The University of Michigan's use of racial preferences in undergraduate admissions was found to be in violation of the Equal Protection Clause of the Fourteenth Amendment, Title VI of the Civil Rights Act of 1964, and 42 U.S.C. § 1981. The Supreme Court reversed the District Court's initial decision upholding the University's guidelines. The plaintiffs sought compensatory and punitive damages, declaratory relief, an injunction prohibiting further discrimination, and an order requiring the University to offer admission to one of the plaintiffs as a transfer student. The District Court certified a class action lawsuit against the University of Michigan, brought by individuals who were not granted admission to the College of Literature, Science & the Arts due to their race or ethnicity. The University's admissions procedure awarded additional points to applicants who were underrepresented minorities, socioeconomically disadvantaged, attended a high school with a predominantly underrepresented minority population, or were underrepresented in the unit they were applying to. This resulted in underrepresented minority applicants being generally admitted while in-state applicants were postponed. The University replaced the Guidelines tables and SCUGA point system with a "selection index" in 1998 that awarded points based on various factors, including membership in an underrepresented racial or ethnic minority group. The University's admissions procedure awarded points to each application based on various factors, including high school GPA, standardized test scores, academic quality of the high school, strength of the high school curriculum, in-state residency, alumni relationship, personal essay, and personal achievement or leadership. The University used a rolling admissions system and "protected seats" for athletes, foreign students, ROTC candidates, and underrepresented minorities. The Enrollment Working Group (EWG) projected the number of applicants from each protected category and paced admissions decisions accordingly. The University established an Admissions Review Committee (ARC) in 1999 to provide an additional level of consideration for some applications. However, applicants with the same academic scores were subject to different admissions outcomes based on their racial or ethnic status, which violated the Equal Protection Clause of the Fourteenth Amendment.

The University of Michigan's Office of Undergraduate Admissions has an admissions policy that assigns an automatic 20-point bonus to underrepresented minority applicants without considering their individual background, experiences, or qualities. The law school, on the other hand, considers each applicant's diversity qualifications, including race, on a case-by-case basis. The admissions policy involves the use of a Selection Index Worksheet to calculate an applicant's selection index score out of 150 possible points. Applicants with a score over 100 are automatically admitted, while those with scores between 95 and 99 are categorized as "admit or postpone." The policy does not provide a meaningful individualized review of applicants and does not meet the individualized consideration required by Grutter v. Bollinger. The University assigns numerical values to academic and non-academic factors, including race, when calculating an applicant's selection index score to achieve a diverse student body. The Admissions Review Committee was added in 1999 to further consider flagged applications that did not meet the selection index parameters. The committee decides whether to admit, defer, or deny the applicant after discussing each flagged application. Admissions counselors may flag an applicant for review by the committee if the applicant possesses one of several qualities valued by the University, including high class rank, unique life experiences, challenges, circumstances, interests or talents, socioeconomic disadvantage, and under-represented race, ethnicity, or geography.

Justice Thomas agrees with the Court's decision in the case, but believes that the Equal Protection Clause prohibits the use of racial discrimination in higher education admissions. The Court invalidated the University of Michigan's College of Literature, Science, and the Arts admissions policy because it did not allow for the consideration of nonracial distinctions among underrepresented minority applicants. The policy awarded all underrepresented minorities the same racial preference, which was not enough to meet the Court's requirements. The Court ruled that a university cannot racially discriminate between the groups constituting the critical mass, and an admissions policy must allow for consideration of nonracial distinctions among applicants on both sides of the single permitted racial classification. The lower court's decision was not upheld.

Justice Breyer agrees with the Court's judgment but not its opinion. He concurs with Justice O'Connor's opinion except where it agrees with the Court. He also agrees with Part I of Justice Ginsburg's dissenting opinion but does not dissent from the Court's decision. Justice Breyer believes that government decision-makers can differentiate between policies of inclusion and exclusion when implementing the Constitution's equality instruction. He agrees with Justice Ginsburg that policies of inclusion are more likely to align with the Constitution's obligation to respect each individual equally.

The Supreme Court case involved a challenge to the University of Michigan's race-conscious freshman admissions policy. The petitioners lacked standing to seek forward-looking relief as they were not in the process of reapplying to Michigan. The District Court certified Hamacher as the sole class representative and limited the claims of the class to injunctive and declaratory relief. The Supreme Court only has jurisdiction over the portion of the District Court's decision that upheld Michigan's new freshman admissions policy. The petitioners have standing to seek damages for the alleged wrongful denial of their applications under Michigan's old freshman admissions system, but they cannot seek forward-looking, injunctive relief unless they can show an imminent threat of future injury. Hamacher's claim of future injury is hypothetical rather than real and immediate, so he does not have standing in the case. The transfer policy is not part of the case and cannot be used to complain about the freshman admissions policy. Relief from the injury must be "likely" to follow from a favorable decision, and the framing of relief must be no broader than required by the precise facts. The challenge does not impact both private and public universities.

Justice Souter dissents from the majority opinion, stating that the plaintiff lacks standing to seek relief against a freshman admissions policy that will not harm him. He also disagrees with the Court's judgment on the merits of the case, arguing that a plaintiff cannot challenge a government program that does not apply to him. The legal cases of Grutter and Bakke provide guidance on the constitutionality of race-conscious admissions schemes, and the freshman admissions system in this case is subject to argument on the merits. The college's selection index system is consistent with a constitutionally acceptable program as it considers all relevant characteristics for each student place to be filled. The admissions process assigns 20 points to underrepresented minority applicants, which is the only qualification to the otherwise constitutionally acceptable selection index system. The Court finds fault with the automatic distribution of 20 points to minority applicants, but this objection is mistaken as it goes against the use of points to quantify and compare characteristics or the number of points awarded due to race. The college's permissible practice of awarding value to racial diversity means that race must be considered in a way that increases some applicants' chances for admission.

The dissenting opinion in a legal case argues against applying the same standard of review to all official race classifications. The author contends that significant disparities in society disproportionately affect certain races and must be dismantled to achieve genuine equal opportunity and nondiscrimination. The Constitution allows classifications based on race that correct past discrimination and promote equality, but the court must carefully examine whether the use of race is relevant to achieving that purpose. The admissions policy of the University of Michigan's College of Literature, Science, and the Arts is constitutional because it considers race as a factor in admissions only to remedy past discrimination against historically marginalized groups, does not reserve seats based on race, and does not unduly harm the opportunities of students who do not receive special consideration based on race.