EEOC v. Merrill Lynch, Pierce, Fenner and Smith

• Decision Date: 17 September 1987
• Docket Number: No. 82 C 2922.,82 C 2922.
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, v. MERRILL LYNCH, PIERCE, FENNER AND SMITH, Defendant.
• Court: U.S. District Court — Northern District of Illinois

677 F. Supp. 918

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, v. MERRILL LYNCH, PIERCE, FENNER AND SMITH, Defendant.

No. 82 C 2922.

United States District Court, N.D. Illinois, E.D.

September 17, 1987.

Kathleen Mulligan, Patricia L. Winfrey, Daniel Preciado, Chicago, Ill., for plaintiff.

Marvin Gittler, Asher, Goodstein, Pavalon, Gittler, Greenfield and Segall, Ltd., Chicago, Ill., Richard T. Sampson, Semmes, Bowen & Semmes, Baltimore, Md., for defendant.

ORDER

NORGLE, District Judge.

This matter is before the Court on defendant's, Merrill Lynch's, objections to Magistrate Weisberg's Report and Recommendation. Pursuant to 28 U.S.C. § 636(b)(1)(B), the Court referred the cross motions for summary judgment in this case to the Executive Committee for assignment to a magistrate. The Executive Committee gave its consent and this case was assigned to Magistrate Weisberg.

On October 2, 1986, Magistrate Weisberg filed his Report and Recommendation. The report recommended this Court grant plaintiff's, Equal Employment Opportunity Commission's ("EEOC's"), motion for summary judgment. Merrill Lynch has filed its objections to the Magistrate's Report and Recommendation.

After a de novo review of the cross motions for summary judgment, the Court finds the Magistrate's Report and Recommendation is supported by the record and the cited authorities.

Merrill Lynch, in its objections to the Magistrate's Report and Recommendation, argues: 1) the EEOC's authority to enforce the Equal Pay Act ("EPA") was not clearly established at the time of the request for records, and, therefore, enforcement of the request would unfairly impose retroactive liability; 2) the EEOC has an obligation to comply with the Title VII (Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq.) notice requirements in conducting an investigation under the Equal Pay Act; and 3) the EEOC's recordkeeping and reporting regulations under the EPA are invalid because they should have been published for public comment and/or public hearing prior to adoption.

The EEOC had the authority in 1981 to request records from Merrill Lynch. The court agrees with the Magistrate that "retroactive application of the Ratification Act in this case is in accord with the terms of that Act and does not create any manifest injustice or violation of due process." Magistrate's Report and Recommendation, p. 9. The Magistrate's conclusion is a correct statement of the law regarding the EEOC's authority to enforce the Equal Pay Act by requesting records from Merrill Lynch in 1981.

Second, EPA cases are not subject to Title VII requirements. See, e.g., E.E.O.C. v. Hernando Bank, Inc., 724 F.2d 1188 (5th Cir.1984); E.E.O.C. v. Home of Economy, Inc., 712 F.2d 356 (8th Cir.1983); Ososky v. Wick, 704 F.2d 1264 (D.C.Cir.1983). Therefore, the Magistrate was correct in finding that the EEOC was not required to give Merrill Lynch notice of the charge in accordance with Title VII.

Finally, this court finds no merit to Merrill Lynch's argument that the EEOC's recordkeeping and reporting regulations are invalid because they were not published for public comment and/or public hearing prior to adoption. The EEOC regulations were interpretive rules exempt from the requirements of publication under the Administrative Procedure Act. 5 U.S.C. § 553.

Accordingly, the Court adopts and incorporates Magistrate Weisberg's Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1) as Appendix A of this Order and orders as follows: (1) Plaintiff's motion for summary judgment is granted; (2) Defendant's cross motion for summary judgment is denied; (3) Merrill Lynch must submit the required reports to the EEOC.

APPENDIX A

MAGISTRATE'S REPORT AND RECOMMENDATION

BERNARD WEISBERG, United States Magistrate.

In 1978 authority to administer and enforce the Equal Pay Act¹ was transferred by President Carter from the Department of Labor to the Equal Employment Opportunity Commission ("EEOC" or "Commission"). The transfer, effective July 1, 1979, was accomplished by Reorganization Plan No. 1² pursuant to the Reorganization Act of 1977.³ The 1977 Act authorized the President to prepare executive agency reorganization plans and required the President to transmit proposed reorganization plans to both Houses of Congress. The Act provided for a "one-house legislative veto". Under Section 906(a), a plan submitted by the President would become effective after 60 days of continuous session of Congress unless during that period either House passed a resolution disapproving the plan. Reorganization Plan No. 1 became effective after the House of Representatives rejected a resolution of disapproval, 124 Cong. Record 11336-11337 (1978), and the Senate voted not to consider a resolution on the subject. Id. at 12888.

Doubts about the constitutionality of the legislative veto device gave rise to numerous challenges to the validity of Reorganization Plan No. 1 and EEOC's authority to enforce the Equal Pay Act ("EPA") as well as the Age Discrimination In Employment Act ("ADEA"), enforcement of which was also transferred to the Commission by that Plan. Those challenges were reinforced in June, 1983 when the Supreme Court for the first time squarely addressed the constitutionality of a legislative veto in Immigration and Naturalization Service v. Chadha, 462 U.S. 919, 103 S.Ct. 2764, 77 L.Ed. 2d 317. Chadha held that Congress' exercise of the legislative veto contained in § 244(c)(2) of the Immigration and Nationality Act⁴ violated Article I, §§ 1 and 7 of the Constitution which require that laws be approved by both Houses of Congress and presented for approval to the President. Uncertainties after Chadha about the validity of reorganization plans implemented under the 1977 Act were resolved in October, 1984 when the President approved Pub.Law 98-532⁵ (the "Ratification Act"). That law expressly ratified all Executive branch reorganization plans implemented pursuant to prior reorganization statutes, including the Reorganization Act of 1977, as well as all actions taken pursuant to such reorganization plans.

Nevertheless, the validity of Reorganization Plan No. 1 and EEOC's authority to enforce the Equal Pay Act prior to approval of the Ratification Act continue to be vigorously disputed in this case which was brought by the EEOC on May 11, 1982 to enforce the reporting requirements of § 11(c) of the Fair Labor Standards Act ("FLSA")⁶ and to aid in an investigation under the Equal Pay Act. The action was brought under § 17 of the Fair Labor Standards Act⁷ after defendant Merrill Lynch, Pierce, Fenner and Smith ("Merrill Lynch"), refused to furnish a report requested on July 17, 1981 by EEOC's Acting District Director. The requested report related to employees who had worked at Merrill Lynch's Chicago facility at 141 W. Jackson Blvd., since March 1, 1977. The complaint asks the court to order Merrill Lynch to submit required reports to the Commission. Jurisdiction is based on 28 U.S.C. §§ 1337 and 1345.

EEOC and Merrill Lynch filed cross motions for summary judgment in 1982 and since then have filed over 500 pages of briefs, in addition to an extensive collection of exhibits, affidavits and letters to the court supplying additional authorities and argument. The first round of briefs was filed in 1982. Ruling was deferred until there was a decision in Chadha, then pending in the Supreme Court. During 1983 and 1984, briefs were filed which argued the effect of Chadha and subsequent lower court decisions. A third group of briefs, filed in 1985, dealt with the effect of the 1984 Ratification Act.

The cases have held that the Ratification Act mooted challenges to the validity of Reorganization Plan No. 1 and EEOC's authority to enforce the Equal Pay Act and the ADEA. EEOC v. Westinghouse Elec. Corp., 765 F.2d 389 (3rd Cir.1985); EEOC v. First Citizens Bank of Billings, 758 F.2d 397 (9th Cir.1985); Barrett v. Suffolk Transportation Services, Inc., 600 F.Supp. 81, 82 (E.D.N.Y.1984). The Third Circuit has also rejected the contention that the Ratification Act should not be applied retroactively to a pending sex discrimination suit brought under the Equal Pay Act. Westinghouse Elec. Corp.

Merrill Lynch distinguishes those cases, based on actual claims of discrimination, from this case which involves the obligation to keep records and make reports. Defendant's argument is that obligations not to discriminate in violation of the Equal Pay Act and ADEA were continuously in effect during the period when EEOC's enforcement authority was in doubt, while the obligation to keep records is by regulation limited to a three-year period which has expired for the report in question. The argument has four steps:

1. The legislative veto provision contained in the Reorganization Act of 1977 is unconstitutional under Chadha.

2. That legislative veto provision is not severable. Therefore (a) the entire 1977 Act is unconstitutional, (b) Reorganization Plan No. 1 was invalid prior to approval of the 1984 Ratification Act and (c) the EEOC had no authority to enforce the Equal Pay Act in 1981 when it requested the report in dispute or in 1982 when it brought this action.

3. Under applicable regulations Merrill Lynch was required to keep pertinent employment records for a three-year period. Its obligation to keep and summarize its records from 1977 to 1981 was extinguished by the passage of time because no lawful request for the disputed report was made prior to approval of the 1984 Ratification Act.

4. It would be manifestly unjust and a violation of constitutional due process requirements to apply the 1984 Ratification Act retroactively to require Merrill Lynch to report on records it was under no duty to keep or report on at the time the 1984 Act was approved.

The last of these contentions will be discussed first.

1. Retroactivity

Section 11(c) of the Fair Labor Standards Act, under which this action is brought, provides:

Every employer

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