Labor & Employment Law Daily Applicants could not rely on national statistics to support disparate impact challenge to felony conviction no-hiring policy
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Thursday, September 24, 2020

Applicants could not rely on national statistics to support disparate impact challenge to felony conviction no-hiring policy

By Kathleen Kapusta, J.D.

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

Observing that this “lawsuit provides a case study as to why” statistics, while helpful, must be consulted cautiously, a divided Second Circuit affirmed 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. 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,” said the court, affirming dismissal of the putative class action. Judge Chin dissented (Mandala v. NTT Data, Inc., September 21, 2020, Sullivan, R.).

One of the applicants applied for a “salesforce developer” opening; the other applied for the position of “web developer.” The company extended job offers to both. Both, however, had felony convictions on their records and, upon learning of their criminal backgrounds, the employer withdrew the offers. The applicants asserted putative class action disparate impact discrimination claims under Title VII, alleging that the employer has a “‘policy and practice of denying job opportunities to individuals with certain criminal convictions including felonies (or similar criminal classifications)’” and that, because African Americans “interact with the criminal justice system at much higher rates than Whites,” this policy and practice had a disparate impact on African Americans in violation of Title VII.

Lower court proceedings. In support of their claim, the applicants cited statistics from the Department of Justice and other sources showing that African-Americans are disproportionately arrested and incarcerated at much higher rates than whites. Dismissing their complaint for failure to state a claim, the district court found that those statistics were “inadequate to show a relationship between the pool of [NTT] applicants who are Caucasian versus African Americans and their respective rates of felony convictions.”

Statistical analysis. On appeal, the Second Circuit first noted that while plaintiffs in disparate impact cases typically rely on statistical evidence to show a disparity in outcome between groups, “not just any statistical assessment will do.” At the very least, said the court, the statistical analysis should focus on the disparity between appropriate comparator groups such that the analysis reveals “disparities between populations that are relevant to the claim the plaintiff seeks to prove.”

Statistics for the general population. And in a typical case regarding racially discriminatory hiring practices, the relevant comparison, observed the court citing Supreme Court precedent, is between “the racial composition of the at-issue jobs and the racial composition of the qualified population in the relevant labor market.” Because such figures are not always available, especially before discovery, plaintiffs sometime rely on statistics for the general population. But general population statistics, the court explained, “are a reliable surrogate only when there is reason to think that they ‘accurately reflect the pool of qualified job applicants’ for the position in question.”

Fatal flaw. And while the applicants argued that the company’s policy of denying job opportunities to individuals with certain criminal convictions has a disparate impact on qualified African Americans because African Americans are arrested and incarcerated for crimes at higher rates than whites, their reasoning, said the court, “ultimately succumbs to a fatal flaw.” There were no allegations that national arrest or incarceration statistics were representative of the pool of qualified potential applicants for a position with the company. “To put it more plainly, it is error for Plaintiffs to simply presume that population-level statistics will accurately describe subgroups of that population.”

Skilled positions. Noting further that their claim concerned hiring policies governing skilled positions requiring at least some educational or technical experience, the court noted that “it is not much of a stretch to imagine that arrest and conviction rates are negatively correlated with education (at least to some degree).” Thus, while their statistics showed that African Americans are on average more likely to have been convicted of a crime than whites, “that does not, without more, make it plausible that an African-American web developer” with the company’s required qualifications “is more likely to have been convicted of a crime than his Caucasian counterpart.”

Although the court was “sensitive to the fact that Plaintiffs are undoubtedly working from an informational disadvantage at this early point in the proceedings,” they were not “free to rely on conclusory statistical inferences to force their way into discovery.” Rather, said the court, a Title VII plaintiff who plans to rely on national statistics to plead a disparate impact claim must explain why those statistics can plausibly be expected to hold true for the qualified pool in question.

Dissent. Dissenting, Judge Chin first argued that the court below did not properly apply the standards applicable to Rule 12(b)(6) motions to dismiss but instead relied on a case setting forth the standards for proving, rather than pleading, a disparate impact case. “To plead a disparate impact claim, however, a plaintiff is not required to show, demonstrate, or identify anything — he need only allege a plausible claim,” he argued, and here, the national statistics and other facts alleged by the applicants were sufficient to meet this minimal burden.

Premature. Further, he contended, the applicants’ reliance on national statistics was appropriate, especially at the pleadings stage of the litigation. The applicants alleged the company was a “global” information technology services company with some 18,000 employees in North America and over 20 offices in the United States, and that both were impacted by the company’s policy even though they lived in different states and applied for different types of work. Thus, he argued, it was premature for the district court to have concluded that national statistics had no probative value.

Finally, Judge Chin contended, the applicants plausibly alleged that the company’s policy had a disparate impact on African-American job applicants. They alleged the policy had an adverse impact on them personally and the national statistics upon which they relied showed that African Americans are arrested and incarcerated at higher rates than whites. While he acknowledged that statistics as to a specific applicant pool might be more accurate, “the absence of such statistics at the motion to dismiss stage should not be fatal to plaintiffs’ claims, as the appropriate applicant pool likely cannot be defined until after discovery, when more details about NTT’s job requirements and applicant pools would become available.”

If the facts alleged by the applicants are true, Judge Chin observed, then they “are vivid examples of the adverse impact an absolute convictions bar can have on individuals generally – and African Americans in particular – seeking employment.”

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