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Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 12, 2013 Decided May 21, 2013

No. 12-5170

DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE

FOR THE TRUSTS,

APPELLEE

ANCHORAGE CAPITAL GROUP, L.L.C., ET AL.,

APPELLANTS

v.

FEDERAL DEPOSIT INSURANCE CORPORATION, IN ITS

CAPACITY AS RECEIVER OF WASHINGTON MUTUAL BANK, 

ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:09-cv-01656)

William W. Taylor III argued the cause for appellants. With

him on the briefs were Shawn P. Naunton and Thomas P.

Vartanian. 

Jerome A. Madden, Counsel, Federal Deposit Insurance

Corporation, argued the cause for appellees FDIC-Receiver. 

With him on the brief were Kathryn R. Norcross, Acting

Assistant General Counsel, and Lawrence H. Richmond, Senior

Counsel. Colleen J. Boles, Assistant General Counsel, Federal

USCA Case #12-5170 Document #1437143 Filed: 05/21/2013 Page 1 of 13
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Deposit Insurance Corporation, Scott H. Christensen, and Robert

L. Shapiro entered appearances.

Brent J. McIntosh argued the cause for appellees JP Morgan

Chase Bank, et al. With him on the brief was Robert A. Sacks.

Talcott J. Franklin and Dennis C. Taylor were on the brief

for appellee Deutsche Bank National Trust Company, as Trustee

for the Trusts. Tanya S. Chutkan entered an appearance.

Before: TATEL, Circuit Judge, and SILBERMAN and

SENTELLE, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

SILBERMAN.

Concurring opinion filed by Senior Circuit Judge

SILBERMAN.

SILBERMAN, Senior Circuit Judge: Appellants, holders of

senior notes issued by Washington Mutual — a failed bank —

sought to intervene in litigation between Deutsche Bank, the

FDIC (Washington Mutual’s receiver), and J.P. Morgan Chase. 

The district court denied intervention under Rule 24 of the

Federal Rules of Civil Procedure. We affirm, but conclude that

the appellants lack standing.

I

Prior to its collapse, Washington Mutual was the sixthlargest bank in the United States; its closure and receivership is

the largest bank failure in American financial history. In

September 2008, the U.S. Office of Thrift Supervision seized

Washington Mutual Bank and placed it into receivership with

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the FDIC.1 At the same time, the FDIC entered into a Purchase

and Assumption Agreement with J.P. Morgan, under which J.P.

Morgan agreed to purchase all of Washington Mutual’s assets,

including its subsidiaries, and certain of its liabilities. FDIC

also agreed to indemnify J.P. Morgan for losses related to any

liabilities that J.P. Morgan did not assume under the Agreement,

and the FDIC’s corporate entity guaranteed this indemnity

obligation.

In August 2009, Deutsche Bank sued the FDIC in the

District Court for the District of Columbia, alleging breach-ofcontract claims in connection with a series of residential

mortgage securitization trusts created, sponsored, or serviced by

Washington Mutual and its subsidiaries, for which Deutsche

Bank served as trustee. Deutsche Bank asserted that

Washington Mutual agreed to repurchase loans that violated

representations and warranties contained in the governing

documents for these trusts, and it sought several billion dollars

in damages from Washington Mutual’s successor. 

FDIC filed a motion to dismiss, arguing that it was not

liable for any of these alleged liabilities under the securitization

trusts because it transferred those liabilities and obligations to

J.P. Morgan. Deutsche Bank then filed an amended complaint

adding J.P. Morgan as a defendant and seeking a declaratory

judgment from the district court as to whether FDIC or J.P.

Morgan had assumed these liabilities, or whether both assumed

them in whole or in part. Those three parties — Deutsche Bank,

1

 The FDIC’s function as a receiver for failed financial

institutions, defined in 12 U.S.C. § 1821, is separate from its function

as a corporate insurer of deposit accounts, defined in 12 U.S.C.

§ 1823. The parties refer to these entities as FDIC-Receiver and

FDIC-Corporate respectively, but we will use “FDIC” to refer to its

role as receiver, unless otherwise specified. 

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FDIC, and J.P. Morgan — are engaged in ongoing, three-way

litigation about two principal issues: (1) which successor

assumed Washington Mutual’s liabilities for Deutsche Bank’s

claims; and (2) the merits and proper damages for those

underlying breach-of-contract claims.

But that’s only background for the case on appeal. A group

of direct holders in Washington Mutual senior notes moved to

intervene in this action as of right under Rule 24(a) of the

Federal Rules of Civil Procedure.2

 FDIC has recognized these

senior notes as legitimate liabilities of the Washington Mutual

receivership, so the Proposed Intervenors will be entitled to

some pro rata share of the receivership’s assets when FDIC

administers payment to Washington Mutual’s creditors. These

note holders sought to intervene as defendants, alleging that any

judgment in Deutsche Bank’s favor against FDIC could reduce

or exhaust the funds in the receivership and therefore jeopardize

their recovery. The district court denied appellants’ motion

under Rule 24(a) on the ground that appellants’ alleged interests

“have yet to crystallize” because they turn on a prior question of

contract interpretation — if J.P. Morgan assumed the relevant

liabilities under the Agreement, the FDIC would be off the hook,

and therefore the appellants would have no further interest in

Deutsche Bank’s litigation. This appeal followed.

II

Appellants’ claim to intervene is challenged by all three of

the basic litigants. Their challenges are based on Rule 24, as

well as Article III and prudential standing. In their briefs, these

2

 The Proposed Intervenors also included investment advisors of

these direct holders authorized to act on their behalf, but the district

court held that these advisers lacked standing because they faced no

injury, and the appellants do not appeal this ruling.

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concepts are intertwined. Indeed, in one of appellee’s briefs,

one paragraph seems to weave through all three concepts

without an effort to separate them.

We must start our analysis with a discussion of standing

because, of course, that implicates our jurisdiction, see Fund for

Animals, Inc. v. Norton, 322 F.3d 728, 732 (D.C. Cir. 2003)

(citing Sierra Club v. EPA, 292 F.3d 895, 898 (D.C. Cir. 2002)),

but we should first describe appellants’ Rule 24 arguments —

both because they make up the bulk of the parties’ briefing, but

also because the Rule 24 and standing requirements are similar. 

Rule 24(a) provides in relevant part that:

“[o]n timely motion, the court must permit anyone to

intervene who . . . claims an interest relating to the

property or transaction that is the subject of the action,

and is so situated that disposing of the action may as a

practical matter impair or impede the movant’s ability

to protect its interest, unless existing parties adequately

represent that interest.” 

FED. R. CIV. P. 24(a)(2). We have drawn from the language of

this rule four distinct requirements that intervenors must

demonstrate: “(1) the application to intervene must be timely;

(2) the applicant must demonstrate a legally protected interest in

the action; (3) the action must threaten to impair that interest;

and (4) no party to the action can be an adequate representative

of the applicant’s interests.” Karsner v. Lothian, 532 F.3d 876,

885 (D.C. Cir. 2008) (quoting SEC v. Prudential Sec. Inc., 136

F.3d 153, 156 (D.C. Cir. 1998)).

Appellants argue that their motion is timely because the

underlying litigation is still at a nascent stage; that their legal

interest in the receivership funds is threatened by Deutsche

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Bank’s suit; and that the FDIC does not adequately represent

their interests because it has a conflict of interest arising from its

indemnity obligation to J.P. Morgan. Most importantly,

appellants argue that the district court’s holding that their claim

had not crystallized misunderstood the core of their concern. 

They fear that the FDIC, perhaps in order to protect the assets of

the FDIC’s corporate entity from an adverse judgment, will

settle with J.P. Morgan at too low a figure. In other words the

FDIC, unlike a typical receiver, has skin in the game — a

downside risk — that could affect its calculation of the strength

of the claim vis-a-vis J.P. Morgan. As we deduce their

objective, appellants wish to intervene to be able to block such

a settlement — perhaps to have negotiating leverage. 

Appellees — which include Deutsche Bank, FDIC, and J.P.

Morgan, all of whom oppose intervention — argue that the

motion was filed more than two years after the initial complaint

was filed with no justification for the delay; that appellants have

no interest in the contract interpretation and breach-of-contract

claims actually at issue in the underlying litigation; and that the

FDIC adequately represents appellants’ interests because it is

statutorily required to maximize the value of creditors’ assets

and is advancing the same position and arguments as the

Proposed Intervenors.3

It should be noted that, given the implications of appellants’

argument, they are swimming up river. If these bond holders are

3

 The Proposed Intervenors have suggested that they are raising

an argument the FDIC has not — specifically, that the trust

agreements between Deutsche Bank and Washington Mutual are

“Qualified Financial Contracts” under 12 U.S.C. § 1821(e)(8)(D). But

appellants did not raise this argument below, and in any event,

Deutsche Bank has itself raised this issue in its amended complaint

naming J.P. Morgan as a defendant.

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entitled to intervene, there is no apparent reason why any

creditor of Washington Mutual, no matter how small, could be

denied a similar opportunity. At oral argument, counsel for

appellants responded that any future intervenor could be rejected

on the ground that appellants themselves provided adequate

representation under Rule 24. But another creditor might assert

a different view of the underlying litigation as a reason why

appellants’ motivation was different than theirs. Morever, a

precedent allowing an ordinary creditor to intervene in litigation

involving a receiver would presumably have widespread effect.

* * * 

Turning to standing, appellants assert initially that as

defendant-intervenors, they are not obliged to demonstrate

Article III standing at all. That contention is drawn from our

dicta in Roeder v. Islamic Republic of Iran, 333 F.3d 228 (D.C.

Cir. 2003). We observed there in passing that “[r]equiring

standing of someone who seeks to intervene as a defendant runs

into the doctrine that the standing inquiry is directed at those

who invoke the court’s jurisdiction.” Id. at 233 (internal citation

omitted). But we went on to hold that, in that case, the United

States as defendant-intervenor did have standing. Id. at 233-34. 

We relied on our prior decision in Rio Grande Pipeline Co. v.

FERC, 178 F.3d 533 (D.C. Cir. 1999), which acknowledged a

circuit split on whether intervenors must possess Article III

standing, but which unequivocally came down on the side of

requiring standing (not distinguishing between plaintiffs and

defendants). Id. at 538. It is therefore circuit law that

intervenors must demonstrate Article III standing, Fund for

Animals, 322 F.3d at 732-33, and we think appellants fail to do

so here.

It is axiomatic that Article III requires a showing of injuryin-fact, causation, and redressability. The leading Supreme

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Court case, Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992),

describes the first element as including a showing of an invasion

of a legally protected interest which is (a) concrete and

particularized, and (b) actual or imminent, not conjectural or

hypothetical. Id. at 560. Appellants point to their economic

interest in the receivership funds as a legally protected interest. 

That much is clearly correct. But appellants are not persuasive

in showing that their economic interest faces an imminent,

threatened invasion — i.e., one that is not conjectural or

speculative. 

First, at least two major contingencies must occur before

Deutsche Bank’s suit could result in economic harm to

appellants: (1) the district court must interpret the Agreement to

find that FDIC did not transfer the relevant liability to J.P.

Morgan; and (2) Deutsche Bank must prevail on the merits

against FDIC in its breach-of-contract claims. It is only if a

federal judgment concludes that the FDIC had not transferred

liability to J.P. Morgan that the receivership funds will even be

in jeopardy; if J.P. Morgan assumed the liabilities, then

appellants’ economic interest drops out entirely. Under such

circumstances, where a threshold legal interpretation must come

out a specific way before a party’s interests are even at risk, it

seems unlikely that the prospect of harm is actual or imminent. 

Cf. Sea-Land Serv., Inc. v. Dep’t of Transp., 137 F.3d 640, 648

(D.C. Cir. 1998) (noting that the creation of adverse legal

precedent is insufficient to create Article III standing, even

where future litigation is foreseeable).

 

But second, and more decisively, the real alleged threat to

appellants’ legally protected interest is not the ostensible

concern with Deutsche Bank’s possible subsequent claim

against the FDIC, but the prospect that the FDIC would enter

into what appellants regard as an unfavorable settlement. And

the difficulty with that claim — besides ignoring the FDIC’s

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statutory obligation to represent creditors fairly — is that it is

hopelessly conjectural. The district court seemed to suggest that

it was only after the contract interpretation was settled that

appellants’ interests would crystallize, but paradoxically, at that

point in the litigation, appellants would no longer be concerned

with intervention. Indeed, their brief acknowledged that

resolution of the contract interpretation is “the principal dispute

in which the Intervenors seek to participate.” After this question

is settled, there is no apparent reason why appellants would be

unwilling to rely on the FDIC to defend against Deutsche

Bank’s claims. Appellants might well have standing under

Article III at that point (though it would be virtually impossible

to show under Rule 24 that existing parties do not adequately

protect their interests), but they do not have it now. 

Even if appellants enjoyed Article III standing — which

they do not — they would still run afoul of prudential standing

requirements, which could be thought similar to the concept

embodied in Rule 24 that a proposed intervenor must have an

interest “relating to” the property or transaction at issue in the

litigation.4

 Appellants lack prudential standing to enforce the

terms of the Agreement because they were neither parties nor

intended third-party beneficiaries to this contract. See Interface

4

 Prudential standing, like Article III standing, is a threshold,

jurisdictional concept. Steffan v. Perry, 41 F.3d 677, 697 (D.C. Cir.

1994) (en banc). Federal courts may consider third-party prudential

standing even before Article III standing, see Kowalski v. Tesmer, 543

U.S. 125, 129 (2004), so there is no problem deciding prudential

standing as an alternative holding — as we have previously found it

appropriate to do. See Haitian Refugee Ctr. v. Gracey, 809 F.2d 794,

807 (D.C. Cir. 1987). On the other hand, it would be improper to

decide the Rule 24 issue (the “merits” question on this appeal), but we

think it appropriate to discuss the “relating to” language of the rule

because we see it as closely bound up with the prudential standing

inquiry. 

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Kanner, LLC v. JPMorgan Chase Bank, N.A., 704 F.3d 927,

932-33 (11th Cir. 2013); GECCMC, 2005-C1 Plummer St.

Office L.P. v. JPMorgan Chase Bank, N.A., 671 F.3d 1027, 1033

(9th Cir. 2012); see also SEC v. Prudential Sec. Inc., 136 F.3d

153, 160 (D.C. Cir. 1998) (“Because the parties to the consent

decree clearly indicated that third parties such as appellants are

not intended third party beneficiaries, appellants have no legally

protected interest in enforcing the terms of the consent

decree.”).5

Of course, appellants are seeking to intervene, not to bring

a cause of action under the Agreement itself. But appellants

concede that they are not intended beneficiaries, so the basic

point remains that the contract does not protect their rights. 

Insofar as the Proposed Intervenors wish to be heard on the

specific question of contract interpretation, they are effectively

seeking to enforce the rights of third parties (here, the FDIC),

which the doctrine of prudential standing prohibits. Steffan v.

Perry, 41 F.3d 677, 697 (D.C. Cir. 1994) (en banc).

To be sure, once before we indicated that if a proposed

intervenor satisfied Article III, then that “is alone sufficient to

establish that [an intervenor] has ‘an interest relating to the

property or transaction that is the subject of the action.’” Fund

for Animals, 322 F.3d at 735 (quoting FED.R.CIV. P. 24(a)(2)). 

That statement could be thought to suggest that the third-party

aspect of prudential standing is inapplicable here — and

similarly, that Rule 24’s phrase “relating to the property or

5

 Other courts do not seem to have specifically identified this rule

as going to third-party prudential standing, but that seems to us the

most natural understanding. When a litigant is neither party to nor an

intended beneficiary of a contract, then any claim brought under that

contract must belong to a third party.

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transaction that is the subject of the action” (emphasis added)

has no meaning beyond Article III’s requirements.

In Fund for Animals, we relied on previous cases that had

equated the legally protected interest requirement of Article III

with the “interest” of Rule 24. Id. at 735. That equation is

undeniable with respect to the kind of interest that Rule 24

protects. As we have indicated, however, the “relating to”

language suggests a sort of nexus requirement more akin to

third-party prudential standing. But in Fund for Animals, we

recognized that the statute in question had been interpreted by

the Supreme Court to eliminate prudential standing

considerations and to extend standing to the full limits of Article

III. Id. at 734 n.6. The standing dispute there was only whether

the intervenor, a Mongolian agency, had adduced sufficient

evidence for the proposition that listing argali sheep as an

endangered species would adversely affect Mongolian tourism. 

Id. at 733-34. Because prudential standing was irrelevant in that

case, the broad language quoted above must be understood in

context as not precluding considerations of prudential standing

under different statutes.

We note also that other circuits have generally concluded

that a party may not intervene in support of a defendant solely

to protect judgment funds that the party wishes to recover itself. 

See, e.g., Med. Liab. Mut. Ins. Co. v. Alan Curtis LLC, 485 F.3d

1006, 1008-09 (8th Cir. 2007); Mt. Hawley Ins. Co. v. Sandy

Lake Props., Inc., 425 F.3d 1308, 1311 (11th Cir. 2005); United

States v. Alisal Water Corp., 370 F.3d 915, 920 (9th Cir. 2004)

(“[A]n allegedly impaired ability to collect judgments arising

from past claims does not, on its own, support a right to

intervention. To hold otherwise would create an open invitation

for virtually any creditor of a defendant to intervene in a lawsuit

where damages might be awarded.”). We would therefore be

quite hesitant to suggest that a creditor’s general economic

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interest in receivership funds, even if sufficient to support

Article III standing, would necessarily be an interest relating to

any action that threatens those funds. Be that as it may, our

holding is only that appellants lack prudential standing, not that

they fail Rule 24’s requirements.

* * * 

Accordingly, we conclude that appellants lack standing, and

the judgment of the district court is affirmed.

So ordered.

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SILBERMAN, Senior Circuit Judge, concurring: As our

opinion explains, Op. at 7, straightforward reliance on our prior

case law suffices to reject appellants’ argument that they need

not demonstrate standing as a defendant-intervenor. But I think

it worth noting the concerns that weigh against any alteration of

our precedent on this point.

If we were authorized to dispense with the standing

requirement for a defendant-intervenor, then any organization or

individual with only a philosophic identification with a

defendant — or a concern with a possible unfavorable precedent

— could attempt to intervene and influence the course of

litigation. To be sure, parties seeking intervention as of right

would still need to meet the specific standards articulated in

Rule 24(a), but district courts have discretion to grant permissive

intervention under Rule 24(b), which requires only that a party

have “a claim or defense that shares with the main action a

common question of law or fact.” FED. R. CIV. P. 24(b)(1)(B). 

Opening participation to parties without standing would be quite

troublesome in direct review in the court of appeals, see Rio

Grande Pipeline Co. v. FERC, 178 F.3d 533, 539 (D.C. Cir.

1999), but intolerable at the district court level, where individual

parties have substantial power to direct the flow of litigation and

affect settlement negotiation. Our rule requiring all intervenors

to demonstrate Article III standing prudently guards against this

possibility.

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