Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 81-C-3163-Edwin A. Robson, Judge.
Cudahy, Eschbach and Posner, Circuit Judges.
The plaintiff in this case asked the district court to render a declaratory judgment that the terms of a merger agreement involving the defendant banks and bank holding company violate 12 U.S.C. § 215a. The district court, holding that subject matter jurisdiction was lacking, dismissed the claim. For the reasons expressed in this opinion, we affirm.
I. THE REORGANIZATION PLAN
In 1980, the individual defendants, directors or substantial shareholders of the First National Bank in DeKalb, Illinois, ("First National") devised a plan to reorganize the bank. According to the plan, First DeKalb Bancshares, Inc., would be formed to operate as a bank holding company. Then an interim, or "phantom" bank, the Second National Bank in DeKalb ("Second National") would be established as a wholly-owned subsidiary of the bank holding company.
The culmination of the reorganization would be the merger of First National into Second National. Pursuant to the terms of the detailed merger agreement, shareholders of First National who dissented to the merger could elect to receive the appraised value of their stock. Shareholders who did not dissent and dissenters who did not elect the appraised value of their stock, would receive shares in First DeKalb Bancshares (the holding company) in exchange for their shares in First National. The resulting bank would then be renamed "The First National Bank in DeKalb" and would succeed to all of the original bank's deposits, accounts, and employees. At this point, however, the ownership structure of First National would have changed. Shareholders who did not receive the appraised value of their First National shares, would own stock in the bank holding company, not the "new" First National Bank in DeKalb.
II. ADMINISTRATIVE APPROVAL AND DISTRICT COURT PROCEEDINGS
The bank reorganization required the approval of two different regulatory agencies. Section 3(a) of the Bank Holding Company Act of 1956, ch. 240, § 3, 70 Stat. 133 (codified as amended at 12 U.S.C. § 1842(a)) makes it unlawful to form a bank holding company or to cause a bank to become a subsidiary of a bank holding company, without prior approval of the Federal Reserve Board. The merger of two national banks, by contrast, requires the approval of the Comptroller of the Currency. 12 U.S.C. §§ 215(a), 215a.
On December 15, 1980, First DeKalb Bancshares applied to the Federal Reserve Bank of Chicago for approval to become a bank holding company.*fn1 The application described all the components of the reorganization plan, including the merger of First National and Second National banks. The plaintiff, a substantial minority shareholder and a director of First National, submitted to the Federal Reserve Bank of Chicago his objections to the reorganization plan; however on May 11, 1981 the application was approved. The Board of Governors of the Federal Reserve System indicated on May 18, 1981, that it would not review the decision and thus the Board's approval of First DeKalb Bancshares' application to become a bank holding company became final. See 12 C.F.R. § 265.3 (1982).
On June 28, 1981, before any of the defendants applied to the Comptroller of the Currency for approval to merge the First National and Second National banks, the plaintiff filed this action in the district court. The plaintiff, in his complaint, asked the court for a declaratory judgment "to the effect that the proposed merger agreement [of First National and Second National banks] is in violation of the express terms of 12 U.S.C. Sec. 215a . . . and that said agreement is unlawful."*fn2 In particular, the plaintiff claimed that § 215a(d)*fn3 mandates that shareholders who vote for the merger and dissenters who so elect, be given shares in the resulting merged bank in exchange for their First National shares. Because the merger agreement specifies that shares of First National are to be exchanged for shares of First DeKalb Bancshares, a holding company, the plaintiff asked the court to declare the agreement illegal. The impetus for the suit arises from the fact that the plaintiff values shares in a bank holding company less than shares in the operating bank; he asserts that he will no longer be able to elect himself to the bank's board of directors.
On August 5, 1981, while the district court action was pending, an application to merge First National into Second National was filed with the Comptroller of the Currency. It is undisputed that the plaintiff was aware that the Comptroller had to approve the merger.*fn4 Throughout August and early September, the DeKalb newspaper published notices of the pending application. The notices invited interested parties to submit comments to the Comptroller; however the plaintiff, vigorously pursuing his federal court action, failed to do so.
The district court, on September 22, 1981, granted the defendants summary judgment on the entire complaint.*fn5 The district court held that the Federal Reserve Board had exclusive original jurisdiction to hear the plaintiff's complaint that the merger agreement violates the command of 215a. Observing that judicial review of Federal Reserve Board decisions is in the courts of appeals, the district court held that it lacked subject matter jurisdiction to hear the plaintiff's claim. The district court further held that to the extent the Comptroller of the Currency has jurisdiction to consider ...