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FDIC Enforcement Decisions and Orders

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   [8006] Docket No. FDIC-89-40j (7-11-89).

   Request for Special Permission to Appeal denied. FDIC found that the ALJ had issued no ruling upon which an interlocutory appeal could be based and that there was no possibility of harm to the parties.

   [.1] Practice and Procedure—Interlocutory Appeals—Standard for Special Permission to Appeal.
   Special Permission for Interlocutory Appeals is granted only if the appeal involves an important, unresolved issue of general application. A preliminary letter from an ALJ concerning burden of proof issues does not constitute an order from which an appeal can be made.

In the Matter of * * * BANK * * *
(Insured State Nonmember Bank)

   This appeal arises from a denial of a Notice of Acquisition of Control application under the Change in Bank Control Act ("CBCA"), 12 U.S.C. § 1817(j), submitted by * * *. On March 10, 1989, the Federal Deposit Insurance Corporation ("FDIC") notified Mr. * * * of its decision to disapprove the proposed acquisition. Mr. * * * filed a request for a hearing pursuant to section 1817(j)(4) of the CBCA and section 308.53 of the FDIC Rules of Practice and Procedures, 12 C.F.R. § 308.53.
   On April 28, 1989, FDIC Enforcement Counsel and Mr. * * * were directed by the Administrative Law Judge ("ALJ") to file memoranda of law on the allocation of the burden of proof. Both parties complied. (See Application, Attachments A and B). On June 12, 1989, the ALJ sent a letter to the parties outlining his "tentative conclusions" as to the allocation of the burden of proof, stating that he was not "inclined to issue an order on the burden of proof dispute prior to the hearing...." Letter at 2. (Application, Attachment C).
   In his June 12, 1989 letter, the ALJ stated that his "tentative conclusion" was that the FDIC has the burden of establishing a prima facie case before the ALJ. Letter at 6. FDIC Enforcement Counsel, in their Brief, concede this point.
   However, the ALJ opined that "there is good reason to believe that the burden of persuasion is on the applicant [Mr. * * *] in the event that a prima facie case has been established." Letter at 6. The ALJ clarifies this point by stating that "the risk of nonpersuasion is initially on the FDIC and then shifts to the applicant." Letter at 2. Mr. * * * would then bear the burden of rebutting the FDIC's prima facie case: "[w]hen the federal regulator presents evidence, it is incumbent on the applicant to rebut the evidence, and to persuade the ALJ that his {{4-1-90 p.I-19}}
version is more likely than not to be true." Letter at 6.

   [.1] Notwithstanding this discussion, the ALJ has not yet affirmatively ruled on these issues. FDIC Enforcement Counsel seeks this interlocutory appeal and stay in order to obtain review of the ALJ's decision to defer his ruling on the burden of proof issue. Application at ¶8.
   B. Special Permission To Appeal And Stay Of Proceedings.
   Interlocutory appeals generally are not favored. Section 308.31(a) of the FDIC Rules and Regulations states in pertinent part:

    General rule. (1) Rulings or orders by an administrative law judge may not be appealed to the Board prior to submission of the record to the Board...unless the Board, in its sole discretion, grants special permission to appeal.
       (2) Special permission to appeal a ruling or order will only be granted if (i) the interlocutory appeal involves an important, unresolved issue of general application that should be immediately decided by the Board....
Thus, the granting of an interlocutory appeal is, within certain limits, discretionary.
   As an initial matter, a question exists as to whether the ALJ's decision to defer constitutes a "ruling or order" as required by section 308.31(a). The ALJ's letter does not purport to be a formal ruling or order, and he may conclusively rule on the issue of burden of proof at the hearing. Letter at 2. In addition, there is nothing in the record to indicate that the ALJ considered the June 12th letter to be an interlocutory ruling or order.
   Even if the letter were deemed to be an interlocutory ruling or order, the Board of Directors ("Board") would decline to grant an appeal. By regulation, FDIC Enforcement Counsel must put on their case-in-chief first. 12 C.F.R. § 308.36. Each side will be given the opportunity to present its evidence and to refute the evidence presented by the other side. Allocating the burden of proof to Enforcement Counsel—even erroneously—should not materially affect the presentation of their case.
   Involvement of the Board at this stage of the proceeding is inadvisable since the undeveloped state of the record would require the Board to operate in a factual vacuum. Furthermore, the ALJ may issue a ruling or order prior to the commencement of the hearing which would obviate the need for any action by the Board. Finally, FDIC Enforcement Counsel will have ample opportunity to file exceptions to the ALJ's recommended decision, if necessary. Therefore, Enforcement Counsel's application for an interlocutory appeal and stay of proceedings is denied.
   C. Extension Of Time.
   As an alternative to their application for an interlocutory appeal, Enforcement Counsel seeks an extension of time to file a statement of the issues, proposed stipulations, witness and exhibit lists, and other preparation. Under the FDIC's regulations, this request should be directed to the ALJ. See 12 C.F.R. §§ 308.07, 308.15. Therefore, the Board declines to consider this request.


   After considering the request of Enforcement Counsel, and the materials submitted therewith,
   IT IS HEREBY ORDERED, that the request by Enforcement Counsel for special permission to appeal and for stay of proceedings is DENIED.
   By direction of the Board of Directors.
   Dated at Washington, D.C., this 11th day of July, 1989.
Hoyle L. Robinson
Executive Secretary

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