Atherton v. Federal Deposit Insurance Co.
United States Supreme Court
519 U.S. 213, 117 S. Ct. 666, 136 L. Ed.2d 656 (1997)
- Written by Mary Phelan D'Isa, JD
Facts
The Federal Deposit Insurance Co., now the Resolution Trust Corp. (RTC), sued the officers and directors of the City Federal Savings Bank (defendants) in federal district court for violating the legal standard of care they owed the bank. Specifically, the RTC alleged that the officers and directors acted, or failed to act, in such a way that led the bank to make bad loans. The RTC claimed that the officers and directors’ actions were unlawful because they constituted gross negligence, simple negligence, and breaches of fiduciary duty. The officers and directors moved to dismiss and argued that under a specific federal statute, the officers and directors could only be liable for gross negligence or similar conduct, and thus actions based on less culpable conduct under state-law standards of care were not authorized under federal law. The district court agreed and dismissed all but the gross-negligence claims. The circuit court of appeals, applying federal common law, reversed, and the officers and directors appealed.
Rule of Law
Issue
Holding and Reasoning (Breyer, J.)
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