04A10032
12-12-2001
Deborah A. Ulloa, Petitioner, v. John E. Potter, Postmaster General, United States Postal Service, (Western Area), Agency.
Deborah A. Ulloa v. United States Postal Service
04A10032
December 12, 2001
.
Deborah A. Ulloa,
Petitioner,
v.
John E. Potter,
Postmaster General,
United States Postal Service,
(Western Area),
Agency.
Petition No. 04A10032
Appeal No. 01972750
Agency No. 5E-1039-91
Hearing No. 350-95-8193X
DECISION ON PETITION FOR ENFORCEMENT
On March 8, 2001, the Equal Employment Opportunity Commission (EEOC or
Commission) docketed a petition for enforcement to examine the enforcement
of an order set forth in Ulloa v. United States Postal Service, EEOC
Appeal No. 01972750 (June 22, 2000). This petition for enforcement is
accepted by the Commission pursuant to 29 C.F.R. � 1614.503. Petitioner
alleged that the agency failed to fully comply with the Commission's
order in that the agency will not pay petitioner the back pay she has
been awarded without first receiving petitioner's tax returns for the
years 1989 to 1999.
Petitioner filed a complaint in which she alleged that the agency
discriminated against her on the bases of her sex and in reprisal for
previous protected activity under Title VII when she was subjected to
sexual and sex-based harassment and retaliated against by additional
supervisors after initiating EEO activity. Petitioner appealed the
agency's final decision concerning her complaint to the Commission.
In EEOC Appeal No. 01972750, the Commission found the agency liable for
hostile work environment harassment on the basis of sex.
The order arising out of that decision specified that the agency had
to pay petitioner back pay retroactive to the date she was placed in
off-work status. The matter was assigned to a compliance Officer and
docketed as Compliance No. 06A01458 on June 26, 2000.
On February 21, 2001, petitioner submitted the instant petition for
enforcement. At issue is whether the agency can require petitioner
to provide her tax returns for the years of 1989 to 1999. Petitioner
maintains that this request is overbroad, an infringement into privileged
information, and an invasion of her husband's privacy, as she filed
joint returns for the years 1995-1999. Further, petitioner contends
that the agency has failed to utilize the financial information already
provided to compute the amount of back pay due. Petitioner has provided
the agency with her W-2s and 1099s, and has offered to supply it with
the returns for 1989-1994, the years when she did not file jointly.
This offer was rejected by the agency.
The agency states that petitioner has not met her obligation, as set
forth in the order provided in conjunction with EEOC Appeal No. 01972750,
to �cooperate in the agency's efforts to compute the amount of back pay
and benefits due and [to] provide all relevant information requested
by the agency.� The agency argues that the tax returns for all the
years specified are necessary to determine the appropriate amount of
offsets and to evaluate mitigation, and argues that such disclosure is
neither restricted nor prohibited by EEOC regulations. Further, the
agency contends that the returns are relevant for several reasons: 1)
the length of time involved in this award; 2) the fact that there are
alternative means of earning income that may not be captured in a W-2,
such as self-employment; and 3) because the returns may include such
information as identified occupation. The agency also argues that while
petitioner's attorney has declined to turn over these records, citing
them as privileged, the attorney has failed to support the contention
that tax returns are privileged information. The agency cites Gala
v. Department of Justice, EEOC Appeal No. 01960392 (June 16, 1998),
in support of its position.
Although we have previously ordered a complainant to turn over tax returns
to an agency, this was in the context of an action where the complainant
had already voluntarily turned over his state tax returns and did not
raise an objection to turning over his federal tax returns. See Barrett
v. United States Postal Service, EEOC Appeal No. 01984091 (June 24, 2001).
We have not previously compelled a complainant to produce tax returns
where such production has been objected to by complainant. Although
complainants have disclosed tax returns to agencies, such disclosure was
voluntary. See Gala v. Department of Justice, EEOC Appeal No. 01960392
(June 16, 1998). We look, therefore, to the federal courts for guidance.
Tax returns in the possession of the taxpayer are not immune to civil
discovery. St. Regis Paper Co. v. United States, 368 U.S. 208, 218-19
(1961). While some courts apply a "qualified privilege" to tax returns in
civil discovery, see Eastern Auto Distributors, Inc. v. Peugeot Motors,
96 F.R.D. 147, 148 (E.D. Va. 1982), most courts hold that, while tax
returns are not privileged, courts, as a matter of policy, should be
cautious in ordering their disclosure. S.E.C. v. Cymaticolor Corp.,
106 F.R.D. 545, 547 (S.D.N.Y. 1985); see Tillman v. Lincoln Warehouse
Corp., 1987 U.S. Dist. LEXIS 3257, No. 83-5381 (S.D.N.Y. 1987); Smith
v. Bader, 83 F.R.D. 437, 438 (S.D.N.Y. 1979); see also Eglin Federal
Credit Union v. Cantor, Fitzgerald Securities Corp., 91 F.R.D. 414,
416 (N.D. Ga. 1981); Mitsui & Co. (U.S.A.) Inc. v. Puerto Rico Water
Resources Authority, 79 F.R.D. 72, 80-81 (D.P.R. 1978). The policy
rationale for this position is based upon "a balancing of the policy of
liberal discovery against the policy of maintaining confidentiality of
tax returns." S.E.C. v. Cymaticolor Corp., 106 F.R.D. at 547 (citing
Sharp v. Coopers & Lybrand, 83 F.R.D. 343, 352 (E.D. Pa. 1979)); see
also Tillman v. Lincoln Warehouse Corp., supra. In Smith v. Bader,
83 F.R.D. at 438, described the policy favoring confidentiality as
follows: "The historic trend seems to stem in part from the private
nature of the sensitive information contained therein, and in part from
the public interest in encouraging the filing by taxpayers of complete
and accurate returns." The Ninth Circuit suggested that while tax
returns do not enjoy an absolute privilege from discovery, a public
policy against unnecessary public disclosure arises from the need,
if the tax laws are to function properly, to encourage taxpayers to
file complete and accurate returns. Premium Service Corp. v. Sperry &
Hutchinson Co., 511 F.2d 225 (9th Cir. 1975).
The Commission is inclined to follow the judicial trend to take caution
before ordering a complainant or petitioner to disclose tax documents
to an agency. To facilitate this, we adopt the two-part test utilize
by most courts:
First, [the Commission] must find that the returns are relevant to the
subject matter of the action; and second, that there is a compelling
need for the returns because the information contained therein is not
otherwise readily obtainable.
United States v. The Bonanno Organized Crime Family of La Cosa Nostra,
et al., 119 F.R.D. 625 (E.D.N.Y. 1988); S.E.C. v. Cymaticolor Corp.,
106 F.R.D. at 547; accord Tillman v. Lincoln Warehouse Corp., 1987
U.S. Dist. LEXIS 3257, No. 83-5381; Smith v. Bader, 83 F.R.D. at 438; see
Eastern Auto Distributors, Inc. v. Peugeot Motors, 96 F.R.D. at 148-49.
While the party seeking discovery of the tax returns bears the burden of
establishing relevance,<1> the party resisting disclosure should bear
the burden of establishing alternative sources for the information.
Eastern Auto Distributors, Inc. v. Peugeot Motors, supra at 149; see
S.E.C. v. Cymaticolor Corp., 106 F.R.D. at 547-48; Biliske v. American
Live Stock Insurance Co., 73 F.R.D. 124, 126 n.1 (W.D. Okla. 1977).
But see, Eglin Federal Credit Union v. Cantor, Fitzgerald Securities
Corp., 91 F.R.D. at 416-17 (burden to prove both prongs apparently on
party seeking discovery).
Applying the Cosa Nostra test, we find that the agency has demonstrated
that petitioner's financial information contained in the tax returns is
clearly relevant to the subject matter of this action. The agency has
been ordered to pay petitioner back pay for a considerable time period.
Petitioner undoubtedly had other employment during that time period to
mitigate her loss of income. In order to determine the amount petitioner
earned, and therefore what amount by which to reduce the back pay award,
the agency is entitled to know about her income during this period for
purposes of calculating back pay. Thus, we find that the first prong,
that of relevance combined with necessity, has been satisfied.
The second prong of the Cosa Nostra test shifts the burden to the
petitioner. Biliske v. American Livestock Ins. Co., 73 F.R.D. at 126.
Courts have generally held that the need to discover tax returns is
not compelling where financial information can be obtained through
deposition, affidavits or other documents within reach of the party
seeking disclosure. See, e.g., Cooper v. Hallgarten & Co., 34 F.R.D. 482,
484 (S.D.N.Y. 1964). Petitioner has established that the information
sought by the agency is readily available elsewhere. Specifically,
petitioner provided the agency with her W-2s and 1099s for the time period
in question. This gives the agency concrete amounts and dates to aid
it in evaluating petitioner's mitigation efforts and the appropriate
offset amounts. The petitioner has, therefore, satisfied her burden
under the second prong.
The agency alluded that they believe petitioner may have had some
self-employment income that would go undetected without disclosure of
the tax returns. The Commission notes that the agency could request
petitioner to execute an affidavit disclosing all sources of income
not included on the standard forms, and also what she declared as her
occupation on her tax returns. Moreover, an affidavit is not inherently
less reliable than the tax returns the agency seeks.<2> See, e.g., Blount
v. Wake Electric Membership Corp. and Stewart Champion, 162 F.R.D. 102,
106 (E.D.N.C. 1993). Further, we are hesitant to require a non-party,
namely petitioner's husband, to disclose personal information which,
although inextricably linked to petitioner's financial information
because they filed jointly, is not relevant to this action.
The information the agency seeks can be obtained through less intrusive
means. Public policy encourages maintaining the confidentiality of
tax returns. Sharp v. Coopers & Lybrand, 83 F.R.D. at 352. Therefore,
in accordance with the order below, the agency is ordered to process and
compute petitioner's back pay award from the information it presently
has together with an affidavit to be supplied by petitioner addressing
the issues of additional sources of income not included on her W-2s and
1099s, as well as her claimed occupation for the years in question.
ORDER (D0900)
Where it has not already done so, the agency is ordered to take the
following remedial action:
The agency shall provide petitioner back pay and other compensation due
her, including any reimbursement for sick, annual or other leave due her,
as well as any overtime pay and related benefits due her, retroactive to
the day petitioner was placed in off-work status, pursuant to 5 C.F.R. �
550.805. The agency shall determine the appropriate amount of back pay
(with interest, where applicable)<3> and other benefits due petitioner,
pursuant to 29 C.F.R. � 1614.501, no later than thirty (30) calendar
days after the date this decision becomes final. The petitioner shall
cooperate in the agency's efforts to compute the amount of back pay and
benefits due, and shall provide all relevant information requested by the
agency, in accordance with this decision. If there is a dispute regarding
the exact amount of back pay and/or benefits, the agency shall issue a
check to the petitioner for the undisputed amount within fifteen (15)
calendar days of the date the agency determines the amount it believes
to be due. The petitioner may petition for enforcement or clarification
of the amount in dispute. The petition for clarification or enforcement
must be filed with the Compliance Officer, at the address referenced in
the statement entitled "Implementation of the Commission's Decision."
The agency is directed to conduct a minimum of twenty-four (24) hours
of training for the managers, supervisors, Postmaster, EEO personnel,
and personnel staff, who were found to have discriminated against
petitioner by failing to take prompt and effective remedial action
concerning petitioner's allegations of sexual harassment. The agency shall
address these employees' responsibilities with respect to eliminating
discrimination in the workplace, ensuring that sexual harassment in
all its forms and retaliation do not occur, understanding the remedies
available against those who discriminate, and all other supervisory and
managerial responsibilities under equal employment opportunity law.
The agency shall provide a minimum of sixteen (16) hours of diversity
training for all employees at the General Mail Facility, Phoenix,
Arizona concerning unlawful harassment in the workplace.
The agency shall take appropriate preventative steps to ensure that
no employee is subjected to harassment under any protected basis or
retaliation for engaging in EEO activity, and to ensure that appropriate
steps are taken immediately after management is notified of any such
harassment.
The agency shall take all appropriate corrective steps to prevent the
recurrence of such discriminatory actions by and from all relevant
agency officials. Such corrective steps shall include reviewing and
revising agency policies and procedures relating to the investigation
and prevention of sexual harassment so as to provide prompt and thorough
investigation of such complaints, and appropriate and effective remedial
corrective actions in response to such complaints. The agency shall also
review the matters giving rise to the instant complaint to determine
the appropriateness of disciplinary actions against agency officials
involved and responsible. The agency shall record its basis for deciding
whether or not to take disciplinary action, submit such records to the
EEOC pursuant to paragraph six below, and maintain such records for
a period of no less than five (5) years from the date this finding of
discrimination becomes final.
The agency is further directed to submit a report of compliance, as
provided in the statement entitled "Implementation of the Commission's
Decision." The report shall include supporting documentation of the
agency's calculation of back pay and other benefits due petitioner,
including evidence that the corrective action has been implemented.
The petitioner may petition for enforcement or clarification of the
amount in dispute. The petition for clarification or enforcement must
be filed with the Compliance Officer, at the address referenced in the
statement entitled "Implementation of the Commission's Decision."
The agency is further directed to submit a report of compliance, as
provided in the statement entitled "Implementation of the Commission's
Decision." The report shall include supporting documentation of the
agency's calculation of back pay and other benefits due petitioner,
including evidence that the corrective action has been implemented.
IMPLEMENTATION OF THE COMMISSION'S DECISION (K0501)
Compliance with the Commission's corrective action is mandatory.
The agency shall submit its compliance report within thirty (30)
calendar days of the completion of all ordered corrective action. The
report shall be submitted to the Compliance Officer, Office of Federal
Operations, Equal Employment Opportunity Commission, P.O. Box 19848,
Washington, D.C. 20036. The agency's report must contain supporting
documentation, and the agency must send a copy of all submissions to the
petitioner. If the agency does not comply with the Commission's order,
the petitioner may petition the Commission for enforcement of the order.
29 C.F.R. � 1614.503(a). The petitioner also has the right to file
a civil action to enforce compliance with the Commission's order
prior to or following an administrative petition for enforcement.
See 29 C.F.R. �� 1614.407, 1614.408, and 29 C.F.R. � 1614.503(g).
Alternatively, the petitioner has the right to file a civil action on
the underlying complaint in accordance with the paragraph below entitled
"Right to File A Civil Action." 29 C.F.R. �� 1614.407 and 1614.408.
A civil action for enforcement or a civil action on the underlying
complaint is subject to the deadline stated in 42 U.S.C. 2000e-16(c)
(1994 & Supp. IV 1999). If the petitioner files a civil action, the
administrative processing of the complaint, including any petition for
enforcement, will be terminated. See 29 C.F.R. � 1614.409.
ATTORNEY'S FEES (H0900)
If complainant has been represented by an attorney (as defined by
29 C.F.R. � 1614.501(e)(1)(iii)), he/she is entitled to an award of
reasonable attorney's fees incurred in the processing of the complaint.
29 C.F.R. � 1614.501(e). The award of attorney's fees shall be paid
by the agency. The attorney shall submit a verified statement of fees
to the agency -- not to the Equal Employment Opportunity Commission,
Office of Federal Operations -- within thirty (30) calendar days of this
decision becoming final. The agency shall then process the claim for
attorney's fees in accordance with 29 C.F.R. � 1614.501.
PETITIONER'S RIGHT TO FILE A CIVIL ACTION (R0900)
This is a decision requiring the agency to continue its administrative
processing of your complaint. However, if you wish to file a civil
action, you have the right to file such action in an appropriate United
States District Court within ninety (90) calendar days from the date
that you receive this decision. In the alternative, you may file a
civil action after one hundred and eighty (180) calendar days of the date
you filed your complaint with the agency, or filed your appeal with the
Commission. If you file a civil action, you must name as the defendant in
the complaint the person who is the official agency head or department
head, identifying that person by his or her full name and official title.
Failure to do so may result in the dismissal of your case in court.
"Agency" or "department" means the national organization, and not the
local office, facility or department in which you work. Filing a civil
action will terminate the administrative processing of your complaint.
RIGHT TO REQUEST COUNSEL (Z1199)
If you decide to file a civil action, and if you do not have or cannot
afford the services of an attorney, you may request that the Court appoint
an attorney to represent you and that the Court permit you to file the
action without payment of fees, costs, or other security. See Title VII
of the Civil Rights Act of 1964, as amended, 42 U.S.C. � 2000e et seq.;
the Rehabilitation Act of 1973, as amended, 29 U.S.C. �� 791, 794(c).
The grant or denial of the request is within the sole discretion of
the Court. Filing a request for an attorney does not extend your time
in which to file a civil action. Both the request and the civil action
must be filed within the time limits as stated in the paragraph above
("Right to File A Civil Action").
FOR THE COMMISSION:
______________________________
Carlton M. Hadden, Director
Office of Federal Operations
December 12, 2001
__________________
Date
1 The Commission notes that courts have merged the burden of proving
relevancy with that of proving a compelling need when applying the Cosa
Nostra test. The Commission will adopt this position, inasmuch as it
is not enough to merely prove general relevance. The party seeking to
compel disclosure must also demonstrate necessity.
2 Just as signing a false affidavit attesting to income or a lack thereof
in this action would be a violation of the False Claims Act and federal
perjury statutes, filing a false tax return is a violation of several
sections of the Internal Revenue Code.
3 The Commission notes that although the discriminatory action predates
the passage of the Civil Rights Act of 1991, we have previously held
that an individual is entitled to interest on the back pay which accrued
subsequent to November 21, 1991, the effective day of the Act. See Malek
v. Department of Health and Human Services, EEOC Appeal No. 04980013
(August 13, 1998) at footnote 4; Ramsay v. Department of the Navy,
EEOC Request No. 05940658 (July 27, 1995).