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.