Evaluating for the second time a dispute between the Equal Employment Opportunity Commission and an employment-test maker that sprouted from a case regarding a discrimination suit involving Kroger’s use of that company’s test in its hiring practices, the U.S. Court of Appeals for the Third Circuit has held that the company is obligated to turn over requested information to the EEOC.

Given the burden on the EEOC in attempting to prove a discrimination case, the court said, it was reasonable for it to seek more information on the test.

The EEOC sought information from Kronos Inc. related to an underlying action in which it was alleged that Kroger, a grocery store chain, violated the Americans with Disabilities Act when it declined to hire a disabled woman after she scored poorly on an employment test designed by Kronos.

After the EEOC initially filed a subpoena for information from Kronos on its tests, Kronos objected, claiming that divulging the information would reveal valuable trade secrets.

The U.S. District Court for the Western District of Pennsylvania ruled that Kronos would be required to answer the subpoena, but narrowed the scope of it to cover only documents related to Kroger’s West Virginia stores, where the incident happened, for a period just more than a year starting in 2006 and covering only the positions for which the woman had applied — cashier, bagger and stocker.

When the Third Circuit was first presented with the case, it “reversed the district court’s geographic and temporal restrictions, as well as the restrictions related to job description,” according to its most recent opinion.

Although on remand the district court widened the scope of what Kronos was obliged to provide, it also imposed a confidentiality order at Kronos’ request. After the EEOC appealed that decision and presented the case again to the circuit court, the Third Circuit instructed the lower court to remove remaining requirements restricting what information Kronos is to provide, but held that some confidentiality is warranted given the sensitive nature of the information and its importance for Kronos’ business. The court issued its opinion Monday.

“In Kronos I we considered (and rejected) the district court’s decision to limit ‘production of “documents discussing, analyzing, or measuring potential adverse impact on individuals with disabilities” to those “relating specifically to and only to The Kroger Co.”‘ We explained that such documents are relevant even if not directly connected to Kroger because they could reveal that the assessment had an adverse impact on disabled applicants or they could ‘assist the EEOC in evaluating whether Kroger’s use of the test constituted an unlawful employment action,’” U.S. Court of Appeals Judge Michael Chagares said in EEOC v. Kronos.

Chagares wrote the unanimous opinion on behalf of a three-judge panel that included Judges Dolores Sloviter and Kent Jordan.

The Third Circuit instructed the district court to remove restrictive language from its order when that court considers the case again on remand.

Explaining the burden that the EEOC is ultimately charged with proving in the underlying case, the Third Circuit said, “It is insufficient for the EEOC to show simply that an employment test screens out disabled applicants. … The EEOC must also prove that the test does not relate to the position at issue and is not ‘consistent with business necessity.’ It is thus a proper inquiry for the EEOC to seek information about how these tests work, including information about the types of characteristics they screen out and how those characteristics relate to the applicant’s ability to fulfill his or her duties for the prospective position.”

Regarding the confidentiality order, the Third Circuit held that there is a reasonable need for some degree of privacy for Kronos.

“While the burden falls on Kronos to show the need for an order, the EEOC’s legitimate purpose and interest in information-sharing cannot outweigh the tremendous harm to Kronos that could result from the disclosure of Kronos’ proprietary information,” Chagares said. “The district court thus did not abuse its discretion in entering a confidentiality order.”

However, the Third Circuit asked the district court to dial back some of the provisions that it had included in the order.

The requirement for the EEOC to alert Kronos to any Freedom of Information Act requests for material related to its tests and the ability for Kronos to stipulate whether the requested information is given were among those requirements nixed by the appeals court.

“The district court erred by impeding the EEOC’s ability to do its required analysis when faced with a FOIA request,” Chagares said.

Terrence Murphy of Littler Mendelson in Pittsburgh represented Kronos and declined to comment on the opinion.

“We are glad the Court again rejected the district court’s restrictive view of the Commission’s subpoena authority and that the district court’s judgment has been reversed. We hope further proceedings in the district court on remand will not be protracted so that the Commission can proceed with its investigation,” Christine Nazer, a spokeswoman for the EEOC, said in a prepared statement.

Saranac Hale Spencer can be contacted at 215-557-2449 or sspencer@alm.com. Follow her on Twitter @SSpencerTLI.

(Copies of the 33-page opinion in EEOC v. Kronos, PICS No. 12-1790, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •