Firm News
Apr 10, 2014
Sixth Circuit Upholds Seyfarth Victory for Kaplan in EEOC Credit History Case
CHICAGO (April 10, 2014, 2013) – Less than three weeks after oral argument, the U.S. Court of Appeals for the Sixth Circuit on Wednesday affirmed a lower court order granting summary judgment in favor of Kaplan Higher Education Corp. against the U.S. Equal Employment Opportunity Commission (EEOC) in the agency’s first-ever racial discrimination lawsuit involving the use of credit history in hiring practices.
Seyfarth’s Gerald Maatman, Jr. represented Kaplan at oral argument in the Sixth Circuit, after Maatman and a team of Seyfarth lawyers originally won summary judgment for Kaplan in January 2013 before Judge Patricia A. Gaughan of the U.S. District Court for the Northern District of Ohio. Judge Gaughan ruled that the EEOC’s statistical evidence of disparate impact was not reliable and not representative of Kaplan’s applicant pool as a whole. As a result, she granted summary judgment and dismissed the EEOC’s lawsuit in its entirety.
Wednesday’s decision is a significant setback for the EEOC. The lawsuit was one of the Commission’s largest and most high-profile cases, asserting novel theories which alleged that Kaplan’s practice of using credit checks in its hiring process had a disparate impact on African Americans. In an earlier ruling in the case by Judge Gaughan, she accepted Seyfarth’s arguments and granted a first-of-its-kind discovery order allowing Kaplan to conduct discovery into the EEEC’s own personnel and hiring practices. In what would later form the basis of the Sixth Circuit’s decision, Seyfarth was able to show that the EEOC itself uses the very sort of background credit checks in its hiring process that the government challenged in bringing suit against Kaplan.
In its seven-page decision, a unanimous Sixth Circuit found no abuse of discretion in Judge Gaughan’s ruling in excluding the EEOC’s expert testimony. At the start of its opinion, the Sixth Circuit stated, “In this case the EEOC sued the defendants for using the same type of background check that the EEOC itself uses.” According to the opinion, 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.”
Seyfarth’s Maatman believes this is a clear rejection of the EEOC’s litigation theory on background check policies, as well as its systemic litigation program in pursuing high-stakes, nationwide lawsuits against employers. “This is an important ruling for all employers, which clearly cements that the use of credit history as a hiring criteria has always been – and remains – lawful,” explained Maatman.
The Seyfarth team representing Kaplan included Gerald L. Maatman Jr., Pamela Q. Devata, David J. Rowland, David Ross, Jennifer A. Riley, and Matt Gagnon. A more detailed analysis of the Sixth Circuit’s ruling can also be found here at Seyfarth’s Workplace Class Action Blog.
Seyfarth’s Gerald Maatman, Jr. represented Kaplan at oral argument in the Sixth Circuit, after Maatman and a team of Seyfarth lawyers originally won summary judgment for Kaplan in January 2013 before Judge Patricia A. Gaughan of the U.S. District Court for the Northern District of Ohio. Judge Gaughan ruled that the EEOC’s statistical evidence of disparate impact was not reliable and not representative of Kaplan’s applicant pool as a whole. As a result, she granted summary judgment and dismissed the EEOC’s lawsuit in its entirety.
Wednesday’s decision is a significant setback for the EEOC. The lawsuit was one of the Commission’s largest and most high-profile cases, asserting novel theories which alleged that Kaplan’s practice of using credit checks in its hiring process had a disparate impact on African Americans. In an earlier ruling in the case by Judge Gaughan, she accepted Seyfarth’s arguments and granted a first-of-its-kind discovery order allowing Kaplan to conduct discovery into the EEEC’s own personnel and hiring practices. In what would later form the basis of the Sixth Circuit’s decision, Seyfarth was able to show that the EEOC itself uses the very sort of background credit checks in its hiring process that the government challenged in bringing suit against Kaplan.
In its seven-page decision, a unanimous Sixth Circuit found no abuse of discretion in Judge Gaughan’s ruling in excluding the EEOC’s expert testimony. At the start of its opinion, the Sixth Circuit stated, “In this case the EEOC sued the defendants for using the same type of background check that the EEOC itself uses.” According to the opinion, 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.”
Seyfarth’s Maatman believes this is a clear rejection of the EEOC’s litigation theory on background check policies, as well as its systemic litigation program in pursuing high-stakes, nationwide lawsuits against employers. “This is an important ruling for all employers, which clearly cements that the use of credit history as a hiring criteria has always been – and remains – lawful,” explained Maatman.
The Seyfarth team representing Kaplan included Gerald L. Maatman Jr., Pamela Q. Devata, David J. Rowland, David Ross, Jennifer A. Riley, and Matt Gagnon. A more detailed analysis of the Sixth Circuit’s ruling can also be found here at Seyfarth’s Workplace Class Action Blog.
Contact:
Brian Kiefer, Director of Public Relations
(312) 460-6401, bkiefer@seyfarth.com
