FEDERAL DEPOSIT INSURANCE CORPORATION, APPELLANT V. JAMES E. MALLEN ET AL. No. 87-82 In the Supreme Court of the United States October Term, 1987 On Appeal from the United States District Court for the Northern District of Iowa Jurisdictional Statement PARTIES TO THE PROCEEDING There is one party in addition to those named in the caption: Appellee, Farmers State Bank of Kanawha, Iowa. TABLE OF CONTENTS Parties to the proceeding Opinions below Jurisdiction Constitutional and statutory provisions involved Questions presented Statement The questions are substantial Conclusion Appendix OPINIONS BELOW The decision of the district court concluding that Section 1818(g) is unconstitutional, declaring the Notice and Order of Suspension null and void, and enjoining appellant from enforcing it against appellee Mallen (App., infra, 1a-18a) is not yet reported. The district court's decisions denying appellant's motion for an amendment of the judgment (App. infra, 19a-23a) and denying appellant's motion for a stay pending appeal (App., infra, 24a-26a) are also not yet reported. JURISDICTION The order of the district court declaring the Notice and Order of Suspension null and void and enjoining appellant from enforcing it against appellee Mallen (App., infra 18a) was entered on February 17, 1987. A notice of appeal to this Court (App., infra 33a-34a) was filed on March 11, 1987. On May 4, 1987, Justice Blackmun extended the time within which to docket this appeal to and including June 9, 1987; on May 30, 1987, Justice Blackmun further extended the time to and including July 9, 1987. The jurisdiction of this Court is invoked under 28 U.S.C. 1252. CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The Fifth Amendment provides in pertinent part: nor shall any person * * * be deprived of life, liberty, or property without due process of law * * *. Section 1818 provides in pertinent part: (g) Suspension or removal of director or officer charged with felony (1) Whenever any director or officer of an insured bank, or other person participating in the conduct of the affairs of such bank, is charged in any information, indictment, or complaint authorized by a United States attorney, with the commission of or participation in a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under State or Federal law, the appropriate Federal banking agency may, if continued service or participation by the individual may pose a threat to the interests of the bank's depositors or may threaten to impair public confidence in the bank, by written notice served upon such director, officer, or other person, suspend him from office or prohibit him from further participation in any manner in the conduct of the affairs of the bank. A copy of such notice shall also be served upon the bank. Such suspension or prohibition shall remain in effect until such information, indictment, or complaint is finally disposed of or until terminated by the agency. In the event that a judgment of conviction with respect to such crime is entered against such director, officer, or other person, and at such time as such judgment is not subject to further appellate review, the agency may, if continued service or participation by the individual may pose a threat to the interests of the bank's depositors or may threaten to impair public confidence in the bank, issue and serve upon such director, officer, or other person an order removing him from office or prohibiting him from further participation in any manner in the conduct of the affairs of the bank except with the consent of the appropriate agency. A copy of such order shall also be served upon such bank, whereupon such director or officer shall cease to be a director or officer of such bank. A finding of not guilty or other disposition of the charge shall not preclude the agency from thereafter instituting proceedings to remove such director, officer or other person from office or to prohibit further participation in bank affairs, pursuant to paragraph (1), (2), (3), or (4) of subsection (e) of this section. Any notice of suspension or order of removal issued under this paragraph shall remain effective and outstanding unitl the completion of any hearing or appeal authorized under paragraph (3) hereof unless terminated by the agency. * * * * * (3) Within thirty days from service of any notice of suspension or order of removal issued pursuant to paragraph (1) of this subsection, the director, officer, or other person concerned may request in writing an opportunity to appear before the agency to show that the continued service to or participation in the conduct of the affairs of the bank by such individual does not, or is not likely to, pose a threat to the interests of the bank's depositors or threaten to impair public confidence in the bank. Upon receipt of any such request, the appropriate Federal banking agency shall fix a time (not more than thirty days after receipt of such request, unless extended at the request of the concerned director, officer, or other person) and place at which the director, officer, or other person may appear, personally or through counsel, before one or more members of the agency or designated employees of the agency to submit written materials (or, at the discretion of the agency, oral testimony) and oral argument. Within sixty days of such hearing, the agency shall notify the director, officer, or other person whether the suspension or prohibition from participation in any manner in the affairs of the bank will be continued, terminated, or otherwise modified, or whether the order removing said director, officer or other person from office or prohibiting such individual from further participation in any manner in the conduct of the affairs of the bank will be rescinded or otherwise modified. Such notification shall contain a statement of the basis for the agency's decision, if adverse to the director, officer or other person. The Federal banking agencies are authorized to prescribe such rules as may be necessary to effectuate the purposes of this subsection. QUESTIONS PRESENTED 1. Whether 12 U.S.C. 1818(g), which provides that, whenever any director or officer of a federally insured bank has been indicted for a crime involving dishonesty or breach of trust that is punishable by imprisonment for more than one year, the appropriate federal banking agency may suspend such person from office if his continued service may pose a threat to the interests of the bank's depositors or to the public confidence in the bank, is invalid under the Due Process Clause of the Fifth Amendment because it allows the agency a maximum of 30 days after receipt of a request to conduct a hearing and a maximum of 60 days after the hearing to issue a written decision whether the suspension order will be continued, terminated or modified. 2. Whether 12 U.S.C. 1818(g) is invalid under the Due Process Clause because it gives the agency discretion as to whether to receive oral testimony at such a hearing. STATEMENT 1. Appellee Mallen is the President and a director of appellee Farmers State Bank of Kanawha, Iowa (App., infra, 2a). He is also the largest stockholder in Kanawha Investment Holding Company, a bank holding company that owns 92% of the stock of the bank (id. at 8a). On December 10, 1986, a federal grand jury in the Northern District of Iowa returned a two-count indictment against Mallen. Count 1 charged Mallen with making false statements in a personal financial statement for the purpose of influencing the actions of appellant Federal Deposit Insurance Corporation (the FDIC), in violation of 18 U.S.C. 1014, a charge that carries a penalty of up to two years in prison. Count 2 charged Mallen with making false statements to the FDIC in violation of 18 U.S.C. 1001, a charge that carries a penalty of up to five years in prison. App., infra 2a. Section 1818(g) authorizes the appropriate federal banking agency -- in the case of Farmers State Bank, the FDIC -- to issue a written notice suspending a bank officer or director from office, or prohibiting him from further participation in the conduct of the affairs of the bank, if he has been indicted for a crime involving dishonesty or breach of trust that carries a penalty of imprisonment for more than one year, if his continued service may pose a threat to the interests of depositors or may threaten to impair public confidence in the bank. If a judgment of conviction of such a crime is entered, Section 1818(g) authorizes the appropriate federal banking agency to remove the officer or director from office. Section 1818(g)(3) sets forth procedures applicable to suspensions from office, prohibitions from participation in the conduct of a bank's affairs, and removals from office. An officer subject to a suspension or prohibition has the right, within 30 days after receiving a notice of suspension or prohibition, to request "an opportunity to appear before the agency to show that the continued service to or participation in the conduct of the affairs of the bank by such individual does not, or is not liekly to, pose a threat to the interests of the bank's depositors or threaten to impair public confidence in the bank." The agency is required to hold such a hearing within 30 days after receipt of such a request. At the hearing, the suspended officer or director may "submit written materials (or, at the discretion of the agency, oral testimony) and oral argument." The FDIC has be rule delegated the authority to decide whether to receive oral testimony to the hearing officer (12 C.F.R 308.61(e)). The agency is required to notify the suspended officer, within sixty days after the hearing, whether the suspension prohibition will be continued, terminated or otherwise modified. If the decision is adverse to the officer, the agency is required to provide a statement of the basis for the agency's decision. /1/ On January 26, 1987, the FDIC served on Mallen, with a copy to the bank, a Notice and Order of Suspension stating that he was suspended, effective immediately, from his positions as President and director of the bank and prohibited from participation in the conduct of the affairs of the bank (App., infra, 27a). One effect of the prohibition on participation in the bank's affairs was to prevent Mallen from voting his stock in the holding company (id. at 2a-3a). The notice explained that Mallen had been thus suspended and prohibited because (1) he had been charged in an indictment, filed by the United States Attorney in the United States District Court for the Northern District of Iowa, with the commission of or participation in crimes involving dishonesty or breach of trust punishable by imprisonment for a term exceeding one year, and (2) it appeared that continued service or participation by Mallen in the affairs of the bank might pose a threat to the interests of the bank's depositors or threaten to impair public confidence in the bank (id. at 27a). The notice of suspension informed Mallen that he had the right, within thirty days of receipt of the notice, to request in writing an opportunity to appear before the FDIC in order to show that his continued participation in the bank's affairs would not threaten the interests of depositors or public confidence in the bank. The notice stated that the FDIC would schedule a hearing to be held within 30 days of its receipt of his request and that the hearing would be conducted in the manner prescribed in 12 U.S.C. 1818(g)(3). App., infra, 27a-28a. By letter dated Friday, January 30, 1987, Mallen's counsel informed the FDIC that Mallen requested an immediate hearing under the statute, with the opportunity to present oral testimony as well as written evidence (App., infra, 4a). The FDIC scheduled the hearing for February 18, nineteen days after the date shown on the request (ibid.). The FDIC's regional counsel "initially took the position that the hearing should simply be oral argument on written submissions" (ibid.), /2/ but it never became "clear whether oral evidence would be permitted, since denying permission to present oral evidence is in the discretion of the hearing officer" (ibid.). On February 6, Mallen brought this action in the United States District Court for the Northern District of Iowa, asking that Section 1818(g) be declared invalid and that the FDIC be enjoined from enforcing the notice of suspension and prohibition against him (App., infra, 1a-2a). Mallen argued that the suspension and prohibition deprived him of liberty and property within the meaning of the Fifth Amendment. He claimed that the post-suspension hearing provided for in the statute was inadequate under the Due Process Clause because (1) the delay permitted between his request for a hearing and final decision by the FDIC was excessive and (2) the hearing officer was authorized, in his discretion, to dispense with oral testimony. Mallen also argued that the statute was unconstitutional because it does not provide for judicial review of the FDIC's ultimate decision to continue, modify or terminate the suspension. /3/ Mallen sought a temporary restraining order, a preliminary injunction and a permanent injunction. Id. at 6a. The FDIC responded that the statute afforded Mallen due process. /4/ 2. On February 17, 1987, the district court enjoined the FDIC from enforcing the notice of suspension and prohibition. /5/ The district court determined (App., infra, 17a) that it had jurisdiction to decide the constitutional issue under 28 U.S.C. 1331. The court then concluded that both Mallen and the bank had property interests in Mallen's continued employment and participation in the bank's affairs (App., infra, 9a). Citing this Court's formulation in Mathews v. Eldridge, 424 U.S. 319, 333 (1976), that due process requires "(an) opportunity to be heard at a meaningful time and in an meaningful manner," the district court next inquired whether it was permissible to suspend Mallen with no pre-suspension hearing (App., infra, 9a). The court decided, citing Mackey v. Montrym, 443 U.S. 1 (1979), that the Constitution does not mandate a pre-suspension hearing because "in cases such as this there generally is a compelling (governmental) interest in a summary adjudication" (App., infra, 10a). The court ruled, however, that the time periods set forth in Section 1818(g)(3) deprived appellees of a meaningful hearing. The court found the situation analogous to that in Barry v. Barchi, 443 U.S. 55 (1979), in which this Court invalidated the New York State Racing Commission's procedures for summary suspension of horse trainers whose horses tested positive for drugs. In Barry, the Court noted that while Barry had been suspended for fifteen days, the Racing Commission's procedures gave the Commission thirty days in which to rule finally on the suspension. Thus, under the New York system trainers like Barry, subject to brief suspensions, would never receive any process at all. Noting (App., infra, 5a) that, under the Speedy Trial Act, 18 U.S.C. 3161(c)(1), which requires that a criminal trial begin within 70 days (not including any "excludable time") after the filing of an indictment, Mallen's criminal trial could be over (assuming minimal "excludable time") before the expiration of the period permitted by Section 1818(g), the district court concluded that the statute's post-suspension hearing was a "toothless" remedy, because it would give Mallen meaningful process only if the FDIC wanted it to (App., infra, 11a-12a). The district court was unable to find any persuasive reason why the FDIC should need 90 days to make a decision (id. at 16a). The district court also found the statute unconstitutional because it gives the FDIC discretion to receive or not receive oral testimony. The court reasoned that "at some point, the plaintiff in a case such as this should have an opportunity to present live witnesses" (App., infra, 15a) and determined that the FDIC had given no persuasive reason why "denial of the opportunity to present (oral)) evidence is in the sole discretion of a hearing officer" (id. at 16a). Rather than order the FDIC to adhere to a stricter timetable and to allow oral testimony at the hearing, the court concluded that the post-suspension procedures "violate due process" and enjoined the FDIC from enforcing the Notice and Order of Suspension against Mallen (id. at 18a). On February 27, the FDIC moved the district court to amend its order. The FDIC proposed that, rather than being enjoined entirely from enforcing the suspension order, it be required to provide Mallen with a prompt hearing, to hear oral testimony, and to make its decision promptly thereafter (App., infra, 20a). At a March 6 hearing before the district court, the FDIC suggested that it hold a hearing on March 9, with an oral disposition by March 26 and written disposition by April 8 (ibid.). On March 10, the district court entered an order refusing to amend its earlier order. It noted that Mallen's criminal trial was scheduled to begin on March 16 and was estimated to last one week. Thus, as the district court understood the situation, the FDIC's decision on the suspension would be entered "only after Mallen has 'suffered the full penalty' imposed by the suspension." App., infra, 20a (quoting Barry v. Barchi, 443 U.S. at 66). The district court also thought it unfair to Mallen to permit the FDIC to conduct a hearing on the suspension at a time so close to Mallen's criminal trial (App., infra, 21a-22a). The next day, the district court denied the FDIC's motion for a stay pending appeal (id. at 24a-26a). /6/ The FDIC then noticed an appeal from the district court's ruling to this Court (id. at 33a-34a). 3. Mallen's criminal trial began on March 16. On March 24, the jury convicted him on both counts of the indictment. On May 1, the district court (not the judge in this case) sentenced Mallen on the second count to three years' imprisonment, suspended all but sixty days, and fined him $10,000. The court set aside the first count, finding the indictment defective. Mallen's appeal, and the Government's cross appeal of the dismissal of the first count of the indictment, are pending in the United States Court of Appeals for the Eighth Circuit (Nos. 87-1590 and 87-1722); briefing has not been completed and oral argument has not yet been scheduled. A different provision of law, 12 U.S.C. 1829, prohibits any person who has been convicted of a crime involving "dishonesty or breach of trust" from serving as a director or officer of a bank insured by the FDIC unless the FDIC consents in writing. After Mallen's conviction, the FDIC informed him that it would not consent to his service at Farmers State Bank. Mallen took the position that the Section 1829 bar does not apply until his appeals are finally disposed of. The FDIC then obtained a preliminary injunction, from the court that had heard the criminal case, restraining Mallen from serving as a director, officer, or employee of the bank (No. C-87-3053 (N.D. Iowa)). /7/ Although this injunction now restrains Mallen from serving as the bank's President or as a director, the injunction does not prevent him from otherwise participating in the bank's affairs, including by voting his stock in the holding company. Hence this injunction is, in a material respect, less broad than the notice of suspension and prohibition at issue in the present case. See Feinberg v. FDIC, 420 F. Supp. 109, 112-115 (D.D.C. 1976) (three-judge court) (challenge to earlier version of Section 1818(g) prohibition not mooted by conviction because Section 1829 disqualification not as broad as Section 1818(g) prohibition). The FDIC now appeals from the district court's order holding Section 1818(g) unconstitutional. THE QUESTIONS ARE SUBSTANTIAL In Section 1818(g), Congress gave the federal banking agencies the power to order the immediate suspension of any bank officer or director who is indicted for a felony involving breach of trust or dishonesty. The original version of Section 1818(g) provided for no pre- or post-suspension hearing. After a three-judge court ruled (in Feinberg v. FDIC, supra) that the Constitution requires at least a post-suspension hearing, Congress added Section 1818(g)(3), which provides that (1) the suspended director or officer may request a hearing, (2) the banking agency must hold a hearing within 30 days after receiving a request, (3) the agency may in its discretion receive or decline to receive oral testimony, and (4) the agency must issue a written decision within 60 days after the hearing. The district court in the present case declared Section 1818(g) invalid on the ground that it allows up to 90 days before a decision is issued, and on the ground that it permits the agency to decline to receive oral testimony at the hearing. This decision, which essentially nullifies the banking agencies' power of suspension under Section 1818(g), is erroneous. We agree that Mallen's interests in his positions with the bank and in his ability to vote his stock in the holding company are "property" protected by the Fifth Amendment. But the district court erred in ruling that Section 1818(g) denies him due process of law. The time periods provided by the statute comport with the requirements of due process under the circumstances. The opportunity to present oral testimony is not, under the circumstances, a requirement of due process, and even assuming it were, the district court erred in invalidating the power of suspension in its entirety rather than directing the FDIC to receive oral testimony. This Court's review is plainily warranted. 1. a. Section 1818(g) was originally enacted as part of the Financial Institutions Supervisory Act of 1966, Pub. L. No. 89-695, 80 Stat. 1028 (the 1966 Act). On its face, it reflects Congress's determination that persons who have been indicted for serious crimes involving dishonesty or breach of trust should be subject to summary suspension from participation in the affairs of federally insured banks. Section 1818(g) is only one of several provisions reflecting the importance of swift summary action by bank regulatory agencies to protect insured banks from conditions that threaten their depositors or public confidence. See, e.g., 12 U.S.C. 1818(c) (temporary orders to cease and desist from unsafe or unsound practices). /8/ As originally enacted, Section 1818(g) did not refer to a threat to the interests of the bank's depositors or to public confidence and contained no provision for a hearing either before or after suspension. Congress expected that suspension following indictment would be "virtually routine" (S. Rep. 1482, 89th Cong., 2d Sess. 2 (1966)) and apparently believed it constitutionally sufficient that the outcome of the criminal proceedings would either terminate the suspension or lead to permanent removal. The section as original enacted was challenged in Feinberg v. FDIC, 420 F. Supp. 109 (D.D.C. 1976) (three-judge court). Feinberg was indicted for conspiracy to commit mail fraud, and the FDIC suspended him from his position as President and a director of the Jefferson State Bank of Chicago and prohibited him from participating in the bank's affairs. Feinberg brought suit, claiming that he had been deprived of liberty and property without due process, since he had been provided with nothing more than an informal conference with FDIC officials prior to his suspension (420 F. Supp. at 111). The court in Feinberg recognized the dangers to banks and their depositors potentially arising from continued participation in their affairs by persons indicted for serious crimes, and it fully appreciated the need for summary suspensions. Based on its examination of the statute and its legislative history, the three-judge court said, "there is a strong governmental-public interest in speedily and efficiently removing indicted officers, directors, or employees from financial institutions, the viability of which depend on the public's confidence" (420 F. Supp. at 119). The court added (id. at 120): It is clear from the congressional history that Congress, in passing 12 U.S.C. Section 1818, was concerned with the dangerous effect of the public's loss of confidence in financial institutions. Notably, section 1818 was introduced at the request of the regulatory agencies, its purpose being the creation of more effective regulatory powers to deal with crises in financial institutions. 112 Cong. Rec. 10077-84, 20223-48 (1966). The Senate Committee Report stated: "Existing remedies have proven inadequate. On the one hand they may be too severe in many situations, such as taking custody of an institution or terminating its insured status. On the other hand they may be so time consuming and cumbersome that substantial injury occurs to the institution before remedial action is effected." Id. at 20082. In order to maintain the public's confidence, Congress agreed with the agencies that immediate action was necessary where a director, officer or employee of an insured bank was indicted for a felony involving dishonesty or breach of trust. To delay this action, which occurs in the form of a Notice and Order of Suspension, would thus seriously and directly undermine the congressional purpose behind Section 1818(g)(1). Accordingly, the three-judge court ruled that a pre-suspension hearing was not constitutionally required (ibid.). The Feinberg court also observed that it "appears arguable that if the issuance of a Notice and Order of Suspension were automatic upon the return of an indictment or the filing of an information or complaint, then there might not be a need for a hearing" (420 F. Supp. at 116). Noting, however, that the statute required the agency to decide whether the crime is one involving "dishonesty or breach of trust" and that the word "may" (issue a notice of suspension) apparently contemplated some exercise of discretion, the court ruled that Section 1818(g) as originally enacted was unconstitutional for failure to provide any hearing at all. The court stated that at a minimum due process required an "immediate post-suspension hearing" (420 F. Supp. at 120). The court added that in its view "notice, the opportunity to be represented by counsel, for written submissions, and for oral argument, appear mandated by the circumstances" (ibid.), but that "the nature of the relevant inquiry' * * * does not seem to require any more than written submission (of evidence)" (ibid. (footnote omitted) (quoting Mathews v. Eldridge, 424 U.S. at 343)). In direct response to Feinberg, Congress amended paragraph (1) of subsection (g), adding the reference to a threat to the interests of depositors or to public confidence, and added paragraph (3) to subsection (g), providing that a post-suspension hearing, following the procedures outlined generally by the Feinberg court, must be convened within 30 days, with a written decision to follow within 60 days. Pub. L. No. 95-630, Section 111(a)(1), 92 Stat. 3665-3666. The House Report accompanying this amendment explained that Feinberg had held that "the removal statute was deficient since it did not provide opportunity for hearing and review of an agency's action. Under the provisions of H.R. 13471 an individual will now have that opportunity" (H.R. Rep. 95-1383, 95th Cong., 2d Sess. 19 (1978). Section 1818(g) thus reflects Congress's specific determination that a summary suspension power is vital to the protection of insured banks and that the procedures specified -- including the time periods allowed and the discretion to accept or not accept oral testimony -- meet the requirements of due process. The district court here exercised the federal courts' "ultimate and supreme (power)" (Chicago & Grand Trunk Ry. v. Wellman, 143 U.S. 339, 345 (1892)) in the face of this deliberate congressional determination. b. As this Court recently stated, "(a) facial challenge to (the validity of) a legislative Act is, of course, the most difficult challenge to mount successfully, since the challenger must establish that no set of circumstances exists under which the Act would be valid" (United States v. Salerno, No. 86-87 (May 26, 1987), slip op. 5). Nevertheless, the district court, on the basis of an unsound analogy to Barry v. Barchi, held the time limits chosen by Congress unconstitutional in all cases. In Barry, the Court invalidated a summary 15-day suspension, which was subject to a 30-day post-suspension review, on the ground that under those circumstances the review did not afford any meaningful process at all. Here, the district court asserted that because of the Speedy Trial Act the period of a Section 1818(g) suspension generally would be less than the time allowed by 12 U.S.C. 1818(g)(3) for a hearing and decision, rendering the post-suspension process similarly meaningless. But the premise of this argument, that a Section 1818(g) suspension would normally last less than 90 days, is demonstrably quite wrong. First, the 70-day period provided for by the Speedy Trial Act is subject to several categories of "excludable time," and a great many criminal trials, including Mallen's, have taken more than 90 days from indictment to verdict. More important, the court misunderstood the duration of a Section 1818(g) suspension, which continues until "such information, indictment, or complaint is finally disposed of or until terminated by the agency." It is clear from the structure of Secion 1818(g) that this refers to the completion of appellate review of a conviction, because the ensuing remedy, permanent removal after conviction, cannot be imposed until the conviction is no longer subject to appellate review. 12 U.S.C. 1818(g)(1). The district court in Feinberg understood this point and noted that "such a final disposition, considering the possible appellate avenues, presents the possibility of a substantial passage of time" (420 F. Supp. at 119). Mallen's indictment has not yet been finally disposed of for purposes of the statute, and may not be for a considerable period. Meanwhile, had the district court not intervened, Mallen would have had his hearing and final determination, on a suspension that began last January 26, some time last April at the latest. The district court, relying on the misplaced analogy to Barry, made no serious examination of whether Congress was justified in allowing up to 30 days to hold a hearing, and up to 60 days thereafter for a decision, before a person under indictment for a felony involving a breach of trust or dishonesty may be returned to a position of trust at an insured bank. As this Court has noted, "there is no obvious bright line dictating when a (post-suspension) hearing must occur" (United States v. Eight Thousand Eight Hundred and Fifty Dollars ($8,850), 461 U.S. 555, 562 (1983)). We respectfully suggest that in this instance the congressional judgment was entitled to deference and should have been sustained. An indictment reflects the grand jury's determination that there is probable cause to believe that the accused has committed the felony charged (see United States v. Calandra, 414 U.S. 338, 343 (1974)); the decision to indict "is made by a deliberative public body acting as an arm of the judiciary, operating under constitutional and other legal constraints" (James A. Merritt and Sons v. Marsh, 791 F.2d 328, 330 (4th Cir. 1986)). Where the felony charged involves dishonesty or breach of trust, the grand jury's determination plainly raises the most serious questions about whether the officer should continue to participate in the conduct of the affairs of a federally insured bank. /9/ Particularly in view of the fact that the grand jury determination provides "an initial check against mistaken decisions" (Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 545-546 (1985)), the 90-day maximum period allowed for final decision on Section 1818(g) suspensions falls well within the range this Court has found acceptable. See, e.g., Eight Thousand Eight Hundred and Fifty Dollars, 461 U.S. at 565 (18-month delay between seizure of currency and commencement of forfeiture action "quite significant" but not excessive); Loudermill, 470 U.S. at 545-546 (nine-month delay in post-termination review acceptable where pretermination hearing provided "initial check"); cf. Mathews v. Eldridge, 424 U.S. at 341-342; Arnett v. Kennedy, 416 U.S. 134, 167-171 (1974) (Powell, J., concurring); Dixon v. Love, 431 U.S. 105, 109-110 (1977). There are sound reasons for the statutory timetable. Where possible, the FDIC schedules a hearing to be held in less than 30 days, as it did here. But the FDIC, which does not employ any administrative law judges, generally secures the services of a retired administrative law judge to conduct the hearing. And the FDIC Regional Counsels' normal practice is to offer oral testimony (subject to cross examination) and not to object to the presentation of oral testimony by the respondent (see generally Hearing Tr. 60-61). Finding a date that is mutually convenient for the administrative law judge, counsel, and witnesses, and which allows for preparation time, may in some instances require the full 30 days Congress allowed. The 60 days permitted for decision (accompanied by a written explanation) is also not an unreasonable period, given the agencies' other responsibilities (which in the case of the FDIC include insurance and oversight responsibility for more than 15,000 insured banks) and the high stakes involved. The decision of the FDIC to return to a position of trust at a federally insured bank an individual who has been indicted for a felony involving personal dishonesty or breach of trust is a significant one. Indeed, because of the seriousness of felony charges against "bank officers and savings and loan officers who are handling other people's money by virtue of a special governmental license granted to them in the public interest" (112 Cong. Rec. 20080 (1966) (remarks of Sen. Proxmire, Senate sponsor of 1966 Act, explaining importance of new regulatory powers)), Congress regarded suspension following indictment as "virtually routine" (S. Rep. 1482, 89th Cong. 2d Sess. 2 (1966)). Congress later reasonably provided enough time for prompt but meaningful agency consideration before the agency acts on the suspended officer's request that it terminate or modify the suspension. The interest of the suspended officer is of course not insubstantial. But in circumstances where it has been determined that there is a basis for charging him with a felony involving breach of trust or dishonesty, the suspended officer's interest simply cannot outweigh the public interest in due consideration before he is returned to a post at a federally insured bank. 2. The district court also held Section 1818(g) unconstitutional because it gives the agency discretion (which the FDIC has delegated to the hearing officer (12 C.F.R. 308.61(e)) to decide not to receive oral testimony. This ruling was error for two reasons. First, although as noted above it is the normal practice of FDIC Regional Counsels not to object to oral testimony, the opportunity to present oral testimony is not, under the circumstances, a requirement of due process. The fact of indictment for a felony involving breach of trust or dishonesty is itself constitutionally sufficient to justify suspension from a position of trust at a federally insured bank, and as noted Congress believed that suspensions would be "virtually routine." The questions left to the agency are whether the crime charged is a crime involving breach of trust or dishonesty, and whether continued participation in the bank's affairs by a person so charged would threaten the interests of depositors or public confidence in the bank; these are primarily matters of law and expert agency judgment. /10/ The officer is permitted, in person or through counsel, to address these questions in written submissions and oral argument. but it is as true under the amended statute as it was at the time of Feinberg, that "the 'nature of the relevant inquiry' * * * does not seem to require any more than written submission" (420 F. Supp. at 120 (footnote ommitted) (quoting Mathews, 424 U.S. at 343)). Cf. Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1, 16 (1979)). Second, even if the Constitution did require the opportunity to present oral testimony, the proper judicial course would have been' to order the agency to receive it. Especially in light of this Court's expressed willingness "to assume a congressional solicitude for fair procedure" (Califano v. Yamasaki, 442 U.S. 682, 693 (1979) (citation omitted)), a court might conclude that it could construe the statute as not authorizing the FDIC to exercise its discretion in an unconstitutional manner. Such a reading, under which the agency would have to determine its constitutional obligations in order to comply with the statute, would avoid attributing to Congress the "unusual doctrine * * * that the (agency) may not construe its own statutory mandate in light of federal constitutional principles." Ohio Civil Rights Comm'n v. Dayton Christian Schools, Inc., No. 85-488 (June 27, 1986), slip op. 8-9 (citing NLRB v. Catholic Bishop, 440 U.S. 490 (1979)). Alternatively, the court could simply order the agency to exercise its discretion in the manner permitted by the Constitution. Finally, if the court concluded that the statute could not be construed so as to preserve its constitutionality, the proper course would have been to invalidate the statute insofar as it purported to confer discretion to decline to receive oral testimony -- not to invalidate the entire suspension procedure. As this Court has often said, "(a) court should refrain from invalidating more of the statute than is necessary.'" Alaska Airlines, Inc. v. Brock, No. 85-920 (Mar. 25, 1987), slip op. 5 (quoting Regan v. Time, Inc., 468 U.S. 641, 652 (1984)). CONCLUSION Probable jurisdiction should be noted. Respectfully submitted. CHARLES FRIED Solicitor General RICHARD K. WILLARD Assistant Attorney General LOUIS R. COHEN Deputy Solicitor General JOHN HARRISON Assistant to the Solicitor General ANTHONY J. STEINMEYER NICHOLAS S. ZEPPOS Attorneys DOUGLAS H. JONES Deputy General Counsel RONALD R. GLANCZ Assistant General Counsel JAMES A. CLARK Senior Attorney Federal Deposit Insurance Corporation JULY 1987 /1/ The statute thus allows a maximum of 90 days to elapse between the request for a hearing and the agency's decision. The FDIC has provided by rule that, at the request of either the officer or the staff of the FDIC's Office of General Counsel, the record shall remain open for five days after the hearing for the parties to make additional sumbissions (12 C.F.R. 308.61(g)). The regulations provide, however, in accordance with the statute, that the FDIC is to make its decision "(w)ithin 60 days following the hearing or receipt of written submissions" (12 C.F.R. 308.62). Thus, the period during which the record may be kept open does not extend the 90-day period allowed by the statute. The district court, which referred to "95 days" (see App., infra, 4a) appears to have misunderstood this point. /2/ Another subsection, 12 U.S.C. 1818(e), sets forth a procedure by which the appropriate federal banking agency may remove or suspend any director or officer of an insured bank who, in the opinion of the agency, has engaged in specified misconduct that, in the agency's judgment, has injured or may injure the bank or the interests of its depositors. Removal is effective after notice and a hearing (12 U.S.C. 1818(e)(5)). Where an individual's conduct is deemed to pose an immediate danger, he may be suspended pending the removal proceeding (12 U.S.C. 1818(e)(4)). Suspension is effective immediately upon written notice and continues through the removal proceeding, unless stayed by a court as provided in the statute (see 12 U.S.C. 1818(e)(4) and (f)). In late 1986 (before Mallen was indicted), the FDIC had conducted a two-week administrative hearing to determine whether to remove Mallen pursuant to Section 1818(e)(5) on account of his activities at the bank. No result was reached because the administrative law judge in that proceeding recused himself before ruling. See App., infra, 3a n.1. The Regional Counsel's position that oral evidence should be dispensed with in the present case was set forth in a letter dated February 2, 1987, to the Executive Secretary of the FDIC and to Mallen's counsel (attached to complaint) and was based in part on the fact that the record of that recent adversarial proceeding, which produced 1400 pages of sworn testimony, was available. /3/ The court did not reach this question. 12 U.S.C. 1818(i) provides that "except as otherwise provided in this section no court shall have jurisdiction to * * * review, modify, suspend, terminate or set aside any such notice or order." The FDIC took the position that this provision does not preclude judicial review of notices of suspension under Section 1818(g) and that it is constitutional to do so. Mallen also alleged that Section 1818(g) violates the Due Process Clause of the Fifth Amendment "because it discriminates against those indicted for federal offenses, but not similar state law offenses." Complaint 7. The district court never ruled on this count. The statute refers to violations of "State of Federal law" (12 U.S.C. 1818(g)(1)). /4/ The FDIC also contended that the district court lacked jurisdiction over the case because 12 U.S.C. 1818(i)(1) provides that "except as otherwise provided in this section no court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under this section, or to review, modify, suspend, terminate or set aside any such notice or order." There is no provision elsewhere in Section 1818 for judicial review of notices and orders under Section 1818(g). The district court understood, however, that it was "not contended that the Court has no jurisdiction to review the constitutionality of the statutory scheme," and found that it had jurisdiction under 28 U.S.C 1331 (App., infra, 17a). We do not argue that Section 1818(i) deprives federal courts of jurisdiction to consider the constitutionality of Section 1818(g). Cf. Johnson v. Robison, 415 U.S. 361, 366-367 (1974). /5/ The district court did not make clear whether its injunction was preliminary or permanent. On the one hand, it explained (App., infra, 1a) that it was ruling on the motion for a preliminary injunction, recited the standard for granting preliminary relief (id. at 7a-8a) and later described its ruling as "based only on the record that had been made to the date of the preliminary injunction hearing" (id. at 19a n.1). On the other hand, the bulk of the court's discussion was on the merits of the claim, no further hearing was set and the Order was permanent in form (id. at 18a). Especially in light of the district court's subsequent refusal to modify its order, we understand it to have issued a permanent injunction. The injunction is appealable to this Court in any event (see 28 U.S.C. 1252). /6/ The district court did stay its order "(t)o the extent that this Court's rulings have an impact on other cases involving indicted bank officers" (App., infra, 25a). Mallen and the bank were the only plaintiffs in the district court proceeding. /7/ The FDIC has moved for a permanent injunction. No date has been set for a hearing on this motion. /8/ See also note 2, supra. /9/ Federal crimes for which the penalty may exceed one year in prison may be prosecuted only by indictment, unless the defendant waives that right (Fed. R. Crim. P. 7(a) and (b)). Section 1818(g) also permits suspension of officers and directors accused in a complaint authorized by a United States Attorney or in an information, including an information charging a state crime. A suspension based on an accusation not amounting to a determination of probable cause might present statutory or constitutional questions not presented in this case. /10/ In particular, the agency's task does not include evaluating the likelihood that the officer is guilty of the crime charged: that is the responsibility of the criminal process, and FDIC regulations preclude consideration of this issue (see 12 C.F.R. 308.56(a)). The question for the agency -- one of law and expert judgment -- is whether the acts charged are such as to suggest a threat to the bank's depositors or to public confidence. Appendix