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Second Circuit won’t rehear decision finding Black applicants could not rely on national statistics in disparate impact challenge to hiring policy

By Kathleen Kapusta, J.D.

The African-American plaintiffs had argued that the company’s alleged policy not to hire persons with certain criminal convictions had a disproportionately large effect on black applicants.

The Second Circuit denied a petition for rehearing en banc of its September 21, 2020, decision affirming the dismissal of the Title VII disparate impact claims asserted by two African-American job applicants against a company that withdrew their job offers upon learning of their felony convictions. In that decision, which the court called “a case study as to why statistics, while helpful, must be consulted cautiously,” a divided Second Circuit panel ruled that while the applicants relied on national statistics showing that, on average, African Americans are more likely to be arrested and incarcerated than whites, “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.” (Mandala v. NTT Data, Inc., February 23, 2021, per curiam).

Concurrence. In an opinion concurring in the order denying rehearing en banc, Judges Sullivan, Nardini, Livingston, Cabranes, and Park asserted that the “dissents misapprehend the nature and consequences of the panel majority opinion, which reflects a heartland application of the plausibility pleading standard that has been the law of this Circuit for more than a decade.” Put simply, they wrote, “we see no reason to fear that requiring Title VII plaintiffs to allege a plausible link between their chosen statistics and the qualified labor pool for the jobs in question will fundamentally alter the existing Title VII architecture.”

While they agreed “as a general proposition” with the dissents’ argument that statistics concerning the general population can be used to “nudge” a disparate impact claim “across the line from conceivable to plausible” at the pleading stage, they contended that the specific pleadings in this case did not plausibly allege that the general population was likely to be representative of the qualified labor pool or the jobs at issue. “As the panel majority opinion concludes, general population statistics may be used only when there is reason to think that they will reflect the qualified labor pool for the positions in question,” the concurrence explained.

Disagreeing further with the dissents’ suggestion that even if the qualified labor pool in question was more educated than the general that did not prohibit the plaintiffs from pleading a plausible claim based only on general population statistics, the concurrence observed that “common sense dictates that highly educated individuals can be expected to have lower conviction rates than the general population.” Accordingly, the concurrence observed, the plaintiffs simply needed to “provide additional allegations to explain why their chosen statistics were likely to be representative of the qualified applicant pool in question. Because they failed to provide those allegations, the panel majority affirmed the district court’s dismissal of their complaint.

New facts. It was worth noting, said the concurrence, that new facts introduced by an amicus brief filed in support of rehearing the case confirmed this conclusion and underscored the limited impact of the panel majority opinion. The brief, submitted by several criminology and sociology professors, identified a study indicating that “Black men with some college education have imprisonment risks that are seven times greater than white men with some college education,” In other words, the concurrence observed, “the very figures that might have rendered Plaintiffs’ claims plausible not only exist but also are publicly available; Plaintiffs simply failed to include them in their pleadings.” Accordingly, the concurrence found “no reason to believe that the panel majority opinion will become ‘a dangerous precedent’ that shuts the courthouse door to disparate impact claims.”

Pooler dissent. In an opinion dissenting from the order denying rehearing en banc, Judge Pooler, joined by Judges Chin, Lohier, and Carney, wrote separately to emphasize that “the principal flaw in the panel opinion is its inversion of the traditional standard applied to pleadings at the motion to dismiss stage.” Judge Pooler argued that the panel opinion imposed a heightened standard for employment discrimination against the instructions of the Supreme Court. “This case,” she wrote, “rests on a simple question—whether a blanket policy of excluding individuals with felony convictions from employment at NTT has a disparate impact on black applicants. To any person with a cursory understanding of America’s troubled racial history, the answer is clearly yes.”

While Judge Pooler was willing to agree that “educational level and conviction rates are likely negatively correlated,” she was “equally certain that racial disparities will continue to exist even after education levels are considered.” Further, she pointed out, “While the concurrence argues that its assumptions regarding the relationship between education levels are a matter of ‘common sense,’ that ability to use common sense and judicial experience to draw conclusions is absent once race enters the equation.”

Undercut Title VII. The panel opinion’s flaws, Judge Pooler further argued, were particularly important for the en banc court to remedy “because they undercut Title VII,” which she stressed might “be this century’s most important piece of remedial legislation. “By employing an eccentric and heightened pleading standard in this case, and importing facts from outside the record, the panel majority and concurrence suggest our Court will find ways to shut the door on litigants seeking to vindicate their civil rights. That is not the message we should send to litigants, especially in these troubled times.”

Chin dissent. In a lengthy dissent to the order denying rehearing en banc joined by Judges Pooler, Katzmann, Lohier, and Carney, Judge Chin argued that by denying the rehearing petition, the court ignored an important question: the adverse impact of an absolute convictions bar on individuals seeking employment, which is disproportionately borne by African Americans. “The heightened pleading standard created by the panel majority for disparate impact cases brought pursuant to Title VII of the Civil Rights Act of 1964, presents a risk that many meritorious civil rights cases will not be reached on the merits. This is particularly troubling now in light of the implications for the struggle for racial equality that Title VII reflects, as the nation continues to address the issue of systemic racism.”

Not only can national statistics be probative of whether a challenged policy has a disparate impact, in the context of a motion to dismiss, he argued, a plaintiff has even more latitude in relying on them. Further, he contended, the plaintiffs here did not rely solely on general population statistics or on statistics in a conclusory or abstract fashion. Rather, they alleged specific facts and circumstances showing that NTT’s blanket convictions bar had an adverse impact on them personally.

Deeply flawed. And not only did the district court misapply the standards applicable to Rule 12(b)(6) motions to dismiss, the panel majority, by affirming the lower court’s decision, adopted its “deeply flawed reasoning that plaintiffs were required to provide, at the pleadings stage and before discovery, statistics as to conviction rates for NTT’s specific applicant pool.” In doing so, Judge Chin asserted, the panel majority made numerous errors. “In concluding that plaintiffs failed to state a plausible claim of disparate impact discrimination, the panel majority rejects national statistics that clearly are a logical starting point for the analysis, because of its assumption that education is a ‘confounding variable’ and its surmise that racial disparities in arrest and conviction rates dissipate as education increases.”

Dangerous precedent. “Our Court,” Judge Chin warned, “has long recognized the importance of Title VII and the rights it protects. By denying the petition for rehearing en banc, the Court is now leaving in place a decision that will become, I am afraid, a dangerous precedent, as it will permit courts to dismiss what may be meritorious disparate impact civil rights claims because plaintiffs, who may be working ‘from an informational disadvantage,’ are not able to provide ‘granular data’ that is only in the possession of the employer, for an applicant pool that has not yet been defined, based on speculation that general statistics are irrelevant because the plaintiffs do not account for all purportedly ‘confounding variable[s],’ all at the pleadings stage of a lawsuit.”