E.E.O.C. v. Sidley Austin Brown & Wood

• Decision Date: 24 October 2002
• Docket Number: No. 02-1605.,02-1605.
• Citation: 315 F.3d 696
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Applicant-Appellee, v. SIDLEY AUSTIN BROWN & WOOD, Respondent-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

315 F.3d 696

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Applicant-Appellee, v. SIDLEY AUSTIN BROWN & WOOD, Respondent-Appellant.

No. 02-1605.

United States Court of Appeals, Seventh Circuit.

Argued September 6, 2002.

Decided October 24, 2002.

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Jennifer S. Goldstein (argued), E.E.O.C., Office of the General Counsel, Washington, DC, for Petitioner-Appellee.

Paul Grossman (argued), Paul, Hastings, Janofsky & Walker, Los Angeles, CA, for Respondent-Appellant.

Before POSNER, EASTERBROOK, and DIANE P. WOOD, Circuit Judges.

POSNER, Circuit Judge.

In 1999, Sidley & Austin (as it then was) demoted 32 of its equity partners to "counsel" or "senior counsel." The significance of these terms is unclear, but Sidley does not deny that they signify demotion and constitute adverse personnel action within the meaning of the anti-discrimination laws. The EEOC began an investigation to determine whether the demotions might have violated the Age Discrimination in Employment Act. After failing to obtain all the information it wanted without recourse to process, the Commission issued a subpoena duces tecum to the firm, seeking a variety of documentation bearing on two distinct areas of inquiry: coverage and discrimination. The reason for the inquiry about coverage is that the ADEA protects employees but not employers. E.g., Simpson v. Ernst & Young, 100 F.3d 436, 443 (6th Cir.1996); see 29 U.S.C. §§ 623(a)(2), (a)(3), 630(f). To be able to establish that the firm had violated the ADEA, therefore, the Commission would have to show that the 32 partners were employees before their demotion.

Sidley provided most of the information sought in the subpoena that related to coverage (but no information relating to discrimination, though Sidley claims that the demotions were due to shortcomings in performance rather than to age), but not all. It contended that it had given the Commission enough information to show that before their demotion the 32 had been "real" partners and so there was no basis for the Commission to continue its investigation. The Commission applied to the district court for an order enforcing the subpoena. The court ordered the firm to comply in full, and the firm appeals. The order to comply was a final order appealable under 28 U.S.C. § 1291 because it terminated the judicial proceeding. The only relief sought was enforcement of the subpoena, and so when enforcement was ordered the EEOC had gotten everything it wanted. CFTC v. Collins, 997 F.2d 1230, 1232 (7th Cir.1993); United States v. Construction Products Research, Inc., 73 F.3d 464, 469 (2d Cir.1996).

The Commission also appears to be seeking information on whether Sidley may be forcing other partners who the Commission suspects may also be employees within the meaning of the age discrimination law to retire on account of their age, contrary to the abolition of mandatory retirement by the age discrimination law. But the parties appear to have assumed that if the 32 were (as Sidley contends) employers, so are all of Sidley's other partners. So we need not consider the mandatory-retirement issue separately.

The law firm's argument proceeds in three steps: (1) the question whether the 32 demoted partners are within the ADEA's coverage is a jurisdictional question, which once answered against the Commission requires that the investigation cease; (2) the target of a subpoena need comply only up to the point at which it has produced evidence that establishes that there is no jurisdiction; (3) the Commission has no jurisdiction in this case because a partner is an employer within the meaning of the federal anti-discrimination laws if (a) his income included a share of the firm's profits, (b) he made a contribution to the capital of the firm, (c) he was liable for the firm's debts, and (d) he had some administrative or managerial responsibilities — and all these things, the firm argues, have been proved.

The facts as developed so far reveal the following:

The firm is controlled by a self-perpetuating executive committee. Partners who are not members of the committee have some powers delegated to them by it with respect to the hiring, firing, promotion, and compensation of their subordinates, but so far as their own status is concerned they are at the committee's mercy. It can fire them, promote them, demote them (as it did to the 32), raise their pay, lower their pay, and so forth. The only firmwide issue on which all partners have voted in the last quarter century was the merger with Brown & Wood and that vote took place after the EEOC began its investigation. Each of the 32 partners at the time of their demotion by the executive committee had a capital account with the firm, averaging about $400,000. Under the firm's rules, each was liable for the firm's liabilities in proportion to his capital in the firm. Their income, however, was determined by the number of percentage points of the firm's overall profits that the executive committee assigned to each of them. Each served on one or more of the firm's committees, but all these committees are subject to control by the executive committee.

Sidley can obtain no mileage by characterizing the coverage issue as "jurisdictional." It is the law that the EEOC cannot protect employers; and it is also the law that like any agency with subpoena powers the EEOC is entitled to obtain the facts necessary to determine whether it can proceed to the enforcement stage. EEOC v. United Air Lines, Inc., 287 F.3d 643, 651 (7th Cir.2002); Commodity Trend Service, Inc. v. CFTC, 233 F.3d 981, 986-87 (7th Cir.2000); SEC v. Brigadoon Scotch Distributing Co., 480 F.2d 1047 1052-53 (2d Cir.1973). Among these are facts bearing on whether the 32 demoted partners were employees within the meaning of the age discrimination law. The Commission is entitled to the information that it thinks it needs in order to be able to formulate its theory of coverage before the court is asked to choose between the Commission's theory and that of the subpoenaed firm. Only if, as in Reich v. Great Lakes Indian Fish & Wildlife Comm'n, 4 F.3d 490 (7th Cir.1993), the information that the subpoenaed firm resists furnishing is not even arguably relevant, because it is evident at the outset that whether the agency has any business conducting the investigation depends on a pure issue of statutory interpretation, can the court resolve the issue then and there without insisting on further compliance with the subpoena. See also EEOC v. Shell Oil Co., 466 U.S. 54, 64-65, 104 S.Ct. 1621, 80 L.Ed.2d 41 (1984); FTC v. Miller, 549 F.2d 452, 460-61 (7th Cir.1977); FTC v. Ken Roberts Co., 276 F.3d 583, 586-87 (D.C.Cir.2001); EEOC v. Karuk Tribe Housing Authority, 260 F.3d 1071, 1076-77 (9th Cir.2001); EEOC v. Ocean City Police Dept., 820 F.2d 1378, 1380 (4th Cir. 1987) (en banc), vacated on other grounds, 486 U.S. 1019, 108 S.Ct. 1990, 100 L.Ed.2d 223 (1988). The issue in Great Lakes was whether the Fair Labor Standards Act applies to game wardens on Indian reservations. If, as we held, it did not, the continued investigation of the wardens' employer was all burden and no benefit, making insistence on compliance with the Labor Department's subpoena unreasonable. See EEOC v. United Air Lines, Inc., supra, 287 F.3d at 653.

Great Lakes does not hold, as Sidley argues, that characterizing a threshold issue as "jurisdictional" takes a case out of the general rule (on which see Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 212-14, 66 S.Ct. 494, 90 L.Ed. 614 (1946); Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 508-09, 63 S.Ct. 339, 87 L.Ed. 424 (1943); EEOC v. Peat, Marwick, Mitchell & Co., 775 F.2d 928, 930-31 (8th Cir.1985); FTC v. Ken Roberts Co., supra, 276 F.3d at 585-87) that enforcement of a subpoena cannot be resisted on the ground that the information the agency is seeking would not justify an enforcement action. The cases are legion that there is no general exception to the rule for issues going to the agency's jurisdiction. See, e.g., FTC v. Feldman, 532 F.2d 1092, 1095-96 (7th Cir.1976); FTC v. Ken Roberts Co., supra, 276 F.3d at 585-87; United States v. Sturm, Ruger & Co., 84 F.3d 1, 5-6 (1st Cir.1996). As explained in United States v. Construction Products Research, Inc., supra, 73 F.3d at 470, "at the subpoena enforcement stage, courts need not determine whether the subpoenaed party is within the agency's jurisdiction or covered by the statute it administers; rather the coverage determination should wait until an enforcement action is brought against the subpoenaed party." Sidley gains nothing, therefore, from characterizing the coverage issue as jurisdictional, and so we need not decide whether the characterization is correct.

But the cases leave intact the principle that a subpoena may be challenged as unreasonable. And one basis on which it may be found unreasonable is that, as in Great Lakes, the agency clearly is ranging far beyond the boundaries of its statutory authority. As the Supreme Court explained in United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 94 L.Ed. 401 (1950), "of course a governmental investigation into corporate matters may be of such a sweeping nature and so unrelated to the matter properly under inquiry as to exceed the investigatory power. But it is sufficient if the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant." In Endicott Johnson Corp. v. Perkins, supra, 317 U.S. at 509, 63 S.Ct. 339, the Court noted that "the evidence sought by the subpoena was not plainly incompetent or irrelevant to any lawful purpose of the Secretary in the discharge of her duties under the Act, and it was the duty of the District Court to order its production for the Secretary's consideration" — implying therefore that had the evidence sought by the subpoena been "plainly incompetent or irrelevant to any lawful...