E.E.O.C. v. Inland Marine Industries

• Decision Date: 05 April 1984
• Docket Number: No. 82-4422,82-4422
• Parties: 34 Fair Empl.Prac.Cas. 881, 34 Empl. Prac. Dec. P 34,306 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. INLAND MARINE INDUSTRIES, Defendant-Appellant. Fletcher L. HOUSTON, Plaintiff-Appellee, v. INLAND MARINE INDUSTRIES; Rudy Sutton; Douglas Sutton; Stanley Sutton; and Does I through XXX, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1229

729 F.2d 1229

34 Fair Empl.Prac.Cas. 881,

34 Empl. Prac. Dec. P 34,306

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. INLAND MARINE INDUSTRIES, Defendant-Appellant.

Fletcher L. HOUSTON, Plaintiff-Appellee, v. INLAND MARINE INDUSTRIES; Rudy Sutton; Douglas Sutton;

Stanley Sutton; and Does I through XXX,

Defendants-Appellants.

No. 82-4422.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Feb. 13, 1984.

Decided April 5, 1984.

Robert W. Tollen, Bronson, Bronson & McKinnon, San Francisco, Cal., for defendants-appellants.

David Offen-Brown, Chern & Culver, Oakland, Cal., Joan M. Graff and Chris Redburn, Employment Law Center, San Fransico, Cal., for plaintiffs-appellees.

On Appeal from the United States District Court for the Northern District of California.

Before DUNIWAY, Senior Circuit Judge, and FARRIS and PREGERSON, Circuit Judges.

PREGERSON, Circuit Judge:

INTRODUCTION

Inland Marine Industries (Inland Marine) appeals from a judgment of the United States District Court for the Northern District of California. The district court found that Inland Marine had violated Title VII of the Civil Rights Act of 1964, Sec. 703(a)(1), 42 U.S.C. Sec. 2000e-2(a)(1) (1976), and 42 U.S.C. Sec. 1981 (1976), by paying black employee Fletcher Houston a lower hourly wage than it paid white employees performing the same work. The court awarded Houston $268.85 in backpay, $500 in compensatory damages, $702.17 in court costs, and $7,500 in attorneys' fees.

At trial, Houston successfully contended that during the relevant period, Inland Marine never paid any of its 6 black employees more than it paid its 4 white employees. He also convinced the district court that Inland Marine ratified this disparity when its foreman, acting on the directive of the proprietor, failed to raise black workers' pay to parity, even after Houston and another black employee had twice complained about wage discrimination.

On appeal, Inland Marine contends that the court made two mistakes.

First, the company says that the district court confused disparate treatment with disparate impact analysis, ¹ and improperly found for Houston by combining mutually exclusive elements of the two theories. In a disparate treatment case, plaintiff must prove that the employer intended to discriminate. Inland Marine argues that the district court's opinion exonerates company officials of the requisite intent, and that the court's finding of discrimination rests solely on the statistical wage differences--an analysis permissible only on a disparate impact theory. We need not, however, consider the applicability of a disparate impact analysis to these facts, because we may affirm the district court's finding of discrimination on disparate treatment grounds. ²

Second, Inland Marine claims that no matter what the district court found, company officials lacked a discriminatory purpose as a matter of law. In the absence of such intent, Inland Marine argues, the district court may not find the employer guilty of violating Title VII.

For the reasons that follow, we reject these arguments and affirm.

FACTS

A. Hiring at Inland Marine

Inland Marine builds shipping berths and sells them primarily to the Navy. During the spring of 1980, Inland Marine rented a warehouse in Alameda to assemble berths sold under a large order. The sole proprietor put his son Douglas Sutton (Sutton) in charge of the assembling.

In March and April, Sutton hired 10 men to help assemble the berths and perform other tasks at the Alameda warehouse. ³ Sutton hired 6 blacks, all referred by the California Employment Development Department (EDD). Without exception, he started them at an hourly wage of $4.50.

Sutton also hired 4 white workers: Louis Runnestrand, Daryl Dennis, Paul Skarry, and John Marksman.

On March 17, on the recommendation of a carpenter already on the payroll, Sutton hired Runnestrand to perform carpentry work at $5.00 per hour.

On March 19, on Runnestrand's recommendation, Sutton hired Dennis to assemble berths at $5.00 per hour. Sutton initially offered $4.50, but Dennis demanded more and Sutton, after talking to Dennis and determining that he was an intelligent person possessing a potential for advancement, offered $5.00. Later, after another employee pointed it out, Sutton observed that Dennis brought his own tools to work and awarded Dennis a raise of indeterminate amount.

On March 25, Sutton needed additional manpower for a last-minute task. He hired Skarry to help load a container at $5.00 per hour. Skarry was not a very good worker, so Inland Marine later fired him.

Finally, on April 16, Sutton hired Marksman. Before setting Marksman's pay, however, Sutton permitted Marksman to work a 17-hour day. Sutton was so impressed by the work that he gave Marksman $5.00 per hour, and later raised it to $5.50.

Sutton hired black referrals from the EDD on April 8 (one man), April 9 (two men), and April 24 (plaintiff-appellee Houston and three other men). He paid every man $4.50 per hour. In no case did he offer more money or provide the black workers with an opportunity to demonstrate their intelligence, purchase their own tools, work longer days, or do other things to earn raises.

Houston and another black worker complained to Sutton about the wage disparity. Sutton acknowledged the differences. ⁴

But instead of ordering pay hikes for all blacks, Sutton awarded 25cents per hour raises only to the two men who complained. Moreover, Sutton simultaneously ordered a 50cents raise for Marksman. When Houston and his companion complained a second time, Sutton paid them the difference between $4.75 and $5.00 per hour--but out of his own pocket, with personal checks. He failed, however, to make up this difference for the other black workers, or to pay any other workers with personal checks.

Based on these facts, Houston charged that Inland Marine had used subjective wage-setting criteria to violate both Title VII ⁵ and Sec. 1981. ⁶ The EEOC filed a Title VII class action on behalf of Houston and other blacks, and Houston filed an individual action under Sec. 1981. After the EEOC settled the class action with the employer, Houston obtained leave to intervene and pursued his individual claims under both Title VII and Sec. 1981.

At trial, Inland Marine contended that Sutton's father, the proprietor, had instructed his son to pay no more than $4.50 per hour, and that the company set this new policy in advance of hiring the EDD referrals. Inland Marine also offered evidence that Sutton had many black friends and acquaintances, and did not treat black people badly.

B. District Court's Findings

In a 4-page opinion, the district court reaffirmed its earlier, oral ruling that Inland Marine had "paid black employees less, in hiring and promotion, than defendant paid other employees for the same work and that such acts were intentional." Houston v. Inland Marine Industries, Civ. No. 81-4729-RPA, slip op. at 1 (N.D.Cal. June 24, 1982) (unpublished opinion and order) (emphasis added). The court reasoned:

Based on statistical evidence showing virtually uniform wage disparity and the highly subjective nature o[f] the decisionmaking involved, this Court determined that plaintiff had made out [a] prima facie case for disparate treatment. The burden then shifted to defendant to offer evidence to rebut the inference of intent. Having reconsidered the evidence, it is the finding of this Court that defendant has failed to adduce evidence sufficient to rebut the inference of intent.

Id. at 3.

But the court qualified its findings. It found "no culpability on the part of Douglas Sutton, the foreman who was primarily responsible for determining wages, and no scheme or plan on the part of the company to discriminate." Id. at 1 (emphasis added); see also id. at 2 (using similar language). The court added:

Despite the fact that the evidence exonerates foreman Douglas Sutton and dispels plaintiff's contention that the company acted with malice, the company intended to discriminate against its black employees within the meaning of Lynn [v. Regents of the University of California, 656 F.2d 1337, 1343 n. 5 (9th Cir.1981) (discussing subtle discrimination), cert. denied, --- U.S. ----, 103 S.Ct. 53, [74 L.Ed.2d 59 (1982) ]. The company did not consciously set out to establish a two-tiered wage structure, and hence did not act maliciously; however, it cannot escape responsibility for the maintenance of that structure....

Houston v. Inland Marine Industries, Civ. No. 81-4729-RPA, slip op. at 3 (N.D.Cal. June 24, 1982) (unpublished opinion and The district court entered judgment for Houston in the amount of $768.85 plus costs and attorneys' fees, and Inland Marine appealed.

                order).  Still, the district court pointed to the wage disparity and noted that despite "ample opportunity to adjust and correct" the problem, Inland Marine had "acquiesced therein and chose to maintain it."    Id.  The court did not state that Sutton's father, the proprietor, was free from culpability
                

STANDARD OF REVIEW

The principal question on review is whether Inland Marine, in setting wages, intended to discriminate against Houston and other blacks. The district court found that Inland Marine so intended. We may reverse this finding only if we conclude that it is clearly erroneous under Fed.R.Civ.P. 52(a). Pullman-Standard v. Swint, 456 U.S. 273, 287-88, 290, 102 S.Ct. 1781, 1791, 72 L.Ed.2d 66 (1982); accord Wall v. National R.R. Passenger Corp., 718 F.2d 906, 909 (9th Cir.1983); Piva v. Xerox Corp., 654 F.2d 591, 594 (9th Cir.1981); Golden v. Local 55, International Association of Firefighters, 633 F.2d 817, 820 (9th Cir.1980).

ANALYSIS

A. District Court's Approach

1. Definitions. The Supreme Court recognizes two theories under which plaintiffs may establish Title VII liability: disparate treatment ⁷ and disparate impact. Disparate treatment

is the most easily understood type of...