the morning is the floor my name is richard grossman i represent builders bank i thought i would begin today by describing what is not in dispute in this case first l which was created by what i call five fact helpful i'm worried about whether we have a case properly for us the the a p a p provides for review only a final agency station and this rating appears to be an input into other decisions rather than a decision by itself so why is it reviewable now you know i believe that wrong look at the language of the a p a it says it applies to all final agency decisions it does not apply independent it does not allow review of decisions taken on the way to some final decision that's just what it provides and the supreme court has insisted that courts of appeals respect that limit so i repeat my question why is this a final agency decision rather than an input into some other agency decision i'm not sure what other agency decision we're talking about the issue everything i see might decide to close the bank for example it might decide to change the premium for insurance i gather that there is some link between this rating and the insurance which are not contesting what the insurance rate is how much the bank pays for its coverage what we are contesting is that could you tell me what the why this is a final decision it's a final decision your honor because if you look at the material supervisory determination it's not in the a p a yet ph talks about final decisions federal agencies send critical letters all the time and we frequently hold that they're not reviewable you know i'm trying to figure out why why you think this one is a final decision i understand why you think it's critical and it might well be material as an input into some other decision like the decision about the rate the bank pays for coverage what i don't understand why it is itself a final decision what i'm suggesting is that the bank examination rating is something that the f d a actually mandates and in and of itself it is meaningful in that the base if another words i'm not asking whether something is meaningful you're i think you you are just obviously unaware of some basic principles of administrative law the federal securities act requires the because it's not a final decision on anything i don't believe even the f d i c can tell i know the f d i c hasn't argued this but this is something that having a reviewable subject before a court is very important the supreme court has insisted that we follow the final decision requirement and i'm trying to figure out why this is a final decision as opposed to an input into one i i can tell you that the i believe that the that the f d a act and five fic when you consider the two of them together congress was very concerned about that i can tell from anything that that's in the record is to determine the level that you pay as a premium for insurance in the f d i c so you know why don't it's finally determinative eligible why don't you challenge that decision if the f d i c use this camel's rating to change how much money the bank asked to pay why don't you challenge that decision that looks to me like it's a final decision i believe that they are equivalent in other words the the exam rating that you get determines your where you so if you get a one two three four five that determines where on the scale of pre of insurance premiums you are that's the purpose of this whole of this whole enterprise is to examine the bank determine what its risk is to the to the ets of the f d i c fund that protects all the banks and and assign a rating to it so that we know where or how much they should pay and where it lies on the on the on the the risk scale so that i that issue wasn't briefed and if you your honor would accept a supplemental brief on that issue i  where you said plaintiff has only one non performing loan and its portfolio of foreclosed properties had in that bed again of over nine million dollars what is that supposed that's if your honor if your honor looks at the at the you first that's the uniform rating system there is a a very detailed concrete description of exactly where you are and what what you're supposed to achieve in order to be in any particular category the rating we got that is the bank got was let's say i'm not going to refer to the specific number because that's supposed credit but let's say it was trouble so we say to do with the fact you had one non performing loans it is that translated into a number if you look again if you look at the chad we have a chart on pages eighty nine of our applied brief which describes each of the categories there are detailed criteria for where you're supposed to fit their when you look at what are you saying that they failed that they failed to give proper way to the fact that only one non performing loans there are many factors we didn't only rely on those we said that a we have we we have only one non performing lumpy we have superior asset quality three we have very well but ok the other the other point in this pay right we foreclosed on it and i'd somehow you've got to come out nine million dollars ahead is that's correct because what in fact that do they have some algorithm or something which will translate and embed again into will contribute to the determination of how much it contributes to the determination if you look at the ratings or suppose the composite ratings are not an average of the component ratings they are it's an overall risk profile determination and when you look at it and you say probability of failure safety and soundness of verity and weakness of problems what we're saying is if you look at the at the whole picture their conclusion that we're trouble which has its own definition of you know it's possible it did they just refused to look at the non performing loans or the embedded gain or that they evaluated them differently from your evaluation what the whole the whole purpose of them such as discuss them we don't even know what what they did because there's no there's nothing in the record without discovery we can't tell what they did or didn't do what we're saying is if you give us a rating that says we're troubled and we go and you look at what we are in fact doing that that conclusion is arbitrary if you pay attention to what the the you first standards are and what we have said before is that these standards are at least as concrete and detailed as those that other courts have found to be sufficient to conduct a review there is a strong presumption of judicial review in for any final agency action assuming that this is final agency action apparently judge easterbrook as a problem with that but but if you consider that these are this is a final agency actually we're  titled to judicial review under the presumption it can only be defeated by something that's that congress has done to say we don't want to the courts to even tamper with this the the  district court and the f d i c contend that the international lending supervisory supervision act bars any consideration of a capital of a exam rating that what we're saying is i the f b i see to cause banking institutions to achieve and maintain adequate capital to fund the the for the the focus of congress is concern in that area is in a foresman action that is to cause the bank they send a letter and they say that this is the capital level that we think you ought to have and here is our order that you maintain it you achieve it and maintaining this is a bank sort of rating it's an evaluative tool it has nothing to do with those countries then looked like they were going to be able to repay the loan so so there was a case bellaire and in that case the court actually said well we don't we reviewed it and we think that the f d a sees order that to maintain a certain little capital it's not justif congress was upset about that and they said we're going to pass a law for the first time we're going to say these this kind of order a capital directive which orders a bank to have a face a specific amount of capital is off limits with the courts you can't interfere with the bank exam rating is simply a tool as i said to determine what how much money you pay under the insurance provision so why isn't that another method of maintaining or ensuring that banks maintain adequate capitalization under thirty nine zero seven yet because that proves too much honor if that's another matter then everything that the f d i c does if they issue a letter or they say we don't like what you're doing where then it falls under thirty nine zero seven because after all as chip judge easterbrook said they send letters all the time they can do this they can do that if if all of those fall under thirty nine zero seven then everything is off limits that that the f t c does and that can't be the case in everything that they do to establish or ensure the banking institutions maintain adequate capitalization is therefore discretionary and unreviewable into the a p a well certainly by whether final or not well i believe this is a final agency action and yes it may well be true the f b i says he does now dispute that there may not have been a final action here that would be one basis for non review ability we chose to litigate an alternative basis for non review ability and of course that's that there is absolute discretion in the agency to make the decision here and there are no meaningful standards pursuant to which this court could judge whether or not the f d i c properly exercised that decision now this  up from the ceiling it doesn't have anything to do with those microphones certainly on a record or a voice certainly around the threshold point is to the to the extent that the factor mentioned in paragraph twenty two to be that if something is committed to agency discretion by law that's a shortfall of federal jurisdiction and that's actually what the district court said this case was dismissed for lack of federal jurisdiction on a motion under the n r c case and i prefer a decision by this court which you realize the supreme court has said it's not jurisdiction i'm not aware that the supreme court is explicitly said that your honor it has reviewed on the merits a number of cases appeals thought that there was a commitment to agency discretion by the law and its outer judgments on the merits or your honor even if i accept that premise for purposes of this argument for purposes of this appeal as we point out in our litigant loses the jurisdictional dismissal means that the case should be presented and argued at some other time or in some other way it doesn't end the decision on the merits but jurisdiction dismissal on the merits there had to be some appeal right if what you want is a decision with preclude soup for you had to file your own appeal we're not supposed to be modifying judgments to make the more favorable to a party the didn't file its own notice of appeal review under the a p a there are no published decisions that i'm aware of within this circuit that hold that that's not a jurisdictional issue there are two that hold that it is and i'm not aware of an interim supreme court case which has held on the merits that decisions such as it made in hector versus cheney decision such as it made in lincoln versus regular against cheney was decided on the merits by the supreme court it was not dismissed for but even if you go to the issue of whether it can give a certain examination rating i would direct the course attention to the only possible alternative source for a standard of review and that's you first your honor and here's what it says this that's the first point the rating is based on the components then critically just a few inches down the page or under it says the composite raid generally bears a close relationship to the component ratings assigned when assigning a composite rating some components may and that's a critical word under both this court's decision are now and the decision cited by the other party the other case may that means permissive discretion because i may be given more weight than others depending on the situation at the institution in general assignment of a composite rating may incorporate any factor that they're significantly on the overall condition your honor not only is that not a standard of review that's the precise opposite of a standard of review that is a provision that was drafted to give the agency discretion and as you work your way through you first it gets even better your honor for example if you go to the composite ratings themselves let's look at numbers three and four for example just by way of example it says financial institutions i mean exhibit some degree of supervisory concern in one or more of the component here is may range from moderate to severe if you work your way through the word may appears six different times and those two elements alone and it gets even better because when you go to the components that you need to look around so what it what happens if the f b i see concludes that this bank needs say three million dollars in net capital and then simply commits an addition error in determining that the bank doesn't have it you think that's completely on reveal well because committed it can see discretion by law now your honor i think that would be a different issue that mean perhaps raised to the level because really what it would be a different issue the district court that's not remotely what the district courts the district court said that if the f b i she's calculation of minimum capital plays or could play any role in the rating then the rating is only reviewable period so i've given you a situation where the f b i sees calculation of or determination of minimum capital plays an explicit role in the rating and you're now saying it is review well you're now not defending the district court's decision you're saying it's wrong your honor i am defending the discourse decision here is why there was no suggest of anything like a mathematical miscalculation what's being challenge here is the expertise and judge bank the bank contends that the f d i c is rating for the f b i sees decision about how much net capital it has to have is not what's responsible for this rating now the bank may be right or wrong but given the answer to the question that you've just given me it sounds like the bank is entitle to a determination of whether it's about how much net capital it has to have is not responsible for the rating and that it does not want the judiciary to review the f b i sees decision about how much net capital it needs that it wants review of other issues that the district court said that's irrelevant because as long as no capital played any role at all in the rating rating is not reviewable it sounds like you have now abandoned the district court's russian a no no i haven't your honor but what i said was is that our position is if you read the complaint if you read the opening brief in this case this case has never been about anything but challenging the f b i seize assessment of capital adequacy we then had a reply brief in which for the first time new issues were raised and they were raised based on the fact that a motion to amend had been filed below that was denied however at no point prior to the reply brief was that ever challenged what i'm saying is having not had an opportunity to respond to a reply brief and in  responding to your question which question assumed that these other factors are in play that if you look at the you first which is all is relied upon under each component whether capital or not the same rubric is set up a list of non exhaustive factors no guidance on how to weigh those factors and so what i'm saying is if this court were to determine incorrectly in the f d i c view that the that the bank can now argue that other factors are in play the result would still be the same because under the decision in deluca when you have not exhausted factors and when you have no guidance in whether it's a statute or regulation about how to weigh those factors that exudes deference to the agency and it's not  the luca and i'd also point out what the us supreme court said in lincoln vs vigil it said agency decisions are not subject to jisshu review where quote it requires a complicated balancing of a number of factors which within its expertise unquote that is precisely what you first does under each of the components it lists eight or more factors a not exhaustive list which again was pivotal under this court's decision in the luca because of course any other factor can commit that's the language i read earlier you first is the precise opposite of the meaningful standard of judicial review it uses the word may be repeated lee it has nonexistence and an exhaustive list of factors it does not give any guidance on how to weigh those factors this is precisely the way that an agency or congress would draft a so called uniform standards that were intended to vest the agencies who were under those statutes with unreviewable discretion indeed if anything you for years exudes more discretion than ilsa so just so that i'm clear we're not changing our position the f b i sees position is that if you read the complaint if you read the opening brief nothing has ever been challenged here but the f b i says captains terminations not america medicare about it but a challenge to the expertise and the opinions that were reached on this subjective issue by the f b i sees examiners but even if this court were to allow not an eleven foot of thirteen hour change in the claim through the reply brief to bring the other factors then we would have gladly litigated that issue below if it had been raised because under you first you must reach the same conclusion repeatedly under each of the components we are given a nine exclusive list of factors we are given no guidance on how to weigh them and these factors are all factors such as capital weight risk associated with things all factors if you look at them carefully examination of financial institutions to promote uniformity that's from their brief the idea of standards is in and of itself the cabin of discretion that's what the whole the whole point  that that there were there was a tower of babel between the various states and federal governments that were that were reviewing bank examinations and there was no standard by which you could tell you can generally accept this is a one this is a two this is three so congress mandated these standards the idea of standards itself is the campaigning of discretion that's the point and if you look at counsel suggests that there are there are there  vague and and not specific enough but if you look at the supreme court's decision in morgan stanley where they said just in lee's inable a standard mock mining which in which justice kagan says that that where there's any kind of a standard all you're due to your due accepted that the supreme court's kook on a case which says that where there's a a divergence of opinion as to whether you could be reasonably construed to be reviewable or not you choose the one that says that there is review right justice kagan and not muck mining says judicial view of executive action is the norm that's where we go when we when we're not sure there's a seven hundred seventy one page f d i c manual which has of examination policies there's all kinds of standards and if you look at it you first itself you'll see that that that the the composite ratings for each of the five levels have what i would call standards any weaknesses or minor they sound in the air in every respect it's exhibit a combination of weaknesses that range from  our courts are doing this kind of work every day and it's certainly as as as as concrete as something like just a reasonable or the other bank's capital when you look at paragraph twenty two of we used that phrase to suggest that's but one index of the arbitrariness of the rating because if you look at the f d i c zone definition of well capitalized we were well capitalized ok well thank you