Acosta v. Shingal et al

Filing 40

ORDER adopting 30 Report and Recommendation; granting 1 Petition to Enforce Administrative Subpoenas. The hearing scheduled for 3/22/2018 is VACATED. PLEASE SEE ORDER FOR FURTHER DETAILS. Signed by Judge Edward J. Davila on 3/16/2018. (ejdlc1S, COURT STAFF) (Filed on 3/16/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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R. ALEXANDER ACOSTA, Secretary of
Labor, United States Department of Labor,
Petitioner,

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v.

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Case No. 5:17-mc-80119-EJD
ORDER ADOPTING REPORT AND
RECOMMENDATION
Re: Dkt. Nos. 30, 33

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MIRA SHINGAL, et al.,
Respondents.

United States District Court
Northern District of California

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This action presents one basic question: whether the court should adopt a magistrate

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judge’s recommended order enforcing subpoenas issued by the Secretary of Labor, R. Alexander

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Acosta, against two individuals - Mira Shingal and Ajay Shingal (the “Individual Respondents”) -

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and several business entities associated with them - namely, Apex Global International, Inc., Delta

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Hotel Group, L.P., SAI RAM Hospitality Group Inc., SAI RAM Hotel Group, Inc., Silicon Valley

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International, Inc., Starlight Management Group, Inc., Sterling International Group, LLC aka as

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Sterling International Group, Inc., and Symbian International, Inc. (the “Corporate Respondents”).

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This record is sufficiently developed such that neither an evidentiary hearing nor a motion

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hearing is necessary to render a decision. Civ. L.R. 7-1(b). Thus, the hearing scheduled for

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March 22, 2018, will be vacated. Because the magistrate judge’s determinations withstand de

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novo review, the court will adopt them for the reasons explained below. But the magistrate

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judge’s separate order granting equitable tolling is premature and unjustified on this record. Such

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an order will, therefore, not be carried over as a part of this limited-issue proceeding.

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I.

FACTUAL AND PROCEDURAL BACKGROUND

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A.

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The Wage and Hour Division opened an investigation of the Wyndham Garden Silicon

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The Secretary’s Investigation

Case No.: 5:17-mc-80119-EJD
ORDER ADOPTING IN PART REPORT AND RECOMMENDATION
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Valley hotel in December, 2016, “in order to determine whether any person had violated or was

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violating any provision of the FLSA or any regulations promulgated thereunder during the period

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beginning January 9, 2014.” Pet., Dkt. No. 1, at ¶ 5. This investigation later expanded to include

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another hotel, the Wyndham Garden San Jose Airport, as well as the restaurants located on both

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hotels’ premises. Id. The Secretary believes that Respondents, individually or in some

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combination thereof, own these entities. Decl. of Lilita Hom, Dkt. No. 3, at ¶ 4.

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Investigators visited the Wyndham Garden Silicon Valley hotel on January 3rd, January

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19th, and January 26, 2017, but were provided limited records. Decl. of Edgar Arriaga, Dkt. No.

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3, at ¶¶ 4-6. An investigator was told by Mira Shingal and others that the hotel would not produce
additional records and would not permit employee interviews. Id. Mira Shingal also “denied

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United States District Court
Northern District of California

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ownership of the Silicon Valley Hotel or the related restaurant, and she denied any knowledge of

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the Airport Hotel.” Id. at ¶ 6.

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Investigators later visited the Wyndham Garden San Jose Airport hotel on March 6, 2017,

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but the hotel’s general manager refused to meet. Id. at ¶ 10. The investigators instead met with

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the hotel’s accounting manager on that date, and again on April 11, 2017. Id.; Decl. of Lilita

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Hom, at ¶ 12. The accounting manager provided limited documents, and investigators interviewed

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some employees on April 11th. Decl. of Lilita Hom, at ¶ 12. The interviews were not completed,

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however, and a follow-up session was scheduled for the next day but eventually refused. Id.

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The Wage and Hour Division also attempted to obtain compliance through an attorney

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representing some Respondents. Decl. of Ana Hurtado-Aldana, Dkt. No. 3, at ¶¶ 6-11. Though

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the attorney produced a limited portion of the requested documents, she declined to produce any

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documents related to the restaurants without separate requests for those entities. Id. at ¶¶ 7-8. The

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attorney also stated the Individual Respondents are not “employers” under FLSA and could not be

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compelled to supply information to the Secretary. Id. at ¶ 10.

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Several categories of documents necessary for the Secretary to complete the investigation
remain outstanding. Id. at ¶¶ 12-13.

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B.

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The Subpoenas

During the investigation, the Secretary submitted ten subpoenas duces tecum to
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Respondents in two sets.
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The first set of eight subpoenas was issued to the Corporate Respondents on February 17,
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2017, by a Wage and Hour Regional Administrator. Decl. of Ruben Rosalez, Dkt. No. 3, at Ex. A.
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Each of the subpoenas required the Corporate Respondents to produce certain categories of
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financial documents for the period beginning January 9, 2014, to January 8, 2017. Id.
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The second set of two subpoenas, issued to the Individual Respondents by the Regional
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Administrator on June 16, 2017, also required the production of certain financial documents for
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the period of January 9, 2014, to January 8, 2017. Id. at Ex. B.
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C.

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The Instant Proceeding

United States District Court
Northern District of California

The Secretary filed a Petition to enforce the subpoenas on September 20, 2017, claiming
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that Respondents failed to produce all responsive documents. The action was assigned to a
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magistrate judge, who ordered Respondents to show cause why they should not be ordered to
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comply. Dkt. Nos. 1, 6. Several Respondents filed returns, and the magistrate judge held a
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hearing on the order to show cause on November 14, 2017. Dkt. Nos. 12-21, 28.
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The magistrate judge found the enforcement issue to be dispositive of the Petition, citing
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National Labor Relations Board v. Cable Car Advertisers, Inc., 319 F. Supp. 2d 991 (N.D. Cal.
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2004), and filed a Report and Recommendation on November 17, 2018. Dkt. No. 30. The case
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was then reassigned to the undersigned, and Respondents filed an Objection. Dkt. Nos. 31, 33.
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II.

LEGAL STANDARD
A.

Review of Magistrate Judge’s Report and Recommendation

Under 28 U.S.C. § 636, “a magistrate judge may hear and determine nondispositive
matters but not dispositive ones.” Bastidas v. Chappell, 791 F.3d 1155, 1159 (9th Cir. 2015). “As

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to dispositive matters, the magistrate judge may go no further than issuing a report and
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recommendation to the district court, which then must undertake de novo review.” Id.
Agreeing with Judge Lloyd’s determination that an enforcement decision is dispositive,

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this court reviews the Report and Recommendation de novo.

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B.

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The Ninth Circuit has explained that the “scope of the judicial inquiry in an . . . agency

Enforcement of Agency Subpoena

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subpoena enforcement proceeding is quire narrow.” EEOC v. Fed. Express Corp., 558 F.3d 842,

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848 (9th Cir. 2009) (“Federal Express”) (quoting EEOC v. Karuk Tribe Hous. Auth., 260 F.3d

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1071, 1076 (9th Cir. 2001). Indeed, “[a] district court is not to use an enforcement proceeding as

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an opportunity to test the strength of the underlying complaint.” McLane Co., Inc. v. EEOC, 137

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S. Ct. 1159, 1165 (2017).
Within this framework of limited review, Federal Express designates three “critical”

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questions: (1) whether Congress granted authority to investigate, (2) whether procedural

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United States District Court
Northern District of California

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requirements have been observed, and (3) whether the evidence is relevant and material to the

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investigation. 558 F.3d at 848. “An affidavit from a government official is sufficient to establish

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a prima facie showing that these requirements have been met.” FDIC v. Garner, 126 F.3d 1138,

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1143 (9th Cir. 1997).
If the Federal Express conditions are satisfied, then “the district court should enforce the

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subpoena unless the employer establishes that the subpoena is ‘too indefinite,’ has been issued for

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an ‘illegitimate purpose,’ or is unduly burdensome.” McLane Co., 137 S. Ct. at 1165.

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III.

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DISCUSSION
Before addressing the merits, the court must first define the boundaries of this proceeding

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because some of the arguments presented in the parties’ pleadings touch on matters that are not up

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for review. First, this is not an action for violation of the FLSA, but instead the corollary of an

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investigation to determine whether any such violation has occurred. See 29 U.S.C. § 211(a).

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Consequently, the court need not delve into the likelihood of any potential violation to decide

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whether or not to enforce the subpoenas. See McLane Co., 137 S. Ct. at 1165.

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Second, Respondents provide no authority to support their suggestion that the court must

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determine, in the context of this limited enforcement review, which records they have produced

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and which records remain outstanding. See Objection, Dkt. No. 33, at p. 2:21-22 (“If each

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subpoena was proper and within the jurisdiction of the Secretary, which records are outstanding,

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and which must still be produced?”). To the contrary, Federal Express teaches that this

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proceeding is a discreet one, turning on the answers to three questions. 558 F.3d at 848. This is

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not the vehicle by which the sufficiency of a document production is reviewed, even if that

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production consists of “several bankers’ boxes full of records” or the voluntary production of

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documents from entities not subject to a subpoena. Whether Respondents have adequately

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complied with particular production requests is a determination for another day.

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Third, Respondents’ criticism of the magistrate judge who originally presided over this
action not only borders on the inappropriate, but is entirely irrelevant. The standard of review is

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de novo, which “means that the reviewing court ‘do[es] not defer to the lower court’s ruling but

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United States District Court
Northern District of California

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freely consider[s] the matter anew, as if no decision had been rendered below.” Dawson v.

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Marshall, 561 F.3d 930, 933 (9th Cir. 2009) (quoting United States v. Silverman, 861 F.2d 571,

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576 (9th Cir. 1988)). Thus, while the court has read the magistrate’s Report and Recommendation

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as part of its inventory of the record, it must nonetheless decide whether or not to adopt it based on

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a new, unfettered assessment of the merits.

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With these clarifications, the court now turns to the Federal Express conditions and the
remainder Respondents’ specific objections.

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A.

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There can be little dispute over the first Federal Express condition. Congress has granted

First Condition: Authority to Investigate

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the Secretary the ability to “investigate and gather data regarding the wages, hours and other

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conditions and practices of employment in any industry” subject to the FLSA, and the Secretary

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“may enter and inspect such places and such records . . . as he may deem necessary or appropriate

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to determine whether any person has violated any provision of [the FLSA], or which may aid in

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the enforcement of the provisions of [the FLSA].” 29 U.S.C. § 211(a). Congress has also

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bestowed upon the Secretary a subpoena power to aid the investigation mandate. 29 U.S.C. § 209.

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Here, the Secretary issued the subpoenas during an active investigation into whether FLSA

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violations have occurred at the Wyndham Garden Silicon Valley hotel, the Wyndham Garden San

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Jose Airport hotel, or either of the these hotels’ restaurants. Given the Secretary’s statutory

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authorization to conduct such investigations, the court finds the “authority” condition easily

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satisfied.

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Despite the explicit FLSA authorization, Respondents nonetheless argue the Secretary

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lacks “jurisdiction” to explore entities not directly subject to the investigation, and cannot obtain

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documents they deem “private corporate financial records,” such as tax filings, balance sheets,

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bank statements, and other financial statements, because the two hotels and two restaurants

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targeted by the Secretary’s investigation have offered to stipulate to “jurisdiction” under the

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FLSA. Respondents contend “[t]here is no authority under the code and statutory scheme that
allows the Secretary to review financial records, and if financial records are necessary it is

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United States District Court
Northern District of California

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narrowly tailored to establish jurisdiction.” This argument is unpersuasive.

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To begin, the objection is not “jurisdictional,” but is rather based on coverage. See Karuk

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Tribe Hous. Auth., 260 F.3d at 1077-78 (explaining the difference between “coverage” and

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“jurisdiction” in a subpoena enforcement action). The portion of the FLSA that Respondents cite

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to support the argument’s framing - that the act applies to enterprises “whose annual gross volume

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of sales made or business done is not less than $500,000” (29 U.S.C. § 203(s)(1)) - has been

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deemed an element of a FLSA claim rather than a jurisdictional prerequisite. Hernandez v.

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Martinez, No. 12-cv-06133-LHK, 2014 WL 3962647, at *3 n.1 (N.D. Cal. Aug. 13, 2014). As

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such, the Secretary’s ability to obtain records, whether financial or otherwise, does not depend on

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whether an enterprise’s sales exceed the statutory amount. See EEOC v. Children’s Hosp. Med.

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Ctr. of N. Cal., 719 F.2d 1426, 1429 (9th Cir. 1983) (holding that “agency jurisdiction is not

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abrogated because the party being investigated may have a valid defense to a subsequent suit by

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the agency”); see also Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 200 (1946) (holding

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that “in case of disobedience, the District Courts are called upon to enforce the subpoena through

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their contempt powers, without express condition requiring showing of coverage” under the

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statutory scheme).

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Nor does FLSA require that an entity be the extant target of an investigation before it can
Case No.: 5:17-mc-80119-EJD
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be subject to a subpoena, or even require that an entity have employees or otherwise qualify as an

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“employer.” See Oklahoma Press Pub. Co., 327 U.S. at 201 (explaining that “[t]he very purpose

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of the subpoena and of the order, as of the authorized investigation, is to discover and procure

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evidence, not to prove a pending charge or complaint, but upon which to make one if, in the

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Administrator’s judgment, the facts thus discovered should justify doing so,” and holding that

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Congress has authorized the agency, “rather than the District Courts in the first instance, to

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determine the question of coverage in the preliminary investigation of possibly existing

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violations”); see also Solis v. Forever 21, Inc., No. CV 12-09188 MMM (MRWx), 2013 WL

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1319769, at *4 n.34 (C.D. Cal. Mar. 7, 2013).

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Rather, the language authorizing the inspection of any records “necessary or appropriate”

United States District Court
Northern District of California

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to assess for a statutory violation or to enforce the FLSA reveals the Secretary may seek records

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outside of those solely focused on wages, hours and working conditions, including records needed

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to confirm whether the FLSA sales volume threshold is satisfied. By offering to stipulate that

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sales exceeded $500,000 for the four target entities, the hotels and restaurants signified their

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intention not to contest that element of coverage for any subsequent FLSA claim against them.

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Respondents could not, however, have curtailed the Secretary’s jurisdiction to seek the universe of

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information permitted by the FLSA, which concept is broader than coverage.

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Respondents’ related objection disputing production of the Individual Respondents’ tax

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returns is misplaced for the same reason. Their argument, unsupported by citation to authority,

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that the Secretary “cannot obtain financial information” but can only “investigate working

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conditions” is inconsistent with the wide scope of records available to the Secretary under the

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FLSA. See 29 U.S.C. § 211(a) (referencing records “necessary or appropriate” to determine

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whether a violation occurred, as well as those records that “may aid in the enforcement of the

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provisions”).

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In sum, the court rejects the portion of Respondents’ objection that seems to challenge the
scope of the Secretary’s authority.

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B.

Second Condition: Observation of Procedural Requirements

Absent unique circumstances, an agency observes procedural requirements when a
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subpoena is properly issued and served. See Solis v. v. MZS Corp., No. MISC 10-80302 VRW,
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2011 WL 337492, at *2 (N.D. Cal. Jan. 31, 2011).
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As a prima facie matter, the Secretary has successfully demonstrated procedural
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compliance. The subpoenas were issued by the Regional Administrator, who was delegated with
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the authority to undertake such tasks by the Secretary. Decl. of Ruben Rosalez, at ¶ 3. The
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subpoenas to the Corporate Respondents were then personally served on various individuals
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affiliated with the hotels and restaurants, since the Secretary identified during the investigation
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that the Corporate Respondents were involved in the operations of those entities. Decl. of Edgar
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Arriaga, at ¶¶ 7-8. Subpoenas issued to the Individual Respondents were personally served on
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United States District Court
Northern District of California

Mira Shingal. Decl. of Lilita Hom, at ¶ 17.
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In response to this showing, Respondents argued before the magistrate judge that the
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manner in which they were served with the subpoenas was insufficient, either because it was not
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served on the designated corporate agent or not personally served on each individual. The
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magistrate judge considered the argument but was nonetheless unconvinced it precluded
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enforcement of the subpoenas. Citing FTC v. Carter, 636 F.2d 781, 791 (D.C. Cir. 1980), the
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magistrate judge observed that “in a proceeding to enforce an administrative subpoena, a court
may allow less formal service of process than that which is generally required under Rule 4,” and

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noted that no party claimed a denial of due process or a deprivation of the opportunity to present a
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defense.
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Reviewing this issue anew, the court concurs with the magistrate judge’s conclusion that

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service was adequately effectuated on all Respondents. Under Federal Rule of Civil Procedure
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81(a)(5), service rules applicable in other civil cases apply to subpoena enforcement actions
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“except as otherwise provided . . by court order in the proceedings.” This rule permits the district

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court to condone less-formal service methods, recognizing that subpoena proceedings are
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summary in nature. Carter, 636 F.2d at 791. Given that all Respondents represented by counsel
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were able to robustly participate in this action, by first attempting to negotiate their responses to

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the subpoenas with the Secretary, opposing the Secretary’s Petition before the magistrate judge,

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and now objecting to enforcement before the district court, the court finds that the service

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procedure utilized here was sufficient to provide notice.

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Accordingly, the second Federal Express condition is satisfied.

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C.

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When examining the third Federal Express condition, the court is mindful that relevancy

Third Condition: Relevant and Material Evidence

and materiality for the purposes of a subpoena proceeding are “determined in terms of the

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investigation rather than in terms of evidentiary relevance.” Fed. Express Corp., 558 F.3d at 854.

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This requirement is “not especially constraining.” Id. (quoting EEOC v. Shell Oil Co., 466 U.S.

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United States District Court
Northern District of California

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54, 68 (1984)). “The term ‘relevant’ is ‘generally construed’ to ‘afford[] the Commission access

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to virtually any material that might cast light on the allegations against the employer.” Id.

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(quoting Shell Oil Co., 446 U.S. at 68-69).

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In their objection, Respondents identify certain categories of documents they argue are

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irrelevant to the Secretary’s investigation: (1) those same “private corporate financial records”

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discussed above, including general ledgers, (2) corporate tax returns, (3) the Individual

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Respondents’ personal tax returns, and (4) property deeds, mortgage documents and loans

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obtained or issued. But given the expansive definition of relevance which governs subpoena

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enforcement actions, the court finds the Secretary has met his burden for each of these categories

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by explaining their significance to the investigation.

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For the first two categories, the Secretary states the documents are needed to identify the

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employees working at the hotels and restaurants, to evaluate which individuals and entities are

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acting as their employers, and to identify any violations of the FLSA that can only be analyzed by

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comparing the financial statements of multiple entities. Reply, Dkt. No. 25, at 8:6-15. As the

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Secretary puts it, “[i]t is textbook investigatory procedure to request documents from related

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entities to confirm that workers are not being shared between entities or paid ‘off the books’ of the

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main entity’s payroll.” Id. And specific to the general ledgers and bank records, the Secretary

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states these documents should be produced because Respondents have not been able to make a

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complete production of payroll records. These are legitimate areas of investigation under the

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FLSA, and the documents requested are relevant to that investigation. See 29 U.S.C. § 211(a).

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For the third category, the Secretary states the personal tax returns are necessary to confirm

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which entities the Individual Respondents own or control and to determine whether there are other

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entities not yet discovered or disclosed that may have been used to pay workers at the hotels and

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restaurants. Reply, Dkt. No. 25, at 11:18-22. These records are particularly relevant to the

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investigation at issue here, since it appears the Individual Respondents have utilized an opaque

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collection of other business entities to manage the affairs of the hotels and restaurants. It also
appears the Individual Respondents were disinclined to fully cooperate with the investigation, both

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United States District Court
Northern District of California

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before and after receiving the subpoenas, and have neglected to provide entirely accurate

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representations concerning their involvement with related entities and those entities’ connections

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to the hotels and restaurants. In light of these circumstances, the production of a wider array of

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documents is justified, all of which may help to sort out the structure of Respondents’ business

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and shed light on the veracity of the Individual Respondents’ statements to the Secretary - and to

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the State of California for that matter.1
For the fourth category, the Secretary states that deeds, mortgages and leases may assist

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with identifying persons or entities having additional documents or information relevant to the

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investigation. The Secretary further states that these documents may show relationships that

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explain the control that certain individuals or entities exercised over other entities or other

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employees. Id. at 8:16-9:2. Like the category discussed directly above, these records have

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increased relevance to the investigation in order to confirm which entities are actually associated

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with the hotels and restaurants, and to determine whether the Individual Respondents’

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representations are accurate.
Respondents’ arguments against the relevance of these records are unpersuasive. They

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For this reason, there is little to be gained from taking judicial notice of documents from the
California Secretary of State.
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contend that some of the records sought, such as bank records, deeds and mortgage documents, do

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not show ownership or identify employees. Their representation, however, does not render these

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documents irrelevant to the investigation because relevance for investigatory purposes is broader

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than the relevance standard used for evidentiary issues. See Fed. Express Corp., 558 F.3d at 854.

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As the court has explained, these records are at least relevant to confirm whether Respondents’

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description of the documents is accurate, but also relevant to understanding the structure of

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Respondents’ business. The out-of-district order Respondents cite to imply otherwise is

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distinguishable because there is no indication from that action that the respondent utilized a web of

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independent yet ostensibly related entities to conduct business. See Acosta v. Austin Elec. Servs.

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LLC, No. CV-16-02737-PHX-ROS, slip op. (Sept. 5, 2017). In contrast, the manner in which the

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United States District Court
Northern District of California

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Individual Respondents have arranged their affairs, and their conduct in response to the

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investigation, mandates the production of a broader array of documents.
In reference to the tax returns specifically, Respondents believe the Secretary must satisfy

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a “compelling need” test before those records are produced. Respondents, however, have not

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produced authority from the Ninth Circuit mandating the application of such a standard to the

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production of tax returns in civil discovery. Notably, in the one Ninth Circuit case Respondents

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do cite, the Ninth Circuit permitted the production of tax returns after declining to find a privilege

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protection or apply a heightened standard for production. See Heathman v. U.S. Dist. Ct., 503

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F.2d 1032, 1045 (9th Cir. 1974). And as the Ninth Circuit observed in another case, any concerns

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over the preservation of confidential information in Respondents’ tax returns can be addressed

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through protective orders. Stokwitz v. United States, 831 F.2d 893, 897 (9th Cir. 1987). This

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court, therefore, finds no legal basis to apply a different standard of production for tax returns.2
Because the Secretary has shown the subpoenas seek evidence relevant and material to the

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investigation, this condition is satisfied.

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Nor will the court issue an order at this time permitting the Individual Respondents to produce
redacted copies of their tax returns. Without reviewing the documents themselves, the court
cannot assess whether the proposed redactions are justified. This issue, like others involving the
sufficiency of Respondents’ production, must be addressed separately if it persists.
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D.

Other Issues
i.

Overbreadth

In their Objection, Respondents argue the subpoenas are overbroad and should be
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narrowed for many of the same reasons already discussed in conjunction with the first and third
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Federal Express conditions. These objections fail in light of the preceding discussion. The Fifth
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Circuit opinion cited by Respondents in support of narrowing the subpoenas, McComb v.
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Hunsaker Trucking Contractor, Inc., 171 F.2d 523 (1949), does not persuade the court otherwise
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given the Secretary’s relevance presentation, the structure of Respondent’s business, and their

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prior unwillingness to fully participate in the investigation.
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Respondents also contend the subpoenas are temporally overbroad because they require
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Respondents to produce documents for four years when the FLSA statute of limitations is three
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United States District Court
Northern District of California

years. Objections based on a statute of limitations, however, do not preclude the enforcement of
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an administrative subpoena. See Karuk Tribe Hous. Auth., 260 F.3d at 1076.
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ii.

Wrong Entities

Respondents claim the magistrate judge “disregarded” their contention that the “wrong
entities” were named in the subpoenas. This objection is somewhat puzzling because rather than
disregarding Respondents’ argument, the magistrate judge specifically addressed it, finding that

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the entities affiliated with Respondents were adequately served and noticed of this proceeding
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despite their nomenclature. The rejection of a considered argument, as occurred here, is
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something different than disregarding an argument.
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In any event, Respondents have not provided a persuasive reason to deviate from the
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magistrate judge’s conclusion about notice to “wrongly named” entities. Their argument on that

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topic fares no better on review.
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iii.

Equitable Tolling

As a final matter, Respondents argue the court should decline to adopt the magistrate
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judge’s order pre-emptively tolling the statute of limitations “until such time as the [Secretary]
notified this Court that Respondents have complied with the administrative subpoenas.” This

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order was not part of the Report and Recommendation and does not directly impact the decision to

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enforce the subpoenas. Nonetheless, Respondents have a point.
“[T]he equitable tolling doctrine ‘enables courts to meet new situations [that] demand

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equitable intervention, and to accord all the relief necessary to correct . . . particular injustices.’”

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Wong v. Beebe, 732 F.3d 1030, 1052 (9th Cir. 2013) (quoting Holland v. Florida, 560 U.S. 631,

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650 (2010)). Generally, the proponent of equitable tolling must establish two elements: (1) that

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the proponent has been pursuing rights diligently, and (2) that some extraordinary circumstances

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stood in the way. Id.
The magistrate judge’s order is troubling on two levels. First, the order essentially issued

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on an ex parte basis, as part of the order to show cause that prompted Respondents to participate in

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United States District Court
Northern District of California

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this action. The record before this court is missing any showing of the doctrine’s two elements

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from the Secretary, and nothing suggests Respondents were provided an opportunity to comment

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on the propriety of such an order before it was issued.
Second, this court shares the concern of another to have recently confronted the same

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species of tolling request. That court described it as “prematurely seeking injunctive relief while

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simultaneously seeking an order to enforce” subpoenas. Acosta v. GT Drywall, Inc., Case No.

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MC 17-0006-JGB (KKx), 2017 WL 3262109, at *4 (C.D. Cal. June 26, 2017). And much like in

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that case, the Secretary has failed to convincingly explain why a tolling decision must be made

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now when it is plainly better-suited to a subsequent FLSA action. By then, all facts related to

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timing, diligence and alleged obstruction can be presented and an informed judicial decision can

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be made on a fully-developed record.
For these reasons, the court will not order the tolling of the FLSA statute of limitations as

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part of this action.

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IV.

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ORDER
Based on the foregoing, the court ADOPTS the magistrate judge’s Report and

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Recommendation (Dkt. No. 30), such that the Secretary’s Petition (Dkt. No. 1) is GRANTED as

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follows:

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Case No.: 5:17-mc-80119-EJD
ORDER ADOPTING IN PART REPORT AND RECOMMENDATION
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1.

Within 45 days of the date of this order, or within another time period agreed to by

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the parties, the Individual Respondents shall produce to the Secretary complete copies of their

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personal tax returns.

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The court orders the parties to meet and confer further over proposed redactions to these

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documents. For his part, the Secretary should seriously consider whether the investigation can

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still advance even if the Individual Defendants produce redacted tax returns. For their part, the

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Individual Defendants should refrain from using redactions to prevent the production of relevant

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information in light of the broad definition that applies to this proceeding.

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Any dispute over redactions that remains after this additional discussion should be
presented in the form of a motion to compel, which motion and response must describe a

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United States District Court
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concentrated effort to resolve this issue short of additional litigation.

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2.

Within 45 days of the date of this order, or within another time period agreed to by

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the parties, the Individual Respondents shall prepare a line-by-line response to the Secretary’s

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subpoenas for each entity conducting any business at the specified addresses for which they have

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possession, custody, or control over the records. For each such entity, the Individual Respondents

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shall either produce the requested records, or provide the Secretary with a sworn statement that the

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records do not exist.

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3.

Within 45 days of the date of this order, Apex Global International, Inc.; Delta

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Hotel Group, L.P.; SAI RAM Hospitality Group, Inc.; SAI RAM Hotel Group, Inc.; Silicon

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Valley International, Inc.; Starlight Management Group, Inc.; Sterling International Group, LLC,

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aka Sterling International Group, Inc.; and Symbian International, Inc. must each prepare a line-

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by-line response to their respective subpoenas. Respondents shall either produce the requested

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records, or provide the Secretary with a sworn statement that the records do not exist.

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4.

To the extent there is overlap between the subpoenas to the Individual Respondents

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and the Corporate Respondents, only one copy of the documents need be produced to the

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Secretary.

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5.

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Where reasonably feasible, Respondents shall produce documents to the Secretary

Case No.: 5:17-mc-80119-EJD
ORDER ADOPTING IN PART REPORT AND RECOMMENDATION
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in their native formats.
6.

The court declines to adopt an order tolling the statute of limitations, and any such

order to that effect issued by the magistrate judge is VACATED.
The hearing scheduled for March 22, 2018, is also VACATED.

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IT IS SO ORDERED.
Dated: March 16, 2018
______________________________________
EDWARD J. DAVILA
United States District Judge

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United States District Court
Northern District of California

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Case No.: 5:17-mc-80119-EJD
ORDER ADOPTING IN PART REPORT AND RECOMMENDATION
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