Board of Governors of the Federal Reserve System of the United States v. McOrp Financial Inc.
United States Supreme Court
Board of Governors of the Federal Reserve System of the United States v. McOrp Financial Inc.
No. Nos 90-913, 90-914 Argued: Oct. 7, 1991. --- Decided: Dec 3, 1991
Syllabus
After MCorp, a bank holding company, filed voluntary bankruptcy petitions, it initiated an adversary proceeding in the Bankruptcy Court against the Board of Governors of the Federal Reserve System (Board) seeking to enjoin the prosecution of two pending administrative proceedings, one charging MCorp with a violation of the Board's "source of strength" regulation and the other alleging a violation of § 23A of the Federal Reserve Act. The District Court transferred the adversary proceeding to its own docket, ruled that it had jurisdiction to enjoin the Board from prosecuting both administrative proceedings, and entered a preliminary injunction halting those proceedings. The Court of Appeals vacated the injunction barring the § 23A proceeding, reasoning that the plain language of the judicial review provisions of the Financial Institutions Supervisory Act of 1966 (FISA), particularly 12 U.S.C. § 1818(i)(1), deprived the District Court of jurisdiction to enjoin either administrative proceeding. However, the Court of Appeals also interpreted Leedom v. Kyne, 358 U.S. 184, 79 S.Ct. 180, 3 L.Ed.2d 210, to authorize an injunction against any administrative proceeding conducted without statutory authorization, ruled that the Board's promulgation and enforcement of its source of strength regulation exceeded its statutory authority, and remanded the case with instructions to the District Court to enjoin the Board from enforcing the regulation.
Held: The District Court lacked jurisdiction to enjoin either regulatory proceeding. Pp. 37-45.
(a) This litigation is controlled by § 1818(i)(1)'s plain, preclusive language: "[N]o court shall have jurisdiction to affect by injunction . . . the issuance or enforcement of any [Board] notice or order." That language is not qualified or superseded by the Bankruptcy Code's automatic stay provision, 11 U.S.C. § 362. The Board's planned actions against MCorp fall squarely within § 362(b)(4), which expressly provides that the automatic stay will not reach proceedings to enforce a "governmental unit's police or regulatory power." MCorp is not protected by §§ 362(a)(3) and 362(a)(6)-which stay "any act" to obtain possession of, or to exercise control over, property of the estate, or to recover claims against the debtor that arose prior to the filing of a bankruptcy petition-because such provisions do not have any application to ongoing, nonfinal administrative proceedings such as those at issue here. Moreover, MCorp's reliance on 28 U.S.C. § 1334(b)-which authorizes district courts to exercise concurrent jurisdiction over certain bankruptcy-related civil proceedings that would otherwise be subject to the exclusive jurisdiction of another "court"-is misplaced, since the Board is not another "court," and since the prosecution of the Board's proceedings, prior to the entry of a final order and the commencement of any enforcement action, seems unlikely to impair the Bankruptcy Court's exclusive jurisdiction over the property of the estate protected by § 1334(d). Pp. 37-42.
(b) The Court of Appeals erred in interpreting Kyne to authorize judicial review of the source of strength regulation. In contrast to the situation in Kyne, FISA, in § 1818(h)(2), expressly provides MCorp with a meaningful and adequate opportunity for review of the regulation's validity and application if and when the Board finds that MCorp has violated the regulation and, in § 1818(i)(1), clearly and directly demonstrates a congressional intent to preclude review. In such circumstances, the District Court is without jurisdiction to review and enjoin the Board's ongoing administrative proceedings. Pp. 42-45.
900 F.2d 852 (CA 1990): No. 90-913, reversed; No. 90-914, affirmed.
STEVENS, J., delivered the opinion of the Court, in which all other Members joined, except THOMAS, J., who took no part in the consideration or decision of the cases.
Jeffrey P. Minear, Washington, D.C., for the Federal Reserve System.
Alan B. Miller, New York City, for MCorp, et al.
Justice STEVENS delivered the opinion of the Court.
Notes[edit]
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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