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Equal Employment Opportunity Commission v. Columbine Health Systems, Inc.

United States District Court, D. Colorado

September 19, 2017

COLUMBINE HEALTH SYSTEMS, INC.; and THE WORTHINGTON, INC., d/b/a New Mercer Commons Assisted Living Facility, Defendants.



         THIS MATTER comes before the Court on cross Motions for Summary Judgment: Defendants Columbine Health Systems (“Columbine”) and The Worthington, Inc. d/b/a New Mercer Commons Assisted Living Facility's (“New Mercer, ” and collectively with Columbine, “Defendants”) Motion for Summary Judgment on the Only Claim Involving Marlene Hoem (#63); and Plaintiff Equal Employment Opportunity Commission's (“EEOC”) Motion for Partial Summary Judgment (#64). Responses (##76, 77) and Replies (##82, 83) were filed to both motions. Also before the Court are three unopposed Motions to Restrict (##71, 81, 86), which were filed by Defendants.

         I. Jurisdictional Statement

         The EEOC asserts claims under Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e et seq.). Federal question jurisdiction exists pursuant to 28 U.S.C. § 1331.

         II. Factual Summary

         The following is a summary of the relevant facts viewed most favorably to the non-movants. More detail will be provided as needed in the Court's analysis.

         Columbine manages several senior citizen facilities, including New Mercer, an assisted living facility in Fort Collins, Colorado. The parties dispute whether Columbine and New Mercer are part of a single integrated enterprise, which - for the reasons explained below - is not an issue that is necessary to resolve in conjunction with this motion. However, in construing the facts most favorably to the non-movant, the Court will refer to Columbine and New Mercer collectively.

         Prior to 2008, the Defendants employed four Black as Personal Care Providers (“PCPs”) (the claimants) at New Mercer. All came from Africa. Kiros Aregahgn is from Ethiopia, and Mohamed Osman Mahgoub, Sawson Ibrahim, and Hanaa Gual are from Sudan. Marlene Hoem, a Caucasian, was their supervisor.

         In mid-2008, the Defendants hired Paula Lewis to oversee New Mercer. Shortly after Ms. Lewis was hired, she had a conversation with Ms. Hoem about the claimants. According to Ms. Hoem, Ms. Lewis told her that New Mercer “had to get rid of ‘these people, ' because they just can't speak English.” Ms. Hoem believed these comments were discriminatory and expressed her disagreement with them to Ms. Lewis. In September 2008, Ms. Lewis suggested that Ms. Hoem demote one of the African employees, but Ms. Hoem refused to do so. Defendants terminated Ms. Hoem's employment a week later, citing her failure to comply with this directive as one - although not the only - reason for terminating her employment.

         In early 2009, Defendants imposed a new requirement that PCPs complete a training course and pass a written examination (the “PCP Exam”). The training course and examination were conducted in English. The four African claimants completed the course, but each received a score below 75 percent on the examination. As a result in May 2009, the Defendants terminated their employment.

         The claimants timely filed EEOC complaints, the EEOC conducted an investigation and brought this lawsuit. Its Amended Complaint (#18) asserts three claims: (1) unlawful discrimination by disparate treatment based on race and/or national origin; (2) unlawful discrimination by disparate impact based on race and/or national origin; and (3) unlawful retaliation in termination of Ms. Hoem's employment. Both parties filed motions for partial summary judgment.

         III. Standard of Review

         Rule 56 of the Federal Rules of Civil Procedure facilitates the entry of a judgment only if no trial is necessary. See White v. York Intern. Corp., 45 F.3d 357, 360 (10th Cir. 1995). A trial is required if there are material factual disputes to resolve, thus entry of summary judgment is authorized only “when there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Savant Homes, Inc. v. Collins, 809 F.3d 1133, 1137 (10th Cir. 2016).

         A fact is material if, under the substantive law, it is an essential element of the claim. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if the conflicting evidence would enable a rational trier of fact to resolve the dispute for either party. Becker v. Bateman, 709 F.3d 1019, 1022 (10th Cir. 2013).

         Substantive law governs which facts are material and what issues must be determined. It also specifies the elements that must be proved for a given claim or defense, sets the standard of proof, and identifies the party with the burden of proof. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Kaiser-Francis Oil Co. v. Producer's Gas Co., 870 F.2d 563, 565 (10th Cir. 1989). A factual dispute is “genuine” if the evidence presented in support of and in opposition to the motion is so contradictory that, if presented at trial, a judgment could enter for either party. See Anderson, 477 U.S. at 248. When considering a summary judgment motion, a court views all evidence in the light most favorable to the non-moving party, thereby favoring the right to a trial. See Tabor v. Hilti, Inc., 703 F.3d 1206, 1215 (10th Cir. 2013); Garrett v. Hewlett Packard Co., 305 F.3d 1210, 1213 (10th Cir. 2002).

         If the movant has the burden of proof on a claim or defense, the movant must establish every element of its claim or defense by sufficient, competent evidence. See Fed. R. Civ. P. 56(c). Once the moving party has met its burden to establish a genuine dispute, the responding party must present competent and contradictory evidence as to a material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Perry v. Woodward, 199 F.3d 1126, 1131 (10th Cir. 1999); Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991).

         When the moving party does not have the burden of proof on the pertinent issue, it may point to an absence of sufficient evidence to establish a claim or defense that the non-movant is obligated to prove. Once the movant has done so, the respondent must come forward with sufficient competent evidence to establish a prima facie claim or defense to justify a trial. If the respondent fails to produce sufficient competent evidence to establish its claim or defense, the claim or defense will be dismissed as a matter of law. See Celotex, 477 U.S. at 322-23.

         This case involves motions for summary judgment filed by both sides. Because the determination of whether there is a genuine dispute as to a material factual issue turns upon which party has the burden of proof and whether adequate evidence has been submitted to support a prima facie case or establish a genuine dispute as to material fact, each motion is evaluated independently. Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000); Buell Cabinet Co. v. Sudduth, 608 F.2d 431, 433 (10th Cir. 1979); In re Ribozyme Pharms., Inc., Sec. Litig., 209 F.Supp.2d 1106, 1112 (D. Colo. 2002).

         IV. EEOC's Motion for Partial Summary Judgment

         The EEOC seeks summary judgment on 1) its claim for unlawful discrimination based on disparate impact; 2) on a discrete issue - whether Columbine and New Mercer are part of an “integrated enterprise” with over 500 employees; and 3) on four of Defendants' affirmative defenses. The Court addresses each in turn.

         A. Disparate Impact Claim

         Title VII forbids not only intentional racial discrimination but also “practices that are fair in form, but discriminatory in operation, ” which is often described as “disparate impact” discrimination. Hilti, Inc., 703 F.3d at 1220 (citing Lewis v. City of Chicago, 560 U.S. 205, 211 (2010)); see 42 U.S.C. § 2000e-2(k). The disparate impact theory seeks to remove employment obstacles which create “built-in headwinds and freeze out protected groups from job opportunities and advancement, ” unless those obstacles are required by business necessity. Hilti, 703 F.3d at 1220 (citing EEOC v. Joe's Stone Crab, Inc., 220 F.3d 123, 1274 (11th Cir. 2000)).

         To establish a prima facie claim for disparate impact, a plaintiff must come forward with evidence that shows that (i) an employer's employment practice (ii) disparately impacted a protected group of employees. Hilti, 703 F.3d at 1220. If the plaintiff makes this prima facie showing, the burden shifts to the defendant to demonstrate that the challenged practice is “job related for the position in question and consistent with business necessity.” 42 U.S.C. § 2000e-2(k)(1)(A)(i); Hilti, 703 F.3d at 1220. If such showing is made, the burden returns to the plaintiff to demonstrate that an available alternative employment practice would serve the employer's legitimate business needs and cause a less severe disparate impact. Ricci v. DeStefano, 557 U.S. 557, 578 (2009); see 42 U.S.C. § 2000e-2(k)(1)(A)(ii).

         As to the first element, there is no dispute that Columbine and/or New Mercer first required passage of the PCP examination as a condition of employment. This undoubtedly qualifies as an employment practice. The question becomes whether there is evidence that it had a disparate impact on a protected group.

         A prima facie showing of disparate impact is “essentially a threshold showing of a significant statistical disparity… and nothing more.” Ricci, 557 U.S. at 587; Carpenter v. Boeing Co., 456 F.3d 1183, 1196 (10th Cir. 2006). Although no specific mathematical formulation is required, statistical disparities between non-protected and protected groups must be substantial to raise an inference of causation. Watson v. Fort Worth Bank and Trust, 487 U.S. 977, 994-95 (1988). To determine whether the Plaintiffs' statistical evidence is sufficient, the Court considers three factors: (1) the size of the disparity between the pass/fail rates of different groups of test takers; (2) the statistical significance of the disparity; and (3) whether the statistical evidence isolates the challenged employment practice as the cause. Hilti, 703 F.3d at 1222.

         The size of the disparity between (a) the employees of the protected group enjoying a job or job benefit; and (b) the total composition of the employees enjoying that job or benefit must be significant. Carpenter, 456 F.3d at 1193, 1202. The EEOC guidelines suggest that a disparity of 20 percent or more in selection rate will be considered evidence of adverse impact in a disparate impact claim. 29 C.F.R. § 1607.4(D). Although not controlling, this guideline often acts as a general rule of thumb. See Hilti, 703 F.3d at 1223; see also Watson, 487 U.S. at 995.

         The second factor, statistical significance, measures the likelihood that the disparity between the groups is random. Hilti, 703 F.3d at 1223. Statistical significance is expressed in terms of standard deviations. The Supreme Court has recognized that a disparity of more than two or three standard deviations makes it unlikely that the disparity occurred randomly. Id. (quoting Hazelwood Sch. Dist. v. United States, 433 U.S. 299, 308 n.14 (1977))

         The third factor is whether the statistical evidence isolates the specific employment practice as the cause of the disparity. Watson, 487 U.S. at 994. A plaintiff must show that the challenged practice results in the disparate impact by eliminating factors other than the challenged practice that might contribute to the disparity. See Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 657 (1989). This becomes necessary when the employer uses the challenged practice along with subjective criteria to make the employment decision. Hilti, 703 F.3d at 1224.

         The Defendants contend that the EEOC has not come forward with sufficient statistical evidence to show that the PCP Exam had a disparate impact on employees of a protected race (Black/African-American) or of a protected national origin (African).[1] Under the circumstances of this case, it is not necessary to distinguish between race and national origin because all four claimants are both Black and of African descent. The EEOC's statistical evidence includes test results for the four claimants and six other individuals identified as African and/or Black by Dr. Thomas Haladyna in his report. A spreadsheet shows the PCP Exam results for all African exam-takers. Four out of seven exam-takers of African origin, and four out of nine exam-takers who are Black, failed the PCP Exam. In comparison, only one of 138 exam-takers who were White, Hispanic, or belonged to other races failed the PCP Exam.

         Dr. Haladyna initially opined that the selection rate for African exam-takers (which he referred to as the “boundary rule”) was less than four-fifths (or eighty percent) of the rate for all exam-takers. In a supplemental report he specified a pass rate of 42.8 percent for African exam-takers, 55.6 percent for Black exam-takers, 99.3 percent for White exam-takers, and 100 percent for Hispanic exam-takers. Dr. Haladyna found the disparity in results of 6.78 standard deviations between the groups to be significantly significant.

         Taken as true, this evidence is sufficient to establish a prima facie disparity in test results for the protected groups. The Defendants contend, however, that Dr. Haladyna's conclusions are unreliable because that the statistical sample used was too small. For this proposition, they rely on the opinion of Dr. Harpe.

         Dr. Harpe does not contradict Dr. Haladyna's mathematical findings. She does not contest that, in terms of the size of the disparity, the statistical data fails the four-fifths guideline nor that Dr. Haladyna's miscalculated the standard deviation. Instead, Dr. Harpe criticizes the small sample size for Black or African PCPs, as well as Dr. Haladyna's decision to include or exclude various test-takers from the analysis. For example, Dr. Harpe notes that 39 test-takers were excluded from analysis because not enough was known about their race or ethnicity; she asserts that given the small sample size of the “African” subgroup, if any of those excluded individuals did fall within that category, they could significantly affect the analysis.

         Most prominently, Dr. Harpe invokes the so-called “flip-flop” rule, which is federal regulatory guidance promulgated (in part) by the EEOC that purportedly holds that in situations involving extremely small sample sizes, if a single hypothetical individual is subtracted from the group with the higher selection rate and added to the group with the lower rate, and the hypothetical recalculated standard deviation results in the reversal of an adverse impact determination (i.e., it is less than two or three standard deviation), there is a relatively high likelihood that the difference in selection rates is a random one. See: Howe v. City of Akron, 789 F.Supp.2d 786, 801 (N.D. Ohio 2010); see also Bazile v. City of Houston, 858 F.Supp.2d 718, 739-40 (S.D. Tex. 2012). Her analysis under this principle essentially consists of two parts.

         First, Dr. Harpe opines that the scores of two of the African exam-takers, Mr. Mahgoub and Ms. Ibrahim, should be excluded. She relies on a memo drafted by Penny Rubala, Defendants' Director of Clinical Education, in which Ms. Rubala recorded that “during all three days of PCP class [including the quiz] Mohamed [Mahgoub] and Sawsan [Ibrahim] were cheating. This was demonstrated by [Ibrahim] holding her hand up by her face and then looking at her husband[']s quiz as he was completing answers and further by [Mr. Mahgoub] whispering under his breath in his native language to [Ms. Ibrahim].” Therefore, Dr. Harpe removes their scores from the data and makes calculations as to the size of the disparity and the statistical significance based on these removals from the populations in question (i.e., two failures out of five African, and seven Black, PCPs). Those calculations show standard deviations between two and three for both groups - in other words, right on the borderline of statistical significance.

         Then, Dr. Harpe invokes the flip-flop rule to show that if one removes a single failure and adds a single hypothetical individual to the passing category, and recalculates the standard deviations, those standard deviations drop below two for both the African and Black categories. As such, according to her opinion, the sample size is too small for Dr. Haladyna's statistical results to be statistically significant (or at least statistically useful). The EEOC does not address the flip-flop rule specifically but instead broadly contends that Dr. Haladyna's methodology is perfectly appropriate, and that courts commonly accept similarly small population sizes when undertaking the disparate impact analysis. The EEOC cites a number of cases in ...

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