Court Opinion

ID: 6984870
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:52:27.633302+00
Date Added: 2024-06-11T16:09:23.470307
License: Public Domain

SILBERMAN, Circuit Judge,
dissenting:
I agree with the majority’s conclusion that Johnson v. SEC, 87 F.3d 484 (D.C.Cir.1996), controls this case, and requires us to apply section 2462’s five-year limitations period to the FDIC’s removal action against Proffitt. While the FDIC makes a strong argument for the contrary result based on historical evidence that state courts declined to apply general statutes of limitations to disbarment proceedings, we considered and rejected this argument in Johnson and are in my view bound by that determination. See id. at 488 n. 6. However, I do not agree with my colleagues’ determination that section 8(e) allows the FDIC to bring an enforcement action against Proffitt seven years after his misconduct. The majority correctly recognizes that we may not defer to the FDIC’s interpretation of section 8(e) because it is a statute administered by more than one agency, but proceeds to afford the FDIC an even greater deference by giving the agency, as a practical matter, the power to determine when the statute of limitations will be triggered.
Relying on a construction of section 8(e) that permits banking regulatory agencies to bring a removal action either at the point that it might be thought that a bank would probably suffer a financial loss or at some later time that an actual financial loss can demonstrated (given the vagaries of litigation and other imponderables it could be decades after the act), the majority concludes that it is within a regulatory agency’s discretion as to which eventuality begins the running of the statute. In other words, the majority reads the statute as creating at least two separate1 causes of action and gives the regulatory agencies an option to choose to bring an action based on a probable financial loss or an actual financial loss. That is not all. Since the statute allows a removal action based on probable or actual other damage, which would certainly include reputational harm, the agency presumably could also wait until sufficient newspaper articles appeared (which incidentally embarrassed the regulatory agency) and then determine that actual reputational harm to the depository *866institution had occurred. Add to this the majority’s rather improbable reliance on section 8(e)’s language authorizing an agency to bring a removal action “whenever” it determines that the statute’s requirements are met, Maj. Op. at 863-64— which I take it means that the statute of limitations is triggered not by objective facts but by a subjective determination of the agency as prosecutor — and one arrives at the inevitable and astounding conclusion that, on the majority’s view, the statute of limitations for an section 8(e) removal action begins to run when the agency decides it should begin to run (making it a non-statute statute reminiscent of the once infamous non-bank bank, cf. Board of Governors of the Fed. Reserve Sys. v. Dimension Fin. Corp., 474 U.S. 361, 363, 106 S.Ct. 681, 88 L.Ed.2d 691 (1986)). With all due respect to my colleagues this interpretation simply will not do.
It seems to me that it is the “three prong” characterization of the elements of a removal cause of action which leads my colleagues astray. Section 8(e) actually contemplates only one act on the part of the wrongdoer, the misconduct which amounts to a violation of a banking law or regulation. See 12 U.S.C. § 1818(e)(1)(A). To be sure, that act must also have certain characteristics. Section 8(e)(1)(C) requires that this act involve personal dishonesty on the part of the target; innocent mistakes are not grounds for removal. And the requirement of section 8(e)(1)(B) must be satisfied, which means that some consequences must flow from the act. But it does not follow that the so-called “culpability” and “effect” prongs constitute separate temporal events, as the majority concludes. I think it makes far more sense to think of them as characteristics of a banker’s misconduct, which must be present at the time of the wrongful act. (Indeed, it seems that the “culpability prong” could only be established by reference to the time of a wrongdoer’s misconduct.) Just as a new cause of action would not spring up if evidence of dishonesty — meeting section 8(e)(l)(C)’s requirement — appeared ten years after a banker’s misconduct, a new and distinct FDIC removal action should not arise at every point that evidence of new consequences flowing from that misconduct is uncovered. Cf. 3M Co. v. Browner, 17 F.3d 1453, 1460-63 (D.C.Cir.1994) (rejecting the application of the “discovery rule” in the context of an agency enforcement proceeding).
My colleagues believe that such a reading “render[s] the ‘has suffered’ language [in 1818(e)(1)(B)] superfluous.” Maj. Op. at 863. But this is plainly mistaken. Actual damage to an institution may or may not be immediately apparent at the time of the wrongful act; thus the FDIC is also permitted to bring an action where an institution “will probably suffer financial loss or other damage” or the depositors “could be prejudiced” from a banker’s misconduct. 12 U.S.C. § 1818(e)(1)(B) (emphasis added). The majority is right when it notes that section 8(e)’s language gives enforcement agencies a great deal of discretion; the obvious purpose of the statute is to allow the regulatory agencies potentially to prosecute a wide range of misconduct. Its threshold is so low that I cannot imagine any violation of law, involving personal dishonesty on the part of a bank officer, that would not qualify.2 However, this discretion is relevant to the range of actions that may be prosecuted, not to the time at which an agency may bring an enforcement action. To the contrary, the early running of the statute of limitations seems to me the inevitable price of section 8(e)’s low threshold; the agencies have to take the “bitter with the sweet.”
As we have recently noted in the very context of an administrative enforcement proceeding, the statute of limitations begins to run when the factual and legal prerequisites for an enforcement action are in place. See 3M, 17 F.3d at 1460. There is no serious question that these prerequisites were in place at the time of Proffitt’s misconduct in 1990; the FDIC’s *867objection that my reading of the statute would force it to bring actions too early is ridiculous, given the minimal hurdle set by the “other damage” language in section 8(e)(1)(B). Nor was there any practical excuse for the FDIC’s behavior in this case. If the FDIC were sincere in claiming that it delayed its action out of concerns of fairness given the pending litigation in the Tennessee courts, it could have sought an agreement with Proffitt tolling the running of the statute of limitations.
Indeed, the facts presented here aptly demonstrate the costs of not enforcing statutes of limitations vigorously. The pressure on courts not to do so is obvious, as it can permit a wrongdoer to escape his or her just desserts. But ignoring the limitations on an agency’s action creates an undesirable incentive for government prosecutors to sit on their hands until some event — typically publicity- — -induces action.

. Unless, perhaps, the act fortuitously led to a bank profit.