[Federal Register Volume 76, Number 145 (Thursday, July 28, 2011)]
[Rules and Regulations]
[Pages 45338-45369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-19032]
[[Page 45337]]
Vol. 76
Thursday,
No. 145
July 28, 2011
Part II
Bureau of Consumer Financial Protection
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12 CFR Part 1081
Rules of Practice for Adjudication Proceedings; Final Rule
Federal Register / Vol. 76, No. 145 / Thursday, July 28, 2011 / Rules
and Regulations
[[Page 45338]]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1081
[Docket No. CFPB-2011-0006]
RIN 3170-AA05
Rules of Practice for Adjudication Proceedings
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Interim final rule with request for public comment.
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SUMMARY: Section 1053(e) of the Consumer Financial Protection Act of
2010 requires the Bureau of Consumer Financial Protection (``CFPB'' or
``Bureau'') to prescribe rules establishing procedures for the conduct
of adjudication proceedings conducted pursuant to section 1053. This
interim final rule with a request for public comment sets forth those
rules.
DATES: This interim final rule is effective on July 28, 2011. Written
comments must be received on or before September 26, 2011.
ADDRESSES: You may submit comments, identified by Docket No. CFPB-2011-
0006, by any of the following methods:
Electronic: http://www.regulations.gov. Follow the
instructions for submitting comments.
Mail or Hand Delivery/Courier in Lieu of Mail: Monica
Jackson, Office of the Executive Secretary, Consumer Financial
Protection Bureau, 1801 L Street, NW., Washington, DC 20036.
All submissions must include the agency name and docket number or
Regulatory Information Number (RIN) for this rulemaking. In general,
all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public
inspection and copying at 1801 L Street, NW., Washington, DC 20036, on
official business days between the hours of 10 a.m. and 5 p.m. Eastern
Time. You can make an appointment to inspect the documents by
telephoning (202) 435-7275.
All comments, including attachments and other supporting materials,
will become part of the public record and subject to public disclosure.
Sensitive personal information, such as account numbers or social
security numbers, should not be included. Comments will not be edited
to remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: Monica Jackson, Office of the
Executive Secretary, Consumer Financial Protection Bureau, 1801 L
Street, NW., Washington, DC 20036, (202) 435-7275.
SUPPLEMENTARY INFORMATION:
The Bureau herein promulgates its Rules of Practice Governing
Adjudication Proceedings (``Rules''), pursuant to section 1053(e) of
the Consumer Financial Protection Act of 2010 (``Act''),\1\ 12 U.S.C.
5563(e). The Rules are promulgated as interim final rules with a
request for comment. The Bureau invites interested members of the
public to submit written comments addressing the issues raised herein.
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\1\ The Act is Title X of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, as amended, Public Law 111-203 (July 21,
2010), Title X, 12 U.S.C. 5481 et seq. Section 1066 of the Act
grants the Secretary of the Treasury interim authority to perform
certain functions of the CFPB. Pursuant to that authority, Treasury
publishes these Rules on behalf of the CFPB.
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A. Background
The Rules will govern proceedings brought under section 1053 of the
Act, 12 U.S.C. 5563, which authorizes the Bureau to use administrative
adjudications to ensure or enforce compliance with (a) the provisions
of the Act, (b) the rules prescribed by the Bureau under the Act, and
(c) any other Federal law or regulation that the Bureau is authorized
to enforce. The Rules do not apply to the issuance of temporary cease-
and-desist proceedings pursuant to section 1053(c) of the Act, but the
Bureau invites comments as to whether special rules governing such
proceedings are necessary and, if so, what they should provide. The
Rules are modeled on the uniform rules and procedures for
administrative hearings (``Uniform Rules'') adopted by the prudential
regulators pursuant to section 916 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (``FIRREA''), 56 FR 38024
(Aug. 9, 1991); \2\ the Federal Trade Commission's (``FTC'') Rules of
Practice for Adjudicative Proceedings (``FTC Rules''), 16 CFR part 3;
and the Security and Exchange Commission's (``SEC'') Rules of Practice
(``SEC Rules''), 17 CFR part 201. The Bureau has also looked to the
Model Adjudication Rules prepared by the Administrative Conference of
the United States. See Michael P. Cox, The Model Adjudication Rules
(MARs), 11 T.M. Cooley L. Rev. 75 (1994).
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\2\ For ease of reference, citations to the Uniform Rules herein
are to the Uniform Rules as adopted by the Office of the Comptroller
of the Currency, which are codified at 12 CFR part 19.
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In drafting these Rules, the Bureau endeavored to create a process
that simultaneously provides for expeditious resolution of claims and
ensures that parties who appear before the Bureau receive a fair
hearing. Notably, in the last several decades, both the SEC and the FTC
revised their rules of practice relating to administrative proceedings
to make the adjudicatory process more efficient. In 1990, the SEC
created a task force ``to review the rules and procedures relating to
[SEC] administrative proceedings, to identify sources of delay in those
proceedings and to recommend steps to make the adjudicatory process
more efficient and effective.'' 60 FR 32738, 32738 (June 23, 1995). The
result was a comprehensive revision of the SEC Rules in 1995. See id.
Similarly, when the FTC proposed revisions to its Rules of Practice for
Adjudicative Proceedings in 2008, the FTC's Notice of Proposed
Rulemaking stated: ``In particular, the [FTC's] Part 3 adjudicatory
process has long been criticized as being too protracted * * * The
[FTC] believes that these comprehensive proposed rule revisions would
strike an appropriate balance between the need for fair process and
quality decision-making, the desire for efficient and speedy resolution
of matters, and the potential costs imposed on the Commission and the
parties.'' 73 FR 58831, 58832-33 (Oct. 7, 2008). The Rules adopted
herein are animated by the experiences of these agencies. Drawing from
best practices of existing agency adjudication processes, these Rules
look to learn from and improve upon other agencies' efforts to
streamline their processes while protecting parties' rights to fair and
impartial proceedings. The following discussion outlines some
significant aspects of the Rules.
The Rules adopt a decision-making procedure that incorporates
elements of the SEC Rules, FTC Rules, and Uniform Rules. The Rules
implement a procedure, like that of the Uniform Rules, whereby a
hearing officer will issue a recommended decision in each
administrative adjudication. Like the FTC Rules, the Bureau's Rules
provide any party the right to contest the recommended decision by
filing a notice of appeal to the Director and perfecting the appeal by
later filing an opening brief. In the event a party fails to timely
file or perfect an appeal, the Director may either adopt the
recommended decision as the Bureau's final decision or order further
briefing with respect to any findings of fact or conclusions of law
contained in the recommended decision. The Bureau believes this
approach best balances the need for expeditious decision-making with
protecting the parties' rights to ultimate consideration of a matter by
the Director.
In keeping with this approach, the Rules also provide that the
hearing
[[Page 45339]]
officer will decide dispositive motions in the first instance, subject
to the same right of review provided for recommended decisions in the
event that the ruling upon such a motion disposes of the case. The
Bureau has adopted this model because it provides for the most
expeditious resolution of matters while preserving all parties' rights
to review by the Director.
The Rules set deadlines for both the recommended decision of the
hearing officer and the final decision of the Director. The Bureau has
adopted an approach, similar to that used by the SEC, wherein the
hearing officer is permitted a specified period of time--300 days,
beginning with service of the notice of charges--to issue a recommended
decision. The Rules also require the hearing officer to convene a
scheduling conference soon after the respondent files its answer to
craft a schedule appropriate to the particular proceeding. This
construct gives the hearing officer considerable discretion in
conducting proceedings and the flexibility to respond to the nuances of
individual matters while ensuring that each case concludes within a
fixed number of days. The Rules do permit hearing officers to request
an extension of the 300-day deadline, but the Bureau's intent is that
such extensions will be requested of and granted by the Director only
in rare circumstances.
The Rules for the timing of the Director's decision on appeal or
review are guided by the language of section 1053 of the Act, 12 U.S.C.
5563. If a recommended decision is appealed to the Director, or the
Director orders additional briefing regarding the recommended decision,
the Rules provide that the Director must notify the parties that the
case has been submitted for final Bureau decision at the expiration of
the time permitted for filing reply briefs with the Director. The
Director then must issue his or her final decision within 90 days of
providing such notice to the parties. See 12 U.S.C. 5563(b)(3). In
keeping with the goal of providing for the expeditious resolution of
claims, the Rules also adopt the SEC's standard governing extensions of
time, which makes it clear that such extensions are generally
disfavored.
The Bureau has adopted the SEC's affirmative disclosure approach to
fact discovery in administrative adjudications. See generally 17 CFR
201.230. Thus, the Rules provide that the Division of Enforcement will
provide any party in an adjudication proceeding with an opportunity to
inspect and copy certain categories of documents obtained by the
Division of Enforcement from persons not employed by the Bureau, as
that term is defined in the Rules, in connection with the investigation
leading to the institution of the proceedings and certain categories of
documents created by the Bureau, provided such material is not
privileged or otherwise protected from disclosure. The Division of
Enforcement's obligation under this rule relates only to documents
obtained by the Division of Enforcement; documents located only in the
files of other divisions or offices of the Bureau are beyond the scope
of this rule. As set forth in greater detail in the section-by-section
analysis below, the Bureau has modified the SEC rule slightly, by
eliminating any reference to Brady v. Maryland while retaining an
obligation to turn over material exculpatory information in the
Division of Enforcement's possession, and by providing that nothing in
the rule shall require the Division of Enforcement to provide reports
of examination to parties to whom the reports do not relate.
The goal in adopting the SEC's approach in this regard is to ensure
that respondents have access to all of the material facts underlying
Enforcement Counsel's decision to commence enforcement proceedings and
have a fair opportunity to prepare and present a defense, while
eliminating much of the expense and delay often associated with pre-
trial discovery in civil matters. Recognizing that administrative
adjudications will take place after a Bureau investigation intended to
gather relevant evidence, and in light of the affirmative obligation
that the Rules place on Enforcement Counsel to provide access to
materials gathered in the course of the investigation, the Rules do not
provide for many other traditional forms of pre-trial discovery, such
as interrogatories and depositions. The Rules do provide for the
deposition of witnesses unavailable for trial, the use of subpoenas to
compel the production of documentary or tangible evidence, and, in
appropriate cases, expert discovery, thus ensuring that respondents
have an adequate opportunity to marshal evidence in support of their
defense. We believe this approach will promote the fair and speedy
resolution of claims while ensuring that parties have access to the
relevant information necessary to prepare a defense.
B. Section-by-Section Summary
Subpart A--General Rules
Section 1081.100 Scope of the Rules of Practice
This section sets forth the scope of the Rules and states that they
apply to adjudication proceedings brought under section 1053 of the
Act. Pursuant to the definition of the term ``adjudication proceeding''
in Sec. 103 of the Rules, the Rules do not apply to proceedings
intended to lead to the formulation of a temporary cease-and-desist
order pursuant to section 1053(c) of the Act, although they would apply
to subsequent proceedings initiated by a notice of charges seeking a
permanent cease-and-desist order or other relief. The Rules do not
apply to Bureau investigations, rulemakings, or other proceedings.
Section 1081.101 Expedition and Fairness of Proceedings
This section, which is modeled on the FTC Rules, 16 CFR 3.1, sets
forth the Bureau's policy to avoid delays in any stage of an
adjudication proceeding while still ensuring fairness to all parties.
It further permits the hearing officer or the Director to shorten time
periods set by the Rules, provided that the parties consent to
shortened time periods. This authority could be used in proceedings
where expedited hearings would serve the public interest or where the
issues do not require expert discovery or extended evidentiary
hearings.
Section 1081.102 Rules of Construction
This section, drawn from the Uniform Rules, 12 CFR 19.2, makes
clear that the use of any term in the Rules includes either its
singular or plural form, as appropriate, and that the use of the
masculine, feminine, or neuter gender shall, if appropriate, be read to
encompass all three. This section also explicitly states that, unless
otherwise indicated, any action required to be taken by a party to a
proceeding may be taken by the party's counsel. Finally, this section
provides that terms not otherwise defined by Sec. 103 should be
defined in accordance with the Act.
Section 1081.103 Definitions
This section sets forth definitions of certain terms used in the
Rules. It defines ``adjudication proceeding'' to include any proceeding
conducted pursuant to section 1053 of the Act, except for proceedings
to obtain a temporary cease-and-desist order pursuant to section
1053(c). The Bureau intends for the term ``counsel'' to
[[Page 45340]]
include any individual representing a party, including, as appropriate,
an individual representing himself or herself. The term ``Director''
has been defined to include the Director, as well as any person
authorized to perform the functions of the Director in accordance with
the law. This is intended to allow the Deputy Director or Acting
Director, or a delegee of the Director, as appropriate, to perform the
functions of the Director. It is also intended to allow the Secretary
of the Treasury to perform certain functions of the Director in
accordance with section 1066 of the Act. The term ``person employed by
the Bureau'' is defined to include Bureau employees and contractors as
well as others working under the direction of Bureau personnel, and is
intended to encompass, among other things, consulting experts.
Section 1081.104 Authority of the Hearing Officer
This section enumerates powers granted to the hearing officer
subsequent to appointment. The list of powers in paragraph (b) is not
intended to be exhaustive. The hearing officer is permitted to take any
other action necessary and appropriate to discharge the duties of a
presiding officer. All powers granted by this provision are intended to
further the Bureau's goal of an expeditious, fair, and impartial
hearing process. The powers set forth in this section are generally
drawn from the Administrative Procedure Act (``APA''), 5 U.S.C. 556,
557, and are similar to the powers granted to hearing officers and
administrative law judges under the Uniform Rules, the SEC Rules, and
the FTC Rules.
This section provides the hearing officer with the explicit
authority to issue sanctions against parties or their counsel as may be
necessary to deter sanctionable conduct, provided that any person to be
sanctioned first has an opportunity to show cause as to why no sanction
should issue. The Bureau believes such authority is included within the
hearing officer's authority to regulate the course of the hearing, 5
U.S.C. 556(c)(5), but considers it appropriate to explicitly authorize
the exercise of such authority in the Rules. The Bureau notes that the
MARs provide adjudicators with the authority ``to impose appropriate
sanctions against any party or person failing to obey his/her order,
refusing to adhere to reasonable standards of orderly and ethical
conduct, or refusing to act in good faith.'' See MARs, 11 T. M. Cooley
L. Rev. at 83.
Section 1081.105 Assignment, Substitution, Performance,
Disqualification of Hearing Officer
This section is modeled on the FTC and the SEC Rules setting forth
the process for assigning hearing officers in the event that more than
one hearing officer is available to the Bureau. See 16 CFR 3.42(b),
(e); 17 CFR 201.110, 201.112, 201.120. Consistent with 5 U.S.C. 3105,
hearing officers will be ``assigned to cases in rotation so far as
practicable.'' This section also sets forth the process by which
hearing officers may be disqualified from presiding over an
adjudication proceeding. Section 556(b) of the APA, 5 U.S.C. 556(b),
provides that a hearing officer may disqualify himself or herself at
any time. The standard for making a motion to disqualify requires that
the movant have a reasonable, good faith basis for the motion. This
standard is intended to emphasize that there must be objective reasons
to seek a disqualification, not just a subjective, though sincerely
held, belief. If a hearing officer does not withdraw in response to a
motion for withdrawal, the motion is certified to the Director for his
or her review in accordance with the Rules' interlocutory review
provision. Finally, this section provides the procedure for
reassignment of a proceeding in the event a hearing officer becomes
unavailable.
Section 1081.106 Deadlines
This section provides that deadlines for action by the hearing
officer established by the Rules do not confer any substantive rights
on respondents. The SEC Rules, 17 CFR 201.360(a)(2), contain similar
language regarding the timelines set out for certain hearing officer
actions in SEC proceedings.
Section 1081.107 Appearance and Practice in Adjudication Proceedings
This section is largely based on the Uniform Rules, 12 CFR 19.6,
and sets forth the criteria for persons acting in a representative
capacity for parties in adjudication proceedings. A notice of
appearance is required to be filed by an individual representing any
party, including an individual representing the Bureau, simultaneously
with or before the submission of papers or other act of representation
on behalf of a party. Any counsel filing a notice of appearance is
deemed to represent that he or she agrees and is authorized to accept
service on behalf of the represented party. The section also sets forth
the standards of conduct expected of attorneys and others practicing
before the Bureau. It provides that counsel may be excluded or
suspended from proceedings, or disbarred from practicing before the
Bureau, for engaging in sanctionable conduct during any phase of the
adjudication proceeding.
Section 1081.108 Good Faith Certification
This section is based on the Uniform Rules, 12 CFR 19.7, and
requires that all filings and submissions be signed by at least one
counsel of record, or the party if appearing on his or her own behalf.
This section provides that, by signing a filing or submission, the
counsel or party certifies and attests that the document has been read
by the signer, and, to the best of his or her knowledge, is well
grounded in fact and is supported by existing law or a good faith
argument for the extension or modification of the existing law. In
addition, the certification attests that the filing or submission is
not for purposes of unnecessary delay or any improper purpose. Oral
motions or arguments are also subject to the good faith certification:
the act of making the oral motion or argument constitutes the required
certification. Finally, this section makes clear that a violation of
the good faith certification requirement would be grounds for sanctions
under Sec. 104(b)(13). This section, which also mirrors the
requirements of Federal Rule of Civil Procedure 11, is intended to
ensure that parties and their counsel are not abusing the
administrative process by making filings that are factually or legally
unfounded or intended simply to delay or obstruct the proceeding.
Section 1081.109 Conflict of Interest
In general, conflicts of interest in representing parties to
adjudication proceedings are prohibited by the Rules. The hearing
officer is empowered to take corrective steps to eliminate such
conflicts. If counsel represents more than one party to a proceeding,
counsel is required to file at the time he or she files his or her
notice of appearance a certification that: (1) The potential for
possible conflicts of interest has been fully discussed with each such
party; and (2) the parties individually waive any right to assert any
conflicts of interest during the proceeding. This approach is based
upon the Uniform Rules, 12 CFR 19.8, which itself was based upon the
Model Code of Conduct for attorneys and the District of Columbia Ethics
Rule. See 56 FR 27790, 27793 (June 17, 1991).
[[Page 45341]]
Section 1081.110 Ex Parte Communication
This section implements the APA's prohibition on ex parte
communications. See 5 U.S.C. 554(d)(1), 557(d)(1). Paragraphs (a)(1),
(a)(2), and (b) are based on the Uniform Rules, 12 CFR 19.9(a), (b),
and prohibit an ex parte communication relevant to the merits of an
adjudication proceeding between a person not employed by the Bureau and
the Director, hearing officer, or any decisional employee during the
pendency of an adjudication proceeding. Paragraph (a)(3) defines the
term ``pendency of an adjudication proceeding,'' and provides that if
the person responsible for the communication has knowledge that a
notice of charges will or is likely to be issued, the pendency of an
adjudication shall be deemed to have commenced at the time of his or
her acquisition of such knowledge. This provision implements 5 U.S.C.
557(d)(1)(E).
Consistent with the MARs and the practice of other agencies,
communications regarding the status of the proceeding are expressly
excluded from the definition of ex parte communications. See MARs, 11
T.M. Cooley L. Rev. at 87; 12 CFR 19.9(a)(2); 16 CFR 4.7(a). If an ex
parte communication does occur, the document itself, or if oral, a
memorandum of the substance of the communication must be placed in the
record. All other parties to the proceeding may have the opportunity to
respond to the prohibited communication, and such response may include
a recommendation for sanctions. The hearing officer or the Director, as
appropriate, may determine whether sanctions are appropriate.
Finally, paragraph (e) of this section provides that the hearing
officer is not permitted to consult an interested person or a party on
any matter relevant to the merits of the adjudication, except to the
extent required for the disposition of ex parte matters. Consistent
with 5 U.S.C. 554(d), this paragraph also provides that Bureau
employees engaged in an investigational or prosecutorial function,
other than the Director, may not participate in the decision-making
function in the same or a factually related matter.
Section 1081.111 Filing of Papers
This section requires the filing of papers in an adjudication
proceeding. It specifies the papers that must be filed and addresses
the time and manner of filing. The section provides for filing by
electronic transmission upon the conditions specified by the Director
or the hearing officer, recognizing that while the Bureau anticipates
the development of an electronic filing system, it may adopt other
means of electronic filing in the interim (e.g., e[dash]mail
transmission). The section authorizes other methods of filing if a
respondent demonstrates that filing via electronic transmission is not
practical.
Section 1081.112 Formal Requirements as to Papers Filed
This section sets forth the formal requirements for papers filed in
adjudication proceedings. It sets forth formatting requirements,
requires that all documents be signed in accordance with Sec. 108, and
requires the redaction of sensitive personal information from filings
where the filing party determines that such information is not relevant
or otherwise necessary for the conduct of the proceeding. This section
also sets forth the method of filing documents containing information
for which confidential treatment has been granted or is sought, and
requires that in addition to the filing of the confidential information
under seal, an expurgated copy of the filing be made on the public
record. Section 119 governs the filing of motions seeking confidential
treatment of information and sets forth the standard to be applied by
the hearing officer in determining whether to grant such treatment.
Section 1081.113 Service of Papers
This section requires that every paper filed in a proceeding be
served on all other parties to the proceeding in the manner set forth
in the rule. Service by electronic transmission is encouraged, but is
conditioned upon the consent of the parties. The section also sets
forth specific methods for the Bureau to serve notices of charges, as
well as recommended decisions and final orders. In this regard, the
section provides that such service cannot be made by First Class mail,
but also provides that service may be made on authorized agents for
service of process.
The section also provides that the Bureau may serve persons at the
most recent business address provided to the Bureau in connection with
a person's registration with the Bureau. Although no such registration
requirements currently exist, the Bureau has included this provision to
account for any such requirements in the future. In the event that a
party is required to register with the Bureau and maintain the accuracy
of such registration information, the Bureau should be entitled to rely
upon such information for service of process. This provision is modeled
on the SEC Rules, 17 CFR 201.141(a)(2)(iii).
Section 1081.114 Construction of Time Limits
This section provides common rules for computing time limits,
taking into account the effect of weekends and holidays on time periods
that are 10 days or less. This section also sets forth when filing or
service is effective. With regard to time limits for responsive
pleadings or papers, the Rules incorporate a three-day extension for
mail service, similar to the Federal Rules of Civil Procedure, and a
one-day extension for overnight delivery, as contained in some
agencies' existing rules. A one-day extension for service by electronic
transmission is consistent with the Uniform Rules and reflects that
electronic transmission may result in delays in actual receipt by the
person served.
Section 1081.115 Change of Time Limits
This section is modeled on the SEC Rules, 17 CFR 201.161, and is
intended to limit extensions of time to those necessary to prevent
substantial prejudice. The section is intended to further the Bureau's
goal of ensuring the timely conclusion of adjudication proceedings. The
section generally provides the hearing officer and the Director with
the authority to extend the time limits prescribed by the Rules in
certain defined circumstances. In keeping with the goal of expeditious
resolution of proceedings, this section provides that motions for
extension of time are strongly disfavored and may only be granted after
consideration of various enumerated factors, provided that the
requesting party makes a strong showing that denial of the motion would
substantially prejudice its case. The section also provides that any
extension of time shall not exceed 21 days unless the hearing officer
or Director, as appropriate, states on the record or in a written order
the reasons why a longer extension of time is necessary. Finally, the
section provides that the granting of a motion for an extension of time
does not affect the deadline for the recommended decision of the
hearing officer, which must be filed no later than the earlier of 300
days after the filing of the notice or charges or 90 days after the end
of post-hearing briefing (unless separately extended by the Director as
provided for in Sec. 400).
Section 1081.116 Witness Fees and Expenses
This section provides that fees and expenses for non-party
witnesses subpoenaed pursuant to these Rules
[[Page 45342]]
shall be the same as for witnesses in United States district courts.
Section 1081.117 Bureau's Right To Conduct Examination, Collect
Information
This section, which is modeled on the Uniform Rules, 12 CFR 19.16,
states that nothing contained in the Rules shall be construed to limit
the right of the Bureau to conduct examinations or visitations of any
person, or the right of the Bureau to conduct any form of investigation
authorized by law, or to take other actions the Bureau is authorized to
take outside the context of conducting adjudication proceedings. This
section is intended to clarify that the pendency of an adjudication
proceeding with respect to a person shall not affect the Bureau's
authority to exercise any of its powers with respect to that person.
Section 1081.118 Collateral Attacks on Adjudication Proceedings
This section, which is modeled on the Uniform Rules, 12 CFR 19.17,
is intended to preclude the use of collateral attacks to circumvent or
delay the administrative process.
Section 1081.119 Confidential Information; Protective Orders
This section sets forth the means by which a party or another
person may seek a protective order shielding confidential information.
While generally modeled on the SEC Rules, 17 CFR 201.322, the section
adopts the substantive standard set forth in the FTC Rules, 16 CFR
3.45(b), which provides that the hearing officer may grant a protective
order only upon a finding that public disclosure will likely result in
a clearly defined, serious injury to the person requesting confidential
treatment or after finding that the material constitutes sensitive
personal information. The Rule adopts the FTC's standard because it
comports with the Bureau's goals of providing as much transparency in
the adjudicative process as possible, while also protecting
confidential business information or other sensitive information of
parties appearing before the Bureau or third parties whose information
may be introduced into evidence. The Bureau expects that the standard
set forth in this section will be met in cases where the disclosure of
trade secrets or other information to the public or to parties is
likely to result in harm, but that the standard will not be met simply
because the information at issue is deemed ``confidential'' or
``proprietary'' by the movant. To the extent that a movant can identify
a clearly defined, serious injury likely to result from the disclosure
of such particular information, it will be protected; generalized
claims of competitive or other injury generally will not suffice. This
section provides that documents subject to a motion for confidential
treatment will be maintained under seal until the motion is decided.
Section 1081.120 Settlement
This section is based on the SEC Rules, 17 CFR 201.240. It
addresses offers of settlement made both prior to and after the
institution of proceedings. Any person who is notified that a
proceeding may or will be instituted against him or her, or any party
to a proceeding, may make an offer of settlement in writing at any
time. Any settlement offer shall be presented to the Director with a
recommendation, except that, if the recommendation is unfavorable, the
offer shall not be presented to the Director unless the person making
the offer so requests.
The section requires that each offer of settlement recite or
incorporate as part of the offer the provisions of paragraphs (c)(3)
and (c)(4). Because certain facts necessary for the Director to make a
reasoned judgment as to whether a particular settlement offer is in the
public interest will often be available only to the Bureau employee
that negotiated the proposed settlement, paragraph (c)(4)(i) requires
waiver of any provisions, under the Rules or otherwise, that may be
construed to prohibit ex parte communications regarding the settlement
offer between the Director and Bureau employee involved in litigating
the proceeding. Paragraph (c)(4)(ii) requires waiver of any right to
claim bias or prejudgment by the Director arising from the Director's
consideration or discussions concerning settlement of all or any part
of the proceeding. If the Director rejects the offer of settlement, the
person making the offer shall be notified of the Director's action. The
rejection of the offer of settlement shall not affect the continued
validity of the waivers pursuant to paragraph (c)(4).
Section 1081.121 Cooperation With Other Agencies
This section sets forth the policy of the Bureau to cooperate with
other governmental agencies to avoid unnecessary overlapping or
duplication of regulatory functions.
Subpart B--Initiation of Proceedings and Prehearing Rules
Section 1081.200 Commencement of Proceedings and Contents of Notice of
Charges
This section, similar to the comparable Uniform Rule, 12 CFR 19.18,
contains the requirements relating to the initiation of adjudication
proceedings, including the required content of a notice of charges
initiating a hearing. In provisions modeled on the MARs and the Federal
Rules of Civil Procedure, see MARs, 11 T.M. Cooley L. Rev. at 96; Fed.
R. Civ. P. 41(a), this section also sets forth the circumstances under
which the Bureau may voluntarily dismiss an adjudication proceeding,
either on its own motion before the respondent(s) serve an answer, or
by filing a stipulation of dismissal signed by all parties who have
appeared. Unless the notice or stipulation of dismissal states
otherwise, a dismissal pursuant to this section is without prejudice.
In keeping with the principle that Bureau proceedings are presumed to
be public, this section also provides that a notice of charges shall be
released to the public after affording the respondent or others an
opportunity to seek a protective order to shield confidential
information.
Section 1081.201 Answer
This section requires a respondent to file an answer in all cases.
The Bureau considered, but rejected, the approach set forth in the SEC
Rules, 17 CFR 201.220(a), whereby an answer is required only if
specified in the notice of charges. The Bureau believes that an answer
can help focus and narrow the matters at issue. Respondents must file
an answer within 14 days of service of the notice of charges. The 14-
day time period is adopted from the FTC Rules, 16 CFR 3.12. As in the
Uniform Rules, 12 CFR 19.19(c), failure to file a timely answer is
deemed to be a waiver of the right to appear and a consent to the entry
of an order granting the relief sought by the Bureau in the notice of
charges. This section provides that in the case of default, the hearing
officer is authorized, without further proceedings, to find the facts
to be as alleged in the notice of charges and to enter a recommended
decision containing appropriate findings and conclusions.
This section adopts the procedure from the SEC Rules for a motion
to set aside a default, 17 CFR 201.155. It also provides that the
hearing officer, prior to the filing of the recommended decision, or
the Director, at any time, may set aside a default for good cause
shown.
[[Page 45343]]
Section 1081.202 Amended Pleadings
This section provides that the parties may amend the notice of
charges or the answer at any stage of the proceeding. Formal amendments
to the notice of charges and answer are not required when an issue not
raised by the notice of charges or answer is tried at the hearing by
express or implied consent of the parties. In the event that a party
seeks to introduce evidence at a hearing that is outside the scope of
matters raised in the notice of charges or answer, the hearing officer
may admit the evidence when admission is likely to assist in
adjudicating the merits of the action unless the objecting party
demonstrates that admission of such evidence would unfairly prejudice
that party's action or defense upon the merits. The Bureau has adopted
this liberal standard to the amendment of the pleadings to promote
adjudication on the merits, and believes that the standard set forth in
the rule should adequately protect parties from undue prejudice.
Section 1081.203 Scheduling Conference
This section requires the parties to meet before the initial
scheduling conference to discuss the nature and basis of their claims
and defenses, the possibilities for a prompt settlement or resolution
of the case, and other matters to be determined at the scheduling
conference.
Within 20 days of the service of the notice of charges, or at
another time if the parties agree, the hearing officer and the parties
are to have a scheduling conference. This section sets forth the issues
to be discussed at the scheduling conference. These issues are drawn
from those the parties are required to discuss at scheduling and
prehearing conferences under the Uniform Rules, 12 CFR 19.31, the SEC
Rules, 17 CFR 201.221, and the FTC Rules, 16 CFR 3.21. Paragraph (b)(1)
provides that the parties shall be prepared to address the
determination of hearing dates and location, and whether, in
proceedings under section 1053(b) of the Act, the hearing should
commence later than 60 days after service of the notice of charges.
This provision was added to account for the requirement in section
1053(b) of the Act that the hearing be held no earlier than 30 days nor
later than 60 days after the date of service of the notice of charges,
unless an earlier or later date is set by the Bureau at the request of
any party so served. It is expected that the parties shall discuss a
hearing date at the scheduling conference, and that this would afford
respondents the opportunity to request a hearing date outside the 30-
to-60 day timeframe.
It is also expected that at or before the scheduling conference,
the parties will discuss any issues related to the production of
documents pursuant to Sec. 206, any anticipated motions for witness
statements pursuant to Sec. 207, whether either party intends to issue
documentary subpoenas, and whether either party believes that
depositions will be necessary to preserve the testimony of witnesses
who will be unavailable for the hearing. The parties are also expected
to discuss the need and a schedule for any expert discovery.
The hearing officer is required to issue a scheduling order at or
within five days of the conclusion of the scheduling hearing, setting
forth the date and location of the hearing, as well as other procedural
determinations made. It is expected that the hearing officer will
establish any dates for expert discovery in the scheduling order, or
else expressly find that such discovery is not necessary or reasonable
in a particular case. This scheduling order will govern the course of
the proceedings, unless later modified by the hearing officer.
Provision for a prompt scheduling conference followed by prompt
issuance of a scheduling order is necessary in order to allow for the
orderly course of proceedings on the timeline set forth elsewhere in
the Rules. Particularly in cases brought pursuant to section 1053(b) of
the Act in which the respondent does not request a hearing date outside
the 30-to-60 day timeframe set forth in the statute, it is essential
that the hearing officer and the parties have a clear understanding of
the applicable schedule at the earliest possible date.
As provided for in the SEC Rules, 17 CFR 201.221(f), this section
provides that any person named as a respondent in a notice of charges
who fails to appear at a scheduling conference may be deemed in default
pursuant to Sec. 201(d)(1). Finally, like the FTC Rules, 16 CFR
3.21(g), this section provides that scheduling conferences are
presumptively public unless the hearing officer determines otherwise
based on the standard set forth in Sec. 119.
Section 1081.204 Consolidation and Severance of Actions
This section, modeled after the Uniform Rules, 12 CFR 19.22, allows
the consolidation of actions if the proceedings arise out of the same
transaction, occurrence, or series of transactions or occurrences or if
the proceedings involve at least one common respondent or a material
common question of law or fact. Proceedings are not to be consolidated
if to do so would unreasonably delay the proceeding or cause
significant injustice.
Severance, on the other hand, may be granted by the hearing officer
only if he or she determines that undue prejudice or injustice would
result from a consolidated proceeding and if such prejudice or
injustice would outweigh the interests of judicial economy and speed in
the adjudication of actions. This is a higher standard than is required
for the consolidation of actions.
Section 1081.205 Non-Dispositive Motions
This section governs all motions other than motions to dismiss or
motions for summary disposition, which are governed by Sec. 212. The
section generally sets forth the requirements for filing a non-
dispositive motion, and requires that all such motions must be in
writing, state with particularity the relief sought, and include a
proposed order. This section also makes clear that motions filed
pursuant to sections that impose different requirements should follow
those requirements, and the requirements of Sec. 205 to the extent
they are not inconsistent. For example, Sec. 208(g), which relates to
motions to quash subpoenas, provides for a shorter time period for the
filing of a responsive brief and prohibits the filing of a reply unless
requested by the hearing officer. These conditions govern motions to
quash, but such motions are still subject to other provisions of Sec.
205, including, inter alia, the need to meet and confer, deadlines for
the hearing officer's ruling, and length limitations of the briefs.
Like the Uniform Rules and the FTC Rules, 12 CFR 19.23(d)(1); 16
CFR 3.22(d), this section gives a party 10 days after service of a non-
dispositive motion to respond to such motion in writing. It provides
for reply briefs, which must be filed within three days after service
of the response. A party's failure to respond to a motion shall waive
that party's right to oppose such motion and constitutes consent to the
entry of an order substantially in the form of the order accompanying
that motion. This section adopts the SEC's 15-page length limitation
for non-dispositive motions and oppositions, 17 CFR 201.154(c), and a
six page length limitation for reply briefs. The Bureau has adopted
these time and length limitations because they provide parties ample
opportunity to express their views on matters that do not concern the
ultimate disposition of the action.
[[Page 45344]]
The section also requires parties to make a good faith effort to
meet and confer prior to the filing of a non-dispositive motion in an
effort to resolve the controversy by agreement. The Bureau has included
the meet-and-confer requirement because it believes that such
conferences can help obviate the need for, or narrow the scope of,
disputed motions, thus saving both the parties and the hearing officer
time and resources.
This section provides that the hearing officer shall rule on a non-
dispositive motion, and shall do so within 14 days after the expiration
of the time for filing of all motions papers authorized by this
section, and that the pendency of a motion shall not stay proceedings.
This time limitation is based on the FTC Rules, 16 CFR 3.22(e), and is
intended to ensure the timely resolution of disputes so that the
proceeding as a whole can conclude in a fair and expeditious manner. As
noted above, both the FTC and the SEC have revised their rules of
practice to provide for the more expeditious resolution of
administrative adjudications, and the incorporation of a time period in
which the hearing officer must rule on a non-dispositive motion is, in
the views of the Bureau, a critical part of that effort. See 73 FR
58831, 58836 (Oct. 7, 2008) (FTC expects that provision requiring ALJs
to decide motions within 14 days will expedite cases).
Section 1081.206 Availability of Documents for Inspection and Copying
Modeled primarily after the SEC Rules, 17 CFR 201.230, this section
adopts the SEC's affirmative disclosure approach to fact discovery in
administrative adjudications. Generally, this section requires that the
Division of Enforcement make available for inspection and copying
certain categories of documents obtained by the Division of Enforcement
prior to the institution of proceedings from persons not employed by
the Bureau, in connection with the investigation leading to the
institution of proceedings.
The Bureau believes that this section will promote the fair and
efficient resolution of administrative proceedings. A respondent's
right to inspect and copy documents under this section is automatic;
the respondent does not need to make a formal request for access
through the hearing officer. Pursuant to this section, the Division of
Enforcement will turn over information from its investigatory file that
was obtained from persons not employed by the Bureau as part of the
investigation resulting in the Bureau's decision to institute
proceedings. The respondent will have access to the documents,
testimony, and other information that the Bureau relied upon in
determining to file a notice of charges, in addition to evidence that
the Bureau will rely upon at the hearing.
This approach has several advantages. By automatically providing
respondents with the factual information gathered by the Division of
Enforcement in the course of the investigation leading to the
institution of proceedings, this provision helps ensure that
respondents have a complete understanding of the basis for the Bureau's
action and can more accurately and efficiently determine the nature of
their defenses or whether they wish to seek settlement. Because this
approach renders traditional document discovery largely unnecessary, it
will lead to a faster and more efficient resolution of Bureau
administrative proceedings, saving both the Bureau and respondents the
resources typically expended in the civil discovery process.
The section adopts most of the procedures and conditions set forth
in the SEC Rules, as discussed below.
Pursuant to paragraph (a)(1), the Division of Enforcement's
obligation under this section relates to documents obtained by the
Division of Enforcement. Documents located only in the files of other
divisions or offices are beyond the scope of the rule. The term
``documents'' has been defined in the same manner as the term
``documentary material'' in section 1051(4) of the Act, and
encompasses, among other things, electronic files or other data or data
compilations stored in any medium.
Paragraph (a)(1) also provides that the Division of Enforcement
will make the documents available for inspection and copying. This
provision is modeled after the SEC Rules and the Federal Rules of Civil
Procedure. The Bureau anticipates that in most cases it will simply
provide either paper or electronic copies of the material at issue to
respondents, but has adopted the formulation in the rule to preserve
flexibility and the Division of Enforcement's right to require
inspection and copying in appropriate cases.
Paragraphs (a)(1)(i), (a)(1)(ii), and (a)(1)(iii) describe the
types of documents that are subject to the disclosure requirement of
paragraph (a)(1). Paragraph (a)(2) provides that the Division of
Enforcement shall also make available each civil investigative demand
or other written request to provide documents or to be interviewed
issued by the Division of Enforcement in connection with the
investigation leading to the institution of proceedings. The Division
of Enforcement shall also make available any final examination or
inspection reports prepared by any other Division of the Bureau if the
Division of Enforcement either intends to introduce any such report
into evidence or to use any such report to refresh the recollection of,
or impeach, any witness. The provisions of paragraph (a)(2) are
included in the SEC Rules, but have been broken out into a separate
paragraph of this section because they do not comprise documents that
the Division of Enforcement obtained from persons not employed by the
Bureau, and thus do not technically fall within the scope of paragraph
(a)(1).
Pursuant to Sec. 1081.208, a respondent may seek production of
other documents pursuant to subpoena. Paragraph (a)(3) is intended to
make clear that the affirmative disclosure obligation set forth in
paragraphs (a)(1) and (a)(2) does not preclude the availability of
subpoenas as separately provided by the Rules.
Paragraph (a)(4) provides that this section does not require the
Division of Enforcement to produce a final examination or inspection
report prepared by any other Division of the Bureau to a respondent who
is not the subject of that report. The Bureau has added this provision,
which does not appear in the SEC Rules, out of concern for the
privileged and confidential nature of examination and inspection
reports and to make clear that respondents cannot rely upon the
Bureau's affirmative disclosure obligation to require the production of
supervision or examination reports concerning other persons. Although
the disclosure obligation as drafted would not require the production
of such reports, the Bureau is adding this provision to remove any
question regarding the issue.
Paragraph (b)(1) of this section permits the Division of
Enforcement to withhold documents that would otherwise be produced
under paragraph (a) under five exceptions. Exception (i) shields
information subject to a claim of privilege. Exception (ii) protects as
work product internal documents prepared by persons employed by the
Bureau, including consulting experts, which will not be offered in
evidence. Work product includes any notes, working papers, memoranda or
other similar materials, prepared by an attorney or under an attorney's
direction in anticipation of litigation. See Hickman v. Taylor, 329
U.S. 495 (1947); see also Fed. R. Civ. P. 26(b)(3) and (b)(5).
Accountants, paralegals, investigators, and consulting experts who work
on an
[[Page 45345]]
investigation do so at the direction of the Director, an associate
director, or another supervisory attorney, and their work product is
therefore shielded by the rule. Although such material would not fall
within the purview of paragraphs (a)(1) and (a)(2), the Bureau has
retained this provision of the SEC Rule to make clear that such work
product is not subject to the affirmative disclosure obligation. An
examination or inspection report prepared by one of the Bureau's
Supervision Divisions, which the Division of Enforcement intends to
introduce into evidence or to use to refresh the recollection of, or
impeach, a witness, is explicitly excluded from the materials that may
be withheld pursuant to this exception.
Exception (iii) protects the identity of a confidential source. See
5 U.S.C. 552(b)(7)(C) and (D). Exception (iv) provides that documents
need not be produced where applicable law prohibits their production.
Exception (v) protects any other document or category of documents that
the hearing officer determines may be withheld as not relevant to the
subject matter of the proceeding, or otherwise for good cause shown.
This exception is intended to provide the hearing officer with the
flexibility to adjust the Bureau's affirmative disclosure obligation to
the particular contours of a proceeding. For example, this exception
could be used in a situation where a single investigation involves a
discrete segment or segments that are related only indirectly, or not
at all, to the recommendations ultimately made to the Director with
respect to the particular respondents in a specific proceeding. To
require that documents not relevant to the subject matter of the
proceeding be made available, simply because they were obtained as part
of a broad investigation, burdens the respondent as well as the
Division of Enforcement with unnecessary costs and delay.
Paragraph (b)(2) of this section provides that paragraph (b) does
not authorize the Division of Enforcement to withhold material
exculpatory evidence in the possession of the Division of Enforcement
that would otherwise be subject to disclosure pursuant to paragraph
(a). Pursuant to this section, the Division of Enforcement will provide
respondents with material exculpatory evidence it has obtained from
persons not employed by the Bureau even if such evidence is contained
in documents that the Division of Enforcement is otherwise permitted to
withhold pursuant to paragraph (b)(1).
The Bureau has declined to adopt the SEC Rules' explicit reference
to Brady v. Maryland, 373 U.S. 83 (1963) in this context. Proceedings
under this part are civil in nature, not criminal, and the requirements
of Brady are therefore inapplicable. The Division of Enforcement will
turn over information from its investigatory file that was obtained
from persons not employed by the Bureau as part of the investigation
resulting in the Bureau's decision to institute proceedings, including
any material exculpatory evidence so obtained. The Bureau understands
this approach to be consistent with that provided for in the SEC Rules.
The Bureau has also added the clause ``that would otherwise be
required to be produced pursuant to paragraph (a) of this section'' to
paragraph (b) to make clear that the material exculpatory evidence
provision works in concert with paragraph (a), and does not impose a
separate, free-standing obligation to disclose exculpatory evidence
that is not otherwise within the scope of paragraph (a).
Paragraph (c) provides that the hearing officer may require the
Division of Enforcement to submit a withheld document list, and may
order that a withheld document be made available for inspection and
copying.
Pursuant to paragraph (d), the Division of Enforcement is required
to make the material governed by this section available for inspection
and copying no later than seven days after service of the notice of
charges. The Bureau has considered requiring production of the covered
material at the time the notice of charges is served, but has decided
against such an approach. A provision for a delay of no more than seven
days will allow for the entry of any appropriate protective orders and
is consistent with the SEC's approach in this regard. See 17 CFR
201.230(d). It is the Bureau's expectation that the Division of
Enforcement will make this material available as soon as possible in
every case.
Paragraphs (e) and (f) set forth the procedure to obtain copies of
documents and the costs of such copies. As noted above, the Bureau
anticipates providing electronic copies of the documents to respondents
in most cases, and paragraph (f) accounts for such a provision of
electronic documents. In order to preserve the discretion of the
Division of Enforcement, however, this paragraph includes provisions
governing the inspection and copying of documents. In order to provide
for the safekeeping of documents subject to inspection, and to control
costs associated with the implementation of this section, paragraph (e)
provides that documents shall be made available for inspection and
copying at the Bureau office where they are ordinarily maintained, or
at such other place as the parties may agree. In cases in which
electronic production is unwarranted, this process appears more likely
to result in prompt access to documents obtained by the Division of
Enforcement that are the basis of the allegations contained in the
notice of charges.
In a provision added by the Bureau, paragraph (g) of this section
imposes upon the Division of Enforcement a duty to supplement its
disclosures under paragraph (a)(1) of this section if it acquires
information after making its disclosures that it intends to rely upon
at a hearing.
Like the SEC Rules, 17 CFR 201.230(h), paragraph (h) provides for a
``harmless error'' standard in the event the Division of Enforcement
fails to make available to a respondent a document required to be made
available by this section.
Finally, paragraph (i) is modeled on the FTC Rules, 16 CFR 3.31(g),
and provides a ``claw back'' mechanism whereby inadvertent disclosure
of privileged or protected information or communications shall not
constitute a waiver of the privilege or protection, provided that the
party took reasonable steps to prevent disclosure and promptly took
reasonable steps to rectify the error. Furthermore, paragraph (i)
provides that disclosure of privileged or protected information or
communications shall waive the privilege only if the waiver was
intentional and that the scope of such waiver is limited to the
undisclosed information or communications concerning the same subject
matter, which in fairness ought to be considered together with the
disclosed information or communications. Paragraph (i) expressly
applies to disclosures made by any party during an adjudication
proceeding.
Section 1081.207 Production of Witness Statements
Modeled after the SEC Rules, 17 CFR 201.231, this section provides
that a respondent may request for inspection and copying any statement
of a Division of Enforcement witness that (1) pertains to or is
expected to pertain to his or her direct testimony; and (2) would be
required to be produced pursuant to the Jencks Act, 18 U.S.C. 3500, if
the adjudication proceeding were a criminal proceeding. This section is
intended to promote the principles of transparency
[[Page 45346]]
and efficiency discussed with respect to Sec. 1081.206. Note, however,
that the respondent is required to move for the production of these
statements.
The Jencks Act does not require production of a witness' prior
statement until the witness takes the stand. The Bureau expects that in
most cases, the Division of Enforcement will provide prehearing
production voluntarily. Submission of a witness' prior statement,
however, may provide a motive for intimidation of that witness or
improper contact by a respondent with the witness. The rule provides,
therefore, that the time for delivery of witness statements is to be
determined by the hearing officer, so that a case-specific
determination of such risks can be made if necessary. Upon a showing
that there is substantial risk of improper use of a witness' prior
statement, the hearing officer may take appropriate steps. For example,
a hearing officer may delay production of a prior statement, or
prohibit parties from communicating with particular witnesses.
Like Sec. 1081.206 and the SEC Rules, this section provides for a
``harmless error'' standard in the event the Division of Enforcement
fails to make available a statement required to be made available by
this section.
Section 1081.208 Subpoenas
This section is modeled after the SEC Rules, 17 CFR 201.232, and
provides that, in connection with a hearing, a party may request the
issuance of a subpoena for the attendance and testimony of a witness or
the production of documents. The availability of subpoenas for
witnesses and documents ensures that respondents have available to them
the necessary tools to adduce evidence in support of their defenses. A
subpoena may only be issued by the hearing officer (as opposed to
counsel) and the section sets forth procedures to prevent the issuance
of subpoenas that may be unreasonable, oppressive, excessive in scope,
or unduly burdensome. The section also sets forth procedures and
standards applicable to a motion to quash or modify a subpoena.
Paragraph (h) of this section also provides that, if a subpoenaed
person fails to comply, the Bureau, on its own motion or on the motion
of the party at whose request the subpoena was issued, may seek an
order requiring compliance. In accordance with section 1052(b)(2) of
the Act, which authorizes the Bureau or a Bureau investigator to seek
enforcement of a subpoena, paragraph (h) only authorizes the Bureau--
and not the party at whose request the subpoena was issued--to seek
judicial enforcement of the subpoena. Compare 12 CFR 19.26(c)
(authorizing the ``subpoenaing party or any other aggrieved party'' to
seek judicial enforcement). In a provision added by the Bureau, this
section also provides that failure to request that the Bureau seek
enforcement of a subpoena constitutes waiver of any claim of prejudice
predicated upon the unavailability of the testimony or evidence sought.
This provision was added to prevent a respondent from declining to
request that the Bureau seek to enforce the subpoena of a witness who
fails to comply, and later claiming that his or her defense was
prejudiced based upon the unavailability of that witness.
Section 1081.209 Deposition of Witness Unavailable for Hearing
This section, generally modeled after the Uniform Rules and the SEC
Rules, 12 CFR 19.27; 17 CFR 201.233, provides that parties may seek to
depose material witnesses unavailable for the hearing upon application
to the hearing officer for a deposition subpoena. The application must
state that the witness is expected to be unavailable due to age,
illness, infirmity or other reason and that the petitioning party was
not the cause of the witness's unavailability. The Bureau has adopted
the Uniform Rules' formulation of this standard, which provides for
such depositions when the witness is ``otherwise unavailable,'' to
account for the possible unavailability of witnesses for reasons other
than those specified in the SEC Rules.
Paragraph (a)(2) requires a party seeking to record a deposition by
audio-visual means to so note in the request for a deposition subpoena.
This provision is modeled on Federal Rule of Civil Procedure 30(b)(3).
Paragraph (a)(4) also provides that a deposition cannot be taken on
less than 14 days' notice to the witness and all parties, absent an
order to the contrary from the hearing officer.
Paragraph (h) incorporates several provisions from the SEC Rules.
It provides that the witness being deposed may have an attorney present
during the deposition; that objections to questions of evidence shall
be noted by the deposition officer, but that only the hearing officer
shall have the power to decide on the competency, materiality, or
relevance of evidence; that the deposition shall be filed with the
Executive Secretary; and that transcripts shall be available to the
deponent and each party for purchase.
This section also incorporates certain procedures from Sec. 208 of
the Rules pertaining to subpoenas. Those procedures are intended to
protect against deposition requests that may be unreasonable,
oppressive, excessive in scope, or unduly burdensome, and to provide a
mechanism for signing and service of a deposition subpoena, the filing
of a motion to quash, and for enforcing subpoenas.
The Bureau considered whether respondents should be allowed to
issue subpoenas for the purpose of compelling prehearing discovery
depositions as is allowed in actions under the Federal Rules of Civil
Procedure. Discovery under the Federal Rules of Civil Procedure,
including deposition practice, is often a source of delay, extensive
collateral disputes and high litigation costs. The Bureau believes
expanding the scope of prehearing discovery to permit discovery
depositions is not warranted for several reasons.
First, the Bureau believes that even if limitations were placed on
the availability of discovery depositions, there remains a significant
potential for extensive collateral litigation over their use. Second,
use of discovery depositions is in tension with the statutory timetable
for hearings in cease-and-desist proceedings under section 1053(b) of
the Act. Indeed, in part for this reason, the Rules allow the hearing
officer to decide whether and to what extent to permit expert discovery
in adjudication proceedings. Allowing prehearing depositions would
present extreme scheduling difficulties in those cases in which
respondents did not request hearing dates outside the 30-to-60 day
timeframe set forth in the Act.
Third, the rationale for permitting oral depositions in litigation
under the Federal Rules of Civil Procedure does not apply equally to a
Bureau administrative proceeding. In the typical civil action between
private parties, where neither party can compel testimony prior to the
filing of the complaint, oral depositions play a critical role in
permitting evidence to be gathered prior to trial. Here, by contrast,
the Bureau can compel such testimony and is committed to making it
available to respondents pursuant to Sec. 1081.206.
Finally, these Rules include three provisions that address in
significant part a respondent's interest in obtaining discovery prior
to the start of the hearing. Section 1081.206 mandates that the
Division of Enforcement generally make available not only transcripts
of testimony, but documents obtained from persons not employed by the
Bureau during the investigation leading to the
[[Page 45347]]
proceeding as well as certain documents of the Bureau. Section 1081.208
authorizes the issuance of subpoenas duces tecum for the production of
documents returnable at any designated time or place. In addition,
Sec. 1081.210 provides for expert discovery in appropriate cases.
Given these discovery mechanisms, the ability to subpoena witnesses to
testify at the hearing, the ability to take the deposition of material
witnesses unavailable for hearing, and the ability of respondents to
conduct informal discovery, the marginal benefits of prehearing
depositions are not justified by their likely cost in time, expense,
collateral disputes and scheduling complexities.
Section 1081.210 Expert Discovery
This section is modeled after the FTC Rules, 16 CFR 3.31A. Neither
the Uniform Rules nor the SEC Rules provide for expert discovery. The
Bureau has provided for expert discovery so that the parties may fully
understand the other side's position prior to the hearing, which will
enable a clearer and more efficient airing of the issues at the
hearing, and which may also clarify the issues for a possible
prehearing settlement. It will also enable the parties to identify
rebuttal expert witnesses, if needed, prior to the hearing.
Paragraph (a) provides that the hearing officer shall establish a
date for the exchange of expert reports in the scheduling order. This
provision is intended to allow flexibility in scheduling expert
discovery depending on the complexity of the case and the date of the
hearing.
Paragraph (b) limits parties to five expert witnesses, including
any rebuttal or surrebuttal experts, as do the FTC Rules, 16 CFR 3.31A.
The Bureau believes this is sufficient to provide the parties with an
opportunity to adequately present expert testimony without unduly
delaying the proceedings. Paragraph (b) also provides that no party may
call an expert witness unless that witness has been identified and
provided a report in accordance with this section, unless the hearing
officer provides otherwise at a scheduling conference. The last clause
is intended to reflect a hearing officer's discretion, at a scheduling
conference, to dispense with or otherwise limit expert discovery in a
particular case (as expressly provided for in paragraph (e) of this
section).
Paragraph (c) sets forth the required contents of an expert report.
This section is based upon the corresponding provisions of the FTC
Rules.
Paragraph (d) provides for expert depositions, which are not to
exceed 8 hours absent agreement of the parties or an order by the
hearing officer. These time limits are intended to provide adequate
time to prepare for expert testimony without unduly delaying the
proceedings. Paragraph (d) also provides that expert depositions shall
be conducted pursuant to the procedures set forth in Sec. 1081.209.
Finally, paragraph (d) provides that an expert's deposition shall be
conducted after submission of the expert's report but no later than
seven days prior to the deadline for submission of rebuttal expert
reports. This provision is intended to allow parties to rely upon the
deposition of an opposing party's expert in the preparation of a
rebuttal expert report. Because, pursuant to paragraph (a), rebuttal
reports are due 28 days after the exchange of expert reports, expert
depositions will need to take place within that 28 day period.
Finally, paragraph (e) authorizes the hearing officer to dispense
with expert discovery in appropriate cases. The Bureau envisions
hearing officers relying on this provision in cease-and-desist
proceedings brought pursuant to section 1053(b) of the Act, where the
respondent has not requested a hearing date outside the statutory 30-
to-60 day timeframe. In such cases, it may be appropriate to dispense
with expert discovery for timing reasons, while allowing the parties to
call expert witnesses.
Section 1081.211 Interlocutory Review
This section sets forth the procedure and standards applicable to
interlocutory review by the Director of a ruling or order of the
hearing officer. In contrast to the practice in the federal judicial
system, but like the SEC, the Director may take up a matter on his or
her own motion at any time, even if a hearing officer does not certify
it for interlocutory review.
Paragraph (b) provides that any party may file a motion for
certification of a ruling or order for interlocutory review within five
days of service of the order or ruling. Responses to such motions are
due within three days, and the hearing officer is required to rule upon
such a motion within five days thereafter.
Paragraph (c) sets forth the permissible bases for certifying a
ruling or order. Certification is appropriate if the hearing officer's
ruling would compel testimony or production of documents from Bureau
officers or employees, or officers or employees from another
governmental agency. This is consistent with the SEC Rules, 17 CFR
201.400. Like FTC Rules, 16 CFR 3.23(a)(1), however, this provision
includes officers and employees from other governmental agencies, and
not just the Bureau, in order to afford the same treatment to other
agencies within the federal government. Paragraph (c) also provides for
certification of rulings or orders as to which there is a substantial
ground for difference of opinion and an immediate review may materially
advance the completion of the proceeding or subsequent review will be
an inadequate remedy. The hearing officer may also certify a ruling or
order where the ruling or order involves a motion for disqualification
of the hearing officer or the suspension of an individual from
appearing before the Bureau.
Paragraph (d) provides that a party whose motion for certification
is denied by the hearing officer may petition the Director directly for
interlocutory review. This provision is intended to guard against a
hearing officer's unwillingness to certify a ruling that appears to
meet the standards set forth in the section. The Bureau expects such
direct petitions to the Director to be used sparingly.
Paragraph (e) governs the Director's review of matters certified
pursuant to paragraph (c) or for which review is sought pursuant to
paragraph (d). It sets forth the policy of the Bureau that
interlocutory review is disfavored and provides that the Director will
grant such review only in extraordinary circumstances.
Paragraph (f) provides that proceedings will not be stayed by the
filing of a motion for certification for interlocutory review or a
grant of such review unless the hearing officer or the Director shall
so order. This is intended to promote the expeditious resolution of
proceedings and to deter frivolous motions for certification or review.
Section 1081.212 Dispositive Motions
This section lays out the procedures and standards for motions to
dismiss and motions for summary disposition. It expressly provides for
the filing of motions to dismiss, but makes clear that filing such a
motion does not affect a party's obligation to file an answer or take
any other action. This is intended to ensure that motions to dismiss do
not delay the proceedings unnecessarily. The timelines for decisions on
dispositive motions, discussed below, should help ensure that a party
ultimately determined to be entitled to dismissal is not required to
engage in the adjudicative process for a lengthy period of time.
Paragraph (b) provides that a respondent may file a motion to
dismiss
[[Page 45348]]
asserting that, even assuming the truth of the facts alleged in the
notice of charges, it is entitled to dismissal as a matter of law.
Neither the SEC Rules, the FTC Rules, nor the Uniform Rules
specifically set forth procedures or a standard applicable to motions
to dismiss, although the FTC Rules and Uniform Rules appear to
contemplate such motions. See 16 CFR 3.22(a) (referencing motions to
dismiss); 12 CFR 19.5(b)(7) (same). The Bureau has determined that such
motions are appropriate and should be provided for in the Rules, but
should not serve to delay the proceedings.
Paragraphs (c) and (d) govern the filing of motions for summary
disposition. They adopt standards similar to those set forth in the
Uniform Rules, the SEC Rules, and the FTC Rules for such motions. Any
party to a proceeding may file a motion for summary disposition of a
proceeding or for partial summary disposition of a proceeding if: (1)
There is no genuine issue as to any material fact; and (2) the moving
party is entitled to a favorable decision as a matter of law. The
motion, which may be filed after a respondent's answer has been filed
and documents have been made available for inspection and copying
pursuant to Sec. 1081.206, must be accompanied by a statement of the
uncontested material facts, a brief, and any documentary evidence in
support of the motion.
Any party opposing such a motion must file a statement setting
forth those material facts as to which he or she contends a genuine
dispute exists, supported by the same type of evidence permitted with a
motion for summary disposition, and a brief in support of the
contention that summary disposition would be inappropriate. These
paragraphs are modeled after the Uniform Rules, 12 CFR 19.29.
Pursuant to paragraphs (e), (f), and (g), motions to dismiss and
for summary disposition are subject to a 35-page limit (modeled on the
SEC Rules, 17 CFR 201.250(c)), responses to such motions are due within
20 days (modeled on the Uniform Rules, 12 CFR 19.29(b)(1)), and reply
briefs are due within five days of the response and shall not exceed 10
pages. Oral argument is permitted at the request of any party or by
motion of the hearing officer.
Paragraph (h) provides that the hearing officer must decide a
dispositive motion within 30 days of the expiration of the time for
filing all oppositions and replies. The Uniform Rules do not set a
deadline for a decision on dispositive motions. The FTC Rules provide
for the Commission to decide substantive motions within 45 days, 16 CFR
3.22(a), and the SEC Rules state that motions for summary disposition
are to be decided ``promptly'' by the hearing officer, 17 CFR
201.250(b). The Bureau has adopted the 30-day timeframe for decisions
on dispositive motions in keeping with its emphasis on expeditious
decision-making in administrative proceedings. The Bureau believes that
30 days affords sufficient time for the hearing officer to properly
assess the merits of the motion and draft either a ruling denying the
motion or a recommended decision granting it.
If the hearing officer finds that a party is not entitled to
dismissal or summary disposition, he or she shall make a ruling denying
that motion. This ruling would not be subject to interlocutory appeal
unless such an appeal was granted pursuant to the procedures and
standards set forth in Sec. 1081.211. If the hearing officer
determines that dismissal or summary adjudication is appropriate, he or
she will issue a recommended decision to that effect. If a party, for
good cause shown, cannot yet present facts essential to justify
opposition to the motion, the hearing officer is to deny or defer the
motion.
Section 1081.213 Partial Summary Disposition
This section is modeled on the FTC Rules, 16 CFR 3.24(a)(5). It
permits a hearing officer who denies summary adjudication of the whole
case nevertheless to issue an order specifying the facts that appear
without substantial controversy. Those facts will be deemed established
in the proceeding. This section enables the hearing officer to narrow
the dispute between the parties so that the hearing can proceed as
efficiently as possible.
Section 1081.214 Prehearing Conferences
This section sets forth the procedures for a prehearing conference,
which the hearing officer may convene on his own motion or at the
request of a party. It sets forth matters that may be discussed at a
prehearing conference. As with a scheduling conference pursuant to
Sec. 203, the conference is presumptively public unless the hearing
officer determines otherwise under the standard set forth in Sec.
1081.119.
Section 1081.215 Prehearing Submissions
This section is modeled primarily after the Uniform Rules, 12 CFR
19.32, which provide for mandatory prehearing submissions by the
parties. Section 215 requires that the following documents be served
upon the other parties no later than 10 days prior to the start of the
hearing: A prehearing statement; a final list of witnesses to be called
to testify that includes a description of the expected testimony of
each witness; any prior sworn statements that a party intends to admit
into evidence pursuant to Sec. 1081.303; a list of exhibits along with
a copy of each exhibit; and any stipulations of fact or liability. The
failure of a party to comply with this provision will preclude the
party from presenting any witnesses or exhibits not listed in its
prehearing submission at the hearing, except for good cause shown. To
account for cases in which the hearing officer has dispensed with
expert discovery, this section also requires that a statement of any
expert's qualifications and other information concerning the expert be
turned over if it has not been provided pursuant to Sec. 1081.210.
The FTC Rules do not provide for a prehearing submission, and the
SEC Rules, 17 CFR 201.222, do not make such a submission mandatory. The
Bureau has followed the Uniform Rules' model as it believes that
prehearing submissions will assist the parties in clarifying and
narrowing the issues to be adjudicated at the hearing, which is
especially important under the expedited hearing schedule provided for
by section 1053(b) of the Act and these Rules.
Section 1081.216 Amicus Participation
This section, based upon the SEC Rules, 17 CFR 201.210, allows for
amicus briefs in proceedings under this part, but only under certain
circumstances. An amicus brief may be allowed when a motion for leave
to file the brief has been granted; the brief is accompanied by written
consent of all parties; the brief is filed at the request of the
Director or the hearing officer, as appropriate; or the brief is
presented by the United States or an officer or agency thereof, or by a
State (defined to include territories or possessions of the United
States, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, Guam, American Samoa or
any federally recognized Indian tribe), or a political subdivision
thereof.
A motion to file an amicus brief is subject to the procedural
requirements set forth in Sec. 1081.205. An amicus will be granted
oral argument only for extraordinary reasons.
The Bureau considered incorporating other provisions of the SEC
Rules regarding participation but decided against doing so. The Bureau
believes that allowing intervention by other parties will serve to
delay the
[[Page 45349]]
proceedings with little or no attendant benefit, particularly in light
of the allowance for amicus participation. The Bureau has also decided
against including a provision providing for the limited participation
of federal or state criminal prosecutors for the purpose of seeking
stays during the pendency of criminal investigations or prosecutions
arising out of the same or similar facts as are at issue in an
adjudication proceeding. The Bureau believes that such stays can be
appropriately sought by Enforcement Counsel upon request of Federal or
state agencies.
Subpart C--Hearings
Section 1081.300 Public Hearings
This section provides that hearings before the Bureau will be
presumptively public, a practice that is consistent with the provisions
of the FTC Rules, 16 CFR 3.41(a), SEC Rules, 17 CFR 201.301, and the
Uniform Rules, 12 CFR 19.33(a). Specifically, hearings will be public
unless a confidentiality order is entered by the hearing officer
according to the standard set forth in Sec. 1081.119, or unless the
Director otherwise orders a non-public hearing on the ground that
holding an open hearing would be contrary to the public interest.
Section 1081.301 Failure To Appear
This section, which is modeled after the Uniform Rules, 12 CFR
19.21, provides that the failure of a respondent to appear in person or
by duly authorized counsel at the hearing may constitute a waiver of
the respondent's right to a hearing and may be deemed an admission of
the facts alleged and a consent to the relief sought in the notice of
charges. Without further notice to the respondent, the hearing officer
shall file a recommended decision addressing the relief sought in the
notice of charges.
Section 1081.302 Conduct of Hearings
This section provides general principles for the conduct of
hearings and the order in which the parties are to present their cases.
The first sentence emphasizing the goals of fairness, impartiality,
expediency, and orderliness is drawn from the SEC Rules, 17 CFR
201.300. The remainder of the section, which governs the order in which
the parties are to present their cases, is modeled after the Uniform
Rules, 12 CFR 19.35.
Section 1081.303 Evidence
This section sets forth rules regarding the offering and
admissibility of evidence at hearings, and adopts evidentiary standards
similar to those set forth in the FTC Rules, SEC Rules, and the Uniform
Rules.
The section provides that Enforcement Counsel shall bear the burden
of proving the ultimate issue(s) of the Bureau's claims at the hearing.
Consistent with general administrative practice, this section
provides that evidence that is relevant, material, reliable, and not
unduly repetitive shall be admissible to the fullest extent authorized
by the APA and other applicable law, and that evidence shall not be
excluded solely on the basis of its being hearsay if it is otherwise
admissible and bears satisfactory indicia of reliability.
This section provides that official notice may be taken of any
material fact that is not subject to reasonable dispute in that it is
either generally known or capable of accurate and ready determination
by resort to sources whose accuracy cannot reasonably be questioned. It
provides further that duplicate copies of documents are admissible to
the same extent as originals unless a genuine issue is raised about the
veracity or legibility of a document. Parties may, at any stage of the
proceeding, stipulate as to any relevant matters of fact or the
authentication of any relevant documents. Such stipulations may be
received in evidence at the hearing and are binding on the parties.
This section also provides that documents generated by respondents that
come from their own files are presumed authentic and kept in the
regular course of business and that the burden of proof is on the
respondent to introduce evidence to rebut such a presumption.
Objections to the admissibility of evidence must be timely made and
a failure to object to the admission of evidence shall constitute a
waiver of the objection. Parties are entitled to present their cases or
defenses by sworn oral testimony and documentary evidence. Witnesses at
a hearing are required to testify under oath or affirmation.
The provisions in this section about introducing prior sworn
statements of witnesses into the record are modeled after the SEC
Rules, 17 CFR 201.235. The section specifies the circumstances under
which prior sworn statements by a non-party witness are admissible into
the record. These statements can be admitted if a witness is dead,
outside of the United States, unable to attend because of age,
sickness, infirmity, imprisonment or other disability, or if the party
offering the sworn statement is unable to procure the attendance of the
witness by subpoena. Even if these conditions are not met, a prior
sworn statement may be introduced into the record in the discretion of
the hearing officer.
Section 1081.304 Record of the Hearing
Modeled on the FTC Rules, 16 CFR 3.44, this section provides that
hearings will be stenographically reported and transcribed and that the
original transcript shall be part of the record. It outlines the
procedure by which a party may request correction of the transcript.
Finally, it states that upon completion of the hearing, the hearing
officer will issue an order closing the record after giving the parties
three days to determine whether the record is complete or requires
supplementation.
Section 1081.305 Post-Hearing Filings
This section is drawn largely from the Uniform Rules, 12 CFR 19.37,
and provides that the parties may file proposed findings of fact,
proposed conclusions of law, and a proposed order within 30 days
following service of a notice on the parties that the transcript has
been properly filed or within such longer period as the hearing officer
may order. Proposed findings and conclusions must be supported by
citation to any relevant authorities, and by page references to any
relevant portions of the record. Responsive briefs may be filed to
these proposed findings and conclusions within 15 days after the
deadline for the proposed findings and conclusions, provided that the
party responding has filed its own proposed findings and conclusions.
The hearing officer shall not order the filing by any party of any
post-hearing brief or responsive brief in advance of the other party's
filing of its post-hearing brief.
Section 1081.306 Record in Proceedings Before Hearing Officer;
Retention of Documents; Copies
This section, drawn from the SEC Rules, 17 CFR 201.350, lists the
documents that comprise the record of a proceeding before the hearing
officer. It provides that those documents excluded from evidence should
be excluded from the record but retained until either a decision of the
Bureau has become final, or the conclusion of any judicial review of
the Director's final order. This section also states that a copy of a
document in the record may be substituted for an original.
Subpart D--Decision and Appeal
Section 1081.400 Recommended Decision of the Hearing Officer
This section adopts the general framework governing decisions by
the hearing officer from the SEC Rules, 17 CFR 201.360. It provides
that the hearing officer will file a recommended decision in each case
within a specified
[[Page 45350]]
time frame. Unlike the SEC Rule, which provides that the hearing
officer will issue an ``initial decision,'' this section provides that
the hearing officer's decision will be a recommended decision to the
Director.
This section also deviates from the SEC model in that it does not
provide for multiple ``tracks'' or timelines, but just one. This
section provides that the hearing officer will file a recommended
decision in each case no later than 90 days after the deadline for
filing post-hearing responsive briefs and in no event later than 300
days after service of the notice of charges. The 300-day timeframe is
taken from the SEC Rules, 17 CFR 201.360(a)(2), and the 90-day
timeframe is modeled on the FTC Rules, 16 CFR 3.51(a). Requests by the
hearing officer for extensions of this time frame must be made to the
Director and will be granted only if the Director determines that
additional time is necessary or appropriate in the public interest. The
Bureau anticipates such requests and extensions to be rare. As noted
above, this provision was adopted to ensure the timely resolution of
adjudication proceedings in light of the experience of other agencies.
The Bureau believes that the 90-day and 300-day timelines set forth in
this section provide sufficient time for the hearing officer to conduct
appropriate proceedings and issue an informed recommended decision.
Paragraph (c) of this section is modeled on the SEC Rules, 17 CFR
201.360(b), and sets forth the contents of the recommended decision,
providing that the recommended decision shall include a statement of
findings of fact and conclusions of law, as well as the reasons or
basis therefore, and an appropriate order, sanction, relief or denial
thereof. The recommended decision shall also state that a notice of
appeal may be filed within 10 days after service of the recommended
decision, and shall include a statement that the Director may issue a
final decision and order adopting the recommended decision, unless a
party timely files and perfects a notice of appeal. The recommended
decision shall be filed with the Executive Secretary, who will promptly
serve the recommended decision on the parties.
Drawing from the FTC Rules, 16 CFR 3.51(d), paragraph (d) of this
section provides that the recommended decision shall be made by the
hearing officer who presided over the hearing, except when he or she
has become unavailable to the Bureau. Paragraph (e) provides that the
hearing officer may reopen proceedings for receipt of further evidence
upon a showing of good cause until the close of the hearing record.
With the exception of correcting clerical errors or addressing a remand
from the Director, the hearing officer's jurisdiction terminates upon
the filing of the recommended decision.
Section 1081.401 Transmission of Documents to Director; Record Index;
Certification
Modeled on the Uniform Rules, 12 CFR 19.38(b) and the SEC Rules, 17
CFR 201.351(c), this section directs the hearing officer to furnish to
the Director a certified index for the case at the same time that the
hearing officer files the recommended decision. It also establishes the
process by which the record is transmitted to the Director for review
on appeal.
Section 1081.402 Notice of Appeal; Review by the Director
This section contains the process for review of a recommended
decision by the Director. Paragraph (a) is drawn from the FTC Rules, 16
CFR 3.52(b), and states that any party may object to the recommended
decision of the hearing officer by filing a notice of appeal to the
Director within 10 days of the recommended decision and perfecting that
notice of appeal by filing an opening brief within 30 days of the
recommended decision. Any party may respond to the opening brief by
filing an answering brief within 30 days of service of the opening
brief, and reply briefs may be filed within seven days after that.
Appeals to the Director are available as of right in all cases where
the hearing officer has issued a recommended decision.
This section also provides that within 40 days after the date of
service of the recommended decision, the Director, on his or her own
initiative, may order further briefing or argument with respect to any
recommended decision or portion of any recommended decision or issue a
final decision and order adopting the recommended decision. The 40-day
time period is intended to provide the Director with the benefit of
knowing whether any party has filed and perfected an appeal before
determining whether further briefing and argument regarding a
recommended decision is necessary. Any such order shall set forth the
scope of further review and the issues that will be considered and will
provide for the filing of briefs if the Director deems briefing
appropriate.
Finally, this section provides that, pursuant to 5 U.S.C. 704, a
perfected appeal to the Director of a recommended decision is a
prerequisite to the seeking of judicial review of a final decision and
order, unless the Director issues a final decision and order that does
not incorporate the recommended decision, in which case judicial review
shall be available to the extent that the Director's final decision and
order does not adopt the recommended decision.
Section 1081.403 Briefs Filed With the Director
This section outlines the requirements for briefs filed with the
Director. Paragraph (a) is modeled on the SEC Rules, 17 CFR 201.350(b),
and governs the content of briefs. Paragraph (b) is also drawn from the
SEC Rules, 17 CFR 201.350(c), and sets forth length limitations for
briefs. Unlike the SEC and the FTC, the Bureau has placed page limits--
rather than word limits--on briefs. This change is intended to simplify
the Rules and place less of a burden upon the parties but should have
no substantive impact.
Section 1081.404 Oral Argument Before the Director
This section adopts the SEC's policy for oral argument on appeal
wherein the Director will consider appeals, motions, and other matters
on the basis of the papers filed without oral argument unless the
Director determines that the presentation of facts and legal arguments
in the briefs and record and the decisional process would be
significantly aided by oral argument. A party who seeks oral argument
is directed to indicate such a request on the first page of its opening
or answering brief. Oral argument shall be public unless otherwise
ordered by the Director.
Section 1081.405 Decision of the Director
This section contains rules regarding the final decision and order
of the Director. Paragraph (a) provides for the scope of the Director's
review and defines the record before the Director as consisting of all
items that were part of the record below in accordance with Sec.
1081.306; any notices of appeal or order directing review; all briefs,
motions, submissions, and other papers filed on appeal or review; and
the transcript of any oral argument held.
The Director may have the advice and assistance of decisional
employees in considering and disposing of a case. In rendering a final
decision, the Director will affirm, adopt, modify, set aside, or remand
for further proceedings the recommended decision and will include in
the decision a statement of the reasons or basis for the Director's
[[Page 45351]]
actions and the findings of fact relied upon.
In accordance with section 1053 of the Act, this section provides
that, at the expiration of the time permitted for the filing of reply
briefs with the Director, the Executive Secretary will notify the
parties that the case has been submitted for final Bureau decision by
the Director. The Director will then issue a final decision and order
within 90 days of such notification to the parties. This policy ensures
a timely final resolution to all administrative adjudications.
Copies of final decisions and orders by the Director will be served
on each party, upon other persons required by statute, and, if directed
by the Director or required by statute, upon any appropriate state or
Federal supervisory authority. The final decision and order will also
be published on the Bureau's Web site or as otherwise deemed
appropriate by the Bureau.
Section 1081.406 Reconsideration
This section permits parties to file petitions for reconsideration
of a final decision and order within 14 days after service of the
decision and order. The Bureau has adopted the practice set forth in
the SEC Rules, 17 CFR 201.470, pursuant to which no response to a
petition for reconsideration will be filed unless requested by the
Director, and the Bureau has added a provision providing that the
Director will request such a response before granting any motion for
reconsideration. This is intended to lessen the burden on prevailing
parties while preserving their opportunity to be heard if the Director
is considering granting a motion for reconsideration.
Section 1081.407 Effective Date; Stays Pending Judicial Review
This section governs the effective date of the Director's final
orders. We have incorporated the requirement in section 1053(b) of the
Act that orders to cease and desist shall become effective 30 days
after the date of service of the Director's final decision and order.
This section also contains the rules and procedures regarding stays
of Bureau orders. Any party subject to a final order, other than a
consent order, may apply to the Director for a stay of all or part of
that order pending judicial review. Such a motion must be made within
30 days of service of the Director's final decision and order. A motion
for a stay shall address the likelihood of the movant's success on
appeal, whether the movant will suffer irreparable harm if a stay is
not granted, the degree of injury to other parties if a stay is
granted, and why the stay is in the public interest.
Finally, this section adopts the provision from the Uniform Rules,
12 CFR 19.41, providing that the commencement of proceedings for
judicial review of a final decision and order of the Director does not,
unless specifically ordered by the Director or a reviewing court,
operate as a stay of any order issued by the Director.
C. Procedural Requirements
1. Regulatory Requirements
The Rules relate solely to agency procedure and practice and, thus,
are not subject to the notice and comment requirements of the APA. See
5 U.S.C. 553(b). Although the Rules are exempt from these requirements,
the Bureau invites comment on them. Because no notice of proposed
rulemaking is required, the requirements of the Regulatory Flexibility
Act, 5 U.S.C. 601(2) do not apply.
2. Section 1022(b)(2) Provisions
The CFPB has conducted an analysis of benefits, costs, and impacts
\3\ and consulted with the prudential regulators, the Department of
Housing and Urban Development, the Securities and Exchange Commission,
the Department of Justice, and the Federal Trade Commission, including
with respect to whether the Rules are consistent with any relevant
prudential, market, and systemic objectives administered by such
agencies.\4\
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\3\ Section 1022(b)(2)(A) addresses the consideration of the
potential benefits and costs of regulation to consumers and
industry, including the potential reduction of access by consumers
to consumer financial products or services; the impact of proposed
rules on depository institutions and credit unions with $10 billion
or less in total assets as described in Section 1026 of the Dodd-
Frank Act; and the impact on consumers in rural areas.
\4\ The President's July 11, 2011, Executive Order 13579
entitled ``Regulation and Independent Regulatory Agencies,'' asks
the independent agencies to follow the cost-saving, burden-reducing
principles in Executive Order 13563; harmonization and
simplification of rules; flexible approaches that reduce costs; and
scientific integrity. In the spirit of Executive Order 13563, the
CFPB has consulted with the Office of Management and Budget
regarding this interim final rule.
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The Bureau concludes that the Rules will benefit consumers and
covered persons alike. The Rules do not impose any obligations on
consumers or covered persons, nor do they have any direct relevance to
consumers' access to consumer financial products and services. Rather,
they provide a clear, efficient mechanism for the conduct of
adjudication proceedings, which benefits consumers because the Rules
offer a systematic process for protecting them from unlawful behavior.
The Rules are intended to provide an expeditious decision-making
process, which will benefit both consumers and covered persons. The
Rules adopt an affirmative disclosure approach to fact discovery,
pursuant to which the Bureau will make available to respondents the
information obtained by the Division of Enforcement from persons not
employed by the Bureau prior to the institution of proceedings, in
connection with the investigation leading to the institution of
proceedings. This affirmative disclosure obligation substitutes for the
traditional civil discovery process, which can be both time-consuming
and expensive. The Bureau believes that the Rules, on the whole, will
afford covered persons with a relatively inexpensive way to have their
cases heard. The Rules are based upon, and drawn from, existing rules
of the prudential regulators, the Federal Trade Commission, and the
Securities and Exchange Commission. Their grounding in rules likely
familiar to practitioners should further reduce the expense of
administrative adjudication for covered persons.
Further, the Rules have no unique impact on insured depository
institutions or insured credit unions with less than $10 billion in
assets described in section 1026(a) of the Act, and do not have a
unique impact on rural consumers.
List of Subjects in 12 CFR Part 1801
Administrative practice and procedure, Banks, banking, Consumer
protection, Credit, Credit unions, Federal Reserve System, Law
enforcement, National banks, Savings associations, Trade practices.
For the reasons set forth above, the Bureau of Consumer Financial
Protection adds part 1081 to 12 CFR Chapter X to read as set forth
below.
TITLE 12--BANKS AND BANKING
CHAPTER X--BUREAU OF CONSUMER FINANCIAL PROTECTION
PART 1081--RULES OF PRACTICE FOR ADJUDICATION PROCEEDINGS
Subpart A--General Rules
Sec.
1081.100 Scope of the rules of practice
1081.101 Expedition and fairness of proceedings
1081.102 Rules of construction
1081.103 Definitions
1081.104 Authority of the hearing officer
1081.105 Assignment, substitution, performance, disqualification of
hearing officer
1081.106 Deadlines
[[Page 45352]]
1081.107 Appearance and practice in adjudication proceedings
1081.108 Good faith certification
1081.109 Conflict of interest
1081.110 Ex parte communication
1081.111 Filing of papers
1081.112 Formal requirements as to papers filed
1081.113 Service of papers
1081.114 Construction of time limits
1081.115 Change of time limits
1081.116 Witness fees and expenses
1081.117 Bureau's right to conduct examination, collect information
1081.118 Collateral attacks on adjudication proceedings
1081.119 Confidential information; protective orders
1081.120 Settlement
1081.121 Cooperation with other agencies
Subpart B--Initiation of Proceedings and Prehearing Rules
1081.200 Commencement of proceeding and contents of notice of
charges
1081.201 Answer
1081.202 Amended pleadings
1081.203 Scheduling conference
1081.204 Consolidation and severance of actions
1081.205 Non-dispositive motions
1081.206 Availability of documents for inspection and copying
1081.207 Production of witness statements
1081.208 Subpoenas
1081.209 Deposition of witness unavailable for hearing
1081.210 Expert discovery
1081.211 Interlocutory review
1081.212 Dispositive motions
1081.213 Partial summary disposition
1081.214 Prehearing conferences
1081.215 Prehearing submissions
1081.216 Amicus participation
Subpart C--Hearings
1081.300 Public hearings
1081.301 Failure to appear
1081.302 Conduct of hearings
1081.303 Evidence
1081.304 Record of the hearing
1081.305 Post-hearing filings
1081.306 Record in proceedings before hearing officer; retention of
documents; copies
Subpart D--Decision and Appeals
1081.400 Recommended decision of the hearing officer
1081.401 Transmission of documents to Director; record index;
certification
1081.402 Notice of appeal; review by the Director
1081.403 Briefs filed with the Director
1081.404 Oral argument before the Director
1081.405 Decision of the Director
1081.406 Reconsideration
1081.407 Effective date; stays pending judicial review
Authority: Pub. L. 111-203, Title X.
Subpart A--General Rules
Sec. 1081.100 Scope of the rules of practice.
This part prescribes rules of practice and procedure applicable to
adjudication proceedings authorized by section 1053 of the Consumer
Financial Protection Act of 2010 (``Act'') to ensure or enforce
compliance with the provisions of the Act, rules prescribed by the
Bureau under the Act, and any other Federal law or regulation that the
Bureau is authorized to enforce. These rules of practice do not govern
the conduct of Bureau investigations, investigational hearings or other
proceedings that do not arise from proceedings after a notice of
charges.
Sec. 1081.101 Expedition and fairness of proceedings.
To the extent practicable, consistent with requirements of law, the
Bureau's policy is to conduct such adjudication proceedings fairly and
expeditiously. In the conduct of such proceedings, the hearing officer
and counsel for all parties shall make every effort at each stage of a
proceeding to avoid delay. With the consent of the parties, the
Director, at any time, or the hearing officer at any time prior to the
filing of his or her recommended decision, may shorten any time limit
prescribed by this part.
Sec. 1081.102 Rules of construction.
For the purposes of this part:
(a) Any term in the singular includes the plural, and the plural
includes the singular, if such use would be appropriate;
(b) Any use of a masculine, feminine, or neutral gender encompasses
all three, if such use would be appropriate;
(c) Unless context requires otherwise, a party's counsel of record,
if any, may, on behalf of that party, take any action required to be
taken by the party.
(d) To the extent this part uses terms defined by the Act, such
terms shall have the same meaning as set forth in the Act, unless
defined differently by Sec. 1081.103.
Sec. 1081.103 Definitions.
For the purposes of this part, unless explicitly stated to the
contrary:
Act means the Consumer Financial Protection Act of 2010, as
amended, Public Law No. 111-203 (July 21, 2010), Title X, 12 U.S.C.
5481 et seq.
Adjudication proceeding means a proceeding conducted pursuant to
section 1053 of the Act and intended to lead to the formulation of a
final order other than a temporary cease and desist order issued
pursuant to section 1053(c) of the Act.
Bureau means the Bureau of Consumer Financial Protection.
Chief hearing officer means the hearing officer charged with
assigning hearing officers to specific proceedings, in the event there
is more than one hearing officer available to the Bureau.
Counsel means any attorney representing a party or any other person
representing a party pursuant to Sec. 1081.107.
Decisional employee means any employee of the Bureau who has not
engaged in an investigative or prosecutorial role in a proceeding and
who may assist the Director or the hearing officer, respectively, in
preparing orders, recommended decisions, decisions, and other documents
under this part.
Director means the Director of the Bureau or a person authorized to
perform the functions of the Director in accordance with the law.
Division of Enforcement means the division of the Bureau
responsible for enforcement of Federal consumer financial law.
Enforcement Counsel means any individual who files a notice of
appearance as counsel on behalf of the Bureau in an adjudication
proceeding.
Executive Secretary means the Executive Secretary of the Bureau.
Final order means an order issued by the Bureau with or without the
consent of the respondent, which has become final, without regard to
the pendency of any petition for reconsideration or review.
General Counsel means the General Counsel of the Bureau or any
Bureau employee to whom the General Counsel has delegated authority to
act under this part.
Hearing officer means an administrative law judge or any other
person duly authorized to preside at a hearing.
Notice of charges means the pleading that commences an adjudication
proceeding, as described in Sec. 1081.200 of this part.
Party means the Bureau and any person named as a party in any
notice of charges issued pursuant to this part.
Person means an individual, partnership, company, corporation,
association (incorporated or unincorporated), trust, estate,
cooperative organization, or other entity.
Person employed by the Bureau means Bureau employees, contractors,
agents, and others acting for or on behalf of the Bureau, or at its
direction, including consulting experts.
Respondent means any party other than the Bureau.
State means any State, territory, or possession of the United
States, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana
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Islands, Guam, American Samoa, or the United States Virgin Islands or
any federally recognized Indian tribe, as defined by the Secretary of
the Interior under section 104(a) of the Federally Recognized Indian
Tribe List Act of 1994 (25 U.S.C. 479a-1(a)).
Sec. 1081.104 Authority of the hearing officer.
(a) General Rule. The hearing officer shall have all powers
necessary to conduct a proceeding in a fair and impartial manner and to
avoid unnecessary delay. No provision of this part shall be construed
to limit the powers of the hearing officers provided by the
Administrative Procedure Act, 5 U.S.C. 556, 557.
(b) Powers. The powers of the hearing officer include but are not
limited to the power:
(1) To administer oaths and affirmations;
(2) To issue subpoenas, subpoenas duces tecum, and protective
orders, as authorized by this part, and to quash or modify any such
subpoenas or orders;
(3) To take depositions or cause depositions to be taken;
(4) To receive relevant evidence and to rule upon the admission of
evidence and offers of proof;
(5) To regulate the course of a proceeding and the conduct of
parties and their counsel;
(6) To reject written submissions that fail to comply with the
requirements of this part, and to deny confidential status to documents
and testimony without prejudice until a party complies with all
relevant rules;
(7) To hold conferences for settlement, simplification of the
issues, or any other proper purpose and require the attendance at any
such conference of at least one representative of each party who has
authority to negotiate concerning the resolution of issues in
controversy;
(8) To inform the parties as to the availability of one or more
alternative means of dispute resolution, and to encourage the use of
such methods;
(9) To certify questions to the Director for his or her
determination in accordance with the rules of this part;
(10) To consider and rule upon, as justice may require, all
procedural and other motions appropriate in adjudication proceedings;
(11) To issue and file recommended decisions;
(12) To recuse himself or herself by motion made by a party or on
his or her own motion;
(13) To issue such sanctions against parties or their counsel as
may be necessary to deter repetition of sanctionable conduct or
comparable conduct by others similarly situated, as provided for in
this part or as otherwise necessary to the appropriate conduct of
hearings and related proceedings, provided that no sanction shall be
imposed before providing the sanctioned person an opportunity to show
cause why no such sanction should issue; and
(14) To do all other things necessary and appropriate to discharge
the duties of a presiding officer.
Sec. 1081.105 Assignment, substitution, performance, disqualification
of hearing officer.
(a) How assigned. In the event that more than one hearing officer
is available to the Bureau for the conduct of proceedings under this
part, the presiding hearing officer shall be designated by the chief
hearing officer, who shall notify the parties of the hearing officer
designated.
(b) Interference. Hearing officers shall not be responsible or
subject to the supervision or direction of any officer, employee, or
agent engaged in the performance of investigative or prosecuting
functions for the Bureau, and all direction by the Bureau to the
hearing officer concerning any adjudication proceedings shall appear in
and be made part of the record.
(c) Disqualification of hearing officers.
(1) When a hearing officer deems himself or herself disqualified to
preside in a particular proceeding, he or she shall issue a notice
stating that he or she is withdrawing from the matter and setting forth
the reasons therefore.
(2) Any party who has a reasonable, good faith basis to believe
that a hearing officer has a personal bias, or is otherwise
disqualified from hearing a case, may make a motion to the hearing
officer that the hearing officer withdraw. The motion shall be
accompanied by an affidavit setting forth the facts alleged to
constitute grounds for disqualification. Such motion shall be filed at
the earliest practicable time after the party learns, or could
reasonably have learned, of the alleged grounds for disqualification.
If the hearing officer does not disqualify himself or herself within 10
days, he or she shall certify the motion to the Director pursuant to
Sec. 1081.211, together with any statement he or she may wish to have
considered by the Director. The Director shall promptly determine the
validity of the grounds alleged, either directly or on the report of
another hearing officer appointed to conduct a hearing for that
purpose, and shall either direct the reassignment of the matter or
confirm the hearing officer's continued role in the matter.
(d) Unavailability of hearing officer. In the event that the
hearing officer withdraws or is otherwise unable to perform the duties
of the hearing officer, the chief hearing officer or the Director shall
designate another hearing officer to serve.
Sec. 1081.106 Deadlines.
The deadlines for action by the hearing officer established by
Sec. Sec. 1081.203, 1081.205, 1081.211, 1081.212, and 1081.400, or
elsewhere in this part, confer no substantive rights on respondents.
Sec. 1081.107 Appearance and practice in adjudication proceedings.
(a) Appearance before the Bureau or a hearing officer.
(1) By attorneys. Any member in good standing of the bar of the
highest court of any state may represent others before the Bureau if
such attorney is not currently suspended or debarred from practice
before the Bureau.
(2) By non-attorneys. So long as such individual is not currently
suspended or debarred from practice before the Bureau:
(i) An individual may appear on his or her own behalf;
(ii) A member of a partnership may represent the partnership;
(iii) A duly authorized officer of a corporation, trust or
association may represent the corporation, trust or association; and
(iv) A duly authorized officer or employee of any government unit,
agency, or authority may represent that unit, agency, or authority.
(3) Notice of appearance. Any individual acting as counsel on
behalf of a party, including the Bureau, shall file a notice of
appearance at or before the time that the individual submits papers or
otherwise appears on behalf of a party in the adjudication proceeding.
The notice of appearance must include a written declaration that the
individual is currently qualified as provided in paragraph (a)(1) or
(a)(2) of this section and is authorized to represent the particular
party, and, if applicable, include the attorney's jurisdiction of
admission or qualification, attorney identification number, and a
statement by the appearing attorney attesting to his or her good
standing within the legal profession. By filing a notice of appearance
on behalf of a party in an adjudication proceeding, the counsel agrees
and represents that he or she is authorized to accept service on behalf
of the represented party and that, in the event of withdrawal from
representation, he or she will, if required by the hearing officer,
continue
[[Page 45354]]
to accept service until a new counsel has filed a notice of appearance
or until the represented party indicates that he or she will proceed on
a pro se basis. The notice of appearance shall provide the
representative's email address, telephone number and business address
and, if different from the representative's addresses, electronic or
U.S. mail addresses at which the represented party may be served.
(b) Sanctions. Dilatory, obstructionist, egregious, contemptuous or
contumacious conduct at any phase of any adjudication proceeding may be
grounds for exclusion or suspension of counsel from the proceeding. An
order imposing a sanction must describe the sanctioned conduct and
explain the basis for the sanction.
(c) Standards of conduct; disbarment.
(1) All attorneys practicing before the Bureau shall conform to the
standards of ethical conduct required by the bars of which the
attorneys are members.
(2) If for good cause shown, the Director believes that any
attorney is not conforming to such standards, or that an attorney or
counsel to a party has been otherwise engaged in conduct warranting
disciplinary action, the Director may issue an order requiring such
person to show cause why he should not be suspended or disbarred from
practice before the Bureau. The alleged offender shall be granted due
opportunity to be heard in his or her own defense and may be
represented by counsel. Thereafter, if warranted by the facts, the
Director may issue against the attorney or counsel an order of
reprimand, suspension, or disbarment.
Sec. 1081.108 Good faith certification.
(a) General requirement. Every filing or submission of record
following the issuance of a notice of charges shall be signed by at
least one counsel of record in his or her individual name and shall
state counsel's address, email address, and telephone number. A party
who acts as his or her own counsel shall sign his or her individual
name and state his or her address, e-mail address, and telephone number
on every filing or submission of record. Papers filed by electronic
transmission may be signed with an ``/s/'' notation, which shall be
deemed the signature of the party or representative whose name appears
below the signature line.
(b) Effect of signature.
(1) The signature of counsel or a party shall constitute a
certification that: the counsel or party has read the filing or
submission of record; to the best of his or her knowledge, information,
and belief formed after reasonable inquiry, the filing or submission of
record is well-grounded in fact and is warranted by existing law or a
good faith argument for the extension, modification, or reversal of
existing law; and the filing or submission of record is not made for
any improper purpose, such as to harass or to cause unnecessary delay
or needless increase in the cost of litigation.
(2) If a filing or submission of record is not signed, the hearing
officer shall strike the filing or submission of record, unless it is
signed promptly after the omission is called to the attention of the
filer.
(c) Effect of making oral motion or argument. The act of making any
oral motion or oral argument by any counsel or party constitutes a
certification that to the best of his or her knowledge, information,
and belief formed after reasonable inquiry, his or her statements are
well-grounded in fact and are warranted by existing law or a good faith
argument for the extension, modification, or reversal of existing law,
and are not made for any improper purpose, such as to harass or to
cause unnecessary delay or needless increase in the cost of litigation.
(d) Sanctions. Counsel or a party that fails to abide by the
requirements of this section may be subject to sanctions pursuant to
Sec. 1081.104(b)(13) of this part.
Sec. 1081.109 Conflict of interest.
(a) Conflict of interest in representation. No person shall appear
as counsel for another person in an adjudication proceeding if it
reasonably appears that such representation may be materially limited
by that counsel's responsibilities to a third person or by the
counsel's own interests. The hearing officer may take corrective
measures at any stage of a proceeding to cure a conflict of interest in
representation, including the issuance of an order limiting the scope
of representation or disqualifying an individual from appearing in a
representative capacity for the duration of the proceeding.
(b) Certification and waiver. If any person appearing as counsel
represents two or more parties to an adjudication proceeding or also
represents a non-party on a matter relevant to an issue in the
proceeding, counsel must certify in writing at the time of filing the
notice of appearance required by Sec. 1081.107(a)(3):
(1) That the counsel has personally and fully discussed the
possibility of conflicts of interest with each such party and non-
party; and
(2) That each such party and/or non-party waives any right it might
otherwise have had to assert any known conflicts of interest or to
assert any conflicts of interest during the course of the proceeding.
Sec. 1081.110 Ex parte communication.
(a) Definitions.
(1) For purposes of this section, ex parte communication means any
material oral or written communication relevant to the merits of an
adjudication proceeding that was neither on the record nor on
reasonable prior notice to all parties that takes place between:
(i) An interested person not employed by the Bureau (including such
person's counsel); and
(ii) The hearing officer handling the proceeding, the Director, or
a decisional employee.
(2) Exception. A request for status of the proceeding does not
constitute an ex parte communication.
(3) Pendency of an adjudication proceeding means the time from when
the Bureau issues a notice of charges, unless the person responsible
for the communication has knowledge that a notice of charges will be or
is likely to be issued, in which case the pendency of an adjudication
shall commence at the time of his or her acquisition of such knowledge,
or from when an order by a court of competent jurisdiction remanding a
Bureau decision and order for further proceedings becomes effective,
until the time the Director enters his or her final decision and order
in the proceeding and the time permitted to seek reconsideration of
that decision and order has elapsed. For purposes of this section, an
order of remand by a court of competent jurisdiction shall be deemed to
become effective when the Bureau determines not to file an appeal or a
petition for a writ of certiorari, or when the time for filing such an
appeal or petition has expired without an appeal or petition having
been filed, or when such a petition has been denied. If a petition for
reconsideration of a Bureau decision is filed pursuant to Sec.
1081.406, the matter shall be considered to be a pending adjudication
proceeding until the time the Bureau enters an order disposing of the
petition.
(b) Prohibited ex parte communications. During the pendency of an
adjudication proceeding, except to the extent required for the
disposition of ex parte matters as authorized by law or as otherwise
authorized by this part:
(1) No interested person not employed by the Bureau shall make or
knowingly cause to be made to the Director, or to the hearing officer,
or to any decisional employee, an ex parte communication; and
[[Page 45355]]
(2) The Director, the hearing officer, or any decisional employee
shall not make or knowingly cause to be made to any interested person
not employed by the Bureau any ex parte communication.
(c) Procedure upon occurrence of ex parte communication. If an ex
parte communication prohibited by paragraph (b) of this section is
received by the hearing officer, the Director, or any decisional
employee, that person shall cause all such written communications (or,
if the communication is oral, a memorandum stating the substance of the
communication) to be placed on the record of the proceeding and served
on all parties. All other parties to the proceeding shall have an
opportunity, within 10 days of receipt of service of the ex parte
communication, to file responses thereto and to recommend any
sanctions, in accordance with paragraph (d) of this section, that they
believe to be appropriate under the circumstances.
(d) Sanctions.
(1) Adverse action on claim. Upon receipt of an ex parte
communication knowingly made or knowingly caused to be made by a party
and prohibited by paragraph (b) of this section, the Director or
hearing officer, as appropriate, may, to the extent consistent with the
interests of justice and the policy of the underlying statutes, require
the party to show cause why his claim or interest in the proceeding
should not be dismissed, denied, disregarded, or otherwise adversely
affected on account of such violation.
(2) Discipline of persons practicing before the Bureau. The
Director may, to the extent not prohibited by law, censure, suspend, or
revoke the privilege to practice before the Bureau of any person who
makes, or solicits the making of, an unauthorized ex parte
communication.
(e) Separation of functions. Except to the extent required for the
disposition of ex parte matters as authorized by law, the hearing
officer may not consult a person or party on any matter relevant to the
merits of the adjudication, unless on notice and opportunity for all
parties to participate. An employee or agent engaged in the performance
of investigative or prosecuting functions for the Bureau in a case,
other than the Director, may not, in that or a factually related case,
participate or advise in the decision, recommended decision, or agency
review of the recommended decision, except as witness or counsel in
public proceedings.
Sec. 1081.111 Filing of papers.
(a) Filing. The following papers must be filed by parties in an
adjudication proceeding: the notice of charges, notices of appearance,
answer, motion, brief, request for issuance or enforcement of a
subpoena, response, opposition, reply, notice of appeal, or petition
for reconsideration. The hearing officer shall file all written orders,
rulings, notices, or requests. Any papers required to be filed shall be
filed with the Executive Secretary, except as otherwise provided
herein.
(b) Manner of filing. Unless otherwise specified by the Director or
the hearing officer, filing may be accomplished by:
(1) Electronic transmission upon any conditions specified by the
Director or the hearing officer, or
(2) Any of the following methods if respondent demonstrates
electronic filing is not practicable:
(i) Personal delivery to the Bureau's headquarters;
(ii) Delivery to a reliable commercial courier service or overnight
delivery service; or
(iii) Mailing the papers by first class, registered, certified, or
Express mail.
Sec. 1081.112 Formal requirements as to papers filed.
(a) Form. All papers filed by parties must:
(1) Set forth the name, address, telephone number, and e-mail
address of the counsel or party making the filing;
(2) Be double-spaced (except for single-spaced footnotes and
single-spaced indented quotations) and printed or typewritten on 8\1/
2\; x 11 inch paper in 12-point or larger font;
(3) Include at the head of the paper, or on a title page, a caption
setting forth the title of the case, the docket number of the
proceeding, and a brief descriptive title indicating the purpose of the
paper;
(4) Be paginated with margins at least 1 inch wide; and
(5) If filed by other than electronic means, be stapled, clipped or
otherwise fastened in a manner that lies flat when opened.
(b) Signature. All papers must be dated and signed as provided in
Sec. 1081.108.
(c) Number of copies. Unless otherwise specified by the Director or
the hearing officer, one copy of all documents and papers shall be
filed if filing is by electronic transmission. If filing is
accomplished by any other means, an original and one copy of all
documents and papers shall be filed, except that only one copy of
transcripts of testimony and exhibits must be filed.
(d) Authority to reject document for filing. The Executive
Secretary or the hearing officer may reject a document for filing that
fails to comply with these rules.
(e) Sensitive personal information. Sensitive personal information,
including but not limited to an individual's Social Security number,
taxpayer identification number, financial account number, credit card
or debit card number, driver's license number, state-issued
identification number, passport number, date of birth (other than
year), and any sensitive health information identifiable by individual,
such as an individual's medical records, shall not be included in, and
must be redacted or omitted from, filings where the filing party
determines that such information is not relevant or otherwise necessary
for the conduct of the proceeding.
(f) Confidential treatment of information in certain filings. A
party seeking confidential treatment of information contained in a
filing must contemporaneously file either a motion requesting such
treatment in accordance with Sec. 1081.119 of this part or a copy of
the order from the Director, hearing officer, or federal court
authorizing such confidential treatment. The filing must be accompanied
by:
(1) A complete, sealed copy of the documents containing the
materials as to which confidential treatment is sought, with the
allegedly confidential material clearly marked as such, and with the
first page of the document labeled ``Under Seal.'' If the movant seeks
or has obtained a protective order against disclosure to other parties
as well as the public, copies of the documents shall not be served on
other parties; and
(2) An expurgated copy of the materials as to which confidential
treatment is sought, with the allegedly confidential materials
redacted. The redacted version shall indicate any omissions with
brackets or ellipses, and its pagination and depiction of text on each
page shall be identical to that of the sealed version.
(g) Certificate of service. Any papers filed in an adjudicative
proceeding shall contain proof of service on all other parties or their
counsel in the form of a statement of the date and manner of service
and of the names of the persons served, certified by the person who
made service. The certificate of service must be affixed to the papers
filed and signed in accordance with Sec. 1081.108 of this part.
[[Page 45356]]
Sec. 1081.113 Service of papers.
(a) When required. In every adjudication proceeding, each paper
required to be filed by Sec. 1081.111 of this part shall be served
upon each party in the proceeding in accordance with the provisions of
this section; provided, however, that absent an order to the contrary,
no service shall be required for motions which are to be heard ex
parte.
(b) Upon a person represented by counsel. Whenever service is
required to be made upon a person represented by counsel who has filed
a notice of appearance pursuant to Sec. 1081.107(a)(3) of this part,
service shall be made pursuant to paragraph (c) of this section upon
counsel, unless service upon the person represented is ordered by the
Director or the hearing officer, as appropriate.
(c) Method of service. Except as provided in paragraph (d) of this
section, service shall be made by delivering a copy of the filing by
one of the following methods:
(1) Transmitting the papers by electronic transmission where the
persons so serving each other have consented to service by specified
electronic transmission and provided the Bureau and the parties with
notice of the means for service by electronic transmission (e.g., email
address or facsimile number);
(2) Personal service. Handing a copy to the person required to be
served; or leaving a copy at the person's office with a clerk or other
person in charge thereof, or, if there is no one in charge, leaving it
in a conspicuous place therein; or, if the office is closed or the
person to be served has no office, leaving it at the person's dwelling
or usual place of abode with some person of suitable age and discretion
then residing therein;
(3) Mailing the papers through the U.S. Postal Service by first
class, registered, or certified mail or Express Mail delivery addressed
to the person; or
(4) Sending the papers through a commercial courier service or
express delivery service.
(d) Service of certain papers by the Bureau. Service of the notice
of charges, recommended decisions and final orders of the Bureau shall
be effected as follows:
(1) Service of a notice of charges.
(i) To individuals. Notice of a proceeding shall be made to an
individual by delivering a copy of the notice of charges to the
individual or to an agent authorized by appointment or by law to
receive such notice. Delivery, for purposes of this paragraph, means
handing a copy of the notice to the individual; or leaving a copy at
the individual's office with a clerk or other person in charge thereof;
or leaving a copy at the individual's dwelling house or usual place of
abode with some person of suitable age and discretion then residing
therein; or sending a copy of the notice addressed to the individual by
U.S. Postal Service certified, registered or Express Mail, or by third-
party commercial carrier, for overnight delivery and obtaining a
confirmation of receipt.
(ii) To corporations or entities. Notice of a proceeding shall be
made to a person other than a natural person by delivering a copy of
the notice of charges to an officer, managing or general agent, or any
other agent authorized by appointment or law to receive such notice, by
any method specified in paragraph (d)(1)(i) of this section.
(iii) Upon persons registered with the Bureau. In addition to any
other method of service specified in paragraph (d)(1) of this section,
notice may be made to a person currently registered with the Bureau by
sending a copy of the notice of charges addressed to the most recent
business address shown on the person's registration form by U.S. Postal
Service certified, registered or Express Mail and obtaining a
confirmation of attempted delivery.
(iv) Upon persons in a foreign country. Notice of a proceeding to a
person in a foreign country may be made by any method specified in
paragraph (d)(1) of this section, or by any other method reasonably
calculated to give notice, provided that the method of service used is
not prohibited by the law of the foreign country.
(v) Record of service. The Bureau shall maintain a record of
service of the notice of charges on parties, identifying the party
given notice, the method of service, the date of service, the address
to which service was made, and the person who made service. If service
is made in person, the certificate of service shall state, if
available, the name of the individual to whom the notice of charges was
given. If service is made by U.S. Postal Service certified or Express
Mail, the Bureau shall maintain the confirmation of receipt or of
attempted delivery. If service is made to an agent authorized by
appointment to receive service, the certificate of service shall be
accompanied by evidence of the appointment.
(vi) Waiver of service. In lieu of service as set forth in
paragraph (d)(1) of this section, the party may be provided a copy of
the notice of charges by first class mail or other reliable means if a
waiver of service is obtained from the party and placed in the record.
(2) Service of recommended decisions and final orders. Recommended
decisions issued by the hearing officer and final orders issued by the
Bureau shall be served promptly on each party pursuant to any method of
service authorized under paragraph (d)(1) of this section. Such
decisions and orders may also be served by electronic transmission if
the party to be served has agreed to accept such service in writing,
signed by the party or its counsel, and has provided the Bureau with
information concerning the manner of electronic transmission.
Sec. 1081.114 Construction of time limits.
(a) General rule. In computing any period of time prescribed by
this part, by order of the Director or a hearing officer, or by any
applicable statute, the date of the act or event that commences the
designated period of time is not included. The last day so computed is
included unless it is a Saturday, Sunday, or Federal holiday as set
forth in 5 U.S.C. 6103(a). When the last day is a Saturday, Sunday, or
Federal holiday, the period runs until the end of the next day that is
not a Saturday, Sunday, or Federal holiday. Intermediate Saturdays,
Sundays, and Federal holidays are included in the computation of time,
except when the time period within which an act is to be performed is
10 days or less, not including any additional time allowed for in
paragraph (c) of this section.
(b) When papers are deemed to be filed or served. Filing and
service are deemed to be effective:
(1) In the case of personal service or same day commercial courier
delivery, upon actual receipt by person served;
(2) In the case of overnight commercial delivery service, U.S.
Express Mail delivery, or first class, registered, or certified mail,
upon deposit in or delivery to an appropriate point of collection;
(3) In the case of electronic transmission, upon transmission.
(c) Calculation of time for service and filing of responsive
papers. Whenever a time limit is measured by a prescribed period from
the service of any notice or paper, the applicable time limits are
calculated as follows:
(1) If service is made by first class, registered, or certified
mail, add three calendar days to the prescribed period;
(2) If service is made by express mail or overnight delivery
service, add one calendar day to the prescribed period; or
(3) If service is made by electronic transmission, add one calendar
day to the prescribed period.
[[Page 45357]]
Sec. 1081.115 Change of time limits.
(a) Except as otherwise provided by law, the hearing officer may,
in any proceeding before him or her, for good cause shown, extend the
time limits prescribed by this part or by any notice or order issued in
the proceedings. After appeal to the Director pursuant to Sec.
1081.402, the Director may grant extensions of the time limits for good
cause shown. Extensions may be granted at the motion of a party after
notice and opportunity to respond is afforded all non-moving parties or
on the Director's or the hearing officer's own motion, as appropriate.
(b) Considerations in determining whether to extend time limits or
grant postponements, adjournments and extensions. In considering all
motions for extensions of time filed pursuant to paragraph (a) of this
section, the Director or the hearing officer should adhere to a policy
of strongly disfavoring granting such motions, except in circumstances
where the moving party makes a strong showing that the denial of the
motion would substantially prejudice its case. In determining whether
to grant any motions, the Director or hearing officer, as appropriate,
shall consider, in addition to any other relevant factors:
(1) The length of the proceeding to date;
(2) The number of postponements, adjournments or extensions already
granted;
(3) The stage of the proceedings at the time of the motion;
(4) The impact of the motion on the hearing officer's ability to
complete the proceeding in the time specified by Sec. 1081.400(a); and
(5) Any other matters as justice may require.
(c) Time limit. Postponements, adjournments, or extensions of time
for filing papers shall not exceed 21 days unless the Director or the
hearing officer, as appropriate, states on the record or sets forth in
a written order the reasons why a longer period of time is necessary.
(d) No effect on deadline for recommended decision. The granting of
any extension of time pursuant to this section shall not affect any
deadlines set pursuant to Sec. 1081.400(a).
Sec. 1081.116 Witness fees and expenses.
Respondents shall pay to witnesses subpoenaed for testimony or
depositions on their behalf the same fees for attendance and mileage as
are paid in the United States district courts in proceedings in which
the United States is a party, provided that, in the case of a
deposition subpoena addressed to a party, no witness fees or mileage
need be paid. Fees for witnesses shall be tendered in advance by any
respondent requesting the issuance of a subpoena, except that fees and
mileage need not be tendered in advance where the Bureau is the party
requesting the subpoena. The Bureau shall pay to witnesses subpoenaed
for testimony or depositions on behalf of the Division of Enforcement
the same fees for attendance and mileage as are paid in the United
States district courts in proceedings in which the United States is a
party, but the Bureau need not tender such fees in advance.
Sec. 1081.117 Bureau's right to conduct examination, collect
information.
Nothing contained in this part limits in any manner the right of
the Bureau to conduct any examination, inspection, or visitation of any
person, to conduct or continue any form of investigation authorized by
law, to collect information in order to monitor the market for risks to
consumers in the offering or provision of consumer financial products
or services, or to otherwise gather information in accordance with law.
Sec. 1081.118 Collateral attacks on adjudication proceedings.
Unless a court of competent jurisdiction, or the Director for good
cause, so directs, if an interlocutory appeal or collateral attack is
brought in any court concerning all or any part of an adjudication
proceeding, the challenged adjudication proceeding shall continue
without regard to the pendency of that court proceeding. No default or
other failure to act as directed in the adjudication proceeding within
the times prescribed in this part shall be excused based on the
pendency before any court of any interlocutory appeal or collateral
attack.
Sec. 1081.119 Confidential information; protective orders.
(a) Procedure. In any adjudication proceeding, a party; any person
who is the owner, subject, or creator of a document subject to subpoena
or which may be introduced as evidence; or any witness who testifies at
a hearing or in a deposition pursuant to Sec. 1081.209 may file a
motion requesting a protective order to limit from disclosure to other
parties or to the public documents or testimony that contain
confidential information. The motion should include a general summary
or extract of the documents or testimony without revealing confidential
details. A motion for confidential treatment of documents should be
filed in accordance with Sec. 1081.112(f).
(b) Basis for issuance. Documents and testimony introduced in a
public hearing are presumed to be public. A motion for a protective
order shall be granted only upon a finding that public disclosure will
likely result in a clearly defined, serious injury to the person
requesting confidential treatment or after finding that the material
constitutes sensitive personal information, as defined in Sec.
1081.112(e).
(c) Requests for additional information supporting confidentiality.
The hearing officer may require a movant under paragraph (a) of this
section to furnish in writing additional information with respect to
the grounds for confidentiality. Failure to supply the information so
requested within five days from the date of receipt by the movant of a
notice of the information required shall be deemed a waiver of the
objection to public disclosure of that portion of the documents to
which the additional information relates, unless the hearing officer
shall otherwise order for good cause shown at or before the expiration
of such 5-day period.
(d) Confidentiality of documents pending decision. Pending a
determination of a motion under this section, the documents as to which
confidential treatment is sought and any other documents that would
reveal the confidential information in those documents shall be
maintained under seal and shall be disclosed only in accordance with
orders of the hearing officer. Any order issued in connection with a
motion under this section shall be public unless the order would
disclose information as to which a protective order has been granted,
in which case that portion of the order that would reveal the protected
information shall be nonpublic.
Sec. 1081.120 Settlement.
(a) Availability. Any person who is notified that a proceeding may
or will be instituted against him or her, or any party to a proceeding
already instituted, may, at any time, propose in writing an offer of
settlement.
(b) Procedure. An offer of settlement shall state that it is made
pursuant to this section; shall recite or incorporate as a part of the
offer the provisions of paragraphs (c)(3) and (4) of this section;
shall be signed by the person making the offer, not by counsel; and
shall be submitted to Enforcement Counsel.
(c) Consideration of offers of settlement.
(1) Offers of settlement shall be considered when time, the nature
of the proceedings, and the public interest permit.
[[Page 45358]]
(2) Any settlement offer shall be presented to the Director with a
recommendation, except that, if the recommendation is unfavorable, the
offer shall not be presented to the Director unless the person making
the offer so requests.
(3) By submitting an offer of settlement, the person making the
offer waives, subject to acceptance of the offer:
(i) All hearings pursuant to the statutory provisions under which
the proceeding is to be or has been instituted;
(ii) The filing of proposed findings of fact and conclusions of
law;
(iii) Proceedings before, and a recommended decision by, a hearing
officer;
(iv) All post-hearing procedures;
(v) Judicial review by any court; and
(vi) Any objection to the jurisdiction of the Bureau under section
1053 of the Act.
(4) By submitting an offer of settlement the person further waives:
(i) Such provisions of this part or other requirements of law as
may be construed to prevent any Bureau employee from participating in
the preparation of, or advising the Director as to, any order, opinion,
finding of fact, or conclusion of law to be entered pursuant to the
offer; and
(ii) Any right to claim bias or prejudgment by the Director based
on the consideration of or discussions concerning settlement of all or
any part of the proceeding.
(5) If the Director rejects the offer of settlement, the person
making the offer shall be notified of the Director's action and the
offer of settlement shall be deemed withdrawn. The rejected offer shall
not constitute a part of the record in any proceeding against the
person making the offer, provided, however, that rejection of an offer
of settlement does not affect the continued validity of waivers
pursuant to paragraph (c)(4) of this section with respect to any
discussions concerning the rejected offer of settlement.
Sec. 1081.121 Cooperation with other agencies.
It is the policy of the Bureau to cooperate with other governmental
agencies to avoid unnecessary overlap or duplication of regulatory
functions.
Subpart B--Initiation of Proceedings and Prehearing Rules
Sec. 1081.200 Commencement of proceeding and contents of notice of
charges.
(a) Commencement of proceeding. A proceeding governed by this part
is commenced by filing of a notice of charges by the Bureau in
accordance with Sec. 1081.111 of this part. The notice of charges must
be served by the Bureau upon the respondent in accordance with Sec.
1081.113(d)(1) of this part.
(b) Contents of a notice of charges. The notice of charges must set
forth:
(1) The legal authority for the proceeding and for the Bureau's
jurisdiction over the proceeding;
(2) A statement of the matters of fact and law showing that the
Bureau is entitled to relief;
(3) A proposed order or prayer for an order granting the requested
relief;
(4) The time and place of the hearing as required by law or
regulation;
(5) The time within which to file an answer as required by law or
regulation;
(6) That the answer shall be filed and served in accordance with
subpart A of this part; and
(7) The docket number for the adjudication proceeding.
(c) Publication of notice of charges. Unless otherwise ordered by
the Bureau, the notice of charges shall be given general circulation by
release to the public, by publication on the Bureau's Web site and,
where directed by the hearing officer or the Director, by publication
in the Federal Register. The Bureau may publish any notice of charges
after 10 days from the date of service except if there is a pending
motion for a protective order filed pursuant to Sec. 1081.119.
(d) Voluntary dismissal.
(1) Without an order. The Bureau may voluntarily dismiss an
adjudication proceeding without an order entered by a hearing officer
by filing either:
(i) A notice of dismissal before the respondent(s) serves an
answer; or
(ii) A stipulation of dismissal signed by all parties who have
appeared.
(2) Effect. Unless the notice or stipulation states otherwise, the
dismissal is without prejudice, and does not operate as an adjudication
on the merits.
Sec. 1081.201 Answer.
(a) When. Within 14 days of service of the notice of charges,
respondent shall file an answer as designated in the notice of charges.
(b) Content of answer. An answer must specifically respond to each
paragraph or allegation of fact contained in the notice of charges and
must admit, deny, or state that the party lacks sufficient information
to admit or deny each allegation of fact. A statement of lack of
information has the effect of a denial. Denials must fairly meet the
substance of each allegation of fact denied; general denials are not
permitted. When a respondent denies part of an allegation, that part
must be denied and the remainder specifically admitted. Any allegation
of fact in the notice of charges which is not denied in the answer must
be deemed admitted for purposes of the proceeding. A respondent is not
required to respond to the portion of a notice of charges that
constitutes the prayer for relief or proposed order. The answer must
set forth affirmative defenses, if any, asserted by the respondent.
(c) If the allegations of the complaint are admitted. If the
respondent elects not to contest the allegations of fact set forth in
the notice of charges, the answer shall consist of a statement that the
respondent admits all of the material allegations to be true. Such an
answer shall constitute a waiver of hearings as to the facts alleged in
the notice of charges, and together with the notice of charges will
provide a record basis on which the hearing officer shall issue a
recommended decision containing appropriate findings and conclusions
and a proposed order disposing of the proceeding. In such an answer,
the respondent may, however, reserve the right to submit proposed
findings of fact and conclusions of law under Sec. 1081.305.
(d) Default.
(1) Failure of a respondent to file an answer within the time
provided shall be deemed to constitute a waiver of the respondent's
right to appear and contest the allegations of the notice of charges
and to authorize the hearing officer, without further notice to the
respondent, to find the facts to be as alleged in the notice of charges
and to enter a recommended decision containing appropriate findings and
conclusions. In such cases, respondent shall have no right to appeal
pursuant to Sec. 1081.402, but must instead proceed pursuant to
paragraph (d)(2) of this section.
(2) A motion to set aside a default shall be made within a
reasonable time, state the reasons for the failure to appear or defend,
and specify the nature of the proposed defense in the proceeding. In
order to prevent injustice and on such conditions as may be
appropriate, the hearing officer, at any time prior to the filing of
the recommended decision, or the Director, at any time, may for good
cause shown set aside a default.
Sec. 1081.202 Amended pleadings.
(a) Amendments. The notice of charges or answer may be amended or
supplemented at any stage of the proceeding. The respondent must answer
an amended notice of charges within the time remaining for the
[[Page 45359]]
respondent's answer to the original notice of charges, or within 10
days after service of the amended notice of charges, whichever period
is longer, unless the hearing officer orders otherwise for good cause.
(b) Amendments to conform to the evidence. When issues not raised
in the notice of charges or answer are tried at the hearing by express
or implied consent of the parties, they will be treated in all respects
as if they had been raised in the notice of charges or answer, and no
formal amendments are required. If evidence is objected to at the
hearing on the ground that it is not within the issues raised by the
notice of charges or answer, the hearing officer may admit the evidence
when admission is likely to assist in adjudicating the merits of the
action and the objecting party fails to satisfy the hearing officer
that the admission of such evidence would unfairly prejudice that
party's action or defense upon the merits. The hearing officer may
grant a continuance to enable the objecting party to meet such
evidence.
Sec. 1081.203 Scheduling conference.
(a) Meeting of the parties before scheduling conference. As early
as practicable before the scheduling conference described in paragraph
(b) of this section, counsel for the parties shall meet to discuss the
nature and basis of their claims and defenses and the possibilities for
a prompt settlement or resolution of the case. The parties shall also
discuss and agree, if possible, on the matters set forth in paragraph
(b) of this section.
(b) Scheduling conference. Within 20 days of service of the notice
of charges or such other time as the parties and hearing officer may
agree, the hearing officer shall direct counsel for all parties to meet
with him or her in person at a specified time and place prior to the
hearing or to confer by telephone for the purpose of scheduling the
course and conduct of the proceeding. This meeting or telephone
conference is called a scheduling conference. At the scheduling
conference, counsel for the parties shall be prepared to address:
(1) Determination of the dates and location of the hearing,
including, in proceedings under section 1053(b) of the Act, whether the
hearing should commence later than 60 days after service of the notice
of charges;
(2) Simplification and clarification of the issues;
(3) Amendments to pleadings;
(4) Settlement of any or all issues;
(5) Production of documents as set forth in Sec. 1081.206 and of
witness statements as set forth in Sec. 1081.207, and prehearing
production of documents in response to subpoenas duces tecum as set
forth in Sec. 1081.208;
(6) Whether or not the parties intend to move for summary
disposition of any or all issues;
(7) Whether the parties intend to seek the deposition of witnesses
pursuant to Sec. 1081.209;
(8) A schedule for the exchange of expert reports and the taking of
expert depositions, if any; and
(9) Such other matters as may aid in the orderly disposition of the
proceeding.
(c) Transcript. The hearing officer, in his or her discretion, may
require that a scheduling conference be recorded by a court reporter. A
transcript of the conference and any materials filed, including orders,
becomes part of the record of the proceeding. A party may obtain a copy
of the transcript at his or her expense.
(d) Scheduling order. At or within five days following the
conclusion of the scheduling conference, the hearing officer shall
serve on each party an order setting forth the date and location of the
hearing and any agreements reached and any procedural determinations
made.
(e) Failure to appear; default. Any person who is named in a notice
of charges as a person against whom findings may be made or sanctions
imposed and who fails to appear, in person or through counsel, at a
scheduling conference of which he or she has been duly notified may be
deemed in default pursuant to Sec. 1081.201(d)(1). A party may make a
motion to set aside a default pursuant to Sec. 1081.201(d)(2).
(f) Public access. The scheduling conference shall be public unless
the hearing officer determines, based on the standard set forth in
Sec. 1081.119(b) of this part, that the conference (or any part
thereof) shall be closed to the public.
Sec. 1081.204 Consolidation and severance of actions.
(a) Consolidation.
(1) On the motion of any party, or on the hearing officer's own
motion, the hearing officer may consolidate, for some or all purposes,
any two or more proceedings, if each such proceeding involves or arises
out of the same transaction, occurrence or series of transactions or
occurrences, or involves at least one common respondent or a material
common question of law or fact, unless such consolidation would cause
unreasonable delay or injustice.
(2) In the event of consolidation under paragraph (a)(1) of this
section, appropriate adjustment to the prehearing schedule may be made
to avoid unnecessary expense, inconvenience, or delay.
(b) Severance. The hearing officer may, upon the motion of any
party, sever the proceeding for separate resolution of the matter as to
any respondent only if the hearing officer finds that:
(1) Undue prejudice or injustice to the moving party would result
from not severing the proceeding; and
(2) Such undue prejudice or injustice would outweigh the interests
of judicial economy and expedition in the complete and final resolution
of the proceeding.
Sec. 1081.205 Non-dispositive motions.
(a) Scope. This section applies to all motions except motions to
dismiss and motions for summary disposition. Non-dispositive motions
filed pursuant to other sections of this part shall comply with any
specific requirements of that section and this section to the extent
these requirements are not inconsistent.
(b) In writing.
(1) Unless made during a hearing or conference, an application or
request for an order or ruling must be made by written motion.
(2) All written motions must state with particularity the relief
sought and must be accompanied by a proposed order.
(3) No oral argument may be held on written motions except as
otherwise directed by the hearing officer. Written memoranda, briefs,
affidavits or other relevant material or documents may be filed in
support of or in opposition to a motion.
(c) Oral motions. The Director or the hearing officer, as
appropriate, may order that an oral motion be submitted in writing.
(d) Responses and replies.
(1) Except as otherwise provided herein, within 10 days after
service of any written motion, or within such other period of time as
may be established by the hearing officer or the Director, as
appropriate, any party may file a written response to a motion. The
hearing officer shall not rule on any oral or written motion before
each party has had an opportunity to file a response.
(2) Reply briefs, if any, may be filed within three days after
service of the response.
(3) The failure of a party to oppose a written motion or an oral
motion made on the record is deemed consent by that party to the entry
of an order substantially in the form of the order accompanying the
motion.
(e) Length limitations. No motion subject to this section (together
with the
[[Page 45360]]
brief in support of the motion) or brief in response to the motion
shall exceed 15 pages in length, exclusive of pages containing the
table of contents, table of authorities, and any addendum that consists
solely of copies of applicable cases, pertinent legislative provisions
or rules, and exhibits. No reply brief shall exceed six pages in
length, exclusive of pages containing the table of contents, table of
authorities, and any addendum that consists solely of copies of
applicable cases, pertinent legislative provisions or rules, and
exhibits. Motions for leave to file motions and briefs in excess of
these limitations are disfavored.
(f) Meet and confer requirements. Each motion filed under this
section shall be accompanied by a signed statement representing that
counsel for the moving party has conferred or made a good faith effort
to confer with opposing counsel in a good faith effort to resolve by
agreement the issues raised by the motion and has been unable to reach
such an agreement. If some of the matters in controversy have been
resolved by agreement, the statement shall specify the matters so
resolved and the matters remaining unresolved.
(g) Ruling on non-dispositive motions. Unless otherwise provided by
a relevant rule, a hearing officer shall rule on non-dispositive
motions. Such ruling shall be issued within 14 days after the
expiration of the time period allowed for the filing of all motions
papers authorized by this section. The Director, for good cause, may
extend the time allowed for a ruling.
(h) Proceedings not stayed. A motion under consideration by the
Director or the hearing officer shall not stay proceedings before the
hearing officer unless the Director or the hearing officer, as
appropriate, so orders.
(i) Dilatory motions. Frivolous, dilatory, or repetitive motions
are prohibited. The filing of such motions may form the basis for
sanctions.
Sec. 1081.206 Availability of documents for inspection and copying.
For purposes of this section, the term documents shall include any
book, document, record, report, memorandum, paper, communication,
tabulation, chart, logs, electronic files, or other data or data
compilations stored in any medium.
(a) Documents to be available for inspection and copying.
(1) Unless otherwise provided by this section, or by order of the
hearing officer, the Division of Enforcement shall make available for
inspection and copying by any party documents obtained by the Division
of Enforcement prior to the institution of proceedings, from persons
not employed by the Bureau, in connection with the investigation
leading to the institution of proceedings. Such documents shall
include:
(i) Any documents turned over in response to civil investigative
demands or other written requests to provide documents or to be
interviewed issued by the Division of Enforcement;
(ii) All transcripts and transcript exhibits; and
(iii) Any other documents obtained from persons not employed by the
Bureau.
(2) In addition, the Division of Enforcement shall make available
for inspection and copying by any party:
(i) Each civil investigative demand or other written request to
provide documents or to be interviewed issued by the Division of
Enforcement in connection with the investigation leading to the
institution of proceedings; and
(ii) Any final examination or inspection reports prepared by any
other Division of the Bureau if the Division of Enforcement either
intends to introduce any such report into evidence or to use any such
report to refresh the recollection of, or impeach, any witness.
(3) Nothing in paragraph (a) of this section shall limit the right
of the Division of Enforcement to make available any other document, or
shall limit the right of a respondent to seek access to or production
pursuant to subpoena of any other document, or shall limit the
authority of the hearing officer to order the production of any
document pursuant to subpoena.
(4) Nothing in paragraph (a) of this section shall require the
Division of Enforcement to produce a final examination or inspection
report prepared by any other Division of the Bureau to a respondent who
is not the subject of that report.
(b) Documents that may be withheld.
(1) The Division of Enforcement may withhold a document if:
(i) The document is privileged;
(ii) The document is an internal memorandum, note or writing
prepared by a person employed by the Bureau or another government
agency, other than an examination or supervision report as specified in
paragraph (a)(2)(ii) of this section, or would otherwise be subject to
the work product doctrine and will not be offered in evidence;
(iii) The document would disclose the identity of a confidential
source;
(iv) Applicable law prohibits the disclosure of the document; or
(v) The hearing officer grants leave to withhold a document or
category of documents as not relevant to the subject matter of the
proceeding or otherwise, for good cause shown.
(2) Nothing in paragraph (b)(1) of this section authorizes the
Division of Enforcement in connection with an adjudication proceeding
to withhold material exculpatory evidence in the possession of the
Division that would otherwise be required to be produced pursuant to
paragraph (a) of this section.
(c) Withheld document list. The hearing officer may require the
Division of Enforcement to submit for review a list of documents or
categories of documents withheld pursuant to paragraphs (b)(1)(i)
through (b)(1)(iv) of this section or to submit any document withheld,
and may determine whether any such document should be made available
for inspection and copying. When similar documents are withheld
pursuant to paragraphs (b)(1)(i) through (b)(1)(iv) of this section,
those documents may be identified by category instead of by individual
document. The hearing officer retains discretion to determine when an
identification by category is insufficient.
(d) Timing of inspection and copying. Unless otherwise ordered by
the hearing officer, the Division of Enforcement shall commence making
documents available to a respondent for inspection and copying pursuant
to this section no later than seven days after service of the notice of
charges.
(e) Place of inspection and copying. Documents subject to
inspection and copying pursuant to this section shall be made available
to the respondent for inspection and copying at the Bureau office where
they are ordinarily maintained, or at such other place as the parties,
in writing, may agree. A respondent shall not be given custody of the
documents or leave to remove the documents from the Bureau's offices
pursuant to the requirements of this section other than by written
agreement of the Division of Enforcement. Such agreement shall specify
the documents subject to the agreement, the date they shall be returned
and such other terms or conditions as are appropriate to provide for
the safekeeping of the documents.
(f) Copying costs and procedures. The respondent may obtain a
photocopy of any documents made available for inspection or, at the
discretion of the Division of Enforcement, electronic copies of such
documents. The respondent shall be responsible for the cost of
photocopying. Unless otherwise ordered, charges for copies made by the
Division of Enforcement at the request
[[Page 45361]]
of the respondent will be at the rate charged pursuant to part 1070.
The respondent shall be given access to the documents at the Bureau's
offices or such other place as the parties may agree during normal
business hours for copying of documents at the respondent's expense.
(g) Duty to supplement. If the Division of Enforcement acquires
information that it intends to rely upon at a hearing after making its
disclosures under part (a)(1) of this section, the Division of
Enforcement shall supplement its disclosures to include such
information.
(h) Failure to make documents available--harmless error. In the
event that a document required to be made available to a respondent
pursuant to this section is not made available by the Division of
Enforcement, no rehearing or redecision of a proceeding already heard
or decided shall be required unless the respondent establishes that the
failure to make the document available was not harmless error.
(i) Disclosure of privileged or protected information or
communications; scope of waiver; obligations of receiving party.
(1)(i) The disclosure of privileged or protected information or
communications by any party during an adjudication proceeding shall not
operate as a waiver if:
(A) The disclosure was inadvertent;
(B) The holder of the privilege or protection took reasonable steps
to prevent disclosure; and
(C) The holder promptly took reasonable steps to rectify the error,
including notifying any party that received the information or
communication of the claim and the basis for it.
(ii) After being notified, the receiving party must promptly
return, sequester, or destroy the specified information and any copies
it has; must not use or disclose the information until the claim is
resolved; must take reasonable steps to retrieve the information if the
party disclosed it before being notified; and may promptly present the
information to the hearing officer under seal for a determination of
the claim. The producing party must preserve the information until the
claim is resolved.
(2) The disclosure of privileged or protected information or
communications by any party during an adjudication proceeding shall
waive the privilege or protection as to undisclosed information or
communications only if:
(i) The waiver is intentional;
(ii) The disclosed and undisclosed information or communications
concern the same subject matter; and
(iii) They ought in fairness to be considered together.
Sec. 1081.207 Production of witness statements.
(a) Availability. Any respondent may move that the Division of
Enforcement produce for inspection and copying any statement of any
person called or to be called as a witness by the Division of
Enforcement that pertains, or is expected to pertain, to his or her
direct testimony and that would be required to be produced pursuant to
the Jencks Act, 18 U.S.C. 3500, if the adjudication proceeding were a
criminal proceeding. For purposes of this section, the term
``statement'' shall have the meaning set forth in 18 U.S.C. 3500(e).
Such production shall be made at a time and place fixed by the hearing
officer and shall be made available to any party, provided, however,
that the production shall be made under conditions intended to preserve
the items to be inspected or copied.
(b) Failure to produce--harmless error. In the event that a
statement required to be made available to a respondent pursuant to
this section is not made available by the Division of Enforcement, no
rehearing or redecision of a proceeding already heard or decided shall
be required unless the respondent establishes that the failure to make
the statement available was not harmless error.
Sec. 1081.208 Subpoenas.
(a) Availability. In connection with any hearing ordered by the
hearing officer, a party may request the issuance of one or more
subpoenas requiring the attendance and testimony of witnesses at the
designated time and place of the hearing, or the production of
documentary or other tangible evidence returnable at any designated
time or place.
(b) Procedure. Unless made on the record at a hearing, requests for
issuance of a subpoena shall be made in writing, and filed and served
on each party pursuant to subpart A of this part. The request must
contain a proposed subpoena and a brief statement showing the general
relevance and reasonableness of the scope of testimony or documents
sought.
(c) Signing may be delegated. A hearing officer may authorize
issuance of a subpoena, and may delegate the manual signing of the
subpoena to any other person authorized to issue subpoenas.
(d) Standards for issuance. The hearing officer shall promptly
issue any subpoena requested pursuant to this section. However, where
it appears to the hearing officer that the subpoena sought may be
unreasonable, oppressive, excessive in scope, or unduly burdensome, he
or she may, in his or her discretion, as a condition precedent to the
issuance of the subpoena, require the person seeking the subpoena to
show further the general relevance and reasonable scope of the
testimony or other evidence sought. If after consideration of all the
circumstances, the hearing officer determines that the subpoena or any
of its terms is unreasonable, oppressive, excessive in scope, or unduly
burdensome, he or she may refuse to issue the subpoena, or issue it
only upon such conditions as fairness requires. In making the foregoing
determination, the hearing officer may inquire of the other
participants whether they will stipulate to the facts sought to be
proved.
(e) Service. Upon issuance by the hearing officer, the party making
the request shall serve the subpoena on the person named in the
subpoena and on each party in accordance with Sec. 1081.113(c).
Subpoenas may be served in any state, on any person or company doing
business in any state, or as otherwise permitted by law.
(f) Tender of fees required. When a subpoena compelling the
attendance of a person at a hearing is issued at the request of anyone
other than an officer or agency of the United States, service is valid
only if the subpoena is accompanied by a tender to the subpoenaed
person of the fees for one day's attendance and mileage specified by
Sec. 1081.116 of this part.
(g) Motion to quash or modify.
(1) Procedure. Any person to whom a subpoena is directed, or who is
an owner, creator or the subject of the documents that are to be
produced pursuant to a subpoena, or any party may, prior to the time
specified therein for compliance, but in no event more than 10 days
after the date of service of such subpoena, move that the subpoena be
quashed or modified. Such motion shall be filed and served on all
parties pursuant to subpart A of this part. Notwithstanding Sec.
1081.205, the party on whose behalf the subpoena was issued or
Enforcement Counsel may, within five days of service of the motion,
file a response to the motion. Reply briefs are not permitted unless
requested by the hearing officer. Filing a motion to modify a subpoena
does not stay the movant's obligation to comply with those portions of
the subpoena that the person has not sought to modify.
(2) Standards governing motion to quash or modify. If compliance
with the subpoena would be unreasonable,
[[Page 45362]]
oppressive, or unduly burdensome, the hearing officer shall quash or
modify the subpoena, or may order return of the subpoena only upon
specified conditions. These conditions may include but are not limited
to a requirement that the party on whose behalf the subpoena was issued
shall make reasonable compensation to the person to whom the subpoena
was addressed for the cost of copying or transporting evidence to the
place for return of the subpoena.
(h) Enforcing subpoenas. If a subpoenaed person fails to comply
with any subpoena issued pursuant to this section or any order of the
hearing officer which directs compliance with all or any portion of a
subpoena, the Bureau may, on its own motion or at the request of the
party on whose behalf the subpoena was issued, apply to an appropriate
United States district court, in the name of the Bureau but on relation
of such party, for an order requiring compliance with so much of the
subpoena as the hearing officer has not quashed or modified, unless, in
the judgment of the General Counsel, the enforcement of such subpoena
would be inconsistent with law and the policies of the Act. Failure to
request the Bureau to seek enforcement of a subpoena constitutes a
waiver of any claim of prejudice predicated upon the unavailability of
the testimony or evidence sought.
Sec. 1081.209 Deposition of witness unavailable for hearing.
(a) General rules.
(1) If a witness will not be available for the hearing, a party
desiring to preserve that witness' testimony for the record may request
in accordance with the procedures set forth in this section that the
hearing officer issue a subpoena, including a subpoena duces tecum,
requiring the attendance of the witness at a deposition. The hearing
officer may issue a deposition subpoena under this section upon showing
that:
(i) The witness will be unable to attend or may be prevented from
attending the hearing because of age, sickness, or infirmity, or will
otherwise be unavailable;
(ii) The witness' unavailability was not procured or caused by the
subpoenaing party;
(iii) The testimony is reasonably expected to be material; and
(iv) Taking the deposition will not result in any undue burden to
any other party and will not cause undue delay of the proceeding.
(2) In addition to making a showing as required by paragraph (a)(1)
of this section, the request for a deposition subpoena must contain a
proposed deposition subpoena and a brief statement showing the general
relevance and reasonableness of the scope of testimony and documents
sought, and the time and place for taking the deposition. Any request
to record the deposition by audio-visual means must be made in the
request for a deposition subpoena.
(3) Any requested deposition subpoena that sets forth a valid basis
for its issuance must be promptly issued, unless the hearing officer on
his or her own motion requires a written response or requires
attendance at a conference concerning whether the requested subpoena
should be issued. However, where it appears to the hearing officer that
the deposition subpoena sought may be unreasonable, oppressive,
excessive in scope, or unduly burdensome, he or she may, in his or her
discretion, as a condition precedent to the issuance of the deposition
subpoena, require the person seeking the deposition subpoena to show
further the general relevance and reasonable scope of the testimony or
other evidence sought. If after consideration of all the circumstances,
the hearing officer determines that the deposition subpoena or any of
its terms is unreasonable, oppressive, excessive in scope, or unduly
burdensome, he or she may refuse to issue the deposition subpoena, or
issue it only upon such conditions as fairness requires. In making the
foregoing determination, the hearing officer may inquire of the other
participants whether they will stipulate to the facts sought to be
proved.
(4) Unless the hearing officer orders otherwise, no deposition
under this section shall be taken on fewer than 14 days' notice to the
witness and all parties.
(b) Procedure. Unless made on the record at a hearing, requests for
issuance of a deposition subpoena shall be made in writing, and filed
and served on each party pursuant to subpart A of this part.
(c) Signing may be delegated. A hearing officer may authorize
issuance of a deposition subpoena, and may delegate the manual signing
of the deposition subpoena to any other person authorized to issue
subpoenas.
(d) Service. Upon issuance by the hearing officer, the party making
the request shall serve the subpoena on the person named in the
subpoena and on each party in accordance with Sec. 1081.113(c).
Deposition subpoenas may be served in any state, territory, possession
of the United States, or the District of Columbia, on any person or
company doing business in any state, territory, possession of the
United States, or the District of Columbia, or as otherwise permitted
by law.
(e) Tender of fees required. When a subpoena compelling the
attendance of a person at a deposition is issued at the request of
anyone other than an officer or agency of the United States, service is
valid only if the subpoena is accompanied by a tender to the subpoenaed
person of the fees for one day's attendance and mileage specified by
Sec. 1081.116 of this part.
(f) Motion to quash or modify.
(1) Procedure. Any person to whom a deposition subpoena is
directed, or who is an owner, creator or the subject of the documents
that are to be produced pursuant to a deposition subpoena, or any party
may, prior to the time specified therein for compliance, but in no
event more than 10 days after the date of service of such subpoena,
move that the deposition subpoena be quashed or modified. Such motion
must include a statement of the basis for the motion to quash or modify
the deposition subpoena, and shall be filed and served on all parties
pursuant to subpart A of this part. Notwithstanding Sec. 1081.205, the
party on whose behalf the deposition subpoena was issued or Enforcement
Counsel may, within five days of service of the motion, file a response
to the motion. Reply briefs are not permitted unless requested by the
hearing officer.
(2) Standards governing motion to quash or modify. If compliance
with the deposition subpoena would be unreasonable, oppressive or
unduly burdensome, or the deposition subpoena does not meet the
requirements set forth in paragraph (a)(1) of this section, the hearing
officer shall quash or modify the deposition subpoena, or may order
return of the deposition subpoena only upon specified conditions. These
conditions may include but are not limited to a requirement that the
party on whose behalf the deposition subpoena was issued shall make
reasonable compensation to the person to whom the deposition subpoena
was addressed for the cost of copying or transporting evidence to the
place for return of the deposition subpoena.
(g) Procedure upon deposition.
(1) Depositions shall be taken before any person before whom a
deposition may be taken pursuant to the Federal Rules of Civil
Procedure (the ``deposition officer'').
(2) The witness being deposed may have an attorney present during
the deposition.
(3) Each witness testifying pursuant to a deposition subpoena must
be duly sworn, and each party shall have the
[[Page 45363]]
right to examine the witness. Objections to questions or documents must
be in short form, stating the grounds for the objection. Objections to
questions of evidence shall be noted by the deposition officer upon the
deposition, but a deposition officer other than the hearing officer
shall not have the power to decide on the competency, materiality, or
relevance of evidence. Failure to object to questions or documents is
not deemed a waiver except where the ground for the objection might
have been avoided if the objection had been timely presented. All
questions, answers, and objections must be recorded.
(4) The deposition must be subscribed by the witness, unless the
parties and the witness, by stipulation, have waived the signing, or
the witness is ill, cannot be found, or has refused to sign. If the
deposition is not subscribed by the witness, the court reporter taking
the deposition shall certify that the transcript is a true and complete
transcript of the deposition.
(5) The original deposition and exhibits shall be filed with the
Executive Secretary. The cost of the transcript shall be paid by the
party requesting the deposition. A copy of the deposition shall be
available to the deponent and each party for purchase at prescribed
rates.
(h) Enforcing subpoenas. Any party may move before the hearing
officer for an order compelling the witness to answer any questions the
witness has refused to answer or submit any evidence the witness has
refused to submit during the deposition. If a subpoenaed person fails
to comply with any order of the hearing officer which directs
compliance with all or any portion of a deposition subpoena under this
section, the Bureau may, on its own motion or at the request of the
party on whose behalf the subpoena was issued, apply to an appropriate
United States district court, in the name of the Bureau but on relation
of such party, for an order requiring compliance with so much of the
subpoena as the hearing officer has not quashed or modified, unless, in
the judgment of the General Counsel, the enforcement of such subpoena
would be inconsistent with law and the policies of the Act. Failure to
request the Bureau to seek enforcement of a subpoena constitutes a
waiver of any claim of prejudice predicated upon the unavailability of
the testimony or evidence sought.
Sec. 1081.210 Expert discovery.
(a) At a date set by the hearing officer at the scheduling
conference, each party shall serve the other with a report prepared by
each of its expert witnesses. Each party shall serve the other parties
with a list of any rebuttal expert witnesses and a rebuttal report
prepared by each such witness not later than 28 days after the deadline
for service of expert reports, unless another date is set by the
hearing officer. A rebuttal report shall be limited to rebuttal of
matters set forth in the expert report for which it is offered in
rebuttal. If material outside the scope of fair rebuttal is presented,
a party may file a motion not later than five days after the deadline
for service of rebuttal reports, seeking appropriate relief with the
hearing officer, including striking all or part of the report, leave to
submit a surrebuttal report by the party's own experts, or leave to
call a surrebuttal witness and to submit a surrebuttal report by that
witness.
(b) No party may call an expert witness at the hearing unless he or
she has been listed and has provided reports as required by this
section, unless otherwise directed by the hearing officer at a
scheduling conference. Each side will be limited to calling at the
hearing five expert witnesses, including any rebuttal or surrebuttal
expert witnesses. A party may file a motion seeking leave to call
additional expert witnesses due to extraordinary circumstances.
(c) Each report shall be signed by the expert and contain a
complete statement of all opinions to be expressed and the basis and
reasons therefore; the data, materials, or other information considered
by the witness in forming the opinions; any exhibits to be used as a
summary of or support for the opinions; the qualifications of the
witness, including a list of all publications authored or co-authored
by the witness within the preceding 10 years; the compensation to be
paid for the study and testimony; and a listing of any other cases in
which the witness has testified or sought to testify as an expert at
trial or by deposition within the preceding four years. A rebuttal or
surrebuttal report need not include any information already included in
the initial report of the witness.
(d) A party may depose any person who has been identified as an
expert whose opinions may be presented at trial. Unless otherwise
ordered by the hearing officer, a deposition of any expert witness
shall be conducted after the disclosure of a report prepared by the
witness in accordance with paragraph (a) of this section, and at least
seven days prior to the deadline for submission of rebuttal expert
reports. A deposition of an expert witness shall be completed no later
than 14 days before the hearing unless otherwise ordered by the hearing
officer. No expert deposition shall exceed 8 hours on the record,
absent agreement of the parties or an order of the hearing officer for
good cause shown. Expert depositions shall be conducted pursuant to the
procedures set forth in Sec. 1081.209.
(e) The hearing officer shall have the discretion to dispense with
the requirement of expert discovery in appropriate cases.
Sec. 1081.211 Interlocutory review.
(a) Availability. The Director may, at any time, direct that any
matter be submitted to him or her for review. Subject to paragraph (c)
of this section, the hearing officer may, on his or her own motion or
on the motion of any party, certify any matter for interlocutory review
by the Director. This section is the exclusive remedy for review of a
hearing officer's ruling or order prior to the Director's consideration
of the entire proceeding.
(b) Procedure. Any party's motion for certification of a ruling or
order for interlocutory review shall be filed with the hearing officer
within five days of service of the ruling or order, shall specify the
ruling or order or parts thereof for which interlocutory review is
sought, shall attach any other portions of the record on which the
moving party relies, and shall otherwise comply with Sec. 1081.205.
Notwithstanding Sec. 1081.205, any response to such a motion must be
filed within three days of service of the motion. The hearing officer
shall issue a ruling on the motion within five days of the deadline for
filing a response.
(c) Certification process. Unless the Director directs otherwise, a
ruling or order may not be submitted to the Director for interlocutory
review unless the hearing officer, upon the hearing officer's motion or
upon the motion of a party, certifies the ruling or order in writing.
The hearing officer shall not certify a ruling or order unless:
(1) The ruling or order would compel testimony of Bureau officers
or employees, or those from another governmental agency, or the
production of documentary evidence in the custody of the Bureau or
another governmental agency;
(2) The ruling or order involves a motion for disqualification of
the hearing officer pursuant to Sec. 1081.105(c)(2) of this part;
(3) The ruling or order suspended or barred an individual from
appearing before the Bureau pursuant to Sec. 1081.107(c) of this part;
or
(4) Upon motion by a party, the hearing officer is of the opinion
that:
(i) The ruling or order involves a controlling question of law as
to which
[[Page 45364]]
there is substantial ground for difference of opinion; and
(ii) An immediate review of the ruling or order is likely to
materially advance the completion of the proceeding or subsequent
review will be an inadequate remedy.
(d) Interlocutory review. A party whose motion for certification
has been denied by the hearing officer may petition the Director for
interlocutory review.
(e) Director review. The Director shall determine whether or not to
review a ruling or order certified under this section or the subject of
a petition for interlocutory review. Interlocutory review is
disfavored, and the Director will grant a petition to review a hearing
officer ruling or order prior to his or her consideration of a
recommended decision only in extraordinary circumstances. The Director
may decline to review a ruling or order certified by a hearing officer
pursuant to paragraph (c) of this section or the petition of a party
who has been denied certification if he or she determines that
interlocutory review is not warranted or appropriate under the
circumstances, in which case he or she may summarily deny the petition.
If the Director determines to grant the review, he or she will review
the matter and issue his or her ruling and order in an expeditious
fashion, consistent with the Bureau's other responsibilities.
(f) Proceedings not stayed. The filing of a motion requesting that
the hearing officer certify any of his or her prior rulings or orders
for interlocutory review or a petition for interlocutory review filed
with the Director, and the grant of any such review, shall not stay
proceedings before the hearing officer unless he or she, or the
Director, shall so order. The Director will not consider a motion for a
stay unless the motion shall have first been made to the hearing
officer.
Sec. 1081.212 Dispositive motions.
(a) Dispositive motions. This section governs the filing of motions
to dismiss and motions for summary disposition. The filing of any such
motion does not obviate a party's obligation to file an answer or take
any other action required by this part or by an order of the hearing
officer, unless expressly so provided by the hearing officer.
(b) Motions to dismiss. A respondent may file a motion to dismiss
asserting that, even assuming the truth of the facts alleged in the
notice of charges, it is entitled to dismissal as a matter of law.
(c) Motion for summary disposition. A party may make a motion for
summary disposition asserting that the undisputed pleaded facts,
admissions, affidavits, stipulations, documentary evidence, matters as
to which official notice may be taken, and any other evidentiary
materials properly submitted in connection with a motion for summary
disposition show that:
(1) There is no genuine issue as to any material fact; and
(2) The moving party is entitled to a decision in its favor as a
matter of law.
(d) Filing of motions for summary disposition and responses.
(1) After a respondent's answer has been filed and documents have
been made available to the respondent for inspection and copying
pursuant to Sec. 1081.206, any party may move for summary disposition
in its favor of all or any part of the proceeding.
(2) A motion for summary disposition must be accompanied by a
statement of the material facts as to which the moving party contends
there is no genuine issue. Such motion must be supported by documentary
evidence, which may take the form of admissions in pleadings,
stipulations, depositions, investigatory depositions, transcripts,
affidavits and any other evidentiary materials that the moving party
contends support his or her position. The motion must also be
accompanied by a brief containing the points and authorities in support
of the contention of the moving party. Any party opposing a motion for
summary disposition must file a statement setting forth those material
facts as to which he or she contends a genuine dispute exists. Such
opposition must be supported by evidence of the same type as may be
submitted in support of a motion for summary disposition and a brief
containing the points and authorities in support of the contention that
summary disposition would be inappropriate.
(3) Any affidavit or declaration submitted in support of or in
opposition to a motion for summary disposition shall set forth such
facts as would be admissible in evidence, shall show affirmatively that
the affiant is competent to testify to the matters stated therein, and
must be signed under oath and penalty of perjury.
(e) Page limitations for dispositive motions. A motion to dismiss
or for summary disposition, together with any brief in support of the
motion (exclusive of any declarations, affidavits, or attachments)
shall not exceed 35 pages in length. Motions for extensions of this
length limitation are disfavored.
(f) Opposition and reply response time and page limitation. Any
party, within 20 days after service of a dispositive motion, or within
such time period as allowed by the hearing officer, may file a response
to such motion. The length limitations set forth in paragraph (e) of
this section shall also apply to such responses. Any reply brief filed
in response to an opposition to a dispositive motion shall be filed
within five days after service of the opposition. Reply briefs shall
not exceed 10 pages.
(g) Oral argument. At the request of any party or on his or her own
motion, the hearing officer may hear oral argument on a dispositive
motion.
(h) Decision on motion. Within 30 days following the expiration of
the time for filing all responses and replies to any dispositive
motion, the hearing officer shall determine whether the motion shall be
granted. If the hearing officer determines that dismissal or summary
disposition is warranted, he or she shall issue a recommended decision
granting the motion. If the hearing officer finds that no party is
entitled to dismissal or summary disposition, he or she shall make a
ruling denying the motion. If it appears that a party, for good cause
shown, cannot present by affidavit prior to hearing facts essential to
justify opposition to the motion, the hearing officer shall deny or
defer the motion.
Sec. 1081.213 Partial summary disposition.
If on a motion for summary disposition under Sec. 1081.212 a
decision is not rendered upon the whole case or for all the relief
asked and a hearing is necessary, the hearing officer shall issue an
order specifying the facts that appear without substantial controversy
and directing further proceedings in the action. The facts so specified
shall be deemed established.
Sec. 1081.214 Prehearing conferences.
(a) Prehearing conferences. The hearing officer may, in addition to
the scheduling conference, on his or her own motion or at the request
of any party, direct counsel for the parties to meet with him or her
(in person or by telephone) at a prehearing conference for further
discussion of the issues outlined in Sec. 1081.203, or for discussion
of any additional matters that in the view of the hearing officer will
aid in an orderly disposition of the proceeding, including but not
limited to:
(1) Identification of potential witnesses and limitation on the
number of witnesses;
(2) The exchange of any prehearing materials including witness
lists, statements of issues, stipulations, exhibits, and any other
materials;
(3) Stipulations, admissions of fact, and the contents,
authenticity, and admissibility into evidence of documents;
[[Page 45365]]
(4) Matters of which official notice may be taken; and
(5) Whether the parties intend to introduce prior sworn statements
of witnesses as set forth in Sec. 1081.303(h).
(b) Transcript. The hearing officer, in his or her discretion, may
require that a prehearing conference be recorded by a court reporter. A
transcript of the conference and any materials filed, including orders,
becomes part of the record of the proceeding. A party may obtain a copy
of the transcript at his or her expense.
(c) Public access. Any prehearing conferences shall be public
unless the hearing officer determines, based on the standard set forth
in Sec. 1081.119(b) of this part, that the conference (or any part
thereof) shall be closed to the public.
Sec. 1081.215 Prehearing submissions.
(a) Within the time set by the hearing officer, but in no case
later than 10 days before the start of the hearing, each party shall
serve on every other party:
(1) A prehearing statement, which shall include an outline or
narrative summary of its case or defense, and the legal theories upon
which it will rely;
(2) A final list of witnesses to be called to testify at the
hearing, including name and address of each witness and a short summary
of the expected testimony of each witness;
(3) Any prior sworn statements that a party intends to admit into
evidence pursuant to Sec. 1081.303(h);
(4) A list of the exhibits to be introduced at the hearing along
with a copy of each exhibit; and
(5) Any stipulations of fact or liability.
(b) Expert witnesses. Each party who intends to call an expert
witness shall also serve, in addition to the information required by
paragraph (a)(2) of this section, a statement of the expert's
qualifications, a listing of other proceedings in which the expert has
given or sought to give expert testimony at trial or by deposition
within the preceding four years, and a list of publications authored or
co-authored by the expert within the preceding 10 years, to the extent
such information has not already been provided pursuant to Sec.
1081.210.
(c) Effect of failure to comply. No witness may testify and no
exhibits may be introduced at the hearing if such witness or exhibit is
not listed in the prehearing submissions pursuant to paragraph (a) of
this section, except for good cause shown.
Sec. 1081.216 Amicus participation.
(a) Availability. An amicus brief may be filed only if:
(1) A motion for leave to file the brief has been granted;
(2) The brief is accompanied by written consent of all parties;
(3) The brief is filed at the request of the Director or the
hearing officer, as appropriate; or
(4) The brief is presented by the United States or an officer or
agency thereof, or by a state or a political subdivision thereof.
(b) Procedure. An amicus brief may be filed conditionally with the
motion for leave. The motion for leave shall identify the interest of
the movant and shall state the reasons why a brief of an amicus curiae
is desirable. Except as all parties otherwise consent, any amicus
curiae shall file its brief within the time allowed the party whose
position the amicus will support, unless the Director or hearing
officer, as appropriate, for good cause shown, grants leave for a later
filing. In the event that a later filing is allowed, the order granting
leave to file shall specify when an opposing party may reply to the
brief.
(c) Motions. A motion for leave to file an amicus brief shall be
subject to Sec. 1081.205.
(d) Oral argument. An amicus curiae may move to present oral
argument at any hearing before the hearing officer, but such motions
will be granted only for extraordinary reasons.
Subpart C--Hearings
Sec. 1081.300 Public hearings.
All hearings in adjudication proceedings shall be public unless a
confidentiality order is entered by the hearing officer pursuant to
Sec. 1081.119 or unless otherwise ordered by the Director on the
grounds that holding an open hearing would be contrary to the public
interest.
Sec. 1081.301 Failure to appear.
Failure of a respondent to appear in person or by a duly authorized
counsel at the hearing constitutes a waiver of respondent's right to a
hearing and may be deemed an admission of the facts as alleged and
consent to the relief sought in the notice of charges. Without further
proceedings or notice to the respondent, the hearing officer shall file
a recommended decision containing findings of fact and addressing the
relief sought in the notice of charges.
Sec. 1081.302 Conduct of hearings.
All hearings shall be conducted in a fair, impartial, expeditious,
and orderly manner. Enforcement Counsel shall present its case-in-chief
first, unless otherwise ordered by the hearing officer, or unless
otherwise expressly specified by law or regulation. Enforcement Counsel
shall be the first party to present an opening statement and a closing
statement, and may make a rebuttal statement after the respondent's
closing statement. If there are multiple respondents, respondents may
agree among themselves as to their order of presentation of their
cases, but if they do not agree, the hearing officer shall fix the
order.
Sec. 1081.303 Evidence.
(a) Burden of proof. Enforcement Counsel shall have the burden of
proof of the ultimate issue(s) of the Bureau's claims at the hearing.
(b) Admissibility.
(1) Except as is otherwise set forth in this section, relevant,
material, and reliable evidence that is not unduly repetitive is
admissible to the fullest extent authorized by the Administrative
Procedure Act and other applicable law. Irrelevant, immaterial, and
unreliable evidence shall be excluded.
(2) Evidence, even if relevant, may be excluded if its probative
value is substantially outweighed by the danger of unfair prejudice or
confusion of the issues; if the evidence would be misleading; or based
on considerations of undue delay, waste of time, or needless
presentation of cumulative evidence.
(3) Evidence that constitutes hearsay may be admitted if it is
relevant, material, and bears satisfactory indicia of reliability so
that its use is fair. Hearsay is a statement, other than one made by
the declarant while testifying at the hearing, offered in evidence to
prove the truth of the matter asserted. If otherwise meeting the
standards for admissibility described in this section, transcripts of
depositions, investigational hearings, prior testimony in Bureau or
other proceedings, and any other form of hearsay shall be admissible
and shall not be excluded solely on the ground that they are or contain
hearsay.
(4) Evidence that would be admissible under the Federal Rules of
Evidence is admissible in a proceeding conducted pursuant to this part.
Evidence that would be inadmissible under the Federal Rules of Evidence
may not be deemed or ruled to be inadmissible in a proceeding conducted
pursuant to this part solely on that basis.
(c) Official notice. Official notice may be taken of any material
fact that is not subject to reasonable dispute in that it is either
generally known or capable of accurate and ready determination by
resort to sources whose accuracy cannot reasonably be questioned. If
official notice is requested or is taken of a
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material fact not appearing in the evidence in the record, the parties,
upon timely request, shall be afforded an opportunity to disprove such
noticed fact.
(d) Documents.
(1) A duplicate copy of a document is admissible to the same extent
as the original, unless a genuine issue is raised as to whether the
copy is in some material respect not a true and legible copy of the
original.
(2) Subject to the requirements of paragraph (b) of this section,
any document, including a report of examination, supervisory activity,
inspection or visitation, prepared by a prudential regulator, as that
term is defined in section 1002(24) of the Act, or by a state
regulatory agency, is presumptively admissible either with or without a
sponsoring witness.
(3) Witnesses may use existing or newly created charts, exhibits,
calendars, calculations, outlines or other graphic material to
summarize, illustrate, or simplify the presentation of testimony. Such
materials may, subject to the hearing officer's discretion, be used
with or without being admitted into evidence.
(4) As respondents are in the best position to determine the nature
of documents generated by such respondents and which come from their
own files, the burden of proof is on the respondent to introduce
evidence to rebut a presumption that such documents are authentic and
kept in the regular course of business.
(e) Objections.
(1) Objections to the admissibility of evidence must be timely made
and rulings on all objections must appear on the record.
(2) Whenever evidence is excluded from the record, the party
offering such evidence may make an offer of proof, which shall be
included in the record. Rejected exhibits, adequately marked for
identification, shall be retained pursuant to Sec. 1081.306(b) so as
to be available for consideration by any reviewing authority.
(3) Failure to object to admission of evidence or to any ruling
constitutes a waiver of the objection.
(f) Stipulations.
(1) The parties may, at any stage of the proceeding, stipulate as
to any relevant matters of fact or the authentication of any relevant
documents. Such stipulations must be received in evidence at a hearing
and are binding on the parties with respect to the matters therein
stipulated.
(2) Unless the hearing officer directs otherwise, all stipulations
of fact and law previously agreed upon by the parties, and all
documents, the admissibility of which have been previously stipulated,
will be admitted into evidence upon commencement of the hearing.
(g) Presentation of evidence.
(1) A witness at a hearing for the purpose of taking evidence shall
testify under oath or affirmation.
(2) A party is entitled to present its case or defense by sworn
oral testimony and documentary evidence, to submit rebuttal evidence,
and to conduct such cross-examination as, in the discretion of the
hearing officer, may be required for a full and true disclosure of the
facts.
(3) An adverse party, or an officer, agent, or employee thereof,
and any witness who appears to be hostile, unwilling, or evasive, may
be interrogated by leading questions and may also be contradicted and
impeached by the party calling him or her.
(4) The hearing officer shall exercise reasonable control over the
mode and order of interrogating witnesses and presenting evidence so as
to:
(i) Make the interrogation and presentation effective for the
ascertainment of the truth;
(ii) Avoid needless consumption of time; and
(iii) Protect witnesses from harassment or undue embarrassment.
(5) The hearing officer may permit a witness to appear at a hearing
via video conference or telephone for good cause shown.
(h) Introducing prior sworn statements of witnesses into the
record. At a hearing, any party wishing to introduce a prior, sworn
statement of a witness, not a party, otherwise admissible in the
proceeding, may make a motion setting forth the reasons therefore. If
only part of a statement is offered in evidence, the hearing officer
may require that all relevant portions of the statement be introduced.
If all of a statement is offered in evidence, the hearing officer may
require that portions not relevant to the proceeding be excluded. A
motion to introduce a prior sworn statement may be granted if:
(1) The witness is dead;
(2) The witness is out of the United States, unless it appears that
the absence of the witness was procured by the party offering the prior
sworn statement;
(3) The witness is unable to attend or testify because of age,
sickness, infirmity, imprisonment or other disability;
(4) The party offering the prior sworn statement has been unable to
procure the attendance of the witness by subpoena; or
(5) In the discretion of the hearing officer, it would be
desirable, in the interests of justice, to allow the prior sworn
statement to be used. In making this determination, due regard shall be
given to the presumption that witnesses will testify orally in an open
hearing. If the parties have stipulated to accept a prior sworn
statement in lieu of live testimony, consideration shall also be given
to the convenience of the parties in avoiding unnecessary expense.
Sec. 1081.304 Record of the hearing.
(a) Reporting and transcription. Hearings shall be stenographically
reported and transcribed under the supervision of the hearing officer,
and the original transcript shall be a part of the record and the sole
official transcript. The live oral testimony of each witness may be
video recorded digitally, in which case the video recording and the
written transcript of the testimony shall be made part of the record.
Copies of transcripts shall be available from the reporter at
prescribed rates.
(b) Corrections. Corrections of the official transcript may be made
only when they involve errors affecting substance and then only in the
manner herein provided. Corrections ordered by the hearing officer or
agreed to in a written stipulation signed by all counsel and parties
not represented by counsel, and approved by the hearing officer, shall
be included in the record, and such stipulations, except to the extent
they are capricious or without substance, shall be approved by the
hearing officer. Corrections shall not be ordered by the hearing
officer except upon notice and opportunity for the hearing of
objections. Such corrections shall be made by the official reporter by
furnishing substitute type pages, under the usual certificate of the
reporter, for insertion in the official record. The original
uncorrected pages shall be retained in the files of the Bureau.
(c) Closing of the hearing record. Upon completion of the hearing,
the hearing officer shall issue an order closing the hearing record
after giving the parties three days to determine if the record is
complete or needs to be supplemented. The hearing officer shall retain
the discretion to permit or order correction of the record as provided
in paragraph (b) of this section.
Sec. 1081.305 Post-hearing filings.
(a) Proposed findings and conclusions and supporting briefs.
(1) Using the same method of service for each party, the hearing
officer shall serve notice upon each party that the certified
transcript, together with all
[[Page 45367]]
hearing exhibits and exhibits introduced but not admitted into evidence
at the hearing, has been filed promptly after that filing. Any party
may file with the hearing officer proposed findings of fact, proposed
conclusions of law, and a proposed order within 30 days following
service of this notice by the hearing officer or within such longer
period as may be ordered by the hearing officer.
(2) Proposed findings and conclusions must be supported by citation
to any relevant authorities and by page references to any relevant
portions of the record. A post-hearing brief may be filed in support of
proposed findings and conclusions, either as part of the same document
or in a separate document.
(b) Responsive briefs. Responsive briefs may be filed within 15
days after the date on which the parties' proposed findings,
conclusions, and order are due. Responsive briefs must be strictly
limited to responding to matters, issues, or arguments raised in
another party's papers. A party who has not filed proposed findings of
fact and conclusions of law or a post-hearing brief may not file a
responsive brief. Unless directed by the hearing officer, reply briefs
are not permitted.
(c) Order of filing. The hearing officer shall not order the filing
by any party of any post-hearing brief or responsive brief in advance
of the other party's filing of its post-hearing brief or responsive
brief.
Sec. 1081.306 Record in proceedings before hearing officer; retention
of documents; copies.
(a) Contents of the record. The record of the proceeding shall
consist of:
(1) The notice of charges, the answer, and any amendments thereto;
(2) Each motion, submission, or other paper filed in the
proceedings, and any amendments and exceptions to or regarding them;
(3) Each stipulation, transcript of testimony, and any document or
other item admitted into evidence;
(4) Any transcript of a conference or hearing before the hearing
officer;
(5) Any amicus briefs filed pursuant to Sec. 1081.216;
(6) With respect to a request to disqualify a hearing officer or to
allow the hearing officer's withdrawal under Sec. 1081.105(c), each
affidavit or transcript of testimony taken and the decision made in
connection with the request;
(7) All motions, briefs, and other papers filed on interlocutory
appeal;
(8) All proposed findings and conclusions;
(9) Each written order issued by the hearing officer or Director;
and
(10) Any other document or item accepted into the record by the
hearing officer.
(b) Retention of documents not admitted. Any document offered into
evidence but excluded shall not be considered part of the record. The
Executive Secretary shall retain any such document until the later of
the date upon which an order by the Director ending the proceeding
becomes final and not appealable, or upon the conclusion of any
judicial review of the Director's order.
(c) Substitution of copies. A true copy of a document may be
substituted for any document in the record or any document retained
pursuant to paragraph (b) of this section.
Subpart D--Decision and Appeals
Sec. 1081.400 Recommended decision of the hearing officer.
(a) Time period for filing recommended decision. Subject to
paragraph (b) of this section, the hearing officer shall file a
recommended decision no later than 90 days after the deadline for
filing post-hearing responsive briefs pursuant to Sec. 1081.305(b) and
in no event later than 300 days after filing of the notice of charges.
(b) Extension of deadlines. In the event the hearing officer
presiding over the proceeding determines that it will not be possible
to issue the recommended decision within the time periods specified in
paragraph (a) of this section, the hearing officer shall submit a
written request to the Director for an extension of the time period for
filing the recommended decision. This request must be filed no later
than 30 days prior to the expiration of the time for issuance of a
recommended decision. The request will be served on all parties in the
proceeding, who may file with the Director briefs in support of or in
opposition to the request. Any such briefs must be filed within three
days of service of the hearing officer's request and shall not exceed
five pages. If the Director determines that additional time is
necessary or appropriate in the public interest, the Director shall
issue an order extending the time period for filing the recommended
decision.
(c) Content.
(1) A recommended decision shall be based on a consideration of the
whole record relevant to the issues decided, and shall be supported by
reliable, probative, and substantial evidence. The recommended decision
shall include a statement of findings of fact (with specific page
references to principal supporting items of evidence in the record) and
conclusions of law, as well as the reasons or basis therefore, as to
all the material issues of fact, law, or discretion presented on the
record and the appropriate order, sanction, relief or denial thereof.
The recommended decision shall also state that a notice of appeal may
be filed within 10 days after service of the recommended decision and
include a statement that, unless a party timely files and perfects a
notice of appeal of the recommended decision, the Director may adopt
the recommended decision as the final decision and order of the Bureau
without further opportunity for briefing or argument.
(2) Consistent with paragraph (a) of this section, when more than
one claim for relief is presented in an adjudication proceeding, or
when multiple parties are involved, the hearing officer may direct the
entry of a recommended decision as to one or more but fewer than all of
the claims or parties only upon an express determination that there is
no just reason for delay and upon an express direction for the entry of
a recommended decision.
(d) By whom made. The recommended decision shall be made and filed
by the hearing officer who presided over the hearings, except when he
or she shall have become unavailable to the Bureau.
(e) Reopening of proceeding by hearing officer; termination of
jurisdiction.
(1) At any time from the close of the hearing record pursuant to
Sec. 1081.304(c) until the filing of his or her recommended decision,
a hearing officer may reopen the proceeding for the receipt of further
evidence for good cause shown.
(2) Except for the correction of clerical errors or pursuant to an
order of remand from the Director, the jurisdiction of the hearing
officer is terminated upon the filing of his or her recommended
decision with respect to those issues decided pursuant to paragraph (c)
of this section.
(f) Filing, service, and publication. The hearing officer shall
file the recommended decision with the Executive Secretary. The
Executive Secretary shall promptly serve the recommended decision upon
the parties.
Sec. 1081.401 Transmission of documents to Director; record index;
certification.
(a) Filing of index. At the same time the hearing officer files the
recommended decision, the hearing officer shall furnish to the Director
a
[[Page 45368]]
certified index of the entire record of the proceeding. The certified
index shall include, at a minimum, an entry for each paper, document or
motion filed in the proceeding, the date of the filing, and the
identity of the filer. The certified index shall also include an
exhibit index containing, at a minimum, an entry consisting of exhibit
number and title or description for each exhibit introduced and
admitted into evidence and each exhibit introduced but not admitted
into evidence.
(b) Final transmittal of record items to the Executive Secretary.
After the close of the hearing, the hearing officer shall transmit to
the Executive Secretary originals of any motions, exhibits or any other
documents filed with, or accepted into evidence by, the hearing
officer, or any other portions of the record that have not already been
transmitted to the Executive Secretary.
Sec. 1081.402 Notice of appeal; review by the Director.
(a) Notice of appeal.
(1) Filing. Any party may file exceptions to the recommended
decision of the hearing officer by filing a notice of appeal with the
Executive Secretary within 10 days after service of the recommended
decision. The notice shall specify the party or parties against whom
the appeal is taken and shall designate the recommended decision or
part thereof appealed from. If a timely notice of appeal is filed by a
party, any other party may thereafter file a notice of appeal within
five days after service of the first notice, or within 10 days after
service of the recommended decision, whichever period expires last.
(2) Perfecting a notice of appeal. Any party filing a notice of
appeal must perfect its appeal by filing its opening appeal brief
within 30 days of service of the recommended decision. Any party may
respond to the opening appeal brief by filing an answering brief within
30 days of service of the opening brief. Any party may file a reply to
an answering brief within seven days of service of the answering brief.
These briefs must conform to the requirements of Sec. 1081.403.
(b) Director review other than pursuant to an appeal. In the event
no party appeals the recommended decision, the Director shall, within
40 days after the date of service of the recommended decision, either
issue a final decision and order adopting the recommended decision, or
order further briefing regarding any portion of the recommended
decision. The Director's order for further briefing shall set forth the
scope of review and the issues that will be considered and will make
provision for the filing of briefs in accordance with the timelines set
forth in paragraph (a)(2) of this section (except that that opening
briefs shall be due within 30 days of service of the order of review)
if deemed appropriate by the Director.
(c) Exhaustion of administrative remedies. Pursuant to 5 U.S.C.
704, a perfected appeal to the Director of a recommended decision
pursuant to paragraph (a) of this section is a prerequisite to the
seeking of judicial review of a final decision and order, or portion of
the final decision and order, adopting the recommended decision..
Sec. 1081.403 Briefs filed with the Director.
(a) Contents of briefs. Briefs shall be confined to the particular
matters at issue. Each exception to the findings or conclusions being
reviewed shall be stated succinctly. Exceptions shall be supported by
citation to the relevant portions of the record, including references
to the specific pages relied upon, and by concise argument including
citation of such statutes, decisions, and other authorities as may be
relevant. If the exception relates to the admission or exclusion of
evidence, the substance of the evidence admitted or excluded shall be
set forth in the brief, in an appendix thereto, or by citation to the
record. Reply briefs shall be confined to matters in answering briefs
of other parties.
(b) Length limitation. Except with leave of the Director, opening
and answering briefs shall not exceed 30 pages, and reply briefs shall
not exceed 15 pages, exclusive of pages containing the table of
contents, table of authorities, and any addendum that consists solely
of copies of applicable cases, pertinent legislative provisions or
rules, and exhibits. Motions to file briefs in excess of these
limitations are disfavored.
Sec. 1081.404 Oral argument before the Director.
(a) Availability. The Director will consider appeals, motions, and
other matters properly before him or her on the basis of the papers
filed by the parties without oral argument unless the Director
determines that the presentation of facts and legal arguments in the
briefs and record and decisional process would be significantly aided
by oral argument, in which case the Director shall issue an order
setting the date on which argument shall be held. A party seeking oral
argument shall so indicate on the first page of its opening or
answering brief.
(b) Public arguments; transcription. All oral arguments shall be
public unless otherwise ordered by the Director. Oral arguments before
the Director shall be reported stenographically, unless otherwise
ordered by the Director. Motions to correct the transcript of oral
argument shall be made according to the same procedure provided in
Sec. 1081.304(b).
Sec. 1081.405 Decision of the Director.
(a) Upon appeal from or upon further review of a recommended
decision, the Director will consider such parts of the record as are
cited or as may be necessary to resolve the issues presented and, in
addition, will, to the extent necessary or desirable, exercise all
powers which he or she could have exercised if he or she had made the
recommended decision. In proceedings before the Director, the record
shall consist of all items part of the record below in accordance with
Sec. 1081.306; any notices of appeal or order directing review; all
briefs, motions, submissions, and other papers filed on appeal or
review; and the transcript of any oral argument held. Review by the
Director of a recommended decision may be limited to the issues
specified in the notice(s) of appeal or the issues, if any, specified
in the order directing further briefing. On notice to all parties,
however, the Director may, at any time prior to issuance of his or her
decision, raise and determine any other matters that he or she deems
material, with opportunity for oral or written argument thereon by the
parties.
(b) Decisional employees may advise and assist the Director in the
consideration and disposition of the case.
(c) In rendering his or her decision, the Director will affirm,
adopt, reverse, modify, set aside, or remand for further proceedings
the recommended decision and will include in the decision a statement
of the reasons or basis for his or her actions and the findings of fact
upon which the decision is predicated.
(d) At the expiration of the time permitted for the filing of reply
briefs with the Director, the Executive Secretary will notify the
parties that the case has been submitted for final Bureau decision. The
Director will issue and the Executive Secretary will serve the
Director's final decision and order within 90 days after such notice,
unless the Director orders that the adjudication proceeding or any
aspect thereof be remanded to the hearing officer for further
proceedings.
(e) Copies of the final decision and order of the Director shall be
served upon each party to the proceeding, upon
[[Page 45369]]
other persons required by statute, and, if directed by the Director or
required by statute, upon any appropriate state or Federal supervisory
authority. The final decision and order will also be published on the
Bureau's Web site or as otherwise deemed appropriate by the Bureau.
Sec. 1081.406 Reconsideration.
Within 14 days after service of the Director's final decision and
order, any party may file with the Director a petition for
reconsideration, briefly and specifically setting forth the relief
desired and the grounds in support thereof. Any petition filed under
this section must be confined to new questions raised by the final
decision or final order and upon which the petitioner had no
opportunity to argue, in writing or orally, before the Director. No
response to a petition for reconsideration shall be filed unless
requested by the Director, who will request such response before
granting any petition for reconsideration. The filing of a petition for
reconsideration shall not operate to stay the effective date of the
final decision or order or to toll the running of any statutory period
affecting such decision or order unless specifically so ordered by the
Director.
Sec. 1081.407 Effective date; stays pending judicial review.
(a) Other than consent orders, which shall become effective at the
time specified therein, an order to cease and desist or for other
affirmative action under section 1053(b) of the Act becomes effective
at the expiration of 30 days after the date of service pursuant to
Sec. 1081.113(d)(2), unless the Director agrees to stay the
effectiveness of the Order pursuant to this section.
(b) Any party subject to a final decision and order, other than a
consent order, may apply to the Director for a stay of all or part of
that order pending judicial review.
(c) A motion for stay shall state the reasons a stay is warranted
and the facts relied upon, and shall include supporting affidavits or
other sworn statements, and a copy of the relevant portions of the
record. The motion shall address the likelihood of the movant's success
on appeal, whether the movant will suffer irreparable harm if a stay is
not granted, the degree of injury to other parties if a stay is
granted, and why the stay is in the public interest.
(d) A motion for stay shall be filed within 30 days of service of
the order on the party. Any party opposing the motion may file a
response within five days after receipt of the motion. The movant may
file a reply brief, limited to new matters raised by the response,
within three days after receipt of the response.
(e) The commencement of proceedings for judicial review of a final
decision and order of the Director does not, unless specifically
ordered by the Director or a reviewing court, operate as a stay of any
order issued by the Director. The Director may, in his or her
discretion, and on such terms as he or she finds just, stay the
effectiveness of all or any part of an order pending a final decision
on a petition for judicial review of that order.
Dated: July 22, 2011.
Sam Valverde,
Deputy Executive Secretary, Department of the Treasury.
[FR Doc. 2011-19032 Filed 7-25-11; 4:15 pm]
BILLING CODE 4810-25-P