Tuesday, May 25, 2010

Disparate-Impact Claims Get a Boost in Unanimous Supreme Court Opinion Written by Justice Scalia

In Lewis v. City of Chicago, 2010 U.S. LEXIS 4165 (May 24, 2010), Justice Scalia, writing for a unanimous Court, held that plaintiffs had timely filed their charges of discrimination with EEOC when they filed more than 300 days after the adoption of the allegedly unlawful practice, but within 300 days of the City’s use of that practice, a use which plaintiffs contend causes a disparate impact on one of the bases prohibited by Title VII. 
In July 1995, after taking some years to develop the examination, the City administered for the first, and only, time the examination to some 26,000 applicants.  The City scored the tests, listed applicants from highest to lowest score, and divided the list into three categories.  The first category included those scoring 89 or above, who were deemed “well qualified”; the second included those scoring 88 to 65, who were deemed “qualified”; and the third included those scoring 64 or below, who were deemed “not qualified.”  In January 1996, after the hiring list was adopted, the City advised the “well qualified” that they would be called in random order to continue the hiring process, which included a physical abilities test, background check, medical evaluation, and drug test.  The “qualified” were told that it was “not likely that they would ever be called due to the large number of applicants who had received “well qualified” scores.  The “qualified” were also told that they would remain on the eligibility list for so long as the list was used. 
Also, in January 1996, the City’s Mayor publicly announced the results, noting that 6.8% (1,782) of the 26,000 applicants were deemed “well qualified”; and that of those “well qualified” candidates, 75.8% were white and 11.5% African American. 
The City used the eligibility list for the first time in May 1996; the second time in October 1996; and eight more times until November 2001, each time selecting at random from the “well qualified” category.  Not until March 31, 1997 did a charge of discrimination get filed with the EEOC. 
Eight “qualified” applicants, as well as the African American Fire Fighters League of Chicago, filed suit against the City, and the District Court, Judge Joan Gottschall, certified a class of about 6,000 African-Americans in the “qualified” category. 
The City admitted adverse impact, and thus the liability phase of the trial focused on issues of job relatedness and whether the examination’s use was consistent with business necessity.  The district court rejected the City’s defense and found the City liable under Title VII. 
On appeal, the City challenged the district court’s holding that the plaintiffs had timely filed a charge with the EEOC.  The Seventh Circuit, Judge Posner writing for the panel, reversed the district court on the timeliness issue, finding that plaintiffs had failed to file an EEOC charge within 300 days after the unlawful practice occurred, which it found to be when the list was adopted and announced.
Justice Scalia, in reversing the Seventh Circuit, held that disparate impact cases are different than disparate treatment cases with respect to the time within which a charge must be filed.  Noting that the language of Title VII’s disparate impact provision talks in terms of an employer’s use of an employment practice that causes a disparate impact, he held that the time within which to file ran from the utilization of the list generated from the test scores.  Thus, in this disparate impact case, the charges were held to be timely filed. 
The opinion rejects the defense argument relying on United Air Lines, Inc. v. Evans, 431 U.S. 553 (1977), that the present effects of prior actions cannot lead to Title VII liability.  The Court in rejecting that argument states: 
“As relevant here, those cases establish only that a Title VII plaintiff must show a ‘present violation’ within the limitations.  What that requires depends on the claim asserted.  For disparate-treatment claims—and others for which discriminatory intent is required—that means the plaintiff must demonstrate deliberate discrimination within the limitations period.  But for claims that do not require discriminatory intent, no such demonstration is needed.  Our opinions, it is true, describe the harms of which the unsuccessful plaintiffs in those cases complained as ‘present effect[s]’ of past discrimination.  But the reasons they could not be the present effects of present discrimination was that the charged discrimination required proof of discriminatory intent which had not even been alleged.  That reasoning has no application when, as here, the charge is disparate impact, which does not require discriminatory intent.”  (citations omitted)
In addition to the good news for plaintiffs with respect to disparate impact claims and charge filing, Justice Scalia, in a pithy sentence, summarizes how easy it is to establish a prima facie claim of disparate impact discrimination.  Citing Ricci, he states that “a plaintiff establishes a prima facie disparate impact claim, by showing that the employer ‘uses a particular employment practice that causes a disparate impact’ on one of the prohibited bases.”
While the City stated yesterday that the case is not over yet, assuming that the Seventh Circuit upholds the district court’s liability ruling, the City will now apparently distribute millions of dollars in back pay to “132 undifferentiated” individuals.  At oral argument before the Supreme Court, Chief Justice Roberts in a colloquy with the Deputy Solicitor General arguing as amicus for the United States, asked:  “So everybody gets 132 over 6,000 times whatever the number of people who would have been hired?”  To which the Deputy Solicitor stated that the Chief’s math was correct.
What seems clearly to have driven the Court to this unanimous result is the fact, which was underscored over and over during oral argument, that if someone had not challenged the announcement of the test results within 300 days, under the City’s interpretation of Title VII’s limitations periods, the City would have “a get-out-of-jail-free card to use for all time.”  Oral argument of Neal Katyal, Esq., Deputy Solicitor General, at p. 18. 
One interesting footnote is that consistently throughout the litigation, the City trumpeted the fact that it had developed the test in consultation with “a prominent African American industrial psychologist” (Oral Argument at p. 38). 
There is an interesting “Cf.” in Justice Scalia’s opinion where he cites Connecticut v. Teal, 457 U.S. 440, 445-51 (1982), after stating the following:  “It may be true that the City’s January 1996 decision to adopt the cutoff score (and to create a list of the applicants above it) gave rise to a freestanding disparate impact claim.”  The Bluebook says that the “Cf.” signal means that one is citing an authority that “supports a proposition different from the main proposition but sufficiently analogous to lend support.”  Having read and re-read the preceding sentence and the “Cf.” to Teal, one can only guess as to what Justice Scalia’s obscure reference means.  I assume that the Justice is relying upon Teal for the proposition that the development and administration of a test, the results of which contain adverse racial impact, is a violation of 703(a)(2) of Title VII and possibly suggesting that Teal’s ultimate holding is still good law, that is, the Teal majority’s rejection of the so-called “bottom-line” defense where an employer argues that it has no disparate-impact liability for a test if the “bottom-line” results of the promotional process was an appropriate racial balance.  All of this is about as obscure as the Greeks reading the entrails of animals (known as “hepatoscopy”—$25 word of the day).  I do note that Teal was a 5-4 decision with Justice Powell writing a dissent on behalf of then Chief Justice Burger and Justices Rehnquist and O’Connor. 
As we have reported in an earlier post, there appears to be a significant uptick in disparate-impact claims, and certainly Lewis will not discourage plaintiffs and EEOC from pursuing such claims.  Presumably, we will increasingly see disparate-impact challenges to background checks that incorporate reliance on criminal history (see Arroyo v. Accenture LLP, Civ. No. 10-03013 (S.D.N.Y.); Michael A. Stoll, Ex-Offenders, Criminal Background Checks, and Racial Consequences in the Labor Market, 2009 U. Chi. Legal F. 381 (2009)); background checks that rely upon an applicant’s credit rating and credit report (see EEOC v. Freeman, Civ. No. 09-02573 (D. Md.); EEOC Advisory Letter, Title VII:  Employer Use of Credit Checks, Mar. 9, 2009, available here)); reliance on educational qualifications for new hires and promotions (see EEOC Advisory Letter, Title VII:  Disparate Impact of Education Requirements, Feb. 19, 2010, available here (in response to an EEOC inquiry as to whether requiring a master’s degree as a hiring requirement would violate Title VII, the letter responded that if a disproportionate exclusion of racial minorities could be proven, then adopting the requirement could subject the employer to liability for disparate impact discrimination unless the employer could show a business necessity for the requirement, and unless the plaintiff failed to show an equally effective less discriminatory requirement)); pencil and paper written tests; prior performance evaluations; and other practices that arguably have a disparate-impact on the bases of criteria, like race, gender, national origin, and age, that are prohibited by federal law.  See also, e.g., Equal Employment For All Act, H.R. 3149, 111th Con. (2009); Testimony of Adam T. Klein, Esq., EEOC Commission Meeting (May 17, 2007), available here.  In addition, state and local courts are interpreting their statutes to recognize disparate-impact claims.  See, e.g., Estenos v. PAHO/WHO Fed. Credit Union, 952 A.2d 878 (D.C. 2008) (“. . . the [D.C. Human Rights Act] also offers protection against unintentional discrimination under the Effects Clause, in which case the employer may defend based only on the narrowly-drawn exceptions in the DCHRA . . .”).

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