filed: July 19, 1991; As Corrected August 15, 1991. Second Correction August 29, 1991. Third Correction December 6, 1991.
Appeal from the United States District Court for the District of New Jersey; D.C. Civ. No. 89-03239, D.C. Civ. No. 89-05413.
Mansmann and Hutchinson, Circuit Judges, and Thomas J. O'Neill, District Judge.*fn*
In this Title VII disparate impact action, we are called upon to address various issues requiring interpretation of the Supreme Court's decision in Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 104 L. Ed. 2d 733, 109 S. Ct. 2115 (1989), the most novel of which is the quantum and quality of evidence which a defendant must produce in order to meet its burden of production with respect to "business justification." Specifically, we must determine whether the district court erred in holding that the Town of Harrison, New Jersey violated Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., when it enacted and enforced a municipal ordinance which provided that "no person shall be an eligible applicant for any position of employment in the classified civil service of the Town who is not a resident of the Town." The district court's holding rested upon the finding that Harrison's residency requirements were, in substantial part, responsible for a "marked disparity between the pool of qualified black applicants for municipal jobs in Harrison and the actual black representation among Harrison's employees." N.A.A.C.P., Newark Branch v. Town of Harrison N.J., 749 F. Supp. 1327, 1337 (D.N.J. 1990).
Finding no error in the district court's application of the law or in its formulation of the remedy, we will affirm.
Because the factual underpinnings of this case are detailed in the opinion of the district court, we set forth only those facts necessary to establish a backdrop against which the legal challenges raised here may be evaluated.
Harrison is a small industrial community located in Hudson County, New Jersey. "Geographically, it is closely aligned with immediately adjacent Essex County to the west and could very well be considered an extension of the City of Newark which it abuts." N.A.A.C.P., 749 F. Supp. at 1331. For as long as the Town's witnesses could remember, the Town of Harrison has adhered to a policy of limiting hiring for its police, fire, and non-uniformed positions to town residents. With the exception of a non-resident black woman whom the Board of Education hired in a highly-skilled educational specialty, the Town of Harrison has never hired a non-resident or a black. Id. at 1329.
In 1947, Harrison brought its workforce within the terms of the New Jersey Civil Service Act, now codified at N.J.S.A. 11A:1-1, et seq., which charges the New Jersey Department of Personnel with establishing titles in the classified service, determining the need for competitive examinations, establishing and administering competitive examinations, establishing, consolidating, using and canceling lists of eligible applicants, and with certifying highest-ranking applicants on the eligibility lists to appropriate municipal officers. Id.
In 1978, the New Jersey Act concerning Residence Requirements for Municipal and County Employees modified the law to permit municipalities to "require [that] . . . all officers and employees employed by the local unit . . . be bona fide residents therein." N.J.S.A. 40A:9-1.3. The Act also provides that a municipality is authorized "to limit the eligibility of applicants for positions and employment in the classified service of such local unit to residents of that local unit." N.J.S.A. 40A:9-1.4. The reach of the Act is limited in that residency requirements are specifically made "subject to any order issued by any court, or by any State or Federal agency pursuant to law, with respect to a requirement to eliminate discrimination in employment based upon race, creed, color, national origin, ancestry, marital status or sex." N.J.S.A. 40A:9-1.10.*fn1
Pursuant to the Act, on October 6, 1981, Harrison adopted Ordinance 747 containing the following provisions:*fn2
Paragraph 1 - "All officers and employees of the Town shall, as a condition of employment, be bona fide residents of the Town. . . ."
Paragraph 2 - "No person shall be an eligible applicant for any position of employment in the classified civil service of the Town who is not a resident of the Town." This requirement could be waived in the event of a Civil Service Commission determination that an insufficient number of qualified residents existed for the positions available.
Paragraph 3 - "All non-residents appointed to positions and employments after the effective date of the Ordinance shall become bona fide residents of the Town within one year of their appointment. . . ."
Paragraph 4 - "Failure . . . to maintain residency in the Town shall be cause for removal or discharge from service."
Paragraph 5 - "Whenever the Town Council determines by a majority vote of its full membership that there are not residents qualified for specific available positions, the Town may advertise for other qualified applicants and may classify these applicants in a specified order of residential preference. Non-residents hired must become bona fide within six months of appointment."
Paragraph 6 - Non-residents may be hired where the position requires talents and skills "not likely to be found among the residents of the Town, such position or employment may be filled without regard to residency."
Paragraph 7 - "Preference in promotion shall be given to officers and employees who are bona fide residence [sic] of the Town."
Paragraph 8 - "This Ordinance shall not apply to members of the police department or fire department."
Harrison has limited municipal hiring in accordance with Ordinance 747 and with the state statutory provisions governing the hiring of police and fire fighters. Non-uniformed employees, laborer or clerk-typist positions, are most often filled by word-of-mouth or through informal application. These positions are non-competitive and do not involve an examination. Rather, appointees occupy a probationary status for a period of time, after which they are formally appointed pursuant to N.J.A.C. 4A:3-1.2(a).
Uniformed employee positions, on the other hand, are filled through an examination process administered by the State Department of Personnel. The Department, at Harrison's direction, classifies applicants according to their municipal residency. The 1988 application forms distributed to those wishing to take the state-wide police or fire fighter examinations contained a statement informing the applicant that he was eligible to apply to a city maintaining a resident eligible list "only if he were a resident of that Town both at the closing date for the Civil Service examination and on the date of actual appointment." N.A.A.C.P., 749 F. Supp. at 1331. The record indicates that no one other than a Harrison resident has ever been considered for a uniformed position. Id.
Given the residential hiring policy in effect in Harrison's municipal sector and the fact that the Town population is no more than .2% black, no uniformed or non-uniformed municipal position has ever been held by a black. Black representation among Harrison's private employers, in contrast, totaled 22.1% in 1988, the last year for which figures are available. Id.
The plaintiffs in this matter, the Newark branch of the membership organization known as the National Association for the Advancement of Colored Persons ("NAACP"), in furtherance of its interest in securing the civil and equal employment rights of minorities, filed suit against Harrison on July 31, 1989, alleging that the town's enactment of Ordinance 747 and its adherence to the hiring practices embodied in the ordinance violated Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2 (1982) because the municipal residency requirement resulted in a disparate impact on blacks.*fn3 The United States District Court for the District of New Jersey dismissed this complaint for failure to allege standing and denied the plaintiffs' motion to file an amended complaint.
On appeal, we upheld the dismissal of the complaint but concluded that the plaintiffs should have been permitted to amend the complaint in order to cure the standing deficiency. Newark Branch, NAACP v. Town of Harrison, 907 F.2d 1408 (3d Cir. 1990).
While the appeal in the original action was pending, the plaintiffs filed a second action asserting identical claims and seeking the same remedies. The two actions were consolidated and an amended complaint was filed. This complaint alleged that individual members of the NAACP had sought police, fire fighting, and clerical positions with the Town of Harrison but were rejected for failing to satisfy the applicable residency requirement.
Following a bench trial, the district court concluded that there was "a marked disparity between the pool of qualified black applicants for municipal jobs in Harrison and the actual black representation among Harrison's employees," and that "the disparity [was] caused, at least in substantial part, by Harrison's residency requirements." N.A.A.C.P., 749 F. Supp. at 1337. Relying on statistical evidence presented by the plaintiffs, the court concluded that there were substantial numbers of blacks qualified for municipal employment in Harrison within the area defined as the relevant labor market. "From the perspective of access Harrison could be considered a part of Newark or Essex County. . . . There are multiple means to travel quickly between most of Essex County and Harrison." Id. at 1341. The district court also found "strong evidence that, if the residency requirements were removed, qualified black persons would seek positions with Harrison's municipal government." Id. Thus, the district court concluded that the plaintiffs had established a prima facie case of disparate impact within the meaning of Title VII. The court also concluded that Harrison had not produced evidence of a business justification sufficiently substantial to overcome the effect of that disparate impact.
After a hearing on remedies, the district court entered a decree enjoining enforcement of Ordinance 747 and obligating the Town of Harrison to recruit and employ qualified black applicants in numbers reflecting their availability in the relevant labor market. Harrison was also enjoined from filling municipal vacancies for uniformed employees from those eligibility lists compiled while the ordinance was in effect. The decree mandated readvertising, retesting and compilation of a new eligibility list from which applicants for police and fire fighting positions would be selected.
It is from this decree that the Town of Harrison appeals, raising three principal claims of error. First, Harrison contends that the district court's restrictive definition of the relevant labor market produced an inaccurate conclusion with respect to disparate impact. Next, Harrison argues that the district court erred in concluding that the Town had presented no legitimate business justification for the challenged ordinance. Finally, Harrison asks that we review the terms of the decree entered by the district court. In Harrison's view, the district court's imposition of affirmative recruitment and hiring obligations was not narrowly tailored to redress any discriminatory effect of the ordinance. Harrison is joined in its attack on the decree by seven town residents as amicus curiae, who allege that the district court's invalidation of the then current list of eligibles deprived them of due process and equal protection of the law. We will consider each of these assignments of error in turn.
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a) provides that:
It shall be an unlawful employment practice for an employer-
(1) 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; or
(2) 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 or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin.
Title VII has been construed to prohibit "not only overt discrimination but also practices that are fair in form but discriminatory in operation." Griggs v. Duke Power Co., 401 U.S. 424, 431, 28 L. Ed. 2d 158, 91 S. Ct. 849 (1971). The "disparate impact" theory of liability, upon which this case turns, has as its basis the premise that "some employment practices, adopted without a deliberately discriminatory motive, may in operation be functionally equivalent to intentional discrimination." Watson v. Fort Worth Bank and Trust, 487 U.S. 977, 987, 101 L. Ed. 2d 827, 108 S. Ct. 2777 (1988).
In 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. Dothard v. Rawlinson, 433 U.S. 321, 329, 53 L. Ed. 2d 786, 97 S. Ct. 2720 (1977). "The evidence in these 'disparate impact' cases usually focuses on statistical disparities. . . ." Watson, 487 U.S. at 987. 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." Wards Cove Packing Co., Inc. v. Atonio, 490 U.S. 642, 104 L. Ed. 2d 733, 109 S. Ct. 2115 (1989).
Once the plaintiffs have succeeded in establishing a prima facie case of disparate impact, the focus shifts to a business justification for continued use of the challenged practice which the employer may offer. The employer bears the burden of production with respect to "whether a challenged practice serves, in a significant way, the legitimate employment goals of the employer." Wards Cove, 490 U.S. at 659. Of course, the burden of persuasion with respect to business justification remains with the plaintiffs. Id. Should the plaintiffs be unable to discredit the legitimate business justification asserted, they may, nonetheless, prevail, where they are able to suggest a viable alternative to the challenged practice which has the effect of reducing the disparate impact and the employer refuses to adopt the alternative. Wards Cove, 490 U.S. at 660-661.
On appeal, Harrison challenges two interrelated elements of the district court's disparate impact analysis: the court's definition of the relevant labor market and its rejection of the business justifications offered to support Harrison's adherence to a residency requirement. Each of these assignments of error centers on the district court's alleged failure to accord proper weight to the New Jersey state statutory scheme which authorizes municipalities to make residency a prerequisite to municipal employment.
In order to assess these arguments it is necessary to examine the statute in some detail. As we have noted, in 1978, the New Jersey legislature passed the Act Concerning Residence Requirements for Municipal and County Employees, N.J.S.A. 40A:9-1, et seq. This Act contains the following provisions:
40A:9-1.3 Bona fide residents of local unit; offices and employees; resolution or ordinance.
Unless otherwise provided by law, the governing body of any local unit may by resolution or ordinance . . . require, subject to the provisions of this act, all officers and employees employed by the local unit after the effective date of this act to be bona fide residents therein . . . .
40A:9-1.4 Eligibility of applicants in local units subject to civil service.
Any local unit having adopted the provisions of Title 11 (Civil Service) . . . which has also adopted the provisions of section 1 of this act . . . may therein limit the eligibility of applicants for positions and employments in the classified service of such local unit to residents of that local unit. Upon receipt of a copy of such ordinance or resolution . . . the Civil Service Commission thereafter shall not open such local unit's eligibility lists to anyone who is not a bona fide resident of the local unit at the time of the closing date following the announcement of examination . . . .
40A:9-1.5 Non resident appointees to become bona fide residents; failure to maintain; grounds for removal or discharge.
The governing body of a local unit which has adopted a resolution or ordinance . . . shall require therein that all nonresidents subsequently appointed to positions or employments shall become bona fide residents of the local unit within 1 year of their appointment . . . .
Failure of any such employee to maintain residency in a local unit shall be cause for removal or ...