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Chao v. General Interior Systems

September 28, 2009


The opinion of the court was delivered by: George H. Lowe, United States Magistrate Judge


Plaintiff is the Secretary of Labor, United States Department of Labor ("Plaintiff" or "the Secretary"). Defendant General Interior Systems, Inc. ("GIS"), is a construction company located in Liverpool, New York. Defendants Jeffrey T. Mento and Richard Mabbett are officers of GIS. The complaint alleges that the Defendants violated the minimum wage, overtime and record keeping provisions of the Fair Labor Standards Act ("FLSA"). More specifically, the Secretary claims the Defendants "improperly classified [certain of their] workers as 'independent contractors' rather than as employees as a means of not paying the overtime wages required by the FLSA." Dkt. No. 16-2, at 2.*fn1

The workers whose status is at issue performed "dry walling, carpentry, and other construction work on many jobsites in the Northeastern United States." Dkt. No. 16-2, at 2. The Department of Labor obtained statements from many of these workers. During pretrial discovery the Defendants sought production of the statements. Plaintiff refused to produce them, in reliance upon the informant's privilege, the work product privilege, and the deliberative process, investigative files, and attorney client privileges.

The issue was brought to the Court's attention, and Plaintiff was directed to submit a privilege log and supporting papers. The Secretary did so. Dkt. No. 16. Defendants filed opposition papers. Dkt. No. 19. The Court ordered oral argument, an evidentiary hearing, and an in camera review of certain of the disputed documents. Dkt. No. 21. The parties made additional submissions. Dkt. Nos. 20 and 22-25.


Defendants argue that the Secretary failed to properly invoke the informant's privilege. Dkt. No. 19, at 3-6. The Court disagrees. The privilege was invoked by John McKeon, the Deputy Administrator for Enforcement of the Wage and Hour Division. Dkt. No. 16-5. The Secretary's attorney, who is an officer of this Court, represents that at the time Mr. McKeon invoked the privilege the Administrator position, which is normally filled by Presidential appointment after Senate confirmation, was vacant because of the presidential transition. Dkt. No. 20, at 1. Therefore, pursuant to a delegation of authority reflected in the Federal Register at 74 Fed. Reg. 7478 (February 17, 2009), Mr. McKeon was given the authority to invoke governmental privileges.

Dkt. No. 20, at 2.

Defendants also argue that the delegation of authority to Mr. McKeon was not proper because he was not provided with guidelines setting forth the standards by which he should determine whether to invoke the privileges. Dkt. No. 19, at 5. This "guideline requirement is indispensable." Martin v. Albany Business Journal, Inc., 780 F. Supp. 927, 935 (N.D.N.Y. 1992). Defendants made this argument in their opposition memorandum but it was not until after oral argument that the Secretary produced the guidelines. Dkt. No. 24. The Court finds this frustrating but not sanctionable, and accepts the late filing. The Court also finds that Mr. McKeon adequately followed the guidelines.

However, even though the informant's privilege was properly invoked here, whether the Court should uphold it requires a "balanc[ing of] the parties' respective interests." Martin, 780 F. Supp. at 937. The Secretary argued in her moving memorandum of law that the Defendants did not need the statements at issue because "Defendants are able to interview and/or depose any of their current or former employees and have an even greater access to their records and employment policies than Plaintiff does." Dkt. No. 16-2, at 4. However, Mr. Mento, the founder and president of GIS, stated as follows in an affidavit:

5. I personally reviewed the list of alleged employees attached to Plaintiffs Complaint and I estimate that approximately 250 of the workers were individuals provided to us by the labor leasing agencies. The rest are individual subcontractors or contractors that have their own workers. The labor agency we used primarily was Construction Personnel Services, Inc., 129 Allen Street, Kernersville, North Carolina 27284. It is owned by Hobart Carver. He also did or does business as Dry Wall Resources, Ltd., 1326 Ashley Square, Winston-Salem, North Carolina 27103.

6. GIS does not maintain contact information for the workers provided by the leasing agencies or contractor employees. We do not know where they currently live, not [sic] do we know how to get in touch with them. GIS has contract [sic] information for approximately 10% of the individuals listed by plaintiff.

7. The cost to locate these individuals, and then bring them to Syracuse so that they could provide statements or deposition testimony would be prohibitive. We would have to pay for their transportation, meals and lodging. In addition, we would incur attorney's fees, witness fees and costs for transcripts once they were here.

Dkt. No. 19-2, at 2.*fn2 The Court directed that Mr. Mento was to be present during oral argument, "to be available to testify on the issues raised in his Affidavit." Dkt. No. 21, at 2. He appeared, but the Secretary explicitly declined the opportunity to cross examine him.

Given Mr. Mento's compelling statements, which the Secretary apparently does not dispute, the Court finds that the Defendants' interests decidedly outweigh the policy underlying the informant's privilege. Therefore, the Secretary's invocation of this privilege, albeit proper, is rejected, ...

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