Waters v. Wisconsin Steel Works of International Harvester Company Opinion

    I s  111 E

$?u*!rrutr (Emir! at the- llniin'i &tatisB
O ctokkb T er 

No. 74-
1974

YvTluam A. 'Waters and D ojsalc Samuels,
Petitioners,

v.

Wiscem-urr Steel W orks of I nternational- H arvester Com­
pany and U nited Order of A merican B ricklayers and 
S tone Masons, Local 21.

PETITION FOB A WRIT OF CERTIORARI TO 
THE UNITED STATES COURT OF APPEALS 

FOR THE SEVENTH CIRCUIT

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.Judson H. Miner 
Ceakles B arnhill, Jr..

Davis, Miner & Barnhill 
14 West Eric Street 
Chicago, Illinois 60610

J ack Greenberg 
J ames M. F7acf.it III  
B arry L. Goldstein 
Morris J. B alleh 
E ric S cknappf.r

10 Columbus Circle 
Suite 2030
New York. New York 10019 

Counsel for Petitioners
Philip. B. FIuri.axd

Rothschild, Barry k  Myers 
Two First National Plaza 
Chicago, Illinois 60670

Of Counsel



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Jfer tfje ê'ucnff; Circuit

Nos. 73-1822, 73-1823, and 73-1824 ^
W illiam A. Watlrs and D onald 

S amuels,
PI a int iffs-A p pclla »Is,

v.
V. iscoxsix S ti lt, W orks of Inter­

national H arvester Company, a 
corporation, and U nited Order 
of A merican B ricklayers and 
S tone Masons, Local 21, an un­
incorporated association, A p p e a l s  from the

Defendants-Appellees. United States Dis-
-----------1 tricl Court for the

U nited Order or A merican B rick- I Northern District 
layers and S t o n k  Masoxs, f of Illinois, Eastern

No. 68 C 2483 
. W illiam J. 

Campbell, J v d o e .

Local 21,
Defendant-A ppcllant, 

v.
W illiam A. Waters and D onald

S amuels,
PI ai nti ff s-A ppellees.

I nternational H arvester Com­
pa n y ,

Def c. ndan t-A ppell a n t, 
v.

W illiam A. W aters and D onald 
S amuels,

Plain tiffs-Appellees.

A rgued A pril 22, 1974 — Decided A ugust 26, 1974

Before S wygert, Chief Judge, H astings, Senior Circuit 
Judge, and S precher, Circuit Judge.



f

73-1822, 73-1823, 73-1824

Swygf.rt, Chief .hidpc. Plaintiffs William A. Waters 
and Donald Samuels, both black journeymen bricklayers, 
appeal from a judgment of the district court, entered 
after a bench trial finding that the defendants had violated 
both Title VII of the Civil Rights Act of 10(>4, 42 
U.S.C. i  2000e ct sci/., and Section I of the Civil Rights 
Act of 18(i(i, 12 U.S.C.  ̂ 1981. The plaintiffs’ appeals 
center solely on the district court’s 
latiMir the plaintiffs’ back-pay award

approach to calcu- 
and attornevs’ fees

under Title VII. Defendants International Harvester 
Company (International), Wisconsin Steel Works of 
International Harvester Company (Wisconsin Steel), and 
Local 21. United Order of American Bricklayers and 
Stone Masons (Local 21), cross-appeal from the district 
court’s finding1 that they violated 1981 and Title VII.

1 nteniational 
known as the 
small force of 
furnaces. Loea’

operates a large steel plant in Chicago, 
Wisconsin Steel Works. Tt employs a 

bricklayers to maintain and repair blast 
21 is the exclusive bargaining representa­

tive for the bricklayers employed by International.
Waters and Samuels Initiated an action in the district 

court on December 27, 19687claiming lllht~certain em­
ployment" practices and policies .of International and 
joined in bv Local 21 denrived them of rights secured 
hv: Section I of the Civil Rights Act of 18(i(i, 42 U.S.C. 
V 1981: Title VII of the Civil Rights Act of 1964. 42 
U.S.C. § 2000 et. seq.\ the Labor Management Relations 
Act. 29 U.S.C. § 185(a); and the National Labor Rela­
tions Act, 29 U.S.C. $ 151 ct see/. Before filing their 
suit, plaintiffs in Maw 1966 had .registered commands 
with tioth the Illinois Pair Employment Practices Com­
mission and the United States Equal Employment 
Opportunity Commission (EEOC) charging Wisconsin 
Steel with racial discrimination due to Wisconsin Steel’s 
.lpy_,-oT »f wm.nv and its subsequent refusal to rehire 
lim and its failure to hire Samuels. The State Com - 

'mission dismissed the charges as unsubstantiated; likewise 
the EEOC concluded in a February, 1967 decision that 
no probable cause, existed to believe that "Wisconsin Steel 
had violated Title VIT. But as a result of new evidence 
that white bricklayers had been hired after Waters sought 
reinstatement and Samuels had requested initial employ-

i



3
73-1822, 73-1823, 73-1824

limit. 1110 KFIOC reassutned jurisdiction and, on recon­
sideration, it determined that the plaintiffs had cause, to 
sue.

Shortly thereafter the plaintiffs initiated their action 
as a class action against both International and Local 
21. On defendants* motions, the district court dismissed 
plaintiffs* claims. On appeal we reversed and remanded 
the cause for a trial. H’n/ms v, ]]riwnnsin Sled  1 Vorl's, 
427_F.2d 470 (7th Oir. 1070). vert, dewed. 400 U.S. Oil 
(1070). On remand the plaintiffs abandoned their class 
allegations and proceeded to trial on claims of individual 
discrimination against the two plaintiffs.

At trial Waters challenged the existence of "Wisconsin 
Stools “last hired, first tired” seniority system for brick­
layers. Waters claimed the system violated section 1981 
and Title All m that it perpetuated alleged prior dis­
criminatory policies and hiring practices of the defen­
dants. In addition, both plaintiffs condemned as violative 
ol Section 1981 and Title A") 1 two amendatory agree­
ments to the collective bargaining contract entered between 
Wisconsin Stool and Local 21 which affected employee 
recall rights and seniority status.

AA ith respect to the seniority system as it relates to 
Waters, it was established at trial that the collective bar­
gaining agreements between Wisconsin Steel and Local 21 
have since 194fi provided for a “last hired, first fired” 
seniority system for bricklayers employed at Wisconsin 
Steel. The seniority system gives full credit to all brick­
layers for their actual length of service or earned seniority 
as bricklayers. Seniority vests after a 90-day probationary 
period and may be broken by various events, including 
lay-offs in excess of two years. The system governs the 
order of lay-offs and recalls of bricklayers.

Waters first inquired about employment at Wisconsin 
Steel in the fall of 1957. lie was told that no bricklayers 
were being hired. Approximately seven years later Waters 
inquired a second time for employment and was hired in 
JjiiJy 1%» Two months later, in September 1934, Waters 
was laid off according to his length of service and before 
completing his 90-day probationary period and achieving 
contractual seniority status. Waters’ lay-off was one of



'several lay-offs during late 1961 and 1965 which oecurred 
as a result of an anticipated deerease in the steel plant’s 
bricklaying needs because of a fundamental change in the 
steelmaking process. (Paring this period, Wisconsin Stool 
was converting from twelve open-hearth brick-lined fur­
naces to two basic oxygen furnaces, and, consequently, it 
bad been anticipated that tbo volume of brick maintenance 
work would be correspondingly reduced.) By March 1905, 
over thirty bricklayers with up to ten years seniority had 
been laid oil. Wisconsin Steel had expected that over half 
of the laid-oll bricklayers, including eight bricklayers with 
five to six years seniority, would not In* recalled within the 
two-year period and that pursuant to the terms of the 
collective bargain ini: contract these bricklayers’ contrac­
tual seniority rights would lie lost. T ------ -

During the course of the next year, however, Wisconsin 
Steel became aware that it had underestimated its brick­
layer requirements for tin* basic oxygen steelmaking pro­
cess. The company therefore began recalling bricklayers 
in the order of their length of prior service.

Besides the contractual right of recall for those em­
ployees with contractual rights, Wisconsin Steel had a 
policy that former employees, including bricklayers who 
did not have contractual seniority rights would nonetheless 
he recalled according to their length of service. Tn March 
1967, pursuant to this policy and not because of contrae- 
tiiaT right of recall, Waters was recalled. Waters accepted 
reinstatement and continued to work until May 19, 1967 
when lie was once again laid off because oT a "temporary 
reduction in plant operations. Waters was recalled on 
August 30, 1967, but refused this third offer of employment 
because he had another job and also, because he believed 
that his return to Wisconsin Steel might prejudice his 
then pending EEOC charges against Wisconsin Steel which 
he had filed in May 1966.

With respect to the amendatory agreements to the col­
lective bargaining contract which plaintiffs challenge as dis­
criminatory, the following evidence was adduced at trial. 
Prior to 1965, Wisconsin Steel, unlike other steel plants, 
had no provision for severance pay in its collective bar­
gaining agreement with Local 21. However, in March 
1965, after the decision had been made to lay off eight 
white bricklayers having five to six years seniority, the

4
73-1822, 73-1823. 73-1824



73-1822, 73-1323, 73-1324

company negotiated a 
21, dealing exclusively

“severance agreement” with Local
( ........................  with these eight employees. The

a^reeineiir provided that al ter being laid off the eight 
bricklayers could elect to retain their contractual seniority 
rights or receive $966.00 in severance pav. An elec I «' to 
retain contractual seniority rights earned with it th< risk 
that these bricklayers would lose then soniont) .'gut 
alivwav after two vears on lay-off; this risk was lichee od 
to ‘be substantial in view of Wisconsin Steels anticipated 
decline in bricklaying needs. Consequently, the eight >i(>- 
lavers. subsequent to their involuntary lay-off puisuant t 
seniority. elected to receive severance pay, thereby foi- 
feiting their contractual seniority rights to recall.

As noted earlier, it became apparent to Wisconsin 
in I960 that it had underestimated its predicted Imu 
laving requirement for the basic oxygen piocess. 
of its new felt demand for brick avers and its asscided 
belief that an injustice had been done to tlm cig 
lavers who had exchanged their cont ract ua sc mo ib : c ;; 
for 8066 00 the company proposed to Local -1 t « _
J to i l1 % 5  sov.-rn.u-i W  bo.pai'OaUv mi11. .<■<!
bv an m m dm m *  restoring the cfeM
tnal seniority rights lor purposes of iccall. Aceoictingi>, 
arT a men da tor v agreement was mitered nto in June, 1906 
Three of the'eight white bricklayers who had previous!) 
?.h.V,Li tl!0 ‘•ev‘,ranco pav also accepted the recall and 
renrned to 'worlg two hi Jlily 1906 and the third in Janu­
ary 1967. In each instance the man was relnrcd without 
reapplying with the company for employment.

\ t trial plaintiffs contended that the June I960 amonda- 
torv agreement was. in effect, discriminatory or it re-

hruMayers wouU,

S=g»=S«2S£f!S
suant to their length of prior service.

After submission of the evidence the trial judge made 
certain findings of fact. He also made the following con­
clusions of law:



6

“4. Prior !o April, 1964, "Wisconsin olool diserimi- 
rmtod in the hiring of bricklayers in violation of 
42 U.S.C. $ 1381.
5. The seniority system negotiated between defen­
dants Wisconsin Steel and Local 21 had its genesis 
in a period of racial discrimination and is thus viola­
tive of 42 U.S.C.  ̂1381 and is not a bona fide senior­
ity system under Title VII.
6. By laying off plaintiff "Waters in September, 1964, 
pursuant to the terms of the seniority system of the 
collective bargaining agreement, defendants violated 
both § 1981 and Title VII. Defendants also violated 
§ 1981 and Title VII when, in reliance on the scnior-

(ity system, Wisconsin Steel failed to recall plaintiff 
(Waters in March, 1965, and when it again laid off 
plaintiff Waters in May, 1967.
7. Defendants June 15, 1966 agreement to amend the 
earlier severance pay agreement and thereby restore 
recall rights to an all white group of bricklayers who 
otherwise possessed no recall rights under the prior 
severance pay agreement, thereby placing those white 
bricklavers ahead of black bricklayers, constituted a 
violation of both  ̂1981 and Title VII. This viola­
tion discriminated against the rights of both plaintiff 
Waters and plaintiff Samuels.”

. Pursuant to its decision the district court directed Wis­
consin Steel to offer employment to Waters and Samuels 
and ordered both defendants to share in a back-pay award 
of $5000 to Waters and $5000 to Samuels. In addition, 
the court awarded the sum of $5000 as attorneys’ fee for 
plaintiffs’ counsel and as a joint liability of the defen­
dants.

We address the following issues in these appeals: (1) 
Whether the district court properly asserted jurisdiction 
over either defendant under 42 TJ.S.C. § 1981; (2) whether 
an aggrieved plaintiff must exhaust grievance procedures 
under a collective bargaining agreement before he can 
initiate a lawsuit under section 1981; (3) whether the 
trial court’s conclusion that defendant Wisconsin Steel 
discriminated in the hiring of bricklayers prior to April 
1964 is clearly erroneous; (4) whether the trial court erred

73-1822, 73-1828, 73-1824



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73-1822, 73-1823, 73-1824

in concluding that Wisconsin Stool’s “last hired, first, fired" 
seniority system is violative of 42 1J.S.C. $ 1981 and is 
not a bona fide seniority system under Title VH; (5) 
whether there was error in holding that defendants’ June 
15, I960 agreement to amend the prior severance pay 
agreement thereby restoring contractual recall rights to 
an all-white group of bricklayers constituted a violation 
of section 1981 and Title VII; (6) whether the. participa­
tion of defendant Local 21 as signatory to the collective 
bargaining agreement as well as to the two challenged 
agreements to amend the collective bargaining agreement 
is sufficient to hold the union liable under section 1981; 
(7) whether the district court erred in its calculation of 
the hack-pay award; and (8) whether the district court 
erred in its making the award of attorneys’ fees to counsel 
for the plaint ill’s. We affirm in part the district, court’s 
finding on liability, but reverse and remand with respect 
to the questions of back-pay damages and attorney fees.

I
Local 21 opposes the district court’s assumption of juris­

diction over it on two grounds: The union contends that 
the plaintiffs did not justify their failure to file charges 
against Local 21 with the EEOC under Title VII. In addi­
tion, it challenges the standing of Waters to sue the union 
under section 1981 on the basis that he was not at any 
relevant time a member of the union.

With respect to the argument of Local 21 that the plain­
tiffs have failed to prove a reasonable excuse for by­
passing the. administrative procedures of Title VII, wc 
previously addressed that issue, in Waters v. Wisconsin 
StceJ, 427 F.2d 476 (7th Cir. 1970) where we stated:

“We hold, therefore, that an aggrieved person may 
sue directly under section 1981 if he pleads a reason­
able excuse for his failure to exhaust EEOC remedies. 
We need not define the full scope of this exception 
here. Nevertheless, wc believe that plaintiffs in the 
case at bar have presented allegations sufficient to 
justify their failure to charge Local 21 before the 
Commission.

We rely particularly on the following allegations. 
The primary charge of racial discrimination made by



/

plaintiffs is hast'd on an amendment of flip colloctivo 
bargaining agropniont between llarvostor and Loeal 
21. That airn'mltnont occurred in dune 19GG after 
plaintiffs filed their charge before the EEOC. Until 
this amendment plaintiffs were, at least arguably, 
unaware of the participation of Local 21 in Harvester’s 
alleged policy of racial discrimination.’’ 427 F.2d at 
487.'

The evidence adduced at trial supports plaintiffs’ allega­
tion that tin' collective bargaining agreement amendment 
occurred after the EEOC charge was filed thereby justify­
ing the by-pass of the EEOC. Moreover, we note and are 
somewhat inclined to agree, with the recent decisions which 
hold that exhaustion of Title VII remedies, or reasonable 
excuse for failing to do so, is not a jurisdictional prerequi­
site to an action under section 1981. See, e.g., Long v. 
Ford Motor Co., 42 U.S.L.W. 2599 (Gth Cir. April 30, 
1974).

As to the contention that Waters lacks standing to sue 
under section 1981, Local 21 premises its argument on the 
assertion that jurisdiction under section 1981 is dependent 
on a contractual relationship between Waters and the 
union (which did not exist here for V. aters was not a 
member of the union). Section 1981 assures that “all per­
sons within the jurisdiction oi the United States shall have 
the same right in every State and Territory to make and 
enforce contracts . . .  as is enjoyed by white citizens.” The 
subject matter of this suit is cognizable under section 1981 
for Waiters complains that his right to enter into an em­
ployment contract with the company on the same basis as 
whites was impaired by the joint action of the union and 
company. It follows that his nonmeinbership in the 
union has no bearing on his section 1981 claim against 
Local 21.'

II
Local 21 contends that plaintiffs should be barred from 

proceeding against the union under section 1981 because 
they failed to exhaust their contractual remedies under 
the'collective bargaining agreement. The nature of plain-

1 In addition, jurisdiction over Wisconsin Steel was properly enter­
tained under both Title VII and section 1981.

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73-1822. 73-1823. 73-1824



9
73-1822, 73-1823, 73-1824

tiffs' claims however is that of a complaint against racial 
discrimination in employment and not a labor law action, 
asserting rights under a collective bargaining contract. 
Indeed, the focus of this civil rights suit is an attack by 
plaintiffs on the contract itself as embodying racially dis­
criminatory practices.

Title VII and section 198,1 arc “parallel or overlapping 
remedies against discrimination.” Alexander v. Gardner- 
1 loner Co., No. 72-f)S47, at p. 10 (U.S. 1974). Conse­
quently. in fashioning a substantive body of law under 
section 1981 the courts should, in an effort to avoid unde­
sirable substantive law conflicts, look to the principles of 
law created under Title VII for direction. It is well-estab­
lished that under Title VII there is no exhaustion of con­
tractual remedies requirement. Alexander v. Gardner- 
Deni er Co., supra, at p. 12; Rios v. Reynolds Metal Co., 
4G7 F.2d 54, 57 (5th Cir. 1972); Bowe v. Colgate-Palmolive 
Co., 416 F.2d 711 (7th Cir. 1969). Moreover, an exhaus­
tion of remedies requirement does not. appear to apply to 
claims for relief brought under any of the civil rights acts. 
See Monroe v. Pape, 365 U.S. 167 (1960); McNeese v. 
Board of Education, 373 U.S. 668 (1963); D’Amico v. Cali­
fornia, 389 U.S. 416 (1967); and King v. Smith, 392 U.S. 
309 (1968)2 We are of the view, therefore, that plain­
tiffs could properly proceed against the union under section 
1981 without first exhausting any contractual remedies 
under the collective bargaining agreement.

m
Wisconsin Steel contends that the evidence does not. 

support the district court’s holding that “ [p]rior to April, 
1964, Wisconsin Steel discriminated in the hiring of brick­
layers in violation of 42 U.S.C. §1981.” We believe the 
record supports the conclusion that Wisconsin Steel en­
gaged in racially discriminatory hiring policies with respect 
to the position of brieklaver prior to the enactment of 
Title VI t.

Wisconsin Steel did not hire its first black bricklayer 
until April 1964.although blacks had made inquiries seek­
ing employment as early as 1947. In addition, the evi- 2

2 Although these cases treated the exhaustion of remedy requirement 
with respect to 42 U.S.C. § 1983 of the Civil Rights Act, we think the 
Court's analysis is applicable to actions brought under 42 UJ3.C. § 1931.



7.1-1822. 7.1-182.1. 7.1-182-1
10

• li'iici' rHli'cfs :\ discriminnfnrv depnrtmontfil Irnnsfor 
poliry whereby Macks hired by Wisconsin Steel as labor­
ers were denied the opportunity available to white labor­
ers to transfer to the bricklayers’ apprenticeship program.

it is urged by the company that the “single statistic” 
oi no black bricklayers prior to lSHil is not sufficient to 
make a showing of discrimination. Although we doubt the 
validity of this contention (see Jones v. Lee Way Motor 
Freight, Inc.. 4,11 R2d 245, 247 (10th Cir. 1070); Parham 
v. Southwest cm Bell Tel, Co., 4.1.1 F.2d 421, 42(> (8th Cir. 
1970)), we think that the statistical data joined by the 
evidence indicating repeated attempts by blacks to obtain 
employment as bricklayers substantiates the trial court’s 
finding of discrimination.

Wisconsin Steel further contends that plaintiffs did not 
make a showing of past racial discrimination because they 
tailed to prove that black applicants were denied actual 
job openings. Relying on McDonnell Douglas Corp. v. 
Green, 411 IJ.S. 792 (1973), the defendant in effect urges 
that discrimination can only he shown if there is a precise 
matching of job openings and job applicants. While a 
showing of matching might be required where the focus 
ot inquiry is on an “individualized hiring decision,” such 
as in McDonnell Douglas,3 we do not believe such a show­
ing is required, where, as hero, the inquiry centers on 
whether the employer engaged in discriminatory hiring 
procedures or practices in the past unrelated to ’the sub­
sequent employment applications. Accordingly, we do not 
find McDonnell Douglas controlling on this issue.

IV
With respect to the validity of Wisconsin Steel’s em­

ployment seniority system which embodies the “last, hired,
-’ In McDonnell Douglcus v. Green, 411 U.S. 792 (1373), the Court 

stated that a plaintiff in a Title VII case establishes a prinia facie case 
of discrimination by showing:

"(i) that he belongs to a racial minority; (ii) that he applied 
and was qualified for a job for which the employer was seeking 
applicants; (iii) that, despite his qualifications, he was rejected; 
and (iv) that, after his rejection, tire position remained open and 
the employer continued to seek applicants from persons of com­
plainant’s qualifications.” 411 U.S. at 802.

In referring to the foregoing elements, the Court stated in a footnote: 
‘‘The facts necessarily will vary in Title VII cases, and the 

specification above of the prima facie proof required from respondent 
is not necessarily applicable in every respect to differing factual 
situations.” 411 U.S. at 802, fn. 13.

i—



11
73-1822, 73-1823, 73-1824

first fired" principle* of seniority for job recalls and lay­
offs, the district court held:

;>. I ho seniority system negotiated between defen­
dants 'Wisconsin Stool and Local 21 had its genesis 
in a period of racial discrimination and is thus viola- 
t i\o ot 42 b.S.t . 1 !)S! and is not a bona tide seniority
system under Title VIl.
6. By laying off plaintifT Waiters in September, 19(14, 
pursuant to the terms of the seniority system of the 
collective bargaining agreement, defendants violated 
both  ̂ 1981 and Title VII. Defendants also violated 
 ̂ 1981 and title' \  !l when, in reliance on the senior­

ity system, Wisconsin Steel failed to recall plaintifT 
Waters in March, 1965, and when it again laid off 
plaintiff Waters in May, 1967.”

The plaintiffs contend that Wisconsin Steel’s employ­
ment seniority system perpetuates the effects of past dis­
crimination in view of the facts that blacks will he laid 
oil before and recalled alter certain whites who might not 
otherwise have had seniority had Wisconsin Steel not dis­
criminated in hi rimw prior to 1964. They argue that such 
a system facilitates a return to the status quo of the era 
when Wisconsin Steel hired no black bricklayers. Wiscon­
sin Steel argues, however, that an employment seniority 
system which accords workers credit for the full period 
of their employment is racially neutral and as such is a 
bona fide seniority svstem within the contemplation of 
$ 703(h) of Title VII, 42 U.S.C. § 2000c-2(h). The defen­
dant says that to strike down its employment seniority 
system would be to countenance reverse discrimination.

It is asserted that, here there is an employment senior­
ity system (unlike the departmental or job seniority sys­
tems which courts have modified under Title VLI) which 
grants workers equal credit for actual length of service 
with the employer. Under a departmental seniority system, 
seniority is measured by length of service in a department 
while a jolt seniority system accords seniority on the 
basis of length of service on a job. The decisions modify­
ing these two forms of seniority systems have routinely 
involved situations where the employer previously main­
tained segregated work forces, prohibiting transfers by 
blacks into various jobs or departments which offered



improved employment conditions. With the. advent of 
Title VII tin' employer would facially lift the restric­
tions on transfers hut would effectively prohibit transfers 
through a department or job seniority policy whereby 
blacks would be given no credit for their previous years 
of employment with the employer and would be placed 
at the bottom of the employee roster in the. formerly all- 
white job or department to which they transferred. Often 
in modifying these discriminatory forms of seniority sys­
tems thi' courts have deployed an employment seniority 
system as a racially neutral and adequate remedy to the 
discriminatory impact of the prior seniority systems.

We are of the view that Wisconsin Steel’s employment 
seniority system embodying the “last hired, first fired” 
principle of seniority is not of itself racially discrimina­
tory or does it have the effect of perpetuating prior racial 
discrimination in violation of the strictures of Title VII. 
To that end we find the legislative history of Title VII 
supportive of the claim that an employment seniority sys­
tem is a “bona fide” seniority system under the Act. The 
history points out that:

“Title. VI1 would have no effect on established se­
niority rights. Its effect is; prospective and not retro­
spective. Thus, for example, if a business has been 
discriminating in the past and as a result has an all- 
white working force, when the title conies into effect 
the employer’s obligation would be simply to fill future 
vacancies on a nondiscriminatory basis. He would 
not be obliged—or indeed, permitted—to fire whites 
in order to hire Negroes, or to prefer Negroes for 
future vacancies, or, once Negroes are hired, to give 
them special seniority rights at the expense of the 
ichite workers hired earlier. (However, where waiting 
lists for employment or training are, prior to the 
effective date of the title, maintained on a discrimi­
natory basis, the use of such lists after the title takes 
effect may be held an unlawful subterfuge to accom­
plish discrimination.)” Interpretative Memorandum 
of Senators Clark and Case, 110 Cong. Roc. 7213 
(April. 8, 1964). (Emphasis added).

In response to written questions by Senator Dirksen, one 
of the Senate floor managers for the bill, Senator Clark,

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72-1822, 73-1822, 72 -1824



/

emphasized (hat the “last hired, first fired" principle of 
seniority would he preserved under Title. VII:

“Question. Would (he same situation prevail in 
respect to promotions, when that management func­
tion is governed by a labor contract calling for pro­
motions on the basis of seniority! What of dismiss­
als? Normally, labor contracts call for ‘last hired,, 
first fired.' If the last hired are Negroes, is the em­
ployer discriminating if his contract requires that 
they be first fired and the remaining employees are 
white""

“Answer. Seniority rights are in no way affected 
by the bill. If under a ‘last hired, first, fired’ agree­
ment a Negro happens to be the ‘last hired,’ he can 
still be ‘first fired’ as long as it is done because of his 
status as ‘last hired’ and not because ol his race.’' 
11(1 t\>ng. dec. 7217 (April S, 1!)(i4).

Moreover, to alleviate any further doubt as to the mean­
ing of Title VII, Senator Clark obtained an interpretative 
memorandum from the Department of Justice which indi­
cated that “last hired, first fired” seniority rules would 
be valid under Title VII :

“Title VII would have no effect-on seniority rights 
existing at the time, it takes effect. If, for example, 
a collective bargaining contract provides that in the 
event of layoffs, those who were hired last must be 
•laid off first, such a provision would not be affected 
in the least by title VIT. This would be true even 
in (he case where owing to discrimination prior to the 
effective date of the title, white workers had more 
seniority than Negroes. Title VII is directed at dis­
crimination based on race, color, religion, sex or 
national origin. It is perfectly clear that when a 
w ork er is laid off or denied a chance for promotion 
because under established seniority rules lie is low 
man on the totem pole lie is not being discriminated 
against because of his race.” 110 Cong. Rec. 7207 
(April 8, 1964).

In Quarles v. Philip Morris, Inc., 279 F.Supp. 505 (E.D. 
Va. 1968), the district court was faced with a proposal by 
the plaintiffs, akin to that presented here, in derogation

13
73-1822, 73-1823, 73-1824



I

of the employment seniority 
after a thorough anahsis ot tut 
Title YLT, Judge Butzner wrote:

“ IT I he plaintiffs’ proposal, while not ousting whit*.

|£ S
result was intciuM.” 2711 I'hSupp. at 519.

Similnrlv. the Fifth Circuit in l>assinK upon the legislative 
history of Title VII stated: _

' “No doubt, Congress, to prevent Reverse ^ c r im i­
nation’ meant to protect certain senumt> rifehts that 
could not have existed but for V™™™ i « 
crimination, For example a Negro ppforP
reieeted by an employer on racial grounds tieiom 
p is a -e  of the Act could not, after henig hired, chuin 
to outrank whites who had been hired before lum but 
after ds oV'inal rejection, even though the Negro 
m'mbt have* had senior status but for the past disernm- 
nation As the court pointed out in Quarles, ih* treat­
ment of ‘job’ or ‘department seniority laises pro 
lems different from those _ discussed in the 8u  
debates • ‘a department seniority system that has its 
genesis in racial discrimination .8 not a bona fide 
seniority system.5 ” 2iv r.oupp. a, on .

“ It is one thing for legislation to require the crea-

requiring employers to coirect th e . 1 V .

-

b fn rg u a ra n tv lth a tT e  new employees had actually 
suffered exclusion at the hands of the emploxei m

C o w iiS ’^ e S  iT ttv  being

hired Negroes would, comprise preferential rather

14
73-1822. 73-1823.73-1824



15
75-1822, 73-1823, 73-1824

than remedial treatment. The clear thrust, of the 
Senate debate is directed against such preferential 
treatment on the basis of race.
“We conclude, in agreement with Quarles, that Con­
gress exempted from the anti discrimination require­
ments only those seniority rights that gave white 
workers preference over junior Negroes.” Local 189, 
United Paper male <fi Paperwork v. United States, 
41(> F.2d 9S0, 8!) 1-95 (5th (hr. 19(59), cert, denied, 
397 U.S. 919 (1970). [Emphasis in original and 
added].

Title VII mandates that workers of every race, be 
treated equally according to their earned seniority. It 
does not require as the Fifth Circuit said, that a worker 
be granted fictional seniority or special privileges be­
cause of his race.

Moreover, an employment seniority system is properly 
distinguished from job or department seniority systems 
for purposes of Title VII. Under the. latter, continuing 
restrictions on transfer and promotion create unearned 
or artificial expectations of preference in favor of white 
workers when compared with black incumbents having 
an equal or greater length of service. Under the employ­
ment seniority system there is equal recognition of em­
ployment seniority which preserves only the earned ex­
pectations of long-service employees.

Title VII speaks only to the future. Its backward gaze 
is found only on a present practice which may perpetuate 
past discrimination. An employment seniority system 
embodying the “last hired, first tired” principle does not 
of itself perpetuate past discrimination. To hold other­
wise would be tantamount to shackling white employees 
with a 'burden of a past discrimination created not by 
them but by their employer. Title VII was not designed 
to nurture such reverse discriminatory preferences. 
Griggs v. Duke Power Co., 401 U.S. 424, 430-31 (1971).

We are not, however, insensitive to the plaintiffs’ argu­
ment, and think employers should be discrete in devising 
an employment seniority system. We recognize that it is 
a fine line we draw between plaintiffs’ claim of discrimi­
nation and defendants’ countercharge of reverse discrimi-



nation. On balance, we think Wisconsin Steel’s seniority 
system is racially neutral and does not perpetuate the 
discrimination of the past/

16
73-1S22, 73-1823, 73-1S24

Y
We come finally to the pivotal issue in determining 

liability: whether'the dune If), 1000 agreement between 
Local 21 and Wisconsin Steel to amend an earlier 
severance pay agreement and thereby recall three white 
bricklayers who had accepted severance pay under the 
initial agreement discriminated against the plaintiffs in 
violation of Title Yll and section 1981. In light of 
Wisconsin Steel's past history ol racially discriminatory 
hiring practices and the racially neutral yet potentially 
discriminatory impact of the employment seniority system 
utilized by the company, we hold that the June 19u6 
agreement reinstating contract recall rights to three 
white bricklayers was racially discriminatory with respect 
to Waters, but not discriminatory with respect to 
Samuels.

The defendants contend that the restoration of con­
tractual seniority rights to the white bricklayers who 
had previously accepted severance pay did not discrimi­
nate against the plaintiifs for it is claimed that the white 
bricklayers would have been entitled to prior recall m 
any event in accordance with company policy. As we 
noted earlier, that policy, pursuant to which plaintiff 
Waters was himself recalled, provided that lormer em­
ployees without contractual rights of recall would 
nonetheless he recalled in order of their length of prior 
service. We do not doubt that a policy favoring recall 
of a former employee with experience even though white 
before considering a new black applicant without ex­
perience comports with the requirements of Title VII 
and section 1981. To that end, we do not perceive any 
discriminatory impact with respect to Samuels who was 
a new applicant.

With respect to Waters, however, the company policy 
occupies a different posture. At the outset we note that 
it is not entirely clear what the company policy was with

4 Having passed scrutiny under the substantive requirements of title 
VII, the employment seniority system utilized by Wisconsin Steel is not 
violative ol 42 U.S.C. § 1931.



17

w lT ln /?  <!l°< 1Jriority Sfi,,us of tl,(- "lute bricklayers 
’ W , ■ SPVl’rar o |,av vis ;Vvis «»Ployoos lu-h"  ' atois wlio possessed no contractual seniority. Even

a.snnm - that the priority of the white bricklayers ac- 
(iptm - severance pay emanated from a long-standin^ 
company policy and not from an ad hoc determination" 
we are inclined to find that aspect of the company policy 
to lie wolafno ot Title MI and section 1981. We reach

73-1822, 73-1823, 73-1824

such a conclusion due to the tact that .Wisconsin Steel
ofr°nngh„mSi lirior discrimination and its implementation 

1 an imphnmoid seniority system occupied a racially 
precarious position—indeed, at the brink of present dis- 
ennnna.ion A company policy of according priority to 
Mute bricklayers who bad accepted the benefits of sever­
ance pay would, m our view, project the company into
iiitinn‘a ?  m° presently perpetuating the racial diserimi- 

ation ol the past. J be company policy is no defense to 
tiie del aidants action m entering the June 1968 agrcc- 
m e n t^ to rm g  contractual seniority to three white brick-

We find the June I960 agreement, therefore, to be 
discriminatory with respect to Waters. Moreover, it can­
not be urged that tiie agreement was justified by “busi­
ness necessity.” The practice of restoring contractual 
senionty to white bricklayers who elected to receive 
severance pay must be justified, if at all, by a showing
U v- Duke Poi^ r p o., 401U. S. 4-1, lo l (19/1). Jn that respect an employment 
practice ‘ can be justified only by a showing that it is 
necessary to the safe and efiicicnl operation of the busi- 
m p n R° h - ^ )l V- Loril,ard Corp., 444 F.2d 791, 797 
i t  h .Vor; quoting, Jones v. Lee Way Molar Freight,
*■ - b--d -4o, _49 (10th Cir. 1970). Defendants’ claim of 

employee-employer goodwill and alleged concern for fear 
oi potential labor strife does not rise to the level of
urgency required for a demonstration of business neces­sity.

VI
Local 21 contends that there is insufficient evidence to 

support a claim against the union under section 1981 It 
is enough, however, that the union was an integral party 
to the June 1966 amendment which discriminated against



'Water?. Johnson v. Goaducar Tire <£ Rubber Co., 7 EPB, 
U9233 (T)111 (*jr. 1974). Local 21 therefore shares jointly 
in the liability of Wisconsin Steel.

18
73-1822. 73-1823, 73-1824

Both Waters ami defendants join in the contention 
that the district court erred in calculating the back-pay 
award to which Waters is entitled. We agree that the 
trial judge abused his discretion in fashioning the hack- 
pay award. The award was the product of an arbitrary 
calculation entirely devoid of any reasoned approach to 
the proper measure of damages. Moreover, the district 
court’s consideration of the absence of a racially discrimi­
natory motive on the part of the defendants was improper. 
The absence of a discriminatory motive is not a proper 
basis for denying or limiting relief. Robinson v. Loriliard 
Corp., 444 E.2d 791, 804 (4th Cir. 1971).

It would appear from the record that but for the dune 
I960 agreement, Waters would have been recalled on 
January 17, 1967 and that he would not have been laid 
off on May 19, 1967, Waters was tendered reemployment 
on September 5, 1967, which he declined to accept. In our 
judgment the discriminatory impact of defendants’ June 
1966 agreement, ended with the tender made to Waters 
in September. The relevant period for computing damages 
therefore ranges from January 17, 1967 to September 
f>, 1967.

Plaintiff Waters’ damages for the relevant period are 
to be determined by measuring the difference between 
plaintiff’s actual earnings for the period and those which 
he would have earned absent the discrimination of de­
fendants. Jn determining the amount of Waters’ likely 
earnings but for the discrimination, we reject the notion 
advanced by Waters that since he could have held two 
jobs while employed at Wisconsin Steel, defendants are 
therefore liable not only for his lost earnings with 
Wisconsin Steel but also for his probable lost earnings 
from a second job. Recompense for economic loss result­
ing from racially discriminatory practices does not 
require that we entertain claims of such a speculative and 
remote nature.

.

I



19

Accordingly, wo remand to the district court for find­
ings with regard to Waters’ actual and probable earnings 
for the relevant period.6

79-1822, 73-1823, 73-1324

VIII
All parties condemn the district court’s method of 

computing the award of attorney fees to the plaintiffs’ 
counsel pursuant to section 700K of Title VI1, 42 U.S.O. 
§ 2000e-f)(K). Although the determination of reasonable, 
attorney fees is left to the sound discretion of the trial 
judge, \VrcLs v. Southern. Bell Tele. <(': Tele. Co., 467 F.2d 
95, 97 (5th (_'ir. 1972), we are convinced that the method 
whereby the judge computed the award of attorney’s fee 
was so lacking of analysis that it constituted an” abuse 
of discretion.

In fashioning a method of analysis to assist in determin­
ing the amount of attorney fees properly to be awarded 
in a Title Vi I action, we cannot subscribe to the view 
that attorney fees are to be determined solely on the 
basis of a formula applying “hours spent times billing 
late.” We recognize however that such a factor is a con­
sideration in making the ultimate award and indeed it 
is a convenient starting point from which adjustments 
can be made for various other elements. Other elements 
to be considered are set out in the Code of Professional 
Responsibility as adopted by the American Bar Associa­
tion : .

Factors to be considered as guides in determining the 
reasonableness of a fee include the following:

(1) The time and labor required, the novelty 
and difficulty of the questions involved, and 
the skill requisite to perform the legal 
service properly.

(2) The likelihood, if apparent to the elient, 
that the acceptance of the particular eim 
ployment. will preclude other employment by 
the lawyer.

5 It would appear that Wisconsin Steel concedes in its brief that 
Waters would not have been laid off on May 19, 1967 had he been 
recalled on January 17, 1967. (Defendant's Brief, n. 44.) The rc-cotd is 
not clear on this matter. Therefore we direct that there be findings 
thereon if defendant does not concede the point. It should be noted 
however that the outer most parameters of defendants’ liability extend 
from January 17, 1907 to September 5, 1807.



73-1822, 73-1823. 73-1824
20

(3) Tiio fee customarily charged in the locality 
for similar legal services.

(4) The amount involved and the results ob­
tained.

(5) The time limitations imposed by the client 
or by the circumstances.

(0) The nature and length of the professional 
relationship with the client.

(7) The experience, reputation, and ability of 
the lawyer or lawyers performing the ser­
vices.

(8) Whether the fee is fixed or contingent.
Disciplinary Rule 2-106.

The Code of Professional Responsibility clearly reflects 
that an award of attorney fees involves the coalescence 
of many considerations including the reasonableness of 
the time spent hv counsel, the extent of counsel’s success, 
and the complexity of the case. An analysis by the district 
court which encompasses the foregoing considerations is 
most assuredly an analysis well within the bounds of 
trial court discretion. Accordingly, we remand to the 
district court for reconsideration of attorneys’ fees in 
light of the aforementioned factors.

The judgment of liability is affirmed in part as to plain­
tiff Waters and reversed as to plaintiff Samuels. In ac­
cordance with Circuit Rule 23 we remand for further 
consideration on the question of damages and award of 
attorney fees to plaintiff Waters, consistent with the 
views expressed herein.

A true Copy:
Teste:

Clerk of the United States Court of 
Appeals for the Seventh Circuit.

USCA 4031—The Scheffer Press, Inc., Chicago, Illinois—8-26-74—225