Quijano v. University Federal Credit Union

• Decision Date: 15 May 1980
• Docket Number: No. 78-2644,78-2644
• Citation: 617 F.2d 129
• Parties: 22 Fair Empl.Prac.Cas. 1307, 23 Empl. Prac. Dec. P 30,933 Carol QUIJANO et al., Plaintiffs-Appellants, v. UNIVERSITY FEDERAL CREDIT UNION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 129

617 F.2d 129

22 Fair Empl.Prac.Cas. 1307,

23 Empl. Prac. Dec. P 30,933

Carol QUIJANO et al., Plaintiffs-Appellants, v. UNIVERSITY FEDERAL CREDIT UNION, Defendant-Appellee.

No. 78-2644.

United States Court of Appeals Fifth Circuit.

May 15, 1980.

Malcolm Greenstein, Austin, Tex., for plaintiffs-appellants.

Rinehart, Nugent & Lock, Jerry Nugent, Austin, Tex., for defendant-appellee.

Appeal from the United States District Court for the Western District of Texas.

Before BROWN, GEWIN and POLITZ, Circuit Judges.

GEWIN, Circuit Judge:

Appellant Carol Quijano filed charges against her employer, the University Federal Credit Union, with the Equal Employment Opportunity Commission (EEOC) in 1975. The EEOC found reasonable cause to believe that the employer had violated Title VII of the Civil Rights Act of 1964. ¹ After all conciliation attempts failed Quijano filed suit in the United States District Court for the Western District of Texas alleging, among other things, ² a violation of Title VII. ³ Defendant credit union filed a motion to dismiss claiming that the court lacked jurisdiction because the credit union was a "bona-fide private membership club (other than a labor organization) which is exempt from taxation under 501(c) of Title 26" and thus pursuant to section 701(b)(2) of Title VII, 42 U.S.C. § 2000e(b)(2) (1970), was not an employer for purposes of Title VII coverage. ⁴ The court transformed this motion into one for summary judgment and ruled that defendant was not an employer subject to suit under the Act because it was a bona fide private membership club exempt from taxation. Appellant appeals on the sole issue of whether the credit union is exempt from Title VII coverage under the "private membership club" exception. We find that the court erred in including defendant within that exception and reverse.

The University Federal Credit Union in Austin, Texas is a federally chartered credit union established under the Federal Credit Union Act ⁵ organized for the purpose of "promoting thrift among its members by affording them an opportunity to accumulate their savings, and to create for them a source of credit for provident and productive purposes." ⁶ By-Laws, University Federal Credit Union. According to a December 31, 1977 newsletter from the University Federal Credit Union there were approximately 13,700 members of the credit union as of that date.

Membership in the credit union for all those in the field of membership is not particularly difficult to obtain. The credit union requires an entrance fee of one dollar ($1.00), purchase of one share of credit union stock for five dollars ($5.00) and approval of the applicant's completed application by a majority of an executive or membership committee or the board of directors of the credit union. The only investigation done by a membership officer prior to recommending approval is a verification that the applicant is within the field of membership and a check of the credit union's records to determine whether the applicant is a former member whose account was closed due to a negative balance.

The By-Laws of the credit union provide for member ownership and self-governance. Membership meetings are held annually at which directors and credit committee members are elected and reports are received. The credit union is essentially a non-profit organization and is exempt from taxation under section 501(c)(14)(A) of Title 26.

Appellant Quijano, an employee of the credit union at the time charges were filed, ⁷ alleges in her complaint that the credit union has engaged in and continues to engage in discriminatory practices in violation of section 703 of Title VII. ⁸ The alleged practices include failure to hire or promote Blacks, Spanish surnamed or female individuals on an equal basis with White males, failure to compensate females or assign job responsibilities to females on an equal basis with males and maintaining job classifications segregated according to race, national origin, or sex. Appellant sought declaratory relief, reinstatement, back pay and injunctive relief for herself and all others similarly situated.

The sole issue presented for review is whether the district court erred in granting summary judgment for the University Federal Credit Union holding that the credit union was not an employer within the language of section 701(b)(2) of Title VII. ⁹ The proposition which guides our analysis of this question is that "Title VII of the Civil Rights Act of 1964 is to be accorded a liberal construction in order to carry out the purposes of Congress to eliminate the inconvenience, unfairness and humiliation of racial discrimination." Parham v. Southwestern Bell Telephone Co., 433 F.2d 421, 425 (8th Cir. 1970). Accord, Rogers v. EEOC, 454 F.2d 234 (5th Cir. 1971), cert. denied, 406 U.S. 957, 92 S.Ct. 2058, 32 L.Ed.2d 343 (1972). The statute's definition of "employer" is entitled to similar liberal construction. Baker v. Stuart Broadcasting Co., 560 F.2d 389 (8th Cir. 1977).

The item that particularly attracts our attention here is the meaning that shall be given to one of the exemptions from Title VII's definition of employer. Section 701(b)(2) of Title VII specifically exempts "a bona fide private membership club . . . which is exempt from taxation under section 501(c) of Title 26" ¹⁰ from its definition of employers and hence from coverage by Title VII. The precise definition of this term takes on particular significance to the parties before the court in this case for if we interpret it to include the credit union, as did the district court, then appellant Quijano's appeal is due to be denied. If, however, we find that a credit union is not a private membership club then the district court's summary judgment in favor of the credit union is to be reversed and Quijano may proceed with her case in the district court.

One rarely abandons the path of logic and commonsense when Webster is consulted for the precise meaning of a term. In reference to the type of club suggested by the section 701(b)(2) exemption Webster's Third International Dictionary of the English Language offers the following definition at page 430:

club an association of persons for social and recreational purposes or for the promotion of some common object (as literature, science, political activity) usually jointly supported and meeting periodically, membership in social clubs usually being conferred by ballot and carrying the privilege of use of the club property. ¹¹

The common understanding of the term "club" is reinforced by Webster's definition. The adjectives "bona fide", "private" and "membership", included in the statute serve to indicate the more limited type of club sought to be exempted by the narrow exception in the statute. These modifiers suggest that, in order to be exempt from coverage by Title VII, an association of persons for social or recreational purposes or for the promotion of some common literary, scientific or political objective must also be legitimate (as opposed to sham), private (as opposed to public) and must require some meaningful conditions of limited membership. ¹²

Most of the cases dealing with a private club exemption from the Civil Rights Act of 1964 deal with an interpretation of Title II of that Act which exempts "a private club or other establishment not in fact open to the public" from the statutory prohibition against discrimination in access to places of public accommodation. Civil Rights Act of 1964, Title II, §§ 201(a) and (e), 42 U.S.C. §§ 2000a(a) and (e) (1970); see, e. g., Tillman v. Wheaton-Haven Recreation Association, 410 U.S. 431, 93 S.Ct. 1090, 35 L.Ed.2d 403 (1973); Moose Lodge v. Irvis, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627 (1972); Daniel v. Paul, 395 U.S. 298, 89 S.Ct. 1697, 23 L.Ed.2d 318 (1969); Olzman v. Lake Hills Swim Club, Inc., 495 F.2d 1333 (2d Cir. 1974); United States v. Central Carolina Bank and Trust Company, 431 F.2d 972 (4th Cir. 1970); Nesmith v. Young Men's Christian Association of Raleigh, 397 F.2d 96 (4th Cir. 1968); United States v. Trustees of Fraternal Order of Eagles, Milwaukee, 472 F.Supp. 1174 (E.D.Wis.1979); Smith v. Young Men's Christian Association of Montgomery, 316 F.Supp. 899 (M.D.Ala.1970), modified as to relief only, 462 F.2d 634 (4th Cir. 1972). Not one of these cases held that the organization in question was a private club exempt from coverage of Title II.

The strict applicability of this case law to an issue concerning a Title VII definition and its import for a credit union is open to question. At least one court has held that the class of organizations exempted by the "private club" language in Title II and by the very precise and limited exception in Title VII should be the same. See Mills v. Fox, 421 F.Supp. 519, 523 (E.D.N.Y.1976). It is clear, however, that if the exemptions are not intended to apply to precisely the same group of clubs, the Title VII exemption certainly applies to the narrower group. Compare 42 U.S.C. § 2000a(e) with 42 U.S.C. § 2000e(b) (2). Given the burden of proof that must be shouldered by the credit union, see Nesmith v. Young Men's Christian Association, 397 F.2d 96, 101 (4th Cir. 1968), and the repeated failure of swim clubs and YMCA's to meet the burden of the arguably broader Title II exception, the credit union's difficulty in proving that it falls within the Title VII exception appears to be insuperable.

Yet in its attempt to meet this burden the credit union has cited the court to only one case in which any organization has been found to be exempt from Title VII coverage under section 701(b)(2). In a Southern District of New York case, Barrister v. Stineberg, 1 E.P.D. P 9806 (S.D.N.Y.1967), a discharged employee's suit against a private hospital was dismissed for lack of jurisdiction because the court found the defendant, Mount Sinai Hospital, to be "a private membership corporation exempt from federal taxation under 26 U.S.C....