BBX CAPITAL, f.k.a. BankAtlantic Bankcorp, Inc., Plaintiff - Appellant, versus FEDERAL DEPOSIT INSURANCE CORP, in its corporate capacity, BOARD OF GOVERNORS OF THE FEDERAL RESERVE BOARD, Defendants - Appellees.
No. 19-11172
United States Court of Appeals, Eleventh Circuit
April 7, 2020
D.C. Docket No. 0:17-cv-62317-JIC
Before ROSENBAUM, JILL PRYOR, and BRANCH, Circuit Judges.
[DO NOT PUBLISH]
Appeal from the United States District Court for the Southern District of Florida
(April 7, 2020)
This case concerns severance payments that Plaintiff-Appellant BBX Capital (“BBX“) seeks to make to five former executives of BankAtlantic (the “Bank“), a federally insured savings bank that BBX‘s predecessor-in-interest, BankAtlantic Bancorp Inc. (“Bancorp“), used to own. Those severance payments were part of a 2011 Stock Purchase Agreement (the “SPA“) that sold the Bank to BB&T Corporation (“BBT“). At that time, however, the Bank was operating in a “troubled” condition, and both the Bank and Bancorp were operating under consent orders that prohibited them from making any so-called golden parachute payments absent approval by the Federal Reserve Bank (the “FRB“) and concurrence by the Federal Deposit Insurance Corporation (the “FDIC“; together with the FRB, the “agencies“). The SPA also called for BBT to reimburse BBX for any severance payments made to the executives.
After the sale of the Bank was finalized, the FDIC notified BBX that it considered the severance payments to be golden parachute payments and that it would approve payments of only twelve months of salary to each executive, significantly less than what the SPA called for. The FDIC also concluded that BBT was required to seek and receive approval before making the reimbursement payments to BBX. Subsequently, the FRB approved the same payment amounts but took no action with respect to approving any payments over 12 months of salary because the FDIC had already prohibited any additional payments.
BBX then filed this action claiming that the agencies’ decisions were arbitrary and capricious and violated due process. The district court dismissed BBX‘s action against
I.
A. Legal Framework
In 1990, Congress added
(A) [A]ny payment (or any agreement to make any payment) in the nature of compensation by any insured depository institution or covered company for the benefit of any institution-affiliated party pursuant to an obligation of such institution or covered company that—
(i) is contingent on the termination of such party‘s affiliation with the institution or holding company; and--
(ii) is received on or after the date which—
(III) the institution‘s appropriate Federal banking agency determines that the insured depository institution is in a troubled condition . . .
The FDIC‘s implementing regulations define “golden parachute” in a largely similar
The regulations also set forth the process by which a covered company can seek and receive approval to make golden parachute payments. A covered company that intends to make a golden parachute payment must file an application with the FDIC and with its primary federal regulator, in this case the FRB. See
To gain regulatory approval to make a golden parachute payment, the applicant must first “demonstrate” and “certify” that it is not aware of any reason to believe the IAP (i) has “committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse,” (ii) was “substantially responsible” for the institution‘s troubled condition, or (iii) has “violated any applicable Federal or State banking law or regulation.”
If that threshold certification requirement is satisfied, then the regulations provide for three categories of permissible payments, only two of which are relevant here: the “regulator‘s-concurrence exception” and the “change-in-control exception.”
In determining whether to permit a payment under one of the listed exceptions, § 359.4(b) provides that the FDIC and the FRB “may consider” the following factors:
(1) Whether, and to what degree, the IAP was in a position of managerial or fiduciary responsibility;
(2) The length of time the IAP was affiliated with the insured depository institution or depository institution holding company, and the degree to which the proposed payment represents a reasonable payment for services rendered over the period of employment; and
(3) Any other factors or circumstances which would indicate that the proposed payment would be contrary to the intent of section 18(k) of the Act or this part.
B. Factual Background
In 2011, Bancorp sought to sell the Bank, which it owned entirely, to BBT
In the wake of the 2008 Great Recession, however, both Bancorp and the Bank had been deemed to be, and remained in 2011, in “troubled condition,” were covered companies, and were operating under public consent orders that, among other things, prohibited the making of any golden parachute payments unless Bancorp complied with the FDIC‘s corresponding regulations. In addition, BBT‘s acquisition of the Bank and Bancorp‘s merger with BBX, under the SPA, required regulatory review and approval. To expedite that approval process, Bancorp agreed that it would not make the Proposed Payments without either a determination by both the FDIC and the FRB that the payments were not golden parachutes, or FRB and FDIC approval of the payments. BBT agreed to the same conditions with respect to its reimbursement payments. The sale of the Bank to BBT closed on July 31, 2012, with the non-objection of the FDIC and the FRB.
The following year, the FDIC notified BBX that the proposed severance payments (and any reimbursements) were golden parachutes that could not be made without FRB approval and FDIC concurrence. With respect to two of the executives, DeVaux and McClung, the FDIC found that though those executives had previously executed severance agreements in 1999 and 2001, respectively, the Proposed Payments set forth in the SPA replaced payments due under the earlier agreements.3 Finally, the FDIC determined that the reimbursement payments from BBT to BBX also constituted indirect golden parachute payments and therefore required approval.
In September 2013, BBX submitted its applications to make the Proposed Payments to each of the executives but also reaffirmed its disagreement about the applicability of the golden parachute provisions.
The FDIC issued its decisions in January 2018. It first confirmed that the Proposed Payments were subject to the golden parachute regulations. Quoting the preamble to its golden parachute regulations, the FDIC noted that § 1828(k)(4)(A)(ii) “provides that any payment which is contingent on the termination of an IAP‘s employment and is received on or after an institution or holding company becomes troubled is a prohibited golden parachute. If this payment is prohibited under the prescribed circumstances, it is prohibited forever.” So changes to the corporate structure—that is, BBT‘s purchase of the Bank and BBX‘s exit from the banking industry—did not change the applicability of the restrictions.
In addition, the FDIC determined that BBX is subject to golden parachute regulations
Then, turning to whether the Proposed Payments were permissible, the FDIC concluded that it would not approve payments in any amount above one year‘s salary for each executive. The FDIC explained that its decision “fully considered Bancorp‘s and the Bank‘s supervisory history, BBX‘s status as successor to Bancorp, the agreements at issue, and the text, structure and intent of Section 1828(k), the certification factors found at 12 C.F.R. § 359.4(a)(4), and the discretionary evaluative criteria found at 12 C.F.R. § 359.4(b).”
Specifically, the FDIC determined that it “would have no objection and would concur, if the FRB were to approve payment . . . in [an] amount . . . representing twelve months salary” under the change-in-control exception. But though additional payments could be permitted under the regulator‘s-concurrence exception, the FDIC determined that additional payments under that exception were not justified based on its internal guidance and the § 359.4(b) factors. In reaching those conclusions, the FDIC considered that the executives had limited responsibility for the Bank‘s troubled condition that “arose in the context of a protracted national economic downturn” and that BBT had acquired the Bank in an unassisted transaction without loss to the FDIC. Nonetheless, the FDIC found that approval of the entire Proposed Payment would be contrary to the intent of the golden parachute restrictions and that independently supported its one year‘s salary determination.
About two weeks later, the FRB issued its decision. The FRB approved payment of 12 months of salary under the change-in-control exception. As to any excess amounts potentially permissible under the regulator‘s-concurrence exception, though, the FRB determined that “no further action [wa]s required” and explicitly “t[ook] no action with regard to those payment amounts” because “FDIC concurrence,” which had already been withheld, “is required before those payments can be made.” Finally, the FRB stated, “It is anticipated that BB&T will reimburse BBX Capital for the golden parachute payments pursuant to Section 5.7(h) of the [SPA]. BB&T must request approval under 12 C.F.R. part 359 prior to making reimbursements for the golden parachute payments.”
In response, BBX sued the FDIC and the FRB under the Administrative Procedure Act (“APA“) and the Due Process Clause of the Fifth Amendment. BBX‘s amended complaint asserts that (1) the FDIC‘s determinations that the Proposed Payments are golden parachute payments and the agencies’ refusal to approve the full Proposed Payment amounts were arbitrary and capricious (Counts I and II); (2) the agencies violated BBX‘s due-process rights by requiring BBT to file a second application before reimbursing BBX (Count IV); and (3) the court should declare that BBX is authorized to make the
The district court subsequently granted summary judgment in favor of the FDIC and dismissed the FRB for lack of jurisdiction, concluding that the FRB was not responsible for any injury BBX sustained. We now affirm.5
II.
We turn first to BBX‘s argument that the district court erroneously concluded that BBX lacked standing to sue the FRB. We review standing determinations de novo, CAMP Legal Def. Fund, Inc. v. City of Atlanta, 451 F.3d 1257, 1268 (11th Cir. 2006), and find that BBX‘s arguments lack merit.
“[S]tanding is an essential and unchanging part of the case-or-controversy requirement of Article III[,]” which the party invoking federal jurisdiction has the burden of proving. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). “[T]he irreducible constitutional minimum of standing under Article III consists of three elements: an actual or imminent injury, causation, and redressability.” Hollywood Mobile Estates Ltd. v. Seminole Tribe of Fla., 641 F.3d 1259, 1265 (11th Cir. 2011) (internal quotation marks omitted).6
The causation element, which we focus on here, requires “a causal connection between the injury and the conduct complained of—the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court.” Lujan, 504 U.S. at 560 (alterations adopted). That requirement does not disappear simply because the plaintiff has named an administrative agency as a defendant. Instead, as with any party that is dragged into court, a plaintiff must allege how the agency‘s action or inaction caused the plaintiff‘s alleged injury. See Hollywood Mobile Estates Ltd., 641 F.3d at 1265-66. Simply describing an agency‘s regulatory responsibilities is not enough. Id. On the other hand, standing is not defeated merely because the complained of injury can be fairly traced to multiple parties. Loggerhead Turtle v. Cty. Council of Volusia Cty., Fla., 148 F.3d 1231, 1247 (11th Cir. 1998).
BBX first argues that it has standing to sue the FRB because the FRB issued its decision after the FDIC issued its own decision. That argument is premised on the text of the regulator‘s-concurrence exception, which states that a golden parachute payment is permissible if “[t]he appropriate federal banking agency [the FRB], with the written concurrence of the [FDIC], determines that such a payment or agreement is permissible[.]”
Next, plaintiff argues that the FRB‘s substantive decision, as opposed to the timing of that decision, injured it. We disagree.
As an initial matter, the FRB approved 12 months of salary, the maximum available, under the change-in-control exception. That decision did not harm BBX.
As to the regulator‘s-concurrence exception, the FRB explicitly took no action because the FDIC had already prohibited any payment under that exception. Because golden parachute payment approval under that exception requires two “yeses” from the governing agencies, even if the FRB had approved payments in excess of 12 months’ salary, no payment could be made. So again, it was the FDIC‘s decision to prohibit any payment in excess of 12 months’ salary, and not the FRB‘s non-decision, that harmed BBX.
Facing the fact that the FRB‘s non-decision did not harm it, BBX asserts that it was harmed by the FRB‘s decision to “rubberstamp” the FDIC‘s decision. To begin, that argument is factually incorrect because, as to the regulator‘s-concurrence exception, the FRB neither approved nor rejected the FDIC‘s decision. So it didn‘t rubberstamp anything.
Pointing to Strickland v. Alexander, 772 F.3d 876, 885-86 (11th Cir. 2014), BBX argues that even the FRB‘s performance of a ministerial task supports Article III standing. But there, we did not hold that the performance of a ministerial task alone could support standing. Rather, we held that when an injury traceable to a defendant exists, the ministerial nature of the action taken—i.e., the causal connection—will not somehow void the injury or causation and thereby defeat standing. See Alexander, 772 F.3d at 885-86.
BBX‘s reliance on Loggerhead Turtle is similarly misplaced. As the district court explained, “the critical factual difference[] between this case and Loggerhead Turtle” is that the Loggerhead Turtle defendant had “absolute authority to issue environmental ordinances that would . . . prevent plaintiffs’ injuries. That is not so here, where the FRB has no authority whatsoever to control the FDIC—an independent agency.”
Finally, BBX argues that it was harmed by the FRB‘s determination that BBT must seek approval before reimbursing BBX. True, the FRB‘s decision letter stated, “BB&T must request approval under 12 C.F.R. part 359 prior to making reimbursements for the golden parachute payments.” But that wasn‘t an adverse decision; it was a statement of the law, as interpreted by the FDIC. The FDIC had already determined that the payments qualified as golden parachute payments, and the FRB had no authority to override the interpretation by an independent agency.
Moreover, in order to expedite approval of the SPA, BBX and BBT contractually agreed that the Proposed Payments would not be made unless both the FRB and the FDIC determined the payments were not subject to the golden parachute provisions.
In sum, because BBX has not shown any injury it has sustained is fairly traceable to an FRB action or inaction, BBX does not have standing to sue the FRB.
III.
Next, we turn to BBX‘s argument that the district court erred by granting summary judgment in favor of the FDIC. BBX makes two overarching arguments in support of its primary APA claims. First, BBX asserts that the FDIC decision to classify the Proposed Payments as golden parachute payments was arbitrary and capricious. Second, BBX contends that even if that decision was not arbitrary and capricious, the FDIC‘s denial of any payments in excess of 12 months’ salary for each executive was itself arbitrary and capricious. Finally, BBX argues that the FDIC‘s requirement that BBT obtain approval before reimbursing BBX was arbitrary and capricious and violated the Due Process Clause.
We review a grant of summary judgment de novo. Preserve Endangered Areas of Cobb‘s History, Inc. v. U.S. Army Corps of Eng‘rs, 87 F.3d 1242, 1246 (11th Cir. 1996). Summary judgment is proper if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Federal courts review challenges to agency decisions under the standard set forth by the APA. See
arbitrary and capricious where the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in view or the product of agency expertise.
Id. (quoting Alabama-Tombigbee Rivers Coal. v. Kempthorne, 477 F.3d 1250, 1254 (11th Cir. 2007)).
Relatedly, “[w]hen Congress has explicitly left a gap for an agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation, and any ensuing regulation is binding in the courts unless procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute.” United States v. Mead Corp., 533 U.S. 218, 227 (2001) (internal citation and quotation marks omitted). And “[a]n agency‘s interpretation of its own regulations is controlling unless plainly erroneous or inconsistent with the regulation.” Sierra Club v. Johnson, 436 F.3d 1269, 1274 (11th Cir. 2006) (internal quotation marks omitted). But when a regulation merely parrots the language of the authorizing statute, the question for the courts is the meaning of the statute. See Gonzales v. Oregon, 546 U.S. 243, 257 (2006).
A.
BBX first contends that the golden parachute statute does not cover the payments at issue here. Specifically, BBX argues that the FDIC has (1) erroneously decided to apply the golden parachute provisions in perpetuity to any institution ever classified as “troubled” and (2) erroneously concluded that the SPA fell within the plain language of the statutory regime. Those arguments fail for essentially the same reason: the golden parachute provisions focus on qualifying payments, not on qualifying institutions.
Chevron requires us to first look at the plain meaning of the statute.8 Chevron U.S.A. Inc. v. NRDC Inc., 467 U.S. 837, 842-43 (1984). If it is unambiguous and does not lead to absurd results, then the analysis ends there. Packard v. Comm‘r, 746 F.3d 1219, 1222 (11th Cir. 2014); Silva-Hernandez v. U.S. Bureau of Citizenship & Immigration Servs., 701 F.3d 356, 363 (11th Cir. 2012) (“This Court‘s one recognized exception to the plain meaning rule is absurdity of results.“). “In determining whether a statute is plain or ambiguous, we consider the language itself, the specific context in which that language is used, and the broader context of the statute as a whole.” In re BFW Liquidation, LLC, 899 F.3d 1178, 1188 (11th Cir. 2018) (internal quotation marks omitted). A statute is ambiguous “if it is susceptible to more than one reasonable interpretation.” Id. Only if we determine the statute is ambiguous do we reach the second step of Chevron, which requires us to defer to the agency‘s construction of a statute it administers if that construction is permissible. Chevron, 467 U.S. at 842-43.
Section 1828(k) authorizes the FDIC to prohibit or limit any golden parachute payment or any agreement to make such a payment: “The term ‘golden parachute payment’ means any payment (or any agreement to make any payment) . . . that (i) is contingent on the termination of such party‘s affiliation with the institution . .
Rather than addressing the plain language of the statute, BBX argues that Congress did not intend for the statute to be applied to well-performing executives of institutions that have recovered from their troubled state. We are unconvinced by that argument for a host of reasons. First, whatever supposed intent BBX gleans from its reading of the statute, we may not ignore the plain meaning of the statutory text unless it leads to absurd results, which it does not. Second, the Bank was still a “troubled” institution at the time the SPA was executed, so it had not “recovered.” Third, despite BBX‘s assertion to the contrary, the FDIC does not apply the golden parachute provisions to once-troubled institutions in perpetuity.9 Rather, it applies the provisions to qualifying payments and agreements to pay in perpetuity. So if the Bank was in fact no longer “troubled,” then it could have executed new severance agreements that would not have been subject to the golden parachute restrictions.
The FDIC‘s focus on payments and agreements to make payments that qualify as golden parachutes is reasonable and makes sense. A contrary reading would allow otherwise prohibited golden parachute payments to be made through simple corporate restructuring or by delaying the payments until after the institution is either no longer covered (as is the case here) or until after the institution is no longer “troubled.” See, e.g., Council for Urological Ints. v. Burwell, 790 F.3d 212, 225 (D.C. Cir. 2015) (upholding as reasonable statutory interpretation that prevented evasion); NRA v. Brady, 914 F.2d 475, 481 (4th Cir. 1990) (same).
BBX‘s final two argument can be dispatched with alacrity. First, BBX argues that the proposed payments do not qualify as golden parachute payments because BBX was under no obligation to pay severance unless and until the sale of the Bank to BBT closed, at which point BBX would completely exit banking, making it no longer subject to FDIC regulations. Cf.
Second, BBX argues that the Proposed Payments to McClung and DeVaux are not golden parachute payments because those two executives had executed severance contracts in 1999 and 2001, when the Bank was not in a troubled condition. That argument fails because, pursuant to the SPA, Bancorp
Moreover, though the prior severance agreements did not qualify as golden parachutes, if the two executives were terminated in 2011 (without the SPA superseding the earlier agreements), the golden parachute provisions would nevertheless apply to payments due under those agreements. See
Because the Proposed Payments fall directly under the plain language of the statute, we cannot conclude that the FDIC‘s decision to apply those provisions was arbitrary or capricious.
B.
BBX next complains that the FDIC‘s decision to deny any payment to the five executives in excess of 12 months’ salary under the regulator‘s-concurrence exception was arbitrary and capricious. BBX argues that the FDIC‘s decision was arbitrary and capricious because the FDIC failed to consider evidence that the five executives committed no fraudulent acts or omissions or insider abuses, were not otherwise responsible for the troubled condition of the Bank, and to the contrary, steered the bank through the Great Recession to the benefit of depositors.
BBX‘s argument gets the regulatory framework wrong. Ordinarily, payments that qualify as golden parachute payments are prohibited unless excepted and deemed permissible.
We also conclude that the FDIC‘s analysis of the discretionary factors set forth in § 359.4(b) supports its decision.10 First, the FDIC found that each of the executives
As to the third factor, which calls for a more wide-ranging inquiry, the FDIC “fully considered that the Bank‘s troubled condition arose in the context of a protracted national economic downturn, which hit Florida markets particularly hard.” It also accounted for the fact that the Bank was acquired in an unassisted transaction without loss to the FDIC or taxpayer funds. “Nonetheless, the FDIC f[ound] that approval” of the full Proposed Payment would be “contrary to the intent” of § 1828(k) because “executives at the helm of” troubled institutions “should not be awarded windfall payments.” Congress‘s primary focus, in enacting the golden parachute provision, was to prevent executives from “vot[ing] themselves generous bonuses at the expense of the institution or company . . . .” 136 Cong. Rec. E3684-02, E3687, 1990 WL 206971 (Oct. 27, 1990); H.R. Rep. 101-681(I), 1990 U.S.C.C.A.N. 6472, 6588 (Sept. 5, 1990) (same).11 That‘s the position the executives were in here.
Nor is there any indication that the FDIC relied on factors that Congress did not intend for it to consider. And we find no merit in BBX‘s remaining contentions.
In short, the FDIC‘s decision was not arbitrary and capricious because the FDIC did exactly what it was supposed to do. It considered the discretionary factors, it considered additional factors that weighed in BBX‘s favor, and it neither refused to consider relevant factors nor relied on irrelevant factors. The explanations the FDIC offered for denying additional payments were reasonable and did not run counter to the evidence. We therefore affirm.
C.
Finally, BBX argues that the FDIC‘s requirement that BBT seek approval before reimbursing BBX was arbitrary and capricious because it did not offer any reasoned basis for the requirement. But in its April 2013 correspondence, the FDIC did explain why it considered BBT‘s reimbursement payments to be “indirect” golden parachute payments. The FDIC‘s final determination letters incorporated that 2013 correspondence by reference. The decision was therefore not arbitrary or capricious for failure to provide a reasoned analysis and, in fact, we find the FDIC‘s analysis reasonable.
Nor did the decision violate due process. Other than claiming that it has a property interest in the reimbursements—which it no doubt does—BBX does not explain how its due-process rights
IV.
For the reasons we have described, we affirm the district court‘s dismissal of the claims against the FRB for lack of standing and affirm the grant of summary judgment in favor of the FDIC. We also CANCEL ORAL ARGUMENT in this case.
AFFIRMED.