______________________________ No. 11-2834 ______________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ______________________________ EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Applicant-Appellant, v. KRONOS INCORPORATED, Respondent-Appellee. ____________________________________________________ On Appeal from the United States District Court for Western District of Pennsylvania ____________________________________________________ REPLY BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION ____________________________________________________ P. DAVID LOPEZ General Counsel LORRAINE C. DAVIS Acting Associate General Counsel CORBETT L. ANDERSON Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M Street, N.E., 5th Floor Washington, DC 20507 (202) 663-4579 corbett.anderson@eeoc.gov TABLE OF CONTENTS TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . iii INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A. The district court had no discretion on remand from Kronos I to remove or otherwise narrow the subpoena’s demand for “all” documents and data constituting or relating to validity studies or evidence . . . . . . . . . . . . . . . . . . . . . . .4 1. The restrictions on access to validation studies and validation evidence are contrary to this Court’s ruling in Kronos I. . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2. The district court’s order limiting the EEOC’s access to validation studies and evidence to that which Kronos “relied upon in creating or implementing” the assessment tests for Kroger contravenes this Court’s ruling in Kronos I . . 9 B. Because a confidentiality order is unnecessary, the district court lacked inherent power or good cause to impose one . . . . 11 C. Several provisions in the district court’s confidentiality order patently conflict with the EEOC’s statutory and regulatory authority and case law. . . . . . . . . . . . . . . . . . . . . 21 D. Kronos waived or forfeited its argument of undue burden or costs in Kronos I but now seeks a free pass to shift its business costs to taxpayers. . . . . . . . . . . . . . . . . . .30 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36-37 TABLE OF AUTHORITIES Cases AT&T v. FCC, 582 F.3d 490 (3d Cir. 2009). . . . . . . . . . . . . . . . 22 Beazer East, Inc. v. Mead Corp., 412 F.3d 429 (3d Cir. 2005). . . . . . 31 Beazer East, Inc. v. Mead Corp., 525 F.3d 255 (3d Cir. 2008). . . . . . 33 Brenner v. Local 514, United Bhd. of Carpenters & Joiners of Am., 927 F.2d 1283 (3d Cir. 1991). . . . . . . . . . . . . . . . . . 30 Chrysler v. Schleisinger, 611 F.2d 439 (3d Cir. 1979). . . . . . . .23, 24 Degen v. United States, 517 U.S. 820 (1996). . . . . . . . . . . . . . 12 EEOC v. Ala. Dep’t of Youth Servs., 2006 WL 1766785 (M.D. Ala., June 26, 2006). . . . . . . . . . 14 EEOC v. Aon Consulting, Inc., 149 F. Supp. 601 (S.D. Ind. 2001). . . . 14 EEOC v. Associated Dry Goods, 449 U.S. 590 (1981). . . . . .18, 19, 20, 27 EEOC v. Bashas’, Inc., 2011 WL 6098788 (D. Ariz., Dec. 8, 2011). . . . 14 EEOC v. C&P Tel. Co., 813 F. Supp. 874 (D. D.C. 1993). . . . . . . . . .14 EEOC v. City of Milwaukee, 54 F. Supp. 2d 885 (E.D. Wis. 1999). . . . . 15 EEOC v. County of Hennepin, 623 F. Supp. 29 (D. Minn. 1985). . . . . . 15 EEOC v. Kronos, Inc., 620 F.3d 287 (3d Cir. 2010). . . . . 1, 4, 9, 17, 21 EEOC v. Morgan Stanley & Co., Inc., 132 F. Supp. 2d 146 (S.D.N.Y. 2000). . . . . . . . . . . . . . 15 EEOC v. Shell Oil Co., 466 U.S. 54 (1984). . . . . . . . . . . . . . . . 6 EEOC v. Univ. of Pa., 850 F.2d 969 (3d Cir. 1988). . . . . . . . . . 10 Eichorn v. AT&T Corp., 484 F.3d 644 (3d Cir. 2007). . . . . . . . . . 32 Exxon v. FTC, 588 F.2d 895 (3d Cir. 1979). . . . . . . . . . . . . . 23 FCC v. Schreiber, 381 U.S. 279 (1965). . . . . . . . . . . . . . . .12, 23 First American Corp. v. Price Waterhouse LLP, 184 F.R.D. 234 (S.D.N.Y. 1998). . . . . . . . . . . . . . . . 32 Glenmede Trust Co. v. Thompson, 56 F.3d 476 (3d Cir. 1995). . . . 16, 18 Lanning v. SEPTA, 183 F.3d 478 (3d Cir. 1999). . . . . . . . . . . . . . 7 Milner v. Dep’t of Navy, 131 S. Ct. 1259 (2011). . . . . . . . . . . . 17 NLRB v. Frazier, 966 F.2d 812 (3d Cir. 1992). . . . . . . . . . . . . . 25 Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994). . . . . . 16 United States v. Friedman, 532 F.2d 928 (3d Cir. 1976). . . . . . . . . 33 Univ. of Pa. v. EEOC, 493 U.S. 182 (1990). . . . . . . . . . . . . . . .13 Statutes 18 U.S.C. § 1905. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 42 U.S.C. § 2000e-8(e). . . . . . . . . . . . . . . . . . . . . . . . 20 42 U.S.C. 12112(b)(6). . . . . . . . . . . . . . . . . . . . . . . . 7, 8 42 U.S.C. 2000e-2(k)(1)(A)(i). . . . . . . . . . . . . . . . . . . . . . 7 Other Authorities Attorney General Holder’s FOIA Guidelines. . . . . . . . . . . . . . . .19 EEOC Compliance Manual. . . . . . . . . . . . . . . . . . . . . 11, 28, 29 EEOC FOIA Reference Guide. . . . . . . . . . . . . . . . . . 11, 17, 29 Rules Fed. R. App. P. 32. . . . . . . . . . . . . . . . . . . . . . . . . . 36 LAR 28.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 L.A.R. 31.1(c). . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 37 Regulations 29 C.F.R. § 1610.19. . . . . . . . . . . . . . . . . . . . . . 12, 21, 29 29 C.F.R. Part 1607. . . . . . . . . . . . . . . . . . . . . . . . . . 8 INTRODUCTION The Equal Employment Opportunity Commission’s (“EEOC” or “Commission”) opening brief made several arguments urging reversal of the district court’s post-remand orders. First, the Commission argued that the district court committed legal error by revisiting issues this Court decided in EEOC v. Kronos, Inc., 620 F.3d 287 (3d Cir. 2010) (“Kronos I”) and by narrowing the scope of the validity studies and evidence required by EEOC’s subpoena in a manner inconsistent with Kronos I and the relevance standard applied therein. EEOC Opening Br. 28-33. The Commission also challenged the district court’s confidentiality order, arguing that the court abused its discretion given that anything Kronos produces in response to EEOC’s subpoena would be covered by statutory, regulatory, policy, and stipulated confidentiality protections, thus rendering any further court order unnecessary. EEOC Opening Br. 33-40. The Commission further argued that several of the specific confidentiality provisions imposed by the district court conflict with the Freedom of Information Act (“FOIA”) and/or the Commission’s independent statutory authority to conduct investigations, reflecting the district court’s failure to adhere to this Court’s admonition in Kronos I to justify each specific confidentiality term it chose to include and to respect the strong presumption against imposing terms conflicting with FOIA. EEOC Opening Br. 41-50. Finally, the Commission argued that the district court abused its discretion in ordering EEOC to pay half of Kronos’s estimated $75,000 cost of compliance with the subpoena, both due to Kronos’s waiver or forfeiture of its argument and for substantive reasons. EEOC Opening Br. 50-56. Kronos’s response brief largely skirts the Commission’s arguments and supporting legal authorities, instead urging this Court to affirm the district court’s orders below based on a host of flawed rationales. For example, Kronos continues to press the meritless proposition that the relevance of validity evidence is tied to a particular statutory basis of discrimination. Kronos Br. 23-27. Kronos also argues that the district court’s language limiting production of the validity evidence to what Kronos “relied upon in creating or implementing the tests for Kroger” does not condition production of such evidence on the specificity of Kronos’s services to Kroger. Kronos Br. 27-28 (emphasis added). Regarding confidentiality, Kronos contends the district court’s order is needed but does not identify any gap in confidentiality protection and all but ignores controlling Supreme Court precedent holding that courts may not exercise inherent power except if, and only to the extent, doing so is necessary. Kronos Br. 29 n.17, 30-45. Kronos similarly avoids any meaningful discussion of Supreme Court and Third Circuit precedent holding that courts must give government agencies the initial opportunity to review subpoenaed documents to determine how confidentiality protections apply and what, if any, additional protections are needed. Kronos Br. 45. And Kronos offers little in rebuttal to EEOC’s argument that the district court erred in preventing EEOC from using subpoenaed material in connection with any investigation to which it is relevant and in requiring it to pre-clear its investigative activities with the court. Kronos Br. 47. Kronos’s arguments in support of the district court order that EEOC pay half of Kronos’s costs in complying with the subpoena are similarly lacking. Kronos concedes that it failed to raise or develop an argument for cost-shifting at any stage of the litigation leading to this Court’s decision in Kronos I (Kronos Br. 53) but essentially urges this Court to ignore that fact. Substantively, Kronos cites this Court’s standard for requiring the government to reimburse a third-party administrative subpoena recipient but then proceeds to ignore that standard altogether. Kronos Br. 48-52. ARGUMENT A. The district court had no discretion on remand from Kronos I to remove or otherwise narrow the subpoena’s demand for “all” documents and data constituting or relating to validity studies or evidence. This Court in Kronos I upheld EEOC’s subpoena paragraph requesting Kronos to produce “any and all documents and data constituting or related to validation studies or validation evidence pertaining to Unicru and/or Kronos assessment tests purchased by The Kroger Company, including but not limited to such studies or evidence as they relate to the use of the tests as personnel selection or screening instruments.” Kronos I, 620 F.3d at 294. In so holding, this Court rejected the district court’s previous rewrite of this paragraph restricting the production of validity materials to those related “specifically and only” to Kroger and agreed with EEOC that materials related to validation studies are relevant “even if such materials are not specific to Kroger’s use of the test.” Id. at 295, 297. On remand, the district court persisted in narrowing this paragraph. First the court added, at Kronos’s request, the restriction that the production of documents related to validity studies “is limited to information relating to disabilities, persons with disabilities, or adverse impact upon persons with disabilities.” I-JA-Tab 3 at 43 ¶1. See also I-JA-Tab 3 at 44 ¶3 (same limitation in paragraph 3). The court also again interpreted the paragraph not to require production of validity materials pertaining to companies other than Kroger. I-JA- Tab 2 at 30, 33, 34. Rejecting the Commission’s suggestion that any concern that the subpoena would elicit race data or information identifying other Kronos customers could be alleviated by redaction, II-JA-Tab 17 at 161-62 ¶1, the court held that documents related to validity studies and evidence need only be provided “if such studies or evidence were relied upon in creating or implementing the tests for Kroger.” I-JA-Tab 4 at 48 ¶1. The Commission’s opening brief argued that the district court erred because the limitations imposed in paragraph 1 of the subpoena – that validity evidence need not be provided unless related to disability discrimination and relied upon in creating or implementing the tests for Kroger – are inconsistent with the letter and spirit of Kronos I and this Court’s acknowledgment and reaffirmation of the broad relevance standard articulated in EEOC v. Shell Oil Co., 466 U.S. 54 (1984). EEOC Opening Br. 28-33. Kronos contends just the opposite. Kronos maintains the district court was free to limit paragraph 1 in this manner because, it argues, the limitations “further[] progress in the long-stalled EEOC investigation” and “address questions left unanswered” in Kronos I. Kronos Br. 22-23. Kronos’s assertions are simply incorrect. 1. The restrictions on access to validation studies and validation evidence are contrary to this Court’s ruling in Kronos I. By limiting Kronos’s production of validity materials to those relating to disabilities, persons with disabilities, or adverse impact upon persons with disabilities, the district court effectively relieved Kronos from having to produce any validity information at all, as Kronos says it has no validation studies with respect to adverse impact on persons with disabilities. EEOC Opening Br. 33 (citing II- JA-Tab 14 at 148 ¶4). The district court similarly erred in restricting access to validation evidence on the ground that EEOC’s subpoena paragraph 1 seeks validity studies and evidence “interwoven” with racial disparate impact. I-JA-Tab 2 at 31. As the Commission argued in its opening brief, “[t]he concept of validity relates not to a particular discriminatory basis such as disability, race, or sex, but to whether a selection device is ‘job related for the position in question and consistent with business necessity.’ 42 U.S.C. 2000e-2(k)(1)(A)(i) (Title VII); 42 U.S.C. 12112(b)(6) (ADA).” EEOC Opening Br. 32. In other words, “validation studies measure the selection device’s capacity to enable the employer to predict job performance; such studies do not measure whether the selection device discriminates. See generally Lanning v. SEPTA, 183 F.3d 478, 485-94 (3d Cir. 1999) (discussing validity and job-related/business necessity standard).” Id. at 32-33. Kronos I did not leave unanswered whether Kronos must produce any and all documents related to validation studies and validation evidence. First, this Court’s determination in Kronos I declining to enforce the subpoena’s request for information related to race discrimination was specifically directed to paragraph 4’s requests for documents discussing, analyzing, or measuring potential adverse impact on the basis of race, not to paragraph 1’s request for documents related to validity evidence. EEOC Opening Br. 31-32. And although Kronos again contends that validity evidence is irrelevant to the Commission’s ADA investigation because the Uniform Guidelines on Employee Selection Procedures (UGESP), 29 C.F.R. Part 1607, do not apply to the ADA, Kronos Br. 24-25, 27, this contention was raised in the litigation leading to Kronos I. The Commission pointed out to this Court that “even though UGESP does not apply directly to the ADA, the ADA requires that if a test screens out or tends to screen out an individual with a disability or a class of individuals with a disability, it must be shown to be job related for the position(s) in question and consistent with business necessity. 42 U.S.C. § 12112(b)(6).” Appeal No. 09-3219, EEOC Opening Br. 23 n.6. See also Appeal No. 09-3219, EEOC Reply Br. 13-14 (“Kronos’s assertion that the UGESP does not apply to the ADA, which the EEOC itself noted, simply misses the point.”). The UGESP point was considered by this Court in Kronos I and this Court nonetheless ordered Kronos to produce all documents Kronos possesses related to the validity of the tests used by Kroger. In arguing otherwise, Kronos, like the district court, contradicts this Court’s ruling in Kronos I. 2. The district court’s order limiting the EEOC’s access to validation studies and evidence to that which Kronos “relied upon in creating or implementing” the assessment tests for Kroger contravenes this Court’s ruling in Kronos I. This Court explicitly rejected limiting the production of validity information to that specifically and only performed for Kroger. EEOC Opening Br. 29-31. This Court enforced without modification paragraph 1 of the subpoena which is carefully worded to require that the validity information to be produced depends not on its relationship to Kronos’s services for any particular client but on its relationship to the Kronos assessment tests that Kroger uses. Kronos I, 620 F.3d at 294. The reason for this, as the Commission explained in its opening brief, and which Kronos does not dispute, is that the tests at issue were designed and validated for use with respect to various customer service jobs at many employers. EEOC Opening Br. 30. The evidence relevant to the validity of the tests thus is not limited to any particular employer either. Kronos inexplicably argues that the restrictions placed by the district court broaden the scope of production of EEOC’s subpoena. Kronos Br. 27. But, in reality, the district court’s order clearly permits Kronos to produce a narrower subset of documents or, worse, could permit Kronos not to produce any documents at all related to validation, as Kronos might not have “relied upon” such documents to “create” or “implement” the tests for Kroger. Rather, Kronos may have just sold Kroger use of the tests and related administering, scoring, and recordkeeping services. While the district court expressed concern that the Commission is simply trying to use the subpoena to target other Kronos clients, that is simply not the case. Indeed, the Commission proposed redaction. II-JA-Tab17 at 161-62 ¶1. Redaction alleviates the district court’s concern without artificially narrowing the scope of relevant information produced. Cf. EEOC v. Univ. of Pa., 850 F.2d 969, 982 (3d Cir. 1988) (holding confidential peer review materials required to be produced but district court could order redactions in a manner that lessens privacy concern). B. Because a confidentiality order is unnecessary, the district court lacked inherent power or good cause to impose one. Pursuant to statute, regulation, policy, and stipulation in this case, during the investigation all documents produced by Kronos pursuant to the subpoena would be protected from disclosure to anyone except EEOC personnel and outside experts working on EEOC’s behalf (with their executed agreements not to disclose outside EEOC). See II-JA-Tab 12 at 134-35 ¶¶4-5. After EEOC’s investigation closes, disclosure could be made only pursuant to a FOIA request by Sandy or Kroger in conjunction with actual or potential litigation.<1> The heightened procedural protections embodied in 29 C.F.R. § 1610.19 for information Kronos has designated in good faith as confidential commercial information covered by FOIA exemption 4 would apply, as would the Trade Secrets Act, 18 U.S.C. § 1905. EEOC Opening Br. 34-40. These confidentiality protections make a court-imposed confidentiality order unnecessary, and thus the district court had no inherent power to impose a confidentiality order in this case because “‘a court’s inherent power is limited by the necessity giving rise to its exercise.’” Id. at 34 (quoting Degen v. United States, 517 U.S. 820, 829 (1996)). The Commission further argued that this Court should not affirm the district court’s exercise of such power based on Kronos’s unsubstantiated or inflated fears that EEOC and its staff “cannot or should not be trusted to maintain confidentiality without a court order.” Id. Such an argument “‘runs contrary to the presumption to which administrative agencies are entitled – that they will act properly and according to law.’” Id. (quoting FCC v. Schreiber, 381 U.S. 279, 296 (1965)). Moreover, the Commission pointed out that reversing the district court’s confidentiality order as unnecessary would be consistent with the Supreme Court’s rationale in declining to recognize a peer-review privilege against complying with an EEOC subpoena. The Court reasoned that Congress has spoken on confidentiality, and recognizing such a privilege would “‘place a potent weapon’” in the hands of those seeking to delay EEOC investigations and lead to a “‘wave of similar’” arguments in other cases. Id. at 40 (quoting Univ. of Pa. v. EEOC, 493 U.S. 182, 194 (1990)). Indeed, it would be unwise to add unnecessary confidentiality arguments to the arsenal of subpoena recipients who often already calculate that they have little to lose from raising every conceivable argument, well-founded or not, to prevent or severely delay EEOC’s investigation, curtail its scope, or otherwise handcuff the agency’s ability to effectively carry out its Congressional mandate. This case is a good illustration. Kronos has succeeded in embroiling the EEOC in close to three years, and counting, of pre-investigative litigation to obtain information to which this Court held in Kronos I the EEOC is largely entitled. Kronos identifies no real gap in the confidentiality protections in place for the materials subject to EEOC’s subpoena, contending instead that it needs “addition[al]” and “different” protections. Kronos Br. 37. Kronos cites several district court cases in other circuits, many unpublished, to support such additional and different confidentiality protections: EEOC v. Bashas’, Inc., 2011 WL 6098788 (D. Ariz., Dec. 8, 2011); NLRB v. CEMEX, Inc., 2009 WL 5184695 (D. Ariz., Dec. 22, 2009); EEOC v. Ala. Dep’t of Youth Servs., 2006 WL 1766785 (M.D. Ala., June 26, 2006); EEOC v. Aon Consulting, Inc., 149 F. Supp. 601 (S.D. Ind. 2001); EEOC v. C&P Tel. Co., 813 F. Supp. 874 (D. D.C. 1993). Kronos Br. 38-42. But these cases are unavailing. The CEMEX case concerned the propriety of a protective order in the context of litigation, in which there is a presumption against confidentiality. CEMEX, 2009 WL 5184695, at *1 (premising need for protective order on public’s right to “gain access to litigation documents and information produced during discovery”). By contrast, providing confidentiality is embodied in the statutory scheme governing EEOC investigations. Kronos cites to no circuit court decision mandating court-ordered confidentiality and the other district court cases it relies upon do not advise in favor of such an order here. Just as there are several cases where district courts have entered such orders, there are several where district courts have rejected respondents’ pleas for duplicative protective orders. See EEOC v. Morgan Stanley & Co., Inc., 132 F. Supp. 2d 146, 154-58 (S.D.N.Y. 2000) (engaging in extensive analysis and holding protective order unnecessary); EEOC v. City of Milwaukee, 54 F. Supp. 2d 885, 891-96 (E.D. Wis. 1999) (same); EEOC v. County of Hennepin, 623 F. Supp. 29, 32-33 (D. Minn. 1985) (same). In addition, this case differs in at least one critical respect from the cases Kronos relies upon. Here, unlike those cases, out of an abundance of respect for Kronos’s concern regarding the sensitivity of some of the information called for by the subpoena, EEOC took the extraordinary step of stipulating that it would not disclose subpoenaed material to the charging parties or other aggrieved persons during the investigation at all. And EEOC would do so after the investigation only pursuant to a FOIA request submitted in conjunction with actual or potential litigation. The Commission’s stipulation renders superfluous the extra confidentiality imposed by the district court. A proper analysis under Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994), as instructed by this Court in Kronos I, makes clear that court-ordered confidentiality is not warranted in this case. As a threshold matter, however, Kronos has demonstrated no basis for concluding that the Pansy factors have any utility here at all. Cf. Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995) (stating Pansy factors “are neither mandatory nor exhaustive”). The Pansy factors are most useful in determining whether there is good cause to order confidentiality for material that otherwise could be disclosed to the public. Cf. Pansy, 23 F.3d at 786 (“Good cause is established on a showing that disclosure will work a clearly defined and serious injury to the party seeking closure.”) (emphasis added). This case involves the very different question of whether there is good cause where the material is already confidential and thus undisclosable to the public. As the Commission explained in its opening brief, any good cause factors that would favor a confidentiality order for the period during the investigation are already met because the material is safeguarded by statute, regulation, policy, and stipulation during that period. EEOC Opening Br. 38-39. And to the extent any material would be disclosable after the investigation, EEOC has stipulated that it would only be in conjunction with actual or potential litigation on the charge and pursuant to FOIA, in which case a strong presumption exists against a confidentiality order under Pansy. See Kronos I, 620 F.3d at 302 (“Under the good cause balancing test, there is a strong presumption against entering an order of confidentiality whose scope would prevent disclosure of information that would otherwise be accessible under a relevant freedom of information law.”); cf. Milner v. Dep’t of Navy, 131 S. Ct. 1259, 1265 n.5 (2011) (“In enacting FOIA, Congress struck the balance it thought right—generally favoring disclosure, subject only to a handful of specified exemptions—and did so across the length and breadth of the Federal Government.”). Kronos recognizes the difference between this case and Pansy, stating that “[n]o … concern about limiting disclosure of ‘otherwise accessible’ information is present here.” Kronos Br. 30. But Kronos misapplies the Pansy factors to yield its desired result. The Commission believes that, to the extent the Pansy factors have any utility here at all, they point decisively to a lack of good cause for a confidentiality order in this case: * Whether disclosure will violate any privacy interests: No. Disclosure in this case could only occur to the charging party or respondent after the investigation closes, in the context of actual or potential litigation (see note 1, supra), and pursuant to FOIA, its exemptions, and the heightened procedural protections for documents or portions thereof which Kronos designates in good faith as confidential commercial information. * Whether the information is being sought for a legitimate purpose: Yes. As the district court recognized, EEOC seeks the subpoenaed information for a legitimate purpose. However, the protections afforded during the investigation in this case by statute, regulation, EEOC policy, and stipulation mean that any person who seeks charge-file information for any reason – legitimate or otherwise – will be denied. To the extent the parties submit a FOIA request after the investigation closes, it would only be granted if there is actual or potential litigation on the charge, which is a proper purpose. Cf. EEOC v. Associated Dry Goods, 449 U.S. 590, 602-03 (1981) (stating that allowing charging parties access to charge-file information to determine whether to pursue litigation – as “private attorney[s] general” – is consistent with Title VII’s purpose). * Whether disclosure of the information will cause a party embarrassment: No. Kronos does not contend that this factor applies to itself, nor could it. See Glenmede, 56 F.3d at 484 (“We have typically viewed the ‘embarrassment’ factor in terms of non-pecuniary harm to individuals”). Kronos contends instead that the district court was correct to recognize the privacy interests of Kroger’s applicants in their test scores. Kronos Br. 33. But even if Sandy or Kroger were to obtain charge-file information at the close of the investigation pursuant to FOIA and in connection with actual or potential litigation, privacy would be considered in determining what not to disclose pursuant to FOIA personal privacy exemptions 6 and 7(C) or whether, instead, the relevant considerations favor disclosure, such as Sandy’s role as a “private attorney general.” Associated Dry Goods, 449 U.S. at 602-03. See also Attorney General Holder’s FOIA Guidelines, 1, 2 (encouraging agencies to make disclosures under FOIA where discretionary, i.e., where a FOIA exemption technically applies but disclosure not otherwise prohibited by law), available at http://www.usdoj.gov/ag/foia- memo-march2009.pdf. * Whether confidentiality is being sought over information important to public health and safety: No. This is undisputed, but it does not factor heavily in the analysis given the statutory, regulatory, policy, and stipulated protections in place. * Whether the sharing of information among litigants will promote fairness and efficiency: Yes. In the narrow circumstance in which EEOC would disclose subpoenaed material to Sandy or Kroger – at the close of the investigation pursuant to FOIA, in connection with actual or potential litigation, and sanitized to remove exempted material – disclosure would promote fairness and efficiency. Cf. Associated Dry Goods, 449 U.S. at 602-03. In addition, as discussed in subsection C below, efficiency and fairness militate against the limitations the district court has placed on EEOC’s “use” of subpoenaed material. * Whether the party benefitting from the order of confidentiality is a public entity or official. It is undisputed that Kronos is not a public entity but, as argued herein, its interests in confidentiality are well protected without a court order. Importantly, however, EEOC is a public entity. Thus, as discussed in subsection C below, this militates against the district court’s order given its provisions which conflict with EEOC’s FOIA obligations to Sandy and Kroger, and which conflict with EEOC’s ability to conduct its investigations without court entanglement or supervision. * Whether the case involves issues important to the public: No disclosure of the subpoenaed material to the “public” would occur. But disclosure in the narrow circumstance in which EEOC would disclose subpoenaed material to Sandy or Kroger – at the close of the investigation pursuant to FOIA, in connection with actual or potential litigation, and sanitized to remove exempted material – is important. Cf. Associated Dry Goods, 449 U.S. at 602-03. Kronos contends the statutory prohibitions against EEOC making charge materials public trigger only “internal sanctions” carrying weak penalties. Kronos Br. 40. It also makes vague references to EEOC’s “conduct” in this case as contextual evidence that a court order is necessary. Kronos Br. 41, 43. However, the criminal penalties available are neither internal nor weak – a conviction, while a misdemeanor, can result in a $1000 fine or a year imprisonment, 42 U.S.C. § 2000e-8(e), and Kronos concedes that it knows of no instance in which a Commission employee even has been charged with a violation. This is a testament to the efficacy of the criminal sanctions and the seriousness with which the Commission takes them. Kronos’s vague, pejorative references to EEOC’s “conduct” in this case are unwarranted, as EEOC has done nothing wrong – this Court largely agreed with the Commission’s understanding of the relevance standard applicable to its investigations. While this Court held that the article co-written by Kronos’s employee stating that Kronos’s tests had a racial disparate impact when given by an unnamed retailer did not justify an EEOC investigation into potential race discrimination in connection with the Sandy v. Kroger charge, this Court did not disparage EEOC’s efforts and did not even hint of any EEOC misconduct. Kronos simply has not satisfied its burden of demonstrating “with specificity” that a court order is needed to avoid a “clearly defined and serious injury” as substantiated “by specific examples [and] articulated reasoning.” Kronos I, 620 F.3d at 302. C. Several provisions in the district court’s confidentiality order patently conflict with the EEOC’s statutory and regulatory authority and case law. The Commission alternatively urges this Court to vacate the district court’s confidentiality order because there is not good cause “for the specific terms [the district court] chose to include” in light of the needs and circumstances of this case. Kronos I, 620 F.3d at 303. The Commission explained in its opening brief that paragraph 8 of the district court’s order conflicts with EEOC’s FOIA regulations at 29 C.F.R. § 1610.19 in several respects. EEOC Opening Br. 41-46. Most significantly, the district court’s order in effect requires EEOC simply to defer to any Kronos objection to disclosure rather than make an independent assessment, and relieves Kronos of any obligation to seek and justify a court injunction against disclosure if EEOC disagrees with Kronos’s designation. I-JA-Tab 3 at 45 ¶8. In effect, it assumes that every document and reasonably segregable portion of each document covered by EEOC’s subpoena is covered by FOIA exemption 4 for confidential commercial information, which is probably false given that the subpoena calls for Kronos to produce far more than that confidential commercial information. EEOC Opening Br. 43-44 (citing, inter alia, AT&T v. FCC, 582 F.3d 490, 499 n.8 (3d Cir. 2009), rev’d on other grounds, 131 S. Ct. 1177 (2010)). While it is obvious why Kronos or any other subpoena respondent would want a provision altering FOIA procedure in its favor as paragraph 8 does, Kronos has not demonstrated why good cause demands it. The Supreme Court and the Third Circuit have held that district courts may not disregard a government agency’s procedure for determining what, if any, confidentiality protection should be afforded to information sought during an investigation, but rather must give the agency the opportunity to decide in the first instance what confidentiality protections are needed. EEOC Opening Br. 45-46 (citing Schreiber, 381 U.S. at 288, 295-96, Chrysler v. Schleisinger, 611 F.2d 439, 440 (3d Cir. 1979), and Exxon v. FTC, 588 F.2d 895, 903 (3d Cir. 1979)). Recognizing that the district court’s order conflicts with the rule set out by the Supreme Court in Schreiber, and followed by this Court in Chrysler and Exxon, Kronos attempts to undercut their applicability to this case by asserting that Schreiber and Exxon are very old decisions concerned with the propriety of rules promulgated by agencies with plenary authority to demand records, while this case “arose out of significantly different facts.” Kronos Br. 45. Again, Kronos misses the point. The Schreiber decision and its Third Circuit progeny are significant to this case not for how the agencies in those cases obtained the information in question but for whether a court may deny the administrative agency the opportunity to decide in the first instance what protections are needed. The precedents are clear that the agency, not the court, must make the confidentiality determination, and this rule applies regardless of how the agency acquires the information. As stated unequivocally by this Court in Chrysler, which Kronos cites but does not discuss, “the determination both of the applicability of [the Trade Secrets Act] to the requested information, and of the availability of an exemption from disclosure [pursuant to FOIA] should be made in the first instance by the agencies from which the information was requested.” Chrysler, 611 F.2d at 440. The same principle applies here. As the Commission argued in its opening brief, “[a]s neither the district court, nor the EEOC has seen the documents, there is no reason to believe that all the subpoenaed information is protected,” and thus this Court should permit the Commission to evaluate any FOIA confidentiality issues in the first instance – if any such issues ever arise at all – after Kronos has fully complied with the subpoena. See EEOC Opening Br. 44-45. The district court took a directly antithetical approach. The confidentiality order states that “[o]nce document production occurs, should the EEOC believe that good cause exists to lift the ‘Confidential Information’ designation for any particular document(s), the EEOC may file a motion in that regard, and the Court will conduct the proper inquiry.” II-JA-Tab 4 at 48-49. In other words, all the documents and portions thereof are presumed sight unseen to be covered by a FOIA exemption and, contrary to what this Court said in Kronos I it is the EEOC, not Kronos, who must convince the court of good cause. Not only is this approach opposite to that prescribed by the case law discussed above, but the court improperly treated this subpoena matter like a discovery dispute attendant to litigation instead of the discrete and summary proceeding it should be. See NLRB v. Frazier, 966 F.2d 812, 817-18 (3d Cir. 1992) (explaining that, unlike a pretrial discovery dispute, decisions in administrative subpoena actions are final orders without the need for continuing court supervision). The district court’s inordinately expansive view of its role in administrative subpoena enforcement actions is similarly reflected in paragraphs 6 and 9 of the confidentiality order, which the Commission also challenged in its opening brief. EEOC Opening Br. 46-47. Both paragraphs contain language usurping EEOC’s authority to decide how it will use subpoenaed materials. Id. The Commission argued that the ADA gives EEOC the sole authority to conduct investigations. Id. at 46. While courts no doubt have an important role in subpoena enforcement actions, it is a sharply limited one which does not include supervising or otherwise entangling themselves in the Commission’s investigations or its performance of any other legitimate function. Id. at 47-49 (citing Univ. of Med. & Dentistry of N.J. v. Corrigan, 347 F.3d 57, 64 (3d Cir. 2003); FTC v. Texaco, 555 F.2d 862, 883-84 & 884 n.62 (D.C. Cir. 1977); and United States v. Rockwell Int’l, 897 F.2d 1255, 1257, 1263 (3d Cir. 1990)). Paragraphs 6 and 9 of the court’s order are not in accord with this well-established division of authority. Paragraph 9’s requirement that EEOC pre-clear with the district court each “use” of personal information regarding any Kroger employee, applicant, and/or test taker (I-JA-Tab 3 at 45 ¶9) unquestionably exceeds the district court’s inherent power and intrudes on the Commission’s statutory investigative authority. EEOC Opening Br. 47. The Commission asked the district court to clarify this provision but the court declined to do so. Kronos tellingly does not even attempt to justify paragraph 9. With respect to paragraph 6’s restriction that EEOC may use subpoenaed material only in connection with the Sandy v. Kroger charge investigation, EEOC argued that this is inconsistent with the Supreme Court’s ruling in EEOC v. Associated Dry Goods, 449 U.S. 590 (1981), in which the Court held that EEOC may place information in multiple charge files. In Associated Dry Goods, seven employees filed charges against the same employer, six alleging sex discrimination and one alleging race discrimination. 449 U.S. at 593. The Commission subpoenaed the personnel records of the charging parties as well as information generally relevant to all the charges, such as information relating to the employer’s general personnel practices. Id. The key issue was whether a prelitigation disclosure to the charging party of information in his or her charge file violates Title VII’s prohibition against making “public” information obtained in a charge investigation. Id. at 592. The Court held that it does not. Id. at 598. The Court also addressed whether EEOC may disclose to charging parties information contained in another charging party’s file. Id. at 603-04. The Court held that EEOC cannot do so, but that because “information about an employer’s general practices may certainly be relevant to individual charges of discrimination,” the Commission can comply with the statute fully by including generally relevant material in each charging party’s file. Id. at 604. Associated Dry Goods permits the Commission to share information relevant to multiple charge files in those files or in a central file as long as the Commission does so in a manner that wards against violating statutory confidentiality strictures. As reflected in the EEOC’s compliance manual, this usually involves multiple charges against the same employer. See EEOC Compliance Manual §28.2(b), 2006 WL 4673127 (EEOC procedures for duplication of information from other files). There is no reason for a different rule simply because a third-party respondent is involved, and Kronos offers none. Kronos objects that using such generally relevant material in multiple charge files would impact confidentiality. It asserts that even though the EEOC has stipulated that it will not disclose the material to the parties to the Sandy v. Kroger charge, that does not protect the confidentiality of the materials with respect to EEOC’s use of the material in conjunction with any other charges. Kronos Br. 41, 46. The Commission, however, is more than willing to stipulate, and it does so now, that it will not disclose any material obtained in this investigation to the parties or aggrieved persons in any other charge investigation except according to the stipulation applicable in this case, i.e., except if the documents are required or permitted to be disclosed pursuant to a FOIA request made in connection with actual or potential litigation and, if documents or portions thereof have been designated in good faith as trade secrets or confidential commercial information, only pursuant to the notice/objection procedures in 29 C.F.R. Part 1610.19.<2> Kronos’s proposed alternative – that, prior to using information relevant to multiple charge files in conjunction with those investigations, the Commission must re-subpoena the information from Kronos each time – is patently absurd. Kronos Br. 47-48. It would serve only to delay and obstruct those investigations in the way Kronos has done here. And it is truly surprising that Kronos would suggest this alternative given its complaint about the cost of complying with this one subpoena. D. Kronos waived or forfeited its argument of undue burden or costs in Kronos I but now seeks a free pass to shift its business costs to taxpayers. In its response brief, Kronos argues that it did not have to raise the cost issue earlier “because the District Court’s re-drafting of the subpoena limited the scope of production,” thereby “suspend[ing]” the cost issue. Kronos Br. 53; see also id. at 54 (“Reimbursement only became an issue when this Court expanded the scope of the investigation beyond what the District Court had permitted.”). Kronos’s argument is simply incorrect and makes no sense. First, it is well settled that, to be preserved, an argument must be raised in the district court in the first instance. See Brenner v. Local 514, United Bhd. of Carpenters & Joiners of Am., 927 F.2d 1283, 1298 (3d Cir. 1991) (“It is well established that failure to raise an issue in the district court constitutes a waiver of the argument.”). Because it is undisputed that Kronos failed to do so, it has lost the opportunity to raise it now. Kronos argues that it was not required to raise this issue earlier because the issue had been in “suspension” until this Court reversed the district court order narrowing the subpoena. Again, Kronos cites no authority for this novel proposition. In addition, this contention makes no sense. Kronos is actually arguing that it was not required to raise the cost issue until it knew the cost it would incur and it did not know that until this Court ruled in Kronos I. But Kronos did know, or should have known, from the very beginning just what complying with the subpoena would have cost. A prudent subpoena respondent faced with the Commission’s original subpoena and given the possibility of full enforcement would anticipate and estimate the total cost full compliance with the subpoena would cause it to incur. Accordingly, Kronos’s contention that it did not know what it would cost to comply with the subpoena until this Court enforced it simply is not credible. Once the case was on appeal in Kronos I, the Commission pointed out that undue burden appeared not to be at issue – a point which Kronos did not contest and which this Court confirmed in summarizing the issues on appeal in Kronos I, thus verifying Kronos’s waiver or forfeiture of the undue burden issue and the highly related issue of cost-shifting. EEOC Opening Br. 51-53 (citing Beazer East, Inc. v. Mead Corp., 412 F.3d 429, 437 n.11 (3d Cir. 2005) (“the appellee waives, as a practical matter anyway, any objections not obvious to the court to specific points urged by the appellant”)). This procedural history distinguishes this case from the cases on which Kronos primarily relies. In Eichorn v. AT&T Corp., 484 F.3d 644 (3d Cir. 2007), this Court stated that the defendants, who were appellees in a previous appeal, “were not required to raise all possible alternative grounds for affirmance to avoid waiving those grounds” because to apply the waiver rule strictly in such a situation would encourage needless compounding of the scope of initial appeals through protective cross appeals. Id. at 657-58. Here, by contrast, Kronos is not raising an alternative ground for affirmance but seeking additional relief not previously sought, which is a very different matter. Of course, Kronos could not, in any event, have cross- appealed on this in Kronos I since it had already waived it in the district court. And in First American Corp. v. Price Waterhouse LLP, 184 F.R.D. 234 (S.D.N.Y. 1998), the district court did not hold a cost-shifting argument waived on remand because, it observed, the party seeking to shift costs “raised the issue of costs many times” in papers filed with the district court and then raised the issue again after appeal. Id. at 239. Here, unlike in First American, Kronos raised the cost shifting issue on remand for the first time ever in litigation. Kronos attempts to distinguish a case the Commission cited in its opening brief, Beazer East, Inc. v. Mead Corp., 525 F.3d 255, 263 (3d Cir. 2008), on the ground that the waiver referred to in that opinion occurred because the appellant failed to appeal an issue addressed in a district court’s final order. Kronos Br. 56. The result certainly can be no different where the litigant, like Kronos, failed ever to raise the issue in court. Either way, a remand on an unrelated issue provides no opportunity to revive the waived issue. In any event, Kronos has not justified the district court’s order that EEOC bear half of its costs of compliance. Kronos recites the standard set forth in United States v. Friedman, 532 F.2d 928 (3d Cir. 1976), for a third-party subpoena respondent to recover compliance costs – that the costs exceeds what it may reasonably be expected to bear as a cost of doing business – but never applies it. As the Commission argued in its opening brief, Kronos is a sophisticated vendor of employment assessment tests whose business includes not only designing the tests, but administering, scoring, and keeping clients’ records related to them. In this regard, Kronos should reasonably expect that there might be an employment law challenge implicating its tests and, thus, that its business costs will include complying with subpoenas such as the one the EEOC issued here. EEOC Opening Br. 55-56. Kronos presents no reason to hold otherwise. Kronos should not be permitted to shift its business costs to taxpayers. CONCLUSION For the reasons stated above and in its opening brief, the Commission respectfully asks this Court to reverse the district court’s judgment on remand, vacate its orders on confidentiality and cost shifting, and direct the court to order Kronos immediately to produce all information sought by the EEOC’s subpoena. Respectfully submitted, P. DAVID LOPEZ General Counsel LORRAINE C. DAVIS Acting Associate General Counsel ___________________________ CORBETT L. ANDERSON Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M Street, N.E., 5th Floor Washington, D.C. 20507 (202) 663-4579 CERTIFICATE OF BAR MEMBERSHIP Under Third Circuit L.A.R. 28.3(d), I certify that, as an attorney representing an agency of the United States, I am not required to be admitted to the bar of this Court. I also certify that all other attorneys whose names appear on this brief likewise represent an agency of the United States and are also not required to be admitted to the bar of this Court. See 3d Cir. L.A.R. 28.3, comm. comt. February 9, 2012 ___________________________ Corbett L. Anderson Counsel for Appellant EEOC CERTIFICATE OF COMPLIANCE (1) This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because it contains 6,940 words, excluding the parts of the brief excepted by Fed. R. App. P. 32(a)(7)(B)(iii). (2) This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type-style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared using Microsoft Word 2003 in 14-point Century Schoolbook font. February 9, 2012 ___________________________ Corbett L. Anderson Counsel for Appellant EEOC CERTIFICATE OF IDENTICALLY FILED BRIEFS Pursuant to L.A.R. 31.1(c), I certify that the text of the electronically filed version of this brief is identical to the text of the hard copies of the brief filed with the Court. February 9, 2012 ___________________________ Corbett L. Anderson Counsel for Appellant EEOC CERTIFICATE OF VIRUS CHECK Pursuant to L.A.R. 31.1(c), I certify that a virus check using Trend Micro OfficeScan, program 10.6.1766, was performed on the electronic version of this brief on February 9, 2012, prior to electronic filing with the Court. No viruses were detected. February 9, 2012 ___________________________ Corbett L. Anderson Counsel for Appellant EEOC CERTIFICATE OF SERVICE I, Corbett L. Anderson, certify that on February 9, 2012, the same day that I transmitted to the court an electronic version of the brief for Appellant EEOC, I caused ten (10) printed and bound copies of the brief to be sent to the Clerk of the United States Court of Appeals for the Third Circuit, by UPS. I also certify that the following counsel, who have agreed to accept electronic service, will be served by the appellate CM/ECF system and that one paper copy of the brief will be served by UPS, to: Counsel for Respondent-Appellee R. Lawrence Ashe, Jr. Ashe, Rafuse & Hill LLP 1355 Peachtree Street, N.E., Suite 500 Atlanta, Georgia 30309-3232 (404) 253-6001 lawrenceashe@asherafuse.com Terrence H. Murphy Littler Mendelson, P.C. 625 Liberty Avenue, 26th Fl Pittsburgh, PA 15222-3110 (412) 201-7621 tmurphy@littler.com February 9, 2012 ___________________________ Corbett L. Anderson Counsel for Appellant EEOC ********************************************************************************** <> <1> See EEOC FOIA Reference Guide §XI (stating EEOC will withhold “[a]ny Title VII or ADA charge file information requested by anyone other than the Charging Party or the Respondent to the charge, such as the charge file or information concerning the existence of charge files,” and EEOC will not grant FOIA requests for such information “requested by the Charging Party or the Respondent after the time limitation for filing a lawsuit has expired and no lawsuit has been filed”), available at http://www.eeoc.gov/eeoc/foia/hb-11.cfm. The EEOC would disclose the sanitized file to Sandy if she has received a notice-of-right to sue and the ninety-day statutory time period for filing suit has not expired. Disclosure to Kroger would occur only if it is a defendant in a lawsuit by Sandy. See EEOC Compliance Manual §83.3(a), (b), available at http://www.eeoc.gov/eeoc/foia/section83.cfm; Associated Dry Goods v. EEOC, 720 F.2d 804, 811 (4th Cir. 1983) (on remand from Supreme Court, observing that the EEOC has “never deviated significantly” from this practice). <2> In connection with the instant subpoena Kronos may, again, redact all references to any clients except Kroger. If there are parties to any other charges not involving Kroger who seek access to their charge files via FOIA in connection to actual or potential litigation, and if they contain information produced pursuant to the instant subpoena, the Commission would redact references to Kroger as part of sanitizing the file. See EEOC FOIA Reference Guide §XI (stating that information withheld from charging parties and respondents includes references to other charges in the file), available at http://www.eeoc.gov/eeoc/foia/hb-11.cfm; cf. EEOC Compliance Manual §83.4 (b) (requiring EEOC staff to “[r]emove information identifying other respondents or other employers”), available at http://www.eeoc.gov/eeoc/foia/section83.cfm.