US Supreme Court Issues Opinion in Ricci v. DeStefano

January 1, 0001



On June 29, 2009, the United States Supreme Court issued its opinion in Ricci v. DeStefano, 557 U.S. ___ (2009). The Court’s majority opinion, written by Justice Kennedy, concludes that an employer’s decision to discard the results of a promotional examination based on concerns about its disparate impact was a “race-based action” that was “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.” Slip op. at 2. The Court went on to hold that under the facts of this case, the City of New Haven could not meet that standard, and so found a violation of Title VII of the Civil Rights Act of 1964 (“Title VII”). In this Client Alert, we summarize the Court’s opinion in Ricci, note some questions left unanswered by the Court, and discuss implications of the decision for employers. Although the defendant in Ricci was a public employer, the Court’s holding applies equally to private employers, and the consequences of the decision are potentially far-reaching.

Summary of the Opinion

In 2003, the City of New Haven held a promotional examination to determine which firefighters would be eligible for promotion to lieutenant or captain. The examination was designed by an outside company specializing in the design of police and fire entry and promotional examinations, and the test-design company took affirmative steps in its design intended to avoid unintentionally favoring white candidates. Nonetheless, when the test was administered, white candidates significantly outperformed minority candidates, and none of the 19 candidates eligible for an immediate promotion based on the test results were African-American (17 were white and 2 Hispanic). Slip op. at 5-6. After holding a series of hearings on the examination, the New Haven Civil Service Board voted not to certify the results, so that the firefighters who passed the examination would not receive a promotion. Among other reasons noted for the decision, the City expressed concern about a potential discrimination suit by minority firefighters based upon the disparate results. Id. at 6-14.

Eighteen firefighters who passed the examination but did not receive a promotion sued the City and various city officials, arguing that by failing to certify the results, the City violated the Equal Protection Clause of the Fourteenth Amendment and the disparate-treatment prohibition in Title VII. The district court granted summary judgment to the defendants, and a panel of the U.S. Court of Appeals for the Second Circuit (including Supreme Court nominee Judge Sonia Sotomayor) affirmed in a per curiam summary order. The Court of Appeals voted to deny rehearing the case en banc, and the Supreme Court granted certiorari.

The Court’s majority opinion began by examining the firefighters’ claim that the City’s refusal to certify the examination results based on the race results of the successful candidates constituted intentional discrimination in violation of Title VII’s disparate treatment provisions. See 42 U.S.C. § 2000e-2(a)(1). The Court accepted the “premise” that the “City’s actions would violate the disparate-treatment prohibition of Title VII absent some valid defense.” Slip op. at 19. The Court observed that “[a]ll the evidence demonstrates that the City chose not to certify the examination results because of the statistical disparity based on race” and concluded that “this express, race-based decisionmaking violates Title VII’s command that employers cannot take adverse employment actions because of an individual’s race.” Id.

The Court then asked “whether the City had a lawful justification for its race-based action” in its concern about the disparate impact of the test results. Id. at 20. The Court rejected the firefighters’ positions – that avoiding a disparate impact can never justify discarding the test results, or that an employer must in fact be in violation of the disparate impact provision in order to do so. Id. at 21. It also rejected the City’s theory – that an employer’s good-faith belief that its actions are necessary to comply with Title VII justifies the conduct. Id. Instead, the Court held that an employer can properly discard test results only if it has a “strong basis in evidence” that doing so was necessary in order to avoid violating the disparate impact provisions of Title VII. Id. at 25. The Court asserted that this standard “appropriately constrains employers’ discretion in making race-based decisions,” but “is not so restrictive that it allows employers to act only when there is a provable, actual violation.” Id. at 24.

In establishing this test, Court borrowed the strong-basis-in-evidence standard from affirmative action cases interpreting the Fourteenth Amendment’s Equal Protection Clause. In that context, the Court requires the government to have a “strong basis in evidence” that remedial actions are necessary in order to take race-based actions to remedy past discrimination. Id. at 22-23 (citing Richmond v. J.A. Croson Co., 488 U.S. 469, 500 (1989); Wygant v. Jackson Bd. of Ed., 476 U.S. 267, 277 (1986) (plurality)).

Notably, rather than remand for the district court to apply this newly adopted standard, the Court itself held that the City could not meet it. Slip op. at 27. The Court acknowledged that “[t]he racial adverse impact” of New Haven’s promotion tests “was significant” and that “the City was faced with a prima facie case of disparate-impact liability.” Id. But, the Court explained, “a prima facie case of disparate-impact liability” was “far from a strong basis in evidence” because in responding to such a prima facie case, the City would have had strong claims that (1) the examination was “job related and consistent with business necessity;” and (2) there was no “equally valid, less-discriminatory alternative.” Id. at 28.

Four Justices dissented, challenging the majority’s portrayal of the facts and explaining that they would have adopted a more lenient standard. Justice Souter was among those in dissent, so the outcome of this case would not differ if Judge Sotomayor is confirmed to take his seat.

Questions Left Unanswered

In articulating this new “strong basis in evidence” standard for an employment examination, the Court offered no guidance on how it should be applied by courts or employers. The dissent pointed out that the standard “is not elaborated” and questioned “what cases would meet the standard.” Slip op. at 21 (Ginsburg, J., dissenting). That said, the Court’s application of the test to the facts of this case does demonstrate that a “strong basis in evidence” of a prima facie case is insufficient; rather the employer apparently must also have a strong basis in evidence that the test is not a business necessity and that a less-discriminatory alternative does not exist. Applying the strong-basis-in-evidence standard is relatively intuitive in the equal protection context -- where the government must have an evidentiary or factual theory of the need for remedial action. It is less certain how it would apply to an employer’s attempt to show that use of the test would violate disparate impact law. What is clear, however, is that an employer’s own belief or speculation that a less discriminatory test might exist will be insufficient to establish a strong basis in evidence.

The Court also did not specify when during the development of a selection device the strong-basis-in-evidence standard is to be applied. The Court asserted that it did 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” and that “Title VII does not prohibit an employer from considering, before administering a test or practice, how to design that test or practice in order to provide a fair opportunity for all individuals, regardless of their race.” Id. at 25. And the Court professed to limit its holding to the type of employment action in this case: “once [a fair] process has been established and employers have made clear their selection criteria, they may not then invalidate the test results.” Id. These statements by the Court suggest that, in the early stages of the development process, an employer may have more flexibility to opt for an alternative test that has less adverse impact. But the Court summarized its holding as applying to an employer that “engage[s] in intentional discrimination for the purpose of avoiding or remedying an unintentional disparate impact.” Id. at 26. The Court’s use of the word “avoiding” suggests that the Court’s holding could apply to any action an employer takes – at any stage – for the purpose of reducing an adverse impact.

Finally, the Court did not address whether a disparate impact action that satisfied the strong-basis-in-evidence standard would also satisfy the Equal Protection Clause. Although Petitioners brought a constitutional claim in this case, the Court did not need to reach it because it invalidated the City’s action on statutory grounds. A concurring opinion by Justice Scalia, however, specifically raised the question of whether Title VII’s disparate impact provisions violate the Equal Protection Clause. As a result, further constitutional challenges aimed directly at limiting or eliminating Title VII’s disparate impact protections are likely in the future.

The Decision’s Implications for Employers

The Court’s decision portends wide-reaching implications for employers as they develop selection criteria. Although the holding of this case only applied directly to a promotional examination, the reasoning appears equally applicable to other selection devices, including those for hiring, reductions in force, performance evaluations, compensation decisions and the like. Following the reasoning of this decision, once an employer establishes and announces a selection criteria, it cannot simply discard the results based on the racial outcome without satisfying the strong-basis-in-evidence standard. As a result, the decision, and the standard it announces, places increased pressure on employers to work with sophisticated testing experts to develop state-of-the-art selection devices that can withstand legal challenges based on potential disparate impact claims. Employers should hesitate to implement experimental selection devices that may not stand up to close scrutiny.

The case also suggests that analysis and efforts intended to avoid adverse impact should occur as early as possible in the test development process, and certainly before a test is announced and administered. On the one hand, the majority’s reasoning would seem to apply to a decision taking race into account at any point in a selection process. (As the Chief Justice has stated elsewhere, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” Parents Involved in Community Schools v. Seattle School District No. 1, 551 U.S. 701 (2007)). But Justices Kennedy and Alito, the possible swing votes on this set of issues, appear to have been deeply uncomfortable with the notion of taking away from Petitioners a promotion that they had already earned.

In sum, the Court’s ruling significantly narrows an employer’s options upon learning the results of an examination. For now at least, the disparate impact provisions of Title VII remain in effect. But an employer need not – indeed, may not – weigh the political and litigation costs of certifying the results of an exam with an adverse impact, unless it has a strong basis in evidence that it is actually in violation of Title VII.

O’Melveny attorneys have significant experience working with employers to develop selection criteria and defend disparate treatment and disparate impact discrimination litigation.