Federal Deposit Insurance Corp. v. Mallen

Supreme Court of the United States · 1988 · Administrative Law

Administrative LawDue ProcessBanking RegulationFDICdue processpost-deprivation hearingbank officer suspensionindictment

Facts

Appellee was president and a director of an FDIC-insured bank when a federal grand jury indicted him for federal offenses punishable by more than one year and involving dishonesty or breach of trust. The FDIC then issued an ex parte order suspending him from office after making the statutory findings that his continued service might threaten depositors' interests or impair public confidence in the bank. Appellee promptly requested an administrative hearing and sought to present oral testimony and written evidence, and a hearing was scheduled within 19 days of the request. Before the agency hearing occurred, appellee sued, and the District Court invalidated the suspension solely because the statute did not guarantee a sufficiently prompt decision or an unqualified right to present oral testimony.

Issue

Whether 12 U.S.C. § 1818(g)(3) violates the Fifth Amendment Due Process Clause because it permits up to 90 days for a post-suspension hearing and decision after an indicted bank officer requests review, and because it does not guarantee the officer an unqualified right to present oral testimony.

Rule

When prompt governmental action justifies postponing a hearing until after an initial deprivation, due process requires evaluation of the adequacy of post-deprivation procedures by considering the importance of the private interest and the harm caused by delay, the government's justification for delay and its relation to the underlying governmental interest, and the likelihood that the interim decision was mistaken. A statutory procedure is not facially unconstitutional merely because oral testimony is not guaranteed in every case; due process does not invariably require oral testimony in administrative proceedings.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Phoenix, a federal banking regulator immediately suspends Dana Mercer, the chief lending officer of Desert Mesa Savings, after a federal grand jury indicts her for a felony fraud offense punishable by more than one year and involving dishonesty. The agency makes written findings that her continued service may threaten depositors and undermine public confidence in the bank, but gives her no hearing beforehand.

Dana sues, arguing that due process always requires a pre-suspension hearing before she can be removed from her position. How should a court rule?

Explanation. The majority held that no pre-suspension hearing is required in this setting when prompt action serves the strong governmental interest in protecting depositors and maintaining confidence in banking institutions, and an indictment supplies an independent probable-cause determination showing the suspension is not baseless. Due process therefore permits postponing the hearing until after the initial deprivation in such limited circumstances.