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FDIC Enforcement Decisions and Orders

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{{8-31-98 p.I-117}}
   [8035] In the Matter of James E. Abbott, et al., Community First State Bank (Formerly the Abbott Bank), Alliance, Nebraska, Docket No. FDIC-94-167e and FDIC-95-187k (5-27-97)

   FDIC Board ruled that the request for interlocutory review of the ALJ's discovery order met the statutory criteria, but ordered that all reports subject to the discovery order be submitted to the Board for in camera review to determine the validity of assertions of privilege.(This order was terminated by order of the FDIC dated 5-27-99; see ¶16,221, ¶16,222, ¶16,223, ¶16,224.)

   [.1] Interlocutory Review—Standards—Subsequent Modification Inadequate Remedy
   Board holds that the request for review meets one of the criteria of FDIC Rules of Practice and Procedure because a subsequent modification of ruling on discovery at the conclusion of the proceedings would be an inadequate remedy.
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   [.2] Discovery—In camera review
   Board orders all Reports of Apparent Crime subject to disclosure by the ALJ's order be submitted to the Board for in camera inspection.

In the Matter of
JAMES E. ABBOTT;
RICHARD L. GORDON;
MORRIS R. SHIELDS;
JOHN H. WESTERING;
ALAN W. FRIESEN;
BRUCE A. HOCKING;
GLENN P. OORLOG; and
RITCH A. BAHE
COMMUNITY FIRST STATE BANK
(Formerly The Abbott Bank)
ALLIANCE, NEBRASKA
Insured State Nonmember Bank
Decision and Order Granting
Request for Interlocutory Review

Of Motion For Severance
FDIC-94-167e
FDIC-95-187k

BACKGROUND

   This matter is before the Board of Directors (the "Board") of the Federal Deposit Insurance Corporation ("FDIC") upon the Motion and Request of Interlocutory Review filed by FDIC Enforcement Counsel. The Request arised out of a prehearing Order on Discovery Rulings on FDIC Assertions of Privilege (the "Order"), issued by Administrative Law Judge Arthur L. Shipe (the "ALJ").1 Respondents Friesen and Hocking filed a Joint Response to FDIC Enforcement Counsel's Request for Interlocutory Review.
   The ALJ's Order requires the FDIC to produce Reports of Apparent Crime prepared by Community First State Bank, Alliance, Nebraska (the "Bank") which are in the possession of the FDIC pursuant to the FDIC's regulation which requires the submission of such documents to the FDIC, as well as to the Department of Justice, 12 C.F.R. 353. FDIC Enforcement Counsel seeks Interlocutory Review of this Order.

INTERLOCUTORY REVIEW

   Section 308.28(b) of the FDIC Rules of Practice and Procedure, 12 C.F.R. § 308.28(b), states that interlocutory review of a ruling of an administrative law judge may be granted if the Board finds that:
   (1) The ruling involves a controlling question of law or policy as to which substantial grounds exist for a difference of opinion;
   (2) Immediate review of the ruling may materially advance the ultimate termination of the proceeding;
   (3) Subsequent modification of the ruling at the conclusion of the proceeding would be an inadequate remedy; or
   (4) Subsequent modification of the ruling would cause unusual delay or expense.

   [.1] The Board concurs with FDIC Enforcement Counsel that subsequent modification of the ALJ's Order at the conclusion of the proceeding would be an inadequate remedy in this instance because disclosure of the responsive documents would result in a permanent breach of confidentiality. Accordingly, the Request for Interlocutory Review is hereby GRANTED.

   [.2] Based on the record before the Board it is impossible, however, to reach a determination on the merits of FDIC Enforcement Counsel's Request. The ALJ's Order does not describe the documents ordered to be produced and does not provide any basis for distinguishing between Reports of Apparent Crime prepared by the FDIC and others. The record does not contain a copy of any such Reports. Therefore, to enable the Board to make a fully informed decision on the merits of the Request for Interlocutory Review, the Board hereby ORDERS, for in camera inspection, the submission to this Board of all Reports of Apparent Crime which would be subject to disclosure under the ALJ's Order of March 3, 1997. The Reports of Apparent Crime are to be submitted to the Office of Executive Secretary for transmission to the Board within ten (10) days of receipt of this Decision and Order.

   By Direction of the Board of Directors.
   Dated at Washington, D.C., this 27th day of May, 1997.


1 FDIC Enforcement Counsel's assertion of privilege pertained to Reports of Apparent Crime submitted by the FDIC and/or others to the United States Department of Justice between October 1994 and March 1995. The ALJ upheld the assertion of privilege with repect to Reports of Apparent Crime prepared by the FDIC, but ordered the production of such reports submitted by others.

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