SCHEDULED FOR ORAL ARGUMENT ON APRIL 24, 2003

 

IN THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

 

No. 02-1171

                                                                           

 

 

DALE E. WASHBURN,

                                                                    Appellant

 

v.

 

OFFICE OF THE COMPTROLLER OF THE CURRENCY,

                                                                    Appellee

 

 

                                                                                                      

 

APPEAL OF FINAL DECISION AND ORDER OF THE

OFFICE OF THE COMPTROLLER OF THE CURRENCY

ENTERED ON MAY 2, 2002

[OCC Docket No. AA-MW-01-04]

                                                                                        

 

REPLY BRIEF OF APPELLANT

                                                                                         

 

                                                                                                                                                                 STEPHENS B. WOODROUGH

                                                                                                                                                                 THE BANKING LAW FIRM

                                                                                                                                                                 100 Beach Drive - Suite 1801-03

                                                                                                                                                                 St. Petersburg, Florida 33701

                                                                                                                                                                 727-898-9009

 

                                                                                                                                                                  Attorney for Appellant

                                                                                                                                                                  Dale E. Washburn

 

 

 

 

 

 

TABLE OF CASES AND AUTHORITIES

 

 

Federal Appellate Decisions ^[1]               Page

 

* Alphin v. National Transp. Safety Bd.

839 F.2d 817 (D.C. Cir. 1988) 3

Anderson v. Heckler

756 F.2d 1011 (4^th Cir. 1985) 4

 

Baily v. Bowen

827 F.2d 368 (8^th Cir. 1987) 3

 

Cornella v. Schweiker

728 F.2d 978 (8th Cir. 1984) 3

 

De Allende v. Baker

891 F.2d 7 (1^st Cir. 1989) 4

 

Frost v. Barnhart

314 F.3d 359 (9th Cir. 2002) 3

 

Gowen v. Bowen

855 F.2d 613 (8^th Cir. 1988) 3

 

* Hammock v. Bowen

879 F.2d 498 (9th Cir. 1989) 3

 

Kuhns v. Board of Governors of the Federal Reserve

930 F.2d 39 (D.C. Cir. 1991) 13

 

Sierra Club v. Sec'y of the Army

820 F.2d 513 (1st Cir.1987) 4

 

* United States v. Yoffe

775 F.2d 447 (1^st Cir. 1985) 4

 

 

 

 

class=Section3>

Federal Statutes

 

5 U.S.C. § 504(c) 3

 

12 U.S.C. § 1818(i) 9, 10, 11, 12

 

12 U.S.C. § 1818(s) 11, 12

 

12 U.S.C. § 1818(s)(1) 12

 

12 U.S.C. § 1818(s)(3) 10, 11, 12

 

31 U.S.C. § 5313 4

 

31 U.S.C. § 5321 9, 10, 11

 

31 U.S.C. § 5321(e) 10, 12

 

 

 

Federal Regulations

 

12 C.F.R. § 21.11 5

 

12 C.F.R. § 21.21 passim

 

31 C.F.R. § 103.18(a)(1) 5

 

31 C.F.R. § 103.22 4

 

31 C.F.R. § 103.22(b)(1) 5

 

31 C.F.R. § 103.23(a) 5

 

31 C.F.R. § 103.23(b) 5

 

31 C.F.R. § 103.24(a) 5

 

 

 

 

 

 

 

 

Miscellaneous

 

Lewis Carroll, Alice’s Adventures  in Wonderland, Classic Press, San Rafael, Cal.(1969 Ed.),

Chap. 12 at 83-85 (Library of Congress Catalog Card Number: 72-79983) 2

 

 

The Comptroller’s Handbook, Bank Secrecy Act/Anti-Money Laundering (Consumer Compliance Examination), September 2000, revised for Web publication December 2000 5, 10, 11, 12

 

The Comptroller’s Handbook, Bank Secrecy Act (Consumer Compliance Examination), September 1996 6

 

 

 

 

PROLOGUE

 

 

In Appellant’s Brief (“Initial Brief”), Dale E. Washburn (“Appellant” or “Washburn”) demonstrated numerous legal errors, failures of supporting factual evidence, serious abuses of agency discretion, and prejudicial misconduct rooted in bad faith by the Office of the Comptroller of the Currency (“OCC,” “Comptroller,” or “Appellee”) that resulted in the de facto imposition of a financial penalty upon Washburn without regard for due process of law, notwithstanding the agency’s formal dismissal of all charges of wrongdoing against Washburn.^[2]

In Appellee’s Brief (“Response Brief”), the OCC distances itself from the legal errors and factual deficiencies delineated in the Initial Brief by ignoring them.  Rather than confront the issues at hand, the OCC simply pretends they do not exist, and continues to reiterate self-serving rhetoric by arguing factual circumstances and conclusions that are not supported in the record, disregarding the effect of explicit statutory language and its underpinning history, dismissing unrefuted documentary evidence in the record that flatly contradicts its position, and glossing over serious inconsistencies in its own reasoning and analysis.

Based upon a plain reading of the arguments and authorities detailed in the Initial Brief, as augmented and amplified by this Reply Brief, it must be concluded the OCC has failed to justify its position that it was substantially justified to institute the CMP Action against Washburn.   The Final Order of the Comptroller should therefore be vacated with instructions to pay the fees and expenses sought in the Application, as well as those incurred by Washburn to bring this appeal.

 

 

ARGUMENT

 

A. General Critique of the Response Brief Filed by the OCC.

The Response Brief is more instructive for its omissions than its content.  The OCC has abandoned two issues it had vigorously argued previously.  In addition, the agency failed to respond to virtually all of the analysis, arguments, and supporting authorities cited in the Initial Brief regarding the core issue of “substantial justification” under EAJA.  Further, the Response Brief includes several misleading statements of fact.  The referenced errors and omissions are briefly discussed to illustrate a regulatory mind-set that, with all due respect, is more reminiscent of that of the King and Queen of Hearts in Lewis Carroll’s Alice’s Adventures in Wonderland, who were incapable of exercising common sense because of their intense myopic focus on a desired  result and the blurring effect their inverted logic and twisted thinking had on that narrow-minded perspective.^[3]

With little or no explanatory comment, the OCC dismissed all of the substantive arguments advanced in the Initial Brief, including all of the supporting cases and authorities cited therein, pertaining to the core issue of substantial justification.  Presumably, the OCC either determined that they were irrelevant, or that they were frivolous and undeserving of any substantive response.^[4] 

1. Issues abandoned by the OCC.

The OCC did not advance its prior argument that Washburn is not a “prevailing party” within EAJA.   The Initial Decision determined that Washburn is a “prevailing party” (JA 518), and the Comptroller demurred on the question ( JA 551) in the Final Order.  Since the Response Brief failed to address the issue, Washburn submits that it has been abandoned and is not before this Court.

The OCC has also abandoned the issue of whether the fees and expenses claimed in the Application were “incurred” by Washburn within EAJA.  Although the OCC had specifically reserved that issue for appellate review (JA 547), it is not addressed in the Response Brief.  The Initial Decision and Final Order did not address or make any finding regarding the “incurred” issue.  Accordingly, Washburn submits the issue has been abandoned and is not before this Court.   

 

2. Issues, arguments, and authorities ignored by the OCC.

The Response Brief disregards, without comment, all of the analysis, arguments, and cited supporting authorities in the Initial Brief pertaining to the sufficiency of evidence to support a determination the OCC was “substantially justified in fact” to institute the underlying CMP Action.  Although the Response Brief includes and extended discussion of the agency’s position regarding that issue (Response Brief at 14-16), the OCC totally ignored the following legal deficiencies and supporting authorities cited in the Initial Brief:

(a) The finding of substantial justification in fact under review was not based upon a review and consideration of all of the evidence in the record, as a whole, but was predicated solely upon the evidence offered by the OCC.  5 U.S.C. § 504 (c); Alphin v. National Transp. Safety Bd., 839 F.2d 817, 821 (D.C. Cir. 1988); Hammock v. Bowen, 879 F.2d 498, 501 (9th Cir. 1989); Gowen v. Bowen, 855 F.2d 613, 616 (8^th Cir. 1988); Baily v. Bowen, 827 F.2d 368, 371 (8^th Cir. 1987); Cornella v. Schweiker, 728 F.2d 978, 984 (8th Cir. 1984); and Frost v. Barnhart, 314 F.3d 359, 366-67 [concurring/dissenting in part opinion] (9th Cir. 2002).  See Initial Brief at 18-21.

 

(b) The finding of substantial justification of fact under review was not supported by a preponderance of the evidence in the record.  De Allende v. Baker, 891 F.2d 7, 12 (1^st Cir. 1989); Sierra Club v. Sec'y of the Army, 820 F.2d 513, 517 (1st Cir.1987);  United States v. Yoffe, 775 F.2d 447, 450 (1^st Cir. 1985); and Anderson v. Heckler, 756 F.2d 1011,1013 (4^th Cir. 1985).  See Initial Brief at 21-22.

 

(c) The finding of substantial justification of fact under review was not supported by evidence in the record regarding each of the pivotal factual elements of the charges in the Notice of Assessment.  See Initial Brief at 23-25.

 

The Response Brief at 15 cites a statement in the Initial Brief regarding the last-cited deficiency^[5] as an introductory lead to refute Washburn’s arguments in footnote 15 of the Initial Brief at 22 regarding the discrepancy between the violations of law cited in the ROE 2000 and those cited in the Notice of Assessment.^[6]  The OCC responded to one of the arguments, explaining:

Ideally, an examination report would mention every violation of law, but in reality the analysis of whether a violation exists can sometimes take considerable time, and a bank’s board of directors should not be kept from reviewing and acting on the report until every issue, legal or supervisory, is resolved.^[7]  More to the point, recording a violation of law in the [OCC] examination report is simply not required. [emphasis added]  Response Brief at 15.

 

  The explanation only responds to half of Washburn’s argument.  The OCC disregarded the question of why, after the ROE  2000 was sent to the Bank, a written notification was not sent to the board advising that the agency had determined the Bank had committed multiple violations of section 21.21.^[8]  The failure (or refusal) of the OCC to respond to that question not only betrays but underscores the hypocritical nature of the statement that OCC examiners are not required to include all violations of law they detect during an examination in the final examination report.

The bogus nature of the alleged violations of section 21.21 is actually buttressed by the acknowledged failure of the OCC to provide a written notification to the Bank regarding such violations.^[9]  The OCC failure to notify the Bank violated a specifically mandated OCC bank examination procedure set forth in The Comptroller’s Handbook, Bank Secrecy Act/Anti-Money Laundering (Consumer Compliance Examination), September 2000, revised for Web publication December 2000 (hereinafter identified as the  “CCE-BSA Handbook”).^[10]   The following instructions to OCC examiners appear under the heading  “BSA Violations and Enforcement” in the handbook:

Examiners should document all BSA violations detected during an examination, regardless of significance, in the [examination] workpapers and in the OCC’s electronic information systems.  Examiners must include a discussion of significant violations of the BSA noted during a supervisory activity [e.g., an OCC examination] in a written communication to the institution.  Examiners must also enter narrative summaries in OCC’s electronic databases (a Type 70 analysis) for violations of 31 C.F.R. 103.18(a)(1), 103.22(b)(1), 103.23(a), 103.23(b), 103.24(a), and 12 C.F.R. 21.21 and 21.11, and any other BSA violations that are included in the report of examination. [emphasis added]  CCE-BSA Handbook at 39.

 

 

The explanation that examiners are not required to include detected violations of law in an  examination report is also contradicted by the published OCC instructions to examiners regarding the conduct of BSA examinations included in the record of this action.  See instructions 96, 99, and 101 in the extract portion of The Comptroller’s Handbook, Bank Secrecy Act (Consumer Compliance Examination), September 1996, that OCC examiner Porter sent to Bank President Davis (but not to Washburn) after the examiners’ on-site work at the Bank had been completed at JA 497-98.^[11]

Washburn does not believe that violations of the cited OCC examination procedures and instructions actually occurred since the OCC examiners who conducted the June 2000 examination did not make the original agency determination that violations of section 21.21 were committed.  Those violations were concocted in bad faith by others for the purpose of implementing the pernicious scheme outlined in the Initial Brief.  In this regard, there is evidence in this record, discussed below,^[12] that strongly suggests senior management officials in the Washington Office of the OCC Division of Compliance and Enforcement did not know that the violations of law cited in the Notice of Assessment were not cited in the ROE 2000 until Friday, August 3, 2001.^[13]  The OCC decided to dismiss all charges against Washburn the following Monday, August 6, 2001.  JA 145

 

 

 

 

3. Inaccurate and misleading “Counterstatements” by the OCC.

 

The Response Brief includes four designated “Counterstatements” pertaining to appellate jurisdiction, the issue under appeal, the origin and disposition of the case below, and the facts of the case.  Washburn replies with the following exceptions to the last two counterstatements.

(a) The OCC Counterstatement of the Case.

Objectionable Statement: “The Notice recited a lengthy list of supporting facts.”  Response Brief at 2.  The statement is inaccurate.  The Notice did nothing more than allege certain facts, some of which might be deemed “supportive” of the alleged violations of law if either admitted or otherwise established with substantial and credible evidence at a hearing.  The Response Brief erroneously argues the allegations in the Notice of Assessment as though they were established

facts without citing any supporting admission or credible evidence.  See, e.g., Response Brief at 14.

Objectionable Statement: “For these violations of 12 C.F.R. § 21.21, the Notice assessed Washburn a civil money penalty.” Response Brief at 3.  The statement is inaccurate and highly misleading.  None of the cited factual allegations in the Notice of Assessment either constituted or were characterized therein as “violations” of any requirement contained in section 21.21.

(b) The OCC Counterstatement of Facts

Objectionable Statement: “As the Bank’s BSA Officer, Washburn was responsible for monitoring the Bank’s day-to-day compliance with BSA, which he failed to do, as evidenced by these facts.”  Response Brief at 7.  The phrase “as evidenced by these facts” is erroneous and misstates the declarations of the OCC examiners upon which it is based.^[14]   The cited declarations do not state the determination that Washburn failed his monitoring responsibility was based upon any facts.  The declaration of examiner Porter states on its face that she based her determination regarding Washburn’s performance upon a presumption:

This failure [of Washburn to monitor the Bank’s compliance with BSA] is evidenced by the fact that the Bank failed to file currency transaction reports on sixty-five reportable large currency transactions between June 1999 and June 2000.  (JA 248)

 

The Porter declaration does not contain any indication that her determination was predicated upon any analysis of identified factual circumstances pertaining to Washburn’s execution of his assigned monitoring responsibilities, or any inquiry regarding the de facto cause(s) of the CTR violations.

Objectionable Statement: “Had these audits been performed as scheduled, the Bank may not have failed to report 65 large cash transactions, or at least the Bank would have detected this failure in a more timely fashion.”  Response Brief at 7-8.  The statement is not factual and is only a tentative opinion based upon speculation.  Accordingly, it is not properly included in any statement of  facts.

 

B. The OCC Position in the Underlying Action Was Not Substantially Justified.

1. The CMP Action against Washburn was not substantially justified in fact.

The OCC argues that the “litany of facts” cited in the Notice of Assessment “by itself” is sufficient to satisfy the “substantially justified in fact” standard required by EAJA.  A similar argument is made with regard to the OCC letter of reprimand as being “replete with facts ... substantiating Washburn’s alleged violation [sic].”  Response Brief at 14.  Washburn categorically rejects such arguments.  Raw allegations of fact in a pleading and naked declarative statements in an accusatory letter are not factual “evidence” or proof of anything. 

With regard to the OCC examiner declarations,  Washburn relies on the analysis in the Initial Brief at 23-25 and marvels at the agency’s patently illogical assessment of those statements.  Even admitting ad arguendo all of the “bulleted” listing of facts in the Response Brief at 14-15, the application of accepted Aristotelian principles of logic does not establish the conclusion of fact showing that the circumstances that caused the CTR violations also caused violations of section 21.21.  The OCC appears to be incapable of understanding that proof of the CTR violations does not automatically prove multiple violations of section 21.21 by the Bank.  At best, proof of a CTR violation is only an indicator or “red flag” that a violation of section 21.21 might have been the cause.  In the present case, ALJ Cook and the Comptroller disregarded all of the evidence offered by Washburn to show that the CTR violations relied upon by the OCC 

examiners were caused by circumstances and events that were not related to Washburn’s performance.

 

2. The CMP Action against Washburn was not substantially justified in law.

With regard to the issue of whether the OCC was substantially justified in law to institute the CMP Action, the Response Brief merely offers a shallow reiteration of the analysis in the Initial Decision (adopted in toto by the Final Order) regarding the plain meaning of the phrase “any law or regulation” that was added to the CMP statute (12 U.S.C. § 1818(i)) in 1989.  The OCC did not offer any substantive rebuttal to any of the arguments advanced by Washburn in the Initial Brief at 28-34, showing that the 1989 amendment did not empower the OCC to institute the CMP Action.

The OCC glosses over the precatory^[15] statement prepared by Treasury in 1989 that clearly indicates the amended CMP statute was not intended to provide the federal banking agencies with CMP authority that overlaps the previously enacted CMP authority vested with Treasury under the provisions of 31 U.S.C. § 5321 with regard to BSA violations.  The OCC argues that Congress was really only saying that CMP sanctions by different agencies should not be imposed for the same violation.  Response Brief at 13.  The fallacy of such argument is easily demonstrated.^[16]  The argument is also contradicted by the sworn testimony of the Assistant Secretary of the Treasury for Enforcement before Congress in 1994,^[17] and it disregards the “plain meaning” of explicit terminology in 12 U.S.C. § 1818(s)(3) enacted in 1986, and 31 U.S.C. § 5321(e) enacted in 1994.^[18]

The most dramatic (and perhaps strongest) rebuttal of the OCC argument, however, is the fact that the OCC position is contradicted by the agency’s official published policy regarding the use of CMP authority to enforce BSA violations.  The CCE-BSA Handbook states at 39-40:

Treasury’s Financial Crimes Enforcement Network (FinCEN) requires the OCC to report quarterly on national bank compliance with the BSA. ...

* * *

It is OCC policy to refer significant BSA violations to FinCEN for review for possible civil money penalties.  The authority to assess civil money penalties for BSA violations against any domestic financial institution, and any director, officer, or employee of a domestic financial institution rests with FinCEN.  (Refer to Appendix C for more information on referring BSA violations to FinCEN.)

* * *

The OCC has authority to take its own administrative action when it identifies significant BSA violations, even after making a referral to FinCEN.  For example, the OCC may assess civil money penalties, impose a cease and desist order or other enforcement document against a bank with inadequate controls.^[19] [emphasis added]

 

How can the OCC reconcile its stated policy of referring “significant BSA violations” to FinCEN for possible CMP action with the averment that the agency has the authority to impose CMP or C&D sanctions even where it has made a referral to FinCEN, and at the same time comply with the principle of not imposing two CMPs by different agencies for the same violation?  The reconcilement is easy if (and only if) the penalties assessed by FinCEN are imposed pursuant to 31 U.S.C. § 5321 while those by the OCC are imposed under 12 U.S.C. § 1818(s)(3).

Washburn submits that the underlying basis for the OCC policy published in The Comptroller’s Handbook, Bank Secrecy Act/Anti-Money Laundering is the agency’s de facto agreement in principle with Washburn’s position in this action, viz., notwithstanding the phrase “any law or regulation” in 12 U.S.C. § 1818(i), the agency does not have the legal authority to impose a CMP for a violation of BSA or any BSA related  regulation, including section 21.21.^[20]

The Response Brief at 13 fn.1 also contends that Washburn’s arguments concerning the provisions of section 8(s) of FDIA are overdrawn:

Washburn overstates the import of 12 U.S.C. § 1818(s), which authorizes a banking agency to issue a cease and desist order to correct BSA violations.

 

The OCC effort to minimize section 8(s) is understandable.  It is the proverbial “thorn” in the agency’s side that cannot be extracted or rationalized into oblivion vis-a-vis the agency’s legal authority to assess a CMP for violations of section 21.21.  Since enforcement of section 21.21 is at the heart of this case, and since section 21.21 was promulgated by the OCC in compliance with the mandate in 12 U.S.C. § 1818(s)(1), Washburn submits it is both reasonable and necessary that section 8(s) be accorded the highest and most prominent import possible in this case.  The OCC is wrong to make the seriously misleading characterization that section 8(s) merely “authorizes” the OCC to issue a cease and desist order “to correct BSA violations.”  Response Brief at 13 fn.1.

As Washburn argued in the Initial Brief, a plain reading of section 8(s)(3) mandates the issuance of a C&D order against banks (not individuals) for violations of section 21.21.^[21]  In this regard, Washburn suggests that it would be instructive for the agency to answer the following question:  In the light of the statutory rule of construction against construing any term as meaningless or surplusage, how can this Court reconcile the express provisions of section 8(s)(3) with the undisputed fact that at the time that statute was enacted in 1986, the OCC had already been vested with the statutory authority to issue a C&D order to enforce violations of regulations promulgated by the agency, as well as the statutory authority to assess a CMP for violations of final C&D orders issued by the agency?  Why would Congress enact a statute in 1986 regarding the power of the OCC to use specified regulatory sanctions under certain specified circumstances if the agency already had the authority to use those sanctions under such prescribed circumstances?  Washburn argues there is only one answer to that question.^[22]

Finally, the OCC strongly argues that this Court adopt a “plain meaning ” construction of 12 U.S.C. § 1818(i), while at the same time ignoring an application of the same principle of statutory construction for 12 U.S.C. § 1818(s)(3) and 31 U.S.C. § 5321(e).  Response Brief at 10-11. Washburn has advanced three separate, mutually exclusive, and judicially recognized reasons (with citations to supporting authorities) to advance the argument that this Court is not bound by the “plain meaning” standard of construction under certain specified circumstances.   Initial Brief 25-26 and 30-32.  Again, the OCC has not responded with a single argument or identified a single case or other authority in rebuttal of any of the three cited reasons.

 

C.  Bad Faith of the OCC Revisited

The OCC urges this Court to disregard Washburn’s argument the CMP Action was instituted in bad faith on the ground it was never mentioned previously and not properly preserved for appeal.  Response Brief at 16.  The OCC is mistaken.  Washburn questioned the integrity of the OCC motive in instituting the CMP Action and raised the intimation of bad faith activity in the Application itself.  JA 193 fn.7.  Washburn had received information from a reliable source that indicated the primary objective of the CMP Action was  to implement a personal agenda of a particular OCC management official with an acute personal animus against Washburn, and that such action was intended to punish Washburn for his perceived indifference to OCC examiner criticisms.^[23]  Washburn has good reason to believe (but, of course, cannot prove based on the evidence in this record) that the same OCC official was centrally involved in the bad faith activities delineated in the Initial Brief.

There are similar declarations in footnotes 3 through 6 and 59 of Washburn’s Response to the OCC’s Answer to the Application.^[24]  JA 269-72 and 292.  Further, Washburn’s Amended Application [accepted ss a “Supplementation” (JA 513)] also raised serious concerns regarding the credibility and accuracy of the explanation of the agency’s decision to dismiss the CMP Action, as proffered in a pleading filed on October 25, 2001,^[25] that stated certain undefined “resource considerations” impelled the agency to make that decision three months earlier.^[26]  

It should also be noted that the timing of Washburn’s formal charge of bad faith in the Initial Brief was dictated largely by the OCC.  The bad faith argument is predicated upon the cumulative import of three separate statements in two different OCC pleadings.  Initial Brief at 39.  The order dismissing the CMP Action was issued summarily without explanation in August 2001.  JA 174.  The first notice of the agency’s alleged impoverishment as an explanation for that action did not occur until October 25, 2001 when the OCC stated (somewhat cryptically) that “because of resource considerations,” the OCC decided to address a letter of reprimand to Washburn in lieu of issuing a final CMP order.  JA 225.  It was not until December 3, 2001 that the remaining statements were made that provided additional meaning of the earlier statement.  JA 312 and 316.  As a result of such timing, Washburn did not have an appropriate opportunity  to assess and respond to the consolidated import of all three statements until the Notice of Appeal was filed with this Court on June 3, 2002 wherein the bad faith issue was first formally raised.^[27]

In this same context, the OCC notes the bad faith argument was not made in Washburn’s Exceptions to the Initial, contending that such failure should be construed as a waiver.  Response Brief at 17.^[28]  In refuting such argument, the obvious (and accurate) reply is that the Initial Decision did not contain any finding that Washburn could have objected to on the basis of a direct allegation of bad faith.  For example, the Initial Decision did not include any determination regarding the reason the CMP Action was dismissed by the OCC.  Similarly, the Initial Decision did not make any

finding or statement regarding the regulatory purpose of instituting a formal punitive action against Washburn several months after he accepted employment at another bank (that is not subject to OCC supervision)^[29] after the OCC had agreed to an informal non-punitive resolution (i.e., the MOU)  with the Bank, where both actions were based upon exactly the same set of circumstances.^[30]  

The best (and also accurate) answer, however,  to the question of why the bad faith argument was not addressed in Washburn’s Exceptions to the Initial Decision is rooted in the special nature of the “evidence” needed to support the argument.  The sine qua non of the bad faith argument are the three cited statements that were candidly volunteered in pleadings filed on behalf of the agency.^[31]  As a matter of appropriate professional conduct, Counsel for Washburn self-imposed a special limitation regarding any utilization of the statements in question due to their origination in argumentative pleadings filed by an attorney advocate on behalf of a client, as opposed to a more traditional source such as a transcript of recorded testimony, affidavit, business letter, or other evidentiary document in the record.  In the same way that opening statements and closing arguments by attorneys to juries are not treated or considered as “testimony” or “record evidence” regarding the merit of any disputed issue, Counsel for Washburn made a unilateral decision that gratuitous statements of fact by an attorney (that possibly included privileged information) in argumentative pleadings should not be treated or used as “record evidence” in direct support of any disputed issue.  Accordingly, the bad faith argument and the three supporting statements were not offered or cited in Washburn’s Exceptions to the Initial Decision since the only matters addressed in the Initial Decision pertained to the merits of disputed issues.

The same caveat is observed in the Initial Brief.  The bad faith argument is not advanced to show that the CMP Action was not “substantially justified;” nor is the argument raised as an independent or alternative basis for recovery of the fees and expenses claimed in the Application.  Rather, the argument of bad faith is addressed solely to the inherent power of this Court to preserve and protect its institutional integrity and that of the federal adjudicatory system of law it serves.^[32]  Such power subsumes the authority to review and consider any matter this Court, in its discretion, deems appropriate for the purpose of guarding against (or unwittingly facilitating) any abuse of the adjudicatory process by a party to any action that has been submitted to it for appellate review. Initial Brief at 34-35.  If this Court takes notice of Washburn’s argument and enters a finding that the CMP Action against Washburn was instituted by the OCC in bad faith, the Initial Brief does not make any suggestion regarding what impact (if any) such finding should have in its final decision and order.  That matter is also left to this Court’s discretionary authority.  Initial Brief at 36.

Finally, in a statement that some observers might label as a “cheap shot,” the OCC urges that this Court follow the lead of ALJ Cook and not “indulge” Washburn and his “lengthy filings” with any analysis or discussion of the bad faith argument in the Court’s final decision and order.^[33]  Response Brief at 17.  Stated differently, the OCC asks this Court to dismiss Washburn’s bad faith argument as frivolous in the same manner that ALJ Cook dismissed all of Washburn’s arguments regarding the legal authority of the OCC to issue the Notice of Assessment.  Washburn, of course, believes that such summary treatment is unwarranted, and that this Court’s agreement will that conclusion will be reflected in its final decision and order.

 

 

CONCLUSION

 

Based upon this Court’s consideration of the record of this action and the arguments and authorities advanced by the respective parties, Washburn respectfully submits that this Court enter a decision and order to reverse and vacate the Comptroller’s Final Order with instructions to the Comptroller to pay the fees and expenses claimed in the Application, and that this Court’s decision also hold that Washburn is a “prevailing party” in this appeal within EAJA, with added instructions to pay the legal fees and expenses incurred by Washburn to bring this appeal, as  permitted by EAJA .

 

 

 

 

 

 

 

Respectfully submitted,.

 

 

 

 

______________________________

Stephens B. Woodrough

 

THE BANKING LAW FIRM

100 Beach Drive Suite 1801-03

St. Petersburg, Florida 33701

727-898-9009

 

Attorney for Appellant

Dale E. Washburn

 

 

 

February 28, 2003