The Financial Institutions Reform, Recovery, and Enforcement Act grew out of the last big financial mess, this one during the 1980s and 1990s, when savings and loans and banks went belly up in large numbers. Speculation and shady practices, you'll recall, accounted for many collapses.
Congress granted the outfit that guarantees deposits, the Federal Deposit Insurance Company, a lot of new powers. Section 1819(b)(2) of FIRREA, for example, allows the FDIC to remove to federal court a state court case involving a bank once the agency becomes the bank's receiver.
But what happens after the FDIC exits the case it removed? May the district court send the lawsuit back to state court?
The Fifth Circuit said no yesterday in Adair v. Lease Partners, Inc., No. 08-60674 (5th Cir. Oct. 28, 2009). FIRREA requires the federal court to keep the case because section 1819(b)(2) transforms all claims into ones that arise under U.S. law, thus conferring federal question jurisdiction, the court ruled.
One judge concurred in the judgment only. He felt that the majority went too far and should've based its decision on the fact that federal claims remained in the case, FIRREA or no FIRREA.