Kouba v. Allstate Ins. Co., Civ. No. S-77-99 LKK.

• Decision Date: 18 September 1981
• Docket Number: Civ. No. S-77-99 LKK.
• Parties: Lola KOUBA, aka Lola Hogan, individually and on behalf of all others similarly situated, Plaintiff, United States Equal Employment Opportunity Commission, Plaintiff in Intervention, v. ALLSTATE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of California

523 F. Supp. 148

Lola KOUBA, aka Lola Hogan, individually and on behalf of all others similarly situated, Plaintiff United States Equal Employment Opportunity Commission, Plaintiff in Intervention, v. ALLSTATE INSURANCE COMPANY, Defendant.

Civ. No. S-77-99 LKK.

United States District Court, E. D. California.

September 3, 1981.

As Corrected September 18, 1981.

COPYRIGHT MATERIAL OMITTED

Kalvin M. Grove, Chicago, Ill., Joseph J. DeHope, Jr., Sacramento, Cal., for defendant Allstate Ins. Co.

O. J. Ramsey, Sacramento, Cal., for Kouba.

Leroy Clark, E.E.O.C., Washington, D. C., John M. Rea, E.E.O.C., San Francisco, Cal., for E.E.O.C.

Nancy Davis, Judith E. Kurtz, San Francisco, Cal., for Equal Rights Advocates.

OPINION AND ORDER

KARLTON, District Judge.

In the recent case of County of Washington v. Gunther, ___ U.S. ___, 101 S.Ct. 2242, 68 L.Ed.2d 751 (1981), the Supreme Court of the United States initiated its analysis of the questions presented when a plaintiff alleges unequal pay for equal work in an action brought pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(h). In its conclusion the Court emphasized that it did "... not decide in this case the precise contours of lawsuits challenging sex discrimination in compensation under Title VII." At ___, 101 S.Ct. at 2254, 68 L.Ed.2d at 767. Elsewhere the Court acknowledged how much was left for another day. "We are not called upon in this case to decide whether respondents have stated a prima facie case of sex discrimination under Title VII citation omitted, or to lay down standards for the further conduct of this litigation." Id. at n.8. Finally, although the Court noted that "we do not decide in this case how sex based wage discrimination litigation under Title VII should be structured to accommodate the fourth affirmative defense of the Equal Pay Act," Id. at ___, 101 S.Ct. at 2249, 68 L.Ed.2d at 761, it recognized that "incorporation of the fourth affirmative defense could have significant consequences for Title VII litigation." Id., at ___, 101 S.Ct. at 2248, 68 L.Ed.2d at 760. In this case this Court is faced with the uncomfortable duty of exploring those very issues which the Supreme Court reserved. For this Court, this case is the other day.

I STATEMENT OF THE CASE

Plaintiff, Lola Kouba, instituted this action against Allstate Insurance Company alleging that the defendant's method for setting its "monthly minimum" for new sales agents/trainees discriminated against women in violation of Title VII. Subsequently the Equal Employment Opportunity Commission ("EEOC") intervened as a party plaintiff.¹ Plaintiff now seeks partial summary judgment on the issue of liability, class certification, preliminary injunctive relief and the setting of prejudgment interest.²

Plaintiffs and defendant filed extensive affidavits, depositions, interrogatories and answers to requests for admissions which provide the factual matrix for this decision.³

Plaintiff Kouba was employed by Allstate on November 19, 1974, and left its employ approximately one year thereafter. As with all new sales agents, Allstate established a "monthly minimum" for plaintiff. This amount represents the actual salary paid to all new sales agents during the first three months of their employment by Allstate during which they are trained for their new position. Subsequent to the training period, the monthly minimum constitutes a minimum compensation that the agents will be paid by Allstate regardless of sales performance. There is no ceiling on the amount of money a sales agent may actually earn once in the field (i. e. selling). That amount is based upon a Compensation Agreement which relates earnings to compensation for products sold, renewal compensation, and for certain new employees, a so-called career supplement. Plaintiff does not in this lawsuit challenge the new, renewal or career supplement compensation. Rather, this litigation addresses the monthly minimum which the agent will receive regardless of sales performance.

The monthly minimum is set through a series of internal steps.⁴ The company is divided essentially into three supervisorial levels — district sales managers, field sales managers, and regional sales managers. The district sales manager has the initial responsibility for recommending to the field sales manager what the monthly minimum should be for an agent who is hired by the district. The ultimate decision regarding an agent's monthly income is determined by the regional sales manager. Although the regional office has the authority to disapprove a recommended monthly minimum, it is rarely exercised.

The monthly minimum is set by application of criteria established by written company directive to facts obtained by the District Sales Manager from an application form, personal interview, and checking with former employers. The directives provide that the monthly minimum "should be commensurate with the individual's ability, experience and current salary situation."⁵ By "current salary situation" is meant the salary the applicant received in the employment immediately preceding hire by Allstate.

Although facially neutral, the result of the system has been that for the period analyzed by plaintiffs (each calendar year commencing in 1973 through the first half of 1979), Allstate has set a mean (average) monthly minimum which results in a differentiation between men and women sales agents/trainees. Plaintiff has attached to her Motion for Summary Judgment the affidavit of a professor of statistics and management science, fully qualified to render such opinions, which analyzes those results. It was the expert's conclusion that "the differences between male agents' mean (average) and female agents is about seven standard deviations (or percent scores) in every year from 1973 through 1979."⁶

Defendant does not challenge either the statistical facts or the expert's conclusion that these deviations cannot be attributable to chance.⁷ Rather, defendant challenges the inference which plaintiffs draw, namely that the deviations noted are the result of prohibited sex discrimination. Defendant asserts that the "monthly minimum" at issue was "assessed only after a full consideration of legitimate non-sex based factors" including prior salary, and that although this full consideration has resulted in an average deviation between men and women, it has also resulted in some women being paid more than some men. Moreover, it notes that while women as a group have received lower average monthly minimums than men, those minimums have generally been set higher than their prior earnings, whereas monthly minimums for men have tended to be lower than their prior earnings.

Neither party has provided this Court with evidence relating to how often, once agents are in the field, their earned compensation is greater or less than the amount guaranteed under the monthly minimum. Defendant does concede that the minimum "serves as a cushion for agents in recognition that, during the early years as agents, they will have peaks and valleys in sales." Finally, as to Kouba herself, it appears to be uncontested that at no time during the five months she was in the field did her actual compensation exceed the monthly minimum.

II BURDENS OF PROOF, BURDENS OF PERSUASION, AND SUMMARY JUDGMENT

Much of the history of Title VII litigation has required the courts to "address ... the nature of the evidentiary burden placed upon the defendant in an employment discrimination suit under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq." Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 249-50, 101 S.Ct. 1089, 1092, 67 L. Ed.2d 207 (1981). From Griggs v. Duke Power Company, 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971), through McDonnell Douglas Corporation v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973) to Teamsters v. United States, 431 U.S. 324, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977) to Texas Department of Community Affairs v. Burdine, supra, the essential issues have been discussed in terms of the allocation of various burdens of proof.⁸ The practice of addressing Title VII issues under the rubric of "burdens of proof" and "shifting burdens of proof" had led to some significant confusion. This confusion arose not because of some intrinsic difficulty in the mode of analysis but because these terms are instances of "lamentable ambiguity of phrase and confusion of terminology under which our law has long suffered." IX Wigmore on Evidence 271 (3d ed. 1940). As Wigmore exhaustively points out, the phrase has at least two possible meanings depending upon the context used. Thus, the phrase "burden of proof" may refer to the burden of persuasion on an issue tendered to the ultimate trier of fact (see IX Wigmore, supra, § 2485), or it may refer to the duty of producing evidence to the judge sufficient to justify presentation of the issue to the trier of fact. Id. at § 2487 and see Texas Department of Community Affairs v. Burdine, 450 U.S. at 254 n.7, 101 S.Ct. at 1094 n.7.⁹

Because of this ambiguity, various courts had mistakenly thought that the process of shifting burdens of proof in the context of Title VII cases referred to the burden of persuasion rather than the burden of producing evidence. Recently the United States Supreme Court dispelled the confusion.

In Burdine, supra, the Court made clear that the shifts in the burden of proof recognized in McDonnell Douglas, referred to the obligation of producing evidence and not to the burden of persuasion which "never shifts." 450 U.S. at 253, 101 S.Ct. at 1093. Although this analytical mode has been particularly explored in Title VII cases, as Justice Powell recently reminded us, the "evidentiary relationship between the presumption created by a prima facie case and the consequential burden of production placed on the defendant is a traditional feature of the common law." Texas Department of...