HARRISBURG, Pa. -- Credit union association attorneys familiar with membership litigation in the U.S. District Court for Middle Pennsylvania have praised a federal judge who was asked to referee a bank-versus-credit union dispute.
Chief Judge Yvette Kane heard a case brought by the American Bankers Association and some Pennsylvania banks against the NCUA and some federal credit unions in Pennsylvania regarding the agency's approval of their six-county community charter.
The bankers charged that NCUA had violated the Federal Credit Union Act when it allowed the $1.3 billion Members 1st FCU to expand its community charter to cover six counties along the I-83 corridor. The bankers argued that the Congress had used the word "local" in the FCUA to limit the size of any community the NCUA could include in a CU's community charter. Bankers charged that the agency had erred in allowing Members 1st to offer service within an area that was made up of two smaller Pennsylvania communities.
The suit also involved two other federal credit unions, which adopted the same community field of membership after it had been granted to Members 1st.
Lawyers from the Justice Department, representing NCUA--with the major CU trade associations, the Pennsylvania Credit Union Association and the individual CUs as intervenors--have countered that the agency had performed properly and thoughtfully when it evaluated the new field of membership and complied with the law.
Credit union lawyers who attended a Jan. 4 hearing before Judge Kane praised the judge for the degree of attention she has apparently paid to the case and for the carefully crafted questions she brought to each side.
"I think both sides definitely brought their best efforts and the judge asked very thoughtful questions," said Carrie Hunt, senior counsel for NAFCU who had attended the hearing but was not one of the litigators. "Of course everyone always studies a judge's questions after a hearing like this in order to discern how the judge is leaning, but I don't think this judge's questions left us any clues."
Eric Richard, general counsel for CUNA, also attended the hearing but was not a litigator, also praised Judge Kane's performance.
"She had clearly studied the administrative record in the case and came prepared with questions from each side," Richard said. He also singled out Eric Womack, the lawyer for the Department of Justice who argued on behalf of NCUA, for praise, citing the attorney's familiarity with the 2,000-page administrative record.
Womack observed, for instance, that NCUA had initially declined Members 1st application for the FOM change and had hardly acted in an arbitrary or capricious manner as bankers had charged, Richard said.
Both Richard and Hunt noted that the judge had asked the attorneys representing the bankers if they could identify the point where the agency could have granted Members 1st a larger community charter which would have been in accord with the Act. Richard said the bankers' lawyers admitted that such a point likely existed but could not say specifically where that point was.
Richard also noted that one line of questioning from Judge Kane seemed to focus on whether there was a definition for the common interests that underpin the notion of community in fields of membership. "She seemed to be considering carefully what that term means, particularly in light of the fact that it is not defined anywhere," Richard explained.
Neither Richard nor Hunt would predict what Judge Kane would decide but each said they doubted the judge would see more information before making her decision. Richard also declined to speculate on whether either side would appeal if the decision went against them. "You need to see what the decision actually says," Richard explained.
Judge Kane said she expected to make her decision within 90 days of the early January hearing.
--dmorrison@cutimes.com
