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U.S. Equal Employment Opportunity Commission v. Phase 2 Investments, Inc.

United States District Court, D. Maryland

February 12, 2018

U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff
v.
PHASE 2 INVESTMENTS INC., et al., Defendants.

          MEMORANDUM

          James K. Bredar Chief Judge

         The Equal Employment Opportunity Commission (“EEOC”) brought this action against Defendants Phase 2 Investments Inc. (“Phase 2”) and CWP West Corp t/a Mister Car Wash (“Mister”) on August 28, 2017, alleging violations of Title VII. (See Compl., ECF No. 1.) The EEOC amended its complaint on September 27, 2017 (Am. Compl., ECF No. 5). After unsuccessful attempts to serve Phase 2, the EEOC successfully moved for alternative service on October 4, 2017. (See Order granting Mot. Alternative Service, ECF No. 11.) On October 11, the EEOC effected alternative service (ECF No. 14) and on October 27, Phase 2 moved to dismiss (ECF No. 15.) The EEOC then moved for attorney's fees and expenses pursuant to Federal Rule of Civil Procedure 4(d)(2). (See Mot. Att'y's Fees and Expenses, ECF No. 17.) Meanwhile, Mister had waived service on October 3, 2017, and moved to dismiss on November 27 (ECF No. 23). The EEOC responded to Mister's motion (see Opp'n Mot. Dismiss, ECF No. 25), and Mister replied (see Reply Mot. Dismiss, ECF No. 27). Mister's reply made several references to the substance of the EEOC's conciliation efforts in this case, and attached documents as exhibits that reference conciliation or were created during conciliation. (See, e.g., Reply Mot. Dismiss at 3; Conciliation Proposal, Ex. B to Minich Supp. Decl. 5-6, ECF No. 27-3; Rhodes Letter to Vander Woude, Ex. C to Minich Supp. Decl., ECF No. 27-4.) The EEOC then moved to strike these references under 42 U.S.C. § 2000e-5(b) which, inter alia, prohibits the use of things “said or done during and as part of [conciliation] as evidence in a subsequent proceeding without the written consent of the persons concerned.” (See Mot. Strike, ECF No. 32.)

         Phase 2 has responded to the EEOC's motion for attorney's fees and expenses (ECF No. 18), and the EEOC has replied (ECF No. 20). Mister has responded to the EEOC's motion to strike (ECF No. 35) and the EEOC has replied to that as well (ECF No. 36). Both of these motions are therefore ripe for review, and no hearing is necessary to resolve either matter. See Local Rule 105.6 (D. Md. 2016). For the reasons stated below, the Court will deny the EEOC's motion for attorney's fees and expenses and grant the EEOC's motion to strike.

         I. Background for EEOC's Motion for Attorney's Fees and Expenses

         The EEOC filed the instant lawsuit against Phase 2 and Mister on August 28, 2017. (See Compl.) That day, the EEOC also sent requests for waiver of service. (See ECF Nos. 2-3.) The EEOC sent a request for waiver of service to Mister's attorney Kevin Kraham, and Mister returned an executed waiver of service two days later. (See ECF No. 4.) The EEOC also sent a request for waiver of service to who it believed was Phase 2's attorney, John S. Vander Woude.

         Mr. Vander Woude had previously represented a company named Maritime Autowash, Inc. (“Maritime Autowash”). (See Opp'n Mot. Att'y's Fees and Expenses 1, ECF No. 18.) Mr. Vander Woude had been contacted by Maritime Autowash's insurance carrier and asked to represent Maritime Autowash because a number of its employees had filed charges of discrimination with the EEOC. (Id.) Mr. Vander Woude “continued to represent Maritime Autowash, Inc. with regard to those Charges of Discrimination through the conclusion of the unsuccessful conciliation process, which ended on or about June 14, 2017.” (Id.) Prior to that date, Maritime Autowash had merged with Maritime Autowash, II and formed Phase 2 Investments, Inc., one of the Defendants in the instant action. (See Am. Compl. ¶ 8.) Hence, after working with Vander Woude on this case in his capacity as representative of Maritime Autowash for several years, the EEOC apparently believed that he was representing its current iteration, Phase 2. (See Mot. Att'y's Fees and Expenses at 1.)

         This belief appeared to be confirmed on September 12, 2017, roughly two weeks after the EEOC had mailed Vander Woude a request for waiver of service. On that date, an article about this case appeared in the Capital Gazette which related a statement Mr. Vander Woude had apparently given, via email, to the reporter who authored the article on September 6: “In short, Maritime is now being sued by one agency of the Federal Government, the EEOC, for complying with the direct order of another agency of the federal government, the Department of Homeland Security (ICE).” (Phil Davis, Attorney for Annapolis car wash denies discrimination against Hispanic workers, Capital Gazette, Sept. 12, 2017, Reply Mot. Att'y's Fees and Expenses Ex. 1 at 3, ECF No. 20-1.) This statement, while referencing “Maritime” and not “Phase 2, ” would seem to suggest that Mr. Vander Woude was representing Phase 2, not to mention very much aware of the complaint that the EEOC had filed.

         Mr. Vander Woude, however, claims that he was not representing Phase 2 at this time. (See Opp'n Mot Att'y's Fees and Expenses at 2.) In fact, “[a]t the time this lawsuit was filed, ” the insurance provider that first asked him to represent Maritime Autowash had “expressly advised” him that “he was not authorized to represent Phase 2 Investments, Inc. in the lawsuit, as Phase 2 Investments, Inc. was not a named Insured in the Maritime insurance policy.” (Id.) As Mr. Vander Woude was not authorized to represent Phase 2, he could not waive service of process for Phase 2, and therefore Mr. Vander Woude did not return the request for service of process that the EEOC had sent him on August 28, 2017.

         Not only did Mr. Vander Woude not return the request for waiver of service, aside from apparently issuing a curious statement on behalf of “Maritime” to the Capital Gazette, Mr. Vander Woude did not do much of anything in regard to this lawsuit. He did not, for instance, inform the EEOC that it had sent a request for waiver of service to the wrong man. Nor did he inform the EEOC who was representing Phase 2. Nor did he, it seems, notify Phase 2 that it was being sued. Instead, on September 27, 2017, the day before the requested waiver was due, the EEOC notified him that it had not received its requested waiver. (See Opp'n Mot. Att'y's Fees and Expenses at 2.) After this slight nudge, Mr. Vander Woude finally informed the EEOC that he did not represent Phase 2, stating in an email, with a lawyer's eye for detail, “I don't currently represent Phase 2 or Phase II or any other Florida organization, and I have not been authorized to accept or waive service.” (See Email from Vander Woude to Salacuse, Mot. Alternative Service Ex. 2, ECF No. 9-2) (emphasis added).) That would soon change.

         Upon learning that Mr. Vander Woude did not represent Phase 2, the EEOC attempted to effect process on Phase 2's registered agent, a Mr. Podrog who lived in Florida, but the EEOC was ultimately unsuccessful. It therefore moved for alternative service, which this Court granted, and the EEOC then effected service on October 6, 2017, by means of, inter alia, serving process on the Florida Secretary of State, by email, and by sending a copy of the summons to Mr. Vander Woude. (See Executed Summons, ECF No. 14.) Fortuitously for Phase 2, on October 19, 2017 Maritime Autowash's insurance provider reversed course and authorized Mr.

         Vander Woude to represent Phase 2. (Opp'n Mot. Att'y's Fees and Expenses at 3.) The EEOC moved for attorney's fees and costs associated with effecting service, pursuant to Federal Rule of Civil Procedure 4(d)(2). Mr. Vander Woude, who does now “currently represent” Phase 2, has filed an opposition.

         II. Background for EEOC's Motion to Strike

         Unlike the EEOC's motion for attorney's fees and costs, determining the merits of the EEOC's motion to strike portions of Mister's reply requires a brief discussion of the underlying complaint in this case. In 2013, nine employees of Maritime Autowash “submitted intake questionnaires to the EEOC indicating their desire to file charges of discrimination against” their employer. (Opp'n Mot. Dismiss 1-2, ECF No. 25.) Ultimately, in 2017, after several years of litigation (including a trip to the Fourth Circuit regarding the enforcement of a subpoena, see EEOC v. Maritime Autowash, Inc., 820 F.3d 662 (2016)) the Director of the Baltimore EEOC field office, Rosemarie Rhodes, sent both Defendants a Letter of Determination, stating that she had determined there was reasonable cause that unlawful employment practices had occurred at the car wash (by now owned and operated by Mister). (See Letter of Determination, Ex. B to Minich Supp. Decl. 2-4, ECF No. 27-3.) This letter represented that there were fourteen charging parties and that they had been subject to unequal terms and conditions of employment “including working longer hours with shorter breaks, not having proper equipment, the assignment of additional duties and payment of lower wages because of their national origin (Hispanic), in violation of Title VII.” (Id. at 1, ECF No. 27-3 at 2.) This letter also informed Defendants that the “Commission attempts to eliminate the alleged unlawful practices by informal methods of conciliation, ” and it included a Conciliation Proposal. (Id. at 3, ECF No. 27-3 at 4; see Conciliation Proposal.) The Conciliation Proposal essentially outlined the terms of a settlement offer.

         After “engag[ing] in communications with Maritime Autowash and Mister Car Wash, ” for several months, the EEOC determined that conciliation had failed, and issued a notice to the Defendants stating as much on June 14, 2017. (See Opp'n Mot. Dismiss ...


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