McClain v. Lufkin Industries, Inc.

REVISED MARCH 10, 2008

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

February 29, 2008

No. 05-41417

Charles R. Fulbruge III

Clerk

SYLVESTER MCCLAIN, on his own behalf and on behalf of a class of similarly

situated persons; BUFORD THOMAS, on his own behalf and on behalf of a class

of similarly situated persons; PATRICK ROSS, on his own behalf and on behalf

of a class of similarly situated persons; MARY THOMAS, on her own behalf and

on behalf of a class of similarly situated persons; EDDIE K. MASK, on his own

behalf and on behalf of a class of similarly situated persons; LEROY GARNER,

on his own behalf and on behalf of a class of similarly situated persons; SHERRY

CALLOWAY SWINT, on her own behalf and on behalf of a class of similarly

situated persons; WALTER BUTLER, on his own behalf and on behalf of a class

of similarly situated persons; also known as A; FLORINE THOMPSON, on her

own behalf and on behalf of a class of similarly situated persons; CLARENCE

OWENS, on his own behalf and on behalf of a class of similarly situated persons;

also known as C; CLIFFORD R. DUIRDEN, on his own behalf and on behalf of

a class of similarly situated persons; EARL POTTS, on his own behalf and on

behalf of a class of similarly situated persons; ROALD MARK, on his own behalf

and on behalf of a class of similarly situated persons

Plaintiffs - Appellants-Cross Appellees

v.

LUFKIN INDUSTRIES, INC.

Defendant - Appellee-Cross Appellant

Appeals from the United States District Court

for the Eastern District of Texas

No. 05-41417

Before JONES, Chief Judge, and HIGGINBOTHAM and CLEMENT, Circuit

Judges.

EDITH H. JONES, Chief Judge:

In this complex Title VII class action against Lufkin Industries, Inc.

(“Lufkin”), African-American plaintiffs allege that Lufkin’s practice of delegating

subjective decision-making authority to its managers with respect to initial

assignments and promotions disparately affected them. After a bench trial, the

district court issued a judgment in favor of the employees. After sifting through

numerous issues, we reach results that are unfortunately inconclusive of the

litigation. We affirm in part, reverse in part, and vacate and remand in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

Lufkin, a large manufacturing corporation located in Lufkin, Texas, is

divided into four production divisions: Foundry, Trailer, Oil Field, and Power

Transmission. The company employs approximately 1,500 hourly and salaried

workers, and the hourly workers have been unionized for many years.

Only two of the representative plaintiffs in this class action filed EEOC

complaints. Sylvester McClain (“McClain”), the named plaintiff, began working

in Lufkin’s Trailer division in 1972. In January 1995, he complained to the

EEOC that his supervisor, Arden Jinkins (“Jinkins”), had discriminated against

him based on his race. Among other things, McClain complained that Jinkins

tried to have him demoted. Buford Thomas (“Thomas”), a Lufkin employee since

1979, filed his EEOC charge in February 1997, a year after he was allegedly

constructively discharged. Thomas complained of being denied promotional and

training opportunities because of his race while working in the Power

Transmission and Oil Field divisions. The EEOC issued right-to-sue letters on

both charges.

McClain and Thomas sued Lufkin for employment discrimination in

violation of Title VII and 42 U.S.C. § 1981. The plaintiffs asserted that

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systematic racial discrimination pervades Lufkin’s initial job assignments,

training, promotions, and compensation. The district court certified the

plaintiffs’ disparate-impact claims as a class action involving 700 current and

former Lufkin employees. The class was described as:

All Black persons employed for any period of time by defendant

Lufkin Industries on or after March 6, 1994, to date, whose

compensation, remuneration, benefits, job assignments, promotional

opportunities, career advancements and other terms and conditions

of employment have been, may have been, or may become, adversely

affected by defendant Lufkin Industries’ past or present systems of

administering hiring, wages, salaries, job assignments, training,

evaluations, promotions, demotions, terminations, layoffs, recalls,

and rehires.

McClain v. Lufkin Indus., Inc., 187 F.R.D. 267, 277-78 (E.D. Tex. 1999). The

court, however, declined to certify a disparate treatment class. Two claims went

to trial: (1) discrimination against blacks in Lufkin’s assignment of newly hired

employees; and (2) racially discriminatory promotion practices that rested on

largely subjective decision-making criteria carried out by a largely white

supervisory corps.

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.

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II. DISCUSSION

Lufkin contends that the named plaintiffs failed to exhaust EEOC

administrative remedies and lack standing to represent the class. Lufkin also

contends that the district court erred in finding that Lufkin’s promotion

practices are subjective and incapable of separation for analysis and that they

had a statistically significant disparate impact on black employees. Lufkin

challenges the court’s calculation of the back pay award according to a class-wide

formula. Finally, Lufkin asserts that the cumulative effect of various errors,

including the limited presentation of evidence, requires us to vacate the

judgment.

For their part, the plaintiffs argue that the district court erred in refusing

to certify a disparate treatment class, in failing to award appropriate injunctive

relief, and in reducing their attorneys’ fees. We turn first to Lufkin’s

contentions.

A. Lufkin’s Arguments

1. Failure to Exhaust EEOC Remedies

As a threshold matter, Lufkin argues that the district court should have

dismissed the plaintiffs’ initial-assignment and promotion claims for failure to

exhaust administrative remedies and for lack of standing to represent a broadly

defined class. Failure to exhaust is not a procedural “gotcha” issue. It is a

mainstay of proper enforcement of Title VII remedies. Lufkin contends that

McClain and Thomas complained to the EEOC about their individual disparate

treatment by the company, but not about their hiring nor about any neutral

employment practices on which a disparate-impact case depends. The scope of

their administrative claims governs the scope of the class claims. Vuyanich v.

Republic Nat’l Bank, 723 F.2d 1195, 1201 (5th Cir. 1984); Evans v. U.S. Pipe &

Foundry Co., 696 F.2d 925, 929 (11th Cir. 1983). Consequently, Lufkin asserts,

the EEOC was never presented with disparate-impact class claims concerning

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No. 05-41417

Lufkin’s hiring and promotional practices, and the administrative process was

circumvented.

The district court ruled that plaintiffs had exhausted their administrative

remedies via McClain’s January 1995 letter to the EEOC. See 29 C.F.R.

§ 1601.12(b); Fellows v. Universal Rests., Inc., 701 F.2d 447, 451 (5th Cir. 1983).

The court also held that a contemporary administrative proceeding pertaining

to Lufkin by the Office of Federal Contract Compliance Programs (“OFCCP”)

sufficiently fulfilled the purposes of exhaustion. This court reviews de novo the

district court’s conclusion concerning exhaustion. See Pacheco v. Mineta,

448 F.3d 783, 788 (5th Cir.), cert. denied, 127 S. Ct. 299 (2006).

Title VII requires employees to exhaust their administrative remedies

before seeking judicial relief. Id. Private sector employees must satisfy this

requirement by filing an administrative charge with the EEOC. Id. at 788 n.6.

The charge enables the EEOC to investigate and, if appropriate, negotiate a

resolution with an employer. Only after administrative efforts terminate may

the employee sue the employer in federal court.

Courts should not condone lawsuits that exceed the scope of EEOC

exhaustion, because doing so would thwart the administrative process and

peremptorily substitute litigation for conciliation. Nevertheless, competing

policies underlie judicial interpretation of the exhaustion requirement. See id.

at 788-89. On one hand, the scope of an EEOC charge should be liberally

construed for litigation purposes because Title VII “was designed to protect the

many who are unlettered and unschooled in the nuances of literary

draftsmanship.” Sanchez v. Standard Brands, Inc., 431 F.2d 455, 465 (5th Cir.

1970). On the other hand, the “primary purpose of Title VII is to trigger the

investigatory and conciliatory procedures of the EEOC, in [an] attempt to

achieve non-judicial resolution of employment discrimination claims.” Pacheco,

448 F.3d at 788-89. To reconcile these policies, this court construes an EEOC

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No. 05-41417

complaint broadly but in terms of the administrative EEOC investigation that

“can reasonably be expected to grow out of the charge of discrimination.”

Sanchez, 431 F.2d at 466. We use a “fact-intensive analysis” of the

administrative charge that looks beyond the four corners of the document to its

substance. Id. In sum, a Title VII lawsuit may include allegations “like or

related to allegation[s] contained in the [EEOC] charge and growing out of such

allegations during the pendency of the case before the Commission.” Id.

Among this court’s numerous rulings on exhaustion of EEOC claims, we

find most relevant the recent Pacheco opinion, which held that an employee

failed to exhaust a disparate-impact claim because his EEOC charge alleged only

disparate treatment and identified no neutral employment policy. 448 F.3d at

792. Although Pacheco’s administrative charge complained that he had not been

promoted because of racial discrimination, his subsequent lawsuit alleged both

disparate treatment and disparate impact. Id. at 786-87. This court affirmed

the dismissal of the disparate-impact allegations because:

a disparate-impact investigation could not reasonably have been

expected to grow out of Pacheco’s administrative charge because of

the following matters taken together: (1) it facially alleged disparate

treatment; (2) it identified no neutral employment policy; and (3) it

complained of past incidents of disparate treatment only.

Id. at 792.

In this case, both the district court and the plaintiffs rely principally on

McClain’s January 1995 letter to establish administrative exhaustion. Like

Pacheco, McClain specifically complained to the EEOC of disparate treatment

and past incidents of discrimination against himself. His three-page letter to the

EEOC describes “discriminatory treatment that I have been receiving for some

time,” and “discriminatory acts against me by Mr. Jinkins.” McClain alleged

that Jinkins, his supervisor, racially discriminated against him and tried to have

him demoted or fired on false charges of unsatisfactory performance.

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No. 05-41417

McClain’s letter nowhere refers to any neutral employment policy of

Lufkin. Yet, according to Pacheco, “the cornerstone of any EEO[C] disparate-

impact investigation” is a neutral employment policy. 448 F.3d at 792.

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. See, e.g., id. at 790.

Compare Marshall v. Fed. Express Corp., 130 F.3d 1095, 1098 (D.C. Cir. 1997)

(“A vague or circumscribed EEOC charge will not satisfy the exhaustion

requirement for claims it does not fairly embrace.”), with Gomes v. Avco Corp.,

964 F.2d 1330, 1335 (2d Cir. 1992) (disparate-impact investigation “would

reasonably have flowed” from an EEOC complaint that referenced an eight-year

track to promotion). McClain’s letter not only failed to identify any neutral

employment policy, but also said nothing about discriminatory hiring at Lufkin.

This limited interpretation of McClain’s letter is confirmed by the actual

scope of the EEOC’s investigation, which is clearly pertinent to an exhaustion

inquiry. See Fine v. GAF Chem. Corp., 995 F.2d 576, 578 (5th Cir. 1993);

Fellows, 701 F.2d at 451. Responding to the January 1995 letter, the EEOC sent

McClain a proposed formal charge of discrimination in August 1996, in which

the agency summarized his claim as follows:

I have been subjected to different terms and conditions of

employment by being denied comparable training, access to supplies

and equipment needed to do a satisfactory job; given unsatisfactory

evaluations.

The charge then repeats McClain’s complaint of demotion. The plaintiffs also

cite another of McClain’s written statements to the EEOC, in which he suggests

that other evidence could be disclosed to support his discrimination claim. In

context, this sentence refers only to Lufkin’s disparate treatment of McClain

alone.

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The district court attempted to fortify its conclusion that exhaustion

occurred by taking into account an investigation by the OFCCP into “similar

claims to those now before the court.” The court seemed to think that an

investigation by another federal agency can exhaust claims that must be

handled by the EEOC and that Lufkin was effectively notified of its exposure to

disparate-impact claims by responding to the OFCCP investigation. The district

court cited no authority in support of its exhaustion bootstrapping, and we are

aware of none. Further, no such Title VII shortcut to exhaustion or notification

exists. Since 1970, the caselaw has explained that “the ‘scope’ of the judicial

complaint is limited to the ‘scope’ of the EEOC investigation which can

reasonably be expected to grow out of the charge of discrimination.” Sanchez,

431 F.2d at 466 (emphasis added); see also Pacheco, 448 F.3d at 792 (“[T]he

plaintiff’s administrative charge will be read somewhat broadly, in a fact-specific

inquiry into what EEOC investigations it can reasonably be expected to trigger.”

(emphasis added)); Fellows, 701 F.2d at 450-51. The district court erred by

utilizing OFCCP’s investigation as a basis for inferring EEOC administrative

exhaustion.

Although McClain’s EEOC complaint and the OFCCP investigation failed

to exhaust the employees’ class claims, Buford Thomas’s EEOC complaint

carries part of the requisite burden. Thomas alleged to the EEOC that he was

constructively discharged, denied promotional and training opportunities, and

overloaded with work because of his race. He specifically stated that

“[r]espondent has similarly discriminated against other black African

Americans.” Thomas’s complaint, viewed in light of the recent Pacheco decision,

presents a close question of exhaustion directed at a discriminatory, albeit

neutral, company policy authorizing subjective promotion decisions. We

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No. 05-41417

conclude, however, that exhaustion was sufficient. Significantly, Lufkin did not

contend otherwise in the trial court.1

Lufkin, instead, forcefully urged that the class failed to exhaust claims

concerning Lufkin’s alleged discriminatory assignment of newly hired black

employees to the Foundry division. Hourly work in the Foundry division is hot

and heavy to a far greater extent than in the company’s other production

divisions. But neither Thomas nor McClain, each with twenty or more years at

Lufkin, had worked in the Foundry division and neither man could or did

complain to the EEOC about Foundry hiring practices. We are persuaded that

the EEOC would not reasonably have investigated discriminatory assignment

of new Foundry division employees based on either McClain’s or Thomas’s

charge. Eastland v. Tenn. Valley Auth., 714 F.2d 1066, 1067-68 (11th Cir. 1983)

(class representatives could not assert initial assignment claims because all had

been hired years before); Evans v. U.S. Pipe & Foundry Co., 696 F.2d 925, 929

(11th Cir. 1983) (EEOC investigation limited to promotion and harassment).

Because of this deficiency, we must vacate the judgment awarding damages and

injunctive relief against Lufkin based on discriminatory initial assignments to

the Foundry division.2

Lufkin’s liability will next be examined in regard to the class’s promotion-

discrimination claim.

1

Because exhaustion was satisfied, we need not here decide whether exhaustion is a

jurisdictional or claim prerequisite. See Pacheco, 448 F.3d at 788 n.7. See generally Arbaugh

v. Y&H Corp., 546 U.S. 500 (2006) (employee numerosity requirement in 42 U.S.C. § 2000e(b)

is an element of a Title VII claim and not a jurisdictional requirement).

2

Caselaw also raises considerable doubt that McClain and Thomas would have had

standing to assert the class hiring claims of Foundry division workers. See E. Tex. Motor

Freight Sys. Inc. v. Rodriguez, 431 U.S. 395, 403 (1977); Vuyanich, 723 F.2d at 1200 (plaintiffs

who alleged injury from hiring and termination practices could not represent class arising from

other bank employment practices).

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2. Failure to Isolate a Specific Employment Practice

The district court identified Lufkin’s subjective decision-making process

in awarding promotions as the employment practice that caused a disparate

impact on black employees. To establish a prima facie case of discrimination

under a disparate-impact theory, a plaintiff must show: (1) an identifiable,

facially neutral personnel policy or practice; (2) a disparate effect on members

of a protected class; and (3) a causal connection between the two. Watson v. Fort

Worth Bank & Trust, 487 U.S. 977, 994 (1988). Ordinarily, a plaintiff must

demonstrate that each particular challenged employment practice causes a

disparate impact. Yet, Title VII provides that “if the complaining party can

demonstrate to the court that the elements of [the employer’s] decision making

process are not capable of separation for analysis, the decision making process

may be analyzed as one employment practice.” 42 U.S.C. § 2000e-2(k)(1)(B)(i).

Lufkin challenges two factual findings underlying the court’s liability

determination: that its decision-making process is subjective; and that its

decision-making process could not be separated for analysis into components

that were objective and non-racially biased. We address each in turn.

a. Subjective Decision Making

Lufkin argues that its promotion system is in fact overwhelmingly

objective, and that the district court’s finding of subjective decision making lacks

support. We review this finding for clear error. See Kona Tech. Corp. v. S. Pac.

Transp. Co., 225 F.3d 595, 601 (5th Cir. 2000).3

In Watson, the Supreme Court defined subjective decision making as

employment decisions “based on the exercise of personal judgment or the

application of inherently subjective criteria.” 487 U.S. at 988. The Court

3

In reviewing the court’s findings, we consider evidence adduced during the bench trial

but not the class certification hearings. The class certification hearings provided Lufkin

limited opportunity for examination on matters going to the merits.

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No. 05-41417

indicated that a system which incorporates a mixture of subjective and objective

criteria should generally be treated as subjective. Id. at 989 (“However one

might distinguish ‘subjective’ from ‘objective’ criteria, it is apparent that

selection systems that combine both types would generally have to be considered

subjective in nature.”).

At Lufkin, promotions within the hourly ranks are putatively governed by

a Collective Bargaining Agreement (“CBA”) between Lufkin and three unions.

Under the CBA, the company must post bid sheets for each new hourly opening.

Seniority is the main criterion for promotion. However, plaintiffs 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 additional 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.

McClain testified that supervisors did not always truly evaluate ability when

awarding promotions under the ability clause, but simply gave the position to

the candidate they favored. Billy Webb, the union’s chief spokesman, testified

that the union had taken issue with the ability provision in past contract

negotiations because it did not think that the ability clause was always

administered fairly. The CBA also provides for a ten-day trial period following

promotion. According to the testimony of one of its managers, Lufkin has no

written guidelines or formal tests for determining which employees pass this

trial period.

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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. In

addition, McClain testified that white employees were given more training in

areas that were relevant to the jobs he sought. McClain explained that when

“white managers and supervisors . . . see a man they want to put on a particular

job, . . . they’ll tap him” for training after his shift, or for external training.

According to McClain, the employee who received the extra training would be

the most qualified and would therefore receive the promotion once the job

became available.

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. If an employee was

absent or tardy and the supervisor did not want the employee to lose credit,

Thompson stated that the supervisor could non-schedule the employee or use the

employee’s vacation days to skew the records. With respect to discipline records,

Steve Reynolds, a Lufkin supervisor, testified that there are no written criteria

for determining when a rule violation should be “written up.” He stated that

this decision is left to individual supervisors.

The evidence also supported that Lufkin engaged in subjective decision

making when awarding promotions in the salaried ranks. Salaried positions are

not governed by the CBA, and company managers admitted that they were

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No. 05-41417

unaware of any guidelines, criteria, or documentation for the process of making

promotions to salaried positions. Rather, most promotions in the salaried ranks

are awarded through an interview process.4

In light of this evidence, we are not left with the definite and firm

conviction that the district court erred in finding subjective decision making in

Lufkin’s promotion system. See United States v. U.S. Gypsum Co., 333 U.S. 364,

395 (1948). Although Lufkin offered some testimony during the bench trial that

would tend to refute the court’s finding, it was within the province of the district

court to accord this testimony less credibility than that of the class members and

their experts. “The reviewing court oversteps the bounds of its duty under Rule

52(a) if it undertakes to duplicate the role of the lower court." Anderson v. City

of Bessemer City, 470 U.S. 564, 573 (1985). Accordingly, we cannot say the

court’s finding of subjective decision making in promotions amounted to clear

error.

b. Not Capable of Separation for Analysis

Lufkin also challenges the district court’s finding that its promotion

practices are not capable of separation for review. Lufkin argues that if the

court had isolated the objective factors in promotions — e.g. Lufkin’s bidding

practices and seniority — the court could not have found a discriminatory

impact. As explained above, Title VII permits a plaintiff to demonstrate that the

elements of the employer’s decision-making process are not capable of separation

for analysis and thus that the process should be analyzed as one employment

practice. 42 U.S.C. § 2000e-2(k)(1)(B)(i). This court has not addressed the

precise conditions under which employment practices are “not capable of

4

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.”

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separation for analysis.” But “where a promotion system uses tightly integrated

and overlapping criteria, it may be difficult as a practical matter for plaintiffs

to isolate the particular step responsible for the observed discrimination.” See

Munoz v. Orr, 200 F.3d 291, 304 (5th Cir. 2000). Some guidance is also provided

by trial court decisions interpreting the provision. In Stender v. Lucky Stores,

Inc., the district court held:

Where the system of promotion is pervaded by a lack of uniform

criteria, criteria that are subjective as well as variable, discretionary

placements and promotions, the failure to follow set procedures and

the absence of written policies or justifications for promotional

decisions, the court is not required to “pinpoint particular aspects of

[the system]” that are unfavorable to [the protected group].

803 F. Supp. 259, 335 (N.D. Cal. 1992) (citation omitted); see also Butler v. Home

Depot, Inc., No. C-94-4335 SI, 1997 WL 605754, at *13 (N.D. Cal. Aug. 29, 1997)

(unreported) (where employer delegated decisions to store managers who made

subjective judgments about candidate’s qualifications without written criteria,

decision-making process not capable of separation for analysis); Schallop v. N.Y.

State Dept. of Law, 20 F. Supp. 2d 384, 402 (N.D.N.Y. 1998) (entire process may

be characterized as a single employment practice when employment decisions

are made based on variable, subjective criteria); Bannister v. Dal-Tile Int’l, Inc.,

No. 3:02-CV-2498, 2003 WL 21145739, at *2 (N.D. Tex. May 14, 2003) (plaintiff

not required to pinpoint specific employment practices where the factors of a

defendant’s decision-making process are “so interwoven that they are incapable

of separation”).

There is no indication that the district court applied incorrect legal

principles in determining that Lufkin’s practices were incapable of separation.

This finding of fact must be reviewed for clear error. See Kona, 225 F.3d at 601.

Lufkin lists various ways in which its employment practices were analytically

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separable, but the court’s express findings preclude separation according to

those factors.

Lufkin argues, for example, that the plaintiffs’ expert could have separated

the challenged employment practices from its legitimate seniority system. The

expert included in his analysis numerous promotions that contributed to the

statistical shortfall in black promotions, even though these jobs were

indisputably awarded to the most senior candidate. This argument ignores the

district court’s finding that 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. In such

a system, a denial of promotion for poor attendance is not helpful to Lufkin

where promotions may also have been awarded following non-uniform

interpretation of employee attendance rules.

Finally, Lufkin contends that its “paper bid sheets provided additional

information that plaintiffs could have separated for analysis.”5 To the contrary,

the district court rejected the bid data, which Lufkin prepared for purposes of

5

Specifically, Lufkin argues that the plaintiffs could have used the bid sheets to analyze

separately whether blacks bid for jobs at some lesser rate than whites; whether blacks were

ineligible for promotion more often than whites because promotion required movement to a

higher rated job; whether blacks received fewer promotions because they did not pass a test

or declined promotion; whether blacks were disqualified by the requisite minimum

qualifications for master classifications or salaried positions more often than whites; and

whether Lufkin’s practice of promoting only candidates who sign the bid sheets adversely

impacts blacks.

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this litigation, as unreliable and incomplete; ample evidence supports this

finding.

Lufkin has not suggested any viable way, consistent with the court’s

findings, in which the plaintiffs could have separated the promotion criteria for

review nor has it shown the district court clearly erred in so finding.

3. Statistically Significant Disparate Impact in Promotions

Lufkin maintains that the plaintiffs failed to demonstrate a statistically

significant disparate impact against black employees in promotions. At trial,

plaintiffs provided statistical evidence of discrimination through the report of

their expert, Dr. Richard Drogin. After constructing hypothetical pools of

employees who would be eligible for promotion, Dr. Drogin found that during the

class period, black employees received 127 fewer hourly promotions and 8.85

fewer salaried promotions than should have been expected given their

representation in these pools. Dr. Drogin determined that these differences were

statistically significant at 7.61 standard deviations for hourly promotions and

at 2.02 standard deviations for salaried promotions. In rebuttal, Lufkin offered

the statistical analysis of Dr. Mary Baker. Dr. Baker conducted her calculations

using bid data from Lufkin’s paper bid sheets, and concluded that there was no

statistically significant disparity in the promotion of blacks to hourly or salaried

positions. Faced with this battle of experts, the district judge credited the

testimony of Dr. Drogin over that of Dr. Baker.

Our role in reviewing this decision is limited. An appellate court owes

great deference to the findings of the trial court with respect to duly admitted

expert testimony. Cleveland ex rel. Cleveland v. United States, 457 F.3d 397, 407

(5th Cir. 2006). We review for abuse of discretion the district court's decision to

credit one expert over another. Id. And we reverse a district court's factual

finding that an employment decision was the product of unlawful discrimination

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only if it is clearly erroneous. See Bazemore v. Friday, 478 U.S. 385, 398 (1986);

Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985).

With these standards in mind, we turn to Lufkin’s specific contentions.

First, Lufkin argues that Dr. Drogin’s analysis is legally insufficient because he

did not use “actual” applicant lists and bid sheets to: (1) construct the

availability pools; (2) consider potentially non-discriminatory explanations for

the promotions; and (3) factor in qualifications of potential applicants. Lufkin

is correct, of course, that actual applicant flow data are superior, and should be

used if available. See Anderson v. Douglas & Lomason Co., 26 F.3d 1277, 1286-

87 (5th Cir. 1994). But as discussed above, the 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 data are unreliable, courts often

permit parties to analyze potential applicant flow data. See, e.g., Malave v.

Potter, 320 F.3d 321, 326-27 (2d Cir. 2003); Berger v. Iron Workers Reinforced

Rodmen Local 201, 843 F.2d 1395, 1414 (D.C. Cir. 1988); Hameed v. Iron

Workers Local 396, 637 F.2d 506, 512 n.6 (8th Cir. 1980); Lewis v. Bloomsburg

Mills, Inc., 773 F.2d 561, 568 (4th Cir. 1985). The district court did not err in

allowing plaintiffs to do so in this case.

Lufkin argues that even if the bid sheets were unavailable, Dr. Drogin’s

regression analysis would still be insufficient because his hypothetical applicant

pools do not take into account other minimum qualifications of applicants, such

as education. However, in selecting an appropriate pool and performing

regression analysis in Title VII cases, the Supreme Court has taught that a

plaintiff’s regression analysis need not include “all measurable variables.” See

Bazemore, 478 U.S. at 400 (“[I]t is clear that a regression analysis that includes

less than ‘all measurable variables’ may serve to prove a plaintiff's case.”); see

also Mozee v. Am. Commercial Marine Serv. Co., 940 F.2d 1036, 1045 (7th Cir.

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No. 05-41417

1991). A plaintiff in a Title VII suit need not prove discrimination with scientific

certainty; rather his or her burden is to prove discrimination by a preponderance

of the evidence. Bazemore, 478 U.S. at 400. We are satisfied that Dr. Drogin’s

regression analysis was sufficiently refined for plaintiffs to meet this burden.

Finally, Lufkin argues that a disparity in salaried promotions of only 2.02

standard deviations does not support the district court’s finding of disparate

impact. This court has rejected the contention that a disparity of two or three

standard deviations is categorically insufficient to support an inference of

adverse impact. See Rendon v. AT&T Techs., 883 F.2d 388, 397-98 (5th Cir.

1989).6 And Lufkin has not persuasively explained why a standard deviation of

this magnitude should be accorded reduced significance under the particular

circumstances of this case. We therefore affirm the district court’s finding of a

statistically significant disparate impact in promotions.

4. Class-Wide Back-Pay Formula

Lufkin also challenges the class-wide back-pay award. The district court's

calculation of a back pay award is reviewed for clear error. Shipes v. Trinity

Indus., 987 F.2d 311, 316-17 (5th Cir. 1993).

a. Class-Wide Formula or Individual Hearings

Lufkin complains that the district court erred by using a formula to

calculate the award rather than computing damages on an individual basis. The

complexity of the case is the determining factor in what method the district court

should utilize to formulate a back-pay award. Pettway v. Am. Cast Iron Pipe Co.,

494 F.2d 211, 261 (5th Cir. 1974). Whenever possible, back pay should be

awarded individually and tailored to the actual victims of discrimination.

United States v. U.S. Steel Corp., 520 F.2d 1043, 1055–56 (5th Cir. 1975). If the

6

Other courts have reached the same conclusion. See, e.g., Palmer v. Schultz, 815 F.2d

84, 96–97 (D.C. Cir. 1987); Coleman v. Exxon Chem. Corp., 162 F. Supp. 2d 593, 616 (S.D. Tex.

2001).

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No. 05-41417

class is small, the time period short, or the effect of the discrimination

straightforward, individual determinations of each claimant’s position but for

the discrimination are possible. Pettway, 494 F.2d at 261. If, however, the class

is large, the promotion or hiring practices are ambiguous, or the illegal practices

continued over an extended period of time, a class-wide approach to the measure

of back pay may be necessary. Id.; see also Shipes, 987 F.2d at 318.

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, 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. See Pettway, 494 F.2d at 260. Class members outnumber

promotion vacancies; jobs become available over time; the vacancies involve

different pay rates; and a determination of who was entitled to a vacancy would

have to be made by an evaluation of seniority and ability at that time. Id. (citing

identical factors in approving the formula approach).7 “[W]here employees start

at entry level jobs in a department and progress into a myriad of other positions

and departments on the basis of seniority and ability over an extended period of

time, exact reconstruction of each individual claimant’s work history, as if

discrimination had not occurred, is not only imprecise but impractical.” Id. at

262. An individualized process of determining actual damages for each plaintiff

in this case would result in the “quagmire of hypothetical judgments” that

7

Lufkin argues that the court could readily make these determinations by reviewing

the bid sheet database. This argument ignores the district court’s finding that the bid sheet

database was incomplete and unreliable.

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No. 05-41417

courts should avoid. Id. at 260. Accordingly, the district court neither abused

its discretion nor clearly erred in adopting the formula-driven approach.

b. Specific Methodology

While Lufkin levies various attacks on the district court’s methodology for

determining the back-pay award, these need not all be considered. With the

elimination of a finding of class discrimination in initial assignments to the

Foundry, the damage award must be vacated and remanded.

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 additional wages attributable each year to each promotion and divide

the value among the class members. See United States v. City of Miami,

195 F.3d 1292, 1299-1302 (11th Cir. 1999); Dougherty v. Barry, 869 F.2d 605,

614-15 (D.C. Cir. 1989) (Ginsburg, J.); Hameed v. Iron Workers Local 396,

637 F.2d 506, 520-21 (8th Cir. 1980). The district court should adapt this

method with whatever modifications will both expediently and fairly apportion

the lost wages among class members working in the multiple divisions of Lufkin.

What the court may not do is return to Dr. Drogin’s lost wages calculations

given our disposition of this case. Dr. Drogin estimated annual hourly wage

disparities between black and white workers and black and non-white workers

and made a similar racial comparison for salaried workers. The conclusions in

this section of his report were intended to demonstrate the systemic effects of

racially discriminatory Foundry assignments throughout workers’ careers.

Whether or not such conclusions would be supportable for both hiring and

promotion claims, they do not pertain to the class claim that is now limited to

lost promotions. Dr. Drogin’s figures would come close to compensating each

class member for the full value of lost promotions, where plainly each member

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No. 05-41417

had at best a possibility of progressing up the ladder. The district court is free

to consider any additional evidence that the parties may offer on this issue.

5. Limitation on the Presentation of Evidence and Trial Location

Lufkin argues that given the complexity of the issues involved in this case,

the district court’s imposition of rigid time limits on the presentation of evidence

deprived Lufkin of a fair trial. A district court has broad discretion in managing

its docket and structuring the conduct of a trial. Sims v. ANR Freight Sys., Inc.,

77 F.3d 846, 849 (5th Cir. 1996). It may maintain the pace of the trial by setting

time limits on counsel. Id. Moreover, a judge has special latitude in applying

time limits in a bench trial, since the court often has become familiar with the

case long before trial begins and can readily comprehend the evidence presented.

Id. at 850. Nevertheless, discretion has its limits. See id. at 849; see also Kelly

v. Boeing Petroleum Servs., Inc., 61 F.3d 350, 358 (5th Cir. 1995). “When the

manner of the presentation of information . . . is judicially restricted to the

extent that the information becomes incomprehensible then the essence of the

trial [is] destroyed.” Sims,77 F.3d at 849.

In this case, we do not doubt that it was difficult for Lufkin to mount a

defense against generalized claims of subjective decision making — claims that

implicated all of its divisions and spanned almost a decade — in the mere twenty

hours the district court allowed each side. But even if the strict time limits

amounted to an abuse of discretion, the district court’s error is presumed

harmless until shown to be prejudicial. See Ruiz v. Estelle, 679 F.2d 1115, 1129

(5th Cir. 1982); see also Sims, 77 F.3d at 849-50 (declining to reverse where the

complaining party did not establish there was a reasonable probability that the

outcome of the case would be different upon retrial). Lufkin has not persuaded

us that it suffered reversible prejudice. Lufkin’s related claim of “cumulative

error” fails because it is essentially rendered moot by the pervasive effect of our

appellate ruling.

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No. 05-41417

B. Plaintiffs’ Arguments

1. Disparate Treatment Class Certification

Plaintiffs contend that the district court erred in denying class certification

of their 42 U.S.C. § 1981 disparate-treatment claim seeking declaratory,

injunctive, and equitable back pay.8 See Allison v. Citgo Petroleum Corp.,

151 F.3d 402, 415-16 (5th Cir. 1998) (equitable monetary relief, i.e., back pay,

available in (b)(2) class actions). The district court declined to certify the class

under Rule 23(b)(2) because individual claims for monetary relief would have

predominated, and it concluded that the class representatives would be

“inadequate” if they dropped the class members’ demand for compensatory and

punitive damages in order to protect the “predominance” of nonmonetary claims.

See FED. R. CIV. P. 23(b)(2). This court reviews the district court’s class-

certification decision for abuse of discretion. See Allison, 151 F.3d at 408.

Whether the court applied the correct legal standard in reaching its decision is

reviewed de novo. Id.

The district court did not abuse its discretion. See Pegues v. Miss. State

Employment Serv., 699 F.2d 760, 763 (5th Cir. 1983) (“Implicit in this deferential

standard of review is the recognition of the essential factual nature of the

certification inquiry and the district court’s inherent power to manage and

control pending litigation.”). Motivated by Zachery v. Texaco Exploration &

Production, Inc., 185 F.R.D. 230 (W.D. Tex. 1999), the district court expressed

concern about the plaintiffs’ disavowal of monetary damages. In Zachery, the

putative class representatives also dropped their demand for compensatory and

punitive damages in order to achieve Rule 23(b)(2) certification. Id. at 233. As

a result, class members would not have had the right to opt out of the class and

8

Plaintiffs characterize the district court’s decision as a “dismissal” of their disparate-

treatment claim; however, the district court clarified that “a disparate treatment claim has not

been ‘dismissed’ because a disparate treatment claim was never certified.”

22

No. 05-41417

might be barred from bringing individual damage claims. Id. at 243 (citing

Cooper v. Fed. Reserve Bank of Richmond, 467 U.S. 867 (1984)). Noting this

serious conflict of interest, the court refused to impose upon the class members

the decision by named plaintiffs to forfeit the compensatory and punitive

damages claim. Id. at 244-45. We agree with Zachery and 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. There

was no error, much less abuse of discretion, in this certification denial.

2. Vague Remedial Injunction

Plaintiffs argue that the district court’s remedial injunction lacks

specificity, fails to remedy the discriminatory exercise of subjective decision-

making practices, and includes no provision to ensure Lufkin’s compliance.

Lufkin agrees that the injunction is unenforceable for lack of specificity, but

urges us to reject the additional injunctive relief that plaintiffs now request. We

review a district court’s fashioning of injunctive relief for abuse of discretion.

Peaches Entm’t Corp. v. Entm’t Repertoire Assocs., Inc., 62 F.3d 690, 693 (5th

Cir. 1995).

The injunction at issue is identical to one the district court included in a

preliminary order in January 2005. Lufkin appealed the injunction immediately

after the preliminary order. We dismissed the appeal, stating that “[b]efore this

matter is ripe for appellate review, the district court must identify the specific

steps the defendant must take to implement and comply with the injunction.”

Despite this instruction, the district court included the original injunction

verbatim in the final amended judgment.

The court’s injunction lacks the detail required under Federal Rule of Civil

Procedure 65(d). The injunction includes such vague directives as “cease and

desist all racially biased assignment and promotion practices,” “create and

23

No. 05-41417

implement a program to ensure that black employees receive an equitable

proportion of promotions,” and “take all necessary steps to remedy the effects of

past discrimination.” An order framed in these broad generalities fails to afford

notice to Lufkin of its proscribed or required conduct and is therefore

unenforceable. We vacate and remand for the court to try again.

This task will not be simple. Where, as here, Title VII does not require

plaintiffs to pinpoint the specific practices that caused the discriminatory effect,

it is especially difficult to craft an adequate remedial order that will eliminate

discrimination without hobbling Lufkin’s legitimate promotion policies. We

leave to the district court the task of reviewing 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.

3. Attorneys’ Fees

Plaintiffs contend that the district court abused its discretion by reducing

their fees without conducting lodestar and Johnson analyses or making factual

findings to support the reduction. A district court’s determination of attorneys’

fees is reviewed for abuse of discretion, and the findings of fact supporting the

award are reviewed for clear error. Von Clark v. Butler, 916 F.2d 255, 258 (5th

Cir. 1990).

The first step in determining statutorily authorized attorneys’ fees is to

calculate a “lodestar” amount by multiplying the number of hours reasonably

expended on the litigation by a reasonable hourly rate. Rutherford v. Harris

County, Tex., 197 F.3d 173, 192 (5th Cir. 1999). The court must then consider

whether the lodestar should be adjusted upward or downward, depending on the

circumstances of the case and the factors set forth in Johnson v. Georgia

Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). A district court must

“explain with a reasonable degree of specificity the findings and reasons upon

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No. 05-41417

which the award is based, including an indication of how each of the Johnson

factors was applied.” Von Clark, 916 F.2d at 258.

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 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.

III. CONCLUSION

The district court struggled to complete its work in this wide-ranging,

complex discrimination case. Nevertheless, the sum of the foregoing discussion

leaves much to be reconsidered. First, we vacate the judgment insofar as it

holds Lufkin liable for a claim, unexhausted before the EEOC, that the company

discriminatorily assigned newly hired African Americans to the Foundry

division. Second, we affirm the judgment of Lufkin’s liability to the class for the

discriminatory impact of its subjective promotional policies. Because of this split

decision, we must vacate and remand the damage award for further proceedings

25

No. 05-41417

consistent with the foregoing discussion, as well as the award of injunctive relief

and attorneys’ fees.

AFFIRMED IN PART, REVERSED IN PART, VACATED AND

REMANDED IN PART.

26