In its much-awaited ruling in the Ricci v. DeStefano “reverse discrimination” case, an extremely divided Supreme Court has held that the City of New Haven, Connecticut violated the civil rights of white and Hispanic firefighters when it discarded the results of promotion tests because African-Americans scored disproportionately lower on those exams. Reversing the decision of the U.S. Court of Appeals for the Second Circuit, the 5-4 majority rejected the City’s argument that it would have been sued by the African-American candidates if it had implemented the tests’ lopsided results.

The majority’s ruling is a cautionary one for employers with affirmative action programs, informal diversity initiatives, and related hiring and promotion policies.

The Ricci Employer: Caught Between the Proverbial Rock and a Hard Place

The Ricci case has fueled controversy because it underscores the no-win situation employers may find themselves in when they seek to achieve workplace diversity. Under Title VII of the Civil Rights Act, good-faith attempts to avoid discrimination against one group can make employers vulnerable to bias charges from another group. This dilemma results from Title VII’s ban on both:

  • “Disparate treatment” discrimination, which is intentional discrimination on account of race, gender, etc.; and
  • “Disparate impact” discrimination, defined as unintentional discrimination resulting from a practice or policy which appears neutral on its face (such as a college degree requirement), but which (1) has a disproportionately adverse affect on a protected group (e.g., minorities); (2) is neither job-related nor justified by business necessity (e.g., receptionist position); and (3) can be replaced with an alternative policy that will have a less discriminatory impact (e.g., high school diploma).

The facts of the Ricci case graphically illustrate how trying to avoid a “disparate impact” lawsuit can make an employer liable for “disparate treatment.”

The case arose after the City’s written tests for fire department promotions produced no qualified African-American candidates. Some members of the Civil Service Board were concerned that the exams may have been inherently biased, although the Board never authorized a post-test evaluation for possible bias. Ultimately, the Board was deadlocked, the tests were discarded, and none of the candidates were promoted.

High Scorers File “Reverse Discrimination” Lawsuit

Frank Ricci, along with 16 other high-scoring white candidates and one Hispanic, sued New Haven’s officials, alleging that the City’s failure to certify the test results and grant promotions constituted, among other things, unlawful “disparate treatment” discrimination. In response, the City argued that, because of the racially disproportionate results, it risked a “disparate impact” lawsuit by the lower-scoring African-American test takers if the exams were used to award promotions.

The Lower Courts’ Rulings

The trial court granted the City’s request to dismiss the lawsuit. A three-member panel of the Second Circuit Court of Appeals, which included Supreme Court nominee Sonia Sotomayor, summarily affirmed, reasoning that the City, in refusing to validate the exams, was “simply trying to fulfill its obligations under Title VII when confronted with test results that had a disproportionate racial impact." Subsequently, the Second Circuit, in a 7-6 decision, refused to rehear the case en banc.

The Majority: “Fear of Litigation Alone” Does Not Justify Reliance on Race

Writing for the majority, and following in the tradition of “swing” voters Sandra Day O’Connor on the Rehnquist Court and Potter Stewart on the Burger Court, Justice Anthony M. Kennedy continued his role, particularly evident in employment law cases, as the pivotal vote on the Roberts’ Court. Justice Kennedy found that the City of New Haven rejected the test results “solely because” the higher scoring candidates were white. As a result, the City’s actions constituted unlawful disparate treatment “absent some valid defense.”

A “Valid Defense” to Disparate Treatment

The majority held that an employer may not take "race-conscious, discriminatory action" against one group of employees, unless there is "a strong basis in evidence to believe it will be subject to" liability to another group. In the majority’s view, the City’s fear of a disparate impact lawsuit, even though based on a statistical disparity that likely could establish a prima facie (i.e., threshold) case of disparate impact discrimination, was insufficient to satisfy the “strong basis in evidence” test.

The majority concluded that the disputed tests were objective, job-related and consistent with business necessity, and that there was no less discriminatory alternative that served the City’s needs. Thus, the Court decided that the City likely would have prevailed in a disparate impact lawsuit, and, therefore, did not have a “valid defense” to the claim of disparate treatment discrimination.

Justice Kennedy was joined in the majority by Chief Justice Roberts and Justices Scalia, Thomas and Alito. Justices Stevens, Souter and Breyer joined in Justice Ginsburg’s dissent.

Bottom Line

The Court’s ruling is somewhat confusing. If there is “a strong basis in evidence” that a disputed practice produces an unlawful disparate impact on one group then disparate treatment against another group, resulting from efforts to remedy the disparate impact, is not unlawful. But, what exactly constitutes “a strong basis in evidence”? The Court does not offer a bright line test. Here, the City of New Haven’s fear of being sued because of lopsided test results was insufficient. Nonetheless, one thing seems clear: the City would have been in a much stronger position had it authorized an expert to analyze the tests after it discovered the statistically disproportionate results. Accordingly, employers should take the following pre- and post- test steps:

  • Pre-test administration steps: Have an expert conduct an objective, thorough evaluation of all hiring and promotion tests and related policies for inherent bias. If bias is found or strongly suspected, the safest course is to revise the test or other practice before it is used.
  • Post-test steps: Before the results are implemented, conduct a statistical analysis according to protected groups, e.g., race, gender, ethnicity. If there is a significant statistical disparity, have an expert evaluate the test or policy for inherent bias. If bias is uncovered or strongly suspected, the employer should then consider:
    • Is the test or policy job-related and consistent with business necessity?
    • Is there an alternative to this test or policy that would produce a less disparate effect while still meeting the company’s business needs?

Employers may want to involve counsel in this process so that they can best evaluate their options for avoiding a lawsuit based either on disparate impact or disparate treatment.

Beyond Ricci

Ricci was the Court’s final employment law decision of the 2008-2009 term, but it is not destined to fade from the public arena anytime soon. In the coming months and years, lower federal courts likely will be tasked with interpreting and applying the ruling. More immediately, the Ricci decision is expected to be front and center during Judge Sotomayor’s confirmation hearings this summer.

Note: Coinciding with Judge Sotomayor’s confirmation hearings, we will provide a Client Alert in mid-July, which reviews all of this term’s labor and employment law decisions.