Bizcapital Bus. & Indust. v. Office of Comptroller
| Decision Date | 23 November 2005 |
| Docket Number | No. Civ.A. 05-1967.,Civ.A. 05-1967. |
| Citation | 406 F.Supp.2d 688 |
| Parties | BIZCAPITAL BUSINESS & INDUSTRIAL DEVELOPMENT CORP. v. OFFICE OF THE COMPTROLLER OF THE CURRENCY OF THE UNITED STATES. |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court are defendant's Motion To Dismiss Or, In The Alternative, For Summary Judgment (Rec.Doc. 9) and plaintiff's Cross-Motion For Summary Judgment (Rec.Doc. 13). The Court also has before it Statements of Interest of the United States (Rec. Docs. 10 and 17). Having considered the motions and legal memoranda, the record, the oral arguments of the parties, and the law, the Court finds that defendant's Motion To Dismiss Or, In The Alternative, For Summary Judgment (Rec.Doc. 9) should be DENIED and plaintiff's Cross-Motion For Summary Judgment (Rec.Doc. 13) should be GRANTED.
The facts in this case are not in dispute. By letter dated March 29, 2005, plaintiff submitted a request to the OCC seeking the release of non-public OCC information pursuant to the OCC's regulations governing public access to such information. 12 C.F.R. §§ 4.31-4.40. See Pl.'s MSJ Ex. A. Plaintiff requested access to any Suspicious Activity Report (SAR) filed by Union Planters National Bank between late 1999 and early 2000 concerning a customer, Telformation, Inc. d/b/a/ Media Direct ("Media Direct"), and its principal Raymond Reggie. Id.
In its administrative request, plaintiff explained that it had brought a civil action for damages in state court and the SAR, if it existed, was critically important evidence that would prevent a miscarriage of justice in its lawsuit. Id. Plaintiff alleged that the bank misled plaintiff and another bank, Hibernia National Bank, into funding substantial loans for Media Direct. Id. The proceeds of the loans were allegedly used to pay a debt that Media Direct owed to the bank, which ultimately resulted in a loss to both plaintiff and Hibernia. Id. According to plaintiff, at the time the bank allegedly misled plaintiff and Hibernia into funding loans for Media Direct, the bank knew or suspected that Media Direct was engaged in a check-kiting scheme in its account with the bank. Id.
Plaintiff's letter fulfilled the technical requirements and offered the showings required by the OCC's regulations regarding requests for non-public OCC information, 12 C.F.R. § 4.33. Id. On April 22, 2005, the OCC denied plaintiff's administrative request in a letter ("OCC denial letter") that referenced OCC regulations, the Bank Secrecy Act, case law, and OCC Interpretive Letter No. 98. See Pl.'s MSJ Ex. B.
On May 27, 2005, plaintiff filed this action seeking review of the OCC's decision under the Administrative Procedure Act, 5 U.S.C. § 704. The only issue before the court is the legal issue of whether the OCC's denial of plaintiff's request for a SAR was arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with the law.
Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Where both parties agree as to the material facts, disposition by summary judgment is clearly warranted. See GeoSouthern Energy Corp. v. Chesapeake Operating, Inc., 274 F.3d 1017, 1020 (5th Cir.2001) (quoting Nunez v. Superior Oil Co., 572 F.2d 1119, 1124 (5th Cir.1978)).
Judicial review of an agency decision is authorized under the Federal Administrative Procedure Act ("APA"). 5 U.S.C. § 706. Under section 706, the court decides questions of law with respect to agency action. Id. Agency actions, findings and conclusions shall be set aside if they are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law or without observance of procedure required by law. Id. The standard of review under the APA is narrow.
A rule is `arbitrary and capricious' only where the agency has considered impermissible factors, failed to consider important aspects of the problem, offered an explanation for its decision that is contrary to the record evidence, or is so irrational that it could not be attributed to a difference in opinion or the result of agency expertise. Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). Thus, agency decisions will be upheld so long as the agency "examine[s] the relevant data and articulate[s] a satisfactory explanation for its action including a `rational connection between the facts found and the choice made.'" Burlington Truck Lines v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962). Review under the APA is limited to the administrative record. 5 U.S.C. § 706(2).
BCCA Appeal Group v. U.S. E.P.A., 355 F.3d 817, 824 (5th Cir.2003).
Under the Bank Secrecy Act, the Secretary of the Treasury has the power to require banks and other financial institutions to report suspicious transactions to the appropriate authorities. 31 U.S.C. § 5318(g)(1). Regarding the disclosure of SARs the Act provides as follows:
(2)(A)(i) the financial institution ... may not notify any person involved in the transaction that the transaction has been reported; and
(ii) no officer or employee of the Federal Government or of any State, local, tribal, or territorial government within the United States, who has any knowledge that such report was made may disclose to any person involved in the transaction that the transaction has been reported, other than as necessary to fulfill the official duties of such officer or employee.
31 U.S.C. § 5318(g)(2)(A).
The OCC, as the Bureau of the Treasury Department with primary supervisory responsibility over national banks, see 12 U.S.C. §§ 1, et seq., has promulgated the following regulation implementing the statute's non-disclosure provisions:
(k) Confidentiality of SARs. SARs are confidential. Any national bank or person subpoenaed or otherwise requested to disclose a SAR or the information contained in a SAR shall decline to produce the SAR or to provide any information that would disclose that a SAR has been prepared or filed, citing this section, applicable law (e.g., 31 U.S.C. 5318(g)), or both, and shall notify the OCC.
In order to balance the interest in confidentiality embodied by the privilege and private litigants' legitimate needs for nonpublic documents, the OCC has promulgated regulations governing the means by which private litigants may obtain OCC materials. See 12 C.F.R. § 4.31 et seq. In United States ex rel. Touhy v. Ragen, 340 U.S. 462, 468, 71 S.Ct. 416, 95 L.Ed. 417 (1951), the Supreme Court held that agency regulations restricting disclosure of information in legal proceedings fall within agency authority under the so-called "housekeeping statute," 5 U.S.C. § 301. Under the OCC's Touhy provisions, a SAR is specifically designated as non-public OCC information. 12 C.F.R. § 4.32(b)(vii). The OCC's regulations require that a party seeking non-public documents submit a request to the Director of the OCC's Litigation Division in Washington, D.C. 12 C.F.R. § 4.34(a). The request must include information sufficient to inform the OCC of the nature of the litigation. 12 C.F.R. § 4.33(a)(3)(ii). The requestor must make a showing that "the information is relevant to the purpose for which it is sought," that "other evidence reasonably suited to the requestor's needs is not available from any other source," and that "the need for the information outweighs the public interest considerations in maintaining the confidentiality of the OCC information and outweighs the burden on the OCC to produce the information." 12 C.F.R. § 4.33(a)(3)(iii). The OCC has sole discretion to deny a request for non-public information "based on its weighing of all appropriate factors including the requestor's fulfilling of the requirements enumerated in § 4.33". 12 C.F.R. § 4.35(a)(1). The OCC's decision is a final agency action which exhausts administrative remedies for discovery of the information. Id. The OCC may deny a request for reasons that include the following:
(i) The requester was unsuccessful in showing that the information is relevant to the pending matter;
(ii) The requester seeks testimony and the requestor did not show a compelling need for the information;
(iii) The request arises from an adversarial matter and other evidence reasonably suited to the requestor's need is available from another source;
(iv) A lawsuit or administrative action has not yet been filed and the request was made in connection with potential litigation; or
(v) The production of the information would be contrary to the public interest or unduly burdensome to the OCC.
Plaintiff argues that the OCC's denial was arbitrary and capricious because it failed to consider the appropriate regulatory factors, as they pertain to plaintiff's request. Plaintiff contends that its request fulfilled all the regulatory requirements for requesting a SAR, including a showing of the relevance, the unavailability of alternative sources of evidence, the need as compared to the public interest in SAR confidentiality, the inapplicability of policy concerns, and the minimal burden of...
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Bizcapital Business v. Comptroller of Currency
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