E-Alert Case Updates

Fourth Circuit Affirms Maryland District Court’s Grant of Summary Judgment for Employer Where EEOC Relied Upon Erroneous Expert Testimony of Industrial Psychologist

EEOC v. Freeman
United States Court of Appeals for the Fourth Circuit, No. 13-2365 (4th Cir. February 20, 2015)
by Jhanelle A. Graham, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.ca4.uscourts.gov/Opinions/Published/132365.P.pdf

In EEOC v. Freeman, Freeman—a provider of integrated services for expositions, conventions, and corporate events, with offices in major cities throughout the United States—began conducting background checks on its job applicants. In 2001, the Equal Employment Opportunity Commission (“EEOC”) alleged that Freeman’s background checks had an unlawful disparate impact on black and male job applicants. The district court granted summary judgment to Freeman after excluding the EEOC’s expert testimony as unreliable under Federal Rule of Evidence 702, without which the agency could not establish a prima facie case of discrimination. Upon review, the Fourth Circuit affirmed the district court’s exclusion of the EEOC’s expert testimony and grant of summary judgment to Freeman.

Freeman commenced background checks of job applicants’ credit and criminal justice histories in 2001, but its check policies excluded applicants whose histories revealed certain prohibited criteria. That is, if an applicant’s history included criteria such as a conviction for a crime of violence, the applicant was not hired. Freeman modified these criteria on July 20, 2006, and again on August 11, 2011, after which it no longer conducted credit checks. In 2008, after an applicant who was denied a position filed a charge of discrimination, the EEOC began an investigation of Freeman’s credit check policy. On March 27, 2009, the EEOC issued a letter of determination, finding that Freeman’s use of credit and criminal checks violated Title VII. When informal resolution attempts failed, the EEOC filed suit under Sections 706 and 707 of Title VII.2 42 U.S.C. §§ 2000e-5, 2000e-6, alleging that Freeman’s criminal checks had a disparate impact on black and male job applicants, and that the credit checks had a disparate impact on black job applicants. The district court subsequently limited the class of applicants on behalf of which the EEOC could seek relief to those individuals affected by criminal checks from November 30, 2007 to July 12, 2012, and those affected by credit checks from March 23, 2007 to August 11, 2011.

The case proceeded to discovery, and the EEOC produced: (1) a report by Kevin Murphy, an industrial/organizational psychologist; and (2) a report by Beth Huebner, an associate professor of criminology, which purported to replicate Murphy’s results. Eight (8) days after its expert disclosure deadline, the EEOC produced an amended report from Murphy with slightly altered calculations. Freeman moved to exclude Murphy’s and Huebner’s reports and also moved for summary judgment, to which the EEOC responded by filing a new declaration and supplemental report from Murphy. The supplemental report included revised calculations and the results from his analysis of a new, expanded database. The EEOC also moved to file a sur-reply, and while that motion was pending, served Freeman with yet another supplemental expert report from Murphy, as well as a supplemental report by Huebner, which the agency sought to introduce at the summary judgment hearing.

The district court denied the EEOC’s motion for leave to file a sur-reply and granted Freeman’s motion to exclude Murphy’s testimony on the basis that it was “rife with analytical errors” and “completely unreliable” under Federal Rule of Evidence 702. Consequently, the court granted Freeman’s motion for summary judgment, and the EEOC appealed timely.

The Fourth Circuit began its analysis by describing the standard for admissibility of expert testimony under the Federal Rules of Evidence, Rule 702, as well as the standard of review for a district court’s decision to admit or to exclude expert evidence. The appellate court noted that the district court identified an alarming number of errors and analytical fallacies in Murphy’s reports, making it impossible to rely on any of his conclusions. Specifically, Murphy omitted data from half of Freeman’s branch offices and failed to utilize a sample size from the relevant time period, although he purported to analyze all background checks with verified outcomes. Further, looking at a subset of forty-one (41) individuals for whom the EEOC was seeking back pay, twenty (29) had at least one (1) error or omission; seven (7) were missing from the database altogether; seven (7) were listed in the database without a race code; one (1) was incorrectly coded as passing the criminal background check; two (2) were incorrectly coded as failing the criminal background check; five (5) had incorrect gender codes; nine (9) were listed twice and double-counted in Murphy’s results, and three (3) who failed the credit check were not coded with a credit check result. Contrary to the EEOC’s claims, Murphy did not fix these errors in subsequently-filed, supplemental reports.

Consequently, according to the Fourth Circuit, the sheer number of mistakes and omissions in Murphy’s analysis rendered it “outside the range where experts might reasonably differ.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149 (1999). For these reasons, the appellate court could not conclude that the district court abused its discretion in ultimately excluding Murphy’s expert testimony as unreliable.

Concurring with the majority opinion, which was authored by the Honorable Judge Roger Gregory, the Honorable Judge G. Steven Agee opined separately to address his concern with the EEOC’s “disappointing litigation conduct.” According to Judge Agee, the Commission’s work of serving the public interest is jeopardized by the kind of missteps that occurred in the case. Gen. Tel. Co. of the Nw. v. EEOC, 446 U.S. 318, 326 (1980). Judge Agee stated that it was troubling that the Commission proffered expert testimony from a witness whose work has been roundly rejected in sister circuits for similar deficiencies to those observe in this case. Identifying “a pattern of suspect work from Murphy,” as well as his “record of slipshod work, faulty analysis, and statistical sleight of hand,” Judge Agee strongly advised that the EEOC “reconsider pursuing a course that does not serve it or the public interest well.”