Constitutionalizing Title VII - Ricci v. DeStefano

Yesterday's decision in Ricci v. DeStefano probably received more publicity than it's due because Supreme Court nominee Sonia Sotomayor was on the panel that decided the appeal in the court of appeals. Nevertheless, the decision is an important one under Title VII for any employer who would avoid disparate impact liability.

In reading Ricci, I was reminded of a remark in Personnel Adm'r of Massachusetts v. Feeney, 442 U.S. 256, 277-79 (1979), that "Discriminatory intent is simply not amenable to calibration." Ricci demonstrates this point perfectly and the difference between intentional discrimination (also called "disparate treatment") and unintentional discrimination (called "disparate impact) continues to confound courts, lawyers and employers.

The facts in Ricci can be simply stated. The city gave a test to those who wanted to be promoted in the fire department. While the test was constructed to be racially neutral, it ended up favoring whites over blacks to a statistically significant degree. After deliberations, the city junked the test results. (This is an oversimplification. Other relevant facts will be added when the discussion warrants.)

The first question the Court decided was whether the City's rejection of the test results was "because of race." The majority got straight to the point and held that it was:

The City rejected the test results solely because the higher scoring candidates were white. The question is not whether that conduct was discriminatory but whether the City had a lawful justification for its race based action.

Slip op. at 19-20

Having decided the city's action amounted to overt racial discrimination, the only other issue was whether the decision was nevertheless justifiable because the city feared a disparate impact lawsuit from the black employees who fared worse than whites on the exam.

Employers take action based upon the fear of lawsuits all the time. Nor is the subject a new one for the Court. One of the statutory defenses in Title VII lets an employer make a decision because of sex but it is nevertheless a lawful on if sex is a bona fide occupational qualification ("BFOQ") for the job. Successful BFOQ defenses are rare, however, as Johnson Controls found out a number of years ago when it unlawfully prohibited females (unless they were infertile) from working on an assembly line making car batteries. UAW v. Johnson Controls, 499 U.S. 187 (1991). One of the more commonly permitted BFOQs is to require guards who have contact with male prisoners to be male. Dothard v. Robinson, 433 U.S. 321 (1977). But Title VII limits the BFOQ defense to sex, religion and national origin. It is not available for race discrimination claims. 42 U.S.C. § 2000e-2(e).

Without any statutory authority to guide it, the Court had to hold that the employer's fear of a disparate impact lawsuit could only justify a decision when (1) the city would be actually liable for a disparate impact or (2) under some lesser threshold than actual liability. It chose the latter, adding to Title VII a standard the Court had adopted in constitutional challenges. Government decisions based upon race, the Court explained, "are constitutional only where there is a 'strong basis in evidence' that the remedial actions were necessary." Slip op. at 22 (citing Richmond v. J. A. Croson Co., 488 U. S. 469, 500 (1989)). There is much that could be said about the reasoning behind this part of the Court's decision – I won't go into it here.

Under the Court's adopted standard, caving to political pressure is not a defense to a Title VII lawsuit. Carried to its logical conclusion, the decision means that an employer (public or private) cannot reject results derived from validly established criteria simply because the results show a statistically significant disparity. The Court explained: "The problem for [the City] is that a prima facie case of disparate-impact liability—essentially, a threshold showing of a significant statistical disparity, Connecticut v. Teal, 457 U. S. 440, 446 (1982), and nothing more—is far from a strong basis in evidence that the City would have been liable under Title VII had it certified the results." Slip op. at 28. What the City had to do was honestly analyze whether it had (or lacked) a valid defense to a disparate impact lawsuit. While the City argued it had a valid concern, the Court rejected these arguments as being "based on a few stray (and contradictory) statements in the record." (The Court's reasons for rejecting the City's arguments are interesting but I won't go into those because they are case specific and any employer who needs to determine whether it has a valid defense to a disparate impact claim should hire qualified counsel.)

From the standpoint of advising employers, what is most troubling about the Ricci is the lack of protection it gives employers who face the difficult choice of being sued no matter what the employer does. (The Court did say that because New Haven should not have thrown out the test results, it could not be liable when the results are implemented. Slip op. at 34. That is a small consolation to New Haven and no help at all to other employers). So, an employer that concludes it lacks a "strong basis in the evidence" for refusing to throw out a test cannot prevent the filing of a disparate impact lawsuit nor can it be assured it will win that lawsuit. Nothing in Ricci requires any court or a jury to defer to an employer's findings. The best (and perhaps only) thing an employer can do is to accurately and honestly assess the merits of the disparate impact claim.

To be sure, Ricci does not invalidate "an employer's affirmative efforts to ensure that all groups have a fair opportunity to apply for promotions and to participate in the process by which promotions will be made." Slip op. at 25. Nor does Ricci preclude so called "voluntary compliance efforts."

Many Tennessee employers will never have to be concerned about the impact of Ricci. At its foundation, the decision means that Title VII does not permit an unfounded fear of a lawsuit to justify an otherwise discriminatory decision. As I said, that is not a new concept. The decision could, however, invalidate any employment decision that is intended to alleviate a statistical imbalance within a hiring pool or other employee population "absent a strong basis in evidence of an impermissible disparate impact." So, any employer that develops a pool of applicants (or employees) and makes a decision (or avoids making a decision) based upon the perceived statistical impact of the decision should consult with counsel before taking any action.

What does Gross Really Mean for Employers?

Gross is, if you don't know, today's U.S. Supreme Court decision which has been heralded with the following sensational (at least in this context) headlines:

Business Gets Stronger Hand in Age Cases (Wall Street Journal)

Supreme Court makes age bias suits harder to win (L.A. Times)

Worker Age-Bias Suits Limited by U.S. Supreme Court (Bloomberg)

Not surprisingly, one senator (Leahy) has already called for its reversal, accusing the Supreme Court of "overreaching" and disregarding precedent.

Employers might think from these headlines that the Supreme Court outright abolished age discrimination altogether.

But focusing, as I try to do, on how the decision actually impacts employers, I would be hard-pressed to say that it changes much of anything.

For quite a while (as in decades) the Supreme Court has recognized, in all sorts of discrimination cases (including NLRA cases a nd constitutional retaliation claims) that employers don't always act with singular motives and that multiple motives usually go into any one employment decision. Sometimes one of these motives is illegal.

For example, an employee who misses a lot of work may justifiably be fired, but suppose part of the reason is that the employee is pregnant. Either motive, alone, might have led to the firing. A legitimate motive is mixed into an illegitimate one. So how does this get sorted out? Badly, in most cases.

Twenty years ago, a divided Supreme Court decided a sex discrimination case against Price Waterhouse brought by a female who had not been promoted to being a partner. She argued her sex played a role and there was some evidence that some of the voting partners had a stereotyped view of how a female should look and act as a Price Waterhouse partner. The Court held the female could sue under Title VII even if she could only show her sex played some role, though not a but-for role, in the vote. It also held, however, that if Price Waterhouse showed she would not have been made a partner despite the stereotyped statements, she would lose.

Congress was OK with the idea that an employee could win a sex discrimination case with only showing a mixed motive but it didn't like the idea that the employer who was motivated by the employees sex to some degree could get off scott free. Congress amended Title VII, giving us the "motivating factor" standard and providing that an employee can partially win a mixed motive case. Congress meant well, no doubt, but the statute has badly confused judges, jurors and lawyers. While Congress amended Title VII, a similar change was not made to the ADEA.

Ostensibly, in Gross, the Supreme was being asked how Price Waterhouse applied to an ADEA claim, that is, what does it take to create a mixed motive case as opposed to a single motive case. The Court, having seen the mess Price Waterhouse created, responded by saying, "enough." We screwed up in Price Waterhouse, we wish we had never heard of a mixed motive. Saying the Price Waterhouse "mixed motive" standard was not compatible with the ADEA, the Court held that an employee claiming age discrimination must prove age was the motive for the decision, not just one of several motives. Age had to have made a difference.

Gross (actually his lawyers) wanted to be able to argue to a jury that the employer had more than one motive for firing him (and that one motive was his age) because, under the cases, that meant the jury would then be told that the employer bears the burden of proving the employee would have been fired even without the illegal motive. Employee lawyers like to press this point because it give an imprimatur to the jury's natural inclination that the employer should justify its decision rather than require the employee to prove they were discriminated against.

Lawyers, you see, love to argue over who has the "burden of persuasion" a topic that, in the real world, makes utterly no difference whatsoever. It is sort-of like the saying, "close only counts in horseshoes." In a legal case, the burden of persuasion only affects what happens when proof is missing and what happens when the evidence is equally divided. Take, for example, our situation above, where the pregnant employee is fired for missing work. The employee could prove sex motivated the decision by showing others who were not pregnant missed as much or more work and were not fired. The pregnant employee bears the burden of persuasion here - it is not up to the employer to prove that it treated all other employees, pregnant and non-pregnant, equally. Of course, if the evidence is there, you can bet that a smart employer's lawyer will put on this evidence of equal treatment. Frankly, I win a lot of cases because the other side fails to ask for this kind of evidence in discovery. Forget about the equally divided cases, that is akin to counting angels on the head of a pin.

To bring this to a resolution, today's decision holds the mixed motives analysis doesn't apply to age discrimination claims. Effectively, that means Price Waterhouse is dead. Good riddance.

Don't celebrate just yet. It may make an age case harder to prove in a legal sense but a strong age case - or even a not so strong age case - will still let a jury find discrimination. Even under Gross decision, an employee simply needs to show that had the employee been substantially younger (5 to 10 years, depending on the court you are in) the decision would have been different. That can be shown in any number of ways, as I've discussed here for some time.

Don't think this means you can start being stupid. Proper documentation, treatment of employees, and investigations are every bit as important today as they were yesterday.

Unfortunately, it probably means Congress will now amend the ADEA to incorporate the mixed motive language from Title VII. While could slap together something, amending the ADEA the right way won't be easy. Age discrimination is unlike sex or race discrimination in many ways. Pensions and other benefits turn on age, in part. It took several years for the impact of the ADEA on those and other issues to be sorted out (the Supreme Court, only last year, had to sort out how the ADEA affected certain disability retirement issues).

Practically, Title VII is meant to combat outright racial and sexual bias. Age discrimination, however, is really more about combatting the stereotype that older workers are more costly and less productive. Some, in the younger generation, may have an outright bias against older folks but by and large most recognize that we will all be older someday. Age matters, in some situations, and hopefully someone in Congress will realize this.

Sixth Circuit Holds Protected Activity Must be Personal

First, I should mention that the prior post was written shortly before I left on vacation so let me apologize for the gap between posts here.

Not long after I returned the Sixth Circuit issued an important decision. It is important for what the court didn't do and for the caution the court issued. The decision in Thompson v. North American Stainless was issued by the full court. Like all other federal courts of appeals, the Sixth Circuit most often convenes 3 judge panels to resolve appeals. It can, however, convene the full court if a sufficient number of judges agree that there is an issue the entire court needs to resolve. Most of the time, the reason to convene the full court is that there are at least two decisions from the 3 judge panels that cannot be reconciled. That was the primary reason for the full court to hear the decision in Thompson.

A 3 judge panel in Thompson had held that someone who had not personally engaged in protected activity could nevertheless be retaliated against in violation of Title VII. The panel imposed a rather unmeasureless standard, saying the "victim" only had to have some relationship - in that case the spouse - to someone who had engaged in protected activity.

That decision was not entirely consistent with other panel decisions or what a majority of the court thought was the "plain text" of Title VII. So, reversing the panel, the full court, by a 10 to 6 vote, held that the person claiming to have been retaliated against must show that he or she personally engaged in protected activity. I won't go into the majority's reasoning other than to say they agreed with other courts of appeals that the relevant language in Title VII mandated the holding.

The decision is important for employers because it gives them some means of assessing who is within the protected activity realm. Had it held, as the panel did, that someone who is merely associated with another who has engaged in protected activity, the set of employees who could sue for retaliation would be markedly expanded. While Thompson relied upon his fiancé’s protected activity, the holding would have been expanded to children, siblings, friends and so forth. The set of those potentially protected would have been virtually limitless.

The full court decision is good news but there are several important cautions. First, an employee such as Thompson could have easily engaged in some protected activity merely, for example, by letting the employer know he supported his fiance's position. It would not have required much effort as I explained in discussing the Supreme Court's decision in Crawford v. Metro. Gov’t of Nashville and Davidson County, Tenn., — U.S. — , 129 S. Ct. 846 (2009).

Second, as the full court acknowledged, even if Thompson had no claim, his fiancé could still argue that Thompson was termination was directed at her. Remember, on this point, that the Supreme Court has said the retaliation provision in Title VII does not confine retaliatory acts to those related to employment or the workplace.

So while the full court's decision is a victory for Tennessee employers, it still doesn't mean employers have free reign to retaliate against someone for what their spouse may have alleged. The far better method, of course, is to make sound decisions based upon the facts by conducting as thorough an investigation as the incident demands.