Fourth Corner Credit Union v. Federal Reserve Bank of Kansas City, 861 F.3d 1052

Background

Fourth Corner Credit Union (Credit Union) sought a Federal Reserve master account to provide banking services to marijuana-related businesses (MRBs) in Colorado, where recreational marijuana is state-legal.
The Federal Reserve Bank of Kansas City (Reserve Bank) denied the application, citing, inter alia, the Credit Union’s focus on MRBs and other concerns (capital, insurance, de novo status).
The Credit Union sued for a declaratory judgment and injunction compelling issuance of a master account, alleging entitlement under 12 U.S.C. § 248a and amending its complaint to say it will serve MRBs only if authorized by law.
The district court dismissed the amended complaint, concluding it could not use equitable relief to facilitate conduct illegal under the Controlled Substances Act (CSA); it did not resolve statutory entitlement or preemption.
On appeal the three-judge panel issued three separate opinions: Judge Moritz would affirm dismissal with prejudice based on illegality; Judge Matheson would vacate and remand with instructions to dismiss without prejudice on prudential-ripeness grounds; Judge Bacharach would reverse, finding the complaint sufficient and § 248a entitles nonmember depository institutions to access services.
The court’s disposition (a vacatur and remand with instruction to dismiss the amended complaint without prejudice) effectuated the judgment of the two panel members who would allow the Credit Union to proceed; the Court also denied the Reserve Bank’s motion to strike reply addenda.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Can a court grant equitable relief (master account) that would enable the Credit Union to serve MRBs given the CSA?	Credit Union: it will obey federal law and serve MRBs only if lawful; executive guidance (Cole Memo/FinCEN) permits compliance-based banking.	Reserve Bank: granting relief would facilitate federally illegal conduct; courts won’t aid illegality.	Split: Judge Moritz—dismiss with prejudice (illegality bars equitable relief). Panel disposition—remand to dismiss without prejudice (prudential ripeness majority).
Is the suit prudentially ripe after the Credit Union amended to pledge it will serve MRBs only if legal (without reapplying)?	Credit Union: amended allegations are sufficient; denial is final and caused hardship—delay would be harmful.	Reserve Bank: amended position creates a different factual scenario; no one has denied an application made on those terms, so adjudication is premature.	Judge Matheson—case unripe; remand to dismiss without prejudice. Judge Bacharach—ripe. Final disposition follows Matheson’s ripeness view for dismissal without prejudice.
Does 12 U.S.C. § 248a(c)(2) create a non‑discretionary right to Federal Reserve services (and thus a master account) for nonmember depository institutions?	Credit Union/Bacharach: § 248a(c)(2) (and legislative history/agency practice) requires services be available to all depository institutions, so master accounts are available.	Reserve Bank: issuance of master accounts involves discretion (invoking § 342 and institutional judgment).	Judge Bacharach would hold § 248a(c)(2) entitles nonmember depository institutions to services (thus rejecting Reserve Bank’s discretionary-defense); other judges did not decide the statutory question because of illegality/ripeness resolutions.
Is the Credit Union’s Colorado charter preempted by the CSA (obstacle preemption), invalidating its authority and foreclosing a master account?	Reserve Bank: charter facilitates violations of federal law and thus is preempted (obstacle).	Credit Union: charter is general and would only be preempted to the extent it authorizes illegal activity; partial preemption would not bar a master account for lawful functions.	Judge Bacharach: reject wholesale obstacle-preemption argument; at most partial preemption of the charter as to illegal activity, leaving lawful operations intact. Other judges did not resolve preemption.

Key Cases Cited

Doe v. City of Albuquerque, 667 F.3d 1111 (10th Cir. 2012) (motion-to-dismiss standard: accept well‑pleaded allegations)
Warner Bros. Theatres, Inc. v. Cooper Found., 189 F.2d 825 (10th Cir. 1951) (equity will not aid illegal arrangements)
Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806 (1945) (clean‑hands doctrine forbids equitable aid to wrongdoing)
Abbott Laboratories v. Gardner, 387 U.S. 136 (1967) (ripeness framework: fitness and hardship)
Texas v. United States, 523 U.S. 296 (1998) (ripeness: contingent future events may render a claim unripe)
Nat’l Park Hospitality Ass’n v. Dep’t of Interior, 538 U.S. 803 (2003) (prudential ripeness can be raised sua sponte)
Planned Parenthood of Kan. & Mid‑Mo. v. Moser, 747 F.3d 814 (10th Cir. 2014) (Supremacy Clause: federal law preempts conflicting state law)
Miller v. Shell Oil Co., 345 F.2d 891 (10th Cir. 1965) (defense may appear on face of the complaint warranting dismissal)