Fourth Corner Credit Union v. Federal Reserve Bank of Kansas City

FILED
United States Court of Appeals
PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS June 27, 2017

Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________

THE FOURTH CORNER CREDIT
UNION, a Colorado state-chartered credit
union,

Plaintiff - Appellant,

v. No. 16-1016

FEDERAL RESERVE BANK OF
KANSAS CITY,

Defendant - Appellee.

------------------------------

BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM,

Amicus Curiae.
_________________________________

Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:15-CV-01633-RBJ)
_________________________________

Mark A. Mason, The Mason Law Firm, P.A., Mount Pleasant, South Carolina (Gabrielle
Z. Lee, The Mason Law Firm, P.A. Mount Pleasant, South Carolina, with him on the
briefs), for Plaintiff-Appellant.

Scott S. Barker, Wheeler Trigg O’Donnell LLP, Denver, Colorado (N. Reid Neureiter
and Benjamin I. Kapnik, Wheeler Trigg O’Donnell LLP, Denver, Colorado, with him on
the brief), for Defendant-Appellee.

Scott G. Alvarez, General Counsel; Richard M. Ashton, Deputy General Counsel;
Katherine H. Wheatley, Associate General Counsel; Yvonne F. Mizusawa, Senior
Counsel, Board of Governors of the Federal Reserve System, Washington, D.C., filed an
amicus brief for Amici Curiae, the Board of Governors of the Federal Reserve System.
_________________________________

Before MATHESON, BACHARACH, and MORITZ, Circuit Judges.
_________________________________

PER CURIAM

In this appeal, we vacate the district court’s order and remand with instructions to

dismiss the amended complaint without prejudice. This disposition is addressed in three

opinions—one by each member of the panel. Judge Moritz would affirm the dismissal

with prejudice. Judge Matheson would vacate and remand with instructions to dismiss the

amended complaint without prejudice on prudential-ripeness grounds. Judge Bacharach

would reverse the dismissal of the amended complaint. By remanding with instructions to

dismiss the amended complaint without prejudice, our disposition effectuates the

judgment of the two panel members who would allow the Fourth Corner Credit Union to

proceed with its claims.

Finally, we deny the Federal Reserve Bank of Kansas City’s motion to strike the

Fourth Corner Credit Union’s reply-brief addenda.

_________________________________

MORITZ, Circuit Judge.
_________________________________

The Fourth Corner Credit Union applied for a master account from the Federal

Reserve Bank of Kansas City. The Reserve Bank denied the application, effectively

crippling the Credit Union’s business operations. The Credit Union sought an

injunction requiring the Reserve Bank to issue it a master account. The district court

2
dismissed the action, ruling that the Credit Union’s raison d’être—to provide banking

services to marijuana-related businesses—would violate the Controlled Substances

Act (CSA), 21 U.S.C. §§ 801-904. Because the district court correctly declined to

lend its equitable power to illegal activity, I would affirm the dismissal with

prejudice.1

BACKGROUND

In 2012, Colorado amended its constitution to legalize a wide array of

recreational marijuana activity. See COLO. CONST. art. XVIII, § 16. An industry of

marijuana growers and retailers sprang up to supply this new market, but they face a

significant obstacle: traditional banks are wary of serving marijuana-related

businesses (MRBs). Many MRBs thus operate solely in cash, a restriction that

“raise[s] significant public safety concerns for customers and employees” and

“make[s] it more difficult for the state and federal government to regulate and audit

[MRBs].” App. 215.

The Credit Union aims to fill this banking void. Its purpose, according to its

amended complaint, is to “provide much needed banking services to compliant,

licensed cannabis and hemp businesses” and to marijuana-legalization supporters. Id.

at 219. But there are many hurdles for a would-be depository institution to clear. The

relevant hurdle here is obtaining a master account. A master account is, put simply, a

bank account for banks. It gives depository institutions access to the Federal Reserve

1
For the reasons stated by Judge Bacharach in his separate opinion, I conclude
that this matter is ripe for resolution. See Op. of J. Bacharach, J., 28-38.
3
System’s services, including its electronic payments system. In the Credit Union’s

words, “Without such access, a depository institution is nothing more than a vault.”

Id. at 225.

The Credit Union applied to the Federal Reserve Bank of Kansas City for a

master account.2 The Reserve Bank denied the application by letter, citing a host of

concerns. In general, the Reserve Bank determined that the Credit Union simply

posed too great a risk to the Federal Reserve System—in large part because of its

“focus on serving [MRBs].”3 Id. at 78.

In response, the Credit Union filed this suit. It sought a declaratory judgment

that the Credit Union is entitled to a master account and an injunction requiring the

Reserve Bank to issue it one. The Credit Union asserted that the Reserve Bank is

required by statute to issue a master account to every applicant, citing 12 U.S.C.

§ 248a. The Reserve Bank moved to dismiss the complaint, arguing that (1) the

Reserve Bank retains statutory discretion to deny master-account applications; (2) the

district court couldn’t use its equitable power to facilitate illegal activity—namely,

violations of the CSA; and (3) the Credit Union’s Colorado charter is preempted and

void under the Supremacy Clause because it conflicts with the CSA. In apparent

2
The Credit Union has one alternate path to access the Reserve Bank’s
services: establishing a correspondent relationship with a financial institution that
already has a master account. But at oral argument in the district court, counsel for
the Credit Union asserted that it tried and failed to secure a correspondent
relationship.
3
Because the Credit Union quoted from the denial letter in its pleadings, and
the letter is central to its claim, this court may consider it when reviewing the
Reserve Bank’s motion to dismiss. See GFF Corp. v. Associated Wholesale Grocers,
130 F.3d 1381, 1384 (10th Cir. 1997).
4
response to the Reserve Bank’s illegality argument, the Credit Union amended its

complaint. In its amended complaint, the Credit Union repeatedly alleges that it will

serve MRBs only if it’s authorized to do so by law. The Credit Union then moved for

summary judgment on its claim, and the Reserve Bank renewed its motion to dismiss.

The district court granted the Reserve Bank’s motion to dismiss and denied the

Credit Union’s motion for summary judgment. The district court didn’t accept the

Credit Union’s allegations that it would follow the law. And based on the principle

that “courts cannot use equitable powers to issue an order that would facilitate

criminal activity,” App. 707, the district court concluded that it couldn’t grant the

Credit Union its requested injunction. The district court declined to reach the Reserve

Bank’s preemption and statutory discretion arguments.

The Credit Union filed a motion for reconsideration requesting, in part, that

the court decide the preemption and statutory discretion issues. The district court

denied that motion. The Credit Union appeals.

DISCUSSION

The Credit Union argues that the district court erred in dismissing its claim

based on the Reserve Bank’s illegality defense. This court reviews de novo the

district court’s grant of the Reserve Bank’s motion to dismiss, applying the same

standard as the district court. Doe v. City of Albuquerque, 667 F.3d 1111, 1118 (10th

Cir. 2012). Specifically, we accept the well-pleaded allegations of the complaint as

true and construe them in the light most favorable to the Credit Union. Id.

5
 The Reserve Bank’s illegality defense is straightforward. It begins with the

principle—which the Credit Union doesn’t dispute—that a court won’t use its

equitable power to facilitate illegal conduct. See Warner Bros. Theatres, Inc. v.

Cooper Found., 189 F.2d 825, 829 (10th Cir. 1951) (holding that “[a] court of equity

should not permit” a party to “take advantage of an admittedly illegal arrangement”);

see also Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814

(1945) (holding that clean-hands doctrine “presupposes [a court of equity’s]

refusal . . . to be the ‘abetter of iniquity’” (quoting Bein v. Heath, 47 U.S. 228, 247

(1848))); Cartlidge v. Rainey, 168 F.2d 841, 845 (5th Cir. 1948) (“It is well settled

that equity will not lend its aid to the perpetration of criminal acts.”).

By its own allegations, the Credit Union would use the court’s equitable relief

to facilitate illegal activity. If given a master account, the Credit Union “intends to

provide banking services to compliant state licensed cannabis and hemp businesses.”

App. 204. But even if these businesses are “compliant” with Colorado law, their

conduct plainly violates the CSA. See 21 U.S.C. § 841(a)(1) (“[I]t shall be unlawful

for any person knowingly or intentionally . . . to manufacture, distribute, or dispense,

or possess with intent to manufacture, distribute, or dispense, a controlled

substance.”).4 By providing banking services to these businesses, the Credit Union

would—by its own admission—facilitate their illegal activity by giving them bank

access that they currently lack. See App. 218 (“None of these [MRBs] have

4
Marijuana is a controlled substance. 21 U.S.C. §§ 802(6), 812
(Schedule I)(c)(10).
6
meaningful and stable access to traditional banking services. . . . The majority of

MRBs are forced to operate in cash only, and to suffer the high cost of handling and

safeguarding this cash.”). And, critically, the Credit Union concedes that it won’t be

able to serve MRBs without the court’s equitable relief. See Aplt. Br. 5 (“Without a

master account[, the Credit Union] cannot function.”). A court-ordered master

account would thus serve as the linchpin for the Credit Union’s facilitation of illegal

conduct.

In response to the Reserve Bank’s illegality defense, the Credit Union argues

that the MRBs it proposes to serve aren’t violating federal law. Specifically, it asserts

that “[c]onduct in full compliance with a presumptively valid state medical or

recreational marijuana law is legal under state and federal law until the state law is

formally invalidated.” Aplt. Br. 54. But the Credit Union seemed to abandon this

position at oral argument, and for good reason: the CSA, by virtue of the Supremacy

Clause, is the law of the land. See U.S. CONST. art. VI, cl. 2. Conduct prohibited by

federal law is illegal, regardless of what Colorado law may permit. See Planned

Parenthood of Kan. & Mid-Mo. v. Moser, 747 F.3d 814, 823 (10th Cir. 2014)

(“[W]hen state or local law conflicts with federal law, federal law prevails.”). For the

same reason, I would decline the Credit Union’s request to decide whether the CSA

preempts Colorado law. Regardless of how we might resolve that issue, the MRBs’

conduct would remain federally illegal.5

5
I would further decline to consider the Credit Union’s argument that federal
marijuana law is void for vagueness. The Credit Union raises this argument for the
7
 The Credit Union also argues that it may legally serve MRBs pursuant to

certain Executive Branch guidance documents. In 2014, then-Deputy Attorney

General James Cole issued a DOJ memorandum outlining that agency’s marijuana-

banking enforcement priorities. But while the Cole Memorandum suggested that the

DOJ may decline to prosecute banks that meet certain criteria, the Memorandum also

made clear that its guidance didn’t create a legal defense for violations of the CSA or

certain money-laundering statutes. See App. 488 (explaining that “[t]his

memorandum does not alter in any way the [DOJ’s] authority to enforce federal law,

including federal laws relating to marijuana, regardless of state law” and doesn’t

“provide[] a legal defense to a violation of federal law, including . . . violation of the

CSA, the money laundering and unlicensed money transmitter statutes, or the [Bank

Secrecy Act]”).

Likewise, the Treasury Department’s Financial Crimes Enforcement Network

(“FinCEN”), which is responsible for enforcing certain money-laundering statutes,

issued its own marijuana-related guidance concurrently with the Cole Memorandum.

The FinCEN Guidance purported to “clarif[y] how financial institutions can provide

services to marijuana-related businesses consistent with their [anti-money

first time on appeal and doesn’t argue for plain error review. See Richison v. Ernest
Grp., Inc., 634 F.3d 1123, 1130 (10th Cir. 2011) (“If a newly raised legal theory is
entitled to appellate review at all . . . it may form a basis for reversal only if the
appellant can satisfy the elements of the plain error standard of review.”). For the
same reason, I would decline to consider the Credit Union’s new argument that
Congress nullified the CSA by prohibiting the Department of Justice (DOJ) from
expending appropriated funds to prevent states from implementing their own medical
marijuana laws.
8
laundering] obligations.” App. 490. But this guidance, like the Cole Memorandum,

didn’t nullify the CSA or federal money-laundering statutes. See id. n.3 (noting that

certain conduct encompassed by the Cole Memorandum “may merit civil or criminal

enforcement of the CSA”). And the Credit Union doesn’t explain how Executive

Branch enforcement decisions could undermine substantive law. See Feinberg v.

Comm’r of Internal Revenue, 808 F.3d 813, 816 (10th Cir. 2015) (“[I]n our

constitutional order it’s Congress that passes the laws, Congress that saw fit to enact

21 U.S.C. § 841, and Congress that in § 841 made the distribution of marijuana a

federal crime.”).

Perhaps recognizing the gossamer-thin nature of its interpretation of federal

law, the Credit Union alternatively argues that it won’t serve MRBs unless doing so

is legal. Specifically, it argues that its amended complaint plausibly alleges that the

Credit Union intends to abide by federal law and that the district court erred in

declining to presume these allegations are true. See Order, App. 709 (referring to the

Credit Union’s inconsistent allegations a “sleight of hand”). I agree with the district

court: the Credit Union’s equivocations don’t allay my concern that the equitable

relief it seeks will facilitate illegal activity.

In its original complaint, the Credit Union left no doubt about its intent to

serve MRBs. Indeed, the dearth of banking services for MRBs is the Credit Union’s

founding purpose. And the Credit Union amended its complaint to suggest otherwise

only after the Reserve Bank raised its illegality defense. Of course, this court looks

only to the operative complaint to assess whether the Credit Union’s allegations are

9
plausible. But that background sheds light on the amended complaint’s series of

seemingly inconsistent allegations. On one hand, the Credit Union repeatedly asserts

its intent to serve MRBs—an illegal course of conduct. On the other hand, the Credit

Union insists that it will follow the law:

- “Consistent with its state credit union charter, and in strict accordance with
state and federal laws, regulations and guidance, [the Credit Union] intends
to provide banking services to compliant state licensed cannabis and hemp
businesses, their employees, [and] industry vendors.” App. 204.6

- “In March 2014, [the Credit Union’s founders] came together to organize a
Colorado state-chartered credit union . . . and thereby provide much needed
banking services to compliant, licensed cannabis and hemp businesses . . . .
The plan to serve the MRB segment of its prospective field of membership
would only be executed if authorized by state and federal law.” Id. at 219.

- “When [the Credit Union] is granted access to the Federal Reserve
payments system it will have the ability to compete . . . for the business of
a newly emerging fast-growing industry. [The Credit Union] only intends
to serve the potential MRB segment of its membership if authorized by
state and federal law.” Id. at 237.

- “[Large commercial] banks currently deposit a substantial amount of state
legal cannabis money into the Federal Reserve payments system. [The
Credit Union] is a putative competitor that also seeks to provide services to
MRBs.” Id.

The Credit Union asserts that its promises to follow the law are plausible. And

this court presumes that the amended complaint’s well-pleaded factual allegations are

true and construes them in the light most favorable to the Credit Union. Doe, 667

F.3d at 1118. That principle might benefit the Credit Union if it unequivocally

6
The language added to the original complaint is underlined.
10
alleged that it won’t serve MRBs. But it never does.7 Instead, the amended

complaint’s allegations are all conditional: if serving MRBs is illegal, then the Credit

Union won’t serve them. We don’t owe the presumption of truth to illusory

allegations. Cf. Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir.

2011) (explaining that “in ruling on a motion to dismiss, a court should disregard all

conclusory statements of law and consider . . . the remaining specific factual

allegations”) (emphasis added). The Credit Union will either serve MRBs or it

won’t—its allegations can’t depend on the answer to a legal question. As one court

explained, “There is a significant difference between pleading alternative theories of

law based upon given facts and pleading alternative statements of fact to support a

given principle of law.” United States v. Gotti, 771 F. Supp. 535, 540 (E.D.N.Y.

1991).

The Credit Union’s promise to follow the law is particularly unworthy of

credence because the amended complaint both asserts that the Credit Union plans to

serve MRBs “in strict accordance with state and federal laws, regulations and

guidance,” App. 204, while at the same time carefully avoiding any concessions

7
When pressed at argument in the district court regarding its inconsistent
positions, the Credit Union seemed to assert that it won’t serve MRBs until federal
marijuana law changes. App. 642-43 (“THE COURT: Are you going to serve them or
not? . . . [COUNSEL]: Not until we can get additional clarification . . . in regards to
this issue.”). But when reviewing a motion to dismiss, our analysis is necessarily
limited to the pleadings.
11
regarding what the law actually is, see, e.g., App. 240 (“Whatever the law is, [the

Credit Union] will obey.”).8

After setting aside the Credit Union’s non-committal, conclusory allegations,

the amended complaint tells a clear story. The Credit Union “intends to provide

banking services to compliant state licensed cannabis and hemp businesses, their

employees, [and] industry vendors.” Id. at 204. The district court correctly declined

to facilitate this illegality.

In his separate opinion, Judge Bacharach suggests that the Credit Union, by

seeking a declaratory judgment, implicitly promised to “abide by the [district court’s]

ruling” regarding the legality of serving MRBs. Opinion of Bacharach, J., 7. But the

Credit Union never asked the district court to declare whether its plan to serve MRBs

is legal. Instead, it sought a declaration regarding its supposed entitlement to a master

account under 12 U.S.C. § 248a. See App. 50-51 (“[The Credit Union] respectfully

requests this Court issue a judgment declaring that [the Reserve Bank] must grant

[the Credit Union] a master account . . . pursuant to 12 U.S.C. §248a(c)(2).”). The

district court took up the illegality issue only when the Reserve Bank raised it as an

affirmative defense. And when the Credit Union amended its complaint in response,

not even that pleading sought a declaration that serving MRBs is legal. In dismissing

8
Judge Bacharach’s separate opinion correctly notes that the Credit Union’s
“stated intent to obey federal law” is a “factual allegation” that the district court
should have “accept[ed] as true.” Op. of J. Bacharach at 6. But as I’ve discussed, the
Credit Union’s own allegations suggest that “obey[ing] federal law” and “servicing
marijuana-related businesses” aren’t mutually exclusive. Id. So the Credit Union’s
promise to do the former reveals nothing about its intent to refrain from the latter.
12
the amended complaint, the district court answered a question that the Credit Union

never asked.

The Credit Union’s final argument is that the Reserve Bank failed to put forth

evidence supporting the illegality defense. But as I’ve discussed, the Credit Union’s

own allegations establish the defense, and the district court properly granted the

Reserve Bank’s motion to dismiss on that basis. See Miller v. Shell Oil Co., 345 F.2d

891, 893 (10th Cir. 1965) (“If the defense appears plainly on the face of the

complaint itself, the motion may be disposed of under [Rule 12(b)(6)].”).

Because I would affirm the district court’s dismissal based on the illegality

defense, I would not decide whether the Credit Union is entitled to a master account

under 12 U.S.C. § 248a or whether federal law preempts the Credit Union’s Colorado

charter. And because the motion to dismiss disposes of the case, I would not address

the Credit Union’s argument that the district court erred in denying the Credit

Union’s motion for summary judgment.

Accordingly, I would affirm the district court’s dismissal of the amended

complaint with prejudice.

13
16-1016, The Fourth Corner Credit Union v. Federal Reserve Bank of Kansas City
MATHESON, Circuit Judge.

We should dismiss this case on ripeness grounds.

A. The Credit Union’s New Claim

The Credit Union was formed primarily to serve MRBs. It requested a master

account from the Reserve Bank to do so. The Reserve Bank denied the Credit Union’s

application for a master account, citing the Credit Union’s “focus on serving marijuana-

related businesses.” Aplt. App. at 485. The Credit Union sued. The Reserve Bank again

expressed its misgiving about the Credit Union’s plan to serve MRBs in a motion to

dismiss the original complaint.

The Credit Union did not re-apply for a master account to alleviate the Reserve

Bank’s concern about MRBs, but instead just amended its complaint to allege it will

serve MRBs only if doing so is legal.

Assuming this allegation is true, as we must, it raises ripeness concerns because

this case has become divorced from the factual backdrop that gave rise to the original

dispute. As the Reserve Bank points out, the new Credit Union—the Credit Union that

excludes MRBs from its membership until serving them becomes legal—is a

“fundamentally different[] entity” than the one the Reserve Bank turned down. Aplee.

Supp. Br. at 17.

B. Ripeness

“The ripeness doctrine aims to prevent courts from entangling themselves in

abstract disagreements by avoiding premature adjudication.” Awad v. Ziriax, 670 F.3d
1111, 1124 (10th Cir. 2012) (quotations omitted). “A claim is not ripe for adjudication if

it rests upon contingent future events that may not occur as anticipated, or indeed may not

occur at all.” Texas v. United States, 523 U.S. 296, 300 (1998) (quotations omitted).

Ripeness has roots “both in the jurisdictional requirement that Article III courts hear only

‘cases and controversies’ and in prudential considerations limiting our jurisdiction.” Alto

Eldorado P’ship v. Cty. of Santa Fe, 634 F.3d 1170, 1173 (10th Cir. 2011). “[E]ven in a

case raising only prudential concerns, the question of ripeness may be considered on a

court’s own motion.” Nat’l Park Hospitality Ass’n v. Dep’t. of Interior, 538 U.S. 803,

808 (2003).1

In assessing prudential ripeness, this court has taken guidance from Abbott

Laboratories v. Gardner, 387 U.S. 136 (1967), abrogated on other grounds by Califano

v. Sanders, 430 U.S. 99 (1977), which “instructs courts to assess ‘both the fitness of the

issues for judicial decision and the hardship to the parties of withholding court

1
The Supreme Court’s recognition of the prudential ripeness doctrine goes back
many years. See, e.g., Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993)
(“Even when a ripeness question in a particular case is prudential, we may raise it on our
own motion, and ‘cannot be bound by the wishes of the parties.’” (quoting Reg’l Rail
Reorganization Act Cases, 419 U.S. 102, 138 (1974))). Recently, however, the Supreme
Court has identified “some tension” between its prudential justiciability doctrines and
“the principle that a federal court’s obligation to hear and decide cases within its
jurisdiction is virtually unflagging.” Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334,
2347 (2014) (quotations omitted). The Court chose not to resolve that tension, see id.
(“[W]e need not resolve the continuing vitality of the prudential ripeness doctrine in this
case . . . .”), and we have continued to apply the doctrine, see United States v. Supreme
Court of N.M., 839 F.3d 888, 903-04 (10th Cir. 2016) (considering prudential ripeness
argument), petition for cert. filed, No. 16-1323 (U.S. May 1, 2017).

-2-
consideration.’” United States v. White, 244 F.3d 1199, 1202 (10th Cir. 2001) (quoting

Abbott Labs., 387 U.S. at 149).

1. Fitness

“First, on fitness, we focus on whether determination of the merits turns upon

strictly legal issues or requires facts that may not yet be sufficiently developed.” Awad,

670 F.3d at 1124 (alterations and quotations omitted).

The Credit Union’s amended complaint reveals this case is no longer based on

sufficiently developed facts.2 In particular, the amended complaint does not and cannot

tell us whether the Reserve Bank would grant a master account on the condition that the

Credit Union will not serve MRBs unless doing so is legal. It cannot do so because, as

the Credit Union explained to the district court, it has never approached the Reserve Bank

about obtaining a master account on the terms now alleged.

The Reserve Bank, in response to our call for supplemental briefing on ripeness,

contends the Credit Union’s position that it will serve MRBs only if legal is merely an

assertion made “in its briefs and during oral argument.” Aplee. Supp. Br. at 2. But that

2
The ripeness problem here is not the product of a pleading defect. It stems from
a lack of developed facts—the Credit Union has not asked the Reserve Bank for a master
account conditioned on its not serving MRBs unless legal, and, having not been asked,
the Reserve Bank has not and could not have denied such an application. Judge
Bacharach argues we can decide whether the allegations in the amended complaint are
sufficient to state a claim, see Op. of Judge Bacharach at 30-32, but even on the face of
the amended complaint, the dispute is hypothetical. And, as explained below, a court’s
ability to decide a legal question is not the full measure of fitness.

-3-
characterization is incorrect because it ignores that the Credit Union made this claim in

its amended complaint.3

If the Credit Union were to apply again based on its new “only if legal” position,

the Reserve Bank may issue a master account, in which case there would be no dispute

and a decision here would be only advisory. Or it might reject a master account for some

other reason, in which case there may be a dispute, though different from the one that

prompted this litigation. We cannot know what the facts would be, making this case

premature.4

Accepting the amended complaint’s factual allegations as true does not obviate the

ripeness problem. The sufficiency of the Credit Union’s amended complaint presents a

legal question, but it does not automatically follow that the case is fit to decide. Indeed,

3
The Credit Union alleged in its amended complaint that “[t]he plan to serve the
MRB segment of its prospective field of membership would only be executed if
authorized by state and federal law.” Aplt. App. at 97; see also id. at 97-98, 101, 103,
116 (making similar allegations). And, as my colleagues’ opinions also note, this was far
from a passing reference. See Op. of Judge Moritz at 10 (illustrating changes in amended
complaint); Op. of Judge Bacharach at 4-5 (similar).
At a hearing, the district court asked the Credit Union’s counsel, “[H]ave you
considered talking with counsel for the Federal Reserve Bank of Kansas City and saying
to them, hey, guys, if we commit that we won’t serve any MRBs, at all, unless and until
Congress acts, will you give us a master account, have you considered asking?” Aplt.
App. at 646-47. The Credit Union answered, “No, Your Honor.” Id. at 647. Although
this exchange illustrates the ripeness problem in this case, the problem stems not from
representations of counsel but rather from the Credit Union’s amended complaint itself
and its “only if legal” allegations.
4
Judge Bacharach criticizes this ripeness concern as “stem[ming] from one
allegedly missing piece of information,” namely, what the Reserve Bank would do with
an application from the Credit Union that promised to exclude MRBs unless serving them
is legal. Op. of Judge Bacharach at 32. This is a critical piece of information. And it is
not allegedly missing; it is missing.

-4-
we have found claims, and sometimes entire cases, unripe at the motion-to-dismiss stage.

See, e.g., S. Utah Wilderness Alliance v. Palma, 707 F.3d 1143, 1157-61 (10th Cir. 2013)

(dismissing case); Salt Lake Tribune Publ’g Co., LLC v. Mgmt. Planning, Inc., 454 F.3d

1128, 1140-41 (10th Cir. 2006) (dismissing claim); see also 5B C. Wright & A. Miller,

Federal Practice and Procedure: Civil § 1350 n.11 and accompanying text (3d ed., Apr.

2017 update) (discussing adjudication of ripeness issues at the pleading stage through a

motion to dismiss under Rule 12(b)(1)).5 Just because resolution of a legal question is

possible, and may even be straightforward, does not mean it is ripe to decide. As the

First Circuit has explained:

The notion that disputes which turn on purely legal questions are always
ripe for judicial review is a myth. . . . Put bluntly, the question of fitness
does not pivot solely on whether a court is capable of resolving a claim
intelligently, but also involves an assessment of whether it is appropriate
for the court to undertake the task. Federal courts cannot—and should
not—spend their scarce resources in what amounts to shadow boxing.
Thus, if a plaintiff’s claim, though predominantly legal in character,
depends upon future events that may never come to pass, or that may not
occur in the form forecasted, then the claim is unripe.

5
Judge Bacharach attempts to distinguish these cases. See Op. of Judge
Bacharach at 31-32 n.14. But in both cases, this court approved dismissals based on
ripeness at the pleading stage. In Palma, for the first time on appeal, this court relied on
ripeness to dismiss, see 707 F.3d at 1157-61, just as I am suggesting here. In Salt Lake
Tribune, we affirmed a Rule 12(b)(6) dismissal of a claim based on ripeness. See 454
F.3d at 1133, 1140-41. Although dismissals based on jurisdiction are technically Rule
12(b)(1) rulings, a federal court’s ripeness inquiry does not turn on what rule the
defendant cited in the motion to dismiss in district court, or even on whether a motion
was filed. When the alleged facts show an actual dispute has not yet occurred, a federal
court, including a circuit court, can and should consider whether the case—including
whether the complaint is legally sufficient—is ripe.

-5-
Ernst & Young v. Depositors Econ. Prot. Corp., 45 F.3d 530, 537 (1st Cir. 1995)

(citations omitted).

A principal difference between Judge Bacharach’s opinion and the conclusion

reached here is the level of confidence in predicting what would happen if the Credit

Union were to ask the Reserve Bank for a master account based on a commitment to

serve MRBs only if legal. He thinks the Reserve Bank would almost certainly deny the

application and thus concludes there is no ripeness issue. See Op. of Judge Bacharach at

32-35. I am much less certain what would happen.

The Credit Union’s plan to serve MRBs was a key reason why the Reserve Bank

denied the master account application. With that justification gone, we do not know what

would happen under the Credit Union’s revised stance. The Reserve Bank’s letter to the

Credit Union explained it was denying a master account based on the Credit Union’s

planned MRB service and “[o]ther factors” “[t]aken together.” Aplt. App. at 485.6 The

other factors included: (1) “the nature of [the Credit Union’s] proposed business model”;

(2) lack of capital; (3) failure to obtain insurance; and (4) its status as a “de novo

depository institution.” Id.

6
This court may rely on the Reserve Bank’s letter because the Credit Union’s
amended complaint refers to it. See Aplt. App. at 115 (discussing denial letter); see also
Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002) (explaining that a
court considering a motion to dismiss “may consider documents referred to in the
complaint if the documents are central to the plaintiff’s claim and the parties do not
dispute the documents’ authenticity”); GFF Corp. v. Associated Wholesale Grocers, Inc.,
130 F.3d 1381, 1384-85 (10th Cir. 1997).

-6-
 These other factors do not mitigate the ripeness concern that the amended

complaint has spawned. First, the Reserve Bank based its master account denial on these

“[o]ther factors” “[t]aken together” with the MRB concern, suggesting its reasons

collectively formed the basis for the denial. Id. In other words, the denial letter did not

say whether any reason, standing alone, would have been enough to deny the master

account. Second, the Reserve Bank identified some of these other concerns as

intertwined with the Credit Union’s planned service of MRBs. For example, the denial

letter tied the “de novo” justification to the MRBs. See id. (explaining the de novo issue

was “of particular concern given [the Credit Union’s] focus on serving marijuana-related

businesses”).7 Third, although the Reserve Bank’s lawyer told the district court he

7
In its supplemental brief, the Reserve Bank again ties several of its reasons for
denying the master account to its concerns about the Credit Union’s serving MRBs. It
refers generally to the “inherent risks associated with providing [the Credit Union] a
master account” and to “the nature of [the Credit Union’s] proposed business model,
which focuses on a newly licensed industry with relatively immature businesses
operating in an environment of evolving laws and regulations.” Aplee. Supp. Br. at 5.
More specifically, it lists:

 The Credit Union’s “ability to . . . comply with applicable laws”—an issue “of
particular concern given [its] focus on serving marijuana-related businesses”; and

 The National Credit Union Administration’s concern that the Credit Union “had
not demonstrated its ability to conduct appropriate enhanced monitoring
requirements and manage its risk appropriately with respect to its customers with
marijuana-related businesses.”

Id. It makes sense that many of the Reserve Bank’s reasons tie back to the MRB
concern. For instance, by not serving MRBs, the Credit Union may find it easier to
obtain insurance, and, with insurance, may find it easier to attract capital. Thus, the new
plan described in the Credit Union’s amended complaint may cause many of its problems
Continued . . .
-7-
“seriously doubt[ed]” a promise from the Credit Union not to serve MRBs would make a

difference, id. at 656, this was an inconclusive prediction. As discussed below, the

Reserve Bank identifies many unanswered questions in its supplemental brief about an

MRB-free Credit Union, suggesting the possibility of a different outcome.

Despite its new position that it will serve MRBs only if legal, the Credit Union

argues that submitting another master account application would be futile. This ignores

why the Reserve Bank denied the first application. The Credit Union’s business plan was

not part of its master account application, but the Credit Union’s planned service of

MRBs was part of the reasoning for the Reserve Bank’s denial. The Credit Union has not

sought a master account on the new condition that it will not serve MRBs unless legal,

and its revised litigation position does not substitute for a new application to the Reserve

Bank. The Credit Union has filed two complaints contemplating two very different

financial entities, but it has submitted only one master account application. As the

Reserve Bank points out, an MRB-free “application would raise numerous questions that

have yet to be asked, much less answered.” Aplee. Supp. Br. at 17.8 Given the change in

to fall away. This may not be the case, but we do not now know what remaining hurdles,
if any, might stand between the Credit Union and a master account.
8
As explained in the Reserve Bank’s supplemental brief, these questions include:

 Would [the Credit Union] be able to obtain deposit insurance with a
non-marijuana business plan?

 Would [the Credit Union’s] revised business plan need to be
approved by the State of Colorado and, if so, would it be approved?

Continued . . .
-8-
circumstances, submitting another application would hardly be an empty gesture. And

even if the result is another denial, it would at least make the factual scenario created by

the amended complaint real rather than hypothetical.

In short, we do not know what would happen if the Credit Union were to seek a

master account based on the new plan alleged in its amended complaint. As the Reserve

Bank discerns, the Credit Union is attempting “to retroactively alter the nature of the

dispute.” Id. at 2. The issues the Credit Union raises are not yet fit for judicial decision.

2. Hardship

 As a de novo institution with no historical track record of operations,
could [the Credit Union] demonstrate that it can operate safely and
soundly and that it has appropriate compliance procedures,
particularly for Bank Secrecy Act and Anti-Money Laundering
responsibilities?

 How would [the Credit Union] satisfy the [Reserve Bank’s] concern
that it will lack capital at inception?

 Could [the Credit Union] establish a correspondent relationship with
a bank with a pre-existing master account?

 Would [the Credit Union’s] charter or field of membership be
subject to review or revocation if it were prohibited from executing
an important part of the business plan, and the economic
assumptions on which the charter was issued were materially
different?

 Given the focus of [the Credit Union’s] prior business plan on
serving MRBs, would [the Reserve Bank] have to examine [the
Credit Union’s] operations to ensure that it limited its business as
stated in its new business plan?

Id. at 17-18 (bullets added).

-9-
 In the second part of our ripeness analysis, we assess the potential “hardship from

withholding judicial review” by asking “whether the challenged action creates a direct

and immediate dilemma for the parties.” Awad, 670 F.3d at 1125 (quotations omitted).

The Reserve Bank faces no hardship. As for the Credit Union, the challenged action is

the Reserve Bank’s denial of a master account, which the Credit Union argues should

have issued within days of its initial request. Without a master account, the Credit Union

contends, it cannot conduct its affairs. The Credit Union’s supplemental briefing also

alludes to an unspecified “irremediable adverse consequence that would flow from

requiring a later challenge,” Aplt. Supp. Br. at 13, but it provides no particulars on how a

dismissal on ripeness grounds would alter the status quo. See Los Alamos Study Grp. v.

U.S. Dep’t of Energy, 692 F.3d 1057, 1064 (10th Cir. 2012) (explaining the plaintiff

bears the burden of showing ripeness).

The Credit Union’s continued inability to conduct legal business is a hardship, but

the scope of the hardship is far from clear. If a dismissal based on ripeness can be said to

put the Credit Union in a direct or immediate dilemma, it can do what it never bothered to

try—including while this case was pending—and ask the Reserve Bank for a master

account now that it does not plan to serve MRBs so long as doing so is illegal. Indeed,

this course, rather than continuing with this litigation, may be the Credit Union’s most

efficient pathway to obtaining a master account.

Judge Bacharach notes that “months may pass” before the Reserve Bank acts on

any reapplication. Op. of Judge Bacharach at 38. But just as we do not know whether

the Reserve Bank would grant a master account to an MRB-free Credit Union, we do not

- 10 -
know how long the Reserve Bank might need to process such a request. He points out

the Reserve Bank took approximately nine months to act on the Credit Union’s first

application, see id., but that history may not be a good guide to the future. The original

delay was more than likely based on concern over the Credit Union’s plan to serve

MRBs. Without that complication, and with the benefit of the detailed knowledge it has

garnered about the Credit Union, the Reserve Bank may find disposition of a new

application relatively straightforward. The Credit Union asserts that processing normally

takes just five to seven business days.

The ripeness problem here traces back to the Credit Union’s decision to amend its

complaint. Under the circumstances discussed here, the Credit Union’s potential

hardship does not overcome the fitness concerns outlined above. See Nat’l Park

Hospitality Ass’n, 538 U.S. at 814-15 (Stevens, J., concurring in the judgment)

(explaining fitness “is the more important” inquiry and that hardship is “less

important”).9

9
This court’s disposition effectively lessens any hardship for the Credit Union.
The Credit Union entered this litigation apparently unsure about the legality of serving
MRBs (as was still evident from the uncertainty built into its amended complaint’s “only
if legal” allegation). Judge Bacharach, relying on his opinion and the opinion of Judge
Moritz, stitches together a panel holding “that servicing marijuana-related businesses
remains illegal under federal law.” Op. of Judge Bacharach at 37. With the benefit of
that holding, the Credit Union “will know that servicing [MRBs] is illegal” and can now
choose whether to pursue a master account for an MRB-free field of membership. Id.
Maybe it will, and maybe, if it does, the Reserve Bank will issue a master account.

- 11 -
C. Conclusion

As the Reserve Bank observes, the Credit Union “is apparently seeking court

review of a decision that [the Reserve Bank] has never made and that the district court

never considered.” Aplee. Supp. Br. at 16. I would dismiss this appeal as premature and

remand to the district court to vacate the judgment and dismiss without prejudice.

- 12 -
The Fourth Corner Credit Union v. Federal Reserve Bank of Kansas City,
No. 16-1016.
BACHARACH, J.
This case involves the denial of a request for a master account. A

master account is required to purchase services that are indispensable for

all financial institutions. 1 Without a master account, a financial institution

must obtain these services through another institution serving as a

“middleman.” To avoid the middleman, a financial institution must obtain

a master account from one of the regional Federal Reserve Banks.

The plaintiff, The Fourth Corner Credit Union, is a credit union that

requested a master account from one of the regional Federal Reserve Banks
1
The Board of Governors of the Federal Reserve System explains:

The master account is both a record of financial transactions
that reflects the financial rights and obligations of an account
holder and the Reserve Bank with respect to each other, and the
place where opening and closing balances are determined. For
each institution, all credits and debits resulting from the use of
Federal Reserve services at any Federal Reserve office are
booked to this single master account at one Reserve Bank.

Bd. of Governors of the Fed. Reserve Sys., Reserve Maintenance Manual 5
(Nov. 2016), available at https://www.federalreserve.gov/monetarypolicy/
files/reserve-maintenance-manual.pdf.

This manual does not appear in the appellate record. But we may take
judicial notice of the manual and other materials on the Board of
Governors’ website. See New Mexico ex rel. Richardson v. Bureau of Land
Mgmt., 565 F.3d 683, 702 n.22 (10th Cir. 2009) (taking judicial notice of
materials on the websites of two federal agencies); see also Winzler v.
Toyota Motor Sales U.S.A., Inc., 681 F.3d 1208, 1213 (10th Cir. 2012)
(“The contents of an administrative agency’s publicly available files . . .
traditionally qualify for judicial notice . . . .”).
(the Federal Reserve Bank of Kansas City). This request would ordinarily

be considered routine for the Federal Reserve Bank of Kansas City. But the

Federal Reserve Bank of Kansas City learned from a third party that Fourth

Corner wanted to service marijuana-related businesses in a state that had

legalized these businesses. 2 The Federal Reserve Bank of Kansas City

refused to grant the master account, prompting Fourth Corner to sue for a

declaratory judgment and an injunction.

The Federal Reserve Bank of Kansas City moved to dismiss, arguing

in part that Fourth Corner would use the master account to violate federal

drug laws. The district court agreed and dismissed the amended complaint.

In my view, this ruling was erroneous for two reasons. First, the

district court should have presumed that Fourth Corner would follow the

law as determined by the court. Second, in the amended complaint, Fourth

2
In the amended complaint, Fourth Corner identified the documents
submitted to the Federal Reserve Bank of Kansas City for a master
account. These documents did not include the business plan or any other
document describing the type of business to be conducted. Apparently,
however, the Bank learned of the business plan from some other source. In
a letter, the Bank told Fourth Corner that a master account would be denied
for eight reasons, including Fourth Corner’s desire to service marijuana-
related businesses. See Part VI(C), below. Based on the allegations in the
amended complaint, this letter constituted the Bank’s first communication
to Fourth Corner about an unwillingness to issue a master account because
of Fourth Corner’s desire to service marijuana-related businesses. See GFF
Corp. v. Associated Wholesale Grocers, 130 F.3d 1381, 1384 (10th Cir.
1997) (stating that in considering a motion to dismiss for failure to state a
valid claim, the court can consider indisputably authentic copies of
documents referenced in the complaint and central to the plaintiff’s claim).

2
Corner promised to obey the law. By seeking a declaratory judgment,

Fourth Corner acknowledged that the court was the sole arbiter of the law.

Thus, the amended complaint indicates that Fourth Corner would obey a

ruling that servicing marijuana-related businesses is illegal. 3

I. Standard of Review

In this appeal, we engage in de novo review. Shimomura v. Carlson,

811 F.3d 349, 358 (10th Cir. 2015). This review requires us to determine

whether the amended complaint states a plausible claim for relief. Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009). In gauging the claim’s plausibility, we

credit all of the amended complaint’s well-pleaded factual allegations and

view them in the light most favorable to Fourth Corner. See Colby v.

Herrick, 849 F.3d 1273, 1279 (10th Cir. 2017).

II. The Amended Complaint and the District Court’s Dismissal

In the amended complaint, Fourth Corner stated that it would service

marijuana-related businesses only if authorized by federal law. Fourth

Corner argued that servicing these businesses had been legalized by recent

guidance from federal agencies. But in the amended complaint, Fourth

Corner promised that “[w]hatever the law is, [Fourth Corner] will obey.”

3
Fourth Corner also argues that its motion for summary judgment
should have been granted. Like my colleagues, I do not discuss the
summary-judgment ruling, for it became academic upon dismissal of the
amended complaint.

3
Appellant’s App’x at 240. Elsewhere in the amended complaint, Fourth

Corner committed to obey the law, stating:

[Fourth Corner’s charter] states [that Fourth Corner] is
“authorized to conduct business pursuant to all of the powers
conferred upon it by law, until this charter is suspended,
revoked or otherwise surrendered in the manner directed by
statute.” [Fourth Corner] takes this grant of authority to mean
it must comply with both state and federal law, and it intends
to do so.

Id. at 224-25. Four other allegations in the amended complaint reiterated

Fourth Corner’s intent to obey the law:

1. The plan to serve the [marijuana-related business]
segment of [Fourth Corner’s] prospective field of
membership would only be executed if authorized by state
and federal law.

Id. at 219.

2. The proposed credit union’s business plan was
straightforward – (i) build a Colorado state-chartered
credit union around a culture of compliance; . . . (iii) if
service of [marijuana-related businesses] is authorized by
state and federal law, charge credit union members that
required enhanced monitoring service fees commensurate
with the cost of the enhanced due diligence required by
[federal guidance from the United States Department of
the Treasury’s Financial Crimes Enforcement Network
and a memorandum from the Department of
Justice]; . . . and (vi) become a regulatory partner with
state and federal government to perform the “gatekeeper”
function as envisioned by [the Financial Crimes
Enforcement Network’s guidance] and the Bank Secrecy
Act . . . .

Id. at 219-20.

4
 3. [Fourth Corner] only intends to serve the [marijuana-
related business] segment of its prospective field of
membership if authorized by law.

Id. at 222.

4. [Fourth Corner] only intends to serve the potential
[marijuana-related business] segment of its membership if
authorized by state and federal law.

Id. at 237.

Fourth Corner also explained that if servicing marijuana-related

businesses is illegal, Fourth Corner would confine its business to servicing

members of social groups supporting the legalization of marijuana. This

part of Fourth Corner’s business plan was legal, and no one has suggested

otherwise. But servicing marijuana-related businesses is different, and the

district court properly concluded that this part of Fourth Corner’s plan

would have violated federal drug laws.

Upon drawing this conclusion, the district court interpreted Fourth

Corner’s promise to obey the law. In the district court’s view, Fourth

Corner was promising to follow its own understanding of the law, not to

obey the district court’s pronouncement of the law. Interpreted this way,

the promise gave the district court little confidence that Fourth Corner

would obey federal drug laws, for Fourth Corner had argued that servicing

marijuana-related businesses was legal. Suspicious that Fourth Corner

would follow its own understanding of the law rather than the court’s, the

district court granted the motion to dismiss.

5
III. Error in Dismissing the Amended Complaint

This ruling was erroneous in two ways.

First, the district court improperly discounted Fourth Corner’s stated

intent to obey federal law. This allegation of intent constituted a factual

allegation. See, e.g., United States v. Hayes, 477 F.2d 868, 873 (10th Cir.

1973) (recognizing that “actual intent or state of mind” involves a factual

inquiry). And like any other factual allegation, this one should have been

interpreted favorably to Fourth Corner (as the non-movant). See Part I,

above.

At a bench trial, the district court could freely decide whether Fourth

Corner actually intended to obey federal law. See Mathis v. Huff & Puff

Trucking, Inc., 787 F.3d 1297, 1305 (10th Cir. 2015) (indicating that in a

bench trial, the district court “has the exclusive function of appraising

credibility” (internal quotation marks omitted)). But here the district court

evaluated the validity of Fourth Corner’s assertion at the motion-to-dismiss

stage. At this stage, the district court must accept as true all of Fourth

Corner’s well-pleaded factual allegations and view them in the light most

favorable to Fourth Corner. See Part I, above. The district court was not

free to scuttle these requirements.

Second, the district court should have presumed that Fourth Corner

would obey the ruling that servicing marijuana-related businesses is

illegal. See, e.g., Royal Coll. Shop, Inc. v. N. Ins. Co. of N.Y., 895 F.2d

6
670, 682-83 (10th Cir. 1990) (discussing the presumption that a person

obeys the law); NLRB v. Shawnee Indus., Inc., 333 F.2d 221, 225 (10th Cir.

1964) (“It is presumed that a person obeys the law and discharges the

obligations imposed on him by law.”). This presumption is especially

fitting here, where Fourth Corner acknowledged the court’s role as arbiter

of the law by the very act of asking for a declaratory judgment. 4 See Specht

v. Jensen, 853 F.2d 805, 807 (10th Cir. 1988) (“[I]t is axiomatic that the

judge is the sole arbiter of the law and its applicability.”). 5 But even

without this acknowledgment, the district court should have presumed that

Fourth Corner would abide by the ruling.

Nothing in the amended complaint overcame this presumption.

Indeed, as explained above, the amended complaint indicated that Fourth

Corner intended to obey the law. And by acknowledging the court’s role as

4
The proposed declaratory judgment involved the right to a master
account, not the legality of servicing marijuana-related businesses. But by
seeking a declaratory judgment, Fourth Corner acknowledged the court’s
role as arbiter of the law.
5
In my view, Fourth Corner unambiguously acknowledged the court’s
role as the arbiter of what was legal. But any lingering doubt would have
been dispelled at the hearing on the motion to dismiss. There Fourth
Corner expressly embraced the court’s status as arbiter of the law: “Your
Honor, . . . with every word you speak, you are the law. . . . I’m listening
to every word you say, and I’m looking to the Court for direction, to the
extent that the Court can provide it.” Appellant’s App’x at 643-44; accord
id. at 691-92 (indicating that Fourth Corner would obey the court’s
conclusion, articulated during the hearing, that federal guidance had not
authorized financial institutions to service marijuana-related businesses).

7
arbiter of the law, Fourth Corner’s promise to obey the law meant that

Fourth Corner would obey the court’s eventual pronouncement of the law.

Nonetheless, the district court interpreted Fourth Corner’s promise to

obey the law in a way that conflicted with the amended complaint as a

whole and Fourth Corner’s acknowledgment of the court as arbiter of the

law. As stated above, Fourth Corner effectively asserted that it intended to

obey the district court. Given this assertion, it makes little sense to

interpret Fourth Corner’s promise merely as a pledge to obey what Fourth

Corner already thought the law was. At this stage of the proceedings, the

only reasonable interpretation is that Fourth Corner promised to acquiesce

in the district court’s pronouncement of the law. 6

The district court’s contrary interpretation was erroneous because it

rested on misapplication of the standard on a motion to dismiss and

abandonment of the presumption that Fourth Corner would follow the law.

6
This interpretation is supported by Fourth Corner’s discussion at the
hearing on the motion to dismiss. The district court asked whether Fourth
Corner would stipulate to “an order that enjoins [Fourth Corner] from
serving [marijuana-related businesses] unless and until the Controlled
Substances Act is amended to permit marijuana possession.” Id. at 629-30.
Fourth Corner answered that it would stipulate to such an order. Id. On
appeal, Fourth Corner made essentially the same commitment at oral
argument.

8
IV. The Federal Reserve Bank of Kansas City’s Alternative
Arguments for Affirmance

The Federal Reserve Bank of Kansas City contends that we may

affirm the dismissal on two alternative grounds:

1. Fourth Corner lacks a statutory right to a master account.

2. Fourth Corner’s charter is preempted because it poses an
obstacle to Congress’s goals under the Controlled Substances
Act.

I would reject both arguments.

A. Fourth Corner’s Statutory Right to a Master Account

Fourth Corner argues that it is entitled to a master account under 12

U.S.C. § 248a(c)(2). The Federal Reserve Bank of Kansas City counters

that federal law does not entitle Fourth Corner to a master account. Though

Fourth Corner relies on § 248a(c)(2), the Federal Reserve Bank of Kansas

City contends that it obtained discretion under 12 U.S.C. § 342. According

to Federal Reserve Bank of Kansas City, § 342 creates discretion on

whether to issue a master account.

The district court properly rejected this argument, for § 248a(c)(2)

unambiguously entitles Fourth Corner to a master account. This

interpretation of § 248a(c)(2) is supported by (1) repeated interpretations

by the Board of Governors and regional Federal Reserve Banks, (2) the

legislative history, and (3) the longstanding interpretation of this statute by

other courts and academics.

9
 1. The Meaning of § 248a(c)(2)

Fourth Corner argues that the right to a master account is

nondiscretionary under 12 U.S.C. § 248a(c)(2). This section was enacted as

part of the 1980 Deregulation and Monetary Control Act and states:

The schedule of fees prescribed pursuant to this section shall
be based on the following principles:
. . .
(2) All Federal Reserve bank services covered by the fee
schedule shall be available to nonmember depository
institutions and such services shall be priced at the same fee
schedule applicable to member banks . . . .
12 U.S.C. § 248a(c)(2) (2012). 7 In my view, this language unambiguously

entitles Fourth Corner to a master account.

a. The Statute’s Unambiguous Language

Interpretation of § 248a(c)(2) begins with its language. Hughes

Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999); United States v.

Handley, 678 F.3d 1185, 1189 (10th Cir. 2012). The statutory language

does two things: It ensures universal access to certain bank services and

provides uniform pricing for them.

The statute uses the term “shall,” which indicates a congressional

command. See Lopez v. Davis, 531 U.S. 230, 241 (2001) (“Congress used

‘shall’ to impose discretionless obligations . . . .”). Thus, the statute
7
The Federal Reserve System classifies financial institutions as either
member banks or nonmember depository institutions. Member banks own
shares of a Federal Reserve Bank and elect most members of the board of
directors. Nonmember depository institutions do not.

10
commands Federal Reserve Banks to make all services covered by “the fee

schedule” available to “nonmember depository institutions.” In this way,

the statute establishes open access to Federal Reserve services for

nonmember depository institutions. Fourth Corner is a nonmember

depository institution; thus, Fourth Corner is entitled to obtain the services

covered in the fee schedule.

The Federal Reserve Bank of Kansas City and the Federal Reserve

System’s Board of Governors, as amicus curiae, argue that the issuance of

master accounts is omitted from the fee schedule’s list of services. Fourth

Corner disagrees, invoking a catchall provision that requires Federal

Reserve Banks to provide nonmember depository institutions with access to

“any new services” offered through the Federal Reserve System. 12 U.S.C.

§ 248a(b)(8).

For the sake of argument, I assume that the issuance of master

accounts does not constitute a new service covered by this catchall

provision. Even with this assumption, § 248a(c)(2) would require the

issuance of master accounts, for all services offered by the Federal Reserve

System are conditioned on the issuance of master accounts. Op. of Judge

Moritz at 3-4; see also Fed. Res. Banks, Operating Circular No. 7, Book-

Entry Securities Account Maintenance and Transfer Services ¶¶ 3.19, 3.21,

& 5.2 (eff. June 30, 2016) (stating that each entity with a Federal Reserve

securities account must maintain a master account to send or receive

11
transfers with assignment of credit to the sender and debit to the receiver).

Without a master account, none of the fee schedule’s services would be

available. Thus, a nonmember depository institution like Fourth Corner can

operate only by obtaining its own master account or using a middleman

that has a master account.

Nonetheless, the Bank contends that it can deny a master account

because the issuance of master accounts is not specifically listed in the

services covered by § 248a(c)(2). This contention flies in the face of

Congress’s unambiguous command to make services in the fee schedule

available to nonmember depository institutions. See United States v.

Walker, 947 F.2d 1439, 1443-44 (10th Cir. 1991) (rejecting a construction

of a statute that “would allow a bank officer to circumvent [congressional]

intent”). I would reject this effort to subvert congressional intent.

The Federal Reserve Bank of Kansas City and the Board of

Governors protest that Fourth Corner’s interpretation reads a new word

into § 248a(c)(2): “all.” The statute does not say that Federal Reserve

services “shall be available to all nonmember depository institutions.”

Instead, the statute requires “all Federal Reserve bank services” to be made

available to “nonmember depository institutions.” 12 U.S.C. § 248a(c)(2).

Thus, the Federal Reserve Bank of Kansas City and the Board of Governors

reason, regional Federal Reserve Banks need not make their services

available to all nonmember depository institutions.

12
 I disagree. In my view, the statute would have the same meaning

regardless of whether the word “all” preceded the phrase “nonmember

depository institutions.” In either case, regional Federal Reserve Banks

would be obligated to make the designated services available to all

nonmember depository institutions.

If the word “all” had been included, it would have served as an

indefinite adjective, modifying the phrase “nonmember depository

institutions.” See Bryan A. Garner, The Chicago Guide to Grammar,

Usage, and Punctuation 60 (2016) (defining indefinite adjectives); see also

United States v. Legg, 157 F.2d 990, 992 (4th Cir. 1946) (recognizing that

“all” can constitute an indefinite adjective); Clapp v. Heiner, 51 F.2d 224,

226 (3d Cir. 1931) (same); Lewis v. Moore, 80 Mass. 184, 185 (1859)

(same). Had “all” been included, the phrase “shall be available to all

nonmember depository institutions” could have meant “shall be available

to each and every nonmember depository institution.” See Webster’s Third

New International Dictionary 54 (Philip Babcock Gove ed., 1993)

(defining one adjectival form of “all”).

But even without the word “all,” the phrase “shall be available to

nonmember depository institutions” means “shall be available to each and

every nonmember depository institution.” Omitting “all” resulted in the

13
absence of a restrictive modifier 8 for the phrase “nonmember depository

institutions.” Without a restrictive modifier, the phrase “nonmember

depository institutions” is an inclusive term that includes all nonmember

depository institutions. See W. Minn. Mun. Power Agency v. Fed. Energy

Regulatory Comm'n, 806 F.3d 588, 592 (D.C. Cir. 2015) (concluding that

the terms “states” and “municipalities” include all states and municipalities

because of the absence of language qualifying or restricting the terms

“states” and “municipalities”); Gares v. Willingboro Twp., 90 F.3d 720,

726 (3d Cir. 1996) (interpreting the plain meaning of the noun phrase

“prevailing plaintiffs” to include all prevailing plaintiffs); Leininger v.

Pioneer Nat’l Latex, 875 N.E.2d 36, 43 (Ohio 2007) (interpreting the term

“Damages,” without a restrictive modifier, as “an inclusive term embracing

the panoply of legally recognized pecuniary relief” (internal quotation

marks omitted)).

In similar circumstances, drafters of statutes are often cautioned

against unnecessarily inserting the adjective “all” before a plural noun

(like “nonmember depository institutions”). See, e.g., 101 Pa. Code

§ 15.142(c) (stating that “it is almost never necessary to use” “indefinite

8
A restrictive modifier is a word in a noun phrase that restricts the
meaning of the noun. See William Frawley, Linguistic Semantics 79
(2013).

14
adjectives” such as “all” “[i]f the subject of the sentence is plural”). For

example, one drafting treatise states:

a. Use adjectives such as “each,” “every,” “any,” “all,”
“no,” and “some” (technically known as “pronominal
indefinite adjectives”) only when necessary.

b. If the subject of the sentence is plural, it is almost never
necessary to use this kind of adjective (e.g., Majors of the
Regular Army shall . . . . ; Majors of the Regular Army
may not . . . .).

William P. Statsky, Legislative Analysis and Drafting 184 (2d ed. 1984)

(emphasis added); see also Reed Dickerson, Legislative Drafting 81 (1954)

(same quotation with a different example of plural nouns). Similarly, a

scholar advises:

“All” is frequently used unnecessarily to give a spurious kind
of emphasis. Constructions may involve tireless
circumlocution. For example—

All those persons who are elected members of the Board
shall hold office for three years.

It is quite adequate to say—

Elected members of the Board shall hold office for three
years.

G.C. Thornton, Legislative Drafting 77 (1970); see also Lawrence E.

Filson & Sandra L. Strokoff, The Legislative Drafter’s Desk Reference

§ 22.10, at 297-98 (2d ed. 2008) (“The terms ‘any,’ ‘each,’ and ‘every’

should ideally be reserved for expressions that require unusual emphasis,

or for those cases where the use of ‘a’ or ‘an’ might permit the unintended

15
interpretation that the obligation is to be discharged (or the privilege

exhausted) by applying it to a single member of the class instead of to all

of them.”).

As these drafting treatises suggest, it was unnecessary to put “all”

before a plural noun like “nonmember depository institutions.” The

meaning was the same with or without the adjective “all.” Either way,

§ 248a(c)(2) unambiguously entitled all nonmember depository institutions

to a master account.

b. Past Interpretations by the Board of Governors

As noted above, the Board of Governors argues as amicus curiae that

§ 248a(c)(2) does not entitle all nonmember depository institutions to

Federal Reserve services. This position is new and unique for the Board.

Before this litigation, the Board of Governors had uniformly

interpreted the 1980 Deregulation and Monetary Control Act to extend

Federal Reserve services to all “depository institutions.” See, e.g.,

Policies: The Federal Reserve in the Payments System, Bd. of Governors of

the Fed. Reserve Sys. (1990), available at http://www.federalreserve.gov/

paymentsystems/pfs_frpaysys.htm (“Federal Reserve payment services are

available to all depository institutions . . . .”); Policies: Standards Related

to Priced-Service Activities of the Federal Reserve Banks, Bd. of

Governors of the Fed. Reserve Sys. (1984) (“The Monetary Control Act of

1980 . . . has expanded the Federal Reserve’s role by requiring the Federal

16
Reserve to provide its services to all depository institutions on an

equitable basis . . . .”), available at http://www.federalreserve.gov/

paymentsystems/pfs_standards.htm; Policies: Principles for the Pricing of

the Federal Reserve Bank Services, Bd. of Governors of the Fed. Reserve

Sys. (1980) (“Services covered by the fee schedule are available to all

depository institutions.”), available at http://www.federalreserve.gov/

paymentsystems/pfs_principles.htm.

Even now, the Board of Governors continues to announce on its

website that the 1980 Deregulation and Monetary Control Act gives “all

depository institutions access to the Federal Reserve’s payment services.”

Federal Reserve’s Key Policies for the Provision of Financial Services:

About, Bd. of Governors of the Fed. Reserve Sys., https://www.

federalreserve.gov/paymentsystems/pfs_about.htm (last updated Oct. 28,

2016) (emphasis added). Thus, the amicus brief in this case appears to be

the only time that the Board of Governors has doubted the right of every

nonmember depository institution to access the Federal Reserve’s

services—even though the adjectival “all” was omitted before the statutory

phrase “nonmember depository institutions.”

Ignoring its past pronouncements and current view expressed on its

own website, the Board of Governors argues that we should defer to its

litigation position here. I would not do so for two reasons.

17
 First, § 248a(c)(2) is not ambiguous. The plain text of § 248a(c)(2)

indicates that nonmember depository institutions are entitled to purchase

services from Federal Reserve Banks. To purchase these services, a master

account is required. Thus, nonmember depository institutions, such as

Fourth Corner, are entitled to master accounts. See Part IV(A)(1)(a),

above. The Board of Governors’ current litigation position cannot trump

the plain meaning of the statute. See Chevron, U.S.A., Inc. v. Nat. Res. Def.

Council, Inc., 467 U.S. 837, 842-43 (1984) (“If the intent of Congress is

clear, that is the end of the matter; for the court, as well as the agency,

must give effect to the unambiguously expressed intent of Congress.”).

Second, this litigation position conflicts with the Board of

Governors’ longstanding interpretation of the statute. Indeed, even now the

Board of Governors continues to state on its webpage that federal law

gives all depository institutions access to the Federal Reserve’s payment

services. As a result, the Board’s current interpretation is “‘entitled to

considerably less deference’ than a consistently held agency view.”

Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 515 (1994) (quoting

I.N.S. v. Cardoza-Fonseca, 480 U.S. 421, 446 n.30 (1987)); see also

William N. Eskridge, Jr., Philip P. Frickey & Elizabeth Garrett,

Legislation and Statutory Interpretation, 334 (2d ed. 2006) (“Agency

litigating positions are generally not entitled to Chevron deference, in part

because the agency is not exercising delegated authority when it takes

18
litigating positions and in part because of fairness concerns that the agency

as advocate will not develop interpretations solely through the use of

neutral expertise.”).

c. Interpretations by Officials with the Regional Federal
Reserve Banks

The Board of Governors’ past interpretations of the statute are

widely shared by officials of the regional Federal Reserve Banks, who join

the chorus of officials recognizing that the 1980 Deregulation and

Monetary Control Act extends Federal Reserve services to all nonmember

depository institutions. See, e.g., J.L. Jackson & Willis J. Winn, Foreword

to Federal Reserve Bank of Cleveland 1980 Annual Report 2, 2 (1981)

(stating that in light of the 1980 Deregulation and Monetary Control Act,

“[o]ur services will now be available to all depository institutions”),

available at https://www.clevelandfed.org/~/media/content/newsroom%20

and%20events/publications/annual%20reports/ar%201980%20the%20

monetary%20control%20act%20mandate%20for%20change%20pdf.pdf?la=

en; Elijah Brewer III, The Depository Institutions Deregulation and

Monetary Control Act of 1980, Econ. Perspectives, Sept.-Oct. 1980, at 3, 4

(stating that the 1980 Deregulation and Monetary Control Act requires the

Federal Reserve to “grant all depository institutions access to [Federal

Reserve] services”), available at https://www.chicagofed.org/digital_

assets/publications/economic_perspectives/1980/ep_sep_oct1980_part1_

19
brewer.pdf; Lynn Elaine Browne, The Evolution of Monetary Policy and

the Federal Reserve System Over the Past Thirty Years: An Overview, New

Eng. Econ. Rev., Jan.-Feb. 2001, at 3, 8 (stating that the 1980 Deregulation

and Monetary Control Act required the Federal Reserve to make Federal

Reserve services “available to all depository institutions”), available at

https://www. bostonfed.org/-/media/Documents/neer/neer101a.pdf; Anatoli

Kuprianov, The Monetary Control Act and the Role of the Federal Reserve

in the Interbank Clearing Market, Econ. Rev., July-Aug. 1985, at 23

(stating that the 1980 Deregulation and Monetary Control Act required

Federal Reserve services to be “made available to all depository

institutions on equal terms”), available at https://www.richmondfed.org/-

/media/richmondfedorg/publications/research/economic_review/1985/pdf/

er710403.pdf; Gary C. Zimmerman, The Pricing of Federal Reserve

Services Under the MCA, Econ. Rev., Winter 1981, at 22 (1981) (stating

that the 1980 Deregulation and Monetary Control Act “provides for access

by all depository institutions to major [Federal Reserve] services”),

available at http://www.frbsf.org/education/files/81-1_22-40.pdf.

d. Legislative History

If § 248a(c)(2) were ambiguous, we could rely not only on this

consensus of interpretation but also on Congress’s own expression of its

intent. Doing so, we find that Congress hoped to do exactly what it did do:

establish open access to Federal Reserve services.

20
 In the years leading up to enactment of the 1980 Deregulation and

Monetary Control Act, Congress sought to establish open access to Federal

Reserve services. See, e.g., H.R. Rep. No. 95-1590, at 20 (1978) (“The

[House Committee on Banking Finance and Urban Affairs] believes that

the wide access to Federal Reserve services for nonmember banks

authorized by this bill will insure [sic] that a basic level of services is

available to all banks throughout this country on a nondiscriminatory

basis.”). This objective was ultimately implemented through 12 U.S.C.

§ 248a(c)(2). See, e.g., 126 Cong. Rec. 6250 (1980) (Conf. Rep.) (“House

amendment includes a provision for the Federal Reserve to . . . open access

to [Federal Reserve] services to all depository institutions on the same

terms and conditions as member banks.”). Thus, the legislative history

supports the widespread agreement that the 1980 Deregulation and

Monetary Control Act entitles every nonmember depository institution to

Federal Reserve services.

e. Interpretation of § 248a(c)(2) by Other Circuits and
Academics

This interpretation of § 248a(c)(2) is also supported by the case law

and academic commentary.

Two circuits have interpreted § 248a(c)(2) to establish open access to

Federal Reserve services. See Greater Buffalo Press, Inc. v. Fed. Reserve

Bank of N.Y., 866 F.2d 38, 40 (2d Cir. 1989) (stating that the 1980

21
Deregulation and Monetary Control Act made “check clearing services . . .

available to all banks”); Jet Courier Servs., Inc. v. Fed. Reserve Bank of

Atlanta, 713 F.2d 1221, 1222-23 (6th Cir. 1983) (stating that the 1980

Deregulation and Monetary Control Act made Federal Reserve services

“available to all banks”). The Federal Reserve Bank of Kansas City argues

that these interpretations appeared in dicta. But dicta or not, these

interpretations support open access to Federal Reserve services. By

contrast, no federal court has interpreted the statute as the Federal Reserve

Bank of Kansas City and the Board of Governors do.

Academics have agreed with our sister circuits, interpreting

§ 248a(c)(2) to entitle all depository institutions to Federal Reserve

services. See, e.g., Timothy K. Armstrong, Chevron Deference and Agency

Self-Interest, 13 Cornell J.L. & Pub. Pol’y 203, 231 n.148 (2004) (“[T]he

[1980 Deregulation and Monetary Control Act] requires all services to be .

. . made available to all depository institutions on equal terms.”); Thomas

C. Baxter, Jr. & James H. Freis, Jr., Fostering Competition in Financial

Services: From Domestic Supervision to Global Standards, 34 New Eng. L.

Rev. 57, 70 (1999) (“The Federal Reserve Banks are required by the [1980

Deregulation and Monetary Control Act] to provide all domestic depository

institutions, including U.S. branches of foreign banks, with payments

services ranging from currency and check collection to wire transfer and

securities settlement.” (footnote omitted)); Fred H. Miller, Robert G.

22
Ballen, & Hal S. Scott, Commercial Paper, Bank Deposits and Collections,

and Commercial Electronic Fund Transfers, 39 Bus. Law. 1333, 1365

(1984) (“The [1980 Deregulation and Monetary Control Act] . . . required

the Federal Reserve, for the first time, to provide access to virtually all of

its services to all depositary institutions on the same terms and conditions,

and to charge for such services.”). These interpretations of § 248a(c)(2)

support the widespread recognition that all nonmember depository

institutions are entitled to Federal Reserve services.

2. Section 342

The Federal Reserve Bank of Kansas City and the Board of

Governors contend that 12 U.S.C. § 342 creates discretion on whether to

issue a master account. This interpretation conflicts with (1) the statutory

text and (2) Supreme Court precedent interpreting an older, virtually

identical version of § 342.

Section 342 reads:

Any Federal Reserve bank may receive from any of its member
banks, or other depository institutions, and from the United
States, deposits of current funds in lawful money, national-
bank notes, Federal reserve notes, or checks, and drafts,
payable upon presentation or other items and also, for
collection, maturing notes and bills . . . .
12 U.S.C. § 342 (emphasis added).
Unlike § 248a(c)(2), § 342 is not a congressional command. The use

of “may” in § 342 indicates that Federal Reserve Banks have discretion.

Jama v. Immigration & Customs Enf’t, 543 U.S. 335, 346 (2005) (“The
23
word ‘may’ customarily connotes discretion.”). But this discretion does not

encompass the issuance of master accounts.

Section 342 addresses the types of monetary instruments that Federal

Reserve Banks may receive for deposit or collection. See Farmers’ &

Merchants’ Bank of Monroe v. Fed. Reserve Bank of Richmond, 262 U.S.

649, 662 (1923) (“But neither section 13, nor any other provision of the

Federal Reserve Act, imposes upon reserve banks any obligation to receive

checks for collection. The act merely confers authority to do so.”). But

§ 342 does not address which institutions can access Federal Reserve

services; that subject is governed instead by § 248a(c)(2), which

establishes open access to Federal Reserve services for all nonmember

depository institutions. As a result, § 342 does not affect Fourth Corner’s

entitlement to a master account.

* * *

Presenting an alternative ground to affirm, the Federal Reserve Bank

of Kansas City argues that Fourth Corner is not entitled to a master

account. I disagree. Under § 248a(c)(2), Fourth Corner is entitled to a

master account based on § 248a(c)(2)’s plain text, past and present

interpretations (outside of this litigation) by the Board of Governors,

interpretations by officials of regional Federal Reserve Banks, legislative

history, and interpretations by other courts and academics.

24
V. The Effect of Partial Preemption

The Federal Reserve Bank of Kansas City also invokes obstacle

preemption, 9 contending that Fourth Corner’s charter is preempted because

it poses an obstacle to Congress’s goals under the Controlled Substances

Act. According to the Federal Reserve Bank of Kansas City, this

preemption forecloses Fourth Corner’s right to operate a credit union. I

disagree.

Colorado granted Fourth Corner a charter, which is a one-page,

boilerplate document that authorizes Fourth Corner “to conduct business

pursuant to all of the powers conferred upon it by law.” Appellant’s App’x

at 224. 10 The charter does not mention marijuana.

Nonetheless, the Federal Reserve Bank of Kansas City invokes

obstacle preemption based on a four-step argument:

1. Fourth Corner’s application for a charter signaled an intent to
service marijuana-related businesses.

9
Obstacle preemption exists “where ‘under the circumstances of [a]
particular case, [the challenged state law] stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of
Congress.’” Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372-73
(2000) (alterations in original) (quoting Hines v. Davidowitz, 312 U.S. 52,
67 (1941)).
10
We can consider the charter because Fourth Corner quoted from the
charter in the amended complaint and the charter is central to Fourth
Corner’s claim. See GFF Corp. v. Associated Wholesale Grocers, 130 F.3d
1381, 1384 (10th Cir. 1997).

25
 2. Colorado therefore issued the charter in order to facilitate
violations of federal law.

3. Because Colorado granted the charter for this purpose, the
charter poses an obstacle to the goals underlying the Controlled
Substances Act.

4. Thus, the charter is preempted.

In evaluating this argument, we can make four assumptions favoring the

Federal Reserve Bank of Kansas City:

1. The reason for the charter was to facilitate violations of federal
law.

2. Because Colorado granted the charter for this purpose, the
charter authorizes Fourth Corner to violate federal law.

3. The charter therefore poses an obstacle to Congress’s goals
under the Controlled Substances Act.

4. Preemption under the Controlled Substances Act is not limited
to impossibility preemption. 11

11
Impossibility preemption exists “where it is impossible for a private
party to comply with both state and federal law . . . .” Crosby v. Nat’l
Foreign Trade Council, 530 U.S. 363, 372 (2000). Some courts have held
that preemption under the Controlled Substances Act is limited to
impossibility preemption. For instance, in County of San Diego v. San
Diego NORML, the court stated that

[b]ecause Congress provided that the [Controlled Substances
Act] preempted only laws positively conflicting with the
[Controlled Substances Act] so that the two sets of laws could
not consistently stand together, and omitted any reference to an
intent to preempt laws posing an obstacle to the [Controlled
Substances Act], we interpret title 21 United States Code
section 903 as preempting only those state laws that positively
conflict with the [Controlled Substances Act] so that
simultaneous compliance with both sets of laws is impossible.

26
Even with these assumptions, the Federal Reserve Bank of Kansas City’s

argument would not justify the wholesale denial of a master account.

Under the preemption doctrine, “state law is displaced only ‘to the

extent that it actually conflicts with federal law.’” Dalton v. Little Rock

Family Planning Servs., 516 U.S. 474, 476 (1996) (quoting Pacific Gas &

Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S.

190, 204 (1983)). Thus, “‘a federal court should not extend its invalidation

of a statute further than necessary to dispose of the case before it.’” Id.

(quoting Brockett v. Spokane Arcades, Inc., 472 U.S. 491, 502 (1985)); see

also Planned Parenthood of Ind., Inc. v. Comm’r of Ind. State Dept. of

Health, 699 F.3d 962, 985 (7th Cir. 2012) (applying this principle in the

obstacle-preemption context).

Under this principle, Fourth Corner’s charter would be preempted

only to the extent that it authorizes service of marijuana-related

81 Cal. Rptr. 3d 461, 480-81 (Cal. Ct. App. 2008).

The Federal Reserve Bank of Kansas City argues that County of San
Diego lacks persuasive value because it preceded the Supreme Court’s
opinion in Wyeth v. Levine, 555 U.S. 555 (2009). But Wyeth served only to
clarify the standard for obstacle preemption in the context of drug-labeling
regulation and state tort suits; Wyeth did not address whether the
Controlled Substances Act can preempt state law under an obstacle-
preemption theory. Nonetheless, we can assume for the sake of argument
that preemption under the Controlled Substances Act is not limited to
impossibility preemption.

27
businesses. Thus, Fourth Corner would still be authorized to pursue its

broader mission of servicing the supporters of legalization.

Because the charter would not be completely invalidated, Fourth

Corner would remain entitled to a master account. Therefore, I would

reject the Federal Reserve Bank of Kansas City’s argument on obstacle

preemption. Rejecting this argument, I would reverse the dismissal.

VI. Prudential Ripeness

Judge Matheson concludes that the appeal is prudentially unripe

because (1) the Federal Reserve Bank of Kansas City might grant a master

account upon a new application with the assurances that Fourth Corner has

made in court proceedings and (2) postponement of judicial review would

not cause Fourth Corner a significant hardship. I disagree in light of the

amended complaint and the parties’ representations to the district court.

Together, they show with relative certainty that (1) the Federal Reserve

Bank of Kansas City will refuse to provide a master account even with an

unambiguous promise by Fourth Corner to refrain from servicing

marijuana-related businesses and (2) dismissal would result in significant

hardship for Fourth Corner, preventing it from accessing basic Federal

Reserve services for any patrons. 12

12
As Judge Moritz states, Fourth Corner represented that it had tried
and failed to obtain a correspondent relationship with another financial
institution that had a master account. Op. of Judge Moritz at 4 n.2.

28
 A. The Doctrine of Prudential Ripeness

“The ripeness doctrine aims to prevent courts ‘from entangling

themselves in abstract disagreements’ by avoiding ‘premature

adjudication.’” Awad v. Ziriax, 670 F.3d 1111, 1124 (10th Cir. 2012)

(quoting Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967), abrogated on

other grounds by Califano v. Sanders, 430 U.S. 99, 105 (1977)). Ripeness

stems not only from Article III of the Constitution but also from prudential

considerations. Id. In applying these prudential considerations, we consider

“both the fitness of the issues for judicial decision and the hardship to the

parties of withholding court consideration.” United States v. White, 244

F.3d 1199, 1202 (10th Cir. 2001) (quoting Abbott Labs., 387 U.S. at 149).

B. Until we ordered supplemental briefing on prudential
ripeness, the parties had never raised this issue.

Roughly six months after oral argument, the panel ordered

supplemental briefing on whether we should consider prudential ripeness

sua sponte. Prior to this order, the parties had never mentioned a concern

about prudential ripeness.

As Judge Matheson states, we have the power to raise the issue sua

sponte. See Nat’l Park Hosp. Ass’n v. Dep’t. of Interior, 538 U.S. 803, 808

(2003) (“[E]ven in a case raising only prudential concerns, the question of

29
ripeness may be considered on a court’s own motion.”). 13 But having this

power does not mean that we should exercise it. And even if we were to

consider the issue sua sponte, we would have little reason to regard the

case as unripe.

C. Fitness of the Issue for a Judicial Decision

As discussed above, the first factor involves fitness of the issue for a

judicial decision. See Part VI(A), above. Here the issue involves the

sufficiency of the complaint. In my view, this issue is fit for a judicial

decision.

In assessing fitness for a judicial decision, we focus on whether

adjudication of this issue would turn on purely legal issues or would

instead require facts that may not be sufficiently developed. See Kan.

Judicial Rev. v. Stout, 519 F.3d 1107, 1118 (10th Cir. 2008). The

sufficiency of a complaint is a question of law, and that question of law is

not “fact-based.” See Carabajal v. City of Cheyenne, 847 F.3d 1203, 1212

(10th Cir. 2017) (stating that “the sufficiency of a complaint is a question

13
The U.S. Supreme Court has indicated that the prudential-ripeness
doctrine lies in tension with federal courts’ virtually unflagging obligation
to hear and decide cases within their jurisdiction. Susan B. Anthony List,
___ U.S. ___, 134 S. Ct. 2334, 2347 (2014); see Lexmark Int’l, Inc. v. Static
Control Components, Inc., ___ U.S. ___, 134 S. Ct. 1377, 1386 (2014)
(indicating that tension exists between prudential requirements and the
federal courts’ obligation to hear and decide cases when jurisdiction
exists); see also Reddy v. Foster, 845 F.3d 493, 501 n.6 (1st Cir. 2017)
(stating that in Susan B. Anthony List, the Supreme Court “cast a measure
of doubt upon ripeness’s prudential dimensions”).

30
of law”); Ashcraft v. Iqbal, 556 U.S. 662, 674 (2009) (“Evaluating the

sufficiency of a complaint is not a ‘fact-based’ question of law . . . .”). The

sufficiency of a complaint does not turn on facts in the real world; instead,

the sufficiency of a complaint turns solely on its allegations. Those

allegations must be credited regardless of what is happening in the real

world. See Part I, above. Thus, further factual development would not help

us decide the sufficiency of Fourth Corner’s amended complaint. This

complaint is either sufficient or not to state a valid claim. 14

14
Judge Matheson states that “we have found claims, and sometimes
entire cases, unripe at the motion-to-dismiss stage.” Op. of Judge
Matheson at 5. For this statement, he cites two of our opinions. But neither
opinion questioned the ripeness of an action when the appellate issue
involved the sufficiency of a complaint for purposes of a motion to
dismiss.

In the first case, Southern Utah Wilderness Alliance v. Palma, the
district court ordered dismissal based on a lack of standing rather than
insufficiency of the complaint. See S. Utah Wilderness All., 707 F.3d 1143,
1147 (10th Cir. 2013). In light of the reliance on standing, the district
court explained that it was basing the dismissal on Rule 12(b)(1) (which
involves subject-matter jurisdiction) rather than Rule 12(b)(6). S. Utah
Wilderness All. v. Palma, No. 2:07-CV-00199-CW, 2011 WL 2565198, at
*2 (D. Utah Apr. 4, 2011) (unpublished), aff’d & remanded, 707 F.3d 1143
(10th Cir. 2013). On appeal, we affirmed the dismissal, but held that the
case was not ripe for review. S. Utah Wilderness All., 707 F.3d at 1147.

In the second case, Salt Lake Tribune Publishing Co. v. Management
Planning, Inc., the district court addressed motions based on ripeness
(Rule 12(b)(1)) and failure to state a valid claim (Rule 12(b)(6)). Salt Lake
Tribune Pub. Co. v. Mgmt. Planning, Inc., No. 2:03-CV-565 TC, 2005 WL
2739148, at *4 (D. Utah Oct. 24, 2005) (unpublished), rev’d & remanded,
454 F.3d 1128 (10th Cir. 2006). In ruling on these motions, the district
court dismissed some claims on the ground that they were unripe. Salt Lake

31
 Two of the three members of the panel conclude that we have enough

information to decide the sufficiency of the amended complaint: I have

concluded that we have enough information to reverse, and Judge Moritz

has elsewhere concluded that we have enough information to affirm.

Though we differ in our conclusions, we share a belief that we have

enough information to decide whether the amended complaint is sufficient

under Rule 12(b)(6).

Judge Matheson states that “[t]he ripeness problem here is not the

product of a pleading defect,” but stems instead “from a lack of developed

facts.” Op. of Judge Matheson at 3 n.2. Essentially, Judge Matheson

expresses uncertainty over whether a concrete dispute remains between the

parties. His concern stems from one allegedly missing piece of

information: What would happen if Fourth Corner makes a promise to the

Federal Reserve Bank of Kansas City to service marijuana-related

businesses only if doing so is legal? But we already know with relative

Tribune Publ’g Co., 454 F.3d at 1140-41. On appeal, we held that only one
of those claims was unripe. Id. at 1141. We did not deem any other claims
unripe.

As these opinions indicate, we have upheld dismissals by finding
cases or claims unripe under the general ripeness doctrine discussed in
Abbott Labs. v. Gardner, 387 U.S. 136 (1967), abrogated on other grounds
by Califano v. Sanders, 430 U.S. 99, 105 (1977). But none of our published
opinions have deemed a case or claim unripe under this doctrine when the
district court had based dismissal on insufficiency of the complaint.
Neither has the Supreme Court.

32
certainty that this promise would not make any difference to the Bank.

Thus, this piece of information is not missing.

The Federal Reserve Bank of Kansas City provided Fourth Corner

with eight reasons for denying the master account; Fourth Corner’s desire

to service marijuana-related businesses was only one of the reasons. See

note 2, above. The importance of the other reasons became readily apparent

in the hearing on the motion to dismiss. There the district court discussed

those reasons with an attorney for the Federal Reserve Bank of Kansas

City. In this discussion, the district court questioned the Federal Reserve

Bank of Kansas City about whether it would be willing to provide a master

account if Fourth Corner agreed not to service marijuana-related

businesses “unless and until there’s congressional action that says they

can.” Appellant’s App’x at 656. The attorney responded: “I seriously doubt

it would make a difference . . . . I think it’s important to recall that there

were eight reasons that were given . . . for denying the account.” Id.

The district court sought clarification on whether the attorney knew

whether his client would take issue with granting a master account even if

Fourth Corner agreed not to service marijuana-related businesses absent

congressional authorization. Id. at 658. The attorney responded: “I know

that my client feels very strongly about the other reasons that were given

for denying the master account to [Fourth Corner].” Id.; see also id. at

660-61 (“I can’t stand here and say, if we carve out the marijuana-related

33
businesses, that solves the problems, because there are other very serious

issues that the bank has to take into consideration in deciding whether or

not to grant a master account.”).

The district court pressed further, instructing the attorney to identify

the “reasons . . . [that were] so important that [Fourth Corner] can’t even

serve the [legalization supporters].” Id. at 658. The attorney gave three

reasons. The first was a lack of insurance for depositors. The attorney

characterized the lack of insurance as “a very important reason.” Id. at

662. The attorney’s second reason was that Fourth Corner was a “[d]e novo

[financial] institution,” meaning that Fourth Corner had “no operational

track record to demonstrate that it [could] . . . carry the financial load of

maintaining a master account.” Id. at 658 (italics in original). The attorney

noted that the Federal Reserve Bank of Kansas City “believes it is very

important that they don’t give master accounts to de novo institutions.” Id.

at 665 (italics in original). The attorney’s third reason involved Fourth

Corner’s lack of capital, described as a problem inherent to new credit

unions. Id. at 662. According to the attorney, this lack of capital “creates

an operational problem because you have to have money to kind of run the

operation while it’s getting up and running.” Id.

At oral argument and in supplemental briefing, the Federal Reserve

Bank of Kansas City retreated, indicating that it might grant a master

account if Fourth Corner submitted a new application and promised not to

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service marijuana-related businesses. I find this eleventh-hour reversal

unpersuasive.

In both district court and our court, Fourth Corner has promised to

service marijuana-related businesses only if such service is legal. In the

face of these assurances, the Federal Reserve Bank of Kansas City has

continued to resist granting a master account to Fourth Corner. In light of

this continued resistance, we know with relative certainty that the Federal

Reserve Bank of Kansas City will continue to refuse a master account even

if Fourth Corner reiterates the promises that it has made in district court

and in our court. In these circumstances, the sufficiency of the amended

complaint is fit for a judicial decision.

D. Fourth Corner’s Hardship

Dismissal based on prudential ripeness would foist a substantial

hardship on Fourth Corner, and the Federal Reserve Bank of Kansas City

does not suggest otherwise. For example, during the delay caused by a

dismissal, Fourth Corner will remain unable to access any Federal Reserve

services. As a result, Fourth Corner will remain unable to conduct any

business, even with members of social groups supporting the legalization

of marijuana. See Neb. Pub. Power Dist. v. MidAmerican Energy Co., 234

F.3d 1032, 1039 (8th Cir. 2000) (indicating that in analyzing hardship,

courts may examine the impact of delayed judicial resolution on the

parties’ “ability to plan and to conduct business operations”).

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 E. Judge Matheson’s Proposed Requirement for Restarting this
Litigation

This hardship would be magnified under Judge Matheson’s approach.

Under his approach, Fourth Corner would need to submit a new application

to the Federal Reserve Bank of Kansas City. This application would consist

of not only the same materials that Fourth Corner has already submitted,

but also a conditional promise that Fourth Corner would service marijuana-

related businesses only if doing so is legal.

This conditional promise is the same one that already appears in the

amended complaint and that has been reiterated in oral argument in both

district court and our court. For four reasons, it would be inappropriate to

force Fourth Corner to follow Judge Matheson’s proposed requirement.

First, it is undisputed that the application for a master account does

not include any information about the applicant’s business plan. In making

this conditional promise, Fourth Corner would be sharing information

about its business plan with the Federal Reserve Bank of Kansas City. We

should hesitate to prohibit Fourth Corner (sua sponte) from going to court

until it does something that apparently deviates from the existing

procedure to obtain a master account.

Second, Fourth Corner has already made this conditional promise in

district court and in our court. What further is to be gained from making

this promise directly to the Federal Reserve Bank of Kansas City? If this

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conditional promise were going to sway the Federal Reserve Bank of

Kansas City, the Bank would already have issued a master account.

Nothing is stopping the Bank from issuing the master account based on the

conditional promise that has already been made in district court and in our

court.

Third, our decision today will apparently eliminate any possibility

that Fourth Corner would use a master account to service marijuana-related

businesses. In the amended complaint, Fourth Corner explained that it has

always intended to service marijuana-related businesses only if doing so is

legal. Today, two of the three panel members hold that servicing

marijuana-related businesses remains illegal under federal law.

With this holding by a panel majority, Fourth Corner will know that

servicing marijuana-related businesses is illegal. See Webbe v.

Commissioner, 902 F.2d 688, 689 (8th Cir. 1990) (discussing the weight

accorded to a concurrence joined by a panel majority). Therefore, we have

no reason to believe that Fourth Corner would intend to service marijuana-

related businesses after today’s issuance of our opinions. Indeed, in district

court and in our court, Fourth Corner expressly promised not to service

marijuana-related businesses upon a pronouncement like the one we make

today. As a result, it would make little sense for Fourth Corner to approach

the Federal Reserve Bank of Kansas City and promise to service marijuana-

related businesses only if such service is legal.

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 Fourth, imposing this requirement on Fourth Corner would magnify

the hardship arising out of this dismissal. Even if Fourth Corner

immediately approaches the Federal Reserve Bank of Kansas City and

promises not to service marijuana-related businesses, months may pass

before a decision is made on whether to grant the master account. The

amended complaint details the considerable delay that has already taken

place, with Fourth Corner waiting roughly nine months before it learned

that it would not get a master account. During the newly created delay,

Fourth Corner would be paralyzed, unable to litigate the right to a master

account or to obtain services that are indispensable for a credit union.

For these four reasons, we should decline to require Fourth Corner to

again request a master account with a promise apparently going beyond

existing procedures.

VII. Conclusion

The district court dismissed the amended complaint, reasoning that

Fourth Corner would use the master account to violate federal drug laws.

This ruling was erroneous. The district court should have presumed that

Fourth Corner would follow the court’s determination that servicing

marijuana-related businesses is illegal. And in the amended complaint,

Fourth Corner essentially promised to obey the law that would be set out in

the eventual declaratory judgment. In these circumstances, the district

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court had little reason to jettison the standard on a motion to dismiss and

rely instead on suspicions about what Fourth Corner would do.

The Federal Reserve Bank of Kansas City makes two alternative

arguments to affirm.

First, the Bank contends that financial institutions lack a right to a

master account. I would reject this contention based on § 248a(c)(2)’s text,

the consensus of persuasive interpretations, and legislative history.

Second, the Federal Reserve Bank of Kansas City invokes obstacle

preemption, arguing that Fourth Corner’s charter impedes Congress in

achieving its objectives under the Controlled Substances Act. But at most,

the charter would be preempted only to the extent that it authorizes Fourth

Corner to service marijuana-related businesses. Fourth Corner would still

be authorized to service supporters of the legalization of marijuana. Thus,

regardless of whether the charter is partially preempted, Fourth Corner

would be entitled to a master account. As a result, I would reverse the

dismissal.

Judge Matheson concludes that dismissal is appropriate on

prudential-ripeness grounds. I respectfully disagree. This appeal is fit for a

judicial decision, and dismissal would hurl a significant, unwarranted

hardship on Fourth Corner.

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