Opinion ID: 855329
Heading Depth: 2
Heading Rank: 1

Heading: the fdic’s special removal authority

Text: Without doubt, Congress granted the FDIC broad removal authority in 12 U.S.C. § 1819(b)(2)(B) (“subpart (2)(B)”). The provision “confers several procedural advantages on the FDIC that go beyond the general removal authorization found in 28 U.S.C. §§ 1441–1452.” Bullion Servs., Inc. v. Valley State Bank, 50 F.3d 705, 707 (9th Cir. 1995). The FDIC can remove a case under subpart (2)(B) even as a plaintiff and even after a state court has entered judgment. Id. (citing FSLIC v. Frumenti Dev. Corp., 857 F.2d 665, 666–67 n.1 (9th Cir. 1988), and Resolution Trust Corp. v. BVS Dev., Inc., 42 F.3d 1206, 1211 (9th Cir. 1994)). Congress established a removal period of ninety days in subpart (2)(B), rather than the thirty days provided in the general removal statute. Id. (citing FDIC v. S & I 85-1, Ltd., 22 F.3d 1070, 1074 (11th Cir. 1994)). In considering whether this provision permits removal where the FDIC is not a party at the time of the removal, we need look no further than the language of the statute. See Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir. 2009). Removal is authorized in two situations: ALLEN V . FDIC 7 (1) where an “action, suit, or proceeding is filed against the Corporation,” and (2) where the FDIC is “substituted as a party” in the state court action. 12 U.S.C. § 1819(b)(2)(B). Subpart (2)(B), although granting the FDIC procedural advantages, ties removal authority to party status. The first circumstance involves claims brought against the FDIC as a defendant. In Bullion Services, for instance, we readily determined that “[FDIC-Corporate] was made a party to the present action” when the plaintiff amended the complaint to add it as a defendant. 50 F.3d at 706–07.2 We went on to note that it was “[o]bvious[]” that “before being added as a party, FDIC Corporate lacked the ability to remove the case to federal court.” Id. at 709 (emphasis added). The second scenario, where “the Corporation is substituted as a party,” is typically invoked when the FDIC, in its receiver capacity, is substituted for a failed bank in litigation—either as plaintiff or defendant. Not surprisingly, courts have held that the filing of a notice of substitution, which makes the FDIC a party to the action, immediately triggers the right to remove under subpart (2)(B). See, e.g., Buczkowski v. FDIC, 415 F.3d 594, 597 (7th Cir. 2005) (“Any litigant, or the court on its own motion, can substitute the FDIC for the failed bank as a party. That would open the 2 The remaining question we considered was whether the removal provision applied independently to the FDIC in both its corporate capacity and its receiver capacity, where the removal provision referred only to “the Corporation,” in contrast to the reference in the original jurisdictional provision to “the Corporation, in any capacity.” In recognition of the “different functions” of the FDIC, and to effectuate Congress’s goal that claims against the FDIC be heard in federal court, we determined the removal provision is applicable to each entity independently. Id. at 709. 8 ALLEN V . FDIC 90-day window for removal.”); Diaz v. McAllen State Bank, 975 F.2d 1145, 1147–48 (5th Cir. 1992) (noting that after appointment as receiver for a defendant bank, “the FDIC removed the case on the same day it intervened [and] therefore the removal was within the 90-day period”). The term “substituted as a party” is also broad enough to embrace situations in which the FDIC becomes party to litigation in capacities other than as receiver—so long as it obtains party status in accordance with the governing law. See generally Buczkowski, 415 F.3d at 596 (“The FDIC may be a bank’s receiver or insurer or regulator (its three statutory capacities) but is not a ‘party’ to anything in particular in any of these capacities. It becomes a ‘party’ only in court.”). We emphasize that a substitution motion, however styled, is distinct from the FDIC’s motion to intervene in this case. Often, the FDIC, having been appointed receiver for a failed bank embroiled in litigation, will move to “intervene” in an action in place of the bank. The cases sometimes use the terms substitution and intervention interchangeably, although the terms are not co-extensive. See, e.g., Diaz, 975 F.2d at 1147 (holding, in case addressing FDIC’s right to remove following appointment as receiver, that subpart (2)(B) “makes it clear that the time period begins to run from the date the FDIC ‘is substituted as a party’ (i.e. intervenes)”) (emphasis added); see also FDIC v. Loyd, 955 F.2d 316, 327 (5th Cir. 1992) (addressing FDIC’s removal under 28 U.S.C. § 1446 and holding that “the FDIC did not become a ‘defendant’ for the purpose of starting the thirty-day removal clock of § 1446(b) until it filed its motion to intervene” in place of failed bank taken into receivership) (emphasis added). Substitution of the FDIC for a failed bank is essentially a ministerial matter, unlike affirmative intervention for other ALLEN V . FDIC 9 purposes. The FDIC is appointed receiver when a bank has failed and the FDIC, upon substitution, immediately becomes the real party in interest. As the FDIC recognized in its briefing, “a state court can have no basis at all for denying a receiver’s substitution motion.” The same cannot be said for the FDIC’s motion to intervene in this case, which rests on its interest in discovery between third parties, and is subject to the procedural and substantive requirements of state law. See Cal. Code Civ. Proc. § 387 (setting forth requirements for permissive and mandatory intervention). The case law regarding the effect of filing for a substitution thus does not support the proposition that a motion by the FDIC to intervene for other purposes automatically triggers the right to remove. We conclude that § 1819(b)(2)(B) authorizes removal by the FDIC only after it has obtained party status. Simply filing a motion to intervene does not open the removal window. Our position is consistent with the Sixth Circuit’s interpretation of subpart (2)(B) in Village of Oakwood v. State Bank and Trust Co., 481 F.3d 364 (6th Cir. 2007). There, the FDIC moved to intervene in an action brought in Ohio court against a bank and then attempted to remove the case to federal court before the state court had ruled on the motion. Id. at 366. The FDIC was not the receiver of the bank, and the plaintiff had no claims against the FDIC. Id. Upon removal, the district court allowed the FDIC to intervene in the suit and exercised jurisdiction over the action. Id. The Sixth Circuit reversed, “read[ing] § 1819(b)(2) in harmony with the longstanding rule that intervention requires an existing claim within the court’s jurisdiction and hold[ing] that the FDIC’s intervention cannot create jurisdiction where none existed.” Id. at 368. The court reasoned that because 10 ALLEN V . FDIC the FDIC was not yet a party to the suit, it could not remove the suit from state court, and there was therefore no action properly before the district court in which the FDIC could intervene. Id. at 367–68. The result “might be . . . different [however] . . . if State Bank had impleaded the FDIC as a third-party defendant,” id. at 369, and the case may have been different had the Ohio court granted the FDIC’s motion to intervene before the attempted removal. In both alternatives, the FDIC would have had status as a party to the litigation. As in the Village of Oakwood case, the FDIC here is not a party under § 1819.