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Ricci v. DiSalvo -- Disparate Treatment Trumps Disparate Impact, But the Supreme Court’s Decision Leaves Employers With More Questions Than Answers…

Todd J. Shill and John R. Martin

Ricci v. DeStefano, a hotly debated and highly anticipated case decided by the United States Supreme Court on June 29, 2009, arose from a lawsuit brought by eighteen firefighters against the City of New Haven, Connecticut (Frank Ricci was the lead plaintiff; John DeStefano is the mayor of New Haven). The firefighters, seventeen white and one Hispanic, alleged that the City discriminated against them in violation of Title VII of the Civil Rights Act of 1964, (“Title VII”) by denying them promotions on the basis of their race. The eighteen firefighters had passed an exam that would have otherwise entitled them to a managerial promotion. However, upon reviewing the results, the City discovered that a disproportionate number of black firefighters had not passed the exam. Fearing a lawsuit over the exam’s “disparate impact” on a protected minority class, the City discarded the exam results and did not promote anyone. (“Disparate impact” discrimination, like “disparate treatment” discrimination, is prohibited under Title VII.)

The City’s decision to set aside the exam was upheld by the lower courts. Essentially, those courts held that the (predominantly) white firefighters did not have a viable “disparate treatment” claim under Title VII, and that the City acted reasonably when it threw out the test results to avoid a “disparate impact” lawsuit from the black firefighters. On appeal to the Supreme Court, the issue to be decided was as follows: “Is it permissible for an employer to engage in intentional race discrimination against one group of employees in order to soften the unintentional, but disparate, racial impact that a particular employment practice has on another group of employees?” Stated simply: “Can an employer intentionally discriminate against one group to avoid the appearance of discrimination against others?”

In a 5-4 decision, the Supreme Court reversed the lower courts’ decisions and found in favor of the plaintiffs. The three key holdings of the Court’s Ricci decision are as follows:

  1. The City violated Title VII, which prohibits intentional discrimination on the basis of race, by disregarding the test results to the detriment of the white firefighters that received the highest scores—thus subjecting them to disparate treatment discrimination.
  2. Avoiding disparate impact liability does not excuse what would otherwise be prohibited disparate treatment discrimination unless the employer has a “strong basis in evidence” for believing that it would be held liable under Title VII if it decided to accept the challenged exam results (or any other facially neutral employment practice).
  3. To have a “strong basis in evidence,” an employer must be able to show: (1) that the exam (or other facially neutral employment practice) was not job related and consistent with business necessity; or (2) that it had refused to adopt an equally valid, less discriminatory alternative.

Essentially, the Court held that the mere threat of a “disparate impact” lawsuit will not be sufficient to condone intentional reverse discrimination against white employees—even though the employer may simply be attempting in good faith to comply with Title VII. The “damned if you do, get sued if you don’t” subtext of the Ricci case (of which all employers are no doubt mindful) has best been summarized in an article written by Walter Olsen:

It’s a question HR managers and company lawyers are used to facing every day. Would you rather field the legal claims that result from targeted layoffs, or the ones that result from sacking people regardless of performance? Would you rather face a defamation lawsuit for mentioning the reasons for a problem employee’s departure, or a failure-to-warn lawsuit for not mentioning them? Will your policy on religious proselytizing in the workplace get you sued by the believers, or by the atheists? But the courts have no general theory of sued-if-you-do, sued-if-you-don’t scenarios, and often they seem unwilling to give the matter much thought at all. Monday, for a change, these issues took center stage … . Monday’s crucial ruling is on the question: how serious does the prospect of litigation over an employment practice have to be before an employer is allowed to lean over in the opposite (discriminatory) direction to avoid liability?
Source: Walter Olsen, Sued If You Do, Sued If You Don’t, (June 29, 2009).

Of course, in typical Supreme Court fashion, the answer to that question is not exactly clear. If anything, the Ricci decision simply inverted the end result, but did not make the potential for actually getting sued any less probable. The City in Ricci chose to protect the black employees and got sued by the white employees. Under the holding in Ricci, the City would now protect the white employees and (as it was at the start) risk being sued by the black employees. While the City (or any employer for that matter) may have a valid defense in light of the Ricci holding, that will most certainly not dampen the likelihood of litigation—costing the employer countless thousands of dollars in legal fees and expenses just to assert that defense.

As with any notable Supreme Court decision, however, the best takeaway is not what the Court answered, but rather, what remains to be answered. To that end, employers should be mindful of the following three topics, which are sure to be the subject of litigation in the coming months and years:

  1. What effect does Ricci have on an employer’s voluntary affirmative action policies? According to the Ricci majority, “[W]e do not question an employer’s affirmative efforts to ensure that all groups have a fair opportunity to apply for promotions and to participate in the process by which promotions will be made. But once the process has been established and employers have made clear their selection criteria, they may not then invalidate the test results, thus upsetting an employee’s legitimate expectation not to be judged on the basis of race… .” This language suggests that employers are still permitted to take steps to ensure that minority employees are given a “fair opportunity” to succeed (thus endorsing, at least to some extent, voluntary affirmative action policies), but, at the same time, and somewhat paradoxically, the Court reinforces the principal that employers cannot make decisions to hire and promote on the basis of race. Thus, the question of “how much” affirmative action is permitted under Title VII is a question left to be decided for another day. But make no mistake, it certainly appears that the pendulum is swinging back in the other direction—away from explicit or implicit endorsements of affirmative action, and towards a more “colorblind” system. As Chief Justice Roberts noted in an earlier case: “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” Whether you agree or disagree with that sentiment, in light of Ricci, it would seem as though this is the direction in which the Supreme Court is headed (and maybe sooner than we think—see the third point below).
  2. Can an employer still conduct a disparate impact analysis when faced with layoffs or terminations? Think about the Ricci decision in reverse. Instead of a promotion, consider layoffs that may affect a large number of employees. Before Ricci, it was good practice for employers to conduct a disparate impact analysis before the layoff/terminations to ensure that any fired employee could not contend that his or her termination resulted from a disparate impact on a protected minority class of which he or she was a member. If the analysis revealed such a result, employers were oftentimes advised to modify the layoff criteria to avoid that disparate impact. But is this legal under Ricci? With respect to the City’s decision to discard the exam results, the Court noted that the City “was not entitled to disregard the tests based solely on the racial disparity of the results.” Does this language suggest that, in the hypothetical layoff situation described above, the employer would be stuck with the original breakdown—irrespective of the anticipated disparate impact? In other words, would it be a violation of Title VII to modify layoff criteria so as to avoid a disparate impact (thus openly exposing the employer to liability to a disparate impact lawsuit for the sole purpose of avoiding a disparate treatment lawsuit)?
  3. Can the “disparate impact” theory of liability survive much longer? Procedurally speaking, the Supreme Court deferred on the constitutional question presented in the Ricci case by deciding the statutory issue under Title VII. (The Supreme Court will always avoid making a constitutional determination if the issue can be resolved in another fashion, e.g., via a matter of statutory construction or application.) Despite the majority’s ruling, however, one Justice noted the difficulty in reconciling the theory of disparate impact liability with the Equal Protection Clause found in the 14th Amendment to the United States Constitution. Indeed, while the Supreme Court in Ricci found in favor of the plaintiffs, and thus, determined that, at least in this instance, disparate treatment trumped disparate impact, Justice Scalia pointed out in his separate concurrence that the decision left open the possibility that a finding of disparate impact liability (which does not require a showing of an intent to discriminate) could actually outweigh a finding of intentional discrimination. This would present a very thorny question, and one that the Supreme Court will eventually have to decide. As noted by Justice Scalia, “resolution of this dispute merely postpones the evil day on which the Court will have to confront the question: Whether, or to what extent, are the disparate-impact provisions of Title VII of the Civil Rights Act of 1964 consistent with the Constitution’s guarantee of equal protection? The question is not an easy one.”

If you have questions about the Supreme Court’s Ricci decision or other employment law issues, please contact Todd Shill at (717) 231-6665 or tshill@rhoads-sinon.com, or John Martin at (717) 237-6734 or jmartin@rhoads-sinon.com.