Legal Document

486 U.S. 230 108 S.Ct. 1780 100 L.Ed.2d 265 FEDERAL DEPOSIT INSURANCE CORPORATION, Appellant,v.James E. MALLEN, et al. No. 87-82. Argued March 22, 1988. Decided May 31, Syllabus Title 12 U.S.C. § 1818(g)(1) authorizes the Federal Deposit Insurance Corporation (FDIC) to suspend from office an indicted official of a federally insured bank if his continued service poses threat interests bank's depositors or threatens impair public confidence in bank. Section 1818(g)(3) entitles suspended hearing before FDIC within 30 days written request, and final decision 60 hearing. At hearing, may "submit materials (or, at discretion agency, oral testimony) argument." The appellee, president director bank, after he was for making false statements purpose influencing violation 18 §§ 1001 1014. A scheduled occur 19 request expedited but FDIC's regional counsel took position that testimony appellee proposed offer would not be necessary. Before date, filed suit District Court, which preliminarily enjoined enforcing suspension order. Although it rejected appellee's argument order invalid because preceded by court concluded 1818(g)(3)'s post-suspension procedure violates Due Process Clause Fifth Amendment does guarantee officer sufficiently prompt unqualified right present testimony. Held: 1. is unconstitutional on its face. Pp. 240-248. (a) Appellee entitled pre-suspension since important governmental interest protecting maintaining confidence, coupled with fact felony indictment provided substantial assurance baseless, justified action held. Cf. Barry v. Barchi, 443 55, 99 2642, 61 365. 240-241. (b) denied has important, constitutionally protected employment, also seeing concerning made excessive haste. Moreover, temporary likely augment injury officer's reputation already been done accusing him serious wrongdoing. Thus, even delay full 90 allowed will usually correct as whether depositors' are threatened, likelihood, arising grandjury's finding probable cause committed involving dishonesty, mistaken. criminal proceedings might more promptly than proceeding irrelevant due process determination, acquittal require vacated, while conviction merely strengthen case suspension. supra, distinguished. 241-247. (c) Court's reliance failure opportunity misplaced. relevant regulation delegates discretionary accept officer, never gave render decision. There no inexorable requirement heard every administrative tendered, unconstitutionality cannot premised authority admit reject such evidence applied arbitrary unfair way some hypothetical case. 247-248. 2. unfairness use this P. 248. 667 F.Supp. 652 (ND Iowa 1987), reversed. STEVENS, J., delivered opinion unanimous Court. John C. Harrison, Washington, D.C., appellant. Mary Curtin, Minneapolis, Minn., appellees. Justice STEVENS 1 question presented appeal concerns constitutionality statutory provision Court therefore suspending serving Farmers State Bank Kanawha, Iowa, otherwise participating conduct affairs any FDIC-insured 652, 662, 664 (1987). We noted jurisdiction. 484 911, 256, 98 214 reverse. 2 * In 1966 Congress adopted several amendments Act give federal banking agencies effective regulatory powers deal crises financial institutions.1 were designed protect prevent potentially debilitating effect loss industry. See S.Rep. 1482, 89th Cong., 2d Sess., 4-5 (1966) (S.Rep.), U.S.Code Cong. & Admin.News 1966, p. 3532; 112 Cong.Rec. 20080 (remarks Sen. Proxmire). enacted appropriate agency2 take immediate she formally charged dishonesty breach trust. As originally enacted, permitted agency without providing either issuance suspension.3 3 1974, invoked Illinois who had conspiracy commit mail fraud. That successfully challenged ground deprived property law. three-judge Feinberg FDIC, 420 109 (DC 1976), found prior meaningful could attempt persuade exercise revoke opinion, emphasized statute given standardless official.4 4 response decision, 1978 amended 1818(g) incorporating standards subsection (1) guide discretion,5 enacting new (3) demonstrate her jeopardize bank.6 It adequacy authorized issue appeal. II 5 On December 10, 1986, grand jury Northern Iowa. He actions 1014, offenses punishable imprisonment one year, unquestionably involve trust.7 time indictment, "[might] pose [might] threaten bank," requirements specified satisfied. 6 January 20, 1987, issued ex parte containing necessary findings, prohibiting "from further participation manner Bank, other FDIC."8 App. Juris. Statement 28a. copy served 26, 1987. Four later, attorney "an hearing" "both evidence" establish 26. letter requested commence later February 9, 7 After various communications counsel, Administrative Law Judge selected decided held 18, F.Supp., 655. those communications, 28-30. however, decide receive interrupted litigation. 8 6, complaint against moved preliminary injunction. receiving form affidavits exhibits, argument—but testimony—the entered declaring "null void" enjoining it. 658, "constitutionally inadequate contemplate 'prompt' disposition," id., 659, "because fails provide can presented," 660.9 clear expressing merits suspension; rested entirely perceived procedural shortcomings process. III 9 undisputed continue serve participate Clause. parties correctly recognized arbitrarily interfere continuing employment relationship nor stockholder holding company. 173 U.S.App.D.C. 120, 125, 522 F.2d 1335, 1340 (1975); cf. Cleveland Bd. Education Loudermill, 470 532, 538-541, 105 1487, 1491-1493, 84 494 (1985). affected deprivation interest. Accordingly, protection 10 "Once determined applies, remains what due." Morrissey Brewer, 408 471, 481, 92 2593, 2600, 33 (1972). Here again, we least start agreement. contend An government interest, accompanied baseless unwarranted, limited cases demanding justify postponing until initial deprivation. 64-66, 2649-2650, 365 (1979); Dixon Love, 431 105, 112-115, 97 1723, 1727-1729, 52 172 (1977); North American Cold Storage Co. Chicago, 211 306, 314-321, 29 101, 103-106, 53 L.Ed. 195 (1908). case, postponement supported legislation under scrutiny congressional officers maintain our institutions. S.Rep., 4-5, This certainly significant State's preserving integrity sport horse racing, deemed U.S., 64-65, S.Ct., brief period affording trainer findings assure baseless. there believe felony. Such provides sufficient basis arrest, course constitutes liberty.10 Baker McCollan, 137, 142, 143, 2689, 2693, 2694, 433 (1979). should sufficient, when institutions, support though did separate all accord proposition. 11 agree post-deprivation indicate, properly concerned about importance procedures situations agency's impairment individual's pre-deprivation 66, 2650. However, seems have improperly danger interminable rather happened interrupted, indeed, dilatory permits. For point unjustified completing "would become constitutional violation," 547, 1496, significance evaluated vacuum. determining how long examine private harm occasioned delay; justification offered Government relation underlying interest; likelihood interim Logan Zimmerman Brush Co., 455 422, 434, 102 1148, 1157, 71 (1982); Mathews Eldridge, 424 319, 334-335, 96 893, 902-903, 47 (1976). requires hold appear contest notify maximum, receives reported able hearing.11 addition, place—had injunction—19 requested. 13 Appellee's doubt ought justification. repeatedly severity depriving someone livelihood. Brock Roadway Express, Inc., 481 252, 263, 107 1740, 1748, 95 239 (1987); 543, 1494. Yet, assuming required complete hear reach persuaded exceeds permissible limits. fact, imposes permissive standard suspension, presumably, doubt, greater weight leave place, particularly impose additional significant, incremental reputation. Through return accused incidental thus conclude 90-day so always violate many cases, perhaps most, factors minimizing risk erroneous 546 -547, 1495-1496 (9-month "unconstitutionally lengthy per se "). 14 magnitude counsels strongly imperative overly hasty decisionmaking. same justifies permitting extends analysis well. industry they do undermine To these influence weigh carefully allowing them remain start. strong ultimate considered deliberate manner. acted bounds set prepare another needed complex issues extensive evidentiary record. Feinberg, 120 (hearing "complex legal question" "subtle interrelation policy"). 15 most significantly, little basis. returning establishes independent body crime term excess year. two ways. First, demonstrates arbitrary. Second, itself objective raise concern being managed responsible initially indicated suspensions "virtually routine." 2, 3532. prompted suggest disavowed expectation; rather, Congress—"may bank"—would easily satisfied officials crimes dishonesty. One expect exception. unlikely particular erroneously imposed. 16 congressionally up benefit ruling. reaching contrary result, attached proceeding. reasoned Speedy Trial trial place 70 indictment—plus, course, excluded Act—the well need 3161. accordingly statutorily "a toothless remedy plaintiffs postpone disposition concluded." 659. "It only chooses remedy." Ibid. 17 find possibility expiration quite irrelevant. If acquitted, disappeared vacated. hand, strengthens grounds 1829 well.12 intervening factor vacated; difficult conceive interferes rights. Nor controlled trainer's license trained discovered drugs system during race. state scheme raised rebuttable presumption administered drug negligent occurrence. claimed neither negligent. considering scheme, first violated "it [was] not" irretrievably suffer penalty put proof Id., situations, must "without appreciable delay." contrast, heard. Rather closing door heard, precede simply forum unjustified. successful proceeding, then prevailed convicted, supported. contention testimony)" argument. 1818(g)(3). regulation, turn, officer. CFR 308.61(e) rejecting assume essential enable make fair appraisal impact security Indeed, problem position, whatever adduced. No ever made, rejected. know, accepted evidence; it, deciding cumulative material adequately covered submissions unnecessary improper. tendered.13 Califano Yamasaki, 442 682, 696, 2545, 2555, 176 absence IV 20 face; injunction 21 ordered. Financial Institutions Supervisory Pub.L. 89-695, II, 80 Stat. 1046-1055, 1818. defines "appropriate agency" reference type subject regulation. 1813(q). example, "in national association, branch foreign Comptroller Currency agency." 1813(q)(1). 1813(q)(3) nonmember . having branch," agency. provided: "Whenever person information, United States attorney, commission trust, may, notice upon director, and/or prohibit shall prohibition finally disposed terminated event judgment respect offense person, appellate review, removing except consent whereupon cease guilty charge preclude thereafter instituting remove affairs, pursuant paragraph (1), (2), (3), (4), (7) (e) section." 1050. breadth afforded intimated mandatory pre- required: appears arguable Notice Order Suspension automatic filing information complaint, incidents retain vitality determination Suspension. But 1818(g)(1), very language, 'involving trust.' Given variety nature offenses, apparent issue. discretion, enhanced lack definition 'dishonesty posed statute. interjects added element 'may' Suspension; so. Furthermore, construed determines still given—and exercised—the purposes specific guidelines discretion. ascertainable guidance general statute: insure public's stability institution." 116-117 (footnotes omitted). 1978, trust exceeding year law, individual section. Any removal outstanding completion hereof unless 3665-3666 (the language 1978). reads follows: "Within thirty subsection, writing show not, to, Upon receipt fix (not extended person) appear, personally through members designated employees submit Within sixty continued, terminated, modified, said rescinded modified. notification contain statement adverse person. prescribe rules effectuate subsection." 3666. convicted both counts. aside 1014 failed allege elements crime. appeal, Appeals Eighth Circuit affirmed reversed setting Mallen, 843 1096 (1988). moot "is 1818(g)(1). structure makes "finally of" review exhausted. once longer "subject review." intended create window between officials. Because yet exhausted effect. 1988, petition rehearing suggestion en banc. date file certiorari. Rule 20.1. mooted 1829. section provides: "Except [FDIC], employee ." 29, judge presiding over granted motion 1829, "as Iowa." 661 1003, 1011 1987). certain respects, broader scope giving reinstatement marginal 1818(j) penalties anyone "votes bank." similar prohibition. Finally, informs us jurisdictional Superintendent Banking placed receivership. appointed receiver, executed "purchase assumption" transaction, whereby deposit liabilities assumed building housed now serves bank—a arguably exists—we nullification moot. receivership transaction. Brief Appellant 13, n. 11. challenge currently Supreme matter Receivership Bernau, 87-1199. dissolved corporate entity invalidate receivership, meaningless forms adequate prerequisite coverage 1818(j). note confirmation 1818(g). Mere changes necessarily terminate September October hearings determine 1818(e)(1), (e)(5). Those subsections permit conducting misconduct. recused himself rendering completed. 655, stage expressed deferred ruling stated: "A described 308.61 pass muster resolution followed presented. Code Regulations, live testimony." 661. "charged prosecuted defendant waives right. Fed.Rules Crim.Proc. 7(a) (b). denying alter amend injunction, wrote: "The requests relief 1987; (March 1987); (April 8, finds schedule suffers difficulties 17, Mallen's 16, estimated last week. Mallen 'suffered imposed' 66 [99 2650, 365] (1979)." 662-663. Corporation, hereafter each willful prohibition, involved $100 day violated, recover use." Imposition 7, supra. hearings: "While trial-type notice, represented submissions, argument, mandated circumstances. Certainly essential. Mullane Central Hanover Trust 339 306 [70 94 865] (1950). assistance question: requiring subtle policy: indictees presentation evidence, 'nature inquiry,' [at] 343 [96 907], seem submission. necessary."

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