United States v. Bethlehem Steel Corporation

• Decision Date: 21 June 1971
• Docket Number: No. 266,Docket 35183.,266
• Citation: 446 F.2d 652
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. BETHLEHEM STEEL CORPORATION et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

446 F.2d 652 (1971)

UNITED STATES of America, Plaintiff-Appellant, v. BETHLEHEM STEEL CORPORATION et al., Defendants-Appellees.

No. 266, Docket 35183.

United States Court of Appeals, Second Circuit.

Argued December 7, 1970.

Decided June 21, 1971.

COPYRIGHT MATERIAL OMITTED

David L. Rose, Atty., Dept. of Justice (Jerris Leonard, Asst. Atty. Gen., H. Kenneth Schroeder, Jr., U. S. Atty. W. D. N. Y., Robert T. Moore, Atty., Dept. of Justice, on the brief), for plaintiff-appellant.

Ralph L. McAfee, New York City (Cravath, Swaine & Moore, New York City, on the brief), for defendant-appellee Bethlehem Steel Corp.

Michael Gottesman, Washington, D. C. (Bredhoff, Gottesman & Cohen, Washington, D. C., Bernard Kleiman, Chicago, Ill., Thomas Krug, Tiernan, Krug & Godinho, Buffalo, N. Y., on the brief), for defendants-appellees Unions.

Before LUMBARD and FEINBERG, Circuit Judges, and CLARIE, District Judge.^*

FEINBERG, Circuit Judge:

In December 1967, the Attorney General of the United States brought an action against the Bethlehem Steel Corporation in the United States District Court for the Western District of New York. Suit was filed pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., a historic legislative attempt to deal with the national problem of discrimination in employment. The complaint alleged that Bethlehem discriminated against blacks in hiring, job assignment, apprenticeship and selection of supervisory personnel at its plant in Lackawanna, New York. An amendment to the complaint in May 1968 added the United Steelworkers of America and five local unions as defendants and alleged that portions of the collective bargaining agreement between Bethlehem and the unions perpetuated discrimination.

Before trial, defendants admitted that many of the charges against them were true, but they refused to stipulate that portions of the labor contract violated the Act. A trial on that one issue was held before Chief Judge John O. Henderson. The judge held in a comprehensive opinion, 312 F.Supp. 977, that the contract provisions as to transfer rights and seniority did perpetuate the effects of prior discrimination. As a result, the judge granted priority transfer rights to those who had been discriminated against, but denied a portion of the relief sought by the Government that would have made the exercise of such rights more attractive. From that order only the Government appeals. For reasons set forth below, we modify the order. The principal effect of our opinion is to grant to those who have been treated illegally in the past the right to transfer without loss of pay or seniority.

I.

The Lackawanna plant, one of the largest of its type in the country, employs about 18,000 workers, of whom approximately 2,600 are black. Operations at the plant cover all phases of steel production from the receipt of raw materials to the final product. Hourly-paid employees, who are represented by the defendant unions, work in 74 of the plant's 82 departments. The 74 departments are organized into 81 seniority units, most of which coincide with the structure of departments.¹ However, in the Coke Ovens Department, of particular interest here, there are four seniority units.

The facts as to discrimination were admitted by defendants in two extensive stipulations. These showed that both before and after the passage of the Civil Rights Act of 1964 blacks were treated unfairly at the Lackawanna plant in hiring, job assignment, apprenticeship and selection of supervisors. The following patterns of discrimination continued up to the time when the Government began its inquiry into Bethlehem's practices. In hiring, jobs were made available to whites rather than to blacks in a number of ways. There were no fixed or reasonably objective standards and procedures for hiring; the aptitude test scores of some white applicants were fraudulently raised; some white applicants were hired without testing; and whites were given preference in summer employment. Job assignment practices were even more reprehensible. Over 80 per cent of black workers were placed in 11 departments, which contained the hotter and dirtier jobs in the plant. Blacks were excluded from higher paying and cleaner jobs. All of the defendants were aware of this racial discrimination. Even within a department, the pattern continued. In the Coke Ovens Department the blacks were assigned for the most part to the two poorest paid and least desirable of the four seniority units. Similar preferential treatment was given to whites in the choosing of apprentices and in the selection of supervisors.

All of this is a very brief summary of a general pattern of racial mistreatment that had existed at the Lackawanna plant for many years. There is no need to continue with a further description. It is enough to say that a sorry picture emerges, made no less so by the undoubted cooperation of Bethlehem with the Government once the investigation had commenced. The fact is that the Lackawanna plant was a microcosm of classic job discrimination in the north, making clear why Congress enacted Title VII of the Civil Rights Act of 1964.²

At trial, the major question was whether the seniority and transfer provisions of the collective bargaining agreement perpetuated the effects of the years of discrimination. Up to a decade ago, seniority at the Lackawanna plant had been departmental rather than plant-wide. That is, for purposes of layoff, recall and promotion seniority had been based on the time spent within a department or seniority unit rather than on the time elapsed from original employment. In 1962, this was altered somewhat for purposes of layoff and recall. "Pool areas" were established, consisting of the lower paid jobs of one or more departments; an employee about to be laid off in his department could exercise plant-wide seniority and transfer into a "pool" job.

Before 1962, employees had no right to transfer between departments. With the establishment of the pool areas, workers were allowed to use plant seniority to bid on job vacancies in another department sharing the same pool, if the employee was qualified to perform the work and the vacancy had not otherwise been filled. Usually such openings were filled by promoting the most senior worker in the job immediately below the vacancy. Therefore, the only jobs available for intra-pool transfers were generally at the low paid, entry level. In 1965, similarly limited plant-wide transfer rights became available allowing transfers to lower level jobs in any department that had not been filled by an intra-pool transfer.³ Employees who transferred under either plan lost accrued seniority for purposes of promotion, and were paid at the rate for their new entry level jobs. Even these limited transfers were not permitted among the four seniority units of the Coke Ovens Department until 1968.

Before Chief Judge Henderson, the Government argued that the combined effect of these arrangements was to keep blacks in the jobs to which they had originally been assigned for racial reasons and that the seniority and transfer provisions of the labor agreements were therefore improper. Defendants argued that these practices were typical of the steel industry, were required for reasons of safety and efficiency and had not been instituted or continued for discriminatory reasons. Chief Judge Henderson, to a great extent, agreed with the Government. Thus, the judge found:

In other words, an employee who chooses to exercise either of these transfer rights must forfeit all of the benefits of seniority which he had accrued in his pre-transfer position, such as pay rate, promotion opportunities, protection against demotion, job selection, and enter the new unit as a new man, generally going to the entry level job.

The court finds as fact that the transfer and seniority system negotiated in the 1962, 1965 and 1968 Master Agreements by the company and union, operates (as described above) in such a way as to tend to lock an employee into the department to which he has been assigned. This lock-in effect becomes stronger as an employee\'s length of service increases in a department. This means that the longer a Negro has worked in the hot and dirty department to which he was admittedly discriminatorily assigned, the more he has to lose by transfer.

* * * * * *

The prohibition against transfers within the Coke Ovens Department * * * was instituted for the purpose of discriminating against Negroes. Local 2601\'s acquiescence therein established that prohibition as part and parcel of the Coke Ovens seniority system. The Coke Ovens unit seniority system and prohibition against transfer had the purpose and effect of segregating Negroes within the Coke Ovens and denying them equal opportunity of employment in the Coke Ovens.

312 F.Supp. at 985-986, 989. Concluding from these findings that the seniority and transfer provisions tended to perpetuate the effects of Bethlehem's discriminatory practices, the district court held in substance that they were "unlawful employment practices" under Title VII. 42 U.S.C. § 2000e-2.

As for the admitted discriminatory practices in hiring and in job, apprenticeship and supervisory assignments, the district court, for the most part, adopted the relief to which the parties had stipulated. The court ordered appellees to establish objective criteria for hiring and promotion, to administer the apprenticeship and related programs in a non-discriminatory fashion, and to report to the court and to the Government the steps taken to comply with the decree. As for the seniority and transfer provisions, the court expanded the contractual transfer rights of all employees working in the 11 departments that had been the focus of the discriminatory practices. Employees in these departments, who were hired before October 1, 1967,⁴ were given priority transfer rights, under the collective bargaining agreement, into any of...