Mandala ex rel. Situated v. NTT Data, Inc.

• Decision Date: 21 September 2020
• Docket Number: August Term 2019,No. 19-2308,19-2308
• Parties: George MANDALA, Charles Barnett Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellants, v. NTT DATA, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

975 F.3d 202

George MANDALA, Charles Barnett Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellants,

v.NTT DATA, INC., Defendant-Appellee.

No. 19-2308

August Term 2019

United States Court of Appeals, Second Circuit.

Argued: March 9, 2020

Decided: September 21, 2020

RACHEL BIEN, Outten & Golden LLP, Los Angeles, CA; Ossai Miazad, Lewis M. Steel, Christopher M. McNerney, Elizabeth V. Stork, on the brief, Outten & Golden LLP, New York, NY; RACHEL M. KLEINMAN (Sherrilyn A. Ifill, Janai S. Nelson, Samuel Spital, on the brief), NAACP Legal Defense & Education Fund, Inc., New York, NY; Catherine Meza, on the brief, NAACP Legal Defense & Education Fund, Inc., Washington, DC, for Plaintiffs-Appellants.

JESSICA F. PIZZUTELLI (Jacqueline Phipps Polito, on the brief), Littler Mendelson P.C., New York, NY, for Defendant-Appellee.

Before: Chin, Sullivan, and Nardini, Circuit Judges.

Judge Chin dissents in a separate opinion.

Richard J. Sullivan, Circuit Judge:

Facts are stubborn things, but statistics are pliable. As Mark Twain's saying suggests, though statistics are often a helpful tool, they must be consulted cautiously. This lawsuit provides a case study as to why that is.

Plaintiffs George Mandala and Charles Barnett have brought a Title VII disparate impact class action against Defendant NTT Data, Inc., arguing that the company's alleged policy not to hire persons with certain criminal convictions has a disproportionately large effect on African-American applicants. To support that assertion, Plaintiffs rely on national statistics showing that, on average, African Americans are more likely to be arrested and incarcerated than whites. But the fact that such a disparity exists among the general population does not automatically mean that it exists among the pool of applicants qualified for the jobs in question – what is true of the whole is not necessarily true of its parts. In fact, because the complaint indicates that the positions that Plaintiffs applied for require certain educational and technical credentials, there is good reason to think that these national statistics are not representative of the qualified applicant pool.

Consequently, Plaintiffs have set forth no allegations plausibly suggesting that the company's hiring policy has a disparate impact on African Americans within the relevant hiring pool. We therefore AFFIRM the judgment of the district court (Siragusa, J. ) dismissing the complaint.

I. Background

In early 2017, George Mandala applied for a position as a Salesforce Developer at NTT Data, Inc., a global information technology services provider.¹ Impressed by his work experience and his answers to various "technical questions" during the interview process, Compl. ¶ 24, NTT offered Mandala a job as an "Application Software Development Senior Principal Consultant," id. ¶ 27. But upon conducting a routine background check, the company discovered that Mandala had been convicted of a felony and quickly withdrew its offer of employment. When a member of NTT's recruitment team broke the news to Mandala, she indicated that "NTT had a policy not to hire persons with felonies on their records." Id. ¶ 33.

Charles Barnett had a similar experience. NTT reached out to him in July 2017 about a "web developer" position on a project for the Kentucky Department of Education. Id. ¶ 38. On paper, Barnett appeared to be a strong candidate: he had relevant work experience, a "Masters of Science in Computer Science Technology[,] and an Associate degree in Applied Science/Computer Programming." Id. ¶ 50. And after a few rounds of interviews, NTT offered him the job. But the company pulled that offer once it learned that Barnett had been convicted of several felonies. Though Barnett asked NTT to consider hiring him for other positions, he was informed that he was ineligible "because of his felony convictions." Id. ¶ 48.

So, in August 2018, Mandala and Barnett filed a putative class action complaint against NTT, alleging that the company's hiring practices violate Title VII of the Civil Rights Act of 1964, as well as several New York State anti-discrimination laws. Specifically, they assert that NTT has a policy not to hire "individuals with certain criminal convictions including felonies (or similar criminal classifications)," id. ¶ 4, which Plaintiffs say is unlawful because it invariably disqualifies a disproportionate number of African-American applicants.

To support this assertion, Plaintiffs point to numerous studies showing that "African Americans are arrested and incarcerated for crimes at higher rates than [w]hites, relative to their share of the national population." Id. ¶ 52. This disparity is compounded, they say, by evidence suggesting that employers place additional weight on criminal history when an applicant is African American as opposed to white. Notably, however, the complaint contains no allegations about racial disparities in NTT's existing workforce or the demographics of qualified applicants that NTT has rejected as a result of its hiring policy. It also fails to identify the precise contours of the policy itself – Plaintiffs equivocate as to whether the policy covers any prior criminal conviction or only felony convictions.

A little less than a year after it was filed, the district court dismissed the complaint for failure to state a claim. See Mandala v. NTT Data, Inc. , No. 18-cv-6591 (CJS), 2019 WL 3237361 (W.D.N.Y. July 18, 2019). The court concluded that the national statistics on which Plaintiffs rely are "inadequate to show a relationship between the pool of [NTT] applicants who are Caucasian versus African Americans and their respective rates of felony convictions." Id. at *4. And without any remaining federal claims, the district court refused to exercise supplemental jurisdiction over Plaintiffs’ state law claims and dismissed their complaint in its entirety. Id.

Plaintiffs now appeal that decision, arguing that the district court imposed an improperly high pleading standard, and that national arrest and conviction statistics are more than sufficient to state a plausible claim for relief under Title VII.

II. Standard of Review

We review de novo a district court's decision to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6). Littlejohn , 795 F.3d at 306. A complaint will survive a motion to dismiss so long as it "contain[s] sufficient factual matter ... to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted). In making that assessment, we accept the plaintiff's factual allegations as true and draw all reasonable inferences in her favor. Menaker v. Hofstra Univ. , 935 F.3d 20, 30 (2d Cir. 2019).

But while this plausibility pleading standard is forgiving, it is not toothless. It does not require us to credit "legal conclusion[s] couched as ... factual allegation[s]" or "naked assertions devoid of further factual enhancement." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation marks and brackets omitted). Nor are allegations that are "merely consistent with" liability enough to defeat a motion to dismiss. Id. (internal quotation marks omitted). Lastly, it bears mentioning that "we are free to affirm a decision [dismissing a complaint] on any grounds supported in the record, even if it is not one on which the trial court relied." Thyroff v. Nationwide Mut. Ins. Co. , 460 F.3d 400, 405 (2d Cir. 2006).

III. Discussion

A. The Elements of a Title VII Disparate Impact Claim

Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. , as amended, prevents employers from discriminating against employees or job applicants based on race, color, religion, sex, or national origin. As originally enacted, "Title VII's principal nondiscrimination provision held employers liable only for" intentional discrimination (known as "disparate treatment"). Ricci v. DeStefano , 557 U.S. 557, 577, 129 S.Ct. 2658, 174 L.Ed.2d 490 (2009). But in Griggs v. Duke Power Co. , the Supreme Court construed the statute to prohibit "not only overt discrimination but also practices that are fair in form, but discriminatory in operation" – that is, practices that have a "disparate impact." 401 U.S. 424, 431, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). Griggs thus read Title VII to focus on "the consequences of employment practices, not simply the motivation" behind them.² Id. at 432, 91 S.Ct. 849 ; see also M.O.C.H.A. Soc'y, Inc. v. City of Buffalo , 689 F.3d 263, 273 (2d Cir. 2012) ; Gulino v. N.Y. State Educ. Dep't , 460 F.3d 361, 382 (2d Cir. 2006).

Pursuing a disparate impact claim is often a complicated endeavor. Such claims "follow a three-part analysis involving shifting evidentiary burdens." Gulino , 460 F.3d at 382 (citing 42 U.S.C. § 2000e–2(k)(1) ). The plaintiff "bears the initial burden of [making] a prima facie showing of disparate impact." Id. This requires the plaintiff to "(1) identify a specific employment practice or policy; (2) demonstrate that a disparity exists; and (3) establish a causal relationship between the two." Chin v. Port Auth. of N.Y. & N.J. , 685 F.3d 135, 151 (2d Cir. 2012) (internal quotation marks and citations omitted). Unlike a disparate treatment claim, however, a disparate impact claim does not require the plaintiff to show that the defendant intended to discriminate against a particular group. See Ricci , 557 U.S. at 577–78, 129 S.Ct. 2658 ; M.O.C.H.A. , 689 F.3d at 273 ; see also Chaidez v. Ford Motor Co. , 937 F.3d 998, 1006–07 (7th Cir. 2019).

Once that prima facie showing is made, "the defendant has two avenues of rebuttal." Gulino , 460 F.3d at 382. One approach is to undermine the plaintiff's disparate impact or causal analysis. Id. ; see also Watson v. Fort Worth Bank & Tr. , 487 U.S. 977, 996, 108 S.Ct. 2777, 101 L.Ed.2d 827 (1988). If the defendant is successful in doing so, that ends the matter. Alternatively, the...