Corporate Counsel Daily, Appellate court upholds dismissal of Minnesota Bankers Association complaint against the FDIC, (Sep 18, 2025)

By Justin Marcus Smith, J.D.

The Eighth Circuit concluded that the FDIC’s “FIL 32” does not order covered institutions to take specific action, nor does it declare any particular practice unlawful.

Bank concerns about an FDIC document providing guidance about multiple re-presentment insufficient funds (NSF) fees were non-justiciable, held the U.S. Court of Appeals for the Eighth Circuit, in affirming a district court dismissal, albeit on an alternate ground. The Banks’ concerns were not ripe. There was no sign of final agency action; the guidance was non-binding; and FDIC regulations provided the FDIC cannot rely on the guidance document in bringing enforcement actions under Section 5 of the Federal Trade Commission Act (Minnesota Bankers Association v. FDIC, No. 24-2154 (8th Cir. Sept. 17, 2025)).

Background. The Minnesota Bankers Association and Lake Central Bank (collectively, the banks) sued the Federal Deposit Insurance Corporation (FDIC) seeking vacatur of an FDIC guidance document, Financial Institutions Letter 32-2023: Supervisory Guidance on Multiple Re-Presentment NSF Fees (FIL 32). Essentially, FIL 32 addresses the charging of multiple “insufficient funds fees” for the same transaction. Assuming the FDIC had any authority to issue the letter at all, the banks claimed the FDIC could only promulgate FIL 32 through notice-and-comment rulemaking.

The federal district court ruled that the Banks lacked standing to challenge FIL 32 and granted the FDIC’s motion to dismiss the complaint for lack of jurisdiction. The district court dismissal was without prejudice. The district court reasoned that even if it were to redress the banks’ alleged injury by invalidating FIL 32, the banks would still be required to comply with statutory unfair-and-deceptive-practices prohibitions (see Banking and Finance Law Daily, Apr. 9, 2024).

The banks, in their appeal to the United States Court of Appeals for the Eighth Circuit, filed a brief in July 2024 arguing FIL 32 was not mere “supervisory guidance.” They argued it was facially binding because it spoke in mandatory terms; created expectations for conduct and imposed consequences; and expended the scope of unfair and deceptive practices under the Federal Trade Commission Act (FTC Act) inasmuch as Section 5 of the FTC Act (Section 5) does not address NSF fees (see Banking and Finance Law Daily, July 30, 2024). Applying de novo review, the U.S. Court of Appeals for the Eighth Circuit affirmed.

Discussion. Although the Eighth Circuit acknowledged FIL 32 warns covered financial institutions of an increased risk of Section 5 unfair or deceptive acts, it agreed with the district court that the banks’ claims were not justiciable. However, the Eighth Circuit said it reached that conclusion on the alternative ground that the claims were not ripe for judicial review.

The Eighth Circuit said it had leeway to choose among threshold grounds for denying a case on the merits. Ripeness draws from Article III limitations on judicial power and from prudential reasons for refusing to exercise jurisdiction. Because the banks’ claims were not ripe for at least prudential reasons, the Eighth Circuit said it did not need to address the “related but separate” question of Article III standing.

Ripeness depends on fitness, but the issues presented here were not fit for a judicial decision because FIL 32 was not a final agency action subject to judicial review under the APA. There was no sign a decision-making process reached a binding determination either compelling or prohibiting conduct. On its face, FIL 32 did not declare multiple re-presentment NSF fees or any related practice unlawful.

FIL 32 explained it was guidance based on FDIC experience with past consumer compliance examinations. The FDIC perceived that poor re-presentment fee disclosure practices have the potential for misleading reasonable consumers. A risk of unfairness would also be present if consumers were unable to avoid fees, but the FDIC acknowledged that problematic situations would be fact-sensitive.

The FDIC characterized FIL 32 as non-binding supervisory guidance. The court said the FDIC brought its first enforcement actions for Section 5 violations caused by multiple re-presentment NSF fee practices in 2021. In 2022, the FDIC cited 172 Section 5 violations, 13% of all FDIC cited violations that year. However, the FDIC said it does not take enforcement actions based on supervisory guidance. Supervisory guidance only sheds light on FDIC supervisory expectations, priorities, and general views. See 22 C.F.R. § 302 app. A.

The banks countered that FIL 32 defines “inadequate” disclosures and practices, and, in that sense, prohibits action previously lawful. They also said it created “safe harbors” pointing to binding effect. However, the court observed FIL 32 did not set out a rule defining terms of inadequacy. Moreover, none of the listed risk-mitigation practices provided a reliable legal safe harbor defense like those the Fifth Circuit identified in Texas v. EEOC, 933 F.3d 433, 443-44 (5th Cir. 2019). Examiners must consider the facts and circumstances of each situation.

The American Bankers Association (ABA), as amicus curiae, argued FIL 32 has the binding legal effect of exposing banks to higher civil penalties. The ABA also contended FIL 32 puts banks on notice that serial violation of Section 5 related to multiple re-presentment NSF fees would perfect scienter and therefore be subject to heightened penalties. At oral argument, the FDIC argued it would all depend on the circumstances. Notice of FIL 32 alone would not prove knowledge.

The Eighth Circuit acknowledged agency action that exposes a regulated entity to heightened penalties can be final agency action. Even so, cases the ABA turned on situations that were inapplicable here. In any event, the Eighth Circuit concluded FIL 32 does not order covered institutions to take specific action, nor does it declare any particular practice unlawful. In an enforcement action, knowledge of FIL 32 might have some probative value, but the FDIC would still have to prove scienter about unlawful practices based on the general information contained in FIL 32.

The Eighth Circuit concluded that withholding judicial consideration of FIL 32 would not cause the banks significant hardship. The FDIC has cited hundreds of pertinent Section 5 violations, while FIL 32 merely gave guidance about reducing the risk of running afoul of Section 5.

The court telegraphed confidence that the FDIC does not rely on FIL 32 to bring enforcement actions, at least in part because FDIC regulations prohibit basing enforcement actions on supervisory guidance letters. In a concurring opinion, Circuit Judge Grasz, acknowledged his dissent in another matter, but concurred here that FIL 32 is not binding and the FDIC does not take enforcement actions based on it.

The case is No. 24-2154.

Judge: Colloton, S.

Attorneys: Leah Chalmers Janus (Fredrikson & Byron P.A.) for Minnesota Bankers Association and Lake Central Bank. Michael K. Morelli, Federal Deposit Insurance Corporation, for the Federal Deposit Insurance Corporation.

Companies: American Bankers Association; Lake Central Bank; Minnesota Bankers Association

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