In stinging language, an appeals court on Wednesday affirmed dismissal of a lawsuit filed by the U.S. Equal Employment Opportunity Commission against Kaplan Higher Education Corp. in a case involving background checks, criticizing in particular the quality of the agency's statistical evidence.
The EEOC sued Chicago-based Kaplan in 2011, alleging it refused to hire a class of black job applicants nationwide because of their credit history.
“In this case, the EEOC sued the defendants for using the same type of background check that the EEOC uses,” said a unanimous three-judge panel of the 6th U.S. Circuit Court of Appeals in Cincinnati in Equal Employment Opportunity Commission v. Kaplan Higher Education Corp. et al.
The ruling states the EEOC runs credit checks on applicants for 84 of its 97 positions. The defendants “have the same concern; and thus Kaplan runs credit checks on applicants for positions that provide access to student's financial-loan information, among other positions. For that practice, the EEOC sued Kaplan.”
The ruling says the EEOC relied on statistical data supplied by Kevin Murphy, who holds a doctorate in industrial and organizational psychology. The U.S. District Court in Cleveland granted Kaplan summary judgment dismissing the case because Mr. Murphy's methodology did not satisfy any of the factors courts typically consider to determine reliability under the relevant federal rule of evidence, and because, “as Murphy himself admitted,” his sample was not representative of Kaplan's applicant pool as a whole, said the appellate ruling.
The appeals court said the methodology developed by Mr. Murphy to determine whether its credit checks were used to disproportionately screen out African-American job applicants involved using “race raters” who looked at drivers' license photos of applicants and then classified them by race. The raters were also provided with each applicant's name, although they were told to disregard this.
Mr. Murphy used this data as the basis for his reports, which concluded the percentage of black applicants who were flagged for review, based upon their credit histories, was higher than the percentage of white applicants flagged, the ruling states.
“The EEOC brought this case on the basis of a homemade methodology, crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness itself,” said the appeals panel. “The district court didn't abuse its discretion in excluding Murphy's testimony,” it said in affirming the lower court's ruling.
The EEOC said in a statement, “We are reviewing the decision and considering our options.”