Petition — Chamber of Commerce of the United States v. Legal Aid Society of Alameda County
Supreme Court brief1980
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fa Ost, U.
EIELED
MAR 14 1980
Supreme Court of the Wnited States
OCTOBER TERM 1979
THE CHAMBER OF COMMERCE OF THE UNITED STATES OF
AMERICA, for and on behalf of its affected members,
Petitioners,
VS.
LEGAL AID SOCIETY OF ALAMEDA COUNTY, et. al.,
Respondents.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GERARD C. SMETANA,
Suite 1400
33 North Dearborn Street
Chicago, Illinois 60602
LAURENCE B. KRAUS, WiILLiaAM H. DuRoss, III
General Counsel Suite 200
CHAMBER OF COMMERCE OF 1919 Pennsylvania Avenue, N.W.
THE UNITED STATES OF Washington, D.C. 20006
AMERICA,
1615 H. Street, N.W., Attorneys for Petitioner.
Washington, D.C. 20006,
Of Counsel:
LAW OFFICES OF
GERARD C. SMETANA
Suite 1400
33 North Dearborn Street
Chicago, Illinois 60602
Suite 200
1919 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
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TABLE OF CONTENTS
Orders and Opinions Below .00............cccccccccccsscsccesescecceceees
Nc ccccosccucausseces
Ne a ccc cncseccnscensecee
Statutes, Orders and Regulations Involved .................0.0..
Cc cscccccesecsees
Ba | Re RI icon ccc conscsccseccseccccceececsee
I]. The Orders and Opinions Below..................0000-
A. The Order and Decree of the District Court........
B. The Decision of the Court of Appeals .................
Reasons for Granting the WFit.............ccccccccsccccesceececeeceeee
TR EE OTR Le
I]. The Questions Presented are of Paramount
ee to Federal Non-Discrimination Po-
et ai aie et i shila lek biivngsekcydeanenvescnsssctcescees
II]. The Ninth Circuit’s Standard for Imposing
Race Conscious Remedies Conflicts with Deci-
a Tn venaceeace
ES SSeS SUES ei
PAORGINGS 5.0 ..60<...00..:.. 66 OSS SEA:
CITATIONS
CASES
Arlington Heights v. Metropolitan Hous. Corp., 429 US.
eg Bac Ce AT SS. a ee
Associated Gen. Contractors of Mass. v. Altshuler, 490
F2d 9 (Ist Cir. 1973), cert. denied, 416 U.S. 957
i EE SREIE Wo) Sea 7 ESE Se
Bd. of Trustees v. Sweeny, 439 U.S. 24 (1978) oocccccccccccs.
Contractors Ass'n of Eastern Pa. v. Sec. of Labor, 442
F2d 159 (3rd Cir.) cert. denied, 404 U.S. 854 (1971).
EEOC v. Local 638, Sheet Metal Wkrs., 532 F2d 821
sc ceceeaneonnes
Farmer v. Phila. Elec. Co. 329 F2d 3 (3rd Cir. 1964) .....
Franks v. Bowman Transp. Co., 424 U.S. 747 (1976)...
Furnco Constr. Corp. v. Waters, 438 U.S. 567 (1978)...
ser School Dist. v. United States, 433 U.S. 299
EEE EEE TES Ry
Kirkland v. New York State Dept. of Correctional
Services, 520 F2d 420 (2d Cir. 1975) .o.......cccccccscccscees
McDonald v. Santa Fe Transp. Co., 427 U.S. 273
Ree RESTS 905 Ee S/S I eel
Page
]
2
2
3
4
4
5
5
7
7
7
8
13
17
Page
15
1]
14-15
1]
15
9
11,13
14
14
15
8,11
i i i
ll
Page
McDonnell Douglas Corp. v. Green, 411 U.S. 792
SMEAR tists incacadiachsat ibis t) sonacwstccreisieketieelRlinaansnsnebaricinaenis 14
NLRB vy. Jones & Laughlin Steel Corp., 301 U.S. 1
I Raa ic cleellirs iiss cons vaniasitaiesculadnsnidcsoateiaeonccebbiiboneisnigites 15
Personnel Administrator of Mass. v. Feeney, 442 US.
2 BUREAU, UOC TRIER Pe Inter sce CPC Pe eae 15
Regents of the University of Cal. v. Bakke, 438 U.S. 265
I etal ce cientrckin ts eatsncsicapeilin Mimcdtlicy rispsainscwechacinnidcees 10, 11
Steelworkers v. Weber, 443 U.S. 193 (1979)... 8,13
Teamsters v. United States, 431 U.S. 324 (1977) wc. 11,14
Weber v. Kaiser Aluminum & Chem. Corp., 563 F2d 216
(Sth Cir. 1977), revs'd on other grounds, 443 U.S. 193
Ca Aiea chalatd nara rected dachiavaide actidaninnsaubictnbattiodice 12
Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579
5 gg PARE ENE RE BS CRAY EME Cee sores aM A AS PERNT 9
STATUTES AND ORDERS
Fifth Amendment to United States Constitution.............. 8
Civil Rights Act of 1964, as amended (78 Stat. 241, 86
Stat. 103, 42 U.S.C. 22 2000e-2000e 15)
I oases Les ete ios laiisasinws cna voce yiedioueshs 10
a ean clips ecenadcomness 15
I cea ds eos edeweiduieoecsane 3
a dc cuibtataialinedoen 3
NE I AL 05... ic ccs databboktvacasionlaniieamngseneeusiesoses passim
a 15
Civil) Rights Act of 1866 (14 Stat. 27, 42 U.S.C.
§§ 1981, 1983)
I NI ooh ci cae a case cee binbbacnwenadbaws 15
I oe ico csnctasantsenectiolnacsisanenineakucune 15
Executive Order 11246
ha ee ee 10
ESS ET ag Re ees: 10
Revised Order No. 4
I I a eae caacptdedsoeinknsevnucthiiabeate 10-11
Eg ete ae CO ll
National Labor Relations Act, as amended (61 Stat.
136, 73 Stat. 419, 29 U.S.C. §§ 151 ef seq)
I aca caus 15
te Nt. Sa Vie eR 1. 2
iil
MISCELLANEOUS
118 Cong. Rec. S. 705 (remarks of Sen. Williams) .........
118 Cong. Rec. S. 693-94 (remarks of Sen. Javits) .........
5 U.S. Comm’n. on Civil Rights, The Federal Civil
Rights Enforcement Effort, 1974: To Eliminate Em-
ployment Discrimination (1975) .......ccccccccceccccceececeeeeees
Fuller, The Forms and Limits of Adjudication, 92 Harv.
hn. NE BOD POD Drapuamnbpacsc tot iii Rocks
Gellhorn, Adverse Publicity by Administrative
Agencies, 86 Harv. L. Rev. 1380 (1973) oo...
Goldstein & Smith, The Estimated Impact of the
Antidiscrimination Program Aimed at Federal Con-
tractors, 29 Indus. Lab. Rel. Rev. 523 (1976) .............
Comment, 60 Iowa L. Rev. 693 (1975) o.occccccccccccececececeees
Comment, 7 Tex. Tech. L. Rev. 671 (1976) ...ccccccccccceceees
Comment, How Far Can Affirmative Action Go Before
It Becomes Reverse Discrimination?, 26 Cath.
A) Rams ee OTE i ks
Note, Title VII and Preferential Treatment: A Response
to EEOC Affirmative Action Guidelines, 67 Geo. L. J.
855 (1979)
SOCHOOSHOSOOOSOSOSO HSE OOOOSESOSCOOOOSESOSLEESOLOEOOSECOEOESECCOOSOOSCSSS
No. __
IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM 1979
THE CHAMBER OF COMMERCE OF THE UNITED STATES OF
AMERICA, for and on behalf of its affected members.
Petitioners,
vs.
LEGAL AID SOCIETY OF ALAMEDA COUNTY. et. al.,
Respondents.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
The Chamber of Commerce of the United States of
America, on behalf of its affected members (‘the Chamber”),
hereby petitions for a writ of certiorari to review the judgment
of the United States Court of Appeals for the Ninth Circuit,
affirming the decree of United States District Court for the
Northern District of California.
ORDERS AND OPINIONS BELOW
The opinion and judgment of the Court of Appeals (Pet.
App.I)' is reported at 608 F.2d 1319. The decision of the
'Pet.App.” refers to the Appendix attached to the instant
petition.
2
District Court (Pet.App.II) granting Legal Aid Society of
Alameda County et al’s motion for partial summary judgment
is reported at 381 F.Supp. 125. The order of the District Court
is unreported. (It is reproduced in full in Pet.App.III). See
also reference to District Court “Decree” in Opinion of Court of
Appeals at 608 F.2d at 1339 (fn. 39), 1340 (fn. 40 and 41),
(Pet.App. A-32—A-34).
JURISDICTION
The judgment of the Court of Appeals (Pet.App. A-103)
was entered on December 4, 1979. The jurisdiction of this
Court is invoked under 28 U.S.C. § 1254(1).
QUESTIONS PRESENTED
1. Whether racial hiring quotas can be imposed upon
government contractors in the enforcement of regulations
promulgated by the Department of Labor under color of
Executive Order 11246 to achieve a designated ratio of minority
employees absent a prior finding of racial discrimination.
2. Whether regulations promulgated by the Department of
Labor as applied by the courts below which in fact impose
minority hiring quotas and create a racial preference violate the
Fifth Amendment to the United States Constitution, Title VII of
the 1964 Civil Rights Act and are contrary to Executive Order
11246.
3. Whether the Office of Federal Contract Compliance
Programs in applying its mandate of affirmative action in
employment is necessarily bound by federal equal employment
policy set forth in Title VII of the 1964 Civil Rights Act.
4. Whether underutilization can properly be predicated
upon work force disparities mirrored by general population
percentages without regard to relevent job skills and their
availability in the labor market.
3
STATUTE, ORDERS AND REGULATIONS INVOLVED
The relevant provisions of Section 703 of Title VII of the
1964 Civil Rights Act, as amended (78 Stat. 241, 86 Stat. 103,
42 U.S.C. §§ 2000e-2000e-15) are as follows:
(a) It shall be unlawful employment practice for an
employer—
(1) to fail or refuse to hire or to discharge any
individual, or otherwise to discriminate against any
individual with respect to his compensation, terms,
conditions, or privilege of employment, because of
such individual’s race, color, religion, sex or national
origin; ¢
(2) to limit, segregate, or classify his employees or
applicants for employment in any way which would
deprive or tend to deprive any individual of employ-
ment opportunities or otherwise adversely affect his
Statu: as an employee, because of such individual’s
race, color, religion, sex, or national origin.
42 U.S.C. § 2000e-2(a).
(d) It shall be an unlawful employment practice
for an employer, labor organization, or joint labor-
management committee controlling apprenticeship or
other training or retraining, including on-the-job train-
ing programs to discriminate against any individual
because of his race, color, religion, sex, or national
origin in admission to, or employment in, any pro-
gram established to provide apprenticeship or other
training.
42 U.S.C. § 2000e-2(d).
(j) Nothing contained in this subchapter shall be
interpreted to require any employer... labor organi-
zation, or joint labor management committee subject
to this subchapter to grant preferential treatment to
any individual to or any group because of their
race, ... OM account of an imbalance which may exist
with respect to the total number or percentage of
4
persons of any race ...in comparison with the total
number or percentage of persons of such race, ... in
any community, state, section or other area, or in the
available work force in any community, state, section,
or other area.
Executive Order 11246 and Revised Order Number 4, 41
C.F.R. § 60-2.1—60-2.11 (hereinafter referred to as Revised
Order Number 4) are set forth in Petitioners’ Appendix IV and
V respectively.2
STATEMENT
I.
THE CAUSE OF ACTION
In February 1973, Legal Aid filed a complaint in the
nature of mandamus against officials of all federal compliance
agencies alleging, inter alia, that the federal defendants had
failed to enforce Executive Order 11246 by approving affirma-
tive action programs of contractors which allegedly did not
comply with the requirements set forth in Revised Order
Number 4. Named as specific defendants were the Secretary of
Labor, the Director of OFCCP, the Secretary of Agriculture,
and the Chief of the Contract Compliance Division of the
Agriculture Department’s Office of Equal Opportunity. No
federal contractors were named as defendants and, although
four unemployed minority persons were named as plaintiffs
who allegedly sought employment and claimed to have been
denied employment from contractors within the compliance
jurisdiction on the basis of race and/or sex, no claim against
any specific contractor was alleged. Rather, Legal Aid sought
to compel the federal defendants to conduct affirmative action
compliance reviews in strict conformity with Revised Order No.
4, to restrain defendants from approving “non-complying”
2 Technical Guidance Memo No. | is the instruction by OFFCP
to field personnel for administering Revised Order No. 4 (See Pet.
App. A-96 for current status of Technical Guidance Memo No. 1).
5
affirmative action programs, to rescind approval of “non-
complying” programs, and to seek debarment and other sanc-
tions against any contractor which did not implement hiring
goals and timetables.
Pursuant to agreement between the Parties, the federal
defendants submitted to Legal Aid the affirmative action
programs of 29 Alameda County contractors approved during
1972-1973. Legal Aid filed a memorandum with exhibits
claiming that these 29 approved affirmative action programs
violated Revised Order Number 4 in that the programs contain-
ed inadequate utilization analyses of each job category in
reference to minorities and women and failed to establish
adequate goals and timetables to correct underutilization by
specific reference to the percentage of women and minority
workers in the job group as compared to their percentage in the
applicable labor market. The federal defendants filed no
response to the memorandum. Thereafter. Legal Aid filed a
motion for partial summary judgment on this portion of its
complaint.
THE ORDERS AND OPINIONS BELOW
A. The Order And Decree of the District Court
The Federal District Court granted Legal Aid’s motion.
Specifically, the Court relied upon Revised Order Number 4
and Technical Guidance Memo No. | to reject the federal
defendants’ contention that “ultimate goals” are not required in
establishing goals and timetables (Pet.App. A-63). The Court
further concluded that “glaring inadequacies” in correcting
utilization deficiencies “cannot be explained away by defend-
ant[s]’ fear that percentage goals would impose inflexible and
illegal quotas on the contractors” (Pet.App. A-65). The Court
further found on the basis of Legal Aid’s unopposed memo-
6
randum that 10 affirmative action programs programs had been
approved in violation of Revised Order Number 4 and ordered
the federal defendants to rescind their prior approval ( Pet.App.
A-69). The federal defendants were further enjoined from
approving affirmative action plans not in compliance with
Revised Order Number 4, and to seek sanctions against any
contractor failing to so comply (/d.).
The federal defendants withdrew a notice of appeal
(Pet.App. A-6). The Chamber’s motion to intervene on behalf
of its affected members was denied except as to appeal rights.
The District Court ordered the following affirmative relief
(Pet.App. A-71—A-72):
(b) Each program must contain goals and timetables
which satisfy each of the following requirements:
(i) An ultimate goal must be established for each
job group in which underutilization exists and must be
designed to completely correct the underutilization.
The ultimate goal must be stated as a percentage of
the total employees in the job group and must be at
least equal to the percentage of minorities or women
available for work in the job group in the labor
market.
(ii) For each job group in which underutilization
exists, a specific timetable must be established for
reaching the ultimate goal in the minimum feasible
time period.
(iii) For each job group in which underutilization
exists, the contractor must establish rates for hiring or
promoting the minorities and women. The rates must
be stated as a percentage of new placements in the job
group, and they must remain in effect (unless specifi-
cally modified on the basis of subsequent data) until
the underutilization is completely corrected. The
percentage rates must be the maximum rates that can
be achieved through the contractor’s putting forth
every good faith effort, including the use of available
recruitment and training facilities, and must not be
lower than the percentages set in the ultimate goals.
5
Numerical goals based on projected openings are
permissible but cannot be used in place of percentage
rates.
B. The Decision of the Court of Appeals
| The Ninth Circuit affirmed the District Court’s fact find-
ings, its judgment and its decree, with one modification
(Pet.App. A-6, A-41).3 The Court of Appeals rejected certain
procedural arguments advanced against Legal Aid’s mandamus
action. These procedural objections are not advanced here.
REASONS FOR GRANTING THE WRIT
I.
INTRODUCTION
The decisions below require federal contractors to in-
voluntarily establish and adhere to a fixed percentage of
minority or women employees based upon a numerical imbal-
ance of such workers in a broadly defined “labor market” for
each job classification where “underutilization” exists. The
District Court’s decree specifically requires contractors to estab-
lish fixed percentage “rates for hiring or promoting of minor-
ities” (Pet.App. 4-72). This fixed percentage is a quota
requirement. As the Court of Appeals stated ( Pet.App. A-35):
“The regulations do rt explicitly require that ultimate goals be
fixed, but they do so by inescapable implication.”
Since a federal contractor must reach this established
percentage or remain non-compliant (Pet.App. A-72—A-73)
and, thus subject to sanction, this quota is inflexible and fixed.
The Court of Appeals in affirming the District Court’s decision
below further limited the contractors “good faith” flexibility set
forth in Revised Order No. 4 as applicable only to the
establishment of the goal not to its achievement (Pet.App. A-
38-A-39).
3In view of the lengthy period of elapsed time, the Court of
Appeals held moot the District Court’s order requiring the federal
defendants to withdraw approval of the affected contractors’ 1972-73
affirmative action programs (Pet.App. A-11).
8
The predicate for this mandatory requirement here is not
judicially or administratively determined past discrimination
against any specific individuals by any of the 29 contractors
contracting with the federal defendants. Indeed, the relief
imposed is independent of any requirement that specific victims
of discrimination even be identified. Rather, this required
preferential treatment for minority and women applicants not
themselves the victims of discrimination is based solely upon
numerical disparity between utilization of such workers in a job
category (irrespective of actual applicants or job openings ) and
an arbitrary percentage of such prospective applicants in a
general population labor market regardless of skills or any
consideration of other factors in neutral hiring decisions.
This petition then presents the questions whether section
703(j) of Title VII and the Fifth Amendment to the US.
Constitution prohibits the judiciary and the government at the
request of third parties from directing government contractors
to adhere to hiring preferences, based solely on race, to
overcome alleged underrepresentation of minorities in the work
place; and whether the evidentiary standard of discrimination
under Title VII applies to Executive Order 11246.
THE QUESTIONS PRESENTED ARE OF
PARAMOUNT SIGNIFICANCE TO FEDERAL
NONDISCRIMINATION POLICY
This petition presents one of the questions reserved by the
Court four years ago in McDonald v. Santa Fe Transp. Co., 427
U.S. 273, 280-81 n. 8 (1976) and not resolved last Term in
Steelworkers v. Weber, 443 U.S. 193 (1979)—that is the
permissible scope of judicially required affirmative action im-
posed under Title VII, The Fifth Amendment or Executive
Order 11246. This question is purely legal and first requires
discerning Congress’ intention with respect to federally imposed
involuntary affirmative action.
9
This Court has not yet held that Title VII or Executive
Order 11246 grants authority to award preferential hiring
treatment to persons not actually the victims of race or sex
discrimination. Section 703(j) of the 1964 Civil Rights Act
expresses an unequivocal legislative judgment to prohibit hiring
preferences based solely upon race or sex. The authority of
federal compliance agencies under the Executive Order to
require preferential hiring quotas absent a finding of unlawful
discrimination is precluded by this expression of legislative will.
While the Executive Order may be validly promulgated upon
the President’s procurement authority, the Executive Order
cannot be applied in a manner which directly conflicts with the
express will of Congress. Otherwise the precarious equilibrium
between the three coordinate branches of our constitutional
system is placed in jeopardy. See Youngstown Sheet & Tube
Co. v. Sawyer, 343 U.S. 579, 638 (1952).
The legislative history of the enactment of Title VII in 1964
and of its amendment in 1972 demonstrates that Congress
intended affirmative action under the Executive Order to be
applied consistently with Title VII.4 At the time Congress
considered limiting the scope of affirmative action under the
Executive OrJer, affirmative action under Title VII was applied
and sparingly at that to remedy past discrimination not numer-
ical imbalances. In rejecting a proposal in 1972 to amend
section 703(j) to proscribe all affirmative action programs
“Both the Executive Order and Title VII put great emphasis
upon voluntary remedial action and conciliation rather than upon
preferential hiring quotas which may exacerbate group consciousness
and racial stereotyping. As Professor Gellhorn has noted:
[T]he fundamental goal of [ agencies encouraging fair employ-
ment practices] has been to improve group relations and recon-
cile differences. The operating assumption has been that dis-
crimination can be eradicated only by eliminating its causes:
ignorance and historical barriers to contact. Open informational
avenues directly achieve these ends. (footnote omitted ). Gell-
horn, “Adverse Publicity by Administrative Agencies,” 86
Harv.L.Rev. 1380, 1398 (1973). See also Farmer v. Phila. Elec.
Co., 329 F.2d 3, 8 (3d Cir. 1964).
10
under the Executive Order, the Senate desired at most to
preserve the existing case law under Title VII and the Executive
Order that race conscious remedies could be fashioned “to
remedy clearly proven cases of discrimination.” 118 Con-
g-Rec.S. 705 (remarks of Sen. Williams); see also 118 Cong.
Rec.S. 693-° + (remarks of Sen. Javits ).5
As Mr. Justice Powell stated in Regents of the University of
Cal. v. Bakke, 438 U.S. 265, 301-302 n. 40 (1978): “Every
decision upholding the requirement of preferential hiring under
the authority of Exec. Order No. 11246... has emphasized the
existence of previous discrimination as a predicate for the
imposition of a preferential remedy.” And (438 USS. at 302 ):
“['W je have never approved preferential classifications in the
absence of proved constitutional or statutory violations (foot-
note omitted ).” By analogy to the express prohibition against
racial preference in admission policy in section 601 of the Civil
Rights Act of 1964 (42 U.S.C. § 2000d), petitioner contends
that racial preference in hiring under the Executive Order is
precluded by section 703(j) of the same Act. Cf. Regents v.
Bakke, supra., 438 U.S. at 408-421 (Opinion of Mr. Justice
Stevens ).6 Indeed, even in Title VII cases where past dis-
° For the view that Congress intended to outlaw all preferential
treatment based on race, see Comment, 60 Iowa Rev. 693, 697-703
(1975); Comment, 7 Tex.Tech.L.Rev. 671, 685-87 ( 1976).
6 There is also no support for the Ninth Circuit’s imposition of
rigid quota goals absent consideration of “good faith” in the Execu-
tive Order or Revised Order No. 4 (Pet.App. A-38—A-39). Com-
pliance is secured not by federal fiat or litigation but by “conference,
conciliation, mediation, and persuasion” before considering sanctions
such as contract termination and bidding ineligibility. Exec. Order
No. 11246, § 209(b), at 3 C.F.R. 169, 174; § 205 at 3 CFR. 172.
Revised Order No. 4 itself premises compliance upon the contractor’s
good faith efforts to secure equal employment opportunity for minor-
ities. Section 60-2.12, entitled “Establishment of Goals and Time-
tables,” provides in Subsection (a) that projected minority hiring
goals “‘may not be rigid and inflexible quotas which must be met, but
(footnote continued on following page)
crimination against specific minority victims has been judicially
determined, and upheld on appeal, this Court has been acutely
sensitive to the impact affirmative remedies may have upon
innocent nonminority employees and job applicants. See, e.g.,
Teamsters v. United States, 431 US. 324, 347-48 (1977):
McDonald v. Santa Fe T, ransp. Co., supra, 427 U.S. at 278-80:
Franks v. Bowman Transp. Co., 424 US. 747, 762 (1976).
While petitioner further contends, infra, pp. 13-15 that the
Ninth, Circuit applied an erroneous standard in equating under-
utilization with discrimination, it is necessary here to note that
numerical disparities found by the District Court were not
predicated upon an industry-wide exclusionary practice or as a
direct and obvious result of the historic, pervasive practice of
craft lebor organizations or employers to exclude minorities and
women from entrance into a specific industry. Here, unlike the
Executive Order construction industry cases cited by Mr. Justice
Powell in Bakke,” the food Processing industry has not been
(footnote concluded from preceding page)
must be targets reasonably attainable by means of applying every
good faith effort to make all aspect of the entire affirmative action
Program work.” 41 C.F.R. 204, 207. Indeed. under Subsection (k )
establishment of separate goals and timetables for different minority
groups is not required, even upon a showing of substantial disparity of
“under-utilization.” 41 C.F.R. at 209. And Section 60-2.14, entitled
“Compliance Status,” expressly provides “[n]Jo contractor’s com-
pliance status shall be judged alone by whether or not he reaches his
goals and meets his timetables.” 41 C.F.R. at 208. In short, these
regulations provide essential discretionary flexibility to better enable
the federal government to Promote fair employment practices, even
gradually if necessary, rather than risking the forfeiture of all Positive
influence which might result from an arbitrary or rigid compliance
standard. This is not a federal Program administered under simple,
inflexible standards.
? Contractors Ass’n of Eastern Pa. v. Sec. of Labor, 442 F.2d 159
(3d Cir.), cert. denied, 404 U.S. 854 (1971); Associated Gen. Con-
tractors of Mass v. Altshuler, 490 F.2d 9 (Ist Cit. 1973), cert. denied,
416 U.S. 957 (1974). Mr. Justice Brennan did not list these cases in
his citations for the proposition that race conscious remedies had been
approved in the absence of judicial findings of discrimination. 438
U.S. at 364.
12
judicially noticed to have practiced industry-wide dis-
crimination. Moreover, here, the statistical imbalances were
presented to the Court by Legal Aid without the contractors’
participation or any rebuttal evidence as to the actual effect of
the individual contractor’s hiring practices.
The imposition of hiring quotas upon federal contractors
under the procedures of this case raise questions of grave
concern to all current and potential government contractors and
to a large segment of the nation’s labor force whose promotion-
al and employment prospects are necessarily diminished
proportionately to the extent of preferential affirmative action.
The immediate impact of this case is staggering. At least 40%
of the nation’s labor force work in positions subject to the
Executive Order, and over 50% of the nation’s employers with
100 or more employees are subject to the affirmative action
requirements of the Executive Order. 5 U.S. Comm’m on Civil
Rights, The Federal Civil Rights Enforcement Effort, 1974: To
Eliminate Employment Discrimination, 230 (1975); Goldstein
& Smith, “The Estimated Impact of the Antidiscrimination
Program Aimed at Federal Contractors”, 29 Indus.
Lab.Rel.Rev. 523, 531-39, 542-43 (1976).
The resolution of this issue should not be postponed. The
decision below has an immediate impact upon all government
contractors within the jurisdiction of the Ninth Circuit. This
impact is also a continuing one for under the District Court’s
decree all future approvals of affirmative action plans by
OFCCP, the successor compliance agency, must be furnished to
Legal Aid for its scrutiny (Pet.App. A-73). The decision below
also brings confusion and uncertainty for other government
contractors having facilities within other Circuit Courts of
Appeals. If this cause were initiated in the Fifth Circuit, no
such rigid quota relief under the Executive Order would have
been ordered in the absence of a finding of prior hiring or
promotion discrimination. Weber v. Kaiser Aluminum & Chem.
Corp., 563 F.2d 217, 226-27 (1977), reversed on other grounds.
13
443 US. 193 (1979). Resolution of this conflict among the
circuits on the fundamental question of the propriety of prefer-
ential relief is further reason for granting the petition.®
On a more significant plane, the case raises the issue of the
legality of involuntary affirmative action quotas to correct racial
imbalances in the work place. The Court is well aware of the
intensity of the social and political debate over the proper place
of such relief in our antidiscrimination policy. See Fuller, “The
Forms and Limits of Adjudication”, 92 Harv. L.Rev. 353, 394-
404 (1978); Comment: “How Far Can Affirmative Action Go
Before It Becomes Discrimination?”, 26 Cath. U.L.Rev. 513,
546 (1977). Whether such relief serves this policy and under
what circumstances are questions which now require guidance
from the Court.
Ill.
THE NINTH CIRCUIT’S STANDARD FOR IMPOSING
RACE-CONSCIOUS REMEDIES CONFLICTS WITH
DECISIONS OF THIS COURT
In Steelworkers v. Weber, supra, the Court suggested that a
numerical imbalance between a work force and the labor
market may permit voluntary correctional race preference re-
medies, particularly in the context of a collective bargaining
relationship where the union may be safely presumed to
adequately represent the interests of current nonminority em-
ployees. See Franks v. Bowman Transp. Co., supra,. The
| 8 The District Court’s decree is the mirror image of Technical
Guidance Memo. No. |. The continuing application of this Memo to
all government contractors, as applied and enforced by OFCCP,
transforms goals into fixed quotas without regard to a contractors
good faith. Indeed OFCCP has continued to follow this approach. Jn
The Matter of Firestone etc., BNA Daily Labor Report Dec. 12, 1978
(Pet.App. A-91-A-107); (See also Ninth Circuit Opinion Pet.App.
A-29 fn. 36). The affirmance of the District Court’s decree by the
Ninth Circuit has, therefore, approved the method adopted by the
District Court and OFCCP of enforcing Executive Order 11246
through mandatory hiring preferences based solely upon race.
14
decision, however, did not reach the distinct question decided
here, that a statistical disparity alone warrants the imposition of
mandatory, involuntary race conscious hiring quotas based
solely upon race. The Ninth Circuit’s basis for imposing this
relief is contrary to and inconsistent with this Courts’ decisions
discussing the proper use of statistical evidence and the burden
of proof which must be met to support even an inference of
discrimination in Title VII cases. The Court has repeatedly
stated that evidence of a statistical imbalance at most presents a
rebuttable presumption of discrimination which the alleged
violator must be permitted to rebutt. Furnco Constr. Corp. v.
Waters, 438 U.S. 567, 579-580 (1978); Teamsters v. United
States, supra, 431 U.S. at 339. Unlike Teamsters, the Ninth
Circuit here adopted the District Court’s imposition of hiring
quotas upon “statistics alone” (Pet.App. A-21). Moreover, the
statistical “disparities” here were found upon a comparison
between particular jobs and the minority work force as a whole
(Pet.App. A-59).
This Court has held that such comparisons have little if any
probative value. In Hazelwood School District v. United States,
433 U.S. 299,308 n. 13, Mr. Justice Stewart stated:
When special qualifications are required to fill particular
jobs, comparisons to the general population (rather than to
the smaller group of individuals who possess the necessary
qualifications ) may have little probative value.
While Hazelwood involved a public employer, it is clear that
private employers are equally included within its rationale. See
Teamsters v. United States, supra, 431 U.S. at 340 n. 20.
Reliance upon general population—job category comparisons
is prohibited by section 703(j).
In McDonnell Douglas Corp. v. Green, 411 U.S. 792
(1973), the Court established an orderly evidentiary procedure
and allocated the burden of proof in Title VII discriminaiton
cases. The charged party need not introduce evidence of
neutral hiring practices until after a prima facie case has been
15
established. Board of Trustees v. Sweeney, 439 U.S. 24, 25
(1978). This standard of proof of discrimination stands in
stark contrast to the one relied upon by the Court of Appeals,
which premised its judgment upon the District Court’s use of a
Statistical imbalance as conclusive of an irrebutable finding of
discrimination. This evidentiary basis for race preferential
relief is markedly in contrast with the standard articulated by
this Court under Title VII. Unless Congressional intent that the
Executive Order cannot override Title VII is to be flagrantly
flouted, then federal contractors must not be subject to sanc-
tions on a lower standard of culpability than that imposed by
Congress under sections 703 and 707 of Title VII. The standard
of discrimination which justifies preferential remedies based
solely upon race should be identical under both statutory and
regulatory antidiscrimination schemes. The justification for this
position is, of course, that Congress in Title VII requires it, and
further such uniform standards will create a consistent and
reliable means of scrutinizing the identical employment deci-
sion making process for discriminatory intent.9
The Second Circuit, we believe, has adopted the proper
evidentiary standard for the imposition of racial hiring quotas.
In Kirkland v. New York State Dept. of Correctional Services,
520 F.2d 420 (1975)19, a discrimination action brought under
42 U.S.C. §§ 1981, 1983, such relief was limited to circum-
stances where plaintiffs demonstrated a clear-cut pattern of
® Under equal protection analysis, adverse impact alone upon
protected classes is insufficient to invalidate state action; proof of
intent to discriminate is required. Personnel Administrator of Mass. v.
Feeney, 442 U.S. 256, 276 (1979); Arlington Heights v. Metropolitan
Hous. Corp., 429 U.S. 252, 270-71, 270 ns. 20 and 21 (1977). See
also NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 45-6 (1937)
(discriminatory motive must be proven under section 8(a)(3) of
NLRA).
10 Reaffirmed in EEOC v. Local 638, Sheet Metal Workers, 532
F.2d 821, 827-8 (2d Cir. 1976).
16
long-standing and egregious racial discrimination and where
such relief would not affect identifiable nonminority employees
or job applicants. The Court has not considered whether this
standard is a valid restriction upon court-ordered quota relief,
or whether the Executive Order is subject to the evidentiary
standard of discrimination adopted by the Court under Title
VII. Government contractors must have definitive criteria upon
which they can reliably assess their personnel policies and if
necessary, take steps to protect themselves from contract debar-
ment and reverse discrimination lawsuits. Note, “Title VII] And
Preferential Treatment: A Response to EEOC Affirmative Ac-
tion Guidelines”, 67 Geo.L.J. 855, 872-76 (1979). The appro-
priate use of racial preferences in employment under Executive
Order 11246 and the evidentiary standard upon which such
remedial measures must be predicated are significant questions
which can and need to be resolved.
17
CONCLUSION
For the reasons stated above, the Chamber respectfully
requests this Court to grant its petition in this case for a Writ of
Certiorari to the United States Court of Appeals for the Ninth
Circuit.
Respectfully submitted,
GERARD C. SMETANA,
Suite 1400
33 North Dearborn Street
Chicago. Illinois 60602
LAURENCE B. Kraus, WILLIAM H. DuRoss, II]
General Counsel Suite 200
CHAMBER OF COMMERCE OF 1919 Pennsylvania Avenue, N.W
7 UNITED STATES OF Washington, D.C. 20006
MERICA,
1615 H. Street, N.W.,
Washington, D.C. 20006.
Of Counsel:
LAW OFFICES OF
GERARD C. SMETANA
Suite 1400
33 North Dearborn Street
Chicago, Illinois 60602
Suite 200
1919 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attorneys for Petitioner.
March 3, 1980.
APPENDIX I
A-|
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LEGAL AID SOCIETY OF ALAMEDA COUNTY;
STEPHEN E. RONFELDT; LINDA CASTILLO;
DELORES LUSTER; JOHN STAFFORD; ISA-
DORE PAYNE; WESTERN REGIONAL JOB
COUNCIL,
Plaintiffs-Appellees,
v.
PETER J. BRENNAN, Secretary of the United States
Department of Labor; PHILIP DAVIS, Acting
Director of the Office of Federal Contract Com-
pliance; EARL L. BUTZ, Secretary of the United
States Department of Agriculture; WILLIAM
GLADDEN, Chief, Contract Compliance Division,
Office of Equal Opportunity, United States Depart-
ment of Agriculture,
Defendants,
CHAMBER OF COMMERCE OF THE UNITED
STATES OF AMERICA, on behalf of its affected
members,
Defendant-Intervenors-Appellants;
LEGAL AID SOCIETY OF ALAMEDA COUNTY, et
al.,
Plaintiffs-Appellees,
\
NCC FOOD CORPORATION,
Defendant-Intervenor-Appellant;
LEGAL AID SOCIETY OF ALAMEDA COUNTY, et
al.,
Plaintiffs-Appellees,
v.
DEL MONTE CORPORATION,
Defendant-Intervenors-Appellants;
LEGAL AID SOCIETY OF ALAMEDA COUNTY, et
al.,
Plaintiffs-Appellees,
v.
CPC INTERNATIONAL
Defendant-Intervenor-Appellant;
5
No
No
No
. 14-2954
. 74-3013
. 714-3014
. 74-3015
A-2
LEGAL AID SOCIETY OF ALAMEDA COUNTY, et >}
al.,
Plaintiffs-Appellees,
‘ No. 74-3234
No. 74-3250
CARNATION COMPANY, H. J. HEINZ COM-
PANY, SUNSHINE’ BISCUITS, INC., BEL’
BRAND FOODS, INC.,
Defendants-Intervenors-Appellants;
LEGAL AID SOCIETY OF ALAMEDA COUNTY, et
al.,
Plaintiffs-Appellees, > No. 74-3317
v.
GRANNY GOOSE FOODS, INC.,
Defendant-Intervenor-Appellant,
LEGAL AID SOCIETY OF ALAMEDA COUNTY et
al.,
Plaintiffs-Appellees, No. 74-3391
v
GOLDEN GRAIN MACARONI CO., and its division, OPINION
GHIRARDELLI CHOCOLATE., INC.,
Defendants-Intervenors-Appellants. )
Appeal from the United States District Court
for the Northern District of California
Before: BROWNING, WALLACE and KENNEDY,
Circuit Judges
BROWNING, Circuit Judge:
As a condition of doing business with the federal govern-
ment, larger federal contractors are required to develop “writ-
ten affirmative action compliance programs” designed to fur-
ther equal employment opportunity. The contents of these
programs are specified by regulation. 41 C.F.R. §§ 60-1.40, 60-
2.10 to 13.
Several Black residents of Alameda County, California and
organizations representing them, brought this suit against re-
A-3
sponsible federal officials, alleging they had failed to discharge
their duty to ensure the maintenance by food processing
contractors of adequate affirmative action programs. The
district court granted partial summary judgment and injunctive
relief. Legal Aid Society v. Brennan, 381 F.Supp. 125 (N.D.
Cal. 1974).
I.
A.
Executive Order 11246 requires government contracting
agencies to include in most federal and federally-assisted
contracts dual covenants (1) that the contractor “will not
discriminate against any employee or applicant for employment
because of race, color, religion, sex, or national origin,” and (2)
that the contractor will “take affirmative action to ensure that
applicants are employed, and that employees are treated during .
employment without regard to their race, color, religion, sex, or
national origin.”’"’ This suit concerns the second covenant—the
“affirmative action” obligation—which was added to the
“nondiscrimination” obligation in 1961 in response to “an
urgent need for expansion and strengthening of efforts to
promote full equality of employment opportunity . . .” 26
Fed.Reg. 1977 (March 8, 1961).
The duty to enforce Executive Order 11246 is vested in the
Secretary of Labor, who is authorized to “adopt such rules and
regulations and issue such orders as he deems necessary and
appropriate to achieve the purposes” of the Order.2
' Executive Order 11246 § 202, 30 Fed.Reg 12219 (1965),
as amended by Executive Order 11375, 32 Fed.Reg !4303
(1967), 42 U.S.C.A. § 2000e note (1974)
For a detailed history of Executive Order 11246 and its
predecessors, see Contractors Ass’n of Eastern Pa. v. Secretary
of Labor, 442 F.2d 159, 168-71 (3d Cir. 1971).
2 Executive Order 11246 § 201.
A-4
Pursuant to his rule-making authority, the Secretary has
delegated enforcement responsibility to the Office of Federal
Contract Compliance Programs (OFCCP).3 Until recently, this
office in turn delegated day-to-day enforcement to various
“compliance agencies.” USDA was designated as the com-
pliance agency for non-construction contractors in the food
production and processing industry.4
The Secretary of Labor has issued regulations detailing the
manner in which contractors are to fulfill the affirmative action
commitment. Each contractor with 50 or more employees and
a federal contract of $50,000 or more is required to develop a
written affirmative action program for each of its estab-
lishments. 41 C.F.R. § 50-1.40. The contents of the programs
are specified in Revised Order No. 4, 41 C.F.R. Part 60-2.5
Acceptable programs include two basic elements: (1) “an
analysis of areas within which the contractor is deficient in the
utilization of minority groups and women,” and, where the
analysis discloses deficiencies, (2) “goals and timetables to
which the contractor’s good faith efforts must be directed to
correct the deficiencies . . . at all levels and in all segments of his
work force where deficiencies exist.” 41 C.F.R. § 60-2.10. The
341 C.F.R. § 60-1.2 (1977), as revised, 43 Fed.Reg 49240
(October 20, 1978).
4OFCC, Revised Order No. 1 (October 24, 1969), re-
printed at [1970] Empl. Prac. Guide (CCH) 17.650. The
authority for designating compliance agencies was found in 4]
C.F.R. § 60-1.3(d) (1973).. USDA’s compliance responsi-
bilities were reassigned in 1977. The entire compliance agency
system was subsequently abolished and all compliance respon-
sibilities consolidated in OFCCP. See 43 Fed.Reg. 43572
(September 26, 1978), reprinted at [1978] Empl. Prac. Guide
(CCH) ¥ 4380.
5 Revised Order No. 4 first became effective in 1970. 35
Fed.Reg. 2586 (1970). Its provisions at the time the district
court entered its order in this action appear at 41 C.F.R. Part
60-2 (1973). As presently modified, they appear at 43
Fed.Reg. 49240 (October 20, 1978).
A-5
factors to be considered in analyzing minority and female
utilization and in formulating goals and timetables for correct-
ing underutilizations are spelled out in 41 C.F.R. §§ 60-2.11
and 2.12. Certain additional ingredients required of acceptable
affirmative action programs are set out in 4] C.F.R. § 60-2.13.
Revised Order No. 4 also details the procedures compliance
authorities are to follow in securing corrective action when a
contractor’s program fails to satisfy the specified criteria and in
imposing sanctions if corrective action is not forthcoming. 4]
C.F.R. § 60-2.2.
Appellees’ complaint contained two central allegations.
First appellees charged that responsible USDA officials failed
to review the affirmative action programs of a majority of
federal contractors within USDA’s compliance jurisdiction.€
This portion of the case is still pending below. Second,
appellees alleged that where compliance reviews were under-
taken, USDA officials regularly approved programs that did not
comply with Revised Order No. 4. In discovery proceedings in
support of the second claim, appellees obtained the affirmative
action programs of 29 contractors in Alameda County, Califor-
nia, that had been reviewed and approved by USDA from
August 1972 through January 1973. These included the
programs of all Alameda County contractors within USDA’s
compliance jurisdiction. Based upon these programs and letters
from the officials approving them, appellees moved for Partial
summary judgment on the complaint that USDA officials had
regularly approved noncomplying programs. Appellees asked
that the officials be restrained from approving noncomplying
programs, and that they be required to rescind approval of
6 Named defendants were the Secretary of Labor, the
Director of OFCCP, the Secretary of Agriculture, and the Chief
of the Contract Compliance Division of USDA’s Office of Equal
Opportunity.
A-6
deficient plans and initiate enforcement proceedings against
companies submitting these plans.
The district court granted appellees’ motion. It concluded
that components of affirmative action programs that were
mandated by Revised Order No. 4 were nonetheless absent
from the programs approved by the officials. It declared ten
specific programs to be violative of the regulations, and there-
fore illegally approved. The court enjoined USDA officials
from approving programs that did not comply with Revised
Order No. 4. They were ordered to rescind approval of the ten
noncomplying programs, to issue show cause notices to the
contractors submitting them, and to seek sanctions against any
contractor that did not develop and implement a complying
program.’
The federal officials filed, then withdrew, a notice of
appeal, and have appeared in this court in support of the
judgment.
The appellants are contractors whose affirmative action
plans formed the basis for the court’s order. The plans of four
appellants were among the ten specifically declared unaccept-
able.§
Appellants were not parties to the proceedings below.
After partial summary judgment was granted, appellants
sought to intervene generally for the purpose of reopening the
proceedings. The district court denied their motion, but
permitted intervention for the purpose of appeal.
Appellants present five issues. First, they contend that
approval of affirmative action plans by a compliance agency is
7 The order also established a reporting and monitoring
system requiring USDA officials to submit newly approved
affirmative action programs to the court and to appellees’
counsel for inspection. This part of the decree is not contested.
8 Appellant of Commerce appears as a representative of
various contractors.
A-7
not subject to judicial review or remedies, at least not at the
behest of these appellees. Second, they contend that judicial
review, if available, was premature because appellees had not
exhausted administrative remedies. Third, they argue that they
were entitled to participate in the proceedings below, and that
e~ ry of summary judgment without their presence deprived
them of due process. Fourth, they contend that in finding the
affirmative action programs inadequate and in formulating the
decree, the district court relied upon standards that were
erroneous in substance and not lawfully promulgated. Finally,
they argue that the decree imposes hiring and promotion quotas
in violation of the Constitution and of Title VII of the Civil
Rights Act of 1964.
The federal appellees argue that appellants lack the requi-
site interest to maintain this appeal. Appellants counted that
their interests were sufficient not only to permit intervention to
appeal but also to require that the judgment be set aside
because they were not parties to the proceedings in the court
below. We turn first to these contentions.
II.
A.
The federai appellees argue that appellant contractors
have no appealable interest in the decision below because the
district court’s order is directed only to the manner in which the
federal appellees carry out their regulatory responsibility. They
further contend that the interests of appellants can be fully
protected in the administrative process, which affords con-
tractors the right to justify their compliance efforts before
sanctions for noncompliance may be imposed.
[1, 2] Post-judgment intervention for purposes of appeal
may be appropriate if the intervenors act promptly after
judgment, United Airlines, Inc. v. McDonald, 432 U.S. 385,
395-96 & n. 16, 97 S.Ct. 2464, 53 L.Ed.2d 423 (1977);
A-8
Pellegrino v. Nesbit, 203 F.2d 463, 465 (9th Cir. 1953), and
meet traditional standing criteria. United States v. Imperial
Irrigation Dist., 559 F.2d 509, 521 (9th Cir. 1977).% Appellees
do not challenge the timeliness of appellants’ motion to inter-
vene for the purpose of appeal, but question whether appellants
have met the standing criteria by alleging a threat of particula-
rized injury from the order they seek to reverse that would be
avoided or redressed if their appeal succeeds. '°
[3, 4] Appellants allege that if the order is implemented,
appellants’ past and future compliance efforts will be measured
by erroneous legal standards and appellants’ ability to retain
current contracts and their eligibility for future contracts will be
affected by those erroneous standards. The four appellants
whose affirmative action programs were disapproved by the
district court further allege that approval of their programs will
be rescinded and show cause orders will be issued against them,
leaving them the choice of preparing new programs or suffering
Since the federal defendants have acquiesced in the
judgment against them, appellants must demonstrate such a
stake in the outcome of an appeal that a live Article III case or
controversy remains for appellate resolution. See Shapiro,
Some Thoughts on Intervention Before Courts, Agencies, and
Arbitrators, 81 Harv.L.Rev. 721, 753-54 (1968). If appellants
satisfy this threshold requirement, they necessarily possess the
interest required to support intervention under Fed.R.Civ.P. 24,
as well as the required “‘appealable interest” in the adjudication
below, see Fishgold v. Sullivan Corp., 328 U.S. 275, 281-83, 66
S.Ct. 1105, 90 L.Ed. 1230 (1946); Seaboard Surety Co. v.
United States, 306 F.2d 855, 859 (9th Cir. 1962); Shapiro,
supra at 753.
10 See Duke Power Co. v. Carolina Environmental Study
Group, Inc., 438 U.S. 59, 98 S.Ct. 2620, 57 L.Ed.2d 595 (1978);
Village of Arlington Heights v. MHDC, 429 U.S. 252, 260-61,
97 S.Ct. 555, 50 L.Ed.2d 450 (1977); Simon v. Eastern
Kentucky Welfare Rights Organization, 426 U.S. 26, 38, 96 S.Ct.
1917, 48 L.Ed.2d 450 (1976); United States v. Imperial
Irrigation District, 559 F.2d 509, 517 (9th Cir. 1977).
A-9
termination of existing contracts and debarment from future
contracts. These allegations reflect a “sufficiently direct threat
of personal detriment,” Planned Parenthood of Missouri v.
Danforth, 428 U.S. 52, 62, 96 S.Ct. 2831, 2838, 49 L.Ed.2d 788
(1976), to establish standing. Appellants’ interests could not
be fully protected in subsequent administrative proceedings
since the agency would have no authority to question the
validity of the district court’s interpretation of the regulations so
long as the decree remained in effect."
[5] Appellees assert appellants have suffered no in-
jury—that the district court’s order simply conformed to exist-
ing regulations and required the government officials to under-
take only those enforcement measures they had a present duty
to perform in any event. The argument addresses the merits of
the action, not the issue of standing. Flast v. Cohen, 392 US.
83, 99. 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968); City of Chicago
v. Atchison, Topeka & Santa Fe R.R. Co., 357 U.S. 77, 83-4, 78
S.Ct. 1063, 2 L.Ed.2d 1174 (1958).
Appellants are properly before this court as intervenors on
appeal.
The contractor appellants argue that the interests which
give them standing to appeal also required that they be joined
as parties initially or be allowed to intervene, and that they be
accorded notice and hearing before entry of the decree below.
[6-8] Assuming appellants should have been joined as
parties to the proceedings below, their presence on appeal
renders harmless any defect in the party structure so far as the
provisions of the decree respecting standards governing future
11 To the extent appellants were admitted as permissive
intervenors, they were not required to show their stake in the
case could not be fully protected elsewhere. Fed.R.Civ.P.
24(b).
A-10
compliance are concerned.'? Appellants’ objections to the dis-
trict court’s interpretation of the Executive Order and adminis-
trative regulations raise strictly legal issues subject to full review
in this court. Appellants’ future compliance will be judged by
the agency against standards formulated after full and fair
consideration of appellants’ objections on this appeal. '3
[9] The decree also orders compliance officials to rescind
approval of the ten affirmative action programs found to be
defective, including the programs of four of the appellants, and
to institute enforcement proceedings immediately under the
applicable regulations. Appellants contend that due process,
the compulsory joinder requirements of Rule 19(a), and the
guarantee of intervention as of right upon timely application
under Rule 24(a), precluded the court from passing in their
absence upon the legality of their specific conduct. Appellees
12 Where the judgment can be shaped to cure any prej-
udice to a pariy absent below, dismissal at the appellate stage is
not required. See Provident Tradesmen Bank & Trust Co. v.
Patterson, 390 U.S. 102, 111-12, 116, 119, 88 S.Ct. 733, 19
L.Ed.2d 936 (1968). See also 7 Wright & Miller, Federal
Practice & Procedure: Civil § 1611 (1972); Fed.R.Civ:P. 21
(dismissals for defect in party structure disfavored ).
13 Appellant Chamber of Commerce also contends that
appellees lacked standing to challenge enforcement of the
Executive Order by compliance officials. See Part IIIB infra.
Denial of intervention except to appeal may have foreclosed the
Chamber’s opportunity to contest the factual basis for ap-
pellees’ standing, an opportunity not fully protected on this
appeal. However, the Chamber did not appeal the denial of
intervention, but only the earlier entry of summary judgment.
It therefore can argue only that the court’s conclusion that
appellees had standing was erroneous on the record before the
district court, in which appellees’ claims to standing were not
disputed. This argument is considered in Part IIIB infra.
The individual contractor appellants, who have appealed
the denial of intervention, do not challenge appellees’ standing.
Whatever interests they may have had in contesting standing in
the district court are not asserted on this appeal.
A-11
respond that the invalidated programs have been superseded in
the process of annual revision and updating required by the
regulations, 41 C.F.R. § 60-1.40(c), and issues relating to the
process by which they were invalidated have thereby become
moot. Appellants do not deny that the invalidated programs
have been replaced, but argue only that forward-looking
features of the decree remain. Issues relating to the latter
features of the decree are fully dealt with on this appeal, as we
have said. We accept appellee’s undisputed suggestion that
events subsequent to the district court’s finding that specific
programs were deficient have deprived that action of any
present consequence, and vacate as moot the portion of the
decree ordering rescission of approval of the condemned pro-
grams and issuance of show cause notices to the contractors
submitting them.
A.
{[10, 11] The provisions of Revised Order No. 4, issued
under Executive Order 11246, have the force of law.'4 Appel-
14 See United States v. New Orleans Pub. Serv., Inc., 553
F.2d 459, 465-68 (Sth Cir. 1977), vacated and remanded on
other grounds, 436 U.S. 942, 98 S.Ct. 2841, 56 L.Ed.2d 783
(1978). Provisions of the regulations governing disclosure of
information secured from contractors may not be sufficiently
rooted in a grant of authority from Congress to have the force
of law, see Chrysler Corp. v. Brown, 441 U.S. 281, 99 S.Ct. 1705,
1718-1721, 60 L.Ed.2d 208 (1979), but there can be no doubt
that the essential features of the affirmative action program
reflected in the regulations promulgated in Revised Order No. 4
were effectively ratified by Congress in adopting the Equal
Employment Opportunity Enforcement Act of 1972. Several
frontal attacks on the OFCC goal-and-timetable enforcement
system were defeated during congressional consideration of the
1972 Act. Court decisions upholding the validity of the
affirmative action program under the Executive Order were
(footnote continued on following page)
A-12
lants do not disagree. They contend, however, that the terms of
the Executive Order and Revised Order No. 4 are not enforce-
able in the courts.
{12, 13] Administrative action is subject to judicial review
unless it is clear that such review was not to be available.
Morris v. Gressette, 432 U.S. 491, 500-01, 97 S.Ct. 2411, 53
L.Ed.2d 506 (1977); Barlow v. Collins, 397 U.S. 159, 166-67,
90 S.Ct. 832, 25 L.Ed.2d 192 (1970); Arizona Power Pooling
before the legislators and figured prominently in the debates.
See 118 Cong.Rec. 1664-72, 4918 (1972) (remarks of Sen.
Javits, reprinting decision in Contractors Ass’n of Eastern Pa. v.
Secretary of Labor, 442 F.2d 159 (3d Cir. 1971)); id. 1386
(Sen. Saxbe); id. 1663-64 (Sen. Ervin); 117 Cong.Rec. 32089
(Rep. Dent); id. 31965 (Rep. Green), H.R.Rep. No.92-238,
92nd Cong. 2d Sess. (1971) (separate views of Rep. Green);
reprinted at [1972] U.S.Code Cong. & Admin.News, pp. 2137,
2176-77. In rejecting the assault on the OFCC affirmative
action approach. Congress approved the exercise of executive
authority to issue binding regulations regarding minority utili-
zation. See Comment, The Philadelphia Plan: A Study in the
Dynamics of Executive Power, 39 U.Chi.L.Rev. 723, 757
(1972).
Independent Meat Packers Ass’n v. Butz, 526 F.2d 228
(8th Cir. 1975), which appellants cite, is not to the contrary.
That court held that Executive Order 11821 was not judicially
enforceable. Executive Order 11821 requires executive agencies
to evaluate the inflationary impact of major legislative propos-
als, rules, and regulations emanating from the executive branch.
The court’s conclusion that the Executive Order lacked legal
force rested on the premise that the Order “was intended
primarily as a managerial tool for implementing the President’s
personal economic policies,” and had been issued as a house-
keeping measure rather than pursuant to constitutional or
statutory authority. 526 F.2d at 235-36. See also Manhattan-
Bronx Postal Union v. Gronouski, 121 U.S. App.D.C. 321, 350
F.2d 451 (D.C. Cir. 1965). Executive Order 11246 rests upon
Statutory and other congressional authorization. See United
States v. New Orleans Pub. Serv., Inc., supra.
A-13
Ass'n v. Morton, 527 F.2d 721, 727 (9th Cir. 1975).15 Nothing
in Executive Order 11246 precludes judicial review. Indeed, the
Order appears to anticipate such review by preserving, in
addition to sanctions expressly authorized by the Order, rem-
edies “as otherwise provided by law.” E.O. 11246, § 202(6).
[14, 15] Although the Executive Order and implementing
regulations place heavy reliance upon administrative expertise
and discretion, not all compliance review action is committed to
discretion of the agency. In these circumstances, judicial review
limited to the non-discretionary aspects of agency action is
appropriate. Ness Investment Corp. v. USDA Forest Service,
512 F.2d 706, 714-15 (9th Cir. 1975); East Oakland-Fruitville
Planning Council v. Rumsfeld, 47\ F.2d 524, 533-34 (9th Cir.
1972 ).16 The regulations sought to be enforced here identify in
clear mandatory terms elements that must be included in
affirmative action programs before they may be deemed accept-
able by compliance officials. Programs “must include an
analysis of the areas within which the contractor is deficient in
the utilization of minorities and women,” 41 C.F.R. § 60-2.10.
This analysis “must contain” the work force breakdown spelled
out in 4] C.F.R. § 60.211, plus a utilization-availability study in
'S It is questionable whether an Executive Order could of
its own force preclude judicial review of action taken pursuant
to it. Congress may create regulatory bodies with lawmaking
powers and insulate those bodies from judicial oversight. It
does not follow that the President may do so solely by
Executive Order, without congressional ratification. In any
event, Executive Order 11246 rests upon statute and other
congressional authorization (see note 14), and neither the
President nor Congress has indicated an intent to preclude
judicial review of action taken by compliance authorities under
the Executive Order.
'6 Compare Peters v. Hobby, 349 U.S. 331, 345, 75 S.Ct.
790, 797, 99 L.Ed. 1129 (1954) (Agencies, whether created
by statute or [by] Executive Order, must of course be free to
give reasonable scope to the terms conferring their authority.
But they are not free to ignore plain limitations on that
authority.”’).
A-14
which the contractor “will consider” at least eight enumerated
factors. 41 C.F.R. § 60-2.11(a)(1) (1973).17 Programs also
“must include ... goals and timetables,” 41 C.F.R. § 60-2.10,
which “must be designed to correct any identifiable defi-
ciencies.” 41 C.F.R. § 60-2.12(g).18 Affirmative action prog-
rams “shall contain” the additional ingredients listed in 41
C.F.R. § 60-2.13.
[16] There is no discretion as to the presence of these
components in an acceptable affirmative action plan. Programs
that lack them do not comply with Revised Order No. 4.
Judicial review is available to insure that compliance officials
perform their non-discretionary duty to refrain from approving
plans that do not contain the elements mandated by the
regulations. The remedies available under the Administrative
Procedure Act—setting aside unlawful program approvals, 5
U.S.C. § 706(2), and compelling unlawfully withheld agency
rejection of noncomplying programs, 5 U.S.C. § 706(1)—may
be invoked against compliance officials who violate this duty.19
17 In the most recent version of Revised Order No. 4, this
provision appears in 41 C.F.R. § 60-2.11(b)(1) (1977). See
43 Fed.Reg. 49240, 49250-51 (October 20, 1978).
18 Similarly, “program[s] shall provide... when there are
deficiencies, [for] the development of specific goals and time-
tables for the prompt achievement of full and equal employ-
ment opportunity.” 41 C.F.R. § 60-1.40(a).
19 Adams v. Richardson, 156 U.S.App.D.C. 267, 480 F.2d
1159 (D.C. Cir. 1973) (en banc), supports this conclusion.
Adams held reviewable the alleged consistent failure of the
Department of Health, Education and Welfare to enforce Title
VI of the Civil Rights Act of 1964 against public school districts
receiving federal funds. Appellants distinguish Adams on the
ground that Title VI specifically permits a judicial role in its
enforcement. Nothing in the Adams opinion suggests that
HEW enforcement orders were made reviewable expressly.
480 F.2d at 1161-63. In any event, judicial review need not be
expressly authorized; availability of judicial review is presumed
unless clear evidence precludes it.
A-15
[17] Relief in the nature of mandamus is also appropriate.
28 U.S.C. § 1361. In arguing to the contrary, appellants stress
the informality and flexibility of the enforcement scheme under
the Executive Order, pointing to its emphasis on mediation and
conciliation, 41 C.F.R. §§ 60—2.2(c)(2),20 60—1.24(c)(2)
(1973), and to the express reservation that “*[n]o contractor’s
compliance status shall be judged alone by whether he meets
his goals and timetables .... [but] shall be reviewed and
determined by ... his good faith efforts to make his program
work ....” 41 C.F.R. § 60—2.14. As appellants correctly
argue, areas of the administrative process so laced with dis-
cretion are traditionally shielded from direct judicial inter-
vention. Smith v. Grimm, 534 F.2d 1346, 1352 (9th Cir. 1976);
Jarrett v. Resor, 426 F.2d 213, 216 (9th Cir. 1970); Wilmot v.
Doyle, 403 F.2d 811, 816 (9th Cir. 1968 ). But these are not the
areas as to which appellees sought and obtained relief. Ap-
pellees’ claim went to a threshold matter—the required content
of acceptable affirmative action plans. This issue is distinct
from such subsequent questions as to whether a contractor is in
compliance with a valid affirmative action program (to which
the good faith standard is relevant), or what should be done to
secure compliance once it is determined that a contractor has
violated his affirmative action obligations (to which the con-
ciliation provisions are directed ).21 Appellees seek only to
“require . .. [compliance] officers . . . to perform the ministerial
duty of complying with their own regulations” by disapproving
programs that do not contain the elements required by the
regulations. Workman v. Mitchell, 502 F.2d 1201, 1205 (9th
20 Jn the current regulations this provision appears as 4]
C.F.R. § 60-2.2(c)(3) (1977). See 43 Fed.Reg. 49240, 49250
(October 20, 1978).
21 As Revised Order No. 4 recognizes, the complex task of
“transform[ing] . . . paper commitments into equal employ-
ment opportunity” requires leeway for the operation of dis-
cretion and good faith. But “developing and judging” the
initial adequacy of the paper commitments can be carried out
according to clearly stated criteria. 41 C.F.R. § 60-2.1.
A-16
Cir. 1974). See also Elliott v. Weinberger, 564 F.2d 1219, 1226
(9th Cir. 1977), aff'd in part, rev'd in part sub nom. Califano v.
Yamasaki, US. —_, 99 S.Ct. 2545, 61 L.Ed.2d 176
(1979). For this an order in the nature of mandamus will lie.
It is no bar to such relief that the court may be required to
interpret Revised Order No. 4 to determine the precise scope of
the agency’s duties. “[O]jnce the court interprets the law, the
defendant’s duty will become clear; the court is not telling the
defendant how to exercise his discretion.” Knuckles v. Weinber-
ger, 511 F.2d 1221, 1222 (9th Cir. 1975).
Appellants rely on three Court of Appeals’ holdings that
Executive Order 11246 does not afford a basis for a private
right of action by an employee against an employer for alleged
discrimination. These cases are inapposite. Two involved suits
for damages for alleged violation of nondiscrimination cov-
enants in private employers’ contracts with the government.22
The courts held that a private right to initiate judicial enforce-
ment of such a covenant independently of the government
would be inconsistent with the enforcement scheme created by
the Executive Order. The third case involved a suit by a
government employee against the government as an employer,
and was based primarily upon sovereign immunity.23
[18] Appellees do not seek recognition of a supplemental
private enforcement mechanism. They do not seek damages for
specific acts of discrimination against themselves. They ask
only that the court review the government’s own enforcement
effort against the standards established by the Executive Order
and regulations. Review of this sort is an ordinary element of
administrative enforcement schemes, absent clear indication to
the contrary. Since the only relief sought in such a suit is that
22 Farmer v. Philadelphia Electric Co., 329 F.2d 3 (3d Cir.
1964); Farkas v. Texas Instrument, Inc., 375 F.2d 629 (Sth Cir.
1967). .
23 Gnotta v. United States, 415 F.2d 1271, 1275 (8th Cir.
1969).
A-17
government officials be required to perform the non-
discretionary duties imposed upon them by the Executive Order
and regulations, the action is by definition compatible with the
scheme established by the Order and regulations. The reluc-
tance of courts to imply separate private enforcement nghts
from statutes or regulations which provide explicitly only for
government enforcement procedures and penalties, see, e.g.,
Cort v. Ash, 422 U.S. 66, 78-80, 95 S.Ct. 2080, 45 L.Ed.2d 26
(1975); National R. R. Passenger Corp. v. National Ass’n of R.
R. Passengers, 414 U.S. 453, 458, 94 S.Ct. 690, 38 L.Ed.2d 646
(1974), is not applicable to such a private proceeding as this.
If the cases on which appellants rely correctly deny the
right to initiate a private suit against a discriminating employer
under Executive Order 11246, judicial oversight of enforcement
efforts of government officials through such a suit as this
becomes doubly important; without it, no remedy would be
available against compliance agencies that ignore the specific
requirements of the Executive Order and regulations.
[19] The argument that sovereign immunity bars this suit
is no longer available. After briefs were filed, Congress
amended the Administrative Procedure Act to remove the
sovereign immunity defense to judicial review of administrative
action where nonmonetary relief is sought. See Pub.L. 94-574.
§ 1, Oct. 21, 1976, 90 Stat. 2721, amending 5 U.S.C. § 702. The
amendment is applicable on this appeal. Hill v. United States,
571 F.2d 1098 (9th Cir. 1978).
[20] Appellant Chamber of Commerce contends that even
if a private judicial remedy is available, appellees have no
standing to pursue it.24
24The Legal Aid Society of Alameda County and the
Western Regional Job Council appear as representatives of the
(footnote continued on following page)
A-18
[21, 22] The standards for evaluating standing are clear.
To establish an Article III case or controversy plaintiffs must
allege they “personally ha[ve] suffered some actual or threat-
ened injury as a result of the putatively illegai conduct of the
defendant ... that is likely to be redressed if they requested
relief is granted.” Gladstone, Realtors v. Bellwood, 441 U.S. 91,
99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979). The injury must be
“fairly traceable to the defendant’s acts or omissions,” Arling-
ton Heights v. Metropolitan Housing Development Corp., 429
U.S. 252, 261, 97 S.Ct. 555, 561, 50 L.Ed.2d 450 (1977); there
must be a “ ‘substantial likelihood’ that the relief requested will
redress the injury claimed.” Duke Power Co. v. Carolina
Environmental Study Group, 438 U.S. 59, 75 n. 20, 98 S.Ct.
2620, 2631, n. 20, 57 L.Ed.2d 595 (1978).25 To sustain a
favorable judgment, the allegations must be uncontroverted or
proven.26
(footnote concluded from preceding page)
individual appellees. Their standing turns on that of the
individuals they represent. Hunt v. Washington Apple Advertis-
ing Commission, 432 U.S. 333, 342-43, 97 S.Ct. 2434, 53
L.Ed.2d 383 (1977), and is not challenged separately by
appellants.
25 See also Simon v. Eastern Kentucky Welfare Rights Org.,
426 U.S. 26, 38, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976); Warth
v. Seldin, 422 U.S. 490, 499, 95 S.Ct. 2197, 45 L.Ed.2d 343
(1975); United States v. Imperial Irrigation District, 559 F.2d
509, 517 (9th Cir. 1977), on denial of rehearing, 595 F.2d 525
(9th Cir. 1979); Bowker v. Morton, 541 F.2d 1347, 1349 (9th
Cir. 1976). '
26 Article II] controls not only who may have access to
federal courts at the threshold of the litigation, but also who
may obtain a judgment. To invoke federal jurisdiction, plain-
tiffs must allege facts adequate to confer standing; to obtain a
judgment and remedy, plaintiffs must establish the truth of
these or other adequate allegations. See Gladstone Realtors v.
Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66
(1979); Duke Power Co. v. Carolina Environmental Study
Group, 438 U.S. 59, 72-78, 98 S.Ct. 2620, 57 L.Ed.2d 595
(1978).
A-19
A fair application of the standards to this case is made
difficult by the fact that appellees’ standing was first questioned
in a reply brief filed in this court by the Chamber of Com-
merce —no other appellant raised the issue. Appellees’ stand-
ing was not contested in the trial court—the defendant officials
did not deny the factual allegations of the complaint relating to
appellees’ standing; they did not challenge the factual or legal
basis for appellees’ standing either in their motion to dismiss
the complaint or in their opposition to appellees’ motion for
partial summary judgment.
[23] The Chamber’s sole argument on standing, stated in
one paragraph in its reply brief, is that contractors might refuse
to contract with the government to avoid complying with the
requirements of the decree, thereby rendering the decree useless
and decreasing rather than increasing job opportunities for
appellees—an argument we reject for reasons stated below. At
no point in the proceedings in this court or the court below has
any party suggested that the named appellees were not injured
or were unlikely to benefit individually from the decree even if
the overall effect of the decree was to make more jobs available
for minority job-hunters in Alameda County. No doubt the
record would be substantially more complete had appellees
been called upon to marshall the facts and law in support of
standing in response to a timely challenge to standing. Taking
the record as it is, however, enough appears to justify the
conclusion that standing requirements were satisfied.
[24] The complaint alleged that the defendant federal
Officials approved affirmative action Programs which did not
comply with Revised Order No. 4. The district court agreed,
finding the officials had consistently approved programs lacking
adequate work force composition analyses and statements of
goals and timetables to correct underutilizations of minorities
and women.27 The complaint further alleged that as a result of
27 The correctness of this finding goes to the merits and is
assumed for purposes of standing. Warth v. Seldin, 422 US.
490, 500, 95 S.Ct. 2197, 45 L.Ed.2d 343 (irs). BGs
considered in parts V-VI, infra.
A-20
the improper approval of affirmative action programs individ-
ual appellees were denied employment opportunities with
contractors for whom appellees desired to work. Second
Amended Complaint 9] 3C-F, 23D, 42. Each individual
appellee alleged that he or she is an unemployed black resident
of Oakland (in Alameda County), and that he or she sought
employment unsuccessfully with identified contractors and was
turned away on the basis of race and/or sex. Appellee Castillo,
for example, alleged that she desired employment generally
with contractors within the defendant officials’ compliance
jurisdiction, that she sought employment with the Chiodo
Candy Company and was turned away without being asked the
type of job she sought or her qualifications, and that she was
denied an opportunity to apply for work because of her race
and sex. On the basis of these uncontested allegations and the
record as a whole, the district court concluded that appellees
‘“‘who have unsuccessfully sought jobs with federal contractors”
had standing because they were “directly and adversely affect-
ed by the failure of [defendant officials] to carry out their
monitoring duties [with respect to approval of affirmative
action programs] under Executive Order 11246.”
[25-28] Two established rules of construction have signifi-
cant bearing upon the adequacy of these allegations and
findings. The allegations are to be treated as admitted since not
denied, Fed.R.Civ.P. 8(d); and the allegations and supporting
evidence are to be construed in favor of the appellees—the
Parties asserting standing, see Warth v. Seldin, 422 U.S. 490,
501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). Moreover it is
unnecessary to examine the standing of all appellees so long as
one had standing to secure the requested relief. See Arlington
Heights v. Metropolitan Housing Development Corp., 429 U.S.
252, 264 n. 9, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977). We
conclude that appellee Castillo had standing.
[29, 30] The denial of employment opportunities to
Castillo satisfied the requirement of “actual injury.” It must also
A-21
appear that this injury was caused by the federal officials’
failure to enforce the executive order. Such causation is
established if actual job opportunities would have arisen had
the federal officials refused to approve Geficient affirmative
action programs. Fairly read, the complaint alleged and the
district court found that, absent approval of deficient programs,
additional minority job opportunities would have been avail-
able with the contractors from whom appellees sought employ-
ment. The substance of appellee Castillo’s claim was that she
was unable to obtain consideration for suitable work with the
Chiodo Candy Company because enforcement officials had not
required goals and timetables to remedy the underutilization of
women and blacks in the company’s work force. A contempo-
rary compliance review of the Chiodo work force showed that
although minority persons constituted 9.4% of the area labor
force, Chiodo had no black employees in the service worker
category, one black among its 30 unskilled employees (labor-
ers), none in the semi-skilled category (operatives), and none
among its office and clerical workers or in management posi-
tions. Only in the skilled craftsman category did it have
substantial black representation (five of 19 employees). Had
compliance officials required implementation of an affirmative
action plan containing the goals and _ timetables appellees
contend were required, it is more than purely speculative that
Chiodo would have been seeking qualified minority applicants
to correct the evident company-wide underutilizations. More-
over, contemporary compliance reviews reflected under-
utilizations of blacks by 70% of the Alameda County food
processing contractors, and systematic underutilization of
blacks both overall and in every or virtually every job category
by more than a third of such contractors.28 There is a substan-
26 Shasta Beverages had one black employee in a work
force of 154, or .6% utilization. That employee was one of
twenty technicians, giving that category a 5% utilization level: in
all other categories utilization was zero. Carnation Company
(footnote continued on following page)
A-22
tial probability that enforcement of the decree against these
contractors would have opened new job opportunities in every
category for black persons generally and for Castillo specific-
ally. This evidence together with the uncontradicted allegations
of the complaint were sufficient to show that appellee Castillo’s
injury was “fairly traceable” to the challenged approval of
deficient affirmative action programs. Castillo must also show a
substantial probability that the relief sought will remedy the
alleged injury. When a plaintiff has established the requisite
causation, the court usually may infer that correction of defend-
ant’s improper conduct will relieve the injury caused thereby.
See Gladstone, Realtors v. Bellwood, supra, 99 S.Ct. 1601 at
had four black employees of 316 in the work force (1.2%), with
utilization at zero in several categories and no higher than 6% in
any. Oscar Meyer and Heinz had no black employees at all.
Rath Packing had one black employee of 48 (2%) overall and
of 23 (4.3%) in the semi-skilled operatives category, all other
categories showing zero utilization. Kockos Brothers showed
17 black employees of 336 (5%), all but two in the operatives
category (which itself had the highest utilization (6%) in the
work force). Foremost Transport had four black employees of
54 (7.4%), with underutilization in all but one category in
which one of the two employees was black. Ghirardelli
Chocolate had two black craftsmen and one black unskilled
laborer among 73 employees (4.1%), with underutilization in
all but one job category. Kilpatrick’s Bakery had 15 black
employees of 247 (6%), with underutilization in all but the
service worker category. Safeway Stores had 37 black employ-
ees in a work force of 741 (4.9%), with zero utilization in some
categories and underutilization in all others except service
workers, where blacks constituted more than 41% of the work
force.
Other contractors evidenced underutilization in some but
not all categories. Some of these also showed underutilization
in their overall figures as well. E.g., Kellogg Company (6.3%
overall, with underutilization in office and clerical, craftsman,
and high-level management categories); Golden Grain Maca-
roni (7.7% overall; underutilization in laborer, craftsman, office
and clerical, and high-level management).
A-23
1608; Duke Power Co. v. Carolina Environmental study Group,
supra, 438 U.S. at 74, 98 S.Ct. 2620. A properly functioning
enforcement authority can require, by force of sanction, that
contractors within its jurisdiction comply with their own
affirmative action programs. If Castillo’s claims have merit, it is
substantially probable that concrete job opportunities for mi-
nority applicants will arise with Chiodo and other identified
contractors in the same area in every or virtually every job
category, from unskilled labor through high level manage-
ment.29
[31] Whatever specific level of skills or qualifications
Castillo has, some work opportunity for which she is qualified
will likely materialize with these identified employers in the
area in which she desires to work. This is sufficient to establish
standing. Compare Arlington Heights v. Metropolitan Housing
Development., 429 U.S. at 264, 97 S.Ct. 555. Appellee need not
prove she is bound to be selected for the new opportunities over
all others. Like the individual plaintiff in Arlington Heights, she
need show only that her “quest” for a desired employment
opportunity for which she could have competed was
“thwarted” by the actions complained of, and that the opportu-
29 Castillo did not allege in so many words that she was
qualified for specific positions which would have been available
had the contractors been required to implement adequate
affirmative action plans. But Castillo did allege that Chiodo
turned her away “without even asking the type of job that she
sought or what her qualifications were.” This necessarily im-
plied that appellee believed herself qualified to perform some
work required in the company’s operations, and Chiodo under-
utilized blacks in virtually every job category. Moreover,
appellee alleged she was denied consideration for work “‘on the
basis of’ her race and sex. Since refusal to hire because of lack
of qualification is not refusal to hire because of race or sex, the
necessary implication of this allegation is that Castillo was not
hired despite the fact that she was qualified. One who claims
loss of employment solely due to racial discrimination neces-
sarily claims to possess the requisite job qualifications.
A-24
nity will likely materialize—thus allowing her to compete for
it—if the defendants act as required by the decree. Cf. id.
[32] The argument advanced by the Chamber of Com-
merce—the only objection to standing actually raised by any
party—is all but frivolous. The Chamber does not suggest that
appellees were not injured nor that the decree, if complied with,
would not have alleviated this injury. The Chamber’s argu-
ment is that the contractors might elect to forego their contracts
with the government rather than comply with affirmative action
programs of the kind appellees assert to be required, and if they
did so the injury to appellees would persist. The record reflects
no substantial additional cost or other factor that might have
led the contractors to abandon existing and presumably profit-
able contracts with the government, and accept debarment
from future contracts, rather than correct deficiencies in their
affirmative action programs. On the contrary, the record
suggests both that the increase in the available labor supply
that would have resulted from elimination of discrimination
against women and minorities would have reduced the con-
tractors’ costs, and that the opportunity to contract with the
government was of great value to the contractors.9° Compare
Simon v. Eastern Kentucky Welfare Rights Organization, 426
U.S. 26, 43-44, 96, 1917, 48 L.Ed.2d 450 (1976).
Castillo and the other appellees also satisfy the prudential
limitations on standing. Like the individual plaintiff in Arling-
ton Heights, appellees assert more than a generalized grievance
shared in equal measure by many others. Appellees’ injury as
minority job seekers among the Alameda County contractors 1s
“peculiar to [themselves] or to a distinct group of which [they
30 The Chamber does not suggest the record could have
been supplemented with concrete evidence to support the
Chamber’s speculation about contractor withdrawal, had the
Chamber had an opportunity to participate below. At any rate,
the Chamber must accept the record as it stands, since the
Chamber has appealed only the summary judgment and not
the denial of intervention. See note 13.
*.
A-25
are] a part.” Gladstone, Realtors v. Bellwood, 441 U.S. at 100,
99 S.Ct. at 1608. They assert their own rights, not those of third
parties. Jd.3' As set forth in part IIIA of this opinion, plaintiffs
have a right to seek judicial relief under Executive Order 11246
and Revised Order No. 4. Warth v. Seldin, supra, 422 US. at
500, 95 S.Ct. 2197.
IV.
[33] Appellants argue the district court acted prematurely
by granting relief without requiring appellees to exhaust the
administrative remedy available under 41 C.F.R. § 60-1.21 ef
seq. (1973). These provisions apply to complaints by employ-
ers, or applicants for employment, against individual employers
for alleged acts of discrimination violating the employer’s
contractual obligations to the government.32 Alth igh the
complaint in this case alleges such acts as the immediate source
31 If the “zone of interests” limitation on Standing survives,
at least as to matters of review under the Administrative
Procedure Act, see Gladstone, Realtors v. Bellwood, 441 US. 91.
99 S.Ct. at 1608 n. 6 (1979); compare Simon v. Eastern
Kentucky Welfare Rights Org., 426 U.S. 26, 38-39 n. 19, 96
S.Ct. 1917 (1976); K. Davis, Administrative Law in the
Seventies § 22.02-11 at 509-15 (1976); 13 Wright, Miller &
Cooper, Federal Practice & Procedure; Civil § 3531 at 87
(Supp. 1978), as a member of a minority group seeking a job
with federal contractors, Castillo falls easily within the zone of
interests protected by Executive Order 11246 and Revised
Ordei No. 4.
xs The complaint procedure in force when appellees began
this action permitted any employee or applicant of a federal
contractor to file “a complaint of alleged discrimination in
violation of the equal opportunity clause.” 41 C.F.R. §§ 60-
1.21, 1.22 ( 1973). The procedure was apparently designed to
handle complaints that specific employment decisions violated
the nondiscrimination covenant of the employer’s federal con-
tract. Thus, the complaint must identify the contractor “‘com-
mitting the alleged discrimination” and must describe “the acts
considered to be discriminatory.” 41 C.F.R. § 6-1.23.
A-26
of the “distinct and palpable injury” to individual appellees
essential to standing, these acts are not the primary target of the
litigation. The complaint is directed instead at the ultimate
cause of appellees’ injury—the systematic approval by govern-
ment officials of affirmative action programs that did not
contain the provisions mandated by the regulations to expose
and eliminate discriminatory employment practices. Appellees
seek a declaration of the standard: by which the adequacy of
affirmative action plans must be judged and a declaration of the
duties of compliance officials in implementing those standards.
The administrative procedures to which appellants point are
not designed for processing claims of this sort or to provide
relief of this scope. With respect to this major aspect of
appellees’ claim, there was no administrative remedy to be
exhausted. Rosado v. Wyman, 397 U.S. 397, 406 & n. 8, 90
S.Ct. 1207, 25 L.Ed.2d 442 (1970).33
[34] Moreover, even if the complaint procedures were
applicable to appellees’ primary claim, we would not reverse
because appellees failed formally to exhaust them. This is not a
case in which exhaustion of administrative remedies is required
by statute as a prerequisite to judicial intervention. As applied
33 Freeman v. Schultz, 153 U.S.App.D.C. 152, 468 F.2d
120 (D.C. Cir. 1972), and Hadnott v. Laird, 149 U.S.App.D.C.
358, 463 F.2d 304 (D.C. Cir. 1972), on which appellants rely,
are distinguishable. In both cases, the complaint was directed
at discriminatory acts of a particular contractor or contractors.
The relief sought (cancellation of existing contracts and debar-
ment from future contracts) was that authorized in such cases
by the Executive order and regulations. Executive Order 11246,
§ 209(a) (1965) 41 C.F.R. § 60-1.24(c)(3) (1973). Hadnott
did seek relief against the responsible enforcement officials, and
the dissenting judge would have read the complaint as directed
to the failure of these officials to perform their duty, but the
majority treated the complaint as seeking relief against specific
offending companies and relegated the plaintiffs to the adminis-
trative remedy available for processing such complaints. See
aiso note 35 infra.
A-27
here, the requirement that administrative remedies be exhaust-
ed is a judicially created doctrine to be employed in the manner
that best serves the competing interests of the court. the agency,
and the aggrieved individual in the circumstances of the
particular case. Montgomery v. Rumsfeld, 572 F.2d 250, 253-54
(9th Cir. 1978). None of the interests served by the exhaustion
requirement would be advanced by a reversal in this case.
The private appellees did not deliberately flout the admin-
istrative process. It is questionable whether the formal remedy
provided by the regulations was applicable to any part of
appellees’ claims. Appellees submitted their grievance to the
agency by informal means before filing suit, and the agency
ruled against them on the merits, finding the affirmative action
programs acceptable. After litigation was commenced, the
district court, following the procedures approved in State of
Washington v. Udall, 417 F.2d 1310, 1319 n. 14 (9th Cir.
1969), required the private appellees to present their claims to
compliance officials a second time, but to no avail.34 Thus
agency Officials were afforded an opportunity to correct their
errors, to make their expertise available. and to develop an
administrative record for review, see Weinberger v. Salfi, 422
U.S. 749, 765, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975), and
declined to do so. Moreover, as defendants in this litigation,
responsible officials provided the court with the counsel of their
experience and expertise to the extent expertise was relevant.
34 Before filing this lawsuit, private appellees requested
federal officials to intensify enforcement of the Executive Order
and regulations. In response, the agency conducted reviews of
all Alameda County contractors within its compliance jurisdic-
tion. The agency concluded all had acceptable affirmative
action programs. After appellees filed suit, the court ordered
Proceedings stayed “to permit disposition of all issues herein
involved at the administrative level of each of the offices
affected by the complaint.” Appellees submitted a detailed
memorandum to the agency discussing the various areas in
which appellees believed administrative enforcement of the
regulations to be deficient. The agency took no action.
A-28
They participated actively in the proceedings below and made
their views as to the correct construction of the regulations
known to the court. Finally, no factual determinations were
involved for which agency procedures or creation of an admin-
istrative record could have been especially useful. See McGee
v. United States, 402 U.S. 479, 485, 91 S.Ct. 1565, 29 L.Ed.2d
47 (1971). The allegation was that the responsible agency
officials approved affirmative action programs that were facially
inadequate in light of the Executive Order and regulations.
Only the documents themselves were relevant. Thus, while
resolution of some charges of affirmative action clause viola-
tions might require detailed fact-finding and_ record-
building—for example, a charge that the contractor had not
sought in good faith to implement his affirmative action pro-
gram—the court in this case was not disadvantaged by the lack
of formal agency complaint proceedings below.95
35 These factors further distinguish Freeman and Hadnott.
See note 33. Those cases involved alleged violations of the
nondiscrimination clause in particular contracts. Such viola-
tions usually raise factual issues as to the relationship between
the employer and the alleged discriminatee. Compare Furnco
Construction Corp. v. Waters, 438 U.S. 567, 575, 98 S.Ct. 2943,
57 L.Ed.2d 957 (1978). Agency investigation procedures may
be especially valuable in ferreting out these facts, and the
administrative record compiled by the agency may be essential
to judicial review. This fact-finding and record-building were
absent in Freeman and Hadnott, see, 153 U.S.App.D.C. at 155
& n. 6, 468 F.2d at 123 & n. 6; 149 U.S.App.D.C. at 362, 463
F.2d at 308. As a consequence, the reviewing court had no
basis, short of hearing the testimony itself, upon which to judge
whether the agency determination of nondiscrimination was
justified.
Further, in this case appellees’ letters and subsequent
communications with the agency and their detailed informal
complaint to the agency cataloging the asserted flaws in the
approved affirmative action plans, together with the court’s
decision to stay its hand for further administrative-level nego-
tiations, gave the agency a significantly greater opportunity to
(footnote continued on following pige)
A-29
V.
[35] The legitimacy of the standards applied by the
district court in evaluating affirmative action programs and in
formulating the decree is challenged on procedural grounds.
The district court concluded that compliance officials ap-
proved affirmative action programs that were in violation of
Revised Order No. 4 in one or more of the following respects:
(1) they contained inadequate utilization analyses, 41 C.F.R.
§ 60—2.11; (2) they failed to establish adequate goals and
timetables designed to correct underutilization of minorities and
women within the minimum period necessary, 41 C.F.R.
§§ 60—2.12, 60—1.20(b); and (3) they failed to include the
required additional ingredients listed in 41 C.F.R. § 60—2.13.
In the course of its analysis, the court referred to Technical
Guidance Memo No. 1, issued to compliance agencies “to give
specific guidance on the proper interpretation of certain selected
issues that have been or continue to be raised regarding
Revised Order 4.”36 Appellants contend that as used by the
(footnote concluded from preceding page)
correct the asserted errors than did the single, unpursued oral
complaint in Freeman, 153 U.S.App.D.C. at 153-54, 468 F.2d
at 121-22, or the apparent lack of any resort to the agency at all
in Hadnott. Indeed, in Hadnott there was every indication that
the agency was correcting sua sponte the errors of which '
aaa complained. 149 U.S.App.D.C. at 360, 463 F.2d at
6.
36 The Memo was issued by the Office of the Federal
Contract Compliance of the Department of Labor on February
22, 1974, a few months before partial summary judgment was
granted. Although the Memo has not been published, its
provisions are virtually identical to those of OFCCP’s Standard
Contractor Review Report, Part B, § XII.B(a)-(c), published in
the Federal Register three weeks after entry of the district
court’s order. See 39 Fed.Reg. 25655 (1974), codified at 41
C.F.R. § 60-60.9 (1977), 43 Fed.Reg. 49240 (1978).
A-30
district court Technical Guidance Memo No. | was a legislative
rule having a substantial impact upon the rights and obligations
of federal contractors, and was invalid because not issued
pursuant to the rule-making procedures of 5 U.S.C. § 553,
citing Texaco, Inc. v. FPC, 412 F.2d 740, 745 (3d Cir. 1969),
and related cases. Appellees respond that Technical Guidance
Memo No. | is an interpretive rule exempt from notice-and-
comment requirements under subsection (b)(A) of 5 U.S.C.
§ 553. See, e.g., Energy Reserves Group, Inc. v. Department of
Energy, 589 F.2d 1082 (Em.App.1978).
We need not decide whether the Technical Guidance
Memo is to be classified as a legislative rule and, if so, whether
it was lawfully issued. Although the district court found
support for its holding in the Technical Guidance Memo (381
F.Supp. at 135-39), the court also concluded that reference to
the Memo was not necessary to the decision of this case (381
F.Supp. at 135-36 n. 16). We agree. It is clear without
reference to the Memo that appellee officials iepeatedly ap-
proved affirmative action programs that failed to satisfy the
fundamental requirements of Revised Order No. 4.
Although approved by compliance officials, non« of the
affirmative action programs contained an analysis of all eight
factors specified in Revised Order No. 4, 41 C.F.R. § 60—2.11,
for determining underutilization in any job category.37 Most of
37 41 C.F.R. § 60-2.11(b)(1) reads:
In determining whether minorities are being underutilized
in any job classification the contractors will consider at least the
following factors:
(1) The minority population of the labor area sur-
rounding the facility;
(ii) The size of the minority unemployment force in
the labor area surrounding the facility;
(iii) The percentage of the minority work force as
compared with the total work force in the immediate labor
area.
(footnote continued on following page)
A-31
the programs failed to establish goals and timetables designed
to correct the underutilization of minorities and women, 4]
C.F.R. § 60—2.12(g), in a manner that would assure the
“prompt achievement of full and equal employment opportu-
nity.” 41 C.F.R. §60—1.40(a). The goals set forth in the
programs neither established long-range targets to complete the
correction of underutilizations, 41 C.F.R. § 60—2.12(e), nor
committed the contractor to eradicating underutilizations within
any period of time, 41 C.F.R. §§ 60—2.12(d), 60—1.20(b).
The annual numerical goals of a number of the programs rested
on unexplained underprojection of job openings anticipated by
the contractor for the forthcoming year.3® All the programs
failed to contain one or more of the “additional ingredients”
required by 41 C.F.R. § 60—2.13, including development and
implementation of affirmative action recruiting programs for
minorities and women, 41 C.F.R. § 60—2.13(f)(j), plans for
support of community-based programs designed to improve
employment opportunities for minorities and women, 41 C.F.R.
§ 60—2.13(i), and development of internal audit and reporting
systems for measuring the effectiveness of the program, 41
C.F.R. § 60—2.13(g).
(footnote concluded from preceding page)
(iv) The general availability of minorities having
requisite skills in the immediate labor area;
(v) The availability of minorities having requisite
skills in an area in which the contractor can reasonably
recruit;
(vi) The availability o1 promotable and transferable
minorities within the contractor’s organization;
(vii) The existence of training institutions capable of
training persons in the requisite skills; and
(viii) The degree of training which the contractor is
reasonably able to undertake as a means of making all job
classes available to minorities.
A similar analysis is required for utilization of women by
section 60-2.11(b)(2).
38 See 351 F.Supp. at 137 & n.19.
A-32
VI.
Appellants object that certain provisions of the decree are
at variance with the Executive Order and implementing regu-
lations.
The court ordered compliance officials to approve only
affirmative action programs containing the utilization analyses,
goals and timetables, and additional ingredients called for by
Revised Order No. 4. The decree imposes specific requirements
with respect to each of these components. The utilization
analysis in each affirmative action program must compare,
separately for each set of similar jobs, the percentage of women
and of each of specified minority groups in the contractor’s
existing work force with the percentage of available women and
members of each minority group in the applicable labor area.
The applicable labor area must be defined as either the city,
county or Standard Metropolitan Statistical Area, depending
upon which of the three has the highest minority population,
unless the contractor justifies use of an area with fewer minority
residents.99 The decree requires that an ultimate goal be set for
39 The portion of the decree dealing with utilization anal-
yses provides:
(a) Each program must contain a utilization analysis
that satisfies each of the following requirements:
(i) The analysis must include a list of all major
job categories (hereinafter referred to as “job
groups”) in the contractor’s work force and, for each
such job group, a statement of the total number of
male and female incumbents for each of the following
ethnic groups: Blacks, Spanish-Surnamed Americans,
American Indians and Orientals.
(ii) Minority and female “availability” must be
separately analyzed for each job group. The avail-
ability analysis must include a statement of the specif-
ic percentages of minority persons (stated separately
for Blacks, Spanish-Surnamed Americans, American
Indians and Orientals) and minority and non-minority
(footnote continued on following page)
A-33
each job group at least equal to the percentage of women and
minority workers in the job group available in the applicable
labor market; that a minimum feasible period be established for
achieving this goal; and that interim percentage hiring rates be
fixed and remain in effect until that underutilization is com-
pletely corrected.4° Each program must contain specific and
(footnote concluded from preceding page)
women determined to be available in the applicable
labor area for each job group.
(ili) Whenever the percentage of total minorities
or of any ethnic group exceeding 2% of the surround-
ing population or of women in a job group is lower
than the percentage of such persons available in that
job group within the applicable labor area, the
affirmative action program must specifically state that
underutilization exists in that job group.
(iv) For purposes of determining availability, the
labor area must not be defined in such a way as to
minimize the availability of minorities or women. In
defining the relevant labor area, the contractor must
set forth statistics showing the ethnic and sexual
composition (including specific data for the four mi-
nority ethnic groups) of the population of the Stan-
dard Metropolitan Statistical Area, county and city in
which the establishment is located and other appropri-
ate adjacent areas. Any program which adopts a
labor area which has a minority population lower than
the highest of the SMSA, county or city must be
rejected unless the program provides an appropriate
written justification for the use of such area.
40 The goals-and-timetables portion of the decree provides:
(b) Each program must contain goals and timetables
which satisfy each of the following requirements:
(i) An ultimate goal must be established for each
job group in which underutilization exists and must be
designed to completely correct the underutilization.
The ultimate goal must be stated as a percentage of
the total employees in the job group and must be at
least equal to the percentage of minorities or women
available for work in the job group in the labor
market.
(footnote continued on following page)
A-34
detailed action-oriented recruitment and training programs.‘
Appellants object that the decree requires compliance
Officials to apply nmgid standards and criteria in testing the
adequacy of the utilization analysis, goals and timetables, and
compliance programs in affirmative actions plans, and that this
is inconsistent with Revised Order No. 4 which imposes flexible
(footnote concluded from preceding page)
(ii) For each job group in which underutilization
exists, a specific timetable must be established for
reaching the ultimate goal in the minimum feasible
time period.
(iii) For each job group in which under-
utilization exists, the contractor must establish rates
for hiring or promoting the minorities and women.
The rates must be stated as a percentage of new
placements in the job group, and they must remain in
effect (unless specifically modified on the basis of
subsequent data) until the underutilization is com-
pletely corrected. The percentage rates must be the
maximum rates that can be achieved through the
contractor’s putting forth every good faith effort,
including the use of available recruitment and training
facilities, and must not be lower than the percentages
set in the ultimate goals. Numerical goals based on
projected openings are permissible but cannot be used
in place of percentage rates.
41 The action-oriented-program requirement of the decree
provides:
(c) Each program must contain specific and detailed
action oriented programs, including recruitment and train-
ing programs, which comply with the requirements of
Revised Order No. 4. These programs must, at a min-
imum, commit the contractor to undertake every good faith
effort to contact and use in some concrete and specific
manner relevant recruitment and training resources for
recruitment and training minorities and women to fill
positions in job groups where underutilization exists. Data
regarding promotable employees, community training fa-
cilities and company training facilities must be prepared by
the contractor itself and related to the locality.
A-35
standards and leaves determinations of compliance largely to
the discretion of compliance officials. Appellants misread the
regulations and the decree.
Appellants argue, for example, that the regulations do not
require affirmative action programs to contain “ultimate goals”
for female and minority utilization as distinguished from annual
Or interim goals, or indeed, no goals at all: and that the
regulations do not require goals tied to the percentage of
available women and minorities in the job groups or in the
labor pool, as distinguished from flexible goals or goals keyed
to a lower level that is more practical in the Particular
circumstances.
The regulations do not explicitly require that ultimate goals
be fixed, but they do so by inescapable implication. Goals are
to be directed toward achieving “full and equal employment
opportunity.” 41 C.F.R. § 60-1.40(a) by correcting “any identi-
fiable deficiencies” in female or minority utilization. 41 C.F.R.
§ 60-212(g). Affirmative action programs must be “result-
oriented,” and the result to which they are to be directed under
the current regulations is not merely “to increase materially the
utilization of minorities and women” —as it once was, 41 C.F.R.
§ 60-2.10 (1973 )—but “to achieve prompt and full utilization
of minorities and women” in deficient segments of the con-
tractor’s work force. 41 C.F.R. § 60-2.10 (1978). Goals that
must be stated in terms of “full utilization” and correction of
“‘any deficiencies” can hardly be less than ultimate goals.42
__ 42 As appellants note, the regulations anticipate that goals
will not be established in some circumstances. For example, 41
C.F.R. § 60—2.12(k) provides that when no goal is provided
the affirmative action program must detail reasons for the
omission. Appellants argue that the decree conflicts with the
regulations in this respect because the decree provides without
qualification that “Each program must contain goals and
timetables.” However, it is clear from the decree as a whole,
and federal appellees concede that if goals are inappropriate
under the regulations in any circumstances, the exception would
be equally applicable under the decree.
A-36
[ 36, 37] Similarly, although the regulations do not state in
so many words that acceptable ultimate goals must reflect a
level of female and minority employment in the contractor’s
establishment at least equal to the percentage of women and
minorities available in the job group in the contractor’s labor
area, no other inference is consistent with what the regulations
do state. Under the regulations, goals in affirmative action
programs are designed to correct underutilizations. 41 C.F.R.
§ 60-2.12(g). Underutilizations are ‘fewer minorities or wom-
en in a particular job group than would reasonable be expected
by their availability.” 41 C.F.R. § 60-2.11(b). Availability
figures are to reflect only qualified workers reasonably available
in the relevant labor pool. Jd. It follows that, absent
discrimination utilization will not be less than availability, and
that to correct underutilization goals must be set to achieve
parity with the level of available women and minority workers
in the relevant labor pool. To say that compliance officia!. may
accept employment goals lower than the level of qualified
women or minority workers in the relevant labor area, as
appellants do, is inconsistent with the simple central canon of
the regulations that underutilization must be corrected.43
This analysis of the decree and the regulations also sug-
gests the error in appellants’ argument that by determining
underutilization and setting goals and hiring rates on the basis
of a comparison of percentages of women and minorities in job
43In this and other respects the district court’s inter-
pretation of the regulations reflected in the decree is consistent
with that found in Technical Guidance Memo No. 1. See note
36. Although we have refrained from deciding whether the
Memo is a lawfully published rule having the force of law,
unquestionably it reflects a construction of Revised Order No. 4
by the agency responsible for its promulgation and enforce-
ment. As such it is entitled to weight ( Udall v. Tallman, 380
U.S. 1, 16, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965) ), even though
it may not be binding authority because of formal deficiencies.
Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89
L.Ed. 124 (1944).
‘
A-37
categories in a contractor’s work force and in the relevant labor
area, the decree substitutes a rigid mathematical formula for
the flexible determination encompassing all relevant factors
contemplated by the regulations. The percentage of women
and minorities available in a contractor’s work force is to be
determined by a consideration of the right variables specified in
the regulations, including, as noted above, possession of the
necessary skills for the particular job category. The same is true
of the determination of the percentage of such persons avail-
able in the work force in the relevant labor area. The
comparison of percentages is mechanical, but the percentages
to be compared are computed on the basis of the full range of
variables specified in the regulations.
[38] Appellants also argue that the decree substitutes a
rigid definition of the relevant labor area for flexible guidelines
in Revised Order No. 4. The regulations require that the
contractor’s availability analysis account for potential minority
employees in the area “surrounding [his] facility,” ‘in the
immediate labor area,” and “in an area in which [he] can
reasonably recruit.” 41 C.F.R. § 60-2.11(b)(1)(i)-(v), (2)(i)-
(v). The decree provides that a program which adopts a labor
area having a lower minority population than the highest in
three standard geographical statistical units (Standard
Metropolitan Statistical Area, County, and City) “must be
rejected unless the program provides an appropriate written
justification for the use of such areas.”44 This provision of the
decree does not displace the regulatory standard. It simply
provides a triggering mechanism for requiring a more explicit
demonstration on the written record that the standard has been
met when it appears that the boundaries of the labor market
may have been skewed to exclude minority workers.
The district court found that compliance officials repeat-
edly approved affirmative action programs containing over or
under-inclusive labor area definitions which minimized minor-
44 See Para (1)(a)(iv) of the decree, note 39.
A-38
ity availability. 381 F.Supp. at 135. Requiring a full written
exposition in the affirmative action program of the justification
for the boundaries drawn, when the circumstances suggest
manipulation, will make it more difficult for compliance offi-
cials to approve noncomplying programs in the future, and
easier to detect abuses if they occur. At the same time, the
power of the agency to determine the appropriate labor market
by careful analysis of the commuting distances, commu-
nications channels, and related factors, remains unimpaired. If
the written justification satisfies compliance officials that the
portions of the municipal unit with the highest minority popu-
lation are beyond reasonable commuting or recruiting range,
for example, a more limited labor area may be approved
though its minority population is lower.
[39] This provision of the decree reflects an appropriate
exercise of the court’s power, in fashioning a remedy on
administrative review, to “adjust its relief to the exigencies of
the case in accordance with the equitable principles governing
judicial action.”” Ford Motor Co. v. NLRB, 305 U.S. 364, 373,
59 S.Ct. 301, 307, 83 L.Ed. 221 (1939). The court’s power is
broad, so long as the court acts “within the bounds of the
[regulation] and without intruding upon the administrative
province.” Jd. The decree violates neither the language of
Revised Order No. 4 nor the “administrative province” of
compliance authorities. Cf. Mitchell v. DeMario Jewelry, 36}
U.S. 288, 290-92, 80 S.Ct. 332, 4 L.Ed.2d 323 (1960); Indiana
& Michigan Electric Co. v. FPC, 163 U.S.App.D.C. 334, 344,
502 F.2d 336, 346 (D.C. Cir. 1974).
[40] Finally, basing goals on availability levels does not
restrict administrative flexibility “in deciding when compliance
has been achieved,” as appellants argue. However the goals
are stated, they remain only “targets reasonably attainable by
means of applying every good faith effort” by the contractor.
41 C.F.R. §2.12(e). Compliance is measured by good faith
efforts to attain them, not by whether they are realized. 41
A-39
C.F.R. § 2.14. The decree does not alter this key tenet. It
affects only how the goals must be set, nor how they are to be
met.
VII.
Appellants argue that the provision in the decree restrain-
ing compliance officials from approving affirmative action plans
unless they include hiring and promotion rates equalling the
percentage of minorities and women available in the relevant
labor market, requires preferential hiring and promotion on the
basis of race and sex and is incompatible with section
703(a)(1), (2), (d) and (j) of Title VII of the Civil Rights Act
of 1964, 42 U.S.C. § 2000e-2(a)(1), (2), (d) & (j), and with
the equal protection component of the Due Process Clause of
the Fifth Amendment.
[41] Appellants’ argument rests on the premise that this
provision of the decree requires preferential hiring and promo-
tion of underutilized minorities and women, and consequent
“reverse discrimination” against individuals not in these
groups. Appellants’ premise is false. Nothing in the decree or
inherent in the circumstances of this case requires preferential
treatment or discrimination on the basis of race or sex. We
therefore need not consider when if ever racial and sexual
preferences and discrimination undertaken to comply with
Executive Order 11246 can be lawful under either Title VII or
the Constitution. Cf. United Steelworkers of America v. Weber,
sebcsiies: Sa , 99 S.Ct. 2721, 2726, 2730, 61 L.Ed.2d
480 (1979); id. at ___, 99 S.Ct. at 2726 (Rehnquist, J.,
dissenting ).
The source of hiring and promotion goals and rates
required by the decree to be included in acceptable affirmative
action programs is significant. As noted earlier (see text at note
43), these goals and rates reflect the contractor’s own determi-
nation of the percentage of minority and female workers
A-40
qualified for the particular job group who are reasonably
available for employment by that contractor. The goals and
rates thus represent the contractor’s own judgment as to the
percentage of females and minority members that would be
found in his work force if all available qualified persons applied
for employment and if all selection processes operated in a
completely nondiscriminatory manner. Given this premise, it is
entirely reasonable to assume that a contractor who finds a
lower percentage of women or minority members in a particular
job category in his work force may well be able to correct the
deficiency simply by removing obstacles to fair and equal
employment, without reliance upon racial preference or dis-
crimination.
Underutilization may be traced to failure of available
women and minority workers to apply, for a variety of reasons,
in the expected numbers. They may not be aware of job
openings. If this is the problem, contacts may be established
with local organizations, institutions, or individuals who are in a
position to refer women and minority applicants; advantage
may be taken of media and events through which potential
women and minority applicants can be reached; and word-of-
mouth recruiting by women and minority employees and
applicants may be encouraged.45 Perhaps the contractor will
discover that potential applicants are discouraged by the con-
tractor’s negative image among women workers or in the
minority community. If so, the problem may be solved by
designating minority’ liaison’ officers, 41 £C.F.R.
§ 60—2.22(a)(b), or by widening dissemination of the con-
tractor’s fair employment policy and_ practices, id.
§ 60—2.21(a)(b). Or deficiency in the flow of applications
from women and minority workers may be attributable to
persons other than the contractor—to labor unions or subcon-
45 See 41 C.F.R. § 60 2.24(e). See also [1976] Empl.
Prac. Guide (CCH) 1414; Fiss, A Theory of Fair Employment
Laws, 38 U.Chi.L.Rev. 235, 282-85 (1971).
A-4]
tractors, for example—whom the contractor can persuade to
abandon exclusionary practices. Jd. § 60—2.23(b)(17).
If the contractor is attracting a balanced flow of applicants,
underutilization may be the product of improper screening or
selection processes. Facially objective job criteria that screen
out women and minority workers disproportionately may prove
to be irrelevant or only marginally related to job performance,
and new and validated criteria can be substituted. Jd.
§ 60—2.24(b); [1976] Empl. Prac. Guide (CCH) 99 1416,
1418. Or the contractor may discover that hiring personnel
entertain subjective biases (conscious or not) that can be
corrected by instruction or training, or by removing biased
officials from the hiring process. 41 C.F.R. § 60—2.24(d).
Under most conditions these and similar steps to correct
flaws in the contractor’s hiring system will involve neither
preference nor discrimination, yet they may be adequate to
enable the contractor to comply fully with hiring and promotion
goals and rates required under the decree. Of course, it may
prove otherwise. Employers may find it expedient to adopt,
indeed compliance officials may require, affirmative action
programs that involve preference and discrimination.46 Both
administrative and judicial remedies will be available to test the
lawfulness of such provisions on the basis of a specific record.
But because the hiring and promotion requirements of the
Revised Order and decree may lead in some circumstances to
the adoption of questionable programs is not a sufficient ground
for condemning the requirement on its face: “A hypothetical
threat is not enough,” United Public Workers v. Mitchell, 330
U.S. 75, 90, 67 S.Ct. 556, 564, 91 L.Ed. 754 (1947).
Paragraph (2) of the decree is stricken as moot. The
remainder of the decree is affirmed.
APPENDIX II
A-42
LEGAL AID SOCIETY OF ALAMEDA
COUNTY et al., Plaintiffs,
v.
Peter J. BRENNAN, Secretary of the
United States Department of Labor,
et al., Defendants.
No. C-73-0282 AJZ.
United States District Court,
N.D. California.
June 20, 1974.
MEMORANDUM OPINION
ZIRPOLI, District Judge.
Executive Order 11246, issued September 24, 1965,’ re-
quires companies that hold federal contracts to:
take affirmative action to ensure that applicants are em-
ployed, and that employees are treated during employ-
ment, without regard to their race, color, religion, sex or
national origin.
' Executive Order 11246 is the latest in a series of executive
orders going back over 30 years which were designed to
promote equal employment opportunities for minority groups
by requiring federal contractors to include nondiscrimination
provisions in their contracts with the government. The first
such executive order was issued by President Franklin D.
Roosevelt on June 25, 1941. Executive Order 8802, 6 Fed.Reg.
3109 (1941). It ordered. “All contracting agencies of the
Government of the United States shall include in all defense
contracts hereafter negotiated by them a provision obligating
the contractor not to discriminate against any worker because of
race, creed, color, or national origin . . .” The order also set up a
Committee of Fair Employment Practices to investigate com-
plaints of discrimination in violation of the order and take
appropriate steps to redress valid grievances.
The order was continued in substantially the same form by
President Truman in 1945 and 1951. Executive Orders 9664
and 10308, 10 Fed.Reg. 15301 (1945) and 16 Fed.Reg. 12303
(1951); and by President Eisenhower in 1953, Executive Order
10479, 18 Fed.Reg. 4899 (1953), although primary responsi-
bility for obtaining compliance with the nondiscrimination
A-43
This case involves important questions concerning the enforce-
ment of this executive order and the scope of judicial review of
individual governmental agencies’ actions taken in its enforce-
ment. Plaintiffs move for partial summary judgment and an
order requiring the United States Department of Agriculture
[USDA] and the persons within the USDA responsible for
enforcing the executive order to refrain from approving
affirmative action programs of contractors assigned to the
USDA in Alameda County, California, which do not comply
with the regulations that set out the requirements of an
adequate affirmative action program. Before considering the
narrow questions presented by this motion, it is necessary to
review the history of this litigation, the executive order and
regulations at issue, and consider defendants’ objections to the
court’s jurisdiction.
I
Plaintiffs’ original complaint filed in this action in Febru-
ary, 1973, contained four claims for relief, seeking: (1) to
compel defendants to release information on the ethnic com-
(footnote concluded from preceding page)
provisions was imposed on the heads of the various contracting
agencies. On March 6, 1961, President Kennedy issued Execu-
tive Order 10925, 26 Fed.Reg. 1977 (1961), which established
the President’s Committee on Equal Employment Opportunity.
The order for the first time required the contractors to take
affirmative action to ensure nondiscrimination and established
sanctions and penalties for noncompliance. Executive Order
11246, presently in effect, was issued by President Johnson, 30
Fed.Reg. 12319 (1965), and transferred responsibility for its
implementation to the Secretary of Labor. Executive Order
11246 was amended by Executive Order 11375, 32 Fed.Reg.
14303 (1967), issued October 13, 1967, to include dis-
crimination on the basis of sex within its nondiscrimination
provisions. More detailed discussions of this history are
contained in Farmer v. Philadelphia Electric Co., 329 F.2d 3,
5-7 (3d Cir. 1964), and Contractors Ass’n of Eastern Pennsylva-
nia v. Secretary of Labor, 442 F.2d 159, 168-171 (3d Cir. ), cert.
denied, 404 U.S. 854, 92 S.Ct. 98, 30 L.Ed.2d 95 (1971). The
text of Executive Order 11246, as amended, may also be found
A-44
position of the work forces of the Alameda County contractors
subject to Executive Order 11246; (2) to require the USDA to
disclose the affirmative action programs and compliance review
reports of Alameda County contractors assigned to the USDA
for enforcement purposes; (3) to require defendants respon-
sible for these programs within the USDA to enforce the
requirements of Executive Order 11246 and the regulations and
orders issued pursuant to the executive order; and (4) to direct
the Secretary of Labor and the Director of the Office of Federal
Contract Compliance [OFCC], who delegated enforcement
responsibility to the USDA, to require the USDA to comply
with the executive order and corresponding regulations.
Named as defendants were Peter J. Brennan, Secretary of
the Department of Labor, who is responsible for the overall
administration of Executive Order 11246, and who is required
to “‘adopt such rules and regulations and issue such orders as he
deems necessary and appropriate to achieve the purposes” of
the executive order;? Philip J. Davis, Director of the OFCC. to
whom the responsibility for enforcing the executive order has
been delegated;3 Earl L. Butz, Secretary of the USDA, to which
primary enforcement responsibility for federal contractors en-
gaged in farming, the provision of agricultural services, sup-
pliers of food and kindred products, tobacco manufacturers.
and certain businesses in the wholesale food trade have been
assigned; and, finally, William Gladden, Chief of the Contract
2 Exec. Order No. 11,246 § 201, 3 C.F.R. 169, 170 ( 1974).
3 See 41 C.F.R. § 60-1.2 (1973).
_ “Fifteen federal agencies including the USDA have been
designated as “compliance agencies” by the OFCC and as-
signed compliance responsibilities under Executive Order 11246
for specific industries according to the categories of the Stan-
dard Industrial Code. The OFCC regulations make each such
agency primarily responsible for obtaining compliance with the
executive order and regulations issued by the OFCC. See 41
C.F.R. § 60-1.6 (1973).
A-45
Compliance Division of the USDA’s Office of Equal Opportu-
nity, who is ultimately responsible for enforcement within the
USDA.
Plaintiffs originally included the Alameda Legal Aid So-
ciety, a federally funded law project which represents low
income minority persons in Alameda County, California, and
which has a compliance project designed specifically to secure
the enforcement of laws relating to equal employment opportu-
nity; the director of the project; four unemployed minority
persons who have sought employment at businesses which
come within the compliance requirements of the executive order
and regulations issued thereunder; and the Western Regional
Job Council, an unincorporated association in Oakland, Califor-
nia, whose primary concern is the employment of minority
persons.®
5 The initial stages of this litigation involved plaintiffs’
attempts to obtain disclosure of the EEO-1, or ethnic com-
position reports for those nonconstruction federal contractors in
Alameda County which are subject to Executive Order 11246;
and the written affirmative action programs and compliance
review reports of federal contractors with establishments in
Alameda County that are assigned to the USDA for enforce-
ment purposes. For the most part these disclosure claims have
been resolved through settlement negotiations between the
parties. As a result, plaintiffs have now agreed to dismiss the
Legal Aid Society of Alameda County and its executive director
as plaintiffs.
Since the original complaint was filed, plaintiffs have filed
two amended complaints adding the United States Postal
Service and General Services Administration and their officials
responsible for administration of Executive Order 11246 as
defendants and raising the same issues against them as are
asserted against the USDA. Certain labor unions associated
with the provision of trucking services to the Postal Service
have also been added as defendants. In conjunction with these
additional claims, two individuals and the National Association
(footnote continued on following page)
A-46
With respect to the third and fourth claims for relief,
plaintiffs contend that defendants have failed to enforce Execu-
tive Order 11246 and the regulations issued pursuant to it in
two respects: (1) they have failed to undertake any review
whatsoever of the affirmative action progrims of the majority
of federal contractors, and (2) that where they have reviewed
programs, they have approved ones which fail to comply with
the executive order and regulations. Their motion for partial
summary judgment deals only with the second contention.
These claims were previously the subject of defendants’
motions to dismiss for lack of subject matter jurisdiction and
failure to state a claim upon which relief can be granted on the
grounds of sovereign immunity, nonreviewability of dis-
cretionary agency action, and failure of plaintiffs to exhaust
their administrative remedies. These motions were denied by
the court May 31, 1973, but they have since been renewed by
defendants, and their arguments are discussed more fully
below.
Following the denial of defendants’ motions to dismiss.
plaintiffs obtained the affirmative action programs of some 27
USDA assigned contractors in Alameda County which were
reviewed and approved during the period from August, 1972,
through January, 1973. Following receipt of these programs,
plaintiffs reviewed them and sent the USDA a lengthy and
detailed memorandum specifying their claims that the pro-
grams as approved were in violation of the applicable regu-
lations. specifically Revised Order Number 4, 41 C.F.R. Part
60-2 (1973), entitled, “Affirmative Action Programs.” When
no response was made, plaintiffs discussed the issues raised with
(footnote concluded from preceding page)
for the Advancement of Colored People have been permitted to
intervene as plaintiffs. None of these additional parties is
involved in plaintiffs’ motion for partial summary judgment
presently before the court.
A-47
an attorney from the Department of Labor. Finally, after
waiting over two months, plaintiffs brought the motion for
partial summary judgment now pending before the court. As
initially presented, the motion sought to restrain the USDA
from approving affirmative action programs that are not in
compliance with Executive Order 11246 and the regulations
issued thereunder. A nationwide scope of relief was requested.
Since the motion was presented, the court has held two
hearings and granted additional time for the USDA to present
materials showing its compliance efforts. The USDA has since
conducted or is conducting followup onsite reviews of all the
contractors directly involved and issued a number of show
cause orders.® Plaintiffs have narrowed the relief sought to
include directions to disapprove the affirmative action programs
of Alameda County contractors whose programs are shown to
be in noncompliance with Revised Order Number 4, and to
require of the USDA that any future approvals in Alameda
County, comply with the Order. The relief sought includes a
means of monitoring the USDA’s operations by plaintiffs and
the court. It is anticipated that if they succeed on this motion,
plaintiffs will submit materials showing that the USDA’s fail-
ings locally are duplicated elsewhere justifying nationwide
relief. For the moment, however, the USDA's activities in
Alameda County are directly under consideration. Before
turning to the merits of plaintiffs’ motion, the court will consider
the procedural and other objections to the court’s jurisdiction
postulated by defendants.
I]
It is important to distinguish at the outset that the basis of
this action is not the claims of individuals against specific
6 Upon a finding that a contractor has an unacceptable
affirmative action program, the compliance agency is required
to issue a notice to the contractor giving him 30 days to show
cause why enforcement proceedings under section 209(b) of
Executive Order 11246 should not be instituted. 41 C.F.R.
§ 60-2.2(c) (1973).
A-48
contractors for failure to employ them in a certain job; rather it
is an action seeking relief in the nature of mandamus to require
federal officers to perform specific and clearly defined duties
mandated by Executive Order 11246 and the regulations
promulgated pursuant to the executive order.
Defendants argue that a mandamus action is inappropriate
here under either the mandamus statute, 28 U.S.C. § 1361, or
the Administrative Procedure Act, 5 U.S.C. §§ 701-706, be-
cause the acts which plaintiffs seek to compel are committed to
the discretion of the agencies involved, because this action is
barred by the doctrine of sovereign immunity, and because
Executive Order 11246 does not create a private cause of action.
[1] Defendants’ principal contention is that Executive
Order 11246 is not mandated by any Act of Congress or the
Constitution, which therefore makes all federal agency actions
taken pursuant to it discretionary and nonreviewable. On the
other hand. executive orders clearly carry the force and effect of
law if they are issued pursuant to constitutional or statutory
authority. This particular executive order and its direct antece-
dents have consistently been held to be based on statutory
authority resting with the President to provide for procurement.
utilization, and management of government property. Con-
tractors Ass'n of Eastern Pennsylvania v. Secretary of Labor,
442 F.2d 159, 166-171 (3d Cir. ), cert. denied. 404 U.S. 854, 92
S.Ct. 98, 30 L.Ed.2d 95 (1971): Farkas v. Texas Instrument,
Inc., 375 F.2d 629, 632 n.1 (Sth Cir.), cert. denied, 389 U.S.
977, 88 S.Ct. 480, 19 L.Ed.2d 471 (1967).? There is no question
that Executive Order 11246 also has firm foundations in the
7 Thus, in issuing Executive Order 11246 on September 24.
1965, President Johnson declared in a preface to the order that
the order was issued “[u]nder and by virtue of the authority
vested in me as President of the United States by the Con-
Stitution and statutes of the United States.’ Exec.Order No.
11,246, 3 C.F.R. 169, 170 (1974).
A-49
fifth and fourteenth amendments to the Constitution and the
several congressional enactments, including the comprehensive
provisions of Title VII of the Civil Rights Act of 1964, 42
U.S.C. § 2000e et seq., intended to provide equal employment
opportunities. This basis for Executive Order 11246 is impli-
citly recognized by defendants when they urge that plaintiffs be
restricted to the procedures provided by the Civil Rights Act of
1964.
In contrast, the authorities relied upon by defendants, for
example, Manhattan-Bronx Postal Union v. Gronouski, 121
U.S.App.D.C. 321, 350 F.2d 451 (D.C.Cir.1965), involve
executive orders which essentially deal with “housekeeping”
functions strictly within the purview of the executive depart-
ment. Gronouski involved the recognition status for federal
employee organizations. As the court pointed out:
Executive Order 10988 represents in essence a formulation
of broad policy by the President for the guidance of federal
employing agencies. It had no specific foundation in
Congressional action, nor was it required to effectuate any
statute. It could have been withdrawn at any time for any
or no reason. It represented simply one President’s effort
to move in the direction of what he had been advised by
his experts would be an improvement in the efficiency of
federal employment.
350 F.2d at 456. The history of Executive Order 11246 and its
basis in the constitutional and statutory provisions noted above
make Gronouski wholly distinguishable from this action.
| 2] Hence, the court concludes that Executive Order 11246
was issued pursuant to constitutional and statutory authority,
and has the full force and effect of law. It is axiomatic that
regulations issued pursuant to such an executive order also
carry the force and effect of law. Vitarelli v. Seaton, 359 U.S.
535, 539, 79 S.Ct. 968, 3 L.Ed.2d 1012 (1959); Service v.
Dulles, 354 U.S. 363, 372, 77 S.Ct. 1152, 1 L.Ed.2d 1403
(1957).
A-50
Next, defendants urge that whatever effect these regu-
lations have, approval and review of federal contractor’s
affirmative action programs are not mandatory, but dis-
cretionary duties, which unenforceable in a mandamus-type
proceeding.
This argument is amply refuted by the language of the
regulations themselves. As noted above, Executive Order
11246 requires companies having federal contracts to:
take affirmative action to ensure that applicants are em-
ployed, and that employees are treated during employ-
ment, without regard to their race, color, religion, sex or
national origin.
§ 202(1), 3 C.F.R. 169, 170 (1974). The requirements of this
“affirmative action” are spelled out in detail in regulations
issued by the OFCC, which also set forth the responsibilities of
the enforcement agency. These duties include requiring certain
federal contractors to adopt affirmative action programs:
(a) Requirement of programs. Each agency... shall
require each prime contractor who has 50 or more employ-
ees and a contract of $50,000 or more... to develop a
written affirmative action compliance program for each of
its establishments.
41 C.F.R. § 60-1.40 (1973). Revised Order Number 4, 41
C.F.R. Part 60-2 (1973), then sets forth the detailed require-
ments governing the contents of these affirmative action pro-
grams and the steps which the compliance agency must take
whenever a contractor’s program does not satisfy the require-
ments of Revised Order Number 4. 41 C.F.R. § 60-2.2(c)
(1973) requires the compliance agency to initiate enforcement
proceedings immediately when a contractor's program is found
insufficient or nonexistent:
(c) Immediately upon finding that a contractor has no
affirmative action program or has deviated substantially
from an approved affirmative action program or that his
program is not acceptable the contracting officer, the
compliance agency representative or the representative of
the Office of Federal Contract Compliance, whichever has
A-51
made such a finding, shall notify officials of the appropri-
ate compliance agency and the Office of Federal Contract
Compliance of such fact. The compliance agency shall
issue a notice to the contractor giving him 30 days to show
cause why enforcement proceedings under section 209( b)
of Executive Order 11246, as amended, should not be
instituted.
See also 41 C.F.R. §§ 60-1.20(c), 60-2.1 & 60-2.2(a) (1973).
As pointed out by the District of Columbia circuit in
Adams v. Richardson, 156 U.S.App.D.C. 267, 480 F.2d 1159
(D.C.Cir. 1973), the agency discretion exception to the general
rule that agency action is reviewable is a narrow one, applicable
only where the statute and regulations are so broadly drawn
there is no law to apply. Jd. at 1161-62. Executive Order 11246
and the regulations issued thereunder provide detailed and
specific guidance to determine the required content of affirma-
tive action programs, and even these regulations have been
further explicated by the OFCC.§
[3] Furthermore, the appropriate compliance agency re-
sponse is provided for in affirmative and mandatory language,
as set out above. Under these circumstances, defendants are
charged with an enforceable legal duty to disapprove affirma-
tive action programs which do not comply with Revised Order
Number 4.
Nevertheless, defendants argue the actions taken by the
OFCC and the USDA are not reviewable in this court because
this is an unconsented suit against the United States and barred
by the doctrine of sovereign immunity. Larson v. Domestic &
8 On February 22, 1974, Philip J. Davis, Director of the
Office of Federal Contract Compliance, United States Depart-
ment of Labor, signed and promulgated to the compliance
agencies “Technical Guidance Memo No. | on Revised Order
No. 4,” the relevant portions of which are cited by the court
where applicable to the interpretation of certain sections of
Revised Order Number 4, infra.
A-52
Foreign Corp. 337 U.S. 682, 69 S.Ct. 1457, 93 L.Ed. 1628
(1949). Dugan v. Rank, 372 U.S. 609, at 620, 83 S.Ct. 999, at
1006, 10 L.Ed.2d 15 (1963), states the doctrine as follows:
The general rule is that a suit is against the sovereign if
“the judgment sought would expend itself on the public
treasury or domain, or interfere with the public adminis-
tration,” or if the effect of the judgment would be “‘to
restrain the Government from acting, or to compel it to
act.” (citations omitted )
[4] Therefore, this suit is barred by the doctrine of
sovereign immunity unless it falls within one of the exceptions
recognized by these same cases. Plaintiffs’ main contention is
that the OFCC and the USDA officers have taken improper
action and failed to act where clearly required to do so by
regulations having the force and effect of law in approving
programs which violate the requirements of Revised Order
Number 4. Such a claim clearly falls within the ultra vires
exception to the bar of sovereign immunity. /s stated in
Larson:
where the officer’s powers are limited by statute, his actions
beyond those limitations are considered individual and not
sovereign actions. The officer is not doing the business
which the sovereign has empowered him to do or he is
doing it in a way which the sovereign has forbidden. His
actions are ultra vires his authority and therefore may be
made the object of specific relief.
337 US. at 689.
Since plaintiffs allege that the federal defendants have
violated a plain legal duty imposed by valid regulations
properly issued, and since whatever burden which might be
imposed on the federal officials involved is outweighted by the
gains anticipated through vigorous enforcement of Executive
Order 11246,9 the court has jurisdiction to review the chal-
8 Footnote | 1 of the Court’s opinion in Larson v. Domestic
& Foreign Corp., 337 U.S. 682, 691 n. 11, 69 S.Ct. 1457, 93
(footnote continued on following page)
A-53
lenged actions of these government officials on the merits
pursuant to 5 U.S.C. §§ 701-706; 28 U.S.C. § 1361; and 28
U.S.C. § 1331.10 See State of Washington v. Udall 417 F.2d
(footnote concluded from preceding page)
L.Ed. 1628 (1949), announces what several courts have inter-
preted as an exception to the ultra vires exception to the
doctrine of sovereign immunity:
(11) Of course, a suit may fail, as one against the
sovereign, even if it is claimed that the officer being sued
has acted unconstitutionally or beyond his statutory pow-
ers, if the relief requested cannot be granted by merely
ordering the cessation of the conduct complained of but
will require affirmative action by the sovereign or the
disposition of unquestionably sovereign property. North
Carolina v. Temple, 134 U.S. 22, 10 S.Ct. 509, 33 L.Ed.
849 (1890).
The ninth circuit has not interpreted this footnote to mean that
a suit must fail if, as here, portions of the relief sought “require
affirmative action by the sovereign.” State of Washington v.
Udall, 417 F.2d 1310, 1317 (9th Cir. 1969). Instead such suits
must be dismissed as suits against the government only where
“the relief sought would work an intolerable burden on govern-
mental functions, outweighing any consideration of private
harm.” Jd. at 1318.
In this case, the USDA officials involved have previously
indicated their willingness to abide by the newly issued Techni-
cal Guidance Memo from the OFCC which incorporates the
interpretation of Revised Order Number 4 that plaintiffs advo-
cate. Thus, the relief requested will not work any intolerable
burden on these officials. Moreover, vigorous enforcement of
the executive order and regulations should produce significantly
expanded employment opportunities for minority groups and
women, and to the extent that truly equal employment opportu-
nities are created, all elements of the population and the
government itself will benefit. Hence, footnote 11 of the Larson
opinion does not create any additional obstacle to either the
court’s jurisdiction or the relief sought by plaintiffs.
10Since the employment opportunities that would be
provided by strict enforcement of the executive order and
(footnote continued on following page)
A-54
1310 (9th Cir. 1969) (ultra vires exception applies where
plaintiffs alleged federal officials acted beyond their delegated
authority by violating a plain legal duty). See also Adams v.
Richardson, supra.
Finally, defendants argue that the executive order does not
create a private right of action against either government
Officials or private contractors, relying on Blaze v. Moon, 440
F.2d 1348 (Sth Cir. 1971); Gnotta v. United States, 415 F.2d
1271 (8th Cir. 1969), cert. denied, 397 U.S. 934, 90 S.Ct. 941,
25 L.Ed.2d 115 (1970); Farkas v. Texas Instrument, Inc.,
supra; Farmer v. Philadelphia Electric Co., 329 F.2d 3 (3d Cir.
1964); and CORE v. Commissioner, 270 F.Supp. 537
(D.Md.1967). These cases were private suits by individuals
seeking relief from or employment with specific government
contractors, using various theories employing Executive Order
11246. The present action, however is a suit against the
Officials of the federal compliance agencies to require them to
comply with their statutory enforcement duties. See Adams v.
Richardson, supra. None of the plaintiffs in this action seeks a
particular job with a specific contractor. Indeed. the action is
solely directed against federal officials vested with enforcement
duties under Executive Order 11246. Without indicating any
approval of the holdings in those cases cited by defendants.
they are simply inapplicable to this action.
Defendants also argue that plaintiffs have failed to exhaust
their administrative remedies set out in 41 C.F.R. § 60-1.21 et
seq. (1973). The regulations in question provide that, “|a]ny
employee of any contractor or applicant for employment with
(footnote concluded from preceding page)
regulations have a value well in excess of $10,000, jurisdiction
also exists under the general federal question statute.
A-55
such contractor may, ... file in writing a complaint of alleged
discrimination in violation of the equal opportunity clause.” 41
C.F.R. § 60-1.21 (1973). The regulations go on to prescribe
the proper place to file the complaint, § 60-1.22, its contents,
§ 60-1.23, procedures for investigating and informally resolving
the complaint, § 60-1.24, hearings in appropriate cases, § 60-
1.26, and authority where necessary to impose the sanctions
described in subsections 209(a)(1), (5), and (6) of Executive
Order 11246, which include cancellation of government con-
tracts. 41 C.F.R. § 60-1.27 (1973). See also 41 C.F.R. § 60-
1.26(b)(2)(v) (1973). It is undisputed that none of the
named plaintiffs have filed such complaints against any of the
29 contractors’! whose affirmative action programs are before
the court.
[5] Defendants’ argument, however, is based on a mis-
conception of the nature of this action which was discussed
previously in considering defendants’ claim that no private night
of action exists under the executive order. Plaintiffs have
steadfastly insisted, and the court is persuaded, that the crux of
this action is not complaints of specific acts of discrimination
against the named private contractors. Rather, it is based upon
the failure of the federal compliance agencies to require federal
contractors to undertake meaningful affirmative action in the
employment of minorities and women. The complaint proce-
dure outlined above is designed only to deal with complaints by
individuals against the actions of specific companies. The
regulations contain no administrative procedures for challeng-
ing the actions of the federal enforcement agencies themselves.
There are no remedies for plaintiffs to exhaust in this area.
Nevertheless, plaintiffs did file an extensive memorandum
with exhibits attached with defendants on September 5, 1973,
to which defendants have made no direct response. The
memorandum specifically presented plaintiffs’ claims that the
27 (now 29) affirmative action programs were deficient in
11 See note 12, infra.
A-56
virtually every significant respect. These claims form the
substance of plaintiffs subsequently noticed motion for sum-
mary judgment, to which the court now turns.
IV
The essence of plantiffs’ motion fer partial summary
judgment is that each of the 29 affirmative action programs12
approved by the USDA in Alameda County during the period
from August, 1972, to January, 1973, was in violation of the
legal requirements for such programs as set out in the appli-
cable regulations, particularly Revised Order Number 4, 41
C.F.R. Part 60-2 (1973).
[6] Since defendants admit that the affirmative action
programs of all 29 contractors were initially reviewed and
approved by the USDA during the period specified above, the
remaining issues before the court are: (1) whether the pro-
grams so approved were in substantial compliance with Revised
Order Number 4, and (2) if not, whether the failure of the
USDA to enforce the regulations and orders issued pursuant to
Executive Order 11246, is excusable, precluding entry of sum-
mary judgment and the relief sought by plaintiffs.
Plaintiffs have made a thorough and convincing showing
that each of the 29 affirmative action programs approved by the
USDA for Alameda County contractors in in violation of the
regulations in one or more of the following respects: (1) they
contain inadequate utilization analyses which are designed to
'2 As noted above, defendants originally supplied plaintiffs
with 27 affirmative action programs approved by the USDA for
Alameda County contractors during 1972-1973. In response to
this motion for summary judgment, defendants submitted
additional materials in connection with the 27 programs pre-
viously supplied and two additional programs of Alameda
County contractors approved during the same general time
period—Coca-Cola Bottling Co. and Sunshine Biscuits. Inc.
Plaintiffs then modified their claims for relief to include all 29 of
the affirmative action programs which are before the court.
A-57
show each job category in which the contractor is deficient in
the utilization of minority persons and women, 41 C.F.R. § 60-
2.11 (1973), (2) they fail to establish adequate goals and
timetables designed to correct each deficiency within the min-
imum period necessary, 41 C.F.R. §§ 60-2.10, 60-2.12 & 60-
1.20(b) (1973); and (3) they fail to include additional in-
gredients required by Revised Order Number 4, 41 C.F.R.
§ 60-2.13 (1973).
1. Inadequate Utilization Analyses
Revised Order Number 4 requires that each affirmative
action program contain a detailed and specific utilization
analysis showing each job category in which the contractor is
deficient in the utilization of minorities and women.'? The
relevent portion of the regulation provides:
Affirmative action programs must contain the following
information:
(a) An analysis of all mojor job classifications at the
facility, with explanation if monorities or women are
currently being underutilized in any one or more job
classifications (job “classification” herein meaning one or a
group of jobs having similar content, wage rates and
opportunities). ‘“Underutilization” is defined as having
fewer minorities or women in a particular job classification
than would reasonably be expected by their availability.
In making the work force analysis, the contractor shall
conduct such analysis separately for minorities and wom-
en.
41 C.F.R. § 60-2.11 (1973).
This utilization analysis is the basic element of the affirma-
tive action program since it identifies the job categories in which
13 This utilization analysis must be done for every minority
group exceeding 2% or more of the labor area and women.
Technical Guidance Memo. supra, at (4) Underutilization
Analysis.
A-58
more minorities and women must be hired in order to meet the
affirmative action requirements of Executive Order 11246.
Plaintiffs contend that by virtue of the eight separate factors
required by Revised Order Number 4 to be considered by the
contractor in determining whether minorities or women are
being underutilized in any job classification,'4 a proper utili-
zation analysis by a contractor requires five stages: first, a
determination of the appropriate labor area; second, a factual
analysis of each of the eight factors; third, based on that
analysis, a determination of the availability of minorities and
women for employment within that category; fourth, the con-
tractor must set forth the ethnic and sexual composition of his
current work force within that category; and fifth, if the
441 C.F.R. § 60-2.11(a) (1973) provides:
(1) In determining whether minorities are being
underutilized in any job classification the contractor will
consider at least all of the following factors:
(1) The minority population of the labor area
surrounding the facility:
(ii) The size of the minority unemployment force
in the labor area surrounding the facility;
(iii) The percentage of the minority work force
as compared with the total work force in the imme-
diate labor area;
(iv) The general availability of minorities having
requisite skills in the immediate labor area:
(v) The availability of minorities having requi-
site skills in an area in which the contractor can
reasonably recruit;
(vi) The availability of promotable and transfer-
able minorities within the contractor’s organization:
(vii) The existence of training institutions ca-
pable of training persons in the requisite skills; and
(viii) The degree of training which the contractor
is reasonably able to undertake as a means of making
all job classes available to minorities.
41 C.F.R. § 60-2.11(a)(2) (1973) requires the contractor to
consider the same eight factors in determining whether women
are being underutilized in any job classification.
A-59
percentage of minorities or women available in any category
exceeds the percentage of minorities or women employed in
that category, the contractor must designate that category as a
deficiency category. Plaintiffs concede that most of the affirma-
tive action programs submitted contain the fourth stage—the
ethnic and sexual composition of the contractor’s work force.
However, they claim none of the programs contains an ade-
quate analysis of the other four stages.
Plaintiffs first contend that the Alameda County con-
tractors define the appropriate labor area to minimize the
available minority percentages, and that they use inconsistent
and contradictory definitions of the relevant labor area. For
example, Southern Alameda County contractors frequently
exclude the predominately urban nonwhite areas in the north-
ern part of the county within commuting distance from the
_ labor area definition, while the Northern Alameda County
contractors define the relevant labor area as the entire San
Francisco-Oakland Standard Metroplitan Statistical Area
(SMSA )‘5 which contains a lower minority population than the
local area. Some of the programs contain no definition of the
relevant labor area.
Defendants do not deny that the definitions of relevant
labor areas approved are contradictory or that they minimize
‘the minorities available. They claim only that plaintiffs are
seeking a definition of the labor area which exaggerates the
relevant minority population. Revised Order Number 4 re-
quires that the contractor use the “immediate labor area” or the
“labor area surrounding the facility” to define the relevant
‘labor area. 41 C.F.R. § 60-2.11 (1973). As explicated by
defendant Davis, “Both terms refer to the local area within
which the contractor can reasonably expect people to com-
mute.” Statement of Philip J. Davis, Director, OFCC, issued
August 8, 1973. Defining the labor area as roughly the
15 The San Francisco-Oakland SMSA includes all of San
Francisco, Contra Costa, Marin, and San Mateo Counties.
A-60
commuting area thus substantiates plaintiffs’ position that de-
fendants have uniformly approved definitions both over-
inclusive and underinclusive which raise serious questions about
the minority percentages obtained thereby.
Defendants do not dispute plaintiffs’ contention that none
of the USDA approved programs contains an analysis of the
eight factors for any job category, a contention which receives
support from the OFCC’s own “Technical Guidance Memo No.
1 on Revised Order No. 4.” [Technical Guidance Memo] '6 For
example, the Memo states that the required utilization analysis
should include “evaluation of opportunities through training
and recruitment” as part of an expanded concept of occupa-
tional availability. 17
16 Defendants object to any reliance on the Technical
Guidance Memo, issued February 22, 1974. (see note 8, supra)
to show that the Alameda County programs were in non-
compliance with Revised Order Number 4 and therefore illegal
when approved by the USDA, since the Technica’ Guidance
Memo was promulgated subsequent to the approvals in ques-
tion. The Technical Guidance Memo, however, does not
purport to be anything more than a clarification of the stan-
dards contained within Revised Order Number 4 which have
been in effect throughout the period when the approvals were
granted. To this extent, it merely supports plaintiffs’ position
regarding what Revised Order Number 4 always required, and
indicates that the USDA applied improper standards and
criteria under Revised Order Number 4.
Plaintiffs’ showing is complete without any need to resort to the
Technical Guidance Memo, and some of the deficiencies cited
by plaintiffs are independent of any particular set of standards,
for example, the USDA’s approval of programs with inconsist-
en
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