“The Sixth Circuit showed much hubris by ignoring the FDIC’s confession of error. The Supreme Court’s decision corrects this legal error.”
—John Masslon, WLF Senior Litigation Counsel
WASHINGTON, DC— The U.S. Supreme Court today reaffirmed an important administrative law principle by granting a certiorari petition, vacating the lower court’s decision, and remanding for further proceedings. This outcome was a victory for Washington Legal Foundation, which filed an amicus curiae brief urging the Court to overturn a decision of the U.S. Court of Appeals for the Sixth Circuit that substituted its judgment for that of the Federal Deposit Insurance Corporation.
The case arose from a lengthy administrative proceeding. The FDIC eventually adopted the ALJ’s recommended decision barring Mr. Calcutt from further participating in the banking industry and imposing significant financial penalties. As the Sixth Circuit correctly noted, the FDIC’s decision included multiple legal errors. Yet the panel still affirmed, finding that the legal errors did not warrant vacating the FDIC’s decision.
As WLF’s brief showed, the Sixth Circuit’s decision departed sharply from Supreme Court precedent and that of other courts of appeals on an important issue of administrative law. Rather than remand the case for the FDIC to apply the correct law to the facts, the Sixth Circuit acted as a factfinder and affirmed the FDIC’s decision based on its searching review of the record. This violated key separation-of-powers principles as it allowed an Article III court to act as policymaker. The Supreme Court’s per curiam opinion tracked these arguments and ordered the Sixth Circuit to remand the case to the FDIC for further proceedings under the correct legal standard.