Federal Home Loan Bank Bd. v. Empie, Civ-83-500-W.

• Decision Date: 25 July 1983
• Docket Number: No. Civ-83-500-W.,Civ-83-500-W.
• Citation: 628 F. Supp. 223
• Parties: FEDERAL HOME LOAN BANK BOARD, Washington, D.C., Plaintiff, v. R.Y. EMPIE, in his official capacity as Oklahoma State Banking Commissioner; and Michael C. Turpen in his official capacity as Attorney General of the State of Oklahoma, Defendants.
• Court: U.S. District Court — Western District of Oklahoma

628 F. Supp. 223

FEDERAL HOME LOAN BANK BOARD, Washington, D.C., Plaintiff, v. R.Y. EMPIE, in his official capacity as Oklahoma State Banking Commissioner; and Michael C. Turpen in his official capacity as Attorney General of the State of Oklahoma, Defendants.

No. Civ-83-500-W.

United States District Court, W.D. Oklahoma.

July 25, 1983.

William S. Price, U.S. Atty., Richard Freeman, Asst. U.S. Atty., Oklahoma City, Okl., Harvey Simon, Associate Gen. Counsel, John E. Gunther, Deputy Director, Litigation Div., Denise Z. Field, Trial Atty., Office of Gen. Counsel, Federal Home Loan Bank Bd., Washington, D.C., for Federal Home Loan Bank Bd.

Michael C. Turpen, Atty. Gen., George R. Barr, Jr., Asst. Atty. Gen., Oklahoma City, Okl., for Michael C. Turpen.

Sandi Cone Silkey, Oklahoma City, Okl., for R.Y. Empie.

Laura Nan Pringle, Vice President and Gen. Counsel, Oklahoma Bankers Ass'n, Ann Threlkeld, Don G. Holladay, Andrews, Davis, Legg, Bixler, Milsten & Murrah, Oklahoma City, Okl., for amicus curiae Oklahoma Bankers Assn.

ORDER

LEE R. WEST, District Judge.

This matter comes before the Court upon the defendants' Motion to Dismiss for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. Plaintiff responded in opposition to the motion. The Oklahoma Bankers Association filed an Amicus Curiae Brief in support of defendants' Motion to Dismiss. Plaintiff responded in opposition to the Oklahoma Bankers Association's Amicus Curiae Brief and defendants replied to plaintiff's response.

The Federal Home Loan Bank Board (FHLBB) filed this action pursuant to the Home Owner's Loan Act of 1933 (HOLA), 12 U.S.C. § 1461 et seq. (1980), and 28 U.S.C. §§ 1331, 1337 and 1345 (1980), to obtain a declaration that the defendants lack the authority to interfere with, or to impede, the exclusive right under controlling federal law of the FHLBB to regulate all aspects of the operations of federally-chartered savings institutions, particularly in the area of advertising practices. The FHLBB also seeks an injunction to prevent the defendants from taking any action to compel compliance by any federally-chartered savings institution with any Oklahoma laws or regulations relating to advertising practices, specifically the use of the terms "bank", "banks", or "banking" in the advertising by such institutions.

The FHLBB initiated this action in response to a suit filed by the defendant, R.Y. Empie, Oklahoma State Banking Commissioner, and the Oklahoma Bankers Association in the District Court of Muskogee County, Oklahoma, against Victor Federal Savings and Loan Association of Muskogee, Oklahoma, seeking to enjoin the use of the term "banking" by Victor Federal's advertisements as violative of Okla.Stat. Ann. tit. 6, § 1401 (West 1982).

Proposition I

In Proposition I, defendants contend that neither the HOLA nor any rules or regulations promulgated by the plaintiff has preempted 6 Okla.Stat.1981, § 1401. Defendants contend that the HOLA does not expressly provide for preemption nor is its regulatory scheme so pervasive as to imply an intent by Congress for the HOLA to "occupy the field."

Plaintiff contends that federal law has preempted the application of Oklahoma law to the advertising practices of federally-chartered savings institutions. Plaintiff contends that Congress intended the HOLA to occupy the field of regulation of federally-chartered savings institutions. Plaintiff also contends that Okla.Stat.Ann., tit. 6, § 1401 directly conflicts with 12 C.F.R. § 563.27 and is therefore preempted.

In Fidelity Federal Savings and Loan Ass'n v. de la Cuesta, 458 U.S. 141, 102 S.Ct. 3014, 73 L.Ed.2d 664, the United States Supreme Court discussed Congress' broad delegation of authority to the FHLBB in the HOLA. With reference to the HOLA, the Court stated at page 4921 that

in § 5(a) of the Act, Congress gave the Board plenary authority to issue regulations governing federal savings and loans:

"In order to provide local mutual thrift institutions in which people may invest their funds and in order to provide for the financing of homes, the Board is authorized, under such rules and regulations as it may prescribe, to provide for the organization, incorporation, examination, operation, and regulation of associations to be known as `Federal Savings and Loan Associations', or `Federal mutual savings banks' ..., and to issue charters therefor, giving primary consideration to the best practices of local mutual thrift and home-financing institutions in the United States." 12 U.S.C. § 1464(a) (1976 ed., Supp. IV) (emphasis added).

The broad language of § 5(a) expresses no limits on the Board's authority to regulate the lending practices of federal savings and loans. As one court put it, "it would have been difficult for Congress to give the Bank Board a broader mandate." Glendale Federal Sav. & Loan Assn. v. Fox, 459 F.Supp. 903, 910 (CD Cal.1978), final summary judgment granted, 481 F.Supp. 616 (1979), order reversing and remanding on other grounds reported at 636 F.2d 1078 (CA9 1981), cert. pending, No. 81-1192.

. . . .

Congress invested the Board with broad authority to regulate federal savings and loans so as to effect the statute's purposes, and plainly indicated that the Board need not feel bound by existing state law.

This discussion supports a finding that Congress intended the HOLA to preempt all state regulation over federally-chartered savings and loan institutions. Decided before de la Cuesta, supra, the Court in People, Etc. v. Coast Federal Sav. & Loan Ass'n, 98 F.Supp. 311, 317 (S.D.Cal.1951), stated that the FHLBB, which determines that advertising methods of savings and loan associations violate its rules, has plenary power to correct any improper or unlawful practices. The Court went on to state at page 319 that "as to federal savings and loan associations, Congress made plenary, preemptive delegation to the Board to organize, incorporate, supervise, and regulate, leaving no field for state supervision." Likewise, the United States Court of Appeals, Ninth Circuit, held that "the broad regulatory authority over the federal associations conferred upon the Bank Board by HOLA does wholly preempt the field of regulatory control over these associations." Conference of Federal Sav. & Loan Ass'ns v. Stein, 604 F.2d 1256, 1260 (9th Cir.1979), aff'd 445 U.S. 921, 100 S.Ct. 1304, 63 L.Ed.2d 754. This Court finds that Congress intended the HOLA to preempt all state regulation over federally-chartered savings and loan institutions and, therefore, any state law which falls within this area exclusively occupied by the HOLA must give way by virtue of the supremacy clause of the United States Constitution. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 236, 67 S.Ct. 1146, 1155, 91 L.Ed. 1447 (1947). Because advertising by federal savings and loan associations is regulated by 12 C.F.R. § 563.27, pursuant to the HOLA, 6 O.S. § 1401 (1981) is preempted.

Proposition II

In Proposition II, defendants contend that plaintiff's preemption argument is actually a defense that should be raised in the pending state action and that, therefore, this Court lacks jurisdiction in this case. Defendants also contend that this Court should abstain from this case under both the Pullman and Younger doctrines of abstention. The Oklahoma Bankers Association in its Amicus Curiae Brief also raises this contention. Defendants further contend that an injunction in this case is inappropriate because the plaintiff has an adequate remedy at law and is not going to suffer irreparable harm. The Oklahoma Bankers Association also contends that no case or controversy exists and therefore this action should be dismissed under the Ripeness Doctrine.

Plaintiff contends that this Court has jurisdiction over this action; that this Court has subject matter jurisdiction over the Bank Board's Complaint under 28 U.S.C. §§ 1331, 1337, and 1345; that the Wycoff case and its progeny are totally inapplicable to the Bank Board's Complaint; and that the Bank Board has clear authority to seek relief against state interference with its exclusive federal regulatory scheme. Plaintiff also contends that this case is not appropriate for the exercise of abstention and that Younger and Pullman are not applicable here. Plaintiff further contends that the Bank Board's Complaint states a case or controversy that is ripe for adjudication.

This Court finds that it has original jurisdiction of this action under 28 U.S.C. § 1331 in that the matter in controversy arises under the Constitution of the United States, article VI, cl. 2, and the laws of the United States, the HOLA, as amended, 12 U.S.C. § 1461 et seq. Because the HOLA is an "Act of Congress" regulating commerce within the meaning of 28 U.S.C. § 1337, People of St. of Ill. ex rel. Bowman v. Home Fed. S. & L.A., 521 F.2d 704, 706 (7th Cir.1975), this Court has original jurisdiction under 28 U.S.C. § 1337. Because this action was brought by an agency of the United States, the FHLBB, this Court also has original jurisdiction of this action under 28 U.S.C. § 1345. Furthermore, this Court finds that the FHLBB has authority to bring this action under 12 U.S.C. § 1464(d)(1) which provides that

the Board shall have power to enforce this section and rules and regulations made hereunder. In the enforcement of any provision of this section or rules and regulations made hereunder, or any other law or regulation, or in any other action, suit, or proceeding to which it is a party or in which it is interested, ..., the Board is authorized to act in its own name and through it own attorneys.

The United States Supreme Court stated in Public Serv. Comm'n v. Wycoff Co., 344 U.S. 237, 248, 73 S.Ct. 236, 242, 97 L.Ed. 291 (1952) that

where the complaint in an action for declaratory judgment seeks in essence to assert a defense to an impending or threatened state court action, it is the character of the threatened

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