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.
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