EEOC v. ABM Janitorial Services, Inc., No. 1:2007cv01428 - Document 193 (E.D. Cal. 2010)
Court Description: ORDER granting in part and denying in part 155 Motion for Protective Order signed by Magistrate Judge Jennifer L. Thurston on 3/3/2010. (Kusamura, W)
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EEOC v. ABM Janitorial Services, Inc. Doc. 193 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, 12 Plaintiff, 13 14 ERIKA MORALES and ANONYMOUS PLAINTIFF’S ONE THROUGH EIGHT 15 Plaintiff-Intervenors 16 v. 17 ABM INDUSTRIES INCORPORATED, et al. 18 Defendants. 19 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 1:07-cv-01428 LJO JLT ORDER GRANTING IN PART AND DENYING IN PART THE MOTION FOR PROTECTIVE ORDER [Doc. 155] 20 Before the Court is a “Motion for Protective Order” brought by the defendants (referred 21 collectively here as “ABM”) against plaintiff, the EEOC. (Doc. 155 ) ABM has identified six disputed 22 categories. As to these categories, the parties cannot agree if documents should be disclosed or, if 23 disclosed, whether they should be maintained in confidence. 24 The Court held oral argument on this motion on March 2, 2010. After considering the moving 25 and opposing papers and the argument of counsel, for the reasons set forth below, the Court GRANTS 26 IN PART and DENIES IN PART the motion for the protective order. 27 28 BACKGROUND In this litigation, the EEOC alleges that the defendants subjected certain employees to a pattern 1 Dockets.Justia.com 1 or practice of sexual harassment, quid pro quo sexual harassment and a hostile work environment at its 2 work sites. (Doc. 118) The EEOC asserts also that ABM failed to exercise reasonable care to prevent 3 the sexually harassing and failed to promptly correct it. (Id.) The EEOC has taken the position that each 4 of the three ABM entities are joint employers of the alleged harassers and have sought discovery toward 5 this end. Likewise, at issue here, is the EEOC’s attempt to discover information related to the worth of 6 the defendants for purposes of supporting the punitive damage claim. 7 8 9 DISCUSSION A. The Court has the authority to forbid disclosure, to set the terms for disclosure and to require the parties maintain the confidentiality of disclosed information 10 Federal Rules of Civil Procedure 26(c) provides, 11 The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: 12 13 14 15 16 17 18 19 (A) forbidding the disclosure or discovery; (B) specifying terms, including time and place, for the disclosure or discovery; (C) prescribing a discovery method other than the one selected by the party seeking discovery; (D) forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters; (E) designating the persons who may be present while the discovery is conducted; (F) requiring that a deposition be sealed and opened only on court order; (G) requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way; and (H) requiring that the parties simultaneously file specified documents or information in sealed envelopes, to be opened as the court directs. 20 The Rule allows “extensive control” over the discovery process by the Court and allows the Court to 21 make “‘any order which justice requires to protect a party or person from annoyance, embarrassment, 22 oppression, or undue burden or expense’ (emphasis added). Thus, as Wright and Miller note, ‘a court 23 may be as inventive as the necessities of a particular case require in order to achieve the benign purposes 24 of the rule.’” United States v. CBS, Inc., 666 F.2d 364, 369 (9th Cir. 1982). A protective order is one 25 such method of safeguarding information that otherwise would be subject to the broad reach of 26 discovery. Id. at 368-369. 27 28 2 1 In their joint statement, the parties outline six categories of documents at issue.1 They cannot 2 agree if the documents should be disclosed or, if they should, whether they should be maintained as 3 confidential records by the parties. 4 1. 5 ABM seeks an order prohibiting the disclosure of its tax returns filed since 2001 and “auditor 6 work papers.”2 ABM argues that its tax returns should not be produced absent a compelling need. 7 Without addressing this argument, the EEOC argues that the documents are relevant to the claim for 8 punitive damages. (Doc 181 at 23.) As such, the EEOC seems to take the position that because the 9 relevance of the documents has been established, this ends the discussion. To the contrary, this is the 10 Tax Returns and “auditor work papers” starting point. 11 Tax returns are not absolutely privileged. Premium Service Corp. v. Sperry & Hutchinson Co., 12 511 F.2d 225, 229 (9th Cir. Cal. 1975). However, Courts are loathe to require their production based 13 upon “a public policy against unnecessary public disclosure arises from the need, if the tax laws are to 14 function properly, to encourage taxpayers to file complete and accurate returns.” Id. To balance the 15 competing interests of allowing liberal discovery and the public policy maintaining the confidentiality 16 of tax returns, courts generally apply a two-pronged test. First, the Court must determine whether the tax 17 returns are relevant to the litigation. Second, the Court must find that there is a compelling need for 18 production of the tax returns “because the information sought is not otherwise available.” Aliotti v. The 19 Vessel Senora, 217 F.R.D. 496, 497-498 (N.D. Cal. 2003). 20 In a similar situation, in EEOC v. Cal. Psychiatric Transitions, 258 F.R.D. 391, 393-395 (E.D. 21 CA 2009), the EEOC sought extensive financial documents, including tax returns, from the defendant 22 to prepare it for its punitive damages claims. The Court evaluated the request and found that financial 23 documents were relevant to the issue but that the types of documents requested were “excessive” and 24 25 26 1 The EEOC identifies a seventh “catchall” category but, because the moving party does not raise this category as one that for which a protective order should issue, the Court does not address it here. 2 27 28 Neither party explains exactly what these documents are but they agree that they are financial documents that bear on relative worth of the defendants. Presumably, “auditor work papers,” are the notes, reports and recommendations of the auditor related to the ABM ’s “books” when it performed the audit. The Court does not consider that ABM’s “audited” financial statements are a part of “auditor work papers.” 3 1 limited production to “balance sheets, statements of income, and statements of cash flow.” Id. at 395. 2 As to the auditor work papers, the parties agree that these are financial documents related to the 3 operation of ABM’s business. Although there is no federal common law privilege akin to the right of 4 privacy, “‘[f]ederal courts ordinarily recognize a constitutionally-based right of privacy that can be raised 5 in response to discovery requests.’” Keith H. v. Long Beach Unified School Dist., 228 F.R.D. 652, 657 6 (C.D. Cal. 2005) (citations omitted); Johnson v. Thompson, 971 F.2d 1487, 1497 (10th Cir. 1992), cert. 7 denied, 507 U.S. 910, 113 S. Ct. 1255, 122 L. Ed. 2d 654 (1993). “Resolution of a privacy objection . 8 . . requires a balancing of the need for the information sought against the privacy right asserted.” Keith 9 H., 228 F.R.D. at 657; Johnson, 971 F.2d at 1497. 10 The EEOC does not explain how the “auditor work papers” documents bear on the issue of 11 punitive damages. Presumably, the result of the auditor’s efforts was the creation of audited financial 12 documents. In the Court’s view, it is the audited financial documents that are prepared according to 13 generally accepted accounting principles, not the work papers of the auditors compiled during the audit, 14 that would tend to yield information that is relevant to the issue of punitive damages. 15 Because the Court is convinced that information related to the issue of punitive damages is 16 available in other 2009/2010 financial documents, such as audited balance sheets, statements of income, 17 and statements of cash flow, the Court finds that there is no compelling need for the production of the 18 tax returns. Therefore, the Court GRANTS the protective order related to the production of ABM’s tax 19 returns and the auditor work papers and orders that these documents will not be produced. 20 2. Board Minutes 21 In Brown Bag Software v. Symantec Corp., 960 F.2d 1465 (9th Cir. 1992), the Court held that 22 to determine whether a protective order for trade secrets is appropriate, courts must balance conflicting 23 interests. Although discovering parties are entitled to all information “reasonably calculated to lead to 24 the discovery of admissible evidence,” responding parties are entitled to protection from “undue burden” 25 in discovery, including protection from misuse of trade secrets by competitors. Id. at 1470. 26 The EEOC seeks the Board Minutes to support their contention that the defendants are joint 27 employers of those involved in the alleged sexual harassment. ABM asserts that the Board Minutes 28 contain highly sensitive and confidential information “not known by competitors, most employees or 4 1 the general public.” 2 The cases cited by ABM are of little assistance. In Gordon, Wolf, Cowen Co., v, Indep. Halvah 3 & Candies, Inc., 9 F.R.D. 700, 702 (S.D.NY 1949), the plaintiff sought the board minutes to address the 4 issue related to whether the defendant set an unreasonably low price on its sales of halvah. However, 5 the court determined that the other financial documents which demonstrated the profits on the sale of 6 havlah more directly provided the information sought. Id. At most, the board minutes might reveal only 7 if the board members themselves believed that the price was reasonable which was too attenuated to the 8 issue to justify the disclosure. Id. 9 Likewise, in Disney v. Walt Disney Co., 2005 Del. Ch. LEXIS 94 at 12-16 (Del. Ch. June 20, 10 2005), at issue were ten documents which were made up of letters, e-mails an excerpt of a report, a 11 memo and the minutes from a special meeting of a committee of the Board of Directors. The documents 12 all related to executive compensation in some manner. Id. at 5-10. The records were being requested 13 under Delaware’s Corporation Code which set forth how a shareholder or director could inspect the 14 “books and records” of the corporation and what documents could be reviewed. Id. at 1-3. The Court 15 was not asked to decide whether the documents should be produced to the parties but, instead, whether 16 one party could make the information known to the public through the use of the process outlined by the 17 Delaware code. Id. In fact, the moving party, had been a member of the Board of Directors and already 18 had lawful possession of the operative documents, unlike here. Id. at 12-13. In ordering the moving 19 party to maintain the confidentiality of the documents, the Court determined that the communications 20 were private, were developed with the intention that they remain private and related to deliberations of 21 the members of the Board of Directors. Id. at 11. 22 Unlike in Gordon, Wolf, here there is a greater potential that the Board Minutes may lead to 23 admissible evidence, specifically regarding whether the various defendants are joint employers. 24 Therefore, ABM is ordered to produce any Board Minutes from 2003 (the year before Jose Vasquez was 25 hired) through the present time that bear on whether the defendants are joint employers of the 26 actors/parties at issue. ABM is permitted to redact the Minutes so that only responsive material is 27 reflected on the produced document. 28 To the extent that the motion seeks a protective order prohibiting disclosure of the documents 5 1 as described by this order, the motion is DENIED. To the extent that the motion seeks to maintain the 2 confidentiality of the material after it is produced, the Court GRANTS the motion. 3 3. 4 ABM asserts that it has already produced the names of all supervisors within the direct chain of 5 command of the employees involved in this litigation. ABM claims that requiring it to produce the 6 names of all officers and managers of all three corporations would reveal the identities of hundreds of 7 current and former employees, given the request is for this information beginning in 2000, without 8 regard for their connection to the current litigation. For its part, the EEOC claims that it needs the names 9 of all of the officers and managers of all three corporations because this bears on the issue of joint 10 Identities of Officers and Managers employment. 11 ABM asserts that no additional information should be required to be disclosed and cites Earley 12 v. Champion Int’l Corp., 907 F.2d 1077, 1084-1085 (11th Cir. 1990) for this proposition. In Earley, the 13 plaintiffs complained that they were not allowed to conduct nationwide discovery regarding the names 14 of each of the company’s employees and information about the company’s various departments. The 15 plaintiff sought this information as a means of supporting their claim that their discharge, in connection 16 with a “reduction in force” (RIF), was motivated by age discrimination. Id. at 1079-1080, 1084-1085. 17 In holding that the trial court did not err in refusing the discovery, the court held, 18 19 20 21 22 23 24 25 26 27 28 "In the context of investigating an individual complaint the most natural focus is upon the source of the complained of discrimination -- the employing unit or work unit." Marshall v. Westinghouse Elec. Corp., 576 F.2d 588, 592 (5th Cir. 1978) (denial of division-wide discovery request which encompassed some 7,500 employees in thirty-two districts and three manufacturing plants); accord EEOC v. Packard Elec. Div., General Motors Corp., 569 F.2d 315, 318-19 (5th Cir. 1978). While Champion's RIF was initiated at the national level, each plant was given considerable autonomy in drawing up its own RIF master plan. The decision to terminate Earley and Noe in the RIF -- as opposed to other employees -- was made at the local level. Where, as here, the employment decisions were made locally, discovery on intent may be limited to the employing unit. See, e.g., Mack v. Great Atlantic and Pacific Tea Co., Inc., 871 F.2d 179, 187 (1st Cir. 1989). Plaintiffs' motion in the district court to compel discovery was conclusory in its statement of reasons for much broader discovery; and the district court was -- we think understandably -- unpersuaded. A vague possibility that loose and sweeping discovery might turn up something suggesting that the structuring of the RIF was discriminatorily motivated does not show particularized need and likely relevance that would require moving discovery beyond the natural focus of the inquiry. Joslin Dry Goods Co. v. EEOC, 483 F.2d 178, 183-84 (10th Cir. 1973). Denial of a motion to compel nationwide discovery will be reversed only if it constitutes an abuse of discretion, Donovan v. Mosher Steel Co., Div. of Trinity Indus., 791 F.2d 1535, 1537 (11th Cir. 1986), and we 6 1 cannot say the district court abused its discretion. 2 Notably, however, the plaintiffs were given nationwide discovery on other issues such as the availability 3 of other positions at the company, the efforts of the company to locate jobs within the organization for 4 those who were downsized and full discovery related to their local business unit. Id. at 1084, n.6. 5 ABM relies also on James v. Newspaper Agency Corp., 591 F.2d 579, 582 (10th Cir. 1979) in 6 which the court determined that a pretrial order limiting discovery to information related to the 7 department in which the plaintiff worked, rather than the entire company. The court held, 8 She filed a motion to compel answers to interrogatories and the production of certain company documents. The trial court granted this motion, although it did limit the discovery to the accounting/credit department and confined it to the four-year period of time from 1969 to 1973. James apparently sought records for an eight-year period, and from the advertising department as well as the accounting/credit department. The trial court held a hearing and by its ruling attempted to grant James her discovery rights and at the same time not cause the defendant to expend an inordinate amount of time producing material that was not really relevant to the issues in the case. James was a long-time employee in the accounting/credit department and the gravamen of her complaint was that when the assistant credit manager retired she failed to be promoted to his position. Viewed in context, the trial court's ruling regarding discovery played an insignificant role in this entire proceeding. 9 10 11 12 13 14 15 Id. 16 Unlike here, in neither of the cases cited was there a claim of joint employment. However, as 17 is the norm, these cases make clear that discovery in employment cases should be allowed but limited 18 to addressing the issues raised in the complaint. Thus, it appears that the EEOC is not entitled to 19 information about every manager and officer employed by each defendant. However, the EEOC is 20 entitled to the information about the managers and officers who act or have acted for more than one of 21 the defendants at any one given time. Therefore, the Court orders ABM to produce responsive 22 documents that identify the officers or managers who acted for more than one defendant entity at the 23 same time. ABM is ordered to produce documents dating from 2003 (the year before Jose Vasquez was 24 employed by ABM) to the present time. ABM is permitted to redact any nonresponsive information 25 contained on the records produced. To the extent that ABM requests that the information produced 26 remain confidential, the motion for protective order is GRANTED. 27 4. Asset purchase agreements, contracts with customers, leases and licenses 28 ABM has agreed to produce responsive documents but seeks an order redacting pricing 7 1 information and requiring that the information remain confidential. ABM notes that these documents 2 reflect such confidential information as pricing strategies, customer information, revenue targets, and 3 employee compensation and assert that they identify resources that ABM considers to be “critical” to 4 its ongoing operation and the operation of its customers’s businesses. In response, the EEOC concludes, 5 without explanation, that ABM has failed to make a particularized showing that would justify 6 maintaining the confidentiality of the information. 7 It is well-settled that the Court has the authority to shield proprietary information related to the 8 ongoing operations of a business from public review. Federal Rules of Civil Procedure 26(c)(1)(G) 9 anticipates that the Court may require that “a trade secret or other confidential research, development, 10 or commercial information not be revealed or be revealed only in a specified way.” In Carpenter v. 11 United States, 484 U.S. 19, 26 (U.S. 1987), the Supreme Court held, 12 16 Confidential business information has long been recognized as property. See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1001-1004 (1984); Dirks v. SEC, 463 U.S. 646, 653, n. 10 (1983); Board of Trade of Chicago v. Christie Grain & Stock Co., 198 U.S. 236, 250-251 (1905); cf. 5 U. S. C. § 552(b)(4). "Confidential information acquired or compiled by a corporation in the course and conduct of its business is a species of property to which the corporation has the exclusive right and benefit, and which a court of equity will protect through the injunctive process or other appropriate remedy." 3 W. Fletcher, Cyclopedia of Law of Private Corporations § 857.1, p. 260 (rev. ed. 1986) (footnote omitted). 17 As noted above, the Court must balance the parties’ interests. Brown Bag Software v. Symantec Corp., 18 supra, 960 F.2d at 1470. In doing so, the Court agrees with ABM’s suggested approach which is to 19 provide the EEOC the documents but prohibit their public disclosure. Therefore, ABM is ordered to 20 produce responsive documents dating from 2003 (the year before Jose Vasquez was employed by ABM) 21 to the present time subject to a protective order that requires the materials to be held confidential and 22 used only in connection with the instant litigation. ABM is authorized to redact any non-responsive 23 information and pricing information contained on the documents. Therefore, the Court GRANTS the 24 motion for protective order related to these documents. 13 14 15 25 26 5. Documents related to parent holding company’s involvement in creating, modifying or eliminating jobs at ABM Janitorial Northern California 27 The joint statement filed by the parties, clarifies that the EEOC seeks documents from only from 28 ABM Industries demonstrating its involvement in creating, modifying or eliminating jobs only at ABM 8 1 Janitorial Northern California. It appears clear that the EEOC is seeking information that would support 2 its joint employer claim. ABM clarified in its oral argument, that it does not, necessarily, object to 3 disclosure of these documents but requests that any documents produced be maintained as confidential. 4 For the reasons stated in headnote 4 above, ABM is ordered to produce responsive documents 5 dating from 2003 (the year before Jose Vasquez was employed by ABM) to the present time subject to 6 a protective order that requires the materials to be held confidential and used only in connection with 7 the instant litigation. ABM is authorized to redact any non-responsive information contained on the 8 documents. Therefore, the Court GRANTS the motion for protective order related to these documents. 9 10 6. The “implementation” of the Service Agreement, Code of Conduct and Employee Handbook 11 At oral argument, the EEOC clarified that it sought records related to the “implementation” of 12 the Service Agreement, Code of Conduct and Employee Handbook. The Court gleaned EEOC’s 13 meaning to be that it seeks documents that described the operation of the Service Agreement, 14 clarifications as to policies set forth in the Code of Conduct and Employee Handbook, any records 15 explaining how the Code of Conduct and Employee Handbook would be provided to the employee and 16 how the policies contained in Code and Handbook would enforced. 17 The parties clarified also that the Service Agreement is in the nature of a contract between the 18 parent company and its holdings which outlined the services provided by the parent. Once again, ABM 19 does not object to disclosure of documents related to the operation of the Service Agreement but requests 20 that the parties keep the records confidential. Therefore, after weighing the interests of the parties, the 21 Court orders ABM to produce responsive documents dated from 2003 through the present. Based on 22 the authorities cited above, the Court agrees that the documents constitute commercial information that 23 should be protected from dissemination. Therefore, the Court GRANTS the motion for protective order 24 related to these documents. 25 Also, the Court orders ABM to disclose any documents from 2003 through the present, related 26 to the “implementation” of the Code of Conduct and Employee Handbook (as the Court has outlined 27 above). ABM is permitted to redact any information contained on these documents that are not 28 responsive. However, the Court cannot determine any basis for maintaining the confidentiality of these 9 1 documents. ABM has already produced the Code and the Handbook without a protective order. Thus, 2 the Court cannot find that the documents clarifying these policies should be subject to greater 3 confidentiality. Thus, the Court DENIES the motion for protective order related to these documents. 4 CONCLUSION 5 6 7 For the reasons stated above, the Court GRANTS the motion IN PART and DENIES the motion IN PART and ORDERS as follows: 1. 8 9 The motion for a protective order prohibiting disclosure of tax records and auditor work papers is GRANTED; 2. ABM is ordered to produce any Board Minutes from 2003 through the present time that 10 bear on whether the defendants are joint employers of the actors/parties at issue. ABM 11 is permitted to redact the Minutes so that only responsive material is reflected on any 12 produced document. The motion for a protective order prohibiting disclosure of the 13 Board Minutes outside of the litigation, is GRANTED. 14 3. ABM is ordered to produce documents that identify the officers or managers who held 15 positions with more than one defendant entity at the same time. ABM is ordered to 16 produce documents dating from 2003 to the present time. ABM is permitted to redact 17 any nonresponsive information contained on the records produced. The motion for a 18 protective order prohibiting disclosure of the responsive documents outside of the 19 litigation, is GRANTED. 20 4. ABM is ordered to produce asset purchase agreements, contracts with customers, leases 21 and licenses dating from 2003 to the present time. ABM is authorized to redact any non- 22 responsive information and pricing information contained on the documents. The motion 23 for a protective order prohibiting disclosure of the responsive documents outside of the 24 litigation, is GRANTED. 25 5. ABM is ordered to produce documents related to the parent holding company’s 26 involvement in creating, modifying or eliminating jobs at ABM Janitorial Northern 27 California from 2003 to the present time. ABM is authorized to redact any non- 28 responsive information contained on the documents. The motion for a protective order 10 1 prohibiting disclosure of the responsive documents outside of the litigation, is 2 GRANTED. 3 6. ABM is ordered to produce documents from 2003 to the present time that describes the 4 operation of the Service Agreement, any written clarification of the policies set forth in 5 the Code of Conduct and Employee Handbook, any records explaining how the Code of 6 Conduct and Employee Handbook would be provided to the employee and any records 7 explaining how the policies contained in Code and Handbook would enforced. As to any 8 documents related to the Service Agreement, the motion for a protective order 9 prohibiting disclosure of the responsive documents outside of the litigation, is 10 GRANTED. As to records related to the Code of Conduct and Employee Handbook, the 11 motion for a protective order prohibiting disclosure of the responsive documents outside 12 of the litigation, is DENIED. 13 7. The parties are ordered to submit a stipulated protective order that will maintain the 14 confidentiality of the information contained in the records to be produced. The stipulated 15 protective order must be filed no later than March 12, 2010. If, after conferring in good 16 faith, the parties cannot agree on the content of the protective order, each party is ordered 17 to file its own proposed protective order by the close of business March 12, 2010. No 18 brief explaining the party’s position shall be filed. 19 20 8. ABM is ordered to make the disclosures required by this order within five business days after the Court issues the protective order. 21 22 IT IS SO ORDERED. 23 Dated: March 3, 2010 9j7khi /s/ Jennifer L. Thurston UNITED STATES MAGISTRATE JUDGE 24 25 26 27 28 11
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