Kendale L. Adams v. City of Indianapolis

In the

United States Court of Appeals

For the Seventh Circuit

No. 12-1874

KENDALE L. ADAMS, et al.,

Plaintiffs-Appellants,

v.

CITY OF INDIANAPOLIS,

Defendant-Appellee.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:09-CV-00175-SEB-DM L — Sarah Evans Barker, Judge.

ARGUED OCTOBER 1, 2012 — DECIDED FEBRUARY 4, 2014

No. 13-3422

KENDALE L. ADAMS, et al.,

Plaintiffs-Appellants,

v.

CITY OF INDIANAPOLIS,

Defendant-Appellee.

2 Nos. 12-1874 & 13-3422

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:12-CV-01806-SEB-DM L — Sarah Evans Barker, Judge.

SUBMITTED JANUARY 24, 2014* — DECIDED FEBRUARY 4, 2014

Before POSNER, WILLIAMS, and SYKES, Circuit Judges.

SYKES, Circuit Judge. These related cases raise dozens of

claims of illegal discrimination in the promotion process used

by the Indianapolis Metropolitan Police Department and the

Indianapolis Fire Department. The complaints are sprawling

and the procedural history is a bit convoluted; we have

simplified the presentation of the issues. A large group of black

police officers and firefighters sued the City of Indianapolis

alleging that the examination process it uses to rank candidates

for promotion in the police and fire departments has a dispa-

rate impact on black candidates and is intentionally discrimina-

tory. They filed back-to-back lawsuits targeting promotion

decisions made in successive promotion cycles dating from

2002, but most of the challenged decisions were based on

scores generated from testing protocols administered by the

police department in 2008 and the fire department in 2007.

The plaintiffs in the first case are 36 black police officers and

firefighters who were passed over for promotions between

2007 and 2009 in favor of candidates who achieved higher

*

After examining the briefs and record, we have concluded that oral

argument is unnecessary. The appeal in Case No. 13-3422 is submitted on

the briefs and record. See F ED . R. A PP . P. 34(a)(2)(C).

Nos. 12-1874 & 13-3422 3

composite scores in the 2007 and 2008 testing sessions. The

plaintiffs amended their complaint once, and the City then

moved for partial judgment on the pleadings. The district court

granted the motion and dismissed many of the claims as either

time-barred or substantively flawed. In particular, the court

dismissed the disparate-impact claims because the amended

complaint alleged that the City’s promotion process was

intentionally biased rather than facially neutral.

The plaintiffs sought leave to amend their complaint again

and tendered a proposed second amended complaint, but the

district court denied the request on grounds of untimeliness

and futility. The disparate-treatment claims then proceeded to

summary judgment, and the court entered judgment for the

City because the plaintiffs had not produced any evidence that

using the test results to make promotions was a pretext for

discrimination. The plaintiffs appealed.

In the meantime, some of the plaintiffs—a group of

20 police officers—filed a second lawsuit alleging that they

were passed over for promotions again in 2010 and 2011. The

district court dismissed the new claims as barred by res

judicata because the more recent promotion decisions were

made from the same eligibility list generated by the testing

process that was at issue in the first case. The plaintiffs

appealed this decision as well.

We have consolidated the appeals for decision and now

affirm in both cases. The plaintiffs have focused most of their

appellate argument on claims of procedural error. They

contend that the district court erroneously applied summary-

judgment standards at the pleadings stage and wrongly denied

4 Nos. 12-1874 & 13-3422

their second motion to amend the complaint. We find no

procedural error. We also conclude that judgment for the City

was proper in both cases.

First, although the district court mistakenly assumed that

allegations of intentional discrimination necessarily defeat a

disparate-impact claim, here the disparate-impact claims fail in

any event because they are stated as legal conclusions, without

any factual content to support an inference that the City’s

examination procedures caused a disparate impact on black

applicants for promotion in the police or fire departments.

Second, the disparate-treatment claims lacked any evidentiary

support and were properly resolved in the City’s favor on

summary judgment. Finally, the claims in the second lawsuit

are precluded. Although the new complaint concerns a

different set of promotion decisions, it attacks the same

eligibility list that was at issue in the first case. The plaintiffs’

challenge to that testing process was fully and finally resolved

against them in the first suit, so their second suit against the

City is barred.

I. Background

The Indianapolis Metropolitan Police Department and the

Indianapolis Fire Department share similar promotion proce-

dures. Both departments administer a promotion examination

process every few years. The police department did so in 2004,

2006, and 2008; the fire department in 2004 and 2007. For each

cycle a “Development Committee” created and implemented

the examination process, which consisted of a written test, an

oral exercise, and an assessment of the candidate’s “personnel

Nos. 12-1874 & 13-3422 5

profile.” The “oral” exercise had three subparts: an oral

interview, an oral assessment in which applicants responded

to hypothetical scenarios, and a written exercise requiring the

applicants to draft reports and correspondence. The fire

department’s promotion processes also included a practical

exercise.

The Development Committees distributed information

booklets to all interested candidates outlining the promotion

criteria and instructing them how to participate. After the

testing was completed, each candidate’s scores on the compo-

nent parts of the process were combined to create a composite

score. The candidates were then ranked on a promotion

eligibility list in order of their scores. Subsequent promotion

decisions were made from the list. Generally speaking, the

department chiefs promoted the highest-ranked candidates in

order of their scores, although promotions ultimately were at

the chiefs’ discretion subject only to approval by “Merit

Boards.” In one case a black officer was promoted to sergeant

ahead of several white candidates with higher scores, but in all

other cases, promotions were awarded to the candidates who

achieved the highest scores in the 2007 and 2008 testing

protocols.

In the first lawsuit—filed in early 2009—26 police officers

and 10 firefighters challenged these procedures as racially

discriminatory.1 As relevant here, they alleged claims under

42 U.S.C. § 1983 for violation of their right to equal protection

and claims under Title VII of the Civil Rights Act of 1964, as

1

Six plaintiffs later dropped their claims.

6 Nos. 12-1874 & 13-3422

amended, 42 U.S.C. §§ 2000e et seq., based on disparate-impact

and disparate-treatment theories.2 Before filing their complaint,

and in compliance with the administrative preconditions to

suit, the officers and firefighters filed discrimination charges

with the EEOC in 2008 and 2009. The charges varied from

employee to employee, but generally they alleged that the

City’s promotion process deprived black officers and fire-

fighters of promotional opportunities because the testing

process was racially and culturally biased and had been

intentionally manipulated. Some of the EEOC charges also

included claims unrelated to the promotion process—for

instance, age-discrimination and hostile-work-environment

claims.

2

The plaintiffs initially asserted a complex and interlocking hierarchy of

claims. Counts I through III pertained to the police officers, Counts IV and

V pertained to the firefighters, and Count VI pertained to both. The counts

varied according to the conduct alleged and the source of law invoked,

although many of the factual allegations are repetitive and overlapping. In

addition to the equal-protection claims under § 1983 and the discrimination

claims under Title VII, the amended complaint also alleged claims under

42 U.S.C. § 1981, the Indiana Constitution, and a vague claim relating to the

police department’s pension plan. The plaintiffs have abandoned all but the

disparate-impact and disparate-treatment claims under Title VII and the

disparate-treatment claims under § 1983; the latter are essentially redundant

of the Title VII disparate-treatment claims. The Greater Indianapolis

Chapter of the NAACP was originally listed as a plaintiff but was dis-

missed for lack of standing early in the case; there is no challenge to that

decision. Finally, the suit also named Indianapolis M ayor Gregory A.

Ballard and Police Chief M ichael T. Spears as defendants in their individual

capacities. The claims against them were also dismissed, and there is no

challenge to that decision on appeal.

Nos. 12-1874 & 13-3422 7

On August 10, 2009, the plaintiffs moved for leave to

amend their complaint and tendered a proposed amended

complaint. On October 1 the defendants moved for partial

judgment on the pleadings; although the district court had not

yet accepted the amended complaint, the motion was

addressed to that pleading. On November 2 the district court

granted leave to amend, accepted the amended complaint, and

set a deadline of November 15 for the plaintiffs to respond to

the motion for partial judgment on the pleadings. The parties

then jointly submitted a case-management plan, which was

approved and entered as a scheduling order on November 10.

The order set a deadline of March 3, 2010, for any further

motions to amend the pleadings. Fact discovery on liability

issues was set to conclude by September 3, 2010, and the

deadline for dispositive motions was October 3, 2010.

The district court did not rule on the motion for partial

judgment on the pleadings until September 16, 2010. The court

granted most of the relief sought, dismissing many of the

claims. As relevant here, the court dismissed the disparate-

impact claims, reasoning that the plaintiffs failed to exhaust

administrative remedies and failed to state a claim because

neither their EEOC charges nor their amended complaint

included allegations that a “specific neutral employment

practice” caused a disparate impact on black officers and

firefighters.3

3

The court also dismissed the disparate-impact claims brought under

§ 1983 because the Supreme Court’s equal-protection jurisprudence does

not recognize a claim for disparate impact. See Washington v. Davis, 426 U.S.

(continued...)

8 Nos. 12-1874 & 13-3422

The court also dismissed the Title VII disparate-treatment

claims of five of the plaintiffs for failure to exhaust administra-

tive remedies. Four of these plaintiffs—Officers Kimberly

Young; Arthur Rowley, Jr.; Kendall Moore, Sr.; and Marta

Bell—filed EEOC charges in 2008 challenging promotion

decisions made in 2002 and 2006, well beyond the 300-day

limitations period generally applicable in Indiana for filing

EEOC charges. See Doe v. R.R. Donnelley & Sons Co., 42 F.3d

439, 445 (7th Cir. 1994) ( “In … Indiana, a charge must be filed

within 300 days of the occurrence of the act … .”). A fifth

plaintiff—firefighter Erik Grissom—filed an EEOC charge in

2009 challenging a promotion decision made two years earlier

in 2007.4

The plaintiffs responded to this litigation setback by asking

the court for permission to amend their complaint a second

time. On October 12 they filed a motion for leave to amend

under Rule 15(a)(2) of the Federal Rules of Civil Procedure and

tendered a proposed second amended complaint with the

motion. The court declined to permit the amendment because

the scheduling order’s deadline to amend the pleadings had

3

(...continued)

229, 239 (1976); Bond v. Atkinson, 728 F.3d 690, 692–93 (7th Cir. 2013). The

plaintiffs prudently do not contest this ruling.

4

The district court also addressed and dismissed a claim of age discrimina-

tion by one officer and a claim of hostile work environment by another. This

appears to be an anomaly; the amended complaint contains no hint of these

claims. The court appears to have been working from the allegations in the

EEOC charges filed by these officers. These allegations are not at issue on

appeal.

Nos. 12-1874 & 13-3422 9

expired more than six months earlier, on March 3. In the

alternative, the court held that amendment was futile because

the proposed second amended complaint was materially the

same as its predecessor and did not cure the defects in the

earlier pleading.

The case then moved forward to summary judgment, and

the district court entered judgment in the City’s favor on the

remaining disparate-treatment claims. Although most of these

claims arose from the 2008 testing period, some of the plaintiffs

also challenged promotion decisions dating to 2005 and 2006.

Because these employment actions fell outside the 300-day

period covered by the 2008 EEOC charges, the court held that

the claims were time-barred. To the extent that the § 1983

claims also related to this earlier time period, they too were

dismissed as untimely; the applicable two-year statute of

limitations expired long before the plaintiffs filed their com-

plaint.

The rest of the disparate-treatment claims failed for lack of

evidentiary support. The plaintiffs had not attempted to

proceed under the direct method of proving intentional

discrimination, and they had no evidence that the City’s

reliance on the objective test scores was pretext for discrimina-

tion. The court entered summary judgment in favor of the City

and terminated the case. The plaintiffs appealed.

After we heard oral argument, some of the plaintiffs—

20 police officers—filed a second lawsuit contesting two new

rounds of promotions made in 2010 and 2011. As before, they

alleged that they were passed over in favor of candidates who

achieved higher scores in the 2008 testing process. The

10 Nos. 12-1874 & 13-3422

allegations in the second suit are almost identical to those in

the first; the plaintiffs claim that the examination process that

produced the 2008 promotion-eligibility list was biased and

had a disparate impact on black officers. The only difference is

that the newly challenged promotion decisions occurred later

and were the subject of new EEOC charges.

The district court dismissed the new complaint on res

judicata grounds. Although the second suit involved a new set

of promotion decisions, the court concluded that it was at

bottom a repetitive attempt to challenge the 2008 examination

process. Because that testing process had been the subject of

the earlier suit, which was resolved against the plaintiffs in a

final judgment, the court held that the new claims were barred.

The plaintiffs appealed this decision as well.5

II. Discussion

The plaintiffs challenge the following rulings: (1) the order

dismissing some of their disparate-treatment claims and all of

their disparate-impact claims on the pleadings; (2) the order

denying leave to amend the complaint a second time; (3) the

summary judgment in favor of the City on the disparate-

treatment claims under Title VII and § 1983; and (4) the order

dismissing the claims in the second suit as barred by

res judicata.

5

A single retaliation claim by one plaintiff remains pending. The district

court entered final judgment dismissing the rest of the case under

Rule 54(b) of the Federal Rules of Civil Procedure, authorizing the appeal.

Nos. 12-1874 & 13-3422 11

We review the dismissal of the second complaint de novo.

Harmon v. Gordon, 712 F.3d 1044, 1054 (7th Cir. 2013). We also

review the partial judgment on the pleadings and the summary

judgment de novo. Naficy v. Ill. Dep’t. of Human Servs., 697 F.3d

504, 509 (7th Cir. 2012) (summary judgment); Matrix IV, Inc. v.

Am. Nat’l Bank & Trust Co. of Chi., 649 F.3d 539, 547 (7th Cir.

2011) (judgment on the pleadings). We review the order

denying leave to amend deferentially for abuse of discretion;

we will reverse “only if no reasonable person could agree with

that decision.” Carroll v. Stryker Corp., 658 F.3d 675, 684 (7th

Cir. 2011) (citation omitted).

A. Partial Judgment on the Pleadings/Denial of Leave to

Amend

The plaintiffs raise several procedural objections to the

district judge’s ruling on the motion for partial judgment on

the pleadings. First, they argue that the judge approached the

motion the wrong way, holding them to a pleading standard

that was too high. We disagree. A motion for judgment on the

pleadings under Rule 12(c) of the Federal Rules of Civil

Procedure is governed by the same standards as a motion to

dismiss for failure to state a claim under Rule 12(b)(6). See

Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007).

To survive a motion to dismiss under Rule 12(b)(6), a

complaint must “state a claim to relief that is plausible on its

face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A

claim has facial plausibility when the plaintiff pleads factual

content that allows the court to draw the reasonable inference

12 Nos. 12-1874 & 13-3422

that the defendant is liable for the misconduct alleged.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Factual allegations are

accepted as true at the pleading stage, but “allegations in the

form of legal conclusions are insufficient to survive a

Rule 12(b)(6) motion.” McReynolds v. Merrill Lynch & Co., Inc.,

694 F.3d 873, 885 (7th Cir. 2012) (citing Iqbal, 556 U.S. at 678).

“Threadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice.”

Iqbal, 556 U.S. at 678. “Where a complaint pleads facts that are

‘merely consistent with’ a defendant’s liability, it ‘stops short

of the line between possibility and plausibility of entitlement

to relief.’ ” Id. (quoting Twombly, 550 U.S. at 557) (internal

quotation marks omitted).

The plaintiffs object that the judge cited summary-

judgment opinions in her order granting partial judgment on

the pleadings—a key indicator (or so they claim) that she

required too much of their complaint. But there’s nothing

wrong with relying on summary-judgment cases at the

pleading stage to explain the substantive legal standards that

apply to the case, and that’s what the judge did here. Even the

Supreme Court in Twombly—the seminal pleading-standards

case—looked to an opinion rendered at the summary-

judgment stage to determine the substantive legal standard to

apply at the pleading stage. See 550 U.S. at 553 (citing Theatre

Enters., Inc. v. Paramount Film Distrib. Corp., 346 U.S. 537, 540

(1954)).

The plaintiffs insist that by relying on summary-judgment

cases, the district court effectively required them to plead a

prima facie case in their complaint. This argument is a

Nos. 12-1874 & 13-3422 13

nonstarter. A complaint must allege facts to support a cause of

action’s basic elements; the plaintiff is required to do at least

that much. Maybe the plaintiffs are saying that the judge

implicitly required them to identify evidence in support of a

prima facie case at the pleading stage. If that’s the argument,

then the plaintiffs have simply misread the district court’s

decision. We see no indication that the judge mistakenly

required the plaintiffs to identify evidence in order to over-

come the motion for partial judgment on the pleadings.

The plaintiffs also argue that defense counsel’s conduct

during discovery suggests that the defendants had figured out

the factual and legal issues and thus were on adequate notice

of the claims in the case. This argument completely misunder-

stands the concept of “notice” pleading. The defendant’s

subjective notice is not the governing standard. Rule 8 specifies

what is required in the complaint: “A pleading that states a

claim for relief must contain: … (2) a short and plain statement

of the claim showing that the pleader is entitled to relief … .”

FED . R. CIV . P. 8(a). “Notice” is not mentioned. Nor does the

plausibility standard established in Twombly and Iqbal turn on

the defendant’s subjective notice of the claims.

It is of course true that many pleading-standards cases both

before and after Twombly and Iqbal refer to “notice,” see, e.g.,

Brooks v. Ross, 578 F.3d 574, 578 (7th Cir. 2009), but the point is

that it is necessary to give the defendants notice of the claims

against them, not that giving the defendants notice is sufficient

to state a claim. By emphasizing a plausibility requirement,

Twombly and Iqbal obviously require more than mere notice.

When ruling on a motion to dismiss, the court must review the

14 Nos. 12-1874 & 13-3422

complaint to determine whether it contains “enough fact to

raise a reasonable expectation that discovery will reveal

evidence” to support liability for the wrongdoing alleged.

Twombly, 550 U.S. at 556; see also Brooks, 578 F.3d at 581. An

inadequate complaint will not survive a motion to dismiss

simply because the defendants managed to figure out the basic

factual or legal grounds for the claims.

The plaintiffs next contend that the motion for judgment on

the pleadings should have been converted to a motion for

summary judgment because the defendants submitted some of

the EEOC charges filed by the plaintiffs. This argument is

frivolous. The plaintiffs themselves referred to the EEOC

charges in their complaint. The defendants were free to attach

the written EEOC charges to a motion to dismiss had they filed

one; it was likewise fair game for them to attach the written

charges to their answer and then move for partial judgment on

the pleadings. “ ‘[D]ocuments attached to a motion to dismiss

are considered part of the pleadings if they are referred to in

the plaintiff’s complaint and are central to his claim.’ ”

Menominee Indian Tribe of Wis. v. Thompson, 161 F.3d 449, 456

(7th Cir. 1998) (quoting Wright v. Associated Ins. Cos., 29 F.3d

1244, 1248 (7th Cir. 1994)). The EEOC charges were deemed

incorporated into the plaintiffs’ pleadings, and the court could

consider them without converting the motion on the pleadings

into a motion for summary judgment. Id.

On the merits the plaintiffs argue that the court wrongly

dismissed some of the Title VII disparate-treatment claims as

Nos. 12-1874 & 13-3422 15

time-barred.6 Invoking the “continuing violation” doctrine,

they claim a right to challenge promotion decisions that took

place in 2002, 2006, and 2007, well outside the 300-day time

period covered by the relevant EEOC charges. This argument

is foreclosed by the Supreme Court’s decision in National

Railroad Passenger Corp. v. Morgan, 536 U.S. 101 (2002).

A Title VII plaintiff normally must first file a charge with

the EEOC within a specified period of time after the challenged

employment action occurs. The applicable limitations period

for filing a charge varies depending on whether the state in

question has an agency empowered to address employment

discrimination. Indiana has such an agency, so the applicable

limitations period is 300 days.7 The limitations period in

6

As we have explained, the district court actually ruled on the timeliness

question in two stages, dismissing a handful of the disparate-treatment

claims on the pleadings and a few more on summary judgment.

7

This is an oversim plification; the statute and regulations are a bit more

complex. In states that lack an agency empowered to address employment

discrimination, a putative Title VII plaintiff must file a charge with the

EEOC within 180 days of the alleged violation. See 42 U.S.C. § 2000e-5(e)(1);

29 C.F.R. § 1601.13(a)(1); see generally EEOC v. Commercial Office Prods. Co.,

486 U.S. 107, 110 (1988) (discussing Title VII’s limitations scheme). In states

that have an employment-discrim ination agency, the plaintiff must file a

charge with the state agency first and allow it 60 days to investigate before

going to the EEOC. See 42 U.S.C. § 2000e-5(c); 29 C.F.R. § 1601.13(a)(3)(ii).

In these states the limitations period is lengthened to 300 days or 30 days

after the state agency terminates its investigation, whichever is earlier. See

42 U.S.C. § 2000e-5(e)(1); 29 C.F.R. § 1601.13(b). Additional rules apply if

the plaintiff files in the wrong place. See 29 C.F.R. § 1601.13(a)(4)(i), (ii).

These intricacies are not relevant here.

16 Nos. 12-1874 & 13-3422

Title VII begins to run when “the alleged unlawful employ-

ment practice occurred.” 42 U.S.C. § 2000e-5(e)(1). The statute

defines when the alleged unlawful employment practice occurs

for violations involving seniority systems and compensation,

id. § 2000e-5(e)(2), (3), but the clock-starting rules for other

types of claims have been left to the courts.

In Morgan the Supreme Court explained that “[e]ach

incident of discrimination and each retaliatory adverse

employment decision constitutes a separate actionable ‘unlaw-

ful employment practice’ ” for purposes of the limitations

period for filing EEOC charges. 536 U.S. at 114. The Court held

that “[e]ach discrete discriminatory act starts a new clock for

filing charges alleging that act.” Id. at 113. Further, and

importantly here, “[d]iscrete acts such as termination, failure to

promote, denial of transfer, or refusal to hire are easy to iden-

tify.” Id. at 114 (emphasis added). The Court distinguished

claims involving discrete acts of discrimination from claims

alleging a hostile work environment: “Hostile environment

claims are different in kind from discrete acts. Their very

nature involves repeated conduct.” Id. at 115. Thus, a hostile-

work-environment charge is timely as long as “any act falls

within the statutory time period,” even if the charge encom-

passes events occurring prior to the statutory time period. Id.

at 120 (emphasis added).

But this reasoning applies to hostile-work-environment

claims only. A Title VII plaintiff seeking redress for a series of

discrete discriminatory acts cannot avoid the effect of the

limitations period by arguing that the discrete acts are

“plausibly or sufficiently related.” Id. at 111–14. To the

Nos. 12-1874 & 13-3422 17

contrary, Morgan holds that “discrete discriminatory acts are

not actionable if time barred, even when they are related to acts

alleged in timely filed charges.” Id. at 113. The Court reaf-

firmed this understanding in Ledbetter v. Goodyear Tire & Rubber

Co., 550 U.S. 618 (2007), superseded by statute with respect to

compensation practices, Pub. L. No. 111-2, 123 Stat. 5 (codified at

42 U.S.C. § 2000e-5(e)).

The employment actions challenged here fall squarely

within the Supreme Court’s list of “discrete acts”—they are

“failures to promote.” Morgan, 536 U.S. at 114; see also Pruitt v.

Chicago, 472 F.3d 925, 927 (7th Cir. 2006) (“Claims about

discrete employment actions, such as failure to promote, must

be made within 300 days under Title VII … .”). Accordingly, to

the extent that some of the Title VII disparate-treatment claims

arose out of promotion decisions made in 2002, 2006, and 2007,

the district court quite properly dismissed them as time-barred.

The district court also properly dismissed disparate-impact

claims under Title VII, although its reasoning was not quite

correct. Title VII’s remedy for employment practices that cause

disparate impact complements the more commonly invoked

remedy for intentional discrimination, generally referred to as

a “disparate treatment” claim. The disparate-impact provision

in the statute states, in pertinent part:

(k) Burden of proof in disparate impact cases

(1)(A) An unlawful employment practice based

on disparate impact is established under this

subchapter only if—

18 Nos. 12-1874 & 13-3422

(i) a complaining party demonstrates that a

respondent uses a particular employment practice

that causes a disparate impact on the basis of race,

color, religion, sex, or national origin and the

respondent fails to demonstrate that the chal-

lenged practice is job-related for the position in

question and consistent with business necessity;

…

(B)(i) With respect to demonstrating that a

particular employment practice causes a dispa-

rate impact as described in subparagraph (A)(i),

the complaining party shall demonstrate that

each particular challenged employment practice

causes a disparate impact, except that if the

complaining party can demonstrate to the court

that the elements of a respondent’s decisionmak-

ing process are not capable of separation for

analysis, the decisionmaking process may be

analyzed as one employment practice.

42 U.S.C. § 2000e-2(k) (emphases added).

If a Title VII plaintiff can show that his employer intention-

ally refused to promote him on account of his race, he has a

disparate-treatment claim and the employer’s assertion of

business justification is irrelevant. In contrast, a disparate-

impact claim does not require proof of intentional discrimina-

tion, but the employer may defeat the claim by showing that

the challenged employment practice is job-related and consis-

tent with business necessity. Here, the City persuaded the

Nos. 12-1874 & 13-3422 19

district court that in order to exhaust and state a disparate-

impact claim, the plaintiffs needed to allege in their EEOC

charges and again in their complaint that a “neutral employ-

ment policy” caused a disparate impact on black candidates for

promotion.

Applying this requirement, the court held that the EEOC

charges failed to raise claims of disparate impact (meaning that

the plaintiffs failed to exhaust administrative remedies) and

that the amended complaint likewise failed to state a disparate-

impact claim. The EEOC charges and the amended complaint

clearly alleged that the City’s promotion process was intention-

ally discriminatory; these allegations were plainly sufficient to

raise disparate-treatment claims. But the court concluded that

the allegations of intentional discrimination defeated any claim

that the promotion process was facially neutral but had caused

a disparate impact.

The legal premise of the court’s ruling was wrong.

Disparate-impact claims may be based on any employment

policy, not just a facially neutral policy. The Supreme Court

addressed this point in Watson v. Fort Worth Bank & Trust,

487 U.S. 977 (1988). There, an employer put an employee

through subjective performance reviews and denied him a

promotion. One of the reviewers had made racist comments,

so there was a hint that the reviews were not only subjective

but also were infected with racial bias and perhaps were

intentionally discriminatory. Id. at 990. The fair implication of

the plaintiff’s complaint was that the subjective reviews

allowed racial bias to affect the employment decisions. The

lower courts in Fort Worth had held that “subjective practices”

20 Nos. 12-1874 & 13-3422

could only be challenged in a disparate-treatment claim, not a

disparate-impact claim.

The Supreme Court reversed, holding “that subjective or

discretionary employment practices may be analyzed under

the disparate impact approach in appropriate cases.” Id. at 991.

The Court explained that there may be situations in which an

employer lacks affirmative discriminatory intent but “subcon-

scious stereotypes and prejudices would remain,” which was

“a lingering form of the problem that Title VII was enacted to

combat.” Id. at 990. The Court recognized that an employment

policy or practice may fall short of being intentionally discrimi-

natory but nonetheless be tainted by bias; the presence of

subjective bias does not remove the policy or practice from the

ambit of disparate-impact theory. Id. at 990–91. Watson shows

that any employment practice, not just facially neutral prac-

tices, may be the subject of a disparate-impact claim.

Watson was decided before Congress amended Title VII in

1991 to codify disparate-impact theory, but it comports with

the modern text of the statute, which we have quoted above.

The word “neutral” does not appear anywhere in the text. We

have recognized the continued force of Watson in a case

decided after the 1991 amendments to Title VII. See Vitug v.

Mulitstate Tax Comm’n, 88 F.3d 506, 513 (7th Cir. 1996) (“The

disparate impact theory of Title VII liability may be utilized to

challenge both objective and, as here, subjective selection

processes.”).

The City relies on a handful of disparate-impact opinions

that use the phrase “facially neutral employment practice,” but

these statements are merely descriptive or illustrative, not

Nos. 12-1874 & 13-3422 21

prescriptive. For example, in Wards Cove Packing Co. v. Atonio,

the Supreme Court said that “a facially neutral employment

practice may be deemed violative of Title VII without evidence

of the employer’s subjective intent to discriminate that is

required in a ‘disparate-treatment’ case.” 490 U.S. 642, 645–46

(1989). The Court was explaining how a disparate-impact claim

works, not promulgating a required element of the claim.

Nothing in the case depended on whether the challenged

policy was facially neutral.

The City also relies on this statement from our decision in

Bennett v. Roberts: “A disparate impact claim exists when an

employer has adopted a particular employment practice that,

although neutral on its face, disproportionally and negatively

impacts members of one of Title VII’s protected classes.”

295 F.3d 687, 698 (7th Cir. 2002) (emphasis added). Nothing in

this statement limits disparate-impact claims to facially neutral

policies. Rather, this passage from Bennett simply explains that

facial neutrality is not a defense in a disparate-impact claim.

Finally, the City relies heavily on two Fifth Circuit cases,

but it reads them for much more than they’re worth. In

Pacheco v. Mineta, the Fifth Circuit held that the plaintiffs had

not exhausted administrative remedies for their disparate-

impact claims because their EEOC charges were so indefinite

that they “ ‘d[id] not even suggest claims under a disparate

impact theory.’ ” 448 F.3d 783, 792 (5th Cir. 2006) (quoting

lower court). In so holding the court observed that “[a] neutral

employment policy is the cornerstone of any EEO disparate-

impact investigation, since the EEO must evaluate both the

policy’s effects on protected classes and any business

22 Nos. 12-1874 & 13-3422

justifications for the policy.” Id. In McClain v. Lufkin Industries,

Inc., the Fifth Circuit again dismissed a disparate-impact claim

for failure to exhaust administrative remedies, quoting

Pacheco’s “cornerstone” remark. 519 F.3d 264, 274 (5th Cir.

2008). Both Pacheco and McClain involved extremely vague

EEOC charges that did not suggest disparate-impact claims at

all. They have no bearing on cases like this one, where it’s clear

from the content of the employees’ EEOC charges that they

were complaining about disparate treatment and disparate

impact. More fundamentally, the Fifth Circuit’s “cornerstone”

language was descriptive only; it does not support the proposi-

tion that disparate-impact claims are limited to facially neutral

employment practices.

Having said that, we agree that the amended complaint

fails to state plausible claims for disparate impact, though

we’ve identified a different set of flaws and gaps in the

allegations than the district court did. The plaintiffs’ EEOC

charges were adequate to exhaust administrative remedies, but

the amended complaint must satisfy the Twombly/Iqbal plausi-

bility standard. For all its heft, the amended complaint alludes

to disparate impact in wholly conclusory terms. In several

places the complaint uses the words “disproportionate” and

“impermissible impact” and other synonyms, but those are

bare legal conclusions, not facts. We reiterate that “[t]hread-

bare recitals of the elements of the cause of action, supported

by mere conclusory statements, do not suffice” to state a

plausible claim for relief. Iqbal, 556 U.S. at 678. Moreover,

“[t]his is a complex discrimination claim, and we have

observed that under Iqbal and Twombly, ‘[t]he required level of

factual specificity rises with the complexity of the claim.’ ”

Nos. 12-1874 & 13-3422 23

McReynolds, 694 F.3d at 887 (quoting McCauley v. City of

Chicago, 671 F.3d 611, 616–17 (7th Cir. 2011)).

In a complex disparate-impact case like this one, we would

expect to see some factual content in the complaint tending to

show that the City’s testing process, or some particular part of

it, caused a relevant and statistically significant disparity

between black and white applicants for promotion. The

amended complaint contains no factual allegations of this sort.

We are told that the promotion-testing process during this

period had several component parts, but the plaintiffs do not

identify which part they are attacking. Perhaps they could try

to demonstrate that the different elements of the testing

process are not capable of separation for analysis, see 42 U.S.C.

§ 2000e-2(k)(1)(B)(i); this flaw alone might not be fatal. The far

more serious problem is the complete lack of factual content

directed at disparate-impact liability. There are no allegations

about the number of applicants and the racial makeup of the

applicant pool as compared to the candidates promoted or as

compared to the police or fire department as a whole. There

are no allegations about the racial makeup of the relevant

workforce in the Indianapolis metropolitan area or the supervi-

sory ranks in the police and fire departments. There are no

factual allegations tending to show a causal link between the

challenged testing protocols and a statistically significant racial

imbalance in the ranks of sergeant, lieutenant, or captain in the

police department or battalion chief, lieutenant, or captain in

the fire department.

Disparate-impact plaintiffs are permitted to rely on a

variety of statistical methods and comparisons to support their

24 Nos. 12-1874 & 13-3422

claims. At the pleading stage, some basic allegations of this sort

will suffice. But the amended complaint contains no allegations

of the kind, nor any other factual material to move the

disparate-impact claims over the plausibility threshold.

Accordingly, these claims were properly dismissed on the

pleadings.

We also conclude that the district court did not abuse its

discretion in denying the plaintiffs’ second motion for leave to

amend the complaint. The court denied the motion primarily

because it was untimely; the deadline to amend the pleadings

had expired six months earlier. We have previously noted that

when a motion for leave to amend is filed after the deadline for

amending the pleadings has elapsed, the generous standard in

Rule 15(a)(2) for allowing amendments “is in some tension

with” Rule 16(b)(4), which governs scheduling orders and

requires a showing of good cause to justify modifying time

limits. See Alioto v. Town of Lisbon, 651 F.3d 715, 719 (7th Cir.

2011). In this situation, the district court is “entitled to apply

the heightened good-cause standard of Rule16(b)(4) before

considering whether the requirements of Rule 15(a)(2) were

satisfied.” Id.; see also FED . R. CIV . P. 6(b)(1)(B) (requiring a

showing of “good cause” and “excusable neglect” to extend a

deadline after it expires).

Here, the district judge did not formally proceed in this

two-step fashion, but she effectively concluded that the

plaintiffs had not demonstrated good cause for relief from the

deadline set in the scheduling order. That was a reasonable

conclusion. When the parties submitted their proposed

schedule on November 3, 2009, the defendants had already

Nos. 12-1874 & 13-3422 25

moved for partial judgment on the pleadings. The plaintiffs

had not yet filed their response brief, and the agreed deadline

to amend the pleadings was about four months away. So the

schedule was aggressive, but the plaintiffs consented to it. As

the March deadline to amend the pleadings approached and

the motion for partial judgment on the pleadings remained

unresolved, the plaintiffs could and should have moved for an

extension if they wished to preserve the opportunity for

further amendments after the court rendered its decision. They

did not do so. Nor did they, as far as we can tell, bring the

approaching deadline to the judge’s attention. In similar cases

we have upheld a district court’s exercise of discretion not to

excuse a missed deadline. See Alioto, 651 F.3d at 720–21;

Brosted v. Unum Life Ins. Co. of Am., 421 F.3d 459, 463–64

(7th Cir. 2005).

The plaintiffs rely on cases applying the general standard

in Rule 15(a)(2)—that motions for leave to amend should be

freely granted—and holding that one opportunity to replead

ordinarily should be allowed. See, e.g., Bausch v. Stryker Corp.,

630 F.3d 546 (7th Cir. 2010). That line of cases does not apply

here. The plaintiffs had an opportunity to amend their com-

plaint once. This was their second motion, and the deadline for

further amendments had long since expired. The district court

did not abuse its discretion in refusing to grant relief from the

lapsed deadline.

Alternatively, the court denied the motion as futile because

the proposed second amended complaint did not correct the

deficiencies in the first. We review this aspect of the district

court’s decision de novo; “ ‘[t]here is no practical difference, in

26 Nos. 12-1874 & 13-3422

terms of review, between a denial of a motion to amend based

on futility and the grant of a motion to dismiss for failure to

state a claim.’ ” Cohen v. Am. Sec. Ins. Co., 735 F.3d 601, 607 (7th

Cir. 2013) (quoting Glassman v. Computervision Corp., 90 F.3d

617, 623 (1st Cir. 1996)). The proposed second amended

complaint was longer than the first, but the disparate-impact

claims were again pleaded in wholly conclusory terms. The

new iteration of the complaint, like its predecessor, failed to

move the disparate-impact claims across the plausibility

threshold, for the reasons we have explained. So although our

reasoning differs from the district court’s, we agree that the

amendment was futile. Our conclusion in this regard is

reinforced by the yawning gap in the plaintiffs’ case at sum-

mary judgment, and we turn to that issue now.

B. Summary Judgment on the Disparate-Treatment Claims

The City moved for summary judgment on the remaining

disparate-treatment claims. This required the plaintiffs to do

one of two things: come forward with sufficient direct or

circumstantial evidence that the City’s promotion decisions

were intentionally discriminatory or make an indirect case of

discrimination under the burden-shifting framework estab-

lished in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973).

The plaintiffs proceeded solely under the indirect method of

proof. In a failure-to-promote case like this one, the indirect

method requires the plaintiff to show that (1) he belonged to a

protected class; (2) he applied and was qualified for the

position sought; (3) he was rejected for that position; and

(4) the employer awarded the promotion to someone outside

Nos. 12-1874 & 13-3422 27

the protected class who was not better qualified. Fischer v.

Avanade, Inc., 519 F.3d 393, 402 (7th Cir. 2008). If the plaintiff

makes this prima facie case, the burden shifts to the defendant

to articulate a legitimate, nondiscriminatory reason for its

action. If the defendant does so, the burden shifts back to the

plaintiff, who must present evidence that the stated reason is

pretext for discrimination. Id.

The parties agree that the first three elements of a prima

facie case are established here. The City disputes the fourth

element because the challenged promotions were awarded to

candidates who achieved higher composite scores in the 2007

and 2008 testing periods and thus were better qualified than

the plaintiffs. The district judge was willing to assume that the

plaintiffs met their burden on this element and moved directly

to the next step in the analysis. The City had a legitimate,

nondiscriminatory reason for its promotional decisions: It

selected candidates for promotion based on their test scores.

The plaintiffs produced no evidence of pretext, so the court

entered judgment for the City.

As is often the case, here the fourth element of the plaintiffs’

prima facie case merges with the question of pretext. The

candidates who won the promotions were better qualified

because they had higher test scores, and the plaintiffs have not

come forward with any evidence to undermine the test scores

as a legitimate, nondiscriminatory means of evaluating

candidates for promotion. In other words, the plaintiffs have

not produced any evidence that the testing process was pretext

for discrimination.

28 Nos. 12-1874 & 13-3422

The plaintiffs make no effort to challenge this analysis on

appeal. Even now, they do not identify any evidence tending

to show that the City’s use of the challenged testing procedure

was pretextual. They argue instead that they can sustain their

burden on their prima facie case by showing that the City

knew that its promotion process caused a disparate impact but

nonetheless continued to use it. There are several problems

with this argument; the main one is that it is utterly devoid of

evidentiary support. The plaintiffs produced no evidence

showing that the promotion tests administered in 2007 and

2008 caused a statistically significant disparate impact on black

candidates for promotion in the police and fire departments.

Accordingly, the City was entitled to summary judgment on

the disparate-treatment claims.

C. The Second Lawsuit/Res Judicata

The district court dismissed the second lawsuit as barred by

res judicata in light of the final judgment entered in the first

suit. The court was right to do so. “The preclusive effect of a

federal-court judgment is determined by federal common law.”

Taylor v. Sturgell, 553 U.S. 880, 891 (2008). The doctrine of res

judicata “promotes predictability in the judicial process,

preserves the limited resources of the judiciary, and protects

litigants from the expense and disruption of being haled into

court repeatedly.” Palka v. City of Chicago, 662 F.3d 428, 437 (7th

Cir. 2011). In federal court, res judicata—or claim preclu-

sion—has three elements: (1) an identity of the parties or their

privies in the first and second lawsuits; (2) an identity of the

cause of action; and (3) a final judgment on the merits in the

Nos. 12-1874 & 13-3422 29

first suit. Matrix IV, 649 F.3d at 547. Whether there is an

identity of the cause of action depends on “whether the claims

comprise the same core of operative facts that give rise to a

remedy.” Id. (internal quotation marks omitted) (alteration

omitted).

A narrower preclusion doctrine—“collateral estoppel” or

“issue preclusion”—applies to prevent relitigation of issues

resolved in an earlier suit. Taylor, 553 U.S. at 892; Matrix IV,

649 F.3d at 547. Issue preclusion has the following elements:

(1) the issue sought to be precluded is the same as an issue in

the prior litigation; (2) the issue must have been actually

litigated in the prior litigation; (3) the determination of the

issue must have been essential to the final judgment; and

(4) the party against whom estoppel is invoked must have been

fully represented in the prior action. Matrix IV, 649 F.3d at 547.

Here, the second lawsuit meets all the elements of claim

preclusion. The parties are the same and the first lawsuit was

resolved in a final judgment. Whether the causes of action in

the two suits arise from the same core of operative facts is a

closer question, but we conclude that they do. The second suit

concerns decisions made in later promotion cycles—in 2010

and 2011—but in every other material respect, the complaint

is almost identical to the amended complaint in the first suit.

The promotions were made based on the 2008 promotion-

eligibility list, and the plaintiffs allege that the 2008 testing

process was biased and had a disparate impact on black

candidates. So although the challenged promotion decisions

occurred at different times, the second suit raises the same core

of factual allegations as the first.

30 Nos. 12-1874 & 13-3422

Even if claim preclusion does not apply, issue preclusion

certainly does, and that’s enough to sustain the dismissal of the

second suit. The 2007 and 2008 testing protocols were the

central subject matter of the earlier suit.8 Whether the tests

were intentionally discriminatory or had a disparate impact

was actually litigated and essential to the final judgment. The

plaintiffs in the second suit were fully represented in the

first—and by the same attorney who appears for them in the

second round of litigation. They cannot now relitigate issues

that were decided against them in the earlier litigation. The

second suit was properly dismissed on preclusion grounds.

AFFIRMED .

8

The City’s use of the 2007 and 2008 test results to make promotion

decisions in 2010 and 2011 was cognizable under Title VII’s disparate-

impact provision, and the plaintiffs’ later challenge to those decisions

appears to be timely. See Lewis v. City of Chicago, 560 U.S. 205, 214–16 (2010).

Lewis does not address preclusion doctrine.