In a remarkably harshly worded decision issued on August 9,
Judge Roger Titus of the United States District Court for the
District of Maryland granted summary judgment against the EEOC in
its challenge to the use of criminal background and credit history
checks by a Maryland-based family-owned company that employs more
than 3,500 full-time and 25,000 part-time and seasonal employees
throughout the United States. EEOC v. Freeman, Memorandum
Opinion, Case No. RWT 09cv2573 (D. Md. August 9, 2013), ECF No.
149. In his decision, Judge Titus took aim at both the EEOC's
theory and the agency's statistical expert, Kevin R.
Murphy.
The EEOC filed the suit against Freeman in 2009, alleging that the
company's criminal background and credit history checks had an
adverse impact against African American, Hispanic, and male
applicants. Through rulings on prior motions, the court had
winnowed the case down to a "credit class" consisting of
51 African Americans who were allegedly unlawfully excluded from
hire as a result of the company's credit check and a
"criminal class" consisting of 83 African Americans and
males who were allegedly denied employment based on their criminal
histories. With his August 9 ruling, Judge Titus dispensed with
these remaining claims and entered judgment in Freeman's
favor.
Using phrases such as "an egregious example of scientific
dishonesty" (Mem. Op. at 18), the "mind-boggling number
of errors contained in Murphy's database" (id. at
19), and "a laughable attempt to better capture the relevant
time period" (id. at 20), Judge Titus easily found
Murphy's conclusions to be "completely unreliable"
(id. at 14) and insufficient to support a finding of
disparate impact. Significantly, Judge Titus noted that Murphy was
the same expert whose testimony was stricken in EEOC v. Kaplan
Higher Learning Education Corp., Case No. 10 CV 2882, 2013 WL
322116, at * 10-11 (N.D. Ohio Jan. 28, 2013), and that the same
rationale warranted exclusion of his report in the Freeman
case. Mem. Op. at 18. On the same basis, he also disregarded the
report of the EEOC's second expert.
Judge Titus also easily dispensed with the EEOC's attempt to
rely on general statistics. Without company-specific data to
establish any adverse impact of the challenged practices, the EEOC
fell back on arguing that certain national statistics regarding
racial disparities in credit ratings, arrests, and convictions were
sufficient to show that the company's practices had an adverse
impact. The court concluded that there was no evidence that these
general statistics were representative of the relevant applicant
pool, and, in any event, the statistics included arrest and
incarceration rates that were not considered under Freeman's
hiring criteria. Moreover, the EEOC had the burden of proving an
adverse impact, and because the EEOC had failed to offer any
reliable evidence of disparate impact, its claim failed as a matter
of law.
Finally, Judge Titus held that, in any event, the EEOC had failed
to identify the specific policy that caused the alleged disparate
impact. For this additional reason, Freeman was entitled to summary
judgment.
In conclusion, Judge Titus wrote:
By bringing actions of this nature, the EEOC has placed many employers in the 'Hobson's choice' of ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers. Something more, far more, than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim based upon criminal history and credit checks. To require less, would be to condemn the use of common sense, and this is simply not what the discrimination laws of this country require.
Mem. Op. at 31-32.
Employers can take comfort that Judge Titus recognized the
failings of the EEOC's recent actions and that, at least in
this one case, common sense has prevailed.
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