Melendez v. Illinois Bell Telephone Co.

Decision Date25 April 1996
Docket NumberNo. 94-3496,94-3496
Citation79 F.3d 661
Parties70 Fair Empl.Prac.Cas. (BNA) 589, 67 Empl. Prac. Dec. P 43,996, 34 Fed.R.Serv.3d 1324 Carmelo MELENDEZ, Plaintiff-Appellee, v. ILLINOIS BELL TELEPHONE COMPANY, Defendant-Appellant.
CourtU.S. Court of Appeals — Seventh Circuit

John H. Hager, Elaine K.B. Siegel (argued), Hager & Siegel, Chicago, IL, for plaintiff-appellee.

Charles C. Jackson (argued), Brenda H. Feis, Ellen E. McLaughlin, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, Hubert O. Thompson, Deborah A. Richards, Carney & Brothers, Chicago, IL, for defendant-appellant.

Before WOOD, Jr., FLAUM, and MANION, Circuit Judges.

FLAUM, Circuit Judge.

Carmelo Melendez filed a complaint in district court, alleging the defendant, Illinois Bell Telephone Company ("Illinois Bell"), violated 42 U.S.C. § 1981, Title VII and the Age Discrimination in Employment Act ("ADEA") by engaging in discriminatory hiring practices. The district court entered summary judgment against the plaintiff on his ADEA claim, but the § 1981 and Title VII claims, based on race discrimination, proceeded to trial. As a sanction for discovery abuses, the district court barred defendant's sole expert witness from testifying. The § 1981 disparate treatment claim was tried before a jury, which returned a general verdict for the defendant. After the § 1981 jury trial, the district court conducted a hearing on plaintiff's Title VII claims, which alleged both disparate treatment of and disparate impact upon Hispanics. In particular, Melendez challenged the discriminatory nature of a standardized management test, the BSAT. The district court held that the § 1981 jury verdict controlled the Title VII disparate treatment claim, but ruled for the plaintiff on his disparate impact claim. The defendant appeals the judgment in favor of the plaintiff on the Title VII disparate impact claim. We affirm.

I.

In September 1988, Melendez, a Hispanic male, applied for the position of Manager of Urban Affairs at Illinois Bell. This job was a first-level management position that entailed analysis and investigation of issues in the urban environment that might have impacted Illinois Bell's service to its Chicago-area Hispanic customers. The vacancy for which Melendez applied was created when the incumbent in that job, an Hispanic woman, was promoted to a higher level position.

At the time, Illinois Bell screened management candidates through a three-part process administered by its personnel department. The personnel department required candidates to complete a formal application for employment and to pass both a structured interview, the Management Selection Interview ("MSI") and a standardized test, the Basic Skills Abilities Test ("BSAT"). Normally, candidates could interview with the particular department at Illinois Bell that was hiring only after successfully completing all three requirements. To accommodate schedules, however, Illinois Bell would occasionally have the hiring department interview candidates before they completed the tripartite screening process.

On September 21, 1988, before being screened by the personnel department, Melendez interviewed with two managers from the urban affairs department, John McDermott and Suzette Broom. Although Melendez did not particularly impress McDermott and Broom during his interview, McDermott directed Melendez to the personnel department for further processing. In the personnel department Melendez completed an employment application and passed the MSI. Melendez also had graduated in the top half of his class from college, which was another one of Illinois Bell's objective qualifications for management positions. Melendez, however, failed the BSAT. Illinois Bell required applicants taking the BSAT to receive a score of at least 196 to be eligible for employment. 1 Melendez's score was 157. On September 25, 1988, Illinois Bell's personnel department advised Melendez that he had failed the BSAT and therefore was not qualified for the manager of urban affairs position. He was informed that he could retake the BSAT in six months. McDermott thereafter selected Henry Lara, an internal candidate who was also Hispanic, to become manager of urban affairs.

The BSAT is a standardized cognitive ability test, which Illinois Bell used to measure the learning potential of candidates for management positions. AT & T psychologists developed the BSAT in 1979 for telephone companies nationally. Local telephone companies, including Illinois Bell, implemented the BSAT in the early 1980's. The examination is "speeded," consisting of 100 multiple choice questions during a one hour time period. The BSAT tests four different skills: mathematics, grammar, reading comprehension, and following directions. The parties stipulated that the BSAT has a disparate impact against Hispanics. 2

To support the fairness and validity of the BSAT, AT & T psychologists conducted a validation study, which reported various statistical analyses of how the BSAT related to job performance. The validation study correlated test scores with actual job performance ratings and directly examined the BSAT by race for its ability to predict job performance. To review this validity evidence, Melendez introduced the expert testimony of Dr. Fred Bryant, Professor of Psychology at Loyola University of Chicago. Dr. Bryant received a Ph.D. in Social Psychology from Northwestern University and has numerous publications involving the statistical analysis of data. Dr. Bryant testified that, in the context of employment examinations, an examination is "valid" if it can predict how people will perform on the job. Dr. Bryant opined that the BSAT is very poor at predicting job performance and therefore lacks validity. In Dr. Bryant's opinion, the statistical evidence from the validation study convincingly showed that BSAT scores and job performance are unrelated for Hispanics. Moreover, Dr. Bryant concluded that the great weight of statistical evidence from the validation study demonstrated that there is no relationship between BSAT scores and job performance for whites. Dr. Bryant likewise found little evidence that the BSAT predicted job performance for African-Americans. Dr. Bryant also attacked the methodology of the validation study, asserting that the study improperly pooled data from different racial subgroups, which caused inflated validity data for the overall group. Even if one uses the inflated overall data, the BSAT predicts job performance only 3 percent better than chance alone. Indeed, prior to this litigation, psychologists hired by Illinois Bell to review its management hiring process concluded that "there is little or no support for the validity of BSAT scores in predicting the core areas of management performance...." Importantly, the data from the validation study illustrates that, despite a statistically significant difference in test scores between whites and Hispanics, there is no significant difference in job performance between the two groups.

In December 1988, Melendez filed a charge with the EEOC, alleging that the BSAT had an unlawful disparate impact on Hispanics. On August 28, 1990, Melendez filed the current action in district court. While his charge was pending before the EEOC, Illinois Bell formed a consortium with other local telephone companies to revise or replace the BSAT. Illinois Bell's representative to the consortium was Dr Gary Morris. 3 On July 11, 1990, Psychological Services, Inc. ("PSI"), a consulting firm, sent a proposal to Dr. Morris and other consortium representatives, which indicated the necessity of establishing a new test with "face validity." The consortium retained PSI to develop a replacement test, which was labelled the BSAT-Replacement ("BSAT-R").

Dr. Morris was personally involved with the development of the BSAT-R. On January 11, 1991 he wrote the following to various Illinois Bell department heads:

I am writing this letter to inform you that the [ ] Consortium to revise the BSAT is finally getting near the point of completing a contract and starting work. A primary goal of this project is to develop a test with item content that is much more job related than was the case with BSAT....

I will be sure to keep you posted on the status of the project as it progresses and on more details related to your involvement as soon as possible.

The contract for PSI's consulting services was executed on March 11, 1991 and identified Dr. Morris as a recipient of contract notices. In an April 4, 1991 letter, Dr. Morris again wrote to various department heads: "As you are all aware, we are involved in a consortium effort to build a replacement for the BSAT. The time frame for its introduction is mid-year 1992." The BSAT-R project included examining the validity evidence for the BSAT as well as collecting additional data relevant to the validity of the BSAT.

While the replacement test for the BSAT was being formulated, Melendez attempted to obtain information relevant to the BSAT's validity through discovery. On November 6, 1990, Melendez requested the production of documents "that constitute, refer or relate to the decision to use the BSAT, or to discussions or analyses concerning its use." Although the trial court ordered Illinois Bell to respond to this request by December 21, 1990, Illinois Bell produced no documents until January 14, 1991. The BSAT-R project was not disclosed, and Illinois Bell failed to produce many BSAT-related documents. When Melendez moved to compel production of these documents, Illinois Bell represented to the district court that production of the BSAT would cause irreparable harm because there was only one form. 4 On March 15, 1991, upon...

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