Allen v. Seidman
| Decision Date | 27 July 1989 |
| Docket Number | 88-2893,Nos. 88-1811,s. 88-1811 |
| Citation | 881 F.2d 375 |
| Parties | 50 Fair Empl.Prac.Cas. 607, 51 Empl. Prac. Dec. P 39,260 Agee ALLEN and Ronald Battle, individually and on behalf of all similarly situated individuals, Plaintiffs-Appellees, v. L. William SEIDMAN, Chairman, Federal Deposit Insurance Corporation, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Stephen G. Seliger, Paddy Harris McNamara, Thomas P. Sullivan, Jenner & Block, Chicago, Ill., for plaintiffs-appellees.
Ann L. Wallace, Daniel C. Murray and Nancy K. Needles, Asst. U.S. Attys., for defendant-appellant.
Before POSNER, RIPPLE, and MANION, Circuit Judges.
This appeal, together with the appeal in Evans v. City of Evanston, 881 F.2d 382 (7th Cir.1989), argued the same day and also decided today, are the first disparate-impact appeals heard and decided by this court in the wake of the Supreme Court's decision in Wards Cove Packing Co. v. Atonio, --- U.S. ----, 109 S.Ct. 2115, 104 L.Ed.2d 733 (1989), which modified the ground rules that most lower courts had followed in disparate-impact cases. Before Wards Cove it was generally believed that if the plaintiff in a Title VII case showed by a reasonable statistical test that a criterion or practice used by an employer to screen candidates for hiring or promotion was disproportionately excluding members of a group protected by the statute, such as blacks or women, the burden shifted to the employer to persuade the judge (the trier of fact in Title VII cases) that the criterion or practice was necessary to the effective operation of the employer's business. See, e.g., Washington v. Electrical Joint Apprenticeship & Training Committee, 845 F.2d 710, 712 (7th Cir.1988); Regner v. City of Chicago, 789 F.2d 534, 537 (7th Cir.1986). Wards Cove returns the burden of persuasion to the plaintiff, while leaving the burden of production on the employer, and also dilutes the "necessity" in the "business necessity" defense in a manner anticipated by the plurality opinion in Watson v. Fort Worth Bank & Trust Co., --- U.S. ----, 108 S.Ct. 2777, 101 L.Ed.2d 827 (1988), and by our decision in Aguilera v. Cook County Police & Corrections Merit Board, 760 F.2d 844, 846-48 (7th Cir.1985). The Court explains in Wards Cove that "there is no requirement that the challenged practice be 'essential' or 'indispensable' to the employer's business for it to pass muster," the question being merely "whether a challenged practice serves, in a significant way, the legitimate employment goals of the employer." 109 S.Ct. at 2125-26. If the plaintiff can show that a less exclusionary practice would serve the employer's legitimate interests just as well, the employer's refusal to adopt it when urged to do so by the plaintiff will defeat the "business necessity" defense (now a misnomer, since the "defense" does not require a showing of necessity and is no longer an affirmative defense). However, the alternative proposed by the plaintiff must be "equally effective as [the defendant's] chosen hiring procedures in achieving [the defendant's] legitimate employment goals," and "the judiciary should proceed with care before mandating that an employer must adopt a plaintiff's alternate selection or hiring practice in response to a Title VII suit." 109 S.Ct. at 2127. The Court also repeated an old point about disparate-impact evidence a shoddy showing of disparate impact will not require the defendant even to produce evidence in justification of the challenged practice. See 109 S.Ct. at 2121-24.
The plaintiffs in this case are the representatives of a class of black bank examiners employed by the Federal Deposit Insurance Corporation, who failed the "Program Evaluation" test that the Corporation formerly used as an aid in determining whether to promote bank examiners at pay level GS-9 to the rank of "commissioned bank examiner" (GS-11). The district court concluded after a bench trial that the test had a disparate impact and had not been shown to be a business necessity, and therefore entered judgment for the class. The Corporation appeals, represented by the Justice Department, which urges us to reverse outright and dismiss the suit. The plaintiffs' counsel urges us to affirm the judgment on the ground that even under the standard of Wards Cove the Program Evaluation test is unreasonably exclusionary.
The first question is whether the district judge committed a clear error in finding that the plaintiffs had demonstrated a disparate impact. As only 39 percent of the black candidates who took the Program Evaluation test passed, compared to 84 percent of the white candidates, and as the large number of candidates made the difference highly significant statistically, it may seem beyond question that the plaintiffs showed a disparate impact, thereby shifting to the defendant the burden of producing evidence of justification. But this the defendant contests, noting first that passing the Program Evaluation test is not a sine qua non for promotion. The regional directors for whom the bank examiners work can promote an examiner who fails it and can refuse to promote an examiner who passes it; the test results are merely advisory. But it is rare for regional directors to ignore the advice, as is suggested although not proved by the fact that of the black candidates who took the test 56 percent were promoted to commissioned bank examiner within one year, compared to 92 percent of the whites. These statistics suggest that while a few "fails" were nevertheless promoted (as can be seen by the difference between 56 percent, the number of blacks promoted, and 39 percent, the number who passed the test, and by the difference between 92 percent and 84 percent--the corresponding figures for whites), this was true for both races and did not reduce the disparate impact of the test. On the contrary, it increased it, for the black fails fared worse than the white ones. Only 27 percent of the black fails were promoted within one year, compared to 53 percent of the white ones.
These statistics are potentially misleading because some examiners who passed the test may not have been promoted, so conceivably it is pure happenstance that blacks both did badly on the test and were less likely to be promoted than whites. But apparently it was extraordinarily rare for a regional director to refuse to promote an examiner who passed the Program Evaluation test; the record contains only two instances of such a refusal.
A stronger attack made by the Corporation on the plaintiffs' statistical test is that the test is simplistic because it has only one independent variable: race. Other variables, such as education, can of course affect performance on a test, and there is a well-known statistical technique, multiple-regression analysis, for estimating the partial effect of one of several independent variables on the dependent variable (here, success on the Program Evaluation test). See 1 Gastwirth, Statistical Reasoning in Law and Public Policy 400-23 (1988). It is possible that if success on the Program Evaluation test had been regressed on other variables as well as race, race would have been found to have no effect, or a statistically insignificant effect, on success; and then there would have been no proof of disparate impact. A statistical analysis must cross a threshold of reliability before it can establish even a prima facie case of disparate impact. See, e.g., Morgan v. Harris Trust & Savings Bank, 867 F.2d 1023, 1028 (7th Cir.1989) (per curiam). But we agree with the plaintiffs, for reasons about to be explained, that they were not required to perform a multiple-regression analysis in this case. Paradoxically, our conclusion is strengthened by Wards Cove, because after that decision the prima facie case means less than it did before, so there is less reason to be fussy about it. Under the regime of Wards Cove it just makes the defendant produce some evidence in justification of its test, after which the plaintiff must prove the test unreasonable. In addition, the defendant can always present evidence to show that there was no disparate impact--that it is merely an artifact of the plaintiff's statistical study. See, e.g., Tagatz v. Marquette University, 861 F.2d 1040, 1044 (7th Cir.1988); Washington v. Electrical Joint Apprenticeship & Training Committee, supra, 845 F.2d at 714.
When, as in this case and those just cited, there has been a full trial, the issue of prima facie case drops out, and the question becomes whether the judge is persuaded that the test or other challenged practice is discriminatory because it has a disparate impact unjustified by the defendant's legitimate business needs. To speak precisely, the existence of a "prima facie case" in the specialized Title VII sense of a case strong enough to shift the burden of production to the defendant becomes moot once the lawsuit is tried. Yet in its older sense of evidence sufficient to defeat a defendant's motion for directed verdict, the existence of a prima facie case...
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