Lewis v. Continental Bank Corporation
| Decision Date | 05 March 1990 |
| Docket Number | No. 87-1955,87-1955 |
| Citation | 110 S.Ct. 1249,108 L.Ed.2d 400,494 U.S. 472 |
| Parties | Gerald A. LEWIS, etc., Appellant v. CONTINENTAL BANK CORPORATION, et al |
| Court | U.S. Supreme Court |
Before 1987, the Bank Holding Company Act of 1956 (BHCA) allowed States to prohibit an out-of-state bank holding company from owning an in-state "bank," which was defined to include an institution that both accepted demand deposits and engaged in the commercial lending business. In 1981, appellee, an Illinois bank holding company, applied to Florida to establish and operate an "industrial savings bank" (ISB) in that State, averring that "all deposit relationships" would be insured "to the maximum extent allowed by the Federal Deposit Insurance Corporation" (FDIC). Appellant Lewis, the State Comptroller, refused to process the application on the ground that two state statutes prohibited out-of-state holding companies from operating ISBs in Florida. Appellee then filed a suit claiming that the state statutes violated the Commerce Clause, and the District Court granted summary judgment in its favor, ordering Lewis to process the application. The court subsequently denied without explanation appellee's motion for attorney's fees under 42 U.S.C. § 1988. In 1987, shortly before the Court of Appeals affirmed on the merits and remanded for an explanation of why the attorney's fees claim had been denied, amendments to the BHCA expanded the definition of "bank" to include all banks whose deposits are insured by the FDIC. Lewis then filed a petition for rehearing in the Court of Appeals, arguing that the new legislation mooted the controversy because, since appellee's proposed ISB would have FDIC-insured deposits, the refusal to process the application was authorized by federal law and hence immune from Commerce Clause challenge. The court denied the petition, awarded appellee attorney's fees for the appeal, and remanded for the District Court to calculate the amount of that award and to determine whether an award was appropriate for work done in the District Court.
Held:
1. The case has been rendered moot by the 1987 BHCA amendments. The only evidence in the record of appellee's stake in the case's outcome is its application to establish and operate an FDIC-insured ISB, which stake was eliminated by the amendments. The application constitutes no evidence that appellee intended to establish an un insured bank, since "insured by the FDIC to the maximum extent allowed" envisions FDIC insurance. There is no merit to appellee's argument that its suit nevertheless remains justiciable because its dispute with Florida is "capable of repetition, yet evading review." Since Florida's allegedly unconstitutional action is no longer unconstitutional with respect to insured ISBs, there is no reasonable expectation that appellee will suffer the same wrong again. Moreover, the State's refusal to issue a bank charter is not the sort of action which, by reason of the inherently short duration of the opportunity for remedy, is likely to evade review. See Los Angeles v. Lyons, 461 U.S. 95, 109, 103 S.Ct. 1660, 1669, 75 L.Ed.2d 675. Pp. 477-482.
2. Appellee's postargument, ex parte affidavit averring its interest in opening, and explaining its failure to file an updated application for, an uninsured ISB will not be evaluated by this Court in the first instance. Since, however, the case's mootness is attributable to a change in the governing legal framework, and since appellee may have a residual claim, which understandably was not asserted previously, that it intended to apply for an uninsured ISB not covered by the new framework, the case is remanded for consideration of such materials as the parties may submit to supplement the record. See Diffenderfer v. Central Baptist Church of Minnesota, 404 U.S. 412, 415, 92 S.Ct. 574, 576, 30 L.Ed.2d 567. P. 482-483.
3. Because the event that mooted the controversy occurred before the Court of Appeals' judgment, appellee was not, at the appeal stage, a "prevailing party" entitled to recover attorney's fees under § 1988. See Rhodes v. Stewart, 488 U.S. 1, 3-4, 109 S.Ct. 203-204, 102 L.Ed.2d 1. Whether appellee can be deemed a "prevailing party" in the District Court, and whether § 1988 fees are available in a Commerce Clause challenge, must be resolved by the courts below in the first instance. P. 483.
827 F.2d 1517 (CA 11 1987) and 838 F.2d 457 (CA 11 1988), vacated and remanded.
Arthur E. Wilmarth, Jr., Washington, D.C., for appellant.
Andrew L. Gordon, Miami, Fla., for respondents.
This case involves an Illinois bank holding company's challenge to certain Florida banking statutes that are alleged to violate the Commerce Clause, U.S. Const., Art. 1, § 8, cl. 3. We conclude that the case has been rendered moot by 1987 amendments to the Bank Holding Company Act.
Under § 3(d) of the Bank Holding Company Act of 1956 (BHCA), 70 Stat. 134, as amended, 12 U.S.C. § 1842(d), a bank holding company with its principal banking operations in one State may not establish or acquire a bank in another State unless the latter State's statutes specifically authorize it to do so. The BHCA thus effectively permits States to prevent out-of-state holding companies from owning in-state banks. That license for state discrimination applies, however, only if the proposed banking subsidiary is a "bank" as defined in § 2(c) of the BHCA, 70 Stat. 133, as amended, 12 U.S.C. § 1841(c). Until 1987, a banking institution qualified as a "bank" for purposes of the BHCA only if it both accepted demand deposits and engaged in the business of commercial lending. As amended by the Competitive Equality Amendments of 1987, 101 Stat. 554, the BHCA definition was expanded to include all banks whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). See 12 U.S.C. § 1841(c)(1)(A).
On June 29, 1981, appellee Continental Bank Corporation, a bank holding company with its principal place of business in Illinois, filed an application with the Florida Department of Banking and Finance to establish and operate an "industrial savings bank" (ISB) in Florida. According to the application, " '[a]ll deposit relationships' " would be insured " 'to the maximum extent allowed by the [FDIC].' " Juris. Statement 1-2.
Appellant Lewis, Comptroller of the State of Florida and head of the Department of Banking and Finance, refused to process the application on the ground that two Florida statutes, Fla.Stat. § 658.29(1) (Supp.1980) and Fla.Stat. § 664.03(14) (Supp.1980), prohibited out-of-state bank holding companies from operating ISBs in Florida. Continental thereupon filed a complaint in the United States District Court for the Northern District of Florida, claiming that the statutes violated the Commerce Clause, U.S. Const., Art. I, § 8, cl. 3, and praying for declaratory and injunctive relief. The District Court granted summary judgment for the plaintiff, holding that the Florida statutes unconstitutionally discriminated against nonresidents, and ordered Lewis to process Continental's application.
In June 1984, after the District Court had entered judgment, the State of Florida amended its statutes to prohibit the chartering of any new ISBs in the State, whether by resident or nonresident enterprises. Fla.Stat. § 664.02(1) (Supp.1984). Lewis then moved to amend or alter the judgment pursuant to Rule 59(e) of the Federal Rules of Civil Procedure, arguing that the new nondiscriminatory ban had rendered the validity of the challenged statutes moot. The District Court denied the motion, reasoning that the new statute, even if constitutional, did not moot the case because the State's unconstitutional behavior was "capable of repetition, yet evading review." App. 66a. Meanwhile, Continental had moved for an award of attorney's fees under 42 U.S.C. § 1988, arguing that Lewis' enforcement of the- stat utes had deprived it of its constitutional rights in violation of 42 U.S.C. § 1983. The District Court denied that motion without explanation.
On appeal, the Court of Appeals for the Eleventh Circuit affirmed on the merits issue, though resting its determination that the case was not moot on the different ground that the supervening ban on new ISBs was unconstitutional, since it had the purpose and effect of denying nonresident holding companies access to Florida deposits. The Court of Appeals did not resolve Continental's claim for attorney's fees, but remanded the case to the District Court for an explanation of why that claim had been denied. Continental Illinois Corp. v. Lewis, 827 F.2d 1517 (1987).
In August 1987, shortly before the Court of Appeals issued its opinion, there was again a change in the law, this time at the federal level. As part of the Competitive Equality Amendments of 1987, 101 Stat. 554, Congress expanded the BHCA definition of "bank." The new definition, codified at 12 U.S.C. § 1841(c)(1)(A), includes any "insured bank as defined by section 3(h) of the Federal Deposit Insurance Act," which in turn defines "insured bank" as "any bank . . . the deposits of which are insured" by the FDIC. 12 U.S.C. § 1813(h). After this amendment to the BHCA, Lewis filed a petition for rehearing in the Court of Appeals, arguing that the new legislation mooted the controversy because the ISB that Continental proposed to establish would have FDIC-insured deposits and therefore would be a "bank" within the coverage of the BHCA. Such coverage, Lewis argued, would mean that Florida's refusal to permit Continental to establish an ISB, even if discriminatory against interstate commerce, would be authorized by federal law and hence immune from challenge under the Commerce Clause.
The Court of Appeals denied the petition for rehearing in a brief opinion, saying that it did "not agree that the amendments necessarily would make Continental's...
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