Slattery v. United States

• Decision Date: 28 January 2011
• Docket Number: 2007–5089.,2007–5064,Nos. 2007–5063,s. 2007–5063
• Citation: 635 F.3d 1298
• Parties: Frank P. SLATTERY, Jr., (on behalf of himself and on behalf of all other similarly situated Shareholders of Meritor Savings Bank), Plaintiff–Cross Appellant,andSteven Roth, and Interstate Properties, Plaintiffs–Cross Appellants,v.UNITED STATES, Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

635 F.3d 1298

Frank P. SLATTERY, Jr., (on behalf of himself and on behalf of all other similarly situated Shareholders of Meritor Savings Bank), Plaintiff–Cross Appellant,andSteven Roth, and Interstate Properties, Plaintiffs–Cross Appellants,

v.UNITED STATES, Defendant–Appellant.

Nos. 2007–5063

2007–5064

2007–5089.

United States Court of Appeals, Federal Circuit.

Jan. 28, 2011.

Thomas M. Buchanan, Winston & Strawn, LLP, of Washington, DC, argued for plaintiff-cross appellant Frank P. Slattery, Jr., (on behalf of himself and on behalf of all other similarly situated shareholders of Meritor Savings Bank) on rehearing en banc. With him on the brief were Peter Kryn Dykema, Eric W. Bloom and Jacob R. Loshin.Bradley P. Smith, Sullivan & Cromwell LLP, of New York, NY, argued for plaintiffs-cross appellants Steven Roth and Interstate Properties on rehearing en banc. With him on the brief were Richard J. Urowsky and Jennifer L. Murray.Jeanne E. Davidson, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellant on rehearing en banc. With her on the brief were Michael F. Hertz, Deputy Assistant Attorney General, Kenneth M. Dintzer, Assistant Director, F. Jefferson Hughes and William G. Kanellis, Trial Attorneys.Dorothy Ashley Doherty, Federal Deposit Insurance Corporation, of Washington, DC, for amicus curiae Federal Deposit Insurance Corporation on rehearing en banc. With her on the brief was John M. Dorsey III.Before RADER, Chief Judge, NEWMAN, LOURIE, BRYSON, GAJARSA, LINN, DYK, PROST, MOORE, and O'MALLEY, Circuit Judges, on rehearing en banc.Opinion for the court filed by Circuit Judge NEWMAN, in which Chief Judge RADER and Circuit Judges LOURIE, BRYSON, LINN, and MOORE join. Dissenting opinion filed by Circuit Judge GAJARSA, in which Circuit Judges DYK, PROST, and O'MALLEY join.NEWMAN, Circuit Judge.

This suit is brought on behalf of shareholders of the Meritor Savings Bank, formerly the Philadelphia Savings Fund Society. The cause originated in 1982, when the Western Savings Fund Society, a Pennsylvania bank, was failing, and the Federal Deposit Insurance Corporation (FDIC) sought a solvent bank to merge with Western, to provide new capital and to assume Western's liabilities; the merger would thereby avoid failure of Western and the accompanying draw on the FDIC insurance fund. The Philadelphia Savings Fund Society and the FDIC agreed to the merger, upon mutual undertakings and specifically including certain accounting procedures necessary to enable the merged bank to comply with statutory and regulatory capital requirements. The merger terms were embodied in several contracts, including a Merger Assistance Agreement and a Memorandum of Understanding. The events that culminated in the seizure and sale of Meritor in 1992 are set forth in the prior opinions of this court and the Court of Federal Claims.

The Court of Federal Claims found that the government had breached its contracts with the acquiring bank, and assessed damages. Slattery v. United States, 53 Fed.Cl. 258 (2002) (liability); Slattery v. United States, 69 Fed.Cl. 573 (2006) (damages); Slattery v. United States, 73 Fed.Cl. 527, modified, 2006 WL 3930812 (Dec. 18, 2006) (final order) ( Slattery I ). The appeal and cross-appeal were heard by a panel of the Federal Circuit, with decision reported at Slattery v. United States, 583 F.3d 800 (Fed.Cir.2009) ( Slattery II ). The United States requested rehearing en banc, challenging the jurisdiction of the Court of Federal Claims and the Federal Circuit. We granted the petition in order to review the question of jurisdiction.

The government denies jurisdiction on several grounds. The principal ground for which rehearing was requested is that the Court of Federal Claims does not have jurisdiction of breach of contract claims when the federal entity that incurred the breach does not receive appropriated funds. Thus the government argues that this claim is not within the court's Tucker Act jurisdiction because the Federal Deposit Insurance Corporation is currently supported by fees from member banks, not by congressional appropriations, and there is no specific appropriation with respect to payment of this judgment. The government states that this court's precedent, including the precedent of our predecessor the Court of Claims,¹ establishes this exception to Tucker Act jurisdiction.

The Court of Federal Claims, receiving this argument, distinguished the FDIC from those government entities whose violation of statute or breach of contract had been deemed to be outside of Tucker Act jurisdiction. Slattery I, 53 Fed.Cl. at 270–74. On appeal, the Federal Circuit agreed that the Court of Federal Claims possessed jurisdiction. Slattery II, 583 F.3d at 807–12, 829–32. In view of the potential reach of this jurisdictional challenge, and perceived conflict in precedent, we granted the government's petition for rehearing en banc, vacated our decision in Slattery II, and requested additional briefing on the following questions:

(a) Is the Federal Deposit Insurance Corporation a nonappropriated fund instrumentality, and if so, what is the effect on the jurisdiction of the Court of Federal Claims over this suit against the United States?

(b) What is the appropriate standard for determining whether an entity is a nonappropriated fund instrumentality?

Slattery v. United States, 369 Fed.Appx. 142 (Fed.Cir.2010) (Order). The Federal Deposit Insurance Corporation has participated in this rehearing as amicus curiae and has filed briefs and presented argument.

On review of the history and application of the Tucker Act, we confirm that the Court of Federal Claims has jurisdiction of this cause. We conclude that the source of a government agency's funds, including funds to pay judgments incurred by agency actions, does not control whether there is jurisdiction of a claim within the subject matter assigned to the court by the Tucker Act. The jurisdictional criterion is not how the government entity is funded or its obligations met, but whether the government entity was acting on behalf of the government. We also confirm that a claim that is within the subject matter of the Tucker Act is not excluded from the jurisdiction of the Court of Federal Claims, or jurisdiction of the district courts under the “Little” Tucker Act, unless such jurisdiction has been unambiguously withdrawn or withheld by a statute specifying such exclusion. Thus we confirm that Tucker Act jurisdiction does not depend on and is not limited by whether the government entity receives or draws upon appropriated funds. Conflicting precedent shall no longer be relied upon.

I

History of the tucker act

The history of the Tucker Act is the history of judicial determination of claims against the United States and the procedures for payment of such claims.

Before 1855 claims against the federal government required direct petition to Congress. In 1855, to improve and expedite the treatment of claims, Congress created a Court of Claims to hear “any claim against the United States founded upon any law of Congress, or upon any regulation of an executive department, or upon any contract, express or implied, with the government of the United States.” Court of Claims Act, ch. 122, § 1, 10 Stat. 612 (1855). This Act provided that the court would investigate each claim and report its findings and proposed decision to Congress; Congress would then review the court's proposal, and finally decide the claim. Any payment to the claimant was implemented by specific legislative enactment. For detailed exposition of this history see Wilson Cowen, Philip Nichols, Jr., and Marion T. Bennett, The United States Court of Claims, A History, Part II (1978), reprinted in 216 Ct. Cl. (1978), and authorities cited therein.

As the number of claims against the federal government increased, and with the increasing congressional burdens of the era, President Lincoln recommended that the Court of Claims be empowered to render final judgments, rather than only make recommendations to Congress. See Cong. Globe, 37th Cong., 2d Sess. app. 2 (1861) (President's annual message to Congress, stating: “It was intended by the organization of the Court of Claims mainly to remove this branch of business from the Halls of Congress; but while the court has proved to be an effective and valuable means of investigation, it in great degree fails to effect the object of its creation, for want of power to make its judgments final.”). President Lincoln's recommendation was implemented by the Amended Court of Claims Act of 1863, ch. 92, 12 Stat. 765 (1863), which authorized the Court of Claims to enter final judgments, see §§ 3, 5, 7, 12 Stat. at 765–66, and also to adjudicate government counterclaims and setoffs, see § 3, 12 Stat. at 765. The statute included the right of appeal to the Supreme Court. See § 5, 12 Stat. at 766; H.R.Rep. No. 37–34, at 3 (2d Sess.1862) (“[The Court of Claims] judgments are made final in all such cases, subject to the right of appeal by either party to the Supreme Court on all questions of law, where the amounts exceed three thousand dollars.”).

The 1863 Act provided that judgments of the Court of Claims would be paid from a general appropriation for that purpose:

[I]n all cases of final judgments by said court, or an appeal by the said supreme court where the same shall be affirmed in favor of the claimant, the sum due thereby shall be paid out of any general appropriation made by law for the payment and satisfaction of private claims, on presentation to the Secretary of the Treasury of a copy of said judgment, certified by the clerk of said court of claims, and signed by the chief justice, or, in his absence, by the presiding judge, of said court.

§ 7, 12 Stat. at 766. This provision, now codified as amended at 28 U.S.C. § 2517(a), removed the need for a special congressional...