Jose Daniel Ruiz Coronado v. Bankatlantic Bancorp , 222 F.3d 1315 ( 2000 )

Jose Daniel Ruiz CORONADO, Plaintiff-Appellant,
v.
BANKATLANTIC BANCORP, INC., Defendant-Appellee.
No. 99-12108.
United States Court of Appeals,
Eleventh Circuit.
Aug. 18, 2000.
Appeal from the United States District Court for the Southern District of Florida.
Before TJOFLAT, MARCUS and CUDAHY*, Circuit Judges.
CUDAHY, Circuit Judge:
BankAtlantic Bancorp, Inc. (BankAtlantic) responded to grand jury subpoenas by producing the bank
records of nearly 1100 international customers. Coronado, one of these customers purporting to represent
a class including the others, filed this lawsuit against BankAtlantic for unlawful disclosure of financial
information, claiming that BankAtlantic's disclosure violated federal and state law. BankAtlantic claimed
immunity under the Annunzio-Wylie Anti-Money Laundering Act's (Annunzio-Wylie Act or Act) safe harbor
provision, 31 U.S.C. § 5318(g)(3), because their disclosure was made pursuant to the grand jury subpoenas.
The district court initially granted BankAtlantic's motion to dismiss, but this court reversed and remanded.
See Lopez v. First Union Nat'l Bank of Florida, 129 F.3d 1186, 1196 (11th Cir.1997). On remand, the case
proceeded to discovery, and Coronado filed several motions to compel disclosure of copies of the grand jury
materials as well as information on BankAtlantic's internal operations. The district court denied these
motions. BankAtlantic then moved for summary judgment, and the district court granted that motion.
Coronado appeals.
__________________
*Honorable Richard D. Cudahy, U.S. Circuit Judge for the Seventh Circuit, sitting by designation.
I. Facts and Disposition Below
A. General Background
In February of 1995, BankAtlantic acquired MegaBank, a Dade County commercial bank, in order
to create an international division. MegaBank's international division was headed by Piedad Ortiz, and after
the acquisition, she became Vice President of BankAtlantic's international division. Ortiz had overseen
approximately 1100 accounts at MegaBank, and she continued this supervision at BankAtlantic. Shortly after
acquiring MegaBank, BankAtlantic conducted an internal audit of its new international division, and this
audit revealed suspicious practices. A private pouch service made regular deliveries addressed to
"BankAtlantic, International Division, Attention Ms. Piedad Ortiz." These pouches, which were uninsured,
contained large amounts of checks, money orders and negotiable instruments along with deposit and transfer
instructions. The pouches originated from a private courier service—discretely located in the back of another
business—in Bogota, Columbia, and the checks and other instruments transported in the pouches were from
various locations in the United States, including New York and New Jersey. BankAtlantic discovered that
Ortiz and her assistant, Lucia Ramirez (who had also joined BankAtlantic as part of the MegaBank
acquisition), were responsible for initiating and maintaining this pouch service.
The BankAtlantic audit also revealed that Ortiz and her assistant were approving new accounts that
were missing required customer identification documentation and allowing personal accounts to be used as
unregistered money exchange facilities (in probable violation of Florida law). Further, BankAtlantic
discovered, among other irregularities, that letters of authorization were missing for numerous wire transfers
and that no currency transaction reports were filed when bearer instruments in excess of $10,000 arrived in
the pouches from Bogota. There were millions of dollars flowing into and out of these Columbia-based
accounts each month.
BankAtlantic became suspicious that its new international division, as headed by Ortiz, was
facilitating money laundering and bank fraud. BankAtlantic took these suspicions to federal law enforcement
officials in June of 1995. At this point, the bank provided general information regarding its suspicions along
with customer names and account numbers for only five accounts obviously connected with this questionable
activity. BankAtlantic did not disclose the contents of any incoming or outgoing wire transfers at this time.
The federal government investigated this suspected money laundering and bank fraud, and sometime
in the spring of 1996, three grand juries were impaneled. These grand juries—sitting in the Southern District
of Florida, the Eastern District of New York and the District of New Jersey—investigated individuals and
organizations in Florida, New York and New Jersey for the suspected laundering of Columbian drug money.
In the late spring, the grand juries issued and served subpoenas on BankAtlantic demanding that it produce
copies of account documents, records and information regarding the 1100 accounts under the oversight of
Ms. Ortiz in the international division.
The federal investigation was centered on these 1100 accounts that Ortiz had supervised at MegaBank
and later at BankAtlantic, and on June 5, 1996, the United States Department of Justice, in conjunction with
Columbian law enforcement agencies, announced the arrest of several individuals: Ortiz and Ramirez1 were
arrested upon suspicion that they were committing bank fraud to facilitate the illegal movement of funds by
individuals in Columbia. Also on June 5, Judge Davis of the Southern District of Florida issued a ten-day
ex parte temporary restraining order freezing the 1100 accounts in BankAtlantic's international division. On
June 11, 1996, Judge Davis released the funds in some accounts, and then, on June 23, the district court issued
a seizure warrant to freeze the remaining accounts until further court order. A supplemental order directed
the Drug Enforcement Agency (DEA) to physically seize all of the frozen funds (subject to certain exceptions
not relevant here). Accordingly, BankAtlantic turned the funds over to the DEA on August 1, and on August
8, forfeiture proceedings were commenced against many of the accounts. About six months after the initial
seizure, the government agreed to release between 400 and 600 of the accounts—there is no evidence in the
record suggesting why—and the funds were returned to these account holders with full interest in December
of 1996.
B. Coronado's Account and Lawsuit
1
On June 14, 1996, a federal grand jury indicted both Ortiz and Ramirez for making false entries in the
books and records of BankAtlantic to keep the bank unaware of the currency transfer operation from
Columbia.
Coronado opened his account with BankAtlantic on May 13, 1996—almost a year after BankAtlantic
first reported suspicious activity to the federal government and, as it turned out, about three weeks before
Ortiz's arrest. Ortiz had opened the account for Coronado using instruments drawn on United States's banks
that had been shipped from Bogota, Columbia, to Miami via the private courier service. Coronado's initial
deposit consisted of four checks in odd amounts that totaled exactly $5000 in value, and subsequent deposits
were comprised of checks, travelers' checks and money orders drawn on banks in New York and New Jersey.
Once the amount Coronado had on deposit grew to a little less then $46,000, $45,500 was wire transferred
to a Swiss bank account. The day after the transfer, new deposits began. BankAtlantic had not mentioned
Coronado in its initial disclosure to federal authorities in 1995 (recall, he did not open his account until 1996),
but Coronado's account information and the records of the wire transfer to Switzerland were turned over to
the grand jury pursuant to the 1996 subpoenas. On June 5, 1996, Coronado's account was frozen along with
the other 1100 that Ortiz had supervised, but his account was not among those released on June 11. Instead,
his funds were seized pursuant to the district court orders, and forfeiture proceedings were commenced
against Coronado's account on August 8. His account was eventually released, along with the 400 to 600
others, pursuant to the agreement with the government, and his funds were returned (with interest) before the
end of 1996.
Months earlier, on September 30, 1996, Coronado had filed this lawsuit against BankAtlantic,
purportedly representing a class consisting of himself and the other 1100 holders of accounts in
BankAtlantic's international division. In his complaint, Coronado alleged that BankAtlantic violated the
Electronic Communications Privacy Act (ECPA), 18 U.S.C. § 2510 et seq., the Right to Financial Privacy
Act (RFPA), 12 U.S.C. § 3401 et seq., and Florida law by disclosing account information and records to the
grand juries. Before class certification, BankAtlantic moved to dismiss Coronado's complaint under Federal
Rule of Civil Procedure 12(b)(6), and the district court granted that motion, dismissing Coronado's complaint
with prejudice exclusively on the ground that BankAtlantic was immune from suit under the Annunzio-Wylie
Act's safe harbor provision, 31 U.S.C. § 5318(g)(3). On appeal, this court reversed and remanded because
the allegations in Coronado's complaint, taken in the light most favorable to Coronado, did not establish
grounds for BankAtlantic's immunity. See Lopez, 129 F.3d at 1194-96. On remand, the case proceeded
through a few months of discovery, with Coronado making motions to compel BankAtlantic's production of
copies of the grand jury subpoenas and documents turned over to the grand juries as well as to compel
production of other BankAtlantic information. The district court denied all these motions, and in June of
1998, BankAtlantic moved for summary judgment. The district court granted BankAtlantic's motion, again
on the ground that the bank was shielded by the safe harbor provisions of the Annunzio-Wylie Act. Coronado
again appeals.
II. Discussion
In his brief on appeal, Coronado identifies three issues we must decide: (1) whether the Annunzio-
Wylie Act provides BankAtlantic with immunity from his claims under federal and state law; (2) whether
Coronado was entitled to partial summary judgment that BankAtlantic had violated the RFPA and the ECPA;
and (3) whether the district court erred in denying Coronado's motions to compel discovery. We review the
first two issues de novo, see Ross v. Clayton County, Ga., 173 F.3d 1305, 1307 (11th Cir.1999), and review
the discovery issue for abuse of discretion, see Leigh v. Warner Brothers, Inc., 212 F.3d 1210, 1218-19 (11th
Cir.2000).
A. Immunity Under the Annunzio-Wylie Act
In 1992, Congress enacted the Annunzio-Wylie Anti-Money Laundering Act in order to facilitate
cooperation between domestic financial institutions and the United States government to stop the global
movement of drug money. Large criminal enterprises depend on their ability to conceal the proceeds of their
criminal endeavors, and the Annunzio-Wylie Act seeks to make concealment much more difficult by
encouraging financial institutions to disclose suspicious activity and cooperate with law enforcement efforts.
But, because disclosure of financial information—either spontaneously or after a request from the
government—could possibly lead to litigation with disgruntled customers like Coronado, the Annunzio-Wylie
Act granted immunity to banks making disclosures. The safe-harbor provision, to this end, reads in its
entirety as follows:
Any financial institution that makes a disclosure of any possible violation of law or regulation or a
disclosure pursuant to this subsection or any other authority, and any director, officer, employee, or
agent of such institution, shall not be liable to any person under any law or regulation of the United
States or any constitution, law, or regulation of any State or political subdivision thereof, for such
disclosure or for any failure to notify the person involved in the transaction or any other person of
such disclosure.
31 U.S.C. § 5318(g)(3). The plain language of this section supplies "an affirmative defense to claims against
a financial institution for disclosing an individual's financial records or account-related activity." Lopez, 129
F.3d at 1191. Few courts have had the opportunity to examine this section in detail, but we recently explained
in Lopez that § 5318(g)(3) grants to financial institutions "immunity from liability for three different types
of disclosures: (i.) A disclosure of any possible violation of law or regulation, (ii.) A disclosure pursuant to
§ 5318(g) itself, or (iii.) A disclosure pursuant to any other authority." Id. These safe harbors are not limited
to currency transactions, and any one of them provides a disclosing bank complete immunity. See id. at 1192.
BankAtlantic claims, and Coronado does not dispute, that the grand jury subpoenas it received were
facially valid and properly served. BankAtlantic argues, quite simply, that because it only disclosed
information pursuant to these subpoenas, it disclosed information in accordance with "other authority" and
has immunity under the Annunzio-Wylie Act's safe harbor (iii). In Lopez, we explained § 5318(g)(3)'s third
safe harbor and the meaning of "any other authority" as follows:
The "other authority" must be legal authority, because authority means "[r]ight to exercise powers,"
Black's Law Dictionary 133 (6th ed.1991), and in our system based on rule of law, the right to
exercise power is derived from law, e.g. statutes, regulations, court orders, etc. Hence, for a financial
institution's disclosure to fall within the confines of the third safe harbor, the financial institution
must be able to point to a statute, regulation, court order, or other source of law that specifically or
impliedly authorized the disclosure. If it cannot do so, the disclosure is not entitled to the protection
of the [third] safe harbor.
Lopez, 129 F.3d at 1193-94. In Lopez, by way of example, we explained that "[c]learly a disclosure in
response to a seizure warrant is protected by the third safe harbor." Id. at 1194. However, we also explained
that a government agent's "verbal request" for information is not "other authority" because there is no "statute
or regulation which gives a government official's verbal request to access an individual's financial records
the force of law." Id. Lopez did not explicitly address grand jury subpoenas, but we believe that these are
properly considered "other authority" for the purposes of § 5318(g)(3).
A federal grand jury has extremely broad investigatory powers and, unlike a federal agent making
a verbal request, "may compel the production of evidence or the testimony of witnesses as it considers
appropriate." United States v. Calandra, 414 U.S. 338, 343, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974). A grand
jury has the power to compel the production of evidence because "a federal grand jury subpoena is issued
under the authority of a court." Doe v. DiGenova, 779 F.2d 74, 80 (D.C.Cir.1985). More specifically: under
Federal Rule of Criminal Procedure 17(a), the clerk of a district court is authorized to issue blank subpoenas
(marked with the seal of the court) to a prosecutor working with a grand jury. See DiGenova, 779 F.2d at 80
n. 12. If a recipient of a grand jury subpoena does not produce the evidence sought, the recipient that
disobeyed the subpoena (which is essentially an order of the court), is in contempt, see 28 U.S.C. § 1826;
FED.R.CRIM.P. 17(g), and may be fined or imprisoned, see 28 U.S.C. § 1826. Thus, unlike, for example, a
mere verbal request from a government agent, there is a legal mechanism to enforce grand jury subpoenas.
They possess the "force of law" because they are issued under the authority of a federal district court, and
disobedience can lead to a legal sanction. See generally Calandra, 414 U.S. at 345, 94 S.Ct. 613 ("The power
of a federal court to compel persons to appear and testify before a grand jury is ... firmly established.").
But Coronado is quick to point out that the reach of grand jury subpoenas is not unlimited: a federal
district court has the power to quash a grand jury subpoena requesting documents "if compliance would be
unreasonable or oppressive," see FED.R.CRIM.P. 17(c), and a grand jury "may not itself violate a valid
privilege, whether established by the Constitution, statutes, or the common law." Calandra, 414 U.S. at 346,
94 S.Ct. 613. Also, Congress has the power to limit grand jury subpoenas by enacting statutes, see Gelbard
v. United States, 408 U.S. 41, 52, 92 S.Ct. 2357, 33 L.Ed.2d 179 (1972) (holding that, under 18 U.S.C. §
2515, a witness called before a grand jury can refuse to answer questions based on information obtained in
violation of Title III of the Omnibus Crime Control and Safe Streets Act of 1968). Coronado argues that the
account records demanded in the grand jury subpoenas here were "privileged" under the ECPA and therefore
outside the reach of the grand jury. His argument is, essentially, that because § 2703(a) of the ECPA states
that "[a] governmental entity may require the disclosure ... of the contents of an electronic communication,
that is in electronic storage in an electronic communications system for one hundred and eighty days or less,
only pursuant to a warrant under the Federal Rules of Criminal Procedure," and because grand jury subpoenas
are not warrants, the grand juries lacked the power to compel production of his account information.
Therefore, BankAtlantic's disclosure pursuant to a grand jury subpoena violated this provision of the ECPA,
and it cannot use the shelter of the Annunzio-Wylie Act's safe harbor, Coronado concludes.
Coronado's argument begs the question. The question here is not whether the government or the
grand jury obtained evidence in violation of the ECPA, but whether BankAtlantic is liable to Coronado for
its disclosure. BankAtlantic was subpoenaed merely as a witness, and long-standing grand jury policy and
practice suggests that we do not want witnesses (who are not even targets of the grand jury) testing the limits
of the grand jury's authority. The Supreme Court has emphasized that "a witness may not interfere with the
course of the grand jury's inquiry." Calandra, 414 U.S. at 345, 94 S.Ct. 613. Further, as a witness,
BankAtlantic was "not entitled to urge objections of incompetency or irrelevancy, such as a party might
raise," id., nor was BankAtlantic entitled "to challenge the authority of the court or of the grand jury, provided
they have a de facto existence and organization." Blair v. United States, 250 U.S. 273, 282, 39 S.Ct. 468, 63
L.Ed. 979 (1919) (holding that witnesses could not refuse to testify or produce documents on the ground that
the relevant criminal statute was unconstitutional). See also Calandra, 414 U.S. at 345, 94 S.Ct. 613. "[A
witness] is not entitled to set limits to the investigation that the grand jury may conduct." Blair, 250 U.S. at
282, 39 S.Ct. 468. Thus, even if the ECPA technically deprived the grand jury of the authority to demand
the account records from BankAtlantic, BankAtlantic—as a witness—was not in a position to test the limits
of the grand jury's authority. BankAtlantic was presented with facially valid subpoenas from three federal
grand juries investigating money laundering. Forcing a bank to challenge a facially valid grand jury subpoena
in order to avoid liability to one (or more) of its customers would fly in the face of both the Annunzio-Wylie
Act's clear intent to encourage cooperation with money laundering investigations and the more general policy
favoring the "effective and expeditious discharge of the grand jur[ies'] duties." Calandra, 414 U.S. at 349-50,
94 S.Ct. 613. We believe it proper to label grand jury subpoenas, like search warrants or court orders, "legal
authority" under Lopez, and we find that a grand jury subpoena qualifies as "other authority" under the
Annunzio-Wylie Act's third safe harbor. BankAtlantic's disclosure, therefore, is covered by the third safe
harbor.
Having determined that BankAtlantic is protected by § 5318(g)(3)'s third safe harbor, it remains only
to determine the scope of the immunity granted by the statute. This is a straight-forward determination.
Section 5318(g)(3) states that a qualified bank "shall not be liable to any person under any law or regulation
of the United States or any constitution, law, or regulation of any State." 31 U.S.C. § 5318(g)(3) (emphasis
added). This immunity is very broad.2 As we recently reiterated in Lopez, "the adjective 'any' is not
ambiguous; it has a well-established meaning" and, "[r]ead naturally, ... has an expansive meaning, that is,
one or some indiscriminately of whatever kind." 129 F.3d at 1192 (citations omitted). "Any person" certainly
includes Coronado, and "any law or regulation" includes the ECPA, the RFPA and Florida law. (In fact, §
5318(g)(3) immunizes BankAtlantic from suit under every source of law except the United States
Constitution.) Because BankAtlantic disclosed Coronado's account records and information pursuant to
facially valid grand jury subpoenas, BankAtlantic is immune from any lawsuit arising from these disclosures.3
Therefore, the district court properly granted BankAtlantic's motion for summary judgment.
B. Discovery
In his remaining argument, Coronado contends that the district court improperly denied his motions
to compel discovery because the denials inhibited his ability to defend against BankAtlantic's motion for
summary judgment. Specifically, Coronado contends that BankAtlantic should have been compelled to (1)
2
There is no official legislative history for the Annunzio-Wylie Act, but in a letter written after the
passage of the Act, Chairman of the House Subcommittee on Financial Institutions, and sponsor of the
Act, Congressman Frank Annunzio explained in a letter that the immunity provisions of the Act sought
"to provide the broadest possible exemption from civil liability for the reporting of suspicious
transactions...." Cong. Rec. E57-02 (1993).
3
Our determination that BankAtlantic is immune under the Annunzio-Wylie Act eliminates any need
to address Coronado's second argument on appeal (that he is entitled to summary judgment on his ECPA
and RFPA claims).
provide him with copies of the bank's FedWire Funds Transfer System contracts, (2) provide copies of all
documents describing the bank's computer accounting system, (3) provide copies of the grand jury subpoenas
and documents produced to the grand juries and (4) allow Coronado to depose Frank Greico, a member of
BankAtlantic's upper management, about the contents of the grand jury subpoenas and documents produced.
Coronado cites little if any legal authority for the allegedly "required" disclosure of any of these materials.
Despite his protestations, we find that the district court did not abuse its discretion by denying these motions.
As Coronado concedes in his brief, the FedWire contracts and information on BankAtlantic's
computer system were only relevant to establishing his claim under the ECPA. But, given that BankAtlantic
is immune under the Annunzio-Wylie Act, Coronado's claim under the ECPA is not viable. Hence, any
possible abuse of discretion in denying Coronado's motion to compel production of this information was
harmless. See Dykes v. Depuy, Inc., 140 F.3d 31, 42 (1st Cir.1998).
Coronado's other two motions to compel sought production of grand jury materials. Coronado claims
that he wanted access to these materials to determine whether BankAtlantic really complied with the
subpoenas as it claims. BankAtlantic could not turn over the documents, nor could Mr. Greico answer
deposition questions about the grand jury, because it is illegal for them to do so. See 18 U.S.C. § 1510(b)(2)
(making it a crime for a bank to directly or indirectly notify a customer of the contents of a grand jury
subpoena or information furnished to a grand jury pursuant to a subpoena). The only way Coronado could
have obtained grand jury materials was through a court order pursuant to Federal Rule of Criminal Procedure
6(e)(3)(C)(i), but he never sought such an order. Even if he had, a district court has "substantial discretion"
in balancing the need for disclosure with the need for grand jury secrecy. Douglas Oil Co. of California v.
Petrol Stops Northwest, 441 U.S. 211, 223, 99 S.Ct. 1667, 60 L.Ed.2d 156 (1979).
Here, Coronado's need for disclosure was tied to his desire to verify BankAtlantic's strict compliance
with the subpoenas. Frank Greico and a government investigator each filed an affidavit stating that the
information submitted by BankAtlantic was limited to that which was responsive to the subpoenas, and the
district court gave Coronado an opportunity to depose both on their affidavits before it granted summary
judgment. Additionally, to verify for itself the accuracy of the affidavits, the district court reviewed the
subpoenas and the documents provided to the grand juries in camera. We believe this procedure
appropriately balanced the need for grand jury secrecy with Coronado's needs as a litigant. See Young v.
United States, 406 F.2d 960, 961 (D.C.Cir.1969) (noting that an in camera inspection is the proper way to
maintain the secrecy of grand jury proceedings and meet the needs of litigation). Therefore, the district court
did not abuse its discretion by denying Coronado's motion to compel production of the grand jury materials.
III. Conclusion
For the foregoing reasons, we reject Coronado's arguments on appeal and AFFIRM the judgment of
the district court.