Opinion ID: 780310
Heading Depth: 1
Heading Rank: 2

Heading: The Constitutional and Civil Rights Act Claims.

Text: 20 A. Mr. Sinclair's Individual Claims. The amended complaint alleges that Mr. Sinclair was sole shareholder and chairman of the board of SNB and was damaged in his business or property by defendants' alleged unlawful regulatory conduct. The pleading is defective for failing to allege Mr. Sinclair's constitutional and prudential standing to assert these claims. His only financial injury was to the value of his investment in SNB resulting from adverse actions taken against SNB. Thus, Mr. Sinclair falls squarely within the prudential standing rule that normally bars litigants from asserting the rights or legal interests of others in order to obtain relief from injury to themselves. Warth v. Seldin, 422 U.S. 490, 509, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). 21 In Potthoff v. Morin, 245 F.3d 710, 716 (8th Cir.2001), we dismissed a sole shareholder's First Amendment claim for lack of standing, applying the longstanding principle that [a]ctions to enforce corporate rights or redress injuries to the corporation cannot be maintained by a stockholder in his own name ... even though the injury to the corporation may incidentally result in the depreciation or destruction of the value of the stock (quotation omitted). Accord Gregory v. Mitchell, 634 F.2d 199, 202 (5th Cir.1981) (dismissing bank shareholders' equal protection and due process claims against the FDIC and state regulators); Des Vergnes v. Seekonk Water Dist., 601 F.2d 9, 16 (1st Cir.1979) (dismissing developer's § 1981 claim against local regulator). Here, too, Mr. Sinclair's indirect monetary loss simply does not give him constitutional or statutory standing to sue the OCC defendants for their regulatory actions against SNB. 22 B. SNB's Bivens Claims. In Bivens, the Supreme Court held that private citizens have a cause of action for damages against federal agents who violate their Fourth Amendment rights. The Court has since declined to extend this nonstatutory damages remedy to contexts in which it may be inferred that Congress has spoken to the contrary. For example, in Bush v. Lucas, 462 U.S. 367, 368, 103 S.Ct. 2404, 76 L.Ed.2d 648 (1983), the Court held that the elaborate and comprehensive statutory remedies available under the civil service system precluded a Bivens damage action by a federal employee who was allegedly disciplined for exercising his First Amendment rights. In Schweiker v. Chilicky, 487 U.S. 412, 414, 108 S.Ct. 2460, 101 L.Ed.2d 370 (1988), the Court held that Social Security claimants may not sue government officials under Bivens for alleged due process violations in denying or delaying benefits. And in FDIC v. Meyer, 510 U.S. 471, 473, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994), and Corr. Servs. Corp. v. Malesko, 534 U.S. 61, 63, 122 S.Ct. 515, 151 L.Ed.2d 456 (2001), the Court refused to extend Bivens to claims against federal agencies and private government contractors, as opposed to individual federal officials. The issue in this case is whether to extend Bivens to Mr. Sinclair's claims for damages against OCC officials for their adverse regulatory actions against SNB. 4 23 In Chilicky, 487 U.S. at 423, 108 S.Ct. 2460, the Supreme Court stated that a special factor precluding a Bivens action is the existence of a statutorily created remedy, even if that remedy does not provide complete relief: 24 When the design of a Government program suggests that Congress has provided what it considers adequate remedial mechanisms for constitutional violations that may occur in the course of its administration, we have not created additional Bivens remedies. 25 We have described this limitation as creating — 26 a sort of presumption against judicial recognition of direct actions for violations of the Constitution by federal officials.... If Congress has not explicitly created such a right of action, and if it has created other remedies to vindicate (though less completely) the particular rights being asserted ... [then only] if Congress's omission to recognize a constitutional tort claim was inadvertent will the courts be free to allow such a claim. 27 McIntosh v. Turner, 861 F.2d 524, 526 (8th Cir.1988). When Congress has created a comprehensive regulatory regime, the existence of a right to judicial review under the Administrative Procedure Act is sufficient to preclude a Bivens action. See Miller v. U.S. Dep't of Agric. Farm Servs. Agency, 143 F.3d 1413, 1416 (11th Cir. 1998); Maxey v. Kadrovach, 890 F.2d 73, 75-76 (8th Cir.1989). [P]arties may not avoid administrative review simply by fashioning their attack on an [agency] decision as a constitutional tort claim against individual [agency] officers. Zephyr Aviation, L.L.C. v. Dailey, 247 F.3d 565, 572 (5th Cir.2001). 28 Congress has been establishing and extensively regulating national banks for over two hundred years. See M'Culloch v. Maryland, 17 U.S. (4 Wheat.) 316, 401-02, 4 L.Ed. 579 (1819). Since the nineteenth century, the designated federal regulator (now, the Comptroller of the Currency) has had broad powers to conduct bank examinations and to declare national banks insolvent. See 12 U.S.C. §§ 161, 191, and their predecessor statutes. Today, the OCC's extensive oversight powers include approving applications for new national bank charters, for the grant of additional corporate powers, and for changes in the ownership of existing banks; issuing cease and desist orders and prompt corrective action notices to curb unsafe and unsound banking practices; assessing civil money penalties; and appointing conservators and receivers to take over distressed and insolvent banks. See 18 U.S.C. §§ 21, 27, 30, 36, 191, 203, 1818, 1831 o ; First Nat'l Bank of La Marque v. Smith, 610 F.2d 1258, 1264-65 (5th Cir.1980). Through periodic examinations and intense regulation of unsound practices, the OCC actively engages with bank management to protect the interest of depositors and the general public in the solvency and soundness of national banks. As Judge Posner observed in Central Nat'l Bank of Mattoon v. U.S. Dept. of Treasury, 912 F.2d 897, 905 (7th Cir.1990), Those banks are [the Comptroller's] wards, and his only wards; if they fail in droves, he will be blamed. The FDIC exercises extensive complementary powers, such as insuring national bank deposits and serving as the statutory receiver for insolvent national banks. 29 In 1966, Congress enacted the Financial Institutions Supervisory Act, Pub.L. 89-695, 80 Stat. 1028 (1966), granting the Comptroller and other federal bank regulators broad powers to issue cease and desist orders and orders suspending and removing unfit bank officers — 30 in order to prevent violations of law or regulation and unsafe and unsound practices which otherwise might adversely affect the Nation's financial institutions, with resulting harmful consequences to the growth and development of the Nation's economy. 31 S.Rep. No. 1482 (1966), reprinted in 1966-3 U.S.C.C.A.N. 3532, 3533. Exercise of these new remedial powers was subject to carefully circumscribed APA review. See 12 U.S.C. § 1818(h) (judicial review of cease and desist and suspension and removal orders is limited to APA review and shall be exclusively as provided in this subsection (h)); 12 U.S.C. § 1818(g)(3) (barring pre-enforcement review of some suspension orders; upheld against a procedural due process challenge in FDIC v. Mallen, 486 U.S. 230, 245, 108 S.Ct. 1780, 100 L.Ed.2d 265 (1988)); 12 U.S.C. § 1818(i)(1) (courts have no jurisdiction to enjoin enforcement actions; applied in Bd. of Governors of the Fed. Reserve Sys. v. MCorp Fin., Inc., 502 U.S. 32, 112 S.Ct. 459, 116 L.Ed.2d 358 (1991)); 12 U.S.C. §§ 1818(c)(2) and 1818(e)(3) (limited judicial authority to stay or enjoin temporary cease-and-desist orders and some suspension and prohibition orders). 32 When these new regulatory powers were enacted in 1966, the Comptroller already possessed the most drastic regulatory power — the authority to declare a national bank insolvent and appoint a statutory receiver or conservator. See 12 U.S.C. § 191, a section of the often-amended National Bank Act. Section 191 permits the Comptroller to appoint the FDIC receiver without prior notice or hearings. While § 203(b) provides for judicial review of a Comptroller order appointing the FDIC as conservator, the National Bank Act is silent as to whether an order appointing the FDIC as receiver is subject to judicial review. Because of the highly discretionary nature of the decision, and the need for prompt action to protect depositors when a bank becomes insolvent, federal courts have divided on this issue. See James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1092-93 (D.C.Cir.1996); American Bank, N.A. v. Clarke, 933 F.2d 899, 903-04 (10th Cir.1991); In re Matter of Liquidation of Amer. City Bank & Trust Co., 402 F.Supp. 1229, 1231 (E.D.Wis.1975) (collecting cases). But many courts have dismissed damage actions against the OCC for wrongfully appointing the FDIC as receiver on the ground that this is a discretionary act exempt under the Federal Tort Claims Act. See FDIC v. Irwin, 916 F.2d 1051, 1053-54 (5th Cir.1990); Golden Pac. Bancorp v. Clarke, 837 F.2d 509, 512 (D.C.Cir.1988); Huntington Towers, Ltd. v. Franklin Nat'l Bank, 559 F.2d 863, 868-70 (2d Cir.1977). 33 In 1989, faced with a nationwide crisis in the savings and loan industry, Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), Pub.L. No. 101-73, 103 Stat. 183 (1989). Convinced that inadequate enforcement powers and regulatory laxity were contributing factors to the failure of many thrift institutions, Congress granted expanded and strengthened enforcement powers to federal bank regulators, including the OCC. See H.R.Rep. No. 101-54(I), at 464-66 (1989), reprinted in 1989-2 U.S.C.C.A.N. 86, 260-62; H.R. Conf. Rep. No. 101-222, at 393, 439-42 (1989), reprinted in 1989-2 U.S.C.C.A.N. 432, 478-81. Of particular relevance to the OCC actions of which SNB complains, FIRREA imposed more stringent capital requirements on commercial banks, see 12 U.S.C. § 1464; expanded the grounds on which the Comptroller may place a national bank in conservatorship or receivership, see 12 U.S.C. §§ 203(a), 1813(x), 1821(c)(5); and prohibited judicial actions to restrain or affect the exercise of powers or functions of the [FDIC] as a conservator or a receiver, 12 U.S.C. § 1821(j). See Hindes v. FDIC, 137 F.3d 148, 160-61 (3d Cir.1998). 34 We conclude that this comprehensive statutory regime precludes the Bivens damage claims asserted by SNB. All the adverse regulatory actions at issue fell within the OCC's express statutory powers to regulate national banks, to take action against unsafe and unsound banking practices, and to appoint a receiver for insolvent banks. The OCC actions up to the declaration of SNB's insolvency were subject to administrative and judicial review processes that SNB invoked. To the extent these APA remedies are limited, the long history of congressional regulation of national banks confirms that the limitations are not inadvertent. Rather, Congress has repeatedly adjusted, and at times overhauled, these statutory remedies in a continuing effort to resolve — 35 a difficult and delicate problem of reconciling conflicting interests — on one hand, the interests of depositors and savers who have their money in these insured institutions, the interests of well-run banks and savings and loan associations who contribute substantial premiums to the reserve funds of the insuring agencies, and the interests of the Government which underwrites the insuring agencies — in preventing irresponsible or even criminal individuals from looting or otherwise wrecking insured banks and savings and loan associations through improper activities; on the other hand, the interests of insured banks and savings and loan associations and their officials in receiving fair treatment from the Government, and in receiving a reasonable degree of protection from Government actions which might at times, for one reason or another, degenerate into arbitrary, capricious, and overbearing tactics. 36 S.Rep. No. 1482, 1966-3 U.S.C.C.A.N. at 3534-35. In this complex regulatory environment, it is for Congress to decide whether the public interest in a sound national banking system would be furthered by a cause of action requiring bank regulators to pay damages personally unless they can convince a jury that their conduct in aggressively regulating a national bank was not the product of an unconstitutional motive. Because Congress has not created that cause of action, we decline to extend Bivens so as to create it by implication, just as many circuits have declined to permit Bivens damage actions against agents of the Internal Revenue Service, who administer another comprehensive federal regulatory regime in which relationships between the regulator and the regulated are frequently hostile and adversarial. See Vennes v. An Unknown Number of Unidentified Agents, 26 F.3d 1448, 1453 (8th Cir.1994); Shreiber v. Mastrogiovanni, 214 F.3d 148, 150-55 (3d Cir.2000), and cases cited. 37 SNB's § 1981 and § 1982 Claims. These civil rights statutes grant causes of action to persons who, on account of race, are denied the right to make and perform contracts (§ 1981) or to buy, hold, and sell property (§ 1982). See, e.g., McDonald v. Santa Fe Trail Transp. Co., 427 U.S. 273, 295-96, 96 S.Ct. 2574, 49 L.Ed.2d 493 (1976); Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 236, 90 S.Ct. 400, 24 L.Ed.2d 386 (1969). The amended complaint alleges that defendants, on account of race, took regulatory actions to deny creditworthy, non-white and minority borrowers and potential borrowers of loans purchased or financed by Plaintiff Sinclair, thereby depriving those persons of their equal right to make and enter into contracts with qualified buyers to buy, own and sell real property on account of Plaintiffs' association with persons who are non-white. 38 SNB did not lend directly to non-white borrowers. Rather, SNB purchased large pools of non-prime loans from a company owned or formerly owned by Mr. Sinclair. The FDIC criticized SNB's high-risk business plan, the OCC demanded increased equity capital to protect the bank's insured depositors, and ultimately the OCC placed SNB in receivership as insolvent. In response to defendants' motion to dismiss in the district court, plaintiffs cited no case imposing § 1981 or § 1982 liability on federal regulators for regulatory actions taken within their statutory authority. Here, it is not enough for SNB to allege and prove that the pools of non-prime loans included a disproportionate number of loans to non-white borrowers. [O]fficial action will not be held unconstitutional solely because it results in a racially disproportionate impact. Village of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 264-65, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977). In these circumstances, we doubt that SNB has stated a claim under § 1981 or § 1982, but in any event it is clear that defendants are entitled to qualified immunity from these damage claims. See Anderson v. Creighton, 483 U.S. 635, 640, 107 S.Ct. 3034, 97 L.Ed.2d 523 (1987). 39