Supreme Court Ruling in Ricci v. DeStefano Puts Employers Between a Rock and a Hard PlaceJuly 1, 2009
Title VII of the Civil Rights Act of 1964 bars intentional discrimination—intentionally different treatment—on the basis of race (Disparate Treatment). 42 U.S.C. § 2000e-2(a). Title VII also makes it illegal to use a facially neutral selection criteria which has an adverse statistical impact on the basis of race (Disparate Impact), unless the employer can demonstrate that (1) the challenged selection criteria is "job related," and (2) "consistent with business necessity" and the employer did not refuse to substitute an alternative selection practice which would not have the Disparate Impact effect. 42 U.S.C. § 2000e-2(k).
The City of New Haven paid six figures to a professional organization to devise a test for promotion to lieutenant and captain in the Fire Department. In 2003, when the test results produced a Disparate Impact in favor of White firefighters, and against minorities, the Civil Service Review Board threw out the results on the grounds that they feared a lawsuit by minorities based on the Disparate Impact theory.
Instead, they were sued by the White firefighters who aced the test, on the theory that the City had been guilty of intentional discrimination (Disparate Treatment) because of their race—White.
On June 29, 2009, the United States Supreme Court split 5 to 4 in favor of the White firefighters. Justice Kennedy wrote the majority opinion, joined by Justices Scalia, Thomas, Alito and Roberts.
The majority held that New Haven could not use race as a basis to ignore the results of the test because of a Disparate Impact, unless it could prove there was "strong evidence" that had it not ignored the results it would have been liable (not just sued) under the Disparate Impact theory. In other words, the threat of a lawsuit was not enough to justify ignoring the test results. The City had to show "strong evidence" that it would have lost a Disparate Impact lawsuit by minorities.
Justice Ginsburg, joined by Justices Stevens, Souter and Breyer, dissented, asserting that the majority ignored substantial evidence of multiple flaws in the tests New Haven used and failed to acknowledge that better tests used in other cities, which could have yielded less racially skewed outcomes and, in any event, the threat of a lawsuit was enough to justify the City's actions. Justice Ginsburg stated: "By order of this Court, New Haven, a city in which African-Americans and Hispanics account for nearly 60 percent of the population, must today be served—as it was in the days of undisguised discrimination—by a fire department in which members of racial and ethnic minorities are rarely seen in command positions." Justice Ginsburg also predicted that the majority opinion would not long endure.
Six years ago, the City of New Haven administered examinations to qualified firefighters for promotion to the rank of lieutenant or captain. One hundred eighteen New Haven firefighters took the examinations, and many studied for months at considerable personal and financial cost.
The examination results showed that White candidates had outperformed minority candidates. This led to a rancorous public debate among politicians, the public, the firefighters' union, firefighters and the Civil Service Board. Those arguing that the results were discriminatory threatened lawsuits against the City if the City made promotions based on the tests. Others, claiming the exams were neutral and fair, threatened a discrimination lawsuit if the City, relying on the statistical racial disparity, ignored the test results and denied promotions to the largely White candidates who had performed well. In the end, the City threw out the results of the examination (based upon a 2 to 2 deadlock of the Civil Service Board), and certain White and Hispanic firefighters who likely would have been promoted based on their good test performance sued the City and some of its officials, alleging that by discarding the test results, the defendants intentionally discriminated against the plaintiffs based on their race (i.e., White and Hispanic).
As noted, the City's response was that if the results were certified, it could have faced a lawsuit under Title VII of the Civil Rights Act for adopting a practice that had a disparate impact on the minority firefighters. The District Court upheld the City's position and dismissed the lawsuit, and the Court of Appeals for the Second Circuit, in a panel that included Judge Sotomayor, affirmed, in a one-page, unsigned opinion.
The Disparate Impact theory derived from the case Griggs v. Duke Power Co., 401 U.S. 424 (1971), in which the Supreme Court held that a selection criteria (high school diploma) established absent discriminatory intent but which had a disparate impact on minorities could violate Title VII of the Civil Rights Act of 1964, unless the employer was able to show a "business necessity" for the requirement in relationship to the employment in question.
In Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975), the Court stated that the employer must demonstrate a "manifest relationship" between the test and the job, but left open the ability of a plaintiff "to show that other tests or selection devices without a similarly undesirable racial effect would also serve the employer's legitimate interest in efficient and trustworthy workmanship."
Congress amended Title VII in 1991 with respect to the Disparate Impact test so that if the employer carries the burden to demonstrate that the challenged practice is job-related for the position in question and consistent with business necessity, the plaintiff may respond by identifying "an alternative employment practice" which the employer had refused to adopt which would not have the Disparate Impact effect. 42 U.S.C. § 2000e-2(k).
The facts in Ricci illustrate the potential difficulties for an employer in using standardized tests to decide which candidates to hire or promote. The City of New Haven, which had a contract with a union representing its firefighters, including its lieutenants and captains, was also subject to a merit system administered by the New Haven Civil Service Board, which required selection from among the top performers on the test. New Haven had agreed with the union that the promotion test should be 60 percent written and 40 percent oral. The City took bids from consultants and hired Industrial/Organizational Solutions Inc. to develop and administer the examinations at a cost to the City of $100,000. The consultant performed a job-analysis to identify the tasks, knowledge, skills and abilities that are essential for the lieutenant and captain positions and interviewed incumbent captains and lieutenants and their supervisors. The consultant also rode with, and observed, other on-duty officers and wrote job-analysis questionnaires and administered them to most of the incumbent battalion chiefs, captains and lieutenants in the department. At every stage of the job analysis, the consultant, by deliberate choice, oversampled minority firefighters to insure that the results would not unintentionally favor White candidates. With this job-analysis information in hand, the consultant developed a written examination to measure the candidates' job-related knowledge. For each test, the consultant compiled a list of training manuals, department procedures and other materials to use as sources for the test questions.
The consultant presented the proposed sources to the New Haven fire chief and assistant fire chief for their approval. It then drafted a multiple-choice test which had 100 questions, as required by the Civil Service Board Rules, and which was written below a tenth-grade reading level. (One of the requirements of the job opening was high school graduation.) After the written test was prepared, the City opened a three-month study period, giving candidates a list that identified the source material for the questions, including the specific chapters from which the questions were taken so candidates had time to prepare for the test.
As for the oral examinations, the consultant concentrated on job skills and abilities. It wrote hypothetical situations to test applicant command skills, firefighting tactics, interpersonal skills and leadership and management ability, among other things. Candidates would be presented with these hypotheticals and asked to respond before a panel of three assessors chosen from a pool of 30 assessors who were superior in rank to the positions being tested and who came from outside the State of Connecticut. The assessors were all battalion chiefs, assistant chiefs and chiefs from departments of similar sizes to New Haven's throughout the country. In addition, 66 percent of the panelists were minorities. And each of the nine three-member assessment panels included an Hispanic and Black assessor in addition to a White assessor.
The Ricci decision reported the results as follows:
Seventy-seven candidates completed the lieutenant examination—43 Whites, 19 Blacks, and 15 Hispanics. Of those, 34 candidates passed [44 percent], 25 Whites [58 percent of the Whites who took the exam], 6 Blacks [32 percent of the Blacks that took the exam] and 3 Hispanics [20 percent of the Hispanics who took the exam]. Eight lieutenant positions were vacant at the time of the examination. [Under the Civil Service Board Rules] the top ten candidates were eligible for immediate promotion to lieutenant. All 10 were White. [?...]
Forty-one candidates completed the captain examination—25 Whites, 8 Blacks and 8 Hispanics. Of those, 22 [54 percent] candidates passed—16 Whites [64 percent of the Whites that took the exam], 3 Blacks [38 percent of the Blacks that took the exam] and 3 Hispanics [38 percent of the Hispanics that took the exam]. ?... Seven captain positions were vacant at the time of the examination. [Under the Civil Service Board Rules] 9 candidates were eligible for an immediate promotion to captain; 7 Whites and 2 Hispanics.
The City of New Haven and the City's counsel took the position that there was a statistical demonstration of Disparate Impact which, standing alone, constituted a sufficiently serious claim of racial discrimination to serve as a predicate for a voluntary race-conscious remedy of discarding the test results.
The Supreme Court majority held that discarding the test results constituted prohibited discrimination on the basis of race. The decision was based solely on statutory interpretation. The Court did not reach the possibility of constitutional challenge based upon an equal protection theory. But Justice Scalia, in a concurrence joined by Justices Alito, Thomas and Roberts, pointed out that the Disparate Impact theory may, in fact, violate the Equal Protection Clause of the Constitution (although this was a question the Court did not have to reach). As the law now stands, Congress could amend Title VII (and likely 42 U.S.C. § 1981) to overturn this Supreme Court decision (as it overturned previous decisions with the Americans with Disabilities Act Amendments Act and the Lily Ledbetter law). If, however, actions such as New Haven's were found to violate the Equal Protection Clause, Congress could not merely pass a law to overturn such a ruling, as a constitutional amendment would be required.
The Lesson for Employers
The lesson for employers seems to be that using tests, even those professionally prepared, which result in Disparate Impact can leave the employer subject to expensive litigation. Employers seeking to avoid litigation may want to use tests which have been validated by statistically significant results before the employer uses the test as a selection method. The best situation is where there are earlier studies correlating success on the test with successful performance on the job.
In the current economic climate, the decision may pose another dilemma for employers. This dilemma might arise in the context of reductions in force (RIF), where an analysis of the initial group potentially selected on the basis of subjective evaluations results in a Disparate Impact on older workers, women or minorities. Would going back to the drawing boards and selecting alternative, younger workers, men or non-minorities, for the RIF be subject to attack under the Age Discrimination in Employment Act or Title VII? The Ricci decision may implicate a danger in this situation. Employers contemplating a RIF often precede it with an offer of voluntary retirement at an enhanced retirement benefit before the composition of the terminees is finalized, or offer severance for the involuntarily RIFed employees in exchange for a release to side-step the potential problem.
In short, Ricci is generally a positive decision for employers, decided by the conservative majority of the present Supreme Court, which will not likely change when Justice Souter, who dissented, is replaced by Justice-nominee Sotomayor (whose decision below was reversed). But the Ricci decision may well be vulnerable to Congressional reversal now that there is a 60 Democrat majority in the Senate.
In any event, the ruling has aspects which can create some difficult decision-making problems, with potential litigation over the consequences, in cases where employers have to choose between individuals in the hiring and firing phase of Human Resource practice, and there is a statistical disparate impact on members of the protected classes like minorities, women and the elderly.