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December 21, 1988


The opinion of the court was delivered by: LECHNER, JR.

 I. Introduction

 The Equal Employment Opportunity Commission (the "EEOC" or "plaintiff")) has brought this action pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq. ("Title VII"), on behalf of Billy McDowell ("McDowell"), a former employee of defendant Chas. Schaefer Sons, Inc. (the "Company" or "defendant"). It appears this court has jurisdiction over the parties and the subject matter of this action. The Company is an employer within the meaning of Title VII. McDowell, who is black, asserts that his involuntary separation from the Company constituted disparate treatment in violation of Title VII.

 In addition to pretrial conferences, the matter was before the court for decision on the merits following a bench trial held November 7, 9, 10 and 14, 1988. Immediately before commencement of trial and during trial both the EEOC and the Company indicated which paragraphs of opposing counsel's proposed findings of fact were admitted and which were denied. The statement of facts set forth below contains all of the facts which were stipulated to by the parties. These stipulations have been perfected and are properly reflected in the trial record.

 The statement of facts contains a number of factual findings (concerning disputed or unresolved factual issues) which I have made upon completion of the bench trial. In addition to considering the facts stipulated by the parties, I have had the opportunity to examine the submissions of the parties and have determined the credibility of the several witnesses after observing their demeanor and considering their relative interests, if any, in this matter. Together with the stipulated facts, my findings are entered as Findings of Fact pursuant to Fed. R. Civ. P. 52(a). *fn1"

 II. Statement of Facts

 The Company is a New Jersey corporation doing business in the State of New Jersey and has corporate offices, packaging operations and warehouse facilities located in the Township of Union, Union County, State of New Jersey. The Company is in the business of wholesale distribution and repackaging salt and industrial chemicals.

 It is useful to begin with an introduction to the several individuals involved in this case. James Barbour was hired by the Company as Vice President on April 1, 1978 to learn the business and assume general management responsibilities. Barbour was intimately familiar with the finances of the Company and participated in the annual salary review process. He was promoted to Executive Vice President and Chief Operating Officer in 1983 and became President of the Company in December, 1986.

 Charles Boeddinghaus was hired by the Company on May 15, 1978 to manage financial matters. His responsibilities included the finance payroll, scheduling, and the hourly workers of the Company. In 1981 Boeddinghaus was promoted to Vice President and Controller of the Company and he became Executive Vice President on January 1, 1987.

 F. W. Schaefer, Jr. and Laurence F. Schaefer, formerly President and Vice President of the Company, both retired on December 31, 1986. In December 1986, the Company was sold by F.W. and Laurence Schaefer to Barbour and Boeddinghaus, who remain the current owners of the Company.

 Ronald Sepscik was hired on June 20, 1982 and was responsible for the daily operation of the physical plants in Union and Woodbridge, New Jersey and Louisiana. He is still Plant Manager.

 McDowell, on whose behalf this action was brought, was hired by the Company on June 10, 1970 as a warehouse employee. He was promoted in 1973 to warehouse supervisor, *fn2" the position he held prior to the time Barbour and Boeddinghause were hired by the Company and until the time he was terminated. The EEOC stipulated that as warehouse supervisor, McDowell's responsibilities included supervising all of the warehouse department employees when they were not specifically assigned to and performing work for other foremen. In other words, according to the EEOC's stipulations, McDowell was responsible for supervising unassigned warehouse employees even if they were not assigned to perform, or were actually performing, tasks for McDowell. *fn3" (EEOC Stip., paras. 8, 9)

 McDowell was the only foreman who had certain hiring and firing responsibilities with regard to the warehouse department employees. These responsibilities, however, ceased after the Company hired a plant manager. Prior to that time, McDowell hired Charles Alford, John McDowell, Robert Dempsey, Mario Joassaint, Richard Williams and Lonnie Murphy as warehouse department employees of the Company. These individuals, together with Clarence Jackson, are sometimes referred to herein as the "Seven Warehouse Employees." Robert Dempsey and John McDowell are both cousins of McDowell. It appears that McDowell was friendly with these men.

 When Barbour joined the Company, McDowell was receiving a salary that was at least equal to or somewhat greater than the other foreman at the Plant site. According to the EEOC's stipulations, and as Barbour testified, after he arrived, Barbour reviewed the relative salaries and responsibilities of the foremen and concluded McDowell had greater responsibilities than the other foremen. These responsibilities included making work assignments for all warehouse department employees at the Plant site throughout the course of the work day, supervising all such workers when they were not specifically assigned to and performing work for other foremen, and hiring and firing warehouse department employees. (EEOC Stip., para. 13)

 Barbour maintains that based upon these extra responsibilities, he recommended to F. W. Schaefer, Jr. that, starting with the 1979 pay adjustments, McDowell receive certain raises which would result in his being paid substantially more than the other foremen. *fn4" F. W. Schaefer, Jr. accepted Barbour's recommendations that McDowell receive these raises and the first raise was effective in 1979. The EEOC stipulated that although Schaefer gave his final approval, it was Barbour who recommended that McDowell receive "substantially" more money than the other foremen. (EEOC Stip., para. 14) Set forth below are financial data taken from a chart prepared by the Company which give the compensation history for McDowell and another foreman, Charles Magee, at the Company. Salary Increase Salary History as of May 1st Bonuses McDowell Magee McDowell Magee McDowell Magee 1975 11,000.00 -- 1,500.00 -- $ 1,200.00 -- 1976 12,500.00 -- 1,500.00 -- 2,000.00 -- 1977 14,000.00 12,283.00 1,500.00 1,717.00 2,000.00 700.00 1978 15,500.00 14,000.00 1,500.00 1,500.00 2,000.00 1,000.00 1979 17,000.00 15,500.00 3,000.00 1,500.00 2,000.00 1,000.00 1980 20,000.00 17,000.00 3,000.00 2,500.00 2,000.00 2,000.00 1981 23,000.00 19,500.00 2,000.00 2,500.00 2,000.00 2,000.00 1982 25,000.00 22,000.00 2,500.00 2,500.00 2,000.00 2,000.00 1983 27,500.00 24,500.00 1,000.00 1,750.00 1,500.00 1,500.00 1984 28,500.00 26,250.00 -- -- 1,500.00 1,500.00

 The Company also provided McDowell other benefits in addition to his salary. The Company gave McDowell interest-free loans on a number of occasions. In addition, in May 1983, the Company sold a 1979 Chevrolet Caprice to McDowell for $ 700, a price below the car's market value. McDowell paid $ 100 as a down payment and the Company agreed to finance the $ 600 balance. As far as the loans to McDowell are concerned, it was established during trial that other employees at the Company also received loans but these loans were discontinued when they became too onerous for the Company.

 The Seven Warehouse Employees operated frontend loaders and forklifts during the period that McDowell was warehouse supervisor. Three other individuals, Arthur Rison, Cleveland Butler and Roger Porcher, were also classified as warehouse department employees during this period. These ten warehouse department employees, all black, were represented by a union and constituted a bargaining unit at the time that the Seven Warehouse Employees were terminated by the Company.

 In 1984, the Company received information causing it to believe that some of its product inventory was being stolen and further that one or more of its employees might be involved. In response to this perceived problem, the Company took various actions, including hiring security guards, installing better locks on the doors at the plant site, installing gates on the front driveway, alerting foremen as to the problem, and instituting tighter inventory controls on packaging items which were ordinarily not subject to inventory controls.

 After the implementation of these security measures to protect against product theft, the Company received additional information causing it to believe that packaging items were also being stolen by one or more of its employees. Based upon this information, the Company concluded the security measures already taken were insufficient to prevent theft. Accordingly, the Company decided to implement the additional security measure of hiring an agency to conduct an undercover investigation. The Company contacted several agencies regarding the possibility of providing an undercover investigator at the Company Plant site. After receiving bids from these agencies, the Company hired Wackenhut Security, Inc. Wackenhut deployed Agent Richard Stancil, a black male, to commence the investigation on January 28, 1985. The investigation was completed on March 25, 1985.

 Stancil prepared nine reports of his observations at the Company Plant site in Union, New Jersey during his undercover investigation, copies of which were provided to the Company. In his reports, Stancil recounts numerous incidents in which certain warehouse department employees of the Company engaged in specific improper conduct at the Plant site. These reports have been admitted into evidence. *fn5"

 On March 29, 1985, the Seven Warehouse Employees were discharged by the Company because each of them was found to have engaged in one or more improper activities at the Plant site including, but not limited to, the following: (a) use of alcohol and/or drugs on Company time and premises; (b) time card abuse; (c) failure to perform required duties; (d) theft; (e) threatening another employee with a knife. The decision to discharge these individuals was made as a result of the undercover investigation and Stancil's reports. The EEOC stipulated that the decision to discharge these individuals was made without regard to race. (EEOC Stip., para. 29) *fn6"

 As indicated above, the Seven Warehouse Employees were represented by a union and were bargaining unit employees. There was a collective bargaining agreement in effect at the time of these terminations which covered these seven employees. This collective bargaining agreement had a grievance procedure which was used by these employees. The summary of their efforts to gain reinstatement would take pages to recite; such a summary is included among the EEOC stipulations which comprise part of the trial record. As relevant here, it is sufficient to note that the Superior Court of New Jersey, Appellate Division, effectively upheld the dismissal of the Seven Warehouse Employees, stating that "it is clear from the record, of course, that [these] employees had in fact violated a Company rule which expressly stated that 'drinking of alcoholic beverages on the premises shall be cause for discharge.'" D-27 at 11.

 McDowell was dismissed from employment with the Company effective April 8, 1985, supposedly for failure to perform his assigned duties. The firing of McDowell occurred about a week after the seven warehousemen were terminated. The delay of a week from the termination of the seven warehousemen to the termination of McDowell was not explained.

 Four officers of the Company, the two Schaefers, Barbour and Boeddinghaus, participated in the decision to terminate McDowell. *fn7" (EEOC Stip., paras. 30, 32) This asserted failure to perform assigned duties involved McDowell's alleged failure to properly supervise the Seven Warehouse Employees during the periods of time when they engaged in improper activities for which they were discharged. According to the EEOC's stipulations, the decision to discharge McDowell was made as a result of the undercover investigation and Stancil's reports. (EEOC Stip., para. 30.) This EEOC stipulation, however, does not reveal the complete story. There exist a number of facts which establish that the Company's decision to terminate McDowell related to his race more than his asserted responsibility for the Seven Warehouse Employees.

 The EEOC argues that it believes that Barbour does not think that blacks are "competent." The EEOC is unable, however, to point to or identify with specificity any incident(s) which support this belief. *fn8" McDowell did testify generally that there were occasions when Barbour made comments about or criticized the work of the black warehouse employees, without specifically referring to the race of these employees.

 During the time relevant to this matter the following were the foremen/supervisors or assistant foremen: McDowell - warehouse supervisor since 1975 (black); George W. Bonasch - foreman since 1975 (white); Charles W. Magee - packaging foreman since 1977 (white); Calvin L. Pretlow - assistant foreman since January 17, 1985, foreman since May, 1985 (black); Kevin J. McCusker - assistant foreman January 15, 1984, warehouse foreman since April 9, 1985 (white); and Joseph L. Karalewich - maintenance foreman since June 25, 1984, plant superintendent since January, 1987 (white).

 McCusker was in charge of the Lehigh facility which is located about a mile from the Union plant. McCusker was promoted from assistant foreman to McDowell's foreman position on April 9, 1985, the day after McDowell was fired. The following discussion of the work activities and procedures at the Company establishes McDowell was treated uniquely for the employee misconduct on the part of the Seven Warehouse Employees. This unique treatment resulted in a vacancy in McDowell's position which the Company filled by promoting McCusker.

 Warehouse employees were required to report to the lunchroom/shack each morning to form a pool from which the various supervisors and assistant supervisors would draw workers for the day. All of the foremen and assistant foremen would meet and decide which men would be assigned to certain jobs. Conferences among the foremen and assistant foremen in which warehouse employees were allocated to specific tasks would occur only in the morning; if workers went back to the lunchroom/shack after completing a job, they were then available for any foreman or assistant foreman who needed additional further assistance that day.

 Sometimes foremen and assistant foremen would inform McDowell when they would enlist warehouse employees from the general pool, as a courtesy to allow for not only equitable, but also efficient, use of the workers available. (Court Finding) Although McDowell generally knew where various employees were at any given time, he could only be responsible in reality for those workers who were actually working for him at the time. It was not possible for McDowell to supervise workers who were assigned to other foremen. (Court Finding)

 Clarence Jackson, one of the Seven Warehouse Employees fired by the Company, was employed from 1967 to 1985 and provides an example of employee misconduct over which McDowell had little or no control. He was a yard man in 1985 and unloaded calcium and rock salt and switched cars around. Jackson testified that Magee helped him perform his duties and that Magee was his supervisor in 1985. McDowell never gave Jackson supervisory direction because this was done by Magee. (Court Finding)

 In addition, John McDowell, another of the Seven Warehouse Employees and a cousin of McDowell, was employed at the Company from 1974 to 1985. In 1985 John McDowell worked primarily as a forklift operator at the Lehigh Avenue warehouse under the supervision of McCusker; McCusker would occasionally throw bags of rock salt on the forklift for John McDowell, but he mostly supervised him. When he was not at the Lehigh Avenue plant John McDowell worked for and was supervised by McDowell, pursuant to the "general pool" system explained above. (Court Finding)

 Richard Williams was also among the Seven Warehouse Employees and was a five year veteran in the packing department. He provided a general overview of how the lines of responsibility were structured. He testified that Magee was the supervisor in packing; Pretlow was the supervisor for the liquid calcium production; McDowell was the supervisor in the warehouse; and McCusker was the supervisor at the Lehigh Avenue plant.

 As to McCusker, a critical player in this case, he was an assistant foreman and spent the majority of his time in 1984 and 1985 at the Lehigh Plant. McCusker testified about a document purportedly signed by him but which he disavows. He testified nonetheless about the substance of the document: there was a conversation between McDowell and Sepscik, the plant manager, during which Sepscik told McDowell he was satisfied that ninety-five percent of McDowell's work was good for that day and five percent needed improvement. McCusker emphasized in his testimony the conversation concerned only "that day," not an extended period of time. McCusker's prior deposition testimony, however, contradicts the "one day" aspect of his trial testimony. (Court Finding)

 I find McCusker's testimony here and on other topics less than credible. By his demeanor and the way he testified it appeared that McCusker had a bias in favor of the Company, if not a prejudice against McDowell. It appeared in fact that McCusker was "pleading a case" for the Company. This is not surprising in light of the fact that he directly benefitted by McDowell's termination by taking over as warehouse foreman when McDowell was fired.

 In contrast to the testimony of McCusker, I found the testimony of Magee quite credible. Magee has been employed by the Company for twelve years as a packaging foreman and has responsibility for the entire packaging operation. Magee testified that every day he would select men who were at the lunchroom/shack and ...

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