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Shabby data dooms EEOC disparate impact claim

4th Cir. affirms ruling against commission in case on background checks

The U.S. Equal Employment Opportunity Commission has come under sharp attack from a federal appeals court judge for its choice of an expert and use of “utterly unreliable” analysis in trying to show that pre-employment background criminal and credit background checks have a disparate impact on black job applicants.

Noting that the EEOC “wields significant power,” 4th U.S. Circuit Court of Appeals Judge G. Steven Agee cautioned the agency not to abuse it.

“The commission’s conduct in this case suggests that its exercise of vigilance has been lacking,” Agee wrote. “It would serve the agency well in the future to reconsider how it might better discharge the responsibilities delegated to it or face the consequences for failing to do so.”

Agee was concurring with the 4th Circuit’s decision last week, affirming the dismissal of EEOC’s lawsuit against Freeman, a Dallas-based convention-planning company, over its employment background checks.

EEOC maintains that such checks constitute unintended but real discrimination against black and male applicants nationwide. In the Freeman case, the complaint alleged discrimination against 130 people, including at least one from Prince George’s County.

In dismissing the case in August 2013, U.S. District Judge Roger W. Titus of Greenbelt said the evidence produced by industrial and organizational psychologist Kevin R. Murphy, an EEOC expert, contained a “mind boggling” number of errors and discrepancies.

For example, of the 41 people for whom the commission was seeking back pay in the case, seven were not even in Murphy’s database and another seven were not listed by race, though EEOC was claiming race discrimination, Titus found.

EEOC appealed.

The Richmond, Va.-based 4th Circuit said, in its published Feb. 20 decision, that the EEOC should not have used Murphy’s “utterly unreliable analysis.” Judge Roger L. Gregory, writing for the three-member panel, said “the sheer number of mistakes and omissions in Murphy’s analysis renders it outside the range where experts might reasonably differ.”

Murphy responds

Murphy, in an email Thursday, said “the fault lies with my team and me” and not with EEOC’s request for documents from the company.

“In Freeman, I led a team that was tasked with using the data obtained in discovery to determine whether the screening procedures used by Freeman [had] adverse impact against minority applicants,” Murphy wrote.

“It is my belief, based on my experience with similar organizations and the comments of Freeman’s experts that they had in their possession personnel files that would make it easy to determine which applicants were rejected and their race,” Murphy added. “The files they produced in response to discovery requests were piecemeal and scattered, with different pieces of necessary data spread across files that lacked a consistent and reliable basis for linking one file to another, and it became our task to try and reassemble a coherent master file from the various pieces we received. We were not able to successfully do that.”

However, the 4th Circuit rejected EEOC’s claim that Freeman was to blame for the problems with the data.

Agee also noted in his concurring opinion that the Freeman case is not the first time Murphy’s analysis has come under judicial attack.

In 2014, the 6th U.S. Circuit Court of Appeals affirmed a district judge’s exclusion of Murphy’s testimony in EEOC’s credit-check case against Kaplan Higher Education Corp. The Cincinnati-based 6th Circuit said Murphy used a skewed, unrepresentative sample, Agee wrote.

Ten years earlier, the Atlanta-based 11th U.S. Circuit Court of Appeals assailed testimony Murphy had provided at trial as having served only to “recapitulate the basic allegations of the plaintiffs in the guise of an expert report,” Agee added.

“[I]t 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,” Agee wrote. “It is my hope that the agency will reconsider pursuing a course that does not serve it or the public well.”

EEOC spokesman James Ryan stated in an email Thursday that “we are disappointed but are still studying the decision and have no further comment at this time.”

Freeman’s attorney, Donald R. Livingston, said the 4th Circuit’s decision should serve as a reminder to the commission.

“The EEOC has to submit a professional, scientifically based demonstration of disparate impact at the outset of its obligation to produce an expert report,” said Livingston, who was the commission’s general counsel from June 1990 to June 1993.

“They need to come forward with an admissible report,” added Livingston, now with Akin Gump Strauss Hauer & Feld LLP in Washington, D.C. “The EEOC was unable to show that it had evidence of disparate impact.”

No opinion on merits

Freeman’s chief executive officer, Joe Popolo, said in a statement that the company is “thrilled the U.S. Court of Appeals affirmed the dismissal of the EEOC’s case against Freeman alleging that our background policies were discriminatory.”

The commission filed suit against Freeman on Sept. 30, 2009, alleging the company had engaged in a pattern or practice of discriminating against black and male applicants by using criminal history as a hiring criterion. The use of the background checks had a significant disparate impact on blacks and men and was neither job-related nor consistent with business necessity, EEOC added.

Freeman defended its use of the checks as necessary to prevent workplace violence, drug use, theft and embezzlement — crimes the company said it had experienced. Freeman said the checks were part of its evaluation of a job candidate’s trustworthiness, reliability and effectiveness, without regard to race or gender.

The 4th Circuit, in a footnote, mentioned “the irony” of the EEOC’s own use of background checks in screening job applicants but added the court was expressing “no opinion on the merits of the EEOC’s claims.”

Judge Albert Diaz joined Gregory and Agee in the court’s decision.

The case is Equal Employment Opportunity Commission v. Freeman, No. 13-2365.