                     United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                                 Nos. 05-4183/4311
                                   ___________

Equal Employment Opportunity         *
Commission,                          *
                                     *
      Appellee/Cross-Appellant,      *
                                     * Appeals from the United States
      v.                             * District Court for the Southern
                                     * District of Iowa.
Dial Corporation,                    *
                                     *
      Appellant/Cross-Appellee.      *
                                ___________

                             Submitted: September 25, 2006
                                Filed: November 17, 2006
                                 ___________

Before MURPHY, HANSEN, and RILEY, Circuit Judges.
                           ___________

MURPHY, Circuit Judge.

       The Equal Employment Opportunity Commission (EEOC) brought this sex
discrimination action against The Dial Corporation under Title VII of the Civil Rights
Act of 1964 on behalf of a number of women who had applied for work but were not
hired. A jury found that Dial had engaged in a pattern or practice of intentional
discrimination against women and awarded compensatory damages, and the district
court1 concluded that Dial's use of a preemployment strength test had an unlawful


      1
      The Honorable Ronald E. Longstaff, United States District Judge for the
Southern District of Iowa.
disparate impact on female applicants and awarded back pay and benefits. Dial
appeals from the denial of its motion for judgment as a matter of law and from the
judgment. EEOC cross appeals the denial of back pay to one claimant. We remand
one issue but otherwise affirm.

       Dial is an international company with a plant located in Fort Madison, Iowa that
produces canned meats. Entry level employees at the plant are assigned to the sausage
packing area where workers daily lift and carry up to 18,000 pounds of sausage,
walking the equivalent of four miles in the process. They are required to carry
approximately 35 pounds of sausage at a time and must lift and load the sausage to
heights between 30 and 60 inches above the floor. Employees who worked in the
sausage packing area experienced a disproportionate number of injuries as compared
to the rest of the workers in the plant.

      Dial implemented several measures to reduce the injury rate starting in late
1996. These included an ergonomic job rotation, institution of a team approach,
lowering the height of machines to decrease lifting pressure for the employees, and
conducting periodic safety audits. In 2000 Dial also instituted a strength test used to
evaluate potential employees, called the Work Tolerance Screen (WTS). In this test
job applicants were asked to carry a 35 pound bar between two frames, approximately
30 and 60 inches off the floor, and to lift and load the bar onto these frames. The
applicants were told to work at their "own pace" for seven minutes. An occupational
therapist watched the process, documented how many lifts each applicant completed,
and recorded her own comments about each candidate's performance. Starting in
2001, the plant nurse, Martha Lutenegger, also watched and documented the process.
From the inception of the test, Lutenegger reviewed the test forms and had the
ultimate hiring authority.

      For many years women and men had worked together in the sausage packing
area doing the same job. Forty six percent of the new hires were women in the three

                                         -2-
years before the WTS was introduced, but the number of women hires dropped to
fifteen percent after the test was implemented. During this time period the test was
the only change in the company's hiring practices. The percentage of women who
passed the test decreased almost each year the test was given, with only eight percent
of the women applicants passing in 2002. The overall percentage of women who
passed was thirty eight percent while the men's passage rate was ninety seven percent.
While overall injuries and strength related injuries among sausage workers declined
consistently after 2000 when the test was implemented, the downward trend in injuries
had begun in 1998 after the company had instituted measures to reduce injuries.

      One of the first applicants to take the WTS was Paula Liles, who applied to Dial
in January 2000 and was not hired even though the occupational therapist who
administered her test told her she had passed. She filed a discrimination complaint
with the Iowa Civil Rights Commission and EEOC in August 2000. On
September 24, 2002, EEOC brought this action on behalf of Liles and fifty three other
women who had applied to work at Dial and were denied employment after taking the
WTS. Twenty four of these applicants had been unable to complete the test.

       A jury trial was held in August 2004, and EEOC and Dial offered testimony by
competing experts. EEOC presented an expert on industrial organization who testified
that the WTS was significantly more difficult than the actual job workers performed
at the plant. He explained that although workers did 1.25 lifts per minute on average
and rested between lifts, applicants who took the WTS performed 6 lifts per minute
on average, usually without any breaks. He also testified that in two of the three years
before Dial had implemented the WTS, the women's injury rate had been lower than
that of the male workers. EEOC's expert also analyzed the company's written
evaluations of the applicants and testified that more men than women were given
offers of employment even when they had received similar comments about their
performance. EEOC also introduced evidence that the occupational nurse marked
some women as failing despite their having completed the full seven minute test.

                                          -3-
      Dial presented an expert in work physiology, who testified that in his opinion
the WTS effectively tested skills which were representative of the actual job, and an
industrial and organizational psychologist, who testified that the WTS measured the
requirements of the job and that the decrease in injuries could be attributed to the test.
Dial also called plant nurse Martha Lutenegger who testified that although she and
other Dial managers knew the WTS was screening out more women than men, the
decrease in injuries warranted its continued use.

       The jury was asked to decide whether Dial had engaged in a pattern or practice
of intentional discrimination against female job applicants, the date on which any such
discrimination began, and a question relating to damages. The jury returned its verdict
on August 23, 2004. It found Dial had engaged in a pattern or practice of intentional
discrimination beginning in April 2001. The jury awarded a total of $30,003 in
compensatory damages to the nine claimants who testified at trial and declined to
assess punitive damages. Dial moved for judgment as a matter of law, alleging there
was insufficient evidence for a reasonable jury to have found intentional
discrimination. The motion was denied on February 3, 2005, but the district court
eliminated nominal damages awarded to two applicants who had been rejected before
April 2001 (the date when Dial's intentional discrimination began according to the
jury verdict).

       Following the jury trial the parties submitted additional evidence and briefs
relating to the disparate impact allegations. The district court ruled on these issues in
sixteen pages of detailed findings of fact and conclusions of law issued on February
3, 2005. It found that the WTS had had a discriminatory effect, that Dial had not
demonstrated that the WTS was a business necessity or shown either content or
criterion validity, and that Dial had not effectively controlled for other variables which
may have caused the decline in injuries, including other safety measures that Dial had
implemented starting in 1996.



                                           -4-
        After the court issued its findings and conclusions, Dial offered employment
to all of the claimants in the spring of 2005. Further discovery and submissions
followed, as well as additional briefing. The district court found that the claimants
who had been unable to complete the full seven minutes of the WTS were also entitled
to relief and determined the amount of back pay and interest to which each applicant
was entitled. Back pay was calculated from the date the district court found the
applicants should have been hired up to the date of Dial's offer of employment, less
any wages earned elsewhere during that period. Health care benefits were awarded
in the amount Dial would have paid for premiums, minus any benefits the women had
received in the meantime. The range of the back pay awarded to the individual
applicants varied from a high of $120,236 to a low of $920, and the individual health
benefits ranged from $30,385 to $882.

       An additional issue was raised in respect to one of the women who had accepted
Dial's reinstatement offer, Heather Wright-Bradley. She had a criminal record
predating her initial application, which included a number of convictions and at least
one felony. Dial dismissed her after learning about her criminal history in a
background check done after her reinstatement. The district court held a telephone
conference with the parties to address whether Wright-Bradley should receive back
pay under the circumstances. Dial's general counsel stated that the company had a
policy on background checks during the period when the WTS was given which
would have uncovered her criminal record. The district court concluded that Dial
would have terminated her on account of her criminal record had she been hired in
2000 and that she was therefore not entitled to back pay.

      On appeal Dial challenges the district court's denial of its motion for judgment
as a matter of law, arguing there was insufficient evidence for a jury to find intentional
discrimination. Dial also attacks the district court's findings of disparate impact and
claims it proved that the WTS was a business necessity because it drastically
decreased the number of injuries in the sausage production area of the plant. It

                                           -5-
contends the district court should not have awarded any back pay to applicants who
were not strong enough to complete the WTS, it should have used the company's
tenure data to calculate back pay, and that no applicant should have been awarded
health care benefits without proof of any actual costs incurred. EEOC disagrees and
cross appeals the denial of back pay to Wright-Bradley. It argues that Dial did not
prove that at the time she was hired it had a policy in place to terminate new
employees with similar criminal backgrounds.

       Dial first argues that EEOC did not establish a pattern or practice of intentional
sex discrimination and that its motion for judgment as a matter of law should therefore
have been granted. EEOC responds that the jury had sufficient evidence on which to
base its decision. We review the district court's denial of Dial's motion for judgment
as a matter of law de novo, using the same standard as the district court. Ollie v. Titan
Tire Corp., 336 F.3d 680, 685 (8th Cir. 2003). The reviewing court must decide
whether there is sufficient evidence to support the jury's verdict when examined in the
light most favorable to the verdict. Id. Judgment as a matter of law is only
appropriate when there is no reasonable inference to be made from the evidence which
can sustain the verdict. Id.

       A pattern or practice of intentional sex discrimination must be shown by
proving "regular and purposeful" discrimination by a preponderance of the evidence,
Int'l Brotherhood of Teamsters v. U.S., 431 U.S. 324, 339, 360 (1977). EEOC must
show that more than an isolated act of discrimination occurred and that
"discrimination was the company's standard operating procedure," id., but statistics
combined with anecdotal examples of discrimination may establish a pattern or
practice of regular, purposeful discrimination. Morgan v. United Parcel Service of
America, Inc., 380 F.3d 459, 463-64 (8th Cir. 2004). Moreover, discriminatory intent
can be inferred from the mere fact of differences in treatment, Teamsters, 431 U.S.
at 335 n.15.



                                          -6-
       Statistical disparities are significant if the difference between the expected
number and the observed number is greater than two or three standard deviations.
Hazelwood Sch. Dist. v. U.S., 433 U.S. 299, 308 n.14 (1977). Here, the disparity
between hiring of men and women showed nearly ten standard deviations. The
percentage of women who passed the WTS declined with each implementation of the
test. Despite knowing about the statistical difference, Dial continued to use the WTS.
Dial argues that EEOC's statistics are inapplicable because men and women are not
similarly situated and have profound physiological differences. There was evidence,
however, that women and men worked the same job together for many years before
the WTS was instituted. There was also evidence of women and men receiving similar
comments on their test forms, but only the males receiving offers of employment.

       Dial attacks the jury's finding that intentional discrimination began in April
2001, a month when the WTS was not in use and no particular identifiable
discriminatory action was alleged. EEOC responds that the jury appeared to have
found April 2001 to be the month when Dial must have known of the discriminatory
effect of the WTS, but nonetheless continued to use it for future hiring periods. A
reasonable jury could discredit Lutenegger's testimony that the decrease in injuries
was the company's motivation for continuing to use the WTS. A reasonable jury
could also have found that the differing treatment of males and females supported an
inference of intentional discrimination. We conclude that the evidence was sufficient
for a reasonable jury to find that there was a pattern and practice of intentional
discrimination against women and that the district court did not err by denying Dial's
motion for judgment as a matter of law.

       Dial objects to the district court's findings of disparate impact and its conclusion
that the company failed to prove the WTS was necessary to establish effective and
safe job performance. We review the district court's factual findings regarding
disparate impact for clear error and its legal findings de novo. Fed. R. Civ. P. 52(a).
In a disparate impact case, once the plaintiff establishes a prima facie case the

                                           -7-
employer must show the practice at issue is "related to safe and efficient job
performance and is consistent with business necessity." Firefighters Inst. for Racial
Equality v. City of St. Louis, 220 F.3d 898, 904 (8th Cir. 2000). An employer using
the business necessity defense must prove that the practice was related to the specific
job and the required skills and physical requirements of the position. Belk v.
Southwestern Bell Telephone Co., 194 F.3d 946, 951 (8th Cir. 1999). Although a
validity study of an employment test can be sufficient to prove business necessity, it
is not necessary if the employer demonstrates the procedure is sufficiently related to
safe and efficient job performance. Hawkins v. Anheuser-Busch, Inc., 697 F.2d 810,
815-16 (8th Cir. 1983). If the employer demonstrates business necessity, the plaintiff
can still prevail by showing there is a less discriminatory alternative. Firefighters, 220
F.3d at 904.

        Dial contends the WTS was shown by its experts to have both content and
criterion validity. Under EEOC guidelines, "A content validity study should consist
of data showing that the content of the selection procedure is representative of
important aspects of performance on the job for which the candidates are to be
evaluated." 29 C.F.R. § 1607.5(B). Dial's physiology expert testified that the WTS
was highly representative of the actions required by the job, and Dial claims that his
testimony was not rebutted by EEOC which had no physiology witness. The district
court was persuaded by EEOC's expert in industrial organization and his testimony
"that a crucial aspect of the WTS is more difficult than the sausage making jobs
themselves" and that the average applicant had to perform four times as many lifts as
current employees and had no rest breaks. There was also evidence that in a testing
environment where hiring is contingent upon test performance, applicants tend to
work as fast as possible during the test in order to outperform the competition.

      Dial argues the WTS was criterion valid because both overall injuries and
strength related injuries decreased dramatically following the implementation of the
WTS. The EEOC guidelines establish that criterion validity can be shown by

                                           -8-
"empirical data demonstrating that the selection procedure is predictive of or
significantly correlated with important elements of job performance." 29 C.F.R. §
1607.5(B). Although Dial claims that the decrease in injuries shows that the WTS
enabled it to predict which applicants could safely handle the strenuous nature of the
work, the sausage plant injuries started decreasing before the WTS was implemented.
Moreover, the injury rate for women employees was lower than that for men in two
of the three years before Dial implemented the WTS. The evidence did not require
the district court to find that the decrease in injuries resulted from the implementation
of the WTS instead of the other safety mechanisms Dial started to put in place in
1996.

       Dial contends finally that the district court improperly gave it the burden to
establish that there was no less discriminatory alternative to the WTS. Dial claims the
burden should have been allocated to EEOC as part of the burden shifting framework
in disparate impact cases, Firefighters, 220 F.3d at 904. Since Dial failed to
demonstrate that the WTS was a business necessity, however, EEOC never was
required to show the absence of a nondiscriminatory alternative. Part of the
employer's burden to establish business necessity is to demonstrate the need for the
challenged procedure, Kirby v. Colony Furniture Co., 613 F.2d 696, 705 n.6 (8th Cir.
1980), and the court found that Dial had not shown that its other safety measures
"could not produce the same results." We conclude that the district court findings in
its disparate impact analysis were not clearly erroneous, and we see no legal error in
its conclusions on liability.

       Dial claims the district court committed error by awarding back pay and
benefits to all but one of the claimants even though twenty four women had been
unable to complete the WTS. But once an employer is found liable for a Title VII
violation, the district court is obligated to grant "the most complete relief possible."
King v. Staley, 849 F.2d 1143, 1144 (8th Cir. 1988). There is a strong presumption
that an employee who has suffered discrimination should receive back pay. E.E.O.C.

                                          -9-
v. Rath Packing Co., 787 F.2d 318, 329 (8th Cir. 1986). This presumption can be
overcome only if back pay would "frustrate the central statutory purposes of
eradicating discrimination throughout the economy and making persons whole for
injuries suffered through past discrimination." Albermarle Paper Co. v. Moody, 422
U.S. 405, 421 (1975). The trial court "has broad equitable discretion to fashion back
pay awards in order to make the Title VII victim whole." E.E.O.C. v. Delight
Wholesale Co., 973 F.2d 664, 669-70 (8th Cir. 1992). The district court's finding of
discrimination was based on Dial's use of the WTS and the evidence that the test was
more difficult than the actual job. Women who were not hired because they were
unable to complete the WTS suffered losses as a consequence, and Dial did not
overcome the presumption in favor of awarding back pay in respect to these claimants.

       Dial also claims the district court erred by refusing to use its employee tenure
data in calculating the amount of back pay because the plant's high turnover rate
suggests the claimants would not have been employed for the entire back pay period.
The district court applied the well established rule for calculating back pay — the
difference between the amount the claimant would have earned absent the
discrimination and the amount of wages actually earned during the relevant period.
See Hartley v. Dillard's, Inc., 310 F.3d 1054, 1062 (8th Cir. 2002). This was
consistent with Title VII's dual purposes of compensating victims and deterring future
discrimination, as well as the district court's obligation to grant "the most complete
relief possible." King, 849 F.2d at 1144.

       Dial also challenges the award of lost medical premiums, arguing the claimants
should have been required to prove they incurred medical expenses. Our court has not
decided whether out of pocket expenses are required before health care benefits can
be awarded, see Tolan v. Levi Strauss & Co., 867 F.2d 467, 470 (8th Cir. 1989), and
other circuits are divided on the issue. In the view of the Fourth Circuit, Congress
intended fringe benefits to be part of the monetary award compensating claimants for
the discrimination they suffered. See Fariss v. Lynchberg Foundry, 769 F.2d 958,

                                         -10-
965-66 (4th Cir. 1985) (awarding medical benefits to widow of age discrimination
victim without requiring proof of out of pocket medical insurance costs); see also
Blackwell v. Sun Elec. Co., 696 F.2d 1176, 1185-86 (6th Cir. 1983) (granting the
amount of health care premiums to claimant as part of recovery); but see Galindo v.
Stoody Co., 793 F.2d 1502,1517 (9th Cir. 1986) (reimbursing only out of pocket
expenses incurred to obtain health care).

      Health care benefits are an important element of an employee's overall
employment package, and Dial does not contest that it would have awarded claimants
health care benefits had they been hired. The district court only required Dial to
compensate the claimants for the amount of health care premiums that would have
been part of their employment package had they not suffered discrimination. No
reimbursement for health care costs incurred by uninsured claimants was awarded.
The court's limited award was reasonable, for "[t]his insurance coverage, not the
proceeds, is the benefit for which the employer must be held liable." Fariss, 769 F.2d
at 965.

       EEOC cross appeals the denial of back pay to Wright-Bradley. EEOC argues
that Dial did not overcome the presumption in favor of awarding back pay to her as
a victim of Title VII violations. See Rath Packing, 787 F.2d at 329. Dial responds that
it should not have to contribute back pay to Wright-Bradley because she was
convicted of a felony before she applied in 2000, a background check would have
revealed her criminal record, and she would have been terminated. EEOC disputes
Dial's factual assertions and argues that McKennon v. Nashville Banner Publishing
Co., 513 U.S. 352 (1995), supports an award of back pay to Wright-Bradley.

      In McKennon, the Supreme Court concluded that an employer's belated
discovery of wrongdoing by a dismissed employee should not completely bar an
award of back pay because of the congressional "objective of forcing employers to
consider and examine their motivations, and of penalizing them for employment

                                         -11-
decisions that spring from [] discrimination." Id.; see also Sellers v. Mineta, 358 F.3d
1058, 1061-62 (8th Cir. 2004) (applying the after acquired evidence rule to Title VII
cases). The Supreme Court decided that back pay should be awarded, but only "from
the date of the unlawful discharge to the date the new information was discovered"
absent findings of "extraordinary equitable circumstances." McKennon, 513 U.S. at
362. The district court distinguished McKennon on the basis that the misconduct there
had occurred during the plaintiff's employment and concluded that back pay would
result in a windfall to Wright-Bradley. Dial argues that this is a mixed motives case
so McKennon does not apply, but Wright-Bradley’s criminal record could not have
been a motive for Dial's not hiring her since it was unaware of it at the time.

       Dial's general counsel represented in the court's telephone conference that its
offers of employment in 2000 were contingent on passing a background check.
Counsel also stated that Dial had not previously dismissed an employee due to such
a check since it had not discovered felony convictions before but that Dial had
terminated five employees with criminal records. EEOC objected that "we've got a
factual problem here," that Dial had offered no evidence to establish that the described
policy existed, and that Dial's job application stated only that a hiring offer was
contingent on a drug test and a check of previous employment. EEOC added that it
had asked Dial during discovery for copies of background checks completed on
employees hired near the time Wright-Bradley took the WTS, but Dial responded that
it did not have such evidence.

       After examining the record we conclude that there are disputed factual issues
here on the question of whether Wright-Bradley should be awarded back pay. The
statements of Dial's counsel on which the district court relied were not made under
oath, and no other evidence of Dial's policy has been proffered. Like the employer in
McKennon, Dial learned about Wright-Bradley's wrongdoing only after its
discriminatory hiring decision was made. Under the after acquired evidence
framework, Dial has the burden of proving that Dial would have terminated Wright-

                                         -12-
Bradley in 2000 because of her criminal background. See McKennon, 513 U.S. at
362-63. If Dial produces such proof, the district court should consider whether
Wright-Bradley is entitled to any amount of back pay. See id.

      In sum, we affirm the district court's denial of judgment as a matter of law, its
findings of disparate impact, and its award of back pay and benefits to all claimants
except Wright-Bradley. Her claim for back pay is remanded for further proceedings
consistent with this opinion.

                       _______________________________




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