Appendix — Rath Packing Co. Creditors' Trust v. Equal Employment Opportunity Commission

eh Supreme Court, U.S,

7 J se ee ee

86-6? .

No. } JOSEPH F SPANIOL, JR.

a CLERK

‘yen --

In the Supreme Court of the United States

OCTOBER TERM, 1936

THE RATH PACKING COMPANY CREDITORS’ TRUST,

Successor in Interest to The Rath Packing Company,

Petitioner,

vs.

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

Respondent.

APPENDIX TO PETITION FOR WRIT OF CER-

TIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE EIGHTH CIRCUIT

JERALD L, HILL

Mark J. BREDEMEIER*

Gutr & Great PLarins LEGAL

FOUNDATION

1000 Brookfield Building

101 West 11th Street

Kansas City, Missouri 64105

(816) 474-6600

Attorneys for Petitioner

*Counsel of Record

July 17, 1986

E. L. Meswoenwuatt, Ivc., 926 Cherry Street, Kansas City, Mo. 64106, (616) 421-3030

TABLE OF APPENDICES

March 20, 1986 Judgment and Opinion of the United

States Court of Appeals for the Eighth Circuit ...........

February 10, 1984 District Court Ruling on Objections

to Report and Recommendation of Special Master ....

September 30, 1983 Report and Recommendation of

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April 22, 1981 Memorandum Opinion and Order of

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Nos. 84-1217, 84-1458 and 85-1502

Equal Employment Opportunity

)

Commission, )

Appellee, )

v. ) Appeals from the

The Rath Packing Company, ) United States

Appellants. ) District Court

District Locai 431 Amalgamated ) for the Southern

Meatcutters and Butcher ) District of Iowa

Workman of North America, _)

AFL-CIO )

Submitted: October 9, 1984

Re-Submitted: April 22, 1985

Filed: March 20, 1986

Before LAY, Chief Judge, ROSS and McMILLIAN, Cir-

cuit Judges.

McMILLIAN, Circuit Judge

Rath Packing Company (Rath) appeals and the Equal

Employment Opportunity Commission (EEOC) cross-ap-

peals from a final judgment entered in the District Court

for the Southern District of Iowa in an action brought pur-

suant to 42 U.S.C. § 2000e (1982) (Title VII). The district

2a

court found that Rath’s subjective hiring practices re-

sulted in discrimination against women and were not justi-

fied by business necessity. The district court upheld

Rath’s no-spouse rule as justified by business necessity.

The district court awarded backpay, post-judgment inter-

est and affirmative injunctive relief. EEOC v. Rath Pack-

ing Co., No. 77-57-D, slip op. at 7 (S.D. Iowa Feb. 10, 1984).

For reversal Rath argues that (1) the action should

have been automatically stayed under 11 U.S.C. § 362(a)

of the Bankruptcy Act, (2) the district court abused its

discretion in denying a stay under 11 U.S.C. § 105 and

28 U.S.C. § 1651, (3) the district court’s judgment vio-

lated 11 U.S.C. §§ 362(b) (5), 502(b) and 1129 because

the judgment enforces a money judgment and imposes

post-judgment interest, (4) the district court erred in

finding a lack of business necessity for Rath’s hiring prac-

tices, and (5) the district court abused its discretion in

awarding backpay in light of Rath’s precarious financial

condition. Rath also appeals a final order entered on

March 14, 1985, denying Rath’s Fed. R. Civ. P. 60(b) mo-

tion.

EEOC on cross-appeal argues that the district court

erred (1) as a matter of law and fact in concluding that

Rath’s no-spouse rule was justified by business necessity,

(2) in denying retroactive seniority, prejudgment interest,

and full costs to EEOC, and (3) in not calculating the class

backpay award on the basis of the availability of female

workers in the general population of Louisa County, Iowa.

For the reasons discussed below, we affirm in part,

reverse in part and remand this case for further proceed-

ings consistent with this opinion.

Rath, an Iowa corporation, is engaged in the business

of slaughtering hogs and processing the meat products ob-

3a

tained from the hogs. Rath has its principal plant in

Waterloo, Iowa, and a limited operation in Columbus Junc-

tion, lowa. The Columbus Junction plant, the subject of

this litigation, is divided into 12 departments: hog kill,

hog cut, loading, sanitation, trim, inedible rendering, yards,

smoking, curing, packing, maintenance and miscellaneous

gang. More than half of the job classifications at the

Columbus Junction plant for the period from September

1, 1970, to August 31, 1979, were in the kill and cut de-

partments. These jobs were considered the least desir-

able jobs in the plant but were the highest paid.

Rath’s Columbus Junction facility employed approxi-

mately 250 persons; 50% of the employees were related

to one another and 95% were male. The population of

Columbus Junction is approximately 1500 persons.

Stipulated statistics established that 554 persons ap-

plied to Rath for employment from January 1, 1973, to

February 15, 1978. During this period seven (or 7.39%)

of the 95 female applicants (who were not spouses of

current employees) were hired. Twenty-six additional

female applicants were denied employment because they

were spouses of current employees. Information concern-

ing applications filed after February 15, 1978, is not avail-

able.

The United Food and Commercial Workers,! AFL-CIO

(formerly Amalgamated Meatcutters and Butchers Work-

men of North America), District Local No. 431 (Union),

was the exclusive bargaining representative for plant em-

1. The Amalgamated Meat Cutters and Butchers Workmen

of North America, District Local 431, AFL-CIO, was designated

as a defendant in the complaint pursuant to Fed. R. Civ. P.

19(a)(2). The district court on September 12, 1979, grantec

the Union’s motion for a partial summary judgment on the issue

of liability. The Union was required to participate in a subse-

quent hearing on relief.

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ployees at the Columbus Junction plant. The collective

bargaining agreements governing the plant required that

where possible Rath would promote or transfer from

within rather than hire from without. When a vacancy

occurred, the vacancy was posted so that employees in

that department could bid. If there were no bids, persons

in other departments could bid. If no one in another de-

partment bid, then the employee with the least seniority in

the department where the vacancy occurred was “forced

to” the job. If there was no employee to “force to” the

job, then a new employee was hired. Rath had no estab-

lished procedure for giving notice of vacancies to the

public.

Rath’s office manager, Walter McFarland, was respon-

sible for accepting and maintaining applications and select-

ing applicants for employment. The plant superintendent

had the authority to overrule McFarland’s choice of ap-

plicants but seldom did so. Rath had no written or other-

wise established selection guidelines and McFarland was

unable to identify what information was deemed signif-

icant in evaluating and selecting applicants. McFarland

expressly discounted age, height, weight, prior experience,

and work history as being critical in the selection of new

employees. McFarland, however, stressed the importance

of getting the right person for the job because the person

could be assigned to any job in the plant.

In August 1973 Rath prospectively implemented a no-

spouse rule prohibiting the employment of spouses of Rath

employees. From approximately 1966 to the time of trial,

Rath employed seven married couples at the Columbus

Junction plant.

EEOC filed this suit in September 1977. The suit

was based on a charge filed on December 15, 1975, by

5a

Mary Turner, who alleged that Rath unlawfully refused

to employ her because of her sex. EEOC alleged in its

complaint that Rath refused to hire women at its Colum-

bus Junction plant and that Rath’s policy of not hiring

spouses of employees excluded a disproportionate number

of women from employment. EEOC sought injunctive re-

lief, full backpay with interest, and costs.

The action was bifurcated and separate trials on lia-

bility and relief were held. After a four day trial in July

1980 on liability, the district court found that Rath dis-

criminated against women in hiring from 1971 forward

and that three women who testified at trial established

individual claims of disparate treatment. The district

court concluded, however, that Rath had shown a business

necessity for the no-spouse rule.

The case was referred to a special master in 1982 for

relief proceedings. In January 1983 Rath closed its

Columbus Junction plant.? In April of 1983 the trial on

relief was held. The special master recommended a class

backpay award of $1,015,901, injunctive relief, and retro-

active seniority for rejected femaie applicants. The special

_ master further recommended that prejudgment interest not

be granted. No recommendation was made concerning costs

because one item of costs was compensation for the ser-

vices of the special master.

After the special master issued his report and recom-

mendations, Rath filed a petition in the bankruptcy court

for reorganization under Chapter 11 of the Bankruptcy

Act. The district court held that Rath’s bankruptcy peti-

tion did not automatically stay the Title VII proceedings,

2. The Columbus Junction plant was closed in June 1978,

reopened in September 1979, closed again in January 1983,

reopened in July 1984, and closed in October 1984.

6a

In re Rath Packing Co., 37 Bankr. 614, 616-17 (S.D. Iowa

1984), and accordingly proceeded to consider the special

master’s recommendations and to enter final judgment.

The district court adopted the special master’s recom-

mendations to grant injunctive relief and to deny pre-

judgment interest. The district court awarded class-based

backpay ($1,000,000) and posit-judgment interest but de-

nied retroactive seniority. The district court ordered that

costs be shared equally between EEOC and Rath.

Rath and EEOC subsequently appealed the judgment

of the district court. On October 9, 1984, the appeal was

argued before this court. In February 1985 Rath filed

a Rule 60(b) motion and requested that its appeal before

this court be held in abeyance pending a decision on the

motion. On February 22, 1985, this court ordered the

district court to certify its ruling on the Rule 60(b) motion

and ordered that the appeal be held in abeyance. On

March 14, 1985, the district court denied Rath’s 60(b)

motion. On April 22, 1985, the order holding the appeals

in abeyance was vacated, and the appeal from the denial

of the 60(b) motion was consolidated with the pending

appeals.

Automatic Stay Under 11 U.S.C. § 362(a)

Rath argues that the district court erred in refusing

to stay those portions of the Title VII proceedings related

to backpay, seniority, and interest because § 362(a) pro-

vides for an automatic stay of such proceedings. In sup-

port of its position, Rath argues that the automatic stay

is one of the fundamental debtor protections provided

by the Bankruptcy Act and is inapplicable only where a

governmental unit sues to protect the public safety and

health. Relying on Missouri v. Bankruptcy Court, 647

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F.2d 768, 776 (8th Cir. 1981), cert. denied, 454 U.S. 1162

(1982), Rath argues that an action brought by EEOC,

although a regulatory agency, is stayed by the automatic

stay provision because it is primarily directed to making

aggrieved persons financially whole.

EEOC argues that this action comes within the ex-

ception to the automatic stay provision because it is a

Title VII action brought to enforce federal laws prohib-

iting discrimination in the work place. EEOC argues that

suits under Title VII are guided by “an overriding public

interest in equal employment opportunity asserted through

direct federal enforcement.” General Telephone Co. v.

EEOC, 446 U.S. 318, 326 (1980) (citations omitted).

Section 362(a)* provides that filing a bankruptcy peti-

tion operates as an automatic stay of judicial proceedings

3. 11 U.S.C. § 362(a) provides:

(a) Except as provided im subsection (b) of this section,

a petition filed under section 301, 302, or 303 of this title operates

as a stay, applicable to all entities, of—

(1) the commencement or continuation, including the

issuance or employment of process, of a judicial, adminis-

trative, or other proceeding against the debtor that was or

could have been commenced before the commencement of

the case under this title, or to recover a claim against the

debtor that arose before the commencement of the case

under this title;

(2) the enforcement, against the debtor or against

property of the estate, of a judgment obtained before the

commencement of the case under this title;

(3) any act to obtain possession of property of the

estate or of property from the estate;

(4) any act to create, perfect, or enforce any lien

against property of the estate;

(5) any act to create, perfect, or enforce against prop-

erty of the debtor any lien to the extent that such lien

secures a claim that arose before the commencement of the

case under this title;

(Continued on following page)

8a

against the debtor. “The general policy behind this sec-

tion is to grant complete, immediate, albeit temporary

relief to the debtor from creditors, and also to prevent

dissipation of the debtor’s assets before orderly distribu-

tion to creditors can be effected.” Penn Terra Ltd. v.

Department of Environmental Resources, 733 F.2d 267, 271

(3d Cir. 1984) (Penn Terra). However, actions by a

government unit to enforce its police or regulatory powers

are exempt from operation of the automatic stay provi-

sion under § 362(b)(4).* Thus,

where a governmental unit is suing a debtor to pre-

vent or stop violation of fraud, environmental pro-

tection, consumer protection, safety, or similar police

or regulatory laws, or attempting to fix damage for

violation of such laws, the action or proceeding is not

stayed under the automatic stay.

S.Rep. No. 989, 95th Cong., 2nd Sess. 52, reprinted in

1978 U.S. Code Cong. & Ad. News 5787, 5838; H. Rep.

No. 595, 95th Cong., 2nd Sess. 343, reprinted in 1978 US.

Code Cong. & Ad. News 5787, 6299.

Footnote continued—

(6) any act to collect, assess, or recover a claim against

the debtor that arose before the commencement of the case

under this title;

(7) the setoff of any debt owing to the debtor that

arose before the commencement of the case under this title

against any claim against the debtor; and

(8) the commencement or continuation of a proceeding

before the United States Tax Court concerning the debtor.

4. 11 USC. § 362(b)(4) provides:

(b) The filing of a petition under section 301, 302, or 303

of this title does not operate as a stay—

(4) under subsection (a)(1) of this section of the

commencement or continuation of an action or proceeding

by a governmental unit to enforce such governmental unit's

police or regulatory power .

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tiie cen oe ns

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No court has considered whether a suit by EEOC

comes within the exception to the automatic stay. Courts

have, however, considered whether actions brought by

other types of regulatory agencies come within the auto-

matic stay. The Sixth Circuit held that workers’ com-

pensation proceedings were not automatically stayed where

the benefits were to be paid from an insurance fund or

from security bonds which were not part of the debtor’s

estate. In re Mansfield Tire & Rubber Co., 660 F.2d 1108,

i115 (6th Cir. 1981). Proceedings brought under the Fair

Labor Standards Act for the assessment of penalties for

violation of child labor laws likewise were not stayed

by the automatic stay provision. In re Tauscher, 7 Bankr.

918, 920 (Bankr. E.D. Wis. 1981). The Third Circuit

has also held that an action seeking a preliminary in-

junction to correct violations of the state environmental

protection statute was not stayed by the automatic stay

provision. Penn Terra, 733 F.2d at 274. Lastly, NLRB

proceedings, which are closely analogous to EEOC pro-

ceedings, have not been stayed by the automatic stay

provision. Ahrens Aircraft, Inc. v. NLRB, 703 F.2d 23,

24 (1st Cir. 1983); NLRB wv. Evans Plumbing Co., 639

F.2d 291, 293 (5th Cir. 1981) (per curiam); In re Bel Air

Chateau Hospitals, Inc., 611 F.2d 1248, 1250-51 (9th Cir.

1979). Contra In re The Theobald Industries, Inc., 16

Bankr. 537, 537 (Bankr. D.N.J. 1981).

Rath, relying on this court’s decision in Missouri v.

Bankruptcy Court, 647 F.2d at 776, argues that under

the reasoning of this case the FEOC proceeding should

have been automatically stayed. We disagree. In Missouri

v. Bankruptcy Court, a state regulatory agency attempted

in state court to enforce Missouri’s grain laws, which

enforcement was in direct conflict with the bankruptcy

court’s orders. This court rejected the state’s contention

10a

that the police power exception automatically applied be-

cause a state agency was involved. Instead we analyzed

the purpose underlying the Missouri law and found that

although the law might be “regulatory in nature, [it]

primarily relate[s] to the protection of pecuniary interest

in the debtors’ property and not to matters of public

safety and health.” Id.

By contrast, “EEOC does not function simply as a

vehicle for conducting litigation on behalf of private par-

ties; it is a federal administrative agency charged with

the responsibility of investigating claims of employment

discrimination and settling disputes.” Occidental Life

Insurance Co. v. EEOC, 432 U.S. 355, 368 (1977). Thus,

“(w]jhen the EEOC acts, albeit at the behest of and for

the benefit of specific individuals, it acts also to vindicate

the public interest in preventing employment discrimina-

tion.” General Telephone Co. v. EEOC, 446 US. at 326.

When EEOC sues to enforce Title VII it seeks to stop

a harm to the public—‘nvidious employment discrimina-

tion which is as detrimental to the welfare of the country

as violations of environmental protection and consumer

safety laws, which are expressly exempt from the auto-

matic stay. We therefore hold that the automatic stay

provision did not apply to this Title VII action brought

by EEOC.

Denial of a Discretionary Stay

Rath next argues that the district court abused its

discretion in refusing to grant a discretionary stay based

on 11 U.S.C. § 105 and 28 U.S.C. § 1651. Rath argues

that its assets were diminished by the litigation expenses

and therefore a discretionary stay should have been

granted. Further, Rath argues that the Columbus Junc-

tion plant closed during the pendency of the litigation

siesta inated

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and no decision had been made at the time of the trial

whether it would reopen. Thus, Rath argues the injunc-

tive relief sought was meaningless.

EEOC argues that the district court properly denied

the discretionary stay because litigation fees do not

threaten the estate of the bankrupt. Litigation fees, like

other debts incurred by a bankrupt before its reorganiza-

tion plan is filed or approved, are ultimately settled by

the bankruptcy court. EEOC argues that Congress by

providing for the exception to the automatic stay implic-

itly recognized that preservation of the estate of the debtor

is not always the primary goal.

Section 105° gives the bankruptcy court the power

to issue orders necessary or appropriate to carry out the

provisions of Title 11. The All Writs Act, 28 USC.

§ 1651,° authorizes bankruptcy courts to issue stays. “Stays

or injunctions issued under these sections will not be

automatic upon the commencement of a case, but will

be granted or issued under the usual rules governing

the issuance of injunctions.” In re Vantage Petroleum

Corp., 25 Bankr. 471, 476 (Bankr. E.D.N.Y. 1982). “(S]tays

will be granted only if a party shows a necessity for a

stay.” In re Bel Air Chateau Hospitals, Inc., 611 F.2d at

1251; see In re Matter of Shippers Interstate Service, Inc.,

618 F.2d 9, 13 (7th Cir. 1980). These stays by definition

are discretionary and this court will overturn the deci-

sion of the lower court only if there has been an abuse

of discretion.

5. 11 U.S.C. § 105(a) provides: “(a) The bankruptcy

court may issue any order, process, or judgment that is necessary

or appropriate to carry out the provisions of this title.”

6. 28 U.S.C. § 1651(a) provides: “(a) The Supreme Court

and all courts established by Act of Congress may issue all writs

necessary or appropriate in aid of their respective jurisdictions

and agreeable to the usages and principles of law.”

12a

We hold that the district court did not abuse its

discretion in denying the request for a stay of the EEOC

action. Congress by excepting certain actions from the

automatic stay provision recognized that the debtor would

likely incur litigation expenses as a result of any excepted

lawsuit. Penn Terra, 733 F.2d at 278. Congress has there-

fore implicitly recognized that litigation expenses alone

do not justify a stay of a proceeding. See In re Rath

Packing Co., 38 Bankr. 552, 562-63 (Bankr. N.D. Iowa

1984) (stay of NLRB proceedings denied).

Entry of Money Judgment

Rath next argues that the district court erred in en-

tering the judgment against Rath because governmental

units may not seek to enforce money judgments. Rath,

relying on In re Mansfield Tire & Rubber Co., 660 F.2d at

1113, 1115, argues that the scope of the district court’s or-

der far exceeds the limited police power exception of 11

U.S.C. § 362(b)(5). Rath argues that the district court

order established a payment plan, imposed prejudgment in-

terest, and elevated EEOC to the status of a favored cred-

itor with 100% payment.

EEOC argues that the district court judgment does

not violate § 362(b)(5). Specifically EEOC argues that

§ 362(b) (5) only prohibits actions to enforce or execute a

money judgment, and the judgment in this case is not

self-executing. Relying on Penn Terra, EEOC argues that

it is the “seizure of a defendant debtor’s property, to

satisfy the judgment .. . which is proscribed by subsection

362(b)(5).” 733 F.2d at 275. EEOC further asserts that

during the pendency of the bankruptcy proceedings it will

not file an action against Rath for contempt for failure to

pay or otherwise attempt to actually obtain execution of

the judgment.

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Section 362(b)(5)’ provides that the automatic stay

does not apply to enforcement of a judgment, other than

a money judgment, obtained in an action or proceeding by

a governmental unit to enforce such governmental unit’s

police or regulatory powers. The reason for this ban

against enforcement of money judgments is to prevent un-

fairness to a debtor’s other creditors.

Since the assets of the debtor are in the possession

and control of the bankruptcy court, and since they

constitute a fund out of which all creditors are en-

titled to share, enforcement by a governmental unit

of a money judgment would give it preferential treat-

ment to the detriment of all other creditors.

H. Rep. No. 595, 95th Cong., 2nd Sess. 342-43 (1978), re-

printed in 1978 U.S. Code Cong. & Ad. News 5787, 6299;

S. Rep. No. 989, 95th Cong., 2nd Sess. 51-52 (1978), re-

printed in 1978 U.S. Code Cong. & Ad. News 5787, 5838.

The entry of judgment for injunctive relief and back-

pay is permitted under § 362(b)(5), but the actual en-

forcement of the backpay judgment is not permitted.

E.g., NLRB v. Evans Plumbing Co., 639 F.2d at 293; cf. In

re Mansfield Tire & Rubber Co., 660 F.2d at 1115 (In-

dustrial Commission of Ohio, Bureau of Workers Com-

pensation, could adjudicate workers’ compensation claims

against the debtor and couJd order payment of the claims

only because the claims were to be paid either from

7. 11 U.S.C. § 362(b)(5) provides:

(b) The filing of a petition under section 301, 302, or 303

of this title does not operate as a stay—

(5) under subsection (a)(2) of this section, of the

enforcement of a judgment, other than a money judgment,

obtained in an action or proceeding by a governmental unit

to enforce such governmental unit’s police or regulatory

power....

l4a

an insurance fund or surety bonds, neither of which were

a part of the debtor’s estate).

We hold that the district court did not err in en-

tering a money judgment against Rath. The district court,

however, went beyond the entry of a money judgment as

permitted by § 362(b)(5) and established a detailed pay-

ment plan. The judgment of February 10, 1984, not only

awarded EEOC the sum of $1,000,000, but required Rath

to repay the sum in five equal installments of principal

with accrued interest, with the first instailment due on

February 10, 1985. Failure to meet a required installment

results in acceleration of the unpaid balance at the option

of EEOC. EEOC was also directed to formulate a plan

for disbursement of judgment proceeds and to set up a

claims system. This plan went beyond the entry of a

money judgment and therefore violated 11 U.S.C. § 362(a).

Rath also argues that the establishment of a payment

plan violates 11 U.S.C. § 1129.8 We agree. The bank-

ruptcy court has the responsibility to confirm a reorganiza-

tion plan and to distribute Rath’s assets in accord with

this plan. Payment of the EEOC claim, a pre-petition

unsecured claim, may not be given preference over the

claims of other creditors. Neither EEOC’s promise not to

collect the judgment nor the possibility that the bank-

ruptcy court will modify the payment plan is sufficient

to correct the error.

Rath further argues that the imposition of post-judg-

ment interest is contrary to 11 U.S.C. § 502(b) which pro-

hibits the imposition of interest after the date of the

8. 11 U.S.C. § 1129(a)(1) provides: “(a) The court shall

confirm a plan only if all of the following requirements are met:

(1) The plan complies with the applicable provisions of the

chapter.”

15a

bankruptcy filing. We agree that the district court erred

in awarding post-judgment interest. Section 502(b)* pro-

vides that as of the date of the bankruptcy filing, interest

will not accrue and any claims for unmatured interest

which become due after the filing date shall be disallowed.

Nicholas v. United States, 384 U.S. 678, 682 (1966); In re

Boston & Maine Corp., 719 F.2d 493, 495 (1st Cir. 1983),

cert. denied, 104 S. Ct. 1913 (1984). The purpose of this

rule is stated in Vanston Bond Holders Protective Commit-

tee v. Green, 329 U.S. 160, 163-64 (1946):

Exaction of interest where the power of the debtor

to pay even his contractual obligations is suspended

by law, has been prohibited because it was considered

in the nature of a penalty imposed because of a delay

in prompt payment— a delay necessitated by law... .-

The delay in distribution . . . is a necessary incident to

the settlement of the estate .. . it would be inequitable

for anyone to gain an advantage or to suffer a loss

because of such delay.

Subjective Hiring Practices

Rath next argues that the district court erred in hold-

ing that there was no business necessity for Rath’s sub-

jective hiring practices. Rath had no established criteria

9. 11 U.S.C. § 502(a), (b), (2) provides:

(a) A claim of interest, proof of which is filed under

section 501 of this title, is deemed allowed, unless a party in

interest, including a creditor of a partner in a partnership that

is a debtor in a case under chapter 7 of this title, objects.

(b) Except as provided in subsections (f), (g), (h) and

(i) of this section, if such objection to a claim is made, the c urt,

after notice and a hearing, shall determine the amount of such

claim as of the date of the filing of the petition, and shall allow

such claim in such amount, except to the extent that—

2) pan claim is for unmatured interest. .

l6a

for selecting employees. Rath argues that the positions,

although unskilled in nature, require certain objective

skills and experience because an employee might be forced

to perform any job in the plant. Rath also argues that

it should not be required to adopt what the court perceives

to be the best hiring procedures rather than those which

Rath has developed based on its experience. Lastly,

Rath argues that the district court did not distinguish

between the strict test of a bona fide occupational require-

ment and the less strict test of a valid business reason.’®

EEOC argues that the district court’s finding is sup-

ported by the overwhelming weight of the evidence and

therefore is not clearly erroneous. EEOC argues that Mc-

Farland, the Rath official primarily responsible for hiring

at Rath, was unable to articulate any particular qualifica-

tions or attributes he looked for in an applicant. EEOC

also argues that Rath failed to establish that the subjective

hiring procedures were necessary or essential and that

10. The district court correctly applied the business neces-

sity test in this case. The business necessity defense and the

bona fide occupational qualification (BFOQ) defense are both

defenses to Title VII violations. The business necessity defense,

however, is appropriately raised when facially neutral employ-

ment practices have a disproportionate impact on protected groups.

The BFOQ defense on the other hand is a defense to affirmative

deliberate discrimination on the basis of sex. Harris v. Pan

American World Airways, Inc., 649 F.2d 670, 674 (9th Cir. 1980);

Garcia v. Gloor, 609 F.2d 156, 163 (5th Cir. 1980); see Dothard

v. Rawlinson, 433 U.S. 321, 332 (1977) (BFOQ) (standard ap-

plied to regulation prohibiting employment of female guards in

maximum security prison; business necessity test applied to height

and weight regulation). Both defenses have been construed

narrowly. Sex discrimination based on a BFOQ is permitted

only where “reasonably necessary to the normal operation of

that particular business.” 42 U.S.C. § 2000e(2)(e). A neutral

employment practice may be justified by business necessity only

if the practice not only fosters safety and efficiency but is essen-

tial to that goal. United States v. St. Louis-San Francisco R.R.,

as F.2d 301, 308 (8th Cir. 1972), cert. denied, 409 U.S. 1116

1973).

17a

there were no alternative practices with less discrimina-

tory effect.

“[A]n employment practice which has a disparate im-

pact on a group protected under Title VII is invalid unless

the employer can prove the challenged practice is justified

by a business necessity.” Kirby v. Colony Furniture Co.,

613 F.2d 696, 703 (8th Cir. 1980). ‘“ ‘The touchstone is

business necessity and the practice must be shown to be

necessary to safe and efficient job performance... .’” Id.

(citations omitted). “The system in question must not

only foster safety and efficiency, but must be essential to

that goal.” United States v. St. Louis-San Francisco R.R.,

464 F.2d 301, 308 (8th Cir. 1972) (emphasis added), cert.

denied, 409 U.S. 1116 (1973). A business practice may

not be justified on the basis of business necessity if there

exists a “nondiscriminatory alternative means of deter-

mining qualification.” Id. at 309; see Dothard v. Rawlin-

son, 433 U.S. 321, 329 (1977).

We hold that the district court did not err in holding

that Rath’s subjective hiring practices were not justified

by business necessity. The undisputed evidence estab-

lished that Rath’s subjective hiring practices had a dis-

parate impact on women. Ninety-five percent of Rath’s

employees were men. After EEOC established the dis-

parate impact of the subjective hiring practices, Rath had

the burden of producing evidence of business necessity and

the burden of persuasion on that issue. Rath was unable

to identify the criteria and qualifications which were

considered in the hiring decisions. It follows therefore

that Rath could not establish that these qualifications and

criteria were necessary to the safety and efficiency of its

operations. Rath’s hiring practices, even if intended to

select the best qualified person, were highly susceptible

18a

to abuse. While some subjectivity is inevitable in the

hiring process, the total lack of objective criteria at Rath

“could only reinforce the prejudices, unconscious or not,

which Congress in Title VII sought to eradicate as a basis

for employment.” Stewart v. General Motors Corp., 542

F.2d 445, 451 (7th Cir. 1976), cert. denied, 433 U.S. 919

(1977). “‘[S]jex is the sole indentifiable factor explain-

ing the divergence in numbers of men and women selected

by Rath during the relevant time frame.’” EEOC v. Rath

Packing Co., No. 77-57-D, slip op. at 6 (liability order of

April 22, 1981) (citation omitted).

Backpay Award

- Rath next argues that the district court erred in award-

ing backpay. In support of this position, Rath argues that

the district court failed to make findings concerning Rath’s

ability to pay or to articulate reasons for its decision. Rath

also argues that the district court failed to consider the

number of victims and the number of nonvictims affected

and the economic circumstances of the industry.

Rath argues that it has experienced “horrendous losses”

since 1977"! and therefore does not have the ability to pay

the award out of current resources, either borrowed or

owned. Rath argues that the employees, the majority

11. Rath argues that its financial position is precarious and

a backpay award plus interest could result in the permanent

closing of the Columbus Junction plant and the loss of jobs.

Rath argues that it has had to resort to extraordinary means to

secure even a limited line of credit (about $15 million), and

that this credit and other loans made by Rath are secured by

Rath’s inventory, receivables, trademarks of the company, and

real property. The company pension plan was terminated for

financial reasons in 1982 and Rath continues to make sizable

payments to reduce its obligations under the plan. Rath is also

required to make cash deposits for performance bonds. The

employees in 1983 deferred $2.50 each per hour in wages and

made other concessions in order to sustain the company.

19a

owners of the company, are the only ones who can pro-

vide funds to satisfy such an award and they have already

made many financial sacrifices for the company.

Rath urges this court to review this issue because

the issue is based almost entirely on the written record

and not upon the testimony of witnesses. Lastly, Rath

argues that it may have no forum to have this issue

reviewed if this court does not review it because EEOC

wili argue in the bankruptcy court that the issue is “res

judicata” and, secondly, the bankruptcy court may believe

that it does not have the authority to modify the district

court’s order.

EEOC argues that the district court did not abuse

its discretion in awarding backpay. EEOC argues that

persons who have been denied employment because of

discrimination are entitled under Title VII to backpay

and backpay is to be denied only in extraordinary cir-

curnstances.

“The district court is obligated to grant a plaintiff

who has been discriminated against . . . the most complete

relief possible.” Briseno v. Central Technical Community

College Area, 739 F.2d 344, 347 (8th Cir. 1984); see Franks

v. Bowman Transportation Co., 424 U.S. 747, 764 (1976).

There is a strong presumption that persons who have

been discriminated against are entitled under Title VII

to backpay; this presumption can only be overcome “for

reasons, which if applied generally, would not frustrate

the central statutory purposes of eradicating discrimina-

tion throughout the economy and making persons whole

for injury suffered through past discrimination.” Albe-

marle Paper Co. v. Moody, 422 U.S. 405, 421 (1975).

“[{S]pecial factors which justify not giving an award of

class wide backpay have been narrowly construed,” Kirby

20a

v. Colony Furniture Co., 613 F.2d at 699; see Wells v.

Meyer’s Bakery, 561 F.2d 1268, 1272 (8th Cir. 1977), and

usually include circumstances where state legislation is

in. conflict with Title VII. Pettway v. American Cast

Iron Pipe Co., 494 F.2d 211, 260 (5th Cir. 1974) (banc).

We consider first Rath’s argument that the district

court was required to state its reasons in support of the

award of backpay. Kath cites two district court cases

for the proposition that a district court must state reasons

for an award of backpay. Ingram v. Madison Square

Garden Center, 482 F. Supp. 918, 921 (S.D.N.Y. 1979);

Rios v. Enterprise Ass’n of Steamfitters Local 638, 400

F. Supp. 988, 991 (S.D.N.Y. 1975). Rath also attempts

to argue by analogy from other cases which state that

a district court must identify the factors which justify

the denial of backpay. The rationale, however, underlying

the requirement for a statement of reasons for a denial

of backpay does not exist where a district court grants

backpay. A presumption exists in favor of backpay; back-

pay may be denied only if there are compelling reasons

justifying the denial. Consequently, the district court is

required to state reasons for the denial in order that a

reviewing court may determine if compelling reasons exist.

We hold that the district court did not err in failing to

identify those specific factors it considered in awarding

backpay.

Rath next argues that the district court did not con-

sider Rath’s ability to pay prior to c*anting backpay.

The record does not support Rath’s assertion. The special

master considered at length Rath’s financial condition.

The special master found that the factors militating against

an award of backpay-—(1) Rath’s “precarious financial

status and ongoing losses,” (2) 60% of the shareholders

2la

are employees, and (3) Rath’s stated inability to liquidate

an award without further employee concessions—were not

of sufficient weight or so exceptional that they overcame

the presumption that backpay is one of the consequences

of Title VII violations.

The district court approved and adopted the report

and recommendation of the special master except as mod-

ified. The district court did not modify the special mas-

ter’s findings or recommendation on backpay except to

round the backpay award off to $1,000,000. Further, the

district court specifically considered and overruled Rath’s

objection to the special master’s recommendation for back-

pay. EEOC v. Rath Packing Co., No. 77-57-D, slip op.

at 7 (order of Feb. 10, 1984). Rath challenged the rec-

ommendation on the grounds that Rath was unable to

pay the award and the award would have an adverse

effect on the employees at the Columbus Junction plant.

In response to this objection, the district court did not

indicate that Rath’s financial condition was not considered

in making the backpay award. Rather, the district court

expressly recognized that “[tjhe effect of this backpay

award can now be taken into consideration by the bank-

ruptcy court.” Id. at 3. The district court in the same

order expressly considered Rath’s financial condition in

awarding post-judgment interest. Id. at 7. The district

court denied prejudgment interest because of Rath’s “pre-

carious financial condition” and ordered installment pay-

ments of the award for the same reason. Id.

We hold that the district court did not abuse its

discretion in awarding backpay. Victims of employment

discrimination are entitled to ‘“make-whole” belief, which

includes backpay. Backpay should not be denied simply

because the employer, who has wronged the victims, will

22a

be adversely affected by the backpay award. See Frank

v. Bowman Transportation Co., 424 U.S. at 774. The im-

pact of the award on Rath’s employees, who are also

the majority stockholders, is an insufficient reason to

deny backpay. These employees were aware of this lit-

igation, which commenced in 1977, when they purchased

their stock in 1983. In addition they received benefits

from the purchase of the stock—the continuation of their

employment and compensation. See In re Rath Packing

Co., 36 Bankr. 979, 981 (Bankr. N.D. Iowa 1984). It is

not inequitable that the employees-shareholders, having

received the benefits of ownership, should share the detri-

ment resulting from the backpay award.

Denial of Rule 60(b) Motion

The district court denied Rath’s Fed. R. Civ. P. 60(b)

motion on the basis that the evidence offered by Rath did

not constitute newly discovered evidence and “for other

reasons expressed in [EEOC’s] response to defendant’s mo-

tion.” The district court found that the evidence ten-

dered as newly discovered evidence was formulated after

the trial.

Rath argues that the district court abused its discre-

tion in denying its motion. Rath submitted a report con-

cerning its hiring procedures upon reopening its Colum-

bus Junction facility in July 1984. The report covered

the four months from the time the Columbus Junction

facility opened in July 1984 to October 1984, when it

closed again. Rath claims that the report reflects the ac-

tual level of interest of women in employment at Rath

and the actual employment experience of women who

accepted employment at Rath during this period.

EEOC argues that the motion was not filed within a

reasonable time as required by the rule. The motion was

23a

filed seven months after the entry of judgment. EEOC

also argues that the evidence was not newly discovered

evidence because it was formulated after the trial and

concerned only post-trial events, that is, Rath’s hiring

practices and experience after the trial. EEOC further

argues that the evidence is neither probative of nor rele-

vant to the issue of Rath’s liability.

In order to obtain relief under Fed. R. Civ. P. 60(b) (2)

on grounds of newly discovered evidence, the moving party

must establish that (1) evidence was discovered after

trial, (2) it exercised diligence to obtain the evidence

before trial, (3) the evidence is not merely cumulative

or impeaching, (4) the evidence is material, and (5) the

evidence is such that a new trial probably would produce

a new verdict. Rosebud Sioux Tribe v. A. & P. Steel, Inc.,

733 F.2d 509, 515 (8th Cir.), cert. denied, 105 S. Ct. 565

(1984). The district court’s ruling on a motion for relief

from judgment will be disturbed on appeal only if the

district court abused its discretion. Pioneer Insurance

Co. v. Gelt, 558 F.2d 1303, 1312 (8th Cir. 1977).

We hold that the district court did not abuse its dis-

cretion in denying Rath’s motion. The report of Rath’s

hiring practices and experience for the period of July

through October 1984 was not evidence which was in

existence at the time of the trial] but was evidence which

was formulated after the trial. Further evidence of

Rath’s hiring practices and experience after the trial is

not relevant to the issue of Rath’s liability prior to trial.

No-Spouse Rule (Cross-appeal)

EEOC on cross-appeal argues that the district court

erred as a matter of law and fact in holding that Rath’s

no-spouse rule was justified by business necessity.

24a

EEOC argues that the district court, although articulating

the proper legal standard, in fact imposed a lighter burden

on Rath than required by the law of this circuit. EEOC

further argues that this finding is contrary to the record

evidence and inconsistent with the district court’s sub-

sidiary findings.

The district court stated that “the issue the court must

address is... whether management’s response to perceived

production problems... was reasonable ... and designed to

improve conditions in the plant.” EEOC v. Rath Packing

Co., slip op. at 23 (order of Apr. 22, 1981) (emphasis

added). The district court found that Rath was “un-

able to statistically corroborate its contention that pro-

duction was adversely affected through the hiring of

spouses.” Id. The district court nonetheless ultimately

concluded that Rath had demonstrated “an acceptable busi-

ness-related basis for the rule,” id. at 24, and that the “anti-

spousal policy was enacted to achieve the interrelated busi-

ness objectives of optimum production and employee per-

formance.” Id. at 20.

Rath urges this court to depart from its strict test

of business necessity and to follow the less demanding

standard applied by the Seventh Circuit in Yuhas v. Lib-

bey-Owens-Ford Co., 562 F.2d 496 (7th Cir. 1977) (Yuhas),

cert. denied, 435 U.S. 934 (1978), and by the district court

in this case. Rath argues that the court in Yuhas cor-

rectly recognized that spousal relationships in the work-

place create situations which are problematic for the em-

ployer and employees—problems of efficiency, produc-

tivity and ease of management. Rath argues that its no-

spouse rule was directed at problems which had occurred

when married couples worked at Rath; these problems

were dual absenteeism, vacation scheduling, supervision,

and employee pressure to hire spouses.

25a

As we have previously stated, Title VII forbids the

use of a facially neutral employment standard which dis-

proportionately excludes a protected class from employ-

ment unless the employer shows that the standard is justi-

fied by business necessity. “[T]he employer must meet

‘the burden of showing that any given requirement [has]

... @ Manifest relation to the employment in question.’ ”

Dothard v. Rawlinson, 433 U.S. at 329, citing Griggs v. Duke

Power Co., 401 U.S. 424, 432 (1971).

[T]he proper standard for determining whether “busi-

ness necessity” justifies a result which has a... dis-

criminatory result is not whether it is justified by

routine business considerations but whether there is a

compelling need for the employer to maintain that

practice and whether the employer can prove there

is no alternative to the challenged practice.

Kirby v. Colony Furniture Co., 613 F.2d at 705 n.6 (em-

phasis in original); see Gilbert v. City of Little Rock, 722

F.2d 1390, 1395 (8th Cir. 1983), cert. denied, 104 S. Ct.

2347 (1984).

We hold that the district court applied the wrong legal

standard in determining whether the no-spouse rule was

justified by business necessity. The district court did not

consider whether there was a compelling need for the no-

spouse rule. In order for Rath to prevail, the problem

12. The standard which this circuit applies in this case is

consistent with the law in the majority of the other circuits.

See Rowe v. Cleveland Pneumatic Co., 690 F.2d 88, 93-94 (6th

Cir. 1982); Jackson v. Seaboard Coastline R.R., 678 F.2d 992,

1016-17 (11th Cir. 1982); Williams v. Colorado Springs School

Dist., 641 F.2d 835, 840-42 (10th Cir. 1981); Kinsey v. First

Regional Sec., Inc., 557 F.2d 830, 837 (D.C. Cir. 1977); Pettway

v. American Cast Iron Pipe Co., 494 F.2d 211, 245-47 (5th Cir.

1974); Robinson v. Lorillard Corp., 444 F.2d 791, 798 (4th Cir.),

cert. denied, 404 U.S. 1006 (1971).

26a

to be addressed by the no-spouse rule must be concrete

and demonstrable, not just “perceived”; and the rule must

be essential to eliminating the problem, not simply rea-

sonable or designed to improve conditions. Jones v. Lee

Way Motor Freight, Inc., 431 F.2d 245, 248 (10th Cir. 1970),

cert. denied, 401 U.S. 954 (1971).

Application of the proper legal standard to the dis-

trict court’s factual findings compels the conclusion that

Rath failed to demonstrate that the no-spouse rule was

justified by business necessity. Rath asserted that dual

absenteeism was a problem when both spouses worked

for Rath. The district court found, however, that from

March 3, 1975, to May 31, 1978, “spouses exhibited a lower

absentee rate than did non-spouses.” EEOC v. Rath Pack-

ing Co., slip op. at 21 (order of Apr. 21, 1981). The district

court noted that Rath was able to point to only one in-

cident of habitual dual absenteeism. The district court

further found that production records between 1975 and

1978 revealed that “daily production was not detrimentally

affected by the minimal dual spouse absenteeism during

this period.” Id. The district court nonetheless held that

“management’s perception in 1973 of a disruptive effect

upon plant operations .. . [was] rationally predicated upon

sound business interests.” Id.

Secondly, Rath asserted that the presence of both

spouses in the work force caused problems in scheduling

vacations. The district court found that “the two most

serious difficulties connected to spousal selection of vaca-

tion time were corrected when the company prohibited

trading [of vacation time] in 1970 and initiated a policy in

1973 requiring all employees to indicate in the order of

seniority their preference when canvassing is undertaken.”

Id. at 22. These two rules eliminated the vacation prob-

27a

lems which had an impact on the efficiency of Rath’s pro-

duction.

The district court, however, felt that the actual sched-

uling of vacations was not the only factor to be con-

sidered, but that employee morale was crucial in the busi-

ness necessity analysis of the problem. The district court

found that “spouses remained dissatisfied with the present

procedure” and that disgruntled fellow workers often ap-

plied for vacation times sought by a less senior spousal

employee in order to prevent a couple from securing a

joint vacation. Id. The district court, however, did not

require Rath to demonstrate how staff morale affected the

safety or efficiency of Rath’s operation. Staff discontent

and reduced staff morale as a result of the scheduling of

spouses’ vacations may not be the basis for the no-spouse

rule unless these problems affect the safety and efficiency

of Rath’s operation.

Rath next asserts that the no-spouse rule was re-

quired in order to avoid problems associated with an

employee’s supervision of his or her spouse. Rath cited

one instance where spousal supervision resulted in com-

plaints of favoritism to and harassment of the supervised

spouse. It is not sufficient that the rule be business-

related; the rule must be essential to safety and efficiency.

Jones v. Lee Way Motor Freight, Inc., 431 F.2d at 249.

There must be no other available nondiscriminatory alter-

native to accomplish the legitimate business purpose.

Dothard v. Rawlinson, 433 U.S. at 329. In this case a

nondiscriminatory alternative existed. The collective bar-

gaining agreement permitted an employee to bid out of

a position where the employee would be supervised by a

spouse. Rath also could have negotiated for the right

to assign employees so that they would not be supervised

by spouses.

28a

The last reason asserted by Rath for the no-spouse

rule is employee pressure to hire spouses. Rath failed

to demonstrate how this pressure resulted in lower pro-

duction or decreased safety. Nor was there any showing

by Rath that the pressure could not have been alleviated

by a rule which did not have a discriminatory impact.

In summary, we hold that Rath failed to establish a

business necessity for the no-spouse rule. Rath faiied to

show that the problems that Rath experienced in ein-

ploying spouses had any demonstrable effect on safety

and efficiency. Workers’ morale, which Rath and the

district court deemed crucial to the business necessity

analysis, cannot justify implementing a discriminatory

policy where the claimed dissatisfaction has not been

shown to have resulted in reduced productivity, decreased

job efficiency, or more dangerous working conditions.

We note further that Rath’s reliance on Yuhas is

misplaced. The Seventh Circuit in Yuhas upheld a no-

spouse rule although the employer was unable to demon-

strate that employment of spouses affected efficiency or

safety. The court held that “[b]Jecause the no-spouse

rule plausibly improves the work environment, and be-

cause it does not penalize women on the basis of their

environmental or genetic background,” the rule was job

related and did not violate Title VII. 562 F.2d at 500.

The court stated however that its decision might have

been different “if plaintiffs had shown that defendant

historically employed more men than women .. . because

it intentionally discriminated against womer [The court

assumed] that the present disparity between men and

women ... was the result of noninvidious factors.” Id.

The standard articulated in Yuhas therefore would not

be applicable to this case because the district court found

29a

Rath intentionally discriminated against women. This

intentional discrimination against women resulted in

Rath’s employees being overwhelmingly male.

Denial of Prejudgment Interest (Cross-appeal)

EEOC argues that the district court erred in denying

prejudgment ‘interest because prejudgment interest, like

backpay, is appropriate in order to promote the make-

whole purpose of Title VII. EEOC further argues that

the district court’s decision, although discretionary, should

be set aside because it was based on erroneous beliefs

and an improper understanding of the law.

Rath argues that the district court did not abuse its

discretion in denying prejudgment interest because there

is no presumption in favor of prejudgment interest and

interest should be denied where its exaction would be

inequitable. Rath further argues that the district court’s

decision may only be set aside if there is no evidence in

the record to support the district court’s decision.

“Prejudgment interest serves at least two purposes:

(1) it helps compensate plaintiffs for the true cost of

money damages they have incurred, (2) where liability

and the amount of damages are fai:iy certain, it promotes

settlement and deters an attempt to benefit unfairly from

the inherent delays of litigation.” General Facilities v.

National Marine Service, 664 F.2d 672, 674 (8th Cir. 1981);

see Behlar v. Smith, 719 F.2d 950, 954 (8th Cir. 1983).

The decision to a vard or deny prejudgment interest will

be upheld unless the district court abuses its discretion.

Earnhardt v. Puerto Rico, 744 F.2d 1, 3 (1st Cir. 1984).

The district court in this case denied prejudgment

interest because of Rath’s precarious financial situation.

The district court also found that (1) the interest rates

30a

which EEOC requested were rates which no member of

the plaintiff class could reasonably have obtained had

she possessed the funds, (2) the delay in determining

Rath’s backpay liability made an assessment of prejudg-

ment interest inequitable and (3) an award of prejudgment

interest would have required additional sacrifices by Rath

employees. Report and Recommendation of Special Mas-

ter, Sept. 30, 1983, at 41-43.

We hold that the district court did not abuse its

discretion in denying prejudgment interest. The district

court properly weighed the interest of the victims in make-

whole relief against the financial impact of a prejudgment

interest award in excess of one million dollars on Rath

and its owner-employees.'* The delay (although the fault

of neither party) and the uncertainty in determining

Rath’s backpay liability, on which the interest is to be

calculated, were also proper factors for the district court

to consider. Heiar v. Crawford County, 746 F.2d 1190,

1201 (7th Cir. 1984), cert. denied, 105 S. Ct. 3500 (1985).

We may not substitute our judgment for that of the

district court in reconciling these competing interest.'™

Domingo v. New England Fish Co., 727 F.2d 1429, 1446

(9th Cir.), modified on other grounds, 742 F.2d 520 (1984).

13. EEOC indicates that prejudgment interest on the back-

pay actually awarded amounts to $988,272.00. This figure does

not include interest on the additional backpay to be awarded

as a result of our decision expanding the relevant labor pool

and holding that the no-spouse rule was not justified by busi-

ness necessity.

14. The district court found that the interest rates requested

by EEOC were rates which “no female employee could have

reasonably obtained had she possessed the funds.” We do not

believe that a district court may deny prejudgment interest

because the plaintiff requests interest at a rate which the court

finds unreasonable. The district court may grant prejudgment

interest at the rate which it determines to be fair and equitable.

(Continued on following page)

3la

Denial of Retroactive Seniority (Cross-appeal)

The district court denied retroactive seniority because

the “complexity of the problems accompanying retroactive

seniority counsel against this particular remedy.” The

district court rejected the special master’s finding that the

problems envisioned by Rath—a delay in maximum pro-

ductivity until training is completed and an undefined

effect on the relationship of the workers—did not over-

come the presumption in favor of retroactive seniority.

EEOC argues that the district court erred in denying

retroactive seniority. Further, EEOC argues that diminu-

tion of seniority expectations of incumbent employees is

clearly a usual and foreseeable impact of hiring claimants

and giving them seniority. EEOC argues that this is not

the type of unusual adverse impact contemplated by

Franks v. Bowman Transportation Co., 424 U.S. at 774-75,

justifying a denial of seniority.

Rath argues that the district court did not err because

retroactive seniority would result in bumping of long time

employees to less desirable jobs, increase the pressure and

strain on employees, lower employee morale, and create

labor management problems.

In Franks v. Bowman Transportation Co., the Supreme

Court, in discussing retroactive seniority in Title VII cases,

stated:

Footnote continued—

EEOC asserts that the rates used in computing the prejudgment

interest were the IRS prime interest rates during the 1973 to

1980 period. We note that prejudgment interest awards based

on the prime interest rates have been permitted by other courts.

E.g., EEOC v. Wooster Brush Co., 727 F.2d 566 (6th Cir. 1984);

EEOC v. Pacific Press Publishing Ass’n, 482 F. Supp. 1291, 1319-

20 (N.D. Cal. 1979), aff'd, 676 F.2d 1271 (9th Cir. 1982).

32a

[I]n exercising their equitable powers, district courts

should take as their starting point the presumption in

favor of rightful-place seniority relief, and proceed

with further legal analysis from that point; and...

such relief may not be denied on the abstract basis

of adverse impact upon interests of other employees

but rather only on the basis of unusual adverse impact

arising from facts and circumstances that would not

be generally found in Title VII cases.

Id. at 779 n.41 (citation omitted).

The Court further stated: ‘We find untenable the

conclusion that this form of relief may be denied merely

because the interest of other employees may thereby be

affected.” Id. at 774-76. “‘Adequate protection of .. .

rights under Title VII may necessitate .. . some adjustment

of the rights of [non-victim] employees. The Court must

be free to deal equitably with conflicting interests of [non-

victim] employees in order to shape remedies that will

most effectively protect and address the rights of the .

victims of discrimination.’” Id. at 775-76 n.35 (citation

omitted). Factors “such as the number of victims, the

number of non-victim employees affected and the alterna-

tives available to them and the economic circumstances

of the industry,” International Brotherhood of Teamsters

v. United States, 431 U.S. 324, 376 n.62 (1977) (citation

omitted), should be considered by the district court in

determining whether to grant retroactive seniority.

In striking this equitable balance between the interests

of the victims of discrimination and incumbent employees,

courts have primarily been concerned that retroactive

seniority relief not result in the discharge of “innocent”

incumbent employees. In Romasanta v. United Airlines,

Inc., 717 F.2d 1140, 1147-56 (7th Cir. 1983), the Seventh

33a

Circuit denied competitive retroactive seniority to a class

of 1400 former employees. The court found that an award

of competitive retroactive seniority would result in the

discharge of hundreds of incumbent employees because

there was a low attrition rate and a low growth rate in

the company. Id.

The Ninth Circuit in Moore v. City of San Jose, 615

F.2d 1265 (9th Cir. 1980), stated that some effects on in-

cumbent employees are justified to achieve the goals of

Title VII. Id. at 1271. The court further stated that the

burden is on the employer to demonstrate some unusual

adverse impact which would justify the denial of retro-

active seniority. Id. The court noted that the award of

retroactive seniority would not result in the discharge of

incumbent employees and further that the small number

of victims would not affect the seniority-based benefits of

incumbent employees.

This court in Briseno v. Central Technical Community

College Area, 739 F.2d at 348, held that the relief granted

a Title VII plaintiff may be limited so that innocent em-

ployees will not be displaced. This court nonetheless rec-

ognized that a plaintiff is entitled to be placed in a com-

parable position with his or her seniority and other rights

to be determined as of the date he or she was denied em-

ployment. Where no vacancy exists, the plaintiff is en-

titled to receive monthly payments equal to the difference

between what plaintiff would receive in a comparable

position and what the plaintiff earned in mitigation of

damages. These payments should continue until the plain-

tiff is hired by the employer. Id.

In the instant case, Rath did not allege nor did the

district court find that the grant of retroactive seniority

would result in the discharge of employees. Rath as-.

34a

serted that the imposition of retroactive seniority would

result in the bumping of long time employees to less de-

sirable jobs, lower employee morale, labor-management

problems, and pressure and strain on employees. These

consequences can be expected in almost all Title VII cases.

Retroactive seniority, therefore, could never be imposed if

such factors are sufficient to justify the denial of retro-

active seniority.

We hold that the district court abused its discretion

in denying retroactive seniority. Imposition of retroactive

seniority is required in the present case in order to make

the identified victims of the discrimination whole, and the

district court offers no compelling reason for the denial of

retroactive seniority.

Labor Force Statistics (Cross-appeal)

EEOC argues that the district court erred in refusing

to use general population stastics to determine the number

of women Rath would have hired absent discrimination

and in determining the number of persons entitled to back-

pay. The district court used applicant flow data. EEOC

argues that the qualifications for the positions at Rath

are those which the general population possesses or can

readily acquire. EEOC further argues that the number

of women workers in the categories of nonfarm laborers

and operatives in nondurable goods manufacturing and

the number of women in Rath’s applicant pool were de-

pressed because of Rath’s discrimination. EEOC argues

that there was overwhelming evidence that women, in

greater numbers than represented in these groups, were

intrested in employment at Rath because the pay was good

and the plant was close to their homes.

Rath argues that the district court correctly required

EEOC to define the available qualified work force in

i ni aie. ES

35a

terms of those in the county who would actually be in-

terested in jobs at Rath. Rath also argues that the appli-

cant flow data is the best indicator of the extent of an

employer’s discrimination.

The district court in its opinion on liability found

that “general population or civilian work force data” was

appropriate to determine whether Rath discriminated

agairist women and the number of persons affected by the

discrimination because “entry level or unskilled positions

was an issue and the necessary qualifications are those

that many people possess or can readily acquire.” EEOC

v. Rath Packing Co., slip op. at 6 (order of Apr. 22, 1981).

In its later clarification order of December 1982, the district

court held, however, that “general work force statistics

have no probative value in determining whether [Rath’s]

... hiring practices adversely impacted against females.”

The district court reasoned that many persons engaged in

jobs in nonmanufacturing industries would not be in-

terested in employment at Rath because of the nature

of the work. The district court held that the general work

force statistics should not be used because in these sta-

tistics the number of women in nonmanufacturing indus-

tries was not separated from the number of women in

nondurable goods manufacturing. The district court there-

fore relied on Rath’s applicant flow data in determining

liability and backpay.

A comparison of general population statistics with an

employer’s relevant work force is generally appropriate

where the jobs in question do not require special qual-

ifications. Hazelwood School District v. United States, 433

U.S. 299, 308 n.13 (1977); International Brotherhood of

Teamsters v. United States, 431 U.S. at 339-40 n.20; EEOC

v. Radiator Specialty, 610 F.2d 178, 184 (4th Cir. 1979).

36a

The burden is on the defendant to establish that the posi-

tions in question require special qualifications which are

not possessed or readily acquired by the general population.

EEOC v. Radiator Specialty, 610 F.2d at 184. The district

court, however, is afforded a great deal of discretion in

determining the relevant labor market. Markey v. Ten-

neco Oil Co., 635 F.2d 497, 499 (5th Cir. 1981).

Rath failed to establish that the positions in question

required special qualifications not possessed or readily ac-

quired by the general population. As previously discussed,

Rath could not identify any criteria it used in selecting

employees or any common qualifications or skills that its

employees possessed. Thus general population statistics

were appropriate in determining the extent of Rath’s dis-

crimination against women and the amount of backpay.

Hazelwood School District v. United States, 433 U.S. at 308

n.13; Kinsey v. First Regional Securities, Inc., 557 F.2d 830,

839 (D.C. Cir. 1977); Kaplan v. International Alliance of

Theatrical & Stage Employees, 525 F.2d 1354, 1358 (9th

Cir. 1975); Parham v. Southwestern Bell Telephone Co.,

433 F.2d 421, 426 (8th Cir. 1970).

We hold that the district court erred in finding that

the percentage of women employed in the nondurable

goods manufacturing category was the appropriate popu-

lation base because only these women would be interested

in jobs at Rath. This finding rests on a faulty premise,

that female representation in this category is a true in-

dicator of women’s interest in positions at Rath. The

district court failed to consider the impact that Rath’s dis-

criminatory practices had on the size of this group. In

1978, 220 or approximately 45 percent of the women in

the nondurable goods manufacturing category were em-

ployed by Rath. Rath’s refusal to hire women, there-

37a

fore, kept the number of women workers in this category

lower than it would have been absent discrimination. If

this category is used rather than general work force sta-

tistics in determining Rath’s liability, Rath would benefit

from its prior wrongful discrimination.

The use of Rath’s applicant flow data is likewise in-

appropriate for the same reasons. Although applicant flow

data is often the best indicator of the extent of an em-

ployer’s discrimination, this is not the case where persons

have been deterred from applying because of the em-

ployer’s discriminatory practices.

The effects of 2.’ the injuries suffered from discrim-

inatory employment practices are not always confined

to those who are expressly denied a requested em-

ployment opportunity. A consistently enforced dis-

criminatory policy can surely deter job applications

from those who are aware of it and are unwilling to

subject themselves to the humiliation of explicit and

certain rejection.... The... message can be com-

municated by [the employer’s] consistent discrimina-

tory treatment of actual applicants ... and even by

the .. . composition .. . of [the] work force... .

International Brotherhood of Teamsters v. United States,

431 U.S. at 365.

This court has also recognized that “(t]he application

process might itself not adequately reflect the actual po-

tential applicant pool, since otherwise qualified people

might be discouraged from applying because of a self-

recognized inability to meet the very standards challenged

as being discriminatory.” Donnell v. General Motors Corp.,

576 F.2d 1292, 1299 (8th Cir. 1978) citing Dothard v. Raw-

linson, 433 U.S. at 330, cert. denied, 459 U.S. 844 (1982).

38a

In this case Rath’s discriminatory practices deterred

women from applying for employment. See Donnell v.

General Motors Corp., 576 F.2d at 1298. Rath was one

of a few large employers in a small community of 1500

and its employment record was known in the community.

There was uncontradicted testimony that women did not

believe they would be hired at Rath. This perception

was consistent with Rath’s hiring practices. Only seven

of the 95 women who applied from 1973-78 were hired;

157 of the 433 male applicants were hired. Ninety-five

percent of Rath’s work force was male. The use of Rath’s

applicant flow data to determine Rath’s liability would not

give an accurate picture of the number of women affected

by Rath’s discrimination.

On remand, the district court should utilize general

work force statistics to determine Rath’s liability and to

compute the backpay award. The district court must also

afford nonapplicants the opportunity to prove that they

were deterred from applying by Rath’s discriminatory

practices. This is not an easy burden for the nonapplicant.

International Brotherhood of Teamsters v. United States,

431 US. at 367-68.

Inasmuch as the purpose of the nonapplicant’s burden

of proof will be to establish that [her] status is sim-

ilar to that of the applicant, [she] must bear the bur-

den of coming forward with the basic information

about [her] qualifications that [she] would have pre-

sented in an application .... [T]he burden then will

be on the employer to show that the nonapplicant was

nevertheless not a victim of discrimination.

Id. at 369 n.53.

Ps le

39a

Costs (Cross-appeal)

EEOC argues that the district court abused its dis-

cretion in allocating 50 percent of the costs to each party.

Rath argues that both parties were partially successful and

therefore the district court was correct in allocating the

costs equally.

Fed. R. Civ. P. 54(d) prowides that costs are to be

allowed as a matter of course to the prevailing party un-

less the court otherwise directs. “A party who has ob-

tained some relief usually will be considered the ‘prevail-

ing party’. . . even if it has not succeeded on all of its

claims.” Superturf, Inc. v. Monsanto Co., 660 F.2d 1275,

1287 (8th Cir. 1981); see Coyne Delany Co. v. Capital De-

velopment Board, 717 F.2d 385, 390 (7th Cir. 1983).

“«fT]}he prevailing party is prima facie entitled to costs

and it is incumbent upon the losing party to overcome

that presumption ... [because] denial of costs is in the

nature of a penalty for some defection . . . in the course of

the litigation.”” Walters v. Roadway Express, Inc., 557

F.2d 521, 526 (5th Cir. 1977) (citation omitted); see Chi-

cago Sugar Co. v. American Sugar Refining Co., 176 F.2d

1 (7th Cir. 1949), cert. denied, 338 U.S. 948 (1950).

EEOC is clearly the prevailing party in this lawsuit.

EEOC was successful in the district court on two of its

three claims: the disparate impact claim based on sub-

jective hiring procedures and the disparate treatment

claims. Our reversal of the district court on the third

claim based on the no-spouse rule means that EEOC suc-

ceeded on all three claims. Neither Rath nor the district

court identified any misconduct by EEOC which would

warrant a denial of costs. Chicago Sugar Co. v. American

Sugar Refinery Co., 176 F.2d at 11. We therefore hold

that EEOC should be awarded full costs. We need not

40a

decide whether the district court’s order equally dividing

costs based on EEOC’s partial success at the trial level was

an abuse of discretion.

Accordingly, the judgment of the district court is

affirmed in part and reversed in part, and this case is

remanded for further proceedings consistent with this

opinion.

ROSS, Circuit Judge, concurring in part and dissenting

in part.

I must respectfully disagree with the majority’s view

that the district judge abused his discretion in declining

to award retroactive competitive seniority to the EEOC.

Moreover, I do not think the district judge erred in his

definition of the relevant available labor pool for purposes

of determining liability and computing backpay. In all

other respects, I concur in the majority’s opinion.

Denial of Retroactive Seniority

I do not agree that the district judge abused his

discretion in denying retroactive competitive seniority.

“(T]he statutory scheme of Title VII ‘implicitly recognizes

that there may be cases calling for one remedy but not

another, and * * * these choices are, of course, left in

the first instance to the district courts.” Franks v. Bow-

man Transportation Co., 424 U.S. 747, 779 (1976).

As the majority notes, Rath’s opposition to full retro-

active seniority is based among other concerns on the

prospect that long-term employees will be bumped to

less desirable jobs. We recognized in Briseno v. Central

Technical, Community College Area, 739 F.2d 344, 348

(8th Cir. 1984), cited by the majority, that the choice

ee ee ee eee ee

4la

of remedies discussed in Franks permits a district court

to limit relief so that innocent incumbent employees will

not be displaced. In Moore v. City of San Jose, 615 F.2d

1265, 1272 (9th Cir. 1980), also cited by the majority,

the Ninth Circuit noted that retroactive seniority in the

circumstances of that case would cause no existing em-

ployees to lose their jobs, and “the number of returning

employees was small enough that their impact on the

seniority-based benefits of incumbent employees would

be minimal.”

Thus, while I am not opposed to an award of non-

competitive “benefit” seniority’ to appropriately indenti-

fied victims of Rath’s discriminatory policies, I would

affirm the district court’s denial of competitive seniority

in this case. In light of the number of persons now right-

fully entitled to a place in Rath’s work force as the result

of the company’s years of discriminatory hiring, as well

as Rath’s current financial status and the certainty that

incumbents will be bumped to lower positions, I consider

the district court’s adjustment of the remedy to account

for incumbent employees appropriate. The retention of

a full work force by a company which has experienced

“horrendous losses” since 1977 and which is presently

1. “Benefit’-type seniority refers to the use of a

worker’s earned seniority credits in computing his level of

economic “fringe benefits.” Examples of such benefits are

pensions, paid vacation time, and unemployment insurance.

“Competitive”-type seniority refers to the use of those same

earned credits in determining his right, relative to other

workers, to job-related “rights” that cannot be supplied

equally to any two employees. Examples can range from

the worker’s right to keep his job while someone else is

laid off, to his right to a place in the punch-out line ahead

of another employee at the end of a workday.

Franks v. Bowman Transp. Co., 424 U.S. 747, 782 n.1 (1976)

(Poweil, J. concurring in part and dissenting in part).

42a

in bankruptcy seems to me exceedingly unlikely. See

Romasanta v. United Air Lines, Inc., 717 F.2d 1140, 1147-

56 (7th Cir. 1983), cert. denied, 104 S.Ct. 1928 (1984)

(declining to award full, retroactive competitive seniority

in light of the adverse impact on a substantial number

of incumbent employees and certain economic conditions

adversely affecting the defendant company’s potential for

growth).

Labor Force Statistics

In Green v. Missouri Pacific Railroad Co., 523 F.2d

1290, 1293-94 (8th Cir. 1975), we recognized that gener-

ally three kinds of statistical comparisons may be used

to establish whether a challenged employment practice

has a disproportionate impact on a protected group in

violation of Title VII. Two of these procedures involve

resort to general population figures. The first examines

whether “[women] as a class (or at least [women] in a

specified geographical area) are excluded by the employ-

ment practice in question at a substantially higher rate

than [men].” Id. at i293. Another involves comparing

the composition of the employer’s work force with the

composition of the population at large. Id. at 1294. The

procedure which does not rely on general population data

and which the district court used “focuses on a compar-

ison of the percentage of [male and female] job applicants

actually excluded by the employment practice * * *.” Id.

The district court considered the EEOC’s evidence

in support of its reliance on general population statistics

defective:

While the Court believes that general population

or similar work force data may be appropriate under

43a

certain circumstances, the Court is of the opinion

that the failure to break the work force statistics for

Louisia [sic] County into the job categories of “du-

rable goods manufacturing” or “non-manufacturing”

industries, eliminates any substantive probative value

the statistics on the general population may have had.

Because of the nature of the jobs offered by the

Rath plant, the Court is of the opinion that many

persons engaged in jobs in non-manufacturing indus-

tries would not be attracted to that type of work,

although it may also be questionable whether this

type of work would be attractive to many in the

durable goods manufacturing. Such statistics would

have had more validity than the general population

figures.

I agree with the district court’s analysis. I cannot

accept the unsubstantiated premise advanced by the EEOC

that the entire female component of the Louisa County,

Iowa work force would have been interested in or qual-

ified to perform the hog slaughtering and processing jobs

at Rath. See New York City Transit Authority v. Beazer,

440 U.S. 568, 586 n.29 (1979):

Although “a statistical showing of disproportion-

ate impact [need not] always be based on an analysis

of the characteristics of actual applicants,’ Dothard

v. Rawlinson, 433 U.S. 321, 330, “evidence showing

that the figures for the general population might not

’ accurately reflect the pool of qualified job applicants”

undermines the significance of such [general popula-

tion] figures. Teamsters v. United States, supra, at

340 n.20.

~~ a

aes eS - o

44a

I therefore consider the district court’s use of applicant

flow data appropriate.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS,

EIGHTH CIRCUIT.

ib

APPENDIX B

(Filed February 10, 1984)

IN THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF IOWA

DAVENPORT DIVISION

EQUAL EMPLOYMENT OPPOR- )

TUNITY COMMISSION, )

Plaintiff, )

vs. ) Civil No. 77-57-D

THE RATH PACKING COM- )

PANY, et al., )

Defendants. )

RULING ON OBJECTIONS TO REPORT AND

RECOMMENDATION OF SPECIAL MASTER

On July 8, 1982 this Court, pursuant to Rule 53 of

the Federal Rules of Civil Procedure, appointed A. V. Hass

of Chariton, Iowa Special Master in the above-entitled

action. The directions to the Special Master are set out

in that Order. On September 30, 1983 the Special Master

filed his Report and Recommendation to which both par-

ties have filed objections. After having examined the Re-

port and Recommendation and the papers filed in connec-

tion with the objections and resistances, and after having

examined the file in the case the Court is prepared to.

consider the Report and Recommendation and the objec-

tions thereto.

OBJECTIONS OF RATH PACKING COMPANY

Rath Packing Company has made twelve objections

to the Report of the Special Master which will be con-

sidered in order.

2b

1. Rath objects to the finding and conclusion in para-

graph 31 of the Report insofar as “rounding” is accepted to

find the number of positions denied to females in each

year. Rath claims that rounding gives significance to a

fractional portion of an employment position when there

is no such thing. Rath claims that the impact of this

rounding procedure resulted in an overstatement of $60,439

in the backpay award.

The parties had agreed that the formula proposed in

Hameed v. International Association of Iron Workers, 637

F. 2d 506 (8th Cir. 1980) should be adopted for the com-

putation of backpay. The Court agrees with the plaintiff

that the formula approach is an approximation only and

that Rath is now attempting to add certain realities to

the formula approach. The Court is of the opinion that

the Special Master properly applied the formula approach

agreed to by the parties.

Rath’s first objection to the Special Master’s Report

is overruled.

2. Rath objects to the findings of the Special Master

in paragraph 35 because he did not require adjustments

for discrepancies in computations of actual wages earned

by female class members. Paragraph 35 refers to some

discrepancies in the evidence relating to gross earnings

of unhired females. He concluded that “authoritative al-

lowance for imprecision would appear to cover all such

discrepancies.” The Court agrees. In actions like this

it is impossible to arrive at an exact figure. There is no

indication that the omission of the wages actually earned

is so substantial that it would so distort the computation

that an injustice would result. In addition, as it is the

Court’s intention to round off the computation of backpay

to an even one million dollars, this procedure more than

3b

offsets any discrepancy in the gross earnings of unhired

females.

Rath’s second objection is overruled.

3. Rath objects to the fact that the Special Master

included Rath employees’ benefits for dental, vision and

prescriptions in connection with the backpay award. Rath

claims that as these benefits are paid on a claim-made

basis rather than as part of an insurance premium the

amount of such benefits is speculative. The Court be-

lieves that the use of the average cost to employees who

elected that coverage is a fair way to arrive at the value

of those benefits. The figures for the monthly expense

were properly included as part of lost wages.

Rath’s objection number three is overruled.

4. In paragraph 4 Rath objects to the award of any

backpay. This objection is based upon Rath’s precarious

financial condition and the claim that this backpay award

could put the jobs of other employees at locations other

than Columbus Junction in jeopardy. Since the filing of

the objection, Rath has entered into a Chapter XI bank-

ruptcy proceeding. The effect of this backpay award can

now be taken into consideration by the bankruptcy court.

5. Rath’s objection number 5 is related to a state-

ment in paragraph 5 of the Report that Rath is uncritical

of EEOC’s calculation except in instances the Special Mas-

ter referred too. This objection is related to the objec-

tions stated in paragraphs 1 and 3, which objections have

been now been overruled by the Court. In addition Rath

is also critical of the Government’s failure to carry its bur-

den of showing in the record that the applicants in the

class were interested in employment at Rath throughout

+b

the period during which their application contributed to

the size of the backpay award. The Court finds that there

is adequate support for the Special Master’s findings in

paragraph 27 and 30.

6. In paragraph J of the Special Master’s Recom-

mended Order and Decree he recommends the entry of a

Judgment in favor of EEOC in the amount of $1,015,901

with interest at the rate of 10% from the date of his re-

port. He recommends that Rath be permitted to pay

the Judgment in five equal installments of principal with

accrued interest to date of payment and sets the date of

the payment of the first installment as October 1, 1984.

Paragraph J provides that in the event a required

installment with interest is not paid, the entire unpaid

balance will accelerate at the option of-the plaintiff. Rath

argues that post-judgment interest should run from the

date of the Judgment and not from the date of the Special

Master Report. It also objects to the acceleration of the

unpaid balance upon default at the option of the plaintiff.

The Court is of the opinion that post-judgment interest

should commence with the entry of Judgment which should

coincide with the date this Ruling is filed. The Court

recognizes the financial stress to which Rath is currently

subjected and that it is being reorganized under Chapter 11

of the Federal Bankruptcy Act. In spite of this situation,

the Court believes that this judgment-creditor should be

entitled to the same rights as any other judgment-creditor.

The Special Master’s Report accommodates Rath by allow-

ing payment of the Judgment over a five-year period.

The Court believes that Rath should be required to keep

the annual payments current. If it defaults on those pay-

ments, the plaintiff here should have the right to declare

the entire unpaid balance with accrued interest due.

5b

As the Court has earlier indicated, any award of

backpay is imprecise and the use of the Hameed formula

benefits the whole class rather than the individuals who

might otherwise have been employed. In recognition

of this fact the Court will make a minor alteration in

the backpay award by rounding it off to an even $1,000,000.

Therefore, paragraph J of the Special Master’s Rec-

ommended Order and Decree will be approved as herein

amended by reducing the Judgment to $1,000,000 with

interest at the rate of 10% from the date of entry of

Judgment. The first installment with interest will be

due one year from the date of the entry of that Judgment.

In all other respects Rath’s objections to paragraph J will

be overruled.

7. Rath objects to the Special Master’s finding of

apparent agreement that tenure is equal between males

and females for that determination. The Special Master

makes reference to Bureau of Labor Statistics of the De-

partment of Labor that a typical job tenure of women

is approximately 75% of that of men. The existence of

that statistic is not binding on the Special Master, and

in the absence of evidence, showing its applicability to

the local situation, the Court does not believe that the

Special Master erred in treating the tenure of women

and men as the same in this particular instance.

8. Rath objects to the failure of the Special Master

to include in the Recommended Decree any recognition

of this Court’s finding that the defendants’ no-spouse

hiring rule was legal. The Court believes that it would

be proper to include such a provision in the Judgment

and Decree and will do so.

9. Rath argues that if a hiring quota is going to be

a part of this Court’s Order it should be recognized that

6b

it may be impossible to obtain enough qualified female

applicants at Columbus Junction to reach a 257% female

work force. The Court believes that it would be appro-

priate to allow Rath, if the Columbus Junction plant re-

opens and if it fails to reach a 25% female work force,

to show that it was impossible to do so (if proceedings

are instituted to enforce this Order and Decree).

10. The Court agrees with Rath’s objection to the

finding in paragraphs 53 and 54 and the inclusion of para-

graph H in the enclosed decree as it relates to retroactive

seniority. The Court believes that adequate remedy is

provided by the backpay award and the complexity of

the problems accompanying retroactive seniority council

against this particular remedy. The Court will eliminate

the last sentence of paragraph H relating to retroactive

seniority.

11. Rath’s objection to paragraph M is renderec moot

by this Court’s decision to eliminate retroactive seniority

as a remedy in the decree.

12. Rath objects to the Special Master’s finding in

paragraph 32 that the affirmative defense of limitations

under 614.1(8) Code of Iowa has been abandoned. The

Court is of the opinion that this affirmative defense was,

if not specifically . bandoned, abandoned in effect by fail-

ure to urge it at appropriate times during the course of

these proceedings.

Rath’s objection number 12 is therefore overruled.

OBJECTION OF EEOC

The Court overrules all of EEOC’s objections. The

Court does not believe prejudgment interest would be

proper in view of Rath’s precarious financial situation.

7b

In the Court’s opinion an award of $200,000 due each year

for five years is an adequate award. The Court has

retained jurisdiction for five years and if reporting re-

quirements suggested by EEOC become necessary, they

can be considered at that time.

IT IS THEREFORE ORDERED that the Report and

Recommendation of Special Master is approved and

adopted, except as herein modified.

IT IS FURTHER ORDERED that the Clerk of the

District Court shall enter Judgment in favor of the plain-

tiff and against the defendant as follows:

IT IS THEREFORE ORDERED, ADJUDGED AND

DECREED:

A. That the word “defendant” herein is intended to

describe and does describe The Rath Packing Company

and its agents, officers and employees having direct or

indirect responsibility for the operation of Rath’s Colum-

bus Junction plant and the hiring of employees at said

location.

B. That the Court shall retain supervisory jurisdic-

tion over this matter and its parties for a period of five

years following the entry of the decree unless sooner

terminated voluntarily by it or for cause shown. Any

party shall have the right to request the Court’s inter-

vention for reasons shown upon timely notice to the

other party or parties affected.

C. That during the period that the Court retains

supervisory jurisdiction over the case and its parties, de-

fendant shall maintain the following records referable to

its Columbus Junction operations:

(1) All applications for employment;

8b

(2) All employment tests, interview notes, reference

checks and investigative reports on applicants;

(3) An applicant-flow log, kept separate from appli-

cations, showing the name of each applicant, the applicant’s

sex and the date of the application;

(4) All advertisements for the hiring of employees;

(5) All personnel files of employees working for

defendant at any time during this period;

(6) All other documents which relate to defendant’s

procedures and criteria for new hires; and

(7) All documents which relate to the discharge of

any female employee.

D. That the defendant is perpetually enjoined from

engaging in any act or maintaining any policy that has

the purpose or effect of discriminating, on the basis of

sex, in the hiring of employees at its Columbus Junction

facility, except as herein expressly authorized. By decision

of the Court Rath’s no spouse hiring rule has been approved

and therefore expressly authorized.

E. That the defendant, within 60 days after the entry

of this decree or within 60 days after reopening its Co-

lumbus Junction plant, whichever is later, shall develop,

file and serve upon the other parties objective selection

procedures which it has adopted for the hiring of new

employees there. Those procedures which shall not dis-

criminate against prospective female applicants shall be-

come effective only after the eligible females listed in

Appendix A attached heretc have either been hired or

have declined an offer of employment or have been found

disqualified.

9b

F. In the event plaintiff believes that defendant’s

selection procedures and criteria are not being followed

by defendant or have need of amendment to carry out

better the intent of this Decree at any time during the

period the Court retains jurisdiction over this matter, the

plaintiff shall notify the defendant in writing of the facts

upon which it relies and request corrective measures.

Within 30 days of the defendant’s reply, the plaintiff shall

notify the defendant in writing of either the plaintiff’s

acceptance of the defendant’s position or the reason said

position is unacceptable and, if applicable, any revised

corrective measures. If the defendant does not take the

action requested by the plaintiff within ten days after the

plaintiff’s notification, the parties will submit their re-

spective positions to the Court for resolution.

G. That nothing herein contained is intended to

interfere with the orderly and preferential recall of those

persons who were employed at Columbus Junction when

it closed on January 24, 1983.

H. That after reopening its Columbus Junction plant

and until those physically and mentally able females listed

in Appendix A have been employed or have declined em-

ployment when offered, the defendant shall hire one quali-

fied female production worker at said plant from among

those listed in Appendix A for each male production

worker hire there after said reopening. Offers to hire

will be made in the order in which the names of females

appear in Appendix A.

I. When the names of those in Appendix A have been

exhausted because of physical or mental disqualification,

acceptance of employment or its refusal defendant shall

thereafter hire not less than two females from among the

10b

female applicants then qualified under its adopted selec-

tion procedures for every three male production workers

hired unt‘! the percentage of females is at least 25% of

the production work force at Columbus Junction on or

before the expiration of five years after the date hereof.

That percentage, within reasonable limits, shall be main-

tained thereafter. If proceedings are instituted to enforce

this provision, Rath may attempt to prove that it was not

reasonably possible for Rath to comply with this provision.

J. That judgment for the use of the class members

shall be entered against The Rath Packing Company in

favor of Equal Opportunity Employment Commission for

the sum of $1,000,000 with interest thereon at the rate of

10% per annum from the date hereof. Said judgment and

interest, unless otherwise settled, may be paid by the

judgment debtor in five equal installments of principal

together with accrued interest to date of payment, the first

such installment with interest to mature one year from

the date this Judgment is filed, and subsequent install-

ments with interest to mature annually thereafter. Fail-

ure to meet a required installment with interest will ac-

celerate the unpaid balance in :.'! together with the

accruing interest at the option of the plaintiff.

K. That under the supervision of the Court, EEOC

shall formulate a plan for disbursement of the judgment

proceeds for the Court’s approval, it shall give written

notice to the members of the class entitled thereto that

they must claim their respective share of said proceeds

within 30 days after said notice given or forfeit her par-

ticipation therein, shall attend to the proper distribution

of said proceeds among class members and, upon their ac-

ceptance, obtain releases which will protect the defendant

EE

11b

from further liability to a class member thus paid. No

class member shall receive more than her actual loss of

earnings plus post-judgment interest thereon.

L. That no female shall be knowingly retaliated

against by defendant because of her participation in this

litigation or any of its benefits.

M. That the petition should be dismissed as against

the defendant District Local 431 Amalgamated Meatcutters

and Butcher Workmen of North America, AFL-CIO.

N. That the costs of the action should be paid by

the parties in the following percentages: Plaintiff, 50%,

and The Rath Packing Company, 50%.

Signed this ........ day of February, 1984.

/s/ W.C. Stuart

W. C. Stuart, Chief Judge

Southern District of Iowa

le

APPENDIX C

(Filed September 30, 1983)

IN THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF IOWA

DAVENPORT DIVISION

EQUAL EMPLOYMENT OP-

PORTUNITY COMMISSION,

Plaintiff,

vs. Civil No. 77-57-D

THE RATH PACKING COMPANY

and DISTRICT LOCAL 431

AMALGAMATED MEATCUT-

TERS AND BUTCHER WORK-

MEN OF NORTH AMERICA,

AFL-CIO,

Nee Nee Ne eee es Ne

Defendants.

REPORT AND RECOMMENDATION

OF SPECIAL MASTER

PRELIMINARY STATEMENT

1. Mary Turner, an unhired applicant for work at the

hog slaughtering plant owned and operated by The Rath

Packing Company (Rath) at Columbus Junction, Iowa,

wrote a letter to the Equal Employment Opportunity

Commission (EEOC) on December 12, 1975, which was

received on December 15, 1975. She claimed in her letter

that, because of their sex, she and other females seeking

employment by Rath were victims of discrimination. The

charge was processed through EEOC channels, conciliation

failed and notice of such failure was served upon Rath.

2c

2. In this action brought by EEOC on September 1,

1977, against Rath and District Local 431 Amalgamated

Meatcutters and Butchers Workmen of North America,

AFL-CIO (Union), plaintiff alleged, in reliance upon

Section 706(f)(1),(3) and (g) of Title VII of the Civil

Rights Act of 1964, as amended, 42 U.S.C. 2000e, et seq.,

that Rath had violated Section 703(a) of that Title.

3. The unlawful practices which EEOC perceived as

being within the scope of the Complaint were Rath’s failure

to hire qualified females only because of their sex and

its maintenance of a “no-spouse” rule after August 1, 1973.

4. On April 24, 1978, disposition of the case was

bifurcated to separate the issue of liability from that of

relief.

5. The Rath facility at Columbus Junction was closed

between June 15, 1978, and September, 1979. Employ-

ment applications after February 15, 1978, until October,

1979, were destroyed by Rath about when the plant re-

opened.

6. On September 12, 1979, the Union’s motion for

partial summary judgment on the liability issue was sus-

tained. It was removed from that phase of the case but

its participation in any relief hearing was ordered.

7. On February 13, 1980, Rath denied the allegations

of the Complaint generally. It also raised an affirmative

defense not argued on brief that claims for unpaid wages

antedating September 15, 1975, were barred by Section

614.1(8), Code of Iowa, 1979, which requires actions for

wages to be commenced within two years after the cause

accrued.

8. Trial was had to the Court in July, 1980. Evi-

dence was presented concerning Rath’s specific failure

3c

to employ Nancy Conaway, Doris O’Connor, Mary Turner,

Christine Hedrick, Louise MacEachern, Janice Stoneking

and Linda Crumly. Statistical evidence bearing on the

issues was also presented. The record was supplemented

thereafter and Post Trial briefs were furnished.

Memorandum Opinion and Order were filed on

April 22, 1981, in which it was found that EEOC had made

out a prima facie case of discriminatory impact based

upon applicant flow data beginning January 1, 1973, and

that it was not successfully rebutted by Rath generally.

Rath’s no-spouse rule, however, was found to be justified

by business necessity. It was determined also that Doris

O’Connor, who applied on November 16, 1976, and again

in 1979 but wasn’t hired was a victim of actual discrim-

ination. Nancy Conaway, an employee’s spouse who was

eligible between July 27, 1973, and August 1, 1973, and

Louise MacEachern, an employee’s spouse who was eligible

from 1966 until August 1, 1973, were also found to be

victims of actual discrimination. Further, Rath did not

establish that any special qualifications were required

for entry jobs at its Columbus Junction plant.

10. Partial summary judgment on the issue of lia-

bility was directed in accordance with the following:

“IT IS FURTHER ORDERED that the parties shall,

within thirty (30) days from the date of this Order,

submit briefs addressing the issue of appropriate relief

in light of the Court’s determination of liability. This

discussion should encompass the question of whether

the non-party discriminatees, O’Connor, Conaway and

MacKachern, are entitled to relief. Each party shall

have ten days thereafter to file reply briefs. If it is

determined that the foregoing persons are not entitled

to some relief, judgment for Rath would be proper.

4c

If it is determined that relief is proper the question

of relief shall be set down for hearing in its regular

course.”

11. In its Brief on Appropriate Relief filed May 22,

1981, EEOC stated its positions as follows:

a. Class relief is proper regardless of the identity

or nonparticipation of the original complainant as a

party.

b. All unsuccessful female applicants for work be-

fore August 1, 1973, are presumptively entitled to

relief.

c. All unsuccessful non-spouse female applicants for

work after August 1, 1973, are presumptively entitled

to relief.

d. Females chilled by Rath’s hiring policy so that

they did not apply for work should be presumptively

entitled to relief.

e. Backpay based on Hameed, et al. v. Iron Workers,

Local 396, 637 F2d 506 (8th Cir. 1980) should be

awarded. The computation, however, should be based

on 1970 census data for the female work force in

Louisa County, Iowa, rather than upon applicant fiow

data because Rath’s known discriminatory policy

against female employment at Columbus Junction

deterred females from applying for work there.

f. Backpay should accrue under Section 706(g) be-

ginning two years prior to the charge made by Mary

Turner on February 7, 1976.

g. Classwide backpay is proper due to the complexity

of the factual situation. The award should be dis-

tributed pro rata among those aggrieved subject,

ccnaes iia inet. penton. au ih iaaaiameammeallll

5c

however, to a limitation that no class member receive

more than her actual damages. Notice to claim dam-

ages should be given to members.

h. Relief should include imposition of a hiring quota

which will reserve 50% of the openings to females

until the percentage of females employed at Columbus

Junction equals the percentage of females in the local

labor force. The openings should be offered first

to eligible females who applied unsuccessfully for

positions and to those who would have applied except

for Rath’s known anti-female employment policy.

i. Retroactive seniority should be granted to each

female accepting employment, such seniority to date

from the first filling of a vacancy after her application.

j. Injunctive relief against discrimination in employ-

ment should be ordered consistent with the Uniform

Guidelines on Employee Selection Procedure.

k. Supervisory jurisdiction should be retained and

reporting requirements required for five years.

1. EEOC should have judgment for the costs under

Rule 54(d).

12. Rath claimed in its Proposed Findings and Con-

clusions filed on May 27, 1981, that there was no remedial

issue except for O’Connor, Conaway and MacEachern who

never filed charges and who are not members of an

established class. They are nonparty strangers to this

proceeding and lack standing to seek a remedy. Since

the Court is without jurisdiction to provide them with

a remedy, judgment should be entered for Rath.

13. EEOC sought leave on June 8, 1981, to advertise

for identity of females who would have applied for work

6c

at the Rath facility between January, 1973, and the present

as well as those who had applied in August, September

and October, 1979.

14. On June 138, 1981, the Court entered a Clarifica-

tion Order to the effect that EEOC had predicated its

prima facie case of discrimination upon applicant flow

data for the period between January 1, 1973, and Feb-

ruary 15, 1978, and upon census data for 1971. The

Order entered was that O’Connor, Conaway and Mac-

Eachern could recover only as members of the class, not

having intervened to seek individual awards.

15. Rath’s Brief As To Remedy filed on August 19,

1981, asserts:

a. Injunctive relief involving the Uniform Guidelines

on Employee Selection Procedure is improper. Those

guidelines relate to testing and objective standards

while here there was only subjective hiring by Rath.

It makes no objection to an injunction against future

discriminatory hiring procedures.

b. Rath should be permitted at the relief hearing to

show nondiscriminatory reasons for refusing any par-

ticular applicant for a vacancy.

c. Successful applicants should be removed from the

class because their very employment is inconsistent

with a finding of discrimination.

d. The Court’s discretion should be exercised against

an award of backpay.

e. Ifa backpay award is made, the formula in Hameed,

supra, is agreeable except that Rath prefers not to

select random earnings of employees and class mem-

bers for comparison. It believes a better solution is

7c

to total the mitigating earnings of all class members

for actual hours worked, divide the total by the num-

ber in the class and multiply that average by a num-

ber of class members comparable to the number of

males whose earnings for hours worked were con-

sidered.

f. Hiring quota is premature because past discrimina-

tion has not been shown. Also, because many of the

jobs are undesirable for females it hasn’t been shown

that Rath’s personnel would ever reflect the percent-

age of females in any sample of employable popula-

tion. Some kind of preference for class members re-

taining interest in employment at Columbus Junction

is not objectionable.

g. Retroactive seniority is unfair to other employees,

will be generally demoralizing and will disrupt labor-

management relations.

h. Retention of supervisory jurisdiction is approved.

16. On September 2, 1981, the Court refused EEOC’s

Motion to Advertise for chilled applicants but granted

it insofar as it sought to locate females who had applied

\for work in August, September and October, 1979, during

which time applications had been destroyed.

17. On September 25, 1981, EEOC filed a Motion to

Exclude Evidence at the relief hearing with respect to

lack of qualifications of any female applicant as a non-

discriminating reason for failure to hire that applicant.

Rath resisted this Motion and by Order on October 9,

1981, the Court treated it as a Motion in Limine to be

held in abeyance until trial of the relief issue.

18. Difficulties arose over the method of obtaining

the testimony of class members and on November 9, 1981,

8c

EEOC filed a Motion to Require Rath to Defray Deposition

Costs or, alternatively, order the testimony obtained by

interrogatories. On November 10, 1981, ruling was made

that written interrogatories be used unless Rath agreed

to pay half the deposition expenses. The ruling further

stated that if Rath assumed the expense in question, the

deposition costs would be assessed in the Court’s final

decision. This testimony was finally obtained by tape re-

cording followed by partially successful transcription.

19. Following further discovery bearing upon relief,

the matter was referred on July 8, 1982, pursuant to the

Court’s findings and this Order:

“It is accordingly ordered that A. V. Hass, 820 North

8th Street, Chariton, Iowa, 50049, be, and is hereby ap-

pointed as Special Master in this case in accordance

with the provisions of Rule 53 of the Federal Rules

of Civil Procedure, and this cause is referred to him

as Special Master to make a preliminary investigation

as to the facts relating to the appropriate remedy

or remedies to be awarded herein; hear the witness

testimony and examine the statistical and other docu-

mentary evidence to be presented at the hearing

on the relief phase of the above-mentioned action;

determine plaintiff’s entitlement to the various forms

of relief requested; perform the detailed computations

necessary to determine the amount of backpay, an ap-

propriate hiring quota and retroactive seniority, in

the event plaintiff is deemed to be entitled to such

forms of relief; and to compile and submit to the

Court a Report and Recommendation setting forth

his Findings of Fact and Conclusions of Law in regard

to the foregoing.”

9c

20. There followed further discovery, an initial con-

ference with Counsel for EEOC and Rath and the estab-

lishment of a tentative schedule. The attorney for the

Union was invited on August 18, 1982, to attend that con-

ference but declined verbally. He confirmed the Union’s

position in this respect by letter dated August 27, 1982,

addressed to the Special Master and reading in part as fol-

lows:

“For the foregoing reasons, the Union takes a neutral

position, as it applies to remedies. The Union does

not support nor encourage, nor sanction any type of

discrimination. We therefore will not participate in

the remedy resolution before you.”

21. On October 27, 1982, EEOC asked the Court to

make clear whether by its Order dated April 22, 1981,

general population statistics for Louisa County were ap-

propriate to rely upon in determining if Rath’s hiring

practices adversely impacted against females. It was

EEOC’s position in its request that should Louisa County

work force statistics be used to determine the number

of females Rath should have hired, it was the general

work force that was involved because of the unskilled

nature of the job openings. In its Order entered on De-

cember 3, 1982, after giving its reasons the Court ruled

that general work force statistics had no probative value

in determining whether Rath’s hiring practices adversely

impacted against women applicants.

22. Evidentiary hearing on the remedial aspects of the

case was held on April 27 and 28, 1983, and was at-

tended by counsel for EEOC and Rath. EEOC’s motion

to exclude evidence filed on September 25, 1981, with re-

spect to lack of job qualifications of any female applicant

10c

who was not hired after January 1, 1973, and which the

Court treated as a motion in limine by its October 9, 1981,

Order was not renewed at the relief hearing. However,

no evidence was presented concerning the ability of any

particular applicant so no ruling need be made sustaining

or overruling the motion at this time.

23. Rath’s objections to Plaintiff’s Exhibits 1, 2, 3, 4,

6, 7, 8, 12, 13, 14, 15, 16 and i7 should be overruled. It

made no objection to Plaintiff's Exhibits 9, 10 and 11.

Its objection to Plaintiff’s Exhibit 5 and plaintiff’s offer

of proof in connection therewith to show increased dam-

ages based upon census data should be sustained.

24. EEOC’s objection of irrelevancy to Defendant’s

Exhibits AA through PPP because Rath’s financial circum-

stances are no defense to an award of backpay should be

overruled. While those exhibits do not constitute a de-

fense to the award generally considered proper in em-

ployment discrimination cases they are relevant to a

proper exercise of the discretion allowed in formulating a

suitable plan of relief.

25. Additional briefing followed the conclusion of the

relief hearing and now the Special Master adds to the

background materials in the Preliminary Statement the

following additional:

FINDINGS OF FACT

26. The class presumptively entitled to relief is com-

posed of (a) the unhired females who applied for work

at Rath’s Columbus Junction plant after January 1, 1973,

but before August 1, 1973, and (b) the unhired females,

not spouses of Rath’s employees, who applied for work

at the Columbus Junction plant between August 1, 1973,

at

lle

and December 31, 1980. Since violations outside the pe-

riod of limitations can affect the measurement of an award

and discrimination in hiring continued after February 15,

1978, the appropriate period for class membership begins

in 1973 and continues through 1980. Thompson v. Sawyer,

678 F.2d 257 (DC Cir 1982).

27. It was not established at either the liabilicy or

relief stage of the trial that special qualifications were

required for entry level production jobs. Those individ-

uals applying for work during the appropriate period were

actually seeking employment. Lack of interest in employ-

ment by particular females which Rath Claims should be

recognized in arriving at the applicant pool was not shown

at the liability stage and was not specifically pointed out

with respect to any applicant during the hearing on relief.

It is true that some of the applicants’ depositions relate

that they no longer wanted work at Rath on the dates

the depositions were taken. However, if defendant ex-

pects the applicant pool to be altered by this testimony it

must go further and show at what exact time the lack

of interest surfaced and then persisted. A female who

applied for work in 1974, for example, and who said on

tape in 1982 that she was no longer seeking a job at Rath

cannot be construed to show that she would not have gone

to work if called during the appropriate period.

28. There is agreement disclosed on the briefs that

if packpay is awarded it should be on a class-wide basis.

(Plaintiff's Briefs filed May 22, 1981, and August 22, 1983;

Rath’s Briefs filed August 7, 1981, and September 19,

1982.)

29. There is agreement also that the formula pro-

posed in Hameed v. International Association of Iron Work-

12¢c

ers, 637 F.2d 506 (8 Cir 1980) should be adopted for com-

putation of backpay, if allowed, subject to a modification

which substitutes the average wages of all male hires in-

stead of random samples selected from among them. (De-

fendant’s Brief served September 10, 1982, and Plaintiff's

Proposed Findings filed May 13, 1983.) The modified

formula agreed upon is acceptable.

30. Employment applications submitted by those who

were not hired remained on file (except those destroyed

by Rath in 1979). These were considered along with new

applications by Rath’s hiring officer at Columbus Junc-

tion when a vacancy was filled. His choice was seldom

disturbed. (Plaintiff’s Exhibit 10, p. 37, liability stage.)

Thus the applicant pool at any given time included carried

over applications of both males and females. It contained

rightly those females who had lost interest in Rath em-

ployment at the times of their depositions. Tidwell v.

American Oil, 4 EPD 7544 (DC Utah 1971); Slack v.

Havens, 8 EPD 9492 (SD Ca. 1973) and Paragraph 27

above.

31. Since a mathematically certain result is seldom

obtainable, Stewart v. General Motors Corporation, 542

F.2d 445, 452 (8 Cir 1980), and the process of recreating

the past involves imprecision and estimation, International

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

372 (1977), rounding upward or downward to the nearest

whole number as proposed by the Plaintiff is approved

in utilizing the modified Hameed formula.

32. The complaint or charge giving rise to the present

litigation was filed with EEOC by Mary Turner on De-

cember 15, 1975. Rath has not argued its affirmative de-

fense that section 614.1(8), Code of Iowa, 1979, bars wage

13c

claitus accruing more than two years prior to the filing

of this action on September 1, 1977. That affirmative de-

fense is considered abandoned. Allowable backpay is lim-

ited to the period beginning two years before December

15, 1975, it being assumed that February 7, 1976, as the

filing date of the charge was mistakenly set out in the

brief filed by EEOC on May 22, 1981. Rath’s liability,

however, may be based upon acts outside the two year

period last mentioned where its current violation of Title

VII is shown. Crawford v. Western Electric Co., Inc.,

614 F.2d 1300, 1309 (5 Cir 1980), and Thompson v. Sawyer,

supra, at 291.

33. Wages paid to hired male employees are sum-

marized in Plaintiff's Exhibit 4 (relief stage), Tables 1-9,

Appendix 3a at each table. In addition, those male em-

ployees received fringe benefits after a temporary period

of hire. These consisted of life, health, accidental death

and dismemberment insurance as well as dental, vision

and prescription reimbursements. Even though the last

three were on a claims-made basis, the benefits were

Rath’s expense in addition to hourly pay. An ordinary

employee would hardly reject them and, therefore, they

should be considered a part of females’ lost wages. Hameed,

supra, p. 521. The cost to Rath of the various benefits

described for employees and their dependents, where the

latter coverage was elected by the employee, is shown in

Plaintiff’s Exhibit 4, supra. It varied from a monthly

expense of $31.57 in January, 1973, to $86.18 in March,

1981. (Plaintiff’s Exhibit 7 (relief stage) .)

34. All male employees hired did not continue in em-

ployment during the entire relevant period. If they did,

their tenure had to be concluded with the Order entered

14c

on April 22, 1981. For example, as shown by Plaintiff’s

Exhibit 8 (relief stage), the average tenure of a male hired

in 1973 was 39 months, in 1974 it was 36 months, in 1975

it was 30 months, in 1976 it was 16 months, in 1977 it was

29 months, in 1979 it was 14 months and in 1980 it was

6 months. While there is authority compiled recently by

the Bureau of Labor Statistics of the U.S. Department

of Labor to show that the typical job tenure of women

is approximately 75% of that of men, there is apparent

agreement that tenure is equal for this determination.

35. For those females who applied for work but were

not hired the average earnings, including benefits for

each calendar period involved during established tenure,

are those disclosed by Plaintiff’s Exhibit 4 (relief stage),

Tables 1-9, Appendix 4 at each table, and summarized

hereafter in Paragraph 37. A review of the depositions

of those not hired discloses some discrepancies in the

gross earnings of unhired females unless wages only

were considered to arrive at averages. For example, Ethel

Devore testified that she had wage income of $1187 and

commissions fo $2385 from insurance sales in 1979 but her

wage summary, Plaintiff’s Exhibit 1, shows only $1187

as a basis for computing the average 1979 earnings of

unhired females. In 1980, her income from insurance

sales, $2631, was also omitted from Plaintiff’s Exhibit 1.

Authoritative allowance for imprecision would appear

to cover all such discrepancies.

36. The following figures are found to be estab-

lished by the evidence introduced at the relief stage of

the trial:

15c

: A b c D E F G

Year | Total Female Female | Filled Available | Hired Females

j

| Applicants | Applicants] Percent Openings Female Females | Denied

Number

{

srs 212 36 32% 52 17 2 15

:

1974 | 211 51 24% 52 12 4 8

1978 ‘' 233 57 24% 25 6 0 6

1976 328 77 23% 40 9 A 8

1977 366 83 23% 21 5 0 5

1978 0 0 0 0 0 0 0

1979 529 135 26% 92 24 9 i5

1980 754 204 27% 44 12 6 6

NOTE: Column C equals B divided by A

Column E equals D times C

Column G equals E minus F

1978 excluded because only one male position filled

18.

16c

37. The wages and benefits received during the

relevant period by male employees and unhired female

9

applicants during their respective tenures are found to

be the following:

A . C D | E FY G

Year | Total Male Males| Average | Average! Excess Female ' Females'

Earnings Hired} Earnings] Earning Hired Hires Lost

Hired Unhired Male Denied Earnings

Males Females Earnings

1973 $1,739,587 50 $34,792 $ 8,699 $26,993 15 $391,395

1974 $1,384,035 47 $29,448 $12,106 $17,342 8 $138,736

1975 $ 565,094 25 $22,604 $10,627 $11,977 6 $ 71,862

1976 $ 661,229 39 $16,955 $ 5,953 $11,902 8 $ 88,916

1977 $ 475,070 20 $23,754 | $12,818 $10,936 > $ 54,680

1978 0 0 0 0 0 0 9

1979 $1,821,545 83 $21,946 $ 7,418 $14,528 15 $217,920

1980 $ 449,045 38 ! $11,817 $ 2,935 $ 8,882 6 $ 53,292

|

! ;

TOTAL LOST FEMALE EARNINGS $ 1,915,991

NOTE -

Column

Column

Column

Column

Column

C equals A divided by B

D is from Plaintiff's Exhibit 4, Tables 1-9

E is C minus D

F is from Column G, preceding summary

G is E times F

1978 excluded because only one male hired

17c

38. The record is undisputed that the meat packing

industry in which the Rath was engaged at Columbus

Junction has been a troubled one for a number of years.

(TR p. 77; Defendant’s Exhibits LLL and UU, p. 20).

Rath, being pork-oriented, has undergone its most trou-

bled times during the past twelve months although its

accountants have entertained serious questions concerning

its ability to survive since 1975. Some of the matters

justifying the accountants’ concerns in this area are re-

lated as follows:

38.1 There has been no dividend for the stockholders

since 1961.

38.2 In 1967, the banks from which it had been ob-

taining operating funds withdrew so it had to resort to

commercial finance sources for those funds. (TR 119).

Although there were subsequent changes in the source,

it will be referred to hereafter as “Security”.

38.3 Since 1972, it has had no cash of its own except

for a brief period in 1980. (TR 121).

38.4 The financial stress was so severe that Security

demanded and obtained a second lien in 1975 upon a

certificate of deposit held in trust to secure Rath’s pay-

ments for livestock purchased as required by the Packers

and Stockyards Act. (Defendant’s Exhibit CC). To sat-

isfy the Department of Agriculture and the defendant’s

insurer, the latter demanding full collateral for its poten-

tial liability, Rath had to borrow $1,185,000 at 15% in-

terest, convert it to a certificate of deposit bearing 814%

interest and deposit it in trust. (TR 125-127).

38.5 Running up against its credit limit in 1975, it

sold most of its feed division, thereby obtaining $3,500,000

in cash which was added to its operating funds. (TR

122-123; Defendant’s Exhibit GG, p. 3).

18c¢

38.6 In 1975, it was unable to pay its contribution

to its pension plan for hourly-paid employees for the

1974 plan year amounting to $3,900,000. (TR 129). The

necessary money was obtained by arranging a secured

loan on or about March 10, 1976, in the amount of $6,000,000

at 2-1/2% interest over prime from several banks which

was 90% guaranteed by Economic Development Admin-

istration. (Defendant’s Exhibit DD, TR 128-130). The

present unpaid balance, $857,000, could not be met when

it fell due on March 1, 1983, so Rath obtained a 60-day

extension and was trying for another when the relief

hearing was being conducted. (TR 130-131).

38.7 In 1976, Security gave notice to the Defendant

that its financing agreement would be ended in 60 days

because some of the participating banks were disturbed

about Rath’s condition. This notice was withdrawn after

a conference. (TR 132-134).

38.8 Rath was without funds required for its con-

tribution to pension plans for the plan years 1975 and

1976 but reached an agreement with the union to amortize

those payments over a forty-year period. (TR 136).

38.9 In June, 1978, it reached the borrowing limit

imposed by Security so closed its Columbus Junction

operation until September, 1979, thereby improving its

cash flow position by about $2,000,000. (TR 135). During

this time, the employees gave up another estimated

$2,000,000 in incentive payments to assist Rath in con-

tinuing as a viable entity. (TR 307-308).

38.10 For the 1977 pension plan year, it sought and

obtained a waiver from Internal Revenue Service as a

hardship case with prospect of recovery. It represented

in its undated application, Defendant’s Exhibit GG 2,

19¢

p. 11, that its current assets exceeded liabilities by

$9,000,000, but reported also that it only had $115,000 cash

on June 3, 1978. (Defendant’s Exhibit GG 1, p. 1).

38.11 In the fall of 1978, at a time when the local

union felt that concessions being requested by manage-

ment would only save the company for 4 or 5 months

(TR 303-307), it was faced with closure of its main plant

at Waterloo, Iowa. Its salvation this time was a UDAG

Grant of $3,000,000 to Blackhawk County Development

Committee which was passed on as a loan to Rath at 6%

interest on October 17, 1978. (Defendant’s Exhibit II;

TR 137-138).

38.12 To satisfy the Iowa Insurance Department that

it should be allowed to continue as a self-insurer of

Workers’ Compensation Benefits, it borrowed $500,000 and

placed it in trust with the accruing interest. (Defendant’s

Exhibit HH). This deposit is now approximately $800,000,

but the cost to Rath by way of interest and compensation

payments is less than the premium cost if it could locate

an insurer willing to accept the worker’s compensation

risk. (TR 139-141; 215).

38.13 In April of 1979, the membership of Rath’s

local union agreed to partial deferrals of benefits for va-

cation, holiday and sickpay into an escrow fund, This

saved $5,709,000 for the defendant in fiscal year 1980,

$3,173,000 during prior years and $5,409,000 in fiscal year

1981. (Defendant’s Exhibit WW, p. 10). Employees also

deferred 50¢ per hour in wages then to help Rath’s cash

problems and began in July, 1980, to buy 1,800,000 shares of

its unissued common stock. Those participating employees

allowed $20 weekly to be withheld from wages for ap-

plication toward the purchase price of $2.00 per share.

(Defendant’s Exhibit NN, p. 9). This stock purchase was

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completed through withholding in this manner in June,

1982 (TR 314), and the employees now own 60% of the

defendant’s outstanding common stock.

38.14 On October 7, 1979, Roth sought waiver from

Internal Revenue Service of its required contribution for

its 1978 pension plan year. It represented in its applica-

tion that its cash on June 2, 1979, was $114,000 and that

its current assets exceeded current liabilities by $5,169,000.

It also disclosed, as related by defendant’s officers at the

relief hearing, that the corporation was on a COD basis

with its major suppliers. (Defendant’s Exhibit OO).

38.15 The City of Waterloo, Iowa, applied in 1979

for a grant of $4,500,000 from HUD to lend to Rath for

plant improvements. The required matching funds came

from the employees’ deferrals in the future. (TR 213).

The agreement to purchase common stock was also a part

of the deal as was an extension of the time of payment of

the loan previously made to Rath by Blackhawk County

Development Cornmittee. The transaction which was

closed on August 1, 1980, as shown by Defendant’s Ex-

hibit RR provided for 3% interest with the first quarterly

principal payment to be made on September 30, 1983.

This was a joint community and employee effort.

38.16 Unable to make its contribution for the pension

plan year 1980, TR 151-153, it applied again to Internal

Revenue Service for a waiver per Defendant’s Exhibit

UU and the waiver was granted. Rath represented then

that its current cash assets exceeded current liabilities by

$12,331,000.

38.17 It was able to negotiate a seasonal increase in

its debt limit from Security on December 21, 1981, until

January 15, 1982. (Defendant’s Exhibit VV).

a

’

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38.18 It realized once more in the summer of 1982

that it could not meet its contribution for the 1981 pension

plan year coming due in September 1982, so it prepared

Defendant’s Exhibit CCC. This was used to show Pension

Benefit Guaranty Corporation that there would be prac-

tically nothing for Defendant’s unsecured creditors in the

event of liquidation and that settlement of its pension lia-

bilities was preferable to reorganization. (TR 158-159).

38.19 Both the local and international unions agreed

then in September, 1982, that the pension plans could be

terminated. (TR 159; Defendant’s Exhibits YY and ZZ).

The labor contract then expiring was extended to August,

1985, and the existing deferrals of benefits were contin-

ued. In addition, its employees deferred payment of $20

weekly in wages and those were frozen for a period of

three years. This deferment of wages was not in addi-

tion to, but was a substitute for, the withholding previously

authorized by the employees for the purchase of stock.

(TR 319-320).

38.20 It applied to Internal Revenue Service, Defen-

dant’s Exhibit DDD, on August 6, 1982, for modification

of the waiver for the 1980 pension plan year and for

waivers of its contributions for the 1981 and 1982 pension

plan years. (TR 163). It represented then that current

assets exceeded current liabilities by $3,686,000 and that

it had $183,000 cash but that if required to make the pay-

ments it would be forced to seek protection in an insolvency

reorganization. The same representation was made to

Pension Benefit Guaranty Corporation. (TR 164). The

company was, in fact, bankrupt in the opinion of its chief

executive officer. (TR 323). It gave notice to Pension

Benefit Guaranty Corporation on September 3, 1982, that

it intended to terminate its pension plans.

22¢c

38.21 Security’s credit limitation was increased from

$14,000,000 to $20,000,000 on October 25, 1982, so that Rath

would have funds with which to make seasonal purchases

and could show survival prospects if the pension plans

were terminated. The increase was to expire on March

1, 1983. (TR 162; Defendant’s Exhibit BBB).

38.22 Pension Benefit Guaranty Corporation allowed

Rath to end the pension plans by Defendant’s Exhibit EEE

dated December 1, 1982. On its books, Rath had carried

$44,000,000 as its liability for those plans. To eliminate

this, it paid $781,313 advanced by three banks and Se-

curity on September 14, 1982, agreed to pay $1,069,931

plus 12% interest from September 15, 1982, and gave its

note for $5,846,447. The first payment on this note due

September 15, 1983, is $1,705,716 plus 12% interest from

September 15, 1982. Subsequent amortizing payments of

$793,259 are to be made quarterly beginning on February

15, 1985, and ending on February 15, 1997.

38.23 Rath’s financial squeeze continued to be acute

so it closed its Columbus Junction facility on January

24, 1983. (TR 172). It remained in this status on the

hearing date, TR 180, and the reopening, if it occurs, will

not occur before the fall of 1983. Rath’s discriminatory

hiring was confined to this plant.

38.24 Rath’s local union, realizing the gravity of its

predicament, agreed to defer wages by $2.50 per hour

for ten months beginning on February 22, 1983. (TR 175-

176; Defendant’s Exhibits KKK and LLL). This gen-

erosity resulted in savings for Rath but also in the filing

of an unfair labor practice by the international union.

(TR 189).

38.25 To reduce its credit line to $16,500,000 as re-

quired by Security, it shut down beef operations at

i Eiieninataneinanan Gene

a

23¢c

Waterloo, obtained earlier payment of government in-

voices and reduced its payroll costs by taking a strike

at its Indianapolis plant. (TR 179-180). It had to pledge

to Security its trademarks, its remaining unencumbered

asset which Rath had always intended to preserve free

of liens, to get the temporary increase of Security’s credit

limit to $20,000,000 and to obtain extensions of time for

paying outstanding loans. (Defendant’s Exhibit OOO;

TR 181, 329).

38.26 Future profits, if any, are pledged as well. 50%

goes to a profit-sharing fund to repay employees’ deferrals,

5% to Blackhawk County Development Committee, and

15% of first $5,000,000, 20% of next $5,000,000 and 25%

of all above $10,000,000 to Pension Benefit Guaranty Cor-

poration. (TR 191).

38.27 It is estimated by Rath’s accountants that if

all operations were to be discontinued, severance pay as

of October 2, 1982, would have been about $30,000,000.

(Defendant’s Exhibit JJJ). It is understood from its

balance sheet as of that date, Defendant’s Exhibit GGG,

that this does not appear as a liability.

38.28 The following schedule will show the financial

results for the fiscal periods indicated:

Profit or Stkhldrs Def

Period (Loss) Equity Ex

10-01-77 ($1,018,000) $6,860,000 EE

9-30-78 ($6,441,000) $ 419,000 JJ

9-29-79 ($1,485,000) ($1,066,000) PP

9-27-80 $3,348,000" $2,674,000* SS

10-03-81 ($9,582,000) ($5,172,000) Www

10-02-82 ($6,492,000) $16,886,000? GGG

1-01-83 ($2,989,000) $13,897,000° Il

4-02-83 ($3,622,000 ) $10,275,000* TR 183

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1. Results in part from extraordinary credit of

$3,173,000 for deferrals by employees.

2. Results in part from extraordinary credit of

$28,160,000 from pension liability settlement.

3. All periods are for fiscal years ending on dates

shown except these are for three months.

INJUNCTION

39. Achieving a remedy that is fair and workable

and, for that purpose, analyzing the competing interests a

pertinent fact is that Rath’s plant where discrimination

was adjudicated in 1981 has been closed since January

24, 1983, because of inadequate operating cash. (TR 108).

Whatever is determined as appropriate in hiring certainly

faces future uncertainties and must defer to activity at

the Columbus Junction plant. One part of the remedy

concerning which there is no disagreement, however, is

that injunctive relief is proper. It is the scope of that

restraint which brings differences between the parties.

40. EEOC advocates that within 30 days after entry

of the Order for relief Rath should submit proposed selec-

tion procedures which are designed to meet the Uniform

Guidelines on Employee Selection Procedures, 29 CFR

1607.1 to 17, with the Court thereafter to resolve any dif-

ferences arising on the subject. Plaintiff would then

impose upon Rath a duty to complete a study at the end

of one year and provide EEOC with a copy to verify that

its selection criteria have been operating in conformity

with the Uniform Guidelines. If at any time during the

five year period that it would have the Court retain

jurisdiction EEOC believes that Rath’s selection procedures

are faulty and the latter disagrees with that belief the

differences again are to be brought to the Court’s atten-

25¢

tion for resolution. Plaintiff would require Rath to keep

extensive records, provide copies thereof periodically to

EEOC and give it access thereto at any reasonable time

after written notice.

41. In view of the facts that the Court should retain

jurisdiction for supervisory purposes, that Rath has never

been subjected to a demonstvation of good faith in hiring

under an injunction prohibiting discrimination based upon

sex, that future operations at Columbus Junction are not

a certainty, that giving preference to females still inter-

ested in working there will consume a long period of time

after any resumption of operations and that the record at

the liability stage of the trial disclosed that there were

no particular qualifications for jobs which can be gen-

erally handled by either sex it is believed that the relief

proposed by EEOC is unnecessarily complex and burden-

some.

42. Rath’s good faith in hiring females can be mea-

sured after re-opening at Columbus Junction, if it occurs,

while the list of female applicants still interested in work

there is being depleted. Since jurisdiction should be re-

tained, Rath’s demeanor toward female employment can

be monitored during that period of time and can result

in strictures, if then appropriate, which are more closely

related to those now espoused by EEOC. If Rath does not

re-open at Columbus Junction, then the extensive burden

associated with the mandatory relief sought by EEOC

can be avoided.

BACKPAY

43. Historically, it was said in Wells v. Meyers

Bakery, 581 F.2d 1268, 1272 (8 Cir 1972) that backpay is

a fundamental remedy deniable only in extraordinary cir-

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cumstances. In Pettway v. American Cast Iron Pipe Co.,

494 F.2d 211, 260 (5 Cir 1974), the Court advised that

“the special factors which would prevent a backpay

award have been narrowly construed and usually in-

clude only circumstances where state legislation is

in conflict with Title VII.”

44. Later, the Supreme Court decided Albemarle

Paper Co. v. Moody, 422 U.S. 405 (1975), remarking for

guidance that backpay should be denied only for reasons

which, if applied generally, would not frustrate the cen-

tral statutory purposes of (1) eradicating discrimination

throughout the economy and (2) making persons whole

for injuries suffered through past discrimination. While

this decision would seem generally, as a practical matter,

to foreclose denial of backpay we are told later in Inter-

national Brotherhood of Teamsters v. U.S., 431 U.S. 324,

375 (1977) that the district court must look to the prac-

tical realities and necessities involved in reconciling com-

peting interests so that it may find that special blend

of what is fair and what is workable. It advised that

perhaps relevant to the decision are the number of vic-

tims, the number of nonvictim employees affected, the

alternatives available to them and the economic circum-

stances of the industry. Later, as if to leave some room

for the district court’s discretion we are told in City

of Los Angeles v. Manhart, 435 U.S. 705 (1978), 98 S.Ct.

1370 at 1378, that the presumption in favor of backpay:

“can seldom be overcome but it does not make mean-

ingless the district court’s duty to determine that it

is appropriate.”

45. EEOC believes that the economic circumstances

of Rath are not relevant to the backpay issue but that

a Cea. ant

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position cannot be rightly sustained. The complete cir-

cumstances facing the parties must be made clear before

the district court can fashion a remedy that is fair, work-

able and not an abuse of its discretion. EEOC, in fact,

recognizes this by suggesting that it does not object to

installment satisfaction of an award. (Plaintiff's Reply

Brief filed September 23, 1982, p. 4).

46. Appealing to the court’s equitable powers, Rath

presents as militating against an award of backpay (1)

its precarious financial straits and ongoing losses, (2) its

60% ownership by employees and (3) its stated inability

to liquidate an award unless the employees make further

concessions. The Special Master believes that these con-

ditions, as they appear in the record, are not of sufficient

weight or so “exceptional” that they overcome the pre-

sumption that backpay, if a loss is proven, is generally

one of the consequences of Title VII violations.

47. With respect to (1) above, Rath has been in

financial jeopardy since 1975, at least, and still shows

substantial operating losses that are mostly in cash. How-

ever, its employed persons have received compensation

from Rath to the exclusion of the female discriminatees

during all the time that the employer’s losses are shown

to have occurred. The benefits of the employment con-

tract enjoyed by the workers have been responsible, in

part, for draining Rath’s resources while the applying

females entitled and able to work were excluded from

joining in the draining process.

48. With respect to (2) last mentioned, that argu-

ment is discounted by Pettway v. American Cast Iron

Pipe Co., supra, 253, and with respect to (3) last men-

tioned, the present employees made their stock purchases

when they must have been aware that this litigation was

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in process as a potential liability. In addition, those stock-

holders through policies of their elected Board of Directors

have continued to discriminate against female employ-

ment. There appears little reason, therefore, for excluding

the discriminatees from sharing in any stockholders’ equity

Rath may have since it has been generated somewhat

by the beneficence of the Pension Benefit Guaranty Cor-

poration in 1982. This result is a proper step toward

fulfilling one of the central purposes set out in Albemarle,

supra. The statement made in Rios v. Local 638, et al.,

400 F. Supp. 988 (S.D.N.Y. 1975) at page 991, to-wit:

“In making awards for backpay, all the circumstances

of the case, including ability to pay, must be taken

into account”,

as set out on page 14 of Rath’s Post Trial Brief on Remedy

antedated Albemarle and must be read now with the

latter decision. ‘Those who have had jobs while Columbus

Junction was open to them have fared better than the

unhired females even though the former have made and

continue to make sacrifices to preserve Rath but also

their individual employment. If, as asserted by Rath’s

management, it should eventuate that the employees must

be asked to make further concessions to right a wrong

in which they participated and from which they have

benefited there is nothing inequitable in the necessity

for that request. Actually, males are not the only ones

who will have to contribute if the employees should be

the only source to which management can turn.

49. Rath argues, however, that EEOC’s computa-

tions are at fault because the Order entered on April 22,

1981, found discrimination established at Columbus Junc-

tion only between January 1, 1973, and February 15, 1978,

and the latter date is not fixed as the terminal cutoff for

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ascertaining lost earnings. EEOC does not read the Order

in that light ard it is not for the Special Master to con-

strue it to resolve those arguments. However, had the

district court intended to limit class-wide backpay to those

females who applied for work prior to February 15, 1978,

it surely would not have sanctioned, at EEOC’s instance,

publication of an advertisement designed to locate females

who had applied for work during August, September and

October, 1979. (Ruling September 2, 1981). It is noted

additionally that in this case begun in 1977 which reached

trial in July, 1980, and was decided initially in April, 1981,

it would be almost impossible for plaintiff to continue

discovery so that it might present discriminatory statistics

which were current at the trial dates. Recognizing those

realities, the following comments were made in Crawford

v. Western Electric Co., Inc., 614 F.2d 1300, 1309 (5 Cir

1980):

“Of course, backpay relief under Title VII is limited

to the two years preceding the filing of a charge with

the EEOC. 42 U.S.C. section 2000e-5(g). However,

liability of the employer for backpay may be based

on acts occurring outside the two year period if a

current violation is shown. Miller v. Miami Prefabri-

cators, Inc., 438 F. Supp. 176, 178-180 (S.D. Fla. 1977);

see also Pettway v. American Cast Iron Pipe Co.,

494 F.2d 211, 260 (5 Cir 1974).”

Reference is made also to EEOC v. Enterprise Association,

etc., 542 F.2d 579 (C.A.N.Y. 1976).

50. If there is to be some adherence to the sugges-

tions made in Stewart v. General Motors Corporation, 543

F.2d 445, 454, (7 Cir 1976), for arriving at backpay, a sig-

nificant determinant is the length of the period during

which discrimination occurred between the filed charge

30c

and the decree finding liability. Since we are concerned

here only with a failure to hire, the appropriate period

with allowance for tenure can begin in 1973 and end on

April 22, 1981. If front pay which is allowable in several

districts is a recognized form of relief which could be

proper here but is not requested, then fixing the end of

the appropriate period and class membership as the date

of the April 22, 1981, Memorandum and Order finding dis-

crimination is not unfair to Rath. It has pointed out no

glaring errors in EEOC’s calculations. It is uncritical of

them except with respect to interest and the use of hiring

statistics for the full year of 1973 and after February 15,

1978. As pointed out elsewhere, there are some minor

discrepancies observable between the earnings disclosed

in the depositions of some unhired females and tabulation

thereof by EEOC. However, the inaccuracies are within

limits and do not fault seriously the total award of

$1,015,901 which the Special Master approves as based

upon established facts.

HIRING QUOTA

51. EEOC originally proposed as part of the relief

a hiring regimen at Columbus Junction of one female to

one male until the female percentage of employees there is

equal to the percentage of females in the local labor force.

(Plaintiff's Proposed Findings of Fact and Conclusions of

Law filed May 13, 1983). Rath contends that any such

proposal is premature, extreme and a possible violation

of 42 U.S.C. section 2000 (e)-2(j). It also claims that

it is at odds with the evidence in that, because of the

natural female dislike for some of the jobs offered at a

meat processing facility, it was not shown that such per-

centage was ever a predictable occurrence. It asserts

also that the proposal is contrary to the Court’s Order

3lc

entered on December 3, 1982. (Defendant’s Post Trial

Brief on Remedy, pp. 5-8). In EEOC’s Reply Brief filed

on June 20, 1983, it retreats, in part, from its original po-

sition and advocates an ultimate percentage of female em-

ployees equal to the ratio of female applicants to total

applicants from 1973 through 1980.

52. The use of hiring quotas is generally recognized

as an appropriate means of eliminating past discrimina-

tion. Carter v. Gallagher, 452 F.2d 315 (8 Cir 1971) and

U. S. v. N. L. Industries, 479 F.2d 354 (8 Cir 1972). Ac-

cording to defendant’s records and Plaintiff's Exhibit 4,

Tables 1-9 (relief stage), roughly one female applied

for work at Columbus Junction as four males were ap-

plying during 1973 through 1980. There is no sound

reason why a sincere effort should not be made to attain

ultimately that ratio in employment upon re-opening, if

it occurs. Where the hiring requirement is reasonable

and temporary in nature, there is no encroachment upon

42 U.S.C. section 2000(e)-2(j). U. S. v. N. L. Industries,

supra. As expressed in U. S. v. City of Miami, Florida,

614 F.2d 1332, 1335 (5 Cir 1980):

“At this point in the history of the fight against

discrimination, it cannot be seriously argued that

there is any insurmountable barrier to the use of

goals or quotas to eradicate the effect of past dis-

crimination.”

To restore or attain a proper balance and thus offset past

discrimination based upon sex in hiring, a quota is proper.

RETROACTIVE SENIORITY

53. Rath opposes strenuously the concept of retro-

active seniority for unhired female applicants who may

be employed later after having been victims of Title VII

32¢c

discrimination. It argues that it is unfair to employees

who have worked to obtain their status, that it will be

demoralizing and that it will produce labor-management

problems because of the undesirabie nature of some of

the jobs in the plant. It notes some of the fears expressed

in Meadows v. Ford Motor Company, 510 F.2d 939, 949

(6 Cir 1975) and is particularly opposed to constructive

competitive seniority. However, as related in Franks v.

Bowman Transportation Company, 424 U.S. 775, 96 S. Ct.

1251, 1269 (1976) these same fears have not caused im-

ponderable difficulties in cases arising under the National

Labor Relations Act where retroactive seniority as part

of the relief for discrimination is the general rule. Franks,

supra, holds that such seniority cannot be denied simply

because the interests of other employees may be affected.

54. That decision quotes with approval the following

parenthetical language in U. S. v. Bethlehem Steel Cor-

poration, 446 F.2d 652, 663 (2 Cir 1971):

“Assuming arguendo that the expectations of some

employees will not be met, their hopes arise from

an illegal system. Moreover, their seniority advan-

tages are not indefeasibly vested rights but mere ex-

pectations derived from a bargaining agreement sub-

ject to modification .... (If relief under Title VII

can be denied merely because the majority group of

employees, who have not suffered discrimination, will

be unhappy about it, there wiil be little hope of cor-

recting the wrongs to which the Act is directed.”)

It also creates a presumption in favor of granting con-

structive seniority and says in f.n. 34 that there must

be persuasive justification for treating Title VII violations

differently. That its imposition is not an illegal pref-

erence because of sex, see Acha v. Beame, 531 F.2d 648,

Me i a a i tl th li eS te pti di a, eee be 5 -

SS ee eee ee ee

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656 (2 Cir 1976). Under the record made here which

only describes time lost due to training a new employee,

male or female, a delay in maximum productivity until

training is completed and an undefined effect on the

relationship of the workers - the presumption in favor

of retroactive seniority is not overcome.

INTEREST

55. The Special Master has been cited to no case

and has found no authority which holds that there is a

presumption in favor of prejudgment interest in the event

of a Title VII violation and award. Generally, where a

claim is unliquidated the allowance of such interest is

discretionary. Thomas v. Duralite Co., 524 F.2d 577 (3

Cir 1975). This seems to be the rule for Title VII cases.

Taylor v. Philips Industries, Inc., 593 F.2d 783, 787 (7 Cir

1979); Washington v. Kroger Co., 671 F.2d 1072, 1078

(8 Cir 1982) and Whatley v. Skaggs Companies, Inc.,

704 F.2d 1129, 1140 (10 Cir 1983). In Board of Commis-

sioners v. United States, 308 U.S. 343, 352 (1943), we

read the following:

“Interest is denied where its exaction would be in-

equitable.”

In Lodges 743 and 1746, etc. v. United Aircraft Corpora-

tion, 534 F.2d 422, 445-7 (2 Cir 1975), this statement ap-

pears:

“Whether to award prejudgment interest in cases

arising under federal law has in the absence of a

statutory directive been placed in the sound discretion

of the district courts..... In suits for breaches of

labor agreements, as in other cases, a vital ingredient

in the determination whether to award prejudgment

interest is a desire to make whole the party injured

34c

by the breach, but in appropriate circumstances, com-

pensatory principles must be tempered by an assess-

ment of the equities.”

56. One of the central purposes of Title VII is to

make whole those who have undergone discrimination so,

at first glance, it seems illogical to meditate over the

disallowance of prejudgment interest where the propriety

of a backpay award has once been determined. However,

the duty of the district court is to attempt a remedy that

gives weight to a reconciliation of the competing interests

and facially, at least, brings about a result that is fair and

workable. Teamsters, supra, 375.

57. As EEOC’s calculations in Plaintiff’s Exhibit 4

(relief stage) are observed, they appear at fault for com-

puting interest on lost benefits and earnings prior to their

being at hand at rates which probably no female employee

could have reasonably obtained had she possessed the fund.

Additionally, it appears that the interest has been com-

pounded by EEOC unless the figures are read incorrectly.

(TR 32-33). The original charge here was filed on De-

cember 15, 1975, and the Complaint in the case was not

filed until September 1, 1977, so 20 months passed before

steps were taken to fix Rath’s responsibility. A year

passed after the Order on April 22, 1981, before reference

was made and another ten months passed between the

reference and the relief hearing. It is not intended to place

all the blame for delay upon EEOC by these remarks.

58. It is undisputed that the pork processing industry

in general remains, in the past few years, highly unprofit-

able. Rath’s financial status, in particular, is such, in the

writer’s opinion, that the added interest burden of $988,272

which EEOC seeks and which has accrued over ten years,

if allowed, could well foreclose opening of the Columbus

35c

Junction operation and bring about Rath’s demise. This

would be accompanied by a devastating loss of jobs and

no employment benefit for those female applicants who

still maintain an interest in working for it. The employees

who sacrificed $20.00 weekly in wages to purchase Rath’s

stock at $2.00 per share but which was last quoted at a

low of 50¢ per share in the fourth quarter of 1982 (De-

fendant’s Exhibit GGG, p. 17), who have deferred fringe

benefits valued roughly at $5,000,000 annually, who have

recently given up $2.50 per hour in wages (TR 175-6;

Defendant’s Exhibits KKK and LLL) into a profit shar-

ing fund that may never come to life and who own 60%

of Rath’s issued common stock should not be called upon

to subordinate their stock of questionable value to pre-

judgment interest on the backpay award. None of the

female class is called upon to contribute to the sacrifices

she would have been required to make had she been hired

so failure to provide prejudgment interest will equalize,

to some extent, these differences.

59. Further, as it will be projected for payment in

the future, it is felt that the award of backpay without

interest before judgment will be within Rath’s reach. It

is determined also that the prejudgment interest sought

when coupled with post-judgment interest thereon could

well precipitate Rath’s downfall. A remedy which creates

the prospect of casualty for both Rath and the discrim-

inatees who still prefer work at Columbus Junction is

neither equitable nor the proper exercise of sound discre-

tion so prejudgment interest should be disregarded.

COSTS

60. The briefs filed by the parties present their re-

spective attitudes toward the assessment of costs. As

the Order of Referral is understood, that is not a matter

36c

upon which the Special Master is expected to make a rec-

ommendation. It would be inappropriate, in any event,

since his interests are indirectly involved. Disposition of

the costs, therefore, is not a part of this Report and Recom-

mendation.

61. The Special Master recommends that the follow-

ing be made a part of the DECREE to be entered:

IT IS THEREFORE ORDERED AND DECREED AS

FOLLOWS:

A. That the word “defendant” herein is intended to

describe and does describe The Rath Packing Company

and its agents, officers and employees having direct or in-

direct responsibility for the operation of Rath’s Columbus

Junction plant and the hiring of employees at said loca-

tion.

B. That the Court shall retain supervisory jurisdic-

tion over this matter and its parties for a period of five

years following the entry of the decree unless sooner

terminated voluntarily by it or for cause shown. Any

party shall have the right to request the Court’s interven-

tion for reasons shown upon timely notice to the other

party or parties affected.

C. That during the period that the Court retains

supervisory jurisdiction over the case and its parties, de-

fendant shall maintain the following records referable to

its Columbus Junction operation:

(1) All applications for employment;

(2) All employment tests, interview notes, reference

checks and investigative reports on applicants;

(3) An applicant-flow log, kzpt separate from ap-

plications, showing the name of each applicant, the ap-

plicant’s sex and the date of the application;

37¢c

(4) All advertisements for the hiring of employees;

(5) All personnel files of employees working for de-

fendant at any time during this period;

(6) All other documents which relate to defendant’s

procedures and criteria for new hires; and

(7) All documents which relate to the discharge of

any female employee.

D. That the defendant is perpetually enjoined from

engaging in any act or maintaining any policy that has

the purpose or effect of discriminating, on the basis of

sex, in the hiring of employees at its Columbus Junction

facility, except as herein expressly authorized.

E. That the defendant, within 60 days after the entry

of this decree or within 60 days after reopening its Colum-

bus Junction plant, whichever is later, shall develop, file

and serve upon the other parties objective selection pro-

cedures which it has adopted for the hiring of new em-

ployees there. Those procedures which shall not discrim-

inate against prospective female applicants shall become

effective only after the eligible females listed in Ap-

pendix A attached hereto have either been hired or have

declined an offer of employment or have been found dis-

qualified.

F. In the event plaintiff believes that defendant’s

selection procedures and criteria are not being followed by

defendant or have need of amendment to carry out better

the intent of this Decree at any time during the period the

Court retains jurisdiction over this matter, the plaintiff

shal] notify the defendant in writing of the facts upon

which it relies and request corrective measures. Within

30 days of the defendant’s reply, the plaintiff shall notify

the defendant in writing of either the plaintiff’s accept-

38e

ance of the defendant’s position or the reason said position

is unacceptable and, if applicable, any revised corrective

measures. If the defendant does not take the action re-

quested by the plaintiff within ten days after of the plain-

tiff’s notification, the parties will submit their respective

positions to the Court for resolution.

G. That nothing herein contained is intended to in-

terfere with the orderly and preferential recall of those

persons who were employed at Columbus Junction when

it closed on January 24, 1983.

H. That after reopening its Columbus Junction plant

and until those physically and mentally able females listed

in Appendix A have been employed or have declined em-

ployment when offered, the defendant shall hire one qual-

ified female production worker at said plant from among

those listed in Appendix A for each male production

worker hire there after said reopening. Offers to hire

will be made in the order in which the names of females

appear in Appendix A. An eligible iemale whose name ap-

pears in Appendix A and who accepts defendant’s em-

ployment offer shall be granted seniority which will be

retroactive for all purposes to the date upon which the

first entry level job was filled by a male after the date

upon which the female’s first application for work at

Columbus Junction was submitted to defendant.

I. When the names of those in Appendix A have

been exhausted because of physical or mental disqualifi-

cation, acceptance of employment or its refusal defendant

shall thereafter hire not less than two females from

among the female applicants then qualified under its

adopted selection procedures for every three male pro-

duction workers hired until] the percentage of females is

at least 25% of the production workforce at Columbus

39c

Junction on or before the expiration of five years after

the date hereof. That percentage, within reasonable limits,

shall be maintained thereafter.

J. That judgment for the use of the class members

shall be entered against The Rath Packing Company in

favor of Equal O

This text is long and has been trimmed here. Open the source document for the complete record.