United States v. Winstar Corporation (1995)
- Docket
- 95-865
- Decided
- 1995-01-01
Summary
Question: Can the federal government be sued by thrifts that were sent into financial trouble when Congress changed the computation of required reserves after the Federal Home Loan Bank Board encouraged actions based on premise that the rules would not change? Conclusion: Yes. In a 7-2 plurality opinion delivered Justice David H. Souter, the Court held that the terms assigning the risk of regulatory change to the Government are enforceable and that the Government is therefore liable in damages for breach, although Congress changed the relevant law, and thereby barred the Government from specifically honoring its agreements. Justices John Paul Stevens and Stephen G. Breyer joined all of the plurality opinion, and Justice Sandra Day O'Connor joined in part. In a concurring opinion, Justice Stephen G. Breyer wrote that the unmistakability doctrine was not intended to displace the rules of contract interpretation applicable to the government. In a concurring opinion joined by Justices Anthony M. Kennedy and Clarence Thomas, Justice Antonin Scalia wrote that the contracts at issue gave rise to an obligation on the part of the government to afford the three thrifts favorable accounting treatment and the contracts were broken by the government's discontinuation of that favorable treatment. Chief Justice William H. Rehnquist dissented in an opinion joined in part by Justice Ruth Bader Ginsburg.