Chicago Teachers Union, Local v. Board of Education of the City

In the

United States Court of Appeals

For the Seventh Circuit

No. 20-1167

CHICAGO TEACHERS UNION, TERRI

FELLS, LILLIAN EDMONDS, and

JOSEPHINE PERRY, Individually and on

Behalf of all Similarly

Situated Persons,

Plaintiffs-Appellants,

v.

BOARD OF EDUCATION OF THE CITY OF

CHICAGO,

Defendant-Appellee.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 12 C 10338 — Jorge L. Alonso, Judge.

ARGUED SEPTEMBER 15, 2020 — DECIDED SEPTEMBER 22, 2021

Before FLAUM, ROVNER, and WOOD, Circuit Judges.

2 No. 20-1167

ROVNER, Circuit Judge. Citing an alleged budget deficit, the

Board of Education of the City of Chicago (“the Board”) laid

off approximately 1,077 teachers and 393 paraprofessional

educators in the summer of 2011. The Chicago Teachers Union

and a class of teachers (collectively “CTU”) filed suit against

the Board alleging that the layoffs discriminated against

African American teachers and paraprofessionals in violation

of Title VII of the Civil Rights Acts of 1964 and the Civil Rights

Act of 1991, 42 U.S.C. §§ 2000e et seq. The district court granted

summary judgment in favor of the Board on the parties’ cross-

motions for summary judgment. CTU appeals, but we affirm.

I.

During the 2010-2011 school year, the Board concluded that

it would need to eliminate certain teaching and paraprofess-

ional positions for the upcoming 2011-2012 school year. This

conclusion was based on a significant projected budget deficit

for the upcoming 2011-2012 school year as well as declining

enrollment in a number of Chicago public schools. Senior

members of the Board met several times in May 2011 to

consider options for reducing the proposed budget deficit.

Ultimately, the Board instituted a series of spending

cuts—$107 million in Central Office spending, $27 million in

operations, and $86.7 million in program reductions.

Most relevant here, however, was the Board’s decision to

close 1,077 teaching and 393 paraprofessional (1,470 total)

positions for the upcoming school year based on declining

enrollment at certain Chicago Public School (“CPS”) schools.

In the 2010-2011 school year, the Chicago school district was

divided into 29 geographic “Areas.” The majority of African

No. 20-1167 3

American students attended schools corresponding

geographically to the south and west sides of Chicago, which

were also the schools with declining enrollment. Specifically,

in the decade leading up to the 2010-2011 school year, the

number of students enrolled in CPS schools dropped by 7.7%

overall—from 437,618 to 404,151—but the number of African

American students declined by 25.2%—from 224,494 to

168,020. These declining enrollment numbers loosely

correlated with census data showing that the population of

African Americans in the City of Chicago declined from

1,065,009 to 887,608 (16.7%) from 2000 to 2010.

As it had in past years, the Board decided which positions

to eliminate and which CPS employees to lay off based on

projected enrollment numbers. The Board laid off faculty and

staff from three types of positions: 1) quota positions;

2) instructional or programmatic positions; and 3)

discretionary fund positions. Quota positions are allocated to

each school based on its student enrollment. Instructional or

programmatic positions, which covered specialized curriculum

such as bilingual education, were also staffed based on

projected enrollment. Finally, discretionary fund positions,

which were based on federal Title I appropriations and

supplemental general state aid appropriations from the Illinois

State Board of Education, were tied to the number of students

eligible for free or reduced lunch, a number that dropped with

declining enrollment.

To reach its decisions about layoffs, the Board worked with

the Office of Management and Budget to determine which

quota positions would be eliminated per school using a

formula based on projected enrollment. Like the quota

4 No. 20-1167

positions, programmatic and instructional positions as well as

discretionary funds for positions were eliminated using

enrollment projections. Using 2011-2012 enrollment projections

provided by the Demographics Department, the Office of

Management and Budget created and disseminated a packet to

each principal explaining its budgeting process. Principals also

received a letter setting forth the number of quota,

instructional, and programmatic positions allowed as well as

the total discretionary funding allocated. If these numbers

required fewer positions than the previous year, the principal

then decided which positions to eliminate. This decision was

based on the principal’s own assessments as well as seniority

and certification criteria set forth in the collective bargaining

agreement (“CBA”).

Before the 2011 layoffs, the Board employed approximately

27,240 Union members. Approximately 8,048 of these

employees were African American, or roughly 30%. Around

1,470 Union members received layoff notices, and over 600 of

those members were African American. Thus, although

African American teachers or paraprofessionals comprised

only 30% of total teachers or paraprofessionals, they made up

over 40% of those who received layoff notices. Many of these

individuals worked at the South and West side schools where

enrollment had declined most sharply.

Under the CBA, teachers and staff receiving layoff notices

received full pay and benefits through August 31, 2011. Some

tenured teachers were transferred to the Reassigned Teachers

Pool, where they received full salary and benefits for ten

months while working as substitute teachers. Others were

offered lower-paying substitute positions on a day-to-day

No. 20-1167 5

basis. Of the 630 African American individuals who received

layoff notices, 335 had found full-time positions with the Board

by September 1, 2011 and therefore suffered no loss of pay or

benefits. Another thirty-four voluntarily retired before

September 1, 2011.

In December 2012, appellants filed suit against the Board,

alleging that the 2011 layoff decisions disparately impacted

African American teachers and staff in violation of Title VII of

the Civil Rights Act of 1964 and the Civil Rights Act of 1991.

42 U.S.C. § 2000e et seq. The individual plaintiffs, Terri Fells,

Lillian Edmonds, and Josephine Hamilton Perry, are African

Americans who were working as teachers in CPS schools when

they received layoff notices in the summer of 2011. In May

2015, the district court certified the class, which it ultimately

defined over the Board’s objection as follows:

All African American persons employed as a

tenured teacher or staff member, as defined by

the collective bargaining agreement between the

Chicago Teachers Union and the Board of

Education of the City of Chicago, who received

a layoff notice from the Board of Education

pursuant to its “layoff policy in 2011.”

Dkt. 165, p. 2.

The plaintiffs later amended their complaint to add a Title

VII disparate treatment claim against the Board. After

considerable back and forth, including the Board’s

unsuccessful attempt to add a counterclaim with its affirmative

defenses, the parties filed cross-motions for summary

6 No. 20-1167

judgment along with Daubert motions to exclude the other

party’s expert testimony.

The district court granted summary judgment in favor of

the Board, and denied as moot both the motion to exclude the

Board’s expert, Dr. David Blanchflower, and the motion to

exclude CTU’s expert, Dr. Jonathan Walker. Although the

parties disputed the admissibility of their respective experts’

reports and the question of whether there had been an adverse

employment action at all (after accounting for the class

members who ultimately suffered no loss of pay or benefits),

the district court dismissed these issues as unnecessary to the

outcome. Ultimately, the district court concluded that the class

had failed to rebut the Board’s legitimate business justification

for the layoffs. Specifically, the court assumed that the report

of CTU’s expert, Dr. Walker, showing a statistically significant

disparate impact on African American employees, was

admissible, and that the report submitted by the Board’s

expert, Dr. Blanchflower, drawing a different conclusion was

not. Nonetheless, the court concluded that the Board had

demonstrated that tying the layoffs to declining enrollment

was consistent with business necessity, and that CTU failed to

provide evidence that the Board could have accomplished the

same business objective in an equally efficient and less

discriminatory way.

The court also relied on the business justification offered by

the Board to conclude that CTU’s disparate treatment claim

failed on the merits. The district court thus sidestepped an

argument between the parties as to whether the disparate

treatment claim had been exhausted, given that CTU had not

explicitly raised it in its Equal Employment Opportunity

No. 20-1167 7

Commission (EEOC) charge. The district court thus granted

summary judgment to the Board on all of CTU’s claims.

II.

CTU appeals, arguing that it has presented sufficient

evidence to withstand summary judgment on both its

disparate impact and disparate treatment claims. We review

the district court’s judgment on cross motions for summary

judgment de novo, drawing all reasonable inferences in favor

of “the party against whom the motion at issue was made.”

Woodring v. Jackson Cty. Ind., 986 F.3d 979, 984 (7th Cir. 2021)

(quotations and internal citation omitted). Summary judgment

is appropriate only when there are no genuine disputes of

material fact and the movant is entitled to judgment as a

matter of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 256 (1986).

The primary prohibition on discrimination in Title VII of

the Civil Rights Act of 1964 makes it unlawful for an employer

to fire or “otherwise to discriminate against any individual

with respect to his compensation, terms, conditions, or

privileges of employment” or “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” on account of race. 42 U.S.C.

§ 2000e(2)(a)(1)-(2). In addition to the express prohibition

against intentional discrimination in § 2000e(2), the Supreme

Court has long recognized that Title VII also prohibits “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 (1971); see also Ricci v. DeStefano, 557 U.S.

8 No. 20-1167

557, 576–78 (2009) (recognizing prohibition on facially neutral

practices that discriminate in operation). This prohibition on

employment practices with a disparate impact was later

codified in the Civil Rights Act of 1991. 105 Stat. 1071 (codified

at 42 U.S.C. § 1981(a) et seq.); see also Ernst v. City of Chicago, 837

F.3d 788, 794 (7th Cir. 2016) (“Title VII prohibits employment

practices that have a disproportionately adverse impact on

employees with protected characteristics, even if the impact is

unintended.”).

We begin with CTU’s disparate impact claim. A plaintiff

establishes a prima facie violation of the disparate impact

statute by demonstrating that an employer uses “a particular

employment practice that causes a disparate impact on the

basis of race, color, religion, sex, or national origin.” 42 U.S.C.

§ 2000e-2(k)(1)(A)(i). To meet this burden, plaintiffs must

produce evidence that an employment practice results in

“‘observed statistical disparities,’” as well as establish

causation with “‘statistical evidence of a kind and degree

sufficient to show that the practice in question has caused the

exclusion of applicants for jobs or promotions because of their

membership in a protected group.’” Puffer v. Allstate Ins. Co.,

675 F.3d 709, 717 (7th Cir. 2012) (quoting Watson v. Ft. Worth

Bank & Trust, 487 U.S. 977, 994 (1988)). A defendant must then

establish “that its method is job-related and consistent with

business necessity.” Price v. City of Chicago, 251 F.3d 656, 659

(7th Cir. 2001); see also Albermarle Paper Co. v. Moody, 422 U.S.

405 (1975); Griggs, 401 U.S. at 431. The burden then shifts back

to the plaintiff to show that the employer refused to use an

available yet equally valid and less discriminatory practice. See

Puffer, 675 F.3d at 717; 42 U.S.C. § 2000e-2(k)(1)(A)(ii).

No. 20-1167 9

Neither party takes issue with the district court’s

assumption that plaintiffs made a prima facie case of disparate

impact with the evidence that African American individuals

comprised approximately 30% of Union members at the time

of the layoffs but made up just over 40% of Union members

receiving layoff notices. Nor do they challenge the court’s

finding that the Board’s decision to tie layoffs to declining

enrollment in schools was legitimate, job-related, and

consistent with business necessity.

Thus, the sole disputed issue on appeal regarding the

disparate impact claim is whether CTU met its burden of

establishing that the Board had an equally efficient and less

discriminatory way to conduct the 2011 layoffs. In the district

court, CTU offered several alternatives it asserted the Board

could have pursued: (1) transferring class members to open

positions; (2) conducting an adverse impact analysis preceding

the layoffs; (3) avoiding the use of enrollment projections to

determine layoffs; or (4) using other sources of funding instead

of laying off employees. On appeal, CTU reasserts its claim

that class members could have been transferred instead of

receiving layoff notices, and also argues that the district court

erred by failing to consider all of its proposed alternatives

together instead of each one in isolation.

To support its assertion that the Board could have avoided

layoffs by transferring employees to open positions, CTU uses

the Board’s own evidence from the district court. The Board

argued in opposition to summary judgment that after taking

into account that over half of the teachers receiving layoff

notices had no loss of pay and benefits and had secured

equivalent jobs by September 1, 2011, CTU could not

10 No. 20-1167

demonstrate that a statistically significant number of African

American employees had suffered an adverse employment

action. The district court, however, assumed for purposes of

summary judgment that the layoff notices themselves

constituted an adverse employment action, and the Board has

not challenged that assumption on appeal. But CTU now seizes

on the Board’s evidence that many of the employees quickly

found comparable jobs to advance its claim that the Board

could have avoided the discriminatory effect of the layoff

notices by transferring employees to what were clearly—as the

Board’s evidence itself demonstrates—available positions.

However, beyond noting the existence of open positions for

which laid off employees were qualified, CTU does little to

meet its burden that its proposed alternative was “available,

equally valid and less discriminatory.” See Allen v. City of

Chicago, 351 F.3d 306, 312 (7th Cir. 2003). Contrary to CTU’s

assertion, the mere fact that over half of the employees were

ultimately able to move into other open positions does little to

satisfy its burden “to demonstrate a viable alternative and give

the employer an opportunity to adopt it.” Id. at 313 (citing 42

U.S.C. § 2000e-2(k)(1)(A)).

CTU’s failure to provide any concrete detail as to how such

a transfer plan would have operated is compounded by two

additional reasons the Board identifies. First, the Illinois School

Code places hiring discretion with principals, not the Board.

On this point, both parties cite to 105 ILCS 5/34-8.1, which

provides in relevant part that vacant positions “shall be filled

by appointment made by the principal in accordance with

procedures established and provided by the Board.” (Emphasis

added.) The Board points out that by statute, vacancies must

No. 20-1167 11

be filled “by the principal.” CTU responds by focusing on the

language vesting ultimate authority with the Board to establish

and provide procedures for filling vacant positions. Given the

Board’s final authority over hiring procedures, CTU may be

correct that the Illinois code does not forbid the kind of transfer

arrangement they now propose. It does, however, clearly vest

hiring authority with school principals and not the Board itself.

Without more evidence as to how the Board could have simply

overridden the existing system, CTU has failed to carry its

burden of demonstrating a “viable” alternative that the Board

refused to adopt. See Adams v. City of Chicago, 469 F.3d 609, 616

(7th Cir. 2006). Given this, CTU’s claim that the Illinois School

Code encourages discrimination if it bars the Board from

unilaterally transferring employees goes nowhere. As the

Board recognizes, the statute’s designation of hiring discretion

to principals neither promotes discrimination nor bears any

relationship to the Board’s decision to tie layoffs to declining

enrollment, which it has already shown to be based on a

legitimate business necessity.

The transfer alternative proposed by CTU is also not

consistent with the CBA, which sets forth procedures for

handling teacher and paraprofessional layoffs and

reassignments when there is a “drop in enrollment.”

Specifically, the portions of the CBA dealing with drops in

enrollment and reassigned teachers in the teachers’ pool both

confirm that school principals retain decisionmaking authority

over permanent hiring within their schools. The CBA thus

reinforces the Illinois School Code with language that both the

Union and the Board agreed to specifying that tenured teachers

in the reassigned teachers’ pool could be transferred to an

12 No. 20-1167

interim position for up to 60 days but that the principal had the

final authority as to whether such teachers could become

permanent employees. CTU’s failure to explain how its

proposed transfer solution could be enacted consistent with the

CBA is yet another reason CTU has failed to meet its burden to

demonstrate an existing, viable alternative to the Board’s

enrollment-based layoffs.

CTU also suggests for the first time on appeal that the

district court erred by failing to consider all of its proposed less

discriminatory alternatives together. Not only did CTU fail to

develop this argument in the district court, here again it

provides no detail as to how the Board would have enacted

such a combination of ideas. As described above, CTU also

claims that in addition to transferring employees to other open

positions, the Board could have (1) conducted an adverse

impact analysis before moving forward with layoffs; (2) relied

on factors other than enrollment to select employees for layoff;

and (3) relied on “other sources” of funding or revenue to

avoid layoffs altogether. But for each proposed alternative,

CTU falls far short of providing the sort of detail necessary to

meet its burden of establishing an alternative to the Board’s

system: it fails to spell out what factors other than enrollment

should have been used; fails to explain precisely how the Board

could have accessed “other sources” of funding or how that

funding would have allowed it to keep teaching positions open

in schools with declining enrollments; and fails to identify how

conducting an adverse impact study would obviate the need

to base layoffs on declining enrollment. Thus, the district court

correctly concluded that CTU did not carry its burden of

establishing an equally valid, less discriminatory alternative

No. 20-1167 13

the Board could have used in lieu of layoffs based on

enrollment numbers.

That leaves only CTU’s disparate treatment claim. To

survive a motion for summary judgment on a Title VII claim of

discriminatory discharge on account of race, the plaintiff must

produce evidence to support a reasonable inference that the

plaintiff’s race (or other forbidden factor) caused the adverse

employment action. See, e.g., Ortiz v. Werner Enters., Inc., 834

F.3d 760, 765 (7th Cir. 2016). The Board first renews its claim

that CTU failed to properly exhaust its administrative remedies

by failing to explicitly bring its disparate treatment claim in its

EEOC charge, which referred only to its disparate impact

claim. See Ajayi v. Aramark Bus. Servs., Inc., 336 F.3d 520, 527

(7th Cir. 2003) (reiterating that Title VII plaintiff may bring

only those claims that were included in or “within the scope

of” the EEOC charge). The CTU responds by arguing that the

Board waived this argument by failing to raise it until it moved

for summary judgment. We need not resolve the parties’

dispute over exhaustion and waiver however, because CTU

has failed to put forth any evidence of intentional

discrimination on the part of the Board.

CTU asserts that it has sufficient evidence to survive

summary judgment on its disparate treatment claim because

it has shown that (1) the adverse impact of the layoffs on

African American employees was statistically significant, and

(2) the Board knew the layoffs would primarily impact African

Americans. Although helpful in establishing its disparate

impact claim, the fact that CTU has shown that layoffs

disparately impacted African Americans in a statistically

significant way does not reasonably lead to the inference that

14 No. 20-1167

the Board intentionally discriminated. CTU points to nothing

in the record undermining the Board’s evidence that its layoff

decisions were based on declining enrollment, not any

intention to discriminate. Likewise, CTU fails to explain what

evidence establishes that the Board knew in advance that the

layoffs would disproportionately impact African American

teachers and paraprofessionals.

What’s more, CTU never explains how such knowledge,

even if proven, would demonstrate that the Board intended to

discriminate. In short, none of CTU’s evidence undermines the

conclusion that the Board used a race-neutral, bureaucratic

mechanism to adjust staffing in Chicago public schools to meet

the needs of declining enrollment and potential budget

shortfalls. CTU has also failed to produce evidence that would

allow a reasonable juror to conclude that the Board’s layoffs

were a pretext for discrimination or that the Board acted with

an intent to discriminate. Summary judgment was thus

appropriate for the Board on the CTU’s disparate treatment

claim as well as its disparate impact claim.

III.

For the foregoing reasons, we AFFIRM the district court’s

grant of summary judgment in all respects.