Campanelli v. Flagstar Bancorp, Inc.

Background

Campanelli filed the action on August 5, 2019. According to Flagstar’s letter, the complaint alleges that Flagstar must make a “golden parachute” payment to Campanelli, although Flagstar is legally prohibited from making the payment without express authorization from federal banking regulators. Flagstar stated that the required authorization had not been provided.

Flagstar had filed a motion to dismiss. After Flagstar filed its reply, Campanelli served two interrogatories and 27 requests for production of documents. The requests sought information and documents covering the period from June 1, 2009, to the present, including documents concerning the disputed payments, certain banking-regulator enforcement actions, and possible misconduct under the Golden Parachute Regulations.

Arguments about staying discovery

Flagstar asked the court to stay, or pause, discovery until the motion to dismiss was decided. Flagstar argued that the requests were unusually broad and would require extensive review. It also argued that some requested materials could contain confidential supervisory information that Flagstar could not disclose under federal banking regulations.

Flagstar further argued that Campanelli would not be harmed by a brief stay because the case was at an early stage and the motion to dismiss could potentially end the action. Flagstar described its motion to dismiss as legally substantial and identified several arguments against Campanelli’s current request for an order requiring Flagstar to make a certification to regulators. These arguments included Flagstar’s position that the certification would require false statements and would violate the First Amendment. Those points were Flagstar’s arguments in support of the stay; the order did not decide the motion to dismiss.

Ruling

The court reviewed the letters filed at Docket Numbers 37 and 38 and ruled that discovery was properly stayed pending resolution of the defendant’s motion to dismiss. The order did not state that the motion to dismiss was granted or denied. The court stated that it would hold an initial pretrial conference after resolution of the motion to dismiss if the complaint survived in whole or in part.