On August 26, 2011, a divided Sixth Circuit ruled in Grant v. Metropolitan Government of Nashville and Davidson County, No. 10-5944 (6th Cir. Aug. 26, 2011), that African-American employees of the Nashville, Tennessee water agency failed to prove their class claims that the agency's promotion practices had a disparate impact based on race. In vacating a judgment in favor of the class, the Sixth Circuit concluded that the employees failed to establish a prima facie case of disparate impact liability. In so ruling, the Sixth Circuit delivered some important lessons for any employers facing disparate impact discrimination claims in a class action context.

In the Grant case, nine named Plaintiffs filed the class action under Title VII against the Metropolitan Government of Nashville and Davidson County. The named Plaintiffs were current and former employees of Metro Water Services ("MWS"), a Metro subdivision. Presenting both disparate treatment and disparate impact theories of liability, Plaintiffs claimed that MWS engaged in systemic practices of discrimination against African-American employees in post-hiring opportunities, including disparate job assignments, promotions, pay, accommodations, discipline, and other terms and conditions of employment. In a previous ruling, the district court granted Plaintiffs' motion for class certification of all former, current, and future African-American employees of MWS from January 1, 2000 through trial.

After a trial of nine days with twenty witnesses and two experts, the district court ruled that Plaintiffs had presented a prima facie case of disparate impact discrimination, and that they were entitled to judgment on their class claims. The district court found that opinions of Plaintiffs' expert were more persuasive that MWS's expert. As a result, the district court awarded the class back pay in an amount to be determined by a special master. The district court also awarded immediate injunctive relief to the class, which prohibited MWS from conducting oral interviews for promotions, imposed an interview requirement for lateral transfers, and ordered the special master to conduct oral interviews and validate all MWS job requirements.

MWS appealed, and in a 2-to-1 decision, the Sixth Circuit vacated the judgment on the grounds that Plaintiffs had not even established a prima facie case of disparate impact discrimination.

Plaintiffs' Prima Facie Case

A prima facie case of disparate impact discrimination under Title VII requires a plaintiff to identify a specific employment practice and present relevant statistical data that the challenged practice has an adverse impact on a protected group. In addition, Title VII provides that a plaintiff must isolate and identify the specific employment practices that are allegedly responsible for any statistical disparities unless "the elements of [an employer's] decision-making process are not capable of separation or analysis;" in that circumstance, then the decision-making "process may be analyzed as one employment practice." 42 U.S.C. § 2000e-2(k)(1)(B)(i).

On appeal, MWS argued that Plaintiffs neglected to isolate and identify specific employment practices and failed to demonstrate that the practices were incapable of separation. Plaintiffs contended that they had, insofar as they challenged MWS's "pre-selection" practices - such as tailored job qualifications, selective interviewing, and subjective decision-making - as causing an adverse impact on African-American employees. The Sixth Circuit's key determination was that although Plaintiffs challenged the decision-making process as a whole, they never attempted to demonstrate that the elements of that process were incapable of separation for analysis. The Sixth Circuit concluded that the district court appeared to assume that Plaintiffs had shown this, and thereby erred in allowing "Plaintiffs to reap the advantages of the statutory exception without first meeting its requirements." Grant, at 7. The dissent severely criticized the majority's conclusion, which it found particularly troubling "in light of the nature and significance of this case - a civil rights class action against a major public employer - and the availability of extensive evidence in the record." Id. at 14.

Defects In Plaintiffs' Statistical Evidence

The Sixth Circuit went on to determine that even if Plaintiffs had satisfied the first prong of their prima facie case, their claim would nevertheless fail on the second prong because "Plaintiffs simply did not present relevant statistical data that MWS's promotion practices caused an adverse, disparate impact" on African-American employees. Id. at 7. The Sixth Circuit criticized Plaintiffs' expert presentation, and concluded that Plaintiffs focused on the wrong issues, as it was merely a description of the racial demographics of MWS's workforce. Further, Plaintiffs' expert compared the wrong groups of people: “[i]nstead of comparing the employees who actually applied for or were eligible for promotions with those who received them, Plaintiffs compared the proportion of black employees in high-paying positions with the proportion of black employees within the entire MWS workforce.” Id. at 8-9. The Sixth Circuit found particularly troubling that Plaintiffs constructed an applicant pool consisting of the entire MWS workforce, “apparently assuming that custodians, equipment operators, painters, secretaries, and customer service representatives are qualified to work as engineers, biologists, and chemists.” Id. at 9 (citing Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 651 (1989), superseded by statute on other grounds, Civil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat. 1071, 42 U.S.C. § 2000e-2(k)).

The Sixth Circuit also found that the district court erred in its determination that each segment of MWS's workforce should mirror the overall racial demographic of MWS, since that would amount "to an impermissible quota system.”  Id. at 9 (citing Wards Cove Packing Co. v. Atonio, 490 U.S. at 652). The Sixth Circuit reasoned that Plaintiffs' evidence showed only that African-American employees were disproportionately represented in lower-paying jobs with fewer opportunities for advancement, but racial imbalance in one segment of an employer's workforce, without more, does not establish a prima facie case of disparate impact with respect to the selection of workers in other segments.

Implications Of The Grant Decision

The Sixth Circuit's ruling is a rare one, where a district court's findings - based on expert evidence and extensive anecdotal testimony by the named Plaintiffs - are overturned on the basis that the class failed to even establish a prima facie case. While acknowledging that the standard of review in these circumstances is narrow, the Sixth Circuit nonetheless took away a judgment in favor of the class.

Given the Supreme Court's recent ruling in Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), disparate impact theories are likely more amenable to class certification than disparate treatment theories which focus on an employer's intent vis-à-vis an employee. The Sixth Circuit's ruling in Grant illustrates the types and quantum of proof requirements that are the focus of the litigation battlefield, and how employers can successfully mount an opposition to Title VII class claims advancing disparate impact theories.