On August 2, 2017, the U.S. Court of Appeals for the D.C. Circuit ordered another stay in the ongoing case between the Financial Stability Oversight Council (FSOC) and MetLife over whether MetLife should be designated as systemically important and subject to additional regulation by the Federal Reserve Board.
As noted in previous blog posts, on March 30, 2016, MetLife prevailed against the FSOC when a US District Court Judge for the District of Columbia issued an order overturning the FSOC’s designation of MetLife as a Systemically Important Financial Institution (SIFI). The FSOC subsequently appealed to the U.S. Court of Appeals for the D.C. Circuit and the case is pending.
After the White House issued a Presidential Memorandum in April that ordered the Treasury Secretary to review the FSOC determination and designation process and provide a report on how the process could be improved, MetLife promptly went to the U.S. Court of Appeals and filed a motion asking that the case be held in abeyance for 180 days pending the issuance of the FSOC review report. On May 12, 2017, the Court of Appeals issued an order granting a 60 day abeyance of the case.
The August 2 Order directs the two parties to file motions to govern future proceedings by the earlier of November 17, 2017, or within 30 days of the issuance of the Secretary’s report on the FSOC designation process.
On August 1, 2017, a different U.S. Court of Appeals panel issued an order in a related case requiring the U.S. District Court to review the almost 2,000 documents filed under seal in the original case to determine whether any should be unsealed and available to the public. The documents contained information regarding the original FSOC designation determination. Better Markets, Inc. characterized in the order as a “‘nonpartisan, nonprofit, public interest organization’ focused on the United States financial system,” filed a motion with the U.S. District Court judge to unseal the documents.
The judge denied the motion, finding that the statutory requirement that the FSOC “maintain the confidentiality of any data, information, and reports” that nonbank financial companies submit as part of the FSOC designation process superseded the Court’s usual 6-factor test (called the Hubbard test after the case in which it was crafted) that it applies when ruling on motions to unseal documents filed with the Court. Better Markets appealed, and the Court of Appeals overruled the District Court, holding that the Hubbard test indeed was applicable and remanded the case back to the District Court to review the sealed documents under that 6-factor test, the Court noting that the “right of public access is a fundamental element of the rule of law,” and that “the Hubbard test has consistently served as our lodestar because it ensures that we fully account for the various public and private interests at stake.”