Ricci returns to the Second Circuit

After the district court in a reverse-discrimination suit approved a settlement that provided retroactive seniority benefits to 63 black, hispanic and female New York City Department of Education employees, the Supreme Court issued its well-known ruling in Ricci v. DeStefano, which made it much more difficult for municipalities to resolve disparate impact claims without a "strong basis in evidence" to believe it will be subject to disparate impact liability without this remedy. Ricci originated in the Second Circuit, and now it comes back as binding precedent in another case.

The case is U.S. v. New York City Department of Education, decided on May 5. The decision is over 100 pages long, owing to the new and complex standard outlined by the Supreme Court in Ricci (the New Haven firefighters case) and the equally complex puzzle of resolving disparate impact claims where the remedy impacts the employment rights of others not before the court.

In Ricci, the Supreme Court said that, “under Title VII, before an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional disparate impact, the employer must have a strong basis in evidence to believe it will be subject to disparate-impact liability if it fails to take the race-conscious, discriminatory action.” In the case before the Second Circuit, the Court throws out the settlement.

The City was originally sued for allegedly using civil service exams that allegedly led to a disparate impact against blacks and Hispanics and also used discriminatory recruiting practices. The case settled in 1999, over the objections of white employees who "objected to four paragraphs that provided permanent appointments and retroactive competitive seniority to 63 black, Hispanic, Asian, or female individuals." In 2001, the Second Circuit vacated the settlement because the white employees should have been allowed to intervene in the lawsuit. They then brought two reverse-discrimination lawsuits against the City. Among other rulings, the district court held that some of the retroactive seniority provided by the settlement agreement was lawful.

The case now returns to the district court. The extensive and painstaking litigation that produced the settlement must be reviewed anew under Ricci. Judge Calabresi writes:

Where, as here, the employer instead provides individualized race- or gender-conscious benefits as a remedy for previous disparate impact, the employer must satisfy the requirements of Ricci, not Johnson and Weber [two prior Supreme Court affirmative action cases], in order to avoid disparate-treatment liability. Under Ricci, the employer must show a strong basis in evidence that, at the time the race- or gender-conscious action was taken, the employer was faced with disparate-impact liability and that the race- or gender-conscious action was necessary to avoid or remedy that liability.

That's life under our appellate system. The trial court works his fingers to the bone applying Supreme Court precedent before new cases come down that change the analysis. The Second Circuit says this is not really an affirmative action case, which is why Johnson and Weber do not apply. This is a Ricci case, where the City tries to avoid a disparate impact judgment and, in so doing, might have handed a disparate treatment case to someone else burdened by the remedy under the settlement. The district court has to look at the case again under Ricci.