Court Opinion

ID: 9474126
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:48:51.319779+00
Date Added: 2024-06-11T17:43:55.181846
License: Public Domain

JOHN R. GIBSON, Circuit Judge,
dissenting.
I am troubled with what the court does today. I do not believe either the statute or precedent allows today’s result. Nor do I think such a result was intended or anticipated by Congress. I therefore respectfully dissent.
Congress enacted the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621, et seq., to prevent employers from discriminating against their employees on the basis of age. 29 U.S.C. § 623. Congress authorized the Equal Employment Opportunity Commission (EEOC) to enforce the ADEA. The definitional section of the statute reflects the limitations Congress intended to set on the scope of the application of the ADEA. “Employee” is defined in 29 U.S.C. § 630(f), with certain specific exceptions not relevant here, as “an individual employed by any employer.” “Employer” is defined in 29 U.S.C. § 630(b) as a person engaged in an industry affecting commerce, and in turn, “person” is defined as including a partnership. Peat, Marwick, Mitchell & Co. (PM) is a partnership. The question before us is whether the EEOC is empowered to investigate relationships among, members of a partnership, a “person” and hence an “employer” within the definitions under ADEA. Congress did not intend that ADEA govern relationships among partners nor did it authorize the EEOC to investigate such relationships.
The EEOC to the contrary contends that just because a business enterprise calls itself a partnership, and the participants in the enterprise call themselves partners, does not for purposes of the ADEA make it so. The EEOC perceives the issue as one of labels rather than legal relationships. The EEOC claims that only it has the authority to determine in the first instance whether the PM partners are partners for purposes of the ADEA. It has served the partnership with a subpoena duces tecum, requesting potentially sensitive partnership documents, to make this determination.
As the court today observes, it is settled that under Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614 (1946), the EEOC is authorized to make the initial determination as to who is covered within the definitions set out by the ADEA, and may subpoena documents for this purpose. This authority, however, has a significant limitation. Under United States v. Powell, 379 U.S. 48, 57, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964), the EEOC “must show the investigation will be conducted pursuant to a legitimate purpose.” PM is a partnership, an employer under the ADEA. I cannot agree that the EEOC investigation of the relationships among the PM partners is supported by a legitimate purpose.
The record before the district court makes clear that PM is a partnership. PM possesses the commonly accepted attributes of a partnership. Its partners make contributions to capital, share profits and losses, and vote on partnership matters. The partners must sign the partnership agreement and all partners must approve any amendments to the agreement. The entire partnership votes on candidates for admission. Partners must agree to devote all their professional time and attention to the partnership. The partnership files partnership information tax returns and distributes Form K-l to its partners. The *932partnership does not enter into employment agreements with any of the partners. The record clearly distinguishes the role of the PM partners from that of their employees.1 Most significantly, the EEOC made clear in open court that it was “not contending that PM is a sham partnership.” (Tr. p. 25)
The EEOC seems to suggest that despite this record, and apparently simply because PM has a large number of partners, some partners may be something less than partners. It argues that in a firm of 1,375 partners,2 it is debatable whether those with a minute equity interest, or physically or otherwise isolated from effective participation in the management or control of partnership affairs, are partners within the meaning of the ADEA’s statutory exemption for employers. It seeks to assert that some members of PM may be labeled partners, but for ADEA purposes are not.
We deal here not with labels but with acknowledged legal relationships. The subpoena expressly calls for documents bearing upon “the relationship of members to the firm and members vis-a-vis members.” The EEOC’s argument based upon the statutory definition of “employee” and “employer,” and its conclusion that “it doesn’t follow that a member of a partnership can never be an employee,” (Brief p. 14) clouds and confuses the definitions in the statute. Its analysis creates a case in which an individual might at the same time be both employer and employee. The entire thrust of the ADEA is to protect employees in their relationship with their employers. There is no evidence in the language of the statute or its legislative history that Congress perceived a need to protect partners from one another. Nowhere does the ADEA even suggest that the EEOC should play a role in the relationships among partners.
Justice Powell’s concurring opinion in Hi-shon v. King & Spalding, 467 U.S. 69, -, 104 S.Ct. 2229, 2236, 81 L.Ed.2d 59, 69 (1984), which deals with Title VII, confirms this view. As Justice Powell’s opinion makes clear, Congress did not intend to extend Title VII to the management of a law firm by its partners or to characterize the relationship among partners as an “employment” relationship to which Title VII would apply. Id. at 69-70.3 Title VII contains definitions analogous to those in the ADEA. The EEOC’s investigation of PM thus runs directly at odds with Hishon.
Certainly Oklahoma Press and Powell sustain the view that questions of coverage may be determined in the first instance by the agency. But in this case coverage is a settled question of law. Furthermore, even if it is argued that a factual inquiry is relevant, the unique record in this case establishes the existence of a legal relationship falling outside the scope of the statute, a relationship that has been established and has been admitted not to be a sham. Under these circumstances, Powell dictates that the investigation be brought to a halt as not pursuant to a legitimate purpose and that production of documents not be compelled.
A further serious issue exists as to the breadth of the EEOC’s subpoena. The permissible breadth of a subpoena is subject to fourth amendment reasonableness requirements, Oklahoma Press, 327 U.S. at 209, 66 S.Ct. at 505-06, which mandate that only those documents specifically relevant to the *933stated inquiry need be produced. Here the stated purpose of EEOC’s subpoena is to determine whether PM is covered by the ADEA. Yet it seeks documents that go not merely to coverage but to substantive questions of whether there are possible violations. Among the PM documents subpoenaed by the EEOC are those relating to PM’s retirement practices and policies for its partners. These documents have no reasonable relevance to whether PM’s partners are subject to the proscriptions of the ADEA.
This case presents the question of whether the EEOC has unlimited power to acquire all relevant records of a business entity that Congress did not place within the scope of the ADEA. PM is one among thousands of professional and business organizations employing the partnership form of legal structure. The court’s decision today, therefore, has broad consequences and implicates serious concerns. The majority relies on Oklahoma Press without appreciating the careful balance the Supreme Court struck between (the important public and private interests at stake. Oklahoma Press reflects a compromise between the public interests and the private interests “of men to be free from officious intermeddling, whether because irrelevant to any lawful purpose or because unauthorized by law, concerning matters which on proper occasion and within lawfully conferred authority of broad limits are subject to public examination in the public interest.” 327 U.S. at 213, 66 S.Ct. at 508. As Justice Rutledge noted, “(o)fficious examination can be expensive, so much so that it eats up men’s substance. It can be time consuming, clogging the processes of business.” Id.
We deal here with a partnership that admittedly is not a sham. If a partnership is in fact something other than that form of organization, different principles apply. A distinctly different situation was involved in Oklahoma Press and the cases on which it relied, where Congress’s commerce clause power brought enormous numbers of firms within the scope of the Fair Labor Standards Act. I cannot sanction this result which permits the EEOC broad powers to compel the disclosure of information from partnerships outside the scope of its statutory authority.
Oklahoma Press and Powell underscore the concern with improper investigatory activity. Here the EEOC specifically directs its efforts toward a partnership. In so doing, the EEOC steps outside the bounds of its investigatory authority established in 29 U.S.C. § 626(a). I would reverse and order that the subpoena be quashed.

. Employees do not share profits, do not bear the risk of losses, and are not responsible for management of the firm’s practice and offices. They may not sign the firm’s name to a report or take part in the electoral process engaged in by the partners.

. The shallow underpinnings of its position is best illustrated by a statement in the EEOC brief that PM may have 300 partners nationwide. (Brief p. 17 ri. 13) PM readily admits and public information states that PM has some 1,375 partners. Such inaccuracy leaves me questioning how thoroughly the agency has considered its case.

. Other courts have considered both partnership and professional corporations as outside the scope of Title VII. Burke v. Friedman, 556 F.2d 867 (7th Cir.1977); EEOC v. Dowd & Dowd, Ltd., 736 F.2d 1177 (7th Cir.1984). The EEOC attempts to distinguish these cases that involve small organizations. This overlooks the legal relationship which was the primary emphasis of the court in each of these cases.