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Marshall & Ilsley Corp. v. Heimann

decided: June 12, 1981.

MARSHALL & ILSLEY CORPORATION, ET AL., PLAINTIFFS-APPELLANTS, V. JOHN G. HEIMANN, COMPTROLLER OF THE CURRENCY OF THE UNITED STATES, ET AL., DEFENDANTS-APPELLEES .


Appeal from the United States District Court for the Western District of Wisconsin. No. 78 C 42 -- Hubert L. Will, Judge .

Before Swygert and Sprecher, Circuit Judges, and Hoffman, Senior District Judge.*fn*

Author: Sprecher

This case arises out of the purchase of assets and assumption of liabilities of the Midland National Bank ("Midland") in Milwaukee, Wisconsin by defendant First Bank (N.A.) of LaCrosse, Wisconsin ("First Bank") and the establishment by First Bank of a new branch bank at the office formerly operated by Midland. These transactions were approved by the Comptroller of the Currency of the United States. Plaintiffs, three Milwaukee banks and the bank holding companies that own them, filed this action against the Comptroller, First Bank, and First Bank System, Inc., the holding company that owns First Bank. Plaintiffs allege that the Comptroller violated 12 U.S.C. § 36(c) and Wis.Stat. § 221.04(1)(j) by permitting First Bank to retain the former Midland office as a branch bank. Plaintiffs also allege that the acquisition of Midland by First Bank was, in reality, an acquisition by First Bank System, and thus, was a holding company acquisition over which the Comptroller had no jurisdiction and which the Comptroller had no authority to approve.

The district court dismissed plaintiffs' original complaint for lack of standing and failure to state a claim. The district court similarly dismissed plaintiffs' amended complaint for lack of standing. We affirm the dismissal of plaintiffs' complaints.

I

The parties disagree as to the facts properly before this court upon review of the district court's orders dismissing plaintiffs' complaints. Plaintiffs have moved to strike portions of First Bank's brief and appendix on the ground that they incorporate contested factual matters that properly were excluded by the district court in resolving the threshold issues of standing and jurisdiction. In particular, plaintiffs object to defendants' submission of materials supporting the Comptroller's finding that emergency measures were necessary in order to prevent the failure of Midland. We agree that only the record established in the district court, and not additional materials submitted by the Comptroller to this court on appeal, are properly before this court. We, therefore, draw no conclusions from the additional materials submitted and confine our review to the following uncontested facts.

By decision dated July 23, 1977, the Comptroller approved the application of First Bank*fn1 to purchase the assets and assume the liabilities of Midland.*fn2 At that time, Midland was the fourth largest bank in Wisconsin. First Bank was considerably smaller, but was and is owned by First Bank System, Inc., of Minneapolis, Minnesota, a bank holding company that controls many banks, with total deposits exceeding $6 billion. The Comptroller's decision was based upon his finding that, from the fall of 1975 through the spring of 1977, Midland suffered a severe and continuing deterioration in its asset structure, principally due to real estate loan problems. The Comptroller reasoned that the severity of the loan problems, as well as the volatility of the bank's deposit structure, threatened Midland's survival unless Midland received a massive injection of capital. The Comptroller considered First Bank's offer to purchase Midland a good solution that would avoid a bank failure and would insure uninterrupted services to Midland's customers.

Because the Comptroller regarded Midland's situation as an emergency, the Comptroller, pursuant to 12 U.S.C. § 181,*fn3 waived the requirement of shareholder approval and waived certain other requirements of bank mergers, pursuant to the Bank Merger Act, 12 U.S.C. § 1828(c).*fn4 The Comptroller also determined that the retention of Midland's existing office as a branch of First Bank was consistent with Wisconsin's emergency branch banking statute, Wis.Stat. § 221.04(1)(j)2, which is made applicable to national banks by 12 U.S.C. § 36(c).*fn5

In January, 1978, plaintiffs filed this action. The original complaint alleged that the Comptroller's approval of the establishment of a branch of First Bank in Milwaukee violated the applicable statutes which limit the establishment of branches by national banks. The original complaint also alleged that the Comptroller had exceeded his jurisdiction and had violated the Bank Holding Company Act, 12 U.S.C. § 1842, in purporting to approve an acquisition by First Bank which was actually an acquisition by First Bank System, Inc., a bank holding company located outside Wisconsin.

The initial decision of the district court, dated September 16, 1978, dismissed the branch banking claim in plaintiffs' complaint without prejudice. The court held that plaintiffs lacked standing with regard to the branch bank issue because they failed to allege "injury in fact." The district court dismissed the Bank Holding Company Act claim with prejudice, holding that no private right of action against the Comptroller could be derived from the Bank Holding Company Act.

Plaintiffs filed an amended complaint limited to the branch banking issue. By order dated June 30, 1980, the district court dismissed the amended complaint for lack of standing.

II

We deal first with plaintiffs' standing to assert the branch banking issues raised in plaintiffs' amended complaint.*fn6 Plaintiffs' amended complaint sets forth two alternative theories of how the Comptroller violated federal and state branch banking statutes: Count I alleges that allowing First Bank to acquire the former Midland facility as a branch violated 12 U.S.C. § 36 and the Wisconsin emergency branch banking statute, Wis.Stat. § 221.04(1)(j)2, because there was no "emergency" at the time the Comptroller acted; Count II alleges that, even if there was an emergency, the Comptroller violated Wis.Stat. § 221.04(1)(j)2 by failing to first offer plaintiffs the opportunity to acquire Midland.

As Justice Douglas stated in Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 151, 90 S. Ct. 827, 829, 25 L. Ed. 2d 184 (1970), "generalizations about standing to sue are largely worthless as such." One commentator has noted that the concept of standing is "among the most amorphous in the entire domain of public law." Hearings on S.2097 before the Subcommittee on Constitutional Rights of the Senate Judiciary Committee, 89th Cong., 2d Sess. 465, 498 (1966) (statement of Prof. Paul A. Freund), quoted in Flast v. Cohen, 392 U.S. 83, 99, 88 S. Ct. 1942, 1952, 20 L. Ed. 2d 947 (1968). In order to avoid confusion and inconsistency in analyzing standing questions, it is necessary to focus on the precise parties, injuries, interests, and statutes involved. Therefore, we must narrow our focus to the specific issue of standing of competitors to challenge agency action which results in allegedly illegal competition.

The general test for standing was first articulated by the Supreme Court in three cases involving competitors' challenges to Comptroller rulings allowing national banks to enter the competitors' fields. Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S. Ct. 827, 25 L. Ed. 2d 184 (1970) (data processing); Arnold Tours v. Camp, 400 U.S. 45, 91 S. Ct. 158, 27 L. Ed. 2d 179 (1970) (travel services); Investment Company Institute v. Camp, 401 U.S. 617, 91 S. Ct. 1091, 28 L. Ed. 2d 367 (1971) (mutual investment funds). The test enunciated in these cases gives meaning to the Administrative Procedure Act's grant of standing to persons "aggrieved by agency action within the meaning of a relevant statute...." 5 U.S.C. § 702.

The test has two prongs. The first part of the test requires that "the plaintiff alleges that the challenged action has caused him injury in fact, economic or otherwise." Data Processing, 397 U.S. at 152, 90 S. Ct. at 829. The second part of the test requires that "the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question." 397 U.S. at 153, 90 S. Ct. at 829.

A

We now consider the first requirement of standing, that there be an "injury in fact." This requirement assures satisfaction of the constitutional requirement of a "case or controversy." See Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 37-38, 96 S. Ct. 1917, 1923-24, 48 L. Ed. 2d 450 (1976). Plaintiffs' original complaint was dismissed because it did not include any allegations of injury in fact, economic or otherwise. The court refused to construe the complaint as alleging the adverse effect necessary to give plaintiffs standing and, consequently, dismissed with leave to amend.*fn7

In their amended complaint, plaintiffs allege that plaintiff banks and Midland were within a radius of one-half mile of each other and competed actively. Plaintiffs allege damages resulting from "illegally acquired changes in the competitive environment" caused by First Bank's acquisition of Midland.*fn8 The district court held that, although plaintiffs alleged that they and the new First Bank branch at the former Midland location were competitors, "plaintiffs' amended complaint still contains no allegation of any concrete or identifiable injury, whether economic or otherwise, caused them by the defendants' acts unless competition itself is somehow considered injurious." Marshall & Ilsley Corp. v. Heimann, No. 78-C-42, slip op. at 4 (W.D.Wis. June 30, 1980).

The Supreme Court has held, however, that an administrative agency's authorization of an allegedly illegal competitor or form of competition does constitute injury to competitors for standing purposes. In Data Processing, 397 U.S. 150, 90 S. Ct. 827, 25 L. Ed. 2d 184 (1970), Arnold Tours, 400 U.S. 45, 91 S. Ct. 158, 27 L. Ed. 2d 179 (1970), and Investment Company Institute, 401 U.S. 617, 91 S. Ct. 1091, 28 L. Ed. 2d 367 (1971), the Comptroller gave national banks permission to enter new areas of operation. "Injury in fact" flowed from the economic harm caused by an additional competitor. In Sierra Club v. Morton, 405 U.S. 727, 92 S. Ct. 1361, 31 L. Ed. 2d 636 (1972), the Court reaffirmed the Data Processing holding that harm to competitive position comprises "injury in fact":

In Data Processing, the injury claimed by the petitioners consisted of harm to their competitive position in the computer-servicing market through a ruling by the Comptroller of the Currency that national banks might perform data-processing services for their customers.... These palpable economic injuries have long been recognized as sufficient to lay ...


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