It’s fairly uncommon to see discovery issues make their way to courts of appeal, particularly in class action or wage and hour cases. Last week, however, the Eighth Circuit issued a decision regarding the scope of discovery in a wage and hour action that may be useful in both kinds of cases in the future.

The decision in Acosta v. La Piedad Corporation, Case No. 17-1845 (8th Cir. July 3, 2018), concerned a wage and hour investigation by the United States Department of Labor (DOL) of a chain of Mexican restaurants. The DOL subpoenaed information regarding related entities also affiliated with the company’s owners, in an obvious attempt to broaden the scope of its inquiries and to tie in additional related locations. The requests included basic information about the company’s owners that was not at issue. More importantly, they sought “all documents showing the names and addresses of all other businesses that are partially and/or fully owned by any of the owners … and the percentage of ownership.” The employer refused to produce anything on that subject, prompting the DOL to petition the district court for the enforcement of the subpoena, a petition that was granted.

The employer still refused to produce any documents, ultimately contending that it (this particular corporate entity) did not have information about what other companies its owners may have been involved in. Unpersuaded, the district court held the employer in contempt and ordered the statute of limitations tolled for any employee of the potentially related entities. The employer appealed.

The crux of the problem was this – the employer really didn’t have the documents the DOL wanted. It – this particular corporate entity – did not have information about what other business interests its owners had.

The Eighth Circuit found this problem to be fatal. Under Federal Rule 45, a party cannot be compelled to produce a document that is not in its possession or control. And the subpoena in this instance was directed to La Piedad Corp., not to its owners. Because the corporate entity did not have the requisite information, it could not be compelled to produce it or be sanctioned for not doing so. Interestingly, while the court largely vacated the district court’s tolling order, it did allow for approximately six months of tolling for its slow production in response to other requests in the subpoena.

In addition to being among the rarer discovery case to go to the court of appeals, the La Piedad decision is of note because of the aggressive position taken by the DOL, which is not unlike that of many plaintiff’s attorneys and some courts that refuse to believe that a Fair Labor Standards Act defendant does not have (or cannot easily get) information needed to broaden a class. These issues often arise in the context of electronic data, where the defendant simply doesn’t have the data requested by the other side and must face the difficult task of proving a negative. The decision is also of note in that the basis of the court of appeals decision, Rule 45, is equally applicable to traditional class and collective action litigation.

The bottom line:

Neither the DOL nor plaintiffs can compel the production of documents an employer doesn’t have.