Timken Co. v. Vaughan

• Decision Date: 03 May 1976
• Docket Number: Civ. A. No. C 76-92 A.
• Citation: 413 F. Supp. 1183
• Parties: The TIMKEN COMPANY, Plaintiff, v. W. VAUGHAN, Lt. Gen. U. S. A., Director, Defense Supply Agency, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

413 F. Supp. 1183

The TIMKEN COMPANY, Plaintiff, v. W. VAUGHAN, Lt. Gen. U. S. A., Director, Defense Supply Agency, et al., Defendants.

Civ. A. No. C 76-92 A.

United States District Court, N. D. Ohio, E. D.

May 3, 1976.

COPYRIGHT MATERIAL OMITTED

J. Sean Keenan, Day, Ketterer, Raley, Wright & Rybolt, Canton, Ohio, Ronald Michael Green, Vedder, Price, Kaufman, Kammholz & Day, New York City, for plaintiff.

David L. Rose, Deborah Seymour, Dept. of Justice, Washington, D.C., for defendants.

MEMORANDUM OPINION AND ORDER

CONTIE, District Judge.

Plaintiff, The Timken Company (hereinafter Timken), initiated this action on March 24, 1976, to review the March 22, 1976 final Decision and Order of the Defense Supply Agency, Department of Defense (hereinafter D.S.A.), debarring Timken from eligibility for contracts with the United States or agencies thereof, and with contractors doing business with the United States or agencies thereof. A declaratory judgment and injunctive relief are sought. The Court's jurisdiction is invoked pursuant to the Administrative Procedure Act, 5 U.S.C. § 701, et seq., 28 U.S.C. §§ 1331, 1343, 1344, 1361, 2201 and 2202.

A temporary restraining order was issued on March 29, 1976, staying the subject Decision and Order. The preliminary and final hearings were consolidated, and final arguments were heard on April 16, 1976.¹

The administrative history of this case commenced in September, 1973, when two D.S.A. representatives visited Timken's Bucyrus facility. The purpose of said visit was to review Timken's compliance status under Executive Order No. 11246, as amended,² and to review Timken's proposed Affirmative Action Plan (hereinafter AAP) for the twelve month period commencing in September, 1973, for its Bucyrus facility. The D.S.A. representatives concluded that the proposed AAP was unacceptable, although the prior year's AAP which was for all relevant purposes identical to the 1973 proposal, had been accepted.

D.S.A.'s objections were not resolved by Timken's November 30, 1973 revision of the proposed AAP. Thereafter, on December 27, 1973, D.S.A. issued a "show cause" letter to Timken, stating therein that Timken's AAP for Bucyrus was deficient because of its failure "to include the minority labor force situated within reasonable recruitment range of the facility." Therefore, the letter continued, the AAP's utilization analysis was "unacceptable" and the goals and timetables "unrealistic."

The parties again failed to resolve the problem. By letter dated June 10, 1974, D.S.A. notified Timken of the proposed cancellation or termination of all Timken contracts with the government or with other government contractors; Timken was further notified of its proposed debarment from future government contracts or subcontracts. Said letter also states:

"On 27 September 1973, an onsite Equal Employment Opportunity compliance review was initiated at your Bucyrus, Ohio facility. During the course of the review it was determined that a restrictive area of recruitment (about 16 miles distance from the facility) existed beyond which your company would hire whites but refused to hire minorities.

"It was further determined that Timken's goals and timetables are based on a 16 mile recruiting area which has about .6% minorities to the total population. The City of Mansfield, only 9 miles outside the current recruitment area, is within a reasonable commuting availability distance to Bucyrus and should be included in Timken's designated recruiting area. The new 25 mile radius would provide at least a 3.5% availability figure which should be reflected in your Company's new goals and timetables.

"The Timken Company is in violation of Executive Order 11246 which requires federal contractors to refrain from discriminating in their employment practices. In addition, the Company's goals and timetables are unrealistic and not in consonance with requirements of 41 CFR 60-2.11 and 60-2.12 respectively."

Said letter concluded by informing Timken of its right to respond to said charges and to request a hearing thereon.

On June 28, 1974, Timken formally responded by letter. Therein Timken essentially denied the allegations and asserted several affirmative defenses. Timken also requested a hearing.

On September 12, 1974, counsel for Timken and for D.S.A. appeared before an administrative law judge for a "pre-hearing conference." At that time, the administrative law judge familiarized himself with the issues presented by the case and generally established procedures and a timetable for prosecution of the hearing. It was further decided at said conference that the June 10, 1974 D.S.A. letter to Timken would constitute the "complaint," and that the June 28, 1974 response of Timken would constitute the "answer" for the purposes of the hearing.

With the issues thus framed, the matter was heard on November 25 and 26, 1974. At that time, a stipulation entered into by the parties on November 18, 974, was approved by the administrative law judge, and the testimony of various witnesses was heard and numerous exhibits were introduced into evidence.

While a more detailed recitation and analysis of the evidence presented will be developed below, at this point the Court finds it appropriate to summarize the general factual background of this action.

Timken manufactures tapered roller bearings, specialty alloy steel, and rock bits at numerous facilities in the United States and world wide. As part of its operations, Timken supplies its products to agencies of the United States both through direct contracts with said agencies and through subcontracts with other contractors with said agencies. Therefore, Timken is subject to Executive Order 11246, as amended.

Timken operates a bearing plant and a distribution center for finished bearings in Bucyrus, Ohio. Bucyrus is located in the southwest quadrant of Crawford County, Ohio. Bucyrus is a comparatively small city, with a population of approximately 15,000 persons and is located approximately 15 miles from the Crawford County-Richland County line. Timken employs approximately 1370 persons at its Bucyrus facility. There are thirteen other major employers in Bucyrus, employing approximately 2,809 employees.³

Crawford County is predominantly rural in character, and has a population of approximately 50,000 persons. There are approximately 360 minorities residing in Crawford County. Richland County abuts the eastern border of Crawford County, and Wyandot County abuts the western border of Crawford County. The cities of Crestline and Galion are located in the southeast quadrant of Crawford County, near the Crawford County-Richland County line.

Mansfield is approximately 25 miles east of Timken's Bucyrus facility. Mansfield is the county seat of Richland County; it is a highly industrialized urban center with a population of approximately 55,000 persons. Approximately 8,300 minorities reside in Mansfield, which is approximately 15.1% of that city's total population. Mansfield has approximately 194 manufacturers, 7 of whom employ in excess of 1000 employees each.

Richland County has a population of approximately 130,000 persons, of whom approximately 8,900, or 6.19%, are minorities. Timken hires its employees from those applicants residing within a fourteen to sixteen mile radius from its plant.⁴ This area encompasses all of Crawford County and the eastern portion of Wyandot County. Said hiring area does not extend to any portion of Richland County.

Timken utilizes this hiring area for two reasons. The first reason is its experience that the further away from the plant that an employee resides, the greater the rate of absenteeism, tardiness, and termination of employment.⁵ These results increase Timken's training costs and reduces productivity. The second reason, though more difficult to demonstrate empirically, involves Timken's attempts to increase productivity by demonstrating to its employees an identity of employer-employee interests. Timken seeks to accomplish this by locating in comparatively small communities, actively involving itself in community affairs, and repeated donations to local charities. It is hoped that these actions, when combined with the obvious facts of the beneficial effects of payrolls and local taxes on the local community, will encourage employees to realize that their own well-being is tied to Timken's prosperity. The value of these efforts is limited, Timken contends, when its employees do not reside in or near the communities benefiting therefrom.

While Mansfield is only approximately twenty-five miles from Bucyrus, the most direct route between these cities is a comparatively old, two-lane highway which is heavily traveled by both automobiles and trucks. It takes approximately thirty-five to forty-five minutes to travel from Mansfield to Timken's facility in Bucyrus.

Evidence was introduced at the administrative hearing regarding the commuting habits of persons residing in Crawford and Richland counties. This evidence primarily consisted of statistical data relating the county of residence to the county of employment, and information indicating the number of Mansfield residents working in Bucyrus and the number of Bucyrus residents working in Mansfield.

Evidence was also introduced which indicated that during the years 1972, 1973, and the first ten months of 1974, Timken aggressively hired minorities at its Bucyrus facility. It appears that during said period, minorities were hired both after a shorter waiting period than nonminority and at a significantly higher rate than the percentage of minority applicants. Although only 0.6% of the persons residing in Timken's hiring range were minorities, Timken increased its proportion of minority employees from 1.4% in 1972 to 2.4% in October 1974.

The administrative law judge found in favor of Timken as to the first discriminatory practice alleged in the June 10, 1974 "complaint;" that is, the...