Full opinion text
WISDOM, Circuit Judge: This case presents, once again, the difficulties inherent in an employer’s obligation to comply with Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, by undoing the effects of past racial discrimination in employment. Five named plaintiffs brought this suit as a class action on behalf of an “affected class” of black employees at the Mobile, Alabama pulp and paper mill of Scott Paper Company (Scott). The defendants are Scott, the United Paper-workers International Union (UPIU), and UPIU Locals 421, 423, 575 and 873. After a lengthy trial, the district court ruled for the defendants on almost all issues. On appeal, we reverse. I. THE FACTS Scott purchased the pulp and paper mill in 1954. As of June 1972, 3,440 employees worked at the plant, which transforms wood into assorted types of paper products. The mill is organized into Production and Maintenance Departments. From the wage earners’ perspective, the higher-paying, skilled craft jobs (welders, pipefitters, machinists, carpenters, sheet metal workers, brick masons, and painters) in the Maintenance Department are more desirable than the jobs in the Production Department. Within each department, jobs are functionally divided into lines of progression, or groups of related jobs in which an employee moves from lower-paying to higher-paying and more responsible jobs. From the time the mill began operating in 1940, until 1963, job opportunities were segregated on the basis of race. Black employees were channeled into lower paying, more physically demanding jobs. For example, blacks were prohibited from working on crews that operated the paper machines, excluded from training opportunities in the Maintenance Department, and precluded from entering the line of progression that would have enabled them to advance to jobs such as “crane operator” and “woodroom yard operator”. Instead, blacks were limited to such jobs as “laborer”. This system of job segregation was reinforced by union policy of maintaining segregated locals. The economic impact of this discrimination was, of course, substantial. As of June 1, 1972, the average rate of pay of affected class members was about $0.47 an hour less than the average for whites. More importantly, a comparison of average wage rates between members of the affected class and their white “contemporaries” hired between 1940 and 1954 shows that the average differential was more than $1.00 an hour. Scott does not deny that discrimination existed. It asserts, however, that it wanted to integrate its work force as early as 1955, that it then pledged to do so, probably in response to presidential executive orders. Scott says that it could not do so “rapidly ... in view of then-prevailing attitudes”. In 1961 Scott announced that no job would be barred to any employee or applicant because of race. Despite this apparent compliance with its 1955 pledge, no blacks began to work in formerly all-white jobs. Only in 1963, after Scott placed four blacks into previous white jobs, did the pattern of strict segregation begin to fade. Although about one-third of the affected class members had transferred to previously all-white jobs by 1968, the majority had not. The probable reason for the failure of more affected class members to'transfer is that in 1963, when the white lines of progression in the production department were “opened” to the class, Scott imposed a high school education requirement for transfers between lines of progression. This requirement served to lock many affected class members into their inferior, black jobs. Scott also imposed upon would-be transferors in 1963 the requirement that they achieve a passing score on the Kopas Aptitude Test. Finally, an age limit on transfer-ors further hindered Scott’s efforts to comply with its 1955 pledge to provide equal employment opportunities. The result of the various limitations upon transfer was that, by May 1969, only seven black employees hired before 1963 had transferred into formerly white lines of progression. At that time, however, the so-called Memorandum of Understanding went into effect. The negotiated Memorandum was a result of the efforts of the Department of Labor’s Office of Federal Contract Compliance (OFCC) to bring Scott into line with Executive Order 11246. It provided, among other things, that affected class members could transfer into formerly white lines of progression with “[Qualification requirements no higher for any employee than for employees working in the line who were hired at approximately the same time”. The Memorandum allowed affected class members to compete within formerly white lines of progression on the basis of their mill seniority, thus seeming to comport with the Title VII remedies afforded in such cases as Local 189, United Papermakers and Paper-workers v. United States, 5 Cir. 1969, 416 F.2d 980, cert. denied, 1970, 397 U.S. 919, 90 S.Ct. 926, 25 L.Ed.2d 100. The plaintiffs, however, contended that the Memorandum was inadequate in itself and, in any event, was inadequately put into effect. The specifics of this contention, with additional facts, are set forth below. In addition to complaining about discrimination with respect to transfer opportunities within Scott’s Production Department, the plaintiffs sued to enjoin the alleged discriminatory operation of Scott’s system of transfers into the Maintenance Department. Scott imposed upon such transfers the high school diploma requirement and the Kopas Aptitude Test requirement in 1963, as it did for transfers within the Production Department. In 1968, Scott switched to the Wonderlic Test at the OFCC’s suggestion, but retained and still retains the diploma requirement. In 1970, Scott again switched tests, this time to a battery — the Scott Battery— that had been “validated” by an expert industrial psychologist. The plaintiffs contended that these requirements have a significant discriminatory impact on blacks, and that Scott had not shown these tests to be sufficiently job-related to justify their use. The plaintiffs also alleged that Scott’s system of selecting salaried supervisors discriminates against blacks. Although there is no assertion that Scott intended to discriminate, the appellants contend that the appointment procedure, which relies heavily upon the recommendations of front-line supervisors based on allegedly “vague and elusive” standards, is inherently .discriminatory. Finally, the plaintiff class claimed an award of back pay, regardless of Scott’s good faith. One of the plaintiffs, Will Robinson, charged Scott with firing him because of his race. II. THE LITIGATION BELOW The district court found for Scott and the defendant unions on virtually every contested point. In an extensive opinion, relying heavily upon the defendants’ post-trial brief, the district court found that the Memorandum of Understanding, as carried out by the defendant Scott, “successfully assured the affected class members that their opportunities for advancement at Scott would in no way be limited by any continuing effect of past discrimination”. The court held that “general statistical information” was not relevant, nor was information showing how many affected class members had actually taken advantage of the opportunities offered them, when the employer had provided new opportunities that were “legally adequate”. The district court found that the statistics the plaintiffs produced, showing the difference in test scores and passing rates between blacks and whites in competition for Maintenance Department jobs, were too insubstantial to show that the tests had an adverse impact on blacks. The court found, however, that, even if there was an adverse impact, the tests were lawful for the defendant’s expert had adequately demonstrated the job-relation of the Scott Battery. The district court found that Scott did not discriminate against blacks in supervisor selection. The court found that first-line superiors did not have the ability to control who was selected for supervisory jobs, and the court approved the qualifications Scott requires of candidates for such positions, as required by business necessity. As a result of these findings and the additional fact that Scott had not intended to discriminate and had acted all along in good faith and with the purpose of promoting equal employment opportunities, the district court denied back pay to the plaintiff class. Finally, the court held that the action taken by Scott against Will Robinson was justified by “repeated instances of negligent work performance”. III. PRODUCTION DEPARTMENT —INTERPRETATION OF THE MEMORANDUM OF UNDERSTANDING A. General Remarks In Johnson v. Goodyear Tire & Rubber Co., 5 Cir. 1974, 491 F.2d 1364, 1367, we observed that “federal remedial legislation has created a right of action ensuring that a discriminatee may be made whole for an employer’s misconducf’. (Emphasis added.) Accordingly, we have condemned “neutral practices of departmental seniority system[s] and . . . posting and bidding procedure[s that] carry forward into the present the stratification of black employees into lower paying, non-skill[ed] departments and jobs resulting from past discrimination”. Pettway v. American Cast Iron Pipe Co., 5 Cir. 1974, 494 F.2d 211, 236. The rule, adopted by this Court in Local 189, United Paper-makers and Papeworkers v. United States, 5 Cir. 1969, 416 F.2d 980, 988, and recently endorsed by the Supreme Court in Franks v. Bowman, 1976, - U.S. -,-,-& n. 41, 96 S.Ct. 1251, 1265, 1271, 47 L.Ed.2d 444, 462-463, 470, 44 U.S.L.W. 4356, 4362, 4365 & n. 41, is that blacks previously discriminated against must be given such remedial relief as to enable them to achieve their “rightful place” in an employer’s employment hierarchy. The rightful place theory is an equitable accommodation between two countervailing interests. The first interest is that of prior discriminatees to achieve what would have been theirs in the absence of discrimination. The countervailing interests are those of employers, employees, and consumers — in maintaining safety and efficiency — and those of employees who acquired their positions within the discriminating system and who would suffer unfairly if required to give up such positions to members of an affected class. See Patterson v. American Tobacco Company, 4 Cir. 1976, 535 F.2d 257. As we stated in Local 189, “[t]he crux of the problem is how far the employer must go to undo the effects of past discrimination”. Local 189, 416 F.2d at 988. The answer is simply that the employer must go as far as he can “unless there is an overriding legitimate, nonracial business purpose”. This overriding purpose can only be a purpose necessary to the safety or efficiency of a business enterprise. United States v. Jacksonville Terminal Co., 5 Cir. 1971, 451 F.2d 418, 451, cert. denied, 406 U.S. 906, 92 S.Ct. 1607, 31 L.Ed.2d 815. We have observed that the “business necessity” doctrine must [do] . . more than serve legitimate management functions. Otherwise, all but the most blatantly discriminatory plans would be excused even if they perpetuated the effects of past discrimination. Necessity connotes an inesistible demand. To be preserved, [a present employment practice] . . must not only directly foster safety and efficiency of a plant, but also be essential to those goals. ... If the legitimate ends of safety and efficiency can be served by a reasonably available alternative system with less discriminatory effects, then the present policies may not be continued. Id., quoting United States v. Bethlehem Steel Corp., 2 Cir. 1971, 446 F.2d 652, 662 (bracketed material and emphasis added). See also Rodriquez v. East Texas Motor Freight, 5 Cir. 1974, 505 F.2d 40, 56 (quoting Bethlehem Steel), appeal pending. These principles have been applied time and again to strike down an employment practice that seemed neutral on its face. Here, the company’s policies might seem to some not only neutral, but favorable to prior discriminatees. But the fact that Scott has made earnest efforts to eliminate the traces of its prior conduct should not obscure the real issue before us. The question is not whether the opportunities afforded by Scott were “ample” in the sense that they substantially reduced the effects of prior discrimination. The question is whether Scott has done enough. And “enough” means, for the purposes of Title VII, everything that is possible. This realm of possibility should be limited only by the most compelling business reasons. If the business can function safely and efficiently after the imposition of remedial relief, it must be subject to such remedial relief. The 'appellants argue that four aspects of Scott’s actions have, unnecessarily, restricted the full enjoyment of Title VII rights by the affected class. First, they contend that the affected class members were not adequately informed of their rights under the Memorandum of Understanding. Second, the appellants urge that Scott’s interpretation of the Memorandum, insofar as it enables junior non-affected class members to move up in lines of progression ahead of senior affected class members, due to the presence of a “blocking” affected class member, severely retards the advancement of some affected class members to their rightful places. Third, they contend that by forcing affected class members to accept a cut in pay in some cases in order to transfer to a formerly all-white line of progression, Scott impedes progress to the rightful places. Finally, the appellants contend that the educational requirements imposed upon affected class members desiring to transfer to formerly all-white lines of progression are arbitrary and continue the effects of prior discrimination, in that their white contemporaries were not subject to the same educational requirements and that those educational requirements are not now justified by any business necessity. We reverse the district court’s decision on each of these issues. B. Carrying Out the Provisions of the Memorandum The appellants contend that “[bjecause the affected class was not fully informed about its meaning and therefore had little access to its ‘opportunities,’ the Memorandum of Understanding was a useless gesture”. The overwhelming evidence adduced at trial supports this contention. There were numerous flaws with Scott’s attempt, through brief interviews with most affected class members, to inform the affected class of its rights under the Memorandum. First, at the time of the interviews, it appears that neither of the interviewers — Giffen, Scott’s chief personnel officer, and Moore, an affected class member himself and a representative of the black local union — understood, or, if they understood, attempted to convey Scott’s complex interpretation of the qualification requirements provision of the Memorandum. This provision stated: Qualification requirements for transfer to any line of progression or for advancement in the line, will be no higher for any employee than for employees working in the line who were hired at approximately the same time. Scott interpreted this to mean that, although a high school diploma would not be required in every line, an affected class member- had to have the same level of formal education as the least educated white in the line of progression to which the affected class member wanted to transfer. The result was, as might be expected, that different lines of progression posed different formal educational barriers to transfer. For example, transfer to the Tissue Traffic line of progression required a fifth grade education; but transfer to the Tissue Shipping line of progression required a seventh grade education, and transfer to the Tissue Finishing line of progression required a tenth grade education. Notwithstanding the “least educated white man” rule and the language of the Memorandum, Scott retained high school requirements on transfer to certain lines of progression on the grounds that they involved special safety considerations or were otherwise required to be competently staffed. For example, a diploma was necessary for transfer to the Recovery Room, although a white incumbent there had only a sixth grade education. It is obvious that an affected class member would not know to which formerly white jobs he could transfer unless a document were published containing the relevant information, or unless he were told, job by job. Yet no such document was published, and the evidence convincingly demonstrates that the affected class members were not told.the details of Scott’s special transfer system. Not only were affected class members not informed about educational requirements which still obtained, but some affected class members did not realize that any educational requirements had been dropped. A serious problem with Scott’s use of the Memorandum was its treatment of the automatic consideration provision. Ordinarily, an employee wishing to transfer to another line of progression had to keep himself informed about vacancies as they were posted on bulletin boards around the plant; if he were interested in a particular vacancy, he had to sign for it on a list in the personnel office. The Memorandum provided, however, that affected class members would automatically be considered for transfers unless, after full explanation of their opportunities for transfer and future advancement, they elect not to be so considered and sign a waiver to that effect. This waiver can be revoked at any time at the written request of the employee. Of the 273 affected class members who were interviewed by Giffen and Moore, 193 signed the top part of a two-part form, which reads: I have had explained to me and understand recent changes agreed to between the Company and the Unions which may provide me with opportunities, not provided by the basic Labor Agreement, for transfer to other jobs and future advancement in lines of progression. These 193 were then deemed by Scott to have waived their rights to automatic consideration for transfer. Another 68 affected class members signed the bottom of the form, which reads: I wish to be automatically considered for all openings in jobs and lines of progression listed below and waive my rights for automatic consideration under the terms of the special agreement referred to above for all other jobs. I understand that I may withdraw this waiver as to future openings at any time by giving written notice to the Company. These 68 listed one or more jobs or lines of progression for which they wished to be automatically considered. Twelve affected class members refused to sign either portion of the form. Scott candidly admits that “[t]he point of the interviews was not to engage in a lengthy, theoretical discussion of the Memorandum’s terms”. “Instead, it was to translate the abstract into the specif - ic, to find out which [affected class members] were interested in pursuing the opportunity to transfer to other lines of progression”. Scott then contends that, by signing the top part of the form, affected class members indicated that they “did not wish automatic consideration for any transfers”. For this sub-class of the affected class, Scott argues that further explanations were unnecessary. We observe that the first paragraph speaks only in terms of “understanding”, not in terms of “waiver”, or “giving up”, or “losing opportunities provided by a recent agreement negotiated with the purpose of affording you your rights”. There is a world of difference between what the “waiver” actually says and the effect it had as interpreted by Scott. One may express an understanding of one’s rights without, at the same time, agreeing to waive them. Thus, contrary to Scott’s argument, it is not at all clear that these 193 affected class members were afforded the “one bona fide opportunity” the law requires. See United States v. Hayes International Corp., 5 Cir. 1972, 456 F.2d 112, 119. Moreover, accepting for the moment the appellants’ version of the interviews, Scott’s approach was to ascertain whether the interviewee was “satisfied” with his present job. If so, he was asked to sign the top part of the form. Yet one may be satisfied with one’s job, but desire to transfer to a better job if and when the opportunity presents itself. We also note that, by indicating interest in automatic consideration for some jobs, affected class members were forced to waive automatic consideration for all other jobs. The average affected class member might not know, at the time of his interview, what vacancies might occur or in what lines of progression he would be interested in the future. Of course, an affected class member could always revoke his waiver or sign up, as other employees are required, for vacancies as they are posted. But the gist of the automatic consideration procedure is to relieve affected class members of most of the responsibility for regaining opportunities initially denied them by their employer. The importance of the automatic consideration procedure is evident here. A number of affected class members, believing either that posted educational requirements applied to them or that some lines of progression were still closed to blacks, failed to sign up for posted vacancies after having “waived” their rights to automatic consideration. Despite these problems, the district court found the waiver approach reasonable and lawful because automatic consideration of every affected class member for every job would have created a “staggering” burden for Scott. 6 FEPC at 525. We see merit in Scott’s contention that not every affected class member should be considered for every opening in a formerly white line. We fail to see that the use of a waiver form, the tendency of which is to cause most affected class members to be automatically considered for a small number of jobs, is justified by. business necessity. To be sure, there was evidence showing that the personnel department’s task of filling job vacancies took a great deal of time. But there is no evidence showing that the procedure suggested by the appellants would take up substantially more time. One effect of automatic consideration, of course, would be the compilation of a longer list of employees from which a job vacancy would be filled. But in both the present procedure and the suggested procedure, most time is or would be spent, not in compiling the list, but in interviewing in order of seniority, the highest person on the list and attempting to fill the vacancy with that person. Although it may seem probable that employees who have not specifically applied for a job are less likely to accept it, if it were offered, than employees that have bid for it, there is no evidence that this is the case. Second, even if non-bidding affected class members are more likely to refuse transfer, there are means by which the district court could have reduced the burden on Scott. Refusal of a job in a particular line of progression could, for example, be deemed a specific waiver of automatic consideration in that line. Finally, even if automatic consideration imposed a substantial burden on Scott, the business necessity test is not necessarily satisfied. By the expenditure of funds and the hiring of a larger personnel staff, Scott could decrease the time it takes to reach senior employees and, more importantly, decrease the number of rejected offers by educating affected class members about the nature of different lines of progression before allowing them to waive specific transfer rights. See Bowe v. Colgate, Palmolive Co., 7 Cir. 1973, 489 F.2d 896, 900. The inadequacies of the waiver forms might not weigh so heavily were it not for the failure of Scott adequately to explain to the interviewees their rights under the Memorandum. We consider the district court’s finding to the contrary to be “clearly erroneous”. First, the district court accepted the testimony of Giffen and Moore, to the effect that the Memorandum’s terms had been fully explained, over the overwhelming testimony of the interviewees that they were not told about the variegated educational requirements, that they were not informed about the right to automatic consideration, and that they did not realize they were signing a waiver. Indeed, the court was so convinced that each interviewee was going to testify in the same general manner that it requested during trial that plaintiffs’ counsel not belabor the point. The district court said that it had been adequately educated on the fact that the majority if not all of the members of the affected class either did not understand or did not have adequately explained to them the effects of the Memorandum Plaintiffs’ counsel remarked that, by dispensing with cumulative testimony about the nature of the interviews, the court would be impairing its ability to evaluate the pervasiveness of Scott’s failures. Nevertheless, except for occasional instances where a witness was asked about specific interview incidents not already covered, the interviewee-witnesses’ testimony about the failure of Giffin and Moore to explain the Memorandum was briefly summarized by counsel in a repeated “proffer”. A trial judge has discretion in eliminating cumulative testimony, but here the court’s cutting off testimony on this key issue deprived it of an opportunity to be persuaded to the plaintiffs’ view of the facts. Its findings are entitled, therefore, to less weight than they would be had each witness, or a large number of witnesses, testified fully as to the interview. The district court articulated two major reasons for disbelieving the interviewees. First, it relied on the fact that 193 interviewees signed the “understanding” section of the waiver form. This, of course, begs the question. The plaintiffs’ theory is that the forms were signed without understanding. To assume that, notwithstanding strong evidence to the contrary, a signature implies understanding is to allow a rule of contract law to play too salient a part in the administration of a remedial civil rights statute. Cf. Alexander v. Gardner-Denver Co., 1974, 415 U.S. 36, 51—52, 94 S.Ct. 1011, 1021-1022, 39 L.Ed.2d 147, 159-160 (Title VII rights are not waived by an employee’s resort to arbitration of a claim under a nondiscrimination clause of a collective bargaining agreement). The second reason the district court assigned for discrediting the interviewees is that the “witnesses who testified that the Memorandum was not explained to them also testified on cross-examination of their falsification of their job applications. The justification for their falsification was as repetitious as a stuck record”. 6 FEPC at 525. The district court did not cite specific testimony, however, and the record contains only one instance of an employee admitting that he knowingly falsified an employment application. The court’s findings on the issue of waiver cannot be examined in a vacuum. A waiver of a federal remedial right is not lightly to be inferred, and the issue must be looked at in the context of the racial discrimination which, for most of its existence, has characterized the mill’s operation. Because we hold that, even if correctly administered, the Memorandum would not have gone far enough to obviate further remedies, the issue is not one of decisive importance. The substantive failures of the Memorandum, however, are more easily understood in light of the method by which Scott attempted to put it into effect. Cf. Rogers v. International Paper Co., 8 Cir. 1975, 510 F.2d 1340, 1345 (passive and minimal recruitment efforts may justify finding of discriminatory conduct). C. Red Circling The Memorandum of Understanding provided, with one limitation, that members of the affected class could transfer to jobs in formerly all-white lines of progression without sacrificing any wages. This device, commonly known as “red circling”, has been required by many courts in their attempts to remove all factors that would force affected class members seeking to achieve their rightful places “to pay a price for those opportunities”. The rationale behind red circling is obvious. Had members of the affected class not been discriminated against, they would have had no need to transfer into formerly all-white lines of progression to qualify eventually for high paying jobs. A remedial program that allows blacks to transfer into formerly white lines but forces them to accept a temporary cut in pay is not an effective way of providing affected class members their rightful places. To the extent that the Memorandum requires red circling, then, it is in accordance with obvious and uncontro-verted legal and practical requirements. The Memorandum of Understanding, however, set a limit on red circling. A transferee to a formerly all-white line of progression would retain his previously higher wage, but only up to $3 an hour. Two weeks after the Memorandum went into effect, a general pay raise at Scott’s Mobile mill put most black jobs over the $3 limit. Therefore, although the Memorandum was to remain in effect for two years, the red circling provision was, for practical purposes, in effect for only two weeks. Despite these facts, the district court found that the red circling limitation was not an impediment to Title VII relief, that it was “doubtful that [the limitation] had [a deterring] effect on any who generally wished to transfer”. 6 FEPC at 523. This conclusion was apparently based upon the failure of most employee-witnesses to testify that they had been discouraged from transferring because of the red circling limitation. This Court, in Stevenson v. International Paper Co., 5 Cir. 1975, 516 F.2d 103, recently reviewed findings of the same district court with respect to a similar red circling limitation in a memorandum which went into effect at the Mobile paper mill of Scott’s competitor. To be sure, we observed there that the evidence was “scant on the existence, in fact, of any [affected class member] who was” inhibited by the $3 an hour limitation on red circling. This suggests that the district court’s finding here answers the relevant legal issue. In Stevenson, however, we went on to state that [I]f the plaintiffs can demonstrate on remand that the limitation presented, or as presently existing does present, a practical impediment to any [affected class members,] the district court should take appropriate action. (Emphasis added.) Stevenson indicates that, even if the $3 an hour limitation at one time might have been no deterrent to affected class transfer, the relevant inquiry is in the present, and not the past. It appears that the base rate of pay at Scott’s Mobile mill has, for some time, been substantially higher than $3 an hour. Thus, even if Stevenson implicitly holds that evidence of specific deterrents must be' adduced, it is inconceivable that affected class members now wishing to transfer would not be deterred by the limitation. We find, at any rate, that Stevenson, in observing that there was scant evidence of an affected class member actually inhibited, did not intend to set a hard and fast rule requiring such evidence before red circling limitations would be enjoined. Stevenson recognized that “[i]t is now clear that red circling is a necessary element of a Title VII remedy in most eases”, citing Pettway v. American Cast Iron Pipe Co., 5 Cir. 1974, 494 F.2d 211, 248. Neither Pettway, nor any of the other red circling cases that have come to our attention, suggests that a limitation on red circling is justifiable. Instead, the cases make clear that red circling is to be complete. Any limitation on red circling requires an affected class member to pay a price for an opportunity provided by Title VII. In view of the unanimity of the red circling decisions, Stevenson cannot be found to have created a new rule for the Fifth Circuit merely by observing that the plaintiffs must demonstrate that the limitation constituted “a practical impediment”. The district court, in finding significant that “all employees, when seeking to advance in a new line of progression, must be willing to take an initial pay cut in order to eventually earn larger salaries in more desirable jobs”, incorrectly stated Title VII law and ignored the rationale of red circling. That rationale is, simply, that the reduction in wage constitutes a term or condition of employment that discriminates against the affected class members on the basis of race. Robinson v. Lorillard Corp., M.D.N.C.1970, 319 F.Supp. 835, 842, aff’d, 4 Cir. 1971, 444 F.2d 791. D. Blocking The Memorandum specifies that contract, or job, seniority will continue to be applied in all transfer and promotion situations except where “affected class” employees are competing with one or more employees who are not members of the “affected class” in which case mill seniority dates will be used for all competing employees. (Emphasis added) The plaintiffs contended at trial that Scott’s misapplication of this rule has resulted in a “blocking” phenomenon. The district court correctly described Scott’s procedures as follows: In a case where two or more affected class members compete with nonmembers, the Memorandum of Understanding requires a three-step procedure. First, affected class members are compared to one another on the basis of contract seniority. Second, the non-members are also compared with one another on the basis of contract seniority. Third, the two surviving employees are compared on the basis of mill seniority, with the more senior man winning the competition. 6 FEPC at 529-30. The district court found this practice justifiable because “[i]t would be totally unfair now to permit . . affected class members who hung back at a time when they could have transferred to now go around the affected class members who had the initiative to transfer at an earlier date” and, in so doing, “sacrificed between four and seven years of mill seniority and perhaps had to take a cut in pay”. Id. at 530-31. The appellants contend that a correct interpretation of the Memorandum, and of Scott’s Title YII obligations, requires mill seniority to prevail unless no non-affected class member is competing with an affected class member. We agree with this contention. The problem can best be understood by reference to the accompanying hypothetical cases. Seniority Chart Case I. Mill Contract Case II. Mill Contract AC! 8 1 ACi 8 1 AC2 4 3 AC2 7 3 NAC 6 2 NAC 6 2 Case III. Mill Contract Case IV. Mill Contract ACi 8 1 ACi 8 1 AC2 4 2 AC2 7 2 NAC 6 3 NAC 6 3 ACi, AC2, and NAC are employees, the first two belonging to the affected class and the last not belonging to the affected class. In each case, all three employees bid for a vacancy in a better job. In Cases II and IV, Scott’s three-step procedure enables AC2 to prevail over NAC. Assuming that ACi and AC2 had an equal opportunity to transfer into their current line of progression, this system does indeed reward the employee who took the initiative. Even with the same assumption, however, this system operates unfairly in Cases I and III. Here, AC2 does not prevail, but NAC does. This is unfair to ACi, for had AC2 not bid on the vacancy, ACi would have won the mill seniority competition. Under Scott’s interpretation, AC2 “blocks” ACi, but does not himself get the vacancy. How this can reward AC2’s initiative is beyond understanding. The appellants’ proposed, alternative system may be easily stated: whenever an affected class member and a nonafr fected class member compete for the same job, the employee with the greatest mill seniority is to prevail. When the only competing bidders are affected class members, contract seniority will govern. This system more adequately secures affected class members rightful places. We note, however, that this system is not without its peculiarities. In Cases I and III, ACi will win the bidding if NAC bids. However, if NAC does not bid, leaving only ACi and AC2 in the picture, the usual seniority. system awards the vacancy to AC2, the employee with the greatest job seniority. Since NAC will probably not bid (as he will likely know that, if he does, ACi will win the competition), AC2 will move up first. He will be followed by ACi and then by NAC. But even under the appellants’ system, NAC may bid, either because he does not realize who else will bid or because he hopes that a senior bidder will later decide not to take the job. If he does bid, then ACi “jumps” over AC2. This fortuity does not require us to discard, however, an otherwise equitable system and replace it with a less equitable system. It may be that no system could be devised that was totally devoid of eccentricity. It is clear, however, that Scott’s device of playing off affected class members against each other on the basis of contract seniority, and using mill seniority only in the third step of a three-step procedure, is more than eccentric. It continues the effects of past discrimination without being justified by compelling business necessity. On remand, the district court should order the appellants’ proposed system into effect, modified only by refinements, if any appear, that eliminate the peculiarities we have noted without allowing non-affeeted class members to proceed at the expense of mill senior affected class members. E. Educational Requirements for Transfer to Production Jobs The Memorandum of Understanding provided that Qualification requirements for transfer to any line of progression or for advancement in the line, will be no higher for any employee than for employees working in the line who were hired at approximately the same time. As we mentioned before with respect to the question whether interviewees were properly informed about the effects of the Memorandum, Scott adopted a system which employed cutoff levels from fourth grade to high school diploma, depending upon the line of progression. The imposition of any educational requirements on the affected class is challenged by the appellants. They contend that, because they were absolutely prohibited from entering white lines of progression when they first were employed by Scott, no educational requirements whatsoever may now be imposed on transfer to such lines. In the event, however, that Title VII allows some educational requirements, the appellants argue that the requirements actually employed by Scott have not, and cannot, be shown to be justified by a business necessity. Scott, on the other hand, argues that Title VII does not require remedial action if an employee was not discriminated against originally. Although Scott admits that segregated lines of progression were maintained until 1963, it argues that affected class members with less formal education than any non-affected class member in a particular line of progression were not discriminated against and would not have received a job in that line in the absence of segregation. As support for this argument, Scott points to testimony of its Manager of Administrative Services that the best applicant was always chosen for a job opening even when Scott did not have a formal high school diploma requirement. The district court found that “Memorandum imposed no requirements on blacks that were higher than requirements imposed on whites who were hired at or about the same time and accordingly [was] not in terms discriminatory” 6 FEPC at 546. Finally, the district court held that the educational requirements were “justified by business necessity and thus . . . legal in any event”. Id. In Griggs v. Duke Power Co., 1971, 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158, the Supreme Court held that a high school requirement having a discriminatory impact on hiring was not supportable under Title VII. The Court, rejecting the high school requirement because it had been instituted merely upon the employer’s judgment that it would generally improve the overall quality of the work force, stated that [t]he Act proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation. The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited. Id. at 431, 91 S.Ct. at 853, 28 L.Ed.2d at 164. The first step in the relevant inquiry is whether the practice of Scott is “discriminatory in operation”. 1. Discriminatory In Operation We note, first, that the district court observed that “the [education] requirements were not shown to have had an adverse impact on black employees by disqualifying more black than white employees”. 6 FEPC at 546. This observation is erroneous. Since no whites are in the affected class, any restriction on the affected class holds back more blacks than whites. In any event, this was not the basis from which to judge whether the employment practice here was discriminatory in operation. An employment practice is discriminatory in operation with respect to an affected class if it retards the advancement of qualified class members to jobs they might have had in- the absence of discrimination. See, e.g., Local 189, 416 F.2d at 983. It is indeed difficult to tell from the record whether Scott’s educational requirements are discriminatory in operation. The mere fact, however, that Scott always hired the best qualified white applicant does not answer the relevant question. A black with a fourth grade education might conceivably have secured a job ahead of a white with a sixth grade education had there been no discrimination. On the other hand, if the disparity, between education levels of rejected black applicants and accepted whites, approaches four or five years, it seems much more likely that the black would not have achieved the job appointment notwithstanding discrimination. If the burden of proof at this juncture rested on the plaintiffs, we would be bound, under the “clearly erroneous” doctrine, to affirm the district court’s implicit finding that formal educational levels did indeed play a determining part in Scott’s pre-1958 initial employment decisions. Once it has been shown, however, that an employer was discriminating against a class of employees, the employer must shoulder the burden of persuasion to show that a particular employee was unqualified for a position in an all-white line of progression. Cf. Franks v. Bowman, 1976, - U.S. -, -, 96 S.Ct. 1251, 1268, 47 L.Ed.2d 444, 466, 44 U.S.L.W. 4356, 4363. In Jacksonville Terminal Co., the district court had found that the government had failed or refused to undertake a comparative evaluation of the entitlement to job vacancies of competing Negroes and whites, upon the basis of individual qualifications, [which left] the record without probative evidence to support [the contention that black employees were not even considered for jobs given to whites] . . . . [P]roof that whites were hired into jobs despite qualifications less or equal to those of competing Negroes was not produced. [t]he trial judge’s pronouncement cannot function as a general rule. It becomes valid only when the employer evidentially demonstrates that objective criteria pertinent to the particular job are the determinants of who is “best qualified United States v. Jacksonville Terminal Co., M.D.Fla. 1970, 316 F.Supp. 567, 581. On appeal, we cautioned that 451 F.2d at 442 (emphasis added). We then considered the actual facts of the employer’s hiring practices and found that there were many instances in which the “best qualified” individual had in fact been given jobs, and that the absence of blacks from skilled positions was accounted for by the fact that the general decline of the railroad industry had caused “many white workers experienced in skilled jobs” to be available in the railroad labor market. Id. at 445. The employer in Jacksonville Terminal had adequately carried its burden. This is not so, however, with respect to Scott. All the record contains is the bald statement of one official that the “best qualified” applicant was always hired for an opening. It was just such an assertion, however, which did not, in Jacksonville Terminal Co., justify the district court’s rejection of a claim of discrimination without putting the employer to the test. In Jacksonville Terminal Co. employment practices were alleged to be overtly discriminatory; here the employment practices were once admittedly discriminatory, and the question is who, in fact, was discriminated against. The relevant question in both cases is “to what extent was there discrimination?” We conclude that Scott has not shown that members of the affected class, with lower formal educational status than the “least educated white”, would not have achieved “white” jobs in the absence of discrimination. Scott is to be afforded an opportunity, however, to show that particular members of the affected class would not have received jobs in white lines of progression in the absence of discrimination. This opportunity is required by Franks v. Bowman, 1976, - U.S. - , -, 96 S.Ct. 1251, 1268, 47 L.Ed.2d 444, 466, 44 U.S.L.W. 4356, 4363. There, in rejecting a district court’s denial of constructive seniority from the time of initial employment applications, the Supreme Court stated that at such time as individual class members seek positions . . . for which they are presumptively entitled to priority hiring consideration . , evidence that particular individuals were not in fact victims of racial discrimination will be material. We caution, however, as did the Supreme Court, that “the burden will be upon [the employer] to prove that individuals who reapply were not in fact victims of previous hiring discrimination” and that if such proof is to be a showing that the individual was not qualified, the employer must show non-qualification “under nondiscriminatory standards actually applied ... to individuals who were in fact hired . ”. Id. at - , 96 S.Ct. at 1268, 47 L.Ed.2d at 466, 44 U.S.L.W. at 4368 & n. 32. 2. Lack of Justification by Business Necessity The district court found that all of Scott’s educational requirements were justified by business necessity. With respect to jobs in the Chemical Recovery line, for example, the court found that employees must be able to monitor a complex control panel in order to prevent explosive situations from developing in the boilers. Failure of the workers to do their job properly would put all of the employees in the entire plant in extreme danger. 6 FEPC at 523.. The court approved of Scott’s high school requirements for the Bleach Plant and P & C Technical Control lines because they required that the workers “employ laboratory techniques”; the trial judge noted, as an example, that the employee in the top job in the Technical Control line “must be able to prepare all the chemicals needed for the laboratory’s operations”. Id. Finally, the district court approved of the high school requirement for the job of Scaler, because Scott expends some $21 million annually for wood on the basis of the tickets submitted by the Scalers. [N]o one in the Controller’s Office checks, or could check, the accuracy of these tickets. Id. at 524. With respect to the lines of progression or jobs in which Scott reduced transfer requirements for affected class members, the district court concluded It was . . . obvious that Scott could not abandon all educational requirements and incur the risk that older employees with little or no schooling would use their substantial mill seniority to move into demanding positions for which they could not reasonably expect to qualify without extremely long training periods, if then. Id. at 523 (emphasis added). (a). High School Requirement The district court was obviously concerned about the advisability of putting affected class members into lines of progression where they might not be qualified for the top job at the time of transfer. The Supreme Court has provided instruction in this area. In Griggs, the Supreme Court held that a high school diploma requirement for hiring and transfer was not justified by business necessity, where a finding that “white employees hired before the time of the high school education requirement continued to perform satisfactorily and achieve promotions” was not challenged. There was no basis, therefore, for the employer’s contention that the requirement served its “avowed policy of advancement”, and the Court did not find it necessary to decide whether that contention, if factually supported, would be legally relevant. In Albemarle Paper Co. v. Moody, 1975, 422 U.S. 405, 434, 95 S.Ct. 2362, 2379, 45 L.Ed.2d 280, 305-06, the Supreme Court again addressed this issue, this time with respect to the validation of a test requirement. The Court “endorsed” EEOC Guideline 1607.4(c)(1), 29 C.F.R. § 1607.-4(c)(1), which provides: If job progression structures and seniority provision are so established that new employees will probably, within a reasonable period of time and in a great majority of cases, progress to a higher level, it may be considered that candidates are being evaluated for jobs at that higher level. However, where job progression is not so nearly automatic, or the time span is such that higher level jobs or employees’ potential may be expected to change in significant ways, it shall be considered that candidates are being evaluated for a job at or near the entry level. The Court warned, therefore, that conclusions drawn about the job-relatedness of a requirement be tempered with considerations of the normal speed of promotion, . the efficacy of on-the-job training in the scheme of promotion, and the possible use of testing as a promotion device, rather than as a screen for entry into low level jobs. Id. It does not appear that the decision of the district court satisfies the requirements set forth in Moody, in that the decision focuses only on “top jobs”, and does not show why on-the-job training is unefficacious. This shortcoming is understandable in light of the fact that the district court’s decision predated the Supreme Court’s decision by about two years. Nevertheless, present equitable standards must govern this appeal. Here, the district court found that the high school requirement was adopted by Scott because Scott had found it “helpful in selecting the best people for training” at another paper mill. 6 FEPC at 518. The court found this requirement justified because “[n]ew, more sophisticated equipment was coming into use”. Id. The court recognized, however, that there were some employees in lines of progression who had failed to earn a high school diploma. It explained that “these employees were able to make up for this by growing with the job as new machinery was adopted”. The court went on to say that It was not shown however, that these non-high school graduates are equal in performance with those who had finished high school. An employee entering the line for the first time would, of course, not have this advantage of prior training, so that his lack of education would be a far more serious obstacle to his learning the job. Id. at 519 (emphasis added). The district court seems to have been under the impression that it was the plaintiff’s responsibility to prove that non-high school graduates are currently equal in performance to high school graduates in formerly white lines of progression. This is backwards. If Scott wishes to validate any barrier to the advancement of affected class members to their rightful places, it has the burden of showing business necessity. Then, even assuming that non-high school graduates do not perform as well as high school graduates, the question should be whether non-high school graduates perform adequately. For only if the diplomaless individual is not adequate to a job may his exclusion from that . job be deemed a business necessity. Next, the fact that lack of a diploma may be a “serious obstacle” to an individual learning a job — and we assume for the purposes of this observation that the district court felt that there would be an obstacle to learning an entry level job — does not show that the diploma is a business necessity. For all that the district court’s findings show, on-the-job training could, within a relatively short time, make up the disparity between the diploma holder and the non-diploma holder. The problems in the district court’s reasoning are particularly distressing where, as here, the record demonstrates that there may well be no business necessity for the diploma requirement. First, as in Moody, there are non-high school graduates in the relevant lines of progression who are performing “adequately”. This was “obvious” to the district court in its Conclusions of Law. 6 FEPC at 546. Second, the labor agreement between Scott and the various unions demonstrates that a promotee or transferee’s ability to perform a job is often considered after promotion or transfer. Thus, a new employee is on probationary status for ninety days before becoming a permanent employee. Furthermore, “[w]hen an employee is permanently promoted to a higher job and feels he is unable to or fails to perform adequately the work of the higher job, he will be able to go back to his former job”, and, after six months more training, again be considered for promotion. Labor Agreement Effective June 1, 1968, § 9. Clearly, even under current practice at Scott’s plant, there is some give and take for on-the-job self-selection, evaluation, and training. If current procedures were inadequate to protect Scott from the possibility of putting unqualified workers into sensitive positions, it is still possible that enlargements of probationary periods or intensive training programs would have met the requirements of business necessity. It is certain that such modifications would have been less restrictive to the affected class than wholesale exclusion. The Supreme Court declared in Moody, 422 U.S. at 425, 95 S.Ct. at 2375, 45 L.Ed.2d at 301, that [i]f an employer does . . . meet the burden of proving that its tests are “job related,” it remains open to the complaining party to show that other tests or selection devices, without a similarly undesirable racial effect, would also serve the employer’s legitimate interest in “efficient and trustworthy workmanship.” It is clear that business necessity is limited to those cases where an employer has no other choice. Here, even if the diploma requirement is job-related, it is likely that its abrogation will not result in unqualified employees being thrown into impossible situations, an outcome clearly not intended by Title VII. Because we hold, however, that Scott has failed in its effort to prove job-relatedness, we do not actually reach the issue of whether less restrictive employment alternatives were available. We held in Pettway, 494 F.2d at 237-38, that a high school diploma requirement was invalid when the employer was attempting to find employees who had “a certain reading level and familiarity with study techniques necessary to participate in the course work of the apprentice program”. Similarly, we struck down a diploma requirement in United States v. Georgia Power Co., 5 Cir. 1973, 474 F.2d 906, 918, where the justification offered at trial was similar to that offered here: that there was an “eventual need for • above-average ability to read and comprehend the increasingly technical maintenance manuals, the training bulletins, operating instructions, forms and the like demanded by the sophisticated industry . . . ”. As the Griggs Court observed, 401 U.S. at 433, 91 S.Ct. at 854, 28 L.Ed.2d at 165, History is filled with examples of men and women who rendered highly effective performance without the conventional badges of accomplishment in terms of certificates, diplomas, or degrees. Diplomas and tests are useful servants, but Congress has mandated the commonsense proposition that they are not to become masters of reality. The use of a diploma requirement seems predicated on the assumption that high school graduates will be able to read, to learn, and to achieve in industry because they were able to achieve in school. This assumption does not meet the demanding standards of Title VII. Dropping out of school may have resulted from the dropout’s being obliged to work to support his family, and not necessarily from inability to achieve the skills demanded by an employer. Finally, even if graduation conclusively shows some achievement, there is no necessary correlation between that achievement and job performance. Graduation from high school demonstrates an ability to pass the various tests administered by the particular school. Certainly, where so many kinds of employment tests have been shown to be unrelated to job performance, it is likely that high school tests, not even designed to predict performance, are subject to the same flaws. In short, we hold that the record in this case provided no basis by which the district court could have deemed the high school requirement for transfer to four jobs or lines of progression required by business necessity. Its finding to that effect is, therefore, clearly erroneous. (b). Other Educational Requirements for Transfer No case law has been cited or discovered that deals with the question whether grade school achievement less than a high school diploma may be a transfer prerequisite justifiably imposed on an affected class. Our discussion of the diploma requirement itself is, however, broad enough to, and does, control here. The biggest problem with requiring grade school achievement is that such a requirement rests on an assumption not entitled to protection from Title VII scrutiny: that the failure to achieve in school reflects an inability to achieve on the job. Grade school achievement requirements have never been validated by Scott or, to our knowledge, by any other manufacturer. As we said before, Scott’s promotion system is already flexible enough to accommodate trainees, and transferring affected class members will not be advanced to the most difficult positions without an opportunity to acquire necessary skills. In these circumstances, the grade school achievement requirements cannot stand. IV. PRODUCTION DEPARTMENT —STRUCTURAL CHANGES THAT MIGHT REMEDY ADVERSE EFFECTS OF PRIOR DISCRIMINATION The Memorandum stated that the question of “revisions” in lines of progression would be referred to negotiations between Scott and the unions. An agreement with respect to the merger of progression lines was to be reached within 90 days of the ratification of the Memorandum, and further meetings were to determine which lines could be shortened, and which jobs, if any, could be skipped in advancing within or transferring between lines. Despite this agreement, no substantial changes were made in job structure at Scott’s mill. Although Scott cites four cases in which it revised job structures so as “to afford black employees better advancement opportunities”, these revisions, in large part, resulted only in white jobs being “stacked” on top of black jobs. Thus, although it is true that a majority of affected class members are now in formerly all-white lines, the requirement that jobs be held in sequential order in any line of progression has the tendency to “lock in” formerly discriminated-against blacks. We have held that, consistent with an employer’s legitimate interest in maintaining the skill and efficiency of its labor force, any structural impediments which delay the attainment by Negroes of jobs generally as good as those held by their white contemporaries or which force Negroes to pay a price for those opportunities are required by law to be removed. Long v. Georgia Kraft Co., 5 Cir. 1971, 450 F.2d 557, 560, quoting United States v. Local 189, United Papermakers and Paperworkers, E.D.La.1969, 301 F.Supp. 906, 917, aff’d, 5 Ci