Monday, March 3, 2008
I am drifting into a busier-than-usual period at work, and so entries may become more sporadic, but I could not let the week begin without singing hosannas for the team in McClain vs. Lufkin Indust Inc., No. 05-41417 (5th Cir. Feb. 29, 2008), who managed to preserve a Title VII disparate impact decision by the late U.S. District Court Judge (and Reagan appointee!) Howell Cobb — which favored a class of some 700 African-Americans — over daunting obstacles. The court summarizes the history thus:
“Protracted pretrial proceedings in this case included two class certification hearings, two interlocutory appeals to this court, and a two-year mediation effort. When the case finally went to bench trial, the court strictly limited each party to twenty hours for the presentation of its case. Ultimately, the district court found that Lufkin’s practice of delegating subjective decision-making authority to its white managers with respect to initial assignments and promotions resulted in a disparate impact on black employees in violation of Title VII. The court awarded the plaintiffs over $3.4 million in back pay, as well as attorneys’ fees and injunctive relief. Both parties appeal.”
The Fifth Circuit decision was not a full vindication, natch, but given the conservative cast of the panel — Chief Judge Jones, and Judges Higginbotham and Clement — I am guessing the plaintiffs’ lawyers were delighted to carry away anything at all.
1. The court vacated a damage award and injunctive relief based on discriminatory initial assignments to the Foundry division, on the ground that the employee failed to present a claim of disparate impact in his administrative charge to the EEOC. “McClain’s letter nowhere refers to any neutral employment policy of Lufkin. Yet, . . .’the cornerstone of any EEO[C] disparate impact investigation’ is a neutral employment policy. . . . Plaintiffs argue that a disparate-impact investigation could have grown out of McClain’s letter because he alluded to a ‘cultural problem’ that extended to all parts of Lufkin’s business. A ‘cultural problem, however, is a vague term that cannot be understood as a neutral employment policy.” [Citation omitted.] A concomitant OFCCP investigation of the same claim was held not to substitute for the charge-filing requirement.
This is a pet peeve of mine (why should employees be expected to set out legal theories in their charges, anyway?), and perhaps if class counsel petitions for rehearing, they might cite last week’s Federal Express Corporation v. Paul Holowecki, No. 06-1322 (U.S. Feb. 27, 2008): “Documents filed by an employee with the EEOC should be construed, to the extent consistent with permissible rules of interpretation, to protect the employee’s rights and statutory remedies. Construing ambiguities against the drafter may be the more efficient rule to encourage precise expression in other contexts; here, however, the rule would undermine the remedial scheme Congress adopted.”
2. The court, on the other hand, affirmed liability on a disparate impact theory based on subjective promotion decision-making. The employer claimed that promotions were awarded by seniority, but the judge’s findings to the contrary were held not to be clearly erroneous:
“[P]laintiffs offered evidence that promotions are not rigidly awarded according to seniority. Class members Sylvester McClain and Florine Thompson testified that they were personally bypassed for promotion in favor of a less senior white employee. Plaintiffs presented addition al evidence that approximately half of all promotions were not awarded to the most senior bidder.
“Moreover, the Collective Bargaining Agreement (‘CBA’) contains an ability clause that allowed Lufkin to fill positions on the basis of ability, regardless of seniority. The evidence indicates that ability determinations were not governed by objective standards. Paul Perez, Lufkin’s Vice President of Human Resources, agreed that the ability determination was subjective. . . .”
* * * *
“Plaintiffs also offered evidence that Lufkin permitted its managers to apportion training opportunities subjectively, a process that disadvantaged black employees who sought promotions. Perez testified that the CBA does not govern employees’ daily work assignments, and he acknowledged that daily job assignments are not made on the basis of seniority. Perez testified that there are no written policies determining who is to receive on-the-job training, and Lufkin does not track how such training is allocated among employees.”
“The district court also heard testimony that Lufkin’s allegedly objective measures for determining which employees were eligible to bid, such as attendance and discipline records, are subject to variance and manipulation. Lufkin has a computer program that tracks attendance, but both McClain and Thompson testified that the system was manipulable.”
An plaintiff’s expert analysis was also credited: “The testimony of the plaintiffs’ expert, Dr. Richard Martell, an Industrial Organization Psychologist, also supports the finding of subjective decision making. Dr. Martell testified that the personnel policies, procedures, and practices at Lufkin were “decidedly subjective.” After discussing Lufkin’s promotion practices in some detail, Martell ultimately concluded that Lufkin is ‘awash in a sea of subjectivity that cuts across all manufacturing divisions.'”
3. The panel also affirmed the district court’s conclusion that even the arguably objective elements of Lufkin’s promotional system (bidding practices and seniority) were not capable of separation for review, so that the disparate impact against blacks could be measured against the entire system.
“Lufkin affords management considerable discretion in deciding whether to follow seniority in promotions. Plaintiffs could not statistically analyze the actual practice they challenge – subjective and discretionary application of the seniority provisions – by excluding promotion based on seniority. Seniority, the court found, was likely to have been irrelevant to the promotion. . . .
“Lufkin also contends that the plaintiffs should have separated out instances in which candidates were properly denied promotions because of unsatisfactory attendance. This argument, too, runs afoul of the court’s finding that managers have substantial discretion in applying attendance rules.”
4. It affirmed an expert evidentiary ruling that allowed Prof. Richard Drogin, plaintiff’s statistical expert, to use constructed pools to analyze promotion in the absence of accurate bid-sheet data. “[T]he district court expressly found that the bid data were incomplete and unreliable, noting that more than half of the promotions were missing from the bid database which Lufkin prepared in anticipation of this litigation. Where actual datare unreliable, courts often permit parties to analyze potential applicant flow data.” It also accepted the plaintiff’s statistical conclusions even though Dr. Drogin did not regress for certain factors, such as education, and that statistical significance dipped to the very threshold of chance (2.02).
5. Most critically, the Fifth Circuit affirmed some its earliest case law to allow a formula back-pay award for the class:
“In this case, the district court concluded that the size of the class and the inherent uncertainty of the individual claims contraindicates the use of an individualized approach. We agree. We are not persuaded that the district court could ‘easily’ make individualized inquiries for each of the more than 700 plaintiffs in this case, as Lufkin contends. Further, as in Pettway [v. Am. Cast Iron Pipe Co., 494 F.2d 211, 261 (5th Cir. 1974)], there is no practical way to determine through individual hearings which jobs the class members would have bid on and obtained but for the discriminatory procedures Lufkin had in place.”
The court tossed the original award on the ground that it included relief for both hiring and promotion claims, with the former now out of the case. “On remand, the district court will be dealing solely with damages attributable to approximately 127 lost promotions in hourly pay grades and nine lost salaried employment promotions. The accepted way to apportion damages among a class of plaintiffs who outnumber the lost promotion spots is to compute the total addition al wages attributable each year to each promotion and divide the value among the class members.”
6. The court declined to reverse the judgment based on the district court’s trial management plan that required the parties to present their evidence in a set number of hours (Lufkin had just 20 hours total for its defense.)
7. The panel affirmed denial of class certification of a § 1981 disparate treatment class. “We agree with . . . the district court’s conclusion here that if the price of a Rule 23(b)(2) disparate treatment class both limits individual opt outs and sacrifices class members’ rights to avail themselves of significant legal remedies, it is too high a price to impose.”
8. On cross-appeal, the panel agreed with the class’s argument that the injunctive relief was too vague, and remanded the order to review “afresh the propriety of the injunction, and if it is found necessary, of balancing plaintiffs’ requests for stronger measures to ensure Lufkin’s compliance with the imprecision of the liability finding.” Finally, it vacated and remanded attorneys fees, finding some of the judge’s decisions too preemptory. “In this case, the plaintiffs sought an interim award of attorneys’ fees, costs and expenses approximating $6.5 million, covering 12,387.9 hours of work performed and nearly a million dollars in out-of-pocket costs. The district court slashed their request and summarily stated that [class counsel] Ms. Demchak’s reported hours were ‘excessive and not necessary’ and that the rates she requested were not ‘usual and customary’ for employment discrimination cases in the geographical area. The court offered no reason to deny all compensation for time spent on the lengthy mediation effort; to deny compensation to Mr. Garrigan for his attendance at plaintiff Roald Mark’s separate suit against Lufkin; to apply a blanket reduction of 25% to all of the billable hours reported by plaintiffs’ counsel; and to reduce the hourly rates requested by plaintiffs’ counsel. Because of these deficiencies, we must vacate the fee award and remand for the district court to conduct proper lodestar-fee and Johnson analyses, and award counsel a reasonable reimbursement.”