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BRYANT v. INTERNATIONAL SCHS. SERVS.

UNITED STATES DISTRICT COURT, DISTRICT OF NEW JERSEY


December 4, 1980

Dotti D. Jernigan BRYANT, Plaintiff,
v.
INTERNATIONAL SCHOOLS SERVICES, INC., Defendant; Theresa O. LILLIBRIDGE, Plaintiff, v. INTERNATIONAL SCHOOLS SERVICES, INC., Defendant

The opinion of the court was delivered by: DEBEVOISE

I. Parties and Proceedings

Plaintiffs in these consolidated actions, Theresa O. Lillibridge and Dotti D. Jernigan Bryant, instituted suit under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. ยง 2000e, et seq. ("Title VII"). Plaintiffs charge that the practice of defendant, International Schools Services, Inc. ("ISS"), of awarding to its overseas teachers two kinds of employment contracts having substantially different compensation and benefit provisions constituted unlawful discrimination against plaintiffs on the basis of sex.

 Lillibridge and Bryant were teachers employed by ISS at the American School in Isfahan, Iran. Each was hired in Iran at a time when she was married to a person employed in that country either by Bell Helicopter International, Inc. or Grumman Aerospace Corporation, each of which provided goods and services to the Iranian government. Both Lillibridge and Bryant were hired pursuant to what has been called, in this case, a "local-hire" contract, one of the two kinds of contracts which ISS entered into with teaching personnel at the American School. The other kind of contract has been referred to in this case as the "ISS-sponsored" contract, under which an employee received benefits substantially greater than those received under the local-hire contract.

 ISS is a private, non-profit corporation organized under the laws of the District of Columbia, with its headquarters in Princeton, New Jersey. ISS works by contract with overseas governments or corporations to operate schools for children of American employees overseas. The services it provides are educational consulting, school operation, education staffing, purchasing, procurement and financial management.

 The case was tried without a jury, and decision was reserved. This opinion constitutes this Court's findings of fact and conclusions of law.

 II. Findings of Fact

 A. The ISS Contracts

 The American School in Isfahan, one of the schools ISS operated, was established in 1973, pursuant to a contract between ISS and Bell Helicopter. The contracts which Bell Helicopter and other companies performed for the Iranian government required the presence of the companies' employees overseas in Iran. These employees brought their families. It was ISS's responsibility, under its contract, to establish a school and employ and supervise the staff of the school where the children of these employees would be educated. ISS initially contracted with Bell Helicopter to operate the American School; for 1976 and thereafter, ISS contracted directly with the Iranian government to operate the school.

 The school term for the American School ran from September of one year through June of the next year, and the staff went on annual leave for the summer months. The American School operated until January 6, 1979, when it was permanently closed due to the revolution in Iran which began in late 1978.

 All of the staff at the American School were compensated according to the same base salary scale, which varied depending upon (1) teaching experience and (2) educational achievement. The base salary scale is not an issue in this case.

 In addition to base salary, all staff were offered certain other benefits. These benefits were:

 

1. A continuity incentive equal to 15% of base salary after three years of service and for each subsequent year thereafter;

 

2. ISS-paid major medical insurance, life insurance and long-term disability insurance;

 

3. Voluntary participation in a retirement plan. This was a TIAA/CREF plan. The staff member contributed a minimum of 5% of base salary to this retirement plan; if the staff member did this, ISS would contribute 10% of base salary;

 

4. Voluntary participation in Blue Cross/Blue Shield. ISS would pay 50% of the premium and the staff member would pay the other 50% of the premium.

 Teachers at the American School taught under two kinds of contracts-local-hire contracts and ISS-sponsored contracts. *fn1" Regardless of the kind of contract, the duties of the teachers did not differ. Persons who had ISS-sponsored contracts received additional allowances. These additional allowances were as follows:

 

1. An overseas allowance paid monthly and equal to 25% of base salary. This was for each member of a teaching couple as of the school year commencing September, 1978, and to one member of the teaching couple prior to that date;

 

2. A transportation allowance of $ 150 per month to help offset the costs to be incurred because it was prohibitively expensive to ship automobiles to Iran;

 

3. Reimbursement for costs of transportation and entry into Iran, including passport fees, and medical examinations;

 

4. A one-time relocation allowance to assist the transition from previous home to new home in Iran;

 

5. Housing allowance or housing in an American Community near Isfahan (including utilities);

 

6. Annual round-trip fare to home of record in the United States for staff member and accompanying dependents;

 

7. Round-trip airfare to and from the United States in case of a death in the family;

 

8. Shipping allowance based on weight of baggage for staff members and dependents for initial location and a small allotment on an annual basis thereafter;

 

9. Transition costs (included hotel, motel and per diem allowance for up to three to four days in the United States, and for up to twenty-eight days in Isfahan);

 

10. Storage of household goods at home of record (up to $ 500 per year); and

 

11. Annual round-trip airfare for college age children (up to four round-trips per four-year period).

 The extra benefits paid under the ISS-sponsored contracts were comparable to extra benefits which business corporations under contract with the Iranian government paid to United States citizens they recruited to work in Iran. ISS specifically patterned its benefits upon those provided by Bell Helicopter.

 Teachers having ISS-sponsored contracts were hired in the United States and in Isfahan; teachers having local-hire contracts were hired only in Isfahan.

 B. Bryant's Employment by ISS

 Bryant was married to Marc Jernigan in 1974 and was an elementary school teacher by profession. She expected to accompany her husband to Iran, where he was to be employed by Grumman. She learned of ISS from a Grumman employee and wrote to ISS at Princeton, New Jersey, informing it of her expected arrival in Isfahan, Iran, in October 1975. ISS sent her application forms, which she completed and returned in early May, 1975. Receiving no response, Bryant made inquiry by letter dated July 30, 1975, again addressing her letter to ISS at Princeton. On September 22, 1975, ISS replied, stating that all positions were filled and advising her to communicate with the School superintendent upon her arrival in Isfahan.

 When Bryant arrived in Isfahan in November, 1975, a Grumman employee introduced her to Michael White, the principal of the American School's Middle School. He already had her resume and hired her forthwith as a substitute teacher, paid on a daily basis. In April 1976, ISS hired Bryant on a full-time basis and entered into a local-hire contract with her. The contract recited that Bryant was entitled to participate in the benefit program attached to the letter agreement. There was no attachment to the letter agreement. She was not informed of the fact that there were two kinds of contract, nor was she given a copy of the School's personnel manual.

 While she was a substitute teacher she had heard of certain allowances being paid to some of the teachers.

 After her employment under a local-hire contract commenced, Bryant asked the American School's assistant superintendent, Ralph Englesby, whether she would receive these allowances. He replied in the negative and, during the course of their discussion, informed her, "You can sue for them."

 At a faculty meeting at the end of the 1975-76 school year which Bryant attended, Dr. Howard Wire, Superintendent of the American School, was asked about the disparity between payments under local-hire contracts and ISS-sponsored contracts. Apparently there was a discussion of an EEOC case entitled Michele Dick v. Telemedia, in which a woman married to a man who worked in Iran was awarded damages for unpaid benefits on the grounds that she, as a married woman, had suffered from discriminatory treatment vis-a-vis married men. Dr. Wire defended ISS's policy of awarding contracts with different benefits. Asked by one of the women if it wouldn't be smart to go to the United States to sue ISS, Dr. Wire stated that "I wouldn't do so if I were you while you and your husband are employed here."

 In October, 1976, Bryant signed another local-hire contract for the school year 1976-77. In March of 1977 Bryant and her spouse decided to seek a divorce. She remained in Iran until June in order to complete her contract with ISS and then returned to the United States. During the period while she was employed under a local-hire contract she received none of the extra benefits provided by an ISS-sponsored contract. She received the equivalent of some of these benefits through her husband's employer, Grumman, such as the expenses of her trip to Iran, housing in Iran, luggage allowance, and moving allowance.

  C. Lillibridge's Employment by ISS

 In May, 1975, Lillibridge, a teacher by profession, accompanied her husband to Iran where he was employed as a pilot by Bell Helicopter. She learned of the American School and, in late June or early July, 1975, she had an interview with Dr. Wire. She completed application forms which disclosed her marital status, the fact that her husband did not teach, and her local address, which also disclosed her husband's affiliation with Bell Helicopter. Lillibridge was not hired at that time, but in October, 1975 she was interviewed by Ralph Englesby and then by Michael White, who hired her to teach the sixth grade.

 Shortly afterward she received the contract form which had "Local Hire Contract" written at the top. No one explained to her what that meant. There was a reference to an attached schedule of benefits, but no such schedule accompanied the copy of the contract sent to Lillibridge. She, like Bryant, was not told there were two kinds of contracts and she, too, was not provided with a copy of the pamphlet describing the American School's personnel policies.

 After starting her employment Lillibridge learned about additional allowances some teachers were receiving, and on one occasion she inquired of White whether she, too, could receive a travel allowance to visit the United States. He told her the difference arose from the fact that she was hired in Iran and referred her to Dr. Wire. Dr. Wire then explained that there were two kinds of contracts-those for persons hired in the United States, who received the extra benefits, and those for persons hired in Iran, who did not receive the extra benefits.

 Lillibridge attended the faculty meeting at which the disparities between the two forms of contract and the Michele Dick case were discussed.

 In the spring of 1976 Lillibridge was rehired under a local-hire contract for the 1976-77 school year. Her husband's contract as an instructor pilot with Bell Helicopter terminated on April 7, 1977. He accepted an additional one-year contract in order to enable her to complete her obligation to ISS for that year and sign up to teach for the 1977-78 school year. Consequently, Lillibridge entered into a local-hire contract for the 1977-78 school year. She took an approved leave of absence in 1978-79, expecting to return in the fall of 1979, but the Iranian revolution intervened.

 In the spring of 1978 C. William Schultheis and Burckhard Blob from ISS's headquarters went to Isfahan to explain ISS's personnel policies and benefits to the American School faculty. They stated, at a meeting of the faculty, that there were two kinds of contract. The reason for not paying the additional benefits under the local-hire contracts was that the persons hired locally in Iran did not need the benefits provided by an ISS-sponsored contract because they received these benefits through their husbands under their husbands' contracts.

 Lillibridge did not receive any of the extra benefits provided by the ISS-sponsored contract while she was a teacher at the American School. She did receive the equivalent of some of these benefits through her husband's employer, Bell Helicopter, such as certain travel allowances, her initial trip to Iran, and shipment of household goods.

 D. ISS's Hiring and Placement Practices

 ISS is a non-profit corporation founded for the purpose of providing educational services to English-speaking children living abroad. These services are designed to enable students to re-enter the American educational system upon their return to the United States. ISS has received its funds from foundations and, more recently, under contracts with the United States government and American companies doing business overseas.

 The kinds of services ISS provides include staffing and teaching referral programs, financial management, cooperative purchasing and school management programs-the development and operation of schools.

 ISS established and followed a routine procedure for processing applications for teaching positions. When it received an inquiry from a person interested in teaching abroad it sent an application form and information about ISS to the applicant. The form asked for information about the applicant's marital status, whether the applicant's spouse also taught, the number of persons who would be accompanying the applicant abroad, the applicant's educational and teaching experience, and the geographical areas in which the applicant would not be willing to teach. ISS would not process an application which excluded all but one geographical area.

 After receiving back the form, ISS arranged for an interview with the applicant at Princeton or elsewhere in the United States or abroad. Upon completion of this process the applicant's dossier was activated, that is to say, it was available to be sent to schools seeking teachers.

 When overseas schools requested that ISS's referral services provide candidates for teaching positions, ISS reviewed its files of qualified candidates and inquired of those who met the specified qualifications whether they wished to have their dossiers sent to the school seeking teachers. Upon receipt of an affirmative answer the dossier was sent out and the school made the selection.

 With respect to overseas schools which ISS itself operated, ISS would communicate with the administrator as to his need for teachers and send him dossiers of candidates for open positions.

 Turning specifically to the American School in Isfahan, Iran, Bell Helicopter communicated with ISS and sought the establishment of a school in Isfahan for children of employees of Bell Helicopter working in that part of Iran. ISS and Bell Helicopter entered into a cost-plus contract for the establishment of such a school and, pursuant to the contract, the American School in Isfahan was organized in the summer of 1973, opening its doors to 100-150 students in October of that year.

 In the fall of 1975 a second contractor doing work in Iran, Grumman, joined Bell Helicopter on the ISS contract to provide a school for dependent children. Both companies were under contract with the Department of Defense, which had contracted with the Iranian government. Inasmuch as these contracts were on a cost-plus basis and Bell Helicopter's and Grumman's payments to ISS constituted part of their costs, the Iranian government concluded that it would contract directly with ISS and thereby avoid duplicate charges. Consequently, on March 26, 1976, a contract was entered into between ISS and the Military Industries Organization, Government of Iran, effective July 1, 1976 to June 30, 1979. Under this agreement ISS continued to "operate and manage at Isfahan, Iran an American Educational Program for kindergarten and grades 1 through 12 for dependent children of (Grumman, Bell Helicopter and certain others)." Payment was on a cost-plus basis. The American School grew from just under 200 children during the 1973-74 school year to 1800 children at the time it had to be closed.

 From the beginning, in 1973, the School was staffed in large part by using the ISS referral service. If it was determined after the beginning of a school year that more teachers were needed, resort was had to Americans in Iran. ISS counted on there being an adequate supply of such persons among the wives of Bell Helicopter and Grumman employees. ISS was not looking specifically for women to fill these positions locally, but it was aware that most, if not all, Bell Helicopter and Grumman employees in Iran were men and that, therefore, the pool from which ISS teachers were to be recruited locally consisted nearly entirely, or entirely, of women.

 All of the teachers whom ISS hired through its referral service were given ISS-sponsored contracts with the full panoply of benefits. As for the teachers hired locally, ISS awarded some ISS-sponsored contracts and some local-hire contracts.

 Both before commencement of this action and during the course of this litigation ISS has articulated several different bases for distinguishing between persons receiving ISS-sponsored contracts and persons receiving local-hire contracts. It is abundantly clear that ISS did not succeed in perfecting its rationale until the closing phases of this law suit. However, even though ISS never clearly expressed what it was doing either to itself or to others, the evidence suggests that in fact ISS's criterion for awarding contracts was a subjective one, namely, whether the teacher came to Iran and remained there for the primary purpose of teaching at the American School or whether the teacher came to Iran and remained there primarily for some other purpose. In the former situation the teacher was awarded an ISS-sponsored contract and in the latter situation the teacher was awarded a local-hire contract.

 ISS decided what was the teacher's primary purpose for coming to or remaining in Iran on the basis of whether the teacher's spouse was employed by Bell Helicopter or Grumman or perhaps some other American company in Iran. Such employment by the spouse would lead ISS to conclude that the would-be teacher and her/his spouse were induced to come to Iran by the spouse's employment and that, presumably, the couple was already receiving benefits comparable to the ones offered by ISS to attract teachers to Iran.

 Bryant and Lillibridge claim that ISS's method of awarding two types of contracts discriminated against them on the basis of sex, in violation of Title VII. Specifically, they maintain that the benefits policy resulted in disparate treatment and/or had a disparate impact on them married females whose spouses were not employed by ISS.

 ISS maintains that its benefits policy was applied equally to males and females and therefore could not result in disparate treatment. Moreover, ISS maintains that its policy did not have a disparate impact on females.

 E. The Impact of ISS's Contract Practices The distribution of local-hire contracts, by sex, during the years when one or both plaintiffs were employed at the American School was as follows: Year Male Female 1975-76 0 15 1976-77 1 n2 24 1977-78 0 28 1978-79 0 30 Total 1 97

19801204

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