Seyfarth Synopsis: A recent Second Circuit decision casts doubt on the usefulness of national statistics to support a claim of hiring disparities at the pleading stage of litigation. Unless the national population mirrors the pool of qualified job applicants, the Court held that national statistics cannot help a plaintiff plead that an employer's hiring policy has a disparate impact on a protected class.
"Facts are stubborn things, but statistics are pliable." With this Mark Twain quote, the Second Circuit opened its recent opinion affirming dismissal of a Title VII disparate impact claim. The opinion explores the extent to which national statistics regarding the arrest and incarceration rates of Black Americans versus Caucasian Americans can support a disparate impact claim.
The decision is a welcome ruling for employers and a helpful reiteration of the limited extent to which broad, national statistics can support a disparate impact claim at the pleading stage.
Background
NTT Data, a technology services provider, separately offered employment to two Black candidates for developer positions. The employment offers were contingent on the results of a routine background check. Upon conducting the background checks, NTT discovered that each candidate had been convicted of at least one felony. As a result, NTT withdrew the employment offers.
The candidates filed a putative class action, alleging that NTT's alleged policy of not hiring individuals with "certain criminal convictions including felonies" violated Title VII of the Civil Rights Act of 1964. The Plaintiffs claimed that NTT's policy had an unlawful disparate impact on Black candidates. A disparate impact claim typically alleges that a facially neutral employment policy adversely affects a protected class; the practice can be sustained if it is job-related and consistent with business necessity.
To support their disparate impact claim, the Plaintiffs pointed to national statistics showing that Black Americans "are arrested and incarcerated for crimes at higher rates than [w]hites, relative to their share of the population." The District Court dismissed the complaint for failure to state a claim, holding that the national statistics on which Plaintiffs relied did not have an adequate relationship with the pool of NTT job applicants.
Second Circuit's Decision
On appeal, the Second Circuit affirmed the dismissal while acknowledging that statistics can "nudge a disparate impact claim across the line from conceivable to plausible," so long as the statistical data actually demonstrates a significant disparity that is caused by the challenged policy. To do this, the population analyzed in the statistical data must actually represent the population in the pool of job applicants. As an example, the Court remarked that "it would make little sense to judge a hospital's physician-hiring policies by looking at the effect those policies would have on a population of high school graduates," because high school graduates lack a medical degree and are thus ineligible for employment as physicians.
In other words, general population statistics are only helpful where they accurately reflect the pool of qualified job applicants. And this is where the Plaintiffs' claim was defeated: the complaint did not plausibly allege that national arrest and incarceration statistics were in any way representative of the pool of qualified applicants for a position at NTT. On the contrary, the complaint took "great pains to highlight Plaintiff's qualifications, plainly indicating that those qualifications are relevant to the jobs at the heart of this dispute." Because the national population at large does not share these qualifications, national statistics could not support the Plaintiffs' disparate impact claim.
Thus, the Court saw "no basis for using national statistics as a proxy for the qualified applicant pools for the developer positions[.]" The fact that Black Americans may be arrested or convicted at higher rates than Caucasian Americans could not, without more, make it plausible that Black web developers with the educational and professional qualifications to work at NTT are more likely to have been convicted of a crime than their Caucasian counterparts. Without additional information, the Plaintiffs' disparate impact claim rested on mere conclusions.
Takeaways
The Second Circuit's decision is welcome news to employers facing disparate impact claims. While the Court acknowledged the "informational disadvantage" that plaintiffs have at the pleading stage - that is, before plaintiffs have an opportunity to request information from the employer in discovery - the Court declined to allow a disparate impact claim to "force [its] way into discovery" merely on the basis of non-representative national statistics. This smooths the path for employers to seek dismissal of disparate impact claims before expensive and time-consuming discovery.
<Originally Published by Seyfarth Shaw, January 2021
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