Houston Business Journal, Inc. v. Office of Comptroller of Currency, U.S. Dept. of Treasury, 95-5273

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Citation86 F.3d 1208
Docket NumberNo. 95-5273,95-5273
Parties, 35 Fed.R.Serv.3d 291 HOUSTON BUSINESS JOURNAL, INC. and Dee Gill, Individually, Appellants, v. OFFICE OF the COMPTROLLER OF the CURRENCY, UNITED STATES DEPARTMENT OF the TREASURY, Appellee.
Decision Date21 June 1996

Appeal from the United States District Court for the District of Columbia (No. 95ms00167).

Richard S. Hoffman, Washington, D.C., argued the cause for appellants, with whom Max Stier was on the briefs.

Ernest C. Barrett, III, Assistant Director, Office of the Comptroller of the Currency, United States Department of the Treasury, argued the cause for appellee, with whom L. Robert Griffin, Director, was on the brief. Julie L. Williams entered an appearance.

Before: SILBERMAN, BUCKLEY and ROGERS, Circuit Judges.

Opinion of the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge:

Appellant Houston Business Journal, Inc., ("Journal") appeals from the denial of its motion to compel the production of documents from the Office of the Comptroller of the Currency ("Comptroller"). The Journal seeks to use the documents in a libel action in Texas state court in which the Journal is the defendant and the Comptroller is not a party. Because the Journal had already failed in its efforts to compel the production of the documents at issue in federal district court in Texas and before the Fifth Circuit, the district court ruled that the Journal was barred by the doctrine of issue preclusion. We affirm on the ground that the district court lacked subject-matter jurisdiction.

I.

On December 26, 1988, the Journal published a story, written by Dee Gill, alleging various financial improprieties by Houston banker Al Fairfield. Fairfield then sued the Journal and Gill in the 269th Judicial District Court of Harris County, Texas. Fairfield v. Houston Business Journal, Inc., No. 89-54189 (filed Dec. 19, 1989). In order to establish the affirmative defense of truth of the statements published, the Journal sought to obtain from the Comptroller documents relating to the examination of Fairfield's banks. On July 7, 1992, the Journal served a subpoena duces tecum on James Jones, an official in the Comptroller's office in Houston. The Comptroller responded by a letter of July 17, 1992, informing the Journal that it should request documents through the agency's administrative request procedure, pursuant to 12 C.F.R. § 4.19 (1995), 1 rather than by state-court subpoena.

After the exchange of several more letters, the Comptroller issued a letter decision on March 15, 1993, which released certain documents to the Journal but withheld others. The Comptroller stated that all of his documents regarding Fairfield's banks were protected by the bank-examination privilege and informed the Journal that its letter decision was "final agency action" for purposes of the Administrative Procedure Act (APA), 5 U.S.C. § 704. Dissatisfied with the Comptroller's limited document production, the Journal obtained from the Texas state court on June 7, 1993, an order to compel the production of the documents based on the Journal's subpoena duces tecum.

The Comptroller did not comply with the state court's order and instead removed that part of the state-court action relating to the enforcement of the subpoena to the United States District Court for the Southern District of Texas. In federal district court, the Journal added claims under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, and the APA, 5 U.S.C. § 706. The district court granted the Comptroller's motion to quash the subpoena because "it is clear that federal sovereign immunity precludes the state court from enforcing the subpoena." Fairfield v. Houston Business Journal, Inc., Civ. No. H-93-1794, 1993 WL 742740 (S.D.Tex. Sept. 8, 1993). The court denied the motion to compel under FOIA because the Journal had failed to file a FOIA request. 2 Finally, the court denied the motion to compel under the APA because "the [Comptroller's] decision was not arbitrary and capricious or contrary to law." Id. Reviewing the factors for the bank-examination privilege that we set forth in In re Subpoena Served Upon Comptroller of Currency, 967 F.2d 630, 634 (D.C.Cir.1992) (Fleet Bank) (quoting In re Franklin Nat'l Bank Secs. Litig., 478 F.Supp. 577, 583 (E.D.N.Y.1979)), the court upheld the Comptroller's decision to withhold certain documents. The Journal appealed to the Fifth Circuit, which affirmed without opinion. Fairfield v. Houston Business Journal, Inc., No. 93-2842, 35 F.3d 562 (5th Cir.1994) (table).

Thereafter, the Journal came to the United States District Court for the District of Columbia and served a federal subpoena duces tecum on the Comptroller. Again, the Comptroller did not turn over the documents, and the Journal moved to compel production of the documents. The district court denied the motion to compel on the ground that the Journal was "barred by the doctrine of issue preclusion from relitigating [its] motion to compel in this Court." In re Subpoena Duces Tecum Served on Office of Comptroller of Currency, Misc. No. 95-167 (D.D.C. July 21, 1995).

II.

On appeal, the Journal contends that collateral estoppel, or issue preclusion, does not apply. The Journal maintains that the federal district court in Texas decided a different issue from that before the district court here: not whether the requested documents are covered by the bank-examination privilege, but instead whether the Comptroller's decision that the requested documents are not covered by the bank-examination privilege was arbitrary and capricious. In particular, the Journal points to the different standards of review in an APA action and a subpoena enforcement action. The Comptroller contends that collateral estoppel applies because the identical issue--the Comptroller's invocation of the bank-examination privilege--was actually decided in federal court in Texas as the Journal asked the district court in the District of Columbia to decide.

We do not reach the issue of collateral estoppel because we conclude that the district court lacked subject-matter jurisdiction to hear the motion to compel. Although the Comptroller does not raise lack of jurisdiction, the court may raise questions of the federal courts' subject-matter jurisdiction sua sponte. Insurance Corp. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 2104, 72 L.Ed.2d 492 (1982).

When a litigant seeks to obtain documents from a non-party federal governmental agency, the procedure varies depending on whether the underlying litigation is in federal or in state court. In state court the federal government is shielded by sovereign immunity, which prevents the state court from enforcing a subpoena. Under Fifth Circuit law, which the Texas district court followed, because a federal court's jurisdiction upon removal is derivative of the state court's, the federal court in a removed action is also barred from enforcing a subpoena against the federal government. Louisiana v. Sparks, 978 F.2d 226, 234-36 (5th Cir.1992). 3 Moreover, a court cannot enforce a subpoena against an employee of the federal governmental agency when the agency has validly enacted a regulation, such as 12 C.F.R. § 4.19 (1995), that withdraws from employees the power to produce documents. United States ex rel. Touhy v. Ragen, 340 U.S. 462, 467-69, 71 S.Ct. 416, 419-20, 95 L.Ed. 417 (1951); id. at 472-73, 71 S.Ct. at 421-22 (Frankfurter, J., concurring). 4 Thus, a state-court litigant must request the documents from the federal agency pursuant to the agency's regulations, as indeed the Journal did. If the agency refuses to produce the requested documents, the sole remedy for the state-court litigant is to file a collateral action in federal court under the APA. See Edwards, 43 F.3d at 314; In re Boeh, 25 F.3d at 764 n. 3. 5

A federal-court litigant, on the other hand, can seek to obtain the production of documents from a federal agency by means of a federal subpoena. In federal court, the federal government has waived its sovereign immunity, see 5 U.S.C. § 702, and neither the Federal Housekeeping Statute nor the Touhy decision authorizes a federal agency to withhold documents from a federal court. Exxon Shipping, 34 F.3d at 777-78. To the extent that the Comptroller's regulation, 12 C.F.R. § 4.19 (1995), may be to the contrary, it conflicts with Federal Rule of Civil Procedure 45 and exceeds the Comptroller's authority under the Housekeeping Statute. See In re Bankers Trust Co., 61 F.3d 465, 469-71 (6th Cir.1995), cert. dismissed, --- U.S. ----, 116 S.Ct. 1711, 134 L.Ed.2d 808 (1996). Accordingly, in past cases in which a federal-court litigant has come to federal district court in the District of Columbia to enforce a subpoena duces tecum against the Comptroller, this court has held that the district court owes no deference to the Comptroller in ruling on whether the documents are covered by the bank-examination privilege. See Schreiber v. Society for Sav. Bancorp, Inc., 11 F.3d 217, 220-21 (D.C.Cir.1993); Fleet Bank, 967 F.2d at 633-34.

The instant appeal presents a novel question: when the underlying litigation is in state court, can a litigant eager to avoid the limitations on the state court's subpoena power obtain a federal-court subpoena instead? We hold that in such circumstances the federal court lacks subject-matter jurisdiction to issue the subpoena.

The procedures for obtaining a subpoena in federal court are set forth in Rule 45. The Rule provides that a subpoena duces tecum "shall issue from the court for the district in which the production or inspection is to be made." FED.R.CIV.P. 45(a)(2). Any motion to quash or modify a subpoena, such as when the party on whom the subpoena is served asserts a privilege, is decided by the issuing court, not the court before which the underlying action is...

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