Showing posts with label unduly burdensome. Show all posts
Showing posts with label unduly burdensome. Show all posts

Wednesday, April 10, 2024

Sixth Circuit Affirms Enforcement of Technically Deficient Investigatory Subpoena on Affiliate Employer Over Objections to Relevance and Burden

Last month, the Sixth Circuit affirmed enforcement of an EEOC investigatory subpoena served on an affiliate company of the Charging Party’s alleged employer.   EEOC v. Ferrellgas, LP, No. 23-1719 (6th Cir. 3/26/24).  After addressing and rejecting a number of technical objections to service of the subpoena and alleged waiver of objections, the Court observed that the employer had not shown that the subpoena was unduly burdensome by merely describing the amount of time and effort to comply.  Proving undue burden is a comparative exercise and the employer failed to also explain how limited (or not) its resources were in light of the burden imposed.   The subpoena was also not overly broad because the Charging Party’s allegations touched on similar issues and the EEOC is given broad powers to investigate most employment-related issues. 

According to the Court’s opinion, the operating partnership, holding company and affiliate corporation all had similar names.  The Charge named the holding company as the employer, but the EEOC served its Request for Information (RFI) on the affiliate corporation.  HR and outside counsel responded to the RFI, provided some requested documents, objected to the RFI’s scope (but not to the addressee)  and did not identify which of the entities employed either of them.  The investigation continued for almost two years.  The EEOC then mailed a subpoena to outside counsel, who provided some responsive documents and objected to the scope of the subpoena, but did not challenge the addressee or manner of service.  The EEOC then sent another RFI to HR, but the only response was an objection that it should have been sent instead to outside counsel.   The EEOC then mailed a subpoena addressed to the corporate affiliate but sent to outside counsel, which objected not to the corporate addressee, but to the fact that it was overly broad, was unduly burdensome, was not sent by certified mail and was not signed.   The EEOC then sent the identical, but signed, subpoena by certified mail.  Without filing a formal objection with the EEOC, outside counsel reiterated its objection to the scope of the subpoena.  The EEOC then obtained enforcement of the subpoena from federal court against the operating partnership (not the named employer or corporate affiliate named in the subpoena) and this appeal ensued. 

The Court rejected the respondents’ objection to manner of service because it had already directed the EEOC several times to communicate only with outside counsel. “To hold otherwise would reward duplicity and allow potential defendants to easily avoid the Commission’s subpoenas. What is more, it would ‘create a rule that would allow a lawyer with actual notice of a subpoena to take no action, in hope that the [Commission] will not seek enforcement, and to make objections only if enforcement proceedings ensue.’”  In addition, “when ‘[a]ctual notice reached counsel promptly and counsel responded on the merits,’ service not in strict conformity with the  . . .  regulations does not preclude a district court’s enforcement of a  . . . subpoena.”

The Court agreed that the respondent raised a valid objection that the EEOC had served it with a subpoena whose response date pre-dated the service date (making compliance an impossibility) and identified an entity other than the employer identified in the Charge or even the entity named in the federal court enforcement action.  “[A]t a surface level, the Commission issued a subpoena with an invalid response date and now seeks court enforcement of that subpoena against an entity that was not, strictly speaking, the target of the subpoena itself.  These technical oversights are blameworthy, and the Commission should have rectified them well before this juncture.”   Nonetheless, the Court refused to “exalt form over substance” because the respondents had failed to raise any of these objections to the EEOC.   Moreover, one purpose of the EEOC’s investigatory process involves identifying the correct defendant employer.  Finally, the EEOC’s errors did not prevent the respondents from raising substantive objections to the subpoena to the EEOC, federal court or appellate court.

Similarly, while the Court agreed that EEOC regulations only gave the respondent 5 days to object to a subpoena, it refused to enforce that deadline here because service of the subpoena was not technically correct. “It is self-evident, [respondents] argues, that an employer’s obligation to exhaust its administrative remedies under § 161(1) and 29 C.F.R. § 1601.16(b)(1), if it exists at all, is contingent upon proper service of a subpoena that complies with the statute and its implementing regulations. This argument carries considerable logical force, and we find support for it in our caselaw.”

The Court rejected the employer’s argument that the subpoena was overly broad in seeking information about its hiring practices when the Charge was focused only on compensation and termination issues.    Courts do not strictly construe relevance against the EEOC “and have afforded the Commission access to virtually any material that might cast light on the allegations against the employer.”  Moreover, in this case, the Charging Party had also made allegations about discriminatory statements made to her during her job interview and her initial job assignment, making inquiries into those matters relevant.  In addition,

The application and hiring information that the Commission seeks could cast light on whether [respondents] discriminated against other job applicants — in the same region and during the same timeframe as [Charging Party’s] employment — based on sex or race. In turn, that information might illuminate whether [it] discriminated against [her] on those same bases but in other employment contexts — i.e., in her pay and termination.

The Court also rejected the employer’s arguments that the subpoena was unduly burdensome.   

“[W]hether a subpoena is overly burdensome turns on the nature of the materials sought and the difficulty the employer will face in producing them.”  . . .  Given its “fact-intensive” nature, the burdensomeness inquiry is “generally not amenable to broad per se rules.”  . . . . The employer bears the obligation to show that compliance would impose an undue burden.

First, the respondent only provided an unsigned and undated declaration, which is not valid evidence in any legal proceeding.   In any event, the argument was unpersuasive because it only described the amount of effort that would be required to respond and did not also describe the respondent’s available resources.  The respondent

“fails to explain why they represent an undue burden. Assessing whether the burden of compliance is undue is a comparative exercise; what is unduly burdensome to a small business with a handful of employees may not be unduly burdensome to a Fortune 500 company. . . . While [its] figures provide an estimate of the burden it might face, [it] offers up no baseline against which we can compare its estimates to decide whether the burden it faces is undue. Merely pointing out that compliance with the subpoena will divert employee attention from ordinary tasks is insufficient — if that were enough, then nearly every EEOC subpoena would fail. We are not blind to the fact that compliance with the Commission’s subpoena will require significant time and effort, but without some metric of how significant that time and effort is, we cannot find that an employer has met its burden to show that compliance would be unduly burdensome.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.