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ALBEMARLE PAPER CO. ET AL. v. MOODY ET AL.

*fn*: June 25, 1975.

ALBEMARLE PAPER CO. ET AL
v.
MOODY ET AL.



CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Burger, Douglas, Brennan, Stewart, White, Marshall, Blackmun, Rehnquist; Powell took no part in the consideration or decision of the cases.

Author: Stewart

[ 422 U.S. Page 408]

 MR. JUSTICE STEWART delivered the opinion of the Court.

These consolidated cases raise two important questions under Title VII of the Civil Rights Act of 1964, 78 Stat. 253, as amended by the Equal Employment Opportunity Act of 1972, 86 Stat. 103, 42 U.S.C. § 2000e et seq. (1970 ed. and Supp. III): First: When employees or applicants for employment have lost the opportunity to earn wages because an employer has engaged in an unlawful discriminatory employment practice, what standards should a federal district court follow in deciding whether to award or deny backpay? Second: What must an employer show to establish that pre-employment tests racially discriminatory in effect, though not in intent, are sufficiently "job related" to survive challenge under Title VII?

I

The respondents -- plaintiffs in the District Court -- are a certified class of present and former Negro employees at a paper mill in Roanoke Rapids, N.C.; the petitioners -- defendants in the District Court -- are the plant's owner, the Albemarle Paper Co., and the plant employees' labor union, Halifax Local No. 425.*fn1 In August 1966, after filing a complaint with the Equal Employment Opportunity Commission (EEOC), and receiving notice of their right to sue,*fn2 the

[ 422 U.S. Page 409]

     respondents brought a class action in the United States District Court for the Eastern District of North Carolina, asking permanent injunctive relief against "any policy, practice, custom or usage" at the plant that violated Title VII. The respondents assured the court that the suit involved no claim for any monetary awards on a class basis, but in June 1970, after several years of discovery, the respondents moved to add a class demand for backpay. The court ruled that this issue would be considered at trial.

At the trial, in July and August 1971, the major issues were the plant's seniority system, its program of employment testing, and the question of backpay. In its opinion of November 9, 1971, the court found that the petitioners had "strictly segregated" the plant's departmental "lines of progression" prior to January 1, 1964, reserving the higher paying and more skilled lines for whites. The "racial identifiability" of whole lines of progression persisted until 1968, when the lines were reorganized under a new collective-bargaining agreement. The court found, however, that this reorganization left Negro employees "locked' in the lower paying job classifications." The formerly "Negro" lines of progression had been merely tacked on to the bottom of the formerly "white" lines, and promotions, demotions, and layoffs continued to be governed -- where skills were "relatively equal" -- by a system of "job seniority." Because of the plant's previous history of overt segregation, only whites had seniority in the higher job categories. Accordingly, the court ordered the petitioners to implement a system of "plantwide" seniority.

[ 422 U.S. Page 410]

     The court refused, however, to award backpay to the plaintiff class for losses suffered under the "job seniority" program.*fn3 The court explained: S

"In the instant case there was no evidence of bad faith non-compliance with the Act. It appears that the company as early as 1964 began active recruitment of blacks for its Maintenance Apprentice Program. Certain lines of progression were merged on its own initiative, and as judicial decisions expanded the then existing interpretations of the Act, the defendants took steps to correct the abuses without delay....IS

"In addition, an award of back pay is an equitable remedy.... The plaintiffs' claim for back pay was filed nearly five years after the institution of this action. It was not prayed for in the pleadings. Although neither party can be charged with deliberate dilatory tactics in bringing this cause to trial, it is apparent that the defendants would be substantially prejudiced by the granting of such affirmative relief. The defendants might have chosen to exercise unusual zeal in having this court determine their rights at an earlier date had they known that back pay would be at issue.

The court also refused to enjoin or limit Albemarle's testing program. Albemarle had required applicants for employment in the skilled lines of progression to have a high school diploma and to pass two tests, the Revised Beta Examination, allegedly a measure of nonverbal intelligence,

[ 422 U.S. Page 411]

     and the Wonderlic Personnel Test (available in alternative Forms A and B), allegedly a measure of verbal facility. After this Court's decision in Griggs v. Duke Power Co., 401 U.S. 424 (1971), and on the eve of trial, Albemarle engaged an industrial psychologist to study the "job relatedness" of its testing program. His study compared the test scores of current employees with supervisorial judgments of their competence in ten job groupings selected from the middle or top of the plant's skilled lines of progression. The study showed a statistically significant correlation with supervisorial ratings in three job groupings for the Beta Test, in seven job groupings for either Form A or Form B of the Wonderlic Test, and in two job groupings for the required battery of both the Beta and the Wonderlic Tests.*fn4 The respondents' experts challenged the reliability of these studies, but the court concluded: S

"The personnel tests administered at the plant have undergone validation studies and have been proven to be job related. The defendants have carried the burden of proof in proving that these tests are 'necessary for the safe and efficient operation of the business' and are, therefore, permitted by the Act. However, the high school education requirement used in conjunction with the testing requirements is unlawful in that the personnel tests alone are adequate to measure the mental ability and reading skills required for the job classifications.

The petitioners did not seek review of the court's judgment, but the respondents appealed the denial of a backpay award and the refusal to enjoin or limit Albemarle's use of pre-employment tests. A divided Court of Appeals for the Fourth Circuit reversed the judgment of

[ 422 U.S. Page 412]

     the District Court, ruling that backpay should have been awarded and that use of the tests should have been enjoined, 474 F.2d 134 (1973). As for backpay, the Court of Appeals held that an award could properly be requested after the complaint was filed and that an award could not be denied merely because the employer had not acted in "bad faith," id., at 142: S

"Because of the compensatory nature of a back pay award and the strong congressional policy embodied in Title VII, a district court must exercise its discretion as to back pay in the same manner it must exercise discretion as to attorney fees under Title II of the Civil Rights Act.... Thus, a plaintiff or a complaining class who is successful in obtaining an injunction under Title VII of the Act should ordinarily be awarded back pay unless special circumstances would render such an award unjust. Newman v. Piggie Park Enterprises, 390 U.S. 400... (1968)." (Footnote omitted.)

As for the pre-employment tests, the Court of Appeals held, id., at 138, that it was error S

"to approve a validation study done without job analysis, to allow Albemarle to require tests for 6 lines of progression where there has been no validation study at all, and to allow Albemarle to require a person to pass two tests for entrance into 7 lines of progression when only one of those tests was validated for that line of progression."I

In so holding the Court of Appeals "gave great deference" to the "Guidelines on Employee Selection Procedures," 29 CFR pt. 1607, which the EEOC has issued "as a workable set of standards for employers, unions and employment agencies in determining whether their selection

[ 422 U.S. Page 413]

     procedures conform with the obligations contained in title VII...." 29 CFR § 1607.1(c).

We granted certiorari*fn5 because of an evident Circuit conflict as to the standards governing awards of backpay*fn6 and as to the showing required to establish the "job relatedness" of pre-employment tests.*fn7

II

Whether a particular member of the plaintiff class should have been awarded any backpay and, if so, how much, are questions not involved in this review. The equities of individual cases were never reached. Though at least some of the members of the plaintiff class obviously suffered a loss of wage opportunities on account of Albemarle's unlawfully discriminatory system of job seniority, the District Court decided that no backpay should be awarded to anyone in the class. The court declined to make such an award on two stated grounds: the lack of "evidence of bad faith non-compliance with the Act," and the fact that "the defendants would be substantially prejudiced" by an award of backpay that was demanded contrary to an earlier representation and late in the progress of the litigation. Relying directly

[ 422 U.S. Page 414]

     on Newman v. Piggie Park Enterprises, 390 U.S. 400 (1968), the Court of Appeals reversed, holding that backpay could be denied only in "special circumstances." The petitioners argue that the Court of Appeals was in error - that a district court has virtually unfettered discretion to award or deny backpay, and that there was no abuse of that discretion here.*fn8

[ 422 U.S. Page 415]

     Piggie Park Enterprises, supra, is not directly in point. The Court held there that attorneys' fees should "ordinarily" be awarded -- i.e., in all but "special circumstances" -- to plaintiffs successful in obtaining injunctions against discrimination in public accommodations, under Title II of the Civil Rights Act of 1964. While the Act appears to leave Title II fee awards to the district court's discretion, 42 U.S.C. § 2000a-3(b), the court determined that the great public interest in having injunctive actions brought could be vindicated only if successful plaintiffs, acting as "private attorneys general," were awarded attorneys' fees in all but very unusual circumstances. There is, of course, an equally strong public interest in having injunctive actions brought under Title VII, to eradicate discriminatory employment practices. But this interest can be vindicated by applying the Piggie Park standard to the attorneys' fees provision of Title VII, 42 U.S.C. § 2000e-5(k), see Northcross v. Memphis Board of Education, 412 U.S. 427, 428 (1973). For guidance as to the granting and denial of backpay, one must, therefore, look elsewhere.

The petitioners contend that the statutory scheme provides no guidance, beyond indicating that backpay awards are within the District Court's discretion. We disagree. It is true that backpay is not an automatic or mandatory remedy; like all other remedies under the Act, it is one which the courts "may" invoke.*fn9 The

[ 422 U.S. Page 416]

     scheme implicitly recognizes that there may be cases calling for one remedy but not another, and -- owing to the structure of the federal judiciary -- these choices are, of course, left in the first instance to the district courts. However, such discretionary choices are not left to a court's "inclination, but to its judgment; and its judgment is to be guided by sound legal principles." United States v. Burr, 25 F. Cas. 30, 35 (No. 14,692d) (CC Va. 1807) (Marshall, C.J.). The power to award backpay was bestowed by Congress, as part of a complex legislative design directed at a historic evil of national proportions. A court must exercise this power "in light of the large objectives of the Act," Hecht Co. v. Bowles, 321 U.S. 321, 331 (1944). That the court's discretion is equitable in nature, see Curtis v.. Loether, 415 U.S. 189, 197 (1974), hardly means that it is unfettered by meaningful standards or shielded from thorough appellate review. In Mitchell v. DeMario Jewelry, 361 U.S. 288, 292 (1960), this Court held, in the face of a silent statute, that district courts enjoyed the "historic power of equity" to award lost wages to workmen unlawfully discriminated

[ 422 U.S. Page 417]

     against under § 17 of the Fair Labor Standards Act of 1938, 52 Stat. 1069, as amended, 29 U.S.C. § 217 (1958 ed). The Court simultaneously noted that "the statutory purposes [leave] little room for the exercise of discretion not to order reimbursement." 361 U.S., at 296.

It is true that "[e]quity eschews mechanical rules... [and] depends on flexibility." Holmberg v. Armbrecht, 327 U.S. 392, 396 (1946). But when Congress invokes the Chancellor's conscience to further transcendent legislative purposes, what is required is the principled application of standards consistent with those purposes and not "equity [which] varies like the Chancellor's foot."*fn10 Important national goals would be frustrated by a regime of discretion that "produce[d] different results for breaches of duty in situations that cannot be differentiated in policy." Moragne v. States Marine Lines, 398 U.S. 375, 405 (1970).

The District Court's decision must therefore be measured against the purposes which inform Title VII. As the Court observed in Griggs v. Duke Power Co., 401 U.S., at 429-430, the primary objective was a prophylactic one: S

"It was to achieve equality of employment opportunities and remove barriers that have operated in the past to favor an identifiable group of white employees over other employees."I

Backpay has an obvious connection with this purpose. If employers faced only the prospect of an injunctive order, they would have little incentive to shun practices of dubious legality. It is the reasonably certain prospect of a backpay award that "provide[s] the spur or catalyst

[ 422 U.S. Page 418]

     which causes employers and unions to self-examine and to self-evaluate their employment practices and to endeavor to eliminate, so far as possible, the last vestiges of an unfortunate and ignominious page in this country's history." United States v. N.L. Industries, Inc., 479 F.2d 354, 379 (CA8 1973).

It is also the purpose of Title VII to make persons whole for injuries suffered on account of unlawful employment discrimination. This is shown by the very fact that Congress took care to arm the courts with full equitable powers. For it is the historic purpose of equity to "secur[e] complete justice," Brown v. Swann, 10 Pet. 497, 503 (1836); see also Porter v. Warner Holding Co., 328 U.S. 395, 397-398 (1946). "[W]here federally protected rights have been invaded, it has been the rule from the beginning that courts will be alert to adjust their remedies so as to grant the necessary relief." Bell v.. Hood, 327 U.S. 678, 684 (1946). Title VII deals with legal injuries of an economic character occasioned by racial or other antiminority discrimination. The terms "complete justice" and "necessary relief" have acquired a clear meaning in such circumstances. Where racial discrimination is concerned, "the [district] court has not merely the power but the duty to render a decree which will so far as possible eliminate the discriminatory effects of the past as well as bar like discrimination in the future." Louisiana v. United States, 380 U.S. 145, 154 (1965). And where a legal injury is of an economic character, S

"[t]he general rule is, that when a wrong has been done, and the law gives a remedy, the compensation shall be equal to the injury. The latter is the standard by which the former is to be measured. The injured party is to be placed, as near as may be, in

[ 422 U.S. Page 419]

     the situation he would have occupied if the wrong had not been committed." Wicker v. Hoppock, 6 Wall. 94, 99 (1867).

The "make whole" purpose of Title VII is made evident by the legislative history. The backpay provision was expressly modeled on the backpay provision of the National Labor Relations Act.*fn11 Under that Act, "[m]aking the workers whole for losses suffered on account of an unfair labor practice is part of the vindication of the public policy which the Board enforces." Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 197 (1941). See also Nathanson v. NLRB, 344 U.S. 25, 27 (1952); NLRB v. Rutter-Rex Mfg. Co., 396 U.S. 258, 263 (1969). We may assume that Congress was aware that the Board,

[ 422 U.S. Page 420]

     since its inception, has awarded backpay as a matter of course - not randomly or in the exercise of a standardless discretion, and not merely where employer violations are peculiarly deliberate, egregious, or inexcusable.*fn12 Furthermore, in passing the Equal Employment Opportunity Act of 1972, Congress considered several bills to limit the judicial power to award backpay. These limiting efforts were rejected, and the backpay provision was re-enacted substantially in its original form.*fn13 A Section-by-Section Analysis introduced by Senator Williams to accompany the Conference Committee Report on the 1972 Act

[ 422 U.S. Page 421]

     strongly reaffirmed the "make whole" purpose of Title VII: S

"The provisions of this subsection are intended to give the courts wide discretion exercising their equitable powers to fashion the most complete relief possible. In dealing with the present section 706(g) the courts have stressed that the scope of relief under that section of the Act is intended to make the victims of unlawful discrimination whole, and that the attainment of this objective rests not only upon the elimination of the particular unlawful employment practice complained of, but also requires that persons aggrieved by the consequences and effects of the unlawful employment practice be, so far as possible, restored to a position where they would have been were it not for the unlawful discrimination." 118 Cong. Rec. 7168 (1972).

As this makes clear, Congress' purpose in vesting a variety of "discretionary" powers in the courts was not to limit appellate review of trial courts, or to invite inconsistency and caprice, but rather to make possible the "fashion[ing] [of] the most complete relief possible."

It follows that, given a finding of unlawful discrimination, backpay should be denied only for reasons which, if applied generally, would not frustrate the central statutory purposes of eradicating discrimination throughout the economy and making persons whole for injuries suffered through past discrimination.*fn14 The courts of appeals must maintain a consistent and principled application of the backpay provision, consonant with the twin statutory objectives, while at the same time recognizing that the trial court will often have the keener

[ 422 U.S. Page 422]

     appreciation of those facts and circumstances peculiar to particular cases.

The District Court's stated grounds for denying backpay in this case must be tested against these standards. The first ground was that Albemarle's breach of Title VII had not been in "bad faith."*fn15 This is not a sufficient reason for denying backpay. Where an employer has shown bad faith -- by maintaining a practice which he knew to be illegal or of highly questionable legality -- he can make no claims whatsoever on the Chancellor's conscience. But, under Title VII, the mere absence of bad faith simply opens the door to equity; it does not depress the scales in the employer's favor. If backpay were awardable only upon a showing of bad faith, the remedy would become a punishment for moral turpitude, rather than a compensation for workers' injuries. This would read the "make whole" purpose right out of Title VII, for a worker's injury is no less real simply because his employer did not inflict it in "bad faith."*fn16 Title VII is not concerned with the employer's "good intent or absence of discriminatory intent" for "Congress directed the thrust of the Act to the consequences of employment practices, not simply the motivation." Griggs v. Duke Power Co.,

[ 422 U.S. Page 423401]

     U.S., at 432. See also Watson v. City of Memphis, 373 U.S. 526, 535 (1963); Wright v. Council of City of Emporia, 407 U.S. 451, 461-462 (1972).*fn17 To condition the awarding of backpay on a showing of "bad faith" would be to open an enormous chasm between injunctive and backpay relief under Title VII. There is nothing on the face of the statute or in its legislative history that justifies the creation of drastic and categorical distinctions between those two remedies.*fn18

The District Court also grounded its denial of backpay on the fact that the respondents initially disclaimed any interest in backpay, first asserting their claim five years after the complaint was filed. The court concluded that the petitioners had been "prejudiced" by this conduct. The Court of Appeals reversed on the ground "that the broad aims of Title VII require that the issue of back pay be fully developed and determined even though it was not raised until the post-trial stage of litigation," 474 F.2d, at 141.

[ 422 U.S. Page 424]

     It is true that Title VII contains no legal bar to raising backpay claims after the complaint for injunctive relief has been filed, or indeed after a trial on that complaint has been had.*fn19 Furthermore, Fed. Rule Civ. Proc. 54(c) directs that S

"every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings.

But a party may not be "entitled" to relief if its conduct of the cause has improperly and substantially prejudiced the other party. The respondents here were not merely tardy, but also inconsistent, in demanding backpay. To deny backpay because a particular cause has been prosecuted in an eccentric fashion, prejudicial to the other party, does not offend the broad purposes of Title VII. This is not to say, however, that the District Court's ruling was necessarily correct. Whether the petitioners were in fact prejudiced, and whether the respondents' trial conduct was excusable, are questions that will be open to review by the Court of Appeals, if the District Court, on remand, decides again to decline to make any award of backpay.*fn20 But the standard of review will be the familiar one of whether the District Court was "clearly erroneous" in its factual findings and whether it "abused" its traditional discretion to locate "a just result" in light of the circumstances peculiar to the case,

[ 422 U.S. Page 425]

     Langnes v. Green, 282 U.S. 531, 541 (1931). On these issues of procedural regularity and prejudice, the "broad aims of ...


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