Court reinstates racial discrimination suit on "exceptional" circumstances

The Court of Appeals in this case parses out Federal Rule 60 in the context of a racial discrimination claim. Not the most exciting issue, but an important one for the plaintiffs and their lawyers. And an important one if you litigate in federal court and need to amend or alter a judgment after the case is dismissed. In this case, the plaintiffs tried to resurrect their disparate impact claim but the district court said this effort was untimely because it fell outside the one-year statute of limitations under Rule 60(b)(1). But the Court of Appeals says the one-year rule does not apply.  The case returns to the district court docket.

The case is Mandala v. NTT Data, Inc., issued on December 8. Plaintiffs allege that the defendant's hiring practices -- they would not hire people with felony convictions -- had a disparate impact on Black applicants. The district court originally dismissed the case on the basis that general statistics in the complaint did not necessarily show a "statistical disparity in the numbers of African-Americans arrested and convicted in proportion to their representative numbers in the pool of applicants for [Defendant's] positions." The Second Circuit affirmed that dismissal in a split decision that led to an en banc petition that the Court of Appeals denied in another split vote. So this is a hotly contested issue.

After the en banc hearing was denied, plaintiffs moved the district court to vacate the judgment dismissing the complaint so they could file an amended complaint. Too late, said the district court, because Rule 60(b)(1) only gives you one year to do this. Under that rule, you can alter the judgment based on a mistake, inadvertence or neglect. The Court of Appeals says that plaintiffs' belief that their complaint satisfied Rule 60(b)(1) was well-founded, even if "mistaken," though it was not their fault, since plaintiffs are not really required to present their full evidence, including granular statistics, in their complaints. What it all means is this is not really a Rule 60(b)(1) case because plaintiffs did not "fumble." Rather, they did not anticipate the Court of Appeals would reject the initial pleading on esoteric grounds.

That brings us to Rule 60(b)(6), which also allows you to vacate the judgment under a "catch-all" provision that does not carry a one-year statute of limitations. You can alter the judgment on "such terms as are just" so long as you make the motion "within a reasonable time." This case falls into that category, not Rule 60(b)(1). Since plaintiffs seek to file a first amended complaint, "it is an abuse of discretion to deny post-judgment relief without any justifying reason, such as undue delay, bad faith or dilatory motive[.]" Plaintiffs win under Rule 60(b)(6). The majority (Jacobs and Kearse [Judge Sullivan dissents]) write:

this is one of the exceptional cases necessitating relief from judgment: Plaintiffs have yet to be afforded a single opportunity to amend their pleading; the original dismissal of the Complaint was premised on grounds subject to reasonable, actual, and vigorous debate; Plaintiffs diligently prosecuted their case at all times; and Plaintiffs’ proposed amendments address the sole pleading deficiency identified by the district court.  On these facts, the court’s contrary holding was not a proper exercise of discretion.