Pegues v. Mississippi State Employment Service
| Decision Date | 07 May 1990 |
| Docket Number | No. 88-4812,88-4812 |
| Parties | 53 Empl. Prac. Dec. P 39,918 Rosie Lee PEGUES, et al., Plaintiffs-Appellees, Cross-Appellants, v. MISSISSIPPI STATE EMPLOYMENT SERVICE, et al., Defendants-Appellants, Cross-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Jan D. Garrick, Leo T. Aragon, Fred J. Lotterhos, Jackson, Miss., for defendants-appellants, cross-appellees.
Richard T. Seymour, Lawyers' Committee for Civil Rights Under Law, and Daniel B. Edelman, Washington, D.C., for plaintiffs-appellees, cross-appellants.
Appeals from the United States District Court for the Northern District of Mississippi.
Before WISDOM, JOHNSON, and HIGGINBOTHAM, Circuit Judges.
This is an appeal from a judgment awarding relief in a Title VII discrimination suit against the Mississippi State Employment Service (MSES), a state employment referral agency. Allegedly, MSES discriminated on the basis of race and gender in referring applicants to job openings listed with it. The district court awarded the plaintiffs, a class of black and female applicants to the MSES Bolivar County office, over $2.8 million in back pay and prejudgment interest. The parties challenge various aspects of the components of the award and the calculation of the amount due. We AFFIRM in part and REVERSE in part.
MSES refers applicants to private sector job openings listed with it. In 1972, the plaintiffs sued MSES, 1 primarily basing the suit on Title VII, 2 alleging that the agency discriminated on the basis of race and gender in classifying, referring, and testing applicants. The district court certified a class of blacks and women who have been or may hereafter be victims of discrimination in seeking referrals from the MSES Bolivar County office. After a three week bench trial in 1979, in a 48 page opinion, the trial court dismissed the individual and class claims on the merits. 3 On appeal, this Court reversed in part, finding that the action of MSES toward the plaintiff class had established a pattern and practice of race and sex-based disparate treatment with respect to job referrals, in violation of Title VII, and that named plaintiff Rebecca Gillespie had succeeded in proving her individual claim of discrimination. 4 We remanded the case for determination of an appropriate remedy. 5
Because many of MSES's records were no longer in existence and because of the large number of claimants, 6 the parties entered into a 48 page stipulation, with close to a hundred pages of attached exhibits, one of the stipulations was that a reasonable method of calculating back pay would be to base the award on the economic value of the relevant job orders listed with MSES, rather than to proceed on the basis of identifiable acts of discrimination against individuals. 7 As will be discussed in greater detail, the parties agreed on a formula to calculate gross back pay that considered the number of job orders and vacancies, the percentage of eligible class members, and the actual referrals of class members. From this, they made adjustments for interim earnings and work-force attrition. 8
In 1984 the district court issued an injunction prohibiting discriminatory out-of-code referrals and gender-specific job orders. Then, in 1988, largely relying on the parties' stipulations, the district court awarded the plaintiffs $2,873,274.94 in back pay and prejudgment interest. 9 Both parties appealed.
As a state agency, MSES argues that the Eleventh Amendment prohibits the imposition of prejudgment interest on a back pay award against it. It also contends that the district court erred in the following respects: 1) by not tolling the accrual of back pay when MSES ceased all discriminatory practices, 2) by not reducing the total award by sixty-eight percent, since there was just a thirty-two percent chance that the average referral by MSES would lead to a job offer, and 3) by not reducing the award by the value of twenty-five job orders that were never filled. 10
The plaintiffs appeal the judgment only insofar as the district court lowered the award for a particular job order to account for a presumed benefit to the plaintiffs for a disproportionately high number of referrals of women to another, lower-paying job.
The Eleventh Amendment bars an award of retroactive monetary relief against an unconsenting state in federal court. 11 The Amendment removes jurisdiction over such suits from the federal courts. 12 There are two important exceptions to this principle. First, a state may explicitly waive its immunity and consent to be sued in federal court. 13 Second, Congress has the power under section 5 of the Fourteenth Amendment to abrogate the state's immunity to enforce the Amendment's protections. 14 Congress exercised this power in enacting the Civil Rights Act of 1964.
The Civil Rights Act of 1964 specifically prohibits discrimination on the basis of race or sex by an employment agency in making referrals. 15 As a member of the national network of state employment services established by the Wagner-Peyser Act, 16 MSES comes under the definition of "employment agency" as used in that Civil Rights Act. 17 The Act also provides for remedies. When a court finds that an employment agency has intentionally engaged in an unlawful employment practice, it may
enjoin the respondent from engaging in such unlawful employment practice, and order such affirmative action as may be appropriate, which may include, but is not limited to, ... hiring of employees, with or without back pay (payable by the employer, employment agency ... responsible for the unlawful employment practice), or any other equitable relief as the Court deems appropriate. 18
The Act clearly abrogates the states' Eleventh Amendment immunity by providing that courts may award retroactive monetary relief against state defendants which violate Title VII.
The ability of courts to award monetary relief to victims of discrimination serves useful purposes: it deters unlawful discrimination and it compensates those who have suffered because of it. 19 With respect to its compensatory purpose, the Act specifies that back pay is an appropriate remedy once a violation is established, but it clearly states that the affirmative relief a court may order is not limited to back pay. Congress vested broad equitable powers in Title VII courts "to make possible the 'fashion[ing] [of] the most complete relief possible' ". 20 The measure of relief is that amount necessary to make persons whole or put them in their "rightful place". 21 In tailoring appropriate relief to successful Title VII plaintiffs, courts have awarded straight back pay, the value of lost fringe benefits, and prejudgment interest. 22
Despite the broad language of the Act, MSES argues that as an arm of the state, it is immune from an award of interest because the Act does not expressly mention interest as a component of a monetary award. We addressed this issue in Whiting v. Jackson State University, 23 and we found, under Title VII, no Eleventh Amendment bar to the assessment of prejudgment interest on a back pay award against an "arm of the state". We reaffirm that decision today.
Interest is compensation for the use of funds; it is not awarded as a penalty against a defendant. 24 We have stated in this Circuit that under Title VII interest is an item that "should be included in back pay" to make a victim whole. 25 Recently in Sellers v. Delgado Community College 26, we found that a magistrate abused his discretion in denying prejudgment interest on a back pay award. The case before us shows that the make-whole purpose of Title VII would be frustrated by the failure to award interest. The defendant's wrongful conduct occurred in 1969 and 1970, approximately twenty years ago. It is obvious that an award of back pay geared to a 1969 or 1970 salary will be insufficient to put the plaintiffs in their rightful place, and it is also true that the defendant has had the use of this money during the intervening years.
MSES argues that Library of Congress v. Shaw 27 controls this case. In Shaw, decided after our decision in Whiting, the Supreme Court held that pursuant to the "no-interest rule", the United States was immune from an award of interest on attorney's fees absent express congressional assent to the award of interest. Title VII, the Court concluded, did not expressly allow interest against the government. Just last term, however, the Court stated that the "added gloss of strictness" 28 imposed by the no-interest rule applies only when the liability of the federal government is at issue. 29 MSES is an arm of the state; it thus does not benefit from the rule applied in Shaw. 30
We reaffirm our holding in Whiting that the Eleventh Amendment does not bar the award of prejudgment interest on a Title VII back pay award against a state agency because Congress exercised its section 5 power to abrogate broadly the state's immunity. Congress did not limit the tools with which courts could fashion relief to victims of discrimination perpetrated by state defendants. The award of prejudgment interest is one of those tools. We hold that the district court properly assessed interest against MSES as part of the plaintiffs' make-whole relief. 31
The district court's judgment awarding back pay to the class necessarily must rest on the parties' stipulations regarding the calculation of back pay. Accordingly, we quote liberally from the stipulations to establish the framework under which the disputed calculations must be made:
27. Plaintiffs and the MSES defendants have agreed that it would be useful to calculate the economic benefit which could have resulted from each job order involved in the back pay proceedings.... This information was calculated by multiplying the number of hours worked a week on a job by...
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