AMERICAN BANKERS ASSOCIATION, WASHINGTON FEDERAL, N.A., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Plaintiffs-Appellants
UNITED STATES, Defendant-Appellee
from the United States Court of Federal Claims in No.
1:17-cv-0194-SGB, Senior Judge Susan G. Braden.
Stephen Joseph Obermeier, Wiley Rein LLP, Washington, DC,
argued for plaintiffs-appellants. Also represented by Claire
J. Evans, Michael E. Toner.
Peter Bruskin, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, DC, argued
for defendant-appellee. Also represented by Joseph H. Hunt,
Robert E. Kirschman, Jr., Kenneth M. Dintzer, Claudia Burke;
Katherine H. Wheatley, Board of Governors of the Federal
Reserve System, Washington, DC.
Wallach, Chen, and Hughes, Circuit Judges.
Hughes, Circuit Judge.
case arises out of legislation amending the statutory rate
for dividend payments on Federal Reserve Bank stock. The
Federal Reserve Act of 1913 set the dividend rate at six
percent per year, which remained in effect until Congress
amended the dividend provision in 2016. The amendment
effectively reduced the dividend rate for certain stockholder
banks from the fixed six percent rate to a lower variable
rate. American Bankers Association and Washington Federal,
N.A. sued the United States in the Court of Federal Claims,
arguing that banks who subscribed to Reserve Bank stock
before the amendment are entitled to dividends at the six
percent rate. The complaint alleged that, by paying dividends
at the amended statutory rate, the United States breached a
contractual duty or, in the alternative, effected a Fifth
Amendment taking. The trial court dismissed the complaint
under Rules of the U.S. Court of Federal Claims 12(b)(6) for
failure to state a claim. American Bankers and Washington
Federal now appeal. Because the complaint does not allege
facts establishing the existence of a contract or an
unconstitutional taking, we affirm.
begin with a brief overview of the Federal Reserve System and
its statutory origins. The Federal Reserve Act of 1913, Pub.
L. No. 63-43, ch. 6, 38 Stat. 251 (1913),  established a
system to oversee banking operations and promote greater
economic stability. The Federal Reserve System includes the
Federal Reserve Board of Governors, see id.,
§§ 10-11, 38 Stat. 260-63, and twelve regional
Reserve Banks, see id. § 2, 38 Stat. 251-52.
The Board exercises broad regulatory supervision over the
Reserve Banks, which serve as banks to the U.S. government
and to commercial banks who are members of the Federal
sets forth the conditions under which commercial banks may
join the Federal Reserve System. One of the conditions of
membership is that member banks must "subscribe" to
the stock of their regional Reserve Bank in an amount
"equal to six per centum of the paid-up capital stock
and surplus of [the] applicant bank . . . ." § 5,
38 Stat. 257. Every national bank is required to join the
system and subscribe to Reserve Bank stock. § 2, 38 Stat
252. Other financial institutions, such as state banks, are
permitted but not required to apply for membership and
subscribe to stock. § 9, 38 Stat. 259.
Bank stock is "divided into shares of $100," which
"shall not be transferred or hypothecated." §
5, 38 Stat. 257. From 1913 to 2015, the Act provided that
"the stockholders of the [Reserve] bank shall be
entitled to receive an annual dividend of six per centum on
the paid-in capital stock . . . ." § 7, 38 Stat
December 4, 2015, Congress passed the Fixing America's
Surface Transportation Act (FAST Act), which authorized
substantial appropriations for surface transportation
infrastructure. See Pub. L. No. 114-94, 129 Stat.
1312. The FAST Act included an amendment to the statutory
dividend rate for Reserve Bank stock owned by member banks
with consolidated assets of more than $10 billion. Under the
amended dividend provision, these banks would receive a
variable dividend rate equal to the lesser of: (1) the rate
of the 10-year Treasury note or (2) six percent. See
§ 32203, 129 Stat. 1739 (codified as amended at 12
U.S.C. § 289(a)(1)).
to 2013, Washington Federal operated as a federally chartered
savings and loan association. On May 29, 2013, Washington
Federal received approval from the Office of the Comptroller
of the Currency to convert to a national bank, contingent on,
inter alia, Washington Federal applying for
membership in the Federal Reserve System.
8, 2013, Washington Federal submitted an application for
Reserve Bank stock to the Reserve Bank of San Francisco
(BSF). A letter from BSF, dated July 17, 2013, informed
Washington Federal that its application and payment for stock
had been processed and enclosed an Advice of Holdings for
479, 610 shares of BSF stock. The letter further noted that
"[d]ividends are paid at the statutory rate of 6 percent
per annum, or $1.50 per share semi-annually." J.A. 65.
2013 to 2015, Washington Federal received dividend payments
on its stock at a rate of six percent per year. After the
FAST Act took effect on January 1, 2016, Washington Federal
received dividends at the rate of the 10-year Treasury note.
In 2016, Washington Federal received dividends totaling $502,
471.53, reflecting an annual rate of approximately two
Federal and American Bankers Association filed a complaint
against the United States in the Court of Federal Claims on
February 9, 2017. The complaint alleged that, by paying
dividends at a rate lower than six percent in 2016, the
government breached a contractual duty to member banks that
subscribed to Reserve Bank stock before December 4, 2015. The