The opinion
Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
2-19-1998
Hindes v. FDIC
Precedential or Non-Precedential:
Docket 97-1354
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Filed February 19, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-1354
Gary E. Hindes, Samuel Rappaport, Raymond Perelman,
Gary Erlbaum, Daniel Neduscin, individually and
derivatively for Meritor Savings Bank, f/k/a The
Philadelphia Savings Fund Society,
Appellants
v.
The Federal Deposit Insurance Corporation, in its
corporate capacity and as receiver for Meritor Savings
Bank, f/k/a The Philadelphia Savings Fund Society;
John/Jane Does 1-10, Directors, Officers, Agents, and
Employees of the Federal Deposit Insurance Corporation;
and Richard C. Rishel, in his official capacity as the
Secretary of Banking of the Commonwealth of
Pennsylvania.
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 94-02355)
Argued December 12, 1997
BEFORE: GREENBERG, ROTH, and SEITZ, Circuit Judges
(Filed: February 19, 1998)
Ken Carroll (Argued)
Kortney Kloppe-Orton
Carrington, Coleman, Sloman &
Blumenthal, L.L.P.
200 Crescent Court, Suite 1500
Dallas, TX 75201
Richard L. Bazelon
A. Richard Feldman
Bazelon & Less
1515 Market Street
7th Floor
Philadelphia, PA 19102
Attorneys for Appellants
Ann S. DuRoss
Assistant General Counsel
Maria Beatrice Valdez
Acting Senior Counsel
Thomas C. Bahlo (Argued)
Counsel
Federal Deposit Insurance
Corporation
550 17th Street, N.W.
Room H-11126
Washington, D.C. 20429
Attorneys for Appellee
Federal Deposit Insurance
Corporation in its Corporate
Capacity
2
David Smith
Rolin P. Bissell
Theresa E. Loscalzo
Schnader, Harrison, Segal & Lewis
1600 Market Street, Suite 3600
Philadelphia, PA 19103
John J. Graubard (Argued)
Colleen J. Boles
Charlotte M. Kaplow
David A. Birch
Federal Deposit Insurance
Corporation Legal Division
101 East River Drive
P.O. Box 280402
East Hartford, CT 06128-0402
Attorneys for Appellee
Federal Deposit Insurance
Corporation as Receiver for Meritor
Savings Bank
D. Michael Fisher
Daniel J. Doyle (argued)
Calvin R. Koons
John G. Knorr, III
Office of Attorney General
Litigation Section
15th Fl., Strawberry Square
Harrisburg, PA 17120
Attorneys for Appellee
Secretary of Banking of the
Commonwealth of Pennsylvania
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. INTRODUCTION
Gary E. Hindes, and other shareholders of Meritor
Savings Bank ("Meritor"), appeal from various district court
3
orders dismissing their claims against the Federal Deposit
Insurance Corporation ("FDIC") and the Pennsylvania
Secretary of Banking ("Secretary"). Appellants contend that
the appellees wrongfully seized Meritor, thereby depriving
them of their substantive due process rights. More
particularly, appellants allege that the FDIC reneged on an
agreement with Meritor with respect to the computation of
its capital base, ignored Meritor's actual financial condition
when seizing Meritor, and engaged in a conspiracy with
state officials to close the bank. Appellants also assert that
the FDIC violated certain of its statutory duties as receiver.
The district court had jurisdiction pursuant to 28 U.S.C.
SS 1331 and 1367 and 12 U.S.C. SS 1819(b)(2)(A) and
1821(d)(6)(A). We have jurisdiction to review thefinal orders
of the district court pursuant to 28 U.S.C. S 1291. We
exercise plenary review over the issues on this appeal, as
they all require review of the district court's interpretation
and application of legal precepts. See Turner v. Schering-
Plough, Corp., 901 F.2d 335, 340 (3d Cir. 1990).
II. FACTS AND PROCEDURAL HISTORY
The Secretary1 closed Meritor, the largest savings bank in
Pennsylvania, on December 11, 1992, and appointed the
FDIC as its receiver. The majority of appellants' allegations
concern the events leading up to that closing, as they
primarily object to the propriety of the seizure of Meritor.
Because the district court disposed of all of appellants'
claims on either motions to dismiss or for summary
judgment, we accept as true their allegations, and therefore
base our recitation of the facts on the allegations in the
complaint.
In 1982, at the FDIC's request, Meritor assumed the
deposit liabilities of Western Savings Fund Society of
Philadelphia ("Western"). To induce Meritor to assume these
liabilities, the FDIC granted Meritor the right to amortize,
_________________________________________________________________
1. The Secretary of Banking at the time of the events we describe was
Sarah W. Hargrove. Since that time, Richard C. Rishel has replaced her.
Thus, in this memo we refer to the Secretary as "he." See Fed. R. App.
P. 43(c).
4
over a 15-year period, $796 million of "goodwill" resulting
from the Western transaction ("grand-fathered goodwill"),
thereby increasing Meritor's regulatory capital base. This
transaction saved the FDIC and its Bank Insurance Fund
$400 million. The FDIC and Meritor evidenced this
regulatory goodwill inducement in a written agreement
dated April 3, 1982. For over ten years, the FDIC and
Meritor abided by that agreement.
In an agreement dated April 5, 1991, the FDIC reaffirmed
the 1982 agreement and further agreed to renegotiate
Meritor's capital requirements if at any time Congress
prohibited Meritor from considering this goodwill as a
capital component. This 1991 agreement was prompted
when Meritor proposed that its 12% Subordinated Capital
Noteholders ("Noteholders") exchange their notes for stock
and cash in order to infuse Meritor with more that $100
million of additional capital. Because the Noteholders would
become shareholders, the continuation of the goodwill as a
regulatory asset of Meritor was crucial to them. Therefore,
before agreeing to the proposal, representatives of the
Noteholders met with senior management of the FDIC, who
assured them that the FDIC had no plans to disallow the
grand-fathered goodwill. In fact, the FDIC encouraged the
Noteholders to participate in the exchange. The exchange
was completed in 1991, resulting in a $108 million increase
in Meritor's capital.
On December 19, 1991, Congress adopted the FDIC
Improvements Act of 1991, requiring the FDIC to adopt new
rules regulating bank capital. The FDIC published draft
regulations in the summer of 1991 which clearly permitted
Meritor's grand-fathered goodwill to continue to be included
in its capital. When the FDIC adopted final regulations in
September 1991, however, the regulations differed from the
proposals so as to create doubt as to whether Meritor's
grand-fathered goodwill would remain as capital. The FDIC
refused Meritor's request to clarify the uncertainty. The
confusion created by the regulations resulted in a
withdrawal of over $300 million in deposits from Meritor.
The appellants allege that, by mid-September, the FDIC
and the Secretary had begun to devise a plan to seize
Meritor in mid-December 1992, which was approximately
5
the time the new regulations would take effect, and to sell
its assets to one of Meritor's most aggressive competitors.
On December 11, 1992, the FDIC hand-delivered a letter
to Meritor reneging on its 1982 agreement and formally
notifying Meritor that, under the new regulations, the
grand-fathered goodwill no longer would be included in its
capital base. On the same day, the FDIC also hand-
delivered Meritor a "Notification to Primary Regulator"
("Notification") which stated that the FDIC Board of
Directors had found that Meritor was in violation of its
1991 agreement regarding capital maintenance, was in an
unsound condition, and had inadequate capital. In the
Notification, the FDIC asserted that it immediately would
institute proceedings to cancel Meritor's insurance if
Meritor did not promptly satisfy certain capitalization
requirements. Because insurance was a prerequisite to
Meritor's continued operation, the demand created a crisis.
The Secretary, who the FDIC notified of these matters prior
to notifying Meritor, used the crisis to justify the immediate
closing of the bank on the same afternoon. At that time, he
appointed the FDIC as receiver of Meritor. Neither Meritor
nor the appellants challenged the appointment under the
state procedure available for that purpose. See Pa. Stat.
Ann., tit. 71, S 733-605 (West 1990).
The appellants also allege that the FDIC and the
Secretary disregarded circumstances which rendered the
closing of Meritor inappropriate. In particular, eight days
before the closing of the bank, Meritor sold a subsidiary
bringing in capital which put it in compliance with the
capital maintenance agreement. In addition, on December
9, 1992, two days prior to the closing of the bank, the FDIC
received a bid of $181.3 million for Meritor's remaining
operations and deposits.
In August 1994, appellants filed this action against the
FDIC, both in its corporate capacity ("FDIC-Corporate") and
as receiver of Meritor ("FDIC-Receiver"), various unidentified
agents and employees of the FDIC ("the Doe defendants"),
and the Secretary. In general, the complaint alleges that
these appellees deprived the appellants of their substantive
due process rights2 and asserts claims under 42 U.S.C.
_________________________________________________________________
2. The complaint also alleges a deprivation of the privileges and
immunities guaranteed under the Fifth and Fourteenth amendments,
6
S 1983, Bivens v. Six Unknown Fed. Narcotics Agents, 403
U.S. 388, 91 S.Ct. 1999 (1971), and the Administrative
Procedure Act ("APA"). The complaint also alleges that the
FDIC violated various statutory duties.
By order entered March 1, 1995, the district court
dismissed the due process claims, embodied in Count I,
against the FDIC and the Secretary as well as appellants'
APA claim in Count IV against FDIC-Corporate on the
grounds that 12 U.S.C. S 1821(j) deprived it of jurisdiction
to adjudicate those claims. The district court also dismissed
the section 1983 claim against the FDIC, finding that the
FDIC was not a "person" under that statute.
By order entered September 6, 1995, the district court
dismissed the claims against the FDIC for the enforcement
of its statutory duties. On November 8, 1996, the district
court approved a Stipulation of Dismissal of the remaining
claims against the Secretary in his individual capacity,
which the court entered on November 27, 1996. Thus,
following the district court's order of November 27, 1996,
appellants' only remaining claims were against the Doe
defendants.
On November 15, 1996, appellants moved the district
court to certify its March 1, 1995 order for an interlocutory
appeal. They argued that the claims involving the Doe
defendants were substantially the same as those against
the FDIC and an immediate appeal would avoid the waste
that would occur if this court eventually overturned the
district court's order. FDIC-Receiver and FDIC-Corporate
objected to the certification of the March 1, 1995 order, in
part because the appellants' request did not include a
request to certify the September 6, 1995 order as well,
which they argued would result in "piecemeal" appellate
review. Thereafter, appellants agreed to an expansion of the
proposed certification to include the district court's order of
September 6, 1995.
On April 27, 1997, the district court denied the
appellants' motion to certify its orders. The district court
_________________________________________________________________
but we need not address this allegation in detail given our disposition of
the claims.
7
dismissed the claims against the Doe defendants because
there were no named parties remaining in the action and
because appellants failed to identify the fictitious parties by
the close of discovery. Having dismissed the claims against
the Doe defendants, the court concluded that its orders
were final so that it therefore denied the appellants' motion
to certify as moot. On May 6, 1997, they filed a notice of
appeal.
III. DISCUSSION
A. TIMELINESS OF APPEAL
An untimely appeal does not vest an appellate court with
jurisdiction. See Browder v. Director, Dep't of Corrections,
434 U.S. 257, 264, 98 S.Ct. 556, 561 (1978); Marcangelo v.
Boardwalk Regency, 47 F.3d 88, 91 (3d Cir. 1995). To be
timely, the notice of appeal must have been filed within 60
days from the date of the district court's entry of a final
judgment. See 28 U.S.C. S 1291; Fed. R. App. P. 4(a)(1)
(establishing a 60-day period for appeal where a federal
agency or officer is a party). In general, a judgment is not
final for purposes of appeal until the district court has
disposed of all claims against all parties. See Buzzard v.
Roadrunner Trucking, Inc., 966 F.2d 777, 779 (3d Cir.
1992); Jackson v. Hart, 435 F.2d 1293, 1294 (3d Cir. 1970)
(per curiam).
Appellees have filed a motion to dismiss this appeal as
untimely. They argue that the district court's orders were
final, thereby starting the running of the time to appeal, on
November 27, 1996, upon the district court's dismissal of
all claims except those against the Doe defendants. Thus,
appellees aver that this appeal is untimely because the
appellants did not file a notice of appeal until May 6, 1997,
179 days after the district court's entry of a final judgment.
We reject appellees' argument and hold that appellants
timely filed this appeal so that we have jurisdiction to
consider the appeal on its merits.
Doe defendants "are routinely used as stand-ins for real
parties until discovery permits the intended defendants to
be installed." Scheetz v. Morning Call, Inc., 130 F.R.D. 34,
8
36 (E.D. Pa. 1990) (citations omitted). The case law is clear
that "[f]ictitious parties must eventually be dismissed, if
discovery yields no identities," id. at 37, and that an action
cannot be maintained solely against Doe defendants. See
Scheetz v. Morning Call, Inc., 747 F. Supp. 1515, 1534-35
(E.D. Pa. 1990) (noting that Federal Rules do not
contemplate a plaintiff proceeding without a tangible
defendant except in extraordinary circumstances), aff'd on
other grounds, 946 F.2d 202 (3d Cir. 1991); Breslin v. City
and County of Philadelphia, 92 F.R.D. 764 (E.D. Pa. 1981)
(dismissing complaint against identified defendants
warrants dismissing unnamed defendants).
Appellees conclude from these cases that Doe defendants
are deemed dismissed, without a formal order by the
district court, if they remain unnamed at the close of
discovery or upon the district court's dismissal of all named
defendants. We, however, need not reach the issue of
whether the district court's order became final on November
27, 1996, by virtue of such a deemed dismissal of the Doe
defendants.3 Even if a final order was entered on that date,
this appeal was timely because the "Motion to Certify for
Immediate Appeal" which appellants filed on November 15,
1996, was the functional equivalent of a notice of appeal
and therefore satisfies the requirements of Fed. R. App. P.
3.
Fed. R. App. P. 3(c) requires that a notice of appeal
specify the parties taking the appeal and the orders from
which the parties appeal. Despite these requirements, an
"appeal will not be dismissed for informality of form or title
of the notice of appeal, or for failure to name a party whose
intent to appeal is otherwise clear from the notice." Id.
_________________________________________________________________
3. We have case law indicating that "[a]n order that effectively ends the
litigation on the merits is an appealable final judgment even if the
district court does not formally include judgment on a claim that has
been abandoned" by a party. Lusardi v. Xerox Corp., 975 F.2d 964, 970
n.9 (3d Cir. 1992) (quoting Jones v. Celotex Corp., 867 F.2d 1503, 1503-
04 (5th Cir. 1989) (per curiam)); see also Baltimore Orioles, Inc. v.
Major
League Baseball Players Ass'n, 805 F.2d 663, 667 (7th Cir. 1986). We
again recognize this authority, but need not decide whether it would
apply in this case because, as explained above, this appeal would be
timely without reliance on it.
9
Courts liberally construe the requirements for a notice of
appeal. See Smith v. Barry, 502 U.S. 244, 248, 112 S.Ct.
678, 681-82 (1992); Torres v. Oakland Scavenger Co., 487
U.S. 312, 316-17, 108 S.Ct. 2405, 2408-09 (1988). Thus,
courts can find that a litigant has satisfied the
requirements of Rule 3(c) even if the litigant files a
document that is "technically at variance with the letter of
[Rule 3] . . . if the litigant's action is the functional
equivalent of what the rule requires." Torres, 487 U.S. at
316-17, 108 S.Ct. at 2408-09. Therefore, if a litigant files a
document, regardless of its title, within the time for appeal
under Fed. R. App. P. 4, it is effective as a notice of appeal
provided that it gives sufficient notice of the party's intent
to appeal. See Smith, 502 U.S. at 248-49, 112 S.Ct. at 682.
We have held that a "Petition for Permission to Appeal"
filed under the mistaken belief that the district court's
order was interlocutory, but which notified the parties and
the court of the intention to appeal, functioned as a notice
of appeal. See Landano v. Rafferty, 970 F.2d 1230, 1237
(3d Cir. 1992); see also San Diego Comm. Against
Registration and the Draft v. Governing Bd. of Grossmont
Union High Sch. Dist., 790 F.2d 1471, 1473-74 (9th Cir.
1986) (construing a Fed. R. App. P. 5(a) motion as a notice
of appeal).
In this case, appellants filed documents which were the
"functional equivalent" of a notice of appeal. On November
15, 1996, appellants filed a "Motion to Certify for Immediate
Appeal" in which they sought leave to file an interlocutory
appeal of the district court's March 1, 1995 order. Thus,
even if the March 1 order became final on November 27,
1996, we will treat the motion, which specifically indicated
an intention to appeal, and which was filed in the belief
that the order remained interlocutory, as a notice of appeal.
See Landano, 970 F.2d at 1237. Subsequently, appellants
also filed a reply to appellees' objection to the certification,
which requested to expand the proposed certified appeal to
include the district court's September 6, 1995 order. Taken
together, these documents notify the parties and the court
as to appellants' specific intention to seek appellate review
of both orders. Therefore, the documents were the
functional equivalent of a de jure notice of appeal.
10
Furthermore, appellants filed these documents within the
period for a timely appeal under Rule 4. The "Motion to
Certify for Immediate Appeal" was filed after the district
court approved the stipulation of dismissal but before the
order actually was entered. Rule 4(a)(2) specifically
addresses this scenario as it provides that "[a] notice of
appeal filed after the court announces a decision or order
but before the entry of the judgment or order is treated as
filed on the date of and after the entry" of that order.
Pursuant to this rule, we treat the motion as filed on
November 27, 1996, after the entry of the dismissal order.
Accordingly, this appeal is timely.4
B. DUE PROCESS AND APA CLAIMS
On March 1, 1995, the district court held that 12 U.S.C.
S 1821(j) deprived it of jurisdiction over appellants' due
process and APA claims, Counts I and IV respectively, and
therefore dismissed those counts against all appellees. By
the same order, the district court also dismissed Count III,
a 42 U.S.C. S 1983 claim, as against the FDIC for failure to
state a claim because the FDIC is not a "person" within
that statute.5
We begin our merits analysis with a discussion of the
appellants' First Amended Complaint. The district court
analyzed the complaint as though Count I asserted an
independent cause of action for a due process violation
against all appellees. We do not adopt this construction of
the complaint.
Count I seeks the following remedies based upon an
alleged due process violation: (1) a declaration that the
_________________________________________________________________
4. In any event, Judge Roth and Judge Seitz conclude that this case is
appealable because a timely notice of appeal was filed from the order
dismissing the Doe defendants.
5. Count III also asserts a section 1983 claim against the Secretary in
his individual capacity. On November 27, 1996, the district court entered
a Stipulation of Dismissal of the claims against the Secretary in his
individual capacity. This appeal, therefore, does not concern Count III to
the extent it asserts a claim against the Secretary in his individual
capacity.
11
FDIC, Doe defendants and the Secretary violated
appellants' substantive due process rights; (2) a declaration
that the FDIC's notification is void and a rescission thereof;
(3) a declaration of the invalidity of the Secretary's orders
closing Meritor and appointing FDIC as receiver and
rescissions thereof; and (4) the imposition of a constructive
trust for Meritor's benefit nunc pro tunc. This count,
however, does not identify the source of the substantive
cause of action for the alleged constitutional violation as
against each appellee.
Accordingly, FDIC-Corporate urges us to dismiss Count I
as improperly seeking declaratory relief without asserting a
substantive cause of action. We decline to view the
complaint so narrowly. Rather, we are required to construe
the pleadings "as to do substantial justice," Fed R. Civ. P.
8(f), and in favor of the appellants. See Budinsky v.
Commonwealth of Pa. Dep't of Envtl. Resources, 819 F.2d
418, 421 (3d Cir. 1987); see also West v. Keve, 571 F.2d
158, 163 (3d Cir. 1978) (liberally construing a complaint,
which literally only sued defendants in their official
capacities, so as also to state a claim against the
defendants in their individual capacities because the
complaint stated facts sufficient to constitute such a claim).
The due process violations alleged in Count I against the
FDIC and the Doe defendants properly are viewed as
constitutional claims asserted under section 1983 and
Bivens, as alleged in Counts III and II respectively.
Therefore, Count I does not assert a separate cause of
action against these defendants, but seeks declaratory and
injunctive relief in addition to the relief requested in Counts
II and III.
The due process claim alleged against the Secretary in
his official capacity is a different matter, however, because
the complaint does not elsewhere identify a substantive
cause of action against the Secretary in his official capacity
for a due process violation. While Count III asserts a claim
against the Secretary, it does so only in his individual
capacity. Accordingly, although the complaint does not
explicitly identify this claim as such, we construe it as
asserting a section 1983 claim against the Secretary in his
official capacity.
12
Thus, we proceed with our analysis as though the relief
sought in Count I against the FDIC and the Doe defendants
was sought in the counts alleging a right to relief pursuant
to section 1983 and Bivens. Although our analysis of these
counts takes a different course than that of the district
court, we ultimately affirm its dismissal of these claims.
We, like the district court, will not discuss the merits of the
Bivens claim because the Doe defendants properly were
dismissed on other grounds.
1. Section 1983 Claim
We begin our analysis with a discussion of the section
1983 claim asserted against the FDIC. The district court
dismissed this claim, holding that the FDIC was not a
"person" within the meaning of section 1983 and therefore
was not subject to section 1983 liability. The complaint
alleges that the FDIC, under color of state law, acted in
concert with the Secretary and deprived appellants of their
substantive due process rights. The district court held that
the FDIC could not be held liable under section 1983
because it was not a "person" within the meaning of the
statute. We agree.
Section 1983 creates a cause of action against "[e]very
person who, under color of any [state law] . .. subjects, or
causes to be subjected, any citizen of the United States or
other person within the jurisdiction thereof to the
deprivation of any rights, privileges, or immunities secured
by the Constitution." 42 U.S.C. S 1983. Because section
1983 provides a remedy for violations of federal law by
persons acting pursuant to state law, federal agencies and
officers are facially exempt from section 1983 liability
inasmuch as in the normal course of events they act
pursuant to federal law. See District of Columbia v. Carter,
409 U.S. 418, 425, 93 S.Ct. 602, 606 (1973); see also Daly-
Murphy v. Winston, 837 F.2d 348, 355 (9th Cir. 1988) (no
section 1983 claim against federal officials acting pursuant
to federal law); Zernial v. United States, 714 F.2d 431, 435
(5th Cir. 1983) (action taken pursuant to federal law by
federal agents and private parties); Kite v. Kelly, 546 F.2d
334, 337 (10th Cir. 1976) (section 1983 is not applicable to
federal officers acting under federal law); Scott v. United
13
States Veteran's Admin., 749 F. Supp. 133, 134 (W.D. La.
1990) (federal government and its agencies acting under
federal law are not "persons" within section 1983), aff'd,
929 F.2d 146 (5th Cir. 1991) (per curiam).
It is a well-established principle, however, that federal
officials are subject to section 1983 liability when sued in
their official capacity where they have acted under color of
state law, for example in conspiracy with state officials. See,
e.g., Melo v. Hafer, 912 F.2d 628, 638 (3d Cir. 1990), aff'd
on other grounds, 502 U.S. 21, 112 S.Ct. 358 (1991); Jorden
v. National Guard Bureau, 799 F.2d 99, 111 n.17 (3d Cir.
1986) (citing Knights of the Klu Klux Klan v. East Baton
Rouge Parish, 735 F.2d 895, 900 (5th Cir. 1984)); see also
Strickland v. Shalala, 123 F.3d 863, 866 (6th Cir. 1997);
Cabrera v. Martin, 973 F.2d 735, 741 (9th Cir. 1992); Olson
v. Norman, 830 F.2d 811, 821 (8th Cir. 1987).
The allegations in the section 1983 claim, however, are
against a federal agency, the FDIC, not federal officials. We
find no authority to support the conclusion that a federal
agency is a "person" subject to section 1983 liability,
whether or not in an alleged conspiracy with state actors.
We, therefore, hold that federal agencies are not "persons"
subject to section 1983 liability.6
In Accardi v. United States, 435 F.2d 1239, 1241 (3d Cir.
1970), we held that "[t]he United States and other
governmental entities are not `persons' within the meaning
of Section 1983." We reject appellants' suggestion that
subsequent decisions of the Supreme Court have
undermined Accardi's authority, except to the extent that
the Court now recognizes municipal liability under section
1983.7 See Monell v. Department of Soc. Servs., 436 U.S.
_________________________________________________________________
6. We note that two district courts in this circuit recently have come to
the same conclusion. See Alexander v. Hargrove, 1997 WL 14436, No.
Civ. 93-5510 (E.D. Pa. Mar. 31, 1995); Hurt v. Philadelphia Hous. Auth.,
806 F. Supp. 515, 524 (E.D. Pa. 1992).
7. In particular, appellants contend that in Accardi we relied on the
Supreme Court's narrow interpretation of "person" in Monroe v. Pape,
365 U.S. 167, 81 S.Ct. 473 (1961), which the Court overruled in Monell
v. Department of Soc. Servs., 436 U.S. 658, 98 S.Ct. 2018 (1977), to the
14
658, 98 S.Ct. 2018 (1977). Accardi's holding that the
United States was an improper party in a section 1983
action, see Accardi, 935 F.2d at 1242, is not affected by the
Supreme Court's subsequent recognition of municipal
liability. Because the United States is not a proper
defendant in a section 1983 action, neither is a federal
agency, an arm of the sovereign. See United States v. Vital
Health Prods., Ltd., 786 F. Supp. 761, 778 (E.D. Wis. 1992),
aff 'd without opinion sub nom., United States v. LeBeau,
985 F.2d 563 (7th Cir. 1993); John's Insulation, Inc. v.
Siska Const. Co., 774 F. Supp. 156, 161 (S.D.N.Y. 1991).
We also note that, relying upon Accardi, the Court of
Appeals for the Fifth Circuit has held that "a federal agency
is . . . excluded from the scope of section 1983 liability."
See Hoffman v. United States Dep't of Hous. & Urban Dev.,
519 F.2d 1160, 1165 (5th Cir. 1975); see also LaRouche v.
City of New York, 369 F. Supp. 565, 567 (S.D.N.Y. 1974)
(holding that the CIA, a federal agency, is not a person
under section 1983).
For the reasons set forth above, we affirm the district
court's dismissal of the section 1983 claim against the
FDIC. In light of our discussion regarding the proper
_________________________________________________________________
extent that Monroe held that local governments were not subject to
section 1983 liability.
Although in Accardi we did not cite Monroe, we did rely on three cases
which rejected liability for local government agencies based upon Monroe.
See Egan v. City of Aurora, 365 U.S. 514, 81 S.Ct. 684 (1961); United
States v. County of Phila., 413 F.2d 84 (3d Cir. 1969); Broome v. Simon,
255 F. Supp. 434 (W.D. La. 1966). Appellants argue that because Monell
reversed Monroe by holding that local governments are subject to suit
under section 1983, the efficacy of Accardi has been undermined.
Appellants essentially argue that under Monell and the Supreme
Court's subsequent decision in Will v. Michigan Dep't of State Police, 491
U.S. 58, 69, 109 S.Ct. 2304, 2311 (1989), federal entities are subject to
suit under section 1983. In Monell, the Court interpreted "person" for
purposes of section 1983 to include "bodies politic and corporate." See
Monell, 436 U.S. at 688-89, 98 S.Ct. at 2034-35. Appellants argue that
the FDIC is within the meaning of "bodies politic and corporate" because
12 U.S.C. S 1819 expressly characterizes the FDIC as a "body corporate."
We reject this rationale.
15
construction of the complaint, our dismissal of the section
1983 claim makes it unnecessary to discuss whether 12
U.S.C. S 1821(j) would preclude the district court from
granting the declaratory and injunctive relief requested in
Count I to the extent it would operate against the FDIC.
2. Bivens Claim
Because we affirm the district court's dismissal of all of
appellants' claims against the named appellees, we, like the
district court, need not address the merits of appellants'
Bivens claim against the Doe defendants. Rather, we affirm
the dismissal of this claim because an action cannot
proceed solely against unnamed parties. See Scheetz, 747
F. Supp. at 1534.
3. APA Claim
a. 12 U.S.C. S 1821(j)
We turn next to Count IV of appellants' complaint, which
seeks APA review of the FDIC's issuance of the Notification
finding that Meritor was operating in an unsafe and
unsound condition. Count IV alleges that the FDIC's
determinations, as embodied in the Notification, were
arbitrary, capricious, an abuse of discretion and in violation
of appellants' constitutional rights. Appellants thus seek
the following remedies: (1) a declaration that thefindings
are null and void; (2) a rescission of the declarations; and
(3) the imposition of a constructive trust. The district court
dismissed this claim as precluded by 12 U.S.C. S 1821(j).
We agree.
The Financial Institutions, Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA") establishes a
comprehensive scheme for conservatorships and
receiverships of insured financial institutions. See Richard
B. Gallagher, Annotation, Construction and Application of
Anti-Injunction Provision of Financial Institutions Reform,
Recovery, and Enforcement Act (FIRREA) (12 U.S.C.A.
S 1821(j)), 126 A.L.R. Fed. 43, 53 (1995). The FDIC8 may be
appointed as a conservator or receiver of an insured
_________________________________________________________________
8. FIRREA grants the Resolution Trust Corporation ("RTC") the same
powers and protections as the FDIC when the RTC operates as a
receiver. See 12 U.S.C. S 1441a(b)(5),S 1441a(b)(4); see also Sunshine
Dev., Inc. v. FDIC, 33 F.3d 106, 112 n.6 (1st Cir. 1994).
16
financial institution if, inter alia, the institution becomes
insolvent. See 12 U.S.C. S 1821(c); Gallagher, supra, at 53.
FIRREA also includes an anti-injunction provision intended
to permit the FDIC to perform its duties as conservator or
receiver promptly and effectively without judicial
interference. See 12 U.S.C. S 1821(j); Gallagher, supra, at
54. Section 1821(j) provides in relevant part that
[e]xcept as provided in this section, no court may take
any action, except at the request of the Board of
Directors by regulation or order, to restrain or affect
the exercise of powers or functions of the Corporation
as a conservator or a receiver.
12 U.S.C. S 1821(j).
In making the determinations and issuing the
Notification, the FDIC clearly was acting in its corporate
capacity. Appellants argue that the district court erred in
dismissing the APA claim based upon section 1821(j)
because the section does not preclude judicial intervention
where the FDIC acts in its corporate capacity. Thus,
appellants would have us interpret section 1821(j) to
preclude only those orders directly against the FDIC as
receiver or as conservator.
We find, however, that the plain language of the statute
is not so limited. Rather, the statute, by its terms, can
preclude relief even against a third party, including the
FDIC in its corporate capacity, where the result is such
that the relief "restrain[s] or affect[s] the exercise of powers
or functions of the [FDIC] as a conservator or a receiver."
12 U.S.C. S 1821(j) (emphasis added). After all, an action
can "affect" the exercise of powers by an agency without
being aimed directly at it.
We note that our holding is not inconsistent with our
decision in Rosa v. RTC, 938 F.2d 383, 397, 400 (3d Cir.
1991).9 In Rosa, we did not decide the reach of section
1821(j) because the RTC conceded that the anti-injunction
_________________________________________________________________
9. This provision applies equally to the RTC. Thus, in considering the
scope of section 1821(j)'s bar of equitable relief, courts refer to and
rely
upon cases involving the RTC and the FDIC interchangeably. See
Sunshine Dev., Inc. v. FDIC, 33 F.3d 106, 112 n.6 (1st Cir. 1994).
17
provision did not preclude the district court orders running
against it in its corporate capacity. See Rosa, 938 F.2d at
397, 400. Thus, Rosa did not hold that section 1821(j)
allows an injunction against the FDIC in its corporate
capacity. Further, because the court did not discuss the
issue, the nature of the district court orders running
against the RTC in its corporate capacity is not clear; thus,
it is unclear whether the order running against the RTC in
its corporate capacity would have had the type of effect we
now describe. We, therefore, find that Rosa does not control
the issue which we now confront.
Likewise, we note that the opinions of other courts of
appeals do not speak directly to the issue at hand. See
Bursik v. One Fourth St. N., Ltd., 84 F.3d 1395, 1397 (11th
Cir. 1996) (the section applies only if the RTC is acting in
its capacity as receiver); Fischer v. RTC, 59 F.3d 1344, 1347
(D.C. Cir. 1995) (noting in dicta that courts have
interpreted the section not to apply where the FDIC is
acting in its corporate, as opposed to its receiver or
conservator, capacity); Sierra Club v. FDIC, 992 F.2d 545,
548-51 (5th Cir. 1993) (holding that the court could enjoin
the FDIC because it was acting in its corporate capacity).
The Court of Appeals for the First Circuit has indicated
quite clearly that a court order which operates against a
third party is precluded by section 1821(j) if the order
would have the same effect from the FDIC's perspective as
a direct action against it precluded by section 1821(j). See
Telematics Int'l, Inc. v. NEMCL Leasing Corp., 967 F.2d 703,
707 (1st Cir. 1992). The Telematics court held that the
district court could not enjoin the FDIC from foreclosing on
a security interest. See id. at 705. But the court went
further and also stated the following:
Telematics argues that even if the district court lacked
the power to enjoin the FDIC from attaching the
certificate of deposit held by Fleet Bank, the court
nevertheless maintained the authority to allow
Telematics to attach the certificate of deposit. The
district court concluded that it lacked such authority,
and we agree. Permitting Telematics to attach the
certificate of deposit, if that attachment were effective
against the FDIC, would have the same effect, from the
18
FDIC's perspective, as directly enjoining the FDIC from
attaching the asset. In either event, the district court
would restrain or affect the FDIC in the exercise of its
powers as receiver. Section 1821(j) prohibits such a
result.
Id. at 707 (emphasis added). We agree with the Court of
Appeals for the First Circuit's pragmatic suggestion that
section 1821(j) precludes a court order against a third party
which would affect the FDIC as receiver, particularly where
the relief would have the same practical result as an order
directed against the FDIC in that capacity.
The relief appellants seek in this case clearly would
"affect the exercise of powers or functions of the [FDIC] as
conservator or receiver." Appellants' Count IV seeks a
declaration that the Notification was void ab initio and a
rescission thereof. Because the FDIC's findings directly and
proximately caused the Secretary to close Meritor, the
appellants also seek the imposition of a constructive trust
as of the date Meritor was seized. Here, the requested relief
against the FDIC-Corporate clearly would affect the FDIC's
continued functioning as receiver and it effectively would
throw into question every act of FDIC-Receiver.
Our opinion, however, should not be overread. The
affecting of the powers of the FDIC-Receiver in this case,
which appellants' requested relief would cause, if granted,
would be dramatic and fundamental. We do not suggest
that we would reach the same result in a case in which the
effect on the FDIC of an order against a third party would
be of little consequence to its overall functioning as
receiver. That type of situation is not before us.
We reject appellants' contention that section 1818(j)
cannot be interpeted to bar their constitutional claims
because Congress did not express a clear intent for the
section to preclude review of constitutional claims. See
Webster v. Doe, 486 U.S. 592, 603, 108 S.Ct. 2047, 2053
(1988). The Webster Court noted that this heightened
standard is intended to avoid the "serious constitutional
question" which would result if a court interpreted a federal
statute so as to deny all judicial review of a constitutional
claim. See id. at 603, 108 S.Ct. at 2053. Our interpretation
19
of section 1821(j) only denies appellants the declaratory
and injunctive relief they now seek, but does not deny them
judicial review for their constitutional claims. Courts
uniformly have held that the preclusion of section 1821(j)
does not affect a damages claim. See, e.g., Sharpe v. FDIC,
126 F.3d 1147, 1155 (9th Cir. 1997); Volges v. RTC, 32
F.3d 50, 53 (2d Cir. 1994); RPM Investments, Inc. v. RTC,
75 F.3d 618, 622 (11th Cir. 1996). Thus, our holding does
not deny appellants a judicial remedy for an appropriate
damages claim.10
b. Availability of APA Review
Even if we agreed that section 1821(j) did not preclude
the relief appellants seek, we would affirm the district
court's dismissal of their claim for review under the APA
because such review is not available in this instance. The
APA grants a right of judicial review of an agency action to
"[a] person suffering legal wrong because of any agency
action, or adversely affected or aggrieved by agency action
within the meaning of a relevant statute." 5 U.S.C. S 702.
This right of review, however, is limited. First, the APA only
provides for review of those actions "made reviewable by
statute and final agency action for which there is no other
adequate remedy in a court." 5 U.S.C. S 704. Second, the
APA withdraws the right of review "to the extent that
statutes preclude judicial review." 5 U.S.C. S 701(a)(1).
We find that the district court did not have jurisdiction to
_________________________________________________________________
10. We recognize that the defendants in such an action might be able to
assert various defenses but our concern here is only with the statute we
are construing. This is also the circumstance in other places in the
opinion in which we recognize the possibility of the bringing of a
damages action.
In fact, shareholders of Meritor have brought a damages action in the
United States Court of Federal Claims against the United States
predicated on the alleged wrongful issuance of the Notification. See
Slattery v. United States, 35 Fed. Cl. 180 (1996). According to appellants
this action is still pending and is predicated both on constitutional and
breach of contract principles. Br. at 15-16. The Court of Federal Claims
rather than this court will make the determination of what effect, if any,
this opinion has in that litigation.
20
review the FDIC-Corporate's issuance of the Notification
because (1) it was not a final agency action, and (2) review
expressly is barred by 12 U.S.C. S 1818(i)(1) and
jurisdiction therefore is withdrawn pursuant to 5 U.S.C.
S 701(a)(1).
The APA provides for review of a "final agency action for
which there is no other adequate remedy in a court," 5
U.S.C. S 704, but the APA does not define what constitutes
a "final" agency action. The Supreme Court has stated that
the "core question is whether the agency has completed its
decisionmaking process, and whether the result of that
process is one that will directly affect the parties." Franklin
v. Massachusetts, 505 U.S. 788, 797, 112 S.Ct. 2767, 2773
(1992). The action must be a "definitive statement of [the
agency's] position" with concrete legal consequences. FTC v.
Standard Oil Co., 449 U.S. 232, 241, 101 S.Ct. 488, 493
(1980); see also Darby v. Cisneros, 509 U.S. 137, 144, 113
S.Ct. 2539, 2543 (1993). We have held that "thefinality of
[an agency action] is determined by its consequences" or its
practical effects. Shea v. Office of Thrift Supervision, 934
F.2d 41, 44 (3d Cir. 1991); see also In re Seidman, 37 F.3d
911, 923 (3d Cir. 1994).
FDIC-Corporate issued Meritor a Notification which
stated that, as a result of the grand-fathered goodwill no
longer being considered in Meritor's capital base, Meritor
was undercapitalized and in violation of the FDIC
agreement. In the Notification, the FDIC also notified
Meritor that procedures would be initiated to cancel
Meritor's deposit insurance if Meritor did not come into
immediate compliance with certain capital requirements.
Based upon this information, the Secretary closed Meritor
the same day that FDIC-Corporate issued the Notification.11
We agree with FDIC-Corporate that the Notification at
issue here was "the first step in a multi-step statutory
_________________________________________________________________
11. The Secretary presumably acted pursuant to Pa. Stat. Ann., tit. 71,
S 733-504(B) (West 1990), which states, in relevant part, that the
Secretary need not conduct a hearing prior to taking possession of a
financial institution "whenever immediate action shall be necessary in
order to protect the interests of the depositors, other creditors, or
shareholders of an institution."
21
procedure which must be followed when FDIC-Corporate
considers terminating an institution's deposit insurance."
Br. of Appellee FDIC-Corporate at 12; see also 12 U.S.C.
S 1818(a)(2). After such a notification is issued, to terminate
an institution's deposit insurance, the FDIC also, inter alia,
must give notice of a hearing and conduct a hearing
pursuant to statutory requirements. See 12 U.S.C.
S 1818(a). In the context of this statutory procedure, the
issuance of the Notification does not represent the FDIC's
definitive statement regarding the termination of a financial
institution's insurance status.
In Standard Oil, the Supreme Court held that the Federal
Trade Commission's ("FTC") issuance of a complaint was
not a final agency action and therefore was not reviewable
under the APA. See Standard Oil, 449 U.S. at 238, 101
S.Ct. at 492. The Court reasoned that the complaint was,
by its terms, not a definitive statement; rather, the
complaint only was indicative of a "reason to believe" that
the party was violating the law. See id. at 241, 101 S.Ct. at
493-94. The Court found that the complaint was a
determination that an administrative proceeding would be
commenced but did not have the legal force or practical
effect on the party's daily business activities indicative of a
final agency determination. See id., 101 S.Ct. at 494. The
Court noted that the finality requirement has been
interpreted "in a pragmatic way." See id. at 239, 101 S.Ct.
at 493.
We find that the issuance of the Notification was not the
FDIC's definitive statement. See id. at 241, 101 S.Ct. at
493. Furthermore, the issuance of the Notification did not
have the type of effect we described and required in Shea v.
Office of Thrift Supervision to be a final, reviewable action,
namely that the agency action must be one that "impose[s]
an obligation, den[ies] a right, or fix[es] some legal
relationship as a consummation of the administrative
process." Shea, 934 F.2d at 44. Rather, the action that had
legal effect was the Secretary's decision to close the bank,
not the FDIC's issuance of the Notification.
We also agree with the Court of Appeals for the Ninth
Circuit, which has held that where a state actor relies upon
a federal agency's notice, the state action does not convert
22
the notice into a final agency act under the APA. See Air
California v. United States Dep't of Transp., 654 F.2d 616,
621 (9th Cir. 1981). In Air California, the Orange County
Board of Supervisors ("Board") had adopted a policy
designed to freeze the level of operations at the Orange
County Airport. See id. at 618. This policy resulted in the
exclusion of new carriers, ultimately inuring to the benefit
of Air California, an existing carrier at the airport. See id.
Thereafter, the Board entered into agreements with the
Federal Aviation Administration ("FAA") to gain federal
airport funds, thereby subjecting the airport to federal
regulations. See id. The FAA held a hearing to investigate
allegations by carriers who unsuccessfully had applied for
authorization to use the airport that the airport policy
violated federal law. See id. Following an investigatory
hearing, the FAA's Chief Counsel sent a letter to the Board
warning that failure to comply with federal regulations
would result in the FAA pursuing sanctions, but that no
formal action would be taken for 30 days. See id. The FAA
never took formal action, but as a result of the letter to the
Board, the Board met and decided to reallocate theflights
to include additional carriers, thereby reducing the number
of flights for which Air California was authorized. See id. Air
California then sought APA review of the FAA letter. See id.
The court held that the letter was not a final agency order
because the Board's action, not the FAA letter, immediately
affected Air California's rights. See id. at 621.
We reject appellants' attempt to distinguish Standard Oil
and Air California; according to appellants, these cases are
distinguishable because of the conspiracy the appellants
allege existed here. While appellants acknowledge that the
Notification could have been the beginning of an internal
adjudicative process, as in Standard Oil, they argue that
this possibility is immaterial in this factual context. Here,
appellants contend that the Notification was not intended
to commence an administrative investigation. They assert
that by virtue of the alleged conspiracy, the FDIC knew and
intended that the Secretary would close Meritor
immediately when he received the Notification. Appellants
also argue that the complicity involved distinguishes the
FDIC's Notification from the FAA letter in Air California
23
because the FDIC issued the Notification knowing and
intending it directly to affect Meritor. In addition, appellants
assert that because the FDIC specifically targeted Meritor
whereas the FAA directed its attention to the Board, not to
the plaintiffs therein, there is a more direct effect on
Meritor associated with the FDIC's action than there was on
the plaintiff in Air California by reason of the challenged
action in that case.
We acknowledge that the Secretary's closing of Meritor
precluded the need for a final agency action terminating
Meritor's insured status. However, appellants' failure to
challenge the appointment of the receiver under the
available state procedure, see Pa. Stat. Ann., tit. 71, S 733-
605 (West 1990), does not convert the Notification, an
otherwise preliminary step in FDIC procedure, into afinal
agency action reviewable under 5 U.S.C. S 704.
APA review is unavailable in this case also because 12
U.S.C. S 1818(i) precludes judicial review of the Notification,
and the APA does not allow judicial review where another
statute specifically prohibits it, see 5 U.S.C. S 701(a)(1).
Section 1818(i) precludes review of orders and notices
except as specifically provided elsewhere in section 1818.
Section 1818(i)(1) provides in relevant part that
except as otherwise provided in this section . . . no
court shall have jurisdiction to affect by injunction or
otherwise the issuance or enforcement of any notice or
order under any such section, or to review, modify,
suspend, terminate, or set aside any such notice or
order.
The Supreme Court has found that this language is clear.
See Board of Governors of the Fed. Reserve Sys. v. MCorp.
Fin., Inc., 502 U.S. 32, 39, 112 S.Ct. 459, 463 (1991). In
MCorp, the Court held that section 1818(i)(1) "provides us
with clear and convincing evidence that Congress intended
to deny the District Court jurisdiction to review and enjoin
the Board's ongoing administrative proceedings." MCorp,
502 U.S. at 44, 112 S.Ct. at 466; see also Groos Nat'l Bank
v. Comptroller of the Currency, 573 F.2d 889, 895 (5th Cir.
1978) (noting that the section "in particular evinces a clear
intention that this regulatory process is not to be disturbed
24
by untimely judicial intervention, at least where there is no
`clear departure from statutory authority' ").
The question we now face is whether the section 1818(i)
applies only where there is such an ongoing administrative
proceeding. As discussed above, here there is no such
proceeding because the Secretary's decision to close Meritor
based upon the Notification eviscerated the need for further
proceedings to terminate Meritor's insured status.
Moreover, to our knowledge, the only case law involving
section 1818(i) is in the context of an ongoing
administrative proceeding.
Yet the plain language of section 1818(i) broadly
precludes the review of the issuance of any notice under
any subsection. See 12 U.S.C. S 1818(i)(1); Henry v. Office
of Thrift Supervision, 43 F.3d 507, 512 (10th Cir. 1994)
(rejecting contention that the "orders" referred to in section
1818(i) are limited to those issued after administrative
hearings). Further, while section 1818 provides for review of
certain notices and orders, such as those issued after a
hearing, see 12 U.S.C. S 1818(a)(5) (providing for review of
an order terminating an institution's insured status); 12
U.S.C. S 1818(h) (providing for review of orders and notices
issued after required hearings), it does not provide for
review of the issuance of this Notification, which was issued
pursuant to section 1818(a)(1). Thus, by its terms section
1818(i) applies to this case and is not restricted to
precluding judicial review which would interfere with an
ongoing administrative proceeding. Based upon this plain
meaning, we conclude that the district court did not have
jurisdiction to review the issuance of the Notification.
Courts, however, have recognized a limited exception to a
statute's specific withdrawal of jurisdiction where the
plaintiff claims that the agency acted in a blatantly lawless
manner or contrary to a clear statutory prohibition. See,
e.g., Abercrombie v. Office of the Comptroller of Currency,
833 F.2d 672, 674-75 (7th Cir. 1987); First Nat'l Bank of
Grayson v. Conover, 715 F.2d 234, 236 (6th Cir. 1983);
Groos Nat'l Bank, 573 F.2d at 895. The roots of this so-
called "statutory-authority" exception are in Leedom v.
Kyne, 358 U.S. 184, 79 S.Ct. 180 (1958).
25
The Supreme Court has considered the application of this
exception to section 1818(i). See Board of Governors of the
Fed. Reserve Sys. v. MCorp Fin., Inc., 502 U.S. 32, 112
S.Ct. 459. In MCorp, the Court declined to apply the
exception, distinguishing it in two respects from the
situation in Kyne. First, the Court found that there were
adequate means of review available upon a final
determination by the agency. Second, the Court held that
Kyne did not apply because there the preclusion was
implied from congressional silence, whereas the preclusion
of section 1818(i) was express and clear. See id. at 43-44,
112 S.Ct. at 465-66.
We recently have addressed the "statutory-authority"
exception and emphasized that an integral factor in
determining the applicability of the exception is the clarity
of the statutory preclusion. See Clinton County Comm'rs v.
EPA, 116 F.3d 1018, 1928-29 (3d Cir. 1997) (en banc)
(citing Board of Governors of the Fed. Reserve Sys. v. MCorp
Fin., Inc., 502 U.S. 32, 112 S.Ct. 459; Briscoe v. Bell, 432
U.S. 404, 97 S.Ct. 2428 (1977)), cert. denied, 118 S.Ct. 687
(1998). In rejecting the plaintiffs' contention that review was
available under Kyne, in Clinton County we held that, as
with section 1818(i), the section precluding review provided
" `clear and convincing evidence' . . . that Congress intended
to deny the district court jurisdiction to review EPA's
ongoing remedial action." Clinton County, 116 F.3d at 1029.
We find that this exception does not apply to this case
primarily for two reasons. First, the exception does not
apply in the face of such clear preclusive language. Second,
the FDIC did not act in a blatantly lawless manner.
Although appellants may object to the FDIC's conclusions,
the FDIC acted pursuant to the requirement that it notify
a financial institution upon making a determination that
the financial institution was operating in an unsafe
financial condition. See 12 U.S.C. S 1818(a)(2).
We have not overlooked the appellants' arguments
regarding the effect of our interpretation of the
jurisdictional bar. First, they argue that where, as here, the
FDIC knowingly acts to eliminate section 1818
administrative review, section 1818(i)(1) cannot preclude
judicial review, because the effect would be to preclude all
26
review of the issuance of the Notification. We reject this
contention because the result of our holding with respect to
the preclusion of section 1818(i) is to bar only APA review
of the FDIC's issuance of the Notification. We are not moved
by the lack of a remedy under the APA because section
1818(i) only precludes court action which would "affect by
injunction or otherwise the issuance or enforcement" of the
Notification. We see no reason why, under proper
circumstances, a plaintiff could not institute, and a district
court could not entertain, an action for damages based
upon the FDIC's allegedly wrongful conduct without
offending section 1818(i).
Second, appellants argue that that we should not
construe section 1818(i)(1) to bar their constitutional claims
because Congress clearly must express an intent to
preclude review of constitutional claims. See Webster, 486
U.S. at 603, 108 S.Ct. at 2053. We reject this argument for
the same reasons that we rejected it above in the context of
the jurisdiction bar of section 1821(j). Again, section
1818(i)(1) precludes the declaratory and injunctive relief
sought here, but on its face would not affect an appropriate
constitutional claim for damages.
4. Due Process Claim Against Secretary
We now turn to the claim in Count I against the
Secretary which seeks a declaration of the
unconstitutionality of the Secretary's order closing Meritor
and a rescission thereof. As noted above, we will treat this
claim as one based upon section 1983 against the
Secretary in his official capacity. On appeal, the Secretary
raises an Eleventh Amendment objection to this claim. For
the reasons we discuss below, we recognize but need not
reach the Eleventh Amendment issue raised by this claim
because we find that the district court correctly dismissed
this claim as barred by 12 U.S.C. S 1821(j).
In general, the Eleventh Amendment prevents suits in
federal court against states, or state officials if the state is
the real party in interest. See Ford Motor Co. v. Department
of Treasury, 323 U.S. 459, 464, 65 S.Ct. 347, 350 (1945).
The Amendment, however, does not bar such suits where
27
the state has waived its immunity, see Atascadero State
Hosp. v. Scanlon, 473 U.S. 234, 241, 105 S.Ct. 3142, 3145
(1985), Congress validly has abrogated the state's immunity
under the Fourteenth Amendment, see Seminole Tribe of
Fla. v. Florida, 517 U.S. 44, 116 S.Ct. 1114 (1996), or the
well-established exception of Ex Parte Young, 209 U.S. 123,
28 S.Ct. 441 (1908), applies.
Of these narrow exceptions, the only one that arguably
applies in this case is that under Young. The principle
which emerges from Young and its progeny is that a state
official sued in his official capacity for prospective
injunctive relief is a person within section 1983, and the
Eleventh Amendment does not bar such a suit. See Hafer
v. Melo, 502 U.S. 21, 27, 112 S.Ct. 358, 362-63 (1991); Will
v. Department of State Police, 491 U.S. 58, 71 n.10, 109
S.Ct. 2304, 2312 n.10 (1989); Kentucky v. Graham , 473
U.S. 159, 167 n.14, 105 S.Ct. 3099, 3106 n.14 (1985)
("[O]fficial-capacity actions for prospective relief are not
treated as actions against the State.") (citing Young, 209
U.S. 123, 28 S.Ct. 441).
Thus, the Eleventh Amendment does not bar this claim
against the Secretary, provided that the relief appellants
seek properly is construed as "prospective injunctive relief"
or is ancillary to such relief. See Quern v. Jordan, 440 U.S.
332, 347-49, 99 S.Ct. 1139, 1148-49 (1979). The type of
prospective relief permitted under Young is relief intended
to prevent a continuing violation of federal law. See Puerto
Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506
U.S. 139, 146, 113 S.Ct. 684, 688 (1993) (the Young
exception "does not permit judgments against state officers
declaring that they violated federal law in the past");
Papasan v. Allain, 478 U.S. 265, 277-78, 106 S.Ct. 2932,
2940 (1986) (the focus of the Young exception is on
addressing ongoing violations of federal law).
Appellants seek threefold relief against the Secretary: (1)
a declaration that the Secretary's order closing Meritor was
unconstitutional; (2) a rescission of the Secretary's order
closing Meritor; and (3) the imposition of a constructive
trust nunc pro tunc. We, however, need not reach the issue
of whether that relief would be prospective because we
recognize that we need not decide difficult jurisdictional
28
issues where we can decide the case on another dispositive
issue in favor of the party who would benefit by a ruling
that we do not have jurisdiction. See Georgine v. Amchem
Prods., Inc., 83 F.3d 610, 623 (3d Cir. 1996) (citing Norton
v. Mathews, 427 U.S. 528, 530-33, 96 S.Ct. 2771, 2774-76
(1976); Elkin v. Fauver, 969 F.2d 48, 52 n.1 (3d Cir. 1992)),
aff'd sub nom., Amchem Prods., Inc. v. Windsor, 117 S.Ct.
2231 (1997).
Although the issue here involves the application of the
Eleventh Amendment rather than subject matter
jurisdiction, we find that the issue "sufficiently partakes of
the nature of a jurisdictional bar" to justify our application
of the principle recognized in Georgine. See College Sav.
Bank v. Florida Prepaid Postsecondary Educ. Expense Bd.,
131 F.3d 353, 365 (3d Cir. 1997) (quoting Edelman v.
Jordan, 415 U.S. 651, 678, 94 S.Ct. 1347, 1363 (1974)).
Moreover, like the jurisdictional issues avoided in Georgine,
questions under the Eleventh Amendment issue are
constitutional in scope. Courts, of course, will avoid such
questions where possible. See, e.g., Spector Motor Servs.,
Inc. v. McLaughlin, 323 U.S. 101, 105, 65 S.Ct. 152, 154
(1944).
Largely for the reasons we stated above regarding the
scope of section 1821(j), we agree with the district court
that section 1821(j) would bar the declaratory and
injunctive relief sought against the Secretary. As discussed
above, section 1821(j) precludes injunctive and declaratory
relief which would restrain or affect the powers of the FDIC
as receiver, even where that relief is directed against a third
party. See Telematics, 967 F.2d at 707. Rescinding the
order closing Meritor clearly would have essentially the
same effect on FDIC-Receiver as would an order directly
enjoining the FDIC from continuing to act as receiver.
Appellants urge that relief is warranted and not
precluded by section 1821(j) where, as here, the gravamen
of the complaint is that the appointment of the receiver was
improper, not that the FDIC was exercising its duties as
receiver improperly. We distinguish James Madison Ltd. v.
Ludwig, 82 F.3d 1085 (D.C. Cir. 1996), cert. denied, 117
S.Ct. 737 (1997),12 upon which appellants rely for this
_________________________________________________________________
12. The district court did not consider the applicability of James Madison
because the Court of Appeals for the District of Columbia Circuit decided
29
proposition. In James Madison, the plaintiffs challenged the
appointment of the FDIC as receiver of two national banks
and requested "an injunction removing the FDIC as
receiver; returning bank assets . . .; restoring the banks'
charters to allow them to resume business; and returning
the banks' files." Id. at 1091. The court rejected the FDIC's
claim that the requested relief violated section 1821(j),
reasoning that
[u]ntil now, this circuit has not considered whether
section 1821(j) precludes federal courts from granting
injunctive or declaratory relief if the [regulators]
improperly appointed the FDIC receiver of a national
bank. In our view, section 1821 does no such thing.
Section 1821(j) states only that courts cannot `restrain
or affect the exercise of powers or functions of the
[FDIC] as a conservator or receiver.' . . . It does not
address federal court power to set aside an illegal
appointment of a conservator or receiver. Congress
knows the difference between judicial power to restrain
an agency properly acting as a receiver and judicial
power to remove an improperly appointed agency.
Id. at 1093. Thus, the court concluded that section 1821(j)
bars a court from "interfering with the FDIC only when the
agency acts within the scope of its authorized powers, not
when the agency was improperly appointed in thefirst
place." Id.
We conclude that James Madison is inapplicable here.
The James Madison court held that the anti-injunction
provision of section 1821(j) did not bar an APA challenge to
the appointment of a receiver for a national bank. The court
first noted that there is no statutory provision which
specifically provides for the review of the appointment of a
receiver for a national bank while there is such a specific
provision for others. See James Madison, 82 F.3d at 1092.
Compare 12 U.S.C. S 191 (appointment of receiver to a
national bank) with 12 U.S.C. S 203(b) (judicial review of
_________________________________________________________________
that case after the district court dismissed appellants' claims, except
for
those against the Secretary in his individual capacity and the Doe
defendants.
30
the appointment of a conservator of a national bank); 12
U.S.C. S 1464(d)(2)(E) (judicial review of an appointment by
the Director of Office of Thrift Supervision of conservator or
receiver); 12 U.S.C. S 1821(c)(7) (judicial review where the
FDIC appoints itself as receiver or conservator of a state
chartered institution); 12 U.S.C. S 1787(a)(1)(B) (review of
appointment of National Credit Union Board as liquidating
agent for insured credit union). The court held that section
1821(j) did not clearly bar such review and review of the
appointment under the APA was therefore proper. See
James Madison, 82 F.3d at 1094. Thus, the court in James
Madison predicated its holding allowing review under the
APA on the lack of an adequate remedy.
We decline to apply the rationale of James Madison here
for two reasons. First, APA review of the appointment of the
FDIC as receiver is not proper here because the
appointment was not made by a federal agency, but rather
by the Secretary, a state official. Second, James Madison
concerned receiverships of national banks, whereas Meritor
was a state-chartered bank, and there is or was another
available procedure for review of the appointment in this
case. See Pa. Stat. Ann., tit. 71, S 733-605 (West 1990).
Federal law explicitly provides for judicial review of the
appointment of a receiver or conservator in certain specific
instances where a receiver or conservator is appointed by a
federal actor. See, e.g., 12 U.S.C. S 203(b) (providing for
judicial review of the appointment of a conservator of a
national bank within 20 days of the appointment); 12
U.S.C. S 1464(d)(2)(B) (providing for judicial review of an
appointment by the Director of Office of Thrift Supervision
within 30 days of the appointment); 12 U.S.C. S 1821(c)(7)
(providing for judicial review within 30 days of the
appointment where the FDIC appoints itself as receiver or
conservator of a state chartered institution); 12 U.S.C.
S 1787(a)(1)(B) (providing for judicial review within ten days
of the appointment of National Credit Union Board as
liquidating agent for insured credit union). Courts have
held that where a plaintiff has not pursued these remedies
to challenge the appointment of a receiver or conservator, a
subsequent action outside the applicable limitation period
is barred for failure to exhaust administrative remedies. See
31
Lafayette Fed. Credit Union v. National Credit Union Admin.,
960 F. Supp. 999, 1005 (E.D. Va. 1997), aff'd, ___ F.3d ___
(4th Cir. 1998) (table).
The same principle applies here where there is an
adequate state procedure available to challenge the
appointment of a receiver by the Secretary.13 In closing
Meritor, the Secretary acted pursuant to Pa. Stat. Ann., tit.
71, S 733-504B (West 1990), so that his action was subject
to review under Pa. Stat. Ann., tit. 71, S 733-605 (West
1990), which provides that "[a]ny institution whose
business or property the secretary has taken possession as
receiver, may, at any time within ten days after the
secretary has become receiver, apply to the court for an
order requiring the secretary to show cause why he should
not be enjoined from continuing as receiver." This state
procedure is consistent with the federal policy of requiring
a swift challenge to the appointment of a receiver. See, e.g.,
12 U.S.C. S 203(b) (providing 20 days to seek judicial
review); 12 U.S.C. S 1464(d)(2)(B) (providing 30 days to seek
judicial review); 12 U.S.C. S 1821(c)(7) (providing 30 days to
seek judicial review); 12 U.S.C. S 1787(a)(1)(B) (providing
ten days to seek judicial review).
The district court refused to require the appellants to
have availed themselves of the state procedure because it
concluded that such a requirement effectively would permit
a state statute to foreclose appellants' constitutional claims.
In so holding, the district court apparently conceived of
such a requirement as imposing a 10-day statute of
limitations on any claim relating to the seizure of the bank.14
_________________________________________________________________
13. Appellants suggested at oral argument that the statute does not
apply here because it only provides for review where the Secretary is
appointed as receiver. Tr. of oral arg. at 10-11. We recognize that there
is scarce case law interpreting Pa. Stat. Ann., tit. 71, S 733-605, but we
see no reason why the Pennsylvania statute would not apply where the
Secretary has designated another to act as receiver.
14. Citing Pa. Stat. Ann., tit. 71, S 733-605, the district court stated
that
"[t]he defendants have asserted a number of arguments in support of
their individual motions, foremost among them the claim that the
plaintiffs are barred from pursuing their constitutional claims here
because of the ten day limitation on applying for court orders placed by
Pennsylvania law." The district court found "that the plaintiffs are not
prejudiced in their ability to bring their constitutional claims here by
the
law in Pennsylvania" but left open the possibility that "the defenses of
waiver, estoppel, or laches may be raised at a later date."
32
Once again, we emphasize the limits of our holding. We
hold that section 1821(j) precludes the relief sought here,
namely a rescission of the Secretary's appointment of a
receiver, because it would wholly prevent the FDIC from
continuing as receiver, where there is an adequate
procedure available to challenge the appointment of a
receiver. As we state elsewhere in this opinion, this holding
is based upon section 1821(j)'s preclusion of remedies and
does not foreclose the possibility of proper constitutional
claims seeking other remedies.15
We also find inapplicable the case law cited by appellants
in which courts have declined to apply certain state
procedural requirements to plaintiffs asserting federal civil
rights actions in federal court. See Felder v. Casey, 487
_________________________________________________________________
15. Appellants' also argue that an action pursuant to Pa. Stat. Ann., tit.
71, S 733-605 could not be brought in federal court because the statute
provides for exclusive jurisdiction in state court. This argument does not
alter our conclusion.
First, appellants are incorrect in their blanket assertion that the
statute vests exclusive jurisdiction in state court. Although the statute
provides that a party must make application to "the court," which is
defined as "[t]he court of common pleas in the county in which the
corporation or person has its principal or only place of business in the
Commonwealth; or, where an institution of which this Secretary is
receiver is concerned, the particular court in which the certificate of
possession . . . is filed," see Pa. Stat. Ann., tit. 71, S 733-2 (West
1990),
a state statute cannot be applied so as to limit a federal court's
supplemental jurisdiction. See, e.g., Scott v. School Dist. No. 6, 815 F.
Supp. 424, 429 (D. Wyo. 1993) (holding that state statute which
purported to establish exclusive jurisdiction in state court is
unconstitutional to extent it preclude federal courts from exercising
supplemental jurisdiction over the state claims). Thus, for example, if a
plaintiff instituted a proper damages suit in federal court within ten
days
of the appointment of a receiver by the Secretary, the state statute could
not be interpreted to preclude the federal court from exercising
supplemental jurisdiction over an action under Pa. Stat. Ann., tit. 71,
S 733-605.
Second, we acknowledge that our example is not realistic in many
cases given the brevity of the time period in the state statute. We see no
reason, however, why our conclusion should be altered by the fact that
an action to challenge the appointment of the receiver pursuant to the
state procedure ordinarily would not be in federal court.
33
U.S. 131, 108 S.Ct. 2302 (1988) (notice of claim statute);
Burnett v. Grattan, 468 U.S. 42, 50-55, 104 S.Ct. 2924,
2929-32 (1984) (state statute of limitations); Patsy v. Board
of Regents, 457 U.S. 496, 516, 102 S.Ct. 2557, 2568 (1982)
(holding that a civil rights plaintiff need not exhaust state
administrative remedies). These cases are inapposite
because the Court based the holdings on the notion that
state laws or requirements which are inconsistent with
federal law or its objectives are subordinated to the federal
law by virtue of the Supremacy Clause. As the Felder Court
noted, applying a state statute of limitations which provides
only a truncated period in which to file an action in civil
rights cases "inadequately accommodate[s] the complexities
of federal civil rights litigation." Felder, 487 U.S. at 140,
108 S.Ct. at 2307.
Here, requiring appellants to have availed themselves of
the Pennsylvania procedure to challenge the Secretary's
taking of possession of the bank would not undermine
federal policy. To the contrary, as we noted above, the state
requirement is consistent with the federal policy of
requiring swift objection to the appointment of a receiver.
C. ENFORCEMENT OF FDIC's STATUTORY
OBLIGATIONS
The district court also dismissed Counts V and VI, in
which appellants sought to enforce certain statutory duties
of the FDIC. We affirm the dismissal of these counts
because there is no implied private right of action to enforce
the FDIC's duty to maximize gain and minimize loss in its
disposition of assets and the shareholders have no
enforceable right to an accurate accounting.
1. FDIC's Duty to Maximize Gain and Minimize Loss in
its Disposition of Assets
In its September 6, 1995 order,16 the district court
_________________________________________________________________
16. The district court initially dismissed this claim, embodied in Count V
of appellants' First Amended Complaint, for lack of jurisdiction by order
dated February 28, 1995. The district court held that the appellants had
failed to exhaust their administrative remedies. Shortly thereafter, the
court reinstated the claim after appellants completed their pursuit of
those procedures. Therefore, the September 6, 1995 disposition of this
claim is the subject of this appeal.
34
dismissed appellants' claim for money damages for the
FDIC-Receiver's alleged failure to comply with its statutory
duty to maximize the gain and minimize the loss in the
disposition of Meritor's assets. See 12 U.S.C.
S 1821(d)(13)(E).17 The district court held that this provision
neither expressly nor impliedly grants a private right of
action to individual shareholders.18 See exhibit B to
appellant's brief.
The standard announced in Cort v. Ash, 422 U.S. 66, 95
S.Ct. 2080 (1975), guides our inquiry into whether section
1821(d)(13)(E) impliedly grants shareholders of a failed
financial institution a private right of action to enforce the
FDIC-Receiver's statutory obligations. In Cort, the Court
announced that courts should consider the following four
factors to determine whether a statute impliedly grants a
private right of action: (1) whether the plaintiff is a member
_________________________________________________________________
17. Section 1821(d)(13)(E) provides:
In exercising any right, power, privilege, or authority as
conservator
or receiver in connection with any sale or disposition of assets of
any insured depository institution for which the Corporation has
been appointed conservator or receiver, including any sale or
disposition of assets acquired by the Corporation under section
1823(d)(1) of this title, the Corporation shall conduct its
operations
in a manner which--
(i) maximizes the net present value return from the sale or
disposition of such assets;
(ii) minimizes the amount of any loss realized in the resolution of
cases;
(iii) ensures adequate competition and fair and consistent
treatment
of offerors;
(iv) prohibits discrimination on the basis of race, sex, or ethnic
groups in the solicitation and consideration of offers; and
(v) maximizes the preservation of the availability and
affordability of
residential real property for low- and moderate-income individuals.
18. Appropriately, appellants do not appeal the district court's decision
to the extent that the court held that the statute does not expressly
grant appellants a private right of action. See Touche Ross & Co. v.
Redington, 442 U.S. 560, 568, 99 S.Ct. 2479, 2485 (1979) (holding that
a right of action must be clear from the text of the statute).
35
of the class for whose special benefit the statute was
created; (2) whether there is either an explicit or implicit
legislative intent to create or deny a private remedy; (3)
whether an implied remedy is consistent with underlying
policies of the statute; and (4) whether the cause of action
is one that traditionally is relegated to state law and the
area is a state concern so that it would be inappropriate to
imply a federal cause of action. See id. at 78, 95 S.Ct. at
2088.
In deciding whether to recognize an implied private right
of action, we ascertain the intent of Congress;"[u]nless
such `congressional intent can be inferred from the
language of the statute, the statutory structure, or some
other source, the essential predicate for implication of a
private remedy simply does not exist.' " Karahalios v.
National Fed'n of Fed. Employees, Local 1263, 489 U.S.
527, 532-33, 109 S.Ct. 1282, 1286 (1989) (quoting
Thompson v. Thompson, 484 U.S. 174, 179, 108 S.Ct. 513,
516 (1988)). Thus, we recently have noted that we should
focus our inquiry on the first two Cort factors. See
Mallenbaum v. Adelphia Communications Corp., 74 F.3d
465, 469 (3d Cir. 1996).
Appellants contend that the district court erred by failing
to give proper consideration of two circumstances which
distinguish this case from others involving receiverships: (1)
the existence of a surplus in the Meritor receivership; and
(2) the appellants, as shareholders, have an express
statutory right to distribution of this surplus. According to
appellants, in the context of a receivership operating with a
surplus, the Cort factors are met and thus we should imply
the existence of a private right of action in their favor.
We disagree. Our analysis of the Cort factors, with an
emphasis on the first two, see Mallenbaum, 74 F.3d at 469,
leads us to the conclusion that there is no evidence of a
congressional intent to provide for a private remedy.
Because such intent is our ultimate guidepost, wefind that
the shareholders of a failed financial institution do not have
a private right of enforcement of the FDIC's duty to
maximize gain and minimize loss in its disposition of the
institution's assets.
36
First, appellants, as shareholders, are not members of a
class for whose special benefit Congress created section
1821(d)(13)(E). The duty to maximize gain in the disposition
of assets has implications broader than to benefit
shareholders. The FDIC's duty to maximize gain and
minimize loss primarily is intended to benefit the insurance
fund by minimizing the claims against it, thereby reducing
the cost to the taxpayers. Thus, the benefits gained by the
shareholders and other claimants are incidental to the
primary intended beneficiaries, the insurance fund and the
taxpayers. See FDIC v. Niblo, 821 F. Supp. 441, 455 n.59
& 456 (N.D. Tex. 1993); FDIC v. Updike Bros., Inc., 814 F.
Supp. 1035, 1041-42 (D. Wyo. 1993).
In a similar context, we have noted that the FDIC does
not have a duty to shareholders. See First State Bank of
Hudson County v. United States, 599 F.2d 558, 563 (3d Cir.
1979). In Hudson County, we held that the FDIC's duty to
examine banks, see 12 U.S.C. S 1820, is intended to
prevent losses which ultimately would result in claims
against the insurance fund. See id. at 562-63. We also
noted that while the examination incidentally might benefit
the bank, its depositors, and its creditors, the primary
purpose of the examination is to safeguard the insurance
fund. See id. at 563. Further, our conclusion is supported
by evidence in the legislative history that Congress was
concerned with reducing the costs to taxpayers. See H.R.
Rep. No. 101-54(I), 101st Cong., 1st Sess., 1, 514-15,
reprinted in 1989 U.S.C.C.A.N. 86, 308-09.
In addition, the duty to maximize gain and minimize loss
does not operate for the special benefit of shareholders
where the receivership is operating with a surplus. Section
1821(d)(11)(B) establishes a shareholder right to
distribution of funds in a case where there is a surplus
after the payment of all claimants and administrative
expenses.19 Given this right to distribution, appellants
_________________________________________________________________
19. The text of the section provides:
In any case in which funds remain after the depositors, creditors,
other claimants, and administrative expenses are paid, the receiver
shall distribute such funds to the depository institution's
37
argue that the FDIC fulfills its statutory duty to maximize
gain in order to preserve the surplus, thus for the sole
benefit of the shareholders. We disagree.
We recognize that the express right to distribution of
surplus granted under section 1821(d)(11)(B) creates a
direct interest in shareholders. See California Hous. Sec.,
Inc. v. United States, 959 F.2d 955, 957 n.2 (Fed. Cir. 1992)
(rejecting the argument that the shareholders did not have
standing to claim an unconstitutional taking); Branch v.
FDIC, 825 F. Supp. 384, 402-06 (D. Mass. 1993) (holding
that shareholders of a failed financial institution have
standing to assert derivative claims because they retain the
right to distribution of surplus). This right, however, does
not transform the FDIC's duty to maximize gain and
minimize loss into one inuring solely to the benefit of the
shareholders. The FDIC performs its section 1821(d)(13)(E)
duty to maximize gain intending to reduce the claims
against the insurance fund, not to ensure that shareholders
receive distribution.
Because the section clearly inures to the benefit of other
classes, the first Cort factor militates strongly against
granting a private remedy. Turning to the second Cort
factor, the parties agree that there is no statement in the
legislative history which suggests that Congress intended
either to create or deny a private right of action to enforce
the FDIC's duty to maximize gain and minimize loss. While
congressional silence does not preclude a court from
implying a private right of action where the other factors
are satisfied, see Zeffiro v. First Pa. Bank & Trust Co., 623
F.2d 290, 297 (3d Cir. 1980), here we find that the other
factors do not support finding a private right of action.
_________________________________________________________________
shareholders or members together with the accounting report
required under paragraph (15)(B).
12 U.S.C. S 1821(d)(11)(B).
Although Congress recently amended this section, the amended
provision only applies to institutions for which receivers were appointed
after the enactment of the amendment. See Pub. L. No. 103-66,
S 3001(a), 107 Stat. 312, 337 (1993). Thus, our discussion is governed
by this version of this section prior to the 1993 amendment.
38
While we acknowledge that an action against a federal
entity to enforce rights expressly granted under federal law
traditionally is not relegated to state law, our inquiry ends
upon our conclusion that the first two Cort factors are not
met. See California v. Sierra Club, 451 U.S. 287, 298, 101
S.Ct. 1775, 1781 (1981) (noting that the second two factors
"are only of relevance if the first two factors give indication
of congressional intent to create the remedy").
2. FDIC's Duty to Provide Annual Accounting
The district court dismissed appellants' claim for a full
and fair accounting from the FDIC-Receiver, to which
appellants alleged they were entitled under 12 U.S.C.
S 1821(d)(15)(A)-(C). The court found that the FDIC-Receiver
had complied with the literal requirements of the provision
by providing a copy of the annual accounting report to
appellants upon their request, and refused to engraft an
enforceable duty to provide a correct accounting to
shareholders.
We again part with the district court's approach, but not
its result. While the district court focused on whether an
accuracy requirement is implicit in the statute, wefind the
more appropriate inquiry to be whether the statute grants
shareholders an implied private right of enforcement. We
hold that it does not.
The relevant portion of 12 U.S.C. S 1821(d)(15) provides:
(A) The Corporation as conservator or receiver shall,
consistent with the accounting and reporting practices
and procedures established by the Corporation,
maintain a full accounting of each conservatorship and
receivership or other disposition of institutions in
default.
(B) With respect to each conservatorship or
receivership to which the Corporation was appointed,
the Corporation shall make an annual accounting or
report, as appropriate, available to the Secretary of the
Treasury, the Comptroller General of the United States,
and the authority which appointed the Corporation as
conservator or receiver.
39
(C) Any report prepared pursuant to subparagraph (B)
shall be made available by the Corporation upon
request to any shareholder of the depository institution
for which the Corporation was appointed conservator
or receiver or any other member of the public.
Although appellants urge us to imply a requirement of
accuracy, they cite no authority which directly supports
this view. Rather, they cite analogous authority, which we
find unpersuasive in this context. See First Nat'l Bank of
Gordon v. Department of Treasury, 911 F.2d 57, 62-63 (8th
Cir. 1990).20 Despite this lack of authority, we recognize
that, in a practical sense, at some point the right to an
accounting may be rendered meaningless if the accounting
is not accurate. Nevertheless, even if we were to imply an
accuracy requirement, we must affirm the district court's
dismissal of this claim because our analysis of the Cort
factors establishes that the shareholders do not have a
private right of action to enforce the FDIC duty.
The shareholders are not members of a special class for
whose benefit the statute was created. Rather, the plain
language of the statute puts shareholders on par with
members of the general public. The statute gives
shareholders and members of the public identical rights --
the FDIC must make the annual report available to either
upon request -- and the statute establishes these rights in
the same subsection. We see no reason, therefore, to
distinguish between shareholders and members of the
general public for purposes of this statute.
Further, the legislative history is silent as to whether
Congress intended to create a private remedy. Because the
first two Cort factors are not satisfied, our inquiry ends
here. See Sierra Club, 451 U.S. at 298, 101 S.Ct. at 1781.
_________________________________________________________________
20. In First National, the court addressed the interpretation of a statute
which requires financial associations to make reports of condition in
accordance with 12 U.S.C. S 1811 et seq. See 12 U.S.C. S 161(a). The
court found that a bank violated section 161(a) where the report of its
condition was not accurate. Section 161(a) includes a requirement that
the report be accurate to the best knowledge and belief of the officers
who sign it, but does not expressly make the bank responsible for an
inaccurate report. In contrast, section 1821(d) does not include language
concerning accuracy. Thus, First National is distinguishable.
40
Because there is no indication of a congressional intent
to grant shareholders a private right to enforce the FDIC's
duty to provide an accounting, we will affirm the dismissal
of this claim. We emphasize, however, that we render no
opinion on whether the FDIC has a duty to provide an
accurate accounting to those officials enumerated in
subsection (B).
IV. CONCLUSION
For the foregoing reasons, we will affirm the district
court's dismissal of appellants' claims.
41
ROTH, Circuit Judge, concurring and dissenting:
I concur for the most part with the majority's thorough
and thoughtful opinion. I cannot, however, agree with their
conclusion in Part III.C.2. that the appellants do not have
a right to demand an annual accounting beyond what the
FDIC might choose to provide to them. The statute states
that the FDIC shall "consistent with the accounting and
reporting practices and procedures established by the
[FDIC], maintain a full accounting of each. . . receivership"
and that it shall provide to any shareholder or to any other
member of the public a copy of its annual report with
respect to each such receivership. 12 U.S.C.
S 1821(d)(15)(A)-(C) (emphasis added).
I conclude from the above statutory language that the
shareholders, as well as the general public, have the right
to an annual report which has been prepared in a manner
which is consistent with the accounting and reporting
practices established by the FDIC. It has not been
documented on the record here that the annual reports
supplied to appellants by the FDIC do conform to such
practices. I would therefore remand this issue to the district
court for a determination whether the reports in question
meet the required statutory standard. Cf. First Nat'l Bank of
Gordon v. Department of Treasury, 911 F.2d 57, 62-63 (8th
Cir. 1990) (holding that bank violated 12 U.S.C.S 161(a),
requiring an accurate report, when it submitted an
inaccurate one to the Comptroller of the Currency).
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
42