Taylor v. Teletype Corporation Brief of Appellant

    UNITED STATES COURT OF APPEALS 
FOR THE EIGHTH CIRCUIT

NO. 79-2027

TOMMIE W. TAYLOR, ET AL., 

APPELLEES, 

v.

TELETYPE CORPORATION, 

APPELLANT.

APPEAL FROM THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF ARKANSAS 

WESTERN DIVISION

HONORABLE RICHARD S. ARNOLD, JUDGE

BRIEF OF APPELLANT

JAMES M. STAULCUP, JR.
5555 Touhy Avenue 
Skokie, Illinois 60067 

(312) 982-3090

G. ROSS SMITH
2000 First National Bldg. 
Little Rock, Arkansas 72201 

(501) 376-2011

Attorneys for Appellant



TABLE OF CONTENTS

TABLE OF CASES AND OTHER AUTHORITIES iv 

STATEMENT OF ISSUES PRESENTED FOR REVIEW 1 
STATEMENT OF THE CASE

PRELIMINARY STATEMENT 4 
PROCEDURAL HISTORY 5 
STATEMENT OF FACTS 7

ARGUMENT

1. THIS COURT SHOULD EXERCISE ITS PLENARY AUTHORITY TO
FULLY REVIEW THE TRIAL COURT'S RULINGS ON THE MERITS OF 
THE CASE AND NOT LIMIT ITS REVIEW TO THE QUESTION 
WHETHER THE TRIAL COURT ABUSED ITS DISCRETION IN ISSUING 
THE INTERLOCUTORY INJUNCTION. 11

2. THE TRIAL COURT'S CONCLUSION THAT A PRIMA FACIE CASE HAD
BEEN MADE WITH RESPECT TO UNLAWFUL RACE DISCRIMINATION 
IN DEMOTION PRACTICES AND ITS GRANT OF INJUNCTIVE RELIEF 
ARE BASED ON CLEARLY ERRONEOUS FINDINGS OF FACT AND THE 
APPLICATION OF ERRONEOUS LEGAL STANDARDS. 13

A. TO ESTABLISH LIABILITY IN A CLASS ACTION SUIT UNDER 
TITLE VII OF THE CIVIL RIGHTS ACT OF 1964,
PLAINTIFFS BEAR THE BURDEN OF PROVING THE EXISTENCE 
OF A PATTERN AND PRACTICE OF DISCRIMINATORY 
CONDUCT, RATHER THAN MERE ISOLATED ACTS OF 
DISCRIMINATION. 13

B. AN EMPLOYER MAY LAWFULLY EFFECT DEMOTIONS AND
LAYOFFS PURSUANT TO BONA FIDE SENIORITY SYSTEMS, 
EMBODIED IN COLLECTIVE BARGAINING AGREEMENTS AND 
COMPANY POLICIES, WHICH SELECT EMPLOYEES FOR 
DEMOTION OR LAYOFF BY REVERSE ORDER OF COMPANY 
SENIORITY. 14

C. THE ELEMENTS COMPRISING THE TRIAL COURT'S
DETERMINATION OF A PRIMA FACIE SHOWING OF LIABILITY 
WITH RESPECT TO DEMOTION PRACTICES IN 1974, 1975 
AND 1976 REST ON CLEARLY ERRONEOUS FACT FINDINGS 
AND THE APPLICATION OF ERRONEOUS LEGAL PRINCIPLES. 17
(1) THE TRIAL COURT CLEARLY ERRED IN DISCOUNTING 

THE MOST DIRECT AND PROBATIVE EVIDENCE ON THE 
ISSUE OF RACIALLY DISPARATE IMPACT IN DEMOTION 
PRACTICES AND RELYING INSTEAD ON DISTORTED 
STATISTICAL DATA WHICH DOES NOT DIRECTLY 
REFLECT ON THE ISSUE INVOLVED; IT FURTHER



ERRED BY APPLYING INCORRECT LEGAL PRINCIPLES 
TO DETERMINE THE SIGNIFICANCE TO BE ATTACHED,
OR NOT ATTACHED, TO THE STATISTICAL DATA 
PRESENTED. 17

(2) THE DISTRICT COURT ERRONEOUSLY CONSIDERED 
"INFIRMITIES" IN THE COMPANY'S AFFIRMATIVE 
ACTION PROGRAM AS A FACTOR SUPPORTING A PRIMA 
FACIE CASE OF CLASS WIDE LIABILITY WITH REGARD 
TO THE DEMOTION PRACTICES AND FURTHER ERRED IN 
HOLDING THAT AN EMPLOYER FACED WITH THE 
NECESSITY OF EFFECTING LARGE WORK FORCE 
REDUCTIONS HAS A LEGAL DUTY TO EMPLOY 
AFFIRMATIVE ACTION CONSIDERATIONS TO SAVE FROM 
DEMOTION OR LAYOFF THOSE BLACK EMPLOYEES WITH 
LESSER COMPANY SENIORITY AND A DUTY TO INSTEAD 
DEMOTE OR LAYOFF MORE SENIOR WHITE EMPLOYEES. 29

(3) THE DISTRICT COURT’S FINDINGS CONCERNING THE
IMPLEMENTATION OF THE SENIORITY PROVISIONS OF 
ARTICLE 28 OF THE BARGAINING AGREEMENT IN 
EFFECTING DEMOTIONS OR LAYOFFS ARE CLEARLY 
ERRONEOUS. 33

(4) THE COURT'S RELIANCE ON THE IMPLEMENTATION OF
RANK ORDER CONCEPTS IN EFFECTING DEMOTIONS OR 
LAYOFFS OF NON-BARGAINING UNIT PERSONNEL AS A 
FACTOR SUPPORTING ITS PRIMA FACIE CASE WAS 
CLEAR ERROR. 37

(5) THE COURT'S RELIANCE ON AN ALLEGED HISOTRY OF 
DISCRIMINATORY PRACTICES AS A FACTOR 
SUPPORTING A PRIMA FACIE CASE IS A DISTORTION 
OF THE COMPANY'S GOOD FAITH EFFORTS, WHICH IT 
WAS NOT LEGALLY OBLIGATED TO UNDERTAKE, TO 
IMPROVE EMPLOYMENT OPPORTUNITIES FOR BLACKS,
AND CONSTITUTES REVERSIBLE ERROR. 38

3. THE TRIAL COURT ABUSED ITS DISCRETION IN ISSUING THE
INTERLOCUTORY INJUNCTION. 41
A. WHERE THE EMPLOYMENT PRACTICES IN ISSUE ARE 

DEMOTIONS, AND THE EVIDENCE AT TRIAL IS DIRECTED TO 
THOSE ISSUES, IT IS AN ABUSE OF DISCRETION TO 
ENJOIN THE COMPANY "FROM DISCRIMINATING AGAINST ANY 
INDIVIDUAL WITH RESPECT TO HIS OR HER COMPENSATION, 
TERMS, CONDITIONS, PRIVILEGES OF EMPLOYMENT, OR IN 
ANY OTHER MANNER BECAUSE OF SUCH INDIVIDUAL'S RACE".

B. WHERE THE TRIAL COURT EXPRESSLY FINDS THAT THE RACE 
DISCRIMINATION IT PERCEIVED IN DEMOTION PRACTICES 
WAS NOT INTENTIONAL, IT IS AN ABUSE OF DISCRETION
TO ENJOIN THE COMPANY PURSUANT TO 42 U.S.C. §2000e-5(g).

xi



C. WHERE THE TRIAL COURT FINDS UNINTENTIONAL RACE
DISCRIMINATION IN THE COMPANY'S DEMOTION PRACTICES 
FOR THE YEARS 1974, 1975 and 1976, BUT NO RACE 
DISCRIMINATION, INTENTIONAL OR OTHERWISE, IN SUCH 
PRACTICES FROM 1976 THROUGH THE TRIAL IN 1979, AND 
FURTHER CONCLUDES THERE IS NO NECESSITY TO ENJOIN 
THE PARTICULAR PROCEDURES USED IN EFFECTING 
DEMOTIONS, IT IS AN ABUSE OF DISCRETION TO BROADLY 
AND GENERALLY ENJOIN THE COMPANY WITH RESPECT TO 
EMPLOYMENT PRACTICES.

4. THE TRIAL COURT CLEARLY ERRED IN FINDING THAT THE 
COMPANY HAD NOT ARTICULATED A LEGITIMATE,
NON-DISCRIMINATORY REASON FOR THE SECOND DOWNGRADE OF 
PLAINTIFF TOMMIE TAYLOR AND CLEARLY ERRED IN FAILING TO 
CONCLUDE THAT THE LEGITIMATE, NON-DISCRIMINATORY REASON 
WHICH WAS ARTICULATED HAD BEEN SHOWN TO FACTUALLY EXIST.

5. THE TRIAL COURT CLEARLY ERRED IN FINDING THAT THE 
COMPANY HAD NOT ARTICULATED A LEGITIMATE, 
NON-DISCRIMINATORY REASON FOR THE DOWNGRADE OF PLAINTIFF 
LARRY PEYTON AND CLEARLY ERRED IN FAILING TO CONCLUDE 
THAT THE LEGITIMATE, NON-DISCRIMINATORY REASON WHICH WAS 
ARTICULATED HAD BEEN SHOWN TO FACTUALLY EXIST.

6. THE TRIAL COURT CLEARLY ERRED IN FINDING THAT THE 
COMPANY HAD NOT ARTICULATED A LEGITIMATE, 
NON-DISCRIMINATORY REASON FOR THE DOWNGRADE OF 
INTERVENORS BIBBS AND HARRIS AND CLEARLY ERRED IN 
FAILING TO CONCLUDE THAT THE LEGITIMATE, 
NON-DISCRIMINATORY REASON WHICH WAS ARTICULATED HAD BEEN 
SHOWN TO FACTUALLY EXIST.

CONCLUSION
APPENDIX

SUMMARY AND REQUEST FOR ORAL ARGUMENT

This is a class action Title VII employment discrimination 
case involving demotions. The trial consumed approximately three 
weeks and the District Court's findings on individual and class 
wide liability involve important issues concerning bona fide 
seniority systems, the "last in, first out" concept, the proper 
evidentiary role of standard deviation statistical evidence, the 
legal ramifications of voluntary adoption of "affirmative action 
plans," and the impact of prior judicial findings as to the 
existence vel non of race discrimination in an employer's 
practices. Appellant requests one hour for oral argument.

44

48

55

58 

A- 1

1 X 1



TABLE OF CASES AND OTHER AUTHORITIES

Albermarle Paper Co. v. Moody. 422 U.S. 405 (1975) 18

Alexander v. Aero Lodge No. 735 Internation Association of
Machinists and Aerospace "Workers, AFL-CIO. 565 F.2d 1764 (6th
Cir. 1977)   12>14

Booth v. Board of Directors of National American Bank, 475 F.
1979) ~ ~~~ ~  — ~~ 1 3 , 1 4

Burdme v. The Texas Department of Community Affairs, 608 F.2d 562 
(5th Cir. 1 979) ~  --------- 45

Castaneda v. Partida, 430 U.S. 482 (1977) 19,21,24,26

DeGraffenreid v. General Motors Assembly Division. 558 F.2d 480 
Tbth Cir. 1977)   -16,38

Donnell v. General Motors Corp., 576 F.2d 1292 (8th Cir. 1978) 42

Dothard v. Rawlinson. 433 U.S. 321 (1977) 18

EEOC v. Local 14, International Union of Operating Engineers, 553 
F.2d 251 (2nd Cir. 19775 42

_Evans v. United Airlines, Inc., 431 U.S. 553 ( 1977) 15,16,38
Furnco Construction Company v. Waters, 438 U.S. 567 (1978) 27,41

Gaines v. Sun Ray Oil Company, 539 F.2d 1136 (8th Cir. 1976) 12
Griggs v. Duke Power Co., 401 U.S. 424 (1971) 18

Hazelwood School District v. United States, 433 U.S. 9,20,21,24.26 
229 (1977) 2 7 ,2 8’
Hedburg y. State Farm Mutual Automobile Insurance Co., 350 F.2d 
92T7 933 (3th Cir. 1 9 6 5) 12

Hoard v. Teletype Corp., 450 F. Supp. 1059 (E.D.Ark. 1978) 5,33,39
(E.D. Ark. 1978) 4 ! ’ 43

Inmates of Nebraska Penal Complex v. Greenholz, 567 F.2d
1368at 1379 (8th Cir. 1971) 14,28

j)nter>national Brotherhood of Teamsters v. United 13,14 16
Stages, 431 U.S. 324 (1977) 20,33,38

Loeb v. Textron. Inc.. _____  F. 2d ____ 20, FEP Cases 29 (1st
C i r . 1 9 7 9) 4 5} 57

IV



McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) 13,45

McNally v. Pulitzer Publishing Co., 5 3 2 F . 2 d 6 9  12
(8th Cir. 1976)

Manning v. General Motors Corp., 466 F. 2d 812, 815 (6th Cir.
1972) ‘ 42

Muller v. United States Steel Corp,, 509 F. 2d 923, 928
(10th Cir. 1975) 29

Parham v. Southwestern Bell Telephone Co,, 433 F. 2d 421
(8th Cir. TWO! 42,43

Payne v. Travenol Laboratories, Inc., 565 F. 2d 895 (5th Cir.
1978) 44

Rich v. Martin Marietta, 522 F. 2d 33, 346
(10th Cir. 1975) 22,25

Rich v. Marietta, 467 F. Supp. 587 (D. Colo. 1979) 27,29,55
Schine Chain Theatres, Inc. v. United States. 334 U.S. 110.
125-26 (1948) 44

Sledge v. J. P. Stevens & Co., Inc., 585 F. 2d 624 (4th Cir.
1978) 43

Taylor v. Teletype Corp., 475 F. Supp. 958
(E. D. Ark. 1979) 5,11,30,57
Taylor v. Teletype Corp., 475 F. Supp. 1227
(E. D. Ark. 1979) 5 , 1 1

Turner v. Texas Instruments, 555 F. 2d 1251, 1255
(5th Cir. 1977) 45

Vaughn v. Westinghouse Electric Corp., F. 2d
ZZZTTBth Cir.No.'79-1561 , April 23, 1 9^01 45
Wade v. Mississippi Cooperative Extension Service,
528 F. 2d 508 (5th Cir. 1976) ' ' 14

Williams v. General Foods Corp., 492 F. 2d 399
(7th Cir. 1974) 42

OTHER AUTHORITIES

28 U.S.C. § 1292(a )(1 ) 1 1 , 1 2

Title VII, Civil Rights Act of 1964, §703(h); 42 U.S.C.
§2000e-2 (h ) 1 5 , 3 3

^3 Fed. Register 38,290 27
^2 U.S.C. 2000e-5(g) Up



UNITED STATES COURT OF APPEALS 
FOR THE EIGHTH CIRCUIT

NO. 79-2027

TOMMIE W. TAYLOR, ET AL. 
APPELLEES,

v.

TELETYPE CORPORATION, 
APPELLANT.

APPEAL FROM THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF ARKANSAS 

WESTERN DIVISION
HONORABLE RICHARD S. ARNOLD, JUDGE

BRIEF OF APPELLANT

STATEMENT OF ISSUES PRESENTED FOR REVIEW

1 . WHETHER THIS COURT SHOULD EXERCISE ITS PLENARY AUTHORITY TO 
FULLY REVIEW THE TRIAL COURT'S RULINGS ON THE MERITS OF THE CASE 
AND NOT LIMIT ITS REVIEW TO THE QUESTION WHETHER THE TRIAL COURT 
ABUSED ITS DISCRETION IN ISSUING THE INTERLOCUTORY INJUNCTION.

Taylor v. Teletype Corp., 475 F. Supp. 958 (E. D. Ark. 1979)
jaylor v. Teletype Corp., 475 F. Supp. 1227 (E. D. Ark. 1979)

GAINES v. SUN RAY OIL COMPANY, 539 F. 2d 1136 (8th Cir. 1976)

Hedburg v. State Farm Mutual Automobile Insurance Co., 350 F. 2d 
924, 933 (8th Cir. 1965)

McNALLY v. PULITZER PUBLISHING CO., 532 F. 2d 69 (8th Cir. 1976) 
532 F. 2d at 74

ALEXANDER v. AERO LODGE NO. 735 INTERNATION ASSOCIATION OF 
MACHINISTS AND AEROSPACE WORKERS, AFL-CIO, 565 F. 2d 1364 (6th 
CTrT~i 977 )-------------------  ------------------- ----------------

28 U.S.C. §1292(a)(1)

1



2. WHETHER THE TRIAL COURT'S CONCLUSION THAT A PRIMA FACIE CASE 
HAD BEEN MADE WITH RESPECT TO UNLAWFUL RACE DISCRIMINATION IN 
DEMOTION PRACTICES AND ITS GRANT OF INJUNCTIVE RELIEF ARE 
BASED ON CLEARLY ERRONEOUS FINDINGS OF FACT AND THE 
APPLICATION OF ERRONEOUS LEGAL STANDARDS.

McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973)

Booth v. Board of Directors of National American Bank, 475 
F.Supp. 638 (E.D.La. 1979) ~~

Wade v. Mississippi Cooperative Extension Service, 528 F.2d 508 
(5th Cir. 1976 ) ' ~~~~~~

Inmates of Nebraska Penal Complex v. Greenholtz 567 F.2d 1368 
(8th Cir. 1977)

Alexander v. Aero Lodge, No. 735, 565 2d. 1364, 1382 (6th Cir. 
1977 )

INTERNATIONAL BROTHERHOOD OF TEAMSTERS v. UNITED STATES, 431 U.S. 
324 ( 19771

Evans v. United Airlines, Inc., 431 U.S. 553 (1977)

Griggs v. Duke Power Co., 401 U.S. 424 (1971)

Albermarle Paper Co. v. Moody, 422 U.S. 405 (1975)
Dothard v, Rawlinson, 433 U.S. 321 (1977)

CASTANEDA v. PARTIDA, 430 U.S. 482 (1977)

HAZELWOOD SCHOOL DISTRICT v. UNITED STATES, 433 U.S. 229 (1977)
Rich v. Martin Marietta, 522 F. 2d 33, 346 (10th Cir.1975)

Rich v. Martin Marietta, 467 F. Supp. 587 (D. Colo. 1979)

PURNCO CONSTRUCTION COMPANY v. WATERS, 438 U.S. 567 (1978)

Muller v. United States Steel Corp., 509 F. 2d 923, 928 (10th 
Cir. 1 9 7 5)

2



Taylor v. Teletype Corp., 475 F.Supp. at 962-963.

DeGraffenreid v. General Motors Assembly Division. 558 F.2d 480 
(8th Cir. 1977) ~~~ —

3. WHETHER THE TRIAL COURT ABUSED ITS DISCRETION IN ISSUING THE 
INTERLOCUTORY INJUNCTION.

PARHAM v. SOUTHWESTERN BELL TELEPHONE CO., 433 F. 2d 421 (8th Cir. 1970) — — —

Williams v. General Foods Corp., 492 F. 2d 399 (7th Cir. 1974)

Manning v. General Motors Corp., 466 F. 2d 812, 815 (6th Cir. 1972)

Donnell v. General Motors Corp., 576 F. 2d 1292 (8th Cir. 1978)

EEOC v. Local 14, International Union of Operating Engineers, 553 
F. 2d 251 (2nd Cir. 1977)

Sledge v. J. P. Stevens & Co., Inc., 585 F. 2d 624 (4th Cir.
1978)

Payne v. Travenol Laboratories, Inc., 565 F.2d 895 (5th Cir.
1978)

Schine Chain Theatres, Inc. v. United States, 334 U.S. 110.
T25-26 (1948)

4. WHETHER THE TRIAL COURT CLEARLY ERRED IN FINDING THAT THE 
COMPANY HAD NOT ARTICULATED A LEGITIMATE, NON-DISCRIMINATORY 
REASON FOR THE SECOND DOWNGRADE OF PLAINTIFF TOMMIE TAYLOR AND 
CLEARLY ERRED IN FAILING TO CONCLUDE THAT THE LEGITIMATE, 
NON-DISCRIMINATORY REASON WHICH WAS ARTICULATED HAD BEEN SHOWN TO 
FACTUALLY EXIST.

mcdonnell douglass v . green, 4n u .s. 792 (1973)

BURDINE v. THE TEXAS DEPARTMENT OF COMMUNITY AFFAIRS, 608 F. 2d 563 
(5th Cir. 1979)
Turner v. Texas Instruments, 555 F. 2d 1251. 1255 (5th Cir.
WnT77~.--------------------------------

Vauighn v. Westinghouse Electric Corp., F. 2nd (8th Cir.
NoTT9-1561, April 2 3 ,1980)

BOOTH v. BOARD OF DIRECTORS OF NATIONAL AMERICAN BANK, 475 F.
Supp. 638 (E.D.La. 1979)

3



5. WHETHER THE TRIAL COURT CLEARLY ERRED IN FINDING THAT THE
COMPANY HAD NOT ARTICULATED A LEGITIMATE, NON-DISCRIMINATORY
REASON FOR THE DOWNGRADE OF PLAINTIFF LARRY PEYTON AND CLEARLY 
ERRED IN FAILING TO CONCLUDE THAT THE LEGITIMATE,
NON-DISCRIMINATORY REASON WHICH WAS ARTICULATED HAD BEEN SHOWN TO 
FACTUALLY EXIST.

6. WHETHER THE TRIAL COURT CLEARLY ERRED IN FINDING THAT THE
COMPANY HAD NOT ARTICULATED A LEGITIMATE, NON-DISCRIMINATORY
REASON FOR THE DOWNGRADE OF INTERVENORS BIBBS AND HARRIS AND 
CLEARLY ERRED IN FAILING TO CONCLUDE THAT THE LEGITIMATE,
NON-DISCRIMINATORY REASON WHICH WAS ARTICULATED HAD BEEN SHOWN TO 
FACTUALLY EXIST.

RICH v. MARTIN MARIETTA, 467 F. Supp. 587 (D. Colo. 1979)

LOEB v. TEXTRON INC., ____ F. 2d ____  20 FEP Cases 29 (1st Cir. 1979

STATEMENT OF THE CASE

PRELIMINARY STATEMENT

This is an appeal pursuant to 42 U.S.C. § 1291(a)(1) from the 

Order of the United States District Court, Eastern District of 
Arkansas, Western Division, Honorable Richard S. Arnold 

presiding, entered on November 5, 1979 which grants an injunction 

against Teletype Corporation with regard to employment practices.

This action was filed in the United States District Court on 
February 28, 1977 by Tommie W. Taylor and Larry C. Peyton, 

invoking jurisdiction pursuant to 28 U.S.C. §1343(3) and (4) and 

42 U.S.C. §2000e-5(f). The action sought equitable relief pur­

suant to 42 U.S.C. §2000e 2(a)(1) and 42 U.S.C. §2000e-5(g) as 
well as a declaratory judgment pursuant 28 U.S.C. §§2201 and 

2202. The Complaint alleged unfair employment practices based on 

race discrimination and purportedly was brought on behalf of a 
class of persons situated similarly to Plaintiffs pursuant to Rule 
23(a) and (b)(2) of the Federal Rules of Civil Procedure.

The original Opinion of Judge Arnold dealing with the merits



of the case is reported as Taylor v. Teletype Corp., 475 F. Supp. 

958 (E. D. Ark. 1979). The Order which permanently enjoins 

Teletype Corporation from discriminating against employees on 

account of race is reported as Taylor v. Teletype Corp., 478 F. 

Supp. 1227 (E. D. Ark. 1979). The Notice of Appeal was filed by 
Teletype on December 3, 1979.

PROCEDURAL HISTORY

The Complaint in this cause was filed by Tommie W. Taylor and 
Larry C. Peyton on February 28, 1977 alleging that Teletype 

Corporation practiced racial discrimination in employment prac­

tices at its Little Rock, Arkansas facility where the Company 

makes machines and equipment for the long-distance transmission 

of data. The Complaint purported to be filed on behalf of a 

class of persons said to be situated similarly to plaintiffs. 

Because Teletype Corporation had been previously involved in 

litigation concerning its employment practices at the same 

facility, Hoard v. Teletype Corp., 450 F. Supp. 1059 (E. D. Ark. 

1978), Teletype suggested that many of the claims asserted by the 

plaintiffs individually and on behalf of a class had been conclu­
sively resolved in Hoard and were therefore res judicata. By 

Order of February 27, 1979, the District Court held that allega­
tions of racially discriminatory discharge and promotion prac­

tices were in fact res judicata. The Court held that Tommie 

Taylor (who had opted out of the Hoard class) could litigate her 

individual claim of a racially discriminatory "constructive" 

discharge and that both Taylor and Peyton could raise issues of 
racially discriminatory demotion practices on their own behalf. 
The Court left open the issue whether a demotion class should be



certified with Peyton and Taylor as its representatives.

On May 8 , 1979, 13 additional named employees were permitted, 
over Teletype's objection, to intervene and file a supplemental 

Complaint which essentially incorporated the allegations of the 

original Complaint. Neither Complaint asserted jurisdiction 

under 42 U.S.C. §1981 .

On June 5, 1979, the District Court certified a class to be

represented by plaintiffs and intervenors, defined as follows:

"Those black employees of the defendant who 
were demoted on or after February 28, 1974, 
including both bargaining-unit and non­
bargaining-unit employees and including those 
persons still employed by defendant and those 
persons no longer employed by defendant." See 
475 F. Supp. at 961.

The case proceeded to trial in July and August, 1979 with the 

Court reserving ruling at the conclusion of testimony on August 

10, 1979. On August 29, 1979, the District Court entered its 

Opinion finding that a prima facie case of racially discrimina­

tory demotion practices on the part of Teletype Corporation had 

been demonstrated with regard to the years 1974, 1975 and 1976 

but not afterwards and finding that Tommie Taylor's first demo­
tion or downgrade was not racially discriminatory but that her 

second demotion, and her "discharge" were based in part upon 

race; Larry Peyton's' demotion on July 28, 1975 was held to be 

based at least in part on his race as were the March 31, 1975 
demotions of Intervenors James H. Bibbs and Joseph Harris. All 

claims of discriminatory demotions by the other 13 original 
intervenors were rejected as not having involved racial con­

siderations as was the demotion claim of Godfrey Hill who inter-

6



vened during the course of the trial. The District Court left 
open the question of the nature of the relief which should be 
granted.

On September 25, 1979 the District Court entered its Order 

denying Teletype Corporation's Motion to Amend Findings of Fact 
but also "on its own motion, in accordance with its intention at 

the time of the issuance of the opinion" modified its findings 

with regard to the individual claims of discrimination to reflect 

that those four demotions "would not have happened but for the 
race of the employees."

On November 5, 1979, the District Court entered its Order 

permanently enjoining Teletype "from discriminating against any 
individual with respect to his or her compensation, terms, 

conditions, privileges of employment, or in any other manner 

because of such individual's race." 478 F. Supp. at 1228. The 
Court also decided certain other issues concerning the nature of 

the relief to be afforded the four individuals who had been 

found victims of discriminatory practices and prescribed the pro­

ceedings to be utilized for entering claims from class members 
and for furnishing notice to such individuals. Id.

Teletype Corporation filed its Notice of Appeal on December 
3, 1979.

STATEMENT OF FACTS

Teletype Corporation operates two manufacturing facilities in 

the United States for the production of machines designed for the 

communication of data. One such plant is in Skokie, Illinois and 
the other in Little Rock, Arkansas, where the events prompting

7



this law suit occurred. The Little Rock facility was launched in 

1957 with a work force of approximately 50 persons. By 1964, the 

work force had increased to 300. and by 1966 to 600. An expansion 

stage commenced in December, 1966 and was completed in 1968 with 

a work force of 700. By the time the second stage of the expan­

sion was complete in 1970, Teletype Corporation in Little Rock 

employed approximately 2,000 people. (Tr. 1819-24).

The business in which Teletype is engaged is a volatile one 

and often results in instability in the number of individuals 

required for its work force (Tr. 1829). Production is effected on 

a "job shop" approach pursuant to which products are built in 

response to customer orders and not for the purpose of main­

taining an inventory (Tr.1831). The needs of the Company with 

regard to the size of the work force are keyed to the receipt and 

monitoring of customer orders. Projections of work force needs 

are thus made on an advance basis for a period approximating 13 

weeks into the future (Tr. 1832). When the number of orders for 

future production are reviewed and reflect a decrease in volume, 

work force reductions are required. The Company has experienced 

two severe such adjustments to its work force at the Little Rock 
facility, in 1971 and again in 1 9 7 5.

The work force at Teletype, Little Rock involves individuals 

directly concerned with production (the direct labor force) who 
are members of a collective bargaining organization and whose 

conditions of employment are governed by the terms of a collec­
tive bargaining agreement. Article 28 of this Bargaining 

Agreement directs the procedures which are to be utilized during 

work force reductions of bargaining unit (hourly) employees.

8



Another segment of the Teletype work force consists of non­

bargaining unit or salaried employees (the expense labor force) 

who essentially work in a support capacity to the manufacturing 

mission (Tr. 1833). When work force reductions are effected, the 
initial concern of Company management is to reduce the total work 

force in accordance with a desired ratio between the direct labor 

force and the expense labor force ("the expense to direct ratio") 

(Tr. 33). The desired ratio varies in accordance with the total 

size of the work force. After a determination has been made as 

to the size of the needed reduction in the direct work force, a 

decision is then made as to the corresponding decrease which will 

be made in the expense personnel. Historical comparative data is 

utilized in arriving at the desired expense to direct ratio (Tr. 
35).

In 1971, the approximate work force reduction at Teletype, 

Little Rock, was from 2,000 to 1 , 700 employees and by the end of 

1972, the work force there was 1,400. Following a period of sta­

bilization and improvement in business, the work force was back 

to 1,650 employees at the end of 1973. However, in 1974, it 

again became apparent to Company management that another econo­

mic downturn was imminent and that another work force reduction 

would be necessary. It was effected in 1975. (Tr. 1839-44).

Work force reductions in the bargaining unit jobs were 

effected pursuant to Article 28 of the Bargaining Agreement which 

provides that, following layoffs of the lowest level of hourly 
employees by the "last in, first out" seniority concept, other 

employees may be downgraded (demoted) by application of the same 
principle. In the salaried work force, layoffs and demotions are

9



effected in accordance with a "rank order" which is compiled by 

supervisors. The employees within each supervisor’s area of 

responsibility are ranked in numerical order based on their 

length of service, the value of their job to the department's 

mission and the quality of performance of the person holding that 

job, including discipline, attendance and production. (See e.g. 
Tr. 1916).

Teletype initiated affirmative action efforts designed to 
improve the employment conditions of blacks at Little Rock in 

1961. These efforts at Little Rock were coordinated with 

appropriate personnel at the Skokie facility and the Little Rock 

office continues to have reporting responsibilities to Skokie in 

the equal employment opportunity area up to the present time. 

Teletype is a wholly owned subsidiary of Western Electric and 

thus was embraced within the early committments and efforts of 

Western Electric towards improving the employment conditions of 
blacks (Tr. 2210-16). As a result of Executive Order 11246, 

revisions to that Order and other agreements to which Western 

Electric, and thus Teletype, were party (the C 3 Agreements), a 

formal affirmative action plan was devised for the Little Rock 
facility of Teletype and implemented in March, 1970 (Tr. 2212).

The employment discrimination claims involved in this case 

deal with the effect of the 1975 work force reduction on black 

employees generally and on 16 individual parties to this case.

Of the individual claims, the District Court dismissed 12 and 
held that race was a factor in the treatment of the remaining 4. 

The District Court also found a racially disparate impact on the 

class of blacks demoted from 1974 through 1976.

10



ARGUMENT

1. THIS COURT SHOULD EXERCISE ITS PLENARY AUTHORITY TO 
FULLY REVIEW THE TRIAL COURT'S RULINGS ON THE MERITS OF THE CASE 
AND NOT LIMIT ITS REVIEW TO THE QUESTION WHETHER THE TRIAL' COURT 
ABUSED ITS DISCRETION IN ISSUING THE INTERLOCUTORY INJUNCTION.

Following a full trial on the merits of the allegations of 

racially discriminatory demotion practices adversely affecting 

identified individual claimants as well as a class of persons 

similarly situated, the trial court issued an Opinion setting 

forth its findings and conclusions that a prima facie case 
of liability had been established with regard to demotion prac­

tices in some years but not others and requesting submissions 
from the parties concerning the issue of relief for individuals 

and the class. Taylor v. Teletype Corp., 475 F. Supp. 958 (E. D. 

Ark. 1979) Thereafter the Court entered an Order on November 5, 

1979 permanently enjoining Teletype Corporation from discrimi­

nating against its employees, and specifying the proceedings to 

be utilized for notification to and receipt of claims from class 

members. Taylor v. Teletype Corp., 475 F. Supp. 1227 (E. D. Ark. 

1979) Teletype Corporation timely filed this appeal pursuant to 

^2 U. S. C. §1292(a)(1) from the order entered November 5, 1979. 

The cited statute authorizes review of interlocutory orders 

"granting, continuing, modifying, refusing or dissolving injunc­

tions or refusing to dissolve or modify injunctions... ."

It is firmly established in this Circuit and elsewhere that 

although the grant or denial of injunctive relief may provide the 
vehicle for appellate review, the scope of review on appeal is 

not limited to the considerations prompting such grant or denial.

Rather, an appeal from an Order granting or refusing injunc-

11



tive relief pursuant to 28 U.S.C. §1292(a)(1) presents for 

appellate review "the entire Order, not merely the propriety of 

injunctive relief... See Gaines v. Sun Ray Oil Company, 539 F.

2d 1136 (8th Cir. 1976); Hedburg v. State Farm Mutual Automobile 

Insurance Co. , 350 F. 2d, 9,24, 933 (8th Cir. 1965 ). In McNally v. 

Pulitzer Publishing Co., 532 F. 2d 69 (8th Cir. 1976) this Court, 

after noting and exercising its authority to review the entire 

Order, observed: "... the appellate court may consider and decide 

the merits of the case and may order dismissal of the action."
532 F. 2d at 74.

Alexander v. Aero Lodge No. 735 Internation Association of 

Machinists and Aerospace VJorkers, AFL-CIO, 565 F. 2d 1364 (6th 

Cir. 1977) is particularly appropriate here. Alexander involved 

an appeal from an interlocutory order granting injunctive relief 

against an employer under Title VII of the Civil Rights Act of 

1964. The procedural posture of that case on appeal was virtually 

identical to the instant case. Although the District Court there 

had partially found for plaintiffs and granted injunctive relief 

against the defendant, it had not yet disposed of claims for back 
pay. Nevertheless, the Court of Appeals entertained the appeal 

pursuant to 28 U.S.C. §1292(a)(1) and declined to limit its con­
sideration to the propriety of the interlocutory injunction. The 

Court noted that: "Where as here, the case is one of long­
standing, has already been tried on the merits, and where most of 

the issues are clearly defined," full review of all aspects of 

the Order including those normally not independently reviewable 
6y interlocutory appeal, was particularly appropriate. The con­

siderations present in Alexander are likewise present here and

12



Teletype Corporation thus urges a full review on the merits of 

the District Court's August 29, 1979 Opinion and its November 5, 
1979 Order which actually grants the interlocutory injunction.

2. THE TRIAL COURT'S CONCLUSION THAT A PRIMA FACIE CASE HAD 
BEEN MADE WITH RESPECT TO UNLAWFUL RACE DISCRIMINATION 
IN DEMOTION PRACTICES AND ITS GRANT OF INJUNCTIVE RELIEF 
ARE BASED ON CLEARLY ERRONEOUS FINDINGS OF FACT AND THE 
APPLICATION OF ERRONEOUS LEGAL STANDARDS.

A. TO ESTABLISH LIABILITY IN A CLASS ACTION SUIT UNDER 
TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, 
PLAINTIFFS BEAR THE BURDEN OF PROVING THE EXISTENCE 
OF A PATTERN AND PRACTICE OF DISCRIMINATORY 
CONDUCT, RATHER THAN MERE ISOLATED ACTS OF 
DISCRIMINATION.

In order to meet their burden of proof, plaintiffs must prove

that there was a pattern or practice of disparate treatment of

blacks or that blacks were subject to disparate impact by

facially neutral policies of the employer and must show that such
differences in treatment or impact were "racially premised."

■International Brotherhood of Teamsters v. United States, 431 U.S.
324 (1977); McDonnell Douglas Corp. v. Green, 411 U.S. 792

(1973); see Booth v. Board of Directors of National American
Bank, 475 F.Supp. 638 (E.D.La. 1979). In Booth the Court noted:

"In making out such a prima facie case of 
discrimination, the plaintiffs (in a class action under 
Title VII) must prove more than the mere occurrence of 
isolated, or 'accidental,' or sporadic discriminatory 
acts. They must establish by a preponderance of the evi­
dence that racial discrimination was the company's stan­
dard operating procedure, i.e., the regular rather than 
the unusual prctice." (citing Teamsters 97S.Ct.1855).

Plaintiffs may establish a prima facie case solely through 
the use of statistical evidence although Teamsters cautioned that

13



the probative value of statistics depends on "all of the

surrounding facts and circumstances." Id., 97 S.Ct. l856,Fn. 20. 

It is clear however, that plaintiffs normally will attempt to 

buttress statistical data with live testimony of individual acts 

of discrimination, and the cases clearly indicate that their 

chances of success by doing so are greater. See Booth v. Board 
of Directors, supra; Wade v. Mississippi Cooperative Extension 
Service, 528 F.2d 508 (5th Cir. 1976). Also, as this Court has 

held, as the probative value of the statistical data lessens, the 

quality and quantity of nonstatistical evidence required to raise 
the inference necessary for a prima facie case becomes 

corrrespondingly greater. Inmates of Nebraska Penal Complex v. 

Greenholtz 567 F.2d 1368 (8th Cir. 1977). In that case the Court 
noted that: "... two or three individual cases (of individual

discrimination) are insufficient to provide more than minimal 

support to an inference of class wide purposeful discrimination." 
Id. at 1381. Finally, to the extent that any disparate impact 

which is statistically demonstrated is a reflection of the impact 

of a bona fide seniority system, such statistical differences 

should be discounted as not supporting plaintiffs' prima facie 

Case* Teamsters, supra; Alexander v. Aero Lodge, No. 735, 565 
2d. 1364, 1382 (6th Cir. 1977).

B. AN EMPLOYER MAY LAWFULLY EFFECT DEMOTIONS AND
LAYOFFS PURSUANT TO BONA FIDE SENIORITY SYSTEMS, 
EMBODIED IN COLLECTIVE BARGAINING AGREEMENTS AND 
COMPANY POLICIES, WHICH SELECT EMPLOYEES FOR 
DEMOTION OR LAYOFF BY REVERSE ORDER OF COMPANY 
SENIORITY.

In International Brotherhood of Teamsters v. United States.
3̂1 U.S. 324 (1977), the Supreme Court considered the force and

14



effect of §703(h) of Title VII in the context of a challenge that 

an employer’s seniority system was racially discriminatory. The 
Court held that §703(h) validates facially neutral seniority 

systems, even if they perpetuate the impact of race discrimina­

tion which occurred before the effective date of Title VII. The 
Court concluded:

"In sum, the unmistakeable purpose of §703(h) 
was to make clear that the routine application of a 
boni fide seniority system would not be unlawful 
under Title VII. As the legislative history shows, 
this was the intended result even where the 
employer's pre-act discrimination resulted in whi­
tes having greater existing seniority rights than 
negros.

* * *

Accordingly, we hold that an otherwise 
neutral, legitimate seniority system does not 
become unlawful under Title VII simply because it 
may perpetuate pre-Act discrimination. Congress 
did not intend to make it illegal for employees 
with vested seniority rights to continue to exer­
cise those rights, even at the expense of pre-Act 
discriminatees."

Thereafter the question arose as to what relief, if any, the vic­

tim of post-Act discrimination under a neutral seniority system 
could receive. In Evans v. United Airlines, Inc,, 431 U.S. 553 

(1977) the plaintiff, a female flight attendant, had been 

employed by the defendant but thereafter involuntarily resigned 

pursuant to an unlawful employment policy forbidding flight 

attendants from marrying and retaining their employment. The 

plaintiff was rehired in 1972 as a new employee with no seniority 
credit for her prior service. The plaintiff then sued under 

Title VII contending that the neutral seniority system per­

petuated the discrimination visited upon her in connection with

15



the forced resignation in 1968 and was therefore unlawful. The 

Supreme Court rejected the plaintiff's claim because she had 
failed to file a discrimination charge within the statutory limi­

tations following her involuntary resignation in 1968. The Court 

observed:

"Respondent is correct in pointing out that 
the seniority system gives present effect to a past 
act of discrimination. But United was entitled to 
treat that past act as lawful after respondent 
failed to file a charge of discrimination within 
the 90 days then allowed by §706(d). A discrimina­
tory act which is not made the basis for a timely 
charge is the legal equivalent of a discriminatory 
act which occurred before the statute was passed.
It may constitute relevant background evidence in a 
proceeding in which the status of a current prac­
tice is at issue, but separately considered it 
is merely an unfortunate event in history which has 
no present legal consequences." 97 S.Ct. at 1889

See DeGraffenreid v. General Motors Assembly Division, 558 F. 2d 
480 (8th Cir. 1977) where this Court applied the principles of 

Teamsters and Evans in a case involving a "last hired-first fired" 
layoff policy under a neutral seniority system. The Court there 

held that a challenge to a neutral seniority system which 
employed a "last hired-first fired" layoff policy must fail as 

either barred by the statute of limitations because of the 
plaintiff's failure to file a timely EEOC charge complaining of 
the hiring discrimination which prevented her from acquiring suf­

ficient seniority to avoid layoff, or, it failed to state a viola­

tion of Title VII. In dismissing the plaintiff's Title VII 

claims, this Court stated:
"Although we do not know precisely when GM's alle­

gedly unlawful employment practices first affected the

16



appellants, we can be sure that any unlawful failure to 
hire appellants ended on their respective dates of hire.
As in Evans, the employer's seniority system is neurtal 
in operation. Thus, when appellants failed to file 
charges with the EEOC within 180 days following their 
entry into service, GM was entitled to consider its 
earlier failure to hire appellants as lawful, a mere 
'unfortunate event in history which has no present legal 
consequences,'" (citing Evans). 558 F. 2d at 485.

The import of the above legal principles is clear - to the

extent that the plaintiffs and intervenors here challenge their <

demotions or layoff because of either hiring discrimination prior

to 1965 or because of a discriminatory failure to hire after 1965

which was not the subject of a timely EEOC charge, their claims

are legally insufficient since the seniority system in issue is
bona fide.

C. THE ELEMENTS COMPRISING THE TRIAL COURT'S
DETERMINATION OF A PRIMA FACIE SHOWING OF LIABILITY 
WITH RESPECT TO DEMOTION PRACTICES IN 1974, 1975 
AND 1976 REST ON CLEARLY ERRONEOUS FACT FINDINGS 
AND THE APPLICATION OF ERRONEOUS LEGAL PRINCIPLES.

(1) THE TRIAL COURT CLEARLY ERRED IN DISCOUNTING 
THE MOST DIRECT AND PROBATIVE EVIDENCE ON THE 
ISSUE OF RACIALLY DISPARATE IMPACT IN DEMOTION 
PRACTICES AND RELYING INSTEAD ON DISTORTED 
STATISTICAL DATA WHICH DOES NOT DIRECTLY 
REFLECT ON THE ISSUE INVOLVED; IT FURTHER 
ERRED BY APPLYING INCORRECT LEGAL PRINCIPLES 
TO DETERMINE THE SIGNIFICANCE TO BE ATTACHED, 
OR NOT ATTACHED, TO THE STATISTICAL DATA 
PRESENTED.

In determining that a limited prima facie case of racial 

discrimination in demotion practices had been established, the 
trial court of necessity concluded that black employees were sub­

ject to disparate impact because of demotion practices. 1 The

At 475 F. Supp 958, 964 it is noted that there is no showing 
of intentional discrimination. See also Note 2, Id. at 965 (No 
purposeful discrimination had been shown.)



direct impact theory under Title VII was first sanctioned by the

Supreme Court in Griggs v. Duke Power Co., 401 U.S. 424 (1971),

where the Court held that Title VII forbids not only overt

discrimination but also employment practices that are neutral or

fair in form, but discriminatory in operation. However, in

Griggs, the Supreme Court did not specify the measures which
should be utilized in determining whether a neutral employment
practice was discriminatory in operation.

Again, in Albermarle Paper Co. v. Moody, 422 U.S. 405 (1975),
the Court dealt with the question of what measure of adverse
impact was necessary to prove a prima facie case. Expanding
shoewhat on Griggs, the Court observed:

"(The plaintiff must show) that the tests in 
question select applicants for hire or promotion in 
a racial pattern significantly different from that 
of the pool of applicants." (Emphasis added)

See also Dothard v. Rawlinson, 433 U.S. 321 (1977) where the 
Court stated: "The plaintiff need only show that the; facility
neutral standards in qustion select applicants for hire in a 

significantly discriminatory pattern." (Emphasis Added) In 
spite of these general observations of the Supreme Court, the 

standard to be utilized for determining whether a prima facie 
case of adverse impact had been shown remained imprecise, since 
there was no authorative discussion of the proper means to deter­
mine "significance" of the observed impact.

As more cases involving class claims of race discrimination 
were litigated, judical consideration of the means by which to 

Judge the significance of statistical data was aided by a more 
specific approach. In two cases decided in 1977, the Supreme

18



Court utilized a standard deviation analysis to determine whether 

there was a significant statistical disparity between observed 
data and the data which one would expect to have occurred from 

some action orpractice if the sole causative factors had been 

randon chance. Castaneda v. Partida, 430 U.S. 482 (1977); 

Hazelwood School District v. United States, 433 U.S. 229 (1977). 

In Hazelwood (a Title VII case) the question was whether there 

was a significant statistical disparity between the racial com­

position of the school district's teaching staff and the racial 

composition ofthe qualified public school teacher population! the 

relevant labor market. Because the Supreme Court could not 

itself on the record before it determine which of two possibili­
ties was the relevant labor market, it remanded the case with 

directions to the district court to decide that issue. In doing 
so, the Supreme Court noted that applying a standard deviation 

analysis to the correct market data would be critical. Relying

on the approach in Castaneda, the Court held that where the dif-f
/

ferenee between the expected value (that which would occur by
random chance) and the observed number is greater than two or

•o 4 df

l .JVo /> '• CA-n/'V
three standard deviations, then a hypothesis that teachers were

nired without regard to race would be suspect. Note 14, 433 U.S.
\  n\ \

308. The data reflected in one relevant market area would have 

resulted in less than two or three standard deviations while the 
data in the other relevant market would have yielded in excess of

Y-

dLolu-4'-

five or six standard deviations. Utilizing the labor market
\

urged by the school district, the standard deviations for the 
^972-73 school year were less than two; for the 1973-74 school 

year less than one, and for the two years combined, less than two



standard deviations from the observed total. The Supreme Court 
stated that this type of showing "may be sufficiently small to 
weaken the government's other proof..." 433 u.S. 311 (Emphasis
Added).

Hazelwood was decided the same term as International Brotherhood
of Teamsters v. United States, 431 U.S. 324 (1977) which also

referred to the use of statistical proof, in a disparate treatment

case. The Supreme Court said with regard to statistical proof:

"Our cases make it unmistakably clear that 'statistical 
analyses have served and will continue to serve an 
important role' in cases in which the existent of 
discrimination is a disputed issue...we have repeatedly 
approved the use of statistical proof,where it reached 
proportions comparable to those in this case, to 
establish a prima facie case of racial discrimination in 
jury selection cases... . Statistics are equally com­
petent in proving employment discrimination." 431 U.S. 339

In Teamsters however, the Supreme Court cautioned as to

selecting the correct statistical comparison as follows:

"We caution only that statistics are not irrefutable; 
they come in infinite variety and, like any other kind 
of evidence, they may be rebutted. In short, their use- 
fullness depends on all of the surrounding facts and 
circumstances." Ibid 2

The controlling question of law herein relates to the 

District Court's selection of standards by which it determined 
that a prima facie case had been presented on the issue of 

Teletype's demotion practices. In deciding that a prima facie

The Supreme Court in Teamsters noted that the force of the 
statistical evidence in that case was "glaring", but that other 
proof had been presented. Speaking of the testimony of indivi­
duals reciting over forty specific instances of discrimination, 
the Court observed: "...this was not a case in which the govern­
ment relied on 'statistics alone'. The individuals who testified 
about their personal experiences with the Company brought the 
£°ld numbers convincingly to life." (Emphasis Added). 431 U.S.

20



case on the issue of racially discriminatory demotion practices 

against the class had been partially made, the District Court 

disregarded the statistical data which related directly to the 

practices in issue (demotions) and which indisputably refuted 

inferences of racial discrimination. The Court resorted instead 

to consideration of statistics dealing with an essentially dif­

ferent employment procedure (i.e. layoff) and attached signifi­

cance to such statistics contrary to the criteria approved by the 

Supreme Court in the Castaneda and Hazelwood Opinion.
In recognition that the most significant inquiry involved in 

a disparate impact theory is actual statistical data, both plain­

tiffs and defendants in this case presented expert testimony as 

to the significance of demotion data. Both experts agreed 
that their respective inquiries and analyses of the issue of 

demotions furnished no basis for an inference of adverse impact. 
Thus, on what is in reality the ultimate issue in the case, the 
testimony on impact was undisputed. Teletype's expert, Dr.
Drane, prepared his analysis (DX 9) from computer tape infor­

mation set forth in DX 7 (a computer listing of active and inac­
tive employees from inception of the BID 3 record keeping system 

in 1973 through June 26, 1979) and, since the demotion provisions 
°f the bargaining agreement (Article 28) would not be applied to 

demote nonbargaining unit employees, including supervisors, limited 

his analysis to bargaining unit employees. The period covered was 

from February 28, 1974 to June, 1979 without a yearly breakdown. 
Drane' s calculation of the standard deviations between observed and 

expected demotions of blacks was 1.403. Plaintiff's expert, Dr.

^""Personal Information Document"

21



James, submitted PX 126 which relates to demotions supposedly- 

covering the period 1971 through June 26, and which was based on 

his hand count from PX 125 (the June 26, 1979 printout furnished to 
plaintiffs in response to a motion for production of documents and 

which excluded supervisory employees), Drane and James reached 

the same conclusion--from a standard deviation analysis, there is 

no statistical evidence of disparate impact arising from demotions 
of blacks.

Notwithstanding the agreement of the experts, the Court 

resorted to consideration of statistical data as to a different 

employment practice (i.e. layoffs) and concluded that such an 
approach yielded a result which "... certainly is entitled to con­

sideration along with other factors, and may help to support a 

prima facie finding." Teletype submits that such an approach is 
inappropriate where there is direct evidence on demotions, where 

the experts are in agreement, where no plaintiff or intervenor is 
claiming adverse treatment or impact by layoff  ̂an<i where there is 
a separate bargaining unit provision for layoffs. "Statistics 

should comport to the specific issues presented." Rich v. Martin 
Marietta. 522 F. 2d 33, 346 (10th Cir.1975).

Not only is layoff data not properly used to find discrimina­
tion in demotions, the approach of Dr. James in his layoff study 

is significantly distorted contra the Court's suggestion. James 

worked with four basic documents in arriving at his analysis.

Three of these were EE0-1 reports for the years 1974 through 
tr~------------------------------------------------------------------

Although the District Court suggested that Mrs. Taylor was 
"forced" to leave the Company, she left as a result of exercising 
an option to elect layoff rather than accept a downgrade of more 
than two grades. Regardless of her "constructive discharge" or 
forced layoff" argument, her departure was not directly caused 
ty a Company decision or rule requiring that result.

22



1976; the 4th exhibit (PX125) was a computer printout of all 
employees (except supervisors) on roll from institution of the 

system through June 26, 1979. This computer printout shows: (a)
There were no layoffs in 1 974 and 1976; 5 (£>) The number of 

employees who were on roll during the period 1974 through 1976 and 

who were statistically eligible for layoff; (c) The number of 

employees who were in the bargaining unit and who were not; (d)

That 112 blacks (110 in the bargaining unit) were laid off in 

1975 as were 349 others (327 in the bargaining unit); (e) That 

166 bargaining unit employees were laid off on January 31, 1975;

199 on March 27th, 24 on August 15th, 40 on September 19th and 8 

on various other dates.
Plaintiff's Exhibit 126 is the statistical analysis prepared 

by Dr. James, using the EE0-1 reports and computer printouts 

referred to. Dr. James totalled the results from the EE0-1 

reports for the years 1974 through 1976 which includes all 
employees on roll at year end, to arrive at a figure of 4,873 

employees eligible for layoff during this period. Any explana­
tion of his preference for the EE0-1 data rather than the more 

complete, accurate and relevant data available from the printout 

was repeatedly avoided and evaded. Nor did he exclude super­

visors from his eligibility totals although they were excluded 
from the computer printout data. He made no distinction between 

bargaining unit and nonbargaining unit employees even though they 

are in a different "universe" and subject to different layoff

~ — --------— ............................................................................................................................................ ...... — ------------------- — -------------------------------------------------------------------------------------------- -----------------------------------

Shapan Kelly, although showing a TER 08 (layoff code) in 
1976, was placed on layoff status for purposes of recall when no 
work was available following her application for return from a 
leave of absence.

23



procedures. He concluded that with a standard deviation (or "Z" 

score) of 2 .2 8 , the difference was statistically and 

"meaningfully" significant.
The court's conclusion that there is no significant 

distortion, even though supervisors were included in James' com­

putations as to the eligible work force, is substantially in 

error. Exclusion of the "Officers and Managers" category 

(supervisors) from the EEO-1 report results in a Z or standard 

deviation of 1.83.  ̂ This difference is highly significant in 

refuting any disparate layoff impact theory under Castenada and 

Hazelwood since no adverse statistical significance attaches 

unless the results are beyond "two or three" standard deviations. 

Even if we were to adopt James' approach but used the December 

31, 1974 EEO-1 figures for employees at the Company subject to 

layoff in 1975 (there were no layoffs in 1974 or 1976) the result 
is 1.99 standard deviations. 7 if we then were to exclude 

supervisors, the standard deviation would be 1.61. ® If we were 

to distinguish between bargaining and non-bargaining unit 

employees, the standard deviation is 1.40. g

A tabulation of Plaintiff's Exhibit 125 based on a hand count 
and a computer program shows a total of 461 employees (other than 

supervisors) being laid off during the period 1974 through 1 9 7 6. 
Again, all layoffs took place in 1975. This was broken down into 

112 blacks (24.3$) and 349 others (75.7$). The resulting Z or 

on standard deviation is 1.63. 10 This calculation was made

...... ....... .......
’ Calculation 7 of Appendix.

g’ Calulation 1 of Appendix.
g' Calculation 3 of Appendix.
1q Calculation 5 of Appendix.

Calculation 6 of Appendix.

24



using the same analysis as James but excluding supervisors from 

the 3 EEO-1 reports and using the accurate tabulation figures on 
layoffs.

We urge that layoffs are conceptually and as implemented not 

properly used to determine adverse impact in demotions. See Rich 

v. Martin Marietta, supra. Dr. James manifested a lack of 

understanding as to these differences and the Court unwittingly 

was led astray-e.g., Dr. James characterized a layoff as "the 

ultimate downgrade", a phrase the Court reiterated in its 
opinion. To support this, the District Court stated that many of 

the layoffs that occurred were the result of demotions of higher 

graded employees - employees who "bumped" others in the demotion 

process, thus ultimately resulting in layoffs. In fact, the 
sequence is exactly the opposite. Under Article 28 of the 

bargaining agreement in effect in 1 9 7 5, it is stated:

"... when lack of work necessitates decreasing 
the work force, the employees to be laid off shall 
be selected in the inverse order of TERM OF 
EMPLOYMENT from grade 91."
Then, as to declarations of surplus employees to be downgraded

"... following such layoff, employees shall be 
selected as surplus in the inverse order of TERM OF 
EMPLOYMENT from the occupation, grade as applicable 
and Department Chief's Organization affected."

Thus, the Union contract and other trial exhibits are at odds
with the Court's conclusion. DX 26 shows a substantial number of

downgrades and other movement foflowing each of the principal

layoff dates in 1975. See also DX 48 and 49 showing selection
Tor layoff by service date.

25



If in fact James and the Court considered layoffs and downgra­

des to be essentially similar and analogous practices, why did not 
James use, and the Court insist on, a combined statistical approach 

which computes the standard deviation based on all employees 

experiencing downgrades or layoffs? Obviously because the already 

weak results of the layoff study would be further diluted.
The Court recognized in its opinion the different standards and 

eriteria employed in connection with downward movements of 
bargaining unit versus non-bargaining unit employees, yet it did 

not exclude the latter from James' analysis. The record clearly 

indicates that Article 28 of the Agreement governs movement within 

the bargaining unit while non-bargaining unit employees are subject 

to Teletype Instructions (Company guidelines) dealing with force 

reductions and rank ordering of salaried employees. Thus salaried, 
non-bargaining unit employees as well as supervisors should have 
been treated statistically separate. The result of such a separa­

tion is a standard deviation almost one-half that computed by 

James. ^

The District Court's resort to the 95% level of confidence 
approach formerly contained in the EEOC guidelines (29 C.F.R. 

§1607(5)(c)(1) is also inappropriate. The use of that concept 
deals with the validation of employment tests and defines the 

required relationship between the test in issue "and at least one 

relevant criterion ... ." It is inapposite as a test of statisti­

cal significance here and contrary to Castenada and Hazelwood; 
n°r is that guideline even currently in effect since the adoption 

on August 28, 1978 of the Uniform Guidelines on Employee

Calculation 5—of Appendix.

26



Selection Procedures, 43 Fed. Register 38 290 et seq. 
Interestingly, the!,new" Uniform Guidelines incorporate an 

approach for determining adverse impact called the "Four-Fifths 

Rule of Thumb," in lieu of a statistical test of significance.

It is stated that "the majority of employers do not hire, promote 

or assign enough employees for most jobs to warrant primary 

reliance upon statistical significance." And further:
"...while the four-fifths rule does not define 

discrimination and does not apply in all cases, it is 
appropriate as a rule of thumb in identifying adverse 
impact." 43 F.R. at 38294. (""Emphasis Added).

Rich v. Martin Marietta, 467 F. Supp. 587 (D. Colo. 1979) 
expressly rejects the four-fifths rule and states more precise 

statistical methods should be employed.
In summary, the District Court clearly erred in ignoring the 

unequivocal and undisputed testimony that the statistical data 

demonstrated the absence of racially disparate impact in demotion 

practices. It clearly erred in attaching statistical signifi­

cance to the layoff study in a demotion case. Even though the 
District Court acknowledged that the statistical data before it 
would not itself be sufficient to estalish a prima facie case 

under Castenada and Hazelwood, it did say that the statistical 

evidence "...may help to support a prima facie finding." That 

approach is an erroneous one. It assumes that statistics can 
only be used to aid the plaintiff's case and not affirmatively 

used by the employer to establish the absence of discrimination. 
Thus is contra to the holdings of the Supreme Court in Hazelwood 

and Furnco Construction Company v. Waters, 438 U.S. 567 (1978)

27



(statistics indicating a racially balanced work force are rele­

vant and should be considered in determining whether or not 

discrimination occurred.)
Under these principles, the District Court should not have 

deemed the statistical data to assist in Plaintiff's efforts to 

make a prima facie case; it should have held that the disparity 

between white and black demotions was "sufficiently small to 

weaken" the Plaintiffs' and Intervenors' other proof. See 

Hazelwood, 433 U.S. at 311. See also the opinion of this Court 
in Inmates of Nebraska Penal Complex v. Greenholz, 567 F.2d 1368 

at 1379 (8th Cir. 197) (failure to meet the standard deviation 
parameters prescribed in Castenada and Hazelwood may require a 

finding that lesser disparities should be considered "utterly 

without significance" to plaintiff's case).
The District Court's failure to accord proper weight to the 

statistical evidence favorable to Teletype is absolutely critical 

in this case. 12 Although the District Court indicated that the 

statistics might only help support other proof to establish a 

prima facie case, the Court then dealt with the "other" proof as 
if disparate impact had been established. For example, the Court 

found illegal infirmities in demotion practices under Article 28 of 

the bargaining agreement and under the rank order concept for non­

bargaining unit employees because subjectivity could have crept

At 475 F. Supp. p-Q64, the Court finds a prima facie case 
with regard to demotions between February 28, 1974 and the end of 
1976. it then finds no prima facie case with regard to 1977,
1978 and 1979 stating: "With regard to these last three years,
the Court accepts defendant's statistical evidence.' 7he only
evidnce justifying the Court's differentiated time frame is Dr. 
James layoff study which purports to deal with the 1974-76 period 
even though all layoffs occurred in 1975.

28



into the decision - making process and thus could have allowed the
exercise of racially discriminatory factors. However, it is clear 

that the exercise, or possible exercise, of subjectivity, is not 
discriminatory per se - it is discriminatory and illegal only if it 

results in a disparate impact. Muller v. United States Steel 

Corp. , 509 F. 2d 923, 928 (10th Cir. 1975) and cases cited there. 
Moreover, none of the other elements of proof relied on by the 

District Court directly involved demotions. Yet demoted plaintiffs 

and intervenors were given the benefit of a prima facie showing.

This approach is improper. In Rich v.Martin Marietta Corp., 467 F. 

Supp. 587 (D. Colo. 1979), the District Court on remand stated with 

regard to the burden of individual class members that each must 

demonstrate their membership in a group which suffered adverse 

impact. Individuals claiming failures to promote but who were in 

job groups as to which no disparate impact had been shown were 

deemed not to have sustained their burden. In this case there is 
simply no evidence of racially disparate impact In demotion 

practices. 1 3

2 C. (2) THE DISTRICT COURT ERRONEOUSLY CONSIDERED 
"INFIRMITIES" IN THE COMPANY'S AFFIRMATIVE 
ACTION PROGRAM AS A FACTOR SUPPORTING A PRIMA 
FACIE CASE OF CLASS WIDE LIABILITY WITH REGARD 
TO THE DEMOTION PRACTICES AND FURTHER ERRED IN 
HOLDING THAT AN EMPLOYER FACED WITH THE 
NECESSITY OF EFFECTING LARGE WORK FORCE 
REDUCTIONS HAS A LEGAL DUTY TO EMPLOY 
AFFIRMATIVE ACTION CONSIDERATIONS TO SAVE FROM 
DEMOTION OR LAYOFF THOSE BLACK EMPLOYEES WITH 
LESSER COMPANY SENIORITY AND A DUTY TO INSTEAD 
DEMOTE OR LAYOFF MORE SENIOR WHITE EMPLOYEES.

After its consideration of the statistical evidence, the

Court then dealt with other factors which it later concluded

T3T~0f 16 individual demotion claims litigated, Teletype prevailed 
°n 12. After notice was afforded to 143 class members, only 26 
even filed claims.

29



aided in establishing a prima facie case. One such area of proof 

involved the Company's affirmative action efforts, or the lack 
thereof. However, the actual evidence considered by the Court in 

the context was very limited. The Court noted generally that 

"...Teletype was slow to develop an effective equal opportunity 

effort, even after the effective date of the Civil Rights Act of 

1964," and that, "From time to time in its affirmative action 

programs the Company made various committments, but its perfor- 

mace did not always live up to the committments." Taylor v. 

Teletype Corp., 475 F.Supp. at 962-963.
Specifically, the District Court referred in this context to 

the apprentice training program that began in 1957 and its 
understanding that no blacks were accepted into the program until 

1971. It referred to "under utilization" of blacks in the engi­
neering associates category and the demotion of a black EA 

(Peyton) though he had been ranked above 13 out of 31 engineering 

associates. The District Court also noted that, when the Company 
was forced by business conditions to substantially reduce its 

work force, "Blacks were harder hit by the layoffs than whites 

were. Blacks had come to the work force late and therefore 

tended to be disfavored when the time came to pare down the 

payroll." Finally, in another section of the Opinion, the Court 

suggested that in the actual demotion and layoff procedure uti­
lized by the Company, affirmative action considerations should 

have been employed to deal with the "disproportionate adverse 

impact on blacks of the 1975 reduction in force." Id.* 963-
Itis submitted here that the District Court erred in two dif­

ferent areas as a result of its consideration of the affirmative

30



actions issues. First, it erred in concluding that "insufficient” 

efforts towards affirmative action to improve the plight of 
minorities can be generally relied on to specifically sustain the 

finding of a prima facie case and impose liability in a Title VII 

class action. Secondly, it erred in suggesting that Teletype had 

a legal duty to deviate from its seniority and rank order 

controlled demotion and layoff pratices in order to afford more 

favorable treatment to black employees with leser seniority.

We would first point out that the development of an adherence 

to an affirmative action plan is a voluntary undertaking arising 

only by virtue of an employer's contractual relationships with 

the federal government. The failure of a company to fulfill 
self-developed goals and timetables based on what the company 

reasonably expects and hopes it can accomplish, can not be deemed 

a violation of Title VII. There is no evidence tht during 

Teletype's entire history with the formal affirmative action 
program, any finding has ever been made by the appropriate 

government agency that Teletype's affirmative action plan was not 

in compliance.
The District Court's recitations converning the apprentice 

program are simply erroneous, This program was not a wife-spread 

apprentice program utilized on a company-wide basis but rather 
was limited to apprenticeships fortoolmaker only, and as the need 

arose. Contrary to the Court's indication that no blacks were 

accepted into the program until 1971, Mr. Frederick D. Walker 
testified (Tr. 1882-83) that the Company exerted sincere efforts 

to recruit blacks for the program but could not get any blacks to 

enroll until Mr. Earnest Edwards did so. Edwards took the

31



necessary preliminary tests for admission to the program and was 

ranked 20th in the total score. There were only 18 openings in 

the program. However, as a special concession, Walker then 

ordered the class size increased to 20 so that Mr. Edwards could 

participate. (Tr. 1882-83) Although Mr. Walker indicated this 
occurred in either the late 19&0's or the early 1970's, a review 

of Defendant's Exhibit 51 will reflect that Mr. Edwards actually 
entered the program in August, 1966.

With regard to the Court's conclusion that blacks were 

"under utilized" in certain categories, we again point out that 
under utilization is not a violation of Title VII but rather a 

part of a self-assessment program. There is no suggestion in the 

District Court's opinion as to what frame of reference was used 

in reaching the under utilization conclusion, or in fact whether 

this conclusion was made in reference to any work force data 

reflecting the availability of blacks qualified for engineering 

associate positions. The Court's reservations concerning the 
particular engineering associate referred to will be discussed 
infra in the Section dealing with Larry Peyton.

There are serious infirmities in the Court's comment con­

cerning the testimony of Mr. Lafayette Y. Morrison, Jr., the EEO 

coordinator, to the effect that blacks were particularly hard hit 

or "victimized" and the Court's observation that blacks had come 
to the work force late and therefore suffered disproportionate 

impact. First, we strongly urge the Court to review the entire 
testimony of Mr. Morrison. It has a totally different tenor and 

in the actual demotion or layoff procedure under Article 28 of 

the Collective Bargaining Agreement, the Court again ignores the

32



clear import of Teamsters and §703(h). Where the Company pro­

ceeds to demote or layoff pursuant to a bona fide seniority 

system, as here, there is simply no such legal duty as the Court 

suggests. Obviously then, the Company's failure to do that which 

it is not legally obligated to do should not be construed as a 
prima facie showing of Title VII liability.

2. C. (3) THE DISTRICT COURT'S FINDINGS CONCERNING THE 
IMPLEMENTATION OF THE SENIORITY PROVISIONS OF 
ARTICLE 28 OF THE BARGAINING AGREEMENT IN 
EFFECTING DEMOTIONS OR LAYOFFS ARE CLEARLY 
ERRONEOUS.

As an additional factor cited in support of its conclusion
\

that a prima facie case had been shown, the District Court 

discussed the procedures utilized under Article 28 of the 

bargaining agreement to effect downgrades and layoffs. In 

addressing the issue of seniority and how it affected demotions 
or layoffs of bargaining unit (hourly) employees, the Court 

concluded that the Company had discretion under the bargaining 

agreement to use criteria other than senority and seemed to 

conclude that the mere existence of that supposed discretion 

created an inference of discriminatory practices, without any 
real inquiry into what actually happened to minority hourly 

employees. The Court here placed primary reliance upon the fin­
dings in Hoard to the effect that seniority was a factor but not 

controlling factor in promotion decisions under the 
bargaining agreement. The District Court apparently translated 
the Hoard findings into the demotion context and concluded:

"Other factors, less susceptible of objective 
measurement, were important, such as competence and 
experience, these factors to be applied in the discre-

33



tion and the judgment of Company management." 475 F.
Supp. at 963.

Additionally, the Court stated:

" 'Term of employment' was only one factor among several
to be considered." Id.

The District Court also concluded that the testimony of Mrs. 

Marianne Eastin, a Section Chief in the Personnel Department, 
that during work force reductions in the bargaining unit, 

seniority was the only criterion utilized to effect demotions and 
layoffs, was "at variance with the terms of the Collective 

Bargaining Agreement." In support of this latter observation, 

the District Court correctly noted that under Section 3.1 of 

Article 28, the Company could exempt from layoff certain 

employees for the purpose of (1) avoiding unreasonable departmen­
tal depletion and (2) to save from demotion or layoff employees 

"whose skill, training, or experience is necessary for the effi­
cient operation of the business." However, the District Court 
then noted that, since in its view seniority was not controlling, 

and since the Company was free to consider factors other than 

seniority, this must be taken into account to consider possible 

explanations for "the disproportionate adverse impact on blacks 

of the 1975 reduction in force." (It should again be noted that 
although the District Court held that the statistical data pre­

sented by plaintiffs was at best inconclusive and that it might 

only help support other elements needed to establish a prima 
facie case, here we again have the District Court clearly 

proceeding on the assumption that disparate impact had in fact 
been established.)

34



The District Court's characterization of the supposed discre­
tion of the Company to proceed with downgrades or layoffs based 

on factors other than seniority, quite simply,totally disregards 

the entire testimony as to the manner in which demotions and 

layoffs are effected. First, the Court's reliance on Hoard fin­

dings as to the existence of such discretion, even assuming that 

those findings accurately describe the promotion process, is 
simply inappropriate in a demotion case. There is no doubt that 

in considering eligibility for promotions, the Company does give 

weight to an employee's documented problems with absenteeism, 

efficiency and discipline and, to that extent, some subjectivity 

may be involved. However, Mrs. Eastin clearly testified that 

these factors do not enter into the decision to demote or layoff 
an employee, nor the decision as to whether he may displace a 

junior employee. (Tr. 1964). An employee who has documented 

write-ups in his personnel file for efficiency, attendance and a 
disciplinary problem may nevertheless displace a junior employee 
who has no such write-ups.

Mrs. Eastin first testified concerning the "lines of 

progression" available to employees who are promoting upward 

through the various job grades. See Tr. 1924 and see in par­

ticular DX 22, Movement of Personnel Charts (Collective Exhibit) 
and DX 23, Trades Group Movement of Personnel Chart. In the

I

upward movement process, qualifications are considered and if the 

senior employee does not get a promotion for which he is 
eligible, the Section Chief must justify that decision in a 
"bypass memo" requiring Personnel Department approval. However, 
Mrs. Eastin then testified, (Tr. 1956) utilizing the same

35



Exhibits, the Collective Bargaining Agreements and the 

"clarifying" letter of September 11, 1974 from Mr. Seamon (DX 
18), as to how downward movements were effected.

In Article 28 of the Collective Bargaining Agreement in effect
during the time period here involved, Paragraph 3 deals with

"Effect of Lack of Work." In Sub-paragraph 3.1, it is stated:

"When lack of work necessitates decreasing the work 
force, the employees to be LAID OFF shall be 
selected in the inverse order of TERM OF EMPLOYMENT 
from Grade 91- Following such LAYOFF, employees 
shall be selected as surplus in the inverse order 
of TERM OF EMPLOYMENT, from the occupation, grade 
if applicable, and Department Chief's organization 
affected. The Company may, however, exempt from 
selection for LAYOFF certain employees when such 
exemptions are necessary to avoid unreasonable 
departmental depletions, and may exempt from selec­
tion as surplus, as otherwise provided herein, cer­
tain employees whose skill, training or experience 
is necessary for the efficient operation of the 
business. An employee selected as surplus or an 
employee who becomes surplus by displacement shall 
be considered for placement in the following suc­
cessive steps:"

If a surplus employee cannot be placed under section 3.11(a) into 
a "vacancy," then he may displace a junior employee by lateral 

(3.11(b)) or downgrade movement under Sub-paragraph 3.11(c), 

provided the surplus employee is considered qualified by previous 

experience (as will be seen, a totally objective determination) 
and has at least three months more seniority than the employee to 

be displaced. Article 28, Section 3.11(b) and (c). Mrs. Eastin 

testified (Tr.1956) that when the personnel office is notified 
of a declaration that certain jobs will be surplus (done by 

a series of movements all based on relative seniority. A surplus 
employee who cannot be placed in a vacancy may displace any

36



demotions and layoffs of hourly personnel. The language con­

cerning the discretion to use factors other than seniority in 

promotions is simply inapplicable. Except for rare business 

justified, "exemptions," (Tr.1989-91), there is no discretion 
vested m  the Company to effect downgrades or layoffs of hourly 
personnel on other than a seniority basis.

2- C. (4) THE COURT'S RELIANCE ON THE IMPLEMENTATION OF 
RANK ORDER CONCEPTS IN EFFECTING DEMOTIONS OR 
LAYOFFS OF NON-BARGAINING UNIT PERSONNEL AS A 
FACTOR SUPPORTING ITS PRIMA FACIE CASE WAS 
CLEAR ERROR.

In dealing with demotions or layoffs of non-bargaining unit 

(salaried) employees, the District Court refers to a policy guide 

dated March 21, 1975 (Plaintiff’s Exhibit 45) and the "Rules for 

Reduction of Salaried Force" dated June 19, 1975 (Plaintiffs' 

Exhibit 51). The Court discusses the various criteria which were 
utilized in preparing rank orders for selection of individuals 

for demotion or layoff and applied the same type of reasoning 

(i.e. criticism of "subjectivity") to conclude that, as 

implemented, these procedures likewise "helped support" a prima 

facie showing of racially discriminatory demotions or layoffs.

Contrary to Article 28, there is admittedly some subjectivity 
involved in the rank order procedure. However, we have pointed 

out that subjectivity is not per se unlawful - it is unlawful 
only if it results in a demonstrated adverse impact which does 
not exist here. The Court sustained the application of rank 

order lists in every instance except that of Peyton and the 

Court's criticism there was that the ranking "was not followed." 
The Court's observations that it is a management decision to 

determine how many employees shall be declared surplus; that such

37



a decision obviously influences the degree of "adverse effect 

felt by lower-ranking employees;" and that the decision 

apparently was made without reference to affirmative action 

goals," again reflects the District Court's misunderstanding of 

the law under Teamsters, supra, Evans, supra, and DeGraffenreid, 

supra. The District Court's entire approach with regard to 

the alleged subjectivity involved, whether in bargaining unit or 

non-bargaining unit positions, is simply based on, not only 

clearly erroneous fact findings, but the application of erroneous 
legal principles.

2* c- (5) THE COURT'S RELIANCE ON AN ALLEGED HISTORY OF 
DISCRIMINATORY PRACTICES AS A FACTOR 
SUPPORTING A PRIMA FACIE CASE IS A DISTORTION 
OF THE COMPANY'S GOOD FAITH EFFORTS, WHICH IT 
WAS NOT LEGALLY OBLIGED TO UNDERTAKE, TO 
IMPROVE EMPLOYMENT OPPORTUNITIES FOR BLACKS, 
AND CONSTITUTES REVERSIBLE ERROR.

Stripped of non-essentials, the District Court's opinion of a 
prima facie case rests on three basic themes: (1) blacks were

"harder hit" during the required downgrades and layoffs in 1975;

(2) the Company's affirmative action efforts were generally "not 

signally successful" and particularly did not ease the purported 
adverse impact during the Company's economic downturn in 1975 and

(3) some of the Company's employment practices have previously 
been found to have involved discrimination. "Themes" 1 and 2 
have been discussed.

In dealing with the Company's historical involvement in 
efforts to specially assist blacks, the District Court, while 

attempting not to "minimize" the Company's efforts, 475 F. Supp. 

at 964, stated only the negative view without consideration of 
the positive corollaries of that history. A close reading of the

38



District Court's opinion here, and that in Hoard, will reflect 
the following:

(1) Although upon opening the Little Rock facility 
in 1957, the Company was found to have discriminated 
against blacks in hiring, that conduct was not illegal;

(2) By 1960, five years before Title VII, the 
Company has begun affirmative action efforts and hiring 
of blacks into non-menial positions, though a failure to 
do so would still have not been illegal;

(3) By 1964, one year prior to the effective date 
of Title VII, the Company had increased the represen­
tation of blacks in its work force to 7%, though not 
legally obligated to have done so. (The District Court 
nevertheless characterizes this as "underrepresentation" 
attributable to racial considerations.);

(4) In 1970, the Company implemented a formal 
affirmative action plan ("AAP ") and appointed coor­
dinators for effecting its committment to aid minorities 
(to the extent the District Court suggests the AAP was 
late in light of the earlier Executive Order No. 11246 
and Title VII, it is in error - formal plans were not 
required until General Order No. 4 some years later. 
AAP's are not even now required by Title VII).

(5) As to illegal hiring discrimination, there was 
none as to service, clerical or any operative positions 
below grade 95 as of 1971 (and there is no finding that 
discrimination existed at these levels anytime after 
1965) but some hiring discrimination existed from 1971 
until 1974 in higher graded, professional and super­
visory positions. (There is virtually no evidence that 
the Company filled any substantial number of these posi­
tions by outside hire);

(6) The Court's observation that no blacks were 
"accepted" into the apprentive training program until 
1971 ignores Mr. Walker's testimony that despite 
recruitment efforts there were no black applicants prior 
to that, that the first black apprentice (Earnest 
Edwards) had to be coaxed into the program and that 
standards for entry were relaxed to assign him to the 
program;

(7) There has been n_o discrimination in discharges;
(8) There has been no discriminations in promo­

tions to grade 96,14 TG1, TG2, 505, 506, 50, 508, 509,

During the trial in Hoard, the Court itself excluded promo- 
tions to 92,93, 94, and 95 from the affected class.

39



510, Jobsetters, Machinesetters, Engineering Associates,
ANSE 1, ANSE 2, or ANSE 3. Discrimination was found in 
promotions to grades 97 and 98, Section Chief and 
Department Chief.

(9) As of 1974, blacks comprised 20.4$ of the 
Company's work force; by 1977 blacks comprised 21.5$ of 
the work force and 18.4$ of the workforce above grade 
95. (The District Court nevertheless viewed the 
Company's efforts toward equal employment opportunities 
for blacks as "not signally successful." Finding No. 22 
in Hoard reflects the percentage of available labor 
market to be 15.5$.);

(10) Demotions of sixteen individuals were 
challenged here, with some individuals having been 
demoted more than once. The court found race was a 
factor in only four demotions;

Viewed in the above perspective, we invite this Court to com­
pare the recited history of Teletype Corporation to that of any 
other employer who has been before this Court in an 

across-the-board" challenge to its employment practices as they 

affect blacks. This Company's active involvement in efforts to 

assist in amelioration of what the District Court sanctimoniously 
referred to as a "social malaise" warrants better treatment. The 

District Court's factual conclusions are clerly erroneous and 

unsupported by the record; its legal conclusions are contrary to 

the teachings of the Supreme Court - the frustration, dismay and 

dissillusionment arising from the District Court's approach in 

this case cannot go unnoticed by other employers genuinely and 

sincerely attempting in good faith to do their part in resolving 
the "...problem (that) is still with us." 475 F. Supp. at 964.

It is understandable that a District Court might so fervently 
deplore the "historical inequality of treatment of black 

workers," that all other considerations be subordinated by 

declaring unlawful any employment practice or procedure which

40



does not "maximize" the immediate reduction of that inequality. 

That course appears to have been followed here. It is identical 

to the improper and "dangerous" remedy condemned by the Supreme 
Court in Furnco Construction Corp., y. Waters. 438 U.S. 56? 
(1978).

3. THE TRIAL COURT ABUSED ITS DISCRETION IN ISSUING THE 
INTERLOCUTORY INJUNCTION.

Many of the Trial Court's findings and conclusions were

based, not on the facts before it, but rather upon conclusions

drawn from very limited holdings in the Hoard case. The Hoard

Court was less inclined to draw broad conclusions or fashion

broad relief from limited factual showings or isolated instances

of disparate treatment. With regard to the class allegations in
that case, the Hoard Court held:

(As to Class I) "While there is evidence that 
Teletype's absence program has not always been operated 
without regard to race, the instances were not so per­
vasive to require that injunctive relief be granted, and 
appear to be eliminated by the time of Trial". 450 F.
Supp. at 1065.

As to Class II, the Company did not rebut the prima facie 

case as to grades 97, 98, Section Chief and Department Chief but 
did rebut as to all other jobs in Class II.

The Company was then enjoined from discrimination in promo­

tions. in the job categories of Class II for which it had failed 
to meet its burden. Thus, the Hoard Court restricted the remedy 

to the violations before it. Compare this carefully limited 

relief to that ordered here where the Court enjoined Teletype 
from discriminating against any individual with respect to his or

41



her compensation, terms, conditions, privileges of employment.

The Court relied on 42 U.S.C. 2000e-5(g) as warranting the 

injunction, noting that such relief may be appropriate where the 

employer has intentionally discriminated against persons because 
of their race. We submit the Court's own emphasis of the 

"intentionally" language of the statute is inexplicable in light 

of its prior finding that such racial discrimination as it per­
ceived was not the result of a conscious effort. With the 

injunction itself being predicated on intentionally discrimina­
tory conduct and the record containing no such showing or 

finding, the entry of the injunction constituted a clear abuse of 
discresion.

In Parham v. Southwestern Bell Telephone Co., 433 F. 2d 421 
(8th Cir. 1970), this Court found that the individual plaintiff 

had failed to show "that he was a victim of any racial 

discrimination." Id at 425. Nevertheless, the Court directed the 
entry of declaratory relief on behalf of the class based largely on 

statistical evidence of discriminatory hiring practices. With 

reference to the Company's primary rebuttal efforts which 

demonstrated exemplary non-discriminatory conduct subsequent to 

the actual acts complained of, the Court noted that an employer's 

recent pratices may bear on the remedies. Because discrimnatory 
practices had ceased, the Court declined to grant an injunction.

See Williams v. General Foods Corp., 492 F. 2d 399 (7th Cir. 
1974); Manning v. General Motors Corp., 466 F. 2d 812, 815 

(6th Cir. 1972); Donnell v. General Motors Corp., 576 F. 2d 

1292 (8th Cir. 1978); EEOC v. Local 14, International Union of

42



Operating Engineers, 553 F. 2d 251 (2nd Cir. 1977) (citing 

Parham, supra). See also Sledge v. J, P. Stevens & Co., Inc.,

585 F. 2d 624 (4th Cir. 1978) where the District Court's grant of 

extraordinary relief was reversed because the employer had not 

"consciously engaged in discriminatory employment practices."
Id. at 647.

In this case, the Court specifically found there had been no 

conscious effort to harm blacks.15 jt further found that no race 

impact in demotions occurred after 1976, almost three years 

before its decision. It refused to restructure the seniority 

system, finding that type of relief inappropriate. Yet, the 

Court entered a broad injunction against the entire spectrum of 
Teletype's employment practices, based on a "proved history of 

discrimination" that was unsupported either on the evidence here 
or the findings in Hoard.

Not only is broad injunctive relief inappropriate on these 

facts, and therefore an abuse of discretion, but the injunction

T5 — --- — -- ---- -— ■—  --— ------- ---- -------- -— ------------—Interestingly, the steps found by the Parham Court to be
"impressive and salutary" in 1970 included the initiation of an 
affirmative action program in 1967, following Parham's filing of an 
EEOC charge; a black population in the workforce of 8.4%; and a 
hiring rate of 2 2 . 6 % black. By comparison, the history which the 
Taylor Court has characterized as a "proved history of 
discrimination" indicating a "substantial amount of discrimination 
... continuing as long as ten years after the Act was passed, "is 
that: Teletype initiated non-discriminatory employment in 1960, 4
years before the Act was passed. By 1964 7% of the workforce was 
black. By 1970, the year Parham was decided, Teletype had insti­
tuted an affirmative action plan, and its workforce averaged, for 
the years 1970-1977, 18.35% black. In 1977, and by the time of 
Hoard, the Teletype workforce was 21 .51% black, and 18.455 of the 
workforce above grade 95 was black.

Admittedly, it is not particularly productive to compare 
statistics, but it is interesting that, in a span of 9 years, two 
such employment histories can be characterized as "salutary" on the 
one hand, and as "continuing discrimination" on the other hand.

43



also fails to satisfy the specificity requirements of Rule 65(d), 
Fed. R. Civ. P. See Payne v. Travenol Laboratories, Inc., 565 
F.2d 895 (5th Cir. 1978), where the Court held that, when speci­

fic relief can be structured for the named plaintiffs, general 
relief in favor of a class of "all present, past and future black 

female employees and applicants at the Cleveland plant" carried 

the order beyond that permitted by the rules. Id. at 897. The 

word "discriminating", like the word "monopolizing" in Schine 
Chain Theatres, Inc, v. United States, 334 U.S. 110, 125-26 

(1948), was held to be too general. The Court found it par­

ticularly offensive that the injunctive was only slightly less 

general than Title VII itself. The injunction here is almost a 

verbatim quote of §703(a) of the Civil Rights Act of 1964.

4. THE TRIAL COURT CLEARLY ERRED IN FINDING THAT THE 
COMPANY HAD NOT ARTICULATED A LEGITIMATE,
NON-DISCRIMINATORY REASON FOR THE SECOND DOWNGRADE OF 
PLAINTIFF TOMMIE TAYLOR AND CLEARLY ERRED IN FAILING TO 
CONCLUDE THAT THE LEGITIMATE, NON-DISCRIMINATORY REASON 
WHICH WAS ARTICULATED HAD BEEN SHOWN TO FACTUALLY EXIST.

Whether the individual claims of Tommie Taylor and Larry 

Peyton, James Bibbs and Joseph Harris are considered to be claims 

of racially discriminatory impact or racially disparate treatment 

by Teletype Corportion, it should be clear that the articulation 

by Teletype of a legitimate nondiscriminatory reason for the 
actions taken with respect to each such employee and the 

demonstration of the factual existence of such reason should be 

deemed to rebut the individual claim of discrimination. The 

exact burden on an employer attempting to rebut an individual 
case of employment discrimination has been the subject of much

k 44



discussion since McDonnell Douglass v. Green, 411 U.S. 792 

(1973). However, the applicable principles now seem reasonably 

clear. Burdine vs. The Texas Department of Connunity Affairs,
608 F. 2d 563, (5th Cir. 1980) explained as follows:

"Defendent may refute plaintiff's prima facie 
case by articulating a legitimate, non- 
discriminatory reason for the rejection. This 
Court requires the defendant to prove non- 
discriminatory reasons by a preponderance of the 
evidence. Turner v. Texas Instruments, 555 F. 2d 
1251, 1255 T5th Cir~ 1977)... ( Our holding in 
Turner simply states the obvious... 'articulating' 
a legitimate reason involves more than merely 
stating fictituous reasons; legally sufficient 
proof is needed before the trier of fact can find 
plaintiff's proof rebutted."

Thus when an employer does articulate a legitimate, non- 

discriminatory reason for the action taken against an individual 

employee and further demonstrates that such reasons "factually 

exist," the burden has been met and the prima facie case has been

rebutted. Vaughn v. Westinghouse Electric Corp., _____  F. 2nd
(8th Cir. No. 79-1561, April 23,1980); Turner v. Texas

Instruments, supra, Booth v. Board of Directors of National 

American Bank, 475 F. Supp. 638 (E.D.La. 1979). It is suggested 
that if an employer takes action against an employee because of 

allegations against the latter, the employer at trial need not 

prove the absolute truth of the allegations; if an employer cites 
a particular necessity for taking an action against an employee, 
he need not prove that the necessity absolutely existed in fact 

-rather, the employer need only prove that he entertained a 
reasonable belief as to the truth of the allegations or that he 

reasonably believed a certain action was necessary and that those

45



By thisbeliefs were the reasons for the actions taken. 16 

process, the employer demonstrates the "factual existence" of a 
nondiscriminatory reason and that it is not "fictitious".

Tommie Taylor's downgrade from ANSE 2 Industrial Relations 
Associate to a Grade 910, Public Relations Repr esentative on 

April 24, 1975 was found by the District Court to be free of 

racial considerations. However, the Court held that Teletype had 
not rebutted the prima facie case with regard to her second 

downgrade on September 22, 1975 from the 910 position to a Grade 

906 in Reproduction and her subsequent "layoff" of September 26, 
1975 .

With respect to the first downgrade which was sustained, the 
Court resolved what it politely described as a "sharp" conflict 
in testimony against the credibility of Mrs. Taylor. Mr. Joe 

Garrison, her Department Chief, testified that he had requested 

that Taylor prepare the 1975 Affirmative Action Program (AAP) in 
final form for Mr. Herald's signature. He also testified that he 

reviewed with her several times the numerous errors in her 

submission. Tommie Taylor denied that she had been given the 
assignment,denied that she had prepared PX58 (the draft of the 

1975 AAP) and denied that any such review had been conducted with 

her by Mr. Garrison. She also denied that she attended any civic 
functions after her downgrade to a 910 during the period April 

25, 1975 to July 28 because "the Company would not permit her to 

leave the premises." Although the District Court held that Mrs. 
Taylor had been fully discredited in her denials concerning her

~"The employer's stated legitimate reason must be reasonably 
articulated and nondiscriminatory, but does not have to be a 
reason the judge or jurors would act on or approve." Loeb v. 
Textron, Inc.. 20 FEP Cases at 35 (1st Cir. 1979). -------

46



responsibility for the 1975 report, it nevertheless seemed to 

accept her testimony about not being permitted to attend civic 

functions even though her own daily calendar which clearly 

impeached her denials of AAP responsibility also indicated she 

had attended events. Her testimony on cross-examination also 

casts doubt on the civic function issue. (See Tr. 1029 and DX4 , 

Taylor's EEO calendar of events which showed that she attended, 

or was scheduled to attend, at least two civic functions in May. 

She testified that she did attend one such event and was not sure 
as to the other event.)

The inconsistencies are clearly in Tommie Taylor's testimony 
rather than in the Company's explanation. During the pre-July, 
1971 period, Tommie Taylor could readily avoid work on the 

Bruning machine without any accommodation on the Company's part. 

As the lead person, she would assign and distribute the work load 
among the five permanent employees and the 2 to 6 "Kelly Girls". 

However, in September, 1975, there were only one or two permanent 

employees and no temporary help. Whatever accommodation that 
could be made in the prior period was simply not available in 

1975 when the Company was in the throes of a massive workforce 
reduction affecting all employees.

Tommie Taylor's testimony regarding the September, 1975 
meeting with Seaman and his purported statement that there was 

plenty of work is, aside from being self-serving, contrary to 

other evidence, the findings and common sense. First, there is a 
contemporaneous memorandum of the meeting which makes no such 

reference to there being plenty of work. (PX55) Second, Tommie 
Taylor's own testimony admits her memory is bad. (Tr.1094).

47



Third, the Judge found her veracity lacking on major issues. 

Fourth, the Judge acknowledged, and witnesses almost uniformly 

testified to, the economic downturn with the attendant massive 

layoffs and downgrades throughout 1975 which certainly does not 

suggest the availability of "plenty of work".

5. WHETHER THE TRIAL COURT CLEARLY ERRED IN FINDING THAT 
THE COMPANY HAD NOT ARTICULATED A LEGITIMATE,
NON-DISCRIMINATORY REASON FOR THE DOWNGRADE OF PLAINTIFF 
LARRY PEYTON AND CLEARLY ERRED IN FAILING TO CONCLUDE 
THAT THE LEGITIMATE, NON-DISCRIMINATORY REASON WHICH WAS 
ARTICULATED HAD BEEN SHOWN TO FACTUALLY EXIST.

The District Court held that the Company's demotion of Larry 
Peyton on July 28, 1975, from the non-bargaining unit job of 
Engineering Associate to the bargaining unit job of Technician, 

Trades Group-II "was based at least in part on his race". 475 F. 

Supp. at 969. The Company submits that, clearly to the contrary, 
the record establishes that any inference of discrimination which 

the Court drew from the fact that Peyton was ranked 18 out of 31 
Engineering Associates in May, 1975 but nevertheless demoted in 

July, 1975, was rebutted.
The District Court reached its findings by comparison of Mr. 

Peyton with one lower-ranked white engineering associate, R. V. 

Tucker, and one unranked engineering associate, R. H. Zieman, 

neither of whom were demoted on July 28, 1975. However, the 
Company had legitimate business reasons for not demoting these 

two individuals on July 28, 1975. Engineering Department Chief 

Jim Eldridge testified that the main reason he recommended to 
Assistant Engineering Manager Glen Stuebenrauch that Mr. Peyton 

rather than Mr. Tucker be downgraded during the 1975 work force 
reduction was the difference In their work experience and assign­

48



ments at the time the first reduction was effected. Production 

of the more electronically sophisticated new Model 40 Teletype 

printer was shifted from the Company's Skokie, Illinois plant to 

the Little Rock plant starting in late 1974. By July, 1975, the 

Model 40 was in production at Little Rock and older models were 

being phased out.

It was undisputed that at the time of Peyton's downgrade, he 

had no prior actual experience on Model 40 cabinetry or assembly 

planning. As an engineering associate, he primarily checked 

electrical component parts for use in the printers then in pro­

duction (including the Model 40) to determine if the parts met 
the specifications of the Company's own research and development 

department. He also wrote instructions for the inspectors to use 

to check the quality of the various printers' component parts.

On the other hand, Mr. Tucker had been trained and was 

experienced in a different aspect of engineering work which 
required him to take drawings and piece parts and translate them 

into instructions for the shop to assemble, wire, adjust, and 

test the cabinetry of the Model 40 which included wiring 

assembly. He was not simply "drafting instructions for other 

employees to use in inspecting outside cabinetry for the 

Company's new Model 40 machine" as concluded by the Court. Id. 

Moreover, Mr. Eldridge, a degreed engineer with many years of 
service with the Company, testified without dispute that in his 

opinion, Mr. Peyton's commercial engineering instruction writing, 
for the inspection of component parts, would not make Peyton as 

qualified as Tucker for the Model 40 assembly instruction writing 

for the shop. The Court, without any support in the record,

49



found that Mr. Peyton, with training of about one month, could do 

Mr. Tucker's job and do it well, and further found that Peyton 

had familiarity with the Model 40 machine, including its outside 

cabinetry. "Familiarity" with Model 40 equipment does not shed 

any light on the extent of training that would be required to 
permit one to do Mr. Tucker's job. The only testimony by Peyton 

as to his experience with cabinetry appears at Tr. 1175 where he 

described his exposure to outside cabinetry as relating to 

covers,such as covers for keyboards and covers for monitors. This 

is not "cabinetry" and deals only with a minor portion of the 

covering for the equipment. He further testified that he was ony 

working with tolerances as outlined in the specifications fur­

nished by Teletype's R & D organization. (Tr. 1176) With these 

specifications, he then prepared procedures for the inspectors to 
follow. Tucker, on the other hand, prepared procedures for the 

actual assembly, wiring and testing of the cabinetry for Model 40 

equipment. Consequently, the evidence does not support the 
Court's conclusion that Mr. Peyton's familiarity with the Model 

40 machine through the checking of component parts would have 

placed him in a position to have learned Mr. Tucker's totally 
different job well in about one month. Ibid. Yet, even if he 

could have learned the job in a month should the Company have 

been expected to delay the process of the new Model 40 assembly 
phase of production for an entire month while in the midst of a 

force reduction, it retrained an engineering associate to perform 
the different duties of an experienced associate? Necessarily, 
Mr. Tucker would have had to do the training since he was the 

only engineering associate performing those duties at the time.

50



For the period of training, the Comany would have had two engi­
neering associates performing the work that could have been per­

formed by one associate.
As testified by Assistant Engineering Department Manager 

Steubenrauch, who was retired at time of trial, the Company was 

trying to cover its engineering needs as best it could during the 

reduction in force without losing through layoff the engineering 

skills of its professionals. Therefore, Mr. Peyton, who had pre­

viously worked in the bargaining unit, was downgraded to a TG2. 

And, he was the first engineering associate of the total of seven 

downgraded (the other six being white) on either July 28 or 
September 1, 1975, to be offered return to his former engineering 

job following the be offered return to his former engineering job 

following the 1975 downturn. He declined.
The District Court took a narrow and, we submit, callous view 

in concluding that the Company should have further downgraded Mr. 

R. H. Zieman, a white 35 year service employee, because of its 
policy instruction to downgrade an unranked salaried employee 

before a "good" or "satisfactorily" rated employee, and that this 

failure was further evidence that Mr. Peyton's downgrade was 

based in part on his race. The facts were that Mr. Zieman, a 
Secton Chief in the Engineering Department, had been transferred 
from the Skokie plant to Little Rock less than six months before 

Peyton's downgrade on July 25, 1975. The Company had a policy of 
not evaluating a salaried employee until he had performed in his 
job for at least six months. Nevertheless, Mr. Zieman, like Mr. 

Peyton, was downgraded about the same time. However, Mr.

51



Peyton’s downgrade to the bargaining unit resulted in no loss of 
pay to him, Mr. Zieman could not even be considered for downgrade 

to the bargaining unit in Little Rock because of the labor 

agreement permitting only return of prior bargaining unit 
employees. Therefore, Mr. Steubenrauch testified that had he 

followed the Teletype instruction literally in Mr. Zieman’s case, 

he would have had to either lay him off or, perhaps place him in 

a non-bargaining unit job of security guard which obviously would 

have entailed a substantial pay cut for an engineering employee 

with 35 years of service with the Company. Mr. Steubenrauch's 

action was not only humane, but consistent with his objective to 

retain experienced engineers within the Company.
Mr. Peyton himself testified, in effect, that the Company’s 

failure to downgrade other engineering associates ranked below 
him was not felt by him to have been the result of any racial 

considerations. (Tr.1098) While this factor alone may not be 

determinative, it is certainly probative evidence of the 
Company's lack of any racial motivation. Mr. Peyton did complain 

of the failure to demote Terry Medal, another EA, instead of him. 

However, Medal was clearly ranked higher than Peyton and, in not 
mentioning in its opinion Mr. Medal’s higher rank ordering in the 

engineering universe, the Court has tacitly acknowledged that 

Medal was a relatively better performer than Peyton and that the 
former's higher ranking and retention within the engineering 

department were based on factors other than his race.
The defendant introduced an exhibit which listed the job 

experience of all of the engineering associates and three 

designers ranked below Mr. Peyton. (Def. Exhibit 2). Thj.s exhi­

52



bit was unchallenged at trial and indicates the difference in the 

engineering experience of these individuals and Mr. Peyton.
Coupled with the testimony of Mr. Eldridge, it establishes a 

legitimate business reason, be it job experience, nature of the 

assignment, or seniority, as the non-racial basis for the 

Company's actions with regard to these individuals when compared 
to Peyton.

Of the 13 employees ranked below Peyton in the EA universe, 
Peyton, Ethridge, Hancock and Douglass were demoted on July 28, 

1975. Paulkner (a designer), Day, Cielsielki and Miller were 

demoted on September 1, 1975. The remaining individuals were 
Larch (a designer), Winter (a designer), Tucker, Lucas, Spanos 

and Jacobson. Larch and Winter were designers and Peyton 

admitted that he could not perform their jobs. (T. 1240-1242). 

Although, he subsequently stated (T. 1243) he could do Winter's 
job with a month or more of training, Peyton also stated that 

he: (1) was not versed in Lucas* job (T. 1242); (2) didn't know 

what Spanos' job entailed (T. 1242); and (3) was familiar with 

the equipment and could do Jacobson's job with a month or more of 

training. (T. 1242, 1243). Ethridge testified about the jobs 
that each of the remaiing EA's were doing and why Peyton could 

not have performed that job or how he might have performed it 

with some training. Even in the case of Tucker, Peyton admitted 

that it would have taken some training (T. 1239, 1240) and 

testified that such training would take maybe a month but perhaps 
longer. In an economic crunch, it should be apparent that the 

Company does not have the means to conduct training when that 
would entail either assigning an engineer to train, or retraining

53



the EA slated for downgrade to train his replacement.

The Court's conclusions in its opinion that Mr. Peyton's 

downgrade to a TG2 job in the bargaining unit "involved signifi­
cantly less fringe benefits, prestige, and opportunity for 

advancement" are simply incorrect and unsupported. (Def. Exhibit 

55). Peyton's W2 form demonstrates that Peyton earned substan­

tially more money as a TG2. There is no evidence showing a 

substantial loss of fringe benefits. His refusal of an oppor­

tunity to return as an engineering associate in 1977 primarily 

because he was earning higher wages as a TG2 in the bargaining 

unit indicates that he was more interested in money than the 

potential of advancement or prestige in the engineering universe. 

(Tr.1189-90). The Judge's recitation of the adve rse consequences 

visited upon Peyton are thus clearly contrary to the record and 
Peyton's own testimony.

In connection with its discussion of the demotion of Bowman 

Burns, 475 F. Supp. at 970, the District Court notes:

"Finally, the effects of the 1978 demotion were 
dissipated, for legal purposes, on August 30, 1978, when 
Mr. Burns was offered a promotion (back) to a grade 97 
but declined because he did not wish to return to that 
grade at that time. DX34. The Court therefore holds 
that no illegal conduct occurred with respect to Mr.
Burns."

Why then were the "legal effects" of Peyton's downgrade not 

"dissipated?" See also the discussion of Cato Conley's refusal 
to return to the grade from which demoted. Id.

The District Court's finding that Peyton was subjected to an 

illegal downgrade is clearly erroneous.

54



6. WHETHER THE TRIAL COURT CLEARLY ERRED IN FINDING THAT 
THE COMPANY HAD NOT ARTICULATED A LEGITIMATE,
NON-DISCRIMINATORY REASON FOR THE DOWNGRADE OF 
INTERVENORS BIBBS AND HARRIS AND CLEARLY ERRED IN 
FAILING TO CONCLUDE THAT THE LEGITIMATE,
NON-DISCRIMINATORY REASON WHICH WAS ARTICULATED HAD BEEN 
SHOWN TO FACTUALLY EXIST.

The District Court found that Joseph Harris' demotion of 

February 19, 1975 from a 908 to a grade 95 had been explained and 

was not unlawful, but that with respect to the March 31, 1975 
demotion from a 95 to a 94 there was no substantial evidence in 

the record explaining this downgrade. What the Court fails to 
note is that there is no evidence offered to show that the 

downgrade of March 31, 1975 was discriminatory and no evidence to 

show that Harris was a member of a group which had been subjected 

to racially disparate impact in demotion practices. Rich v. 

Martin Marietta, 467 F. Supp. 587 (D. Colo. 1979. In fact, the 
only evidence introduced on behalf of Mr. Harris was that there 

was a downgrade. The Company contends that actually, Harris was 

not even contesting this downgrade as racially discriminatory.

In response to counsel's question as to Harris' complaints about 

this downgrade, Harris replied (T. 1558) "That were other people 

that was brought back. In other words, there was Louis Wallace 

that was brought back from the raw materials back to packing 

department as a grade 94; and I had more time and service than he 

had." "Who was he?" "Louis Wallace." "What was his race?" "He 

was black." The only real complaint that Harris had was his 

first downgrade from the salaried position back into the 

bargaining unit. This is borne out by his testimony both on 

direct and cross examination and in his deposition. DX26, p. 16

55



shows Harris being declared surplus and displacing a D. Green who 

is white.
It is apparent that the Judge is relying on his initial prima 

facie findings with respect to the class to support a finding of 

discrimination with respect to Harris' downgrade of March 31,

1975. The same objections lodged by the Company against these 

findings are relevent with respect to Mr. Harris.
With respect to intervenor James H. Bibbs, the court found 

that he was employed on October 14, 1968; that he was downgraded

on March 31, 1975 from a 94 Stockkeeper to a 93 Stock Selector; 
and that two white employees with less seniority were left at 

grade 94. These two white employees are Charles Ford, Jr. and 

Norman Odom. The Court noted that the difference in treatment 

between Bibbs, Odom and Ford was not "explained." Odom's service 

date is November 11, 1968 and Ford's service date is October 21, 

1968. Both were grade 94 Punch Press Operators on March 31, 1975 

and prior thereto. (See DX7 and PX125). The Collective 
Bargaining Agreement (DX17 and PX110) provides "employees shall 

be selected as surplus in the inverse order of TERM OF EMPLOYMENT 
from the occupation, grade if applicable, and department chief's 

organization affected." A comparison of Bibbs cannot be made 

with these two employees since they were in different occupations 

and departments (see DX7 and PX125). In any event, in order for 

a surplus employee to displace a shorter term employee, the 

senior employee must have had previous experience and must have 

at least three months more term of employment. Assuming that 
Bibbs had the experience, he could not displace either Odom or 

Ford because of his not having three months more of service.

56



The District Court's original findings of the Company's 

failure to rebut prima facie cases of racial discrimination 

against Taylor, Peyton, Harris and Bibbs were decided by 
reference to incorrect legal principles. The Court stated that 

with regard to the demotions of those individuals that it found 

such demotions to have been "based at least in part on race."

See Taylor v. Teletype Corp., 475 F. Supp. 958, 969. In its 

Memorandum in Support of Defendant's Motion to Amend and Add 

Findings of Fact, filed September 19, 1979, page 6, Teletype 

urged that the test used by the Court to determine a casual con­

nection between the individual's race and the resulting demotion 

was improper, as it clearly was. See Loeb v, Textron, Inc.,

supra; Fisher v. Flynn, ____ F. 2d ____ (1st Cir. 1979). In
ruling on Teletype's Motion to Amend, the District Court stated 

that it was denying Teletype's request, but that on its own 

Motion, it was amending the findings to reflect that "but for" 
the race of the individuals, they would have been demoted. We 

submit that this retroactive application of the correct rule can­

not cure the defect contained in the Court's original approach 
and original findings. The Company strongly denies that race was 

even "a factor" in the actions affecting these individuals but 

even if it was, that is insufficient grounds for a finding of an 

illegal demotion. The findings that race was a factor are 
clearly erroneous; a further finding that the demotions would not 

have occurred "but for" the race of the employee is obviously 

even more extreme and unsupportable.

57



CONCLUSION

This Court should reverse the District Court's finding of a 

Pr -̂ma case with regard to the class of blacks demoted, as

well as the four individuals as to whom the prima facie case was 
deemed not rebutted; should dissolve the injunction and should 
dismiss the cause in its entirety.

Respectfully submitted,

JAMES M. STAULCUP, JR.
5555 Touhy Avenue 
Skokie, Illinois 60067 
(312) 982-3090

G. ROSS SMITH 
2000 First National Bldg. 
Little Rock, Arkansas 72201 
(501) 376-2011

Attorneys for Appellant

58



APPENDIX



STATISTICAL COMPARISONS

Garments: (1) The numbers from PX 125 (our tally) do not include 15
employees (12 bargaining unit and 3 non-bargainina 
unit) who were placed on layoff status for purpose 
of recall following application for reinstatement 
from leave of absence when no work was available.
These individuals have successive termination codes 
of TER 16, TER 29, and TER 08.

(2) There were no layoffs in 1974 and 1976. Shopman Kelly 
was placed on layoff status in 1976 (see explanation 
in (1) above.)

(3) Except in 6 below, the 1974 EEO-1 report statistics 
are used (indicates employees on roll on 12/31/74).

1. 1974 EEO-1 Report (as of 12/31/74) James' Tally from PX 125

B 368 (20.9)
W 1396 (79.1)

1764

113 (24.7) 
344 (75.3) 
457

Z -247 - .209 .038 .038

.033
.01902

1.99



2. 1974 EEO-1 Report Our Tally from PX 125

B 368 (20.9)
W 1396 (79.1)

1764
112 (24.3) 
349 (75.7) 
461

.243 - .209

(.209) (.791)
461

.035 .035
.165319
461

.000358609

.035 - 1.84
.013936

1974 EEO-1 Report (excluding Supervisors) James' Tally from PX 125
B 364 (21.6)
W 1323 (78.4)

1687
113 (24.7) 
344 (75.3) 
457

Z .247 - .216 .031 .031
/ (.216) (.784) 

V  457
.169344

T5T
.000370558

•031 = 1.61
.01924



4. 1974 EEO-1 Report (excluding Supervisors) Our Tally from PX 125

B 364 (21.6)
W 1323 (78.4)

1687
112 (24.3) 
349 (75.7) 
461

.243 - .216

(.216) (.784) _  TgI

.027

.169344

.027

.00036734

.027
.019166 1.41

1974 EEO-1 Report (excluding non­
bargaining unit)

B 354 (22.4)
W 1225 (77.6)

1579

Our Tally from PX 125 
(excluding non-bargaining unit)

110 (25.2)
327 (74.8)
437

Z .252 - .224 .028 .028
(.224) (.776) 

437 173824
~TT7~

.000397766

.028 = 1.40
.01994



6. 1974-1976 EEO-1 Reports (excluding Supervisors) Our Tally from PX 125

B 988 (21.2)
W 3670 (78.8)

4658

112 (24.3)
349 (75.7)
461

Z .243 - .212

/  (.212) (.788)
V  46l

.031

.167056
461

.031

.000362377

.031 = 1.63
019036

7. 1974-1976 EEO-1 Reports (excluding Supervisors) James' Tally from PX125

B 988 (21.2)
W 3670 (78.8)

4658
113 (24.7) 
344 (75.3) 
457

Z = .247 - .212 .035 .035

/ (.212) (.788) 
V  457

.167056
457

.0003655492

.035
.01912

1.83