Acosta v. Xcel Communications of South Alabama, Inc.

          ORDER

          WILLIAM H. STEELE UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on petitioner's Petition for Enforcement of Administrative Subpoena Duces Tecum (doc. 1) and respondent's Motion to Conduct Limited Discovery (doc. 5). Both the Petition and the Motion have been extensively briefed and are now ripe for disposition. Also pending is petitioner's Motion for Leave to Submit Sur-Reply (doc. 14). For cause shown, that Motion is granted. Petitioner's proposed Sur-Reply (doc. 15) will be considered in adjudicating the Motion to Conduct Limited Discovery.^[1]

         I. Background.

         The Government initiated this miscellaneous action by filing a Petition for Enforcement of Administrative Subpoena Duces Tecum. In that Petition, the Government alleges that the United States Department of Labor, Wage and Hour Division, Region IV (the “WHD”) commenced investigations in February 2018 of five Metro PCS Mobile locations in this judicial district. All five of those Metro PCS Mobile locations are owned and operated by respondent, Xcel Communications of South Alabama, Inc. (“Xcel”). The stated purpose of these investigations is to determine coverage under and compliance with the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 201 et seq. (the “Act” or the “FLSA”).

         Pursuant to these investigations, WHD representatives contacted Xcel in writing on February 22, 2018, explained the purpose of the investigations, fixed a date and time for an initial conference, and provided a checklist of documents requested. (Jacobs Dec. (doc. 1-2), ¶ 5.) Several days later, Xcel's counsel contacted WHD by telephone and indicated that Xcel would neither produce documents nor allow WHD investigators onto Xcel's premises to conduct employee interviews. (Id., ¶ 7; Chambers Dec. (doc. 1-4), ¶ 7.) Over the course of the next several months, there were numerous written and telephonic communications between WHD officials and Xcel's counsel regarding ongoing WHD investigations of multiple Metro PCS Mobile facilities owned and operated by Xcel. The consistent, recurring pattern of these communications was that WHD requested documents and set dates for initial conferences, but that Xcel neither produced documents nor appeared at those conferences. (Chambers Dec., ¶¶ 9-13; Jacobs Dec., ¶¶ 8-10; Roberts Dec. (doc. 1-3), ¶¶ 5-10.)

         In light of Xcel's chronic refusal to appear and produce the requested records, WHD issued a Subpoena Duces Tecum (the “Subpoena”) to Xcel on May 30, 2018. (Chambers Dec., ¶ 14.) On its face, the Subpoena required Xcel to appear before WHD's Assistant District Director Patricia Chambers on June 7, 2018 at 9:00 a.m., and to produce at that time and place “books, documents and other tangible things, regarding the wages, hours, and other conditions and practices of employment maintained by Xcel Communications of South Alabama dba Metro PCS - as specifically described in Attachment # 1, Items - 1-14 which is made a part of this subpoena.” (Doc. 1-5, at 1.)^[2] Xcel produced no documents in response to the Subpoena. (Chambers Dec., ¶ 16; Jacobs Dec., ¶ 10.) This enforcement action followed.

         II. Motion to Conduct Limited Discovery.

         Upon being confronted with WHD's Petition, Xcel theorizes that the Subpoena may have been issued “in bad faith and/or in violation of the DOL's policies and procedures.” (Doc. 5, ¶ 11.) In support of this contention, Xcel submits the following facts: (i) these investigations mark the third and fourth times that WHD has investigated Xcel in its five years of existence; (ii) WHD is operating under a directive to investigate cell phone companies; (iii) Ashraf Hijaz, an Xcel officer and shareholder, is of Middle Eastern descent; and (iv) WHD has refused to acknowledge documents that Xcel furnished in prior investigations in prior years. (Doc. 4, at 8.) Based on this showing, Xcel posits that it “should be allowed to engage in minimal discovery to determine whether the DOL has violated its own policies and/or engaged with nefarious intentions.” (Doc. 5, ¶ 12.) The specific discovery sought by Xcel includes taking the deposition of Patricia Chambers, Assistant Director of WHD's Mobile Area Office; obtaining WHD's written policies and procedures; and accessing information regarding all WHD audits or investigations of cell phone stores in the greater Mobile area from 2015 to the present. (Id., ¶ 8.) According to respondent, the objectives of such discovery would be to determine whether WHD is unfairly targeting Xcel and whether it has “thrown its policies and procedures into the wind.” (Id., ¶ 13.)

         It is well-settled that “summons enforcement proceedings are to be summary in nature, ” and that “courts may ask only whether the [Government] issued a summons in good faith.” United States v. Clarke, 573 U.S. 248, 254, 134 S.Ct. 2361, 189 L.Ed.2d 330 (2014) (citations and internal quotation marks omitted); see also Azis v. U.S. I.R.S., 522 Fed.Appx. 770, 778 (11^th Cir. July 1, 2013) (“Summons enforcement proceedings should be summary in nature, and discovery should be limited.”) (citation omitted). The Eleventh Circuit has explained that, in the context of a proceeding to enforce an administrative summons or subpoena, “[d]epositions, interrogatories, and the rest of the panoply of expensive and time-consuming pretrial discovery devices may not be resorted to as a matter of course and on a mere allegation of improper purpose.” Nero Trading, LLC v. U.S. Dep't of Treasury, I.R.S., 570 F.3d 1244, 1249 (11^th Cir. 2009) (citation omitted); see also Azis, 522 Fed.Appx. at 778 (same). The appropriate legal test for access to additional information from the Government is that a party seeking to avoid an administrative subpoena “is entitled to examine [a Government] agent when he can point to specific facts or circumstances plausibly raising an inference of bad faith. Naked allegations of improper purpose are not enough: The [respondent] must offer some credible evidence supporting his charge.” Clarke, 573 U.S. at 254. “That standard will ensure inquiry where the facts and circumstances make inquiry appropriate, without turning every summons dispute into a fishing expedition for official wrongdoing.” Id. at 254-55.^[3]

         The critical takeaways from the case law are that (i) Xcel is not entitled to question WHD representatives or obtain their documents based on a naked allegation of improper purpose; but (ii) Xcel may be entitled to do so if it points to specific facts or circumstances plausibly raising an inference of bad faith. In an attempt to satisfy this burden, Xcel identifies what it claims are four specific facts and circumstances plausibly raising an inference of bad faith. First, WHD has investigated Xcel on multiple occasions in a short period of time. Second, the Department of Labor acknowledges a directive to investigate cell phone companies. Third, Hijaz (Xcel's Vice President and a shareholder) is of Middle Eastern descent. Fourth, the DOL has failed to acknowledge documents already in its possession from prior investigations. (Doc. 4, at 8; doc. 5, ¶¶ 3-7, 12, 13.)

         These facts and circumstances, considered individually and collectively, do not plausibly raise an inference that WHD issued the Subpoena to Xcel in bad faith. As an initial matter, there is nothing nefarious or untoward about WHD undertaking an initiative to ensure FLSA compliance by a certain industry (here, wireless service providers) where WHD has noted a history of noncompliance within that industry. (Chambers Dec. II (doc. 9-1), ¶ 4.) Likewise, the mere fact of multiple investigations of respondent is not indicative of bad faith. See, e.g., Doe v. United States, 253 F.3d 256, 272 (6^th Cir. 2001) (no evidence of institutional bad faith or harassment where agency served three subpoenas on respondent in two years); Solis v. PulteGroup, Inc., 2013 WL 4482978, *6 (E.D. Mich. Aug. 19, 2013) (“two or even three such investigations does not constitute harassment without some other credible evidence of bad faith or improper purpose”). Besides, the uncontroverted evidence is that only one of the five Metro PCS locations owned by Xcel that is currently under investigation has been investigated previously. (Chambers Dec. II, ¶ 3.) That WHD investigated other Xcel locations at other times does not give rise to a plausible inference of bad faith. Petitioner also shows that Patricia Chambers, the WHD official who selected the 13 investigations in the Mobile area pursuant to the wireless service provider initiative, was unaware that these five Metro PCS locations share common ownership. (Id., ¶ 8.)^[4] Similarly, petitioner shows that WHD investigator Monetta Roberts, who was assigned three Xcel locations for investigation, was unaware of the common corporate ownership of those locations when they were assigned to her. (Roberts Dec., ¶ 3.)

         The analysis becomes no cheerier for Xcel with respect to its suggestion that the investigation was motivated by unlawful bias because Xcel Vice President Hijaz is of Middle Eastern descent. Chambers declares that when she selected these locations for investigation, she knew neither that Hijaz was a corporate officer of Xcel nor that Hijaz was of Middle Eastern descent. (Chambers Dec. II, ¶ 9.) Respondent offers neither facts nor evidence to cast doubt or suspicion on the veracity of Chambers' statement in that regard. The Court readily finds that Xcel has identified no facts or circumstances giving rise to a plausible inference that WHD targeted Xcel locations based on the ethnic background of Xcel's Vice President.

         Finally, Xcel alleges that it provided “a voluminous number of documents” to WHD in 2015 and 2017 with respect to prior investigations. (Hijaz Dec. (doc. 5-1), ¶¶ 3-4.) Be that as it may, the mere fact that Xcel provided documents to WHD in the past does not call into question the agency's good faith in issuing this Subpoena. There is no specific indication in Xcel's submissions about the degree of overlap in the document requests, just general statements about “duplicitous” [sic] requests and a remark that WHD “requested documents in which some had been produced in both the 2015 investigation and the 2017 investigation.” (Id., ¶¶ 5-6 (emphasis added).) To the contrary, the record unambiguously establishes that this Subpoena covers different Xcel locations (save one) and a different time period than the prior investigations; therefore, it stands to reason that the bulk of the documents requested would be different as well. Why would it be improper for WHD to confirm that FLSA coverage facts existing in previous years for other locations were valid today for these locations? It would not. Besides, Xcel has made no showing and expressed no willingness to produce any non-overlapping documents in response to the Subpoena. In short, a respondent's mere cooperation with a prior agency investigation does not support a plausible inference of bad faith or harassment when the agency subsequently issues a Subpoena covering mostly different locations and a different time period.

         For all of the foregoing reasons, the undersigned concludes that Xcel has failed to meet its burden of pointing to specific facts or circumstances plausibly raising an inference of bad faith, and coming forward with credible evidence supporting its charge that WHD's issuance of the Subpoena is motivated by discriminatory animus, vindictiveness or a spiteful desire to harass Xcel. Because the discovery sought by Xcel essentially amounts to a fishing expedition for official wrongdoing, ...