On August 25, the U.S. Court of Appeals for the 5th Circuit reversed and remanded a district court’s decision that granted injunctive relief in an FDIC enforcement action against a bank executive. The FDIC initiated the enforcement action in 2014, resulting in a final order from the FDIC’s board of directors that the bank CEO be removed from bank-related positions, barred from future work in the banking industry, and imposing a $200,000 civil penalty. The CEO argued, among other claims, that the administrative law judge (ALJ) overseeing the case was unconstitutionally appointed and sought to enjoin the FDIC’s final order.
On appeal, the case was remanded to the district court with instructions for the matter to be adjudicated before a constitutionally appointed ALJ. After an ALJ recommended the same outcome on remand, the CEO sought a preliminary injunction in district court to prevent the FDIC from issuing a final order. The district court granted the request based on a claim that a final order could violate the CEO’s constitutional right to a trial. The FDIC appealed the injunction, asserting that 12 U.S.C. § 1818(i)(1) contains an “explicit jurisdictional preclusion provision,” that denies district courts authority to issue injunctions affecting the issuance or enforcement of agency orders. The appellate court agreed, holding that the statute precludes district court jurisdiction even when a challenge is based on constitutional claims.
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