Cafeteria & Restaurant Workers Local 473 v. McElroy, 367 U.S. at 896, 81 S. Ct. at 1749 ("opportunity to work at one isolated and specific military installation").
Defendants, while not really disputing the seriousness of the deprivation, assert that the plaintiff is nevertheless not only not entitled to a pre-suspension hearing, but also that there is no due process requirement for a post-suspension hearing in regard to action taken pursuant to 12 U.S.C. § 1818(g)(1). This latter argument is bottomed on defendants' belief
that a Notice and Order of Suspension based upon the return of an indictment, and issued within the standards of section 1818(g)(1), does not by its nature admit a hearing before the regulatory agency since there are no material facts which may properly be disputed, the indictment being dispositive on the issue of probable cause that the individual committed the offense charged. Defendants add that since, in their view, the only question is probable cause, a re-examination of that issue by the agency would result in an impermissible intrusion into the criminal process.
And, they maintain that the criminal trial would in any event serve as a speedy and appropriate forum for the individual to contest the question of probable cause. Finally, defendants seek to emphasize the importance of the governmental interest underlying section 1818(g)(1).
It appears arguable that if the issuance of a Notice and Order of Suspension were automatic upon the return of an indictment or the filing of an information or complaint, then there might not be a need for a hearing or other incidents of due process.
Such an argument could only retain its vitality though if there were no agency determination required prior to the issuance of the Notice and Order of Suspension.
But this is not the case. Section 1818(g)(1), by its very language, requires that the agency decide whether the crime charged is one "involving dishonesty or breach of trust."
Given the variety and nature of state offenses, it is apparent that the agency must exercise discretion as to this issue. This discretion, in fact, is enhanced by the lack in the statute of a definition of a crime of "dishonesty or breach of trust." But this is not the only discretionary question posed by the statute. The statute interjects an added element of discretion by providing that the agency "may" issue a Notice and Order of Suspension; it is not required to do so. Furthermore, when the statute is construed it appears clear
that even if the agency determines that the crime charged is one involving dishonesty or a breach of trust, the agency is still given -- and in fact has exercised
-- the discretion not to issue a Notice and Order of Suspension. In addition, it is significant for purposes of due process that no specific guidelines are provided in the statute for the exercise of this discretion.
The only ascertainable guidance is the general purpose of the statute: to insure the public's confidence in the stability of the financial institution. Given the fact of and the extent
of the discretion which attends the issuance of a Notice and Order of Suspension, coupled with the resultant deprivation of a constitutionally-protected right, it is therefore clear that there is a need here for imposing the safeguards of due process; for, the "touchstone of due process is protection of the individual against arbitrary action of the government, Dent v. West Virginia, 129 U.S. 114, 123 [9 S. Ct. 231, 233, 32 L. Ed. 623] (1889)," Wolff v. McDonnell, 418 U.S. 539, 558, 94 S. Ct. 2963, 2975, 41 L. Ed. 2d 935 (1974).
The criminal trial is hardly the proper or timely hearing for the deprivation at issue. Despite the Speedy Trial Act, 18 U.S.C. § 3162 et seq. (Supp.1976), the interim between indictment and trial is sufficient time within which plaintiff's interest could be permanently and irreparably impaired.
Moreover, contrary to defendant's belief, the question relating to issuance of a Notice and Order of Suspension is not the person's guilt or innocence but, rather, whether the crime charged can be characterized as a crime involving "dishonesty or breach of trust," and whether the decision to issue a Notice and Order of Suspension in a particular case is necessary to further the legislative purpose of the statute.
Since a criminal trial is not a forum for addressing either of these questions, it is not a permissible substitute for affording plaintiff the protection of having an opportunity to be heard.
There is no question but that there is a strong governmental purpose for a speedy and efficient action in order to maintain the public's confidence in the insured financial institutions. See 112 Cong. Rec. 20080 (1966) (Remarks of Senator Proxmire, a sponsor of the bill); Report of the Senate Committee on Banking and Currency, S.Rep.No.1482, 89th Cong., 2d Sess. 5-6 (1966); Report of the House Committee on Banking and Currency, H.Rep.No.2077, 89th Cong., 2d Sess. 4-5 (1966); Hearings on S. 3158 Before the Senate Committee on Banking and Currency, 89th Cong., 2d Sess. 28, 30 (1966) (respective statements of Joseph W. Barr, Undersecretary of the Treasury, and Kenneth H. Randall, Chairman, Federal Deposit Insurance Corporation). The importance of this interest has been recognized in the past. See Fuentes v. Shevin, 407 U.S. 67, 92 & n. 26, 92 S. Ct. 1983, 2000, 32 L. Ed. 2d 556, citing Fahey v. Mallonee, 332 U.S. 245, 67 S. Ct. 1552, 91 L. Ed. 2030 (1946). But the importance of the governmental interest alone does not provide a basis for not affording any protection to interests that are constitutionally deserving of protection. Instead, the importance of the governmental interest is to be considered in determining what incidents of due process are necessary and appropriate under the circumstances. Mathews v. Eldridge, 424 U.S. 319, 332-355, 96 S. Ct. 893, 901-903, 47 L. Ed. 2d 18. Thus, where an important governmental interest requires summary action, immediate and full post-action hearings have been held to be within the parameters of due process. See Goldberg v. Kelly, 397 U.S. 254, 263 and n. 10, 25 L. Ed. 2d 287, 90 S. Ct. 1011, 1018 and note 10 (1970).
This Court concludes that defendants have deprived the plaintiff of a constitutionally-protected property interest. Having so concluded, the Court now turns to the question of whether this has been accomplished in violation of the Constitution. To make this determination, the Court must necessarily determine what minimal incidents of due process are required under the circumstances.
B. Due Process Under the Circumstances
"The fundamental requisite of due process of law is the opportunity to be heard." Grannis v. Ordean, 234 U.S. 385, 394, 34 S. Ct. 779, 783, 58 L. Ed. 1363 (1914). And while at one point it appeared that due process required a hearing prior to any deprivation of a constitutionally-protected interest, with the exception of certain "extraordinary circumstances," Fuentes v. Shevin, 407 U.S. 67, 91, 92 S. Ct. 1983, 1999, 32 L. Ed. 2d 556 (1972), citing Boddie v. Connecticut, 401 U.S. 371, 379, 91 S. Ct. 780, 786, 28 L. Ed. 2d 113 (1971), it now appears that the process due in a particular case is to be determined by the circumstances, Mitchell v. W. T. Grant Co., 416 U.S. 600, 94 S. Ct. 1895, 40 L. Ed. 2d 406 (1974).
Reaching this determination
"requires consideration of three distinct factors: first, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and, finally, the government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail." Mathews v. Eldridge, 424 U.S. 319, 335, 96 S. Ct. 893, 903, 47 L. Ed. 2d 18 (1976).
In examining the private interest, this Court notes, as it did above, that the precise ramifications of plaintiff Feinberg's being prohibited from voting his stock have not been completely articulated. There is no question, however, that this deprivation has a serious impact on the plaintiff's financial status. While defendants argue that the seriousness of the injury is diminished by the temporary nature of the deprivation, we decline to characterize it as such. A Notice and Order of Suspension "remains in effect until such information, indictment, or complaint is finally disposed of or until terminated by the agency." 12 U.S.C. § 1818(g)(1). Such a final disposition, considering the possible appellate avenues, presents the possibility of a substantial passage of time. And while the agency can terminate the Notice and Order of Suspension on its own initiative, such terminations have not occurred and appear unlikely in the future. Being so contingent, agency termination does not diminish the expected duration of the deprivation. Moreover, unlike Eldridge, this case involves a permanent loss of property in that Feinberg cannot be awarded full -- or, for that matter, even partial -- retroactive relief. 424 U.S. at 339, 96 S. Ct. at 905.
Also as stated above, there is a strong governmental-public interest in speedily and efficiently removing indicted officers, directors, or employees from financial institutions, the viability of which depend upon the public's confidence. See page 118, supra. But it also must be recognized that the costs of providing the incidents of due process would not be significant since there are simply not many § 1818(g)(1) cases.
Moreover, balanced against the governmental interest in minimizing administrative cost is the governmental interest in a sound banking system. Congress itself has emphasized that "to permit suspensions and removals without thorough consideration would be unfair to the institution and officers involved. Any system which would permit this would have a harmful effect on the banking system itself and on depositors, borrowers, and the public." S.Rep.No.1482, 89th Cong., 2d Sess. (1966). Balancing the effect of the deprivation upon the individual with the governmental-public interest to be served, it appears that the minimal process constitutionally permissible under the circumstances would be an immediate postsuspension hearing. Cf. Fahey v. Mallonee, 332 U.S. 245, 67 S. Ct. 1552, 91 L. Ed. 2030 (1947).
It is clear from the congressional history that Congress, in passing 12 U.S.C. § 1818, was concerned with the dangerous effect of the public's loss of confidence in financial institutions. Notably, section 1818 was introduced at the request of the regulatory agencies, its purpose being the creation of more effective regulatory powers to deal with crises in financial institutions. 112 Cong.Rec. 10077-84, 20223-48 (1966). The Senate Committee Report stated:
"Existing remedies have proven inadequate. On the one hand they may be too severe in many situations, such as taking custody of an institution or terminating its insured status. On the other hand they may be so time consuming and cumbersome that substantial injury occurs to the institution before remedial action is effected." Id. at 20082.