Summary
assessing fees and costs pursuant to FRCP 37 in action by NLRB seeking obedience to investigative subpoenas
Summary of this case from Lineback v. Cherry Creek Elec., Inc.Opinion
Case No. 4:04-MC-8.
March 4, 2005
MEMORANDUM AND ORDER
This matter comes before the Court on the Application by the National Labor Relations Board ("the Board") for a Summary Order Requiring Obedience to Investigative Subpoenas (Doc. 1). The Court also considers Respondents' Joint Motion to Quash Subpoenas Ad Testificandum (Doc. 42 with memorandum at Doc. 43), the Board's Response (Doc. 44), and Respondents' reply (Doc.45).
In its application, the Board seeks an order enforcing two investigative subpoenas issued to respondents Deborah Coughlin ("Coughlin") (subpoena number A-666917) and Don Carmody ("Carmody") (subpoena number A-666918), respectively. Coughlin is the senior director of human resources of Marion Hospital Corporation d/b/a Heartland Regional Medical Center ("Heartland"), and Carmody is Heartland's labor counsel. The Board issued the subpoenas purportedly to investigate whether Heartland was complying with an August 27, 2001, Board order that resulted from unfair labor practice proceedings. The Board served the subpoenas on March 10, 2004, directing Coughlin and Carmody to appear for depositions on March 25, 2004, at Heartland's facility. While Coughlin and Carmody initially agreed to appear, they announced two days before the depositions were to begin that they would not attend. Neither respondent attempted to quash the deposition subpoena through administrative procedures. On March 30, 2004, the Board applied to this Court for an order requiring Coughlin and Carmody to obey the Board's subpoenas pursuant to 29 U.S.C. § 161(2). Coughlin and Carmody ask the Court to quash the subpoenas on the grounds that enforcing them would unduly interfere with ongoing labor negotiations and with the attorney-client privilege and the work product doctrine. The Board argues, first, that Coughlin and Carmody have waived challenges to the subpoenas and, second, that the subpoenas were proper, in good faith, and must therefore be enforced.
I. Waiver
As a preliminary matter, the Board argues that Coughlin and Carmody have waived any objections to the subpoenas in this forum by failing to challenge them through administrative proceedings. For their part, Coughlin and Carmody argue that exhaustion of administrative remedies does not deprive this Court of jurisdiction and, in any case, there are no established administrative procedures that Coughlin and Carmody could have followed to challenge the subpoenas at issue in this case.
A. Jurisdiction
As for the jurisdictional issue, the Court agrees that Congress has not clearly set forth that the failure to exhaust administrative remedies is a jurisdictional prerequisite to challenging an administrative subpoena in court. See I.A.M. Nat'l Pension Fund Ben. Plan C v. Stockton TRI Indus., 727 F.2d 1204, 1208 (D.C. Cir. 1984) ("Only when Congress states in clear, unequivocal terms that the judiciary is barred from hearing an action until the administrative agency has come to a decision . . . has the Supreme Court held that exhaustion is a jurisdictional prerequisite."). However, exhaustion of remedies may be a jurisprudential doctrine that could estop a subpoenaed person from raising arguments that were not raised in an administrative proceeding to revoke a subpoena. See id.; see, e.g., Maurice v. NLRB, 691 F.2d 182, 183 (4th Cir. 1982) ("Under a long-established legal principle, a party must exhaust administrative remedies before seeking judicial relief."); 29 U.S.C. § 160(e) ("No objection that has not been urged before the Board, its member, agent, or agency, shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances."). Accordingly, the Court finds that it has jurisdiction over this matter, but that it may find that the respondents are estopped from raising arguments in this forum that they did not raise in the available administrative proceedings.
B. Available Administrative Proceedings
As for the respondents' second argument, that there were no administrative proceedings available to them, the Court begins by consulting the statutes and regulations that establish the administrative proceedings to challenge administrative subpoenas. The Board's authority to issue subpoenas for the prevention of unfair labor practices is set forth in 29 U.S.C. § 161(1) (§ 11 of the National Labor Relations Act ("NLRA")) and 29 C.F.R. § 102.31(a). Section 11 provides,
Within five days after the service of a subp[o]ena on any person requiring the production of any evidence in his possession or under his control, such person may petition the Board to revoke and the Board shall revoke, such subp[o]ena if in its opinion the evidence whose production is required does not relate to any matter under investigation, or any matter in question in such proceedings, or if in its opinion such subp[o]ena does not describe with sufficient particularity the evidence whose production is required.29 U.S.C. § 161(a). Federal labor regulations further provide,
Any person served with a subpoena, whether ad testificandum or duces tecum, if he or she does not intend to comply with the subpoena, shall, within 5 days after the date of service of the subpoena, petition in writing to revoke the subpoena. . . . Such petition to revoke, if made prior to the hearing, shall be filed with the regional director and the regional director shall refer the petition to the administrative law judge or the Board for ruling. Petitions to revoke subpoenas filed during the hearing shall be filed with the administrative law judge. . . . The administrative law judge or the Board, as the case may be, shall revoke the subpoena if in its opinion the evidence whose production is required does not relate to any matter under investigation or in question in the proceedings or the subpoena does not describe with sufficient particularity the evidence whose production is required, or if for any other reason sufficient in law the subpoena is otherwise invalid.29 C.F.R. § 102.31(b). The subpoenas at issue in this case refer to 29 C.F.R. § 102.31(b) on their faces and warn that the failure to file a timely petition to revoke "may result in the loss of any ability to raise such objections in court." Subpoenas, Application, Ex. 6 7.
Coughlin and Carmody first argue that the aforementioned regulation regarding objecting to a subpoena does not apply to them. They argue that the regulation on its face provides only for subpoenas issued prior to or during a hearing, but not for subpoenas issued after a hearing in connection with a compliance investigation. The Board, on the other hand, notes that 29 C.F.R. part 102, Subpart B (of which § 102.31(b) is a part) states in a caption that it sets forth procedures to be used under § 10 of the NLRA, which provides for post-hearing compliance investigations.
The Court finds that 29 C.F.R. § 102.31(b) applies to provide an administrative avenue to revoke the subpoena in this case. It clearly states that "[a]ny person served with a subpoena . . . [who] does not intend to comply with the subpoena, shall . . . petition in writing to revoke the subpoena." (emphasis added). While it is true that § 102.31(b) does not state with which Board representative or officer a petition to revoke a post-hearing subpoena should be filed, neither does it explicitly foreclose the possibility of such a petition. In light of the language mandating the filing of a petition to revoke if a party does not intend to comply with a subpoena, the Court will not find that the absence of further specific direction negates that requirement. The respondents' argument might be sufficient to counter an argument that they were untimely because, for example, they filed with the administrative law judge who heard the case instead of another Board official, but it is not sufficient to excuse their failure to file any petition to revoke whatsoever.
Coughlin and Carmody next argue that they did not have sufficient notice of the revocation proceedings available to them. They cite EEOC v. Lutheran Social Servs., 186 F.3d 959 (D.C. Cir. 1999), a Title VII employment discrimination case, in support of their position. In that case, the EEOC sought via subpoena a report prepared by an attorney for Lutheran Social Services in preparation for litigation. Id. at 960. Lutheran Social Services objected informally that the report was covered by the attorney-client privilege and work product doctrine, but it did not file an administrative petition to revoke the subpoena. Id. at 961. Consequently, when Lutheran Social Services did not produce the report, the EEOC filed an enforcement action in the district court, arguing that Lutheran Social Services had waived its privilege objections by failing to file a petition to revoke with the EEOC. Id. The Court of Appeals held that Lutheran Social Services had not waived its privilege objections. Id. at 964. Several factors were critical to its holding. First, the subpoena had not cited any statute or regulation requiring, as opposed to allowing, a petition to revoke, and had only cited law allowing a petition on grounds other than attorney-client privilege or work product doctrine. Id. Second, the Court of Appeals noted that an EEOC representative had acted toward Lutheran Social Services in a manner inconsistent with waiver. Id. at 965.
The Board argues, and the Court agrees, that Lutheran Social Services can be distinguished in several important ways from the case at bar. In this case, the subpoena on its face referred to § 102.31(b), which clearly requires anyone not intending to comply with a subpoena to file a petition to revoke. The regulation is mandatory and does not limit its application to only those who object on grounds of relevance or particularity. Indeed, it specifically allows the Board to revoke a subpoena "if for any other reason sufficient in law the subpoena is otherwise invalid." 29 C.F.R. § 102.31(b).
Furthermore, in this case, there was no ambiguity about whether the Board acted inconsistently with the respondents' waiver of their right to object or any similar estoppel. Coughlin and Carmody fault the Board's counsel for misrepresenting the correct administrative procedures, but they do not ever claim that she was complacent or lulled them into believing that the Board would not argue waiver or estoppel. They can also have no colorable argument that they relied on the Board attorney's misstatements because by the time she had made those statements, the time for filing a petition to revoke had already passed.
In sum, the Court does not find Lutheran Social Services, which acknowledged that it was limited to the particular circumstances of that case, persuasive to justify not requiring exhaustion of administrative remedies in this case. The limited exception to this holding is that the Court does not find that Coughlin or Carmody has waived objections to specific questions regarding attorney-client privilege or work product doctrine. As Lutheran Social Services noted, Courts possess a special expertise regarding attorney-client privilege and the work product doctrine that the Board does not. Lutheran Social Servs., 186 F.3d at 965. Such objections may be raised during the depositions.
For the foregoing reasons, the Court finds that, with respect to all objections except for the attorney-client privilege and the work product doctrine, the respondents have failed to exhaust their administrative remedies and cannot now make those objections before this Court.
II. Lawful Purpose
Alternatively, the Court finds that the respondents' objections have no merit. The Court notes at the outset that it plays a limited role in administrative subpoena enforcement. If the administrative subpoena is not "plainly incompetent or irrelevant to any lawful purpose," the Court must enforce it. Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509 (1943). The subpoena must simply relate to an investigation within the agency's authority, seek reasonably relevant information, and not be too indefinite. Commodity Futures Trading Comm'n v. Tohkeim, 153 F.3d 474, 477 (7th Cir. 1998) (citing EEOC v. Quad/Graphics, Inc., 63 F.3d 642, 644-45 (7th Cir. 1995)).
Coughlin and Carmody argue that the Court should quash the subpoenas because requiring them to appear for deposition will interfere with Heartland's bargaining rights in its ongoing labor negotiations under the NLRA and will infringe on the attorney-client privilege and the work product doctrine.
In their first point, the respondents argue that the Board issued the subpoenas in bad fath, for the improper purpose of "surreptitiously coercing Heartland's bargaining representatives to reveal the reasoning behind their negotiating positions relating to issues remaining on the bargaining table." Resp't M. Quash at 7. The Board, they claim, is improperly exceeding its role as objective fact-finder and is attempting to improperly influence labor negotiations. In support of this argument, the respondents cite New York News, Inc. v. New York, 745 F. Supp. 165 (S.D.N.Y. 1990). In that case, the plaintiff sought to enjoin a state agency's board of inquiry from investigating the plaintiff's labor negotiation dispute with ten labor unions while it was in those very negotiations. Id. at 166. The state had requested the investigation in an effort to identify the causes and circumstances of the dispute and the parties' respective positions in order to assist in the dispute's voluntary resolution. Id. at 166. In other words, the express purpose of the board of inquiry was to have an impact on the labor negotiations. See id. at 167. The court ultimately granted the injunction, finding that the board of inquiry's interference would irreparably harm the parties' ability to freely participate in the ongoing labor negotiations. Id. at 168-70. The court further found that the NLRA preempted the authority for formation of the board of inquiry. Id. at 171.
The Court must reject Coughlin and Carmody's proposition that a Board compliance investigation, by its very nature, impinges on the exercise of collective bargaining rights of those being investigated. They have provided no support for such a broad — and clearly erroneous — finding. If it is true that the Board does not have evidence that Heartland is not complying with its prior order, that is no obstacle to further investigation that may yield some such evidence. Collective bargaining negotiations cannot insulate parties — whether compliant or non-compliant with Board orders — specifically from efforts to investigate those orders or generally from Board oversight of compliance with the NLRA.
New York News does not call for any different result. In that case, the board of inquiry intended to investigate and influence labor negotiations in an area in which state law was preempted by the NLRA. In this case, the Board is investigating not the negotiations themselves in an attempt to influence them, but Heartland's compliance with an order not directly related to the ongoing negotiations. The Board is not seeking to investigate Heartland's bargaining positions or strategies but the factual basis for determining if Heartland has complied with a past order. Furthermore, unlike the board of inquiry in New York News, the Board is acting in an area over which it clearly has jurisdiction and has the authority to investigate surface or bad faith bargaining if warranted. To the extent that the respondents are concerned with being asked about privileged information during their depositions, they are free to object to specific questions when they are asked. The mere appearance of Coughlin or Carmody at a deposition does not, by itself, violate any privilege.
In sum, Coughlin and Carmody have not demonstrated that the Board's subpoenas were issued for any unlawful purpose.
III. Fees
The appropriate standards for assessing fees and costs in this case is found in Federal Rule of Civil Procedure 37(a)(4)(A), which provides, in pertinent part, that if a motion to compel discovery is granted,
the court shall, after affording an opportunity to be heard, require the party or deponent whose conduct necessitated the motion or the party or attorney advising such conduct or both of them to pay to the moving party the reasonable expenses incurred in making the motion, including attorney's fees, unless the court finds that the motion was filed without the movant's first making a good faith effort to obtain the disclosure or discovery without court action, or that the opposing party's nondisclosure, response, or objection was substantially justified, or that other circumstances make an award of expenses unjust.
The Court finds that the Board made good faith efforts to obtain Coughlin's and Carmody's attendance at their depositions prior to filing the pending application both through written correspondence and telephone calls. The Court further finds that the respondents' position in this matter was not substantially justified for the reasons those arguments were rejected in this order. The respondents have not identified any other circumstances that would make an award of expenses unjust. Accordingly, the Court will order the respondents to pay the Board's reasonable expenses incurred in making this motion.
IV. Conclusion
For the foregoing reasons, the Court GRANTS the Board's application (Doc. 1), DENIES the respondents' motion to quash (Doc. 42), and ORDERS that respondents Coughlin and Carmody shall fully comply, respectively, with subpoenas A-666917 and A-666918, by appearing for depositions at the Melvin Price Federal Building, United States Courthouse, 750 Missouri Avenue, East St. Louis, Illinois, or any other place within the district that is agreeable to all parties involved, on dates to be designated by the Board with at least two weeks advance notice to the respondents. Specific arrangements for use of space at the courthouse must be arranged with the Clerk of Court. The Court has chosen the location for this deposition for the reasons stated in its order of April 1, 2004 (Doc. 5).
The Court FURTHER ORDERS that respondents Coughlin and Carmody shall reimburse the Board for the attorneys' fees and costs incurred by the Board in connection with this subpoena enforcement proceeding. Upon failure of the parties to agree upon the amount of such reimbursement, the Board may make further application to the Court for an order fixing such amount. Upon failure of respondents Coughlin or Carmody to comply with this order, the Court may impose contempt sanctions pursuant to further motion by the Board and may take such other and further actions and grant such other relief as may be just, reasonable, and proper to assure compliance with this Court's order.