E.E.O.C. v. Federal Home Loan Mortgage Corp.

• Decision Date: 10 March 1999
• Docket Number: No. Civ.A. 97-101-MC.,Civ.A. 97-101-MC.
• Citation: 37 F.Supp.2d 769
• Court: U.S. District Court — Eastern District of Virginia
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Applicant, v. FEDERAL HOME LOAN MORTGAGE CORPORATION, Respondent.

37 F.Supp.2d 769

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Applicant, v. FEDERAL HOME LOAN MORTGAGE CORPORATION, Respondent.

No. Civ.A. 97-101-MC.

United States District Court, E.D. Virginia, Alexandria Division.

March 10, 1999.

Arlene T. Shadoan, Gerald Kiel, Victor M. Lawrence, Equal Opportunity Employment Commission, Baltimore, MD, for Applicant.

Robert J. Smith, Kirkpatrick and Lockhart, Washington, DC, Diane M. Ennist, Federal Home Loan Mortgage Corporation, McLean, VA, for Respondent.

MEMORANDUM OPINION

ELLIS, District Judge.

This administrative subpoena enforcement action presents the question whether the Equal Employment Opportunity Commission (EEOC) may obtain enforcement of a document subpoena where, as here, the charge and investigation giving rise to the subpoena have now ripened into the issuance of a right to sue letter and the filing of a suit that includes all of the allegations of the charge, including its class allegations. Put another way, the question is whether the EEOC's authority to seek enforcement of a document subpoena issued in connection with an investigation of a charge ends with, or continues beyond, i) the issuance of a right to sue letter and a determination stemming from the investigation and ii) the institution of a private suit based on the conduct set forth in the charge.¹

I.

In December 1996, Tony Morgan, a former Federal Home Loan Mortgage Corporation ("Freddie Mac") employee, filed an EEOC charge against Freddie Mac and various of its supervisory personnel, alleging unlawful discrimination on the basis of race against both Morgan and black employees as a class.² The filing of this charge triggered an EEOC investigation of Freddie Mac. As a part of the investigation, the EEOC requested that Freddie Mac submit to the EEOC all internal audits and surveys of its workplace and practices. On July 18, 1997, Freddie Mac produced to EEOC a partial, redacted version of a report entitled "Diversity Assessment," summarizing the conclusions of an internal investigation conducted for Freddie Mac by outside consultants in 1994, with a cover letter citing self-evaluative privilege cases to justify the redactions. The EEOC then requested production of the unredacted Diversity Assessment; Freddie Mac replied that it would not voluntarily disclose the entire document. Thereafter, on July 21, 1997, the EEOC issued a subpoena to Freddie Mac seeking any and all reports on diversity studies or investigations conducted internally or by outside consultants, including the unredacted Diversity Assessment. Freddie Mac filed a timely petition for revocation of the subpoena, which the EEOC denied on August 11, 1997, setting August 25, 1997 as the deadline for production of all responsive documents, including the Diversity Assessment. Freddie Mac again declined to produce the document. Thereafter, the EEOC filed here its "Application for Order to Show Cause Why Subpoena Should Not Be Enforced" on September 26, 1997.

At a status conference on December 19, 1997,³ Freddie Mac argued both that the Diversity Assessment was irrelevant and that, in any event, the document was protected by the self-evaluative privilege. Further briefing was ordered on the self-evaluative privilege issue, and the matter was taken under advisement. Yet, the issue remained undecided because the Court was under the mistaken impression that the matter had been resolved by the parties.⁴ In any event, the matter remained undecided until it was brought to the Court's attention in December 1998. Prior to this, on August 12, 1998, the EEOC issued a "Determination" and a right to sue letter. The Determination included the following statements in separate, consecutive paragraphs:

The Commission makes no finding as to the allegations of demotion and initial job assignments.

Based on the preceding analysis, I have determined that the evidence obtained during the investigation establishes that the Respondent violated Title VII of the Civil Rights Act of 1964, as amended.

A subpoena enforcement action remains pending in the Eastern District of Virginia.

I reserve the right to issue an addendum to this determination to include any additional evidence obtained as a result of the opinion issued in this action.

Additionally, the Determination further stated that an EEOC representative would soon contact the parties (Morgan and Freddie Mac) to begin the conciliation process.

The right to sue letter i) notified Morgan of his right to sue, and the requirement that he do so within 90 days, ii) indicated that "[m]ore than 180 days have expired since the filing of this charge," and iii) indicated also that "[i]t has been determined that the Commission will continue to investigate your charge."

On August 21, 1998, less than two weeks after the right to sue letter issued, Morgan filed suit in the United States District Court for the District of Columbia asserting a class action against Freddie Mac under Title VII, 42 U.S.C. § 1981, and the D.C. Human Rights Act.⁵ In paragraph 87 of the complaint, Morgan asserted that

[t]he questions of law common to the above described class are: (a) whether or not the hiring, placement, salary (including fringe benefits), and promotion practices of defendant Freddie Mac deprives the members of the class the civil rights secured to the them by Title VII, by denying them positions, salaries, and other working conditions granted to similarly qualified white persons.

Approximately three months later, the EEOC raised the document subpoena issue again by filing, on December 11, 1998, a Memorandum of New Evidence regarding the application of the self-evaluative privilege. In this memorandum, the EEOC argued essentially that the self-evaluative privilege, even assuming its existence, had been waived because the Diversity Assessment had not been kept confidential.⁶

II.

The threshold question is whether the EEOC retains the authority to seek enforcement of a document subpoena after it has issued a determination and a right to sue letter on the charge giving rise to the subpoena and after a private suit has been instituted on the conduct alleged in the charge. No controlling Fourth Circuit precedent exists on this precise issue,⁷ but the Fifth Circuit opinion in EEOC v. Hearst Corp., 103 F.3d 462 (5th Cir.1997), squarely addresses the continued existence of EEOC investigative authority in these circumstances, analyzes the issue thoroughly, and reaches a sound result. In Hearst, the Fifth Circuit held that "in a case where the charging party has requested and received a right to sue notice and is engaged in a civil action that is based upon the conduct alleged in the charge filed with the EEOC, that charge no longer provides a basis for EEOC investigation." See id. at 470. The Court went on to note that the EEOC could continue to seek such information only on the basis of a different individual charge or a Commissioner charge. See id.

The foundation of the Fifth Circuit's analysis is Title VII's "`integrated, multistep enforcement procedure'" with its four separate stages, namely, "filing and notice of charge, investigation, conference and conciliation, and finally, enforcement." See id. at 468 (quoting Occidental Life Ins. Co. v. EEOC, 432 U.S. 355, 359, 97 S.Ct. 2447, 53 L.Ed.2d 402 (1977)). The court noted that the separate stages are "important to the statute's enforcement scheme because of the different roles that the EEOC plays in the management of discrimination charges: administrator, investigator, mediator, and finally, enforcer." See id. at 469.⁸ The court, after examining the legislative history,⁹ concluded that "Congress granted the EEOC broad investigatory authority so that the agency promptly and effectively could determine whether Title VII had been violated, and to assist the agency in its efforts to resolve the disputes without formal litigation. These purposes are no longer served once formal litigation has commenced." See id. Thus, the court held that after private litigation has commenced on the charge that provided the basis for the EEOC's investigative authority, the EEOC must pursue its further interest either through intervention and discovery in the courts, or, if that interest is beyond the private party charge upon which it is acting, by filing a Commissioner's charge. See id.¹⁰

Hearst's sound reasoning and rationale are persuasive and apply here, where the EEOC conducted an investigation, issued a right to sue letter and a determination, the charging party, Morgan, has sued, and a comparison of the initial charge with Morgan's complaint makes clear that it is based on precisely the same conduct as that alleged in the charge. The EEOC itself, appropriately, has moved on to the next stage in this multistage process, and is pursuing conciliation with Freddie Mac. If that fails, and if the EEOC's interests are beyond the lawsuit filed by Morgan, the EEOC may file a charge, institute its own suit, and seek the document in the context of that suit pursuant to the Federal Rules of Civil Procedure.¹¹ Alternatively, the EEOC may seek to intervene in Morgan's action, and pursue the complete Diversity Assessment there through discovery. But it may not use its investigative powers in this suit at this time because those powers have expired.¹² Were the rule otherwise, there would be significant potential for disruption of the statutory scheme devised by Congress to redress discrimination in the workplace through both litigation and non-litigation solutions. Consider, for example, the disruption that might be caused by the issuance of investigative subpoenas amidst an ongoing conciliation process. Hearst correctly precludes any such disruption by preserving the Congressional scheme that separates the EEOC's investigative role from its role in conciliation or litigation. Thus, once the investigative stage has ended, the agency's authority to issue investigative subpoenas also ends.

The EEOC's...