# Petition for Writ of Certiorari — Industrial National Bank of Rhode Island v. Wingate Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_1339%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1970 - **Citation:** 397 U.S. 987 ## Text ail ck ia - Office Supreme Court, US. LIBRARY 2 129° FILED . IPREME COURT. LI. & nn. MAY 19 1969 ioe JOHN F. BAVIS, CLERK In the Supreme Court of the United States. Octoser Term, Mm 1/969 - INDUSTRIAL ay es BANK OF RHODE =. 3 ISLAND, eS Petitioner, ; v. es : THE WINGATE CORPORATION, Respondent. : — ae 2 “ / PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT. . MartHEew W. Gortne, Hincxk.ey, ALLEN, Sauissury & Parsons, 2200 Industrial Bank Building, Providence, Rhode Isfand 02903, Rosert W. MEseERve, : a Nutter, McCiennen & F isu, 75 Federal Street, Boston, Massachusetts 02110, : Attorneys’for the Petitioner. Of Counsel: Joun B. NEwHaAtL, Gorpon L. DorrFsr, Nutrer, McCuennen & F isu, 75 Federal Street, — Boston, Massachusetts 02110. ADDISON C. GETCHELL & SON, INC., LAW PRINTERS, BOSTON. Table of Contents. ¢ Opinions below Jurisdiction Question presented Statutes involved Statement of the case Reasons for granting the writ 1. The decision of the Court of Appeals in this case is in square conflict with the decision of the ‘Court of Appeals for the Eighth Circuit in Asso- ciation of Data Processing Service Organiza- tions, Inc. v. William B. Camp, Comptroller of the Currency of the United States, No. ‘19, 218, decided February 6, 1969 2. The First Circuit in this case has decided a fed- eral question in a way in conflict with applicable decisions of this Court Conclusion Appendix A. Appendix B. | Appendix C. Appendix D. Appendix E. Appendix F. Appendix G. The slbiiactit below The opinion of the Court of Appeals below _ The seule of the District Court Statutes involved ~—_ vy Order. of the District Court "granting motions to dismiss Opinion of the Court of Appeals for the Eighth Circuit in Association of Data Processing, ate. Portions of legislative history of the Bank Service Corporation Act erp = 4 WO rw pnw bw wv rv li TABLE OF AUTHORITIES CITED Table of Authorities Cited. CasEs. Association of Data Processing Service Organiza- ‘tions, Inc., v. Camp, 279 F. Supp. 675 Association of Data Processing Service Organiza- tions, Inc. v. William B. Camp, Comptroller of the ‘Currency of the United States, No. 19,218, “dec. Feb. 6,1969 Commissioner of Internal Revenue v. Bilder, Execu- F trix, 369 U.S. 499 Egan v. City of Aurora, 365 U.S. 514 Hardin v. Kentucky Utilities Co., 390 U.S. 1. ‘Larson v. Domestic and Foreign Commerce Corp., 337 U.S. 682 : - New York, sity of v. Saper, Trustee in at ae eacig STATUTES. - Bank Service Corporation Act, 76 Stat. 1132, 12 U.S.C. §§ 1861-1865 | ‘ _ National Bank Act, 12 U.S.C. § 24(7) 28 U.S.C. § 1254(1) | % 3 | | MISCELLANEOUS. Comptroller’s Manual for National Banks, par. 3500 (Oct. 15, 1966 ed.) Rules of the U.S. Supreme Court, Rule 19(b) - {pS Rin Laie sa SOY eae 3n.” " —_ eee Ls In the Supreme Court of the United ‘States... 7 : Ocroser Term, 1968. é a "No. INDUSTRIAL NATIONAL BANK OF RHODE ISLAND, . Petitioner, epee v. THE WINGATE CORPORATION, | z Respondent. d PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT. The petitioner, Industrial National Bank of Rhode Island, prays that a writ of certiorari issue to review the judgnient of the United States Court: of Appeals for the First Circuit entered in the above-entitled case on March 27, 1969 (App. A, imfra, p. 9)... The decision below is in conflict with a decision of the United States Court of Ap- peals forthe Eighth Circuit on the same issue of law and decides a federal question in a way in conflict with ap- plicable. decisions of this Court. 1**App.’’ refers to an Appendix to this petition. y’ Jeb at te Seapine ges ae RTE Rt tae Sa. $ a : 2 Opinions Below. sh The opinion of the Court of Appeals (App. B, infra, pp. 10-21) is unreported. The opinion of the District Court (App. C, mfra, pp. 23-36) is reported at 288 F. Supp. 49. Jurisdiction. ‘The jurisdiction of this Court is invoked under 28 U.S.C: § 1254(1). — Question Presented. m Accepting the conclusion of the Court of Appeals that .. the National Bank Act does not give the respondent-' plaintiff standing to sue to enjoin the petitioner-defendant from providing data processing services for others, and ° where the\ only statute relied upon by the’ respondent in its pleadings was said Act, do the provisigns of the Bank Service Corporation Act give it such standing? - Statutes Involved. a The statutory provisions herein involved .are portions of the Bank Service Corporation Act, 76 Stat. -1132, 12 U.S.C. §§ 1861-1865, and of the National’ Bank Act, 12. : U.S.C. § 24(7) (App. D, infra, p. 37). S “\ Statement of the ‘Case. The respondent’s Améndéd Complaint (R. p. 7)? alleged that the petitioner, a national bank, was offering data processing services to ‘its customers and to the public at large and that this placed the petitioner in unlawful com- 2°*R.’’ refers to the Record on appeal. ? a aloe ietiabee ¢ ad 3 petition with the respondent, a commercial data processor, ° and exceeded the’ power granted nationat banks under the National Bank Act. - ) The City of Providence and the Comptroller of the Currency intervened. The respondent sought injunctive and declaratory relief, asserting that the ruling of the Comptroller with respect to data processing activities *was beyond his authority. - Motions were filed by the City of Providence, the bank . and the Comptroller to dismiss thé action for lack of Standing of the respondent to maintain it, and lack of ° jurisdiction in the District Court over the subject matter (R. pp. 18, 18). d ; The District Court granted the motions and dismissed the action (App. E, infra, p. 39). The Court of Appeals reversed. ? | ? Reasons for Granting the Writ. ‘1. The decision of the Court of Appeals in this case is in square conflict with the decisionof the Court of Appeals for the Highth Circuit in Association of Data Processing Service Organization, Inc. v. William B. Camp, Comp- _ troller of the Currency of the United Stated, No. 19,218, decided February 6, 1969 (App. F, infra, pp. 41-53). In that case};the District Court for the District of Min- ~ nesota held the plaintiffs to be without, standing to sue. * The ruling appears*“in the Comptrolle?’s Manual for National Banks, paragraph 3500 (October 15, 1966 ed.) in the. following language : . - -- ‘*Incidental to its banking services, a national bank may make available its data processing equipment or per- _ form data processing services on such equipment for ' other banks and bank customers.’’ ° . eee aee ran 4 (279 F. Supp. 675 (1968)). The Court of Appeals affirmed.‘ _ The decision of the District Court in the instant case (which was in accord with the decisions of the District Court in Minnesota and.the Court of Appeals for the Eighth Cir- cuit) has been reversed by the First Circuit, creating an irreconcilable conflict between the circuits. _ The issue in these two eases is identical. The plaintiffs were corporations engaged.in performing data processing services; the defendants included national banks and the Comptroller of the Currency. The relief sought in each case was the same, and in each the District Court dis- missed the complaint on the ground that the plaintiffs -lacked standing to sue and that the court, therefore, had no jurisdiction over the subject matter ,of the action. In each case, plaintiffs argued below that thé Bank Service Cor- poration. Act afforded the necessary statutory aid to standing. . The problem presented by. this conflict is of the utmost importance. It is unthinkable that a national banking _ System can operate properly if national banks in some circuits are subject to suit for competing with commercial data processors and national banks in other areas are not. Uniformity in the administration of the national banking system is as important as uniformity im the ad- ministration of the Bankruptcy Act (see City of New York v. Saper, Trustee in Bankruptcy, 336 U.S. 328 (1949)), . or in the administration of the Internal Revenue Code (see___ Commissioner of Internal Revenue v. Bilder, Executria, 369 U.S. 499 (1962)). } The petitioner recognizes the general principle that this Court is more reluctant to grant ‘certiorari where the cir- cuit decision pp question dges not fiflally: dispose of the m Zs u L * The plaintiff in that case has petitioned for certiorari (see No. 1246) on the ground, inter alia, that that decision conflicts with the decision in the instant case. . > we litigation. That general principle would seem not applicable to the instant controversy. A petition for cer- tiorari has been filed with relation to the Eighth Cireuit decision—a decision which finally disposes of that’ case, unless certiorari be granted. It would seem that if cer- tiorari is granted in the Kighth Cireuit case, certiorari should also be granted in the instant case which conflicts with the Kighth Circuit decision. Quite apart, however, from the application made in the Eighth Circuit case, the major jurisdictional question raised” by the instant case. is'in itself sufficiently important to the administration of justice and fundamental to the further conduct of the case so that it ought to be resolved now, and before the parties to the instant case have incurred the expense of trial on the merits. See Larson v. Domestic and Foreign Commerce Corp., 337 U.S. 682, 685 (1949). 2. The First Circuit in this case has decided a federal question in a way in conflict with applicable decisions of this Court. The writ should issue on this ground, (See Rule 19(b), and. Egan v. City of Aurora, 365 U.S. 514 (1961).) / The most recent case decided by this Court, restating the doctrine’ of a long line of cases involving standing, is Har- din v. Kentucky Utilities Co., 390 U.S. 1 (1968), in which the. Court said at p. 6: ‘‘This Court has, it is true, repeatedly held that ~~—~——the economic injury which results from lawful compe- tition cannot, in and of itself, confer standing on the — injured business to question the legality of any aspect of its competitor’ s operations. Railroad Co. v. Eller- man, 105 U.S. 166, 26 L.Ed. 1015 (1882); Alabama Power Co, v. Ickes, 302 U.S. 464, 58 S.Ct. 300, 82 L.Ed. 374 (1938) ; Tennessee Power Co. v. TV A, 306 U.S. 118, ‘ ~ . PAR pe IT ore ee On ee * sate Ge has ° 6 59 8.Ct. 366, 83 L.Ed. 543 (1939). Perkins v. Lukens Steel Co., 310 U.S. 113, 60 S.Ct. 869, 84 L.Ed. 1108 (1940). But competitive injury provided no basis for standing in the above cases simply because the statu- tory and constitutional requirements that the plaintiff sought to enforce were in no way concerned with pro- tecting against competitive injury. In contrast, it has been the rule at least since the Chicago Junction Case, 264 U.S. 258, 44 S.Ct. 317, 68 L.Ed. 667 (1924), that when the particular statutory provision invoked does reflect a legislative purpose to protect a competitive interest, the injured competitor has standing to re- quire compliance with that provision. See Alton R. Co. v. United States, 315 U.S. 15, 19, 62 S.Ct. 432, 435, 86 L.Ed. 586 (1942). Chicago v. Atchison, T. & S. F. R. Co., 357 U.S. 77, 83, 78 S.Ct. 1063, 1066, 2 L.Ed.2d 1174 (1958).’’ (Emphasis supplied.) The Bank Service Corporation Act prohibits certain ac-_ tivities by bank service corporations. It has no application to the operations of a national bank and contains no prohibitions against their activities. The First Cireuit has adopted an erroneous view of the settled law on this ques- tion. See the portion of the opinion of the First Circuit which appears in App. B, infra, at p. 20, and in particular . this comment: ‘‘We think Congress es. provided the sufficient statutory aid to standing even though the competition may not be the precise kind Congress legislated ° against.’’ There was in this legislation no purpose or design to protect the respondent-plaintiff from competition by banks « 66. RAGAN (853 thal PCR. LIA A ADELE TE as distinguished from competition by bank service cor- porations. The legislative history does not compel or permit the finding upon which the opinion of the First Cireuit is based. (See extracts from legislative history, App. G, infra, at pp. 55-60.) With full knowledge that national banks were,competing with enterprises like that of the respondent- plaintiff, Con- gress failed to amend the National Bank Act to prohibit or ~—s such activities by individual national banks. Conclusion. Because the court below has erroneously decided an important federal question and its decision is in conflict with a decision of the United States Court of Appeals for the Eighth Circuit on the same issue of law and is in con- flict with applicable decisions of this Court, this petition for writ of certiorari should be granted. Respectfully submitted, MarrHew_W. Gorin, Hinckuey, ALLEN, Sauispury & Parsons, 2200 Industrial Bank Building, Providence, Rhode Island 02903, Rosert W. MEseERvE, Nutter, McCuiennan & Fisn, 75 Federal Street, .- Boston, Massachusetts 02110, Attorneys for the Petitioner. Of Counsel: Joun B. NEwHALL, Gorpon L. DogrFer, Nutter, McCiennen & Fisu, 75 Federal Street, Boston, Massachusetts 02110. oes Ane te i lle hel MSs wane Appendix ‘A. - t Unirep Starrs Court or APPEALS For THE First Circuir No. 7186. THE WINGATE CORPORATION, Plaintiff, Appellant, o.' eee INDUSTRIAL NATIONAL BANK OF RHODE ISLAND, ET AL.., Defendants, Appellees, JUDGMENT By the Court: /s/ Roger A. Stinchfield Clerk. ’ Jap RR aa a IND ae eae aes BPS ee a CR PME RE Sao meln AI Bec le A RRS Os PE te. SIE tb AO aE BA Ac a Sore we AL. Wi Peed Lat GEA Breet Un SS i li } ae 10 Appendix B.- ' UNITED STATES — or APPEALS For THE First Circurr : No. 7192. = ‘tis Arnotp Tours, INc., ET AL., : ; PLAINTIFFS, APPELLANTS, v. Wituiam B. Camp ET AL., ca Ne DEFENDANTS, APPELLEES. <— . APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS and No. 7186. ‘ Tur WexcaTe CoRPORATION, PLAINTIFF, APPELLANT, v. InpustriaAL NaTIUNAL BANK ET AL, DEFENDANTS, APPELLEES. APPEAL FROM THE UNITED STATES! DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND Before Aupricu, Chief Judge, - Woopsury,* Senior Circuit Judge, and CorFin, Circuit Judge. No. 7192. Richard J. Murphy, with whom Timothy J. Murphy was on brief, for appellants. Alan 8. Rosenthal, ‘Attorney, ise of Justice, with whom *Sitting by designation. 11 2 sARNOLD TOURS — WINGATE CORPORATION CASES Edwin L. Weisl, Jr., Assistant ‘Attorney General, Paul F. Mark- ham, United State Attorney, and Leonard Schaitman, Attorney, Department of Justice, were on brief, for William B. Camp, Comptroller of the Currency, appellee. . : Elliott. V. Grabill, with whom Arthur H. Bloomberg and Gra- bill, Ley & Butterworth were on br'ef, for South Shore National Bank, appellee. : \ No. 7186. . Edward J. Regan, with whom Eustace T. Plaikas and Graham, Reid, Ewing & Stapleton were on brief, for appellant. Matthew W. Goring, wita whom Edward M. Watson, Robert W. Meserve, John B. Newhail, Gordon L. Doerfer, Hinckley, Allen, Salisbury & Parsons and Nutter, McClennen & Fish were on brief, for Industrial National Bank of Rhode Island, appellee. Alan 8S. Rosenthal, Attorney, Department of J ustice, with whom Edwin L. Weisl, Jr., Assistant Attorney General, Edward P. Gal- logly, United States Attorney, and Stephen R. Felson, Attorney, Department of Justice, were on- brief, for William B. Camp, Comptroller of the Currency, appellee. Robert J. McOsker, City Solicitor, and‘ Vincent J. Piccirilli, Assistant City Solicitor, on brief for City of Providence, appellee. A Hale on brief for The American Bankers Assoc tion, micus curiae. * March 27, 1969. Avpricu, Chief Judge. These are two actions by parties _ engaged in certain business pursuits to restrain competi- » tion from national banks which, supported by rulings of the Comptroller of the Currency, have entered their fields. Plaintiffs ‘seek, basically, to attack these rulings. In both ‘ eases the district courts held that they were without stand- ing to do so, and dismissed the complaints on motions of the defendants. Plaintiffs appeal. THE TRAVEL AGENCY BUSINESS We consider first the action brought by Arnold Tours, Ine. and some forty other independent travel agencies in Massachusetts, allegedly on. behalf of others similarly sit- iB der cs ie ee Be PE SE, alr EN SOD aR Ee CR Ee SIE a ie B Pe EN aE RE ON C5. sk te 12 ~ OPINION OF THE COURT 2 uated as well as themselves, against the Comptroller and the South Shore National Bank. The bank, in reliance upon a ruling by defendant Comptroller’s predecessor,’ is en- gaging not merely in the financial aspects of travel, but ‘“‘full’’ travel service, or, a complete travel agency busi- ness. To quote from what is said to be the bank’s own an- nouncement, its employees are prepared to arrange for bi- oe eycles in Bermuda, villas on the Riviera, and houseboats Wi in Kashmir. The Comptroller argues at length that this is Be tgte ts traditional and legitimate bank activity. We-do not, how- Bs ever, consider this matter except to say that plaintiffs pre- sent enough of an issue so that the question of standing ¢ is properly before us. We also note that no question of re- 3 viewability of the Comptroller’s rulings has been raised. See generally, Saferstein, Nonreviewability: A Functional Analysis of ‘‘Committed to Agency Discretion,’’ 82 Harv. L. Rev. 367, 383 & n. 60 (1968). Our sole question isthe cor- rectness of defendants’ contention, which we will par Join as saying that what the bank chooses to do is, oth literally and figuratively, none of plaintiffs’ business. It has long been settled that an ordinary competitor has no standing to complain of a party’s lack of legal authority to engage in his business, in a suit against the competi- tor, the government, or both. Railroad Co. v. Ellerman, 1881, 105 U.S. 166; Alabama Power Co. v. Ickes; 1938, 302 U.S! 464; Tennessee Power Co. v. TV A, 1939, 306 U.S. 118. Despite numerous exceptions, this principle has withstood 1**97475. National banks acting as travel agents. Incident to those powers vested in theni under 12 U.S.C. 24, national banks may provide travel services for. their customers and receive compensation therefor. Such services may include the sale of trip insurance and the rental of automobiles as agent for a local rental service. In connection, therewith, national banks may advertise, develop, and extend such travel services for the purpose of attracting customers to the bank. See {[7376.’’ Pi Lami CRA aR Eiiiimind eh ROAD ay / 13 4 ARNOLD TOURS — WINGATE CORPORATION CASES erosion not only, because of the tr aditional rationale be- . _hind standing doctrines generally, sce Flast v . Gohen, 1968, 392 U.S. 83, 91-101, but because of the policy encouraging free and open competition—a policy that favors competi- tion in the market place, not in the courts. The excep- tions, where standing is recognized, are as well estab- se as the pr inciple itself. The first is for complaints of ‘legal’? competition, by which is usually meant competi- tion that is unlawful as to plaintiff apart from considera- tions of corporate power or authority. See Alabama Power Co. v. Ickes, supra at 479; Central Louisiana Elec. Co. v. REA, W.D.La., 1964, 236 F.Supp. 271, 277, rev’d, 5 Cir., 354 J. 2d 859, aut. dented 385 U.S. 815; but cf. Kansas Cite Ly Power & Iaght Co. v. McKay, D.C.Cir. , 1955, 225 F.2d 924, cert, denied 350 U.S. 884. Plaintiffs to not suggest that the Comptroller has sanctioned, or that.the bank has under- taken, any unfair, conspiratorial, or criminal methods of competition, or that there has been any violation of the anti- trust laws. The second exception is where it is claimed that some ‘‘legal right’? hasbeen injured, by which is meant, in its nonconclusory sense,’ that plaintiff has an independent property right, or a right to be free from the particular kind of competition he is challenging. Such a ~ right is attached to or arises out of an exclusive fran- chise, on the one hand, or a restricted license or the like, on the other. Frost v. Corporation Commission, 1929, 278 US. 515; cf. Whitney National Bank v. Bank of New Or- leans, D.C.Cir., 1963, 323, F.2d 290, 299-300, rev’d on other grounds, 379 U. S. 411. Plaintiffs fit in no such category. The final general exception is where the plaintiff can show the existence of a ‘‘statutory aid to standing”’ for a class of persons which includes himself. This statutory aid may take the form of a ‘‘judicial review”’ provision of the particular administrator in question for ‘‘parties ag- 14 OPINION OF THE COURT 4) > sf . ° ; . we grieved,’’ ‘‘adversely affected,’’ or the like. In such a ease, FCC v. Sanders Bros. Radio Station, 1940, 309 U.S. 470, would presumably provide standing for legitimate competi- tors. See generally, Jaffe, Judicial Control of Adminis- trative Actions, 513-31. There is, however, no such provision as ‘to the Comptroller. of ,the Currency‘ |. An alternative statutory aid. may be found if there’ is an indication of Congressional intent, explicit or im- plicit, in the relevant ‘substantive acts to grant protec- tion to the competitive interests of a class of -buSinesses ' which includes the plaintiff. Thus in Hardin v. Kentucky Utilities Co., 1968, 390 U.S..1, the Supreme Court found that a competing private utility company had standing — igi to challenge the.expansion of TVA into new areas in al-’ \ leged violation of the ‘area limitations of section 15d(a) of . the Tennessee Valley Authority Act, 16 U.S.C. § 831n-4 (a). The Court said, ‘‘[O]ne of the primary purposes of the area limitations in § 15d of the Act was to protect private utilities from TVA competition. ... Since re- spondent is thus.in the class which § 15d is designed to pro- ; tect, it has standing . . . .’’ 390 U.S. at 6-7. The only possible statutory aid-to the standing of travel agents in national banking legislation exists in 12 U.S.C. _§24(7). This section states that national banks may ‘‘exer- cise . . . all such incidental powers as shall be heceéssary to carry on the business of banking,’’ and then lists nu- merous powers explicitly granted. It has long been settled in suits over private contracts that the enumeration of such powers is an effective and strong prohibition of all activities not enumerated and not incidental to banking. See First National Bank v. Nationai Exchange Bank, 1875, 92 U.S. 122, 128; Nativnat Bank v. Matthews, 1878, 98 U.S. 621, 625; Logan County National Bank v. Townsend, 1891, 15 6 ARNOLD TOURS — WINGATE CORPORATION CASES 139-U.S. 67, 73. But even assuming that’ national banks are prohibited by section 24(7) from entering into the business of procuring travel arrangements, this is not “sufficient to provide a statutory aid to standing. The pro- hibition must be demonstrably intended to protect the competitive interests f other members of the prohibited business. See the condurring opinion of J udge Thornberry in Saxon v. Georgia Ass’n. of Independent Ins. Agents,. 1968, 5 Cir., 399 F.2d 1010, 1019; Association of Data Proc- essing Serv. Organizations v. Camp, D.Minn., 1968, 27 . F.Supp. 675, aff’d, 8 Cir. 2/6/69, | F 2d . We, too, (see 8th Cir. opinion in Camp, n.10), cannot accept the simplistic siggestion by the majority in Georgia Ass’n, 399 F.2d at 1016, that as soon as it appears that the . competitive activities were ‘unlawfully carried out the plaintiffs have standing. Sache The plaintiffs have not pointed to, nor have we in our research discovered, any evidence that Congress in de- - limiting the scope of banking activity in the ultra vires sec- tion, quoted supra, was concerned, in 1863 and 1864 when the national banks were formed,” with competitors in the businesses impliedly prohibited, much less in any. particu- larity with travel agents .(if they then existed). Rather, the limitations were for the purpose of insuring the sta-. bility, liquidity, and safety of the banks. See National Bank v. Matthews, supra at 626; Davis, Banking Regulation To- day: A Banker’s View, 31 Law & Contemp. Problems 639 (1966). See also Million, The Debate of the National Bank Act of 1863, 2 J. of Pol. Econ. 251 (1894). No doubt Con- gress has continuously, from 1864 to the present, been “‘very careful’’ (see infra) in restricting the aci.vities of * National Bank Act of 1863, ch. 58, 12 Stat, 665; National Bank Act of 1864, ch.. 106, 13 Stat. 99. eas 16 .OPINION OF THE COURT 7 7 banks; and no doubt Congress has been, as ‘we shall see ‘in the second portion of this opinion, specifically concerned with certain potential competitors of the banks. But as Senator Proxmire pointed out while offering an amend- ment to banking legislation * specifically designed to pro- tect particular competitors, the thrust of the close regula- tion of banks is for purp6ses of stability: ‘‘We are very careful in the regulations.of banks. This has principally been done to assure the solvency of the banks by limit- ing the activities of banks to safe and relatively liquid investments.’’ 108 Cong. Rec. 22031 (1962). (See also S.Rep. ' No. 2105, 87th Cong., 2d Sess. (1962) (Supplemental views of Senators Proxmire, Douglas, and Neuberger) in 2 U.S. Code Cong. & Admin. News, 1962, at 3887. While at some point Congressional concern with a sufficient quantity of specific competitors of banks might indicate a Congres- sional intent that section 24(7) should now be read as a easure not only to protect investors but also to protect otential members of prohibited activities, such a point has not been reached, More proof of Congressional solici- ° or has undergone substantial change. First, they argue that section 10(a) of the Administrative Procedure Act, 5 U.S.C. § 702 provides standing for any persons claim- ing to be “adversely ete in fact.’’ This contention seems derived from thé interpretation of section 10(a) urged by Professor Davis in his Administrative Law Trea- tise, § 22.02, and presumably adopted in American Presi- 3 This legislation will form the basis of our holding in the second half of this opinion. * 17 8 ARNOLD TOURS — WINGATE CORPORATION CASES dent Lines v. FMB, D.D.C., 1953, 112 F.Supp. 346: We, however, choose to side with Professor Jaffe® and the majority of the courts ® in holding that the.passage of the APA was not intended to alter to such a drastic extent previous law on the question of standing. Moreover,. we should add that we have serious reservations whether a test of ‘‘adversely affected in fact’’ would provide a simpler means of deciding the issue of standing. We do not pause for such analysis in the present case, but if, as has been suggested, simplicity and pase of determination is a reason for preferring the new interpretation, we do not find it. The plaintiffs alternatively urge that Flast v. Cohen, supra, indicates a major shift in the judicial attitude to- ' ward the general doctrine of standing; and that while it is not directly in point, this decision indicates that the relevant test for determining standing in this situation is whether the parties are sufficiently adverse to bring into focus the issues raised. See also the concurrence of Judge Thornberry in Saxon v. Georgia Ass’n of Independent Ins. Agents, supra. Our first response to plaintiffs’ contention is that Flast v. Cohen was not intended to have any major _*See also Baker, Watts & Co. vy. Saxon, D.D.C., 1966, 261 F.Supp. 247. 5 Jaffe, Judicial Control of Admitistrative Action 528-30. See also Note, Competitors’ Standing To Challenge Administrative Action Under the APA, 104 U.Pa.L.Rev. 843 (1956). ® See Saxon v. Georgia Ass’n of Independent Ins. Agents, supra, at 1019 n.1; REA v. Northern States Power Co., 8 Cir., 1967, 373 F.2d 686, 692-93 & nn. 9-10, cert. denied 387 U.S. 945; Kansas City Power & Light Co. v. McKay, supra. 7 Indeed, one of the bases for the rule against competitors’ suits might well be the difficulty of determining whether mere increased competition is an injury in fact, particularly where a new and largely undeveloped market is involved. Cf. World Airways, Inc. v. Northeast Airlines, Inc., 1 Cir., 1966, 358 F.2d 691, 18 OPINION OF THE COURT 9 reshaping effect outside the area of standing determina- tions under Article III for taxpayer suits challenging the constitutionality of a federal taxing and spending statute. Such an approach to standing as used in Flast—one focusing solely upon an assessment of the degree of ad- versity and clarity of the particular case—if-applied to questions of administrative law standing would disturb the entire judicial relationship to the administrative as presently understood by Congress. Congress now knows that if it wishes a particular class of plaintiffs to have, or not to have, standing to seek review of agency rulings, it may make, or not make, the types of legislative provi- sions discussed earlier in this opinion, and that is an end to the matter. Under plaintiffs’ proffered approach, the courts would have the last word on standing, based upon their view of the justiciability of the particular circum- stances pleaded. When the conflict is one of constitutional dimensions, such an approach may be necessary. In purely administrative matters we think otherwise. _ Our second answer is that even if we were to assume that Flast v. Cohen was intended to affect other areas, we do not read that case to require all administrative stand- ing determinations to be made solely upon an assessment of the degree of adversity and clarity. Rather, Flast was concerned with reevaluating the standards for determin- ing adversity and clarity in a situation where the relevant standing doctrine was adjudged to rest entirely upon such considerations. Flast is inapplicable when the standing doctrine in question rests upon a basis largely independ- ent of the concerns for adversity and clarity—namely, the limited role of the judiciary in regulating legitimate competition. | * LT doa Tiana Roh = STREP ALL Se nll 19 10 ARNOLD TOURS — WINGATE CORPORATION CASES In sum, we find no acceptable basis for standing for the travel agents. DATA PROCESSING Turning to the second action involving the Comptroller, here plaintiff, Wingate Corporation, which performs cer- . tain data processing services for hire, brings suit to enjoin the defendant, Industrial National Bank of Rhode Island, from performing data processing services for the City of Providence, as sanctioned by a general ruling of the Comptroller. While Wingate, like Arnold, complains that the bank is violating section 24(7) of 12 U.S.C. by provid- ing such services to bank customers, its claim to stand- ing is aided by the presence of specific Congressional legis- lation dealing with banks and computer servicing. In 1962 Congress, after some debate, enacted the Bank Serv- ice Corporation Act, 76 Stat. 1132, which allowed small banks to combine to form a-separate corporation which could own data processing equipment. The primary pur- pose of this legislation was to allow small banks to com- pete more effectively with the larger banks, which had sufficient capital and business to buy their own electric data processing equipment. However, in order to prevent such corporations being used as a subterfuge for entering into the nonbanking business of data processing, and to protect the interests of certified public accounting firms, Congress provided in section 4 of that Act, 12 U.S.C. § 1864, ‘‘No bank service corporation may engage in any activity other than the performance of bank services for banks.’’ The legislative history is clear. The prohibition originated in an amendment proposed by the National Society of Public Accountants, which objected to the origi- nal version of the bill that would have allowed bank service corporations to solicit outside business to some extent. The ————_—————— ee = 20 OPINION OF THE COURT 11 s Accountants feared injury to their growing business of bookkeeping with the aid of computers. The final pro- vision was an obvious response. See 108 Cong. Rec. 16499, 22031 (1962); Hearings on Mise. Bank Bills Before the * Comm. on Banking & Currency of the United States Senate, 87th Cong., 2d Sess., at 79-80 (1962). We conclude that the present plaintiff is within the class of persons intended to be protected by section 4 of the 1962 legislation, and the only question is whether standing exists to complain not of competition from bank service corporations, but from national banks directly. We conclude in the affirmative. When Congress so ex- plicitly provides protection for a particular business against competition from a_ regulated national entity—even though indirectly by regulating a subsidiary—standing exists at least to entertain complaints by that business concerning its competitive relationship to the national entity. Section 4 had a broader purpose than regulating only the service corporations. It was also a response to the fears, expressed by a few senators, that without such a prohibition, the bill would have enabled ‘‘banks to en- gage in a nonbanking activity,’’ S.Rep. No. 2105, supra (Supplemental views of Senators Proxmire, Douglas, and Neuberger), and thus constitute ‘‘a serious exception to the accepted public policy which strictly limits banks to banking.’’ (Supplemental views of Senators Muskie and Clark). We think Congress has provided the sufficient statutory aid to standing even though the competition may not be the precise kind Congress legislated against.* 8 But cf. Association of Data Processing Serv. Organizations v. Camp, 8 Cir., 1969, F.2d © , n.12, which stated that the re- liance of similar plaintiffs upon the Act for standing was ‘‘mis- placed.’’ ~ pe, ORM MRT IIE 1 ee ee Ae ert 12 ARNOLD TOURS — WINGATE CORPORATION ou TA rt Indeed, there is a plausible argument. any th Bank | Service Corporation Act, read in conjunction with 12 U.S.C. § 24(7), does in fact impliedly. prohibit national banks from directly entering into the data processing service | business. If the section four prohibition could be avoided by a small national bank, member. of a group owning a service corporation, soliciting its own data processing cystomers to be serviced by the subsidiary via the bank, the prohibition would be largely illusory. And if a small bank could not directly solicit such customers, it would fol- low that the large banks, owning their own equipment, could not, or the equalizing effect of the Bank Service Corporation Act would be lost. To be considered in op- position to such an argument is the Comptroller’s ruling interpreting the section,® and the phenomenon of the one- bank holding company, that is not covered by the Bank Holding Company Act of 1956, 12 U.S.C. §§ 1841-49, which requires only multi-bank holding companies to divest them- selves of all nonbanking interests. We leave the resolution of this conflict to future determination. For the purposes of the‘issue of standing, we need decide only that the pas- sage of the Bank Service Corporation Act arguably pro- hibits direct entry by national banks into the data process- ing service business. ® Comptroller’s Rulmg 7399 provides in part that : ‘«... such corporations may only perform bank services for banks. Bank services, however, as defined in the Act, would include any service which a bank would ordinarily perform for a customer. Accordingly, if a bank undertakes to handle. the payroll accounts or the accounts receivable of a customer, a bank service corporation may perform for the bank the service necessary to enable the bank to fulfill its undertaking. ’’ i ) PLS NRS PESO Se MS GRE, SE Ea tC PRES So old ee Rai? 2 eg 22 OPINION OF THE COURT 13 In case No. 7192 the judgment of the District Court is affirmed. | In case No. 7186 the judgment of the District Court is: vacated and the case remanded for further proceedings 9 not inconsistent herewith. ee tl ae ee ee ee Pedng LETTERS aia | se dh PER TREE BOUT ER A ie “ ; % 23 Appendix C. \ ™ District Court oF THE UNITED StTaTEs For tHE Districr or RHopE IsLaNp THE WINGATE CoRPORATION Plaintiff v. Crviz Action No. 3847 InpustriaL National Bank ET AL. Defendants Opinion. July 25, 1968 Day, Chief Judge. In this action the plaintiff seeks a declaratory judgment, injunctive relief and compensatory damages on the ground that the marketing of electronic data processing services by the defendant Industrial Na- tional Bank of Rhode Island is illegal, contrary to law and constitutes illegal competition with the plaintiff and others engaged in the business of furnishing such data processing services to the public at large. 3 This action was originally instituted against said In- dustrial National Bank of Rhode Island. Upon the filing of its complaint, the plaintiff sought an ex parte restrain- ing order enjoining said defendant from executing a con- . templated contract with the City of Providence, a municipal corporation, under the terms of which the defendant, its _ agents and servants would perform certain data processing services for.said City of Providence. This relief was de- nied by me. Subsequently William B.,Camp, Comptroller of the Cur- rency of the United States, and said City of Providence 24 were granted leave to intervene as parties defendant. Thereafter plaintiff filed an amended complaint against said three defendants. In said amended complaint plaintiff alleges that it, a corporation organized under the laws of the State of Rhode Island, and doing business as the Wingate Computing Cen- ter, is engaged in the business of,marketing and perform- ing data processing services for the general business com- munity; that the defendant Industrial National Bank of Rhode Island is a national banking association organized and established under the National Bank Act with its prin- cipal place of business in the City of Providence, in the State of Rhode Island; that this action arises under the National Bank Act and involves an interpretation and ap- plication of said‘ Act and a determination of the powers granted to national banking associations under the pro-. visions of said Act as set forthlin Title 12 U.S.C. § 24; that the defendant Comptroller of the Currency has by adminis- trative ruling authorized the defendant Industrial National Bank of Rhode Island and other national banks to perform data processing services for the public at large; that said Comptroller of the Currency and said defendant bank may exercise only those p§wers granted to them, respectively, by said National Bank Act; that under the provision¥ of Title 12 U.S.C. § 24, paragraph Seventh, a = banking association has power: ‘*to exercise by its board of directors,or duly au- thorized officers or agents, subject to law, all such. incidental powers as shall be necessary to carry on the business of banking; ... .”’ be and that in no section of said National Bank Act is a na- tional banking association authorized to engage in any other business activities which are not necéssary to carry 25 on the business of banking, and more specifically, that there is no provision in said Act authorizing a national banking association to engage in the business .of offering and per- forming data processing services on equipment owned by it for the public at large. Plaintiff further alleges that.the ruling’? by said Comp- troller of the ‘Currency authorizing national banking asso- ciations to engage in the marketing of data processing services is, therefore, ‘‘in violation of the, National Bank Act, beyond statutory authority, arbitrary, capriciqus, an- ‘abuse of discretion and not in accordance with law’’; that the defendant bank is engaged in the business of perform- ing data processing services for the public at large not necessary to carry on the business of banking, which @aid activities are beyond the grant of powers to national bank- ing associations and are unlawful and constitute illegal competition with the plaintiff and other persons similrly engaged in the business of furnishing data processing .erv- ices for the public at large; that on October 2, 1967, said defendant bank entered into a contract with said City of Providence for the performance of such data processing services then- being performed by its employees, and, fur- ther, that it is advised that the defendant bank did com- mence to perform Such services on or about October 1, 1967; and that said activities of the defendant bank in performing and holding itself out as willing to perform data processing services for the City of Providence and 1 The present form of this ruling, set forth in Par. 3500 in Comptroller’s Manual For National Banks (1966 Ed.) is: “©3500. Utilization of data _ processing equipment Incidental to its banking services, a national bank may make available its data processing equipment or perform data processing services on such equipment for other banks and bank customers.”’ 26 the public at large are illegal, not a part of, incidental to or necessary to carrying on the business of banking, and... _ are beyond the powers granted to national banks under said Act; that by performing said illegal data processing serv- ices and by holding itself out as willing and able to perform such services the defendant bank has caused, and unless restrained and enjoined, will cause substantial and ir- reparable harm to the plaintiff and to other persons en- gaged in the business of furnishing data processing services to the public at large by depriving them of customers for whom data processing services would be rendered and from whom compensation would be received, and that it has suffered injury and damage and is continuing to suffer injury and damage by the unlawful authorization of the defendant Comptroller of the Currency and said illegal activities of the defendant bank. In its answer the defendant, Industrial National Bank of Rhode Island, admits that it has in the past and is presently offering incidental to its banking services to make available, and is performing data processing services for its customers and for other banks, but denies that it has offered in the past or presently is offering to perform. data processing services for the public at large, not incidental to its banking services. It also admits that it has entered into a contract for the performance of certain data process- ing services for the City of Providence, one of its cus- tomers, and denies that the performance by it of such services for said City of Providence and other bank cus- ~ toraers would be illegal or beyond its statutory powers. The City of Providence ih its answer admits the execution by it of said contract with said Industrial National Bank of Rhode Island for the performance: by it of the data processing services described therein, and likewise denies - that the performance thereof by the latter would be illegal or beyond its statutory powers. | 27 This matter is now before me upon the motion of each of the defendants to dismiss this action upon the grounds . that the plaintiff lacks standing to maintain this action and that this Court.lacks jurisdiction over the subject mat- ter thereof. Plaintiff contends that it has standing to Gata validity of said ruling by the Comptroller of the Currency under the provisions of Section 10 of the Administrative Procedure Act, 5 U. S.C. § 702, which provides as follows: ‘‘Rights of Review. A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency - action within the meaning of a relevant-statute is en- titled to judicial review thereof.”’ In construing a substantially similar provision in the Administrative Procedure Act, prior to its amendment in 1966, the Court-of Appeals for the District of Columbia Cir- cuit in Pennsylvania Railroad Company v. Dillon, 1964, 335 F’, 2d 292, cert. denied sub nom American Hawaiian 8.8. Co. v. Dillon, 1964, 379 U.S. 945, held at pages 294, 295: . Under this statute appellants have standing to challenge agency action which they allege either causes them a ‘legaHwrong’ or adversely affects or aggrieves them ‘within the meaning of any relevant statute’. ‘«“Tegal wrong’, as we have only recently noted, is the invasion of a legally protected right. See Gon- zalez v. Freeman, supra, 117 U.S. App. D.C. at — n.6, 334 F. 2d at 576 n.6. Alhus, in order to make out a claim of ‘legal wrong*under Administrative Procedure Act § 10(a), appellants must assert some legally pro- tected right to be free of the competition provided by the two vessels whose documentation they are chal- 28 lenging. This court has very recently spoken on this aspect of standing. When ‘Congress has not given them any such standing by express or implied provision of statute . . .“mere economic competition made pos- sible by governmental action (even if allegedly illegal) does not give standing in the courts to sue“to restrain such action. Tennessee Electric Power (Co. v. Ten- nessee Valley Authority, 306, U.S. 118, 59 S.Ct. 366, 83 L.Ed. 543 (1939); Alabamd Power Co. vy. Ickes, 302 U.S. 464, 58 S.Ct. 300, 82 L.Ed. 374 (1938); Kansas City Power & Light Co. v. McKay, 96 U.S. App. D.C. 273, 225 F. 2d 924, cert. denied, 350 U.S. 884, 76 S.Ct. 137, 100 L.Ed. 780 (1955).’ Texas State AFL-CIO v. Kennedy, 117 U.S. App. D.C. 343, 345, 330 F’. 2d 217, 219 (1964). For purposes of standing in this case, the sufficiency of appellants’ allegations of ‘legal wrong’ thus depend upon congressional intent to bestow upon them a legal right to protection from such competition. ‘Similarly, appellants’ allegations that they are ‘adversely affected or aggrieved . . . within the mean- ing of any relevant-statute’ depend for their adequacy as to standing upon the congressional purpose under- . lying the relevant sections of the Merchant Marine Act of 1920, as amended. .. .”’ To the same effect see: Rural Electrification Administra- tion v. Northern States Power Company, 1967, 8 Cir., 373 F. 2d 686; Rutal Electrification Administration v. Central Louisiana Electric Company, 1966, 5 Cir., 354 F. 2d 859; Braude v. Wirtz, 1965, 9 Cir., 350 F. 2d 702; Troutman v. Shriver, 1967, D.C. Fla., 273 F. Supp. 415. In the recent case of Hardin y. Kentucky Utilities Co., 1968, 390 U.S. 1, the Supreme Court in passing upon the \ 29 standing of Kentucky Utilities Company to maintain said action, said at page 5: “Before discussing the merits, we shall briefly con- sider petitioners’: contention that the Kentucky Utili- ties Gompany lacks standing to challenge the legality of TVA’s activities. We agree with both the courts below that this contention is without merit. This Court has, it is true, repeatedly held that the economic injury which results from lawful competition cannot, in and of itself, confer standing on the injured business to question the legality of any aspect of its competitor’s operations. Railroad Co. vy. Ellerman, 105 U.S. 166 (1882); Alabama Power Co. v. Ickes, 302 U.S. 464 (1938); Tennessee Power (Co. v. TVA, 306 U.S. 118 (1939); Perkins v. Lukens Steel Co., 310 U.S. 113 (1940). But competitive injury provided no basis for standing in the above cases simply because the statu- tory and constitutional requirements that the plaintiff sought to enforce were in no way concerned with pro- tecting against competitive injury. In contrast, it has been the rule at least since the Chicago Junction Case, 264 U.S. 258 (1924), that when the particular statu- tory provision invoked does reflect a legislative pur- pose to protect a competitive interest, the injured competitor has standing to require compliance with that provision. See Alton R. Co. v. United States, 315 U.S. 15, 19 (1942); Chicago v. Atchison, T. & S.F. R. Co.,. 357 U.S. 77, 83 (1958). ‘*Petitioners concede, as of course they must, that one of the primary purposes of the area limitations in § 15 d of the Act was to protect private utilities from TVA competition... . Since respondent is thus in the class which § 15 d is designed to protect, it has standing under familiar judicial principles to bring 30 this suit, see Stark v. Wickard, 321 U.S. 288, 309 (1944) ; ef. United States v. I.C.C., 337 U.S. 426, 433- 434 (1949), and no explicit statutory provision is necessary to confer standing.’’ In my opinion the cases relied upon by the plaintiff to support its claim of standing to maintain this action and to entitle it to the relief it,seeks herein are clearly dis- tinguishable from the instant ease. In National Bank of Detroit v. Wayne Oakland Bank, 1958, 6 Cir.,-252 F. 2d 537, the plaintiff state bank was held to have standing to maintain an action to enjoin the estab- lishment of a branch bank by the defendant, National Bank of Detroit, on the ground that it was protected against the competition of such a proposed branch bank by the pro- visions of 12 U.S.C. § 36(¢c) which incorporated by refer- ence the statute law of the State of Michigan and under the circumstances existing the establishment of the proposed branch was prohibited by the statute law of Michigan. In holding that the plaintiff had standing to maintain its suit, the Court of Appeals held at page 544: **As to the standing of The Wayne Oakland Bank to maintain its suit, it was faced with invasion of prop- erty rights and injury from a competition which was prohibited by the federal statutes subjecting national banks to the same rules of law as cover state banks. ’° e Suburban Trust Company v. National Bank of Westfield, 1962, D.C. N.J., 211 F. Supp. 694, is likewise a branch bank case. The plaintiff was held to have standing to maintain a suit to enjoin competition by a branch bank of the defendant national banking association under the pro- " AAO CONS ANAT it ailing SE APG wie! 0h 31 visions of 12 U.S.C. § 36(c). Title 12 U.S.C. § 36(c) per- mits a national banking association, with the approval of the Comptroller of the Currency, to establish and operate new branches—‘‘(2) at any point within the State in which said association is situated, if such establishment and operation are at the time authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks.’’ Suburban sought to enjoin the establishment and operation of said branch bank in a location in which sa’ banks by New Jersey law (N.J. S.A. 17: 9A-18) were pré- hibited from establishing and maintaining branches. The courts held that plaintiff had standing to sue by virtue of the provisions of 12 U.S.C..§ 36(c). Commercial State Bank of Roseville et al. v. Gidney, 1959, D.C. D.C., 174 F. Supp. 770, aff’d 278 F. 2a 871, is likewise a branch bank case. The plaintiffs, Michigan state banks, sought a preliminary injunction to restrain | the Comptroller of the Currency from issuing a certificate authorizing a national bank to open a branch office in Michigan. The court found that branch banking (banking operations at other than the principal office) by national banks is regulated by state law under the provisions of 12 U.S.C. § 36(c), and that the plaintiffs had standing to sue as they sought to enjoin unlawful competition, i.e., com- petition prohibited by the statutes of the State of Michigan and enacted for their protection. Similarly, Whitney National Bank v. Bank of New Or- leans and Trust Company, 1963, D.C. Cir., 323 F. 2d 290, is a branch bank case. The Court of Appeals held that the plaintiff state bank had standing to sue to enjoin the estab- lishment of a branch bank by Whitney National Bank which was prohibited under the provisions of 12 U.S.C. § 36(¢). 32 In Webster Groves Trust Company v. Saxon, 1966, 8 Cir., 370 F. 2d 381, also relied upon by the plaintiff, the Court of Appeals held that competing banks as interested parties had standing to object to illegal competition but concluded that the Comptroller of the Currency was under no duty to hold a formal hearing on an application for a charter for a new national bank. In Baker, Watts & Co. v. Saxon, 1966, D.C. D.C., 261 F. Supp. 247, the plaintiffs sought to enjoin the Comp- troller of the Currency from authorizing national banks to underwrite and deal in certain securities, The gravamen of their complaint was that they would then be subjected to illegal competition to their detriment, In holding that the plaintiffs had standing to maintain said suit, the court held that the Glass-Steagall Act, 12 U.S.C. § 378, prohibited such activities by national banks. In Georgia Association of Independent Insurance Agents, Ine. v. Saxon, 1966, D.C. Ga., 260 F. Supp. 802, the plaintiffs were independent insurance agents and organizations which represented the collective interests of independent insur- ance agents. They sought a declaratory judgment and an injunction against allegedly illegal acts by the defendant Comptroller of the Currency. In that case the defendant had authorized national banks in places with a population - which exceeded five thousand inhabitants to act as insur- ance agents in writing insurance which was incidental to banking transactions, although Section 92 of Title 12 of the United States Code permitted national banks to act as insurance agents in places whose population did not exceed five thousand inhabitants. Plaintiffs alleged that the de- fendant was without authority to make said ruling which was in violation of Title 12 U.S.C. § 92, and that as the result of said ruling, national banks were able to compete illegally with the plaintiffs. 33. In denying the defendant’s motion to dismiss for want of standing, the Court held at page 803: ‘In Tennessee Power Company, supra, and in Ala- bama Power Co. v. Ickes, 302 U.S. 464, 58 S.Ct. 300, 82 L.Kd. 374 (1937), the plaintiffs alleged that they were suffering economic loss from government-created competition. In both cases the Supreme Court held that such economic loss alone did not confer standing on the aspiring plaintiffs. It is important to note that such competition was authorized by Congress and was based upon statutory grounds. ‘‘In the instant case, the competition complained of is not explicitly authorized by statute, but rather is. impliedly prohibited by the congressional grant of the. power to act as insurance agent in cities of 5,090 or less}. population. Title 12 U.S.C.A.§ 92.77 iy A | And, further, the Court at page 804 stated: é F | s ‘*Thus, the Court is of the opinion that the defend- ant’s attack on the plaintiffs’ standing is without merit. Title 12 U.S.C.A. § 92 has’ the effect of pro- tecting insurance agents from certain competition. Surely, the plaintiffs have the right to their day in court to show that protection afforded them by 12 U.S.C.A. § 92 had been violated.’’ Investment Company Institute et al. v. Camp, 1967, D.C. D.C., 274 F. Supp. 624, was a suit by an association which represented open-end investment companies, invest- _ Inent advisors and principal underwriters, and by some of its members for an injunction to restrain the Comptroller of the Currency from authorizing national banks to collec- tively invest funds tendered to them as managing agents 34 solely for investment purposes. Plaintiffs alleged that such activities by national banks would constitute illegal competition to their detriment. In holding that the plain- tiffs had standing to sue, the Court said at Page 636: “*... The statutes under which the regulation in issue was promulgated, were enacted to establish a. clear Congressional policy which sought to separate national commercial banking from the securities busi- ness. The primary intent of Congress was to segre- gate these functions and to allow separate entities to engage in these business areas. This clarity of pur- pose is garnered. not only from the Congressional hearings reports of the Glass-Steagall Act, but also from the exactitude with which Congress has delineated - the areas of common interest in this financial structure. ‘This strong general policy against the invasion of either field of endeavor by either entity is sufficient to postu- late an interest upon which standing to challenge the regulation may be premised, ef. American Trucking Ass’ns, Ine. v. United States, 364 U.S. 1, 80 8. Ct. 1570, 4 L.Ed. 2d 1527 (1960). ‘‘Therefore, by implication, the plaintiffs here have a right to complain of the competition which is being condoned under tlie Regulation. This competition is illegal in the sense that Congress has indicated its pol- icy of separating the two financial institutions and this Regulation allows in an indirect manner a joinder of these interests. The plaintiffs were the recipients by implication of Congressional protection.”’ In granting the plaintiffs’ motion for summary judgment on the merits, the Court held at Page 648: ‘‘In view of the statements and conclusions made above, this court holds that the provisions of Regula- 35 tion 9 which allow commingling of managing agency » accounts do not comply with the statutory provision of the Glass-Steagall Act and are, therefore, illegal. The promulgation of these specific prdvisions allowing a commingling of managing agency accounts is also beyond the power of the Comptroller under Section 92a(a) of Title 12, and it is ordered to be set aside.’’ In support of its claim that the performance by the de- fendant bank of data processing services on its equipment for bank customers constitutes illegal competition with it and others who are similarly engaged in performing such services for the public at large, the plaintiff relies upon the provisions of 12 U.S.C. ¢ 24 (par. Seventh), the pro- _ visions of the Bank Service Corporations Act, 12 U.S.C. §§ 1861-1865, and the congressional purpose that may be obtained from the legislative history of that Act. 12 U.S.C. § 24 (par. Seventh) provides that a national bank shall have the powers: ‘‘To exercise by its board of directors or duly au- thorized officers or agents, subject to law, all such incidental: powers as shall be necessary to carry on the business of banking; . .°.’’ Said Bank Service Corporations Act authorizes two or more banks subject to Federal supervision to invest limited funds in a bank service corporation for the purpose of pro- viding bank services only for banks. Said Act defines bank services as: ‘‘services such as check and deposit sorting and post- ing, computation and posting of interest and other credits and charges, preparation and making of checks, statements, notices and similar items or any other cleri- SPSS SS ee 36 cal, bookkeeping, accounting, statistical, or similar functions performed for a bank.”’ : e By = 7, In my opinion the plaintiff has failed to establish that the provisions of paragraph Seventh of 12 U.S.C. § 24, .which appeared in identical form in the National Bank Act of 1864, reflect a congressional purpose to protect the plaintiff from the competition which it-seeks to enjoin in this action. Similarly, I ‘find that there has. been no showing bythe plaintiff that said Bank Service Corporations Act reflects a congressional purpose to protect the plaintiff and others engaged in performing data processing services for the public from thé competition arising from the performance by national banks on their equipment of data processing services for other-banks and their bank customers as a part of the business of banking and incidental thereto. Since said Act is by its. express terms limited to Bank Service Corporations and their activities, it cannot be properly construed to apply to the activities of national banks gen- erally. Finding, as I do, that neither parageanh Seventh of 12 U.S.C. § 24 nor said Bank Service Corporations Act re- flects a legislative purpose to protect the plaintiff against the competition: of which it complains, it follows that the - plaintiff lacks standing to maintain this action and this Court lacks jurisdiction over the subject matter thereof. The defendants’ motions to dismiss are granted. Ss Chief Judge 37 Appendix D. 5 U.S.C. §702: 7 ‘*A- person suffering legal wrong because of agency, ae- tion, or adversely affected or aggrieved by agency ts within the meaning of a relevant statute, is entitledto ju- dicial review thereof.’’ 3 12 U.S.C. §24: ‘‘Upon duly making and filing articles of association and an organization certificate a national banking association shall become, as from the date of the execution of its or gani- zation certificate, a body corporate, and as such, and i in the name designated in the organization certificate, it shall have power— - ttt Seventh. To exercise by its board of directors or duly auffforized officers or agents, subject to law, all such in- cidental powers as shall be necessary to carry on the busi- ness of banking; by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt: : by receiving deposits; by buying and selling exchange; coin, and bullion; by loaning money on personal security; and by obtaining, issuing, and circulating notes: according to the provisions of this chapter. . ...’’ 12 U.S.C. $1864: ‘“No-bank service corporation may engage in‘any ac- tivity other than the performance of bank services for banks.’’ i APACS Ab a tie > . *° SALE ae datS * 3 3 $ , 7 - 3 a ¥ : : | ; - / 4 . : , ° if . ; oe ’ - ‘ rs e - : > -s a . . : : : ; 4 * s- , , 4 : : q : : . . , 2 . “ ~ | ; . - ; - t. % . < . : e ‘ aa RRS ZO SHAT LR A PLGIIOO NINES LE LOE SAIN A D> PRAT HIS Fresiscoapacd r : ° 39 Appendix E. — ™ Disfrict Court oF THE Unitep States For THE District. or RuHopE Istannp / THE WINGATE CORPORATION ; actus Civ. Action No. 3847 US. InpustriAL NationaL BANK ET AL ORDER ee Defendants This cause came on to be heard on Defendants’ Motions to Dismiss the action on the ground that the Plaintiff lacks standing to maintain this action and mo fr Court lacks — jurisdiction over the subject matter and_after argument thereon, it is hereby tf ORDERED, ApsupGED, AND DECREED that Defendants’ Motions to Dismiss are gianted. Dated: July 29, 1968 (s) Neate D. Murpuy Clerk | Enter : (s) Epwarp W. Day Chief Judge : —a Re ae A 6 I lie ee = ee - . ‘ ° . g bs 5 * \ \ ‘ \ —_ / eg x j / ~ , f , - . f } ° * / . — ; ; . } ‘ e ' o , * Y : , , . ‘ £ Ce / 41 Appendix F. Unirep States Court or APPEALS 8 For tHE Eicutu Circuit No. 19,218 Association oF Data Processine Service Orcanizations, Ixc., anp Data Systems, Inc., Aoniias Appeal from the United States Dis- trict Court for the Wituum B. Camp, Comptroller of District of Minne- the Currency of the United sota. States, and American National Bank and Trust Company, Appellees. v. [February 6, 1969.] Before Vocer, Lay and Bricut, Circuit Judges. é , Lay, Circuit Judge. Plaintiffs appeal from an order dismissing their com- plaint against the Comptroller of the Currency of the United States and the Minnesota domiciled American Na- tional Bank and Trust Company. One of the plaintiffs is — *Q 42 Association of Data Processing Service Organizations, an incorporated association of data service organizations domiciled in Pennsylvania whose members perform data processing services throughout the United States. It is hereinafter referred ‘to as ADAPSO. The other plaintiff, Data Systems, Inc., is a Minnesota corporation engaged in the data processing business, with its principal place of business in Minneapolis. The complaint seeks equitable relief against the defendants and a ‘‘determination of the powers granted national banking associations under [the National Banking] Act as set forth in 12 U.S. Code § 24.” It is alleged that by administrative rule the Comptroller of the Currency has authorized national banks to perform data processing services for bank customers in violation of 12 U.S.C. § 24 which gives national banks only ‘inci-~ dental powers as shall be necessary to carry on the busi- ness of banking.’’ Plaintiffs allege that as a result of the unauthorized action ADAPSO members are threatened » with the loss of a substantial part of the data processing --market.’ It is alleged that American National now per- forms data processing services for two companies with whom Data Systems had ‘‘negotiated’’ as prospective customers. Jurisdiction is asserted by reason of an alleged federal question arising under the banking laws of the United States. 12 U.S.C. §§ 21 et seq. The trial court dismissed plaintiffs’ complaint for lack of jurisdictional standing. -. We affirm. The question of standing serves as a test of federal jurisdiction. Standing is the constitutional prerequisite * We need not decide whether ADAPSO as an association can properly allege ‘‘loss°of competition’’ on behalf of its members when it is not engaged in the data processing business itself. See discussion Jaffe, Judicial Control of Administrative Action 542-43 (1965). : Fe ee Se et 43 related to whether a justiciable ‘‘case or controversy”’ exists. Involved is an ¢xamination to determine whether the plaintiffs have a personal stake legally sufficient ‘to assure that concrete adverseness’’ which avoids merely ab- stract determinations. Flast v. Cohen, 392 U.S. 83 (1968). See also Aetna Life Ins..Co. v. Haworth, 300°U.S. 227 (1937). Justiciability, although not always related to standing, becomes definitively attached when we consider whether the legal relationships of parties are such that they are aligned with adverse legal interests. Plaintiffs assert standing in that they have been and will continue to be economically injured by illegal com- petition of the national banks? Whether a litigant has standing to challenge competitive injury has been the sub- ject of extended litigation and discussion. Doctrinal rules have developed a maze of conceptualistic abstractions and theories which at times are viewed and applied as being indistinguishable one from another. See Baker, Watts & Co. v. Saxon, 261 F.Supp. 247 (D.D.C. 1966), aff’d sub © nom., Port of N. Y. Authority v. Baker, Watts & Co., 392 F. 2d 497 (D.C. Cir. 1968) ; Saxon v. Georgia Ass’n of Ind. Ins. Agents, Inc., 399 F.2d 1010, 1019 (5 Cir. 1968) (con- curring opinion).” The trial court here has observed that language in Rural Elec. Admin. v. Northern States Power Co., 373 F.2d 686 (8 Cir. 1967) (denying standing)? and in Webster Groves Trust Co. v. Saxon, 370 F.2d 381 (8 Cir. 1966) . 2See also extended discussion in 3 Davis, Administrative Law ~~ 208-294 (1958) ; Jaffe, Judicial Control of Administrative Action 500-531 ( 1965). And more recently Davis, Standing: Taxpayers and Others, 35 U. Chi. L. Rev. 601 (1968). ® We stated in Northern States, 373 F.2d 692: ‘* Appellees readily recognize that the interest of the economic competitor is not sufficient standing to challenge the authority or discretion of the Administratot to make loans.’’ 44 (allowing standing)* seems to state divergent principles, either of which could govern in the instant case. However, all legal principles must be qualitatively analyzed within the context of factual surroundings. Much of the con- fusion on standing seems to arise from the emphasis upon the issues to be adjudicated or upon the possible merits of the substantive claim rather than upon an examination of the status of the complaining plaintiff. Whether or not a defendant is alleged to be engaged in illegal competition cannot by itself determine a plaintiff’s standing to com- plain. Cf. Chicago v. Atchison, T. & 8. F. Ry., 357 US. 77 (1958) and note 8 infra. Chief Justice Warren has stated, ‘‘The fundamental aspect of standing is that it focuses on the party seeking to get his complaint before a federal court and not on the en he wishes to have adjudicated.”’ However, he added, .. it is both ap-— propriate and necessary to look to the substantive issues for another purpose, namely, to determine whether there is a logical nexus between the status asserted and the claim sought to be adjudicated.’? Flast v. Cohen, 392 U.S. 83, 99, 102 (1968). “ Whether a party may or may not challenge allegedly illegal competition by others is best evaluated by examining the various factual circumstances within which the courts have discussed a particular plaintiff’s standing and com- petitive injury. | Perhaps most well known are the so-called ‘*nower cases,’’ where the threatened economic loss arises from government-created competition. In these situations the embryo of the competition by the defendant is generally * We stated in Webster Groves, 370 F.2d 388: “‘(W]hen a competitor believes he is being subjected to illegal competition owing to impropriety by the Comptroller, the courts should be open to hear and decide the alleged wrong.’’ “eee ) See * bet VE ORE PV es CEM le LE 45 found in congressional legislation. But even though the validity of such legislation is challenged, or an attack is made on the authority of a government agent to loan money, the courts uniformly have denied standing to com- petitors who otherwise possess no legal right to be free from competition.® This group of cases is represented by Tennessee Elec. Power Co. v. TV A, 306 U.S. 118, 137 (1939), which early emphasized : ‘“The appellants invoke the doctrine that one threat-. ened with direct and special injury by the act of an ‘agent of the government which, but for statutory au- thority for its performance, would be ‘a violation of his legal rights, may challenge the validity pf the stat- ute in a suit against the agent. The principle is with- out application unless the right invaded is a legal right,—one of property, one arising out of contract, one protected against tortious invasion, or one founded on a statute which confers a privilege.’’ See‘also Rural Elec. Admin. v. Northern States Power Co., supra. 2 Secondly, in contrast to the “power”? cases are situa- tions where a plaintiff, possessing a public grant or con- tract to operate, seeks to prevent a competitor from enter- ing into an area of regulated and restricted competition. Representative of ‘these cases is Frost v. Corporation Comm’n, 278 U.S. 515 (1929). This court has applied the rationale of ee: to a suit by a state bank against the ® In addition, even though the attack upon a peaDENEy A program to loan money is alleged to be illegal, this does not,make the com- petition itself legally wrong. This is explained because ‘‘the bor, rower owes him [the plaintiff] no ‘obligation to refrain from using the proceeds in any lawful way the borrower may choose.’’ Ala- bama Power Co. v. Ickes, 302 U.S. 464, 480 (1938). (Emphasis ours. ) ee TT eT 46 Comptroller to prevent illegal competition. Webster Groves Trust Co. v. Saxon, 370 F.2d 381 (8 Cir. 1966). As ob- served in Whitney Nat’l Bank v. Bank of New Orleans & Trust Co., 323 F.2d 290 (D.C. Cir. 1963), rev’d on other grounds, 379 U.S. 411 (1965), involved is a property right arising out of a public charter which bestows a legal in- terest on a state bank to complain.° Closely related but significantly different are those cases involving areas of competition which because of public interest find need of public licensing as opposed to a public grant or contract.’ Here plaintiff-competitors are °The branch banking provisions ‘of the National Banking Act make the establishment of branch banks subject to the law of the states. 12 U.S.C. § 36. A primary purpose in doing so is to ensure competitive equality between state and national banks. First Nat’l Bank v. Walker Bank & Trust Co., 385 U.S. 252 (1966). It has ac- cordingly been held that this provision gives state banks a suffi- cient legal interest to provide them with statutory standing to challenge the legality of branching by national banks. See National Bank v. Wayne Oakland Bank, 252 F.2d 537 (6 Cir. 1958), dis- cussed in Hoosier State Bank v. Saxon, 248 F.Supp. 233 (N.D.Ind. 1965). The contrast between basing a state bank’s standing on a “property right’’ arising out of its charter and standing, by reason of its inclusion within the class intended to be protected by the National Banking Act is one without essential difference. Perhaps the most realistic approach is that the right indigenous to the charter is protected by the statute. | 7The Court stated in FCC v. Sanders Bros. Radio Station, 309 U.S. 470 at 474 (1940) : “‘In contradistinction te communication by telephone and telegraph, which the Communications Act recognizes as a common carrier activity amd regulates accordingly in analogy to the regulation of rail and other. carriers by the Interstate Commerce Commission, the Act recognizes that broadcasters are not common carriers and are not to be dealt with as such. Thus the Act recognizes that the field of broadcasting is one of free competition. The sections dealing with broadcasting demonstrate that Congress has not, in its regulatory scheme, abandoned the principle of free competition, as it has done in the case of railroads, in_respect of which regulation in- oh) ceca Pat AEE PREGA, TUTE 47 considered to be without a private ‘‘legal right’’ to.pro- test unauthorized competition but nevertheless find stand- ing by specific legislation as ‘‘aggrieved persons’* to act in the public interest. See, e.g., FCC v. Sanders Bros. Radio Station, 309 U.S. i (1940) ; Seripps-Howard Radio, Inc. v. FCC, 316 U.S. 4 (1942). Cf. Office of Communication of United Church of Christ v. FCC, 359 F.2d 994 (D.C. Cir. 1966). In these cases Congress has patently recognized need for judicial review. even though the competitive busi- ness controlled is considered free and otherwise unre: stricted.® volves the suppression of wasteful practices due to competi- tion, the regulation of rates and charges, and other measures which are unneeessary if free competition is to be permitted. ‘‘An important element of public interest and convenience affecting the issue of a license is the ability of the licensee to render the best practicable service to the community reached by his broadcasts. That such ability may be assured’the Act contemplates inquiry by the Commission, inter alia, into an applicant’s finaticial qualifications to operate the proposed station. ‘*But the Act does not essay to regulate the business of the licensee. The Commission is given no supervisory control of the programs, of business management or of policy. In short, the broadcasting field is open to anyone, provided there be an available frequency over which he can broadeast without in- terference to others, if he shows his competency, the ade- quacy of his equipment, and financial ability to make good use of the assigned channel.”’ 8 But ef. Chicago v. Atchison, T. & S. F. Ry., 357 U.S. 77 (1958). The Supreme Court recognized standing of a municipal licensed public transportation system to intervene and attack the entry of one seeking to compete in an alleged violation of a city ordinance. The Court made clear that standing of the intervenor could not be viewed from examination of the merits as to whether in fact the competition was or was hot illegal. Parmelee, the intervenor, for many years had enjoyed an arrangement with the railroad to transport passengers between stations. Parmelee was notified of its termination. A competitor, Railroad Transfer Service, was sub- 48 Fourth, there are situations where competitors are given standing to challenge competition which is allegedly in violation of a statute, where the statute itself is said to be enacted for the express protection of the class of competitor complaining. The most recent example of th se cases is found in Hardin v. Kentucky Util. Co., 390 U.S. 1 (1968).° Plaintiffs’ reliance on recent cases agemst the sequently given this business notw ithstanding a city eaaies that prohibited it from doing so without a license from the city. The Court found that Parmelee had ‘‘a direct and substantial personal | interest in the’ outeome’’ and allowed standing. The ordinance was then held unconstitutional as being repugnant to the Interstate Commerce Act and the intervenor lost. This case may best be categorized with those instances where standing to challenge illegal competition is implicitly found within a legislative enactment, be it an existing ordinance or statute, valid or not. .Cf. Alton R.R. v. United States, 315 U.S. 15, 19 (1942), ® The Supreme Court said: ‘*This Court has, it is true, repeatedly held that the eeonomic injury which results from lawful competition cannot, in and of itself, confer standing on the injured business to question the legality of any aspect of its competitor’s operations. Railroad Co. v. Ellerman, 105 U.S. 166 (1882); Alabama seats Co. v. Ickes, 302 U.S. 464 (1938); Tennessee Power - Co. TVA, 306 U.S. 118 (1939) ; Perkins v. Lukens Steel Co., 310 U.S. 113 (1940). But competitive injury provided no basin for standing in the above cases simply because the statu: . tory and constitutional requirements that the plaintiff sought to enforce were in no way concerned with protecting against competitive injury. In contrast, it has been the rule, at. least since the Chicago Junction Case, 264 U.S. 258 (1924). that when the particular statutory-provision invoked does reflect a | legislative purpose to protect a competitive interest, the in- jured competitor has standing to require compliance with that provision. See Alton R. Co. v. United States, 315. U.S. 15, 19 (1942); Chicago v. Atchison, T. & 8. F. R. Co., 357 U.S. 77, 83 (1958). : ‘Petitioners concede, as of course they must, that one of the primary purposes of the area limitations in § 15d of the Act ‘was to protect private utilities from TVA competition.’’ Har- din v. Kentucky Util. Co., 390 U.S. at 5-6. 49 Comptroller fall within facile classification of, this rule. See, e.g., Baker, Watts & Co. v. Saxon, 261 F.Supp. 247, supra, as explained in Investment Co. Institute: v. Camp, 274 F.Supp. 624, 636°(D.D.C. 1967); Saxon v. Georgia Ass’n of Ind. Ins. Agents, Inc., 399 F.2d 1010 (5 Cir. 1968). ; , Fifth, the last group of ‘‘competition”’ cases relates to a plaintiff’s unsuccessful challenge of a competitor’s al- leged ultra vires acts affecting plaintiff’s non-regulated area of commerce. This factual setting is best illustrated by Railroad Co. v. Ellerman, 105 U.S. 166 (1882). In that ease the plaintiff, who had contracted with the city 6f New. Orleans to collect revenue from users of the city wharves, \ sought to enjoin a railroad company from. operating | wharves in New Orleans. He alleged this action would constitute illegal competition because the state statute authorizing the company to operate wharves was wiira , vires and unconstitutional. The principle here furnishes an analogue to that in the ‘‘power cases’’ where the con- duct of the defendant, although alleged to be. illegal is nevertheless considered ‘‘lawful’’ with respect to the .plain- tiff because of the total absence of legal interest found in plaintiff’s status.” 10 We do not share confidence in the alternative holding in Saxon v. Georgia Ass’n of Ind. Ins. Agents, Inc., 399 F.2d 1010 (5 Cir. 1968), that outside the ‘‘statutory aid to standing?’ plaintiffs had ‘‘a‘legal right to protect themselves from unlawful competition.’ Id. at 1018. The emphasis that plaintiff's standing arises out of the allegation of ‘‘unlawful competition’’ as contrasted to ‘‘lawful competition’’ seemingly relates standing tthe merits of the claim to be adjudicated rather than the status of a party to complain. _For a similar critique, see Judge Thornberry’s concurring opinion 399 F.2d at 1020 n. 3. 11 This is explained by Mr. Justice Matthews in malin oad Co. Vv. Ellerman; 105 U.S. at 173-174: ‘The sole remaining question then, is, w ether Ellerman, as assignee of the city, has any legal interest which entitled him’ NN a tile a rie? ac ORE 50 In summary, a plaintiff may challenge alleged illegal competition when as complainant it pursues (1) a legal to enjoin the company from using its wharf as a publie w chart beyond the limits of such use, as defined by that construction of the joint resolution. If he has such interest, it can only consist in preventing competition with himself as a wharfinger, which such more. extensive use of the railroad property would create. And if the-right to assert it exists, it must rest, not upon the claim that the premises are thus used for purposes to which they might not be lawfully devoted if owned and i : used by a natural person, but on the allegation merely that . such use isrbeyond the corporate powers of the company. But Lt if the competition in itself, however injurious, is not a wrong 4 of which he could complain against a natural person, being the riparian proprietor, how does it become so merely be- } . cause the author of it is a corporation acting ultra vires? The | ia _ damage is attributable to the competition, and to that alone. ~ But the competition is not illegal. It is not unlawful for any one to compete with the company, although the latter may not be authorized to engage in the same business. The legal interest which qualifics a complainant other than the State : ‘ itself to sue tn such a case is a pecuniary interest in preventing the defendant from doing an act where the injury alleged flows from its quality and character as a breach of some legal or equitable duty. A stockholder of the company has such an interest in restraining it within the limits of the enterprise for which it was formed, beeituse that is to enforce his con- tract of membership. The State has a legal ‘interest in prevent- ing the usurpation and perversion of its franchises, because it is a trustee of its powers for uses strictly public. Tp these questions the appellee has no interest, and he cannot raise them in order, under that cover, -to create and protect a monopoly which the law does not give him. The only injury of which he can be heard in a judicial tribunal to complain-is the in- vasion of some legal or equitable right. If he asserts that the competition of the, railroad company damages him, the answer is, that it does not abridge or impair any such right. If he alleges that the railroad company is acting beyond the warrant of the law, the answer is, that a violation of its charter does not of itself injuriously affect any of his rights. ,The company. is not shown to owe him any duty which it has not performed. es (Emphasis ours. ) Thar be eit 51 interest by reason of public charter or contract, Frost v. Corporation Comm’n, supra, (2) a legal interest by reason of statutory protection, Baker, Watts & Co. v. Saxon, _ supra, or (3) a ‘‘publie interest’? in which Congress has recognized the. need for review of administrative action and plaintiff is significantly involved to have standing to represent the public, FCC v. Sanders Bros. Radio Station, supra. From this analysis, it seems clear that an allega- tion of ‘‘illegal competition’’ is not the balancing deter- minant of a plaintiff’s standing. The primary search must rest on whether the plaintiff’s status is one which enjoys a private interest entitled to protection or is one which the law recognizes to be of such legal significance to allow a party to act as a public representative for a public . interest. In the instant case.the facts clearly place plaintiffs out- side those cases which recognize standing. Plaintiffs are competing in a non-regulatory field of free competition. They possess no private legal interest nor do they plead- any legal harm which is recognized at law. Their status is not one which places them within a class designedly id otected by statute.’ In direct accord see Wingate Corp. . Industrial Nat’l Bank, 288 F.Supp. 49 (D.R.1. 1968) ; Pree Tours, Inc. v. Camp, 286 F.Supp. .770 (D.Mass. 1968). 1 The Banking Act has never been construed to give a private litigant standing to complain concerning ultra vires acts of national banks relating to, executed contracts. See National Bank v. Matthews, 98 U.S. 621 (1878). Although distinctive policy argu- ments exist for this rule, nevertheless there exists no legislative history. nor do plaintiffs offer agy serious contention that the National Banking Act was intended to give these private litigants standing to litigate alleged ultra vires activities of national banks. - The reliance of the Bank Holding Company Act of 1966 and the Bank Service Corporation Act is misplaced. Neither act is ap- plicable here. tna Te Wii as TE Pe ae ee OS ee ee 52 Plaintiffs’ argument is in essence an equitable plea, that in effect they have a personal stake to pursue, even though not a legal one, but nevertheless one which makes them logical parties to protect the public interest from illegal actions of government agencies, The problem with their plea is many-fold. Congress has not seen fit within’ the National Banking Act to recognize any ‘‘aggrieved person’’ to assert the public’s rights. Congress has not expressed a public concern for protec-. tion as found in FCC v. Sanders Bros. Radio Station, 309 U.S. 470 (1940), and its progenitors. Without a legal in- terest or the status of @ recognized ‘‘aggrieved”’ party, the complaint resolves itself into an attempt mgrely to show ‘‘a common concern for obedience to law.’”’ L, Singer . & Sons v. Union Pac. R.R., 311 U.S. 295, 304 (1940). As pronounced in Singer, outside statutory consent, the gen- eral or common interest can find protection only in the standing granted to public authorities. Unless a relevant statute provides for a ‘‘party in interest’’ to seek judicial review or unless a complainant possesses a recognized legal interest, he lacks standing to be a ‘‘private attorney general’’ to represent the public interest. See Kansas City Power & Light Co. v. McKay, 225 F.2d 924 (D.C. Cir. 1955); Braude v. Wirtz, 350 F.2d 702, 707, 708 (9 Cir. 1965) .% Mr. Justice Frankfurter best describes judicial obliga- tion to avoid review when legal standing is not otherwise involved: ‘*The jurisdiction of the federal courts can be invoked only under circumstances which to the expert feel of lawyers constitute a ‘ease or controversy.’ The scope and consequences of the review with which the judi- 8 See also our prior discussions concerning the applicability of the Administrative Procedure Act in Rural Elec. Admin. v. North- ern States Power Co., 373 F.2d at 692 n. 9. i | at eade Lone : Dae | ‘ciary is entrusted over executive and legislative action require us to observe.these bounds fastidiously.’’ Jomt Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 150 (1951) re opinion). Suiguint affirmed. . i | A: true copy. f{ # =, ‘. Attest: Clerk, U. S. Court of Appeals, Eighth Circuit. / ° ° . MMSE, ROE CT ames or cee Ee Ween By ~~ . - °° r * . . ‘ i ‘ ios * . . % . . e ° . y 5, BAAS ABI ARDE t fS,5 ase ek BE BM 55 Appendix G. PorTIONS OF LEGISLATWE History OF THE Bank SERVICE CorRPORATION ACT “B: 1. Extract from-debate in the House of Representatives d on October 14, 1962. mn ‘‘Mr. Spence. . . . The expense of “furnishing this kind of service is so great that only the large banks can avail themselves of it.. This is essentially a_ bill to help the small banks obtain an essential service which may not be obtained other than by the means proposed in this bill. ‘*Mr. McDonough... . oe this equipment is expen- sive. As a matter of fact, presently only the bigger banks—and by this I mean the banks with 100 million on deposit—can afford this kind of equipment, Be? cause of the cost of the equipment, it must be kept - in almost constant use to justify its expense. Most..of the larger banks are effecting prograzas to aiitomate all or a greater portion of their account- ing, bookkeeping, sorting, mailing, and other similar >services. The smaller banks would like to obtain the . advantages of this new equipment but are foreclosed from acting alone because the cost is prohibitive. Some of them are using outside facilities for these auto- mation operations, principally by engaging an in- dependent data processing bureau to do the work, or getting it done by a correspondent bank. However, such facilities are available on limited scale and only in the metropolitan areas. ... At the hearings no one found any fault with this progressive legislation designed to benefit the smaller 56 banks of the country, in that it would*better enable them to compete on nearer a terms with ‘their larger competitors. ... This bill primarily will siieble the ‘guniiber banks to better serve their customers. “Mr, Rousselot. . . . H. R. 8874 is a*bill tailored to benefit the smaller banks of the Nation. It will enable smaller banks to better compete with the larger bank- ing institutions and, at the same time, provide their customers with better services at no extra cost ‘to the bank. The oveeall purpose of this ‘bill is to permit the smaller banks to band together by pooling their re- sources for the joint use of automatic data processing | equipment. This equipment is expensive—whether it is bought outright or leased. In fact, it is so ex- pensive that the equipment must be operated on close to a capacity basis for the equipment to be’ economically feasible. Small individual banks do not have sufficient work to keep this equipment utilized on an economic basis. However, if several banks band together and each uses the equipment at stated times and for a designated number of hours, so as to keep the wheels turning, all can get full benefit of this modern equipment. These benefits are presently avail- able to the bigger banks—the banks of $100 million in deposits and more. This bill will not help them. . This bill would enable small and medium sized banks to obtain some if not all the advantages of automa- tion—which presently are only available to the big © institutions. . . ‘Mr. Multer.... According to the téstimony . be- fore the committee, this bill permits the smaller hanks of the country to avail themselves of services that are \ aes ted Rear. now purchased or bought by larger banks, each for themselves. . : ‘“*Mr. Widnall. ... . At the present time, large banks, whether or not they are affiliated with a bank holding company or have branches, are purchasing electronic equipment to handle the ever-increasing clerical work- load. Large banks have the resources to do this on their own and will continue to do so regardless of whether or not this bill is enacted into law. If this bill is defeated, the great losers will be the small banks, whether they are unit banks, holding company banks or branch banks, because they will be denied an opportunity to provide their customers with up- to-date service on an economical basis. ‘‘Mr. O’Hara. Mr. Chairman, ordinarily I would not be speaking on a bill within the jurisdiction of the Committee on Banking and Currency, but I have a particular interest in this bill. The motivation for its presentation to the Congress arose, in part, from the needs, and the techniques developed to meet those needs of three small banks in my congressional dis- trict. The bankSare located in Algonac, Marine City, and Saint Clair, \ No one of these banks, each of which has capital ds of less than $1 million, could, by itself, afford to have its own automatic book- keeping and data processing equipment. They were therefore at a disadvantage in competing with larger banks that could afford such equipment. Through the device of having one office of each bank join to form a service corporation they managed to acquire such services, but is (sic) is not nearly so satisfactory an arrangement as it would be if the banks them- selves could own the stock in this service corporation. Even the device they followed would not be available to most small banks unless this bill is passed. PEAS ATES ERTL RBI ES Stes RIN NSE AUN Bi aie ei puelstech teste 58 I make this point to demonstrate to the Members of the House and to the Members of this Committee - that this bill is very much to the advantage of small banks in the United States. It permits them to com- pete effectively by cutting their bookkeeping and ac- counting costs... . ‘‘Mr. Seeley-Brown. . . . I believe that it will make it possible for smaller banks, by cooperating with one or’ more other small banks, to continue to be com- petitive'in the multiple channels of commercial bank- ing, which in this era of mergers has become a battle of giants. The high cost of electronic bookkeeping, sorting and data processing machinery makes it prohibitive for small banks to purchase this necessary banking equipment. Yet, in this day and age, they scarcely can operate effectively without it. However, what one small bank cannot do because of prohibitive cost can be done by pooling its needs with other small banks like itself. = “*Mr. Harvey. . . . This bill can only be a help to. small independent banks... . ‘‘Mr. Moorhead. ... Mr. Chairman, H. R. 8874 could well be cited as the ‘Small Bank Survival Act . of 1962.’ : Under today’s technological economy banks must automate to survive. Many of. the large banks of the country may be able to afford to purchase this expensive equipment, but the 10,000 small banks with deposits of $10 mil- . q lion or less cannot economically do so. The choice ; for such small banks is either to go out of business we or to merge with larger banks. .. .”’ ‘ A EAA RPT NRE eo A AS AA ARERR A VLA ABE RADA RIS NDS ELEN ISP BAL ERLIOLLE NSLS LIED Re. Ba et aaa iota ale Vicia a RTS Say Hs arta bie 108 Congressional Record, pp. 16498-16503. ‘3 ee a 2 CARLIN D A NOOR NG ea Ad CE ‘ Te RGA REN Mat 2A VARNES LIN i IE 59 . 2, Extract from debate in the Senate on September 29, 1962. ‘ See ot ‘‘My, Robertson. . . . In addition, the three Senators say that one or two suppliers of bank equipment are opposed to the bill. But I point out that it may cost as much as $150,000 or $250,000 to fully equip a small bank; but many of the banks do not have more than $25,000 or $30,000 to spend on capital equipment. How- — | ever, three Senators have said, ‘Oh, no; the banks cannot have this bill.’ So, Mr. President, I ask unanimous consent to have my views on the bill printed in the RECORD; Ape There being no objection, the statement was ordered to be printed in the RECORD, as follows: The purpose of H. R. 8874 is to help small- and medium-sized banks compete more effectively with larger banks and give better service to the public, by forming bank service corporations which will make available efficient and expensive equipment the banks individually could not afford to buy... .’’ 108 Congressional Record, p. 21311 3. Extract from debate in House of Representatives on October 5, 1962. : « : ‘‘Mr. Patman. The purpose of this bill is to allow banks to invest in a separate corporation for the purpose of doing bookkeeping and clerical work neces- _ sary through the use of new electronic data processing machines which are now available. . . . | ‘*Mr. Widnall. In other words, it will be very. help-. ful to the small banks in helping them do their book- keeping and get out some of the burdensome reports ais a A eae Bg ced a rr Ra they must mail out in the matter of dividend and. interest payments.’’ 108 Congressional Record, p. 22612 4. Further extract from debate in the House of Repre- Sentatives. - c ‘‘Mr Reuss. Further on the point raised by the gentleman from California I would call his attention to the fact that a big bank which has its own data proc- essing equipment is now able, without limitation, to ¥ go into the business of furnishing these s@rvices; so really this makes the situation referred to by the gentleman from California better rather than worse. : ‘‘Mr. Roosevelt. The gentleman from Wisconsin ‘ "is telling me & bank like the Bank of America can, . through a subsidiary corporation, provide these ser- -vices for itself, then get into competition with viene S businesses ? ‘‘Mr. Reuss. Not through ey corporations. © ‘There is a limitation. ‘‘Mr. Rodsevelt. As a part of the banking service ~ to outside people? . ‘*Mr. Reuss. That is correct. This limitation im- proves the situation.” — \ (108 Congressional Record, p. 16501.) ‘ LO EACLE LE Se. Sts MEE AEN ity i it iin 6 BERS Dit A Adin AACR ae thas 8 FELED 1 ABRARY JUN 11 1969 “IPREMG& COUREL U. A = Oi —bv/S, CLERK ee -evsow. ae in the ‘ Supreme Court of the United States Octroser Trnw, 1969 No. =. IAG INDUSTRIAL NATIONAL BANK OF RHODE . ISLAND, vd PETITIONER, Vv. a ~~ THE WINGATE CORPORATION, RESPONDENT. BRIEF OF THE WINGATE CORPORATION, RESPONDENT, IN OPPOSITION TO PETITION FOR A WRIT OF CERTIORARI, Eustace T. Purakas Epwarp J. Recan GraHaM, Rew, Ewine & StapPiteton 1130 Hospital Trust Building Providence, Rhode Island 02903 Attorneys for The Respondent canes Blanchard Press, Inc., Boston, Mass. — Law Printers Laer detans a . TABLE OF CONTENTS — Statement of the Case ............. Pe ROE Rs RA Question: Piressetl: 2.0 Sea eee Reasons for not Granting Writ ..................... I. “The Decision of the Court of Appeals in this Case is not a Final Judgment and this Court Should Follow its Long-Standing Rule and a not Grant a Writ of Certiorari........... II. No Conflict Presently Exists Between the Courts of Appeal of the First and Eighth Circuits Since no Final Decision has yet . Been Rendered in the First Circuit iuessad AAG esis Wontar pce III. The Decision of the First Circuit Court of Appeals is in no way in Conflict with any Decided Case of this Court ............... IV. This Case in its Present Posture does not Meet any of the Criteria for Review on Cer- tiorari as Outlined in Supreme Court Rule Nineteen or in Applicable Decisions of This Core <2 Se ee ee ee Possibility of Certiorari to Consider the Substantive i PROP a a ee ee Cénolasion 3.0500 i ee ee TABLE or A@THORITIES ed Eases Adler v. Northern Hotel Co., 175 F.2d 619 (7: er, AOE) ios sie See eee hs genre ee YY il Table of Contents Page pa & Key West Railway Company, 148 U.S. 372, 13 ik 000, oF 60OR E00 (1088). 2 es The Arlington, Inc. v. Mayer, cert. den. 539 U.S. 965 CR eS ee iy Se aorta, Arnold Tours, Inc. vy. Camp, No. 7192, 1st Cir., March 27, 1969 (decided with instant case, reprinted in Ap- ' pendix B to Petition for Writ of Certiorari at page jy Seeman eed My MBI hie arte errclinte Ge thet 7-0, ok A Nn Association of Data eins Service Organizations, Inc. v. Camp, 406 F.2d 837 (1969)... 0.055. ...05... The Chicago & Northwestern Railway Company v. Os- borne, 146 U.S. 354 13 8.Ct. 281, 36 L ed 1002 (1892) . Fields v. Washington, 173 F.2d 701 (3 Cir., 1949) ..... Harriman v. Northern Securities Co., 197 U.S. 244, 20 §.Ct. 493, 49 L ed 739 (1905) .........0.05.2.... Holcombe v. McK usick, 20 How 552, 554, - L ed 1020, SD Sie es WG be dy Cetin eee ee Land v. Dollar, 330 U.S. 731, 734, 91 L ed 1209, 1214 RE oreo Se rt ce Sec ie ae hee The Life and Fire Insurance ae of New York v. Adams, 9 Pet. 573, 602, 9 L ed 234, 244 (1835) ..... meciasa y. Mog, 141 US: G1... soe. 5 ae. Meagher v. Minnesota Thresher Manufacturing Com- pany, 145 U.S. 608 ........... COE eae ater me We TP, BU MISCO | ons oie ec ewes The Wingate Corporation v. Industrial National Bank, No. 7186, 1st Cir., March 27, 1969 (instant case, re- printed in Appendix B of Petition for Writ of Cer- seprem Ot: pepe 10)... 2.22... AER ft eR Statutes etree. 6 1001-1805 “2... ... es ee es 4,7 &" In the Supreme Court of the United States Ocroser Trem, 1968. No. 1408 INDUSTRIAL NATIONAL BANK OF RHODE ISLAND, PETITIONER, Vv. THE WINGATE CORPORATION, RESPONDENT. BRIEF OF THE WINGATE CORPORATION, RESPONDENT, IN OPPOSITION TO PETITION = FOR A WRIT OF CERTIORARI Statemeni Of The Case Respondent, The Wingate Corporation, filed in the United States District Court for the District of Rhode Island its in- itial complaint in this matter seeking to have the prospec- tive data processing activities of Petitioner, Industrial Na- tional Bank of Rhode Island (hereinafter referred to as ‘‘Industrial’’), for the City of Providence and for the pub- lic at large declared to be illegal; seeking to have Indus- trial enjoined from performing data processing services for the City of Providence or the public at large not inci- dental or necessary for the carrying out of the business of banking; and seeking damages resulting from such illegal. activities by Industrial. Subsequently, William B. Camp, Comptroller of Currency, and the City of Providence both Sean aetna Rirracarer rerio reyerem-men- em 2 moved to intervene as party defendants and their motions were granted by the District Court. Respondent herein filed an amended complaint seeking in addition to the relief requested in its original com- _ plaint, declaratory and injunctive relief against the inter- vener defendant, Comptroller of Currency, as he had pur- ported to authorize the aforementioned activities of Indus- trial in a 1966 ruling. | Motions to dismiss filed by the three defendants based on lack of standing of the Respondent and lack of juris- diction of the District Court over the subject matter were granted by the District Court. The Court of Appeals reversed holding that Sections 1861 to 1865 and Section 24(7) of Title 12 of the United States Code, when read in pari materia, give the Respond- ent standing to obtain a judicial determination of the lega- lity of the acts of the defendants which are the subject ‘ matter of this litigation. Questions Presented Respondent respectfully submits that the Petitioner’s Statement of the question presented (Pet., page 2) indi- cates that the Petitioner has misread the opinion of the Court of Appeals. While the Respondent opposes the grant- ing of a writ of certiorari in this case, it prays that if this Honorable Court should issue such a writ, the writ be is- _ sued to review such questions as are reasonably pertifent ‘to the disposition of this case. Respondent submits that Industrial’s statement that the Court of Appeals has con- cluded ‘‘that the National Bank Act does not give the Respondent-Plaintiff standing to sue. . .’’ and its implica- tion that standing was premised solely on the so-called Bank Service Corporation Act is erroneous. Respondent’s un- derstanding of the Court of Appeals decision is that it is 4 3 _ based on a reading, ?n pari materia, of several sections of Title 12 of the United States Code. Respondent therefore prays that should this Court grant a writ of certiorari in this case, such writ be granted in order to determine at least all aspects of the question of Standing. Reasons For Not Granting The Writ I. ue Decision or tHE Court or APPEALS IN THIS Case IS Not A Fina JupGMENT anv THIs Court SHoutp Fot- Low Its Lone-stanpinc RuLE AND Not GRANT A Writ or CERTIORARI. This Court has always made it a policy not to exercise its supervisory powers prior to the entry of a final judgment or decree in-a lower court, unless compelling reasons dic- tate otherwise. As early as 1835, Chief Justice: Marshall stated | ‘‘The Supreme Court, in the exercise of its ordinary appellate jurisdiction, can take cognizance of no case until a final judgment or decree shall have been made in the inferior court. Though the merits of the cause may have been substantially decided, while anything, though merely formal, remains to be done, this court ; cannot pass upon the subject. If from any intermediate stage in the proceedings an appeal might be taken ‘to the Supreme Court, the appeal might be repeated to the great oppression of the parties.”’ The Life and Fire Insurance Company of New York v. Adams, 9 Pet. 573, 602, 9 L ed 234, 244 ( 1835). ; This . reasoning has been followed consistently by the ? 4 Court dowh through the years. In H olcombe v. McK usick, 20 How 552, 554, 15 L ed 1020, 1021 (1858), this -Court held ) “The whole of the cause, therefore, in “gic court , below, was not disposed of, and no final judgment ren- | dered, upon which a writ of error from this court would lie.’ It is the settled practice of this court, and the same in the King’s Bench in England, that the writ _ ees a will not lie until the whole of the matters in contro- versy in’the suit below are disposed of. The writ itself is conditional and does not authorize the court below to send up the ease, unless all the matters between the parties to the record have been, determined. The cause is not to be sent up in fragments.”’ In The Chicago & Northwestern Railway Company v. Osboyne, 146 U.S. 354, 13 S.Ct. 281, 36 L ed 1002 (1892), Chief Justice Fuller denied the petitions for writs of cer- “tiorari to the Eighth Cireuit Court of Appeals because a - final judgment had not yet been entered. He cited as au- ‘thority McLish v. Roff, 141 U.S. 661; Rice v. Sanger, 144 U.S. 197; and Meagher v. Minnesota Thresher Manufac- turing Company, 145 U.S: 608. In more recent years the practice of this Court has been to deny petitions for writs of certiorari without opinion. Of necessity, therefore, the rule under discussion has been elu- , cidated primarily in cases in which this Court has made exceptions to dt. See, for example, American Construction Company v. Jacksonville, Tampa & Key West Railway Company, 148 U.S. 372, 13 S.Ct. 758, 87 L ed 486 (1893) ; Land v. Dollar,.330 U.S. 731, 734, 91 L ed 1209, 1214 (1947). The Court of Appeals in this case has not determined the question of whether the data processing activities of In- dustrial would violate the applicable Federal statutes. All Seen —— ee “| Saas "- x ; ‘ . , 9 ‘ DO™\W se Court of Appeals«decided was that Respondent could Honorable Court werf to grant certiorari in this case and then affirm the Court. of Appeals decision, a further re- view by this Court might well be required.once the sub- stantive «issues are finally determined below. The present posture of this case w ould seem almost to require that the litigation be permitted to run its course .in the District Court. : have a day in court ots to determine that issue. If this II. No Conrucr Presentty Exists Between THE Courts Or Apprau Or TuEe-First ANp Eicutu Creovurts Since No Fina Decision Has Yet Bren Renpexep In THE . IT 2DING . First Circuit Pifece oP I The primary Ree by Industrial for the granting of certiorari in this case is fhat the decision of the First Cireuit Court of Appeals herein is in direct con- flict with the decision of the Eighth Cireuit in Association of Data Processing Service Organizations, Inc. v. Camp; 406 F.2d 837 (1969). In that connection, Industrial raises ‘the specter of dire consequences. to the banking industry because of this supposed divergency between the Circuits. While’ the opinions cf the two courts are certainly di- . vergent, no ‘‘conflict’’ in the classical sense is presented, nor can there be any: problems of national banking ad- ministration until such time as a final judgment is entered - ‘in the instant case. Since there has been no final judgment entered in this case, Industrial has been continuing: to operate its data processing service just as its counterparts have been doing in the Kighth Circuit and elsewhere. As long as the: substantive question in this case has not been finally adjudicated, there does not appear to be any serious consideration of national banking policy which would re- quire this Court to depart from its traditional rule of . Neti bl Se ate MO eae So SN Sb Maui PRIN Leica si insite Whe Hilal --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_1339%3A1. Public record. Not legal advice.