you're reserving five reserving five yes your honor ok good morning in may it please the court steve overmyer on behalf of the american bankers association of washington federal this case involves congress's decision to enact legislation to fast act a member bank would be entitled to different compensation or damage in the amounts are pending on the claim vindicated the number of shares on to and possibly other considerations such as bank withdrawal and that that would require individual eyes proof that spring from the members just closing associational standing and i want your response to that if we disagree with the characterization that the government makes the only variable here is the number of stock points about fresh one is brown says that the third prong of hunter's credentials and we're only talking about the third problem the first two problems are disputed second point is brown specifically says in a footnote that it is not deciding whether a simplified damages formula would be for closed in association is standing we have about i think about five district court cases post brown where there are damages awarded the association of standing cases the government admittedly cites a lot of circuit court cases but almost all of them are pretty brown and am almost every single one the legal issue they're very similar here actually  targeted for entirely unrelated transportation expenses and this is an immensely important case there's a lot of money on the line here thing that prohibits congress from from taking money from you know if they have the the like from one regulatory scheme and transferring it to appropriations on another scheme that the transferring of fees to a different scheme is not per se the problem here it's evidence of two issues one is the and the more important one i think for  withdraw to a trial at this point would be not the way to see how this how this ends up on the other thing is that there is a reality about withdrawing which is this is a major kind of regulatory and business decision and so it would take time right if this is like an ocean liner you can't just turn it around and so so i think it's important to understand that there and you can see that actually and how washington federal and how we played this with the amount of time that went into a decision to move from the thrift and then to choose to be a national bank versus state bank your breach of contract it's with the federal reserve bank was with the united states your honor but the but the contract is with doc subscription is with the federal reserve bank right correct your honor per the direction of the statute right so i'm i'm just trying to understand if the stock subscription is issued by the federal reserve by the federal reserve bank is it not appropriated funds instrumentality then maybe the right place to be suing the federal reserve bank is not the court of federal claims because the federal reserve bank doesn't receive money appropriated funds from congress so you know i would disagree with that it's not a federal issue entirely it is a federal instrumentality that hasn't actually been challenged by the government directly at any point in the case this court has said it was it's a case called it's not cited in these brief because it was addressed below which i think we cited about ten cases below that it was a federal instrumentality d o j has said i have the language here but i that the federal reserve is not and and a half i is a federal instrumentalities my recollection your honor but these are the cases we cited below again this issue hasn't been raised on appeal by the by the government the other thing is d o j has said in an internal  you know the definition they have authority make contracts to issue stock so we've been we've been kind of steadfast there from its instrumentality from day one and it really hasn't been challenged other than the occasional foot no there is a footnote the government's opposition and then there they've  it i would also just say i was saying it's a very important case it's also a unique case appellants are aware of no other government regime that's quite like the stock subscription regime that's at issue here and if the government has in say any kind of looked like regimes that are quite like ard of the reserve bank saying you know that you accept there are the terms there so you know separately negotiated or they just based on the statutory requirements from the original federal reserve act so so i guess think you're aware it's cited all over the place that it's very unusual to consider legislation to be termed contracts rather than regulatory regimes and so if we're looking at that and looking at the language in the statute how do you get over the presumption that this wasn't intended to be a contractual arrangement that it's just a regulatory regime express language of the statute what's expressed where does it give anybody the authority to enter into contracts rather than just hundred ten which is just before the factions and you have any what's your best case for the notion that when congress uses language of this tie that they and without anything further that they intended to create a contractual language i guess directly in front of me but it basically the secretary shot into a contractor i think it was something that's a little bit different right that's congress directing somebody to enter a contractual relationship that's a lot more like our more recent cases in the spent nuclear fuel industry where congress directed energy to enter into contractual relationships and they separately negotiated different contracts you don't have that here we don't respect that i disagree because the word subscribe is what makes it directly analogous those cases they might have well as said contract with the federal reserve banks to buy stock machines and is refusing to buy to buy federal reserve bank stock and they don't and again they're directing them to subscribe meaning that the banks then purchase and own the stock in any kind of corporate setting and that's what this is a corporate stock as a corporate organization with the government's established that stock relationship is a contract we say cases going back head of a get to pay other cases but let me ask you this then hypothetically if the government wanted to establish the same kind of regime and require national banks to participate if they want to be termed a national bank and get all the benefits and privileges of that and they wanted to you know make it entirely fee funded and they would issue stock in the light how would they do that and how would they write the statute differently to make it a regulatory regime and not a contract regime they could just well rather than saying that the banks were invited to subscribe to stock they could so so let me step back for a second are the regime was set up as a voluntary regime right when they write what is this is my question just be clear i'm with the exact same voluntary routine with all the same requirements language would congress have used to make it a regulatory regime rather than a contractual thing well they wouldn't have used the word subscribe i guess is the first thing that was with their views well your honor i guess they could say to the extent  stock purchase and i agree your honor i don't think it's a purchase and that in that case you're basically saying that there's no legal way for congress to set up a regulatory regime to have banks in this capacity without making  contractual arrangement that they would have had to have some other type of regulatory conceivably i guess you know they could say ok thanks you have to be and you have to pay you get nothing in response you get nothing else in this case they're saying th faith in the fact that they actually understood that there were you know cause and effect or balances and whatever and offered to give you return on the investment is what turned it into a contractual relationship they could have made you do it for nothing but once they gave you a return that made it a contract rather than a regulation well invited to subscribe invited to join from the beginning to accept the terms of the statute that's what the original statute said even for national banks serve the what if it was invited to join but you get nothing in return without me a contract well it depends on the on the on the on the circumstances of joyner i mean if you're paying to get something back which is what happens here they only stop the government sending on the stock the statutes i see on the stuff i mean that's that's that's kind of fundamental to why this is a contract so i'm trying to think of a hypothetical where they're not getting anything but they're in the system so the system they're in the system then what they're getting something because they belong to the system and are allowed to be a national bank and you know  reality is the vast majority of banks are not members of the federal reserve system they choose not to do it for all kinds of free or all kinds of regulatory regimes that congress makes you apply to enjoying if you want to participate in that industry and what you get is the privilege of operating under some kind of federal charter or federal permission and you what you get is the benefits of allowing to operate in that sphere that's a classic regulatory scheme what they've done here is added a t contractual regimes i mean this isn't a case where we're operating on a level playing field you have the burden of showing that congress intended specifically to contract understood your honor and i don't think knowing what aware of whether they've done so but i i can't say whether they have or they have not i'm asking that question because of this sovereign entity question right now we mr omar was correct we did not contend below that they needed to go to district court in california because the so reserve bank in this instance was acting as a federal interim in tallahassee and effectuating the requirements of the federal reserve act at the behest of the board i think we should start  where we left off with mr omar and then i just get one thing out of the way i know that you argued this differently in the trial court and soley on the reservation of power supplies and you argued not a little bit in the brief but that wouldn't necessarily be inconsistent with a contractual theory would it well i think it would for two reasons your honor one is that the national railroad case says that reservation power is hardly the language of contract so no i get that but that's and i mean if there were clear and elsewhere for instance in the spent nuclear fuel cases which i'm pretty sure you're familiar with congress which they clearly directed contractual arrangements there if there had been a reservation or power was closet says we reserve the right to change this at any time that wouldn't change it from a contractual to a regulatory regime if the rest of the act sounded in contract correct but the plaintiffs would still lose under the hypothetical because under boeing where there was no dispute that there was a contract in the statute itself said title voluntary agreements the actual right at issue did not that's because there was a reservation of rights in the contract it was one of the provisions and that is what the pla s allege here at the federal reserve act makes up the terms and conditions of the alleged agreement so that reservation of powers clause as part of this oppose it agreement and so even if there was a contract based on some other indication of the government's intent that right a six percent dividend would not be a vested right that's contractual and guaranteed and for which they can seek damages much like california could not seek to vindicate their right to terminate their participation in the social security act i think it's pretty telling that when you ask what the number one case is that they have to show that there was an intent to contract here they cited groth which is the milk you know diversion program where the statute the court said instead you very clearly said if you want to participate you have to apply and form the terms of the contract rather than this mill case or set up cases or some other cases where congress directed agencies to enter into contracts i mean the cases they cite the although in both cases there were other and disha that there was clear intent to contract what i think what's clear is that there is no case where a single word like subscribe in a contract was found sufficient to show that the government intended to contract i think it's a little disingenuous to suggest that the federal reserve act was a sort of free invitation for banks to sign up if they want it does say that the that the national banks are invited to signify their except in sport if they don't within a certain time period they lose the right to be a national bank and so yes it is voluntary to a point but it is certainly not the same as a corporation offering its stock to the public for purchase i think that brings us to the next point i'd like to make which is that the server are both said that this is a very unique situation very unique program but then said but we should treat it just like a private stock transaction and for a number of reasons that doesn't hold water this is not like i go down and buy a share of apple they have to join once they're a national bank they have to buy a certain set amount of stock at a certain set price it never loses value and if they so choose they can go get a full return of the money that they've  is very much a unique situation that is not analogous to a private stock transaction there's no intent shown in the federal reserve act for congress to make this a kin to just another private transaction between a corporation and a shareholder  just quickly to address the standing issue that your honor raised i think it's again it's telling that the best case they cite to is brock for the proposition that damages are recoverable in that case the court held that it was a statutory interpretation that was being challenged and they said as a result of the change in the statutory interpretation i think was union members may be intitled to damages but they have to go seek that from the state authority so the association there was not seeking damages in that litigation and if that's the best case they can cite i think it pales compared to the number of circuit court cases that we cited many of which actually predate the brown decision that show that not only are  damages where even where there is a relatively simple written tick still require that individual participation but i think plaintiff sort of skipped over the fact that if the claims themselves require individual participation that the third prong is not satisfied for association with standing supposing instead of reducing the amount of interest paid the government has said we're going to levy on all shareholders and would be an exercise of the federal reserve's power to do that i mean there are certain circumstances that plaintiffs rely on if there's a national emergency then they can rely on their shareholders the members to provide additional capital so that would again just be an exercise of the regulatory or statutory power and again by joining the federal reserve the banks take on the risk that the federal reserve will use any of the powers that it is given by statute or that congress will use the powers of its reserves in them and so that stock doesn't necessarily mean you know it's valid and well the stock itself still does because if they came if if your hypothetical happened washington federal can turn around tomorrow and say we're going to fluctuate a withdraw and they would still have to return one hundred dollars per share of the share that they are and so if we're focused just on that capital that they've invested here they can get a full return from the drug so that the government's view that the federal reserve banks here are   on appropriated funds instrumentality or not i don't know we decided not to challenge jurisdiction on that basis on the basis of the fact that the banks are after operating the federal instrumentalities sort of agents of the federal reserve but they are you know not funded by appropriations i believe from the federal government so i don't know where that fits into the sort of na accounting for the reserve bank assuming cisco is not a federal employee and so their claim here is that a non federal employee who has no particular authority in any statute or regulation can actually buy in the united states for basics i think that would be true if that's the only thing th resist it it's certainly possible that they would have for you know i think it depends on what i've ations were made if there was a contract or if they tried to allege takings a hard to to analyze that particular claim we you so yeah i'll try to grease around with respect to the contract and what is the contract i do want to make clear that it's not all over the place is the statute if the application is subscription the the reserve bank then sends a letter saying dividends are paid six percent and they give what's a stock certificate in advice of holdings saying how much stock is held in how much stock is paid for the actual stock subscription says that they're subscribing to stock with washing federal submitted they say they agree to pay this money so the contract is evidence by all of those things not just the statute that was the offer or the united states i mean it's an it's it's it's the offer of the united states and it's saying it's not that it i guess is not unlike federal offer as either a stock offer that would result in a unilateral implied in fact contract or it's an invitation for washing better submit it's offer is the offer or it could be either one it doesn't matter because the result right so the offer or is either the government or it's that it's washington federal and all of those all of the documents the very woman who's that weren't accepted then to san francisco for the united states so you are at the direction of congress because they've subscribed or been told to subscribe and we talked about rob and we were unable to mention the other cases and mr ruskin did mention the other cases we've relied on are new york airways and radium but again that's only under the theory of the statute being the offer which is what your honor asked directly about i mean i think you know any of the cases that basically say that the government can you know that the rules of private contract rules apply to the government