March 3, 2014

FEDERAL MAGISTRATE ORDERS VOLUNTARY REMAND IN ARB RULING AGAINST FRITO-LAY

The ruling, which was handed down on 2/11/14 by US Magistrate Judge David L. Horan in and for the District Court of the Northern District of Texas, may be viewed here.

The facts are that OFCCP initiated a compliance review of Frito-Lay’s Dallas Baked facility on July 13, 2007, requesting hiring data from January 1, 2006 through June 30, 2007. Frito-Lay complied with this request, as well as a subsequent request for additional data dating back to December 31, 2007 and for July 13, 2007 through December 31, 2007. After analyzing the data, OFCCP claimed it found a 3.26 standard deviation (SD) difference in hiring rates for women versus men with a shortfall of 9 women. As a result, OFCCP requested additional hiring data for 2008 and 2009. Frito-Lay refused to comply with this request and an administrative law judge (ALJ) sided with Frito-Lay. However, the administrative review board (ARB) overturned the ALJ ruling that OFCCP has the authority to request the additional data based on the fact that statistical disparities equal to or greater than 2SDs “has long been accepted as significant in adverse impact analysis.”

To this point, there was nothing out of the ordinary given OFCCP’s historical practices in evaluating statistical disparities. However, OFCCP subsequently discovered mistakes in its own analysis calling into question the reliability of the purported 3.26 SD disparity. Originally, the disparity was thought to apply only to full-time positions and it turns out that the data also included part-time positions. Also, Frito-Lay identified other mistakes, including the scope of the analysis, which involved two warehouses, not one, and that in both warehouses, the data represented two job titles (material handlers and packers). This might not seem like much, but remember, we’re talking about a shortfall of only 9 women. Based on these errors, to which OFCCP admitted, Frito-Lay sought summary judgment and OFCCP sought voluntary remand to the ARB to review its own decision in light of the errors. Judge Horan went for the voluntary remand.

There are complex issues here. Judge Horan pointed out that the OFCCP normally has five options in such cases, including (1) defending its original decision for previously articulated reasons, (2) defending the original decisions based on new information, (3) reconsideration in view of intervening events outside its control, (4) requesting remand without confessing error and (5) requesting remand based on the belief the original decision was in error and to change the decision. Judge Horan ruled that the facts in this case were closed to the fifth option.

After reviewing a considerable amount of case law on related issues, Judge Horan rejected four arguments offered by Frito-Lay supporting summary judgment. These were that (1) voluntary remand would not be “arbitrary and capricious”, (2) that the remand was sought within a “reasonable amount of time”, (3) that vacating the ARB ruling would not be appropriate at this time, and (4) and that remand is not at this time premature. Bottom line — the case goes back to the ARB to reconsider its ruling in light of the admitted errors in the OFCCP analysis. Should be interesting to see what the ARB rules. Of course, as always, we will keep you posted.

by Art Gutman, Ph.D., Professor, Florida Institute of Technology

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