IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

JACK BEAM and RENEE BEAM, 

 Plaintiffs, 

 v. 

MATTHEW S. PETERSEN, FEDERAL 

ELECTION COMMISSION CHAIRMAN, 

 Defendant. 

Civil No. 07cv1227 

Judge Rebecca R. Pallmeyer 

Magistrate Judge Cole 

REPLY IN SUPPORT OF 

SECOND MOTION FOR 

SUMMARY JUDGMENT 

DEFENDANT FEDERAL ELECTION COMMISSION'S 

 REPLY IN SUPPORT OF ITS 

SECOND MOTION FOR SUMMARY JUDGMENT 

In their response to the Federal Election Commission’s (“Commission” or “FEC”) 

motion for summary judgment, plaintiffs have still submitted no evidence to support their 

remaining claim: no evidence to show which of their financial records were allegedly 

transferred, to demonstrate what institution allegedly provided them to the government, 

or to prove that any such institution is a financial entity subject to the Right to Financial 

Privacy Act, 12 U.S.C. § 3401 et seq. (“RFPA”). Plaintiffs’ short opposition thus fails to 

meet their burden to show that the Court has jurisdiction over this case. 

In particular, plaintiffs fail to refute the Commission’s showing that the brokerage 

arm of Merrill Lynch that administered the Cash Management Account (“CMA”) that 

appears to be the subject of plaintiffs’ claim is not a “financial institution” covered by the 

RFPA, 12 U.S.C. § 3401(1), because that entity is not a “bank” and the CMA is not a 

bank account. Indeed, plaintiffs do not even respond to, much less dispute, the 

Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 1 of 11
Commission’s demonstration of the precise nature of the Merrill Lynch entity apparently 

at issue or the limited reach of the RFPA as interpreted by federal courts. Instead, 

plaintiffs merely argue generally that “Merrill Lynch” provides “investment banking 

services” and that plaintiffs had a “money market checking account.” However, those 

general arguments do not establish that the Department of Justice (“DOJ”) received 

records from a “financial institution” covered by the RFPA. Merrill Lynch is simply not 

such an institution. Accordingly, this Court has no subject-matter jurisdiction and it 

should dismiss this case, Fed. R. Civ. P. 12(h)(3), or alternatively grant summary 

judgment in favor of the Commission. 

I. THE COURT SHOULD DISMISS THIS CASE FOR LACK 

OF JURISDICTION 

A. Plaintiffs Have Provided No Evidence to Show That the Conduct 

They Allege Violated the RFPA 

Plaintiffs have presented no evidence that any of their records were obtained by 

DOJ from an institution covered by the RFPA. Therefore, there is no evidence that there 

could have been an RFPA violation even if DOJ had provided plaintiffs’ financial records 

to the Commission (which it did not). Accordingly, the Court has no subject-matter 

jurisdiction and it must dismiss this case. See Fed. R. Civ. P. 12(h)(3) (“If the court 

determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the 

action.”). “[I]t has been the virtually universally accepted practice of the federal courts to 

permit any party to challenge or, indeed, to raise sua sponte the subject-matter 

jurisdiction of the court at any time and at any stage of the proceedings.” Sadat v. 

Mertes, 615 F.2d 1176, 1188 (7th Cir. 1980). “Subject-matter jurisdiction is so central to 

the district court’s power to issue any orders whatsoever that it may be inquired into at 

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Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 2 of 11
any time, with or without a motion, by any party or by the court itself.” Craig v. Ontario 

Corp. 543 F.3d 872, 875 (7th Cir. 2008). Moreover, plaintiffs bear the burden of 

establishing that a suit is properly brought in federal court. See In re Repository 

Technologies, Inc. 601 F.3d 710, ___, 2010 WL 1427524, at *10 (7th Cir., April 12, 

2010) (citing Craig, 543 F.3d at 876). 

 Here, plaintiffs have produced no evidence at all, let alone any that establishes 

that the Court has jurisdiction over their RFPA claim.1

 Instead, in their Opposition to the 

FEC’s Second Motion for Summary Judgment filed May 4, 2010 (“Pls’ Opp.”) (Doc. 

#178), plaintiffs merely make the unsubstantiated claim that they “deposited money into 

their Merrill Lynch money market checking account (interest bearing) and received 

deposit notices and financial statements just like any other bank.” Id. at 2. Plaintiffs 

have provided no exhibits, affidavits, or other evidence that might demonstrate the 

existence of any such accounts, what specific institution they mean by “Merrill Lynch,” 

or which specific records were allegedly received by DOJ. 

 The only relevant evidence before this Court is the three checks that the 

Commission received as part of its audit of the Edwards for President campaign as 

 

1

 “Once a party has made a properly-supported motion for summary judgment, the 

opposing party may not simply rest upon the pleadings but must instead submit 

evidentiary materials that set forth specific facts showing that there is a genuine issue for 

trial.” Harney v. Speedway SuperAmerica, LLC, 526 F.3d 1099, 1104 (7th Cir. 2008), 

(quotation marks omitted), cert. denied, 129 S. Ct. 1349 (2009); see Fed. R. Civ. P. 

56(e)(2). Summary judgment is the “put up or shut up” moment in a lawsuit. Johnson v. 

Cambridge Indus., Inc., 325 F.3d 892, 901 (7th Cir. 2003). This evidentiary requirement 

is fully applicable to a plaintiff’s burden of demonstrating that the court has jurisdiction, 

and each element of that burden must be supported “with the manner and degree of 

evidence required at the successive stages of the litigation.” Lujan v. Defenders of 

Wildlife, 504 U.S. 555, 561 (1992) (citations omitted). In response to a summary 

judgment motion, the plaintiff must set forth by affidavit or other evidence specific facts 

which will be taken as true. Id. 

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Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 3 of 11
mandated by 26 U.S.C. § 9038. These checks state that they relate to a Cash 

Management Account (“CMA”) at “Merrill Lynch,” and the checks also contain the 

name “Bank One.” See Memorandum in Support of Defendant FEC’s Motion for 

Summary Judgment (“FEC SJ Mem.”) at 9-11 and Exh. 8 (Doc. #142). Plaintiffs do not 

contend that these three checks themselves were the subject of any RFPA violation. In 

fact, plaintiffs have never even confirmed that their RFPA claim is about records related 

to this CMA — though plaintiffs do not dispute the Commission’s suggestion to that 

effect. See FEC’s Memorandum in Support of Its Second Motion for Summary Judgment 

(“FEC 2nd SJ Mem.”) at 6 n.3 (Doc. #161). As we explain below, assuming the records 

at issue do relate to this account, plaintiffs fail to counter the Commission’s showing that 

accounts of this type were offered by Merrill Lynch, Pierce, Fenner & Smith, Inc. 

(“MLPF&S”), which has never been a bank but has always been a broker-dealer. 

MLPF&S was a subsidiary of the holding company Merrill Lynch & Co., Inc. during the 

period in 2003 when plaintiffs wrote their checks to the Edwards campaign.2

 

Plaintiffs offer no excuse for why they would lack proof of basic facts about their 

own finances. Plaintiffs and their counsel would also appear to have access to records 

related to plaintiffs that DOJ received during the Fieger criminal case, see Letter from 

DOJ to Fieger attorneys, with courtesy copy to Michael Dezsi, dated Oct. 4, 2007 (Doc. 

#67-3 at 2-3). Thus, not only have plaintiffs failed to meet their burden to establish 

jurisdiction, but their failure to produce evidence within their control also warrants this 

 

2

 See 2003 10-K filing of Merrill Lynch with the Securities and Exchange 

Commission, Exh. 21, available at 

http://www.sec.gov/Archives/edgar/data/65100/000095012304003030/y94583e10exv21.

htm (visited May 5, 2010); Dunn & Bradstreet report, FEC Exh. 11 at 25. 

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Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 4 of 11
Court to infer that no evidence exists that would support plaintiffs’ claim that their 

financial records were obtained from a “financial institution” covered by the RFPA. See

Overnite Transp. v. NLRB, 140 F.3d 259, 266 n.1 (D.C. Cir. 1998) (adverse inference 

rule is based on theory that “a party will of his own volition introduce the strongest 

evidence available to prove his case”). See also International Union (UAW) v. NLRB, 

459 F.2d 1329, 1338 (D.C. Cir. 1972) (“If evidence within the party’s control would in 

fact strengthen his case, he can be expected to introduce it . . . . Conversely, if such 

evidence is not introduced, it may be inferred that the evidence is unfavorable to the party 

suppressing it.”). 

B. Plaintiffs Have Failed to Refute the Commission’s Showing That 

Merrill Lynch Is Not a Bank Under the RFPA 

As the Commission explained in its opening brief (FEC 2nd SJ Mem. at 5-6), 

“Merrill Lynch” is a trade name of certain entities owned at the relevant time by Merrill 

Lynch & Co., Inc., a holding company.3 One of those subsidiary entities, MLPF&S, 

created the Cash Management Account service in 1977 and still offers it to clients.4 

MLPF&S is a “registered broker-dealer” of securities, and it is “not a bank.” FEC Exh. 

12 at 2. 5 

 

3

 Since 2009, Merrill Lynch & Co., Inc. has been owned by Bank of America 

Corporation. See Dunn & Bradstreet report, FEC Exh. 11 at 4, 19, 25. 

4

 See Paine, Webber, Jackson & Curtis, Inc. v. Merrill Lynch, Pierce, Fenner & 

Smith, Inc., 564 F. Supp. 1358, 1361-62 (D. Del. 1983) (“Paine Webber”); FEC Exh. 12, 

CMA Financial Service, FEC Exh. 13, Cash Management Account, from 

www.totalmerrill.com, at 1-5 (visited May 10, 2010). 

5

 The United States Federal Reserve System website lists MLPF&S as a “Securities 

Broker/Dealer,” and defines such entities as ones “primarily engaged in acting as agents 

(i.e., brokers) between buyers and sellers in buying or selling securities on a commission 

or transaction fee basis.” FEC Exh. 14, available at National Information Center of the 

5 

Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 5 of 11
Plaintiffs rely on a page from the Merrill Lynch website and on Merrill Lynch, 

Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71 (2006), to argue that “Merrill Lynch” 

is a bank under the RFPA because it offers “investment banking services.” Pls’ Opp. at 

1-2 (quoting Merrill Lynch web site, www.ml.com; italics and bold added by plaintiffs). 

But Merrill Lynch has also categorically stated, in distinguishing MLPF&S from 

affiliated FDIC-insured entities, that “Merrill Lynch, Pierce, Fenner & Smith 

Incorporated is not a bank.” FEC Exh. 12 at 2, 29; FEC Exh. 13 at 4 n.2 (emphasis 

added). In fact, the sentence from Dabit on which plaintiffs rely does not suggest that 

Merrill Lynch is a “bank,” but merely that it “is an investment banking firm that offers 

research and brokerage services to investors.” Dabit, 547 U.S. at 74. 

Moreover, even the provision of investment banking services does not make an 

entity a “bank” under the RFPA, which applies only to a limited category of institutions 

and their disclosure of personal records of individuals. See 12 U.S.C. §§ 3401(2), (4), 

and (5). “Investment banking” is a term of art within the financial services industry; it 

does not concern personal banking services for individuals but is instead the 

sale and distribution of a new offering of securities, carried out by 

a financial intermediary (an investment banker), who buys 

securities from the issuer as principal, and assumes the risk of 

distributing the securities to investors. The process of purchasing 

and distributing securities is known as underwriting. . . . The 

Glass-Steagall [Act of 1933] restrictions were finally removed by 

the Gramm-Leach-Bliley Act of 1999, which authorized 

commercial banks to engage in investment banking activities 

 

Federal Reserve System, http://www.ffiec.gov/nicpubweb/Content/HELP/Institution%s

20Type%20Description.htm (visited May 10, 2010). 

 

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Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 6 of 11
through affiliated companies, underwriting commercial paper, 

corporate debt, and equity securities. . . .6

 

In short, MLPF&S is not “just like any other bank,” as plaintiffs claim, see Pls’ 

Opp. at 2; on the contrary, it is not a bank at all, as the Commission has 

demonstrated. See FEC 2nd SJ Mem. at 5-6. And plaintiffs have not disputed 

the Commission’s showing that DOJ had subpoenaed records from the brokerage 

arm of Merrill Lynch. Id.

Plaintiffs allege, without evidentiary support, that they have a “money market 

checking account,” Pls’ Opp. at 2, but that unsupported claim cannot transform MLPF&S 

into a bank covered by the RFPA. Plaintiffs evidently had check-writing features in 

connection with their CMA, but an institution such as MLPF&S does not itself become a 

bank simply because it has affiliations with banks that issue checks, such as Bank One. 

Cf. Adelphia Recovery Trust v. Bank of America, N.A., 390 B.R. 64, 72 (2008) 

(investment banks not within definition of “bank” for purposes of the Bank Holding 

Company Act (“BHCA”) even if affiliated with banks that are); Flintridge Station Assoc. 

v. Am Fletcher Mortgage Co., 761 F.2d 434, 437 (7th Cir. 1985) (citing 1970 U.S. Code 

Cong. & Admin. News 5541) (mortgage company not a bank under the BHCA: “This 

narrow definition was purposefully provided by Congress.”). 

Plaintiffs fail even to address the Commission’s showing that the key, threshold 

issue about the RFPA’s scope is whether the financial institution in question is a “bank,” 

not whether the institution has provided a certain type of records to the government. See

 

6

 Business Glossary, Business Dictionaries from AllBusiness, Dunn & Bradstreet. 

Available at http://www.allbusiness.com/glossaries/investment-banking/4944573-1.html

(visited May 7, 2010). 

7 

Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 7 of 11
FEC 2nd SJ Mem. at 6-9. In particular, plaintiffs provide no authority to refute the 

Commission’s demonstration that the definition of “financial institution” in 12 U.S.C. 

§ 3401(1) is narrowly construed, and it does not include broker-dealers like MLPF&S 

because they are not among the entities enumerated in the statute. The Supreme Court 

has “stated time and again that courts must presume that a legislature says in a statute 

what it means and means in a statute what it says there. When the words of a statute are 

unambiguous, then, this first canon is also the last: ‘Judicial inquiry is complete.’” 

Conn. Nat’l Bank v. Germain, 503 U.S. 249, 254-55 (1992) (quoting Rubin v. United 

States, 449 U.S. 424, 430 (1981)) (other citations omitted in original). 

In sum, plaintiffs have failed to counter the Commission’s showing that Merrill 

Lynch is not a “financial institution” under the RFPA. 

 C. The Merrill Lynch CMA Is Not a Bank Account 

 Plaintiffs have still failed to state clearly what records are the subject of their 

RFPA claim, but to the extent the records relate to the Merrill Lynch CMA reflected in 

the three checks plaintiffs wrote to the Edwards campaign in 2003, that account is a 

central asset account maintained by a broker-dealer, not a bank account. MLPF&S 

started the Cash Management Account service in 1977 as an integrated asset management 

account, and the CMA consists of several core components: securities trading, checking 

account services, money market investment services, and a debit (Visa) card.7

 As Merrill 

Lynch itself explains, the CMA is essentially a securities account: 

 

7

 Business Glossary, Business Dictionaries from AllBusiness, Dunn & Bradstreet. 

Available at http://www.allbusiness.com/glossaries/cash-management/4950369-1.html

(visited May 14, 2010); FEC Exh. 12 at 2-4. See also Paine Webber, 564 F. Supp. at 

1361-62; Krinsk v. Fund Asset Management, Inc. 875 F.2d 404, 406-08 (2d Cir. 1989). 

8 

Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 8 of 11
[The] Beyond Banking and CMA accounts are securities accounts with 

Merrill Lynch, Pierce, Fenner & Smith Incorporated. The accounts 

provide access to services and products offered by licensed banks, 

including checking and FDIC-insured deposits that are held at the banks. 

Securities, mutual funds and other nondeposit investment products 

available through the accounts are not FDIC-insured, not guaranteed by a 

bank and may lose value. 

FEC Exh. 13 at 4 (emphasis added). Thus, while the CMA provides access to bank 

deposit accounts, the CMA itself is not a bank account. In 2003, when the plaintiffs 

wrote the checks to the Edwards campaign, Merrill Lynch’s CMA apparently provided 

access to an account held at Bank One. See Paine Webber, 564 F. Supp. at 1361-62. 

MLPF&S requires affiliation with FDIC-insured deposit banks for the deposit 

components of the CMA because as a broker-dealer, it does not itself accept deposits; if it 

did, it would not need to be affiliated with those banks. Because the CMA is not a 

deposit bank account, the “money funds” component of the CMA is not FDIC-insured: 

Only clients with assets of $250,000 or more are eligible for the 

money funds. . . . Before investing, carefully consider the investment 

objectives, risks, and charges and expenses of the fund. . . . 

Investments in the money market funds are not insured or guaranteed 

by the Federal Deposit Insurance Corporation or any other government 

agency. Although the funds seek to preserve the value of your 

investment at $1 per share, it is possible to lose money by investing in 

the funds. 

FEC Exh. 13 at 4. 

In accord with CMA’s status as a securities account, the CMA is covered by the 

Securities Investor Protection Corporation of 1970 (“SIPC”), of which MLPF&S is a 

member. FEC Exh. 12 at 3, 29; FEC Exh.15, SIPC Information at 1. The SIPC describes 

itself as “a nonprofit, membership corporation, funded by its member securities brokerdealers,” and although created by the Securities Investor Protection Act (15 U.S.C. § 

78aaa et seq.), it is “neither a government agency nor a regulatory authority.” FEC Exh. 

9 

Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 9 of 11
15 at 4. The SIPC explains that “[w]hen a brokerage firm is closed due to bankruptcy or 

other financial difficulties and customer assets are missing, SIPC steps in as quickly as 

possible and, within certain limits, works to return customers’ cash, stock and other 

securities.” Id. at 2. 

Plaintiffs seem to argue that because they were able to make deposits, write 

checks, and receive statements on their CMA, that service is a bank account. See Pls’ 

Opp. at 1-2. But plaintiffs offer no support for that proposition, and there is none. On the 

contrary, as Merrill Lynch itself notes: 

As central asset accounts, the CMA and Beyond Banking Accounts are 

investment and money management vehicles. The Visa Card and checking 

features are intended to provide you with easy access to the assets in your 

accounts. The CMA and Beyond Banking Accounts are not bank accounts. 

FEC Exh. 12 at 29. 

II. CONCLUSION 

Plaintiffs have failed to meet their burden to provide evidence to show that the 

conduct they allege would establish a claim within this Court’s jurisdiction under the 

RFPA. Even if any documents were provided to DOJ by a brokerage arm of Merrill 

Lynch regarding plaintiffs’ CMA, that broker-dealer is not a bank or other institution 

subject to the RFPA, and the CMA is not a bank account. Thus, this Court lacks subjectmatter jurisdiction and should dismiss the case. 

 Respectfully submitted, 

Thomasenia P. Duncan* 

 General Counsel 

 David Kolker* 

Associate General Counsel 

 

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Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 10 of 11
11 

Harry J. Summers* 

Assistant General Counsel 

/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, DC 20463 

 202-694-1650 

May 18, 2010 

Case 1:07-cv-01227 Document 180 Filed 05/18/10 Page 11 of 11