FDIC in-house proceedings
Burgess v. Federal Deposit Insurance Corporation
Date: March 20, 2026
Issue: Whether en banc review is warranted to rehear a three-judge Fifth Circuit panel decision holding that district courts lack authority to block Federal Deposit Insurance Corporation (FDIC) enforcement proceedings.
Case Summary: The full Fifth Circuit denied former Hering Bank CEO Cornelius Campbell Burgess’ petition for rehearing en banc, leaving in place a panel decision that district courts lack authority to block FDIC enforcement proceedings.
In SEC v. Jarkesy, the U.S. Supreme Court upheld a Fifth Circuit decision that concluded the SEC’s use of its in-house judicial forum unconstitutional under the Seventh Amendment when imposing civil money penalties (CMPs).
FDIC alleged that Cornelius Campbell Burgess abused his position while serving as president and CEO of Herring Bank. According to FDIC, Burgess used the bank’s corporate cards to pay his personal expenses. FDIC launched an enforcement proceeding against Burgess before an FDIC administrative law judge (ALJ). The ALJ determined Burgess should be permanently banned from the banking industry and ordered him to pay a $200,000 CMP. Burgess appealed the ALJ’s decision to FDIC, but his appeal was denied.
Afterward, Burgess sued FDIC, arguing its proceedings were unconstitutional on various grounds. Burgess claimed the proceeding deprived him of his Seventh Amendment right to a jury trial. He also claimed a tenure-protected ALJ presided over the proceeding and that the agency has an unconstitutionally structured board. The district court granted Burgess a preliminary injunction, but only on his claim that the procedure violated Burgess’ constitutional right to a jury trial. FDIC and Burgess both appealed to the Fifth Circuit, which stayed the appeals while the U.S. Supreme Court considered Jarkesy. ABA filed a coalition amicus brief supporting Burgess, emphasizing the banking agencies’ civil penalty enforcement actions are not broadly exempt under the “public rights” exception and that in-house banking enforcement actions raise serious constitutional concerns.
However, a three-judge panel unanimously ruled the Federal Deposit Insurance Act (FDIA) expressly strips district courts of subject-matter jurisdiction to enjoin ongoing FDIC enforcement proceedings, including those raising constitutional claims. The panel highlighted the statute’s clear language, stating that “no court shall have jurisdiction to affect by injunction or otherwise” the issuance or enforcement of FDIC orders, and concluded that Congress explicitly prohibited such lawsuits. The panel also explained that Congress created a detailed review scheme that channels challenges through the administrative process and into the courts of appeals after a final agency order is entered. Because of restrictions on when district courts may act, the panel concluded that the district court lacked jurisdiction and erred in granting injunctive relief.
The panel also rejected Burgess’s argument that constitutional claims require an exception to this jurisdictional bar. It explained that Supreme Court precedent does not require a heightened clear statement when Congress directs claims to a different forum instead of eliminating judicial review altogether. The panel emphasized the FDIA allows parties to raise constitutional claims during the administrative process and then seek review in a federal court of appeals after a final order is entered. The panel declined to address Burgess’s constitutional claims, reversed the district court’s injunction, and remanded the case with instructions to dismiss for lack of jurisdiction.
On Oct. 9, 2025, Burgess petitioned the Fifth Circuit for en banc review, arguing that the panel’s decision conflicts with Supreme Court precedent. Burgess pointed to Collins v. Department of the Treasury, which requires a clear statement from Congress to preclude judicial review of constitutional claims, a standard he argued the FDIA does not meet. Burgess also argued the case is exceptionally important because the panel’s ruling shields FDIC proceedings from meaningful judicial review and forces parties to endure potentially unconstitutional processes before obtaining relief. Finally, Burgess argued the panel’s decision was wrong because it failed to apply the clear statement rule and concluded that after-the-fact appellate review provides meaningful relief. However, the Fifth Circuit denied Burgess’ petition without providing further commentary.
Bottom Line: The Fifth Circuit left intact a three-judge panel decision that ruled the FDIA bars district courts from halting FDIC enforcement actions.
Document: Petition; Fifth Circuit Opinion
