About Us  |  About Cheetah®  |  Contact Us

EEOC expert’s ‘mind-boggling’ errors nullify testimony in background check case

By Kathleen Kapusta, J.D.

Affirming a district court’s exclusion of the EEOC’s expert testimony, and the grant of summary judgment in favor of an employer on the agency’s claim that a company’s background checks had an unlawful disparate impact on black and male job applicants, the Fourth Circuit found that the sheer number of mistakes and omissions in the expert’s analysis rendered it “outside the range where experts might reasonably differ.” In a separate concurring opinion, Judge Agee wrote that “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. It is my hope that the agency will reconsider pursuing a course that does not serve it or the public interest well” (EEOC v. Freeman, February 20, 2015, Gregory, R.).

The family-owned company, which employed over 28,500 full-time, part-time, and seasonal workers, had problems with theft, drug use, and workplace violence by some employees. In 2001, it began conducting background checks of applicants’ credit and criminal justice histories. Criminal background checks were required for all applicants, and credit history checks for “credit sensitive” positions involving money handling or access to sensitive financial information.

Disparate impact. In 2008, the EEOC began an investigation of the employer’s credit check policy after an applicant who was denied a position filed a charge. It subsequently expanded the investigation to the criminal background check policy, ultimately concluding that the employer’s use of credit and criminal background checks violated Title VII. After conciliation failed, it filed suit alleging that the company’s criminal background checks had a disparate impact on black and male job applicants, and that the credit checks had a disparate impact on black job applicants.

Report. The case proceeded to discovery and the EEOC produced an expert report by an industrial/organizational psychologist. Eight days after its expert disclosure deadline, the EEOC produced an amended report from the expert with slightly altered calculations. The company then moved to exclude the report, and also moved for summary judgment. In response, the EEOC filed a new declaration and supplemental report from the expert, with revised calculations and the results from his analysis of a new, expanded database.

Lower court proceedings. The EEOC also moved to file a surreply, and while that motion was pending, served the company yet another supplemental report from the same expert. The district court denied the agency’s motion and granted the company’s motion to exclude his testimony, finding it “rife with analytical errors” and “completely unreliable.” The court also granted the company’s motion for summary judgment.

Errors, errors, and … Observing that a district court, in determining reliability, exercises a special gatekeeping obligation, the Fourth Circuit pointed out that the lower court identified “an alarming number of errors and analytical fallacies” in the expert’s reports, “making it impossible to rely on any of his conclusions.” Noting that the company provided the EEOC with complete background check logs for hundreds, if not thousands, of applicants whom the expert did not include in his database of fewer than 2,014 background checks prior to October 2008, the court observed that only 19 post-October 2008 applicants were included in his database, all but one of whom failed the checks.

More troubling to the court was the fact that the district court found a “mind-boggling” number of errors and unexplained discrepancies in the expert’s database. While the agency contended that the errors were present in the original data, the appeals court noted that this contention was dispelled by comparing the information from the discovery materials to the expert’s database. “It was in fact [the expert] who introduced these errors into his own analysis,” wrote the court.

… more errors. And while the EEOC also asserted that the expert fixed any errors in his analysis in subsequently filed, supplemental reports, the district court, after examining a third report by him, found that not only did he not make certain corrections to his database, despite claims of doing so, he “managed to introduce fresh errors into his new analysis,” like double-counting applicants who had failed their background checks. Thus, based on the sheer number of errors and mistakes in the expert’s analysis, the appeals court found that the district court did not abuse its discretion in excluding his report as unreliable. The court also affirmed the district court’s grant of summary judgment to the employer solely on the basis that the district court did not abuse its discretion in excluding the agency’s expert reports as unreliable under Rule 702.

Concurrence. Writing separately to address his “concern with the EEOC’s disappointing litigation conduct,” Judge Agee noted that while the problems identified by the district court “would be troubling enough standing alone,” they were “even more disquieting in the context of what appears to be a pattern of suspect work” from the expert. Despite his “record of slipshod work, faulty analysis, and statistical sleight of hand, the EEOC continues on appeal to defend his testimony,” wrote the judge, noting that while the agency conceded that his report was not an “A+ report,” it nevertheless contended that it met some indeterminate threshold of reliability. “In doing so, however, the Commission advances positions that are not grounded in law. Most troubling is its view that problems in an expert’s data are an inappropriate reason to exclude that expert,” he stated.

In a final warning to the agency, Judge Agee wrote: “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.”