Opinion for the Court filed by JUSTICE, District Judge.
JUSTICE, District Judge:
Plaintiff-appellant instituted this action under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and 42 U.S.C. § 1981, seeking redress of alleged employment discrimination by defendant-appellee in its recruitment, testing, and hiring of applicants for the position of securities sales representative. Originally filed as a class action, that aspect of the case was dismissed by the district court,
On December 14, 1968, Thomas Edward Kinsey, a black citizen twenty-six years of age,
On December 14, 1968, Kinsey applied to Legg, Mason for employment as a securities salesman. He was interviewed at the Silver Spring, Maryland, office of Legg, Mason by William Gray, the registered representative in charge of that office. Gray administered to Kinsey the Securities Sales Selection Battery (SSSB), a test purporting to measure both an applicant's chances of passing the New York Stock Exchange (NYSE) qualifying examination
Kinsey reported back to Gray the following week for the purpose of taking the Klein Battery, an examination comprised of seven individual tests, designed to evaluate aptitude for securities sales work, certain personality traits, and social intelligence. This test data was interpreted by the Klein Institute, which issued a "conditional recommendation" that Kinsey be hired. The Klein reservation was based on a question as to Kinsey's long-term commitment to the non-management position of retail sales representative.
Thereafter, Gray reviewed Kinsey's test results, application form, and resume with H. Grieg Cummings, branch manager of the company's Washington office. Cummings decided, on the basis of the test results, that Kinsey did not meet Legg, Mason's qualifications.
Kinsey did not take another job until June, 1969, when he was employed by Bache & Co., a large securities firm. On December 7, 1969, Kinsey took the examination for registration with the NYSE, receiving a grade of "C." He resigned from Bache & Co., on December 31, 1970, to attend the Harvard Graduate School of Business Administration, where he received the Master of Business Administration degree. Kinsey is presently engaged as a financial consultant.
At the time Kinsey applied to Legg, Mason, the company had allegedly curtailed the hiring of additional sales trainees, in order to concentrate on training recently hired sales personnel. In effect during the period of October 29, 1968, to March 25, 1969, the "moratorium" existed only in the Washington, D. C., area. The company continued to recruit and hire in the Baltimore area. During the curtailment period, the company alleged, its policy was to hire only "exceptional" sales applicants. Legg, Mason's costs incurred in training a securities sales representative for six months and paying a supplemental salary for one year after NYSE registration was from $12,000 to $15,000. Since it took about three years to recover this investment, the company endeavored to hire applicants who demonstrated sales ability, as well as a career desire for securities sales work.
At the trial, testimony was heard from four other black applicants who were denied employment by Legg, Mason.
Of the white individuals who made application and were hired during the period in question, some were not required to take and pass the SSSB as a prerequisite of employment, even though they had not previously taken the National Association of Securities Dealers examination. (The NASD examination was regarded as the equivalent of the SSSB, with respect to predicting success on the NYSE examination.) At trial, Legg, Mason showed that the administrative processing of three of the applications had commenced prior to imposition of the moratorium. Four of the whites applied during the moratorium and were hired after it ceased to be in effect. Legg, Mason testified that the one individual who applied and was hired as a sales trainee during the curtailment period was an "exceptionally well qualified" applicant. This employee was a sales representative with IBM and had sold mutual funds for six months; like Kinsey, he was previously registered with the NASD and was conditionally recommended by the Klein Institute.
Prima Facie Case
The district court found that, although plaintiff demonstrated the requisite educational qualifications for a securities sales position, defendant entertained actual reservations as to Kinsey's motivation to make a career of selling securities, on the basis of the test results. The court below concluded, therefore, that Legg, Mason had a valid business reason for refusing to employ Kinsey in a period of curtailment, during which the company's policy was to concentrate on training its existing sales personnel and to hire only "exceptionally qualified and motivated" applicants.
Appellant challenges the trial court's conclusion here on the grounds that the court erred in not finding that he had established a prima facie case of racial discrimination, and that appellee's avowed reasons for refusal to hire were merely pretextual. In addressing these contentions, we are governed by the "clearly erroneous" test of Fed.R.Civ.P. 52(a) in reviewing the district court's findings of fact.
Causey v. Ford Motor Co., 516 F.2d 416, 420 (5th Cir., 1975); See also Wade v. Mississippi Cooperative Extension Service, 528 F.2d 508, 516 (5th Cir. 1976). In this manner, we now direct our attention to the claim before us, to ascertain whether under applicable law the district court was correct in its findings of nondiscrimination.
The requirements for establishing a prima facie case of racial discrimination were enunciated by the Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). Plaintiff's initial burden under Title VII is to show:
411 U.S. at 802, 93 S.Ct. at 1824. Once the plaintiff establishes the above elements, the burden then shifts to the employer "to articulate some legitimate, nondiscriminatory reason" for the plaintiff's rejection. However, the inquiry must not end there. Plaintiff may rebut by showing that defendant's stated reason for rejection was in fact pretext. Id.
Legg, Mason's general qualifications for an applicant seeking a securities sales position were four:
There is no dispute as to Kinsey's meeting the first two requisites. In support of its argument that Kinsey was not qualified for employment, Legg, Mason asserts that Kinsey lacked sales experience
The "business necessity" justification for employment practices having a discriminatory impact was recognized in Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). Delineating the remedial purposes of Congress in enacting Title VII of the Civil Rights Act of 1964, the Supreme Court stated:
Id. at 219.
We cannot earnestly compare the training program of a securities sales representative with that of a flight officer who ultimately is responsible for the safety of passengers as well as costly aircraft. In the latter, public interest is paramount and justifies high employment standards. The cost of Legg, Mason's securities sales representative training program is not the economic risk that was the concern of the court in Spurlock. Other courts have held that an employment policy that perpetuates the vestiges of discrimination can be justified only by "an overriding legitimate business purpose such that the practice is necessary to the safe and efficient operation of the business." Robinson v. Lorillard Corp., 444 F.2d 791, 798 (4th Cir.), cert. dism'd, 404 U.S. 1006, 1007, 92 S.Ct. 573, 30 L.Ed.2d 655 (1971); see also United States v. N. L. Industries, Inc., 479 F.2d 354, 365 (8th Cir. 1973); Jones v. Lee Way Motor Freight, Inc., 431 F.2d 245, 249 (10th Cir.), cert. denied, 401 U.S. 954, 91 S.Ct. 972, 28 L.Ed.2d 237 (1971); Local 189, United Papermakers and Paperworkers v. United States, 416 F.2d 980, 989 (5th Cir. 1969), cert. denied, 397 U.S. 919, 90 S.Ct. 926, 25 L.Ed.2d 100 (1970). In light of this authority, the investment cost in training its salesmen cannot sufficiently justify Legg, Mason's application of criteria which operate to freeze the status quo of an historical preference for whites in the profession.
Appellee's argument that it relied on objective criteria is particularly suspect, since these criteria were not applied alike to all applicants. The record discloses that as to several of the white applicants who were hired during the moratorium or shortly thereafter, Legg, Mason waived one or two of its requirements. In fact, it appears that the company hired some white applicants who had qualifications inferior to Kinsey's.
A careful examination of the record leads us reasonably to conclude that Legg, Mason's avowed moratorium on hiring served as a pretext to exclude Kinsey, who otherwise was qualified for the position
Appellant and the Equal Employment Opportunity Commission, as amicus curiae, attack the word of mouth recruiting by the company's securities salesmen and the referral of applicants by all-white sales managerial personnel, as being subjective in nature and discriminatory against blacks.
Legg, Mason admitted that, up to the time of trial, the company had never employed a black securities sales representative.
In this respect, the record indicates that Legg, Mason's retail securities salesmen primarily produced commission income for the company. Legg, Mason required that its salesmen have the initiative to solicit and build their clientele, and gain the confidence of prospective clients by exuding integrity, reliability and long-term service.
Although Legg, Mason had instituted an affirmative minority recruitment policy in 1968 (four years after the effective date of the Civil Rights Act), realization of that policy is not readily discernible. Rather, the record reflects that appellee's practices fell short of affirmative action. An employer in a profession which traditionally has been white may unknowingly gauge a minority group applicant against the white stereotype, and conclude that he lacks the intangible qualities indicative of professional aptitude and competence.
Finally, appellant argues that his efforts to develop a prima facie case were improperly constrained by the trial court's exclusion of proffered expert testimony regarding appellee's hiring practices from 1965 to 1972. The evidence was rejected on two grounds: (1) it was based on facts outside the six-month period which the district judge ruled should circumscribe the trial proceedings,
The district court's exclusion of the evidence of hiring practices and statistical data was erroneous. It is well established that statistical evidence demonstrating a racially disproportionate impact of employment practices may be used to buttress a prima facie case of racial discrimination. See McDonnell Douglas v. Green, supra 411 U.S. at 802, 93 S.Ct. 1817; Barnett v. W. T. Grant Co., supra at 549; Brown v. Gaston County Dyeing Machine Co., supra at 1382; Senter v. General Motors Corp., 532 F.2d 511, 527 (6th Cir. 1976); United States v. Hazlewood School District, 534 F.2d 805, 810-11 (8th Cir. 1976). It has been further held that statistical disparity between the proportion of blacks in the employer's work force and the proportion of blacks in the relevant labor market constitutes a prima facie case of discrimination in violation of Title VII. See Parham v. Southwestern Bell Telephone Co., 433 F.2d 421, 426 (8th Cir. 1970); Carter v. Gallagher, 452 F.2d 315, 323 (8th Cir. 1971), modified on rehearing, en banc, 452 F.2d 327, cert. denied, 406 U.S. 950, 92 S.Ct. 2045, 32 L.Ed.2d 338 (1972); Jones v. Lee Way Motor Freight, supra at 247; Rodriquez v. East Texas Motor Freight, 505 F.2d 40, 53-54 (5th Cir. 1974), cert. granted, 425 U.S. 990, 96 S.Ct. 2200, 48 L.Ed.2d 814 (1975).
Such evidence is equally valid in an upper level job discrimination case, provided the relevant labor pool is accurately defined, as to those persons possessing the qualifications which the employer requires. The district court's attempt to facilitate the trial proceedings by limiting evidence to the appellee's activities in the metropolitan District of Columbia geographic boundary and to the six month time-frame was an unnecessary constriction. An individual claim, as opposed to a class action, does not alter the probative value of an employer's practices, policies or patterns, relative to a determination of whether racial discrimination existed in a specific case. Particularly appropriate for consideration by the factfinder was evidence of Legg, Mason's employment practices in relation to the qualified labor market after 1964, the effective date of the Civil Rights Act.
Validity of Tests
In view of our disposition of the issue concerning appellant's prima facie case, we find it unnecessary to reach his second point, attacking the validity of the aptitude and ability tests utilized in screening job applicants. Moreover, the possible changes in this area of the law occasioned by recent decisions of the Supreme Court
Reversed and remanded.
On Aug. 1, 1970, Mason & Company, Inc., was dissolved and Legg, Mason & Company, Inc., formed. On Sept. 28, 1973, the corporate name was changed to First Regional Securities, Inc., and on Dec. 23, 1976, it was changed again to Legg Mason Wood Walker, Inc.
Also in August, 1968, James White, III, a black male with a B.A. degree from Rutgers University and two years' service in the Presidential Honor Guard, applied to Legg, Mason. White's sales-related experience consisted of having sold food freezer plans while in college; he also had engaged in fund-raising and public relations, as a professional staff member of the Boy Scouts of America. White was administered the SSSB, scoring "C+" on Part A and "C-" on Part B. White's employment counsellor testified that Legg, Mason's assistant branch manager, Joseph Smith, who interviewed White, informed her that White would not be offered employment, because of the company's racial policy. Smith denied making the statement but admitted his personal reservations about a black's possibility for success in the securities sales business. Joint App. at 446.
Joyce Booker, a twenty-one year old black woman with a degree in business administration, applied in early October, 1968, at a job fair held by Legg, Mason, for the purpose of interviewing prospective sales representative applicants. After completing an employment application, Ms. Booker had a brief interview with a Legg, Mason staff member. She had no further communication with the company.
In late 1969 or early 1970, Samuel Keys, a black male with some college education, applied to Legg, Mason, in order to relocate from New York City. He was employed there in the mutual funds operations department of a corresponding firm for Legg, Mason. Keys was interviewed and told that the company was not hiring at the time. He was never notified of any available position.
Griggs v. Duke Power Co., supra, 401 U.S. at 430, 91 S.Ct. at 853.