In a blow to some midwestern banks, the Supreme Court agreed last week to dismiss a case challenging litigants' power to make banks hand over examination reports during discovery, the fact-gathering process that precedes a trial.

Bankers Trust New York Corp. and Procter & Gamble had requested the court to drop the appeal, which arose from a lawsuit over derivative sales. The two companies said the issue was moot because they had settled the suit.

Michael Crotty, deputy general counsel for litigation at the American Bankers Association, said the court's order is bad news for banks in Ohio, Michigan, Kentucky, and Tennessee.

These institutions must live with an August ruling of the U.S. Court of Appeals for the Sixth Circuit that said Bankers Trust had to turn over its examination reports to Procter & Gamble.

The ABA had wanted the Supreme Court to overturn the decision. It had urged the justices to adopt the view of the U.S. Court of Appeals for the District of Columbia, which has said banks may not disclose these reports. Rather, that court said, litigants must sue the banking agency that issued the report to obtain a copy.

The split in the circuits means that a bank in one of those four states will have to bring the case all the way back to the Supreme Court if it wants to avoid turning over examination reports. "It will be a long, difficult battle," Mr. Crotty said.

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