IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

NO. 95-40207 IN RE: FEDERAL DEPOSIT INSURANCE CORPORATION, Petitioner. Petition for Writ of Mandamus to the United States District Court for the Southern District of Texas NO. 95-40230 UNITED STATES OF AMERICA, Plaint iff, versus 11,950 ACRES OF LAND, MORE OR LESS, LOCATED IN CAMERON COUNTY, TEXAS, Defendant, FIRST HEIGHTS BANK, Defendant-Counter Claimant, STATE OF TEXAS; CAMERON COUNTY TAX ASSESSOR-COLLECTOR, Defendants, and PACIFIC UNION COMPANY, Defendant-Appellee. *********************************** POINT ISABEL INDEPENDENT SCHOOL DISTRICT, Cross Claimants-Appellees, versus FEDERAL DEPOSIT INSURANCE CORPORATION, As Manager of the FSLIC Resolution Fund (FDIC), Cross Defendant-Appellant. *********************************** JOE G. SANDERS, Trustee, KATHY GRADY, C. L.

BALLARD, PLAYA DEL RIO INC., KMG ENTERPRISES, Defendants, and PACIFIC UNION COMPANY, Cross Defendant-Appellee. Appeal from the United States District Court for the Southern District of Texas (July 7, 1995) Before JOLLY and BENAVIDES, Circuit Judges, and FITZWATER, District Judge. * FITZWATER, District Judge: This petition for a writ of mandamus challenges an order of a magistrate judge declining to quash notices of deposition issued to three members of the Board of Directors of the Federal Deposit Insurance Corporati on ("FDIC"). The question presented is whether the magistrate judge clearly abused his discretion by permitting the depositions in the absence of findings of, and of a basis to find, exceptional circumstances. We hold that he did, and therefore grant the petition.

I Petitioner FDIC seeks relief from an order of a magistrate judge 1 in a condemnation action filed by plaint iff United States of America ("Unit ed States") in the Brownsville Division of the Southern District of Texas (the "Brownsville Action"). The United States sues to condemn several thousand acres of land located at the southernmost t ip o f Texas along the Gulf Coast and the Rio Grande River, known as Playa del Rio. We are not strangers to litigation regarding Playa del Rio, which we have previously characterized as "an environmentally sensitive tract o f land in South Texas." S ee Sierra Club v. FDIC , 992 F.2d 545, 547 (5th Cir. 1993). Although we address in this petition a ruling in the Brownsville Action, t he animat ing force for the instant dispute is related litigation pending in the Houston Division of the Southern District of Texas (the "Houston Action").

The Houston Action pertains to the validity and enforceability of a 1992 agreement to sell Playa del Rio to defendant-respondent Pacific Union Company ("Pacific Union"). In order to understand the relevant background facts as well as the question we decide, it is necessary that we recount some of the prior history of this contemplated sale, and of the Sierra Club litigation, and that we discuss the Houston Action. In 1988 First Heights Savings Bank, fsb ("First Heights") and the Federal Savings and Loan Insurance Corporati on ("FSLIC") entered into a transaction whe reby First Heights acquired the assetsincluding Playa del Rioof vario us failed thrift institutions. 2 As part of the arrangement between First Heights and the FSLIC, the parties executed an Assistance Agreement that entitled First Heights to reimbursement for losses on covered assets. The loss protecti on conferred by the Agreement obligated Firs t Height s to procure the FSLIC's approval prior to the sale of a covered asset . The Agreement also gave the FSLIC the right in its discretion to direct the transfer of a covered asset to anyone whom the FSLIC specified. The FDIC became Manager of the FSLIC Resolution Fund upon passage of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. No. 101-73, 1989 U.S.C.C.A.N. (103 Stat.) 183 ("FIRREA"). FIRREA abolished the FSLIC, and the FDIC retained most of the FSLIC's liabilit ies. The FDIC is a party to the Houston Action in its capacity as Manager of the FSLIC Resolution Fund. The FDIC i s not a party to the Brownsville Action. The Board adopted a resolution that recited inter alia that the FDIC had earlier approved the sale to Pacific Union for $5.8 millio n, but noted the Sierra Club litigation and the district court's injunction. The resolution explained that Playa del Rio included substantial wetlands and represented a valuable natural resource and critical habitat to several endangered species. It also pointed out that the Coastal Barrier Improvement Act of 1990 authorized the Fish & Wildlife Service to acquire the property from First Heights. The Board found that the sale would permit the recovery of significant economic value for Playa del Rio , and should resolve the issues presented by the Sierra Club litigation.

In July 1993, prior to the FDIC's directing First Heights to sell Playa del Rio to the Fish & Wildlife Service, First Heights resubmitted to the FDIC a request to approve the sale to Pacific Union, and for loss assistance. In an August 24, 1993 letter, the FDIC notified First Heights that it had disapproved the request. First Heights then terminated the sale contract.

The next day, on August 25, 1993, First Heights and the FDIC initiated the Houston Action, seeking a judgment declaring on various grounds that the proposed sale of Playa del Rio from First Heights to Pacific Union was of no force and effect. Pacific Union has counterclaimed, contending that First Heights and the FDIC are liable for violating the Fifth Amendment by taking property without just compens a tion; seeking review of the FDIC's decisions pursuant to the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq. ; and alleging a violation of Pacific Union's right to substantive due process.

Pacific Union complains that it is an unjustly-r eject ed suitor for Playa del Rio who has expended in excess o f $1.75 million to close the purchase. It contends that discovery in the Brownsville and Houston Actions has reve aled t hat First Heights declined to complete the sale to Pacific Union because another agency of the United States government wanted the property . Pacific Union asserts that after the parties ex ecuted the sale contract, and following FDIC approval, Secretary of the Interior Bruce Babbitt ("Secretary Babbitt") requested of FDIC A c ting Chairman A ndrew Hove ("Chairman Hove") that FDIC representatives meet with Fish & Wildlife Servic e personnel. Secretary Babbitt indicated that the Fish & Wildlife Service was interested in adding Playa del Rio to the lower Rio Grande Valley National Wildlife Refuge Complex. Pacific Union avers that fo rmer Texas Governor Ann Richards and Vice President Al Gore supported Secretary Babbitt's efforts. Pacific Union maintains that without its knowledge, representatives of the Fish & Wildlife Service and the FDIC met in April, resulting in a plan to sell Playa del Rio to the Fish & Wildlife Service or its designee. The parties discussed transferring Playa del Rio to the Fish & Wildlife Service through a conduit, The Nature Conservancy ("TNC"). The FDIC and TNC could not agree on an amount necessary to indemnify TNC from anticipated claims by Pacific Union that TNC had interfered with the First Heights-Pacific Union sale contract. Pacific Union contends the Houston Action is the result of the FDIC and First Heights' realization that the First Heights-Pacific Union sale contract was an impediment to the Fish & Wildlife Service's plan to acquire Playa del Rio. Pacific Union asserts that it submitted interrogatories in the Houston Action concerning the identities of fact witnesses and persons responsible for making the decision concerning the FDIC's August 24, 1993 disapproval of First Heights ' request to approve the sale to Pacific Union and request for loss assistance. It points out that the parties agreed that this discovery was also equally usable in the Brownsvi l le Action. The FDIC identified three persons in response to the interrogatories: Act ing Chairman Hove; Comptroller of the Currency Eugene A. Ludwig ("Comptroller Ludwig"); and Acting Director of the Office of Thrift Supervision Jonathan L. Fiechter ("Dir ect o r Fiechter"). Pacific Union contends that aside from the significance of the deponents' testimony with respect to the claims against the FDIC, the depositions will be important to establish civil conspiracy against First Heights.

On December 8, 1993 the United States commenced the instant Brownsville Action, in which it seeks to condemn 11,500 acres of Playa del Rio. The trial court has bifurcated the trial of the title and value issues, and the first phase is currently set to be tried in August 1995. In the Houston Action, the parties have engaged in substantial discovery. Pacific Union has deposed six current or f o rmer FDIC employees, including Kevin Stein ("Director Stein"), the Associate Director of the FDIC's Division of Resolutions, wh o was principally responsible for managing the FSLIC Resolution Fund. Also deposed were Michael D. Solomon, who was Acting "An abuse of discretion exists only when there is [a] definite and firm conviction that the court below committed clear error of judgment in the conclusion it reached upon a weighing of the relevant factors." C onkling v. Turner , 18 F.3d 1285, 1293 (5th Cir. 1994) (qu oting Ho ffman v. Merrell Dow Pharmaceuticals, Inc., (In re Bendectin Litig. ), 857 F.2d 290, 307 (6th Cir. 1988), cert. denied , 488 U.S. 1006 (1989)) (internal quotati ons omitted). The term abuse of discretion "does not imply intentional wrong or bad faith, or misconduct, nor any reflection on the judge." U nited States v. Walker , 772 F.2d 1172, 1176 n.9 (5th Cir. 1985) (quoting Black's Law Dictionary (5th ed. 1979 at 10)).

It is a settled rule in this circuit that "exceptional circumstances must ex ist before the involuntary depositions of high agency o fficials are permitted." I n re Office of Inspector General , 933 F.2d 276, 278 (5th Cir. 1991) (per curiam) (citing EEOC v. K-Mart , 694 F.2d 1055, 1067-68 (6th Cir. 1982)). "[T]op executive department officials should not, absent extraordinary circumstances, be called to testif y regarding t heir reasons for taking official actions." I d. (quoting Simplex Time Recorder Co. v. Secretary of Labor , 766 F.2d 575, 586 (D.C. Cir. 1985)). "High ranking government o fficials have greater duties and time constraints than other witnesses." I n re United States , 985 F.2d 510, 512 (11th Cir.) (per curiam), cert. denied , U.S., 114 S.Ct. 545 (1993). "[T]he Supreme Court has indicated that the practic e o f calling high officials as witnesses should be discouraged." Id. (citing United States v. Morgan , 313 U.S. 409 (1941)).

III We hold that the magistrate judge clearly abused his discretion by declining to quash the deposition notices issued to the three FDIC Directors.

A - As a threshold matter, we observe that the magistrate judge apparently made no attempt to find exceptional circumstances before rejecting the FDIC's motion to quash. During the course of a previously-scheduled status conference with counsel, the judge addressed the merits of the FDIC's quasha l motion. The hearing record reflects that he considered brief arguments from counsel; assumed that some areas of inquiry might be privileged and that objections based upon privilege could be lodged during the course of the depositions; and concluded that the depositions should be allowed to go forward. Except with respect to the scheduling of the depositions, 8 it does not appear that the magistrate judge considered the high-ranking status of the deponents, the potential burden that the depositions wo uld impose upon them, or the substantive reasons for taking the depositions. The judge's order denied the motion without assigning reasons. After rejecting the motion to quash, and in denying the FDIC's motion for a stay pending appeal, the magistrate judge offered some rationale for his decision. He held i nter alia that Pacific Un ion was entitled to depose the three Directors because (1) the FDIC is a party to the Houston Action, and that action involves issues concerning Playa del Rio, which is the center of the Brownsville Action; (2) Pacific Union has a motion pending to add the FDIC as a party to the Brownsville Action and there is a motion pending in the Houston Action to abate in favor of the Brownsville Action; (3) in the Houston Action the FDIC has indicated in i nterrogatory answers that the three Directors made certain decisions concerning the sale of the property, and those matters are relevant to the dispute; (4) the parties have stipulated to the use of the Houston Action interrogatories in the Brownsville Action; and (5) Pacific Union has represented that it has been unable t o o bt ain t he information through other means. These findings do not demonstrate, however, that t he judge specifically considered and found that exceptional circumstances were present.

B Moreover, we are unable to discern from the record before us a basis on which the judge could have found the existence of exceptional circumstances.

Pacific Unio n co ntends, on essentially the following line of reasoning, that the depositions should be allowed to go forward. Chairman Hove was the author and recipient of correspondence that reveals the development and implementation of a plan and agreement to sell Playa del Rio to the Fish & Wildlife Service rather than to Pacific Union. The FDIC's decision is the subject of Pacific Union's counterclaim in the Houston Action and cross-claim in the Brownsville Action. The FDIC is seeking in the Houston Action a declaration that the decision to sell the land to the Fish & Wildlife Service rather than to Pacific Union was proper and that the First Heights-Pacific Union contract is a nullit y; therefore, Pacific Union should be permitted to depose the decision-ma kers in order to ascertain the facts on which the determination was based and the standard applied in the process. The FDIC made a decision that directly affected Pacific Union's property rights and then filed a lawsuit against Pacific Union seeking a judicial determination that its action terminated those rights. There is no other source of evidence than the testimony of three deponents in question, especially since the FDIC designated only these individuals as being t he persons responsible for making the decision regarding the FDIC's August 24, 1993 disapproval of First Heights' request. The June 9, 1993 FDIC resolution is an inadequate substitute for a full administrative agency record. The seriousness of the litigation, and of allegations of misconduct (including conspiracy and cover-up) by government agencies and o fficials who grossly abused their power to deprive Pacific Union of its contract rights, and the government's role as a party-plaintiff, favor disclosure.

W e disagree t hat Pacific Union has made the strong showing necessary for a finding of exceptional circumstances. Pacific Union disclaims any intention to "suggest that senior government o fficials may be deposed in every case in which the government is a party." (Footnote om i tted). Yet the reasoning Pacific Union advances would risk eviscerating well-settled principles of administrative law. If countenanced, this rationale would justify deposing high-level government officers in a plethora of cases in order to probe their decision-making processes and the reasons for their decisions. Agency leaders often send and receive correspondence relative to their actions. Their official conduct frequently affectssometimes adverselythe property rights of private parties. This does not of itself subject them to the burdens of litigation discovery. N o r is t he present case distinguished by the fact that the FDIC initiated the Houston declaratory judgment action. As the FDIC correctly points out, the order before us for review was entered in the Brownsville Action, which the FDIC did not commence and to which it is not a party.

It is not sufficient for Pacific Union to rely upon the joint nature of the discovery undertaken in the two cases, because in the Houston Actionto which the FDIC is a partythe magistrate judge quashed the depositions. But even overlooking this impediment to Pacific Union's position, we reject the proposition that an administrative agency subjects its high-level o fficials to discovery when it brings a declaratory judgment action intended to give effect to an agency decision. Agency actions are usually reviewable, if at all, 9 pursuant to the APA. It is recognized that courts reviewing these decisions normally "may not require the agency officials who participated in that decision to give testimony explaining their action unless there has been a strong showing of bad faith or improper behavior." B ank of Commerce v. City National Bank , 484 F.2d 284, 288 (5th Cir. 1973) (citing Citizens to Preserve Overton Park, Inc. v. Volpe , 401 U.S. 402, 420 (1971)), cert. denied , 416 U.S. 905 (1974). We discern nothing in the character of a declaratory judgment action of the type brought here that warrants altering this rule, and permitting discovery from t he agency's high-level officials in which they are obligated to explain their decisions. Absent a strong showing of bad faith or improper behavior, senior agency decision-makers do not sub ject t hemselves to discovery when the agency seeks a declaratory judgment as to the validity of its action. By adopting such a rule, courts could unintentionally place government agencies in the untenable position of relinquishing otherwise available avenues of relief in order to preserve the application of settled rules that govern judicial review of agency decisions.

Nor do we see in the presen t record a strong showing of bad faith or improper behavior, notwithstanding Pacific Union's allegations of misconduct (including conspiracy and cover-up) and assertions of gross abuse of power by government agencies and officials. The present state of the evidence reflects that, pursuant to its authority under the Assistance Agreement to approve the sale of covered as sets and to direct First Heights to transfer such assets to anyone whom the FDIC specified, the FDIC retained discretion with regard to the dispo sit io n of Playa del Rio. Absent a showing of contrary provisions of law or contract, and none has been made here, the fact that agency heads considered the preferences (even political ones) of other government o fficials concerning how this discretion should be exercised does not estab lish the required degree of bad faith or improper behavior. We note that Pac ific Unio n also relies in part upon the FDIC's response to Pacific Union's i nterrogatory No. 7 to urge that the three Directors are proper depone nts. In that i nterrogatory , Pacific Union asked the FDIC to "[i]dentify each and every committee or board, and its members, that made, was responsible for, or was principally involved with any determination or decision concerning the August 24, 1993 disapproval" of First Heights' July 1993 second request to approve the sale of Playa del Rio to Pacific Union and request for loss assistance. The FDIC has demonstrated, however, that although i nterrogatory No. 7 an d an at t endant definition of terms required that it identify the Directors, the August 24 decision was in fact made by Director Stein of the FDIC 's Division of Resolutions, whom Pacific Union has already deposed. We think it will be the rarest of casesand the present action is not onein which exceptional circumstances can be shown where the testimony is available from an alternate witness. See In re United States , 985 F.2d at 512 (citing as weighing against finding of extraordinary circumstances, fact t hat testimony was available from alternate witnesses). * * * The magistrate judge denied the FDIC's motion to quash depositions without first determining that there were exceptional circ umst ances that justified this form of discovery from three senior o fficials of the FDIC. This was a clear abuse of discretion. Moreover, from our review of the record, we are unable to discern any exceptional circumstances that would have warranted allo wing the depositions to take place. Accordingly, we grant the petition and order the magistrate judge to vacate the March 6, 1995 order and grant the FDIC's motion to quash depositions. 10 PETITION GRANTED.

* District Judge of the Northern District of Texas, sitting by designation. 1 The parties have consented to try the lawsuit before the magistrate judge. Therefore, there was no need for the FDIC first to seek review of the order from a district judge

2 Because the particulars are unnecessary to our decision, we do not elaborate upon the details of the transactions by which First Heights became the owner of Playa del Rio. These may be gleaned from Sierra Club , 992 F.2d at 547

3 We observed in Sierra Club that plaint iffs' apparent goal was to prevent the sale to Pacific Union "so that an environmentally conscious entity . . . can purchase the land." Id. 4 We filed our opinion in Sierra Club on June 8, 1993, one day prior to the Board's action. S ierra Club , 992 F.2d 545

5 Chairman Hove is currently Vice Chairman of the FDIC. 6 The Houston magistrate judge directed Pacific Union to submit proposed questions in writing, following which the judge would give the issue further consideration. 7 We ho ld t hat the FDIC has no other adequate means of obtaining relief. We agree with the Eleventh Circuit that requiring a government official "to incur a contempt sanction would have - 7 - Assistant General Counsel and served as Director Stein's primary legal advisor; Leslie R. Crawford, a staff attorney who was involved in advising Director Stein regarding Playa d el Rio; James A. Weaver, Dallas Regional Manager of the FDIC's Division of Resolutions; Ken Sheffield, a Senior Case Manager on the Division staff; and Benjamin R. Idziak, formerly an attorney in the FDIC's Dallas office. On March 2, 1995 Pacific Union served deposition notices directed to three members of the FDIC's Board of Directors: Chairman Hove, 5 Comptroll e r Ludwig, and Director Fiechter. The notices bore the cas e capt ion of both the Brownsville and Houston Actions, and stated that the depositions would take place in Dallas, Texas on March 13 and 14, 1995. On March 6, 1995 the FDIC moved in both the Brownsville and Houston Actions to quash t he notices. Pacific Union contended the depositions were appropriate because the FDIC had id ent ified these individuals in response to interrogatories as persons responsible for, or principally involved in, the FDIC's disapproval of the sale to Pacific Union. The magistrate judge in the Houston Action granted the relief, 6 but the magistrate judge in the Brownsville Action denied the FDIC's motion. The FDIC appealed the March 6, 1995 order of the Brownsville magistrate judge to this court, and separately filed the instant petition for a writ of mandamus. A panel of this court stayed the order, and expedited the appeal. II "We are to issue a writ of mandamus only `to remedy a clear usurpation of power or abuse of discretion' when `no other adequate means of obtaining relief is available.'" I n re Fibreboard Corp. , 893 F.2d 706, 707 (5th Cir. 1990 ) (quoting I n re Paradyne Corp. , 803 F.2d 604, 612 (11th Cir. 1986))

serious repercussions for the relationship between two coequal branches of government." In re United States , 985 F.2d 510, 513 (11th Cir.) (per curiam) (granting writ of mandamus), cert. denied , U.S., 114 S.Ct. 545 (1993). Moreover, although the FDIC also brings an interlocutory appeal of the magistrate judge's order, seeking to invoke appellate jurisdiction on the basis of Cates v. LTV Aerospace Corp. , 480 F.2d 620 (5th Cir. 1973), Pacific Union maintains that Cates does not confer jurisdiction, and moves to dismiss the appeal . We do not think Pacific Union can at once move to dismiss the appeal and urge that the FDIC has an adequate means of obtaining relief

8 The magistrate judge provided in his ord er t hat , "Considering the high-level governmental positions held by these deponents, the Court admonishes the parties to cooperate as to the scheduling of these depositions." -

9 The FDIC contends it decisions with respect to Playa del Rio are unreviewable. We need not decide this question

10 We dismiss the FDIC's appeal as moot