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

INDEX

Page

fee DOW. ....-......--..-.-------------+------ 1

Rinne ahaa wh ah onan wines en ceseen= eae 1

Questions EG Se a ee 2

ead onan unacnnenedkances 2

Ene whine amateen eens cnn ensencesecenmecce 3

Arguinent:

Introduction and summary-_--._._-.-.-.-------------- 7

I. Standing to complain of competition made pos-

sible by governmental action is dependent upon

a showing of a legally protected right to be

free from that competition___......__._-___- 9

II. Data processing service companies have no

legally recognized interest in freedom from

competition generally, or from the competition

of national banks in particular_-------___--_-_- 18

III. There is no sound reason why this Court should

overturn its consistent holdings that standing

is dependent upon the assertion of a legally

RES RET SSE el 25

ncaa i Fen Samctenn wis ave akusensanne 33

CEE te ee 35

CITATIONS

Cases:

Arnold Tours, Inc. v. Camp, 408 F. 2d 1147, petition

for certiorari pending, No. 128, O.T., 1969_ ____ 16, 20, 25

Associated Industries v. Ickes, 134 F. 2d 694, vacated

ES 28, 29

a ©. wees, oo0 F. 20 702... .....-...-...-.-. 25

Chicago v. Atchison, T. & S.F. R. Co., 357 U.S. 77__- 15

mumee V. Deering, 264 US. 443...........--..«..-- 24

Federal Communications Commission v. Sanders Radio

Station, 309 U.S. 470____- bee PES ER PPOET PT 28

First Agricultural National Bank of Berkshire County

v. State Tax Commission, 392 U.S. 339___________- 27, 30

(I)

367-405—69——-1

II

Cases—Continued a

Fae T, Ce BR GR. Chinn pcciwecncsiwesinds 11,21

Frost v. Corporation Commission, 278 U.S. 515_-____- hy

Hardin v. Kentucky Utilities Co., 390 U.S. 1_-_--____-

12, 13, 14, 17, 19, 21, 24, 27, 32, Pe

Jenkins v. McKeithen, 395 U.S. 411__..---------__- 14

Kansas City Power & Light Co. v. McKay, 225 F. 2d

924, certiorari denied, 350 U.S. 884___....._______ 25

L. Singer & Sons, v. Union Pac. R.R., 311 U.S. 295_- 29

Marine Space Enclosures v. Federal Maritime Commis-

sion (C.A.D.C., No. 22,936, decided July 30,1969). 96

National Ass’n of Securities Dealers, Inc. v. Securities

and Exchange Commission (C.A.D.C., No. 21,611 et

ig By Prien kcnnsccesscnnnss 15, 16, 20

National Bank v. Matthews, 98 U.S. 621___________- 20

Office of Communication of United Church of Christ v.

Federal Communications Commission, 359 F.2d 994.. 28

Pennsylvania Railroad Company v. Dillon, 335 F. 2d

292, certiorari denied sub nom. American-Hawaiian

S.S. Co. v. Dillon, 379 U.S. 945.......-.--------- 15, 24

Railroad Co. v. Ellerman, 105 U.S. 166_----- 9, 11, 12, 27, 33

Rural Electrification Administration v. Central Louisi-

ana Electric Co., 354 F. 2d 859, certiorari denied, 385

WE ib kakd chbneacsconehestdussdsuancne 15, 30

Sazon v. Georgia Ass’n of Independent Insurance

PUN. UB ke Se eer 15

Scripps-Howard Radio, Inc. v. Federal Communications

II Ti on oe ee 28

South Suburban Safeway Lines v. City of Chicago, et al.

(C.A. 7, No. 17,179, decided October 6, 1969)____- 18

Tennessee Power Co. v. Tennessee Valley Authority, 306

SE, Seeks tehhsha wae weate 11, 12, 15, 25, 26, 27, 32

Troutman v. Shriver (C.A. 5, No. 25,539, decided

NE AN - SN nck sink aps db nawaounemens 16, 17, 35

Wingate Corp., The v. Industrial National Bank, 408 F.

2d 1147, petitions for certiorari pending, Nos. 129

i Sci co desk tc ereniednan nd babe none 15, 22

a

Statutes:

Ill

Administrative Procedure Act, Sec. 10(a), 5 U.S.C. page

ce ha 2 eer nena 24, 25

Bank Service Corporation Act of 1962:

eS I 21

ecb sone. OnE 3, 20, 21, 23

Economic Opportunity Act of 1964, as amended, 78

Stat. 508, 42 U.S.C. 2701, et seg... 17

Federal Food, Drug, and Cosmetic Act, Sec. 701(f)(1),

lh depres pp 27

Federal Power Act, Sec. 313(b), 16 U.S.C. 825l(b)_ __ 27

Interstate Commerce Act, Sec. 1(20), 49 U.S.C. 1(20)_ 27

National Bank Act, Sec. 24 Seventh, 12 U.S.C. 24

on cnbewnadevcumavoriins cic ok 2,3, 4,7

Public Utility Holding Company Act of 1934, Sec.

Site, €6- U0). Tine)... ...................... 27

Securities Act of 1933, Sec. 9(a), 15 U.S.C. 77i(a)____ 27

T.V.A. Act of 1864,13S at.101_.......... 19

eh a, Re re eee aA 15, 16, 18, 19

sosdbp iaskermadhoie ened, oe en ae 21

Miscellaneous:

Annual Report, Secretary of the Treasury, 38th Cong.,

Ist Sess., pp. 19-21, reprinted in Federal Banking

Laws and Reports (1780-1912), Senate Committee

on Banking and Currency, 88th Cong., Ist Sess.,

PN te nnduwhenostsolsstsneciicce) 20

108 Cong. Rec. 22031.__-........-.......... 20

Hearings before the House Committee on Banking and

Currency on H.R. 8874, 87th Cong., 2d Sess., p. 34. 22

Hearings before the House Committee on Banking and

Currency on H.R. 6778, 91st Cong., Ist Sess., pp.

627-628, 560, 570-671... me... 27

Hearings before the Senate Committee on Banking

and Currency on H.R. 8874, 87th Cong., 2d Sess.,

Re ntneinnveceisaacdiugangie. fink oe: 22

H. Rep. No. 2062, 87th Cong., 2d Sess... 22

og ge EE ARAL AT bat NT ss

gn the Supreme Gourt of the Anited States

OctoBER TERM, 1969

No. 85

AssOCcIATION OF Data PROCESSING SERVICE ORGANIZA-

tions, INc., AND Data Systems, INC., PETITIONERS

2,

Witt1am B. Camp, CoMPTROLLER OF THE CURRENCY,

AnD AMERICAN NATIONAL BANK AND Trust Com-

PANY

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE EIGHTH CIRCUIT

BRIEF FOR THE COMPTROLLER OF THE CURRENCY

OPINIONS BELOW

The opinion of the United States District Court

for the District of Minnesota (App. 19-29) is reported

at 279 F. Supp. 675. The opinion of the United States

Court of Appeals for the Eighth Cirenit (App. 31-41)

is reported at 406 F. 2d 837.

JURISDICTION

The judgment of the court of appeals (App. 42)

was entered on February 6, 1969. The petition for a

(1)

ma

2

writ of certiorari was filed on April 10, 1969, and

was granted on June 23, 1969 (App. 43). The juris.

diction of this Court rests upon 28 U.S.C. 1254(1),

‘QUESTIONS PRESENTED

1. Whether the allegation that a competitor’s actiy-

ities are prohibited by statute suffices to confer stand-

ing to challenge those activities in the absence of any

statutory purpose to protect the plaintiff or any other

additicnal aid to standing.

2. Whether, in applying the principle _ that

standing to complain that a competitor’s activities

are prohibited exists only if the plaintiff is a member

of a class intended to be protected by the statute

allegedly violated, standing may be rested solely on a

subsidiary policy alleged to lie behind a different stat-

ute plainly inapplicable to the defendant competitor.

STATUTES INVOLVED

The pertinent Section of the National Bank Act,

12 U.S.C. 24 Seventh, provides in part:

Upon duly making and filing articles of asso-

ciation and an organization certificate a nation-

al banking association 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;

by discounting and negotiating promissory

—— "

3

notes, drafts, bills of exchange, and other evi-

dences of debt; by receiving deposits; * * * by

loaning money on personal security; and by

obtaining, issuing, and circulating notes accord-

ing to the provisions of this chapter. * * *

Section 4 of the Bank Service Corporation Act of

1962, 12 U.S.C. 1864, provides:

No bank service corporation may engage in

any activity other than the performance of bank

services for banks.

STATEMENT

Petitioners in this action are the Association of

Data Processing Service Organizations, Incorporated

(ADAPSO), whose members sell data processing serv-

ices to the business community, and Data Systems,

Incorporated (Data Systems), a member of that Asso-

ciation. They are seeking here to establish standing to

challenge a ruling by the respondent Comptroller of

the Currency that as an incident to their banking serv-

ices national banks such as respondent American

National Bank and Trust Company (American Bank)

may make data processing services available to other

banks and bank customers.

Data processing is a growing and increasingly im-

portant element of American business life. Because of

the volume of data they must handle in their own af-

fairs, banks have been at the forefront in the use of

modern data processing equipment. The question soon

arose Whether national banks, under the ‘‘incidental

powers’ clause of the National Bank Act, 12 U.S.C.

24 Seventh, could in some circumstances make their

own surplus data processing facilities available to

a ee

7

other banks and bank customers. Three successive

Comptrollers ruled that such activities were proper;

the current ruling was set out in the October 15, 1966,

revision of the Comptroller’s Manual (App. 21):

4

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. [Para. 3500.]

On June 15, 1967, petitioners brought this ac-

tion seeking to invalidate this ruling and to enjoin

American Bank from performing data processing serv-

ices pursuant to it. The complaint stated that the

action arose under the National Bank Act and tl at it

involved ‘‘an interpretation and application of” that

Act and a ‘‘determination of the powers granted” na-

tional banks “under that Act as set forth in 12 U.S.

Code § 24’’ (App. 5). In accordance with this general

statement of the nature of the suit, the complaint as-

serted that the action of the Comptroller and the Bank

contravened 12 U.S.C. 24 Seventh (App. 6). No viola-

tion of any other statutory provision was claimed.’

The complaint also set out the harm which allegedly

would result from the Comptroller’s ruling (App.

6-8) :

? The complaint also sought $100,000 in damages from Ameri-

can Bank (App. 9), presumably fer tortious interference with

contract riglits (see App. 7-8). This claim was not mentioned

as a basis for standing to attack the Comptroller's ruling in

petitioner's brief in the district court, and was referred to only

briefy in the court of appeals. It is not relied upon in this

Court.

7"

5

11. * * * [T]he marketing of data processing

services by national banks has been growing

rapidly, and is anticipated to grow even more

rapidly in the future.

* * * * *%

16. * * * Dara Sysrems has been deprived

of the right and opportunity to perform * * *

[certain data processing] services [for a poten-

tial customer] and to be compensated therefor.

* * * * +

18. * * * By performing said illegal data

processing services, and by holding itself out as

willing and able to perform such services,

AMERICAN Bank has caused and unless enjoined

will continue to cause substantial and irrepa-

rable harm to Data SysTEm’s business and to the

business of other members of Apapso, by depriv-

ing them of customers for whom data process-

ing services would be rendered and from whom

compensation would be received.

No allegation was made that American Bank or other

national banks risked injury to the public interest in

preserving the financial stability of banks through

engaging in the practices concerned.

Both respondents moved to dismiss the complaint

on the ground that these allegations of threatened

competitive injury did not give petitioners standing

to maintain the action (App. 15, 17). The district

cout granted the motions to dismiss (App. 18-19),

and the court of appeals affirmed (App. 42). The

court of appeals concluded, after an exhaustive anal-

ysis of the decisions of this Court and of the various

courts of appeals, that a competitor may challenge

allegedly ‘‘illegal’’ competition only when he can

°37-405—69-——-2

an

show (1) a legal right to be free from competition

by reason of a governmental charter; or (2) that

specific legislation authorizes him as an “aggrieved

person” to sue in the public interest; or (3) that he

is a member of a class given express statutory pro-

tection against the competition which he seeks to

attack. It then found that data processing service

companies possess no property right by virtue of

franchise or charter to be free from competition, that

there is no “‘person aggrieved’ review provision in

the National Bank Act, and that it was not a legisla-

tive purpose of the Act to confer statutory protection

on the competitors of national banks (App. 40-41).

Petitioners’ argument that such a purpose is reflected

in the Bank Service Corporation Act, which permits

two or more banks to form a joint subsidiary to per-

form such “bank services for banks,” was held to he

“misplaced’’ (App. 40, n. 12). In these circumstances,

the court reasoned, petitioners’ claim to standing

amounted to (App. 41):

* * * an attempt merely to show “a common

concern for obedience to law.”’ L. Singer &

Sons v. Union Pac. R.R., 311 U.S. 295, 304

(1940). As pronounced in Singer, outside statu-

tory consent, the general or common interest

can find protection only in the standing granted

to public authorities. Unless a relevant statute

provides for a “‘party in interest’”’ to seck

judicial review or unless a complainant pos-

sesses a recognized legal interest, he lacks

standing to be a ‘‘private attorney general” to

represent the public interest.

7

ARGUMENT

INTRODUCTION AND SUMMARY

Petitioners brought this action to challenge the rul-

ing of the Comptroller of the Currency that national

hanks may perform data processing services for other

banks and bank customers. They contend that the

performance of such services is not within the pur-

view of the provisions of the National Bank Act,

12 U.S.C. 24 Seventh, authorizing national banks to

exercise ‘‘such incidental powers as shall be necessary

to carry on the business of banking,” and complain

that the effect of national bank activity in this area

will be to provide additional competition to data proc-

essing service companies. Petitioners do not con-

tend that the Comptroller is attempting to regulate

their own activities in any fashion or that data proe-

essing service companies are threatened with any

injury other than the increased competition which

will be provided by national banks as a result of the

Comptroller’s ruling.

While the gravamen of petitioners’ complaint is thus

competitive injury, and competitive injury alone, pe-

‘itioners do not and could not assert that data proces-

sing service companies possess any form of franchise

or license which gives them the right to operate ex-

‘lusively in this field and to prevent others from en-

ering it. The data processing service industry is on

he same footing as the vast majority of American

nanufacturing and service industries, in which free

ind open competition is not merely permitted but

neouraged.

i Sitencennincienenenieiinanniitaietaita

8

In these circumstances, we submit, the courts below

correctly concluded that petitioners lack standing to

maintain this suit. This Court’s decisions over a period

of almost 100 years firmly established that where, as

here, there is no special statutory provision for judi-

cial review, a complainant seeking to attack govern-

mental action which does no more than increase

competition against him must show that he possesses a

legally protected right to be free from that competi-

tion. If, as here, no such right is conferred by fran-

chise or license, the plaintiff must be able to demon-

strate that the statutory enactment alleged to have

been violated was intended for his protection against

the competition complained of. Petitioners’ complaint

alleges only a violation of the ‘“‘incidental powers”

clause of the National Bank Act. Their invocation now

of the Administrative Procedure Act and the Bank

Service Corporation Act—intended to consolidate

prior law and to govern the acts of entirely different

banking corporations, respectively—is insufficient to

show a congressional judgment that they should be

empowered to test the construction of the incidental

powers clause in the nation’s courts. Since the Na-

tional Bank Act was not designed for the protection

of potential competitors of national banks, they have

no standing to challenge the Act’s interpretation.

9

I. Sranpinc To CoMPLaIN oF CoMPETITION MapE Pos-

SIBLE BY GOVERNMENTAL ACTION Is DEPENDENT UPON

4 SHOWING OF A LEGALLY Prorectep RicHt To Br

Free From THat CoMPETITION

The question of standing in a judicial forum to

attack competitive activity made possible by govern-

mental action was first thoroughly explored by this

Court in Railroad Co, v. Ellerman, 105 U.S. 166. There

the plaintiff was conducting a public wharfing busi-

ness in New Orleans when the Louisiana legislature

passed a resolution authorizing the defendant railroad

to engage in a similar business in New Orleans, in

competition with him. Plaintiff alleged, first, that en-

gaging in the wharfing business would violate the

railroad’s charter from the state legislature and was

therefore ultra vires (105 U.S. at 173); and, second,

that the legislative resolution allowing this competi-

tion was unconstitutional (id. at 170). Since these

claims in no way reflected on any right of the plaintiff

to be free from competition by another wharfinger,

this Court found them insufficient to establish—

* * * any legal interest which entitles him to

enjoin the company from using its wharf as

a public wharf beyond the limits of such use,

as defined by that construction of the joint

resolution. If he has such interest, it can only

consist in preventing competition with himself

as a wharfinger, which such more extensive use

of the railroad property would create. And if

the right to assert it exists, it must rest * * * on

the allegation merely that such use is beyond

the corporate powers of the company. * * * The

=

damage is attributable to the competition, and

to that alone. But the competition ts not illegal,

Tt is not unlawful for any one to compete with

the company [sic—should he appellee], although

the [company] may not be authorized to en.

gage in the same business. 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 do-

ing an act where the injury alleged flows from

its quality and character as a breach of some

legal or equitable duty. A stockholder of the

company has such an interest in restraining it

within the limits of the enterprise for which it

was formed, because that is to enforce his con-

tract of membership. The State has a legal in-

terest in preventing the usurpation and perver-

sion of its franchises, because it is a trustee of

its powers for uses strictly public. In these

questions the appellee has no interest, and he

cannot raise them in order, under that cover, to

create and protect a monopoly which the iaw

does not give him. The only injury of which he

can be heard in a judicial tribunal to complain

is the invasion of some legal or equitable right.

If he asserts that the competition of the rail-

road company damages him, the answer is, that

it does not abridge or impair any such right. If

he alleges that the railroad company is acting

beyond the warrant of law, the answer its, that a

violation of its charter does not of itself injuri-

ously affect any of his rights. The company is

not shown to owe him any duty which it has not

performed. [Jd. at 173-174; emphasis added.]

One has no standing to assert that a competitor, or

the government in authorizing competition, is behav-

ing illegally in the abstract. In this Court’s more re-

—_

11

cent language, there must be “a logical nexus between

the status asserted [by a plaintiff] and the claim

sought to be adjudicated.” Flast v. Cohen, 392 US.

83, 102. The plaintiff must establish that the assertedly

unlawful grant of authority to the competitor invades

some legally protected right, personal to him, to be

free from the competition. Thus, in Hillerman, the rail-

road's wharfinger activities—even if “beyond the war-

rant of law”—violated no duty owed to the plaintiff,

since the law did not entitle him to create or protect

a monopolistic position in the field of enterprise in-

volved.

The teaching of Ellerman is still vital. Tennessee

Power Co. v. Tennessee Valley Authority, 306 U.S.

118, 140, n. 11; Hardin v. Kentucky Utilities Co., 390

U.S. 1, 5-6. In Tennessee Power, various power com-

panies sought to restrain the Tennessee Valley Au-

thority (T.V.A.) from competing with them in the

sale of electric power, alleging that the Act allowing

this competition was unconstitutional, and that they

had “the right to be free from illegal competition.”’

306 U.S. at 124. This Court reiterated that such alle-

gations were insufficient to confer standing:

* * * unless the right invaded is a legal right,—

one of property, one arising out of contract,

one protected against tortious invasion, or one

founded on a statute which confers a privilege.

* * * The pith of the complaint is the Au-

thority’s competition. But the appellants realize

that competition between natural persons is

wer. * **

* * * * *

a

The appellants further argue that even if

invasion of their franchise rights does not give

them standing, they may, by suit, challenge the

constitutionality of the statutory grant of

power the exercise of which results in compe-

tition. * * * If the thesis were sound, appellants

could enjoin a competing corporation or agency

on the ground that its injurious competition is

ultra vires, that there is a defect in the grant of

powers to it, or that the means of competition

were acquired by some violation of the Consti-

tution. The contention is foreclosed by prior

decisions that the damage consequent on competi-

tion, otherwise unlawful, is in such cireun-

stances damnum absque injuria, and will not

support a cause of action or a right to sue.

[Id. at 137-140; emphasis supplied; footnotes

omitted. ]

In its Hardin decision just two Terms ago, this

Court specifically approved both Tennessce Power and

Ellerman. Hardin was a suit by a private power com-

pany seeking to enjoin the T.V.A. from supplying

electric power in a certain area in competition with

the power company. The complaint alleged that the

extension of service into that area would contravene a

1959 amendment to the Tennessee Valley Authority

Act which precluded T.V.A. from expanding its sales

outside the area for which it was the primary source

of power on a specified date.

2We discuss below (p. 30ff, infra) petitioners’ insistence

(Br. pp. 20 et seq.) that Tennessee Power was incorrectly de-

cided and should be reexamined by this Court.

-

Addressing itself first to the question of the power

company’s standing to enforce the statutory restric-

tion, this Court pointed out that it had

* * * repeatedly held that the economic injury

which results from lawful competition cannot,

in and of itself, confer standing on the injured

business to question the legality of any aspect

of its competitor’s operations. Railroad Co. v.

Ellerman, 105 U.S. 166 (1882) ; Alabama Power

Co. v. Ickes, 302 U.S. 464 (1938); Tennessee

Power Co. Vv. T.V.A., 306 U.S. 118 (1939);

Perkins v. Lukens Steel Co., 310 U.S. 113

(1940) [390 U.S. at 5-6].

Competitive injury provided no basis for standing in

those cases because

* * * the statutory and constitutional require-

ments that the plaintiff sought to enforce were

in no way concerned with protecting against

competitive injury [td. at 6].

On the other hand, the Court concluded,

* * * when the particular statutory provision

invoked does reflect a legislative purpose to

protect a competitive interest, the injured com-

petitor has standing to require compliance with

that provision [tbid.; emphasis added].

In the circumstances of Hardin, this Court found it

“clear and undisputed”’ from the Act and its legisla-

tive history that “one of the primary purposes of the

area limitations * * * was to protect private utilities

from TVA competition.’’* Id. at 6. Thus, “[s]ince

*The Court pointed to a committee report and several state-

ments of individual members of both Houses in connection

with the 1959 amendment which made it “clear and undis-

367-405—69-—3

; a

[the power company] is * * * in the class which [the

enactment] is designed to protect, it has standing

under familiar judicial principles to bring’ this

mt °° °" da, at T.

In sum, under an unbroken line of decisions in this

Court, competitor standing cannot be supported sim-

ply by the assertion that the defendant’s competing

activity is illegal in the abstract. Rather, the threat-

ened competition must invade some legally protected

interest which the plaintiff itself possesses. Such an

interest can stem from either (1) a specifically con-

ferred property right (e.g., in the form of a franchise

or license) to be free from the allegedly illegal com-

petitive activity (cf. Frost v. Corporation Commission,

278 U.S. 515); or (2) a clear legislative intent, under-

lying the statutory provision claimed to have been vio-

lated, to confer protection from competitive injury

upon the plaintiff or his class (Hardin v. Kentucky

Utilities Co., supra). But if must be there.

[T]he concept of standing focuses on the party

seeking relief, rather than on the precise nature

of the relief sought. * * * The decisions of this

Court have also made it clear that something

more than an “adversary interest’’ is necessary

to confer standing. There must in addition be

some connection between the official action chal-

lenged and some legally protected interest of

the party challenging that action. See Flast v.

Cohen, supra, at 101-106. [Jenkins v. Me-

Keithen, 395 U.S. 411, 423.]

puted that protection of private utilities from TVA compe

tition was almost universally regarded as the primary objective

of the limitation.” 390 U.S. at 7.

_—

15

Standing cannot be asserted, as petitioners would

have it (Br., pp. 11-12), on simply a strong “ad-

yersary” interest.*

The courts of appeals have, for the most part, fol-

lowed this Court’s decisions in the area of competitor

standing and have refused to find standing absent a

statutory aid of some kind. See, ¢.g., Pennsylvania

Railroad Company v. Dillon, 335 F, 2d 292 (C.A.D.C.),

certiorari denied sub nom. American-Hawatian SS.

(‘o. y. Dillon, 379 U.S. 945; Rural Electrification Ad-

ministration Vv. Central Louisiana Electric Co., 354 F.

94 859 (C.A. 5), certiorari denied, 385 U.S. 815; Ar-

nold Tours, Inc. v. Camp, 408 F. 2d 1147 (C.A. 1),

petition for certiorari pending, No. 128, O.T., 1969;

The Wingate Corp. v. Industrial National Bank, 408

F. 2d 1147 (C.A. 1), petitions for certiorari pending,

Nos. 129 and 225, O.T., 1969. But cf. Saxon v. Georgia

Ass’n of Independent Insurance Agents, Inc., 399 F.

2d 1010 (C.A. 5);° National Ass’n of Securities

‘Contrary to petitioners’ belief (Br., pp. 28-29), Chicago v.

Atchison, T. & SP. R. Co... 357 U.S. -77, is not in conflict with

Tennessve Power, That case involved a complaining party which

had been issued a license to. operate its transportation com-

pany within the city limits. This, along with the competitive

restrictions of a city ordinance, conferred upon it “the right

to be free from unJawful competition.” 357 U.S, at 83.

°In Georgia Assn, the plaintiff insurance agents were held

to have standing to enforce 12 U.S.C. 92, which deals expressly

with the subject of insurance activities on the part of national

banks. One ground of the decision was that the legislative his-

tory of Section 92 manifested a congressional intent to protect

insurance agents from competition on the part of national banks

(399 F. 2d at 1018). The court also concluded, however, that

the plaintiffs’ assertion that the competitive activity was il-

legal (7... in violation of Section 92) was in itself sufficient

to confer standing (399 F. 2d at 1017). This latter conclusion

is plainly inconsistent with the holdings of this Court and, in-

7

Dealers, Inc. v. Securities and Exchange Commission

(C.A.D.C., No. 20,164, decided July 1, 1969).°

The very recent decision of the Court of Appeals

for the Fifth Circuit in Troutman v. Shriver (Ap-

pendix A, infra) is illustrative. In Troutman, a prac-

ticing attorney in Orange County, Florida, and four

county bar associations as would-be intervenors, sought

to enjoin the institution of legal aid service programs

in Orange County and three other Florida counties by

the Director of the Office of Economic Opportunity,

According to the plaintiff, if that plan were carried

out, he would be forced to compete with OEO law-

yers for a clientele who could afford to obtain repre-

16

deed, was sharply criticized by both the court below in this

case (App. 38, n. 10) and the First Circuit in Arnold Tours,

Inc. v. Camp, supra.

*In National Ass’n of Securities Dealers, members of the

mutual fund industry sought to challenge the Comptroller's

authorization to a national bank to operate a commingled man-

aging agency account which would compete with mutual funds,

The district court held that the plaintiffs had standing and

then concluded on the merits that, inter alia, the operation of

a commingled managing agency account violated penal pro-

visions of the Glass-Steagall Act. The court of appeals re-

versed on the merits. With respect to standing, the majority

of the panel expressed its “reservations amounting to virtual

disbelief in” the plaintiffs’ standing. While being “unable to set

aside [its] grave doubts” in this regard, the majority neverthe-

less decided to resolve those doubts in favor of standing be-

cause of its belief that there was a “need for judicial examina-

tion of the important questions raised” (slip op. pp. 46, 47).

Presumably, it had in mind the fact that a reversal of the judg-

ment on standing grounds alone would have left unresolved the

question as to whether, as the district court had ruled, the bank

was engaged in criminal activity. In the circumstances, that case

can be fairly regarded as sui generis.

' y

sentation by him. He asserted that the Economic

Opportunity Act of 1964, as amended, 78 Stat. 508,

42 U.S.C. 2701 et seg., was unconstitutional and that

the establishment of the legal aid service programs

was in excess of the Director’s statutory authority.

Without reaching the merits, the district court dis-

missed the complaint on the ground that neither the

attorney nor the bar associations had standing to

maintain the action. The Fifth Circuit affirmed.

After rejecting the claims of standing as taxpayers

and “as citizens and attorneys,’’ the court in T'rout-

man turned to the assertion that the plaintiff and in-

tervenors had standing “because of their position as

eompetitors.’’ The restriction of the practice of law in

Florida to those who have been examined and found

qualified is, the court held, designed “to protect the

public from being advised and represented in legal

matters by unqualified persons’’—and not “to aid or

protect the members of the legal profession either in

creating or maintaining a monopoly or closed shop.

** * (Ty}he decisions of the courts appear to be uni-

form in denying standing to competitors who other-

wise possess no legal right to be free from competi-

tion” (infra, p. 40). In response to a Hardin

argument based on a 1967 Amendment to the Act,

which the court found from its examination of the

legislative history not to have been intended to protect

the asserted competitive interests, the court added:

* * * There are times when competitors are

given standing by Congress to challenge com-

petition which allegedly is in violation of a

statute. where the statute itself is said to be

enacted for the express protection of the class

a

of competitor complaining. ‘In order to fall

within this classification, however, the particular

statutory provision invoked must reflect a. legis-

lative purpose to protect a competitive interest,

Hardin v. Kentucky Util. Co., 390 U.S. 1, 54,

88 8. Ct. 651, —, 19 L. Ed. 2d 787, 792 (1968),

But where, as here, the purpose of the statutory

provision is simply to benefit the public at

large * * * no right, nor legal standing, is

conferred [App., infra, p. 43].

This contemporary pronouncement by a court of

appeals respecting competitor standing reflects an

accurate understanding and application of the goy-

erning principles in this sphere. And see also, to the

same effect, South Suburban Safeway Lines v. City

of Chicago, et al. (C.A. 7, No. 17,179, decided October

6, 1969), holding that a bus company lacks standing

to challenge federal assistance to a competing rail

transportation system under the provisions of the

Urban Mass Transportation Act of 1964.

JI. Data Processixe Service Companies Have No

_ Leeatity Recocnizep Interest 1x FReepom From

CoMPETITION GENERALLY, OR From THE CoMPETITION

oF Narionat Banks IN ParricuLar

Applying these settled principles to the present

case, We. think .it clear that the court below was cor-

rect in its conclusion that petitioners lack standing.

The Comptroller’s ruling that, under the ‘incidental

powers” clause of 12 U.S.C. 24 Seventh, national

banks. may provide data processing services to other

banks and bank customers does not invade any legally

—

recognized interest of data processing companies to

be free from such competition. And there is no other

basis upon which petitioners can assert such an

19

interest.

1. It is undisputed that petitioners and their class

have not been given, by franchise or otherwise, any

eeneral right to restrictions upon those who may

engage in data processing activities. Thus, their stand-

ing is dependent upon whether, in the words of Har-

din, “the particular statutory provision invoked [re-

flects] a legislative purpose to protect a competitive

interest”; if, but only if, such purpose appears, ‘‘the

injured competitor has standing to require compli-

ance with that provision.”’ 390 U.S. at 6 [emphasis

supplied].

The single statutory provision invoked in peti-

tioners’ complaint was 12 U.S.C. 24 Seventh—the

“incidental powers” clause of the National Bank

Act. It is solely that provision which petitioners claim

to he violated by the challenged data processing activ-

ities on the part of national banks. Yet, in this Court,

as in the courts below, petitioners do not contend that

Section 24 Seventh had any purpose—let alone a

“primary”. purpose such as was found in Hardin

with respect to the T.V.A. Act—to protect the interest

of potential competitors of national banks. The reason

is clear: the legislative history of the Section dispels

all possible doubt that’ its enactment in- 1864 (13

Stat. 101) was for the express and sole purpose of

creating a strong national banking system, ‘initially

. . . 4 : ? f°

: me

to assist in the alleviation of the financial crisis

occasioned by the Civil War.’ To the extent that the

protection of a competitive interest was at the bottom

of the enactment of Section 24 Seventh, it was the

interest of the national banks and not of their

competitors.’

2. Confronted with this lack of any. protective pur-

pose in the only statutory provision invoked in their

complaint, petitioners now endeavor (Br., pp. 30-41)

to find the requisite statutory aid to standing in the

Bank Service Corporation Act of 1962—a statute

which does not purport to be directed to the business

activities of national banks and which petitioners do

not seriously claim itself forbids the activities which

they seek to enjoin.

Specifically, they rely. on Section 4 of that Act, 12

U.S.C. 1864, which provides that ‘“‘[n]o bank service

corporation may engage in any activity other than the

performance of bank services for banks.’’ Although

this restriction in terms applies only. to a bank service

corporation,’ petitioners maintain that it gives them a

7 See Special Message of President Lincoln, Sen. Jour., 37th

Cong., 3d Sess., pp. 121-122; Annual Report, Secretary of the

Treasury, 38th Cong., Ist Sess., pp. 19-21, reprinted in Fed-

eral Banking Laws and Reports (1780-1912), Senate Com-

mittee on Banking and Currency, 88th Cong., Ist Sess., pp.

345-347.

* See, ¢.g., Arnold Tours, Inc. v. Camp, supra, 408 F. 2d at

1150-1151; National Ass'n of Securities Dealers, Inc. v. Secu

rities and Exchange Commission, supra, at 16; National Bank v.

Matthews; 98 U.S. 621, 626; 108 Cong. Rec. 22031 (1962) (re

marks of Sen. Proxmire).

*A “corporation organized to perform bank services for two

or more banks, each of which owns part of the capital stock of

%

21

legally protected interest in preventing competijjon by

national banks under the National Bank Act.’As this

Court held in Hardin, however, the requisite aid to

standing must be found in “the particular statutory

provision invoked” on the merits. The reason for the

articulation of the rule in these terms is not difficult

to perceive. Since the crux of the issue of standing is

the status of the plaintiff and not the challenged activ-

ity of the defendant, only those persons stating a

legally recognized grievance may invoke the power of

the courts to invalidate governmental action. Flast v.

Cohen, supra, 392 U.S. at 101-106. A necessary ingre-

dient of a legally recognized grievance is, of course,

that the plaintiff has been harmed. It follows that

when a plaintiff asserts, as a basis for standing, that a

particular statute was intended to protect him or his

class from a certain injury, it is incumbent upon him

to allege that that injury—and not some other injury

to which the statute is not addressed—has occurred.

In the framework of the present case, this means

that to invoke Section 4 of the Bank Service Corpo-

ration Act as the statutory aid to standing, petitioners

must be in a position to allege that that section has

been violated and that they have been harmed as a

consequence. No such allegation is made, nor is the

American Bank a corporation subject to Section 4 or

a stockholder of such a corporation. Assuming, then,

that Congress has granted a legally recognized interest

to petitioners insofar as the restriction in Section 4

such corporation, and at least one of which is- subject to. exami-

nation. by a Federal supervisory agency,” 12 U.S.C. 1861(c).

—e

upon the activities of bank service corporations is con-

cerned, that interest has not been jeopardized.

Nor can we agree with the suggestion of the First

Cireuit in The Wingate Corp. v. Industrial National

Bank, supra, that Section 4 of the Bank Service Cor-

poration Act may in fact “impliedly prohibit national

banks from directly entering into the data processing

service business,’’ 408 F. 2d at 1153. The legislative

history of the Bank Service Corporation Act reflects

that both congressional committees were aware that

national banks were already providing data processing

services of the kind challanged by petitioners. Chair-

man Martin of the Federal Reserve Board testified

before the House Committee that:

22

Notwithstanding the high initial cost of

equipment of this kind, some banks—especially

the larger banks—are purchasing or leasing this

equipment. Other banks are gaining access to

this equipment through various contractual ar-

rangements with data processing centers oper-

ated by private commercial concerns, and some

banks that have purchased or leased this equip-

ment are doing data processing for other banks

and business concerns. [Emphasis supplied.]

Hearings before the House Committee on Banking

and Currency on H.R. 8874, 87th Cong., 2d Sess.,

p. 34. A staff member of the Board provided the

saine information to the Senate Committee. Hearings

before the Senate Committee on Banking and Cur-

rency on H.R. 8874, 87th Cong., 2d Sess., p. 64. Yet

neither Committee report (H. Rep. No. 2062, 87th

Cong., 2d Sess.; 8S. Rep. No. 2105, -87th Cong, 2d

-

23

Sess.) contained any suggestion either that such bank

activity was illegal or that it should be proscribed.”

The question of the legality of the data processing

activities of national banks is, of course, not now

before this Court. We submit, however, that this leg-

islative history highlights the unavailability of the

Bank Service Corporation Act as a vehicle for as-

serting a protected right to question that legality.

For it is difficult to see how it can be seriously con-

tended that that Act was intended to give petitioners

a legal interest in preventing competition on the part

of national banks when, with full knowledge of the

fact that such competition existed, neither congres-

sional comnutiee addressed itself to the subject at

ail in reporting out the Act. While it may well be

true that national banks and bank service corpora-

tions are not wholly unrelated (Pet. br., p. 37), Con-

gress has clearly manifested its belief that the two

»

” Petitioners quote (Br. pp. 31-32) a colloquy on the floor

of the House between Representatives Reuss and Roosevelt,

in which the former (a member of the House Committee)

specifically acknowledged that banks were then able to furnigh

data processing services “without limitation”. Petitioner? 3-—

tempt to draw an implication from the colloquy that Mr.

Reuss believed that the Bank Service Corporation Act was

intended to impose a ‘limitation on national barks as well as

bank service corporations. But- Mr. Reuss’. quoted’ remarks,

teken as a whole, make it elear that he deemed the limita-

tion to which he referred to be applicable only to bank service

corporations. Moreov er, petitioners do not attempt to explain

why, if Mr.-Reuss was of the view which they attribute to

him, he did not seek to have Section 4 written so as to

apply in terms to banks (whieh he ‘knew were- not merely

tble- then to provide data arses 2 services ~—. in —

were doing so).

“™

RPC OITA MOAI

VT

24

are not the same thing and, accordingly, has dealt

with them in different statutes containing different

provisions. Whether that fact was the product of

compromise or policy determinations, its existence

cannot be ignored. In determining standing, there-

fore, the courts below properly looked only to the

National Bank Act, and not to the Bank Service

Corporation Act.”

3. Petitioners contend in this Court for the first

time (Br., pp. 39-41) that the judicial review provi-

sions of Section 10(a) of the Administrative Proce-

dure Act, 5 U.S.C. (Supp. IV) 702(a), provide a basis

for standing. Numerous courts of appeals have con-

sidered the question as to whether Section 10(a) was

intended to alter accepted concepts of standing and

have uniformly concluded that it did not eliminate

the requirement that plaintiffs establish a congres-

sional purpose underlying the allegedly violated stat-

utory provisions ‘‘to bestow upon them a legal right

to protection from [the complained of] competition,”

Pennsylvania Railroad Company v. Dillon, 335 F. 2d

-" For present purposes we have assumed that petitioners are

correct in their assertion that a primary purpose of the Bank

Service Corporation Act was to protect some kind of competi-

tive interest of data processing service companies. We note,

however, that the only support that they offer for this asser-

tion is the statement of a single Senator on the floor of the

Senate (Br., p. 35). Such a statement is highly suspect as evi-

dence of the intention of Congreas as a whole. See Duplez v.

Deering, 254 US. 443, 474-475. At the very least, it falls far

short of the legislative history which persuaded this Court

that a primary purpose of the statutory enactment in Hardin

v. Kentucky Utilities was to protect a competitive interest. See

p. 13 and n. 3, supra. This Court need not, however, reach this

point.

wil 25

292, 295 (C.A.D.C.), certiorari denied sub nom. Ameri-

can-Hawatian S.S. Co. v. Dillon, 379 U.S. 945; Kansas

City Power & Light Co. v. McKay, 225 F. 2d 924, 932

(C.A.D.C.), certiorari denied, 350 U.S. 884; Braude v.

Wirtz, 350 F. 2d 702, 707-708 (C.A. 9); Arnold Tours,

Inc. v. Camp, supra, 408 F. 2d at 1151. See also Jaffe,

Judicial Control of Administrative Action (1965)

528-531. Nor can it be said that, for the purposes of

this action, the Bank Service Corporation Act is a

“relevant statute’’ within the meaning of Section

10(a) ; for the reasons we have given, that Act simply

does not apply at all. This being so, petitioners are not

“adversely affected or aggrieved by agency action

within the meaning of a relevant statute.”’

III. THERE Is No Sounp Reason Wuy Tuts Court

SHOULD OVERTURN Its ConsISTENT HoLpincs THaT

STaNDING Is DEPENDENT UPON THE ASSERTION OF A

LEGALLY PROTECTED RIGHT

Apparently conceding the difficulties they face if

this Court adheres to the settled principle that a plain-

tiff claiming standing must show a ‘“‘logical nexus”

between his status—.e., legal posture—and the legal

questions he seeks to have resolved, petitioners seek to

induce this Court to repudiate that principle, chiefly

by an assault on Tennessee Power, supra. Of course,

that case was only one of the many to recognize the

principle. While criticism of the. principle has not

been lacking from those who would prefer a standard

of ‘‘aggrievement in fact,” notably Professor Davis,

few if any courts have consciously departed from it.

a

See pp. 15-16, supra. We submit that there is no sound

reason now to do so.

1. The ‘“‘legal right” test, most strongly stated in

Tennessee Power, is not cireular, as petitioners con-

tend, but embodies important governmental policies

independent of the legality of the acts ultimately in

question. The established test draws a clear and valid

distinction between a plaintiff’s legal interests, which

determine standing, and the issue of the legality of a

defendant’s acts, which is pertinent only if the merits

are reached. For a variety of reasons, the law could

permissibly make the judgment that the legality vel

non of certain types of activity ought to be a matter of

indifference to one or another class of persons. This

may be in order to promote the overall efficiency of

the judicial system by some reduction of the oppor-

tunities for litigation, to avoid undue interference with

the operations of government, to assure proper pres-

26

entation, or, in the case of competitor standing, to aid

a general social policy in favor of competition in eco-

nomie affairs. Allowing established enterprises to op-

pose the entry of new competitors on the ground that

they ‘‘have no right” tends to inhibit entry, and with

it competition. It is not, then, circular to make the

judgment, in the context of a society generally dedi-

cated to the encouragement of competition in economic

affairs, that businessmen should not be free to inter-

fere with prospective competitors in the absence of a

rather specific legislative determination that there are

potential injuries from which they need protection.

Jaffe, op. cit. supra, 509-510; see also Marine Space

__ ——

27

Enclosures v. Federal Maritime Commission, C.A.D.C.,

No. 22,936, July 30, 1969, slip op., pp. 20-21. Such is

precisely the reasoning of Ellerman, Tennessee Power,

and Hardin.

2, It is highly relevant, in a system where the

“legal right” test has been the firmly established

standard for many years, that Congress has known

how to make exceptions when it concludes that pub-

lie policy requires the conferring of a right to review

upon those who ¢an claim only an “agerievement

in fact.” See, e.g., Section 9(a) of the Securities

Act of 1933, 15 U.S.C. TTi(a) (“person aggrieved”’) ;

Section 24(a) of the Public Utility Holding Company

Act of 1934, 15 U.S.C. 79x(a) (same) ; Section 313(b)

of the Federal Power Act, 16 U.S.C. 825/(b) (same) ;

Section 701(f)(1) of the Federal Food, Drug and

Cosmetic Act, 21 U.S.C. 371(f)(1) (persons “ad-

versely affected”); Section 1(20) of the Interstate

Commerce Act, 49 U.S.C. 1(20) (“any party in inter-

est’’). That Congress has not enacted such a provision

in the National Bank Act is especially pertinent be-

cause “the banking field has traditionally been an area

of particular congressional concern marked by legisla-

tion responsive to new problems.’’ First Agricultural

National Bank of Berkshire County v. State Tax

Commission, 392 U.S. 339, 345.”

1 The congressional inaction here cannot be attributed to th

absence of a request for such relief. Petitioner ADAPSO

itself has testified before Congress concerning the need for

review provisions to be written expressly into regulatory

statutes of this kind, and the power of Congress to ensure

review in this matter. Hearings before the House Committee

om Banking and Currency on H.R. 6778, 91st Cong., Ist Sess.,

pp. 527-528, 560, 570-571.

28

As the court below observed (App. 36-37), the spe-

cial “aggrieved persons’’ review provisions have been

enacted by Congress in areas where there has been a

“patently recognized need for judicial review even

though the competitive business controlled is con-

sidered free and otherwise unrestricted”; while one

qualifying as a ‘“‘person aggrieved’’ may be “without

a private ‘legal right’ to protest unauthorized compe-

tition,” he nevertheless is given standing by the review

provision “to act in the public interest’’. This analysis

is fully supported by this Court’s decisions in Federal

Communications Commission v. Sanders Radio Sta-

tion, 309 U.S. 470, 475-478, and Scripps-Howard

Radio v. Federal Communications Commission, 316

US. 4, 14-15. See, also, Office of Communication of

United Church of Christ v. Federal Communications

Commission, 359 F. 2d 994, 1001-1002 (C.A.D.C.);

Associated Industries v. Ickes, 134 F. 2d 694, 702-704

(C.A. 2), vacated as moot, 320 U.S. 707. But Congress

has not considered the regulation of national bank

activities an area warranting such creation of private

attorneys general.

Indeed even if Congress were interested in deputiz-

ing private parties to enforce “the proper functioning

of the national banking system”’ (Pet. Br., p. 18), it

would not necessarily choose parties with limited pri-

vate interests unrecognized by statute, such as peti-

tioners, to do so.” As this Court has recognized, such

13 Without at all conceding that the amicus Sierra Club has

the standing it asserts in the litigation in which it is presently

involved, we note that its situation appears to differ from peti-

tioners’ in this regard. For it claims as the basis of standing not

a private injury unrelated to the statutory scheme invoked, but

a public injury assertedly prohibited by it. Whether Congress

_—

29

parties are not motivated by the ““common concern for

obedience to law,’’ L. Singer & Sons v. Union Pac. R.

Co., 311 U.S. 295, 304, which they profess.

To entrust the vindication of this public in-

terest to a private litigant professing a special

stake in the public interest is to impinge on the

responsibility of the public authorities desig-

nated by Congress, [Id. at 306 (Frankfurter, J.,

concurring for five members of the Court).]

Congress is of course, under no obligation to create

a right, or remedy, for every alleged wrong—even

those assertedly perpetrated by public officials. Nor is

it appropriate for courts to fashion remedies in Con-

gress’ stead—especially where the injury asserted is

not of the type historically regarded as appropriate

for judicial redress. The remedies which Congress

chooses to afford or deny are as significant a part of

the statutory structure as the apparent legal frame-

work it creates. If it delegates authority to an agency

or official with only limited authority for judicial re-

view, it intends the effects of those limitations as much

as any other feature of the scheme. In the absence of

constitutional claims, which petitioners do not advance

here, there is no greater justification for interference

with that feature than with any other.

Adherence to the established rubric of standing,

where Congress has not provided otherwise, does not

leave remediless those who, like petitioners, can estab-

may be thought to have authorized “private Attorney Generals,”

Associated Industries, supra, 134 F. 2d at 704, to act in these

circumstances is a separate issue, not before the Court at this

time.

: ’

lish only aggrievement in fact. Nor does it leave

unprotected the “strong public interest in the fune-

tioning of the banking system” (Pet. Br., p. 19) of

which petitioners claim to be the only guardians,

Underlying much of petitioners’ argument is the

implicit premise that only the courts are both able

and willing to superintend administrative com-

pliance with statutory mandates. But, as the Fifth

Circuit pointed out in Rural Electrification Admin-

istration v. Central Louisiana Electric Co., 354

F. 2d 859, 865, certiorari denied, 385 USS.

815, Congress also is equipped to oversee the

administration of its laws and, in fact exercises that

function. This observation, made in the context of a

complaint regarding non-compliance with the Rural

Electrification Act, is applicable a fortiori to the

Comptroller’s administration of the banking laws. For,

as this Court has observed, “[t]here are important

committees on banking and currency in both Houses

which continually monitor banking affairs and pro-

pose new legislation when changes are felt to be

needed.” First Agricultural National Bank of Berk-

shire County v. State Tax Commission, supra, 392

U.S. at 341.

What petitioners are endeavoring to do in this ae-

tion is to enforce a particular Act of Congress. But,

as we have shown, Congress has made a choice as to

how the public interests reflected in that Act should

be protected. By declining to establish a “person ag-

grieved’’ judicial review provision, Congress has

chosen not to establish persons ‘‘aggrieved in fact”’ as

private attorneys general to represent the public inter-

-

31

est, and it has not given them any private legal inter-

est in enforcement of the Act. Petitioners’ assertion

that ‘‘aggrievement in fact’’ should be the sole meas-

ure of standing would nullify that choice in this and

every other situation where Congress has made it; in-

deed, all of the specific ‘‘person aggrieved’’ review

provisions would become entirely meaningless, This

Court should not disregard the choice that Cungress

has made.

3. Of the countless governmental actions taken

daily, many have at least an indirect adverse economic

impact upon (7.e., result in “aggrievement in fact’’ to)

some citizens or groups. An across-the-board ‘“ag-

grievement in fact” standard would vastly expand the

role of the courts, effectively tearing down the sub-

stantial insulation they have under present general

standing rules from intimate involvement in the af-

fairs of government.” This effect would be felt even

were the courts given some latitude to accept or deny

standing on the basis of the degree of significance of

the alleged statutory violation or of the seriousness or

extent of the aggrievement asserted by the plaintiff.

Such facts frequently would not be susceptible of eval-

uation until after a full trial; there is no reasonably

precise formula that could be devised to determine the

“Some proponents of the elimination of the “legal right”

test of standing have pointed to the relatively few taxpayers

suits brought (where authorized) to challenge state and local

governmental action. Whether or not attributable in some meas-

ure to an inhospitable attitude on the part of state courts to

such suits, this provides no basis for forecasting a like expe-

rience if an aggrievement in fact test were to be applied to

attempts to challenge actions of the federal government.

nn

a

32

sufficiency of aggrievement. The result would be to in-

ject an undesirable element of uncertainty and lack

of uniformity in the resolution of what is essentially

a jurisdictional issue. It would be difficult if not im-

possible in many instances for a potential plaintiff to

make an intelligent judgment in advance of filing suit

whether his aggrievement would be found of sufficient

consequence to confer standing.

No such problems are inherent in the Tennesse

Power view of standing, as amplified in Hardin. Un-

less the aggrieved person can show the invasion of a

personal legal interest, judicial intervention is re-

quired only if Congress has manifested a determina-

tion that there is involved an important publie in-

terest which can be best safeguarded by making

judicial review available. And since there are rela-

tively few statutes containing ‘‘person aggrieved”

review provisions, the problems of evaluating ag-

grievement arise relatively seldom and in well-defined

areas. To be sure, in the larger number of situations

governed by the general rule there may from time to

time be room for legitimate difference of opinion as to

whether the plaintiff has a legally protected right. But

the standards which this Court has evolved are clear,

simple, and comparatively easy of application. In gen-

eral, there is no concrete evidence that, in the utiliza-

tion of the “‘legal right” test over the years, the

courts have encountered in any substantial measure

the difficulties which petitioners claim exist in that

test.

33

In sum, we respectfully submit that this Court

should once again reaffirm—not depart from—the rule

of Ellerman, Tennessee Power and Hardin. That rule

is founded upon the fundamental proposition that,

in our form of government, the function of the judi-

cial branch is essentially that of a guardian of legal

rights and interests—as well as the additional rec-

ognition that a person has no legal right to prevent

competition unless and to the extent that the Jegisla-

ture has chosen to confer that right. These proposi-

tions are just as valid today as they were when

enunciated in Ellerman. And their observance is just

as essential to the proper working of all three

branches of government.

CONCLUSION

For the reasons stated, we respectfully submit that

the judgment of the court of appeals should be

affirmed.

Erwin N. Griswo.D,

Solicitor General.

Wiu14aM D. RUCKELSHAUS,

Assistant Attorney General.

Peter L. Strauss,

Assistant to the Solicitor General.

ALAN S. RosENTHAL,

STEPHEN R. FELSON,

Attorneys.

OcToBER 1969.

APPENDIX

In the United States Court of Appeals for the

Fifth Circuit

No. 25539

RvussELL TROUTMAN, ET AL., APPELLANTS

v.

SarGeNT SHRIVER, Director, OrriceE or Economic

OPPORTUNITY, AND UNITED STATES OF AMERICA,

APPELLEES

Appeals from the United States District Court for the

Middle District of Florida

September 30, 1969

Before: THORNBERRY and Simpson, Circuit Judges,

and Sutrie, District Judge.

Smpson, Circuit Judge: The determinative issue

in this appeal is whether the appellants, as four county

bar associations and a taxpayer-citizen-attorney, have

standing to challenge the constitutionality of the Eco-

nomic Opportunity Act of 1964, as amended, 78 Stat.

508, 42 U.S.C.A. § 2701 et seq., or alleged acts or omis-

sions of the Director of the Office of Economic Oppor-

tunity regarding the establishment of legal aid service

programs in their counties pursuant to the Act.

Appellant Russell Troutman by an amended com-

plaint of January 10, 1967, alleged that Office of Fco-

nomic Opportunity Legal Services Programs had been

instituted in Dade, Volusia and St. Lucie Counties,

(35)

a

36

Florida, and that the Director of the Office of Keo-

nomie Opportunity had plans for imminent institution

of an OEO Legal Services Program in Orange County,

Florida, where Troutman is a citizen, taxpayer and

practicing attorney. The complaint further alleged that

if an OEO Legal Services Program were instituted in

Orange County, Troutman would be deprived of the

privilege and obligation of providing legal services to

those who could not otherwise obtain representation

and that he would be forced to compete with OEO

lawyers for a clientele who could afford to obtain rep-

resentation by Troutman. The complaint prayed for

declaratory and injunctive relief, asserting the inva-

lidity and impropriety of the Economie Opportunity

Act and the impropriety and lack of authority of the

Director’s involvement with the profession of law.

The four local bar associations * moved to intervene

as plaintiffs in Troutman’s suit, charging that the de-

fendants were operating,’ promoting or prospectively

would operate * OEO Legal Services Programs in their

respective counties. Generally the movants sought re-

lief similar to that demanded by Troutman.

The Court below held that none of the appellants

had standing to maintain the action. Without ruling

upon the merits or other jurisdictional defenses inter-

posed by the defendants, the district judge dismissed

Troutman’s amended complaint with prejudice and

denied the motions to intervene. This appeal ensued.

We affirm.

*The Orange County Bar, Osceola County Bar Association,

Seminole County Bar Association, and St. Lucie County Bar

Association.

* St. Lucie County.

>The other three counties.

ee

37

In order to resolve the question whether appellants

have standing to contest the validity and constitution-

ality of the Act or the actions of the Director, it must

be determined whether they are proper persons to re-

quest an adjudication of issues raised by such action.

“The fundamental aspect of standing is that it focuses

on the party seeking to get his complaint before a

federal court and not on the issues he wishes to have

adjudicated.’’ Flast v. Cohen, 1968, 392 U.S. 83, 99,

gg S.Ct. 1942, —, 20 L.Ed. 2d 947, 961. The status

asserted by the person whose standing is challenged

must be examined to ascertain whether there is a

logical nexus between the status asserted and the

claim sought to be adjudicated. Jd. at 102. It is the

existence of a logical nexus which ensures that ‘‘the

party seeking relief has ‘alleged such a personal stake

in the outcome of the controversy as to assure that

concrete adverseness which sharpens the presentation

of issues upon which the court so largely depends for

illumination of difficult constitutional questions.’ ”’ 7.

at 99, quoting Baker v. Carr, 1962 369 U.S. 186, 204,

82 S.Ct. 691, —, 7 L.Ed. 2d 663, 678.

The first status asserted by the appellants is that

of federal taxpayer.

‘The nexus demanded of federal taxpayers

has two aspects to it. First, the taxpayer must

establish a logical link between that status and

the type of legislative enactment attacked. Sec-

ondly, the taxpayer must establish a nexus he-

tween that status and the precise nature of the

constitutional infringement alleged.’’ 7d. at 102.

“TIjn Flast v. Cohen, supra, * * * the [Su-

preme] Court set out the requirements which

must be met by the taxpayer before he has

standing. Essentially they are:

1. that he is in fact a taxpayer;

2. that the tax dollars are being expended in

38

the furtherance of specific government

business ; |

3. that there is a substantial expenditure; and

4. that these expenditures exceed the limits —

imposed by the establishment clause of the —

first amendment on the taxing and spend-

ing powers in Aricle I.”’

Protestants and Other Americans, etc. v. Watson,

D.C. Cir. 1968, 407 F. 2d 1264, 1265 [emphasis

omitted].

It is important for our purposes that in Flast yr.

Cohen the majority pointed out that the Flast

test of taxpayer standing is consistent with the

result of the Court’s prior decision in Frothing-

ham v. Mellon, 1963, 262 U.S. 447, 43 S.Ct. 597,

67 L.Ed. 1078, which ruled that a federal taxpayer

is without standing to challenge the constitution-

ality of a federal statute. See Flast v. Cohen,

supra at 104-105. The difference between Flast and

Frothingham was that in the former the taxpayer

attacked the statute on the ground of its inconsistency

with a specific limitation upon the congressional tax-

ing and spending power: the Establishment Clause of

the First Amendment, whereas in the latter the tax-

payer's challenge was bottomed upon the general pro-

visions of the Tenth Amendment and the Due Process

Clause of the Fifth Amendment. “In essence, Mrs.

Frothingham was attempting to assert the States’ in-

terest in their legislative perogatives and not a federal

taxpayer's interest in being free of taxing and spend-

ing in contravention of specific constitutional limita-

tions imposed upon Congress’ taxing and spending

power.” Flast v. Cohen, supra at 105.

The appellants have not coupled their attack, as tax-

payers, upon the Economie Opportunity Act with any

specific limitation upon Congress’ taxing and spending

power and thus have failed to “establish a nexus be-

susnseeeeneemeeeeeneeemenemnenennnnttiill

1!

39

tween that status and the precise nature of the con-

stitutional infringement alleged.” Id. at 102. There-

fore they were without standing to challenge the Act.

Frothingham v. Mellon, supra.‘

The appellants’ further claims of standing as citi-

gens and attorneys must also fail. Exactly as with the

status of taxpayer qua taxpayer, these claims of status

have not been coupled with any assertion of direct in-

jury in violation of specific constitutional limitations.

“It is an established principle that to entitle a private

individual to invoke the judicial power to determine

the validity of executive or legislative action he must

show that he has sustained or is immediately in dan-

ver of sustaining a direct injury as the result of that

action and it is not sufficient that he has merely a gen-

eral interest common to all members of the public.”

Ex parte Levitt, 1937, 302 U.S. 633, 684, 58 S.Ct. 1,

82 L.Ed. 493. [citations omitted.] See also Dade-Com-

nonwealth Title Ins. Co. v. North Dade Bar Ass’n,

Fla. 1963, 153 So. 2d 723, 726-27.

Neither do appellants have standing to challenge the

Act or the actions of the Director because of their po-

sition as competitors, because they do not have the

type of interest required to confer standing to chal-

lenge the Act in the status of competitors.

‘We have not overlooked our decision in Saxon, Comptroller

of the Currency, ete. v. Georgia Assn. of Independent Insurance

Agents, Inc. et al., 5 Cir. 1968, 399 F.2d 1010, Since that case

involved the Comptroller's approval by regulation of competi-

tion made expressly unlawful by statute, it is inapposite. As

we held there, the insurance agents had a “statutory aid to

standing”, op. cit. at 1018, in addition to their legal right to

protect themselves from unlawful competition. There was thus

presented in that case a dispute in the necessary concrete ad-

versary context. Flast, supra. See the further explication in

Judge Thornberry’s specially concurring opinion in Saxon, op.

cit. at 1019-1021.

40

In Florida, attorneys enjoy no protections from

competition by those qualified to engage in legal sery-

ices. Restricting the practice of law to those who

have been examined and found qualified “is not done

to aid or protect the members of the legal profession

either in creating or maintaining a monopoly or closed

shop. It is done to protect the public from being ad-

vised and represented in legal matters by unqualified

persons * * *.’’ State ex rel. The Florida Bar v.

Sperry, Fla. 1962, 140 So. 2d 587, 595, rev’d on other

grounds, 1963, 373 U.S. 379, 83 S.Ct. 1322, 10 L.Ed.,

2d 428.

The decisions of the courts appear to be uniform in

denying standing to competitors who otherwise pos-

sess no legal right to be free from competition. See

Tennessee Power Co. v. T.V.A., 306 U.S. 118, 137, 59

S.Ct. 423, —, 83 L.Ed. 548, 549 (1939) ; Rural Electri-

fication Admin. v. Central La. Elec. Co., 5 Cir. 1966,

354 F. 2d 859, cert. denied 358 U.S. 815, 87 S.Ct. 34, 17

L.Ed. 2d 54 (1966). These appellants lack such a legal

right and hence lack standing.

The recent 8th Circuit case of Association of Data

Processing Service Organizations, Inc. v. Camp, 8 Cir.

1969, 406 F. 2d 837, cert. granted 395 U.S. 976, —

S.Ct. —, 23 L.Ed. 2d 764 (June 23, 1969), sets forth a

clear summation of the holdings of prior cases as to

the legal interest required for standing to sue as a

competitor:

“Tn summary, a plaintiff may challenge al-

leged illegal competition when as complainant it

pursues (1) a legal interest by reason of pub-

lie charter or contract, Frost v. Corporation

Comm’n, supra, (2) a legal interest by reason

of statutory protection, Baker, Watts & Co. vy.

Saxon, supra, or (3) a ‘public¢ interest’ in which

-

41

Congress has recognized the need for review of

administrative action and plaintiff is signifi-

cantly involved to have standing to represent

the public, FCC v. Sanders Bros. Radio Sta-

tion, supra. From this analysis, it seems clear

that an allegation of ‘illegal competition’ is not

the balancing determinant of a plaintiff’s stand-

ing. The primary search must rest on whether

the plaintiff’s status is one which enjoys a pri-

vate interest entitled to protection or is one

which the law recognizes to be of such legal sig-

nificance to allow a party to act as a public rep-

resentative for a public interest.”

Appellants earnestly argue that the Act itself con-

fers standing upon them by virtue of the “Ichord

Amendment,” section 222(a)(3) of the Act, 42

U.S.C.A. § 2809(a)(3).° It is urged that, while the

amendment does not expressly confer standing upon

attorneys or bar associations as ‘‘aggrieved persons,”’

see, €.g., Scripps-Howard Radio, Inc. v. F.C.C., 1942,

316 U.S. 4, 62 S.Ct. 875, 86 L.Ed. 1229; F.C.C. v. San-

ders Bros. Radio Station, 1940, 309 U.S. 470, 60 S.Ct.

693, 84 L.Ed. 869; it created a right of local bar asso-

ciations to be consulted prior to approval or funding

of legal services programs and by implication confers

‘The Ichord Amendment reads as follows:

“The Director shall make arrangements under which

the State bar association and the principal local bar

associations in the community to be served by any pro-

posed project authorized by this paragraph shall be con-

sulted and afforded an adequate opportunity to submit,

to the Director, comments and recommendations on the

proposed project before such project is approved or

funded, and to submit, to the Director, comments and

recommendations on the operations of such project, if

approved and funded.” 42 U.S.C.A. §2809(a) (3).

42

standing to contest the Director’s actions. We

disagree.*

The Ichord Amendment as originally passed in 1966

provided that the Director was to consult with the

local bar associations, but it was made clear at the

time by the sponsor of the amendment that it was not

intended to give the local ber associations any form

of veto over proposed programs but rather was for

the purpose of giving them an opportunity to present

suggestions and recommendations as to the proposed

programs. See 112 Cong. Rec. 24437 (Sept. 29 1966)’

The provision as originally enacted was amended in

1967 to provide the State bar associations an oppor-

tunity to make comments and recommendations re-

garding proposed projects, but the amendment was

explained as being for the purpose of providing more

helpful assistance to the Director due to the broader

hase and typically better staff assistance which State

bar associations can provide. See 113 Cong. Rec. No.

154, S13856 (Sept. 28, 1967).’

* Appellants contend that the amendment was violated as to

Orange and St. Lucie Counties. The pleadings assert that there

was an O.E.O. Legal Service chartered and about to start opera-

tions in Orange County, while in St. Lucie County the O.E.O.

Legal Services Program was already in operation. The O.E.0.

was then promoting programs in Osceola and Seminole, the

other two counties whose bar associations sought leave to

intervene.

7™Mr. Ichord: “* * * this does not give the local bar associa-

tions a veto over the proposed programs but merely gives the

various bar associations the opportunity to present suggestions

and recommendations thereon.” 112 Cong. Rec. 24437 (Sept.

29, 1966).

® Senator Cooper explained the 1967 amendment which he

introduced, as follows:

The present language of the bill provides that in

assisting in the provision of legal services to the poor.

the director shall make arrangements with the principal

ST

_—

43

We are unpersuaded that the Ichord Amendment

confers standing upon appellants because we perceive

no legislative purpose in that amendment to protect a

competitive interest of appellants. There are times

when competitors are given standing by Congress to

challenge competition which allegedly is in violation

of a statute where the statute itself is said to be en-

acted for the express protection of the class of com-

petitor complaining. In order to fall within this classi-

fication, however, the particular statutory provision

invoked must reflect a legislative purpose to protect a

competitive interest, Hardin v. Kentucky Util. Co.,

380 U.S. 1, 5-6, 88 S.Ct. 651, —, 19 L.Ed. 2d 787, 792

(1968). But where, as here the purpose of the statu-

tory provision is simply to benefit the public at large

by easing the task of administration of the statute no

right, nor legal standing, is conferred.

Appellants’ reliance upon Abbott Laboratories v.

Gardner, 1967, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.

2d. 681, is misplaced. Abbott involved an essentially

regulatory statute requiring the petitioners to make

significant changes in their everyday business prac-

tices, id. at 154, including the possible destruction of

existing property rights, id. at 152, or possible crimi-

nal sanctions for noncompliance, id. at 154. Thus the

Government there acted not as a competitor but as a

regulator interfering with legally recognized rights.

Where legally recognized rights such as the use or en-

joyment of property are sought to be protected by im-

bar associations in the area. My amendment provides

that, in addition, they shall seek the advice and com-

ments of the State bar association. I believe that State

bar associations are more broadly based, and they usually

have a staff which is better able to provide helpful

assistance: 113 Cong. Rec. No. 154, S13856 (Sept. 28,

1967).

44

position of a consultation requirement as a condition

precedent to agency action, the individuals affected by

agency noncompliance with the condition, or organi-

zations representing their interests, may have stand-

ing to contest the action by virtue of the condition,

See Citizens Ass’n v. Simonson, D.C. Cir. 1968, 403 F,

2d 175. Appellants, however, have demonstrated no

legal rights sought to be protected by Congress, there

ordinarily being no right to be free from competition

and the statute having been passed for the benefit of

the public at large.

AFFIRMED,

$ GOVERNMENT PRINTING OFFICE: 1969