., 552 F2d 39 , 42, cert denied 434 US 845 ; Note, State Action: Theories For Applying Constitutional Restrictions To Private Activity, 74 Colum L Rev 656 , 657-658, 661). More generally, government has been permitted fewer contacts with private actors engaged in racial discrimination than with those otherwise acting in a manner which the government itself could not (see, e.g., Granfield v Catholic Univ., 530 F2d 1035 , 1046, n 29, cert denied 429 US 821 ; compare, e.g., title VI of the Civil Rights Act, 42 USC § 2000d [prohibiting racial discrimination in any activity or program receiving Federal financial assistance, without exception], with title IX of the Educational Amendments of 1972, 20

Courts have uniformly refused to apply the same level of scrutiny applied to racial classifications in determining equal protection challenges to classifications based on sexual orientation (see, e.g., Rich v Secretary of Army, 735 F2d 1220 , 1229; Hatheway v Secretary of Army, 641 F2d 1376 , 1382, cert denied 454 US 864 ; DeSantis v Pacific Tel. & Tel. Co., 608 F2d, at p 332, supra). We need not decide now whether some level of “heightened scrutiny” would be applied to governmental discrimination based on sexual orientation (see, Hatheway v Secretary of Army, 641 F2d, at p 1382, supra; Note, An Argument for the Application of Equal Protection Heightened Scrutiny to Classifications Based on Homosexuality, 57 S Cal L Rev 797 , 810-834; Note, Challenging Sexual Preference Discrimination in Private Employment, 41 Ohio St U 501, 513-514). Rather, we conclude only that the equal protection clause does not ordinarily prevent the city from contracting with private employers who discriminate on this basis, as the existence of the contract would not, by itself, make the city “responsible” for the private employment decisions so as to invoke constitutional protections (see, Blum v Yaretsky, 457 US, at p 1004, supra). Thus, we reject defendants’ contention that the prohibition in Executive Order No. 50 against discrimination by city contractors on the basis of “sexual orientation or affectional preference” is necessary to prevent the city from aiding or engaging in a violation of the 14th Amendment.

As we have found that the Mayor lacked any authority to promulgate the challenged portion of Executive Order No. 50, we hold that this portion was an unlawful usurpation of the legislative power of the City Council. Accordingly, the order of the Appellate Division should be modified by reinstating the orders and judgments at Special Term.

(dissenting). In concluding that the Mayor of New York City is not empowered by Constitution, Federal or State, or statute to bar those contracting with the city from discriminating in employment on a basis unrelated to bona fide occupational qualification, the majority ignores the difference between hiring quotas affirmatively imposed and a negative ban on arbitrary discrimination, and drastically extends this court’s prior decisions concerning the Mayor’s power with respect to city

In fact, the Mayor “is empowered to enter into contracts * * * and to determine the manner of transacting the city’s business and affairs” (Matter of Bauch v City of New York, 21 NY2d 599 , 605). In exercising that power, the Mayor’s obligation is to ensure that the city receive the greatest value for the lowest possible cost (see, e.g., Matter of Dairymen’s League Coop. Assn. v Murtagh, 274 App Div 591 , 594-595, affd 299 NY 634 ). Thus, in Matter of Broidrick v Lindsay ( 39 NY2d 641 , 648, supra), the court held that “cost minimization is a proper consideration in setting government procurement policy,” thereby explicitly recognizing the validity of the social policy embodied in Executive Order No. 50.

The majority holds, however, that notwithstanding the recognition in Matter of Broidrick v Lindsay (supra), and Matter of Fullilove v Beame ( 48 NY2d 376 , 379, supra) of the Mayor’s power to require discrimination-free merit selection, he is permitted to ban particular kinds of discrimination by city contractors only if the State Legislature or City Council has either itself already done so or expressly authorized him to do so. But one searches in vain for any language in these cases, or in the other cases cited by the majority, that limits the Mayor’s power in this manner. Rapp v Carey ( 44 NY2d 157 ) invalidated an Executive Order issued by the Governor because it was not only unauthorized by any statute or constitutional provision, but was actually inconsistent with existing legislation (id., at pp 164-165). And the defect in the Executive Order in Subcontractors Trade Assn. v Koch ( 62 NY2d 422 , 429, supra) was that it imposed an affirmative, remedial plan which required that “a certain percentage of city construction contracts * * * be allotted to a particular group or category of business enterprise”. Here, no affirmative action is mandated. There is only a ban on arbitrary discrimination, designed to implement the accepted social policy that the city should seek to get the most for its money.

Finally, in light of the majority’s reliance on separation of powers cases involving the Federal Constitution, it should be noted that a number of Federal courts have upheld presidential