Third Circuit Finds Ricci Defense Not Applicable to Disparate Impact Claim

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National Association for the Advancement of Colored People v. North Hudson Regional Fire & Rescue, Nos. 10-CV-3965, 10-CV-3983., 2011 BL 313100 (3d Cir. Dec. 12, 2011)

  • Substantial statistical disparities between the racial composition of the jobs at issue and the racial composition of the qualified population in the relevant labor market alone can raise an inference that the challenged employment practice has caused an adverse impact in violation of Title VII.
  • The Supreme Court's holding in Ricci (that an employer can assert as a defense to a Title VII disparate treatment discrimination claim that there is a "strong basis in evidence" to believe that the employer's failure to engage in the discriminatory action would lead to disparate-impact liability) is not applicable to a disparate impact discrimination claim.
The U.S. Court of Appeals for the Third Circuit held that plaintiffs, the National Association for the Advancement of Colored People (NAACP) and three African-American firefighter candidates, established through substantial statistical evidence that a residency requirement for firefighter candidates imposed by North Hudson Regional Fire & Rescue (North Hudson) had a disparate impact on African- American applicants in violation of Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. § 2000e, et seq. The Court further held that North Hudson had failed to establish a business necessity for the requirement by showing that it was related to the minimum qualifications for the position. Finally, the Court found that the Supreme Court's decision in Ricci v. DeStefano, 129 S. Ct. 2658 (2009), recognizing as a defense in disparate-treatment suits an employer's "strong basis in evidence" to believe that failing to engage in the challenged discriminatory action would lead to disparate-impact liability, was inapplicable to disparate treatment claims.

Residency Requirement Allegedly Had Disparate Impact on African American Candidates

North Hudson was a consolidated municipal fire department comprised of five New Jersey municipalities (Member Municipalities). Pursuant to the New Jersey Civil Service Act, N.J.S.A. 11A:1-1, et seq., applicants for firefighter positions with North Hudson were required to pass an examination administered by the New Jersey Department of Personnel (DOP). The DOP then created ranked eligibility lists on the basis of test scores, excluding non-residents of the Member Municipalities. North Hudson also required that candidates be residents at the time of hire. Once hired, however, residency was no longer required. Plaintiffs commenced a class action against North Hudson alleging that its residency requirement caused a disparate impact on African-American applicants in violation of Title VII. The district court certified the class and preliminarily enjoined North Hudson from hiring firefighters from its then-current eligibility list (Residents Only List). NAACP v. North Hudson Regional Fire & Rescue, 255 F.R.D. 374 (D.N.J. 2009), discussed in New Jersey District Court Certifies Class and Issues Injunction in Firefighter Race Discrimination Case, Bloomberg Law Reports - Labor & Employment, Vol. 3, No. 9 (Mar. 2, 2009). Subsequently, the district court permitted six Hispanic firefighters eligible for hiring based on the Residents Only List to intervene, granted plaintiffs' motion for summary judgment, and permanently enjoined North Hudson's use of its Residents-Only List. NAACP v. North Hudson Regional Fire & Rescue, 742 F. Supp. 2d 501 (D.N.J. 2010).

Prima Facie Case of Disparate Impact

The Third Circuit explained that substantial statistical disparities "between the racial composition of [the at-issue jobs] and the racial composition of the qualified . . . population in the relevant labor market" alone can raise an inference of causation. Wards Cove Packing Co., Inc. v. Atonio, 490 U.S. 642, 650 (1989). In this regard, the Court found that, in more than a decade since North Hudson's inception, it hired only two African-American firefighters (0.62 percent of its firefighters), despite an African-American population of 3.4 percent in the Member Municipalities. The Court opined that a minority workforce representation that low suggested discrimination. Further, the Court concluded that this suggestion was supported by the expert reports submitted by both sides. Based primarily on commuting times and the fact that state-regulated workers tend to search for jobs statewide, plaintiff's expert identified the relevant labor market area as either the neighboring three counties or the entire state. Further, the expert testified that the most analogous occupations were those in the "full-time protective service" category, which included firefighters and police. The district court accepted this definition because it was "based in sound reasoning" and because North Hudson did not suggest an alternative definition. The Third Circuit agreed. Based on the relevant labor market, plaintiffs' expert concluded that North Hudson could reasonably have been expected to employee 65-120 African-American firefighters, but in fact it employed only two. Given the statistically significant disparity in these numbers, the Court held that plaintiffs had established that the disparity was caused by discrimination. The Court further found that, far from rebutting plaintiffs' statistical evidence, North Hudson's expert's report also showed a statistical finding of disparate impact. North Hudson objected to the expert's reliance on protective service employees because it included several non-analogous positions, such as crossing guards and parking enforcement workers. In the Court's view, however, this class of positions fairly, and as nearly as possible, approximated the pool of qualified African-Americans because many of these positions, like firefighter positions, required emergency medical training, physical fitness, calmness under pressure, and strategic decision-making in emergencies. According to the Court, "the law does not demand a perfect analog."

North Hartford Failed to Establish Business Necessity Defense

The Court next considered whether North Hartford had rebutted plaintiffs' prima facie case by establishing a business necessity for the residency requirement. North Hudson contended that residency was essential because it: (1) increased the likelihood that its firefighters would be able to respond to emergencies more quickly; (2) comported with the terms of a prior settlement; (3) increased the number of Spanish-speaking firefighters in a department that served a 69 percent Hispanic population; and (4) fostered community pride. The Court, however, found that the claim that residency would improve performance was belied by the fact that North Hudson's firefighters were allowed to live elsewhere after they were hired. In addition, the Court noted, the prior settlement that North Hudson relied on dealt with promotional and recruitment procedures, not residency requirements. As for employing a certain number of Spanish-speaking firefighters, the Court found that there were alternative non-discriminatory ways to ensure the hiring of Spanish-speaking firefighters, such as seeking out bilingual candidates. Finally, the Court concluded that "community pride" is not a sufficient justification for a discriminatory hiring practice. In sum, the Court held that the district court properly concluded that North Hudson's business-necessity arguments failed.

Ricci Offered No Safe Harbor

North Hudson also contended that the Supreme Court's decision in Ricci offered it safe harbor. Ricci established a defense for defendants in disparate-treatment suits (which require intentional discrimination) who can show a "strong basis in evidence" to believe that failing to engage in the discriminatory action being challenged would lead to disparate-impact liability. North Hudson sought to establish a defense in the reverse situation, where an employer is charged with disparate-impact discrimination but fears disparate-treatment liability if it ceases the employment practice that is causing the disparate impact. Specifically, North Hudson asserted that removing its residency requirement to eliminate the disparate impact on African-Americans would subject it to suit by Hispanics alleging disparate treatment. The Court found that removing the residency requirement would adversely affect the Hispanic intervenors because they would lose their high rankings on North Hudson's hiring list. Nevertheless, the Court found that the facts and claims before it were dissimilar to those in Ricci. In that case, the municipality had already administered the purportedly illegal exam (the basis for the disparate-impact claim) and attempted to remedy the exam results by denying white firefighters promotions (the basis for the disparate-treatment claim). Thus, the municipality had to choose between irreconcilable alleged errors before it secured judicial guidance regarding the merits of the competing discrimination claims. On the other hand, North Hudson's only action was the use of its Residents-Only List, which caused a disparate impact in violation of Title VII. Further, the Court stated, North Hudson had taken no steps to eliminate the residency requirement or otherwise adjust its policies to reduce the adverse effect. Thus, the Court concluded that North Hudson faced a classic disparate-impact claim and agreed with the Second Circuit that Ricci did not apply to such claims. See Briscoe v. New Haven, 654 F.3d 200 (2d Cir. 2011), discussed in Second Circuit Holds "Strong Basis in Evidence" Defense to Disparate Treatment Claims from Supreme Court's Ricci Decision Inapplicable to Disparate Impact Claims, Bloomberg Law Reports - Labor & Employment, Vol. 5, No. 36 (Aug. 29, 2011). Moreover, the Court found no basis to believe that North Hudson would be liable to the Hispanic intervenors or other North Hudson resident applicants under a disparate-treatment theory, given that the Court, not North Hudson, would be responsible for eliminating the residency requirement and a government employer's compliance with a judicial mandate does not constitute an official policy or employment practice of the employer. In addition, the Court pointed out, North Hudson would have a "legitimate, nondiscriminatory reason" for hiring more broadly, namely, the superior merit of higher-ranked non-resident applicants. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973). Thus, even if Ricci applied to disparate impact claims, North Hudson's mere fear of litigation was insufficient to prevail on the defense.

Interpretations of Ricci

As the opinion noted, after the Supreme Court found in favor of the white firefighters on their disparate treatment claim in Ricci, an African-American candidate commenced a disparate impact action arising from the same examination. Although the district court dismissed the complaint based on Ricci, the Second Circuit reversed, finding that the Supreme Court's holding did not apply to disparate impact claims. See Briscoe, 654 F.3d 200. Unlike the Third Circuit's reasoning, however, the Second Circuit emphasized that the dicta in Ricci, stating that "in light of [its] holding" the employer in that case clearly would not be liable in a subsequent disparate impact lawsuit, was contrary to the Supreme Court's actual holding and could not have been intended to change the well-established statutory standards applicable to disparate impact claims. DisclaimerThis document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

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