I.An employee of Liberty Mutual Insurance Co. brought a lawsuit alleging violations of Title VII of the Civil Rights Act.Did Ms. Chescheir establish a prima facie case of discrimination under Title VII?

Case: FACTS

Liberty Mutual Insurance Company has a rule prohibit- ing its adjusters and first-year supervisors from attend- ing law school. This "law school rule" was proposed and implemented on a national basis by Edmund Carr, a vice president and general claims manager, in November 1972.

Joan Chescheir (plaintiff) was hired by Liberty Mutual's Dallas office in March 1973 as a claims adjuster. In January 1975, she voluntarily resigned but in June of that year was hired in Liberty's Houston office as a claims adjuster.

In August 1976, Wyatt Trainer, the claims manager at the Houston office, received an anonymous letter informing him that Ms. Chescheir was attending law school. After consulting with his assistants and supe- rior, Mr. Trainer fired her after she admitted she was attending law school.

Charity O'Connell also worked in the Houston office as a claims adjuster during the same period Ms. Chescheir did. During a coffee break with a

new employee, Timothy Schwirtz (also an adjuster), Ms. O'Connell relayed the story of Ms. Chescheir's firing. Mr. Schwirtz then said, "Oh, that's strange, because when I was hired, when Wells [Southwest Division claims manager] interviewed me, he told me that I could go to law school and in fact if I came down to the Houston office, there were law schools in Houston." Ms. O'Connell then went to her supervisor and told him she also was attending law school. She refused to quit law school and was fired.

William McCarthy, Liberty's house counsel in its Houston office, attended law school while working as an adjuster and was retained as house counsel upon his graduation. The trial court found that Mr. McCarthy's supervisors were aware of his contemporaneous law school career. Alvin Dwayne White was employed as an adjuster in Liberty's Fort Worth office and asked for a transfer to Houston so he could attend law school. He was given the transfer and attended law school in Houston. James Ballard worked as an adjuster in Houston, attended law school, and was promotedto supervisor while in law school. Supervisors and employees were aware of his law school attendance, but the law school rule was not enforced against him. In short, none of the male employees known to have been attending law school was fired.

Ms. Chescheir and Ms. O'Connell both filed com- plaints with the EEOC, were given right of suit letters, and filed suit in federal district court. After a lengthy trial, the court found that Liberty Mutual had violated Title VII. Both women were given back pay. Liberty Mutual appealed.

JUDICIAL OPINION

GOLDBERG, Circuit Judge

Title VII applies ... not only to the more blatant forms of discrimination, but also to subtler forms, such as dis- criminatory enforcement of work rules.

The four-part test for demonstrating aprima faciecase for discriminatory discharge due to unequal impo- sition of discipline [is]:

1. That plaintiff was a member of a protected group;
2. That there was a company policy or practice con- cerning the activity for which he or she was discharged;
3. That nonminority employees either were given the benefit of a lenient company practice or were not held to compliance with a strict company policy; and
4. That the minority employee was disciplined either without the application of a lenient policy, or in conformity with the strict one.
5. Of course, if an employer is unaware that a non-

minority employee is in violation of company policy, the absence of discipline does not demonstrate a more lenient policy. It follows from this that if an employer applies a rule differently to people it believes are differ- ently situated, no discriminatory intent has been shown.

It is clear that the plaintiffs are members of a protected group and that there was a company policy or practice concerning the activity for which the plaintiffs were discharged; thus the first two ele- ments of the test are met. It is also clear that minority employees were disciplined without the application of a lenient policy, and in conformity with a strict policy. All women known to violate the law school rule were immediately discharged. Furthermore, even potential violations of the rule by women were investigated promptly. An anonymous letter was sufficient to trigger an investigation of Chescheir, and the fact that Chescheir was attending law school moved the company to interrogate another woman.

The only remaining element of theprima faciecase is a finding that male employees either were given the

benefit of a lenient company practice or were not held to compliance with a strict company policy. This is the element upon which Liberty Mutual focuses its attack. Recasting Liberty Mutual's argument slightly, it claims that other males were strictly disciplined in accord with the law school rule, and that Liberty Mutual never knew that McCarthy, White, and Ballard were attend- ing law school. Thus, claims Liberty Mutual, the third element was not met.

We are not persuaded. First, our review of the record does not disclose any males in the Southwest Division who were discharged because of the law school rule. Second, even were we to accept Liberty Mutual's con- tention that it did not actually know McCarthy, White, and Ballard were attending law school, we would still affirm the judgment. The operative question is merely whether Liberty Mutual applied a more liberal standard to male employees. The district court found that there were widespread rumors that McCarthy and Ballard were attending law school. Also, the EEOC notified Liberty Mutual that a male adjuster was attending law school (Ballard) and requested an explanation. Key managerial employees, at a minimum, suspected McCarthy was attending law school but preferred not to ask and confirm their suspicions. One male adjuster was told when he was hired that he could attend law school. In contrast to Liberty Mutual's energetic inves- tigation of women it believed might be attending law school, Liberty Mutual never investigated any of these allegations, suspicions, or rumors about male adjusters. The case of Mr. White is even more dramatic. After he expressed a desire to transfer to Houston in order to attend law school, that transfer was granted and he was never told he could not attend law school.

The preceding facts are more than enough to sup- port the third leg [of the test]. Males at Liberty Mutual were subject to lenient enforcement of the law school rule. The district court's ultimate finding of fact that Liberty Mutual applied its law school rule discrimina- torily finds firm support in the record; all four elements of theprima faciecase are present.

Once Chescheir and O'Connell established aprima faciecase of discrimination, the burden shifted to Liberty Mutual to present a justification. The district court found that Liberty Mutual offered no justification. Accordingly, the judgment of the district court is affirmed.

II.You are the CEO of a small hospital located in a southeastern state.You have successfully competed with larger hospitals in the area because your hospital is more efficient than the larger hospitals, and you have a dedicated staff of doctors who have remained loyal to you despite receiving lower pay than doctors at the large hospitals.

Your hospital serves a rural population of mostly lower middle-class farm families who work small tracts of land.Most of those small farms have been passed down from generation to generation.In addition, your hospital serves a large population of immigrant families who work as farm hands on the local farms.Most of these families live at or below the poverty level.Yours is the only hospital within 50 miles.

Recent news reports have caused you great concern.Several of the large hospitals have been successfully sued by patients who claimed they were injured as the result of medical malpractice.At least six hospitals have paid out multi-million-dollar damage claims, some of which included punitive damages.

You realize that even one such lawsuit would likely put your hospital out of business. At a recent conference of small rural hospitals that you attended, several CEO's warned that ours had become a very litigious society and that small hospitals need to protect themselves from these frivolous lawsuits.One speaker suggested that the tort laws should be changed to prevent these huge damage awards.

The more you listened, the more you realized that these kinds of lawsuits could destroy your business, leaving many patients without hospital service.The last speaker at the conference was a lobbyist hired by the hospital industry to try to convince the state legislature to pass, among other things, a law placing a cap on damage awards for medical malpractice.He invited all interested hospital CEO's to join in the effort to reform the tort law.

One of the members of the Board of Directors of your hospital also attended the conference.She has reported back to the full Board.As a result, the Board has voted to support the idea of tort reform.The Board has directed you to present, at the next meeting of the Board, a plan for tort reform in your state.Describe, in detail, the plan for tort reform that you will present at the next Board meeting.

You are the CEO of a small hospital located in a southeastern state.You have successfully competed with larger hospitals in the area because your hospital is more efficient than the larger hospitals, and you have a dedicated staff of doctors who have remained loyal to you despite receiving lower pay than doctors at the large hospitals.

Your hospital serves a rural population of mostly lower middle-class farm families who work small tracts of land.Most of those small farms have been passed down from generation to generation.In addition, your hospital serves a large population of immigrant families who work as farm hands on the local farms.Most of these families live at or below the poverty level.Yours is the only hospital within 50 miles.

Recent news reports have caused you great concern.Several of the large hospitals have been successfully sued by patients who claimed they were injured as the result of medical malpractice.At least six hospitals have paid out multi-million-dollar damage claims, some of which included punitive damages.

You realize that even one such lawsuit would likely put your hospital out of business. At a recent conference of small rural hospitals that you attended, several CEO's warned that ours had become a very litigious society and that small hospitals need to protect themselves from these frivolous lawsuits.One speaker suggested that the tort laws should be changed to prevent these huge damage awards.

The more you listened, the more you realized that these kinds of lawsuits could destroy your business, leaving many patients without hospital service.The last speaker at the conference was a lobbyist hired by the hospital industry to try to convince the state legislature to pass, among other things, a law placing a cap on damage awards for medical malpractice.He invited all interested hospital CEO's to join in the effort to reform the tort law.

One of the members of the Board of Directors of your hospital also attended the conference.She has reported back to the full Board.As a result, the Board has voted to support the idea of tort reform.The Board has directed you to present, at the next meeting of the Board, a plan for tort reform in your state.Describe, in detail, the plan for tort reform that you will present at the next Board meeting.