On June 29, the U.S. Supreme Court held, in a 5-4 decision, that the City of New Haven’s action in discarding test results that were used to identify those firefighters best qualified for promotion violated Title VII of the Civil Rights Act. Justice Anthony Kennedy, writing for the majority, ruled that the City’s race-based rejection of the test results cannot satisfy the strong-basis-in-evidence standard, which the Court adopted to resolve any conflict between Title VII’s disparate treatment and disparate impact provisions. According to the Court, “[f]ear of litigation alone cannot justify an employer’s reliance on race to the detriment of individuals who passed the examinations and qualified for promotions.” Ricci v. DeStefano, No. 07–1428, U.S. Supreme Court (June 29, 2009).

Factual Background

In 2003, the City of New Haven administered exams for promotion to lieutenant and captain – as required by the city charter – that were designed by a third-party contractor. Under a union collective bargaining agreement, the written exams made up 60 percent of an applicant’s overall score, while an oral exam would account for 40 percent. With one exception, all employee panels that conducted the oral exams were comprised of one African-American, one Hispanic, and one white employee.

After each test, the New Haven Civil Service Board (CSB) certified a ranked list of applicants who passed the test. The city charter required the “rule of three,” which meant that the person selected for a position must be among the three individuals with the highest scores.

For the lieutenant exam, 43 whites, 19 blacks, and 15 Hispanics took the exam. Twenty-five whites, six blacks, and three Hispanics passed the exam. All of the top 10 scorers were white, and there were eight lieutenant vacancies.

For the captain exam, 25 whites, eight blacks, and eight Hispanics were tested. Sixteen whites, three blacks, and three Hispanics passed. There were only seven captain vacancies. The top nine scorers on the captain exam included seven whites and two Hispanics.

In 2004, based on its concerns over a possible “disparate impact” on racial minorities, the CSB held hearings on whether to certify the promotional lists which included no black employees. The CSB split 2-2 and, therefore, did not certify them. As a result, no promotions were made. The white and Hispanic firefighters who were denied promotions as a result of the refusal to certify the results sued the City for race discrimination.

In 2006, a federal district court rejected the discrimination claims. On appeal, a three-judge panel of the Second Circuit Court of Appeals summarily affirmed the lower court’s decision, finding that the City’s actions were protected because it was “simply trying to fulfill its obligations under Title VII when confronted with test results that had a disproportionate racial impact.” The case will attract additional public attention because Judge Sonia Sotomayor was on the panel that decided the case in the City’s favor.

Legal Analysis

The Court first considered the Title VII issue. Title VII prohibits both intentional discrimination (“disparate treatment”) as well as unintentional discrimination that results from practices that, while not intended to discriminate, have a disproportionately adverse effect on members of a particular classification (“disparate impact”).

The firefighters argued that when the CSB refused to certify the exam results because of the racial composition of the group of successful candidates, it discriminated against them in violation of Title VII’s disparate treatment provision. The City countered that it had a good faith belief that, had it certified the test results, it would have violated the disparate impact provision and thus, that its decision was permissible.

Given this framework, the Court noted that the City’s rejection of the test results is “express, race-based decisionmaking,” which violates the disparate treatment prohibition of Title VII absent some valid defense. As a result, the Court next considered whether the City’s effort to avoid disparate impact liability justified disparate treatment against the firefighters.

Justice Kennedy rejected the firefighters’ argument that under Title VII, avoiding unintentional discrimination cannot justify intentional discrimination and thus, that the City was prohibited from avoiding disparate impact liability by engaging in disparate treatment discrimination. The Court also rejected the firefighters’ argument that an employer must show that it is guilty of disparate impact discrimination in order to use its attempt to avoid that violation as a defense against disparate treatment liability. Justice Kennedy wrote, “[f]orbidding employers to act unless they know, with certainty, that a practice violates the disparate-impact provision would bring compliance efforts to a near standstill.”

The Court also rejected the City’s argument that a good faith belief that it might violate the disparate impact prohibition justifies race-based employment decisions. According to Justice Kennedy, such a practice “would encourage race-based action at the slightest hint of disparate impact.”

Instead of these extremes, the Court borrowed a standard from Equal Protection jurisprudence to resolve the conflict between the disparate treatment and disparate impact provisions of Title VII. Under the “strong-basis-in-evidence” standard, actions based on race are impermissible under Title VII unless the employer can demonstrate a strong basis in evidence that, had it not taken the action, it would have been liable under the disparate impact statute. Thus, the Court reasoned, the City could have refused to certify the results if the record demonstrated that there was a strong basis in the evidence to show that certification would have lead to disparate impact liability.

The Court held that the record did not justify the City’s actions. Even if the City was motivated by a desire to avoid committing disparate impact discrimination, the Court ruled, the record failed to show that it had an objective, strong basis in evidence to find the tests inadequate and that it would face disparate impact liability if it had certified the results.

The Court found that since certifying the examinations would have meant that the City could not have considered black candidates for any of the vacant positions, the City did face a prima facie case of disparate impact liability. But, a prima facie case of disparate impact liability alone is not a strong basis in evidence that the City would have been liable under Title VII had it certified the results. The City would have been liable under the disparate impact theory only if it was not able to show that the examinations were job-related and consistent with business necessity and if the City refused to adopt an available alternative practice that had less disparate impact but still served the City’s needs.

The Court concluded that there was no strong basis in evidence showing that the test was deficient in either of these respects. It reasoned that the examinations were clearly job-related and consistent with business necessity. Moreover, the Court ruled that the record lacked a strong basis in evidence of an equally valid, less-discriminatory testing alternative that the City would necessarily have refused to adopt had it certified the test results.

In particular, the Court rejected arguments that the City could have adopted a different composite-score calculation (weighing the written and oral examination scores 30/70 rather than 60/40) and a different interpretation of the “rule of three.” Furthermore, the Court found that the mere suggestion of alternative test methods does not raise a genuine issue of whether these alternatives were available to the City and that they would have produced a less adverse impact.

Because there was no genuine dispute that the City lacked a strong basis in evidence to believe it would face disparate impact liability if it certified the test results, the Court held that Title VII did not permit it to disregard the test results. In light of this ruling, the Court declined to consider the issue of whether the City’s actions may have violated the Equal Protection Clause. The Court explained further that, notwithstanding the prima facie case against it, the City could defend against a disparate impact claim on the basis that a failure to certify the test results would result in liability for disparate treatment.

Practical Impact

According to a shareholder in Ogletree Deakins’ Boston office, the Court’s decision indicates that business-related testing that yields disproportionate results should not cause employers deep concern. “As long as the employer can show that the test is job-related and consistent with business necessity, it should accept the results of the test.” The shareholder explained further that “this divided Court simply refused to sanction New Haven’s effort to fix something that looked wrong. And, in so doing, it should give employers comfort that solid decisionmaking in advance of testing will provide meaningful insulation against claims of unintentional discrimination.”

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