On June 29, 2009, the Supreme Court issued its decision in the case of Ricci v. DeStefano (see June 15, 2009 blog post for an explanation of the case and the positions of the parties).  In a 5-4 decision, the Supreme Court reversed the Second Circuit Court of Appeals, holding that the City of New Haven violated Title VII of the Civil Rights Act by refusing to certify the results of firefighter promotional examinations because too few minority candidates passed.

The Supreme Court agreed with the plaintiffs that an employer must have a "strong basis in evidence" to believe it will be subject to disparate impact liability in order to make a race-conscious decision such as the one made by the City of New Haven.  The Supreme Court rejected the position of the City of New Haven (and the position taken by the U.S. Government in its amicus brief) that an employer need only have a "reasonable basis" for believing it might be liable under a disparate impact theory.  In prior decisions (such as Richmond v. J.A. Croson Co., 488 U.S. 469 (1989)), the Supreme Court has applied this same "strong basis in evidence" standard in determining whether certain types of race-conscious government actions to remedy past racial discrimination are justified under the Equal Protection Clause of the U.S. Constitution.  Therefore, it appears that the Supreme Court's decision is consistent with, rather than a deviation from, the current legal standards.

Upon examining the record, the Supreme Court held that the City of New Haven did not have a strong basis in evidence to believe it would have been subject to disparate impact liability.  The Supreme Court found that the City of New Haven's decision to throw out the results of the promotional examinations was based only on the statistical disparity in the number of white and minority candidates who passed.  The Supreme Court held that the statistical disparity alone was insufficient to justify the City of New Haven's race-based decision to reject the results of the examinations.  The City of New Haven would only have been liable under a disparate impact theory if the examinations were not job-related and consistent with business necessity, or if there existed a less discriminatory alternative that the City refused to adopt.  The Supreme Court found that there was no evidence that the examinations were not job-related and consistent with business necessity, or that there were less discriminatory alternatives available.  The Supreme Court held that "fear of litigation alone cannot justify an employer's reliance on race to the detriment of individuals who passed the examinations and qualified for promotions."

The lesson of the Ricci v. DeStefano case is that employers must be extremely cautious about making race-based employment decisions (or employment decisions based on any protected category) simply to avoid a disparate impact lawsuit.  Employers that find themselves in the difficult position faced by the City of New Haven should do a thorough analysis in order to determine whether there is a strong basis in evidence to support a disparate impact theory of liability, and should not make race-based employment decisions in the absence of such evidence.

On April 22, 2009, the Supreme Court heard oral arguments from both parties in the case of Ricci v. DeStefano. In the Ricci case, 17 white firefighters and one Hispanic firefighter who passed promotional examinations filed claims under Title VII of the Civil Rights Act and the Equal Protection Clause of the U.S. Constitution that the City of New Haven discriminated against them based on their race by refusing to certify the results of the exam because too few minority candidates passed. The Supreme Court granted certiorari after the U.S. District Court granted summary judgment to the City of New Haven, and the Second Circuit Court of Appeals affirmed.  Circuit Judge Sonia Sotomayor, who was recently nominated by President Obama to serve on the Supreme Court, was on the three-member Second Circuit panel that affirmed the District Court's decision.

The facts of the case are fairly simple. In late 2003, 118 applicants took a written and oral exam administered by the New Haven Fire Department for promotion to the positions of Captain and Lieutenant. Of the 118 applicants, 68 were white, 27 were African-American, and 23 were Hispanic. Based on the results of the exam, no African-American or Hispanic candidates were eligible for promotion to the Lieutenant position. Only two Hispanic candidates and no African-American candidates were eligible for promotion to the Captain position. The City of New Haven refused to certify the results of the exam, and did not grant any promotions based on the results of the exam, due to its stated fear that it would face a disparate impact lawsuit from non-white applicants.

The fundamental legal issue is whether a municipal employer’s fear of a disparate impact race discrimination lawsuit is a valid basis to disregard the results of a promotional exam that would make disproportionately more white applicants eligible for promotion than minority applicants. In other words, can a municipal employer engage in disparate treatment based on race, due to a fear of a disparate impact lawsuit? The plaintiffs contend that the City of New Haven’s fear of a disparate impact lawsuit was not sufficient to justify making the decision to disregard the results of the exam. The plaintiffs urged the Supreme Court to hold that an employer must have a “strong basis in evidence” for believing that an exam violates the law, and argued that the City of New Haven did not make such a showing.

The City of New Haven contends that an employer need only have a reasonable basis for believing that it could lose a disparate impact lawsuit if it makes promotions based on the results of an exam. The City of New Haven argued that the District Court correctly held that its belief that it could lose a disparate impact lawsuit was reasonable, based on the disproportionate percentage of white applicants who passed the exam, concerns about the validity of the exam, and the possibility of alternate exams.

The U.S. Government filed an amicus brief in this case, and also presented its argument to the Supreme Court. The Government essentially supports the City of New Haven’s argument that an employer need only have a reasonable belief that it could be liable under a disparate impact theory, but asked the Supreme Court to remand the case back to the District Court for further consideration of whether the City of New Haven’s belief in this case was reasonable. The Government noted during oral argument that the District Court found that there were several motivations for the City’s decision to disregard the results of the exam, which included not only the disparate impact concern, but also a desire to promote diversity within the Fire Department and to develop managerial role models for aspiring firefighters. The Government’s counsel stated during oral argument that promoting diversity and developing managerial role models “do not fit into complying with the Title VII disparate impact test,” and that the District Court therefore needed to re-examine whether the disparate impact concern alone was reasonable.

The Supreme Court's decision in the case is expected to be issued before the end of its term in June.