E.E.O.C. v. Recruit U.S.A., Inc.

Decision Date19 July 1991
Docket NumberNo. 89-16095,89-16095
Citation939 F.2d 746
Parties56 Fair Empl.Prac.Cas. 721, 56 Empl. Prac. Dec. P 40,888 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. RECRUIT U.S.A., INC.; Interplace/Transworld Recruit, Inc., Defendants-Appellants.
CourtU.S. Court of Appeals — Ninth Circuit

John R. Shiner, Baker & McKenzie, Los Angeles, Cal., for defendants-appellants.

Susan L. Starr, E.E.O.C., Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before SNEED, TANG and THOMPSON, Circuit Judges.

TANG, Circuit Judge:

INTRODUCTION

On May 30, 1989, the United States Equal Employment Opportunity Commission ("EEOC") filed a complaint seeking an ex parte temporary restraining order and a preliminary injunction prohibiting Recruit, U.S.A., Inc. ("Recruit"), and Transworld Recruit, Inc. (d.b.a. Interplace) ("Interplace") from destroying, altering, or removing beyond the territorial limits of the United States certain business records pertaining to allegedly discriminatory practices engaged in by the two companies. EEOC argued that the information was essential to its investigation of charges of race, sex, and age discrimination by Recruit and Interplace. On June 22, 1989, the district court entered a preliminary injunction against the alteration or movement of the relevant documents pending final disposition of the EEOC's charges. Recruit and Interplace appeal the entry of the preliminary injunction and the district court's failure to assess sanctions against the EEOC for publicizing the charges. We affirm.

BACKGROUND
A. Factual and Procedural History

Recruit, a California corporation, operates an employment referral service primarily for Japanese companies. Interplace, which is also incorporated in California, recruits prospective employees for American and foreign companies operating in the United States.

On April 26, 1989, and May 2, 1989, the San Francisco Chronicle published two articles revealing allegedly discriminatory hiring practices engaged in by the two companies. The first article, which focused on Interplace, described an internal coding system used to sift prospective employees in accordance with the client's age, racial, ethnic, and sexual preferences. 1 The second article addressed accusations of discrimination levelled against Recruit. It described an internal corporate memorandum that purportedly was posted in Recruit's offices for three months. The memo supposedly stated that IBM Japan sought job applications from recent college graduates, but did not want to consider foreigners. The memo instructed that African Americans and Caucasians were to be excluded from the recruitment process.

In response to these articles, the EEOC commenced an investigation of the two companies. Four former employees of the companies presented firsthand accounts of discriminatory practices at Recruit and Interplace. Ms. Sugimura and Mr. Jeremy Giddings attested to Interplace's coding system. Ms. Nora Stone described an incident of hiring discrimination by Interplace in filling an internal vacancy. 2 Mr. Paul Schmidtberger, a former Recruit employee, provided evidence of four separate instances where Recruit screened job applicants in accordance with clients' discriminatory preferences.

Based on this information, R. Gaull Silberman, the Vice-Chair of the EEOC, filed employment discrimination charges against Recruit and Interplace on May 26, 1989. The charges accused the two companies of violating section 703 of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. Sec. 2000e-2, and section 4(b) of the Age Discrimination in Employment Act of 1967, 29 U.S.C. Sec. 623(b).

Four days later, the EEOC filed an ex parte application for a temporary restraining order prohibiting Recruit and Interplace from altering, destroying, or moving outside the United States business documents and records relevant to the discrimination charges. The application explained the critical importance of these documents to the EEOC's investigation. As evidence of the urgency of its request, the EEOC submitted the sworn statement of Ms. Sugimura attesting that, while an employee at Interplace, she had been instructed to erase all race-coding data from the computer base because management anticipated an investigation into the company's practices. To protect against premature disclosure of its investigation (fearing that it would prompt the destruction or alteration of evidence), the EEOC filed its complaint under seal. The EEOC appended to the complaint copies of the charges filed against Recruit and Interplace.

The district court granted the temporary restraining order and motion to seal on the same day in which they were filed. Following service of the order upon the companies, the EEOC requested that the seal be lifted and issued a press release announcing the action against Recruit and Interplace. The district court granted the motion to lift the seal on June 1, 1989, making the EEOC charges appended to the complaint a matter of public record.

On June 22, 1989, the district court entered a preliminary injunction, the scope of which largely mirrored the temporary restraining order. The court found that:

Plaintiff, the United States Equal Employment Opportunity Commission, will suffer immediate and irreversible injury to its ability to investigate and determine charges of discrimination filed against defendants by Commission Vice Chairman R. Gaull Silberman on May 26, 1989 if any of the business records enumerated The court also concluded that Interplace and Recruit would not be unduly burdened by the order, the EEOC would likely succeed on the merits, and entry of the order would serve the public interest.

in ... plaintiff's Complaint for Temporary Restraining Order and Preliminary Injunction are altered, destroyed, or removed beyond the territorial limits of the United States before a true copy thereof is made and preserved for the Commission's use. Such injury would be irreparable because, if these documents are so altered or destroyed, evidence of the discriminatory policies and practices alleged in the above-referenced discrimination charges will be irreversibly lost, and potential victims of those discriminatory policies and practices will not be subject to identification. Under such circumstances, the Commission would be unable to fulfill its Congressional mandate to enforce the provisions of Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967.

In response to the companies' concerns that they be allowed to update and change records in the course of ordinary business, the order specifically permitted such alterations as long as the companies first made copies of the original documents and preserved them for the EEOC's inspection. The injunction reaches all relevant documents maintained by Recruit and Interplace since their incorporation in California (a span of four and one-half and three and one-half years, respectively). The injunction is to remain in effect until the final disposition of the EEOC's charges.

During proceedings before the district court, the companies not only argued against the issuance of a preliminary injunction, but also sought the imposition of sanctions against the EEOC, under 42 U.S.C. Secs. 2000e-5(b), 2000e-8(e), for failing to maintain the confidentiality of the discrimination charges. The district court declined to address this issue.

Following the district court's entry of the preliminary injunction, Recruit and Interplace filed timely notices of interlocutory appeal to this court.

B. Statutory Framework

Title VII instructs the EEOC to notify an employer or an employment agency within ten days of charges filed against it under the Act. 42 U.S.C. Sec. 2000e-5(b). Section 2000e-5(b) specifically states that "[c]harges shall not be made public by the Commission."

The EEOC then investigates the charges to determine whether reasonable cause exists to believe unlawful discrimination did occur. During the investigation, EEOC officials must be provided "access to ... any evidence of any person being investigated or proceeded against that relates to unlawful employment practices ... and is relevant to the charge under investigation." 42 U.S.C. Sec. 2000e-8(a).

Section 2000e-8(e) prohibits the disclosure of information obtained pursuant to an EEOC investigation or as a result of EEOC record-keeping requirements prior to the commencement of proceedings by the EEOC. 3 The section provides:

It shall be unlawful for any officer or employee of the Commission to make public in any manner whatever any information obtained by the Commission pursuant to its authority under this section prior to the institution of any proceeding under this subchapter involving such information. Any officer or employee of the Commission who shall make public in any manner whatever any information in violation of this subsection shall be guilty of a misdemeanor and upon conviction thereof, shall be fined not more than $1,000, or imprisoned not more than one year.

The EEOC's own regulations reaffirm the obligation of confidentiality. See 29 C.F.R. Sec. 1601.22 ("Neither a charge, nor information obtained pursuant to section 709(a) of Title VII, nor information obtained from records required to be kept or reports required to be filed pursuant to section 709(c) and (d) of Title VII, shall be made matters of public information by the Commission prior to the institution of any proceedings under this Title involving such charge or information.").

If, after investigating, the EEOC finds reasonable cause to believe the charges are true, it undertakes to eliminate the disputed employment practice "by informal methods of conference, conciliation, and persuasion." 42 U.S.C. Sec. 2000e-5(b). This section also forbids the public disclosure or use in a subsequent...

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