Sixth Circuit Affirms Lower Court’s Ruling Against EEOC in EEOC v. Kaplan Higher Education Corporation

Charles W. Miller & Associates

The Sixth Circuit recently sided against the Equal Employment Opportunity Commission (EEOC) in a case involving whether black applicants for employment were rejected at a higher rate than white applicants due to their credit scores. In EEOC v. Kaplan Higher Education Corp., Kaplan offered both graduate and undergraduate degrees, with some of the students receiving financial aid through the Department of Education. As Kaplan’s employees had access to student financial records, there was a troubling string of events where employees were stealing checks intended for students and causing other irregularities. To prevent further problems, Kaplan installed a pre-employment credit check system for anyone applying to executive, financial aid, or accounting positions.

Third-party vendors performed the credit checks, flagging any applicants who filed for bankruptcy, were delinquent on their child support payments, any outstanding civil judgments worth more than $2,000, garnishment of wages, and Social Security numbers that did not match what the credit bureau kept on file. Kaplan then reviewed the applications and determined which ones should move forward.

The race of the applicants was supposedly not revealed. However, the EEOC filed a lawsuit against Kaplan that claimed both Kaplan’s and the vendor’s practices led to the exclusion of black applicants at a higher rate than white applicants. The EEOC supported its claim through the work of an expert in industrial and organizational psychology, Dr. Kevin Murphy. Murphy had developed a process known as “race rating,” where five “raters” attempted to identify the race of each person in their driver’s license photos. If four of the five identified the same race, Murphy would record whether they rejected or accepted the applicant. He used this method in order to prove that one of Kaplan’s vendors, General Information Services, was doing the same thing.

The district court excluded Murphy’s testimony on the grounds that it was unreliable and granted summary judgment against the EEOC. The EEOC then appealed to the Sixth Circuit.

The Sixth Circuit reviewed the district court’s decision to determine whether there was an abuse of discretion. The lower court had noted that under Federal Rule of Evidence 702, a qualified expert witness must offer testimony “based on sufficient facts and data,” and that as a proponent of the expert testimony, the EEOC bore the burden of proving that it was admissible. Among the reasons the lower court rejected Murphy’s testimony were that he created the process purely for the specific litigation, that he had no expertise in constructing such methodologies, and that his “race raters” had no noteworthy qualifications. The lower court applied the Daubert v. Merrell Dow Pharmaceuticals, Inc. factors and found that the EEOC had failed to prove that Murphy’s method had been properly tested, that it had been peer-reviewed, or that there were any standards controlling the technique. Moreover, the sample used was not representative of the applicants who applied to Kaplan.

The Sixth Circuit agreed with the lower court’s conclusions and affirmed its decision. This case highlights the challenges of any plaintiff’s lawyer to provide evidence of racial bias in hiring that is not easily discernable.

Charles W. Miller & Associates is an Indiana and Kentucky plaintiffs law firm serving residents of Kentucky and Indiana. Located in Louisville, Kentucky, the firm provides representation in the areas of personal injury and employment law. If you need a Kentucky or Indiana employment law attorney, contact us today for a free consultation.

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