Decision: The US Court of Appeals for the Sixth Circuit in EEOC v. Kaplan Higher Education Corp. reinforced the Federal Rules of Evidence requirement that each part of a proposed expert’s methodology be reliable in order for the expert’s testimony to be admissible.

The EEOC’s lawsuit against Kaplan alleged that Kaplan’s use of pre-employment credit checks caused it to reject more African-American applicants than white applicants, creating a disparate impact in violation of Title VII of the federal Civil Rights Act. To support its claim, the EEOC offered expert testimony in the form of statistical analysis that purportedly demonstrated the disparate impact. Because information about the race of the applicants was not available, the EEOC’s expert employed a “race rating” methodology under which five individuals referred to as “race raters” (who had no previous experience with methodologies to identify race by visual means) determined an applicant’s race by reviewing the applicant’s driver’s license picture. If at least four of the five race raters agreed, then the applicant was categorized for purposes of the statistical analysis as being a member of the identified race.

The district court excluded the expert’s testimony as unreliable. The Sixth Circuit affirmed because the race-rating methodology, which the expert had developed specifically for the EEOC’s case: (i) had not been generally accepted in the scientific community, had not been tested and did not have an acceptable rate of error; (ii) had not been subject to peer review and publication; and (iii) lacked standards for controlling the technique’s operation given that the five race raters used no standard for determining the applicant’s race other than their own visual impression of the applicant’s photo. Additionally, the sample of 1,090 applicants analyzed was not representative of the applicant pool as a whole because 23.8 percent of applicants in the sample had been rejected because of their credit history whereas only 13.3 percent of applicants overall had been rejected as a result of their credit history.

As the Sixth Circuit wrote, the EEOC “brought [a] case on the basis of a homemade methodology, 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 by only the witness himself.”

Impact: This is an important decision for employers facing expert testimony in employment claims. While it is a particularly helpful decision in combating claims of statistical proof that are not well supported, the decision will also support employer challenges to attempts to use expert testimony in non-statistical approaches. It confirms that all aspects of the expert’s methodology must meet the requirements of Federal Rule of Evidence 702, including the selection of data, the steps in the expert’s analysis, the choice of individuals who conduct any part of the analysis and the error correction method or cross-check performed in an effort to validate the methodology.