Final Enforcement Decision Issued by the Board of Governors

By Johnson, Jennifer J. | Federal Reserve Bulletin, March 2000 | Go to article overview

Final Enforcement Decision Issued by the Board of Governors


Johnson, Jennifer J., Federal Reserve Bulletin


In the Matter of
Incus Co., Ltd.
Tortola, British Virgin Islands and
Carlos Hank Rhon
An Institution-Affiliated Party of
Incus Co., Ltd., and
Laredo National Bancshares
Laredo, Texas

Docket Nos. 98-038-B-FHC, 98-038-B-I, 98-038-CMP-FHC, 98-038-CMP-I, 98-038-E-I

Determination on Requests for Interlocutory Review

Before the Board are three requests tot interlocutory review filed jointly by Incus Co., Ltd. and Carlos Hank Rhon, the respondents in the above-captioned action (collectively, "Respondents"). The first request challenges the administrative law judge's order striking certain affirmative defenses advanced by Respondents. The second and third requests involve three discovery rulings made by the administrative law judge (the "ALJ") relating to the scope of discovery and the assertion of privilege by Board Enforcement Counsel ("Enforcement Counsel").

Requests for interlocutory review of orders of an ALJ are governed by section 263.28 of the Board's Rules of Practice for Hearings, 12C.F.R. [sections] 263.28 ("Rule 28"). Under that rule, the Board "may exercise interlocutory review" of an ALJ order if the Board finds that at least one of four circumstances exists:

(1) The ruling involves a controlling question of law or policy as to which substantial grounds exist for a difference of opinion;

(2) Immediate review of the ruling may materially advance the ultimate termination of the proceeding;

(3) Subsequent modification of the ruling at the conclusion of the proceeding would be an inadequate remedy; or

(4) Subsequent modification of the ruling would cause unusual delay or expense.

12 C.F.R. [sections] 263.28(b). These provisions are similar to 28 U.S.C. [sections] 1292(b), which sets forth the circumstances under which federal appellate courts may exercise jurisdiction over interlocutory appeals. Accordingly, the Board has previously observed that "`[w]hile section 1292(b) and case law governing interlocutory review in civil proceedings are not binding in this administrative proceeding, they provide useful guidance to the [agencies] in deciding procedural issues' such as the one presented here." In re Clifford & Altman, No. 92-080-E-II, Order on Respondents' Motion for Interlocutory Review of Administrative Law Judge's Order (Part 1), August 21, 1996, ("Clifford & Altman I"), slip op. at 32, quoting In the Matter of David L. Paul, Order No. OTS AP 92-92, 1992 OTS DD LEXIS 90, *8 (1992).

In Clifford & Altman I, the Board noted that interlocutory review is discretionary, and that the scope within which such discretion should be exercised is extremely narrow. Clifford & Altman I, slip op. at 33, citing US. v. Ivory, 29 F. 3d 1307, 1311 (8th Cir. 1994), cert. denied, 116 S. Ct. 963 (1996). This limitation reflects a strong and longstanding policy against piecemeal appeals before a final judgment. Switzerland Cheese Ass'n, Inc. v. E. Horne's Market, Inc., 385 U.S. 23, 24-25 (1966). "[T]here has been a firm congressional policy against interlocutory or `piecemeal' appeals and courts have consistently given effect to that policy." Abney v. U.S., 431 U.S. 651, 656 (1976). Therefore, while Section 1292(b) and Rule 28 contemplate "discretionary" interlocutory review, the exercise of that discretion should be viewed in the context of an overriding federal policy against piecemeal review of litigation before the entry of a final judgment.

Accordingly, while a finding of one of the four circumstances identified in Rule 28 is a necessary precondition to interlocutory review by the Board, it is not alone sufficient to require such review. Rather, the Board will exercise its discretion to grant interlocutory review where at least one of the prerequisites is met, using all of the prerequisites as guideposts in the exercise of that discretion. Accord, In re Henderson, OTS Order No. AP 96-23, 1996 OTS DD LEXIS 12 at *7 (applying identical regulation). …

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