Emerson Elec. Co. v. Schlesinger, s. 79-1158

Decision Date21 November 1979
Docket NumberNos. 79-1158,79-1187,s. 79-1158
Citation609 F.2d 898
Parties21 Fair Empl.Prac.Cas. 475, 21 Empl. Prac. Dec. P 30,390 EMERSON ELECTRIC COMPANY, Appellant, v. James A. SCHLESINGER, Lt. General Wallace Robinson, Philip J. Davis, Ray Marshall, John H. Powell, Jr., Appellees. McDONNELL DOUGLAS CORPORATION, a corporation, Appellant, v. Ray MARSHALL, Secretary, U. S. Department of Labor; John H. Powell, Jr., Chairman, EEOC; Philip J. Davis, Director, Office of Federal Contract Compliance; James W. Cisco, Deputy Chief, Office of Federal Contract Compliance DCASR; Robert T. Horner, Chief, Office of Contract Compliance DCASR, St. Louis; and Eugene P. Keenan, District Director, EEOC, St. Louis, Appellees.
CourtU.S. Court of Appeals — Eighth Circuit

Thomas C. Walsh, Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., argued, Dennis C. Donnelly and Gary T. Carr, St. Louis, Mo., on brief, for appellants.

Susan M. Chalker, Atty., Appellate Staff, Civil Division, Dept. of Justice, Washington, D. C., argued, for appellees, EEOC and Dept. of Labor. Barbara Allen Babcock, Asst. Atty. Gen., Leonard Schaitman, Atty., Appellate Staff, Civil Div., Dept. of Justice, Washington, D. C., and Robert D. Kingsland, U. S. Atty., St. Louis, Mo. Abner W. Sibal, Gen. Counsel; Joseph T. Eddins, Jr., Associate Gen. Counsel; Beatrice Rosenberg, Asst. Gen. Counsel; and Paul E. Mirengoff, Atty., EEOC, Washington, D. C., on brief, for appellees.

Before HEANEY and STEPHENSON, Circuit Judges, and MARKEY, * Chief Judge, United States Court of Customs and Patent Appeals.

HEANEY, Circuit Judge.

Emerson Electric Company and McDonnell Douglas Corporation appeal from a ruling of the District Court upholding the validity of a 1974 "Memorandum of Understanding" providing, Inter alia, for the sharing of information between the Equal Employment Opportunity Commission (EEOC) and the Department of Labor's Office of Federal Contract Compliance Programs (OFCCP). 1 Because appellants assert a number of grounds in support of their appeal and the issues involved in this case are relatively complex, a detailed examination of the facts underlying this appeal is necessary.


Appellants, as United States government contractors, must comply with the requirements of Executive Order 11246, as amended by Executive Order 11375, 2 and the OFCCP regulations promulgated thereunder. 3 Current regulations require the appellants to submit certain reports to a compliance agency designated by the OFCCP. Included among the documents required are annual "affirmative action programs" (AAPs) prepared for each of the contractors' facilities. AAPs contain detailed analyses of the facility's work force, reports of the contractor's success or failure in taking affirmative action to employ and advance minority group members and women, and self-imposed goals for correcting deficiencies. See 41 C.F.R. §§ 60-2.10 to .14 (1978). In addition, the appellants are required to file Employer Information (EEO-1) Reports with both the compliance agency and the EEOC. These reports contain other information used in determining whether unlawful employment practices are being committed. The compliance agency analyzes the contractor's AAPs and supporting documents to determine whether the contractor has complied with the Executive Orders. OFCCP officials then prepare and file Compliance Review Reports and Complaint Investigation Reports on the contractors.

The 1974 Memorandum of Understanding that is the subject of the current dispute provides that the EEOC and the OFCCP are to share these reports and supporting documents with each other. 4 In addition, paragraph 10 of the Memorandum provides that complaints filed with the OFCCP shall be deemed to be charges filed with the EEOC.

The appellants challenge the Memorandum on the grounds that (1) it is a substantive regulation that is beyond the authority of the agencies involved; (2) it impermissibly circumvents the relevancy requirement imposed on the EEOC by Title VII of the Civil Rights Act of 1964; (3) it violates the Federal Reports Act; (4) it abridges the appellants' privilege against disclosure of self-evaluative reports; and (5) it violates the Trade Secrets Act. The District Court rejected these arguments 5 and granted the agencies' motion for summary judgment. 465 F.Supp. 22 (E.D.Mo.1978).


The overriding issue is whether the EEOC and the OFCCP had authority to enter into the Memorandum of Understanding. The OFCCP, as the delegate of the Secretary of Labor, claims broad authority under Section 201 of Executive Order 11246, 3 C.F.R. §§ 339, 340 (1964-1965 Compilation). That section provides: "The Secretary of Labor shall be responsible for the administration of Parts II and III of this Order and shall adopt such rules and regulations and issue such orders as he deems necessary and appropriate to achieve the purposes thereof." The EEOC derives its rulemaking authority from Section 713(a) of Title VII, Civil Rights Act of 1964, 42 U.S.C. § 2000e-12(a), which provides in part: "The (EEOC) shall have authority from time to time to issue, amend, or rescind suitable procedural regulations to carry out the provisions of this subchapter."

Section 713(a) of Title VII has been interpreted to preclude the EEOC from issuing Substantive regulations. See General Electric Co. v. Gilbert, 429 U.S. 125, 141, 97 S.Ct. 401, 50 L.Ed.2d 343 (1976); EEOC v. Raymond Metal Products Co., 530 F.2d 590 (4th Cir. 1976). Thus, whether the agencies had authority to enter into the Memorandum will depend on whether it is characterized as substantive or procedural in nature. This characterization is also significant in another respect: if the Memorandum is considered to be procedural, there is no requirement that it be promulgated in accordance with the notice and comment provisions of the Administrative Procedure Act, 5 U.S.C. § 553(a)(2), (b)(A).

Although the term "substantive" defies precise definition, a substantive rule has been held to be one that affects individual rights and obligations. Chrysler Corp. v. Brown, 441 U.S. 281, 99 S.Ct. 1705, 1718, 60 L.Ed.2d 208 (1979); Morton v. Ruiz, 415 U.S. 199, 232, 94 S.Ct. 1055, 39 L.Ed.2d 270 (1974); Lewis-Mota v. Secretary of Labor, 469 F.2d 478, 482 (2d Cir. 1972). At the outset, we note that the effect of the Memorandum on the appellants is limited since the Memorandum deals only with interagency exchanges of information. No public disclosure is authorized or contemplated. Many of the harms claimed by the appellants would result only if the information transferred between the agencies were disclosed to the public. The appellants, however, have failed to show that public disclosure is made more likely by the Memorandum. The terms of the Memorandum itself provide safeguards against public disclosure. Paragraph 5 of the Memorandum provides: "All requests by third parties for disclosure of information shall be referred to the agency which initially compiled or collected the information." In keeping with this provision, the EEOC Compliance Manual, which governs the day-to-day operations of the EEOC, expressly states that prior to disclosure of a case file, "(a)ll information obtained from OFCCP or any of its constituent contract compliance agencies pursuant to the Memorandum of Understanding, paragraph 5, will be removed." EEOC Compl. Man. (BNA) P 83.6(g). Moreover, even with this information removed, EEOC disclosure will be made only to persons within a few limited categories, and then only when the receiving party agrees, in writing, not to make the information public "except in the normal course of a civil action or other proceeding instituted under Title VII." EEOC Compl. Man. P 83.3(b); See id., at P P 83.1-.5. Indeed, § 709(e) of Title VII, 42 U.S.C. § 2000e-8(e), imposes criminal penalties on EEOC employees who disclose to the public information obtained by the EEOC prior to institution of a proceeding under Title VII. Finally, the Memorandum's impact on the appellants is further limited by the Trade Secrets Act, which, as detailed later in this opinion, prohibits public disclosure of certain information by either the EEOC or the OFCCP.

Whether a given rule affects individual rights and obligations, of course, depends largely on the rights and obligations in existence at the time of the rule's promulgation. To determine the preexisting rights and obligations of the parties in this instance, it is necessary to carefully examine the sources from which the agencies draw their authority.

The common goal of the EEOC and the OFCCP is to eradicate employment discrimination. The agencies' areas of responsibility, however, are distinct. The OFCCP is responsible for ensuring that federal contractors comply with their statutory and contractual obligations, while the EEOC deals with the complaints of individual employees. See Reynolds Metals Co. v. Rumsfeld, 564 F.2d 663, 668 (4th Cir. 1977), Cert. denied, 435 U.S. 995, 98 S.Ct. 1646, 56 L.Ed.2d 84 (1978). Nevertheless, the functions of the agencies are closely related, and there is sufficient evidence to indicate that Congress intended the two agencies to cooperate and share information when possible.

The most direct indication that Congress intended that the EEOC cooperate with other agencies is found in the language of the Civil Rights Act. Section 705, 42 U.S.C. § 2000e-4(g)(1), provides: "The (EEOC) shall have power * * * to cooperate with and, with their consent, utilize regional, State, local, and other agencies, both public and private, and individuals(.)" There is no reason to hold that the "consent" provided for in this section could not be obtained through a formal Memorandum of Understanding. And if the word " utilize" is to have any meaning at all in this context, it must contemplate an exchange of information between the agencies. Moreover, the authorization to cooperate with other agencies is unambiguous. Indeed, §...

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