What did the Supreme Court do in the Ricci case?

The most controversial Supreme Court case of the year was handed down on June 29, re-working the rules governing employment discrimination cases. The case involving firefighter test scores in New Haven took on added significance because Ricci v. DeStefano arose from the Second Circuit, where future Supreme Court Justice Sonia Sotomayor was on the three-judge panel that ruled in favor of the City.

The case has touched a nerve. Those favoring the white firefighters argue that the City practiced reverse discrimination in rejecting promotional examinations which disparately impacted minority candidates. But the case actually became the perfect storm in which two competing legal principles collided.

Title VII of the Civil Rights Act of 1964 is the relevant law. The Supreme Court has long recognized two ways to win an employment discrimination case. The most common method is "disparate treatment," or McDonnell-Douglas cases, where the employer violates the statute in making employment decisions because of race. The other method (invoked less frequently) is "disparate impact," where an employment test or other selection criteria has a disparate impact on black candidates. Employers lose disparate impact cases unless the selection criteria is "job related for the position in question and consistent with business necessity."

In New Haven, white candidates had substantially outperformed black test-takers on the promotional exams. The City was faced with a dilemma. If the City did not certify the test results, the successful test-takers could sue for disparate treatment; after all, they could argue, they were eligible for promotions but the tests were thrown out for racial reasons, i.e., few minorities passed. On the other hand, the City was staring disparate impact liability in the face if it certified the test but could not show the tests were job-related and consistent with business necessity. This was a problem. After its Civil Service Board heard evidence on the test's validity from the consultant who created the test and experts who raised questions about the examination's fairness, the City decided against certifying the examinations in recognition that Title VII prohibits disparate impact.

But what about disparate treatment? The firefighters who passed the test claimed the test was essentially thrown out because of race. Technically, they were right. But disparate impact liability necessarily takes race into account in that the employer has to think twice when a substantial portion of the minority test-takers fail the test and the City may not be able to prove the test was valid or job-related. So we are going around in circles here.

After the Second Circuit affirmed the trial court's ruling in favor of the City, the Supreme Court took the case. This was before President Obama nominated Judge Sotomayor for the Supreme Court, which reverses the Court of Appeals and sets down new rules for this unique problem.

Justice Kennedy recognizes that it's a tough call. And he's not about to disparage the future Justice Sotomayor. Framing the issue, the Court asks "whether the purpose to avoid disparate-impact liability excuses what otherwise would be prohibited disparate-treatment discrimination." Neither side offers a satisfactory solution. The firefighters, for example, make the rigid argument that the employer cannot make race-based employment decisions even for the purposes of avoiding clear disparate impact liability. That approach undercuts Title VII's recognition that the law prohibits facially neutral selection rules which have a prohibited disparate impact. But the City does not offer a satisfactory solution, either. It argues that the employer's good faith belief that it was trying to avoid disparate impact liability is enough to throw out the tests. The problem with this approach is that, in codifying disparate impact liability in 1991, Congress did not outline any good-faith justifications for disparate treatment in this context.

The Supreme Court therefore devises a new rule: the employer may discard a selection criteria (such as a written examination) if it "has a strong basis in evidence that the test was deficient and that discarding the results is necessary to avoid violating the disparate-impact provision." The Court borrows this standard from affirmative action cases decided under the Constitution's Equal Protection Clause. My guess is that no one offered up this legal standard to the Supreme Court for the purposes of resolving this case. But the Supreme Court can think for itself.

Under the standard, the Supreme Court finds that New Haven cannot show that it had a strong basis in evidence that that the test was deficient and that it was justified in avoiding disparate impact liability. By way of example, while the City was faced with a prima facie case of disparate impact liability in light of the large numbers of minorities who failed the test, it did not do enough to ensure that the test was truly deficient. Among other things, the Court says, "the City ... turned a blind eye to evidence that supported the exam's validity" in that it did not request the validation report prepared by the consultant who created the test.

This was a 5-4 case, with the usual line-up on each side. Supreme Court watchers know what I'm talking about. Kennedy, Roberts, Alito, Thomas and Scalia voted with the majority. The four dissenters signed on to Justice Ginsburg's dissent. She is the only current Justice who represented plaintiffs in employment discrimination cases. She proposes a different legal standard: "I would ... hold that an employer who jettisons a selection device when its disproportionate racial impact becomes apparent does not violate Title VII's disparate-treatment bar automatically or at all, subject to this key condition: The employer must have good cause to believe the device would not withstand examination for business necessity." So, rather than apply the "strong basis in evidence" standard, the dissenters would apply a "good faith" defense. Obviously a more favorable legal standard for employers who want to diversify the workplace with qualified candidates.

As the dissent sees the case, this test had many problems. "Relying heavily on written tests to select fire officers is a questionable practice, to say the least." Leadership skills which include good interpersonal skills, the ability to make decisions under tremendous pressure and other skills are are more appropriately tested in other ways. (People say this about the written bar exam's ability to test good lawyering skills, by the way). Justice Ginsburg further suggests "it is unsurprising that most municipal employers do not evaluate their fire-officer candidates as New Haven does," and "nearly two-thirds of surveyed municipalities used assessment centers ('simulations of the real world of work') as part of their promotion processes." Moreover, the dissenters said, nearby Bridgeport "saw less skewed results after switching to a selection process that placed primary weight on an oral exam."

Politicos who will use the Ricci case to bash Judge Sotomayor should look elsewhere. The Supreme Court does this all the time: resolving a case by adopting a legal standard that few, if any, courts had previously employed. The Court did this in 1998 when it ironed out competing legal standards among the lower federal courts governing employer liability in sexual harassment cases. That the Court overruled a Second Circuit ruling that Judge Sotomayor had joined is no basis to question her legal acumen. As her colleagues on the Second Circuit had suggested when other judges on the Court of Appeals weighed in on the issue afterwards, the panel that ruled against the firefighters was applying Circuit precedent, without the benefit of any Supreme Court authority. As one Second Circuit panel cannot overrule Second Circuit precedent on the same issue, the panel that ruled against the firefighters arguably had no choice. At a minimum, without any definitive guidance from the Supreme Court on how to resolve this sticky issue, the fact that the Court ultimately rejected Judge Sotomayor's reasoning is a fact of life familiar to anyone who understands federal court practice.