Legal Document

519 U.S. 213117 S.Ct. 666136 L.Ed.2d 656 John W. ATHERTON, Jr., Petitioner,v.FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for City Savings, F.S.B. No. 95-928. Supreme Court of the United States Argued Nov. 4, 1996. Decided Jan. 14, 1997. Syllabus * After Federal Savings Bank, a federally chartered, insured savings association, went into receivership, Resolution Trust Corporation (RTC), which has since been replaced receiver by respondent Deposit Insurance (FDIC), brought this action in Federal's name against several its officers and directors, claiming that they had acted (or failed to act) ways led make bad loans, these actions omissions) were unlawful because amounted gross negligence, simple breaches fiduciary duty. The defendants moved dismiss under 12 U.S.C. § 1821(k), states, relevant part: ''A director or officer [a bank] may be held personally liable monetary damages any [RTC-initiated] civil . negligence [or] similar conduct demonstrates greater disregard duty care (than negligence) Nothing paragraph shall impair affect right [RTC] other applicable law.'' (Emphasis added.) In dismissing all but claims, District agreed with that, authorizing more seriously culpable conduct, statute intended forbid based upon less such negligence. Reversing, Third Circuit interpreted 1821(k) simply offering safeguard state legislation watered down standards care-below benchmark. As so interpreted, did not prohibit resting stricter standard rules-whether originating law (which found state-chartered banks) federal common chartered banks). Noting charter, concluded Government could pursue claims breach available matter law. Held: State sets directors institutions long (such is than 1821(k). nonetheless ''gross negligence'' floor, applies substitute are relaxed. Pp. ___-___. (a) There no would create general case absent common-law corporate governance enunciated cases Briggs v. Spaulding, 141 132, 11 924, 35 L.Ed. 662, applied banks, does survive Court's later decision Erie R. Co. Tompkins, 304 64, 78, 58 817, 822, 82 1188. Normally, court fashion rules only specific showing use will significant conflict with, threat to, some policy interest. See, e.g., O'Melveny & Myers FDIC, 512 79, 87, 114 2048, 2055, 129 67. basic arguments FDIC implicitly explicitly raises-(1) invocation need ''uniformity'' responsibility banks; (2) suggestion must banks question chartered; (3) analogy laws ''internal affairs doctrine'' support contention courts should look find care; (4) reliance on Office Thrift Supervision opinions applying bank officers-do point interest caused application state-law care. notes here, O'Melveny, ac ting institution; it pursuing Government's insurer-an likely present whether institution state, federally, chartered. here far weaker was few restricted instances created Thus, (except modified 1821(k)) provides decision. (b) Section 1821(k)'s floor; stand way making For one thing, statutory clause's language, read literally, preserves applicability when says ''[n]othing [here]in another, background whole-its enactment at time failing associations, large payments depositors, recent changes designed limit pre-existing liability-supports reading an effort preserve ability recover insurance funds creating floor. legislative history, insofar relevant, supports conclusion. petitioner's argument displaces uniform state-chartered, fails light statute's language conclusion inapplicable, fact Congress separate consideration two types institutions. 57 F.3d 1231, vacated remanded. BREYER, J., delivered opinion Court, REHNQUIST, C.J., STEVENS, KENNEDY, SOUTER, GINSBURG, JJ., joined, O'CONNOR, SCALIA, THOMAS, except extent relies history. filed concurring part judgment, SCALIA joined. Ronald Stevens, Washington, DC, petitioner. Richard P. Bress, respondent. Justice BREYER Court. 1 (RTC) sued violated legal owed institution. focuses determining their behavior improper. It asks where measure propriety defendants' conduct-to law, special (103 Stat. 243, speaks negligence''? 2 We conclude statute. 3 1989, Bank (City Federal), receivership. RTC, receiver, bank's directors. (Throughout opinion, we colloquial term ''bank'' refer variety ''federal associations.'') complaint said various development, construction, business acquisition loans. claimed negligen ce, 4 dismiss. They pointed statute, ''director officer'' ''may damages'' RTC-initiated ''civil '' ''similar argued rose level dismissed claims. 5 Circuit, providing interlocutory appeal, 28 1292(b), reversed. those originated Corp. Cityfed Financial Corp., 1243-1244, 1245-1249 (1995). institution, RTC free ''to Id., 1249. 6 defendants, pointing variations Circuits' interpretations sought certiorari. Compare Frates, 52 295 (C.A.10 1995) prohibits Cityfed, supra, 1246-1249 negligence). And granted review. II 7 begin temporarily setting side, asking whether, there provide standard. recognize, once articulate standards, banks. 662 (1891). See also Martin Webb, 110 7, 15, 428, 433, 49 (1884) (directors ''use ordinary diligence exercise reasonable control''); Bowerman Hamner, 250 504, 39 549, 63 1113 (1919). But before held, 1188 (1938), ''[t]here S.Ct., 822. while considering itself bound Briggs, asked have survived Erie. Part III, infra ) 8 This recently discussed what might call law'' strictest sense, i.e., rule amounts, interpretation properly promulgated administrative rule, but, rather, judicial ''creation'' Texas Industries, Inc. Radcliff Materials, Inc., 451 630, 640-643, 101 2061, 2066-2068, 68 500 (1981). ''cases creation justified 'few restri cted.' 67 (1994) (quoting Wheeldin Wheeler, 373 647, 651, 83 1441, 1445, 10 605 (1963)). ''Whether latent power exercised displace primarily Congress,'' courts. Wallis Pan American Petroleum 384 63, 68, 86 1301, 1304, 16 369 (1966). Nor existence related statutes automatically show rules, 'Congress acts total corpus juris states ' 1304 H. Hart Wechsler, Courts System 435 (1953)). normally, decide ''the guiding principle between first specifically shown.'' Ibid. Indeed, ''conflict'' normally ''precondition.'' 2055. Kimbell Foods, 440 715, 728, 99 1448, 1458-1459, 59 711 (1979); Kamen Kemper Services, 90, 98, 111 1711, 1717, 152 (1991). 9 No doubts legislate deciding like us. enacted legislation. Certain specify, example, how form ''national banks'' (i.e., bank), amend articles shareholders vote, directors' qualifications, ''organization certificate,'' minimum capital requirements, list powers. 21 et seq. Other regulate activities associations ways. E.g., 1464(b) (various regulations rate loans). argues, however, either statutes, validly pursuant set forth sort issue association Federal. Cf. C.F.R. 7.2000 (1996) (discussed infra, __) (describing procedures national associations). Consequently, thereby significantly threaten, examined each raises. our view, do significant, explain why. (The respondent, way, now Corporation-the FDIC-which new 1441a(b)(4)(A).) First, invokes ''uniformity.'' says, uniformity, ''[s]uperimposing over developed chartering authority 'upset balance' 'may strike Brief Respondent 23 Kamen, 103, 1720). To invoke concept ''uniformity,'' prove need. 730, 1459 (rejecting ''generalized pleas uniformity''); 88, 2055 (same). number about equally divided Corporation, Statistics Banking: A Statistical History U nited Banking Industry, Table SI-9, p. B-9 (Aug.1995) (showing 1,595 1,492 ones); increases uniformity among former increase disparity latter. 13 Nation's banking system thrived despite disparities matters governance. Consider, divergent different States, e. g., Ind.Code Ann. 23-1-35-1(e)(2) unless constitutes least ''willful misconduct recklessness''); Iowa Code 524.605 (1995) (providing standard), well lower 1891 Mason, 115 F.2d 548, 551-552 (C.A.3 1940) (applying Washington Bancorporation Said, 812 F.Supp. 1256, 1266 (D.D.C.1993) (Briggs apply ''simple care). Stevens B. Nielson, Standard Care Directors Officers Federally Chartered Depository Institutions: It's Gross Negligence Regardless Whether Preempts Common Law, Review L. 169, 172 (in ''widely varying results, neither fully developed, nor settled''). __ (citing Comptroller Currency, acting through regulation, permits considerable jurisdiction Supervision, §§1462a, 1463(a)). (permitting within broad limits, follow main office located Delaware General Law Model Business Act''). 14 Second, times suggests argument, little more, seemed strong during most century then norm exception-and often encountered hostility deleterious laws. Klebaner, Commercial 4-11 (1990) (tracing origin dual 1780 Philadelphia discussing proposals then-young Alexander Hamilton); Hammond, Banks Politics America: From Revolution Civil War 41-66 (1957) controversial, successful, Federalist second States). 15 President Madison helped many taxed weaken it. taxes unconstitutional. McCulloch Maryland, Wheat. 316, 431, 579 (1819) (''[T]he tax involves destroy''). also, Osborn 738, 204 (1824) (federal marshals lawfully seizing from collector who hurdled counter Chilicothe Branch taken $100,000 vault). Still, years Andrew Jackson effectively killed Bank. His Secretary Treasury Roger Taney (later Chief Justice), believing able serve Nation, took steps ''ushe[r] era expansive banking.'' A. Pollard, J. Passaic, K. Ellis, Daly, Unite d (1988). Briscoe Kentucky, Pet. 257, 709 (1837) paper money certain circumstances). During after reemerged. Moved war-related financing needs, Justice) Salmon Chase proposed, enacted, Act Feb. 20, 1863, ch. 43, 655, encouraging obtain charters. June 3, 1864, 106, (only can currency). Veazie Fenno, Wall. 533, 19 482 (1869) (opinion Chase, C.J.) (upholding constitutionality taxation Just World I, reserve system. Dec. 23, 1913, 6, 38 251. war, agencies regulatory both 16, 1933, 89, 48 162. provided 13, 62, 128. 17 latter history 1870 thereafter subject National Commonwealth, 353, 361, 701 (1869). distinguished recalling Maryland's ''used destroy,'' added 18 ''are State, governed daily course nation. All contracts construed Their transfer property, collect debts, liability incapacitates discharging duties government becomes unconstitutional.'' Wall., 362. subsequently numerous Davis Elmira 161 275, 290, 502, 506, 40 700 (1896) (''Nothing, course, deny operation undiscriminating letter objects purposes Congressional legislation''); First Nat. St. Louis Missouri, 263 640, 656, 44 213, 215, 486 (1924) (national respect interfere creation, tend destroy efficiency paramount States''); Wichita Royalty Falls, 306 420, 515 (1939) tort claim depositor bank); Anderson Luckett, 321 233, 248, 64 599, 607, 88 692 (1944) (''National laws, infringe impose undue burden performance banks' functions''); California Fed. Sav. Loan Assn. Guerra, 479 272, 107 683, 93 613 (1987) employment discrimination loan association). 20 purposes, consequence following: charter shows conflict, threat, answer critical question. Third, refers called doctrine''-a doctrine described 22 ''a recognizes corporation's internal affairs-mat ters peculiar relationships corporation current officers, shareholders-because otherwise faced conflicting demands.'' Edgar MITE 457 624, 645, 102 2629, 2642, 73 269 (1982). business' incorporation Restatement (Second) Conflict Laws 309 (1971). analogy, argued, governing Chapman, 29 1120, 1123-1124 (C.A.7 1994). 24 justification formal symmetry controlling requirement, namely, arising out U.S., 85, need, seeks avoid requiring single reference. source federal. 1126-1127 (Posner, dissenting). absence (we say find) closest analogically maintains principal place business. (federally commercial ''follow located''). So said, (that next door other). And, if approach proved problematic, congressionally delegated remain contrary. 25 Fourth, points agency, fine, remove office, adds proceedings, OTS, ordinary-care [of ] spoken authoritatively respecting associations.'' 23-25 (citations omitted). claim, OTS statements, interpreting judge-made themselves agency promulgate binding regulation congressional authority. found, examination opinions, convincing evidence 26 Finally, note 27 sum, ''few instances,'' Milwaukee Illinois, 304, 313, 1784, 1790, (1981), Hinderlider La Plata River Cherry Creek Ditch Co., 92, 803, 1202 (1938) (controversy regarding ap portionment streamwater); Boyle Technologies 487 500, 108 2510, 442 (1988) (Federal contractors officials); Oil Cal., 332 301, 305, 1604, 1606-1607, 91 2067 (1947) (relationship members armed forces); Howard Lyons, 360 593, 597, 79 1331, 1333-1334, 1454 (1959) ( official duty); Banco Nacional de Cuba Sabbatino, 376 398, 425, 84 923, 938-939, 804 (1964) (relationships countries). 641, 2067, (1981) (''[A]bsent authorization formulate substantive decision, exists narrow areas concerned rights obligations interstate international disputes implicating relations foreign nations, admiralty cases''). interests declined recognize appear as, stronger than, here. (1966) land owned leased Government); 726, 732-738, 1457, 1460-1464 priority liens lending programs). Tompkins. case. III turn further question: Does (namely, statute), supplant care? parts follows: 30 depository by, behalf of, request direction conservator including intentional tortious terms defined determined (emphasis added). 31 Lower positions stating liable'' amounts worse, immunizes them McSweeney, 976 532, 537, n. (C.A.9 1992), cert. denied, 508 950, 113 2440, 124 658 (1993); Canfield, 967 443, 446, (C.A.10) (en banc), dism'd, 506 993, 516, 121 527 (1992); Swager, 773 1244 (D.Minn.1991). Cert. i (''The questions presented review are: 1. supplants 'federal law' exclusive damage ''); Bankers Association al. Amici Curiae 7-8. 32 floor-a guarantee meet standa rd. provide. 33 contains clause standards. petitioner, contending ''any right'' means elsewhere same Congress, enforcement provisions. 1818(b) (cease-and-desist provision). compel restrictive reading. That naturally, enough save federal, 34 another see 135 Cong. Rec. (1989) (statement Rep. Roth); 1760 Sen. Graham), preexisting liability. Fla. 607.0831 (1993) (''recklessness act omission committed faith malicious purpose''); Ohio Rev.Code 1701.59(D) (''deliberate intent cause injury undertaken reckless best corporation''). made difficult recover, negligent spent rescue depositors. whole Members repeatedly referred harm liability-relaxing Government, hence taxpayer, tried insurers pay depositors 7150-7151 Riegle) establishment overriding protecting soundness fund very limited scope. wholesale preemption longstanding principles ''). pre-empted cured problem (where weaker) aggravated others stronger). 36 fact, more. Senate Report addresses specifically. says: 37 ''This subsection prevent financial (1) violating care, negligence.'' S.Rep. 101-19, 318 (1989). published until weeks But, petitioner concedes, circulated voted. Senator Riegle, Committee Chairman, statement, his own Garn, six voted S6907 (daily ed., 19, 1989). Contrast Clarke Securities Industry Assn., 388, 407, 750, 761, 757 (refusing ''attach substantial weight'' Representative's statement days law). side. Record competing purpose, namely protect too strict 7150 Sanford) (supporting ''provisions relating affecting institutions'' ''these essential attract qualified institutions''). statements. inconsistent Report. largely rejected courts, pre-empts F.2d, 540-541 banks); 448-449 below alternative ground final complicated why He universally conceded assumes, sake determine wanted absolute standard, all, assumption without hold strict, stricter, (as universal freeing potentially what, given assumptions, totally unnecessary logical conclusion, suggest displaced 41 One obvious short ingenious lies runs contrary argument's assumption, applies. Without floor identical instances, needed efforts standards; serves purpose; reasons strong. 42 thorough nowhere separated ask looked try content reconcile silence brings state-chartered) scope, assuming enacting leave exactly That, says. face value achieve objective floor) having unravel arcane intricacies understanding better explains interpretation, imputing 43 reasons, judgment Appeals vacated, remanded proceedings consistent opinion. ordered. 45 whom THOMAS join, judgment. 46 I join notably unhelpful Ante, __-__. correctly out, natural covers rights. With plain hand, reason rely is, majority recognizes, ''not side.'' __. syllabus prepared Reporter Decisions convenience reader. Detroit Timber Lumber 200 321, 337, 282, 287, 50 499.

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