## Facts

- A federally chartered credit union operated under the Federal Credit Union Act (FCUA) and National Credit Union Administration (NCUA) oversight, including NCUA-approved bylaws governing officer duties and removal.
- Two members (Barany and Elliott) were elected to the credit union’s three-person credit committee; a third committee member (Devine) also served as loan officer, treasurer, a director, and the only full-time paid employee.
- Devine approved loans to certain former members working in the relevant trades without disclosing the practice to Barany and Elliott.
- After discovering the practice, Barany and Elliott informed Devine and the board that the committee would not approve such loans because the borrowers allegedly fell outside the credit union’s field of membership.
- Following this dispute, the board adopted a resolution removing Barany and Elliott from the credit committee.
- Barany and Elliott alleged the removal violated the FCUA and the NCUA-approved bylaws (including asserted requirements of cause and prescribed procedures).

## Issues

1. Whether claims challenging removal of elected credit-committee members of a federally chartered credit union arise under federal law for purposes of federal-question jurisdiction.
2. Whether the FCUA and the federally approved bylaws support an implied private right of action permitting removed officers to sue for reinstatement.
3. Whether the action should be treated as a state-law quo warranto-type proceeding that defeats federal jurisdiction or federal relief.

## Decision

- The court of appeals reversed the dismissal and remanded.
- The court held the complaint presented a federal question because the asserted right to office and the rules governing removal derived from federal statute and federally approved bylaws with regulatory force.
- The court rejected the view that labeling the suit “quo warranto” required relegation to state remedies when federal law supplied the rule of decision.
- The court held an implied private right of action was available for the asserted statutory/bylaw violations, allowing plaintiffs to pursue equitable relief such as reinstatement.
- The court did not decide whether the removals were lawful on the merits; it held only that plaintiffs stated a federal claim that could proceed.

## Legal Principles

- A dispute over tenure and removal of officers in a federally chartered credit union may “arise under” federal law when the claimed rights and governing standards are created by federal statute and federally approved bylaws/regulations.
- The formal characterization of a claim as quo warranto-like does not bar federal jurisdiction where federal law supplies the substantive rule of decision.
- Courts may recognize an implied federal cause of action within a federal regulatory scheme when the plaintiffs are among the statute’s intended beneficiaries and a judicial remedy is consistent with the statutory structure and oversight framework.

## Conclusion

The Seventh Circuit held that removed credit-committee members could sue in federal court because their claimed protections against removal were federally created and enforceable through an implied private action under the FCUA and NCUA-approved bylaws, requiring reversal of the dismissal and remand for merits proceedings.


Barany v. Buller, 670 F.2d 726 (7th Cir. 1982)