# Petitioners Brief — Association of Data Processing Service Organizations, Inc. v. Camp > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0156%3A06 ## Record - **Collection:** Supreme Court brief - **Document type:** Petitioners Brief - **Published:** January 1, 1970 - **Citation:** 397 U.S. 150 ## Text 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 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.” : ; ! | — 25 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 26 “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 — 27 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 —— — 29 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 30 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). _ 31 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. a 32 “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: _—— 33 “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 34 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). 35 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). 36 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 _ 37 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 38 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. — 39 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.) 40 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. — 41 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- 42 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0156%3A06. Public record. Not legal advice.