U.S. v. New Orleans Public Service, Inc., 83-3097

• Citation: 723 F.2d 422
• Decision Date: 23 January 1984
• Docket Number: No. 83-3097,83-3097
• Parties: 33 Fair Empl.Prac.Cas. 1489, 33 Empl. Prac. Dec. P 34,079 UNITED STATES of America, Plaintiff-Appellee, v. NEW ORLEANS PUBLIC SERVICE, INC., Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 422

723 F.2d 422

33 Fair Empl.Prac.Cas. 1489,

33 Empl. Prac. Dec. P 34,079

UNITED STATES of America, Plaintiff-Appellee, v. NEW ORLEANS PUBLIC SERVICE, INC., Defendant-Appellant.

No. 83-3097.

United States Court of Appeals,

Fifth Circuit.

Jan. 23, 1984.

Milling, Benson, Woodward, Hillyer, Pierson & Miller, Michael J. Molony, Jr., New Orleans, La., for defendant-appellant.

David L. Rose, Federal Enforcement Section, Richard S. Ugelow, U.S. Dept. of Justice, Civil Rights Div., Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before GARZA, WILLIAMS and HIGGINBOTHAM, Circuit Judges.

GARZA, Circuit Judge:

I.

FACTS

New Orleans Public Service, Inc. (NOPSI) is a private Louisiana corporation and public utility that produces, distributes, and sells electric power and natural gas to consumers in New Orleans. Until June 30, 1970, NOPSI had a contract with the National Aeronautics and Space Administration (NASA) that contained a nondiscrimination clause specifically limited to NOPSI's facilities at NASA's Michoud Assembly Facility (MAF). The MAF facilities were not staffed by NOPSI employees. When the limited MAF contract expired NOPSI and NASA failed to agree on a new contract with an expanded nondiscrimination clause. Negotiations continued for an undetermined time period and NOPSI officials testified that the talks never concerned expansion of the nondiscrimination clause or rate changes. Although no contract agreement was reached, NOPSI continued to supply gas and electric service to NASA pursuant to its obligation as a public utility.

Executive Order (E.O.) 11,246 prohibits employment discrimination by contractors with the federal government. The order requires that all covered government contracts contain a nondiscrimination clause and that contractors agree to take affirmative action to ensure the equal employment opportunity goals of the order are attained.

E.O. 11,246, as amended, 3 C.F.R. Sec. 339 (1964) assigns responsibility for assuring compliance with its terms to the Secretary of Labor, who promulgated guidelines codified at 41 C.F.R. Sec. 60-1 et seq. (1983). When the events leading to this litigation occurred, the Labor Secretary had delegated enforcement responsibility to the Director of the Office of Federal Contract Compliance. 41 C.F.R. Sec. 601.2 (1972). The OFCC assigned enforcement responsibility for various industries (including utilities) to the General Services Administration.

At the time NOPSI was selected for an E.O. 11,246 compliance review, contractors were chosen in one of two ways. First, Edward Mitchell, Contract Compliance Officer for GSA, established a list of companies from which regional GSA officials could schedule compliance reviews from October 1970 through June 1971. Second, by applying certain criteria, Regional officers could select companies not on Mitchell's list and then submit their proposed reviews to Washington, D.C. for approval.

On March 15, 1971, Kenneth Patton, a Senior Assistant Regional Contract Compliance Officer, notified NOPSI that they had been selected for a compliance review. Patton proposed to visit NOPSI to examine their employment statistics and records. NOPSI refused to comply with this request. On March 15, 1972, GSA sought a pre-award compliance review of NOPSI because the company was negotiating a government contract in excess of a million dollars. Again, NOPSI refused to cooperate with GSA.

II.

JUDICIAL PROCEEDINGS

On May 17, 1973, the Attorney General sought injunctive relief to require NOPSI to permit access to its records and to comply with all other rules and regulations issued pursuant to E.O. 11,246. The District Court permanently enjoined the utility from failing or refusing to 1) comply with the executive order; 2) implement regulations; 3) allow the government to conduct compliance reviews of NOPSI. United Again NOPSI appealed to the Fifth Circuit, which vacated and remanded. United States v. Mississippi Power & Light Co., 638 F.2d 899 (5th Cir.1981). In that decision the Fifth Circuit held that at least three elements are essential to justify the reasonableness of the proposed search under the fourth amendment. Id. at 908. These are 1) whether the proposed search is authorized by statute; 2) whether the proposed search is properly limited in scope and; 3) how the agency chose to initiate the particular search. Id. at 907. ¹ The first two elements are questions of law and the last element one of fact. In an earlier opinion involving this case, the Fifth Circuit held that the first two elements had been satisfied. 553 F.2d 459. In Mississippi Power we remanded for a factual determination of the third element. In this regard the Court stated that:

                States v. New Orleans Public Service, Inc., 8 FEP Cases 1089 (E.D.La.1974).  NOPSI appealed, arguing that the E.O. and its regulations could not be imposed on the company without its contractual consent and that the fourth amendment protected its records from government inspection.  The Fifth Circuit rejected these arguments and held that the regulations were proper and did apply to NOPSI, and that the proposed inspections were properly limited in scope, but we vacated the district court's injunction.  The court required NOPSI's compliance but allowed it to do so voluntarily through the regular GSA administrative process.   United States v. New Orleans Public Service, Inc., 553 F.2d 459 (5th Cir.1977).  The Supreme Court then granted cert. and vacated the Fifth Circuit decision for reconsideration in light of Marshall v. Barlow's Inc., 436 U.S. 307 (1978), 98 S.Ct. 1816, 56 L.Ed.2d 305 (1978).  Consequently, the Fifth Circuit remanded the case to the district court for reconsideration in light of Barlow's.  United States v. New Orleans Public Service, Inc., 577 F.2d 1030 (5th Cir.1978).  The district court concluded that Barlow's did not require a change in its earlier ruling, and entered an order authorizing the government to proceed against NOPSI through its administrative process.   United States v. New Orleans Public Service, Inc., 480 F.Supp. 705 (E.D.La.1979)
                

The search will be reasonable if based either on (1) specific evidence of an existing violation, (2) a showing that "reasonable legislative or administrative standards for conducting an ... inspection are satisfied with respect to a particular [establishment]," 436 U.S. at 320-21, 98 S.Ct. at 1824, 56 L.Ed.2d at 316, (quoting Camara [v. Municipal Court of City and County of San Francisco ], 387 U.S. at 538, 87 S.Ct. [1727] at 1736, 18 L.Ed.2d at 940), or (3) a showing that the search is "pursuant to an administrative plan containing specific neutral criteria". 436 U.S. at 323, 98 S.Ct. at 1826, 56 L.Ed.2d at 318.

638 F.2d at 907. On remand the District Court held that both the 1971 and 1972 attempts to review NOPSI were reasonable under the fourth amendment. The Court then entered an injunction requiring NOPSI to submit to a compliance review. United States v. New Orleans Public Service, Inc., 550 F.Supp. 911 (E.D.La.1982). On January 14, 1983, the district court issued a "General Injunctive Order" permanently enjoining NOPSI from refusing to comply with section 202(5) of E.O. 11,246. That order also authorized the commencement of discovery and the court's retention of jurisdiction for the purpose of conducting a trial concerning NOPSI's substantive compliance with the E.O.

In an uncharacteristic move, NOPSI now appeals from the lower court's ruling.

III.

ISSUES

Appellant/Defendant raises three points of error. It argues that the district court erred in holding that the 1971 and 1972 selections were proper, and that its general injunctive order was an abuse of its discretion. After an extensive examination of the 1981 and 1974 hearings in the trial court and the depositions, affidavits, exhibits and briefs filed in connection with those proceedings, we find merit in all of its points of error. Thus, we reverse the trial court's findings and vacate its injunction.

The 1971 Selection

To find that the proposed 1971 search in this case was reasonable the lower court needed to find that it was based on any one of three factors: (1) specific evidence of an existing violation, (2) a showing that reasonable legislative or administrative standards for conducting the inspection were satisfied with respect to NOPSI, or (3) a showing that the proper search was pursuant to an administrative plan containing specific neutral criteria.

As to specific evidence of an existing violation, the trial court found that at the time of the review a comparison of NOPSI's EEO-1 reports with the experienced civilian labor force in New Orleans would have shown an underrepresentation of minorities in several employment positions. Finding of Fact 23. The court also determined that discrimination claims had been filed with the EEOC, Finding of Fact 24, and that the EEOC Commissioner had charged NOPSI with violating Title VII. Finding of Fact 25. Finally, he found that as of March 1971, the EEOC had issued three decisions holding that there was reasonable cause to believe that NOPSI employment practices were in violation of Title VII. Finding of Fact 26.

As to the second factor, a showing that reasonable legislative standards for conducting an inspection were satisfied with respect to NOPSI, the court found that: "[i]t was Mr. Patton's practice, in conjunction with the scheduling of compliance reviews," to consider specifically seven different pieces of information as part of the selection process. Finding of Fact 21 (emphasis added). The Court also stated that it "infers and finds that Mr. Patton did follow his ordinary business practice and consider the [seven] ² factors ..." Finding of Fact 30 (emphasis added).

As to the third factor under our fourth amendment test, the court found that "[t]he government developed and implemented an administrative plan...