## Facts

- Meritor Savings Bank assumed liabilities of a distressed thrift after an agreement allowing Meritor to count substantial “purchase-accounting goodwill” as regulatory capital over an extended amortization period.
- After FIRREA altered the regulatory framework, the FDIC adopted regulations and later informed Meritor it could no longer include the goodwill in its capital base, rendering Meritor noncompliant with capital requirements and exposing it to potential termination of deposit insurance.
- The shareholders alleged the FDIC refused to clarify Meritor’s capital treatment, contributing to large deposit withdrawals and a worsening liquidity and capital crisis.
- The Pennsylvania Secretary of Banking closed Meritor based on capital deficiency and appointed the FDIC as receiver.
- Shareholders sued the FDIC (in corporate and receiver capacities) and the Secretary, asserting federal constitutional claims (including substantive due process), statutory violations, and related state-law claims arising from the closure and receivership.
- The district court dismissed the action, concluding FIRREA barred or limited judicial review and otherwise defeated the pleaded theories; the shareholders appealed.

## Issues

1. Whether FIRREA’s administrative claims process and jurisdictional limits bar federal court jurisdiction over shareholder claims seeking relief related to the FDIC’s acts or omissions as receiver, absent exhaustion.
2. Whether claims framed against the FDIC in its corporate capacity avoid FIRREA’s jurisdictional bar when they arise from conduct tied to a bank’s closure and receivership.
3. Whether the alleged repudiation of the goodwill arrangement and coordinated closure decisions stated a substantive due process violation.
4. Whether federal claims against the state banking official for closing the bank could proceed notwithstanding FIRREA and the constitutional standard.

## Decision

- The Third Circuit affirmed dismissal of the shareholders’ claims.
- The court held that FIRREA provides an exclusive administrative process for claims seeking payment from, or determinations of rights in, receivership assets, and for claims relating to acts or omissions of the FDIC as receiver; unexhausted claims were outside federal jurisdiction.
- The court treated the shareholders’ challenges as substantively directed at the closure/receivership and therefore within FIRREA’s channeling scheme, even where styled as constitutional or statutory claims.
- The court concluded the alleged conduct did not meet the threshold for substantive due process liability in the context of economic and financial institution regulation.
- Claims against the Pennsylvania Secretary of Banking failed along with the federal claims against the FDIC.

## Legal Principles

- FIRREA’s administrative claims process under 12 U.S.C. § 1821(d) is the exclusive path for claims that seek payment from receivership assets, seek determinations of rights with respect to such assets, or relate to acts or omissions of the FDIC as receiver; failure to exhaust generally defeats federal jurisdiction.
- Plaintiffs cannot avoid FIRREA’s jurisdictional limits by recharacterizing receivership-related disputes as constitutional, tort, or other federal claims when the relief is functionally connected to the receivership.
- Distinctions between the FDIC’s corporate and receiver capacities do not permit judicial review where the asserted wrongdoing and requested relief are tied to the closure and receivership decisions.
- Substantive due process requires governmental conduct that is arbitrary in the constitutional sense; regulatory actions in the bank-capital and closure context ordinarily do not qualify absent extreme, conscience-shocking behavior.

## Conclusion

The court upheld dismissal because FIRREA required receivership-related claims to proceed through the statute’s administrative process and because the shareholders’ allegations about the goodwill treatment and the bank’s closure did not state a substantive due process violation in the context of financial regulation and receivership.


Hindes v. Fed. Deposit Ins. Corp., 137 F.3d 148 (3d Cir. 1998)