United States District Court, E.D. Louisiana
BANK OF LOUISIANA, G. HARRISON SCOTT, SHARRY SCOTT, AND JOHNNY CROW
v.
FEDERAL DEPOSIT INSURANCE CORPORATION
SECTION
"F"
ORDER AND REASONS
MARTIN
L. C. FELDMAN UNITED STATES DISTRICT JUDGE.
Before
the Court is the defendant's motion to dismiss pursuant
to Rule 12(b)(1) for lack of subject matter jurisdiction. For
the following reasons, the motion is GRANTED.
Background
This
motion to dismiss arises out of the Federal Deposit Insurance
Corporation's investigation and charges against the Bank
of Louisiana for violations of agency regulations. In
response to the FDIC's enforcement proceedings against
the Bank, the Bank and others filed suit in this Court
alleging constitutional violations against the Bank through
the FDIC's practices.
The
Bank of Louisiana is a small, community bank founded in New
Orleans in 1958 by former President G. Harrison Scott, James
Comiskey, and Dr. Nicholas Chetta. The Bank provides banking
services to a small, local, and well-known customer base.
On
October 22, 2013, the FDIC filed charges against Sharry
Scott, G. Harrison Scott, and Johnny Crow (the directors) for
violation of Regulation O. The FDIC alleged that the
directors illegally approved a loan to a director as well as
a loan to an executive officer. The Regulation O proceeding
sought an award of civil penalties of $10, 000 from each of
the three directors, as well as court costs and
attorneys' fees of more than $200, 000. The notice of
charge alleged that between October 2009 and November 2011,
the directors caused the bank to engage in federal violations
by providing favorable treatment to bank insiders by making
improper loans and allowing the insiders to overdraw their
accounts on multiple occasions without collecting overdraft
fees. On July 2, 2014, the administrative law
judge[1] issued a 29-page recommended decision
after full briefing and conducting an evidentiary hearing.
The ALJ recommended that each of the three named directors
pay a civil penalty of $10, 000. The plaintiffs waited 90
days to file exceptions to the recommendation. Although the
FDIC's Uniform Rules of Practice and Procedure require
that a party file exceptions to a recommended decision within
30 days, the FDIC Board considered and addressed in its
decision the untimely exceptions. On December 22, 2014, the
plaintiffs filed a petition for review of the FDIC
Board's final decision with the United States Court of
Appeals for the Fifth Circuit. On September 16, 2015, the
plaintiffs filed an unopposed motion to stay the appeal
pending the resolution of the FDIC's second enforcement
proceeding against the bank; the Fifth Circuit entered an
order staying the proceeding until the conclusion of the
enforcement action against the bank.[2]
On
November 1, 2013, [3] the FDIC filed three separate
cease-and-desist charges against the bank. The cease and
desist proceeding sought three cease-and-desist orders and an
award of civil penalties in the amount of $540, 000. The
notice of charges alleged that the bank was operating in an
unsafe and unsound manner based on inadequate management,
deficient asset quality, deficient earnings, various
violations of law, and compliance violations with respect to
the Bank Secrecy Act, The Electronic Funds Transfer Act, the
Real Estate Settlement Practices Act, the Truth in Lending
Act, the Home Mortgage Disclosure Act, and the National Flood
Insurance Program. This notice sought an order requiring the
bank to cease and desist from these practices and to pay a
civil penalty in the amount of $500, 000 for Bank Secrecy Act
violations. The ALJ conducted a six-day trial in March 2015;
the parties introduced evidence, cross-examined witnesses,
and filed post-hearing and reply briefs. On May 17, 2016, the
ALJ issued a decision, recommending a $500, 000 civil
penalty; the bank filed exceptions to the recommended
decision with the FDIC Board. The Board's final order
affirms the ALJ's recommendation and imposes a $500, 000
civil penalty against the bank for Bank Secrecy Act
violations and an order to cease and desist for various
statutory and regulatory violations. The plaintiffs have now
filed a timely appeal of that decision with the Fifth
Circuit, with no decision yet.
The
plaintiffs filed suit in this Court. The plaintiffs'
amended complaint asserts four causes of action: (1) a
permanent injunction to stop the FDIC Board from issuing a
final decision in the then-pending enforcement proceeding;
(2) a request for declaratory judgment that the FDIC violated
various statutes and constitutional provisions in conducting
both enforcement proceedings; (3) damages; and (4)
sanctions.[4] In support of the constitutional
violations, the plaintiffs allege that the bank and the
directors were subject to age discrimination, retaliation,
ridicule, and mockery, and were denied procedural due process
rights guaranteed under the United States Constitution.
Specifically, the plaintiffs allege that an assistant FDIC
director embarked on a vendetta campaign to unseat the
bank's president. The mission of the alleged vendetta,
according to the plaintiffs, was to remove the chairman and
president of the bank, G. Harrison Scott, because he was too
old. The plaintiffs also allege that the ALJ
unconstitutionally kept Scott from conferring with counsel
during an overnight recess at the cease and desist hearing,
in violation of the bank's constitutional rights to
counsel and to free speech, and was wrongfully denied the
right to make a proffer of evidence. The plaintiffs assert
that this Court has jurisdiction for the age discrimination
and constitutional violations because without this
Court's intervention, these claims will escape a
meaningful judicial review.
The
defendant moves the Court to dismiss this case for lack of
subject matter jurisdiction. In response, the plaintiffs
contend that 12 U.S.C. § 1818(h) and Free Enterprise
Fund v. Public Company Accounting Oversight Board, 561
U.S. 477 (2010) allow this Court to exercise subject matter
jurisdiction for these allegedly “wholly
collateral” constitutional claims. The Court now
determines whether Congress has foreclosed its jurisdiction
to hear these constitutional claims.
I.
Motions
filed under Rule 12(b)(1) of the Federal Rules of Civil
Procedure allow a party to challenge the Court's subject
matter jurisdiction. Fed.R.Civ.P. 12(b)(1). "As a court
of limited jurisdiction, a federal court must affirmatively
ascertain subject-matter jurisdiction before adjudicating a
suit. The district court should dismiss where it appears
certain that the plaintiff cannot prove a plausible set of
facts that establish subject-matter jurisdiction."
Venable v. Louisiana Workers' Compensation
Corp., 740 F.3d 937, 941 (5th Cir. 2014)(citations and
internal quotations omitted).
Contrary
to a 12(b)(6) motion, the Court may find a plausible set of
facts to support subject matter jurisdiction by considering
any of the following: “(1) the complaint alone; (2) the
complaint supplemented by undisputed facts evidenced in the
record; or (3) the complaint supplemented by undisputed facts
plus the court's resolution of disputed facts.”
Spotts v. United States, 613 F.3d 559, 565-66 (5th
Cir. 2010)(citation omitted). "The burden of proof for a
Rule 12(b)(1) motion is on the party asserting
jurisdiction." Alfonso v. United States, 752
F.3d 622, 625 (5th Cir. 2014)(quoting In re FEMA Trailer
Formaldehyde Prods. Liab. Litig., 646 F.3d 185, 189 (5th
Cir. 2011)(internal citation and quotation marks omitted)).
The
12(b)(1) standard is similar to that applicable to motions to
dismiss under Rule 12(b)(6). See Williams v. Wynne,
533 F.3d 360, 364-65 n.2 (5th Cir. 2008)(observing that the
Rule 12(b)(1) and Rule 12(b)(6) standards are similar, but
noting that applying the Rule 12(b)(1) standard permits the
Court to consider a broader range of materials in resolving
the motion). "'[T]he central issue [in deciding a
motion to dismiss] is whether, in the light most favorable to
the plaintiff, the complaint states a valid claim for
relief.'" Gentilello v. Rege, 627 F.3d 540,
544 (5th Cir. 2010)(citation omitted).
II.
A.
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