5TH CIRCUIT REMANDS RETALIATION CLAIM BASED ON THOMPSON V. NORTH AMERICAN STAINLESS

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

The case is Zamora v. Houston [2011 U.S. App. LEXIS 9827], decided on May 12, 2011. The facts are that a Houston Police Department (HPD) lieutenant (Manuel Zamora) filed original race discrimination and retaliation charges against the HPD. Subsequently, his son (Christopher Zamora), an entry-level HPD officer, filed a retaliation claim on grounds that he was forced by superiors to transfer out of a prestigious Crime Reduction Unit to a less desirable patrol officer position after his father sued the HPD. The district court granted summary judgment to the HPD on all charges and the 5th Circuit upheld summary judgment with respect to the father. However, the 5th Circuit remanded the son’s claim based on Thompson v. North American Stainless, in which the Supreme Court held that an employee could bring a claim of retaliation based on protected activity by co-workers who is are close family members.

Generally, there are three prongs in a retaliation claim: (1) engaging in a protected activity and (2) experiencing a subsequent adverse action that is (3) causally connected to having engaged in the protected activity. Prior to the Thompson case, the 5th Circuit precedent was to disallow claims on prong 1 that were not based on the individual’s own engagement in protected activity. Therefore, based on the Thompson ruling, the 5th Circuit ruled that Christopher Zamora satisfied prong 1, and that the district court must decide on remand whether his transfer was an adverse action, and whether it was causally connected to his father’s claims against the HPD.

DISTRICT COURT OF WESTERN PENNSYLVANIA CALLS EEOC SUBPOENA A "FISHING EXPEDITION"

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

The case is EEOC v. University of Pittsburgh Medical Center (UPMC), decided on May 24, 2011 [2011 U.S. Dist. LEXIS 55311]. The facts of the case are as follows. The EEOC sued UPMC on behalf of Carol Gailey, a terminated Certified Nursing Assistant (CNA). In November 2007, Gailey, who had numerous health problems (heart disease, diabetes, cancer, angina, shortness of breath, and severe depression), notified UPMC that her health problems would force her to miss an unspecified period of work. Gailey, who was not at the time eligible for FMLA, was provided with a Personal Leave of Absence (PLOA) for several subsequent periods of time. She returned on February 5, 2008 and worked for 30 hours per week on temporary non-CNA assignments. She continued to receive short-term disability until they expired on May 4, 2008. She applied for long-term disability, which was declined based on her ability to do the part-time work. Gailey then filed a charge with the EEOC on June 17, 2009 claiming she was discharged because she did not return to work in timely fashion from short-term disability. She also alleged she was given no termination warning for failure to report.

Here’s where the action begins. In April 2010, the EEOC sent UPMC a request for information that included identification of all employees in the Pittsburgh region who were terminated in accordance with the PLOA and/or disabilities policies. After UPMC refused, the EEOC issued a subpoena. UPMC moved for revocation or modification of the subpoena, which the EEOC denied. The EEOC then sued for court enforcement of the subpoena.

In his ruling, District Court Judge Terrence V. McVerry, citing from the 3rd Circuit ruling in EEOC v. Kronos (2010), stated:

The EEOC is empowered to investigate charges of discrimination to determine whether there is reasonable cause to believe that an employer has engaged in an unlawful employment practice. …. In connection with its investigation, the EEOC may issue administrative subpoenas. However, the EEOC's statutory investigative authority is not plenary; the EEOC is entitled to access only evidence "relevant to the charge under investigation."

Judge McVerry further noted that Kronos Court established a five-part test. Thus, “to obtain enforcement of an administrative subpoena, and agency must demonstrate” the following:

1) its investigation has a legitimate purpose, 2) the inquiry is relevant to that purpose, 3) the agency does not already possess the information requested, 4) the agency has complied with relevant administrative requirements, and 5) the demand is not " 'unreasonably broad or burdensome.'"

After evaluating the subpoena, which included information beyond the time that Gailey was terminated, Judge McVerry ruled:

In sum, the Court concludes that the Subpoena at issue constitutes a "fishing expedition" to discover the existence of other potential claimants rather than a reasonable effort to develop information that is relevant to Gailey's charge of discrimination.

And so it goes … a bad month for the EEOC. You’ll recall that in Kronos, the 3rd Circuit refused to let the EEOC “fish” for evidence of racial discrimination in another ADA case.

EEOC ORDERED TO SPLIT SUBPOENA COMPLIANCE COSTS WITH THIRD-PARTY TESTER

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

On May 3, 2011 Judge Arthur J. Schwab of the District Court of Western Pennsylvania ordered the EEOC and Kronos Inc. to split the costs (estimated at $75,000) of complying with a subpoena from the EEOC to furnish information relating to an ADA claim by an applicant (Vicky Sandy) who was rejected for hire as a cashier/checker at a Kroger Store in Clarksburg, West Virginia. The order(s) may be viewed at:

Kronos - Order to Split Costs
Kronos - Motion for Reconsideration Denied

The implications of Judge Schwab’s order(s) pale in comparison to the implications of what the EEOC sought to obtain in this case. The case begin in May 2007 when Ms. Sandy applied for the cashier/checking job and was rejected after oral administration of a personality assessment instrument created by Kronos. The EEOC sued Kroger on July 3, 2007 claiming that Sandy was rejected because she is hearing and speech impaired. More importantly, as part of its investigation, the EEOC sought the following from Kronos to produce:

Any and all documents and data constituting or related to validation studies or validation evidence pertaining to Unicru [Kronos' predecessor] and/or Kronos assessment tests purchased by The Kroger Company including but not limited to such studies or evidence as they relate to the use of the tests as personnel selection or screening instruments.

The user's manual and instructions for the use of the Assessment Tests used by The Kroger Company

Any and all documents and data, including but not limited to correspondence, notes, and data files, relating to The Kroger Company, its use of the Assessment Tests; results, ratings, or scores of individual test-takers; and any validation efforts made thereto.

Any and all documents discussing, analyzing or measuring potential adverse impact on individuals with disabilities and/or an individual's race.

Any and all documents related to any and all job analyses created or drafted by any person or entity relating to any and all positions at The Kroger Company

A catalogue which includes each and every assessment offered by Unicru/Kronos. Additionally provide descriptions of each assessment.

In his ruling on June 1, 2009 [2009 U.S. Dist. LEXIS 45449], Judge Schwab called the Subpoena “breathtaking”, and sought to limit its scope. In the words of the judge:

The scope of the Subpoena is breathtaking - - potentially including most of Kronos' business documents, covering its entire client base, 1 with no time, geographic, or job description limitations. To the extent that the EEOC Subpoena seeks materials from a third-party that are unrelated to the Sandy discriminatory treatment investigation, this Court deems the request to be far beyond, and not relevant to, the legitimate purpose of that investigation and that charge.

Judge Schwab then limited the subpoena to production of documents relating to the Kroger Company and specific jobs relating to the positions of bagger, stocker, and/or cashier/checker.

Any user's manual and instructions for the use of the Assessment Tests provided to The Kroger Company

Any and all documents and data, including but not limited to correspondence, notes, and data files, relating to The Kroger Company, including use of the Assessment Tests; results, ratings, or scores of individual test-takers at The Kroger Company; and any validation efforts performed specific for and only for The Kroger Company

Any and all documents discussing, analyzing or measuring potential adverse impact on individuals with disabilities relating specifically to and only to The Kroger Company

Any and all documents related to any and all job analyses created or drafted by Kronos relating to the bagger, stocker, and/or cashier/checker positions at The Kroger Company

Any catalogue provided to The Kroger Company

Any and all reference to race was eliminated and the discovery period was limited to January 1, 2006 through May 31, 2007. Judge Schwab also ordered the parties to enter into "any appropriate confidentiality order to protect any trade secret/confidential information of Kronos and the personal information of persons taking the Assessment Tests."

Then, on September 7, 2007, the 3rd Circuit [620 F.3d 287] ruled that Judge Schwab abused his discretion by: (1) limiting the scope of the subpoena to including only bagger, stocker, and/or cashier/checker positions (because the assessment instrument is used for all retail positions; (2) limiting the scope to only the state of West Virginia; (3) limiting the time frame for collecting relevant documents, and (4) limiting the scope to only Kroger stores. However, the 3rd Circuit preserved the right of Judge Schwab to eliminate information related to race discrimination.

On remand, Judge Schwab issued the following order in his May 3, 2011 ruling:

Kronos shall produce any and all documents and data constituting or related to validation studies or validation evidence pertaining to Unicru and/or Kronos assessment tests purchased by The Kroger Company, including but not limited to such studies or evidence as they relate to the use of the tests as personnel selection or screening instruments, even if created or performed for other customer(s), if such studies or evidence were relied upon in creating or implementing the tests for Kroger. The names/identity of any other customer(s) should be deleted/redacted. [Said document production is limited to information relating to disabilities, persons with disabilities, or adverse impact upon persons with disabilities.]

Judge Schwab also reinforced the provisions for confidentiality.

Collectively, these rulings have implications beyond the 50-50 monetary split between the EEOC and Kronos. It serves notice of potential vulnerability for companies and/or consultants that develop tests as well as companies that use these tests.

7TH CIRCUIT RULES IN LEWIS V. CHICAGO

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

As reported in a May 2010 alert, the Supreme Court unanimously opined that the plaintiffs in Lewis v. Chicago may proceed to trial with their adverse impact challenge to written exams for entry-level jobs in the Chicago Fire Department. To refresh your memory, in July 1995 a test was administered to 26,000 applicants, and in January 1996, the City of Chicago announced it would draw randomly from “top tier” (or “well qualified) applicants (scores of 89 out of 100 or greater). These applicants were labeled “well qualified”, and would be randomly selected to proceed to the next phase of selection process consisting of a physical abilities test, background check, medical examination, and drug test. Applicants scoring below 65 were labeled “unqualified” and were informed that they failed the test. However, applicants scoring between 65 and 88 were labeled “qualified” and were informed it was unlikely they would be selected, but that their scores would remain on file in the event the list of “well qualified” applicants was exhausted. The City selected its first group of applicants on May 16, 1996 and a second group on October 1, 1996. The process was then repeated nine more times over the next six years.

One of the “qualified” applicants sued on March 31, 1997. After a bench trial, the district court rejected the City’s business-necessity defense and awarded relief to 132 class members. Interestingly, the City raised only one question on appeal; whether a March 1997 discrimination charge was timely because it came more than 300 days after the applicants in the “qualified” pool learned they were unlikely to be hired. The 7th Circuit ruled that the charge was untimely, but this ruling was reversed in a unanimous Supreme Court opinion written by Justice Scalia. More specifically, Scalia ruled that in an adverse impact claim, the time starts anew every time the employer uses the test to make hiring decisions. As a result, each of the 10 hiring events after the first one was considered timely. Or in Justice Scalia’s words:

Under the City's reading, if an employer adopts an unlawful practice and notimely charge is brought, it can continue using the practice indefinitely, with impunity, despite ongoing disparate impact. Equitable tolling or estoppel may allow some affected employees or applicants to sue, but many others will be left out in the cold. Moreover, the City's reading may induce plaintiffs aware of the danger of delay to file charges upon the announcement of a hiring practice, before they have any basis for believing it will produce a disparate impact.

Interestingly, had the subsequent 10 hiring events used strict rank order selection, the district court would be forced to consider 10 separate analyses. However, since the selection in each hiring was random from within the “well qualified” group, only one analysis is required. Or in the words of the 7th Circuit:

If the City had hired in rank order, as many civil-service employers do, things would have been different. Suppose applicants who got 100 had been hired in May 1996, those who got 99 four months later, those with scores of 98 four months after that, and so on. Then it would have been essential for plaintiffs and the district court to evaluate each use of the list separately. For it is possible that some of these uses would not have produced a disparate impact—and, if any given band of scores had an adverse effect on minority applicants, it might have been easier for the employer to justify the practice. Perhaps it would have been "consistent with business necessity" to hire those who scored 100 ahead of those who scored 85, even if it was not necessary to hire those who scored 90 ahead of those who scored 88. But Chicago did not hire new firefighters in rank order. Everyone who scored 89 and up was treated alike; everyone who scored 65 to 88 was treated alike.

In effect, this means that the original ruling by the district court now stands, as the City conceded there was adverse impact and cutoff score was deemed unjustified by the district court. Or, in the words of the 7th Circuit, “the City's concession plus the district court's uncontested findings establish all that is required for the plaintiffs to prevail on the merits.”

So be it for the supposed advantage of selecting randomly within bands as opposed to strict rank ordering.

ADDENDUM TO 2ND CIRCUIT COURT RULING IN UNITED STATES V. NYC BD. OF ED.

I believe that the 2nd Circuit ruling in this case as relates to affirmative action is both confusing and, based on prior Supreme Court precedents, incorrect. Bare with me as I explain. Let’s begin by comparing the rulings in United Steelworkers v. Weber (1979) and Johnson v. Transportation (1987). Both were Title VII rulings, and both figured into the 2nd Circuit ruling relating to the Affirmative Action Plan (AAP) defense.

Brian Weber challenged a voluntary AAP by Kaiser Aluminum. Kaiser had required prior craft experience for skilled jobs, but the unions teaching these crafts historically excluded blacks. As a result, in Weber's plant, only 5 of 273 skilled workers (1.83%) were black, relative to 39% in the local labor force. To correct what was a fairly obvious pattern or practice violation, Kaiser entered into a collective bargaining agreement with the union to temporarily reserve 50% of all new training slots for black employees until the percentage of black craftworkers in a plant is commensurate with the percentage of blacks in the local labor force. Weber sued when slots were then awarded to black employees with less seniority than he had. In a 5-2 ruling upholding the Kaiser AAP, Justice Brennan, speaking for Blackmun, Marshall, Stewart, and White ruled:

The purposes of the plan mirror those of the statute [Title VII]. Both were designed to break down old patterns of racial segregation .... At the same time, the plan does not unnecessarily trammel the interest of white employees. The plan does not require the discharge of white workers ... Nor does the plan create an absolute bar to the advancement of white employees .... [finally] the plan is a temporary measure ... not intended to maintain racial balance, but simply to eliminate manifest racial imbalance

Incidentally, the Weber ruling has since served as the basis for Title VII reverse discrimination cases in a parallel fashion to the strict scrutiny test in 14th Amendment case. Thus, Prong 1 of the Title VII test (an egregious violation) parallels Prong 1 of the strict scrutiny test, which is a compelling government interest, and Prong 2 of the Title VII test (temporary non-trammeling solution) parallels Prong 2 of the strict scrutiny test, which is a solution narrowly tailored to the compelling interest.

In Johnson, a state agency had 238 skilled craft workers, all of whom were male. Additionally, females were underrepresented throughout the agency and were segregated into five of seven job categories. Therefore, an AAP was developed to achieve “a statistically measurable yearly improvement in hiring, training and promotion of minorities and women” in the suspect job categories. Subsequently, Diane Joyce and Paul Johnson were among seven finalists for promotion. Mr. Johnson was rated slightly higher than Ms. Joyce and was recommended by the three supervisors who provided the ratings. However, the agency director, with input from an affirmative action officer whom Joyce petitioned, ordered his subordinate to choose any of the seven finalists. Joyce was selected and Johnson filed a Title VII claim alleging that sex was the "determining factor in [Joyce's] selection." Justice Brennan, speaking for Blackmun, Marshall, Powell and Stevens, echoed Justice Powell's words from the Regents v. Bakke (1978), ruling:

The Agency's Plan thus set aside no specific number of positions for minorities and women, but authorized the consideration of ethnicity or sex as a factor when evaluating qualified candidates for jobs in which members of such groups were poorly represented.

Thus, as in Justice Powell’s ruling in Bakke, sex was considered an extra plus for Joyce, who otherwise, was deemed equally as qualified for promotion as Johnson.

Justice O'Connor concurred on grounds that the manifest statistical imbalance was sufficient for a prima facie Title VII claim. Accordingly:

[The agency] had a firm basis for adopting an affirmative action program. ... when compared to the percentage of women in the qualified work force, the statistical disparity would have been sufficient for a prima facie Title VII case .... [the agency's] affirmative action plan as implemented in this instance ... satisfies the requirements of Weber and Wygant.

Note the use of “firm basis” in O’Connor’s opinion … more on that later. For present purposes, it is important to note that Justice White, the critical fifth vote in Weber, disagreed with O'Connor's assessment, stating:

My understanding of Weber was, and is, the employer's plan did not violate Title VII because it was designed to remedy the intentional and systematic exclusion of blacks ... That is how I understood "traditionally segregated jobs" ... The Court now interprets it to mean nothing more than a manifest imbalance between one identifiable group and another in an employer's labor force.

In other words, White joined the majority in Weber only because he believed there was strong evidence of egregious violations by the union and there were identifiable victims of these violations. He did not believe that a “manifest imbalance” by itself, rose to the level of a pattern or practice of discrimination, which he felt was necessary for relief for identified victims of discrimination.

Now on to my real bone of contention --- the Ricci standard was not created in the Ricci case … rather … it was lifted from Supreme Court reverse discrimination rulings both before and after the Johnson case.

For example, in Wygant v. Jackson (1986), a 14th Amendment case, the Supreme Court ruled against a school board that attempted to defy an agreement with a teacher’s union so that it could layoff two white teachers with more seniority than two maintained black teachers. This was a 5-4 case in which Justice O’Connor was the deciding vote. Justice Powell, who wrote the opinion for the Court, stated the following:

Evidentiary support for the conclusion that remedial action is warranted becomes crucial when the remedial program is challenged in court by nonminority employees. In this case, for example, petitioners contended at trial that the remedial program … had the purpose and effect of instituting a racial classification that was not justified by a remedial purpose. In such a case, the trial court must make a factual determination that the employer had a strong basis in evidence for its conclusion that remedial action was necessary. The ultimate burden remains with the employees to demonstrate the unconstitutionality of an affirmative-action program.

For her part, Justice O’Connor piped in that:

This remedial purpose need not be accompanied by contemporaneous findings of actual discrimination to be accepted as legitimate as long as the public actor has a firm basis for believing that remedial action is required.

The reason O’Connor sided with the majority is that she believed the stated basis (role modeling for black students) did not rise to the firm basis standard.

Then in the Johnson case, O’Connor stated the following:

In my view, the proper initial inquiry in evaluating the legality of an affirmative action plan by a public employer under Title VII is no different from that required by the Equal Protection Clause. In either case, consistent with the congressional intent to provide some measure of protection to the interests of the employer's nonminority employees, the employer must have had a firm basis for believing that remedial action was required. An employer would have such a firm basis if it can point to a statistical disparity sufficient to support a prima facie claim under Title VII by the employee beneficiaries of the affirmative action plan of a pattern or practice claim of discrimination.

Then in Richmond v. Croson (1989), another 5-4 ruling under the 14th Amendment case, the Supreme Court struck down a set-aside of municipal funds for minority business enterprises, the rational was provided by Justice O’Connor, who wrote the majority ruling. Accordingly:

None of these "findings," [by the City of Richmond] singly or together, provide the city of Richmond with a "strong basis in evidence for its conclusion that remedial action was necessary."… There is nothing approaching a prima facie case of a constitutional or statutory violation by anyone in the Richmond construction industry.

Justice O’Connor than reiterated the strong basis in evidence standard in Adarand v. Pena (1995), a set-aside case involving federal contractors.

I hope I’ve made my point. The “Ricci” standard is hardly new, and is not distinct from defenses to reverse discrimination claims under either Title VII or the 14th Amendment (or 5th Amendment as in Adarand). Therefore, the 2nd Circuit to reject the so-called “AAP Defense” is tantamount to changing the Supreme Court’s prior rulings in several major pre-Ricci reverse discrimination cases. I think the Supreme Court needs to clarify all of this, if only to alleviate my confusion (Joke).

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.

POTENTIAL IMPLICATIONS OF ENFORCEMENT OF VEVRAA FOR WOMEN

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

On April 26, 2011, the OFCCP proposed a rule requiring federal contractors to establish annual benchmarks for hiring veterans under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). The potential implications for employers have been previously discussed on this website. The purpose of this alert is to discuss the implications of veteran’s preference on women. The case law is sparse, but revealing. Two cases of interest include the Supreme Court’s 1979 ruling in Personnel Administrator of Massachusetts v. Feeney [442 U.S. 256] and the 7th Circuit’s 1989 ruling in Fallon v. Illinois [882 F.2d 1206].

In the Massachusetts case, Helen Feeney was a 12-year public employee who lost out to veterans with lower qualifying test scores on several occasions based on a Massachusetts law requiring preference for qualified veterans. For example, she had the second highest score for a job with the Board of Dental Examiners in 1971 and the third highest on a test for an Administrative Assistant position with a mental health center in 1973. Nevertheless, she was placed 6th after the 1971 exam and 12th after the 1973 exam, in both cases, behind veterans with passing, but lower scores. This happened on other occasions as well. Feeney lodged a 14th Amendment Equal Protection lawsuit in 1975 after her job was abolished.

At the time the suit was filed, more than 98% of veterans in Massachusetts were male. Initially, the district court favored Feeney because the Massachusetts law adversely impacted females. However, in 1977, the Supreme Court vacated and remanded the case back to the district court in light of its ruling in Washington v. Davis (1976) [426 U.S. 229], involving a 14th Amendment claim of race-based adverse impact based on a civil service exam. In Davis, the Supreme Court ruled that adverse impact is not a valid claim under constitutional. Law. Nevertheless, on remand, the district court again favored Feeney based on disparate treatment principles, ruling that:

[T]he criteria set forth in the challenged statutory formula failed to measure job performance, that statistical evidence demonstrated a pattern of exclusion of women from the civil service, and that there were less drastic alternatives available to the state to achieve its purpose of aiding veterans.

The Supreme Court then reversed in a 7-2 ruling in which Justice Stewart, speaking for the majority, stated:

[A]lthough the result of the statute had a disproportionate impact on women, it had not been enacted in order to discriminate against women. The statute contained gender neutral language. Because the statute was gender-neutral on its face, the Court considered first whether the statutory classification was neutral and then whether the adverse effect reflected invidious gender-based discrimination. The statutory classification was neutral because it was intended to discriminate against non-veterans, not against women. Female veterans were entitled to its benefits. Moreover, the legislative purpose had not been to invidiously discriminate against women.

The two dissenters (Marshall & Brennan) disagreed, and opined that “Massachusetts' choice of an absolute veteran’s preference system evinced purposeful gender-based discrimination and could not withstand scrutiny under the equal protection clause because the statutory scheme bore no substantial relationship to a legitimate governmental objective.”

Fallon v. Illinois (1989) was a pay discrimination case where a female Veterans Service Officer Associate (VSOA) lost under both the Equal Pay Act (EPA) and Title VII. A male Veterans Service Officer (VSO) was paid more than Fallon for jobs that, otherwise, were substantially equal in skill, effort, responsibility, and working conditions. The key to the case was that only military veterans could be VSOs, whereas non-veterans could only be VSOAs. The district court ruled for Fallon under the EPA and Title VII and the 7th Circuit reversed. The 7th Circuit agreed that the jobs were substantially equal, but that the requirement to be a veteran was a valid FOS (factor other than sex).

To this point, there has been no case claiming adverse impact from a veteran’s preference policy on females via Title VII. However, that’s not the key issue. Clearly, there will always be adverse impact on females based on veteran’s preference. Furthermore, regardless what the statutes say, there is a difference between affirmative action (AA) based on veteran status as opposed to discrimination because of failure to hire a veteran. AA principles generally demand enhanced recruitment and outreach, as well as equal opportunity training; they do not mandate preference in selection. VEVRAA is an affirmative action statute. Therefore, if employers feel compelled to hire albeit qualified, but less qualified individuals to meet a quantitative goal, it defies the spirit of what AA means. This is particularly the case if the means used to meet a quantitative goal have an adverse impact on another protected group. Also, if the Feeney case related to AA based on race, there is no doubt the employer would lose under the Civil Rights Act of 1991 by automatically providing higher rankings for lower scoring blacks than higher scoring whites.

In short, whether knowingly or not, the proposed OFCCP rule may place an inferred threat on the part of employers to hire less qualified veterans under the assumption they will be subject to an unfavorable audit if they do not meet a quantitative goal. This may be a step past traditional affirmative action, and this preference could have an adverse impact against females. Whether this impact would be defensible is unclear.

FOLLOWING UP ON OFCCPs’ PROPOSED RULES RECOMMENDING BENCHMARKS FOR HIRING VETERANS

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

Under a proposed rule by the OFCCP on April 26, 2011 federal contractors would be required for the first time to establish annual benchmarks for hiring veterans. In an interview on April 28, 2011, DCI president David Cohen told SHRM Online that he expects that the OFCCP would use referral and hiring ratios as evidence of discrimination in hiring by contractors. According to Cohen, the benchmarks would be expressed as the percentage of total hires who are protected veterans, and would apply to contractors with 50 or more employees and contracts of $100,000 or more (under 60-300). The basis for suit would be the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA), as amended, which requires each federal contractor with a federal contract of $100,000 or more to take affirmative action to hire and advance in employment qualified Armed Forces Service Medal veterans, disabled veterans, recently separated veterans and other protected veterans.

According to Cohen, the proposed rule would require federal contractors to solicit veterans’ status at the pre-offer stage to identify “protected veterans”. Questions relating to disabilities are prohibited in accordance with the ADA’s proscription of questions relating to medical or psychological issues at the pre-offer stage.

To establish benchmarks, contractors would have to consult several sources of information, including:

• The percentage of veterans in the civilian labor force, tabulated by the Bureau of Labor Statistics and to be published on OFCCP’s website.



• The raw number of veterans who were participants in the state employment service in the state where the contractor’s establishment is located, which will be published on OFCCP’s website



• The referral, applicant and hiring ratios required by the proposed rule.



• The contractor’s recent assessments of the effectiveness of its external outreach and recruitment efforts, as required by the proposed rule.



• Any other factors, including but not limited to the nature of the contractor’s job openings and/or its location, which would tend to affect the availability of qualified protected veterans.

According to Cohen, the OFCCP concedes that there is no census data for contractors to ascertain things such as percentage by area that are protected veterans, so the agency “wants you to do a lot of legwork to create data.”

The proposed rule would require federal contractors to document and maintain the following information:

• For referral data, the total number of referrals, the number of priority referrals of protected veterans and the referral ratio of referred protected veterans to total referrals.



• For applicant data, the total number of applicants, the number of applicants who are known protected veterans and the applicant ratio of protected veteran applicants to total applicants.



• For hiring data, the total number of people hired, the number of protected veterans hired and the hiring ratio of protected veteran hires to total hires.



• The total number of job openings, the number of jobs that are filled and the job fill ratio of job openings to job openings filled.

Under the proposed regulations, contractors are required to document these measurements annually and maintain records of them for five years. The measurements would provide contractors and the OFCCP with important information that does not currently exist. And the measurements would help contractors evaluate and tailor their recruitment and outreach efforts and establish hiring benchmarks, it noted.

Additionally, federal contractor will be required to provide the state employment service with the following additional information each year:

• Its status as a federal contractor.



• The contact information for the contractor hiring official at each location in the state.



• The contractor’s request for priority referrals of protected veterans for job openings at all its locations in the state.



• “Requiring the federal contractor to provide this additional information will facilitate the priority referral process,” the OFCCP stated.



• The contractor would be required to provide the state employment service with the contact information for any outside job-search companies the contractor uses.

To evaluate recruitment efforts, contractors will be required to review their outreach and recruitment efforts for the prior 12 months and evaluate how effective they are in these efforts. Contractors will have some flexibility in the recruitment process. However, Cohen expects that the OFCCP will want to know how many protected veteran candidates are identified in each effort.
Additionally, the proposed rule requires documentation relating to the two years prior to the most recent 12-month interval.

According to Cohen, these benchmark rules “seem kind of arbitrary” because contractors could establish benchmarks they are comfortable with, and the proposed rule has no penalties for failure to meet goals. Nevertheless, Cohen is worried that OFCCP compliance officer might confuse affirmative action, which requires enhanced recruitment and outreach efforts, with actual discrimination, which requires evidence that contractors are excluding applicants based on their veteran status. According to Cohen, the OFCCP already is already looking at hiring rates of veterans, particularly when jobs have not been posted with state employment offices. Indeed, Cohen gave on example of one conciliation agreement in 2010 in which the OFCCP said that discriminated against protected veterans in its hiring practices due to the fact that they did not post its jobs with the state employment office. More specifically, the conciliation agreement stated that the contractor had in fact hired one veteran out of the one that applied but that didn’t take into account the veterans that “could have applied”. Meaning the OFCCP contacted the state and identified 79 veterans (note that this doesn’t mean that they were protected veterans under VEVRAA) and said that the “true” hiring ratio is one out of 80 or 1.25%. OFCCP then applied an adverse inference theory of discrimination and concluded that the contractor had in fact discriminated against all 79 veterans that were registered in the state employment office database even though they never expressed interest in the company. The contractor agreed to pay approximately $50,000 to the group of 79.

Stay tuned for more information.

OFCCP PROPOSES CHANGES TO THE SCHEDULING LETTER

by David Cohen, President, DCI Consulting

The OFCCP is requesting OMB approval to make changes to its current scheduling letter and itemized listing. As most of you are aware, the scheduling letter lists the 11 items needed to submit to OFCCP within 30 days. The current scheduling letter is set to expire on September 30, 2011 and most of us were anticipating that OFCCP would attempt to make some changes. The public can get a copy from the Federal Register on May 13th.

Links to the new documents as posted on Regulations.gov:

OFCCP Supporting Document
New Compliance Check Letter
New Scheduling Letter
New Itemized Listing

OFCCP is proposing to add two new items to the scheduling letter. This includes the submittal of the last three years VETS-100 and/or VETS-100A report as well as the contractors' leave policy.

OFCCP states the following:

Submission of employment policies covering the Family and Medical Leave Act (FMLA), pregnancy leave, and accommodations for religious observances and practices. Receipt of these policies would assist OFCCP in better determining the existence of sex or religious discrimination indicators within contractor organizations. Additionally, the policy requirements would enhance OFCCP's broad authority under Executive Order 11246 to prohibit sex and religious discrimination in employment and its share enforcement responsibilities with the EEOC under Title VII.

In addition to the two new requests, OFCCP is proposing to make substantive changes to four other request items in the scheduling letter.

• Changes to current Item 8 which requests a copy of the collective bargaining agreement (if applicable)
  
  Changes to new item 9 (current item 8) -- OFCCP further defined "other information" in contractor collective bargaining agreements to clarify for contractors the specific information requested during compliance evaluations




• Changes the current language pertaining to the goal attainment report
  
  Changes to new item 10 (current item 9) -- AAP reporting requirements changed from preceding year to immediate preceding year to clarify specific AAP reporting timelines for contractors. No change in burden hours for this item.



• Changes the language to the current Item 10 requesting personnel activity data. The new request would REQUIRE contractors submit by Job Group AND Job Title.
  
  Changes to new item 11 (current item 10) -- OFCCP included more specific demographic information related to Applicants, Hires, Promotions, and Terminations to eliminate ambiguous minority and non-minority terminology. In addition, contractors would now be required to submit data by job group and job title, instead of job group or job title in the current Scheduling Letter. This revised submission would result in OFCCP obtaining more accurate reporting data for its analyses related to identifying sex and race discrimination indicators. Given the widespread use of computer technology for Human Resources data entry and management, we estimate 1 hour increased burden per contractor.
  Furthermore under the promotions and terminations data request contractors must develop constructed pools of who was actually considered for promotion or termination.
  


• The final, and in my opinion, the most significant, is a major change to the current Item 11 request for compensation. The new request asks for information to be submitted in the "disaggregate" . I take this to mean that the current 12 Factor (or 15, 18) would replace Item 11 as the new scheduling letter language. (Note that I think the OFCCP accidentally put the word "aggregate" when they meant to say "disaggregate" and vice-versa). Additionally, data is to be submitted as of February 1 (i.e., the data as it existed on the most recent February 1st date)
  
  Changes to new item 12 (current item 11) -- The changes would require a contractor to submit more precise data for OFCCP's compensation analysis. The more precise data is aggregate data rather than the disaggregate data requested in the current Scheduling Letter. A submission of aggregated data would allow OFCCP to perform more specific analyses, and pinpoint possible discrimination based on race or sex. We will no longer ask for disaggregate compensation data, which required contractors to aggregate the data themselves, thereby increasing their burden. In addition, the disaggregate data was less effective in allowing OFCCP to analyze compensation.