Judge Will Hear Oral Arguments in Discovery Objection in ABA FOM Case

SALT LAKE CITY-Judge Dale Kimball plans to schedule a hearing regarding NCUA and the intervenors’ objections to the magistrate judge’s decision to allow for discovery in the American Bankers Association’s lawsuit against the credit union regulator. The defendants-NCUA, CUNA, NAFCU, NASCUS, the Utah League of Credit Unions, and Tooele, America First, and Goldenwest Federal Credit Unions’-were informed that this hearing was a possibility when they filed their objections to the magistrate judge’s decision, according to NAFCU Director of Regulatory Affairs Gwen Baker. Oral arguments were initially scheduled for March 2, but that date may be moved up to some time in the next few weeks, she said. The attorney obtained by the intervenors, Paul Lambert of Bingham McCutchen LLP, said that date would likely be Feb. 3. The credit union parties’ reply to ABA, Utah Bankers Association, Bank of Utah, Liberty Bank, First Utah Bank, and Frontier Bank’s response to the objection to discovery was filed Jan. 14. “Basically, our reply is stating that we believe the order was inconsistent with the Administrative Procedures Act and that at this time, the court should not be considering information outside the administrative record,” Baker explained. Briefs were shuffled into Judge Kimball from the plaintiffs and defendants concerning the discovery decision. On Jan. 12, the bankers filed a response to NCUA and the intervenors’ objections filed against the judge magistrate’s ruling to allow for discovery in the case. The plaintiffs argued that the defendants were mischaracterizing the challenge. “The Bank Group does not seek to supplement the administrative record, as suggested by the Defendants. The Bank Group seeks to challenge the credibility and reliability of the NCUA’s administrative record (original emphasis),” the bankers’ brief read. Therefore, ABA explained, it has to perform discovery to expose the faulty information and demonstrate that NCUA’s decision to approve the Utah credit unions’ community charter conversions was based on “erroneous, cursory and unreliable” data that “NCUA failed to investigate or verify.” ABA, et al, is seeking to execute third-party subpoenas from several sources that the credit unions used to prove that the approved field of membership was a community and provide expert testimony on demographics, as well as depose Tooele FCU and its consultants. Lambert said the bankers’ could spin their position anyway they wished, but they are still “definitely supplementing the record” with evidence that was not before NCUA when it approved the fields of membership. He added that the credit union parties “are not concerned about the facts discovery will produce,” but do not want to prolong the proceedings and rack up enormous expenses. “The purpose of oral argument is to help the judge,” Lambert explained. He said as far as the facts were concerned, holding oral arguments regarding the discovery decision should not really help or hurt the credit unions’ argument. In their response, NCUA and the intervenors, filing jointly, stated the bankers were confusing two separate issues: whether a court may consider evidence outside the administrative record in a challenge to agency action; and whether a challenge to an agency action should be treated like “any other civil action” with the usual pretrial procedures. The brief also accused the bankers’ of going on a fishing expedition. “[T]he Bank Group may not use this proceeding as a means of trying to discover a basis to challenge NCUA’s decision,” it read. No timeline has been set for a decision on the discovery objection or the remainder of the case. The ABA’s lawsuit charges that Tooele’s community charter expansion, as approved by NCUA, was “arbitrary and capricious” in nature and outside the bounds of the Federal Credit Union Act. NCUA approved Tooele for a community expansion from one county to six earlier this year. America First and Goldenwest subsequently received approvals for the same area. [email protected]