Amicus Brief for the United States — Cooper v. Federal Reserve Bank of Richmond

———— | Ofics . Serene Court, U.S.

FILED

No. 83-185 DEC 15 1066

In the Supreme Court of the United States.

OCTOBER TERM, 1983

STEVAS,

SYLVIA COOPER, ET AL., PETITIONERS

Vv.

FEDERAL RESERVE BANK OF RICHMOND

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES AND THE EQUAL

EMPLOYMENT OPPORTUNITY COMMISSION

AS AMICUS CURIAE SUPPORTING PETITIONERS

REx E. LEE

Solicitor General

LAWRENCE G. WALLACE

Deputy Solicitor General

HARRIET S. SHAPIRO

Assistant to the Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

DAVID L. SLATE ~

General Counsel,

PHILIP B. SKLOVER

Associate General Counsel

VELLA M. FINK

Assistant General Counsel

BARBARA LIPSKY

Attorney ~

Equal Employment ity Commission

Washington, D.C.

4

QUESTION PRESENTED

Whether a prior finding that an employer has not

engaged in a pattern or practice of racial discrimina-

tion against the class to which petitioners belong pre-

cludes their assertion of individual claims that they

were discriminated against because of their race.

(1)

TABLE OF CONTENTS

Page

Interest of the United States = DP aS aE Mea S avs tN 1

ESTO Hibet poet RD a ES 2

Summaty of argument ...................... sececoicenepenbaubealppaaite 8

Argument:

I. Res judicara does not bar litigation of the

Baxter petitioners’ claims .........................sc0c..<.<s 10

II. Fed. R. Civ. P. 23 does not bar litigation of the

Baxter petitioners’ claims ................................... 16

III. Permitting the Baxter petitioners to proceed

with their individual claims is not unfair to the

eae RE Ere eaAee Aa Rare e Re eel ee 21

IV. Dismissal was improper on the particular facts

of this case _............. icthasset isunpabageaeticenrioaesLentendanee 23

NID, Soca ses coulhcictime) Sitiendlascvebamcsonnvoembemmcsiccrdtptenccetoncstak 25

TABLE OF AUTHORITIES

Cases: nt

Allen v. McCurry, 449 U.S. 90 2000000. 10

American Pipe & Construction Co. v. Utah, 414

et ERAS DOSS ener catalan eee roy 16, 17, 22

Bogard v. Cook, 586 F.2d 399, cert. denied, 444

MI issih tects ca liacigeeasacunanthgnd tthe eandiceds adic oka 20

aesars Palace Securities Litigation, 360 F. Supp.

Calagaz Vv. Calhoon, 309 F. 2a 248 snaepaeeibiilnalibieencenes 18

Christiansburg Garment Co. v. EEOC, 434 U.S.

ABR EES te ale PCs POR 22

Church of the New Song Vv. Establishment of Re-

ligion, 620 F.2d 648 . reese Pees Bcd 10

Commissioner V. Sunnen, 333 US. 591. WEES 10

Connecticut Vv. Teal, 457 U.S. 440... ‘ 13

Croker v. Boeing Co., 662 F.2d 976 .............. 11, 17, 24

(111)

IV

Cases—Continued : Page

Crown, Cork & Seal Co. v. Parker, No. 82-118

ee eR aa wie ee miee se 16, 17, 22-23

Dalton v. Employment Sec. Comm’n, 671 F.2d 835,

cert. denied, No. 82-129 (Oct. 4, 1982) _............ 12

Dickerson vy. United States Steel Corp., 582 F.2d

A Ee La ee ieiadencnemeat 11, 12, 14, 16, 17

Dore ¥. Rleppe, G22 FBG TSG q.....22.--00ccccecensecarcasense 18, 22

Dosier Vv. Miami Valley Broadcasting Corp., 656

ct Bh Ae RRS Died entity Beans ete AR a 12

Eastiand v. TVA, 704 F.2d 618 ........................-....... 12

Esplin v. Hirschi, 402 F.2d 94, cert. denied, 394

SRNL IE EFS trae CBE NE MRC ays Sees das BON 21

Fowler v. Birmingham News Co., 608 F.2d 1055.. 12

Franks v. Bowman Transportation Co., 424 U.S.

sale RSP ATRL Aertel SE Sas Seal ane ECE Se A REL CROP LAS 14

Furnco Construction Corp. v. Waters, 438 U.S.

IA re ESTE REM SIN TR TEN ete aD 13, 22

General Telephone Co. Vv. Falcon, 457 U.S. 147... 2

Gonzales v. Cassidy, 474 F.2d 67 .........000....... wales 18

Griggs V. Duke Power Co., 401 US. RE ciseaeks 13

Gulf Oil Co. v. Bernard, 452 U.S. 89 0.0... 2

Hansberry ¥. Lee, $11 U.S. SB ......-.........----.020022204000 21

Hebert v. Monsanto Co., 576 F.2d 77, vacated on

other grounds, 580 F.2d 178 ................................ 20

Herendeen y. Champion International Corp., 525

Pa Bee os SAL eg a A ES, SO ne 10

International Brotherhood of Teamsters v. United

(a OS Oe ee 4, 14, 17, 19, 21, 23

Jones V. Bell Helicopter Co., 614 F.2d 1389 ........... 12

Jones-Bey Vv. Caso, 535 F.2d 1860 0.0000... 20-21

Kemp Vv. Birmingham News Co., 608 F.2d 1049... 12

Marshall v. Kirkland, 602 F.2d 1282 0... 21

Robinson v. Union Carbide Corp., 544 F.2d 1258... 17

Sam Fox Publishing Co. v. United States, 366 U. S.

ESS Gea I ea Rn, Erg AD 18

Stevenson v. International Paper Co., 516 F.2d

Ea ae A I ee i a IM Se es MOTE 10

Teras Department of Community Affairs v. Bur-

dine, 459 U.S. 248 . sk en ee 14

Transocean Tender Offer Securities Litigation, In

re, 427 F. Supp. 1211 . sisS cd sedlhmiencaricidlanail 20

Cases—Continued : Page

United Airlines, Inc. v. McDonald, 432 U.S. 385... 17

Woodson V. Fulton, 614 F.2d 940 20. 12

Statutes and rules:

Civil Rights Act of 1964, Title VII, 42 U.S.C. (&

I Or CO okie ececrneetecniichterenrnntonsen 1

§ 708(a), 42 U.S.C. 2000e-2(a) ...................... 2

a Ae Ry CII ceniiccicciesnsentciceonecdecentcuese 1

a Se nite FOO cscs chersirceracereredorne pmvese 1

§ 717, 42 U.S.C. (& Supp. V) 2000e-16 .......... 1-2

12 U.S.C. 341 ..... ESA PEER A RAR IN IEA aS MA AR UTES 2

UR ear eae ROIS SOA 7

ey eon ode a ke 7

Fed. R. Civ. P.:

IR ths eae tices ee DS Se Bie ye

advisory committee note 0... reas 21

Se I oe Pe Se PAN ec 3,18

AGL SIE NS Ree tA aR Ate ti ee 3, 18

ew 18

sR ETN RA cartier cr Sie eran 20

ee 24

Miscellaneous:

1B Moore, Lucas & Currier, Moore’s Federal Prac-

a oe oat a 10

Restatement (Second) of Judgments (1982)... 25

18 Wright & Miller, Federal Practice and Proce-

I GI, Sine ied ce henacbaveniniisiacauueiceredcks ...18, 19, 20

Iu the Supreme Court of the United States

OCTOBER TERM, 1983

No. 83-185

SYLVIA COOPER, ET AL., PETITIONERS

v.

FEDERAL RESERVE BANK OF RICHMOND

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES AND THE EQUAL

EMPLOYMENT OPPORTUNITY COMMISSION

AS AMICUS CURIAE SUPPORTING PETITIONERS

INTEREST OF THE UNITED STATES

Title VII of the Civil Rights Act of 1964, 42 U.S.C.

(& Supp. V) 2000e et seq., prohibits, inter alia, ra-

cial discrimination in employment. The Equal Em-

ployment Opportunity Commission and the Attorney

General are responsible for the enforcement of Title

VII, 42 U.S.C. 2000e-5 and 2000e-6. Title VII is

also enforced through private lawsuits, 42 U.S.C.

2000e-5, which provide an important complement to

federal enforcement efforts. The federal government

therefore has an interest in the development of the

proper standards to govern private Title VII actions.

In addition, since the government as an employer is

subject to private suit under Title VII, 42 U.S.C.

(1)

2

(& Supp. V) 2000e-16, the decision in this case will

affect the federal government as a Title VII defend-

ant. The United States has participated in previous

private Title VII class action cases for similar rea-

sons. E.g., General Telephone Co. v. Falcon, 457 U.S.

147 (1982); Gulf Oil Co. v. Bernard, 452 U.S. 89

(1981).

STATEMENT

1. On March 22, 1977, the Equal Employment Op-

portunity Commission brought a civil action in the

United States. District Court for the Western District

of North Carolina alleging that the Federal Reserve

Bank of Richmond (the Bank) had violated Section

703(a) of Title VII of the Civil Rights Act of 1964,

42 U.S.C. 2000e-2(a).' Specifically, the complaint

alleged that the Bank had failed to promote black

employees at its Charlotte, North Carolina, branch

because of their race (II C. A. App. 1-3).* On Sep-

1 Although Federal Reserve Banks perform important stat-

utory functions, they are not governmental bodies for Title

VII purposes, and their employees are not employees of the

federal government. Upon the filing of an organization cer-

tificate with the Comptroller of the Currency, a federal re-

serve bank becomes a body corporate, with power to sue and

be sued, and to appoint employees, define their duties, and

dismiss them “at pleasure” (12 U.S.C. 341). Only the ap-

pointment of the president and first vice president requires

the approval of the Board of Governors of the Federal Re-

serve System (ibid.). The Board of Directors of the bank, or

its duly authorized officers or agents, is empowered to exer-

cise “such incidental powers as shall be necessary to carry on

the business of banking” (ibid.)—obviously including the es-

tablishment and implementation of personnel policies, includ-

ing the ones challenged in this action.

2“TI C. A. App.” refers to the Appendix filed in the court

of appeals in the Baxter case; “I C.A. App.” refers to the

Appendix filed in the court of appeals in the EEOC case.

3

tember 21, 1977, the district court permitted Sylvia

Cooper, Constance Russell, Helen Moore and Elmore

Hannah, Jr. (the Cooper petitioners) to intervene in

the action. A class consisting of “[a]ll black persons

who have been employed by the defendant at its

Charlotte Branch Office at any time since January 3,

1974 * * *, who have been discriminated against in

promotion, wages, job assignments and terms and

conditions of employment because of their race” was

conditionally certified pursuant to Rule 23(b) (2)

and (3), Fed. R. Civ. P., on April 26, 1978 (Pet.

App. 199a-200a (footnote omitted)). The district

court ruled that the Cooper petitioners were appro-

priate representatives of the class; it directed the

mailing of notice to identifiable class members, and

its publication in the Charlotte newspaper (II C.A.

App. 11-12). Phyllis Baxter and four other class

members (the Baxter petitioners) received this notice

(II C.A. App. 86), and did not seek to be excluded

from the class, as the notice informed them they

could be.*

* The court order, to which all parties expressly consented,

approved a notice that contained the following paragraphs

(II C.A. App. 15):

4. If you fit in the definition of the class in paragraph 3

you are a class member. As a class member, you are en-

titled to pursue in this action any claim of racial dis-

crimination in employment that you may have against

the defendant. You need to do nothing further at this

time to remain a member of the class. However, if you

so desire, you may exclude yourself from the class by

notifying the Clerk, United States District Court, as pro-

vided in paragraph 6 below.

5. If you decide to remain in this action, you should be

advised that: the court will include you in the class in

this action unless you request to be excluded from the

class in writing; the judgment in this case, whether

4

2. An eight-day bench trial was held in September

1980, under the bifurcated procedure sanctioned in

International Brotherhood of Teamsters vy. United

States, 431 U.S. 324, 359-362 (1977).* At that time,

the Baxter petitioners testified in support of the al-

legation of a pattern or practice of discrimination.’

After considering post-trial submissions by both par-

ties (Pet. App. 191la-192a), the district court issued

a Memorandum of Decision holding “that defendant

engaged in a pattern and practice of discrimination

from 1974 through 1978 by failing to afford black

employees opportunities for advancement and assign-

ment equal to opportunities afforded white employees

in pay grades 4 and 5. * * * Other than in the above

favorable or unfavorable to the plaintiff and the plaintiff-

intervenors, will include all members of the class; all class

members will be bound by the judgment or other deter-

mination of this action; and if you do not request exclu-

sion, you may appear at the hearings and trial of this

action through the attorney of your choice.

6. If you desire to exclude yourself from this action, you

will not be bound by any judgment or other determina-

tion in this action and you will not be able to depend on

this action to toll any statutes of limitations on any in-

dividual claims that you may have against the defendant.

You may exclude yourself from this action by notifying

the Clerk in writing that you do not desire to participate

in this action.

* Under that procedure, the stage I trial considers only the

question of the employer’s liability vel non. If liability is

found, the claims of individual employees for specific relief

are considered in stage II proceedings.

* At the bank’s request, their testimony at trial was limited

to the class issues (I C.A. App. 524-525). The district court

ruled that it would not consider their testimony as presenting

individual claims (ibid.).

5

particulars, however, there does not appear to be a

pattern and practice of discrimination pervasive

enough for the court to order relief” (Pet. App. 193a-

194a). The district court also concluded that re-

spondent Bank had discriminated against Cooper and

Russell, but not against Moore and Hannah,* and

stated further that “[a]lthough the court also has an

opinion about the entitlement to relief of some of the

class members who testified at trial, it will defer

decision of those matters to a Stage II proceedings”

(Pet. App. 194a).

The Baxter petitioners thereupon moved to inter-

vene;* respondent Bank opposed that motion, noting

that the Baxter petitioners “can pursue any individ-

ual claims they have in separate proceedings” (Re-

sponse to Motion to Intervene 4 (quoted at Pet. 10) ).

In denying the motion to intervene, the district court

stated that “[t]hose intervenors [sic] * * * in grade

5 or below are in the class as to which relief has

been ordered by the judgment in this case and their

rights will be dealt with in Stage II proceedings”

(Pet. App. 286a-287a).* As to the other applicants

* The district court found that respondent’s refusal to pro-

mote Cooper to pay grade 8 and her subsequent discharge

were discriminatory (Pet. App. 216a-223a) as was its failure

to treat Russell similarly to others in pay grade 6 (Pet. App.

223a-229a). Moore complained of her treatment in pay grade

10 (Pet. App. 230a-232a); Hannah was denied promotion

from pay grade 3 (Pet. App. 276a).

7 One of the Baxter petitioners was denied promotion from

pay grade 3, one from pay grade 6, two from pay grade 7, and

one from pay grade 9 (II C.A. App. 72).

* In addition to the Baxter petitioners, Emma Ruffin sought

to intervene alleging the bank had improperly refused to pro-

mote her from pay grade 4 (II C.A. App. 21-24).

6

for intervention, however, the district court concluded

that the finding of no pattern or practice of discrimi-

nation in the group to which they belonged disquali-

fied them from participation in the remedial stage of

the litigation. The district court accordingly denied

the motions to intervene “without prejudice to any

underlying rights the intervenors may have’’ (Pet.

App. 289a). It emphasized, however, that, because

the Baxter petitioners were class members, the pend-

ency of the suit tolled the applicable statutes of limi-

tations on their individual claims, and “I see no rea-

son why, if any of the would be intervenors are ac-

tively interested in pursuing their claims, they can-

not file a Section 1981 suit next week” (Pet. App.

288a).

After denying the motions to intervene, the dis-

trict court entered detailed findings of fact and con-

clusions of law. The factual findings included find-

ings based on the testimony of the Baxter petitioners.

Thus, the court found that Gilliam, who had sought

a preferable job given to a white co-worker, Yates,

“had more seniority than Yates and was equally qual-

ified” (Pet. App. 248a); and that a white employee

with “a lower performance rating and no greater

qualification than Knott” had been promoted to be a

supervisor over her, and the Bank had “offered no

explanation” for this action (Pet. App. 25la-252a).

See also Pet. App. 247a (Baxter findings), 253a

(Harrison findings), 253a-254a (McCorkle findings).

However, no conclusions of law concerning the indi-

vidual Baxter petitioners were adopted, although

there were such conclusions for all the Cooper plain-

tiffs, who had, of course, been granted intervention

(Pet. App. 263a-283a).

Accepting the district court’s suggestion, the Baxter

petitioners thereupen filed a new complaint alleging

7

that each had been denied equal employment opportu-

nities by respondent Bank in violation of 42 U.S.C.

1981 (II C.A. App. 71-73). The complaint recited

the specific facts upon which each individual com-

plainant relied for the claim of disparate treatment

(id. at 72), and did not allege any general pattern

of discriminatory treatment. The complaint sought

affirmative relief in obtaining the promotions with-

held and back and front pay (id. at 73). The Bank

moved to dismiss the new action on the ground that

it was barred, as res judicata, by the prior class ac-

tion (II C.A. App. 74-80). Although the district

court denied the motion, stating its “inten[t] to de-

cide the merits of the claims and appropriate relief,

if any, for those claims” (Pet. App. 290a), it certi-

fied the question to the court of appeals for immediate

review pursuant to 28 U.S.C. 1292 (Pet. App. 291la).’°

3. The court of appeals reversed. It held that a

class member who does not opt out of a class action

is precluded by res judicata from “maintaining sub-

sequently an individual action claiming discrimina-

tion in a particular ruled on in the class action”’ (Pet.

App. 178a). The court held that the claims litigated

in the class action included those asserted by the Bax-

ter petitioners individually (Pet. App. 179a). Since

the court of appeals found no “special circumstances”

that would preclude the application of res judicata

® The Baxter petitioners, who had not filed charges of dis-

crimination with EEOC, did not seek to suc under Title VII.

” The interlocutory appeal of the Barter case was con-

solidated with respondent Bank’s appeal in the class action

from the finding of a pattern or practice of racial discrimina-

tion in promotions from pay grades 4 and 5, and from the

finding of discrimination against Russell and Cooper individ-

ually.

8

(i.e., improper class certification, inadequate notice,

or inadequate representation), it held the individual

claims barred by the original class action (Pet. App.

177a-184a). Accordingly, it remanded the Baxter

case to the district court with instructions to dismiss

(Pet. App. 184a)." Rehearing en bane was denied

by an equally divided court (Pet. App. 189a).

SUMMARY OF ARGUMENT

Analysis of this case must start with recognition

that class claims and individual claims of employment

discrimination are distinct, presenting different is-

sues that may be proved by different evidence. Thus,

to prevail in a class claim, the employees must show

a pattern or practice of discrimination, while indi-

vidual claims focus on the treatment of the specific

employee on a specific occasion. In the original case

here, the district court adjudicated the class-wide

claim; it did not decide the individual claims of the

Baxter petitioners.

Although the doctrine of res judicata forbids repe-

titious suits on the same cause of action, it does not

preclude litigation between the parties to an earlier

suit of related claims that were not, and could not

have been, adjudicated in the original suit. The in-

dividual employment claims of the Baxter petitioners

were not adjudicated in the class action, which deter-

mined only that there was no pattern of discrimina-

tion “pervasive enough” to warrant class-wide relief

for the groups to which they belonged. Nor is it rea-

‘The court of appeals also reversed the district court's

judgment against respondent in the class action. Although

the petition for a writ of certiorari presented two questions

concerning that reversal, this Court granted certiorari only

on the question involved in the Barter appeal.

9

sonable to conclude that they could have been so liti-

gated—the district court reasonably denied petition-

ers’ motion to intervene; rather than turning the

class action into a forum for adjudicating respond-

ent’s liability on the particular facts of a large num-

ber of discrete claims, the court properly referred the

Baxter petitioners to separate suits on their indi-

vidual claims.

This was an entirely appropriate exercise of the

court’s discretion in managing a class action. Rule

23 contemplates that the class action will be used to °

resolve issues common to the class while issues pecu-

liar to each class member may be separately litigated.

It is contrary to the purposes of Rule 23 to require

each class member to intervene in the class suit in

order to avoid forfeiting his right to litigate his

individual claim. Nor is it reasonable to require the

class member who knows he has been individually dis-

criminated against to opt out of the class action in

order to preserve his right to recover for that dis-

crimination in the event the court ultimately deter-

mines that the class has not shown that the employer

was more generally given to such practices.

An employer who prevails in a class action suit

will reap substantial benefits from that victory in

defending against any subsequent individual suits.

The class member employees in those subsequent suits

will be unable to use evidence tending to show any

general discriminatory practices, and the employer

can rely on the earlier judgment in his defense—for

example to aid in rebutting a contention that his as-

serted business reason for the challenged adverse ac-

tion was pretextual. Since the class action provides

notice of the claims of all the class members, the em-

ployer is not prejudiced by lack of notice in the later

individual suits.

10

In any event, on the particular facts of this case,

it is clear that respondent urged, and the district

court decided, that the Baxter petitioners could pre-

sent their individual claims in a subsequent suit.

After the district court denied petitioners’ motion to

intervene on that basis, ‘the court of appeals should

not have deprived the petitioners of all opportunity

to litigate their individual claims.

ARGUMENT

I. RES JUDICATA DOES NOT BAR LITIGATION OF

THE BAXTER PETITIONERS’ CLAIMS

It is well established that the res judicata effect of

a judgment in any action extends to issues that “were

or could have been raised in that action.” Allen v.

McCurry, 449 U.S. 90, 94 (1980); Commissioner v.

Sunnen, 333 U.S. 591, 597-598 (1948); 1B Moore,

Lucas & Currier, Moore’s Federal Practice © 0.410[1],

at 1154 (1981). In determining whether the doctrine

bar's a subsequent suit, courts have considered whether

there is such identity of issues that a different judg-

ment in the second action would destroy or impair

rights established by the first judgment, and whether

the same evidence would suffice to sustain both judg-

ments. Moore, supra, at 1158; Church of the New

Song v. Establishment of Religion, 620 F.2d 648, 652

(7th Cir. 1980) ; Herendeen v. Champion International

Corp, 525 F.2d 130, 188 (2d Cir. 1975); Stevenson

v. International Paper Co., 516 F.2d 108, 109 (5th

Cir. 1975). It is, we submit, clear that individual

claims of racial discrimination of the kind the Bax-

ter petitioners apparently seek to litigate do not

involve issues that were or could have been litigated

in the EEOC class action.”

The Baxter complaint by itself might be read as asserting

no more than the claims common to the class (II C.A. App.

11

A. Any individual claims the Baxter petitioners

may have were not actually determined in the EEOC

class action. The finding that the Bank did not en-

gage in a pattern of discrimination pervasive enough

to grant relief did not eliminate the possibility that

the Bank may have engaged in some acts of discrimi-

nation against individual class members. As _ the

Third Circuit explained in refusing to apply the doc-

trine of res judicata in similar circumstances, a “find-

ing of an absence of class-wide discrimination is not

necessarily inconsistent with a claim that discrete,

isolated instances of discrimination occurred.” Dick-

erson v. United States Steel Corp., 582 F.2d 827, 830-

831 (1978).* See also Croker v. Boeing Co., 662 F.2d

975, 997 (3d Cir. 1981), recognizing that individual

claims survive the negative class finding by affirming

72-73), but the district court’s factual findings strongly sug-

gest that at least some of the Baxter petitioners do have dis- °

tinct individual claims (see page 6, supra). This is a matter

to be considered by the district court in the course of the suit

on the individual claims. If no such claims are asserted, that

suit should be dismissed.

1% Respondents (Br. in Opp. 4) and the court below (Pet.

App. 183a) assert that the quoted language is dictum. Al-

though it is true that the court there concluded that the dis-

trict court had no power to adjudicate the individual claims of

non-intervening witnesses after finding an absence of class

discrimination, that conclusion rested in substantial part on

the different nature of the individual and class claims—the

same rationale that led the court to reject the employer's

alternative res judicata argument. That rationale—and the

court’s emphasis on the potential unfairness to a defendant

*wemployer in permitting intervention after the trial court

focused solely on the class issue (582 F.2d at 882)—strongly

suggests that the Dickerson court assumed the class members

could raise their individual claims in subsequent suits.

12

that class members may move to intervene to obtain

an adjudication of their individual claims."*

Indeed, this Court has repeatedly held that an em-

ployer’s showing that it has not engaged in discrimi-

nation against a group in the aggregate does not im-

munize it from claims that it has discriminated

1 Respondent’s claim (Br. in Opp. 4) that the decision be-

low “is consistent with other decisions involving this narrow

issue,” citing Dalton v. Employment Sec. Comm'n, 671 F.2¢

835 (4th Cir. 1982), cert. denied, No. 82-129 (Oct. 4, 1982) ;

Woodson V. Fulton, 614 F.2d 940 (4th Cir. 1980); Kemp v.

Birmingham News Co., 608 F.2d 1049 (5th Cir. 1979); Fowler

Vv. Birmingham News Co., 608 F.2d 1055 (5th Cir. 1979);

Jones v. Bell Helicopter Co., 614 F.2d 1389 (5th Cir. 1980);

and Dosier v. Miami Valley Broadcasting Corp., 656 F.2d

1295 (9th Cir. 1981). Jones held that when the EEOC sues

on the charge of an individual and that suit is dismissed on

the merits, the individual is precluded from bringing a repeti-

tive private action on the identical charge (614 F.2d at 1390).

The other cases all involve situations in which a pattern or

practice of discrimination is conceded either in a consent de-

cree or in a settlement that includes an award of relief to the

class members, including those who subsequently attempt to

file individual suits; the latter cases thus simply effectuate the

salutary policy against double recovery. There is nothing in-

consistent between any of these cases and the Dickerson anal-

ysis. The individual employment actions of an employer who

has engaged in a pattern or practice of discrimination may

reasonably be assumed to reflect that general discriminatory

practice, so recovery on a pattern or practice claim properly

bars a repetitive recovery by class members for individual

claims. It does not follow that the absence of a sufficient

showing of general discriminatory practice leads reasonably

to the assumption that no individual employment decision was

discriminatory. See, e.g., Eastland v. TVA, 704 F.2d 618

(11th Cir. 1983) (although the district court correctly found

evidence of pattern or practice of discrimination insufficient,

evidence did establish that one “selecting supervisor” was

racially biased, so two named plaintiffs recovered on individ-

ual claims).

SE

13

aga nst particular individuals in the group. For ex-

ample, in Furnco Construction Corp. v. Waters, 438

U.S. 567, 579 (1978), the Court emphasized that ‘‘the

obligation imposed by Title VII is to provide an equal

opportunity for each applicant regardless of race,

without regard to whether members of the applicant’s

race are already proportionately represented in the

work force.” Accordingly, the Court held that “a ra-

cially balanced work force cannot immunize an em-

ployer from liability for specific acts of discrimina-

tion” (ibid.). Similarly, in Connecticut v. Teal, 457

U.S. 440, 453-454 (1982), the Court reiterated that

“(t]he principal focus of the statute is the protection

of the individual employee, rather than the protection

of the minority group as whole.” The Court therefore

rejected the argument that an employer could justify

an employment practice having a disparate effect on

black applicants by showing that its employment

practices did not in the aggregate have a disparate

effect on blacks. These decisions unequivocally show

that an employer’s nondiscriminatory treaument of a

class as a whole does not relieve it of liability for

individual instances of discrimination against mem-

bers of that class. It follows here that the finding of

an absence of class-wide discrimination in the EEOC

class action did not determine the individual claims

of the Baxter petitioners.”

This analysis relates primarily to individual and class

claims of disparate treatment, such as the ones involved here

(Pet. App. 9a-13a). In disparate impact cases, class and in-

dividual claims will generally coincide, because such claims

attack a facially neutral policy, applied equally to all employ-

ees, on the grounds that the policy has a disproportionate

effect on minority employees. See, e.g., Griggs Vv. Duke Power

Co., 401 U.S. 424, 427 (1971). All class members would gen-

erally be affected by the policy in the same way and have the

same claim. But cf. Connecticut Vv. Teal, supra.

14

B. Nor is there any basis for concluding that the

Baxter petitioners’ claims could have been litigated in

the Cooper class action. The liability phase of a class

action is generally restricted to claims of class-wide

discrimination; it does not include an opportunity to

litigate the discrete claims of nonparticipating class

members. Franks v. Bowman Transportation Co.,

424 U.S. 747, 772-773 (1976); Teamsters v. United

States, 431 U.S. at 360-361; Dickerson v. United

States Steel Cory., 582 F.2d at 831-832.

This limitation reflects the different character and

methods of proof of the two types of claims. Indi-

vidual claims focus on the treatment of a specific in-

dividual on a specific occasion. The basic question is

whether that individual was denied an employment

opportunity for a discriminatory reason. Texas De-

partment of Community Affairs v. Burdine, 450 U.S.

248, 256-259 (1981). To prevail, an employee must

initially demonstrate that he applied and was quali-

fied for an available position. The employer must

then explain the reason for its unfavorable action.

The ultimate question for the trier of fact is whether

the employer or its agent, in taking the particular

employment action in question, was actually moti-

vated by discrimination or by legitimate business

reasons. Jd. at 257. In a claim alleging a class-wide

“pattern or practice” of discrimination, on the other

hand, different standards of liability are applied and

different proof is required. It is not sufficient for a

plaintiff to demonstrate that an employer has en-

gaged in sporadic acts of discrimination. Rather,

plaintiffs must prove that discrimination is the com-

pany’s “standard operating procedure—the regular

rather than the unusual practice.” Teamsters vy.

United States, 431 U.S. at 336. Proof of class-wide

a) 15

discrimination generally depends very heavily on sta-

tistical evidence concerning the overall treatment of

different groups. Although “anecdotal” evidence con-

cerning the treatment of specific individuals is fre-

quently presented as well, such evidence is offered to

demonstrate that the employer has a class-wide prac-

tice of disfavoring minorities. Such testimony gen-

erally will not be a comprehensive or thorough pres-

entation of the merits of the claims of each affected

employee.

The district court’s management of the Cooper class

action reflected this difference in standards. The

original EEOC complaint and the complaint in inter-

vention of the Cooper petitioners alleged that the em-

ployer had engaged in a pattern or practice of dis-

crimination against black employees with respect to

assignment, promotion, wages and discipline. Statis-

tical evidence on these practices was presented at

trial. Although the Baxter class members were per-

mitted to testify at trial, their testimony was ac-

cepted only to the extent that it was relevant to proof

of the class action (I C.A. App. 524-525). The district

court’s decision was similarly limited to the merits of

the class claim."® The court concluded that, except in

pay grades 4 and 5, there was not a pattern of dis-

crimination “pervasive” enough to justify class re-

lief (Pét. App. 194a). This conclusion was based on

findings that there was “no statistically significant

difference” between the treatment of white and black

employees except in pay grades 4 and 5 (Pet. App.

237a-288a). Although the court’s factual findings

strongly suggest that it believed at least some of the

16 It did decide the merits of the claims of the intervening

petitioners (see pages 5-6, supra).

16

individual claims of the Baxter petitioners were meri-

torious (Pet. App. 248a-254a), it made no legal con-

clusions as to those claims. Finally, following its

decision on class liability, the district court specifi-

cally refused to permit the Baxter plaintiffs to inter-

vene for the purpose of litigating their individual

claims, citing Dickerson.

In light of these rulings, the Baxter petitioners’

individual claims could not have been litigated in the

EEOC class action. The court of appeals therefore

erred in applying the doctrine of res judicata to pre-

clude the assertion of those claims in a separate suit.

IJ. FED. R. CIV. P. 23 DOES NOT BAR LITIGATION OF

THE BAXTER PETITIONERS’ CLAIMS

A. The court of appeals’ decision also conflicts with

the policies underlying Fed. R. Civ. P. 23. As this

Court has explained, “‘[a] federal class action is no

longer ‘an invitation to joinder’ but a truly repre-

sentative suit designed to avoid, rather than enceur-

age unnecessary filing of repetitious papers and mo-

tions.” American Pipe & Construction Co. v. Utah,

414 U.S. 538, 550 (1974); accord, Crown, Cork a:

Seal Co. v. Parker, No. 82-118 (June 13, 1983), slip.

op. 5. Under the decision below, however, a class

member who wants to benefit from class representa-

‘ion without losing the right to litigate his individual

claim must file a protective motion to intervene in the

class suit. The decision would thus promote “pre-

cisely the multiplicity of activity which Rule 23 was

designed to avoid.” American Pipe, 414 U.S. at 551.

It would also pose a difficult dilemma for district

courts attempting to keep class actions within man-

ageable limits without sacrificing the rights of class

members.

17

In any event, here the Baxter petitioners did at-

tempt to file precisely such a motion, The Bank sug-

gests (Br. in Op. 7-8) that their motion was un-

timely, but this Court has disfavored interpretations

of Rule 23 that require class members to seek early

intervention in order to protect their rights. Amerv-

can Pipe; Crown, Cork & Seal; United Airlines, Ine.

v. McDonald, 432 U.S. 385, 394 n.15 (1977); accord,

Robinson v. Union Carbide Corp., 544 F.2d 1258,

1261 (5th Cir. 1977). The Baxter petitioners sought

intervention at the most logical point in the proceed-

ings; if the district court had concluded that there

was a pattern or practice of discrimination, there

would have been no need for them to intervene to ob-

tain an adjudication of their separate claims (cf. note

14, supra). Instead, they would simply have partici-

pated in the stage II proceedings in order to deter-

mine the relief, if any, to which each of them would

be entitled (Teamsters, 431 U.S. at 361-362). Thus,

it would be inefficient and contrary to the purposes of

Rule 23 as explicated in American Pipe and Crown,

Cork & Seal to require class members to intervene be-

fore the determination of the class claim in order to

preserve their right to an adjudication of their in-

dividual claims.”’

B. The court below (Pet. App. 173a-174a) and re-

spondent Bank (Br. in Op. 7) also suggest that the

'* Moreover, as this Court emphasized in Crown, Cork &

Seal, slip op. 5, “permission to intervene might be refused

for reasons wholly unrelated to the merits of the claim”, for

example if the intervention would so complicate the issues to

be resolved in the action as to make it unmanageable. Ac-

cordingly, even after a class has been certified, class members

do not have a right to intervene to obtain an adjudication of

their individual claims. Dickerson v. United States Steel Corp.,

supra; Croker Vv. Boeing Co., 662 F.2d at 997.

18

right of class members to obtain adjudications on

their individual claims is fully protected by the “opt-

out” provisions of Rule 23(c) (2).'"* They emphasize

that the Baxter plaintiffs received notice and an op-

portunity to opt out of the class. By failing to opt

out, the Bank argues, the Baxter plaintiffs agreed to

be bound by the judgment in the class action. This

argument misses the point. There is no dispute over

whether the Baxter plaintiffs are bound by the judg-

ment. But this simply means that they are precluded

from litigating issues that were litigated in the class

action."® Giving class members notice and an oppor-

18 This suggestion, of course, assumes that the suit is

brought under Rule 23(b) (3), which permits a class member

to opt out. Many Title VII suits are certified only under Rule

23(b) (2), where no such opportunity is available. Cf. Gon-

zales V. Cassidy, 474 F.2d 67, 74 n.12 (5th Cir. 1973). Class

members in such suits could hardly be denied both the op-

portunity to opt out to preserve their claims and the oppor-

tunity to preserve their individual claims once a class suit has

been filed. Here, the class was certified under both 23(b) (2)

and (3), and the notice included the opt out provisions (II

C.A. App. 11, 15).

1° The court in Dore v. Kleppe, 522 F.2d 1369, 1374 (5th

Cir. 1975) recognized that in determining whether a subse-

quent suit by a class member is barred by the prior class ac-

tion because it raises the same cause of action, it is necessary

to consider the special nature of class actions. Thus, it is in-

appropriate in this context to apply the principles of res

judicata expansively to bar all claims that might have been

litigated in the original action, thereby threatening the man-

ageability of class actions by requiring class representatives

to litigate numerous additional issues in order to preserve

them. Accord, 18 Wright & Miller, Federal Practice. and Pro-

cedure § 4455, at 474-475 (1981). Cf. Sam Fox Publishing Co.

v. United States, 366 U.S. 683 (1961) i Calagaz Vv. Calhoon, 309

F.2d 248 (5th Cir. 1962) (judgment in-class action to be given

res judicata effect only when class members were adequately

represented).

19

tunity to opt out cannot justify stripping them of

their statutory right to litigate claims that are be-

yond the scope of the class action.” See, 18 Wright &

Miller, Federal Practice and Procedure § 4455, at

473-474 (1981).

The decision to opt out of a class action is not an

easy one. The class member who receives notice of the

filing of a pattern or practice suit can be expected

to know the facts concerning his own employment

history, upon which his individual claim would be

based. He may not, however, have sufficient informa-

tion to be able to make an informed judgment about

whether his experience is typical, and thus whether

the class claim is meritorious. If he determines not

to participate in the class claim, he not only loses the

substantial benefits of pooled resources,” he also loses

the opportunity to participate in the stage II reme-

dial proceedings in which he could rely on the Team-

sters presumption (see 431 U.S. at 361-362).”

2° Indeed, the notice actually provided here can not reason-

ably be read to contemplate such a result. The notice specifi-

cally informed the class members that if they opted out they

would “not be able to depend on this action to toll any statutes

of limitations on any individual claims that you may have

against the [Bank]” (II C.A. App. 15). This strongly implies

that such individual claims survive for class members. A

class member could hardly read this and believe that the fail-

ure to opt out, while tolling the statute of limitations, would

waive the claim itself.

*1 Evidence of an employer’s general discriminatory prac-

tices would be useful in establishing a prima facie case of in-

dividual discrimination or in contending that an asserted busi-

ness justification was pretextual. An individual plaintiff

would be unlikely to have the resources necessary to conduct

discovery or to hire the experts necessary to present persua-

sive evidence of general] discriminatory practices.

*2 It is not entirely clear to what extent a non-participating

class member might be able, under principles of collateral

20

Rule 23 does not force a potential class member to

make an election between litigating a class claim and

a distinctly different individual claim. Rather, the

right to opt out provided by Rule 23 is the right to

opt out and present the same claim as that presented

in the class action.” Where, as here, the claims are

genuinely different, the failure to opt out of the class

action does not bar the class member’s subsequent

assertion of the individual claim.

C. In sum, nothing in Rule 23 or the case law in-

terpreting it indicates that an adjudication of class-

wide issues against them should bar the distinctly

different individual claims of class members. Al-

though Rule 23(c) (3) states that judgments in class

actions are binding on all class members, this can

only logically refer to the common class question ac-

tually adjudicated in the action. This is precisely

how Rule 23 has been interpreted. It has been recog-

nized in various contexts that where a class action

determines only the class-wide issue of whether the

defendant maintained certain illegal policies or prac-

tices, that action, resulting in equitable relief, does

not bar future suits seeking damages for specific

deprivations of individual rights. Bogard vy. Cook,

586 F.2d 399 (5th Cir. 1978), cert. denied, 444 U.S.

883 (1979); Jones-Bey v. Caso, 535 F.2d 1360 (2d

estoppel, to rely on a finding in a prior class action that the

employer had engaged in a pattern or practice of discrimina-

tion. Presumably, he would continue to bear the burden of

persuasion in his individual suit.

23 Herbert Vv. Monsanto Co., 576 F.2d 77, 80, vacated on

other grounds, 580 F.2d 178 (5th Cir. 1978); In re Trans-

ocean Tender Offer Securities Litigation, 427 F. Supp. (1271,

1217-1218 (N.D. Ill. 1977) ; 18 Wright & Miller, Federal Prac-

tice and Procedure § 4455, at 473 (1981).

21

Cir. 1976) ; Marshall v. Kirkland, 602 F.2d 1282 (8th

Cir. 1979). Similarly, a district court’s finding of no

pattern or practice of discrimination should not bar

plaintiffs’ claims that they have been subjected to

individual acts of discrimination.

III. PERMITTING THE BAXTER PETITIONERS TO

PROCEED WITH THEIR INDIVIDUAL CLAIMS IS

NOT UNFAIR TO THE BANK.

A. The Bank contends that permitting the Baxter

petitioners’ claims to go forward will deprive it of

the benefit of its judgment and undermine the poli-

cies of Rule 23 (Br. in Op. 9-10), This contention is

unpersuasive. Class actions will continue to be an

efficient way of adjudicating numerous claims against

an employer.** Where class-wide discrimination is

tound, the court will proceed to adjudicate the claims

of entitlement to relief of the individual class mem-

bers and a single suit will dispose of all claims against

the employer. Where, as here, no class-wide discrimi-

nation is found, the class action will still have served

as a final adjudication of the issue of whether the

employer engaged in a pattern or practice of dis-

crimination. The class members are bound by the

class action (see, e.g., Hansberry v. Lee, 311 U.S. 32,

42-43 (1940)), and thus will be barred by collateral

** Of course, resolution of the issues common to the class

will not always fully determine the claims of all class mem-

bers; additional proceedings on the individual issues may be

necessary. See, e.g., Teamsters; Esplin v. Hirschi, 402 F.2d

94, 100-101 (10th Cir. 1968), cert. denied, 394 U.S. 928

(1969). That does not mean that the class action has not

served its intended purpose of “achiev[ing] economies of

time, effort, and expense, and promot[ing] uniformity of de

cision as to persons similarly situated” (Fed. R. Civ. P. 23

advisory committee notes).

22

estoppel from contesting that finding in any future

suit (Dore v. Kleppe, 522 F.2d 1369, 1374 (5th Cir.

1975) ).” They will thus be precluded from using evi-

dence tending to show such a pattern or practice to

establish a prima facie case of individual discrimi-

nation, or to establish that the defendant’s asserted

reasons for its personnel decisions were pretextual.

In contrast, the Bank can rely on the finding here

in defending against the individual suits; the fact

that it has not engaged in a pattern or practice of

discrimination is relevant to, although not dispositive

of, the claim that its actions in any particular case

were discriminatory. Furnco Construction Corp. v.

Waters, 438 U.S. at 580.

Class members will be limited to presenting the

unique facts of their own individual situation. If

such facts do not of themselves reasonably support a

charge of discrimination, a pattern or practice deci-

sion favorable to the employer could be used to justify

the award of counsel fees to it under Christiansburg

Garment Co. v. EEOC, 484 U.S. 412 (1978). This

should serve to discourage the filing of insubstantial

individual claims in the wake of an unsuccessful class

suit, and to protect the employer if such claims are

filed.

B. The Bank will not be prejudiced in defending

the suit by the Baxter petitioners by any lack of ade-

quate notice of their claims. The filing of the class

action put the Bank on notice of the claims of all em-

ployees denied promotion since 1974. Crown, Cork

5 For this reason, respondent’s claim (Br. in Op. 8-9) that

the Baxter petitioners are asserting a right to the “one-way

intervention” eliminated by the 1966 amendments to Rule 23

is without merit. Cf. American Pipe & Construction Co. v.

Utah, 414 U.S. at 547-548.

23

and Seal v. Parker, slip op. 7-8. If there had been a

finding of class-wide discrimination, stage IJ pro-

ceedings would have been conducted to determine the

proper relief for individual class members (Team-

sters, 431 U.S. at 361-362). The Bank would have

had to establish the circumstances surrounding any

individual class member’s lack of promotion in at-

tempting to prove that, even absent the pattern of

discrimination, the individual still would not have

been promoted (id. at 362). Thus, the filing of the

class action put the Bank on notice of the need to

preserve evidence concerning the employment history

of all class members. That plaintiffs’ individual claims

will now be heard in a separate suit rather than dur-

ing stage II proceedings certainly causes no prejudice

to the Bank.”

IV. DISMISSAL WAS IMPROPER ON THE PARTICU-

LAR FACTS OF THIS CASE

Even if this Court were to disagree with our pri-

mary submission and conclude that either the prin-

ciples of res judicata or the interests underlying Rule

23 would ordinarily bar the assertion of individual

claims of discriminatory treatment after a finding

that no pattern or practice of such discrimination has

been established, the court of appeals erred in direct-

ing the dismissal of the Baxter petitioners’ suit on the

particular facts of this case.

The Bank opposed intervention by the Baxter peti-

tioners on the ground that they could file a separate

26 The fact that the district court resolved some issues in

the class suit in the Bank’s favor can make no difference here,

in light of the Baxter petitioners’ attempt to intervene and

the district court’s suggestion that they should instead pursue

their individual claims in a separate suit. (See pages 5-6,

supra).

\

24

action (page 5, supra); the district court agreed, and

expressly so stated in its denial of intervention (Pet.

App. 288a-289a), which was stated to be “without

prejudice to any underlying rights” of petitioners

(id. at 289a). Moreover, the district court’s findings

of fact make it clear that it did not intend, by its

refusal to find a pattern or practice of racial dis-

crimination except in pay grades 4 and 5, to fore-

close the possibility of proving particular instances

of discrimination against individual employees in

other grades (Pet. App. 248a-254a).* And in cer-

tifying for interlocutory appeal the denial of the

Bank’s motion to dismiss, the district court again

made clear that it had not intended, by its manage-

ment of the class suit, to foreclose the bringing of

individual claims not included within its finding of

liability in the class action (Pet. App. 290a).

In these circumstances, the court of appeals clearly

erred in dismissing the district court’s explanation of

the effect of its order denying intervention as “plain

dictum” (Pet. App. 182a), and refusing to give effect

to the stated limitations of that court’s rulings. In-

stead, the court of appeals should have deferred to

the district court’s exercise of its discretion in man-

aging the class action.** In any event, the principles

27 Indeed, the findings that petitioners Cooper and Russell,

who had intervened, had been discriminated against in pay

grades 7 and 6 are flatly inconsistent with any such conclu-

sion (Pet. App. 216a-229a, 263a-274a). It is not entirely clear

whether the courts below passed on the question whether there

was a pattern or practice of discrimination in promotions out

of pay grade 3, which petitioner Harrison occupied. This is a

matter for decision in the Barter action on remand.

28 Fed. R. Civ. P. 23(d); Croker v. Boeing, 662 F.2d at

997; In re Caesars Palace Securities Litigation, 360 F. Supp.

866, 8398-399 (S.D.N.Y. 1973).

25

of res judicata do not bar the maintenance of a second

action in which the defendant has acquiesced. Re-

statement (Second) of Judgments § 26(1)(a) (1982).

Nor do they preclude a court from limiting the scope

of the action before it by reserving the plaintiff’s

right to bring a second action (id. § 26(1)(b)). Both

of these exceptions apply here.

CONCLUSION

The judgment of the court of appeals should be

reversed.

Respectfully submitted.

REx E, LEE

Solicitor General

LAWRENCE G. WALLACE

Deputy Solicitor General

HARRIET S. SHAPIRO

Assistant to the Solicitor General

DAVID L. SLATE

General Counsel

PHILIP B. SKLOVER

Associate General Counsel

VELLA M. FINK

Assistant General Counsel

BARBARA LIPSKY

Attorney

DECEMBER 19838

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