On December 21, 2010, the Equal Employment Opportunity Commission ("EEOC"), on behalf of Black job applicants and incumbents, filed a lawsuit in the Northern District Court of Ohio under Title VII of the Civil Rights Act of 1964 against Kaplan Higher Education Corporation, Kaplan, Inc., and Kaplan University. The EEOC sought injunctive relief, compensatory damages, and other forms of affirmative relief, claiming that the defendants' discriminatory selection criteria for hiring and discharge, namely its use of credit history information, had a disparate impact on Black applicants and incumbents and was not job-related or consistent with business necessity.

The defendants participate in a highly regulated industry since they, as educational institutions, have to abide by the Department of Education's ("DOE") requirements and guidelines. The defendants' financial aid departments routinely utilize the National Student Loan data System (DOE's student aid database) to access student and parent information. Prior to 2004, the defendants discovered breaches of their systems in which business officers misappropriated student payments. As a result, the defendants took additional steps to ensure compliance with financial rules and regulations, as well as DOE guidelines. Shortly thereafter, the defendants began utilizing credit history checks for applicants of certain positions, looking in particular for those who had "financial stress or burdens" that might compromise their ethical obligations.

On May 10, 2011, the District Court (Judge Patricia A. Gaughan) granted the defendants' motion for partial summary judgment. The defendants argued that employment decisions made more than 300 days before the suit was filed were time-barred. The plaintiffs argued that the continuing violations doctrine would apply here, however, the District Court (Judge Gaughan) disagreed and found that decisions to hire and fire were discrete, individual decisions instead of a series of connected discrete acts.

On March 14, 2012, the EEOC filed an amended complaint. On January 28, 2013, the District Court (Judge Patricia A. Gaughan) granted the defendants' motion for summary judgment. The District Court (Judge Gaughan) found that the EEOC failed to present a prima facie case of disparate impact discrimination due to its failure to provide reliable statistical evidence of employment discrimination. The EEOC then filed a motion for reconsideration, but the District Court (Judge Gaughan) denied it on May 6, 2013.

Perry Miska - 04/07/2014


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