We don't see a lot of disparate impact cases these days. The Supreme Court recognized the disparate impact theory in racial and other discrimination cases under Title VII back in 1971, holding that facially-neutral employment practices can violate Title VII if they produce a disparate impact against blacks, women, etc., and the employer cannot articulate a good reason for the disparate impact. In this case, the Court of Appeals decides for the first time how disparate impact cases should be pled at the outset of the case.
The case is Mandala v. NTT Data, Inc., issued on September 21. Plaintiffs are black men whose offers of employment were revoked because the employer learned they had criminal records. Plaintiffs argue this violates Title VII because national statistics shows that African Americans have higher arrest and incarceration rates than whites. The district court dismissed the complaint (prior to discovery) and the Court of Appeals agrees the plaintiffs have not sufficiently pled their case.
Along the way, the Court of Appeals (Sullivan and Nardini) sets for the legal standard guiding disparate impact cases under the Iqbal pleading standard that the Supreme Court devised in 2009, which requires that plaintiffs assert a "plausible" claim for relief, putting to rest the "notice pleading" that had been in effect since 1957. While the Second Circuit has held that pleading requirements for disparate treatment cases under Iqbal only require the plaintiff to set forth "enough facts to provide at least minimal support for the proposition that the employer was motivated by discriminatory intent" (Vega v. Hempstead School Dist., 801 F.3d 72, 86-87 (2d Cir. 2015))," that is not the standard for disparate impact claims. The requirement for disparate impact claims is the plaintiff "must at least set forth enough factual allegations to plausible support each of the basic elements of a disparate impact claim." The Circuit cites Adams v. City of Indianapolis, 742 F.3d 720 (7th Cir. 2014), for this proposition, which is now Second Circuit law.
What this means for this case is that plaintiffs have not properly pled a disparate impact case. While national statistics may show that African Americans have a disproportionate incarceration rate, "the statistical analysis must, at the very least, focus on the disparity between appropriate comparator groups." In other words, "the statistical analysis must reveal disparities between populations that are relevant to the claim the plaintiff seeks to prove." The complaint fails because "Plaintiffs provide no allegations to demonstrate that national arrest or incarceration statistics are in any way representative of the pool of potential applicants qualified for a position at NTT. All Plaintiffs offer is the conclusory and unsupported assertion that these figures are so stark that they must hold true for this (or any) segment of the population. But that is not a plausible -- or, for that matter, logical -- inference."
Judge Chin dissents. I try not to get political here, but this case shows the ideological divide that is now taking shape at the Second Circuit. The majority judges in this case are Trump appointees. Judge Chin was appointed by Obama. In addition to objecting to the heightened pleading standard that the majority adopted for disparate impact claims, he writes:
As the statistics show, there are significant racial disparities in arrest, conviction, and incarceration rates in this country. As scholars and the EEOC have recognized, criminal history screens can have a substantial adverse disparate impact based on race, and, as discussed above, a number of courts have denied motions to dismiss disparate impact claims using general population statistics to challenge such policies, concluding that plaintiffs had plausibly stated a disparate impact claim under Title VII. Some states, including New York, recognize the harm that blanket criminal history screens can cause, forbidding companies from denying employment solely because a job applicant has a criminal record, and instead requiring employers to engage in an individualized consideration. If the facts alleged in the complaint are true, then Mandala and Barnett are vivid examples of the adverse impact an absolute convictions bar can have on individuals generally -- and African Americans in particular -- seeking employment.
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