2ND CIRCUIT COURT BECOMES FIRST APPEALS COURT TO INVOKE RICCI STANDARD

by Art Gutman Ph.D., Professor, Florida Institute of Technology

I guess that’s appropriate since the 2nd Circuit was the “victim” of the Supreme Court’s ruling in Ricci v. Destefano (2009). Recall that in Ricci, the 2nd Circuit endorsed the City of New Haven’s refusal to certify a test because the city had “good faith” belief it would lose an adverse impact claim by minority firefighters. The Supreme Court then applied the “strong basis in evidence” standard and reversed. The present case (United States v. New York City Bd. of Ed. [2011 U.S. App. LEXIS 9455], decided on May 5, 2011), addressed a consent decree between the DOJ and the NYC Board of Education (or simply the Board). The issue is whether and what parts of the consent degree satisfy the Ricci standard. Bare with me … the facts of this case are complex. The most recent district court rulings were rendered while Ricci was in the Supreme Court, and the 2nd Circuit remanded to the district court to review its most recent rulings in light of the Ricci ruling.

The case began in 1996 when the DOJ sued the Board on behalf of custodians and custodian engineers claiming that (1) civil service exams adversely impacted blacks and Hispanics and (2) illegal recruitment practices (e.g., word-of-mouth recruitment) adversely impacted blacks, Hispanics, Asians, and Women. The DOJ and the Board agreed to a court-approved settlement in 1999 on behalf of 63 black, Hispanic, Asian, or female individuals. Incumbent employees were unaffected by most of the settlement provisions, but a group of white incumbents (the Brennan group) objected to four paragraphs of the settlement awarding permanent appointments and retroactive competitive seniority to the 63 individuals. The Brennan group attempted to intervene, but were not allowed to do so.

In 2001, the 2nd Circuit ruled that the district court erred by not allowing the Brennan group to intervene. Reverse discrimination charges were then filed by the Brennan group under Title VII and the 14th Amendment (the Equal Protection Clause), and these claims were consolidated with the original 1996 lawsuit. In the interim, the DOJ decided it would defend the original settlement only in part, creating, in effect, two additional groups. One group consisted of 10 Offerees who had taken and failed an exam (the Arroyo group) and 22 Offerees who had not taken any exams (the Caldero group). After several years of litigation and extensive discovery, the district court issued the following four-part judgment:

  1. retroactive seniority of the test-failer Offerees did not violate Title VII or the Equal Protection Clause, except insofar as layoff seniority was granted to individuals who were not actual victims of discrimination;

  2. some of the test-failers were actual victims and others were not;

  3. the female non-test-failer Offerees' retroactive seniority did not violate Title VII or the Equal Protection Clause, except that their layoff seniority violated both Title VII and the Equal Protection Clause since-- because there was no prima facie case of recruiting discrimination with respect to them--none of them were actual victims of such discrimination; and

  4. the minority male non-test-failers' retroactive seniority did not violate Title VII, but did violate the Equal Protection Clause.


The district court then entered declaratory judgment and schedules specifying the extent to which retroactive seniority was lawful on an individual basis. The court also certified the Brennan group, but rejected their damage claims. Additionally, the court declined to enter any portion of the disputed paragraphs in the original settlement between the DOJ and Board into the consent decree.

That brings us up to date … now on to the 2011 2nd Circuit ruling … which is also complex.

The 2nd Circuit viewed this case a “straightforward application of the first two steps of McDonnell Douglas.” I disagree. In the typical McDonnell-Douglas hiring case, the first step is simple … the plaintiff establishes he/she is a protected class member, is qualified for the job, was passed over, and the search continued. The second step is also simple … the defendant must answer with a simple explanation (without proof) of a legitimate nondiscriminatory reason for the challenged selection decision. The 2nd Circuit ruling in this case reads more like a direct evidence case requiring a more affirmative defense by the employer. More specifically, the court ruled that "the 1999 settlement agreement was explicitly race- and sex-based, thereby giving rise to the required inference of discrimination” (thus satisfying step 1). The court then examined two possible defenses for step 2, the AAP defense and the Ricci defense.

The AAP defense (for the Caldero and Arroyo groups) is that the settlement agreement was a valid affirmative action plan (AAP). The district court upheld this defense, but the 2nd Circuit reversed, ruling:

The district court agreed in part … [that] the retroactive seniority awards constituted permissible affirmative action. We, instead, hold that the City Defendants' implementation of the settlement agreement was not affirmative action at all, let alone permissible affirmative action; and that it was, therefore, error for the district court to apply such an "affirmative action" defense to the Brennan Plaintiffs' claims.


The reasoning behind this is somewhat obtuse in my opinion involving interpretations of the Supreme Court’s prior rulings in United Steelworkers v. Weber (1979) and Johnson v. Transportation (1987). For purposes of exposition, I will briefly summarize the Weber/Johnson connection below and write a separate follow-up alert to explain why I think invocation of these rulings is confusing.

Briefly, the 2nd Circuit ruled that the Weber and Johnson rulings were “pre-Ricci” law and do not apply to all race or gender-based employer actions. In the words of the 2nd Circuit:

We hold that, contrary to the pre-Ricci law in this Circuit, Johnson and Weber do not apply to all race- or gender-conscious employer actions. In light of Ricci, the "manifest imbalance" and "no unnecessary trammeling" analysis of those cases extends, at most, to circumstances in which an employer has undertaken a race- or gender- conscious affirmative action plan designed to benefit all members of a racial or gender class in a forward-looking manner only. 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, 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.


The 2nd Circuit ruled further:

In light of Ricci, we agree with the Brennan Plaintiffs that the district court's holding skipped a threshold step in the analysis. That is, to determine whether a voluntary, private, race- and sex-conscious employer action is eligible for the Johnson/Weber defense, courts must now ask whether the race- and sex-conscious action constitutes an affirmative action plan at all. In this case, we answer that question in the negative.


In a nutshell, what that means is that the AAP defense applies only to prospective (or forward looking) relief for all members of a class, whereas the current case involves “make-whole” (retrospective) relief for individual victims, which requires the newly minted “strong basis in evidence” defense from Ricci. Bolstering its argument, the 2nd Circuit cited testimony from Katherine Baldwin, a DOJ lawyer, that the DOJ policy is to seek relief for “identified victims of discrimination”, and that it would not have approved the settlement for non-victims.

This was a majority ruling in which the 3rd judge (Raggi) concurred in the judgment, but wrote separately that:

I agree with the majority [the other two judges] that Ricci is not limited, as the Caldero and Arroyo Intervenors urge, to its particular facts. I also agree that the challenged settlement cannot be characterized as an affirmative action plan, so that we need not consider these intervenors' argument that Ricci does not apply to such plans. With due respect, however, I cannot join in the majority opinion because I think its extended discussion of Title VII jurisprudence generally, and the scope of the Ricci rule in particular, is not required to our decision to remand and yields an abundance of dicta that could confuse future consideration of judgments actually based on Ricci. "


In the main, Judge Raggi accused the two majority judges of invoking the McDonnell Douglas defense, which was never even mentioned in the Supreme Court’s ruling in Ricci. Raggi noted “we should let Ricci speak for itself on remand without added gloss from this panel.” The added “gloss”, I think, is confusion relating to interpretations of both the Ricci and the McDonnell Douglas defense.
As an additional point, I would note that this case began with a settlement that was forced on the Board by the DOJ under the threat of a lawsuit. This leaves me wondering if the same ruling would apply to an OFFCP judgment against a contractor forcing relief to minorities or females that non-minorities might challenge.

Stay tuned …. More to follow.

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