REVISED MARCH 10, 2008
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 29, 2008
No. 05-41417
Charles R. Fulbruge III
Clerk
SYLVESTER MCCLAIN, on his own behalf and on behalf of a class of similarly
situated persons; BUFORD THOMAS, on his own behalf and on behalf of a class
of similarly situated persons; PATRICK ROSS, on his own behalf and on behalf
of a class of similarly situated persons; MARY THOMAS, on her own behalf and
on behalf of a class of similarly situated persons; EDDIE K. MASK, on his own
behalf and on behalf of a class of similarly situated persons; LEROY GARNER,
on his own behalf and on behalf of a class of similarly situated persons; SHERRY
CALLOWAY SWINT, on her own behalf and on behalf of a class of similarly
situated persons; WALTER BUTLER, on his own behalf and on behalf of a class
of similarly situated persons; also known as A; FLORINE THOMPSON, on her
own behalf and on behalf of a class of similarly situated persons; CLARENCE
OWENS, on his own behalf and on behalf of a class of similarly situated persons;
also known as C; CLIFFORD R. DUIRDEN, on his own behalf and on behalf of
a class of similarly situated persons; EARL POTTS, on his own behalf and on
behalf of a class of similarly situated persons; ROALD MARK, on his own behalf
and on behalf of a class of similarly situated persons
Plaintiffs - Appellants-Cross Appellees
v.
LUFKIN INDUSTRIES, INC.
Defendant - Appellee-Cross Appellant
Appeals from the United States District Court
for the Eastern District of Texas
No. 05-41417
Before JONES, Chief Judge, and HIGGINBOTHAM and CLEMENT, Circuit
Judges.
EDITH H. JONES, Chief Judge:
In this complex Title VII class action against Lufkin Industries, Inc.
(“Lufkin”), African-American plaintiffs allege that Lufkin’s practice of delegating
subjective decision-making authority to its managers with respect to initial
assignments and promotions disparately affected them. After a bench trial, the
district court issued a judgment in favor of the employees. After sifting through
numerous issues, we reach results that are unfortunately inconclusive of the
litigation. We affirm in part, reverse in part, and vacate and remand in part.
I. FACTUAL AND PROCEDURAL BACKGROUND
Lufkin, a large manufacturing corporation located in Lufkin, Texas, is
divided into four production divisions: Foundry, Trailer, Oil Field, and Power
Transmission. The company employs approximately 1,500 hourly and salaried
workers, and the hourly workers have been unionized for many years.
Only two of the representative plaintiffs in this class action filed EEOC
complaints. Sylvester McClain (“McClain”), the named plaintiff, began working
in Lufkin’s Trailer division in 1972. In January 1995, he complained to the
EEOC that his supervisor, Arden Jinkins (“Jinkins”), had discriminated against
him based on his race. Among other things, McClain complained that Jinkins
tried to have him demoted. Buford Thomas (“Thomas”), a Lufkin employee since
1979, filed his EEOC charge in February 1997, a year after he was allegedly
constructively discharged. Thomas complained of being denied promotional and
training opportunities because of his race while working in the Power
Transmission and Oil Field divisions. The EEOC issued right-to-sue letters on
both charges.
McClain and Thomas sued Lufkin for employment discrimination in
violation of Title VII and 42 U.S.C. § 1981. The plaintiffs asserted that
2
No. 05-41417
systematic racial discrimination pervades Lufkin’s initial job assignments,
training, promotions, and compensation. The district court certified the
plaintiffs’ disparate-impact claims as a class action involving 700 current and
former Lufkin employees. The class was described as:
All Black persons employed for any period of time by defendant
Lufkin Industries on or after March 6, 1994, to date, whose
compensation, remuneration, benefits, job assignments, promotional
opportunities, career advancements and other terms and conditions
of employment have been, may have been, or may become, adversely
affected by defendant Lufkin Industries’ past or present systems of
administering hiring, wages, salaries, job assignments, training,
evaluations, promotions, demotions, terminations, layoffs, recalls,
and rehires.
McClain v. Lufkin Indus., Inc., 187 F.R.D. 267, 277-78 (E.D. Tex. 1999). The
court, however, declined to certify a disparate treatment class. Two claims went
to trial: (1) discrimination against blacks in Lufkin’s assignment of newly hired
employees; and (2) racially discriminatory promotion practices that rested on
largely subjective decision-making criteria carried out by a largely white
supervisory corps.
Protracted pretrial proceedings in this case included two class certification
hearings, two interlocutory appeals to this court, and a two-year mediation
effort. When the case finally went to bench trial, the court strictly limited each
party to twenty hours for the presentation of its case. Ultimately, the district
court found that Lufkin’s practice of delegating subjective decision-making
authority to its white managers with respect to initial assignments and
promotions resulted in a disparate impact on black employees in violation of
Title VII. The court awarded the plaintiffs over $3.4 million in back pay, as well
as attorneys’ fees and injunctive relief. Both parties appeal.
3
No. 05-41417
II. DISCUSSION
Lufkin contends that the named plaintiffs failed to exhaust EEOC
administrative remedies and lack standing to represent the class. Lufkin also
contends that the district court erred in finding that Lufkin’s promotion
practices are subjective and incapable of separation for analysis and that they
had a statistically significant disparate impact on black employees. Lufkin
challenges the court’s calculation of the back pay award according to a class-wide
formula. Finally, Lufkin asserts that the cumulative effect of various errors,
including the limited presentation of evidence, requires us to vacate the
judgment.
For their part, the plaintiffs argue that the district court erred in refusing
to certify a disparate treatment class, in failing to award appropriate injunctive
relief, and in reducing their attorneys’ fees. We turn first to Lufkin’s
contentions.
A. Lufkin’s Arguments
1. Failure to Exhaust EEOC Remedies
As a threshold matter, Lufkin argues that the district court should have
dismissed the plaintiffs’ initial-assignment and promotion claims for failure to
exhaust administrative remedies and for lack of standing to represent a broadly
defined class. Failure to exhaust is not a procedural “gotcha” issue. It is a
mainstay of proper enforcement of Title VII remedies. Lufkin contends that
McClain and Thomas complained to the EEOC about their individual disparate
treatment by the company, but not about their hiring nor about any neutral
employment practices on which a disparate-impact case depends. The scope of
their administrative claims governs the scope of the class claims. Vuyanich v.
Republic Nat’l Bank, 723 F.2d 1195, 1201 (5th Cir. 1984); Evans v. U.S. Pipe &
Foundry Co., 696 F.2d 925, 929 (11th Cir. 1983). Consequently, Lufkin asserts,
the EEOC was never presented with disparate-impact class claims concerning
4
No. 05-41417
Lufkin’s hiring and promotional practices, and the administrative process was
circumvented.
The district court ruled that plaintiffs had exhausted their administrative
remedies via McClain’s January 1995 letter to the EEOC. See 29 C.F.R.
§ 1601.12(b); Fellows v. Universal Rests., Inc., 701 F.2d 447, 451 (5th Cir. 1983).
The court also held that a contemporary administrative proceeding pertaining
to Lufkin by the Office of Federal Contract Compliance Programs (“OFCCP”)
sufficiently fulfilled the purposes of exhaustion. This court reviews de novo the
district court’s conclusion concerning exhaustion. See Pacheco v. Mineta,
448 F.3d 783, 788 (5th Cir.), cert. denied, 127 S. Ct. 299 (2006).
Title VII requires employees to exhaust their administrative remedies
before seeking judicial relief. Id. Private sector employees must satisfy this
requirement by filing an administrative charge with the EEOC. Id. at 788 n.6.
The charge enables the EEOC to investigate and, if appropriate, negotiate a
resolution with an employer. Only after administrative efforts terminate may
the employee sue the employer in federal court.
Courts should not condone lawsuits that exceed the scope of EEOC
exhaustion, because doing so would thwart the administrative process and
peremptorily substitute litigation for conciliation. Nevertheless, competing
policies underlie judicial interpretation of the exhaustion requirement. See id.
at 788-89. On one hand, the scope of an EEOC charge should be liberally
construed for litigation purposes because Title VII “was designed to protect the
many who are unlettered and unschooled in the nuances of literary
draftsmanship.” Sanchez v. Standard Brands, Inc., 431 F.2d 455, 465 (5th Cir.
1970). On the other hand, the “primary purpose of Title VII is to trigger the
investigatory and conciliatory procedures of the EEOC, in [an] attempt to
achieve non-judicial resolution of employment discrimination claims.” Pacheco,
448 F.3d at 788-89. To reconcile these policies, this court construes an EEOC
5
No. 05-41417
complaint broadly but in terms of the administrative EEOC investigation that
“can reasonably be expected to grow out of the charge of discrimination.”
Sanchez, 431 F.2d at 466. We use a “fact-intensive analysis” of the
administrative charge that looks beyond the four corners of the document to its
substance. Id. In sum, a Title VII lawsuit may include allegations “like or
related to allegation[s] contained in the [EEOC] charge and growing out of such
allegations during the pendency of the case before the Commission.” Id.
Among this court’s numerous rulings on exhaustion of EEOC claims, we
find most relevant the recent Pacheco opinion, which held that an employee
failed to exhaust a disparate-impact claim because his EEOC charge alleged only
disparate treatment and identified no neutral employment policy. 448 F.3d at
792. Although Pacheco’s administrative charge complained that he had not been
promoted because of racial discrimination, his subsequent lawsuit alleged both
disparate treatment and disparate impact. Id. at 786-87. This court affirmed
the dismissal of the disparate-impact allegations because:
a disparate-impact investigation could not reasonably have been
expected to grow out of Pacheco’s administrative charge because of
the following matters taken together: (1) it facially alleged disparate
treatment; (2) it identified no neutral employment policy; and (3) it
complained of past incidents of disparate treatment only.
Id. at 792.
In this case, both the district court and the plaintiffs rely principally on
McClain’s January 1995 letter to establish administrative exhaustion. Like
Pacheco, McClain specifically complained to the EEOC of disparate treatment
and past incidents of discrimination against himself. His three-page letter to the
EEOC describes “discriminatory treatment that I have been receiving for some
time,” and “discriminatory acts against me by Mr. Jinkins.” McClain alleged
that Jinkins, his supervisor, racially discriminated against him and tried to have
him demoted or fired on false charges of unsatisfactory performance.
6
No. 05-41417
McClain’s letter nowhere refers to any neutral employment policy of
Lufkin. Yet, according to Pacheco, “the cornerstone of any EEO[C] disparate-
impact investigation” is a neutral employment policy. 448 F.3d at 792.
Plaintiffs argue that a disparate-impact investigation could have grown out of
McClain’s letter because he alluded to a “cultural problem” that extended to all
parts of Lufkin’s business. A “cultural problem,” however, is a vague term that
cannot be understood as a neutral employment policy. See, e.g., id. at 790.
Compare Marshall v. Fed. Express Corp., 130 F.3d 1095, 1098 (D.C. Cir. 1997)
(“A vague or circumscribed EEOC charge will not satisfy the exhaustion
requirement for claims it does not fairly embrace.”), with Gomes v. Avco Corp.,
964 F.2d 1330, 1335 (2d Cir. 1992) (disparate-impact investigation “would
reasonably have flowed” from an EEOC complaint that referenced an eight-year
track to promotion). McClain’s letter not only failed to identify any neutral
employment policy, but also said nothing about discriminatory hiring at Lufkin.
This limited interpretation of McClain’s letter is confirmed by the actual
scope of the EEOC’s investigation, which is clearly pertinent to an exhaustion
inquiry. See Fine v. GAF Chem. Corp., 995 F.2d 576, 578 (5th Cir. 1993);
Fellows, 701 F.2d at 451. Responding to the January 1995 letter, the EEOC sent
McClain a proposed formal charge of discrimination in August 1996, in which
the agency summarized his claim as follows:
I have been subjected to different terms and conditions of
employment by being denied comparable training, access to supplies
and equipment needed to do a satisfactory job; given unsatisfactory
evaluations.
The charge then repeats McClain’s complaint of demotion. The plaintiffs also
cite another of McClain’s written statements to the EEOC, in which he suggests
that other evidence could be disclosed to support his discrimination claim. In
context, this sentence refers only to Lufkin’s disparate treatment of McClain
alone.
7
No. 05-41417
The district court attempted to fortify its conclusion that exhaustion
occurred by taking into account an investigation by the OFCCP into “similar
claims to those now before the court.” The court seemed to think that an
investigation by another federal agency can exhaust claims that must be
handled by the EEOC and that Lufkin was effectively notified of its exposure to
disparate-impact claims by responding to the OFCCP investigation. The district
court cited no authority in support of its exhaustion bootstrapping, and we are
aware of none. Further, no such Title VII shortcut to exhaustion or notification
exists. Since 1970, the caselaw has explained that “the ‘scope’ of the judicial
complaint is limited to the ‘scope’ of the EEOC investigation which can
reasonably be expected to grow out of the charge of discrimination.” Sanchez,
431 F.2d at 466 (emphasis added); see also Pacheco, 448 F.3d at 792 (“[T]he
plaintiff’s administrative charge will be read somewhat broadly, in a fact-specific
inquiry into what EEOC investigations it can reasonably be expected to trigger.”
(emphasis added)); Fellows, 701 F.2d at 450-51. The district court erred by
utilizing OFCCP’s investigation as a basis for inferring EEOC administrative
exhaustion.
Although McClain’s EEOC complaint and the OFCCP investigation failed
to exhaust the employees’ class claims, Buford Thomas’s EEOC complaint
carries part of the requisite burden. Thomas alleged to the EEOC that he was
constructively discharged, denied promotional and training opportunities, and
overloaded with work because of his race. He specifically stated that
“[r]espondent has similarly discriminated against other black African
Americans.” Thomas’s complaint, viewed in light of the recent Pacheco decision,
presents a close question of exhaustion directed at a discriminatory, albeit
neutral, company policy authorizing subjective promotion decisions. We
8
No. 05-41417
conclude, however, that exhaustion was sufficient. Significantly, Lufkin did not
contend otherwise in the trial court.1
Lufkin, instead, forcefully urged that the class failed to exhaust claims
concerning Lufkin’s alleged discriminatory assignment of newly hired black
employees to the Foundry division. Hourly work in the Foundry division is hot
and heavy to a far greater extent than in the company’s other production
divisions. But neither Thomas nor McClain, each with twenty or more years at
Lufkin, had worked in the Foundry division and neither man could or did
complain to the EEOC about Foundry hiring practices. We are persuaded that
the EEOC would not reasonably have investigated discriminatory assignment
of new Foundry division employees based on either McClain’s or Thomas’s
charge. Eastland v. Tenn. Valley Auth., 714 F.2d 1066, 1067-68 (11th Cir. 1983)
(class representatives could not assert initial assignment claims because all had
been hired years before); Evans v. U.S. Pipe & Foundry Co., 696 F.2d 925, 929
(11th Cir. 1983) (EEOC investigation limited to promotion and harassment).
Because of this deficiency, we must vacate the judgment awarding damages and
injunctive relief against Lufkin based on discriminatory initial assignments to
the Foundry division.2
Lufkin’s liability will next be examined in regard to the class’s promotion-
discrimination claim.
1
Because exhaustion was satisfied, we need not here decide whether exhaustion is a
jurisdictional or claim prerequisite. See Pacheco, 448 F.3d at 788 n.7. See generally Arbaugh
v. Y&H Corp., 546 U.S. 500 (2006) (employee numerosity requirement in 42 U.S.C. § 2000e(b)
is an element of a Title VII claim and not a jurisdictional requirement).
2
Caselaw also raises considerable doubt that McClain and Thomas would have had
standing to assert the class hiring claims of Foundry division workers. See E. Tex. Motor
Freight Sys. Inc. v. Rodriguez, 431 U.S. 395, 403 (1977); Vuyanich, 723 F.2d at 1200 (plaintiffs
who alleged injury from hiring and termination practices could not represent class arising from
other bank employment practices).
9
No. 05-41417
2. Failure to Isolate a Specific Employment Practice
The district court identified Lufkin’s subjective decision-making process
in awarding promotions as the employment practice that caused a disparate
impact on black employees. To establish a prima facie case of discrimination
under a disparate-impact theory, a plaintiff must show: (1) an identifiable,
facially neutral personnel policy or practice; (2) a disparate effect on members
of a protected class; and (3) a causal connection between the two. Watson v. Fort
Worth Bank & Trust, 487 U.S. 977, 994 (1988). Ordinarily, a plaintiff must
demonstrate that each particular challenged employment practice causes a
disparate impact. Yet, Title VII provides that “if the complaining party can
demonstrate to the court that the elements of [the employer’s] decision making
process are not capable of separation for analysis, the decision making process
may be analyzed as one employment practice.” 42 U.S.C. § 2000e-2(k)(1)(B)(i).
Lufkin challenges two factual findings underlying the court’s liability
determination: that its decision-making process is subjective; and that its
decision-making process could not be separated for analysis into components
that were objective and non-racially biased. We address each in turn.
a. Subjective Decision Making
Lufkin argues that its promotion system is in fact overwhelmingly
objective, and that the district court’s finding of subjective decision making lacks
support. We review this finding for clear error. See Kona Tech. Corp. v. S. Pac.
Transp. Co., 225 F.3d 595, 601 (5th Cir. 2000).3
In Watson, the Supreme Court defined subjective decision making as
employment decisions “based on the exercise of personal judgment or the
application of inherently subjective criteria.” 487 U.S. at 988. The Court
3
In reviewing the court’s findings, we consider evidence adduced during the bench trial
but not the class certification hearings. The class certification hearings provided Lufkin
limited opportunity for examination on matters going to the merits.
10
No. 05-41417
indicated that a system which incorporates a mixture of subjective and objective
criteria should generally be treated as subjective. Id. at 989 (“However one
might distinguish ‘subjective’ from ‘objective’ criteria, it is apparent that
selection systems that combine both types would generally have to be considered
subjective in nature.”).
At Lufkin, promotions within the hourly ranks are putatively governed by
a Collective Bargaining Agreement (“CBA”) between Lufkin and three unions.
Under the CBA, the company must post bid sheets for each new hourly opening.
Seniority is the main criterion for promotion. However, plaintiffs offered
evidence that promotions are not rigidly awarded according to seniority. Class
members Sylvester McClain and Florine Thompson testified that they were
personally bypassed for promotion in favor of a less senior white employee.
Plaintiffs presented additional evidence that approximately half of all
promotions were not awarded to the most senior bidder.
Moreover, the Collective Bargaining Agreement (“CBA”) contains an
ability clause that allowed Lufkin to fill positions on the basis of ability,
regardless of seniority. The evidence indicates that ability determinations were
not governed by objective standards. Paul Perez, Lufkin’s Vice President of
Human Resources, agreed that the ability determination was subjective.
McClain testified that supervisors did not always truly evaluate ability when
awarding promotions under the ability clause, but simply gave the position to
the candidate they favored. Billy Webb, the union’s chief spokesman, testified
that the union had taken issue with the ability provision in past contract
negotiations because it did not think that the ability clause was always
administered fairly. The CBA also provides for a ten-day trial period following
promotion. According to the testimony of one of its managers, Lufkin has no
written guidelines or formal tests for determining which employees pass this
trial period.
11
No. 05-41417
Plaintiffs also offered evidence that Lufkin permitted its managers to
apportion training opportunities subjectively, a process that disadvantaged black
employees who sought promotions. Perez testified that the CBA does not govern
employees’ daily work assignments, and he acknowledged that daily job
assignments are not made on the basis of seniority. Perez testified that there
are no written policies determining who is to receive on-the-job training, and
Lufkin does not track how such training is allocated among employees. In
addition, McClain testified that white employees were given more training in
areas that were relevant to the jobs he sought. McClain explained that when
“white managers and supervisors . . . see a man they want to put on a particular
job, . . . they’ll tap him” for training after his shift, or for external training.
According to McClain, the employee who received the extra training would be
the most qualified and would therefore receive the promotion once the job
became available.
The district court also heard testimony that Lufkin’s allegedly objective
measures for determining which employees were eligible to bid, such as
attendance and discipline records, are subject to variance and manipulation.
Lufkin has a computer program that tracks attendance, but both McClain and
Thompson testified that the system was manipulable. If an employee was
absent or tardy and the supervisor did not want the employee to lose credit,
Thompson stated that the supervisor could non-schedule the employee or use the
employee’s vacation days to skew the records. With respect to discipline records,
Steve Reynolds, a Lufkin supervisor, testified that there are no written criteria
for determining when a rule violation should be “written up.” He stated that
this decision is left to individual supervisors.
The evidence also supported that Lufkin engaged in subjective decision
making when awarding promotions in the salaried ranks. Salaried positions are
not governed by the CBA, and company managers admitted that they were
12
No. 05-41417
unaware of any guidelines, criteria, or documentation for the process of making
promotions to salaried positions. Rather, most promotions in the salaried ranks
are awarded through an interview process.4
In light of this evidence, we are not left with the definite and firm
conviction that the district court erred in finding subjective decision making in
Lufkin’s promotion system. See United States v. U.S. Gypsum Co., 333 U.S. 364,
395 (1948). Although Lufkin offered some testimony during the bench trial that
would tend to refute the court’s finding, it was within the province of the district
court to accord this testimony less credibility than that of the class members and
their experts. “The reviewing court oversteps the bounds of its duty under Rule
52(a) if it undertakes to duplicate the role of the lower court." Anderson v. City
of Bessemer City, 470 U.S. 564, 573 (1985). Accordingly, we cannot say the
court’s finding of subjective decision making in promotions amounted to clear
error.
b. Not Capable of Separation for Analysis
Lufkin also challenges the district court’s finding that its promotion
practices are not capable of separation for review. Lufkin argues that if the
court had isolated the objective factors in promotions — e.g. Lufkin’s bidding
practices and seniority — the court could not have found a discriminatory
impact. As explained above, Title VII permits a plaintiff to demonstrate that the
elements of the employer’s decision-making process are not capable of separation
for analysis and thus that the process should be analyzed as one employment
practice. 42 U.S.C. § 2000e-2(k)(1)(B)(i). This court has not addressed the
precise conditions under which employment practices are “not capable of
4
The testimony of the plaintiffs’ expert, Dr. Richard Martell, an Industrial Organization
Psychologist, also supports the finding of subjective decision making. Dr. Martell testified that
the personnel policies, procedures, and practices at Lufkin were “decidedly subjective.” After
discussing Lufkin’s promotion practices in some detail, Martell ultimately concluded that
Lufkin is “awash in a sea of subjectivity that cuts across all manufacturing divisions.”
13
No. 05-41417
separation for analysis.” But “where a promotion system uses tightly integrated
and overlapping criteria, it may be difficult as a practical matter for plaintiffs
to isolate the particular step responsible for the observed discrimination.” See
Munoz v. Orr, 200 F.3d 291, 304 (5th Cir. 2000). Some guidance is also provided
by trial court decisions interpreting the provision. In Stender v. Lucky Stores,
Inc., the district court held:
Where the system of promotion is pervaded by a lack of uniform
criteria, criteria that are subjective as well as variable, discretionary
placements and promotions, the failure to follow set procedures and
the absence of written policies or justifications for promotional
decisions, the court is not required to “pinpoint particular aspects of
[the system]” that are unfavorable to [the protected group].
803 F. Supp. 259, 335 (N.D. Cal. 1992) (citation omitted); see also Butler v. Home
Depot, Inc., No. C-94-4335 SI, 1997 WL 605754, at *13 (N.D. Cal. Aug. 29, 1997)
(unreported) (where employer delegated decisions to store managers who made
subjective judgments about candidate’s qualifications without written criteria,
decision-making process not capable of separation for analysis); Schallop v. N.Y.
State Dept. of Law, 20 F. Supp. 2d 384, 402 (N.D.N.Y. 1998) (entire process may
be characterized as a single employment practice when employment decisions
are made based on variable, subjective criteria); Bannister v. Dal-Tile Int’l, Inc.,
No. 3:02-CV-2498, 2003 WL 21145739, at *2 (N.D. Tex. May 14, 2003) (plaintiff
not required to pinpoint specific employment practices where the factors of a
defendant’s decision-making process are “so interwoven that they are incapable
of separation”).
There is no indication that the district court applied incorrect legal
principles in determining that Lufkin’s practices were incapable of separation.
This finding of fact must be reviewed for clear error. See Kona, 225 F.3d at 601.
Lufkin lists various ways in which its employment practices were analytically
14
No. 05-41417
separable, but the court’s express findings preclude separation according to
those factors.
Lufkin argues, for example, that the plaintiffs’ expert could have separated
the challenged employment practices from its legitimate seniority system. The
expert included in his analysis numerous promotions that contributed to the
statistical shortfall in black promotions, even though these jobs were
indisputably awarded to the most senior candidate. This argument ignores the
district court’s finding that Lufkin affords management considerable discretion
in deciding whether to follow seniority in promotions. Plaintiffs could not
statistically analyze the actual practice they challenge — subjective and
discretionary application of the seniority provisions — by excluding promotion
based on seniority. Seniority, the court found, was likely to have been irrelevant
to the promotion.
Lufkin also contends that the plaintiffs should have separated out
instances in which candidates were properly denied promotions because of
unsatisfactory attendance. This argument, too, runs afoul of the court’s finding
that managers have substantial discretion in applying attendance rules. In such
a system, a denial of promotion for poor attendance is not helpful to Lufkin
where promotions may also have been awarded following non-uniform
interpretation of employee attendance rules.
Finally, Lufkin contends that its “paper bid sheets provided additional
information that plaintiffs could have separated for analysis.”5 To the contrary,
the district court rejected the bid data, which Lufkin prepared for purposes of
5
Specifically, Lufkin argues that the plaintiffs could have used the bid sheets to analyze
separately whether blacks bid for jobs at some lesser rate than whites; whether blacks were
ineligible for promotion more often than whites because promotion required movement to a
higher rated job; whether blacks received fewer promotions because they did not pass a test
or declined promotion; whether blacks were disqualified by the requisite minimum
qualifications for master classifications or salaried positions more often than whites; and
whether Lufkin’s practice of promoting only candidates who sign the bid sheets adversely
impacts blacks.
15
No. 05-41417
this litigation, as unreliable and incomplete; ample evidence supports this
finding.
Lufkin has not suggested any viable way, consistent with the court’s
findings, in which the plaintiffs could have separated the promotion criteria for
review nor has it shown the district court clearly erred in so finding.
3. Statistically Significant Disparate Impact in Promotions
Lufkin maintains that the plaintiffs failed to demonstrate a statistically
significant disparate impact against black employees in promotions. At trial,
plaintiffs provided statistical evidence of discrimination through the report of
their expert, Dr. Richard Drogin. After constructing hypothetical pools of
employees who would be eligible for promotion, Dr. Drogin found that during the
class period, black employees received 127 fewer hourly promotions and 8.85
fewer salaried promotions than should have been expected given their
representation in these pools. Dr. Drogin determined that these differences were
statistically significant at 7.61 standard deviations for hourly promotions and
at 2.02 standard deviations for salaried promotions. In rebuttal, Lufkin offered
the statistical analysis of Dr. Mary Baker. Dr. Baker conducted her calculations
using bid data from Lufkin’s paper bid sheets, and concluded that there was no
statistically significant disparity in the promotion of blacks to hourly or salaried
positions. Faced with this battle of experts, the district judge credited the
testimony of Dr. Drogin over that of Dr. Baker.
Our role in reviewing this decision is limited. An appellate court owes
great deference to the findings of the trial court with respect to duly admitted
expert testimony. Cleveland ex rel. Cleveland v. United States, 457 F.3d 397, 407
(5th Cir. 2006). We review for abuse of discretion the district court's decision to
credit one expert over another. Id. And we reverse a district court's factual
finding that an employment decision was the product of unlawful discrimination
16
No. 05-41417
only if it is clearly erroneous. See Bazemore v. Friday, 478 U.S. 385, 398 (1986);
Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985).
With these standards in mind, we turn to Lufkin’s specific contentions.
First, Lufkin argues that Dr. Drogin’s analysis is legally insufficient because he
did not use “actual” applicant lists and bid sheets to: (1) construct the
availability pools; (2) consider potentially non-discriminatory explanations for
the promotions; and (3) factor in qualifications of potential applicants. Lufkin
is correct, of course, that actual applicant flow data are superior, and should be
used if available. See Anderson v. Douglas & Lomason Co., 26 F.3d 1277, 1286-
87 (5th Cir. 1994). But as discussed above, the district court expressly found
that the bid data were incomplete and unreliable, noting that more than half of
the promotions were missing from the bid database which Lufkin prepared in
anticipation of this litigation. Where actual data are unreliable, courts often
permit parties to analyze potential applicant flow data. See, e.g., Malave v.
Potter, 320 F.3d 321, 326-27 (2d Cir. 2003); Berger v. Iron Workers Reinforced
Rodmen Local 201, 843 F.2d 1395, 1414 (D.C. Cir. 1988); Hameed v. Iron
Workers Local 396, 637 F.2d 506, 512 n.6 (8th Cir. 1980); Lewis v. Bloomsburg
Mills, Inc., 773 F.2d 561, 568 (4th Cir. 1985). The district court did not err in
allowing plaintiffs to do so in this case.
Lufkin argues that even if the bid sheets were unavailable, Dr. Drogin’s
regression analysis would still be insufficient because his hypothetical applicant
pools do not take into account other minimum qualifications of applicants, such
as education. However, in selecting an appropriate pool and performing
regression analysis in Title VII cases, the Supreme Court has taught that a
plaintiff’s regression analysis need not include “all measurable variables.” See
Bazemore, 478 U.S. at 400 (“[I]t is clear that a regression analysis that includes
less than ‘all measurable variables’ may serve to prove a plaintiff's case.”); see
also Mozee v. Am. Commercial Marine Serv. Co., 940 F.2d 1036, 1045 (7th Cir.
17
No. 05-41417
1991). A plaintiff in a Title VII suit need not prove discrimination with scientific
certainty; rather his or her burden is to prove discrimination by a preponderance
of the evidence. Bazemore, 478 U.S. at 400. We are satisfied that Dr. Drogin’s
regression analysis was sufficiently refined for plaintiffs to meet this burden.
Finally, Lufkin argues that a disparity in salaried promotions of only 2.02
standard deviations does not support the district court’s finding of disparate
impact. This court has rejected the contention that a disparity of two or three
standard deviations is categorically insufficient to support an inference of
adverse impact. See Rendon v. AT&T Techs., 883 F.2d 388, 397-98 (5th Cir.
1989).6 And Lufkin has not persuasively explained why a standard deviation of
this magnitude should be accorded reduced significance under the particular
circumstances of this case. We therefore affirm the district court’s finding of a
statistically significant disparate impact in promotions.
4. Class-Wide Back-Pay Formula
Lufkin also challenges the class-wide back-pay award. The district court's
calculation of a back pay award is reviewed for clear error. Shipes v. Trinity
Indus., 987 F.2d 311, 316-17 (5th Cir. 1993).
a. Class-Wide Formula or Individual Hearings
Lufkin complains that the district court erred by using a formula to
calculate the award rather than computing damages on an individual basis. The
complexity of the case is the determining factor in what method the district court
should utilize to formulate a back-pay award. Pettway v. Am. Cast Iron Pipe Co.,
494 F.2d 211, 261 (5th Cir. 1974). Whenever possible, back pay should be
awarded individually and tailored to the actual victims of discrimination.
United States v. U.S. Steel Corp., 520 F.2d 1043, 1055–56 (5th Cir. 1975). If the
6
Other courts have reached the same conclusion. See, e.g., Palmer v. Schultz, 815 F.2d
84, 96–97 (D.C. Cir. 1987); Coleman v. Exxon Chem. Corp., 162 F. Supp. 2d 593, 616 (S.D. Tex.
2001).
18
No. 05-41417
class is small, the time period short, or the effect of the discrimination
straightforward, individual determinations of each claimant’s position but for
the discrimination are possible. Pettway, 494 F.2d at 261. If, however, the class
is large, the promotion or hiring practices are ambiguous, or the illegal practices
continued over an extended period of time, a class-wide approach to the measure
of back pay may be necessary. Id.; see also Shipes, 987 F.2d at 318.
In this case, the district court concluded that the size of the class and the
inherent uncertainty of the individual claims contraindicates the use of an
individualized approach. We agree. We are not persuaded that the district court
could “easily” make individualized inquiries for each of the more than 700
plaintiffs in this case, as Lufkin contends. Further, as in Pettway, there is no
practical way to determine through individual hearings which jobs the class
members would have bid on and obtained but for the discriminatory procedures
Lufkin had in place. See Pettway, 494 F.2d at 260. Class members outnumber
promotion vacancies; jobs become available over time; the vacancies involve
different pay rates; and a determination of who was entitled to a vacancy would
have to be made by an evaluation of seniority and ability at that time. Id. (citing
identical factors in approving the formula approach).7 “[W]here employees start
at entry level jobs in a department and progress into a myriad of other positions
and departments on the basis of seniority and ability over an extended period of
time, exact reconstruction of each individual claimant’s work history, as if
discrimination had not occurred, is not only imprecise but impractical.” Id. at
262. An individualized process of determining actual damages for each plaintiff
in this case would result in the “quagmire of hypothetical judgments” that
7
Lufkin argues that the court could readily make these determinations by reviewing
the bid sheet database. This argument ignores the district court’s finding that the bid sheet
database was incomplete and unreliable.
19
No. 05-41417
courts should avoid. Id. at 260. Accordingly, the district court neither abused
its discretion nor clearly erred in adopting the formula-driven approach.
b. Specific Methodology
While Lufkin levies various attacks on the district court’s methodology for
determining the back-pay award, these need not all be considered. With the
elimination of a finding of class discrimination in initial assignments to the
Foundry, the damage award must be vacated and remanded.
On remand, the district court will be dealing solely with damages
attributable to approximately 127 lost promotions in hourly pay grades and nine
lost salaried employment promotions. The accepted way to apportion damages
among a class of plaintiffs who outnumber the lost promotion spots is to compute
the total additional wages attributable each year to each promotion and divide
the value among the class members. See United States v. City of Miami,
195 F.3d 1292, 1299-1302 (11th Cir. 1999); Dougherty v. Barry, 869 F.2d 605,
614-15 (D.C. Cir. 1989) (Ginsburg, J.); Hameed v. Iron Workers Local 396,
637 F.2d 506, 520-21 (8th Cir. 1980). The district court should adapt this
method with whatever modifications will both expediently and fairly apportion
the lost wages among class members working in the multiple divisions of Lufkin.
What the court may not do is return to Dr. Drogin’s lost wages calculations
given our disposition of this case. Dr. Drogin estimated annual hourly wage
disparities between black and white workers and black and non-white workers
and made a similar racial comparison for salaried workers. The conclusions in
this section of his report were intended to demonstrate the systemic effects of
racially discriminatory Foundry assignments throughout workers’ careers.
Whether or not such conclusions would be supportable for both hiring and
promotion claims, they do not pertain to the class claim that is now limited to
lost promotions. Dr. Drogin’s figures would come close to compensating each
class member for the full value of lost promotions, where plainly each member
20
No. 05-41417
had at best a possibility of progressing up the ladder. The district court is free
to consider any additional evidence that the parties may offer on this issue.
5. Limitation on the Presentation of Evidence and Trial Location
Lufkin argues that given the complexity of the issues involved in this case,
the district court’s imposition of rigid time limits on the presentation of evidence
deprived Lufkin of a fair trial. A district court has broad discretion in managing
its docket and structuring the conduct of a trial. Sims v. ANR Freight Sys., Inc.,
77 F.3d 846, 849 (5th Cir. 1996). It may maintain the pace of the trial by setting
time limits on counsel. Id. Moreover, a judge has special latitude in applying
time limits in a bench trial, since the court often has become familiar with the
case long before trial begins and can readily comprehend the evidence presented.
Id. at 850. Nevertheless, discretion has its limits. See id. at 849; see also Kelly
v. Boeing Petroleum Servs., Inc., 61 F.3d 350, 358 (5th Cir. 1995). “When the
manner of the presentation of information . . . is judicially restricted to the
extent that the information becomes incomprehensible then the essence of the
trial [is] destroyed.” Sims,77 F.3d at 849.
In this case, we do not doubt that it was difficult for Lufkin to mount a
defense against generalized claims of subjective decision making — claims that
implicated all of its divisions and spanned almost a decade — in the mere twenty
hours the district court allowed each side. But even if the strict time limits
amounted to an abuse of discretion, the district court’s error is presumed
harmless until shown to be prejudicial. See Ruiz v. Estelle, 679 F.2d 1115, 1129
(5th Cir. 1982); see also Sims, 77 F.3d at 849-50 (declining to reverse where the
complaining party did not establish there was a reasonable probability that the
outcome of the case would be different upon retrial). Lufkin has not persuaded
us that it suffered reversible prejudice. Lufkin’s related claim of “cumulative
error” fails because it is essentially rendered moot by the pervasive effect of our
appellate ruling.
21
No. 05-41417
B. Plaintiffs’ Arguments
1. Disparate Treatment Class Certification
Plaintiffs contend that the district court erred in denying class certification
of their 42 U.S.C. § 1981 disparate-treatment claim seeking declaratory,
injunctive, and equitable back pay.8 See Allison v. Citgo Petroleum Corp.,
151 F.3d 402, 415-16 (5th Cir. 1998) (equitable monetary relief, i.e., back pay,
available in (b)(2) class actions). The district court declined to certify the class
under Rule 23(b)(2) because individual claims for monetary relief would have
predominated, and it concluded that the class representatives would be
“inadequate” if they dropped the class members’ demand for compensatory and
punitive damages in order to protect the “predominance” of nonmonetary claims.
See FED. R. CIV. P. 23(b)(2). This court reviews the district court’s class-
certification decision for abuse of discretion. See Allison, 151 F.3d at 408.
Whether the court applied the correct legal standard in reaching its decision is
reviewed de novo. Id.
The district court did not abuse its discretion. See Pegues v. Miss. State
Employment Serv., 699 F.2d 760, 763 (5th Cir. 1983) (“Implicit in this deferential
standard of review is the recognition of the essential factual nature of the
certification inquiry and the district court’s inherent power to manage and
control pending litigation.”). Motivated by Zachery v. Texaco Exploration &
Production, Inc., 185 F.R.D. 230 (W.D. Tex. 1999), the district court expressed
concern about the plaintiffs’ disavowal of monetary damages. In Zachery, the
putative class representatives also dropped their demand for compensatory and
punitive damages in order to achieve Rule 23(b)(2) certification. Id. at 233. As
a result, class members would not have had the right to opt out of the class and
8
Plaintiffs characterize the district court’s decision as a “dismissal” of their disparate-
treatment claim; however, the district court clarified that “a disparate treatment claim has not
been ‘dismissed’ because a disparate treatment claim was never certified.”
22
No. 05-41417
might be barred from bringing individual damage claims. Id. at 243 (citing
Cooper v. Fed. Reserve Bank of Richmond, 467 U.S. 867 (1984)). Noting this
serious conflict of interest, the court refused to impose upon the class members
the decision by named plaintiffs to forfeit the compensatory and punitive
damages claim. Id. at 244-45. We agree with Zachery and with the district
court’s conclusion here that if the price of a Rule 23(b)(2) disparate treatment
class both limits individual opt outs and sacrifices class members’ rights to avail
themselves of significant legal remedies, it is too high a price to impose. There
was no error, much less abuse of discretion, in this certification denial.
2. Vague Remedial Injunction
Plaintiffs argue that the district court’s remedial injunction lacks
specificity, fails to remedy the discriminatory exercise of subjective decision-
making practices, and includes no provision to ensure Lufkin’s compliance.
Lufkin agrees that the injunction is unenforceable for lack of specificity, but
urges us to reject the additional injunctive relief that plaintiffs now request. We
review a district court’s fashioning of injunctive relief for abuse of discretion.
Peaches Entm’t Corp. v. Entm’t Repertoire Assocs., Inc., 62 F.3d 690, 693 (5th
Cir. 1995).
The injunction at issue is identical to one the district court included in a
preliminary order in January 2005. Lufkin appealed the injunction immediately
after the preliminary order. We dismissed the appeal, stating that “[b]efore this
matter is ripe for appellate review, the district court must identify the specific
steps the defendant must take to implement and comply with the injunction.”
Despite this instruction, the district court included the original injunction
verbatim in the final amended judgment.
The court’s injunction lacks the detail required under Federal Rule of Civil
Procedure 65(d). The injunction includes such vague directives as “cease and
desist all racially biased assignment and promotion practices,” “create and
23
No. 05-41417
implement a program to ensure that black employees receive an equitable
proportion of promotions,” and “take all necessary steps to remedy the effects of
past discrimination.” An order framed in these broad generalities fails to afford
notice to Lufkin of its proscribed or required conduct and is therefore
unenforceable. We vacate and remand for the court to try again.
This task will not be simple. Where, as here, Title VII does not require
plaintiffs to pinpoint the specific practices that caused the discriminatory effect,
it is especially difficult to craft an adequate remedial order that will eliminate
discrimination without hobbling Lufkin’s legitimate promotion policies. We
leave to the district court the task of reviewing afresh the propriety of the
injunction, and if it is found necessary, of balancing plaintiffs’ requests for
stronger measures to ensure Lufkin’s compliance with the imprecision of the
liability finding.
3. Attorneys’ Fees
Plaintiffs contend that the district court abused its discretion by reducing
their fees without conducting lodestar and Johnson analyses or making factual
findings to support the reduction. A district court’s determination of attorneys’
fees is reviewed for abuse of discretion, and the findings of fact supporting the
award are reviewed for clear error. Von Clark v. Butler, 916 F.2d 255, 258 (5th
Cir. 1990).
The first step in determining statutorily authorized attorneys’ fees is to
calculate a “lodestar” amount by multiplying the number of hours reasonably
expended on the litigation by a reasonable hourly rate. Rutherford v. Harris
County, Tex., 197 F.3d 173, 192 (5th Cir. 1999). The court must then consider
whether the lodestar should be adjusted upward or downward, depending on the
circumstances of the case and the factors set forth in Johnson v. Georgia
Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). A district court must
“explain with a reasonable degree of specificity the findings and reasons upon
24
No. 05-41417
which the award is based, including an indication of how each of the Johnson
factors was applied.” Von Clark, 916 F.2d at 258.
In this case, the plaintiffs sought an interim award of attorneys’ fees, costs
and expenses approximating $6.5 million, covering 12,387.9 hours of work
performed and nearly a million dollars in out-of-pocket costs. The district court
slashed their request and summarily stated that Ms. Demchak’s reported hours
were “excessive and not necessary” and that the rates she requested were not
“usual and customary” for employment discrimination cases in the geographical
area. The court offered no reason to deny all compensation for time spent on the
lengthy mediation effort; to deny compensation to Mr. Garrigan for his
attendance at plaintiff Roald Mark’s separate suit against Lufkin; to apply a
blanket reduction of 25% to all of the billable hours reported by plaintiffs’
counsel; and to reduce the hourly rates requested by plaintiffs’ counsel. Because
of these deficiencies, we must vacate the fee award and remand for the district
court to conduct proper lodestar-fee and Johnson analyses, and award counsel
a reasonable reimbursement.
III. CONCLUSION
The district court struggled to complete its work in this wide-ranging,
complex discrimination case. Nevertheless, the sum of the foregoing discussion
leaves much to be reconsidered. First, we vacate the judgment insofar as it
holds Lufkin liable for a claim, unexhausted before the EEOC, that the company
discriminatorily assigned newly hired African Americans to the Foundry
division. Second, we affirm the judgment of Lufkin’s liability to the class for the
discriminatory impact of its subjective promotional policies. Because of this split
decision, we must vacate and remand the damage award for further proceedings
25
No. 05-41417
consistent with the foregoing discussion, as well as the award of injunctive relief
and attorneys’ fees.
AFFIRMED IN PART, REVERSED IN PART, VACATED AND
REMANDED IN PART.
26