Big news out of the Third Circuit

There is a big decision out of the Third Circuit that creates a circuit split with three other circuits. On January 10, 2017, the Third Circuit issued an opinion in Karlo v. Pittsburg Glass Works, LLC, No. 15-3435. The Third Circuit held that subgroup claims are allowed in ADEA disparate impact cases, creating a circuit split on the issue.   A subgroup claim is when a group of workers tries to establish disparate impact by proving that a subset of older workers were disparately impacted by a decision. For example, in a reduction in force, the employees might argue that workers 50 and older were impacted by the reduction in force compared to workers younger than 50. If you want to read more about this issue read my article (cited by the 3d Circuit), Sandra F. Sperino, The Sky Remains Intact: Why Allowing Subgroup Evidence is Consistent with the Age Discrimination in Employment Act, 90 Marq. L. Rev. 227 (2006).

The Third Circuit takes a textual approach to the ADEA, arguing that the statutory language does not require all individuals 40 and older to be treated in the same negative way. Rather, the statute prohibits discrimination on the basis of age, not class membership (citing O’Connor v. Consolidated Coin Caterers, Corp.). As the Third Circuit noted, the ADEA prohibits age discrimination “as opposed to 40 or over discrimination.” The Court held that interpretation of the text of the ADEA relevant to disparate treatment claims should be applied to the same language used for disparate impact claims.

The Third Circuit buttressed its argument by citing Connecticut v. Teal. It noted that allowing subgroup claims was consistent with the Supreme Court’s decision that the bottom-line defense is not proper. As the Third Circuit noted, “The ADEA does not permit the victim of a facially discriminatory policy to be told that he has not been wronged because other persons aged forty or older were preferred.” The Court further reasoned that “[m]andating a forty-and-older comparison group would allow an employer to adopt facially neutral policies which had a profoundly disparate impact on individuals over age 50 or 55, so long as younger individuals within the protected class received sufficiently favorable treatment.”

What to do about McDonnell Douglas?

There is much to like in Ortiz; however, there is one part of the opinion that is problematic.  While the Seventh Circuit decries dividing evidence into buckets labeled direct evidence and indirect evidence and then analyzing that evidence separately, it is left with a bit of a problem with what to do with McDonnell Douglas. Ortiz already presses discrimination jurisprudence forward quite significantly and it is probably too much to ask to demand that the court also take on the behemoth that is McDonnell Douglas.

Rather than take it on, the Seventh Circuit simply notes that McDonnell Douglas is consistent with Ortiz. In principle, the Seventh Circuit is correct.  McDonnell Douglas and its progeny set forth one way for courts to look at certain discrimination cases.  That framework is not the only way to look at these cases.  However, the Seventh Circuit missed an important opportunity to address a difference between principle and practice.  Many judges treat McDonnell Douglas as if it is the only way to establish a disparate treatment claim based on circumstantial evidence.  The test has created the same problems and the same confusion as that unintentionally produced with the convincing mosaic test.

The convincing mosaic test was an important diversion from the primacy of McDonnell Douglas.  I worry that sounding the death knell of the convincing mosaic test will return McDonnell Douglas to its primacy in the Seventh Circuit.

More praise for Ortiz

There is so much to like about Ortiz. It recognized a fundamental problem with the employment discrimination frameworks.  Ortiz noted:

And the direct-and-indirect framework does nothing to simplify the analysis. Instead it complicates matters by forcing parties to consider the same evidence in multiple ways (and sometimes to disregard evidence that does not seem to fit one method rather than the other).

The Seventh Circuit has explicitly required lower courts to stop dividing evidence into direct and indirect frameworks and to consider it as a whole.

Legal kudzu

The Seventh Circuit’s Ortiz opinion is extraordinary in many respects. I want to praise it for its candor.  The Seventh Circuit recognizes its own role in creating the convincing mosaic of circumstantial evidence test, discusses the hopes it had for the test, and then shows why the test eventually proved less helpful than anticipated.  As I stated in my prior post, I still consider the convincing mosaic to be an important innovation in discrimination law that did further the jurisprudence.

What the Seventh Circuit recognizes is that the federal courts have a consistent tendency to want to change the evidentiary frameworks for thinking about discrimination into the elements of the cause of action.  This is understandable because some courts have not always been clear about what the frameworks are.  McDonnell Douglas does not establish the elements of a discrimination claim. It is a way to help courts think through discrimination claims (whether it does that is a different issue).  Likewise, the convincing mosaic of circumstantial evidence test did not constitute the elements of a discrimination case.  It was just another way to encourage judges to think about the totality of facts in a case.

Nonetheless, because these evidentiary frameworks look like elements of a claim and because some courts write about them in this way, it is understandable that some judges understand them to be elements of a claim. Ortiz makes clear what should have already been clear: the convincing mosaic test does not state the elements of a discrimination claim.

The Seventh Circuit recognized that the convincing mosaic test was supposed to be helpful to judges.  Instead, it produced what the Seventh Circuit called a form of “legal kudzu.”

Good-bye to the convincing mosaic

The Seventh Circuit had developed an interesting way of thinking about discrimination cases called the convincing mosaic of circumstantial evidence.  Under prior Seventh Circuit case law, the court used this phrase to describe one way that a worker could survive summary judgment.  If the worker put together enough circumstantial evidence that evidence could be pulled together to create a convincing case that discrimination occurred.

In Ortiz, the Seventh Circuit admitted that the convincing mosaic test created more problems than it solved.  Although Ortiz signals the demise of the convincing mosaic test, I want to sing some of its praises and note that it was an important legal innovation.  While agreeing that the test is problematic, I want to point out why it was an important interstitial step in discrimination jurisprudence.

In 1973, the Supreme Court developed the McDonnell-Douglas test for evaluating individual disparate treatment claims with circumstantial evidence. Although the Supreme Court explicitly stated otherwise, lower courts began interpreting McDonnell Douglas as though it created the only way of proving an individual disparate treatment case with circumstantial evidence.  In many circuits, workers trying to establish a discrimination case must proceed through either McDonnell Douglas or a direct evidence framework.  If they fail both tests, their cases are dismissed.

The Seventh Circuit recognized one of the problems with this dichotomy, that neither test fully captured the many ways that a worker might successfully prove discrimination.  The court created the convincing mosaic of circumstantial evidence concept as a new way for courts to think about how a worker might show discrimination.  By trying to wean lower courts off of the McDonnell-Douglas/direct evidence dichotomy, this test was an important development for discrimination law.

Ortiz overrules 10 Seventh Circuit cases

This post continues our discussion of Ortiz. In Ortiz, the Seventh Circuit worried that the direct and indirect frameworks distract trial court judges away from the real substantive issue in a disparate treatment case: whether a protected trait played a role in a negative employment action.

Ortiz recognizes that the core question of discrimination law had been lost in the morass of frameworks the courts created to evaluate discrimination cases. The opinion now requires judges in the Seventh Circuit to focus on a more straightforward approach to discrimination cases. Looking at the evidence as whole could a reasonable jury find that the worker’s protected trait played a negative role in the challenged employment decision?  If the answer to this question is yes, a jury should determine whether discrimination occurred. If the answer is no, then summary judgment is appropriate.

The Ortiz case overrules 10 Seventh Circuit cases to the extent that those cases segregated facts into the direct and indirect tests and treated those tests as if they established the elements of a discrimination claim.

More on Ortiz

In Ortiz v. Werner Enterprises, the Seventh Circuit addresses head on the frameworks used in that circuit for evaluating discrimination cases.  Because the frameworks vary slightly by circuit, I will set up the prevailing analysis in the Seventh Circuit prior to Ortiz.

The Seventh Circuit had developed a two-pronged analysis for individual disparate treatment cases.  Cases could proceed through a direct method of analysis or under an indirect method.  Courts often analyzed the facts of cases under both methods to determine whether a worker could survive summary judgment.

Unfortunately and unintentionally, this framing often caused judges to divide up the facts, what the late Professor Mike Zimmer called “slicing and dicing.” One way to slice and dice a case is to separate all of the so-called “direct evidence” from the indirect evidence.  A judge might evaluate all of the direct evidence and find it insufficient to pass the direct evidence test.  Likewise, the judge might evaluate all of the indirect evidence and also find that insufficient to pass the indirect evidence test.

The problem is that juries are not asked to evaluate cases in this manner.  Juries are asked to determine whether the facts as a whole demonstrate that race, sex, or another protected trait made a difference in an employment outcome. Once a judge (at summary judgment) separates the evidence into different buckets for purposes of funneling that evidence through the various tests, there is a tendency to forget to evaluate the evidence as a whole, as a jury would. This is the fundamental problem that Ortiz addresses: the failure to look at the evidence in its totality.