We have discussed the Freeman case in several Alerts (8/22/12, 9/14/13 & 3/3/14). The challenge was to Freeman’s use of background checks and criminal records adversely impacted blacks, Hispanics, and males. The EEOC also charged Freeman with a pattern or practice of discrimination. Ultimately, the district court threw out the statistical expert report and, in a ruling dated 2/20/15, so did the 4th Circuit (see 2015 U.S. App. LEXIS 2592). The 6th Circuit had previously done likewise to the EEOC and the same expert in EEOC v. Kaplan (see 748 F.3d 749; 4/9/15).
In the Kaplan case, the 6th Circuit ruled, among other things, that the methodology used “flunked” all five Daubert facts and, in its conclusion ruled:
We need not belabor the issue further. The EEOC brought this case on the basis of a homemade methodology, crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself.
The 4th Circuit was equally as enraged as the 6th Circuit. The court cited an “alarming number of analytical fallacies” in the expert report “making it impossible to rely on any of his conclusions.” As noted by the court:
Freeman provided the EEOC with complete background check logs for hundreds, if not thousands, of applicants who [the expert] did not include in his database of fewer than 2,014 background checks conducted largely before October 14, 2008. Only 19 post-October 14, 2008 applicants were included in Murphy's database, all but one of whom failed the checks. However, Freeman, through its background check vendor, "conducted more than 1,500 criminal background investigations and more than 300 credit investigations on applicants between October 15, 2008 to August 31, 2011" with Freeman producing in discovery [*8] "race and gender [The expert] furthermore omitted data from half of Freeman's branch offices. This is despite the fact that he did not seek to utilize a sample size from the relevant time period, but purported to analyze all background checks with verified outcomes.
Some of the language used in the main opinion (by Judge Gregory) was even saltier than this. Additionally, Judge Agee wrote a separate concurrence in which he took the EEOC to task for bringing such cases. In Judge Agee’s words:
Although I concur in Judge Gregory's opinion, I write separately to address my concern with the EEOC's disappointing litigation conduct. The Commission's work of serving "the public interest" is jeopardized by the kind of missteps that occurred here. Gen. Tel. Co. of the Nw. v. EEOC, 446 U.S. 318, 326, 100 S. Ct. 1698, 64 L. Ed. 2d 319 (1980). And it troubles me that the Commission continues to proffer expert testimony from a witness whose work has been roundly rejected in our sister circuits for similar deficiencies to those we observe here. It is my hope that the agency will reconsider pursuing a course that does not serve it or the public interest well.
Again, this is just a sampling of some of the language used by Judge Gregory and Judge Agee. It should be interesting to see how future cases on credit and background checks are viewed in the courts. This much we know … the EEOC continues to forge (or force) conciliatory agreement on these terms.
By Art Gutman, Ph.D., Professor, Florida Institute of Technology