Tuesday, November 3, 2009

RICCI v. DeSTEFANO: A TROUBLESOME BURDEN FOR EMPLOYERS

On June 29, 2009, the United States Supreme Court, in a 5-4 ruling, decided the much-anticipated discrimination case of Ricci v. DeStefano, 129 S.Ct. 2658 (2009) and held that Title VII prohibits an employer from engaging in intentional discriminatory practices for the purpose of avoiding or remedying an unintentional disparate impact, unless the employer has a “strong basis in evidence to believe it will be subject to disparate-impact liability if it fails to take the race-conscious, discriminatory action,” being complained of. In other words, an employer whose decision or policy unintentionally causes a disparate impact under Title VII, may not engage in any “curative” discriminatory practices in order to obviate the impact unless the employer can produce strong evidence that it will be subject to a disparate impact claim if it does nothing. Even though the Court’s decision holds firm to the unambiguous statutory mandates of Title VII, and thus is analytically sound, the practical effect that this ruling may have on employers going forward may be less than logical and indeed, may be downright burdensome.

The dispute in Ricci centered on a promotional examination for firefighters that was administered by the City of New Haven, Connecticut. In 2003, New Haven found itself with seventeen vacant officer positions within the City’s fire department. To fill these vacancies, New Haven administered a comprehensive promotional examination, consisting of both a written and an oral test. Ultimately, the examinations were taken by 118 firefighters with requisite service credentials. Of these 118 applicants, sixty-eight candidates were white, twenty-seven were black, and twenty-three were Hispanic. Fifty-six examinees passed the tests – forty-one whites, nine blacks and six Hispanics. The City’s civil service rules required the City to fill each vacancy by choosing one candidate from the top three scorers on the list of passing examinees, which meant that the eight available lieutenant positions would be filled entirely by white applicants, and that seven white candidates and two Hispanic candidates would be eligible for promotion to the seven vacant captain positions.

After seeing the statistical disparity in the results of the promotional examinations, some officials of the City of New Haven, including the City’s attorney, began to express their concerns that the tests had discriminated against minority candidates and urged the City to reject the results, claiming that the test results reflected a “statistical demonstration of a disparate impact,” which would subject the City to a discrimination claim under Title VII, if not rejected. Many of the firefighters who took the exam, however, argued that the results were fair and should be allowed to stand. Ultimately, the examination results were not accepted.

The firefighters thereafter sued the City under Title VII, claiming that when the City rejected the test results in order to alleviate a perceived disparate impact on the minority candidates, the plaintiffs themselves had suffered an adverse employment decision due to their race - an action clearly in violation of Title VII. In response, the City argued that “they cannot be held liable under Title VII’s disparate-treatment provision for attempting to comply with Title VII’s disparate impact bar.” Ricci at 19.

Writing for the majority of the Court, Justice Kennedy recognized that “[t]he City’s actions would violate the disparate-treatment prohibition of Title VII absent some valid defense,” and that notwithstanding “the City’s ultimate aim – however well intentioned or benevolent it might have seemed – the City made its employment decision because of race. The City rejected the test results solely because the higher scoring candidates were white.” Ricci, at 19-20. Having recognized that the City’s decision to reject the test results was, in and of itself, a patent violation of Title VII, the Court noted that “the question is not whether that conduct was discriminatory but whether the City had a lawful justification for its race-based action.” Id.

To answer this question, the majority turned to the Court’s Fourteenth Amendment Equal Protection jurisprudence and adopted a “strong basis in evidence” standard to govern these types of employer decisions. Under this test, “before an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional disparate impact, the employer must have a strong basis in evidence to believe it will be subject to a disparate-impact liability if it fails to take the race-conscious, discriminatory action.” Id. at 26. Importantly, this test is an objective one, and will not necessarily be resolved in favor of the employer, even when the employer maintained a subjective motivation or belief that it was taking action in order to avoid committing disparate-impact liability. Id. In short, the majority found that on the record before it, the City of New Haven was unable, as a matter of law, to establish “an objective, strong basis in evidence to find the tests inadequate, with some consequent disparate-impact liability in violation of Title VII.”

In practice, the new “strong basis in evidence” defense that was enunciated by the Court’s majority places the burden on the employer to essentially prove, almost as if it were the plaintiff, that the policy or decision sought to be remedied or avoided actually resulted in an impermissible disparate impact in violation of Title VII. While the burden of proof on an employer seeking the protection of this defense was not precisely described by the majority in such terms, it was made quite clear that more than a mere showing of a disparate impact is required. Specifically, the majority opinion stated that “a prima facie case of disparate-impact liability – essentially a threshold showing of a significant statistical disparity . . . and nothing more – is far from a strong basis in evidence that the City would have been liable under Title VII . . .” Id. at 28. And, the majority was unequivocal in noting that “fear of litigation alone cannot justify an employer’s reliance on race to the detriment of individuals . . .” Id. at 33.

The consequences of an employer’s reliance on this defense should be obvious. In order to avoid liability for a racially motivated, albeit subjectively well-intentioned employment decision, undertaken to cure a different perceived discriminatory action, an employer is now forced to establish and produce sufficient evidence of its own liability for a disparate-impact violation under Title VII. For an employee, who is a member of the “disparate-impact” class, nothing could be more desirable than having the employer produce and argue evidence of its own Title VII disparate-impact transgression. Moreover, the employer who is actually successful in establishing a “strong basis in evidence” defense and avoiding a disparate treatment claim, has now almost assuredly left itself wide-open for liability on the disparate-impact claim. On the other hand, in those situations where the employer is unable to meet the evidentiary threshold of the “strong basis in evidence” defense, liability for the employer’s disparate-treatment decision is almost assured. And, consider what would happen if the employer finds itself litigating both a disparate-treatment and a disparate-impact suit at the same time – how does the employer go about mounting a credible defense to one without jettisoning its ability to prevail in the other?

Despite the legal and statutory foundation for the Court majority’s ruling, it appears that in practice, the Ricci test that is now applicable in such discrimination lawsuits under Title VII, may work more of a zero-sum game for employers than was perhaps intended or desired, with liability almost certainly resulting from one position or another. Therefore, an employer who attempts to remedy or alleviate a previous employment practice or decision it believes, in good-faith, may work a disparate-impact (even through such a practice or decision may have been made without any malice or discriminatory intent whatsoever), will find itself forced into a “damned-if-you-do, damned-if-you-don’t,” situation as a consequence of the framework set forth by the Ricci case. Therefore, both employers and their counsel must be cognizant of such a situation, including the consequences thereof. After all, in the landscape of discrimination claims following the Ricci decision, preparation may well be the only real defense an employer can muster.