Justia Federal District Court Opinions

This complex class action employment discrimination suit, now before us for the fourth time, illustrates the difficulties inherent in judicial efforts to remedy violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., by undoing the effects of past racial discrimination in employment. Complaints alleging racial discrimination in employment were first filed with the Equal Employment Opportunity Commission on November 22, 1965.¹ Suit was brought on May 13, 1966 under Title VII and 42 U.S.C. § 1981, and the class was certified pursuant to Federal Rules of Civil Procedure 23(b)(2).

The complaint was dismissed by the district court on March 10, 1967 on the ground that the EEOC had failed to attempt conciliation prior to initiation of the court action. On appeal with several other actions, we reversed. Dent v. St. Louis-San Francisco Railway Co., 406 F.2d 399 (5th Cir. 1969). During the pendency of that first appeal, the defendant, American Cast Iron Pipe Company (hereinafter "ACIPCO") discharged one of the named plaintiffs. That plaintiff then sought and was denied relief in the district court. We again reversed, directing reinstatement and back pay. Pettway and Wrenn v. American Cast Iron Pipe Co., 411 F.2d 998 (5th Cir. 1969).

The district court then addressed itself to the plaintiffs' substantive charges. In 1970 the court examined the racial composition of the Board of Operatives, an advisory board composed of non-supervisory personnel elected by employees of the company. In 1922 the founder of ACIPCO, John J. Eagan, had bequeathed all the outstanding common stock of the company to the members of Board of Operatives and the Board of Management, a body composed of corporate officials elected by the Board of Directors to conduct the day to day business of the company, and their successors in office. The Boards acted as trustees for the benefit of the present and future employees of the company. From 1922 until January, 1970 the membership of the Board of Operatives was explicitly limited to "white" employees. Blacks were relegated to the Auxiliary Board, which was created to advise the other two boards on matters affecting the interests of black employees. Pettway v. American Cast Iron Pipe Co., 494 F.2d 211 (5th Cir. 1974). In 1970 the district court ordered the integration of the Board of Operatives and the abolition of the all-black Auxiliary Board. Pettway v. American Cast Iron Pipe Co., 332 F.Supp. 811 (N.D.Ala.1970), aff'd 494 F.2d 211, 264-67 (5th Cir. 1974).

The employee discrimination charges were tried in October 1971. The district court found that certain testing conducted by the company had an adverse impact on the employment opportunities of black employees and did not pass muster under Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). Nevertheless, the court denied all requested relief except attorneys' fees and costs. On appeal, we again reversed the district court, and to guide the court on remand, we examined the governing law in a lengthy and detailed opinion. We instructed the court to order back pay to compensate class members for wages lost due to past discrimination and to formulate injunctive relief particularized to the circumstances of the case but as broad in scope as necessary to ensure black employees the opportunity to reach positions in the company previously denied to them by discriminatory practices. Pettway v. American Cast Iron Pipe Co., 494 F.2d 211 (5th Cir. 1974) (hereinafter cited as "Pettway III ").

On remand the district court encouraged the litigants to engage in settlement negotiations directed toward the fashioning of a decree to carry out the mandate of Pettway III. The district judge played an active role in the extensive negotiations which followed. It remains unclear precisely what was resolved during these negotiations. In any event, on May 14, 1975 the court, over the plaintiffs' objections, issued a decree ordering injunctive relief and back pay. On June 12, 1975, after further negotiations concentrating primarily on the issue of back pay, the court issued its final judgment awarding one million dollars to a subclass composed of 841 members (the "back pay subclass")² of the 2242 person class.³ The June 12 judgment also effected a few minor modifications in some of the injunctive provisions of the May 14 decree.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

On June 13, 1975 the active named plaintiffs⁴ and a number of other class members requested that class attorney Oscar W. Adams, Jr. appeal the decree and judgment. Mr. Adams informed these class members that he did not intend to appeal. Robert L. Wiggins, Jr., then was retained to file objections to the decree and to prosecute an appeal. On September 5, 1975, the district court denied a motion by appellants to substitute Mr. Wiggins as class counsel and on November 20, entered its final order overruling all motions by the dissatisfied class members. This appeal followed.

The length of litigation in complex Title VII class actions often rivals that of even the most notorious antitrust cases. In the instant case, we encounter another judicial paleolithic museum piece. Last year this court, speaking in retrospect but proving to be prophetic as well, cited Pettway III as an example of the time and expense which must be incurred "before the dust of combat has finally settled" in employment discrimination class actions. Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977). Little did we then realize that we were dealing with atomic fallout rather than mere dust. At the beginning of our 57 page opinion in Pettway III we stated, perhaps naively, that

Although the path of this law suit is strewn with the corpses of intermediate decisions, the posture of the present case on appeal will hopefully allow final resolution. In order to accomplish this the opinion must unfortunately be long and complex.

494 F.2d at 216 (footnote omitted). As is now evident, the fallout continues to radiate, and our earlier optimism regarding the disposition of this case has mutated to less hopeful emotions. Nonetheless, we are undaunted by the crushing weight of accumulated record and remain mindful that the Court must not diverge from the direction chartered for us by the Title VII compass, no matter how long and difficult the journey. We, thus, address ourselves to the fourth appearance of this case, determined to ensure that the victims of illegal racial discrimination receive the full measure of relief which the law accords them.

Our burden is eased considerably by the thorough and scholarly opinion written by Judge Tuttle in the prior appeal. Except where subsequent cases further elucidate our prior holding or provide necessary qualifications, we have been able to adopt the factual and legal conclusions reached in Pettway III without the need for an extensive review of previously considered authorities. Even so, our task will require an opinion of a magnitude similar to Judge Tuttle's opus.

This case presents a multitude of issues. On the one hand, we are asked to address fundamental questions at the heart of class action jurisprudence, such as the appealability of class action judgments by dissatisfied class members, the standards for settlement approval in the face of widespread dissent from the class, and the choice of the appropriate decision-maker to act on behalf of the class. We are also asked to resolve highly technical questions concerning specific affirmative modifications of present plant operating practices. Appellants' primary contentions on appeal are that the injunctive relieve portions of the judgment below are inadequate to effectuate our mandate in Pettway III, that the district court erred in denying back pay to over 1400 class members, and that the back pay settlement on behalf of the subclass was inadequate and improperly approved by the court. Before reaching these issues, however, we must consider defendant's contention that appellants lack "standing" to appeal the district court's decree. Because our analysis of both appealability and the substantive issues depends in part on whether the decree should be considered a settlement or the court's own judgment, a question upon which there is vehement disagreement, we turn first to an examination of the proceedings below which culminated in the district court's November 20, 1975 final order.

I. Settlement or the Court's Own Judgment Entering the Twilight Zone

The role of an appellate court in reviewing a decree in a class action suit varies greatly depending on whether the decree was reached through a settlement by the litigants or whether the decree represents the judgment of the court. Compare Cotton v. Hinton, 559 F.2d 1326, 1330-31 (5th Cir. 1977) (settlement); Flinn v. FMC Corp., 528 F.2d 1169 (4th Cir. 1975), cert. denied, 424 U.S. 967, 96 S.Ct. 1462, 47 L.Ed.2d 734 (1976) (settlement); United States v. Allegheny-Ludlum Industries, Inc.,517 F.2d 826, 846-51 (5th Cir. 1975), cert. denied, 425 U.S. 944, 96 S.Ct. 1684, 48 L.Ed.2d 187 (1976) (settlement); and Newman v. Stein, 464 F.2d 689, 692-93 (2d Cir. 1972) (Friendly, J.) (settlement); with Albemarle Paper Co. v. Moody, 422 U.S. 405, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975) (judgment); Watkins v. Scott Paper Co., 530 F.2d 1159 (5th Cir. 1976) (judgment); United States v. United States Steel Corp., 520 F.2d 1043 (5th Cir. 1975) (judgment); Rogers v. International Paper Co., 510 F.2d 1340 (8th Cir. 1975), vacated on other grounds, 423 U.S. 809, 96 S.Ct. 19, 46 L.Ed.2d 29 (1975) (judgment) and Head v. Timiken Roller Bearing Co., 486 F.2d 870, 875-77 (6th Cir. 1973) (judgment). These differing modes of review reflect a recognition of the different character of the two types of judicial resolution. The standard of review appropriate to a court judgment is premised on the requirement that the trial judge, following adversary presentation of the facts and law, exercise his independent judgment on each of the issues presented for decision. His ruling must be based on findings of fact supported by evidence in the record and on conclusions of law. The role of the trial court in arriving at an independent judgment closely parallels its more traditional role in the non-class action context. Consequently, review of class action judgments is patterned after the conventional modes of review. The appellate court can review the trial court's findings of fact to ensure that they are supported by the record and are not clearly erroneous, while giving appropriate deference to the trial judge's superior ability to assess demeanor and credibility. The reviewing court is also particularly well suited to make an independent assessment of the law as applied to the facts, again giving deference to the lower court where the law affords some measure of latitude and discretion.

Different problems are posed by class action settlements. Lacking a fully developed evidentiary record, both the trial court and the appellate court would be incapable of making the independent assessment of the facts and law required in the adjudicatory context. Moreover, a definitive judicial determination of the facts and law would be inappropriate because compromise of legal rights is intrinsic to the settlement process. Because of the limited control exercised by any particular class member over the decision to engage in these compromises, however, the settlement process is more susceptible than adversarial adjudications to certain types of abuse. The interests of lawyer and class may diverge, as may the interest of different members of the class, and certain interests may be wrongfully compromised, betrayed, or "sold out" without drawing the attention of the court. For this reason, in addition to requiring that the trial court evaluate whether a class action settlement is "fair, adequate and reasonable and is not the product of collusion between the parties", Cotton v. Hinton, supra, 559 F.2d at 1330, the law accords special protections, primarily procedural in nature, to individual class members whose interests may be compromised in the settlement process. These protections include notice, ensuring that class members know when their rights are being compromised, and an opportunity to voice objections to the settlement.

We recognize that this neat dichotomy is in some respects over-simple. In the class action context, some of the abuses generally associated with settlements may insinuate themselves into litigation resulting in the court's own judgment. For example, in framing litigation strategy in a complex suit the class attorney and named plaintiffs might concentrate on relief for certain members of the class while ignoring the interests of others. Nevertheless, because the potential for abuse is much greater when class actions are resolved through a settlement, the procedural protections applicable to settlements are not utilized in the judgment context.⁵

Courts have not often been required to examine the nuances of the distinction between a settlement and a court's own judgment. The nature of the lower court's decree is usually obvious as a factual matter and not subject to dispute by the parties. That is decidedly not the case here. The litigants before us dispute almost every factual or quasi-legal element in the case, and the classification of the district court's order as a settlement or judgment is no exception. We are thus faced with the novel issue of determining whether the lower court's order, as it relates to injunctive relief, the scope of the back pay subclass, and the size of the back pay award, constitutes a consent decree or the judgment of the district court.

Appellants maintain that both the injunctive relief and back pay awards resulted from a settlement between ACIPCO and Mr. Adams, the original class attorney. If this characterization is accepted, appellants could then argue that the procedures prerequisite to acceptance of the settlement by the district court were not followed below and that the district court therefore abused its discretion in approving the consent decree.⁶ The district court's order could then be reversed on this "procedural" ground without necessitating a review of the substantive elements of the order.

The defendant, on the other hand, argues that the entire order of the district court constitutes the court's own judgment, in which event appellants were not entitled to the procedural safeguards prerequisite to judicial acceptance of a class action settlement. The court's order then could be reversed only if the district court applied an improper legal standard or misapplied the correct standards.

Our careful examination of the record reveals that the district court's order is not susceptible to easy or uniform characterization. Settlements and court judgments are distinguished not by different platonic essences, but by the processes of their creation. Thus in order to resolve the dilemma posed by the litigants, it is necessary to consider the process by which the district court reached its final order of November 20, 1975.

Following remand from this court's decision in Pettway III, the district judge met with counsel in chambers on July 11, 1974 and directed the parties to fashion an appropriate decree. On August 19, 1974 the defendant submitted to both Mr. Adams and the court a proposed decree covering both back pay and injunctive relief. The plaintiffs filed objections to the proposed injunctive order and submitted a counter-proposal for back pay. After negotiations between the parties, the defendant filed a revised proposal, including an augmented back pay offer of $560,000 to the back pay subclass. The plaintiffs did not accept either the proffered injunctive relief or back pay settlement offer. Further negotiations failed to resolve this impasse, and on May 14, 1975 the court entered its May decree. This decree substantially adopted defendant's revised proposal as to injunctive relief but, in an apparent attempt to satisfy the plaintiffs' objections to the back pay award, ordered the company to utilize a modified method of calculation to compute the award for the back pay subclass.⁷ This method of calculation resulted in a total back pay award of $907,222.18, to be divided among members of the subclass according to a distribution formula.

On May 23, 1975 the plaintiffs filed a motion for reconsideration, objecting to the injunctive relief provisions of the decree, the exclusion from the back pay subclass of 1400 class members, and the amount of the back pay award. After an in-chambers conference with the parties, the district court overruled plaintiffs' objections to the affirmative relief provisions of the decree and to the court's exclusion of 1400 employees from the back pay subclass, but revised both the back pay distribution formula and the method for determining the size of the back pay award. A few minor changes were also made in some of the departmental lines of progression previously adopted by the court.⁸ All of these changes were embodied in a judgment dated June 12, 1975. Calculations based on the June 12 judgment resulted in a total back pay award of $1,000,000. The court also awarded plaintiffs' counsel $220,000 in attorney's fees.

The court's final order and modified judgment of November 20, 1975 essentially restated the provisions of the June 12 judgment with the addition of findings of fact and conclusions of law. The November 20 final order also provided dissenting subclass members with the opportunity to opt-out of the back pay award. See footnote 2 supra.

Our review of the record and this procedural history compels the conclusion that the injunctive relief provisions of the decree constituted the court's own judgment. The district judge indicated his own view concerning the proper characterization of this portion of the decree during a hearing held on October 30, 1975.⁹ In the course of that hearing, Judge Lynne stated:

(T)he judgment of this Court entered on May the 14th granting the affirmative relief mandated by the Fifth Circuit was my judgment. I was aided in its formulation by the arguments, extensive arguments of counsel, but that is my final judgment implementing the decree of the Fifth Circuit. (emphasis supplied).

The record fully supports this characterization by Judge Lynne. Mr. Adams repeatedly objected to the injunctive relief provisions of the order and at no time consented to defendant's proposed decree on injunctive relief. Nor did the district court modify any of the injunctive provisions in response to plaintiffs' objections. See footnote 8 supra. Appellants and the EEOC argue that Mr. Adams concentrated on back pay in his negotiations with the company and that as a practical matter the injunctive provisions were based on compromise and settlement. We find nothing in the record that supports this conclusion. Moreover, it can hardly be inferred from the fact that Mr. Adams concentrated on back pay during the negotiations that he consented to the injunctive relief provisions.

Our conclusion is not changed by anything found in a stipulation entered into by Mr. Adams and counsel for the defendant.¹⁰ The stipulation relates an off-the-record statement made by Mr. Adams to the court to the effect that while the May decree and the June final judgment did not contain every provision sought by the plaintiffs, they "constituted a good decree . . . and the judgment should be given an opportunity to work . . . ." Mr. Adams therefore concluded that he would not appeal from the decree. The EEOC argues that this stipulation reveals that the injunctive relief provisions resulted from compromise between the parties. We cannot agree. We perceive a significant distinction between an after-the-fact conclusion that a court's judgment is essentially satisfactory and, all things considered, does not justify an appeal, and a before-the-fact consent to the precise terms of defendant's proposed decree. Nothing in the stipulation indicates that Mr. Adams did more than acquiesce in the court's final order after it became apparent that the court would not consider further objections. In the context of this litigation, this may more aptly be characterized as resignation to the inevitable then consent to a settlement. While the arguments of appellants and the EEOC may indicate the potential dangers of less than avid advocacy even in the context of a court judgment, they do not shake our firm conclusion that the injunctive relief portions of the decree represent the court's own judgment, rather than a settlement between the parties, and must be treated accordingly.

The district court's May 14 decree excluded all blacks hired by ACIPCO subsequent to July 2, 1965 from the back pay subclass. As a result, 1400 of the 2241 employees in the class were precluded from receiving any award of back pay. See note 3 supra. Despite repeated objections by Mr. Adams to the exclusion of class members from the back pay subclass, the court refused to reconsider its decision. We find no suggestion in the record that Mr. Adams ever agreed to the exclusion of 1400 class members from a share of the back pay award. In the November 20 final order, the court acknowledged that the definition of the subclass was the court's own judgment:

(T)he Court finds from the evidence and concludes that no black employee employed subsequent to July 2, 1965 has suffered any economic loss due to the Company's testing and educational requirements or from any other alleged discriminatory practice. (A 415)

We therefore conclude that the exclusion of 1400 class members from the back pay subclass was the court's own judgment and not part of any settlement by the litigants.

The district court's final order of November 20, 1975 provided for the distribution of $1,000,000 to the members of the back pay subclass. If the injunctive relief and subclass determinations resisted facile classification, the manner in which the back pay determination was made defies virtually any traditional characterization. Typically, class action settlements are reached by the parties, who draft a consent decree which is submitted to the trial judge for approval. The court's role is generally limited to mediating disputes and offering suggestions. Indeed, we have recently stated that while the court in reviewing a settlement may make suggestions for modifications of the proposed decree, it may not unilaterally change the decree. Approval of the parties' settlement must be either given or withheld. See Cotton v. Hinton, supra, 559 F.2d at 1331. See also Flinn v. FMC Corp., supra, 528 F.2d at 1173-74.

The events leading to the final back pay award in this case do not conform to this model. An examination limited to the court's May decree and June judgment might suggest that the award was the court's own judgment. While changes in the back pay formula resulting in increases in the total amount of the award were made in response to plaintiffs' objections to both the defendants' back pay offer and the courts' May decree, it was the trial judge, rather than the defendant, who determined the amount of the June award. As the court stated in its June judgment when describing its role in resolving the back pay issue:

The Court has carefully examined the varying contentions of the parties, has adopted some elements of each, and has determined therefrom that . . . .

(the court then described the final back pay judgment) (A 183)

Thus it is clear that the court did not merely accept or reject a proposed settlement.

Nonetheless, the record reveals that the size of the back pay award was determined in a process of negotiation and that the final award was determined with the consent of plaintiffs counsel. The impression that the back pay award was the court's own judgment results in part because there exists no record of the numerous conferences held between the parties and Judge Lynne on the back pay issue. Judge Lynne's own pronouncements on the question reveal that the final $1,000,000 back pay figure in the November order was arrived at through some sort of agreement by the parties. For example, at the September 5 hearing on substitution of counsel Judge Lynne stated:

A study was made by the company which indicated to my satisfaction that there were at least three hundred employees who were not entitled to anything.¹¹ We went over that study very carefully. The obligation of the company for back pay as disclosed by a very careful analysis was in the neighborhood of $650,000 or $680,000, somewhere along that line . . . . After many conferences in which I expressed the opinion that a formula should be devised so that every black employee in the class would get some back-pay award, eventually we came to the amount involved of a million dollars. (A 989) (emphasis supplied).

At the October 30 hearing, which was held for the purpose of receiving evidence on the process by which the May and June judgments were formulated, the court reiterated this view. After stating that injunctive relief constituted the court's own judgment, Judge Lynne noted:

The matter stands somewhat differently with respect to the back pay award. Back pay award resulted from continuous negotiations. (A 1043)

I am aware of the fact, of course, that there are members of the class who are dissatisfied with every aspect of this final judgment. That's almost inescapable where human beings are involved, and particularly with the award of back pay at which the Court arrived with the agreement of counsel. (A 1044). (emphasis supplied).¹²

Finally, the district judge in his November 20 final order concluded that "the individual back pay awards were arrived at through negotiations between the parties at the urging of the Court and are in the nature of a consent settlement . . . ." (A 417) (emphasis supplied).

We are thus faced with a situation in which the events leading to the back pay award do not coincide with the paradigmatic class action settlement, yet plaintiffs' counsel did in fact agree to the amount of the final award. In this context it is virtually impossible to distinguish meaningfully between a process in which each party finally acceded to a figure chosen by the trial judge¹³ and one in which the parties themselves came to an agreement which was then adopted by the court in its final order. Any such distinction is especially tenuous where, as here, the trial judge has been authorized to participate in the settlement negotiations. See Pettway III, supra, 494 F.2d at 258.

In these circumstances, the trial court's characterization of its back pay decree as "in the nature of" a consent settlement marks the extent of the progress we can achieve in our definitional inquiry with any sense of confidence. Recognizing the hybrid nature of the decree, we find it necessary to abandon any further attempt to pigeonhole or classify it, and look instead to the functional considerations underlying the distinctive treatment of settlements and judgments. Under this functional approach, the question becomes whether this decree is more appropriately treated, for purposes of judicial review, as a settlement, requiring certain procedural protections for members of the class, or as the court's own judgment, in which case our evaluation must focus not on the procedural protections, but on the factual and legal bases for the award. We look for guidance to those factors counselling in favor of procedural protections for class members in traditional settlements and counselling against a paradigmatic judgment.¹⁴

Examining the decree in the context of this appeal by members of the back pay subclass, it becomes clear that we must treat Judge Lynne's order as a consent decree. First, we note that each of Judge Lynne's orders represented an attempt to satisfy specific objections advanced by Mr. Adams with respect to prior formulations for determining the size of the back pay award. The trial judge, in essence, was negotiating with the class. These negotiations culminated, prior to the June 12 judgment, in Mr. Adams' consent to the $1,000,000 proposal. At least from the viewpoint of the class, the decree was in fact reached by agreement. Such an agreement, which perhaps embodied compromises of class rights, calls for the procedural protections normally associated with class action settlements. To allow a class attorney to compromise the rights of class members without providing these protections would be inconsistent with the policies of Rule 23(e).

Equally important, the statements of the trial judge quoted above reveal that Judge Lynne viewed the order as a consent decree reached through a process of negotiation. The record does not indicate that the final back pay award resulted from the district court's own valuation of the economic loss to the back pay subclass resulting from the defendants' discriminatory practices as measured by the standards set out in Pettway III. To the contrary, Judge Lynne's own pronouncements demonstrate that the award was viewed by the court as a compromise between the parties.¹⁵ Thus the substantive protections normally present in an adjudicated judgment, including the judge's independent determination of facts and law, were not present here. The district court in framing an adjudicated judgment must determine the full measure of damages to which the class is entitled as a matter of law. Under these circumstances in which the district court did not purport to make such a determination, we cannot treat the award as the court's judgment, and must instead treat it as a consent decree vis-a-vis the class.

In sum, we have determined that the injunctive relief portions of the decree and the denial of back pay to class members employed subsequent to July 2, 1965 must be considered as the court's own judgment. The back pay award to the subclass shall be treated as a consent settlement.

The company argues vigorously that appellants are procedurally disqualified from raising each of their points of error on this appeal. First, ACIPCO alleges that Mr. Wiggins has never been certified as class counsel and thus may not appeal on behalf of the class the injunctive portions of the decree or the decision to exclude 1400 class members from the subclass. The company also alleges that each of the individual appellants either lacks standing to challenge the back pay settlement on appeal or has yet to receive an appealable final judgment as to back pay. Before addressing these contentions, however, it is necessary to outline briefly the chronology of events leading to this appeal.

On June 13, 1975, the day after the court entered its June judgment, the three active named class representatives and at least twenty-eight of the thirty elected representatives of the Committee for Equal Job Opportunity¹⁶ met with the class counsel, Mr. Adams, and requested that he appeal the court's judgment. Mr. Adams stated his intention not to appeal the judgment,¹⁷ but indicated that the individual plaintiffs were free to consult other counsel for purposes of retaining separate representation and prosecuting an appeal. On June 20, 1975, 661 class members filed objections to the decree, and on June 22 these plaintiffs retained Mr. Wiggins as counsel. On September 5 the district court denied appellants' motion to substitute Mr. Wiggins as class counsel; motions requesting discovery and further evidentiary hearings were denied in the court's November 20 final order. This appeal followed.

B. Injunctive Relief and Exclusion from the Back Pay Subclass

We consider first the appealability of the district court's judgment as to both injunctive relief and the denial of back pay to 1400 class members. The defendant argues that appellants may not upset the court's judgment binding the class because they are appealing solely in their individual capacities and not as a class.¹⁸ Appellants respond that Mr. Adams ceased to adequately represent the class when he refused to appeal those portions of the order which we have concluded were the court's own judgment. They urge this court to find that the district court abused its discretion in denying appellants' motion to substitute class counsel for purposes of this appeal, that appellants' counsel, Mr. Wiggins, serves as attorney for the class on this appeal, and that this appeal on behalf of the class is therefore properly before the court.

We are not aware of any cases in which the named class representatives and a large portion of the class desired to prosecute an appeal of a district court's judgment, yet the class attorney refused to do so. The issue before us is thus one of first impression, raising difficult and perplexing questions regarding the appropriate decision-maker on behalf of the class. While the "class" itself clearly has standing to appeal a judgment of the district court, see, e. g., Pettway III, supra; James v. Stockham Valves & Fittings Co., 559 F.2d 310 (5th Cir. 1977), it is far from clear who may make the final determination of whether the "class" should appeal when the desirability of an appeal is at issue. In the instant case the class attorney, Mr. Adams, concluded that an appeal would not be in the best interests of the class. Mr. Adams stated on the record that he believed the decree to be a fair one and that an appeal would only delay implementation of the rights already obtained by the plaintiffs. On the other hand, the three active class representatives, the Committee for Equal Job Opportunity, and a sizable portion of the class itself believed that the decree did not adequately vindicate the interests of the class and that an appeal was warranted.

In the context of individual-plaintiff litigation the roles of the attorney and the client are well defined. The A.B.A. Code of Professional Responsibility envisions the attorney as an advocate of the interests of the client. American Bar Ass'n, Code of Professional Responsibility, EC 7-1 (hereinafter cited as ABA Code). Although the lawyer has some freedom to make tactical choices during litigation without consulting his client, the lawyer is expected to defer to the client's wishes on major litigation decisions. See ABA Code EC 7-1, EC 7-7, EC 7-9. Unfortunately, it remains unclear whether this model can be carried over to the class action context, as no clear concept of the allocation of decision-making responsibility between the attorney and the class members has yet emerged. See generally Developments in the Law Class Actions, 89 Harv.L.Rev. 1318, 1578 (1976). Certainly it is inappropriate to import the traditional understanding of the attorney-client relationship into the class action context by simply substituting the named plaintiffs as the client. The interests of the named plaintiffs and those of other class members may diverge, and a core requirement for preventing abuse of the class action device is some means of ensuring that the interests and rights of each class member receive consideration by the court. Were the class attorney to treat the named plaintiff as the exclusive client, the interests of other class members might go unnoticed and unrepresented. See Gonzales v. Cassidy, 474 F.2d 67, 69-71, 76 (5th Cir. 1973); Developments in the Law, Class Actions, 89 Harv.L.Rev. 1318, 1592-95 (1976). Thus, when a potential conflict arises between the named plaintiffs and the rest of the class, the class attorney must not allow decisions on behalf of the class to rest exclusively with the named plaintiffs. In such a situation, the attorney's duty to the class requires him to point out conflicts to the court so that the court may take appropriate steps to protect the interests of absentee class members.

This does not mean, however, that the class attorney may ignore the wishes of the class representatives in making fundamental litigation decisions. As one court has stated, "An attorney who prosecutes a class action with unfettered discretion becomes, in fact, the representative of the class. This is an unacceptable situation because of the possible conflicts of interest involved." Leib v. 20th Century Corp., 61 F.R.D. 592 (M.D.Pa.1974). In the context of a shareholders' derivative action, Saylor v. Lindsley, 456 F.2d 896 (2nd Cir. 1972), Judge Friendly has stressed that courts should not "accept the view that the attorney for the plaintiff is the dominus litis and the plaintiff only a key to the courthouse door dispensable once entry has been effected":

There can be no blinking at the fact that the interests of the plaintiff in a stockholder's derivative suit and of his attorney are by no means congruent. While, in a general sense, both are interested in maximizing the recovery this is only a half-truth. Even apart from special considerations which . . . may cause divergence of interest in cases where extremely large amounts are at stake, there is a difference in every case. The plaintiff's financial interest is in his share of the total recovery less what may be awarded to counsel, simpliciter; counsel's financial interest is in the amount of the award to him less the time and effort needed to produce it. A relatively small settlement may well produce an allowance bearing a higher ratio to the cost of the work than a much larger recovery obtained only after extensive discovery, a long trial and appeal. We say this not in criticism but in simple recognition of the facts of class action life.

456 F.2d at 900-01. The same considerations may cause a class attorney who has been awarded a substantial fee by the court to conclude that an appeal of the court's judgment might result in personally unremunerative litigation or a substantial and undesirable delay in the receipt of the fee award. When the possibility that counsel's own fervor may have been exhausted by an apparently endless legal battle is added to the equation, the potential conflict between the interests of the class and those of its attorney in an appeal cannot be ignored.

It is, therefore, clear that the decision to appeal cannot rest entirely with either the named plaintiffs or with class counsel. Nonetheless, the Rule 23(a) (4) requirement that the trial court determine whether "the representative parties will fairly and adequately protect the interests of the class" contemplates that the named plaintiffs will undertake a major role in the prosecution of a class action. The requirement also provides an important guarantee of a coincidence of interest between the named plaintiffs and the class.

We considered the scope of Rule 23(a)(4) and the proper role of the class representatives in deciding whether to appeal from a class action judgment in Gonzales v. Cassidy, 474 F.2d 67 (5th Cir. 1973). Gonzales was a class member in a prior class action in which only the class representative, Gaytan, was awarded both retrospective monetary relief and prospective injunctive relief. The other members of the class, including Gonzales, were granted only prospective relief. No appeal was taken. Gonzales subsequently brought a second class action raising identical issues against the same defendant, who sought to raise res judicata as a bar to relief. We rejected the defendant's res judicata defense, finding that Gaytan's failure to appeal the earlier judgment constituted inadequate representation of the class. We stressed throughout the Gonzales opinion that it was the class representative's duty to appeal the lower court's judgment and thus it was the class representative who inadequately represented the class. Implicit in our discussion and holding in Gonzales was the conviction that, at least under the circumstances of that case, the class plaintiff and not the class attorney, was responsible for deciding whether to appeal.

The foregoing considerations convince us that, at least as an initial matter, the decision to appeal a class action judgment must rest with the class plaintiffs. If in making that decision the class plaintiffs arguably fail to adequately represent the interests of the class, the class attorney should point out potential inadequacies or conflicts of interest to the trial judge. Where the named plaintiffs wish to appeal, but the class attorney concludes that an appeal is not in the best interest of the class, the district court must exercise its discretion in deciding whether to substitute class counsel to allow the named plaintiffs to maintain the appeal on behalf of the class.¹⁹ The proper exercise of the district court's discretion will depend on the facts and circumstances of each case. Among the factors that should be considered by the court are (1) the adequacy of representation of the named plaintiffs, including any apparent or potential conflicts of interest they might have with the remainder of the class, (2) the extent to which other class members support or oppose the appeal, and the extent to which an appeal may be necessary to protect the interests of absent class members, (3) the adequacy of representation provided by the class attorney and any conflicts of interest between the class attorney and the class, and (4) the reasonableness of the decision to appeal, including an assessment of the possibility of success on the merits.

Applying these principles to the instant case, we conclude that the class representatives should have been allowed to prosecute this appeal on behalf of the class. The trial court abused its discretion in denying appellants' motion to substitute class counsel for purposes of appealing the court's judgment.

First, we note that the class representatives have provided excellent representation on behalf of the class during the ten years of this litigation. The named plaintiffs, through the representative Committee for Equal Job Opportunity, have held monthly meetings and distributed news letters to keep the class informed of the progress of the case. There is undisputed testimony in the record that at an early stage of the settlement negotiations, the named plaintiffs rejected offers of special back pay compensation to the most active class members, themselves included, and demanded equal consideration for all members of the class. (A 1163-65). Throughout the entire course of this litigation, including the post-judgment period, not a single class member has objected to the representation provided by the named plaintiffs. Nor has any class member objected to the prosecution of this appeal. The only potential conflict between the interests of the class representatives and those of other class members arose when all three class representatives were awarded relatively sizeable shares of the back pay award, while many class members received no back pay. This potential conflict disappeared, however, when all three active named plaintiffs rejected their back pay award and chose to prosecute this appeal.

We also find noteworthy the extent to which individual class members have demonstrated their interest in, and support for, this appeal. We reiterate that the sentiment of the class is but one factor in our analysis of the appealability question. Insofar as relevant, this is a factual question for which we necessarily must draw inferences from the sparse information contained in the record. Nonetheless, we find that the record clearly indicates a deep-seated and widespread dissatisfaction with the injunctive provisions of the decree. Among the 841 members of the subclass awarded back pay, 511 signed the June 20, 1975 objections to the decree and notice of intent to appeal. These objections focused on the injunctive portions of the decree in great detail. An additional 78 members of the subclass refused to accept the back pay award.²⁰ Thus 589 members of the 841 person subclass indicated dissatisfaction with the court's judgment. See footnote 3 supra.²¹ While only 150 of the 1400 class members who were excluded from the back pay subclass explicitly objected to the injunctive portions of the decree by signing the June 20 objections, the record indicates that many individuals in this group received no notification of the judgment and had no opportunity to object either to their exclusion from the subclass or to the injunctive provisions of the decree.²² Moreover, according to appellants' figures which are not contested by ACIPCO, over 1000 of the 2242 class members were no longer employed by ACIPCO in 1975. These members of the class did not have a personal stake in the injunctive provisions of the decree and could not be expected to object to allegedly inadequate injunctive relief. When due consideration is given to these factors, along with the widespread objections to the injunctive portions of the decree raised by the subclass members and the failure of a single class member to object to the representation provided by the named plaintiffs or their decision to prosecute this appeal, we find that a substantial portion of the class supported this appeal on the issue of injunctive relief.

Furthermore, there can be no doubt that an appeal from the denial of back pay is in the best interests of the 1400 class members who were excluded from the subclass. Gonzales v. Cassidy, supra, compels the conclusion that the class plaintiffs, in order to satisfy their duty to adequately represent the class, must appeal this portion of the court's order. As we noted in Gonzales :

Gaytan (the class representative), through his attorney, vigorously represented the class until he obtained individual relief (for himself only). The problem is that he was representing approximately 150,000 persons, who, although having had their licenses and registration receipts suspended without due process, were denied any relief by the three-judge court's prospective only application of its decision. So long as an appeal from this decision could not be characterized as patently meritless or frivolous, Gaytan should have prosecuted an appeal. Otherwise, it cannot be said that he vigorously and tenaciously protected the interests of the class he was purporting to represent, or that all members of the class had been afforded due process of law by having a full day in court. It is axiomatic that an appeal is a significant element in the judicial process. Gaytan's failure to prosecute an appeal deprived the members of his class, whose rights were not vindicated by the three-judge court's decision, of full participation in this process.

474 F.2d at 76 (emphasis supplied). Likewise, the class members excluded from the subclass were denied any back pay relief to compensate for past discrimination by the company. As our discussion in section IV infra reveals, an appeal from this decision could hardly be characterized as patently meritless or frivolous.²³ On the basis of Gonzales alone the district court should have granted the motion to substitute counsel for the purpose of appealing this portion of the decree.

Finally, we note that an appeal on the issue of injunctive relief can hardly be deemed frivolous. The trial judge was well aware of the complexity of the legal and factual issues involved and the prior history of this litigation.²⁴

In conclusion, we hold that under the circumstances of this case the trial judge abused his discretion by not granting appellants' motion to substitute class counsel for purposes of appealing the court's judgment. The decision to appeal rested as an initial matter with the named plaintiffs. These representatives chose to appeal, and an analysis of the factors considered above demonstrates that their choice should have been honored. The named plaintiffs have provided excellent representation in the past, and there is no indication in the record that their decision to appeal was based on any considerations other than the interests of the class. The decision received widespread support among the class. With regard to those who were denied back pay, there can be no doubt that an appeal is necessary to effectuate their legal rights. While we do not question the sincerity of Mr. Adams' belief that an appeal of the injunctive decree is not in the class' interest, nothing in the record convinces us that the named plaintiffs' conclusion on this question was unreasonable. See section III infra. Finally, the issues raised on appeal are neither frivolous nor insubstantial. We therefore shall treat this appeal of the injunctive relief and denial of back pay portions of the district court's decree as an appeal on behalf of the class.

C. Back Pay Award to the Subclass: Appealability of the Settlement

In subsection I(D) supra we determined that the award of back pay to the subclass must be treated as a settlement. It is well settled that dissenters to a class action settlement may retain new counsel to appeal the district court's approval of a consent decree. See Cotton v. Hinton, 559 F.2d 1326, 1329 (5th Cir. 1977); Flinn v. FMC Corp., 528 F.2d 1169, 1174 (4th Cir. 1975), cert. denied, 424 U.S. 967, 96 S.Ct. 1462, 47 L.Ed.2d 734 (1976). The company poses the rather ingenious argument that notwithstanding this general rule, none of the appellants in this case has "standing" to appeal the back pay settlement. First, the company argues that those members of the back pay subclass who failed to cash their back pay checks may not appeal the district court's approval of the settlement because under the terms of the court's November 20 final order, they have opted out of the subclass and have yet to receive an appealable final judgment as to back pay. The company then argues that those appellants who accepted their back pay award by cashing the company's check did so under the express condition that acceptance of back pay constituted a release of any claims of discrimination,²⁵ and those appellants therefore have waived their right to maintain this appeal. Finally, the company maintains that those appellants who were excluded from the back pay subclass have no standing to contest on appeal the adequacy of the back pay award received by others. Therefore, according to the company, individual appellants either lack standing to appeal, have waived their right to appeal, or are not the subjects of an appealable final back pay judgment.

We agree with the defendant that appellants who were excluded from the subclass and denied back pay lack standing to contest the adequacy of the awards received by other class members. However, we conclude that the decree does constitute an appealable final judgment for those awardees who opted out of the settlement by refusing to cash their back pay checks. We also find that awardees who cashed their checks pursuant to the district court's opt-in, opt-out scheme did not waive their right to appeal the back pay settlement.

It is clear that the district court's November 20 final order constitutes a final decision within the meaning of 28 U.S.C. § 1291.²⁶ The order was intended to end the litigation on the merits and leave nothing for the court to do but execute judgment. Catlin v. United States, 324 U.S. 229, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945). See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974).

ACIPCO incorrectly asserts that the district court's order does not constitute a final judgment because the order provided subclass members who opted out of the subclass an opportunity to pursue individual damage claims in this lawsuit. We read the order to require subclass members who opted out of the subclass to pursue their damage claims in separate, independent lawsuits. In Pettway III we stated that the district court could allow claimants who were dissatisfied with their pro rata share of a class-wide back pay award to opt-out of the back pay subclass and demonstrate that they were entitled to a larger award. 494 F.2d at 263 and n. 154. The district court properly attempted to utilize this opt-out device. In the notice to all subclass members who had not yet cashed their back pay checks, mailed by the company at the court's direction on November 21, 1975, the court advised that back pay awards would become "null and void" as to all awardees who failed to cash their check prior to December 15, 1975. See November 20 Final Order and Modified Judgment, A. 418. The court's notice continued:

"(Y)ou will have the right thereafter to bring an independent action against the Company . . . and the Company will have the right to assert . . . (defenses) as if there had never been the entry of the back pay in your favor in the Pettway case." (A 418) (emphasis supplied).

In the November 20 final order the court explained that a claimant who opted out of the settlement would have the right to pursue an independent action "free of the defense of res judicata or collateral estoppel insofar as his individual back pay claim is concerned." (A 417) (emphasis supplied). This language, together with the fact that the court did not afford awardees who declined to cash their back pay checks any opportunity to prove their individual damages in the proceedings of this suit, convinces us that the district court contemplated that its November final order would be the final adjudication in this suit of the rights of dissatisfied subclass members. Consequently, the court's order represents a final decision within the meaning of 28 U.S.C. § 1291.²⁷

We also find that those claimants who cashed their back pay checks may appeal from the lower court's approval of the settlement notwithstanding the fact that the waiver form they signed in cashing their checks could be construed as a waiver of their right to appeal.²⁸ Rule 23 recognizes that many small claimants frequently have no litigable claim unless aggregated in a class suit. Because of the cost and difficulty of proving individual damages, see Pettway III, supra, 494 F.2d at 258-63, even the opportunity to prove individual damages in the same litigation often will not be an adequate substitute for participation in an acceptable settlement. Without the right to appeal approval of a settlement prior to the expiration of the option period, dissatisfied claimants could be faced with the equally unpalatable alternatives of opting into a settlement which should not have been approved or undertaking the burdens of individual actions. See Ace Heating & Plumbing Co., 453 F.2d 30, at 32-33 (3rd Cir. 1971). Requiring claimants to opt into a back pay subclass before they have an opportunity to seek appellate review of the settlement would be inconsistent with design of Rule 23(e), which bounds the court's discretion in approving proposed settlements. Subclass members have an interest in ensuring that a settlement is reviewed by the district court in conformity with settled legal standards, and we will not allow subversion of the protections afforded by Rule 23(e) by requiring claimants to opt-out of a settlement in order to obtain appellate review.

To protect the rights of claimants to participate in a valid settlement, we conclude that the option of subclass members to opt into a back pay settlement may not be cut off before a final determination of the propriety of that settlement is made. See subsection V(B)(2) infra; cf. Ace Heating & Plumbing Co. v. Crane Co., supra. Because the district court improperly terminated the option to opt into the settlement before this appeal could be completed, thereby imposing upon the subclass members the impermissible choice of opting into what may be an unacceptable settlement or opting out of the subclass and undertaking the burdens of proving individual claims, we conclude that any waiver of appellate rights by those claimants who opted into the subclass is invalid.

Thus each of the appellants who were members of the back pay subclass may appeal from the district court's approval of the back pay settlement. Having already held that the appeal of the injunctive relief and denial of back pay portions of the district court's judgment has been brought on behalf of the class, we conclude that each of the substantive issues raised by appellants is properly before us. With both a sense of relief for having finally resolved the thorny procedural issues in the case and apprehension at what lurks ahead, we now turn to appellants' substantive claims.III. Injunctive Relief

Having concluded in section I, supra, that the injunctive relief portions of the district court's decree constituted the court's own judgment, we now reach appellants' contention that Judge Lynne failed to follow our mandate in Pettway III in devising affirmative relief for class members. Our discussion is unavoidably complex, and we find it necessary to reverse the district court on a number of points. Underlying many of our determinations with respect to the injunctive portions of the decree are the complex and technical problems inherent in judicial attempts to remedy past employment discrimination by restructuring the multi-faceted employment practices of a large industrial concern. To a large extent, our own difficulties with the decree stem from the method by which Judge Lynne attempted to resolve these problems. We do not criticize Judge Lynne for attempting to utilize informal techniques of conciliation. We know from long experience the limitations and frustrations inherent in grappling with these problems using traditional litigative methods. We are not so bold or naive as to suggest that these complexities would dissolve if remedial responsibilities in the employment discrimination area were entrusted to an alternative institutional decision-making body, and recognize in any case that Congress has placed on the courts a responsibility to give effect to its policies of equal and non-discriminatory treatment for minorities in the employment area, as in other phases of our national life. In carrying out our responsibilities, we must and do remain alert to the possibility of utilizing innovative techniques of conciliation and problem solving. Many of our recent opinions in the Title VII area recognize the desirability of encouraging settlement among the contesting parties, particularly with respect to required modifications of plant employment and promotion practices. See, e. g., Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977); United States v. Allegheny-Ludlum Industries, Inc., 517 F.2d 826, 846 (5th Cir. 1975), cert. denied, 425 U.S. 944, 96 S.Ct. 1684, 48 L.Ed.2d 187 (1976). We further recognize that the courts can sometimes best facilitate these conciliation efforts by utilizing informal techniques. We do not suggest here that conciliation efforts be forced into a Procrustean bed of on-the-record hearings.

Sometimes, however, settlement efforts do not achieve fruition. In these instances the trial court must alter its role and adjudicate the dispute among the parties. Such an adjudication, particularly in the context of class action litigation, presents a series of conundrums for both trial and appellate courts. Much of the information and evidence necessary to frame an adjudicated decree may be known to the district court through its participation in settlement negotiations, but will not be reflected on the record. Thus, the evidentiary support for the district court's ultimate decision will not be apparent to a reviewing court unless steps are taken to develop a satisfactory record. Evidentiary hearings and the submission of exhibits into the record may sometimes appear redundant and inefficient from the perspectives of the parties and the district court, but they are indispensable for purposes of conscientious appellate review. This court cannot properly review a district court's findings and conclusions without examining the supporting evidence. Tasby v. Estes, 572 F.2d 1010 (5th Cir. 1978).

The fundamental problem facing us in our task today is the absence of an adequately developed factual record. Following our remand in Pettway III, the district court encouraged settlement negotiations in informal proceedings held off the record. No trial or evidentiary hearing was held. As a result, almost no evidence was added to the record subsequent to our decision in Pettway III. We do not criticize the district court's attempt to resolve this dispute through informal procedures. When it became clear, however, that settlement negotiations would not bear fruit, it was incumbent on the court to base its conclusions on evidence in the record. Instead, numerous conclusions of the district court rest on factual predicates without evidentiary support in the record. ACIPCO represents that the district court considered evidence in chambers which supported these findings and conclusions, but we have no way of judging whether this is correct or whether the "evidence" which may have been examined by the district court actually supports its conclusions. The learned and experienced judge who tried this case may conscientiously, logically, and intelligently have come to the conclusion that his judgment was correct. There may have been rivers of evidence coursing through the chambers of the district judge. But without that evidence available to us on the record, we are unable to gauge the depth of those rivers or assess its navigability as a route to the district judge's conclusions. Other conclusions of the district court rest on evidence already assessed in our prior opinion and found insufficient to support some of the legal conclusions now drawn therefrom. In light of our clear mandate in Pettway III, this evidence standing alone simply cannot be the basis for legal conclusions already rejected by our prior opinion.

The company's failure to present evidence on the record in support of its position may be due in part to the failure of all the parties to distinguish clearly those portions of the decree which were resolved by settlement from those which were adjudicated by the court. It is likely that some portions of the injunctive decree actually were reached through the agreement of both ACIPCO and attorney Adams. Nevertheless, the decree represents the court's own judgment. See subsection I(B) supra. If it were clear precisely which portions of the injunctive decree were reached through agreement of counsel, we could treat those sections of the decree as a settlement and require the Rule 23 procedural safeguards discussed in subsection V(A), infra. As has been the case with regard to most of the factual issues raised by this appeal, however, the record is silent on this question. In any event, the district court did not draw such a distinction among portions of the injunctive decree or provide class members the requisite procedural safeguards with regard to those sections, if any, which it considered the parties to have accepted. Under the circumstances, we must require full evidentiary support for each element in the injunctive decree. Otherwise, the participants to the negotiations could compromise the legal rights of the class members free from both the procedural strictures of Rule 23 and the appellate court's review of the substantive legal requirements for framing injunctive relief.

In summary, we must reverse the district court where it misapprehended the purport of our prior mandate or where its conclusions are not supported by evidence in the record. This appeal presents multiple manifestations of ACIPCO's failure to supplement the record and of the district court's failure to base its conclusions on evidence in the record. That the errors below may flow from a single source does not, however, relieve us of the responsibility to consider and address each legal issue properly raised by appellants.

Our extensive opinion in Pettway III discusses at length the organization of the company, 494 F.2d at 217-18, its employment practices through 1974, id. at 218-222, and the present discriminatory effect of these practices necessitating affirmative relief. Id. at 222-43. While we need not repeat that discussion here, it is necessary at the outset to summarize briefly the factual and legal conclusions relevant to our disposition of the issues raised on this appeal. We shall then examine the standards outlined in Pettway III for framing affirmative relief, the district court's injunctive decree on remand, and appellants' allegations that the decree does not comply with our prior mandate.

The company's operations are organized into various departments. The five primary production departments include the monocast department, the fittings foundry, the steel foundry, the melting department, and the steel pipe foundry. The machine shop performs some additional labor on items produced by the production departments and provides replacement maintenance on all machinery. The company also has seven service departments consisting of the general yards, central stores, shipping, electrical, maintenance, inspection, and construction departments. The responsibilities of these departments include the receipt of raw materials, the shipment of finished products, and the performance of various maintenance functions. The company's highly-skilled craft positions are concentrated in the electrical, maintenance, and inspection departments and in the machine shop. These four craft departments and the steel pipe foundry have historically contained very low percentages of black employees.²⁹

Prior to our 1974 decision in Pettway III, the method of advancement within all of ACIPCO's departments involved a wage progression schedule consisting of 15 pay groups. As of the date of the 1971 trial below, over 95% of the company's black employees worked in pay groups 1-8. Only 30% of ACIPCO's white employees held these lower paying positions. Advancement up the pay group ladder was based on departmental seniority. Until 1971 the company did not have a systematic written procedure for filling vacancies. Promotions within a department went to the senior department employee in the pay group immediately below the vacancy, with advancement within pay groups 9-15 subject to illegal testing requirements. The company discouraged transfers between different departments. Id. at 223 n. 27. In 1971 the company adopted a new procedure for filling vacancies in positions above pay group 3. First job vacancies were posted for three days within the department. If qualified bids were received, a selection was made on the basis of departmental seniority and ability. If no qualified bids were received from within the department, vacancies were posted plant wide and filled on the basis of plant-wide seniority. An employee transferring from another department did not carry over any of his accumulated seniority for purposes of seniority within the new department. Id. at 223.

2. Our Evaluation of ACIPCO's Employment Practices in Pettway III

Until 1961 ACIPCO maintained a formal policy of segregating employees by race. While this policy was discontinued after the promulgation of Presidential Executive Order No. 10925 in 1961, the resulting segregated employment profile was maintained at least through 1964, when the company instituted testing and educational requirements for hiring, interdepartmental transfer, and intradepartmental promotion. These testing and educational requirements, which were held to be illegal in Pettway III, remained in effect until as late as 1971. Pettway III, supra, 494 F.2d at 219-20, 222, 258. As a result, in 1971 only 25% of the 232 jobs in the plant were integrated. 494 F.2d at 230.

Based on these findings we concluded that "black employees have been derogated to the lower paying, non-skill departments and to the lower paying positions in all departments because of these past discriminatory employment practices." Id. at 236. We then determined that the departmental seniority system acted to maintain and effectuate the stratification of black employees in the less desirable departments and in the lower paying, non-skilled jobs within all departments. The seniority system locked black employees into their present departments because a black desiring to transfer to a department with better promotional opportunities would have to forfeit seniority and often endure a wage cut in order to transfer. An employee who did transfer would be handicapped by being unable to compete equally for promotion based on departmental seniority with a white employee situated in the department at the time of the transfer. This would be true even if the white employee had less plant seniority than the black transferee. Id. at 223-24, 235-36. Furthermore, in many cases the requirement that initial consideration be given to persons within the department perpetuated the historical stratification of black employees by preventing the majority of class members from even applying for jobs in the higher paying, predominantly white departments. After reviewing the relevant case law, we concluded that affirmative relief was required. Id. at 236.

3. Pettway III Guidelines for Relief: Promotion and Transfer Procedures

In Pettway III we followed the well-established principle that on remand a remedy must be fashioned within the framework of the "rightful place" theory. 494 F.2d at 243. Under this theory, blacks must be "assured the first opportunity to move into the next vacancies in positions which they would have occupied but for the wrongful discrimination and which they are qualified to fill." Id., quoting United States v. Georgia Power Co., 474 F.2d 906, 927 (5th Cir. 1973). We therefore ordered the district court to issue an injunction requiring: "(1) the posting of all vacancies plant-wide; (2) the selection of 'qualified' personnel for the vacancies on the basis of plant-wide seniority; (3) transferring members of the class shall retain their plant-wide seniority for all purposes including promotion, lay-off, reduction-in-force, and recall; (4) advance entry into jobs for which an employee in the class is 'qualified' or for which no specific training is necessary; (5) red circling of members of the class . . . ."³⁰ Id. at 248 (footnotes omitted).

We tempered this holding by allowing the company to demonstrate a "business necessity" for maintaining departmental lines of progression in which experience in one position is required for advancement to a higher position in the line. We stressed, however, the "heavy nature of the defendant's burden" to justify a seniority system which perpetuated past discrimination. Id. at 245. Quoting from United States v. Jacksonville Terminal Co., 451 F.2d 418, 451 (5th Cir. 1971), we stated that "the 'business necessity' doctrine must mean more than that transfer and seniority policy serve legitimate management functions. . . . Necessity connotes an irresistible demand. To be preserved, the seniority and transfer system must not only directly foster safety and efficiency of a plant, but also be essential to those goals." Id. Thus business necessity justifies existing seniority and promotion systems only where the district court finds that each position in the line of progression within a department provides necessary training for the next higher job and that there are no acceptable alternatives for accomplishing the company's safety and efficiency goals. Id. at 245-46.

We then remanded the case to the district court to frame an injunctive order which would effectuate our mandate.

On remand the district court entered an order which effected the following changes in the company's seniority and transfer policies. Plant seniority was substituted for departmental seniority for purposes of future promotions, demotions, layoffs, and recalls, subject to a one year residency requirement for transferees to a new line of progression.³¹ The court's order also prescribes a two step procedure for filling vacancies within the newly established lines of progression. Permanent vacancies are to be filled by incumbent employees working in, or laid off from, the position immediately below the vacancy in the line of progression, with bidding based on plant seniority as modified by the residence requirement. Each resulting vacancy is to be filled from within the line in the same manner, until an entry level job remains which cannot be filled from within the line of progression. At this point the second step of the bidding procedure is reached, and the entry level position is posted plantwide, with bids considered according to plant seniority. Employees bidding for a position in a new line of progression must have at least six months seniority, and the company retains the right to refuse to promote or to transfer any employee it determines is unqualified to fill a position. Furthermore, the company may return any transferring employee to his prior position at the end of a 30 day trial period, without loss of seniority, if he cannot meet the requirements for the new job.

The district court, in its attempt to reconcile the rightful place requirement with the business necessity exception to plant-wide bidding for every position in the plant, also made three general revisions in the company's lines of progression.³²

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

First, the court's order created "pre-entry level" positions, consisting of unskilled jobs in the lower pay groups which do not provide experience necessary for the successful performance of the next higher-rated position. These jobs were removed from the departmental lines of progression, with the result that potential transferees can now skip over these positions and bid immediately into the higher "entry level" positions. Second, the court "boxed" together certain jobs requiring similar skills and providing roughly equivalent experience for preparing employees for the next higher position on the line. The employee with the greatest plant seniority on any job within the box would have the first opportunity to bid on the next higher-rated position. This boxing mechanism affords employees an opportunity to bypass other jobs in the box, thus hastening the rise of plant-senior class members to their rightful place within the lines of progression.³³ Finally, the court designated eight positions as "advanced entry jobs." These are higher-rated positions within certain departments, for which the requisite training can be obtained through successful performance on similar jobs in other departments without any necessity for prior departmental experience.³⁴ Vacancies in advanced entry jobs are to be filled through plant-wide bidding based on plant seniority.³⁵

Appellants maintain on appeal that the promotion and transfer procedure outlined above is deficient in numerous respects and does not comport with our mandate in Pettway III. Before evaluating appellants' contentions, however, we must first examine the case law subsequent to Pettway III, and particularly the Supreme Court's decision in International Brotherhood of Teamsters v. United States, 431 U.S. 324, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977), to determine whether the standards enunciated in our prior decision are still applicable for purposes of this appeal.

B. The Effect of Teamsters on Our Prior Mandate

In Pettway III we concluded that the "neutral practices of the departmental seniority system and the posting and bidding procedure carry forward into the present the stratification of black employees into lower paying, non-skill departments and jobs resulting from past discrimination." 494 F.2d at 236. After reviewing the relevant authorities, we ordered specific affirmative relief. See subsection III(A)(3) supra.

The recent Supreme Court decision in United States v. International Brotherhood of Teamsters, 431 U.S. 324, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977), casts doubt upon the validity of our prior mandate insofar as it required plant-wide seniority to be calculated from the date of employment with ACIPCO. See also United Airlines, Inc. v. Evans, 431 U.S. 553, 97 S.Ct. 1885, 52 L.Ed.2d 571 (1977); Trans World Airlines, Inc. v. Hardison, 432 U.S. 63, 97 S.Ct. 2264, 53 L.Ed.2d 113 (1977). In Teamsters the Supreme Court admitted that under the rationale of Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971), a seniority system, not justified by business necessity, whose operation served to freeze the status quo of prior discriminatory employment practices, "would seem" to be unlawful. 97 S.Ct. at 1862. Nevertheless, the Court concluded that such a system would be legally valid under section 703(h) of Title VII,³⁶ 42 U.S.C. § 2000e-2(h), if it were a bona fide seniority system within the meaning of that section. That is to say, a bona fide system is not itself illegal merely because it perpetuates the effects of pre-Act or post-Act discrimination. 97 S.Ct. at 1843 n.30. See James v. Stockham Valves & Fittings Co., 559 F.2d 310, 351-53 (5th Cir. 1977), for a discussion of the criteria for determining whether a seniority system is bona fide under Teamsters.

The Court's determination that such seniority systems are not intrinsically illegal was not meant to insulate all such systems from modifications necessary to accord relief for past discrimination. With regard to relief, the Court differentiated between pre- and post-Act discriminatory practices, holding that

(p)ost-Act discriminatees . . . may obtain full "make whole" relief, including retroactive seniority . . . without attacking the legality of the seniority system as applied to them.

97 S.Ct. at 1860. As we elaborated in James v. Stockham Valves & Fittings Co., supra, after considering the effect of Teamsters on the district court's decree:

Seniority relief is mandatory in this case even if the district court finds the system bona fide. See Teamsters, 431 U.S. at 348, 97 S.Ct. 1843. The federal courts are empowered to fashion such retroactive seniority as the particular circumstances of a case may require to make whole, insofar as possible, the victims of racial discrimination in job assignments, transfers, and promotions.

559 F.2d at 355. Thus, the Court still permits seniority modifications necessary to remedy other illegal acts, so long as those other acts are independently actionable. Teamsters does, however, limit the scope of permissible relief. With regard to bona fide seniority systems, discrimination after the effective date of Title VII can no longer engender a remedy involving retroactive seniority which antedates the Act. If a seniority system "did not have its genesis in racial discrimination . . . (and) was negotiated and has been maintained free from any illegal purpose", those "employees who suffered only pre-Act discrimination are not entitled to relief, and no person may be given retroactive seniority to a date earlier than the effective date of the Act." 97 S.Ct. at 1865.

In the case at bar, the plaintiffs filed their complaint with the EEOC on November 22, 1965, attacking both pre-Act and post-Act discrimination. It is clear that the testing and educational requirements which illegally discriminated against black employees remained in effect after the original complaint was filed. 494 F.2d at 219-20, 222-23, 236. The utilization of plant-wide seniority from the effective date of Title VII is necessary to remedy these actionable post-Act discriminatory practices, and therefore is consistent with the Teamsters decision. In Pettway III, however, we provided plant-wide seniority to all employees from the date of their original employment by ACIPCO. For some employees, this seniority will antedate the effective date of Title VII. If the departmental seniority system in effect at ACIPCO prior to our decision in Pettway III was bona fide, this portion of the relief ordered in Pettway III would be inconsistent with the Supreme Court's holding in Teamsters. If, on the other hand, the departmental seniority system was not bona fide, it would not be protected under Section 703(h), and our prior substitution of a plant-wide seniority system for the illegally maintained departmental seniority system would be consistent with the Teamsters holding.

Appellants urge this court to refrain from reexamining our prior holding in light of Teamsters. They correctly argue that under well-settled principles of law, a decision by this court at an earlier stage of the same litigation represents the law of the case. See Carpa, Inc. v. Ward Foods, Inc., 567 F.2d 1316 (5th Cir. 1978); Lehrman v. Gulf Oil Corp., 500 F.2d 659 (5th Cir. 1974), cert. denied, 420 U.S. 929, 95 S.Ct. 1128, 43 L.Ed.2d 402 (1975); Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16 (5th Cir.), cert. denied, 419 U.S. 987, 95 S.Ct. 246, 42 L.Ed.2d 260 (1974). As such, the earlier decision generally precludes reconsideration of any legal question that has already been decided. We recently observed that

(t)he "law of the case" rule is based on the salutary and sound public policy that litigation should come to an end. It is predicated on the premise that . . . it would be impossible for an appellate court to perform its duties satisfactorily and efficiently and expeditiously if a question, once considered and decided by it were to be litigated anew in the same case upon any and every subsequent appeal thereof.

Carpa, Inc. v. Ward Foods, Inc., supra, at 1319-20, quoting White v. Murtha, 377 F.2d 428, 431 (5th Cir. 1967).

The doctrine, while not a limitation on the court's power to reconsider its prior holding, is nevertheless an expression of good sense and wise judicial practice, Terrell v. Household Goods Carriers' Bureau, supra, 494 F.2d at 19, waived "only for the most cogent of reasons and to avoid manifest injustice." Id. at 19-20. Perhaps the most cogent reason possible for not following a previous decision in the same litigation is an intervening decision by the Supreme Court. Id. at 19. Indeed, this court has previously reconsidered its prior holdings on a subsequent appeal of the same case when intervening Supreme Court decisions cast doubt on the validity of the original decision. See Jennings v. Patterson, 488 F.2d 436, 441 (5th Cir. 1974); McComb v. Crane, 174 F.2d 646 (5th Cir. 1949). In McComb the judgment appealed from was rendered pursuant to a prior Fifth Circuit opinion holding that the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 et seq., did not permit the Administrator to collect wage deficiencies by injunction and civil contempt proceedings. Subsequently, the Supreme Court held that the Administrator could bring civil contempt proceedings. We stated that under the circumstances, "(w)e are compelled to disavow our previous decision as the law of this case and to reverse the judgment appealed from." 174 F.2d at 647.

We find ourselves bound by our decisions in Jennings v. Patterson and McComb v. Crane and therefore must reconsider the seniority determination in our prior mandate in light of the Supreme Court's pronouncements in Teamsters. We do so mindful that Teamsters is an extraordinary case from the standpoint of stare decisis. See EEOC v. United Air Lines, supra, 560 F.2d at 235-36. In the words of Justice Marshall's dissent:

As the Court also concedes, with a touch of understatement, "the view that § 703(h) does not immunize seniority systems that perpetuate the effects of prior discrimination has much support." Ante, at 1860, n. 28. Without a single dissent, six courts of appeals have so held in over 30 cases, and two other courts of appeals have indicated their agreement, also without dissent. In an unbroken line of cases, the EEOC has reached the same conclusion. And the overwhelming weight of scholarly opinion is in accord.

97 S.Ct. at 1876 (footnotes omitted). See also Myers v. Gilman Paper Corp., 556 F.2d 758 (5th Cir. 1977) (on petition for rehearing). We also recognize that this result is inconsistent with the policies of finality in an ongoing lawsuit. As the Second Circuit eloquently stated in affirming the district court's application of Teamsters in a somewhat similar procedural setting: