                               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.
