Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 1 of 19

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA _______________________________________ ) UNITED WESTERN BANK, et al., ) ) Plaintiffs, ) ) v. ) ) OFFICE OF THE COMPTROLLER OF THE ) CURRENCY, et al., ) ) Defendants. ) _______________________________________)

1:11-cv-00408 The Honorable Amy Berman Jackson

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS RENEWED SECOND MOTION TO COMPEL PRODUCTION OF THE COMPLETE ADMINISTRATIVE RECORD More than eight months ago, Plaintiff moved to compel the production of the complete administrative record related to the Office of Thrift Supervisions (OTS) seizure of United Western Bank (the Bank). The Court granted the motion to compel, and Defendants failed to comply. After a second motion to compel, the Court ordered Defendants to certify that an accurate and complete administrative record had been provided to Plaintiff and further required Defendants to respond to Plaintiffs discovery requests as approved by the Court. Defendants have failed to respond as required to the discovery requests and to finally produce a full and complete administrative record. . Specifically, Defendants have violated the Court's discovery order by failing to provide documents responsive to the Plaintiffs court approved discovery request, failing to adequately respond to clearly written interrogatories, and withholding documents under an inappropriate claim of privilege. Defendants failure to comply with the Courts orders and produce a complete

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 2 of 19

administrative record preclude the Court from engaging in meaningful judicial review of Defendants unlawful, arbitrary and capricious seizure of the Bank. On September 9, the Court ordered that Defendants respond to a Court-edited and approved version of Plaintiffs discovery requests seeking information and documents provided to, directly or indirectly considered by, or relied upon by the Acting Director in making the Seizure Decision (the September 9 Order). Order on Proposed Disc., Sept. 9, 2011, ECF No. 56; Not. of Pl.s Filing of Disc. Proposal, Sept. 1, 2011, ECF No. 55-1. The Courts Order followed the submission of declarations by the former Acting Director of the OTS and the Acting Comptroller of the Comptroller of the Currency (OCC) to the Court stating that the initial incomplete administrative record produced to Plaintiff on June 15, 2011, contains an accurate and complete record of all information that [the former Acting Director] considered, directly or indirectly, and upon which [he] relied in making the January 21, 2011 decision to appoint a receiver for [the Bank]. See Defs. Notice of Filing of Decls. of John E. Bowman and John G. Walsh, Sept. 1, 2011, ECF No. 54. As a threshold matter, the Acting Comptroller refused to take any responsibility for that representation in his declaration notwithstanding the Courts direction, instead relying completely on a companion declaration not requested by the Court of the Acting Director. The apparent concerns of the OCC at taking responsibility for the prior decisions of the OTS have proven well founded. Notwithstanding those declarations, when required by the Court to undertake a review of OTS files to respond to the discovery requests, Defendants suddenly identified over 1,000 pages of documents considered by or relied upon by the former Acting Director that were not included in the initial incomplete record provided to the Court. Defendants production of additional information directly contradicts the sworn declarations of the Acting Comptroller and the Acting

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 3 of 19

Director, as well as the repeated representations made by Defendants counsel in Court filings and the August 11, 2011 hearing, and constitutes an admission that the record initially proffered was anything but complete. Moreover, even with this Court-ordered supplementation of record, it remains demonstrably incomplete. Among the deficiencies in the Defendants response, Defendants have improperly withheld over 200 pages of documents and redacted additional documents at the direction of the Federal Deposit Insurance Corporation (FDIC) based solely on the FDICs request that it do so even though there is no basis for a party to assert a privilege on behalf of a third-party. Furthermore, there is direct evidence that Defendants have again chosen to produce some, but not all, of the administrative record in an attempt to deny the Court the ability to engage in meaningful judicial review of the seizure decision. One of the many indicators of cherry-picking or a deficient search of internal records is that Defendants production, like the sanitized record originally produced, is largely devoid of any substantive electronic communications notwithstanding that key agency officials acted from different locations throughout the country. Additionally, Defendants failed to fully answer a number of interrogatories by, for example, failing to adequately identify oral communications and limiting their responses to communications between Defendants and the FDIC when the requests included no such limitation. Therefore, for the reasons set forth herein, Plaintiff moves, for a third time, for an order to compel production of the complete administrative record. I. Procedural History On February 18, 2011, Plaintiff brought this action pursuant to 12 U.S.C. 1464(d)(2)(B) against Defendants, the OTS and its Acting Director John E. Bowman (now the OCC and Acting

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 4 of 19

Comptroller John G. Walsh). As this Court well knows, Plaintiff seeks an order instructing Defendants to remove the FDIC as receiver of the Bank. On the same day that Plaintiff filed its complaint, counsel for Defendants assured Plaintiff that the complete administrative record would be produced within ten days. Relying on Defendants representations that the record was forthcoming, Plaintiff waited. Ten days passed and no record was produced. Evidently, at some point within the ten-day period, Defendants changed their position; rather than promptly producing the record, Defendants determined to withhold the record until the Court ruled on motions to dismiss that they had not yet filed. Because time is of the essence, Plaintiff filed an immediate motion to compel production of the administrative record on March 1, 2011, and sought expedited consideration of that motion. See Pls. Mot. to Compel, Mar. 1, 2011, ECF No. 10; Pls. Mot. to Expedite, Apr. 19, 2011, ECF No. 19. Plaintiffs position was simple: an on the record proceeding required the complete record. But rather than responding to the merits of Plaintiffs motion, Defendants largely repeated the jurisdictional arguments offered in their motion to dismiss. The FDIC too filed an opposition to the motion to expedite (even though the motion to compel was directed at the present Defendants), arguing that the Plaintiff did not act quickly enough. See FDICs Oppn. to Pls. Mot. to Expedite, May 3, 2011, ECF No. 26 On June 8, 2011, the Court granted Plaintiffs motion to compel and ordered Defendants to produce the administrative record. Instead, on June 15, 2011, Defendants produced a sanitized record consisting largely of two memoranda with recommendations to seize the Bank along with certain exhibits. The Acting Director did not certify that the proffered record, which did not include any meaningful analysis or communications except those to and from the Bank, was a complete record. Instead

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 5 of 19

another OTS official certified that the proffered record was a true and complete copy of the documents prepared for the Acting Director to rely upon in making the decision to appoint a receiver for the Bank. In other words, the proffered record was what was on the cartthe documents in the same room as the Acting Director the afternoon he signed the seizure order and not the full record of information considered by or relied upon by him. As a result, the Bank was forced to file a second motion to compel. Pl.s Second Mot. to Compel Production of the Complete Admin. R., July 11, 2011, ECF No. 39. The basis of Defendants opposition to the second motion to compel was based entirely on the unfounded and patently absurdtheory that Defendants could select those documents that supported its position and include only those in the administrative record. Defs. Oppn. to Pls. Mot. to Supplement the R., Aug. 1, 2011, ECF No. 48. At the August 11, 2011 hearing on Plaintiffs second motion to compel, Defendants counsel went further, suggesting to the Court that the OTS had complete discretion to determine the scope of the record available to the Court for its consideration of whether the agency acted in an arbitrary and capricious manner in seizing the bank. Tr. of Proceedings at 36-37, Aug. 11, 2011 ([t]he Court of Appeals that binds your Honor [has] said that your review of the receivership decision is limited to the administrative record compiled by the agency at the time of receivership ). When the Court rejected this preposterous suggestion, Defendants counsel proffered the alternative argument that in fact its all there. Tr. of Proceedings at 52. He thus asked the Court to believe that the record that he had moments earlier represented as selected for the Court, in fact was the complete record as defined in case law.

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 6 of 19

Following the August 11 hearing, the Court ordered that: The defendant John G. Walsh, Acting Comptroller of the Currency, shall certify that the administrative record produced to the plaintiff, or the record as supplemented by any additional materials produced on or before the date of the certification, is the accurate and complete record of all the information which the then Acting Director of the Office of Thrift Supervision considered, directly or indirectly, or upon which he relied, in making the January 21, 2011 decision to appoint a receiver for United Western Bank pursuant to 12 USC 1464(d)(2)(A). The Court also ordered that Plaintiff submit a proposal detailing the scope of limited discovery it sought to conduct to enable Plaintiff to uncover evidence relevant to whether documents that are properly part of the administrative record had been withheld by Defendant. On September 1, 2011, both parties responded to the Courts order. Defendants disregarded the Courts direction. Instead of a declaration by the Acting Comptroller containing the required certification, it filed two declarations. One by the Acting Director containing the required certification, and another by the Acting Comptroller that relied entirely on the Declaration of the Acting Director. Specifically, Acting Director Bowman submitted a declaration that the proffered record contains an accurate and complete record of all information that I considered, directly or indirectly, and upon which I relied in making the January 21, 2011 decision to appoint a receiver for the Bank. See Defs. Notice of Filing of Decls. of John E. Bowman and John G. Walsh, Decl. of John E. Bowman at 3, Sept. 1, 2011, ECF No. 54-1. Acting Comptroller Walsh filed a Declaration merely saying that [o]n the basis of the Acting Directors Declaration and in reliance upon it he certified that the record was complete. See Defs. Notice of Filing of Decls. of John E. Bowman and John G. Walsh, Decl. of John G. Walsh, Sept. 1, 2011, ECF No. 54-2. The Acting Comptrollers complete reliance on the Acting Directors declaration, in the apparent absence of any due diligence was not properly responsive to the Courts order.

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 7 of 19

Consistent with the Courts August 11 order, Plaintiff thereafter filed limited proposed discovery requests to test the completeness of the record and the veracity of the declarations. See Notice of Filing of Pl.s Discovery Proposal, Sept. 1, 2011, ECF No. 55. At the Courts direction, the proposed discovery was carefully limited to information and documents provided to, directly or indirectly considered by, or relied upon by the Acting Director in making the Seizure Decision.1 Id. On September 9, 2011, the Court ordered Defendants to respond to Plaintiffs discovery proposal as revised by the Court. On October 11, 2011 Defendants provided Plaintiff with their response to the September 9 Order. See Defs. Answers to Interrogs. and Reqs. for Produc., Oct. 11, 2011, Answers to Interrogs. Nos. 1, 2, 3, 4, 5, 7, 9, 10, attached hereto as Exhibit 1.2 Notwithstanding the prior declarations and certifications of the former Acting Director and the Acting Comptroller that the record contains an accurate and complete record of all information that [the Acting Director] considered, directly or indirectly, and upon which [he] relied in making the January 21, 2011 decision to appoint a receiver for the Bank, Defendants produced 798 pages of such materials to Plaintiffsome with redactionsand withheld over 200 pages based on an assertion of privilege by the FDIC. Defendants also provided written responses to the interrogatories, though many of these answers are plainly inadequate as described in detail below.

1 The exception was Interrogatory No. 15, which relates to Defendants failure to provide Plaintiff with the January 2010 report of examination. Id. 2 All of the documents produced by Defendants, with the exception of a Federal Express receipt for the mailing of an April 28, 2010 letter, are being filed with the Court as an attachment to a Supplement to Plaintiffs Second Motion to Compel Production of the Complete Administrative Record, with a request that the administrative record be supplemented to include those documents. 7

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 8 of 19

For all the reasons set forth herein, Plaintiff now renews its second motion to compel production of the complete administrative record. II. Defendants Failed to Comply with the Courts September 9 Order In crafting their responses to the September 9 Order, Defendants selectively ignored the accompanying instructions as well as key portions of requests. Defendants also provided vague and general answers to requests that required specific information. Furthermore, although accompanied by the former Acting Directors verification that the responses are true and complete, the responses themselves strongly suggest that Defendants have withheld responsive information. A. Defendants Discovery Responses are Facially Inadequate The majority of Defendants interrogatory responses are clearly deficient. First, though Defendants have produced additional information that was provided to the Acting Director, Defendants have not stated that they, in fact, provided all the additional information that was provided to him. See Exhibit 1, answers to Interrogs. Nos. 1, 2, 3, 4, 5, 7, 9, 10. These responses beg the question of what additional information has yet to be produced. Second, where an interrogatory requested identification of each written or oral communication, including each communication with the FDIC, Defendants responded only that they have not identified any communications between the OTS and the FDIC, see Exhibit 1, answers to Interrogs. Nos. 8, 9, 10, or did not explicitly state whether there were any responsive communications or what had been done to search for them. See Exhibit 1, answer to Interrog. No. 4. During the October 17 meet and confer conference, Defendants counsel represented that the interrogatories were complicated and Defendants had interpreted them to the best of their abilities. Plaintiff submits that there are no ambiguities in the interrogatories at issue and

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 9 of 19

believes that Defendants are simply attempting to avoid producing internal communications that may be adverse to their position. Third, Defendants failed to adequately identify relevant oral communications. Defendants revealed in their response to interrogatories that the Acting Director attended numerous meetings, which generally occurred weekly, at which the Bank was reviewed and discussed. Exhibit 1, answer to Interrog. No. 15. Defendants also admit that, in addition to these meeting, the Acting Director received informal status reports or updates from senior staff concerning the Bank. Exhibit 1, answer to Interrog. No. 15. However, Defendants do not identify the substance of these oral communications, nor do they specifically identify the place and date they were made, the identities of the persons who made or received such oral communications, or all documents relating to or reflecting those communications. By intentionally withholding this information, Defendants are depriving the Court and Plaintiff of a complete picture of the information actually considered by the Acting Director in making the seizure determination. Now that it is established that the Acting Director was routinely briefed about the Bank over a period of months and received informal status reports and updates about the Bank it is inconceivable that the undisclosed information about the Bank communicated to him was not considered or relied upon by him in making his decision to seize the Bank. The administrative record simply cannot be complete without this information. Defendants also inserted a non-existent materiality requirement into a number of interrogatories. See Exhibit 1, answer to Interrog. No. 1 (Defendants have not identified any . additional material information or facts.) and answers to Interrog. Nos. 8, 12, 15. It is highly improper for Defendants to unilaterally decide what parts of the responsive information it identifies it believes are material and to withhold from the Court and the Plaintiff that which it

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 10 of 19

characterizes as not material. This approach to meeting Court-ordered discovery obligations, like Defendants earlier position that it is entitled to decide what the Court should be entitled to see in reviewing the seizure decision, is inappropriate and should not be countenanced. As one example of this improper approach of Defendants to meeting their discovery obligations pursuant to the Courts order, during the October 17 meet and confer, Defendants counsel admitted that, despite clear instructions to the contrary, Defendants produced only a portion of the December 24, 2010 letter from counsel for one of the anchor investors in the recapitalization transaction to the OTS because Defendants determined the attachments to the letter were not material. This exclusion was not explicitly disclosed anywhere in Defendants response. B. Failure to Conduct a Reasonable Search "Under Rule 26, a party is obligated to make a reasonable effort to search for and produce documents responsive to the opposing party's document requests. Moore v. Napolitano, 723 F. Supp. 2d 167, 173 (D.D.C. 2010) (emphasis added). There is substantial evidence to suggest that Defendants failed to make a reasonable effort to identify and produce responsive documents and information. Like the sanitized record originally proffered, Defendants production is largely devoid of any substantive emails. The production includes a total of 37 emails, 27 of which are from the Bank or its counsel to Defendants.3 Once again Defendants would like the Court to suspend disbelief and accept the proposition that, though the potential seizure of the Bank was being discussed at meetings attended by the Acting Director as early as June 2010 and he was being briefed on the Bank, there were only ten emails communicating any information about the Bank The production of these 27 emails contradicts Defendants counsels representation to the Court that the record included every submission the bank made to the agency. Tr. of Proceedings at 53. 10

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 11 of 19

that were provided to, considered by or relied upon by the Acting Director in making the seizure determination. Moreover, the lack of credibility of this production is further indicated by the fact that of the ten carefully selected internal emails provided, half lack any substance at all. All internal OTS emails produced are attached hereto as Exhibit 2. Three are forwards of emails from the Bank or its counsel by the Acting Director to other OTS employees and two are thank you responses to other emails produced. Notably, two of the remaining emails are requests for meetings or oral updates from the Acting Director in response to communications from the Bank, yet Defendants have provided no information regarding these meetings or oral updates.4 Plaintiff uncovered additional evidence suggesting an inadequate search in the course of the October 17 meet and confer. Throughout the meet and confer, Defendants counsel maintained that Defendants had conducted a diligent search of their records, but he refused to provide any details regarding the search. When Plaintiff questioned Defendants failure to adequately identify oral communications, Defendants counsel represented that the information regarding oral communications provided was all that the Acting Director recalled. Regardless of whether such an assertion is accurate, it is insufficient. Defendants are under an obligation to produce the entirety of information provided to, considered by, or relied upon by the Acting Director and not just what the Acting Director remembers over nine months later. Where Defendants in response to interrogatories have revealed that the Acting Director attended numerous meetings at which the Bank as discussed and was briefed by staff about the Bank the failure to determine if those who were at the meetings or briefed the Acting Director knew more is a violation of Defendants discovery obligations. Defendants approach to the September 9
4

Oddly the email header on OCC-UWB 326 indicates that it was printed by someone who was not a listed recipient of the email, suggesting that there was a subsequent, unproduced email forwarding the original email. All other emails produced have a header indicating they were printed from the former Acting Directors mailbox. 11

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 12 of 19

Order seems to be that if the Acting Director has forgotten about responsive information, their obligation to search for and produce it is extinguished. Defendants are mistaken. Based on the substance of the production, Defendants conflicting declarations and verifications regarding the information considered by the Acting Director in making the seizure determination, as well as representations by counsel for Defendants, Plaintiff submits that Defendants have failed to make a reasonable search for responsive information. To remedy this deficiency, and in light of the long history in this case of Defendants refusal to produce a complete administrative record, Plaintiff requests that Defendants be ordered to provide a declaration detailing their search efforts and to make the declarant available for further questioning if necessary. See id. at 172-73. It is clear from the record in these proceedings that this is a case where the simple assurances of agency counsel that the search was reasonable and adequate are inadequate. III. Defendants May Not Withhold Responsive Documents Based on a Non-Partys Purported Assertion of Privilege Defendants are improperly withholding responsive documents and information at the behest of the FDIC.5 Rather than complying with the September 9 Order, Defendants have refused to produce certain materials on the basis of a third-partys claim that they are privileged under the bank examination and deliberative process privileges, all the while disclaiming any claim of privilege on their own behalf and refusing to take any position on the matter. See letter from Liana R. Prieto to Christopher A. Sterbenz (Oct. 26, 2011) (attached hereto as Exhibit 3); letter from Christopher A. Sterbenz to Liana R. Prieto (Oct. 27, 2011) The very existence of over 200 pages of FDIC documents that were considered by the Acting Director in making the seizure determination contradicts Defendants counsels representation to the court that The FDIC [was] not involved and was kept at arms length. Tr. of Proceedings, at 43, 46-47, Aug. 11, 2011.
5

12

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 13 of 19

(attached hereto as Exhibit 4) letter from Liana R. Prieto to Christopher A. Sterbenz (Oct. 28, 2011) (attached hereto as Exhibit 5). They insist that the Bank must seek the materials elsewhere, even though the documents and information are admittedly within Defendants possession and responsive to the September 9 Order. Additionally, only after two follow-up requests and more than two weeks after the production deadline did Defendants provide a document purporting to be the required privilege log, though that log is patently inadequate. See Exhibits 3-4. Simply put, it is improper for Defendants to invoke a privilege on behalf of the FDIC, a non-party. The law does not recognize any such privilege-by-proxy objection to discovery, as [a] distinctive attribute of any privilege is that only the holder of the privilege has the ultimate power to assert the privilege. Alexander v. FBI, 186 F.R.D. 12, 17 (D.D.C. 1998). Because Defendants admittedly have no protectable interest in these materials, they have no standing to raise a claim of privilege. See, e.g., Amobi v. D.C. Dept of Corr., 257 F.R.D. 8, 10 (D.D.C. 2009) (explaining that defendant agency had no right to claim work product or attorney-client privilege on behalf of another agency); Novak v. Capital Mgmt. & Dev. Corp., 241 F.R.D. 389, 394 (D.D.C. 2007); Washington v. Thurgood Marshall Acad., 230 F.R.D. 18, 21-22 (D.D.C. 2005); accord Miller v. Transamerican Press, 709 F.2d 524, 527 (9th Cir. 1983) (Normally a privilege is assertible only by its holder.). Only the FDIC can properly raise its own ostensible privilege. In an effort to rationalize their discovery failures, Defendants cite certain FDIC administrative regulations, including 12 C.F.R. 309.6 and 309.7. Those regulations are inapplicable here. The FDIC regulations that Defendants rely upon simply prohibit a party from disclosing records of the FDIC. Preliminarily, the redacted documentsnumerous versions of

13

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 14 of 19

the OTS Regulatory Profile of the Bankare records created and maintained by the OTS and, therefore, regulations concerning disclosure of FDIC records are inapplicable as the redacted information is not a part of an FDIC record. Moreover, even if the documents completely withheld are FDIC records, FDIC administrative regulations do not excuse Defendants from complying with the September 9 Order or their discovery obligations. The FDIC regulations are nothing more than Touhy regulations, which prohibit the unauthorized release of agency documents. See generally United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951). Such internal housekeeping regulations do not provide a responding agency with any basis to resist discovery, in the form of privilege or otherwise. See Watts v. SEC, 482 F.3d 501, 508-09 (D.C. Cir. 2007); Houston Bus. Journal, Inc. v. OCC, 86 F.3d 1208, 1212 (D.C. Cir. 1996) ([N]either the Federal Housekeeping Statute nor the Touhy decision authorizes a federal agency to withhold documents from a federal court.); see also SEC v. Selden, 484 F. Supp. 2d 105, 108-09 (D.D.C. 2007) (explaining that administrative regulations do not negate the requirements of the Federal Rules of Civil Procedure and the bounds of discovery are ultimately defined by the Court, not the agency). Thus, Defendants may not rely on the FDICs regulations to avoid their own discovery obligations. See, e.g., Merchants Bank v. Vescio, 205 B.R. 37, 40-41 (D. Vt. 1997) (holding that FDICs administrative regulations did not justify partys refusal to turn over documents in discovery). When the government or one of its agencies comes into court, it is to be treated in exactly the same way as any other litigant. Appointment to office does not confer upon a bureaucrat the right to decide the rules of the game applicable to his crusades or his lawsuits. Alexander v. FBI, 186 F.R.D. 66, 70-71 (D.D.C. 1998) (internal marks omitted).

14

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 15 of 19

Defendants have stated that they are bound to respect the invocation of privilege by the FDIC just as they were bound to respect the invocations of confidentiality made by Legent Clearing, LLC. Exhibit 4. The analogy is not only inapt, but destructive to Defendants position. Legents approach demonstrates what a party should do when it wishes to protect against disclosure of documents over which it claims a privilege. When Legent learned that some of its confidential information could be disclosed, it intervened in the case and filed a motion for a protective order. Legent Clearing, LLCs Mot. to Intervene, July 7, 2011, ECF No. 40; Legent Clearing, LLCs Mot. for Protective Order, July 25, 2011, ECF No. 47. Legent then worked with the OTS to resolve the disclosure issues. Legents behavior stands in stark contrast to the behavior of the FDIC, which has not intervened in the case, has not contacted the Bank directly, and has not endeavored to work within the framework of the Federal Rules. Instead, it continues its attempts to influence the litigation from afar.6 But a non-party with a potential claim of privilege cannot pass it off to [a party in the case] and tell [that party] to assert that privilege on their behalf, while they sit on the sidelines. Rendon Grp., Inc. v. Rigsby, 268 F.R.D. 124, 127 (D.D.C. 2010). There is no basis for the Defendants to withhold the documents in question and the Court should order Defendants to produce the improperly withheld materials immediately. Furthermore, the limited information Defendants have provided about the withheld documents and information suggests any claims of privilege lack merit because the withheld This is the second time the FDIC has attempted to improperly assert its interests in this litigation as if it was not subject to the same rules as everyone else. The first example was the FDIC filing an opposition to Legents Motion for a Protective Order after their dismissal from the case. Joint Oppn. of FDIC in its Corporate Capacity and its Capacity as Receiver for United Western Bank to Legent Clearing, LLCs Mot. for Protective Order, Aug. 8, 2011, ECF No. 51. The Court properly struck that opposition. Minute Order Striking Mem. In Oppn., Aug. 10, 2011.
6

15

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 16 of 19

material appears to be largely factual. Defendants bear the burden of showing that either of their claimed privileges applies. Tax Analysts v. IRS, 117 F.3d 607, 616 (D.C. Cir. 1997) (deliberative process privilege); Schreiber v. Socy for Sav. Bancorp, Inc., 11 F.3d 217, 220 (D.C. Cir. 1993) (bank examination privilege). Neither privilege applies to purely factual material. In re Sealed Case, 121 F.3d 729, 737 (D.C. Cir. 1997) (deliberative process privilege); Schreiber, 11 F.3d at 220 (bank examination privilege). Here, the terse titles of the bulk of the withheld documents liquidity reportsindicate they are factual. See Schreiber, 11 F.3d at 221 ([W]e note that every court that has examined the nature of bank examination reports thus far has found them to be at least partly factual.). Likewise, the redacted items appear to be factual when read in context, as the documents in which they are contained are largely factual recitals of the Banks supervisory history. Yet it is difficult to evaluate the claims of privilege on their merits, as Defendants have also inexplicably refused to provide an adequate privilege log. The court-approved discovery requests are clear: Defendants were to produce a privilege log at the time they provided their discovery responses. Defendants were instructed to do three things in their log: (1) state the existence of the information, document, or communication, (2) identify the specific ground(s) upon which any objection is based, and (3) identify the information objected to by furnishing its date, participants, and a general description of the nature, rather than the substance, of the purportedly privileged information. See Notice of Filing of Pl.s Discovery Proposal at 5, Sept. 1, 2011, ECF No. 55-1. But rather than producing a log with their discovery responses, Defendantsin direct contravention of the plain language of the instructionsinitially contended that no log was necessary since Defendants were not actually asserting a privilege, the FDIC was.

16

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 17 of 19

More than two weeks later, and only after two requests by Plaintiff, Defendants provided what they called a privilege log. Instead of meeting the three requirements of a proper log, Defendants log provided skeletal references to the withheld documents without any description sufficient to determine if the documents are subject to the claimed privileges. The log does not list all recipients, and interestingly, the Acting Director is not listed as a recipient for the bulk of the withheld documents, suggesting that there were additional internal OTS communications transmitting that information to the Acting Director that have not been produced either. In fact, the log itself does not even make clear what privileges are claimed for each document, as it merely claims the bank examination and/or the deliberative process privilege for every document. In the absence of any other documentation or explanation, these deficiencies render the Defendants privilege log more or less useless. Ascom Hasler Mailing Sys., Inc. v. U.S. Postal Serv., 267 F.R.D. 1, 5 (D.D.C. 2010). Defendants treatment of the privilege log obligation reflects their generally dismissive approach to the process of discovery that the Court ordered in this case. Finally, even if either privilege applied, both privileges are qualified and may be overcome by a showing of sufficient need. In re Sealed Case, 121 F.3d at 737; Schreiber, 11 F.3d at 220-21. Given the governments central role in this case, the lack of any other source for this evidence, and the critical and important issues implicated by this litigation, it is likely the balancing test would favor the Bank.

17

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 18 of 19

IV. Conclusion For the foregoing reasons, and in light of the Defendants non-compliance with the Courts June 8 and September 9 orders, the Plaintiff requests that the Court order Defendants to: comply with the September 9 Order by providing full and complete responses to all interrogatories and supplementing the response to Document Request No. 1, including production of all information and documents withheld at the direction of the FDIC; provide a declaration detailing the efforts that were made to comply with the September 9 Order and make the declarant available for a deposition or questioning before the Court; make available former Acting Director John E. Bowman for a limited deposition or questioning before the Court to reconcile his conflicting representations regarding what information he considered, directly or indirectly, or relied upon in making the January 21, 2011 decision to seize the Bank.

18

Case 1:11-cv-00408-ABJ Document 60-1

Filed 11/02/11 Page 19 of 19

Respectfully submitted,

_/s/ Andrew L. Sandler ______________ Andrew L. Sandler (DC Bar No. 387825) Samuel J. Buffone (DC Bar No. 161828) Liana R. Prieto (DC Bar No. 987287) BUCKLEYSANDLER LLP 1250 24th St., NW, Suite 700 Washington, DC 20037 (202) 349-8001 (Telephone) (202) 349-8080 (Facsimile) Attorneys for Plaintiff United Western Bank

_____________ _/s/ Kirby D. Behre Kirby D. Behre (DC Bar No. 398461) Lawrence D. Kaplan (DC Bar No. 415186) PAUL HASTINGS LLP 875 15th Street NW Washington, DC 20005 (202) 551-1719 (Telephone) (202) 551-0119 (Facsimile) Attorneys for Plaintiff United Western Bank

_/s/ Theodore J. Abariotes____________ Theodore J. Abariotes Deputy General Counsel United Western Bancorp, Inc. 700 17th Street, Suite 2100 Denver, Colorado 80202 (720) 932-4216 (Telephone) (720) 946-1218 (Facsimile) Attorney for Plaintiff United Western Bank Dated: November 2, 2011

19