By Pamela Q. Devata

Challenges are on the increase over the use of credit checks by employers. One of the first private party class actions of this ilk – entitled Appolon, et al. v. University of Miami, Case No. 1:01-CV-24166 (S.D. Fla.) – asserts claims under Title VII of the Civil Rights Act of 1964, alleging disparate impact discrimination against African-Americans and Latinos due to the employer’s use of credit information in hiring decisions.

In the first substantive ruling in Appolon, the Court issued a ruling on March 14, 2011 [link to ruling], granting the employer’s motion to dismiss, and significantly limiting the scope of the lawsuit. Plaintiffs Loudy Appolon, an African-American woman, and Maria Olivera, a Latina woman, alleged that the University’s hiring policy of using credit checks in making certain employment decisions disparately impacted them and a class of African-Americans and Latinos in violation of Title VII. Appolon alleged that she was not hired for a Senior Medical Collector position in the Department of Patient Financial Services based on her credit history. The University moved to dismiss the complaint on multiple grounds, including: (i) that Olivera failed to exhaust her administrative remedies as required under Title VII; (ii) because of Olivera’s failure to exhaust her remedies, all Latino members of the purported class lacked standing (having no adequate representative); (iii) the Amended Complaint failed to plead any viable basis of relief; and (iv) the class allegations were flawed and speculative.

The Court ruled that because Olivera filed her EEOC charge of discrimination after the lawsuit was filed, she had failed to exhaust her administrative remedies. While Olivera argued that her administrative charge should “piggy-back” on that of the other named Plaintiff’s charge of discrimination – which was timely filed by Appolon – the Court disagreed. Quoting Hipp v. Liberty National Life Insurance Company, 252 F. 3d 1208, 1225 (11th Cir. 2001), the Court reasoned that “in order to piggy-back, a Plaintiff must have been able to file his or her charge of discrimination on the date the representative Plaintiff filed the [EEOC] charge,” and further reasoned that “… the forward scope of a representative charge ends on the date that it was filed.” Id. at 8. Accordingly, the Court dismissed Olivera from the action. The Court further held that with Olivera’s dismissal, the only remaining class representative in the case was Appolon – who is not Latino – and that she had standing to assert claims for a class of African-Americans only. The Court trimmed the lawsuit’s scope on the grounds that there was no class representative who was similarly-situated to the purported Latino class members, and thus that aspect of the class failed for lack of standing of a viable named Plaintiff to champion their cause. Id. at 11.

At the same time, the Court declined to dismiss the Amended Complaint brought relative to Plaintiff Appolon. The Court concluded that the alleged class theory was viable in stating a cause of action that Defendant’s practice disparately impacts applicants for employment. Id. at 12. For this reason, the Court determined that it would revisit the sufficiency of the case theory when determining whether class certification was proper under Rule 23.

While this initial ruling favored the defense on procedural grounds, the battle is now drawn on the viability of the credit check class theory. Given the current legal landscape regarding these types of claims, this case warrants keeping a close eye out for new developments in this area of the law.