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Amicus Supports Government’s Position in Mach Mining vs. EEOC

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On Nov. 3, six advocacy groups representing the interests of workers and plaintiffs’ class action lawyers filed an amicus brief with the U.S. Supreme Court in Mach Mining v. EEOC, No. 13-1019. A copy is here.

Authored by the Civil Rights Clinic of the Dickinson School of Law and The Impact Fund, the amicus brief represents the collective views of multiple public interest organizations, including the National Employment Lawyers Association, The Impact Fund, the American Association of Retired Person, the Asian Americans Advancing Justice-Asian Law Caucus, Disability Rights California and Public Counsel.

The amicus brief was filed in support of the U.S. Equal Employment Opportunity Commission, which filed its Reply Brief with the SCOTUS on Oct. 27, 2014. In supporting the government’s position, the amicus asserted that the brief represents the “perspective of the victims of workplace discrimination whom Title VII is intended to protect.”

Given the importance of this case and the issue presented, the new amicus brief is well worth a read by employers.

The Context and the Stakes

Mach Mining v. EEOC is a big case for employers and for government enforcement litigation. In a game-changing decision in December 2013, the U.S. Court of Appeals for the Seventh Circuit ruled that an alleged failure to conciliate is not an affirmative defense to the merits of an employment discrimination suit brought by the EEOC.

That decision had far-reaching, real world significance to the employment community, for it means the EEOC is virtually immune from review in terms of the settlement positions it takes prior to suing employers: “pay millions or we will sue and announce it in a media release.”

We have blogged on this case at various points before, as the litigation winded through the lower courts and culminated in the precedent-setting decision of the Seventh Circuit reported at 738 F.3d 171 (7th Cir. 2013). Readers can find the previous posts here and here and here.

In essence, the Seventh Circuit determined that the EEOC’s pre-lawsuit conduct in the context of conciliation activities cannot be judicially reviewed. Subsequently, in what many SCOTUS watchers found ironic, even though the EEOC prevailed in the Seventh Circuit, the Government also backed Mach Mining’s request for SCOTUS review to resolve the disagreement among the courts of appeals regarding the EEOC’s conciliation obligations. Given the stakes, the SCOTUS accepted Mach Mining’s petition for certiorari in short order to resolve this issue.

Amicus Briefs for the Defense

Employer groups have lined up behind Mach Mining to support reversal of the Seventh Circuit’s decision. Seyfarth Shaw LLP submitted an amicus brief to the U.S. Supreme Court on behalf of the American Insurance Association in Mach Mining. For blog readers interested in our amicus brief, a copy is here.

Amicus Brief Filed In Support of the EEOC

The amicus submission to the Supreme Court asserts that interpreting Title VII to allow judicial review of conciliation efforts by the EEOC would harm alleged victims of discrimination by violating the mandate of the statute that conciliation remain confidential. Judicial review, the amicus brief asserts, would chill full and frank settlement discussions; expose sensitive information about pre-lawsuit negotiations to the public, and hurt the cases of allegedly injured workers because federal judges might be potentially influenced by irrelevant settlement communications. The amicus brief also argues that if the SCOTUS interprets the statute to allow judicial review of pre-lawsuit conciliation efforts by the EEOC, dismissal is an overly harsh remedy where those efforts are determined to be inadequate (and instead the parties should be ordered to engage in further settlement negotiations).

The point of the amicus brief about compromising the impartiality of federal judges—by exposing the court to settlement discussions in conciliation—is somewhat surprising. Federal judges conduct mediations and settlement conferences as a matter of course, and are “exposed” to settlement discussions routinely.

Next Up on the Docket

Mach Mining’s answering brief is due on Nov. 26, 2014, and then the SCOTUS will set the case for oral argument for January 2015. We will keep our readers updated as developments occur in this litigation.

This post was previously published on the Seyfarth Shaw website here.

Texas Fires Back at EEOC Motion

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We normally pass, on blogging about briefs filed by a party before a court ruling, but Texas’ litigation against the EEOC and U.S. Attorney General Eric Holder is not shaping up to be just an everyday lawsuit.

This is a must read for employers. It goes to the heart of what the EEOC is doing these days, and how it is carrying out its duties.

Case Background

In April 2012, the EEOC issued guidance urging businesses to avoid a blanket rule against hiring individuals with criminal convictions, reasoning that such rules could violate Title VII if they create a disparate impact on particular races or national origins. Like various other states, Texas has enacted statutes prohibiting the hiring of felons in certain job categories. In November 2013, Texas sued the EEOC, seeking to enjoin the enforcement of this guidance, which Texas has nicknamed the “Felon Hiring Rule.” In March of this year, Texas amended its complaint to include more specific allegations of injury. For example, Texas alleged that the EEOC issued a right-to-sue letter to an applicant who had been rejected by the Texas Department of Public Safety after disclosing on his application that he had been convicted of a felony (unauthorized use of a motor vehicle). Texas claimed that the job involved “access to sensitive personal information for all 26 million Texans.”

Against this backdrop is a growing firestorm of litigation initiated by the EEOC over hiring checks based on criminal backgrounds. We have blogged about those cases and rulings previously (here, here, here, here, and here).

Earlier this month, the EEOC filed a motion to dismiss Texas’ lawsuit. In its motion, the EEOC offered three primary arguments. First, the EEOC contends that the U.S. District Court lacks jurisdiction to hear the case because the EEOC’s guidance is not legally binding and does not constitute a final agency action. Second, and in part because the EEOC claims its guidance has no binding authority, the EEOC argues that Texas lacks standing to pursue its claims. As the EEOC stated, “[t]he state may disagree with the EEOC’s interpretation of the law, but that does not imbue the interpretation with any legal consequences.” Third, the EEOC said the state’s claims should be dismissed because they are not ripe.

The State Of Texas Replies

In its brief, Texas started by pointing out other cases in which the EEOC pursued administrative investigations and lawsuits against employers and invoked its 2012 guidance. Making the point that the EEOC was attempting to have its cake and eat it too, the state characterized the EEOC as arguing that the guidance is “not worth the paper it’s printed on—even though it urges other courts to defer to it.”

Having set the theme, Texas turned to its legal arguments. The state argued that whether or not the 2012 guidance was a “final agency action” was not a jurisdictional issue, as the EEOC contended it was. Nevertheless, the state explained why the 2012 guidance in fact constituted a “final agency action” under the Administrative Procedure Act. Texas argued that the EEOC’s argument, that only those rules and regulations that were entitled to Chevron deference were reviewable, improperly narrowed the term “action” in a way that “no case from any court in the history of the Nation” had adopted. Texas also pointed out that the EEOC could not prevent review under the APA simply by re-characterizing its process in order to avoid judicial scrutiny under the Act.

Turning to the standing  issue, Texas identified three types of injury it has suffered, each of which independently established Article III standing, including (i) as an employer, the State of Texas is subject to the EEOC’s “Felon Hiring Rule,” and the EEOC issuance of a right-to-sue letter to an applicant denied a job after a criminal background check demonstrates that the state has been subjected to enforcement of the rule; (ii) Texas is seeking to enforce its right to participate in the notice-and-comment provisions of the APA, and the EEOC’s failure to comply with the APA had denied Texas its right to do that; and (iii) Texas has been injured by the EEOC’s purported preemption of the State’s laws. As evidence of this final injury, Texas pointed to the EEOC’s own website, which states that the Felon Hiring Rule “says that state and local laws or regulations are preempted by Title VII” if they cause a disparate impact.

On the ripeness question, Texas argued that, despite the EEOC’s attempts to recast its 2012 guidance as not requiring “individualized assessments” of all job applications, the case remained ripe for adjudication because it presents the “purely legal question” of whether “the State of Texas can continue to follow its facially neutral blanket no-felons policies …or whether the state must abandon those facially neutral policies.”

Implications for Employers

In defending against Texas’ case, the EEOC may have compromised future efforts to enforce its “guidance” against employers in Texas and other jurisdictions. To the extent the EEOC attempts to rely upon its 2012 statements as the basis for prosecuting disparate impact cases focused on criminal background check practices, particularly in cases where the EEOC alleges that an employer willfully violated Title VII, employers need only turn to the EEOC’s representations to the U.S. District Court for fodder in their own defense. Stay tuned for the upcoming ruling in this case.

This column previously appeared on the Seyfarth Shaw blog site.

Sixth Circuit Affirms EEOC Credit-Check Case Dismissal

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Less than three weeks after oral argument, the Sixth Circuit affirmed a lower court order granting summary judgment in favor of Kaplan in one of the EEOC’s most high profile cases – EEOC v. Kaplan Higher Education Corp.

The EEOC brought suit against Kaplan for using credit-checks in its hiring process – “the same type of background check that the EEOC itself uses” the Sixth Circuit pointed out – claiming that the practice had a disparate impact on African Americans.

On Jan. 28, 2013, Judge Patricia A. Gaughan of the U.S. District Court for the Northern District of Ohio granted summary judgment in favor of Kaplan, finding that the EEOC’s statistical evidence of disparate impact was not reliable and not representative of Kaplan’s applicant pool as a whole. (Read more about that ruling here.)

The Sixth Circuit found no abuse of discretion. The EEOC’s “homemade” methodology for determining race – by asking its “race raters” to label photographs – was, in the Sixth Circuit’s words, “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 himself.”

Background

The EEOC filed suit against Kaplan alleging that Kaplan’s use of credit-checks causes it to screen out more African-American applicants than white applicants, creating a disparate impact in violation of Title VII.

In support of its allegations, the EEOC relied on statistical data compiled by Kevin Murphy.  Because Kaplan’s credit check process was race-blind, the EEOC subpoenaed records regarding Kaplan’s applicants from state departments of motor vehicles. Thirty-six states and the District of Columbia provided color copies of approximately 900 drivers’ license photos.

Murphy assembled a team of five “race raters” and directed them to review the photos and classify them as “African-American,” “Asian,” “Hispanic,” “White,” or “Other.” Murphy also provided the raters with applicant names.

Based on the results of this “race rating,” Murphy opined that, in a sample of 1,090 (out of 4,670 applicants), the percentage of black applicants who were flagged for review based upon their credit histories was higher than the percentage of white applicants who were flagged.

The district court excluded Murphy’s testimony as unreliable for two reasons. First, the EEOC presented “no evidence” that Murphy’s methodology satisfied any of the factors that courts typically consider in determining reliability under Federal Rule of Evidence 702; and second, as Murphy himself admitted, his sample was not representative of Kaplan’s applicant pool as a whole. The district court granted summary judgment in favor of Kaplan, and the EEOC appealed.

The Sixth Circuit’s Opinion

The Sixth Circuit affirmed. The Sixth Circuit noted that, as the proponent of expert testimony, the EEOC bears the burden of proving its admissibility. It determined that the district court did not abuse its discretion in finding that the EEOC failed to make such a showing.

The EEOC argued that the district court erred in finding that it had “wholly fail[ed]” to provide evidence that its technique had been tested or had any “known or potential rate of error.” The EEOC contended that it provided such support in the form of “anecdotal corroboration.” That is, as to 57 applicants, Murphy cross-checked his raters’ classifications with racial identifications provided by a DMV or Kaplan.

The Sixth Circuit noted that the EEOC’s cross-check yielded an 80% match – “an unimpressive correlation in case where a few percentage points (in credit-check fail rates for blacks and whites) might make the difference between significant liability and none.” In any event, as Murphy himself conceded, a mere 57 instances of anecdotal corroboration is “not enough” to establish the reliability of his photo rating methodology.

As the Sixth Circuit found, “[t]he EEOC’s case goes downhill from there.” The EEOC failed to present evidence that its technique was subjected to peer-review or publication, failed to show that Murphy employed standards to control “the technique’s operation,” and presented no evidence that Murphy’s race-rating methodology was “generally accepted in the scientific community.” The raters themselves “had no particular standard in classifying each applicant; instead, they just eyeballed the DMV photos.”

Finally, as an independent ground for excluding Murphy’s testimony, the district court found “no indication” that Murphy’s group of 1,090 applicants was representative of the applicant pool as a whole. The Sixth Circuit noted that, “[i]nstead there is a strong indication to the contrary: Murphy’s group had a fail rate of 23.8%, whereas the GIS applicant pool had a fail rate of only 13.3%.” It held that an unrepresentative sample “by definition” might skew the respective fail rates of black and white applicants in the larger pool – “and thus is not a reliable means to demonstrate disparate impact.”

Implications

In its opinion, the Sixth Circuit staunchly critiqued the EEOC’s “do as I say, not as I do” litigation tactics. It noted (in the first line of its opinion) that the EEOC “sued the defendants for using the same type of background check that the EEOC itself uses.” It also noted, as the district court observed, that “the EEOC itself discourages employers from visually identifying an individual by race and indicates that visual identification is appropriate ‘only if an employee refuses to self-identify.’”

This blog was previously published by Seyfarth Shaw LLP.