Perna v. Health One Credit Union

• Citation: 983 F.3d 258
• Decision Date: 21 December 2020
• Docket Number: No. 19-1965,19-1965
• Parties: James M. PERNA, Plaintiff-Appellant, v. HEALTH ONE CREDIT UNION; National Credit Union Administration; National Credit Union Administration Board, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

983 F.3d 258

James M. PERNA, Plaintiff-Appellant,

v.HEALTH ONE CREDIT UNION; National Credit Union Administration; National Credit Union Administration Board, Defendants-Appellees.

No. 19-1965

United States Court of Appeals, Sixth Circuit.

Argued: February 6, 2020

Decided and Filed: December 21, 2020

Rehearing En Banc Denied January 26, 2021

ARGUED: Cindy Rhodes Victor, KUS RYAN, PLLC, Auburn Hills, Michigan, for Appellant. Emily C. Palacios, MILLER, CANFIELD, PADDOCK & STONE, P.L.C., Ann Arbor, Michigan, for Appellees. ON BRIEF: Cindy Rhodes Victor, KUS RYAN, PLLC, Auburn Hills, Michigan, for Appellant. Emily C. Palacios, Brian Schwartz, MILLER, CANFIELD, PADDOCK & STONE, P.L.C., Ann Arbor, Michigan, for Appellees.

Before: SUHRHEINRICH, DONALD, and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

In recent decades the Supreme Court has cautioned courts not to mistake a forfeitable claims-processing rule (such as a rule that a party assert a claim within a specific time) for a nonforfeitable jurisdictional limit that deprives the court of the power to adjudicate the claim. Fort Bend County v. Davis , ––– U.S. ––––, 139 S. Ct. 1843, 1848–50, 204 L.Ed.2d 116 (2019). Yet this cautionary note must not be overread: It does not permit us to ignore a clear jurisdictional limit that Congress has, in fact, imposed. Id. at 1850. And here, James Perna seeks to litigate a claim that Congress has "clearly" deprived us of jurisdiction to entertain. Id. (citation omitted).

Perna worked for Health One Credit Union, a federally insured but state-chartered credit union. A state regulator found that Health One had become financially unsound and appointed the National Credit Union Administration Board, a federal entity, as Health One's liquidator. The Board terminated Perna's employment. Perna has since sought damages in many ways, from filing a complaint with a state agency, to asserting a claim with the Board, to conducting an arbitration with an arbitration agency. In this suit, Perna seeks to modify the arbitration award by making the Board liable on it. But the Federal Credit Union Act provides that "no court shall have jurisdiction over" claims against covered credit unions asserted outside its exclusive framework. 12 U.S.C. § 1787(b)(13)(D). The district court thus held that it lacked jurisdiction over Perna's suit. We agree, although we clarify that the court should have dismissed this suit for lack of subject-matter jurisdiction, not granted summary judgment to the defendants.

I

A

A complex overlay of federal law on top of state law applies to Michigan credit unions that are federally insured. First up is state law. The Michigan Credit Union Act governs most credit unions operating within the state. See Mich. Comp. Laws 490.101 –.601. Michigan law places primary regulatory responsibility over these entities in the Director of the Department of Insurance and Financial Services (the "Director"). Id. §§ 490.102(n)–(o), .201(1). This law includes many rules tailored to Michigan-chartered credit unions. Among them, the Director must inspect the financial health of these state credit unions every 18 months. Id. § 490.207(1).

When the Director concludes that a Michigan credit union "is in an unsafe or unsound condition," the Director may appoint a conservator (to manage the credit union's affairs) or ask a state court to appoint a receiver (to liquidate the credit union). Id. § 490.232(1). A liquidating receiver has the power to control the credit union's property, oversee its business, and ultimately dissolve the entity. Id. §§ 490.231(1), .233–35. Michigan law permits the Director to appoint a federal agency as the receiver, which then incorporates "the receivership procedures of the federal agency[.]" Id. § 490.231(2). If the Director opts to initially appoint a conservator, the conservator has the same powers as a receiver except for the liquidation power. Id. § 490.242(1). After the conservator has managed the credit union, the Director will decide whether to return it to normal operations or apply for a receiver to liquidate it. Id. § 490.245.

Next up is federal law. The Federal Credit Union Act governs federally chartered credit unions and state-chartered credit unions that participate in a federal insurance program like the well-known program for banks. See 12 U.S.C. §§ 1751 – 1795k. Federal law places primary regulatory responsibility for covered credit unions in the National Credit Union Administration, an agency managed by the National Credit Union Administration Board (the "Board"). Id. § 1752a(a). The Board has many oversight duties for federally chartered credit unions. See, e.g. , id. § 1766; cf. id. § 1771(a)(4). And once state credit unions opt to receive federal insurance, they become subject to many similar regulations. See, e.g. , id. §§ 1781(a)–(b)(2), 1785–86.

If a federally insured state credit union becomes financially insecure, the Board has the power to appoint itself as conservator or liquidating agent. See id. §§ 1786(h)(1), 1787(a)(3). Before taking that action, however, the Board must seek input from the credit union's state regulator.

See id. §§ 1786(h)(2), 1787(a)(3), 1790d(l). When acting as a conservator or liquidating agent, the Board must manage the credit union and take control of its assets. Id. §§ 1786(h)(1), 1787(b)(2). Federal law also gives the Board the power to repudiate any of the credit union's contracts if the Board finds that they would be "burdensome." Id. § 1787(c).

When the Board acts as a credit union's "liquidating agent," it has the power to resolve "claims" against the credit union in accordance with a statutory framework. Id. § 1787(b)(3)(A). Creditors have a certain period to file claims from the date that the Board gives them notice, id. § 1787(b)(3)(B), and the Board may approve or deny them, id. § 1787(b)(5)(B), (D). When the Board denies a claim, the claimant has various routes to judicial review. Id. § 1787(b)(6)(A)(ii), (7)(A). Outside the specified routes, though, "no court shall have jurisdiction over" claims seeking the credit union's assets or challenging its actions. Id. § 1787(b)(13)(D).

B

This case concerns the now-defunct Health One Credit Union, a Michigan-chartered credit union that was federally insured. Initially hired in 1971, James Perna served as Health One's general manager for over 40 years. Perna signed a three-year employment agreement with Health One in 2009. This agreement contained an arbitration clause requiring Health One and Perna to arbitrate any disputes arising out of it. The parties twice renewed the contract, and it was set to expire at the end of 2015.

But Perna did not make it through that term. On May 16, 2014, the Michigan Director concluded that Health One had been operating in an "unsafe and unsound condition." See Mich. Comp. Laws §§ 490.232(1), .241(1). The Director appointed the federal Board as Health One's conservator. The same day, the Board decided that Health One's contract with Perna was burdensome, repudiated his contract, and terminated his employment. See 12 U.S.C. § 1787(c)(1).

Health One's financial condition continued to deteriorate, so the Director asked a state court to appoint a receiver. In December 2014, the court issued an order appointing the Board as receiver. (Technically, the court appointed the National Credit Union Administration rather than its Board, as the court glossed over the distinction between this federal agency and its managing entity. 12 U.S.C. § 1752a(a). But neither party suggests that this naming difference matters to any issue in this case.) The same day that the Board was appointed as receiver, it sold Health One's assets to the New England Federal Credit Union.

C

After the Board repudiated Perna's contract, he pursued many routes seeking compensation from Health One or the National Credit Union Administration. All have come up short.

First , in October 2014, Perna filed a claim for unpaid benefits and expenses with the Michigan Department of Licensing and Regulatory Affairs. This agency dismissed Perna's claim without considering the merits. It reasoned that Perna's employment contract directed him to arbitrate disputes, and the agency's regulations required it to dismiss claims subject to arbitration.

Second , in May 2015, Perna submitted a claim to the Board under the claims-processing rules that apply when the Board acts as a credit union's liquidating agent. 12 U.S.C. § 1787(b)(5). Perna requested the benefits and expenses that he had sought with the state agency and the unpaid wages for the remainder of his contract term. The Board denied his claim as untimely because its notice to Health One's creditors required them to file claims by March 2015. Id. § 1787(b)(5)(C)(i). Perna moved for reconsideration, arguing that he fell within a safe harbor to this time limit for creditors who lacked notice. Id. § 1787(b)(5)(C)(ii). In February 2016, the Board denied Perna's claim because he had received actual notice of its appointment.

Third , over two years later in April 2018, Perna invoked his contract's arbitration clause to file a contract claim for unpaid wages and benefits with the American Arbitration Association. He named Health One and the National Credit Union Administration as defendants. Counsel for the defendants refused to participate. Because counsel had been notified, an arbitrator concluded that the arbitration could proceed. Perna and a former Health One board member testified at a hearing. The arbitrator found that Health One's firing of Perna had been "without cause" and triggered Perna's right to severance pay under the contract. The arbitrator awarded him $315,645.02. Yet this was a Pyrrhic victory. The arbitrator also found that this decision could bind only Health One (a defunct entity), not the National Credit Union Administration. He reasoned that the Board's role as Health One's conservator at the time of Perna's firing had not made it a substitute party to the contract.

Fourth ,...