Crown Zellerbach Corp. v. Marshall, Civ. A. No. 77-1833.

Citation441 F. Supp. 1110
Decision Date25 October 1977
Docket NumberCiv. A. No. 77-1833.
PartiesCROWN ZELLERBACH CORPORATION v. Raymond MARSHALL, Secretary of Labor, et al.
CourtUnited States District Courts. 5th Circuit. United States District Court (Eastern District of Louisiana)

COPYRIGHT MATERIAL OMITTED

Robert K. McCall, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, La., for plaintiff.

Louis G. Ferrand, Jr., Counsel for Civil Rights, Dept. of Labor, Washington, D.C., James D. Llewellyn, Regional Counsel, General Services Administration, Fort Worth, Tex., Joan Elaine Chauvin, Asst. U.S. Atty., New Orleans, La., David L. Rose, Dept. of Justice, Washington, D.C., for defendants.

ALVIN B. RUBIN, Circuit Judge:*

This motion for a preliminary injunction raises the issue whether the government, without a hearing, may refuse to contract with firms that do not adopt a seniority system that is intended to provide affirmative action relief to females. The seniority system that the government here requires would provide females with seniority rights that would be less favorable to the company's present employees, who are predominantly male, than those accorded under the terms of the company's existing collective bargaining agreement, and would, in effect, require renegotiation of that contract. But the executive may validly decide not to enter into a particular contract on the basis that specific conditions affecting the composition of a bidder's work force violate governmental policy. Hence, the motion is DENIED.

I

On August 17, 1976, the General Services Administration ("GSA"), conducted a "preaward" compliance review of Crown Zellerbach Corporation's ("Crown's") Container Plant at its Bogalusa, Louisiana facility. In a letter dated September 8, 1976, GSA informed Crown that, in GSA's opinion, female employees and female applicants had been subject to sex-based discrimination. Thereafter, GSA informed Crown that it had confirmed the existence of sex discrimination against females, and it listed steps that it believed Crown should take in order to come into compliance with Executive Order 11246,1 as amended.

Following attempts by GSA and the Company to resolve the dispute, Crown sought a temporary restraining order and a preliminary and permanent injunction barring the government from denying Crown future government contracts. Three hearings were held on Crown's request for a temporary restraining order. It developed that the government sought both remedial action with respect to Crown's performance of existing contracts, and in addition, assurances of the manner in which it would perform contracts that it would seek in the future. At the conclusion of the third hearing, the court granted a temporary restraining order, which restrained the government from adversely affecting Crown,

. . . based upon Crown's failure to provide relief for alleged violation of past government contracts without affording Crown . . . notice and hearing on any issues of alleged discrimination arising out of past conduct by Crown . . at its Bogalusa, Louisiana Facilities.

But the court specifically refused to enjoin the government from exacting as a condition of future contracts an agreement by Crown,

. . . not to discriminate in employment on the basis of sex; to utilize goals and timetables for the hiring and promotion of females; to create a nonhostile work atmosphere for females; and to safeguard opportunities for promotion of female applicants and incumbents.

The court also asked the government to prepare a list of those requirements it sought to impose on Crown that it believed were subject to the temporary restraining order, as well as a separate list of those items that it believed were not subject to the order.

The government prepared such a list, including as its requirements that female employees who bid into jobs subject to goals and timetables2 should take their company seniority with them for use in those jobs, and that incumbent employees in the jobs would also use their company seniority when in competition against these women.3 This would require Crown to violate its agreement with Local 189, United Paper Workers International Union, which provides that employees utilize their job seniority in bidding for promotion and their seniority in a line of progress for layoffs,4 as well as their agreement with Local No. 1362 representing production and maintenance workers at the Box, Multiwall Bag, and Grocery Bag plants, which provides that those employees utilize a combined system of plant and line of progression seniority.5

Crown requested, pursuant to 41 CFR 60-2.2(b), that the Director of OFCCP determine that there are substantial issues of law and fact "concerning the eligibility, qualifications and rights, constructive seniority, and other remedies," and that the claims and proposed remedies involved various substantial factual and legal questions, in order to obtain a hearing on these issues. The Director issued such a determination in which he granted the portion of Crown's request that dealt with the identity of individual affected class members and the relief due them on an individual basis. However, the Director's determination specifically excluded appropriate goals and timetables, maternity leave standards, and other related requirements that the government seeks to impose as a condition of its future government contracts.

Thereafter, at a hearing on Crown's motion for a preliminary injunction, counsel for the government informed the court that Crown would not be denied government contracts because of its failure to provide affected class relief on an individual basis as set out in the Director of OFCCP's "substantial issues" determination. However, the government would seek to exact other requirements, with respect to seniority and other action on behalf of females, as a condition to Crown's receiving government contracts in the future. The court denied Crown's Motion for a Preliminary Injunction.

After further meetings between the parties, Crown filed a new motion seeking to prevent the government from withholding future contracts on the basis of Crown's failure to adopt the seniority system proposed by the government. Thus, in effect, Crown once again sought to compel the government to continue to award future contracts to it until there had been a hearing with respect to the manner of utilizing females under the terms of those contracts.

This motion for a preliminary injunction raises four discrete issues: Whether withholding fewer than two contracts without a prior hearing violates the requirements of the Executive Order; whether withholding the contracts without a hearing violates the due process clause of the Constitution; whether the Executive Order was promulgated pursuant to the applicable provisions of the Administrative Procedure Act, 5 U.S.C. § 551, et seq., so as to be valid and enforceable; and whether the government's proposed seniority plan violates a national policy to preserve "bona fide" seniority systems as expressed in Section 703(h) of Title VII of the Civil Rights Act, 42 U.S.C. § 2000e-2(h). We shall consider these issues separately.

II

The Executive authority over procurement practices has long been recognized and is specifically authorized by Congress with respect to direct federal procurement. In pertinent part, the Federal Property and Administrative Services Act, 40 U.S.C. § 486(a), provides:

The President may prescribe such policies and directives, not inconsistent with the provisions of this Act, as he shall deem necessary to effectuate the provisions of said Act, which policies and directives shall govern the Administrator and executive agencies in carrying out their respective functions hereunder.

In Farkas v. Texas Instrument, Inc., 5 Cir. 1967, 375 F.2d 629, 632 note 1, cert. denied, 389 U.S. 977, 88 S.Ct. 480, 19 L.Ed.2d 471, the court held that Executive Order 10925, the predecessor of Executive Order 11246, is specifically authorized by this statute. See also, Contractors Association of Eastern Pennsylvania v. Secretary of Labor, 3 Cir. 1971, 442 F.2d 159, 170, cert. denied, 1971, 404 U.S. 854, 92 S.Ct. 98, 30 L.Ed.2d 95.

Every court before which the issue has come has held that Executive Order 11246, like its predecessor Executive Order 10925, has the force and effect of law. Contractors Association of Eastern Pennsylvania v. Secretary of Labor, supra; United States v. Local 189, United Papermakers & Paperwork., E.D.La.1968, 282 F.Supp. 39, 43, aff'd., 5 Cir. 1969, 416 F.2d 980, cert. denied, 1970, 397 U.S. 919, 90 S.Ct. 926, 25 L.Ed.2d 100; Southern Illinois Builders Association v. Ogilvie, S.D.Ill.1971, 327 F.Supp. 1154, aff'd., 7th Cir. 1972, 471 F.2d 680. See also, Farkas v. Texas Instruments Co., supra; Farmer v. Philadelphia Electric Co., 3 Cir. 1964, 329 F.2d 3.

Likewise, it is well established that regulations issued by government agencies, pursuant to appropriate federal law, themselves have the force and effect of law unless they are in conflict with the authorizing provisions. See Paul v. United States, 1963, 371 U.S. 245, 83 S.Ct. 426, 9 L.Ed.2d 292; Leslie Miller v. Arkansas, 1956, 352 U.S. 187, 77 S.Ct. 257, 1 L.Ed.2d 231; Maryland Casualty Co. v. United States, 1920, 251 U.S. 342, 349, 40 S.Ct. 155, 158, 64 L.Ed. 297; Ex parte Sackett, 9 Cir. 1935, 74 F.2d 922, 923; Williams v. Commissioner of Internal Revenue, 8 Cir. 1930, 44 F.2d 467, 468-469; Daeuffer-Liberman Brewing Co. v. United States, 3 Cir. 1929, 36 F.2d 568, 570; G. L. Christian and Associates v. United States, 1963, 160 Ct.Cl. 1, 7, 312 F.2d 418, 424, reh. denied, 160 Ct.Cl. 58, 320 F.2d 345; Barclay v. United States, 1964, 166 Ct.Cl. 421, 430, 333 F.2d 847, 856.

Pursuant to Section 202 of the Executive Order 11246, each government contractor or prospective contractor who is not exempt6 from the provisions of the Executive Order agrees, as a condition of his contract with the United States, to the following:

(1) The contractor will not discriminate
...

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