Equal Employment Opportunity Commission v. Sterling Jewelers Inc.

Filing 23

REPORT AND RECOMMENDATION re 1 Application for an Order to Show Cause why an administrative subpoena should not be enforced. Objections due November 21, 2011. Signed by Hon. Jeremiah J. McCarthy on 11/2/11. (DAZ)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
___________________________________________
EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION,
Applicant,

REPORT AND
RECOMMENDATION
11-mc-00028-(A)(M)

v.
STERLING JEWELERS INC.,
Respondent.
___________________________________________
INTRODUCTION
Petitioner Equal Employment Opportunity Commission (“EEOC”) filed an
application for order to show cause why its administrative subpoena duces tecum, #NY-A10-006,
to Sterling Jewelers Inc. (“Sterling”) should not be enforced [1].1 This motion, being dispositive,
has been referred to me by Hon. Richard J. Arcara for report and recommendation [19].2 Oral
argument was held on May 17, 2011. For the following reasons, I recommend that the subpoena
be enforced in its entirety.

1

2

Bracketed references are to the CM/ECF docket entries.

“A motion to enforce a subpoena is not always considered a dispositive motion for
purposes of Federal Rule of Civil Procedure 72 . . . . Because the Magistrate’s order would dispose of
the entire matter at issue in this case, however, the order is more properly treated as a Report and
Recommendation, subject to de novo review.” U.S. E.E.O.C. v. Dolgencorp., 2008 WL 4542973, *2
(N.D.Ill. 2008). See E.E.O.C. v. Schwan’s Home Service, 707 F.Supp.2d 980, 989 (D.Minn.
2010)(same).

BACKGROUND
A.

The Thielker Charge
On August 6, 2008, Diane Thielker, a former employee of Sterling (d/b/a Jared

the Galleria of Jewelry), filed a charge of discrimination (the “Thielker Charge”) alleging:
“I believe that I have been the victim of unlawful discrimination in
employment because of my age . . . , in violation of the Age
Discrimination in Employment Act of 1967 . . . and because of my
sex, female, in violation of Title VII of the Civil Rights Act of
1964. . . because:
A. I applied for the timepiece manager position in January 2008
and I was rejected. Instead a 23 year old male, who did not even
apply was hired.
B. I believe that when I told [the General Manager] that I believed
this was age and sex discrimination, he retaliated by saying I did
not meet standards and by terminating me.” Thompson Declaration
[3], Exs. 1 (Charge No. 523-2008-00926) and 4.
As part of its investigation into the Thielker Charge, on October 9, 2009 Ms. Thielker provided
the EEOC with a copy of an August 3, 2007 Employee Counseling Report issued by Sterling to
Ms. Thielker. The Counseling Report states that “[a]ny discussion regarding payroll need only to
be made between said employee and mgr. Having inappropriate discussions only contribute to
and fosters ill will amongst team members as well as being a direct violation of Sterlings [sic]
code of conduct.” Thompson Declaration [3], Ex. 10 (emphasis added). Included in the
Counseling Report are Ms. Thielker’s comments that “I feel I’m being discriminated against
being a woman in this company where men always make more money than women”. Id.
On January 20, 2010 the EEOC served the subpoena, which requests the
following information from January 1, 2005 through present:

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1.

The Code of Conduct referred to in the Counseling Report
“and any other policies prohibiting employees from
discussing their pay”;

2.

“[A]ll disciplinary or warning notices, counseling reports,
or similar documents reflecting Sterling’s enforcement of
its policy prohibiting employees from discussing their pay”;
and

3.

[D]ocuments that evidence or explain . . . all individuals
disciplined under Sterling’s policy prohibiting employees
from discussing their pay”. Thompson Declaration [3], Ex.
13.3

Sterling’s petition to the EEOC to revoke or modify the subpoena was denied by the EEOC on
June 29, 2010. Thompson Declaration [3], Exs. 14, 15. Thereafter, the EEOC sought
compliance with the subpoena by August 11, 2010, but Sterling advised that it would not
comply. Id., Exs. 16-17.

B.

The Primary Action
On September 23, 2008 the EEOC filed EEOC v. Sterling Jewelers Inc., 08-cv-

0706(A)(M) (the “Primary Action”) in this Court alleging gender discrimination pursuant to
Sections 706 and 707 of Title VII of the Civil Rights Act of 1964, as amended. The complaint
alleges that “since at least January 1, 2003, Sterling has engaged in unlawful employment
practices throughout its stores nationwide . . . by maintaining a system for making promotion and
compensation decisions that is excessively subjective and through which Sterling has permitted
or encouraged managers to deny female employees equal access to promotion opportunities and

3

An earlier subpoena was revoked by the EEOC due to an error in service. Thompson
Declaration [3], ¶25.

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the same compensation paid to similarly situated male employees” ([1], ¶7(a)), and by
“maintain[ing] a system for making promotion and compensation decisions that is excessively
subjective and that has a disparate impact on female retail sales employees”. Id., ¶8(a).

C.

The Arbitration
Current and former female Sterling employees commenced a class action lawsuit

alleging that Sterling discriminated against them in pay and promotion on the basis of their
gender (the “arbitration claimants”). See Jock v. Sterling Jewelers Inc., 08-cv2875 (S.D.N.Y.).
The Court granted plaintiffs’ motion to refer the dispute to arbitration and to stay the litigation
pending conclusion of that arbitration. See Jock v. Sterling Jewelers, Inc., 564 F.Supp.2d 307,
311 (S.D.N.Y.2008). The Second Circuit recently held that the arbitrator did not exceed her
authority in determining that the arbitration claimants could proceed with their efforts to certify a
class in the arbitration proceeding. See Jock v. Sterling Jewelers Inc., 646 F.3d 113, 127 (2d Cir.
2011).
This action ensued on April 15, 2011 and Sterling has opposed the EEOC’s
application, arguing that it constitutes an improper attempt to circumvent the discovery process
in the Primary Action, that the information sought in the subpoena is irrelevant to the Thielker
Charge, overbroad and unduly burdensome, and that the subpoena is barred by the parties’
mediation agreement. Sterling’s Memorandum of Law [17]. Despite its opposition to the
subpoena, Sterling states that it has no company policy that prohibits employees from discussing
their pay with co-workers, which moots those aspects of the subpoena requesting this policy.
Lynch Declaration [17-2], ¶¶7-9.
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ANALYSIS
“[T]he district court’s ‘role in a proceeding to enforce an administrative subpoena
is extremely limited.’” E.E.O.C. v. United Parcel Service, Inc., 587 F.3d 136, 139 (2d Cir. 2009).
“To obtain enforcement of an administrative subpoena, ‘[a]n agency must show only [1] that the
investigation will be conducted pursuant to a legitimate purpose, [2] that the inquiry may be
relevant to the purpose, [3] that the information sought is not already within [the agency’s]
possession, and [4] that the administrative steps required . . . have been followed.’” Id. “A
subpoena that satisfies these criteria will be enforced unless the party opposing enforcement
demonstrates that the subpoena is unreasonable or that compliance would be ‘unnecessarily
burdensome.’” Id. Sterling’s challenge to the subpoena centers solely on the first and second
prongs.

A.

Is the Subpoena being Issued for a Legitimate Purpose?
Sterling argues that the subpoena is being issued to end-run the discovery process

in the Primary Action. Sterling’s Memorandum of Law [17], Point I. However, commencement
of the Primary Action is not a per se bar to the EEOC’s authority to investigate the Thielker
Charge. See E.E.O.C. v. Von Maur, Inc., 2007 WL 3503435, *4 (S.D.Iowa 2007) (“[T]o hold that
the class action and Mr. Smith’s intervention deprive the EEOC of authority to continue to
investigate suspected systemic discrimination similar to that alleged in Mr. Smith’s charge would
be inconsistent with the expansive investigative authority conferred on the EEOC by Title VII and
without clear textual support in the statute”).

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Although the timing of the EEOC’s actions with respect to the subpoena are
curious when compared to the progress of discovery in the Primary Action, “[o]rdinarily the
EEOC [has] the prerogative to decide at what pace and how vigorously to pursue a given
investigation.” E.E.O.C. v. Bashas’, Inc., 2009 WL 3241763, *12 (D.Ariz. 2009). Sterling also
argues that the scope of the subpoena, which seeks company-wide information relevant to the
EEOC’s pattern or practice claims in the Primary Action, evidences that it is being issued for an
ulterior purpose. Sterling’s Memorandum of Law [17], p. 9. However, the Counseling Report
states that Ms. Thielker was disciplined under “Sterlings [sic] code of conduct” prohibiting
employees from discussing their pay and that Ms. Thielker believed that women working for
Sterling make less than their male counterparts, thereby evidencing a company-wide policy. “An
employer’s nationwide use of a practice under investigation supports a subpoena for nationwide
data on that practice.” E.E.O.C. v. Kronos Inc., 620 F.3d 287, 298 (3d Cir. 2010) (citing United
Parcel Service. Inc., 587 F.3d at 139)).
Moreover, the cases upon which Sterling relies are readily distinguishable. For
example, in United States v. Giant Industries, Inc., 1981 WL 1277,*2 (D.Ariz. 1981), the
administrative agency’s subpoena was intended to further a criminal proceeding. Sterling’s
Memorandum of Law [17], p. 6. Sterling also relies on Bashas’, Inc., where the respondent made
a sufficient preliminary showing entitling it to conduct limited discovery into the EEOC’s purpose
for issuing the subpoena. Sterling’s Memorandum of Law [17], p.7. However, here, Sterling
“does not seek limited discovery at this juncture.” Sterling’s Memorandum of Law [17], p. 7 n. 3.
Therefore, I conclude that the EEOC has met its burden of establishing that the
subpoena was issued for a legitimate purpose.
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B.

Does the Subpoena Request Relevant Information?
“In connection with any investigation of a charge . . . , the Commission . . . shall

at all reasonable times have 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.A. §2000e-8. The “limitation on the Commission’s investigative
authority is not especially constraining. . . . [C]ourts have generously construed the term
‘relevant’ and have afforded the Commission access to virtually any material that might cast light
on the allegations against the employer. E.E.O.C. v. Shell Oil Co., 466 U.S. 54, 68-69
(1984). Nevertheless, “[w]hile the notions of relevancy in an EEOC investigation are broad, they
are not limitless.” E.E.O.C. v. Local 32B-32J, Service Employees International Union, AFL-CIO,
1992 WL 84474, *2 (S.D.N.Y. 1992). See Shell Oil Co., 466 U.S. at 69 (“Congress did not
eliminate the relevance requirement, and we must be careful not to construe the regulation
adopted by the EEOC governing what goes into a charge in a fashion that renders that requirement
a nullity”).
“The charge is not to be treated as a common-law pleading that strictly cabins the
investigation that results therefrom . . . . The charge merely provides the EEOC with ‘a
jurisdictional springboard to investigate whether the employer is engaged in any discriminatory
practices;’ and that investigation may well ‘disclose, as in this instance, illegal practices other
than those listed in the charge’”. E.E.O.C. v. General Electric Co., 532 F.2d 359, 364 (4th Cir.
1976). See E.E.O.C. v. Astra U.S.A., Inc., 94 F.3d 738, 746 (1st Cir. 1996)(“The allegations
contained in the charge do not narrowly circumscribe the Commission’s investigation. Rather, the
charge serves as ‘a jurisdictional springboard’ enabling the Commission ‘to investigate whether
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the employer is engaged in any discriminatory practices.’ . . . So viewed, the charge is capable of
supporting an EEOC investigation into both the discrimination described in the charge itself and
into the surrounding circumstances (including a full probing of any evidence of discriminatory
practices unearthed during the course of the initial investigation)”).
From its investigation of the Thielker Charge, the EEOC learned of the Counseling
Report, which alleges that Sterling has a company-wide policy of paying women less than men
and of prohibiting employees from discussing their pay with each other. Therefore, I conclude
that the subpoena seeks information relevant to the Thielker Charge, which was learned directly
through the EEOC’s investigation of the Charge. See E.E.O.C. v. Konica Minolta Business
Solutions U.S.A., Inc., __F.3d__ , 2011 WL 1602064, *3 (7th Cir. 2011)(although the charge did
not allege that “Konica had refused to hire him, but that does not make hiring data irrelevant. The
question . . . is not whether Thompson specifically alleged discrimination in hiring, but instead is
whether information regarding Konica’s hiring practices will ‘cast light’ on Thompson’s race
discrimination complaint”); Schwan’s Home Service, 707 F.Supp.2d at 995(“Courts have
routinely authorized enforcement of administrative subpoenas that request information that
goes beyond information directly tied to the charging party’s personal experiences and
circumstances”).4
Sterling’s representation that it has no company policy prohibiting employees from
discussing their pay, which is in direct contravention to the statements in the Counseling Report,

4

Compare with E.E.O.C. v. Southern Farm Bureau Casualty Insurance Co., 2000 WL
1610617, *4 (E.D.La. 2000), aff’d, 271 F.3d 209 (5th Cir. 2001) (where the EEOC sought to expand its
investigation of a raced based charge into an investigation of gender discrimination, the court held that
the “EEOC cannot judicially enforce a subpoena seeking information irrelevant to that charge by merely
asserting that it has expanded its investigation into other matters”).

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only highlights the relevancy of the information sought in the subpoena to the EEOC’s
investigation of the Thielker Charge. Nevertheless, even without the Counseling Report,
Sterling’s nationwide policies are relevant to Ms. Thielker’s individual charge. See Schwan’s
Home Service, 707 F.Supp.2d at 995 (holding that “even if the original [non-class action] charge
were to govern the Court’s relevance inquiry, the information [related to nationwide practices] the
EEOC seeks in the . . . Subpoena would be relevant”).5
Therefore, I conclude that the EEOC has met its burden of establishing that the
information sought is relevant.

C.

Would Compliance with the Subpoena Place an Undue Burden on Sterling?
“[A] court may modify or exclude portions of a subpoena only if the employer

‘carries the difficult burden of showing that the demands are unduly burdensome or unreasonably
broad’” by demonstrating that “‘compliance would threaten the normal operation of a
respondent’s business.’” E.E.O.C. v. United Air Lines, Inc., 287 F.3d 643, 653 (7th Cir. 2002).
See E.E.O.C. v. Morgan Stanley & Co., Inc., 132 F.Supp.2d 146, 161 (S.D.N.Y. 2000) (“In
assessing the burdensomeness of a subpoena the Court must show ‘that the cost of gathering this
information is unduly burdensome in light of the company’s normal operating costs’”); E.E.O.C.
v. Pan American World Airways, 1983 WL 482, *4 (S.D.N.Y. 1983).

5

Compare with Joslin Dry Goods Co. v. E.E.O.C., 483 F.2d 178, 184 (10th Cir. 1973)(“It
was not shown that there were any hiring or firing practices and procedures applicable to all of the stores.
This being so, the decision of the district court limiting the demand of EEOC to the Downtown Denver
store is affirmed”).

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In support of this showing, Sterling asserts that compliance with the subpoena
would necessitate it having to review each file of the approximately 54,000 individual employees
it has employed in retail sales positions since January 1, 2005. Lynch Declaration [17-2], ¶¶1013. According to Sterling, this review would require “thousands of staff or temporary assistance
in hours” and “would seriously disrupt the operations of Sterling’s Human Resources
Department”. Id., ¶¶14-18.
Although Sterling has done more than simply assert in conclusory fashion that
compliance would be burdensome,6 I do not find that it has met its “difficult burden” of
establishing that compliance with the subpoena would threaten its normal business operations. It
is difficult to understand how the subpoena, which seeks information related to Sterling’s alleged
policy of prohibiting employees from discussing their pay, would impose an undue burden on
Sterling when they state that they have no such policy.
In any event, Sterling offers no concrete cost estimate associated with complying
with the subpoena, nor does it allege that compliance would disrupt any department other than
Human Resources. As argued by the EEOC ([21], p. 6 n.4), Sterling’s estimate that it would have
to review 54,000 personnel files to comply with the subpoena also appears inflated. Sterling
maintains computerized records that would allow it to determine which employees received
counseling. Lynch Declaration [17-2], ¶11. Extracting from its review those employees that have

6

Compare with E.E.O.C. v. Sunoco, Inc. (R & M), 2009 WL 197555, *6 (E.D.Pa.
2009)(respondent failed to meet its burden where it “summarily asserts that the documents it would have
to collect and produce would be ‘inordinate[ly]’ and ‘significant[ly]’ cost- and time-intensive”).

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not received counseling would reduce the number of personnel files Sterling would have to
manually review.

D.

Does the Mediation Agreement Bar the Subpoena?
Prior to the litigation commenced by the EEOC and the arbitration claimants, the

parties agreed to engage in private mediation concerning the charges brought by 19 women other
than Ms. Thielker, which resulted in a Mediation and Confidentiality Agreement (“Mediation
Agreement”) dated January 22, 2007. Thompson Declaration [3], Ex. 3. The EEOC, Sterling and
arbitration claimants (by their counsel Cohen Milstein Sellers & Toll PLLC) were parties to the
Mediation Agreement. Id. The unsuccessful mediation concluded on February 26, 2008.
EEOC’s Memorandum of Law [2], Point IV.
Under the Mediation Agreement, the parties agreed that “in the event that counsel
for Charging Parties have other clients that file charges of discrimination with the EEOC . . .
arising in whole or in part out of the same or substantially the same set of circumstances, such
Other Clients shall be considered Charging Parties for purposes of this Agreement.” Thompson
Declaration [3], Ex. 3, Preamble. The parties also agreed that “Sterling shall be under no
obligation to provide additional information or documentation relating to the Charges.” Id.,
Fourth Addendum, ¶8.
Relying on these provisions, Sterling argues that Ms. Thielker is a Charging Party
under the Mediation Agreement because she is represented by the firm representing the
arbitration claimants (although she has not opted-in to that action), and therefore it is not required

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to provide information regarding her charge. Maatman Declaration [17-1], Ex. B; Sterling’s
Opposition [17], p. 4 n. 1.
I disagree. The Mediation Agreement only limited Sterling’s obligation to provide
additional information “relating to the Charges”, not the Charging Parties. Fourth Addendum, ¶8
(emphasis added). At that time, the mediation centered on the then pending 19 charges at issue.
Therefore, the limitation in the Mediation Agreement on the EEOC’s ability to request
information from Sterling does not apply to the Thielker Charge, which was filed approximately
six months after the mediation concluded.

CONCLUSION
For these reasons, I recommend that the EEOC’s subpoena be enforced in its
entirety.
Unless otherwise ordered by Judge Arcara, any objections to this Report and
Recommendation must be filed with the clerk of this court by November 21, 2011 (applying the
time frames set forth in Rules 6(a)(1)(C), 6(d), and 72(b)(2)). Any requests for extension of this
deadline must be made to Judge Arcara. A party who “fails to object timely . . . waives any right
to further judicial review of [this] decision”. Wesolek v. Canadair Ltd., 838 F. 2d 55, 58 (2d Cir.
1988); Thomas v. Arn, 474 U.S. 140, 155 (1985).
Moreover, the district judge will ordinarily refuse to consider de novo arguments,
case law and/or evidentiary material which could have been, but were not, presented to the
magistrate judge in the first instance. Patterson-Leitch Co. v. Massachusetts Municipal Wholesale
Electric Co., 840 F. 2d 985, 990-91 (1st Cir. 1988).
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The parties are reminded that, pursuant to Rule 72(b) and (c) of this Court’s Local
Rules of Civil Procedure, written objections shall “specifically identify the portions of the
proposed findings and recommendations to which objection is made and the basis for each
objection . . . supported by legal authority”, and must include “a written statement either certifying
that the objections do not raise new legal/factual arguments, or identifying the new arguments and
explaining why they were not raised to the Magistrate Judge”. Failure to comply with these
provisions may result in the district judge’s refusal to consider the objections.
Dated: November 2, 2011
/s/ Jeremiah J. McCarthy
JEREMIAH J. MCCARTHY
United States Magistrate Judge

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