## Facts

- Medical Supply Chain, Inc. (Medical) developed a certification program for healthcare supplies and sought to enter the healthcare-supply market.
- US Bancorp N.A. (the bank) was a bank holding company with which Medical had dealings related to Medical’s business plans.
- Medical sued the bank in federal court and, among other theories, asserted claims based on the USA PATRIOT Act.
- Medical alleged the bank violated the PATRIOT Act by (1) failing to train employees regarding the Act, (2) failing to provide a PATRIOT Act compliance officer, (3) misusing authority and using excessive force as “enforcement officers” under the Act, and (4) violating criminal laws to influence public policy under the Act.
- Medical attempted to pursue its PATRIOT Act theories through 42 U.S.C. § 1983.
- Medical’s complaint did not allege that the bank acted jointly with state officials or that any state official participated in the complained-of conduct.
- In response to the bank’s dismissal motion, Medical asserted in a conclusory manner that the bank acted as an agent of the federal government.
- The bank moved to dismiss, arguing Medical failed to state a claim and, as to the PATRIOT Act counts, raised questions about standing and whether the Act can be privately enforced.

## Issues

1. Whether Medical could maintain a private civil action to enforce the USA PATRIOT Act, including by invoking 42 U.S.C. § 1983.
2. Whether Medical plausibly alleged that the bank acted “under color of state law” (state action) as required for § 1983 liability.
3. Whether the PATRIOT Act provisions Medical relied on created enforceable individual rights that can be vindicated in private litigation.
4. Whether Medical’s remaining federal statutory and antitrust theories were adequately pleaded to survive dismissal.
5. After dismissal of federal claims, whether the court should keep supplemental jurisdiction over any state-law claims.

## Decision

- The court granted the bank’s motion to dismiss for failure to state a claim.
- The court dismissed Medical’s PATRIOT Act-based claims, concluding Medical lacked a viable private mechanism to enforce the Act in this suit.
- The court rejected Medical’s § 1983 theory because the complaint did not plead facts showing the bank acted under color of state law, and Medical did not allege joint action with state officials.
- The court dismissed Medical’s other federal claims asserted in the amended complaint.
- With no surviving federal claims, the court dismissed the remaining state-law claims without prejudice by declining supplemental jurisdiction.
- The dismissal was later affirmed on appeal. See 112 F. App’x 730 (10th Cir. 2004).

## Legal Principles

- A plaintiff cannot sue for damages under a federal statute unless Congress created a private right of action or the plaintiff can otherwise identify a valid civil enforcement vehicle.
- Section 1983 is available only for deprivations of federal rights committed under color of state law; private parties generally are not state actors.
- A regulated private entity does not become a state actor merely because federal law imposes compliance obligations on it.
- Conclusory allegations that a private defendant is a government agent do not satisfy the state-action requirement; factual allegations showing joint action with state officials or comparable state involvement are required.
- When all federal claims are dismissed at an early stage, a federal court may decline supplemental jurisdiction over state-law claims under 28 U.S.C. § 1367(c) and dismiss them without prejudice.

## Conclusion

Medical Supply Chain, Inc. v. US Bancorp N.A. held that Medical could not pursue USA PATRIOT Act-based claims against a private bank through § 1983 because the complaint did not allege state action and the Act did not supply privately enforceable rights for Medical’s theories; the district court dismissed the federal claims for failure to state a claim and, with no federal basis remaining, dismissed any state-law claims without prejudice, a result later affirmed on appeal.


Medical Supply Chain, Inc. v. US Bancorp N.A., 2003 WL 21479192 (2003)