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A federal appeals court Thursday trained an eye on the power of the U.S. Equal Employment Opportunity Commission to subpoena internal documents of companies under investigation, sparking claims of “abuse of power” and crystallizing tension over the scope of the agency’s authority.

Accounting firm BDO USA could be forced to disclose certain internal documents to U.S. regulators who are investigating claims the company discriminated and retaliated against female employees, including the chief human resources officer. A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit on Thursday overturned a lower court’s decision that blocked enforcement of EEOC subpoena. The ruling was unanimous.

The EEOC generally brings between 100 to 150 lawsuits a year that allege discrimination. Before filing any lawsuit, the agency investigates a charge of discrimination. The commission in these investigations can ask for documents or specific information from the company. If the company refuses to issue those items, the EEOC can turn to the courts to enforce a subpoena. The EEOC in the last 10 years filed on average about 30 cases annually to enforce an administrative subpoena.

“This case is indicative of the process of the fight between the employer, the community and agency about the proper use of that power to investigate EEOC charges,” said Gerald Maatman, a partner Chicago-based Seyfarth Shaw. “There’s been a big debate going on that.”

Maatman said Thursday’s ruling is not necessarily a win for the employer or the commission—yet. He said the case is unique in that it provides a blueprint for employers in determining the contours of arguments over whether a document is considered privileged.

The EEOC said it is “pleased that the Fifth Circuit has clarified the scope of the attorney-client privilege in the context of an administrative investigation. The court’s explanation of the difference between legal and business advice is especially helpful in this case—which involves a high-ranking HR official.”

DLA Piper partners Rachel Cowen in Chicago and Ileana Blanco in Houston represented BDO. Cowen and Blanco declined to comment Friday, citing the firm’s policy not to discuss ongoing litigation.

Yet in court papers, the attorneys called the EEOC’s approach“nothing short of an abuse of process.”

BDO’s Chief HR Official Brings Claims

Federal regulators are investigating claims brought by Hang Bower, an Asian-American female who resigned from the company in 2014. Bower at the time was the chief human resources officer, the highest HR position at Chicago-based BDO, the appeals court said. She earlier had been performing chief compliance officer duties, in 2012, according to the EEOC, but the company appointed a male to fill that post. Bower’s responsibilities at BDO included investigating discrimination allegations.

Bower, after leaving the company, alleged BDO discriminated against her and other women and created a hostile work environment. She claimed among other things that BDO took retaliatory action against her for pushing to ensure compliance with company policies.

The appeals court, describing the allegations, said BDO removed Bower “from leadership meetings, decreased her job responsibilities, reprimanded her and ordered her to stop investigating certain employees.”

BDO disclosed some information to the EEOC in 2015 but clung to a cache of purportedly “confidential” communication, including correspondence between Bower and in-house and outside lawyers. The company listed 278 confidential documents—including emails and memoranda—on a privilege log.

The EEOC sued BDO in December 2015 in the U.S. District Court for the Southern District of Texas to enforce an agency subpoena. A federal magistrate judge—later upheld by a U.S. district judge—ruled against the EEOC. The judges said the attorney-client privilege shielded the communication from disclosure. The agency appealed to the Fifth Circuit.

“Given the factual background of this case, the HR context in which it takes place, and the nature of Bower’s allegations, the privilege log in its current form is not sufficient to serve its purpose,” Chief Judge Carl Stewart, joined by Judges Carolyn King and James Dennis, wrote in Thursday’s ruling.

The appeals court generally found BDO’s entries on its privilege log were too vague to allow the court to draw conclusions about whether the attorney-client privilege should protect any of the identified communication. The court also rejected the magistrate judge’s conclusion that “anything that comes out of that lawyer’s mouth is legal advice.”

“There is no presumption that a company’s communications with counsel are privileged,” Stewart wrote. He continued: “[C]ourts have stated that simply describing a lawyer’s advice as ‘legal,’ without more, is conclusory and insufficient to carry out the proponent’s burden of establishing attorney-client privilege.”

The appeals panel said it wants the trial court to more closely review the BDO communication at issue to determine whether, if at all, the attorney-client privilege applies.

Agency Reached Questioned

The case also illustrates an ongoing tension over the agency’s reach.

Maatman noted the EEOC’s adopting a strategic enforcement program in 2006, with the stated goal to fight systemic discrimination. About one in four of the commission’s cases involves systemic change, he said. This is key in the debate over what can be asked from a company in the investigation process, he said.

“The background of this thing is all about systemic cases and the kind of balancing act between doing an efficient administrative investigation or an investigation that expands,” he said. “The larger the investigation gets, the more that an employer needs to protect itself and administrative enforcement over a subpoena.”

Last month, the U.S. Supreme Court ruled in a similar case in which the EEOC filed a subpoena enforcement action where it investigated a sex discrimination charge filed against a Texas-based grocery supply chain.

The commission launched an investigation of the charged and expanded it to include all of the Temple, Texas-based McLane facilities nationwide. The commission typically has wide latitude on the information it deems necessary to investigate charges.

The high court said the Ninth Circuit should review the lower court’s decision to enforce or quash the EEOC subpoena on the basis of abuse of discretion.

The direction of the commission could change under the new acting chair Victoria Lipnic, who has indicated that the EEOC should handle cases on an individual basis, rather than using taxpayer dollars for extensive digging. Mark Konkel of Kelley Drye  & Warren said there could be a shift in the agency to “leaving employers alone” and not aggressively investigate claims under its new leadership.

“The EEOC had been taking a hard look at systemic practices that were a nationwide concern. There are now indications that it will return to its more limited role of looking at individual discrimination cases,” Konkel said. He added with the uncertainty of the new administration, “It’s too soon to tell.”