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Bank of America seeking federal court review of latest ARB decision in 20-plus-year dispute with OFCCP

May 26th, 2016  |  Cynthia L. Hackerott

Earlier this week, Bank of America (BOA) filed a complaint seeking federal court review of the DOL Administrative Review Board’s (ARB) latest ruling in a case that started with the initiation of an OFCCP compliance review over two decades ago. In its most recent ruling, an ARB panel unanimously affirmed an ALJ’s conclusions that the bank intentionally discriminated against African Americans in 1993 as well as the ALJ’s award of remedies on those claims. However, a majority of the ARB panel foundfor different reasonsthat the OFCCP failed to establish that BOA was liable for the damages awarded for alleged discrimination in 2002-2005, and therefore, reversed the ALJ’s liability and remedy orders pertaining to 2002-2005 period. One of the administrative appeal judges in the 2-1 majority found fault with the OFCCP’s statistical analysis as to that period, while the other determined that the OFCCP violated the bank’s due process rights as to those claims (OFCCP v Bank of America, ARB Case No 13-099 (ALJ Case No 1997-OFC-016), April 21, 2016).

The bank’s complaint, filed in the federal district court for the District of Columbia on May 23, 2016 (dkt no 1:16-cv-968), alleges that the ARB’s conclusion that BOA intentionally discriminated against African American applicants in 1993 was erroneous because it:

  • is based upon a fundamental misunderstanding of the nature of a pattern or practice of intentional discrimination case, of the proof required in such a case, and of the use and meaning of statistics in such a case;
  • is contrary to the OFCCP’s established procedures, practices and regulations; and
  • fails to consider or account for all of the evidence, is contrary to the evidence, and is unsupported by substantial evidence.

BOA also challenges the ARB’s remedy award and its conclusion that the bank voluntarily consented to the compliance review, claiming that the agency violated the Fourth Amendment when it selected the bank for the compliance review. The ARB decision at issue is discussed below.

Procedural history. The case began in November 1993 when the OFCCP initiated a compliance review of the bank’s (at that time known as NationsBank) Charlotte, North Carolina facility. In April 2004, the bank responded without objection by providing the documents requested by the OFCCP and permitting the agency to conduct an onsite investigation. After the OFCCP advised the bank of its findings of discrimination, first in October 1994 and then with a revised notice in June 1995, the bank brought a federal court challenge to the agency’s authority to conduct the review, arguing that the OFCCP’s action violated the bank’s Fourth Amendment rights. When the court challenge failed (NationsBank Corp v Herman, 4thCir, No 98-1127, April 6, 1999 (75 EPD ¶45,814); cert. denied, sub nom. Bank of America Corp v Herman, USSCt, No 99-394, December 6, 1999) and Labor Department attorneys filed an administrative complaint, the bank pursued the case in the administrative forum.

The ARB ruled in 2003 (ARB Case No 00-079) that if the bank had consented to the review, there was no Fourth Amendment violation. In 2004, ALJ Linda Chapman held on remand that the bank had, in fact, consented. The bank unsuccessfully sought an interlocutory appeal of that order (ARB Case No 04-169). On January 21, 2010, the ALJ issued a Recommended Decision and Order finding the bank violated Executive Order (EO) 11246 by discriminating against African-American job applicants for entry level positions at the Charlotte facility in 1993 and from 2002 to 2005.

Specifically, ALJ Chapman held that the bank intentionally discriminated against African-American clerical, clerical/administrative and bank teller applicants at its Charlotte facility because the OFCCP sufficiently demonstrated that there were substantial disparities in selection rates for the particular jobs at issue. She also held that the bank’s failure to retain records as required by law without justification did not lessen the statistical disparities found by the OFCCP’s expert. The ALJ retained jurisdiction over the case in order to determine what remedies should be provided by the bank.

On April 29, 2010, the ARB denied BOA’s request for an interlocutory review and remanded the case to the ALJ for further proceedings and “to issue a recommended decision resolving this case in its entirety” (ARB Case No 10-048).

On September 17, 2013, ALJ Chapman issued a ruling awarding over $2 million in damages. Because she found in her 2010 ruling that the bank discriminated against African-American job applicants for entry level positions, she resolved ambiguities in favor of the OFCCP in determining the damages award. Moreover, she adopted the methodologies offered by the OFCCP’s expert over those offered by BOA’s expert, in part due the bank’s failure to maintain and produce relevant records. The ALJ also ordered the bank to extend job offers, with appropriate seniority, to ten people in the affected classes, and to report on the progress of these job offers to the OFCCP. Once again, BOA appealed to the ARB.

Fourth Amendment. Administrative Appeals Judge Luis A. Corchado wrote the ARB’s plurality opinion. Prior to addressing the merits, the ARB briefly addressed BOA’s objections to the OFCCP’s selection of the Charlotte facility. The ARB panel unanimously concluded that the ALJ’s 2004 summary judgment ruling on that issue, combined with BOA’s failure to present additional evidence at the subsequent merits hearing—aside from what the bank had already presented in support of its argument that the OFCCP’s scheduling letter was coercive, which was rejected by the ARB in its 2003 ruling—settled this issue. Consequently, the ARB found that its 2003 ruling was dispositive on the Fourth Amendment issue.

Burden of proof. In the ARB plurality opinion, Corchado began the analysis of the merits by clarifying the burdens and standards of proof required to establish a pattern or practice of intentional discrimination in violation of Executive Order (EO) 11246. To frame the discussion, the ARB pointed out that, as confirmed during oral argument, the OFCCP unequivocally chose to pursue only claims of intentional disparate treatment, meaning that the agency was not pursuing a disparate impact claim or a claim that the bank violated its affirmative action obligations under the laws enforced by the OFCCP. The parties did not dispute that, in order to prevail on its intentional disparate treatment claims under the pattern or practice theory, the OFCCP was required to prove that unlawful discrimination was the bank’s regular procedure or policy.

Noting that, at this stage of the litigation, it was not was not required to engage in the burden of production analysis, Corchado explained that in reviewing the ALJ’s ruling on the merits, its focus was on the ultimate question of whether the OFCCP proved that BOA engaged in a pattern or practice of intentionally rejecting African-American applicants and that race was a factor. Explicitly rejecting the OFCCP’s argument that the bank failed, as a matter of law, to present proper rebuttal evidence on the question of intentional discrimination, Corchado admonished that “the burden of proof always remains with the OFCCP.”  Rebuttal evidence includes any evidence that attacks the validity of the agency’s proof, supports an alternative causation theory, or does both, he explained. Here, BOA presented evidence before the ALJ to show that the statistical disparities at issue were not as significant as the OFCCP’s expert claimed and that reasons other than discrimination caused the hiring disparities between white and African-American applicants.

Statistical evidence. In a pattern or practice claim of intentional race discrimination, the OFCCP must show that there was a sufficient disparity and prove that race was a motivating factor. Recognizing that “some disagreement continues in the courts about the role of statistical evidence in employment discrimination cases,” Corchado then discussed a few principles that “seem fairly established.” First, statistical evidence may be used to rule out chance as a likely reason for a significant racial disparity, and courts have consistently found significance in disparities exceeding the two standard deviation mark. Still, ruling out chance does not automatically mean race discrimination was a motivating factor, but it makes such a reason a viable factor that could be inferred, he explained.

“The more severe the statistical disparity, the less additional evidence is needed to prove that the reason was discrimination,” Corchado wrote. “Indeed, very extreme cases of statistical disparity may permit the trier of fact to conclude intentional race discrimination occurred without needing additional evidence.”

Rulings as to 1993 claims affirmed. Unanimously affirming the ALJ’s finding that BOA intentionally discriminated against African-American applicants in 1993, the ARB concluded that the evidence supported these findings and established a pattern or practice by the bank of intentional racial discrimination against African-American applicants in 1993 for jobs in two specific job groups: (1) a group consisting of bank tellers for prime time, full-time and part-time positions, and (2) a group consisting of several clerical and administrative positions, including data entry operators, account clerks and remittance processing specialists.

When an applicant was disqualified or rejected for a job position, the bank used disposition codes to record the reason. For the job groups at issue, two of these disposition codes fell substantially more harshly on African-American applicants than white applicants; one disqualified applicants because of credit checks and the other disqualified applicants for incompatible hours. In her ruling on the 1993 claims, the ALJ relied on a variety of evidence, including: (1) multiple statistical analyses showing significant standard deviations occurred at various stages of the hiring process and when employment offers were made, (2) the lack of standards for some decision-making processes, (3) anecdotal evidence of arbitrary treatment, and (4) troubling and unexplained disparate use of the “incompatible hours” disposition code. Moreover, there was unrefuted evidence that the “credit check” and “incompatible hours” disposition codes eliminated a grossly disproportionate number of African-American applicants compared to white applicants. The ARB could not identify any objective standards that BOA applied that could explain the gross disparity in the bank’s use of these codes, adding that “[w]e cannot imagine a rational objective reason for a gross disparity in the use of the [“incompatible hours”] code. Even more troubling to the ARB was evidence in the record suggesting the race of the applicants may have been known for some applicants at the time these two disposition codes were applied.

The ARB also affirmed the ALJ’s damages award, finding it to be a reasonable remedy for the unsuccessful 1993 African-American applicants. In addition, the ARB ordered the bank to pay an amount of additional interest on the back pay award for the period from September 18, 2013, to the date on which BOA has paid the monetary judgement in full.

Rulings as to 2002-2005 claims reversed. As to the discrimination claims for the period 2002-2005, the ARB majority ruled that the OFCCP improperly found BOA liable. Therefore, the ARB reversed the ALJ’s finding of a pattern or practice of intentional discrimination during the 2002-2005 period and reversed the ALJ’s remedy orders pertaining to that period.

To begin with, Judge Corchado determined that the 2002-2005 time period must be analyzed as a follow-up, but separate, claim of pattern or practice race discrimination and not as a continuation of the same 1993 pattern or practice claim because the ten-year gap of data and evidentiary information between these time periods prevented any realistic ability to logically connect the two. Among other reasons, Corchado noted that the OFCCP expert’s statistical analysis for the 1993 period had many different standard deviation analyses and tests, while his 2002-2005 analyses rested on only two or three bottom line conclusions for the entire period. Also, fundamental changes occurred with BOA and its hiring process between 1993 and 2002, he observed. The bank changed from NationsBank to BOA. The recruiting process dramatically changed, including the number of recruiters (from two to 58) and the discontinued use of credit checks and drug tests.

In contrast to the variety of evidence that supported the ALJ’s rulings on the 1993 claims, Corchado noted that for the 2002-2005 claims, the ALJ relied on only the statistical disparity of that four-year period as a whole. He also drew other contrasts between the evidence presented for the 1993 period and that presented for the 2002-2006 period. First, dissimilar from the 1993 period, there was no evidence that BOA used the “credit check” and “incompatible hours” disposition codes or other code to eliminate African-American applicants disproportionately during the 2002-2005 period. Second, contrary to the 1993 standard deviation analysis, the OFCCP’s evidence of discrimination in 2002-2005 boiled down to one standard deviation of 4.0 (or 4.1) for the four-year period, but no standard deviation conclusions year by year. Third, unlike the 1993 analyses, the OFCCP did not argue that there were statistically significant standard deviations for one or more stages of the hiring process. In terms of raw numbers for each year, two of the four years failed to provide powerful statistical evidence of intentional discrimination. Specifically, in 2003, 44 African Americans were offered a job instead of the expected number of 47.9, and in 2005, 32 instead of 34.5.

“These are small shortfalls,” Corchado observed. “Without more evidence, one bottom line standard deviation of 4.0 for four years with minor shortfalls in two of those years is not enough in this particular case to prove a pattern or practice of intentional racial discrimination.”

Concurrence. Judge E. Cooper Brown concurred as to the majority’s resolution, but wrote separately to express his opinion that the bank’s due process rights were violated by the way in which the OFCCP incorporated the job data for 2002-2005 into the enforcement proceeding before the ALJ without having first afforded BOA the procedural protections mandated under EO 11246 and OFCCP regulations. “[A]s the comments accompanying the regulations in effect at all times relevant to this action attest, up until the present case it has apparently been the OFCCP’s practice to limit its assessment of liability for discriminatory practices in a contractor’s employment practices to the two-year period prior to the initiation of a compliance review,” Brown wrote. Therefore, he found the OFCCP’s actions as to the 2002-2005 claims were both arbitrary and capricious, and consequently, rejected the ALJ’s finding of liability for that period on those grounds.

A footnote in the plurality opinion notes that Judge Corchado “took no position as to whether the OFCCP was authorized to conduct a follow-up review for the period of 2002-2005 or the extent to which the OFCCP is authorized to conduct follow-up compliance reviews after finding a violation, especially in a case where BOA refused for many years to submit to a meaningful compliance review.”

Dissent. Judge Joanne Royce concurred with the plurality opinion as to the Fourth Amendment and 1993 discrimination liability rulings, but disagreed with the panel majority’s finding that BOA may not be held liable for the discrimination alleged during the 2002-2005 time period. The OFCCP offered a statistical analysis in support of the 1993 claims that demonstrated discrimination against many of the same class of applicants and in the same facility, between 2002 and 2005, she noted. Agreeing with the ALJ, Royce concluded that BOA neither successfully attacked the OFCCP’s statistical method nor demonstrated that the statistical disparities could be explained by non-discriminatory factors. Accordingly, she would affirm the ALJ’s finding that the OFCCP established by a preponderance of the evidence “that BOA’s illegal practices against African-American candidates for entry level positions continued over an extended period of time as demonstrated by the statistical disparity of 6.9 standard deviations for entry level positions between African-American and white job applicants during 1993, and a statistical disparity of 4 standard deviations for similar entry level positions during 2002-2005.”

[Note: This case (ALJ Case No 1997-OFC-16) is not to be confused with the other long-term OFCCP litigation against BOA (ALJ Case No 2006-OFC-003), which ended on January 12, 2015, when the D.C. Circuit issued an order granting Bank of America’s “Consent Motion to Dismiss” the bank’s appeal of a July 2014 decision by a federal district court for the District of Columbia that upheld a 2009 DOL ARB decision in favor of the agency. That case involved OFCCP charges of gender and race bias in compensation and the bank’s claim that the agency violated its Fourth Amendment rights.]

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Update: On June 4, 2016, OFCCP Director Patricia Shiu posted a blog entitled, “Setting the Record Straight: OFCCP v. Bank of America,” where she writes that: “A number of published reports and statements reflect a misunderstanding of the ARB’s split decision, in which three judges took three distinct approaches to resolving the allegations regarding discrimination during 2002-2005.”

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