United States District Court, S.D. Alabama, Southern Division
R. ALEXANDER ACOSTA, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, Petitioner,
XCEL COMMUNICATIONS OF SOUTH ALABAMA, INC. d/b/a METRO PCS, Respondent.
WILLIAM H. STEELE UNITED STATES DISTRICT JUDGE.
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.
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”).
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),
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
Xcel produced no documents in response to the Subpoena.
(Chambers Dec., ¶ 16; Jacobs Dec., ¶ 10.) This
enforcement action followed.
Motion to Conduct Limited Discovery.
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.)
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 (11th 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
(11th 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.
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,
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 (6th 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.) 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.)
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.
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.
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