UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 92-5165
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WILLIAM T. MOHAM,
Plaintiff-Appellee,
VERSUS
STEEGO CORP., ET AL.,
Defendants,
STEEGO CORPORATION,
Defendant-Appellant.
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Appeal from the United States District Court
for the Western District of Louisiana
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(September 27, 1993)
Before REAVLEY, DUHÉ, and BARKSDALE, Circuit Judges.
BARKSDALE, Circuit Judge:
In this Title VII case, the only issue on appeal concerns the
denial of the equal opportunity to seek employment; and that issue
turns on whether a selling company can be held liable for the
discriminatory acts of its supervisors committed while in the
employ of the seller, but while acting for the benefit of the
purchasing company. Because we conclude that such liability would
push beyond the limits of applicable general agency principles, we
REVERSE that part of the judgment appealed from.
I.
Nabors Trailers, Inc., a subsidiary of Steego Corporation,
manufactured and distributed trailers through its facility in
Mansfield, Louisiana. Early in 1988, it stopped manufacturing,
maintaining only its parts, shipping and service departments.
The repair shop was part of the service department. William
T. Moham, who began his employment with Nabors in 1966, worked in
that shop. In June 1988, Moham (age 58) and four others were
working under the supervision of foreman Tommy Mason and service
department supervisor Joe Leone. Three of Moham's co-workers were
white; Moham and one co-worker were black. All three whites
received raises that month; neither Moham nor his black co-worker
did.
On August 23, 1988, pursuant to an agreement signed that July
1, Nabors sold its assets to Mansfield Industries, Inc., which
assumed operation of the business the next day.1 In the weeks
prior to the sale, Mason had made applications for employment with
the new company (Mansfield) available to the repair shop employees.
All except Moham were interviewed and assured that they would
maintain their positions after the sale.2
As Moham left work on Tuesday, August 23, at approximately
four o'clock, Mason told him that, if the sale took effect that
1
Mansfield Industries took the name "Nabors Trailers". We
refer to it as "Mansfield".
2
Wilfred Woods, the other black working in the repair shop,
suffered a job-related injury after he submitted his application.
As a result, he was not on the job when the sale took place, but
was interviewed and hired when he returned after the sale.
2
night, Moham would no longer have a job; otherwise, he should
report to work as usual. When Moham asked for an explanation,
Mason said that Moham had failed to turn in his application. Moham
offered to go home, get the application and return it immediately.
Instead, Mason gave Moham his paycheck, and instructed him to turn
in his application at the Louisiana Job Service office.
Within an hour, Mason had telephoned a friend, who was white,
and suggested that his 19-year-old son come to the plant for an
interview. And, by six o'clock that day, the friend's son had been
hired to fill Moham's position and report to work the following day
for the new company. The next morning, Moham returned and met with
Leone, who again told him that he must apply for a job through the
Louisiana Job Service.
After filing a complaint with the EEOC for age and race
discrimination, Moham was issued a right to sue letter; and suit
was brought against, inter alia, Mansfield and Steego, Nabors'
parent. Because of its bankrupt status, Mansfield was dismissed,
pursuant to joint motion. And, because Nabors and Steego had
merged, the parties agreed that Steego would be liable for any
discriminatory acts by Nabors.
After a short bench trial, the district court found Steego
liable for the discriminatory acts which deprived Moham of both the
June pay raise ($320 in damages) and the opportunity to seek
employment with Mansfield (net damages of approximately $37,000).
The court also found that Moham had not established age as a
motivating factor in those discriminatory acts.
3
II.
Section 703(a)(1) of Title VII of the Civil Rights Act of
1964, 42 U.S.C. § 2000e, et seq. states that it is an unlawful
employment practice for an employer to
fail or refuse to hire or to discharge any
individual, or otherwise to discriminate against
any individual with respect to his compensation,
terms, conditions, or privileges of employment,
because of such individual's race, color, religion,
sex, or national origin.
42 U.S.C. § 2000e-2(a)(1). Steego does not challenge the pay raise
ruling; it appeals only the finding that Mason and Leone violated
Title VII and the conclusion that they did so as its agents.
Because only the liability of Steego (Nabors), the selling company,
is in issue, we need not reach the issue of discrimination, unless
Steego can be held liable for it. Therefore, we address the latter
issue first.
But, for a full understanding of this issue, we need to
present briefly the claimed discriminatory acts. And, in order to
do that, we must note quickly that the burden of proof for § 2000e
cases, articulated in McDonnell Douglas Corp. v. Green, 411 U.S.
792 (1973), has been recently reaffirmed and clarified in St.
Mary's Honor Center v. Hicks, ___ U.S. ___, 113 S. Ct. 2742 (1993).
As is well known, the plaintiff must first establish a prima facie
case of discrimination. If he does, he has created a presumption
of discrimination, see Texas Dept. of Community Affairs v. Burdine,
450 U.S. 248, 254 (1981); and the burden shifts to the defendant to
"articulate some legitimate, nondiscriminatory reason" for the
challenged action, McDonnell Douglas, 411 U.S. at 802. If the
4
defendant meets this burden by presenting evidence which, "if
believed by the trier of fact, would support a finding that
unlawful discrimination was not the cause of the employment
action", St. Mary's, ___ U.S. ___, 113 S. Ct. at 2747 (emphasis
omitted), then the presumption raised by the plaintiff's prima
facie case essentially disappears, and the plaintiff is left with
the ultimate burden, which has never left him: that of proving
that the defendant intentionally discriminated against him, see id.
And, the trier of fact must still answer that ultimate
question of discrimination, even if the defendant's explanation has
been rejected. As explained in St. Mary's, that rejection is not,
in and of itself, a finding of intentional discrimination. "[A]
reason cannot be proved to be a `pretext for discrimination' unless
it is shown both that the reason was false, and that discrimination
was the real reason". Id. at ___, 113 S. Ct. at 2752 (citation and
emphasis omitted).
The defendant's proffered reason for hiring the 19-year-old
white, and not considering Moham for his old position with the new
company, was that he did not apply for it. When asked if Moham was
not hired because he failed to turn in his application, Mason
testified that Moham was rejected "[s]olely on that basis". In
addition to finding Mason's testimony "unconvincing", the court
found Moham's testimony "credible" and obviously believed that he
had specifically asked for permission to submit his application
before leaving work on August 23 -- before Mason solicited an
application from his friend's son. Certainly this is a finding
5
that the defendant's proffered reason is false. (This finding is
supported by the testimony of a white co-worker of Moham's, who
testified that Mason told him in June 1988 that "he was maybe gonna
have an all-white shop, get rid of all these blacks".) The court
went on to make the required finding on the ultimate question:
"Mr. Moham, a black man, was discriminatorily denied an equal
opportunity to seek employment with the new company".
Therefore, assuming that Mason and Leone did discriminate in
this fashion against Moham on the basis of his race, we must
determine whether Steego can be held liable for that
discrimination. On this issue, the district court concluded:
Tommy Mason and Joe Leone were employees of Nabors
... at the time the discriminatory acts occurred,
were being paid by Nabors ... and were acting
within the purview of their employment as
supervisory personnel of Nabors. ... Their actions
in denying Moham the equal opportunity to seek
employment with the new company [Mansfield] were
clearly within the scope of their employment. An
employer is liable for the discriminatory acts of
its personnel.
Needless to say, we freely review this conclusion of law.
For the definition of "employer", 42 U.S.C. § 2000e(b),
Congress includes "any agent of such a person". Because of such
use of the term "agent", instead of "employee" or "supervisor", for
example, the Supreme Court has interpreted this provision to mean
"that Congress wanted courts to look to agency principles for
guidance in this area". Meritor Sav. Bank, FSB v. Vinson, 477 U.S.
57, 72 (1986). The Court noted that although "common-law
principles [of agency] may not be transferable in all their
particulars to Title VII, Congress' decision to define `employer'
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to include any `agent' of an employer ... surely evinces an intent
to place some limits on the acts of employees for which employers
under Title VII are to be held responsible." Id. In its ruling,
the Court cited the Restatement (Second) of Agency. Id.
Section 219 of the Restatement provides that a master is
liable for the acts of his servants "committed while acting in the
scope of their employment". A servant's conduct is within the
scope of his employment if
(a) it is of the kind he is employed to perform;
(b) it occurs substantially within the authorized
time and space limits; [and]
(c) it is actuated, at least in part, by a purpose
to serve the master.
Restatement (Second) of Agency § 228(1).
Parts (a) and (b) are not at issue; it is uncontested that
Mason and Leone were authorized to hire repair shop employees for
Nabors and that their acts took place on Nabors' property during
working hours. The final element, however, cuts against Steego's
liability, and is decisive.
Consistent with the above quoted § 228, Restatement § 235
provides that conduct is not within the scope of employment if it
is not performed for the purpose of serving the master. The
comment explains that the rule applies
although the servant would be authorized to do the
very act done if it were done for the purpose of
serving the master, and although outwardly the act
appears to be done on the master's account. It is
the state of the servant's mind which is material.
... Conduct is within the scope of employment only
if the servant is actuated to some extent by an
intent to serve his master.
7
Restatement (Second) of Agency § 235 cmt. a. (emphasis added).
As stated, we find this agency principle applicable and
controlling. Mason and Leone took applications and interviewed
potential employees for Mansfield, the purchasing company. The
applicants were already employed by Nabors. Interviewing them for
positions with a successor company might have been "actuated ... by
a purpose to serve" the predecessor (Steego/Nabors) if it had
contracted to have a work force in place, or if the sale was more
likely to take place, or at a higher price, if the work force
remained. But, there was no such evidence. In fact, John Lowrey,
a representative of the purchaser, testified that Mansfield was
"buying assets, and it was up to us to make them productive.
[Steego] didn't care whether we did or not." He further testified
that the ongoing service department had no effect on the price
Mansfield was willing to pay: "[A]s far as Mansfield was
concerned, ... [Nabors] was closed down. It was nice that there
were a few people hanging around, but it didn't help us any, didn't
add anything."
However, Lowrey did meet with Nabors' middle management in
July or August and make it known that Mansfield wanted to start
operations as soon as possible after the sale. It is unclear how,
or when, these middle management employees were hired by Mansfield.
In any event, Bobby Dillard, Nabors' plant superintendent,
testified that "we all felt that the ones that were called at the
meeting at Mr. Lowrey's would be involved with the [new] company".
8
And, it is uncontested that "[m]iddle management was largely the
same for [Steego/Nabors and Mansfield]."
Although he could not recall any discussion about having a
work crew ready to start after the sale, Dillard testified that "it
was kinda understood". And, at some point after the meeting with
Lowery, Mason and Leone began distributing applications and
conducting interviews. (Leone attended the meeting with Lowrey.
Mason did not. Mason testified that his instructions to make the
applications available came from Leone.) Dillard testified that,
about three days before the August 23 sale, he also became involved
with getting a crew together. He testified further that no one
with Nabors or Steego consulted him, directed him, or had any
connection with this effort. Dillard confirmed that his actions
were "just an effort to assist the new owners in starting up".
In asserting that the discriminatory acts are nonetheless
attributable to Steego, Moham relies upon Sibley Memorial Hosp. v.
Wilson, 488 F.2d 1338 (D.C.Cir. 1973) and a line of similar cases.
Sibley, however, does not involve an agency question. Rather, it
notes that Title VII prohibits an employer from discriminating
against "any individual", and holds that, under its plain meaning,
a plaintiff may sue one who interferes with his access to
employment, even if he is not the plaintiff's direct employer. The
question here, however, is not whether Steego could be liable under
Title VII if its agents had interfered with Moham's access to
employment. Rather, the question is whether Mason and Leone were,
in fact, acting as Steego's agents while hiring repair shop
9
employees for the new company. We conclude that they were not.
Instead, they were acting solely for the benefit of Mansfield; and,
therefore, their discriminatory acts cannot be attributable to
Steego, the selling company.3
III.
Accordingly, that part of the judgment appealed from (equal
opportunity to seek employment) is REVERSED, and judgment is
RENDERED for Steego on that issue; and this matter is REMANDED for
such further proceedings as may be necessary.
AFFIRMED in Part, REVERSED and RENDERED in Part, and REMANDED
3
As alternative bases for Steego's liability, Moham seeks
assistance under theories of equity and of Steego (Nabors) and
Mansfield "be[ing] considered brother-sister corporations for acts
of discrimination occurring during the transition period". Neither
theory has merit. The former is, in fact, no more than a misguided
deep pocket approach; the cases relied on concern successor
liability, while here it is the predecessor that Moham seeks to
hold liable. And, the latter theory is not supported by the
record.
10