Friday, November 1, 2013

United States v. Gaubert case brief

United States v. Gaubert case brief summary
409 U.S. 315 (1991)

Petitioner sought review of the judgment from the United States Court of Appeals for the Seventh Circuit finding that petitioner's action against respondent exchange for antitrust violations had to be stayed to allow the Commodity Exchange Commission to review the allegations.


  • Thomas A. Gaubert (plaintiff) was the chairman and largest shareholder of the Independent American Savings Association (IASA), a Texas chartered federally insured savings and loan. 
  • In 1984, the Federal Home Loan Bank Board (FHLBB) sought to merge IASA with Investex Savings, which was a failing Texas thrift. 
  • The FHLBB and the Federal Home Loan Bank-Dallas (FHLB-D) requested that Gaubert sign a neutralization agreement that would remove him from IASA’s management and post a $25 million interest in real property as security for his personal guarantee that IASA’s net worth would exceed the regulatory minimums.
  •  Gaubert agreed to this. 
  • Federal officials then provided regulatory and financial advice to complete the merger. 
  • In the spring of 1986, regulators threatened to close IASA unless its management and board of directors were replaced. 
  • IASA’s current management and board agreed to step down and be replaced with persons recommended by FHLB-D. 
  • After the new management took over, FHLB-D became heavily involved in IASA’s daily management. 
  • Although IASA had been financially sound while Gaubert managed it, in 1987, the new directors had announced that IASA had a substantial negative net worth. 
  • Gaubert filed a claim under the Federal Tort Claims Act (FTCA) in the United States District Court for the Northern District of Texas, seeking $100 million in damages for the alleged negligence by FHLBB and officials of FHLB-D. 
  • The court of appeals found for Gaubert, finding that the federal officials were not exempt from liability under the FTCA under the FTCA’s exception for liability for discretionary functions. 
  • The government appealed and the Supreme Court granted certiorari.

  • The United States Supreme Court affirmed the judgment staying the litigation between petitioner and respondent exchange until the Commodity Exchange Commission could adjudicate the dispute. 
  • Petitioner's membership in respondent was transferred to another entity without notice to petitioner, and petitioner brought an action alleging exchange rules violations and antitrust violations. 
  • The Court held that respondent was not completely exempt from antitrust laws, even though respondent was permitted actions by law that would normally be antitrust violations under rules established for exchanges. 
  • As a result, the Court found that if respondent's actions violated established rules, petitioner's antitrust claim might be able to proceed. 
  • The Court, however, also held that the alleged violation of rules brought petitioner's claim under the Commodity Exchange Commission. 
  • If the Commission determined that a rule was violated, petitioner's antitrust claim might be moot because petitioner could proceed against respondent for rules violations. 
  • Thus, the Court held that the Commodity Exchange Commission had to review the dispute and make a determination before the Court could proceed further.


The judgment finding that petitioner's action against respondent exchange for antitrust violations had to be stayed to allow the Commodity Exchange Commission to review the allegations was affirmed because the allegations alleged by petitioner were within the authority of the Commission.

Recommended Supplements for Administrative Law Examples & Explanations: Administrative Law, Fourth Edition
Administrative Law and Process: In a Nutshell (Nutshell Series)

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