EEOC Information Requests

In the spring of 1999, the Venetian Casino Resort (Venetian) conducted a mass hiring process to staff a new casino and resort in Las Vegas. In its wake, at least 11 people filed employment discrimination complaints with the EEOC against Venetian, alleging discrimination based on age, race and color in violation of the Age Discrimination in Employment Act (ADEA) and Title VII of the Civil Rights Act of 1964. The EEOC opened files and began investigating these charges pursuant to customary administrative procedures.

As part of routine information requests, the EEOC requested employee data and statistics from Venetian. Venetian failed to produce the requested documents. The EEOC then issued an administrative subpoena for the information. Venetian filed objections to the subpoena, using the EEOC's administrative process. The EEOC denied those objections, and Venetian was forced to file the instant action against the EEOC for declaratory and injunctive relief in December 2000.

In February 2002, Venetian settled all claims that fell under Title VII, but not the claims of age discrimination. As a result, the EEOC's age discrimination files for Venetian remained open. Venetian continued to refuse to turn over requested data. Venetian challenged the EEOC's disclosure policy set forth in Section 83 of the EEOC Compliance Manual, which permits the Agency to disclose information from closed Title VII and ADA case files without prior notice to the employer and without regard to whether the employer deemed the data to be confidential.

Venetian asserted a broad based challenge to the EEOC's policy regarding the disclosure of information deemed confidential and/or proprietary, arguing that it was violative of Title VII, the Trade Secrets Act, the Freedom of Information Act, Executive Order No. 12,600, the Copyright Act and the Administrative Procedure Act. Venetian argued that because the EEOC does not require employers that submit information to be given pre-disclosure notice, their current policy constitutes a 'back door' by which charging parties, their counsel, and incidental third parties may obtain access to case files containing confidential and proprietary information, as well as trade secrets.

On Jan. 12, 2004, the District Court of the District of Columbia granted the EEOC's motion to dismiss on the ground that the issue was not ripe for review. On May 27, 2005, the circuit court reversed, holding that 'the question of whether [the] EEOC's disclosure policy is lawful presents a live and focused dispute emanating from Agency action that is both final and consequential to Venetian.' On Nov. 10, 2005, the court issued an order requiring both parties to file cross-motions for summary judgment. The sole issue before the court was whether an EEOC disclosure policy or practice, whether written or not, that allows the Agency to release documents that a submitting party has identified as containing trade secrets and/or confidential material without first notifying the submitting party, is lawful.

Court's Decision and Analysis

In its decision, the court addressed each of the grounds upon which Venetian claimed the disclosure policy of the EEOC violates various federal laws. The court disagreed with Venetian's contention on each of the grounds, holding that the EEOC disclosure policy and practice does not violate federal law, even if it allows disclosure of trade secrets or other confidential information to third parties without prior notice to the employer. The court addressed each of Venetian's claims as follows:

Title VII

Title VII gives the EEOC two formal means of obtaining information when it investigates a charge. First, the EEOC may examine and copy any evidence in the possession of the employer being investigated. Second, it may subpoena evidence and documents. The Act, however, limits the ability of the EEOC to make public disclosures of information gathered during its investigations, directing that '[c]harges shall not be made public by the Commission.' The decision in Venetian references a 1981 case that explicitly upheld the EEOC's practice of making limited disclosures of confidential information to charging parties in their own Title VII charge files. EEOC v. Associated Dry Goods, Corp., 449 U.S. 590 (1981).

In upholding the EEOC's disclosure policy, the Supreme Court in Asso-ciated Dry Goods concluded that the EEOC's interpretation of its founding statute is consistent with the coordinated scheme of administrative and judicial enforcement which Congress created to enforce Title VII. First, limited disclosure to the parties can speed the Commission's required investigation in that the EEOC is more likely to obtain information if it can present the parties with specific facts for them to corroborate or rebut. Second, limited disclosure enhances the Commission's ability to carry out its statutory responsibility to resolve charges through informal conciliation and negotiation. A party is far more likely to settle when it has ample information to be able to assess the strengths and weaknesses of their opponent's case as well as its own.

Finally, the EEOC's disclosure policy supports Title VII's scheme of enforcement that includes private rights of action. As the Associated Dry Goods court noted: 'Congress considered the charging party a 'private attorney general' ' [who] could hardly play that role without access to information needed to assess the feasibility of litigation.' In the instant case, the court did not find the EEOC's disclosure policy to be violative of Title VII.

The Trade Secrets Act and Freedom of Information Act

The Trade Secrets Act is a criminal statute that regulates conduct of individual officers of the government. The Supreme Court has acknowledged that the Act does not afford a private right of action to enjoin disclosure of information in violation of the statute. Chrysler Corp. v. Brown, 441 U.S. 281 (1979). Accordingly, the Venetian court rejected the argument that a party submitting confidential information to the EEOC has a private right of action under the Trade Secrets Act. This omission is significant because the D.C. Circuit, in which Venetian was decided, 'is considerably more reluctant to engraft numerous and significant qualifications onto an apparently clear, unambiguous text where the provision is criminal.' CAN Fin. Corp. v. Donovan, 830 F.2d 1132 (D.C.Cir. 1976). Therefore, in this case at hand, the Trade Secrets Act alone does not mandate any particular EEOC procedure.

Executive Order 12,600

Executive Order 12,600 provides a requirement that federal agencies create notice procedures to parties submitting records that contain confidential information as to requests for their disclosure. The court in Venetian easily dismissed this plank of the plaintiff's argument by finding that the EEOC complied with these requirements by publishing its predisclosure notification procedures in Section 83 of the EEOC Compliance Manual.

The Copyright Act and Administrative Procedure Act

On this contention, the court in Venetian simply held that while the Copyright Act proscribes infringement of copyrighted material, nothing in the Act requires the government to treat copyrighted material as confidential. Further, the Act provides an express remedy for alleged copyright violations ' a private right of action for infringement. Nothing in the Act requires the establishment of particular internal agency procedures. As such, the Copyright Act does not provide a legal basis to challenge the EEOC's disclosure policy.

The Administrative Procedure Act

In addition, Venetian challenged the EEOC's disclosure policy as arbitrary, capricious, and a violation of the Administrative Procedure Act. In this case, the court stated that the EEOC's policy cannot be said to be 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law,' such as to warrant judicial intervention pursuant to the Act. Section 83 of the EEOC's Compliance Manual does not violate any applicable statute and, as noted previously by the Supreme Court has been held to be consistent with administrative enforcement of Title VII.

Practical Advice

This decision represents a clear warning to employers ' documents turned over to agencies during the investigation phase of an administrative charge, even if marked as confidential, are subject to disclosure to third parties. A thoughtless response to an EEOC information request by in-house counsel or human resources could lead to disclosure of confidential and proprietary information, trade secrets and other highly sensitive corporate data. As such, it is critical that companies responding to the EEOC do not ignore the importance of careful response and production of documents to the Commission at all stages of the administrative process.

Care must be taken in analyzing the information to be provided, with consideration of whether a response can be made without producing otherwise confidential or proprietary information. Be knowledgeable and understand your rights to challenge and/or limit informal and formal information requests. Talk to legal counsel about protective measures such as submitting motions to quash a subpoena or for a protective order. At the very least, take the time to review documents carefully and to redact sensitive company information.

Mark Blondman and Brooke Iley are partners in the Employment, Benefits and Labor practice at Blank Rome LLP in Washington, DC. Blondman may be reached at [email protected] or 202-772-5800; Iley can be contacted at 202-772-5816 or [email protected].

Understandably, companies have become more sensitive about protecting confidential, proprietary business information from disclosure to competitors and others outside the company. A recent ruling by the United States District Court for the District of Columbia, Venetian Casino Report v. EEOC, 2006 WL 2806568 (D.D. Cir. 2006), demonstrates that such disclosures may occur in the most unexpected ways.

The court's holding in Venetian makes it clear that the Equal Employment Opportunity Com-mission (EEOC) can release sensitive, confidential or proprietary company documents submitted in response to a Charge of Discrimination without first providing notice to the employer that submitted the information. Further, the EEOC is empowered to release these documents not only to the charging party but also to third parties. Employers should be aware of this potential source of disclosure and consider steps to limit inadvertent misuse of company information.

Facts and Procedure

In the spring of 1999, the Venetian Casino Resort (Venetian) conducted a mass hiring process to staff a new casino and resort in Las Vegas. In its wake, at least 11 people filed employment discrimination complaints with the EEOC against Venetian, alleging discrimination based on age, race and color in violation of the Age Discrimination in Employment Act (ADEA) and Title VII of the Civil Rights Act of 1964. The EEOC opened files and began investigating these charges pursuant to customary administrative procedures.

As part of routine information requests, the EEOC requested employee data and statistics from Venetian. Venetian failed to produce the requested documents. The EEOC then issued an administrative subpoena for the information. Venetian filed objections to the subpoena, using the EEOC's administrative process. The EEOC denied those objections, and Venetian was forced to file the instant action against the EEOC for declaratory and injunctive relief in December 2000.

In February 2002, Venetian settled all claims that fell under Title VII, but not the claims of age discrimination. As a result, the EEOC's age discrimination files for Venetian remained open. Venetian continued to refuse to turn over requested data. Venetian challenged the EEOC's disclosure policy set forth in Section 83 of the EEOC Compliance Manual, which permits the Agency to disclose information from closed Title VII and ADA case files without prior notice to the employer and without regard to whether the employer deemed the data to be confidential.

Venetian asserted a broad based challenge to the EEOC's policy regarding the disclosure of information deemed confidential and/or proprietary, arguing that it was violative of Title VII, the Trade Secrets Act, the Freedom of Information Act, Executive Order No. 12,600, the Copyright Act and the Administrative Procedure Act. Venetian argued that because the EEOC does not require employers that submit information to be given pre-disclosure notice, their current policy constitutes a 'back door' by which charging parties, their counsel, and incidental third parties may obtain access to case files containing confidential and proprietary information, as well as trade secrets.

On Jan. 12, 2004, the District Court of the District of Columbia granted the EEOC's motion to dismiss on the ground that the issue was not ripe for review. On May 27, 2005, the circuit court reversed, holding that 'the question of whether [the] EEOC's disclosure policy is lawful presents a live and focused dispute emanating from Agency action that is both final and consequential to Venetian.' On Nov. 10, 2005, the court issued an order requiring both parties to file cross-motions for summary judgment. The sole issue before the court was whether an EEOC disclosure policy or practice, whether written or not, that allows the Agency to release documents that a submitting party has identified as containing trade secrets and/or confidential material without first notifying the submitting party, is lawful.

Court's Decision and Analysis

In its decision, the court addressed each of the grounds upon which Venetian claimed the disclosure policy of the EEOC violates various federal laws. The court disagreed with Venetian's contention on each of the grounds, holding that the EEOC disclosure policy and practice does not violate federal law, even if it allows disclosure of trade secrets or other confidential information to third parties without prior notice to the employer. The court addressed each of Venetian's claims as follows:

Title VII

Title VII gives the EEOC two formal means of obtaining information when it investigates a charge. First, the EEOC may examine and copy any evidence in the possession of the employer being investigated. Second, it may subpoena evidence and documents. The Act, however, limits the ability of the EEOC to make public disclosures of information gathered during its investigations, directing that '[c]harges shall not be made public by the Commission.' The decision in Venetian references a 1981 case that explicitly upheld the EEOC's practice of making limited disclosures of confidential information to charging parties in their own Title VII charge files. EEOC v. Associated Dry Goods, Corp. , 449 U.S. 590 (1981).

In upholding the EEOC's disclosure policy, the Supreme Court in Asso-ciated Dry Goods concluded that the EEOC's interpretation of its founding statute is consistent with the coordinated scheme of administrative and judicial enforcement which Congress created to enforce Title VII. First, limited disclosure to the parties can speed the Commission's required investigation in that the EEOC is more likely to obtain information if it can present the parties with specific facts for them to corroborate or rebut. Second, limited disclosure enhances the Commission's ability to carry out its statutory responsibility to resolve charges through informal conciliation and negotiation. A party is far more likely to settle when it has ample information to be able to assess the strengths and weaknesses of their opponent's case as well as its own.

Finally, the EEOC's disclosure policy supports Title VII's scheme of enforcement that includes private rights of action. As the Associated Dry Goods court noted: 'Congress considered the charging party a 'private attorney general' ' [who] could hardly play that role without access to information needed to assess the feasibility of litigation.' In the instant case, the court did not find the EEOC's disclosure policy to be violative of Title VII.

The Trade Secrets Act and Freedom of Information Act

The Trade Secrets Act is a criminal statute that regulates conduct of individual officers of the government. The Supreme Court has acknowledged that the Act does not afford a private right of action to enjoin disclosure of information in violation of the statute. Chrysler Corp. v. Brown , 441 U.S. 281 (1979). Accordingly, the Venetian court rejected the argument that a party submitting confidential information to the EEOC has a private right of action under the Trade Secrets Act. This omission is significant because the D.C. Circuit, in which Venetian was decided, 'is considerably more reluctant to engraft numerous and significant qualifications onto an apparently clear, unambiguous text where the provision is criminal.' CAN Fin. Corp. v. Donovan , 830 F.2d 1132 (D.C.Cir. 1976). Therefore, in this case at hand, the Trade Secrets Act alone does not mandate any particular EEOC procedure.

Executive Order 12,600

Executive Order 12,600 provides a requirement that federal agencies create notice procedures to parties submitting records that contain confidential information as to requests for their disclosure. The court in Venetian easily dismissed this plank of the plaintiff's argument by finding that the EEOC complied with these requirements by publishing its predisclosure notification procedures in Section 83 of the EEOC Compliance Manual.

The Copyright Act and Administrative Procedure Act

On this contention, the court in Venetian simply held that while the Copyright Act proscribes infringement of copyrighted material, nothing in the Act requires the government to treat copyrighted material as confidential. Further, the Act provides an express remedy for alleged copyright violations ' a private right of action for infringement. Nothing in the Act requires the establishment of particular internal agency procedures. As such, the Copyright Act does not provide a legal basis to challenge the EEOC's disclosure policy.

The Administrative Procedure Act

In addition, Venetian challenged the EEOC's disclosure policy as arbitrary, capricious, and a violation of the Administrative Procedure Act. In this case, the court stated that the EEOC's policy cannot be said to be 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law,' such as to warrant judicial intervention pursuant to the Act. Section 83 of the EEOC's Compliance Manual does not violate any applicable statute and, as noted previously by the Supreme Court has been held to be consistent with administrative enforcement of Title VII.

Practical Advice

This decision represents a clear warning to employers ' documents turned over to agencies during the investigation phase of an administrative charge, even if marked as confidential, are subject to disclosure to third parties. A thoughtless response to an EEOC information request by in-house counsel or human resources could lead to disclosure of confidential and proprietary information, trade secrets and other highly sensitive corporate data. As such, it is critical that companies responding to the EEOC do not ignore the importance of careful response and production of documents to the Commission at all stages of the administrative process.

Care must be taken in analyzing the information to be provided, with consideration of whether a response can be made without producing otherwise confidential or proprietary information. Be knowledgeable and understand your rights to challenge and/or limit informal and formal information requests. Talk to legal counsel about protective measures such as submitting motions to quash a subpoena or for a protective order. At the very least, take the time to review documents carefully and to redact sensitive company information.

Mark Blondman and Brooke Iley are partners in the Employment, Benefits and Labor practice at Blank Rome LLP in Washington, DC. Blondman may be reached at [email protected] or 202-772-5800; Iley can be contacted at 202-772-5816 or [email protected].