Good for employers: Title VII ruling brings 9th Circuit in line

On April 3, the U.S. Supreme Court ruled that Courts of Appeals should largely defer to lower courts' decisions when policing Equal Employment Opportunity Commission subpoenas. McLane v. Equal Employment Opportunity Commission. By requiring that lower court rulings be reviewed for abuse of discretion, rather than de novo, the decision keeps a more sensible limit on the EEOC's investigatory powers, including the scope of requests for information in administrative subpoenas. The ruling is good news for employers, putting the 9th U.S. Circuit Court of Appeals in line with rulings of courts in other circuits.

A Far-Reaching Investigation

Damiana Ochoa worked as a cigarette selector for McLane, a supply chain services company, for approximately eight years. Ochoa went on maternity leave, and upon her return in 2007, McLane required her to pass a physical capabilities evaluation before she could resume her duties. McLane required this evaluation for all new employees and any employee returning from leave in excess of 30 days. After Ochoa failed the evaluation three times, McLane terminated her employment.

Ochoa filed an EEOC charge alleging sex/pregnancy discrimination in violation of Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act. In response to an EEOC request during the investigation, McLane provided information about the evaluation and the individuals who had been required to take it (each evaluation taker's gender, job class, reason for taking the evaluation and score received).

But the EEOC also requested "pedigree" information, which included the evaluation takers' names, Social Security numbers and last known contact information. McLane objected to this request, as well as to information about when and why evaluation takers had been discharged, claiming that the request was too broad and unduly burdensome.

Eventually, the EEOC expanded the scope of its investigation and sought pedigree information about employees from McLane facilities across the nation (more than 14,000 people). McLane continued to oppose disclosing pedigree information or information about discharged evaluation takers.

After the EEOC issued an administrative subpoena demanding that information and McLane resisted compliance, the EEOC filed a subpoena enforcement action in federal district court in Arizona, claiming it needed the pedigree information to investigate possible discrimination violations against each person who had taken the physical capabilities evaluation.

Lower Courts Disagree

The district court refused to enforce the subpoena to the extent it required McLane to divulge pedigree information. It determined the EEOC's primary motivation for requesting pedigree information was related to the ADA, but the information was not relevant to determining whether the physical capabilities evaluation was discriminatory based on sex - the information did not tend to prove that unlawful gender discrimination occurred.

The EEOC appealed to the 9th Circuit, which reviewed the ruling de novo even though each of the eight other federal appellate circuits addressing subpoena enforcement actions have employed the more deferential "abuse-of-discretion" standard.

The 9th Circuit reversed the lower court and determined that the pedigree information met Title VII's relevancy standard because it would relate to employment practices made unlawful by Title VII and would be relevant to the charge under investigation. According to the 9th Circuit, the relevancy standard encompasses "virtually any material that might cast light on allegations against the employer."

The court observed that the EEOC's goal at the investigative stage is to determine whether reasonable cause exists "to believe that the charge is true." Because the EEOC wanted to contact other McLane employees about their experiences with the physical capabilities evaluation, the 9th Circuit held that the pedigree information was within the boundaries of the relevancy standard and subject to an EEOC subpoena.

SCOTUS: EEOC Overstepped Its Bounds

In a majority opinion by Justice Sonia Sotomayor, the Supreme Court held that a federal Court of Appeals should use the "abuse of discretion" standard, and not the de novo standard, when reviewing a district court's ruling on a challenge to an EEOC administrative subpoena. This decision means that a federal appellate court will generally defer to the trial court's ruling unless the record reveals that the trial court abused its discretion when making its order.

The court reviewed longstanding practices of Courts of Appeals and determined they have generally applied the abuse-of-discretion standard in reviewing trial court decisions to enforce or quash administrative subpoenas. The court also noted that nearly all Courts of Appeals apply the same standard. The only outlier has been the 9th Circuit, which has applied the de novo standard.

The Supreme Court confirmed that trial judges are better positioned than appellate judges to consider the variety of issues coming into play when the EEOC issues a subpoena seeking information for one of its investigations. The court noted that these types of decisions will turn either on whether the evidence sought is relevant to the specific charge, or whether the subpoena is unduly burdensome. Further, the court noted that such determinations are fact-intensive, close calls that fall neatly under the purview of trial court judges.

In sum, the court decided that unless evidence exists to show the trial court arbitrarily exercised its discretion or made a clear error in applying applicable law, the trial judge's decision should not be overturned.

What This Means

The McLane decision favors employers in the 9th Circuit by ensuring that lower court rulings on EEOC subpoenas will receive appropriate deference on appeal. It is not unusual for employers to face EEOC requests for information far exceeding the scope of what is relevant for the charge at hand. An employer challenging a subpoena will, in nearly all cases, have a better chance of obtaining a favorable outcome from a trial judge who is intimately familiar with all facets of the case, including the parties and the facts. The Supreme Court's decision recognizes the unique qualifications that trial judges have for knowing and understanding the day-to-day details of a case, placing them in a better position to determine whether the EEOC's information requests are relevant or overbroad.