Petition for Writ of Certiorari — Bettersworth v. Federal Deposit Insurance
Supreme Court brief2001
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U.S.
Sephember 10, Goo/ Frees
01 444 SEP 1 0200)
No. OFFICE OF THE CLERK
IN THE
Supreme Court of the Anited States
wae
JAMES A. BETTERSWORTH,
Petitioner,
V.
FEDERAL DEPOSIT INSURANCE CORPORATION; OFFICE
OF THE COMPTROLLER OF THE CURRENCY; BOARD OF
THE FEDERAL RESERVE; FEDERAL RESERVE BANK OF
KANSAS CITY,
Respondents.
ON WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
MICHAEL WALSH, ESQ.
Of Counsel
621 Colfax Avenue
Scranton, Pennsylvania 18510
(570) 969-1969
JAMES S. BETTERSWORTH, ESQ.
Attorney of Record
RUTHERFORD @ RUTHERFORD & BETTERSWORTH
825 S. St. Mary’s Street
San Antonio, TX 78205-3408
(210) 225-4200
Attorneys for Petitioner
Wright Appellate Services
(215) 733-9870 @ (800) 507-9020 @ Fax (215) 733-9872
QUESTION PRESENTED FOR REVIEW
I. Does the Privacy Act of 1974 permit a citizen to have
access to records kept by a federal agency that contain any
reference to the citizen that can be retrieved by the agency,
or does it permit access only to records that relate directly to
him and are filed under his name or other identifier?
Il. Does the Privacy Act of 1974 require that an “adverse
determination” that prejudices the plaintiff be the result of a
formal action by the defendant administrative agency?
LIST OF PARTIES TO THE PROCEEDING
The Petitioner, who was the Plaintiff below, is James A.
Bettersworth.
The Respondents, who were the Defendants in the District
Court action, are the Federal Deposit Insurance Corporation,
the Office of the Comptroller of the Currency, the Board of
the Federal Reserve, and Federal Reserve Bank of Kansas
City.
il
TABLE OF CONTENTS
Page
CRON PORIIIIIE acti ccrie\ccicintncinnnipeeniacngiehidananiminaie i
List of Partios to the Proceeding, ..0..<.<es.0s00css0escsssceneneconseccecese i
Fa CE I a siisescasiceciasnita iis idciectiiddicaibidadecnnineabaieeaeasiae il
TORR OE I a vias acinhnieiiletanainsenaliianaceaciaieiapieniiniaeitiian ill
CRADIE TI sicsneinasieiceeiasinssantaentciiaidianialaiaidieetipsanhddiates dace l
SRneees OE TTI sais seneceisnnconcienidcaticsioesnceantaiiaennniice l
Constitutional and Statutory Provisions. ..............cccccsceseseeeees l
Seatenenenea ON Gt CIB a siassciinsintisccnchcsairsateakecheauimnplislebseliaianaatanaag 3
PRUE oi. sissnsninnoniansissiminiisaaiiideanuasiatalehiadinduisiegenialindiiaanens 11
I. THIS COURT SHOULD RESOLVE AN AP-
PARENT CONFLICT AMONG THE CIR-
CUITS ON WHAT CONSTITUTES A
“SYSTEM OF RECORDS” WITHIN THE
MEANING OF THE PRIVACY ACT OF 1974............ ll
Pr, CN aicisecins shi ssctibtaticialitadacicicge ian aaah ataaaniintiilin 11
B. The Act’s Legislative History...............::cccccessseeeseees 12
C. An Overview of the Act’s Relevant Provisions........ 17
D. Interpreting the “system of records” requirement.....18
Il. THIS COURT SHOULD RESOLVE AN AP-
PARENT CONFLICT AMONG THE CIR-
CUITS ON WHAT CONSTITUTES ON
“ADVERSE DETERMINATION” WITHIN
THE MEANING OF THE PRIVACY ACT OF
Iv ——
TABLE OF AUTHORITIES
Cases:
Bartel v. F.A.A., 725 F.2d 1403 (D.C. Cir. 1984) ............... 12
Bettersworth v. FDIC, 248 F.3d 386, 393 5" Cir. 2001)...26
Boyd v. Secretary of Navy, 709 F.2d 684 (11™ Cir.
1983), cert. denied sub nom. Boyd v. Lehman, 464
She ee ee snkicoicenststhacechaibetlaciesiandiibbanivisiiettanniicdos 24
Curccaro v. Secretary of Labor, 770 F.2d 355 (3d Cir.
5 EROS OTEEHS OOO PMN SIDES s TL! Aer rtrd UNE See MERIT ENE 22
Dickson v. Office of Personnel Management, 828 F.2d
Ds FF a Se ictiinntiieicdieniancdinnnainicisaniniiaaiabddaaal 26
Gowan v. United States Department of Air Force, 148
we oT, gle @ — RRRRURRUNMMOmnoIn 20, 24
Henke v. United States Department of Commerce, 83
Fe BS A, Ge Co tstdencatininttcessnsiectnnainis 18, 21
Hernandez v. Alexander, 671 F.2d 402 (10 Cir.
PINUS ccivcensasenciieinetstiesipicestincetslgliaiai edie allenic Gpitneneeaabienmnienie 20
Hewitt v. Grabicki, 794 F.2d 1373, 1379 (9™ Cir.
PI sccisosesishdndiinniinlaseiesanpaienihinich ascetic tected ad 27
Howard v. Marsh, 596 F. Supp. 1107 (E.D. Mo. 1984),
rev'd on other grounds, 785 F.2d 645 (8" Cir.
1986), cert. denied, 479 U.S. 988 (1986) ..................4. 20
Hudson v. Reno, 130 F.3d 1193 (6™ Cir. 1997) ........cesess00: 23
Vv
Manuel v. Veterans Administration Hospital; 857 ¥:26-——————————
(6" Cir. 1988), cert. denied, 489 U.S. 1055 (1989).....23
Pennsylvania Department of Public Welfare v.
Davenport, 495 U.S. 552 (1990) ....sesesessessseseeereeeees 18
Smiertka v. United States Department of Treasury, 447
F.Supp.221 (D.D.C. 1978), vacated and remanded
on other grounds, 604 F.2d 698 (D.C. Cir. 1979)....... 22
Wren v. Heckler, 744 F.2d 86 (10 Cir. 1984) .......-++++. 20, 24
Zeller v. United States, 467 F. Supp. 487 (E.D.N.Y.
1979)......c.cseccesessccsesessocacsncsasccecscceesscsosessnssssseososacsosoonsees 19
Statutes:
5 U.S.C. § 5528.......sccccsecsscsscerssrcscsscrssssncsscesscssecnsscsers 2, 4, 11
5 U.S.C. § 552a(a)(4)......scsssessercssseeresesresessesessscnseeeenees 17, 24
5 U.S.C. § 552a(a(5)....cscessssceresesscenesssenseesessesssceseaseneensers 17
5 U.S.C. § S52a(D) 0... cecescssssrsecessessssecsecsnscssssrsseseeeesenssesons 12
5 U.S.C. § S552a(€)(4).......scsscsscesserseecsrcseesessessssssseerenss 17, 18
5 U.S.C. § 552a(g)(1)....cecssessesessercensreeesnesessessssesssseeesnenennens 3
28 U.S.C. § 1254(1) .....scesscscceeseseesceneneeneeesssterssseeeeensnensenenens 1
28 U.S.C. § 1291 uu... eeeesssscsereesereessencnnsnseessssesssersessnensencecees 3
Lik Fok hs. ORERR ED NNR men CIEE Reena OTN IE Ot 3
Other Authorities
H.R. Rep. No. 93-1416, P. 7 (1974) .....ccssesssesssesssseeessseceseees 13
S. 3418, 93 Cong., § 301(3) (1974) ......ccccecsessessee 13, 14, 16
Sen. Rep. No. 93-1183, 93 Cong., 2d Sess., re-
printed in U.S. Code Cong. & Admin. News, p.
eNO. SA Te ak Ee 13, 15, 16
Privacy Act Implementation: Guidelines and Respon-
sibilities, 40 Fed. Reg. 28,948, 28,957 (July 9, 1975)......... 17
Privacy Act of (1974), Pub. L. No. 93-579, § 2(a)(1),
88 Stat. 1896, 1896 (Congressional findings) ............... 13, 15
Vii
APPENDIX
Appendix A — Order of The United States Court
of Appeals For The Fifth Circuit, Filed
FU Bile tte cceicinsninincescaniciancininiiseniajninenneransmenennmene We
Appendix B — Judgement of The United States Court
of Appeals For The Fifth Circuit, Filed
FI tis a capeteinsiiditenprnincreetesiintaiatgsipeiieniittnanonenceatiqnecente 2a
Appendix C — Opinion of The United States Court
of Appeals For The Fifth Circuit, Filed
i catitriinsctendsasnninincaincnbdigdinnnsnctichmnemenaiesnecen 4a
Appendix D- Report and Recommendation of The
United States Magistrate Judge in The United
States District Court For The Western District
of Texas, Austin Division, Filed February 1, 2000.....20a
OPINIONS BELOW
The Opinion of the United States Court of Appeals for the
Fifth Circuit, No. 00B50262, which appears at 248 F.3d 386
(2001), is reproduced at page 4a of Appendix C.
The unpublished Report and Recommendation of the
United States Magistrate Judge in the United States District
Court for the Western District of Texas is reproduced at page
20a of Appendix D.
STATEMENT OF JURISDICTION
The Judgment sought to be reviewed was filed by the
United States Court of Appeals for the Fifth Circuit on April
12, 2001 (No. 00-50262), in response to the Petitioner’s ap-
peal from the District Court’s Order. The Court of Appeals
denied the Petitioner’s Petition for Rehearing on June 12,
2001.
The original unpublished Report and Recommendation of
the United States Magistrate Judge, in the United States Dis-
trict Court for the Western District of Texas, Austin Division
(No. A-97-CA-624 JN), was filed on February 1, 2000.
This Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1254(1), which permits review by writ of certiorari
“in any civil or criminal case, before or after rendition of
judgment or decree.”
CONSTITUTIONAL AND STATUTORY PROVISIONS
The Fifth Amendment to the United States Constitution
states in relevant part: “No person shall . . . be deprived of
life, liberty, or property, without due process of law... .”
2
The Privacy Act of 1974, 5 U.S.C. § 552a, provides in
(a) For purposes of this section--
(5) the term “system of records” means a group of
any records under the control of any agency from
which information is retrieved by the name of the
individual or by some identifying number, symbol,
or other identifying particular assigned to the indi-
vidual;
(d) Each agency that maintains a system of records
shall--
(1) upon request by any individual to gain access
to his record or to any information pertaining to
him which is contained in the system, permit him
and upon his request, a person of his own choosing
to accompany him, to review the record and have a
copy made of all or any portion thereof in a form
comprehensible to him, except that the agency may
require the individual to furnish a written statement
authorizing discussion of that individual’s record
in the accompanying person’s presence.
(g)(1) Civil remedies. Whenever any agency-
(B) refuses to comply with an individual request
under subsection (d)(1) of this section;
the individual may bring a civil action against the
agency, and the district courts of the United States
shall have jurisdiction in the matters under the pro-
visions of this subsection.
STATEMENT OF THE CASE
Jurisdiction of the Courts Below
The United States Court of Appeals for the Fifth Circuit,
the order of which is sought to be reviewed in this Petition,
had jurisdiction of this matter pursuant to 28 U.S.C. § 1291
(“Final decisions of district courts”), which states in part:
“The courts of appeals . . . shall have jurisdiction of appeals
from all final decisions of the district courts of the United
States. ...”
The United States District Court for the Western District
of Texas had jurisdiction over this case pursuant to 28 U.S.C.
§ 1331 (“Federal question”), which provides: “The district
courts shall have original jurisdiction of all civil actions
arising under the Constitution, laws, or treaties of the United
States.”
The District Court also had jurisdiction under 5
U.S.C. § 552a(g)(1) (“Civil Remedies”), which
states in part:
Whenever any agency-
(B) refuses to comply with an individual request
under subsection (d)(1) of this section;
(C) fails to maintain any record concerning any in-
dividual with such accuracy, relevance, timeliness,
and completeness as is necessary to assure fairness
in any determination relating to the qualifications,
character, rights, or opportunities of, or benefits to
the individual that may be made on the basis of
such record, and consequently a determination is
made which is adverse to the individual. . . .
the individual may bring a civil action against the
agency, and the district courts of the United States
shall have jurisdiction in the matters under the pro-
visions of this subsection.
Facts
Procedural History
The Petitioner James A. Bettersworth instituted this action
on August 21, 1997, against the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency
(AOCC”), the Board of the Federal Reserve, and the Federal
Reserve Bank of Kansas City (collectively, the “Defen-
dants”) for violations of the Privacy Act of 1974, 5 U.S.C. §
552a. He based his complaint on three causes of action:
first, that the Defendants had denied him access to records
5
that he was rightfully entitled to see; second, that the Defen-
dants had made adverse determinations about Mr. Better-
sworth based on improperly maintained records; and third,
that the Defendants had failed to comply with the Privacy
Act so as to have an adverse effect on Mr. Bettersworth.
After various motions were filed by Mr. Bettersworth and
the Defendants over the next few years, a Final Judgment
was filed by the District Court on February 17, 2000, which
dismissed Mr. Bettersworth’s claims with prejudice and
granted the Defendants’ motion to dismiss or in the alterna-
tive for summary judgment.
Mr. Bettersworth filed his Notice of Appeal to the Fifth
Circuit on March 29, 2000. In a Judgment filed April 12,
2001, the Fifth Circuit affirmed the judgment of the District
Court and ordered Mr. Bettersworth to pay to the Defendants
the costs on appeal. Motion for Rehearing denied App. 1a.
Background
Mr. Bettersworth has twenty-two years of experience in
the banking industry. From 1971 to 1973, he served as vice
president of First National Bank, Seguin, Texas. In 1983, he
founded First Commercial Bank (“FCB”) in Seguin, Texas.
He served as chief executive officer and chairman of the
board of FCB from 1983 through May, 1990. During that
time, the OCC never communicated to him or to the board of
FCB that he was unqualified or unfit for the position that he
held.
Mr. Bettersworth founded Southwestern Commercial
Capital Company (“SWCC”) in 1981. SWCC was a spe-
cialized lending company under the supervision of the Small
6
Business Administration (“SBA”). In 1984, Mr. Better-
sworth formed Southwestern ComCorp, Inc. (“ComCorp”), a
non-bank holding company, into which Mr. Bettersworth put
SWCC and Southwestern Venture Capital of Texas (“SVC”).
SVC was a small business investment company under the
supervision of the SBA. FCB, ComCorp, SWCC, and SVC
were recognized by the companies and the federal regulators
as affiliates.
From 1985 until 1989, the FCB participated for its own
account in the retained portions of SBA loans that were not
sold into the government securities market. FCB participated
in these loans pursuant to the authority granted for such
transactions in 12 C.F.R. 250.250. The OCC regulators ap-
proved the participation by FCB in the loans without qualifi-
cation.
The Affiliate Relationship
In 1987, ComCorp legally acquired by foreclosure the Re-
public Bank of Tecumseh, Oklahoma (“RBT”). As a result
of the discovery process in this litigation, the OCC thought
that Mr. Bettersworth had somehow planned the foreclosure
to avoid various banking laws.
In 1989, the affiliate relationship among FCB, ComCorp,
SWCC, SWVC, and RBT was terminated. Desiring to assure
himself that the OCC agreed that the relationship had indeed
terminated, Mr. Bettersworth requested a special examination
by the OCC to affirm this fact. The OCC confirmed that the
relationship had been terminated. From 1989 on, FCB con-
ducted its business with former affiliates in accordance with
this finding.
7
In early 1989, poor health forced Mr. Bettersworth to
leave the banking business. In 1991, Liz Corey, an attorney
for the OCC, stated in a letter sent to FCB’s attorneys that, in
‘her opinion, FCB, ComCorp, and ComCorp’s subsidiaries
were affiliates in June, 1990. Officially, the OCC never
made a formal finding that the companies were affiliated, and
the agency dropped the matter. FCB was never cited for
violation of the law regarding transactions between affiliates.
The Adverse Determination Made by the OCC
Out of the debate about the affiliate status of the various
entities came an adverse determination by the OCC that is at
the core of this litigation. In August, 1991, more than eight-
een months after Mr. Bettersworth had departed from FCB,
John Barlow, an OCC bank examiner, made the following
entry in the agency’s computerized database, known as the
Supervisory Monitoring System (“SMS”):
and former Pres/CEO/COB James Bettersworth
share major blame for the Bank’s poor condition.
They allowed poor quality assets to be purchased
from affiliate SWCC. Bettersworth was also a di-
rector and executive officer at Comcorp and
SWCC for much of their existence. These indi-
viduals should not be approved in an executive ca-
pacity at a troubled institution.
This finding was placed in the SMS, which is a proprietary
information system that is not known to bankers or to the
public. It is accessible only by confidential passwords that
are issued to certain employees of the Defendants’ agencies.
Mr. Barlow later confirmed in his deposition that the only
8
way that Mr. Bettersworth would be able to gain access to the
entries in the SMS about him was by filing a lawsuit such as
this cne.
Barlow’s entry about Mr. Bettersworth was reviewed and
approved by the manager of the San Antonio Field office of
the OCC. The entry was again reviewed and approved by the
“Southwestern Regional Office of the OCC, and it was then
archived in the SMS as a permanent, official determination of
the OCC. Mr. Barlow later testified in his deposition that the
purpose of placing the above-noted entry in the SMS was so
that anyone inquiring about Mr. Bettersworth would see the
entry. He also admitted that the entry did in fact have a
negative impact on Mr. Bettersworth.
The Adverse Determination Made by the Board of Gover-
nors and the Reserve Bank
In August, 1993, the Petitioner and Jeffrey D. Anderson
acquired control of ComCorp. Its primary remaining asset
was RBT. In October, 1993, ComCorp field a draft applica-
tion for bank holding status with the Board of Governors of
the Federal Reserve System (“Board”) through its agent, the
Federal Reserve Bank of Kansas City, Missouri (“Reserve
Bank”). In conjunction with this application, Mr. Better-
sworth, as a major shareholder of ComCorp, provided per-
sonal and financial data to the Board on Board forms
provided with the application package. In response to the
draft application, the Reserve Bank conducted a background
investigation of Mr. Bettersworth based on the information
that he had provided. The investigation, conducted by Pam
Johnson, an examiner for the Reserve Bank, revealed several
negative comments about Mr. Bettersworth, including the
9
entry by OCC examiner Barlow in the SMS, which was cited
earlier.
As a result of her investigation, Ms. Johnson concluded:
“This deal stinks! We need to encourage them not to pursue
this and to begin a plan of divestiture.” She went on to note
that Mr. Bettersworth caused many of the problems at FCB
and RBT. Under the part of the report labeled “Integrity,”
she indicated that Mr. Bettersworth manipulated and circum-
vented the Bank Holding Company Act and 23A. Yet, Mr.
Bettersworth was never placed on notice that he was being
accused of either.
Ms. Johnson accused Mr. Bettersworth of causing im-
proper affiliate transactions between FCB and ComCorp,
despite the determination by the OCC that FCB and Com-
Corp were no longer affiliated. She also noted that the OCC
considered Mr. Bettersworth to be a liberal and innovative
banker and that he was unfamiliar with banking laws and
regulations. She described Mr. Bettersworth as uncoopera-
_ tive, adversarial, and suffering from manic depression. She
stated that Mr. Bettersworth had a sordid banking back-
ground with a failed bank in Texas. (In reality, Mr. Better-
sworth has never been associated with a failed bank.) Ms.
Johnson’s determinations about Mr. Bettersworth were never
disclosed to him. He was not aware of their existence, and he
was not afforded an opportunity to rebut them.
Based on her investigation, Ms. Johnson drafted a letter
for the signature of Mr. Stephen E. McBride, the Assistant
Vice President of the Reserve Bank. On November 5, 1993,
this letter was faxed to the attorneys for ComCorp. It indi-
cated that the prospect for approval of an application for ban-
10
holding status filed by ComCorp was “extremely dim.” This
conclusion was based primarily on the adverse determination
made about Mr. Bettersworth, which was confirmed during a
telephone conversation between Mr. McBride and one of
ComCorp’s attorneys. McBride made it clear that the trans-
action would not be approved because of Mr. Bettersworth’s
involvement and branded Mr. Bettersworth a “troublemaker”
and “uncooperative,” terms later discovered in Reserve Bank
documents obtained in discovery in connection with this ac-
tion.
In a later conversation between Kevin Moore, an official
of the Reserve Bank, and another attorney for ComCorp,
Moore confirmed that Mr. Bettersworth was the primary
problem with the application and that.the application would
be viewed favorably if Mr. Bettersworth were not included in
the application. Based on the acrimonious condemnation of
Mr. Bettersworth, ComCorp decided that proceeding with the
application was inadvisable and hurriedly signed a contract
agreeing to sell RBT.
Bettersworth’s Privacy Act Requests
Mr. Bettersworth decided to re-enter the banking business
on October 3, 1995, by forming a new bank in Lakeway,
Texas. The investors did not want to proceed with the proj-
ect unless Mr. Bettersworth could clear his name with bank
regulators. Mr. Bettersworth wrote several letters to the De-
fendants, requesting an opportunity to address issues raised
during the ComCorp bank holding company application. The
Defendants refused, stating that they had no position about
Mr. Bettersworth and were not required to express one.
—s
11
On October 3, 1995, Mr. Bettersworth made Privacy Act
requests of the Defendants. The Defendants refused. On
October 30, 1995, Mr. Bettersworth spoke with Kevin Moore
on the telephone and asked which individual bank regulators
had apparently made adverse comments about him. Mr.
Moore did not identify the individuals but indicated that the
information about Mr. Bettersworth was taken from Confi-
dential Reports of Examination that were not revealed to
banks. Moore stated that, even if those reports contained
derogatory information about Mr. Bettersworth, he could not
have access to that information.
On August 27, 1997, Mr. Bettersworth filed this action in
an attempt to gain access to records used by the Board and
the Reserve Bank in making their determinations about him
and, if possible, to clear his name. As explained above, the
District Court awarded summary judgment to the Defendants
and dismissed the Petitioner’s action with prejudice. The
Fifth Circuit affirmed.
ARGUMENT
I. THIS COURT SHOULD RESOLVE AN
APPARENT CONFLICT AMONG THE
CIRCUITS ON WHAT CONSTITUTES A
“SYSTEM OF RECORDS” WITHIN THE
MEANING OF THE PRIVACY ACT OF 1974
A. Introduction
The Privacy Act of 1974, 5 U.S.C. § 552a (1994)(“Act”),
generally prohibits federal agencies from disclosing “any
record which is contained in a system of records by any
means of communication to any person, or to another agency,
12
except pursuant to a written request by, or with the prior
written consent of, the individual to whom the record pertains
....” 5 U.S.C. § 552a(b). The Act “safeguards the public
from unwarranted collection, maintenance, use and dissemi-
nation of personal information contained in agency records . .
. by allowing an individual to participate in ensuring that his
records are accurate and properly used.” Bartel v. F.A.A.,
725 F.2d 1403, 1407 (D.C. Cir. 1984).
The issue that this Court is being urged to address is
whether the Act intended that a private citizen could obtain
access to information to any file, kept by a federal agency, in
which his name or other identifier appeared, or whether it
restricts access only to files, part of a “system of records,” on
which the citizen’s name or other identifier appears. The
latter interpretation would make sense if this were 50 years
ago, when files were kept in manilla folders and searching a
folder for references to a citizen whose name did not appear
on the outside of the folder would be an impossibly burden-
some task. This is not at all the case today, however, when
computerized records can be searched instantly and effort-
lessly for any name, word, or phrase that appears within the
record.
In short, this Petition respectfully requests that this Court
interpret this provision of the Act to clear up a conflict
among the Circuits regarding the extent of a citizen’s right to
avail himself of the protection of the Act.
B. The Act’s Legislative History
The Senate bill, S. 3418, modified as the compromise bill,
was enacted into law as the Privacy Act. The purposes of the
13
Act include “the promotion of governmental respect for the
privacy of citizens by requiring all departments and agencies
of the executive branch and their employees to observe cer-
tain constitutional rules in the computerization, collection,
management, use, and disclosure of personal information
about the individuals.” Sen. Rep. No. 93-1183, 93rd Cong.,
2d Sess., reprinted in U.S. Code Cong. & Admin. News, p.
6916 (1974).
Congress enacted this legislation largely out of concern
over “the impact of computer data banks on individual pri-
vacy.” H.R. Rep. No. 93-1416, p. 7 (1974). The legislative
history of the Act makes frequent references to the need to
protect against governmental abuse of “personal informa-
tion.” See, e.g., Privacy Act of 1974, Pub. L. No. 93-579, §
2(a)(1), 88 Stat. 1896, 1896 (Congressional findings); S. Rep.
93-1183, at 1. The legislative history makes it plain that
Congress intended “personal information” itself to have a
broad meaning, encompassing
all information that describes, locates or indexes
anything about an individual including his educa-
tion, financial transactions, medical history, crimi-
nal, or employment record, or that affords a basis
for inferring personal characteristics, such as finger
and voice prints, photographs, or things done by or
to such individual, and the record of his presence,
registration, or membership in an organization or
activity, or admission to an institution.
S. 3418, 93d Cong., § 301(3) (1974).
The Report from the Committee on Government Opera-
14
tions, which recommended passage of the Senate Bill, stated:
The purpose of S. 3418, as amended, is to promote
governmental respect for the privacy of citizens by
requiring all departments and agencies of the ex-
ecutive branch and their employees to observe
certain constitutional rules in the computerization,
collection, management, use, and disclosure of per-
sonal information about individuals.
The Report went on to explain:
[The Act] is designed to prevent the kind of illegal,
unwise, overbroad investigation and record sur-
veillance of law-abiding citizens produced in re-
cent years from actions of some over-zealous
investigators, and the curiosity of some govern-
ment administrators, or the wrongful disclosure
and use, in some cases of personal files held by
Federal agencies.
The Report then stated that the Act was intended:
e To prevent the secret gathering of information systems
of data banks on Americans by agency employees;
e To set in motion a long-overdue evaluation of the needs
of the federal government to acquire and retain personal in-
formation on Americans, by requiring stricter review within
agencies of criteria for collection and retention; and
e To promote observance of “valued principles of fairness
and individual privacy by those who develop, operate, and
administer other major institutional and organizational data
15
banks of government and society.” S. Rep. No. 1183, 93
Cong., 2d Sess. 1-2, reprinted in 1974 U.S. Code Cong. &
Admin. News 6919 (“USCAN”).
Finally, the Report concluded that the underlying premise
of the Act is that “good government and efficient manage-
ment require that basic principles of privacy, confidentiality
and due process must apply to all personal information pro-
grams and practices of the Federal Government.” S. Rep. at
14, USCAN at 6929. In addition, the Senate Report made it
clear that an agency must assure the lawful use and proper
treatment of information transferred to other agencies when it
is used to make a decision about an individual. The Report
emphasized that agencies must not
use the Freedom of Information Act as an excuse
to avoid their obligations under this section to ob-
tain informed consent and to assure to the extent
possible the lawful use and proper treatment of in-
formation transferred to other agencies, when it
may be used to make a decision about an individ-
ual.
Id.
The legislative history of the Act makes frequent refer-
ences to the need to protect against governmental abuse of
“personal information.” See, e.g., Privacy Act of 1974, Pub.
L. No. 93-579, § 2(a)(1), 88 Stat. 1896, 1896 (Congressional
findings); S. Rep. 93-1183, at 1. The legislative history
makes it plain that Congress intended “personal information”
itself to have a broad meaning, encompassing
16
all information that describes, locates or indexes
anything about an individual including his educa-
tion, financial transactions, medical history, crimi-
nal, or employment record, or that affords a basis
for inferring personal characteristics, such as finger
and voice prints, photographs, or things done by or
to such individual, and the record of his presence,
registration, or membership in an organization or
activity, or admission to an institution.
S. 3418, 93d Cong., § 301(3) (1974).
In short, the legislative history of the Act suggests that the
hair-splitting that the Courts have engaged in, as demon-
strated below, is utterly inappropriate, as it contravenes the
intent of the statute, which is to bestow the broadest possible
rights on the citizenry to obtain access to information held by
federal agencies in their computer data banks. Speaking of
the House version of the Bill that ultimately was passed,
Congressman Erlenborn, in his general comments on the ear-
lier House version of the statute, stated:
Under this bill we are allowing any individual ac-
cess to records that are maintained by the Govern-
ment relative to himself. In other words, any
person, any individual can go to the agency that is
subject to this act and say “I want copies of any-
thing you have relating to me.” 120 Cong. Rec.
36961 (Nov. 21, 1974).
The narrow interpretations of what constitutes a “system
of records” under the Act by numerous circuits ignores the
intent of Congress in fashioning a powerful tool for citizens
17
to find out what information federal agencies have gathered
and may have disseminated about them.
C. An Overview of the Act’s Relevant Provisions
To safeguard the privacy of individual citizens, the Act re-
quires any agency that maintains a “system of records” to
publish at least annually a statement in the Federal Register
describing that system. See 5 U.S.C. § 552a(e)(4)- A “sys-
tem of records” is defined as “a group of any records under
the control of any agency from which information is retrieved
by the name of the individual or by some identifying number,
symbol, or other identifying particular assigned to the indi-
vidual.” 5 U.S.C. § 552a(a)(5). A “record” is defined as
any item, collection, or grouping of information
about an individual that is maintained by an
agency, including, but not limited to, his education,
financial transactions, medical history, and crimi-
nal or employment history and that contains his
name, or the identifying number, symbol, or other
identifying particular assigned to the individual,
such as a finger or voice print or a photograph.
5 U.S.C. § 552a(a)(4).
The Privacy Act Guidelines promulgated by the Office of
Management and Budget provide that individuals have a
right of access only to information keyed to the requestor’s
own name or identifying number or symbol. See Privacy Act
Implementation: Guidelines and Responsibilities, 40 Fed.
Reg. 28,948, 28,957 (July 9, 1975). Of course, the courts are
under no obligation to follow guidelines or regulations that
are promulgated by agencies. Indeed, these Guidelines ap-
18
pear to directly contravene the expressed intent of Congress
in enacting this legislation.
Determining that a “system of records exists” in a par-
ticular case is of the utmost importance, because it “triggers
virtually all of the other substantive provisions of the Privacy
Act, such as an individual’s right to receive copies and to
request amendment of her records.” Henke v. United States
Department of Commerce, 83 F.3d 1453, 1459 (D.C. Cir.
1996).
D. Interpreting the “system of records” requirement
i. View that a “system of records” exists so long as
the file is retrievable by the requestor’s name or
other identifier from any file containing informa-
tion about him a
To determine what constitutes a “system of records”
within the meaning of the Privacy Act, this Court has long
recognized that interpretation must, of course, begin with the
language of the statute itself. See, e.g., Pennsylvania De-
partment of Public Welfare v. Davenport, 495 U.S. 552, 557-
58 (1990).
The Act itself suggests that Congress intended to provide
access to agencies’ records whenever records pertaining to
the requestor are retrievable by the use of his or her name or
other identifier, regardless of whether the file has been cre-
ated under his name or other identifier. Section (e)(4) of the
Act requires agencies, when they promulgate their notice of
their system of records, to publish “the policies and practices
of the agency regarding storage, retrievability, access con-
trols, retention, and disposal of the records.” 5 U.S.C. §
19
552a(e)(4). This language suggests that retrievability, not
actual retrieval, should be the standard for determining
whether a “system of records” exists under the Act.
Thus, the rights of a person requesting information under
the Act should not depend on how the “file” containing the
information is labeled, only upon whether the requested in-
- formation is retrievable by any means.
The Second Circuit’s interpretation of “system of records”
is represented by this District Court’s interpretation of the
Act:
Correctly construed, the Privacy Act extends to all
information contained within an agency’s system
of records that pertains to an individual and can be
retrieved by the individual’s name or by some
identifier assigned to him, without regard to the
content of the information or whether it pertains to
the individual’s business activities. The scope of
information available under the statute is defined
not by the content of the record maintained by the
agency, but by the retrieval method used in the
agency’s system of records.
Zeller v. United States, 467 F. Supp. 487, 497 (E.D.NLY.
1979). This statement suggests that, so long as an individual
agency has the means of searching its records for the individ-
ual’s name or other identifier assigned to him, it is maintain-
ing a “svstem of records” under the Act. It should go without
saying that federal agencies today all possess the ability to
search computerized records with blinding speed to unearth
any reference to an individual who is attempting to assert his
rights under the Act, regardless of how these records are la-
20
beled.
Some decisions of the Tenth Circuit appear to take the po-
sition that, so long as documents requested under the Privacy
Act are “name retrievable,” then they are within a “system of
records” maintained by the agency. See Howard v. Marsh,
596 F. Supp. 1107, 1111 (E.D. Mo. 1984), rev'd on other
grounds, 785 F.2d 645 (8" Cir. 1986), cert. denied, 479 U.S.
988 (1986).
In another Privacy Act decision, the Tenth Circuit consid-
ered whether a former civilian employee of the U.S. Army
was entitled to access to an Investigative Report under the
auspices of the Inspector General and four memoranda. The
memoranda consisted of a list containing a description of
certain documents sent and received by the former employee
and three other memoranda, all of which were prepared by an
attorney in the office of the Staff Judge Advocate at White
Sands Missile Range. The court concluded without discus-
sion that the former employee was entitled under the Privacy
Act to see these records. See Hernandez v. Alexander, 671
F.2d 402, 408 (10 Cir. 1982).
Other decisions of the Tenth Circuit are difficult to recon-
cile with these, however, as its decisions in Wren v. Heckler,
744 F.2d 86, 89 (10" Cir. 1984), and Gowan v. United States
Department of Air Force, 148 F.3d 1182, 1191 (10 Cir.
1998), discussed immediately below, illustrate.
The view that a “system of records” exists so long as the
file is retrievable by the requestor’s name or other identifier
is fully supported by the express terms of the Act, its legisla-
tive history, and the decisions cited above. Moreover, this
view is in keeping with the reality of the extraordinary capa-
21
bilities of modern data retrieval software, which can search
volumes of entries in seconds when provided with a name or
other key word or phrase. Some have argued that the term
“system of records” must be construed narrowly so that
agencies are not disrupted by the inundation of Privacy Act
requests by individuals whose names or other identifiers do
not actually appear on files retrieved by the agency. Even if
this argument ever carried any weight, it collapses when con-
sidered in light of the blinding speed at which modern com-
puters, armed with data retrieval software, operate today. So
long as the name or other identifier of the person requesting
information under the Act exists somewhere in the file, it can
be ferreted out in a matter of seconds nowadays.
ii. View that a “system of records” exists only when
the agency has an actual practice of retrieving in-
formation by the name of the individual found on
the record itself
Focusing on Congress’s use of the phrase “is retrieved” in
the Privacy Act, the D.C. Circuit held in Henke v. United
States Department of Commerce, 83 F.3d 1453 (D.C. Cir.
1996), that a group of records generally should not be con-
sidered a “system of records” within the meaning of the Pri-
vacy Act unless the agency actually retrieves records keyed
to individuals and that retrieval capability is not alone suffi-
cient to create a system of records. 83 F.3d at 1460. The
court cautioned, however, that the agency’s retrieval practice
is only one factor in determining whether a “system of rec-
ords” exists in a particular case. Courts should also consider
“the agency’s function and the purpose for which the infor-
mation was gathered” when determining whether a group of
records qualifies as a system of records. /d. at 1461.
22
The court reasoned that the phrase “system of records”
should be narrowly construed because, under an expansive
reading of the phrase,
an agency faces the threat of being found retro-
spectively to be maintaining a system of records it
did not even know existed, simply by dint of a po-
tential use it neither engaged in nor contemplated.
This in turn would create serious compliance
problems for the agency, because if it had not rec-
ognized that it maintained a system of records and
had therefore not published notice of its system in
the Federal Register, then neither would it have
followed the procedures necessary [under the Act].
Id.
In another decision of the D.C. Circuit, the plaintiff was
held not entitled to daily reports prepared by an agency in-
vestigation because they were not accessible by the plaintiff's
name or other personal identifier, but by the name of the
agency investigator who prepared them. See Smiertka v.
United States Department of Treasury, 447 F.Supp. 221, 228-
29 (D.D.C. 1978), vacated and remanded on other grounds,
604 F.2d 698 (D.C. Cir. 1979).
The Third Circuit rebuffed a plaintiff's attempt under the
Privacy Act to obtain access to portions of investigative files
complied as a result of his complaints and the ensuing inves-
tigations of his former employer regarding alleged OSHA
violations in Cuccaro v. Secretary of Labor, 770 F.2d 355
(3d Cir. 1985). The court held that the requested documents
23
were not contained within a “system of records” retrievable
by the name of the individual requesting the information. It
took the position that individuals have a right to access under
the Privacy Act only to information in a record that is main-
tained in a system of records “cued to the requestor’s own
name or identifier.” 770 F.2d at 360.
The Sixth Circuit held that notes kept in a locked drawer
and labeled the “First Assistant’s” filed were not accessible
under the Privacy Act because they were not retrievable by
the plaintiff's name or other personal identifier, but by the
name of the agency investigator who prepared them. See
Hudson v. Reno, 130 F.3d 1193, 1206 (6" Cir. 1997). The
Court reached the same result in Manuel v. Veterans Admini-
stration Hospital, 857 F.2d 1112, 1119 (6" Cir. 1988), cert.
denied, 489 U.S. 1055 (1989))(daily reports containing refer-
ences to investigations conducted by the Veterans Admini-
stration held not to qualify as “records” contained in a
“system of records” because they were not accessible by the
plaintiff's name or other personal identifier, but by the name
of the agency investigator who prepared them).
As noted earlier, decisions of the Tenth Circuit seem in
conflict concerning what constitutes a “system of records”
under the Act. Thus, it held that a plaintiff's request under
the Act was properly denied when the only identifier on the
file for which he sought disclosure was the word “Ethics,”
even though the plaintiff's file was the only one in existence
in the “Ethics” file when he made his first request under the
Act. The court reasoned that the word “Ethics” was not a
personal identifier of the plaintiff and thus did not fall within
the definition of a “record” as “any item, collection, or
grouping of information about an individual that is main-
24
tained by an agency . . . that contains his name, or the identi-
fying number, symbol, or other identifying particular as-
signed to the individual.” 5 U.S.C. § 552a(a)(4). See Gowan
v. United States Department of Air Force, 148 F.3d 1182,
1191 (10" Cir. 1998).
In another Tenth Circuit decision, a plaintiff's request un-
der the Act to obtain access to a document was denied be-
cause it was not part of a “system of records,”
notwithstanding that it contained information relating to the
plaintiff, since it was not retrievable by the plaintiff's name
or other identifying symbol. See Wren v. Heckler, 744 F.2d
86, 89 (10 Cir. 1984). Retrieval of the document was ac-
complished by a document search, and access to the file was
limited to three employees of the agency. Jd.
The Eleventh Circuit appears also to have taken the nar-
row view of what constitutes a “system of records.” It held
in Boyd v. Secretary of Navy, 709 F.2d 684, 686 (1 1* Cir.
1983), cert. denied sub nom. Boyd v. Lehman, 464 U.S. 1043
(1984), that individuals have a right to access under the Pri-
vacy Act only to information in a record that is maintained in
a system of records cued to the requestor’s own name or
identifier. The court noted that the memorandum sought by
the plaintiff was not in a “system of records” because it was ~
not keyed to his name or any identifying number, was kept in
a “random-type” file, and could be re<ieved only by search-
ing through the file. 709 F.2d at 686-87.
These decisions ignore the express terms of the Act; its
legislative history, which indicates that the Act was intended
to afford citizens the broadest powers to ascertain what in-
formation about them held in agencies’ files had been re-
25
leased to others; and the reality of modern data retrieval sys-
tems, which permit anyone with a nodding familiarity with
computers to retrieve almost instantaneously any information
about a particular individual that is contained in computer-
ized files, no matter how voluminous.
Only this Court has the authority to return to the citizens
of this county the important rights and safeguards that were
intended by Congress when it enacted the Privacy Act more
than a quarter of a century ago. The confusion that currently
exists about the scope of protection afforded under the Pri-
vacy Act can be stated simply. Can the citizen assert his
rights under the Act whenever information can be found
about him in an agency file, or only when his name or other
identifier appears on the file?
II. THIS COURT SHOULD RESOLVE AN
APPARENT CONFLICT AMONG THE
CIRCUITS ON WHAT CONSTITUTES AN
“ADVERSE DETERMINATION” WITHIN THE
MEANING OF THE PRIVACY ACT OF 1974.
The Privacy Act provides that an individual can bring an
action against that
fails to maintain any record concerning [the] indi-
vidual with such accuracy, relevance, timeliness,
and completeness as is necessary to assure fairness
in any determination relating to the qualifications,
character, rights, or opportunities of, or benefits to
the individual that may be made on the basis of
such record, and consequently a determination is
made which is adverse to the individual. . .
26
5 U.S.C. § 552a (g) (1) (C) (emphasis added). Courts are in
disagreement about what is meant by an adverse determina-
tion, a conflict that only this Court can resolve.
i. The view that a determination is adverse only when it
has been made by the defendant agency
The Fifth Circuit stated in its opinion below that the de-
fendant agencies asked it to hold that the word “determina-
tion” as used in Section 552a (g) (1) (B) must mean
“something akin to a formal or final administrative decision.”
Bettersworth .v FDIC, 248 F.3d 386, 393 (5™ Cir. 2001). Al-
though the Court declined to go that far, it affirmed the Dis-
trict Court’s conclusion that Mr. Bettersworth’s adverse
determination claim failed because there was no evidence of
an adverse administrative determination against him. /d.
The D.C. Circuit has taken the position that the critical
phrase in the Act “consequently a determination is made”
means that the adverse determination need not to be made by
the agency that is being sued by the plaintiff in order for a
damage actions to properly lie. The court reasoned:
This choice of grammar, which is the only time the
passive voice is used in the section dealing with
civil remedies, unambiguously subjects [the defen-
dant agency] to a damage action when an adverse
determination “is made,” whether by [the defen-
dant agency] or by another agency.
Dickson v. Office of Personnel Management, 828 F.2d 32, 37
(D.C. Cir. 1987).
27
iii. The view that the plaintiff's response to the agency's
objectionable is not an “adverse determination 7
Although the Ninth Circuit did not rule definitively on
whether only an agency can make an “adverse determina-
tion,” its decision in one case that the plaintiff's resignation
as a result of his unacceptable treatment at the hands of the
agency did not constitute an “adverse determination” based
upon personnel records permitting the award of damages un-
der the Privacy Act. See Hewitt v. Grabicki, 794 F.2d 1373,
1379 (9 Cir. 1986). In short, the confusion that exists
among the Circuits regarding the meaning of an “adverse
determination” under the Act limits the Act’s effectiveness as
a remedy for an aggrieved citizen.
28
CONCLUSION
The undersigned respectfully requests that this Court grant
certiorari in this matter for the reasons stated above.
Respectfully submitted,
MICHAEL WALSH, ESQ.
Of Counsel
621 Colfax Avenue
Scranton, Pennsylvania 18510
(570) 969-1969
JAMES S. BETTERSWORTH, ESQ.
Attorney of Record
RUTHERFORD @ RUTHERFORD
& BETTERSWORTH
825 S. St. Mary’s Street
San Antonio, TX 78205-3408
(210) 225-4200
la
APPENDIX A - ORDER OF THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT,
FILED JUNE 12, 2001
No. 00-50262
JAMES A. BETTERSWORTH,
Plaintiff-Appellant,
Vv
FEDERAL DEPOSIT INSURANCE CORPORATION; OF-
FICE OF THE COMPTROLLER OF THE CURRENCY;
BOARD OF THE FEDERAL RESERVE; FEDERAL RE-
SERVE BANK OF KANSAS CITY,
Defendants-Appellees.
Appeal from the United States District Court
For the Western District of Texas, Austin
ON PETITION FOR REHEARING
Before REAVLEY, SMITH, and DeMOSS, Circuit Judges.
PER CURIAM:
IT IS ORDERD that the petition for rehearing is DE-
NIED.
ENTERED FOR THE COURT:
s/ Harold R. DeMoss
United States Circuit Judge
2a
APPENDIX B - JUDGMENT OF THE UNITED
STATES COURT OF APPEALS FOR THE FIFTH
CIRCUIT, FILED APRIL 12, 2001
No. 00-50262
D.C. Docket No. A-97-CV-624-JN
JAMES A. BETTERSWORTH,
Plaintiff-Appellant,
Vv
FEDERAL DEPOSIT INSURANCE CORPORATION; OF-
FICE OF THE COMPTROLLER OF THE CURRENCY;
BOARD OF THE FEDERAL RESERVE; FEDERAL RE-
SERVE BANK OF KANSAS CITY,
Defendants-Appeliees.
Appeal from the United States District Court
For the Western District of Texas, Austin
Before REAVLEY, SMITH, and DeMOSS, Circuit Judges.
JUDGMENT
This cause was considered on the record on appeal and was
argued by counsel.
3a
It is ordered and adjudged that the judgment of the District
Court is affirmed.
IT IS FURTHER ORDERED that plaintiff-appellant pay to
defendants-appellees the cost on appeal to be taxed by the
Clerk of this Court.
ISSUED AS MANDATE: Jun 20, 2001
4a
APPENDIX C - OPINION OF THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT,
FILED MAY 12, 2001
Revised May 3, 2001
No. 00-50262
JAMES A. BETTERSWORTH,
Plaintiff-Appellant,
VERSUS
FEDERAL DEPOSIT INSURANCE CORPORATION; OF-
FICE OF THE COMPTROLLER OF THE CURRENCY;
BOARD OF THE FEDERAL RESERVE; FEDERAL RE-
SERVE BANK OF KANSAS CITY,
Defendants-Appellees.
Appeal from the United States District Court
For the Western District of Texas
Before REAVLEY, SMITH, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
Plaintiff James A. Bettersworth appeals the district court’s
order granting summary judgment in favor of defendants,
the Federal Deposit Insurance Corporation (FDIC), the Of-
Sa
fice of the Comptroller of the Currency (Office of the
Comptroller of the Currency), the Board of Governors of the
Federal Reserve System (the Board), and the Federal Re-
serve Bank of Kansas City (the Reserve Bank), and dis-
missing his claims. We affirm.
I. BACKGROUND
Bettersworth has an extensive background in the banking
industry, which is well documented in the summary judg-
ment record before the Court. Between 1973 and 1980, Bet-
tersworth was employed by the First National Bank of
Seguin. In 1981, Bettersworth formed Southwest Commer-
cial Capital, Inc. (SWCC), which is described as a venture
capital company. In 1983, Bettersworth founded First Com-
mercial Bank of Seguin, Texas (FCB), a federally chartered
bank, where he served as Chief Executive Officer and
Chairman of the Board until 1989. In 1984, Bettersworth
formed Southwesterr. ComCorp, Incorporated (ComCorp), a
non-bank holding company. Bettersworth also formed a sec-
ond small business investment company called Southwestern
Venture Capital (SVC). Bettersworth placed SWCC and
SVC under the umbrella of ComCorp. Bettersworth owned
either a participaiory interest or a management position or
both in these ventures. Bettersworth also owned a controlling
interest or management position in other related financial
institutions.
In 1987, ComCorp acquired the Republic Bank of Tecum-
seh, Oklahoma (RBT) by foreclosure, and Bettersworth as-
sumed control of RBT. The Bank Holding Company Act
(BHCA), 12 U.S.C. § 1841-1850, provides that no company
may gain control of a bank without prior approval of the
6a
Board of Governors of the Federal Reserve System. See 12
U.S.C. § 1841; id. § 1842(a). The Act contains an exception
to the requirement for prior Board approval when controlling
interest in a bank is obtained in the course of collecting upon
a previously contracted debt. 12 U.S.C. § 1841(a). In such a
case, the company assuming control of the bank must divest
itself of the acquired bank shares within two years. Id. That
two-year period may be extended one year at a time, but the
maximum time period during which a company may hold
shares giving it a controlling interest in a bank is five years.
Id. ComCorp’s foreclosure of a debt owed by one of RBT’s
officers and guaranteed by RBT assets fell within the fore-
closure exception to the requirement for prior Board ap-
proval. Moreover, ComCorp received an extension, which
permitted ComCorp to hold RBT for up to five years, or until
December 1993, before securing Board approval or divesting
itself of the RBT assets.
In 1989 or 1990, Bettersworth resigned from his positions
with FCB and RBT. Bettersworth also lost control of Com-
Corp. In early 1993, Bettersworth and a partner regained
controlling interest in ComCorp. In October 1993, ComCorp
filed an application for bank holding company (BHC) status
under the BHCA with the Federal Reserve Bank of Kansas
City (the Reserve Bank). Federal Reserve Banks are author-
ized to receive and review applications for BHC status. The
controlling regulations permit the Reserve Bank to either ap-
prove the application or to refer it to the Board. See 12
C.F.R. § 225.15. Thus, the Reserve Bank has no authority to
finally deny an application for BHC status. When consider-
ing whether to approve an application for BHC status, the
Board is authorized to consider inter alia “the financial and
7a
managerial resources and future prospects of the company or
companies and the banks concerned,” id. § 1842(c)(2), which
in turn includes “consideration of the competence, experi-
ence, and integrity of the officers, directors, and principal
shareholders of the company or bank, id. § 1842(c)(5).
ComCorp’s application for BHC status proposed that
ComCorp retain 100 percent of RBT. The application dis-
closed Bettersworth’s prior affiliations with FCB and RBT.
Accordingly, Pamela Johnson, the Reserve Bank official as-
signed to review the application, began retrieving and re-
viewing the records maintained by other banking regulatory
agencies on those banks.
Johnson reviewed OCC records relating to the financial
condition and management of FCB.' Those records included
unfavorable assessments of both the condition of the bank
and the bank’s management, including Bettersworth. Rec-
ords from bank examinations conducted shortly after Better-
sworth left FCB reported that the bank was in bad financial
shape and suggested that Bettersworth’s placement of SBA
loans generated by ComCoprp or its affiliates contributed to
the bank’s poor financial status. Johnson also reviewed the
OCC’s Supervisory Monitoring System (SMS), a confiden-
tial database maintained by the OCC and accessible with a
password by other banking regulatory agencies. The SMS
' The Office of the Comptroller of the Currency (OCC) is the pri-
mary federal regulator of nationally chartered banks. OCC is in-
volved in this case because of Bettersworth’s affiliation with FCB,
a federally chartered bank that was a member of the Federal Re-
serve System.
‘ 4
3
'
8a
likewise contained an entry blaming Bettersworth and an-
other individual for the “bank’s poor condition,” and con-
cluding that “these individuals should not be approved in an
executive capacity at a troubled institution.” Bettersworth
identifies this statement in the OCC database as an adverse
determination within the meaning of the Privacy Act, 5
U.S.C. § 552a(g)(1)(c).
Johnson also reviewed FDIC’ records relating to the fi-
nancial condition and management of RBT. Those records
included unfavorable assessments of both the condition of
the bank and the bank’s management, including Better-
sworth. Records from examinations conducted after Better-
sworth left RBT reported that the bank was in bad financial
shape and suggested that Bettersworth’s placement of SBA
loans generated by ComCorp or its affiliates contributed to
the bank’s poor financial status. Certain records also sug-
gested that Bettersworth and another individual forced RBT
into foreclosure so that SWCC could obtain the assets of
RBT without having to comply with the BHCA.
Johnson also telephoned OCC and FDIC examiners fa-
miliar with FCB and RBT examinations and discussed these
matters with the examiners. Johnson also consulted internal
Reserve Bank records. Through her investigations, Johnson
2 FDIC is a corporation created by Congress, which insures the
deposits of banks and savings associations. FDIC is also the pri-
mary federal regulator for state chartered banks that are not mem-
bers of the Federal Reserve System. FDIC is involved in the case
because of Bettersworth’s affiliation with RBT, a state chartered
bank that was not a member of the Federal Reserve System.
9a
learned that the banks had charged off large loans made to
Bettersworth or his companies. Bettersworth’s personal
guarantee on one such loan had forced his own personal
bankruptcy. In sum, Johnson’s investigation generated sig-
nificant questions concerning, among other things, the RBT
foreclosure, Bettersworth’s decision to place a substantial
number of SBA loans generated by his own companies with
banks which he also controlled, and Bettersworth’s failure to
honor or default upon certain loans extended to him person-
ally or to his companies by the banks which he managed.
Johnson eventually authored a memo to Reserve Bank vice-
president Stephen McBride, setting out the problems with
ComCorp’s BHCA application.
On November 5, 1993, Reserve Bank vice-president
McBride issued a letter stating that the Reserve Bank had
completed its review and identified several areas of concern
with respect to the application. The areas of concern were
stated in some detail and specific questions were posed at the
end of the letter, the answers to which could have signifi-
cantly enhanced the possibility of approval. The letter con-
cluded that, based upon the existing information, the
prospects for approval were “extremely dim,” and that any
further application would be considered directly by the
Board. ComCorp did not, however, pursue the application
further by providing the specific information requested in an
amended application to the Board. Rather, ComCorp aban-
doned the application and negotiated the sale of RBT, which
closed in early 1994.
In 1995, Bettersworth decided he wanted to start a new
bank in Lakeway, Texas and began trying to clear his name.
10a
After informal efforts failed, Bettersworth made Privacy Act
requests in October 1995. Bettersworth requested records on
himself, stating three variations on his name. The agencies
responded that they either did not have records responsive to
his request or that the documents they had were not subject
to the Privacy Act. Bettersworth subsequently learned that
the agencies maintained confidential records relating to bank
examinations that sometimes contained comments about
bank management. Bettersworth made another Privacy Act
request for those records, which was denied because the rec-
ords were not kept in a “system of records” tied to his name.
There does not appear to be any dispute about the fact that
these records were maintained, in accordance with the agen-
cies’ regulatory purpose, in files on the banks with which
Bettersworth was affiliated rather than in a file on Better-
sworth.
Il. PROCEDURAL HISTORY
In August 1997, Bettersworth filed suit claiming that the
defendant agencies violated his rights under the Privacy Act,
5 U.S.C. § 552a. Bettersworth raised three claims. First,
Bettersworth claimed that the agencies denied his request for
access to information about him in a Privacy Act system of
records, in violation of 5 U.S.C. § 552a(d)(1) (obligating an
agency to provide access to covered records); see also id.
§ 552a(g)(1)(B) (providing a civil remedy for violation of
§ 552a(d)(1)). Second, Bettersworth claimed that the agen-
cies made a number of adverse determinations about him on
the basis of inaccurate and incomplete records, in violation
of 5 U.S.C. § 552a(g)(1)(C). Finally, Bettersworth claimed
lla
that the agencies violated subsection 552a(e)(1) (requiring
that agencies maintain only such records as are required to
perform a legitimate agency function) and subsection
552a(e)(7) (prohibiting the maintenance of records describ-
ing how an individual exercised First Amendment rights un-
less authorized by statute or the subject individual) “in such
a way as to have an adverse effect on” him. See 5 U.S.C.
§ 552a(g)(1)(D).’
In January 1998, the agencies filed a motion to dismiss,
which was denied. In February 1999, Bettersworth amended
his complaint to allege additional facts in support of his three
Privacy Act claims. In June 1999, Bettersworth moved for
partial summary judgment on the access claim. That same
month, the agencies filed a motion to dismiss, or in the alter-
native, for summary judgment. The district court referred the
motions to a magistrate judge, who recommended that the
agencies’ motion be granted. Bettersworth filed objections,
and the district court conducted a de novo review, after
which the district court granted the agencies’ motion and
> Bettersworth also alleged that the agencies violated subsection
552a(e)(S) which requires agencies to “maintain all records which
are used by the agency in making any determination about any
individual with such accuracy, relevance, timeliness, and com-
pleteness as is reasonably necessary to assure fairness to the indi-
vidual in the determination.” This statutory obligation is made
enforceable by substantively identical language in subsection
552a(g)(1)(C). Bettersworth’s allegation under subsection
552a(e)(5) is therefore subsumed by his allegation under subsec-
tion 552a(g)(1)(C).
12a
dismissed all of Bettersworth’s claims with prejudice. Bet-
tersworth filed a timely notice of appeal.
Summary judgment is appropriate when there are no
" genuine issues of material fact, and the moving party is enti-
tled to judgment as a matter of law. Fed. R. Civ. P. 56. A
moving party may rely upon the absence of evidence to sup-
port an essential element of the non-movant’s case. See
Duffy v. Leading Edge Prods., 44 F.3d 308, 310 (Sth Cir.
1995). Once that showing is made, the non-moving party is
required to come forward with specific and credible facts
that would support a reasonable inference of liability with
respect to the essential elements of the non-moving party’s
claims. /d. Thus, the district court was charged with exam-
ining the summary judgment evidence to determine whether
there was evidence supporting each of the essential elements
of Bettersworth’s access, adverse determination, and adverse
effect claims under the Privacy Act. We review the district
court’s decision granting summary judgment de novo, ap-
plying the same standards as did the district court. /d. at 312.
Ill. BETTERSWORTH’S ACCESS CLAIM
Subsection 552a(d)(1) of the Privacy Act provides that
each agency that maintains a system of records shall:
(1) upon request by any individual to gain access to
his record or to any information pertaining to him
which is contained in the system, permit him and
upon his request, a person of his own choosing to
accompany him, to review the record and have a
copy made of all or any portion thereof in a form
comprehensible to him, except that the agency may
watt
l3a
require the individual to furnish a written statement
authorizing discussion of that individual’s record
in the accompanying person’s presence.
5S U.S.C. § 552a(d)(1). Subsection 552a(a)(5) defines
“system of records” as follows:
(5) the term “system of records” means a group of
any records under the control of any agency from
which the information is retrieved by the name of
the individual or by some identifying number,
symbol, or other identifying particular assigned to
the individual.
5 U.S.C. § 552a(a)(5). Subsection 552a(g)(1) provides a civil
remedy for violation of subsection 552a(d)(1).
The threshold issue in any claim alleging denial of access
under the Privacy Act is whether the records sought by the
plaintiff are maintained in a “system of records” retrievable
by an “identifying particular assigned to” the plaintiff. This
qualifying language in the statute reflects a statutory com-
promise between affording individuals access to those rec-
ords relating directly to them and protecting federal agencies
from the burdensome task of searching through agency rec-
ords for mere mention of an individual’s name. Many of the
published Privacy Act cases are aimed at giving meaning to
this statutory requirement. See, e.g., Gowan v. United States
Dep't of the Air Force, 148 F.3d 1182, 1191 (10th Cir. 1998)
(file marked “ethics” was not a surrogate identifier for plain-
tiff under ethics investigation and thus records were not ac-
cessible under the Privacy Act, even though the file
contained information about the plaintiff); Hudson v. Reno,
14a
130 F.3d 1193, 1206 (6th Cir. 1997) (records not accessible
under the Privacy Act because not retrievable by the plain-
tiff's name); Henke v. United States Dep 't of Commerce, 83
F.3d 1453 (D.C. Cir. 1996) (records not accessible under the
Privacy Act, even though agency could search for the rec-
ords by the plaintiff's name, because the agency as a practi-
cal matter did not use the information that way); Cuccaro v.
Secretary of Labor, 770 F.2d 355, 359-60 (3d Cir. 1985)
(documents relating to agency’s investigation of accident
involving plaintiff were not tied to plaintiff's name and thus
not accessible under the Privacy Act); Wren v. Heckler, 744
F.2d 86, 90 (10th Cir. 1994) (records not accessible under
the Privacy Act because not retrievable by the plaintiff's
name, even though the information related to plaintiff).
The district court held that the records Bettersworth
wants, primarily information retrieved by Reserve Bank ex-
aminer Johnson from various agencies and then included in
Reserve Bank files concerning ComCorp’s application for
BHC status, were not maintained in a system of records re-
trievable by Bettersworth’s name, and were therefore not ac-
cessible under § 552a(d)(1). There does not appear to be any
dispute about the fact that the records were maintained in
files referencing the banks with which Bettersworth was as-
sociated, rather than Bettersworth personally. Further, there
does not appear to be any dispute about the fact that the files
were maintained for the purpose of discharging the responsi-
bilities vested by federal law with the defendant agencies.
Bettersworth urges the Court to interpret the statute
broadly to require that he be given access to the agencies’
records in this case because the records pertained to him.
15a
Alternatively, Bettersworth maintains that the agencies used
the bank files as surrogate identifiers for records pertaining
to him. We decline to interpret the statute in a manner that
would deny meaning to the statutory language requiring that
the records be retrievable “by some identifying number,
symbol, or other identifying particular assigned to the indi-
vidual.” 5 U.S.C. § 552a(a)(5); id. § 552a(d)(1). Moreover,
Bettersworth’s assertion that the agencies used the bank files
as a surrogate identifier for information relating to him finds
no support in the record. For these reasons, we affirm the
district court’s dismissal of Bettersworth’s claim that he was
denied access to records subject to disclosure under the Pri-
vacy Act.
IV. BETTERSWORTH’S ADVERSE
DETERMINATION CLAIM
Subsection 552a(g)(1)(C) provides a civil remedy when-
ever an agency:
fails to maintain any record concerning any indi-
vidual with such accuracy, relevance, timeliness,
and completeness as is necessary to assure fairness
in any determination relating to the qualifications,
character, rights, or opportunities of, or benefits to
the individual that may be made on the basis of
such record, and consequently a determination is
made which is adverse to the individual.
5 U.S.C. § 552a(g)(1)(C). Bettersworth’s adverse determina-
tion claim is premised almost entirely upon the Reserve
Bank’s handling of ComCorp’s BHCA application. Specifi-
l6a
cally, Bettersworth claims that the following items constitute
adverse determinations against him within the meaning of §
552a(g)(1)(C): (1) Reserve Bank vice-president McBride’s
November 5, 1993 letter informing ComCorp that the pros-
pects for approval of its BHCA application were extremely
dim, and that further applications would be reviewed directly
by the Board; (2) oral statements made by McBride during a
telephone conversation with Bettersworth’s lawyers about
the viability of ComCorp’s BHCA application; (3) Reserve
Bank examiner Johnson’s working papers and notes prepared
in the course of her review of ComCorp’s BHCA applica-
tion; and (4) the entry in the OCC’s SMS database flagging
Bettersworth’s role in the financial decline of FCB. The dis-
trict court held that Bettersworth’s adverse determination
claim failed as a matter of law because none of the various
statements and writings identified by Bettersworth consti-
tuted an “adverse determination” within the meaning of the
statute.
The district court held that McBride’s November 5, 1993
letter was the only item relied upon by Bettersworth which
even potentially constituted an adverse determination. The
remaining items concern information allegedly relied upon to
draft that jetter.* The district court held that McBride’s No-
* On this point, we note that Bettersworth’s allegations do not di-
rectly identify adverse determinations made by each and every
defendant agency. To the contrary, Bettersworth premises his
claim against the other defendants primarily upon the fact that the
Reserve Bank accessed and relied upon records from the other
agencies when making its determination. At least one court has
recognized that such a connection may be sufficient to support
17a
vember 5, 1993 letter did not constitute a determination be-
cause the letter identified other reasons for the Reserve
Bank’s disinclination to approve the application. The district
court also suggested that ComCorp (or Bettersworth) decided
not to pursue an application with the Board because there
were no Satisfactory answers to the legitimate questions
asked in McBride’s letter.
The agencies argue that the November 5, 1993 letter can-
not be considered an adverse determination because the Re-
serve Bank had no authority to deny ComCorp’s application.
The controlling regulations permit only two courses of ac-
tion; the Reserve Bank can either approve an application for
BHC status or refer it to the Board for further consideration.
See 12 C.F.R. § 225.15. Thus, the agencies maintain that
there could be no determination unless and until ComCorp
forwarded an application to the Board and it was finally de-
nied. See Deters v. United States Parole Comm'n, 85 F.3d
655 (D.C. 1996). Given that ComCorp abandoned that effort,
the matter was terminated before an administrative determi-
nation could be made. In this same vein, the defendant agen-
cies maintain that, even if the November 5, 1993 letter
constituted a determination of any sort, it would be a deter-
mination against ComCorp, the company making the appli-
cation, rather than against Bettersworth personally. Having
reviewed the record, we are persuaded that the diverse
liability. See Dickson, 828 F.2d at 36. Because we affirm the dis-
trict court’s decision that the items identified by Bettersworth do
not constitute an adverse determination under the statute in any
event, we need not and do not decide whether such a showing is
sufficient in this Circuit.
18a
grounds relied upon in the Reserve Bank’s letter, coupled
with the fact that ComCorp was the entity applying for
BHCA status, provide adequate support for the district
court’s conclusion that the November 5, 1993 letter did not
constitute an adverse determination against Bettersworth
within the meaning of § 552a(g)(1)(C).
With regard to the remaining items identified by Better-
sworth as adverse determinations, the agencies ask the Court
to hold that the word “determination” as used in the statute
must mean something akin tu a formal or final administrative
decision. We need not go that far in order to say that no de-
termination was made in this case. At the very least, informal
oral or written statements made in the deliberative process
about a particular administrative determination do not con-
stitute the determination itself. We therefore affirm the dis-
trict court’s conclusion that Bettersworth’s adverse
determination claim fails because there was no evidence of
an adverse administrative determination against him. See 5
U.S.C. § 552a(g)(1)(C) (providing that the determination
must be adverse “to the individual”).
V. BETTERSWORTH’S ADVERSE EFFECT CLAIM
Subsection 552a(g)(1)(D) provides for a civil remedy
whenever an agency “fails to comply with any other provi-
sion of this section, or any rule promulgated thereunder, in
such a way as to have an adverse effect on an individual.”
Bettersworth asserts that the defendant agencies kept infor-
mation on him that was unnecessary to the agencies’ man-
dated purpose, in violation of subsection 552a(e)(1), and that
the agency maintained records describing Bettersworth’s ex-
ercise of his First Amendment rights, in violation of subsec-
- geese ane
19a
tion 552a(e)(7). Beyond these general assertions, Better-
sworth does not describe what portions of which records
maintained by which agencies show such violations. Better-
sworth simply states that the cause of action is supported by
his affidavit. Bettersworth then relies upon the district
court’s failure to address this claim in detail to excuse his
own duty to brief it on appeal.
Federal Rule of Appellate Procedure 28 requires that ap-
pellate parties provide cogent argument, supported by cita-
tion to relevant authorities, statutes, and the record, for all
points raised on appeal. Without such argument, this Court is
in no position to provide any meaningful review. In the ab-
sence of such briefing, we decline to address Bettersworth’s
claim that the district court erroneously dismissed his
§ 552a(g)(1)(D) claim. See, e.g., Matter of T-H New Orleans
Ltd. Partnership, 116 F.3d 790, 796 (Sth Cir. 1997); Mead-
owbriar Home for Children, Inc. v. Gunn, 81 F.3d 521, 532
(Sth Cir. 1996).
CONCLUSION
The district court’s order granting summary judgment in
favor of the defendants (the Federal Deposit Insurance Cor-
poration, the Office of the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System, and the
Federal Reserve Bank of Kansas City) and dismissing plain-
tiff Bettersworth’s Privacy Act claims with prejudice is AF-
FIRMED.
20a
APPENDIX D- REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE IN
THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF TEXAS, AUSTIN
DIVISION, FILED FEBRUARY 1, 2000
A-97-CA-624 JN
JAMES A. BETTERSWORTH
Plaintiff,
V.
FDIC, OCC, BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM & FEDERAL RESERVE BANK
Defendants.
REPORT AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
TO: THEHONORABLE JAMES R. NOWLIN
UNITED STATES DISTRICT JUDGE
Before the Court is Plaintiff's Motion for Partial Summary
Judgement (Doc. #55); Defendants’ Joint Opposition to
Plaintiffs Motion for Partial Summary Judgment (Doc.
#70); Plaintiff's Reply to Defendants’ Joint Opposition (Doc.
#88); Exhibit A to Plaintiff's Motion for Leave to Supple-
ment Summary Judgment Record (Doc. #110); Defendants’
Joint Motion to Dismiss or in the Alternative for Summary
Judgment (Doc. #57); Defendants’ Proposed Findings of
Uncontroverted Facts (Doc. #52); Plaintiffs Response to
2la
Defendants’ Joint Motion to Dismiss or in the Alternative
Summary Judgment (Doc. #72); and Defendants’ Joint Reply
(Doc. #81). These dispositive motions were referred by
United States Chief District Judge James R. Nowlin to the
undersigned for a Report and Recommendation as to the
merits of the motions pursuant to 28 U.S.C. § 636(b), Rule
72 of the Federal Rules of Civil Procedure, and Rule 1(d) of
Appendix C of the Local Rules of the United States District
Court for the Western District of Texas. After reviewing the
parties’ pleadings, relevant case law, as well as the entire
case file, the undersigned issues the following Report and
Recommendation to the District Court.
I. BACKGROUND
Plaintiff, James Bettersworth, and Defendants, Federal De-
posit Insurance Corporation (“FDIC”), the Office of the
Controller of the Currency (“OCC”), the Board of Governors
of the Federal Reserve System (“Board”), and the Federal
Reserve Bank of Kansas City (“Reserve Bank”), have filed
cross-motions for summary judgment. Bettersworth was the
Chief Executive Officer (“CEQ”) and Chairman of the Board
(“COB”) of Southwestern ComCorp., Inc. (“ComCorp”).
Following a foreclosure on a debt, ComCorp acquired all
voting shares of Republic Bank of Tecumeseh, Tecumeseh,
Texas (“Republic”) in December 1988. ComCorp decided to
retain its controlling shares of Republic. Pursuant to the
Bank Holding Company Act’s requirement that the Board
approve all such acquisitions, see 12 U.S.C. §§ 1842 (a)(1),
1841 (a)(1)-(2), ComCorp submitted a draft holding com-
pany application to the Reserve Bank. The draft application
revealed Bettersworth was the CEO and COB of Republic
from August 1987 to May 1989, and that he had also been
22a
CEO and COB of First Commercial Bank (“First Commer-
cial”) in Seguin, Oklahoma from May 1983 to May 1990.
On November 5, 1993, the Reserve Bank responded to
Bettersworth’s draft application with comments outlining
concerns with the application, including managerial and fi-
nancial factors that must be considered under the Bank
Holding Company Act. See 12 U.S.C. § 1842 (c)(2). The
comments detailed concerns with the financial stability of
both banks during the time periods Bettersworth served as
their CEO and COB. Reserve Bank finally commented that
these considerations were not consistent with Board approval
largely because Republic had a unfavorable financial condi-
tion and ComCorp’s debt servicing requirements wouid
place too great a strain on the Bank. The Reserve Bank sug-
gested that if ComCorp wanted to pursue the Application
with the Board, it should include a list of additional informa-
tion. ComCorp did not pursue the application with the
Board, and instead sold Republic in March of 1994.
In late 1995, Bettersworth submitted separate requests,
pursuant to the Privacy Act, to all Defendants for the agen-
cies’ files on “James Austin Bettersworth, James A. Better-
sworth, or J. A. Bettersworth.” Each Defendant agency
responded they did not have records maintained under any of
those names and his request was therefore not subject to the
Privacy Act or the Freedom of Information Act.
On August 27, 1997, Bettersworth filed this cause of action
alleging that Defendants maintained “secret records” con-
cerning him that were contained in “confidential portions” of
the OCC and the FDIC bank examination reports, and that
the Reserve Bank used these secret records to comment on
23a
the sufficiency of ComCorp’s 1993 draft application.’ Bet-
tersworth’s Complaint contains three allegations of Privacy
Act violations: (1) that Defendants failed to give him access
to these secret records; (2) that Defendants kept inaccurate
information resulting in an adverse determination against
him; and (3) that Defendants failed to keep only those rec-
ords that are relevant to fulfill an agency’s statutory purpose.
Defendant’s previously filed a motion to dismiss present-
ing largely the same arguments as their current motion for
summary judgment. The District court denied the motion
stating Bettersworth had sufficiently alleged violations of the
Act, but inviting Defendants to present the arguments in a
properly supported motion for summary judgment. (Doc.
#25).
Ii. ANALYSIS
A. Standard of Review
Summary judgment is appropriate under Rule 56(c) of the
Federal Rules of Civil Procedure only “if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving
' Bettersworth’s amended complaint additionally alleges that De-
fendant OCC maintained its secret records concerning him in its
electronic and paper files for First Commerce. He further alleges
that in a OCC Aug. 1991 Supervisory comment the OCC and an
adverse regulatory determination under section 914 of the Finan-
cial Institution Reform, Recovery, and Enforcement Act of 1989,
12 U.S.C. § 18311,
24a
party is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(c). A dispute is genuine only if the evidence is such
that a reasonable jury could return a verdict for the non-
moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S.
242 (1986).
The party seeking summary judgment bears the burden of
showing that there is an absence of evidence to support the
non-movant’s case. See Celotex Corp. v. Catrett, 477 US.
317 (1986); Coleman v. Houston Independent School Dis-
trict, 13 F.3d 528, 533 (5" Cir. 1997). After a proper motion
for summary judgment is made, the non-movant must set
forth specific facts showing that there is a genuine issue of
material fact for trial. See Anderson, 477 U.S. at 248.
The Court views facts in the light most favorable to the
non-movant and draws all reasonable inferences in his favor.
See Coleman, 113 F.3d at 533. Unsupported allegations or
affidavit or deposition testimony setting forth ultimate or
conclusory facts and conclusions of law are insufficient to
defeat a proper motion for summary judgment. See Duffy v.
Leading Edge Products, Inc., 44 F.3d 308, 312 (5" Cir.
1995). Applying these standards, the undersigned turns to
the merits of the motions for summary of judgment.
B. Privacy Act
The privacy act was enacted in 1974 in an effort to im-
prove the quality of information concerning individuals
maintained in agency filed. See Henke v. United States De-
partment of Commerce, 83 F.3d 1453, 1456 (D.C. Cir.
1996). The Privacy Act provides, in pertinent part:
et
25a
each agency that maintains a system of records
shall . . . upon request by an individual to gain ac-
cess to his record or to any information pertaining
to him which is contained in the system, permit
him . . . to review the record and have a copy
made...
5 U.S.C. § 552a (d)(1). The Act defines a “system of rec-
ords” as:
a group of any records under the control of any
agency from which information is retrieved by the
name of the individual or by some identifying
number, symbol, or other identifying particular as-
signed to the individual.
Id. § 552a (a) (b). The Act encourages government agencies
to keep accurate records by requiring them to maintain all
records which are used by the agency in making any deter-
mination about any individual with accuracy, relevance,
timeliness, and completeness as is reasonably necessary to
assure fairness. See id §522a (e) (5). The Act further pro-
hibits disclosure of any record contained in a system of rec-
ords by any means of communication to any other person or
any other agency unless the individual has given prior writ-
ten consent, except if disclosure of the information would be
required under the Freedom of Information Act.? See Id.
552a (b) (2).
* The Freedom of Information Act reflects a general philosophy of
full agency disclosure with certain delineated statutory exemp-
26a
C. Bettersworth’s Claim for Access to Defendants’
Records
Bettersworth’s first claim is that Defendants maintained
secret records concerning him which are subject to the Pri-
vacy Act. In order for the Privacy Act to apply, Bettersworth
must establish that the agency maintains a system of records
by which they can retrieve records by his name or a number
or identifier assigned to him, and that Defendants withheld
these records from him. See 5 U.S.C. § 552a (g) (1) (C).
Bettersworth does not dispute that Defendants do not main-
tain files under his name; however, he argues he is entitled to
Defendants’ files which contain any references to him.
Generally, Defendants are authorized to evaluate, and in
fact are charged with the duty of evaluating, the performance
of banking management which involves, inter alia, evaluat-
ing individual bank officers through periodic bank examina-
tions. See 12 U.S.C. §§ 325, 481, 1820 (b) and (d).
Specifically, the Board is charged with the administration of
the Bank Holding Company Act which prohibits a company
from holding more that twenty-five (25%) of voting shares in
a bank without Board approval. See 12 U.S.C. § 1841, ef.
seq. To this end, the Board assesses the financial and mana-
gerial resources of the applicant company and the bank. See
id. § 1842 (c) (2). The Board delegates the authority to ac-
cept and determine the informational completeness of appli-
cations for approval to the Federal Reserve Banks. See 12
C.F.R. § 225.15.
tions. See Dep't of Air Force v. Rose, 425 U.S. 352, 360-61
(1976).
27a
In this case, Reserve Bank was required to evaluate the
managerial competency of Bettersworth in connections with
reviewing ComCorp’s draft application to acquire Republic.
ComCorp’s draft applications revealed his previous supervi-
sory positions with First Commercial and Republic Bank.
Reserve Bank retrieved those institution’s examination files,
which contained as part of their examination information on
Bettersworth as a bank officer.
Accordingly, documents referencing Bettersworth do ap-
pear to exist. However, in responding to a request for infor-
mation, Congress does not impress upon a federal agency an
obligation to “comb its records for mention of a requestor’s
name.” See Connolly v. Comptroller of the Currency, 673
F.Supp. 1419, 1424 (S.D. Texas 1987), rev'd on other
grounds, 876 F.2d 1209 (5"™ Cir. 1989).
An agency is required to maintain records that are rea-
sonably relevant and necessary to accomplish a statutory
mandated purpose. See 5 U.S.C. § 552a (e)(1). The Office
of Management and Budget Guidelines provide cogent guid-
ance in this area.
Congress did not intend to require that an individ-
ual be given access to information which the
agency does not retrieve by reference to his or her
name or some other identifying particular. It an
individual is named in a record about someone else
(or some other type of entity) and his agency only
retrieves the portion pertaining to him by reference
to the other person’s name (or some other organi-
zation/subject identifier), the agency is not required
to grant him access. Indeed, if this were not the
28a
case, it would be necessary to establish elaborate
cross-reference among records, thereby increasing
the potential for privacy abuses.
40 Fed. Reg. 28, 957 (July 9, 1975). Bettersworth does not
dispute that Defendant agencies do not index their records
under an individual’s name. There is no evidence that this
system of record-keeping is a covert attempt to conceal in-
formation; but, instead, the summary judgment evidence es-
tablished the system is the most efficient system of
accomplishing each Defendant’s task of performing bank
examinations. There is no evidence that Defendant agencies
used financial institutions as a “surrogate identifier” for
Bettersworth. Bettersworth does not dispute the names of
the financial institutions for which he served as an officer
came from information he himself provided to Defendants.
An elaborate cross-referencing index would be unduly
burdensome on Defendants and would not further any statu-
torily mandated purposed. The summary judgment evidence
established that records referencing Bettersworth were dis-
covered in response to ComCorp’s draft applications by
pulling the examination files for the banks for which he
served as a financial officer. Because Bettersworth sought
files on “Bettersworth” and Defendants’ files are maintained
according to the name of the financial institution. there is no
requirement that Defendants make them accessible to Better-
sworth under Privacy Act. Therefore, the undersigned finds
that the records Bettersworth seeks are not subject to the Act
and he is not entitled to injunctive relief.
29a
D. Defendants Did Not Make and Adverse Determination
Bettersworth’s worth second claim is that Defendants
failed to maintain accurate records resulting in an adverse
determination against him and entitling him to damages un-
der 5 U.S.C. § 552a (g) (1) (c). Although at least one court
has held that the “system of records” requirement of 5 U.S.C.
§ 552a (d) (1) does not apply to 5 U.S.C. § 552a (g) (1) (c),?
the undersigned notes both sgetions contain the “system of
records” language and is unpersuaded that Congress intended
any other meaning than what has previously been applied.
Regardless, the undersigned finds that Bettersworth fails to
establish an adverse determination. The only opportunity for
Defendants to make a determination was ComCorp’s sub-
mission of a draft application to retain shares of Republic
and thereby become a bank holding company. As stated
previously, the Board delegated its authority to review hold-
ing company applications to Reserve Bank. Reserve Bank,
however, does not have the authority to deny an application
on behalf of the Board. Reserve Bank simply compiled a
commentary for ComCorp’s use in Filing a formal applica-
tion with the Board. )
Defendants’ summary judgment evidence establishes a
multitude of areas which were not consistent with Board ap-
proval. To be certain, some of these areas concerned Better-
sworth’s involvement in the past with less than financially
* See Connolly v. Comptroller of the Currency, 673 F.Supp. 1419,
1424 (S.D. Tex. 1987), rev'd on other grounds, 876 F.2d 1209 (5"
Cir. 1989)
30a
stable financial institutions. Perhaps these are areas that
Bettersworth could not improve for submission to the Board
and the Court suspects this is why ComCorp decided not to
pursue the application formally. However, the plain lan-
guage of the Privacy Act requires there can be an adverse
determination in order for damages to be assessed. See 5
U.S.C. § 552a (g) (1) (C). Because the commentary did not
amount to a determination, and indeed Reserve Bank lacked
the authority to make a determination. Bettersworth is not
entitled to damage pursuant to this section.
Ill. RECOMMENDATION
The undersigned recommends that the District Court
GRANT Defendant’s Motion to Dismiss or in the Alterna-
tive for Summary Judgment, DENY Plaintiff's Motion for
Partial Summary Judgment; and DISMISS WITH PREJU-
DICE Plaintiff's claims brought against Defendants. The
undersigned further recommends that all pending motions in
this case be denied as moot.
IV. OBJECTIONS
The parties may file objections to this Report and Recom-
mendation. A party filing objections must specifically iden-
tify those findings or recommendations to which objections
are being made. The District Court need not consider frivo-
lous, conclusive, or general objections. See Battis v. United
States Parole Comm'n, 834 F.2d 419, 421 (5" Cir. 1987).
A party’s failure to file written objections to the proposed
findings and recommendations contained in this Report
within ten (10) days after that party is served with a copy of
the Report shall bar that party from de novo review by the
3la
district court of the proposed findings and recommendations
in the Report and, except upon grounds of plain error, shall
bar the party from appellate review of unobjected-to pro-
posed factual findings and legal conclusions accepted by the
district court. See 28 U.S.C. § 636 (b) (1)(C); Thomas v.
Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Serv-
ice Auto Assoc., 79 F.3d 1415, 1428-29 (5"™ Cir. 1996) (en
banc).
The Clerk is directed to send a copy of this Report and
Recommendation to the parties by certified mail, return re-
ceipt requested.
SIGNED this 1“ day of February, 2000.
STEPHEN H. CAPELLE
UNITED STATES
MAGISTRATE JUDGE
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