Petitioners Brief — Association of Data Processing Service Organizations, Inc. v. Camp

Supreme Court brief1970

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On Writ of Certiorati to the United States

Court of Appeals for the Eighth Circuit |

Mirt0n BR. Waesm.

4% Park Avenue

New York, New York 10022

Bauer M. Gross and

TABLE OF CONTENTS

Page

OPINIONS BELOW. ....0.0..0.....:ccccccssscsssesssesssscssrcsssecersssserssesssssssess 1

JURISDICTION ............ Sok ed idsovbabedmeannn nies 1

STATUTES AND REGULATIONS INVOLVED... 2

QUESTION PRESENTED. .00000000..00.00ccccccccccesseeeetereeneseerennenenreenen 3

STATEMENT OF THE CASE... cccccccteteeteeeetetseretsetsereesens 3

SUMMARY OF ARGUMENT. ttteeeeeteeteees 4

ARGUMENT:

1. An analysis of the considerations underlying the rules of

standing compels the conclusion that competitors should

have standing to assert claims of unlawful competition

against national banks and claims of unlawful authoriza-

tion of such competition against the Comptroller of the

RSI RG eee, OREO ; 7

. The restrictive rules established in the Tennessee Electric

Power case conflict with the underlying policy considera-

tions which should frame and limit proper rules of stand-

ing and consequently these restrictive rules should not be

extended to new fields... Pree ; Sara a toe 20

. Petitioners have standing because in unseen

the Bank Service Corporation Act, evinced a specific legis-

lative purpose to protect the competitive interest of data

processors against national bank competition... 30

I ce ce ae ee ae Ae

TABLE OF AUTHORITIES

CASES: Page

ee A i SO COD sed cvecicsacerccaccacirsobeadésehsesxedesasbbes 25

Alabama Power Co, v. Ickes, 302 U.S. 464 (1938)....... ice onan 28, 37

Alton R. Co. v. United States, 315 U.S. 15 (1942)... 37

Arnold Tours, Inc. v. Camp, 408 F.2d 1147 (1st Cir. 1969).......... 0

ey Se Me. Se CRUD ccc ocscrcsathccvesscrscresicssecseapine 17

Ass’n of Data Processing Service Organizations, Inc. v. Camp, 279

F.Supp. 675 (D.Minn. 1968). Pap a eos, Femme ree eee a 14

Baker v. Carr, 369 U.S. 186 (1962) Spy eG RE Reo PS AR 9

Baker, Watts & Co. v. Saxon, 261 F.Supp. 247 (D.D.C. 1966),

aff'd sub. nom. Port of New York Authority v. Baker, Watts &

Co., 392 F.24 497 (D.C. Cir. 1968) ........... payee

Bantam Books, Inc. v. Sullivan, 372 U.S. 58 (1963) Se ais s gstisllalnpieaon 18

Bell v. Hood, 327 U.S. 678 Dudtvstaee e

Chicago v. Atchison, T. & S. F. Ry., 357 U.S. 77 (1958). ile sousvene

Fei were, Sm

Chicago junction Case, 264 US. 258 (1924). Sedo tuhe hace Peshessay isan

Clements Auto Co. v. Service Bureau Corp., 298 F.Supp. 115 (D.

Minn. 1969). TTS en erate edad eee a ; 8 pater ee

DAR HMR ES ERE TRIS RRR

ARLE i eS

hwtiee’

Sw?

—

Elizabeth Fed. Sav. & Loan Ass’n v. Howell, 24 N.J. 488, 132

Sc eKaecnmnchbhadsRhennhoksenetedvensbbeantioaberanebasadatensa in tupaWkabsiohcbeesass piee 5,10, 12, 39, 41

First Nat’l Bank of Charlotte v. Nat’l Exch. Bank, 92 U.S. 122

(1875)

First Nat’l Bank v. Saxon, 352 F.2d 267 (4th Cir. 1965).............. 2

Fiast v. Cohen, 392 U.S. 83 (1968)........................ 5, 8, 9, 12,17, 18,19

Frost v. Corp. Comm’n, 278 U.S. 515 (1929).....................e, 10, 16

Hardin v. Kentucky Util. Co., 390 U.S. 1 (1968)............ 23, 30, 36, 37

Heikkile v. Barber, 346 U.S. 329 (1968).................................0000 40

Investment Co. Institute v. Camp, No. 21,662, D.C. Cir., July 1,

1969, CCH Fed. Banking L. Rep.:

Ne Reo ond et ccts ee paccicvnns nab une seus NUNS Wad CMAER REESE SHEER I 22

I a. iss oa 45h prs we bo Savon nniikaes Bs venguanbven bien Sass eth once etokgeee eee 17, 24

hoo oot ui co dak dun cuca na xen ku ou bbcuaeamensbere eee ncitentink caltas vibes emcee Eee 26

ls ea. Sl dxcax cg dubanouycyabunbuk eon nucc tie Wate meee eee RNa oasis aa eae 26

COE RET TLE RE RMT CS SORES Teh ee Ry aL 8,12, 25

Logan County Nat’l Bank v. Townsend, 139 U.S. 67 (1891).......... 29

National Bank of Detroit v. Wayne Oakland Bank, 252 F.2d 537

(6 Cir. 1958), cert. denied 358 U.S. 830, 79 S.Ct. 603................ 16

National Bank v. Matthews, 98 U.S. 621 (1878)...........000000000000..... 29

Norwalk Core v. Norwalk Redevelopment Agency, 395 F.2d 920

I a i eh ee ee en aah et 39

People ex rel. Ayres v. Board of State Auditors, 42 Mich. 422, 4

Ss IR MID ooo en sas cerann oxcevas dpaion baeseuaness sn oh ich upek eoueeet aera te 27

Perkins v. Lukens Steel Co., 310 ee RB SO iia ccsinicsncnceiesae 37

Railroad Co. v. Ellerman, 105 U.S. 166 (1882) ..............0...0...... 22, 37

Rex v. Richmond Confirming Authority [1921], 90 L.J.K.B. (n.s.)

aaa eee nes Opa ber ama ha dss ds bins Gxicnd habia sab ncxh tee Oi ces RC REE eee TaTS 27

Saxon v. Georgia ‘Ass'n ‘of Ind. ‘Tes. Agents, Inc., 399 F.2d 1010

ER HI EI fj me rece capo ce <hessseadin eka cs Sabeva sake pena eats eeRN 8,19, 22, 24

Scenic Hudson Preservation Conference v. FPC, 354 F.2d 608

(2d Cir. 1965), cert. denied 384 U.S. 941 (1966)............0000000... 40

Scripps-Howard Radio v. FCC, 316 U.S. 4 (1942)..................... 10

Tennessee Elec. Power Co. v. TVA, 306 U.S. 118 (1939)..............

Eee PEE BORE RS CS Pre SERMON TEA 6,19, 20, 21, 22, 23, 24, 28, 37

United States ex rel. Chapman v. FPC, 345 U.S. 153 (1953)........ 1

Webster Groves Trust Co. v. Saxon, 370 F.2d 381 (8th Cir. 1966) 16

Wingate Corporation v. Camp, 408 F.2d at 1151 ....... whcnapeaea esteueneeed 14

Wingate Corp. v. Industrial Nat’l Bank, 408 F.2d 1147 (1st Cir.

OL RS RE CEU eR ete, ene Rtas fl Re ae a ae epemiee ns ere eli ge Cres: 7, 8, 29, 30

CONSTITUTIONAL PROVISIONS, STATUTES AND

REGULATIONS:

Constitution of the United States, Article III........................ 5, 8, 19, 25

13 Stat. 101 (1864), 12 U.S.C. §24 (Seventh) (1964)...... 2, 4, 29, 34

SS mst. BSE CAGE), BS WEG. B12 . CRORES: ... 0c ccc acon 16

39 Stat. 753 (1916), 12 U.S.C.A. $92 ........... cece eeeeneetenes 24

60 Stat. 243 (1946), 5 U.S.C. §1009(a) (1958)

——

Page

76 Stat. 1132 (1962), 12 U.S.C. $1864 (1964)........ sehackess 2, 7, 30, 34

go Stat. 392 (1966), 5 U.S.C. §702 (Supp. II, 1965-66)... 2, 7, 38

9g U.S.C. §1254(1) (1964) , By de ne ty HPAL RE A ete 1

Comptroller’s Manual for National Banks:

GBEOO nnn ceceeeseceseeecseenectensnesctersnenensenasssensensarsnnesesestansensansansancenerees 2,4

TS9D nnscreecceeeeeeeesssestserencneneneneenttassnnentssnenenecsssasnsscsneneesanencnenenensess 38

LEGISLATIVE MATERIALS:

gs. Doc. No. 248, 79th Cong., 2d Sess. IBD cece srcisuau pres neccmncncewectes 41

s. Rep. No. 1095, S4th Cone., tat Sees. (1956) .......-.5....650.0:sc00s 15

sg. Rep. No. 2105, 87th Cong., 2d Sess. SED ondcpsssiescnnsanvoyees 14, 33

108 Cong. Rec. 16501 (1962) 2... ccc ese te teeter tee tetees 31, 32

108 Comg. Rec. 16503 (1962) 2.2... ccc ects cteree ster teens ttetne tess 31

108 Cong. Rec. 22029 (1962)... .ececc cess eeeeeseenes tes teetecteess 31, 36

108 Cong. Rec. 22031 eae kena oat vane avaciencondaos seateosisvanhess 35

H. R. 8499, 88th Cong., 2d Sess. (1964) 2... ees 11

H. R. 8874, 87th Cong., 2d Sess. CRORE DR osi5i::-. eae

Hearings on H. R. 112, 117 and 10529, Before the Subcommittee

on Bank Supervision and Insurance of the House Committee on

Banking and Currency, 89th Cong., 2d Sess. (1966)

Set een pkstek KE Mares 34

MISCELLANEOUS: “i

9 Administrative Law Bulletin Re CRED coxccenseone 30

Bickel, The Supreme Court 1960 Term, Forward: “The ‘Passive

Virtues, 75 Harv. L. Rev. 40 (1961) : és . 82

Carpenter, Interference with Contract Relations, 41 ‘Harv. . Rev.

TOE (1OBB) .....neeceeceeesecccceeeesnsssercssneneecnnecenreneseensersnseeecenscunnanansessense 21

Davis, A. K., Banking Regulation Today: “* ‘Banker's View, 31

Law & Contemp. Prob. 639 (1966) ..............--.::ccescseeeee teen sete enna ees 15

Davis, K. C., Administrative Law Treatise, Vol. 3, pp. 208-294

CROGB) nnn neesccercessnssssesenersnereesassncensscnnsecseseconsnsonesessesessunensesnes 10, 20, 39

Davis, K. C., Discretionary Justice, A Preliminary Inquiry 159

(206D) ence ceecescccscesscssesseeeensesseseeesensacenenracancesscasssterecnsausararonssnensensss 41

Economic Analysis of the Data Processing Service Industry (1967) 13

Hart and Wechsler, The Federal Courts and the Federal System

174 (1953) . RT ir RS LR ered er ee me Te ne +)

Jaffe, Judicial Control of Administrative ‘Action 324, 459-545

(1965) Bao RE El Seen les Ni wees SNe ewe ane eg Ee 13, 18, 21, 39, 42

Motion for Leave to File Brief on ‘Behalf of the American Bank-

ers Association as Amicus Curiae in Support of Petitions for

Writs of Certiorari, June 12, 1969, Pp. 7... 0.0... cece reece eens 13

Petition by Comptroller of the Currency for Writ of Certiorari in

Camp v. Wingate Corp., No. 1511, Oct. Term ie Seer 14

1 Schwartz, A Commentary on the Constitution of the United

States, Part I, The Powers of Government 440-41 (i : } ee 24

Wall Street Journal, March 27, 1968, p. 1...... HAGE AS okt se at eee 16

Wall Street Journal, Sept. 21, 1967, p. 28................:c:ccccceeeeeeeeteteeees 15

Wright, Federal Courts 38 (1963)

In The R

Supreme Court of the gpuited States

October Term, 196°”

No. 85

ASSOCIATION OF DATA PROCESS NG SERVICE OR-

GANIZATIONS, INC., and DATA SYSTEMS, INC.,

Petitioners,

V8.

WILLIAM B. CAMP, Comptroller of the Currency of the

United States, and AMERICAN NATIONAL BANK

AND TRUST COMPANY

: : Respondents.

On. Writ of Certiorari to the United States

Court of Appeals for the Eighth Circuit

BRIEF FOR THE PETITIONERS

OPINIONS BELOW

The opinion of the district court is reported in 279 F.Supp.

675 (D. Minn. 1968) (A. 19-29). The opinion of the court

of appeals is reported in 406 F.2d 837 (8th Cir. 1969) (A.

31-41).

JURISDICTION

The judgment of the court of appeals was entered on Feb-

ruary 6, 1969 (A. 42). The petition for a writ of certiorari

was filed on April 10, 1969, and granted on June 23, 1969

(37 U.S.L.W. 3493) (A. 43). The jurisdiction of this Court

rests on 28 U.S.C. 1254(1).

STATUTES AND REGULATIONS INVOLVED

Section 24 (Seventh) of the National Bank Act, 13 Stat,

101 (1864), 12 U.S.C. §24 (1964):

“$24. Corporate powers of associations.

Upon duly making and filing articles of association

and an organization certificate a national banking asso.

ciation shall become, as from the date of the execution

of its organization certificate, a body corporate, and as

such, and in the name designated in the organization

certificate, it shall have power—

Seventh. To exercise by its board of directors or duly

authorized officers or agents, subject to law, all such

incidental powers as shall be necessary to carry on the

business of banking; . . .”

Section 4 of the Bank Service Corporation Act, 76 Stat,

1132 (1962), 12 U.S.C. §1864 (1964) :

“No bank service corporation may engage in any ac.

tivity other than the performance of bank services for

banks.”

Section 10 of the Administrative Procedure Act, 80 Stat.

392 (1966), 5 U.S.C. 702 (Supp. II, 1965-66) :

“A person suffering legal wrong because of agency

action, or adversely affected or aggrieved by agency ac-

tion within the meaning of a relevant statute, is entitled

to judicial review thereof.”

Paragraph 3500, Comptroller’s Manual for National Banks

(Oct. 15, 1966 Ed.) :

“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.”

——

QUESTION PRESENTED

Whether independent data processing service organiza-

tions, whose business is to provide data processing services

for the general business public, have standing to assert a

claim (a) that national banks are illegally offering compet-

ing data processing services to the general business public

and (b) that the Comptroller of the Currency has illegally

authorized national banks to perform such services.

STATEMENT OF THE CASE

As petitioners’ complaint was dismissed by the district

court on motion before trial and before any information was

obtained by any party in pre-trial discovery proceedings,

this statement of the case is necessarily limited to the plead-

ings on file (A. 4-14).

Petitioners are the Association of Data Processing Service

Organizations, Inc. (referred to as “ADAPSO”), and Data

Systems, Inc., a Minnesota corporation and a member of that

Association (referred to as “Data Systems”). The members

of ADAPSO are engaged in the business of performing data

processing services for the general business community. For

some time prior to the commencement of this action, the re-

spondent American National Bank and Trust Company of

St. Paul, Minnesota, a national bank (referred to as “Amer-

ican Bank”) had been similarly engaged in the business of

performing data processing services for the general business

community. In fact, respondent American Bank, at the time

petitioners began their action, was performing or preparing

to perform such services for the Minnesota State Capitol

Credit Union, with whom petitioner Data Systems had pre-

viously agreed to perform such services, and for Carlen In-

dustries, Inc., with whom Data Systems had previously been

negotiating regarding such services ( Petitioners’ Complaint,

pars. 13-16, A. 7-8). Petitioners brought this action to have

American Bank’s data processing activities of this nature

—

declared unlawful, to have them enjoined, and for damages

resulting from these illegal activities.

Petitioners also sought declaratory and injunctive relief

against the respondent Comptroller of the Currency (the

“Comptroller”), as he had purported to authorize such ac.

tivities in his 1966 ruling, which stated as follows:

“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.” Comptroller’s Man.

ual for National Banks (October 15, 1966 Ed.), par.

3500.

Petitioners have alleged, and for purposes of this review

these allegations must be accepted, that these activities by

the American Bank and the above ruling by the Comptroller

are illegal under the National Bank Act, 12 U.S.C. §24

(1964), and that if these activities are continued under the

umbrella of this ruling they will cause substantial and ir-

reparable harm to petitioners.

Prior to trial, respondents moved to dismiss the com-

plaint on the grounds that petitioners lacked standing to

maintain this action (A. 15-17). The district court granted

the motion (.A. 18-19), and the court of appeals affirmed th

judgment of dismissal (A. 42).

SUMMARY OF ARGUMENT

In recent years, national banks have entered into several

different fields of business not formerly considered as being

within the business of banking. In all instances, the Comp-

troller of the Currency authorized these bank activities.

Non-bank competitors have brought suit to enjoin both these

bank activities and the Comptroller’s actions in authorizing

them. The basis for these lawsuits has been the assertion that

the banks have engaged in activities not authorized and thus

—

prohibited by the federal banking laws. Various lower courts

have split sharply on the question of the claimants’ stand-

ing to bring these actions. These conflicts among the courts

indicate that a fundamental re-examination of the rules of

standing is required. This re-examination compels the con-

clusion that there should be standing for these claimants to

assert their claims of illegal action.

In Flast rv. Cohen, 392 U.S. 83 (1968), this Court stated

that the concept of standing is related to the restrictions of

Article III of the Constitution limiting the federal judicial

power to cases and controversies. In constitutional terms,

the question of standing is whether a claimant has alleged

such a personal stake in the outcome of the controversy as

to assure concrete adverseness of a dispute which is capable

of judicial resolution.

When the present case is considered in terms of the con-

stitutional requirements of standing, there is no doubt that

a competitor has standing within the limits of Article III

to assert his claim of illegal competition. His personal stake

in the litigation is direct and important. Consistent with

this analysis, this Court has found no constitutional bar to

actions based on a competitive interest. FCC v. Sanders

Bros. Radio Station, 309 U.S. 470 (1940) ; Chicago v. Atchi-

son, T. & SF. Ry., 357 U.S. 77 (1958).

Granting the constitutional power to entertain such

claims, an examination of the policy considerations behind

the rules of standing indicates that there are no valid rea-

sons to deny standing to competitors.

To the extent that the rules of standing are designed to

exclude persons who have no personal interest in the litiga-

tion, the rules do not apply to the present case. To the ex-

tent that these rules are designed to bar hypothetical, friend-

ly or collusive lawsuits, or disputes not capable of judicial

resolution, these rules do not apply to the present case.

The underlying substantive issues involved in the merits

of the present case are vitally important both to the parties

and to the public. To the extent that the rules of standing

have flexibility in any particular case depending on the im.

portance of the substantive issues involved, the present case

is a compelling one in favor of standing, involving as it does

the legality of actions taken by the banking industry, where

public interests are of paramount importance.

Competitors are the most natural, and probably the only,

persons to bring to the courts these important questions of

the legality of bank actions.

Il.

The doctrine of Tennessee Electric Power Co. v. TVA, 306

U.S. 118 (1939), denying standing to competitors because

they lack “legal rights,” is unsound because the result in

that case was not based on a proper application of the under.

lying considerations which should frame and limit the rules

of standing. The rationale of this decision has been subject

to varying interpretations, but under any interpretation it

would be merely coincidental if an application of the rule of

that case carried forward the principles behind the rules of

standing. The rule of that case should therefore not be ex-

tended to the present case.

Instead, whenever there is presented to the courts a con-

stitutional case or controversy, where the claimant has been

injured in fact, and where important public issues are in-

volved, that case should be heard unless Congress has barred

judicial review. Other cases have accepted this reasoning,

including cases from this Court. Chicago v. Atchison, T. &

S.F. Ry., 357 U.S. 77 (1958).

IIT.

Petitioners have standing under the settled rule that if

Congress has indicated a legislative purpose to protect a com-

petitive interest, that interest supplies standing to complain

of its infringement.

—_

In the Bank Service Corporation Act, 12 U.S.C. §1864

(1964), Congress clearly indicated a legislative purpose to

protect data processors against bank competition. Specific

amendments to the proposed Act, while it was pending in

Congress, were made to protect this interest. A substantial

body of legislative history reveals that certain key legisla-

tors were of the opinion that the Act limited banks as well

as service corporations from entering the data processing

business.

Even if the Act affects only service corporations, it is suf-

ficient to give standing to petitioners under the judicial re-

view provisions of the Administrative Procedure Act, 5

U.S.C. §702 (1966), as being a relevant statute closely re-

lated to the statute allegedly violated.

ARGUMENT

AN ANALYSIS OF THE CONSIDERATIONS UNDERLYING THE

RULES OF STANDING COMPELS THE CONCLUSION THAT

COMPETITORS SHOULD HAVE STANDING TO ASSERT

CLAIMS OF UNLAWFUL COMPETITION AGAINST NATIONAL

BANKS AND CLAIMS OF UNLAWFUL AUTHORIZATION OF

SUCH COMPETITION AGAINST THE COMPTROLLER OF THE

CURRENCY.

This Court has characterized the law of standing as a

“complicated specialty of federal jurisdiction.” United

States ex rel. Chapman v. FPC, 345 U.S. 153, 156 (1953).

Nowhere are these complications more sharply highlighted

than in the recent cases involving challenges to the entrance

of national banks into fields of business activity not tradi-

tionally encompassed within the business of banking. These

cases reflect bank entrance into the data processing business

(this case and Wingate Corp. v. Industrial Nat. Bank, 408

F.2d 1147, 1st Cir. 1969), the travel agency business. (Ar-

nold Tours, Inc. v. Camp, 408 F.2d 1147, 1st Cir. 1969),

the business of dealing in revenue bonds (Baker, Watts ¢

Co. v. Saron, 261 F.Supp. 247, D.D.C. 1966, aff'd sub. nom,

Port of New York Authority v. Baker, Watts & Co., 392 F.24

497, D.C. Cir. 1968), the investment fund business (/nvest.

ment Co. Institute vr. Camp, No. 21,662, D.C. Cir. July 1,

1969, CCH Fed. Banking L. Rep. 795,157), and the insur.

ance business (Saron v. Georgia Ass’n of Ind. Ins. Agents,

Tnc., 399 F.2d 1010, 5th Cir. 1968). In each case, the Comp

troller authorized the national bank activity in question. In

each case, a competitor brought suit to have the competi-

tive activities enjoined. In four of the cases (the Wingate

case, the Baker, Watts case, the Investment Co. Institute

case, and the Georgia Ins. Agents case) the courts held the

competitor had standing. In two cases (this case and the

Arnold Tours case) the courts held the competitors lacked

standing. In two of the cases where standing was found (the

Investment Co, Institute and the Georgia Ins. Agents cases),

the three judges hearing the particular case could not agree

on the reasons for upholding standing and one judge on each

court felt compelled to issue a concurring opinion on this

question.

Surely the divergent results reflected in these cases in es-

sentially similar situations indicate that the present rules

of standing in this area are not working satisfactorily and

compel a fundamental reconsideration of these rules. We

believe that this reconsideration leads most reasonably to

the conclusion that competitors of the national banks are

entitled to challenge allegedly unlawful national bank activi-

ties and allegedly unlawful rulings by the Comptroller

authorizing these activities.

The most searching recent analysis of the policies behind

the law of standing is to be found in Flast v. Cohen, 392 US.

83 (1968). In that case Chief Justice Warren began with

the premise that Article III of the Constitution restricts the

_—

judicial power of the federal courts to “cases” and “contro-

versies.” One aspect of this limitation on the federal judi-

cial power has been framed in terms of standing:

“Thus, in terms of Article III limitations on federal

court jurisdiction, the question of standing is related

only to whether the dispute sought to be adjudicated

will be presented in an adversary context and in a form

historically viewed as capable of judicial resolution.”

Flast v. Cohen, 392 U.S. at 101.

How is a court to determine whether a dispute before it

satisfies the constitutional requirements relating to stand-

ing? This determination must be made by an inquiry into the

relationship between the claimant and his claim. (Flast v.

Cohen, 392 U.S. 99) :

“The ‘gist of the question of standing’ is whether the

party seeking relief has ‘alleged such a personal stake

in the outcome of the controversy as to assure that con-

crete adverseness which sharpens the presentation of

issues upon which the court so largely depends for

illumination of difficult constitutional questions.’ Baker

y. Carr, 369 U.S. 186, 204 (1962).”

This concept of standing had been phrased in similar terms

some years before:

“More precisely stated, the question of standing in this

sense is the question whether the litigant has a sufficient

personal interest in getting the relief he seeks, or is a

sufficiently appropriate representative of other inter-

ested persons, to warrant giving him the relief, if he

establishes the illegality alleged—and, by the same

token, to warrant recognizing him as entitled to invoke

the court’s decision on the issue of illegality.” Hart

and Wechsler, The Federal Courts and the Federal Sys-

tem 174 (1953).

When standing is viewed in terms of “personal stake” or

“personal interest” in the outcome of litigation there is no

question that, logically, a competitor will have standing to

challenge both allegedly illegal competition and the adminis-

trative action authorizing such competition. The persona]

stake or interest of a competitor is second to none in gueh

situations. Consistent with these principles, this Court hag

repeatedly allowed a competitor standing to challenge 4).

legedly unlawful competition, thus establishing beyond any

doubt that Article III is no bar to suits of this nature.

FCC rv. Sandera Bros. Radio Station, 309 U.S. 476

(1940) ;

Ncrippe-Howard Radio v. FCC, 316 U.S. 4 (1942);

The Chicago Junction Case, 264 U.S. 258 (1924);

Frost rv. Corporation Comm'n, 278 U.S. 515 (1929) ;

Chicago v, Atchison, T, & 8.F. Ry., 357 U.8. 77 (1958).

With the constitutional power allowing competitors ac.

cess to the federal courts being firmly established, it becomes

appropriate to examine the considerations which as a matter

of policy should be weighed in determining whether to deny

particular claimants access to the courts to hear their claims,

When these considerations are weighed in the present case,

the scale tips heavily in favor of permitting these claims to

be heard.

1. Perhaps the most fundamental reason for hearing such

cases flows from the nature of the petitioners’ claim: they

will, in fact, suffer substantial harm from allegedly illegal

bank activities which have been authorized by allegedly

illegal governmental action. Ax a first principle, the courts

should be open to redress harm resulting from unlawful ae-

tion:

“The reasons in favor of permitting a challenge of

governmental action by one who is in fact adversely af-

fected by that action are very powerful. The strongest

reason is the principle of elementary justice that one

who is in fact hurt by illegal action should have a

remedy.” 3 Davis, Administrative Law Treatise 211

(1958) [hereinafter cited as Davis}.

——

Applying this principle to the general area of allegedly

illegal competition by national banks, there can be little

doubt that non-bank businesses are subject to material harm

from bank invasion of their areas of business endeavor. For

example, in the investment fund field, the Comptroller has

predicted that within ten years commercial banks “might

capture as much as two billion dollars of mutual fund busi-

ness.” Hearings on H.R. 8499, 9410 before the Commerce

and Finance Subcommittee of the House Committee on In

terstate and Foreign Commerce, 88 Cong., 2d Sess. 26

(1964).

In the particular case before this Court, there can be no

doubt of harm to the individual petitioner, Data Systems.

The complaint in this action alleges that Data Systems had

reached an agreement with a particular customer to pro-

vide data processing services and that thereafter the re-

spondent bank supplanted Data Systems as the supplier of

the data processing services (Paras. 13-14, Complaint, A. 7).

Of course, petitioners’ complaint was dismissed on motion _

before there was any opportunity to develop a concrete rec-

ord on the extent of the harm, but the complaint alone is

clearly sufficient to support at this point a preliminary find-

ing of injury in fact. (The complaint having been dismissed

before trial, its allegations of fact must be accepted for pur-

poses of this review.)

Thus, to the extent that the restrictive rules of standing

are designed to bar claimants who have no personal interest

in the outcome of the litigation, the rules surely have no ap-

plication to the present case.

2, Access to the courts presumably will be denied where

the courts lack confidence that “the questions will be framed

with the necessary specificity, that the issues will be con-

tested with the necessary adverseness and that the litiga-

tion will be pursued with the necessary vigor” required to

assure that the controversy will be “capable of judicial rego.

lution.” Flast v. Cohen, 392 U.S. at 106.

The present case presents in particularly sharp focus the

“concrete adverseness” required under these principles. If

the merits of the present case are ever reached, the specific

clash between Data Systems and the American Nationa]

Bank over specific customers insures the development of a

full record regarding the issues involved in this case. The

setting of this litigation establishes beyond doubt that this

case is not one where the claimant “seeks to employ a fed-

eral court as a forum in which to air his generalized griey-.

ances about the conduct of government or the allocation of

power in the Federal System.” Flast v. Cohen, 392 U.S.

at 106.

The twofold task of the federal courts in this type of case

is familiar and traditional: to determine whether certain

conduct is prohibited by statute, and to determine whether

administrative action has exceeded statutory authority. The

basic relief requested by petitioners—injunction of illegal

action—presents no unusual problems for a federal court.

It is obvious that the controversy is “capable of judicial reso-

lution.”

3. <A further reason not to deny access to the courts in

this case stems from the importance of the underlying sub-

stantive issues involved, both to petitioners and to the pub-

lic. Considerations of this nature have recently been ex-

plicitly noted by the courts. /nvestment Company Institute

vr. Camp, No. 21,662, D.C. Cir., July 1, 1969. A thoughtful

commentator has also suggested this approach.’

1 “Our analysis of Sanders and of public actions generally suggests that the line

between legal grievance and a factual grievance is often difficult to draw, just

as it may be difficult to determine whether an issue is ‘big’ enough to con-

cern ‘the public.” Where the classification of the grievance is inconclusive,

judicial discretion in terms of the size, urgency, and clarity of the issue at

stake may be a useful tool in the decision to take jurisdiction. Dryly techni-

From the standpoint of both petitioners’ “private” inter-

est and the “public” interest in the banking system the pres-

ent case is particularly appropriate for judicial review. Un-

questionably, the data processing service industry is a sig-

nificant and growing segment of American industry. A sur-

yey undertaken by petitioner ADAPSO in 1966 estimated

that in 1970 the revenue for the data processing service in-

dustry would exceed one and one quarter billion dollars. An

Economic Analysis of the Data Processing Service Indus-

try, p. 11 (published in March, 1967, by the Association of

Data Processing Service Organizations, Inc.).

The survey further indicated that competition from banks

is a significant factor in the data processing service indus-

try. Economic Analysis, supra, pp. 9-10.

A recent survey conducted by the American Bankers As-

sociation indicates that some 2,000 banks, including almost

all of the larger banks, provide or intend shortly to provide

data processing services to other banks and bank customers.

See Motion for Leave to File Brief on Behalf of the American

Bankers Association as Amicus Curiae in Support of Peti-

tions for Writs of Certiorari, June 12, 1969, filed in these

proceedings, p. 7. Certainly these surveys reveal a signifi-

cant area of competition.

The Comptroller himself acknowledges the importance of

the problems involved, when he notes that in 1967, 82 per

cent of banks with fifty million to one hundred million dol-

lars in assets offered computer services to customers; the

cal issues, issues of peripheral relevance to the administrative task, issues not

presently weli-focused, issues better handled elsewhere need not be decided

by a court or forced upon an agency, certainly not at the suit of persons

whose claim to justice or to the attention of this forum is marginal. On the

other hand, in a case where the sense of personal grievance although acute is

not clearly grounded in law, a court may appropriately intervene to correct

clear illegality even though ‘the public’ is not overly concerned.” Jaffe, Ju-

dicial Control of Administrative Action 527-28 (1965). [Hereinafter cited as

Jaffe.)

—

figure rose to 98 per cent of banks with over five hundred

million in assets. Petition by Comptroller of the Currency

for Writ of Certiorari in Camp v. Wingate Corp., No. 1511,

Oct. Term 1968, p. 9. In effect, the Comptroller argued in

his petition in Wingate that because of the importance to

the banking industry of the questions raised in these cases,

this Court should reverse a lower court decision that al.

lowed the merits of the questions to be reached.

Thus, from the viewpoint of all parties, the subject matter

of the litigation clearly involves questions of major impor.

tance. This case, however, assumes even greater significance

when consideration is given to the vital public interest in

insuring that the nation’s banking laws are not violated.

The sensitive nature of the banking industry has been re

peatedly recognized by the courts,’ by Congress, by admin-

2“No doubt Congress has continuously, from 1864 to the present, been ‘very

careful’ (see infra) in restricting the activities of banks . . . .” [T]he thrust

of the close regulation of banks is for purposes of stability ....” Wingate

Corporation v. Camp, 408 F.2d at 1151.

“A grocery store or data processing company failure or bankruptcy would

be unfortunate and cause the proprietors and owners to lose their investment,

but a bank failure would cause not only loss of the owner’s investment but

also loss to many unwary members of the public who are depositors.” Ass'n

of Data Processing Service Organizations, Inc. v. Camp, 279 F.Supp. 675,

680 (D. Minn. 1968).

3 “Generally, banks have been prohibited from carrying on any business other

than that of banking. This prohibition, which has been an accepted tradi-

tion throughout the banking industry, is grounded upon the conviction that

banking is a quasi-public industry. Therefore, the chartering of banks has

been subject to Government approval, and the continuing solvency of banks

has been zealously guarded by the chartering authority. One of the principal

means of guarding that solvency has been by limiting the activities, invest-

ment or otherwise, in which banks can engage.” S. Rep. No. 2105, 87th

Cong., 2d Sess. 10 (1962) (supplemental views of Senators Proxmire, Doug-

las, and Neuberger).

_—

istrative officials,* and by private cc oe

Undeniably, entry by national bank mentators.

ing service business raises new and 8 into the data process-

individual banks and the banking in@™PO?t@nt questions for

relate to the stability and safety of pestry: These questions

a paramount public interest is presen” 8; questions in which

which may be encountered in this fie” arava * hazards

cial losses from the installation of @ include serious finan-

ment® and large damage claims in data processing equip-

mnection with the per-

4“Chairman Martin noted that the principal

company field arise from two circumstances: ,;oblems in the bank holding

(2) The combination under single control

ing enterprises, permitting departure from tho¢ por, banking and nonbank-

tions should not engage in business wholly UM» rinciple that banking institu-

bination involves the lending of depositors’ ear ere se Seer

business enterprise, not connected with banki ney, whereas other types of

of trusteeship.” S. Rep. No. 1095, 84th Cong, 4, not involve this element

5“Bank regulation in this country dates back n Ist Sess. 2 (1955).

ter. It came into being as soon as there was. 441.

. ere, century and a quar-

failure could be more destructive to individ eneral realization that a bank

ties for the most part are held by ae paar, PRET ta emcearendag hon

circulating medium. Accordingly, the closir, | Res 1 wen abili-

hardship upor. the individual by destroying” f “eter Po

able—a portion of his monetary resources, t pat not only wor =

portant, a bank failure frequently paralyzed” “igen gig unavail-

munity. On occasion, when failures were ny aso, perhaps more im-

the nation, was prostrated.” Archie K. Dav’© economic life of the com-

Association, 1966, Banking Regulation Toda}®TUs, an entire state, or even

roemasang Aer hegre Hy i , President, American Bankers

A Banker's View, 31 Law &

*In 1967, company officials of Villager, Inc., t

a new computer for a 40% drop in profits in t

ter, in which profits dropped from $1,790,¢ned the high cost of installing

$1,001,103. Wall Street Journal, September” COmpany’s second fiscal quar-

4 in a comparable quarter to

= l, 1967, p. 28.

ERR RTE

nace te age

formance of data processing services.’

In view of these hazards, it is of major public interest to

determine whether national banks are lawfully permitted to

engage in the business giving rise to the risks. But who will

protect this public interest?

In the first instance, the Comptroller of the Currency has

been granted by Congress the authority to supervise the

banking system. 38 Stat. 261 (1913), 12 U.S.C. §1 (1964).

However, it has been repeatedly held that the Comptroller's

decisions are subject to judicial review.

First Nat’l Bank v. Saron, 352 F.2d 267 (4th Cir. 1965) ;

Webster Groves Trust Co. vr. Saron, 370 F.2d 381 (8th

Cir. 1966).*

7In Clements Auto Co. v. Service Bureau Corp., 298 F.Supp. 115 (D. Minn.

1969), the court held a data processing company liable for damages of

$480,811.33 for misrepresenting the necessity for, and benefits to be expected

from, the installation of a data processing system for inventory control.

The Wall Street Journal, March 27, 1968, p. 1, reported a judgment against

International Business Machines for $53,200 for computer programming errors

causing failure of a computer to properly perform billing and inventory con-

trol services for a business concern.

8In Webster Groves, the court stated as follows:

“The Comptroller takes the position that neither the appellant nor any of

the competitor banks have a standing to challenge the chartering of a new

national bank; that the chartering of a new national bank is discretionary

and is not subject to judicial review ... .

“We believe that competing banks, as interested parties, have a right to

challenge illegal acts of the Comptroller and that the Comptroller’s discre-

tionary actions are not immunized from judicial review . . . . (p. 384.)

“The Comptroller, however, must be subordinate to the law from which

he received his authority, and is subject to the limitations imposed by that

law. Therefore, if he acts in excess of his statutory grant of power, acts arbi-

trarily or capriciously, abuses his discretion, or unlawfully discriminates in

violation of the Constitution, he is certainly subject to restraint by the courts

. (p. 387.)

“The Comptroller is also asserting that a competitor has no standing to

object to lawful competition. With this rule we find no fault, but the banks

surely have the standing to object to illegal competition. Frost v. Corporation

Commission of Oklahoma, 278 U.S. 515, 49 S.Ct. 235, 73 L.Ed. 483 (1929);

National Bank of Detroit v. Wayne Oakland Bank, 252 F.2d 537 (6 Cir.

1958), cert. denied 358 U.S. 830, 79 S.Ct. 503. Therefore, when a competi-

_—

The question posed previously should thus be restated to

ask: Who will challenge illegal actions of the Comptroller?

An examination of the potential challengers confirms the

conclusion that a competitor will be the most likely and

most vigorous challenger.

Under Flast v. Cohen is is doubtful that a taxpayer could

challenge Comptroller action. There is involved here “an

essentially regulatory statute” which may not be challenged

by taxpayers as such.

It is unlikely that a bank depositor or customer would

attack the actions involved in this case. “The intended bene-

ficiaries of the banking laws, if the class is narrower than

the public, are bank customers who have no immediate and

compelling interest in litigation to further long-term sound

banking.” Investment Co. Institute v. Camp, CCH Fed.

Banking L. Rep. 80,166 (Bazelon, J., concurring).

Conceivably, a bank shareholder could challenge the ques-

tioned actions. But such a challenge has not yet appeared

and would be of questionable validity. A shareholder, unlike

a competitor, would have extreme difficulty in showing any

actual injury. See Ashwander v. TVA, 297 U.S. 288 (1936).

Certainly, when the injury to a competitor is compared to

the injury to a bank shareholder, the competitor’s interest

is more direct and substantial. It is reasonable to believe

that such a lawsuit would be more likely “pursued with the

necessary Vigor” by a competitor than a shareholder. In any

event the possibility that a shareholder might challenge the

action here questioned should not bar the present lawsuit.®

tor 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.” (p. 388.)

9 “However, if, as we conclude, there are circumstances under which a tax-

payer will be a proper and appropriate party to seek judicial review of fed-

eral statutes, the taxpayer’s access to federal courts should not be barred

because there might be at large in society a hypothetical plaintiff who might

possibly bring such a suit.” Flast v. Cohen, 392 U.S. at 98, n. 17.

Professor Louis Jaffe has analyzed the law of standing in

terms of “public actions” and “private actions.” Jaffe 459.

545. In a “public” action, the party seeking judicial review

of administrative action would not be required to show a per.

sonal interest in the litigation; standing would be grounded

in the public interest in judicial review of certain aspects of

governmental action. In the “private” action, the standing

of the claimant is grounded in a “distinctive or discriminat-

ing impact which specially entitles him to challenge an al.

legedly illegal administrative action.” Jaffe 501. See also

Harlan, J., dissenting in Flast v. Cohen, 392 U.S. at 116,

Regardless of the sharpness of the distinction between the

two types of actions, it is apparent that they merge in a

unique manner in the present case. The inescapable fact that

the competitor here has suffered actual harm gives him the

“personal stake” that this Court required in Flast r. Cohen,

and, indeed, a stake that goes far beyond the interest of the

plaintiffs in that suit; this financial interest makes the com-

petitor the logical and probably the only person willing and

able to assert the acknowledged vital public interest in the

proper functioning of the national banking system."°

The decided cases in this field have borne out the preced-

ing contentions. In all these cases it has been a competitor

10This Court has not been unaware of strong motivation supplied by injury

to financial interests in redressing public rights. In commenting on the stand-

ing of a book publisher to bring action against a State Commission which

attempted to dissuade third parties from distributing the publisher’s books,

the Court stated as follows:

“Finally, pragmatic considerations argue strongly for the standing of pub-

lishers in cases such as the present one. The distributor who is prevent-

ed from selling a few titles is not likely to sustain sufficient economic in-

jury to induce him to seek judicial vindication of his rights. The pub-

lisher has the greater economic stake, because suppression of a particu-

lar book prevents him from recouping his investment in publishing it.

Unless he is permitted to sue, infringements of freedom of the press may

too often go unremedied.” Bantam Books, Inc. v. Sullivan, 372 US. 58,

65, n. 6 (1963).

wan

who has shouldered the considerable burden of litigation.

The results in those cases where the barrier of standing was

surmounted have been of substantial public benefit. In two

of the three cases where the courts of appeals have reached

the merits it was decided that the banks were prohibited

from engaging in the particular activity in question. Saron

rt. Georgia Ass’n of Ind. Ins. Agents, Inc., 399 F.2d 1010

(sth Cir. 1968); Port of New York Authority v. Baker,

Watts & Co., 392 F.2d 497 (D.C. Cir. 1968). Had the banks

and the Comptroller been successful in their efforts to resist

inquiry into the merits of these actions, both would presum-

ably still be acting in violation of law.

To summarize, it is beyond dispute that the federal courts

have the power, consistent with Article III of the Constitu-

tion, to hear petitioners’ claims. Both from the standpoint

of petitioners, who have suffered material injury, and from

the standpoint of the strong public interest in the functioning

of the banking system, it is important that the merits of the

controversy be determined. Why, then, have the courts been

so troubled with problems of standing in this area? What

are the reasons for the contradictory results among the var-

ious courts which have considered the problem? We submit

that these problems have primarily risen as a result of the

lower courts’ efforts to apply or distinguish the ruling by

this Court in Tennessee Electric Power Co. v. TVA, 306

U.S. 118 (1939), that competitors lacked standing to chal-

lenge the constitutionality of the legislation establishing the

Tennessee Valley Authority. We further submit that, just

as this Court in Flast rv. Cohen recently re-examined the re-

strictive rules of standing of tarpayers, so the Court should

similarly undertake a fresh evaluation of these restrictive

rules as they relate to competitors of national banks.

THE RESTRICTIVE RULES ESTABLISHED IN THE TENNESSEE

ELECTRIC POWER CASE CONFLICT WITH THE UNDERLYING

POLICY CONSIDERATIONS WHICH SHOULD FRAME AND

LIMIT PROPER RULES OF STANDING AND CONSEQUENTLY

THESE RESTRICTIVE RULES SHOULD NOT BE EXTENDED To

NEW FIELDS.

In Tennessee Electric Power, a number of private power

companies brought action to challenge the constitutionality

of legislation establishing the TVA. The Court held that

these competitors lacked standing in a decision which ap.

pears to have been based on two principles of doubtful sound-

ness: (1) a claimant may not challenge governmental ac.

tion “unless the right invaded is a legal right,—one of prop-

erty, one arising out of contract, one protected against tor-

tious invasion, or one founded on a statute which confers a

privilege” (306 U.S. 137-38), and (2) “the damage conse-

quent upon competition, otherwise lawful, is in such cir-

cumstances damnum asque injuria, and will not support

a cause of action or a right to sue.” (306 U.S. 140.)

(1) As to the stated requirement of “legal right”: This

reasoning has been consistently criticized :

“Such an approach is demonstrably circular: if the

plaintiff is given standing to assert his claims, his in-

terest is legally protected; if he is denied standing, his

interest is not legally protected.” Wright, Federal

Courts 38 (1963).

“When a legal right of the plaintiff is not at stake,

a plaintiff sometimes has standing and sometimes lacks

standing. Circular reasoning is very common, for one of

the questions asked in order to determine whether a

plaintiff has standing is whether the plaintiff has a legal

right, but the question whether the plaintiff has a legal

right is the final conclusion, for if the plaintiff has

standing his interest is a legally-protected interest, and

that is what is meant by a legal right.” 3 Davis 217.

-—

The requirement that a “legal right” be invaded as a con-

dition precedent to a finding that a claimant has standing is

valueless as an aid to determining the outcome of close cases.

For in close cases the answer to the preliminary question

whether a “legal right” has been invaded depends solely on

the answer to the ultimate question whether the claimant

has standing. Therefore, to determine that a claimant’s legal

rights have not been invaded is merely to announce the con-

dusion that the claimant is without standing.

Aside from logical difficulties, the “legal right” theory

runs into practical problems. As pointed out by Professor

Jaffe, much administrative action does not readily lend it-

self to classification in “traditional right-duty” terms and

therefore the “legal right” requirement to support a chal-

lenge to administrative action is not appropriate. Jaffe 508.

(2) As to the Court’s discussion of “damnum absque in-

juria”: The other reason given in Tennessee Electric Power

for denying standing is, like the “legal right” requirement,

merely a conclusion. Admittedly there are strong policy

-onsiderations favoring lawful competition in this country.

For this reason, the economic harm to a competitor resulting

from competition of this nature is not protected by the law.

In effect, there is a privilege to inflict financial harm upon

another in the pursuit of one’s own legitimate economic in-

terests, and no one may object to such conduct. See Carpen-

ter, Interference With Contract Relations, 41 Harv. L. Rev.

728, 754-62 (1928).

Granting these premises, it does not at all necessarily fol-

low that the considerations favoring and protecting lawful

competitive activities are equally applicable to competitive

activities which are prohibited by legislation or Constitu-

tion, or that these considerations are not outweighed by other

considerations militating in favor of allowing an injured

party to object to this type of conduct. Perhaps the Court

in Tennessee Electric Power weighed the conflicting cop.

siderations; the opinion does not articulate this process if it

occurred. To support its conclusion, the Court cited Rail.

road Co. v. Ellerman, 105 U.S. 166 (1882), a case resting

upon the “legal right” theory previously discussed.”

Perhaps because of the absence of an analysis of the un.

derlying considerations for its conclusion, Tennessee Elec.

tric Power has been subject to varying interpretations by

courts and commentators alike. The case has been thought

of as having been grounded in “considerations of separation

of powers,” ** as involving “federally financed competition

by a new competitor who was laocfully authorized to com-

pete,” ** or as based on the “philosophy of Frothingham +»,

Mellon . . . that not just anyone should have standing to

assert the invalidity of a federal program.” ** Another sur-

mise was that the Court decided “on the merits but without

opinion, that the Constitution does not protect against com-

petition by such a governmental unit as the TVA [footnote

omitted] or that the case was for some discretionary reason

an unsuitable one in which to pass on the constitutionality

of the Tennessee Valley Authority.” *°

11 “The legal interest which qualifies a complainant other than the State itself

to sue in 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 . . . . The only injury of

which he can be heard in a judicial tribunal to complain is the invasion of

some legal or equitable right.” Railroad Co. v. Ellerman, 105 U.S. 166, 173-

74 (1882).

12Bazelon, J., concurring in Investment Co. Institute 0. Camp, CCH Fed.

Banking L. Rep. 80,164.

18El}liott, J., in Georgia Ass'n of Ind. Ins. Agents vo. Saxon, 390 F.2d 1010,

1016 (1968).

14Thornberry, J., concurring in Georgia Ass'n of Ind. Ins. Agents ov. Saxon, 390

F.2d at 1020.

15Bickel, The Supreme Court, 1960 Term, Forward: The Passive Virtues, 75

Harv. L. Rev. 40, 44 (1961).

—

Tennessee Electric Power has recently been explained by

this Court as denying standing “because the statutory and

constitutional requirements that the plaintiff sought to en-

force were in no way concerned with protecting against com-

petitive injury.” Hardin v. Kentucky Util. Co., 390 U.S. 1,

6 (1968). This principle is the converse of the holding of

the Court in Hardin “that when the particular statutory pro-

yision invoked does reflect a legisiative purpose to protect a

competitive interest, the injured competitor has standing to

require compliance with that provision.” (390 U.S. at 6. )

We agree with the holding in Hardin which granted stand-

ing, but we believe this Court should re-examine the doctrine

denying standing solely because of the absence of a legiela-

tive purpose to protect the competitive interest. The re-

strictive rule does not necessarily follow from the permis-

sive rule: merely because a court must grant standing where

the legislature has protected an interest, it is not required

that a court deny standing where that particular legislative

purpose does not appear. The difficulty with a rule making

standing dependent on legislative protection is at least three-

fold:

1. The presence or absence of a legislative purpose to pro-

tect a competitive interest has no more than a fortuitous re-

lationship to the actual harm or injury which the claimant

may have suffered, or to his “personal stake” in the contro-

versy’®.

16“The interest of a competitor in avoiding increased competition or reducing

existing competition should be enough to give him standing to challenge the

constitutionality of a statute whicl: directly affects his competitive position,

even though the statutory provisions are not in terms aimed at him and do

not order him to do, or refrain from doing, anything.

“The competitor’s standing should be clear if we look to the very basis of

the standing requirement itself. That requirement stems from the recogni-

tion that, within the framework of our adversary system, the adjudicatory

process is most securely founded when it is exercised under the impact of a

real conflict between antagonistic demands. Hence, it follows that the case

: a,

2. The presence or absence of a legislative purpose to pro-

tect a competitive interest has no more than a fortuitous re.

lationship to the public interest involved in requiring compli-

ance with the substance of the legislation.’’

3. The rule is often difficult to apply. In many instances

judges in the lower eeurts have been unable to agree whether

Congress did or did not indicate a design to protect a com.

petitive interest. For example in the Georgia Ins. Agents

case, 399 F.2d 1010 (Sth Cir. 1968), where the majority

found such a congressional purpose in Section 92 of the Na-

tional Bank Act, 39 Stat. 753 (1916), Thornberry, J., con-

earring, stated “But in evaluating the legislative history of

Section 92, I find little evidence of an intent to protect insur.

ance agents from competition.” 399 F.2d at 1019.

Whatever the rationale of Tennessee Electric Power may

be, we believe that case should not be extended to this one.

Certainly, where Congress has protected a competitive inter-

est, that interest becomes a “legal right” and must be heard

under any ru!> of standing. But even though such legisla-

tive protection may be lacking, where there exists (1) a case

must be one which i, im actual fact, the litigant’s own, so that it will be

competitive position is directly affected by a statute aiding his competitor, it

to find thet such businessman does not have the personal

to permit him to seek to have such statute ruled invalid.

is financially harmed by the statute concerned, it is hardly

he will do less than his utmost in pressing his challenge to

the law.” 1 Schwartz, A Commentary on the Constitution of the United

States, Part I, The Powers of Covernment, 440-41 (1963) (footnotes omit-

17TThis anomaly was noticed by Judge Bazelon in the Investment Co. Institute

case (CCH Fed. Banking L. Rep. 80,166-67):

“Thus, under the usual rules of standing, a state bank can enjoin illegal

branching by national banks, but there is no party who can sue to enforce

the separation between commercial banking and the securities business.

Given the relative triviality of the threat to the banking system posed by

the menace of illegal securities deal-

ing, this result is too bizarre to have been intended by Congress.”

;

| —

or controversy within the meaning of Article III of the Con-

stitution, (2) substantial injury, in fact, to the claimant, and

(3) en important public interest, then the federal courts

should be open to challenges of illegal government action.

Such cases should be heard unless Congress has declared the

administrative action in question to be unreviewable.** We

believe that rules of standing based on these factors would

more nearly accord with the underlying principles giving rise

to these rules.

This approach was explicitly adopted in the recent decision

in Investment Co. Institute v. Camp, No. 21,662, D.C. Cir.,

July 1, 1969, CCH Fed. Banking L. Rep. 995,157, where the

court held that an association representing the mutual fund

industry had standing to present the claim of illegal compe-

tition :

“Evaluating Appellees’ qualifications as prospective

litigants on behalf of their own private economic inter-

ests and the public’s interests, it becomes evident that

they are indeed adverse both as respects their actual

prosecution of this litigation and in regard to their fun-

damental challenge to the Comptroller’s authority to al-

low the national banks to engage in this type of securi-

ties activity. Their financial interest in these proceed-

ings has been examined in the preceding opinion, and

when this is coupled with authoritative prognostications

of impending financial harm to their interests if the

Comptroller’s regulations are allowed to stand [footnote

omitted], it is obvious that there exists one cogent quali-

fication of a challenger in the reasonable probability of

factual aggrievement sufficient to insure the spirited ad-

verseness necessary to judicial resolutions.

“With this element satisfied, on this record the alter-

native to a grant of Appellees’ claim to standing would

be to effectively frustrate any challenge to the regula-

tions in question.

18For an example of statutory exclusion see AFL o. NLRB, 308 U.S. 401

(1940).

LTT

“Because of the factors discussed heretofore I am yp.

able to set aside my grave doubts as to Appellees’ stand.

ing to institute and maintain these suits. However, in

the uncertain state of the law as to standing, there js

something to be said on both sides of that question, |

therefore resolve my doubts in favor of the Appellees and

concur in the result of that portion of the foregoing

opinion which holds that the Appellees have standing, |

am influenced substantially, as I indicated at the outset,

by the need for judicial examination of the important

questions raised.” Investment Co. Institute v. Camp,

CCH Federal Banking L. Rep. 80,172-73 (Burger, J.,

concurring ).

“Principles of standing in competitors’ suits have op.

erated as rules of thumb to sort out proper plaintiffs and

legal issues of competition deemed appropriate for judi-

cial resolution. Both are present here. It is not disput-

ed that the members of the ICI are aggrieved by the

Comptroller’s ruling . . . . The ICI presents a ques.

tion of statutory construction to define the boundaries

of official authority, a type of question well within the

traditional competence of courts of law. It is the only

party likely to assert the public interest in observance

of the banking laws by the agency responsible for enforce.

ing them. In the exceptional circumstances of this case,

I would grant the ICI standing to vindicate the public

interest despite the absence of statutory aid to standing.”

Investment Co. Institute v. Camp, CCH Fed. Banking L.

Rep. 80,167 (Bazelon, J., concurring).

This approach to questions of standing is not unknown in

other jurisdictions. In Elizabeth Fed. Sav. & Loan Ass'n ».

Howell, 24 N.J. 488, 182 A.2d 779 (1957), the court upheld

standing of a savings and loan association to challenge the

establishment of a branch office by a competing association.

Chief Justice Vanderbilt framed the considerations relevant

to standing in the following terms:

“We condition the right to invoke the judicial power,

however, by the requirement that there be some interest

to be protected beyond a mere abstraction; but yet, in

cases involving substantial pubiic interest, the courts

—

have held that ‘but slight private interest, added to and

harmonizing with the public interest’ is sufficient to give

standing. . . . Moreover, this right to seek judicial re-

view of administrative decisions . . . belongs to all per-

sons who are directly affected by and aggrieved as a re-

sult of the particular action sought to be brought before

the courts for review.

“Competing banking institutions may be the only per-

sons With sufficient private interest in harmony with the

public concern for the safety of savings and bank de-

posits to bring the attention of the courts to errors of

law in an administrative action granting a license to

establish a branch contrary to the standards set by the

statute delegating authority to so act. If such banking

institutzons do not have the necessary standing, who

then is there who can or will challenge an administra-

tive decision favorable to the applicant? Without stand-

ing in the appellants to invoke the power of judicial re-

view, the Commissioner’s action . . ., right or wrong,

proper or arbitrary, takes on a conclusive character to

the possible great detriment of the people as a whole.”

(1382 A.2d 779, 785-786, T87.)*°

An English decision involving the writ of certiorari takes

ihe same approach, without, however, even requiring an im-

portant pubtic interest. Rex v. Richmond Confirming Author-

ity [1921], 90 L.J.K.B. (n.s.) 413, involved standing of a

liquor dispenser to challenge the grant of a license to a com-

petitor. In upholding standing, the court stated as follows

(Earl of Reading, C.J.) :

19A similar decision is People ex rel. Ayres v. Board of State Auditors, 42 Mich.

422, 4 N.W. 274 (1880), where, in granting mandamus at the request of a

printer to compel state officials to let a printing contract according to stat-

ute, the court stated:

“The rule which rejects the intervention of private complainants against

public grievances is one of discretion and not of law. There are serious

objections against allowing mere interlopers to meddle with the affairs of

the state, and it is not usually allowed, unless under circumstances where

the public injury, by its refusal, will be serious.” (4 N.W. at 279.)

ne ——

“The first point turns entirely on the question whether

the applicant can be said to be a person aggrieved .. , .

The applicant does not, in my opinion, stand in the same

category as a member of the public who may be said to

have only a general interest in seeing that the law jg

properly carried out. He had a particular interest jp

this subject-matter ... .” (90 L.J.K.B. (n.s.) at 415.)

This Court also has, in the past, gone beyond the rule of

Tennessee Electric Power. In Chicago v. Atchison, T. & 8.F.

Ry., 357 U.S. 77 (1958), the Court had before it a case test.

ing the validity of an ordinance which purported to bar the

Railroad Transfer Service Company from entering into the

business of transporting passengers between railroad stations

in Chicago. Parmalee, already engaged in that business, had

been permitted to intervene in the lower court. This Court

requested counsel to consider the following jurisdictional

issue (357 U.S. at 82):

“Whether Parmelee Transportation Co. has standing to

seek review here on appeal or by writ of certiorari.”

The Court gave the following reasons for its affirmative

answer to this question (357 U.S. at 83-84) :

“Parmelee has standing to secure review of the judg-

ment below by appeal. It is enough, for purposes of

standing, that we have an actual controversy before us

in which Parmalee has a direct and substantial personal

interest in the outcome. Undoubtedly it is affected ad-

versely by Transfer’s operation. Parmelee contends that

this operation is prohibited by a valid city ordinance and

asserts the right to be free from unlawful competition.

Transfer, on the other hand, suggests that Parmelee has

no standing because the city ordinance is invalid and

Transfer’s operation is lawful. It argues that a party

has no right to complain about lawful competition, cit-

ing Alabama Power Co. v. Ickes, 302 U.S. 464, and Ten-

nessee Electric Power Co. v. Tennessee Valley Authority,

306 U.S. 118. We do not regard either of these cases as

controlling here. It seems to us that Transfer’s argu-

ment confuses the merits of the controversy with the

——

—

standing of Parmelee to litigate them. Cf. Bell v. Hood,

327 U.S. 678. Parmelee’s standing could hardly depend

on whether or not it is eventually held that Transfer can

lawfully operate without a certificate of convenience and

necessity.”

The parallel between that case and the present case is close.

In the earlier case, the party seeking standing alleged that

an ordinance prohibited another’s entry into the field; in the

present case, petitioners allege that national banks are pro-

hibited from entry into the data processing service business.”°

In the earlier case, the party entering the field claimed the

ordinance was invalid; in this case, the respondents claim

that the statute does not prohibit them from entering the

field. The nature of the threatened harm is identical: finan-

cial injury as a result of competition allegedly prohibited by

law. The claimants’ “personal interest in the outcome” is

also id.-ntical. The decision in th, present case should be gov-

erned by the same considerat.. 1s which led the Court to

grant standing in the earlier case. Personal interest, or

harm, in fact, not “legal right,” should be the touchstone to

standing, particularly where the personal interest merges

with a vital public interest in the questions presented.”*

24s recognized by the First Circuit, “It has long been settled . . . that the

enumeration of such powers [in 12 U.S.C. §24(7)] is an effective and strong

prohibition of all activities not enumerated and not incidental to banking.

See First National Bank of Charlotte v. National Exchange Bank (1875), 92

U.S. 122, 128, 23 L.Ed. 679; National Bank v. Matthews (1878), 98 U.S.

621, 625, 25 L.Ed. 188; Logan County National Bank v. Townsend (1891),

139 U.S. 67, 73, 11 S.Ct. 496, 35 L.Ed. 107.” Wingate Corp. v. Ind. Nat.

Bank, 408 F.2d 1147, 1150 (1969).

21 “The courts, in holding, as they sometimes do, that someone like a competi-

tor or a consumer has no standing, have lost sight of the overriding need in

our system—to make sure that someone shall in fact be able to secure re-

view of administrative action. It is only if this need is satisfied that the

principle of administrative legality can truly be enforced. It is in the in-

terest of the community as a whole that illegal agency action be not left

untouched. It is for the judiciary to vindicate this interest by ensuring that

there are no unnecessary obstacles in the path of those seeking to challenge

ih.

PETITIONERS HAVE STANDING BECAUSE CONGRESS, IN EN.

ACTING THE BANK SERVICE CORPORATION ACT, EVINCED

A SPECIFIC LEGISLATIVE PURPOSE TO PROTECT THE Com.

PETITIVE INTEREST OF DATA PROCESSORS AGAINST Na.

TIONAL BANK COMPETITION.

It is firmly settled that if a legislative purpose can be found

to protect a competitive interest, the injured competitor has

standing to complain of the disregard of the protected inter.

est. Hardin v. Kentucky Utilities Co., 390 U.S. 1 (1968).

The courts in the Eighth Circuit in this case and the First

Circuit in the Wingate case agreed on the existence of this

rule but differed sharply on its applicability to the identical

factual pattern presented in the two cases. The First Circuit

ruled that section 4 of the Bank Service Corporation Act,

76 Stat. 1132 (1962), 12 U.S.C. §1864 (1964), gave standing

to data processors, while the Eighth Circuit held in a foot-

note that the Act was not applicable. An inquiry into the

legislative history of the Act demonstrates the validity of

the First Circuit’s resolution of the question.

In 1962, Congress passed the Bank Service Corporation

Act to enable national banks to join together in common

ownership of subsidiary corporations established to perform

data processing and clerical services for banks. At that time,

it was felt that the banking laws prohibited banks from ac-

quiring ownership of subsidiary service organizations. The

purpose of the 1962 statute was stated in the following

terms:

“The purpose of H.R. 8874 is to help small and me.

dium-sized banks compete more effectively with larger

banks and give better service to the public, by forming

bank service corporations which will make available

the legality of administrative action. To construe the standing requirement

as our courts sometimes do is to place an unnecessary obstruction on the

road of justice.” 9 Administrative Law Bulletin 122, Bernard Schwartz,

Editor (1957).

efficient and expensive equipment the banks individually

could not afford to buy.” 108 Cong. Rec. 22029 (1962).

(Statement by Senator Robertson, Chairman of Senate

Banking and Currency Committee. )

The law originated in the House of Representatives, H.R.

8874, 87th Cong., 2d Sess. (1962). As introduced, Section 4

of the bill read as follows:

“Sec. 4. No bank service corporation may engage in

any revenue-producing activity other than the perform-

ance of bank services for banks and, to an extent not ex-

ceeding one-half of its total activity, the performance

of similar services for persons or organizations other

than banks.” 108 Cong. Rec. 16503 (1962).

This provision created serious questions in the House re-

garding its effect on competitors such as petitioners:

“Mr. Roosevelt. ... May I just add, sir, a point which

somewhat worries me. There are, in California, and I

assume there may be in the gentleman’s State and also

in other States, many businesses which might be called

data processing concerns which have arisen in recent

years and which seek to perform many of the services

this bill is directly aimed at.

“What worries me is not that the banks could collab-

orate together to perform these services, but that they

could also compete with outside private concerns doing

the same type of processing. Would this not be unfair

to a rising new industry? Such competition could come

not only from a combination of smaller banks, but from

the larger independents as well.” 108 Cong. Rec. 16501

(1962).

Congressman Reuss replied to Congressman Roosevelt’s

expression of concern:

“Mr. Reuss. Further on the point raised by the gen-

tleman from California I would call his attention to the

fact that a big bank which has its own data processing

equipment is now able, without limitation, to go into

the business of furnishing these services; so really this

mikes the situation referred to by the gentleman from

California better rather than worse.

“Mr. Roosevelt. The gentleman from Wisconsin jg

telling me a bank like the Bank of America can, through

a subsidiary corporation, provide these services for it.

self, then get into competition with other businesses?

“Mr. Reuss. Not through subsidiary corporations,

There is a limitation.

“Mr. Roosevelt. As part of the banking service to

outside people?

“Mr. Reuss. That is correct. This limitation im.

proves the situation.” 108 Cong. Rec. 16501 (1962).

(Emphasis supplied. )

Those portions of Congressman Reuss’ statements printed

here in italics make sense only as they clearly imply that

Mr. Reuss, a member of the Banking and Currency Com.

mittee, believed that the Bank Service Corporation Act

restricted banks, as well as bank service corporations, from

performing data processing services. It must be remembered

that the existence of bank service corporations was not per-

mitted at all prior to the 1962 law. So there could have been

no competition by bank service corporations at the time Mr.

Reuss spoke. Thus, when he stated that the 1962 Act would

make the situation “better rather than worse” he was obvi-

ously referring to a limitation on bank activities. When he

stated that the limitation in the 1962 Act “improves the situ-

ation” he could only have been referring to the existing sit-

uation relating to banks. The context of his remarks compels

this interpretation. Thus, he must have meant that the 50

percent limitation on services for non-bank businesses at

least by implication restricted banks as well as their subsidi-

ary service corporations.

H.R. 8874 as passed by the House contained the provision

permitting bank service corporations to perform up to one-

half of their services for non-bank customers. Certain Sena-

tors on the Banking and Currency Committee expressed

grave doubts that this restriction was adequate:

_——

“Section 4 of the bill permits a bank service corporation

to perform up to one-half of its services for persons

other than banks. In effect, this will enable banks to en-

gage in a nonbanking activity—that of offering com-

puter services and related activities. For many banks

this may become a substantial and important business

enterprise.

“Generally, banks have been prohibited from carrying

on any business other than that of banking. This pro-

hibition, which has been an accepted tradition through-

out the banking industry, is grounded upon the convic-

tion that banking is a quasi-public industry. Therefore,

the chartering of banks has been subject to Government

approval, and the continuing solvency of banks has been

zealously guarded by the chartering authority. One of

the principal means of guarding that solvency has been

by limiting the activities, investment or otherwise, in

which banks can engage.

“lhe purpose of this bill is to exempt from such limi-

tation investment in a bank service corporation. To that

we do not object, for we believe that this can and will

serve a useful purpose. However, adequate justification

has not been demonstrated for extending this exemption

to permit banks to engage in the business of data process-

ing, which this bill permits up to 50 percent of the total

activity of a bank service corporation.” 8. Rep. No. 2105,

Sith Cong., 2d Sess. 10 (1962) (supplemental views of

Senators Proxmire, Douglas and Neuberger; emphasis

supplied ).

Representative Reuss had been of the opinion that prior to

the 1962 Act banks had been allowed to engage in the data

processing business, but that the 1962 Act restricted banks

from these activities. The material last quoted indicates that

Senators Proxmire, Douglas and Neuberger apparently be-

lieved that prior to the 1962 Act, banks could not lawfully en-

gage in the data processing business, but that the House ver-

sion of the 1962 Act allowed banks to enter this business. It

does not matter for this case which view was correct (or if

either was correct) ; the crucial point is that key legislators

i eeinenieenieeansinenaemeasel

believed that the 1962 Act had operative effects on banks ag

well as service corporations.”*

This aspect of the present case involves an attempt to de.

termine whether Congress evinced a legislative purpose to

protect data processors from bank competition. Whatever

the merits of various congressional views of the substantive

law relating to bank power to engage in the data processing

business prior to 1962, it is indisputable that a considerable

number of legislators, all on Banking Committees, were of

the opinion that they were affecting bank activities in enact.

ing the 1962 law. So if it should appear that in 1962 Cop.

gress intended to protect data processors at all, there is no

escape from the conclusion that Congress meant its protee.

tion to extend to competition from banks.

There simply can be no doubt that Section 4 of the 1962

Act, as finally passed, was designed to protect data proc.

22“With reference to the prohibition contained in 12 U.S.C. 1864, directed

at nonbanking activities on the part of bank service corporations, the follow-

ing excerpt from the Senate committee report is relevant: ‘The bill is not

intended as a means to engage in nonbank business, and the committee looks

to the bank supervisory agencies [12 U.S.C. 1865] to make sure that banks

do not organize service corporations for the purpose of entering into bus-

nesses other than banking’ (op. cit., p. 4). [Emphasis supplied.]”

“For a national bank to engage directly in the nonbanking activities sanc-

tioned by the regulation manifestly would be at variance with the intent of

Congress as expressed in this quoted statement, but it seems reasonable to

conclude that the committee was of the opinion that national banks already

were prohibited by the term of 12 U.S.C. 24 (Seventh) from embarking

upon undertakings not incidental to, or necessary for, the carrying on of

the business of banking; and, accordingly, that the restriction contained in

12 U.S.C. 1864 was essential only to prevent indirect evasion of Section 24

through engagement in nonbanking activities on the part of bank service

corporations, the agents of the principal. It is inconceivable that the Con-

gress intended to exclude the agent, but not the principal, from engaging

in these forbidden activities. As indicated, the failure to include the prin-

cipal within the express prohibition is understandable only upon the assump-

tion that the Congress was convinced that the principals already had been

restricted under previously enacted laws.” Hearings on H.R. 112, 117, and

10529, Before the Subcommittee on Bank Supervision and Insurance of the

House Committee on Banking and Currency, 89th Cong., 2d Sess. 28 (1966)

(views of House Committee Staff).

essors. As prevously noted, Senator Proxmire was dissatis-

fied wth the provisions of the bill allowing up to one-half of

service corporation business to be for non-bank customers.

He decided to close the door by eliminating the offending

clause :

“Generally, banks have been prohibited from carrying

on any business other than banking. Our Federal laws

have been careful to restrict them.

“This is particularly true because banks have customer

lists, and they could offer their customers, for instance,

the service of handling their receivables, which would

give the banks a substantial advantage over other legiti-

mate, long established business providing this kind of

service.

“A number of these businesses have informed me and

other Senators that this kind of competition would be

rery unfair. It would be unfair because the bank could

use their own personnel, charge merely the out-of-pocket

cost, and the unfair competition could drive businesses

now offering this kind of service to the wall.

“Those are the reasons why I have offered the amend-

ment. My amendment would confine these bank service

corporations exclusively to servicing themselves and

other banks. . . .

“With the adoption of the amendment, I think we

are in a position to have a bill that provides what the

banks really want, and what the members of the com-

mittee feel is justified, and at the same time safeguard

legitimate business enterprises which otherwise might be

put out of business.” 108 Cong. Rec. 22031 (1962) (re-

marks of Senator Proxmire; emphasis added.) **

3Another expression of congressional intent was as follows: “I join with the

Senator in supporting the bill. I think the Senator's amendment is well

taken. I think it is advisable to try this situation out at the bank level be-

fore we authorize banks to go into competition with other service organiza-

tions in providing the type of service contemplated here.” 108 Cong. Rec.

22031 (1962) (remarks of Senator Bush).

Congress adopted the Proxmire amendment:

“After much thought, the sponsors of the bill have agreed

to accept an amendment to the bill, Senator Proxmire’s

9-21-62D, which would limit the activities of bank sery.

ice corporations to the performance of services for

banks.” 108 Cong. Rec. 22029 (1962) (Statement of

Senator Robertson.)

Section 4 of the Act now reads:

“No bank service corporation may engage in any activity

other than the performance of bank services for banks,”

The foregoing review of the legislative history of Section

4 of the Act demonstrates a clear congressional purpose to

protect data processors from bank competition. Respond.

ents argue, however, that if this Act gives any protection at

all, it protects only against competition by bank service cor.

porations and that this protection cannot be extended to give

standing to assert illegal competition by banks themselves.

But there are overwhelming difficulties with this argument.

First, the legislative history recited above strongly indi-

cates that many legislators were of the opinion that the 1962

Act would protect data processors against competitive bank

activity. Whether they were right or wrong in this opinion

is a question relating only to the merits of the litigation, but

the purpose to give such protection is clear, and this pur-

pose is enough for standing. Respondents have fallen into

the error, pointed out in a prior case, of confusing “the merits

of the controversy with the standing . . . to litigate them.”

Chicago v. Atchison, T. & 8S. F. Ry., 357 U.S. 77, 83 (1958).

Second, respondents take an unduly restrictive view of the

already restrictive rules of standing. Their position is ap-

parently based on language in Hardin v. Kentucky Util. Co.,

390 U.S. 1, 5-6 (1968), where the Court stated:

“This Court has, it is true, repeatedly held that the eco-

nomic injury which results from lawful competition can-

not, in and of itself, confer standing on the injured

business to question the legality of any aspect of his

competitor’s operations. Railroad Co, y. Ellerman, 105

U.S. 166 (1882); Alabama Power Co. v. Ickes, 202 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 purpose

to protect a competitive interest, the injured competitor

has standing to require compliance with that provision.

See Alton R. Co. vy. United States, 315 U.S. 15, 19

(1942); Chicago v. Atchison, T. & S.F.R. Co., 357 U.S.

77, 83 (1958).”

Assuming for the moment (although we vigorously dis-

pute the assumption) that the 1962 Act can be carved down

to the point where it indicates a legislative purpose to pro-

tect only against competition by bank subsidiaries, not banks,

there is still no authority for denying standing. In none of

the cases cited in the Hardin opinion where standing was

denied did the claimant assert the existence of a statutory

or constitutional provision clearly protecting against com-

petition from a source so closely related to the actual source

of the competition as to be virtually indistinguishable. Thus,

neither the decision nor the opinion in Hardin bars the pres-

ent petitioners; neither Hardin nor any cases cited therein

involved a situation similar to that presented here.

The Comptroller for purposes of this case has made an ef-

fort to isolate banks and bank service corporations in two

separate worlds, with no relationship between them. How-

ever, he has taken an entirely different position within the

banking community. Despite the clear mandate of Section 4

of the Bank Service Corporation Act, the Comptroller has

ruled in effect that bank service corporations can engage

in the data processing business. The Compiroller has ruleg

with respect to bank service corporations 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 ordinar.

ily perform for a customer. Accordingly, if a bank yp.

dertakes 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.” Comptroller’s Manuaj

for National Banks, par. 7399, 3 CCH Fed. Banking

Law Rep. J59,880D.

The Comptroller’s ruling appears to be an obvious at.

tempt to circumvent the restrictions of the Bank Service

Corporation Act, but that is not important here. It is im.

portant, however, to note that the Comptroller takes the

position that the service corporation can engage in the data

processing business for non-bank customers on the basis that

a bank has agreed to perform these services for its customer.

This close interrelationship between banks and their service

corporations in furnishing data processing services should be

recognized when considering the extent of the protection

agaist the furnishing of these services.

Petitioners find statutory warrant for their position in the

judicial review provisions of the Administrative Procedure

Act, 80 Stat. 392 (1966), 5 U.S.C. $702 (Supp. II, 1965-66),

which reads:

“A person suffering legal wrong because of agency

action, or adversely affected or aggrieved by agency ac

tion within the meaning of a relevant statute, Is entitled

to judicial review thereof.” a

24Section 10(a) of the Act originally read as follows:

“Any person suffering legal wrong because of any agency action, or

adversely affected or aggrieved by such action within the meaning of any

relevant statute, shall be entitled to judicial review thereof.” 60 Stat.

243 (1946), 5 U.S.C. §1009(a) (1958).

The 1966 changes were not designed to alter the meaning in any way.

—

A powerful argument can be made that this provision of

the Administrative Procedure Act extended the doctrine of

FCC v. Sanders Bros. Radio Station, 309 U.S. 470 (1940),

to all administrative action.** However, it is unnecessary to

so hold in this case. It is only necessary to find that petition-

ers were adversely affected or aggrieved by the Comptroller’s

action “within the meaning of a relevant statute” (emphasis

supplied). To deny standing in the present case, it must be

determined that the Bank Service Corporation Act falls out-

side the class of laws designated by the term “a relevant

statute.”2® In view of the legislative history reviewed previ-

ously, it would initially appear unreasonable to assert that

the Bank Service Corporation Act is not even “relevant.”

Further analysis confirms this initial conclusion.

A statute cannot be relevant in the abstract; it must be

relevant to some other matter or consideration. The matter

which the Bank Service Corporation Act must be relevant to

is obviously the Comptroller’s ruling authorizing banks to

engage in the data processing business. The question then

becomes one of how closely connected to the Comptroller’s

ruling the Act must be to be a “relevant” statute.

The legislative history of the Administrative Procedure

Act gives no help on this question, as the phrase “within the

meaning of any relevant statute” was not elaborated on by

the legislators. Professor Jaffe interpreted this provision as

limiting standing to actions brought under the particular

statute which gives standing to the claimant “or perhaps un-

der closely related statutes.” Jaffe 530. But the question of

how closely related still remains.

25See 3 Davis 211-213.

26As pointed out by the court in Norwalk Core v. Norwalk Redevelopment

Agency, 395 F.2d 920 (2d Cir. 1968), a “relevant statute” can classify a

party as “adversely affected or aggrieved” either explicitly by means of a

“persons aggrieved” provision or by implication through a legislative purpose

to protect a certain interest. (395 F.2d at 933, n. 26.)

A restrictive interpretation would translate the phrase

“qa relevant statute” as meaning “the controlling statute”

or “the particular statute claimed to have been violated,”

Such a narrow interpreta.on might be appropriate whep

dealing with a criminal statute, but not when construing a

remedial law such as the Administrative Procedure Act.”"

It is not necessary (or perhaps possible) to formulate a

general rule establishing for all cases how closely related a

statute must be to the matter at issue to be “relevant.” A}j

that need be settled in this case is to decide that the Bank

Service Corporation Act is “close enough.” When the con-

gressional policy to protect data processors under the Bank

Service Corporation Act is joined with the congressional

policy to provide judicial review as expressed in the Admin-

istrative Procedure Act, enough has been shown for stand-

ing. Petitioners, after all, are only seeking to reach the

merits of the controversy; why should a court strain to

avoid hearing the substance of litigation? In close cases,

cases in doubt, we submit that doubt should be resolved in

favor of proceeding to the merits.”*

An interpretation such as petitioners here contend for

would not, as respondents fear, open the doors to unlimited

lawsuits by claimants basing their claims on the theory that

some statute, somewhere among the laws of the United

States, protected them and thus gave them standing. As

27In Heikkila v. Barber, 345 U.S. 229, 232 (1953), the Court, in commenting

on the Administrative Procedure Act, and the legislative history of the Act

pertaining to judicial review, stated as follows:

“The spirit of these statements together with the broadly remedial pur-

poses of the Act counsel a judicial attitude of hospitality towards the

claim that §10 greatly expanded the availability of judicial review.”

28For a sympathetic interpretation in another context of a “party aggrieved”

statute, see Scenic Hudson Preservation Conference v. FPC, 354 F.2d 608

(2d Cir. 1965), cert. denied 384 U.S. 941 (1966), where the court gave

standing to a conservation organization to attack an order of the Federal

Power Commission.

—

Congress has required in the Administrative Procedure Act,

the claim would have to be based on a “relevant statute.”

Such a limitation by no means construes the Act to extend

the Sanders Bros. doctrine throughout the entire sphere of

administrative action.

Although petitioners are not in accord with the opinion

expressed in 1946 by the Attorney General that Section 10

“reflects existing law,” S. Doc. No. 248, 79th Cong., 2d Sess.

310 (1946), the result sought here is not inconsistent with

that interpretation. Before 1946 there was no law, statutory

or decisional, contrary to petitioners’ position that they are

protected by a relevant statute. Indeed, there is today no

contrary law, save in the Eighth Circuit as a result of this

case.

CONCLUSION

Professor Davis has recently deplored efforts by the gov-

ernment to avoid judicial consideration of the merits of law-

suits claiming illegal government action. He requests “above

all, that the system of constant pressure from government

lawyers to increase the legal complesxities and to close the

judicial doors to determinations on the merits should be re-

lared.” Davis, Discretionary Justice, A Preliminary Inquiry

159 (1969). He suggests that the executive branch voluntar-

ily waive judicially-created limitations on standing. Peti-

tioners agree that a problem exists but doubt that the sys-

tem can or should be changed by the executive branch or its

attorneys; the system should be changed by the same branch

of government which created the “legal complexities.” It

is for the courts to interpret the restrictive rules of stand-

ing so that these rules do not go beyond the reasons for the

rules. Such interpretations will not uaduly interfere with

administrative action. In the long run, administrative agen-

cies can only benefit by reasonable judicial review of their

actions.

“The guarantee of legality by an organ independent

of the executive is one of the profoundest, most pervasive

premises of our system. Indeed I would venture to gay

that it is the very condition which makes possible, which

makes so acceptable, the wide freedom of our adminis.

trative system, and gives it its remarkable vitality and

flexibility.” Jaffee 324.

For the reasons stated, the judgment of the court beloy

should be reversed and the case remanded to the district

court with instructions to reinstate the complaint.

Respectfully submitted,

MILTON R. WESSEL

425 Park Avenue

New York, New York 10022

Bert M. Gross and

FELIX M. PHILLIPS

909 Farmers & Mechanics Bank Bldg.

Minneapolis, Minnesota 55402

Counsel for Petitioners

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.