713 F.2d 1221 (6th Cir. 1983), 83-3128, Jet Courier Services, Inc. v. Federal Reserve Bank of Atlanta
|Citation:||713 F.2d 1221|
|Party Name:||JET COURIER SERVICES, INC., PDQ Air Services, Inc., Dixie Airways, Inc., Plaintiffs-Appellants, v. FEDERAL RESERVE BANK OF ATLANTA, et al., Defendants-Appellees.|
|Case Date:||July 29, 1983|
|Court:||United States Courts of Appeals, Court of Appeals for the Sixth Circuit|
Argued May 24, 1983.
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.
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...
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