# O

+-----------------------------------------------------------------------+
| ## Comptroller of the Currency                                        |
|                                                                       |
| > Administrator of National Banks                                     |
+-----------------------------------------------------------------------+

Washington, DC 20219

#### Interpretive Letter #972

August 12, 2003 **September 2003**

#### 12 CFR 4.31

Thomas R. Dyer, Esq.

Wyatt Tarrant & Combs, LLP

1715 Aaron Brenner Drive, Suite 800

Memphis, Tennessee 38120-4367

Subject: [Union Planters Bank, N.A. v. Continental Casualty, No.
02-2332-GV (W.D. Tenn.)]{.underline}

Dear Mr. Dyer:

This acknowledges your telephone calls and your August 8 letter
informing us, as required by OCC regulations, 12 C.F.R. § 4.37(b)(3),
that defendants in the above referenced litigation have filed a Motion
to use certain confidential and privileged OCC documents stemming from
an OCC examination of Union Planters Bank, N.A., Memphis, Tennessee.
Your letter indicates that Union Planters inadvertently produced these
documents to defendants, and the bank has requested their return. The
documents contain the subjective analysis and recommendations of OCC
examiners.

For the reasons below, the OCC, as the bank's federal regulator, is
concerned about the defendants' Motion and the bank's inadvertent
production, and we ask you to convey our concerns to the court.

**First**, examination reports prepared by OCC examiners on national
banks are confidential in that they are expressly exempt from the
mandatory disclosure provisions of the Freedom of Information Act by
virtue of 5 U.S.C. § 552(b)(8). These reports are also privileged under
the bank examination privilege. As explained in detail in [In Re
Subpoena Served Upon the Comptroller of the Currency]{.underline}, 967
F.2d 630 (D.C. Cir. 1992), the success of the OCC's regulation of banks
is highly dependent on a candid flow of information between the bank and
the OCC, and "These conditions simply could not be met as well if
communications between the bank and its regulators were not privileged."
967 F.2d at 633-634. [See also]{.underline} [In re]{.underline} [Bankers
Trust Co]{.underline}., 61 F.3d 465, 471 (6^th^ Cir. 1995) ("Thus, the
privilege is designed to promote the effective functioning of an agency
by allowing the agency and the regulated banks the opportunity to be
forthright in all communications"). The bank examination privilege
belongs to the OCC, [First Eastern Corp. v. Mainwaring]{.underline}, 21
F.3d 465, 468 (D.C. Cir. 1994), and the OCC has not waived the privilege
in the above referenced litigation.

**Second**, although the bank is in lawful possession of the OCC
examination report and other supervisory communications, the bank is
barred by federal law from producing these documents without the OCC's
approval. 12 C.F.R. § 4.37(b)(1). Bank supervisory materials are
"non-public OCC information" and "the property of the Comptroller," and
are "loaned to the bank . . . for its confidential use only." 12 C.F.R.
§ 4.32(b)(2). The OCC has not given Union Planters Bank permission to
produce this material to others, and the OCC has not authorized any
party to this litigation to use these confidential documents.

**Third**, the defendants have not exhausted their administrative
remedies with the OCC. For private litigants like defendants here, the
OCC and the other federal bank regulatory agencies (Federal Reserve
Board, FDIC and Office of Thrift Supervision) have promulgated
regulations allowing a party to apply to the agency for access to
non-public information. [See]{.underline} 12 C.F.R. § 4.31 *et seq*.
Here, the proper course of action is for defendants to exhaust their
administrative remedies by seeking the OCC's approval under 12 C.F.R.
§ 4.31 to use the documents. To do this, defendants should write the
OCC's Director of Litigation at the address in 12 C.F.R. § 4.34(a) and
make the showings required by 12 C.F.R. § 4.33 (especially, showings as
to relevance, availability of alternative evidence, and need). The OCC
will then render a final agency decision that a federal court may review
if called upon to do so. Indeed, this procedure is codified in OCC
regulations:

> Without OCC approval, no person, national bank or other entity,
> including one in lawful possession of non-public OCC information under
> paragraph (b)(2) of this section, may disclose information covered by
> this subpart in any manner, except: (A) After the requester has sought
> the information from the OCC pursuant to the procedures set forth in
> this subpart; and (B) As ordered by a Federal court in a judicial
> proceeding in which the OCC has had the opportunity to appear and
> oppose discovery.

12 C.F.R. \' 4.37(b)(1). Since this procedure is available, the federal
courts have required private litigants to use it in order to exhaust
their administrative remedies.[^1]

Two decisions in the case of *Raffa v. Wachovia Corp*., *supra*, which
involved a national bank's attempt to retrieve an inadvertently produced
OCC examination report, support this result. In the first decision, the
court ordered the party in possession of the OCC information to submit
an administrative request to the OCC to use the information. 242 F.
Supp. 2d 1223, 1225 (M.D. Fla. 2002). The party did so, the OCC denied
the request in a final agency decision, the party sought review in the
same court, and the court upheld the OCC's decision. *Raffa v. Wachovia*
*Corp*., 2003 WL 21517778 (M.D. Fla. May 15, 2003). This is the process
envisioned in 12 C.F.R. § 4.37(b)(1) and endorsed by the federal courts,
and defendants should follow it here.

I appreciate your conveying our concerns to the court. If the court
schedules oral argument on the defendants' Motion, please inform me or
Ford Barrett, Assistant Director of our Litigation Division, at
202-874-5280, so that the OCC may be represented.

Sincerely,

/s/ Raymond Natter

Raymond Natter

Deputy Chief Counsel

cc: Joe Dycus, Esq.

Assistant U. S. Attorney

[^1]: *Raffa v. Wachovia Corp*., 242 F.Supp.2d 1223 (M.D. Fla. 2002)
    (directing plaintiff shareholders to use OCC's administrative
    procedures for access to non-public OCC information); *American Sav.
    Bank v. PaineWebber*, 210 F.R.D. 721, 722 (D. Hawaii 2001) (stating
    with reference to OTS regulations that "Courts, in construing
    regulations which control the release of official information, have
    held that such information should not be compelled to be produced in
    violation of these regulations"); *In Re First Chicago Shareholder
    Securities Litigation*, Civ. No. 00 C 67 (N.D. Ill. Nov. 20, 2001)
    (denying motion to compel bank to produce OCC examination reports
    while the OCC considers an administrative request); *U.S. v. Amico*,
    2003 WL 1145426 (W.D.N.Y. Jan. 3, 2003) (quashing subpoena for OCC
    documents and directing defendant to exhaust administrative
    remedies); *Nat'l Union Fire Ins. Co. v. Midland Bancorp, Inc*., 159
    F.R.D. 562, 571-72 (D. Kan. 1994) ("When federal agencies promulgate
    official regulations, setting forth procedures to obtain information
    otherwise exempt from disclosure, the party seeking it may obtain
    it, if at all, only after following those procedures"); *Golden
    Pacific Bancorp v. FDIC,* 1999 U.S. Dist. LEXIS 20303, 1999 WL
    1332312 (D.N.J. Nov. 10, 1999) (quashing subpoena for OCC employee's
    testimony for failure to exhaust administrative remedies); *Frick v.
    Austin Bank*, *N.A*., 1999 U.S. Dist. LEXIS 11493 (E.D. Tex. June
    25, 1999) (directing party to use the OCC's administrative process);
    *In re* *Adelbert A. Thompson*, No. 98-11253 (Bankr. D. Vt. Apr. 26,
    1999) (denying motion for Rule 2004 examination and directing debtor
    to submit administrative request for examination report to the OCC).