UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS, 

EASTERN DIVISION 

JACK BEAM and RENEE BEAM, ) 

 ) Civil No. 07cv1227 

 Plaintiffs, ) 

 ) Judge Rebecca R. Pallmeyer 

 v. ) 

 ) 

MATTHEW S. PETERSEN, FEDERAL ) MEMORANDUM IN SUPPORT OF 

ELECTION COMMISSION CHAIRMAN, ) PETITION FOR INTERLOCUTORY 

) APPEAL, MOTION TO AMEND ORDER, 

Defendant. ) AND MOTION TO STAY 

) PROCEEDINGS PENDING APPEAL 

DEFENDANT’S MEMORANDUM IN SUPPORT OF COMBINED PETITION 

FOR CERTIFICATION OF INTERLOCUTORY APPEAL UNDER 28 U.S.C. 

§ 1292(b) AND MOTIONS TO AMEND ORDER AND STAY PROCEEDINGS 

PENDING APPEAL 

I. INTRODUCTION 

Although the federal courts do not routinely grant petitions for interlocutory appeals, the 

Seventh Circuit has explained that “[i]t is equally important . . . to emphasize the duty of the 

district court and of [the Seventh Circuit] as well to allow an immediate appeal to be taken when 

the statutory criteria are met.” Ahrenholz v. Board of Trustees of the Univ. of Ill., 219 F.3d 674, 

677 (7th Cir. 2000). See 28 U.S.C. § 1292(b). Those criteria are met here because whether a 

securities broker-dealer registered with the Securities and Exchange Commission is a “financial 

institution” within the meaning of the Right to Financial Privacy Act (“RFPA”), 12 U.S.C. 

§§ 3401-3422, is a controlling and contestable question of law. The answer to that question 

determines whether this Court has subject-matter jurisdiction over this litigation, and an 

immediate appeal from the Court’s Order of May 27, 2010, will materially advance the ultimate 

termination of the litigation. The Federal Election Commission (“Commission”) is filing this 

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section 1292(b) petition and related motions within a reasonable time — seven days (including a 

holiday and a weekend) — after the Court issued its ruling. The Court should therefore certify 

this important question for an interlocutory appeal to the Seventh Circuit. 

I. BACKGROUND 

 The facts underlying the question of law that the Commission seeks to present to the 

Seventh Circuit are undisputed. The Commission set out those facts in arguing that this Court 

lacks subject-matter jurisdiction. See Doc. ##161, 180; see also Doc. #162 ¶ 6 (FEC’s Statement 

of Material Facts as to which There Is No Genuine Issue). In brief, the plaintiffs do not deny that 

the financial records allegedly disclosed came from the brokerage arm of “Merrill Lynch,” 

a trade name of certain entities owned at the time relevant to this litigation by Merrill Lynch & 

Co., Inc., whose primary business was as a broker-dealer of securities. (Doc. #161 at 6.) 

Although the plaintiffs had money in a Merrill Lynch Cash Management Account (“CMA”), 

according to Merrill Lynch, a CMA “is an investment and money management vehicle. The 

VISA card and checking features are intended to provide clients with easy access to the assets in 

their accounts, but the [CMA] is not a bank account.” (Doc. #161 at 6 n.3.) And the Merrill 

Lynch subsidiary that offers the Cash Management Account service is not a bank, but a securities 

broker-dealer. (Doc. #180 at 5; see id. at 5-8.) 

The RFPA defines “financial institution” in relevant part as “any office of a bank, savings 

bank, card issuer [as defined elsewhere], industrial loan company, trust company, savings 

association, building and loan, or homestead association (including cooperative banks), credit 

union, or consumer finance institution.” 12 U.S.C. § 3401(1). 

In its Order of May 27, 2010 (Doc. #181), the Court denied the Commission’s second 

motion for summary judgment (Doc. #161). The Court stated that “the Right to Financial 

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Privacy Act defines ‘financial institution’ broadly” and concluded that “the financial services 

furnished by Merrill Lynch place it comfortably within that category.” 

II. THE CRITERIA FOR AN IMMEDIATE INTERLOCUTORY APPEAL 

HAVE BEEN MET 

A. Legal Standard 

Section 1292(b) provides that a litigant may take an interlocutory appeal if the underlying 

order “involves a controlling question of law as to which there is substantial ground for 

difference of opinion” and if “an immediate appeal from the order may materially advance the 

ultimate termination of the litigation.” 28 U.S.C. § 1292(b). Under the Seventh Circuit’s 

interpretation of section 1292(b), an interlocutory appeal is appropriate if “(1) the appeal presents 

a question of law; (2) it is controlling; (3) it is contestable; (4) its resolution will expedite the 

resolution of the litigation, and (5) the petition to appeal is filed in the district court within a 

reasonable amount of time after entry of the order sought to be appealed.” Boim v. Quranic 

Literacy Inst. & Holy Land Found. For Relief and Development, 291 F.3d 1000, 1007 (7th Cir. 

2002). 

B. The Appeal Presents a Controlling Question of Law 

Under the first factor specified in section 1292(b), a litigant may take an interlocutory 

appeal if the underlying order “involves a controlling question of law.” The Seventh Circuit has 

concluded that a “question of law” as used in section 1292(b) refers “to a question of the 

meaning of a statutory or constitutional provision, regulation, or common law doctrine.” 

Ahrenholz, 219 F.3d at 676. The question raised here concerns the meaning of the statutory term 

“financial institution” in the RFPA: Does that term include a securities broker-dealer even 

though that kind of company is not listed in the term’s definition? This question of law is 

“controlling.” If the Seventh Circuit finds that a securities broker-dealer does not come within 

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the RFPA’s definition of “financial institution,” this Court will lack subject-matter jurisdiction 

over the litigation. 

C. There is Substantial Ground for Differing Opinions on Whether a Securities 

Broker-Dealer Comes within the RFPA’s Definition of “Financial 

Institution” 

The issue of whether a securities broker-dealer is a “financial institution” under the 

RFPA also satisfies section 1292(b)’s requirement that there be substantial ground for a 

difference of opinion on the issue raised or, under the Seventh Circuit’s interpretation, that the 

issue be “contestable.” Boim, 291 F.3d at 1007. Moreover, to the best of our knowledge, 

whether a securities broker-dealer is a “financial institution” under the RFPA is an issue of first 

impression. See id. at 1007-1008 (“As these are questions of first impression, the application of 

these statutes to the facts alleged here is certainly contestable.”). 

The RFPA’s definition of “financial institution,” supra p. 2, does not specify that 

securities broker-dealers of any kind fall within its coverage. 12 U.S.C. § 3401(1). Under the 

statutory construction doctrine “inclusion unius, exclusion alterius” — the listing of some things 

implies that other things were purposefully excluded — securities broker-dealers are not covered 

by the RFPA. Compare 31 U.S.C. § 5312(2) (Bank Secrecy Act treats brokers and dealers 

separately from other entities). In addition, the courts must narrowly interpret the scope of the 

entities listed in the statutory definition of “financial institution” because the RFPA waives the 

federal government’s sovereign immunity; as the Commission explained in opposing the 

plaintiffs’ jury demand, waivers of sovereign immunity are strictly construed. See Doc. ##160, 

179. The Supreme Court has repeatedly explained that the federal courts may not extend a 

waiver beyond what the statutory language requires. See, e.g., Lane v. Pena, 518 U.S. 187, 192 

(1996); Lehman v. Nakshian, 453 U.S. 156, 170 (1981). Cf. SEC v. Jerry T. O’Brien, Inc.,

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467 U.S. 735, 745 (1984) (“The most salient feature of the [RFPA] is the narrow scope of the 

entitlements it creates.”); Doc. #161 at 6-9 (demonstrating the narrow construction of RFPA 

provisions). 

These arguments evidence “substantial ground” for differing opinions on whether 

securities broker-dealers are within the scope of the RFPA. 

D. An Immediate Appeal from the Order Will Materially Advance the Ultimate 

Termination of the Litigation 

Finally, in determining whether to certify an interlocutory appeal, a court considers 

whether an immediate appeal “may materially advance the ultimate termination of the litigation.” 

28 U.S.C. § 1292(b). Here, an immediate appeal will satisfy this statutory factor. The Court has 

set a trial date for July 6. See Doc. #181. As we have noted, if the appellate court finds that a 

securities broker-dealer does not come within the RFPA’s definition of “financial institution,” 

this Court will lack subject-matter jurisdiction over the litigation. The case will end without the 

expense and effort of pre-trial preparation and a trial; the Court would either dismiss the case for 

lack of jurisdiction, see Fed. R. Civ. P. 12(h)(3), or grant the Commission summary judgment on 

that ground. If the appellate court holds that a securities broker-dealer does come within the 

definition, that holding will simplify the issues to be resolved at the bench trial. 

III. AMENDING THE MAY 27 ORDER AND STAYING FURTHER PROCEEDINGS 

IN THIS COURT ARE NECESSARY TO MAKE THE SECTION 1292(b) 

APPEAL EFFECTIVE 

 

Section 1292(b) provides that when a district judge makes an interlocutory order 

appealable under the statutory factors, “he shall so state in writing in such order.” The May 27 

Order does not include that statement. However, Federal Rule of Appellate Procedure 5(a)(3) 

authorizes a district court to amend an order to add the findings required for interlocutory 

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appeal.1

 Thus, if the Court grants the Commission’s section 1292(b) petition, it should also 

grant the Commission’s motion to amend the May 27 Order. 

An application for an appeal under section 1292(b) “shall not stay proceedings in the 

district court unless the district judge or the Court of Appeals or a judge thereof shall so order.” 

A stay of proceedings in this Court is necessary to preserve one of the benefits of an 

interlocutory appeal — saving this Court’s and the parties’ resources. 

IV. CONCLUSION 

 The criteria for an interlocutory appeal under 28 U.S.C. § 1292(b) are satisfied. The 

Commission requests, therefore, that the Court certify an interlocutory appeal from the May 27 

Order denying in part the Commission’s second motion for summary judgment. The 

Commission also requests that the Court effectuate the appeal by amending the May 27 Order to 

add the necessary findings and by staying the district court proceedings pending the Seventh 

Circuit’s disposition of the appeal. 

Respectfully submitted, 

Thomasenia P. Duncan* 

General Counsel 

David Kolker* 

Associate General Counsel 

Harry J. Summers* 

Assistant General Counsel 

                                                           

1 (a) Petition for Permission to Appeal 

 . . . 

 (3) If a party cannot petition for appeal unless the district court first 

enters an order granting permission to do so or stating that the necessary 

conditions are met, the district court may amend its order, either on its 

own or in response to a party's motion, to include the required permission 

or statement. In that event, the time to petition runs from entry of the 

amended order. 

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7

/s/ Holly J. Baker

Holly J. Baker* 

Attorney 

*Admitted pro hac vice 

COUNSEL FOR DEFENDANT 

FEDERAL ELECTION COMMISSION AND 

ITS CHAIRMAN 

999 E Street, N.W. 

Washington, D.C. 20463 

(202) 694-1650 

June 3, 2010 

Case 1:07-cv-01227 Document 182 Filed 06/03/10 Page 7 of 7