will hear you opening yes thank you your honor may may please the court steven for arena from williams and connelly on the half of appellant daniel belcher i apologize to the court for the technical issues  this case involves an important question of statutory interpretation under the sarbanes oxley act all documents or information prepared or received by or for the p c o be in connection with a o b in investigation are to be treated as confidential and privileged this statutory privilege is a cornerstone of the regulatory framework established by the act as i believe the legislative history which we cite in our papers makes clear the purpose of the privilege is to promote the transparent flow of information between accountants and accounting firms and the p c obey during the course of an investigation many investigations ultimately are close without any actions being taken and the investigations themselves are by law privileged and confidential they're not publicly disclosed all of these materials that are generated in the course of an investigation including testimony are covered by the privilege the privilege has been enforced by numerous federal courts since many including in cases involving the f b i cia and our opening brief we cite the colonial bank group case which like here is another case involving the f d i c as receiver bring in common law claims against an accounting firm for damages it's not a regulatory action it's it's a civil lawsuit for damages are the reason i have a question about maybe and that may be related to some of these other cases i haven't seen a procedurally similar case i mean in that the f d i c filed this particular lawsuit to enforce a subpoena for mr belcher and so the district court here had jurisdiction obviously to decide if the deposition should proceed and wrapped up in that would be maybe you want to limit the deposition or you shouldn't get into these documents because i have concerns about how they were turned over but what gives this district already to you know require if it had if we were to agree with you on the merits turning the documents back over i mean why wouldn't that be an issue my understanding is now there's an accounting up accounting that the receiver's brought against ernst and young why in this limited force a subpoena would there be jurisdiction to just say give these documents  the agency you've got them so mr belcher and you why are filed multiple motions there was a motion to quash the subpoena and i think it's well settled under established law that protection of privilege is a basis upon which one could watch a subpoena including the intrusion of privilege in the deposition itself but mr belcher also filed a motion to disqualify  well i think the way it would have worked in the way we envisioned it working is that the relief that we were seeking was that the deposition go forward with counsel who was not tainted having received the confidential and privileged information none of the witnesses including mr belcher objected to the idea of giving testimony to the f t c i see it was simply not testimony taken by someone who had intruded into the privilege hence the motion for  which the my vision was you want the district court in this matter to say give these documents back well i think that's actually among the relief that that the f b i see itself contemplates and it's briefing clearly both the district court did not address the issue of remedies because the court found there was no statutory violation we have asked in our appeal papers that the matter be remanded to the district court so the district court could fashion an appropriate remedy the f acknowledges in his papers that some remedy would be available for a violation they just dispute the appropriate remedy there's a new wrinkle to all this and that the f b i says receiver has now in that other lawsuit can the f d i c just subpoena these documents from i'm still young you know maybe that would be privileges or not but maybe they can just get him through normal civil discovery independently of having gotten him from the agency well that is exactly not the case and that is the root of the problem here so the colonial bank case and the other cases like that are as you said in the more traditional context of you have a plaintiff bring an action they try to get documents that are covered by the privilege defendant says no they're covered by the privilege and the privileges and force so if the f d i c had gone that route and simply tried to subpoena mr belcher's testimony in the civil case that they have now filed the privilege would be applied and they would not get those documents i don't think there's any question about that the issue is whether by virtue of this exception and whether the exception applies they were allowed to get these documents same counsel for the same purpose just they got it differently and therefore there's no statutory violation we submitted i mean i wasn't in the other case in front of judge fallon couldn't they just asked for the documents directly for me and why and that be not from the government agency they couldn't they could not ask for the documents that are covered by the statutory privilege they're clearly documented correct so for example the best example of that your honor is the testimony so we're not saying that they couldn't get our work  papers that's what i'm saying you could in the normal course of discovery you're suing an accounting firm you're going to say produce your related papers in and it might be fought you know like every discovery battle whether you're entitled to that but just because you can't get in the agency because they were turned over there doesn't mean the normal course of civil discovery they can't get the documents absolutely and that's true for documents that are not specifically prepared for the p c abate that the transcripts are a very good example of such information there's no way as a private let it get and in the case before judge found they could get those there's twenty eight dollars days where the testimony thousands and thousands of pages i don't think any litigator would question the value of having that and that includes four days  deposition testimony from mr belcher there's another wrinkle to all this that is alluded to in our papers that there are louisiana statutory privileges for some of the material that would protect disclosure in the civil action c actually got those materials also from the p c obey so those are two categories of information that would not be available in the civil action but to be clear to the extent the documents are available in the civil action there's nothing wrong with the f b i see having them there's nothing wrong with ship pardon having them it is the documents that are covered by the privilege that they're not supposed to have and that the the privilege is and is intended to protect that's where we take issue and it's and that is not an insubstantial volume of materials and the possession of those materials by counsel violates our statutory right and there needs to be a remedy now it would go back to the district  judge whether it's judge saini or judge fallon or some combination of the two a fashioning the appropriate remedy i think that is an issue that could be left to the to the district court here though judge saini determined that there was no statutory violation we think that was predicated on a misreading of the statute and that issue is before this court i don't think there's any question that it's still a live issue if that issue is decided in mr  violation then i think it would be appropriate for the district court to make the appropriate remedy there's clearly a just spewed as to the appropriate remedy and that would be addressed below i don't think there's a record for this court to address that that specific issue but whether or not the court misread and misapplied the statue is clearly before this court the statute does have an exception the exception provides that documents that are confidential and privilege can be shared with the the appropriate federal functional regulator with respect to an audit report for an institution subject to the jurisdiction of such regulator we think that the error here by the district court was in finding that the f b i see was the appropriate federal functional regulator with respect to the entity for whom the audit report was prepared the holding company is the client it's the holding company's financial statements that were audited by the why it's the holding companies controls that were the subject of an audit by a wide the holding company is regulated by the federal reserve there is no deceased among the parties that the appropriate federal functional regulator for the holding company is the federal reserve there is no dispute that the f b i see is not the appropriate federal functional regulator for the holding company so then the question is was the audit conducted for the holding company or for the bank the subsidiary all of the underlying facts are undisputed e y was engaged by the audit committee of the holding company that's in the record record eggs are paid forty one it why was not engaged by the bank the holding company and the bank of course are separate legal entities e y was engaged to audit financial statements issued by the holding company and the internal controls of the holding company e y was not engaged to audit the financial statements or internal controls of the bank issued its audit reports addressed to the board of directors of the holding company and the opinions are on the financial statements of the holding company and the internal controls of the holding company and the opinion of self is included in the records in the record excerpts submitted by the f t i see that audit report references the holding company six times there's not a single reference in the audit report to the bank you why did not issue any audit report on the financial statements of the bank or on the financial statements internal controls and audit report is specifically defined in sarbanes oxley and an audit is also specifically defined in sarbanes oxley and they both relate with respect to the issuer and the issuer here is not the bank the issuer here is the holding company we do not dispute that the see is a federal functional regulator the question is whether they were at the appropriate federal functional regulator with respect to a wise audit we believe that's again a question of sta interpretation the court simply misread and misapplied the statute now what the court said was two things st the audit report appears to have been used by the bank so the the holding company's financial statements and the holding company internal controls that was commissioned by the holding company and issue to the holding company was used by the bank for purposes of its own regulatory filings and that was permitted under the regulations but the statute does not speak to the use of an audit report the statute speaks to whether the audit report with for a particular entity or institution and there are any number of individuals or entities that may use audited financial statements the auton financial statements for the holding company were published in the holding companies form ten k there are investors there are lenders there are commercial counter parties any number of people may use an audit report that doesn't make the audit report an audit report for those constituencies and that reading by the court which is not supported by the of the statute that's not what the statute says would dramatically expand the scope with the exception contrary to congressional intent and contrary to the plain language of the statute used by is not sufficient to satisfy the criteria laid out expressly in the statute for the application of the exception the other thing that the district court relied upon and the receiver on the appeal does the same is the fact that the financial statements issued by the holding company were consolidated financial statements so the consolidated financial statements of the holding company sub the information of its subsidiaries here the bank there's no question that that's true but that does not make the holding companies financial statements the financial statements of the bank the bank has its own financial statements they different than the financial statements of the holding company e y did not issue an opinion on the bank's financial statements it issued an opinion on the holding companies financial statements that's evident from the face of the opinion so those were the two bases upon which the district court determined that the exception apply it and we think in light of facts that are not in dispute here none of the things that i've mentioned are in dispute the question is whether or not those facts are sufficient to meet the statutory criteria to apply the exception and we think that ate a fair reading a literal reading of the statutory tax does not permit the exception to apply here and mr farina's assertion of the bottom report in reference to bank it did it did in several places on page twenty two dollars of the record this court will see that the auditor itself said the bank on and in many places and there's simply no basis for finding that the order or it was not for the bank now mr breen argues that was for the holding company and once it was for both innings which is no surprise given that it was an audit of consolidated financial statements of both entities and its roots here in your honor it is routine for banks to obtain to submit for their or for their audit reporting requirements sense and common sense reading of the statute these the conclusion of your report was for the bank as well as the holding company and mr belcher argues that the bank didn't engage the audit firm well that's true but it's irrelevant nothing in the statute assigns any significance to what and he engaged you at a firm and that's not consistent with the ordinary meaning of for four does not does not presuppose a contractual relationship if parents said well let's pick up some pizza for the kids no one would say no no parents you can't say that because the kids aren't paying for the pizza and by the same terms made by the same token there's no reason why the fact the bank didn't engage the on firm means that the other report is not for the case as to involuntary disclosure in that occasion but it doesn't speak the not nothing in the legislative history speaks to a voluntary disclosure by the p c obey to regulate so the fact that in some well let me ask you this this is one of those cases we get often where nobody argues that the language is ambiguous but both sides say the language clearly of yours in their respective favor so this we have he federal regulator the other side says there may be true but it's not the functional better regulator in this instance so that's going to what attraction is so assuming our view window that we agree with counts for mr belcher that transcript is not before the court or doesn't have it that doesn't have a premised on doesn't have the information to assess said we think that this report we'll find on remand but nothing about that deposition deposition that we don't believe they'll be any basis and that's how you said you assumed away the quote you assume the question whether the documents are related to this information of this subpoena which is all this case it is but that the mr belcher invokes the piece you'll be sharing as a basis for for resisting enforcement of a subpoena now he has not argued he has not argued before this court or did not argue in his opening brief before this court fact misled and of subpoenas the fruit of the misleading conduct that is grounds for finding an abuse of process i don't think anything any of that is satisfied here so when we talk about roughly where we're as you say assuming th to say with respect to an art report for an institution subject to the jurisdiction of such regulator so we submit that the appropriate or d a functional regulator has to be read together with subject to the jurisdiction of such regulator institutions subject t jurisdiction of such regulator and that that leads back to the four issue so appropriate is going to feed the meeting appropriate it comes back to whether there is an institution regulated by this regulator sides make reasonable arguments about the war in the you know the meaning of the statute and conclude that it's therefore ambiguous where does that leave us well the supreme court's decision instead more of the spliffs council is looking over my notes to see whether there are additional points have spoken i think to every aspect of why we think these this is our report is for the bank and we think that mr belcher is seeking to rewrite the statute to replace the term institution with issue or to replace the term the term for with paid for general interest on attention an audit report can only be for one institution in a time which is nowhere reflected in statute and to introduce a distinction between regulators and that against that doesn't exist regulators let it get all the time nothing in the statute limits disclosure to regulators don't mitigate it up we're going to use the information in the ticket so none of that is supported by the text of the statute we think if we think that the court should find that because imposed in situations where counsel a team privileged information if they knew or should have known should not be shared with them that's not the case here you have to see received information whose disclosure was authorized by  single sentence starting on page thirty five of the f b i see if brief suggesting that chevron or skip more might apply here there is no legal basis to apply chevron deference ryssdal this is not an panel's asking questions about what if what if it isn't an ambiguous and i will turn to that momentarily but in terms of chevron deference the supreme court in the christensen versus harris county case wrote interpretations such as those in opinion letters like interpretations contained in policy statements agency manuals enforcement guidelines all of which lacks the force of law do not warrant chevron style deference and there been many many cases applying that rule this was not an interpretation that resulted from rule making or some regular practice it was a rationalization for a decision that had been made in terms of skidmore deference is a measure of deference proportionate to the thoroughness evident in its consideration the validity of its reasoning its consistency with the earlier and later pronouncements all of those factors that give it the power to persuade and that again is from the christians and case in short of the supreme court of said under skidmore deference the court gives whatever deference the the decision warrants here you have a letter from counsel  the st letter which was the cover letter just providing the documents includes no interpretation at all it simply provides the documents and says their privilege the nd letter that was received after we objected to the disclosure of our privilege and confidential information does not include any interpretation of the statute it simply says and this is in the record at page five of the record excerpt that a federal functional regulator includes c and we do not dispute that the f b i c is a federal functional regulator it is not the appropriate federal functional regulator and there's actually nothing in that letter that supports that position the p c b has said it can decide whether to provide documents to another agency that is true but only if the statutory criteria have been met they can choose to ignore sarbanes oxley so there's nothing about what th o b has said or done other than the fact that it did what it did that would be entitled to any difference whatsoever because they have not actually offered an interpretation of the statue i do want to go back very briefly to the report of the independent accountants i think there may be some confusion about that the report appears in the f b i seize record eggs or us it is in fact are easier o's one and that is from and eighty five in the record it is the report of independent accountants it is addressed to the board of directors of st and b c bank holding company it says we have examined st and b c bank holding companies internal controls it says that we express an opinion on st n b c bank holding companies internal controls there is a reference to the dish in the letter but there's no reference to the bank and again the opinion that is expressed in this report which was included by the f t i say is an opinion on the controls and financial statements of the holding company not of the bank in terms of why are we here and is there some protection afforded to the actions taken here by virtue of the fact that we challenge them in the context of enforcement of a subpoena the district court clearly believed that it had to you the district court did in fact address those issues we believe they did so incorrectly and for us to obtain relief we need this court to address the district court's decision thank you very much all right thank you both moves to reno where  you geographically situated i am in washington d c as i believe my my adversary may be as well and we are in the middle of a tropical storm here but it seems to be have just passed  well hopefully it will us out as more in the weather port there was you know headed that way oh please maybe only get good rain but that said thank you for the briefing in argument in the case an interesting case to