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Opinion of the Court
to federal common law, or to a special federal statute (103 Stat. 243, 12 U. S. C. § 1821(k)) that speaks of "gross negligence"?
We conclude that state law sets the standard of conduct as long as the state standard (such as simple negligence) is stricter than that of the federal statute. The federal statute nonetheless sets a "gross negligence" floor, which applies as a substitute for state standards that are more relaxed.
I
In 1989, City Federal Savings Bank (City Federal), a federal savings association, went into receivership. The RTC, as receiver, brought this action in the bank's name against officers and directors. (Throughout this opinion, we use the more colloquial term "bank" to refer to a variety of institutions such as "federal savings associations.") The complaint said that the defendants had acted (or failed to act) in ways that led City Federal to make various bad development, construction, and business acquisition loans. It claimed that these actions (or omissions) were unlawful because they amounted to gross negligence, simple negligence, and breaches of fiduciary duty.
The defendants moved to dismiss. They pointed to a federal statute, 12 U. S. C. § 1821(k), that says in part that a "director or officer" of a federally insured bank "may be held personally liable for monetary damages" in an RTC-initiated "civil action . . . for gross negligence" or "similar conduct . . . that demonstrates a greater disregard of a duty of care (than gross negligence) . . . ." (Emphasis added.) They argued that, by authorizing actions for gross negligence or more seriously culpable conduct, the statute intended to forbid actions based upon less seriously culpable conduct, such as conduct that rose only to the level of simple negligence. The District Court agreed and dismissed all but the gross negligence claims.
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