Rothe Development, Inc. v. Department of Defense, 107 F. Supp. 3d 183

Background

Rothe Development, Inc., a woman-owned small business that bids on DOD contracts, challenged Section 8(a) of the Small Business Act as facially unconstitutional and as an unlawful delegation of legislative power. Rothe does not participate in the 8(a) program.
Section 8(a) provides contracting preferences and development assistance to businesses owned by "socially and economically disadvantaged individuals," with a statutory presumption for listed racial/ethnic groups and collateral eligibility rules.
Rothe sought declaratory and injunctive relief, arguing the statutory definition of "socially disadvantaged" is a race-based classification failing strict scrutiny and that Congress unconstitutionally delegated authority to the SBA.
The government defended under strict scrutiny: (1) asserting a compelling interest in remedying discrimination in federal contracting; (2) presenting a "strong basis in evidence" including disparity studies and expert economic analyses; and (3) arguing the program is narrowly tailored.
The court held Daubert hearings on competing experts. It admitted the government experts (economists Rubinovitz and Wainwright) and excluded Rothe’s experts (Patenaude and Sullivan) for lack of qualification and unreliable methodology.
Applying the D.C. district-court precedent DynaLantic, the court concluded Rothe failed its facial challenge and ruled Section 8(a) constitutional on its face; the nondelegation challenge likewise failed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Facial equal-protection challenge to §8(a) racial classification	§8(a)’s statutory presumption based on race is unconstitutional racial balancing and cannot satisfy strict scrutiny	§8(a) furthers a compelling interest (remedying discrimination) with a strong evidentiary basis and is narrowly tailored	Court denied Rothe’s MSJ and granted government MSJ; §8(a) facially constitutional (adopting DynaLantic reasoning)
Relevance/admissibility of post‑enactment statistical evidence	Post‑reauthorization evidence and experts not before Congress are irrelevant to constitutional review	Post‑enactment evidence and modern disparity/regression studies are admissible and relevant, especially for an older statute	Court admitted government experts and considered post‑enactment evidence as probative of a present strong basis in evidence
Expert admissibility (Daubert)	Government experts’ methods are flawed and their testimony should be excluded	Government experts are qualified; methodologies are reliable and relevant; plaintiff’s experts are unqualified/unreliable	Court admitted Rubinovitz and Wainwright; excluded Patenaude and Sullivan; denied plaintiff’s Daubert motion and granted defendants’ motions
Nondelegation challenge to §8(a)	Statute lacks an intelligible principle to limit SBA discretion in defining social disadvantage and detecting bias	Statute defines "socially disadvantaged" and states program purpose and findings, providing adequate guidance	Court held the statutory definitions and context supply an intelligible principle; nondelegation claim failed

Key Cases Cited

Daubert v. Merrell Dow Pharm., 509 U.S. 579 (admissibility gatekeeping for expert testimony)
United States v. Salerno, 481 U.S. 739 (facial‑challenge "no set of circumstances" standard)
DynaLantic Corp. v. United States Dep’t of Defense, 885 F. Supp. 2d 237 (D.D.C. 2012) (extensive district‑court analysis upholding §8(a) on its face; relied upon by this court)
Adarand Constructors, Inc. v. Peña, 515 U.S. 200 (race‑based classifications subject to strict scrutiny)
Grutter v. Bollinger, 539 U.S. 306 (narrow‑tailoring framework for race‑conscious measures)
Kumho Tire Co. v. Carmichael, 526 U.S. 137 (Daubert gatekeeping applies to all expert testimony)
Whitman v. American Trucking Ass’ns, 531 U.S. 457 (nondelegation doctrine standards; intelligible principle)
Mistretta v. United States, 488 U.S. 361 (separation‑of‑powers/nondelegation principles)