Jerry Von Rohr v. Reliance Bank
826 F.3d 1046
| 8th Cir. | 2016Background
- Von Rohr was an executive at Reliance Bank; the bank notified him in June 2011 that his employment would not be renewed effective September 1, 2011, though his contract allegedly had one year remaining.
- Von Rohr demanded payment for the remaining year; the bank asked the FDIC whether such payment would be a prohibited “golden parachute” under 12 U.S.C. § 1828(k) and 12 C.F.R. pt. 359.
- The FDIC concluded Von Rohr was an institution-affiliated party (IAP) seeking a golden parachute from a bank in troubled condition and that post-termination payments for services not rendered constituted prohibited golden parachute payments; it did not reach an exception because the application was deficient.
- Von Rohr sued the bank and the FDIC for breach of contract and sought declaratory relief; the district court stayed the case while he applied to the FDIC and later upheld the FDIC determination and granted summary judgment for the bank on impossibility grounds.
- On appeal, the court reviewed the FDIC action for arbitrariness and the district court’s summary judgment de novo, ultimately affirming that the payment was contingent on termination and thus a prohibited golden parachute, and that the bank’s contractual duty was rendered impossible.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FDIC’s determination merits deference given alleged inconsistent agency positions | Von Rohr argued FDIC previously suggested golden parachute rules do not bar salary/bonus or litigation recoveries, so its action is inconsistent | FDIC/Bank argued its letter was consistent (it barred post-termination payments for services not rendered) and distinguished statutory damages from contract claims | Court upheld deference; FDIC’s distinction and application were reasonable |
| Whether the payment was "contingent on" termination under 12 U.S.C. § 1828(k) | Von Rohr argued he would have been paid the same if he had worked the remaining year, so payment is not contingent on termination | FDIC argued the obligation arose because of termination (or continued employment), so it is properly characterized as contingent on termination | Court held agency’s characterization was not arbitrary; payment was contingent on termination |
| Whether FDIC regulation improperly covers payments not expressly payable "solely" on termination (regulatory scope) | Von Rohr urged a narrow reading limiting FDIC to arrangements that expressly contemplate sole compensation upon termination | FDIC argued a narrow rule would create a loophole allowing functional golden parachutes to evade regulation | Court rejected Von Rohr’s narrow construction as creating an unacceptable loophole and affirmed FDIC interpretation |
| Whether the bank’s performance was excused (impossibility) because FDIC barred payment and whether the bank failed to pursue an exception | Von Rohr argued the bank could have applied for FDIC approval and thus cannot claim impossibility | Bank showed it could not certify lack of information indicating IAP responsibility (citing board letter) and Von Rohr failed to submit a proper application or rebut evidence | Court held FDIC action made performance impossible; bank satisfied impossibility defense and summary judgment was proper |
Key Cases Cited
- El Dorado Chemical Co. v. EPA, 763 F.3d 950 (8th Cir. 2014) (standard for arbitrary and capricious review of agency action)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (deference to reasonable agency statutory interpretation)
- Perrin v. United States, 444 U.S. 37 (1979) (statutory definitions control over common meaning)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (standard for summary judgment regarding material factual disputes)
- McCarron v. FDIC, 111 F.3d 1089 (3d Cir. 1997) (vesting of certain retirement benefits in FDIC receivership context)