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Marie v. Eastern Railroad Association and Traffic Executive Association

decided: May 29, 1981.


Appeal from a judgment of the District Court for the Southern District of New York, Robert L. Carter, Judge, in a sex discrimination class action, under Title VII of the Civil Rights Act, awarding an injunction, back pay, and attorneys' fees and expenses. See 72 F.R.D. 443 (1976) (class certification); 458 F. Supp. 1147 (1978) (liability); 497 F. Supp. 800 (1980) (remedy). Reversed and remanded.

Before Friendly, Mansfield and Kearse, Circuit Judges.

Author: Friendly; Per Curiam

This is an appeal from a final judgment in a sex discrimination class action in the District Court for the Southern District of New York under Title VII of the Civil Rights Act, 42 U.S.C. ยง 2002e-2, wherein Theresa J. Ste. Marie (Ste. Marie) is the named plaintiff and Eastern Railroad Association (ERA) and one of its components, Traffic Executive Association (TEA), are defendants. The gravamen of the complaint is that defendants discriminated against women in appointments to technical and managerial positions. The action has necessarily consumed a great deal of the time of Judge Carter over the last five years. The results of his labors are embodied in three published opinions, two of them lengthy, 72 F.R.D. 443 (1976) (class certification), 458 F. Supp. 1147 (1978) (liability), and 497 F. Supp. 800 (1980) (remedy), familiarity with which is assumed. In the first opinion, 72 F.R.D. 443, he certified Ste. Marie to represent a class consisting of all female employees of ERA. In the second opinion, 458 F. Supp. 1147, considering the case as presenting a claim of disparate treatment, he concluded that defendants had followed a policy and practice of sex discrimination during the relevant period, beginning 180 days prior to plaintiff's filing, in August 1974, of a charge of sex discrimination with the Equal Employment Opportunity Commission (EEOC). In the third opinion, 497 F. Supp. 800, he reviewed the claims of eleven employees who sought back pay or other individual relief and sustained seven. He also directed defendants to institute an elaborate program of job evaluation and classification of all positions throughout the organization. This included performance appraisal systems, publicization and explanation of performance ratings and review procedures, posting of all vacancies along with qualifications required to fill the positions, and much else, see 497 F. Supp. at 811. He awarded plaintiff's attorney a basic total fee of $140,670, plus a bonus of 10% of that amount, or $14,067, see City of Detroit v. Grinnell Corp., 495 F.2d 448, 471-72 (2 Cir. 1974), along with a fee for the services of a personnel expert, a statistical expert and his assistants, and costs. Defendants appeal from essentially all of the judge's rulings.

The number and difficulty of sex and race discrimination cases have increased to a point where it is neither practicable nor useful to write appellate opinions dealing in detail with every facet of each case. Decision turns on the particular history and practices of each employer, and opinions thus have limited precedential value. The guidelines for the determination of disparate treatment cases like this have been so clearly laid down by the Supreme Court in a series of cases beginning with McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973), and continuing through Teamsters v. United States, 431 U.S. 324, 97 S. Ct. 1843, 52 L. Ed. 2d 396 (1977); Hazelwood School District v. United States, 433 U.S. 299, 97 S. Ct. 2736, 53 L. Ed. 2d 768 (1977); Furnco Construction Co. v. Waters, 438 U.S. 567, 98 S. Ct. 2943, 57 L. Ed. 2d 957 (1978); Board of Trustees of Keene State College v. Sweeney, 439 U.S. 24, 99 S. Ct. 295, 58 L. Ed. 2d 216 (1979); and, most recently, Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981), that there should be little need for intervention by courts of appeals. While unfortunately we find such a need to exist in this case despite the conscientious efforts of the district judge, we limit ourselves to our principal conclusions of error, without attempting to restate fully the complex and unique facts or to discuss every argument made by the parties. We are confident that when the case is reconsidered on remand, the district judge will deal with such further arguments as may still be pressed in light of the conclusions expressed in this opinion. However, a brief description of ERA's structure and past practices towards women is required.

ERA is an unincorporated association formed in 1970 to perform various traffic management and inspection services for its members, 23 northeastern railroads. It consists essentially of three component organizations: TEA, the Eastern Weighing and Inspection Bureau (EWIB) and the Railroad Perishable Inspection Agency (RPIA). TEA, with offices chiefly in New York City, analyzes proposals for rate and tariff changes submitted by member lines or shippers and makes recommendations, which are then voted upon by ERA's members. TEA also compiles and publishes tariffs and provides data processing services. EWIB monitors weight agreements and transit accounts between shippers and member lines and investigates loss and damage claims. It has 9 district offices. RPIA has offices in 32 cities. Its employees perform routine inspections for damage to shipments of perishable goods. The principal job classification in both EWIB and RPIA is that of inspector. Although there is no educational requirement for the position of EWIB inspector, an RPIA inspector must have completed two years of college education in agriculture, biology or bacteriology.

The district court found that prior to 1972 ERA hired women solely to fill secretarial positions and did not train them for responsibility in technical areas. Women were barred from participation in ERA's tuition refund program and "none were encouraged to attend Advanced Traffic School where they could have acquired basic technical skills to speed their advancement" in TEA. 458 F. Supp. at 1160. Except for positions in RPIA covered by a collective bargaining agreement, job vacancies were not advertised and promotions, initiated by management, were "based on the ad hoc subjective judgment of the appointing authority that a particular male employee had the necessary qualifications needed to fill the vacancy or to take on a new assignment." Id. at 1160-61. During this period, all ERA's managers and all inspectors were men. In 1972, however, pursuant to a conciliation agreement resulting from another Title VII charge, TEA agreed not to discriminate against women in the future. The tuition refund program was opened to women and women began attending Advanced Traffic School. Non-management positions in TEA were advertised and women were hired and promoted to fill a variety of technical positions in that organization. The significance of this history of discrimination antedating the commencement of liability and ERA's efforts to overcome it will emerge more fully below.

The overarching reason why the decision must be reversed is that the judge, having concluded, perhaps wrongly, that plaintiff had established a prima facie case, proceeded on the basis of a clearly improper standard as to the burden thereby placed on the defendant. He stated, 458 F. Supp. at 1165, that with the establishment of a prima facie case of sex discrimination "the burden shifted to the defendant to rebut plaintiff's case, and its failure to do so compels the conclusion that its policies and practices violate the Act." Continuing, he stated, 458 F. Supp. at 1165-66:

Disparate treatment of male and female employees can be sustained against a Title VII challenge only if the employer can establish business necessity justifying the disparity, or a bona fide occupational qualification reasonably necessary to the business operation. * * * A business necessity defense requires more than a mere showing that the questioned practices or policy served some legitimate managerial function, * * *. Instead, the challenged practices must be essential with no other reasonable alternative available. * * * Defendant's rebuttal evidence does not come close to meeting this standard. Accordingly, plaintiff has not only established a prima facie case of discrimination against defendant's female employees as a class, but she has met the ultimate burden of persuasion, * * * warranting the entry of judgment against defendant on the issue of liability.

This was error. It has been clear ever since McDonnell Douglas, supra, 411 U.S. at 802, 93 S. Ct. at 1824, that the burden that is shifted to the defendant by plaintiff's making out a prima facie case of disparate treatment a task described in Burdine as "not onerous", -- U.S. at -- , 101 S. Ct. at 1093 is not a burden of persuading the trier of a business necessity to employ or promote a person belonging to the majority. The shifted burden is simply "to articulate some legitimate, nondiscriminatory reason for the (minority) employee's rejection." 411 U.S. at 802, 93 S. Ct. at 1824. This follows necessarily from the language and purpose of Title VII. The employer is not required to hire or promote a minority employee; rather he is forbidden to refuse to hire or promote such an employee because of race or sex. Hence he sufficiently rebuts a prima facie case by pointing to a business reason for his employment decision. By doing this he adequately negates, for the time being, the force of a plaintiff's initial showing that a qualified minority employee was denied employment or promotion which was given to a majority employee instead. The plaintiff then has the burden "to show that (the) stated reason was in fact pretext," 411 U.S. at 804, 93 S. Ct. at 1825, or, as later phrased, id. at 805, 93 S. Ct. at 1826, "that the presumptively valid reasons" for failure to hire or promote "were in fact a coverup for a racially (here sexually) discriminatory decision." Justice Powell's recent opinion in Burdine, supra,*fn1 simply elaborates in a helpful fashion on the theme sufficiently sounded eight years ago in McDonnell Douglas from which the Court has never deviated. The district court's conclusion that defendants had followed a pattern and practice of disparate treatment must therefore fall as based on an erroneous allocation of the burden of proof.*fn2

The district court's liability opinion is infected by other errors. The most significant flaw is its treatment of statistical data offered by plaintiff's expert which, in its words, "conclusively establishes plaintiff's claim of discrimination against women throughout defendant's work force at the managerial and technical levels," 458 F. Supp. at 1163, and of defendants' reports to the EEOC for 1974, 1975, 1976 and 1977. The statistical data showed the proportions of men and women in defendants' work force and in various categories in January, 1977 and January, 1975. Although plaintiff's expert claimed that the statistics showed discrimination in respect of salaries, the court found, 458 F. Supp. at 1156, there was no evidence of any salary disparities between men and women occupying the same position and that the gap between male and female employees in salary and salary expectations occurred because of the low representation of women in higher salaried positions. The data revealed by the statistics were as follows:

Clerical Technical Managerial Total

Women 80 (69%) 35 (30%) 1 (1%) 116


Men 31 (7%) 331 (76%) 74 ...

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