419 United States v. Michigan National Corporation 8212 1737

• Decision Date: 21 October 1974
• Docket Number: No. 73,73
• Citation: 42 L.Ed.2d 1,95 S.Ct. 10
• Parties: . 419 U.S. 1 UNITED STATES v. MICHIGAN NATIONAL CORPORATION et al. —1737
• Court: U.S. Supreme Court

42 L.Ed.2d 1

95 S.Ct. 10.

419 U.S. 1

UNITED STATES

v MICHIGAN NATIONAL CORPORATION et al.

No. 73—1737.

Oct. 21, 1974.

[Syllabus intentionally omitted]

PER CURIAM.

This is an appeal from an order of the District Court dismissing without prejudice the Government's suit under § 7 of the Clayton Act, 38 Stat. 731, 15 U.S.C. 18, to enjoin a bank holding company's acquisition. Appellee Michigan National Corporation (MNC), a bank holding company that owns five Michigan banks, seeks control of four additional Michigan banks. The planned acquisition will take the following form. MNC will charter four 'phantom' banks, initially having no assets or deposits, whose stock it will acquire. The four target banks will be merged with the phantom banks, thereby becoming subsidiary banks of the holding company.

The form of the transaction brings it within the purview of two regulatory statutes. Section 3 of the Bank Holding Company Act of 1956, 70 Stat. 134, as amended, 80 Stat. 237, 12 U.S.C. § 1842, requires that an acquisition of a subsidiary bank by a holding company be approved by the Board of Governors of the Federal Reserve System. Section 18(c)(2)(A), of the Federal Deposit Insurance Act, as amended by the Bank Merger Act, 80 Stat. 7, 12 U.S.C. § 1828(c)(2)(A), requires approval of bank mergers by a designated agency, which in the case of an acquisition by a national bank is the Comptroller of the Currency. Each regulatory statute provides time limitations for antitrust suits challenging transactions that have gained administrative approval. The Bank Holding Company Act, § 11, as amended, 80 Stat. 240, 12 U.S.C. § 1849, provides that an antitrust suit arising from a holding company acquisition must be brought within 30 days of approval by the Federal Reserve Board. The Bank Merger Act, 12 U.S.C. § 1828(c)(6) and (7), establishes a similar 30-day period following approval of a merger by the designated administrative body.¹ Under both statutes transactions having administrative approval cannot go forward during the period within which an antitrust suit may be brought, or during the pendency of a timely antitrust suit unless the court otherwise orders. The expiration of the period without the filing of an antitrust suit, however, allows the transacting parties to consummate arrangements without fear of challenge.

MNC made applications to both the Federal Reserve Board and the Comptroller for approval of its proposed transactions. Disapproval by either body would prevent MNC from completing the entire acquisition as planned. In October 1973 the Federal Reserve Board approved the acquisitions by the holding company. Without awaiting action by the Comptroller, the Government filed complaints under the Clayton Act to enjoin the acquisition; the suit was brought within the 30-day period prescribed by § 11 of the Bank Holding Company Act. The District Court dismissed the complaints without prejudice, ruling that the Government should bring a new lawsuit if and when the Comptroller approved the merger of the target banks with the 'phantoms.' The Government took a direct appeal to this Court, 32 Stat. 823, 15 U.S.C. § 29.

The District Court reasoned that the Government's suit was 'premature,' since a disapproval by the Comptroller would moot the Clayton Act claim. Whether viewed as a dismissal for lack of a 'case or controversy' or as an exercise of equitable discretion, we believe the District Court's action was error.

The view that the possibility of disapproval by the Comptroller deprived the District Court of an actual controversy to adjudicate, a position taken by appel- lees below, cannot be squared with the many decisions permitting a federal court to stay proceedings in a case properly before it while awaiting the decision of another tribunal. This is the holding of Railroad Comm'n v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), which launched the abstention doctrine. Pullman held that where an order of the Texas Railroad Commission was challenged in a District Court as violative of the Fourteenth Amendment and as outside the Commission's authority under state law, the federal court should stay proceedings pending a resolution by the Texas courts of the state law question of the Commission's authority. In succeeding cases that have applied the Pullman doctrine, the common practice has been for the district court to retain jurisdiction but to stay proceedings while awaiting a decision in the state courts. See, e.g., Chicago v. Fieldcrest Dairies, Inc., 316 U.S. 168, 62 S.Ct. 986, 86 L.Ed. 1355 (1942); Spector Motor Service, Inc. v. McLaughlin, 323 U.S. 101, 65 S.Ct. 152, 89 L.Ed. 101 (1944); Government Civic Employees Organizing Committee v. Windsor, 353 U.S. 364, 77 S.Ct. 149, 1 L.Ed.2d 115 (1957); Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25, 79 S.Ct. 1070, 3 L.Ed.2d 1058 (1959); England v. Louisiana State Board of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964); Lake Carriers' Assn. v. MacMullan, 406 U.S. 498, 92 S.Ct. 1749, 32 L.Ed.2d 257 (1972). That a favorable decision in the state court might moot the plaintiff's constitutional claim brought to the federal court was never thought to create any jurisdictional impediment. For jurisdictional purposes, it suffices that there is a 'real and substantial controversy admitting of specific relief through a decree of a conclusive character as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.' Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 241, 57 S.Ct. 461, 464, 81 L.Ed. 395 (1937).

The same procedure has generally been followed when the resolution of a claim cognizable in a federal court must await a determination by an administrative agency having primary jurisdiction. See Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 222—224, 86 S.Ct. 781, 787, 15 L.Ed.2d 709 (1966); General American Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 432—433, 60 S.Ct. 325, 331, 84 L.Ed. 361 (1940); Mitchell Coal Co. v. Pennsylvania R. Co., 230 U.S. 247, 33 S.Ct. 916, 57 L.Ed. 1472 (1913). Dismissal rather than a stay has been approved where there is assurance that no party is prejudiced thereby.² See Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576 (1952).

In the present case we cannot say with assurance that the Government will not be prejudiced by a dismissal. Section 11 of the Bank Holding Company Act provides that '(a)ny action brought under the entitrust laws arising out of an acquisition, merger, or consolidation transaction' shall be commenced within the 30-day period following approval by the Board. 12 U.S.C. § 1849(b) ...