E.E.O.C. v. Chicago Miniature Lamp Works

• Decision Date: 23 December 1991
• Docket Number: No. 90-2632,90-2632
• Citation: 947 F.2d 292
• Parties: 57 Fair Empl.Prac.Cas. (BNA) 408, 57 Empl. Prac. Dec. P 41,076, 60 USLW 2334 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. CHICAGO MINIATURE LAMP WORKS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 292

947 F.2d 292

57 Fair Empl.Prac.Cas. (BNA) 408,

57 Empl. Prac. Dec. P 41,076, 60 USLW 2334

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. CHICAGO MINIATURE LAMP WORKS, Defendant-Appellant.

No. 90-2632.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 27, 1991.

Decided Nov. 8, 1991.

Rehearing and Rehearing En Banc

Denied Dec. 23, 1991.

Margaret Herbert, E.E.O.C., Chicago, Ill., Paul Bogas (argued), Washington, D.C., for plaintiff-appellee.

Michael T. Brody, Jerold S. Solovy, William D. Snapp (argued), Jenner & Block, Chicago, Ill., for defendant-appellant.

Before CUMMINGS, EASTERBROOK, and KANNE, Circuit Judges.

CUMMINGS, Circuit Judge.

This case highlights the problems of implementing Title VII's prohibitions against race-based employment discrimination in Chicago, which contains various segregated communities. ¹ Defendant Chicago Miniature Lamp Works ("Miniature") is a manufacturer of light bulbs located in a largely Hispanic and Asian neighborhood on the north side of Chicago. Plaintiff Equal Employment Opportunity Commission ("EEOC") investigated Miniature, found reasonable cause to believe that Miniature had engaged in a pattern or practice of discrimination against blacks as a class in recruitment, hiring and promotion, and filed suit against Miniature on June 8, 1979. After a bench trial, the district court found that Miniature had violated Title VII by engaging in a pattern or practice of discrimination against blacks as a class. ² Miniature appeals the trial court's ruling that it was liable under both a disparate treatment and a disparate impact theory, arguing that these findings were based on a misapprehension of the law and were clearly erroneous. For the reasons stated below, we reverse.

I. FACTS

Miniature manufactured small incandescent and neon lamps and related components at its plant located at 4433 North Ravenswood Avenue in Chicago. The EEOC alleged at trial that Miniature had discriminated against blacks in its recruitment and hiring of entry-level workers. Although the district court considered evidence concerning the representation of blacks in Miniature's work force from 1970 to 1981, the bulk of the evidence presented at trial concerned its hiring practices from 1978 to 1981. Miniature last hired an entry-level factory worker on June 29, 1981.

The entry-level jobs at Miniature involved light manufacturing work and did not require any prior experience, particular educational background, or special skills. Basic manual dexterity and the ability to speak some English were the minimal qualifications required by Miniature. The beginning pay was low and did not rise substantially over time. Because the jobs did not require English language fluency, they had some special attraction to those persons who did not speak English as a primary language.

Miniature's principal method of obtaining new entry-level workers merits particular attention. Miniature relied almost exclusively on "word-of-mouth" in order to fill its entry-level job openings. Employees would simply tell their relatives and friends about the nature of the job--if interested, these persons then would come to Miniature's office and complete an application form. Miniature did not tell or encourage its employees to recruit in this manner. The evidence indicates that the only time Miniature initiated this word-of-mouth process was during 1977 when it adopted an Affirmative Action plan. At that time, Miniature asked one or two black employees to recruit black applicants from among their relatives and friends.

Miniature received applications whether or not it currently had an entry-level opening to fill. Whenever Miniature needed to fill an opening, it would go through its applications on file in order, phoning applicants until one was reached at home. Until August 1980, Miniature would start with the applications that were four to five months old and process them forward in time. After that date, Miniature started with the most recent application and processed applications backward in time. Evidence indicated that only one person was hired for every fifteen that applied. Because of the success of this process, Miniature never advertised for these jobs, and only rarely used the State of Illinois unemployment referral service.

The district court found that Miniature's reliance on word-of-mouth for filling entry-level jobs "resulted in the exclusion of blacks from the network of information concerning jobs at Chicago Miniature, * * * and gross underrepresentation of blacks in, and their exclusion from, Chicago Miniature's entry-level work force." 622 F.Supp. 1281, 1288 (N.D.Ill.1985). In reaching this conclusion, the lower court relied almost exclusively on statistics presented by the EEOC's expert, Dr. Hekmat Elkhanialy.

A central task for the district court was to define the relevant labor market--that area from which Miniature would be expected to draw workers. The court found that the factors that enter into this definition include the location and accessibility of the employer, commuting patterns, and the employer's applicant flow. Based on its analysis of these factors, the trial court found that Chicago (the city only, not the metropolitan area) was the relevant labor market for Miniature's entry-level workers.

Although it concluded that Chicago was the relevant labor market, the district court examined a number of different "relevant labor markets" and concluded that illegal discrimination occurred in each of these labor markets. Specifically, the district court examined each of the following labor markets: the City of Chicago, a 12-zip code area from which Miniature drew more than 90% of its applicants, a 5-zip code area from which it drew more than 70% of its applicants, and Miniature's own zip code area, from which it drew nearly 30% of its applicants.

In 1970, the percentage of entry-level workers in Chicago who were black was 35%. In 1980, this percentage had increased to 36.4%. The judge used these percentages as a basis for comparison against Miniature's work force in two ways. First, he compared them with the percentage of blacks in Miniature's entry-level work force for the years 1970-1981. In addition, he compared them with the percentage of blacks hired by Miniature for entry-level positions for the years 1978-1981.

Between 1978 and 1981, Miniature hired 146 entry-level workers. Nine of these workers (6%) were black. The trial court concluded that "the statistical probability of Chicago Miniature's hiring so few blacks in the 1978-81 period, in the absence of racial bias against blacks in recruitment and hiring, is virtually zero." Id. at 1295. The trial court also concluded that racial bias was the reason for the disparities between the percentage of blacks in Miniature's entry-level work force for the years 1970-1981 and the percentage of black entry-level workers in Chicago. Although the differences between expected number of black hires and applicants and actual numbers were less when the judge restricted the relevant labor market to smaller geographical areas closer to Miniature's plant, he concluded that racial discrimination must have been the cause of disparities even in geographically smaller relevant labor markets. The judge also commented that a number of black applicants (the record reveals that there were 11) had the letter "B" hand-written on their applications.

The district court declined to attach significance to the fact that Miniature, on a percentage basis, hired more blacks than non-blacks who applied for the jobs in question. From 1978-1981, the percentage of black applicants who were hired was 16.4%; the overall percentage of applicants who were hired was 6.1%. 622 F.Supp. at 1319 (App. 3). The judge considered the higher percentage of black applicants hired an unreliable figure because of the small number of blacks involved (only 9 blacks were hired in the 1978-1981 period).

II. ANALYSIS

Miniature challenges the district court rulings as based both on a misapprehension of the law and as unsupported by the evidence. Although we revisit questions of law decided below and raised on appeal on the clean slate of de novo review, the Court sets aside only those factual determinations that were clearly erroneous. Mozee v. American Comm'l Marine Serv. Co., 940 F.2d 1036, 1044 (7th Cir.1991). The clearly erroneous standard for factual questions is especially appropriate in a discrimination case where the trial court weighed the competing statistical testimony of experts. Soria v. Ozinga Brothers, Inc., 704 F.2d 990, 995 n. 6 (7th Cir.1983).

The Supreme Court has considerably altered the landscape of Title VII jurisprudence since the trial judge issued his opinion in October 1985. See Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 109 S.Ct. 2115, 104 L.Ed.2d 733 (1989); Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 108 S.Ct. 2777, 101 L.Ed.2d 827 (1988). Title VII itself remains unchanged--an employer may not discriminate against an employee or applicant on the basis of race:

(a) It shall be an unlawful employment practice for an employer--

(1) to fail or refuse to hire * * * any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin; or

(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin.

42 U.S.C. § 2000e-2(a). Nevertheless, the Supreme Court has attempted in recent years to reconcile this general proscription with other considerations expressed elsewhere in Title VII--a caution to employers not to engage in hiring quotas, and...