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Federal Deposit Insurance Corporation, As Receiver For 1st Centennial Bank v. James R. Appleton

June 28, 2011

FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER FOR 1ST CENTENNIAL BANK PLAINTIFF,
v.
JAMES R. APPLETON, BRUCE J. BARTELLS, CAROLE H. BESWICK, LARRY F. JACINTO, RONALD J. JEFFREY, WILLIAM A. MCCALMON, PATRICK J. MEYER, THOMAS E. VESSEY, STANLEY C. WEISSER, DOUGLAS F. WELEBIR, JOHN LANG, AND CLIFFORD N. SCHOONOVER, DEFENDANTS.



The opinion of the court was delivered by: Magistrate Judge Paul L. Abrams

PROTECTIVE ORDER REGARDING CONFIDENTIAL INFORMATION DISCOVERY MATTER

Plaintiff Federal Deposit Insurance Corporation, as Receiver for 1st Centennial Bank ("FDIC-R" or "Plaintiff") in the above-captioned action believes that disclosure and discovery in this action will involve production of sensitive and confidential information for which special protection from public disclosure and from use for any purpose other than prosecuting this Litigation may be warranted. FDIC-R has taken reasonable efforts to protect this sensitive information from disclosure, and believes that there is good cause pursuant to Fed. R. Civ. P. 26(c) to warrant the continued protection of this information from dissemination to the public at large. Such information will likely include documents created pursuant to federal and state regulatory examinations and investigations of 1st Centennial Bank ("1st Centennial" or "the Bank"), and financial and personal information of obligors, obligees, and customers of the Bank.

FDIC-R contends that discovery in this action will involve the disclosure of confidential information contained in Reports of Examination ("ROEs") and other official reports created in the course of, or in response to, official regulatory examinations and investigations of the Bank. The information contained in the ROEs and corresponding reports and communications between the FDIC and the Bank concerning the examinations or investigations of 1st Centennial are granted specific protections from public disclosure under FDIC Rules and Regulations. Specifically, 12 C.F.R. Part 309.5(g) exempts certain records from public disclosure, including "[r]ecords that are contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of the FDIC or any agency responsible for the regulation or supervision of financial institutions." 12 C.F.R. Part 309.5(g)(8).

FDIC-R further contends that discovery in this action will also likely involve disclosure of confidential information contained in reports and communications pursuant to examinations and investigations by the California Department of Financial Institutions ("CDFI"). The California Public Records Act (the "CA PRA") exempts documents from public disclosure where such disclosure is prohibited by express provisions of law. CA PRA, §6253(b). The CA PRA specifically exempts from public disclosure information contained in:

(1) applications filed with any state agency responsible for the regulation or supervision of the issuance of securities or of financial institutions;

(2) examination, operating, or condition reports prepared by, on behalf of, or for the use of, any state agency referred to in paragraph (1);

(3) preliminary drafts, notes, or interagency or intra-agency communications prepared by, on behalf of, or for the use of, any state agency referred to in paragraph (1); and

(4) information received in confidence by any state agency referred to in paragraph (1).

CA PRA, §6254(d).

FDIC-R contends discovery in this action will also likely involve the disclosure of financial information and personal identifying information from the receivership files of the Bank customers prior to the Bank's failure. Public disclosure of such information is prohibited without the consent of the individual whose information is disclosed, by The Privacy Act of 1974, 5 U.S.C. §552a. An exception to this prohibition under the FDIC's Regulations governing the Privacy Act and Insured Financial Institution Liquidation Records exists for the information of an obligor or obligee of a failed financial institution that may be disclosed only:

To the individual, the individual's counsel or other representatives, insurance carrier(s) or underwriters of bankers' blanket bonds or other financial institution bonds for failed or assisted FDIC-insured financial institutions in conjunction with claims made by the FDIC or litigation instituted by the FDIC or others on behalf of the FDIC against former officers, directors, accountants, lawyers, consultants, appraisers, or underwriters of bankers' blanket bonds or other financial institution bonds of a failed or assisted FDIC-insured financial institution.

12 C.F.R. Part 310, FDIC--30--64--0013(16) (2009).

FDIC-R further believes good cause exists to prevent disclosure to the public at large, financial information and personal identifying information of 1st Centennial Bank customers pursuant to the Information Privacy Provisions of the Gramm-LeachBliley Act, 15 U.S.C. §6801, and California Financial Code, §§4050-60. Documents containing information protected by the above provisions will include 1st Centennial Bank loan files, loan applications, financial statements, income tax returns, and internal bank records containing taxpayer information, account numbers, account statements, transaction records and other personal identifying information.

The Parties acknowledge that this Stipulated Protective Order (the "Order") does not confer blanket protections on all disclosures or responses to discovery, and that the protection it affords extends only to the information or items that are entitled to confidential treatment under the applicable legal principles. The Parties further acknowledge that this Order creates no entitlement to file confidential information under seal, and good cause must be shown in any motion to file confidential information under seal.

Good cause exists to enter this Order to protect the above-referenced information from public disclosure, pursuant to FDIC Rules and Regulations, the laws of the State of California, and other federal or state laws. Accordingly, pursuant to Fed. R. Civ. P. 26(c), the Parties hereby stipulate to and petition the Court to enter the the Order.

IT IS HEREBY STIPULATED AND AGREED by and between Plaintiff and Defendants in the Litigation, by and between their undersigned counsel, that all documents or information designated as Confidential Information in this Litigation shall be subject to the terms and provisions set forth:

GENERAL PROVISIONS

1. Definitions

a. "Challenging Party" means a Party or Non-Party that challenges the designation of information or items under this Order.

b. "Confidential Information" means (regardless of how it is generated, stored, or maintained), materials, documents or items supplied in any form containing non-public information that qualifies for protection under Fed. R. Civ. P. 26(c); FDIC Rules and Regulations, 12 C.F.R. §308-10, FDIC--30--64--0013(16) (2009); Privacy Act, 5 U.S.C. §552a; California Public Record Act, §6254(d); Gramm-Leach-Bliley Act, 15 U.S.C.. §6801, and California Financial Code, §§4050-60.

c. "Counsel" means Counsel for Plaintiff or Defendants in this Litigation.

d. "Designating Party" means a Party or Non-Party that designates information or items that it produces in disclosures or in responses to ...


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