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Disparate Impact and Recent Cases from the Supreme Court

Christopher T. Vrountas, Esq.Stephen D. Coppolo, Esq.

Nelson, Kinder, Mosseau & Saturley, P.C.Employment Counseling and Litigation Group

Topics for Discussion

• How does SCOTUS make a decision these days? – Meachem v. Knolls Atomic Power Laboratory– Ricci v. DeStefano

• What is the judicial philosophy of this Court? – Is this an activist, policy-making Court or a Court limiting itself to calling

“balls and strikes” and “fidelity to the law”? – Does that distinction make sense?

• What are the implications for employers?

Meacham: The Facts

• Knolls Atomic Power Laboratory is funded by U.S. Navy’s Nuclear Propulsion Program

• In FY 1996, the Program imposed stricter limits on staffing at the same time it gave more work to the Lab

• Knolls initiated an involuntary reduction in force (IRIF)

Meacham: The Facts

• To conduct the IRIF, Knolls circulated a guide to over-budget managers, directing them to rank employees in the categories of “performance,” “criticality,” and “flexibility.”

• Of the 31 employees ultimately laid off, 30 were over age 40.

Meacham: The Lawsuit

• The plaintiffs, the discharged employees over age 40, filed suit

• They sued under the Age Discrimination in Employment Act (ADEA), claiming:– Knolls deliberately designed the

IRIF to eliminate older workers (disparate treatment)

– Regardless of intent, the IRIF had a discriminatory impact on ADEA protected employees (those over 40) (disparate impact)

Meacham: 2d Circuit

• The issue- In an ADEA disparate impact case, which party has the burden of proof on whether the employer’s decision making criteria was (un)reasonable under the RFOA (Reasonable Factor Other than Age) criteria?

Meacham: 2d Circuit

• The Second Circuit held that the employee has the burden of proving the employer’s decision making process was unreasonable

• The court: “Age is often highly correlated with legitimate employment needs.”

• Because the plaintiffs failed to prove unreasonableness, the court ordered the case thrown out

Meacham: Supreme Court

• The Supreme Court overruled the Second Circuit, and held that the employer had both the burdens of production and persuasion in demonstrating that an employment decision having a disparate impact on older workers was based on a reasonable factor other than age.

Meacham: Supreme Court

• The Rationale: The RFOA provision in the ADEA is placed adjacent to the Bona Fide Occupational Qualification (BFOQ), which has already been recognized as an affirmative defense.

Meacham: Supreme Court

• The statutory structure thus dictates that the RFOA condition is also an affirmative defense.

• Further, it is a recognized principal of statutory interpretation that the party seeking to benefit from an exception to the body of a statute has the burden of proving that the exemption applies.

Meacham: Supreme Court

• The Court stated that that employers’ concerns regarding increased difficulty and costs of defending against disparate impact lawsuits must be addressed to Congress, which established the current balance between employer and employee.

Meacham: Implications

• Seven Justices joined the majority opinion at least in part

• The Meacham majority applied rigidly textual reading of the ADEA to reach its result

• This decision, along with Ledbetter v. Goodyear Tire & Rubber Co. and Ricci v. DeStefano signal a willingness of the Roberts Court to resolve employment discrimination claims on very narrow textual grounds

Judicial Philosophy

• Unanimous decision: textual analysis prevailed over policy oriented arguments, even when the policy oriented arguments focused on what has been typically viewed as conservative, i.e. pro-employer, interests.

• “Balls and strikes” view of the law? (Roberts)• “Fidelity to the law” approach? (Sotomayor) • Are we all on the same page?

Ricci v. DeStefano

• The Background:– The City of New Haven

developed a test for firefighters to take to determine who was eligible for promotion

– The City expended significant resources to develop an effective test, calculated to determine qualified candidates for promotion

Ricci v. DeStefano

Background (continued):– When the results came

in, the candidates identified as eligible for promotion were all White, save for one Hispanic.

– No African American candidates were identified as being eligible for promotion.

Ricci v. DeStefano

Background (continued):– Faced with the fear of a

disparate impact lawsuit under Title VII from unsuccessful minority candidates, the City decided to scrap the test results.

– The firefighters identified by the test as eligible for promotion then sued the City for disparate treatment under Title VII.

Ricci v. DeStefano

• Lower Courts:– The District Court granted summary judgment

in favor of the City, and the Second Circuit Affirmed.

Ricci v. DeStefano

• Supreme Court (Kennedy, J., for five Justices):– The Question: “whether the

purpose to avoid disparate-impact liability excuses what otherwise would be prohibited disparate-treatment discrimination?”

– The Answer: Not in this case.

Ricci v. DeStefano

• Rejection of the successful test applicants based solely on the racial makeup of those who passed constituted nothing more than race discrimination, regardless of the allegedly benign intent.

Ricci v. DeStefano

• Disparate impact under Title VII: when an employer’s facially neutral employment policy results in a disparate impact against a protected class (here race), unless the employer can show that the practice is supported by business necessity.

• Disparate treatment under Title VII: treating similarly situated people differently (i.e. disfavorably) because of their membership in a protected class (here race).

The Threat of Disparate Impact Liability: Was It Real?

• Here, the Court acknowledged that the City had been threatened with a disparate impact lawsuit by those not identified for a promotion.

• The Court also acknowledged that the unsuccessful applicants could make out a “prima facie” disparate impact case.

Ricci v. DeStefano

• BUT--There was no evidence, according to the majority, that the test was unrelated to the position the firefighters applied for, or that the test could have been replaced with an equally valid alternative test that was less discriminatory.

Ricci v. DeStefano: Reasoning

• While a disparate impact lawsuit had been threatened, fear of litigation alone does not justify a race-based employment decision (even when the prospective plaintiffs had a demonstrable prima facie case).

• The employer must have a “strong basis in evidence” that it would truly be subject to disparate impact liability in the event of a lawsuit. [Where does this standard come from?]

Ricci v. DeStefano

• In the absence of such evidence, the majority held that the invalidation of the test results post-facto could only be described as disparate treatment race discrimination in violation of Title VII.

Ricci v. DeStefano

• The Dissent (Ginsburg, J. for four Justices):– The City should be

held to a “good faith” standard in seeking to avoid disparate impact liability from the unsuccessful applicants. [Where does this standard come from?]

Ricci v. DeStefano

• The Dissent:– The substantial disparate impact in the racial

makeup of the successful applicants, coupled with the history of racial discrimination in the New Haven Fire Department, allowed the City to avoid Title VII liability through the dissent’s proffered “good faith” standard.

Tension in the Text

• Unlike Meacham, the text the Court needed to apply was not simple.

• Title VII outlaws both disparate impact and disparate treatment.

• Employers can be liable for either.• To avoid disparate impact, employers have been

able to apply race conscious solutions.• But race based decision making amounts to

“disparate treatment,” i.e. discrimination.

Judicial Philosophy

• So, when is a race conscious action appropriate to avoid disparate impact?

• Is it ever appropriate? (If no, what does that mean to a whole section of the law?)

• Where is the guidance in the statute?• What kind of reasoning must be applied to

answer this question?• Are we just “calling balls and strikes?”• What does “fidelity to the law” mean here?

Judicial Philosophy

• Split decision: 5 v. 4 decision

• Was this “activist” jurisprudence by a majority guided by the “balls and strikes” view of the law?

• Was this decision “policy-making” or simply applying a known rule?

• Was this a good call?

Ricci v. DeStefano

• Implications:– Could undermine the foundation for traditional

“Affirmative Action” programs in the workplace.

– More employers could find themselves in no-win situations, where either path leads to potential Title VII liability.

– Could lead to decreased use of standardized testing in hiring that legitimately seeks to test for skills relevant to the desired provision for fear of receiving “Ricci-type” results.

The Presenters

• Christopher T. Vrountas leads the Employment Practice Group for Nelson, Kinder, Mosseau & Saturley, P.C. Mr. Vrountas represents companies in matters involving employment discrimination and wage claims, covenants not to compete, whistleblower claims, intellectual property matters, defamation claims, contract claims and other business disputes. He has appeared before various state and federal civil rights commissions nationally and has tried employment and commercial matters in both state and federal courts. He is a frequent speaker on employment law issues.

• Stephen D. Coppolo is an associate with Nelson, Kinder, Mosseau & Saturley, P.C. and a member of the Employment Practice Group. In addition representing employers in an array of litigation and human rights commission matters, he has consulted with employers to develop policies and training materials for their workforce, and he conducts training on a variety of employment issues. In addition to his employment work, his practice also involves a wide range of civil litigation matters, including professional liability, land use, and insolvency.