In the prior articles in this series, we concluded that the Supreme Court’s pattern or practice holdings in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), provide important guardrails applicable to OFCCP enforcement actions related to the merits of disparate impact claims and claims of a pattern or practice of disparate treatment. As to the former, the Supreme Court stressed the importance of isolating the particular employment practice responsible for alleged statistical disparities, and reaffirmed that generalized challenges to delegating discretion to managers is not enough. As to the latter, the Supreme Court emphasized the crucial role of anecdotal evidence. As to either types of claims, the Court found aggregate statistical analyses to be insufficient and indicated that the analyses must be structured to evaluate the pay decisions of the decision-maker(s) who made decisions for the employees included in the analyses or to evaluate the possible disparate impact of a particular employment practice applicable to those employees.
In this last article, we consider how lower courts have addressed these questions since Dukes. Unfortunately, there have been few cases where courts have directly addressed the question of the application of Dukes in the context of an OFCCP matter. The Department of Labor’s (DOL) Administrative Review Board has not addressed the issue. However, two DOL administrative law judges recently issued written decisions that rely on Dukes for the legal standard on the merits of disparate impact and pattern or practice claims. Both cases addressed the merits of an OFCCP action alleging systemic pay discrimination. In the most recent ruling, Administrative Law Judge Richard M. Clark explained that, “[v]iolations of Title VII can be based on either a disparate treatment or disparate impact theory. See, e.g., Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011); Int’l Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n.15 (1977).” Order Granting in Part and Denying in Part OFCCP’s Motion to Compel Historical Data of Comparator Employees, in OFCCP v. Oracle America, Inc., 2017-OFC-06, Slip Op. at 5-6 (May 16, 2019). Several months ago, Administrative Law Judge Colleen A. Geraghty cited Dukes when identifying the relevant standard for a disparate impact claim: “In order to establish a disparate impact violation, OFCCP must demonstrate Analogic ‘uses a particular employment practice that causes a disparate impact on the basis of [sex.]’ 42 U.S.C. § 2000e-2(k)(1)(A)(i); Wards Cove Packaging Co. v. Antonio, 490 U.S. 642, 657 (1989); Wal-Mart Stores Inc. v. Dukes, 564 U.S. 338 (2011). . . ” OFCCP v. Analogic Corp., 2017-OFC-00001, Slip. Op. at 31 (ALJ March 22, 2019).
While outside of the OFCCP context many courts have applied Dukes, it may be most helpful to consider cases that sought to distinguish Dukes when addressing the merits of specific claims. The question is whether those few cases provide support for a contention that the reasoning in Dukes is inapplicable outside of Rule 23. Research indicates two such cases. First, in Tabor v. Hilti, 703 F.3d 1206, 1229-30 (10th Cir. 2013), a panel of the Court of Appeals ruled that Dukes precluded the plaintiffs’ request for class certification on a disparate impact claim:
In the current case, Plaintiffs challenge a highly discretionary policy for granting promotions. They have not shown that Hilti maintained “a common mode of exercising discretion that pervade[d] the entire company.” 131 S. Ct. at 2254-55. To the contrary, the record suggests that Hilti failed to maintain the GDCP system in any uniform manner. Even if Plaintiffs’ statistical evidence demonstrates (at least facially) that this haphazard policy caused an overall disparate impact on women, Plaintiffs have not shown that the facts and circumstances involved in Hilti’s promotion choices are common across the class of female employees. The very circumstances at issue in the individual claims of the two current plaintiffs illustrate this point: Ms. Tabor received a P1 rating and applied for at least two promotions, whereas Ms. Gray did not receive a P1 rating, did not apply for promotion, and apparently received disciplinary warnings. In each case, Hilti offers a very different defense to allegations of discrimination.
Tabor I, 703 F.3d at 1229-30.
Despite denying class certification on the basis of Dukes, the Court ruled that Dukes did not preclude one of the plaintiff’s individual disparate impact challenges to the employer’s performance management process that resulted in promotion readiness scores. The employer argued that the challenges were foreclosed by Dukes because it depended on the allegation of discretionary decision-making. The Tenth Circuit panel disagreed:
Hilti argues that the GDCP system cannot be the basis of a disparate impact claim because the Supreme Court’s recent decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), rejects use of a discretionary practice as the basis of such a claim. But Hilti misunderstands the Supreme Court’s opinion in Wal-Mart and the Court’s precedent on this issue. The Court has said that discretionary practices may form the basis for an individual disparate impact claim. See Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 990 (1988) (“[D]isparate impact analysis is in principle no less applicable to subjective employment criteria than to objective or standardized tests.”). Wal-Mart did not disturb this precedent. In Wal-Mart, the Court held that the company’s practice of leaving hiring and promotion decisions to the discretion of local supervisors without a more specific policy could not form the basis for class certification. See 131 S. Ct. at 2554-56. The issue in Wal-Mart was factual commonality across all plaintiffs in the class. The Court found it unlikely that thousands of Wal-Mart managers across different regions of the country “would exercise their discretion in a common way without some common direction.” Id. at 2555.
Tabor I, 703 F.3d at 1221-22.
In proceedings following the initial Tenth Circuit panel decision, another panel of the same court affirmed the district court’s ruling that the plaintiff’s individual disparate impact claim failed precisely because the plaintiff’s statistical analyses did not isolate the particular employment practice:
The [district] court held, however, that Ms. Tabor’s statistical analysis “did not isolate the GDCP.” Id. at 1585. It elaborated as follows:
The court concluded that, “[b]ecause [the expert analysis] does not isolate the GDCP from the interview process, the disparate impact may be caused by one or both of those processes. And without knowing which of those processes cause[s] the alleged disparate impact, the court would be unable to fashion an appropriate equitable remedy.” Id. Ultimately, the court held that “[b]ecause the statistical evidence does not isolate the GDCP, [Ms.] Tabor has not carried her burden of demonstrating that the GDCP causes a disparate impact on female feeder pool applicants who apply for outside sales Account Manager positions.” Id. at 1586.
The district court further determined that Ms. Tabor was not affected by the GDCP: “Tabor applied for an Account Manager position, participated in the GDCP, earned the highest [P-]rating possible, and interviewed for the Account Manager positions. Thus, through the GDCP, Tabor secured an interview for the Account Manager positions.” Id. at 1587. The court concluded that the decision not to hire Ms. Tabor as an Account Manager “resulted from the interview process, not the GDCP. Therefore, even if [Ms.] Tabor had demonstrated the GDCP caused a disparate impact on female Account Manager applicants, that discrimination would not have applied to her personally.” Id.
Tabor II, 577 Fed. App’x 870, 875 (10th Cir. 2014).
The second panel of the Tenth Circuit affirmed, explaining that the district court had not erred in determining that the plaintiff failed to identify a particular employment practice and isolate it as the cause of statistical disparities. Id. at 876-77.
It is unclear how the Tenth Circuit’s rulings in the Tabor cases would provide any support to the contention that EEOC or OFCCP can mount a generalized disparate impact challenge to the practice of delegating discretion to managers where the agencies seek relief for an “affected class” of employees. This would not be an individual disparate treatment claim. Moreover, the Tenth Circuit’s ultimate decision in Tabor II required the plaintiff to isolate the particular employment practice and did not authorize a generalized challenge to delegated discretion.
One other court sought to distinguish Dukes where there was a challenge to centralized decision-making, rather than a challenge to delegated discretion, and the challenge was supported by substantial proof of the alleged centralized decision-making. In EEOC v. Texas Roadhouse, Inc., 215 F. Supp.3d 140, 170-71 (D. Mass. 2016), the EEOC alleged a pattern or practice of age discrimination for customer-facing positions based on allegations that the employer’s corporate managers influenced local hiring decisions through training and management interactions:
As part of their overall training, Managing Partners receive training on how to hire for different positions including FOH positions comprised of hosts, servers, server assistants and bussers and bartenders. D. 589 ¶ 58; D. 616 ¶ 58; D. 617 ¶ 61; D. 644 ¶ 61. Managers in training are validated on legendary hiring, behavioral interviewing and “hiring for Image and Heart.” D. 617 ¶ 62; D. 644 ¶ 62. Texas Roadhouse also provided interviewing and hiring handouts to all attendees of Legendary Learning and Service Manager University. D. 617 ¶ 63; D. 644 ¶ 63. Texas Roadhouse also provides hiring training to managers at Market meetings. D. 617 ¶ 64; D. 644 ¶ 64. Texas Roadhouse believes it is important that all Texas Roadhouse managers with hiring responsibility receive and apply consistent hiring practices. D. 617 ¶¶ 66-68; D. 644 ¶¶ 66-68.
215 F. Supp.3d at 151.
The district court recounted a number of examples of anecdotal evidence presented by EEOC in support of allegations that corporate managers instructed local managers to hire candidates for customer-facing positions who met a desired “image.” For example:
Testimony by some former employees of Texas Roadhouse corroborate the applicant testimonies. Kathryn Osborne, a former employee of Asheville, NC training center, testified that she believed the Legendary Look to be attractive, mostly female, younger and fit, D. 617 ¶ 170, 176; D. 644 ¶ 170, 176, and that she derived this opinion from both looking around the stores and from statements made in front of her by Market Partner Greg Beckel and other male managers from other stores. D. 618-62 at 11-12; D. 617 ¶ 1; D. 644 ¶ 1.
215 F. Supp.3d at 174.
Based on the evidentiary support for EEOC’s allegations of centralized decision-making, the district court rejected the employer’s argument that the Agency’s claim was foreclosed by Dukes:
Again, relying on Dukes, Texas Roadhouse argues that it is entitled to summary judgment since the EEOC’s reliance upon Crawford’s use of aggregated data fails, as a matter of law, to show a pattern or practice of discrimination. Dukes does not compel this conclusion. In Dukes, plaintiffs brought a proposed class action against Wal-Mart alleging that Wal-Mart’s refusal to restrict local managers’ autonomy and discretion over pay and promotion and its allowance of the same disproportionately favored men and thus constituted disparate treatment by Wal–Mart. Dukes, 564 U.S. at 343–45, 131 S.Ct. 2541. This is distinct from the EEOC’s allegations, which contend that Texas Roadhouse had a top-down policy of hiring under 40 FOH workers instituted by its corporate structure and emphasized by its training programs. Additionally in Dukes, the Supreme Court, in concluding that Rule 23 certification was not warranted because the class of female plaintiffs subject to hiring/promotion positions decided by local supervisors had not shown commonality of their claims, concluded that the statistical analysis was insufficient to support commonality. Dukes, 564 U.S. at 356–57, 359–60, 131 S.Ct. 2541. There, plaintiffs’ statistical evidence was two-fold. One expert used regression analysis to compare the number of women promoted into management positions with the percentage of women in the available pool of hourly workers and concluded that the disparities could only be explained by gender, and the second compared workforce data from Wal-Mart competitors and opined that Wal-Mart promotes a lower percentage of women than those competitors do. Id. at 356, 131 S.Ct. 2541. In analyzing these statistics, the Court found that the nationwide commonality necessary to satisfy Rule 23 was not met because regional and national level disparities did not establish store-by-store disparities, a critical component of the plaintiffs’ commonality theory. Id. at 357, 131 S.Ct. 2541. No such problem exists here with the use of Crawford’s statistical analysis as the EEOC does not use it to show store-by-store disparities nor need rely upon those localized disparities, but instead utilizes Crawford’s analysis to demonstrate nationwide disparities that may reveal a top-down policy of encouraging discriminatory hiring. The Supreme Court also concluded that, even if the statistical evidence demonstrated that every Wal-Mart store had gender disparity in pay and promotion, plaintiffs still failed to satisfy Rule 23 commonality because merely showing that the policy of discretion has produced an overall disparity does not suffice to show disparate treatment, and the entirety of the evidence revealed that class members held a number of different jobs at different levels of the corporate hierarchy and that these jobs were held for differing lengths of time and subject to a number of varying regional policies. Id. The same is not true here where this litigation is confined to one set of positions at Texas Roadhouse, the statistics bear only upon those specified positions and the discrepancies in hiring therein and the non-statistical evidence raises a genuine issue of fact as to whether there was a company-wide message of discriminatory hiring. Thus, these kinds of statistics are more relevant here as a manner of proving that the top-down policy was causing disparate treatment in the hiring of PAG workers.
EEOC v. Texas Roadhouse, Inc., 215 F.Supp.3d 140, 170-71 (D. Mass. 2016).
Accordingly, the district court distinguished Dukes on the grounds that EEOC’s allegations were supported by evidence of centralized decision-making, and not on the grounds that Dukes was relevant only to Rule 23. To the extent that other courts find this district court’s decision persuasive, substantial evidence that supports allegations of centralized decision-making might, in an appropriate case, be a basis for distinguishing certain aspects of Dukes.
In the last analyses, there is no basis for understanding that the Supreme Court’s pattern or practice and disparate impact holdings in Dukes do not apply to systemic discrimination claims brought to OFCCP. Agency challenges that do not adhere to those rulings simply fail to respect the Supreme Court and its ultimate standing in our constitutional system “to say what the law is.” When the Supreme Court has spoken, its rulings should be respected by federal agencies. Regulated entities should not be subject to claims that run contrary to the Court’s rulings and that depend for their success on untenable arguments and the practical threat of reputational harm and substantial defense costs.