Amicus Brief — Furnco Construction Corp. v. Waters

Ir Supreme Court, U, S

FILED

MAR 16 1978

| MICHAEL RODAK, JR., CLERK

No. 77-369

Gu the Supreme Gourt of the Wnited States

Octoser TERM, 1977

Furnco CoNnstTRUCTION CORPORATION, | PETITIONER

v.

WILLIAM WATERS, ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES AND THE EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION AS AMICI CURIAE

WADE H. McCREE, Jr.,

Solicitor General,

DREW 8S. DAYS, III,

Assistant Attorney General,

BRIAN K. LANDSBERG,

ROBERT J. REINSTEIN,

Attorneys,

Department of Juatice,

Washington, D.C. 205380.

ABNER W. SIBAL,

General Counsel,

Equat Rmployment Opportunity Commission,

Washington, D.C. 20506,

INDEX

Interest of the United States and the Equal Employment — page

Opportunity Commission._........----.------------- 1

Brateses onc canccnccecacencescceccccccesccceccccese 2

Summary of argument........--.--.----------.-------- 8

D Sedicdiiddinddoumbincionhnsntimenaatiibnin 12

The judgment of the court of appeals should be affirmed

as to respondents Smith and Samuels but reversed.

as to respondent Nemhard......-.......-------- 12

A. Furnco failed to show a legitimate non-dis-

criminatory reason rebutting the inference

of racial discrimination arising from the

exclusion of all black bricklayers from its

hiring supervisor’s list and the resulting

failure to offer employment to Smith and

Bees <cccnvodbicattinnennccnetnaneny 13

B. Furnco’s practice of hiring only by supervisor's

reference was properly found on this record

to be a legitimate non-discriminatory policy

rebutting the inference of discrimination

raised by its refusal to accept the applica-

tion of Nemhard at the gate_............. 19

Cent acancccndritapuiilttnclindithibecnsnbbeiidetann 26

CITATIONS

Cases :

Albemarle Paper Co. vy. Moody, 422 U.S. 405_..... 12, 24, 25

Batiste v. Furnco, 503 F, 2d 447, certiorari denied, 420

Wath Ceicnddcoducndtintistinbbattisivebnetantiniens 3

Baumgartner v. United States, 322 U.S, 665.......... 19

Baxter v. Savannah Sugar Refining Corp., 495 F. 2d

437, certiorari denied, 419 U.S, 1088............._. 15

Brown v. Gaston Country Dyeing Machine Co., 457 F.

2d 1377, certiorari dénied, 409 U.S. 982... 15

Castaneda y. Partida, 430 U.S, 482.......0..0- . 9,14, 16,18

te)

257—305—77—-1

II

Causey v. Ford Motor Co., 516 F, 2d 416_.....------. 19, 21

Dothard v, Rawlinson, 433 UB, S81....nnnqnvocceees 23, 24

Equal Employment Opportunity Commission v. Detroit

Edison Co., 515 F, 2d 301, vacated and remanded on

other grounds, IO 15

Franks v. Bowman Transportation Co,, 424 U.S, 747... 23, 24

Gates v. Georgia-Pacific Corp., 492 F. 2d 292......... 12, 23

Griggs v. Duke Power Co., 401 U.S, 424........-..... 12, 24

Holthaus v. Compton & Sons, Inc., 514 F, 2d 651.....- 21

International Brotherhood of Teamsters v. United

Piates, GA OB. Gb. .caccccoccesscseccus 9, 14, 20, 21, 24

MeDonald v. Santa Fe Trail Transportation Co., 427

a A ee 10, 16

MeDonnell Douglas Corp. vy. Green, 411 U.S. 702_...-. 7,

11, 19-20, 21, 25

Nashwille Gas Co. v. Satty, No. 75-536, decided Decem-

CERI NES FS Ra Senet Ce rye A 23

Norris v. Alabama, 294 U.S. 587.....-....-..-..-...-. 19

Ostapowies v. Johnson Bronze Co., 541 F. 2d 394... 21

Reed v. Arlington Hotel Co., Inc., 476 F. 2d 721, certio-

rari denied, 414 U.S, 854......................... 15

Robinson v. Lorillard Corp., 444 F, 2d 791, certiorari

denied, 404 U.S. 1006............................ 25

Rowe v. General Motors Corp., 457 F. 2d 348_.......- 15

United States v. Bethlehem Steel Corp., 446 F. 2d 652_. 15, 25

Villiage of Arlington Heights v. Metropolitan Housing

Development Corp., 429 U.S. 262...........-...--. 14

Vulcan Society of the New York City Fire Department,

Ine, v. Civil Service Commission of New York, 490

re OD Goi canctintheteerocinnstanitincinntnbdng tiene ds: 21

Waters v. Wisconsin Steel Works of International Har-

vester Co., 502 F. 24 1300... 11, 21, 23

Yick Wo v. Hopkine, 159 UG, 906... cccccaccncecccecs 14

Statutes :

42 U.S.C. (Supp. V) 2000e-5(f) (1) ...-----------.-. 1

42 U.S.C. (and Supp, V) 2000e-6_...............-.. 2

Miscellaneous :

B, Schlei & P. Grosnnan, Employment Diseriminetion

Law, Ch. 6 (1976)...-..--- w os

TT

Yn the Supreme Gourt of the Vinied Sates

OctToseR TERM, 1977

No. 77-369

Furnco Construction CORPORATION, PETITIONER

Vv.

WirLiaAM WATERS, ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES AND THE EQUAL EMPLOYMENT

- OPPORTUNITY COMMISSION AS AMICI CURIAE

INTEREST OF THE UNITED STATES AND THE EQUAL

EMPLOYMENT OPPORTUNITY COMMISSION .

Federal enforcement of Title VII of the Civil

Rights Act of 1964 has been vested by Congress in the

Equal Employment Opportunity Commission, the De-

partment of Justice and the Civil Service Commission.

The Equal Employment Opportunity Commission has

authority to bring civil actions against private em-

ployers under 42 U.S.C. (Supp. V) 2000e-5(f) (1).

The. Attorney General has enforcement responsibility

when the employer is a state government, govern-

Se

2

mental agency, or political subdivision, 42 U.S.C.

(and Supp. V) 2000e-6. This case raises questions

eoncerning the substantive reach of Titlé VII, the

resolution of which may affect federal administration

and enforcement of the Act.

STATEMENT

Furneco Construction Corporation (“Furnco”) is a

large contractor specializing in steel mill and blast

furnace relining. In August 1971, Furnco entered into

a contract with Interlake, Inc., to reline the larger of

Interlake’s two blast furnaces. Furnco’s superintend-

ent, Joe Dacies, had authority to hire bricklayers for

the Interlake job. The choice of which bricklayers to

hire was committed totally to Dacies’ discretion (Pet.

3; Tr. 668-669, 693, 769). Dacies had worked in the

bricklaying trade since 1946 and had been a job super-

intendent for Furnco since 1965 (Tr. 768). His gen-

eral practice is to hire bricklayers from a list which

he maintains of men he considers competent based

upon their work with him on prior relining jobs

(known in the trade as “firebrick’’ work). Dacies de-

acribed his hiring method as follows (Tr. 769) :

Well, I have a list of bricklayers. There are

various notes, I don’t have a direct file system,

but it is people, prior to even working with

Furnco, I had worked with bricklayers all over

the country, and in this area. I have kept

their telephone numbers, because they were

good mechanics. So when I have a job, I try

to contact them.

‘“Tr,” refers to the transcript of proceedings in the district

court.

3

Dacies “[o]nce in a while” accepts recommendations

from. foremen or other superintendents (Tr. 770),

‘but he does not accept or consider written or job-site

applications from bricklayers because he always has

enough men “on [his] list” to fill the jobs (Tr. 771).

Dacies justifies his practice, which is common in the

firebrick industry (Tr. 35-38),’ primarily as a meas-

ure to.ensure the hiring of competent firebrick workers

(Tr. 71-772).

_ Although he had worked with black bricklayers

on firebrick jobs (Tr. 343-344, 309-360, 773, 873),

Dacies’ list consisted entirely of white persons (Tr.

777-778). * But before the Interlake job started,

Dacies was advised by Furnco’s general manager,

John Wright, that he should try to have at least 16

percent of the work done by competent black brick-

layers (Tr. 675, 777-778). The company adopted this

‘affirmative action” goal in response to a suit by

black bricklayers who had not been hired for a 1969

Furnco job (the Batiste litigation) (Tr. 673-674).* The

* Furnco expects its superintendents to hire bricklayers known

by them and they generally do so (Tr. 669-672). If this method

does not produce enough workers for the job, superintendents are

expected to seek recommendations from other superintendents and

workers (Tr. 671). On several occasions, some of Furnco’s super-

intendents hired bricklayers who applied at the jobsite and also

hired bricklayers who had no prior experience in firebrick work

(Tr. 234-236, 314-315, 324-335, 509-510, 516, 561-563).

* Petitioner characterizes Dacies’ list as “various notes,” but con-

cedes that “the names contained on such notes were of white

bricklayers” (Pet. Br, 34, n, 29).

* See Batiste v. Furnco, 503 F. 2d 447 (C.A.7), certiorari denied,

420 U.S. 928,

4

goal was intended to preclude additional lawsuits and

was limited to Cook County where the company had

been sued. (Tr. 674-675).

Since Wright had stated that Furneo “would like

to have black people on the job” (Tr. 777) and there

were no blacks on Dacies’ list, Dacies obtained refer-

ences of black bricklayers from another Furnco super-

intendent in the area.’ Between August 26 and Sep-

tember 27, 1971, Dacies hired four blacks who had

been recommended to him and 37 whites from his

list (Joint Exh. 1; Tr. 781-786). These 41 bricklayers

were hired on a staggered basis. The first four brick-

layers ‘hired (between August 26 and September 8)

were white, then a black was hired on September 9;

15 bricklayers were hired between September 10 and

18, of whom two were black; and 21 were hired be-

tween September 21 and 27, including one black

(Joint Exh. 1). While this hiring was taking place,

Furnco was in settlement negotiations with the

Batiste plaintiffs (Tr. 677). The negotiations broke

down in late September 1971, and Wright advised

* Dacies testified that he contacted the other superintendent “to

see if he had black bricklayers that could do parts of this job in

the blast furnace work. He said he thought thai he had a few

that could make it. He subsequently gave me some names and

telephone numbers and I called them” (Tr. 778). When asked

whether Interlake was the first job for which Dacies had ever

hired black bricklayers, Dacies said: “I thought maybe it was the

South Works job that I started to run * * * I thought there was

two of them. I don’t recall exactly, because I quit the job subse-

quently, very shortly after” (Tr. 875). Petitioner cites no other

authority for its statement that Dacies hired “several” blacks on

this earlier job (Pet. Br. 8 n. 8, citing Tr. 875).

Dacies to consider the Batiste plaintiffs when hiring

resumed (Tr. 677-678, 778-779). Between October 12

and 27, 1971, Dacies hired 14 more bricklayers, includ-

ing seven blacks involved in the Batiste case (Joint

Exh. 1; Tr. 781-786). Overall on the Interlake job,

55 bricklayers were hired, 44 whites selected from

Dacies’ list and 11 blacks recommended to him by

Wright and another Furneo superintendent. The work

of the black bricklayers constituted 13.3 percent of

the total man-days expended on the job (Joint Exh.

1). :

Willtam Smith, Donald Samuels and Robert Nem-

hard are three black bricklayers who unsuccessfully

sought employment on the Interlake job (Pet. App.

A17). Smith, a bricklayer for 30 years, had worked

on many firebrick jobs; Furneo conceded his quali-

fications (Tr. 311-314). Before the Interlake job,

Smith had worked with Dacies four times—1958, 1962,

1969 (for Furnco) and 1970-1971 (for Furnco) (Tr.

343-346, 359-360). On one of these jobs, Smith super-

vised Dacies (Tr. 785). Smith’s mame did not, howev-

er, appear on Dacies’ list. Samuels was a bricklayer

for 17 years (Tr. 227), and had worked on 6-8 fire-

brick jobs (Tr. 229), including one for Furneo in

1969-1970 on which Dacies also worked (Tr. 234,

874).* Samuels’ name also did not appear on Dacies’

list. Memhard had been a bricklayer for 29 years; he

had worked on one firebrick job for about two years,

but not with Dacies or Furnco (Tr. 66-69, 72).

© Although Smith and Samuels had worked on certain Furnco

jobs with Dacies, they had been hired by other superintendents

(Tr. 235-236, 314-316).

257—303— 77-2

Since neither Smith nor Samuels was included on

Dacies’ list, they were not among the past Furnco

bricklayers whom Dacies called using his normal pro-

cedures. If any black bricklayers had been on Dacies’

list, they would have been called by him and offered

employment (Tr. 777-778). Smith and Samuels as

well as Nemhard each applied for work at the Inter-

lake job by going to the job-site in August 1971, be-

fore construction began (Tr. 73-74, 250, 327). Each

returned to the job-site on a number of occasions dur-

ing construction (Tr. 74-77, 251-259, 328-331). They

applied “at the gate” because this is how they had

been hired on earlier firebrick jobs (Tr. 72, 229-236,

311-316, 327). Nemhard also sent a written appli-

eation to Furnco (Tr. 77-78).

Samuels and Nemhard were never hired on the

Interlake job. Smith’s attempt to obtain work by

applying at the gate was also unsuccessful; but on

October 12, 1971 (Tr. 350), he was hired at Wright’s

suggestion as one of the Batiste plaintiffs. After ex-

hausting their administrative remedies before the

Equal Employment Opportunity Commission, Smith,

Samuels and Nemhard brought suit against Furnco

under Title VII of the 1964 Civil Rights Act. Sam-

uels and Nemhard claimed that they were not hired

because of their race; Smith claimed that he was dis-

criminatorily denied employment until the job was

near completion.

Following an evidentiary hearing, the district court

entered judgment for Furnco (Pet App. C). Focus-

ing solely upon Furnco’s refusal to consider respond-

7

ents’ applications at the job-site and in writing, the

court held that this practice was racially neutral,

was not a pretext for excluding black bricklayers, did

not have a disproportionate effect on black brick-

layers,’ and was justified as a business necessity (Pet.

App. A16-A18).*

The court of appeals reversed (Pet. App. A), hold-

ing that Smith, Samuels and Nemhard had each es-

tablished a prima facie case of discrimination under

McDonnell Douglas Corp. v. Green, 411 U.S. 792, and

that the company’s policy of hiring only bricklayers

known by or recommended to its superintendent was

neither legitimate nor non-discriminatory. The court

viewed the practice as fraught with the potential for

arbitrary and discriminatory decisions especially in

light of the alternative of accepting applications in

writing and checking references, The court held that

because of historical discrimination against blacks,

‘it is prima facie racial discrimination to refuse

to consider the qualifications of a black job seeker

before hiring from an approved list containing

' The district court found that 5.7 percent of the bricklayers in

the relevant labor force were minorities, relying on 1969 data in

the “Chicago plan” which includes the five counties surrounding

Cook County (Pet. App. A16). The court excluded respondents’

evidence that the bricklayers’ local union in Cook County was

13-14 percent black in 1973, and stated that, even if accepted,

this figure would not be probative evidence of racial discrimina-

tion because 13.8 percent of the work at the Interlake job was

performed by blacks (Pet. App. A16 and n. 1).

* Five other black bricklayers joined this lawsuit. The district

court held that their claims were without merit (Pet. App. A16-

A18), and the court of appeals affirmed (Pet. App. A3-A5).

257—303—-77 ——-3

8

only the names of white bricklayers’’ (Pet. App.

A7). Responding to the company’s argument that

there was no racial imbalance on the Interlake job,

the court stated that respondents had no chance to be

considered for most of the jobs, which ‘‘were fore-

ordained to be filled by white bricklayers” from Dacies’

all-white list (Pet. App. A8). The court concluded:

“[V ]is-a-vis the white bricklayers employed in 84-87

percent of the jobs, racial discrimination is established

under the principle of McDonnell Douglas” (Pet. App.

A8-A9).°

SUMMARY OF ARGUMENT

Both the district court and the court of appeals

erred in treating the claims of the three respond-

ents as identical. Although each respondent is a black

bricklayer with proven competence, and each was

unable to secure employment on the Interlake job

by applying at the gate, a crucial factual difference

distinguishes Smith’s and Samuels’ claim from Nem-

hard’s. Smith and Samuels had each worked with

* The court of appeals held that the district court erred in ex-

cluding plaintiffs’ evidence that the labor force was 13-14 percent

black (Pet. App. A9). But the court of appeals concluded that

this error was not prejudicial inasmuch as black representation

on the Interlake job compared favorably with this statistic (ibid.).

The court of appeals noted that it did not rely on any alleged

statistical imbalances in finding that Furnco had discriminated

against the plaintiffs (ibid.), because (Pet. App. A8) :

“Where the percentage of minority members in a workforce is

lower than the group considered, that fact may well indicate the

operation of racial discrimination, Absence of such discrimina-

tion is not proved by the percentage in the workforce being highe~

than the percentage in the group considered.”

Dacies on earlier Furnco jobs but were excluded

from his (all-white) hiring list; Nemhard had never

worked with Dacies or Furnco. An analysis taking

into account this factual difference shows that Smith

and Samuels suffered racial discrimination in viola-

tion of Title VII but Nemhard did not. —

A. Respondents Smith and Samuels established a

prima facie case of racial discrimination based upon

their exclusion from Dacies’ list of qualified brick-

layers with whom he had previous working experi-

ence, Smith and Samuels had both worked with Dacies

on prior Furnco jobs. Both had demonstrated their

competency, and Smith had even supervised Dacies

on a prior job. Nevertheless, neither Smith nor Sam-

uels was on Dacies’ list, which contained only the

names of white persons. Bricklayers whose names ap-

peared on Dacies’ list were called directly to work by

the superintendent. Since Smith’s and Samuels’ names

did not appear, they did not have the same employ-

ment opportunity afforded to similarly situated white

bricklayers who had worked with Dacies, The all-

white composition of Dacies’ hiring list, particularly

when coupled with the totally subjective process by

which it was compiled, is prima facie evidence of in-

tentional discrimination against black bricklayers, in-

eluding Smith and Samuels, who had worked with

Dacies and Furnco. International Brotherhood of

Teamsters v. United States, 431 U.S. 324, 337-342 and

n. 23; Castaneda v. Partida, 430 U.S. 482, 494-499.

Furnco presented no evidence to rebut this prima

facie case. No explanation was offered why Smith and

lak

10

Samuels or other competent black bricklayers were

omitted from the supervisor’s hiring list, and from

the employment opportunity that concededly would

have followed from inclusion on the list. Furnco’s

refusal to take applications at the gate, while perhaps

a legitimate nondiscriminatory policy, is not disposi-

tive of the claims of Smith and Samuels, whose ap-

plications at the gate merely emphasize their avail-

ability to accept the employment opportunities offered

to white bricklayers who had worked with Dacies.

Nor is the individual injury which they suffered as

a result of discrimination negated by Furnco’s hiring

of other black bricklayers through other mechanisms.

Both Smith and Samuels are entitled to Title VII

relief because they presented an unrebutted prima

facie case based upon their discriminatory exclusion

from the supervisor’s list and the resulting failure of

Furnco to *ffer them early employment at the Inter-

job. fee McDonald vy. Santa Fe Trail Trans-

portation Co., 427 U.S. 273, 281-283.

B. The claims of respondent Nemhard have a com-

pletely different factual basis and require a separate

disposition under Title VII. Unlike the claims of

Smith and Samuels, the claim of Nemhard has no

connection with the racial composition of Dacies’

hiring list. Nemhard never worked with Furneco or

Dacies and could not possibly have appeared on

Dacies’ list of persons with whom he had previously

worked. Nemhard’s claim of discrimination is based

upon the alleged illegality of Furnco’s refusal to take

applications at the gate.

11

By demonstrating that he was qualified, applied,

was rejected, and that other bricklayers were hired

in his stead, Nemhard made out a prima facie case of

racial discrimination. McDonnell Douglas Corp. v.

Green, 411 U.S. 792, 802. Furnco proved that it did

not consider any written or job site applications for

the Interlake job, but hired only bricklayers known

by or recommended to its job superintendent. An em-

ployer of highly skilled craftsmen may reasonably

assume that a hiring by reference policy will enhance

the overall quality of its workforce. Firsthand knowl-

edge of an employee’s past performance is a reasonable

measure of future performance, and employers of

skilled craftsmen may understandably weight their

employment decisions in favor of their own knowledge

of the past performance of individuals rather than

depend on the recommendations of strangers. See

Waters v. Wisconsin Steel Works of International

Harvester Co., 502 F. 2d 1309, 1320 (C.A. 7). Here,

in findings that are not clearly erroneous, the district

court found Furnco’s reasons for rejecting applica-

tions at the Interlake job justified by the evidence.

Thus, on this record, Furneo met its burden of rebut-

tal under McDonnell Douglas v. Green, supra.

Our conclusion that Title VII does not as a per

se matter require employers to abandon a “hiring

from within’’ policy, does not mean that such policies

are insulated from Title VII serutiny in their appli-

cation. As with subjective hiring practices generally,

such a policy is unlawful if it is discriminatorily ap-

12

plied or has an exclusionary effect on minorities. See

Gates v. Georgia-Pacific Co., 492 F. 2d 292 (C.A. 9).

Furnco’s hiring policy was not discriminatorily ap-

plied against Nemhard because he had never worked

for Dacies or Furneo and because no outside appli-

cant, of any race, was hired on the Interlake job.

Similarly, Nemhard failed to prove that the rejection

of outside applicants was a pretext for racial dis-

crimination. Blacks were hired on the Interlake job

in a proportion at least comparable to their apparent

representation in the labor force. Of course, even if

applied neutrally, a “hiring from within” policy would

be vulnerable under Title VII if it had an exelu-

sionary effect on minorities. See Griggs v. Duke Power

Co., 401 U.S. 424, 429-431. However, such a challenge

must be premised on a showing that the practice did

exclude minorities disproportionately. See Albemarle

Paper Co. v. Moody, 422 U.S. 405, 425. Minorities

were not shown to have been disproportionately ex-

eluded from the Interlake job. Since Nemhard has

not shown that Furneo’s hiring practices were inten-

tionally discriminatory against him or had an ex-

clusionary effect on minorities as a class, his rejec-

tion was not shown to be the product of unlawful

discrimination.

ARGUMENT

THE JUDGMENT OF THE COURT OF APPEALS SHOULD BE

AFFIRMED AS TO RESPONDENTS SMITH AND SAMUELS

BUT REVERSED AS TO RESPONDENT NEMHARD

All three respondents are blacks who have worked

as bricklayers from between 17 and 30 years, who have

13

prior experience in firebrick work, and who took every

reasonable step to make known their desire to work

at Furnco’s Interlake job. Although the applications

of all three were rejected, the district court and the

court of appeals were in error in treating their claims

as identical. The respondents are not similarly situ-

ated. Smith and Samuels had worked with Dacies on

Furneo jobs, but were omitted from his list of com-

petent bricklayers with whom he had previously

worked and thereby denied otherwise virtually certain

employment on the Interlake job. Nemhard never

worked for a Furnco supervisor and his sole claim is

that the refusal to take his application at the gate was

the result of discrimination.

A. FURNCO FAILED TO SHOW A LEGITIMATE NON-DISCRIMINATORY

REASON REBUTTING THE INFERENCE OF RACIAL DISCRIMINATION

ARISING FROM THE EXCLUSION OF ALL BLACK BRICKLAYERS FROM

ITS HIRING SUPERVISOR'S LIST AND THE RESULTING FAILURE TO

OFFER EMPLOYMENT TO SMITH AND SAMUELS

Respondents Smith and Samuels established a prima

facie case of discrimination based upon their exclu-

sion from Dacies’ list of qualified bricklayers with

whom he had previous working experience. Smith had

been a bricklayer for 30 years, while Samuels had 17

years’ experience. Both had extensive experience in

firebrick work, Both had worked on prior Furnco jobs

with Dacies, and Smith had even supervised Dacies.

Both bricklayers had therefore demonstrated their

competence in service with the Furnco supervisor

charged with the hiring for the Interlake job.

14

Bricklayers who had worked competently on earlier

firebrick jobs with Furnco’s superintendents did not

have to apply for work when a new job began. Under

the company’s hiring policy, they were called directly

by the superintendent, who maintained a hiring list

for that purpose. On the Interlake job, the list was

compiled and utilized by Dacies, who determined ac-

cording to his own personal judgment which of his

prior employees would be called to work. Such a hir-

ing system, controlled by the unreviewable and sub-

jective judgment of one man, is susceptible of dis-

eriminatory abuse. Castaneda vy. Partida, 430 U.S.

482, 497. The potential for discriminatory application

has been realized in this case; for although Dacies

had concededly worked with Smith and Samuels as

well as other black bricklayers in the past, his hiring

list consisted only of white persons.

The all-white composition of Dacies’ hiring list,

particularly when coupled with the totally subjec-

tive process by which it was compiled, is prima facie

evidence of intentional discrimination against black

bricklayers, including Smith and Samuels, who had

worked with Dacies and Furnco. International Broth-

erhood of Teamsters v. United States, 431 U.S. 324,

337-342 and n. 23; Castaneda vy. Partida, supra, 430

U.S. at 495-499. See Village of Arlington Heights v.

Metropolitan Housing Development Corp., 429 U.S.

252, 266; Yick Wo v. Hopkins, 118 U.S. 356, 369-

15

374." Furneo presented no evidence to rebut this

prima facie case. Although Dacies testified, he did

not attempt to explain why. his hiring list was all-

white or why Smith and Samuels were omitted from

¥.*

It is undisputed that Dacies had worked with black .

bricklayers on firebrick jobs; nd,claim has been made,

let alone proven, by Dacies o1\ Furneo that every

black bricklayer with whom Dacljes worked was less

competent than the whites on his \list. Indeed, given

the conceded qualifications of S (who actually

*° The courts of appeals have repeatedly

subjective evaluations of supervisors are not

under Title VII, they provide “a ready mechani

nation.” Rowe v. General Motors Corp., 457 F. 2d

5). See also, e.g., Reed v. Arlington Hotel Co., Ind, 476 F, 2d

signidcant racial prraberAe there is prima roy evi

Brown v. Gaston County Dyeing Machine Co., 457 F.2d 137, 382

(C.A, 4), certiorari denied, 409 U.S. 982; United States v. Beth-

lehem Steel Corp., 446 F, 2d 652, 655 (C.A. 2); Equal E'mplo,

ment Opportunity Commission vy, Detroit Edison Co., 515 F, 2d

301, 313 (C.A. 6), vacated and remanded on other grounds, 431

U.S. 951; Bawter v. Savannah Sugar Refining Corp., 495 F. 2d 437

(C.A. 5), certiorari denied, 419 U.S. 1033. See generally B. Schlei &

P. Grossman, Employment Discrimination Law, Ch. 6 (1976).

"' It appears from Dacies’ testimony that the exclusion of blacks

from his hiring list was his standard procedure, Before the In-

terlake job, Dacies had called at most two black bricklayers for

work during his entire career as a firebrick superintendent (see

n. 5, supra).

16

supervised Dacies on one job) and Samuels, such a

claim would have been frivolous. The burden was on

Furnco “to dispel the inference of intentional. dis-

crimination” (Castaneda v. Partida, supra, 430 U.S.

at 497-498), and that burden was not met.

Thus, Smith’s and Samuels’ claims do not turn on

the legitimacy of Furnco’s refusal to accept appli-

eations at the gate. While Smith and Samuels. did

appear at the Interlake job site and did request em-

ployment, their efforts at the gate are merely evidence

of their availability to accept the employment oppor-

tunities offered to competent white bricklayers who

worked with Dacies, but withheld from similarly

situated black bricklayers. Both black bricklayers

were similarly situated to white bricklayers who had

worked with Dacies and Furnco and who did not have

to apply for the Interlake job but were called di-

rectly. If Dacies had not discriminated on racial

grounds in compiling the hiring list, that list would

have contained the names of competent black brick-

layers including Smith and Samuels and, as Dacies

acknowledged, those black bricklayers would have

been hired for the Interlake job. Smith and Samuels

have therefore made out an unrebutted prima facie

case that they were denied the opportunity to be hired

from Dacies’ list because of their race. See McDonald

v. Santa Fe Trail Transportation Co., 427 U.S. 273,

281-283.

Furneo is not exonerated from liability to Smith

and Samuels because its overall hiring of black brick-

layers on the Interlake job compares favorably with

17

the available labor pool. This is not a class action in

which it is contended that blacks as a group were

treated worse than whites as a group. The question

is whether two blacks, as individuals, were treated

differently from similarly situated whites because of

their race. Smith and “Samuels were denied the op-

portunity to be hired at the beginning of the Inter-

lake job because of Dacies’ discrimination against

black bricklayers who had worked with him and

Furneo. This overt discrimination suffered by two

individuals did not disappear simply because Dacies,

having been instructed to hire some blacks on the

Interlake job, obtained the names of other black

bricklayers and hired them.

Our conclusion that Smith and Samuels are the

victims of purposeful discrimination is not impaired

by the district court’s finding that Furnco’s hiring

practices at the Interlake job were racially neutral

and were not applied pretextually against black brick-

layers (Pet. App. A18). The district court disposed

of the claims of all three respondents in a unitary

fashion without regard to the factual differences that

distinguished their claims or their differing posture

with respect to Furnco’s hiring processes. Thus the

district court held that Smith’s and Samuels’ claims

were sufficiently answered by the legitimate policy of

refusing to take applications at the gate even though

similarly situated white bricklayers were hired with-

out any application whatsoever (Pet. App. A17—A18).

The district court overlooked entirely the all-white

composition of Dacies’ hiring list and did not con-

18

sider Smith’s and Samuels’ right to be treated the

same as white bricklayers who had worked with

Dacies and Furnco,

Although the error of both the district court and

the court of appeals in failing to analyze the Title

VII claims of Smith and Samuels in light of their

special posture with respect to Dacies’ all-white hir-

ing list may in part be attributable to respondents’

emphasis on the alleged illegality of Furnco’s prac-

tice of rejecting applications “at the gate,’ we do not

believe that this is an appropriate case for a remand.

Respondents did argue in the courts below that Dacies

discriminatorily excluded blacks such as Smith and

Samuels from his list of past qualified employees.”

This issue was fully litigated and all of the facts

necessary for an appropriate determination have been

elicited.” We therefore believe that the question

should be decided by this Court. Whether there was

purposeful discrimination against these respondents

is a question of ultimate fact to be determined by an

evaluation of evidentiary facts according to govern-

ing legal standards. See, e.g., Castaneda v. Partida,

'* See Brief for Plaintiffs-Appellants 21-26; Reply Brief for

Plaintiffs-Appellants 5 n. 5.

'* Dacies testified that his hiring list was all white (see p- 3,

supra). He did not offer any legitimate explanation for this fact

and conceded that he had worked with competent black brick-

layers. Petitioner has never suggested that the white bricklayers

on Dacies’ list were more competent than every black bricklayer

with whom he worked. This is not surprising in light of Smith’s

qualifications (see p. 5, supra). If there is any plausible non-

racial hypothesis for the total exclusion of blacks from the list,

Furnco has not advanced it.

19

supra; Norris v. Alabama, 294 U.S. 587; Causey V.

Ford Motor Co., 516 F. 2d 416 (C.A. 5). Cf. Baum-

gartner v. United States, 322 U.S. 665, 670-671. The

evidentiary facts relating to Smith’s and Samuels’

claims have been found and are not disputed on this

record; the conclusion of disparate treatment based

on race follows as a matter of law.

B. FURNCO’S PRACTICE OF HIRING ONLY BY SUPERVISOR'S REFERENCE

WAS PROPERLY FOUND ON THIS RECORD TO BE A LEGITIMATE NON-

DISCRIMINATORY POLICY REBUTTING THE INFERENCE OF DISCRIMI-

NATION RAISED BY ITS REFUSAL TO ACCEPT THE APPLICATION OF

NEMHARD AT THE GATE

Unlike the claims of Smith and Samuels, the claim

of Nemhard is unrelated to the racial composition of

Dacies’ hiring list. Because Nemhard never worked

with Furneco or with Dacies, Nemhard’s name could

not have appeared on Dacies’ list of bricklayers who

had demonstrated their competence in prior work with

him. As a result, Nemhard’s claim was wholly de-

pendent upon the alleged illegality of refusing to

take the applications of either white or black brick-

layers “at the gate.’’ While we believe that Nemhard’s

claim of rejection at the gate established a prima

facte ease of discrimination, we have concluded that

Furneo successfully rebutted the inference of racial

discrimination with respect to Nemhard.

Nemhard established a prima facie case of discrim-

ination within the meaning of McDonnell Douglas

* There is no evidence in the record that Nemhard had at-

tempted to secure employment with Dacies or Furnco before he

applied for the Interlake job.

Corp. v. Green, 411 U.S. 792, 802, by demonstrat-

ing that he was a qualified firebrick worker, had

applied at the Interlake job for employment, was

rejected, and other persons of similar qualifica-

tions in firebrick work were hired instead. In a

private, non-class action such as this, proof that a

qualified minority applicant was denied employment

when there were available vacancies will, absent ex-

planation from the employer, create an inference that

race was a motivating factor in the rejection. McDon-

nell Douglas, supra, 411 U.S. at 802. Furneo’s re-

fusal to hire Nemhard was demonstrably not based

on a laek of qualifications or of vacancies. See In-

ternational Brotherhood of Teamsters v. United

States, 431 U.S. 324, 358 n. 44. Nemhard had made

his threshold prima facie showing as petitioner ac-

knowledges (Pet. Br. 17), and the burden there-

fore shifted to Furnco “to articulate some legitimate,

nondiscriminatory reason for [Nemhard’s] rejection.”’

McDonnell Douglas Corp. v. Green, supra, 411 U.S.

at 802.

In response, Furneo proved that it did not consider

any written or job-site applications for the Interlake

job but hired instead only bricklayers known by or

recommended to its job superintendent. An employer

of highly skilled craftsmen may reasonably assume

that a hiring by reference policy will enhance the

overall quality of its workforce. Firsthand knowledge

of an employee’s past performance is a reasonable, if

not infallible, measure of future performance; and

such employers may understandably weight their deci-

Sions in favor of their own knowledge of past per-

21

formance rather than depend on the recommendations

of strangers. A policy which favors prior employees

over new applicants is not per se unlawful under ‘Title

VII. See Waters v. Wisconsin Steel Works of Inter-

national Harvester Co., 502 F. 2d 1309, 1320 (C.A. 7)

Here, the district court found that such factors as the

special skills required at the Interlake job, the speed

at which the job was to be done, and the cost to Furnco

if the work was faultily completed, prevented Furnco

from hiring persons not known by it to be “experi-

enced and highly qualified” or from engaging in “on-

the-job training” (Pet. App. Al4-A15). While these

findings may be subject to dispute, they are not clearly

erroneous. Thus, on the record here, Furnco met its

burden of rebuttal under McDonnell Douglas.” The

18 McDonnell Douglas does not identify the precise nature of

the burden which is shifted to the employer to rebut the individ-

ual’s prima facie case. We believe that the employer has the

burden of showing both what its reasons are for rejecting the

application and that those reasons are legitimate, i.c., that they

grow out of the needs of its business, The employer, in our view,

bears the burden of persuasion on both issues. Here, the com-

plainant has proven that the two most common legitimate rea-

sons for rejection (lack of vacancies and qualifications) do not

apply. See 7eamsters, supra, 431 U.S. at 358 n. 44. If there is a

legitimate reason, it rests within the employer’s knowledge; and

the employer also possesses the evidence to support that reason

factually. Cf. id. at 359 n. 45. The courts of appeals have cor-

rectly construed McDonnell Douglas as placing on the employer

the burden of production and the risk of non-persuasion on the

articulated reason for rejection. See, ¢.g., Ostapowicz v. Johnson

Bronze Co., 541 F. 2d 394, 399 (C.A. 3); Causey v. Ford Motor

Co., 516 F. 2d 416, 422-423 (C.A. 5); Holthaus v. Compton &

Sons, Ine., 514 F. 24 651 (C.A. 8); Vulcan Society of the New

York City Fire Department, Inc. y. Civil Service Commission of

New York, 490 F. 2d 387, 393 (C.A. 2).

22

court of appeals therefore erred in holding that

Furneo did not establish a legitimate reason, unrelated

to race, to justify Nemhard’s rejection.

Furneo’s facially legitimate policy is not immune

from scrutiny in its application. The facially neu-

tral policy of hiring only by supervisor’s reference

would be unlawful if applied with racially discrimi-

natory purpose or effect. But the facts of this. case

do not support the apparent view of the court of ap-

peals that Furnco’s policy of not considering written

or job-site applications was applied discriminatorily

against black applicants. No applicant “at the gate,”

white or black, was considered for employment at

Interlake. The refusal to accept applications does not

appear to have been motivated by a desire to maintain

an all-white work force. Indeed, hiring was not re-

stricted to the all-white list; Dacies also hired black

bricklayers who were recommended to him, and black

representation on the job compares favorably with that

in the apparently available labor force.** Respondents

** The court of appeals correctly held that the district court

erred in excluding respondents’ evidence concerning the racial

composition of the available labor force but that this error was

not prejudicial, Blacks were not under-represented on the Inter-

lake job whether the available labor force is 5.7 percent black, as

contended by petitioner, vr 13-14 percent black, as contended by

respondents. As we have noted (supra, p. 4), three blacks were

among the twenty bricklayers hired during the first three weeks of

the Interlake job. We would view Nemhard’s claims very differ-

ently if Dacies had filled all of the early positions with whites,

while at the same time rejecting new applicants, and then hired

blacks ouly during the tail-end portion of the job. Under those cir-

cumstances, it could be concluded that Furnco’s policy of rejecting

applicants was designed to reserve the best long-term jobs for

whites.

23

did not prove that the company placed an artificial

ceiling on the number of blacks it would hire. Re-

spondents thus did not show that Furnco’s policy of

rejecting new applications was a pretext for racial

discrimination against black applicants without prior

experience. Thus, while experienced black bricklayers

like Smith and Samuels were the victims of disparate

treatment based upon race, black applicants without

prior experience with Dacies or Furnco were not.

See Waters v. Wisconsin Steel Works of Interna-

national Harvester Co., 502 F. 2d 1309, 1321-1322

(C.A. 7).

Irrespective of motivation, a policy of “hiring from

within” may lead to discriminatory results if minori-

ties are under-represented in a company or indus

See Gates v. Georgia-Pacific Corp., 492 F. 2d 292

(C.A. 9). The use of a policy that has a disproportion-

ately adverse impact on minorities or which per-

petuates the effects of past discrimination violates

Title VII unless it is justified by business necessity.”

a Congress “intended to prohibit all practices in whatever form

which create inequality in employment opportunity due to dis-

crimination on the basis of race, religion, sex, or national origin.”

Franks vy. Bowman Transportation Co., 424 U.S. 747, 763. See

also, e.g., Nashville Gas Co. v. Satty, No. 75-536, decided Decem-

ber 6, 1977; Dothard v. Rawlinson, 433, U.S. 321, 328-329.

18 In contrast, an individual who suffers purposeful discrimina-

tion need not prove that other members of the group to which

he belongs were also the victims of discrimination. Of course, one

method of establishing purposeful discrimination against individ-

uals is by proving that the employer engaged in a pattern of

(Continued)

24

But this is not an industry-wide lawsuit, and re-

spondents did not challenge Furnco’s hiring policy

at any job except Interlake. On that job, there

has been no showing that Furnco’s policy of re-

jecting applications resulted in the disproportionate

exclusion of black bricklayers or perpetuated the ef-

feets of past discrimination.”* Nemhard did not demon-

strate, for example, that at the time of the Interlake

job, unemployed black bricklayers constituted sub-

stantially more than 13 percent of the pool of com-

petent bricklayers available to work for Furneo. The

record therefore does not disclose that the facially

neutral employment practice of hiring only by super-

visor’s reference in fact had any disparate effect on

a group of which Nemhard is a member. See Albe-

marle Paper Co. v. Moody, 422 U.S. 405, 425; Dothard

Vv. Rawlinson, 433, U.S. 321, 328-331.”

(Centinued)

class-wide discrimination, Such proof creates a rebuttable pre-

sumption that individual members of the class were in fact vic-

tims of discrimination, Teamsters, supra, 431 U.S. at 358-362 ;

Franks v. Bowman Transportation Co., supra, 424 U.S. at 772.

"* The potential impact of a reference system of hiring in per-

petuating past discrimination is emphasized by the experience of

Nicholas Popovic, the president of the bricklayers’ local which

covers Cook County, who worked in the bricklaying industry for

35 years before becoming a union official (Tr. 22-25). Mr. Popovic

was & supervisor on many jobs, and his standard hiring practice

was to call directly experienced firebrick workers from a list which

— (Tr. 47-49). Mr. Popovic never worked with a

cklayer on a firebrick job either as a supervi

Bra (Tr. 57). ' are

*° See J'eamsters, supra, 431 U.S. at 348-350; Gri

US. at 420-481. a

In the absence of proof of discriminatory treatment

or effect, the availability of alternative hiring .prac-

tices. does not render Furnco’s policy of rejecting

applicants at the gate unlawful. The court of appeals

concluded that a policy of accepting written applica-

tions and checking recommendations is both ‘‘reason-

able” ‘and “‘feasible” (Pet. App. A6), a conelusion

that would be highly relevant, and perhaps disposi-

tive, if Furnco had the burden of justifying its ex-

isting practice as a business necessity. See, e.g., United

States v. Bethlehem Steel Corp., 446 F. 2d 652, 662

(C.A. 2); Robinson v. Lorillard Corp., 444 F. 2d 791,

799-800 (C.A. 4), certiorari denied, 404 U.S. 1006.

But the business necessity defense arises only upon

a showing that the challenged practice has an adverse

impact on racial or other prohibited grounds; that

showing has not been made.” Furnco’s only burden

was to demonstrate that the alternative it chose was

legitimate and nondiscriminatory. McDonnell Douglas

v. Green, supra, 411 U.S. at 802. That burden was

met, and in these circumstances, the availability of a

feasible alternative did not require, or in itself per-

mit, the district court to find a Title VII violation.”

"1 For this reason, it is unnecessary to determine whether the

district court erred in concluding that Furnco’s practices “were

justified as a business necessity in that they were necessary for

the safe and efficient operation of Furnco’s business” (Pet. App.

A20-A21).

2 Respondents did not show that the alternative practice advo-

cated by the court of appeals would have resulted in a greater

representation of blacks on the Interlake job—a showing which

might indicate that Furnco’s practice of rejecting applicants was

a pretext for discrimination. See Albemarle Paper Co. v. Moody,

supra, 422 U.S, at 425. -

26

CONCLUSION

The judgment of the court of appeals should be

affirmed as to respondents Smith and Samuels and

reversed as to respondent Nemhard.

Respectfully submitted.

Wave H. McCrer, Jr.,

Solicitor General.

Drew S. Days, ITI,

Assistant Attorney General.

Brian K. Lanpssero,

Rosert J. REINSTEIN,

Attorneys.

ABNER W. Srmat,

General Counsel,

Equal Employment Opportunity

Commission.

Marcu 1978.

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