Transcript

IN THE SUPREME COURT OF THE UNITED STATES

COIT INDEPENDENCE JOINT VENTURE, Petitioner v. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, AS RECEIVER OF FIRSTSOUTH, F.A.

No. 87-996

November 1, 1988

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 10:01 o'clock a.m.

APPEARANCES:

ROBERT E. GOODFRIEND, ESQ., Dallas, Texas; on behalf of the Petitioner.

JEFFREY P. MINEAR, ESQ., Assistant to the Solicitor General, Department of Justice, Washington, D.C.; on behalf of the Respondent.

PROCEEDINGS

10:01 a.m.

CHIEF JUSTICE REHNQUIST: We'll hear arguments first this morning in No. 87-996, Coit Independence Joint Venture v. FSLIC.

Mr. Goodfriend, you may proceed whenever you're ready.

ORAL ARGUMENT OF ROBERT E. GOODFRIEND ON BEHALF OF THE PETITIONER

MR. GOODFRIEND: Mr. Chief Justice, and may it please the Court:

This case involves the so-called Hudspeth Doctrine, a rule of law that was announced by the Fifth Circuit in 1985 and that effectively closes the courthouse door to creditors of insolvent savings and loans that have been placed in receivership by the Federal Savings and Loan Insurance Corporation, which I will refer to hereafter as FSLIC.

Under the so-called Hudspeth Doctrine, at least as it was originally conceived, a creditor's claim must first be presented to FSLIC, then any adverse ruling appealed to the Federal Home Loan Bank Board, and thereafter any adverse determination reviewed by the courts under a very limited standard of review under the Administrative Procedure Act.

This case began when Coit, a real estate partnership, sued FirstSouth, a federal savings and loan, in state court, suing FirstSouth for usury, breach of fiduciary duty and breach of a duty of good faith and fair dealing in connection with two real estate transactions.

The case remained in state court for approximately two months at which time FirstSouth became insolvent and was placed in receivership by FSLIC.

Thereafter, FSLIC's move to dismiss the case from federal court under the Hudspeth Doctrine, which motion was granted, and Coit took an appeal to the Fifth Circuit. The Fifth Circuit affirmed relying on its prior decisions under the Hudspeth case. This Court then granted a writ of certiorari.

A conflict presently exists between the Fifth and the Ninth Circuits on the Hudspeth Doctrine, the Ninth Circuit having rejected the Hudspeth Doctrine in the Morrison-Knudsen case.

Now, the issue has changed somewhat from what it was when this Court initially granted a writ of certiorari. Initially this case involved the question of whether Congress by statutes had ousted the federal courts of subject matter jurisdiction to hear a broad range of creditor or claims against an insolvent savings and loan association. In so ruling, the Fifth Circuit relied on two statutory provisions: 12 U.S.C. 1464(d)(6)(C) which has the restrain or affect language, and 12 U.S.C. 29(d) which makes FSLIC's appointment as receiver "subject only to the regulation of the Federal Home Loan Bank Board."

A recent Law Review article in the Western New England Law Review, which we have sent the Court, extensively reviews the legislative history of these provisions and I think presents convincing legislative history that neither of these provisions has anything to do with the jurisdiction of the courts to hear creditor claims.

The restrain or affect language was inserted initially to limit challenges by the savings and loan itself and by its directors to the appointment of FSLIC as receiver limiting those challenges to a 30-day period. And that's specifically in the statute.

And the subject only to the regulation of the Board language was apparently inserted in response to a special situation which arose in the State of Illinois where a state court-appointed receiver ignored FSLIC's request for information and FSLIC's monetary claims.

QUESTION: Mr. Goodfriend, FSLIC has retreated substantially --

MR. GOODFRIEND: Yes.

QUESTION: -- in this Court from the doctrine of the Hudspeth case. Has it not?

MR. GOODFRIEND: Yes, Your Honor, and I was about to get exactly to that point.

Let me just say we've also argued on -- in terms of the initial position of the Court that any determination as to the amount and validity of a claim has never been considered to be an interference with the functions of the receiver at common law.

QUESTION: May I also inquire whether as of this time the claim of your client has ever been acted upon --

MR. GOODFRIEND: No, it has not, Your Honor.

QUESTION: -- administratively?

It's still in the so-called black hole?

MR. GOODFRIEND: Exactly, retained for further review. It has now been 13 months since that claim was originally filed and a little bit more than two years since Coit originally sued in state court.

QUESTION: Now, do you take the position that the statutes do not permit FSLIC, as you call it, to adopt an administrative --

MR. GOODFRIEND: Yes, Your Honor.

QUESTION: -- exhaustion requirement?

MR. GOODFRIEND: We -- we reject both the initial position of the Fifth Circuit, which was a subject matter jurisdiction position, and we also reject the revised position of the Solicitor General which concerns agency-mandated exhaustion, which we wish to clearly distinguish from court-mandated exhaustion, which was referred to somewhat in the Morrison-Knudsen case. We think the implications of agency-mandated exhaustion are very different from judicial exhaustion.

The Solicitor General has revised the issue in this case. He no longer takes the position that this is a matter of subject matter jurisdiction, and he no longer takes the position that FSLIC has the power to adjudicate creditor claims.

What he does say -- and I think this is the nub of the case -- is that the Federal Home Loan Bank Board has the power to promulgate regulations under section 5(d)(11) of the Homeowner's Loan Act to mandate that creditors exhaust their administrative remedies before FSLIC and the Board before seeking review in the courts. We think that the Solicitor General contemplates de novo review after completion of the exhaustion process, but his position in this regard is not entirely clear.

QUESTION: And if there is de novo review, there wouldn't be any Article III problems.

MR. GOODFRIEND: Your Honor, I think -- we think there still is. Initially that -- that was my thought. But what we submit, Your Honor, is where the delay in agency-mandated jurisdiction is undue, as it has been in these cases, so that ultimate judicial review may be ineffective or worthless to a litigant, Article III concerns and Seventh Amendment concerns are still in the case.

As for the due process question, the constitutional due process question of the absence of a disinterested tribunal, that is very definitely still in the case because this Court has held in Gibson v. Berryhill and in Ward v. Monroeville that a party is entitled to a disinterested tribunal at the first level even if he subsequently obtains de novo judicial review.

QUESTION: How has the delay hurt your client in this case?

MR. GOODFRIEND: Your Honor, the delay we say has hurt our client in a number of ways. The significant thing is that this case involves a wasting asset. The Solicitor General refers to it as a limited pool of assets. It doesn't involve the -- the savings and loan has long since gone. It has been -- but there is a pool of money. That pool of money is wasting every day. It is wasting in receivership expenses. It may be diminished by interim distributions made to other creditors.

QUESTION: But would your be -- but would your being able to get into court earlier than you have effect that at all --

MR. GOODFRIEND: Absolutely.

QUESTION: -- because it's in still a receivership.

MR. GOODFRIEND: Yes, Your Honor. But the validity of our claim might have already been determined in a state court. Indeed, the --

QUESTION: But supposing the validity of your claim had been determined in a state court.

MR. GOODFRIEND: Yes, Your Honor.

QUESTION: Would it have advanced your client's position so far as his dollars and cents are concerned?

MR. GOODFRIEND: Well, what we say is we would then be in line for a potential distribution from the receiver depending upon the priority of our claims under FSLIC's regulations, and we might receive substantially more money, maybe 50 percent of the amount of our total claim, instead of two or three years down the line, maybe we might receive only 20 percent.

QUESTION: That's a -- that would be kind of unusual for a receivership to distribute in that manner, wouldn't it?

MR. GOODFRIEND: Well, my understanding is that interim -- interim distributions from a receivership estate are authorized.

Now, it does depend upon the priorities whether I think you're on a higher level of priorities or low level of priorities. And quite frankly, FSLIC's priorities in this regard are not clear except for the fact that in certain states they have promulgated a regulation recently whereby they have placed themselves in the position where they can recover on their subrogation claims first ahead of every other creditor, we think a very questionable ruling on their part.

We also say, Your Honor, that we are potentially threatened every day by foreclosure on our property. The situation there is that the receiver had at one earlier point, in fact, about two weeks before the Fifth Circuit ruled in this case, posted Coit's property for foreclosure. We then petitioned the Board under the expedited claims procedure to stay that posting of the foreclosure, and before the Board could act, FSLIC voluntarily withdrew its claim without prejudice to reinstating it at any time.

So, I could leave this podium today, go back to my office in Dallas and find out that FSLIC is foreclosing on my client's property. And nothing prevents them from doing that. The only thing I can do is go back to the Board and ask them for discretionary relief.

So, we say that that constant threat and the wasting nature of this asset not only -- makes even the constitutional claims ripe for review at this time.

I would like to make a number of points at the outset, if I may. First --

QUESTION: Excuse me.

MR. GOODFRIEND: Yes, Your Honor.

QUESTION: I assume that you would have no judicial remedy for that foreclosure?

MR. GOODFRIEND: Your Honor, as I understand the Board's position, in its regulations they say that when property is posted for foreclosure, a -- the owner of that property has five working days to seek relief from FSLIC -- excuse me -- from the Federal Home Loan Bank Board, which is the supervisory agency over FSLIC, from the foreclosure. And then, if he misses the five working days, his right to seek judicial review is waived. If he gets within that -- those five working days, he may then appeal the Board's failure to give that judicial relief into the courts. But he may not initially go into a state court, which I submit almost every litigant not familiar with these arcane procedures would do and seek a temporary restraining order.

QUESTION: Being -- being deprived of your property by foreclosure is not --

MR. GOODFRIEND: Absolutely.

QUESTION: -- is not an added threat unless you miss the five days.

MR. GOODFRIEND: Yes, Your Honor.

QUESTION: Okay.

MR. GOODFRIEND: But it's easy to miss those five days.

I would like to make a couple of points at the outset. One is the tremendous breadth of the Hudspeth Doctrine. This is not a doctrine which applies only to a narrow range of claims as to which the Board might claim some expertise. It applies to virtually every conceivable state and federal cause of action against an insolvent savings and loan. It covers antitrust claims, securities claims, employment discrimination claims, RICO, and under state law a breach of contract, fraud, usury, even personal injury claims. If I left this courtroom and was hit by a vehicle owned by a savings and loans that was insolvent or one that became insolvent, I would have to present my personal injury claim to FSLIC.

Further, the Board has defined in its regulations the concept of claims so broadly that it includes compulsory counterclaims and even affirmative defenses. If FSLIC goes into court and sues my client on a note, which they could do in this case, foreclose on the property and sue on the deficiency, or on a contract, as they did in Mr. Hudspeth's case, he may not -- the defendant may not counterclaim or set off his own claims against FSLIC in -- in court, but must, according to the Hudspeth Doctrine, raise his counterclaims or even some courts have held his affirmative defense by way of offset in the administrative proceeding. So, what this does --

QUESTION: Is that --

MR. GOODFRIEND: -- is bifurcate.

QUESTION: Is that mandated by FSLIC regulation now?

MR. GOODFRIEND: Yes, Your Honor. They have -- I will read to the Court. They have defined the term "claim" in -- in their -- I have the April regulations. I understand from my co-counsel, Mr. Art Leibold, that just yesterday FSLIC made these regulations final with some additional prefatory language that I have not seen.

But under the term "claim," Your Honor, "Claim includes but is not limited to demand for recoupment, set-off, security, priority or preference."

QUESTION: But now we -- let's assume that you're totally right on the meaning of the regulation. We don't have that particular problem before us. I mean, there's nothing in this case that requires us to consider the validity of every single aspect of --

MR. GOODFRIEND: No.

QUESTION: -- FSLIC's regulations.

MR. GOODFRIEND: No, Your Honor. But -- but you do have that issue before -- my client has been threatened with foreclosure once. And the question of --

QUESTION: We -- we don't have before us -- or correct me if I'm wrong. We don't have before us the situation where FSLIC initiates a lawsuit against a party. The party seeks to counterclaim. FSLIC says, no, you should have filed a claim. You -- you can no longer counter-claim. That isn't present in this case, is it?

MR. GOODFRIEND: Your Honor, it hasn't happened yet. It can happen on the facts here before the Court because once FSLIC forecloses on the property, they can sue my client on the deficiency on the note. And then, when I raise our -- try to raise those as a defense or offset in federal court, I will be referred to the administrative track under Hudspeth. So, it hasn't happened yet, but it's -- it is implicit in the facts of the case.

QUESTION: If -- if we rule in -- generally in your favor, should that include a declaration that you're not required to submit claims at all even for notice purposes?

MR. GOODFRIEND: You say for notice purposes. Is this -- is your --

QUESTION: I mean, I -- I assume that you have to submit notice of claims to FSLIC within 30 days under the regulations.

MR. GOODFRIEND: That goes to the bar date, Your Honor?

QUESTION: Yes.

MR. GOODFRIEND: That's I think a very important point. What we say happens in this case is that the combination of a mandatory exhaustion requirement, together with the receiver's bar date, which is usually 90 days after the receiver publishes notice of the receivership to all creditors, actually operates to modify substantive state and federal statutes of limitation.

So, if you combine that with the mandatory exhaustion requirement, I would dispute it. If you say there is only a permissive exhaustion requirement, as there is under the National Bank Act where a creditor can file a claim, if he wishes, with the receiver, but the bar date of the receiver -- this is the Queenan v. Mays case -- does not prevent the creditor from going into court even after the bar date has run and having the validity of his claim determined there. Now, he cannot execute on any judgment he obtains from a court.

QUESTION: But you would conceded the authority of FSLIC under either existing regulations or the existing statute to require a notice of claim?

MR. GOODFRIEND: A voluntary claims procedure. Is that the same as --

QUESTION: Suppose it's a -- would you concede that they can require a mandatory claims procedure to give them notice of the existence of the claim not for adjudication purposes?

MR. GOODFRIEND: Let me ask this. Does that contemplate that we cannot go into court until we --

QUESTION: No.

MR. GOODFRIEND: -- comply?

QUESTION: Yes. Yes, it means that before you can go to court, you have to give them notice of your claim.

MR. GOODFRIEND: Your Honor, that takes it -- I would say this, that there is no authority for that. But if it does not entail any significant deferring of federal court jurisdiction, yes. If it requires any significant deferring of federal court jurisdiction under express jurisdictional grants to -- to litigants, I would say no.

QUESTION: Suppose it doesn't require deferring, but it cuts it off. I mean, suppose if you don't file, you can't bring a suit -- you can't bring a suit in court, state or federal. You wouldn't like that.

(Laughter.)

MR. GOODFRIEND: I wouldn't like it.

QUESTION: But once you file, you can sue as soon as you like.

MR. GOODFRIEND: There is no express authority for this, Your Honor. I would say this, that if this Court held that such a notice requirement were required, but that a litigant, once he complied, could go immediately to federal court, I would say there would be no significant infringement on -- or it would not be a significant abuse of the powers granted by Congress.

The problem here --

QUESTION: But you think we can't rule for you and -- and have that regime. I mean --

MR. GOODFRIEND: It could have --

QUESTION: -- it's really all or nothing -- nothing at all.

MR. GOODFRIEND: Well, Your Honor, I think it's a question of power. And what I think is that really what is at stake here is the question of whether an agency can by regulation with no express statutory authority force a federal court to defer jurisdiction. And I think that is probably the key question in this case.

QUESTION: Is it arguable that the existing regulations can be interpreted to provide that there must be notice, or would those --

MR. GOODFRIEND: No, (inaudible) --

QUESTION: -- regulations have to be amended?

MR. GOODFRIEND: Well, Your Honor, I think they would have to be amended. What is requires now is that the creditor file a claim and then it sits -- he cannot go to court, and it sits there until the special representative either denies it or retains it for further -- no -- either grants it, denies or retains it for further review. And what we have shown in the limited statistics we have available --

QUESTION: But --

MR. GOODFRIEND: -- is they're very large claims.

QUESTION: I take it your position isn't that once you get your judgment, if you get it, that you don't have to go to the receiver.

MR. GOODFRIEND: No. That is not -- my position, Your Honor, is you have to go to the receiver.

QUESTION: And you -- and I suppose that the receiver would have to wait until he knew what the other claims were before you divided up the pie.

MR. GOODFRIEND: Your Honor, that's what the Fifth Circuit thought. And that seems contrary to all prior receivership practice and contrary, for example, to interim distributions which are authorized under the Bankruptcy Code.

QUESTION: Well, I -- I take it that isn't -- I guess that issue isn't here anyway, but --

MR. GOODFRIEND: Well, it's here only in that the Fifth Circuit felt that that was a restraint. And he needed to know the -- he would say we need to know the denominator of the equation, how much we're going to pay out, before we can pay anything out.

QUESTION: But if -- if there's only 10,000 units available in the pool, and you have a judgment for 5,000 units, and yet there are claims ten times that, do you think you should get a distribution for 5,000 units?

MR. GOODFRIEND: Well, what has happened, Your Honor, first of all, sometimes claims of a certain priority are all in and a receiver can make distribution with --

QUESTION: Yes, yes.

MR. GOODFRIEND: -- without prejudicing --

QUESTION: But you -- you agree that -- that all the claims of a certain class ought to be in before anybody gets anything.

MR. GOODFRIEND: No, I don't, Your Honor. I think you can set up a -- let me say under the Bankruptcy Code there is a provision that contemplates this where you can set up a reserve where there is contested litigation. And you can make distributions to creditors whose claims are liquidated while the receiver sets up a reserve to cover the claims of those that are not.

QUESTION: But is FSLIC required to borrow from the bankruptcy statute that particular procedure?

MR. GOODFRIEND: No, Your Honor, I don't think they are required. The point is this that the Fifth Circuit's assumption that all the claims must be litigated and therefore that the mere attempt to liquidate a claim in court is a restraint is fallacious.

QUESTION: One can accept that I think without going as far as you do in suggesting that the -- the receiver would have to follow some provisions about interim distributions that aren't at all clear from the statute.

MR. GOODFRIEND: I agree, Your Honor. He does not have to follow those provisions, but the point is it is his voluntary decision to make or not make interim distributions. He does not have to have all claims liquidated before he can make any distribution.

What I'd like to address, if I may, is the -- what I think is the critical issue in this case, and that is the question of whether -- whether or not -- what the standard of review is for determining the validity of a regulation by a federal agency mandating exhaustion where, as the Solicitor General admits in this case, there is no express statutory authority for a mandatory exhaustion requirement in the statute; and secondly, where the Solicitor General has cited no relevant legislative history concerning congressional intent to require exhaustion.

Yet, in that context, the Solicitor General proposes the most deferential standard of review as to the validity of this exhaustion regulation. He proposes that it be reviewed under the standard of whether it is reasonably related to the purposes of the enabling legislation. We discuss this in footnote 15 of our brief. And he relies on Mourning v. Family Publications and Weinberger v. Salfi, and a number of other cases cited in a footnote.

Secondly, Hudspeth -- in the Morrison-Knudsen case there was an oblique reference to the standard of review of administrative regulations, and the court there referred to the Chevron v. National Resource Defense Council case by this Court. And also there's a Duke law Journal that has been sent to this Court which uses the Chevron test which is also very deferential. It is whether or not the regulations should be upheld according to Chevron if it is not arbitrary, capricious or manifestly contrary to the statute.

QUESTION: We're talking here about the standard by which a court reviews FSLIC's regulations not by which a court would review a FSLIC determination that a claim wasn't any good. Is that right?

MR. GOODFRIEND: What I'm talking about, Your Honor, is the validity -- the SG has taken the position that FSLIC has the power -- the Board has the power to impose these regulations. And the question is, under section 5(d)(11) of the Act, which is a general grant to FSLIC of the power to set up receiverships -- and the question is does the Board have the power to impose mandatory exhaustion requirements under that general grant of power and, if so, by what standard is the validity of the exercise of that power to be determined.

And we reject both the Chevron test and Mourning v. Family Publications and Weinberger v. Salfi. And we do so because we believe that what is at issue here is the validity of agency regulations which attempt to limit the access of litigants to the courts.

And traditionally, when dealing with a limitation on the right of access to the courts, this Court has always subjected that kind of legislation or regulation to a higher degree of scrutiny than other types of legislation, and it has placed the burden of showing that Congress intended to limit access on the party asserting the limitation.

QUESTION: But every --

QUESTION: Didn't the -- didn't the regulations in Salfi limit access to the courts?

MR. GOODFRIEND: Yes, Your Honor, but I distinguished Salfi, Your Honor, because there the statute expressly contemplated exhaustion. It said you've got to go to the Secretary and then you can appeal any final decision. The statute set up the exhaustion mechanism. An agency did not by fiat with no statutory authorization at all declare exhaustion.

And I have found no case -- and maybe the Solicitor General can -- can advise the Court. I have found no case from this Court which has determined whether an agency can enact an agency-directed and mandated exhaustion requirement with no statutory authorization. And the question is when that happens, what is the standard of review.

And we submit that under -- this Court has used a heightened scrutiny in Johnson v. Robison and Abbott Laboratories v. Gardner to review cases where Congress tries to limit judicial review. And even in the abstention area, Justice Brennan writing for the Court in Colorado River Water Conservation District and later the Court's decision in Moses Cohn where abstention comes up, which is also a postponing of the -- of jurisdiction, this Court has referred to the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them.

We think Mourning is inapplicable. It does not involve exhaustion. Chevron doesn't involve exhaustion. Weinberger did, but it was expressly in the statute.

QUESTION: Do you -- do you mean, Mr. Goodfriend, if there's a statute that says the Secretary can make a particular determination -- that's all the statute says -- the agency can't -- doesn't -- and the agency has rulemaking authority, just general rulemaking authority, the agency cannot devise a -- a system by which that determination will be made which requires the applicant to apply first to one level with an appeal to a second level --

MR. GOODFRIEND: Possibly if --

QUESTION: -- with an appeal to a third level? And you -- you think we wouldn't hold that he had to exhaust?

MR. GOODFRIEND: I think if it contemplated action by the action by the Secretary, in some ways I think the agency could flesh out the details of the exhaustion requirement.

The point here is all you have is a general grant to the agency to enact regulations dealing with receiverships. Nowhere does it contemplate a priority, who goes first.

QUESTION: But it does say that the corporation shall have authority to liquidate the institution in order -- in an orderly manner.

MR. GOODFRIEND: Yes, Your Honor, it does say that.

QUESTION: That is a -- that is quite a grant of power.

MR. GOODFRIEND: But, Your Honor, I think this is the significant thing. Only creditors of savings and loans have to go through this administrative process which involves no -- no hearings, no -- no taking of evidence, only one-way discovery basically. The creditors of just about every other financial institution, banks, credit unions, insurance companies, in liquidation, when those financial institutions go into litigation -- into liquidation, all those other creditors get to have their claims determined in court. Under the National Bank Act, since the 1800s, creditors of banks have had the right to have their claims determined in court.

QUESTION: We're not fighting about that anymore I thought.

MR. GOODFRIEND: We're not fighting about what, Your Honor?

QUESTION: The right to get it determined in court. I gather that has been conceded.

MR. GOODFRIEND: Well, as far as I know, Your Honor, under the National Bank Act, there is no exhaustion requirement. In fact, as we have pointed out in our brief, there is a voluntary claims procedure before the FDIC, and a creditor who, say, has a small claim and doesn't want to incur the expense of -- of litigation can go there.

But the fact that that claims procedure exists and the fact that the receiver may impose a bar date in a bank liquidation does not prevent a creditor of a national bank in receivership under FDIC from having his claim determined in federal or state court. And that discrimination I believe between creditors of savings and loans and creditors of banks I think is going to upset the careful balance that Congress has crafted between savings and loans and banks and other financial institutions.

And one of the reasons that the U.S. Savings League, the trade association of the largest number of savings and loans in this country, is here in this Court filing an amicus curiae brief on behalf of Coit and against the regulatory agency that regulates savings and loans is that they fear that the Hudspeth Doctrine is going to cause businessmen in the future to prefer banks and other financial institutions over savings and loans when it comes to engaging in new business transactions. And we think savings and loans are going to be -- and apparently they do to -- going to be seriously hurt by the existence of the Hudspeth Doctrine.

We also think that the Hudspeth Doctrine threatens the security of many homeowners in this country who, because of the limited nature of review for foreclosure proceedings, actually stand at risk if their mortgages are held by savings and loans because if FSLIC posts their home for foreclosure, even mistakenly, and they don't meet that five-day window, their property can be taken and no court in the land under the Hudspeth Doctrine can come to their aid.

So, we believe that this is a sweeping doctrine. And we believe if that if the Board wishes to contravene the rights of these litigants to avail themselves of express jurisdictional grants from Congress and to shorten federal and state statutes of limitations, then the Board has the burden to show that Congress intended to make an exception where insolvent savings and loans are concerned. We believe if any lesser standard were used, then every federal agency could require exhaustion simply by adopting a regulation to that effect.

QUESTION: Thank you, Mr. Goodfriend.

We'll hear now from you, Mr. Minear.

ORAL ARGUMENT OF JEFFREY P. MINEAR ON BEHALF OF THE RESPONDENT

MR. MINEAR: Mr. Chief Justice, and say it please the Court:

The savings and loan industry is presently facing the worst financial crisis since the Great Depression. The Federal Home Loan Bank Board estimates that at least 400 federally insured savings and loan institutions are insolvent. And the Bank Board, which itself is facing serious financial constraints, has already ordered the liquidation of 85 other hopelessly insolvent institutions. The liquidation process is just beginning, and already there are thousands of claims seeking billions of dollars against just these 85 thrifts.

Those claims are pressed by a wide variety of interests, including defaulting borrowers like Coit, who claim that they are not obligated to pay back their loans and that the lender, in fact, should pay them damages.

This case presents an extraordinarily important, albeit it narrow, question, namely, what is the first step in the process for resolving these thousands of claims. We submit that claims against an insolvent thrift that has been placed in Federal receivership must be presented to the receiver in the first instance for allowance or disallowance before the claimant can seek a judicial remedy.

The circuit courts that have tolled in this vineyard all recognize the concepts of primary jurisdiction or exhaustion of remedies apply, but they have differed with respect to whether a claimant must always participate in the administrative process before seeking judicial review. The Third, Fifth and the Seventh Circuits require a mandatory resort to the Bank Board's claims procedure where the Ninth Circuit's Morrison-Knudsen decision held that a trial court should consider whether recourse to that process is appropriate under the circumstances of the particular case.

We submit, based on the logic and language of the relevant statutes, that a claim -- a claimant is required to participate in the Bank Board's claims process and that any other result would have disastrous consequences for the orderly liquidation of a failed thrift.

QUESTION: You say that there's a statute that requires exhaustion?

MR. MINEAR: No, Your Honor, we do not say that there's a statute that expressly requires exhaustion. The exhaustion requirement, in fact, is implicit in the statutory scheme that is set up by the Homeowner's Loan Act and the National Housing Act.

Section 5(d)(6) of the Homeowner's Act gives the Bank Board exclusive power to reorganize or liquidate an insolvent thrift using FSLIC as receiver for that purpose. Section 5(d)(11) then broadly states that the Board shall have power to make rules and regulations for the liquidation of associations and the conduct of receiverships.

Congress, in short, gave the Bank Board broad power to design and put into effect an administrative process in lieu of the Title XI bankruptcy procedures for liquidating failed thrift institutions. And here, as in de la Cuesta, it would have been difficult for Congress to have given the Bank Board a broader mandate.

QUESTION: The only issue is whether that includes the power to cut off a claim. Do you think that language fairly includes the power to cut off a claim is what we're talking about --

MR. MINEAR: There's -- we're not asserting that the Bank Board has the power to cut off a claim. We're asserting that a -- that the claims process only postpones judicial determination of that claim until FSLIC, after review by the Bank Board, has had a determination -- a chance to make a determination whether to pay, settle or dispute that claim.

QUESTION: Aren't you -- aren't you claiming that if -- if -- if a claim is not presented timely to FSLIC, the claim is cut off?

MR. MINEAR: But that -- that really results -- that result follows from failure to comply with the administrative process.

QUESTION: Well, to be sure. But -- but the power you're asserting is the right -- is the power to cut off a claim if they don't do what you tell them to do.

MR. MINEAR: But, Your Honor, I think the same thing would happen under the Social Security Act, for instance, if a party refused to comply with the Secretary's regulations governing the -- the pursuit of a claim in the administrative forum.

What we're asserting is that the claimant does, in fact, have to comply with these rules and regulations that FSLIC might -- might impose. Now, whether those rules or regulations are fair, in fact, can be reviewed by this Court.

QUESTION: Under the Social Security Act, the claimant must establish his claim before the Social Security Administration. You have conceded that the claimant does not have to establish his claim before FSLIC. He's entitled to establish it before the courts. I there find it -- I, therefore, find it hard to imply a power on the part of FSLIC simply to chop that claim away if this individual doesn't follow what FSLIC wants, or at least I -- you know, it seems to me there ought to be more specific language in the statute.

MR. MINEAR: Your Honor, without that sort of power, it would be impossible to conduct any sort of liquidation procedure at all. If parties are not, in fact, willing to comply with the -- the liquidation scheme that Congress has set up, then the liquidation scheme will simply not work. We think that this power is implicit in the broad grant of authority to create a liquidation scheme. Absent the power to require creditors to comply with the liquidation provisions, it's going to be -- it's going to be impossible to get anyone to even participate in this liquidation scheme.

QUESTION: Mr. Minear, is it de novo judicial review, if you want to call it judicial review, when a person takes a claim to court after it has been passed down by the Board?

MR. MINEAR: Well, Your Honor, first this question isn't squarely presented here, and we think --

QUESTION: Well, but I -- I think it's very useful. It would be very useful to me in deciding the case because if the FSLIC determination means absolutely nothing, turning down the claim is entitled to no weight in court, there doesn't seem to be much point to the whole procedure. And on the other hand, if the FSLIC determination is entitled to some weight, then the -- you wonder whether an agency can by regulation cut off the -- the right to process it in court ab initio.

MR. MINEAR: We submit as follows with respect to that question, Your Honor. Once FSLIC has made a determination whether to pay, settle or dispute a claim, if it -- if its determination is to dispute the claim, the parties go to court and they litigate that question. And it, in fact, is a -- the beginning of a judicial remedy. All we've really done is postponed the judicial determination of that claim until the Bank Board has had an opportunity to determine whether to allow it --

QUESTION: Well, that's where FSLIC, in effect, denies the claim.

MR. MINEAR: Yes. Its denial of its claim is, in essence, an assertion it's going to dispute that claim in court.

QUESTION: Most claims are granted. Most claims that have any basis for them --

MR. MINEAR: Yes, that's --

QUESTION: And it's very important to get those out of the way.

MR. MINEAR: Exactly. And, in fact, FSLIC often cannot make a wise litigation judgment on these claims until it has an opportunity to see all the claims that have been presented and sort out the relationship between the creditors and the validity and nature of the claims.

QUESTION: Because in the -- in the claims process that's provided for by the regulations, it doesn't contemplate any kind of a hearing, just a filing and a paper -- a paper presentation.

MR. MINEAR: They can, in fact -- FSLIC can, in fact, require an oral presentation.

QUESTION: I -- I know they can, but they --

MR. MINEAR: They can require it, but they do not. It's not required.

QUESTION: But the -- but the claimant has no right to an oral presentation.

MR. MINEAR: No, he does not have a right to oral presentation.

QUESTION: So, it just -- it just contemplates a -- a tentative decision about it. And if they're going to grant it, it's final.

MR. MINEAR: Yes.

QUESTION: If they're not, why, you're going to litigate.

MR. MINEAR: Yes. And with respect to that, I think it's useful to point out how the -- the present status of this receivership. There are over 1,700 claims that were filed in this particular receivership that sought over $800 million in damages from the receivership estate. At this point approximately 570 of those claims have been resolved, either allowed, disallowed or settled. At present another 530 are under negotiation under a global settlement plan. These 530 claims all arise from 67 related loans.

QUESTION: Mr. Minear, after FSLIC turns down a claim, is its denial of the claim entitled to any weight in the judicial proceeding?

MR. MINEAR: The Bank Board has argued in a number of cases that it's subject to APA review, and the Solicitor General disagrees with that position.

QUESTION: What does the Solicitor General --

MR. MINEAR: The Solicitor General's position is that the party begins his claim anew. It's, in essence, a de novo determination of that claim.

Now, there are -- I think it's important to point out at the same time, however, that there are -- that the receivership determination can, in fact, constrain as a practical matter this claim in various ways. For instance, the receivership's determination might be admissible in court under a hearsay exception. For instance, 803(c)(8) I think would allow admission of that. It also might lead to stipulations among the parties as a practical matter. The net effect of the receivership procedure is to narrow the issues in these cases.

Often times it will allow for a summary judgment determination of these claims once the parties find through the receivership process that there, in fact, is no factual issues in dispute.

QUESTION: What about time? What about time? The claimant has to wait until there's a decision by FSLIC.

MR. MINEAR: Yes, generally, but there's also an APA remedy in the -- in the event --

QUESTION: Well, can't -- do you -- can't the party just file a suit? Let's assume he files with the receiver. May he also file a suit in court and then have that stayed?

MR. MINEAR: We submit that he cannot, that simply the receivership process will not work under --

QUESTION: Well, how does he avoid the statute of limitations?

MR. MINEAR: There's a couple of ways. First of all, these claims are often resolved long before statute of limitations --

QUESTION: Well, they often aren't.

(Laughter.)

MR. MINEAR: Well, in this respect, Your Honor, that there has been a claim here that this claim has lingered for 13 months, and I do have to clarify the record on that.

QUESTION: Well, let's --

MR. MINEAR: When this --

QUESTION: You don't have to do that till you answer this question.

MR. MINEAR: Sure.

QUESTION: What about the statute of limitations?

MR. MINEAR: Certainly, Your Honor.

The statute of limitations problems can be dealt with in several ways. First of all, if it appears that the statute of limitations is going to run, FSLIC can allow the party to file its suit subject to a stay pending the determination of the receiver whether or not to go forward with that plan.

QUESTION: Well, but FSLIC you say may --

MR. MINEAR: Yes.

QUESTION: Why would it do that? I mean, it's --

(Laughter.)

QUESTION: It's the person owing the money.

MR. MINEAR: But, Your Honor, the -- the -- FSLIC's interest here is in a fair resolution of these claims. And FSLIC does not have any interest in forcing people to, in fact, default on their claims through a statute of limitations. That is simply not what FSLIC is interested in doing.

In any event, if the claim is delayed, the party can go to court and seek a remedy under the APA for agency action unduly delayed. There is a remedy there that would preclude any of these problems.

QUESTION: What -- what if you want to go to state court and sue?

MR. MINEAR: Well, there's still the APA remedy in those circumstances for, in fact, obtaining --

QUESTION: So, you bring a separate APA suit in federal court against FSLIC for unlawfully delaying your claim before you can go into state court and file a claim on the merit.

MR. MINEAR: Yes, Your Honor, but that -- first of all, these -- these threats are all rather hypothetical. In fact, as I pointed out already, in one year the First South receivership has resolved 550 of the 1,380 non-shareholder claims.

QUESTION: Yes, but it hasn't resolved the claim that your opponent is fighting about.

MR. MINEAR: And there's a reason for that, Your Honor. And if I can point out, when they -- when Coit filed its claim, it also included a letter, and this letter states: "Claimant's claims are presently on appeal in the United States Court of Appeals for the Fifth Circuit. The Claimant will supply additional factual material in support of the attached proof of claim at the appropriate time, but in order to save cost to all parties, all information is not being presented at this time."

As a result of that --

QUESTION: Yes, but of course, you probably have read the complaint, and you're a party to the litigation. So, it's not exactly a mystery what the lawsuit is all about, is it?

MR. MINEAR: Well, yes, your -- but, Your Honor, there is still -- in order for -- these determinations are made by separate parties. The receiver is not the same person as the person who is, in fact, litigating this claim in a different court. For the receiver and his special representative to determine this claim, he has to acquire certain information that is going to be necessary for him to pass on that judgment.

QUESTION: Well, who is in --

MR. MINEAR: Until he receives that --

QUESTION: Who is in control of the defense of state court litigation?

MR. MINEAR: The Bank Board is in control of that; the Department of Justice is not.

QUESTION: But -- and FSLIC can't get the information from the Bank Board? They don't know what the case is all about?

MR. MINEAR: Well, it can, but again, Your Honor, remember there are 1,700 claims here, each of which can be a potential lawsuit. And this is just one receivership.

QUESTION: Well, this is not a potential lawsuit; this is an actual lawsuit. It started even before the receivership was started.

MR. MINEAR: Yes, Your Honor, that's true. And when FSLIC steps into the shoes of the savings and loan in these circumstances, it has the difficulty of learning about the claims, learning about what those claims are about, whether they're meritorious or not, whether or not to defend the claim, whether or not to settle the claim, whether or not to pay the claim.

QUESTION: Well, Mr. Minear, the -- the Petitioner alleges that in actuality the small claims are dealt with by FSLIC and resolved, and the claims that amount to substantial sums of money go into the so-called black hole and just aren't acted on.

How is the administrative scheme adequate under this Court's holdings if there is no time limit and if there is no reasonable mechanism by which the creditors can expect to see action in a timely fashion on their claims?

MR. MINEAR: Your Honor, when a claimant, in fact, can point to undue delay in the administrative process, then that is the time to review that question. But we don't have that in these circumstances. FSLIC has not been provided with the information necessary to act on Colt's claim. And until it does, it's very disingenuous for the party to claim that this claim has disappeared into a black hole.

As for the size of the claims that are disputed here --

QUESTION: But there is nothing in the administrative regulations that even purports to set any kind of time limit for action by the FSLIC.

MR. MINEAR: Well, if that is the only --

QUESTION: I would find it very difficult to think that's an adequate administrative remedy frankly.

MR. MINEAR: Your Honor, if that is the only deficiency in these regulations -- and I'm sure that the Bank Board could enact a regulation that would require action on those claims within a certain time. But you must remember that these claims are oftentimes very complex, they're interrelated, they cannot be resolved immediately.

Mr. Hudspeth's claim -- they point to the -- the supposed nightmare of Mr. Hudspeth. He settled his claim this summer. In fact, these claims are being resolved. Hundreds of them are being resolved. Thousands of them are being resolved.

I think it's also important in terms of --

QUESTION: Of course, some people may have settled because they're worn down not being able to --

MR. MINEAR: Well, Your Honor, of course.

QUESTION: -- go into state court. Sure.

MR. MINEAR: But they might also have settled because FSLIC has, in fact, given them a fair deal on their claims once they determine how little is, in fact, in the assets of the receivership estate.

QUESTION: Well, Mr. Minear, I can see how it's necessary for an orderly conduct of the receivership to know what claims are out there and -- and maybe the -- the general language is enough to -- to give you that authority. But why is it necessary for a orderly conduct of the receivership to stop people from commencing lawsuits which you have acknowledged will be the determinative lawsuits? You've acknowledged that ultimately the state or federal court determinations are going to be what govern.

MR. MINEAR: Your Honor, for the very same reasons that there's an automatic stay in bankruptcy, that when the receiver or a trustee steps into the shoes of an insolvent debtor, it must have an opportunity to assess the legal situation and the financial situation of the particular debtor. Without that breathing space, there's simply going to be chaos. And that is the -- the prospect that we face right here.

QUESTION: Who is -- who is going to make the ultimate determination in the bankruptcy case?

MR. MINEAR: In the bankruptcy case of the -- the claim itself would ultimately be made by the Bankruptcy Court.

QUESTION: That's a big difference, isn't it? I mean, that's the point. Here the ultimately -- the ultimate determination is not going to be made by FSLIC. It's going to be made by those courts anyway, as you -- as you've now told us.

Under the former theory that FSLIC had, it made some sense. You could say, well, since ultimately FSLIC is going to make the determination, subject to -- subject to arbitrary and capricious review, it makes a lot of sense to say you have to come to FSLIC for, but -- first.

But now you come before us and you say FSLIC isn't the one that makes the determination; it's going to be the state and federal courts. If that's the case, I don't see any reason why -- I can see a reason why you want to know what claims are out there, but why don't you let the courts go ahead and tell you what -- it actually helps you.

MR. MINEAR: Because the receiver --

QUESTION: You'll know that much sooner which claims are good ones.

MR. MINEAR: The receiver also has to have an opportunity to make a determination, not simply know about the claim, know that someone submits a paper and says that the receivership estate owes them $100 million. They have to have an opportunity to evaluate the legal significance of those claims whether or not they're right on the law, whether or not the claim ought to be settled because, in fact, there are no assets in the receivership estate.

One of the anomalies that the -- the Court's position creates here is tremendous litigation over an empty bucket. There -- in fact, in many of these receivership estates, there are no assets, and yet we have parties that are going out and filing claims, seeking discovery and, in fact, demanding litigation when, in fact, there is no money there that would ultimately pay the claims. The one --

QUESTION: People represented by lawyers?

MR. MINEAR: What?

(Laughter.)

QUESTION: Take a default.

MR. MINEAR: Surprisingly so, yes, Your Honor.

QUESTION: Take a default. It will serve them right.

MR. MINEAR: Well, the government is not in a position to be taking default judgments in these matters. And this is a serious question, Your Honor, that in fact should FSLIC, if there are no assets in the receivership estate, simply take default judgments. That's -- that would be a very peculiar situation.

What is also peculiar --

QUESTION: I take it, counsel, that FSLIC could request a state or federal court to stay the action at the court's discretion.

MR. MINEAR: Again, the courts -- the court -- the Bank Board and FSLIC can certainly do that. But if in fact, end up litigating over the question of exhaustion itself -- and that is what is occurring in the Ninth Circuit --

QUESTION: Well, it's not exhaustion; it's just -- it's just a request for stay so that you can evaluate your position.

MR. MINEAR: (Inaudible).

QUESTION: Any court would exercise its discretion. You've been arguing that FSLIC has discretion. Courts have discretion as well.

MR. MINEAR: But -- but, Your Honor, that neglects the fact that oftentimes many of these claims will all arise out of one piece of property, one or a series of related transactions. Suits will be filed all across the country all relating to that particular property.

QUESTION: What is the experience in the Ninth Circuit where they have a contrary rule?

MR. MINEAR: The -- what FSLIC tells me is, in fact, they spend a good deal of time now litigating whether or not the claims process ought to be exhausted. And, in fact, they can spend thousands and, in some cases, tens of thousands of dollars --

QUESTION: If we decide for the other side --

MR. MINEAR: -- (inaudible) determinations.

QUESTION: -- you won't be litigating that (inaudible.)

(Laughter.)

MR. MINEAR: No, we won't, but we'll be litigating the -- certainly the litigation bills will be even higher.

And it's important to remember that those litigation costs are borne by the receivership estate. And this is where we go again to the point of a need for an orderly mechanism for litigating these claims.

All that FSLIC is asking for in this situation is the opportunity to evaluate whether to pay, settle or disallow a claim --

QUESTION: I can't imagine, Mr. Minear -- I don't -- I don't know what your experience with district judges is, state of federal, but I can't imagine if FSLIC goes in when the suit is filed and says, you know, Your Honor, we are in active settlement negotiations, we're evaluating this thing. The court says, no, no, I'm sorry. I want to go ahead with a trial. I want to have a trial on my docket. I can't imagine that that's what happens.

MR. MINEAR: But is this Court really --

QUESTION: If you were actively --

MR. MINEAR: Is this Court really willing to rule on that decision based on its perception of what hundreds, literally hundreds, of judges might do in particular cases? There really is a need for a rule here to restore order.

QUESTION: I can -- I can more accurately predict a good result from what those judges will do than a good result from leaving it with FSLIC to -- to -- to decide how long it wants to act upon these things.

MR. MINEAR: Your Honor, I'd like to point out that it has been treated as if this whole process is truly unique or abnormal. But we only need to look to Texas State procedures to see that, in fact, this is the way that receiverships are often conducted.

Under Article 852(a) of the Texas Civil Code, Section 8.09, Texas has established a receivership proceeding -- and, in fact, they call it a liquidation proceeding -- that is very similar to, in fact, what FSLIC is advocating in this particular case. In that case, the liquidating agency --

QUESTION: It's a shame I suppose that Congress didn't enact a similar statute.

(Laughter.)

MR. MINEAR: Your Honor, this -- again let's remember the context of these statutes. They were enacted in 1933 at a time when there were thousands of foreclosures taking place. There's very little legislative history on this statute, and it's quite clear that what Congress did in this particular statute was delegate exceedingly broad authority to the agency to create a liquidation scheme. They entrusted the agency with that responsibility in lieu of the bankruptcy procedures.

And, in fact, the result that -- that would follow from Coit's argument here would be that there would be less protection and far less protection than is available under the bankruptcy scheme. And we can't believe that Congress really wished that sort of anomaly, that in the case of every other insolvent debtor except thrifts --

QUESTION: Yes, but again you compare it to the Bankruptcy Code. That's not a -- a one-line document saying bankruptcy judges make up a lot of rules. It's a rather elaborate legislative code that's administered.

MR. MINEAR: That's -- that is correct, Your Honor.

QUESTION: It's quite different from --

MR. MINEAR: But that simply underscores the difficulties of the problems that are faced here.

QUESTION: The Bankruptcy Court's decision there is the operative decision. That's a big difference from what -- what -- what -- the situation here. Here the receiver does not make the decision.

MR. MINEAR: But, Your Honor, let's compare this again to the Texas code that I was alluding to simply a few minutes earlier. In that case a liquidating agent is appointed. The liquidating agent has authority to pass on claims. When he makes -- first of all, all the parties are required to submit their claims to the liquidating agent within a period of time. It's longer than the -- than the FSLIC program. But if a party does not submit his claim, he is precluded from any participation in the distribution of the receivership assets until all of the other claimants who have timely filed have been paid off in full.

Now, after the party submits his claim to the liquidating agent, the liquidating agent makes a determination on that, on that claim. If he determines to disallow the claim, the party is then entitled to bring a suit in state court in a particular county, mind you, in Travis County, to in fact litigate that claim.

Now, that's not far removed from what the receiver is asking for here. And, indeed, it would be quite anomalous if in the case of federal receiverships, no such protection is given, but in the case of state receiverships, that protection is available when they are liquidated through the state proceedings.

There are other anomalies that result from Coit's position that I must point out. Absent a centralized process requiring presentation of claims, FSLIC would have to wait until the expiration of the longest period -- the longest possible statute of limitations before it could even determine the total amount of claims that face the receivership.

FSLIC, accordingly, would be unable to begin even partial distribution of assets until that time. Under these circumstances, it's clear that FSLIC would have great difficulty in making even interim distributions because it must wait until it has all the claims before it.

QUESTION: A notification requirement would stop that problem. You don't need an exhaustion requirement --

MR. MINEAR: The notification would solve that particular problem, but it wouldn't solve the problem that courts could still become engaged in pointless litigation.

As I pointed out before, some receiverships have no assets. In other cases, individual claimants are each pursuing their claim without regard to others and, in fact, are exhausting the receivership assets. Now, that certainly is not in the best interest of an orderly liquidation. And it's not in the best interest of the claimants in this situation either.

Now, Colt has raised several other objections here to the -- to this process. And one of those is the question of foreclosures. And the fact of the matter is that FSLIC gives as much protection to foreclosures as the states often give. A party is entitled upon receiving notice of a foreclosure to seek a stay on an expedited basis from the Bank Board. If the Bank Board rejects that stay, the party then has an opportunity to seek judicial review before the foreclosure takes place.

In this particular case, there was a notice of foreclosure, and based on the -- the litigation, the ongoing litigation, and other matters as well, FSLIC has determined not to foreclose on that property. There's no --

QUESTION: Does -- does FSLIC have authority to foreclose without going to court?

MR. MINEAR: In -- in states where it's operating under a deed of trust --

QUESTION: So, it depends on the deed of trust-mortgage distinction basically.

MR. MINEAR: Yes, state law. They are looking to state law. But in most states now, there are nonjudicial procedures for foreclosure.

And as for the -- with respect to the claim-counterclaim controversy, there is no reason to believe that the administrative claims process will inevitably lead to the resolution of FSLIC claims and creditor counterclaims in different forums.

When FSLIC is litigating a claim against a receivership claimant, it can agree to stay its action pending the claimant's exhaustion of the administrative remedy. Furthermore, a district court in appropriate circumstances could order such a result.

In any event, the mere possibility that claims and counterclaims might be decided in different forums provides no reason for dispensing with the substantial benefits that flow to every claimant from the administrative claims process.

Finally, Colt has discussed the careful balance between the bank statute, the National Bank Act, and the thrift statute in this case. I think it's important to point out that the states -- the banks and thrifts operate under completely different statutes.

And in addition, it's important to point out that there is a centralized procedure in the banking context that does allow for -- for determination of these claims; 12 U.S.C. 94 of the National Bank Act provides, in fact, that all claims must be filed -- in a receivership must be filed in a particular district. And that, in effect, solves the centralized -- centralization problem that I've discussed so far.

Again, I think it's important -- we cannot understate the importance -- or we cannot overstate the importance of a centralized process resolving these thousands of claims. And, again, this situation is only likely to grow worse.

In short, the Bank Board's administrative claims process is a lawful and sensible first step in resolving creditor claims. The Bank Board can justly require that claimants participate in this process before seeking a judicial remedy. Any other result would severely cripple the Bank Board's ability to deal with the present savings and loan crisis, a crisis that is widely expected to grow only worse in the coming years.

QUESTION: (Inaudible) are you litigating this issue in any courts of appeals now?

MR. MINEAR: I believe that the issue continues to be -- to arise in courts of appeals. Many courts are simply staying these actions pending your decision in this case.

QUESTION: Has anyone -- this is a new position that the -- that the FSLIC has taken.

MR. MINEAR: Yes, that is correct.

QUESTION: And are you presenting this to courts of appeals now?

MR. MINEAR: Well, part of the problem here is --

QUESTION: Or are you going on the -- down the old road?

MR. MINEAR: The Bank Board, in fact, conducts the litigation in the lower courts, and we've advised them of our views on these matters. The Bank Board does not necessarily agree with us on every point; however --

QUESTION: So, the litigation is going on based on the jurisdictional --

MR. MINEAR: I'm not sure whether it is or not. I think that the Bank Board is, in fact, trying to dismiss these claims based on our theory, but I can't be certain what --

QUESTION: Are there any other decisions on this issue in the --

MR. MINEAR: The most recent decision that I'm aware of is the O'Henry decision which, in fact, is not squarely a Hudspeth decision but, in fact, does address Hudspeth as a question of primary jurisdiction.

QUESTION: And where is that? Is that --

MR. MINEAR: We have filed a copy of that opinion with the Clerk of the Court.

QUESTION: What -- what CA is that in?

MR. MINEAR: This is in the Fifth Circuit, and there's a concurrence by Judge Higginbotham in which he discusses his view of the Hudspeth decision as well. So, in fact, there is -- there does continue to be litigation here.

Judge Higginbotham does treat this as a matter of primary jurisdiction, and he points out that Hudspeth, in fact, did not address the issues of what judicial relief or remedy would be available after the administrative process is followed.

If there are no further questions.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Minear.

The case is submitted.

(Whereupon, at 10:59 a.m., the case in the above-entitled matter was submitted.)