First National Bank and Trust Company v. National Credit Union Administration First National Bank and Trust Company, Lexington State Bank v. National Credit Union AdministrationFirst National Bank and Trust Company v. National Credit Union Administration First National Bank and Trust Company, Lexington State Bank v. National Credit Union Administration
Jonathan R. Siegel, Atty., Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., Jay P. Stephens, U.S. Atty., and Douglas N. Letter, Atty., Dept. of Justice, were on the brief, for appellee Nat. Credit Union Admin.
Paul J. Lambert and Teresa Burke were on the brief, for appellees AT&T Family Federal Credit Union and Credit Union National Association, Inc.
Edward C. Winslow and William C. Scott were on the brief, for amicus curiae North Carolina Alliance of Community Financial Institutions.
SILBERMAN, Circuit Judge:
Appellants, four North Carolina banks and the American Bankers Association, challenged the National Credit Union Administration‘s (NCUA) approval of several recent applications by AT & T Family Federal Credit Union (AT & T Family) to expand its membership. According to appellants, the NCUA‘s decisions violated the requirement of the Federal Credit Union Act (FCUA) that membership in federal credit unions be limited to “groups having a common bond of occupation or association.”
I.
Passed in 1934 in the midst of the Great Depression, the FCUA,
To ensure that credit unions fulfilled their purpose of meeting members’ credit needs, Congress restricted credit unions’ management and business activities. For example, a federal credit union is owned and controlled by its members, see
A related provision of the FCUA, the common bond requirement, is at the heart of this case. Section 109 of the Act restricts membership in federal credit unions to “groups having a common bond of occupation or association.”
Appellants challenged several decisions in which the NCUA applied IRPS 89-1 to approve applications by AT & T Family to expand its field of membership. Until recently, AT & T Family‘s membership consisted primarily of employees of AT & T Technologies, Inc., AT & T Network Systems, and Bell Telephone Labs. In late 1989 and 1990, AT & T Family filed eight applications to extend its membership to include groups of employees from other companies such as the American Tobacco Company, Western Auto Supply Company, and WGHP-TV, to name but a few. In all, the NCUA approved the extension of AT & T Family‘s membership to 16 new employee groups. Appellants claimed before the agency and in the district court that IRPS 89-1 ignored the statutory language by allowing groups lacking any common bond between them to join together in a credit union. The banks contended that by allowing AT & T Family to expand to 71,000 members in violation of the statute, the NCUA has allowed the credit union, which is exempt from state and federal income taxes, see
The district court granted NCUA‘s motion to dismiss for lack of standing. The court determined that appellants were not pressing claims “arguably within the zone of interests” protected by the FCUA. See First Nat‘l Bank & Trust Co. v. National Credit Union Admin., 772 F.Supp. 609, 611-13 (D.D.C.1991). Relying on the language of this court‘s post-Clarke decisions on prudential standing, see, e.g., Hazardous Waste Treatment Council v. Thomas, 885 F.2d 918 (D.C.Cir.1989) (HWTC IV );
II.
It should be noted that no one questions appellants’ Article III standing; that appellants will suffer competitive or economic injury is not in doubt. The question before us is whether under the FCUA the banks can claim prudential standing as well. In other words, are they pursuing an interest (not just an objective), see HWTC IV, 885 F.2d at 925,1 arguably within the zone of interests Congress intended either to regulate or protect, and, thus, are they among the class of persons entitled to sue to enforce FCUA‘s restrictions? See Clarke, 479 U.S. at 396, 107 S.Ct. at 755; Data Processing, 397 U.S. at 153, 90 S.Ct. at 829. This “zone of interests” test ensures that standing is granted only to plaintiffs who will not distort congressional objectives. It excludes those plaintiffs whose “interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.” Clarke, 479 U.S. at 399, 107 S.Ct. at 757. Because the banks are not regulated by the common bond requirement, we must inquire whether the banks can be thought to have been “protected” by that statutory limitation on the activities of credit unions. Litigants can qualify as “protected” by a statute if they are intended beneficiaries of the legislation or are nevertheless what we have termed suitable challengers, see HWTC IV, 885 F.2d at 923-24; that is, if their interests are sufficiently congruent with those of the intended beneficiaries that the litigants are not “more likely to frustrate than to further the statutory objectives.” Clarke, 479 U.S. at 397 n. 12, 107 S.Ct. at 756 n. 12.
Appellants claim that they qualify both as intended beneficiaries and as suitable challengers under the FCUA. We agree with the district court, however, that Congress did not, in 1934, intend to shield banks from competition from credit unions. Indeed, the very notion seems anomalous, because Congress’ general purpose was to encourage the proliferation of credit unions, which were expected to provide service to those would-be customers that banks disdained. See 78 CONG.REC. 7259 (1934) (statement of Sen. Barkley) (“[B]ank[s] ... cannot extend credit to
To be sure, as time passed—as credit unions flourished and competition among consumer lending institutions intensified—bankers began to see the common bond requirement as a desirable limitation on credit union expansion. To that end, in the 1970s bankers, according to appellants, became active in lobbying Congress to urge the maintenance of the common bond requirement. But that fact, assuming it is true, hardly serves to illuminate the intent of the Congress that first enacted the common bond requirement in 1934. And we find no indication that Congress was, at that earlier time, concerned about the competitive position of banks.
There remains, however, the more subtle question, whether banks can be thought suitable challengers to enforce a requirement designed to benefit the members—particularly potential borrowers—of credit unions. Appellants rely on the Supreme Court‘s reasoning in ICI and Clarke, and it seems to us the parallels between those cases and the present one are striking. In ICI the securities industry challenged a ruling by the Comptroller of the Currency that would have permitted banks to slip the Glass-Steagall leash and enter what was considered a part of the securities business. See ICI, 401 U.S. at 618-19, 91 S.Ct. at 1092-93. As the Supreme Court later explained in Clarke, the Glass-Steagall Act, which limited the securities underwriting and investment activities of banks, was designed to protect bank depositors from risky bank activities—not to insulate investment bankers, or indeed, any noncommercial bankers, from competition. See Clarke, 479 U.S. at 398 & n. 13, 107 S.Ct. at 756 & n. 13. Nevertheless, because the investment bankers pursued interests congruent with those of the intended beneficiaries, they were permitted to sue in ICI to enforce Glass-Steagall‘s restrictions on banks.
Similarly, in Clarke the ever-vigilant securities industry was permitted to challenge a Comptroller decision that authorized a national bank to offer discount brokerage services not only at its established branches, but also at locations both inside and outside the bank‘s home state. The challenge was based on the McFadden Act, which restricts the interstate branching of national banks. See Clarke, 479 U.S. at 391, 107 S.Ct. at 752. The Act was designed to establish competitive equality between national and state banks and thus to protect smaller banks from competition from out-of-state leviathans, see First Nat‘l Bank v. Walker Bank & Trust Co., 385 U.S. 252, 261, 87 S.Ct. 492, 497, 17 L.Ed.2d 343 (1966), not to protect investment bankers. Nevertheless, the investment bankers had standing to sue. The Supreme Court relied on the correlative congressional objective of preventing national banks from gaining too much (“monopoly“) control over credit and money through “unlimited branching.” Clarke, 479 U.S. at 402, 107 S.Ct. at 758. Given
We take from these cases the principle that a plaintiff who has a competitive interest in confining a regulated industry within certain congressionally imposed limitations may sue to prevent the alleged loosening of those restrictions, even if the plaintiff‘s interest is not precisely the one that Congress sought to protect.3 The limitations may be restrictions on entry—geographic or product line—or they might be, as in our case, limitations on growth, which are akin to entry restrictions. Like more classic entry restrictions, the common bond requirement, by limiting a credit union‘s customer base, effectively prevents the credit union from offering its services and competing in a broader market.
We previously have recognized the particular significance of statutory entry restrictions on prudential standing. In HWTC II, we distinguished the case before us from the Supreme Court‘s cases granting standing to competitors (Data Processing, ICI, and Clarke ), on the grounds that it did not involve an “entry-restricting” statute. See HWTC II, 861 F.2d at 284. Similarly, in Panhandle Producers & Royalty Owners Ass‘n v. Economic Regulatory Administration, 822 F.2d 1105 (D.C.Cir.1987), we noted that “[c]ompetitors have a seemingly unbroken record of success in securing standing” in cases involving regulatory systems that “restrict[ ] entry into a particular field or transaction.” Id. at 1109. Indeed, the district court attempted to distinguish this case from ICI and Clarke on the grounds that the common bond requirement was not an entry restriction.4 See First Nat‘l Bank, 772 F.Supp. at 613.
Appellees, sidestepping the entry-restriction cases, rely primarily on our refinement of prudential standing analysis in HWTC IV. In that case, an organization of companies that treated hazardous waste and marketed products derived from processed waste sued to force the EPA to adopt stricter environmental regulations on other companies so as to create a greater market for their own services and products. We held that HWTC‘s interests (irrespective of its particular objectives in the case before us) were not sufficiently congruent with those of the intended beneficiaries of the statute to make HWTC a suitable challenger. See HWTC IV, 885 F.2d at 924. The treatment firms’ interest was in selling more services and equipment to the regulated companies, and therefore the firms would seek regulations that would increase demand for their product regardless of the effects on the statute‘s intended beneficiaries. We concluded that to have standing under the statute, HWTC would have to have shown a systematic alignment of interests with the statute‘s beneficiaries, see id. at 924, a standard that appellees understandably claim was stricter than our prior characterization of Clarke as a test requiring “less than a showing of congressional
Our decision did not rest on a conclusion that the economic interests of the treatment firms were somehow less deserving than the environmental interests the statute was designed to foster; nor was it based on a view that the firms’ economic incentives were inherently less worthy than the economic objectives of the securities industry plaintiffs in ICI and Clarke. On the contrary, the economic motivations could be thought analogous. If the watchword of the treatment firms in HWTC IV was “treatment is good and more treatment is better,” HWTC IV, 885 F.2d at 925, it might be said that the watchword of all competitors with regard to their potential rivals must be “regulation is good and more restrictive regulation is better.” And one cannot base standing on one‘s mere status as an economic beneficiary of government regulation of others. In Lujan v. National Wildlife Federation, 497 U.S. 871, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990), the Supreme Court said:
[T]he failure of an agency to comply with a statutory provision requiring “on the record” hearings would assuredly have an adverse effect upon the company that has the contract to record and transcribe the agency‘s proceedings; but since the provision was obviously enacted to protect the interests of the parties to the proceedings and not those of the reporters, that company would not be “adversely affected within the meaning” of the statute.
Id. at 883, 110 S.Ct. at 3186.
The distinction between HWTC IV and the Supreme Court‘s Lujan hypothetical on the one hand and ICI and Clarke on the other must be that in ICI and Clarke the potentially limitless incentives of competitors were channelled by the terms of the statute into suits of a limited nature brought to enforce the statutory demarcation dividing the banking and securities industries. The interests the securities industry plaintiffs sought to protect were thus less open-ended and more confined than were the economic interests pursued in HWTC IV, and as a result there was a reduced danger of distorting congressional purpose. By contrast, nothing in the statute in HWTC IV could ensure that there would be any connection at all between the treatment firms’ interests and the statutory purpose. “[T]here is not the slightest reason to think that treatment firms’ interest in getting more revenue by increasing the demand for their particular treatment services will serve [the statute‘s] purpose of protecting health and the environment.” HWTC IV, 885 F.2d at 924. There is, however, a reason to think that a competitor‘s interest in patrolling a statutory picket line will bear some relation to the congressional purpose, because the entry-like restriction itself reflects a congressional judgment that the constraint on competition is the means to secure the statutory end. The restriction connects the economic interests of competitors to the purposes of the statute and yet constrains competitors to a limited role in guarding a congressionally drawn boundary. In these circumstances the plaintiffs can be thought to have interests “systematically aligned” with those the statute is designed to benefit.
The securities industry plaintiffs in ICI and Clarke were not seeking to impose new regulations on banks in areas unrelated to an existing, specific statutory norm simply to provide a demand for their services or to weaken banks as competitors.5 We certainly would not accept as a suitable plaintiff a party who had only a general economic interest in harming a competitor and who, accordingly, sought to impose some new, more onerous regulation upon that competitor. See, e.g., Calumet Indus., Inc. v. Brock, 807 F.2d 225, 228 (D.C.Cir.1986). But, when the plaintiff seeks to enforce a statutory restriction on
Our reasoning in HWTC suggests that our reaction might be different if the banks appeared before us, not asking to patrol the common bond picket line, but seeking a new regulation that would squeeze the credit unions into a smaller market or even eliminate them from the market altogether. It is unnecessary, however, to extend our holding into a definitive answer to appellants’ hypotheticals; we concede that the general issue is devilishly complex. We feel confident, however, that this case is a good deal closer to the paradigm of ICI and Clarke than it is to HWTC, and, therefore, we hold that appellants have standing. The judgment of the district court is reversed and the case remanded.
WALD, Circuit Judge, concurring:
The panel opinion‘s analysis of precedents on “entry-restricting” statutes quite correctly concludes that, under circuit case law, as well as under the Supreme Court‘s directives in Clarke v. Securities Industry Association, 479 U.S. 388, 107 S.Ct. 750, 93 L.Ed.2d 757 (1987), and Investment Company Institute v. Camp, 401 U.S. 617, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971), plaintiff banks have standing to challenge the NCUA‘s interpretation of the common-bond requirement. I agree with my colleagues that, where an entry-restricting or analogous statute is involved, “a plaintiff who has a competitive interest in confining a regulated industry within certain congressionally imposed limitations may do so to prevent the alleged loosening of those restrictions, even if the plaintiff‘s interest is not precisely the one that Congress sought to protect.” Panel opinion (“Panel op.“) at 9.
I originally—and still—disagree, however, with the “suitable challenger” test articulated in Hazardous Waste Treatment Council v. Thomas, 885 F.2d 918 (1989) (HWTC IV ), which requires a “systematic coincidence,” id. at 924, or “systematic alignment,” Panel op. at 1277-78, 1278, of interests between the would-be plaintiffs and the statute‘s intended beneficiaries. As I stated at the time, I find this test without roots either in Supreme Court law1-1 or in the general purposes of standing. See HWTC IV, 885 F.2d at 927-34 (Wald, C.J., dissenting). I recognize, however, that this test is nonetheless part of our circuit law. In that context, I agree with the panel opinion that, when an entry-restricting or analogous statute “reflects a congressional judgment that the restraint on competition is the means to assure the statutory end,” Panel op. at 11, and plaintiffs seek only to “enforce the statutory demarcation,” id., between the beneficiaries of a licensing scheme and their competitors, plaintiffs clearly satisfy the goal of the “suitable challenger” test, i.e., to ensure that plaintiffs are more likely to further than to frustrate the purpose of the statute. See HWTC IV, 885 F.2d at 925; see also Clarke v. Securities Industry Ass‘n, 479 U.S. at 397 n. 12, 107 S.Ct. at 756 n. 12 (citing this as purpose of “zone of interest” test).