Wards Cove Packing Co. v. Atonio

Facts

The statutory anchor is Title VII, which makes it unlawful for an employer “to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin,” and equally unlawful “to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities … because of such individual’s race,” etc. (42 U.S.C. § 2000e-2(a); quoted at Wards Cove, supra, 490 U.S. at p. 645, fn. 1.) As Justice White’s opinion recounted, Griggs v. Duke Power Co., 401 U.S. 424, 431 (1971), construed Title VII to proscribe “not only overt discrimination but also practices that are fair in form but discriminatory in practice” — the “disparate-impact” theory at issue here, under which “a facially neutral employment practice may be deemed violative of Title VII without evidence of the employer’s subjective intent to discriminate that is required in a ‘disparate-treatment’ case.” (Wards Cove, supra, 490 U.S. at pp. 645–646.)

The petitioners were “two companies that operate salmon canneries in remote and widely separated areas of Alaska.” (Id. at p. 646.) The canneries “operate only during the salmon runs in the summer months” and are “inoperative and vacant for the rest of the year.” (Ibid.) Because salmon “must be processed soon after they are caught,” “the work during the canning season is … intense,” and “all workers are housed at the canneries and have their meals in company-owned mess halls.” (Id. at pp. 646–647.)

Two job types, two hiring channels. Jobs were “of two general types: ‘cannery jobs’ on the cannery line, which are unskilled positions; and ‘noncannery jobs,’” “[m]ost” of which “are classified as skilled positions.” (Id. at p. 647.) “Cannery jobs are filled predominantly by nonwhites: Filipinos and Alaska Natives.” (Ibid.) The Filipinos were “hired through, and dispatched by, Local 37 of the International Longshoremen’s and Warehousemen’s Union pursuant to a hiring hall agreement,” while the Alaska Natives “primarily reside in villages near the remote cannery locations.” (Ibid.) “Noncannery jobs are filled with predominantly white workers, who are hired during the winter months from the companies’ offices in Washington and Oregon.” (Ibid.) “Virtually all of the noncannery jobs pay more than cannery positions,” and “[t]he predominantly white noncannery workers and the predominantly nonwhite cannery employees live in separate dormitories and eat in separate mess halls.” (Ibid.)

In 1974 the respondents — “a class of nonwhite cannery workers who were (or had been) employed at the canneries” — sued under Title VII, alleging that “a variety of petitioners’ hiring/promotion practices — e. g., nepotism, a rehire preference, a lack of objective hiring criteria, separate hiring channels, a practice of not promoting from within — were responsible for the racial stratification of the work force and had denied them … employment as noncannery workers on the basis of race.” (Id. at pp. 647–648.) They “also complained of petitioners’ racially segregated housing and dining facilities,” advancing all claims “under both the disparate-treatment and disparate-impact theories.” (Id. at p. 648.)

Procedural history

After a bench trial yielding “172 findings of fact,” the District Court “rejected all of respondents’ disparate-treatment claims,” rejected the disparate-impact challenges to the subjective criteria on the ground that they “were not subject to attack under a disparate-impact theory,” and rejected the challenges to the “objective” practices “for failure of proof.” (Id. at p. 648.) Judgment was entered for the companies. (Ibid.)

A Ninth Circuit panel affirmed, but that decision was vacated for en banc review to resolve “whether subjective hiring practices could be analyzed under a disparate-impact model.” (Ibid.) The en banc court held — “as this Court subsequently ruled in Watson v. Fort Worth Bank & Trust, 487 U.S. 977 (1988)” — that disparate-impact analysis applies to subjective practices, and further concluded that “‘[o]nce the plaintiff class has shown disparate impact caused by specific, identifiable employment practices or criteria, the burden shifts to the employer’” to “‘prov[e the] business necessity’” of the challenged practice. (Id. at pp. 648–649.) On remand the panel “held that respondents had made out a prima facie case of disparate impact in hiring for both skilled and unskilled noncannery positions” and “instruct[ed] the District Court that it was the employer’s burden to prove that any disparate impact … was justified by business necessity.” (Id. at p. 649.) Notably, “[n]either the en banc court nor the panel disturbed the District Court’s rejection of the disparate-treatment claims.” (Ibid.) The Court granted certiorari because the issues overlapped those on which it had been “evenly divided in Watson.” (Id. at p. 650.)

Issue

The Court addressed “disputed questions of the proper application of Title VII’s disparate-impact theory of liability.” (Ibid.) Three questions emerged: (1) whether a comparison between the racial composition of the cannery and noncannery workforces makes out a prima facie case of disparate impact (id. at p. 650); (2) “the question of causation in a disparate-impact case” — whether the plaintiff must identify the specific practice causing the disparity (id. at p. 656); and (3) “the nature of the employer’s defense” and “who bears the ultimate burden of proof as to whether there is a legitimate business justification for such practices” (id. at pp. 656, 658).

Holding

Reasoning

The wrong statistical comparison. The Court began with the proof the Ninth Circuit had accepted: “statistics showing a high percentage of nonwhite workers in the cannery jobs and a low percentage of such workers in the noncannery positions.” (Id. at p. 650.) Although “statistical proof can alone make out a prima facie case,” the panel’s ruling “misapprehends our precedents and the purposes of Title VII.” (Ibid.) Borrowing the language of Hazelwood School Dist. v. United States, the Court declared that the comparison “‘fundamentally misconceived the role of statistics in employment discrimination cases,’” because the “‘proper comparison [is] between the racial composition of [the at-issue jobs] and the racial composition of the qualified … population in the relevant labor market.’” (Id. at p. 650.) Where labor-market figures are elusive, “measures indicating the racial composition of ‘otherwise-qualified applicants’ for at-issue jobs … are equally probative.” (Ibid.)

Skilled jobs: a “nonsensical” comparison. Measuring “alleged discrimination in the selection of accountants, managers, boat captains, electricians, doctors, and engineers … by comparing the number of nonwhites occupying these jobs to the number of nonwhites filling cannery worker positions is nonsensical.” (Id. at p. 651.) “If the absence of minorities holding such skilled positions is due to a dearth of qualified nonwhite applicants (for reasons that are not petitioners’ fault), petitioners’ selection methods or employment practices cannot be said to have had a ‘disparate impact’ on nonwhites.” (Id. at pp. 651–652.) The Court qualified, however, that “the analysis would be different if it were found that the dearth of qualified nonwhite applicants was due to practices on petitioners’ part which — expressly or implicitly — deterred minority group members from applying.” (Id. at p. 651, fn. 7.) Accepting the panel’s theory, the Court warned, “would mean that any employer who had a segment of his work force that was — for some reason — racially imbalanced, could be haled into court and forced to engage in the expensive and time-consuming task of defending the ‘business necessity’ of [his] methods,” with “[t]he only practicable option for many employers” being “to adopt racial quotas” — “a result that Congress expressly rejected in drafting Title VII.” (Id. at p. 652.)

Unskilled jobs: bottom-line balance is irrelevant either way. Even for the unskilled noncannery positions “where workers … may have somewhat fungible skills,” racial imbalance in one segment does not establish a prima facie case. (Id. at pp. 652–653.) “As long as there are no barriers or practices deterring qualified nonwhites from applying … if the percentage of selected applicants who are nonwhite is not significantly less than the percentage of qualified applicants who are nonwhite, the employer’s selection mechanism probably does not operate with a disparate impact.” (Id. at p. 653.) The Court was careful to keep this symmetrical with Connecticut v. Teal: “bottom-line racial balance is not a defense under Title VII,” so even a balanced bottom line will not save an employer if a plaintiff “could prove that some particular hiring practice has a disparate impact on minorities.” (Id. at p. 653, fn. 8.)

The cannery pool was both too broad and too narrow. “[I]solating the cannery workers as the potential ‘labor force’ for unskilled noncannery positions is at once both too broad and too narrow.” (Id. at p. 653.) Too broad, “because the vast majority of these cannery workers did not seek jobs in unskilled noncannery positions”; too narrow, “because there are obviously many qualified persons in the labor market for noncannery jobs who are not cannery workers.” (Id. at pp. 653–654.) The “peculiar facts” drove the point home: because the District Court found nonwhites “‘overrepresent[ed]’” among cannery workers owing to the Local 37 hiring channel, the companies could, “with no change whatsoever in their hiring practices for noncannery workers,” make “respondents’ prima facie case of disparate impact ‘disappear’” simply by ceasing to use that union — “precisely such an ironic result that the Court of Appeals reached below.” (Id. at pp. 654–655.)

Specific causation: isolate the practice. Because the relied-upon disparity failed, the Court said its inquiry into causation and justification was “pretermitted,” but it addressed both questions for the remand. (Id. at p. 655.) Adopting Justice O’Connor’s Watson opinion, the Court held that “‘the plaintiff’s burden in establishing a prima facie case goes beyond the need to show that there are statistical disparities. … The plaintiff must begin by identifying the specific employment practice that is challenged,’” and is “‘responsible for isolating and identifying the specific employment practices that are allegedly responsible for any observed statistical disparities,’” especially where subjective criteria are combined with “‘more rigid standardized rules or tests.’” (Id. at p. 656.) Just as an employer cannot hide behind a balanced bottom line, “a Title VII plaintiff does not make out a case of disparate impact simply by showing that, ‘at the bottom line,’ there is racial imbalance in the work force.” (Id. at pp. 656–657.) To do otherwise would expose employers to liability for “‘the myriad of innocent causes that may lead to statistical imbalances.’” (Id. at p. 657.) Anticipating the objection that this rule is “unduly burdensome,” the Court answered that “liberal civil discovery rules give plaintiffs broad access to employers’ records,” and the Uniform Guidelines require covered employers to “‘maintain … records … which will disclose the impact which [their] tests and other selection procedures have’” by race. (Id. at pp. 657–658.)

The business-justification stage and the burden of persuasion. If a prima facie case is established, “the case will shift to any business justification petitioners offer,” a phase with “two components”: “the justifications an employer offers,” and “the availability of alternative practices … with less racial impact.” (Id. at p. 658.) On the justification standard, “the dispositive issue is whether a challenged practice serves, in a significant way, the legitimate employment goals of the employer.” (Id. at p. 659.) A “mere insubstantial justification … will not suffice,” but — critically — “there is no requirement that the challenged practice be ‘essential’ or ‘indispensable’ … for it to pass muster,” because that “degree of scrutiny would be almost impossible for most employers to meet.” (Ibid.) On the allocation of proof, the Court drew the central line: “the employer carries the burden of producing evidence of a business justification … . The burden of persuasion, however, remains with the disparate-impact plaintiff.” (Ibid.) To the extent the Ninth Circuit had shifted persuasion to the employer, “its decisions were erroneous,” for “‘[t]he ultimate burden of proving that discrimination against a protected group has been caused by a specific employment practice remains with the plaintiff at all times.’” (Id. at pp. 659–660.) The Court recast its own earlier language: where prior cases “speak of an employer’s ‘burden of proof’ … they should have been understood to mean an employer’s production — but not persuasion — burden.” (Id. at p. 660.) Finally, even losing on business necessity, plaintiffs “may still … prevail” by proving “‘other tests or selection devices, without a similarly undesirable racial effect, would also serve the employer’s legitimate [hiring] interest[s],’” showing the employer used its practices “‘merely as a “pretext” for discrimination’” — though any alternative “must be equally effective” given “the cost or other burdens,” and “‘[c]ourts are generally less competent than employers to restructure business practices.’” (Id. at pp. 660–661.)

The dissents. Justice Blackmun, joined by Justices Brennan and Marshall, charged that “a bare majority … takes three major strides backwards”: “upsetting the longstanding distribution of burdens of proof,” “bar[ring] the use of internal work force comparisons … even where the structure of the industry … renders any other statistical comparison meaningless,” and “requir[ing] practice-by-practice statistical proof of causation, even where … such proof would be impossible.” (Id. at p. 661 (Blackmun, J., dissenting).) He described an industry whose “total residential and work environment organized on principles of racial stratification and segregation … resembles a plantation economy,” and wondered “whether the majority still believes that race discrimination … against nonwhites … is a problem in our society.” (Id. at pp. 661–662.) Justice Stevens, joined by Justices Brennan, Marshall, and Blackmun, opened by recalling that “[f]ully 18 years ago, this Court unanimously held” in Griggs that Title VII “prohibits employment practices that have discriminatory effects as well as those that are intended to discriminate.” (Id. at p. 662 (Stevens, J., dissenting).) He accused the majority of “perfunctorily reject[ing] a longstanding rule of law,” reaching out to decide “‘these disputed questions’” at an “interlocutory stage,” and faulted it for “[t]urning a blind eye to the meaning and purpose of Title VII.” (Id. at pp. 662–663.)

Significance

Wards Cove sits at the hinge of a now-famous doctrinal whiplash: Griggs → Wards Cove → the Civil Rights Act of 1991. Griggs v. Duke Power Co. (1971) 401 U.S. 424 had established disparate-impact liability and, as later courts read it, placed the burden of proving “business necessity” on the employer. Wards Cove recalibrated that framework on two fronts. It tightened the plaintiff’s prima facie burden — demanding the “proper comparison” to the qualified labor pool (490 U.S. at p. 650) and “isolating and identifying the specific employment practices” causing the disparity (id. at p. 656) — and it reallocated the defense, holding that the employer bears only a burden of production while “[t]he burden of persuasion … remains with the disparate-impact plaintiff” (id. at p. 659), with no requirement that the practice be “‘essential’ or ‘indispensable’” (ibid.).

Congress responded directly. The Civil Rights Act of 1991 (Pub. L. No. 102-166, § 105) added 42 U.S.C. § 2000e-2(k), which overrode the burden-of-persuasion holding: once a plaintiff demonstrates that a particular practice causes a disparate impact, the employer must “demonstrate” — defined by the Act to include the burden of persuasion — that the practice is “job related for the position in question and consistent with business necessity.” The 1991 Act expressly invoked Griggs and pre-Wards Cove law as the governing standard. By contrast, the Act codified, with a limited exception, Wards Cove’s specific-causation requirement: § 2000e-2(k)(1)(B) generally requires a plaintiff to “demonstrate that each particular challenged employment practice causes a disparate impact,” unless the plaintiff shows the elements of the decisionmaking process “are not capable of separation for analysis,” in which case the process may be analyzed as one practice. Practitioners must therefore be precise: Wards Cove’s burden allocation and its rejection of an “essential/indispensable” standard are no longer good law, while its insistence on a specific, causally linked practice — and its “proper comparison” to the qualified labor pool — substantially survive in statutory form. As always, confirm the current state of § 2000e-2(k) with a citator before relying on this opinion.

Key quotes

“Racial imbalance in one segment of an employer’s work force does not, without more, establish a prima facie case of disparate impact with respect to the selection of workers for the employer’s other positions … .” (Wards Cove, supra, 490 U.S. at p. 653.)

“As a general matter, a plaintiff must demonstrate that it is the application of a specific or particular employment practice that has created the disparate impact under attack. Such a showing is an integral part of the plaintiff’s prima facie case in a disparate-impact suit under Title VII.” (Id. at p. 657.)

“In this phase, the employer carries the burden of producing evidence of a business justification for his employment practice. The burden of persuasion, however, remains with the disparate-impact plaintiff.” (Id. at p. 659.)

“[T]here is no requirement that the challenged practice be ‘essential’ or ‘indispensable’ to the employer’s business for it to pass muster … .” (Ibid.)

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Practice pointer

Open questions

The Court reserved several issues. Most pointedly, it did not decide whether a prima facie case existed on a sound basis: “this leaves unresolved whether the record made in the District Court will support a conclusion that a prima facie case of disparate impact has been established on some basis other than the racial disparity between cannery and noncannery workers,” an issue the lower courts “should address in the first instance.” (Id. at p. 655.) Because the relied-upon disparity failed, “any inquiry by us into whether the specific challenged employment practices … caused that disparity is pretermitted, as is any inquiry into whether the disparate impact … was justified by business considerations.” (Ibid.) The Court also flagged, without deciding, that a discrete practice “such as nepotism, if it were proved to exist, could … itself be subject to challenge if it had a disparate impact,” and that “segregated dormitories and eating facilities … may [be] challenged under 42 U.S.C. § 2000e-2(a)(2) without showing a disparate impact on hiring or promotion.” (Id. at p. 656, fn. 9.) Justice Stevens noted in dissent that respondents “do not press” a freestanding theory directed at the segregated facilities. (Id. at p. 663, fn. 4 (Stevens, J., dissenting).)