Opinion ID: 614325
Heading Depth: 2
Heading Rank: 3

Heading: analysis

Text: Meditz claims that Newark's residency requirement for non-uniformed employees has a disparate impact on white, non-Hispanics in violation of Title VII. In support of his claim, he cites evidence of the relatively low percentage of white, non-Hispanics in Newark's non-uniformed work force. The statistics he provides demonstrate that the percentage of white, non-Hispanics in Newark's non-uniformed work force is lower than the percentage that would be anticipated based on the percentage of white, non-Hispanics in the population of the relevant labor market. Title VII makes it unlawful 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. 42 U.S.C. § 2000e-2(a)(1). The Supreme Court has long recognized that Title VII plaintiffs can make out a viable employment discrimination claim without alleging or proving discriminatory intent. See Griggs v. Duke Power, 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). Under Title VII, practices, procedures, or tests neutral on their face, and even neutral in terms of intent, cannot be maintained if they operate to `freeze' the status quo of prior discriminatory employment practices. Griggs, 401 U.S. at 430, 91 S.Ct. 849. The [Supreme] Court announced that these `disparate impact' cases should proceed in two steps: (1) the plaintiff must prove that the challenged policy discriminates against members of a protected class, and then (2) the defendant can overcome the showing of disparate impact by proving a `manifest relationship' between the policy and job performance. This second step came to be known as the `business necessity' defense, and it serves as an employer's only means of defeating a Title VII claim when its employment policy has a discriminatory effect. El v. SEPTA, 479 F.3d 232, 239-40 (3d Cir.2007) (footnotes omitted.) [T]he successful assertion of the business necessity defense is not an ironclad shield; rather, the plaintiff can overcome it by showing that an alternative policy exists that would serve the employer's legitimate goals as well as the challenged policy with less of a discriminatory effect. Id. at 240 n. 9. Thus, [i]n order to establish a prima facie case of disparate impact discrimination, a plaintiff is required to demonstrate that application of a facially neutral standard has resulted in a significantly discriminatory hiring pattern. N.A.A.C.P. v. Harrison, 940 F.2d 792, 798 (3d Cir.1991) (citing Dothard v. Rawlinson, 433 U.S. 321, 329, 97 S.Ct. 2720, 53 L.Ed.2d 786 (1977)). The evidence in these `disparate impact' cases usually focuses on statistical disparities. Watson v. Fort Worth Bank and Trust, 487 U.S. 977, 987, 108 S.Ct. 2777, 101 L.Ed.2d 827 (1988). A comparison between the racial composition of those qualified persons in the relevant labor market and that of those in the jobs at issue typically `forms the proper basis for the initial inquiry in a disparate impact case.' Harrison, 940 F.2d at 798 (quoting Wards Cove Packing Co., Inc. v. Atonio, 490 U.S. 642, 650-51, 109 S.Ct. 2115, 104 L.Ed.2d 733(1989) (superceded by statute on other grounds)). The Supreme Court has noted in several cases that statistics may serve to establish plaintiff's prima facie case. See, e.g., Watson, 487 U.S. at 991-95, 108 S.Ct. 2777; Hazelwood School Dist. v. United States, 433 U.S. 299, 97 S.Ct. 2736, 53 L.Ed.2d 768 (1977). That is, [w]here gross statistical disparities can be shown, they alone may in a proper case constitute prima facie proof of a pattern or practice of discrimination. Hazelwood, 433 U.S. at 307-08, 97 S.Ct. 2736. But, [o]nce the employment practice at issue has been identified, causation must be proved; that is, the plaintiff must offer statistical evidence of a kind and degree sufficient to show that the practice in question has caused the exclusion of applicants for jobs or promotions because of their membership in a protected group. Our formulations, which have never been framed in terms of any rigid mathematical formula, have consistently stressed that statistical disparities must be sufficiently substantial that they raise such an inference of causation. Watson, 487 U.S. at 994-95, 108 S.Ct. 2777. See also Green v. USX Corp., 896 F.2d 801, 804 (3d Cir.1990) (observing that [t]he [Supreme] Court held that the plaintiff may not make out a prima facie discrimination case simply by showing a bottom line racial imbalance in the work force, or by identifying a number of allegedly discriminatory employment practices. Instead, the plaintiff must `demonstrate that the [racial] disparity . . . is the result of one or more of the employment practices that they are attacking . . ., specifically showing that each challenged practice has a significantly disparate impact on employment opportunities for whites and nonwhites.' (quoting Wards Cove, 490 U.S. at 657, 109 S.Ct. 2115)). However, a key factor in assessing the statistics is ensuring that the court is using the correct basis for comparison. That is, [w]hat the hiring figures prove obviously depends upon the figures to which they are compared. Hazelwood, 433 U.S. at 310, 97 S.Ct. 2736. [12] To use the vernacular, we cannot compare apples to oranges. In Hazelwood, that was essentially what the district court didit compared the percentage of minority teachers to the percentage of minority students, rather than comparing the percentage of minority teachers in the Hazelwood school district to the percentage of minority teachers in the relevant labor market. The Supreme Court directed the district court, on remand, to evaluate the parameters of the appropriate relevant labor market, including whether it should or should not include the city of St. Louis. The Court, after discussing statistical methodology, commented that those observations are not intended to suggest that precise calculations of statistical significance are necessary in employing statistical proof, but merely to highlight the importance of the choice of the relevant labor market area. Id. at 311, 97 S.Ct. 2736. Similarly, we have addressed the question of what constitutes the relevant labor market. In Harrison, the Third Circuit examined Harrison's employment related residency requirement, and that policy's impact on the city's ability to hire minorities. Given that the city of Harrison had a very small minority population, limiting hiring to city residents almost assured having no minority employees. However, that fact alone was insufficient to establish plaintiff's prima facie case. In Harrison, we approved the District Court's methodology for defining the relevant labor market. The factors included geographical location, flow of transportation facilities, locations from which private employers in Harrison draw their work force, and commuting patterns. 940 F.2d at 799-801. Here, in support of his prima facie case, Meditz offered statistical evidence showing that the percentage of white, non-Hispanics employed by Newark was lower than the percentage of white, non-Hispanics in the general population of Newark. Meditz also offered statistics showing the percentage of white, non-Hispanics in surrounding areas, both for the general population and for the private and government work forces. Finally, Meditz offered evidence of the percentage of white, non-Hispanics employed by the Essex County government in Newark. Out of all of these percentages, the lowest was the percentage of white, non-Hispanics employed by the city of Newark. This compilation of statistics supported Meditz's claim that white, non-Hispanics were under-represented in Newark's non-uniformed work force. The Supreme Court has set forth standards to be used as a basis for evaluating statistical evidence in disparate impact claims. Relying on the statistical standards developed in jury analysis cases, the Supreme Court suggested that fluctuation of more than two or three standard deviations would undercut the hypothesis that decisions were being made randomly with respect to race. Hazelwood, 433 U.S. at 311 n. 17, 97 S.Ct. 2736. [13] Assuming for the moment that the District Court was correct and the relevant labor market is the population of the city of Newark, the difference between the two percentages is slightly over six standard deviations, far in excess of the Supreme Court's suggested standard of two or three standard deviations. [14] This difference appears to establish a prima facie case. [15] Despite this statistical evidence, the District Court concluded that Meditz failed to prove his prima facie case because the difference between the percentage of white, non-Hispanics employed by the city (9.24%) compared to the percentage of white, non-Hispanics living in the city (14.2%), did not constitute sufficient evidence of a significantly discriminatory hiring pattern. Meditz, 2010 WL 1529612, at . Given this bald conclusion, it is not clear what methodology or statistical analysis the District Court employed. Notably, the District Court made no reference to the standard deviation analysis recommended by the Supreme Court. Before the District Court can reach the statistical analysis, it must make a determination as to the parameters of the relevant labor market. See Hazelwood, 433 U.S. at 313, 97 S.Ct. 2736. In conducting this analysis, the District Court should consider the factors set forth in Harrison, including geographical location, flow of transportation facilities, locations from which private employers draw their workforce, and commuting patterns. [16] Harrison, 940 F.2d at 799-801. In Harrison, this Court concluded that the factors considered by the district court in determining what geographical area constituted the relevant labor market were reasonable. 940 F.2d at 801. The District Court here focused on the fact that the population of Harrison, at the time of this Court's decision in that case, included few blacks, and Harrison employed no blacks. By comparison, according to the District Court here, the fact that Newark employed 180 white, non-Hispanics, far more than Harrison's employment of zero blacks, sufficed to demonstrate a lack of discrimination. The District Court misinterpreted Harrison. Rather than reading Harrison as setting forth appropriate criteria to consider in determining the relevant labor market, the District Court read Harrison to stand for the proposition that the only reason to look outside the city limits is a lack of minorities within the city. We will remand so that the District Court can determine the relevant labor market, relying on the criteria set forth in Harrison, and then conduct a complete and correct statistical analysis, [17] comparing the makeup of Newark's non-uniformed labor force with the similarly skilled labor force in the relevant labor market. To the extent the District Court concluded that, even if Meditz established a prima facie claim of disparate impact, Newark is still entitled to summary judgment because the city has met the requirements of the business necessity defense, we further reverse the Court on this point. We agree with Meditz that the District Court applied the incorrect standard. The District Court focused only on whether the business justifications offered by Newark had any connection to the residency policy even if unrelated to Meditz's ability to perform the job in question. The District Court mistakenly relied on this court's opinion in Harrison that in turn relied on the Supreme Court's definition of business justification in Wards Cove. The Civil Rights Act of 1991 abrogated the decision in Wards Cove, and returned the business necessity defense to the standard that existed prior to the date of the decision in Wards Cove, El, 479 F.3d at 241. Since the enactment of the Civil Rights Act of 1991, we have not had the occasion to consider the business necessity defense in a case involving a challenge to an employment related residency requirement. However, in El, we carefully considered the evolution of the business necessity defense, and concluded that hiring criteria must effectively measure the `minimum qualifications for successful performance of the job in question.' This holding reflects the Griggs/Albemarle/Dothard rejection of criteria that are overbroad or merely general, unsophisticated measures of a legitimate job-related quality. It is also consistent with the fact that Congress continues to call the test `business necessity,' not `business convenience' or some other weaker term. El, 479 F.3d at 242 (quoting Lanning v. SEPTA, 181 F.3d 478, 481 (3d Cir.1999)). It is this standard, and not the standard set forth in Harrison, that the District Court must address on remand. We note that even under the diluted [18] business necessity defense applied in Harrison, this Court found the reasons proffered by the city of Harrison to be insubstantial and not supported by objective evidence demonstrating a nexus between [the] residency ordinance and any specific employment goal. Harrison, 940 F.2d at 805. The business necessities we rejected in Harrison are strikingly similar to the justifications offered by Newark here. Unlike the city of Harrison, which offered testimony in support of its business necessity defense, Newark provides scant support or explanation for its proffered business necessities. On remand, if the District Court reaches the question of business necessity, it should analyze the evidence offered by Newark in support of its position, and not simply conclude that [t]his Court is satisfied that Defendant has objectively demonstrated a nexus between its residency ordinance and its employment goals. Meditz, 2010 WL 1529612, at .