Full opinion text
MEMORANDUM OPINION MYRON H. THOMPSON, Chief Judge. In this 13-year-old class-action lawsuit, the plaintiffs charged the defendants with employment discrimination based on race in the Aabama Department of Transportation. The plaintiffs are African-Americans, and they represent a class of African-American merit and non-merit system employees and unsuccessful applicants. The defendants include the Aabama Department of Transportation, the Aabama State Personnel Department, and several state officials. On April 16, 1997, the court entered an order requiring that the defendants pay the plaintiff class the sum of $34,732,487.00 in backpay pursuant to two mathematical formulas that the parties adopted for determining whether plaintiff class members are eligible for backpay, and for calculating the amount of backpay, if any, each class member is entitled to receive. The award resolves the backpay claims of approximately 2,400 plaintiff class members, and actually provides backpay to 2,137 class members for the discrimination they faced in the time period from 1979 to 1997. The April 16 order was based on a number of summary findings in earlier orders. This memorandum opinion expands on these findings and explains in more detail the basis for the April 16 order. I. BACKGROUND A general and chronological overview is necessary for proper discussion of the issues before the court. May 21, 1985 The nine plaintiffs in this lawsuit are Johnny Reynolds, Ouida Maxwell, Martha Ann Boleware, Florence Belser, Peggy Vonsherie Alen, Jeffrey Brown, Robert Johnson, Cecil Parker, and Frank Reed. Reynolds filed this lawsuit on May 21,1985, and the other plaintiffs were allowed to intervene over the next seven years. They charged the defendants with widespread and long-lasting race discrimination, and advanced claims based on theories of “disparate treatment” and “disparate impact.” The plaintiffs based this lawsuit on the following: Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.A. §§ 1981a, 2000e through 2000e-17; the fourteenth amendment to the United States Constitution, as enforced by 42 U.S.C.A. § 1983; and 42 U.S.C.A. § 1981. The jurisdiction of the court has been invoked pursuant to 28 U.S.C.A. § 1343 and 42 U.S.C.A. § 2000e-5(f)(3). October 8, 1986 The court entered an order certifying a plaintiff class as follows: (1) all black merit system employees employed by the Transportation Department at any time since May 21, 1979; (2) all black non-merit system employees of the department who have unsuccessfully sought employment as merit system employees with the department at any time since May 21, 1979; and (3) all black non-employees who have unsuccessfully sought employment as merit system employees with the department at any time since May 21, 1979. Subclasses (1) and (2) therefore consisted of “employees” of the department, and subclass (3) consisted of “non-employees.” 1988 The parties reached a full settlement of this case, but the court refused to approve the proposed consent decree in the face of numerous objections from the members of the plaintiff class. The court explained that “there are five critical factors which together conclusively counsel against” the settlement. “First, the record developed by the parties is insufficient to support the difference in treatment between the six named plaintiffs and all the other class members. Second, the record is insufficient to justify a result which would in effect deny to hundreds of class members, whether they like it or not, an opportunity to have ever had their claims heard in a court of law. Third, there is nothing in the record upon which the court could base its affirmative approval of the EIT requirement. Fourth, the court cannot turn a blind eye to the fact that from the present record it appears that, of those class members who appear to have any interest in this litigation, the overwhelming majority strongly oppose it. And fifth and finally, the record is insufficient as to several issues regarding the legality of the proposed consent decree.” 1991 In January 1991, following shortly after the court’s rejection of the first proposed settlement, the parties submitted a second proposed consent decree. The court provisionally approved the consent decree and set in motion the processes for notice to the plaintiff class members of the proposed settlement and their opportunity to opt-out of the settlement and file any objections they may have. Over the following two months, a number of class members opted-out, and there were two additional attempts to intervene in this litigation. In light of these events, and the defendants’ position that the events made it impossible to settle fully the on-going litigation, the defendants exercised their option to withdraw from the second proposed consent decree. The court then entered an order that the proposed consent decree was not approved. 1992 The trial began and extended, with some breaks, over several months, from June 15, 1992, to November 25, 1992. The plaintiffs first reintroduced findings and orders from an earlier ease, United States v. Frazer, civil action no. 2709-N (M.D.Ala.), which was consolidated with this case, and then proceeded to introduce new evidence from the time period following Frazer. United States v. Frazer: For the first three-quarters of this century, the State of Aabama and its agencies excluded African-Americans, because of their race, from employment other than in low and menial positions, and throughout the last quarter of this century, despite outstanding court orders, the Transportation Department manipulated, or even circumvented, State personnel procedures to avoid hiring and promotion of African-Americans into responsible and non-menial jobs. In the late 1960s, the United States brought an action against the Alabama State Personnel Department challenging personnel practices which it contended intentionally discriminated against African-American applicants and employees. In 1970, in United States v. Frazer, 317 F.Supp. 1079 (M.D.Ala.), the court agreed with the United States, and found that agencies of the State of Aabama had engaged in a State-sanctioned policy of manipulating and circumventing the State’s personnel procedures to avoid the hiring and promotion of African-Americans. Id. at 1084-87. The court found intentional, pervasive, systematic exclusion and avoidance of black employees and applicants throughout numerous State departments. The evidence demonstrated that racial discrimination was accomplished in several ways, many of which involved manipulations of personnel practices and procedures to exclude eligible and qualified black employees from competing for jobs. The evidence overwhelmingly showed refusals to hire, or even to interview, African-Americans who had qualified and appeared on the certificates of eligibles, despite an 'urgent and constant need to fill positions. Id. at 1087. It also showed that agencies maintained racially segregated facilities in their buildings. Id. Indeed, John S. Frazer, director of the Personnel Department, testified to his belief that the race of applicants was a legitimate factor for consideration in selecting employees. Id. at 1085. The Frazer court found that “defendants’ systematic refusal to appoint Negro applicants and their preference for lower-ranking white applicants constitute unlawful race diserimination[,] ... a clear violation of the equal protection clause of the Fourteenth Amendment.” Id. at 1089-90. The court entered similar findings on the defendants’ recruitment and advertising practices. The Frazer court entered an order broadly prohibiting State officials from “engaging in any employment practices, including recruitment, examination, appointment, training, promotion, retention, or any other personnel action, for the purpose or with the effect of discriminating against any employee, or actual or potential applicant for employment, on the ground of race or color.” Id. at 1090. The court further imposed what has come to be known as the “no-bypass rule,” which provides that State officials “shall not appoint or offer a position to a lower-ranking white applicant on a certificate in preference to' a higher-ranking available Negro applicant, unless the defendants have first contacted and interviewed the higher-ranking Negro applicant and have determined that the Negro applicant cannot perform the functions of the position, is otherwise unfit for it, or is unavailable.” Id. at 1091. Six years later, in the same litigation, similar allegations were again before the court. The United States charged that State personnel practices were systematically and deliberately manipulated to prevent blacks from competing with white- applicants for jobs and promotions. In an order entered in August 1976, the court found a pattern and practice of racial discrimination in employment in the Transportation Department (then known as., the Highway Department). See United States v. Frazer, civil action no. 2709-N, 1976 WL 729 (M.D.Ala. Aug.20, 1976). Specifically, the Frazer court found that the new defendants, including the Transportation Department, “avoided compliance with the decrees in this case by examining job registers maintained by the Personnel Department of the State of Aabama and by requesting certificates of eligibles only at times when no blacks were available for certification.” Id. at *4. The court also pointed out other evidence of discriminatory practices, including maintaining registers on a non-continuous basis (establishing a register and not adding any persons until that register is exhausted and another exam is administered), or “closing” a register for as long as two years. In this way, all-white registers were maintained. Id. at *5-*6. The court observed, “Progress toward erasing the effects of prior exclusionary practices upon the basis of race has been minimal and in many instances non-existent.” Id. at *6. The Frazer court also recounted the story of one black applicant’s attempts to obtain a position with the State, and the elaborate lengths to which the Personnel Department went to avoid him. This occurred despite the fact that he was first on the register for the position, and that the Alabama Development Office Assistant Director found him “extremely well qualified.” Id. at *4-*5. The Frazer court entered a more detailed order requiring, among other things, that defendants validate all written tests. It also ordered that State officials “shall insure that blacks who are appointed to ... job classifications common to several agencies shall be appointed to all agencies in which such vacancies occur. No defendant shall attempt to avoid this provision by deferring requests for certification until blacks are unavailable.” Id. at *7. One of the injunction’s specific provisions required that the defendants “engage in intensive recruitment for black applicants for ... Graduate Civil Engineer.” Id. New Evidence: The evidence presented reflected that, during the years following the court’s 1976 findings in Frazer, defendants continued to engage in the same pattern and practice of racial discrimination. By use of these practices, the evidence reflected, the defendants could preclude black applicants from applying for the historically white job classifications for prolonged periods, extending such exclusion into the late 1980s for some larger and more important job classifications. The most obvious of these practices, condemned and enjoined in 1976, was the refusal to permit applications for years at a time while the existing register used to fill vacancies was either all-white or predominantly white. In the 1980s, when African-Americans began to apply for positions where registers had been exhausted, applicants were suddenly subjected to a battery of new screening criteria and examinations. No evidence established that these criteria were job-related, nor validated as required by the Frazer injunction. For example, the first qualification imposed on applicants for the Graduate Civil Engineer positions, an entry level job, was that they graduate from an “accredited” program, which eliminated graduates from most predominantly black schools. In mid-1979, however, a graduate of Southern University’s accredited Civil Engineering program learned of a Graduate Civil Engineer job at the Transportation Department and attempted to apply for it. Josh Chappie testified at trial, and the Department’s internal documents corroborated his testimony, that, instead of processing Chappie’s application in the normal fashion according to the established criteria and procedures, both the Transportation Department and the Personnel Department subjected him to a series of delays and special requirements. Among them were: (1) a requirement that he pass the “engineer-in-training,’’ also known as the “EIT,” examination, though the defendants did not require that of white applicants; (2) a requirement that he take additional college course work in geology and transportation science before they would accept his application, though they did not post such course work on the job announcement or require it of white applicants; and (3) various other roadblocks catalogued on a daily basis in a Transportation Department internal memorandum dated November 3, 1978. In another, later in-house memorandum, dated March 16, 1984, the Transportation Department’s minority recruiter wrote: “[A] door to potential black [Graduate Civil Engineer’s from predominantly black Southern University was slammed when, on November, 1978, the qualifications which had been sufficient for many years for white [Graduate Civil Engineerj’s were found to be unsatisfactory” for the first black applicants who satisfied them. Finally, when two African-American applicants on the register were to be hired because of the no-bypass rule of Frazer, and ten more African-American graduates appeared on the Graduate Civil Engineer employment register, the defendants suddenly abolished the register. The new job announcement included the EIT test as a posted requirement. The defendants, in an unabashed echo of their earlier racially discriminatory treatment of Chappie, declared the ten African-American applicants ineligible to reapply, despite their having successfully competed and ranking high enough on the register to be selected and despite the affirmative duty placed on the defendants by the Frazer injunction to “engage in intensive recruitment for black applicants for ... Graduate Civil Engineer.” Frazer, 1976 WL 729, at *7. Chappie’s story is one of the most compelling. But there was testimony from other witnesses of numerous other instances of racially discriminatory employment practice— far too many instances to recount here: One example, however, was plaintiff class member Ganiu Alabi. Alabi testified that in spite of his qualifications, which included college degrees in petroleum and civil engineering, passing the EIT exam, and teaching labs for college engineering courses, his applications with the Transportation Department for civil engineering jobs were repeatedly denied. Instead, he was hired as an Engineering Assistant I, a position which requires only a high school diploma, in a geographic area more than 150 miles from his home. Neither his supervisor, his supervisor’s supervisor, nor his supervisor’s supervisor’s supervisor had a college degree in engineering. In addition, Alabi rode in a Transportation Department truck from Fort Deposit, Alabama, to his work site with his supervisor throughout the year of his employment. His supervisor refused to permit him to ride in the cab of the truck; though it was not occupied. From the driver’s seat, the supervisor would spit tobacco juice out the window, striking Alabi in the face. Alabi described the insulting incident as follows: “[MR. ALABI]: ... [The supervisor] chews tobacco and makes sure to spit it out while the truck was in motion. I ended up with most of the juice in my face. “[PLAINTIFFS’ COUNSEL]: Did you complain about that? “MR. ALABI: Yes, I did. “[PLAINTIFFS’ COUNSEL]: Yes, you did? “MR. ALABI: He told me, ‘tough shit, it was a privilege to ride in the truck, not a right.’ ” In addition to these insulting behaviors, Ala-bi’s supervisor also expressed his opinions that blacks with engineering degrees were inferior to whites with similar qualifications, and that blacks were lazy and sat around watching television and collecting welfare. Finally, despite Alabi’s continuing attempts to be considered for engineering jobs better suited to his qualifications, and despite a transfer to another area, he had not, at the time of the 1992 trial, been considered for an entry level engineering job. He was not even promoted to an Engineering Assistant-II. He left the Transportation Department for a engineering job with the Alabama Department of Natural Resources. Other evidence established that the Transportation Department had posted no job announcements, nor received applications in certain job categories, for as long as seven years, far longer than the two years that the court condemned as discriminatory in Frazer. For example, the defendants refused to receive applications for Civil Engineer-I and -II positions from 1974 to 1987, except for one three-week period in 1979 and a second three-week period in 1984. The defendants still did not take Civil Engineer-II applications up to the entry of consent decree I — opening that classification for only nine weeks in 20 years. Similar statistics were presented for many other job classifications. Evidence also showed maintenance of multiple registers, which supervisors could preview before determining from which to fill a job and which they could then use to manipulate the selection process so as assure the selection of persons whom the supervisors wanted, despite the relative qualifications of those under consideration and despite any roadblock the no-bypass rule might have place in the selection process. The 1976 Frazer injunction specifically condemned previewing registers. Frazer, 1976 WL 729, at *4. Just before completion of the plaintiffs’ case, the parties announced that they might be able to settle the litigation again. 1993 The parties reached a third, albeit only partial, settlement, subsequently embodied in three consent decrees. In the wake of this new settlement, the court allowed a group of non-class members — consisting mostly of white employees of the Department of Transportation, and now commonly referred to as the “Adams intervenors” — to intervene and challenge any race-conscious provisions in the settlement. March 16, 1991 The court approved one of the consent decrees, now known as “consent decree I.” The court reaffirmed the certification of a plaintiff class, with subclasses, as set forth in the order of October 8, 1986. The other two proposed consent decrees are currently under the court’s consideration. Consent decree I was a comprehensive document addressing the classwide issues raised in this litigation. It completely revamped and updated the personnel policies and practices at the Transportation Department in an attempt to undo the extensive history of racial discrimination that had infected the process for many decades. Starting from the ground up, the consent decree abolished all the existing registers at the Transportation Department (article IV), and directed the creation of new job validations (article II), new exams (article III), and the resulting new registers. Article VI specifically identified the form the new registers could take and set forth the policies the department would use in working with and maintaining the registers. Article VII set forth the policies for working with certificates of eligibles drawn from the registers. Finally, article VIII set forth policies for conducting interviews of applicants. In the period leading to the foregoing being fully operational, the consent decree provided for provisional appointments to any open positions (article TV). To augment the new hiring procedures and to ensure that the existing Transportation Department employees who had been the victims of the discrimination were able to compete fully for positions, the consent decree required that they receive information about the job opportunities available to them within the department (article X), participate in a rotation of duties and assignments to give them experience in various jobs (article XIV), and receive training that they had been denied over the years (article XVI). The consent decree also required that the Transportation Department engage in aggressive recruitment to encourage potential black applicants to apply for jobs at the department, particularly engineering jobs (article I). The Transportation Department’s engineering jobs were particularly profoundly effected by discrimination, and article XIII directed that the department take a number of actions to rid these jobs of discrimination and ensure the appointment of black engineers. Finally, the consent decree contained a number of other provisions governing the Transportation Department’s policy against racial harassment (article XVII), the appointment of relatives (article XVIII), general provisions relating to the consent decree (article XIX), further proceedings regarding class members’ individual claims (article XX), and attorneys’ fees (article XXI). July 5, 1995 On July 5, 1995, the court entered an order dividing the plaintiff class into three groups: (1) the named plaintiffs; (2) all witnesses who testified at the 1992 trial; and (3) the remainder of the plaintiff class. This division was part of the court’s larger plan for proceeding with resolution of the class members’ individual claims pursuant to article XX of consent decree I, which provides, in part, as follows: “Further negotiations and proceedings are required to resolve the claims for monetary and non-monetary remedies for individual members of the class (including the named plaintiffs and intervenors), provided however, that this Decree does not in and of itself entitled any such class member to such remedies. Such claims shall be resolved first by settlement negotiations and then, to the extent not resolved by settlement negotiations, by the Court.” In its July 5 order, the court indicated that members of groups one and two would have the opportunity to have their claims heard individually, and-set forth procedures to begin this process. The court also indicated that it was considering methods, including the use of a formula, for resolving the claims of members of group three, August 28, 1995 After the approval of the consent decree I, the parties attempted to settle some of the remaining issues in this lawsuit, including how to calculate eligibility for and the amount of backpay for class members. These negotiations took place pursuant to article XX of consent decree I. As part of their effort to agree on formulas for calculating backpay, the attorneys and experts for the plaintiffs and the Department of Transportation submitted on August 28,1995, what is now called the “August 28 report.” For purposes of discussion of the issue now before the court, the report contains essentially two formulas, one to calculate “eligibility” for backpay (the eligibility formula) and another to calculate the “amount” of backpay (the amount formula) for class members. The eligibility formula is, in part, as follows: “Pursuant to prior Orders of the Court, the parties have met and discussed the points of agreement and disagreement between them on the formula for resolving further remedies under Article Twenty of Consent Decree I. The parties agree to the following: 1. Backpay for class members who have been employed by the Alabama Department of Transportation (formerly the Alabama Highway Department)1 will be determined by a multiple regression formula constructed as follows: a. Class members will be categorized into cohort groups within line of progression or job families in which they worked or applied. For example, the Civil Engineer line of progression or job families is the one that begins with Engineering Assistant I and proceeds through Civil Engineering VII. The Highway Maintenance Technician line of progression or job family is the one that begins with Highway Maintenance Technician I or Laborer and proceeds through Highway Maintenance Superintendent and/or other supervision of HMT’s or Laborers. b. The statistical method of ‘ordinary least squares’ will be used to determine the weight each regression factor played in determining salary. For each cohort group, a multiple regression equation will be determined using non-racial job-related factors actually used by the State Personnel Department plus race as an additional independent variable (coded as ‘black equals one,’ and ‘white equals zero’). For those cohort groups for which the coefficient of the race variable is statistically significant from zero (defined as at least a number of standard deviations of_or other threshold standard),2 the formula will then be used to compute expected earnings of each class member in the same way as the following example. n. 1. The parties have not yet agreed as to whether other remedial issues can be resolved through the agreed-upon formula, but are continuing to discuss this issue. n. 2. The parties are in disagreement as to the handling of the effects of pre-1979 disparities at this point. The Department of Transportation proposes that the claimants be divided and examined in two categories of employees (i) the earnings of all employees hired after the effective date (January 1979), and (ii) the increments in earnings after January 1979 of those who are hired before January 1979. Then regression analysis can be utilized to measure in a similar fashion the impact of race on earnings. Again, if the race coefficient is found to be statistically significant, then claimants will be all those whose actual earnings are below their level based on the estimated formula. The parties also are continuing to discuss the appropriate number of standard deviations or other threshold standard for determining which cohort groups have sufficient racial disparities in salary to be subject to the formula set forth above." The report then concluded with an acknowledgment of full “agreement” to the formula conditioned upon “non-acceptance” within a set time period by either party. The amount formula is as follows: “Assume that years of service (‘S’), years of education (‘E’) and race (‘R’) resulted in the following equation where race is a significant factor: Expected salary = $9000 + 200 x S + 300 x E - 1000 x R This indicates a base salary of $9,000 with an additional $200 for each year of service and $300 for each year of college education as determined by multiple regression of such factors and that African-Americans with comparable service and education earn $1,000 less than their white counterparts. With these assumptions, the formula set forth above would compute expected earnings for a class member having 2 years of service (‘S’) and 4 years of education (‘E’) as follows: Expected Salary = $9000 + 200 x 2 + 300 x 4 + 1000 (for a total of $11,600 in expected earnings if there had been no racial discrimination) This analysis will be performed for each year of the liability period. Backpay for this class member would be the foregoing Expected Salary of $11,600 minus his actual pay salary for the same time period with interest for the difference computed at NLRB-IRS interest rates compounded quarterly. e. The parties agree that any regression factor must satisfy the following conditions in order to be used in the equations and calculations: (1) it was actually utilized by the State Personnel Department in determining qualifications of competing candidates for the job classifications in question throughout the period of liability (1979-1995); (2) it does not have disparate impact on the plaintiff class or otherwise perpetuate the effects of past discrimination by the defendants against such class or if it does, it is valid, job related, and consistent with business necessity; and (3) it was not the subject of any remedial provision of the Consent Decree in this action. The foregoing standards will apply to all regression factors, including those listed in ¶ 1 of the Expert Report of Dr. Ephraim Asher dated August 10, 1995, namely: race, seniority, years of experience (where applicable), years of education (where applicable), educational degrees and certifications (where applicable). The parties have not agreed that these factors satisfy the foregoing standards for inclusion in the agreed upon formula or calculations.” The August 28 report’s conclusion provided: “2. Counsels’ tentative agreement in this regard is subject to each party’s acceptance of these terms, and other resolution of outstanding issues with respect to the issues in footnotes 1 and 2 hereinabove. Written notice of non-acceptance must be filed with the Court and served by the close of business on Friday, September 1, 1995. Discussion of issues not resolved herein may continue to be discussed after that date.” Neither side rejected the formula within the time allowed, and the formula thus became a binding agreement. September 11, 1995 The plaintiffs and the Transportation Department submitted another joint report, signed by counsel for both sides, and now called the “September 11 report,” stating that, “Pursuant to the instructions of the Court, the parties have determined the issues related to implementation of Article Twenty that they have resolved by agreement and those that must be resolved by the Court at the hearing scheduled for September 14, 1995.” The parties therefore made clear two separate points of agreement in the September 11 report: first, that “they have determined the issues related to implementation of Article Twenty that they have resolved by agreement”; and, second, that they “have determined ... those that must be resolved by the Court.” In accordance with the first agreement in the September 11 report, the parties stated that, first, “The multiple regression formula agreed upon by the parties is set forth in the Report of Points of Agreement and Disagreement Regarding Formula for Determination under Article Twenty of Consent Decree I.” The parties then listed six items for “resolution” by the court as part of their second agreement. They stated in the September 11 report that, “The parties have agreed that the Court must determine the following issues that have not yet been agreed upon: 1. Should the remedial formula that the parties agreed upon in the Joint Report of August 28, 1995, be restricted to the job families that satisfy a test of statistical significance, or should some other threshold standard be adopted? If a strict test of statistical significance is to be adopted, what probability level should be adopted and should it be determined by a one-tailed or two-tailed test? 2. May class members dissatisfied with the results of the formula opt-out for an individualized trial and, if so, under what conditions? 3. Should the Court adopt the adjustment proposed by the [Alabama Department of Transportation] for the effects of pre-1979 disparities in footnote 2 of the Joint Report of August 28,1992? 4. Should the multiple regression formula be extended to the non-employee class members and, if so, what modifications may be necessary to do so? If not, what method of determining remedies should be adopted under Article Twenty of Consent Decree for non-employee class members? 5. Should constructive employment, service histories and expected current job classifications be determined by reference to the job classification in the applicable job family that corresponds to the salary level in the salary range established by the State Personnel Department? If not, what method of determining job awards and constructive service histories should be adopted? 6. Should the back-pay awarded to each class member be adjusted upward to compensate for increased tax-rates or tax obligations from receiving such pay in a lump sum in 1995 rather than in bi-weekly installments during the period from 1979 through 1994?” September H, 1995 A hearing was held on the issues identified in the September 11 report for “resolution” by the court. At the hearing, the court stated that it had never been confronted with an agreement where it was essentially suppose to fill in the blanks in the agreement. The court asked the parties to reaffirm the court’s understanding that the parties wanted it to, in fact, “resolve” the parts left open in the formulas in the August 28 report. In other words, this was not a mediation hearing, but a resolution hearing. The parties reaffirmed this understanding of the August 28 report and the September 11 report. Indeed, the only issue of dispute with regard to the court’s role was whether the court’s resolution of the blank or ambiguous parts of the August 28 report would be subject to appellate review. The Transportation Department argued that there should be appellate review, and the plaintiffs argued that consent decree I and the August 28 report did not allow for such. The court noted that the issue of appellate review need not be resolved at that time, but emphasized that the import of the dispute was that the parties agreed that filling in the blanks in the formulas was for the court and that the court’s actions, subject only to arguable appellate review, were binding. November 30, 1995 The court entered an order, pursuant to Rule 706(a) of the Federal Rules of Evidence, appointing Mr. Ben Fine, an attorney and professor of mathematics, to serve as an expert witness as to mathematical and statistical issues. January 22, 1996 The court, at the request of the defendants, and over the strong objection of the plaintiffs, entered an order modifying the formula for calculating the amount of back-pay contained in the August 28 report. The August 28 report referred to two formulas, as follows: “Expected salary = $9000 + 200 x S + 300 x E - 1000 X R “Expected Salary = $9000 + 200 x 2 + 300 x 4 + 1000 (for a total of $11,600 in expected earnings if there had been no racial discrimination)” The court rejected the defendants’ argument that “the addition of the race coefficient in the second equation [was] a mistake.” The court explained that, “First, it is unlikely that the department believed when it signed the August 28 report that the second equation contained a minus sign because the equation in which the alleged mistake exists is solved and the addition is complete and correct. If the result of the equation had been given as $9,600, rather than $11,600, it would be plausible that the department thought that the sign before the $1000 term was a minus. Not only does the sign appear as a plus, the result of the equation, which is given twice, reflects that the $1000 term was added to the rest of the equation. Further, the parties discussed this very equation throughout their negotiations on August 28, 1995. According to the plaintiffs, when the department’s expert proposed a formula that included race as a factor, and included blacks and whites in the database, but also added the race factor twice, they agreed to it because it would result in higher awards for class members. Also, the department’s attorney and expert both signed the report. Thus, at the end of the August 28 negotiations, the department was fully aware of the contents of the report.” The court further explained that “the August 28 report contained a provision which gave the parties from Monday, August 28, through Friday, September 1, to review the report and back out of it if they wished. The department did not indicate in any way during this time that it had any reservations about the report. Indeed, on Friday, September 1, 1995, in a teleconference with counsel for the plaintiffs and the department, the court told the parties that it was confused by the fact that the first equation subtracted the race coefficient while the second equation added the race coefficient, and asked counsel for the department directly if the second equation was correct. The department’s counsel assured the court that both equations were correct and noted particularly that the parties intended for the sign to switch from a minus in the first equation to a plus in the second equation. Thus, not only did the August 28 report provide the parties with time to review the report on their own before being bound, but the court itself directed the department’s attention to the very equation now at issue and asked it whether it intended for the equation to read as it did. Of course the fact that the parties had the opportunity to review the report does not establish that the report is free from mistakes. However, the fact that counsel for the department told the court directly that the equation at issue said what the department wanted it to say indicates that the equation was not a mistake.” The court nevertheless relieved the defendants of compliance with the second equation as written and modified the August 28 report. The court wrote that, “it appears that the two equations at issue cannot logically be reconciled. As explained above, the two equations purport to calculate the same thing, but they use different methods and produce different results. Because the August 28 report does not explain how the various equations are to be used together, the report is susceptible to at least two different facial interpretations: that the parties intended that each class member receive $1,000 more than similarly situated whites, or that they intended that each class member receive $1,000 less than similarly situated whites. The result of the contradiction between the two equations is that the August 28 report is ambiguous.” The court explained that the following new equation, fashioned by the court, “will best accomplish the parties’ intentions and resolve the ambiguity in the August 28 report would be one that combines both the first and second equations, with the result that the race coefficient is canceled out or eliminated”: “Expected salary = B + 200 x years of service + 300 x years of education.” The court further wrote: “In this equation, B is equal to the base salary calculated using only whites in the database. The analysis determined that each year of service contributed $200 to the final salary and each year of education contributed $300. Again, these values were calculated using only whites in the database. The ‘years of service’ and ‘years of education’ terms are used as examples of the kinds of factors that might eventually go into the equation. The court should not be understood to have decided the actual components of the equation; it has not. Rather, the court is demonstrating the construction of the equation. Because the race coefficient is already contained in B, it is neither added nor subtracted. The equation constructed by the court accomplishes the goals of the parties because it will calculate what a class member would have earned in the absence of discrimination. Because the department did not discriminate against white employees, only the salaries of whites will be used to calculate the base salary and the values of each term of the equation.” May 13, H, and 15, 1996 The court held a hearing on a number of issues regarding the backpay formulas for eligibility and amount. May 16, 1996 After the May 13-15 hearing, the court entered a summary order of its general findings and conclusions for determining eligibility for and the amount of backpay for all class members. After noting that, under the August 28 report, “class members will be divided into cohort groups, and backpay will be calculated using the backpay equation for those class members who are in eligible cohorts,” the court found as follows: “(1) Class-wide liability. The court finds that the entry of consent decree I, entered on March 16,1994,1994 WL 899259, operated as a finding of class-wide liability. “(2) Determining eligibility. Eligibility for application of the backpay equation will be determined at the cohort level. The structure of the eligibility formula will be as follows: (a) The court presumes that a cohort will include all the job categories within a line of progression, and will encompass the entire department. To overcome this presumption, the department' must demonstrate convincingly that a line of progression should be subdivided into more than one cohort, by division or otherwise. (b) The burden is on the department to show convincingly that a cohort should be excluded. The plaintiffs arid the department may submit any evidence they desire to show how the burden of showing ‘convincingly’ translates into a statistical test. (c) All individuals within an otherwise eligible cohort shall be eligible for backpay, to be determined in the manner described below, without having to pass any additional statistical test. In other words, there will be no ‘accounting of error around the fitted line’ using a prediction interval, confidence interval, or any other method. “(3) Backpay equation. The backpay equation will be structured as defined in the January 22 order. The components of the regression analysis will be determined as follows: (a) The parties shall determine a set of .job-related factors upon which to regress. The goal is to select the set of factors that best models pay, according to good statistical practice.- At this stage, the parties shall ignore the possibility that some factors are race-tainted, and' the focus should be purely statistical and econometric. (b) The parties shall negotiate to determine which, if any, of these explanatory variables should be excluded because it fads any of the following tests described in the August 28 joint report: (1) the factor was actually used by the State Personnel Department in determining whether to promote or hire; (2) the factor does not have a disparate impact on the class, that is, the factor itself is not.significantly correlated with race, except that a factor may be used if it is valid, job-related, and consistent with business necessity; and (3) the factor was not the subject of any remedial provision of consent decree I. .(e) If the parties are unable to agree on the factors to include in the regression analysis, the court will resolve the dispute. The court’s focus will be on whether the disputed factor fails any of the tests described above.” On that same day, the court issued another order setting a hearing for May 21, 1996, as to, first, “whether the use of appraisal scores in the multiple regression analysis violates any of the three requirements for a valid regression factor listed in ¶ 1(c) of the August 28 report,” and, second, “any other factor which any party contends should be included in the multiple regression analysis.” The court added that, “Any party seeking to include any factor other than education, years of seniority, and appraisal scores in the multiple regression analysis must submit its briefs and evidentiary materials regarding such factor(s) pursuant to the schedule outlined in the May 15 order.” In that same order, based on the findings and conclusions in the general order, the court held that, at the May 21 hearing it would also make specific determinations regarding the non-licensed engineer line of progression. The court stated that it would “determine whether the non-licensed engineer line of progression is eligible for back-pay, and if so, by what formula backpay will be calculated. In other words, the court will make the following determinations for this line of progression: (a) whether the entire line of progression should constitute a cohort or whether it should be subdivided in some manner into smaller cohorts; (b) whether the cohort (or cohorts) within the line of progression suffered discrimination as a cohort, in other words, whether the cohort (or cohorts) is eligible for the backpay equation; and (c) what factors should be included in the multiple regression analysis.” The court concluded that “It is the intent of the court that any concern regarding the non-licensed engineer line of progression be raised at the May 21 hearing so that the eligibility and backpay formulas can be applied to this line forthwith. In other words, as to non-licensed engineers, speak now or forever hold your peace.” May 21 and 22, 1996 The court held a hearing regarding the issues listed in its May 16 orders. May 28, 1996 The court entered an order, based on the evidence presented at the May 21-22 hearing, summarizing its findings as to the non-licensed engineer line of progression After noting again that it was seeking to determine “the final eligibility and backpay formula for the non-licensed engineer line of progression,” the court found as follows with regard to the non-licensed engineer line of progression: “(1) Eligibility formula. (a) The entire non-licensed engineer line of progression shall constitute a cohort group. It shall not be subdivided into smaller cohort groups, and all white employees in the line of progression will be included in the cohort group. (b) This cohort group shall be eligible for the backpay equation if the race coefficient is less than or equal to zero. In other words, if the race coefficient is greater than zero, the cohort group shall be excluded from the backpay equation. See United States v. United States Steel Corp., 520 F.2d 1043, 1054 (5th Cir.1975), (to exclude subclass, defendant must ‘show convincingly ... that a given group of discrimínateos outearned, or at least earned as much as,’ similarly situated non-class employees), cert. denied, 429 U.S. 817, 97 S.Ct. 61, 50 L.Ed.2d 77 (1976). The purpose of the eligibility formula is to determine whether the pay experience of black employees in a cohort group, as compared with that of white employees in the same cohort group, meets a statistical test. The statistic the court will use to compare black and white pay experiences will be the coefficient of race in a multiple regression equation, where the logarithm of pay is the dependent variable and years of service, the logarithm of education, and race are the independent variables. Race will be used as an indicator variable, taking the value of one equals black and zero equals white. Thus, a negative race coefficient indicates that the average salary of black employees is less than the average salary of white employees when adjusted for years of service and education. The court will set some number of standard deviations at or above zero as the statistical threshold. If the race coefficient exceeds that threshold, the defendants will be deemed to have rebutted the presumption of discrimination flowing from the finding of class-wide discrimination, and the members of that cohort group shall be ineligible for the backpay equation. The court rejects the defendants’ suggestion that the threshold should be minus 1.645 standard deviations for two reasons. First, the court is convinced that the proper threshold is at least zero, and more probably a positive number. Second, to impose a threshold at the level suggested by the defendants would render meaningless the presumption that, because of the finding of class-wide discrimination, class members are entitled to backpay. However, because the plaintiffs are willing to accept, as to this cohort group only, a threshold of zero, the court need not determine at this time whether it would be appropriate to impose a higher threshold test of eligibility than zero. For example, under such a test, the threshold might be plus 1.645 standard deviations.* n. * At the May 21-22 hearing, the department objected to this statistical test for eligibility. It urged the court to adopt a test of minus 1.645 standard deviations to determine eligibility for the backpay equation. The court overruled this objection because it believes that the proper threshold is at least zero, and more probably a positive number. In any event, the court believes that the non-licensed engineer line of progression would pass even under the department's test, which would make the objection moot. In order to determine whether the objection actually is moot, the department shall show whether the cohort group would have been eligible for the backpay equation even if the court had adopted the department’s test of minus 1.645 standard deviations. “(2) Backpay equation. (a) The only variables to be included in the regression analysis are years of education and years of service. (b) No adjustment shall be made for the possibility that the years of service factor might have a disparate impact on the plaintiff class.” The court concluded that “the parties shall jointly file by 3:00 p.m. on Friday, May 31, 1996, the results of the eligibility formula and backpay equation for the non-licensed engineer line of progression.” May SI, 1996 The parties filed a joint report under seal of the results of the application of the eligibility and backpay formulas to the non-licensed engineer line of progression. For the first time, however, the defendants raised the contention in court that “no employee class member should receive back-pay for any period during which the employee had less than one year of service.” This was the first that the court had heard that the defendants contended that class members with less than one year of service should be excluded from a cohort. June 11, 1996 The court entered an order setting the following issues for submission on July 5, 1996: “(1) whether there are class members missing from the database; (2) whether the database contains incomplete or inaccurate information regarding years of service and years of education for some class members; (3) whether backpay should be calculated for the period since December 31, 1995; (4) whether the Graduate Civil Engineer and other non-licensed engineer lines of progression should be included in another cohort group; (5) whether class members who “worked or applied’ in the non-licensed engineer line of progression, but were never classified within that line of progression, should be included in the non-licensed engineers cohort group for the purposes of the backpay and eligibility formulas; and (6) whether backpay should be calculated for class members who have less than one year of service.” October 16, 1996 The court entered an order holding that backpay for the non-licensed engineer line of progression should not exclude calculations for plaintiff class members who have less than one year of service. October 23, 1996 The court entered an order holding that, under the August 28 report, the backpay for the non-licensed engineer line of progression should extend beyond December 31, 1995, through 28 days before the date of distribution of backpay and need not be repeated. With regard to whether backpay should extend beyond December 31, 1995, the court explained: “Nothing in the August 28 report suggests that backpay should be terminated on December 31, 1995. Under the report, the backpay determination is based on whatever relevant information is available at the time the determination is made. The only prospective temporal limitation on the back-pay determination is, therefore, the amount of backpay information available at the time the determination is made, and thus when the determination is made.” The court further stated: “This understanding not only follows from the August 28 report, it serves a very important interest in this litigation. The court has repeatedly instructed that it is time to put the August 28 report into effect. This understanding of the backpay determination furthers this instruction in two ways. First and obviously, the plaintiff class is interested in having the backpay determination and distribution done as soon as possible, so that class members can receive their money. Second, the Department of Transportation should be interested in the same because its liability for backpay will not cease to grow until there has been a determination and distribution of backpay.” With regard to next issue, the court rejected the plaintiffs’ contention that the backpay formula would be reapplied indefinitely until plaintiff class members were placed in appropriate positions. The court explained: “First, the formula is a product of negotiations between the parties pursuant to ¶2 article XX of consent decree I. The formula is contained in the August 28 joint report and is very detailed. The formula contains no language suggesting that it is to be applied more than once or repeatedly. Second, the attorneys for all of the parties have, throughout the history of litigation, never suggested that the formula would be applied more than once. See order of October 16, 1996 (‘The court agrees with the plaintiffs that the defendants’ one-year-of-serviee objection, not raised until' May 31, comes too late.’).” The court further stated that, third and finally, “Plaintiffs’ counsel ... envisioned a onetime determination of backpay followed immediately by a determination of the appropriate salary level and job classification.” The court added that, “Admittedly, with the current pace of the litigation, the salary-level and job-classification determinations may not follow with the immediacy plaintiffs’ counsel expected.” The court nevertheless observed that “this disappointment does not detract from, the fact that counsel for the parties envisioned that the backpay determination would be a one-time event under the August 28 report.” The court also recognized that the plaintiffs had correctly noted that “trial courts have not only the power but the duty to provide relief that will so far as is reasonably possible eliminate the discriminatory effects of past discrimination, and that this relief typically includes backpay until the date of instatement or reinstatement. See, e.g., Al bemarle Paper Co. v. Moody, 422 U.S. 405, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975); Nord v. U.S. Steel Corp., 758 F.2d 1462 (11th Cir. 1985); Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157 (5th Cir.1978), cert. denied, 439 U.S. 1115, 99. S.Ct. 1020, 59 L.Ed.2d 74 (1979).” The court nevertheless concluded that “The plaintiffs overlook ... that the backpay formula is a product of a settlement. ‘A settlement is in large measure a reasoned choice of a certainty over a gamble, the certainty being the settlement and the gamble being the risk that comes with going to trial.’ Paradise v. Wells, 686 F.Supp. 1442, 1446 (M.D.Ala.1988). The plaintiffs here took the certainty, which may be much less than what, would have ..been obtained at trial. However, it could also be-much more.” November 7, 1996 The court entered an order' holding that, under the August 28 report, class members who “worked or applied” in the non-licensed engineer line of progression, but were never classified in that line of progression, should not be included in the non-licensed engineers’ cohort group for purposes of the eligibility formula. November 22, 1996 The court entered an order holding that, under the August 28 report, backpay for the non-licensed engineer line of progression should not include an accounting for possible increased tax consequences to members of the plaintiff class. November 25, 1996 The court entered an order requiring that the Department of Transportation submit to the court, by December 31, 1996, a final report for backpay for the non-licensed engineer line of progression. December 5, 1996 The court entered an order modifying its October 23 order to read that, under the August 28 report, the backpay for the non-licensed engineer line of progression should extend through 60 days before the date of distribution of backpay and need not be repeated. The court also entered an order requiring the Department of Transportation to submit to the court, by December 31, 1996, a final report for backpay for thé following lines of progression: Highway Maintenance Technician/Laborer, Clerical, Accounting, Audit, Data, Electronic, Equipment, HMT-Speeialty, Licensed Engineers, Right of Way, and Trades. The report was to reflect backpay as of December 6,1996. December SI, 1996 The Transportation Department filed a final report for backpay for the following lines of progression: Non-licensed Engineer, Highway Maintenance Teehnician/Laborer, Clerical, Accounting, Audit, Data, Electronic, Equipment, HMT-Specialty, Licensed Engineers, Right of Way, and Trades. January S, 1997 The court entered an order granting, without explanation, plaintiffs’ motion in limine for a finding of class-wide liability in their favor. The motion was filed in anticipation of the resumption of the 1992 trial. The court also entered an order stating that “the class-wide formulas contained in the August 28, 1995 report ... apply, in the language of the report, to plaintiff ‘class members who have been employed by the Alabama Department of Transportation’ and does not allow for opt-out by those class members.” The court also entered an order adopting the following recommendation of Court-Appointed Expert Ben Fine: “that the use of a multiple regression equation to calculate backpay is appropriate where the cohort numbers at least 8,” and that “[f]or smaller cohorts, ... data from different years [should be combined] within a line of progression until the pool contains at least 12 data points.” The court entered another order adopting the recommendation of Court-Appointed Expert Fine for the redistribution of backpay among class members. The court explained that “Mr. Fine proposes the use of a redistribution formula which he postulates captures as well as possible the nature and extent of the losses suffered by individual class members, and which has no inherent statistical biases toward any segment of the class. Moreover, the formula represents a true compromise between the positions advanced by the parties.” January 21, 1997 The court entered a memorandum opinion in support of its order entered on November 7, 1996, holding that, under the August 28 report, class members who “worked or applied” in the non-licensed engineer line of progression, but were never classified in that line of progression, should not be included in the non-licensed engineers’ cohort group for purposes of the eligibility formula. The court also entered an order setting up further procedures for the determination of backpay for the members of the plaintiff class excluded from that cohort by its November 7 order, but who still might be entitled to backpay as members of the cohort. March 27, 1997 The court entered an order requiring that the Transportation Department submit a final report for backpay for all lines of progression, as of February 14, 1997. The court stated that the final report should be structured such that some unresolved back-pay issues may each be resolved later and separately, and that, with the report, the court will immediately enter an order for final payment to those lines of progression, for payment to the plaintiff class within 60 days of February 14, 1997. The court reaffirmed that the Transportation Department’s report and the court’s final payment order are subject to the condition set out in earlier orders that, if an anticipated determination or distribution of backpay is delayed by some legal action — such as a motion for reconsideration or correction or an appeal — the back-pay would then extend through the resolution of that legal action, until 60 days before the actual distribution of backpay to the plaintiff class. Therefore, for example, if there is an appeal and if the appellate court should determine that plaintiffs are entitled to backpay (either as determined by this court or with modifications), backpay wo