“Gotta Know When To Fold Em”
The Freeman case has been discussed in prior alerts dated 8/22/12, 9/4/13, 3/3/14 and 3/2/15. In the most recent ruling, decided on 9/4/15, District Court Judge Titus of Maryland ruled that the EEOC owes $938,771.50 to Freeman. Freeman had requested $1,583,762. Thus, Freeman got about 1/3 of what it asked for.
Briefly, the history of the case is that to support its charges of adverse impact based on criminal and credit background checks, the EEOC offered the report of a well-known I/O psychologist. All told, there were four reports. The original report was deemed to have flaws, including an incomplete database and “cherry picking” of the data analyzed. This led to a report by a second expert purporting to clear up the flaws in the initial report. This report was also deemed flawed. The third report, by the initial expert, purported to fix the first report, but it too was deemed flawed. Freeman moved for summary judgment, which was granted by the district court and ultimately affirmed by the 4th Circuit. Freeman then moved for attorney fees, but this motion was stayed as the EEOC appealed, offering its fourth report. The claim at this point was that flaws in the data were Freeman’s fault. The claim was denied, and upon report to Judge Titus, the aforementioned costs were granted, supplemented by additional costs incurred by Freeman to defend the second appeal.
In prior Alerts in this case, both Judge Titus and the circuit court issued a number of statements vilifying the EEOC and its experts, and many of them were repeated by Judge Titus in the current ruling. I sampled several of these statements in the prior Alerts and won’t repeat them here. Furthermore, I will not repeat the litany of new statements by Judge Titus. Rather, the following quote pretty much summarizes his feelings. In his opening statement, there is a quote from the song “The Gambler” by Kenny Rogers. Accordingly:
World-renowned poker expert Kenny Rogers once sagely advised, "You've got to know when to hold 'em. Know when to fold 'em. Know when to walk away." In the Title VII context, the plaintiff who wishes to avoid paying a defendant's attorneys' fees must fold 'em once its case becomes so groundless that continuing to litigate is unreasonable, i.e. once it is clear it cannot have a winning hand. In this case, once Defendant Freeman revealed the inexplicably shoddy work of the EEOC's expert witness in its motion to exclude that expert, it was obvious Freeman held a royal flush, while the EEOC held nothing. Yet, instead of folding, the EEOC went all in and defended its expert through extensive briefing in this Court and on appeal. Like the unwise gambler, it did so at its peril. Because the EEOC insisted on playing a hand it could not win, it is liable for Freeman's reasonable attorneys' fees.
Basically, the ruling is that the EEOC should have known after several failures to prove adverse impact that its “dog did not hunt.” Or in the words of Judge Titus:
The EEOC needed to stop pursuing this case after Freeman showed that the EEOC's dog did not hunt. Once Freeman filed its motion to exclude, it should have been obvious to the EEOC that its dog had a variety of debilitating infirmities. The hunt was lost. Instead, the EEOC continued pursuing a lost cause. As a result, Freeman is entitled to its reasonable attorneys' fees. By separate Order, the Court will award Freeman $938,771.50 in attorneys' fees.
I’ll leave you with one thought. There were no statements in any of the rulings denying the EEOC’s right to pursue adverse impact cases based on background checks; only that this was a case in which the EEOC should have known it could not make the prima facie case. Beyond that, I’m struck by the fact that the EEOC’s policy statements on background checks focus primarily, if not entirely, on automatic exclusions based on criminal or credit history. Freeman had no such policies and clearly provided for individual assessments after applicants were flagged. Indeed, they used the caveats offered by EEOC guidance (e.g., nature of crime/credit issue, time since the event, etc.).
At any rate, what this case shows is that the EEOC may doggedly pursue such cases and that employers need to be mindful of the EEOC policies. At the same time, the EEOC obviously needs to do a better job finding cases in which it can prove adverse impact.
By Art Gutman, Ph.D., Professor, Florida Institute of Technology
