American Bankers Association v. United States
932 F.3d 1375
| Fed. Cir. | 2019Background
- The Federal Reserve Act (1913) required member banks to subscribe to regional Reserve Bank stock and, from 1913–2015, provided that stockholders were "entitled to receive an annual dividend of six per cent".
- The FAST Act (Dec. 4, 2015) amended the dividend provision: banks with consolidated assets over $10 billion receive a variable dividend equal to the lesser of the 10‑year Treasury rate or 6% (effective Jan. 1, 2016).
- Washington Federal converted to a national bank in 2013, purchased Reserve Bank stock, and received 6% dividends through 2015; in 2016 it received reduced dividends (~2%).
- Washington Federal and the American Bankers Association sued the United States in the Court of Federal Claims, alleging breach of contract (express or implied) and, alternatively, a Fifth Amendment taking; the CFC dismissed the complaint under RCFC 12(b)(6).
- The Federal Circuit affirmed: plaintiffs failed to plead facts showing a contract with the government or a cognizable property interest for a taking claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Federal Reserve Act or the equities arising from stock subscription created an enforceable contract obligating the U.S. to pay 6% dividends | The Act (and subsequent acceptance by subscribing/paying for stock) was an offer or formed an express contract; membership communications (e.g., BSF letter) confirmed a 6% contractual dividend | The statute is regulatory, lacks traditional indicia of a contract (no language "speaks of a contract" or mandate to execute contracts); legislative presumption disfavours treating statutes as contracts | No contract: plaintiff failed to plead objective evidence of government intent to bind itself; breach claim dismissed |
| Whether plaintiffs have an associational or individual standing to sue | ABA asserted associational standing on behalf of affected members; Washington Fed asserted individual standing | Government argued individualized proof would defeat ABA standing; Washington Fed had standing but claims lacked merit | ABA failed associational standing; Washington Fed had standing for appeal but its substantive claims fail |
| Whether amendment to dividend statute effected a Fifth Amendment taking of (a) alleged contractual or statutory right to 6% dividends | Washington Fed claimed a property interest in contractual/statutory right to 6% dividends; loss of that right is a taking | Statutory entitlements do not create vested property when Congress may amend; no contractual right was pled | No taking: no cognizable property interest in a statutory entitlement and no pleaded contract |
| Whether amendment or reduced dividends amounted to a taking of capital investment in Reserve Bank stock | Washington Fed argued the reduction effectively seized the return on its invested capital | Government stressed voluntary participation in a heavily regulated scheme, pervasive government control, and statutory refund/surrender remedies | No taking: participation was voluntary within a regulatory scheme subject to government control; alternative takings theory inadequate to state claim |
Key Cases Cited
- Nat’l R.R. Passenger Corp. v. Atchison Topeka & Santa Fe Ry. Co., 470 U.S. 451 (1985) (statute does not create contractual rights absent clear legislative intent to bind the government)
- Dodge v. Bd. of Educ., 302 U.S. 74 (1937) (statutory benefits do not necessarily vest as contractual rights; presumption against creating contracts by statute)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard to survive dismissal under Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (courts accept well‑pled facts but need not accept legal conclusions)
- Anderson v. United States, 344 F.3d 1343 (Fed. Cir. 2003) (elements required to form a contract binding the government)
- Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980) (expectations alone do not create a protected property interest under the Fifth Amendment)
- Members of Peanut Quota Holders Ass’n, Inc. v. United States, 421 F.3d 1323 (Fed. Cir. 2005) (Congress retains power to amend statutory entitlements; regulatory changes do not necessarily give rise to compensable property rights)