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United Western Bank v. Office of Thrift Supervision

February 24, 2012

UNITED WESTERN BANK, PLAINTIFF,
v.
OFFICE OF THRIFT SUPERVISION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Amy Berman JACKSONUnited States District Judge

MEMORANDUM OPINION & ORDER

On February 10, 2012, the Court granted a motion filed by the Federal Deposit Insurance Corporation in its corporate capacity ("FDIC") to intervene for the limited purpose of addressing the production of documents by defendant Office of the Comptroller of the Currency ("OCC"). FDIC asserts that certain documents, which OCC has determined are responsive to plaintiff's discovery requests and which the Court has ordered OCC to produce, are protected by FDIC's bank examiner's privilege and/or the deliberative process privilege. FDIC contends that under the applicable statute and regulations, including 12 U.S.C. § 1821(t)(1) and 12 C.F.R. § 309.6(a), OCC is prohibited from producing FDIC's privileged material without its consent. In its ruling on the motion to intervene, the Court ordered FDIC to consider plaintiff's motion to compel [Dkt. # 60] as a request to waive the asserted privileges over the documents and to either authorize OCC to produce the documents or submit them in camera for the Court's review. Minute Order, Feb. 10, 2012.

On February 15, 2012, FDIC notified the Court that it had undertaken further review of the documents and elected to make a discretionary disclosure of some of them. Specifically, the FDIC agreed to produce all of the liquidity reports and accompanying emails that OCC identified as responsive. FDIC represented that it would provide these documents to plaintiff after the Court ruled on it motion for protective order. [Dkt. # 77].

The Court will enter an appropriate protective order that limits the distribution of FDIC materials and restricts their use to the instant litigation as provided in paragraphs 1, 2, 6, and 7 of FDIC's proposed order. The Court also has no objection to the provision in paragraph 4 that calls for the redaction of irrelevant material from any confidential documents filed with the Court. However, paragraphs 3, 4, and 5, which require the filing of these materials under seal if submitted in connection with the upcoming briefing on the merits, are inconsistent with the D.C. Circuit's general view about the sealing of pleadings. Furthermore, the sealing requirement does not appear to be necessary unless plaintiff moves for leave to file materials related to its financial condition under seal pursuant to LCvR 5(j) and shows good cause to do so. Therefore, it is ORDERED that FDIC must submit a revised protective order for the Court's signature in accordance with these instructions on or before March 2, 2012.

There are three additional documents before the Court that OCC has identified as responsive but for which FDIC does not agree to waive its asserted privileges. They are:

(1) an email circulated among FDIC Board Members on November 5, 2010;

(2) a Case Memorandum to the FDIC Board dated October 25, 2010, which includes two attachments entitled "Cost Test Summary" and "Resolution"; and

(3) an agenda for the FDIC Board closed meeting on November 9, 2010. ANALYSIS

I. The Privileges Asserted by FDIC

The deliberative process privilege "protects documents reflecting advisory opinions, recommendations, and deliberations comprising an agency's decisionmaking process." First Eastern Corp. v. Mainwaring, 21 F.3d 465, 468 (D.C. Cir. 1994), citing NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150 (1975). "[T]he ultimate purpose of this long-recognized privilege is to prevent injury to the quality of agency decisions." Sears, Roebuck & Co., 421 U.S. at 149--151 (discussing the privilege in the context of FOIA Exemption 5, which covers any documents "normally privileged in the civil discovery context"). As such, the privilege only applies to predecisional communications. Id. The privilege is similarly restricted to deliberative materials. See Jordan v. U.S. Dept. of Justice, 591 F.2d 753, 774 (D.C. Cir. 1978), overruled in part on other grounds, Crooker v. BATF, 670 F.2d 1051 (D.C. Cir. 1981) (en banc). Thus, a requested document "must be a direct part of the deliberative process in that it makes recommendations or expresses opinions on legal or policy matters." Id. "[M]emoranda consisting only of compiled factual material or purely factual material contained in deliberative memoranda and severable from its context would generally be available for discovery by private parties in litigation with the Government." EPA v. Mink, 410 U.S. 73, 87--88 (1973), superseded by statute, Public Law No. 93-502, 88 Stat. 1561 (1974).

Similarly, the bank examination privilege is a qualified privilege protecting bank examiners' reports and related information. See In re Subpoena Served Upon Comptroller of Currency, 967 F.2d 630, 633--34 (D.C. Cir. 1992) ("Fleet"). Like the deliberative process privilege, the bank examination privilege protects opinions and recommendations but does not protect factual materials. Schreiber v. Society for Sav. Bancorp, Inc., 11 F.3d 217, 220 (1993). The privilege exists to protect open communication between banks and regulators, which is essential to effective bank supervision. Fleet, 967 F.2d at 633--34. "The agency asserting the privilege has the burden of establishing its applicability to the documents at issue." Schreiber, 11 F.3d at 220.

When discussing the deliberative process privilege, the D.C. Circuit has stated that the privilege does not apply when the plaintiff's cause of action is directed at the government's intent. In re Subpoena Duces Tecum Served on Office of Comptroller of Currency, 145 F.3d 1422, 1424 (D.C. Cir. 1998). "If Congress creates a cause of action that deliberately exposes government decisionmaking to the light, the privilege's raison d'etre evaporates." Id. However, on rehearing, the court clarified this statement by reiterating that in most cases where a party is challenging agency action, the assessment of that action is based upon the administrative record alone:

According to the government, our reasoning could be interpreted as suggesting that the deliberative process privilege would not apply in a case where the government action is challenged as arbitrary and capricious under the APA . . . .

[T]he ordinary APA cause of action does not directly call into question the agency's subjective intent. And our holding that the deliberative process privilege is unavailable is limited to those circumstances in which the cause ...


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