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LEPELLETIER v. FDIC

September 8, 1997

ROBERT LEPELLETIER, JR., Plaintiff,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, et al., Defendants.



The opinion of the court was delivered by: ROBERTSON

MEMORANDUM OPINION

 Plaintiff describes himself as an independent money finder. On October 4, 1995, he made a Freedom of Information Act (FOIA) request to defendant FDIC for lists of all the unclaimed deposits of three failed banks -- National Bank of Washington ("NBW") and Madison National Banks of Washington D.C. and Virginia -- that the FDIC holds in receivership. The FDIC provided the requested information for the unclaimed deposits of state and local municipalities, non-profit entities and deceased depositors. With respect to deposits of living individuals and businesses, FDIC disclosed deposit balances but withheld depositor names, invoking FOIA Exemptions 4 and 6, 5 U.S.C. §§ 552(b)(4) and (b)(6). Plaintiff brought this action on June 14, 1996. He alleges that FDIC's assertion of Exemptions 4 and 6 was improper and that FDIC violated the due process clause of the Constitution by failing to give sufficient notice to the depositors of their right to the unclaimed funds. *fn1"

 On December 22, 1996, FDIC announced its plans to terminate its receivership of Madison National Bank of Virginia. Because termination would extinguish the rights of depositors to unclaimed funds at that bank, plaintiff moved for an emergency temporary restraining order and a permanent injunction. At a hearing on February 4, 1997, defendant agreed to take no action to terminate the receiverships of any of the three institutions until resolution of this suit. Both parties subsequently moved for summary judgment on the FOIA claim, and defendant moved for summary judgment on the due process claim. I heard argument on June 27, 1997.

 BACKGROUND

 The information plaintiff seeks was acquired by FDIC in its capacity as receiver for insolvent banks pursuant to 12 U.S.C. § 1821(c)(2)(A)(ii). FDIC assumes control of the records of insolvent banks by operation of law when it becomes receiver. 12 U.S.C. § 1821(d)(2)(A). FDIC must make good on the insured deposits of an insolvent bank, either by paying cash or by establishing deposits in other local banks. 12 U.S.C. § 1821(f). *fn2"

 In 1993, Congress changed the procedures for notification to depositors in the event of FDIC receiverships. Pub. L. No. 103-44, 107 Stat. 220 (codified at 12 U.S.C. § 1822(e)). The new procedures were to apply prospectively to all receiverships created after June 28, 1993. For receiverships created between January 1, 1989 and June 28, 1993 -- including the receiverships of the NBW and the Madison banks which are the subject of this action -- Congress established a special rule. The special rule extended the time for a depositor to make a claim against FDIC from 18 months to the date the receivership is terminated. Pub. L. No. 103-44, § 2(b). The statute also required that FDIC provide to any state, upon request, the name and last known address of any insured depositor eligible to make a claim against FDIC. Pub. L. No. 103-44, § 2(c).

 In the present case, the FDIC has taken initial steps to terminate the receivership of Madison National Bank of Virginia and has expressed a desire to terminate the receivership of the NBW and Madison National Bank of Washington, D.C.

 ANALYSIS

 A. FOIA Claims

 FDIC has declined to disclose the identities of businesses having unclaimed deposits, invoking FOIA Exemption 4, and declined to disclose the identities of individual depositors, invoking FOIA Exemption 6. For the reasons set forth below, FDIC will be required to disclose the identities of business depositors but may continue to withhold the identities of individuals.

 1. Exemption 4

 Exemption 4 protects from disclosure "trade secrets and commercial or financial information obtained from a person [that are] privileged or confidential." 5 U.S.C. § 552(b)(4). The information sought in this case is "financial information" for purposes of the exemption. See Washington Post Co. v. U.S. Dep't of Health and Human Servcs., 223 U.S. App. D.C. 139, 690 F.2d 252, 266 (D.C. Cir. 1982) (a list of organizations in which an individual had financial interests, even without dollar amounts, was "financial" information). The banks from which FDIC obtained the information are "persons" within the meaning of Exemption 4. See, e.g., Comstock Int'l Inc. v. Export-Import Bank of the United States, 464 F. Supp. 804, 806 (D.D.C. 1979). The question is whether the information is "confidential."

 Different standards are used for determining whether information is confidential for Exemption 4 purposes depending on whether the information was required by the government or was volunteered to the government. Critical Mass Energy Project v. Nuclear Regulatory Comm'n, 298 U.S. App. D.C. 8, 975 F.2d 871, 878 (D.C. Cir. 1992), cert. denied, 507 U.S. 984, 123 L. Ed. 2d 147, 113 S. Ct. 1579 (1993). *fn3" Required information is "confidential" if its disclosure is likely to cause substantial harm to the competitive position of the person from whom it was obtained. National Parks & Conservation Ass'n v. Morton, 162 U.S. App. D.C. 223, 498 F.2d 765, 770 (D.C. Cir. 1974). This standard requires a showing of "actual competition and a likelihood of substantial competitive injury." CNA Fin. Corp. v. Donovan, 265 U.S. App. D.C. 248, 830 F.2d 1132, 1152 (D.C. Cir. 1987). Voluntarily provided information is protected if it "would customarily not be released to the public by the person from whom it was obtained." Critical Mass, 975 F.2d at 879.

 In this case it was the insolvent banks, and not the individual depositors, that were compelled to provide financial information to the government. The obvious question -- whether Exemption 4 applies at all to one party's information when it has been provided by another -- is not answered by the briefs of the parties. It is, however, an academic question in this case, because depositors who have abandoned deposits, at least in District of Columbia and Virginia, have no continuing expectation of confidentiality. The District of Columbia and Virginia both presume that bank deposits have been abandoned after 5 years of inactivity, and both provide for publication of the names of depositors. D.C. Code § 42-206 & § 42-218; VA Code § 55-210.3:01 & § 55-210.13. Plaintiff properly points out that all persons having property in a state have constructive notice of the state statutes that govern the disposition of abandoned property. See Anderson Nat'l Bank v. Luckett, 321 U.S. 233, 243-44, 88 L. Ed. 692, 64 S. Ct. 599 (1944). Thus, without even reaching the ...


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