United States v. Winstar Corp.

United States v. Winstar Corp., 518 U.S. 839 (1996), was a decision by the United States Supreme Court which held that the United States Government had breached its contractual obligations. The court in Winstar rejected the Government's “unmistakability defense”—that surrenders of sovereign authority, such as the promise to refrain from regulatory changes, must appear in unmistakable terms in a contract in order to be enforceable.[1]

United States v. Winstar Corp.
Argued April 24, 1996
Decided July 1, 1996
Full case nameUnited States v. Winstar Corp., et al.
Citations518 U.S. 839 (more)
116 S.Ct. 2432; 135 L. Ed. 2d 964; 1996 U.S. LEXIS 4266
Case history
PriorWinstar Corp. v. United States, 25 Cl. Ct. 541 (1992); reversed, 994 F.2d 797 (Fed. Cir. 1993); on rehearing en banc, 64 F.3d 1531 (Fed. Cir. 1995); cert. granted, 516 U.S. 1087 (1996).
Holding
Waivers of sovereign power generally must be surrendered in unmistakable terms.
Court membership
Chief Justice
William Rehnquist
Associate Justices
John P. Stevens · Sandra Day O'Connor
Antonin Scalia · Anthony Kennedy
David Souter · Clarence Thomas
Ruth Bader Ginsburg · Stephen Breyer
Case opinions
PluralitySouter, joined by Stevens, O'Connor, Breyer
ConcurrenceBreyer
ConcurrenceScalia, joined by Kennedy, Thomas
DissentRehnquist, joined by Ginsburg

Winstar arose as a consequence of the savings and loan crisis. Federal regulators had allowed "supervisory goodwill" to be counted as regulatory capital for financial institutions that took over failing thrifts. Congress later passed the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which substantially changed these advantages and one of the successor banks successfully sued. The United States Court of Appeals for the Federal Circuit found a breach of contract and awarded damages—the Supreme Court upheld the lower court decision. "Winstar" cases resulted in multimillion-dollar payouts to plaintiffs. As of July 31, 2000, there were 13 settlements or judgments totaling $1.158 billion against the federal government, with more than 100 more cases pending, as a result of the Winstar decision.[2]

Winstar Corporation and its subsidiary United Federal Savings Bank was successfully represented by Charles J. Cooper. The board of United Federal Savings Bank consisted of chairman E. Ted Yoch, and directors Kenneth Bureau, Howard Rekstad, Gary Nordness, and William Bartolic. The decision makes clear that the Stipulation and Consent to Issuance of Order of Prohibition against United's board was improperly required by the Government.

See also

References
  1. United States v. Winstar Corp., 518 U.S. 839 (1996).
  2. "The Cost of Savings & Loan Crisis: Truth & Consequences. Appendix: Goodwill Litigation" (PDF). Archived from the original (PDF) on 2008-10-29. Retrieved 2008-11-02.

Further reading
  • Citron, Roger D. (2002). "Lessons from the Damages Decisions Following United States v. Winstar Corp.". Public Contract Law Journal. 32: 1. ISSN 0033-3441.
  • Cramer, M. T. (1997). "Contracts Written in Stone: An Examination of United States v. Winstar Corp.". Pepperdine Law Review. 25: 567. ISSN 0092-430X.
  • Goldberg, Daniel S. (1997). "Government Precommitment to Tax Incentive Subsidies: The Impact of United States v. Winstar Corp. on Retroactive Tax Legislation". American Journal of Tax Policy. 14: 1. ISSN 0739-7569.
  • Stouck, Jerry; Lipson, David R. (1996). "United States v. Winstar Corp: Affirming the Application of Private Contract Law Principles to the Federal Government". Federal Circuit Bar Journal. 6: 315. ISSN 1055-8195.
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