Expert Testimony in Background Check Case Properly Blocked as Unreliable, 4th Cir. Rules

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By Jay-Anne Casuga

Feb. 20 — A federal judge in Maryland rightly excluded flawed expert testimony provided by the Equal Employment Opportunity Commission in its lawsuit alleging that a nationwide event-planning company's use of criminal background and credit checks had an unlawful disparate impact on black and male job applicants, the U.S. Court of Appeals for the Fourth Circuit ruled Feb. 20.

The ruling follows EEOC v. Kaplan Higher Education Corp., 748 F.3d 749, 122 FEP Cases 509 (6th Cir. 2014), in which the Sixth Circuit expressed sharp disapproval of the EEOC's statistical evidence in a case involving allegations of racial disparate impact from an employer's use of credit histories in hiring decisions. Management attorneys Feb. 20 told Bloomberg BNA that they believe the rulings from the Fourth and Sixth circuits should put the EEOC on notice that it must base its disparate impact claims on rigorous statistical data and analysis.

The Fourth Circuit affirmed summary judgment to Freeman solely on the basis that Judge Roger W. Titus of the U.S. District Court for the District of Maryland didn't abuse his discretion in excluding statistical reports submitted by the EEOC's expert, industrial/organizational psychologist Kevin Murphy.

The appeals court agreed that the reports were unreliable under Rule 702 of the Federal Rules of Evidence, pointing to the “sheer number of mistakes and omissions” in Murphy's analyses. The court added, however, that its ruling expresses no opinion on the EEOC's disparate impact claim.

Judge Roger Gregory wrote the decision, joined by Judges Albert Diaz and G. Steven Agee, who wrote separately in a concurring opinion to address his concern with the EEOC's “disappointing litigation conduct.”

Attorneys: Ruling Rebukes EEOC

Donald Livingston, a management lawyer with Akin Gump Strauss Hauer & Feld in Washington who represented Freeman, said in a Feb. 20 statement that the Fourth Circuit's ruling “confirms that the EEOC sued with merely a theory and had no facts to support the claims of discrimination.”

Rae T. Vann, general counsel for the Equal Employment Advisory Council in Washington, which submitted an amicus brief in the case, observed that the EEOC's action was “built on a deeply flawed foundation of bad data and, worse, shoddy analysis.”

“To the extent that the court sharply criticized the agency’s judgment in continuing to litigate in the face of those evidentiary problems, we hope that the decision will discourage the EEOC from utilizing similar tactics in future cases,” Vann told Bloomberg BNA Feb. 20. “If nothing else, the decision puts the EEOC on notice that it must do a much better job with its statistical data if it hopes to advance these types of claims.”

Joshua Thompson, senior staff attorney at Pacific Legal Foundation in Sacramento, Calif., expressed his hope that the Fourth Circuit's ruling in Freeman and the Sixth Circuit's ruling in Kaplan will affect the EEOC's behavior in pursuing disparate impact litigation. PLF also filed an amicus brief in Freeman.

Disparate impact actions are “not simply available to the EEOC without rigorous statistical analysis,” Thompson told Bloomberg BNA Feb. 20, adding that the agency “can’t throw together a few numbers and hope to condemn legitimate business practices.”

An EEOC spokesperson Feb. 20 told Bloomberg BNA that the agency is “disappointed” in the ruling but is “still studying the decision.”

EEOC Alleged Disparate Impact

Freeman, an event-planning firm also known as TFC Holding Inc., began conducting background checks on job applicants in 2001, according to the court.

In 2008, a rejected applicant filed a charge of discrimination with the EEOC, which conducted an investigation and determined that Freeman's background checks had a disparate impact on black and male job applicants in violation of Title VII of the 1964 Civil Rights Act. The EEOC sued Freeman in 2009, alleging discrimination against Hispanic, black and male job applicants based on race and sex.

The claims and classes of plaintiffs ultimately were whittled down, and the parties stipulated that the EEOC's claims on behalf of Hispanic workers be dismissed with prejudice.

Two classes of job applicants remained: 51 black workers who applied for jobs between March 23, 2007, and Aug. 11, 2011, and were not selected because of concerns about their credit histories; and 83 black and male workers who applied for jobs between Nov. 30, 2007, and July 12, 2012, and were disqualified based on their criminal records.

The EEOC presented statistical reports by Murphy in support of its claims, and Freeman moved to exclude them and for summary judgment. The district court granted Freeman's motions in August 2013.

Court Finds Expert Testimony Unreliable

Affirming on appeal, the Fourth Circuit observed that FRE 702 provides that expert evidence is admissible if it “rests on a reliable foundation and is relevant.”

In the present case, the court pointed to an “alarming number of errors and analytical fallacies in Murphy's reports, making it impossible to rely on any of his conclusions.”

For example, it said, Murphy's database included only 19 applicants from after October 2008, even though Freeman “conducted more than 1,500 criminal background investigations and more than 300 credit investigations” between that date and August 2011. Eighteen of those 19 applicants failed Freeman's background checks. Murphy also omitted data “from half of Freeman's branch offices,” the court said.

Additionally, the court said Murphy's database had a “mind-boggling” number of errors and “unexplained discrepancies,” such as “incorrect coding of race and pass/fail status” of applicants or the “double-counting” of applicants.

Although the EEOC argued that Murphy fixed any errors in subsequent reports, the court observed that Murphy didn't make certain corrections and introduced “fresh errors into his new analysis.”

“The sheer number of mistakes and omissions in Murphy's analysis renders it ‘outside the range where experts might reasonably differ,'” the court said. “We therefore cannot say the district court abused its discretion in ultimately excluding Murphy's expert testimony as unreliable.”

Concurrence Expresses Concern With EEOC

Concurring, Agee wrote separately and said the EEOC's “work of serving ‘the public interest' is jeopardized by the kind of missteps that occurred” in this case.

“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,” Agee said. “It is my hope that the agency will reconsider pursuing a course that does not serve it or the public interest well.”

Agee pointed to three problems in the case that “merit special recognition,” namely the EEOC “drawing broad conclusions from incomplete data,” as well as using expert testimony that “cherry-picks” and that contains “many obvious errors and mistakes.”

The EEOC has a duty to serve employee interests, Agee said, but it also has duties to employers to reasonably investigate discrimination charges, conciliate in good faith and cease enforcement where an action lacks merit.

“The EEOC must be constantly vigilant that it does not abuse the power conferred upon it by Congress,” he said. “The Commission's conduct in this case suggests that its exercise of vigilance has been lacking. 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.”

EEOC General Counsel P. David Lopez, Acting Associate General Counsel Lorraine C. Davis and attorneys Jennifer S. Goldstein and Anne N. Occhialino in Washington represented the agency. In addition to Livingston, W. Randolph Teslik, Hyland Hunt and John T. Koerner of Akin, Gump, Strauss, Hauer & Feld in Washington represented Freeman.

To contact the reporter on this story: Jay-Anne Casuga in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Text of the opinion is available at