Appendix — American National Bank v. Equal Employment Opportunity Commission

AMERICAN NATIONAL BANK,

Petitioner,

Vv.

EQUAL EMPLOYMENT OPPORTUNITY

COMMISSION,

Respondent.

Hunton & WituiamMs Pau. M. THompson

Post Office Box 1535 Tuomas J. Maniey

707 East Main Street Grecory B. Rosertson

Richmond, Virginia 23212 Hunton & Wituiams

(804) 788-8516 Counsel for Petitioner

TABLE OF CONTENTS

Page

A. Opinion of the Court of Appeals ................... App. |!

B. Opinion of the District Court ...................... App. 95

C. Order of the Court of Appeals

Denying a Rehearing and Suggestion

For Rehearing En Bane ............0.6000cccceeeeees App. 243

D. Statutory Provisions Involved ...................... App. 263

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App. |

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 79-1533

Equal Employment Opportunity Commission,

Appellant,

versus

Americ.n National Bank,

Appellee.

No. 79-1725

Equal Employment Opportunity Commision,

Appellanc,

versus

American National Bank,

Appellee.

Appeal from the United States District Court for the Eastern

District of Virginia, at Norfolk. J. Calvice Clarke, District

Judge.

Argued May 6, 1980. Decided June 26, 1981

Before BUTZNER, RUSSELL and PHILLIPS, Circuit Judges.

William H. Ng, EEOC (Leroy D. Clark, General Counsel, Joseph

T. Eddins, Associate General Counsel, Beatrice Rosenberg,

Assistant General Counsel, EEOC on brief) for Appellanc;

Thomas J. Manley (Paul M. Thompson, Jack W. Burtch, Jr.,

Hunton & Williams on brief) for Appellee.

Waa

App. 2

PHILLIPS, Circuit Judge:

The Equal Employment Opportunity Commission (EEOC)

instituted this action on a complaint charging that detendant

American National Bank (ANB or Bank) had engaged in a patcern

or practice of racially discriminatory hiring practices from 1969 to

1975, in violation of Title VIL of the Civil Rights Act of 1964, 42

U.S.C. § 2000¢ ef seq. The district court tound chat the seatic work

force statistics submitted by the EEOC revealed a continuous

underrepresentation of blacks in defendant's work force during the

relevant period, both generally and in the specific job categories of

officials and managers and of office and clerical personnel, and

therefore constituted prima facie proof of a pattern or practice of

discrimination. It then held that prima facie case rebutted,

however, at ANB's applicant flow data and a standard deviation

analysis of the static work force statistics. The court then

examined each of ANB's hiring practices that the EEOC had

alleged to be discriminatory, and found them to be legitimate

business practices and nondiscriminatory in effect , both separately

and in combination. Additionally, the court evaluated 41 claimed

examples of discrimination in specific hiring decisions, and found

that none showed a denial of employment because of race.

Concluding that the EEOC had therefore failed to prove a pattern

or practice of discrimination, the court dismissed the st. It then

ruled that the EEOC had brought a frivolous claim and pursued it

in bad faith, justifying an award of costs and attorneys’ fees co

defendant. In a later order, the court determined the amount of

reasonable attorneys’ fees to be that submitted by ANB, in the

amount of $106,084.75.

We agree with the district court's ruling that the EEOC's

statistical proof made out a prima facie case of discrimination, but,

with the exception of one employment category, we conclude chat

the court erred in holding that defendant's rebuttal evidence was

sufficient to overcome the prima facie case. Because the proof of a

pattern or practice of discrimination thus stands unreburted as to

all but the one category on a proper legal analysis of the coral

App. 3

evidence, we reverse and remand tor the determination ot

appropriate relict. '

This case began with a charge of discrimination tiled with the

EEOC in 1969 by a rejected black applicant, Sandra Holland. Ms.

Holland alleged chat she had been refused employment at ANB's

Suffolk branch. The EEOC conducted an investigation in 1970,

and found that Ms. Holland's application at the Suffolk branch

could not be located, though it did find an earlier application at

the Portsmouth branch. The EEOC issued its tormal

“determination” in March 1974, finding reasonable cause to

believe that ANB had engaged in discriminatory hiring practices.

The determination discussed hiring figures only for ANB's

Suffolk branch, and in a footnote rejected information about the

hiring of blacks in ANB's Portsmouth branches as “irrelevant to

employment at its Suffolk branch.” App. 1523. Conciliation

efforts were unsuccessful, and Ms. Holland was issued a right-to-

sue notice in August 1974, but declined to file suit. The EEOC

then insitituted this action in January of 1976, charging a pattern

or practice of discrimination in both the Suffolk and Portsmouth

branches.

In August of 1976, the district court granted defendant's

motion for summary judgment and dismissed the action for

laches. This court vacated and remanded the case, in EFOC vy.

American National Bank, S74 F.2d 1173 (1978). Applying

Owidental Life Insurance Co. v. EEOC, 432 U.S. 355 (1977), we

held the action not barred because no federal statute of limitations

applied to suits by the EEOC once jurisdiction over the complaint

is properly obtained, and noted that Congress did not intend state

statutes of limitation to apply to such suits. Additionally, we held

that the EEOC was encitled to bring suit on the broader pattern or

practice allegation, founded on its reasonable cause determination

and conciliation efforts. Any prejudice to the Bank resulting from

the loss of evidence relating to Sandra Holland's charge did not

affect its ability to defend the pattern or practice suit. 574 F.2d at

1175-76.

App. 4

The case was tried over a four-day period in December 1978.

The EEOC presented statistical evidence designed to show gross

disparities becween ANB's work force and the relevant labor pool

of qualified blacks during the period charged. Further evidence

was offered to prove ANB's use of subjective selection ciriteria and

other discriminatory hiring practices. Finally, the EEOC

presented 52 specific instances of black applicants who were

allegedly not hired because of their race. (Thirty-one of these

testified at trial).

The EEOC’s statistical evidence, presented in the form of

stipulated exhibits, compared on a static basis the racial

composition of ANB's work force in its Suffolk and Portsmouth

branches from 1968-75 to chat of the general available work force

in the relevant market areas.' It then compared the racial

composition of specific job categories at both branches -- officials

' The EBOC offered two different definitions of the relevant market area;

ANB neither challenged the EEOC’s approaches nor offered its own definition.

The district court found the relevant labor market area for ANB's Portsmouth

branches co be the City of Portsmouth and the Norfolk-Portsmouth SMSA; for

the Suffolk branches, it defined the relevant area as the city of Suffolk and

Nansemond County.

The court used the data set out in Appendix A for general work force

comparisons for the years 1968-1975, comparing for each year che number and

percentage of blacks employed by ANB with the percentage of blacks in the

relevant market area.

The data employed here are of course subject to the general limitation

implicit in the term “static.” They only depict che work force as it existed on

specific days at intervals of a year during the charged period. They do nor

therefore purport to reflect all employment decisions occurring during those

intervals, and may “miss” significant hirings occurring during those intervals.

It is this general limitation rather than any specific inaccuracy in the data

here used by che district court chat the dissent has pointed up. Slip op. at 93-

95. While this limitation can of course give a distorted picture on the ultimate

issue of post-Act discrimination, the means for correcting it are provided by the

cate Supsemte Couse datielons thas euthesisn use of emncic work fesce seatietics

to make a prima facie case. See generally note 7 infra.

App. 5

and managers, office and clerical workers, and servcie workers --

with the proportion of qualified blacks in the population, for each

category.’ The statistics revealed, as the district court found, chat

in the Suffolk branches there were no blacks employed as officers

or managers during the eight-year period, though blacks

comprised 8-10.99 of the qualified labor market. In its twenty

clerical positions, ANB-Suffolk employed one black in the years

1970 and 1973, and two in 1971 and 1972. There were no blacks

employed in this category during the other relevant years, as

compared to a qualified labor market that was 10. 3-22.5% black.

In the seven ANB-Portsmouth branches, there were no black

managers from 1968-1972, and one for each of the remaining

three years. The qualified work force during this period was 4.8-

6.9% black. In the office and clerical categories at Portsmouth,

the Bank's work force was from 0 to 6.5% black from 1968-1974,

and 9.3% in 1975, compared with a qualified work force that was

13.9-21.5% black. Only in the service worker category has the

percentage of black bank employees been greater than the

percentage of blacks in the available service worker force in the

relevant labor market area. During the entire period, the service

work force in both branches was at least 75%, and often 100%

black.

The evidence as to the Bank's hiring procedures’ was also

stipulated by the parties. Applicants had to appear and submit an

application form which would be retained on file and considered

for vacancies for up to six months. The application form sought

information on the individual's education, work experience,

skills, references, desired position and salary, and relatives or

friends at the Bank. Before 1973, applicants were required to take

the Wonderlic Personnel test; until May 1975, a high school

’ The court used the data set out in Appendix B for special qualifications

work force comparisons for the years 1968-1975, comparing for each year che

number and percentage of blacks employed by the defendant in Suffolk and

Portsmouth in each category with the percentage of qualified blacks in the

available work force.

‘Hiring procedures were similar at the Portsmouth and Suffolk branches.

_——

App. 6

diploma was required for a clerical position. Application forms

would be submitted to a designated employee, usually a difterent

official would screen the applications and conduct interviews

when a vacancy occurred. Until 1975, when the Bank began

Maintaining records tor determining compliance with affirmative

action plan, no notation was made of the race of an applicant.

There may have been clues, however, in their addresses and

Bank officials testified that when a vacancy developed, they

would review the most recent applications first, and usually would

not reach applications submitted more than 30 days previously. In

a few cases, when they did not find a qualified applicant on file,

they would advertise the vacancy. After reviewing applications,

officials would select a few applicants to interview. There were no

written job descriptions or criteria for hiring. The interviewers,

all of whom were white, would evaluate the applicant's ability co

communicate, maturity, personality, and physical appearance.

The interviewer's decision to accept or reject an applicant was

generally controlling. When ANB became particularly interested

in hiring an applicant, prior employers were contacted, and

character references were sometimes checked. Prior to 1975, ANB

occasionlly made retail credit checks on final applicants. Nearly

half of the hires during this period had listed friends or relatives

among bank employees.

As part of its nonstatistical evidence, the EEOC presented the

testimony and written statements of 31 black applicants who had

been rejected for positions at ANB. The EEOC stipulated that its

case as to individual examples of discrimination would be limited

to those 31 applicants who were able to testify. Twenty-one

additional applicants were identified by the EEOC as having been

discriminated against. Although these particular cases were not

submitted co the court on the pattern or practice of discrimination

issue, the court considered them in deciding the attorney's fecs

issuc.

‘forra

|

*

App. 7

The Bank, in rebuetal, submitted applicant Mow data

purporting to compare the number of blacks and whites hired

with these who submitte! an application during 1969-1975.:

These figures revealed that in the Suttolk branches during this

time, blacks submitted 25. 1% of che applications and represented

17.9% of those hired, while whites submitted 71.9% of the

appheations and constituted 82.1% of the hires. For the

Porrsmouth branches, only 1975 data was available. They

indicated that blacks constituted 25.3% of the applicants and

11.1% of che hires, while whites were 76.10% of the applicants

and 88.9% of che hires. These statistics did not separate the

applicants by job category, but combined the service worker hires

with the clerical and managerial hires.

Before ruling on the substantive issues under Title VII, the

court considered the preliminary issue whether it had jurisdiction

to hear the claims. Although finding that the initial charge by Ms.

Holland was valid and the EEOC’s broader investigation of the

general policies and practices of ANB's Suffolk branches relevant to

the initial charge, the court concluded that the activities of the

Portsmouth branches were not the subject of the EEOC

investigation nor were they included in the reasonable cause

determination of March 11, 1974. Consequently, che court ruled

that it lacked jurisdiction to hear that part of the case concerning

the allegedly disciminatory practices and the individual claims of

discriminatory hiring at the Portsmouth branches. Anticipating

that the case would be appealed, the court nevertheless included

the Portsmouth branches in its analysis of the merits.

Addressing the merits, the court first considered the static

work force statistics presented by the EEOC, comparing the

percentage of blacks in defendant's work force with the percentage

of blacks available in the population, using borh gencral work

force and spectal qualifications work force figures. From each set of

figures, the court found that blacks were underrepresented in

ANB's work force. Under Hazelwood School District v. United

‘See Appendix C.

pre

App. 8

States. 433 U.S. 299 (1977), the court therefore found that the

EEOC had presented prima facie proof by statistical means of a

pattern or practice of discrmination at ANB's Suffolk and

Portsmouth branches.

The court then evaluated ANB's rebuttal evidence consisting of

its applicant flow data for the charged period, and the EEOC’'s

nonstatistical evidence related to ANB's screening and hiring

practices, and the 31 cases of unsuccessful black applicants who

testified at trial. The applicant-flow data and a standard deviation

analysis of the static work force statistics were found sufficient in

combination to rebut the EEOC’s prima facie case. Alternatively,

though without discussion, the court found that too few hiring

decisions were made to justify an inference of discrimination.

After an extensive analysis of each of the hiring practices shown by

the EEOC, the court concluded that neither separately nor

together were these practices discriminatory but rather served

legitimate business purposes. Finally, the court found that none of

the 31 unsuccessful black applicants were victims of racial

discrimination in hiring. On balance, then, the court concluded

that the EEOC'’s statistical evidence of a prima facie case was

substantially rebutted. Conceding that ANB's work force was

virtually all white prior to 1969 and racially imbalanced from

1969-1975, the court concluded that the imbalance was a product

of pre- 1969 activities and therefore not violative of Title VII. For

reasons that follow, we find error requiring reversal in the court's

legal and factual analysis of the evidence.

ll

Initially we consider and reject the district court's conclusion

that it had no jurisdiction over that part of the suit concerning

ANB's Portsmouth branches.

The 1972 amendments to Title VII gave the EEOC broad

enforcement powers. Section 706 enabled the EEOC, after a

charge alleging discrimination had been filed with the EEOC and

conciliation efforts with the respondent had failed, to bring suit in

—-

App. 9

its own name. 42 U.S.C. § 2000e-S(f) (1). Although Congress

declined to expand the EEOC’s powers to the extent exercised by

the NLRB, broad litigation powers were added to preexisting

powers to enable the EEOC “to vindicate the public interest.”

EEOC v. Kimberly-Clark Corp., 511 F. 2d 1352, 1361 (6th Cir.

1975). Consistent with this expansion of the EEOC’s role co

include enforcement as well as conciliation, EEOC v. Cleveland

Mills Co., 502 F.2d 153, 155-56 (4th Cir. 1974); EEOC v.

Kimberly-Clark Corp. 511 F.2d at 1357, the 1972 amendments

were intended to enable the EEOC to correct “public or ‘societal’

wrongs, {to be] the public avenger by civil suit of any

discrimination uncovered in a valid investigation and subjected to

conciliation under the Act.” EEOC v. General Electric Co. , 532

F.2d 359, 373 (4th Cir. 1976). We determined in General Electric

that the EEOC had standing, after 1972, to bring suit in its own

name on “discrimination stated in the charge itself or developed in

the course of a reasonable investigation of that charge, provided

such discrimination was ircluded in the reasonable cause

determination of the EEOC and was followed by compliance with

the conciliation procedures fixed in the Act.” Id. at 366 (italics

omitted). In giving the EEOC the right to sue in its own name,

Congress signalled its desire “{to eliminate] employment

discrimination as a national evil” rather than provide solely for the

redress of private interests. To confine standing of the EEOC to

that of an individual complaining party would nullify the

legislative intent of the 1972 amendments. Id. at 373.

The EEOC’s new role as an enforcer, however, was not intended

to diminish its role as conciliator. Title VII establishes a

comprehensive administrative procedure whereby the parties

involved, including the EEOC, have the fullest opportunity to

resolve charges of discrimination without resorting to the courts.

See 42 U.S.C. § 2000e-5(b), (fX 1). Before the EEOC may bring a

civil action under Title Vii against an employer there must be a

charge filed with the EEOC, notice of the charge to the employer,

investigation by the FEOC, a determination of reasonable cause.

oil

App. 10

and an effort at conciliation. EEOC v. Raymond Metal Products Co. ,

385 F. Supp. 907, 916(D. Md. 1974). affd in relevant part. 530

F.2d $90 (4th Cir. 1976). Two important purposes are served by

this preadjudicative administrative procedure: first, che employer

is fully notified of the violation alleged by the charging party; and

second, the EEOC has the opportunity to consider ail the charges

and to attempt their resolution through conciliation and

voluntary compliance. Id.

The 1972 amendments, while enlarging the powers of the

EEOC to include enforcement, retained the previous emphasis on

administrative resolution and conciliation of charges.

Interpretations of the 1972 amendments emphasize the sequential

nature of the process. “[E]Jach step in the Commission's

administrative process is designed co be a prerequisite to the

following step and, ultimately, to suit.” EEOC v. E. 1. duPont de

Nemours & Co., 373 F. Supp. 1321, 1336 (D. Del. 1974), affd

516 F.2d 1297 (3d Cir. 1975). Conciliation, the final step in the

process, can therefore be regarded as a condition precedent to the

EEOC’'s power to sue. See EEOC v. Allegheny Airlines, 436 F.

Supp. 1300 (W.D. Pa. 1977), and legislative history of the 1972

amendments quoted therein. —

The law on the question of the permissible scope of a complaint

filed by the EEOC pursuant to the 1972 amendments has focused

on the role of the EEOC as investigator and the statutory

preference for administrative resolution of charges of

discrimination. Proper investigation and conciliation of charges

are characterized as jurisdictional prerequisites to a suit by che

EEOC on a particular claim. But see EEOC v. Westvaco Corp. , 372

F. Supp. 985, 991 (D. Md. 1974) (EEOC’s failure to make a

timely reasonable cause determination and to attempt conciliation

before filing suit goes to whether a claim has been stated rather

than to subject matter jurisdiction.)

The district court in this case dismissed the EEOC action

insofar as it related to the Portsmouth branches of ANB and the

individuals allegedly discriminated against at those branches.

=”

App. 11

Characterizing the Portsmouth charges as “new discrimination”

not included in the original charge by Sandra Holland, the court

analyzed whether or not these charges could be included in the

EEOC civil complaint under the test set forth in General Electric.

Finding that the EEOC investigation and reasonable cause

determination concerned only the allegations of discrimination at

the Suffolk branches, the court concluded it was without

jurisdiction to hear the Portsmouth charges.

We disagree with the district court's analysis and conclusion on

this issue. The question was not whether the court had

jurisdiction over “new” charges of discrimination brought for the

first time by the EEOC in its civil complaint. The crucial issue was

instead whether the district court had jurisdiction over the same

charges of discrimination against a single defendant, expanded to

include the same practices at all its branch offices when the

original charge and investigation focused on one city but where

there was common ownership and control over branches in both

that city and a nearby city, and where the challenged hiring

practices for all branches were similar. We conclude that

jurisdiction over charges pertaining to all branches of ANB was

proper in this case because there was, through the EEOC’s

investigation and attempted conciliation with regard to Suffolk,

adequate notice to the defendant of the practices under

investigation and ample opportunity for conciliation concerning

those practices. Had the conciliation effort been successful, given

the common control over and similar practices at the two cities’

branches, whatever changes were to be instituted at the Suffolk

branches would no doubt logically and necessarily have been made

at the Portsmouth branches as well.

Our resolution of this issue does not disturb the rule announced

in General Electric and since adhered to by this court. See EEOC v.

Chesapeake & Ohio Ry.. $77 F.2d 229, 241-42 (Ach Cie. 1978) As

we noted above, completion of the full administrative process is a

prerequisite to the EEOC’s power to bring suit in its own name.

This power of enforcement is bottomed on an administrative

App. 12

scheme giving every employer charged with discrimination under

Title VII the opportunity to correct its fault out of court. See

Macon v. Bailar, 451 F. Supp. 140, 142 (E.D. Va. 1978), citing

Alexander v. Gardner-Denver Co., 415 U.S. 36, 44 (1974).

Consistent with this scheme, we require that particular charge of

discrimination be the subject of the reasonable cause

determination and conciliation before being subject to suit by the

EEOC. This requirement, for example, protects an employer

charged in the reasonable cause determination with race

discrimination in hiring against being surprised by a subsequent

suit including charges of race discrimination in layoffs or

promotion, or sex discrimination. There would have been no prior

notice to the employer that practices relating to these charges were

suspect nor an opportunity for the employer to remedy the

problems out of court.

This case, however, does not present such a situation. There is

but a single charge of race discrimination in hiring. ANB is a

single employer with operations at multiple locations, all subject

to unified supervision and control and using similar hiring

practices. 21 F.E.P. Cases at 1541. But of. Stastmy v. Southern Bell

Telephone & Telegraph Co., 628 F.2d 267 (4th Cir. 1980)

(importance of local autonomy and discrete labor pools in

adjudicating liability); Hill v. Western Electric Co., 596 F.2d 99

(4th Cir. 1979) (same). Alchough the notice of the original charge

by Sandra Holland was sent to Donald King, Assistant Vice

President of ANB Suffolk, the receipt of the notice was

acknowledged by Joseph M. Fail, Vice President at the main office

in Portsmouth. App. 1518, 1519. Also, the EEOC’s notice of

failure of the conciliation effort was sent to ANB's attorney, id. at

1526, who presumably represented not only che Suffolk branches

but che entire organization. ANB's officers must therefore be

charged with full awareness of the charges and the issues to be

resolved in conciliation and thus fully aware of che practices

challenged by the EEOC.’ There was therefore no possibility for

prejudicial surprise of the sore that has properly been held to

preclude proof of later added charges in other situations.

App. 13

We conclude, therefore, that the district court did have

jurisdiction over the Portsmouth claims and should have

considered proof related to them.

Il

We turn now to the district court's analysis on the merits. As

indicated in our general summary of the course of proceedings, the

district court specifically concluded that, based upon the static

work force statistical evidence, there was prima facie proof of a

pattern or practice of race discrimination in hiring:

{Tyhe fact {is} that from 1969 to 1975, blacks were

underrepresented in defendant's work force, not only in the

work force generally but also in the specific categories of

* The situation is similar to one that occasionally occurs in the private suit

where the plaintiff names a defendant not named in the original charge filed

with the EEOC. The general rule is that “[i}t is a jurisdictional prerequisite to

the filing of a suit under Title VII chat a charge be filed with the EEOC against

the party sought to be sued.” Bowe v. Colgate-Palmolive Co., 416 F.2d 711, 719

(7th Cir. 1969), see Stith v. Manor Baking Co., 418 F. Supp. 150, 155-56

(W.D. Mo. 1976), and cases cited therein. The rationale for the rule is like that

behind the rule that the claims in a EEOC enforcement suit must have been

included in the reasonable cause determination and subject to conciliation. The

defendant, if he has been named in the original charge, has been notified of the

asserted Title VII violation. Further, the charged party is thus brought before

the EEOC, “[permitting) effectuation of the Act's primary goal, the securing of

voluntary compliance with the law.” Bowe v. Colgate-Palmolive Co., 416 F.2d at

719. Courts have developed exceptions to this rule, though, where it is clear

that the defendant through some relationship with the named respondent had

notice of the charges and participated in the conciliation process. See,e.g.. Stith

v. Manor Baking Co., 418 F. Supp. at 156, and cases cited therein; Escamilla v.

Mosher Steel Co., 386 F. Supp. 101, 105 (S.D. Tex. 1975) (jurisdiction proper

over parent of wholly-owned subsidiary where parent had or should have had

notice of conciliation process); Chastang v. Flynn & Emrich Co.. 365 F. Supp.

957, 964 (D. Md. 1973) (“where there is substantial, if not complete identity

of parties before the EEOC and the court, it would require an unnecessarily

technical and restrictive reading of {the statue}” to deny jurisdiction), aff'd im

relevant part, S41 F.2d 1040 (4th Cir. 1976).

App. 14

officials and managers and office and clerical personnel. The

Court cannot agree with defendant that these comparisons

are “irrelevant.” Hazelwood School District v. United States.

433 U.S. 299, 15 F.E.P. Cases 1 (1977), held chat

comparative statistics showing gross statistical disparities

are prima facie proof of a pattern or practice of

discrimination. Id. at 308-09. The Court finds, therefore,

that the statistical evidence presented here by the EEOC is

prima facie statistical proof of a pattern or practice of

discrimination.

21 F.E.P. Cases at 1552 (footnote omitted). The court then

concluded, however, after analyzing the defendant's applicant

flow data and applying a standard deviation analysis to both the

static work force statistics and the applicant flow data, that the

inference of a pattern or practice of race discrimination had been

neutralized. Id. at 1560. Having thus concluded that the

statistically based prima facie case had been effectively rebutted,

the court then turned to independent consideration of the EEOC’s

nonstatistical evidence offered to show a discriminatory pattern or

practice. Concluding that this evidence would not support an

inference of discrimination, the court was led inexorably to the

ultimate conclusion that the EEOC had failed to carry its burden

of proof. 21 F.E.P. Cases at 1584.

For reasons that follow, we conclude that in a number of critical

respects the district court's analysis of the evidence was flawed by

specific failures correctly to apprehend or to apply controlling

legal principles developed by the Supreme Court for analyzing the

evidence in this type case. These misapprehensions and

misapplications constituted errors of law which invalidate with

one exception the court’s ultimate conclusion that the EEOC

failed to prove the pattern or practice of discrimination as charged

and properly under consideration. We further conclude that under

a legally correct analysis o, the essentially undisputed historical

facts in evidence, a prima facie case was established and except

ah

App. 15

with respect to managerial employees in the Suffolk branches not

rebutted or avoided, and that in consequence a pattern or practice

of racial discrimination in hiring was proved.

Specifically we find errors of law in the weight apparently

assigned by the court to a standard deviation analysis of certain of

the statistical evidence; in the significance which the court

assigned to ANB's applicant flow statistics as rebutting evidence;

and in the way in which the court treated the relationship between

the statistical and nonstatistical evidence offered to prove the

discriminatory pattern or practice charged. To show why, we

briefly summarize the controlling principles for analysis of proof

in this case, and then indicate wherein we think the district court

so far misapprehended or misapplied these as to make erroneous its

ultimate conclusion that the EEOC had failed to prove a pattern or

practice of discrimination violative of Title VII.

The controlling principles are those embodied in the proof

scheme developed by the Supreme Court for assessing claims of

patterns or practices of disparate treatment, principally in

International Brotherhood of Teamsters v. United States, 431U.S. 324

(1977) and Hazelwood. While designed merely to provide a

“sensible, orderly way to evaluate the evidence,” Furnco

Construction Corp. v. Waters, 438 U. S. 567, 577 (1978), and not

intended as an inflexible, rigid framework for all cases, id. at 575,

577, the basic design of this proof scheme is perfectly and

appropriately adaptable to the evidence presented in the instant

case.

In the type case we consider, the ultimate issue is whether an

employer regularly and purposefully treats or has treated blacks

less favorably than whites and whether this disparate treatment is

racially motivated. Teamsters, 431 U. S. at 335. The EEOC of

course bears the initial burden of making out a prima facie case of

discrimination. This prima facie showing may in a proper case be

made out by statistics alone, Teamsters, 431 U. S. at 339;

Hazelwood, 433 U. S. at 307-08; Barnett v. W. T. Grant Co.. 518

F.2d 543, 549 (4th Cir. 1975), or by a cumulation of evidence,

App. 16

including statistics, patterns, practices, general policies, or

specific instances of discrimination. See Barnett v. W. T. Grant

Co., 518 F.2d at 549; Brown v. Gaston County Dyeing Machine Co..

457 F.2d 1377, 1382 (4th Cir. 1972). If the prima facie case is

established by the EEOC’s statistical evidence, the employer may

nevertheless rebut it, dispelling the inference of a general policy of

discrimination, by “demonstrating that the Government's proof is

either inaccurate or insignificant.” Teamsters, 431 U. S. at 360.

One way that static work force statistics revealing gross disparities

can be shown nevertheless to be “insignificant” is by showing that

the disparities are mainly attributable to pre-Act rather than to

post-Act employment actions. This may be done in two basic

ways: by focusing on the static work force statistics and purging

them of all pre-Act employment actions so that only post-Act

actions remain for assessment; or, more commonly, by focusing on

post-Act employment decisions, and showing either that

considered alone, they affirmatively reveal nondiscrimination in

the post-Act period or that they are insufficient in number to

support an ultimate conclusion of a post-Act discriminatory

pattern or practice.* Hazelwood, 433 U. S. at 309, 313.

In the instant case, the EEOC sought within this scheme of

proof to make out a prima facie case by a combination of static

work force statistical evidence covering the charge period,

evidence of specific hiring practices followed by ANB during that

period, and evidence of specific instances of individual

discriminatory actions during the period. In attempted rebuttal of

the statistical evidence, ANB sought to establish its

“insignificance,” rather than its “inaccuracy” in any

computational or objective fact sense. Its chosen means of showing

probative insignificance was two-fold: by subjecting it to a

* The district court apparently concluded alternatively that, applying this

principle, ANB's hiring decisions during che relevant period, as revealed in its

application flow data, were too few in number (39 in Suffolk from 1968 to 1975

and 27 in Portsmouth in 1975) co justify an inference of discrimination. 21

F.E.P. Cases at 1556. ,

App. 17 .

standard deviation analysis, to reveal its weakness as proot of a

regular operating policy of purposeful discrimination; and by

showing, through applicant flow statistical data, chat its post-Act

decisions were manifestly nondiscriminatory when considered in

relation to its hiring opportunities during that period,

particularly when subjected to a standard deviation analysis.

It is with respect to the evidence offered by the parties to

support these positions that the district judge committed the

specific legal errors of analysis that we now address.

First off, the court's analysis reveals a basic misapprehension of

the relationship between statistical and nonstatistical evidence

offered to establish a prima facie case, of the relationship between

these and evidence tending to rebut any prima facie case

established, and of the appropriate mode of analysis under the

disparate treatment proof scheme. This appears in the following

way.

Although the court concluded that the EEOC had proved a

prima facie case of a pattern of racial discrimination in hiring by

ANB between 1969 and 1975, 21 F.E.P. Cases at 1552, it then

found that “{t}he available hiring statistics, {a standard deviation}

analysis, the evidence concerning the hiring practices of

defendant, and the 31 cases of unsuccessful black applicants who

testified at trial substantially outweigh and refute the EEOC's

statistical evidence.” 21 F.E.P. Cases at 1584. Ar this point the

court moved on to an independent evaluation of the EEOC’s

nonstatistical evidence, finding no suggestion of discrimination

in either the hiring practices or in the individual claims of

discrimination. In this manner the EEOC’s nonstatistical and

statistical evidence were required independently to show

discrimination sufficient to establish a prima facie case.

While, as indicated, the suggested disparate treatment proof

scheme is not ironclad and rigid, the mode of analysis used by the

district court so completely skews its substantive underpinnings

that the resulting conclusion of a failure of proof is simply not

supportable. Under a proper analysis, all of the evidence,

App. 18

statistical and nonstatistical, tending to establish a prima facie

case should first have been assessed on a cumulative basis. If that

assessment showed a prima facie case made out, inquiry should

then have turned to whether, by any of the suggested means, the

prima facie case -- the inference of discrimination -- had been

effectively dispelled. Under such an analysis, and with the

statistical data correctly assessed, we conclude, for reasons that

follow, that on the evidence before the district court, the EEOC

with one exception did prove a pattern or practice of

discrimination in the respects charged.

A.

We commence in agreement with the district court's specific

conclusion that looking alone to the EEOC’s static work force

statistics’, a prima facie case of discriminatory hiring patterns or

practices was made out. As frequently observed by the Supreme

Court, and as recognized by the district court, gross statistical

disparities in the static work force during the relevant period may

alone constitute prima facie proof of the discriminatory practice.

Hazelwood, 433 U. S. at 307-08; see Teamsters, 431 U. S. at 335

n.15, 339 .20; Arlington Heights v. Metropolitan Housing

Development Corp., 429 U. S. 252, 265-66 (1976). The evidence

supporting this fundamental, threshold conclusion by the district

"Section 703(j) of Title VII “imposes no requirement that a work force mirror

the general population.” Teamsters v. United States, 431 U.S. 324, 339 2.20

(1977). Employment discrimination is seldom overt, however, and courts must

look to evidence other than specific acts of discrimination to determine whether

discrimination exists. Brown v. Gaston County Dyeing Machine Co., 457 F.2d

1377, 1382 (4th Cir. 1972). Static work force statistics showing a racial

imbalance are probative in these cases not because the imbalance shown is in

itself violative of Title VII, but because “such imbalance is often a telltale sign

of purposeful discrimination; absent explanation, it is ordinarily to be expected

that nondiscriminatory hiring practices will in time result in a work force more

or less representative of the racial and ethnic composition of the population in

the community from which employees are hired. Evidence of longlasting and

gross disparity between the composition of a work force and that of the general

population thus may be significant. . . .” Teamsters, 431 U.S. at 339 0.20.

App. 19

court bears emphasis at this point in view of that court's

subsequent conclusion that its inferential force was completely

dispelled by other evidence.

The statistical data in respect of officers and managers, using

qualified labor pool figures," showed that in Suffolk there were no

black officials or managers during any of the years in question,”

while the available work force was 8.0-10.9% black. In the office

and clerical workers category, during three of the charge years

(1969, 1974, 1975) there were no blacks employed in Suffolk in

these categories. In two years (1970, 1973), there was one black,

and in two years (1971, 1972) there were two. When two blacks

were employed, the percentage (10.0-11. 1%) is equivalent to the

percentage of blacks available in Suffolk (10.3%) but far short of

the percentage in Nansemond County (22.5%). Further, for five

of seven years, 100% of the service workers in Suffolk were black,

compared with 44.8-58.1% in the available work force.

The Portsmouth figures are equally compelling. For four of

seven years there were no black officials and managers; for the

remaining three years there was one black employed in that

category (2.7-2.8%). The percentage of blacks in the available

work force was 4.8-6.9%. In the office and clerical workers

category, the percentage of blacks ranged from 0.0-6.5% for six of

the years, with a high of 9.3% in 1975, while the available work

force was 13.9-21.5% black. As in Suffolk, the service workers

* The district court analyzed, as well, general work force figures. See

Appendix A. We recognize that in EEOC v. United Virginia Bank!Seaboard

National, 615 F.2d 147, 150 (4th Cir. 1980), we upheld under Fed. R. Civ. P.

52(a) a finding by the district court chat general labor force statistics were not an

appropriate statistical group for comparison with bank employees. Without

further analysis we here rely only on the specialized work force figures, which

clearly support an inference that race was a factor in hiring. See Appendix B for

this data.

* The district court included 1968 in its charts, but the charge years included

only 1969-1975. The practices apparent in 1968 are consistent with the pattern

in later years. Even so, in finding an inference of discrimination we have

considered only 1969-1975.

App. 20

were 80.0- 100.0% black while the available work force was only

45.3-59.2% black.

These statistical disparities are substantial, in some cases

reaching the “inexorable zero” point. Teamsters, 431 U. S. at 342

n.23. They show that blacks were consistently underrepresented

in the office and clerical categories in branches in both cities and

unrepresented in the officials and managers categories in Suffolk

for ali years and Portsmouth for four of seven years. The district

court's conclusion that, considered alone, they establish a prima

facie case is firmly supported by the record.

We turn now in detail to the process of analysis by which,

starting from this point, the district court ultimately determined

that this prima facie statistical case was defeated. One neutralizing

factor for the district court was the perceived effect of a standard

deviation analysis’ upon this static work force statistical data. In

the officer/manager category the court found that the standard

deviations always remained less than two, and in the office and

clerical employees category, the standard deviations were always

less than three for Suffolk and almost always more than three for

Portsmouth. This analysis, according to the district court,

neutralized the prima facie statistical case in all but che office and

clerical workers category for Portsmouth.

We disagree with this conclusion derived by the district court

from its standard deviation analysis -- for reasons that we think

important to spell out. The conclusion was based upon an

apparent assumption that if standard deviations reflected in static

work force statistics were not “more than two or three” the

disparities were necessarily shown to be statistically insignificant.

21 F.E.P. Cases at 1558-59. This assumption is simply incorrect -

- for reasons we think it important to develop in order to guard

against misuse of this method of analyzing statistical proof and co

emphasize its limitations when used by courts in this type case.

“ The district court applied the standard deviation analysis co the specialized

work force figures, recording generalized values for the number of standard

deviations revealed, as follows: (Continued on next page)

s

Ae

Tae Se

3

2

¥

App. 21

(fn. 10 continued)

NUMBER OF STANDARD DEVIATIONS

Official-Managerial Employces

Suffolk Branches Portsmouth Branches

Norfolk -

Portsmouth

Suffolk Nansemond Portsmouth SMSA

(8.0%) (10.9%) (6.9%) (4.8%)

1968 0-1 0-1 1-2 1-2

i969 0-1 0-1 1-2 1-2

1970 0-1 0-1 1-2 1-2

1971 0-1 0-1 1-2 1-2

1972 0-1 0-1 1-2 1-2

1973 0-1 0-1 1-2 0-1

1974 0-1 0-1 1-2 0-1

1975 0-1 0-1 1-2 . Ol

Office and Clerical Employees

Suftolk Branches Portsmouth Branches

Norfolk -

Portsmouth

Suffolk Nansemond Portsmouth SMSA

(10.3%) (22.5%) (21.5%) (13.9%)

1968 1-2 2-3 4-5 3-4

1969 1-2 2-3 5-6 4-5

1970 0-1 1-2 4-5 3-4

1971 0-1 1-2 4-5 2-3

1972 0-1 1-2 4-5 2-3

1973 0-1 1-2 4-5 2-3

1974 1-2 2-3 4-5 2-3

1975 1-2 1-2 3-4 1-2

App. 22

This district court's assumption was presumably drawn from

general observations made by the Supreme Court in the course of

footnote discussions of standard deviation analysis as a means of

testing statistical proof in Castaneda v. Partida, 430 U. S. 482,

496 n. 17 (1977) and again in Hazelwood, 433 U. S. at 311 0.17.

As briefly explained and applied in those opinions, standard

deviation analysis may perform some legitimate service for courts

in assessing the statistical significance of data offered to establish

(Castaneda) or tebut (Hazelwood) a charge of discrimination in

composing juries (Castaneda) or work forces (Hazelwood). Simply

put, it tests the hypothesis that underrepresentation of a protected

minority group in any sample made up of a protected and a

nonprotected group (binomial distribution) might be attributable

to normal fluctuations of chance rather than to discriminatory

design. The “standard deviation” is the measure of the predictable

fluctuation in a random selection process. The difference between

actual (“observed”) numbers of the protected group in such a

sample and the number that would be “expected” in a perfectly

proportional process of selection from the appropriate pool can

then be expressed in numbers of standard deviations. In turn,

standard deviations can be expressed in terms of the mathematical

probability that chance is the cause of the disparities (differences

between “observed numbers and expected values”) measured. As

standard deviations increase numerically, the probability of

chance as the cause of revealed underrepresentation of course

diminishes. To the extent the probability of chance is shown to be

quite small, the legal inference of discrimination based upon a

rough legal assessment that disparities are manifestly “gross” or

“substantial” is thus “scientifically” confirmed.

It was against this general background that the Supreme Court

in Castaneda noted that “fa}s a general rule . . . , if the difference

between the expected value and the observed number is greater

than two or three standard deviations, then the hypothesis that the

{selection process} was random would be suspect to a social

scientist.” 430 U. S. at 497 n. 17. The Court then pointed out that

App. 23

the standard deviations revealed in the data before it were so far

beyond this “suspect” range -- 29 for one sample, 12 for another --

that the probability of chance as the explanation was simply

infinitesimal: in the convenient mathematical short-forms -- | in

10'” and | in 10”, respectively. In this context, it is obvious that

the Court was merely emphasizing the lack of any theoretical

possibiliry chat chance rather than discriminatory design underlay

the underrepresentation it was considering.

If a legal rule of analysis can properly be derived from the

Castaneda footnote, it can only be that standard deviations greater

than two or three necessarily exclude chance as a cause of

underrepresentation. The converse of this -- that standard

deviations of not “more than two or three” necessarily exclude

discriminatory design as the cause -- is nowhere implied. Nor

could it be, as we shall now attempt to show.

The Castaneda Court had no need to explore the levels of

probability that exist in the range of “two or three” standard.

deviations, being content to note that beyond this range social

scientists would find “suspect” for scientific purposes the

hypothesis of random choice. When this range is explored,

however, it appears that well short of three standard deviations the

probability levels for chance as explanation have already dropped

far below the point at which courts of law -- concerned with proof

by the “greater weight” or “preponderance” of the evidence --

would presumably have discarded the hypothesis of chance. Just

short of two standard deviations -- specifically at 1.96 -- the

probability of chance is only 5 in 100; at just over two and one

half, it is only 1 in 100; by three it is less than | in 100. W. Hays

& R. Winkler, Statistics: Probability, Inference and Decision

218-19, 381-82 (1971). For this reason, authority can be found

for the proposition that most social scientists, applying laboratory

rigor to rule out chance as even a theoretical possibility rather than

the law’s rougher gauge of the “preponderance of the evidence,”

are prepared to discard chance as a hypothesis when its probability

level is no more than 5%, /.¢. at approximately two standard

deviations. Id. at 394.

App. 24

From all this we conclude that courts of law should be

extremely cautious in drawing any conclusions from standard

deviations in the range of one to three. Above this range, with

standard deviations of more than three, the analysis may perhaps

safely be used absolutely to exclude chance as a hypothesis, hence

absolutely to confirm the legitimacy of an inference of

discrimination based upon judicial appraisals that disparities are,

to the legally trained eye, “gross.” This we conclude is all chat the

Supreme Court has ever directly approved by its own use of the

process.'' Within the range of one to three standard deviations,

where the probability of chance as explanation for revealed

underrepresentation declines precipitately from only 5% at two

standard deviations to less than 1% at three, we do not see how a

court can properly find the only other hypothesis -- discrimination

-- dispelled by this analysis alone. On this basis, we conclude that

the district court's analysis revealing standard deviations which,

as applied to the aggregate of years and work categories involved,

lay preponderately within or above this range, could not properly

be taken as dispelling the inference of discrimination based upon

the disparities in the static work force data. To the extent this was

'' In Hazelwood the Court used a standard deviation analysis to emphasize the

importance o -hoosing the right labor pool from which to derive base data for

showing statistical disparities. The Court was careful to emphasize that this was

the sole purpose and that its “observations were not intended to suggest that

precise calculations of statistical significance are necessary in employing

statistical proof. . . .” 433 U.S. at 311 1.17. Noting, in paraphrase of the

chove-cleed pamnge tum Cammnede, dues “0 Gutmention of mace han ¢we or

being made randomly with respect to race,” id, the Court then proceeded to

point out that depending upon which of two possible labor pools were chosen,

the standard deviations could range from less than one to more than six.

Significantly, the only direct consequence for proof assessment noted by the

Court was that standard deviations of more than two or three would “undercut”

the hypothesis of random selection. To the extent there is any implication that

the low-side deviations might rebut, sae bc aammammenna ta disess a oa

than two.

App. 25

the basis of the district court's finding, we conclude that it was

clearly erroneous. ':

B.

We turn now to the district court's assessment of the

defendant's applicant flow data'’ offered to rebut the prima facic

case of discrimination made out by the static work force statistics.

ANB contends that it does so in two approved ways: first, by

affirmatively showing that ANB’s hiring decisions during the

charge periods were not discriminatory; alternatively by

demonstrating that the total number of hiring decisions during

the period were so few in total number that, without regard to

their substance, they could not support any conclusion of a

discriminatory pattern or practice underlying them. As earlier

noted in this opinion, both of these avenues of rebuttal are open to

" Another factor suggesting great caution in making fine-tuned use of

standard deviation analysis in these cases is that its reliability diminishes in

ways probably not susceptible of precise handling by courts as the binomial

distribution sampie diminishes in size. See W. Hays & R. Winkler, Statistics:

Probability, Inference and Decision 222-26(197 1). The Supreme Court has not

indicated the size samples reliably susceptible to this analysis. Castaneds.

dealing with an observed figure of more than 300 in a sample of 870, referred in

its discussion to the general rule “for such large samples.” 430 U.S. at 496

n. 17, The smallest sample in Hazelwood where the same sort of standurd

deviation analysis was discussed was 123. 433 U.S. at 311 0.171. This is

therefore the smallest sample considered by the Court in this context, as noted

by the district court. 21 F.E.P. Cases at 1558 1.54. Significantly, the

categories in the district court's analysis which yielded the smallest standard

deviations -- Suffolk official/managerial employees -- also represented the

smallest samples: four to five. We are aware that in EEOC v. United Virginia

Bank/Seaboard National, 615 F.2d 147 (Ath Cir. 1980), a divided panel of this

court used a standard deviation analysis in respect of samples even smaller than

some in the present case. That panel recognized, however. chat at some point

sample size affects the reliability of this mode of analysis, id. at 151, 152, and

employed it there as merely one of several factors demonstrating error in a

district court's factual determination that a statistically based prima facie case

had been established.

' See Appendix C.

App. 26

an employer, and the district court apparently relied upon chem as

alternative grounds in concluding that the prima facie case had

been rebutted. See note 6 supra.

We address these in reverse order, looking first to che

conclusion that che number of hiring decisions was insufficient to

support a conclusion of discrimination in their making. Because

the prima facie statistical proof of discrimination was keyed to

different employment categories based upon qualifications, hence

involved different labor pools for base data, analysis of the

sufficiency of rebuttal proof in these two respects must similarly

be separately assessed.

ANB’s rebuttal applicant flow evidence showed that in Suffolk

ANB hired 35 clerical employees and 2 managers over the seven

year period 1969-1975, while in Portsmouth during the single

year 1975 it hired a total of 23 clerical employees and 2 managers.

21 F.E.P. Cases at 1556 n.51. These are, in absolute terms,

concededly small samples from which to attempt straight

comparisons with applicant pools or general labor pools as sources

of base data. Samples too small are suspect as a basis upon which to

infer any pattern of discrimination in making employment

decisions. See Mayor of Philadelphia v. Educational Equality League,

415 U. S. 605, 620(1974). But, aside from the Supreme Court's

general observation in Mayor of Philadelphia chat on the very

special facts there presented “the District Court's concern for the

smallness of the sample presented by the 13-member Panel was

also well founded,” id. at 621, we have no guidance as to how

small is too small other chan our own best judgment.

There are two conflicting considerations to be kept in mind in

exercising that judgment. The danger of unfairness to the

employer in resting inferences of discriminatory employment

practices on proof involving small total members of employment

decisions is obvious. But there is the countervailing consideration

that, given the difficulties of proving discriminatory motive

under any circumstances, see Brown v. Gaston County Dyeing

Machine Co., 457 F.2d 1377, 1382 (4th Cir. 1972); United States

App. 27

v. Jacksonville Terminal Co., 451 F.2d 418, 442 (Sth Cir. 1971), a

too ready rejection of claims solely on this account practically

precludes proof of discrimination in circumstances involving local

employers with relatively small total work forces. Courts have

simply to balance the two with an eye to protecting against purely

speculative findings of discrimination while not cutting off the

claims of some employees simply because of the small overall size

of the work forces in which they happen to be employed. See

Chicano Police Officers’ Ass'n v. Stover. 326 F.2d 431, 439 (10th Cir.

1975). This difficule balancing problem is made even more

difficult where, as here, the charged discrimination runs to severa!

categories of differently qualified employees so that, under

developed doctrine, proof must be assessed separately as to each.

In this situation we think it is entirely proper in gauging the

danger of unfair inferences from small numbers in respect of one

category to take into account -- for this limited purpose -- any

patterns inferable from the total range of hiring decisions affecting

all categories during a charged period of discrimination.

Guided by these general considerations, we cannot find error in

the district court's conclusion that the total number of hiring

decisions affecting managers in the Suffolk branches -- on ANB's

undisputed evidence but two over a seven year period -- was too

small fairly to support any inference of a discriminatory pattern of

hiring. On this basis we agree that the prima facie case was

rebutted with respect to this category of employee

notwithstanding the proof pro and con with respect to other

categories.

With respect to the numbers of decisions affecting both

managers and office/clerical employees in the Portsmouth

branches, we find error in the district court's apparent conclusion

that those numbers were also insufficient for inferential purposes.

They were limited in ANB's proof to those for just one year, 1975.

F reasons more fully developed in our later discussion of the

sufficiency of the applicant flow data affirmatively to rebut the

prima facie case, we do not consider this omission of proof running

App. 28

to the whole record excusable on ANB's part. Accordingly, we

conclude that as to these categories, the prima facie statistical case

is not rebutted by this obviously incomplete showing of the total

number of hiring decisions made over the charged period.

With respect to the number of hiring decisions affecting office/

clerical positions in Suffolk over the charged period -- thirty-five

on ANB's proof -- we think it quite sufficient as a basis for

inferring the pattern of discrimination prima facie established.

Accordingly, we find error in the district court's contrary

conclusion as to this category.

More fundamentally, the district court concluded that ANB's

applicant flow data in any event sufficed affirmatively to rebut the

statistically based prima facie case by showing that its hiring

decisions during the charge period were not discriminatorily

motivated. Hazelwood has of course established that a prima facie

statistical case can be so rebutted. 433 U. S. at 313. Because

employment discrimination was not illegal under Title VII until

1965, “{an} employer who from that date forward made all its

employment decisions in a wholly nondiscriminatory way would

not violate Title VII even if it had formerly maintained an all-

white work force by purposefully excluding Negroes.” Id. at 309.

Applicant flow data obviously is adaptable to that end. To be

considered for this purpose, however, the particular data offered

must be “sufficiently reliable . . . to permit consideration of {an

employer's} argument that those data may undercut a statistical

analysis dependent upon hirings alone.” Jd. at 313 n.21.

Over the EEOC’s objections the district court found ANB's

applicant flow data sufficiently reliable to consider in rebuttal of

the work force statistics. When the court then assessed the data it

concluded that because it did not give rise to an inference of

discrimination, it sufficed to rebut the prima facie case made out

by the static work force statistics. 21 F.E.P. Cases at 1555-56.

We think the district court erred in its conclusion that the data

was sufficiently reliable to be considered as rebutting evidence. Its

App. 29

reliability is suspect on three separate bases which in conjunction

undercut its probative force for the intended purpose. ''

First, the applicant flow data for the Portsmouth branches is

limited to only one of the charged years, 1975. Applicant flow

data limited to one out of seven relevant years cannot be held to

rebut a prima facie case based upon gross disparities revealed in

static work force statistics over the period. It simply has not that

probative force. The district court recognized its unreliability

because of incompleteness, but excused the incompleteness

because of what it considered the EEOC’s bad faith in failing to

notify ANB until commencing action that the Portsmouth

branches were to be included in the charges.

In consequence ANB had destroyed its pre-1975 records for

Portsmouth, a decision which the district court concluded was

reasonable and which accordingly should not be allowed to

prejudice ANB in presenting its rebuttal evidence. We find

nothing in Title VII, EEOC regulations, or Supreme Court

interpretations of Title VII that would operate to relieve

employers of the normal consequences of such a deficiency of

proof.

The district court found sufficient excuse by negative

implication from the EEOC’s requirement that all applications for

employment be routinely preserved for six months, and that after

a charge has been filed all relevant records be maintained until

final disposition. 29 C.F.R. § 1602. 14(a) (1976). From this the

court concluded that ANB was reasonably entitled to decide, after

the reasonable cause determination which did not include

Portsmouth had been made, that preservation of relevant

‘* We do not consider sti!l another possible basis of unreliability because of a

lack of factual basi: for assessing it. In some cases the comparison of hires to the

relevant applicant pool for rebuttal may be entirely inappropriate because the

employer's discriminatory hiring practices are so well known throughout the

community that blacks may be reluctant to apply because such an effort would

be futile. See, ¢.g.. Lea v. Come Mills Corp., 301 F. Supp. 97, 102 (M.D.N.C.

1969), aff'd in relevant part 438 F.2d 86 (Ath Cir. 1971). There is no direct

evidence to support this in the record.

Ee,

App. 30

application forms for those branches were not necessary. 21 F.E.P.

Cases at 1555.

Leaving aside all questions of the reasonableness of such a

business decision, we disagree with consequence given it by the

district court. The affirmative obligation imposed by § 1602. 14(a)

to preserve records was clearly designed to protect Title VII

plaintiffs from an employer's destruction of possibly damaging

evidence. This being its purpose, it cannot sefisiviy be interpreted

as being intended also to protect employers against the

consequences of their voluntary destruction of such records just

because the affirmative obligation to preserve them has expired.

So co interpret it would license a self-serving destruction of records

by avoiding the normal factual inference of self-serving that arises

from the destruction of evidence. This we think could not accord

with the broad remedial purposes of Title VII. See EEOC v. Cook

Paint & Varnish Co., 24 F.E.P. Cases 51, 55 (W.D. Mo. 1980).

Employers have been on notice since the earliest days of Title VII's

enforcement of the critical importance of the maintenance of

employment records going back at least to the effective date of the

Title. In consequence, holding this employer to the normal

litigation consequences of a failure to maintain relevant

employment records imposes no higher standard than that

dictated by sound business judgment in respect of the

maintenance of all business records having potential relevance in

any of the litigation patterns to which businesses stand constantly

exposed.

Next, the data’s reliability is open to serious question because it

apparently reflected less than half -- the EEOC contended only

46% -- of the actual applicants from 1969-1975. The district

court dismissed the EEOC’s contencion of its unreliability on this

score, finding that the contention was based upon a confused

reference to the proportion of the available applications requested

by the EEOC during discovery. 21 F.E.P. Cases at 1554. -

Whether or not the EEOC confused its references, it seems highly

unlikely on the record we review that this data represents

App. 31

substantially all the applicant flow data for the years in question.

As the district court noted, the total number of applications

reflected in the data offered the court varied widely from year to

year, from a low of sixteen in 1972 to a high of ninety-seven in

1974. Id. at 1554 n.42.

Finally, the data considered by the district court included

service workers." Because 100% of the service workers hired in

both Suffolk and Portsmouth were black, including them

distorted the picture of minority hiring in the contested

categories. If we limit the applicant flow data to office/clerical

workers categories, purging the data, as offered, of all officials/

managers and service worker hires,'* it completely fails to dispel

the inference of discrimination found by the district court to have

been created by the EEOC’s statistical proof. In Suffolk, ANB

never hired more than one black clerical worker at a time -- in

some years none. The Suffolk samples for each year are concededly

small, but the overall results simply confirm rather than dispel the

* ANB contests the EEOC’s assertion that che district court “lumped”

together managerial, clerical and janitorial categories for its analysis of the

appli- nt flow data. Brief for Appellee 31 n. 15. Both parties are correct. The

court combined all hires in its general analysis of the statistical disparities, 2!

F.E.P. Cases at 1555-56, but, separated out janitorial and managerial hires for

its standard deviation analysis of the figures. Id. at 1559-60. However, in

assessing the correctness of the district court's general evaluation of the

applicant flow data, we note that for that purpose all employees were “lumped”

together.

“ The clerical category in Suffolk is all we consider here, given our

conclusions that the prima facie case with respect to managers had been

rebutted. Further, consistent with our position that where special

qualifications are required the rebuttal data must also be so categorized, we

approach the Portsmouth data by category and consider only the clerical hires

due to the small number of managerial hires. The district court noted that two

management trainees and two black service workers were hired in Suffolk

during 1969-1975 and in Portsmouth in 1975. 21 F.E.P. Cases at 1559 0.57,

1560. Removing these hires and all service-worker applicants from the data, we

are left with:

(Continued on next page)

App. 32

(fn. 16 continued)

Suffolk Branches

Number of Applications

White Black

1969 22 7

1970 40 6

1971 59 20

1972 11 4

1973 60 19

1974 62 35

1975 40 6

Total 294 97

Percentage of Applications Percentage of Hires

White Black White Black

1969 76.7 23.3 83.3 16.7

1970 87.2 12.8 100.0 0.0

1971 74.7 25.3 50.0 50.0

1972 73.3 26.7 80.0 20.0

1973 75.9 24.1 100.0 0.0

1974 63.9 36.1 85.7 14.3

1975 87.0 13.0 85.7 14.3

75.2 24.8 85.7 14.2

Portsmouth Branches

Number of Applications Number of Hires

White Black White Black

1975 377 113 22 1

These figures translate into the following percentages:

Percentage of Applications Percentage of Hires

White Black White Black

1975 76.9 23.1 95.7 4.3

Number of Hires

White Black

4 1

2 0

1 1

4 1

7 0

6 1

6 1

30 5

App. 33

prima facie case based upon static work force statistics: over these

years, during which blacks made up 24.8% of the qualified

applicant pool, only 14.2% of those hired in these categories were

black. In Portsmouth the limited data for 1975, purged of service

workers, not only fails to dispel the prima facie case but reinforces

it. ANB's seven Portsmouth branches in 1975 hired one black

clerical worker -- 4.3% of its hires -- out of an applicant pool

23.1% black."

We conclude, with respect to the Office/Clerical category in

Suffolk and Office/Clerical and Officials/Managers categories in

Portsmouth, that the district court erred in ascribing to the

defendant's applicant flow data the neutralizing effect reflected in

that court's decision. At this stage in its analysis, the district court

should instead have concluded, as we now do, that the prima facie

case of discrimination for those categories made out on the static

work force statistics had not been rebutted by this data.

" The district court applied a stancard deviation analysis to the office and

clerical worker segments of the applicant flow figures, correctly finding the

officials and managers categories of hires too small for such analysis. 21 F.E.P.

Cases at 1559-60. In doing so, although the statistical and numerical

comparisons were between the annual applicant pools and hires, the court

analyzed the hires in relation to the qualified labor pool statistics for cach city

rather than the applicant pool. The court found this comparison mandated by

Hazelwood and Castaneda. Id. at 1556 0.53. We find no such rule emanating

from either case, noting that Hazeluood’s discussion was mercly collateral given

that the Court ordered a remand to the district court for further findings on that

data, 433 U.S. at 313, and pointing out also that Castaneda's comparison of jury

composition to general population figures was not only logical but unavoidable

because juries are not selected from applicants but from the citizenry at large.

Further, it is manifestly incorrect to compare hires with the applicant pool and

then test these statistical comparisons by a standard deviation analysis based on

different population statistics. Therefore, the district court's particular use of

the standard deviation analysis was without legal or factual basis, and we

disregard it entirely. Because of the demonstrated unreliability of these figures

there is no need to attempt a correct reanalysis of the statistical significance of

these disparities.

App. 34

Cc.

We turn next to the way in which the district court assessed the

EEOC’s nonstatistical evidence of specific hiring practices.

Specifically the EEOC alleged and introduced evidence to prove

that berween 1969 and 1975 ANB failed to use objective, job

related standards, used inconsistent standards and perpetuated the

predominantly white work force through a preference for friends

and relatives of employees and word-of-mouth recruiting

(including walk-in hiring), and by maintaining an all-white

interviewer staff.

The district court concluded that all these practices,

individually and collectively assessed, were lawful and created no

inference of discrimination." Specifically, the court concluded

that hiring was not conducted primarily through “word of mouth

recruiting”; that there was no preference for friends or relatives of

employees; that most of the hiring standards used, though

unwritten, were sufficiently specific and objective, and were

consistently applied; that the subjective evaluations of

attractiveness, neatness, maturity and personality, and ability to

communicate were justified by legitimate and important business

considerations and applied in a nondiscriminatory way; and that

” The district court also examined a number of specific practices “which the

EEOC, before and at trial, suggested were discriminatory.” 21 F.E.P. Cases at

1560. Many of these allegations were made in the reasonable cause

determination but were apparently not actively pursued at crial. The district

court stated repeatedly in evaluating chese claims that the EEOC put on no

evidence to support them. We find no error in the resulting findings and

conclusions regarding che discriminatory effect of retail credit checks, the

requirement for a high school diploma, the requirement for character and

employment references, cesting, the faiiure to correspond with applicants or

college education as a negative factor. To the extent the EEOC’s failure to

follow up charges with attempted proof reflected irresponsible broadside

charging -- a conclusion apparently drawn by the district court -- we obviously

do not condone the practice and indeed approve the district court's implicit

condemnation of it. This does not, however, relieve cither that court or this one

of the obligation co subject evidence actually adduced of other hiring practices

to independent, objective evaluation.

J

App. 35

the use of an all-white interviewing staff had no discriminatory

effects. From this the court concluded that the hiring practices

evidence actually operated with the applicant flow data and the

standard deviation analysis to undercut the statistically based

prima facie case, rather than to corroborate or bolster it as

intended by the EEOC. In this conclusion we find error of law.

While we are not prepared to say that attempted proof of this

sort may never, by reason of its intrinsic weakness, have such a

negative effect upon a prima facie statistical case, this evidence

could not properly be given such an effect. The district court's

legal analysis leading to its contrary conclusion is flawed in two

ways.

First, it failed to assess the evidence in the light of, and colored

by, the gross underrepresentation of blacks in ANB's work force

already statistically demonstrated to the district court's

satisfaction. This was at odds with the teaching of such cases as

Barnett v. W. T. Grant Co., 5318 F.2d 543 (4th Cir. 1975) and

Rock v. Norfolk & Western Ry., 473 F.2d 1344 (Ath Cir. 1973),

that where such an imbalance in the work force has been

statistically shown, the uses of particular hiring practices are then

to be assessed for their tendency to perpetuate that imbalance, an

assessment in which they may properly be found to be “badges of

discrimination that serve to corroborate, not to rebut, the racial

bias pictured by the statistical pattern of the . . . work force.”

Brown v. Gaston County Dyeing Machine Co., 457 F.2d 1377, 1383

(4th Cir. 1972). Here, rather than analyzing the hiring practices

on a basis which assessed their tendency to perpetuate an existing

condition of underrepresentation, the district court approached

them as if no such imbalance existed. Inquiry was confined to

specific practices isolated from any inferences of discrimination

already established. It was, in effect, as if the EEOC had sought to

base its case solely upon the nonstatistical evidence related to

hiring practices. The resulting analysis failed properly to take into

account the backdrop of existing imbalance against which the

practices were carried out and in consequence misapplied

controlling legal principles to the evidence.

App. 36

This general approach obviously colored the district court's

overall analysis of the specific hiring practices challenged by the

EEOC. In addition, we think the assessment of certain of the

specific practices was further tainted by faulty analysis of the

evidence addressed to those practices. To show why, we briefly

summarize the pertinent evidence and the district court's

assessment.

The uncontradicted evidence showed that ANB relied almost

exclusively upon walk-ins as a primary source of new employces,

never advertising a vacancy unless it had exhausted the file

without filling the position. Applicants were required to list on

their applications friends or relatives employed by the bank.

Thirty-two of sixty-five applicants hired in Suffolk from 1969-

1975 and in Portsmouth in 1975 -- 49.2% -- had listed friends or

relatives on theice applications. Further, the applicants were

screened and interviewed by an all-white interviewer statf whose

evaluations of their attractiveness and neatness were very

important factors in hiring. The EEOC contended that this

evidence was probative of one of the traditional “badges of

discrimination”: word-of-mouth recruiting rather than general

advertising through established public channels co fill vacancies.

Specifically, this was said to be established as the standard hiring

practice by the facts that (1) friends and relatives of employees

were demonstrably preferred, (2) vacancies were not advertised

until after on-file applications were depleted, and (3) no notices of

vacancies were posted to employees. The court essentially rejected

this evidence as having no probative force. It did not show that

word-of-mouth was the primary hiring technique of the defendant

because (1) there was no preference for friends or relatives; (2)

ANB “did attempt to ‘advertise’ itself to qualified minorities

outside its work force” ;"” (3) the screening process was not “tainted

with discriminatory intent {nor did it operate) (through word-of-

month recruitment or preference for friends or relatives of

employees, for example) to perpetuate minority representation’ ;

and (4) the failure to post notices to its employees was not a

App. 37 .

violation of Title VII because the eviderice of discrimination was at

best inconclusive. 21 F.E.P. Cases at 1566. -

The court's finding that there was no preference for friends and

relatives was crucial to the conclusion that word-of-month

recruiting was not shown to be the primary means for filling

vacancies. The evidence showed that thirty-two of the sixty-five

hires -- 49.2% -- at Suffolk in 1969-1975 and Portsmouth in

1975 had listed friends or relatives on their applications. From

this the court concluded that “{i}f anything, the . . . statistics

show{ed} that the listing of friends and relatives was a minor

factor; a majority of the hires had no ‘contacts’ working for

defendants.” Id. at 1565.

Without ascribing controlling significance co this particular

factor in the overall assessment of ANB's hiring practices, we

observe that if anything, this data implies that the listing of

friends and relatives did indeed tend to perpetuate the

" The district court concluded at one point that the only word-of-mouth

recruiting shown was that involving some affirmative efforts made by ANB to

recruit qualified black employees, and that this obviously did not tend to prove

discriminatory motive in hiring. While the court did consider and reject other

suggestions of word-of-mouth recruiting, its apparent perception that this was

the only direct evidence on the issue in the record clearly influenced the

ultimate conclusion that the EEOC had failed to establish word-of-mouth

recruiting as its primary hiring procedure. This completely warps the meaning

and significance of the cerm in the context of Title VII litigation. As developed

in this context, the term connotes a passive dependence for applicants upon

informal advertising of vacancies through employees’ communications to

friends, relatives and acquaintances and upon walk-in applicants, rather chan

upon systematic public advertising designed to reach the qualified available

labor pool. There was of course substantial direct evidence in the record of

word-of-mouth recruiting so understood.

Significantly, the court did not find and ANB does not contend that the

the claim of word-of-mouth recruiting produced any results. Properly assessed

this evidence simply shows one episodic means of recruiting used by ANB

within an unmistakable general pattern of word-of-mouth recruiting assuredly

not aimed specifically at blacks whether or not deliberately aimed to exclude

them.

eee

App. 38

underrepresentation of blacks in non-service jobs and their

concentration in service jobs.” Whether this practice was a major

factor in hiring or not, its unmistakable tendency to perpetuate

the existing racial imbalance in the work force could not properly

be dismissed as of no consequence.

In similar fashion, the district court essentially rejected out of

hand any significance for the fact that throughout the charged

period, ANB used an all-white interviewing staff. We cannot

quarrel with the court's related conclusions that the criteria used

for selection were for the most part objective and consistently

applied, and that the subjective evaluations of attractiveness and

neatness were business-justified. Furthermore, it is clear that the

use of an all-white interviewing staff standing alone could not

support a determination of liability. Nevertheless, it was error to

reject as having no probative force on the issue of discriminatory

hiring practices the fact that in a racially imbalanced setting, the

staff charged with the duty of evaluating personal characteristics

of job applicants was maintained all-white throughout the

charged period. See Fisher v. Procter & Gamble Manufocturing Co.,

613 F.2d 527, 545-46 (Sth Cir. 1980); Domingo v. New England

Fish Co., 16 E.P.D. 48207 at 5070, 5080 (W.D. Wash. 1977).

In summary, on this aspect of the case we conclude that, rightly

assessed, the EEOC’s evidence of word-of-mouth recruiting as the

* Of the sixty-five hires, ten were black. Of these, rwo, or 20% , had listed

friends or relatives on their applications. 21 F.E.P. Cases at 1565. Of the ten

blacks hired, four were hired as service wor'ers, including the cwo who listed

friends on their applications. Comparing proportions of white and black hires

listing friends, and noticing the percentage of black service workers who listed

friends, we must eliminate the hypothesis that listing friends was a minor

manors Listing friends/relatives

Number Percent of total

Total hires 65 32 49.2

White hires 55 w 54.5

Black hires i0 2 20.0

Blick service worker hires 4 2 50.0

Black non-servic. «orker hires 6 0 0.0

. he Ae

App. 39

primary means used by ANB to fill vacancies, and the use of an all-

white interviewing staff to make its subjective hiring evaluations

tended to corroborate -- to some degree at least -- the prima facie

showing of discrimination made by the static work force statistics.

The district court's apparent conclusion that it had no such

probative force or that its lack of force tended indeed to rebut the

prima facie statistical showing reveals a misapprehension or

misapplication of controlling principles of law.

D.

We now briefly consider the district court's analysis of the

EEOC’s evidence of individual instances of discrimination. As

earlier indicated, 31 of 52 black persons identified by the EEOC as

victims of individual acts of discrimination in hiring gave

testimony, and the district court found on the evidence presented

that none was a specific victim of discrimination. In consequence,

as with the hiring practice evidence, the district court dismissed

this evidence as having no probative force in respect of the pattern

or pvactice issue, or possibly treated it as having a negative impact

for that purpose.

Because we conclude that the EEOC’s prima facie case was

otherwise established and not rebutted without reference to this

evidence, we find it unnecessary to review the district court's

findings and conclusions which led to its out of hand rejection.

We observe only that the evidence was not offered at this stage to

establish entitlement to individual relief, but merely as

corroborating or buttressing evidence of a general pattern of racial

discrimination in hiring. Assuming for purposes of this appeal

that its cumulative impact for this purpose was rightly assessed by

the district court as not buttressing the EEOC’s other evidence,

we hold that neither could its cumulative impact be properly

adjudged to rebut the EEOC’s case. Given the basis of our

disposition, it may simply be set aside as a neutral factor in the

overal! assessment of the evidence.

App. 40

E.

Looking now co the whole body of evidence before the district

court, we hold, in concluding summary, chat (1) the district court

correctly determined that the EEOC'’s static work force statistics

established a prima facie case of discriminatory pattern or practice

of hiring during the charged period; (2) except with respect to the

Officials/Managers category in Suffolk, the district court erred as a

matter of law in holding that this prima facie case was rebutted by

the combined force of the standard deviation analysis applied co

the static work force statistics, the applicant flow data for the

charged period as tested by a standard deviation analysis, and the

weakness or negative impact of the EEOC’s nonstatistical evidence

of hiring practices and individual instances of discrimination.

Analyzed free of the identified errors of misapprehension and

misapplication of controlling legal principle, we conclude that the

evidence before the district court established a prima facie case

based upon the statistically revealed gross disparities in the work

force; that this was buttressed to some degree by evidence of hiring

practices which tended to perpetuate the undisputed racial

imbalance; and that this prima facie case -- except in one respect --

was never rebutted by legally sufficient evidence.

Accordingly, we hold that, except in respect of the one category

of officials/managers in the Suffolk branches, the cotal evidence

established the existence of a discriminatoi / pattern or practice of

hiring in violation of Title VII chat requires remand for the

determination of appropriate relief.

IV

Upon remand the EEOC is entitled to an injunctive decree

appropriately shaped to remedy the consequences of the

discriminatory hiring policy we find conclusively established

upon the record, and to further proceedings in which individual

persons claiming to have suffered the consequences of that pattern

or practice during the charged period may have their individual

claims adjudicated. In these Stage II proceedings, an individual

* a

App. 41

claimant is entitled, upon proving only that he or she was a black

who applied unsuccessfully tor a job with the defendant during the

relevant period, Sledge v. J. P. Stevens & Co., S85 F.2d 625, 637

(4th Cir. 1978), to the benefit of an inference that the decision not

to hire “was made in pursuit of that policy of discrimination.”

Teamsters, 431 U. S. at 362. The burden then shifts to the

empl yer to show “that che individual applicant was denied an

employment opportunity for lawful reasons.” J. This burden

involves showing by a preponderance of the evidence that

nondiscriminatory factors motivated the decision not to hire.

Sledge v. J. P. Stevens, 385 F.2d at 637. If the defendant meets this

burden, the individual claimant is then entitled to show that the

“exculpatory reason advanced by the employer is mere pretense --

that, for example, white persons with qualifications identical to

those of the claimant ot who also did not meet the prescribed

qualifications were nonetheless assigned to the position sought.”

Id.

As earlier noted, the district court has made findings and

conclusions in respect of some persons who may present claims in

the Stage II proceedings. Those findings and conclusions, made in

connection with the general issue of the existence of a

discriminatory pattern or policy and under different burdens of

proof, have no preclusive effect in Stage II proceedings.

Consistent with the result we reach on the merits, we vacate the

district court's award of attorney's fees in favor of ANB.

AFFIRMED IN PART;

REVERSED IN PART;

AND REMANDED.

~)

App. 42

APPENDIX A

General Work Force Statistics

Suffolk Branches

Number and Percentage Percentage of Blacks in

of Blacks Available Work Force

Nansemond

Number Percentage Suffolk County

1968 3 8.3 31.0 47.9

1969 3 11.1 31.0 47.9

1970 4 13.8 31.0 47.9

1971 5 17.9 31.0 47.9

1972 5 17.2 31.0 47.9

1973 3 9.7 31.0 47.9

1974 2 8.3 31.0 47.9

1975 2 10.5 31.0 47.9

Portsmouth Branches

_Number and Percentage Percentage of Blacks in

of Blacks Available W ork Force

Norfolk -

Number Percentage § Portsmouth Portsmouth SMSA

1968 7 5.6 36.0 25.1

1969 6 aa 36.0 25.1

1970 8 5.4 36.0 25.1

1971 11 7.1 36.0 25.1

1972 15 8.9 36.0 25.1

1973 15 <P 36.0 25.1

1974 15 8.4 36.0 25.1

1975 16 10.4 36.0 25.1

SESE RTC!

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App. 43

Consolidated Figures (Suffolk and Portsmouth Branches)

No. & % of Blacks % of Blacks in Available Work Force

Norfolk -

Portsmouth

No. _% Suffolk Nansemond Portsmouth SMSA

1968 10 6.3 310 47.9 36.0 25.1

1969 9 5.5 31.0 47.9 36.0 25.1

1970 12 6.8 31.0 47.9 36.0 25.1

1971 16 8.7 31.0 47.9 36.0 25.1

1972 20 10.2 31.0 47.9 36.0 25.1

1973 18 9.2 310 47.9 36.0 25.1

1974 17 8.1 31.0 47.9 36.0 25.1

1975 18 10.0 31.0 47.9 36.0 25.1

App. 44

APPENDIX B

Special Qualification Work Force Statistics

Suffolk Branches

Officials and Managers

Number and Percentage Percentage of Blacks in

of Blacks Available W ork Force

Nansemond

Number Percentage Suffolk County

1968 0 0.0 8.0 10.9

1969 0 0.0 8.0 10.9

1970 0 0.0 8.0 10.9

1971 0 0.0 8.0 10.9

1972 0 0.0 8.0 10.9

1973 0 0.0 8.0 10.9

1974 0 0.0 8.0 10.9

1975 0 0.0 8.0 10.9

Office and Clerical Workers

Number and Percentage Percentage of Blacks in

of Blacks Available W ork Force

Nanesmond

Number Percentage Suffolk County

1968 0 0.0 10.3 22.5

1969 0 0.0 10.3 22.5

1970 l 5.3 10 3 22.5

1971 2 11.1 10.3 22.5

1972 2 10.0 10.3 22.5

1973 l 4.8 10.3 22.5

1974 0 0.0 i0.3 22.5

1975 0 0.0 10.3 22.5

aX

. ¥

|

App. 45

Service Workers

Number and Percentage Percentage of Blacks in

of Blacks Available Work Force

Nansemond

Number Percentage Suffolk County

1968 3 100.0 44.8 58.1

1969 3 75.0 44.8 58.1

1970 3 75.0 44.8 58.1

1971 3 75.0 44.8 58.1

1972 3 100.0 44.8 58.1

1973 2 100.0 44.8 58.1

1974 2 100.0 44.8 58.1

1975 2 100.0 44.8 58.1

Portsmouth Branches

Officials and Managers

Number and Percentage Percentage of Blacks in

of Blacks Available W ork Force

Norfolk -

Number Percentage Portsmouth Portsmouth SMSA

1968 0 0.0 6.9 4.8

1969 0 0.0 6.9 4.8

1970 0 0.0 6.9 4.8

1971 0 0.0 6.9 4.8

1972 0 0.0 6.9 4.8

1973 1 2.8 6.9 4.8

1974 1 2.8 6.9 4.8

1975 1 2.7 6.9 4.8

App. 46

Office and Clerical Workers

Number and Percentage Percentage of Blacks in

of Blacks Available Work Force

Norfolk -

Number Percentage Portsmouth Portsmouth SMSA

1968 l 1.1 21.5 13.9

1969 0 0.0 21.5 13.9

1970 3 3.2 21.5 13.9

1971 5 4.9 21.5 13.9

1972 8 6.5 21.5 13.9

1973 7 5.9 21.5 13.9

1974 7 5.3 21.5 13.9

1975 10 9.3 21.5 13.9

Service Workers

Number and Percentage Percentage of Blacks in

of Blacks Available Work Force

Norfolk -

Number Percentage Portsmouth Portsmouth SMSA

1968 6 85.7 59.2 45.3

1969 6 100.0 59.2 45.3

1970 4 80.0 59.2 45.3

1971 5 83.3 59.2 45.3

1972 7 87.5 59.2 45.3

1973 7 ’ 87.5 59.2 45.3

1974 7 87.5 59.2 45.3

1975 5 83.3 59.2 45.3

App. 47

Combined Figures (Suffolk and Portsmouth Branches)

Officials and Managers

No. & % of Blacks % of Blacks in Available Work Force

Norfolk -

Portsmouth

No. _% Suffolk Nansemond Portsmouth SMSA

1968 0 0.0 8.0 10.9 6.9 4.8

1969 0 0.0 8.0 10.9 6.9 4.8

1970 0 0.0 8.0 10.9 6.9 4.8

1971 0 0.0 8.0 10.9 6.9 4.8

1972 0 0.0 8.0 10.9 6.9 4.8

1973 1 23 8.0 10.9 6.9 4.8

1974 l 2.4 8.0 10.9 6.9 4.8

1975 1 2.3 8.0 10.9 6.9 4.8

Office and Clerical Workers

No. &% of Blacks % of Blacks in Available Work Force

Norfolk -

Portsmouth

No. _% Suffolk Nansemond Portsmouth SMSA

1968 l 0.8 10.3 22.5 21.5 13.9

1969 0 0.0 10.3 22.5 21.5 13.9

1970 q 3.3.10.3. 22:5 21.5 13.9

1971 7 5.8 110.3 22.5 21.5 13.9

1972 i0 7.0 10.3 22.5 21.5 13.9

1973 8 5.8 10.3 22.5 21.5 13.9

1974 7 49° * 003... 229 21.5 13.9

1975 10 7.9 10.3 22.5 21.5 13.9

App. 48

Service Workers

No. & % of Blacks §% of Blacks in Available Work Force

Norfolk -

Portsmouth

No. _%- Suffolk Nansemond Portsmouth SMSA

1968 9 90.0 44.8 58.1 59.2 45.3

1969 9 90.0 448 58.1 59.2 45.3

1970 7 77.8 44.8 58.1 59.2 45.3

1971 8 80.0 44.8 58.1 59.2 45.3

1972 10 91.0 448 58.1 59.2 45.3

1973 9 90.0 448 58.1 59.2 45.3

1974 9 90.0 448 58.1 59.2 45.3

1975 7 87.5 44.8 58.1 59.2 45.3

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App. 49

APPENDIX C

icant Flow Data

Suffolk Branches

N ications Number of Hirecs

White Black White Black

1969 23 7 5 !

1970 41 6 3 0

1971 59 20 1 l

1972 il 5 4 2

1973 60 19 7 0

1974 62 35 6 1

1975 40 7 6 2

Total 296 99 32 7

These figures translate into the following percentages:

Percentage of Applications Percentage of Hirees

White Black White Black

1969 76.7 23.3 83.3 16.7

1970 87.2 12.8 100.0 0.0

1971 74.7 25.3 50.0 50.0

1972 68.7 31.3 66.7 33.3

1973 75.9 24.1 100.0 0.0

1974 63.9 36.1 85.7 14.3

1975 85.1 14.9 75.0 25.0

74.9 25.1 82.1 17.9

al

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App. 50

Portsmouth Branches

Number of Applications Number of Hirees

White Black White Black

1969 (not available) (not available)

1970 (not available) (not available)

1971 (not available) (not available)

1972 (not available) (not available)

1973 (not available) 55 11

1974 (not available) 65 12

1975 379 115 24 3

These figures translate into the following percentages:

Percentage of Applications Percentage of Hirees

White Black White Black

1969 (not available) (not availalbe)

1970 (not available) (not available)

1971 (not availabie) (not available)

1972 (not available) (not available)

1973 (not available) 83.3 16.7

1974 (not available) 844 15.6

1975 76.7 - 23.3 88.9 11.1

y

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App. 51

RUSSELL, Circuit Judge, dissenting:

I dissent.

My difference with the majority opinion begins with its reversal

of the district court's determination that it (the district court) was

without jurisdiction in this proceeding to consider a claim of

discrimination in hiring at the Portsmouth branch of the

defendant Bank. The district court based its conclusion that

hiring practices at the Portsmouth branch were not a proper

subject of suit in this litigation because such practices had not

been included in the initiating charge on which the Equal

Employment Opportunity Commission (hereinafter EEOC)

acted, or in the investigation conducted by the EEOC in

connection with that charge, or in the reasonable cause

detertmination of discrimination as made by the EEOC, or had

been a subject of conciliation between the EEOC and the

All of the factual findings on which the district court rested this

determination are clearly supported by the record. The charge of

Ms. Holland filed with the EEOC in June, 1969, which provided

the basis for this proceeding, related solely to a refusal of

employment by officials at the Suffolk branch of the defendant. In

her charge she made no refererce whatsoever to the Portsmouth

branch. When the EEOC undertook its investigation of the charge

filed by Ms. Holland in March, 1970, it advised the defendant

that it was sending its investigator to “Suffolk” and it requested

that the “Suffolk branch” be informed of the impending visit of

the investigator. It made no reference to any possible investigation

of the Portsmouth branch or of any charges involving that branch.

The investigator in the course of the investigation concerned

herself solely with the Suffolk branch and its employment

practices during most of the year 1969 and a few days in 1970.

Later, when the reasonable cause determination, with its address

of the employer given as “Suffolk, Virginia,” was issued, it, as the

district court points out, again focused exclusively on the hiring

practices of the Suffolk branch during the period “March 1, 1969

ean

\ eel

ES

App. 52

through January 13, 1970.” In that determination, the EEOC

stated that as of May, 1969, the employees of the “respondent”

consisted of 18 whites and no blacks in an office/clerical

classification, a number which significantly was the exact number

and character of employees at the Suffolk branch, as reported by

the defendant for its Suffolk branch in its EEOC report of May,

1969. It also stated in its report which was dated March | 1, 1974,

that it had reviewed all applications for employment and that the

defendant bank had “hired seven persons, six Caucasians and one

Negro. Of these seven persons, five were hired into clerical or

teller positions, one Negro and four Caucasians. The Negro teller

was hired in November, 1969.” These figures are also clearly

identifiable as relating to the Suffolk branch alone, and related

exclusively to the period ending January 13, 1970. Moreover, in

its reasonable cause determination, the EEOC stated that, during

its investigation, it had represented to the defendant that any

records of employment at the Portsmouth branch were “irrelevant

to employment at {the} Suffolk branch” which was the subject of

its investigation. After its reasonable cause determination, the

only conciliation engaged in between the defendant and the EEOC

concerned the Suffolk branch and the facts disclosed by its

investigation of that branch covering the period from March 1,

1969 to January 13, 1970.

In short, from the filing of the original charge in June, 1969,

up to the filing of this action by the EEOC (in default of any action

by Ms. Holland) in January, 1976, the EEOC had confined its

investigations, its determinations of discrimination (dated March

11, 1974) and its conciliation efforts (held in July and August,

1974) exclusively and wholly to the employment practices of the

defendant at the Suffolk branch for a period of time terminating on

January 13, 1970, and, in refusing to consider any employment

figures at the Portsmouth branch, had firmly rejected as

“irrelevant” any inquiry into the defendant's employment

practices at the defendant's Portsmouth branch.

App. 53

Whether, under the circumstances detailed, the district court's

jurisdiction in this case was confined to inquiry into hiring

activities of the defendant at its Suffolk branch is a question

controlled by our decision in EEOC v. General Elec. Co. , 532 F.2d

359 (4th Cir. 1976).' In that case, we said that the court's

jurisdiction was not limited to the language of the charge as filed

by a complaining employee or applicant but extended to such

types of discrimination as were reasonably uncovered during the

investigation of the charge by the EEOC, were included in the

reasonable cause determination, and were the subject of

conciliation between the EEOC and the employer. 532 F.2d at

372-73. We emphasized, however, that each step in this

administrative procedure of (a) investigation, (b) reasonable cause

determination and (c) conciliation, was an essential step under the

Act and, as the majority opinions states, “each step. . . is designed

to be a prerequisite to the following step and, ultimately, to

suit.”? And, again as the majority itself observes, this is

particularly true of the conciliation step, which, in order to be

effective, demands that the employer be fully notified of the

violation which is the subject of conciliation.’

If che rule enunciated in General Electric is applied in this case, it

cannot be disputed that the scope of the action filed by the EEOC

in this case should be restricted to the employment practices at the

Suffolk branch. That was the activity covered by the charge filed

by the complainant. The EEOC itself strictly confined its

investigations to employment practices for the relevant time

period at that branch alone. Even more significant is the fact that

the EBOIC refused to consider or investigate any employment

practices at the Portsmouth branch. Aad in its reasonable cause

' General Electric was reaffirmed in EEOC v. Chesapeake & Obio Ry., 577 F.2d

229, 231-32 (4th Cir. 1978)

In Bridgesmith, Representing the Title VII Class Action: A Question of

Degree, 26 Wayne L. Rev. 1413, 1417 (1980), The writer says:

“Although courts are not overly restrictive in interpreting the

administrative prerequisites to suit, a clear circumvention of the

administrative scheme will resule in the dismissal of the :itial

(Continued on next page)

App. 54

(fn. | continued)

complaint. In Jerome v. Viviano Food Co. [489 F.2d 965 (6th Cir, 1974)},

the plaintiff filed a charge of sex discrimination with the EEOC bur did

not obtain a right to sue notice from the EEOC before instituting suit in

federal court. The court granted the defendant's motion for dismissal,

holding that an EEOC opportunity for investigation and conciliation is

at the heart of the Title VII remedy and may not be avoided by a litigant

in order to bring a judicial complaint. {/d. 966; accord, Troy v. Shell Oil

Co., 378 F.Supp. 1042 (E.D.Mich. 1974), appeal dismissed as moot, 519

F.2d 403 (6th Cir. 1975)).

“An obvious problem exists when the Title VII litigant is empowered

to bring a judicial complaint which differs materially from that which

was brought with the EEOC. If continuity is lacking between the

administrative relief afforded by Title VII and a subsequent judicial

proceeding, the administrative first step would be illusory. As a matter

of due process ro be afforded Title VII defendants, there should be some

basic relationship between che judicial complaint and the EEOC charge

which preceded it. There has never been a question that the EEOC charge

and subsequent judicial complaint should somehow relate to one

another. Much litigation has taken place, however, concerning the

degree to which synonymy is required.

“One commentator stated that the applicable principle is one of

affording the charged party with an opportunity for rebuttal. [See Smads,

supra, nore 6, at 830, (28 S.C.L.Rev.)). Therefore, if a substantially

different issue arises late in the investigatory or conciliation process, the

charged party has no opportunity to rebut. Rebuttal, in the nature of an

opportunity to be heard, is necessary for the protection of due process.

The question is clearly one of fact, and relatedness between an EEOC

charge and a judicial complain should be dependent upon adequate

notice co the charged party and ample time to be heard.” (Emphasis in

text)

*? Quoting from EEOC v. E. 1. duPont de Nemours & Co. , 373 F. Supp. 1321,

1326 (D.Del. 1974).

* In Patterson v. American Tobacco Co, , 535 F.2d 257, 272 (4th Cir. 1976), we

said “that the commission's statutory duty to attempt conciliation is among its

most essential functions;” and, in EEOC v. General Electric Co., $32 F.2d at

363, we added chat “the opportunity to conciliate is a crucial issue in

determining the issues open for adjudication in che civil suit.”

ee eee At

App. 55

determination, it made it crystal clear that any action at the

Portsmouth branch was “irrelevant” to its investigation and to its

reasonable cause determination. It was against this background

that the EEOC filed this civil action, seven years after the charge of

discrimination was filed, six years after it began its investigation

of the charge, and two years after it had issued its reasonable cause

determination, raising for the first time the question of

discrimination at the Portsmouth branch, without a charge being

filed, without an EEOC investigation, without an EEOC

reasonable cause determination, and without any effort at

conciliation by the EEOC ct hiring practices at Portsmouth. If

each step in the administrative procedure ina Title VII proceeding

i.e., an EEOC investigation, and EEOC reasonable cause

determination, and an effort by EEOC ar conciliation, is an

essential “prerequisite. . . to suit,” as the majority opinion

declares, it would seem beyond controversy that there was no

authority for inclusion of the employment practices at the

Portsmouth branch in the civil suit by the EEOC in this case.

Moreover, apart from the constricting language of the Act itself on

the proper scope of this action, it is difficult to perceive under

what principle of fairness and due process the EEOC should be

permitted to inject into this proceeding at this belated date a

claim that it had not merely failed to raise earlier but one that it

hed expressly asserted both in its investigation and in its

reasonable cause determination was “irrelevant” to its inquiry. '

The majority opinion, though declaring unequivocally that

“we require that a particular charge of discrimination be the

subject of the reasonable cause determination and conciliation

before being subject to suit by the EEOC,” proceeds to reverse the

district court and to find jurisdiction in this action over hiring

practices at the Portsmouth branch. It bases this ruling on the

reasoning that (a) the charge filed and investigated by the EEOC

in connection with the Suffolk branch involved hiring practices

which, if found illegal at Suffolk, would support a like finding in

' See Bridgesmith, supra, 26 Wayne L.Rev. 1413.

-

App. 56

connection with the Portsmouth branch, (b) “the EEOC’s

investigation [in 1969-70} and attempted conciliation [in 1974]

with regard to Suffolk [gave] adequate notice to the defendant of

the practices under investigation and ample opportunity for

conciliation concerning those practices,” and (c) “{h]ad the

conciliation effort been successful, given the common control over

the similar practices at the two cities’ branches, whatever changes

were to be instituted at the Suffolk branch would no doubt

logically and necessarily have been made at the Portsmouth

branch as well.” I submit no one of those reasons is sound.

A finding of hiring discrimination at the Suffolk branch on the

evidence in this case would not necessarily establish

discrimination at the Portsmouth branch. Decisions on hiring

were made separately at the two branches by the interviewing

officer of the respective branch. The labor market from which the

two branches drew their job applicants were different and the two

labor markets varied markedly in their black consitituency,

measured both in numbers and in qualifications. So far as the

EEOC'’s case rests on bare statistics, a finding of discrimination at

either branch would depend on a comparison of the percentage of

black hirees at each branch with the percentage of qualified blacks

in the applicable labor market. The percentage of hirees as well as

the percentage of qualified blacks in the applicable labor market,

varied substantially at the two branches. Proof that the

comparison of black applicants and hirees may have been sufficient

at one branch to support an assumption of discrimination, based as

such assumption would be on statistical data unique to that

branch, would not establish that a similar situation existed at the

other branch. Thus, if the statistical comparison resulted in a

standard deviation of one at Suffolk and five at Portsmouth -- a

result that could be possible because of the differences in the labor

market and perhaps a difference in the attitude of the interviewing

officers -- it could well be that any assumption of discrmination in

hiring at Suffolk could not be justified but could be justified at

Portsmouth. And the EEOC, as does the majority opinion,

recognized all this, for it prepared and filed for the record separate

App. 57

evidence and separate statistical data and reached different results

in connection with the two branches. A Fortiori, it would follow

that, under this supposition, Portsmouth might be required to

make changes but Suffolk would not. Accordingly, two of the

grounds assigned by the majority for its conclusion will not stand

analysis.

The third ground is cqually untenable. | suggest it is

inexplicable to assume that an investigation which the EEOC

itself had expressly noticed the employer was absolutely limited to

one branch of the cmployer's business and where it had

represented to the employer that any discussion or investigation of

employment practices at another branch (Portsmouth) of the

employer was “irrelevant” would be effective notice to the

defendant that the EEOC would years later charge that the

employment practices at such other branch (Portsmouth) were

included within the investigation and conciliation which never

touched that branch (Portsmouth) so as to provide a basis for a

later civil suit involving that other branch. Such a doctrine, if

accepted, would make meaningless and unimportant the statutory

provision for a reasonable cause determination finding and an ofter

of conciliation by the EEOC as conditions to a right of suit as well

as all the other procedural steps mandated by the statute as a

“prerequisite” to suit. So long as the EEOC had met the

prerequisites for suit on a charge involving one branch of an

employer's business, it could, under the prinicple stated in the

majority opinion, include at its whim in its suit, filed years later,

charges of discrimination at all the branches of the employer even

though the hiring practices at these other branches had never been

investigated, had never been the subject of a reasonable cause

determination, and had never been the subject of an offer of

conciliation. Such a rule, if adopted, would mean that the new

rule had washed out the step-by-step procedure so carcfully laid

down by Congress in the Act for the institution of a suit under

Title Vil. 1 am unwilling to participate in such guillotining of

the Congressionally mandated procedure, under a novel exception

App. 58

which would enable the EEOC to broaden almost at will a charge

at one plant of an employer made in 1969, into a charge against all

plants of the employer, made for the first time in 1976, even

though the employer was never notified of such broadening of the

charge or given any opportunity of conciliation on the broadened

charge. The reasons assigned by the majority for including the

Portsmouth branch, I respectfully suggest, are unsupportable.

The majority would find support for its conclusion in the

opinions in Statsny v. Southern Bell Telephone & Telegraph Co. , 628

F.2d 267 (4th Cir. 1980), and Hill v. Western Electric Co. , 596

F.2d 99 (4th Cir. 1979). Neither of those cases involved the

precise point which is raised in this appeal. There was no question

raised in either of those cases about the scope of the EEOC

investigation, the reasonable cause determination or the range of

the offer of conciliation or the effect of the absence of any of these

actions on the right to maintain a civil suit. To such extent as it is

analogous, Hi// even would seem to be contrary to the result

reached by the majority. One of the issues in Hi//, for instance,

was the extent to which a class representative could represent

employees having the same claim at two or more plants of the

employer which may be considered analogous to the issue here.

The Court held specifically that the class representative could only

represent class members who had suffered “injury” in precisely the

same way” as he had in “other departments of the same facility”

(Italics added). 596 F.2d at 102. That language would confine the

class representation to the single facility or plant. If this situation

can be taken as analogous to that now before us, it is manifest that

__ the plaintiff in this case cannot meet the requirement established

in Hill. Admittedly Portsmouth is not “the same facility” as

Suffolk. Hill is thus unquestionably contrary to the majority's

conclusion. ;

Hill did refer to and distinguish P =tterson v. American Tobacco

Co., 535 F.2d 257 (4th Cir.), cert. dewsed, 429 U.S. 920 (1976).°

’ This case later came before the court in 586 F.2d 300 (1978), and in 634

F.2d 744 (1980).

App. 59

In chat case the issue involved whether the exemption under Title

VII granted a bona fide seniority system was applicable to

employees who work “not in different locations.” In other words,

the controversy related to what branches (/.e., those “not in

different locations”) of an employer might be included within a

claim that the employer's employment practices were immunized

by a bona fide seniority system in connection with charges under

Title VII. That question is quite analogous to that presented in

this case. In Patterson the district court had found that the two

plants, located a few blocks apart and engaged in the same general

manufacturing operations, were “not in different locations” for the

purposes of the Act and were accordingly not within the

exemption. But -- and this is the important fact in the case --we

held, in deciding that issue, “that the labor market is the most

important factor in determining whether a company’s employees

work in different locations.” 535 F.2d at 266. For authority the

Court cited Russell v. American Tobacco Co. , 5328 F.2d 357 (4th Cir.

1975). In Russell, the Court said at pp. 362-63:

“Neither the Act nor the EEOC regulations define the

statutory term “employees who work in different locations,”

and we deem it unwise to attempt to draft a definition for

every situation. It is readily apparent, however, that the

labor market is the most important criterion for determining

whether a company’s employees work in different locations.

If the labor for each plant is recruited from different

geographical areas, or if one plant requires labor possessing

different skills from the labor employed at another company

plant, it is obvious that the company cannot draw from the

same labor market to man its plants. Under these

circumstances, it generally can be said that the employees

work at different locations. In contrast, if a company can

operate two or more of its plants with employees from the

same geographical area who are unskilled or possess the same

skills, an applicant for a job can be assigned to an entry level

App. 60

position in either plant. Therefore, these employees, having

been hired from the same labor market, would not generally

fall within the statutory class of ‘employees who work in

different locations.”

If che controlling factor is identity of labor market, as | deduce it is

in the light of the decisions in Patterson and Russell, then it is

improper to treat the two branches of Suffolk and Portsmouth as

one and to find that a discrimination charge against a branch in

one labor market may be considered a charge against another

branch of the same employer in another labor market. That,

however, is what the majority does in this case and what I think is

not warranted.

There is another reason, grounded on fair dealings and the

fundamentals of due process, for denying jurisidiction over

Portsmouth hiring practices in this suit. From 1969 to 1976, the

EEOC was in effect representing to the defendant that there was

no claim of hiring discrimination against the Portsmouth branch.

As a result of its investigation of the Suffolk branch, the EEOC

knew of the defendant's practice of discarding employment

applications after six months. Thus it was in possession of the

knowledge that when it told the defendant it had no interest in the

Portsmouth records, the defendant would follow its routine

practice of discarding all applications after six months, thereby

destroying evidence of possible great valuc to it in establishing a

rebuttal to any charges against it involving the Portsmouth

branch by proof of applicant flow from 1969 to 1975. To permit

the EEOC now, without a charge to investigate, without any

investigation, without a reasonable cause determination, without

notice and without an offer of conciliation, and after six years of

implicit representation that it was making no claim of

discrimination at the Portsmouth branch, and after the defendant

had placed itself at a disadvantage in proof because of the EEOC’s

own conduct, to attempt to piggy-back Portsmouth onto Suffolk

in a belated claim of hiring discrimination offends the purposes of

£

i ae

App. 61

Title VII as well as that clement of fundamental fair dealings

which is at the base of due process. And, though it is not discussed

in the majority opinion, prejudice to the defendant arising out of

what has all the appearances of a legal “ambush,” whether

intended or not, was, as we see in a moment, one of the “triable

issues” in this case. The very inclusion in the Act of the

prerequisites to suits, to which I have already referred, was to

prevent an “ambush” and to avoid the inevitable prejudice such an

“ambush” would impose on an employer such as this defendant

against whom the EEOC, after some seven years, unexpectedly

and without prior notice, leveled the charges relating to the

Portsmouth branch. Under the language and intent of the Act, as

construed in General Electric and other like auhtorities, and under

every principle of fundamental fairness, any inquiry into hiring

practices of the Portsmouth branch should have becn excluded

from the case. The district court agreed. The majority reverses. |

think the majority is wrong.

Turning from the jurisdictional issue to the consideration of the

merits of the EEOC’s claim of discrimination, | would begin with

the stipulation of the parties on the issues triable in the case (apart,

of course, from the jurisdictional issue involving the Portsmouth

branch, already discussed). These issues were stipulated to be: “B.

Whether defendant American National Bank failed or refused to

initially hire black employees because of race from 1969 to 1975.°

C. Whether any of the individual claimants whom EEOC presents

at trial were denied employment . . . because of their race. D.

Whether the passage of time has prejudiced defendant.” In

connection with those issues, the parties, prior to trial, entered

into certain supplementary stipulations. First, they stipulated

that the charges of discrimination were limited to initial hirings in

two employment classification (/.¢., (1) officer/manager, and (2)

* Just as in EEOC v. United Bank/Seaboard National, 615 F.2d 147, 149 (Ath

Cir. 1980): “There is no claim of other racial discrimination in such things as

promotions, transfers, pay, etc., which, as often as not, appear in litigation of

this nature.”

a

App. 62

office/clerical) in the years 1969 co 1975 at two branches, one at

Suffolk, and the other at Portsmouth." It is important to

emphasize that, as the EEOC has stipulated, the action was not

concerned with any hiring by the defendant prior to 1969, nor was

it concerned with the composition of the defendant's work force

prior to 1969. What was in issue under the stipulation of issues

agreed on by the parties was the change in the composition of such

employment classification as a result of hirings from 1969

through 1975, and whether hirings in chat classification were

racially motivated.” They also stipulated the statistical data as

shown by the 1970 census on the racial breakdown of Total

Population and Labor Force characteristics for Norfolk, Suffolk,

Nansemond County, Portsmouth, Norfolk-Portsmouth, and that

the breakdown of “Workforce Availabliliry Data on Minority

Groups and Women in the Recruitable Labor Market Area” in

those areas.’ Under these compilations, the parties did not differ

on the black qualified labor force in these various areas. According

to the charts on the office/clerical classification, the representation

of blacks was 10.3% in Suffolk and 22.5% in Nansemond

County. The comparable figure in Portsmouth proper was 13.9%

’ The majority concedes that the evidence was insufficient to support a

finding of discrimination in connection with hiring in the officer/manager

category. We are thus only concerned with hirings in the office/clerical

category.

* In this discussion of the merits of the claim, we deal with the Portsmouth

branch as well as the Suffolk branch, though, under what | conceive to be the

proper issue in the case, the Portsmouth branch operation should have no place

in this discussion. Since, however, the majority has dealt with the Portsmouth

branch as properly within che issues and since, as | view it, there is no basis for

an action involving the Portsmouth branch, | have chosen co deal with che

Portsmouth branch despite my firm opinion chat the court in this case should

never have considered the Portsmouth branch as a proper subject of inquiry

here.

’ See the language of Justice White in Hazelwood, quoted later, 433 U.S. at

347-48.

" Stipulations 37 and 38.

i aes te _— = +e 7?

App. 63

and 21.5% for Norfolk-Portsmouth. The parties, also, stipulated

the employment practices followed by the bank in its employment

decisions.

Though offering the same types of employment, the two

branches received separately any applications for employment at

their separate branch offices and made thier own separate

determination on hiring. The branches were located about

twenty-five miles apart in an area of the State where access

between cities is not especially easy. In their employment, the two

branches drew from entirely different labor markets. The district

court found, and the majority accepts the finding, that the Suffolk

branch draws its employees from the Suffolk and Nansemond

County labor market'' and the Portsmouth branch from the

Portsmouth and Portsmouth-Norfolk labor market. © It was the

long-established procedures of the defendant to require written

applications for employment. These applications inquired into

the applicant's health, his or her previous banking experience, any

special skills or business-machine experience, education,

employment record and personal references. They provided no

information on the applicant's race. The branches were only

required to retain the applications for at least six months. Both

branches followed the practice of hiring only as a vacancy

developed. In filling the vacancies the bank would normally

review the applications filed within the six months prior to the

date of the vacancy, select one or more applicants for interview,

and, after the interview, would make its choice. Each branch had

its own interviewing officer for employment applicants. In

passing on the applications the branch would normally not

employ without its labor market and would give some preference

to the proximity of an applicant's residence to the branch where he

or she was to be employed.

When the trial actually began, the parties stated their

respective claims either for relief or by way of defense. Counsel for

the EEOC began his presentation of his claim by asking

rhetorically “what are we required to do” to make out a prima facie

App. 64

' The use of Nansemond County as a labor source in establishing the

relevant labor pool is, in my opinion contrary to recent precedent both of this

and other circuits. The proper standard for establishing che labor market in this

context is derived from an applicant flow analysis. We, in effect, held this in

United States v. Fairfax County, 629 F.2d 932, 940 (Ath Cir. 1980). In rejecting

SMSA svatistics in favor of applicant flow data, we said:

“At the outset, we note that applicant data are normally highly

relevant evidence of an employer's labor market. See, Hazelwood School

District v. United States, 433 U.S. at 308 n.13, 97 S.C. at 2741. Those

who apply constitute the pool from which employees are selected.”

The same rule was stated by the Fifth Circuit in Markey v. Tenneco Oil Co. , 635

F.2d 497, 500-501 (Sth Cir. 1981), where the Court suggested that, in

determining the relevant labor pool, it was appropriate to

“assign a statistical weight to the percentage of blacks in cach parish

{the employment area) based on that parish's contribution to the

applicant pool. Absent discriminatory recruiting practices, the

percentage of applicants from a particular parish may be probative of the

willingness of individuals in that parish co travel to the Tenneco plant

and of the relative accessibiliry of the plant to residents of the parish, and

thus be a more accurate measure of that parish's contribution to

Tenneco's labor pool. The trial court should, of course, consider any

evidence that helps define the areas from which Tenneco would normally

be expected to draw its employees.”

If we apply this standard, Nansernond County should be eliminated from

the relevant labor pool and Suffolk should be treated as the sole source. Thus,

the undisputed evidence establishes: Of the alleged discriminatees at the

Suffolk branch, all were residents of Suffolk. Again, in the EEOC listing of

black applicants denied employment “iscriminatorily in its answers to

interrogatories, every applicant was at the time a resident of Suffolk. (See

Appendix pp. 1660-1661) The record does not list a single applicant at Suffolk

who lived in Nansermond Country. The use of Nansemond County as a source of

employment applicants is accordingly unsupported by the record and the

proper labor pool, if we apply as we should applicant flow, in Suffolk.

” But two of the Portsmouth applicants identified by the EEOC as alleged

discrirninatees lived elsewhere than in Portsmouth at the time. One of these

lived at Chesapeake; the other who lived at Virginia Beach applied for a job as a

manager and was not interested in a office/clerical job. Thus, the use of the

Norfolk area as a labor pool for employment by the bank at the Portsmouth

branch, also, seems unjustified for the same reason stated in Norte | 1.

App. 65

case, and then answered his own inquiry by declaring that he

(meaning the plaintiff EEOC) “was required to show that an

individual who applied for a job was black. . .{was} qualified. . .

that a vacancy existed and {was} rejected.” When that proof had

been adduced and a prima facie case was thereby made out, EEOC

counsel proceeded: “The burden then shifts to the defendant to

come forth and show your Honor, based upon valid business

reasons, why these individuals were not considered; in fact, were

rejected.”'’ Having so stated the defendant's burden, counsel for

the EEOC ar this point offered the firm opinion that the defendant

would be unable to meet this burden and that, ceerow ges

failure, “[t}he only conclusion, under these circumstances,

that race was a factor” ts dia silteebifh Winds Aiclalans exh «

decree in its favor was in order on behalf of all claimants. '’

The EEOC’s proof at the trial followed precisely the scenario

thus laid out by its counsel at the commencement of the trial. In

its live testimony following this statement by its counsel of its

The burden in such a case is not one of “convincing” but only one to

“produce admissible evidence which would allow the trier of fact rationally to

conclude that the employment decision had not been motivated by

discriminatory animus.” Texas Dept. of Community Affairs v. Burdine, ———

U.S. (decided March 4, 1981), Slip Opinion p. 9.

For a recent restatement of this, as it applies particularly co statistical

evidence, see the remand of Johnson v. Uncle Ben's Inc., 628 F.2d 419 (Sth Cir.

1980), by the Supreme Court for ceconsideration in the light of Burdine, 49

L.W. 3787, April 21, 1981. .

‘* Counsel for the EEOC in this outline of his theory of the case was making a

statement of the classical disparate treatment formula of McDonnell Douglas v.

Green, 411 U.S. 792 (1973). Implicit in it was the recognitior: on the part of the

EEOC that ultimately and finally in this case, with its small number of hiring

decisions involved over a substantial span of time and with the number of

potential discriminatees specifically identified, no real pattern «+ practice of

discrimination could be established uniess the EEOC was atte to prove that all

or at least a substantial number of the hiring decisions mac by the defendant

were racially tainted by the refusal to hire one or more of the potential

discriminatees. See International Brotherhood of Teamsters v. United States, 431

U.S. 324, 336 (1977).

Wine

a ‘

Nea,

-

App. 66

theory of the case, the EEOC began by developing in painstaking

fashion the procedure followed by it in its investigation of alleged

discrimination on the part of the defendant. It first secured and

reviewed all employment applications at the Suffolk branch for the

entire relevaut period (i.e., 1969 to 1975) and all employment

applications at the Portsmouth branch for the years 1973-

1975, inclusive. After identifying all the black applicants on these

lists, the EEOC, through its representatives, sought to

communicate with them suggesting that they might have a claim

of discrimination against the defendant and a right to backpay,

and requesting information from them relative to their claims.

The EEOC took the replies it received and proceeded to identify

all those made within six months of any employment decision by

the bank at the relevant branch. It did this because the undisputed

and agreed practice of the bank, as we have seen, was to consider

only applications filed within six months of the time when a

vacancy arose. If a white was employed at any time when there was

a qualified black applicant or applicants with an application

pending within the preceding six months’ period, then that black

applicant or those applicants were treated by the Commission as

potential discriminatees. In this manner the 51 discriminatees

asserted by the Commission were, according to the EEOC’s

testimony, identified by the EEOC through its witness, a

paralegal with seven years’ experience in this type of work. On the

basis of this identification the EEOC stipulated that the 51

individuals so identified represented the only potential

discriminatees in this action. The EEOC then proceede j to offer

proof of its investigation to establish exactly the amount due each

of such discriminatees by way of backpay and the result of this

investigation was offered as proof of the amount of backpay due

each claimant. The Commission followed up with the tesitmony

of some 34 of the individual claimants. These claimants gave the

circumstances on which they based their claims of discrimination.

Contrary to the expectations of the Commission's counsel, the

bank, not only impeached the statistical evidence of the

Le" Se

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App. 67

Commission, but it did, at the conclusion of the Commission's

case, accept the burden of production, as declared in Texas Dept. of

Community Affairs v. Burdine, U.S. , (decided

March 4, 1981), and did “produce admissible evidence which

would allow the trier of fact rationally to conclude that the

employment decisions (in connection with every potentia!

discriminatory claim) had not been motivated by discriminatory

animus.” In fact, the bank went beyond this burden in connection

with every employment decision in the relevant category for the

period in question. The bank offered extensive proof in support of

its failure to employ all the alleged discriminatees who had

testified at trial. The bank, however, did not content itself merely

with producing evidence in support of its decision in connection

with the claims of the alleged discriminatees who had testifed but

adduced evidence which was found by the district court to be

sufficient to support a rational conclusion “that the employment

decision{s} {in all the other cases as well} had not been motivated

by discriminatory animus.” Thus, the defendant contested with

proof the Commission's claim of discrimination in favor of every

one of the named 51 alleged discriminatees and, as | later point

out, the district court found that the defendant had not engaged in

racial discrimination in failing to employ any one of the 5 | alieged

discriminatees. The bank, also, introduced evidence of its

affirmative action program for minority employment which it had

adopted in 1973, and had since implemented with the approval of

the Department of Labor, to whom jurisdiction over such

programs was assigned under che Government Contract

Compliance Executive Order. Finally, it impeached the statistical

proof by subjecting it to the standard Castaneda test’ and asserted

it failed in proof of discrimination under such test.

At this point it seems appropriate to mark out precisely the

conclusions reached on this record in the district court's opinion

dismissing the action and the reasoning of the majority opinion

reversing the district court and ordering exclusive relief in favor of

" Castaneda v. Partida, 430 U.S. 482 (1977).

App. 68

the plaintiff, along with my own statement of my views which

differ from those of the district court and those stated in the

majority opinion. After finding that the action properly only

embraced hiring decisions at the Suffolk branch, the district court

proceeded, however, to consider the discrimination charge as it

affected separately first the Suffolk branch and then the

Portsmouth branch since the EEOC sought to present in this

action its claim against the Portsmouth branch. It held at the

outset that solely on the basis of the EEOC’s statistical evidence of

hirings in the two agreed work-force categories at the two

branches, compared both with the overall black work force and

with the qualified black work force in the specific categorie

involved in the action, the EEOC had made out a prima facie case.

It then undertook to determine whether the defendant had

rebutted or overcome both the prima facie case resting on

inferences drawn from the statistical evidence and the additional

nonstatistical evidence offered by the EEOC, which related co the

51 claims of individual discrimination and to the defendant's

hiring practices. It found that, when tested by the standard

deviation test developed in Castaneda, the statistical evidence was

not sufficient to support a reasonable hypothesis of discrimination

and the prima facie finding, base. 2n the raw statistical data, was

thus neutralized as proof of discriminatory motive or intent. It

then reviewed carefully the applicant flow evidence, found it

reasonably reliable, and, after evaluating all the evideace on the

51 claims of individual discrimination identified by the EEOC,

found as a fact that in no case did the evidence support a finding of

discrimination. Finally, it reviewed the defendant's hiring

practices and found, again as a fact, that none was discriminatory.

It accordingly dismissed the complaint. Thus, the district court

found (a) that the statistical evidence was, when tested by the

Castaneda standard, neutral in the probability of discrimination in

hiring, (b) chat there was, as a matter of fact, no discrimination on

the part of the defendant in failure to hire any one of the 5 | alleged

discriminatees, who, by stipulation of the parties, were “the only

;

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a5

App. 69

(possible) porentia! discriminatees” out of the black applicanes for

at_either of the for the relevant

time periods, and (c) that che defendant had engaged in no hiring

practice that resulted in discrimination in the relevant time

period.

The majority opinion agrees with “the district court's ruling

that the EBOC’s statistical proof made out a prima facie case of

discrimination” but found that the district court “erred in holding

tha: defendant's rebuttal evidence was sufficient to overcome the

prima facie case.” As a basis for this latter finding, the majority

opinion states that “the district court's analysis of the evidence (by

which it concluded that the defendant had met successfully the

EEOC’s prima facie case) was flawed by specific failures correctly

to apprehend or to apply controlling legal principles developed by

the Suprerae Court for analyzing the evidence in this type of case.”

It identified these flaws as” (1) the weight apparently assigned by

the (district) court to a standard deviation analysis of certain of the

statistical evicdence;. . .(2) the significance which the (district)

court assigned to ANB's applicant flow statistics as rebutting

evidence; and (3) in the way in which the (district) court treated

the relationship between the statistical and nonstatistical evidence

offered to prove the discriminatory pattern or practice charged.”

* The majority, | submit, indicates in this sentence, facal misunderstanding

of the burdens on the respective parties in the McDonnell Douglas convext. When

the plaintiff in a McDonnell Douglas type case makes out a prima facie case, the

burden on the defendant is merely to produce “evidence that the plaintiff was

rejected, or someone else was preferred, for a legitimate, nondiscriminatory

reason. The defendant need not persuade the court that it was actually

motivated by the proffered reasons.” Texas Dept. of Community Affairs v.

Burdine, supra, p. 6, slip opinion. The burden of the plaintiff then is “to

demonstrate that the proffered reasons was not the true reason for the

decision” and that burden then “merges with che ultimate burden

of persuading (a burden which rests on the plaintiff throughout the trial) che

court that she has been che victim of intentional discrimination.” Id. p. 7, slip

opinion; see also che Supreme Court's remand of Johnson vy. Uncle Ben's, Inc. , 628

F. 24 419 (Sth Cir, 1980), 49 L.W. 3787.

App. 70

Although these flaws would appear to be largely errors in the

weight or significance to be assigned to the evidence, the majority

opinion treats them as “errors of law” and thus not subject to the

clear error rule for appellate review. It did this by concluding that

in the case of the statistical evidence the district court gave

improper weight to the standard deviation test, and that, in

weighing the nonstatistical evidence, the district court failed to

give proper consideration to the “coloring” which the statistical

evidence gave to the nonstatistical evidence.

At the outset, I differ with both the district court and the

majority opinions in their conclusion that on the statistical

evidence alone the EEOC had proved a prima facie case. I think

that the application of the standard deviation test as declared in

Castaneda, which was unquestionably required in evaluating the

statistical evidence in considering whether che EEOC had made

out a prima facie case on the basis of such statistical evidence

alone,'’ demonstrates that the statistical evidence relied on both

by the district court and by the majority was insufficient to make

out a prima facie case of discrimination, but, more than chat, if the

statistical evidence, though not refined by the use of the standard

deviation test, could be regarded as making out a prima facie case

(which I dispute),such a statistical prima facie case was, as the

district court found, rebutted by the standard deviation test, the

applicant-flow proof, the complete rebuttal of the 51 individual

claims of discrimination, and the express findings with respect to

the defendant's hiring practices. Specifically, | would find no flaw

in the use of the standard deviation test by the district court, in the

district court's factual finding of the reliability of the defendant's

applicant-flow data, or in its findings on the individual claims of

discrimination or on the defendant's hiring practices. Finally,

" See Hazelwond, supra, 433 U.S. at 308 0 14:

“A precise method of measuring the significance of such statistical

disparities (between qualified work force and hirings) was explained in

Castaneda ¥. Partida, 490 US. 482, 496-497 0.17. . . It involves

calculation of the ‘standard deviation’ as a measure of predicted

fluctuations from the expected value of a sample.”

App. 71

unlike the majority, | conceive of all these findings as findings of

fact and not as “legal errors,” as analyses and weighing of the

evidence, reversible only for clear error.

I first address the finding by the district court and the majority

that solely on the statistical evidence the EEOC had made out a

prima facie case. The statistical evidence relied on for this finding

consisted of two comparisons: One based on general work force

statistics comparing the percentage of blacks in the general work

force in the pertinent labor market of each branch with that of

blacks hired by the defendant at such branch in the period 1969-

75 and the other using the percentage of qualified blacks in the

two labor categories involved in the charge for the pertinent labor

market of each branch for the period 1969-75. Both the district

court and the majority discarded the first comparison” and

“rel{ied) only on the specialized work figures.” On the basis of

these “specialized work figures,” they found that biacks were so

“grossly underrepresented” as to make out a prima facie case. In

arriving at this conclusion for purposes of determining whether a

prima facie case was made out, neither looked to the standard

deviation test enunciated in Castaneda but looked to the record of

hirings, particularly in the Suffolk branch in che office/clerical

Review (1979) 17 at 32-33:

“The inappropriateness of comparisons between the racial makeup of

the general population and chat of an employer's work force ts evidenced

by the obvious fact that general population figures count children equally

with adults, and few children have the strength, skill, and arcention span

needed to drive heavy trucks. In more general terms, as long as we have

child labor laws, general population figures will always produce gross

overestimates in the labor force of any area, To dismiss this fact in

making group comparisons as if the error were a constant une is simply

wrong. We know that che ratio of children co adults differs markedly in

different groups at different cimes and places, as does the ratio of older,

retired people co active adults. As a result, che overestimation will often

be significantly greater for some groups than for others ~

App. 72

classification.” They noted that the percentage of blacks available

in this category for Suffolk was 10.3% and for Nansemond County

22.5%, or an average of 16.4%. The majority chen declares that

“during three of the charge years (1969, 1974, 1975) there were

no blacks employed in these categories [/.¢., the office/clerical

category}. In two years (1970, 1973), there was one black, and in

two years (1971, 1972) there were two.” This was the basis for the

finding by both the district court and by the majority opinion of

gross underrepresentation of blacks.

As a matter of fact, these figures on employment as used by the

~ majority as a basis for its concurrence in the district court's finding

of a prima facie case are inadequate in themselves to make out a

prima facie case. In 1969 the EBOC’s own undisputed evidence

shows that there were five persons hired at the Suffolk branch in

the office/clerical category, one of whom was a black (Beulah

Chambers, hired on November 17, 1969). In effect, then, 20%

of all hirees in this category at the Suffolk branch during 1969

were black. This percentage is twice the representation of blacks

in the qualified Suffolk work force, considerably more than the

average of both Suffolk and Nansemond County qualified work

force statistics for the category (16.4%), and just under the

qualified work force statistics for Nansemond County alone.’

Again, in both the years 1974 and 1975 the records included in

the evidence by the EEOC show that, out of seven persons

employed in the office/clerical category during those years, there

” L confine my discussion to the office/clerical category because, as | have

already noted, the majority concedes there is insufficient evidence to sustain a

finding of hiring discrimination in the officer/manager classification for the

relevant period.

* See EBOC's Exhibit #41, set forth at page 1561 of the Appendix. This

fact is confirmed in EBOC’s report of investigation where it states 5 persons

were employed in this category, one of whom was black. Incidental'y, chis was

the only investigation, limited as it was basically co che year 1969, made by the

EBOC before it filed its suit.

" See nore 9.

App. 73

was included at least one black hiree in each year.” The percentage

of blacks hired in this category in those two years was thus

approximately 14%. The majority would seemingly discredit the

hirings in 1971 and 1972, saying there were but two blacks hired

in those two years. That is true, but in 1971, there were only two

applicants hired in this category and one of these was black, for a

percentage of 50%, and in 1972 there was one black hired out of

five persons employed in this office/clerical category, for a

percentage of 20% black. It is thus seen that, for three of the seven

years in question, the percentage of the defendant's hiring in the

office/clerical category at the Suffolk branch exceeded

considerably the percentage of qualified blacks in that category

both in the Suffolk and in the Nansemond County labor markets,

and in two of the other four years, the percentage of hirings

considerably exceeded the percentage of qualified blacks in the

Suffolk labor market and was within two percentage points of the

percentage of qualified blacks in the Nansemond County labor

market.” If, on the other hand, we compare the total number of

hirees in the office/clerical category with the black hirees in this

category for the full period of 1969 through 1975 at the Suffolk

branch, but approximately 2 percentage points less than the

average of qualified blacks in the combined Suffolk and

Nansemond County labor markets. For the Portsmouth branch we

have hiring figures only for the years 1973, 1974, and 1975. In

these three years the average percentage of black hirees in relation

" The black hiree in 1974 was Gwen Bethea and in 1975 Karen Estes.

"In looking at the Nansemond County figures, we must remember that it

was the admitted policy of the bank to favor those applicants living near the

branch (a practice which would work against employment from Nansemond

County) and apparently Nansemond County individuals were not attracted co

apply at che Suffolk branch. This lacter fact is evident from the fact that, of the

51 discriminatees charged co have been discriminated against, not one who

applied at the Suffolk branch was from Nansemond County. The use of

Nansemond County statistics, in evaluating employment at the Suffolk

branch, is at best of minimal value.

App. 74

to overall hiring in the pertinent classifications was 15.2%, which

did not represent any “gross underrepresentation” by any

standard. These sporadic, spotty figures in hiring, in both of the

pertinent classifications, spread as they are over seven years, and

varying markedly from year to year, certainly evidence no clear-

cut pattern or practice, “no standard operating procedures”’’ of

discrimination against blacks, (the required finding under

Teamsters) and they cannot support a finding of “gross

underrepresentation,” which could be the basis for a finding of a

prima facie case of discrimination on the part of the defendanc,

either at che Suffolk or at the Portsmouth branch.

But, apart from the complete inadequacy of even the evidence

on which the district court and the majority sought to ground

their finding of a prima facie case of a “standard practice” of

discrimination in hiring, | think that the majority sought to

deduce a prima facie case from statistical evidence, which

necessarily involves an element of intent, in the wrong way and by

disregarding the test established by the Supreme Court and

followed by us in United Bank for such deduction. Intent is an

essential element in a disparate treatment case. Manifestly,

whenever, as here, a court seeks to determine whether a hiring

selection by an employer is racially tainted by a statistical

comparison of hirings with available qualified work force in the

labor market, it does not ordinarily do so on the basis of evidence

of express intent or motive. Statistics do not provide expressly

such evidence. One must resort to the law of probabilities in

assessing such statistics for purposes of arriving at a possibly

reasonable inference of discriminatory intent. Under the law of

'' Similarly there is no difference either beeween che district court and the

majority, or between the majority and myself, over the agreed legal rule

applicable co this claim. The EEOC must prove, in order to establish a claim of

discriminatory practice in hiring, more than “che mere occurrence of isolated or

‘accidental’ or sporadic discriminatory acts” in hiring; it must prove chat racial

discrimination in such hiring over the period in the two classifications in issue

was “the standard operating procedure’ of the defendant. /nternational

Brotherhood of Teamsters v. United States, 441 U.S. 324, 396(1977).

App. 75

probabilities, it is not sufficient for a finding of an inference of

tainted motive that the percentage of hirings does not correspond

exactly with che percentage of qualified blacks in the work force in

the pertinent labor marker; it is only when the deviation from the

norm reaches such a level chat it is reasonable to assume or

hypothesize that the hiring was biased or intentional, rather than

by chance or at random, that it becomes supportive of a prima facie

case of discrimination. The Supreme Court recognized this and in

Castaneda provided courts with what it characterizes as “precise”

test or forumula for ascertaining when the deviation reaches this

level and may be sufficient to justify a hypothesis of intent or bias

in the hiring process.” In arriving at such formula, on the basis of

the mathematics of probabilities ic declared that when the

deviation provided by the statistical comparison is “greater than

two or three. . .then the hypothesis” that defendant hired

employees without regard to race “would be suspect ,”” to such an

extent that it was not unfair to assume that the hiring selection

was tainted. In essence, what the court was saying was that until

the deviation reached the level of “more than two or three,”

statistics based on a comparison of hirings with qualified work

force would not render those hirings “suspect” of racial

discrimination.

In reaching their determination that the EEOC had established

a prima facie case solely on the statistical evidence, both the

district court erred and the majority departed from the rule

established by Castaneda and adopted by us in United Bank for

qualifying statistical evidence in this context. The district court

did it is true later apply the Castaneda standard in determining

whether the statistics, when tested by the Castaneda rule, rebutted

the prima facie finding. In so doing it determined that the

deviations in this case, taken over the full period in both

categories, were not “more than two or three.” It concluded that

* See nore 17.

» 440 U.S, at 497 0.17

App. 76

such determination “neutralized” the value of the statistics as

proof of a tainted hiring practice and as a basis for a hypothesis of

bias in the hiring process. I agree with the district court in its

calculations under the Castaneda rule, as | assume the majority

does at least, it does not express disagreement. My difference with

the district court is its failure to use the Castaneda test in

determining whether the EEOC had made out a prima facie case

with statistical evidence which was “neutral” in providing

authority for a hypothesis <f intent. In taking this position, I am

following precisely what the panel did in United Bank, 615 F.2d

14, and what the Supreme Court in Castaneda, 430 U.S. 482, and

Hazelwood School District v. United States, 433 U.S. 299 (1977),

directed us to do.

If, however, we are to apply the Castaneda test by way of

rebuttal, as did the district court, I agree with the district court's

conclusion that the deviation in this case in the statistical evidence

was not sufficient to render the hiring selections of the defendant

“suspect” of bias. Under those circumstances, the district court

correctly held that the statistical evidence was “neutralized” as

evidence of bias in the hiring selection and, if bias was an essential

element of the plaintiff's case, as the plaintiff itself concedes, it

was necessary for the Commission to produce evidence of it

elsewhere in the record, for, as we have seen, it is the

Commission's burden to persuade throughout the case under

Burdine. The majority, however, takes issue with this conclusion.

As I read it, the majority opinion does not find fault with the

district court's finding that the standard deviation reflected in the

statistical evidence for the two pertinent employment categories

was not “more than two or three.” It contends rather that the

district court committed “legal error” in the neutral effect given

by it to a finding that the standard deviation in the statistical

evidence was no “more than two or three.” This is one of the three

“specific failures. . .to apply controlling legal principles

developed by the Supreme Court for analyzing the evidence in this

type of case” found to have flawed the district court's opinion.

ee

App. 77

The majority opinion faults the district court on this point

because that Court held that, under Castaneda, “if standard

deviations reflected in static work force statistics were not ‘more

than two or three’ the disparities were necessarily shown to be

statistically insignificant.” (emphasis added) It asserts flatly that

this statement “is simply incorrect.” The statement of the

majority is not, however, a strictly accurate reading of the

conclusion which the district court said should be drawn from a

standard deviation of “not more than two or three.” What the

district court did conclude was that, when the standard deviation

in the employee selection was more than “two or three,” it was a

fair hypothesis, based on accepted standards of mathematical

probabilities, chat the selection whereby blacks were not hired was

“suspect” and not by chance but, conversely, that if the standard

deviation in such a situation was no “more than two or three,”

there was no basis for a hypothesis that the selection was by design

rather than by chance. In essence, the conclusion was that, if the

deviation was no “more than two or three,” that fact would not

permit a hypothesis of bias or design as distinguished from chance

and would be purely a neutral indicator insufficient to satisfy the

plaintiff's burden of persuasion, which as Teamsters teaches, goes

with the plaintiff in a discrimination case throughout the

proceedings.” That I think is a reading clearly justified by

Castaneda and it was in effect the reading given Castaneda in United

Bank, 615 F.2d at 152. Moreover, it is not substantially different

from the construction of Castameda arrived at in the majority

opinion itself to the effect “that courts of law should be extremely

cautious in drawing any conclusions from standard deviations in

the range of one to three.”

In my opinion, Castaneda begins with the premise -- a premise

reaffirmed recently in Bwrdine, supra -- that the burden of

persuasion in a discrimination case rests throughout the case, both

in establishing a prima facie case and in sustaining a judgment of

” This accords with what was said in Tasmsters, supra, 431 U.S. at 336.

App. 78

final liability, upon him who asserts discrimination.” When the

complainant relies as a basis for sustaining this burden on

statistical evidence, that evidence is to be tested by rules of

statistical probability.” Until the statistics measured by these

rules of probability, as stated in Castaneda reach a point of deviation

in their application that will support a hypothesis of bias in

hiring, promotion, etc., the plaintiff has not met this burden of

persuasion and the defendant is entitled to prevail. Castameda

establishes this threshold point where a hypothetical construct of

bias is warranted as a standard deviation of “more than two or

three.” When the standard deviation fails to reach that level of

“more than two or three,” the plaintiff, so far as his statistical

proof is concerned, has not sustained his burden of persuasion and

has not met the threshold test for a prima facie case based on

construction, the EEOC had unquestionably failed to satisfy the

requirements for a prima facie case on the basis of the statistical

evidence.

I would assume the majority does not suggest a court might

hypothesize when the deviation is no “more than two or three”

that the employer's selection of hirees was by design, i.¢., was

discriminatory. To do that would be to give the same weight to a

standard deviation of no “more than two or three,” as Castaneda

says should be given to a standard deviation of “more than two or

three,” and I am confident that the majority does not opt for any

such misapplication of Castaneda. 1 can only assume that the

majority means that the “weight” to be given a finding of no

* See also Teamsters, supra, 431 U.S. at 336.

» In Note, Title VII -- iscrimination -- Use of

ists i ie Evidence iscrimination, 25 N.Y.L.S.L. Rev. 759,

578 (1980), che commentator said:

“In essence, the utility of statistics in Title VII actions is based upon

ray mag hehe arvema~ B

See also, Braun, and Its

to Title Vil Cases, yo 39, oe

App. 79

“more than two or three” is that such a finding does not support a

hypothesis of selection in hiring either by design or by chance.

Such a finding authorizes an assumption neither of discrimination

nor of non-discrimination, specifically, that the finding in such a

case is inconclusive, supportive of neither a hypothesis of design

nor of chance. If this is the view of the majority, the district court

adopted that view and I can find no reason for the majority to fault

it as the first “flaw” which it finds “skewed” the district court's

conclusions. The very test or formula articulated by the majority

(i.¢., “that courts of law should be extremely cautious in drawing

any conclusions from standard deviations in the range of one to

three”) unquestionably justified the district court saying that such

neutralization of the statistical evidence meant simply that the

statistical evidence was without value in determining

discrimination, either prima facie or substantively. Is not such a

finding evidence that the district court, in its review of the

statistical evidence was being “extemely cautious” in drawing any

conclusions from the flawed statistical evidence, and has not the

majority trespassed far beyond appellate review and abandoned its

own tule of “extemely cautious” in evaluating the statistical

evidence, giving it in effect conclusive effect?

The best evidence of discrimination or no discrimination in this

case does not,

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