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Community Trust Company Brief, secretary’s petition for panel rehearing and rehearing en banc

Case No. 05-2785/05-4828
___________

IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________

ELAINE L. CHAO, SECRETARY OF LABOR,
UNITED STATES DEPARTMENT OF LABOR,

Petitioner-Appellee,

v.

COMMUNITY TRUST COMPANY,

Respondent-Appellant.

___________

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
___________

THE SECRETARY OF LABOR'S PETITION FOR PANEL REHEARING AND
REHEARING EN BANC

___________

JONATHAN L. SNARE
Acting Solicitor of Labor

TIMOTHY D. HAUSER
Associate Solicitor

KAREN L. HANDORF
Counsel for Appellate and Special Litigation

ROBYN M. SWANSON
Attorney
United States Department of Labor
Plan Benefits Security Division
200 Constitution Ave., N.W., Suite N-4611
Washington, D.C. 20210
Phone: 202-693-5803; Fax: 202-693-5610

TABLE OF CONTENTS

TABLE OF AUTHORITIES

REQUIRED STATEMENT FOR REHEARING EN BANC

REASONS FOR GRANTING THE PETITION

STATEMENT

ARGUMENT

  1. Rehearing is warranted to correct the panel's erroneous holdings regarding the law of deference which are contrary to Supreme Court and Third Circuit precedent.

  2. Rehearing is warranted because the panel misconstrued the purpose of the GLBA and the scope of its privacy protections to announce a new standard for administrative subpoena enforcement that is inconsistent with Supreme Court and Third Circuit precedent.

CONCLUSION

CERTIFICATE OF COMPLIANCE

CERTIFICATE OF SERVICE

TABLE OF AUTHORITIES

Federal Cases:

Amerada Hess Pipeline Corp. v. Fed. Energy Regulatory Comm'n, 117 F.3d 596 (D.C. Cir. 1997)

Am. Family Ins. Co. v. Roth, No. 05C3839, 2005 WL 3700232 (N.D. Ill. Aug. 5, 2005)

Babbitt v. Sweet Home Chapter of Comtys. for a Great Oregon, 515 U.S. 687 (1995)

Bragdon v. Abbott, 524 U.S. 624 (1998)

Chao v. Community Trust Co., 474 F.3d 75 (3d Cir. 2007)

Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984)

Donovan v. Dillingham, 688 F.2d 1367 (11th Cir. 1982) (en banc)

Endicott Johnson Corp. v. Perkins, 317 U.S. 501 (1943)

FDIC v. Wentz, 55 F.3d 905 (3d Cir. 1995)

Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232 (2004)

I.C.C. v. Gould, 629 F.2d 847 (3d Cir. 1980)

Individual Reference Servs. Group, Inc. v. FTC, 145 F. Supp. 2d 6 (D.D.C. 2001)

Matinchek v. John Alden Life Ins. Co., 93 F.3d 96 (3d Cir. 1996)

N.Y. State Bar Ass'n v. FTC, 276 F. Supp. 2d 110 (D.D.C. 2003)

Nat'l Cable & Telecommunications Ass'n v. Brand X Internet Servs., 545 U.S. 967 (2005)

Oklahoma Press Publ'g Co. v. Walling, 327 U.S. 186 (1946)

Sec'y of Labor v. Excel Mining, LLC, 334 F.3d 1 (D.C. Cir. 2003)

Skidmore v. Swift, 323 U.S. 134 (1944)

Smiley v. Citibank, 517 U.S. 735 (1996)

Thomas Jefferson Univ. v. Shalala, 512 U.S. 504 (1994)

Trans Union LLC v. FTC, 295 F.3d 42 (D.C. Cir. 2002)

U.S. v. Mead Corp., 533 U.S. 218 (2001)

U.S. v. Morton Salt Co., 338 U.S. 632 (1950)

U.S. v. Powell, 379 U.S. 48 (1964)

Yeskey v. Commonwealth of Pennsylvania Dep't of Corrections, 118 F.3d 168 (3d Cir. 1997)

Federal Statutes:

Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq.

Section 504, 29 U.S.C. § 1134
Section 504(c), 29 U.S.C. § 1134(c)

Federal Trade Commission Act:

Section 9, 15 U.S.C. § 49
Section 10, 15 U.S.C. § 50

Gramm-Leach-Bliley Act,

15 U.S.C. § 6801, et seq.:
15 U.S.C. § 6802(a)
15 U.S.C. § 6802(b)(1)
15 U.S.C. § 6802(b)(2)
15 U.S.C. § 6802(e)(1)-(8)
15 U.S.C. § 6802(e)(8)
15 U.S.C. § 6804(a)(1)-(2)
15 U.S.C. § 6805(7)
15 U.S.C. § 6809(4)
15 U.S.C. § 6809(9)

Federal Regulations:

Commodity Futures Trading Commission,17 C.F.R. § 160.3(h)(2)(v)-(vii)

Federal Deposit Insurance Corporation, 12 C.F.R. § 332.3(e)(2)(vi)-(viii)

Federal Reserve Board, 12 C.F.R. § 216.3(e)(2)(vi)-(viii)

National Credit Union Administration, 12 C.F.R. § 716.3(e)(v)

Office of the Comptroller of the Currency: 12 C.F.R. § 40.3(e)(2)(vi)-(viii)

Office of Thrift Supervision, 12 C.F.R. § 573.3(e)(2)(vi)-(viii)

Securities and Exchange Commission 17 C.F.R. § 248.3(g)(2)(vi)-viii)

16 C.F.R. § 313.3(e)(2)(vi)-(viii)

Other Authorities:

65 Fed. Reg. 33646 (May 24, 2000)

145 Cong. Rec. H11513 (daily ed. Nov. 4, 1999)

45 Cong. Rec. S13883 (daily ed. Nov. 4, 1999)

REQUIRED STATEMENT FOR REHEARING EN BANC

    I express a belief, based on a reasoned and studied professional judgment, that the panel decision is contrary to decisions of the United States Court of Appeals for the Third Circuit or the Supreme Court of the United States, and that consideration by the full court is necessary to secure and maintain uniformity of decisions in this court, i.e., the panel's decision is contrary to decisions of this court and the Supreme Court insofar as it refused to accord deference to the FTC's interpretation of a statute that it is charged with administering simply because the FTC is not a party to this case and insofar as it failed to follow established precedent regarding the question whether a subpoena is "properly authorized."

REASONS FOR GRANTING THE PETITION

    This case presents two questions of exceptional legal and public significance: 1) whether the reasonable interpretation of ambiguous provisions of the Gramm-Leach-Bliley Act ("GLBA"), 15 U.S.C. §§ 6801, et seq., by the federal agency charged with administering and enforcing the statute as expressed in a regulation promulgated after notice and comment is entitled to deference, and 2) whether an exception to the privacy provisions of that statute for a "properly authorized" subpoena alter the long-established standards for administrative subpoena enforcement.

    The Secretary believes that rehearing en banc is warranted because two aspects of the decision conflict with Third Circuit and Supreme Court precedent. First, the panel's holding that Federal Trade Commission ("FTC") regulations interpreting an ambiguous term in section 6809(4) of the GLBA "are persuasive, but no more, as to statutory interpretation" is contrary to Supreme Court precedent regarding the level of deference accorded to agency regulations. See U.S. v. Mead Corp., 533 U.S. 218, 227 (2001); Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). The panel held that Chevron deference is not required where the Secretary cites regulations of the FTC, the agency charged with administering and enforcing the GLBA, to assist in construing an ambiguous term of the GLBA. The panel's holding appears to be based on the misperception that the Secretary sought deference for her own interpretation of the GLBA, rather than the interpretation of the FTC. While the misperception itself might be characterized as a mistake of fact not worthy of en banc consideration, the effect of that mistake is a construction of the GLBA that is at odds with the interpretation of the agency charged with administering and enforcing it, as well as with the interpretation of nearly all agencies with rulemaking authority under the statute, and is inconsistent with decisions of this Court and the Supreme Court regarding the deference to be afforded to the relevant administrative interpretation. As a result, the panel's mistake will have serious and widespread adverse consequences for the ability of federal, state and local authorities to obtain information necessary for law enforcement purposes.

    Second, even if the panel's interpretation of section 6809(4) of the GLBA were correct, the Secretary was entitled to enforcement of her subpoena pursuant to section 6802(e)(8) of the GLBA, which excepts from the statute's notice requirement disclosure "to comply with a properly authorized civil, criminal, or regulatory investigation or subpoena or summons by Federal, State, or local authorities; or to respond to judicial process . . . ." The Court ignored well-established standards for enforcing administrative subpoenas by requiring that the Secretary prove coverage in order to show that the subpoena is properly authorized. See U.S. v. Morton Salt Co., 338 U.S. 632, 652 (1950); Oklahoma Press Publ'g Co. v. Walling, 327 U.S. 186, 200 (1946); Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509 (1943); FDIC v. Wentz, 55 F.3d 905, 908 (3d Cir. 1995). This requirement restricts the ability of federal agencies to investigate potential statutory violations where the question of jurisdiction turns on the nonpublic personal information sought in the subpoena. There is nothing in the GLBA – a statute intended to enhance competition in the financial services industry – or its legislative history to justify such a departure from precedent.

    Rehearing by the panel or en banc is thus warranted.

STATEMENT

  1. In 1999, Congress enacted the Gramm-Leach-Bliley Act ("GLBA"), 15 U.S.C. §§ 6801 et seq., to enhance competition and efficiency in the financial services industries by eliminating barriers to affiliations among financial services providers. See, e.g., Trans Union LLC v. FTC, 295 F.3d 42, 46-47 (D.C. Cir. 2002); N.Y. State Bar Ass'n v. FTC, 276 F. Supp. 2d 110, 111-12 (D.D.C. 2003). A primary purpose of the Act is to facilitate the sharing of information within the financial services industry. Congress included in the Act certain privacy protections to address secondary concerns about unrestrained access to consumers' nonpublic personal information. See generally 145 Cong. Rec. S13883 (daily ed. Nov. 4, 1999) (report on the Financial Services Modernization Act of 1999); 145 Cong. Rec. H11513 (daily ed. Nov. 4, 1999) (report on the GLBA).

    The GLBA defines a "consumer" as "an individual who obtains, from a financial institution, financial products or services which are to be used primarily for personal, family, or household purposes, and also means the legal representative of such an individual." 15 U.S.C. § 6809(9). The GLBA provides that "a financial institution may not . . . disclose to a nonaffiliated third party any nonpublic personal information, unless such financial institution provides or has provided to the consumer . . . notice." 15 U.S.C. § 6802(a). That is, before disclosing a consumer's nonpublic personal information to a nonaffiliated third party, the financial institution must provide an opt-out notice that clearly informs the consumer of his or her right to elect to keep the information private. Id. at § 6802(b)(1). No opt-out notice is required, however, where one of the GLBA's enumerated exceptions is met. Id. at §§ 6802(b)(2), (e)(1)-(8).

  1. The GLBA instructs the FTC, which has regulatory authority over state-chartered trust companies, and other agencies with regulatory authority over other financial institutions under the Act to "consult and coordinate" to prescribe "consistent and comparable" regulations "necessary to carry out the purpose of" the GLBA's privacy provisions. 15 U.S.C. § 6804(a)(1)-(2). As the FTC observed, "the definition of 'consumer' [in the GLBA's privacy provisions] does not squarely resolve whether the beneficiary of a trust is a consumer of the financial institution that is the trustee." See 65 Fed. Reg. 33,646, 33,651 (May 24, 2000).

    The FTC addressed this ambiguity in regulations issued through notice and comment rulemaking. 65 Fed. Reg. at 33,646. The FTC regulations provide that "an individual is not your consumer solely because he or she has designated you as trustee for a trust," or "because he or she is a beneficiary of a trust for which you are a trustee," or "because he or she is a participant or a beneficiary of an employee benefit plan that you sponsor or for which you act as a trustee or fiduciary." 16 C.F.R. §§ 313.3(e)(2)(vi)-(viii). [1] The FTC provided additional clarification in the preamble to the regulations, noting, "when the financial institution serves as trustee of a trust, neither the grantor nor the beneficiary is a consumer or customer under the rule. Instead, the trust itself is the institution's 'customer,' and therefore, the rule does not apply because the trust is not an individual." 65 Fed. Reg. at 33,652.

  1. In February 2004, the Department of Labor ("DOL") began an investigation into possible violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001, et seq., involving the Regional Employers' Assurance Leagues' Voluntary Employees Beneficiary Association ("REAL VEBA"). As part of the investigation, the Secretary issued an administrative subpoena duces tecum to Community Trust Company ("CTC"), a state-chartered trust company that serves as the trustee of the REAL VEBA, seeking documents related to the REAL VEBA. As a state-chartered trust company, CTC is under the regulatory authority of the FTC for purposes of the GLBA.

    CTC refused to comply with the subpoena on the basis that, among other things, it would violate financial privacy rights set forth in the GLBA. The Secretary petitioned to enforce the subpoena in the District Court for the Eastern District of Pennsylvania.

    The district court entered judgment for the Secretary, finding that one of the GLBA's exceptions – which permits disclosure "to comply with a properly authorized civil, criminal, or regulatory investigation or subpoena or summons by Federal, State, or local authorities," 15 U.S.C. § 6802(e)(8) – was met. Based on well-established standards for administrative subpoena enforcement, the district court held that DOL's subpoena was "properly authorized," and that the DOL need not establish jurisdiction to conduct the investigation.

  1. CTC appealed the decision, and this Court reversed. See Chao v. Community Trust Co., 474 F.3d 75 (3d Cir. 2007) (attached). The panel rejected the Secretary's argument – based on the FTC's interpretation of who is not a "consumer" under the GLBA – that neither the individual beneficiaries nor the REAL VEBA qualify as "consumers" of CTC. The panel acknowledged that "financial institutions like CTC, a state-chartered non-banking trust, are within the catch-all regulatory ambit of the FTC." Id. at 84 (citing 15 U.S.C. § 6805(7)). According to the panel, however, agency regulations are entitled to controlling-weight deference under Chevron "only when the agencies are enforcing their own regulations." Community Trust Co., 474 F.3d at 84-85 (emphasis in original). "When an agency seeks to piggyback upon another agency's regulation for its own enforcement purposes, such deference is inappropriate." Id. at 85.

    The panel also stated that it need not defer to the FTC regulations "because of the possibility of multiple, conflicting regulatory interpretations of the GLBA by the various agencies with overlapping rulemaking authority under [the] GLBA." Community Trust Co., 474 F.3d at 85. The panel held that the Secretary should not be entitled to "pick and choose between conflicting regulations," and then select the "convenient" one. Id. "In such a situation," according to the panel, "federal regulations are persuasive, but no more, as to statutory interpretation." Id. The panel concluded that the REAL VEBA beneficiaries are consumers because they "obtain" financial services from CTC, and that the REAL VEBA qualifies as a consumer "if it is the beneficiaries' legal representative." Id.

    The panel also held that the Secretary had not established that her investigation was properly authorized, stating that "[i]mplicit in the term 'properly authorized' is a finding of jurisdiction to undertake the investigation." Community Trust Co., 474 F.3d at 87. According to the panel, "[i]n order to make GLBA's protections meaningful, before private consumer financial information is released by a financial institution to the DOL, the Secretary must establish jurisdiction to conduct the investigation." Id. at 88. Because the Secretary had not established jurisdiction to conduct the investigation, the panel held that the subpoena was not "properly authorized" and that the GLBA's administrative subpoena exception did not apply.

    The panel vacated the lower court's orders enforcing the subpoena and finding CTC in contempt and remanded the case for further proceedings.

ARGUMENT

  1. Rehearing is warranted to correct the panel's erroneous holdings regarding the law of deference which are contrary to Supreme Court and Third Circuit precedent.

    The first fundamental flaw in the majority's decision is its failure to follow the analytical course prescribed by the Supreme Court in Chevron, 467 U.S. 837.

In Chevron, this Court held that ambiguities in statutes within an agency's jurisdiction to administer are delegations of authority to the agency to fill the statutory gap in reasonable fashion. Filling these gaps, the Court explained, involves difficult policy choices that agencies are better equipped to make than courts. If a statute is ambiguous, and if the implementing agency's construction is reasonable, Chevron requires a federal court to accept the agency's construction of the statute, even if the agency's reading differs from what the court believes is the best statutory interpretation.

Nat'l Cable & Telecommunications Ass'n v. Brand X Internet Servs, 545 U.S. 967, 980 (2005) (internal citations omitted). According to the Court, "[T]he well-reasoned views of the agencies implementing a statute 'constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.'" Mead Corp., 533 U.S. at 227 (citing Bragdon v. Abbott, 524 U.S. 624, 642 (1998); Skidmore v. Swift, 323 U.S. 134 (1944)). As such, "considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer." Mead, 533 U.S. at 227-28 (citing Chevron, 467 U.S. at 844). Chevron deference is warranted "when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority." Mead, 533 U.S. at 226.

    The panel was incorrect to hold that the FTC's interpretation of who is not a "consumer" under the GLBA is "persuasive, but no more." Community Trust Co., 474 F.3d at 85 (citing Sec'y of Labor v. Excel Mining, LLC, 334 F.3d 1, 7 (D.C. Cir. 2003); Amerada Hess Pipeline Corp. v. Fed. Energy Regulatory Comm'n, 117 F.3d 596, 600 (D.C. Cir. 1997)). [2] The FTC is the agency with authority to administer and enforce the GLBA's privacy provisions against financial institutions like the ones at issue here, and the regulation, promulgated after notice and comment under an express delegation of statutory authority, directly addresses the question of statutory coverage in this case. The Supreme Court and the Third Circuit have repeatedly deferred to agency interpretations of ambiguous statutes in cases in which the agency itself was not a party. See, e.g., Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 238-239 (2004); Smiley v. Citibank, 517 U.S. 735, 739-744 (1996); Matinchek v. John Alden Life Ins. Co., 93 F.3d 96, 100 (3d Cir. 1996) (deferring to DOL's interpretation of ERISA).

    Here, the FTC's regulation, promulgated after notice and comment under an express delegation of statutory authority, is legislative rulemaking entitled to the highest level of deference. Chevron, 467 U.S. at 842-43; Mead, 533 U.S. at 229-30. As such, the FTC's regulation "should be accorded controlling weight unless [it is] arbitrary, capricious, or manifestly contrary to the statute." Yeskey v. Commonwealth of Pennsylvania Dep't of Corrections, 118 F.3d 168, 171 (3d Cir. 1997) (citing Babbitt v. Sweet Home Chapter of Comtys. for a Great Oregon, 515 U.S. 687 (1995)). Moreover, the preamble accompanying regulations should be accorded the same treatment as the regulations – controlling weight deference unless it is arbitrary, capricious, or manifestly contrary to the statute – because it is part of the agency's official interpretation of the legislation. See Yeskey, 118 F.3d at 171 (citing Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 510-12 (1994)).

    The panel was also incorrect to suggest that "the mere fact that that there could be conflicting regulations [regarding the same statutory term] should preclude Chevron deference." Community Trust Co., 474 F.3d at 85 (with no citation to authority). First, the FTC is the agency with regulatory authority over CTC and the REAL VEBA for purposes of the GLBA and, therefore, it should be irrelevant that other agencies have regulations covering the other financial institutions within their jurisdiction. Moreover, the agencies' regulations are virtually identical. See fn. 1, supra. As one district court noted, in rejecting an argument that Chevron deference should not apply where Congress has directed numerous agencies to administer the statute, "the six defendant agencies and the SEC . . . coordinated their efforts and issued similar sets of regulations, each of which is designed to support the others, rather than to undermine them. Thus . . . there is no inter-agency conflict here." See Individual Reference Servs. Group, Inc. v. FTC, 145 F. Supp. 2d 6, 24 n.12 (D.D.C. 2001), aff'd sub nom., Trans Union LLC v. FTC, 295 F.3d 42 (D.C. Cir. 2002).

    In this case, the panel's decision creates disuniformity among the circuits. Because the FTC's regulation was promulgated under notice and comment, the regulation has "the effect of law" in all other circuits. See Mead, 533 U.S. at 230. That means that, if the panel's decision stands, the law on whether a trust beneficiary qualifies as a "consumer" of the trustee of that trust under the GLBA will be different in the Third Circuit than in the rest of the country. Moreover, for all such cases in this Circuit, the panel's decision now throws aside the FTC's clear definition of who is not a "consumer" under the GLBA in favor of an unclear regime under which the GLBA's ambiguous definition of "consumer" is subject to differing interpretations. Panel rehearing or en banc rehearing is warranted in order to correct this result.

  1. Rehearing is warranted because the panel misconstrued the purpose of the GLBA and the scope of its privacy protections to announce a new standard for administrative subpoena enforcement that is inconsistent with Supreme Court and Third Circuit precedent.

    The second fundamental flaw in the panel's decision is its failure to follow well-established precedent in this Circuit and in the Supreme Court regarding the standards for administrative subpoena enforcement. The panel's departure from precedent is unjustified because nothing in the GLBA or its legislative history suggests that Congress intended the Act to change the criteria an administrative subpoena must meet in order to be "properly authorized."

    Under Supreme Court precedent, an agency with broad subpoena authority such as that granted by section 504 of ERISA, 29 U.S.C. § 1134, "can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not." U.S. v. Powell, 379 U.S. 48, 57 (1964) (citation omitted). An agency is also generally not required to establish that a subpoenaed entity is covered by the statute in order to obtain enforcement of the subpoena. Oklahoma Press Publ'g Co., 327 U.S. at 200 (under section 9 of the Federal Trade Commission Act, 15 U.S.C. § 49, district courts are called upon to enforce subpoenas "without express condition requiring showing of coverage"); [3] Endicott Johnson Corp., 317 U.S. at 509 (district court was not "authorized to decide the question of coverage itself"); I.C.C. v. Gould, 629 F.2d 847, 851 (3d Cir. 1980) (noting that "the cases that have examined analogous issues of jurisdiction of other agencies have consistently accorded broad latitude to the agencies' powers, including 'jurisdiction to determine jurisdiction' by summary procedures").

    The panel's departure from precedent is unjustified. A finding of jurisdiction to undertake the investigation is in no way "implicit" in the term "properly authorized" in the GLBA. Community Trust Co., 474 F.3d at 87. Nor is the panel's holding necessary to make the GLBA's privacy protections "meaningful." Id. Indeed, "[t]he purpose of the Act was not to create rights but to allow for enhanced competition among entities that hitherto could not compete with each other. The protection of confidential information was ancillary to that goal." Am. Family Ins. Co. v. Roth, No. 05C3839, 2005 WL 3700232, at *8 (N.D. Ill. Aug. 5, 2005). As such, the GLBA merely requires financial institutions to provide "opt-out" notice before sharing a consumer's nonpublic personal information. And, even more importantly, Congress carved out wide exceptions to the opt-out notice requirement, making clear that it did not intend for the Act's privacy protections to prohibit a financial institution from disclosing information to comply with Federal, State, or local government laws, rules, other legal requirements, investigations, subpoenas, summonses, or judicial process. See 15 U.S.C. § 6802(e)(8). In fact, there is nothing in the text of the GLBA or its legislative history to suggest that Congress was concerned with government access to nonpublic personal information. The panel was completely unjustified to conclude that Congress intended the words "properly authorized," appearing as they do in a broad exception to the GLBA's privacy protections, to alter long-accepted standards for administrative subpoena enforcement, and to thereby limit the ability of federal agencies to investigate potential crimes.

    The case law makes clear that federal agencies with broad subpoena authority such as that granted by section 504 of ERISA, 29 U.S.C. § 1134, need not – and often cannot – establish jurisdiction at the subpoena enforcement stage. If the panel's decision stands, and the Secretary is required to prove that she has jurisdiction over an ERISA plan before her subpoena of nonpublic personal information can be considered "properly authorized" in this Circuit, her ability to investigate potential violations of ERISA will be severely restricted, particularly where, as here, the question of jurisdiction turns on the very information sought by the subpoena. [4]

CONCLUSION

    For the foregoing reasons, the Secretary respectfully requests that the Court grant panel rehearing or en banc rehearing.

Respectfully submitted,

JONATHAN L. SNARE
Acting Solicitor of Labor

TIMOTHY D. HAUSER
Associate Solicitor of Labor

KAREN L. HANDORF
Counsel for Appellate and Special Litigation

___signed______________
ROBYN M. SWANSON
Attorney
U.S. Department of Labor

MARCH 5, 2007

Certificate of Compliance with Virus Scan and PDF Duplication

    I certify that the text of the brief transmitted to the Court as a PDF file is identical to the text of the paper copies mailed to the Court and counsel of record. In addition, I certify that the PDF file was scanned for viruses using VirusScan Enterprise 8.0.0 by McAfee Security. The scan indicated there were no viruses present.

___signed______________
ROBYN M. SWANSON
Attorney

CERTIFICATE OF SERVICE

    I hereby certify that on March 5, 2007, two paper copies of the foregoing Secretary of Labor's Petition for Panel Rehearing and Rehearing En Banc were served using Federal Express, postage prepaid, upon the following counsel of record:

Lowell R. Gates, Esquire
Albert N. Peterlin, Esquire
Gates, Halbruner & Hatch, P.C.
1013 Mumma Road
Suite 100
Lemoyne, PA 17043

___signed______________
ROBYN M. SWANSON
Attorney


Footnotes

[1]    Six of the seven other agencies with rulemaking authority under the GLBA issued virtually identical provisions defining who is not a "consumer." See 12 C.F.R. § 216.3(e)(2)(vi)-(viii) (Federal Reserve Board); 12 C.F.R. § 573.3(e)(2)(vi)-(viii) (Office of Thrift Supervision); 12 C.F.R. § 40.3(e)(2)(vi)-(viii) (Office of the Comptroller of the Currency); 12 C.F.R. § 332.3(e)(2)(vi)-(viii) (Federal Deposit Insurance Corporation); 17 C.F.R. § 248.3(g)(2)(vi)-(viii) (Securities and Exchange Commission); and 17 C.F.R. § 160.3(h)(2)(v)-(vii) (Commodity Futures Trading Commission). The seventh agency issued a less detailed but entirely consistent definition. See 12 C.F.R. § 716.3(e)(v) (National Credit Union Administration) ("An individual is not your consumer solely because he or she is a participant or a beneficiary of an employee benefit plan that you sponsor or for which you act as a trustee or fiduciary.").

[2]    Both cases cited by the panel address whether deference is appropriate when one agency interprets the regulations of another agency. These decisions are not applicable to the facts of this case, where the Secretary did not ask the panel to defer to her interpretation of the FTC's regulation.

[3]    Under section 504(c), 29 U.S.C. § 1134(c), the provisions of sections 9 and 10 of the Federal Trade Commission Act, 15 U.S.C. § 49, 50, are made applicable to the investigative jurisdictions, powers, and duties of the Secretary.

[4]    Moreover, the Secretary is not required to establish that the REAL VEBA is an employee benefit plan in order for her investigation to be properly authorized. Even if the REAL VEBA itself is not an employee benefit plan, employers who fund their employees' benefits through the REAL VEBA create employee benefit plans over which the Secretary has jurisdiction. See, e.g., Donovan v. Dillingham, 688 F.2d 1367, 1372 n.10 (11th Cir. 1982) (en banc) ("[E]ven though [the MEWA in question] is not an employee benefit welfare plan, [it] may nonetheless be subject to ERISA's fiduciary responsibilities if it is a fiduciary to employee benefit plans established or maintained by other entities.").