Williams v. City of New Orleans, 729 F.2d 1554 (5th Cir. 1984)

JERRE S. WILLIAMS, Circuit Judge:

The disposition of this appeal is grounded in the amount of discretion properly given a district court in its decision to enter or disallow a proposed consent decree in a Title VII discrimination suit. We hold that the district court did not abuse its discretion by refusing to approve the proposed consent decree, and we affirm the holding of the district court.

The plaintiffs are a class of black applicants for positions with and members of the New Orleans Police Department. The suit is brought against the City of New Orleans, the Civil Service Commission and individual officials, claiming racial discrimination under Title VII of the Civil Rights Act of 1964. 42 U.S.C. § 2000e et seq. The class complained of discriminatory policies in the selection, training and promotion of city police officers.

On October 13, 1981, the day the trial was scheduled to begin, the parties announced that they had settled the case and submitted their proposed consent decree to the district court for its approval. The 33-page proposed decree governed “virtually every phase of an officer’s employment by the New Orleans Police Department”

(NOPD). 543 F.Supp. 662, 668. (E.D.La.1982). The decree provided for significant changes in the NOPD’s recruiting, hiring, training, testing and promotion standards and procedures.

Under the settlement defendants were required to send black officers on recruiting missions to black neighborhoods and schools. Black applicants would then be assigned “buddies” to guide them through the application process. The defendants agreed to shorten the application process itself and expeditiously address any problems associated with the process. New entry level procedures would be adopted under the settlement to assure that the proportion of blacks who graduated from the police academy was no lower than the proportion of blacks who passed the entry level examination. Training sessions were planned to help applicants prepare for the Police Recruit examinations, and black as well as white tutors and instructors would be made available for consultation. The proposed decree eliminated the use of general intelligence tests. In addition, it required the City to create an “Academy Review Panel”, half of the members to be composed of black officers, to review any decision to dismiss a recruit. Any officer who was the subject of repeated citizen complaints could not serve as a police instructor.

The portion of the settlement here in issue has to do with officer promotions under the proposed decree. The City agreed to adopt procedures so that the proportion of whites appointed to each sub-classification of officers would not exceed the proportion of whites actually eligible for that position. The City agreed to create 44 new supervisory positions immediately and fill all 44 positions with black officers. After this, whenever a supervisory position became available, the settlement provided that one black officer be promoted for every white until blacks constituted 50% of all ranks within the NOPD.

The settlement streamlined the requirements to be fulfilled before applying for a supervisory position, and implemented new, non-discriminatory selection criteria. Further, if a black officer failed to complete the probationary period pursuant to promotion, the settlement required that the vacancy be filled by another black officer. Content-valid tests were mandated and any use of a test item with a “statistically significant adverse impact against blacks” was disallowed.

Finally, the proposed decree provided for a $300,000 backpay fund to the plaintiff class, awarded costs and attorneys’ fees to the plaintiffs, and imposed extensive reporting obligations on the defendants.

When the consent decree was submitted, objections were filed by classes of female officers, Hispanic officers, and white officers, who were granted leave to intervene for the limited purpose of challenging the decree.1 Objections were also filed by eighteen members of the black plaintiff class.

After a four-day fairness hearing, during which the district court heard testimony from individual class members, intervenors and experts, the district court decided to withhold approval of the consent decree. While indicating approval of every other provision of the decree, Judge Sear concluded that the provision requiring black and white officers to be promoted on a one-to-one ratio until blacks constituted 50% of all ranks within the NOPD exceeded the court’s remedial objectives and seriously jeopardized the career interests of non-black officers. Thus, the court did not approve the decree but encouraged the parties to modify the decree in a manner consistent with its opinion and resubmit it for approval. Plaintiffs appealed this decision,2 and a panel of this court by a divided vote concluded that the district court had abused its discretion in conditioning its approval of the proposed consent decree on

deletion of the promotion quota. The panel remanded the case with directions for Judge Sear to sign the decree. Williams v. City of New Orleans, 694 F.2d 987 (5th Cir.1982).

The United States subsequently sought and was granted permission to intervene and file a suggestion of rehearing en banc. On February 14, 1983, we granted the petition for an en banc rehearing, 694 F.2d 987, 988.

I. Per Se Attack

We first respond to the intervenorgovernment’s argument that affirmative action remedies, such as the disputed provision in this case, are never permissible under Title VII. The plaintiffs object to the trial court’s failure to impose a firm quota system on the police department to remedy past violations of Title VII. In marked contrast, the government argues that the district judge had no power at all to order the NOPD to employ any kind of quota system to remedy past discrimination. According to the government’s argument, the last sentence in § 706(g) of Title VII proscribes the use of any remedy which is not limited to actual victims of past discrimination.3 Since the one-to-one quota system in the proposed consent decree was designed to benefit all blacks in the plaintiff class, and not just actual victims of discrimination, the government urges us to find that the quota provision violated Title VII.

We cannot accept this per se rule; the statute does not so require. As we said in United States v. City of Miami, 614 F.2d 1322, “at this point in the history of the fight against discrimination, it cannot be seriously argued that there is any insurmountable barrier to the use of goals or quotas to eradicate the effects of past discrimination.” 614 F.2d 1322, 1335 (5th Cir.1980), aff'd in part and in part vacated and remanded on other grounds, 664 F.2d 435 (5th Cir.1981) (en banc).

This Court has long upheld the use of affirmative action in consent decrees under Title VII and has not required that relief be limited to actual victims of discrimination. See Morrow v. Crisler, 491 F.2d 1053 (5th Cir.) (en banc) cert. denied, 419 U.S. 895, 95 S.Ct. 173, 42 L.Ed.2d 139 (1974); United States v. City of Alexandria, 614 F.2d 1358 (5th Cir.1980). Further, the use of quotas or goals under Title VII without regard to specific victims as one means to remedy past discrimination has been upheld regularly throughout the federal courts of appeals. See, e.g., Boston Chapter, NAACP, Inc. v. Beecher, 504 F.2d 1017 (1st Cir.1974), cert. denied, 421 U.S. 910, 95 S.Ct. 1561, 43 L.Ed.2d 775 (1975); Rios v. Enterprise Association Steamfitters Local 638, 501 F.2d 622 (2d Cir.1974); Contractors Association of Eastern Pennsylvania v. Secretary of Labor, 442 F.2d 159 (3d Cir.), cert. denied, 404 U.S. 854, 92 S.Ct. 8, 39 L.Ed.2d 95 (1971); Patterson v. American Tobacco Co., 535 F.2d 257, 273-74 (4th Cir.), cert. denied, 429 U.S. 920, 97 S.Ct. 314, 315, 50 L.Ed.2d 286 (1976); United States v. International Brotherhood of Electrical Workers, Local No. 38, 428 F.2d 144 (6th Cir.), cert. denied, 400 U.S. 943, 91 S.Ct. 245, 27 L.Ed.2d 248 (1970); United

States v. City of Chicago, 549 F.2d 415 (7th Cir.), cert. denied, 434 U.S. 875, 98 S.Ct. 225, 54 L.Ed.2d 155 (1977); United States v. N.L. Industries, Inc., 479 F.2d 354 (8th Cir.1973); United States v. Ironworkers Local 86, 443 F.2d 544 (9th Cir.), cert. denied, 404 U.S. 984, 92 S.Ct. 447, 30 L.Ed.2d 367 (1971).

The Government' only complains about the one-to-one promotion requirement in this case, but actually that was not the only provision in the proposed consent decree which afforded relief to individuals who had not actually suffered from the discriminatory policies of the NOPD. In fact, virtually all of the provisions were designed to benefit future applicants. In any event, the district court did not in its decision view as controlling the fact that the consent decree benefited non-victims. Nor do we. The question of whether affirmative action provisions are permissible as a general remedy under Title VII is not an issue in this case.4 Instead, the issue in this case is the measure of discretion available to district judges in approval or disapproval of consent decrees. With regard to that narrow issue, we hold that the trial judge acted well within his discretion in affording the plaintiffs less than all the relief they had requested.

II. Standard of Appellate Review

In Title VII litigation, this Court has held that the district court is entitled to a substantial measure of discretion in dealing with consent decrees, and that as a result, “on appeal, our duty is to ascertain whether or not the trial judge clearly abused his discretion ...”5 Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir.1977). See also United States v. Allegheny-Ludlum Industries, 517 F.2d 826, 850 (5th Cir.), cert. denied, 425 U.S. 944, 96 S.Ct. 1684, 48 L.Ed.2d 187 (1975). Despite our expressed preference for this standard of review, however, appellants in this case urge us instead to engage in a de novo review of the district court’s decision. They base their contention on our decision in City of Alexandria, supra, 614 F.2d 1358, in which we did not use the abuse of discretion standard in reviewing a consent decree. The opinion in that case, however, makes clear that it was recognizing the circumstances of that case as creating an exception to the general rule of “abuse of discretion” review.

In City of Alexandria, the parties had reached an agreement early in the pretrial process. When the settlement was presented for approval, the trial court had not heard any evidence at all in the case. Thus, the Court had no special knowledge as to the evidence. It had made no credibility choices; it had not had the opportunity to weigh evidence thoroughly based upon a full presentation of the case. As we noted in City of Alexandria, then, “the degree of appellate scrutiny must depend on a variety of factors, such as the familiarity of the trial court with the lawsuit, the stage of the proceeding at which the settlement is approved, and the types of issues involved.” 614 F.2d at 1361.

The present case presents contrasting circumstances surrounding the district court’s consideration of the consent decree. In the present case the trial court was completely involved in the pretrial proceedings. There were numerous pretrial conferences. Further, the district court held a four-day evidentiary fairness hearing,

which included presentation of testimony from the parties, intervenors, and experts. In this case, therefore, we have consideration of a proposed consent decree after a thorough airing of the facts.' We here recognize that a district court does play a significant role in exercising discretion when it is fully cognizant of the facts and circumstances surrounding the case.

The panel opinion in this case carefully considered the contention of appellants that this Court should subject the decision of the district court to de novo review. Although the panel divided on the merits, the panel was unanimous in concluding that the standard of review in a case where the district court has had the thorough opportunity to consider the contentions of all persons involved should be reviewed on the basis of whether the district court has abused its discretion in its decision. As the panel opinion said: “The circumstances particularly upon which we rely include the district court’s consideration and careful weighing, after a substantial evidentiary showing and its prolonged familiarity with the circumstances of the case, of the interests of the plaintiff black officer class as opposed to those of the intervening white, female, and Hispanic officer classes.” 694 F.2d at 992.

We conclude that under the circumstances of this case, as opposed to the exceptional circumstances of the City of Alexandria case, the district court’s denial of the present proposed decree is to be reviewed under the abuse of discretion standard. And we make no distinction based upon whether the district court approved or refused to approve the proposed settlement.

III. Trial Court Approval of Proposed Consent Decrees

• We have repeatedly stressed our preference for voluntary settlement of Title VII employment discrimination suits, where Congress has expressed its specific intention that settlements be encouraged. See Dent v. St. Louis San Francisco Ry. Co., 406 F.2d 399, 402 (5th Cir.), cert. denied, 403 U.S. 912, 91 S.Ct. 2219, 29 L.Ed.2d 689 (1969). Further, as we noted in City of Alexandria, “[i]t can be said without fear of contradiction that, in practice, district courts have generally approved proposed settlements ...” 614 F.2d at 1361. While settlement is encouraged and such agreements are generally enforced, however, the district judge cannot summarily approve a Title VII settlement, but must make an independent decision in each case concerning the fairness of every provision in the decree.

In a Title VII consent decree case, we require the district court to become more involved in the settlement process than it would in an ordinary case. When presented with an ordinary settlement, the court will approve the agreement if it is “fair, adequate and reasonable.” Cotton v. Hinton, supra, 559 F.2d at 1330. In a Title VII consent decree case, however, even though the decree is contractual in nature, “the court ... must not merely sign on the line provided by the parties.” City of Miami, supra, 664 F.2d at 440. As Judge Rubin emphasized in City of Miami, since a consent decree reaches into the future and has continuing effect, the district court must take an active role in its implementation.6 Even where all the parties agree to a consent decree, the court should

Id. at 441.

The district court properly goes through this examination even when the consent

decree only affects the parties who drafted the decree. But where, as in this case, the decree has the potential to affect third parties, the court must make an additional finding. When third parties are involved, the court must also carefully scrutinize the decree with respect to their rights and conclude that the effect on the third parties is “neither unreasonable nor proscribed.” Ibid.

In this particular case, the need for the district court to play an active role was even more essential than it was in City of Miami or City of Alexandria. In those cases, as in most discrimination consent decree cases, the United States Department of Justice instigated the lawsuit. As this Court remarked in City of Miami, the presence of the Justice Department in the suit allowed the Court “safely [to] assume that the interests of all affected had been considered,” since the Government is responsible for representing “the interests of all citizens, white as well as black, males as well as females.” United States v. City of Miami, supra, 614 F.2d at 1332, n. 18, aff'd, 664 F.2d 435 (1981) (en banc). In the present case, however, the litigation and settlement were instigated by a class of private plaintiffs which did not have any responsibility toward third parties who might be affected by their actions. The suit was pursued on behalf of blacks only, and the remedies contained in the consent decree were designed to benefit blacks only. Because of the absence of any governmental agency to protect nonrepresented groups subject to discrimination, such as Hispanics, women, and non-Hispanic whites, there was no adversative constraint upon a possible tendency of affirmative action to go too far. Thus, the district court had to bear the full responsibility in this case to safeguard the interests of those individuals who were affected by the decree but were not represented in the negotiations. The thrust of the district court decision was rooted in this responsibility.

IV. Discretion in Approval of the Particular Quota Provision

Although this Court has frequently approved preferential hiring ratios in the past, see United States v. Allegheny-Ludlum Industries, Inc., 517 F.2d 826 (5th Cir.1975); Morrow v. Crisler, 491 F.2d 1053 (5th Cir.1974); United States v. City of Alexandria, 614 F.2d 1358 (5th Cir.1980), their use is not mandated in every instance. Further, firm rules have not been established as to when quotas must be used. Instead, we have left the district courts with the responsible and difficult task of determining the outer boundaries of affirmative remedial relief. In contrast to the lack of authority describing when quotas must be used, the two leading Title VII quota cases — United Steelworkers of America v. Weber, 443 U.S. 193, 99 S.Ct. 2721, 61 L.Ed.2d 480 (1979); and Fullilove v. Klutznick, 448 U.S. 448, 100 S.Ct. 2758, 65 L.Ed.2d 902 (1980) do provide guidance with respect to the analysis a district court should follow in making this decision.

Weber involved a voluntary collective bargaining agreement between the United Steelworkers of America and Kaiser Aluminum and Chemical Corporation. The agreement, which covered terms and conditions of employment at Kaiser plants, contained a numerical hiring goal equal to the percentage of blacks in the local labor forces. Under the plan, on-the-job-training programs were established to help plants meet the goal, and 50% of the openings in the training programs were reserved for blacks. Several white production workers, who were rejected from the training program because of the quota, instituted a Title VII class action and secured an injunction against the implementation of the program. The Supreme Court reversed the decision enjoining the program but specifically refused to “define in detail the demarcation between permissible and impermissible affirmative action plans.” The court limited its holding to finding that the quota fell “on the permissible side of the line.” 99 S.Ct. at 2730. Despite their reluctance to dictate the precise limits on affirmative relief, however, the Court in Weber did illuminate the field to a certain degree by disclosing the analysis it followed in reaching the decision to approve the quota in that case. Before issuing its

approval, the Court carefully reviewed the purpose and duration of the plan, as well as the plan's effect on third parties. The Court’s opinion shows that there must be careful analysis of the. context of each individual case before imposition of numerical relief. While the quota fell on the “permissible side of the line” on the facts in Weber, the holding in that case is far short of giving a carte blanche to all similar quota systems.

In Fullilove v. Klutznick, the Supreme Court again focused its attention on the need for careful analysis of all surrounding circumstances before implementation of numerical relief. In that case, the Court upheld the power of Congress to approve a provision of the Public Works Employment Act of 1977, which required that at least 10% of federal grants for local public works projects be used to procure services provided by minority groups. While the Court approved the quota, Justice Burger cautioned that “[a]ny preference based upon racial or ethnic criteria must necessarily receive a most searching examination.” 100 S.Ct. at 2781.

Justice Powell agreed with this strict standard. In his concurring opinion he listed various factors that should be considered before entering a race-conscious remedy, and in defining the scope of such a remedy. Although this case involved Congressional approval rather than a judicial decree, Justice Powell relied on the factors traditionally used in judicial decisions regarding numerical relief. He noted that when faced with the option of numerical relief, courts have considered such factors as: the efficacy of alternate remedies; the planned duration of the remedy; the relationship between the percentage of minority workers to be employed and the percentage of minority group members in the relevant population or workforce; and the availability of waiver provisions. Id. at 2791. The Justice affirmatively rejected the suggestion that the burden placed on nonminorities was legally irrelevant to the decision whether to implement a numerical quota. He emphasized that after consideration of all the other factors, “[a],race-conscious remedy should not be approved without consideration of an additional crucial factor — the effect of the set-aside upon innocent third parties.” Id. at 2793.

Following the guidelines set out in these two cases, this Court has also adopted a cautious, methodical approach to the implementation of percentage goals. In City of Alexandria, supra, 614 F.2d 1358, for example, we used the guidelines to review the settlement between the United States Department of Justice and the City of Alexandria. The decree in that case provided affirmative hiring relief for women and blacks in the police and fire departments. Even though everyone involved agreed to the quota, we still assessed its purpose, duration and effect on third parties.7

In the present case, 75% of the members of the police department had filed objections to the terms of the decree. The court obviously was obligated to give careful consideration to the interests of all persons affected. The court properly followed the guidelines set out above, and evaluated the proposed elements of the settlement, giving a detailed review to every provision. After four days of hearings, the court concluded that with one exception, all of the affirmative action aspects of the settlement were valid. The court found only that the provision requiring a one-to-one promotion ratio was overbroad and unreasonable in the light of the severe and longlasting effect on the rights of women, Hispanics, and non-Hispanic whites. The record built in the district court enabled it to give full consideration to the relationship between the numerical targets specified in the proposed decree and the proportion of blacks in the relevant population, the extent to which third parties’ rights were infringed, the duration of the remedy, the efficacy of the alternative measures, and the remedy’s flexibility.

The court first found that the quota’s target of 50% blacks in all ranks was unsupported by the record. In reaching this conclusion, the district court relied on plaintiff’s labor economist, Dr. Mark Bendick, who testified that even if hiring and promotions on the NOPD had been conducted free of racial considerations, by 1980 blacks would have only comprised 40.7% of all sergeants, 39.4% of all lieutenants, 37.4% of all captains, and 30% of all majors.

Furthermore, the district court found that even these estimates were overstated due to certain shortcomings in Dr. Bendick’s analysis. First, in calculating these percentages, Dr. Bendick relied on applicant flow data, which indicates the racial breakdown of all applicants to the police department. While applicant flow data is a proper consideration in determining the relevant labor market, Markey v. Tenneco Oil Co., 635 F.2d 497 (5th Cir.1981), this type data cannot always be taken at face value. See Castaneda v. Pickard, 648 F.2d 989, 1003 (5th Cir.1981) (applicant flow data invalid since discriminatory practices infected recruiting). Experts called by the Hispanic, non-Hispanic white, and female intervenors testified that in this case such data was statistically distorted because the NOPD had engaged in extensive black recruitment throughout the 1970’s. As a result,' the percentage of black applicants to the NOPD was deceptively inflated. Several NOPD officers and CSC employees testified about the existence of special recruiting efforts for blacks and this testimony was not refuted by the plaintiffs. The district court thus had a substantial basis for deciding that the analysis of the plaintiff’s expert, which utilized applicant flow data, overstated the percentages of blacks in the relevant labor market.

The district court also felt Dr. Bendick’s analysis was flawed in its choice of relevant labor market. Dr. Bendick confined his study to Orleans Parish, which is at present 55% black. The district court concluded that the true labor market extends past Orleans Parish to include the general Standard Metropolitan Statistical Area (SMSA), which contains a substantially lower percentage of blacks. This particular statistical finding by the district court is the cornerstone upon which appellants launch their attack. Appellants contend that the district court misinterpreted the statistics and relied on the wrong geographical pool. As a result, the appellants argue, the district court’s finding against the 50% target quota was clearly erroneous. We must disagree. The district court reached its decision after hearing testimony from several witnesses. One expert8 testified that a state statute (33:2411) and a city ordinance (No. 5240, MCS) require the City to hire city residents unless the NOPD’s needs could not be fulfilled from this market. But, on the other hand, this witness also testified that even if applicants resided outside the City of New Orleans, they could still be hired if they agreed to move within Orleans Parish during their one-year probationary period. In some cases, even this requirement was waived. In addition, after questioning by the court, one of plaintiff’s own witnesses9 testified that the NOPD actively engaged in efforts to recruit officers from areas outside of Orleans Parish. There also was testimony to the contrary.

The power of the district court clearly includes the exercise of discretion in weighing testimony. The record amply supports the conclusion reached by the court. It was based upon the testimony of witnesses presented by both sides that the City recruited outside Orleans Parish. The court also relied on intervenor’s expert witness, Dr. Morris, an industrial psychologist, who testified that based on the City’s practices, the correct geographical area was the general SMSA and not just Orleans Par