ON PETITION FOR REHEARING
VANCE, Circuit Judge:
The motion for rehearing is granted. This panel's unpublished opinion of April 11, 1980, 615 F.2d 917 (5th Cir.), is vacated in its entirety.
This appeal challenges the district court's disposition of a class action brought pursuant to section 1981, 42 U.S.C. § 1981, and Title VII, 42 U.S.C. § 2000e et seq. Suing on behalf of a class of black persons and Mexican-American persons who have been, are, or may be, employed by defendant Uncle Ben's, Inc., plaintiffs alleged in their complaint that Uncle Ben's had engaged in a variety of discriminatory employment practices. Specifically, they contended that Uncle Ben's discriminated against both groups in compensation, hiring, promotion, transfer, seniority and other terms and conditions of employment. The district court, however, held that plaintiffs had failed to present a prima facie case showing discriminatory treatment of Mexican-Americans and on all but one issue regarding blacks, and, therefore, it dismissed as to these issues at the conclusion of plaintiffs' case. On that one issue, the district court found that plaintiffs had established a prima facie case of discrimination against blacks in promotion, but ultimately ruled in favor of Uncle Ben's on this point as well.
The district court adopted and applied an erroneous notion of the controlling legal principles regarding the use and role of statistics in an employment discrimination case. In discussing the promotion issue, the district court stated,
(Emphasis added.) This standard is incorrect.
Statistics as to racial composition of the defendant's work force serve an important role in judging employment discrimination cases. International Brotherhood of Teamsters v. United States, 431 U.S. 324, 339, 97 S.Ct. 1843, 1856, 52 L.Ed.2d 396 (1977); Fisher v. Procter & Gamble Manufacturing Co., 613 F.2d 527, 543-44 (5th Cir. 1980). "Where gross statistical disparities can be shown, they alone may ... constitute prima facie proof of a pattern or practice of discrimination." Hazelwood School District v. United States, 433 U.S. 299, 307-08, 97 S.Ct. 2736, 2741, 53 L.Ed.2d 768 (1977). See also Fisher v. Procter & Gamble Manufacturing Co., 613 F.2d at 544; Pettway v. American Cast Iron Pipe Co., 494 F.2d 211, 225 & n.34 (5th Cir.
The clearly erroneous standard of review does not apply to findings of fact premised upon an erroneous view of controlling legal principles. Parson v. Kaiser Aluminum & Chemical Corp., 575 F.2d 1374, 1382 (5th Cir. 1978), cert. denied, 441 U.S. 968, 99 S.Ct. 2417, 60 L.Ed.2d 1073 (1979); Johnson v. Goodyear Tire & Rubber Co., 491 F.2d 1364, 1372 n.20 (5th Cir. 1974). The district court's findings based on its misunderstanding of this legal standard are entitled to no deference. We must undertake an independent analysis of the record before us in light of the correct legal standards.
Plaintiffs alleged that between 1972 and the institution of this suit in 1974, and as far back as 1960,
This case nevertheless raises a difficult problem involving whether there was evidence of Uncle Ben's substantial underutilization of Mexican-Americans at the close of plaintiffs' direct case. Uncle Ben's asserts that the district court properly dismissed plaintiffs' allegations of discrimination against Mexican-Americans because at the close of plaintiffs' case the record was devoid of evidence supporting such allegations. We agree.
Plaintiffs' case regarding Mexican-Americans rested on the testimony of their expert, Richard Alfred Tapia, to the effect that Uncle Ben's substantially underutilized Mexican-Americans. On cross examination, however, Dr. Tapia disclosed that he had relied on statistics relating to 1975, more than a year after suit was filed. He conceded that he had no information regarding the number of Mexican-Americans employed and terminated during the period covered by the suit. He conceded further that the basis for his opinion did not include
The district court originally, and at the time quite correctly, determined that plaintiff would adequately represent the certified class of blacks and Mexican-Americans. At trial, however, representation of the class of Mexican-Americans was not adequate. The thrust of plaintiffs' direct case concerned the situation involving black employees. Although this may well have been necessary on the issue of promotion considering the small number of Mexican-Americans employed by Uncle Ben's, plaintiffs' preoccupation with the issue of black promotion seemingly led them to omit to introduce into evidence the number of Mexican-Americans hired by Uncle Ben's.
Under Rule 23 of the Federal Rules of Civil Procedure, the trial court has a duty to supervise plaintiffs' presentation to safeguard the rights of the class being represented. Grigsby v. Northern Mississippi Medical Center, Inc., 586 F.2d 457, 462 (5th Cir. 1978); Guerine v. J & W Investment, Inc., 544 F.2d 863, 864-65 (5th Cir. 1977). When it became apparent that plaintiffs did not adequately represent the Mexican Americans, the trial court should have taken action such as dividing the certified class into a separate subclass for the Mexican-American members, see Fed.R.Civ.P. 23(c)(4), decertifying that class, or certifying a second class. To remedy the trial court's failure in this respect we now hold that dismissal of all claims regarding Mexican-Americans is without prejudice. This judgment does not have res judicata effect against them in light of plaintiffs' total failure adequately to represent them. Sam Fox Publishing Co. v. United States, 366 U.S. 683, 691, 81 S.Ct. 1309, 1314, 6 L.Ed.2d 604 (1961) ("the judgment in a class action will bind only those members of the class whose interests have been adequately represented by existing parties to the litigation"); Grigsby v. North Mississippi Medical Center, 586 F.2d at 461-62; Gonzales v. Cassidy, 474 F.2d 67, 73-75 (5th Cir. 1973).
Plaintiffs' case of employment discrimination against blacks showed that the proportion of that group in each job grade did not reflect the proportion of blacks available for promotion from lower job levels.
The district court correctly determined that plaintiffs' statistical evidence and testimonial evidence made out a prima facie showing of discrimination against
The trial court held that plaintiffs' prima facie case had been rebutted by Uncle Ben's evidence showing both the absence of discriminatory impact and the presence of "legitimate, nondiscriminatory" explanations for the status quo. Plaintiffs did not introduce evidence that these explanations were pretextual.
The findings regarding the absence of discriminatory impact are, in pertinent part, as follows:
On the discriminatory impact issue, Uncle Ben's persuaded the district court that the black/white ratio in each of Uncle Ben's job levels should be compared to the black/white ratio in comparable jobs in the Houston SMSA, and not compared to the black/white ratio in the relevant lower job level(s) at Uncle Ben's. The district court accepted this argument and, because of the favorable statistical comparison between Uncle Ben's at various levels and similar Houston SMSA job levels, found that Uncle Ben's had not violated Title VII.
The dispositive issue is whether Uncle Ben's ordinarily employs individuals for upper level positions by hiring laterally from outside the company or by promoting from within. If it hires laterally, the relevant comparison is to the general or qualified outside labor force. If Uncle Ben's fills jobs by promotion, the relevant comparison, as we recognized in James v. Stockham Valves & Fittings Co., 559 F.2d at 331, 341, is the company's internal work force. Accord, Hereford v. Huntsville Board of Education, 574 F.2d 268, 272-273 (5th Cir. 1978). The applicability of James in any given case turns on whether vacancies in non-entry level positions are or could be filled by promotion. If the vacant positions ordinarily are filled by lateral hires or hiring from among graduates of relevant educational programs, then the rigid James rule is inapplicable. See Mayor of Philadelphia v. Educational Equality League, 415 U.S. 605, 620-21, 94 S.Ct. 1323, 1333-1334, 39 L.Ed.2d 630 (1974); Hester v. Southern Ry., 497 F.2d 1374, 1379 n.6 (5th Cir. 1974).
The difficulty is that most cases fall between these extremes of exclusive promotion and of exclusive nonpromotion. As a general matter, however, cases are dealt with in terms of the extreme to which they most closely accord. In addition, the necessity of nonpromotions in certain jobs — or even in the majority of jobs within a company — should not foreclose an inquiry at trial into whether the remaining jobs filled by promotion are discriminatorily filled.
The district court frankly ignored deciding the questions of whether any promotion or upward mobility occurs at Uncle Ben's, and, if so, whether blacks suffer a disparate impact in seeking promotions. The trial court's findings 11-13 and 19 suggest that promotions occur. Findings 14-16 suggest that no promotions are made from Plant to Office. Yet neither set of findings is necessarily incorrect: Uncle Ben's may fill some of its positions by promotions while it must fill other positions from outside the company. If so, it is insufficient to know that blacks constitute 141 of Uncle Ben's 394 employees. We must know how many of those 394 employees hold jobs that ordinarily cannot be filled by promotion to decide the question of discriminatory impact.
The two issues of access — promotion and lateral hiring (including hiring from schools) — should be kept separate in scrutinizing statistical analyses. Cf. Johnson v. Goodyear Tire & Rubber Co., 491 F.2d at 1372-73 (statistical consequences of unvalidated testing should not be manipulated by including effects of independent transferral policy). Assuming that Uncle Ben's only hired whites for nonpromotion positions, only similarly situated black applicants have suffered discrimination. The class of black laborers who are striving, or would be striving but for discrimination, International Brotherhood of Teamsters v. United States, 431 U.S. at 363-64, 97 S.Ct. at 1868-1869; James v. Stockham Valves & Fittings Co., 559 F.2d at 341-42, for a promotion from within the company to a promotion job may not have been injured. Similarly, if lateral hires were exclusively black, this would provide little solace for the class of black laborers, and would not mitigate any discrimination suffered in promotions.
The trial court erred in tacitly approving the part of Uncle Ben's promotion system that is based on the use of subjective supervisory evaluations. We have repeatedly held that subjective selection processes involving white supervisors provide a ready mechanism for racial discrimination. Parson v. Kaiser Aluminum & Chemical Corp., 575 F.2d at 1385; James v. Stockham Valves & Fittings Co., 559 F.2d at 345; Rowe v. General Motors Corp., 457 F.2d at 359.
Uncle Ben's subjective promotion system substantially embodies the mechanisms that we invalidated in Rowe:
Id. at 358-59 (footnote omitted). See Wade v. Mississippi Cooperative Extension Service, 528 F.2d 508, 518 (5th Cir. 1976) (§ 1981 standard). These Rowe vices are
In all likelihood, the district court did not mean to approve Uncle Ben's subjective promotion system. Rather, it probably concluded that Rowe was inapplicable because no resulting substantial discrimination existed. Hester v. Southern Ry., 497 F.2d at 1381. We hold that Uncle Ben's subjective promotion system fails, unless the district court concludes in light of our instructions in Part V that blacks suffered no discriminatory impact in promotion.
If the district court finds on remand that a discriminatory impact existed, it must then reexamine its conclusions regarding whether Uncle Ben's educational requirements have been validated. Should such inquiry be necessary, it must be made in light of the following standards and principles.
Title VII was specifically designed to remove "artificial, arbitrary, and unnecessary barriers to employment when the barriers operate invidiously to discriminate on the basis of racial or other impermissible classification." Griggs v. Duke Power Co., 401 U.S. 424, 431, 91 S.Ct. 849, 853, 28 L.Ed.2d 158 (1971). Cf. Miller v. International Paper Co., 408 F.2d 283, 294 (5th Cir. 1969) ("The ethic which permeates the American Dream is that a person may advance as far as his talents and his merit will carry him.") An educational requirement for a job is lawful if it is required by "business necessity," Griggs v. Duke Power Co., 401 U.S. at 431, 91 S.Ct. at 853-854; Payne v. Travenol Laboratories, Inc., 565 F.2d 895, 899-900 (5th Cir.), cert. denied, 439 U.S. 835, 99 S.Ct. 118, 58 L.Ed.2d 131 (1978), and valid under the EEOC's Uniform Guidelines on Employee Selection Procedures, 29 C.F.R. § 1607 (1979); see Albemarle Paper Co. v. Moody, 422 U.S. 405, 425, 95 S.Ct. 2362, 2375, 45 L.Ed.2d 280 (1975). See generally Griggs v. Duke Power Co., 401 U.S. at 431-33, 436, 91 S.Ct. at 853-854.
MODIFIED AND AFFIRMED IN PART, REVERSED IN PART AND REMANDED.
DANIEL HOLCOMBE THOMAS, District Judge, dissenting:
This writer respectfully dissents. In the course of rendering its decision, the district court stated "that what has transpired . . at Uncle Ben's could not have statistically have [sic] happened by chance," yet "[t]he law does not say that the defendant shall not violate the rules of mathematical probability." Although this and similar statements indicate the Court's confusion as to the role of statistics in cases of this sort, e. g., Fisher v. Procter & Gamble Mfg. Co., 613 F.2d 527, 544 (5th Cir. 1980). I would affirm because, when evaluated on legally sufficient grounds, the district court's findings regarding the lack of discrimination in the promotion of blacks at Uncle Ben's are not clearly erroneous. I would further conclude that the district court did not err in holding that the plaintiffs had failed to establish a prima facie case on all issues other than discrimination against blacks
Pettway v. American Cast Iron Pipe Co., 494 F.2d at 218 n. 10. See also Hazelwood School Dist. v. United States, 433 U.S. 299, 309 n. 15, 97 S.Ct. at 2742-2743 n. 15, 53 L.Ed.2d 768 (1977).