Federal Deposit Insurance Corporation v. Belcher

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

FEDERAL DEPOSIT INSURANCE CORPORATION AS

RECEIVER FOR FIRST NBC BANK CIVIL ACTION

VERSUS NO. 19-12561

DANIEL BELCHER SECTION “A” (5)

ORDER AND REASONS

Before the Court is a Motion to Stay Order on Motion for Summary Enforcement

of Administrative Subpoena (Rec. Doc. 68) filed by the Defendant Daniel Belcher. The

Plaintiff Federal Deposit Insurance Company (“FDIC”) opposes this motion. (Rec. Doc. 76).

This motion, set for submission on January 8, 2020, is before the Court on the briefs without

oral argument.

I. BACKGROUND

First NBC Bank Holding Company (“Holding Company”) employed the public

accounting firm Ernst & Young LLP (“EY”) to perform audits over its issued financial

statements. (Rec. Doc. 23-23, p. 3, Belcher’s Opposition to the FDIC’s Subpoena). Each

opinion made by EY was made with respect to the Holding Company and was included in the

Holding Company’s yearly required 10-K. Id. However, the Holding Company’s only

significant asset was First NBC Bank (“Bank”). (Rec. Doc. 49, p. 2, FDIC’s Response

Memorandum). Thus, EY’s annual audit was performed on a consolidated basis and included

the financial statements of both the Holding Company and the Bank. Id.

During the Bank’s financial distress, the Public Company Accounting Oversight Board

(“PCAOB”) initiated a confidential investigation relating to EY’s audits of the Holding Company

and the Bank between 2013 and 2015. (Rec. Doc. 23-27, Letter from EY). In connection with

this investigation, EY produced thousands of pages of documents to the PCAOB, including

audit workpapers, emails, proprietary firm guidance and methodology, personnel files and

reviews, firm audit quality review documents, and other documents. (Rec. Doc. 23-23, p. 6,

Belcher’s Opposition to the FDIC’s Subpoena). Further, eight EY auditors provided a

combined 28 days of testimony to the PCAOB, generating over 62,000 transcript pages and

using 390 exhibits. Id.

Then, in May of 2017, the Holding Company declared bankruptcy, and the Louisiana

Office of Financial Institutions closed the Bank and appointed the FDIC as its receiver. (Rec.

Doc. 5-5, p. 2, FDIC’s Memorandum in Support). The FDIC subsequently issued an Order of

Investigation authorizing a probe into the work performed by EY, and the FDIC began

requesting documents from the PCAOB. Id. at 3. After the PCAOB’s Board of Directors

received this request, the PCAOB’s Board authorized the disclosure of particular records to

the FDIC, which included deposition transcripts and other documents that it had received

from EY. (Rec. Doc. 49, p. 4, FDIC’s Response Memorandum). However, the PCAOB never

notified EY that it made these disclosures to the FDIC. (Rec. Doc. 23-23, p. 6-7, Belcher’s

Opposition to the FDIC’s Subpoena).

As the FDIC’s investigation developed, it subsequently issued subpoenas for six

administrative depositions of current and former EY personnel. (Rec. Doc. 5-5, p. 3, FDIC’s

Memorandum in Support). Of the six scheduled depositions, the FDIC scheduled Mr.

Belcher’s first. Id. However, three days before his deposition, Mr. Belcher notified the FDIC

that he would not be attending the deposition because the PCAOB had improperly shared

classified EY documents and testimony with the FDIC. Id. Thus, the FDIC filed a Motion for

Summary Enforcement of Subpoena (Rec. Doc. 5) to compel Mr. Belcher’s deposition.

Upon reviewing the FDIC’s Motion, the Court granted the Motion for Summary

Enforcement and instructed Mr. Belcher “to appear promptly for an administrative deposition.”

(Rec. Doc. 65, p. 11, Court’s Order and Reasons). Instead of complying with this Order, Mr.

Belcher requested this Court to stay its Order while the Fifth Circuit “considers the significant

questions of statutory interpretation and privilege at issue.” (Rec. Doc. 68-3, p. 11, Belcher’s

Memorandum in Support). The Court will now address the merits of Belcher’s Motion to Stay.

II. LEGAL STANDARD

“A stay pending appeal ‘simply suspends judicial alteration of the status quo.’” Veasey

v. Perry, 769 F.3d 890, 892 (5th Cir. 2014) (citing Nken v. Holder, 556 U.S. 418, 429 (2009)).

A stay may be automatic or discretionary. If the merits of the case before the district court are

directly involved in the merits of an appeal, the district court’s proceedings must be stayed.

Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982) (per curiam). When an

automatic stay is not required by an appeal, the district court may nevertheless grant a

discretionary stay of the proceedings. See Weingarten Realty Investors v. Miller, 661 F.3d

904, 908 (5th Cir. 2011). While a district court is granted discretion in its decision on whether

to grant a stay when a stay is not required, “the exercise of that discretion is not unbridled.”

In re First South Sav. Ass'n, 820 F.2d 700, 709 (5th Cir. 1987). “[R]ather, the court must

exercise its discretion in light of what this court has recognized as the four criteria for a stay

pending appeal.” Id. Those four traditional factors include: “(1) whether a stay applicant has

made a strong showing that he is likely to succeed on the merits; (2) whether the applicant

will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially

injure the other parties interested in the proceeding; and (4) where the public interest lies.”

Weingarten Realty Investors, 661 F.3d at 910. Notably, the Supreme Court has held that the

“first two factors of the traditional standard are the most critical.” Veasey, 769 F.3d at 892

(citing Nken, 556 U.S. at 434). Accordingly, there is a “widely held view that a stay can never

be granted unless the movant has shown that success on appeal is probable.” Ruiz v. Estelle

(Ruiz I), 650 F.2d 555, 565 (5th Cir. 1981).

There is, however, an exception where the heavy burden of the first factor is not

required. Under this exception to the traditional rule, when a court is “confronted with a case

in which the other three factors strongly favor interim relief,” the court may lessen the burden

of the first factor from a strong showing of succeeding on the merits, to a substantial case on

the merits. Ruiz, 650 F.2d at 565 (citing Washington Metropolitan Area Transit Commission

v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977). Thus, when the three remaining

factors strongly favor interim relief and the exception applies, “the movant need only present

a substantial case on the merits when a serious legal question is involved and show that the

balance of equities weighs heavily in favor of granting a stay.” Ruiz, 650 F.2d at 565

(emphasis added) (citing Providence Journal v. Federal Bureau of Investigation, 595 F.2d

889 (1st Cir. 1979); U.S. v. Baylor University Medical Center, 711 F.2d 38 (5th Cir. 1983); see

also In re Deepwater Horizon, 732 F.3d 326, 345 (5th Cir. 2013) (citing Weingarten Realty

Investors, 661 F.3d at 910) (stating “where there is a serious legal question involved and the

balance of equities heavily favors a stay . . . the movant only needs to present a substantial

case on the merits.”)). If the moving party cannot demonstrate this, then it must “make a more

substantial showing of likelihood of success on the merits in order to obtain a stay pending

appeal.” Id.

Whether the analysis falls under the traditional approach or the exception, the movant

bears the burden of showing that a stay is warranted. Weingarten Realty Investors, 661 F.3d

at 910. Where “there is even a fair possibility that the stay . . . will work damage to someone

else,” the party seeking a stay “must make out a clear case of hardship or inequity in being

required to go forward.” Landis, 299 U.S. at 255; see Ind. State Police Pension Tr. v. Chrysler

LLC, 556 U.S. 960, 961 (2009) (citation omitted) (“‘[A] stay is not a matter of right, even if

irreparable injury might result otherwise.’ It is instead an exercise of judicial discretion, and

the ‘party requesting a stay bears the burden of showing that the circumstances justify an

exercise of that discretion.’”).

III. DISCUSSION

a. “Strong Showing of Succeeding on the Merits” Test

Determining what constitutes a “likelihood of success,” is no easy task. As the Second

Circuit has stated, “[a]lthough courts have discussed and applied these four criteria on

numerous occasions, some uncertainty has developed as to the first factor because of the

various formulations used to describe the degree of likelihood of success that must be

shown.” Mohammed v. Reno, 309 F.3d 95, 100 (2d Cir. 2002). While the analysis “somewhat

resembles the test applied in the district court when evaluating a request for a preliminary

injunction, [] the differences in posture mean that the two tests are not identical.” See

FEDERAL PRACTICE AND PROCEDURE § 3954 (citing National Treasury Employees

Union v. Von Raab, 808 F.2d 1057 (5th Cir. 1987)). Thus, it is apparent that the circuits have,

to a large degree, chosen to engage in an ad-hoc decision-making process, rather than a

formulaic analysis when it comes to the first factor. However, according to the Supreme Court,

a sufficient demonstration of a likelihood of success on the merits “requires more than a mere

possibility that relief will be granted. Nken, 556 U.S. at 418. Even more specifically, when

determining the likelihood of a movant’s success, the Fifth Circuit has explicitly considered

the length and care in the district court’s opinion on the issue on appeal to indicate a higher

likelihood of success. See Wildmon v. Berwick Universal Pictures, 983 F.2d 21, 24 (5th Cir.

1992) (“A reading of the district court's careful and lengthy opinion is all that is needed to

support our conclusion on that factor.”).

In his Memorandum in Support, Belcher argues that “he not only presents a

‘substantial case on the merits,’ but in fact makes a ‘strong showing that he is likely to

succeed.’” (Rec. Doc. 68-3, p. 5, Belcher’s Memorandum in Support) (internal citations

omitted). The Bank, as an FDIC insured and regulated institution, was required to have an

annual audit report on its financial statements and internal controls, and that audit report was

required to be filed with the FDIC. See 12 U.S.C. § 1831m(a), (d); 12 C.F.R. §§ 363.1(b),

363.2(a)-(b), 363.4(a). Part 363.1(b) specifically governs “compliance by subsidiaries of

holding companies” and provides that a holding company’s financial statements satisfy a

bank’s regulatory requirements under the FDIC Improvement Act. 12 C.F.R. § 363.1(b). As a

result, the Bank1 filed EY’s audit reports on the Holding Company with the FDIC to satisfy §

1831(m) and Part 363. See (Rec. Doc. 44-7, Ex. A, Ex. 2) (evidencing the Bank’s submission

of the EY audit report and audited financial statements to the FDIC for the 2014 fiscal year.).

This EY audit report was done on a consolidated basis and included the financials of both

the Holding Company and the Bank.2 Thus, while EY’s consolidated audit report on the

Holding Company and the Bank was submitted to the Federal Reserve through Form Y-9C,

this report was also submitted by the Bank to the FDIC through a Part 363 Annual Report.

Accordingly, this Court originally ruled that EY’s consolidated report was still “for” the FDIC,

as well as the Federal Reserve, under 15 U.S.C. § 7215(b)(5)(B)(ii)(II).3 (Rec. Doc. 65, p. 11,

Court’s Order and Reasons).

1 Although Belcher rightly notes that the Court’s Order incorrectly states that “the Holding Company

filed EY’s audit reports with the FDIC” instead of saying that the “Bank filed EY’s audit reports with the

FDIC,” this does not change the Court’s ultimate conclusions. (Rec. Doc. 68-3, p.7 n.3, Belcher’s

Memorandum in Support); (Rec. Doc. 65, p. 6, Court’s Order). EY’s audit report was still for the Holding

Company and the Bank.

2 “The accompanying consolidated financial statements include the accounts of the [First NBC Bank

Holding] Company and First NBC Bank, and First NBC Bank’s wholly owned subsidiaries[.]” (Rec.

Doc. 5-2, p. 65, The Holding Company’s 10-k).

3 Under the PCAOB’s discretion, the PCAOB may disclose any confidential records it received to: “the

appropriate Federal functional regulator (as defined [by 15 U.S.C. § 6809]) . . . with respect to an audit

report for an institution subject to the jurisdiction of such regulator[.]” 15 U.S.C. § 7215(b)(5)(B)(ii)(II)

(emphasis added). Further, 15 U.S.C. § 6809(2) labels the “Board of Directors of the Federal Deposit

Insurance Corporation” as one of six “Federal functional regulators.”

In his motion, Belcher argues that he makes a “strong showing that he is likely to

succeed” on the merits of this case by presenting a simple two step argument. (Rec. Doc. 68-

3, p. 6, Belcher’s Memorandum in Support). First, “EY only ever conducted audits with respect

to the [Holding Company].” Id. This is evidenced by the fact that EY’s engagement agreement

was only with “the Audit Committee of First NBC Bank Holding Company.” Id. Although the

Holding Company’s “main asset was the Bank, and that [the Holding Company’s]

consolidated financial statements as to which EY expressed an audit opinion therefore

reflected financial information from the Bank, [this fact does] not thereby transform EY’s audit

into an audit of the Bank.” Id. n.2. “It remains the case that EY was only ever engaged by [the

Holding Company].” Id. “And the audit report itself expressly addressed only ‘First NBC Bank

Holding Company.’” Id. Thus, Belcher concludes that EY’s audit report can only be considered

“for” the Holding Company under 15 U.S.C. § 7215(b)(5)(B)(ii)(II).4

Second, Belcher contends that the Federal Reserve was the only appropriate “Federal

functional regulator” under 15 U.S.C. § 7215(b)(5)(B)(ii)(II). Although the Bank’s financials

were required to be submitted to the FDIC under 12 C.F.R. § 363.2(a), the Holding

Company’s financials were not. Id. at 6. “Rather, [12 C.F.R. § 363.1(b)] provides that an

insured depository institution that is a subsidiary of a holding company ‘may’ submit that

holding company’s audited financials in order to satisfy its reporting requirements.” Id. “This

regulation merely provides an optional avenue by which subsidiary banks can fulfill their own

financial reporting requirements to the FDIC by utilizing the holding company’s audited

financials.” Id. at 6-7. “But those financials are still the holding company’s financials – and the

4 15 U.S.C. § 7215 states that, under the PCAOB’s discretion, the PCAOB may disclose any

confidential records it received to: “the appropriate Federal functional regulator (as defined [by 15

U.S.C. § 6809]) . . . with respect to an audit report for an institution subject to the jurisdiction of

such regulator[.]” § 7215(b)(5)(B)(ii)(II) (emphasis added). Further, 15 U.S.C. § 6809(2) labels the

“Board of Directors of the Federal Deposit Insurance Corporation” as one of six “Federal functional

regulators.”

audit opinion is still with respect to the holding company.” Id. at 7. Thus, Belcher concludes

that the regulator of the Holding Company, the Federal Reserve, is the only appropriate

“Federal functional regulator” under 15 U.S.C. § 7215(b)(5)(B)(ii)(II).

Although the Court appreciates the thoughtfulness of Belcher’s argument, the Court

still remains unconvinced by his interpretation of 15 U.S.C. § 7215(b)(5)(B)(ii)(II). First,

Belcher’s interpretation of the word “for” in § 7215(b)(5)(B)(ii)(II) is too restrictive. Although

the Court recognizes that EY contracted only with the Holding Company and addressed its

report only to the Holding Company’s Board of Directors, one cannot thereby conclude that

EY’s report was only for the Holding Company within the meaning of § 7215(b)(5)(B)(ii)(II).

(Rec. Doc. 22-1, Exs. 1-3, EY’s Engagement Agreement); (Rec. Doc. 49-3, p. 10, EY’s Report

of Independent Accountants). In other words, while one could consider EY’s audit reports

superficially only “for” the Holding Company, it is disingenuous to say that these reports, in

substance, were not “for” the Holding Company and the Bank. As EY notes in its audit report:

Because management’s assessment and our audit were conducted to meet

the reporting requirements of Section 112 of the Federal Deposit

Insurance Corporation Improvement Act (FDICIA), our audit of First NBC

Bank Holding Company’s internal control over financial reporting included

control over the preparation of financial statements in accordance with U.S.

generally accepted accounting principles and with the instructions to the Form

Y-9C.5

Additionally:

We have also audited, in accordance with auditing standards generally

accepted in the United States, the consolidated balance sheets of First NBC

Bank Holding Company as of December 31, 2014 and 2013 and the related

consolidated statements of income and comprehensive income changes to

stockholders’ equity and cash flows for each of the three years in the period

ended December 31, 2014 and our report dated March 31, 2015 expressed

an unmodified opinion thereon.6

5 (Rec. Doc. 49-3, p. 10, EY’s Audit Report) (emphasis added).

6 Id. at 11 (emphasis added).

Lastly:

The accompanying consolidated financial statements include the accounts of

the [Holding] Company and First NBC Bank[.]”

Thus, because EY issued an opinion on the Holding Company’s consolidated financials, this

audit report therefore expresses an opinion on both the Holding Company’s financial

statements and the Bank’s financial statements. Although Belcher says in his Motion that

“[a]s the report makes clear, EY still only expressed an opinion on [the Holding Company’s]

financial statements and internal controls,” this appears questionable because EY had to

perform audit procedures and tests on the Bank’s account balances to express an opinion on

the consolidated financials of both the Holding Company and the Bank. (Rec. Doc. 86, p. 4

n.1, Belcher’s Reply)

Further, as the plain wording of EY’s report shows, the report was completed to satisfy

the Federal Reserve’s filing requirements, through Form FR Y-9C; but, and more importantly

here, this report was also completed to satisfy the Bank’s annual filing requirements with the

FDIC under 12 C.F.R. §§ 363.2(a). As Belcher continuously reiterated, “[12 C.F.R. §§

363.1(b) provides than an insured depository institution that is a subsidiary of a holding

company ‘may’ submit the holding company’s audited financials in order to satisfy its reporting

requirements.” (Rec. Doc. 68-3, p. 6, Belcher’s Memorandum in Support). Thus, when the

Bank submitted EY’s audit report on the consolidated financial statements of both the Holding

Company and the bank to the FDIC, this audit report effectively became “for” the Bank under

15 U.S.C. § 7215(b)(5)(B)(ii)(II). Accordingly, because EY’s audit report was “for” the bank,

the FDIC was also the “appropriate Federal functional regulator” under 15 U.S.C. §

7215(b)(5)(B)(ii)(II).

As a result of this determination, the Court additionally finds that Belcher cannot

present a strong showing that he is likely to succeed on the merits.

b. “Substantial Case on the Merits” Test

Although Belcher cannot show that he is likely to succeed on the merits, the Court

agrees with Belcher that the less stringent “substantial case” standard should be applied here.

(Rec. Doc. 68-3, p. 4, Belcher’s Memorandum in Support). More specifically, “[t]he Fifth

Circuit recognizes that a party presents a substantial case on the merits when there is a lack

of precedent to clarify the issues at bar.” Cruson v. Jackson Nat'l Life Ins. Co., No. 4:16-CV-

00912, 2018 WL 2937471, at *4 (E.D. Tex. June 12, 2018) (finding a substantial case on the

merits when the issue was novel, serious, and there was a significant lack of precedent). For

example, in Ruiz, the Fifth Circuit looked to case law to find a constitutional mandate for the

disputed legal issue. 650 F.2d at 568. The Fifth Circuit there found that there was no

“constitutionally mandated square footage requirement” for prison cells based on its reading

of Rhodes v. Chapman, 452 U.S. 337, 337 (1981), Newman v. Alabama, 559 F.2d 283, 288

(5th Cir. 1977), and William v. Edwards, 547 F.2d 1206, 1215 (5th Cir. 1977). Id. at 568. The

Fifth Circuit subsequently found that “we know of no constitutional mandate for correctional

units to be situated within 50 miles of a major metropolitan area in order to ensure adequate

staffing.” Id. at 574. “Therefore, we conclude that the State has made a substantial case on

the merits[.]” Id.

Here, Belcher was correct when he noted that “the Court issued a first-of-its-kind

opinion [in this case] on a key issue of statutory interpretation.” Id. The Court could not find

any case law or other relevant precedent to provide guidance on how to apply this particular

provision. Thus, the Court finds that Belcher’s case satisfies the “substantial case” test. As a

result, Belcher need now only show that (1) this matter involves a serious legal question and

(2) that the balance of equities (i.e., the other three remaining factors) weighs heavily in favor

of granting a stay.

c. Whether This Matter Involves a Serious Legal Question

A serious legal question is one that could have a broad impact on federal and state

relations, or an otherwise far-reaching effect of public concern. Wildmon, 983 F.2d at 23-24

(citing Baylor, 711 F.2d at 40). For example, the Fifth Circuit determined in Baylor that “the

serious legal question involved was whether Medicare and Medicaid payments constitute

federal financial assistance within the meaning of the Rehabilitation Act because ‘that could

have a broad impact on federal/state relations’ which could open ‘the doors of private

institutions to the probing tools of an HHS investigation.’” Id. (quoting Baylor, 711 F.2d at 40).

Belcher argued that this case involves a “serious legal question” by saying “[g]iven the

significance of this opinion to accountants and accounting firms around the country, operating

under the understanding that materials submitted to the PCAOB are ‘confidential and

privileged,’ . . . there can be no genuine dispute that the legal questions here are ‘serious.’”

(Rec. Doc. 68-3, p. 4-5, Belcher’s Memorandum in Support). However, the FDIC countered

by saying “Belcher characterizes the Court’s order as raising ‘serious’ legal issues on the

theory that the issues have broader significance to the accounting industry.” (Rec. Doc. 76-

2, p. 7, FDIC’s Memorandum in Support). “But in reality[,] the Court’s order is a straightforward

application of a statute that allows the PCAOB to share information with multiple federal

agencies under various circumstances.” Id.

Here, the Court finds that the seriousness of this case does not rise to the level

necessitated by this factor. Although this case decides an important aspect of law for

accounting firms, this case does not have the far-reaching effects and public concerns that is

required by Baylor. While this determination ends the determination of whether Belcher is

entitled to stay the proceedings, the Court will proceed, in arguendo, to the balance of equities

factor.

d. The Balance of Equities

A determination of the balance of equities, “i.e. consideration of the other three

factors,” is critically relevant to the court’s determination. Ruiz I, 650 F.2d at 565–66. If a

court finds that this balance “is not heavily tilted in the movant’s favor, the movant must then

make a more substantial showing of likelihood of success on the merits.” Id. (emphasis

added). Each of the three factors is addressed below.

i. Factor One – Belcher’s Irreparable Injury

For this factor, the Court analyzes whether the applicant will be irreparably injured

absent a stay. The Court defines this type of injury as one for which a monetary award cannot

serve as adequate compensation. To satisfy this factor, the moving party must show more

than just a possibility of irreparable injury. See Nken, 556 U.S. at 418. Further, when there is

not a substantial likelihood of success on appeal, the importance of this factor is significantly

reduced. See Arnold v. Garlock, Inc., 278 F.3d 426, 441 (5th Cir. 2001).

Here, the Court agrees with Belcher that he will experience some irreparable harm if

a stay is not granted. For instance, in Maness v. Meyers, the Supreme Court “recognized that

‘[w]hen a court during trial orders a witness to reveal information . . . [c]ompliance could cause

irreparable injury because appellate courts cannot always “unring the bell” once the

information has been released.’” In re Grand Jury Proceedings, 601 F.2d 162, 169 (5th Cir.

1979) (alterations in original) (quoting Maness v. Meyers, 419 U.S. 449, 460 (1975). As

Belcher notes in his Memorandum in Support, “if [Belcher’s] deposition goes forward,

[Belcher] will be required to answer questions based on – if not also explicitly reflecting –

information from the PCAOB-privileged materials, resulting in further breaches of his statutory

privilege.” (Rec. Doc. 68-3, p. 8, Belcher’s Memorandum in Support). Although the Court

agrees with Belcher that this factor weighs in favor of granting a stay, the Court also notes

that the significance of this factor is greatly reduced because there is no substantial likelihood

of Belcher being successful on appeal. See Arnold, 278 F.3d at 441.

ii. Factor Two – FDIC’s Irreparable Injury

Next, this second factor looks at whether a stay “will cause [non-movants] difficulties

in presenting [their] case.” Weingarten, 661 F.3d at 913. Here, the applicable statute of

limitations requires that the FDIC complete its investigation and file any complaint related to

EY’s audits by April 2020. (Rec. Doc. 76-2, p. 1, FDIC’s Memorandum in Support). As the

FDIC points out, “[g]iven the time required for an appeal and the deadline posed by the statute

of limitations, a stay is effectively a reversal of the Court’s order because no depositions could

occur within the limitations period.” Id. at 8. Here, the Court agrees with the FDIC that a stay

will substantially jeopardize its ability to conduct any administrative depositions of Belcher or

the other remaining EY auditors. Thus, the Court finds that this factor weighs in favor of not

granting a stay.

iii. Factor Three – Public’s Interest

Lastly, for the third factor, there is a “general public policy of preserving judicial

resources from the risk of reversal,” especially where a difficult question is presented on

appeal; but where the movant fails to present a likelihood of success on the merits, there is

“little reason to invoke” this policy interest. Weingarten, 661 F.3d at 913. Here, because the

FDIC is a governmental agency, “its interest and harm merges with that of the public.”

Planned Parenthood of Greater Texas Surgical Health Servs. v. Abbott, 734 F.3d 406, 419

(5th Cir. 2013). As the FDIC notes, “Congress had directed the FDIC as receiver to investigate

misconduct that caused harm to failed institutions.” (Rec. Doc. 76-2, p. 11, FDIC’s

Memorandum in Support). “A stay that interferes with the FDIC’s collection of information

relevant to its investigation accordingly harms both the FDIC and the public. Id.; see Cornish

v. Dudas, 540 F. Supp. 2d 61, 65 (D.D.C. 2008) (“there is inherent harm to an agency in

preventing it from enforcing regulations that Congress found it in the public interest to direct

that agency to develop and enforce.”). Thus, the Court agrees with the FDIC and finds that

this factor also weighs in favor of not granting a stay.

Upon conducting the three-factor balancing test, the Court is particularly swayed by

Humphries v. OneBeacon Am. Ins. Co., No. CIV.A. 13-5426, 2014 WL 1330034, at *2 (E.D.

La. Apr. 2, 2014). There, the court found that the moving party would experience irreparable

harm if a stay was not granted. /d. However, the court also recognized that the non-moving

party would be substantially injured if a stay was granted. /d. Ultimately, because the moving

party did not have a substantial likelinood of success on appeal, the court found that the non-

movant’s potential injury greatly outweighed the movant’s potential injury. /d. at *3. Thus, the

court denied the stay. /d.

Similar to Humphries, the balance of equities here does not weigh in favor of granting

a stay. Because Belcher does not have a substantial likelihood of success on appeal, the

potential harm to the FDIC and the public greatly outweigh the potential harm to Belcher.

Therefore, the Court concludes that this matter shall not be stayed. This final determination

is bolstered by the fact that this matter does not rise to the required level of seriousness

required by the Fifth Circuit in Wildmon and Baylor.

Accordingly;

IT IS ORDERED that the Motion to Stay (Rec. Doc. 68) filed by the Defendant Daniel

Belcher is DENIED. Mr. Belcher is to appear for an administrative deposition with the FDIC

on the day that the parties agreed to, January 28, 2020. (Rec. Doc. 76-3).

C6

Yanuary 19, 2020 Nitees es Steer JUD E

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