Slattery v. United States ( 2011 )

United States Court of Appeals
for the Federal Circuit
__________________________
FRANK P. SLATTERY, JR., (ON BEHALF OF HIMSELF
AND ON BEHALF OF ALL OTHER SIMILARLY SITUATED
SHAREHOLDERS OF MERITOR SAVINGS BANK),
Plaintiff-Cross Appellant,
AND
STEVEN ROTH,
AND INTERSTATE PROPERTIES,
Plaintiffs-Cross Appellants,
v.
UNITED STATES,
Defendant-Appellant.
__________________________
2007-5063,-5064,-5089
__________________________
Appeal from the United States Court of Federal
Claims in Case No. 93-CV-280, Senior Judge Loren A.
Smith.
___________________________
Decided: January 28, 2011
___________________________
THOMAS M. BUCHANAN, Winston & Strawn, LLP, of
Washington, DC, argued for plaintiff-cross appellant
Frank P. Slattery, Jr., (on behalf of himself and on behalf
of all other similarly situated shareholders of Meritor
SLATTERY v. US 2
Savings Bank) on rehearing en banc. With him on the
brief were PETER KRYN DYKEMA, ERIC W. BLOOM and
JACOB R. LOSHIN.
BRADLEY P. SMITH, Sullivan & Cromwell LLP, of New
York, New York, argued for plaintiffs-cross appellants
Steven Roth and Interstate Properties on rehearing en
banc. With him on the brief were RICHARD J. UROWSKY
and JENNIFER L. MURRAY.
JEANNE E. DAVIDSON, Director, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, of Washington, DC, argued for defendant-
appellant on rehearing en banc. With her on the brief
were MICHAEL F. HERTZ, Deputy Assistant Attorney
General, KENNETH M. DINTZER, Assistant Director, F.
JEFFERSON HUGHES and WILLIAM G. KANELLIS, Trial
Attorneys.
DOROTHY ASHLEY DOHERTY, Federal Deposit Insur-
ance Corporation, of Washington, DC, for amicus curiae
Federal Deposit Insurance Corporation on rehearing en
banc. With her on the brief was JOHN M. DORSEY III.
__________________________
Before RADER, Chief Judge, NEWMAN, LOURIE, BRYSON,
GAJARSA, LINN, DYK, PROST, MOORE, and O’MALLEY,
Circuit Judges, on rehearing en banc.
Opinion for the court filed by Circuit Judge NEWMAN, in
which Chief Judge RADER and Circuit Judges LOURIE,
BRYSON, LINN, and MOORE join. Dissenting opinion filed
by Circuit Judge GAJARSA, in which Circuit Judges DYK,
PROST, and O’MALLEY join.
3 SLATTERY v. US
NEWMAN, Circuit Judge.
This suit is brought on behalf of shareholders of the
Meritor Savings Bank, formerly the Philadelphia Savings
Fund Society. The cause originated in 1982, when the
Western Savings Fund Society, a Pennsylvania bank, was
failing, and the Federal Deposit Insurance Corporation
(FDIC) sought a solvent bank to merge with Western, to
provide new capital and to assume Western’s liabilities;
the merger would thereby avoid failure of Western and
the accompanying draw on the FDIC insurance fund. The
Philadelphia Savings Fund Society and the FDIC agreed
to the merger, upon mutual undertakings and specifically
including certain accounting procedures necessary to
enable the merged bank to comply with statutory and
regulatory capital requirements. The merger terms were
embodied in several contracts, including a Merger Assis-
tance Agreement and a Memorandum of Understanding.
The events that culminated in the seizure and sale of
Meritor in 1992 are set forth in the prior opinions of this
court and the Court of Federal Claims.
The Court of Federal Claims found that the govern-
ment had breached its contracts with the acquiring bank,
and assessed damages. Slattery v. United States, 53 Fed.
Cl. 258 (2002) (liability); Slattery v. United States, 69 Fed.
Cl. 573 (2006) (damages); Slattery v. United States, 73
Fed. Cl. 527, modified, 2006 WL 3930812 (Dec. 18, 2006)
(final order) (Slattery I). The appeal and cross-appeal
were heard by a panel of the Federal Circuit, with deci-
sion reported at Slattery v. United States, 583 F.3d 800(Fed. Cir. 2009) (Slattery II). The United States re-
quested rehearing en banc, challenging the jurisdiction of
the Court of Federal Claims and the Federal Circuit. We
granted the petition in order to review the question of
jurisdiction.
SLATTERY v. US 4
The government denies jurisdiction on several
grounds. The principal ground for which rehearing was
requested is that the Court of Federal Claims does not
have jurisdiction of breach of contract claims when the
federal entity that incurred the breach does not receive
appropriated funds. Thus the government argues that
this claim is not within the court’s Tucker Act jurisdiction
because the Federal Deposit Insurance Corporation is
currently supported by fees from member banks, not by
congressional appropriations, and there is no specific
appropriation with respect to payment of this judgment.
The government states that this court’s precedent, includ-
ing the precedent of our predecessor the Court of Claims, 1
establishes this exception to Tucker Act jurisdiction.
The Court of Federal Claims, receiving this argument,
distinguished the FDIC from those government entities
whose violation of statute or breach of contract had been
deemed to be outside of Tucker Act jurisdiction. Slattery
I, 53 Fed. Cl. at 270–74. On appeal, the Federal Circuit
agreed that the Court of Federal Claims possessed juris-
diction. Slattery II, 583 F.3d at 807–12, 829–32. In view
of the potential reach of this jurisdictional challenge, and
perceived conflict in precedent, we granted the govern-
ment’s petition for rehearing en banc, vacated our deci-
sion in Slattery II, and requested additional briefing on
the following questions:
(a) Is the Federal Deposit Insurance Corporation
a nonappropriated fund instrumentality, and
if so, what is the effect on the jurisdiction of
1 In South Corp. v. United States, 690 F.2d 1368,
1369 (Fed. Cir. 1982) (en banc), the precedent of the Court
of Claims was adopted by the Court of Appeals for the
Federal Circuit. The Court of Federal Claims is the
successor to the Trial Division of the Court of Claims.
5 SLATTERY v. US
the Court of Federal Claims over this suit
against the United States?
(b) What is the appropriate standard for deter-
mining whether an entity is a nonappropri-
ated fund instrumentality?
Slattery v. United States, 369 F. App’x 142 (Fed. Cir.
2010) (Order). The Federal Deposit Insurance Corpora-
tion has participated in this rehearing as amicus curiae
and has filed briefs and presented argument.
On review of the history and application of the Tucker
Act, we confirm that the Court of Federal Claims has
jurisdiction of this cause. We conclude that the source of
a government agency’s funds, including funds to pay
judgments incurred by agency actions, does not control
whether there is jurisdiction of a claim within the subject
matter assigned to the court by the Tucker Act. The
jurisdictional criterion is not how the government entity
is funded or its obligations met, but whether the govern-
ment entity was acting on behalf of the government. We
also confirm that a claim that is within the subject matter
of the Tucker Act is not excluded from the jurisdiction of
the Court of Federal Claims, or jurisdiction of the district
courts under the “Little” Tucker Act, unless such jurisdic-
tion has been unambiguously withdrawn or withheld by a
statute specifying such exclusion. Thus we confirm that
Tucker Act jurisdiction does not depend on and is not
limited by whether the government entity receives or
draws upon appropriated funds. Conflicting precedent
shall no longer be relied upon.
SLATTERY v. US 6
I
HISTORY OF THE TUCKER ACT
The history of the Tucker Act is the history of judicial
determination of claims against the United States and the
procedures for payment of such claims.
Before 1855 claims against the federal government
required direct petition to Congress. In 1855, to improve
and expedite the treatment of claims, Congress created a
Court of Claims to hear “any claim against the United
States founded upon any law of Congress, or upon any
regulation of an executive department, or upon any con-
tract, express or implied, with the government of the
United States.” Court of Claims Act, ch. 122, §1, 10 Stat.
612 (1855). This Act provided that the court would inves-
tigate each claim and report its findings and proposed
decision to Congress; Congress would then review the
court’s proposal, and finally decide the claim. Any pay-
ment to the claimant was implemented by specific legisla-
tive enactment. For detailed exposition of this history see
Wilson Cowen, Philip Nichols, Jr., and Marion T. Bennett,
The United States Court of Claims, A History, Part II
(1978), reprinted in 216 Ct. Cl. (1978), and authorities
cited therein.
As the number of claims against the federal govern-
ment increased, and with the increasing congressional
burdens of the era, President Lincoln recommended that
the Court of Claims be empowered to render final judg-
ments, rather than only make recommendations to Con-
gress. See Cong. Globe, 37th Cong., 2d Sess. app. 2 (1861)
(President’s annual message to Congress, stating: “It was
intended by the organization of the Court of Claims
mainly to remove this branch of business from the Halls
of Congress; but while the court has proved to be an
effective and valuable means of investigation, it in great
7 SLATTERY v. US
degree fails to effect the object of its creation, for want of
power to make its judgments final.”). President Lincoln’s
recommendation was implemented by the Amended Court
of Claims Act of 1863, ch. 92, 12 Stat. 765 (1863), which
authorized the Court of Claims to enter final judgments,
see §§3, 5, 7, 12 Stat. at 765–66, and also to adjudicate
government counterclaims and setoffs, see §3, 12 Stat. at
765. The statute included the right of appeal to the
Supreme Court. See §5, 12 Stat. at 766; H.R. Rep. No. 37-
34, at 3 (2d Sess. 1862) (“[The Court of Claims] judgments
are made final in all such cases, subject to the right of
appeal by either party to the Supreme Court on all ques-
tions of law, where the amounts exceed three thousand
dollars.”).
The 1863 Act provided that judgments of the Court of
Claims would be paid from a general appropriation for
that purpose:
[I]n all cases of final judgments by said court, or
an appeal by the said supreme court where the
same shall be affirmed in favor of the claimant,
the sum due thereby shall be paid out of any gen-
eral appropriation made by law for the payment
and satisfaction of private claims, on presentation
to the Secretary of the Treasury of a copy of said
judgment, certified by the clerk of said court of
claims, and signed by the chief justice, or, in his
absence, by the presiding judge, of said court.
§7, 12 Stat. at 766. This provision, now codified as
amended at 28 U.S.C. §2517(a), removed the need for a
special congressional appropriation to pay each individual
judgment. See Floyd D. Shimomura, The History of
Claims Against the United States: The Evolution from a
Legislative Toward a Judicial Model of Payment, 45 La.
L. Rev. 625, 652–53 (1985).
SLATTERY v. US 8
The Act of 1863 had initially also provided, in Section
14, that “no money shall be paid out of the Treasury for
any claim passed upon by the Court of Claims until after
an appropriation therefor shall be estimated for by the
Secretary of the Treasury.” §14, 12 Stat. at 768. Section
14 was repealed by Act of March 17, 1866, ch.19, §1, 14
Stat. 9, after the Supreme Court held in Gordon v. United
States, 69 U.S. (2 Wall.) 561 (1864), that “under the
Constitution, no appellate jurisdiction over the Court of
Claims could be exercised by this court.” The Court later
explained that it was contrary to the Constitution to
subject a judicial decision to “revision of a Secretary and
Congress,” Gordon v. United States, 117 U.S. 697, 703
(1886), citing Hayburn’s Case, 2 U.S. (2 Dall. 409) 408
(1792), and United States v. Ferreira, 54 U.S. (13 How.) 40
(1851). See generally Cowen et al., supra, at 23–24 &
nn.77–78.
The debate during enactment of the 1863 Act had fo-
cused on whether the Appropriations Clause prohibited
Congress from delegating its authority to settle claims,
and also on the provision whereby Congress would “ap-
propriate in gross a sum to pay private claims.” Cong.
Globe, 37th Cong., 3d Sess. 416–17 (1863) (statement of
Sen. Hale); see also Cong. Globe, 37th Cong., 2d Sess.
1671–73 (1862) (statement of Rep. Diven) (stating other
objections). Senator Trumbull explained the general
appropriation provision:
The provision is that the judgments are to be paid
out of any general appropriation which Congress
may make for the purpose of paying them. Con-
gress will still make the appropriation for the
purpose of paying them as it does now; but the bill
goes on the supposition that instead of taking up
each case and making a specific appropriation to
pay $10,000 to A B, and then in another bill an
9 SLATTERY v. US
appropriation of $10,000 to C D, we shall have a
general appropriation to pay the judgments ren-
dered by the Court of Claims, and those judg-
ments will be paid out of that general
appropriation.
Cong. Globe, 37th Cong., 3d Sess. 304 (1863). Senator
Doolittle further explained that
as the bill now stands, it provides and seems to
anticipate that there shall be a general fund ap-
propriated by Congress from year to year to pay
the private claims that may be found due against
the Government; and it provides that these claims
are to be paid out of that general fund.
Id. at 398.
Following the 1863 enactment, Congress made peri-
odic general appropriations for payment of the judgments
of the Court of Claims, initially on an annualized basis,
e.g., Act of June 25, 1864, ch. 147, 13 Stat. 145, 148, and
then by a standing appropriation that created a Judgment
Fund to pay all Court of Claims judgments for which a
specific appropriation did not exist, e.g., Supplemental
Appropriation Act, 1957, Pub. L. No. 84-814, §1302, 70
Stat. 678, 694–95 (1956). See generally Shimomura, 45
La. L. Rev. at 660–61, 686–87.
In Glidden Co. v. Zdanok, 370 U.S. 530 (1962), the
Supreme Court reviewed this history and explained how
the general judgment fund implements the prompt pay-
ment of judgments against the United States: “A judg-
ment creditor . . . simply files in the General Accounting
Office a certificate of the judgment signed by the clerk
and the chief judge of the Court of Claims, and is paid.”
Id. at 569. The Court observed that the possibility that
judgments against the government might not be funded
SLATTERY v. US 10
did not affect the court’s judicial power, id. at 570; the
Court recognized that the funding of payment of judg-
ments was unrelated to Tucker Act jurisdiction.
The Judgment Fund had been limited to payments up
to $100,000, but Congress removed the cap, so that the
Fund covers claims of any amount. Supplemental Appro-
priations Act, 1977, Pub. L. No. 95-26, ch. 14, 91 Stat. 61,
96–97. The Cowen et al. History explains that this “per-
manent and indefinite appropriation,” S. Rep. No. 95-64,
at 206 (1977), to fund judgments of the Court of Claims
fulfilled the promise of the Act of 1863 by rendering the
court’s judgments final in every meaningful respect.
Cowen et al., supra, at 161–62.
These enactments concerning payment of judgments
did not deal with the jurisdiction of the Court of Claims;
the Judgment Fund was designed to facilitate the pay-
ment by the United States of its obligations, along with
the grant of authority to the Court of Claims to render
final judgments. There is no indication that this mode of
payment of judgments of the Court of Claims affected the
court’s jurisdiction, or was intended for this purpose.
However, some later decisions viewed as “jurisdictional”
the source of funds to pay judgments arising from activi-
ties of federal entities, leading to the present jurisdic-
tional challenge.
The next relevant legislative action after the Acts of
1863 and 1866 was the Act, introduced by Representative
John Randolph Tucker of Virginia, that enlarged the
jurisdiction of the Court of Claims to include not only the
classes of claims set forth in the 1855 Court of Claims Act,
but also “claims founded upon the Constitution of the
United States.” Act of March 3, 1887, ch. 359, 24 Stat.
505. Representative Bayne remarked that the statutory
purpose was “to give the people of the United States what
11 SLATTERY v. US
every civilized nation of the world has already done—the
right to go into the courts to seek redress against the
Government for their grievances.” 18 Cong. Rec. 2680
(Mar. 3, 1887).
Justice Holmes called the Tucker Act a “great act of
justice.” United States v. Emery, Bird, Thayer Realty Co.,
237 U.S. 28, 32 (1915). In United States v. Mitchell, 463
U.S. 206 (1983), the Court observed that “government
liability in contract is viewed as perhaps ‘the widest and
most unequivocal waiver of federal immunity from suit,’”
id. at 215 (quoting Developments in the Law—Remedies
Against the United States and Its Officials, 70 Harv. L.
Rev. 827, 876 (1957)), and that “the Act makes absolutely
no distinction between claims founded upon contracts and
claims founded upon other specified sources of law,” id. at
216.
Tucker Act jurisdiction remained undiluted until sev-
eral cases arose concerning claims against military post
exchanges and other operations at military bases. In
these cases the Court of Claims implemented the statutes
and regulations that absolved the government of liability
for claims against “nonappropriated fund instrumentali-
ties” of the military services.
A. The Nonappropriated Fund Instrumentality (NAFI)
The military post exchanges and other entities such
as officers clubs are described in military statutes and
regulations by the term “nonappropriated fund instru-
mentality.” This term is defined as operations “for the
comfort, pleasure, contentment, or physical or mental
improvement of members of the Armed Forces,” 10 U.S.C.
§2488(f). See Paul J. Kovar, Legal Aspects of Nonappro-
priated Fund Activities, 1 Mil. L. Rev. 95, 95–103 (1958)
(explaining military origin and usage of the term “nonap-
SLATTERY v. US 12
propriated fund instrumentality”). Among the statutes
directed to these activities, 10 U.S.C. §4779(b) provides
that “[n]o money appropriated for the support of the Army
may be spent for post gardens or Army exchanges.” The
Court of Claims, applying the military provisions, held
that claims arising from violation of law or contract by
these instrumentalities could not be remedied by suit
under the Tucker Act.
The status of the post exchanges came to the atten-
tion of the Supreme Court in Standard Oil Co. of Califor-
nia v. Johnson, 316 U.S. 481 (1942), on an issue of state
taxation. The California courts had required Standard
Oil to pay the state tax on gasoline sales to post ex-
changes, holding that the exchanges were not an instru-
mentality of the federal government because “an army
post exchange ‘is not instituted by the aid of funds from
the United States nor are its avails paid into the treasury.
. . . Neither the government nor the officers of the post
wherein the exchange is located are liable for its debts.’”
Standard Oil Co. of Cal. v. Johnson, 19 Cal. 2d 104, 107–
08 (1941) (quoting People v. Standard Oil Co., 218 Cal.
123, 128 (1933)), rev’d, 316 U.S. 481 (1942). In reversing,
the Court held that the post exchanges “are arms of the
government deemed by it essential for the performance of
governmental functions. They are integral parts of the
War Department, share in fulfilling the duties entrusted
to it, and partake of whatever immunities it may have
under the constitution and federal statutes.” Standard
Oil, 316 U.S. at 485. The Court stated this conclusion
even as it observed that “the government assumes none of
the financial obligations of the exchange.” Id.The Court’s recognition of the government’s dis-
claimer of liability for obligations of the post exchanges
was cited by the Court of Claims in negating Tucker Act
jurisdiction of claims for breach of contract by the ex-
13 SLATTERY v. US
changes. Thus in Borden v. United States, 116 F. Supp.
873 (Ct. Cl. 1953), the Court of Claims held that the
United States could not be sued under the Tucker Act to
redress a breached employment obligation with a civilian
employee of a post exchange, citing Standard Oil and
Army Regulation 210-65 ¶35(h)(1):
¶35(h)(1) Exchange contracts are solely the obli-
gation of the exchange. They are not Government
contracts and the distinction between exchange
contracts and Government contracts will be ob-
served and clearly indicated at all times.
116 F. Supp. at 877. The court mentioned the reliance of
the Regulations on a theory of nonappropriated funds,
and, citing several other decisions to the same effect, held
that there was not Tucker Act jurisdiction of claims for
breach of exchange contracts.
The Court of Claims recognized that these holdings
had the effect of insulating contracts of the military
exchanges from suit anywhere, for the exchanges had
been held immune from suit in other federal courts and in
state forums in light of Standard Oil’s ruling that they
were government entities. The court suggested that “this
situation should be called to the attention of the Congress.
It seems fair that either the Post Exchanges or the Gov-
ernment should be subject to suit and liable for any
breach of contract that had been duly signed by the Army
Exchange Service.” Id. at 878.
Citing Borden and Standard Oil, in Pulaski Cab Co.
v. United States, 157 F. Supp. 955 (Ct. Cl. 1958), the
Court of Claims denied Tucker Act jurisdiction of a claim
for breach of a contract between the Fort Leonard Wood
Exchange and taxicab operators. The court observed that
the contract included the proviso required by the Army
regulations, placing the Pulaski Cab Company on notice
SLATTERY v. US 14
that its contract was not with the government. The court
held that “the United States has not consented to be sued
upon a contract of this instrumentality which includes
within its terms a specific declaration of governmental
nonliability,” and dismissed the suit for lack of jurisdic-
tion. Id. at 958. Judge Whitaker wrote in concurrence
that it was “abhorrent . . . for the sovereign to do a wrong
and to refuse redress for it,” but observed that in this case
the contract itself stated that the government would not
be liable. Id. (Whitaker, J., concurring).
The Court of Claims again denied Tucker Act jurisdic-
tion in Gradall v. United States, 329 F.2d 960 (Ct. Cl.
1963), applying the military regulations to a claim that
raised the question of whether post exchange employees
were covered by the Economy Act of 1932. The court cited
Pulaski Cab and Army and Air Force Regulations provid-
ing that “[t]he United States is not responsible for con-
tract, tort and compensation claims against the Army and
Air Force Exchange Systems and has not waived its
immunity from suit on those claims. Any claim arising
out of the activities of the A and AFES shall be payable
solely from nonappropriated funds,” Gradall, 329 F.2d at
963 (quoting AR-60-10, AFR 147-7A, Exchange Service,
dated August 2, 1960, Section 1(7)).
Again in Keetz v. United States, 168 Ct. Cl. 205 (1964)
(per curiam), the court referred to “the recurring question
of the legal status of an employee of an Armed Forces Post
Exchange.” Id. at 206. The court held that since prior
cases established that exchange employees are not em-
ployed by the United States, any violation of federal
employment law by the exchanges is not subject to suit
against the United States under the Tucker Act. Id. at
207.
15 SLATTERY v. US
These restrictions on access to Tucker Act redress for
claims arising from actions of the military exchanges were
widely perceived as unfair, for they deprived aggrieved
persons of all legal recourse, in that the exchanges suc-
cessfully invoked sovereign immunity to bar suit in the
district courts and state courts. The inequity was magni-
fied because the United States could and did bring suit on
behalf of the exchanges, while an aggrieved contracting
party had no remedy when the exchange was the breach-
ing party. E.g., United States v. Howell, 318 F.2d 162 (9th
Cir. 1963) (suit by the United States against a cleaning
concession for breach of a contract with a post exchange). 2
Issues of nonappropriated funds continued to be
raised with respect to Tucker Act jurisdiction of agency
actions, and governmental challenges to jurisdiction
began to appear in wider contexts. In National State
Bank of Newark v. United States, 357 F.2d 704 (Ct. Cl.
1966), the Court of Claims rejected the government’s
challenge to jurisdiction of a claim based on contracts
with the Federal Housing Authority (FHA). The FHA had
been established under the National Housing Act of 1934
to provide a federal system of mortgage insurance and
thereby “encourage improvement in housing standards
and conditions.” Id. at 708–09 & n.6. The government
argued that there was not Tucker Act jurisdiction because
the National Housing Act only allowed the FHA to issue
debentures on mortgages assigned to it, but not to obli-
gate Treasury funds, and also because Congress specifi-
cally authorized the FHA to “sue and be sued” in the
district courts. Id. at 710. The Court of Claims held that
because the FHA was “doing work of the government,” its
2 By legislation in 1970 the Congress remedied this
“inequitable ‘loophole’ in the Tucker Act,” as it was de-
scribed in United States v. Hopkins, 427 U.S. 123, 126
(1976). See Part II.A, post.
SLATTERY v. US 16
contracts were subject to the jurisdiction of the Tucker
Act. Id. at 708 (quoting Keifer & Keifer v. Reconstruction
Fin. Corp., 306 U.S. 381, 389 (1939)). The court stated
that “[b]y using the FHA to carry out [the purposes of the
National Housing Act], the United States submits itself to
suit under the Tucker Act unless there is some specific
provision to the contrary.” Id. at 706–07.
In addressing the government’s argument that “only
the FHA Housing Insurance Fund is liable for insurance
benefits, and that a judgment by [the Court of Claims]
would assess the general revenues of the Treasury,” the
court explained that there was “nothing in the insurance
benefits provisions to indicate any intention to extract
from the Tucker Act’s broad coverage claims based on the
acts of the Housing Insurance Fund.” Id. at 712. Re-
sponding to the argument that the congressional authori-
zation to “sue and be sued” was a limited waiver of
sovereign immunity only in the district courts, the Court
of Claims held that the bank’s claim for breach of contract
was subject to Tucker Act jurisdiction independent of
whether the FHA could be sued in the district courts. Id.
at 710–11.
Soon after the Bank of Newark decision, the Court of
Claims decided Kyer v. United States, 369 F.2d 714 (Ct.
Cl. 1966). The Court of Claims had initially limited its
denial of Tucker Act jurisdiction to activities whose au-
thorizing statutes and regulations denied government
responsibility, whereas the court had generally declined
to apply the nonappropriated fund theory to negate juris-
diction in other areas of government activity, as illus-
trated in Bank of Newark. However, the court in Kyer
applied the nonappropriated fund theory more broadly.
Mr. Kyer had a sales commission contract with the
Grape Crush Administrative Committee of the Secretary
17 SLATTERY v. US
of Agriculture, whereby Mr. Kyer, as broker, would locate
purchasers of industrial alcohol derived from surplus
grapes. His suit for breach of contract was initially filed
in state court and removed to federal district court, and
was dismissed on the government’s claim of sovereign
immunity, the government stating that the Grape Crush
Committee was an “integral part of the Department of
Agriculture and of the United States,” id. at 716. Mr.
Kyer then brought suit in the Court of Claims, where the
government argued that the government was not subject
to suit because the Grape Crush Committee was a nonap-
propriated fund instrumentality. Id. at 717. The Court of
Claims held that the contract was not subject to Tucker
Act jurisdiction because Tucker Act claims are paid from
the Judgment Fund, and the Grape Crush Committee was
“neither supported by appropriations nor authorized, in
any manner, to obligate such funds,” id. The court stated:
While the terms of [the Tucker Act] are broad, its
words must be read in conjunction with and must
be regarded as limited by another statute which
provides that our judgments are paid only from
appropriated funds. [footnote 15] Thus, to re-
main within the framework of our jurisdiction, it
is essential that the contract sued on be one which
could have been satisfied out of appropriated
funds.
[footnote 15]: 28 U.S.C. §2517 (1964)
states, in part: “(a) Every final judgment
rendered by the Court of Claims against
the United States shall be paid out of any
general appropriation therefor, on presen-
tation to the General Accounting Office of
a certification of the judgment by the clerk
and chief judge of the court.”
SLATTERY v. US 18
Kyer, 369 F.2d at 718 & n.15.
This description of the Judgment Fund as “limiting”
Tucker Act jurisdiction came to be raised by the govern-
ment whenever a government entity received support
from a source other than congressional appropriation. In
most cases Tucker Act jurisdiction was sustained, despite
the entity’s self-supporting activity or fee-based income,
because the court found that Congress had not separated
the agency from appropriated funds. Examples are the
United States Postal Service as held in Butz Engineering
Corp. v. United States, 499 F.2d 619 (Ct. Cl. 1974); the
Saint Lawrence Seaway Development Corporation as held
in Breitbeck v. United States, 500 F.2d 556 (Ct. Cl. 1974);
the General Services Administration as held in Convery v.
United States, 597 F.2d 727 (Ct. Cl. 1979); the Office of
the Comptroller of the Currency as held in L’Enfant Plaza
Properties, Inc. v. United States, 668 F.2d 1211 (Ct. Cl.
1982); and the Agency for International Development as
held in McCarthy v. United States, 670 F.2d 996 (Ct. Cl.
1982).
Tucker Act jurisdiction was sustained when the
agency had access to appropriated funds, even if such
funds were not used. Examples include DeMauro Con-
struction Corp. v. United States, 568 F.2d 1322, 1328–29
(Ct. Cl. 1978) (contract with Corps of Engineers for con-
struction of a dam in Okinawa not excluded from Tucker
Act jurisdiction in view of the Corps’ access to appropri-
ated funds in connection with the project), and Norris
Industries, Inc. v. United States, 681 F.2d 751 (Ct. Cl.
1982) (Tucker Act jurisdiction applies in view of access to
appropriated funds for sales under the Foreign Military
Sales Act). 3
3 The Tucker Act is not available when the breach-
ing entity is not part of the federal government or not
19 SLATTERY v. US
In each case the government had argued that because
the government entity was not supported by appropriated
funds it was excluded from Tucker Act jurisdiction. For
example, in Breitbeck the issue arose in a pay claim by
employees of the Saint Lawrence Seaway Development
Corporation, a government entity that was intended to be
self-sustaining and was authorized to charge user fees
and issue revenue bonds. The Court of Claims rejected
the government’s argument that there was no Tucker Act
jurisdiction because the Seaway was a nonappropriated
fund instrumentality, and observed that the Seaway “is
‘an agency selected by the Government to accomplish
purely Governmental purposes,’” Breitbeck, 500 F.2d at
558 (quoting Cherry Cotton Mills, Inc. v. United States,
327 U.S. 536, 539 (1946)). The court remarked that “it
would be anomalous to hold that suits for retirement pay
acting as its agent, or when jurisdiction has been explic-
itly disclaimed. Such situations are illustrated in Chas.
H. Tompkins Co. v. United States, 230 Ct. Cl. 754, 756
(1982), the court explaining that the National Trust for
Historic Preservation in the United States, a charitable
nonprofit corporation, “is not a federal instrumentality
and performs no [federal governmental] functions.” In
Green v. United States, 229 Ct. Cl. 812, 814 (1982), the
court held that the United States could not be sued for
actions of Amtrak because Congress expressly provided
that “[t]he Corporation will not be an agency or estab-
lishment of the United States Government.” In Porter v.
United States, 496 F.2d 583, 587–91 (Ct. Cl. 1974), the
court held that the Government of the Trust Territory of
the Pacific Islands, established by the United States as
trustee under an agreement with the United Nations, was
neither part of the United States nor an agent authorized
to bind the United States. The FDIC statute provides
that entities such as “bridge depository institutions”
chartered to assist the FDIC in dealing with insured
institutions that are in default, are not agencies of the
United States, see 12 U.S.C. §1821(n)(6)(A).
SLATTERY v. US 20
could be brought under the Tucker Act but that actions
for regular pre-retirement pay could lie only against the
Corporation itself.” Id. at 559. The court distinguished
Kyer on the ground that there was “no such clear cleavage
between the Corporation’s own funds and those of the
United States that one can say that Congress wished to
cut the agency entirely loose from appropriated funds.”
Id. The court also distinguished Abbott v. United States,
112 F.Supp. 801 (Ct. Cl. 1953), where the court held that
it did not have jurisdiction to receive employee pay claims
arising from operations of the Panama Canal Company.
The Abbott court pointed out that Canal employees are
not subject to the Federal Classification Act or the general
pay schedule, and concluded that “Congress seems to have
wanted to cut [the Canal] loose from the United States as
far as possible.” Id. at 804.
Butz Engineering concerned the newly independent
United States Postal Service. The court held that there
continued to be Tucker Act jurisdiction, observing that
“Congress has shown it is capable of unequivocally cleav-
ing a public service or corporation from all governmental
nexus when it so desires.” 499 F.2d at 624. The court
cited the example of the Securities Investors Protection
Corporation, whose legislation provided that it “’shall not
be an agency or establishment of the United States Gov-
ernment,’” id. (citing 15 U.S.C. §78ccc(a)(1) (1970)); the
court contrasted that legislation with the absence of such
a provision with respect to the Postal Service.
The court in Butz Engineering again distinguished
Kyer, and held that the Kyer Judgment Fund “limitation”
on jurisdiction did not apply because the Postal Service
Reorganization Act shows that “the United States was to
continue responsible for USPS activities.” Id. at 625. The
court explained that a government entity can be legisla-
tively required to pay its own judgments, or to reimburse
21 SLATTERY v. US
the Treasury for judgments paid, without affecting Tucker
Act jurisdiction of the claim. Such an arrangement was
established for the Postal Service. See 39 U.S.C. §409(h)
(“A judgment against the Government of the United
States arising out of activities of the Postal Service shall
be paid by the Postal Service out of any funds available to
the Postal Service, subject to the restriction specified in
section 2011(g).”).
In some cases, including cases involving issues other
than government contracts, the courts have held that
there is Tucker Act jurisdiction of claims against the
United States based on activities of a governmental
entity, unless Congress specifically stated its intention to
withdraw Tucker Act jurisdiction. In the Regional Rail
Reorganization Act Cases, 419 U.S. 102 (1974), the Su-
preme Court examined whether the Regional Railroad
Reorganization Act of 1973 should be construed to bar
action under the Tucker Act for a claim concerning the
taking of property. The district court had looked to
whether the Rail Act “affirmatively provided the Tucker
Act remedy,” and, finding no such provision, concluded
that there was not Tucker Act jurisdiction. The Court
held that the district court had made the wrong inquiry,
and that:
The question is not whether the Rail Act ex-
presses an affirmative showing of congressional
intent to permit recourse to a Tucker Act remedy.
Rather, it is whether Congress has in the Rail Act
withdrawn the Tucker Act grant of jurisdiction to
the Court of Claims to hear a suit involving the
Rail Act “founded . . . upon the Constitution.”
Id. at 126. The Court explained that although the Rail
Act provisions were “said plainly to evince Congress’
determination that no federal funds beyond those ex-
SLATTERY v. US 22
pressly committed by the Act were to be paid for the rail
properties,” id. at 127, the statute “suggests that Con-
gress . . . gave no consideration to withdrawal of the
Tucker Act remedy,” id. at 129. The Court cited the canon
that “repeals by implication are disfavored,” id. at 133
(citing, e.g., Mercantile Nat’l Bank v. Langdeau, 371 U.S.
555, 565 (1963)), and held that a partial repeal of the
Tucker Act could not be inferred.
The Court reiterated the requirement of an “unambi-
guous intention” of Congress to withdraw access to the
Tucker Act, in reviewing jurisdiction of the constitutional
claim in Presault v. Interstate Commerce Commission, 494
U.S. 1, 12 (1990) (“Congress did not exhibit the type of
‘unambiguous intention to withdraw the Tucker Act
remedy’ that is necessary to preclude a Tucker Act claim.”
(quoting Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1019
(1984))). See also Ruckelshaus, 467 U.S. at 1017 (“A
withdrawal of jurisdiction would amount to a partial
repeal of the Tucker Act. This Court has recognized,
however, that repeals by implication are disfavored.”). In
Lion Raisins, Inc. v. United States, 416 F.3d 1356, 1363–
68 (Fed. Cir. 2005), the Federal Circuit rejected the
applicability of a “nonappropriated funds” theory to
jurisdiction of constitutional takings claims, citing Pre-
sault and the Regional Rail Reorganization Act Cases. A
similar contention was rejected in the context of statutory
violations, see El-Sheikh v. United States, 177 F.3d 1321,
1324–25 (Fed. Cir. 1999) (rejecting application of nonap-
propriated funds theory to claim for statutory violation in
employee’s Fair Labor Standards Act suit). In several
contract cases, the Court of Claims likewise described the
applicable test as providing that “when a federal instru-
mentality acts within its statutory authority to carry out
defendant’s purposes, the United States submits itself to
liability under the Tucker Act unless ‘some specific provi-
23 SLATTERY v. US
sion to the contrary’ exists.” Butz Engineering, 499 F.2d
at 622; Breitbeck, 500 F.2d at 558 (same); Convery, 597
F.2d at 729 (same). In Convery the court distinguished
Kyer and held that the United States was subject to
Tucker Act jurisdiction for contracts of the General Ser-
vices Administration; the court stated that “we think this
is an appropriate case for directing attention to the Re-
gional Rail Reorganization Act Cases, 419 U.S. 102, 125-
36 (1974), wherein the Supreme Court made it abun-
dantly clear that stronger and more explicit statutory
language than that relied on by defendant is required to
deprive a claimant of his Tucker Act remedy.” Convery,
597 F.2d at 730.
In other cases in which the Federal Circuit applied
the Kyer statement that the Judgment Fund statute is a
“limitation” on the Tucker Act, the court found no juris-
diction based on the fact that the agencies in question
were not supported by appropriated funds. These cases
held that there was not Tucker Act jurisdiction over
breach of contract by the Federal Housing Finance Board
(Furash & Co. v. United States, 252 F.3d 1336 (Fed. Cir.
2001)), the Federal Prison Industries (Core Concepts of
Fla., Inc. v. United States, 327 F.3d 1331 (Fed. Cir. 2003)),
and the United States Mint (AINS, Inc. v. United States,
365 F.3d 1333 (Fed. Cir. 2004)). In each case the court
reasoned that each of these entities receives support from
sources other than congressional appropriation, and
therefore that Tucker Act suit is not available, although
there was no legislative withholding of such jurisdiction.
In Furash the court held that the Federal Housing
Finance Board is a nonappropriated funds instrumental-
ity because there is “no situation in which appropriated
funds would be used to make up a deficiency” in the
Board’s housing finance operations. 252 F.3d at 1340. In
Core Concepts the court held that Congress intended that
SLATTERY v. US 24
the Federal Prison Industries would be self-sufficient, and
thus “providing a ‘firm indication’ that it intended to
absolve appropriated funds from liability for FPI’s ac-
tions,” 327 F.3d at 1337. In AINS the court held that the
U.S. Mint is a nonappropriated funds instrumentality
because it “does not receive its monies by congressional
appropriation” and it “derives its funding primarily
through its own activities”; the court observed that
“[t]here does not appear to be any mechanism whereby
the Mint could receive appropriated funds without a
statutory amendment,” for it was intended to be “self-
financing and distinct from the general fund.” 365 F.3d at
1343.
The Kyer line of cases is here invoked by the govern-
ment for application to the Federal Deposit Insurance
Corporation, as requiring that “[j]urisdiction under the
Tucker Act is ‘limited, however, by the general require-
ment that judgments awarded against the government be
paid out of appropriated funds,’” Gov’t Br. 9 (quoting Core
Concepts, 327 F.3d at 1334). The government argues that
“absent an express statutory provision establishing that
the agency will be funded by public monies,” there can be
no Tucker Act jurisdiction of the FDIC’s breaches of
contract. Id. at 28–29.
Recognizing the importance of this Tucker Act issue
both in general and as applied to a major governmental
entity such as the Federal Deposit Insurance Corporation,
we turn to the application of statute and precedent to this
jurisdictional issue and to its application to the agency
involved in this case.
25 SLATTERY v. US
II
THE FEDERAL DEPOSIT INSURANCE CORPORATION
The government raises several arguments to support
its position that there is not Tucker Act jurisdiction of
claims based on contract breaches by the Federal Deposit
Insurance Corporation.
A. The 1970 amendment to the Tucker Act
In 1970 Congress overturned the judicial rulings that
had denied jurisdiction of contract breaches by certain
military-related instrumentalities, and added the follow-
ing sentence to the Tucker Act:
For the purpose of this paragraph, an express or
implied contract with the Army and Air Force Ex-
change Service, Navy Exchanges, Marine Corps
Exchanges, Coast Guard Exchanges, or Exchange
Councils of the National Aeronautics and Space
Administration shall be considered an express or
implied contract with the United States.
Pub. L. No. 91-350, §1(b), 84 Stat. 449 (1970) (now codi-
fied at 28 U.S.C. §1491(a)(1)). The same amendment was
added to the “Little” Tucker Act, 28 U.S.C. §1346(a)(2).
The government argues that this amendment, be-
cause of its explicit terms, means that all other federal
entities that do not receive appropriated funds are ex-
cluded from the jurisdiction of the Tucker Act. The gov-
ernment states that because Congress listed only the
military and NASA exchanges in the amendment as
enacted, although an earlier draft included all nonappro-
priated fund activities, this means that every other non-
appropriated fund activity was intended to be excluded
from Tucker Act jurisdiction. On this interpretation of
the 1970 amendment, the government argues that con-
SLATTERY v. US 26
tracts with the Federal Deposit Insurance Corporation are
not subject to Tucker Act jurisdiction.
Broader language had indeed been proposed during
the legislative inquiry, but this history does not support
the government’s theory that Congress intended to nar-
row, rather than restore, the Tucker Act’s scope. A bill
introduced by Senator Tydings on March 14, 1968 in-
cluded any “nonappropriated fund activity of or under a
department, agency, or Armed Force of the United
States.” S. 1363, 90th Cong. (1968). At the first Senate
hearings on the proposed bill, as summarized by Senator
Tydings:
All of the witnesses agreed that there was no ra-
tional policy ground that would justify the con-
tinuation of the anachronistic immunity from
suits of nonappropriated fund activities, when
Congress has already waived such protection from
suits on contracts of the U.S. Government itself,
and the courts have held the nonappropriated
fund activities to be instrumentalities of the
United States for purposes other than suit.
115 Cong. Rec. 3163 (1969). The hearing record is unre-
mitting in its criticism of the decisions removing “nonap-
propriated fund activities” from access to judicial remedy.
However, during the hearings, concerns emerged about
subjecting “all” nonappropriated fund activities to the
Tucker Act when the nature and extent of such activities
were unknown, and also because some such activities
were subject to specific jurisdictional statutes or not
under government control. See id. (naming the American
Red Cross and the Tennessee Valley Authority as exam-
ples).
A second Senate hearing again showed agreement
with respect to suits based on actions of the military
27 SLATTERY v. US
exchanges, but repeated the concern about certain “pro-
curement activities of groups not subject to control by the
responsible officials of the Government.” S. Rep. No. 91-
268, at 5 (1969). Recognizing the difficulty of definition,
Senator Tydings asked each witness whether Congress
should attempt a definition of “nonappropriated fund
activities,” but those testifying found such specificity
unnecessary. The committee report explained that the
purpose of the bill was to correct the “injustice and ineq-
uity” worked by the judicial “loophole” to the Tucker Act,
id. at 2, and several written submissions attached to the
report pointed up the uncertainty of definition of the
“nonappropriated fund activities” the bill would cover.
The Department of Justice recommended limiting this
term to activities “subject to the supervision and control”
of a department or agency. Id. at 11. The Department of
Agriculture expressed concern about possible liability for
contracts made by “informal associations of employees for
recreational purposes.” Id. at 12. NASA suggested that
clarity was needed for certain “semiofficial activities, such
as bowling leagues, employee clubs, and baseball teams,
operating incidentally to Government agencies.” Id. at
15. No universally satisfactory definition emerged, and
the Senate eventually passed the bill without restrictive
definition, the Senate Committee on the Judiciary report-
ing that “a legislative definition of a nonappropriated
fund activity was clearly not necessary. . . . [A]ny attempt
to limit the courts in their determination of what is and
what is not a ‘nonappropriated fund activity . . .’ would
ultimately serve to create additional loopholes through
which clever defendants may ultimately retreat into the
anachronism of governmental immunity that the bill
seeks to eradicate.” Id. at 6.
However, during the House hearings concern about
the absence of a definition for “nonappropriated fund
SLATTERY v. US 28
activity” was the subject of an extensive record, see Juris-
diction of U.S. Courts—Nonappropriated Fund Activities:
Hearings Before Subcommittee No. 4 of the House Com-
mittee on the Judiciary on S. 980, 91st Cong. (1969).
Congressman Wiggins expressed particular concern about
the vagueness of the term in his questioning of several
witnesses. A colloquy between Lt. Col. Benjamin Rosker
of the Air Force Judge Advocate General Department and
Congressman Wiggins is illustrative:
MR. WIGGINS: Let me restate the question. I
am worried about the definition of “nonappropri-
ated funds.” Every time I think of one, you give
me another one; then I think of another possibil-
ity. But let’s suppose we took all the guesswork
out of the matter and said we are going to solve
the problem of the PX’s for all branches of the
armed services. How much of the problem are we
solving if we do that?
COLONEL ROSKER: If I understand you cor-
rectly, I think you are suggesting that there be a
limitation on suits only against the PX’s.
MR. WIGGINS: I am just throwing that out now
as a way of avoiding the possibility of open-ended
definition.
COLONEL ROSKER: Naturally from a dollar
standpoint, the PX’s spend a massive percent of
the dollars involved as far as expenditures of non-
appropriated funds. But I think that the whole
concept is that each and every one of these funds
really serve just as much a governmental purpose
as the other.
MR. WIGGINS: I understand what you are say-
ing, but that assumes we can identify the funds
29 SLATTERY v. US
we are talking about. But with this very vague
definition, we may not be able to do that.
Id. at 18–19.
In the House, the concern was eventually resolved by
limiting the bill to the military exchanges, as Congress-
man Wiggins had suggested to Colonel Rosker. The
House Report explained that the Committee had
concluded that the complete removal of sovereign
immunity for all nonappropriated fund activities
would be undesirable for several reasons:
First, since not every nonappropriated fund activ-
ity has sufficient assets to reimburse the United
States, the cost of the judgment would in some
cases be imposed on the taxpayer—a result which
is inconsistent with the very concept of nonappro-
priated fund activities.
Second, the broad inclusion of all nonappropriated
fund activities might create serious definitional
questions, making it difficult to predict the outer
limits of the liability of the Federal Government.
Third, data concerning all of the nonappropriated
fund activities of the United States is unavailable.
The Bureau of the Budget has not compiled such
data nor can such data be obtained from the vari-
ous Government agencies under which nonappro-
priated fund activities are conducted. Clearly,
Congress ought not to expose the Federal Gov-
ernment to liability for all nonappropriated fund
activities unless such data is assembled.
H.R. Rep. No. 91-933, at 3 (1970). The House version was
duly enacted into law.
SLATTERY v. US 30
The legislative record belies the government’s argu-
ment that the specificity of this amendment means that
Congress intended to exclude from the jurisdiction of the
Tucker Act every government entity that does not receive
support from appropriated funds except for the military
and NASA Exchanges. In McDonald’s Corp. v. United
States, 926 F.2d 1126 (Fed. Cir. 1991), the court reviewed
this legislative history, and rejected the government’s
position that “[a]ny organization not explicitly named,
and which obligated any insubstantial amount of nonap-
propriated funding, would retain an immunity that Con-
gress found to be a loophole in need of closing, thereby
creating a new, although smaller, loophole in the bulwark
Congress concluded should be solid.” Id. at 1132.
The clearly stated purpose of the amendment was to
restore access to the courts where such access had been
removed, not to extend the removal into new, unknown
areas. “Going behind the plain language of a statute in
search of a possibly contrary congressional intent is a step
to be taken cautiously even under the best of circum-
stances.” Am. Tobacco Co. v. Patterson, 456 U.S. 63, 75
(1982). Nonetheless, this argument is again pressed.
Legislative action to close a much-criticized loophole
cannot reasonably be understood as an endorsement of
the loophole itself, and certainly not an endorsement of its
future application. Nothing in the 1970 amendment or its
history suggests that Congress approved of the reasoning
behind the judicial decisions it was overturning. It cannot
be inferred that Congress, by omitting the long-
terminated Grape Crush Administrative Committee from
the 1970 amendment, 4 intended to endorse the ruling
4 The Grape Crush Administrative Committee was
terminated in December 1964 pursuant to 7 U.S.C.
§608c(16) (1964). See Kyer, 369 F.2d at 719 n.18.
31 SLATTERY v. US
that Kyer applied to this Committee. The Court has
cautioned that it is “impossible to assert with any degree
of assurance that congressional failure to act represents
affirmative congressional approval of the [courts’] statu-
tory interpretation,” Cent. Bank of Denver, N.A. v. First
Interstate Bank of Denver, N.A., 511 U.S. 164, 186 (1994).
“We walk on quicksand when we try to find in the absence
of corrective legislation a controlling legal principle.” Id.(quoting Helvering v. Hallock, 309 U.S. 106, 121 (1940)).
In assessing the 1970 legislation, the legislative re-
cord shows that the proponents of that legislation were
principally concerned with the narrow problem of the
military post exchanges, and they eventually directed
their solution to this problem. Although Congress ulti-
mately decided to leave unchanged the general line of
judicial authority, the decision not to legislate in areas
whose boundaries could not be defined did not constitute
an endorsement of all judicial rulings relating to instru-
mentalities for which no agency was able to provide a
precise definition. There is a difference between Con-
gress’ choosing not to upset a preexisting line of judicial
authority and choosing to adopt that line of authority as a
legislative mandate that would render it immune to
subsequent efforts at judicial modification. The 1970
legislation did the former, but not the latter. Congress
did not abrogate the Kyer line of authority, but that is not
to say that it approved of that line of authority, much less
adopted it.
The government argues that even if the legislative
history of the 1970 amendment is not helpful to it, the
Supreme Court thereafter endorsed the exclusion of
nonappropriated fund instrumentalities from the Tucker
Act despite the amendment, citing United States v. Hop-
kins, 427 U.S. 123 (1976), and Army & Air Force Ex-
change Service v. Sheehan, 456 U.S. 728 (1982). See Gov’t
SLATTERY v. US 32
Br. 11; Reply Br. 23. However, in neither of these deci-
sions did the Court depart from the 1970 amendment or
apply it to activities other than the military exchanges.
Hopkins involved a pay claim by a discharged employee of
a post exchange, and the Court granted certiorari to
resolve a conflict concerning whether Tucker Act contract
actions include employment contracts with exchanges.
See 427 U.S. at 124 (resolving conflicting rulings between
Young v. United States, 498 F.2d 1211 (5th Cir. 1974) and
Hopkins v. United States, 513 F.2d 1360 (Ct. Cl. 1975)).
The Court observed that the 1970 amendment returned
the military exchanges to the Tucker Act, 427 U.S. at125–26, and held that this included employment contracts
with the military exchanges, id. at 126.
Similarly in Sheehan, the Court was not concerned
with nonappropriated fund entities beyond those listed in
the 1970 amendment. Sheehan involved the question of
whether a military exchange’s violation of its own regula-
tions could be deemed a breach of an implied-in-fact
contract, thus bringing a discharged employee’s claim
within the jurisdiction of the Tucker Act. The Court
noted that the 1970 amendment closed a jurisdictional
“loophole.” 456 U.S. at 734 n.4. There was no discussion
of the status of other nonappropriated fund instrumen-
talities under the Tucker Act.
The legislative and judicial histories of the 1970
amendment stress the restoration of the full scope of the
Tucker Act’s waiver of immunity, without imposing
limitations grounded in the source of the government
entity’s funds. The amendment and its history contain no
support for the theory that Tucker Act jurisdiction was
intended to be withheld from all entities that do not
receive appropriated funds except the military and NASA
exchanges. No congressional intent, or national purpose,
33 SLATTERY v. US
supports the government’s proposed view of the 1970
amendment.
B. The “sue and be sued” clause and corporate status
The FDIC is authorized by statute “[t]o sue and be
sued, and complain and defend, by and through its own
attorneys, in any court of law or equity, State or Federal.”
12 U.S.C. §1819(a)(Fourth); see also id. at 1819(b)(2)(a).
The government argues that suit for breach of contract
must be pursued against the FDIC in district court.
However, it is well established that the potential avail-
ability of a remedy in district court does not of itself
withdraw jurisdiction under the Tucker Act.
In Butz Engineering the Court of Claims explained
that authorization to a government agency to sue and be
sued in the district court is not a negation of Tucker Act
jurisdiction. The court stated that “it is well settled that
an agency’s ‘sue-and-be-sued’ clause does not nullify the
concurrent liability of the United States as principal.” Id.
at 625. See also Bank of Newark, 357 F.2d at 711 (“[W]e
have concurrent jurisdiction with ‘any court of competent
jurisdiction, State or Federal,’ to entertain plaintiffs’
claims. Our jurisdiction is derived from the Tucker Act
and that of the other courts is derived from the FHA’s ‘to
sue and be sued’ clause.” (quoting 12 U.S.C. §1702)).
A similar sue and be sued provision relating to the
savings-and-loan insurance fund was considered in Far
West Federal Bank, S.B. v. Director, Office of Thrift Su-
pervision, 930 F.2d 883, 889 (Fed. Cir. 1991), the court
holding that the statutory authorization for suit by and
against the Office of Thrift Supervision in district court
did not remove the Tucker Act jurisdiction of the Court of
Federal Claims with respect to contracts made by the
Office. We discern no basis for viewing the sue and be
SLATTERY v. US 34
sued clause for the Federal Deposit Insurance Corpora-
tion differently from the Federal Savings and Loan Insur-
ance Corporation—or indeed differently from any other
federal agency as to this aspect.
With respect to the corporate status of the FDIC, it is
established beyond dispute that the jurisdictional crite-
rion is not whether the government entity is incorporated,
but whether it is acting on authority of the United States.
See, e.g., Cherry Cotton Mills, 327 U.S. at 539 (“That the
Congress chose to call it a corporation does not alter its
characteristics so as to make it something other than
what it actually is, an agency selected by Government to
accomplish purely Governmental purposes.”); Nat’l Cored
Forgings Co. v. United States, 132 F. Supp. 454, 458 (Ct.
Cl. 1953) (“When a Government corporation acting within
the scope of its statutory authority makes a contract as
the agent of the United States, the United States may be
sued in this court as principal on the contract.”); Crooks
Terminal Warehouses, Inc. v. United States, 92 Ct. Cl.
401, 414 (1941) (holding that the Federal Surplus Com-
modities Corporation had authority to bind the govern-
ment by contract, for “the corporation was created solely
to perform governmental objectives and it so acted,” and
thus claims for breach of contract are within Tucker Act
jurisdiction).
No provision of the FDIC statute, and no precedent,
suggests that either the “sue and be sued” provision or the
agency’s corporate status, or both together, are a with-
drawal of Tucker Act jurisdiction. Any such withdrawal
must be specific and unambiguous. Regional Rail Cases,
419 U.S. at 126.
35 SLATTERY v. US
C. Payment of FDIC judgments
The government argues that “[i]f Congress did not
stipulate that Federal funds may be used to pay a judg-
ment against a government instrumentality, the Court of
Federal Claims does not possess jurisdiction to hear the
claim.” Gov’t Br. 10. The government’s theory relies on
the Kyer holding that access to the Judgment Fund is a
“limitation” on Tucker Act jurisdiction. See id. at 9 (citing
Judgment Fund statute, 28 U.S.C. §2517(a)).
In most of the cases since Kyer, the Court of Claims
distinguished Kyer on its facts. For example, in L'Enfant
Plaza Properties, Inc. v. United States, 668 F.2d 1211 (Ct.
Cl. 1982), the court described Kyer as holding that: “The
jurisdictional grant under the Tucker Act is limited by the
fact that judgments awarded by this court are to be paid
out of appropriated monies. 28 U.S.C. §2517 (1976).
Jurisdiction can only be exercised, therefore, over cases in
which appropriated funds can be obligated.” 668 F.2d at
1212. However, that court distinguished Kyer on its facts
and concluded that “[j]urisdiction under the Tucker Act
must be exercised absent a firm indication by Congress
that it intended to absolve the appropriated funds of the
United States from liability for acts of the Comptroller,”
id., citing the Regional Rail Reorganization Act Cases.
The court explained that although the Comptroller had
not recently been supported by appropriated funds, the
relevant legislation did not “preclude Congressional
appropriation of funds to the Comptroller,” id., whether or
not funds were actually appropriated. On this reasoning
the court held that the jurisdictional “limitation” in Kyer
did not apply.
The government cites Wolverine Supply, Inc. v. United
States, 17 Cl. Ct. 190 (1989), as requiring that there is not
Tucker Act jurisdiction of this claim against the FDIC.
SLATTERY v. US 36
Gov’t Br. 10. In Wolverine Supply, the Claims Court (as
the Court of Federal Claims was previously named) held
that because the contract for construction of a recrea-
tional area at an Air Force base stated that the contract
was to be paid from nonappropriated funds, the court did
not have jurisdiction under the Tucker Act. This case
illustrates the continuing inconsistency flowing from the
Kyer statement that “to remain within the framework of
our jurisdiction, it is essential that the contract sued on
be one which could have been satisfied out of appropriated
funds.” Kyer, 369 F.2d at 718.
The inclusion of the Judgment Fund as a jurisdic-
tional “limitation” of claims within the scope of the Tucker
Act has received scholarly criticism. It has been described
as requiring a “second layer of appropriations” as a condi-
tion of bringing claims against the government. See Evan
C. Zoldan, The King is Dead, Long Live the King!: Sover-
eign Immunity and the Curious Case of Nonappropriated
Fund Instrumentalities, 38 Conn. L. Rev. 455, 490 (2006).
This purported restriction on Tucker Act jurisdiction is in
tension with the Court’s reminder in Mitchell that no
“second waiver” of immunity is required for jurisdiction
under the Tucker Act. See 463 U.S. at 218 (“[A] court
need not find consent to suit in ‘any express or implied
contract with the United States.’ The Tucker Act itself
provides the necessary consent.” (quoting 28 U.S.C.
§1491)). The Court in Mitchell stressed that “by giving
the Court of Claims jurisdiction over specified types of
claims against the United States, the Tucker Act consti-
tutes a waiver of sovereign immunity with respect to
those claims.” Id. at 212 (footnote omitted). The Court
stated that: ”If a claim falls within the terms of the
Tucker Act, the United States has presumptively con-
sented to suit.” Id. at 216.
37 SLATTERY v. US
Neither the Tucker Act, nor Supreme Court prece-
dent, nor most of the jurisprudence of the Court of Claims
and the Federal Circuit, limits jurisdiction over the claim
by the source of funds to pay any judgment on the claim.
As the government acknowledges, the purpose of the
Judgment Fund statute, 28 U.S.C. §2517(a), is to provide
a fund to pay judgments of the Court of Claims and its
successor court “instead of requiring specific bills for each
successful claimant,” Reply Br. 6. Nonetheless the gov-
ernment argues that §2517(a) requires that the United
States cannot be sued under the Tucker Act unless there
is a specific—not a general—appropriation to pay the
judgment, “ensuring that judgments were paid only by
appropriations specifically for that purpose.” Id. at 7.
The government’s citation of authority for this argu-
ment suggests a misunderstanding of the history of
§2517(a), for in its opening and reply briefs the govern-
ment presents the following quote from Williams v.
United States, 289 U.S. 553, 562–63 (1933), as a binding
holding of the Supreme Court: “no money shall be paid
out of the treasury for any claim passed upon by the court
of claims till after an appropriation therefor shall be
estimated for by the Secretary of the Treasury.” Gov’t Br.
9; Reply Br. 8–9. The quoted words indeed appear in
Williams, for the Court was quoting Section 14 of the
Amended Court of Claims Act of 1863, which, as Williams
also states, was repealed in 1866. See Williams, 289 U.S.
at 564 (“At the next session of Congress section 14 was
repealed.”). Since 1866, §2517(a) has not contained the
restriction now attributed to it.
The purpose of the Judgment Fund was to avoid the
need for specific appropriations to pay judgments
awarded by the Court of Claims. The government argues
that the Judgment Fund is not available for FDIC
breaches because neither the FDIC statute, nor any other
SLATTERY v. US 38
statute, provides such a specific appropriation. According
to the government, “if Congress intended that the Gov-
ernment would be liable for judgments against the FDIC
in its capacity as insurer of banks, it would have made
that obligation clear – as it did when it established the
[FSLIC Resolution Fund] to fund judgments against the
FSLIC in Winstar-related litigation.” Gov’t Br. 22. The
government thus argues that although the Tucker Act
does provide jurisdiction of actions for breach of contracts
with the FSLIC, it does not provide jurisdiction for con-
tracts with the counterpart FDIC.
The distinction between the FSLIC (for savings and
loan institutions) and the FDIC (initially for savings
banks) does not support a jurisdictional distinction under
the Tucker Act. Jurisdiction of claims arising from
breaches by either agency tracks the unchallenged Tucker
Act jurisdiction of the Winstar cases, which initially arose
on FSLIC contracts, and came to include FDIC contracts.
No challenge was raised to Tucker Act jurisdiction based
on the source of funding of these agencies, either before or
after the FSLIC exhausted its fee-raised funds and its
liabilities were resolved by the Resolution Trust Fund
using funds appropriated for the purpose. The jurisdic-
tion of the Court of Federal Claims did not depend on
whether the FSLIC had exhausted its insurance fund
when the breach occurred or when the action was brought
or resolved; jurisdiction depended on whether the statu-
tory conditions of the Tucker Act were met, as to subject
matter and as to parties. See Kontrick v. Ryan , 540 U.S.
443, 455 (2004) (statutory requirements are not properly
described as “jurisdictional” unless they “delineat[e] the
classes of cases (subject-matter jurisdiction) and the
persons (personal jurisdiction) falling within a court’s
adjudicatory authority”).
39 SLATTERY v. US
The principles and the factual premises are virtually
identical in this suit and in the many suits arising from
breached contracts of the FSLIC. The Tucker Act chal-
lenge now presented was not raised in United States v.
Winstar Corp., 518 U.S. 839 (1996), which arose on con-
tracts with the FSLIC. The government now proposes
that the reason why jurisdiction was proper when the
FSLIC was the breaching entity is that the FSLIC obliga-
tions were met by congressional appropriation after the
FSLIC exhausted its fee-derived funds. See 12 U.S.C.
§1821a(a) (creating FSLIC Resolution Fund to resolve
assets and liabilities of the FSLIC); id. §1821a(c) (author-
izing appropriations necessary to meet any shortfall in
the FSLIC Resolution Fund). These expedients have no
relation to jurisdiction, and were not so characterized by
Congress or in any Winstar decision.
The appropriation provisions of the Financial Institu-
tions Reform, Recovery and Enforcement Act (FIRREA)
were an appropriation to pay governmental obligations,
not a prohibition on Tucker Act jurisdiction for breaches
by the agency. Tucker Act jurisdiction of the many claims
for breach of contract by the FSLIC did not depend on
how the government met its obligations, either before or
after the FSLIC funds were exhausted. Absent specific
statutory provision addressing jurisdiction, Tucker Act
jurisdiction is not affected by how the agency meets its
obligations or how any judgment establishing those
obligations is satisfied.
D. The full faith and credit of the United States
Congressional pronouncements stress the full faith
and credit of the United States in connection with the
FDIC. See Slattery II, 583 F.3d at 810–11. However, the
government states that “these congressional pronounce-
ments are irrelevant” to the FDIC’s regulatory obliga-
SLATTERY v. US 40
tions. Reply Br. 15. This position is contrary to the
opinions of the Attorney General and the Comptroller
General, issued when the question arose with respect to
the FSLIC. A Comptroller General letter stated, in
response to an inquiry from Congress:
2. Comptroller General letter concludes that
FSLIC obligations are obligations of the United
States backed by its full faith and credit since no
general liability of the United States has been
statutorily disclaimed. Conclusion is based on
analysis that FSLIC is an instrumentality of the
United States, has been designated by Congress to
carry out a program of insurance and regulation,
and issues notes and guarantees under statutory
authority. Analysis used is based on series of At-
torney General opinions.
****
Your second question asks whether the promis-
sory notes and assistance guarantees issued by
FSLIC are backed by the full faith and credit of
the United States. Applying the criteria con-
tained in a long line of Attorney General opinions,
we are of the opinion that FSLIC’s promissory
notes and assistance guarantees are obligations of
the United States, backed by its full faith and
credit. A detailed analysis of this issue also is en-
closed.
68 Comp. Gen. 14, 1988 WL 223985 (Oct. 11, 1988).
The Comptroller General letter cited a series of rul-
ings of the Attorney General concerning obligations of the
United States with respect to various governmental
activities; e.g., 42 Op. A.G. 327 (1966) (guarantees of the
Import-Export Bank, a government corporation, are
41 SLATTERY v. US
obligations of the United States); 42 Op. A.G. 21 (1961)
(loan guarantees made by the Development Loan Fund
under the Mutual Security Act of 1954 are obligations of
the United States despite corporate status of the Fund);
41 Op. A.G. 424 (1959) (loan guarantees issued by the
Secretary of Defense under the Armed Services housing
mortgage insurance program are obligations of the United
States); 41 Op. A.G. 403 (1959) (guarantees by the Inter-
state Commerce Commission are obligations of the United
States despite absence of an explicit pledge of the full
faith and credit of the United States); 41 Op. A.G. 363
(1958) (contracts entered by Secretary of Commerce to
insure loans and mortgages pursuant to the Merchant
Marine Act of 1936 are binding obligations of the United
States, despite need for future appropriations); 41 Op.
A.G. 138 (1953) (contracts between Public Housing Ad-
ministration and local public housing agencies are bind-
ing obligations of the United States). In Bank of Newark,
357 F.2d at 711–12, the Court of Claims observed that the
debentures of the Housing Insurance Fund were backed
by the full faith and credit of the United States, in dis-
cussing Tucker Act jurisdiction.
The Attorney General’s and Comptroller General’s
rulings contravene the government’s position concerning
the FDIC. The FDIC is an agency of the United States.
12 U.S.C. §1819(b)(1); see 12 U.S.C. §1813(z) (“The term
‘Federal banking agency’ means the Comptroller of the
Currency, the Director of the Office of Thrift Supervision,
the Board of Governors of the Federal Reserve System, or
the Federal Deposit Insurance Corporation.”). FDIC
directors are appointed by the President and confirmed by
the Senate, and the FDIC is required to report annually
to Congress and quarterly to the Treasury. See id.§§1812(a), 1827. The FDIC has free use of the United
States mails “in the same manner as the executive de-
SLATTERY v. US 42
partments of the Government,” id. §1820(a), and is ex-
empt from state and federal income taxes, id. §1825. The
FDIC is empowered to regulate bank management, opera-
tions, capital, accounting, and executive compensation.
The FDIC is authorized to issue subpoenas, block the
hiring of unapproved executives, prevent or require
remedial action such as mergers, terminate a bank’s
deposit insurance, and liquidate or otherwise resolve
failed or failing banks, see id. §§1814–1818, 1819, 1820,
1821, 1823, 1828 1831i, 1831o, 1831p-1, and is granted
“such incidental powers as shall be necessary to carry out
the powers” specifically granted, id. §1819(a)(Seventh).
The FDIC is authorized “[t]o make contracts.” Id.
§1819(a)(Third). The government’s argument that the full
faith and credit of the United States does not apply to the
FDIC’s contractual obligations, including the notes,
guarantees, and promises made for the purpose of avert-
ing bank failure, are without foundation. The legislative
purpose, judicial precedent, and the views of the Comp-
troller General and the Attorney General, are contrary to
this position.
E. The self-supporting structure of the FDIC
The government also argues that the FDIC is self-
supporting without congressional appropriations, and
that this too negates Tucker Act jurisdiction. When the
FDIC was created in 1933, it was funded with an appro-
priation of $150 million. The FDIC was authorized to
charge fees to the banks that it insures, and it has since
its inception been funded by these fees, and repaid the
initial appropriation. See Gov’t Br. 13, 15–16. Thus the
government argues that appropriated funds do not sup-
port the FDIC.
43 SLATTERY v. US
The FDIC is authorized to borrow from the Treasury,
with borrowing limits that have periodically been in-
creased, from $3 billion in 1950 to $5 billion in 1989, then
to $30 billion in 1991, then to $100 billion in 2009, with a
temporary increase to $500 billion through the end of
2010 if needed and approved by Treasury, see 12 U.S.C.A.
§1824(a)(3)(A) (West 2009). The government argues that
although the FDIC has now exhausted its funds it has not
borrowed from the Treasury, instead meeting its current
shortfall by requiring member banks to make advance
payments. None of these expedients excludes or with-
draws Tucker Act jurisdiction of claims within the subject
matter set forth in the Tucker Act.
In view of the conflicts in precedent that led to this en
banc rehearing, we resolve the conflicts as follows:
III
RESOLUTION OF CONFLICTS
Over the long history of the Tucker Act, the courts
have respected the nation’s intention to provide a broad
waiver of immunity for claims against the government.
Apart from the Court of Claims’ explanation of its ruling
in Kyer with respect to the Grape Crush Administrative
Committee and the extension of this ruling to cases
falling directly within the rule articulated in Kyer, the
government’s argument that Tucker Act jurisdiction is
limited by access to the Judgment Fund, or varies with
the self-sufficiency of the activity, is devoid of support.
We resolve “the confusion generated by the ‘less than
meticulous’ uses of the term ‘jurisdictional’ in our earlier
cases,” Eberhart v. United States, 546 U.S. 12, 16 (2005),
and hold that the source of funding of an agency’s activi-
ties or for payment of its judgments is not a limitation on
Tucker Act jurisdiction. The Judgment Fund statute is
not properly deemed “jurisdictional,” for it “does not speak
SLATTERY v. US 44
in jurisdictional terms or refer in any way to the jurisdic-
tion of the [court].” Zipes v. Trans World Airlines, Inc.,
455 U.S. 385, 394 (1982).
The Court explained in Kontrick v. Ryan, 540 U.S. at
455, that statutory requirements are not “jurisdictional”
unless they “delineat[e] the classes of cases (subject-
matter jurisdiction) and the persons (personal jurisdic-
tion) falling within a court’s adjudicatory authority.” The
Court elaborated in Arbaugh v. Y&H Corp., 546 U.S. 500,
515–16 (2006) that “when Congress does not rank a
statutory limitation on coverage as jurisdictional, courts
should treat the restriction as nonjurisdictional in charac-
ter.” “In light of the important distinctions between
jurisdictional prescriptions and claim-processing rules,”
the Court has “encouraged federal courts and litigants to
‘facilitat[e]’ clarity by using the term ‘jurisdictional’ only
when it is apposite.” Reed Elsevier, Inc. v. Muchnick, 130
S. Ct. 1237, 1244 (2010) (alteration in original). The
Court’s “recent cases evince a marked desire to curtail
such ‘drive-by jurisdictional rulings,’” id. (quoting Steel
Co. v. Citizens For A Better Env’t, 523 U.S. 83, 91 (1998)),
that “miss the ‘critical difference[s]’ between true jurisdic-
tional conditions and nonjurisdictional limitations on
causes of action,” id. (alteration in original).
Applying these precepts, the overreach of the state-
ment in Kyer is apparent, for the Judgment Fund statute
does not speak in jurisdictional terms. Section 2517(a)
originated in the Amended Court of Claims Act of 1863,
for the purpose of removing the need for a specific con-
gressional appropriation to pay each judgment. This
statute neither restricted nor enlarged the jurisdiction of
the Court of Claims; it is applied after the court has
entered final judgment, to provide a mechanism whereby
that judgment “shall be paid out of any general appro-
priation therefor.” The contrary statement in the Kyer
45 SLATTERY v. US
decision and the cases that relied on Kyer shall no longer
be applied as precedent. We reaffirm the guidance of
Mitchell, 463 U.S. at 216, that ”[i]f a claim falls within the
terms of the Tucker Act, the United States has presump-
tively consented to suit”; exceptions require an unambi-
guous statement by Congress, see Regional Rail
Reorganization Act Cases, 419 U.S. at 126–36; Presault,
494 U.S. at 12 (“Congress did not exhibit the type of
‘unambiguous intention to withdraw the Tucker Act
remedy’ that is necessary to preclude a Tucker Act claim.”
(quoting Ruckelshaus, 467 U.S. at 1019)).
On this en banc review, we hold that (1) when a gov-
ernment agency is asserted to have breached an express
or implied contract that it entered on behalf of the United
States, there is Tucker Act jurisdiction of the cause unless
such jurisdiction was explicitly withheld or withdrawn by
statute, and (2) the jurisdictional foundation of the Tucker
Act is not limited by the appropriation status of the
agency’s funds or the source of funds by which any judg-
ment may be paid.
Thus jurisdiction of this claim was properly exercised
by the Court of Federal Claims. The decision in Slattery
II, reported at Slattery v. United States, 583 F.3d 800(Fed. Cir. 2009), is reinstated; Part I, the jurisdictional
section of Slattery II, is modified to resolve conflicting
precedent as set forth herein. We remand to the Court of
Federal Claims for further proceedings as set forth
therein.
JUDGMENT REINSTATED; CASE REMANDED
United States Court of Appeals
for the Federal Circuit
__________________________
FRANK P. SLATTERY, JR., (ON BEHALF OF HIMSELF
AND ON BEHALF OF ALL OTHER SIMILARLY SITUATED
SHAREHOLDERS OF MERITOR SAVINGS BANK),
Plaintiff-Cross Appellant,
AND
STEVEN ROTH,
AND INTERSTATE PROPERTIES,
Plaintiffs-Cross Appellants,
v.
UNITED STATES,
Defendant-Appellant.
__________________________
2007-5063, -5064, -5089
__________________________
Appeal from the United States Court of Federal
Claims in Case No. 93-CV-280, Senior Judge Loren A.
Smith.
__________________________
GAJARSA, Circuit Judge, dissenting, with whom DYK,
PROST, and O’MALLEY, Circuit Judges, join.
It has been settled law for more than half a century
that the Tucker Act’s waiver of sovereign immunity does
not apply to contracts entered into by nonappropriated
fund instrumentalities (“NAFIs”) of the federal govern-
2
ment. This settled law is recognized and endorsed by
Congress and the Supreme Court. It is also settled law
that no federal court may enlarge its jurisdiction; only
Congress may do so. Nevertheless, the court today over-
turns and eviscerates the vast body of NAFI law in one
fell swoop. The court is wrong to do so, and I therefore
dissent.
A.
The central question here is what entities are in-
cluded in the phrase “the United States” as used in the
Tucker Act’s reference to claims founded “upon any ex-
press or implied contract with the United States.” 28
U.S.C. § 1491(a)(1). The term “United States” in that part
of the Tucker Act is ambiguous as to whether it includes
each and every Federal agency. 1 For more than sixty
years the Supreme Court, our predecessor court, and our
court have held that the term “United States” in the
Tucker Act does not include NAFIs. The majority today
eliminates the NAFI doctrine. The majority holds “that
Tucker Act jurisdiction does not depend on and is not
limited by whether the government entity receives or
draws upon appropriated funds. Conflicting precedent
shall no longer be relied upon.” Majority Op. at 5. The
sole question is whether “the government entity was
acting on behalf of the government.” Id.1 Notably, the term “United States” in the earlier
part of the Tucker Act referring to “any claim against the
United States” does not include separate Federal agen-
cies. The Tucker Act does not authorize suit against
Federal agencies, only the United States itself. Hansen v.
United States, 214 Ct. Cl. 823, 1977 WL 25876 at *1 (Ct.
Cl. 1977) (unpublished); see also United States v. Sher-
wood, 312 U.S. 584, 588 (1941). This clearly suggests that
the term “United States” elsewhere in the statute does
not include all Federal agencies
3
But the NAFI doctrine is not ours to eliminate; it is a
long-standing doctrine of sovereign immunity born of the
Supreme Court and recognized by Congress. As a court of
appeals, we lack authority to abandon the doctrine. If we
had a clean slate upon which to write new law, we could
pursue a different path; however, we do not, and this
court is not the legislative branch. The issue before this
court—whether the Tucker Act waives the sovereign
immunity of the United States for contractual commit-
ments of the FDIC—is one of statutory construction.
While the Tucker Act does not use the term “non-
appropriated funds instrumentality,” the statute and its
legislative history must be read in the context of the
Supreme Court’s decisions.
The genesis of the NAFI doctrine is found in the Su-
preme Court’s decision in Standard Oil Co. of California
v. Johnson, 316 U.S. 481 (1942). In Standard Oil, the
Court reviewed a California statute that imposed a li-
cense tax on the sale of motor vehicle fuel. 316 U.S. at
482. The statute exempted “any motor vehicle fuel sold to
the government of the United States or any department
thereof for official use of said government.” Id. The
question before the Court was whether a military post
exchange qualified for the statute’s exemption. Id. at 483.
The Court held that the military post exchange was a
federal instrumentality entitled to “whatever immunities
it may have under the Constitution and federal statutes.”
Id. at 485. In classifying the post exchange as a federal
instrumentality, the Court focused on the fact that “[t]he
government assumes none of the financial obligations of
the exchange.” Id. at 485.
In the years following Standard Oil, the Court of
Claims interpreted the decision as imposing a limitation
on Tucker Act jurisdiction. In Borden v. United States,
116 F. Supp. 873 (Ct. Cl. 1953) and Pulaski Cab Co. v.
4
United States, 157 F. Supp. 955 (Ct. Cl. 1958), the Court
of Claims held it lacked jurisdiction to adjudicate breach
of contract actions against military exchanges. See Bor-
den, 116 F. Supp. at 877 (“[I]n light of [Standard Oil] . . .
we reluctantly reach the conclusion that plaintiff cannot
sue the United States on a contract of employment which
is signed by the Army Exchange Service . . . .”); Pulaski
Cab, 157 F. Supp. at 958 (“We conclude that the United
States has not consented to be sued upon a contract of
this instrumentality . . . .”). The Court of Claims reached
a similar conclusion in Keetz v. United States, 168 Ct. Cl.
205 (1964) (per curiam), though it recognized the inequi-
ties engendered by dismissing the plaintiff’s suit. Id. at
205 (“We are aware that plaintiff is placed in somewhat of
a difficult position . . . . However, we believe that in these
situations (especially where the question of the waiver of
sovereign immunity is involved) it is up to Congress to
remedy this apparent harsh result, and the courts should
refrain from legislating by judicial fiat.”).
In Kyer v. United States the Court of Claims extended
the NAFI doctrine beyond the realm of military exchanges
by holding that the Grape Crush Administrative Commit-
tee (“Committee”), appointed by the Secretary of Agricul-
ture, was a NAFI. 369 F.2d 714, 717-18 (Ct. Cl. 1966). 2
According to the Court of Claims, because the Committee
was “neither supported by appropriations nor authorized,
in any manner, to obligate such funds,” it was a NAFI.
2 The majority recognizes that Kyer’s extension
of the NAFI concept beyond military exchanges is the
direct ancestor of the NAFI doctrine, citing its progeny:
Furash & Co. v. United States, 252 F.3d 1336 (Fed. Cir.
2001), Core Concepts of Florida, Inc. v. United States, 327
F.3d 1331 (Fed. Cir. 2003), and AINS, Inc. v. United
States, 365 F.3d 1333 (Fed. Cir. 2004). Majority Op. at
23-24. The majority then attempts to distinguish Kyer
and ultimately overturns it.
5
Id. at 718. The court then held it lacked jurisdiction to
adjudicate a breach of contract action against the Com-
mittee because “to remain within the framework of our
jurisdiction, it is essential that the contract sued on be
one which could have been satisfied out of appropriated
funds.” Id. The Court of Claims reasoned that because
its Tucker Act jurisdiction “must be read in conjunction
with and must be regarded as limited by” 28 U.S.C. §
2517, which “provides that [Court of Claims] judgments
are paid only from appropriated funds,” any suit against a
NAFI for breach of contract is beyond its jurisdiction. Id.
at 717-18.
It was against the backdrop of this history that Con-
gress in 1970 amended the original Tucker Act to include
a provision directly relevant to the NAFI doctrine and
today’s ruling. As discussed above, the original Tucker
Act provided the Court of Federal Claims with jurisdiction
to hear, inter alia, a claim against the United States
founded “upon any express or implied contract with the
United States.” 28 U.S.C. § 1491(a)(1) (originally enacted
as Tucker Act, ch. 359, 24 Stat. 505 (1887)). But Congress
amended the original Tucker Act by adding the sentence:
“For the purpose of this paragraph, an express or implied
contract with the Army and Air Force Exchange Service,
Navy Exchanges, Marine Corps Exchanges, Coast Guard
Exchanges, or Exchange Councils of the National Aero-
nautics and Space Administration shall be considered an
express or implied contract with the United States.” Act
of July 23, 1970, Pub. L. No. 91-350, § 1(b), 84 Stat. 449(“1970 Act”). As a textual matter, the amendment applies
only to the enumerated entities in light of the canon
expressio unius est exclusio alterius (the express mention
of one thing excludes all others). See, e.g., Tenn. Valley
Authority v. Hill, 437 U.S. 153, 188 (1978) (because the
Endangered Species Act of 1973 “create[d] a number of
6
limited ‘hardship exemptions’” and “no exemptions . . . for
federal agencies,” the Court found “under the maxim of
expressio unius est exclusio alterius . . . that these were
the only ‘hardship cases’ Congress intended to exempt”);
cf. Nat’l R.R. Passenger Corp. v. Nat’l Ass’n of R.R. Pas-
sengers, 414 U.S. 453, 458 (1974) (noting the “frequently
stated principle of statutory construction . . . that when
legislation expressly provides a particular remedy or
remedies, courts should not expand the coverage of the
statute to subsume other remedies”). This appropriately
narrow construction is further consistent with the general
rule that “a waiver of the Government’s sovereign immu-
nity will be strictly construed, in terms of its scope, in
favor of the sovereign” and that such a waiver “must be
unequivocally expressed in [the] statutory text,” Lane v.
Pena, 518 U.S. 187, 192 (1996). That Congress intended
and understood the amendment as extending Tucker Act
jurisdiction only to the listed NAFI entities—to the exclu-
sion of all others—is unequivocally confirmed by the
amendment’s legislative history.
Congress amended the Tucker Act in 1970 in part due
to its concern that the NAFI doctrine created an inequita-
ble loop-hole in the Tucker Act. Indeed, the original
Senate bill sought to eliminate the NAFI doctrine en-
tirely. It provided that “an express or implied contract
with a nonappropriated fund activity of or under the
United States or a department or agency of the United
States shall be considered an express or implied contract
with the United States.” S. 980, 91st Cong. (1st Sess.
1969). The Senate report stated that:
S. 980 will fill a gap in the Tucker Act’s waiver of
immunity of the United States to claims based
upon contracts with departments or agencies of
the Government. . . . The courts have repeatedly
held . . . that the Federal Government’s liability to
7
suit under [the Tucker Act] only exists with re-
spect to contract obligations to be paid out of ap-
propriated funds. See, e.g., Kyer v. United States,
369 F.2d 714 (Ct. Claims 1966); Pulaski Cab Co. v.
United States, 157 F. Supp. 955 (Ct. Claims 1968);
Keetz v. United States, 168 Ct. Claims 205 (1964);
Borden v. United States, 116 F. Supp. 873 (Ct.
Claims 1953).
....
Despite [the] consistent identification of the
nonappropriated fund activity with its parent de-
partment or agency and the United States, con-
tractors with such activities have found it
impossible to get a “day in court” when they allege
breach of contract by such activities. Your com-
mittee believes that there is no rational reason to
continue the immunity from contract suit pres-
ently afforded nonappropriated fund activities. . . .
....
. . . In so doing, S. 980 will erase an anachro-
nistic and baseless distinction between suits on
contracts of the United States to be paid out of
appropriated funds and those to be paid out of
nonappropriated funds.
S. Rep. No. 91-268, at 2-3, 5 (1969).
The House, however, strongly disagreed with the
Senate’s proposed elimination of the entire NAFI doc-
trine. The House report stated:
In evaluating the proposal as passed by the Sen-
ate, your committee concluded that the complete
removal of sovereign immunity for all nonappro-
priated fund activities would be undesirable for
several reasons:
8
First, since not every nonappropriated fund
activity has sufficient assets to reimburse the
United States [for the cost of a judgment, as re-
quired by S. 980], the cost of the judgment would
in some cases be imposed on the taxpayer—a re-
sult which is inconsistent with the very concept of
nonappropriated fund activities.
Second, the broad inclusion of all nonappro-
priated fund activities might create serious defini-
tional questions, making it difficult to predict the
outer limits of the liability of the Federal Gov-
ernment.
Third, data concerning all of the nonappropri-
ated fund activities of the United States is un-
available. The Bureau of the Budget has not
compiled such data nor can such data be obtained
from the various Government agencies under
which nonappropriated fund activities are con-
ducted. Clearly, Congress ought not to expose the
Federal Government to liability for all nonappro-
priated fund activities unless such data is assem-
bled.
H.R. Rep. No. 91-933, at 3 (1970), reprinted in 1970
U.S.C.C.A.N. 3477, 3479 (emphasis in original). 3 Accord-
ingly, the House amended the bill, limiting the NAFI
exclusion to military post exchanges and NASA exchange
councils. Id. The House version of the bill passed, 1970
Act § 1(b), 84 Stat. at 449, and the NAFI doctrine, albeit
limited by the Congress, remains in effect today, 28
3 The majority cites to the same language but re-
fuses to accept its import: namely, that the House explic-
itly rejected the Senate’s complete elimination of the
NAFI doctrine.
9
U.S.C. § 1491(a)(1). By making clear that some NAFIs
are within the definition of the “United States” for pur-
poses of the Tucker Act, Congress made quite clear that
other NAFIs are excluded. The majority’s conclusion—
premised on its interpretation of the legislative history to
support its rationale that Congress eliminated all
NAFIs—is illogical, just like talking about the shining
moonlight on a sunny afternoon. There is simply no
support for the majority’s assertion that “[t]he legislative
and judicial histories of the 1970 amendment stress the
restoration of the full scope of the Tucker Act’s waiver of
immunity, without imposing limitations grounded in the
source of the government entity’s funds.” Majority Op. at
32.
Consistent with this background, this court has re-
peatedly interpreted the 1970 Act as “a narrow exemption
from the [NAFI] doctrine for certain entities,” which left
“the doctrine intact for all other non-appropriated fund
instrumentalities unrelated to the post exchanges and
exchange councils.” Furash & Co. v. United States, 252
F.3d 1336, 1339 (Fed. Cir. 2001); see also Lion Raisins,
Inc. v. United States, 416 F.3d 1356, 1365 (Fed. Cir.
2005); AINS, Inc. v. United States, 365 F.3d 1333, 1338-39
(Fed. Cir. 2004); El-Sheikh v. United States, 177 F.3d
1321, 1325 (Fed. Cir. 1999); McDonald's Corp. v. United
States, 926 F.2d 1126, 1129-33 (Fed. Cir. 1991). In doing
so, this court correctly reasoned that had Congress in-
tended to eliminate the doctrine entirely, it would have
adopted the Senate bill, not the House’s amended version.
Congress’s action, therefore, speaks volumes. By leaving
the doctrine in place, Congress ratified the Supreme
Court decisions and our decisions defining it. 4
4 The majority’s contrary argument—that Con-
gress’s choosing to enact only a narrow exception to the
10
Our analysis is confirmed by the Supreme Court’s
consistent teaching that a narrow statutory exception,
crafted in response to specific judicial decisions, demon-
strates Congress’s awareness of those decisions. More
specifically, the Court teaches that such an exception
“lends powerful support” to the continued viability of the
larger rule. Square D Co. v. Niagara Frontier Tariff
Bureau, Inc., 476 U.S. 409, 418-19 (1986). For example,
in Maislin Industries, U.S., Inc. v. Primary Steel, Inc., the
Court held that a statutory exception, exempting motor
contract carriers from the decades-old filed-rates doctrine,
“demonstrat[ed] that Congress is aware of the require-
ment and has deliberately chosen not to disturb it with
respect to motor common carriers.” 497 U.S. 116, 135
(1990). Similarly, in Square D, the Court refused to
overturn a long-standing judicial doctrine when Congress
specifically addressed a particular application, but de-
clined to alter the larger rule. 476 U.S. at 418-20. Such
rules of interpretation are corollary to the strong disfavor
shown reversals of long-standing law. See Ill. Brick Co. v.
Illinois, 431 U.S. 720, 736 (1977) (“[W]e must bear in
mind that considerations of stare decisis weigh heavily in
the area of statutory construction, where Congress is free
to change this Court’s interpretation of its legislation”); cf.
Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535
U.S. 722, 739 (2002) (courts must use caution before
adopting changes that disrupt settled expectations).
Moreover, we are not alone in considering the signifi-
cance of the 1970 Act, as the Supreme Court addressed
the act in United States v. Hopkins, 427 U.S. 123 (1976).
NAFI doctrine offers no guidance as to the continued
viability of the doctrine itself—cites no authority, Major-
ity Op. at 31, and is consistent only with the majority’s
studied indifference to precedent binding upon this court,
infra.
11
In Hopkins, the Court considered whether a civilian
employee of the Army and Air Force Exchange Service
could sue the United States for breach of an employment
contract with the exchange. Id. at 124. The Court first
noted that its Standard Oil decision had formed “the
basis of a series of decisions by the Court of Claims to the
effect that it lacked jurisdiction over claims concerning
the activities of nonappropriated fund instrumentalities.”
Id. at 125 (citing Borden, Pulaski, and Kyer). The Court
took no exception with the Court of Claims’ interpretation
of Standard Oil, specifically defined a nonappropriated
fund instrumentality as “one which does not receive its
monies by congressional appropriation,” id. at 125 n.2,
and stated that “[t]he nonappropriated-fund status of the
exchanges places them in a position whereby the Federal
Government, absent special legislation, does not assume
the obligations of those exchanges in the manner that
contracts entered into by appropriated fund agencies are
assumed,” id. at 127. The Court then found such “special
legislation” in the 1970 Act, which specifically addressed
Keetz’s call for a Congressional remedy to the NAFI
doctrine’s apparent harsh result by providing that con-
tracts with military exchanges shall be considered con-
tracts with the United States. See id. at 125-26 (“The
purpose of the bill was clearly to provide a remedy to
‘contractors’ with nonappropriated fund instrumentali-
ties.”). According to the Court, the 1970 Act waived the
sovereign immunity of the United States and conferred
jurisdiction on the Court of Claims for breach of contract
claims against military exchanges. Id. The Supreme
Court therefore recognized that the 1970 Act was, as we
subsequently stated, “a narrow exemption from the
[NAFI] doctrine for certain entities.” Furash, 252 F.3d at
1339.
12
Our statutory construction of the Tucker Act finds
further support in the legislative history of the Contract
Disputes Act, 41 U.S.C. §§ 601-613 (“CDA”). The CDA
permits contractors to sue the federal government for
breach of contract and applies “to any express or implied
contract (including those of the non-appropriated fund
activities described in sections 1346 and 1491 of title 28)
entered into by an executive agency for . . . (2) the pro-
curement of services.” Id. § 602.
Following the CDA’s passage, a question was raised
whether the Tucker Act’s NAFI doctrine applied with
equal vigor to the CDA. We addressed this question in
Furash and, in doing so, considered the CDA’s legislative
history. See 252 F.3d at 1342-44. We concluded that “for
CDA jurisdiction to be foreclosed, Congress must make
clear that the activity in question was intended to operate
without appropriated funds, the same standard that is
used under the Tucker Act.” Id. at 1342. To bolster our
conclusion, we turned to the CDA’s legislative history,
“which makes clear that Congress did not intend for the
CDA to apply to non-appropriated fund instrumentalities
except for those specifically identified in the [Tucker]
Act.” See id. at 1343-44. We pointed to a Senate report,
which explicitly addressed the NAFI doctrine:
The bill expressly states its applicability to those
nonappropriated fund activities over which the
courts presently have jurisdiction under 28 U.S.C.
1346 and 1491. Consideration was given to includ-
ing all nonappropriated fund activities. However,
since the court's present jurisdiction over nonap-
propriated fund contracts is limited to certain post
exchanges, and as there appears to be no problem
with remedies relating to other nonappropriated
fund activities, it was deemed unnecessary to in-
13
clude all or any additional nonappropriated fund
activities within the scope of the bill.
Id. at 1343 (quoting S. Rep. No. 95-1118, at 18 (1978),
reprinted in 1978 U.S.C.C.A.N. 5235, 5252). This legisla-
tive history led us to the “inescapable” conclusion “that
Congress was aware of the non-appropriated funds doc-
trine and that it did not intend for the CDA to expand the
court’s jurisdiction to reach non-appropriated fund activi-
ties other than those specifically identified in the Tucker
Act and incorporated by reference in the CDA.” Id. at
1343-44.
The CDA’s legislative history not only confirms that
the NAFI doctrine applies to the CDA, it also reinforces
our court’s consistent view of the 1970 Act as “a narrow
exemption from the [NAFI] doctrine for certain entities.”
Id. at 1339. The Senate report states that, as of 1978, the
Court of Claims’ “present jurisdiction . . . is limited to
certain post exchanges.” S. Rep. No. 95-1118, at 18 (em-
phasis added). This is unequivocal congressional recogni-
tion that the 1970 Act is a narrow exemption to, not a
broad abandonment of, the NAFI doctrine. Moreover, the
Senate report states that “as there appears to be no
problem with remedies relating to other nonappropriated
fund activities, it was deemed unnecessary to include all
or any additional nonappropriated fund activities within
the scope of the bill.” Id. Again, this is unequivocal
congressional recognition that NAFIs include more than
military post exchanges and that the 1970 Act leaves
these “additional” activities untouched.
The CDA’s legislative history takes on greater impor-
tance when one considers that in the eight years between
the 1970 Act and the CDA, the Court of Claims continued
to expand the NAFI doctrine beyond military exchanges
and did so relying on the same reasoning the majority
14
abandons today. For instance, in McCloskey & Co. v.
United States, the Court of Claims held that the District
of Columbia Armory Board was a NAFI and that the
United States, therefore, was not subject to suit in the
Court of Claims for breach of a contract entered into by
the Board. 530 F.2d 374, 378 (Ct. Cl. 1976). In explain-
ing the scope of the Tucker Act, the court, quoting Kyer
extensively, reasoned that the Tucker Act is limited by 28
U.S.C. § 2517. Similarly, in Novid Co. v. United States,
the Court of Claims found that the Army Corp of Engi-
neers acted as a NAFI when it entered into a construction
contract that was not to be paid through general appro-
priations. 535 F.2d 5, 6-8 (Ct. Cl. 1976). Given the Army
Corp of Engineers’ NAFI status, the court held that the
United States could not be sued for breach of the con-
struction contract. Id. Like McCloskey, the court again
justified its decision with reference to Kyer’s reasoning.
Id. Despite the continued growth of the NAFI doctrine
and the Court of Claims’ continued reliance on Kyer’s
reasoning, Congress “deemed [it] unnecessary to include
all or any additional nonappropriated fund activities
within the scope of the [CDA].” S. Rep. No. 95-1118, at
18.
To summarize: contrary to the majority, the text of
the Tucker Act and the legislative history surrounding the
1970 Act both confirm that the 1970 Act provided only a
limited exception to the NAFI doctrine. Congress ex-
pressly revoked the NAFI doctrine for certain NAFIs
(military and NASA exchanges), but it left all other
NAFIs untouched. This interpretation is implicitly sup-
ported by the maxim of expressio unius est exclusio alte-
rius and explicitly supported by the act’s legislative
history and text.
The rationale expounded by the majority is flawed be-
cause both Congress and the Supreme Court have en-
15
dorsed the NAFI doctrine. The doctrine serves to shield
the public fisc from liability incurred by self-funded
federal entities. Absent appropriations and specific
statutory contractual authority, these federal entities are
not endowed with the power to contractually bind the
United States government. Abandoning the doctrine, as
the majority has done today, opens a door to the Court of
Federal Claims that both Congress and the Supreme
Court have kept shut for the past six decades.
B.
In my view, under Supreme Court precedent and our
precedent, the FDIC is clearly a NAFI because it receives
no appropriated funds and is, moreover, a separate entity
with independent authority to sue and be sued. Conse-
quently, the FDIC is not subject to suit in the Court of
Federal Claims in actions alleging breach of contract.
In Hopkins, the Supreme Court described a NAFI as
“one which does not receive its monies by congressional
appropriation.” 427 U.S. at 125 n.2; see also Standard
Oil, 316 U.S. at 485 (focusing on receipt of funds for
operational purposes). Using this test as our starting
point, our role is to determine whether Congress clearly
intended to create an entity whose activities are to be
independent of Treasury funds, particularly to the extent
those activities give rise to the dispute lodged in the Court
of Federal Claims. In making this determination, we
must examine the governmental entity in question, the
relevant activities of the entity, and the entity’s enabling
statute. We look primarily to the source of the entity’s
operational funds and its ability to sue and be sued as a
separate entity. To the extent our prior cases have de-
parted from the Supreme Court’s standard for determin-
ing NAFI status, I believe those cases were incorrectly
decided.
16
Turning to the case at hand, both parties rely upon
and focus their arguments almost exclusively on the four-
part test set forth in AINS, 365 F.3d at 1342-43. While
AINS summarizes the development and application of the
NAFI doctrine in this court, to the extent it has been read
to set forth a new rigid test for NAFI status, such a read-
ing sweeps too broadly. And while I conclude that the
FDIC would be a NAFI under the AINS test, I caution
against elevating AINS above our obligation to assess the
jurisdictional question posed in light of the Supreme
Court’s directives in Hopkins and Standard Oil.
Examining the pertinent facts here, the FDIC is
clearly a NAFI such that breach of contract actions
against it are not cognizable in the Court of Federal
Claims. As a starting point, the FDIC does not receive
funding through congressional appropriation. There is no
provision within the FDIC’s enabling statute authorizing
the appropriation of funds to the Deposit Insurance Fund
(“DIF”), the fund the FDIC uses to perform its insurance
and regulatory functions. Simply put, the FDIC is a self-
funded entity. 5 The FDIC receives its funding from
5 The majority attempts to establish that “the juris-
dictional criterion is not whether the government entity is
incorporated, but whether it is acting on authority of the
United States.” Majority Op. at 34. The cases the major-
ity cites for support involve entities that clearly fall
outside the NAFI doctrine not because they deal with a
corporation, but because they are funded by government
appropriation. See Cherry Cotton Mills, Inc. v. United
States, 327 U.S. 536 (1946) (Reconstruction Finance
Corporation); National Cored Forgings v. United States,
132 F.Supp. 454 (Ct. Cl. 1955) (same). The Supreme
Court noted that “all of [the RFC’s] money comes from the
Government; its profits, if any, go to the Government;
[and] its losses the Government must bear.” Cherry
Cotton Mills, 327 U.S. at 539. And Crooks Terminal
Warehouses v. United States, 92 Ct. Cl. 401 (1941), cited
17
assessments on member banks, 12 U.S.C. § 1817(b), and
the FDIC’s enabling statute does not provide for the
appropriation of general funds to defray the FDIC’s
expenses. In fact, Congress strictly limited the FDIC’s
ability to incur obligations, see id. § 1825(c)(5), and ex-
pected the FDIC to make special assessments upon mem-
ber banks when it requires additional funds, see id. §
1817(b)(5). 6 Until the majority’s opinion today, this court
has found such assessment powers significant to the
NAFI analysis. For instance, in Furash we held that the
Federal Housing Finance Board (“Finance Board”) was a
NAFI because it was self-funded funded “through assess-
ments against federal home loan banks, not from general
fund revenues.” 252 F.3d at 1341. The Finance Board’s
assessment powers were nearly identical to the FDIC’s,
including the ability to make emergency assessments in
the event of an asset deficiency. Compare 12 U.S.C. §
1438(b)(2) (2006) (repealed 2008) with 12 U.S.C. §
1817(b)(5). Similarly, we found the Federal Reserve
Board to be a NAFI in part because it was self-funded
through assessments. Denkler v. United States, 782 F.2d
1003, 1005 (Fed. Cir. 1986).
Not only is the FDIC self-funded, it is statutorily re-
quired to separate its money from the general fund of the
United States. First, all funds collected through assess-
in the same discussion, similarly involved a government
corporation that was operated via appropriated funds. It
is the funding source, not corporate structure, that is
relevant to determining NAFI status.
6 In the face of the most recent financial crisis,
the FDIC exercised its emergency assessment powers and
required its member institutions to pre-pay three years of
premia to capitalize the DIF. See 74 Fed. Reg. 59056(Nov. 17, 2009). Despite the significant strain the most
recent financial crisis placed on the FDIC, the corporation
did not request a loan from the Treasury.
18
ments must be placed in the DIF, not the general fund of
the United States. See 12 U.S.C. § 1821(a)(4)(D). Second,
Congress provided that the DIF’s funds are not subject to
apportionment. Pursuant to 12 U.S.C. § 1817(d), any
“amounts received pursuant to [the FDIC’s assessment
power] and any other amounts received by the [FDIC]
shall not be subject to apportionment for the purposes of
chapter 15 of Title 31 or under any other authority.” In
Furash, we found that strikingly similar language in the
Finance Board’s enabling statute supported classifying
the Finance Board as a NAFI. See Furash, 252 F.3d at
1341 (discussing 12 U.S.C. § 1422b(c)). Likewise, in Core
Concepts of Florida, Inc. v. United States, we held that the
Federal Prison Industries is a NAFI in part because its
enabling statute made “clear that [Federal Prison Indus-
tries’s] funds are to be kept distinct from general federal
revenues.” 327 F.3d 1331, 1336 (Fed. Cir. 2003).
These provisions make clear that the FDIC is a self-
funded entity. As a self-funded entity, the FDIC lacks
authority to obligate appropriated funds. 7 The United
7 Moreover, in creating the FDIC, Congress specifi-
cally authorized the corporate body “to make contracts.”
Banking Act of 1933, Pub. L. No. 73-66, § 8, 48 Stat. 162,
172 (codified at 12 U.S.C. § 1819); see also id. at 176 (“The
Corporation may make such . . . contracts as it may deem
necessary in order to carry out the provisions of this
section.”). But unlike the Federal Savings and Loan
Insurance Corporation, the FDIC’s authorizing statute
omits any statement that the FDIC is an instrumentality
of the United States. Compare 12 U.S.C. § 1819(a) with
12 U.S.C. § 1725(c) (1988), repealed by FIRREA, Pub. L.
No. 101-73, § 407, 103 Stat. 183, 363 (1989). And the
FDIC was not given the statutory status of an “agency of
the United States” until 1989, and even then only for the
limited purpose of giving the federal district courts origi-
nal jurisdiction over civil actions commenced by the FDIC.
19
States is thereby not bound by the FDIC’s contractual
commitments and cannot be sued in the Court of Federal
Claims. See Lion Raisins, 416 F.3d at 1366.
C.
In passing, the majority suggests that the above
precedent is inapplicable simply because the FDIC can
borrow money from the Treasury. I, however, believe
there is a fundamental distinction between allowing an
entity to borrow funds from the Treasury and appropriat-
ing funds to that entity. In the former scenario, the entity
retains its self-funded status, and it alone is responsible
for its contractual commitments. In the latter scenario,
the unfettered use of taxpayer dollars evidences congres-
sional intent to share responsibilities for the entity’s
contractual commitments. This distinction is the essence
of the NAFI doctrine.
Before demonstrating why borrowing is substantively
different from receiving appropriations, it is fitting to
examine the clear restrictions imposed upon the FDIC’s
borrowing authority. First, any funds borrowed can only
be used “for insurance purposes.” 12 U.S.C. § 1824(a).
Second, while the FDIC may borrow from the Treasury to
fund the DIF, such borrowing requires an agreed upon
repayment schedule and a demonstration by the FDIC
that its income from assessments will be sufficient for
timely repayment of principal and interest. Id. § 1824(c).
To ensure prompt repayment of any Treasury loan, Con-
gress authorized the FDIC to levy “Emergency Special
Assessments” on its member institutions if “necessary . . .
to provide sufficient assessment income to repay amounts
borrowed from the Secretary of the Treasury.” Id. §
1817(b)(5). It is this assessment authority that led Sena-
See 103 Stat. at 216 (codified at 12 U.S.C. § 1819(b)(1)); 28
U.S.C. § 1345.
20
tor Michael Crapo during debate on the Helping Families
Save Their Homes Act of 2009 to state that “[i]t is impor-
tant to note that this borrowing authority is not coming
from taxpayer dollars. The levies and the assessments
that are made on the participants in the financial indus-
try themselves, the depository institutions, are the source
of the dollars that would cover this loan authority.” 155
Cong. Rec. S5088, S5093 (May 5, 2009) (emphasis added).
Finally, while the Secretary of the Treasury is “directed to
loan” money to the FDIC, ultimately, the loan is purely
discretionary and “subject to the approval of the Secretary
of the Treasury.” 12 U.S.C. § 1824(a)(1). Moreover, if the
Secretary does decide to loan the FDIC money, the statute
requires that the FDIC pay interest on the loan “not . . .
less than an amount determined by the Secretary . . .
taking into consideration current market yields.” Id. §
1824(a)(1). This requirement of interest payments is
significant because it demonstrates both the FDIC’s
independent operation and Congress’s intent to shield
taxpayers from even indirect funding of the FDIC. Con-
siderable weight must be given to the significant limits
Congress placed on the FDIC’s ability to borrow from the
Treasury. 8
Even if the FDIC’s borrowing authority was largely
unrestricted, borrowing is substantively different from
receiving appropriations. Indeed, neither this court nor
the Court of Federal Claims has found an instrumental-
ity’s ability to borrow funds precludes application of the
8 The majority tries to import significance to the in-
crease in the line of credit afforded the FDIC by Congress,
from $3 billion to $500 billion. Majority Op. at 43. But
the line of credit is a borrowing capacity granted the
FDIC which must be repaid. See 12 U.S.C. § 1824(c).
And the line of credit was not authorized until well-after
after the creation of the FDIC.
21
NAFI doctrine. For example, in AINS we held that the
U.S. Mint was a NAFI even though the Mint’s enabling
statute permits it to borrow money from the Treasury if
needed. See 365 F.3d at 1344; 31 U.S.C. § 5136 (authoriz-
ing the Mint to borrow from the Treasury). The Court of
Federal Claims has similarly distinguished between
appropriated money and borrowed money. In Aaron v.
United States, 51 Fed. Cl. 690, 692 (2002) judgment
vacated in part on other grounds Aaron v. United States,
52 Fed. Cl. 20 (2002), the court had to determine whether
the Federal Prison Industries, Inc. (“FPI” a/k/a
“UNICOR”) was a NAFI. The plaintiff argued that the
FPI could not be a NAFI because it borrowed $20 million
from the Treasury to purchase equipment. See id. The
court rejected the plaintiff’s argument and found the FPI
to be a NAFI because “[a]n appropriation is very different
from a loan . . . which must be repaid.” Id. And, in
McCloskey & Co. v. United States, the Court of Claims
considered whether the District of Columbia Armory
Board (“Armory Board”) was a NAFI. 530 F.2d 374, 375
(Ct. Cl. 1976). The plaintiff entered into a contract with
the Armory Board for the construction of RFK Stadium.
Id. at 375-76. Congress authorized the Armory Board to
issue bonds to pay for the construction of the stadium, but
also provided that the Armory Board could borrow funds
from the Treasury if the funds from bonds were insuffi-
cient. See id. at 376. Despite the ability to borrow funds,
the court held that the Armory Board was a NAFI be-
cause Congress intended for the construction to be paid
from non-appropriated funds. See id. at 377.
The distinction between borrowing and appropriating
is made even clearer when one considers Congress’s
actions during the savings and loan crisis. In response to
that crisis, Congress dissolved the Federal Savings and
Loan Insurance Corporation (“FSLIC”) by passing the
22
Financial Institutions Reform, Recovery and Enforcement
Act of 1989 (“FIRREA”), Pub. L. 101-73, 103 Stat. 183.
Prior to its dissolution, the FSLIC was to savings and
loan institutions what the FDIC is today to commercial
banks, i.e., it had “responsibility to insure thrift deposits
and regulate all federally insured thrifts.” United States
v. Winstar Corp., 518 U.S. 839, 844 (1996). The combina-
tion of high interest rates and inflation in the late 1970s
and early 1980s caused hundreds of savings and loan
institutions to fail. See id. at 845. Various legislative
actions performed during the mid-1980s proved insuffi-
cient to ameliorate the crisis and “the multitude of al-
ready-failed savings and loans confronted FSLIC with
deposit insurance liabilities that threatened to exhaust its
insurance fund.” Id. at 846. In response, Congress
passed FIRREA, which abolished the FSLIC and trans-
ferred its insurance functions to the FDIC. Id. at 856.
Congress, however, did not transfer the FSLIC’s as-
sets and liabilities to the FDIC. Instead, it created a
separate fund—the FSLIC Resolution Fund—to house all
of the FSLIC’s assets and liabilities. See 12 U.S.C. §
1821a. Congress then provided that “[a]ny judgment
resulting from a proceeding to which the [FSLIC] was a
party prior to its dissolution or which is initiated against
the [FDIC] with respect to the [FSLIC] or with respect to
the FSLIC Resolution Fund shall be limited to the assets
of the FSLIC Resolution Fund.” 12 U.S.C. § 1821a(d). In
other words, all suits against the FSLIC or the FDIC (in
its capacity as the FSLIC’s successor) were to be paid
from the FSLIC Resolution Fund. This is why “past
payments on Winstar judgments are withdrawn from the
FSLIC Resolution Fund.” See Home Sav. of Am., F.S.B. v.
United States, 69 Fed. Cl. 187, 191 (2005).
In addition to the FSLIC’s existing assets, the FSLIC
Resolution Fund is funded by (1) “[i]ncome earned on
23
assets of the FSLIC Resolution Fund,” (2) “[l]iquidating
dividends and payments made on claims received by the
FSLIC Resolution Fund from receiverships,” and (3)
“[a]mounts borrowed by the Financing Corporation.” 12
U.S.C. § 1821a(b). Importantly, however, the FSLIC
Resolution Fund also receives complete Treasury backup.
Specifically, Congress provided that if the FSLIC Resolu-
tion Fund’s assets ever became “insufficient to satisfy the
liabilities of the FSLIC Resolution Fund, the Secretary of
the Treasury shall pay to the Fund such amounts as may
be necessary, as determined by the [FDIC] and the Secre-
tary, for FSLIC Resolution Fund purposes.” Id. §
1821a(c). Treasury backing of the FSLIC Resolution
Fund is mandatory, not discretionary. Id. (“[T]he Secre-
tary of the Treasury shall pay to the Fund . . . .” (empha-
sis added)).
The differences between the FDIC’s DIF and the
FSLIC Resolution Fund are striking and underscore the
distinction between a Congressional appropriation and a
Congressional loan. Unlike loans authorized for the DIF,
the FDIC has no obligation to repay any funds paid from
the Treasury to the FSLIC Resolution Fund. See id. §
1824 (requiring repayment plan and demonstration that
the FDIC has sufficient income to repay Treasury loan for
DIF). Moreover, we have held that to the extent the
FSLIC Resolution Fund is depleted, the “Treasury is
required to disburse funds to the [FSLIC Resolution
Fund].” Landmark Land Co. v. United States, 256 F.3d
1365, 1381 (Fed. Cir. 2001) (citing 12 U.S.C. § 1821a(c));
see also id. (“[E]ven if the FRF-FSLIC Fund were drained
of all assets due to payment of damages for claims
brought by the FDIC in the numerous Winstar-related
cases, the government remains obligated to fully fund the
FRF.”). In contrast, there is no statutory requirement
that the Secretary of the Treasury lend money to the
24
FDIC for the DIF. See 12 U.S.C. § 1824(a)(1) (authorizing
Treasury loan “subject to the approval of the Secretary of
the Treasury”). The FSLIC Resolution Fund, therefore,
illustrates how Congress appropriates funds to an entity,
while the DIF illustrates how Congress makes available a
loan to an otherwise self-supporting institution. The
distinction between the two is fundamental to the NAFI
doctrine. In the former scenario Congress subjects itself
to contractual liability under the Tucker Act because
appropriations are implicated, while in the latter scenario
such contractual liability does not exist. The majority
fails to appreciate this legal distinction.
D.
The majority also finds support for its conclusion in
congressional statements that “stress the full faith and
credit of the United States in connection with the FDIC.”
Majority Op. at 39. But these statements are directed to
the FDIC’s obligations to depositors, not its contract
obligations, see, e.g., Senate Concurrent Resolution 72
(128 Congressional Record S4530) (Mar. 17, 1982), and
they do not have the force of a statutory obligation in any
event. The relevant inquiry is whether the FDIC’s cur-
rent enabling statute contains an express commitment of
appropriated funds. It does not.
The savings and loan crisis once again provides a lu-
cid example. Faced with the potential collapse of the
entire savings and loan industry, Congress did not simply
appropriate funds to the FSLIC. Instead, it passed
FIRREA, dissolved the FSLIC, and created the FSLIC
Resolution Fund with an express Treasury backup. It
was politically expedient to provide the FSLIC with
appropriated funds, but political expediency did not
extirpate the need to amend FSLIC’s enabling statute.
The same is true with the FDIC, A statutory authoriza-
25
tion is essential to appropriate funds. See AINS, 365 F.3d
at 1342 (holding that an entity is a NAFI if, inter alia, it
is entitled to use appropriated funds only through a
statutory amendment).
To the extent the majority gives congressional state-
ments weight, it is relevant to note that Congress has
consistently stated that the FDIC is a self-funded agency
not dependent upon taxpayer funds. For example, during
recent debate on the Continuing Extension Act of 2010,
Senator Barbara Boxer aptly explained: “I think the
American people have appreciated the FDIC over the
years, because the FDIC was another way for taxpayers to
be kept out of a problem, because it is an insurance fund.
The banks are taxed and they put the money into the
fund.” 156 Cong. Rec. S2341, S2353 (Apr. 15, 2010).
Similarly, Representative Brad Sherman stated “the
FDIC collects an insurance premium from the banks so it
would be the financial system, not the American taxpayer,
paying the cost of taking care of this risk.” 154 Cong. Rec.
H10690, H10691 (Oct. 2, 2008). While these statements
largely support my view of the FDIC, I cite them not for
support, but to illustrate that the majority’s reliance on
select Congressional statements is erroneous.
If Congress wants to appropriate funds to the FDIC, it
must do so through amending the FDIC’s enabling stat-
ute, not through generalized statements of support.
When Congress sought to “bail out” the savings and loan
industry, it amended the FSLIC’s enabling statute to
create the FSLIC Resolution Fund and provide it express
Treasury backup. Any comparable “bail out” of the FDIC
would require a similar amendment to the FDIC’s ena-
bling statute because the FDIC is otherwise barred from
using appropriated funds.
26
E.
A finding by this court that the FDIC is a NAFI would
not close the courthouse doors on plaintiffs like Frank
Slattery. The FDIC’s enabling statute contains a “sue
and be sued” provision. See 12 U.S.C. § 1819(a) (“[T]he
Corporation shall become a body corporate and as such
shall have power . . . [t]o sue and be sued, and complain
and defend, by and through its own attorneys, in any
court of law or equity, State or Federal.”). This provision
is a waiver of the FDIC’s sovereign immunity. See Wood-
bridge Plaza v. Bank of Irvine, 815 F.2d 538, 542-43 (9th
Cir. 1987) (“The ‘sue-and-be-sued’ language of 12 U.S.C. §
1819 (Fourth) is a general waiver of sovereign immunity
from claims brought against the FDIC.”). Accordingly,
suits such as Mr. Slattery’s can be brought against the
FDIC in district court. See Brief of the United States at
25, n.3 (“Slattery could have brought suit against the
FDIC in United States district court pursuant to 12
U.S.C. § 1819(a).”). This is true, even if the plaintiff seeks
money damages. See Far W. Fed. Bank v. Office of Thrift
Supervision, 930 F.2d 883, 889 (Fed. Cir. 1991) (listing
cases from eight circuits in which the FDIC’s “sue and be
sued” clause permitted suits for money damages in dis-
trict court).
If Mr. Slattery had brought his suit in district court,
any judgment he received against the FDIC would be paid
from the DIF. See Karstens Prods., Inc. v. F.D.I.C., No.
95-1392, 1995 WL 769019, at *4 (Fed. Cir. 1995) (unpub-
lished) (“[I]n Far West [Federal Bank v. Office of Thrift
Supervision, 930 F.2d 883, 890 (Fed. Cir. 1991)] we held
that recovery in an action against the FDIC is limited to
funds in the FDIC's possession and control and that such
an action is not one against the United States.”). Impor-
tantly, the FDIC could not borrow from the Treasury if
Mr. Slattery’s judgment exceeded the DIF’s assets be-
27
cause the FDIC's borrowing authority is limited to its
insurance functions. See 12 U.S.C. § 1824(a) (“The Corpo-
ration is authorized to borrow from the Treasury . . . such
funds as . . . are from time to time required for insurance
purposes . . . .” (emphasis added)). Instead, the FDIC
would need to impose an emergency assessment on in-
sured depository institutions to satisfy the judgment. See
Id. §§ 1817(b)(5) (providing the FDIC with the authority
to impose an emergency assessment “for any other pur-
pose that the Corporation may deem necessary”);
1817(b)(2)(B)(ii) (providing that in determining the
amount to assess banks, the Director should take into
account any “case resolution expenses”). Accordingly, Mr.
Slattery can bring his suit against the FDIC; he simply
must do so in district court and is limited to those funds
that the FDIC has acquired through its corporate activi-
ties or can acquire through an emergency assessment.
Likewise, a finding that the FDIC is a NAFI would
not prevent depositors from bringing suits against the
FDIC concerning their deposits. In the event of a bank
failure, the FDIC must provide depositors with their
insured deposits “as soon as possible.” Id. § 1821(f)(1).
Recognizing that there were likely to be disputes over
deposits, Congress provided the FDIC with discretion to
promulgate regulations for resolving deposit disputes.
See id. § 1821(f)(3). When the FDIC resolves a dispute, its
determination is a “final determination” subject to appeal
in the “United States district court for the Federal judicial
district where the principal place of business of the de-
pository institution is located.” 12 U.S.C. § 1821(f)(4).
Therefore, if we correctly hold that the FDIC is a NAFI,
we will not disrupt Congress’s prescribed method for
resolving depositor disputes because our holding would
28
only affect the Court of Federal Claims’ jurisdiction, not
the district court’s. 9
F.
Because the majority rules that the FDIC is not a
NAFI, the United States is now directly liable for the
FDIC’s contractual commitments. Mr. Slattery and
future plaintiffs like him can now sue the United States
in the Court of Federal Claims and will receive money
damages directly from the Judgment Fund. See
McCarthy v. United States, 670 F.2d 996, 1002 (Ct. Cl.
1982) (“[O]ur judgments, when awarded against the
United States, are normally payable not from appropria-
tions to maintain the agency that incurred the liability,
but from appropriations made for the purpose of paying
Court of Claims and other court judgments, now normally
standing appropriations.”). The FDIC, however, has no
statutory obligation to reimburse the government for any
9 At this juncture, I note that the majority rein-
states—in fragments—the panel opinion reported at
Slattery v. United States, 583 F.3d 800 (Fed. Cir. 2009).
Majority Op. at 45. Although I believe it would be best to
vacate the panel opinion and allow the en banc opinion to
speak unambiguously for this court, to the extent the
majority intends to reinstate Parts II and III of the panel
opinion, I continue to dissent from those sections because
we lack jurisdiction to decide the issues presented.
Though not addressed in the majority en banc opinion, to
the extent the majority reinstates Part IV, I continue to
concur in the decision to reverse the judgment of the
Court of Federal Claims dismissing Roth’s claims, but
only to the extent Roth asserts a constitutional takings
claim against the Meritor receivership surplus. See Lion
Raisins, Inc. v. United States, 416 F.3d 1356, 1368 (Fed.
Cir. 2005) (“If there is a taking, the claim is ‘founded upon
the Constitution’ and within the jurisdiction of the Court
of Claims to hear and determine.’” (quoting United States
v. Causby, 328 U.S. 256, 267 (1946)).
29
damages paid out of the Judgment Fund. Accordingly,
from this date forth, taxpayers, not the FDIC, shall bear
the burden of the FDIC’s contractual commitments.
The majority affords the FDIC complete insulation
from liability. This insulation stands in stark contrast to
Congress’s requirement that those NAFIs specifically
identified in the 1970 Act reimburse the government for
any liability incurred by their breach of contract. See 31
U.S.C. § 1304(c)(2) (“The Exchange making the contract
shall reimburse the Government for the amount paid by
the Government.”); El-Sheikh, 177 F.3d at 1325 (discuss-
ing the reimbursement obligation). The Army and Air
Force Exchange Service must reimburse the government
if a suit is brought against the United States for its ac-
tions, but the FDIC has no similar obligation. No policy
reason exists to justify this disparate treatment. The
most logical conclusion is that Congress never envisioned
the United States being held liable for the FDIC’s con-
tractual commitments and therefore never saw a need to
require reimbursement.
Startlingly, under the majority’s analysis, taxpayers
bear a heavier burden than they did when Congress
bailed out the savings and loan industry in 1989. While
the FSLIC Resolution Fund enjoys full Treasury backup,
the backup is a “last resort,” only to be called upon if the
FSLIC’s other assets are exhausted. See 12 U.S.C. §
1821a(c) & (d). Under the majority’s holding, the FDIC
need not exhaust any of its assets because the govern-
ment is directly liable. In other words, the majority has
by judicial fiat created a more direct bailout than the 1989
Congressional bailout of the savings and loan industry.
When Congress bails out a federal corporation, it requires
the corporation to expend all its assets first; when the
Federal Circuit bails out a federal corporation, it asks
30
taxpayers to foot the entire bill. Because I do not support
this alarming result, I dissent.