Opinion ID: 751774
Heading Depth: 3
Heading Rank: 4

Heading: Due Process Claim Against Secretary

Text: 77 We now turn to the claim in Count I against the Secretary which seeks a declaration of the unconstitutionality of the Secretary's order closing Meritor and a rescission thereof. As noted above, we will treat this claim as one based upon section 1983 against the Secretary in his official capacity. On appeal, the Secretary raises an Eleventh Amendment objection to this claim. For the reasons we discuss below, we recognize but need not reach the Eleventh Amendment issue raised by this claim because we find that the district court correctly dismissed this claim as barred by 12 U.S.C. § 1821(j). 78 In general, the Eleventh Amendment prevents suits in federal court against states, or state officials if the state is the real party in interest. See Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 464, 65 S.Ct. 347, 350, 89 L.Ed. 389 (1945). The Amendment, however, does not bar such suits where the state has waived its immunity, see Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 241, 105 S.Ct. 3142, 3145, 87 L.Ed.2d 171 (1985), Congress validly has abrogated the state's immunity under the Fourteenth Amendment, see Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996), or the well-established exception of Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), applies. 79 Of these narrow exceptions, the only one that arguably applies in this case is that under Young. The principle which emerges from Young and its progeny is that a state official sued in his official capacity for prospective injunctive relief is a person within section 1983, and the Eleventh Amendment does not bar such a suit. See Hafer v. Melo, 502 U.S. 21, 27, 112 S.Ct. 358, 362-63, 116 L.Ed.2d 301 (1991); Will v. Michigan Department of State Police, 491 U.S. 58, 71 n. 10, 109 S.Ct. 2304, 2312 n. 10, 105 L.Ed.2d 45 (1989); Kentucky v. Graham, 473 U.S. 159, 167 n. 14, 105 S.Ct. 3099, 3106 n. 14, 87 L.Ed.2d 114 (1985) ([O]fficial-capacity actions for prospective relief are not treated as actions against the State.) (citing Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714). 80 Thus, the Eleventh Amendment does not bar this claim against the Secretary, provided that the relief appellants seek properly is construed as prospective injunctive relief or is ancillary to such relief. See Quern v. Jordan, 440 U.S. 332, 347-49, 99 S.Ct. 1139, 1148-49, 59 L.Ed.2d 358 (1979). The type of prospective relief permitted under Young is relief intended to prevent a continuing violation of federal law. See Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 146, 113 S.Ct. 684, 688, 121 L.Ed.2d 605 (1993) (the Young exception does not permit judgments against state officers declaring that they violated federal law in the past); Papasan v. Allain, 478 U.S. 265, 277-78, 106 S.Ct. 2932, 2940, 92 L.Ed.2d 209 (1986) (the focus of the Young exception is on addressing ongoing violations of federal law). 81 Appellants seek threefold relief against the Secretary: (1) a declaration that the Secretary's order closing Meritor was unconstitutional; (2) a rescission of the Secretary's order closing Meritor; and (3) the imposition of a constructive trust nunc pro tunc. We, however, need not reach the issue of whether that relief would be prospective because we recognize that we need not decide difficult jurisdictional issues where we can decide the case on another dispositive issue in favor of the party who would benefit by a ruling that we do not have jurisdiction. See Georgine v. Amchem Prods., Inc., 83 F.3d 610, 623 (3d Cir.1996) (citing Norton v. Mathews, 427 U.S. 524, 530-33, 96 S.Ct. 2771, 2774-76, 49 L.Ed.2d 672 (1976); Elkin v. Fauver, 969 F.2d 48, 52 n. 1 (3d Cir.1992)), aff'd sub nom., Amchem Prods., Inc. v. Windsor, --- U.S. ----, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). 82 Although the issue here involves the application of the Eleventh Amendment rather than subject matter jurisdiction, we find that the issue sufficiently partakes of the nature of a jurisdictional bar to justify our application of the principle recognized in Georgine. See College Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 131 F.3d 353, 365 (3d Cir.1997) (quoting Edelman v. Jordan, 415 U.S. 651, 678, 94 S.Ct. 1347, 1363, 39 L.Ed.2d 662 (1974)). Moreover, like the jurisdictional issues avoided in Georgine, questions under the Eleventh Amendment issue are constitutional in scope. Courts, of course, will avoid such questions where possible. See, e.g., Spector Motor Service v. McLaughlin, 323 U.S. 101, 105, 65 S.Ct. 152, 154, 89 L.Ed. 101 (1944). 83 Largely for the reasons we stated above regarding the scope of section 1821(j), we agree with the district court that section 1821(j) would bar the declaratory and injunctive relief sought against the Secretary. As discussed above, section 1821(j) precludes injunctive and declaratory relief which would restrain or affect the powers of the FDIC as receiver, even where that relief is directed against a third party. See Telematics, 967 F.2d at 707. Rescinding the order closing Meritor clearly would have essentially the same effect on FDIC-Receiver as would an order directly enjoining the FDIC from continuing to act as receiver. 84 Appellants urge that relief is warranted and not precluded by section 1821(j) where, as here, the gravamen of the complaint is that the appointment of the receiver was improper, not that the FDIC was exercising its duties as receiver improperly. We distinguish James Madison Ltd. v. Ludwig, 82 F.3d 1085 (D.C.Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 737, 136 L.Ed.2d 676 (1997), 12 upon which appellants rely for this proposition. In James Madison, the plaintiffs challenged the appointment of the FDIC as receiver of two national banks and requested an injunction removing the FDIC as receiver; returning bank assets ...; restoring the banks' charters to allow them to resume business; and returning the banks' files. Id. at 1091. The court rejected the FDIC's claim that the requested relief violated section 1821(j), reasoning that 85 [u]ntil now, this circuit has not considered whether section 1821(j) precludes federal courts from granting injunctive or declaratory relief if the [regulators] improperly appointed the FDIC receiver of a national bank. In our view, section 1821 does no such thing. Section 1821(j) states only that courts cannot 'restrain or affect the exercise of powers or functions of the [FDIC] as a conservator or receiver.' ... It does not address federal court power to set aside an illegal appointment of a conservator or receiver. Congress knows the difference between judicial power to restrain an agency properly acting as a receiver and judicial power to remove an improperly appointed agency. 86 Id. at 1093. Thus, the court concluded that section 1821(j) bars a court from interfering with the FDIC only when the agency acts within the scope of its authorized powers, not when the agency was improperly appointed in the first place. Id. 87 We conclude that James Madison is inapplicable here. The James Madison court held that the anti-injunction provision of section 1821(j) did not bar an APA challenge to the appointment of a receiver for a national bank. The court first noted that there is no statutory provision which specifically provides for the review of the appointment of a receiver for a national bank while there is such a specific provision for others. See James Madison, 82 F.3d at 1092. Compare 12 U.S.C. § 191 (appointment of receiver to a national bank) with 12 U.S.C. § 203(b) (judicial review of the appointment of a conservator of a national bank); 12 U.S.C. § 1464(d)(2)(E) (judicial review of an appointment by the Director of Office of Thrift Supervision of conservator or receiver); 12 U.S.C. § 1821(c)(7) (judicial review where the FDIC appoints itself as receiver or conservator of a state chartered institution); 12 U.S.C. § 1787(a)(1)(B) (review of appointment of National Credit Union Board as liquidating agent for insured credit union). The court held that section 1821(j) did not clearly bar such review and review of the appointment under the APA was therefore proper. See James Madison, 82 F.3d at 1094. Thus, the court in James Madison predicated its holding allowing review under the APA on the lack of an adequate remedy. 88 We decline to apply the rationale of James Madison here for two reasons. First, APA review of the appointment of the FDIC as receiver is not proper here because the appointment was not made by a federal agency, but rather by the Secretary, a state official. Second, James Madison concerned receiverships of national banks, whereas Meritor was a state-chartered bank, and there is or was another available procedure for review of the appointment in this case. See Pa. Stat. Ann., tit. 71, § 733-605 (West 1990). 89 Federal law explicitly provides for judicial review of the appointment of a receiver or conservator in certain specific instances where a receiver or conservator is appointed by a federal actor. See, e.g., 12 U.S.C. § 203(b) (providing for judicial review of the appointment of a conservator of a national bank within 20 days of the appointment); 12 U.S.C. § 1464(d)(2)(B) (providing for judicial review of an appointment by the Director of Office of Thrift Supervision within 30 days of the appointment); 12 U.S.C. § 1821(c)(7) (providing for judicial review within 30 days of the appointment where the FDIC appoints itself as receiver or conservator of a state chartered institution); 12 U.S.C. § 1787(a)(1)(B) (providing for judicial review within ten days of the appointment of National Credit Union Board as liquidating agent for insured credit union). Courts have held that where a plaintiff has not pursued these remedies to challenge the appointment of a receiver or conservator, a subsequent action outside the applicable limitation period is barred for failure to exhaust administrative remedies. See Lafayette Fed. Credit Union v. National Credit Union Admin., 960 F.Supp. 999, 1005 (E.D.Va.1997), aff'd, 133 F.3d 915 (4th Cir.1998) (table). 90 The same principle applies here where there is an adequate state procedure available to challenge the appointment of a receiver by the Secretary. 13 In closing Meritor, the Secretary acted pursuant to Pa. Stat. Ann., tit. 71, § 733-504B (West 1990), so that his action was subject to review under Pa. Stat. Ann., tit. 71, § 733-605 (West 1990), which provides that [a]ny institution whose business or property the secretary has taken possession as receiver, may, at any time within ten days after the secretary has become receiver, apply to the court for an order requiring the secretary to show cause why he should not be enjoined from continuing as receiver. This state procedure is consistent with the federal policy of requiring a swift challenge to the appointment of a receiver. See, e.g., 12 U.S.C. § 203(b) (providing 20 days to seek judicial review); 12 U.S.C. § 1464(d)(2)(B) (providing 30 days to seek judicial review); 12 U.S.C. § 1821(c)(7) (providing 30 days to seek judicial review); 12 U.S.C. § 1787(a)(1)(B) (providing ten days to seek judicial review). 91 The district court refused to require the appellants to have availed themselves of the state procedure because it concluded that such a requirement effectively would permit a state statute to foreclose appellants' constitutional claims. In so holding, the district court apparently conceived of such a requirement as imposing a ten-day statute of limitations on any claim relating to the seizure of the bank. 14 Once again, we emphasize the limits of our holding. We hold that section 1821(j) precludes the relief sought here, namely a rescission of the Secretary's appointment of a receiver, because it would wholly prevent the FDIC from continuing as receiver, where there is an adequate procedure available to challenge the appointment of a receiver. As we state elsewhere in this opinion, this holding is based upon section 1821(j)'s preclusion of remedies and does not foreclose the possibility of proper constitutional claims seeking other remedies. 15 92 We also find inapplicable the case law cited by appellants in which courts have declined to apply certain state procedural requirements to plaintiffs asserting federal civil rights actions in federal court. See Felder v. Casey, 487 U.S. 131, 108 S.Ct. 2302, 101 L.Ed.2d 123 (1988) (notice of claim statute); Burnett v. Grattan, 468 U.S. 42, 50-55, 104 S.Ct. 2924, 2929-32, 82 L.Ed.2d 36 (1984) (state statute of limitations); Patsy v. Board of Regents, 457 U.S. 496, 516, 102 S.Ct. 2557, 2568, 73 L.Ed.2d 172 (1982) (holding that a civil rights plaintiff need not exhaust state administrative remedies). These cases are inapposite because the Court based the holdings on the notion that state laws or requirements which are inconsistent with federal law or its objectives are subordinated to the federal law by virtue of the Supremacy Clause. As the Felder Court noted, applying a state statute of limitations which provides only a truncated period in which to file an action in civil rights cases inadequately accommodate[s] the complexities of federal civil rights litigation. Felder, 487 U.S. at 140, 108 S.Ct. at 2307. 93 Here, requiring appellants to have availed themselves of the Pennsylvania procedure to challenge the Secretary's taking of possession of the bank would not undermine federal policy. To the contrary, as we noted above, the state requirement is consistent with the federal policy of requiring swift objection to the appointment of a receiver. 94