Equal Employment Opportortunity Commission v.  Lutheran Social Services
 98-5245 98-5401
 ARGUED ON APRIL 30, 1999
 IN THE UNITED STATES COURT OF APPEALS
 FOR THE DISTRICT OF COLUMBIA CIRCUIT
 Nos. 98-5245 & 98-5401
 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,
 Applicant-Appellee, Cross-Appellant,
 v.
 LUTHERAN SOCIAL SERVICES,
 Respondent-Appellant, Cross-Appellee.
 On Appeal from the United States District Court
 for the District of Columbia
 PETITION OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
 FOR REHEARING AND SUGGESTION FOR REHEARING EN BANC
 C. GREGORY STEWART
 General Counsel Designate
 PHILIP B. SKLOVER
 Associate General Counsel
 VINCENT J. BLACKWOOD
 Assistant General Counsel
 JOHN F. SUHRE
 Attorney
 EQUAL EMPLOYMENT OPPORTUNITY
 COMMISSION
 1801 L Street N.W., Room 7010
 Washington, D.C. 20507 TABLE OF CONTENTS
 Page
 CONCISE STATEMENT OF ISSUE AND ITS IMPORTANCE 1
 BACKGROUND 2
 REASONS FOR GRANTING THE PETITION 5
 CONCLUSION 14TABLE OF AUTHORITIES
 Cases  Page(s)
 ATC Petroleum, Inc. v. Sanders, 860 F.2d 1104 (D.C. Cir. 1988)  9
 Atlantic Richfield Co. v. Department of Energy, 769 F.2d 771
 (D.C. Cir. 1984)  7, 11
 Bowden v. United States, , 106 F.3d 433 (D.C. Cir. 1997)  1, 4, 5, 8,
 9, 10
 EEOC v. Cuzzens of Georgia, 608 F.2d 1062 (5th Cir. 1979 6
 Hedison Manufacturing Co. v. NLRB, 643 F.2d 32 (1st Cir. 1981)  6
 Honig v. Doe, 484 U.S. 305 (1988)  1, 8, 10
 Marine Mammal, 134 F.3d 409 (D.C. Cir. 1998)  12
 Maurice v. NLRB, 691 F.2d 182 (4th Cir. 1982)  6
 McCarthy v. Madigan, 503 U.S. 140 (1992)  1, 7, 11, 13
 Myers v. Bethlehem Corp., 303 U.S. 41 (1938)  7
 NLRB v. Frederick Cowan and Co., 522 F.2d 26 (2d Cir. 1975)  6
 Parisi v. Davidson, 405 U.S. 34 (1972)  11, 12, 13
 Rafeedie v. I.N.S., 880 F.2d 506 (D.C. Cir. 1989)  7
 Randolph-Sheppard Vendors of America v. Weinberger, 795 F.2d 90
 (D.C. Cir. 1986)  1, 7, 11
 Salt Lake Community Action Program, Inc. v. Shalala, 11 F.3d  1084
 (D.C. Cir. 1993)  11
 UDC Chairs Ch., America Association v. Board of Trustees, 56 F.3d 1469
 (D.C. Cir. 1995)  7
 Washington v. WMATA, 160 F.3d 750 (D.C. Cir. 1998), 9, 10
 TABLE OF AUTHORITIES -- cont'd
 Statutes Page(s)
 29 U.S.C. 
 161(1)..................................................1,2
 29 C.F.R.  1601.16(b)(1)  1, 2
 29 C.F.R.1601.16(b)(2)........................................passim
 CONCISE STATEMENT OF ISSUE AND ITS IMPORTANCE
  In this case, a divided panel vacated the district court order
  enforcing an EEOC administrative subpoena issued to Lutheran Social
  Services based on Lutheran's objections to the subpoena despite its
  failure to exhaust the administrative remedy available under Section
  11 of the National Labor Relations Act ("NLRA"), 29 U.S.C.  161(1)
  and the EEOC's regulation, 29 C.F.R.  1601.16(b)(1).  The panel took
  this action despite recognizing that the applicable regulation requires
  a recipient of an EEOC subpoena to file an administrative appeal if it
  does not intend to comply and despite this Court's consistent precedent
  holding that a party that fails to exhaust an agency's administrative
  remedies forfeits its right to oppose the agency's action in court.
  The panel stated that it was excusing Lutheran's failure to exhaust
  because the facts of this case "constitute circumstances sufficiently
  extraordinary" to defeat the "strong presumption that issues parties
  fail to present to the agency will not be heard in court."  Slip op. at
  8-9.  However, in reaching this conclusion, the panel ignored numerous
  decisions of this Court and the Supreme Court carefully delineating the
  circumstances under which failure to exhaust administrative procedures
  can be excused, and instead based its decision on factors which are
  neither extraordinary nor compelling.  Consequently, the panel's
  decision, despite paying lip-service to the important principle of
  administrative exhaustion, directly conflicts with prior decisions of
  this Court and the Supreme Court narrowly limiting the exceptions to
  the rule that objections not presented in an administrative appeal will
  not be heard in district court.  See, e.g., Randolph-Sheppard Vendors
  of America v. Weinberger, 795 F.2d 90 (D.C. Cir. 1986) (delineating the
  "most exceptional circumstances" that can justify failure to exhaust);
  McCarthy v. Madigan, 503 U.S. 140 (1992) (same).  Moreover, contrary to
  the decisions of this Court and the Supreme Court, the majority excused
  Lutheran's failure to exhaust without requiring Lutheran to demonstrate
  its entitlement to an exception.  Honig v. Doe, 484 U.S. 305, 327 (1988)
  (party claiming an exception to administrative exhaustion requirement
  has burden to prove it); Bowden v. United States, 106 F.3d 433, 437
  (D.C. Cir. 1997) (party failing to exhaust administrative remedies has
  burden of showing "equitable avoidance" of that failure).
  By excusing a party's failure to exhaust administrative remedies in this
  case, where Lutheran has neither argued nor offered any evidence to
  suggest that its failure to file a timely petition for administrative
  review was due to anything but its own negligence or a disdain for the
  EEOC's procedures, the panel frustrates the important purposes served
  by the doctrine of administrative exhaustion.  Unless corrected, the
  panel's decision will inevitably divert to the district court many
  disputes that could have been resolved administratively in subpoena
  enforcement proceedings under Title VII and the NLRA.
  BACKGROUND
  These appeals arise from the EEOC's efforts to enforce an administrative
  subpoena issued by the Director of the Washington Field Office on January
  30, 1998, requesting Lutheran to produce a copy of an investigative
  report prepared by its counsel regarding allegations of sexual harassment
  by Lutheran's former president.  J.A. 20.  Lutheran did not comply.
  Rather, on February 13, 1998, the return date for the subpoena,
  Lutheran's counsel, Williams & Connolly, sent a letter to the EEOC
  investigator stating that Lutheran would not comply with the subpoena
  because it is "improper."  J.A. 22.
  Section 11 of the NLRA, 29 U.S.C.  161(1), which controls the EEOC's
  subpoena authority, states that, "[w]ithin five days after the service
  of a subpoena [the recipient] may petition the Board to revoke."  The
  EEOC's regulations provide that "[a]ny person served with a subpoena
  who intends not to comply shall petition the issuing Director . . . to
  seek its revocation or modification . . . within five days (excluding
  Saturdays, Sundays and Federal legal holidays) after service of the
  subpoena," and the party must "identify each portion of the subpoena
  with which [it] does not intend to comply" and "state with respect to
  each such portion, the basis for non-compliance with the subpoena."
  29 C.F.R.  1601.16(b)(1) & (2).  The Director is required to either
  grant or modify the petition to revoke or "make a proposed determination
  on the petition, stating reasons, and submit the petition and proposed
  determination to the Commission for its review and final determination."
  29 C.F.R. 1601.16(b)(2).
  Lutheran made no attempt to comply with these administrative procedures.
  After the EEOC filed an action to enforce the subpoena, the district
  court ordered Lutheran to provide a redacted copy of the report omitting
  any part that contained "legal advice or conclusions."  J.A. 52-53.
  Both parties appealed and a divided panel of this Court remanded this
  case to the district court "to dismiss the Commission's enforcement
  action."  Slip op. at 18.
  The majority (Judges Tatel and Williams) recognized that the EEOC's
  regulation "creates a strong presumption that issues parties fail to
  present to the agency will not be heard in court."  Slip op. at 8.
  Nevertheless, the majority held that "the circumstances of this case"
  were "sufficiently extraordinary" to defeat this "strong presumption"
  because: 1) "[n]othing on the face of the subpoena or in the statutes to
  which it referred would have led [Lutheran's Human Resources Director]
  to believe that [Lutheran] must petition the EEOC within five days,"
  especially given the bases of Lutheran's objection to the subpoena;
  2) the EEOC investigator did not tell Williams & Connolly in a phone
  conversation that the time to file a petition had passed; and 3) Lutheran
  "detailed" its privilege claim to the investigator and the District
  Director.  Id. at 9-10.  The majority stated that the EEOC's procedure
  would suffer "little if any damage" because requiring exhaustion would
  not serve the doctrine's "basic purpose" of permitting the agency to
  apply its "special competence," inasmuch as the EEOC "has no expertise"
  as to attorney-client or work product privilege.  Id. at 10-11.  Lastly,
  the majority stated that the important role voluntary compliance plays
  in Title VII's enforcement plan "depends on sound legal advice," which
  "often depends on the attorney-client and work product privilege," and
  that, because the EEOC can obtain whatever evidence rests in the report
  by interviewing the witnesses itself, the EEOC is not deprived of any
  "sources of possible evidence of discrimination."  Id. at 12-13.<1>
  Judge Silberman dissented.  He faulted the majority for going beyond
  the "traditional limited exceptions" to administrative exhaustion,
  such as "futility or agency bias."  Dissent at 1-4.  According to Judge
  Silberman, the majority, by relying in part on the fact that Lutheran's
  objections to the subpoena do not implicate the EEOC's special expertise,
  overlooked an important purpose of exhaustion -  to permit an agency
  to exercise its discretion in considering whether to revoke or modify
  its investigative subpoenas.  Id. at 6-7.  Judge Silberman observed
  that the majority's resort to "broad notions of 'equity'" conflicts
  with other courts of appeals's uniform application of exhaustion to
  National Labor Relations Board ("NLRB") subpoena recipients who do not
  comply with NLRB's similar regulation.  Id. at 8.
  Furthermore, in Judge Silberman's view, even if  broad equitable
  principles were applicable, they would not excuse Lutheran's failure to
  file an administrative appeal in this case.  Judge Silberman found the
  majority's view that Lutheran was excused from exhaustion because the
  EEOC's subpoena did not notify the recipient of the appeal requirement
  inconsistent with this Court's decision in Bowden v. United States, 106
  F.3d 433, 438 (D.C. Cir. 1997).  Dissent at 9 ("inaccurate or ineffective
  notice from a government agency is an excuse for non-compliance with an
  EEOC time limit only when the agency is 'required to provide notice of
  the limitations period'").  According to Judge Silberman, the "supposed
  unfairness to Lutheran in not receiving notice of a federal regulation"
  is illusory.  Id. at 10.  Judge Silberman opined that "any lawyer
  experienced in the employment law field . . . would be familiar with the
  regulation," and "any competent lawyer receiving such a subpoena would
  spend the ten minutes necessary to determine the applicable law."  Id.
  Furthermore, in Judge Silberman's view, any human resources director who
  did not consult an attorney immediately upon receiving an EEOC subpoena
  "would be guilty of gross negligence."  Id.  Judge Silberman stated that
  the majority's view that voluntary compliance with Title VII depends on
  preserving the attorney-client privilege "conflates the merits" of  the
  privilege claim with the need for an exhaustion requirement.  Id. Judge
  Silberman concluded that the majority's holding that the exhaustion
  requirement does not apply here will undermine voluntary compliance
  "by encouraging subpoena recipients to flout agency regulations and to
  gamble on garnering equitable relief from a court."  Id. at 10-11.
 REASONS FOR GRANTING THE PETITION
  The majority begins its decision with a lengthy discussion of its
  supposed dispute with the dissent as to whether a respondent's failure to
  comply with  1601.16(b)(1)'s exhaustion requirement deprives a district
  court of jurisdiction to consider objections to a subpoena that were
  not first presented to the EEOC.  Slip op. at 6-8.  However, there is
  in fact no disagreement between the majority and the dissent in the
  articulation of the standard for judicial consideration of unexhausted
  objections to EEOC subpoenas.  The majority, the dissent, and the EEOC
  all agree that, in light of  1601.16(b)(1), a subpoena recipient who
  fails to petition the EEOC for review is prohibited from challenging
  the subpoena in federal court except in extraordinary circumstances.<2>
  The real dispute between the majority and the dissent is not over the
  label to be attached to the exhaustion requirement, but over the meaning
  of the exception.  The dissent correctly notes that this Court and the
  Supreme Court have established well-defined and limited exceptions to
  the exhaustion requirement. The majority, on the other hand, disregards
  this precedent in favor of an ill-defined fairness exception which,
  as applied in this case, essentially permits a court to ignore the
  exhaustion requirement based on its own views of the importance of
  agency review in a particular case and speculation about the reasons
  for the respondents failure to exhaust.
  Other courts of appeals, applying traditional exhaustion principles,
  have held that the recipient of a subpoena issued by the EEOC or the
  NLRB (which issues subpoenas under the same statutory provision and a
  regulation which is identical in all relevant respects to the EEOC's)
  cannot challenge the subpoena in court if it did not petition the agency
  to modify or revoke the subpoena.  EEOC v. Cuzzens of Georgia, 608 F.2d
  1062, 1063-64 (5th Cir.  1979 (per curiam) (recipient not permitted
  to challenge subpoena in district court because it made "no effort to
  exhaust the available administrative remedies");<3> NLRB v. Frederick
  Cowan and Co., 522 F.2d 26, 28 (2d Cir. 1975) (district court ordered to
  enforce NLRB's subpoena because the recipient "never sought by petition
  to revoke the subpoena in issue as provided by 29 U.S.C.  161(1)" and,
  therefore, abandoned "normal agency procedures"); Maurice v. NLRB, 691
  F.2d 182, 183 (4th Cir. 1982) (vacating district court's injunction
  against enforcement of NLRB subpoena seeking testimony from reporter
  because she "did not exhaust her administrative remedies"); Hedison
  Mfg. Co. v. NLRB, 643 F.2d 32, 34 (1st Cir. 1981) (enforcing Board's
  subpoena and finding "frivolous" company's claim that it did not have the
  opportunity to challenge the subpoena because "[u]nder Board rules, [the
  company] had the right" to petition for revocation of the subpoena).
  As the majority recognizes, this Court and the Supreme Court have
  held that there is a "strong presumption" that a party must exhaust a
  congressionally-created administrative procedure and that the failure to
  do so may be waived only in "the most exceptional circumstances."  See,
  e.g., Randolph-Sheppard Vendors of America v. Weinberger, 795 F.2d 90,
  103, 106 (D.C. Cir. 1986); UDC Chairs Ch., Am. Ass'n v. Bd. of Trustees,
  56 F.3d 1469, 1475 (D.C. Cir. 1995); Myers v. Bethlehem Corp., 303
  U.S. 41, 50-51 (1938) (it is a long settled rule of administrative law
  that "no one is entitled to judicial relief for a supposed or threatened
  injury until the prescribed administrative remedy has been exhausted")
  (internal quotations omitted); Rafeedie v. I.N.S., 880 F.2d 506, 518
  (D.C. Cir. 1989) (this Court is "loathe to find that administrative
  remedies need not be exhausted").  This Court has limited the exceptions
  to the exhaustion doctrine to situations where: 1) the party would suffer
  irreparable injury without immediate judicial review,  Randolph-Sheppard,
  795 F.2d at 107; 2) resort to administrative review would be futile
  either because the agency has made it clear that it would not change
  its position or because the agency cannot provide adequate relief,
  id. at 105-08; and 3) a more complete record is unnecessary because the
  issue is a purely legal one which the court can address or the agency's
  expertise is not needed.  Atlantic Richfield Co. v. Dep't of Energy,
  769 F.2d 771, 782 (D.C. Cir. 1984).  Similarly, the Supreme Court has
  limited exceptions to cases where:  1) resort to the administrative
  remedy may cause undue prejudice to a later court action (due, for
  example, to delay by the agency), 2) it is doubtful that the agency can
  grant effective relief, and 3) there is proven bias or predetermination
  on the issue by the agency.  McCarthy, 503 U.S. at 146-48.<4>
  The majority, which fails even to mention these narrow constraints on
  a court's ability to excuse a party from the exhaustion requirement,
  did not require Lutheran to overcome the "strong presumption" in favor
  of exhaustion by proving, as was its burden, that it was entitled to one
  of the limited exceptions discussed above.  See Honig, 484 U.S. at 327;
  Bowden, 106 F.3d at 437. In fact, as Judge Silberman notes (dissent at
  6), Lutheran "has not claimed one of [those] recognized exceptions."
  Moreover, as the EEOC argued in its opening brief at 16-18, none of those
  exceptions apply here.  Thus, the majority's holding that Lutheran's
  failure to exhaust administrative remedies should be excused is
  inconsistent with prior decisions of this Court and the Supreme Court.
  Eschewing the customary exceptions to the exhaustion doctrine,
  the majority excused Lutheran's failure to file a  1601.16(b)(1)
  petition because, based on the circumstances of this case, the panel
  "think[s] it would be inappropriate to view Lutheran's failure to
  file a . . . petition as a waiver of its privilege claim."  Slip
  op. at 11.  Although the panel does not spell out what it means by this
  "appropriateness" standard, the panel's application of the standard
  to this case indicates that it is a far cry from the "extraordinary
  circumstances" test previously applied by the Court, since the
  circumstances on which the panel bases its holding that exhaustion
  was not required here are not extraordinary in any ordinary sense of
  that word.  In fact, as Judge Silberman points out, they are neither
  unusual nor unfair to Lutheran.
  The majority's primary reason for not applying exhaustion here is that
  the subpoena did not state on its face that the recipient had five days
  to object and that this could have misled Lutheran.  Slip op. at 9.
  It is important to keep in mind that, although Lutheran's failure to
  file a petition has been an issue throughout these proceedings, Lutheran
  has never argued or produced any evidence to suggest that its failure to
  comply with the EEOC's regulation was caused in whole or in part by the
  lack of a notice of the time limit for filing an administrative petition
  on the face of the subpoena.  In fact, the majority does not refer to
  any record evidence, but simply relies on speculation as to what might
  have occurred "had" the Human Resources Director looked up section
  2000e-9 or "had" Lutheran's counsel received the subpoena on time.
  Slip op. at 9-10.  Initially, we agree with Judge Silberman that, even
  if one of the panel's speculative scenarios were true, it would not be
  unfair to enforce the exhaustion requirement since Lutheran's failure
  to learn of the EEOC's clear regulation mandating exhaustion would be
  negligent at best.<5>  Dissent at 10 .
  Moreover, the panel's holding that the lack of notice on the EEOC's
  subpoena provides an equitable basis for excusing Lutheran's failure to
  file a section 1601.16(b)(1) petition cannot be reconciled with this
  Court's decision in Bowden refusing to excuse the plaintiff from the
  requirement that he file a timely complaint under Title VII because the
  agency "failed to give him notice" of the time limit.  Bowden, 106 F.3d
  at 438.  The Court noted that it had excused parties from limitations
  periods when they established that they were misled "by inaccurate or
  ineffective notice from a government agency required to provide notice
  of the limitations period." Id.  However, the Court held that the failure
  to give notice could not be a basis for excusing the plaintiff's default
  because, since neither Title VII nor the EEOC's regulations "require[]
  notice of the time limit on allegations of noncompliance with settlement
  agreements," the INS "had no responsibility to notify him in the first
  place."<6>  Id.
  The panel's holding that the EEOC's failure to provide notice of the
  administrative appeal procedure on the subpoena excuses Lutheran's
  failure to file a petition to modify or revoke stands exhaustion
  principles on their heads.  Rather than requiring Lutheran to meet
  its burden to establish that extraordinary circumstances warrant a
  departure from the rule that issues not presented in an administrative
  appeal may not be presented to a court, (Honig, 484 U.S. at 327; Bowden,
  106 F.3d at 437), the panel held that exhaustion was not required here
  because the EEOC cannot assure the court that Lutheran might not have
  been misled by the agency's procedures.  This is a daunting task for
  any party and a standard that essentially allows a district court
  to second-guess agency procedures simply because it "think[s]" that
  the agency might have been able to do things differently.  If applied
  generally, this approach would seriously undermine the deference which
  courts are required to accord to administrative procedures.
  The majority also based its decision to excuse Lutheran's failure to
  file a petition on testimony that the EEOC's investigator failed to
  tell Lutheran's counsel, in response to his letter declining to produce
  the report, that it was "too late" to file a section 1601.16(b)(1)
  petition because the five-day period had passed.  Slip op. at 10. The
  majority notes that, although the investigator does not recall making
  the statement, the attorney stated that the investigator agreed to keep
  the lawyer posted and to contact him before taking further action.
  Id.  As Judge Silberman notes (dissent at 9), on the date of the
  phone conversation between the investigator and Williams & Connolly's
  attorney, February 17th, the time to file a petition had passed. Thus,
  even if the investigator had mentioned the appeal procedure, Lutheran
  could not have relied on that statement to its detriment, since the
  five-day period had expired.  See Washington v. WMATA, 160 F.3d 750,
  753 (D.C. Cir. 1998) (because 180 days had already passed between the
  last alleged discriminatory act and the issuance of the agency's letter
  disposing of plaintiff's claim, he could not have relied on letter to
  his detriment).
  The majority also based its decision to excuse Lutheran's failure
  to exhaust on the assertion that Lutheran's counsel "detailed his
  client's view that the report was privileged" to the investigator and
  the District Director.  Slip op. at 10-11.  This statement is unsupported
  by the record.  Lutheran's attorneys, both before and after issuance of
  the subpoena, simply stated without elaboration or supporting evidence
  that the report is privileged. J.A. 13-14, 22. Thus, like the cases
  cited at 6-7, Lutheran "detailed" its position for the first time in
  district court.
  The majority stated that its ruling "would do little if any damage" to
  the EEOC's section 1601.16(b)(1) procedures because requiring Lutheran
  to follow those procedures would not serve the "basic purpose" of
  exhaustion -- permitting an agency to perform functions within its
  "special competence" -- inasmuch as the EEOC lacks expertise as to
  privilege issues.  Slip op. at 11 (quoting Parisi v. Davidson, 405
  U.S. 34, 37 (1972)).  The majority's narrow view of the exhaustion
  doctrine's purposes is contrary to precedent of the Supreme Court and
  this Court.
  The exhaustion requirement serves both to "protect[] administrative
  agency authority and promot[e] judicial efficiency." McCarthy,
  503 U.S. at 145; Atlantic Richfield Co., 769 F.2d at 781 ("primary
  objective of the exhaustion doctrine is promotion of administrative
  and judicial efficiency").  The doctrine recognizes the "commonsense
  notion" that "an agency ought to have an opportunity to correct its
  own mistakes with respect to the programs it administers," thereby
  possibly avoiding a judicial controversy.  McCarthy, 503 U.S. at
  145; Randolph-Sheppard, 795 F.2d at 105.  Administrative agencies,
  not the courts, should have primary responsibility for the programs
  that Congress has charged them to administer, particularly "when the
  action under review involves exercise of the agency's discretionary
  power."  McCarthy, 503 U.S. at 145; Salt Lake Community Action Program,
  Inc. v. Shalala, 11 F.3d 1084, 1087 (D.C. Cir. 1993) (primary policy
  underlying exhaustion "might be hindered" where the agency is not
  permitted to "exercise its discretion").<7>
  Those basic underpinnings of the exhaustion doctrine would have been
  served by requiring Lutheran to file a section 1601.16(b)(1) petition.
  It is the EEOC Commissioners, not the investigator or the District
  Director, who make the final decision either to modify or revoke a
  subpoena. See 29 C.F.R.  1601.16(b)(2); see also dissent at 9 n.5
  (noting that Lutheran held informal conversations with "the wrong
  person").  Had Lutheran presented to the Commissioners the detailed
  evidence and arguments it presented to district court, the Commissioners
  might have disagreed with the District Director's decision to issue
  the subpoena.  Marine Mammal, 134 F.3d 409, 412 (D.C. Cir. 1998) (where
  there is concern that inferior agency officials may have erred, that
  is "all the more reason for insisting that the aggrieved party appeal
  and give the agency a chance to rectify the error").  For instance,
  the Commissioners might have revoked the subpoena because they believed
  that the material is privileged (or that a district court would so
  find) or because they believed, as the majority notes at 12-13, that
  seeking an investigative report prepared by a recipient's attorney
  is inconsistent with Title VII's notion of voluntary compliance.
  Such considerations are "laced with discretion" (dissent at 6) and,
  consistent with the basic purpose of the exhaustion doctrine, the EEOC
  should have had the initial opportunity "to correct its own errors so
  as to moot judicial controversies."<8>  Parisi, 405 U.S. at 37.
  Likewise, the majority is mistaken in its view that its holding will
  do little harm to the EEOC's procedures.  The exhaustion doctrine
  applies with "special force" when "'frequent and deliberate flouting
  of the administrative process' could weaken an agency's effectiveness
  by encouraging disregard of its procedures."  McCarthy, 503 U.S. at
  145 (internal cites and quotations omitted).  The EEOC, which has no
  independent enforcement authority, can obtain material from a reluctant
  party under investigation only by issuing an administrative subpoena
  and then, if the party does not comply, by seeking court enforcement.
  Where, as here, a party is permitted to ignore the administrative
  process without providing evidence showing why its failure to comply
  is excused under traditional exhaustion principles, there is a real
  danger of encouraging other entities to disregard the EEOC's procedure,
  thereby weakening the EEOC's effectiveness and flooding the courts with
  enforcement proceedings.  See dissent at 10-11 (majority's holding will
  "encourag[e] subpoena recipients to flout the agency regulations and
  to gamble on garnering equitable relief from a court").
 CONCLUSION
  For the reasons stated, the petition should be granted and the case
  should be reheard by the panel or, if necessary, by the Court en banc.
 Respectfully submitted,
 C. GREGORY STEWART
 General Counsel Designate
 PHILIP B. SKLOVER
 Associate General Counsel
 VINCENT J. BLACKWOOD
 Assistant General Counsel
 JOHN F. SUHRE
 Attorney
 EQUAL EMPLOYMENT OPPORTUNITY
 COMMISSION
 1801 L Street N.W., Room 7010
 Washington, D.C. 20507
 (202) 663-4716
 ADDENDUM
 CERTIFICATE OF SERVICE
  I hereby certify that two copies of the foregoing petition were mailed,
  first class, postage prepaid, on this the 7th day of October, 1999,
  to the following counsel of record:
 Jonathan P. Graham, Esq.
 Williams & Connolly
 725 12th Street, N.W.
 Washington, D.C. 20005
 JOHN F. SUHRE
 Attorney
 EQUAL EMPLOYMENT OPPORTUNITY
 COMMISSION
 1801 L Street N.W., Room 7010
 Washington, D.C. 20507
 (202) 663
 1       The majority also concluded that, because the entire
 report was protected as work product, it did not have to consider whether
 the attorney-client privilege applied.  The EEOC does not seek further
 review of this holding.
 2       The majority acknowledges, as it must given this Court's
 consistent precedent, that "section 1601.16(b)(1)'s mandatory language
 creates a strong presumption that issues parties fail to present to the
 agency will not be heard in court," and that this presumption may be
 defeated only in "extraordinary" circumstances. Slip op. at 8-9.  Judge
 Silberman likewise recognizes that a "non-jurisdictional but mandatory
 exhaustion requirement allows a court to consider certain traditional
 limited exceptions such as futility or agency bias."  Dissent at 4.
 3       Contrary to the majority's view (slip op. at 14-15), Cuzzens is
 no different from this case. In that case, the court held that Cuzzens
 was required to turn over documents sought in an EEOC subpoena without
 considering the company's objections because the company failed to
 petition the EEOC.  Cuzzens, 608 F.2d at 1064.  That is precisely
 what the EEOC is asking here.  There is nothing to suggest, as the
 majority implies, that the court's observation that Cuzzens would have
 an opportunity to present the argument which formed the basis for its
 objection - that it was not covered by Title VII - at a later stage in the
 proceedings played any role in the court's exhaustion holding.  On the
 contrary, the Cuzzens court stated that its holding "has reference only
 to the enforcement of the subpoena."  Id.  Thus, the court recognized
 that, whatever relevance Cuzzens' coverage claim might have in later
 proceedings, Cuzzens could not rely on it to challenge the EEOC's
 subpoena.
 4       In McCarthy, the Court, in permitting a prisoner to go to court
 without exhausting the prison's administrative procedure, stated that
 courts must give "appropriate deference to Congress' power to prescribe
 the basic procedural scheme under which a claim may be heard" in federal
 court and must fashion "exhaustion principles in a manner consistent
 with congressional intent and any applicable statutory scheme."  503
 U.S. at 144.  There, even though, unlike in this case, "the general
 grievance procedure was neither enacted nor mandated by Congress" id. at
 149, the Court narrowly limited the situations where failure to exhaust
 would be excused.
 5       As Judge Silberman notes, (dissent at 10), the "supposed
 unfairness" to Lutheran is illusory.  It simply is not unfair to hold
 Lutheran (and its counsel) responsible for knowing that a government
 agency's actions are controlled by regulations as well as statutes.
 ATC Petroleum, Inc. v. Sanders, 860 F.2d 1104, 1111-12 (D.C. Cir. 1988)
 (in denying party's equitable estoppel claim against a government agency,
 Court stated that "there is no grave injustice in holding parties to a
 reasonable knowledge of the law"), citing Heckler v. Community Health
 Serv., 467 U.S. 51, 63 (1984) (parties dealing with the government "are
 expected to know the law").  Moreover, as Judge Silberman observes
 (dissent at 10), Lutheran's Human Resources Director's failure to
 contact counsel immediately upon receiving the subpoena would be "gross
 negligence" that would not entitle Lutheran to relief from the exhaustion
 requirement.  Washington v. WMATA, 160 F.3d 750, 752 (D.C. Cir. 1998)
 (equitable tolling not applied "'where the claimant failed to exercise
 due diligence in preserving his legal rights'"), quoting Irwin v. Dep't
 of Veterans Affairs, 498 U.S. 89, 96 (1990).
 6       In Bowden, the Court also based its refusal to excuse the
 plaintiff's failure to file a timely complaint on the fact that he made
 "no allegation that the INS's failure to give notice misled him." 106
 F.3d at 438.  As discussed at 9-10, Lutheran neither claimed nor provided
 evidence that it was misled by the lack of notice on the subpoena.
 7       Parisi is not to the contrary. There, the Supreme Court, in
 describing the "basic purpose of the exhaustion doctrine" included as
 "functions within [the agency's] special competence" correcting "its own
 errors so as to moot judicial controversies."  Parisi, 405 U.S. at 37.
 8       The majority also excuses Lutheran's failure to exhaust because of
 the relationship between the privileges and the importance of voluntary
 compliance to Title VII enforcement and because the EEOC will not be
 deprived of access to sources of possible evidence.  Slip op. at 12-13.
 Voluntary compliance is important, but so is the integrity of the EEOC's
 administrative process, under which Congress has stated that the EEOC
 should have the first shot at deciding whether or not to revoke or modify
 a subpoena.  If Lutheran followed the prescribed procedure, but the EEOC,
 rather than revoke or modify the subpoena, sought its enforcement, this
 Court could refuse to enforce the subpoena without giving deference to
 the EEOC's view.  See majority at 11.  The majority's view that the EEOC
 has no need for the report "conflates the merits of Lutheran's privilege
 claim with the need for an exhaustion requirement."  See dissent at 10.