Finds Race-Based Rejection Of Test Results Was Unlawful

On June 29, the U.S. Supreme Court held, in a 5-4 ruling, that the City of New Haven's decision to discard test results that were used to identify those firefighters best qualified for promotion violated Title VII of the Civil Rights Act. Justice Anthony Kennedy, writing for the majority, ruled that the City's race-based rejection of the test results cannot satisfy the "strong-basis-in-evidence standard," which the Court adopted to resolve conflicts between Title VII's disparate treatment and disparate impact provisions. According to the Court, "[f]ear of litigation alone cannot justify an employer's reliance on race to the detriment of individuals who passed the examinations and qualified for promotions." Ricci v. DeStefano, No. 07_1428, U.S. Supreme Court (June 29, 2009).

Factual Background

In 2003, the City of New Haven administered exams for promotion to lieutenant and captain - as required by the city charter - that were designed by a third-party contractor. Under a union collective bargaining agreement, the written exams made up 60 percent of an applicant's overall score, while an oral exam accounted for 40 percent. With one exception, all employee panels that conducted the oral exams were comprised of one African-American, one Hispanic, and one white employee.

After each test, the New Haven Civil Service Board (CSB) certified a ranked list of applicants who had passed. The city charter also imposed the "rule of three," which meant that the person selected for a position must be one of the top three scorers on the test.

For the lieutenant position, 43 whites, 19 blacks, and 15 Hispanics took the exam. Twenty-five whites, six blacks, and three Hispanics passed the exam. All of the top 10 scorers were white, and there were eight lieutenant vacancies.

For the captain position, 25 whites, eight blacks, and eight Hispanics were tested. Sixteen whites, three blacks, and three Hispanics passed. There were only seven captain vacancies. The top nine scorers on the captain exam included seven whites and two Hispanics.

In 2004, based on its concerns over a possible "disparate impact" on racial minorities, the CSB held hearings to decide whether to certify promotional lists which included no black employees. The CSB split 2-2 and, therefore, did not certify the lists. As a result, no promotions were made. The white and Hispanic firefighters who were denied promotions as a result sued the City for race discrimination.

In 2006, a federal district court rejected the discrimination claims. On appeal, a three-judge panel of the Second Circuit Court of Appeals summarily affirmed the lower court's decision, finding that the City's actions were protected because it was "simply trying to fulfill its obligations under Title VII when confronted with test results that had a disproportionate racial impact." The case attracted significant public attention, in part, because Judge Sonia Sotomayor was on the panel that ruled in the City's favor.

Legal Analysis

The Supreme Court first noted that Title VII prohibits both intentional discrimination ("disparate treatment") as well as unintentional discrimination that results from practices that, while not intended to discriminate, have a disproportionately adverse effect on members of a particular classification ("disparate impact").

The firefighters argued that when the CSB refused to certify the exam results because of the racial composition of the group of successful candidates, it discriminated against them in violation of Title VII's disparate treatment provision. The City countered that it had a good faith belief that, had it certified the test results, it would have violated the disparate impact provision.

The Court found that the City's rejection of the test results is "express, race-based decision-making," which violates the disparate treatment prohibition of Title VII (absent some valid defense). Thus, the Court next considered whether the City's effort to avoid disparate impact liability justified disparate treatment bias with respect to the firefighters.

Justice Kennedy and the majority rejected the firefighters' argument that the City could never avoid disparate impact liability by engaging in disparate treatment discrimination. The Court also rejected the firefighters' argument that an employer must be in violation of the disparate impact provision before it can use compliance as a defense in a disparate treatment suit. Justice Kennedy wrote, "[f]orbidding employers to act unless they know, with certainty, that a practice violates the disparate impact provision would bring compliance efforts to a near standstill."

The Court also rejected the City's argument that a "good faith belief " that it might violate the disparate impact prohibition justifies race-based employment decisions. According to Justice Kennedy, such a practice "would encourage race-based action at the slightest hint of disparate impact."

Instead of these extremes, the Court borrowed a standard from Equal Protection jurisprudence to resolve the conflict between the disparate treatment and disparate impact provisions of Title VII. Under the "strong-basis-in-evidence" standard, actions based on race are 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. Thus, the Court reasoned, the City could have refused to certify the results if the record demonstrated that there was a strong basis in the evidence that certification would have lead to disparate impact liability.

The Court held that the record did not justify the City's actions. Even if the City was motivated by a desire to avoid disparate impact discrimination, the Court ruled, the record failed to show that it had an objective, strong basis in evidence to find the tests inadequate and that it would face legal liability if it had certified the results.

The Court found that since certifying the examinations meant that the City would not have promoted any black candidates for the vacant positions, the City did face a prima facie case of disparate impact bias. But, a prima facie case of disparate impact liability alone is not a strong basis in evidence that the City would have been liable under Title VII had it certified the results. The City would be held liable under the disparate impact theory only if it could not show that the examinations were job-related and consistent with business necessity. Further, there must be an alternative practice available that would have less disparate impact but still serve the City's needs.

The Court concluded that there was no strong basis in evidence showing that the test was deficient in either of these respects. First, the majority reasoned that the examinations were clearly job-related and consistent with business necessity. Moreover, the Court ruled that the record lacked a strong basis in evidence of an equally valid, less-discriminatory testing alternative available to the City.

In particular, the Court rejected arguments that the City could have adopted a different composite-score calculation (weighing the written and oral examination scores 30/70 rather than 60/40) and a different interpretation of the "rule of three." Furthermore, the Court found that the mere suggestion of alternative testing methods does not raise a genuine issue as to whether these alternatives were available to the City and whether they would have produced a less adverse impact.

Because the City lacked a strong basis in evidence to believe it would face disparate impact liability if it certified the test results, the Court held that Title VII did not permit it to disregard the results. In light of this ruling, the Court declined to consider whether the City's actions may have violated the Equal Protection Clause. The Court concluded by noting that, notwithstanding the prima facie case against it, the City could defend against a disparate impact claim on the basis that failing to certify the test results would result in liability for disparate treatment bias.

Practical Impact

According to Josh Davis, a shareholder in Ogletree Deakins' recently-opened Boston office, the Court's decision indicates that business-related testing that yields disproportionate results should not cause employers deep concern. "As long as the employer can show that the test is job-related and consistent with business necessity, it should accept the results of the test." Davis explained further that "this divided Court simply refused to sanction New Haven's effort to fix something that looked wrong. And in so doing, it suggested that employers will need to rely on pre-test decisionmaking in defending against claims of intentional and unintentional discrimination. The Court seems to anticipate that appropriate testing will provide a solid defense against both types of claims."