Jet Courier Services, Inc. v. Federal Reserve Bank of Atlanta, 83-3128

Decision Date29 July 1983
Docket NumberNo. 83-3128,83-3128
Citation713 F.2d 1221
Parties1983-2 Trade Cases P 65,549 JET COURIER SERVICES, INC., PDQ Air Services, Inc., Dixie Airways, Inc., Plaintiffs-Appellants, v. FEDERAL RESERVE BANK OF ATLANTA, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

Glenn V. Whitaker (LC), Graydon, Head & Ritchey, Cincinnati, Ohio, Daniel B. Silver (argued), Lee C. Buchheit, Vincent Alventosa, Eric C. Jeffrey, Cleary, Gottlied, Steen & Hamilton, Washington, D.C., for plaintiffs-appellants.

Christopher K. Barnes, U.S. Atty., Donetta D. Wiethe, Asst. U.S. Atty., James F. McDaniel, Cincinnati, Ohio, Mark Rutzick (argued), Federal Programs Branch, Civ.Div., Washington, D.C., for defendants-appellees.

Before LIVELY and CONTIE, Circuit Judges, and SILER, District Judge. *

LIVELY, Circuit Judge.

In this action three private air couriers sought to enjoin the Board of Governors of the Federal Reserve System (the Board) and the twelve regional Federal Reserve Banks from implementing an order which modified their check collection services. The program sought to be enjoined extended the time for presentment of checks and established a schedule of fees to be charged by Federal Reserve Banks for check collection services. The district court dismissed the action and this court granted an expedited appeal.

I.

For many years prior to 1980 the Federal Reserve Banks performed check collection services for member banks without charge. The earnings on reserves which member banks were required to maintain on deposit with the Federal Reserve Banks made this free service possible. As part of a general overhaul of the government's regulation of the banking industry Congress enacted the Monetary Control Act of 1980, Pub.L. 96-221, 94 Stat. 132 (The MCA). One feature of the MCA is a provision by which many banks in the United States that are not now members will eventually be required to maintain reserve accounts with the Federal Reserve System. Further, services such as check clearing formerly provided to member banks only will be made available to all banks, regardless of whether or not they are members. The services will no longer be free of charge, however. Section 107 of the MCA added a new Section 11A to the Federal Reserve Act, codified as 12 U.S.C. § 248a (1976 ed., Supp. IV):

§ 248a. Pricing of services

(a) Publication of pricing principles and proposed schedule of fees; effective date of schedule of fees

Not later than the first day of the sixth month after March 31, 1980; the Board shall publish for public comment a set of pricing principles in accordance with this section and a proposed schedule of fees based upon those principles for Federal Reserve bank services to depository institutions, and not later than the first day of the eighteenth month after March 31, 1980, the Board shall begin to put into effect a schedule of fees for such services which is based on those principles.

(b) Covered services

The services which shall be covered by the schedule of fees under subsection (a) of this section are--

(1) currency and coin services;

(2) check clearing and collection services;

(3) wire transfer services;

(4) automated clearinghouse services;

(5) settlement services;

(6) securities safekeeping services;

(7) Federal Reserve float; and

(8) any new services which the Federal Reserve System offers, including but not limited to payment services to effectuate the electronic transfer of funds.

(c) Criteria applicable

The schedule of fees prescribed pursuant to this section shall be based on the following principles:

(1) All Federal Reserve bank services covered by the fee schedule shall be priced explicitly.

(2) All Federal Reserve bank services covered by the fee schedule shall be available to nonmember depository institutions and such services shall be priced at the same fee schedule applicable to member banks, except that nonmembers shall be subject to any other terms, including a requirement of balances sufficient for clearing purposes, that the Board may determine are applicable to member banks.

(3) Over the long run, fees shall be established on the basis of all direct and indirect costs actually incurred in providing the Federal Reserve services priced, including interest on items credited prior to actual collection, overhead, and an allocation of imputed costs which takes into account the taxes that would have been paid and the return on capital that would have been provided had the services been furnished by a private business firm, except that the pricing principles shall give due regard to competitive factors and the provision of an adequate level of such services nationwide.

(4) Interest on items credited prior to collection shall be charged at the current rate applicable in the market for Federal funds.

(d) Budgetary consequences of decline in volume of services

The Board shall require reductions in the operating budgets of the Federal Reserve banks commensurate with any actual or projected decline in the volume of services to be provided by such banks. The full amount of any savings so realized shall be paid into the United States Treasury.

In their complaint, filed February 17, 1983, the plaintiffs charged that the Board violated Section 107 of the MCA by directing the Reserve Banks to begin implementing previously determined new fee schedules, deposit deadlines and funds availability schedules for check collection services on February 24, 1983. The plaintiffs asserted that the fees, presentment and availability schedules violated the MCA by tending to create a monopoly or near monopoly for the Federal Reserve Banks in the market for check collection and transportation services in violation of a congressional mandate that Reserve Banks compete on a fair and equal basis with their commercial clearing bank counterparts. This unfair competition was achieved, the plaintiffs claimed, by establishing fee schedules which failed to cover the full cost of the services offered by the Federal Reserve Banks. The plaintiffs charged that the fee schedules for use of the Interdistrict Transportation System (ITS), a component of the check clearing operations conducted by the Federal Reserve System had no relation to the cost of services actually offered and reflected "a deliberate pattern of predatory pricing." The ITS performs services for the Federal Reserve Banks and the banks which use their check collection services which is similar to that performed by the plaintiffs and other air couriers for private clearing banks and their check collection customers.

The plaintiffs based their demand for injunctive relief on claimed violation of the pricing criteria contained in 12 U.S.C. § 248a(c), supra, alleged failure to publish the plan for comment sufficiently in advance of the effective date and an asserted violation of Section 2 of the Sherman Act, 15 U.S.C. § 2 (1976). 1 The plaintiffs filed a motion for a temporary restraining order with supporting affidavits and the Board and one Reserve Bank filed responses in opposition to the motion, also supported by affidavits. After conducting a hearing the district court dismissed the action on February 22, 1983, upon concluding that the plaintiffs lacked standing to sue under the MCA and that the complaint failed to state a claim upon which relief could be granted under the Sherman Act. Both the district court and this court denied motions to stay the judgment of dismissal.

II.

We agree with the district court that the plaintiffs lack standing under the relevant statute, 2 the MCA. The plaintiffs are not banks and do not function as check processing or clearing centers. They are private air couriers which contract with banks other than Federal Reserve Banks that perform check collection services. None of the banks which utilize the transportation services of the plaintiffs joined in bringing this action.

A.

The requirement that a plaintiff must have "standing" in order to bring an action in a federal court has been long recognized, and has been the subject of many decisions. The most recent Supreme Court statement on the subject is contained in Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982). In Valley Forge the court noted that standing involves both constitutional ("case" or "controversy") requirements and prudential considerations. After discussing some ambiguity concerning the nature of the standing requirement arising from earlier decisions, the Court identified the "irreducible minimum" constitutional requirement as follows:

A recent line of decisions, however, has resolved that ambiguity, at least to the following extent: at an irreducible minimum, Art. III requires the party who invokes the court's authority to "show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant," Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 99 [99 S.Ct. 1601, 1607, 60 L.Ed.2d 66] (1979), and that the injury "fairly can be traced to the challenged action" and "is likely to be redressed by a favorable decision," Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 38, 41 [96 S.Ct. 1917, 1924, 1925, 48 L.Ed.2d 450] (1976). In this manner does Art. III limit the federal judicial power "to those disputes which confine federal courts to a role consistent with a system of separated powers and which are traditionally thought to be capable of resolution through the judicial process." Flast v. Cohen, supra [392 U.S. 83], at 97 [88 S.Ct. 1942, at 1951, 20 L.Ed.2d 947 (1968) ].

454 U.S. at 472, 102 S.Ct. at 758 (footnote omitted). The Court also outlined the governing prudential considerations:

Beyond the constitutional requirements, the federal judiciary has also adhered to a set of prudential principles that bear on the question of...

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