Minnesota Bankers Association appeals dismissal of lawsuit against FDIC over NSF fee guidance

June 6, 2024 7:30 pm
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On June 5, 2024, Minnesota Bankers Association and Lake Central Bank (“Plaintiffs”), filed a notice of appeal to the United States Court of Appeals for the Eighth Circuit to appeal the Minnesota federal district court’s April 9, 2024 dismissal of the Plaintiffs’ lawsuit against the Federal Deposit Insurance Corporation (FDIC) challenging the FDIC’s guidance on non-sufficient funds (NSF) fees. FDIC Financial Institutions Letter 40-2022: Supervisory Guidance on Multiple Re-Presentment NSF Fees (“FIL 40”) replaced by Financial Institutions Letter 32-2023: FDIC Clarifying Supervisory Approach Regarding Supervisory Guidance on Multiple Re-Presentment NSF Fees (“FIL 32”) prohibits FDIC supervised banks from charging multiple NSF fees for the same item.

The Plaintiffs filed their complaint in July 2023 seeking declaratory and injunctive relief under the Administrative Procedures Act (APA) against the FDIC. The complaint alleges that FIL 40 is a legislative rule promulgated without adherence to the APA’s notice and comment rulemaking procedures, resulting in arbitrary and capricious agency action, and that the FDIC exceeded its statutory authority. In September 2023, the FDIC filed a motion to dismiss the lawsuit, arguing that the Plaintiffs lack standing, FIL 32 is not a final agency action imposing legal consequences, and the relief sought would not redress any injury. In opposition to the motion to dismiss, the Plaintiffs argued that their amended complaint pleads plausible APA claims that are ripe for review, they have standing to sue, and the court should vacate FIL 32.

The district court granted the FDIC’s motion to dismiss, finding that (i) the Plaintiffs lack standing and (ii) FIL 32 is not a final rule and therefore no legal consequences flow from it. Because the court found that the Plaintiffs lacked standing, it declined to rule on the Plaintiffs’ claims for arbitrary and capricious agency action and agency action contrary to law.

We will continue to monitor this appeal.

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