ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA (Civil Action No. 75-1020)
Before: GIBBONS, HUNTER and GARTH, Circuit Judges
This racial discrimination action has previously proceeded before the Pittsburgh Commission on Human Relations and thence through the Pennsylvania courts. In this appeal of the plaintiff Davis's § 1981 action brought in the District Court of the Western District of Pennsylvania, we are required to review the basis for her discharge. We are satisfied that had any other employee, white or black, acted as Ms. Davis had, that employee would also have been dismissed. Accordingly, while we do not hold that res judicata bars Ms. Davis's action, we reverse the order of the district court in her favor, holding that under even the most stringent standard of review, a standard which we need not employ, the district court's judgment may not be sustained.
Thelma Davis, a black woman, commenced her employment with the Steel Supply Division of the United States Steel Corporation (USS) on May 5, 1966. She was employed as a Flexograph operator and was the first black office employee at the Supply Division's Reedsdale Street location. She had been employed by USS for almost four years when her employment terminated on February 3, 1970.
During her tenure with USS, Davis experienced difficulties with her fellow employees.Tension developed between Davis and two other women employees who also worked in the Flexograph Room, where invoices were prepared. At least one of these women complained to Pishko, their immediate supervisor, that Davis was uncooperative.Davis, in turn, submitted a letter to Beecher Taylor, Pishko's supervisor, complaining of numerous incidents involving co-workers. Some of these complaints were racial in nature. As a result of these and other actions, as Taylor's direction, Pishko talked to Davis and several other employees in an effort to restore office harmony.
These efforts were to no avail, at least as far as the Flexograph Room was concerned. In early 1969, therefore, Pishko moved Davis to the File Room. The record is equivocal as to whether Davis's problems continued in that department. However, on the morning of February 3, 1970, Pishko, as a result of complaints made by co-workers, requested Davis to use less perfume on her person. Davis was offended by this request and complained to Sykes, the acting district manager and Pishko's then supervisor. Later that day, Davis discovered that one of her boots was torn and attributed that action to her fellow employees.She complained to Pishko that the torn boot was another example of the type of harassment she was suffering. During a tempestuous discussion, Davis left Pishko's office and refused his requests that she return. Pishko then went to Sykes, and, after informing Sykes of the events that had transpired, asked Sykes to discharge Davis. Davis was thereupon called to Sykes's office and discharged by him. She alleges, and Sykes denies, that Sykes had told her, among other things, that her discharge was for "her safety's sake."
Davis first complained to the City of Pittsburgh Commission on Human Relations (PCHR) on February 4, 1970, the day after her discharge. She alleged that an atmosphere of racial intolerance was maintained at USS and that she had been subjected to harassment by fellow employees during the last three years of her employment. She alleged that her complaints to supervisors had been largely ignored and that her discharge occurred after Taylor, a district manager who had been sensitive to her complaints, was transferred to another city.
The Commission conducted a full adversary hearing on Davis's complaint on June 4, 1971. The Commission issued its decision on March 6, 1972 and found that U.S. Steel had violated § 8(a) of the Pittsburgh Human Relations Ordinance because it had treated Davis differently than it treated other employees.The Commission wrote that the ordinance "prohibits discrimination or difference in treatment on the basis of race" (Appendix at 278a).*fn1 The Commission based its ruling on three observations First, it noted that Davis was the first black employee in the office section of the Supply Division and that, after her departure, the Division had no black office workers. The Commission wrote that while this fact "did not of itself establish past discriminatory practices, it certainly raises a strong presumption that the company has not followed an affirmative action program and possibly has engaged in discrimination on past occasions." (Appendix at 279a). Second the Commission found that Davis was treated differently than other employees by virtue of the fact that "[h]er files and records appeared to contain material that was being compiled by her supervisor to support a dismissal charge." Id .Third, the manner in which Davis was dismissed was found to be "arbitrary, unreasonable, and not conducive to instilling good inter-group relations in the City of Pittsburgh." Id .
In its opinion the Commission recited recited "that [the] management of [a] large corporation [has] a positive duty to actively establish conditions of work that enable all races and all ethnic and religious groups to work together in harmony." Id . The Commission ordered Davis reinstated with payment for her lost wages.
USS appearled this decision under 53 P.S. § 11308 (repealed in 1978) to the Pennsylvania Court of Common Pleas.*fn2 Pursuant to that statute, the court reviewed the Commission's decision on the basis of the 269 page transcript of the Pittsburgh Human Relations Commission hearing. The Common Pleas Court affirmed the Commission's decision and on November 20, 1975, then ordered the appeal of the United States Steel Supply Division dismissed. The court found that "[t]he problem relating to Mrs. Davis' relations with other employees thus had become to subject of company action. It was not an abuse of discretion on the part of the Commission to find the company had improperly resolved the complaints in taking action against Mrs. Davis" (Appendix at 286a).
USS then successfully appealed the Court of Common Pleas judgment to he Commonwealth Court of Pennsylvania. United States Steel Supply Division v. City of Pittsburgh Commission on Human Relations , 332 A.2d 871 (Pa. Commw. Ct. 1975). That court found that all of the Commission's factual findings, with the exception of its finding that Davis's records were kept in a different manner than those of other employees, were irrelevant to Davis's charge that her discharge was discriminatory.*fn3
The Commonwealth Court also decided that the record revealed that even the one relevant finding, dealing with the manner in which records were kept, did not, without more, constitute racial discrimination on the part of the Supply Division. Rather, it held that uncontroverted evidence established that the record keeping practice was put into effect only after Davis's suit was filed and that the notations and additions to Davis's file "would appear to be the normal procedure for any employer facing such a lawsuit." Id . at 875. The Commonwealth Court then vacated the orders of the Pittsburgh Commission on Human Relations.
Davis did not appeal this decision to the Pennsylvania Supreme Court. Rather, on August 13, 1975, she filed the instant civil action for damages pursuant to 42 U.S.C.§ 1981 on August 13, 1975. In her complaint, Davis alleged that she was sugjected to a pattern of racial discrimination consisting of racial slurs and racially motivated harassment. She claimed that she was then unlawfully dismissed from her employment and sought damages to compensate her for lost wages, fringe benefits and pension rights as well as costs and attorneys' fees.
The district court found in Davis's favor after the case, pursuant to the stipulation of the parties, was submitted to the court for a determination of liability on the basis of the transcript of the PHRC hearing of June 4, 1971, and the deposition of Davis dated April 24, 1979. (Appendix at 382a). No live testimony was heard. In an opinion dated October 19, 1979, the district court found that USS practiced racial discrimination in discharging Ms. Davis.*fn4
The plaintiff could have been terminated on suggestion of the office manager out of a retaliatory motive on his part. But, the motivation for retaliation is bound up with racial issues, since it was just such complaints that were the substance of the 1969 letter to the district manager. For all of the above reasons, I find that the discharge was racially discriminatory.
The foregoing shall constitute findings of fact and conclusions of law as required by Federal Rule of Civil Procedure 42(a). [sic] An appropriate Order will issue.
In a subsequent opinion based on the same submissions and three additional exhibits, the court determined the amount of Davis's damages ($44,236.11 and $6,500 in attorney's fees and costs) and the issue of mitigation. On appeal, USS asserts that Ms. Davis's claim was barred by res judicata ; that no evidence establishing a racially motivated discharge appears in the record; and that Davis failed to mitigate damages.*fn5 We reverse.
USS claims that Davis's suit is barred by res judicata . In an earlier appeal, Davis v. U.S. Steel Supply Division , 581 F.2d 335 (3d Cir. 1978), this court resolved in Davis's favor the question of the appropriate state statute of limitations that would be applied in an action under 42 U.S.C. § 1981 "where the gist of a § 1981 complaint concerns the racially discriminatory discharge of an employee...." Id . at 341 n.8. On that appeal, this court left the res judicata issue open when it concluded, contrary to the district court, that Davis's claim was not barred by the statute of limitations. Although USS had also moved for summary judgment asserting res judicata , the court did not reach the merits of that argument, noting that:
There is an open question under state and federal law whether the Commonwealth Court's reversal of the Commission's order would be accorded res judicata effect in a subsequent private suit brought under either the Human Relations Act or under federal civil rights laws. The res judicata force of state judicial review of local administrative adjudications depends on a variety of factors which have not been developed in the record in his case.See New Jersey Educ. Ass'n v. Burke , 579 F.2d 764 (3d Cir. 1978); Mitchell v. NBC , 553 F.2d 265 (2d Cir. 1977). The district court, in fact, did not reach the res judicata issue in dismissing plaintiff's § 1981 complaint. We intimate no view as to the proper res judicata effect, if any, that should be accorded the Commonwealth Court's reversal of a finding of discrimination in a subsequent action under the Pennsylvania Human Relations Act or § 1981.
Id . at 340 n.5. In this appeal, however, we must decide the res judicata question which was raised below and decided against USS by the district court.
Here, USS relies upon the reasoning of the Second Circuit in Mitchell v. National Broadcasting Corp ., 553 F.2d 265 (2d Cir. 1977). In that case, the court held that Mitchell, who had filed a complaint charging that she had been dismissed from her job as a result of racially discriminatory employment practices, was barred by res judicata from bringing a § 1981 claim in federal court. Her federal action had been brought after her claim had been rejected by the New York State Division of Human Rights, and her appeals rejected by the New York State Human Rights Appeal Board and the Appellate Division of the New York State Supreme Court.*fn6
Both the majority and the dissenting opinions in Mitchell were concerned with the policy which underlies the doctrine of res judicata and the adequacy of the state proceedings. Both opinions were concerned with the potential for multiple and endless proceedings that could be mounted by a plaintiff if res judicata was held not to apply. Indeed, the majority in Mitchell , while recognizing that strong federal policies can override the mandate of 28 U.S.C. § 1738,*fn7 providing for full recognition of a state court judgment in the federal courts, nevertheless held that Mitchell was not entitled to still another trial on her employment claim.
The question is admittedly a close one, but we are persuaded, as was Judge Feinberg (now Chief Judge) writing in dissent in Mitchell , that "[w]ith respect to employment discrimination, Congress has shown a clear intent to provide injured plaintiffs with a federal fact-finding forum, and... this intent supersedes the requirement of § 1738." 553 F.2d at 277 (Feinberg, J. dissenting). That intent, and the importance of a federal fact finding forum in the employment discrimination context, in our opinion, sets off this category of cases from those that might otherwise respond to the concerns for comity and judicial efficiency that are ordinarily served by applying a res judicata bar. (See Lehman v. Lycoming County Children's Services , 648 F.2d 135, 138-39 (3d Cir. 1981) (en banc ) for a discussion of the res judicata effect of state court judgments in federal court.)
While arguably there are differences between the earlier state proceedings initiated by Mitchell and those which the Commonwealth court reviewed as a result of Davis's complaint, those differences are not significant in terms of res judicata principles once we have determined that Congress intended that a federal fact finding forum be available to an injured plaintiff. Thus, the concluding portion of Judge Feinberg's dissenting opinion is as pertinent and relevant here, in the context of Davis's action, as it was in Mitchell :
It may be that there is no basis for Mitchell's [Davis's] claim, and viewed from that perspective, allowing her to present it in the federal court duplicates effort and squanders scarce judicial resources. Yet, the duplication complained of is part and parcel of the congressional determination that racial discrimination claims in employment are important enough to warrant independent and overlapping federal remedies. And they are also important enough to warrant de novo review of administrative rulings on employment discrimination. Some of this effort may be unnecessary, but the courts should not use the doctrine of res judicata to prune away what they view as redundancies in this scheme without close attention to the congressional intention.
553 F.2d at 280 (Feinberg, J., dissenting).
This conclusion -- that res judicata does not bar Davis's present action -- is buttressed by this court's decision in Smouse v. General Electric Co ., 626 F.2d 333 (3d Cir. 1980). There, a plaintiff brought a Title VII action against General Electric claiming that a phase-out of General Electric's operations at its West Mifflin plant, which took place in 1971, discriminated against women who, as a result, were transferred from full to part-time positions. Prior to the institution of the plaintiff's action in federal court, a class action*fn8 had been successfully prosecuted in the Pennsylvania courts. Although the class plaintiffs had ultimately prevailed before the Supreme Court of Pennsylvania, no relief had been received by any of the affected employees. We assume that plaintiff Smouse's impatience with the delay in implementing relief caused her to initiate her separate action in federal court even though she was a member of the class that had prevailed in the state proceedings.
The district court granted summary judgment to General Electric on the ground that Smouse's action was barred by res judicata as a result of the state proceedings. On appeal, this court reversed. We held that under the reasoning of Alexander v. Gardner-Denver Co ., 415 U.S. 36(1974) state administrative proceedings such as those conducted by the Pennsylvania Human Relations Commission, even though reviewed through and by the highest court of Pennsylvania, can not bar federal relitigation of discrimination claims under Title VII.
The Smouse court reasoned, in a Title VII context, as we now reason in a § 1981 setting, that "the legislative intent to permit independent assertion of claims under both Title VII and other applicable state and federal statutes, means that state administrative proceedings do not act as res judicata as to Title VII claims." Smouse, supra , at 335 (citation omitted). It is true that certain differences in administrative procedures were noted, but the court concluded that "given our analysis of Title VII and its objective, we cannot agree that a state determination at any stage is an absolute bar to a Title VII action." Smouse, supra , at 336.*fn9
For the purposes of res judicata , we, too, see no reason to distinguish between an action commenced under § 1981, (Davis's) or an action commenced under Title VII (Smouse's). The reasoning found in the dissenting opinion in Mitchell and in our own court's Smouse opinion is compelling. We hold that the predominant federal policy involved in these types of actions does not permit res judicata to operate as a bar to the maintenance of a federal suit.
Having concluded that Davis's § 1981 action was not barred by the prior proceedings which culminated in the Commonwealth Court of Pennsylvania's decision in favor of USS, we turn to a consideration of the merits of her claim.
In reviewing the district court's proceedings we start from the premise that the normal "clearly erroneous" standard of review is not the standard governing this case.*fn10 As this court said in In re Holi-Penn , 535 F.2d 841, 845 (3d Cir. 1978):
In the instant case, all of the evidence before the district court was documentary. Since we are thus 'in as good a position to determine the question as is the district court,' we many review the finding... without being constricted by the clearly erroneous rule. Government of the Virgin Islands v. Gereau , 523 F.2d 140, 145-46 (3d Cir. 1975); Universal Athletic Sales Co. v. Salkeld , 511 F.2d 904, 907 (3d Cir. 1975), cert. denied , 423 U.S. 863, 96 S. Ct. 122, 47 L. Ed. 2d 94, 44 U.S.L.W. 3204 (1975).
While we recognize that other circuits have divided with respect to the appropriate standard by which to review a case which is wholly documentary,*fn11 this court is firmly committed to the principle that a documentary non-jury case is reviewed differently than a case in which the district court has had the opportunity to see the witnesses, hear live testimony, and make credibility determinations. Thus in Scott Paper Co. v. Scott's Liquid Gold, Inc ., 589 F.2d 1225, 1229 n.3 (3d Cir. 1978), we wrote "in cases decided primarily on documentary evidence... we are in an equally good position to evaluate the evidence and need not be as constrained in cases where credibility of a witness may be in issue." In Re Multidistrict Litigation involving Frost Patent , 540 F.2d 601, 603 (3d Cir. 1976); Gov't of Virgin Islands v. Gereau , 523 F.2d 140, 144-46 (3d Cir. 1975), cert. denied , 424 U.S. 917 (1976); Universal Athletic Sales v. Salkeld , 511 F.2d 904, 907 (3d Cir.), cert. denied , 423 U.S. 863 (1975); Consolidated Sun Ray, Inc. v. Lea , 401 F.2d 650, 658 n.34 (3d Cir. 1968), cert. denied , 393 U.S. 1050 (1969); Borden Co. v. Clearfield Cheese Co ., 369 F.2d 96, 101 (3d Cir. 1966). See generally 5A Moore's Federal Practice, 2d Ed., P52.04. In situations where live testimony is heard, of course, it is understandable that deference be given to the district court's evaluations and findings of fact. In those cases, such findings of fact may only be set aside when they are clearly erroneous, that is "when although there is evidence to support [the finding], the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co ., 333 U.S. 364 (1948).
The dissent, however, in arguing for a rule contrary to the established law of this Circuit, claims that the cases of this court which establish the "documentary" rule of review are substantially different from the case sub judice . Yet a reading of those cases, see Scott Paper Co. v. Scott's Liquid Gold, Inc., supra; In re Holi-Penn, Inc., supra; Universal Athletic Sales Co. v. Salkeld, supra; Borden Co. v. Clearfield Cheese Co., Inc., Supra; Surgical Supply Service, Inc. v. Adler , 321 F.2d 536 (3d Cir. 1963), does not support the dissent's attempted distinction. In each of those cases, as in the instant case, the record consisted wholly of documentary evidence, which the parties claimed supported their version of the facts in dispute. In each instance, the facts on which the trial court's disposition was based were redetermined de novo by this court.
Moreover, the dissent's claim that our standard of review is proscribed by United States v. United States Gypsum Co ., 333 U.S. 364 (1948), and Commissioner v. Duberstein , 363 U.S. 278 (1960), is as unsupportable as its purported distinction of this court's decisional law.The dissent states that in both Gypsum and Duberstein the Supreme "Court applied the clearly erroneous standard of Rule 52(a) to inferences drawn from documentary evidence and from disputed facts." Typescript at 7. Nothing could be further from the fact. In Gypsum , the Court applied the "clearly erroneous standard" because the Government, in addition to presenting documentary exhibits, also examined twenty-eight live witnesses, 333 U.S. at 372, whose testimony was conflicting, id . at 395. In Commissioner v. Duberstein , in which the identical issue was presented by two different cases heard together by the Supreme Court, there was oral witness testimony in addition to the documentary evidence. In the Duberstein case, Duberstein testified, see 363 U.S. at 280-81; in Stanton v. United States , the companion case to Duberstein , a company director testified, id . at 281-82.
Thus, both Gypsum and Duberstein reflect exactly the same doctrinal approach to Rule 52(a)'s standard of review as our precedents and this case reflect. That standard was recently summarized in Altman v. Altman , No. 80-2106 (3d Cir. June 29, 1981) slip op. at 7 n.3: where the record consists of purely documentary evidence, we are in as good a position as the district court to find the facts. However, if there is oral testimony before the district court, then even though the record may be largely documentary, the standard of review is whether the district court's finding of facts are clearly erroneous.
We confess that United States v. United Steelworkers of America , 271 F.2d 676 (3d Cir.), aff'd , 361 U.S. 39 (1959), is puzzling in this respect because while it does not discuss either Gypsum or Duberstein , as the dissent may be read to imply, the decision contradicts its own earlier legal premise. In Steelworkers , the court noted that the case was submitted on affidavits and without oral testimony. It went on to state, as all other Third Circuit cases have stated since that time, that
[t]he result of this method of proof is that the rule which calls upon us to support the findings of the district judge unless clearly erroneous is inapplicable so far as it has to do with the trial court's opportunity to observe the demeanor of the witnesses and like matters.
Id . at 685. However, it then concluded by stating without discussion that
[o]n a review of the entire record we conclude that we cannot say that the findings made by the court below are clearly erroneous.
Id . at 688.We can only surmise that the court's conclusion was a harmless inadvertency, and one which, had it been called to the attention of the opinion writer, would undoubtedly have resulted in a phrasing of its conclusion consistent with its earlier correct statement of the "documentary" standard of review. Indeed, were it otherwise, this court since that time would have been consistently in disregard of its own precedents, see, e.g., Scott Paper Co., supra , and its own procedures. See United States Court of Appeals for the Third Circuit, Internal Operating Procedures, Ch. VIII, § C (1978); O. Hommel Co. v. Ferro Corp ., Nos. 80-2062, 80-2723 (3d Cir. Sept. 2, 1981), slip op. at 28; Hamilton v. Roth , 624 F.2d 1204, 1209 (3d Cir. 1980).
We have thus consistently held for at least the past quarter century, as we do now, that the Rule 52(a) "clearly erroneous" standard does not apply to wholly documentary cases where the record discloses no oral testimony.The dissent, however, theorizes that adherence to the "documentary" standard of review will greatly increase the burden on this court by requiring "far greater expenditure of judge time than will review under the clearly erroneous standard." Typescript at 10. This court, however, has not complained of, nor suffered, any undue burden during its long history of experience with the "documentary" standard of review. Nor is it surprising that this should be so: we must always review the entire record, even in cases involving live testimony which are governed by the "clearly erroneous" standard, in order to ensure that the record contains sufficient support to affirm the district court's findings. See e.g., Krasnov v. Dinan , 465 F.2d 1298 (3d Cir. 1972); Case v. Morrisette , 475 F.2d 1300, 1308 (D.C. Cir. 1973) (under "clearly erroneous" standard, reviewing court "must look to all of the evidence of record to determine whether the findings can pass muster") (footnote omitted).
In the present case, we do not have live witnesses who have testified and who were thus open to the district court's scrutiny, examination, and assessment. The entire record in this case, by stipulation of the parties, consists of four discrete components: (1) the record developed before the PCHR; (2) the stipulations of the parties; (3) the April 24, 1979 deposition of the plaintiff, Davis; and (4) three written exhibits.*fn12 Thus, on this appeal, where the record is wholly documentary, we are in as good a position as the district court to determine the facts and we are not constrained to apply the "clearly erroneous" standard.
Davis's entire claim rises or falls on her proof that she was discharged because she was black and for no other reason. 42 U.S.C. § 1981 provides:
All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.
Although there have been somewhat varying views*fn13 as to whether or not purposeful discrimination is necessary to make out a prima facie claim under § 1981, that issue need not concern us here. Even if we were to reach that issue, i.e ., is purposeful discrimination required under § 1981, and were to hold that it is not, on this record Davis would still fall far short of establishing her claim. Here the record is clear that Davis's race played no part in her termination, and that she was discharged for race-neutral considerations. Thus her § 1981 claim must fail.
The record discloses that Davis was discharged on February 3, 1970, by Sykes, the acting district manager, at the request of Pishko, Davis's immediate supervisor. Pishko had been Davis's supervisor since 1966. Therefore, for Davis to prevail, it must be shown that either Sykes or Pishko acted on the basis of racial considerations.
In reviewing the record, however, we are struck by the complete absence of evidentiary support for such a claim. The evidence respecting the events immediately attendant upon Davis's discharge, as well as the evidence concerning Davis's employment and treatment throughout her tenure, is barren of any racial bias attributable to USS. We have carefully examined the record as it reflects the events of February 3, 1970, the date on which Davis was fired. In our opinion, the record demonstrates that Davis's behavior on that date, and not her race, was the only reason that she was terminated.
Pishko, Davis's immediate supervisor, testified that he had been embarrassed in front of other employees by Davis's behavior when she stormed out of his office and refused to return after he had requested her to do so a number of times. It was at that point that Pishko testified that he felt he had no alternative but to ...