American Bankers Association v. United States
17-194
| Fed. Cl. | Oct 30, 2017Background
- The Federal Reserve Act (1913) required national banks to subscribe to Federal Reserve Bank stock and provided for a cumulative annual dividend at six percent, while expressly reserving Congress’s right to amend the Act.
- Washington Federal converted to a national bank in 2013, purchased FRB stock (paid 50% of par, with the remainder subject to call), and relied on the historic six percent dividend in deciding to convert.
- The FAST Act (2015) changed dividend payments effective Jan 1, 2016: banks with consolidated assets > $10 billion receive a variable rate (10-year Treasury or 6% whichever is less); banks under $10 billion retained 6%.
- Washington Federal (assets > $10B) alleged its dividend fell substantially in 2016 and sued in the Court of Federal Claims with the American Bankers Association (AB), asserting breach of contract, breach of implied duty of good faith, and a Fifth Amendment takings claim.
- The Government moved to dismiss; the court found it had Tucker Act jurisdiction over the claims but held AB lacked associational standing while Washington Federal had standing as to its monetary injury.
- On the merits the court concluded as a matter of law that neither a contractual/statutory right to a fixed six percent dividend nor a cognizable property interest existed because Congress reserved the power to amend the statute; the complaint was dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Court jurisdiction / Tucker Act money-mandating source | Tucker Act permits claims founded on statutes, contracts, or Constitution; plaintiffs invoke contract and Takings Clause | Government argued no money-mandating contract or property interest exists | Court: jurisdiction exists to decide claims under Tucker Act (no jurisdictional bar) but merits prevail for gov’t as below |
| Standing — American Bankers Association (associational) | AB may represent member banks because issues are common and legal, not individualized | AB lacks privity/standing for damages; harms differ by member and require individualized proof | Court: AB lacks associational standing to seek damages on behalf of members; dismissed from suit |
| Existence of contract / enforceable right to 6% dividend | Washington Fed alleges statutory/contractual right to six percent dividend that cannot be altered | Government: Federal Reserve Act expressly reserves Congress’s right to amend; no irrevocable contractual right was conferred | Court: No enforceable contractual or statutory right to an unchangeable six percent dividend; Congress’s reservation defeats plaintiffs’ contract claim |
| Takings Clause / property interest in fixed dividend | Washington Fed claims dividend right is private property and its reduction is a taking requiring just compensation | Government: no cognizable property interest because dividend subject to statute and legislative reservation; contractual remedies remain | Court: No cognizable property interest in a fixed 6% dividend; no compensable taking; claim fails |
Key Cases Cited
- Testan v. United States, 424 U.S. 392 (Tucker Act confers jurisdiction but not substantive money-mandating rights)
- United States v. Mitchell, 463 U.S. 206 (statutory source must fairly be interpreted as mandating compensation)
- Jan’s Helicopter Serv., Inc. v. FAA, 525 F.3d 1299 (assessing Tucker Act money-mandating sources and standing)
- United States v. Winstar Corp., 518 U.S. 839 (when contractual reliance on specific statutory regulatory terms can create liability)
- Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U.S. 41 (statutory reservation of amendment power limits creation of irrevocable rights)
- Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (sovereign power to legislate remains unless unmistakably surrendered)
- Sinking-Fund Cases, 99 U.S. 700 (treatment of congressional reservation of amendment power)
- Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (property interests are defined by independent sources; mere expectation is not property)
- Warth v. Seldin, 422 U.S. 490 (standards for associational standing)
- American Pelagic Fishing Co. v. United States, 379 F.3d 1363 (absence of assignability and government control undercuts property-right characterization)