THE FOURTH CORNER CREDIT UNION, a Colorado state-chartered credit union, Plaintiff - Appellant,
FEDERAL RESERVE BANK OF KANSAS CITY, Defendant-Appellee. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Amicus Curiae.
from the United States District Court for the District of
Colorado (D.C. No. 1:15-CV-01633-RBJ)
A. Mason, The Mason Law Firm, P.A., Mount Pleasant, South
Carolina (Gabrielle Z. Lee, The Mason Law Firm, P.A. Mount
Pleasant, South Carolina, with him on the briefs), for
S. Barker, Wheeler Trigg O'Donnell LLP, Denver, Colorado
(N. Reid Neureiter and Benjamin I. Kapnik, Wheeler Trigg
O'Donnell LLP, Denver, Colorado, with him on the brief),
G. Alvarez, General Counsel; Richard M. Ashton, Deputy
General Counsel; Katherine H. Wheatley, Associate General
Counsel; Yvonne F. Mizusawa, Senior Counsel, Board of
Governors of the Federal Reserve System, Washington, D.C.,
filed an amicus brief for Amici Curiae, the Board of
Governors of the Federal Reserve System.
MATHESON, BACHARACH, and MORITZ, Circuit Judges.
appeal, we vacate the district court's order and remand
with instructions to dismiss the amended complaint without
prejudice. This disposition is addressed in three
opinions-one by each member of the panel. Judge Moritz would
affirm the dismissal with prejudice. Judge Matheson would
vacate and remand with instructions to dismiss the amended
complaint without prejudice on prudential-ripeness grounds.
Judge Bacharach would reverse the dismissal of the amended
complaint. By remanding with instructions to dismiss the
amended complaint without prejudice, our disposition
effectuates the judgment of the two panel members who would
allow the Fourth Corner Credit Union to proceed with its
we deny the Federal Reserve Bank of Kansas City's motion
to strike the Fourth Corner Credit Union's reply-brief
MORITZ, Circuit Judge.
Fourth Corner Credit Union applied for a master account from
the Federal Reserve Bank of Kansas City. The Reserve Bank
denied the application, effectively crippling the Credit
Union's business operations. The Credit Union sought an
injunction requiring the Reserve Bank to issue it a master
account. The district court dismissed the action, ruling that
the Credit Union's raison d'être-to provide
banking services to marijuana-related businesses-would
violate the Controlled Substances Act (CSA), 21 U.S.C.
§§ 801-904. Because the district court correctly
declined to lend its equitable power to illegal activity, I
would affirm the dismissal with prejudice.
2012, Colorado amended its constitution to legalize a wide
array of recreational marijuana activity. See Colo.
Const. art. XVIII, § 16. An industry of marijuana
growers and retailers sprang up to supply this new market,
but they face a significant obstacle: traditional banks are
wary of serving marijuana-related businesses (MRBs). Many
MRBs thus operate solely in cash, a restriction that
"raise[s] significant public safety concerns for
customers and employees" and "make[s] it more
difficult for the state and federal government to regulate
and audit [MRBs]." App. 215.
Credit Union aims to fill this banking void. Its purpose,
according to its amended complaint, is to "provide much
needed banking services to compliant, licensed cannabis and
hemp businesses" and to marijuana-legalization
supporters. Id. at 219. But there are many hurdles
for a would-be depository institution to clear. The relevant
hurdle here is obtaining a master account. A master account
is, put simply, a bank account for banks. It gives depository
institutions access to the Federal Reserve
System's services, including its electronic payments
system. In the Credit Union's words, "Without such
access, a depository institution is nothing more than a
vault." Id. at 225.
Credit Union applied to the Federal Reserve Bank of Kansas
City for a master account. The Reserve Bank denied the application
by letter, citing a host of concerns. In general, the Reserve
Bank determined that the Credit Union simply posed too great
a risk to the Federal Reserve System-in large part because of
its "focus on serving [MRBs]." Id. at
response, the Credit Union filed this suit. It sought a
declaratory judgment that the Credit Union is entitled to a
master account and an injunction requiring the Reserve Bank
to issue it one. The Credit Union asserted that the Reserve
Bank is required by statute to issue a master account to
every applicant, citing 12 U.S.C. § 248a. The Reserve
Bank moved to dismiss the complaint, arguing that (1) the
Reserve Bank retains statutory discretion to deny
master-account applications; (2) the district court
couldn't use its equitable power to facilitate illegal
activity-namely, violations of the CSA; and (3) the Credit
Union's Colorado charter is preempted and void under the
Supremacy Clause because it conflicts with the CSA. In
apparent response to the Reserve Bank's illegality
argument, the Credit Union amended its complaint. In its
amended complaint, the Credit Union repeatedly alleges that
it will serve MRBs only if it's authorized to do so by
law. The Credit Union then moved for summary judgment on its
claim, and the Reserve Bank renewed its motion to dismiss.
district court granted the Reserve Bank's motion to
dismiss and denied the Credit Union's motion for summary
judgment. The district court didn't accept the Credit
Union's allegations that it would follow the law. And
based on the principle that "courts cannot use equitable
powers to issue an order that would facilitate criminal
activity, " App. 707, the district court concluded that
it couldn't grant the Credit Union its requested
injunction. The district court declined to reach the Reserve
Bank's preemption and statutory discretion arguments.
Credit Union filed a motion for reconsideration requesting,
in part, that the court decide the preemption and statutory
discretion issues. The district court denied that motion. The
Credit Union appeals.
Credit Union argues that the district court erred in
dismissing its claim based on the Reserve Bank's
illegality defense. This court reviews de novo the district
court's grant of the Reserve Bank's motion to
dismiss, applying the same standard as the district court.
Doe v. City of Albuquerque, 667 F.3d 1111, 1118
(10th Cir. 2012). Specifically, we accept the well-pleaded
allegations of the complaint as true and construe them in the
light most favorable to the Credit Union. Id.
Reserve Bank's illegality defense is straightforward. It
begins with the principle-which the Credit Union doesn't
dispute-that a court won't use its equitable power to
facilitate illegal conduct. See Warner Bros. Theatres,
Inc. v. Cooper Found., 189 F.2d 825, 829 (10th Cir.
1951) (holding that "[a] court of equity should not
permit" a party to "take advantage of an admittedly
illegal arrangement"); see also Precision Instrument
Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814
(1945) (holding that clean-hands doctrine "presupposes
[a court of equity's] refusal . . . to be the
'abetter of iniquity'" (quoting Bein v.
Heath, 47 U.S. 228, 247 (1848))); Cartlidge v.
Rainey, 168 F.2d 841, 845 (5th Cir. 1948) ("It is
well settled that equity will not lend its aid to the
perpetration of criminal acts.").
own allegations, the Credit Union would use the court's
equitable relief to facilitate illegal activity. If given a
master account, the Credit Union "intends to provide
banking services to compliant state licensed cannabis and
hemp businesses." App. 204. But even if these businesses
are "compliant" with Colorado law, their conduct
plainly violates the CSA. See 21 U.S.C. §
841(a)(1) ("[I]t shall be unlawful for any person
knowingly or intentionally . . . to manufacture, distribute,
or dispense, or possess with intent to manufacture,
distribute, or dispense, a controlled
substance."). By providing banking services to these
businesses, the Credit Union would-by its own
admission-facilitate their illegal activity by giving them
bank access that they currently lack. See App. 218
("None of these [MRBs] have meaningful and stable access
to traditional banking services. . . . The majority of MRBs
are forced to operate in cash only, and to suffer the high
cost of handling and safeguarding this cash."). And,
critically, the Credit Union concedes that it won't be
able to serve MRBs without the court's equitable relief.
See Aplt. Br. 5 ("Without a master account[,
the Credit Union] cannot function."). A court-ordered
master account would thus serve as the linchpin for the
Credit Union's facilitation of illegal conduct.
response to the Reserve Bank's illegality defense, the
Credit Union argues that the MRBs it proposes to serve
aren't violating federal law. Specifically, it asserts
that "[c]onduct in full compliance with a presumptively
valid state medical or recreational marijuana law is legal
under state and federal law until the state law is formally
invalidated." Aplt. Br. 54. But the Credit Union seemed
to abandon this position at oral argument, and for good
reason: the CSA, by virtue of the Supremacy Clause, is the
law of the land. See U.S. Const. art. VI, cl. 2.
Conduct prohibited by federal law is illegal, regardless of
what Colorado law may permit. See Planned Parenthood of
Kan. & Mid-Mo. v. Moser, 747 F.3d 814, 823 (10th
Cir. 2014) ("[W]hen state or local law conflicts with
federal law, federal law prevails."). For the same
reason, I would decline the Credit Union's request to
decide whether the CSA preempts Colorado law. Regardless of
how we might resolve that issue, the MRBs' conduct would
remain federally illegal.
Credit Union also argues that it may legally serve MRBs
pursuant to certain Executive Branch guidance documents. In
2014, then-Deputy Attorney General James Cole issued a DOJ
memorandum outlining that agency's marijuana-banking
enforcement priorities. But while the Cole Memorandum
suggested that the DOJ may decline to prosecute banks that
meet certain criteria, the Memorandum also made clear that
its guidance didn't create a legal defense for violations
of the CSA or certain money-laundering statutes. See
App. 488 (explaining that "[t]his memorandum does not
alter in any way the [DOJ's] authority to enforce federal
law, including federal laws relating to marijuana, regardless
of state law" and doesn't "provide a legal
defense to a violation of federal law, including . . .
violation of the CSA, the money laundering and unlicensed
money transmitter statutes, or the [Bank Secrecy Act]").
the Treasury Department's Financial Crimes Enforcement
Network ("FinCEN"), which is responsible for
enforcing certain money-laundering statutes, issued its own
marijuana-related guidance concurrently with the Cole
Memorandum. The FinCEN Guidance purported to "clarif[y]
how financial institutions can provide services to
marijuana-related businesses consistent with their
[anti-money laundering] obligations." App. 490.
But this guidance, like the Cole Memorandum, didn't
nullify the CSA or federal money-laundering statutes. See
id. n.3 (noting that certain conduct encompassed by the
Cole Memorandum "may merit civil or criminal enforcement
of the CSA"). And the Credit Union doesn't explain
how Executive Branch enforcement decisions could undermine
substantive law. See Feinberg v. Comm'r of Internal
Revenue, 808 F.3d 813, 816 (10th Cir. 2015) ("[I]n
our constitutional order it's Congress that passes the
laws, Congress that saw fit to enact 21 U.S.C. § 841,
and Congress that in § 841 made the distribution of
marijuana a federal crime.").
recognizing the gossamer-thin nature of its interpretation of
federal law, the Credit Union alternatively argues that it
won't serve MRBs unless doing so is legal. Specifically,
it argues that its amended complaint plausibly alleges that
the Credit Union intends to abide by federal law and that the
district court erred in declining to presume these
allegations are true. See Order, App. 709 (referring
to the Credit Union's inconsistent allegations a
"sleight of hand"). I agree with the district
court: the Credit Union's equivocations don't allay
my concern that the equitable relief it seeks will facilitate
original complaint, the Credit Union left no doubt about its
intent to serve MRBs. Indeed, the dearth of banking services
for MRBs is the Credit Union's founding purpose. And the
Credit Union amended its complaint to suggest otherwise only
after the Reserve Bank raised its illegality defense. Of
course, this court looks only to the operative complaint to
assess whether the Credit Union's allegations are
plausible. But that background sheds light on the amended
complaint's series of seemingly inconsistent allegations.
On one hand, the Credit Union repeatedly asserts its intent
to serve MRBs-an illegal course of conduct. On the other
hand, the Credit Union insists that it will follow the law:
- "Consistent with its state credit union charter,
and in strict accordance with state and federal laws,
regulations and guidance, [the Credit Union] intends to
provide banking services to compliant state licensed cannabis
and hemp businesses, their employees, [and] industry
vendors." App. 204.
- "In March 2014, [the Credit Union's founders] came
together to organize a Colorado state-chartered credit union
. . . and thereby provide much needed banking services to
compliant, licensed cannabis and hemp businesses . . . .
The plan to serve the MRB segment of its prospective
field of membership would only be executed if authorized by
state and federal law." Id. at 219.
- "When [the Credit Union] is granted access to the
Federal Reserve payments system it will have the ability to
compete . . . for the business of a newly emerging
fast-growing industry. [The Credit Union] only intends to
serve the potential MRB segment of its membership if
authorized by state and federal law." Id.
- "[Large commercial] banks currently deposit a
substantial amount of state legal cannabis money into the
Federal Reserve payments system. [The Credit Union] is a
putative competitor that also seeks to provide services to
Credit Union asserts that its promises to follow the law are
plausible. And this court presumes that the amended
complaint's well-pleaded factual allegations are true and
construes them in the light most favorable to the Credit
Union. Doe, 667 F.3d at 1118. That principle might
benefit the Credit Union if it unequivocally alleged that it
won't serve MRBs. But it never does. Instead, the
amended complaint's allegations are all conditional:
if serving MRBs is illegal, then the Credit
Union won't serve them. We don't owe the presumption
of truth to illusory allegations. Cf. Kan. Penn Gaming,
LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011)
(explaining that "in ruling on a motion to dismiss, a
court should disregard all conclusory statements of law and
consider . . . the remaining specific factual
allegations") (emphasis added). The Credit Union
will either serve MRBs or it won't-its allegations
can't depend on the answer to a legal question. As one
court explained, "There is a significant difference
between pleading alternative theories of law based upon given
facts and pleading alternative statements of fact to support
a given principle of law." United States v.
Gotti, 771 F.Supp. 535, 540 (E.D.N.Y. 1991).
Credit Union's promise to follow the law is particularly
unworthy of credence because the amended complaint both
asserts that the Credit Union plans to serve MRBs "in
strict accordance with state and federal laws, regulations
and guidance, " App. 204, while at the same time
carefully avoiding any concessions regarding what the law
actually is, see, e.g., App. 240
("Whatever the law is, [the Credit Union] will
setting aside the Credit Union's non-committal,
conclusory allegations, the amended complaint tells a clear
story. The Credit Union "intends to provide banking
services to compliant state licensed cannabis and hemp
businesses, their employees, [and] industry vendors."
Id. at 204. The district court correctly declined to
facilitate this illegality.
separate opinion, Judge Bacharach suggests that the Credit
Union, by seeking a declaratory judgment, implicitly promised
to "abide by the [district court's] ruling"
regarding the legality of serving MRBs. Opinion of Bacharach,
J., 7. But the Credit Union never asked the district court to
declare whether its plan to serve MRBs is legal. Instead, it
sought a declaration regarding its supposed entitlement to a
master account under 12 U.S.C. § 248a. See App.
50-51 ("[The Credit Union] respectfully requests this
Court issue a judgment declaring that [the Reserve Bank] must
grant [the Credit Union] a master account . . . pursuant to
12 U.S.C. §248a(c)(2)."). The district court took
up the illegality issue only when the Reserve Bank raised it
as an affirmative defense. And when the Credit Union amended
its complaint in response, not even that pleading
sought a declaration that serving MRBs is legal. In
dismissing the amended complaint, the district court answered
a question that the Credit Union never asked.
Credit Union's final argument is that the Reserve Bank
failed to put forth evidence supporting the illegality
defense. But as I've discussed, the Credit Union's
own allegations establish the defense, and the district court
properly granted the Reserve Bank's motion to dismiss on
that basis. See Miller v. Shell Oil Co., 345 F.2d
891, 893 (10th Cir. 1965) ("If the defense appears
plainly on the face of the complaint itself, the motion may
be disposed of under [Rule 12(b)(6)].").
I would affirm the district court's dismissal based on
the illegality defense, I would not decide whether the Credit
Union is entitled to a master account under 12 U.S.C. §
248a or whether federal law preempts the Credit Union's
Colorado charter. And because the motion to dismiss disposes
of the case, I would not address the Credit Union's
argument that the district court erred in denying the Credit
Union's motion for summary judgment.
I would affirm the district court's dismissal of the
amended complaint with prejudice.
should dismiss this case on ripeness grounds.
The Credit Union's New Claim
Credit Union was formed primarily to serve MRBs. It requested
a master account from the Reserve Bank to do so. The Reserve
Bank denied the Credit Union's application for a master
account, citing the Credit Union's "focus on serving
marijuana-related businesses." Aplt. App. at 485. The
Credit Union sued. The Reserve Bank again expressed its
misgiving about the Credit Union's plan to serve MRBs in
a motion to dismiss the original complaint.
Credit Union did not re-apply for a master account to
alleviate the Reserve Bank's concern about MRBs, but
instead just amended its complaint to allege it will serve
MRBs only if doing so is legal.
this allegation is true, as we must, it raises ripeness
concerns because this case has become divorced from the
factual backdrop that gave rise to the original dispute. As
the Reserve Bank points out, the new Credit Union-the Credit
Union that excludes MRBs from its membership until serving
them becomes legal-is a "fundamentally different
entity" than the one the Reserve Bank turned down.
Aplee. Supp. Br. at 17.
ripeness doctrine aims to prevent courts from entangling
themselves in abstract disagreements by avoiding premature
adjudication." Awad v. Ziriax, 670 F.3d 1111,
1124 (10th Cir. 2012) (quotations omitted). "A claim is
not ripe for adjudication if it rests upon contingent future
events that may not occur as anticipated, or indeed may not
occur at all." Texas v. United States, 523 U.S.
296, 300 (1998) (quotations omitted). Ripeness has roots
"both in the jurisdictional requirement that Article III
courts hear only 'cases and controversies' and in
prudential considerations limiting our jurisdiction."
Alto Eldorado P'ship v. Cty. of Santa Fe, 634
F.3d 1170, 1173 (10th Cir. 2011). "[E]ven in a case
raising only prudential concerns, the question of ripeness
may be considered on a court's own motion."
Nat'l Park Hospitality Ass'n v. Dep't. of
Interior, 538 U.S. 803, 808 (2003).
assessing prudential ripeness, this court has taken guidance
from Abbott Laboratories v. Gardner, 387 U.S. 136
(1967), abrogated on other grounds by Califano v.
Sanders, 430 U.S. 99 (1977), which "instructs
courts to assess 'both the fitness of the issues for
judicial decision and the hardship to the parties of
withholding court consideration.'" United States
v. White, 244 F.3d 1199, 1202 (10th Cir. 2001) (quoting
Abbott Labs., 387 U.S. at 149).
on fitness, we focus on whether determination of the merits
turns upon strictly legal issues or requires facts that may
not yet be sufficiently developed." Awad, 670
F.3d at 1124 (alterations and quotations omitted).
Credit Union's amended complaint reveals this case is no
longer based on sufficiently developed facts. In particular,
the amended complaint does not and cannot tell us whether the
Reserve Bank would grant a master account on the condition
that the Credit Union will not serve MRBs unless doing so is
legal. It cannot do so because, as the Credit Union explained
to the district court, it has never approached the Reserve
Bank about obtaining a master account on the terms now
Reserve Bank, in response to our call for supplemental
briefing on ripeness, contends the Credit Union's
position that it will serve MRBs only if legal is merely an
assertion made "in its briefs and during oral
argument." Aplee. Supp. Br. at 2. But that
characterization is incorrect because it ignores that the
Credit Union made this claim in its amended
Credit Union were to apply again based on its new "only
if legal" position, the Reserve Bank may issue a master
account, in which case there would be no dispute and a
decision here would be only advisory. Or it might reject a
master account for some other reason, in which case there may
be a dispute, though different from the one that prompted
this litigation. We cannot know what the facts would be,
making this case premature.
the amended complaint's factual allegations as true does
not obviate the ripeness problem. The sufficiency of the
Credit Union's amended complaint presents a legal
question, but it does not automatically follow that the case
is fit to decide. Indeed, we have found claims, and sometimes
entire cases, unripe at the motion-to-dismiss stage. See,
e.g., S. Utah Wilderness Alliance v. Palma, 707
F.3d 1143, 1157-61 (10th Cir. 2013) (dismissing case);
Salt Lake Tribune Publ'g Co., LLC v. Mgmt. Planning,
Inc., 454 F.3d 1128, 1140-41 (10th Cir. 2006)
(dismissing claim); see also 5B C. Wright & A.
Miller, Federal Practice and Procedure: Civil § 1350
n.11 and accompanying text (3d ed., Apr. 2017 update)
(discussing adjudication of ripeness issues at the pleading
stage through a motion to dismiss under Rule
12(b)(1)). Just because resolution of a legal
question is possible, and may even be straightforward, does
not mean it is ripe to decide. As the First Circuit has
The notion that disputes which turn on purely legal questions
are always ripe for judicial review is a myth. . . . Put
bluntly, the question of fitness does not pivot solely on
whether a court is capable of resolving a claim
intelligently, but also involves an assessment of whether it
is appropriate for the court to undertake the task. Federal
courts cannot-and should not-spend their scarce resources in
what amounts to shadow boxing. Thus, if a plaintiff's
claim, though predominantly legal in character, depends upon
future events that may never come to pass, or that may not
occur in the form forecasted, then the claim is unripe.
Ernst & Young v. Depositors Econ. Prot. Corp.,
45 F.3d 530, 537 (1st Cir. 1995) (citations omitted).
principal difference between Judge Bacharach's opinion
and the conclusion reached here is the level of confidence in
predicting what would happen if the Credit Union were to ask
the Reserve Bank for a master account based on a commitment
to serve MRBs only if legal. He thinks the Reserve Bank would
almost certainly deny the application and thus concludes
there is no ripeness issue. See Op. of Judge
Bacharach at 32-35. I am much less certain what would happen.
Credit Union's plan to serve MRBs was a key reason why
the Reserve Bank denied the master account application. With
that justification gone, we do not know what would happen
under the Credit Union's revised stance. The Reserve
Bank's letter to the Credit Union explained it was
denying a master account based on the Credit Union's
planned MRB service and "[o]ther factors"
"[t]aken together." Aplt. App. at
485. The other factors included: (1) "the
nature of [the Credit Union's] proposed business
model"; (2) lack of capital; (3) failure to obtain
insurance; and (4) its status as a "de novo depository
other factors do not mitigate the ripeness concern that the
amended complaint has spawned. First, the Reserve Bank based
its master account denial on these "[o]ther
factors" "[t]aken together" with the MRB
concern, suggesting its reasons collectively formed the basis
for the denial. Id. In other words, the denial
letter did not say whether any reason, standing alone, would
have been enough to deny the master account. Second, the
Reserve Bank identified some of these other concerns as
intertwined with the Credit Union's planned service of
MRBs. For example, the denial letter tied the "de
novo" justification to the MRBs. See id.
(explaining the de novo issue was "of particular concern
given [the Credit Union's] focus on serving
marijuana-related businesses"). Third, although the
Reserve Bank's lawyer told the district court he
"seriously doubt[ed]" a promise from the Credit
Union not to serve MRBs would make a difference, id.
at 656, this was an inconclusive prediction. As discussed
below, the Reserve Bank identifies many unanswered questions
in its supplemental brief about an MRB-free Credit Union,
suggesting the possibility of a different outcome.
its new position that it will serve MRBs only if legal, the
Credit Union argues that submitting another master account
application would be futile. This ignores why the Reserve
Bank denied the first application. The Credit Union's
business plan was not part of its master account application,
but the Credit Union's planned service of MRBs was part
of the reasoning for the Reserve Bank's denial. The
Credit Union has not sought a master account on the new
condition that it will not serve MRBs unless legal, and its
revised litigation position does not substitute for a new
application to the Reserve Bank. The Credit Union has filed
two complaints contemplating two very different financial
entities, but it has submitted only one master account
application. As the Reserve Bank points out, an MRB-free
"application would raise numerous questions that have
yet to be asked, much less answered." Aplee. Supp. Br.
at 17. Given the change in circumstances,
submitting another application would hardly be an empty
gesture. And even if the result is another denial, it would
at least make the factual scenario created by the amended
complaint real rather than hypothetical.
short, we do not know what would happen if the Credit Union
were to seek a master account based on the new plan alleged
in its amended complaint. As the Reserve Bank discerns, the
Credit Union is attempting "to retroactively alter the
nature of the dispute." Id. at 2. The issues
the Credit Union raises are not yet fit for judicial
second part of our ripeness analysis, we assess the potential
"hardship from withholding judicial review" by
asking "whether the challenged action creates a direct
and immediate dilemma for the parties." Awad,
670 F.3d at 1125 (quotations omitted). The Reserve Bank faces
no hardship. As for the Credit Union, the challenged action
is the Reserve Bank's denial of a master account, which
the Credit Union argues should have issued within days of its
initial request. Without a master account, the Credit Union
contends, it cannot conduct its affairs. The Credit
Union's supplemental briefing also alludes to an
unspecified "irremediable adverse consequence that would
flow from requiring a later challenge, " Aplt. Supp. Br.
at 13, but it provides no particulars on how a dismissal on
ripeness grounds would alter the status quo. See Los
Alamos Study Grp. v. U.S. Dep't of Energy, 692 F.3d
1057, 1064 (10th Cir. 2012) (explaining the plaintiff bears
the burden of showing ripeness).
Credit Union's continued inability to conduct legal
business is a hardship, but the scope of the hardship is far
from clear. If a dismissal based on ripeness can be said to
put the Credit Union in a direct or immediate dilemma, it can
do what it never bothered to try-including while this case
was pending-and ask the Reserve Bank for a master account now
that it does not plan to serve MRBs so long as doing so is
illegal. Indeed, this course, rather than continuing with
this litigation, may be the Credit Union's most efficient
pathway to obtaining a master account.
Bacharach notes that "months may pass" before the
Reserve Bank acts on any reapplication. Op. of Judge
Bacharach at 38. But just as we do not know whether the
Reserve Bank would grant a master account to an MRB-free
Credit Union, we do not know how long the Reserve Bank might
need to process such a request. He points out the Reserve
Bank took approximately nine months to act on the Credit
Union's first application, see id., but that
history may not be a good guide to the future. The original
delay was more than likely based on concern over the Credit
Union's plan to serve MRBs. Without that complication,
and with the benefit of the detailed knowledge it has
garnered about the Credit Union, the Reserve Bank may find
disposition of a new application relatively straightforward.
The Credit Union asserts that processing normally takes just
five to seven business days.
ripeness problem here traces back to the Credit Union's
decision to amend its complaint. Under the circumstances
discussed here, the Credit Union's potential hardship
does not overcome the fitness concerns outlined above.
See Nat'l Park Hospitality Ass'n, 538 U.S.
at 814-15 (Stevens, J., concurring in the judgment)
(explaining fitness "is the more important" inquiry
and that hardship is "less
Reserve Bank observes, the Credit Union "is apparently
seeking court review of a decision that [the Reserve Bank]
has never made and that the district court never
considered." Aplee. Supp. Br. at 16. I would dismiss
this appeal as premature and remand to the district court to
vacate the judgment and dismiss without prejudice.
case involves the denial of a request for a master account. A
master account is required to purchase services that are
indispensable for all financial institutions. Without a
master account, a financial institution must obtain these
services through another institution serving as a
"middleman." To avoid the middleman, a financial
institution must obtain a master account from one of the
regional Federal Reserve Banks.
plaintiff, The Fourth Corner Credit Union, is a credit union
that requested a master account from one of the regional
Federal Reserve Banks (the Federal Reserve Bank of Kansas
City). This request would ordinarily be considered routine
for the Federal Reserve Bank of Kansas City. But the Federal
Reserve Bank of Kansas City learned from a third party that
Fourth Corner wanted to service marijuana-related businesses
in a state that had legalized these businesses. The Federal
Reserve Bank of Kansas City refused to grant the master
account, prompting Fourth Corner to sue for a declaratory
judgment and an injunction.
Federal Reserve Bank of Kansas City moved to dismiss, arguing
in part that Fourth Corner would use the master account to
violate federal drug laws. The district court agreed and
dismissed the amended complaint.
view, this ruling was erroneous for two reasons. First, the
district court should have presumed that Fourth Corner would
follow the law as determined by the court. Second, in the
amended complaint, Fourth Corner promised to obey the law. By
seeking a declaratory judgment, Fourth Corner acknowledged
that the court was the sole arbiter of the law. Thus, the
amended complaint indicates that Fourth Corner would obey a
ruling that servicing marijuana-related businesses is
Standard of Review
appeal, we engage in de novo review. Shimomura v.
Carlson, 811 F.3d 349, 358 (10th Cir. 2015). This review
requires us to determine whether the amended complaint states
a plausible claim for relief. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). In gauging the claim's
plausibility, we credit all of the amended complaint's
well-pleaded factual allegations and view them in the light
most favorable to Fourth Corner. See Colby v.
Herrick, 849 F.3d 1273, 1279 (10th Cir. 2017).
The Amended Complaint and the District Court's
amended complaint, Fourth Corner stated that it would service
marijuana-related businesses only if authorized by federal
law. Fourth Corner argued that servicing these businesses had
been legalized by recent guidance from federal agencies. But
in the amended complaint, Fourth Corner promised that
"[w]hatever the law is, [Fourth Corner] will obey."
App'x at 240. Elsewhere in the amended complaint, Fourth
Corner committed to obey the law, stating:
[Fourth Corner's charter] states [that Fourth Corner] is
"authorized to conduct business pursuant to all of the
powers conferred upon it by law, until this charter is
suspended, revoked or otherwise surrendered in the manner
directed by statute." [Fourth Corner] takes this grant
of authority to mean it ...