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GREGORY v. FDIC

March 29, 1979

E. A. GREGORY et al., Plaintiffs,
v.
FEDERAL DEPOSIT INSURANCE CORP., Defendant



The opinion of the court was delivered by: RICHEY

MEMORANDUM OPINION

Cross-motions for summary judgment are currently before the Court in this Freedom of Information Act (hereinafter, "FOIA") action. 5 U.S.C. §§ 552 Et seq. This case raises questions concerning exemptions five, six, seven, and eight. 5 U.S.C. § 552(b)(5), (6), (7), and (8).

 I. BACKGROUND.

 By two letters dated July 7, 1978, and a third letter dated July 18, 1978, the plaintiffs, E. A. Gregory, Vonna Jo. Gregory, and the Faith Investment Company, Inc., wrote to the Executive Secretary of the defendant, the Federal Deposit Insurance Corporation (hereinafter, "FDIC") seeking records pursuant to the FOIA. One of the letters dated July 7, 1978, requested copies of documents in the FDIC's possession as insurer of the closed First Bank of Macon County for the period April 1, 1976, through the termination of business on January 26, 1978. The second letter dated July 7, 1978, requested copies of documents in the FDIC's possession as insurer of the closed Wilcox County Bank for the period June 1, 1975, through the termination of business, March 1, 1978. The letter dated July 18, 1978, requested copies of all documents in the defendant's possession naming any of the plaintiffs. In each of these letters, the term "documents" was defined as "all written material normally understood by reasonable persons to be encompassed thereunder, including but not limited to memoranda, correspondence, reports, telephone logs, work papers, minutes, pink sheets or microfilm of any of the foregoing."

 By three letters dated August 4, 1978, the Executive Secretary of the FDIC responded to each of the plaintiffs' requests. The FDIC released a number of the documents requested by the plaintiffs; however, the FDIC declined to release others on the basis of exemptions (4), (5), (6), and (8) of the FOIA, 5 U.S.C. § 552(b)(4), (5), (6), and (8).

 By letter dated August 8, 1978, the plaintiffs asked the FDIC to consolidate their three requests and initiated an administrative appeal of the FDIC's refusal to release documents responsive to their request. As a result of this appeal, additional material was released. However, in a letter dated September 6, 1978, the agency indicated that it would continue to withhold a substantial number of responsive records.

 This action was filed on September 11, 1978, to enjoin the withholding of FDIC records responsive to the plaintiffs' request. On November 16, 1978, over the objections of the FDIC, the Court ordered the FDIC to file an index to the disputed documents, pursuant to Vaughn v. Rosen, 157 U.S.App.D.C. 340, 484 F.2d 820 (1973), Cert. denied 415 U.S. 977, 94 S. Ct. 1564, 39 L. Ed. 2d 873 (1974). On December 8, 1978, the FDIC filed an eighty-five (85) page detailed justification, itemization, and index of the documents withheld.

 Following discovery, which included some interim skirmishes, the parties have cross-moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The FDIC now relies on exemptions five, six, seven, and eight to justify their refusal to release the records requested by the plaintiffs.

 II. EXEMPTION EIGHT OF THE FOIA DOES NOT APPLY TO CLOSED BANKS.

 Under exemption eight of the FOIA, agencies are not compelled to disclose matters that are "contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions." 5 U.S.C. § 552(b)(8). The FDIC, unquestionably an agency responsible for the regulation and supervision of financial institutions within exemption eight, has declined to disclose examination reports of the Macon and Wilcox County Banks despite the fact that these banks are now closed.

 The plaintiffs contend that the eighth exemption does not apply to closed banks. In response, the FDIC argues that the statute makes no differentiation between open and closed banks, and that these records fall within the plain language of the statute.

 The FDIC is correct in asserting that these documents fall within the plain language of the statute. Although the exemption's plain meaning is the Court's first step in interpreting its language, when a literal reading leads to an unreasonable result, a court can look behind the plain meaning of the statute. Consumers Union v. Heimann, 191 U.S.App.D.C. 8, 10, 589 F.2d 531, 533 (1978).

 To an important extent, both sides in this action agree that the plain meaning of the statute results in an unreasonable result. Under a literal reading, the eighth exemption would seal the records of a bank for all time, even after the bank has been closed for centuries. The FDIC concedes that, despite the plain language of the exemption, "the passage of time and the fact that a bank is closed may affect the releasibility of examination reports." Defendant's Opposition to Plaintiffs' Cross-motion for Partial Summary Judgment, at 8 (February 26, 1979). Therefore, the plain language of the statute leads to an unreasonable result, and the Court must examine the legislative history of the exemption to determine the Congressional intent behind its enactment.

 Clearly, the central purpose of the exemption is to protect the financial integrity of banks. As the Court of Appeals recognized in Consumers Union v. Heimann, 191 U.S.App.D.C. at 11, 589 F.2d at 534, "the primary reason for adoption of exemption 8 was to ensure the security of financial institutions." (citation omitted). The Court in Consumers Union found legislative history to show that "there was concern that disclosure of examination, operation, and condition reports containing frank ...


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