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PULLMAN-STANDARD v. SWINT ET AL.

decided*fn*: April 27, 1982.

PULLMAN-STANDARD, A DIVISION OF PULLMAN, INC
v.
SWINT ET AL.



CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT.

White, J., delivered the opinion of the Court, in which Burger, C. J., and Brennan, Powell, Rehnquist, and O'connor, JJ., joined. Stevens, J., filed a statement concurring in part, post, p. 293. Marshall, J., filed a dissenting opinion, in which Blackmun, J., joined except as to Part I, post, p. 293.

Author: White

[ 456 U.S. Page 275]

 JUSTICE WHITE delivered the opinion of the Court.

Respondents were black employees at the Bessemer, Ala., plant of petitioner Pullman-Standard (the Company), a manufacturer of railway freight cars and parts. They brought suit against the Company and the union petitioners -- the United Steelworkers of America, AFL-CIO-CLC, and its Local 1466 (collectively USW) -- alleging violations of Title VII of the Civil Rights Act of 1964, 78 Stat. 253, as amended, 42 U. S. C. § 2000e et seq. (1976) ed. and Supp. IV), and 42 U. S. C. § 1981.*fn1 As they come here, these cases involve only the validity, under Title VII, of a seniority system maintained by the Company and USW. The District Court found "that the differences in terms, conditions or privileges of employment resulting [from the seniority system] are 'not the result of an intention to discriminate' because of race or color," App. to Pet. for Cert. in No. 80-1190, p. A-147 (hereinafter App.), and held, therefore, that the system satisfied the requirements of § 703(h) of the Act. The Court of Appeals for the Fifth Circuit reversed:

"Because we find that the differences in the terms, conditions and standards of employment for black workers and white workers at Pullman-Standard resulted from an intent to discriminate because of race, we hold that the system is not legally valid under section 703(h) of Title VII, 42 U. S. C. 2000e-2(h)." 624 F.2d 525, 533-534 (1980).

[ 456 U.S. Page 276]

     We granted the petitions for certiorari filed by USW and by the Company, 451 U.S. 906 (1981), limited to the first question presented in each petition: whether a court of appeals is bound by the "clearly erroneous" rule of Federal Rule of Civil Procedure 52(a) in reviewing a district court's findings of fact, arrived at after a lengthy trial, as to the motivation of the parties who negotiated a seniority system; and whether the court below applied wrong legal criteria in determining the bona fides of the seniority system. We conclude that the Court of Appeals erred in the course of its review and accordingly reverse its judgment and remand for further proceedings.

I

Title VII is a broad remedial measure, designed "to assure equality of employment opportunities." McDonnell Douglas Corp. v. Green, 411 U.S. 792, 800 (1973). The Act was designed to bar not only overt employment discrimination, "but also practices that are fair in form, but discriminatory in operation." Griggs v. Duke Power Co., 401 U.S. 424, 431 (1971). "Thus, the Court has repeatedly held that a prima facie Title VII violation may be established by policies or practices that are neutral on their face and in intent but that nonetheless discriminate in effect against a particular group." Teamsters v. United States, 431 U.S. 324, 349 (1977) (hereinafter Teamsters). The Act's treatment of seniority systems, however, establishes an exception to these general principles. Section 703(h), 78 Stat. 257, as set forth in 42 U. S. C. § 2000e-2(h), provides in pertinent part:

"Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority . . . system . . . provided that such differences are not the result of an intention to discriminate because of race."

[ 456 U.S. Page 277]

     Under this section, a showing of disparate impact is insufficient to invalidate a seniority system, even though the result may be to perpetuate pre-Act discrimination. In Trans World Airlines, Inc. v. Hardison, 432 U.S. 63, 82 (1977), we summarized the effect of § 703(h) as follows: "[Absent] a discriminatory purpose, the operation of a seniority system cannot be an unlawful employment practice even if the system has some discriminatory consequences." Thus, any challenge to a seniority system under Title VII will require a trial on the issue of discriminatory intent: Was the system adopted because of its racially discriminatory impact?

This is precisely what happened in these cases. Following our decision in Teamsters, the District Court held a new trial on the limited question of whether the seniority system was "instituted or maintained contrary to Section 703(h) of the new Civil Rights Act of 1964." App. A-125.*fn2 That court concluded, as we noted above and will discuss below, that the system was adopted and maintained for purposes wholly independent of any discriminatory intent. The Court of Appeals for the Fifth Circuit reversed.

II

Petitioners submit that the Court of Appeals failed to comply with the command of Rule 52(a) that the findings of fact of a district court may not be set aside unless clearly erroneous. We first describe the findings of the District Court and the Court of Appeals.

Certain facts are common ground for both the District Court and the Court of Appeals. The Company's Bessemer plant was unionized in the early 1940's. Both before and after unionization, the plant was divided into a number of different operational departments.*fn3 USW sought to represent

[ 456 U.S. Page 278]

     all production and maintenance employees at the plant and was elected in 1941 as the bargaining representative of a bargaining unit consisting of most of these employees. At that same time, IAM became the bargaining representative of a unit consisting of five departments.*fn4 Between 1941 and 1944, IAM ceded certain workers in its bargaining unit to USW. As a result of this transfer, the IAM bargaining unit became all white.

Throughout the period of representation by USW, the plant was approximately half black. Prior to 1965, the Company openly pursued a racially discriminatory policy of job assignments. Most departments contained more than one job category and as a result most departments were racially mixed. There were no lines of progression or promotion within departments.

The seniority system at issue here was adopted in 1954.*fn5 Under that agreement, seniority was measured by length of continuous service in a particular department.*fn6 Seniority was originally exercised only for purposes of layoffs and hirings within particular departments. In 1956, seniority was formally recognized for promotional purposes as well. Again, however, seniority, with limited exceptions, was only exercised within departments; employees transferring to

[ 456 U.S. Page 279]

     new departments forfeited their seniority. This seniority system remained virtually unchanged until after this suit was brought in 1971.*fn7

The District Court approached the question of discriminatory intent in the manner suggested by the Fifth Circuit in James v. Stockham Valves & Fittings Co., 559 F.2d 310 (1977). There, the Court of Appeals stated that under Teamsters "the totality of the circumstances in the development and maintenance of the system is relevant to examining that issue." 559 F.2d, at 352. There were, in its view, however, four particular factors that a court should focus on.*fn8

First, a court must determine whether the system "operates to discourage all employees equally from transferring between seniority units." Ibid. The District Court held that the system here "was facially neutral and . . . was applied equally to all races and ethnic groups." App. A-132. Although there were charges of racial discrimination in its application, the court held that these were "not substantiated by the evidence." Id., at A-133. It concluded that the system "applied equally and uniformly to all employees, black and white, and that, given the approximately equal number

[ 456 U.S. Page 280]

     of employees of the two groups, it was quantitatively neutral as well." Id., at A-134.*fn9

Second, a court must examine the rationality of the departmental structure, upon which the seniority system relies, in light of the general industry practice. James, supra, at 352. The District Court found that linking seniority to "departmental age" was "the modal form of agreements generally, as well as with manufacturers of railroad equipment in particular." App. A-137. Furthermore, it found the basic arrangement of departments at the plant to be rationally related to the nature of the work and to be "consistent with practices which were . . . generally followed at other unionized plants throughout the country." Id., at A-136 -- A-137. While questions could be raised about the necessity of certain departmental divisions, it found that all of the challenged lines of division grew out of historical circumstances at the plant that were unrelated to racial discrimination.*fn10 Although unionization did produce an all-white IAM bargaining unit, it found that USW "cannot be charged with racial bias in its response to the IAM situation. [USW] sought to represent all workers, black and white, in the plant." Id., at A-145. Nor could the Company be charged with any racial discrimination that may have existed in IAM:

"The company properly took a 'hands-off' approach towards the establishment of the election units . . . . It bargained with those unions which were afforded representational

[ 456 U.S. Page 281]

     status by the NLRB and did so without any discriminatory animus." Id., at A-146.

Third, a court had to consider "whether the seniority system had its genesis in racial discrimination," James, supra, at 352, by which it meant the relationship between the system and other racially discriminatory practices. Although finding ample discrimination by the Company in its employment practices and some discriminatory practices by the union,*fn11 the District Court concluded that the seniority system was in no way related to the discriminatory practices:

"The seniority system . . . had its genesis . . . at a period when racial segregation was certainly being practiced; but this system was not itself the product of this bias. The system rather came about as a result of colorblind objectives of a union which -- unlike most structures and institutions of the era -- was not an arm of a segregated society. Nor did it foster the discrimination . . . which was being practiced by custom in the plant." App. A-144.

Finally, a court must consider "whether the system was negotiated and has been maintained free from any illegal purpose." James, supra, at 352. Stating that it had "carefully considered the detailed record of negotiation sessions and contracts which span a period of some thirty-five years," App. A-146, the court found that the system was untainted by any discriminatory purpose. Thus, although the District

[ 456 U.S. Page 282]

     Court focused on particular factors in carrying out the analysis required by § 703(h), it also looked to the entire record and to the "totality of the system under attack." Id., at A-147.

The Court of Appeals addressed each of the four factors of the James test and reached the opposite conclusion. First, it held that the District Court erred in putting aside qualitative differences between the departments in which blacks were concentrated and those dominated by whites, in considering whether the system applied "equally" to whites and blacks.*fn12 This is a purported correction of a legal standard under which the evidence is to be evaluated.

Second, it rejected the District Court's conclusion that the structure of departments was rational, in line with industry practice, and did not reflect any discriminatory intent. Its discussion is brief but focuses on the role of IAM and certain ...


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