Golden v. BofI Holding, Inc. et al

Filing 361

ORDER on Discovery Disputes regarding the Bank Examination Privilege (ECF Nos. 300 , 301 ). Signed by Magistrate Judge Karen S. Crawford on 2/17/22. (dlg)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

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In re B of I HOLDING, INC.
SECURITIES LITIGATION

Case No.: 15-cv-2324-GPC-KSC
ORDER ON DISCOVERY DISPUTES
REGARDING THE BANK
EXAMINATION PRIVILEGE

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[Doc. Nos. 300, 301]

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Before the Court are two joint discovery motions related to defendants’ assertion of

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the bank examination privilege (hereafter sometimes “BEP”) on behalf of the Office of the

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Comptroller of the Currency (“OCC” or the “Agency”), and the documents withheld or

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redacted on the basis of that privilege. See Doc. Nos. 300 (redacted) 318 (under seal), 301

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(redacted); 318-1 (under seal). Plaintiffs dispute the assertion of privilege, and alternatively

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assert that there is good cause to override the privilege. See generally id. The OCC also

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filed a brief at the Court’s invitation stating its position as to the parties’ dispute. See Doc.

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No. 299. At the Court’s request, defendants lodged a sampling of the disputed documents

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with the Court for an in camera review. See Doc. No. 326. Having considered the

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arguments of counsel, the applicable law, and based on its in camera review, the Court

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now enters the following Order.
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I.

BACKGROUND

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Plaintiff alleges in this class action that defendants BofI (“BofI” or the “Bank”) and

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certain of its officers and directors made materially misleading statements to investors in

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violation of federal securities laws. See generally Doc. No. 136. In responding to plaintiff’s

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discovery requests, the Bank and its counsel were required to evaluate whether any

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responsive documents were protected by the bank examination privilege and, if so, to

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withhold them as privileged and log them accordingly. Because it is the OCC and not the

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Bank who holds the privilege, it was then incumbent upon plaintiff to request that the OCC

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waive the privilege as to any protected documents. See Doc. No. 194.

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Between August 20, 2021 and September 7, 2021, as their document production was

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nearing completion, defendants produced privilege logs to plaintiff, which indicated that

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defendants withheld or redacted over 29,000 documents as protected by the BEP (hereafter

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the “Withheld Documents”). 1 Doc. No. 300 at 3. Pursuant to the procedures agreed to by

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the parties, plaintiff then contacted the OCC and requested that the agency waive the

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privilege as to these documents. See Doc. No. 299-1 at 8-22. The OCC declined to review

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all of the Withheld Documents, but instead – and with the parties’ agreement – invited

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plaintiff and defendants to each select 20 documents to serve as exemplars (hereafter the

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“Exemplar Documents”), which the OCC would review and provide “guidance as to

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whether defendants had properly asserted the bank examination privilege.” See Doc. No.

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299-1 at 8.

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The OCC conveyed its final determination regarding waiver on November 2, 2021.

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See id. Of the 40 Exemplar Documents reviewed, the Agency determined that two did not

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contain any bank examination privileged information, and that seven others did contain

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The parties and the OCC provided inconsistent figures and often rough approximations regarding how
many documents were at issue. Pursuant to the Court’s Order (Doc. No. 326), defendants reported that
they asserted the bank examination privilege over a total of 29,067 documents. Of those, 25,602 were
withheld in their entirety and 3,465 were redacted. Defendants also reported that of the 25,602 documents
withheld from production, 4,225 duplicates were produced to plaintiff in other non-privileged contexts.
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bank examination privileged information but that the protected information could have

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been redacted rather than withholding the document in full. See Doc. No. 299 at 5; Doc.

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No. 299-1 at 4-5. The Agency also considered plaintiff’s request to waive the privilege and

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found that waiver was appropriate as to some sent by the Bank to the OCC bearing on

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specific allegations in the operative complaint that the Bank deceived the OCC. Id. at 5.

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Accordingly, the OCC “authorize[d] the Bank to produce email communications, and their

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corresponding attachments, that specifically respond to the allegations contained in

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paragraphs 73, 75-78, 83-84, 122, 125, and 187” of the Third Amended Complaint. See id.

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at 5; Doc. No. 136. The Agency declined otherwise to waive the privilege. See Doc. No.

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299-1 at 5.

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After several discovery conferences wherein the matter of the OCC’s review was

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discussed, the Court ordered the parties to file two joint motions: first, a motion to compel

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production of any nonprivileged information within the Withheld Documents, and second,

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a request for judicial review of the OCC’s final decision regarding waiver. See Doc. No.

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292. These Motions followed. In the first Motion (Doc. Nos. 300, 318), which the parties

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have styled the “Factual Information Motion,” plaintiff asks the Court to compel

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defendants to produce any factual information contained within the Withheld Documents,

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arguing that the privilege does not extend to such information. In the second Motion (Doc.

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Nos. 301, 318-1), which the parties have styled the “BEP Documents Motion,” plaintiff

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asks the Court to find as to any privileged information that there is good cause to waive the

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privilege (essentially setting aside the OCC’s determination) and to compel the wholesale

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production of all Withheld Documents.

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II.

LEGAL STANDARDS

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The bank examination privilege protects communications between banks and their

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regulators from disclosure, with the aim of “preserv[ing] and promot[ing] candor” in such

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communications. Southeastern Penn. Transp. Auth. v. Orrstown Fin. Svcs., Inc., 367 F.

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Supp. 3d 267, 277 (M. D. Penn. 2019). “Practicality necessitates the bank examination

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privilege,” which exists “to preserve a safe banking environment.” In re Bank One Sec.
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Litig., First Chicago S’holder Claims, 209 F.R.D. 418, 426 (N.D. Ill. 2002); see also

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United W. Bank v. Office of Thrift Supervision, 853 F. Supp. 2d 12, 16 (D.D.C. 2012)

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(observing that open communication between banks and regulators “is essential to effective

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bank supervision”) (citation omitted).

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III.

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DISCUSSION

A. Factual Information Motion

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In the Factual Information Motion, plaintiff argues that the bank examination

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privilege does not apply to purely factual information, such that the privilege never

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attached to any factual information in the Withheld Documents. See Doc. No. 300 at 6-10.

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Plaintiff requests an order compelling defendants to re-review all Withheld Documents and

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produce any factual information contained therein. Id. at 12.

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The Court agrees with plaintiff that the privilege protects opinions and deliberations,

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not facts. See Southeastern Penn., 367 F. Supp. 3d at 277 (“The privilege does not apply

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to factual information.”) (citation omitted). Factual information, if relevant to the parties’

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claims and defenses, is not privileged and is discoverable. See id. (citation omitted).

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Plaintiff asserts that the Withheld Documents are relevant to plaintiff’s claims. Defendants

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do not seriously contest their relevance, stating only that plaintiff has not shown them to

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be “materially” relevant. Doc. No. 300 at 14 (emphasis added). The Court is not aware any

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authority for such a heightened standard of relevance. Furthermore, although defendants

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“disagree that [the] documents are ‘relevant’ . . . simply because they hit on a search term,”

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id., the ESI search used to capture the documents was one that both parties agreed was an

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appropriate tool to locate relevant evidence.

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Of course, relevance alone is not sufficient to justify overriding the OCC’s privilege

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assertion. Rule 26 expressly provides that privileged information “‘may be withheld’” in

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discovery, “‘even if it is relevant to the lawsuit and essential to the establishment of

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plaintiff's claim.’” Chowdhury v. Northwest Airlines Corp., 226 F.R.D. 608, 610 (N.D. Cal.

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2004) (quoting Baldrige v. Shapiro, 455 U.S. 345, 360 (1982)). As defendants point out,

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“all documents contain facts” (Doc. No. 300 at 14 n.12), and where those facts are
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“intertwined with the OCC’s opinions, conclusions and recommendations” such that “the

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deliberative portions cannot be redacted from the documents,” the privilege is properly

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asserted over the entire document. In re Providian Fin. Corp., 222 F.R.D. 22, 26 (D.D.C.

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2004); see also Southeastern Penn., 367 F.Supp.3d at 277 (noting that where possible, “an

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agency should redact the documents and produce the factual material,” but where the

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opinion and facts are “inextricably intertwined,” the Court must instead determine whether

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the privilege should be overridden). Furthermore, the Court rejects plaintiff’s assertion that

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the Bank “must . . . produce ‘internally disseminated communications not sent to the OCC”

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because internal documents are per se outside the scope of the privilege. Doc. No. 300 at

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10. As plaintiffs admit, it is possible for internal communications to convey the substance

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of the OCC’s communications and deliberations with the Bank. See id.

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With these principles in mind, the Court conducted an in camera review of the

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Exemplar Documents. 2 The purpose of the Court’s review was to evaluate whether the

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documents were relevant, and if so, whether defendants had properly asserted the bank

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examination privilege on the OCC’s behalf or whether defendants withheld nonprivileged

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factual information that should have been produced to plaintiff. Although the Court’s

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review consisted of the same set of documents as reviewed by the OCC, the Court

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conducted its review de novo and without regard to the OCC’s findings. Based upon its

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review, the Court makes the following findings:

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///

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///

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///

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Defendants lodged the Exemplar Documents with the undersigned’s chambers in accordance with the
Court’s Order. Doc. No. 326. Documents withheld entirely from production were designated with a
control number beginning with “CTRL” and accompanied by cover sheets indicating that the documents
were withheld from production. Documents that were produced with redactions were designated by a
Bates number beginning with “BofI” and the redacted information was identified by yellow highlighting.
All documents were lodged in electronic form, and all but several voluminous spreadsheets were also
provided in hard copy.
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No.

CTRL or Bates
Number

Court’s Assessment of Privilege Assertion

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BofI000035769

Document 3 contains BEP-protected information
that has been appropriately redacted

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BofI000265186

Document does not contain BEP-protected
information

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BofI000282692

Document contains BEP-protected information
but some nonprivileged factual information has
been redacted

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BofI000347489

Document contains BEP-protected information
but some nonprivileged factual information has
been redacted

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CTRL0011116

Document contains BEP-protected information
with which information is inextricably
intertwined

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CTRL0011132

Document contains BEP-protected material, but
factual information is separable

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CTRL0011146

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0011171

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0011259

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0011330

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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The Court’s use of “document” denotes the document and all attachments. Unless stated otherwise
herein, the Court’s assessment of privilege is the same for all documents in the family.
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No.

CTRL or Bates
Number

Court’s Assessment of Privilege Assertion

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CTRL0012257

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0013940

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0014127

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0016187

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0016754

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0035562

Document contains BEP-protected information,
but factual information is separable

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CTRL0037667

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0044079

Document does not contain BEP-protected
information

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CTRL0176178

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0313237

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0319551

Document does not contain BEP-protected
information

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No.

CTRL or Bates
Number

Court’s Assessment of Privilege Assertion

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CTRL0335301

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0335567

Document does not contain BEP-protected
information

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CTRL0405332

Document does not contain BEP-protected
information

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CTRL0405881

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0407812

Document does not contain BEP-protected
information

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CTRL0695401

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0702432

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0707859

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0781437

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL0806639

Document contains BEP-protected information,
but factual information is separable

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No.

CTRL or Bates
Number

Court’s Assessment of Privilege Assertion

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CTRL1443487

As to cover email: Document contains BEPprotected information, but factual information is
separable

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3
4
5

As to attachment(s): Document does not contain
BEP

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7
8
9
10
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12

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CTRL1863586

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL1864142

Document contains BEP-protected information,
but factual information is separable

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CTRL1864938

As to cover email: Document contains BEPprotected information, but factual information is
separable

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As to attachment(s): Document does not contain
BEP

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16

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CTRL1865322

Document does not contain BEP-protected
information

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CTRL1874921

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL1909890

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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CTRL3077198

Document contains BEP-protected information
with which factual information is inextricably
intertwined

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No.

CTRL or Bates
Number

Court’s Assessment of Privilege Assertion

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CTRL3082302

As to cover email: Document contains BEPprotected material, but factual information is
separable

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3
4
5

As to attachment (CTRL ending in -306):
Document contains BEP-protected material, but
factual information is separable

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7

As to all other attachment(s): Document does not
contain BEP-protected information

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9

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BofI000267927 4

Document contains BEP-protected information

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On the question of relevance, although it would be impossible to say with certainty

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that all 29,067 Withheld Documents are relevant, the Court finds the limited Exemplar

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Documents it reviewed in camera were well within Rule 26’s broad scope and by

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extrapolation the Withheld Documents satisfy this standard. Therefore, any purely factual

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material within the documents that can reasonably be separated from privileged

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information must be produced to plaintiff.

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The Court observes that its findings mirror those reached by the OCC. See Doc. No.

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299-1 at 4-5. Indeed, the parties report that subsequent to the OCC’s review, certain of the

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Exemplar Documents were produced to plaintiff, either because the OCC waived the

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privilege or because the OCC determined that defendants withheld or redacted information

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that was not privileged. Doc. No. 301 at 14. Following its in camera review, therefore, the

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This document was not among the Exemplar Documents but is attached to the Motions as Exhibit E (as
originally produced to plaintiff) and Exhibit F (with an additional proposed redaction). See Doc. Nos.
302-6 and 318-2. Defendant has requested to clawback the information to implement the proposed
additional redaction. The Court finds that this request is appropriate because the document identifies the
OCC as the source of the information under discussion and illuminates the OCC’s particular concerns as
relayed to defendants.
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Court requested that defendants lodge the subsequently produced documents. See Doc. No.

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347. Based on its review of those documents, the Court finds that, for those documents the

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Court determined contained both bank examination privileged and factual information not

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inextricably intertwined with privileged material, the segregable factual information has

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already been produced to plaintiff. 5

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The Court turns to the question of whether defendants must review the remaining

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Withheld Documents. Defendants protest that they have already determined that the bank

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examination privilege applies to these documents. Doc. No. 300 at 15. Although the Court

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does not doubt defendants’ good faith in making that determination – and plaintiff’s

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assertions of “abuse” are not well taken, see id. at 10 – both the OCC’s and the Court’s

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independent review demonstrate that defendants’ assessments were not always right. It is

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“not irrational to infer” that if defendants improperly asserted the bank examination

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privilege over some of the Exemplar Documents, they also did so with respect to some

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portion of the Withheld Documents. See Campidoglio LLC v. Wells Fargo & Company,

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870 F.3d 963, 976 (9th Cir. 2017). Defendants’ good faith does not absolve them of the

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responsibility to correct these errors. The Court therefore finds that defendants must review

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the Withheld Documents and, considering the Court’s (and the OCC’s) guidance, assess

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whether the bank examination privilege applies. 6 If it does, defendants must also ascertain

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whether any factual information can be separated from the privileged information and

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There are, however, five documents the Court determined did not contain bank examination privileged
information which do not appear to have been produced to plaintiff: BofI000265186, CTRL0319551,
CTRL0335567, CTRL0405332, and CTRL0407812. The OCC identified these documents as not subject
to the bank examination privilege, but potentially subject to withholding for other reasons. See Doc. No.
299-1 at 5. The purpose of the Court’s in camera review was to determine whether the information was
subject to the bank examination privilege, and the Court has not been provided with any information or
explanation regarding other reasons for withholding the documents. The Court therefore makes no finding
as to whether any other privilege is properly asserted.
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The Court notes that the OCC takes no position on whether defendants are obligated to conduct a second
review of the Withheld Documents as a result of the exemplar review. Doc. No. 299 at 4 n.4.
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produced to plaintiff with appropriate redactions. 7

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The Court is not persuaded that the task of reviewing these documents is unduly

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burdensome or disproportional to the case. Based on the Court’s own review, defendants’

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estimate that a team of ten reviewers would need ten months to complete this review

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appears significantly overstated. As will be discussed in more detail below, the Court

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estimates that with reasonable diligence the review could be completed with 30 days.

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B. The BEP Documents Motion

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In the BEP Documents Motion, plaintiff argues that as to those documents over

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which the bank examination privilege has been properly asserted, the Court should

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nevertheless find good cause to override the privilege and compel production of the

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Withheld Documents. See Doc. No. 301 at 3-10; see Southeastern Penn., 367 F. Supp. 3d

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at 277 (noting that where “opinion and factual material are inextricably intertwined, [the]

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court must determine whether to override the privilege for good cause”). The OCC states

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that in its review of the Exemplar Documents, it “took into consideration” whether there

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was good cause to waive the privilege and weighed plaintiff’s “needs and allegations”

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against the Agency’s “need to protect supervisory information and communications.” Doc.

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No. 299 at 3-4. The OCC asserts that “no good cause exists here to waive the privilege any

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further” than the Agency has already done. Id. at 6. Defendants also oppose plaintiff’s

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request, both on the basis that the Court should “[h]onor” the OCC’s determination and

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because plaintiff has not demonstrated good cause for waiver. Doc. No. 301 at 11-18.

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As a preliminary matter, the Court finds that, contrary to the OCC’s assertions,

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plaintiff’s request that the Court determine whether there is good cause to override the

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privilege is properly before it, even though the OCC is not a party to this Action. Cf. Doc.

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No. 299 at 3 (the OCC’s statement that “judicial review” of the Agency’s privilege

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Excluded from defendants’ review are the 4,225 documents produced to plaintiff in other, nonprivileged
contexts. Since plaintiff is already in possession of those documents, the Court determines it would be
disproportional to the needs of the case to require defendants to re-review them.
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determination “is not procedurally proper as part of the instant action”). The Court notes

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that under controlling Ninth Circuit authority, the OCC’s Touhy regulations neither “create

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an independent privilege to withhold government information” nor supplant the Federal

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Rules of Civil Procedure with respect to the discoverability of that information. See Exxon

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Shipping Co. v. U.S. Dep’t of the Interior, 34 F.3d 774, 780 (9th Cir. 1994) (finding that

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“federal district courts . . . can adequately protect” both the parties’ right to evidence and

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the government’s interest in nondisclosure by applying “the federal rules of discovery”);

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Erhart v. BofI Holding, Inc., No. 15cv2287-BAS (NLS), 2018 WL 5994417, at *4 (S.D.

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Cal. Nov. 15, 2018) (noting that “the OCC regulations by themselves are insufficient to

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override the discovery procedures in the Federal Rules”). Although plaintiff’s request for

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the documents was directed to defendants and not the OCC, the OCC’s participation in this

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dispute was required because the privilege “belongs to the [A]gency and cannot be waived

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by private parties.” See Erhart, 2018 WL 5994417, at *5. For that reason, the OCC was

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provided notice of the motion and an opportunity to present its position. The Court

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concludes that “[t]he Federal Rules, and not the APA, govern this matter,” and will proceed

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with its analysis accordingly. See Sec. Exch. Comm. v. Lent, No. C-04-4088 CW (EMC),

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2006 WL 8434734, at *4 (N.D. Cal. Jan. 12, 2006). 8

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Because it is a qualified privilege, the bank examination privilege may be overcome

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by a showing of good cause. See In re Subpoena Served Upon Comptroller of the Currency

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(“Fleet”), 967 F.2d 630, 634 (D.C. Cir. 1992); see also In re Bank One Sec. Litig., 209

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F.R.D. at 427 (noting that “[t]he bank examination privilege is not an absolute privilege”

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and “‘may be overridden where necessary’”) (citation omitted). The burden is on the party

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seeking to overcome the privilege to establish good cause exists to do so. See id.

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Although the Court applies the Federal Rules and precedent in determining this dispute, it rejects
plaintiff’s position that the OCC’s determination regarding privilege is entitled to no deference at all. See
Doc. No. 301 at 4 (stating that “this Court owes no deference to the OCC’s determinations regarding the
[bank examination privilege]”). The OCC is the holder of the privilege and is in the best position to
determine the Agency’s interest in keeping its information confidential.
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To ascertain whether good cause to overcome the privilege exists, “the [C]ourt must

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balance the importance of the privilege against the need for the information and its

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availability from other sources.” In re Wilmington Trust Sec. Litig., No. 10–990–SLR–

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SRF, 2016 WL 9753979, at *7 (D. Del. Aug. 16, 2016). To do so, courts generally apply a

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balancing test of five factors:

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(1) The relevance of the privileged information;

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(2) The availability of other information;

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(3) The seriousness of the litigation;

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(4) The role of the government in the litigation; and

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(5) The possible chilling effect of disclosure.

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See id. (citing Schreiber v. Soc’y for Sav. Bancorp, Inc., 11 F.3d 217, 220-21 (D.C. Cir.

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1993) and Fleet, 967 F.2d at 634). The Court considers each of these in turn.

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1. Relevance

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For the reasons discussed above, and based on its review of the Exemplar

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Documents, the Court finds that the Withheld Documents are relevant to plaintiff’s claims.

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This factor weighs in favor of disclosure.

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2. Availability of Information from Other Sources

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The OCC determined that information relevant to plaintiff’s generalized allegations

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of “widespread mismanagement” is available from other sources, such that intruding upon

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privileged communications is improper. Doc. No. 299-1 at 5; see also Doc. No. 299 at 6-7

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(stating that plaintiff can assess defendants’ alleged deficient internal controls and

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mismanagement “through direct review of [d]efendants’ own books and records, and

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testimony from bank employees and expert witnesses, even if such information was also

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independently reviewed in OCC examinations”). The Court agrees. Certainly, it is hard to

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reconcile plaintiff’s assertions that the Bank’s misconduct was “widespread” and

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evidenced only by communications with the OCC.

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After over a year of exhaustive discovery efforts, plaintiff has at its disposal: over

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85,000 documents produced by defendants in response to more than 100 requests for
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production, documents produced by third parties in this litigation, defendants’ responses to

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plaintiff’s interrogatories and any other written discovery responses, and deposition

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testimony (and associated exhibits) of defendants and current and former Bank employees

4

taken in two other cases. Plaintiff has also deposed, or will depose, 15 percipient or party

5

witnesses in this matter, and has been or will be afforded the opportunity to question any

6

of defendants’ 15 deponents. In plaintiff’s own words, it seeks access to the OCC’s

7

privileged information because it would “substantiate” information plaintiff has learned

8

from former employees and would “provid[e] further evidence” of defendants’

9

misconduct. Doc. No. 299-1 at 17 (emphasis added). Accordingly, the Court finds that

10

plaintiff has not established that there is no other evidence of defendants’ “widespread

11

mismanagement” available to it. See In re Bank One Sec. Litig., 209 F.R.D. at 427 (finding

12

that good cause to overcome the privilege did not exist where “[p]laintiffs have been

13

afforded adequate forms of alternative information”). Therefore, this factor weighs against

14

a finding of good cause to override the OCC’s privilege in toto.

15

As the OCC correctly perceived, however, plaintiff’s allegations that the Bank and

16

its executives were not truthful in certain communications with the Agency necessarily

17

require access to those communications, which are not otherwise available to plaintiff. See

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Doc. No. 299 at 6-7. The Court agrees with the OCC that “non-privileged evidence cannot

19

meet plaintiff’s needs” with respect to allegations that “[d]efendants presented OCC with

20

an inaccurate picture of the Bank’s internal controls.” See id. Accordingly, the Court finds

21

this factor weighs heavily in favor of disclosure of the OCC’s privileged information

22

insofar as it is relevant to the allegations in the Third Amended Complaint that BofI

23

falsified information provided to the OCC.

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3. Seriousness of the Litigation

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Unsurprisingly, plaintiff argues that the “serious bank misconduct” alleged in its

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operative complaint justifies waiver of the privilege. Doc. No. 301 at 9. The Court does not

27

dispute that “public confidence in the fairness of financial markets” is important. See id. It

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does not follow, however, that disclosure of the OCC’s privileged information is required.
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As one court aptly noted, “the policies underlying the bank examination privilege are not

2

necessarily eclipsed whenever the policy in favor of securities disclosure surfaces.”

3

Providian, 222 F.R.D. at 29. Other than a generic statement that confidence in the financial

4

markets is important, plaintiff offers no specific reason to “preempt the policies underlying

5

the bank examination privilege” in this case. See id. Accordingly, the Court finds that this

6

factor weighs against compelling the wholesale disclosure of the Withheld Documents.

7

4. The Government’s Role in the Litigation

8

The OCC is not a party to this litigation, and “does not have a direct interest” in its

9

outcome. See In re Bank One Sec. Litig., 209 F.R.D. at 428 (declining to find good cause

10

to override privilege where “the government’s interest in th[e] case [was] minimal”).

11

Furthermore, neither the OCC’s conduct nor its accountability for that conduct are at issue

12

in this case. The Court finds that this factor weighs against disclosure.

13

5. The Possible Chilling Effect if Disclosure Is Required

14

“A break in confidentiality could have a ‘chilling effect’ on the ability of bank

15

regulators to perform their duties in the future.” In re Bank One Sec. Litig., 209 F.R.D. at

16

428. The Court finds that disclosure of the OCC’s confidential communications could

17

impede candid discussions between Agency personnel and banks in the future, which

18

weighs against disclosure. Plaintiff argues that the protective order in place in the Action

19

“minimize[s]” any potential harm from disclosure. Doc. No. 301 at 10 (citation omitted)

20

(alteration in original). However, given the Court’s findings as to the other factors – and

21

particularly its finding that plaintiff has not established that information about defendants’

22

misconduct is not otherwise available to it, with limited exceptions – the mitigating effect

23

of the protective order does not alter the Court’s analysis. The Court finds this factor weighs

24

against disclosure.

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6. Conclusion Regarding Good Cause Analysis

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For the foregoing reasons, the Court finds that, on balance, plaintiff has not shown

27

good cause to override the bank examination privilege with respect to all 29,067 Withheld

28

Documents. The Court further finds that plaintiff has shown good cause to override the
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bank examination privilege for documents relevant to its allegations that defendants

2

provided falsified information to the OCC, because the relevance of the information and

3

its unavailability from other sources. Accordingly, with respect to this information, the

4

other factors weighing against disclosure are overcome.

5

The Court notes, again, that its determination is consistent with those of the OCC,

6

and that the Agency has already authorized a limited waiver of the bank examination

7

privilege for “communications . . . that specifically respond to the allegations contained in

8

paragraphs 73, 75-78, 83-84, 122, 125 and 187” of the operative complaint. See Doc. No.

9

299-1 at 5. Therefore, during their review, defendants must also assess whether any of the

10

Withheld Documents relate to these allegations, such that they are within the scope of the

11

OCC’s waiver and the Court’s finding herein.

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C. Timing of the Parties’ Review

13

As noted, the Court finds that by proceeding with diligence, defendants should be

14

able to review the remaining Withheld Documents within 30 days of this Order.

15

Defendants must produce the documents that they determine can be produced to plaintiff

16

in redacted form (or with fewer redactions contained in the documents as previously

17

produced), if any, on a rolling basis in weekly installments. Plaintiff must in turn diligently

18

review the documents it receives and must complete its review of any newly produced

19

documents within 45 days of this Order. The Court expects the parties to work

20

cooperatively to prioritize the review to allow depositions to proceed apace. Indeed, the

21

parties have represented to the Court that there are at least 14 fact witnesses “whose

22

testimony is not dependent on the BEP-designated documents.” Doc. No. 276 at 10.

23

The Court has repeatedly admonished the parties that good cause to modify the

24

schedule is absent where the parties’ inability to meet deadlines is the result of their

25

“dilatory and combative approach to discovery.” Doc. No. 293 at 5. The instant dispute is

26

illustrative. The parties were aware no later than April 2021 that documents responsive to

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plaintiff’s discovery requests would likely be subject to the bank examination privilege,

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and that they would be required to seek waiver of that privilege from the OCC. Instead of
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engaging in an early and ongoing dialogue – among themselves or with the Agency –

2

regarding the volume of documents impacted, however, plaintiff awaited the completion

3

of defendants’ document production and service of defendants’ privilege log to begin to

4

address the issue. Plaintiff apparently contacted the OCC within days of receiving

5

defendants’ privilege log on August 20, 2021, but then let the matter drop until several

6

weeks later, until October 7, 2021. To its credit, the OCC worked to review the Exemplar

7

Documents and provided guidance to the parties by November 2, 2021. 9 At the Court’s

8

order, the instant Motions were filed on December 3, 2021, 10 culminating in this Order in

9

which the Court has reached the identical conclusions that the parties received from the

10

OCC months ago.

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Against this backdrop, the Court has also recently been advised that despite its clear

12

guidance to the parties that the dates set forth in the operative pretrial schedule were firm,

13

plaintiff to date has taken only two depositions. 11 Inexplicably, and despite its earlier

14

representation to the undersigned that at least 14 witnesses could be deposed irrespective

15

of the outcome of this dispute, plaintiff apparently refused to take any depositions in

16

December and January in anticipation of the Court’s issuance of this Order. Doc. No. 354-

17

1 at 10. The parties proceed at this leisurely pace at their own risk. As the Court has

18

repeatedly cautioned, the parties’ lack of diligence will not be considered good cause to

19

extend any deadline in the current Scheduling Order.

20

To ensure that the parties’ respective reviews of the Withheld Documents proceeds

21

without delay, the Court will hold a telephonic Status Conference with counsel in three

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25
26
27
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9

Indeed, the OCC commented on the untimeliness of the submitted privilege dispute and the burden it
imposed on the Agency. Doc. No. 299 at 4 n.2.
10

These two Motions were swiftly followed by two additional discovery motions relating to five other
discrete discovery disputes (see Doc. Nos. 308, 315) and a full-day discovery conference to address
disputes concerning 24 discovery requests (see Doc. Nos. 305, 318) which necessitated additional oral
argument and a ruling from the bench. See Doc. Nos. 327, 339, and 340.
11

The parties did not state how many depositions defendants have taken.
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weeks, at which time the Court will hear from the parties regarding their respective reviews

2

of the Withheld Documents and their progress in completing depositions.

3
4

ORDER
For the foregoing reasons, the Court ORDERS as follows:

5

1. Plaintiff’s Motion to Compel the production of nonprivileged factual information

6

from the Withheld Documents [Factual Information Motion, Doc. No. 300] is

7

GRANTED. Defendants must review the Withheld Documents and identify any

8

such nonprivileged factual information that can be separated from the privileged

9

information and produced to plaintiff, with redactions in compliance with the

10

scope of this Order. Documents containing such information, if any, must be

11

produced to plaintiff on a rolling basis in weekly installments (or, at defendants’

12

option, more frequently) and must be completed within 30 days of the date of

13

this Order.

14

2. Plaintiff’s request to override the bank examination privilege and compel the

15

production of the Withheld Documents [BEP Documents Motion, Doc. No.

16

301] is GRANTED IN PART and DENIED IN PART. The request is granted

17

as to information relating to plaintiff’s allegations that defendants deceived the

18

OCC and is denied in all other respects. Defendants must therefore review the

19

Withheld Documents and identify any information related to plaintiff’s

20

allegations that defendants deceived the OCC as alleged in paragraphs 73, 75-78,

21

83-84, 122, 125 and 187 of the Third Amended Complaint. See Doc. No. 136.

22

Documents containing such information that have not already been produced to

23

plaintiff as a result of the OCC’s identical determination, if any, must be

24

produced to plaintiff on a rolling basis in weekly installments (or, at defendants’

25

option, more frequently) and must be completed within 30 days of the date of

26

this Order.

27
28

3. Plaintiff must expeditiously review any documents produced pursuant to this
Order and must complete their review within 45 days of the date of this Order.
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4. Counsel for the parties are ordered to appear for a telephonic status conference

2

before the undersigned Magistrate Judge on March 10, 2022, at 11:00 a.m. To

3

participate, counsel must dial 1-877-873-8017 and use access code 2924630. No

4

later than 48 hours before the status conference, the parties shall lodge with the

5

undersigned’s chambers ([e-mail]) a Joint Status

6

Report of no more than 6 pages, describing their progress with respect both to the

7

review of the Withheld Documents and the deposition schedule.

8
9

5. All deadlines in the Court’s November 22, 2021 Amended Scheduling Order
[Doc. No. 293] shall remain in effect.

10

IT IS SO ORDERED.

11

Dated: February 17, 2022

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