USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________

No. 94-2262

CAROL SAWYER PARKS,

Plaintiff - Appellant,

v.

FEDERAL DEPOSIT INSURANCE CORPORATION,

AS RECEIVER FOR OLYMPIC INTERNATIONAL
BANK AND TRUST COMPANY,

Defendant - Appellee.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Edward F. Harrington, U.S. District Judge]

___________________

____________________

Before

Torruella, Chief Judge,

___________
Bownes, Senior Circuit Judge,
____________________
and Selya, Circuit Judge.
_____________

_____________________

David G. Hanrahan, with whom

__________________

Ross D. Ginsberg
________________

and Gilman,
_______

McLaughlin & Hanrahan, were on brief for appellant.

_____________________

Jaclyn C. Taner, Counsel, with whom Ann S. Duross, Assistant

_______________
_____________
General Counsel,

Colleen B. Bombardier, Senior

_____________________

Counsel, John P.
_______

Parker, Senior Attorney,

______

and Juanita L. Dean, Counsel, were

________________

on

brief for appellee, Federal Deposit Insurance Corporation.

____________________

September 13, 1995

____________________

TORRUELLA,
TORRUELLA,

Chief Judge.
Chief Judge.
____________

Plaintiff-appellant

Carol

Sawyer Parks filed suit

Massachusetts

to

in the United States District

enjoin

defendant-appellee

Insurance Company ("FDIC") from

seeking

Parks'

personal

district

court

granted

complaint, and for summary

appeal

of

question:

Federal

Deposit

enforcing a subpoena duces tecum

_____ _____

financial

the

Court for

papers and

FDIC's motion

to

records.

dismiss

enforcement of the subpoena.

that

decision

Does

the Fourth

presents

the

Amendment's

following

The

Parks'

Parks'

important

proscription

against

unreasonable searches and seizures require the FDIC to articulate

some quantum

of

individualized suspicion

of wrongdoing

subpoenaing a citizen's private financial papers?

Supreme

Court's

long-held

distinction

Amendment rights accorded private --

between

before

Relying on the

the

Fourth

as opposed to corporate

--

papers, we answer in the affirmative.

Because the district court

did not review the subpoena under the standard we announce today,

we

reverse and

remand for

further proceedings

consistent with

this opinion.

BACKGROUND
BACKGROUND
__________

The FDIC insures deposits in financial institutions and

is

authorized

institutions

authority.

that

to

statute

fail

12 U.S.C.

is appointed

law

by

"all

to

and

are

as

receiver

closed

by

rights, titles,

for

their

1811, 1821(c)(2) & (3).

receiver for a

institution's officers

act

powers,

and

chartering

When

failed institution, it

insured

the FDIC

succeeds by

privileges" of

and directors with respect

the

to the assets

-2-

of the institution.

FDIC

failed

Id. at
__

1821(d)(2)(A).

the

is authorized to collect all obligations and moneys owed to

institutions

for

the

creditors and shareholders.

this

As a receiver,

function,

Congress

Id.
__

has

benefit

of

the

1821(d)(2)(B).

authorized

the

institution's

To facilitate

FDIC

to

issue

subpoenas and subpoenas duces tecum "for purposes of carrying out

_____ _____

any

power,

authority,

depository

or

duty

with

respect

institution (including determining

to

an

insured

any claim against

the institution and determining and

realizing upon any assets of

any

collecting

person

in

the

institution). . . ."

course

Id.
__

of

money

due

1818(n), 1821(d)(2)(I)(i).

the

The FDIC

is empowered to avoid fraudulent transfers, assert claims against

directors and

Id.
__

officers, and seek court

1821(d)(17), 1821(k),

directs

1821(d)(18).

In addition, Congress

the FDIC, generally, to maximize the return for the sale

of assets, and to minimize losses.

Ms. Parks was a

and Trust

orders attaching assets.

Id.
__

1821(d)(13)(E).

director of Olympic International Bank

Company ("Olympic") from

May 1987 through

July 1990.

On June 26, 1992, Olympic was declared insolvent and the FDIC was

appointed its receiver.

Order of Investigation to

On June

28, 1994, the

FDIC issued

an

determine whether (1) former directors

and officers may be liable as a result of any actions or failures

to act which may have affected Olympic; (2) pursuit of litigation

would be

cost effective, considering the extent of the potential

defendants' ability to pay

to avoid

a judgment; (3) the FDIC

a transfer of assets;

and (4) the FDIC

-3-

should seek

should seek an

attachment of assets.

On

July 28,

1994, the

FDIC issued

a subpoena

tecum to Ms. Parks requesting the following information:

_____

1.

Your current financial statement and all

financial statements listing your

assets and

liabilities, (alone or with others).

2.

All financial statements of your spouse.

3.

All credit applications submitted by you

or your spouse, alone

or with others, to any

depository institution or any other person or

entity.

4.

All

records

received on or
August 1,
source
you

generated,

after August 1, 1993

or

through

1994, referring or relating to the

and amount of

or on

limited

prepared,

to

your

any income received by

behalf,

all wages,

including but

not

salary, commissions,

duces
_____

bonuses, interest and dividend

payments, and

any other form of income received by you.

5.

All federal, state and local tax returns

filed by you
with

either individually or

another,

schedules

along

filed

with

with

all

such

jointly

forms

returns

and
from

January 1, 1989 through April 15, 1994.

6.

All

records

prepared,

received from August

1, 1994

which

bonds,

securities

currently
others,

1, 1993 through

refer or

owned

or

by

including

generated,

August

relate

to

other

investments

individually
but

or

stocks,

or

not limited

to

with
any

statements showing their value.

7.

All

relate to
property

documents
any

that

financial, real

transactions,

which you,

reflect, refer
or

including

or anyone acting

or

personal
cash,

in

on your behalf,

or under your control or influence, have been

involved, (except as

the attorney,

or agent of another party

employee

on transactions in

which you had no personal interest), having a

value

of

$5,000

organization

per

or

more,

year,

per

person

including, but

or
not

limited to, the following:

-4-

a. all

real

purchases,

and

sales

personal

property

or transfers,

with or

without consideration;
b. all trust participants;
c. mortgages,
security

trusts

or other

interests obtained

to any third party;

d. lawsuits; and
e. repossessions and returns.

liens on

or supplied

8.

All documents referring

or relating

any

transfer of

any

entity, account, place or person located

assets exceeding

to

$5,000 to

outside the United States of America.

9.

All records referring or relating to any

interest
other

you hold

type of

in any

real personal

property exceeding

or

$5,000 in

value not described above.

10.

All documents referring

any

transfer or

or relating

assets exceeding

any entity, account,

to

$5,000 to

place or person located

outside the United States of America.

11.

All records referring or relating to any

interest
other

you hold

type of

in any

real

property exceeding

personal or
$5,000 in

value not described above.

Ms. Parks refused to produce the information.

she

filed a complaint

for declaratory and

Instead,

injunctive relief in

the United States District Court for Massachusetts arguing, among

other things,

that compelled

production of the

documents would

violate her rights under the Fourth Amendment.

motion

to dismiss the complaint, and

the subpoena.

On the same

the district court,

The FDIC

filed a

for summary enforcement of

day that the FDIC

filed its motion,

without the benefit of a

hearing, or even a

response from Parks, granted the FDIC's motion to dismiss and for

summary

enforcement

subsequent

motion to

of

the

subpoena.

stay enforcement

-5-

We

of the

granted

Parks'

subpoena pending

appeal.

-6-

DISCUSSION
DISCUSSION
__________

Ms. Parks argues that

"unreasonable

search"

violation of her rights

of

her

the FDIC subpoena constitutes an

private

financial

under the Fourth Amendment.

papers

in

The Fourth

Amendment protects the "right of the people to be secure in their

persons,

houses,

searches

and seizures . . . ."

the

v.

papers,

and

effects,

against

unreasonable

The Supreme Court has described

subpoena as a "constructive" search, Oklahoma Press Pub. Co.

_______________________

Walling, 327 U.S. 186

_______

Fourth Amendment

(1945), which is

limitations.

Donovan v. Lone Steer, Inc., 464

_______
_________________

U.S. 408, 415 (1984); United States v.

_____________

632, 651

(1950)

("[T]he 'right

comprehensive of rights

therefore subject to

to

and the right

Morton Salt Co., 338 U.S.

_______________

be let

alone

-- the

most valued by

most

civilized

men,' is not confined literally to searches and seizures as such,

but extends as

well to

the orderly taking

process . . . .") (citations omitted).

Ms. Parks'

has

privately held

a "legitimate

of

It is beyond dispute that

expectation

financial papers and

under compulsion

of privacy"

records, and thus

in

her

that her

Fourth Amendment

rights are

implicated by the

FDIC's subpoena.

See United States v. Jacobsen, 466 U.S. 109, 113 (1984); Nixon v.
___ _____________
________
_____

Admin. of General Serv., 433 U.S.

________________________

has

legitimate expectation

Cf.
__

United States
_____________

Fourth

Amendment

financial papers

of privacy

v. Miller,
______

interest

425, 457-58 (1976) (President

425 U.S.

of

private papers).

435, 440-44

depositor

ceased to be "private

-7-

in his

(1975) (no

implicated

because

papers" when transferred

to bank).1

The question

by the FDIC

Amendment.

then becomes whether the

was "reasonable"

Florida
_______

touchstone of

subpoena issued

within the meaning

v. Jimeno,
______

500 U.S. 248,

the Fourth Amendment

of the

Fourth

250 (1991)

("The

is reasonableness."); United
______

States v. Calandra, 414 U.S. 338, 354 (1974) ("The purpose of the
______
________

Fourth

Amendment

intrusions

effects.").

that,

is

to

into the privacy

Our

although

review of

the

FDIC

prevent

unreasonable

of one's person,

the relevant case

met

the

governmental

house, papers, or

law persuades

lenient

standard

us

of

reasonableness for administrative subpoenas of corporate records,

_________

it failed

applies

to meet the

to

stricter standard of

administrative

subpoenas

of

reasonableness that

personal
________

papers

and

records.

I.
I.

The FDIC asserts that the only constraints on its power

to subpoena an individual's private financial papers are that the

investigation

be

within

its

authority,

the

subpoena

____________________

The Supreme Court has recognized that:

Of all the rights of the citizen, few are

of greater importance

or more

essential

to his peace and happiness than the right

of personal security, and
not merely protection

that involves,

of his person from

be

assault,

but exemption of his private

_______________________________

affairs, books, and papers

from the
_________________________________________
inspection
and
scrutiny of
others.
________________________________________
Without the enjoyment of this

right, all

others would lose half their value.

Interstate Commerce Comm'n

__________________________

v. Brimson, 154 U.S. 447,

_______

479 (1894)

(citation and internal quotation marks omitted; emphasis added).

-8-

sufficiently

definite, and the information reasonably relevant.2

The

FDIC relies on our decision in

United States v. Comley, 890

_____________
______

F.2d 539, 541 (1st Cir. 1989), where we stated that:

In

general,

an

agency

subpoena

is

enforceable if it is for a proper purpose

authorized
sought

by Congress,

is relevant

adequately

the information

to that

described,

purpose and

and

statutory

procedures are followed in the subpoena's

issuance.

investigation
authority,

.
is

the

"As
within

subpoena

long
the
is

as

the

agency's
not

too

indefinite, and the information sought is

reasonably

relevant, the

district court

must enforce an administrative subpoena."

Id. at 541 (internal

__

citations omitted) (quoting EEOC v.

____

Steel Co., 814 F.2d 482, 485 (7th Cir. 1987)).

_________

concerned

below,

the

corporate papers,

Supreme

between the two.

Court

not private

has long

Comley, however,
______

papers.

recognized

Tempel
______

As explained

distinction

Comley relied on United States

______
_____________

v. Powell, 379 U.S. 48,

______

57-58 (1964), which concerned a challenge by a corporate taxpayer

to a request

by the IRS

rejecting the

probable

taxpayer's contention that the

cause

enforcement

to produce corporate
_________

of

wrongdoing

of the request, the

cases principally relied on

327 U.S. 186

as a

In

IRS must establish

prerequisite

to

Powell Court relied

______

here by the FDIC --

and Morton Salt 338 U.S. 632.

___________

corporate records, a fact

tax records.

judicial

on the two

Oklahoma Press,
______________

Both cases involved

the Supreme Court evidently considered

____________________

As noted previously, the FDIC is empowered to avoid fraudulent

transfers, assert claims against directors and officers, and seek

court

orders attaching

assets.

Id.
__

1821(d)(17),

1821(k),

1821(d)(18).

-9-

of paramount importance in analyzing the Fourth Amendment issue.

In

corporations

judicial

records

Oklahoma
Press,
________________

challenged

enforcement

of

several

the right

subpoenas

of

newspaper

government agency

duces
_____

absent a showing of wrongdoing.

publishing

tecum for
_____

to

corporate

In rejecting a probable

cause standard

Court

for issuance

explained that

state,

they

of an administrative

because

"are not

corporations are

entitled

to

all

U.S. at 204-05.

and

the

it

administrative subpoena

was

established

for

duces tecum under

_____ _____

the

constitutional

Oklahoma Press, 327

______________

The court made it quite plain

standard

created by

of the

protections which private individuals have."

subpoena, the

that its holding,

enforcement

of

an

the Fourth Amendment,

predicated on the fact that corporate, as opposed to private

papers were at issue.

Historically private corporations have

been subject to

broad visitorial

power,

both in England and in this country.

it

long

Congress may
power

over

visitorial

has

been

established

And
that

exercise wide investigative

them,
power

state, when their

of

analogous
the

to

the

incorporating

activities take

place

within

or

affect

interstate

commerce.

Correspondingly it has been settled that

_________________________________________
corporations are not entitled to all of
_________________________________________
the
constitutional
protections which
_________________________________________
private
individuals
have
in
these
_________________________________________
matters.
_______

Id. at 204-05 (footnotes omitted).

__

The respondent corporations

in Morton Salt
___________

challenged

the Federal Trade Commission's ("FTC's") power to require them to

file

reports

appeal's

indicating

decree enforcing

compliance

an FTC

-10-

with a

cease and

federal

court

desist order.

of

In

language relied on heavily

compared the subpoena

Grand

by the FDIC

power of an administrative

Jury, which does

not depend on a

power to

get evidence

but can

that the

law is being

violated, or

that it

is

not."

however,

was made

in

reference to

that

the

jurisdiction,

Amendment

it

claim.3

agency

had

had nothing

The

Court

case or controversy for

642-43.

do

made

the

court

respondent's

of

with respondent's

this clear:

it wants

The comparison,

the corporate

invaded

to

suspicion

even just because

Id. at
__

Court

agency "to the

investigate merely on

assurance

claim

in this case, the

appeals

Fourth

"Whether

the

Commission

has

invaded any

consider under later rubrics.

heading

private

right

of respondents'

we

Our only concern under the present

is whether the Commission's order infringes prerogatives

of the court."

Id. at 643.
__

The Morton Salt Court did hold -- in the section of the

___________

opinion which actually concerned the Fourth Amendment -- that the

FTC need not establish

in

wrongdoing by the respondent corporations

order to subpoena their financial documents.

The Court based

this decision on the fact that corporations do not merit the same

degree of Forth Amendment protections as private individuals.

While

they

may

and

should

protection from unlawful demands

the

name

of

public

have

made in

investigation,

corporations can claim no equality with

_________________________________________
individuals

in the enjoyment

of a right

_________________________________________
to privacy.
__________
attributes.
impact

upon

They are endowed with public

They

have

society,

from

collective
which

they

____________________

The above quoted language came under a section of the opinion

entitled "Invasion of Court of Appeals Jurisdiction".

-11-

derive

the

privilege

artificial entities.

of

acting

as

Id. at 651-52 (emphasis added; internal citations omitted).

__

We

Salt
____

is

think the clear import of Oklahoma Press and Morton

______________
______

that

the

standard

for

judicial

enforcement

of

administrative subpoenas of a private citizen's private papers is

stricter than that for corporate

papers.

Our research indicates

that the Supreme Court has never extended the lenient Morton Salt
___________

standard

private

for administrative

records.

Rather,

standard in the context

target.4

lenient

The FDIC

subpoenas

of corporate

the Court

has

records to

always

of the corporate status of

couched the

the subpoena

argues that we should nevertheless

Morton Salt standard

___________

apply the

governing administrative subpoenas

of corporate papers to subpoenas for private papers because three

federal appeals courts have recently done so.

We find

the cases

cited by the FDIC unpersuasive.

In

Cir.

1994),

Resolution Trust Corp. v. Walde,

______________________
_____

the

court implicitly

required to articulate an

when

it subpoenas

held

that

18 F.3d 943 (D.C.

the

RTC is

not

individualized suspicion of wrongdoing

private

records

for determining

liability,

____________________

For example, in

Donovan, supra, the Court stated

_______ _____

an administrative agency
the Fourth

subpoenas corporate
_________

Amendment requires that the

limited in scope, relevant in purpose,

that, "when

books or

subpoena be sufficiently

and specific in directive

so that compliance will no be unreasonably burdensome."

at 415

records,

464 U.S.

(quoting See v. City of Seattle, 387 U.S. 541, 544 (1967)

___
_______________

and citing Morton Salt, 338 U.S. at 652-53).

______ ___________

-12-

avoiding asset

transfers, and

The court's discussion

quoting

freezing

of this

issue begins and

of the Morton Salt standard

___________

an administrative subpoena.

Salt's sharp
____

assets.

Id. at
__

946.5

ends with

its

for judicial enforcement of

The court completely ignores Morton

______

distinction between corporate

and private

papers.

See id. at 946.

___ __

it

ignores

Walde,
_____

the Supreme

Oklahoma Press and

_______________

deserve

then, is unpersuasive to the extent that

stricter

Court's

explicit

Morton Salt that

____________

Fourth

Amendment

recognition in

private financial

protection

than

both

papers

corporate

papers.

In

Second

In re McVane,
_____________

Circuit concluded

44 F.3d

that

recognized that individuals enjoy

do

corporations, courts

Morton Salt test

____________

records."

this

seemingly

(2d Cir.

"although the

1995), the

Morton Salt
___________

case

greater rights of privacy than

have nevertheless

to administrative

Id. at 1137.
__

1127

applied

the lenient

subpoenas seeking

personal

The court cited two cases as examples of

anomalous

practice

-- Walde
_____

and

the

Supreme

Court's decision in United States v. Stuart, 489 U.S. 353 (1989).

_____________
______

____________________

As noted previously,

authorized by statute.
fourth asserted
effectiveness

the RTC's

investigation -- determining

the cost-

of a potential lawsuit -- is not authorized by its

to

to

maximize

minimize

1821(d)(13)(E).

the return

losses.

The court

subpoena for this purpose,

Id.
__

44 F.3d 1127,

1139-40 (2d

failed

litigation

bank,

is not

for

the

sale

949;

12

U.S.C.

that when

the RTC must demonstrate at

Id.
__

proper

purpose

subpoena).

-13-

the
for

issuing a

least an

that, absent

that a former director

determining

of

See also In Re McVane,

________ ____________

Cir. 1995) (holding

least an articulable suspicion

the

at

therefore held

articulable suspicion of wrongdoing.

to

of investigation are

The court held, however, that

area of

statutory directive
assets, and

these three areas

is liable

cost-effectiveness
the

at

issuance

of

of

As noted, Walde
_____

ignores

sheds little

light on this

the Morton Salt Court's

____________

documents and personal records.

subject because

distinction between

it

corporate

At least, however, Walde

_____

is on

point; Stuart is not.

______

Stuart concerned a treaty between the United States and

______

Canada

that

obliged

the United

States

to

obtain

and convey

information to Canadian authorities to assist them in determining

a Canadian taxpayer's income tax liability.

The respondents were

Canadian citizens

and residents who maintained

the United States.

They challenged

issue an administrative

financial

without

investigation

pursuant

investigation's referral

raised

as a

defense by

that

to the Justice Department

for criminal

the

The Fourth Amendment

respondent taxpayers;

the

bank,

been

no

reasonable

exposed

to

expectation

was never

indeed, the

the Stuart opinion.

______

Because the documents

had

tax

domestic tax

reason is manifest.

respondents

Canadian

to a

never even mentioned in

had thus

by

the Canadian

The

and

to

for their private

request

stage analogous

489 U.S. at 357.

Fourth Amendment is

to

first determining

had reached a

prosecution.

the authority of the IRS

summons to their bank

documents,

authorities,

bank accounts in

were located at

third parties,

of

privacy,

the

and,

consequently, no Fourth Amendment interest in the documents.

Securities and Exchange Comm'n

_______________________________

v. O'Brien, Inc.,
_____________

743

does

(1984)

(Fourth

Amendment

not

See
___

467 U.S. 735,

protect

information

communicated to a third party); United States v. Payner, 447 U.S.

_____________
______

727,

731-32

(1979) (no

legitimate

expectation

of privacy

in

United States

v.

-14-

documents

voluntarily turned

over

to bank);

_____________

Miller, 425 U.S. 435, 441-43 (1975) (depositor has no expectation

______

of privacy and thus no "protectable Fourth Amendment interest" in

financial records

retained by

bank).

Stuart thus provides

______

no

support for the proposition asserted here by the FDIC.

The FDIC

also directs us to the Third Circuit's recent

decision in Federal Deposit Insurance Corp. v.

_________________________________

329921 (3d Cir. 1995).

Wentz, 1995
_____

WL

Wentz is the only administrative subpoena

_____

case we have found that contains more than a passing reference to

the distinction

between corporate and private

to the FDIC's assertions,

papers.

however, we think it provides

Contrary

as much

support for Parks' position as that of the FDIC.

In

Wentz, the
_____

court upheld

an FDIC

subpoena

of the

personal financial documents of

a failed bank.

The court began by citing the lenient Morton Salt

___________

test for enforcement

recognized,

former officers and directors of

however,

of an administrative

that

"[w]hen

subpoena.

personal

The

court

documents

of

individuals, as contrasted with business records of corporations,

are

the

subject

considered."

(1977)).

of

the

subpoena,

The court

then balanced the governmental need

the respondents'

personal

documents,

financial

in

outweighs the

concerns

must be

Id. at *2 (citing Whalen v. Roe, 429 U.S. 589, 599

__
______
___

information against

interest

privacy

"safeguarding

privacy interest

and concluded

the

FDIC's

minimal intrusion into the

that

the

legislative

for the

in their

public

mandate

privacy that surrounds

the directors' personal financial records . . . ."

Id. at *4.

__

-15-

Wentz
_____

recognized that

financial

documents

therefore

be evaluated

documents.

As

implicate

by

subpoenas

privacy

a stricter

explained below,

for

privately

concerns

and

standard than

we agree

with Wentz
_____

held

should

corporate

that the

proper inquiry requires a balancing between the governmental need

to search and

Where we

the privacy

interests of the

part company with Wentz

_____

the balancing itself.

subpoena target.6

is solely in

the mechanics of

We address this issue below.7

II.
II.

The

FDIC

financial papers of

asserts the

power

to

rummage through

private citizens based on

nothing more than

the hope that illegal conduct might be revealed.

that Ms.

Parks

private

papers by

federally

1418.

the

waived

her Fourth

serving

regulated bank.

Moreover, we think

Constitution, who

on

See
___

the

Amendment

board

We do not think

interest

of

directors

In re Sealed Case, 42
__________________

it inconceivable that

knew so

well and

the

cared so

in

her

of

F.3d at

the Framers of

deeply about

arbitrary governmental interference in private citizen's affairs,

would

countenance

such

administrative agency.

523,

unbridled

power

in

the

hands

of an

See Camara v. Municipal Court, 387 U.S.

___ ______
________________

528 (1967) (the "basic purpose" of the Fourth Amendment "is

____________________

6
the

Interestingly, although Wentz

_____
respondent's

Amendment,

the

privacy
court

did not explicitly

interest

posited

what

derived
is

from

essentially

state that
the

Fourth

Fourth

Amendment reasonableness test.

Other

federal court of

appeals cases cited

inapposite because, like Comley,

______

by the FDIC

are

they concern corporate records.

See, e.g., Linde Thomson Langworthy Kohn & Van Dyke, P.C. v. RTC,
___ ____ ______________________________________________
___
5 F.3d 1508 (D.C. Cir. 1993).

-16-

to

safeguard the

privacy

and security

of individuals

arbitrary invasions by government officials").

As Justice Holmes

observed:

Anyone who respects the spirit as well as

the letter of
be

loath

intended

to

subordinate
traditions
fishing

the Fourth Amendment would

to

believe

that

authorize

one

agencies
into the

to

expeditions into

Congress
of

its

sweep all

fire and

our

to direct

private papers

on the possibility that they may disclose

evidence of crime.
question
tried,
explicit

whether it
as

nothing
language

We do not discuss the

could
short
would

do so
of

if it

the

induce

attribute to Congress that intent.

against

most
us

to

Federal Trade Comm'n v. American Tobacco Co., 264 U.S. 298, 305_____________________
____________________

06 (1924) (citation omitted).8

The question that remains

should be required for judicial

of

an

individual's

enforcement of an FDIC

private

financial

reasonableness is the touchstone,

balancing

of "the

nature and

is what quantum of suspicion

subpoena

papers.

Since

our inquiry requires a careful

quality of

the intrusion

on the

individual's Fourth Amendment interests against the importance of

the

governmental interests

United States v.
_____________

Place, 462
_____

U.S.

(1967).

at

534-35

alleged

to justify

U.S. 696, 703

In

the intrusion."

(1983); Camara,
______

this

case

there are

heavily

upon

the

387

compelling

____________________

The

dissent

relies

fact

that

an

administrative subpoena, unlike a search in the criminal context,

is not
have

self-executing.

Whatever relevance

in the ordinary case,

this distinction may

it surely has none

in this one.

As

noted previously, the district court granted the FDIC's motion to

dismiss,

and for summary enforcement of the subpoena on the same

day

motion

the

was

filed.

Ms.

Parks

thus

never

had

an

opportunity to be heard on the motion, or even to respond to it.

-17-

interests on both sides.

promptly resolving

There is

the affairs of

their creditors and depositors.

a strong public interest

insolvent banks on

in

behalf of

Moreover, the FDIC's legislative

mandate is

clear with respect to

attaching

assets,

directors

U.S.C.

private

their

and

and officers

avoiding fraudulent transfers,

generally

of

asserting

failed financial

1821(d)(17), 1821(d)(18), 1821(k).

citizens have

personally held

a significant

claims

institutions.

12

On the other hand,

expectation of

financial papers.

against

Indeed,

privacy in

"papers" are

specifically listed in the text of the Fourth Amendment.

We

the affairs

think the significant

public interest in resolving

of failed institutions,

as reflected by

legislative mandate, deserves considerable weight.

we

conclude

that the

"balancing

interests suggests that the

Fourth Amendment

of

the FDIC's

Consequently,

governmental and

private

public interest is best served

standard of reasonableness that

by a

stops short of

probable cause."

In

such

cases,

reasonableness

New Jersey v. T.L.O., 325 U.S. 334, 341 (1985).

__________
______

the

Supreme

standard

Court

which

requires

articulate a reasonable suspicion of

the search.

See, e.g., id.

___ ____ __

873, 881 (1979);

has

often

the

utilized

government

to

wrongdoing by the target of

at 342; Delaware v. Prouse, 440 U.S.

________
______

United States v. Mart nez-Fuerte, 428 U.S. 648,

_____________
_______________

654-55 (1976); United States v. Brignoni-Ponce, 422 U.S. 873, 881

_____________
______________

(1975); Terry v. Ohio, 392 U.S. 1 (1968).

_____
____

strikes

the

appropriate

citizens' private

balance

papers and

We think this standard

between

protecting

enabling the FDIC

-18-

private

to fulfill

its

statutory mandate.9

The district

court did

not consider whether

had articulated reasonable suspicion

Moreover,

we think

that the

of wrongdoing by Ms. Parks.

affidavit supplied

FDIC's investigators, which was on record at

does

not provide

such an

the FDIC

by one

of the

the district court,

articulable suspicion

of wrongdoing.

The affidavit simply states that the bank lost over eight million

dollars

as a result of several insider loans which were approved

or ratified by

the

bank had

practices.

the directors of Olympic,

received

including Parks, after

regulatory warnings

regarding its

loan

The investigator concludes that the nature and extent

of the losses suggests that the directors "were grossly negligent

and violated their fiduciary duty of loyalty to Olympic in making

the insider loans."

The

affidavit articulates

wrongdoing by the

bank directors,

a generalized

but fails

required individualized suspicion of

the subpoena,

Ms. Parks.

Cf.
__

suspicion of

to articulate

the

wrongdoing by the target of

Ybarra v. Illinois,
______
________

444 U.S. 85,

____________________

In

conducting

apparently
quantum

concluded

this
that

balancing,
the

the

FDIC need

Wentz
_____
not

court,

supra,
_____

articulate

any

of suspicion because the targets of the subpoena had not

shown that the information

contained in their personal financial

records was of such a sensitive nature

suffer

any adverse

effects from

that they were "likely to

disclosure."

Wentz, 1995
_____

WL

329921, at *4 (quoting United States v. Westinghouse Elec. Corp.,

_____________
________________________
638 F.2d 570, 578 (3d
it

must be,

privacy
question
effects

in
is

that

a citizen

privately
not

cir. 1980)).

held

whether

from disclosure,

adequate justification

has

But once it
a legitimate

financial papers,
the individual

but whether

for searching

will

is conceded, as
expectation
see
___

supra,
_____

suffer

the government
______________
the documents.

would think, is the whole point of the Fourth Amendment.

-19-

of

the

adverse

has shown

This, one

93, 97 (1980); United States v. Lott, 870 F.2d 778, 783 (1st Cir.
_____________
____

1989).

(2d

See also United States v.

________ _____________

Cir. 1994)

("any

invasion of

Jaramillo, 25 F.3d 1146, 1150

_________

a person's

Fourth Amendment

interests must be justified at least by 'specific and articulable

facts'

directed

to

the

invaded").

Similarly, in

subpoena of

certain former

the

FDIC

affidavit

transferred assets

Directors

whose

McVane, the
______

only

that

to family members.

(as

interests

court

are

another

The court

to

the

unnamed

be

FDIC

because

director

has

reasoned that

no grounds for suspecting that

opposed

to

rejected an

directors' familial records

stated

"the FDIC has articulated

these
_____

person

'other

director') has transferred assets to family members."

any of

former

McVane, 44
______

F.3d at 1139.

The FDIC has not shown

that Parks received an

insider

loan or otherwise benefited from such a loan to another director.

Cf.
___

Resolution Trust Corp.

_______________________

v. Adams,
_____

869 F.

Supp.

1, 3

n.4

(D.D.C. 1994) (respondent directors paid themselves approximately

$8

million in

Nor

has the

preferred dividends

FDIC

shown

questionable payment

other

Parks.

"a

suspicious

by the

former officers

and

failed institution).

asset

transfer

target, or deposition

directors"

Walde, 18 F.3d at 949.

_____

1417 (finding

of the

casting

or

testimony of

suspicion

upon

Cf. In Re Sealed Case, 42 F.3d at

__ _________________

articulable suspicion due to

respondent directors

involvement in unusual transfers "between two companies that they

owned within a bank

that they controlled").

Under

a reasonable

suspicion standard, if the FDIC has no "specific basis . . . upon

-20-

which

to suspect that the target engaged in wrongdoing, then the

__________

subpoena

added).

has

cannot be enforced."

Based on the

Walde, 18 F.3d
_____

at 949 (emphasis

current record, we conclude that the

failed to articulate specific

FDIC

facts for suspecting that Ms.

Parks has engaged in any wrongdoing with respect to her role as a

director

of Olympic.

Amendment dictates

Until the

FDIC

can do

that her privately held

so, the

Fourth

financial papers are

just that -- private.10

CONCLUSION
CONCLUSION

The Fourth Amendment requires that

an individualized suspicion of wrongdoing

prerequisite to

judicial enforcement

seeking her privately

the FDIC articulate

by the petitioner as a

of a subpoena

held financial documents.

the district court is therefore

duces tecum
_____ _____

The judgment of

reversed, and the case

________

remanded
________

for further proceedings to determine whether the FDIC can in fact

meet this standard.

-- Dissenting Opinion follows --

____________________

10

Of course, petitioner

respect
public.

cannot assert any

to any documents that

See
___

Nixon, 425
_____

she has already

U.S. at 459

Dionisio, 410 U.S. 1, 14 (1973)).

________

-21-

privacy claim with

disclosed to the

(citing United States v.

______________

SELYA, Circuit Judge (dissenting).

SELYA, Circuit Judge (dissenting).
_____________

I believe that this

case is less exotic than the majority suggests.

within its

order of

statutory authority, 12

1821(d),

investigation to determine, inter

_____

directors and

Bank and

U.S.C.

officers of

Trust Co., may

omissions

affecting

administrative

director).

subpoena in

a failed bank,

be liable

Olympic.

subpoena to

The FDIC, acting

alia, whether former

____

Olympic International

as a result

The

appellant

issued an

agency

Parks

of any

then

acts or

directed

(a former

an

Olympic

The record makes manifest that the agency issued this

good faith and for a

statutorily permitted purpose.

The

majority concedes,

lenient

standard of

subpoenas

under

validations

reasonableness"

sufficient.

limitation

Constitution

7, that

longstanding case

are

additional

ante at
____

does

that

not

the subpoena

imposed on

law.

In

Precedent

does

the

require

majority

that

"met the

administrative

my

view,

these

not support

today

limitation,

unveils,

and

the

the

policy

considerations counsel against its imposition.

A
A

In

completely

the

unprecedented.

self-executing

direction

first

to

place,

An

the

majority's

administrative

and is, therefore, not

produce

subpoena is

itself a search;

documents and/or

judicial review should the subpoenaed

position

testimony,

party balk.

not

it is a

subject

See

is

to

Oklahoma

___

Press Pub. Co.

______________

v. Walling, 327 U.S. 186, 195,

_______

________

202 (1945); In re
_____

Grand Jury Subpoena Served Upon Simon Horowitz, 482 F.2d 72, 75_______________________________________________

79 (2d Cir.) (Friendly,

J.), cert. denied, 414 U.S.

_____ ______

867 (1973).

-22-

In

other words, a person upon whom an administrative subpoena is

served

unlike a person subjected to, say, an actual search or a

Terry
_____

stop

has an

opportunity to

quash the

subpoena before

producing the information.

At that stage, of course,

the Fourth Amendment can

interposed as a bar to enforcement of the subpoena.

v. Lone Steer, Inc.,

_________________

however,

464 U.S.

408, 415 (1984).

be

See Donovan
___ _______

Until

today,

no modern federal appellate court has ever held that an

administrative subpoena which satisfies the traditional four-part

test

(that

is,

administrative

steps

subpoena

have been

issued

taken,

after

all

appropriate

for

a proper

purpose,

seeking information that is relevant to that purpose and which is

not within

the agency's possession) is

to curtailment solely on the ground that

unenforceable or subject

it implicates "personal

financial

records"

as

opposed

to "corporate

records."

The

decisions with which I am familiar run uniformly to the contrary.

See, e.g.,
___ ____

RTC v. Frates,
___
______

[1995 WL 471777 at

___ F.3d

___, ___

(D.C. Cir.

1995)

*3] (rejecting articulable suspicion standard

for enforcing RTC subpoena of personal financial records); In re

______

McVane,
______

44

F.3d 1127,

Walde, 18 F.3d
_____

Knopfler,
________

showing

1136 (2d

943, 946-47

Cir.

1995) (similar);

(D.C. Cir. 1994)

RTC v.
___

(similar); SEC
___

v.

658 F.2d 25, 26 (2d Cir. 1981) (enforcing, on standard

for administrative

subpoenas,

SEC

individuals for personal financial records

subpoena issued

to

relating to potential

insider trading), cert. denied, 455 U.S. 908 (1982).

_____ ______

The majority,

without citing

a single case

on point,

-23-

abruptly departs from this established precedent.

to

create

singular

benchmark

against

The upshot

which

is

certain

administrative subpoenas henceforth will

have to be evaluated in

the

First

First

unwilling

Circuit

and

only

to venture along this

siren's call.

in the

Circuit.

rocky coast simply

am

to answer a

B
B

My

principal substantive

objection to

the majority's

approach is to the notion that the Fourth Amendment distinguishes

between "personal financial records" and "corporate records" with

regard

to

administrative

faithfully

more

to

the

the Supreme

exigencies

subpoena cases then

individually

or

approximating a

personal

To

quoted by the majority suggests

genteel era,

rulings

subpoenas.

than a

Indeed,

of

before it

in the

the

care to

particular

but those

ensemble,

records

must

do

language on

which

language

confine its

administrative

cases, whether

not constitute

always

corporation's privacy

read the

sure,

that, in an earlier,

conclusive holding that the

financial

respect

Court took

be

read

anything

privacy interest in

be

accorded

interest in

greater

its records.

the majority

relies as

denoting nothing more

keep the question open.

have blurred

than that the Court desired at the time to

And more

recent developments in the law

whatever distinction

these earlier cases

may have

sought to preserve.

The

proof of

the pudding

is the

long line

starting with United States v. Powell, 379 U.S. 48 (1964)

_____________
______

-24-

of cases

cases

that

repeatedly have

agency, the

for

sanctioned the

Internal Revenue

authority of

Service (IRS), to

either personal or corporate records

that the majority

today explicitly

(explaining that the IRS need

will be

conducted pursuant

inquiry

may

be relevant

issue summonses

on the minimal showing

rejects.

See
___

only "show that the

to a

legitimate

to the

a particular

id. at
___

investigation

purpose, that

purpose, that

57-58

the

the information

sought is not already within the [IRS's] possession, and that the

administrative steps

Though

Powell
______

transpicuously

production

of

required by the Code

itself dealt

clear that

private

with

the

have been followed").

a corporate

taxpayer,

Powell standard
______

financial

papers

and

it is

applies to

the

records

of

individuals, that is,

to the production of records pertaining to

economic or fiscal activity (which, for simplicity's sake, I will

henceforth call

States,
______

379

individual

financial records).

U.S.

61,

62

taxpayer "for the

(1964)

(upholding

reasons given in

Powell"); United States v. McAnlis,

______
______________
_______

Cir.

See, e.g., Ryan

___ ____ ____

IRS

v. United
______

summons

to

United States v.
_____________

721 F.2d 334,

336-37 (11th

1983), cert. denied, 467 U.S. 1227 (1984); United States v.

_____ ______
_____________

Roundtree, 420 F.2d 845, 847-51 (5th Cir. 1969).

_________

The

Powell standard remains both the

______

law of the land,

see, e.g., Tiffany Fine Arts, Inc. v. United States, 469

___ ____ _________________________
______________

310, 323

U.S.

(1985), and the law of this circuit, see, e.g., Copp v.

___ ____ ____

United States, 968 F.2d 1435, 1437 (1st Cir. 1992), cert. denied,
_____________
_____ ______

113 S. Ct.

1257 (1993).

What is more,

Powell is the
______

building

block around which, up to now, our modern administrative subpoena

-25-

jurisprudence has been constructed.

Comley,
______

890 F.2d

539, 541

See, e.g., United States

___ ____ _____________

(1st Cir.

1991) (citing

v.

Powell and
______

applying Powell principles

______

the Nuclear Regulatory

to administrative subpoena issued

by

Commission); SEC v. Howatt, 525 F.2d 226,

___
______

229 (1st Cir. 1975) (same, with respect to subpoena issued by the

SEC).

There

should not

is no

valid reason why

apply here.

If

Congress can authorize

issue summonses calling for

records

Fourth

this standard,

undiluted,

the IRS

to

the production of personal financial

on such a bareboned showing without running afoul of the

Amendment, then

authorize

other

commentators

it

is clear

agencies to

bear witness

do the

to this

to

me that

same.

verity.

Congress

can

The cases

and the

See, e.g.,
___ ____

SEC v.
___

Kaplan, 397 F. Supp. 564, 570 (E.D.N.Y. 1975) (enforcing subpoena

______

issued by SEC for personal

financial records of an

Wayne R. LaFave, Search & Seizure

________________

individual);

4.13(e), at 383 (2d ed. 1987)

(acknowledging rule).

Believing, as I

do, that an individual has

no greater

(legitimate) expectation of privacy in her financial records than

does a business, I see no reason to conduct the kind of balancing

that the majority covets

in order to test the

an administrative subpoena that

financial records.

with

the

conclusion

financial

seeks the production of personal

Oklahoma Press and Morton Salt, read together

______________
___________

Powell-Ryan
______ ____

line

that, to

borrow a

of cases,

holds

lead

inexorably

leaf from Gertrude

records are financial

This conclusion

reasonableness of

records are

true whether

-26-

the

to the

Stein's book,

financial records.

records belong

to

an

individual

or to

an

enterprise,

seeking such records

lawfully

are per

authorized,

and administrative

se reasonable a

relevant,

sufficiently

subpoenas

long as they

are

specific,

and

procedurally unblemished.

Let me be

perfectly clear.

I do not

suggest that the

minions of an administrative agency can roam at will, like a herd

of zebra on the veldt, through an individual's personal papers or

effects.

I am open

to the idea that

there may be a

heightened

privacy interest in certain

diaries, letters,

non-business records (e.g., personal

medical records,

and the like)

requiring, in

turn, a more finely calibrated balance between public and private

interests before a court lawfully can order such records produced

in response to a summons.

908

(3d

Cir.

1995);

See, e.g., FDIC v. Wentz, 55 F.3d 905,

___ ____ ____
_____

see
___

generally
_________

(suggesting that, "[i]n the

the

mere relevance

LaFave,

supra,
_____

at

383

case of private individuals, perhaps

standard

is sufficient

to protect

privacy

interests in documents related to economic activity, but arguably

purely

private

investigatory

Recognizing,

papers

body

to

should

meet

however, that

intrusion on privacy that

be protected

"[w]e

more

by

requiring

stringent

are not

so

the

standard").

outraged by

the

accompanies the seizure of [financial]

records as we

are by the

States,
______

409 U.S. 322,

discern

no

seizure of a

350 (1973) (Marshall,

constitutional

subpoena that the FDIC served

conclusively that the

diary," Couch v.
_____

impediment

on Parks.

to

J., dissenting), I

the

administrative

Since the record

FDIC issued the subpoena for

-27-

United
______

shows

a legitimate

purpose (an investigation into, inter alia, whether Parks may

_____ ____

liable

to

the FDIC),11

that the

inquiry

is relevant

be

to that

purpose, that the information requested is not already within the

agency's

ken,

and

that

the necessary

procedural

bases

were

touched, the subpoena should be enforced.

C
C

Apart

standard

from the

is unmoored

fact

both from

Amendment, the standard also

will not

dwell on

that

the

precedent

majority's

brand-new

and from

the Fourth

fares poorly on policy grounds.

this aspect,

except to

note

that the

rule

envisioned in the majority opinion is inconsistent with the bases

of the modern administrative state.

Administrative investigations differ significantly from

criminal

investigations:

investigate

structures

in

of

information from

order

government

to enforce

economic

agencies

compliance

regulation.

The

is vital

to the success

of the

See United States v. Morton Salt Co., 338

___ _____________
_______________

(1950);

Oklahoma Press,
______________

Richard B.

at 216;

to

obtain

persons in privity

scheme.

327 U.S.

complicated

ability

regulated parties and those

with them typically

with

typically

regulatory

U.S. 632, 642

Stephen G.

Breyer &

Stewart, Administrative Law & Regulatory Policy 975

________________________________________

(2d ed. 1985).

And it is

a fact of life

that agencies charged

____________________

11

In this instance, it is

immaterial that the FDIC's order of

investigation listed other objects as well.

requirement that an administrative subpoena
proper

purpose

is

satisfied in

the

case

See ante at 3.
___ ____

The

must be issued for a

of a

multi-purpose

subpoena as long as any one of the underlying purposes is proper.

See Tiffany Fine Arts, 469

___ _________________

U.S. at 324; FTC v. Carter,

___
______

636 F.2d

781, 789 (D.C. Cir. 1980).

-28-

with

regulating

economic

activity

probable cause or even reasonable

often

cannot

articulate

suspicion that a violation has

transpired without first examining documents reflecting a party's

economic activity.

See Kenneth
___

Jr., Administrative Law Treatise

____________________________

C. Davis &

Richard J.

4.1, at 138

(3d ed.

Pierce,

1994).

This incipient problem

the need

the cart

is

has great

significance for

to hitch the horse in front of

frequently exacerbated because the

subpoena power

most administrative agencies

in the

conduct of important public business.

Partially

concern for

for

that

reason

separation of powers

and partially

courts

laws, see, e.g.,

___ ____

historically have had

oversight of

of

it is trite but true that the

Judicial Branch must respect the Executive Branch's

to enforce the

out

Howatt, 521 F.2d

______

a very

administrative subpoenas.

prerogatives

at 229

circumscribed role

See,
___

the

in the

e.g., Morton Salt,

____ ___________

338 U.S. at 642-43; EEOC v. Bay Shipbuilding Corp., 668 F.2d 304,
____
______________________

308-09

(7th Cir. 1981); Goodyear Tire & Rubber Co. v. NLRB, 122
___________________________
____

F.2d 450, 451 (6th Cir. 1941).

regarding the enforcement

relatively

informal and

of such subpoenas

summary in

United States,
_____________

400 U.S. 517,

F.2d

The

at 309.

subpoena

the law.

is issued for a

nature.

are intended to

be

See Donaldson
___ _________

v.

529 (1971); Bay Shipbuilding, 668

_________________

court's sole

function is

proper purpose and

See Comley, 890 F.2d at 541; FTC

___ ______
___

F.2d 862, 872 (D.C. Cir.)

(1977).

To this end, judicial proceedings

to ensure

that a

in compliance with

v. Texaco, Inc., 555

____________

(en banc), cert. denied, 431 U.S.

_____ ______

974

By handing the targets of agency investigations a potent

-29-

new weapon, cf. SEC v. Jerry T. O'Brien, Inc., 467

___ ___
______________________

(1984)

(rejecting

subpoenas in

ability

of

legitimate

facilitates

notice

part because

persons

who

investigations

the

requirement

agency

effectiveness), but

third-party

it "would substantially

have

by

insertion

something

the

of

probes

also for

to

monkey

(thereby

SEC

increase the

hide

Commission"),

administrative machinery, and creates

delaying

for

U.S. 735, 750

to

the

wrenches

impede

majority

into

the

the potential not only for

further

eroding

increasing the extent

agency

of judicial

intrusions into the agency sphere.

It is

clear that

Having written the FDIC's

agency

to

affiliated

assess

with

the

Congress feared these

organic statute broadly, requiring the

conduct

federally

of

insured

different perspectives, most of

interest in

very dangers.

officials

banks

from

by

or

variety

of

which relate to the governmental

minimizing the public's exposure

Congress vested generous,

employed

easily enforceable

to financial loss,

subpoena power

the FDIC so that the agency could pursue its public mission.

H.R.

Rep. No.

reprinted in
_________ __

ability

681(I), 101st

1990 U.S.C.C.A.N.

to use this power

Cong., 2d

Sess. 170,

6472, 6576,

6592.

as Congress intended

in

See
___

186 (1990),

Without the

including the

ability to subpoena individuals' personal financial records based

on relevance and nothing more

in

its

efforts

to perform

responsibilities.

Thus,

the FDIC likely will be hamstrung

the

the

full

range

majority's

of its

statutory

suggested

standard

(which, as I have explained, is mandated neither by precedent nor

-30-

by

constitutional doctrine) unaccountably undermines the ability

of

the FDIC

and

every other

administrative agency

to do

Congress's bidding, and thereby frustrates the congressional will

for no

good reason.12

See Federal Maritime Comm'n v. Port of

___ ________________________
________

Seattle, 521 F.2d 431,

_______

"very backbone

carrying

out

433 (9th Cir. 1975) (explaining

of an

the

administrative

that the

agency's effectiveness

congressionally mandated

duties

in

of industry

regulation is the rapid exercise of the power to investigate").

D
D

Because

needlessly

agencies,

am

convinced

infringing upon the

and

because

intentioned effort

fear

to resurrect

that

my

lawful powers

the

Amendment may produce, I respectfully dissent.

are

of administrative

mischief

a moribund

colleagues

that this

view of the

well-

Fourth

____________________

12

This does not mean, of course, that I endorse, as a matter of

policy,

either the FDIC's

aggressive
requires
precedent

penchant for riding

use of administrative subpoenas.

judges

to

and reason.

subrogate
After

such
all,

justifiable than personal

Hampshire,
_________

354

U.S.

234,

267

concurring).

-31-

But the rule of law

personal

reservations

to

constitutional adjudication

"must be an overriding judgment founded

and more

roughshod or its

on something much deeper

preference."
(1957)

Sweezy
______

(Frankfurter,

v. New
___

J.,