Opposition Brief — USX Corp. v. Green

| Supreme Court, US,

LYBRARY | FILED

eypREME COUR" 99543 2) AUG 18 1988

WASHINGTON PP No. 88-141

Jn the Supreme Court of the Gnited States

OCTOBER TERM, 1988

USX CORPORATION,

Petitioner,

V.

ELBERT G. GREEN AND ROBERT DANLEY,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Third Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

RICHARD Z. FREEMANN, JR."

CREED C. BLACK, JR.

MARK S. STEWART

BALLARD, SPAHR, ANDREWS &

INGERSOLL

30 South 17th Street

20th Floor

Philadelphia, PA 19103

(215) 636-4876

Attorneys for Respondents

*Counsel of Record

TET AST TELE SCTE R AEN TERT SE MN AN AP TNE SES IE SATE ETT IE ALE TEL STOEL LEAR ETE TICE I

i

COUNTERSTATEMENT OF THE QUESTIONS

PRESENTED FOR REVIEW

Whether the court of appeals correctly held, under

settled Title VII principles and facts found by the

district court, that USX Corporation’s subjective in-

terviewing process had a disparate and adverse im-

pact on qualified black applicants for unskilled jobs.

Whether the court of appeals correctly held, under

settled Title VII principles and facts found by the

district court, that plaintiffs proved intentional dis-

crimination on the part of USX Corporation.

il

TABLE OF CONTENTS

Page

COUNTERSTATEMENT OF THE QUESTIONS

PRESENTED FOR REVIEW ................ i

SADA OF AUTHORITIES «ok fics vescdene ners iil

COUNTERSTATEMENT OF THE CASE........ 2

REASONS FOR DENYING THE WRIT......... 6

I. THE THIRD CIRCUIT'S RULING THAT

USX’S SUBJECTIVE HIRING PRACTICE

HAD A DISCRIMINATORY IMPACT ON

BLACK APPLICANTS HONORS THE RUL-

ENigs OF THES OUUBL.. .. 6 .kskeng eee 8

A. The Prima Facie Case... .... 525465445 8

B. USX’s Inadequate Response To The

Prema Fee Case. 6... oo see 13

1. The “Best Qualified” Excuse....... 15

2. The “Drop Out” Excuse........... 17

Il. THE THIRD CIRCUIT’S INTENTIONAL

DISCRIMINATION DECISION IS FACTU-

ALLY CORRECT AND CONSISTENT

WITH THE RULINGS OF THIS COURT... 19

A. The Correct Test For Intent Was Used .. 20

B. There Was No Need To Remand....... 21

C. USX Failed To Rebut The Prima Facie

Case Of Disparate Treatment.......... 22

CAPUVARRMURIEN 6565s cae as don nea 23

iil

TABLE OF AUTH DRITIES

CASES

Atonio v. Wards Cove Packing Co., 810

F.2d 1477 (9th Cir. 1987), cert. granted in

part, 108 S. Ct. 2896 (1988) .............

Bazemore v. Friday, 478 U.S. 385 (1986). ..

Castaneda v. Partida, 430 U.S. 482 (1977) ..

Gay v. Waiters’ and Dairy Lunchmen’s

Union, 694 F.2d 531 (9th Cir. 1982) ......

Griggs v. Duke Power Co., 401 U.S. 424

sg Pols ovo diiviec sc cacces

Hazelwood School District v. United

States, 433 U.S. 299 (1977) ..............

International Brotherhood of Teamsters

v. United States, 431 U.S. 324 (1942) ....

McDonnell Douglas Corp. v. Green, 411

EE Gb bcc cess nk ccnecccsess

Pullman-Standard v. Swint, 456 U.S. 273

on wedvsecuee

Segar v. Smith, 738 F.2d 1249 (D.C. Cir.

1984), cert. denied, 471 U.S. 1115 (1985)..

Texas Dep’t of Community Affairs v.

Burtgxc, 450 U.S. 248 (1981)............

Thorne v. City of El Segundo, 726 F.2d 459

(9th Cir. 1983), cert. denied, 469 U.S. 979

I

Watson v. Fort Worth Bank and Trust, 108

a

REGULATIONS

29 C.F.R. §§ 1607.1-1607.18 (1968) .........

43 Fed. Reg. 38290 ........... 000... eee

Page

24

12

11, 12

22

14

12

19, 20

19, 20

21, 22

21

13, 19, 20

22

passim

No. 88-141

Jn The Supreme Court of the United States

OCTOBER TERM, 1988

USX CORPORATION,

Petitioner,

V.

ELBERT G. GREEN AND ROBERT DANLEY,

Respondents.

RESPONDENTS’ BRIEF IN OPPOSITION

TO PETITION FOR A WRIT OF CERTIORARI

Respondents Elbert G. Green and Robert Danley, in-

dividually and as representatives of a class of persons

similarly situated, respectfully pray that this Court de-

ny the petition of USX Corporation (““USX’’) seeking a

writ of certiorari to review the decision of the United

States Court of Appea's for the Third Circuit entered

on March 29, 1988.

2

COUNTERSTATEMENT OF THE CASE

This Title VII and Section 1981 class action was filed

many years ago on behalf of over 10,000 black men and

women who, after July 10, 1972, applied without suc-

cess for unskilled laborer jobs at the Fairless Hills,

Pennsylvania, steel plant of USX Corporation (“USX”’).

The qualifications of white applicants for those jobs

were no better than those of black applicants. Nonethe-

less, using a subjective interviewing process described

by the courts below as “bizarre” and “unseemly,” USX

hired a disproportionately large number of whites to fill

thousands of the unskilled jobs in question.

When USX (then United States Steel Corporation)

opened its huge steel-making plant at Fairless Hills in

the early 1950s, race discrimination in employment was

widely practiced in this country. USX was no exception.

Indeed, despite passage of the Civil Rights Act of 1964,

USX’s work force at Fairless Hills remained almost all

white throughout the 1970s.! Thus, USX faced many

discrimination cases. Among them, the EEOC and the

Attorney General of the United States sued USX in

1974 in a complaint alleging a pattern and practice of

race and sex discrimination violations of Title VII and

Executive Order 11246.* By the mid-1970s, almost fifty

1Petitioner’s description of its Fairless Hills plant as an “integrated

steel mill’ can only mean in the industrial sense. Pet. 2. (For convenience,

the abbreviations listed in the petition at page 3, footnote 3, are used

herein. Reference to the petition will be designated “Pet.”’)

2To settle that suit, USX entered into two consent decrees in 1974 which

permanently enjoined the company from discriminating in employment on

the basis of race, color, or sex. The consent decrees also limited the use of

unvalidated employee selection criteria; ordered the payment of substan-

tial back pay to employees; and prohibited destruction of hiring records

for at least three years.

3

separate EEOC charges of race discrimination had

been filed against USX’s Fairless Hills plant. Plaintiffs

filed this race discrimination class action in 1976.

Still, USX’s business was thriving. Between 1972 and

1982, the company hired over 5,000 people to work in its

Fairless Hills plant as unskilled laborers, the most

menial job in the Production & Maintenance depart-

ment (“P & M”). Ninety percent of USX’s laborer hir-

ing occurred in the years 1972, 1973, 1974, 1978 and

1979.8

To be hired as an unskilled laborer, USX required

only that the applicant be at least 18 years old, able to

read basic safety signs, and able to pass a physical

exam. Indeed, USX advertised the laborer job in news-

papers as requiring nothing more than “common sense

anda desire to work”; “no experience” was required.

Black and white applicants possessed these few

requirements equally.‘

3USX did virtually no hiring in 1975, 1980 and 1981. In 1976, USX faced

Title VII suits, numerous EEOC charges of race discrimination, and close

government scrutiny resulting from the consent decrees it had executed.

To counter these pressures, for a short time USX consciously increased

its hiring of blacks to a level that avoided discrimination. LFF 52 (App. B,

67a-68a). However, by 1978 and 1979 blacks were again subject to over-

whelming employment barriers at USX. As the trial court noted, “when

the pressure to meet consent decree goals lessened after 1976, the rate of

black hires quickly sank back nearly to its former level.” App. B, 104a.

4{The district court found

no evidence from which I could reasonably conclude that blacks, on

the average, are less qualified to be laborers in steel mills than

whites. ... To the extent defendant's argument suggests I should

take judicial notice of the inferior qualifications of blacks, it is mor-

ally and legally offensive.

App. B, 100a-101a

4

When one of USX’s departments at the steel plant

needed unskilled laborers, the department foreman

would notify the personnel department. Personnel

clerks would then schedule interviews of persons who

had previously submitted applications. After clearing

preliminary interviews in the personnel office, appli-

cants were given final interviews by the foremen in the

department having the vacancies. The foremen had un-

fettered power to accept or reject applicants and relied

on nothing more than “gut level’’ reactions. App. B,

102a.

USX argued that its foremen interviewed using some

twenty amorphous factors, including “attitude,” “‘ini-

tiative,” “personality,” “alertness,” “intelligence,” “‘in-

terest,’ and “personal references.” But the foremen

were never “trained in any way as to what the different

criteria meant or how to implement them uniformly.”

LFF 39 (App. B, 64a). Nor did USX ever make any at-

tempt to determine whether these vague criteria were

job related.® Significantly, USX’s own employment

manual specifically banned the use of subjective factors

like “alertness” and “general ability.”

’”? 66 99

Moreover, USX’s employment manual required that

a special ‘““Reviewer’s Remarks” form be completed to

explain why an applicant was rejected. USX and its

foremen, however, “largely ignored” this requirement.

App. B, 102a. Indeed, in violation of its consent decree

‘The consent decrees which settled the United States Government's

Title VII suit agains: USX directed the company not to use unvalidated

hiring criteria. LFF 41, 42 (App. B, 65a). EEOC guidelines also prohibited

the use of unvalidated criteria. Uniform Guidelines On Employee Selec-

tion Procedures (1978), 29 C.F.R. 88 1607.1-1607.18 (1968). See also 43 Fed.

Reg. 38290 (1978) (discussing EEOC guidelines adopted in 1966 to advise

employers on permissible employee selection criteria).

0

and EEOC obligations, USX destroyed the few “Re-

viewer's Remarks” forms that had been prepared on

unsuccessful applicants.® As a result, the foremen at

USX never had to explain why they favored white ap-

plicants over blacks.

The district court characterized the situation this

way:

[W]hen relatively vague subjective standards are

given to a large number of individuals to be applied

in whatever manner they see fit, with no systemat-

ic review to ensure fairness, the chances are great

that conscious or unconscious racial bias on the

part of some of those individuals will tinge the se-

lection process.

App. B, 97a.

The evidence at trial showed that USX’s system

caused extraordinary statistical disparities. Black men

and women submitted 26% of the 50,000 applications

considered for laborer jobs during the decade. The ratio

of black applicants called for final interviews with fore-

men was consistent with the ratio of blacks submitting

applications. However, of the 5,000 unskilled laborers

USX’s foremen employed during the five primary years

of hiring, only 16% were black. The hiring advantage

USX gave to white applicants over blacks was extreme,

ranging yearly from 47% to 85%. Measured in terms of

the overall opportunity to be hired by USX, a white

®As charges of race discrimination mounted, the company destroyed

many other employment documents, too. USX threw out the thousands of

applications from unsuccessful candidates it considered between 1972 and

1974, when almost two-thirds of the class period hiring occurred. USX also

destroyed most of the Daily Call-In Logs showing the race of individuals

scheduled for interviews, as well as the Job Applicant Log for 1972.

i ies bs

6

laborer applicant had a 72% “edge” over an equally

qualified black applicant.?

The overall “shortfall” in USX black hiring—mean-

ing the number of laborer jobs which blacks deserved

but which USX gave to whites-—was in excess of 400.

This shortfall had a statistical value more than 14

standard deviations below what one would expect if the

system were fair. Standard deviations of this magni-

tude mean that there is less than one chance in 100,000

that the event occurred by chance, yielding virtual cer-

tainty that the shortfall was no accident.

Following years of discovery and lengthy trials on

liability and damages, USX was found liable for race

discrimination.® Substantial monetary and injunctive re-

lief was awarded to the class. Both the trial court and

the court of appeals concluded that USX’s wholly sub-

jective hiring process violated Title VII because it had

a disparate impact on blacks. Relying upon facts found

by the trial court, the court of appeals also determined

that USX was liable under the disparate treatment test.

USX’s petition to the Third Circuit for a rehearing in

banc was denied. App. D, 188a.

REASONS FOR DENYING THE WRIT

This twelve year old case with peculiar and distress-

ing facts does not merit a writ of certiorari. No impor-

tant unsettled question of federal law is presented. The

7Even USX’s expert admitted that USX gave white applicants an

“edge” over blacks when hiring. LFF 119 (App. B, 89a).

‘The district court said: ‘{P]laintiffs have proved that disproportionate-

ly few black applicants were hired for entry-level P & M jobs, overall

during the class period and during 1972, 1973, 1974, 1978, and 1979 in

particular, in relation to the number of blacks in the applicant pool for

these jobs.... I find that the shortfall in black hiring was statistically

significant.” LFF 104 (App. B, 83a-84a).

—_—_—-~

7

unanimous liability decision rendered by the Third Cir-

cuit Court of Appeals does not conflict with any deci-

sion of this Court. Because USX was found liable under

two distinct legal theories, the outcome of this suit will

not change unless this Court reverses the Third Circuit

on both its disparate impact and disparate treatment

rulings. What USX is really complaining about are the

factual rulings establishing its liability.

For years, USX stubbornly maintained in the courts

below that the disparate impact test of Title VII habili-

ty could not be used to challenge its subjective hiring

practice. Both the trial and appellate courts disagreed.

In Watson v. Fort Worth Bank_and Trust, 108 S. Ct.

2777, 2787 (1988), this Court, too, unanimously rejected

USX’s contention, ruling that “subjective or discretion-

ary employment practices may be analyzed under the

disparate impact approach. ...”’

Staggered by Watson’s impact, USX has been left

combing the record in a frantic attempt to create some

other issue that might enable it to escape accountability

for its discrimination. Thus, USX weakly contends that

the courts below misapplied the procedural “burden

shifting” guidelines (prima facie case, rebuttal, etc.)

when analyzing USX’s conduct under the disparate im-

pact and disparate treatment tests.

As to the disparate impact ruling against it, USX

cites views expressed in the plurality opinion in Wat-

son, and argues that its liability should be erased

%This Court in Watson “cautioned that these shifting burdens are

meant only to aid courts and litigants in arranging the presentation of

evidence....” 108 S. Ct. at 2784. The Third Circuit agreed: “[these for-

mulae] are simply tools designed to aid in the analysis of evidence. The

ultimate question remains whether the defendant has discriminated.”

App. A, 21a.

et

8

because plaintiffs did not “isolate and identify the

challenged employment practice and demonstrate a

causal connection between that practice and a racially

unequal result.”’ Pet. 12. USX’s statement is factually

incorrect.

As to the disparate treatment ruling against it, USX

incorrectly contends that the Third Circuit exceeded its

authority and imposed an improper burden of proof

upon USX. Pet. 18, 28-24.

The truth is that the courts below showed striking

foresight in their liability rulings against USX. Their

analyses are in complete harmony with the teaching of

Watson that subjective criteria can be tested under the

disparate impact approach. By insuring that the plain-

tiffs always carried the proper burden of proof, the

courts below carefully avoided becoming entangled in

those few procedural issues which separated Watson's

plurality and concurring opinions. Certiorari is not war-

ranted.

I. THE THIRD CIRCUIT’S RULING THAT USX’S

SUBJECTIVE HIRING PRACTICE HAD A DIS.-

CRIMINATORY IMPACT ON BLACK APPLI-

CANTS HONORS THE RULINGS OF THIS

COURT.

A. The Prima Facie Case.

In addition to the unanimous central holding in Wat-

son, seven justices agreed that to make out a prima

facie case of disparate impact, plaintiffs must show that

a facially neutral hiring practice selects applicants in a

significantly discriminatory pattern. See Watson, 108 S.

9

Ct. at 2791-92 (Blackmun, J.).!° Three concurring jus-

tices did not offer evidentiary guidelines on how to

prove such a prima facie case. The plurality of four did

state their views on what kind of evidence can be used

to establish a prima facie case of disparate impact.

Plaintiffs should (a) “begin by identifying the specific

employment practice that is challenged,” 7d. at 2788,

and (b) then “offer statistical evidence of a kind and

degree sufficient to show that the practice in question

caused the exclusion of applicants for jobs . . . because

of their membership in a protected group,” 7d. at

2788-89.

Plaintiffs’ prima facie case of disparate impact

against USX was entirely consistent with both the

plurality’s views and earlier Supreme Court rulings.

Contrary to USX’s contention, Pet. 13, plaintiffs did

identify the USX employment practice they were chal-

lenging. As the Third Circuit noted:

In the present case, the class has identified one

“specific procedure” or “selection criteri[on],”

namely the requirement that prospective em-

ployees “pass” an interview with P & M foremen,

that results in the disparate hiring.

App. A, 17a n.10. The evidence at trial clearly estab-

lished that qualified blacks were disproportionately ex-

cluded during interviews with foremen.

USX may be suggesting here, as it did below, that it

is not enough that plaintiffs show that the disparate

impact was caused by subjective foremen interviews.

l0Justice Kennedy did not participate in the decision. Justice Stevens

took no position on the evidentiary standards to be applied to disparate

impact cases involving subjective employment criteria. See Watson, 108

S. Ct. at 2791, 2797.

10

USX would require plaintiffs to identify which specific

subjective criterion—such as “initiative” or ‘“‘attitude”’

—resulted in the disproportionate exclusion of blacks.

There are at least three reasons why USX’s position is

wrong.

First, this Court has never suggested that such an

unrealistically sharp focus is required. In Watson, suf-

ficient specificity was found where plaintiffs’ challenge

was to the bank’s practice of relying on the “‘subjective

judgment of supervisors who were acquainted with the

candidates and with the nature of the jobs to be filled.”’

108 S. Ct. at 2782.1!

Second, plaintiffs could not have shown specifically

which subjective interview factors controlled because

USX, itself, would not say which ones governed. As the

trial court noted, “[f]urther refinement of plaintiffs’

definition of the hiring selection system they attack

was made impossible by defendant’s own refusal to be

pinned down as to the selection criteria it employs, be-

yond listing the twenty subjective criteria . . . and stat-

ing that these criteria were applied as an ‘amalgam.’ ”’

App. B, 98a.!2

Third, any opportunity for plaintiffs to be more spe-

cific about why the foremen disproportionately favored

whites was thwarted by USX’s practice of neglecting to

11The Third Circuit rejected USX’s position as seeking a “strained level

of specificity.”” App. A, 17a n.10.

121m his concurring opinion in Watson, 108 S. Ct. at 2797 n.10, Justice

Blackmun aptly stated:

Nor can the requirement that a plaintiff in a disparate impact case

specify the employment practice responsible for the statistical dispar-

ity be turned around to shield from liability an employer whose selec-

tion process is so poorly defined that no specific criterion can be iden-

tified with any certainty, let alone be connected to the disparate effect.

11

keep or destroying interview and-other records in vio-

lation of the consent decrees, EEOC guidelines, and

USX’s own policies.!8 ,

Clearly, plaintiffs identified, with all the specificity

required or possible, the USX employment practice

causing the tremendous disparity—subjective foremen

nterviews.

Sensing the weakness in its opening argument, USX

next asserts that even if plaintiffs did sufficiently iden-

tify the practice, their prima facie case was still flawed

because plaintiffs failed to “prove that the cause of the

disparity between the number of black hires and black

applicants was any employment practice of USX.” Pet.

13. That assertion, which tries to mimic the second

prong of the evidentiary approach suggested by the

Watson plurality, is nothing short of incredible in light

of the staggering statistics which were presented by

plaintiffs at trial; accepted by the district court; not

challenged by USX on appeal; and fully credited by the

court of appeals.

Plaintiffs’ expert statistician employed four different

statistical methods to test USX’s subjective hiring, ad-

justing his analysis to take into account variations that

could have affected the accuracy of his conclusions. His

13As Justice Blackmun also observed in Watson, an employer who

complies with the EEOC’s record keeping requirements and ‘“‘keeps track

of the-effect of its practices on protected classes, will be better prepared

to document the correlation between its employment practices and suc-

cessful job performance when required to do so by Title VII.” Watson,

108 S. Ct. at 2796.

14This Court has stressed “the useful role that statistical methods can

have in Title VII cases ... ,” Watson, 108 S. Ct. at 2789 n.3, and previously

observed that “greater than two or three standard deviations” is signifi-

cant, Castaneda v. Partida, 430 U.S. 482, 497 n.17 (1976).

12

analysis considered the minimal job qualifications in-

volved, the possibility of clerical errors in recording an

applicant’s race, the fact that some people submitted

more than one application, the possibility that some ap-

plications were missing, the length of time USX treated

applications as active, and other factors.!° Each of his

methods showed standard deviations greater than —4,

and the overall shortfall of black hires exceeded — 14

standard deviations. Each method demonstrated that

USX’s subjective interviewing practice had a statistical-

ly significant adverse effect upon blacks. In short, plain-

tiffs did present compelling statistical evidence ‘that

the practice in question . . . caused the exclusion of

applicants for jobs . . . because of their membership in

a protected group.” Watson, 108 S. Ct. at 2789.16

Ironically, at trial USX’s own statistical evidence con-

firmed the bias in its system. The district court noted

that “two defense experts . . . confirmed that the

analyses [plaintiffs’ expert] performed in relation to the

overall P & M applicant pool were appropriate, and that

the results he obtained were reliable, given his data and

assumptions.” App. B, 78a. Indeed, one USX expert tes-

15Although in Bazemore v. Friday, 478 U.S. 385, 400 (1986), this Court

ruled that a plaintiff’s statistical proof need not account for ‘‘all measur-

able variables thought to have an effect’ on the employer’s decision, the

district court here found that plaintiffs’ statistics accounted for every

significant variable. LFF 63, 83, 104 (App. B, 72a, 77a-78a, 83-84a).

16A though it never challenged plaintiffs’ statistics in the Third Circuit,

App. A, 12a n.7, USX now attacks them on the grounds that they “only

eliminated chance as the cause of the disparity.”” Pet. 13. Where tests of

statistical significance eliminate chance as a possible explanation for a

disparity in hiring, courts will presume that the differences are attributa-

ble to discriminatory practices. See Hazelwood School District v. United

States, 433 U.S. 299, 308-09 n.14 (1977); Castaneda, at 496-97 n.17 (1977).

Plaintiffs’ statistics amply established the requisite “inference of causa-

tion.” See Watson, 108 S. Ct. at 2789.

13

tified that in USX’s hiring system “being white gave an

applicant an ‘edge,’ that is, an increased possibility of

being hired.”’ LFF 119 (App. B, 89a).!7

Thus, the Third Circuit properly concluded that plain-

tiffs had made out a prima facie case of disparate im-

pact against USX. That prima facie case satisfied all the

evidentiary guidelines suggested by this Court’s earlier

decisions and the Watson plurality. Thus USX was ob-

ligated to rebut the prima facie case or suffer liability.

B. USX’s Inadequate Response To The Prima

Facie Case.

Watson also addressed the employer’s obligation to

respond to a prima facie case of disparate impact. The

plurality says the employer must “produce evidence”’

or “show” that “its employment practices are based on

legitimate business reasons.” 108 S. Ct. at 2790, 2791.

According to the concurring opinion, the employer

must “prove” that the challenged practice is a business

necessity. /d. at 2792. These differences are of no bene-

fit to USX because both the plurality and concurring

views would clearly agree that the employer must pro-

duce at least some legitimate evidence to rebut a prima

facie case. As this Court stated in Texas Dep’t of Com-

munity Affairs v. Burdine, 450 U.S. 248, 258 (1981),

the employer’s “explanation of its legitimate reasons

must be clear and reasonably specific.” While the em-

ployees always bear the ultimate burden of proof, an

17There was really no way for USX to mount a legitimate attack on

plaintiffs’ statistics. Unlike Watson, the statistics here were based on a

huge sample of almost 50,000 applicants. Moreover, there were no mean-

ingful job qualifications so the sample was not tainted by individuals

“lacking normal qualifications for the job.”’ Cf Watson, 108 S. Ct. at 2790.

Indeed, the district court concluded that “virtually all applicants pos-

sessed the minimum qualifications.’”’ LFF 63 (App. B, 72a).

14

employer cannot rebut a prima facie case merely by

uttering some unfounded or specious excuse—plaus-

ible facts are needed.'®

In an attempt to gloss over the flaws in its rebuttal,

USX misreads the plurality opinion in Watson to sug-

gest that once an employer offers any explanation for

the disparity, however nonsensical, the court must

move on to step three and determine whether the plain-

tiffs have proved “that other selection devices would

serve USX’s legitimate interests in choosing the best

qualified employees.” Pet. 15.

The Watson plurality’s suggestion that an employer

need only “produce evidence” explaining the disparity

cannot be read to mean that the trial court must accept

the employer’s excuse without question. If the employ-

er’s claims are so fanciful that they collapse from their

own weight, or through cross examination or other evi-

dence are shown to be pretextual, the employer has not

rebutted the prima facie case. When this failure occurs,

the plaintiffs have satisfied their ultimate burden of

proof and liability is established.

At trial USX offered two explanations for why blacks

suffered: (1) “the class members’ qualifications were

less than those of the applicants u!timately hired; and

(2) ... a greater proportion of black applicants

18The company’s assertion, Pet. 8, 15, that it was required to “prove”

that its excuses were valid is not supported by the record. The standard

employed by the district court, citing Griggs v. Duke Power Co., 401 U.S.

424 (1971), was that USX had “to explain” or make a ‘‘showing’”’ that its

subjective interviews served a legitimate business purpose. App. B, 100a-

10la. The Third Circuit only required USX to “articulate{ ] a sufficient

non-discriminatory reason to rebut the inference that its hiring practice

was discriminatory.”’ App. A, 34a. USX never had the ultimate burden of

proof.

15

,

voluntarily ‘dropped out’ of the hiring process... .’

App. A, 34a. For factual reasons discussed below, both

the district court and the court of appeals concluded

that these contentions were “wholly without merit.”

Indeed, the Third Circuit found the record was ‘“‘com-

pletely devoid of evidence’ to support either USX posi-

tion.!9 App. A, 34a-35a.

1. The “Best Qualified” Excuse.

USX’s “best qualified” claim was that although there

were no meaningful job requirements, the company

made substantive evaluations of laborer applicants and

chose those with greater potential for promotion. USX

claimed that its disproportionate hiring reflected the

fact that white applicants were better qualified for pro-

motion than black applicants.?°

The district court found that USX’s subjective inter-

view system did not identify the “best qualified” candi-

dates.

[T]he process by which [USX] divined who, among

its applicants, were the best qualified was wholly

subjective, consisting essentially of combining the

gut reactions to the applicant of employees in the

personnel office and one or more foremen in the

plant. No evidence was presented or offered to

19U)SX’s failure to produce evidence of a legitimate business purpose

for hiring practices that exclude blacks obviates any need to address

whether plaintiffs were required to show that a different practice, without

an undesirable racial effect, could also serve USX’s needs. Cf Watsen, 108

S. Ct. at 2790. Suffice it to say that more effort toward record-keeping (and

less toward record destruction), greater emphasis on training foremen,

and better monitoring of the results of USX’s subjective hiring practices

might have avoided the discriminatory effects.

20USX’s reliance on this issue is undercut by the company’s discovery

abuses before trial. The district court ruled that USX “had foreclosed

plaintiffs from inquiring into the issue of promotability as a hiring crite-

rion during discovery... .’’ LFF 110 (App. B, 86a).

16

show that applicants were tested in any way for

ability to do specific tasks required of workers

above the laborer level.

LFF 110 (App. B, 87a).

Indeed, USX’s own witnesses destroyed its “best

qualified” claim. USX introduced a study performed by

an expert, Dr. Finis Welch, to “show” that USX’s hiring

reflected differences in applicants’ qualifications rather

than racial bias. The district court described Dr.

Welch’s report this way:

If the Winner/Loser study revealed anything

about what [USX] looked for in its applicants, it

showed that [USX’s] conduct was bizarre. Dr.

Welch found that an applicant who had spent 7 of

the past 10 years working as a manufacturing

operative had no better chance of hire at [USX]

than a person who had never worked a day in his

life. He found that an applicant with one year of

experience as an assembly line worker in an ice

cream plant was more likely to be hired by [USX]

than an applicant with 10 years of experience as a

steel mill laborer. He found that applicants who

had a college degree or some college training had

a reduced chance of hire at [USX], as did applicants

who had clerical experience. Ironically, he found

that being white gave an applicant an “edge,” that

is, an increased possibility of being hired.

LFF 119 (App. B, 89a) (emphasis in original). The court

concluded that:

The Winner/Loser study did not show any rela-

tionship between the variables Dr. Welch meas-

ured and successful performance on P & M jobs. It

did not attempt to determine whether the multi-

tude of criteria [USX] used were job-related. Nor

17

did it purport to show that blacks were less quali-

fied than non-blacks, under [USX’s] or any other

criteria.

LFF 121 (App. B, 90a).

The court of appeals agreed that “USX articulated no

logically comprehensible standard that it used to iden-

tify applicants who were ‘better qualified’ to do the jobs

for which USX was hiring”’; that “the evidence that was

presented by USX negated the [best qualified] conten-

tion”; and that “‘the [USX] hiring process was unseem-

ly.” App. A, 35a-36a.

Thus, USX never produced any real “evidence that

its employment practices are based on legitimate busi-

ness reasons.” The courts below properly determined

that USX’s “best qualified’’ argument had no factual

merit.

2. The “Drop Out” Excuse.

USX’s second explanation for its hiring bias was that

a disproportionately large share uf black applicants vol-

untarily withdrew from the hiring process. USX intro-

duced this excuse through testimony from a low-level

employee with no statistical expertise who claimed to

have reviewed some hiring data for the years 1973 and

1974. From these he concluded that over the entire dec-

ade USX had offered blacks a statistically proportionate

number of “job opportunities.”

Rejecting the witness’ story as “unreliable,’’ LFF 126

(App. B, 91a), the district court cited testimony from

Larry Edwards, USX’s head of personnel, who testified

that “there were no reliable [USX] records from which

18

rates of applicant dropouts or failures of physical ex-

ams could be determined.”’ LFF 127 (App. B, 91a). More-

over, Edwards testified that in his experience the ‘‘phe-

nomenon of ‘dropping out’ during the interview pro-

cess, or after a job offer had been extended, occurred

‘across the board,’ and .. . did not occur disproportion-

ately often among blacks.” LFF 127 (App. B, 91a-92a).

Rebuttal testimony from the plaintiffs’ expert also ex-

posed the fiction of USX’s defense. LFF 130 (App. B,

92a-93a).?!

After considering all the evidence, the district court

therefore concluded that USX’s “drop out” excuse “had

not explained the statistically significant shortfall in

black hiring for entry level P & M jobs... .’’ LFF 132

(App. B, 93a). The court of appeals agreed that the

“drop out” excuse was “not supported by the evidence

of record.” App. A, 37a.

Faced with these factual determinations, the position

USX now peddles is that this Court should reverse be-

cause the company was required to do more in response

to plaintiffs’ prima facie case than merely utter some

excuse having no factual basis. USX’s position grossly

misreads the decisions of this Court and ignores the

speciousness of the “excuses.”” The courts below prop-

erly reviewed and rejected USX’s excuses and there is

no reason for this Court to engage in a further review.

2IThis rebuttal testimony belies USX’s contention that “plaintiffs of-

fered no evidence disproving USX’s defenses or proving that they were

pretexts....”’ Pet. 24.

224s Justice Blackmun’s concurring opinion noted, a prima facie case

cannot be rebutted by “the bald assertion that a purely discretionary

selection process allowed [it] to discover the best people for the job, with-

out any further evidentiary support.” Watson, 108 S. Ct. at 2796.

19

Il. THE THIRD CIRCUIT’S INTENTIONAL DIS-

CRIMINATION DECISION IS FACTUALLY

CORRECT AND CONSISTENT WITH THE

RULINGS OF THIS COURT.

The Third Circuit also found Title VII liability

against USX under the disparate treatment theory. In

the process, it found that the district court had applied

the wrong legal standard for “intent.’’ Accepting the

facts found by the district court, the appellate court

carefully reviewed the record to determine: (1) whether

plaintiffs had made out a prima facie case of disparate

treatment; and (2) whether USX had “articulated a suf-

ficient non-discriminatory reason to rebut the inference

that its hiring practice was discriminatory.” App. A,

34a. In so doing, the Third Circuit scrupulously honored

the burden-shifting process which this Court has con-

sistently recommended for the analysis of treatment

claims. See, e.g., Watson, 108 S. Ct. at 2784; Texas Dep’t

of Community Affairs v. Burdine, 450 U.S. 248 (1981);

International Brotherhood of Teamsters v. United

States, 431 U.S. 324 (1977); McDonnell Douglas Corp.

v. Green, 411 U.S. 792 (1973).

USX argues that the Third Circuit erred in conclud-

ing, based upon facts proven at trial, that USX engaged

in disparate treatment of thousands of blacks who ap-

plied for laborer jobs. That USX feels it must make

such a tenuous argument is understandable. USX

knows that the judgment below will remain undis-

turbed unless it convinces this Court to reverse its lia-

bility under both the disparate impact and disparate

treatment theories.

USX’s attack on the treatment ruling is essentially

three-fold: (1)-that the Third Circuit used the wrong

legal standard for intent; (2) that the Third Circuit

es |

20

should have remanded the case, leaving to the district

court the ultimate question of whether the proven dis-

crimination was intentional; and (3) that too_heavy a

burden was put on USX to rebut the prima facie case

of intentional discrimination. Pet. 17-25. These argu-

ments have no merit.

A. The Correct Test For Intent Was Used.

The Third Circuit conciuded that the district court

had ‘“‘misconstrued the appropriate legal standard re-

garding discriminatory intent... .” App. A, 29a. The dis-

trict court had placed upon the plaintiff class a “much

more onerous burden” (App. A, 29a) than controlling

decisions of this Court dictated. Citing Burdine, Team-

sters and McDonnell Douglas—the very decisions

which USX now contends were ignored—the court of

appeals observed that plaintiffs had introduced “abun-

dant circumstantial evidence from which the inference

of discriminatory treatment can reasonably be drawn.”

App. A, 30a.23 The district court’s legal error was in

requiring plaintiffs to prove that USX had an “invidious

purpose” or a “hostile motive.”’ /d.

In its petition, USX does not explain what it believes

was wrong with the legal standard used by the Third

Circuit. Rather, its argument appears to be that the

plaintiffs’ statistical evidence was, in USX’s view, “‘in-

sufficient to support an inference of discrimination.”

Pet. 20-21.

USX’s contention that plaintiffs “relied solely on

gross cumulative statistics to prove intentional discrim-

ination,” Pet. 24, flagrantly mischaracterizes the facts

231n Watson this Court reiterated that the “burden of proving a prima

facie case is ‘not onerous.’ 108 S. Ct. at 2784.

21

of this case. Plaintiffs’ proof extended far beyond sta-

tistics. It included evidence of USX’s racial segregation

of job applications; its destruction of crucial employ-

ment records; its unguided use of a purely subjective

interview process; “race-conscious” adjustments to its

hiring process; USX’s refusal to take any remedial ac-

tion despite knowledge that its system was excluding

blacks; and anecdotal evidence of discrimination.24

It was all this evidence, along with the extraordinary

statistical racial disparity in USX’s hiring, which sat-

isfied the Third Circuit that plaintiffs had established a

prima facie case of intentional discriminat.on. App. A,

32a.2%

B. There Was No Need To Remand.

Based on a distorted reading of Pullman-Standard

v. Swint, 456 U.S. 273 (1982), USX contends that the

Third Circuit should have remanded the case to the

district court to make the “ultimate finding of fact on

discriminatory intent.” Pet. 23. Ironically, in Pullman-

Standard this Court specifically approved what the

court of appeals did here.

247 egally, no anecdotal evidence is necessary to establish a prima facie

treatment case. Segar v. Smith, 738 F.2d 1249, 1278-79 (D.C. Cir. 1984),

cert. denied, 471 U.S. 1115 (1985). Nonetheless, Sheila Walker, a USX

employee, did testify about instances where USX foremen remarked that

they “had enough” blacks and “did not want any more’; and where one

USX foreman “just said he didn’t want to take all of these black girls,

because they all looked alike and he didn’t want any more.” P-176 at pp.

5480, 5488-5489 (J.A. 362, 370-371).

2>The district court’s finding that certain USX employees had no racial

animus does not, as USX suggests, translate into a finding that the fore-

men had no intent to discriminate. To the contrary, the district court

characterized the foremen’s behavior as “subtle and perhaps unconscious

discrimination against black applicants.”” App. B, 108a.

22

The Court of Appeals, therefore, was quite right in

saying that if a district court’s findings rest on an

erroneous view of the law, they may be set aside

on that basis. But here the district court was not

faulted for a misunderstanding or applying an er-

roneous definition of intentional discrimination.

456 U.S. at 287. See also Thorne v. City of El Segundo,

726 F.2d 459, 464 n.5 (9th Cir. 1983) (“whether the plain-

tiff’s proof established a prima facie case ... is a legal

conclusion freely reviewable on appeal.’’), cert. denied,

469 U.S. 979 (1984) (quoting Gay v. Waiters’ and Dairy

Lunchmen’s Union, 694 F.2d 531 (9th Cir. 1982)).

The Third Circuit adhered to the Pullman-Standard

rule, applied the proper legal standard to the findings

of fact made by the district court, and concluded that

plaintiffs had proven intentional discrimination.

We note here that our conclusion that the district

court’s decision was in error is not founded upon

the “clearly erroneous” standard of factual re-

view. Rather, we find that the district court miscon-

strued the appropriate legal standard regarding

discriminatory intent in reaching its result. There-

fore, our review is of its /egal and not its factual

conclusion, and our standard of review is plenary.

See Pullman-Standard v. Swint, 456 U.S. 273, 287

(1982).

App. A, 29a n.12 (emphasis in original). Under these

circumstances no remand was necessary or warranted.

C. USX Failed To Rebut The Prima Facie Case

Of Disparate Treatment.

Lastly, USX challenges the manner in which the

court of appeals determined that the company had not

rebutted the plaintiffs’ prima facie case of disparate

treatment.

23

USX contends that the Third Circuit imposed the ul-

timate burden of proof on USX. Pet. 18, 28-24. That

position is certainly not supported by the record or the

opinions below. See, infra, p. 14 n.18.

At trial, USX offered the hollow “best qualified” and

“drop out” excuses in an attempt to rebut the plaintiffs’

prima facie case of disparate treatment. See, infra, pp.

15-18. As the Third Circuit stated:

Both of these arguments were explicitly rejected

by the district court. Our review of the record re-

veals that the district court was correct in conclud-

ing that these assertions are wholly without merit,

and we find them pretextual.

App. A, 34a-35a.76 The rebuttal burden that the court of

appeals imposed upon USX—to articulate a sufficient

non-discriminatory reason (App. A, 34a)—was entirely

consistent with the governing decisions of this Court.

USX’s problem was that it simply could not muster any

fact to rebut the prima facie case of disparate treat-

ment. That is why USX was found liable. There were

no errors of law.

CONCLUSION

The Third Circuit found that USX’s subjective hiring

practices discriminated against thousands of blacks un-

der both the disparate impact and disparate treatment

methods of analysis recognized by this Court. The deci-

sions of the Third Circuit in this intensely factual case

26The case was tried before the district court as one involving intention-

al discrimination, and USX had every chance to rebut the plaintiffs’ claims.

The Third Circuit recognized that the disparate treatment claim “was

fully litigated, and therefore USX had a complete opportunity, and an

obligation, to present its case refuting the class’s allegation.” App. A, 34a

n.15.

24

are in full accord with the rulings of this Court. The

conduct of USX was in direct conflict with all of the

principles underlying Title VII. The writ should be

denied.”’

Respectfully submitted,

RICHARD Z. FREEMANN, JR.*

CREED C. BLACK, JR.

MARK 8. STEWART

BALLARD, SPAHR, ANDREWS &

INGERSOLL

30 South 17th Street

20th Floor

Philadelphia, PA 19103

(215) 636-4876

Attorneys for Respondents

*Counsel of Record

2/The Court’s recent decision to address the question whether the dis-

parate impact model may be used to challenge the cumulative effects of a

wide range of employment practices has no bearing on this case. See

Atonio v. Wards Cove Packing Co., 810 F.2d 1477 (9th Cir. 1987), cert.

granted in part, 108 S. Ct. 2896 (1988). The Atonio plaintiffs mounted an

attack against myriad discriminatory practices, including hiring, promo-

tion, work assignments, housing, pay differentials, rehire preferences, and

termination. The use of subjective hiring criteria was only one of sixteen

challenged practices. Unlike Atonzo, this case involves a single practice—

hiring interviews using subjective factors.

To equate Atonio and this case in any fashion would be entirely unwar-

ranted and unfair to the thousands of plaintiff class members in this action

who have been victimized for years by USX’s wholly meritless conduct.