Federal Deposit Insurance v. RBS Securities Inc.
798 F.3d 244
5th Cir.2015Background
- Guaranty Bank purchased hundreds of millions in AAA-rated residential mortgage-backed securities (RMBS) from RBS, Goldman Sachs, and Deutsche Bank; FDIC became receiver after the bank failed in August 2009.
- FDIC sued the underwriters on August 17, 2012, alleging securities fraud under federal law and the Texas Securities Act.
- FDIC filed within 3 years of appointment as receiver (compliant with the FDIC Extender Statute, 12 U.S.C. § 1821(d)(14)) but more than 5 years after the securities sales, falling outside Texas’ 5-year statute of repose.
- Defendants moved for judgment on the pleadings, arguing the state statute of repose barred FDIC’s claims despite the federal extender statute.
- District court dismissed FDIC claims, relying on CTS Corp. v. Waldburger to hold the FDIC Extender Statute preempts state statutes of limitations but not statutes of repose.
- Fifth Circuit reversed: held the FDIC Extender Statute preempts all state time bars (limitations and repose) that would deprive FDIC of its statutory minimum period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FDIC Extender Statute preempts state statutes of repose | Extender statute creates a mandatory federal minimum limitations period for FDIC actions and displaces any shorter state time bar, including repose | CTS requires reading preemption to cover only statutes of limitations, not statutes of repose | Extender statute preempts statutes of repose that would cut off FDIC’s federally guaranteed minimum period |
| How to interpret the phrase "statute of limitations" in the extender statute | Term describes the new federal period created and may encompass state repose periods when necessary to give FDIC three years | Term should be read narrowly (per CTS) to exclude repose because repose and limitations are distinct | Court reads the term in context and structure to cover all state time periods that would shorten the federal minimum |
| Whether CTS Corp. v. Waldburger controls construction of the FDIC extender statute | FDIC: CTS is distinguishable — CERCLA provision framed preemption as an exception to state-law default; extender statute sets federal default | Defendants: CTS shows Congress distinguishes repose vs limitations and preemption should be limited | Court: CTS is distinguishable on text, structure, and purpose; its reasoning does not compel excluding repose here |
| Whether legislative purpose supports broad preemption | FDIC: FIRREA’s purpose was to give receivers time/certainty to investigate claims after bank failures — preemption of repose is necessary | Defendants: Legislative history insufficient; cannot "pursue purpose at all costs" | Court: Purpose, structure, and text support broad preemption to ensure FDIC the statutory minimum investigation period |
Key Cases Cited
- CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014) (interpreted CERCLA provision to preempt state statutes of limitations but not statutes of repose)
- Nat’l Credit Union Admin. Bd. v. Nomura Home Equity Loan, Inc., 764 F.3d 1199 (10th Cir. 2014) (construed an extender statute as displacing state time bars, including repose)
- Fed. Hous. Fin. Agency v. UBS Ams. Inc., 712 F.3d 136 (2d Cir. 2013) (similar construction of an agency extender statute to preempt state limitations/repose that would shorten federal minimum)
- Barton v. FDIC, 96 F.3d 128 (5th Cir. 1996) (explains extender statute pulls live state claims forward but cannot revive claims already expired before receivership)
- O’Melveny & Myers v. FDIC, 512 U.S. 79 (1994) (limits reliance on broad ‘more money’ or fund-depletion rationales when creating federal common law)