Petition for Writ of Certiorari — At&t Family Federal Credit Union v. First National Bank & Trust Co.

ny | Bupreme Court, U.s

4 F | eo

92-2010 Jun 211983

IN THE

Supreme Court of the United States

OCTOBER TERM, 1992

AT&T FAMILY FEDERAL CREDIT UNION and

CREDIT UNION NATIONAL ASSOCIATION, INC.,

Petitioners,

v.

First NATIONAL BANK & TRuST Co., et al.,

Respondents.

Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The District Of Columbia Circuit

PETITION FOR A WRIT OF CERTIORARI

PAUL J. LAMBERT

(Counsel of Record)

TERESA BURKE

BINGHAM, DANA & GOULD

1550 M Street, N.W.

Suite 1200

Washington, D.C. 20005

(202) 822-9320

Attorneys for Petitioners

June 21, 1993

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

QUESTION PRESENTED

Do the plaintiff banks, which assert that they com-

pete with credit unions and which have sued to chal-

lenge the National Credit Union’s interpretation of

the ‘“‘common bond” provision of the Federal Credit

Union Act, Satisfy the “zone of interest” test for

prudential standing even though

a) the D.C. Circuit ruled that banks were not

among the intended beneficiaries of the Act

or of the common bond provision;

b) the D.C. Circuit ruled that the general purpose

of the FCUA was to promote the growth of

credit unions; and

c) Congress did not even arguably intend the

common bond provision to limit competition

between banks and credit unicns?

ii

LIST OF PARTIES

The parties below included the following:

The National Credit Union Administration

(“NCUA”), defendant in the district court and ap-

pellee below, is the agency charged with the admin-

istration and enforcement of the Federal Credit Union

Act.

Lexington State Bank, Predmont State Bank, Ran-

dolph Bank and Trust Company and Bankers Trust

of North Carolina joined the First National Bank and

Trust Company in bringing this action against the

NCUA, as did the American Bankers Association.

These parties were plaintiffs in the district court and

appellants below.

AT&T Family Federal Credit Union (‘Family Fed-

eral’) is a corporation organized and existing under

federal law pursuant to the Federal Credit Union Act.

Its purpose is to promote thrift among its members

and to create a source of credit for productive pur-

poses. Credit Union National Association (‘“‘CUNA’’)

is a trade association consisting of fifty-two credit

union leagues. Its purposes include the representation

of the interests of credit unions with respect to leg-

islative and regulatory matters. Family Federal and

CUNA (collectively the “Credit Unions’) were per-

mitted to intervene as defendants in the district court

and were appellees below. They submitted briefs on

the standing issue presented here in both the district

court and the court of appeals. Neither Family Fed-

eral nor CUNA have any parent companies or sub-

sidiaries.

iil

The North Carolina Alla

cial Institutions fi

appellants in the

ance of Community Finan-

led an amicus brief on behalf of the

proceedings before the Court of

Appeals for the District of Columbia Circuit.

iv

TABLE OF CONTENTS

Page

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CI TEI rasrettrsnetnercinenreceecctenareieetieiine 1

SOI sisiisitietnicciniihaisiansinniilldstiinssiiianinounneiiaminens 2

RELEVANT STATUTES AND REGULATIONS ............0.+ 2

EATER CR TUE GR wiccccsencsncnicasivincinaniteinnins 3

BASIS FOR FEDERAL JURISDICTION IN THE COURT OF

ED SCAT pisisinnssencnisidiaiadsieniinidineniies

REASONS FOR GRANTING THE WRIT ...........:sscceeeeeees 6

I. The D.C. Circuit’s Opinion is Contrary to

Supreme Court Precedents ..............c.cceeeeeeee 6

II. The D.C. Circuit’s Opinion Creates a Conflict

Sy GR Ce Cai cciaceececacieectistinesinenscainnsanas 14

III. Important Questions are Raised .................. 16

A. For Litigants Generally ...................sese00 16

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TABLE OF AUTHORITIES

Cases: Page

Air Courier Conference v. American Postal Workers

Union, 498 U.S. 517 (1991) veces... 6-7,9-11,14-16

Association of Data Processing Orgs. v. Camp, 397

ee. BO CIID ccsivicsnenibicabiticnnniiciainiae 7-8,11-12,14

Block v. Community Nutrition Inst., 467 U.S. 340

A cian NE EC SATS ie ON 8

(RHE sista ncetvediacnissnbiensimiceetaisdecudusacsc. 8

cece! Sen AE at 5,7-9,11-12,14-16

First Nat’l Bank & Trust Co. v. National Credit

Union Admin., 772 F. Supp. 609 (D.D.C.

NUAD sticshstnvivistiesiiiinssiinsinatiaicainigiiaDicaasiecs. ce. 3-4

First Nat’l Bank & Trust Co. v. National Credit

Union Admin., 988 F.2d 1272 (D.C. Cir.

POP taecapmaasibbliteicoiee ae Ls, 4-5,8,11,13-15

Hardin v. Kentucky Utils. Co., 390 U.S. 1

CRUD Satis cenhanensicicelanshcbdchincsibntiibdtranndiansaieecc. cs... 8

MTD Streit sitaaiasnaiaetab shctitintbaneeaetianiiaxarsipien aed 8

Investment Co. Inst. v. Camp, 401 U.S. 617

PIE Niilalniiassns bitches tise 11-12,14

Lujan v. National Wildlife Federation, 497 U.S.

Pe ND chneiilll etsnsucaibiilisstiddaticnnniansidenaceccc.c., 10

Warth v. Seldin, 422 U.S. 490 SID sthcidéaiarcecceseen 6

Statutes:

Preamble to Federal Credit Union Act

Pub. L. 73-467, 48 Stat. 1217

eeain: ST en OC DN 17

Table of Authorities Continued

Page

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NR cts sacs saeniaphsebhaakenabhencoieans 12

88 ED i. RR eo ee OD 2-3

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SO eh BUND cis cceniaisdiasdsaanseancksnsbenvenssacninnen 6

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1992

No. ____

AT&T Fami.y FEDERAL CREDIT UNION and

CREDIT UNION NATIONAL ASSOCIATION, INC.,

Petitioners,

a

FIRST NATIONAL BANK & TRUST Co., et al.,

Respondents.

Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The District Of Columbia Circuit

PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW

1. First Nat’l Bank & Trust Co. v. National Credit

Union Admin., 772 F. Supp. 609 (D.D.C. 1991), see

App. 16a-25a.

2. First Nat’l Bank & Trust Co. v. National Credit

Union Admin., 988 F.2d 1272 (D.C. Cir. 1993), see

App. la-15a.

JURISDICTION

On April 2, 1993, the District of Columbia Circuit

reversed the district court’s dismissal of the plaintiff

banks’ action on the grounds of prudential standing.

Neither the Credit Unions nor the NCUA sought re-

hearing.

This Court has jurisdiction of this matter pursuant

to 28 U.S.C. § 1254(1). Both CUNA and Family Fed-

eral are “‘parties’”’ to this action within the meaning

of § 1254(1), having been granted leave to intervene

in the district court by order entered on April 25,

1991. They joined in, and filed a brief in support of,

NCUA’s motion to dismiss for lack of standing and

briefed the standing issue presented here in the court

of appeals.

RELEVANT STATUTES AND REGULATIONS

The Administrative Procedure Act, 5 U.S.C. § 702,

provides in pertinent part that

A person suffering legal wrong because of

agency action, or adversely affected or ag-

grieved by agency action within the meaning

of a relevant statute, is entitled to judicial

review thereof.

The ‘‘common bond” provision of the Federal Credit

Union Act, 12 U.S.C. § 1759, reads, in pertinent part,

as follows:

Federal credit union membership shall be lim-

ited to groups having a common bond of oc-

cupation or association, or to groups within

a weil-defined neighborhood, community or

rural district.

‘

STATEMENT OF THE CASE

Five banks and the American Bankers Association

(collectively, the ‘‘Banks’’) brought this action against

the National Credit Union Administration (“NCUA”)

challenging NCUA’s approval of certain amendments

of the charter of the AT&T Family Federal Credit

Union (“Family Federal”). These amendments ex-

panded Family Federal’s field of membership to in-

clude various additional employee groups to which

credit union services would not otherwise be available.

The Banks claim that these charter amendments vi-

olate the ‘common bond” requirement of the Federal

Credit Union Act, which states that “federal credit

union membership shall be limited to groups having

a common bond of occupation or association. ...”’ 12

U.S.C. § 1759. The Banks seek a declaratory judg-

ment that the charter amendments at issue are null

and void, and an injunction prohibiting the NCUA

from approving similar charter amendments in the

future.

Family Federal and Credit Union National Asso-

ciation (““CUNA”), a trade association consisting of

fifty-two credit union leagues, were permitted to in-

tervene in the case as parties defendant on April 25,

1991.

On August 9, 1991, the district court dismissed the

banks’ action on the grounds that the banks lacked

prudential standing to challenge the NCUA actions

at issue. First Nat’ Bank & Trust Co. v. National

Credit Union Admin., 772 F. Supp. 609 (D.D.Cc. 1991),

See App. 16a. The Court utilized a two-part test for

determining whether the plaintiff banks were within

the “zone of interest’’ of the common bond provision

of the Federal Credit Union Act. First, the Court

determined that banks were not “intended benefici-

: ”

aries” of the common bond provision:

[T]he Act was passed to establish a place for

credit unions within the country’s financial

market, and specifically not to protect the

competitive interest of banks ... Nor was

the common bond requirement included in the

Act to protect banks. Instead, it was de-

signed to ensure that credit unions remain

responsive to those they were designed to

serve.

772 F. Supp. at 612, App. 22a.

Second, the district court applied a “suitable chal-

lenger’’ standard that the D.C. Circuit had articulated

in several other cases. The D.C. Circuit’s “suitable

challenger’ test permits plaintiffs who are not in-

tended beneficiaries of the statute in question to sue

if their interests merely ‘“‘coincide’’ systematically with

the interests which Congress did intend to protect

and if their suits will not frustrate the purposes of

the statute. Using the test, the district court found

that banks were not suitable challengers to agency

decisions about the common bond provision, because

[T]he interests of banks will rarely, if ever,

coincide with those of credit unions, the in-

terest which Congress did intend to pro-

ae

772 F. Supp. at 612, App. 28a.

The D.C. Circuit reversed. First Nat’l Bank & Trust

Co. v. National Credit Union Admin., 988 F.2d 1272

(D.C. Cir. 1993), See App. la. The Circuit agreed with

‘aia

5

the district court that “Congress did not, in 1934

[when the common bond provision was enacted as

part of the Federal Credit Union Act], intend to shield

banks from competition from credit unions.” 988 F.2d

at 1275, App. 7a. To the contrary, it found this notion

anomalous because Congress’ “general purpose was

to encourage the proliferation of credit unions, which

were expected to provide service to those would-be

customers that banks disdained.” 988 F.2d at 1275,

App. 7a. The common bond provision was the “‘ce-

ment that united credit union members in a cooper-

ative venture and was, therefore, thought important

to credit unions’ continued success.” Jd. at 1276, App.

7a.

The D.C. Circuit then went on to consider what it

described as the “more subtle” question whether

banks could be considered “suitable challengers” to

enforce the common bond provision. 988 F.2d at 1276,

App. 8a. It concluded that the interests of banks were

sufficiently congruent with the interests protected by

the common bond provision for the court to allow the

suit. The Circuit stated that Branch Bank & Trust

Co. v. National Credit Union Admin., 786 F.2d 621

(4th Cir. 1986), cert. denied, 479 U.S. 1063 (1987),

an identical case where the Fourth Circuit ruled that

banks lacked Standing, had been “emptie[d] of its per-

Suasiveness” by Clarke v. Securities Industry Assn.,

479 U.S. 388 (1987) with its “explication of the suit-

able challenger route to Standing... .” 988 F.2d at

1277, n.3, App. 10a, n.3.

BASIS FOR FEDERAL JURISDICTION

IN THE COURT OF FIRST INSTANCE

Original jurisdiction was vested in the District Court

pursuant to 28 U.S.C. § 1331 (federal question juris-

diction). For purposes of the Credit Unions’ motion

to dismiss only, the Credit Unions have not challenged

the Banks’ claims that the Article III jurisdictional

requirements are met.!

REASONS FOR GRANTING THE WRIT

This Court should grant the credit unions’ petition

and review the District of Columbia Circuit’s opinion

on writ of certiorari because the opinion conflicts with

applicable Supreme Court precedents and creates a

conflict in the circuits, and because important ques-

tions are raised.

I. The D.C. Circuit’s Opinion Is Contrary to Supreme

Court Precedents

Certiorari should be granted, first, because the D.C.

Circuit has reached a result that extends the test for

prudential ‘‘zone of interest’’ standing beyond the lim-

its set by applicable Supreme Court precedents.? The

‘For purposes of ruling on a motion to dismiss for lack of

standing, the Court must take all material allegations of the

complaint as true and construe the complaint in favor of the

complaining party. Warth v. Seldin, 422 U.S. 490, 501 (1975).

2 The ‘‘zone of interest’’ standard is the second element of a

two-part test for standing. A plaintiff suing under the Admin-

istrative Procedure Act, 5 U.S.C. § 702, must show, first, that

it has suffered injury in fact and thus has been adversely af-

fected or aggrieved by agency action. Then, a plaintiff must

establish that it is within the zone of interest to be protected

by the relevant statute. See Air Courier Conference v. American

Postal Workers Union, 498 U.S. 517, 523 (1991).

a

7

D.C. Circuit agreed with the district court that Con-

gress did not intend the FCUA to protect the inter-

ests of banks like the plaintiffs. However, without

even mentioning Air Courier Conference v. American,

Postal Workers’ Union, 498 U.S. 917 (1991), which

denied standing because intent to benefit the

plaintiffs’ interests had not been established, it never-

theless held that the banks met the “zone of interest’

test and had standing to sue. It relied upon what it

considered to be an alternative route to standing

which it traced to a footnote in Clarke v. Securities

Indus. Assn., 479 U.S. 388 (1987). The D.C. Circuit

held that it was enough for standing if the banks’

interests were sufficiently congruent with those of the

intended beneficiaries that they were not more likely

to frustrate than to further the objectives of the Fed-

eral Credit Union Act.

This alternative approach to standing is inconsistent

with the zone of interest test because it substitutes

a functional standard for the intent standard estab-

lished in prior Supreme Court case law. Under the

zone of interest test, congressional intent to protect

interests including those of the potential plaintiff is

the critical determining factor for prudential standing.

Standing is permitted where “the interest sought to

be protected by the complainant is arguably within

the zone of interests to be protected or regulated by

the statute or constitutional guarantee in question.’’

Association of Data Processing Orgs. v. Camp, 397

U.S. 150, 153 (1970). The phrase “to be protected”’

establishes that congressional intent to protect is at

the core of the zone of interest approach.

*The prior cases cited by the Court in Data Processing as

According to the D.C. Circuit, footnote 12 in the

Clarke decision, 479 U.S. at 397, established an al-

ternative zone of interest analysis that obviates the

need to show congressional intent to protect. See First

Nat’l Bank and Trust Co. v. National Credit Union

Admin., 988 F.2d 1272, 1279 (D.C. Cir. 1993). The

pertinent part of the Clarke footnote states:

However, the concern that the plaintiff be

‘reliable’ carries over to the ‘zone of interest’

inquiry, which seeks to exclude those

plaintiffs whose suits are more likely to frus-

trate than to further statutory objectives.‘

Clarke, 479 U.S. at 397, n.12.

“closely analogous” also demonstrate that congressional intent

with respect to interests to be protected is conclusive. See Chi-

cago v. Atchison, T&S.F.R. Co., 357 U.S. 77, 83-84 (1958) and

Hardin V. Kentucky Utils. Co., 390 U.S. 1 (1968). As the Data

Processing court recognized, both of these cases held that

plaintiffs had standing to sue where the statutory provision at

issue was designed to protect their interests. See Data Process-

ing, 397 U.S. at 154-5 (In Atchison, an “existing entrepreneur

had standing to challenge the legality of the entrance of a new-

comer into the business, because the established business was

allegedly protected by a valid city ordinance,” while Hardin

involved ‘‘a section of the TVA Act designed primarily to protect

... private utilities against TVA competition”). Similarly, in

Block v. Community Nutrition Inst., 467 U.S. 340 (1984), the

Supreme Court stated that the essential inquiry is whether Con-

gress “‘intended for [a particular] class [of plaintiffs] to be relied

upon to challenge agency disregard of the law.”’ Jd. at 347.

‘Citing the same footnote in Hazardous Waste Treatment

Council v. Thomas (“HWTC IV”), 885 F.2d 918 (D.C. Cir. 1989),

the D.C. Circuit described suitable challengers as “‘parties whose

interests, while not in any specific or obvious sense among those

Congress intended to protect, coincide with the protected inter-

ests.”” Id. at 922.

ee

The Credit Unions assert that the D.C. Circuit has

misread and misapplied Clarke. In footnote 12, the

Clarke Court was only describing the purpose of the

zone of interest test; it was not creating a new route

to standing. Indeed, Clarke itself expresses the pri-

macy of congressional intent: “[A]t bottom the re-

viewability question turns on congressional intent, and

all indicators helpful in discerning that intent must

be weighed.” Clarke at 400.

It is apparent from the D.C. Circuit’s language that

under its approach, it is possible for a party to be

granted standing where it is seeking to advance in-

terests that Congress never intended to protect. In

effect, it permits a court to substitute its judgment

for that of Congress in deciding which suits are to

be allowed. This is directly inconsistent with the prin-

ciple at the heart of the zone of interest test.

In Air Courier, decided several years after Clarke,

this Court again stressed that congressional intent to

protect is the touchstone for determining whether

plaintiffs meet the zone of interest test. It stated,

“We must inquire, then, as to Congress’ intent in

enacting the PES in order to determine whether

postal workers were meant to be within the zone of

interests protected by those statutes.” 498 U.S. at

524 (emphasis added). There, the Court reversed a

decision of the D.C. Circuit that had upheld standing.

The action had been brought by unions representing

postal workers. They challenged Postal Service reg-

ulations that had the effect of reducing revenues. The

Unions asserted that they would be injured by the

regulations because reduced revenues would lead to

the loss of jobs.

10

The D.C. Circuit’s rationale in allowing standing in

Air Courier was that there was a plausible relation-

ship between the revenue protective provisions of the

relevant postal statutes and the plaintiffs’ interests

in preventing the loss of jobs. The Supreme Court,

however, said that the D.C. Circuit’s view was ‘“‘mis-

taken,’”’ and that this was not enough to confer stand-

ing because it conflated injury in fact with the zone

of interest test. 498 U.S. at 524. The former looks

at the effect of regulatory activity, while the latter

looks at congressional intent.’ Thus, in its analysis,

the Supreme Court focused single-mindedly on

whether Congress intended to protect the plaintiff

postal workers. It did not indulge any presumption

in favor of standing.®

It is true that in some cases Congress has not

expressed its intent in an explicit way. In those cir-

cumstances, the role of the court is to seek to infer

congressional intent from the language of the statute,

5 The court illustrated this point by referring to the “‘Lujan

hypothetical,’’ which showed how “‘injury in fact does not nec-

essarily mean one is within the zone of interests to be protected

by a given statute.” Air Courier, 498 U.S. at 524. In Lwan v.

National Wildlife Federation, 497 U.S. 871 (1990), this Court

posited the failure of an agency to comply with a statutory

provision requiring its hearings to be transcribed. This would

have an adverse effect on a transcribing company. Although the

company would be affected by the agency’s action, it would not

be entitled to sue because the provision had not been “enacted

to protect [its] interests.”” Air Courier, 498 U.S. at 524, citing

Lujan, 497 U.S. at 883.

® The D.C. Circuit did not address Air Courier in its opinion

although the Credit Unions had relied upon it to support their

argument that the plaintiff banks were required to show Con-

gress’ intent to benefit their interests.

|

11

its overall purposes, and its legislative history. How-

ever, inferring congressional intent is far removed

from the D.C. Circuit’s approach, where the decision

to grant standing is based on an assessment of

whether the litigants have interests congruent with

the class Congress actually intended to protect and

whether the plaintiffs are more likely to frustrate or

advance the statutory objectives.

In the present case, as in Air Courier, the D.C.

Circuit failed to focus on the intent of the statute

under review and it reached a result inconsistent with

Supreme Court precedents. It interpreted Clarke, as

well as Data Processing and Investment Co. Inst. v.

Camp (“ICI’’), 401 U.S. 617 (1971), prior “competitor

Standing”’ cases, as Supporting the conclusion

[T]hat a plaintiff who has a competitive in-

terest in confining a regulated industry within

certain congressionally imposed limitations

may sue to prevent the alleged loosening of

those restrictions, even uf the plaintiff's in-

terest 1s not precisely the one that Congress

sought to protect.

988 F.2d at 1277, App. 9a-10a (emphasis added).

This conclusion ignores congressional intent entirely

and represents an extension of Data Processing, ICI

and Clarke. Each of these cases, unlike the present

one, arose under statutes that reflected clear congres-

sional intent to limit the competitive reach of the

regulated entities. It was for that reason that, in

each, the Court correctly held that the plaintiffs’ com-

petitive interests at least arguably were within the

zone of interest Congress intended to protect.

12

Clarke involved Sections 81 and 36(c) of the Na-

tional Bank Act (12 U.S.C. §§ 81, 36). Section 81

explicitly “limits the general business” of a national

bank to its headquarters and any branches permitted

by 36(c); 36(c) allows branching only in a bank’s home

state and only to the extent permitted under state

law. 479 U.S. at 391. The Court in Clarke concluded

that Congress arguably had legislated against the

competition being challenged by the plaintiff brokers,

and that there was reason to infer that Congress

intended the plaintiffs’ class to be relied upon to chal-

lenge agency action. 479 U.S. at 403.

In Data Processing, the statute at issue (Section 4

of the Bank Service Corporation Act) stated, ‘‘ ‘No

bank service corporation may engage in any activity

other than the performance of bank services for

banks.’ ”’ 397 U.S. at 155. Similarly, JCJ interpreted

the Glass-Steagall Act, where the relevant statutory

language stated that a national bank ‘“‘shall not un-

derwrite any issue of securities or stock’’ and shall

not purchase ‘‘for its own account ... any shares of

stock of any corporation ....” 401 U.S. at 634. In

ICI, the Court stated that in the case before it as

well as in Data Processing, Congress had arguably

legislated against the competition that the plaintiffs

sought to challenge. 401 U.S. at 620.

In short, in the prior competitor standing cases,

the Supreme Court has inferred a congressional intent

to permit competitors to sue based upon the conclu-

sion that Congress arguably had legislated against the

competition being challenged by the competitors, and

has held that the zone of interest test was satisfied

as a result.

13

The present case is different. There is no basis to

infer an intent to permit bank competitors to sue

because it is clear that Congress was not even ar-

guably legislating against competition. The general

purposes of the FCUA and the Specific purpose of

the common bond provision support this conclusion.

The D.C. Circuit recognized that the general pur-

pose of the FCUA was to encourage the growth of

credit unions and it said that it was “‘anomalous’’ to

believe that it was intended to shield banks from

credit union competition. 988 F.2d at 1275, App. 7a.

It observed that it wasn’t until credit unions became

successful that bankers began to see the common bond

provision as a potential limitation on credit union ex-

pansion. Id. at 1276, App. 8a. Similarly, the Court of

Appeals for the Fourth Circuit in Branch Bank &

Trust Co. v. National Credit Union Admin., 786 F.2d

621 (4th Cir. 1986), cert. denied, 479 U.S. 1063 (1987),

ruled that the federal credit union system was estab-

lished as an alternative to an unacceptable credit

structure that included banks. It said that the general

purpose of the FCUA Suggested not that Congress

desired to protect banks, but rather that Congress

deliberately sacrificed the competitive interests of

banks to the goal of making credit more available to

people of limited financial means. 786 F.2d at 626.

Neither is there anything in the common bond pro-

vision itself suggesting an intent to protect or benefit

banks. While the effect of the common bond provision

may be to limit competition if the banks’ interpre-

tation of it were adopted, this clearly was not its

14

fore, thought important to credit unions’ continued

success.”’ 988 F.2d at 1276, App. 7a. The Fourth Cir-

cuit expressed a similar view in Branch Bank:

There is no evidence from any source cited

to this court that Congress also intended by

this provision to protect the competitive in-

terests of banks. Given the specific rationale

for the common bond requirement, we will

not attribute to it a meaning that is at cross

purposes with the general goals of the stat-

ute. If the NCUA were seen to violate the

common bond requirement to the detriment

of union members, they would possess stand-

ing to sue. The banks, by virtue of the stat-

ute, simply do not occupy a similar position.

786 F.2d at 626.

In sum, neither the general purpose of the FCUA

nor the specific purpose of the common bond provi-

sion supports an inference that Congress arguably

legislated against the competition now being chal-

lenged by the banks or that it otherwise intended

that banks’ interests be within the zone of interests

to be protected. Indeed, as the Fourth Circuit stated,

the most reasonable inference is directly to the con-

trary. If the D.C. Circuit had adhered faithfully to

Data Processing, ICI, Clarke and Air Courier, it

would have affirmed rather than reversed the district

court.

II. The D.C. Circuit’s Opinion Creates A Conflict In

The Circuits

The second reason why certiorari should be granted

is to resolve the conflict between the results reached

by the D.C. Circuit in this case and by the Fourth

15

Circuit in Branch Bank. As stated above, Branch

Bank and this case are identical] in all relevant re-

spects except the outcome.

The D.C. Circuit chose not to follow Branch Bank

although it agreed with its conclusions concerning the

overall purposes of the Act generally and of the com-

mon bond provision in particular. It also agreed with

the Fourth Circuit that banks were not intended be-

neficiaries of the Act. However, it stated that it be-

lieved that the “subsequent explication of the suitable

challenger route to standing in Clarke,” 988 F.2d at

1277, n.3, App. 10a, n.3, provided an alternative basis

for standing that the Fourth Circuit had not consid-

ered.

For the reasons discussed above, the Credit Unions

assert that the D.C. Circuit has misinterpreted Clarke,

created a new basis for standing where none was

intended, and extended the reach of the prior com-

petitor standing cases. Thus, Clarke did not “expli-

catje] ... the suitable challenger route to standing.’

The D.C. Circuit incorrectly distinguished Branch

Bank from the instant case on this basis, and there

is therefore a split in the circuits.

In addition, the D.C. Circuit was wrong in criticiz-

ing the Fourth Circuit’s exclusive focus on the issue

whether Congress intended that banks interests be

protected under the FCUA. As stated above, this

analysis is at the core of the zone of interests test.

Indeed, the Fourth Circuit followed exactly the same

approach that the Supreme Court utilized when it

reversed the D.C. Circuit in Air Courier. Both fo-

cused exclusively on whether Congress intended to

protect the interests of the plaintiffs who brought the

action.

16

III. Important Questions Are Raised

This petition raises special and important questions

for litigants generally and for credit unions in par-

ticular.

A. For Litigants Generally

Whether ‘‘zone of interest’ standing exists is a

consideration in many challenges to agency and other

governmental action. Even if it is not clear that the

D.C. Circuit misconstrued applicable Supreme Court

precedents, it is apparent that substantial confusion

exists with respect to the nature of the zone of in-

terest test and that the law on this important issue

requires clarification.

The D.C. Circuit has adopted an alternative test

for zone of interest standing which it calls the “‘suit-

able challenger’’ route to standing. It eliminates a

plaintiff's need to show any congressional intent to

protect its interests. The D.C. Circuit bases this ap-

proach on the Supreme Court’s decision in Clarke. It

has continued to utilize this approach notwithstanding

the fact that subsequently, in Air Courer, the

Supreme Court ruled that plaintiffs did not have

standing to sue absent a showing of congressional

intent to protect their interests. Addressing this ap-

parent conflict would assist other litigants and other

courts.

B. For Credit Unions

The issues raised are particularly important to

credit unions and their members.

In passing the Federal Credit Union Act in 1934

in the midst of the Great Depression, Congress was

seeking to ‘‘make more available to people of small

17

means credit for provident purposes.” Preamble to

Federal Credit Union Act. Pub. L. 73-467, 48 Stat.

1217 (1934). Credit unions have continued to serve

these goals, providing access to credit and a means

of saving for millions of Americans.

The decision of the District of Columbia Circuit is

likely to have a major impact on the ability of credit

unions to continue to provide services to their mem-

bers. If this decision is allowed to stand, banks will

be permitted to challenge every amendment to every

credit union’s charter, since all charter amendments

must comply with the common bond provision. In fact,

within six weeks of the issuance of the D.C. Circuit’s

opinion, a group of banks filed suit against the NCUA

in federal district court in Michigan, alleging that the

charter amendments of a local credit union were void

for failure to comply with the common bond provision.

The resulting increase in the burdens on both credit

unions and the NCUA is likely to be substantial.

Moreover, this decision will affect credit unions re-

gardless of where they are located, since NCUA ap-

provals can always be challenged in the District of

Columbia Circuit. For these reasons, this decision,

although it expresses the law of only one circuit, will

affect the interests of credit unions nationwide.

18

CONCLUSION

For the reasons stated above, the Credit Unions

submit that this case is a compelling one for Supreme

Court review. The Credit Unions respectfully request

that this Court grant their petition and review the

decision in this case on writ of certiorari.

Respectfully submitted,

PAUL J. LAMBERT

(Counsel of Record)

TERESA BURKE

BINGHAM, DANA & GOULD

1550 M Street, N.W.

Suite 1200

Washington, D.C. 20005

Attorneys for Petitioners

June 21, 1993

la

APPENDIX A

UNITED STATES COURT OF APPEALS

DISTRICT OF COLUMBIA CIRCUIT

Nos. 91-5262, 91-5336

FIRST NATIONAL BANK AND TRUST COMPANY, et al.,

Appellants,

v.

NATIONAL CREDIT UNION ADMINISTRATION, et al.

FIRST NATIONAL BANK AND TRUST COMPANY, et al.,

Lexington State Bank,

Appellants,

v.

NATIONAL CREDIT UNION ADMINISTRATION

Argued Nov. 16, 1992

Decided April 2, 1993

*_ ses *& &

Michael S. Helfer, with whom William J. Kolasky, Jr.,

John J. Gill, and Michael F. Crotty, were on the brief, for

appellants.

Jonathan R. Siegel, Atty., Dept. of Justice, with whom

Stuart M. Gerson, Asst. Atty. Gen., Jay P. Stephens, U.S.

Atty., and Douglas N. Letter, Atty., Dept. of Justice, were

on the brief, for appellees.

Edward C. Winslow and William C. Scott were on the

brief, for amicus curiae North Carolina Alliance of Com-

munity Financial Institutions.

2a

Before: WALD, SILBERMAN, and D.H. GINSBURG, Cir-

cuit Judges.

Opinion for the Court filed by Circuit Judge SILBER-

MAN.

Concurring opinion filed by Circuit Judge WALD.

SILBERMAN, Circuit Judge:

Appellants, four North Carolina banks and the American

Banking Association, challenged the National Credit Union

Administration’s (NCUA) approval of several recent appli-

cations by AT & T Family Federal Credit Union (AT &

T Family) to expand its membership. According to

appellants, the NCUA’s decisions violated the requirement

of the Federal Credit Union Act (FCUA) that membership

in federal credit unions be limited to “groups having a

common bond of occupation or association.” 12 U.S.C.

§ 1759. The banks complain that, by allowing AT & T

Family improperly to extend its membership and thereby

its number of potential borrowing customers, the NCUA

has made the credit union a formidable competitor. The

district court applied the ‘‘zone of interests” tests for pru-

dential standing and determined that appellants lacked

standing to sue. Although we agree with the district court

that the appellants were not intended beneficiaries of the

FCUA, we think that they are suitable challengers because

the statute arguably prohibits the competition of which

they complain. This case thus falls within the rationale of

Clarke v. Securities Industry Association, 479 U.S. 388,

107 S.Ct. 750, 93 L.Ed.2d 757 (1987), and Investment Com-

pany Institute v. Camp, 401 U.S. 617, 91 S.Ct. 1091, 28

L.Ed.2d 367 (1971). We reverse and remand to the district

court.

i.

Passed in 1934 in the midst of the Great Depression,

the FCUA, 12 U.S.C. §§ 1751-1795k (1988), was designed

3a

to improve access to credit for people of ‘small means.”

S.REP. No. 555, 73d Cong., 2d Sess. 1 (934). For many

working Americans, credit at reasonable rates had essen-

tially disappeared in the years following the stock market

crash. Lacking the security necessary to obtain loans from

banks, working Americans turned to loan sharks who typ-

ically charged usurious interest rates, which was thought

to reduce the overall purchasing power of American con-

sumers. See 78 Conc.REc. 12,223 (1934). Congress saw

the solution to this problem in a system of federal credit

unions that would provide credit at reasonable rates and

thus would help spur economic recovery. See id. at 7260,

12,223-25.

To ensure that credit unions fulfilled their purpose of

meeting members’ credit needs, Congress restricted credit

unions’ management and business activities. For example,

a federal credit union is owned and controlled by its mem-

bers, see 12 U.S.C. §§ 1757-1761, and it can make loans

only to members or to other credit unions, see id. § 1757(5).

Congress expected that such measures guaranteeing dem-

ocratic self-government would infuse the credit union with

a spirit of cooperative self-help and ensure that the credit

union would remain responsive to its members’ needs.

A related provision of the FCUA, the common bond re-

quirement, is at the heart of this case. Section 109 of the

Act restricts membership in federal credit unions to

“groups having a common bond of occupation or associ-

ation.” 12 U.S.C. § 1759. For much of the Act’s history,

the NCUA interpreted this provision to require all members

of a credit union to share the same bond. In the 1980s,

however, the NCUA issued a series of Interpretive Ruling

and Policy Statements (IRPS) construing the statute to

allow a number of different groups, each having its own

bond, to form a credit union, even though no overall com-

mon bond united the different groups. See 47 Fed.Reg.

26,808 (1982) (IRPS 82-3); 48 Fed.Reg. 22,899 (1983); 49

Fed.Reg. 46,536 (1984) (IRPS 84-1); 54 Fed.Reg. 31,165

4a

(1989) (IRPS 89-1). The NCUA’s most recent interpretation,

IRPS 89-1, made clear that a credit union could comprise

a “combination of distinct, definable occupational and/or

associational groups.” 54 Fed.Reg. 31,165, 31,170 (1989).

Appellants challenged several decisions in which the

NCUA applied IRPS 89-1 to approve applications by AT &

T Family to expand its field of membership. Until recently,

AT & T Family’s membership consisted primarily of em-

ployees of AT & T Technologies, Inc., AT & T Network

Systems, and Bell Telephone Labs. In late 1989 and 1990,

AT & T Family filed eight applications to extend its mem-

bership to include groups of employees from other com-

panies such as the American Tobacco Company, Western

Auto Supply Company, and WGHP-TV, to name but a few.

In all, the NCUA approved the extension of AT & T Fam-

ily’s membership to 16 new employee groups. Appellants

claimed before the agency and in the district court that

IRPS 89-1, ignored the statutory language by allowing

groups lacking any common bond between them to join

together in a credit union. The banks contended that by

allowing AT & T Family to expand to 71,000 members in

violation of the statute, the NCUA has allowed the credit

union, which is exempt from state and federal income

taxes, see 12 U.S.C. § 1768, to become a formidable com-

petitor to banks.

The district court granted NCUA’s motion to dismiss for

lack of standing. The court determined that appellants were

not pressing claims ‘‘arguably within the zone of interests’

protected by the FCUA. See First Nat’l Bank & Trust Co.

v. National Credit Union Admin., 772 F.Supp. 609, 611-

13 (D.D.C. 1991). Relying on the language of this court’s

post-Clarke decisions on prudential standing,f see, e.@.,

Hazardous Waste Treatment Council v. Thomas, 885 F.2d

918 (D.C.Cir. 1989) (HWTC IV); Hazardous Waste Treat-

ment Council v. United States Envtl. Protection Agency,

861 F.2d 277 (D.C.Cir. 1988), cert. denied, 490 U.S. 1106,

109 S.Ct. 3157, 104 L.Ed.2d 1020 (1989) (HWTC ID, the

Eo

5a

district court said that “{t]hose not regulated by an agency

have standing only if they are the intended beneficiaries

of the specific statute or are nonetheless ‘suitable chal-

lengers’ to the statute, because their interests coincide

with the interests which Congress did intend to protect.”’

First Nat'l Bank, 772 F.Supp. at 611. The banks were

not intended beneficiaries of the Act, thought the district

court, because “the Act was passed to establish a place

for credit unions within the country’s financial market, and

specifically not to protect the competitive interest of

banks.” Id. at 612; see also Branch Bank & Trust Co. v.

National Credit Union Admin. Bd., 786 F.2d 621 (4th Cir.

1986), cert. denied, 479 U.S. 1068, 107 S.Ct. 948, 93

L.Ed.2d 997 (1987). Under applicable precedent, the dis-

trict court believed that the banks were not suitable chal-

lengers either. Because the banks and the credit union

competed for the same business, any coincidence in their

interests “‘would be at best fortuitous.” First Nat’l Bank,

772 F.Supp. at 612. The banks, according to the district

court, could not rely on the Supreme Court’s cases, see,

e.g., Clarke v. Securities Industry Ass’n, 479 U.S. 388, 107

S.Ct. 750, 93 L.Ed.2d 757 (1987); Investment Co. Inst. v.

Camp, 401 U.S. 617, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971)

(ICI); Association of Data Processing Serv. Orgs. v. Camp,

397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970), that

granted standing to competitors as suitable challengers

because, unlike the competitors in those cases, the banks

were not suing under an entry-restricting statute. See First

Nat’l Bank, 772 F.Supp. at 613.

II.

It should be noted that no one questions appellants’

Article III standing; that appellants will suffer competitive

or economic injury is not in doubt. The question before us

is whether under the FCUA the banks can claim prudential

standing as well. In other words, are they pursuing an

interest (not just an objective), see HWTC IV, 885 F.2d at

6a

925,! arguably within the zone of interests Congress in-

tended either to regulate or protect, and, thus, are they

among the class of persons entitled to sue to enforce

FCUA’s restrictions? See Clarke, 479 U.S. at 396, 107 S.Ct.

at 755; Data Processing, 397 U.S. at 153, 90 S.Ct. at 829.

This “zone of interests’ test ensures that standing is

granted only to plaintiffs who will not distort congressional

objectives. It excludes those plaintiffs whose “‘interests are

so marginally related to or inconsistent with the purposes

implicit in the statute that it cannot reasonably be assumed

that Congress intended to permit the suit.’ Clarke, 479

U.S. at 399, 107 S.Ct. at 757. Because the banks are not

regulated by the common bond requirement, we must in-

quire whether the banks can be thought to have been

“‘protected’’ by that statutory limitation on the activities

of credit unions. Litigants can qualify as “protected” by

a statute if they are intended beneficiaries of the legis-

lation or are nevertheless what we have termed suitable

challengers, see HWTC IV, 885 F.2d at 923-24; that is, if

their interests are sufficiently congruent with those of the

intended beneficiaries that the litigants are not ‘“‘more

likely to frustrate than to further the statutory objectives.”

Clarke, 479 U.S. at 397 n. 12, 107 S.Ct. at 756 n. 12.

Appellants claim that they qualify both as intended be-

neficiaries and as suitable challengers under the FCUA.

We agree with the district court, however, that Congress

did not, in 1934, intend to shield banks from competition

from credit unions. Indeed, the very notion seems anom-

alous, because Congress’ general purpose was to encourage

the proliferation of credit unions, which were expected to

provide service to those would-be customers that banks

disdain. See 78 Conc.REc. 7259 (1934) (statement of Sen.

Barkley) (‘({BJank[s] ... cannot extend credit to many of

‘In HWTC IV, we emphasized that “‘it is the interests that the

challenger seeks to protect and not the challenge with which we must

be concerned.” HWTC IV, 885 F.2d at 925.

7a

these people, because they do not have the required se-

curity.”’); id. at 12,225 (statement of Rep. Luce) (noting

that credit unions would serve those “who do not use and

cannot use banks ... for small borrowings’’). The common

bond requirement, an existing characteristic of state credit

unions, was designed, in combination with the restriction

that permitted credit unions to loan only to members, to

ensure that credit unions would effectively meet members’

borrowing needs. It would seem, therefore, that Congress

assumed implicitly that a common bond amongst members

would ensure both that those making lending decisions

would know more about applicants and that borrowers

would be more reluctant to default. That is surely why it

was thought that credit unions, unlike banks, could “loan

on character.”’ See id. at 12,223. The common bond was

seen as the cement that united credit union members in

a cooperative venture, and was, therefore, thought impor-

tant to credit unions’ continued success.2

To be sure, as time passed—as credit unions flourished

and competition among consumer lending institutions in-

tensified—bankers began to see the common bond require-

ment as a desirable limitation on credit union expansion.

To that end, in the 1970s bankers, according to appellants,

became active in lobbying Congress to urge the mainte-

nance of the common bond requirement. But that fact,

assuming it is true, hardly serves to illuminate the intent

of the Congress that first enacted the common bond re-

quirement in 1934. And we find no indication that Con-

gress was, at that earlier time, concerned about the

competitive position of banks.

There remains, however, the more subtle question,

whether banks can be thought suitable challengers to en-

* The Senate report on the bill praised credit unions for their record

of successful service during the Depression, a record that contrasted

sharply with a grim history of bank failures, and attributed the success

largely to credit unions’ self-government and attentiveness to members’

needs. See SEN.REP. No. 555, 73d Cong., 2d Sess. 2-4 (1934).

8a

force a requirement designed to benefit the members—

particularly potential borrowers—of credit unions.

Appellants rely on the Supreme Court’s reasoning in ICI

and Clarke, and it seems to us the parallels between those

cases and the present one are striking. In JCI the securities

industry challenged a ruling by the Comptroller of the

Currency that would have permitted banks to slip the

Glass-Steagall leash and enter what was considered a part

of the securities business. See ICI, 401 U.S. at 618-19, 91

S.Ct. at 1092-93. As the Supreme Court later explained

in Clarke, the Glass-Steagall Act, which limited the se-

curities underwriting and investment activities of banks,

was designed to protect bank depositors from risky bank

activities—not to insulate investment bankers, or indeed,

any noncommercial bankers, from competition. See Clarke,

479 U.S. at 398 & n. 18, 107 S.Ct. at 756 & n. 13. Never-

theless, because the investment bankers pursued interests

congruent with those of the intended beneficiaries, they

were permitted to sue in JCI to enforce Glass-Steagall’s

restrictions on banks.

Similarly, in Clarke the ever-vigilant securities industry

was permitted to challenge a Comptroller decision that

authorized a national bank to offer discount brokerage ser-

vices not only at its established branches, but also at lo-

cations both inside and outside the bank’s home state. The

challenge was based on the McFadden Act, which restricts

the interstate branching of national banks. See Clarke, 479

U.S. at 391, 107 S.Ct. at 752. The Act was designed to

establish competitive equality between national and state

banks and thus to protect smaller banks from competition

from out-of-state leviathans, see First Nat’l Bank v. Walker

Bank & Trust Co., 385 U.S. 252, 261, 87 S.Ct. 492, 497,

17 L.Ed.2d 343 (1966), not to protect investment bankers.

Nevertheless, the investment bankers had standing to sue.

The Supreme Court relied on the correlative congressional

objective of preventing national banks from gaining too

much (“monopoly”) control over credit and money through

9a

“unlimited branching.” Clarke, 479 U.S. at 402, 107 S.Ct.

at 758. Given that general congressional purpose, the Court

thought that the securities industry, which was a compet-

itor at least with respect to discount brokerage services,

was a Suitable challenger. In other words, even though

the Congress that passed the McFadden Act was not at

all concerned with the spread of discount brokerage—only

branch-banking—and the securities industry was a com-

petitor with regard to the former, not the latter, it was

nevertheless permitted to challenge the spread of discount

brokerage through the McFadden Act, again because of

the congruence of plaintiffs’ interests with those of the

intended beneficiaries.

We take from these cases the principle that a plaintiff

who has a competitive interest in confining a regulated

industry within certain congressionally imposed limitations

may sue to prevent the alleged loosening of those restric-

tions, even if the plaintiff’s interest is not precisely the

one that Congress sought to protect.* The limitations may

be restrictions on entry—geographic or product line—or

they might be, as in our case, limitations on growth, which

are akin to entry restrictions. Like more classic entry re-

strictions, the common bond requirement, by limiting a

credit union’s customer base, effectively prevents the credit

union from offering its services and competing in a broader

market.

We previously have recognized the particular signifi-

cance of statutory entry restrictions on prudential stand-

* We cannot agree with the pre-Clarke reasoning of Branch Bank &

Trust Co. v. National Credit Union Administration Board, 786 F.2d

621 (4th Cir. 1986), in which the Fourth Circuit focused exclusively on

the question whether banks’ interests were intended to be protected

under the FCUA and concluded that banks do not have standing under

the FCUA, see id. at 626. The subsequent explication of the suitable

challenger route to standing in Clarke empties the Branch Bank decision

of its persuasiveness.

10a

ing. In HWTC II, we distinguished the case before us from

the Supreme Court’s cases granting standing to compet-

itors (Data Processing, ICI, and Clarke), on the grounds

that it did not involve an “‘entry-restricting’’ statute. See

HWTC II, 861 F.2d at 284. Similarly, in Panhandle Pro-

ducers & Royalty Owners Ass’n v. Economic Regulatory

Administration, 822 F.2d 1105 (D.C.Cir. 1987), we noted

that ‘[c]lompetitors have a seemingly unbroken record of

success in securing standing” in cases involving regulatory

systems that “restrict{[] entry into a particular field or

transaction.”’ Jd. at 1109. Indeed, the district court at-

tempted to distinguish this case from JCI and Clarke on

the grounds that the common bond requirement was not

an entry restriction.‘ See First Nat’l Bank, 772 F.Supp.

at 613.

Appellees, sidestepping the entry-restriction cases, rely

primarily on our refinement of prudential standing analysis

in HWTC IV. In that case, an organization of companies

that treated hazardous waste and marketed products de-

rived from processed waste sued to force the EPA to adopt

stricter environmental regulations on other companies so

as to create a greater market for their own services and

products. We held that HWTC’s interests (irrespective of

its particular objectives in the case before us) were not

sufficiently congruent with those of the intended benefi-

ciaries of the statute to make HWTC a suitable challenger.

See HWTC IV, 885 F.2d at 924. The treatment firms’

interest was in selling more services and equipment to the

regulated companies, and therefore the firms would seek

regulations that would increase demand for their product

regardless of the effects on the statute’s intended bene-

‘We have expressed concern in the past about allowing potential

plaintiffs to gain standing through a facile assertion that they are

enforcing entry-restricting legislation (a concern that again highlights

the importance we have implicitly attached to entry restrictions in

standing cases). See HWTC II, 861 F.2d at 284. This, of course, is not

such a case.

lla

ficiaries. We concluded that to have standing under the

statute, HWTC would have to have shown a systematic

alignment of interests with the statute’s beneficiaries, see

id. at 924, a standard that appellees understandably claim

was stricter than our prior characterization of Clarke as

a test requiring “less than a showing of congressional

intent to benefit but more than a marginal relationship to

the statutory purposes.” HWTC II, 861 F.2d at 283.

Our decision did not rest on a conclusion that the eco-

nomic interests of the treatment first were somehow less

deserving than the environmental interests the statute was

designed to foster; nor was it based on a view that the

firms’ economic incentives were inherently less worthy than

the economic objectives of the securities industry plaintiffs

in JCI and Clarke. On the contrary, the economic moti-

vations could be thought analogous. If the watchword of

the treatment firms in HWTC IV was “treatment is good

and more treatment is better,” HWTC IV, 885 F.2d at

925, it might be said that the watchword of all competitors

with regard to their potential rivals must be “regulation

is good and more restrictive regulation is better.” And

one cannot base standing on one’s mere status as an eco-

nomic beneficiary of government regulation of others. In

Lujan v. National Wildlife Federation, 497 U.S. 87 1, 110

S.Ct. 3177, 111 L.Ed.2d 695 (1990), the Supreme Court

said:

(T]he failure of an agency to comply with a statutory

provision requiring “‘on the record” hearings would

assuredly have an adverse effect upon the company

that has the contract to record and transcribe the

agency’s proceedings; but since the provision was ob-

viously enacted to protect the interests of the parties

to the proceedings and not those of the reporters,

that company would not be “adversely affected within

the meaning’”’ of the statute.

Id. at 883, 110 S.Ct. at 3186.

12a

The distinction between HWTC IV and the Supreme

Court’s Lujan hypothetical on the one hand and JCI and

Clarke on the other must be that in JCJ and Clarke the

potentially limitless incentives of competitors were chan-

nelled by the terms of the statute into suits of a limited

nature brought to enforce the statutory demarcation di-

viding the banking and securities industries. The interests

the securities industry plaintiffs sought to protect were

thus less open-ended and more confined than were the

economic interests pursued in HWTC IV, and as a result

there was a reduced danger of distorting congressional

purpose. By contrast, nothing in the statute in HWTC IV

could ensure that there would be any connection at all

between the treatment firms’ interests and the statutory

purpose. “[TJhere is not the slightest reason to think that

treatment firms’ interest in getting more revenue by in-

creasing the demand for their particular treatment services

will serve [the statute’s] purpose of protecting health and

the environment.” HWTC IV, 885 F.2d at 924. There is,

however, a reason to think that a competitor’s interest in

patrolling a statutory picket line will bear some relation

to the congressional purpose, because the entry-like re-

striction itself reflects a congressional judgment that the

constraint on competition is the means to secure the sta-

tutory end. The restriction connects the economic interests

of competitors to the purposes of the statute and yet con-

strains competitors to a limited role in guarding a congres-

sionally drawn boundary. In these circumstances the

plaintiffs can be thought to have interests ‘“‘systematically

aligned” with those the statute is designed to benefit.

The securities industry plaintiffs in JCJ and Clarke were

not seeking to impose new regulations on banks in areas

unrelated to an existing, specific statutory norm simply to

provide a demand for their services or to weaken banks

as competitors.’ We certainly would not accept as a suit-

’ Perhaps it is also relevant—in considering whether a plaintiff has

a

13a

able plaintiff a party who had only a general economic

interest in harming a competitor and who, accordingly,

sought to impose some new, more onerous regulation upon

that competitor. See, e.g., Calwmet Indus., Inc. v. Brock,

807 F.2d 225, 228 (D.C.Cir. 1986). But, when the plaintiff

seeks to enforce a statutory restriction on his competitor—

a restriction the plaintiff enjoys as well as the statutory

beneficiaries—there is a good deal less risk that recogniz-

ing the plaintiff's standing will lead to a misdirection of

a statutory scheme.

Our reasoning in HWTC Suggests that our reaction

might be different if the banks appeared before us, not

asking to patrol the common bond picket line, but seeking

a new regulation that would squeeze the credit unions into

a smaller market or even eliminate them from the market

altogether. It is unnecessary, however, to extend our hold-

ing into a definitive answer to appellants’ hypotheticals;

we concede that the general issue is devilishly complex.

We feel confident, however, that this case is a good deal

closer to the paradigm of JCI and Clarke than it is to

HWTC, and, therefore, we hold that appellants have stand-

ing. The judgment of the district court is reversed and

the case remanded.

WALD, Circuit Judge, concurring:

The panel opinion’s analysis of precedents on “entry-

restricting” statutes quite correctly concludes that, under

circuit case law, as well as under the Supreme Court’s

directives in Clarke v. Securities Industry Association, 479

U.S. 388, 107 S.Ct. 750, 98 L.Ed.2d 757 (1987), and Jn-

vestment Company Institute v. Camp, 401 U.S. 617, 91

prudential standing, if not Article III standing, see Schlesinger v. Re-

servists Comm. to Stop the War, 418 U.S. 208, 227, 94 S.Ct. 2925,

2935, 41 L.Ed.2d 706 (1974)—to ask whether, as the Supreme Court

may well have in JCI, one can be confident that the intended benefi-

ciaries had sufficient incentive and organizational resources to sue. See

HWTC II, 861 F.2d at 284.

l4a

S.Ct. 1091, 28 L.Ed.2d 367 (1971), plaintiff banks have

standing to challenge the NCUA’s interpretation of the

common-bond requirement. I agree with my colleagues

that, where an entry-restricting or analogous statute is

involved, “‘a plaintiff who has a competitive interest in

confining a regulated industry within certain congression-

ally imposed limitations may do so to prevent the alleged

loosening of those restrictions, even if the plaintiffs in-

terest is not precisely the one that Congress sought to

protect.’’ Panel opinion (‘‘Panel op.’’) at 9.

I originally—and still—disagree, however, with the “‘suit-

able challenger’ test articulated in Hazardous Waste

Treatment Council v. Thomas, 885 F.2d 918 (1989) (HWTC

IV), which requires a ‘‘systematic coincidence,” 1d. at 924,

or ‘‘systematic alignment,” Panel op. at 10, 12, of interests

between the would-be plaintiffs and the statute’s intended

beneficiaries. As I stated at the time, I find this test

without roots either in Supreme Court law! or in the gen-

eral purposes of standing. See HWTC IV, 885 F.2d at 927-

34 (Wald, C.J., dissenting). I recognize, however, that this

test is nonetheless part of our circuit law. In that context,

I agree with the panel opinion that, when an entry-re-

stricting or analogous statute “reflects a congressional

judgment that the restraint on competition is the means

to assure the statutory end,” Panel op. at 11, and plaintiffs

seek only to “enforce the statutory demarcation,” id., be-

tween the beneficiaries of a licensing scheme and their

competitors, plaintiffs clearly satisfy the goal of the “‘suit-

able challenger” test, 2.e., to ensure that plaintiffs are

‘It should be noted that, while the Supreme Court in Clarke v.

Securities Industry Association, 479 U.S. 388, 107 F.Ct. 750, 93 L.Ed.2d

757 (1988), did determine that the securities industry was a “proper

party’’ to challenge the Comptroller’s decision to permit expanded bank

activities, id. at 403, 107 S.Ct. at 759, it did so under its own “not

.. especially demanding” zone of interest test, id. at 399, 107 S.Ct.

at 757, not under any “‘suitable challenger’ test akin to that laid down

in HWTC IV.

15a

more likely to further than to frustrate the purpose of the

Statute. See HWTC IV, 885 F.2d at 925; see also Clarke

v. Securities Industry Ass’n, 479 U.S. at 397 n. 12, 107

S.Ct. at 756 n. 12 (citing this as purpose of “zone of

interest’’ test).

l6a

APPENDIX B

UNITED STATES DISTRICT COURT

DISTRICT OF COLUMBIA

Civ. A. No. 90-2948 SSH

FIRST NATIONAL BANK AND TRUST COMPANY,

Piedmont State Bank, Lexington State Bank, Randolph

Bank and Trust Company, Bankers Trust of North

Carolina, and American Bankers Association,

Plaintiffs,

v.

NATIONAL CREDIT UNION ADMINISTRATION,

Defendant,

and

AT & T Family Federal Credit Union and Credit Union

National Association, Inc.,

Defendants-Intervenors.

Aug. 9, 1991

Michael S. Helfer, William J. Kolasky, Jr., Lance W.

Edwards, John J. Gill and Michael F. Crotty, Washington,

D.C., for plaintiffs.

Vaughn Finn and Theodore C. Hirt, Washington, D.C.

for defendant.

Paul Joseph Lambert, Washington, D.C., for defendants-

intervenors.

’

OPINION

STANLEY S. HARRIS, District Judge.

:

>

&

17a

Plaintiffs, five North Carolina banks and the American

Bankers Association, challenge decisions by the National

Credit Union Administration (NCUA) approving amend-

ments to the charter of the AT & T Family Federal Credit

Union (AT & T Family) expanding its field of membership.

They allege that when the NCUA approved the amend-

ments, it acted arbitrarily and capriciously, and violated

the statutory requirement under the Federal Credit Union

Act, 12 U.S.C. §1751 et seg. (FCUA), that there be a

“common bond of occupation or association” among the

members of a federal credit union association. Pursuant

to 5 U.S.C. § 706 and 28 U.S.C. §§ 2201 and 2202, they

ask that various NCUA approvals of applications by AT &

T Family be declared null and void and that defendant be

enjoined from approving similar amendments to AT & T

Family’s charter. Now before the court are defendant’s

motion to dismiss for lack of standing and plaintiffs’ op-

position thereto. For the reasons set forth below,

defendant’s motion is granted, and the case is dismissed.

BACKGROUND

The Federal Credit Union Act was passed in 1934, in

the wake of the Great Depression. After the crash, access

to credit had been virtually eliminated for the great ma-

jority of the working class: most potential borrowers lacked

the security to acquire a loan from a bank, and other

licensed money lenders were able to charge extremely high

interest rates. S.Rep. No. 555, 73d Cong., 2d Sess. 3 (1934);

see also 78 Cong.Rec. 7259 (1934). Without access to credit,

the nation’s lower and middle classes saw their buying

power spiral downward. S.Rep. No. 555 at 3.

The establishment of national credit unions, modelled

after state supported organizations which had thrived

through the economic chaos of the Depression, was seen

as a “happy medium” between the loan shark and the

bank. 78 Cong.Rec. 7259 (1934). Congress expected that

members of credit unions, “with their own money and

18a

under their own management,”’ would be able to solve

their own credit difficulties. S.Rep. No. 555 at 2. It was

hoped that with access to small amounts of funds at rea-

sonable interest rates, national credit unions would return

significant buying power to those otherwise unable to have

it. Jd. at 1. Though state-sponsored credit unions fulfilled

this need in some areas, Congress felt that the nation

would benefit from a federal system because it would be

capable of rapid expansion and would permit the creation

of credit unions in states that did not previously authorize

them. Jd. at 2, 3.

The credit union is distinctive in that it is the members

who own and control the organization. Members purchase

shares in the credit union and exercise control over it,

democratically, irrespective of the number of shares held.

12 U.S.C. §§ 1757(6), 1760 (1988). Loans may be made

only to members of the organization or to other credit

unions. § 1757(5). Each credit union is managed by a board

of directors elected annually by and from the members,

and no member of the board receives any compensation

for these services. § 1761. Supervision and chartering of

credit unions is entrusted to the Board of the National

Credit Union Administration (NCUA), a three-member panel

appointed by the President upon the advice and consent

of the Senate. §§ 1752a, 1754, 1756.

At issue in this case is § 109 of the FCUA, now codified

at 12 U.S.C. § 1759, which provides that members of a

credit union must share ‘“‘a common bond” of occupation,

association, or location. The NCUA has defined a common

bond as:

the sharing of some unifying factor or characteristic

among persons that simultaneously links them to-

gether and distinguishes them from the general public.

This unifying factor must be something more than an

unfocused, generalized agreement on a given topic, or

en

19a

a common belief or philosophy on matters of general

concern.

45 Fed.Reg. 8285 (1980).

In recent years the NCUA has interpreted the common

bond requirement to allow a number of occupational or

associational groups to form a credit union if each group

shares its own common bond. See 12 C.F.R. § 701.1 (1991);

04 Fed.Reg. 31,169 (1989). Plaintiffs challenge decisions

by the NCUA approving applications by AT & T Family

to expand its membership to include employee groups that

have a separate common bond from the AT & T employee

group. Defendant moves to dismiss for lack of standing

to sue under its FCUA, and is joined in that motion by

intervenors AT & T Family and Credit Union National

Association, Inc.

DISCUSSION

The Administrative Procedure Act (APA) grants stand-

ing to anyone “adversely affected by agency action within

the meaning of the relevant statute.” 5 U.S.C. § 702. In

Association of Data Processing Service Organizations v.

Camp, the Supreme Court explained that a party meets

this standard if “the interest sought to be protected by

the complainant is arguably within the zone of interests

to be protected or regulated by the statute ... in ques-

‘In order to bring their claim, plaintiffs must show that they have

both constitutional and prudential standing. See National Federation of

Federal Employees v. Cheney, 883 F.2d 1038, 1041 (D.C.Cir. 1989), cert.

denied, __U.S.___, 110 S.Ct. 3214, 110 L.Ed.2d 662 (1990). To

establish constitutional standing, a plaintiff must allege an injury-in-

fact which is fairly traceable to the conduct complained of and likely

to be redressed by the relief requested. See Allen v. Wright, 468 U.S.

737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984); Valley Forge Christian

College v. Americans United for Separation of Church and State, 454

U.S. 464,102 S.Ct. 752, 70 L.Ed.2d 700 (1982). Because the court

dismisses the amended complaint for lack of prudential standing, it

need not address the issue of Article III standing.

20a

tion.” 397 U.S. 150, 153, 90 S.Ct. 827, 830, 25 L.Ed.2d

184 (1970). Since Data Processing, the ‘‘zone of interests’’

test has been the standard by which the Court has judged

questions of standing under § 702 of the APA.

The Court clarified what it means for a complainant to

be within the “zone of interests’ of a statute in Clarke

v. Securities Industry Ass’n, 479 U.S. 388, 107 S.Ct. 750,

93 L.Ed.2d 757 (1987). The ultimate inquiry, it asserted,

is centered upon congressional intent. Jd. at 399, 107 S.Ct.

at 757. In view of Congress’s evident intent to make

agency action presumptively reviewable, a plaintiff has

standing only if Congress intended for that particular class

of plaintiffs to be relied upon to challenge agency action

allegedly in disregard of the law. Id. The goal of the test

is to exclude those plaintiffs who are more likely to frus-

trate than to further statutory objectives. Jd. at 397, n.

12, 107 S.Ct. at 756, n. 12. In cases where a party is the

subject of the contested regulation, it is clear that Con-

gress intends for that party to be able to act as a “private

attorney general’’ through bringing a suit to enforce the

statute. Jd. at 399, 107 S.Ct. at 757. But when not the

subject of the statute, a party will be denied review if its

interests are ‘‘so marginally related to or inconsistent with

the purposes implicit in the statute that it cannot reason-

ably be presumed that Congress intended to permit the

suit.” Id. at 399-400, 107 S.Ct. at 757.

Though the test is not meant to be especially demanding

and there need be no explicit indication of congressional

purpose to permit the suit, there are occasions where the

requisite congressional intent is not present. Jd. The Curt

provided a hypothetical example of such a case in Lujan

v. Natwonal Wildlife Federation, _._U.S.__ , 110 S.Ct.

3177, 3186, 111 L.Ed.2d 695 (1990:

[T]he failure of an agency to comply with a statutory

provision requiring ‘“‘on the record” hearings would

assuredly have an adverse effect upon the company

ee |

2la

that has the contract to record and transcribe the

agency’s proceedings’ but since the provision was ob-

viously enacted to protect the interests of the parties

to the proceedings and not those of the reporters,

that company would not be “adversely affected within

the meaning”’ of the statute.

Such a company certainly would have Article III standing

because it would have suffered an injury-in-fact which is

fairly traceable to the agency action, but it would not meet

the heightened requirement of prudential standing as de-

fined by the APA. It simply is not the type of challenge

which Congress would have imagined when it passed the

Statute. See also Air Courier Conference of America v.

American Postal Workers Union, AFL-CIO, __U.S.

—, 111 S.Ct. 913, 112 L.Ed.2d 1125 (1991) (union rep-

resenting Postal employees does not have standing to chal-

lenge the Postal Service’s suspension of a statute designed

to preserve adequate revenues for the Service.).

The D.C. Circuit has had occasion to clarify this stand-

ard further. Those not regulated by an agency have stand-

ing only if they are the intended beneficiaries of the specific

statute or are nonetheless ‘“‘suitable challengers’ to the

statute because their interests coincide with the interests

which Congress did intend to protect. Hazardous Waste

Treatment Council v. Thomas, 885 F.2d 918, 924 (D.C.Cir.

1989) (HWTC IV). A party is a suitable challenger if its

interests coincide systematically, and not simply fortui-

tously, with the interests of those whom Congress intended

to protect. Id.; Hazardous Waste Treatment Council v.

United States Environmental Protection Agency, 861 F.2d

277, 283 (D.C.Cir. 1988), cert. denied, 490 U.S. 1106, 109

S.Ct. 3157, 104 L.Ed.2d 1020 (1989) (HWTC II).

The legislative history of the FCUA makes it clear that

the Act was passed to establish a place for credit unions

within the country’s financial market, and specifically not

to protect the competitive interest of banks. As noted,

22a

credit unions were seen as a “happy medium’ between

the loan shark and the bank at a time when neither could

satisfy the normal credit needs of the working class. 78

Cong.Rec. 7259 (1934). Further, Congress concluded that

commercial banks were not in a position to make funds

available to those of small means who generally had no

security for loans. Jd. Against this backdrop, it would defy

logic to assume that Congress, in passing the FCUA,

wanted to protect the interest of banks.

Nor was the common bond requirement included in the

Act to protect banks. Instead, it was designed to ensure

that credit unions remain responsive to those they were

designed to serve. A major selling point for the FCUA was

the outstanding record of state credit unions through the

Depression, a record which was attributed to their dem-

ocratic control, honest management, and faithful service

to members. Sen.Rep. No. 555 at 2. It was largely through

its limitation of membership to those with a common bond

that credit unions were thought to fulfill this democratic

ideal. Barany v. Butler, 670 F.2d 726, 734 (7th Cir. 1982);

La Caisse Populaire Ste. Marie v. United States, 563 F.2d

505, 509 (1st Cir. 1977). Such an arrangement was sup-

posed to make credit unions “incapable of exploitation.”

Sen.Rep. No. 555 at 3. For their part, plaintiffs can cite

nothing in the legislative history of the FCUA to buttress

their assertion that the common bond requirement was

designed to protect banks.?

? Plaintiffs point only to a statement made during a hearing regarding

a credit union authorization for the District of Columbia two years

before the FCUA to support their argument. See Plaintiff's Motion of

Points and Authorities in Opposition to Defendant’s Motion to Dismiss

at 12. The speaker mentioned in passing that amendments to the D.C.

bill had been proposed after considering the suggestions of the Bankers’

Association of the District of Columbia. Even if this court were to

accept the legislative history of the D.C. statute as evidence of congres-

sional intent with regard to the federal statute, it is hardly convincing

evidence that Congress was trying to protect the interests of com-

23a

Having shown that Congress did not have in mind the

competitive interests of banks when it enacted the common

bond requirement, it is a short step to conclude that nei-

ther are banks suitable challengers to actions taken under

the authority of the FCUA. As this case shows, the in-

terests of banks will rarely if ever coincide with those of

credit unions, the interest which Congress did intend to

protect, because both compete for the same business. Any

coincidence of interest would be at least fortuitous. Thus,

because they are neither intended beneficiaries nor suitable

challengers, commercial banks are not within the zone of

interests which Congress intended to protect when it

passed the FCUA.

This position is in keeping the D.C. Circuit decisions on

the subject of prudential standing In HWTC IV and HWTC

II, the court found no standing for waste treatment com-

panies which suffered competitive injury and challenged

the regulatory structure for the safe treatment, storage,

and disposal of hazardous wastes. Because those regula-

tions were designed to protect human health and the en-

vironment and not to improve the business opportunities

of waste treatment companies, the court was unwilling to

infer that Congress intended for such companies to be able

to challenge the regulations. HWTC IV, 885 F.2d at 924;

HWTC II, 861 F.2d at 283. Nor did their interests coincide

with the interests Congress intended to protect to the

point at which they could nonetheless be seen as “suitable

challengers” to the regulations. HWTC IV, 885 F.2d at

924; HWTC II, 861 F.2d at 288. In either case, the fact

that firms are benefitted by congressional action, like the

court reporters in Lujan v. National Wildlife Federation

and like the commercial banks in this case, does not mean

that an agency decision with regard to that decision con-

mercial banks when it enacted the common bond requirement. In fact,

the passage cited emphasizes that the primary concern in authorizing

credit unions was that they be successful.

24a

fers standing. Jd.; see also National Federation of Federal

Employees v. Cheney, 883 F.2d 1038 (D.C.Cir. 1989), cert.

denied, __ U.S. __., 110 S.Ct. 3214, 110 L.Ed.2d 662

(1990) (organization of federai employees lacks standing to

contest the Army’s decision to contract out certain services

as violative of statutes designed to coordinate budgeting

procedures and increase efficiency in government opera-

tions.).

The Fourth Circuit reached the same conclusion when

presented with facts virtually identical to these. In Branch

Bank & Trust C. v. National Credit Union Administration,

786 F.2d 621 (4th Cir. 1986), cert. denied, 479 U.S. 1063,

107 S.Ct. 948, 98 L.Ed.2d 997 (1987), the court found no

standing for banks to challenge application of the common

borid requirement:

[T]he general purposes of the Act, rather than indi-

cating a desire to protect banks, instead suggest that

competitive interests of banks were purposely sacri-

ficed by Congress to the interests of facilitating credit

for people of limited personal means. ... [T]he com-

mon bond provision was designed to ensure the coh-

esive operation of credit unions rather than to limit

their reach in an effort to protect banks.

Id. at 626.

Given this specific rationale for the common bond require-

ment, the court was unwilling to attribute to it a meaning

at odds with the general goals of the statute. Jd. This

court shares the Fourth Circuit’s basic conclusion.

Plaintiffs erroneously rely on a string of cases in which

the Supreme Court has found standing where a group or

business has suffered a competitive injury due to agency

action. See Clarke, 479 U.S. 388, 107 S.Ct. 750, 98 L.Ed.2d

757 (1987); Data Processing, 397 U.S. 150, 90 S.Ct. 827,

25 L.Ed.2d 184 (1970); Arnold Tours, Inc. v. Camp, 400

U.S. 45, 91 S.Ct. 158, 27 L.Ed.2d 179 (1970); Investment

25a

Co. Institute v. Camp, 401 U.S. 617, 91 S.Ct. 1091, 28

L.Ed.2d 367 (1971). Contrary to plaintiffs’ assertion, all

of these cases involve statutes directed at restricting entry

into a given field or business. Even in Clarke, where a

trade association representing securities brokers asserted

that a decision to allow two national banks to open a

discount brokerage operation violated anti-branching laws,

the Court found standing because the statute was passed

in part due to congressional fear that national banks might

obtain monopoly control of credit and money if permitted

to branch unrestricted. 479 U.S. at 402, 107 S.Ct. at 758.

Because those plaintiffs’ members competed with banks in

providing discount brokerage services, the Court found that

Congress arguably had legislated against the competition

that plaintiffs sought to challenge. Jd. at 408, 107 S.Ct.

at 759. This intent to restrict entry was what made

plaintiffs “very reasonable candidates to seek review.” Jd.

As noted, Congress had no such intent when it passed the

FCUA.

CONCLUSION

For these reasons, the court finds that plaintiffs lack

prudential standing to challenge the action of the NCUA.

Accordingly, defendant’s motion to dismiss is granted and

the case is dismissed.