E.E.O.C. v. Peat, Marwick, Mitchell and Co.

• Decision Date: 10 October 1985
• Docket Number: No. 84-1869,84-1869
• Citation: 775 F.2d 928
• Parties: 38 Fair Empl.Prac.Cas. 1846, 38 Empl. Prac. Dec. P 35,616, 54 USLW 2211, 6 Employee Benefits Ca 2626 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Appellee, v. PEAT, MARWICK, MITCHELL AND COMPANY, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 928

775 F.2d 928

38 Fair Empl.Prac.Cas. 1846,

38 Empl. Prac. Dec. P 35,616, 54 USLW 2211,

6 Employee Benefits Ca 2626

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Appellee, v. PEAT, MARWICK, MITCHELL AND COMPANY, Appellant.

No. 84-1869.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 18, 1985.

Decided Oct. 10, 1985.

Victor M. Earle, III, New York City, for appellant.

Peggy R. Mastroianni, Washington, D.C., for appellee.

Before LAY, Chief Judge, and JOHN R. GIBSON and FAGG, Circuit Judges.

FAGG, Circuit Judge.

Peat, Marwick, Mitchell & Co. (PM) appeals from an order of the district court requiring it to produce documents subpoenaed by the Equal Employment Opportunity Commission (EEOC). We affirm.

In May of 1982, the EEOC began investigating the retirement practices and policies of PM in an effort to determine whether the practices and policies are violative of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. Sec. 621 et seq. In accordance with the investigatory powers granted it under section 7(a) of the ADEA, 29 U.S.C. Sec. 626(a), the EEOC subpoenaed documents of PM bearing upon "the relationship of members to the firm and members vis-a-vis members" and documents relating to PM's retirement practices and policies.

After PM refused to comply with the subpoena, the EEOC initiated this enforcement proceeding in the district court. In response to the EEOC's application for an order to show cause why the subpoena should not be enforced, PM contended, among other things, that (1) the information sought by the EEOC is not relevant to any legitimate interests of the EEOC; (2) the EEOC's efforts to enforce the subpoena amount to an abuse of the court's process and are not in good faith; and (3) enforcement of the subpoena would violate various constitutional rights of PM and its members. The district court, 589 F.Supp. 534, ordered enforcement of the subpoena and also granted PM's motion to stay enforcement of the order to produce pending this appeal.

PM's primary argument on appeal is that the subpoena should not be enforced because the EEOC's investigation is not for a legitimate purpose authorized by Congress. The ADEA prohibits discrimination by an employer against an employee or prospective employee on the basis of age. See 29 U.S.C. Sec. 623(a). PM contends that its partners are not employees under the ADEA but rather they fall within the definition provided for employers in the Act, see 29 U.S.C. Sec. 630(b). Thus, according to PM, the EEOC's investigation of the relationship of PM partners, as employers, to the firm and to each other and its investigation of the retirement practices and policies of the partnership is not for a legitimate purpose authorized by Congress.

The EEOC notes that "[a] determination of whether an individual is an employee and therefore covered by the protections in [the] ADEA should not center on the label which the organization has chosen to give to the position." EEOC v. First Catholic Slovak Ladies Association, 694 F.2d 1068, 1070 (6th Cir.1982), cert. denied, 464 U.S. 819, 104 S.Ct. 80, 78 L.Ed.2d 90 (1983). See Zimmerman v. North American Signal Co., 704 F.2d 347, 352 and n. 4 (7th Cir.1983). EEOC maintains that it has subpoenaed the records of PM in an effort to determine whether individuals that PM classifies as "partners" fall within the definition of "employees" for purposes of the ADEA.

Congress has established the EEOC as the administrative body empowered to investigate violations of the ADEA and has given the EEOC subpoena power in order to carry out its investigations. The authority to investigate violations includes the authority to investigate coverage under the statute. Donovan v. Shaw, 668 F.2d 985, 989 (8th Cir.1982). It can no longer be disputed that "a subpoena enforcement proceeding is not the proper forum in which to litigate the question of coverage under a particular federal statute." Id. at 989. See Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 214, 66 S.Ct. 494, 508, 90 L.Ed. 614 (1946); Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509, 63 S.Ct. 339, 343, 87 L.Ed. 424 (1943); EEOC v. Roadway Express, Inc., 750 F.2d 40, 42 (6th Cir.1984); EEOC v. Quick Shop Markets, Inc., 526 F.2d 802, 803 (8th Cir.1975). The initial determination of the coverage question is left to the administrative agency seeking enforcement of the subpoena. Oklahoma Press, 327 U.S. at 214, 66 S.Ct. at 508; Endicott, 317 U.S. at 509, 63 S.Ct. at 343; Donovan, 668 F.2d at 989; Quick Shop Markets, Inc., 526 F.2d at 803. Often a coverage question cannot be resolved until the administrative agency has had an opportunity to examine the subpoenaed records. Endicott, 317 U.S. at 508-09, 63 S.Ct. at 343; Donovan, 668 F.2d at 989.

"The showing of reasonable cause required to support an application for enforcement of a subpoena duces tecum 'is satisfied ... by the court's determination that the investigation is authorized by Congress, is for a purpose Congress can order, and the documents sought are relevant to the inquiry.' " Donovan, 668 F.2d at 989 (quoting Oklahoma Press, 327 U.S. at 209, 66 S.Ct. at 505-06). See also United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 254-55, 13 L.Ed.2d 112 (1964); United States v. Morton Salt Co., 338 U.S. 632, 652-53, 70 S.Ct. 357, 368-69, 94 L.Ed. 401 (1950). The EEOC's investigation of PM is in an effort to determine whether PM's retirement practices and policies discriminate against individuals classified as employees for purposes of the ADEA. Thus, EEOC's investigation is for a legitimate purpose authorized by Congress. PM has not questioned the relevancy of the documents subpoenaed by the EEOC to a determination of this question.

PM also argues that the district court committed error in enforcing the subpoena because it is abusive, unreasonable, not in good faith, and violative of the constitutional rights of PM and its members. In this regard, PM argues that the EEOC has never made or attempted to make a showing that PM's partners may in fact be employees for purposes of the ADEA, or that it has reason to believe that PM's retirement practices and policies may be violative of the ADEA.

The EEOC is not required to make such a showing. As previously indicated, the EEOC must show that its investigation is for a legitimate purpose authorized by Congress and that the documents subpoenaed are relevant to its inquiry. Oklahoma Press, 327 U.S. at 209, 66 S.Ct. at 505-06. If this demonstration is made, the EEOC is entitled to the documents subpoenaed unless PM demonstrates that judicial enforcement of the subpoena would amount to an abuse of the court's process. Powell, 379 U.S. at 57-58, 85 S.Ct. at 254-55; see United States v. Lask, 703 F.2d 293, 297 (8th Cir.), cert. denied, 464 U.S. 829, 104 S.Ct. 104, 78 L.Ed.2d 107 (1983); EEOC v. K-Mart Corp., 694 F.2d 1055, 1066 (6th Cir.1982). PM has presented no evidence of bad faith or an abuse of the court's process by the EEOC.

PM also argues that ordering production of the documents violates its constitutional rights. We decline to address this issue as it was not ruled on by the district court.

We affirm.

JOHN R. GIBSON, Circuit Judge, dissenting.

I am troubled with what the court does today. I do not believe either the statute or precedent allows today's result. Nor do I think such a result was intended or anticipated by Congress. I therefore respectfully dissent.

Congress enacted the Age Discrimination in Employment Act (ADEA), 29 U.S.C. Sec. 621, et seq., to prevent employers from discriminating against their employees on the basis of age. 29 U.S.C. Sec. 623. Congress authorized the Equal Employment Opportunity Commission (EEOC) to enforce the ADEA. The definitional section of the statute reflects the limitations Congress intended to set on the scope of the application of the ADEA. "Employee" is defined in 29 U.S.C. Sec. 630(f), with certain specific exceptions not relevant here, as "an individual employed by any employer." "Employer" is defined in 29 U.S.C. Sec. 630(b) as a person engaged in an industry affecting commerce, and in turn, "person" is defined as including a partnership. Peat, Marwick, Mitchell & Co. (PM) is a partnership. The question before us is whether the EEOC is empowered to investigate relationships among members of a partnership, a "person" and hence an "employer" within the definitions under ADEA. Congress did not intend that ADEA govern relationships among partners nor did it authorize the EEOC to investigate such relationships.

The EEOC to the contrary contends that just because a business enterprise calls itself a partnership, and the participants in the enterprise call themselves partners, does not for purposes of the ADEA make it so. The EEOC perceives the issue as one of labels rather than legal relationships. The EEOC claims that only it has the authority to determine in the first instance whether the PM partners are partners for purposes of the ADEA. It has served the partnership with a subpoena duces tecum, requesting potentially sensitive partnership documents, to make this determination.

As the court today observes, it is settled that under Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614 (1946), the EEOC is authorized to make the initial determination as to who is covered within the definitions set out by the ADEA, and may subpoena documents for this purpose. This authority, however, has a significant limitation. Under United States v. Powell, 379 U.S. 48, 57, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964), the EEOC "must show the investigation will be conducted pursuant to a legitimate purpose." PM is a partnership, an employer under the ADEA. I cannot agree that the EEOC investigation of the relationships among the PM partners is supported by a legitimate purpose.

The record before the district court makes clear that PM is a partnership. PM possesses the commonly accepted...