Revised May 3, 2001
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 00-50262
JAMES A. BETTERSWORTH,
Plaintiff-Appellant,
VERSUS
FEDERAL DEPOSIT INSURANCE CORPORATION; OFFICE OF THE
COMPTROLLER OF THE CURRENCY; BOARD OF THE FEDERAL RESERVE;
FEDERAL RESERVE BANK OF KANSAS CITY,
Defendants-Appellees.
Appeal from the United States District Court
For the Western District of Texas
April 12, 2001
Before REAVLEY, SMITH, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
Plaintiff James A. Bettersworth appeals the district court's
order granting summary judgment in favor of defendants, the Federal
Deposit Insurance Corporation (FDIC), the Office of the Comptroller
of the Currency (Office of the Comptroller of the Currency), the
Board of Governors of the Federal Reserve System (the Board), and
the Federal Reserve Bank of Kansas City (the Reserve Bank), and
dismissing his claims. We affirm.
I. BACKGROUND
Bettersworth has an extensive background in the banking
industry, which is well documented in the summary judgment record
before the Court. Between 1973 and 1980, Bettersworth was employed
by the First National Bank of Seguin. In 1981, Bettersworth formed
Southwest Commercial Capital, Inc. (SWCC), which is described as a
venture capital company. In 1983, Bettersworth founded First
Commercial Bank of Seguin, Texas (FCB), a federally chartered bank,
where he served as Chief Executive Officer and Chairman of the
Board until 1989. In 1984, Bettersworth formed Southwestern
ComCorp, Incorporated (ComCorp), a non-bank holding company.
Bettersworth also formed a second small business investment company
called Southwestern Venture Capital (SVC). Bettersworth placed
SWCC and SVC under the umbrella of ComCorp. Bettersworth owned
either a participatory interest or a management position or both in
these ventures. Bettersworth also owned a controlling interest or
management position in other related financial institutions.
In 1987, ComCorp acquired the Republic Bank of Tecumseh,
Oklahoma (RBT) by foreclosure, and Bettersworth assumed control of
RBT. The Bank Holding Company Act (BHCA), 12 U.S.C. § 1841-1850,
provides that no company may gain control of a bank without prior
approval of the Board of Governors of the Federal Reserve System.
See 12 U.S.C. § 1841; id. § 1842(a). The Act contains an exception
2
to the requirement for prior Board approval when controlling
interest in a bank is obtained in the course of collecting upon a
previously contracted debt. 12 U.S.C. § 1841(a). In such a case,
the company assuming control of the bank must divest itself of the
acquired bank shares within two years. Id. That two-year period
may be extended one year at a time, but the maximum time period
during which a company may hold shares giving it a controlling
interest in a bank is five years. Id. ComCorp's foreclosure of a
debt owed by one of RBT's officers and guaranteed by RBT assets
fell within the foreclosure exception to the requirement for prior
Board approval. Moreover, ComCorp received an extension, which
permitted ComCorp to hold RBT for up to five years, or until
December 1993, before securing Board approval or divesting itself
of the RBT assets.
In 1989 or 1990, Bettersworth resigned from his positions with
FCB and RBT. Bettersworth also lost control of ComCorp. In early
1993, Bettersworth and a partner regained controlling interest in
ComCorp. In October 1993, ComCorp filed an application for bank
holding company (BHC) status under the BHCA with the Federal
Reserve Bank of Kansas City (the Reserve Bank). Federal Reserve
Banks are authorized to receive and review applications for BHC
status. The controlling regulations permit the Reserve Bank to
either approve the application or to refer it to the Board. See 12
C.F.R. § 225.15. Thus, the Reserve Bank has no authority to
3
finally deny an application for BHC status. When considering
whether to approve an application for BHC status, the Board is
authorized to consider inter alia “the financial and managerial
resources and future prospects of the company or companies and the
banks concerned,” id. § 1842(c)(2), which in turn includes
“consideration of the competence, experience, and integrity of the
officers, directors, and principal shareholders of the company or
bank, id. § 1842(c)(5).
ComCorp's application for BHC status proposed that ComCorp
retain 100 percent of RBT. The application disclosed
Bettersworth’s prior affiliations with FCB and RBT. Accordingly,
Pamela Johnson, the Reserve Bank official assigned to review the
application, began retrieving and reviewing the records maintained
by other banking regulatory agencies on those banks.
Johnson reviewed OCC records relating to the financial
condition and management of FCB.1 Those records included
unfavorable assessments of both the condition of the bank and the
bank's management, including Bettersworth. Records from bank
examinations conducted shortly after Bettersworth left FCB reported
that the bank was in bad financial shape and suggested that
Bettersworth's placement of SBA loans generated by ComCorp or its
1
The Office of the Comptroller of the Currency (OCC) is the
primary federal regulator of nationally chartered banks. OCC is
involved in this case because of Bettersworth's affiliation with
FCB, a federally chartered bank that was a member of the Federal
Reserve System.
4
affiliates contributed to the bank's poor financial status.
Johnson also reviewed the OCC's Supervisory Monitoring System
(SMS), a confidential database maintained by the OCC and accessible
with a password by other banking regulatory agencies. The SMS
likewise contained an entry blaming Bettersworth and another
individual for the “bank’s poor condition,” and concluding that
“these individuals should not be approved in an executive capacity
at a troubled institution.” Bettersworth identifies this
statement in the OCC database as an adverse determination within
the meaning of the Privacy Act, 5 U.S.C. § 552a(g)(1)(c).
Johnson also reviewed FDIC2 records relating to the financial
condition and management of RBT. Those records included
unfavorable assessments of both the condition of the bank and the
bank's management, including Bettersworth. Records from
examinations conducted after Bettersworth left RBT reported that
the bank was in bad financial shape and suggested that
Bettersworth's placement of SBA loans generated by ComCorp or its
affiliates contributed to the bank's poor financial status.
Certain records also suggested that Bettersworth and another
2
FDIC is a corporation created by Congress, which insures the
deposits of banks and savings associations. FDIC is also the
primary federal regulator for state chartered banks that are not
members of the Federal Reserve System. FDIC is involved in the
case because of Bettersworth's affiliation with RBT, a state
chartered bank that was not a member of the Federal Reserve System.
5
individual forced RBT into foreclosure so that SWCC could obtain
the assets of RBT without having to comply with the BHCA.
Johnson also telephoned OCC and FDIC examiners familiar with
FCB and RBT examinations and discussed these matters with the
examiners. Johnson also consulted internal Reserve Bank records.
Through her investigations, Johnson learned that the banks had
charged off large loans made to Bettersworth or his companies.
Bettersworth's personal guarantee on one such loan had forced his
own personal bankruptcy. In sum, Johnson's investigation generated
significant questions concerning, among other things, the RBT
foreclosure, Bettersworth's decision to place a substantial number
of SBA loans generated by his own companies with banks which he
also controlled, and Bettersworth's failure to honor or default
upon certain loans extended to him personally or to his companies
by the banks which he managed. Johnson eventually authored a memo
to Reserve Bank vice-president Stephen McBride, setting out the
problems with ComCorp's BHCA application.
On November 5, 1993, Reserve Bank vice-president McBride
issued a letter stating that the Reserve Bank had completed its
review and identified several areas of concern with respect to the
application. The areas of concern were stated in some detail and
specific questions were posed at the end of the letter, the answers
to which could have significantly enhanced the possibility of
approval. The letter concluded that, based upon the existing
6
information, the prospects for approval were "extremely dim," and
that any further application would be considered directly by the
Board. ComCorp did not, however, pursue the application further by
providing the specific information requested in an amended
application to the Board. Rather, ComCorp abandoned the
application and negotiated the sale of RBT, which closed in early
1994.
In 1995, Bettersworth decided he wanted to start a new bank in
Lakeway, Texas and began trying to clear his name. After informal
efforts failed, Bettersworth made Privacy Act requests in October
1995. Bettersworth requested records on himself, stating three
variations on his name. The agencies responded that they either
did not have records responsive to his request or that the
documents they had were not subject to the Privacy Act.
Bettersworth subsequently learned that the agencies maintained
confidential records relating to bank examinations that sometimes
contained comments about bank management. Bettersworth made
another Privacy Act request for those records, which was denied
because the records were not kept in a "system of records" tied to
his name. There does not appear to be any dispute about the fact
that these records were maintained, in accordance with the
agencies' regulatory purpose, in files on the banks with which
Bettersworth was affiliated rather than in a file on Bettersworth.
7
II. PROCEDURAL HISTORY
In August 1997, Bettersworth filed suit claiming that the
defendant agencies violated his rights under the Privacy Act,
5 U.S.C. § 552a. Bettersworth raised three claims. First,
Bettersworth claimed that the agencies denied his request for
access to information about him in a Privacy Act system of records,
in violation of 5 U.S.C. § 552a(d)(1) (obligating an agency to
provide access to covered records); see also id. § 552a(g)(1)(B)
(providing a civil remedy for violation of § 552a(d)(1)). Second,
Bettersworth claimed that the agencies made a number of adverse
determinations about him on the basis of inaccurate and incomplete
records, in violation of 5 U.S.C. § 552a(g)(1)(C). Finally,
Bettersworth claimed that the agencies violated subsection
552a(e)(1) (requiring that agencies maintain only such records as
are required to perform a legitimate agency function) and
subsection 552a(e)(7) (prohibiting the maintenance of records
describing how an individual exercised First Amendment rights
unless authorized by statute or the subject individual) “in such a
way as to have an adverse effect on" him. See 5 U.S.C.
§ 552a(g)(1)(D).3
3
Bettersworth also alleged that the agencies violated subsection
552a(e)(5) which requires agencies to “maintain all records which
are used by the agency in making any determination about any
individual with such accuracy, relevance, timeliness, and
completeness as is reasonably necessary to assure fairness to the
individual in the determination.” This statutory obligation is
made enforceable by substantively identical language in subsection
8
In January 1998, the agencies filed a motion to dismiss, which
was denied. In February 1999, Bettersworth amended his complaint
to allege additional facts in support of his three Privacy Act
claims. In June 1999, Bettersworth moved for partial summary
judgment on the access claim. That same month, the agencies filed
a motion to dismiss, or in the alternative, for summary judgment.
The district court referred the motions to a magistrate judge, who
recommended that the agencies' motion be granted. Bettersworth
filed objections, and the district court conducted a de novo
review, after which the district court granted the agencies' motion
and dismissed all of Bettersworth's claims with prejudice.
Bettersworth filed a timely notice of appeal.
Summary judgment is appropriate when there are no genuine
issues of material fact, and the moving party is entitled to
judgment as a matter of law. FED. R. CIV. P. 56. A moving party may
rely upon the absence of evidence to support an essential element
of the non-movant's case. See Duffy v. Leading Edge Prods., 44
F.3d 308, 310 (5th Cir. 1995). Once that showing is made, the non-
moving party is required to come forward with specific and credible
facts that would support a reasonable inference of liability with
respect to the essential elements of the non-moving party's claims.
Id. Thus, the district court was charged with examining the
552a(g)(1)(C). Bettersworth's allegation under subsection
552a(e)(5) is therefore subsumed by his allegation under subsection
552a(g)(1)(C).
9
summary judgment evidence to determine whether there was evidence
supporting each of the essential elements of Bettersworth's access,
adverse determination, and adverse effect claims under the Privacy
Act. We review the district court's decision granting summary
judgment de novo, applying the same standards as did the district
court. Id. at 312.
III. BETTERSWORTH'S ACCESS CLAIM
Subsection 552a(d)(1) of the Privacy Act provides that each
agency that maintains a system of records shall:
(1) upon request by any individual to gain access
to his record or to any information pertaining to
him which is contained in the system, permit him
and upon his request, a person of his own choosing
to accompany him, to review the record and have a
copy made of all or any portion thereof in a form
comprehensible to him, except that the agency may
require the individual to furnish a written
statement authorizing discussion of that
individual's record in the accompanying person's
presence.
5 U.S.C. § 552a(d)(1). Subsection 552a(a)(5) defines “system of
records” as follows:
(5) the term “system of records” means a group of
any records under the control of any agency from
which the information is retrieved by the name of
the individual or by some identifying number,
symbol, or other identifying particular assigned to
the individual.
5 U.S.C. § 552a(a)(5). Subsection 552a(g)(1) provides a civil
remedy for violation of subsection 552a(d)(1).
The threshold issue in any claim alleging denial of access
under the Privacy Act is whether the records sought by the
10
plaintiff are maintained in a "system of records" retrievable by an
"identifying particular assigned to" the plaintiff. This
qualifying language in the statute reflects a statutory compromise
between affording individuals access to those records relating
directly to them and protecting federal agencies from the
burdensome task of searching through agency records for mere
mention of an individual's name. Many of the published Privacy Act
cases are aimed at giving meaning to this statutory requirement.
See, e.g., Gowan v. United States Dep’t of the Air Force, 148 F.3d
1182, 1191 (10th Cir. 1998) (file marked "ethics" was not a
surrogate identifier for plaintiff under ethics investigation and
thus records were not accessible under the Privacy Act, even though
the file contained information about the plaintiff); Hudson v.
Reno, 130 F.3d 1193, 1206 (6th Cir. 1997) (records not accessible
under the Privacy Act because not retrievable by the plaintiff’s
name); Henke v. United States Dep’t of Commerce, 83 F.3d 1453 (D.C.
Cir. 1996) (records not accessible under the Privacy Act, even
though agency could search for the records by the plaintiff’s name,
because the agency as a practical matter did not use the
information that way); Cuccaro v. Secretary of Labor, 770 F.2d 355,
359-60 (3d Cir. 1985) (documents relating to agency’s investigation
of accident involving plaintiff were not tied to plaintiff’s name
and thus not accessible under the Privacy Act); Wren v. Heckler,
744 F.2d 86, 90 (10th Cir. 1994) (records not accessible under the
11
Privacy Act because not retrievable by the plaintiff’s name, even
though the information related to plaintiff).
The district court held that the records Bettersworth wants,
primarily information retrieved by Reserve Bank examiner Johnson
from various agencies and then included in Reserve Bank files
concerning ComCorp’s application for BHC status, were not
maintained in a system of records retrievable by Bettersworth’s
name, and were therefore not accessible under § 552a(d)(1). There
does not appear to be any dispute about the fact that the records
were maintained in files referencing the banks with which
Bettersworth was associated, rather than Bettersworth personally.
Further, there does not appear to be any dispute about the fact
that the files were maintained for the purpose of discharging the
responsibilities vested by federal law with the defendant agencies.
Bettersworth urges the Court to interpret the statute broadly
to require that he be given access to the agencies’ records in this
case because the records pertained to him. Alternatively,
Bettersworth maintains that the agencies used the bank files as
surrogate identifiers for records pertaining to him. We decline to
interpret the statute in a manner that would deny meaning to the
statutory language requiring that the records be retrievable “by
some identifying number, symbol, or other identifying particular
assigned to the individual.” 5 U.S.C. § 552a(a)(5); id.
§ 552a(d)(1). Moreover, Bettersworth's assertion that the agencies
12
used the bank files as a surrogate identifier for information
relating to him finds no support in the record. For these reasons,
we affirm the district court's dismissal of Bettersworth's claim
that he was denied access to records subject to disclosure under
the Privacy Act.
IV. BETTERSWORTH'S ADVERSE DETERMINATION CLAIM
Subsection 552a(g)(1)(C) provides a civil remedy whenever an
agency:
fails to maintain any record concerning any
individual with such accuracy, relevance,
timeliness, and completeness as is necessary to
assure fairness in any determination relating to
the qualifications, character, rights, or
opportunities of, or benefits to the individual
that may be made on the basis of such record, and
consequently a determination is made which is
adverse to the individual.
5 U.S.C. § 552a(g)(1)(C). Bettersworth's adverse determination
claim is premised almost entirely upon the Reserve Bank’s handling
of ComCorp’s BHCA application. Specifically, Bettersworth claims
that the following items constitute adverse determinations against
him within the meaning of § 552a(g)(1)(C): (1) Reserve Bank vice-
president McBride's November 5, 1993 letter informing ComCorp that
the prospects for approval of its BHCA application were extremely
dim, and that further applications would be reviewed directly by
the Board; (2) oral statements made by McBride during a telephone
conversation with Bettersworth's lawyers about the viability of
ComCorp's BHCA application; (3) Reserve Bank examiner Johnson's
13
working papers and notes prepared in the course of her review of
ComCorp's BHCA application; and (4) the entry in the OCC's SMS
database flagging Bettersworth's role in the financial decline of
FCB. The district court held that Bettersworth’s adverse
determination claim failed as a matter of law because none of the
various statements and writings identified by Bettersworth
constituted an "adverse determination" within the meaning of the
statute.
The district court held that McBride's November 5, 1993 letter
was the only item relied upon by Bettersworth which even
potentially constituted an adverse determination. The remaining
items concern information allegedly relied upon to draft that
letter.4 The district court held that McBride's November 5, 1993
letter did not constitute a determination because the letter
identified other reasons for the Reserve Bank’s disinclination to
approve the application. The district court also suggested that
ComCorp (or Bettersworth) decided not to pursue an application with
4
On this point, we note that Bettersworth's allegations do not
directly identify adverse determinations made by each and every
defendant agency. To the contrary, Bettersworth premises his claim
against the other defendants primarily upon the fact that the
Reserve Bank accessed and relied upon records from the other
agencies when making its determination. At least one court has
recognized that such a connection may be sufficient to support
liability. See Dickson, 828 F.2d at 36. Because we affirm the
district court's decision that the items identified by Bettersworth
do not constitute an adverse determination under the statute in any
event, we need not and do not decide whether such a showing is
sufficient in this Circuit.
14
the Board because there were no satisfactory answers to the
legitimate questions asked in McBride’s letter.
The agencies argue that the November 5, 1993 letter cannot be
considered an adverse determination because the Reserve Bank had no
authority to deny ComCorp’s application. The controlling
regulations permit only two courses of action; the Reserve Bank can
either approve an application for BHC status or refer it to the
Board for further consideration. See 12 C.F.R. § 225.15. Thus,
the agencies maintain that there could be no determination unless
and until ComCorp forwarded an application to the Board and it was
finally denied. See Deters v. United States Parole Comm’n, 85 F.3d
655 (D.C. 1996). Given that ComCorp abandoned that effort, the
matter was terminated before an administrative determination could
be made. In this same vein, the defendant agencies maintain that,
even if the November 5, 1993 letter constituted a determination of
any sort, it would be a determination against ComCorp, the company
making the application, rather than against Bettersworth
personally. Having reviewed the record, we are persuaded that the
diverse grounds relied upon in the Reserve Bank's letter, coupled
with the fact that ComCorp was the entity applying for BHCA status,
provide adequate support for the district court's conclusion that
the November 5, 1993 letter did not constitute an adverse
determination against Bettersworth within the meaning of
§ 552a(g)(1)(C).
15
With regard to the remaining items identified by Bettersworth
as adverse determinations, the agencies ask the Court to hold that
the word "determination" as used in the statute must mean something
akin to a formal or final administrative decision. We need not go
that far in order to say that no determination was made in this
case. At the very least, informal oral or written statements made
in the deliberative process about a particular administrative
determination do not constitute the determination itself. We
therefore affirm the district court's conclusion that
Bettersworth's adverse determination claim fails because there was
no evidence of an adverse administrative determination against him.
See 5 U.S.C. § 552a(g)(1)(C) (providing that the determination must
be adverse “to the individual”).
V. BETTERSWORTH'S ADVERSE EFFECT CLAIM
Subsection 552a(g)(1)(D) provides for a civil remedy whenever
an agency “fails to comply with any other provision of this
section, or any rule promulgated thereunder, in such a way as to
have an adverse effect on an individual.” Bettersworth asserts
that the defendant agencies kept information on him that was
unnecessary to the agencies’ mandated purpose, in violation of
subsection 552a(e)(1), and that the agency maintained records
describing Bettersworth’s exercise of his First Amendment rights,
in violation of subsection 552a(e)(7). Beyond these general
assertions, Bettersworth does not describe what portions of which
16
records maintained by which agencies show such violations.
Bettersworth simply states that the cause of action is supported by
his affidavit. Bettersworth then relies upon the district court’s
failure to address this claim in detail to excuse his own duty to
brief it on appeal.
Federal Rule of Appellate Procedure 28 requires that appellate
parties provide cogent argument, supported by citation to relevant
authorities, statutes, and the record, for all points raised on
appeal. Without such argument, this Court is in no position to
provide any meaningful review. In the absence of such briefing, we
decline to address Bettersworth's claim that the district court
erroneously dismissed his § 552a(g)(1)(D) claim. See, e.g., Matter
of T-H New Orleans Ltd. Partnership, 116 F.3d 790, 796 (5th Cir.
1997); Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521,
532 (5th Cir. 1996).
CONCLUSION
The district court's order granting summary judgment in favor
of the defendants (the Federal Deposit Insurance Corporation, the
Office of the Comptroller of the Currency, the Board of Governors
of the Federal Reserve System, and the Federal Reserve Bank of
Kansas City) and dismissing plaintiff Bettersworth's Privacy Act
claims with prejudice is AFFIRMED.
17