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Equal Employment Opportunity Commission v. American Telephone and Telegraph Co.

argued: February 14, 1977.

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, JAMES D. HODGSON, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR AND UNITED STATES OF AMERICA
v.
AMERICAN TELEPHONE AND TELEGRAPH COMPANY, NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY, THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY, NEW YORK TELEPHONE COMPANY, NEW JERSEY BELL TELEPHONE COMPANY, THE BELL TELEPHONE COMPANY OF PENNSYLVANIA AND THE DIAMOND STATE TELEPHONE COMPANY, THE CHESAPEAKE AND POTOMAC TELEPHONE COMPANY, THE CHESAPEAKE AND POTOMAC TELEPHONE COMPANY OF MARYLAND, THE CHESAPEAKE AND POTOMAC TELEPHONE COMPANY OF VIRGINIA, THE CHESAPEAKE AND POTOMAC TELEPHONE COMPANY OF WEST VIRGINIA, SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY, SOUTH CENTRAL BELL TELEPHONE COMPANY, THE OHIO BELL TELEPHONE COMPANY, CINCINNATI BELL INC., MICHIGAN BELL TELEPHONE COMPANY, INDIANA BELL TELEPHONE COMPANY, INCORPORATED, WISCONSIN TELEPHONE COMPANY, ILLINOIS BELL TELEPHONE COMPANY, NORTHWESTERN BELL TELEPHONE COMPANY, SOUTHWESTERN BELL TELEPHONE COMPANY, THE MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, PACIFIC NORTHWEST BELL TELEPHONE COMPANY, THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY AND BELL TELEPHONE COMPANY OF NEVADA COMMUNICATIONS WORKERS OF AMERICA AFL-CIO (CWA) (INTERVENING DEFTS.) TELEPHONE COORDINATING COUNCIL, TCC-1 (NATIONAL BELL COUNCIL), IBEW ("IBEW" COUNCIL) AND THE ALLIANCE OF INDEPENDENT TELEPHONE UNIONS-INTERVENING DEFTS. COMMUNICATIONS WORKERS OF AMERICA, APPELLANT IN NO. 76-2217 THE TELEPHONE COORDINATING COUNCIL, TCC-1, IBEW APPELLANT IN NO. 76-2281 ALLIANCE OF INDEPENDENT TELEPHONE UNIONS, APPELLANT IN NO. 76-2285



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA D.C. Civil No. 73-149.

Seitz, Chief Judge, Aldisert and Gibbons, Circuit Judges.

Author: Gibbons

Opinion OF THE COURT

GIBBONS, Circuit Judge

This is an appeal by three labor unions: the Communications Workers of America (CWA), the Telephone Coordinating Council TCC-1, International Brotherhood of Electrical Workers (IBEW), and the Alliance of Independent Telephone Unions (Alliance) (hereinafter referred to collectively as the intervening defendants). The order below denied their motions to modify a consent decree, dismissed the motion of CWA for a preliminary injunction against continued implementation of an affirmative action override provided for by the decree, and granted the motion of the plaintiffs and the original defendants for the entry of a supplemental injunctive order. The plaintiffs are the Equal Employment Opportunity Commission (EEOC), the Secretary of Labor, and the United States. Their complaint, filed on January 18, 1973, charged violations of the Fair Labor Standards Act, of Title VII of the Civil Rights Act of 1964, and of Executive Order 11246. The defendant is the American Telephone and Telegraph Company (AT&T), appearing for itself and on behalf of its associated telephone companies in the Bell System. On the same day that the complaint was filed AT&T answered, denying the violations alleged. However, it simultaneously approved and consented to a decree which embodied and was designed to enforce a negotiated agreement under which AT&T undertook to implement a model affirmative action program. That program was designed to overcome the effects of past employment discrimination in the Bell System with respect to women, blacks, and other minorities. The intervening defendants contend that the consent decree, as originally agreed to and as supplemented, conflicts with provisions of collective bargaining agreements between them and AT&T, and otherwise unlawfully invades rights of their members respecting competitive seniority in transfer and promotion.*fn1 We affirm.

I. THE CONSENT DECREE

In November 1970, AT&T filed with the Federal Communications Commission (FCC) a proposed tariff which would increase interstate telephone rates. Before that filing was acted on, EEOC filed with the FCC a petition requesting that the increase be denied because AT&T's operating companies were engaged in systemwide discrimination against women and minorities. The FCC initiated a special proceeding to consider the charges, holding 60 days of hearings in 1971 and 1972. A number of organizations intervened in support of the EEOC. While the hearings progressed, settlement negotiations took place between AT&T and the government parties, which eventually led to the termination of the FCC special proceeding and the entry of the Consent Decree. Although the Alliance of Independent Telephone Unions did not participate in negotiating the Consent Decree, the IBEW did participate, and CWA was invited to do so but remained deliberately aloof. 365 F. Supp. at 1108, 1109.

The Bell System is one of the largest employers in the United States. Traditionally, its operating companies have been organized along departmental lines. The plant department has been responsible for installation and maintenance of physical facilities such as central office equipment, transmission lines, and subscriber telephones. The traffic department has been responsible for putting calls through, operator assistance, information, and related services. The commercial department has handled subscriber sales and billing. The accounting department has performed the bookkeeping and accounting functions. Until at least the late 1960's, Bell System hiring practices generally followed departmental lines. The plant department, in which craft jobs predominated, was traditionally a male preserve, while female employees were generally employed as operators, bookkeepers, or in other clerical occupations in the traffic and commercial departments. Pay scales at both entry and higher levels in the plant department were, and remain, higher than for employees with comparable length of service in the other departments. Transfers from the traffic or commercial departments were possible, but there was a general policy of slotting a transferred employee in at the next higher pay rate than that last enjoyed in the previous position. Since traffic and commercial employees had lower starting rates and lower rates at each step of the wage progression schedule, that policy resulted in a transferee to the plant department receiving a lower rate of pay than would an employee performing the same job who had been hired on the same date, but who had started in the plant department. These hiring practices resulted in a concentration of males and females in certain classifications. Moreover, there was an imbalance between the racial and ethnic composition of the work forces of many operating companies and the racial and ethnic makeup of their available labor markets. The intervening defendants do not dispute that past patterns and practices were discriminatory, nor do they dispute that the present work force in many Bell System departments still reflects those past patterns and practices.

The Consent Decree directs the Bell System Companies to establish goals and intermediate targets to promote the full utilization of all race, sex, and ethnic groups in each of fifteen job classifications. The intermediate targets, set annually, reflect the representation of such groups in the external labor market in relevant pools for each operating company's work force. The intermediate targets are the major prospective remedies in the Consent Decree. When any Bell Company is unable to achieve or maintain its intermediate target, applying normal selection standards, it is required by the decree to depart from those standards in selecting candidates for promotional opportunities. It must then pass over candidates with greater seniority or better qualifications in favor of members of the under-represented group who are at least "basically qualified." Without this affirmative action override, the greater time in title of incumbent members of the over-represented race, sex, or ethnic group would inevitably reduce the opportunity for advancement of the under-represented groups and would perpetuate the effects of the former discrimination. The affirmative action override applies, however, only to minority promotional opportunity. A promotion under the override does not result in any increase in competitive seniority for purposes of layoff or rehire, as to which the collective bargaining agreements control.*fn2 The life of the decree is six years, ending on January 17, 1979. It provides that AT&T may bargain collectively with collective bargaining representatives for alternative provisions which would also comply with federal law. No such alternative provisions have been presented to the district court.

II. THE SUPPLEMENTAL ORDER

In an interim report on compliance with the Consent Decree it appeared that in a number of specific categories the Bell Companies fell short of attaining intermediate targets promulgated for 1973. The government plaintiffs and AT&T jointly moved for the entry of a supplemental order aimed at remedying these deficiencies and assuring future achievement of targets and goals. The supplemental order provides that unmet targets shall be carried forward in certain establishments and job classifications. For a two month period ending on October 24, 1976 some Bell Companies were required to make all placements in affected job classifications from groups as to which their targets had not been met. The supplemental order also provides for the creation of a Bell System Affirmative Action Fund and its expenditure on projects which will advance the objects of the decree. It also articulates the understanding of the parties that while the original Consent Decree was not intended to supplant the collective bargaining agreements, to the extent that any provisions of the latter would prevent the achievement of the affirmative action targets and goals, the decree controlled. The carry-forward provisions of the supplemental order do not enlarge the Bell Companies' total affirmative action obligations under the Consent Decree, nor do they extend its life.

III. BELL SYSTEM PROMOTIONAL SENIORITY

Since the only alleged conflict between the collective bargaining agreements and the Consent Decree and supplemental order relates to promotional seniority, our starting point is a description of bargained-for promotional practices. The contracts between AT&T and each of the intervening defendants are not identical. As to each intervening defendant there are also variations, in contracts with specific operating companies, negotiated locally to reflect local conditions and practices. However, a common feature of all the agreements is that seniority for all purposes is determined by "net credited service" in any department in the Bell System. It is also common to provide that in selecting employees for promotion, other factors being equal, the Company will promote the employee with the greatest net credited service. However, it is clear that the company has not bargained to the union any role in the determination of employee qualifications. Some agreements refer to "the employee whom Company finds is best qualified." Others speak of "ability, aptitude, attendance, physical fitness for the job, and proximity to the assignment." Some agreements even qualify the seniority-equal qualification language by language to the effect that "nothing in this paragraph shall be construed to prevent Company from promoting employees for unusually meritorious service or exceptional ability." Although their approach to the alleged conflict between the Consent Decree and their collective bargaining agreements is not identical the intervening defendants agree that the bargained-for promotional system is a merit selection system. Management determines the employee best qualified in its judgment, but seniority decides the issue where two employees are considered by management to be equally qualified. The effect of the affirmative action override, then, where and when it operates, is to eliminate from consideration those employees who would normally have been selected under pre-decree practice. The decree provides for selecting, from the under-utilized group of persons, those who in the judgment of management are "basically qualified." Although the briefs of the intervening defendants stress the issue of competitive seniority, the real dispute is less over seniority, which under the contracts would only be determinative in cases of equal qualification, as over the departure from the "best qualified" criterion. The continued operation of that criterion would, of course, significantly confine promotions within departmental lines, as has been the past practice, since experience in the department will always be a significant factor in an employee's qualification level. By executing the Consent Decree AT&T has agreed, in the instances in which the affirmative action override applies, to limit its bargained-for management prerogative of determining the employee best qualified for promotion, so long as it promotes a basically qualified applicant from an under-represented group. The unions urge that it may not do so without illegally breaching their collective bargaining agreements and the rights of some of the employees they represent.

IV. THE UNION CONTENTIONS

Claiming standing as representatives of their members and by virtue of the conflict between the affirmative action override and the collective bargaining agreements, the intervenor unions attack the Consent Decree on a number of grounds. Some of these grounds transcend the issue of the purported conflict between the decree and the collective bargaining agreements. They recognize that in making their broad-gauged challenge they may be acting inconsistently with the best interests of some of the persons whom they represent in the collective bargaining process, but point out that this potential conflict is inherent in the collective bargaining relationship. See Emporium Capwell Co. v. Western Addition Community Organization, 420 U.S. 50, 43 L. Ed. 2d 12, 95 S. Ct. 977 (1975). Since the unions object to the claimed inconsistency between the decree and the promotional seniority provisions of their contracts, they have standing to assert all grounds of invalidity of the decree which would result in the elimination of that conflict. Moreover they are appropriate representatives of their members within the standing test of Sierra Club v. Morton, 405 U.S. 727, 31 L. Ed. 2d 636, 92 S. Ct. 1361 (1972). Thus we will consider each of their statutory and constitutional challenges, as well as the contention that entry of the decree was an abuse of the district court's discretion.

A. The Consent Decree and Third Party Interests

The unions contended in the district court, and contend somewhat less vigorously here, that it was improper in a Consent Decree to award relief affecting third party rights. That objection is meritless. To the extent that third party rights in which the unions are interested have been affected, they were allowed to intervene and be heard in this case. They do not dispute the factual predicate of the decree, the prior patterns and practices of discrimination. If this were a litigated judgment the fact that they and their members did not cause the discrimination would not prevent relief affecting third parties. See Franks v. Bowman Transp. Co., 424 U.S. 747, 778, 47 L. Ed. 2d 444, 96 S. Ct. 1251 (1976). At best, in a fully litigated case, they would be entitled to be heard only on the appropriateness of the remedy. They have been heard on that aspect of the case. Class actions frequently affect the interests of persons who are before the court only by virtue of the opting out provisions of Fed. R. Civ. P. 23(c). We have approved the settlement of those actions even over the objection of ...


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