Justice Kennedy for a 5-4 Court split along ideological lines. The Court reverses outright, and rejects the Obama Administration's suggestion that the case be vacated and remanded for further proceedings. Justices Scalia and Alito wrote concurring opinions. Justice GInsburg wrote the dissent. More on SCOTUSBlog.

UPDATE: The opinion is here — it's a long one: 93 pages.

SECOND UPDATE: Here is how Justice Kennedy summarizes the Court's holding:

We conclude that race-based action like the City's in thiscase is impermissible under Title VII unless the employer can demonstrate a strong basis in evidence that, had it not taken the action, it would have been liable under the disparate-impact statute. The respondents, we further determine, cannot meet that threshold standard. As a result, the City's action in discarding the tests was a violation of Title VII. In light of our ruling under the statutes, we need not reach the question whether respon-dents' actions may have violated the Equal Protection Clause.

And the opinion concludes:

The record in this litigation documents a process that, atthe outset, had the potential to produce a testing proce-dure that was true to the promise of Title VII: No individual should face workplace discrimination based on race. Respondents thought about promotion qualifications and relevant experience in neutral ways. They were careful to ensure broad racial participation in the design of the testitself and its administration. As we have discussed at length, the process was open and fair.

The problem, of course, is that after the tests were completed, the raw racial results became the predominant rationale for the City's refusal to certify the results. The injury arises in part from the high, and justified, expectations of the candidates who had participated in the testing process on the terms the City had established for the promotional process. Many of the candidates had studied for months, at considerable personal and financial expense, and thus the injury caused by the City's reliance on raw racial statistics at the end of the process was all the more severe. Confronted with arguments both for and against certifying the test results—and threats of a law-suit either way—the City was required to make a difficult inquiry. But its hearings produced no strong evidence of a disparate-impact violation, and the City was not entitled to disregard the tests based solely on the racial disparity in the results.

Our holding today clarifies how Title VII applies to resolve competing expectations under the disparate-treatment and disparate-impact provisions. If, after it certifies the test results, the City faces a disparate-impact suit, then in light of our holding today it should be clear that the City would avoid disparate-impact liability based on the strong basis in evidence that, had it not certified the results, it would have been subject to disparate-treatment liability.

Petitioners are entitled to summary judgment on their Title VII claim, and we therefore need not decide the underlying constitutional question. The judgment of the Court of Appeals is reversed, and the cases are remanded for further proceedings consistent with this opinion.

My initial thoughts: I'm inclined to think the Court is correct, though I am somewhat surprised that the justices did not coalesce around a narrower holding, such as that suggested by the Obama Administration (vacate and remand for further consideration of whether New Haven's purported justification for invalidating the test was a pretext). From a super-duper-quick perusal, it seems that one significant effect of this ruling is that it could shield employers from disparate impact liability where avoiding such a suit could give rise to this sort of disparate treatment suit. I'll be curious to see how much this holding is dependent on the specific facts of this case, as New Haven had gone out of its way to develop a fair test and there was evidence that the city was motivated by more than potential Title VII liability. More later.