[¶5242A] In the Matter of Rick A. Jenson, Scott P. Crabtree, Michael D. Landry,
Alton B. Lewis, and Danna A Doucet, First Guaranty Bank, Hammond,
Louisiana, Docket No. 95-65e (4-7-97).
FDIC denied Respondent Michael D. Landry's Request for Interlocutory
Review of the Order on Respondent Landry's Motion for Document
Production. FDIC found Landry failed to meet the four criteria
necessary to grant interlocutory review of a ruling of an
administrative law judge.
[.1] Interlocutory ReviewStandardsFailure to meet any criteria
Review of a ruling of an administrative law judge may be granted if the
Board of Directors of the FDIC finds four criteria were met.
Order did not present controlling question of law or policy as to which
substantial grounds exists for a difference of opinion.
In the Matter of
RICK A. JENSON,
SCOTT P. CRABTREE,
MICHAEL D. LANDRY,
ALTON B. LEWIS,
DANNA A DOUCET,
individually, and as institution-affiliated parties of
FIRST GUARANTY BANK HAMMOND, LOUISIANA (Insured State Nonmember Bank)
Decision and Order on Request for Interlocutory Review
This matter involves the Request of Respondent Michael D. Landry
("Respondent") for Interlocutory Review of the "Order on
Respondent Landry's Motion for Document Production"
("Order"). The Order denied Respondent's Motion to Compel
Production ("Motion to Compel") except for further production of
additional exculpatory "Brady" material to the extent that it
exists. The request arose during the proceedings of a removal and
prohibition action under section 8(e) of the Federal Deposit Insurance
Act ("FDI Act"), 12 U.S.C. §1818(e).
On April 30, 1996, the Federal Deposit Insurance Corporation
("FDIC") initiated this action by the issuance of a "Notice of
Intention to Remove from Office and to Prohibit from Further
Participation" ("Notice"), which was served on Rick A. Jenson,
Scott P. Crabtree, Alton B. Lewis, Danna Doucet, and Respondent,
individually, and as institution-affiliated parties of First Guaranty
Bank, Hammond, Louisiana ("Bank"). The Notice alleged that
Respondent(s) had engaged in certain unsafe or unsound practices,
violations of law and regulations, and/or breaches of fiduciary duty
that have evidenced the personal dishonesty and/or willful or
continuing disregard for the safety and soundness of the Bank and their
unfitness to serve as officer(s) or director(s) of any insured
depository institution. The Notice further alleged that this conduct
has resulted in or will result in financial loss or damage to the Bank,
has prejudiced the interests of the Bank's depositors, and/or has
resulted in financial gain to the Respondents. On June 21, 1996,
Respondent filed an Answer, including affirmative defenses.
During the pre-hearing discovery, counsel for Respondent made Requests
for Production of Documents. In October 1996, Enforcement counsel
forwarded Respondent more than 20,000 pages of responsive documents.
Enforcement Counsel also provided Respondent with a "Federal Deposit
Insurance Corporation Privilege Log" ("Privilege Log"),
asserting that 97 documents were subject to privilege(s). For each
document listed, the Privilege Log identified the type of document
withheld, the privilege(s) asserted, a brief description of the
contents of the document, the identity of the person to whom the
document was addressed, the author of the document, and the date of the
On October 18, 1996, Respondent filed a Motion to Compel the production
of the 97 documents listed on the Privilege Log. Respondent's Motion
to Compel asserted that (1) Enforcement Counsel withheld documents that
constituted "Brady" 1 material; (2) by instituting
the enforcement proceeding Petitioner had waived all governmental
privileges; (3) the deliberative process privilege, the law enforcement
privilege and the inter-agency or intra-agency privileges do not apply
to the documents withheld; and (4) the privilege log is inadequate.
Enforcement Counsel timely filed a "Response to Respondent Landry's
Motion to Compel" ("Response"). This Response included the
declaration under penalty of perjury of Cottrell L. Webster
("Declarant"), Regional Director (Memphis) of the FDIC, Division
of Supervision, Memphis, Tennessee, the jurisdictional Region in which
this depository institution is located. Declarant, "after personal
consideration," formally claimed on behalf of the FDIC, the
deliberative process privilege.
The Administrative Law Judge ("ALJ") adjudicated the issues
raised in Respondent's Motion to Compel, issuing his Order on December
6, 1996. It is from this Order that Respondent seeks interlocutory
[.1] 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 of Directors
("Board") of the FDIC 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
None of the four criteria enumerated in section 308.28(b) are
present in this case and, therefore, the FDIC finds no basis for
disagreement with the ALJ's Order.
[.2] The ALJ in his Order addresses in detail the due process requirements
of Brady, supra, and subsequent cases. While the holding in
Brady is limited to criminal matters, the ALJ correctly
concluded that in civil and enforcement matters fundamental fairness
requires the production of all exculpatory, factual material. See
Winthrow v. Larkin, 421 U.S. 35 (1975);Mister Discount
Stockbrokers, Inc. v. SEC, 768 F.2d 875, 878 (1985);
McClelland v. Andrus, 606 F.2d 1278 (D.C. Cir. 1979).
Enforcement Counsel asserts that all such information has been
disclosed to Respondent, and that none of the documents at issue in
this Motion to Compel contain exculpatory, factual material. Respondent
has made no showing of bad faith with regard to Enforcement Counsel's
assertion. Respondent does not contest the ALJ's decision requiring
the production of exculpatory, factual material. Rather, Respondent
appears to challenge the fact that the ALJ's Order permits the FDIC to
determine whether additional exculpatory exists and does not require
in camera inspection of the withheld documents. However, the
FDIC finds that the ALJ correctly states that without more,
Respondent's mere "suspicions" are insufficient grounds to
require in camera inspection of the documents. Respondent's
complaint about the procedure and/or the method established for
compliance with the Order does not satisfy any of the four criteria set
out in 12 C.F.R. §308.28(b).
[.3] Respondent also raises the issues of whether Petitioner waived all
privileges by the initiation of this case, whether Petitioner properly
invoked the deliberative process privilege, whether Petitioner can
assert the law enforcement privilege and the inter-agency and
intra-agency privileges, and whether Petitioner's privilege log is
adequate. As to these issues, the Order does not present any
controlling question of law or policy as to which substantial grounds
exist for a difference of opinion.
In cases such as this one, involving the denial of a motion to
compel, the scope of the asserted privilege(s) does not involve
"controlling questions of law or policy" within the meaning of
section 308.28(b). The Board has addressed the issue of what is a
1Brady v. Maryland, 373 U.S. 83,
87 (1963), held that in criminal prosecutions, "[s]upression by
the prosecution of evidence favorable to the accused violates due
process where the evidence is material either to guilt or punishment,
irrespective of the good faith or bad faith of the prosecution."
controlling question of law or policy in cases involving similar
discovery matters on several previous occasions.
FDIC-85-83k, 1 FDIC Enf. Dec. ¶8001, I-1 (1985); In
the Matter of Ronald J. Grubb, FDIC-88-282k, FDIC-89-111e, 1 FDIC
Enf. Dec. ¶8006A, I-20 (1990). The FDIC finds nothing in the record
to distinguish these previous rulings.
In his Order, the ALJ found, and the FDIC agrees, that Respondent's
submission presents no evidence overcoming the assertion of privilege
made by Mr. Webster.2 Moreover, the disclosure of
information between parties sharing a common legal interestsuch as
the shared enforcement authority and obligations of the FDIC and the
State Department of Bankingdoes not waive privileged communications.
In re Grand Jury Subpoenas, 89-3 and 89-4, 904 F.2d 244, 249
(4th Cir. 1990).
Additionally, the FDIC is unconvinced that review will materially
advance the ultimate conclusion of the proceeding. The FDIC concludes
that Respondent will have adequate recourse through exceptions at the
conclusion of the proceeding on the merits and the Board will have a
complete record before it in considering Respondent's disagreements
with the procedural rulings of the ALJ. Respondent's allegations of
unusual delay and expense are not the types of irreparable injury which
the procedures under Rule 28 are designed to avoid. Interlocutory
review is the exception, rather than the rule, and recognizing costs of
litigation as a relevant concern would completely undermine the
exceptional nature of the relief. In the Matter of the Citizens
Bank of Clovis, FDIC-91-406b, 1 FDIC Enf. Dec. ¶ 8016, I-58
(1992). Accordingly, Respondent's Request for Interlocutory Review is
For the foregoing reasons, it is hereby ORDERED that the Request
for Interlocutory Review is DENIED.
Pursuant to delegated authority, upon the advice and recommendation of
the Deputy General counsel for Litigation.
Dated at Washington, D.C., this 7th day of April, 1997.