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February 21, 1979

WESTERN ELECTRIC CO., et al., Defendants.

The opinion of the court was delivered by: STERN

At the conclusion of "Stage I" of this Title VII litigation the liability phase this Court found that Western Electric discriminated against its female employees, applicants and former employees in the areas of hiring, promotion, participation in job training programs, layoffs, wages and opportunities for testing. *fn1" We now enter "Stage II", the damage phase. Stage II requires adjudication of the claims of thousands of class members. *fn2"

To assist it in this formidable task, the Court has appointed three Special Masters pursuant to Rule 53(a) of the Federal Rules of Civil Procedure. The Court now addresses some of the procedural hurdles which confront it at this stage.

 1. Burden of Proof

 The Supreme Court has made clear that once there has been a finding of class-wide discrimination, the burden then shifts to the employer to prove that a class member was not discriminated against; that is, a finding of discrimination creates a rebuttable presumption in favor of recovery. The Court first addressed this in Franks v. Bowman, 424 U.S. 747, 772, 96 S. Ct. 1251, 1268, 47 L. Ed. 2d 444 (1976) in which it held that:

Petitioners here have carried their burden of demonstrating the existence of a discriminatory hiring pattern and practice by the respondents and, therefore, the burden will be upon respondents to prove that individuals who reapply were not in fact victims of previous hiring discrimination.

 More recently, in International Brotherhood of Teamsters v. United States, 431 U.S. 324, 361-2, 97 S. Ct. 1843, 1868, 52 L. Ed. 2d 396 (1977), the Court specifically rejected the contention that in the remedial stage of a pattern-or-practice case, the government must prove that the individual was actually the victim of discrimination:

That basic contention was rejected in the Franks case. As was true of the particular facts in Franks, and as is typical of Title VII pattern-or-practice suits, the question of individual relief does not arise until it has been proved that the employer has followed an employment policy of unlawful discrimination. The force of that proof does not dissipate at the remedial stage of the trial. The employer cannot, therefore, claim that there is no reason to believe that its individual employment decisions were discriminatorily based; it has already been shown to have maintained a policy of discriminatory decisionmaking.
The proof of the pattern or practice supports an inference that any particular employment decision, during the period in which the discriminatory policy was in force, was made in pursuit of that policy. The Government need only show that an alleged individual discriminatee unsuccessfully applied for a job and therefore was a potential victim of the proved discrimination. As in Franks, the burden then rests on the employer to demonstrate that the individual applicant was denied an employment opportunity for lawful reasons.

 (Footnote omitted; citation omitted).

 Accordingly, the sole burden upon class members will be to demonstrate that they are members of the class, that is, that now or at any time since June 9, 1971, they were either employed by Western, applied for employment at Western or were terminated by Western. In practical terms, this will be reflected in the Proof of Claim forms which class members will be required to fill out. Those forms require only that the putative class member state the dates of her employment and/or application, the positions she held and/or sought. *fn3" The Court will not require individual class members to specify the manner in which they were discriminated against. As was held in Stage I, employees remained for the most part ignorant of the fact that they were being passed over for promotion and training programs, and unsuccessful applicants may well be unaware that they were rejected on the basis of their sex. The fact is that employment decisions are rarely put in discriminatory terms, no matter how discriminatorily bottomed. Individual employees should not be put to the almost impossible task of delving into the corporate consciousness to demonstrate how an already proven policy of discrimination exactly impacted each one of them. *fn4" Thus, once an individual demonstrates that she is a class member, the burden will then shift to Western to demonstrate that the individual class member was not the victim of discrimination.

 2. Notice

 Pursuant to Rule 23(d)(2), Federal Rules of Civil Procedure, Western is required to give notice to class members in the following manner. All class members whose addresses are known to Western will be sent a notice and Proof of Claim form together with a prepaid envelope. The remaining class members will be notified by publication in six local newspapers for two consecutive weeks in the Sunday editions and three weekday editions. *fn5" All costs of notification are, of course, to be borne by Western. See Love v. Pullman, 13 FEP Cases 423 (D.Col.1976); Sledge v. J. P. Stevens & Co., 18 FEP Cases 259 (E.D.N.C.1976); English v. Seaboard Coastline RR Co., 12 FEP Cases 90 (S.D.Ga.1975); and Meadows v. Ford Motor Co., 62 F.R.D. 98 (W.D.Ky.1973).

 3. Computation of Back Pay Awards

 The courts have adopted a number of approaches in connection with the computation of back pay awards. *fn7" One approach, the "pro rata" formula referred to in Pettway v. American Cast Iron Pipe Co., 494 F.2d 211 (5th Cir. 1974), and United States v. United States Steel, 520 F.2d 1043 (5th Cir. 1975), looks to the difference between the salary of the class members computed collectively and that received by employees of comparable skills and seniority, not the victims of discrimination. The class member then receives his pro rata share of that collective difference, based upon his salary differential and the number of competitors for the position. Another approach is the "test period" approach, used in Bowe v. Colgate, Palmolive Co., 489 F.2d 896 (7th Cir. 1973), in which the court awards class members the difference between the pay they receive after implementation of the Title VII decree and the pay they received while the discriminatory policies were in force. A variation of the "test period" approach was used in Stewart v. General Motors, 542 F.2d 445 (7th Cir. 1976), Cert. denied, 433 U.S. 919, 97 S. Ct. 2995, 53 L. Ed. 2d 1105 (1977), in which the court awarded the class members the difference between the wages of salaried white workers during a test period and that actually received by the class. Yet another approach was used in Stamps v. Detroit Edison Co., 365 F. Supp. 87, 121 (E.D.Mich.1973), Rev'd on other grounds sub nom. EEOC v. Detroit Edison Co., 515 F.2d 301 (6th Cir. 1975), in which the court awarded class members the difference between their own actual earnings and the earnings of the skilled trade opportunity jobs from the effective date of Title VII.

 The Court finds none of these approaches appropriate here. As we found in connection with Stage I, we deal with discrimination which manifests itself in a number of ways. For example, a woman might initially be hired at the lowest grade 32 while a comparable male would have been hired at grade 33. During the course of a ten-year period, the woman perhaps unbeknownst to her would be passed over for promotion, denied entry into job training programs and, finally, notwithstanding her seniority, would be the first to be laid off because she was in the lowest job category. She may in fact have been laid off and rehired a number of times. *fn8" By contrast, the male, during the same period and having started at a higher grade, would be promoted several grades perhaps even trained for a supervisory position and would thus remain unscathed in times of layoffs. It is, therefore, apparent that a back pay award must take into account the fact that a male and a female entering Western with comparable skills would, over a period of time, take dramatically divergent paths.

 While this approach will not yield an exact measure of damages, neither could any other approach. However, the law is clear that where one has been damaged by the wrong of another, the victim is not to be denied any recompense merely because the exact measure of damages is uncertain. See Zenith Radio Corp. v. Hazeltine Research, 401 U.S. 321, 91 S. Ct. 795, 28 L. Ed. 2d 77 (1971); Hairston v. McClean Trucking Co., 520 F.2d 226 (4th Cir. 1975). The approach we adopt at least gives individual consideration to each claimant and, if not precise, it is no more imprecise than lumping claimants into groups and extracting averages, or otherwise depersonalizing victims of discrimination by running them through a mathematical blender.

 Moreover, Western itself objects to any formula type or averaging approach in awarding back pay that is, to any but an individual approach under which the merits of each woman's claim is separately considered. (Reply Brief at 7-11). In the face of Western's objections, it may be that due process considerations require that any award to an individual be on the merits of that individual's case. See Pettway v. American Cast Iron Pipe Co., 494 F.2d 211, 267 (5th Cir. 1974) (Bell, J., concurring.) In any event, it does seem that an individual approach is more fair both to class members and to Western.

 In its proposed Order of Reference, Western proposes that:

45. If there is more than one eligible claimant for a given designated vacancy, net back pay awards shall be computed for each claimant. One award shall be made in an amount equal to the highest individual net award. Each claimant shall share that award in the proportion that her individual net back pay award bears to her total of all claimants' net back pay awards pursuant to the formula set forth in United States v. United States Steel, 520 F.2d 1043 (5th Cir. 1975).

 The Court rejects this approach. According to Western, if there were three women who should have been considered for one promotion and none were, and if we cannot now determine which of the three women should have received the promotion, then each one receives one-third of the benefits. As Western notes, this approach does shield Western from having to pay three increases when only one was actually possible, but it also unjustly penalizes the one woman who was entitled to All not just one-third of the benefits of that promotion. Under Western's approach, two of the claimants get a windfall while the actual victim receives only one-third of the back pay to which she is statutorily entitled. If we know that all three claimants were discriminated against in that they were not considered for promotion but that only one which, we do not know would have actually received the promotion, then all three should get the full benefit of the promotional opportunity. Where it is proved that an employer unlawfully disregarded women for promotion, it is better that it pay a little more than to permit an innocent party to shoulder the burdens of the guilty. Western Will be permitted to demonstrate that the promotion would have gone to one class member, rather than the others. However, if Western cannot demonstrate which claimant would have received the promotion, Western cannot divide the benefits of the one job. It is no more unreal to construe three promotions out of one, than to divide the salary increase of one promotion among three prospects. Either smacks of some artificiality but the latter protects the wrongdoer at the expense of the innocent.

 The Order of Reference to the Special Masters is reproduced in the Appendix. Among other requirements, in an effort to assure back pay awards on as individualized basis as possible, where appropriate class members will be compared to the male employee with comparable skills upon initial hire and comparable seniority. The class member will then be awarded the difference between her salary and that received by the male counterpart, including bonuses and any other fringe benefits. See Pettway v. American Cast Iron Pipe Co., supra.

 4. Compensation of Special Masters

 The final problem which confronts us at the outset of Stage II is the compensation of the Special Masters.

 All parties have recognized that the number of potential claimants virtually mandates the appointment of Special Masters. The parties agree that if any significant portion of the 10,000 potential claimants respond, the existing court mechanism of a district judge and a magistrate is totally inadequate to deal with the issues which will confront the Court. Even 3,000 claimants out of the 10,000 eligible, for example, would exceed the yearly civil filings for this entire district of nine active judges and five magistrates. Moreover, unlike a rough sampling of the typical civil case cross section, many of which will be voluntarily dismissed, others of which will be settled without any judicial supervision, and the overwhelming majority of which will be settled without any judicial fact-finding, *fn9" it appears that each one of the claims of Western's present or former employees will have to be individually considered and adjudicated. Western has objected to any formula approach, and has requested that each claim be considered upon its own merits. The Court agrees that not only is Western entitled to this approach, but that each claimant is also entitled to individual consideration. In many instances this approach requires that efforts be made to project the actual benefits lost by each Western employee who has been found to have been a victim of Western's discrimination. Whole work histories will have to be recast, based on evaluations of the background, education, potential and abilities of each claimant, as compared with the opportunities available to and realized by similarly situated males at Western. In a very real sense, Stage II proceedings under this approach resemble a host of individual cases, sharing many common questions of law and fact, as much as it does the pure class action of more common experience.

 Faced with this task, the parties agree not merely to the appointment of a Special Master, but to the appointment of three Special Masters. The parties also agree that these Special Masters should not only be lawyers, but experienced trial lawyers. Western has demanded, and the Court has granted, an opportunity for it to conduct "discovery regarding the . . . claims pursuant to the Federal Rules of Civil Procedure." If the past is any gauge of the future, the Special Masters will be occupied with discovery matters concerning many hundreds of claimants even before they get down to dealing with the merits of each.

 Western suggests, citing Newton v. Consolidated Gas, 259 U.S. 101, 42 S. Ct. 438, 66 L. Ed. 844 (1921), that the Special Masters' compensation should be keyed to the salary of a district judge, if not a magistrate. Thus, Western suggests that the Special Masters be compensated at a rate between $ 30 and $ 40 an hour.

 Because of the complexity of the task they assume which will include not only the computation of back pay, but also discovery disputes and fact-finding the Court finds that it is in the best interests of the class members to appoint attorneys well known for their integrity, service to the community, and litigation skills and experience. In order to justify this imposition upon their time, the Court finds that it must compensate them in a manner comparable to what they receive in their private practices, and not to limit them to the salary of a judge, who has no overhead costs, no staff to pay, whose retirement is paid, and so forth. And, while in the more typical case an attorney who served as Special Master should expect to receive at least some of his compensation in the honor of his selection and service, this is not the typical case. The Special Masters here will have to devote a substantial amount of time for an unforeseeable future in order to provide the individual consideration wanted and required.

 The question of the compensation of Special Masters received extended discussion in Newton v. Consolidated Gas Co., supra. In that case, the Supreme Court reversed as excessive the district court's award of fees to a special master, noting that, while normally such matters were within the discretion of the district court, the award of excessive fees would be deemed an abuse of discretion. The Court went on to hold that the proper compensation should be keyed to public salaries with a premium to attract persons of high caliber from the private sector:

His compensation should be liberal, but not exorbitant. The rights of those who must ultimately pay must be carefully protected; and while salaries prescribed by law for judicial officers performing similar duties are valuable guides, a higher rate of compensation is generally necessary in order to secure ability and experience in an exacting and Temporary employment which often seriously interferes with other undertakings.

 Id., at 105, 42 S. Ct. at 439. (Emphasis added)

 Since the Newton decision, the question of the compensation of special masters has received little discussion: some courts have approved the award of fees which appear to be roughly comparable to that which is earned in private practice; See, e.g., American Safety Table v. Schreiber, 415 F.2d 373 (2nd Cir. 1969) (approving rate of $ 40 per hour in 1969); Chesa International v. Fashion Associates, 425 F. Supp. 234 (S.D.N.Y.1977) (fee of $ 100 an hour), while others have awarded a somewhat lower rate, See, e.g., Hart v. Community School Board of Brooklyn, 383 F. Supp. 699 (E.D.N.Y.1974), Appeal dismissed 497 F.2d 1027 (2nd Cir. 1974) (fee of law school professor in school desegregation case to be about half that charged by attorneys in private practice, but all overhead costs paid).

 The Court finds that it is in the interest of all the parties particularly the class members to compensate the Special Masters in a manner roughly comparable to that which they receive in the practices from which they are being diverted. The Court cannot be blind to the fact that the path ahead of the Special Masters is a thorny one one that will include complex questions of damage, difficult and tedious discovery disputes, hearings and fact finding. Further, the Special Masters will necessarily be diverted from their own practices, losing not only present business but also the future business which a successful attorney-client relationship ensures. While it is true that the Supreme Court in 1922 suggested that special masters in "temporary" employment, are to be compensated only slightly in excess of the salaries received by public officials, the Court finds this goal no longer viable given the realities of the current practice of law, and that which faces the Special Masters here is no temporary endeavor. Months, if not years of arduous work lie ahead, and Western's suggested compensation for the trial lawyers it wishes as Special Masters is less than what many firms in this area bill for paralegal clerical employees.

 Accordingly, the Court will compensate the Special Masters as follows: an hourly rate of $ 125 will be awarded Bernard Hellring, Esquire, who has been designated the "Administrative" Special Master; and an hourly rate of $ 115 will be awarded the two other Special Masters, Thomas F. Campion, Esquire and Bruce I. Goldstein, Esquire. This is less than what they would usually bill for such a service as Western does not dispute but these three members of the Bar have indicated their willingness to take less, notwithstanding the protracted nature of the proceedings, as a part of their obligations as members of our Bar.

 The fees will be paid at designated intervals and will be borne by the defendant. See Stastny v. Southern Bell Tel. & Tel. Co., 458 F. Supp. 314 (W.D.N.C.1978).

 TO: Female Applicants, Employees or Former Employees of Western Electric's Kearny Plant (including the Clark Shops)

 RE: Sex Discrimination Action Against Western

 If you are a woman and now or any time since June 9, 1971 you either: (a) applied for employment at Western's Kearny plant and were rejected; Or (b) were employed in any position at Western's Kearny plant; Or (c) were laid off or discharged from any position at Western's Kearny plant, please read this notice carefully.

 On October 30, 1978, in a lawsuit brought by Kyriaki Cleo Kyriazi, a former employee of Western, the United States District Court for the District of New Jersey found that Western has been discriminating against its women employees at its Kearny plant in violation of federal law. It was found that women, As a group, were discriminated against in the following ways:

 1) Hiring Women are hired into the lowest grades, while men with equal skills and experience were hired into the higher grades.

 2) Promotion Women employees were not given promotional opportunities equal to male employees.

 3) Layoffs Women were not treated fairly when employees had to be laid off.

 4) Transfer into Kearny Women who transferred into the Kearny plant were placed in lower grades than they were in before they transferred.

 5) Discharge More women were fired than men.

 6) Participation in Job Training Programs Women were not given the opportunities given to men to participate in job training programs.

 7) Opportunities for Testing Women were not given the opportunity to take tests for promotion to better positions.

 The Court has completed the first stage of this lawsuit by finding that Western had discriminated against women in its Kearny plant. Copies of the Court's opinion are on file in the United States District Court of the District of New Jersey.

 There will be soon be a second stage, "Stage II", at which time the Court will determine the damages and other relief which it will award to individual women. If you are or were at any time since June 9, 1971 an employee of Western, or if you ever applied for a position at Western, you may be entitled to certain benefits, including monetary payments. The "Stage II" proceedings will determine this question. At these "Stage II" proceedings, any eligible woman will be presumed to have been discriminated against. It will be Western's duty to show that it did not deny a woman employment opportunities because of her sex. If Western fails to demonstrate this, that women will be entitled to recovery, which may include back pay and reinstatement.

 If you wish to be considered, you must fill out the enclosed form. Your claim will not be considered if you do not do so and return the form by April 2nd, 1979. If you do fill out the form, you may be required, with no cost to yourself, to participate in court proceedings. You will be furnished an attorney without cost to you. That attorney will be Judith Vladeck, Attorney for plaintiff Kyriazi. If you prefer, you may retain an attorney of your own choosing. If you wish further information, you may contact the attorney for the plaintiff, Judith Vladeck, at (212) 354-8330



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