Pettway v. AMERICAN CAST IRON PIPE COMPANY, Civ. A. No. 66-315.

• Decision Date: 19 March 1970
• Docket Number: Civ. A. No. 66-315.
• Citation: 332 F. Supp. 811
• Parties: Rush PETTWAY et al., Plaintiffs, v. AMERICAN CAST IRON PIPE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Alabama

332 F. Supp. 811

Rush PETTWAY et al., Plaintiffs, v. AMERICAN CAST IRON PIPE COMPANY, Defendant.

Civ. A. No. 66-315.

United States District Court, N. D. Alabama, S. D.

January 21, 1970.

Memorandum Opinion and Order March 19, 1970.

Oscar W. Adams, Jr., Birmingham, Ala., Robert Belton, Charlotte, N. C., Jack Greenberg, New York City, for plaintiffs Rush Pettway, and others.

W. L. Williams, Jr., Birmingham, Ala., Stanley P. Hebert, Gen. Counsel, John de J. Pemberton, Deputy Gen. Counsel, David A. Zugschwerdt, Chief, Trial Section, and John F. Goemaat, E.E.O.C., Washington, D. C., for plaintiff Equal Employment Opportunity Comm.

James R. Forman, Jr., and Samuel H. Burr of Thomas, Taliaferro, Forman, Burr & Murray, Birmingham, Ala., for defendant American Cast Iron Pipe Co.

OPINION

LYNNE, Chief Judge.

The plaintiffs, having commenced this action against their employer, invoking the provisions of Title VII of the Civil Rights Act of 1964¹, alleging various acts of racial discrimination against themselves and the class which they claim to represent, filed a motion seeking to enjoin the defendant from vacating the offices of certain members of the Auxiliary Board and holding elections to fill their vacancies, and further for a declaratory judgment declaring that segregated boards now existing at the American Cast Iron Pipe Company (Acipco) plant are in violation of the 1964 Civil Rights Act. The plaintiffs further seek by their motion to require the defendant to reorganize its managerial and organizational structure under the Will of John J. Eagan without the requirement of segregated boards so that the Negro employees at Acipco will have equal authority with white employees with respect to management control, with all other incidents and benefits now accruing to white employees at Acipco.²

The Court, having heard and carefully considered the evidence presented at an open hearing, the exhibits submitted by the parties, and arguments of counsel, finds the following facts and states the following conclusions of law in the form of this Memorandum Decision.

An understanding of the Company's history and organization under the Plan and Codicil to the Will of Mr. John J. Eagan, is necessary in deciding whether or not a violation of Title VII with respect to the Board of Operatives and the Auxiliary Board has occurred in this case. Acipco, a corporation organized and incorporated under the laws of Georgia, with its principal office and production facilities located in Jefferson County, Alabama, has operated under a unique plan of corporate management known as the "Eagan Plan" for over forty-five years.

The Eagan Plan is a plan of cooperative industrial management conceived and put in effect by John Joseph Eagan, the founder of American Cast Iron Pipe Company, during his lifetime. The details of Mr. Eagan's plan to effectuate his ideal of cooperative effort between labor and management were first presented to the employees of Acipco in March of 1922 and were ratified and accepted by the employees in an election for that purpose. The Plan, as conceived by Mr. Eagan and presented to the employees, called for the control of the policies and conduct of the business to be vested in a Board of Directors elected by the stockholders. The day-to-day management of the business was placed in the hands of a "Board of Management", composed of the corporate officers elected by the Board of Directors. The "Board of Management" also serves as the "Executive Committee" of the Board of Directors between the meetings of the Board of Directors, a committee common to most corporate organizations. The distinguishing feature of the Eagan Plan is the "Board of Operatives" composed of nonsupervisory personnel elected by the employees of the Company. Since the creation of the Eagan Plan, an important function of the Board of Operatives has been to advise the Board of Management on matters affecting the employees' welfare and to provide a channel of communication between the management and the employees of the Company. Under the Eagan Plan, the Board of Operatives also nominates two of its members to the stockholders for election to the Board of Directors of Acipco.

The evidence is clear that Mr. Eagan during his lifetime established the following qualifications for election to the Board of Operatives. Candidates must be white men over twenty years of age, American citizens and employed in a nonsupervisory capacity for three or more full years. All employees, without regard to race, were eligible to vote in the Board of Operatives elections.

No provision was made by Mr. Eagan in his original plan, as presented to the employees in 1922, for an Auxiliary Board of Negro employees. The genesis of the Auxiliary Board was the Board of Directors of the Acipco Colored YMCA. The Acipco Colored YMCA, which is no longer in existence, was maintained in the early history of the Company, as was a white YMCA, also having a Board of Directors. As an adjunct to this plan, Mr. Eagan assigned to the Board of Directors of the Acipco Colored YMCA, in addition to their regular duties, the additional function of advising the Board of Management and Board of Operatives on matters affecting the interests of the Negro employees. The members of the Colored YMCA Board and of its successor Board, the Auxiliary Board, were, and are, elected by vote of the Negro employees, and membership was, and is, restricted to Negro employees. The name of the "Colored YMCA Board" was changed in 1935 to the Colored Auxiliary to the Board of Operatives and to the YMCA Board of Management". The Eagan Plan contemplated that the Board of Directors of the Colored YMCA would be called into conference from time to time as an advisory board to the Board of Operatives and the Board of Management. It can be concluded that the advisory functions of the Colored YMCA would not have been originated except for the restriction to membership on the Board of Operatives to white men only.

Throughout the history of the Eagan Plan the two Boards, the Board of Operatives and the Auxiliary Board, have functioned separately under the express provisions of the Eagan Plan, the By-Laws of the Corporation, and the rules and regulations pertaining to the operation of the two Boards which implement Mr. Eagan's original plan.

The death of Mr. Eagan on March 30, 1924, brought about a significant change in the legal status of the Board of Operatives. The Codicil to Mr. Eagan's Will bequeathed all of the outstanding common stock of Acipco to the members of the Board of Management and members of the Board of Operatives, jointly, and their successors in office on said Boards, as Trustees for the benefit of the employees and future employees of the Company and their families. The Codicil to Mr. Eagan's Will clothed the members of the Board of Operatives with the capacity of joint stockholders and co-trustees of all the outstanding common stock of the American Cast Iron Pipe Company. The legal status of the Board of Operatives as a trustee and stockholder has been consistently recognized by the Court decisions interpreting Mr. Eagan's Codicil. Moore, et al. v. Hardin, Case No. 55715, 10th Jud.Cir. of Ala., in Equity, April 6, 1942 Plaintiff's Exhibit 4; Decree of Superior Court of Fulton County, Georgia, February 12, 1925 Defendant's Exhibit 2; Hoglan v. Moore, 219 Ala. 497, 122 So. 824 (1929); and Eagan v. Commissioner of Internal Revenue, 43 F.2d 881 (5th Cir., 1930). A similar status was not conferred upon the members of the Board of Directors of the Colored YMCA.

While the Codicil to Mr. Eagan's Will did not in express language restrict membership on the Board of Operatives to white men only, Mr. Eagan clearly intended that the qualifications imposed on eligibility to serve on the Board of Operatives during his lifetime would continue in effect with respect to future members on the Board of Operatives, including the restriction limiting membership to white men only. The Codicil itself provided that all persons employed in the future by Acipco would be beneficiaries of Mr. Eagan's beneficent trust, with "all of the rights and privileges enjoyed by the employees of said Company at the time of my death and subject to the same conditions" (See Plaintiffs' Exhibit 1, Page 10). At the time of Mr. Eagan's death and during his lifetime, membership on the Board of Operatives was not a right or privilege enjoyed by Negro employees under the conditions and circumstances of that time.

The evidence shows that from the inception of the Eagan Plan until the present time, the stockholders, trustees and officers of the Company, mindful of their responsibility to be faithful to the terms and conditions of the Eagan Plan and Trust, have diligently endeavored to fulfill the spirit and letter of Mr. Eagan's Plan and Trust, with respect to eligibility for membership on the Board of Operatives and in regard to the separate existence and operation of the advisory Auxiliary Board. The Court finds that the racial restriction on membership on the Board of Operatives and the existence and operation of the segregated Auxiliary Board were in full accord with the original intent of Mr. Eagan, and were therefore proper and in no wise unlawful until July 2, 1965, the effective date of Title VII of the Civil Rights Act of 1964.

However, the passage of Title VII of the Civil Rights Act of 1964 presents, in the judgment of this Court, a novel case of first impression. Assuming the propriety and lawfulness of the operation of the Eagan Plan at Acipco prior to July 2, 1965, the issue is presented concerning the effect on the Eagan Plan of the new and overriding legislative policy of Title VII which now controls the employment practices of all private corporations covered by the Act. Title VII now prohibits, in no uncertain terms, any discrimination by an employer with respect to compensation, terms, conditions or privileges of employment...