Opinion ID: 855329
Heading Depth: 2
Heading Rank: 2

Heading: the fdic’s efforts to extend the reach of

Text: § 1819 In the absence of statutory language favoring its position, the FDIC offers two avenues to extend the reach of the removal statute: (1) permitting removal where there is a threat to federal interests; or (2) invoking the provision granting the FDIC original jurisdiction in federal court. We are persuaded by neither rationale. In Village of Oakwood, the Sixth Circuit suggested that, notwithstanding a state court’s failure to grant an intervention motion, the FDIC might be permitted to remove a state action that poses a threat to federal interests. The court explained: [T]here may be an instance in which the FDIC, recognizing that it has a substantial interest in the litigation, wishes to intervene in a state court proceeding between nondiverse parties, but the state court denies its motion to intervene. In such a case, the FDIC—despite its status as a federal institution, and despite ALLEN V . FDIC 11 the threat to its interests—would not be able to protect those interests because a state court has refused to crown the FDIC with the requisite “party” status, thus preventing removal to federal court. Id. at 369 n.3. The court accordingly “le[ft] open the possibility that a federal court could determine that the FDIC is a party under § 1819(b)(2),” and thus supplant state rules, in a case presenting a “significant conflict with or threat to a federal interest.” Id. Although the FDIC urges that this case presents exactly such a serious threat, the record presents a more complicated and different picture. This is not a case that requires us to determine whether the statute has some give in the joints. Nothing that happened here rises to the level of a “significant conflict with or threat to” federal interests. Importantly, the state court never denied the FDIC’s motion to intervene. Contrary to FDIC’s characterization, the court’s refusal to grant the FDIC’s motion to intervene on an expedited basis does not reflect serious adversity to federal interests. The FDIC was on notice for months that the confidentiality of its examination reports was at issue. Nonetheless, it did not seek to intervene and remove the dispute to a federal forum until late in the game, when it perceived that Allen was committed to pursuing sanctions for the Bank’s failure to produce the reports. Although the FDIC reasonably explains that it delayed seeking intervention because it hoped for a negotiated resolution, the FDIC’s miscalculation did not oblige the state court to leap to its rescue. The court denied the ex parte motion without prejudice to the merits, which it was prepared 12 ALLEN V . FDIC to consider approximately one month later. The FDIC argues that this ruling was patently unreasonable in light of the impending motion for sanctions. But it is speculation to assume that disposition of that motion would have resulted in the immediate disclosure of the reports or serious damage to federal interests, particularly because the federal regulations on FDIC records do not provide for a blanket blackout on disclosure but rather permit disclosure under certain conditions. See 12 C.F.R. § 309.6(b). In short, the record does not support the FDIC’s picture of a “recalcitrant state court.” Respect for the state court system counsels strongly against micro-managing the state court’s scheduling decisions and imputing to the court a nefarious motive of obstructing federal interests. See generally Yellow Freight Sys., Inc. v. Donnelly, 494 U.S. 820, 823 (1990) (“Under our system of dual sovereignty, we have consistently held that state courts have inherent authority, and are thus presumptively competent, to adjudicate claims arising under the laws of the United States.”) (internal quotation marks and citation omitted). Thus, even if the potential carve out suggested by Village of Oakland is sound—a question we need not resolve—the present appeal does not warrant its invocation.3 3 W e do not perceive the state court’s refusal to adopt the stipulated protective order facilitated by the Ninth Circuit’s mediation program as evidence of adversity to federal interests. At a hearing after remand, the state court concluded the federal district court had no authority to issue “special instructions” to the state court and noted that the parties had not independently established the propriety of the order. W e can hardly say that the state court flouted any federal interest in declining to enter an order negotiated by the parties. ALLEN V . FDIC 13 Finally, we reject the FDIC’s proposition that remand is precluded because the district court has jurisdiction under § 1819(b)(2)(A), which grants original jurisdiction in federal district court over civil suits “to which the Corporation, in any capacity, is a party.” 12 U.S.C. § 1819(b)(2)(A) (“subpart (2)(A)”). The FDIC argues that “[t]he FDIC’s party status . . . confers instant federal jurisdiction” under this provision and that “[b]y tying removal rights to ‘party’ status Congress could only have intended that the FDIC be entitled to remove when it is entitled to intervention.” The FDIC accordingly contends that, where a state court has not granted intervention, the district court must determine upon removal whether the FDIC is entitled to intervene and, if so, exercise jurisdiction. The text of subpart (2)(A) refutes this argument: it is a grant of original jurisdiction in federal district court and does not expand removal jurisdiction. The FDIC urges us to adopt the Fifth Circuit’s approach in Heaton v. Monogram Credit Card Bank of Georgia, 297 F.3d 416 (5th Cir. 2002). There, the court considered whether the FDIC’s attempted intervention in federal district court empowered that court to maintain jurisdiction over an action improperly removed by the defendant bank. Id. at 419–20. No claims were asserted against the FDIC, but the Corporation wanted to intervene to advocate for a particular interpretation of a statute relevant to the outcome of the suit. Id. at 424. Although the grounds for the defendant’s removal were indisputably unsound, the Fifth Circuit evaluated the merits of the FDIC’s intervention under Federal Rule of Civil Procedure 24 and decided that “the remand order was wrong because the FDIC was entitled to intervene in the case, conferring instant federal subject matter jurisdiction under the broad rubric of 12 U.S.C. § 1819(b)(2)(A).” Id. at 420; see also id. at 421 n.4 (reasoning that “[a] district court has no 14 ALLEN V . FDIC discretionary authority to remand a case over which it has subject matter jurisdiction”) (internal quotation marks and citation omitted). We decline to embrace Heaton. To begin, its analysis is in tension with the established proposition that federal jurisdiction is determined at the time of removal, not after a case has been removed. See, e.g., Hukic v. Aurora Loan Servs., 588 F.3d 420, 427 (7th Cir. 2009) (holding that jurisdiction must be analyzed “at the time of removal, as that is when the case first appears in federal court”); Local Union 598 v. J.A. Jones Construction Co., 846 F.2d 1213, 1215 (9th Cir. 1988), aff’d, 488 U.S. 881 (1988) (recognizing that “removability is generally determined as of the time of the petition for removal,” and noting exceptions not relevant here, such as when a “case has been tried on the merits and the federal court would have had original jurisdiction had the case been filed in federal court in the posture it had at the time of the entry of final judgment”). Although the FDIC in Heaton moved to intervene “immediately” after the defendant removed the action, Heaton, 297 F.3d at 420, its attempted intervention was ancillary and subsequent to the notice of removal. Embracing the Heaton rationale risks sanctioning improper removals, as the decision sidestepped the critical fact that the federal claim forming the asserted basis for the defendant’s notice of removal had been dismissed, albeit without the defendant’s knowledge, by the time of the notice. Id.4 4 Heaton relied on FDIC v. Loyd to explain the “jurisdictional significance of the motion to intervene,” and appears to endorse the proposition that a mere attempt by the FDIC to intervene, regardless of the merits of the intervention motion, is enough to confer party status to support the FDIC’s own removal of a case. Heaton, 297 F.3d at 421. As ALLEN V . FDIC 15 Under the Heaton approach, there is nothing to stop the FDIC from, for instance, filing a notice of removal beyond the clear 90-day time limitation specified in subpart (2)(B) and then arguing that remand is nonetheless precluded because the federal court has original jurisdiction under subpart (2)(A). Accepting this argument would read the requirements of the removal provision out of § 1819 entirely. We agree with the Sixth Circuit: “Heaton errs by putting the intervention cart before the jurisdiction horse.” Village of Oakwood, 481 F.3d at 369. In sum, Congress granted the FDIC far broader access to the federal courts than is available to ordinary litigants, but that access is not unlimited. Whether the FDIC’s access should be broader is a question for Congress, not the court. As drafted, 12 U.S.C. § 1819(b)(2)(B) does not authorize removal by the FDIC where it is not a party to the state court action and its role in the litigation is limited to a prospective, would-be intervenor.5 AFFIRMED. noted above, Loyd addressed a motion for substitution as receiver for a defendant bank, and its reasoning does not extend to intervention for other purposes. 5 At oral argument, the FDIC raised for the first time the proposition that, were the court to consider removal improper under § 1819, the court could conclude that the general removal provisions, 28 U.S.C. § 1441 et seq., authorized the removal. W e ordinarily decline to consider arguments not raised in an appellant’s opening brief. See Entm’t Research Grp., Inc. v. Genesis Creative Grp., Inc., 122 F.3d 1211, 1217 (9th Cir. 1997). Regardless, the general removal provision does not save the FDIC here. It authorizes defendants to remove under certain circumstances, but the FDIC never was a defendant in the state action.