Equal Emp't Opportunity Comm'n v. Freeman, 13–2365.

• Citation: 778 F.3d 463
• Decision Date: 20 February 2015
• Docket Number: No. 13–2365.,13–2365.
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff–Appellant, v. FREEMAN, Defendant–Appellee, and The United States Office of Personnel Management, Intervenor. Pacific Legal Foundation; Equal Employment Advisory Council; National Federation of Independent Business Small Business Legal Center; Retail Litigation Center; Chamber of Commerce of The United States of America, Amici Supporting, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

778 F.3d 463

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff–Appellant

v. FREEMAN, Defendant–AppelleeandThe United States Office of Personnel Management, Intervenor.Pacific Legal Foundation; Equal Employment Advisory Council; National Federation of Independent Business Small Business Legal Center; Retail Litigation Center; Chamber of Commerce of The United States of America, Amici Supporting, Appellee.

No. 13–2365.

United States Court of Appeals, Fourth Circuit.

Argued: Oct. 29, 2014.

Decided: Feb. 20, 2015.

ARGUED:Anne Noel Occhialino, U.S. Equal Employment Opportunity Commission, Washington, D.C., for Appellant. Donald R. Livingston, Akin Gump Strauss Hauer & Feld LLP, Washington, D.C., for Appellee. ON BRIEF:P. David Lopez, General Counsel, Lorraine C. Davis, Acting Associate General Counsel, Jennifer S. Goldstein, U.S. Equal Employment Opportunity Commission, Washington, D.C., for Appellant. W. Randolph Teslik, Hyland Hunt, John T. Koerner, Akin Gump Strauss Hauer & Feld LLP, Washington, D.C., for Appellee. Meriem L. Hubbard, Joshua P. Thompson, Jonathan W. Williams, Pacific Legal Foundation, Sacramento, California, for Amicus Pacific Legal Foundation. Karen R. Harned, Elizabeth Milito, National Federation of Independent Business Small Business Legal Center, Washington, D.C., for Amicus National Federal of Independent Business Small Business Legal Center. Rae T. Vann, Norris, Tysse, Lampley & Lakis, LLP, Washington, D.C., for Amicus Equal Employment Advisory Council. Deborah R. White, Retail Litigation Center, Inc., Arlington, Virginia, for Amicus Retail Litigation Center. Rachel L. Brand, Steven P. Lehotsky, National Chamber Litigation Center, Inc., Washington, D.C.; Eric S. Dreiband, Emily J. Kennedy, Jones Day, Washington, D.C., for Amicus Chamber of Commerce of the United States of America.

Before GREGORY, AGEE, and DIAZ, Circuit Judges.

Opinion

Affirmed by published opinion. Judge GREGORY wrote the opinion, in which Judge AGEE and Judge DIAZ joined. Judge AGEE wrote a separate concurring opinion.

GREGORY, Circuit Judge:

In 2001, Freeman began conducting background checks on its job applicants, which the Equal Employment Opportunity Commission (“EEOC”) alleges had an unlawful disparate impact on black and male job applicants. The district court granted summary judgment to Freeman after excluding the EEOC's expert testimony as unreliable under Federal Rule of Evidence 702. Without this testimony, the district court found the agency failed to establish a prima facie case of discrimination. For the reasons below, we affirm the district court's exclusion of the EEOC's expert testimony and grant of summary judgment to Freeman.

I.

Freeman is a provider of integrated services for expositions, conventions, and corporate events, with offices in major cities throughout the United States. In 2001, the company commenced background checks of job 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. Freeman's credit and criminal background check policies excluded applicants whose histories revealed certain prohibited criteria. If an applicant's history included one of the listed criteria, like a conviction for a crime of violence, the applicant was not hired.¹ Freeman modified these criteria on July 20, 2006, and again on August 11, 2011, after which it no longer conducted credit checks.

In 2008, after an applicant who was denied a position filed a charge of discrimination, the EEOC began an investigation of Freeman's credit check policy. On September 25, 2008, it notified Freeman it was expanding this investigation to the criminal background check policy. On March 27, 2009, the EEOC issued a letter of determination finding Freeman's use of credit and criminal checks violated Title VII.

After conciliation failed, the EEOC filed suit under Sections 706 and 707 of Title VII.² 42 U.S.C. §§ 2000e–5, 2000e–6. It alleged Freeman's criminal checks had a disparate impact on black and male job applicants,³ and that the credit checks had a disparate impact on black job applicants. The district court subsequently limited the class of applicants on behalf of which the EEOC could seek relief to those individuals affected by criminal checks from November 30, 2007 to July 12, 2012, and those affected by credit checks from March 23, 2007 to August 11, 2011.

The case proceeded to discovery. The EEOC produced a report by Kevin Murphy, an industrial/organizational psychologist, and one by Beth Huebner, an associate professor of criminology, which purported to replicate Murphy's results. Then, eight days after its expert disclosure deadline, the EEOC produced an amended report from Murphy with slightly altered calculations. Freeman moved to exclude Murphy's and Huebner's reports and also moved for summary judgment. In response to Freeman's motion to exclude, the EEOC filed a new declaration and supplemental report from Murphy, with revised calculations and the results from his analysis of a new, expanded database. The EEOC also moved to file a sur-reply, and while that motion was pending, served Freeman yet another supplemental expert report from Murphy, as well as a supplemental report by Huebner, which the agency sought to introduce at the summary judgment hearing on June 19, 2013.

The district court denied the EEOC's motion for leave to file a sur-reply and granted Freeman's motion to exclude Murphy's testimony on the basis that it was “rife with analytical errors” and “completely unreliable” under Federal Rule of Evidence 702. The court granted Freeman's motion for summary judgment. The EEOC timely appealed.

II.

Federal Rule of Evidence 702 governs the admissibility of expert evidence. Expert testimony under Rule 702 is admissible if it “rests on a reliable foundation and is relevant.” Westberry v. Gislaved Gummi AB, 178 F.3d 257, 260 (4th Cir.1999) (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) ). In determining reliability, a district court exercises a special gatekeeping obligation. See Kumho, 526 U.S. at 147, 119 S.Ct. 1167. It possesses “broad latitude” to take into account any “factors bearing on validity that the court finds to be useful.”⁴ Westberry , 178 F.3d at 261. The scope of the court's gatekeeping inquiry will depend upon the particular expert testimony and facts of the case. See Kumho, 526 U.S. at 150, 119 S.Ct. 1167.

We review a district court's decision to admit or to exclude expert evidence for an abuse of discretion. See Westberry, 178 F.3d at 261. A district court abuses its discretion if it relies on an error of law or a clearly erroneous factual finding. See id. We reverse the district court only if we have “a definite and firm conviction that the court below committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors.” Id. (quoting Wilson v. Volkswagen of Am., Inc., 561 F.2d 494, 506 (4th Cir.1977) ).

A.

The district court identified an alarming number of errors and analytical fallacies in Murphy's reports, making it impossible to rely on any of his conclusions. Freeman provided the EEOC with complete background check logs for hundreds, if not thousands, of applicants who Murphy did not include in his database of fewer than 2,014 background checks conducted largely before October 14, 2008. J.A. 1061. Only 19 post-October 14, 2008 applicants were included in Murphy's database, all but one of whom failed the checks. J.A. 1063. However, Freeman, through its background check vendor, “conducted more than 1,500 criminal background investigations and more than 300 credit investigations on applicants between October 15, 2008 to August 31, 2011” with Freeman producing in discovery “race and gender information for hundreds of these applicants.” J.A. 461–62. Murphy furthermore omitted data from half of Freeman's branch offices. This is despite the fact that he did not seek to utilize a sample size from the relevant time period, but purported to analyze all background checks with verified outcomes.

Most troubling, the district court found a “mind-boggling” number of errors and unexplained discrepancies in Murphy's database. For example, looking at a subset of 41 individuals for whom the EEOC is seeking back pay, 29 had at least one error or omission. Seven were missing from the database altogether. Seven were listed in the database without a race code, “one was incorrectly coded as passing the criminal background check, two were incorrectly coded as failing the criminal background check, one ha[d] an incorrect race code, five ha[d] incorrect gender codes, nine [we]re listed twice and double-counted in Murphy's results, and three who failed the credit check [we]re not coded with a credit check result.” J.A. 1064. The EEOC claims these errors were present in the original data, a contention dispelled by comparing the information from the discovery materials to Murphy's database. It was in fact Murphy who introduced these errors into his own analysis.⁵

The EEOC also contends that Murphy fixed any errors in his analysis in subsequently-filed, supplemental reports. The district court examined a third report by Murphy⁶ and found that he did not make certain corrections to his database, despite claims of doing so. Contrary to his assertions, Murphy did not change “incorrect coding of race and pass/fail status for several individuals.” J.A. 1065. The district court also found that Murphy “managed to introduce fresh errors into his new analysis,” like double-counting applicants who had failed their background checks.⁷ Id. And Murphy's new, expanded database still omitted hundreds of applicants for whom Freeman produced complete information in discovery.

The sheer number of mistakes and omissions in Murphy's analysis renders it “outside the range where experts might...