The Zai Doctrine: Post-Bar-Date Claims Against NCUA Liquidators Bypass Administrative Exhaustion

Introduction

In Tina Zai v. National Credit Union Administration Board, the United States Court of Appeals for the Sixth Circuit confronted a seemingly technical—but ultimately momentous—jurisdictional question under the Federal Credit Union Act (FCUA), 12 U.S.C. §§ 1751–1795k. The dispute traces back to the 2010 collapse of St. Paul Croatian Federal Credit Union (SPCFCU) and a 2013 settlement in which Tina Zai and her husband agreed to pay the National Credit Union Administration Board (NCUAB) $22 million. Years later, Zai alleges that the Board breached that settlement by failing to re-transfer a promissory note once the $22 million had been collected. Instead of reaching the contract merits, the district court dismissed the action for lack of subject-matter jurisdiction, concluding that § 1787(b)(13)(D) of the FCUA stripped courts of power because Zai had not exhausted the Board’s administrative claims process.

The Sixth Circuit vacated that dismissal, holding that where a claim accrues after the liquidation “bar date” fixed by the NCUAB, the FCUA’s exhaustion and jurisdiction-stripping provisions do not apply. This decision parts company with several sister circuits that have required exhaustion for late-arising claims, and it arrives in the wake of Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), which overruled Chevron deference. Together, these developments create a new Sixth Circuit rule—herein dubbed the “Zai Doctrine.”

Summary of the Judgment

• Statutory grant of jurisdiction. 12 U.S.C. § 1789(a)(2) expressly gives federal courts “original jurisdiction” over all civil suits to which the NCUAB, acting as liquidating agent, is a party.
• Jurisdiction-stripping examined. Section 1787(b)(13)(D) bars courts from hearing claims that must first be presented to the Board, but that bar is co-extensive with the FCUA’s administrative-exhaustion regime.
• Key holding (“Zai Doctrine”). The term “claim” in the exhaustion provisions refers only to claims that exist while the administrative window is open. Claims that accrue after the bar date (the closure of that window) need not be exhausted and may be filed directly in court.
• Disposition. District court’s dismissal was vacated and the case remanded for proceedings on the merits.

Detailed Analysis

1. Precedents Cited and Their Influence

• Kokkonen v. Guardian Life, 511 U.S. 375 (1994) – reaffirmed that federal courts presume a lawsuit lies outside their jurisdiction absent statutory authorization.
• Village of Oakwood v. SB&T Co., 539 F.3d 373 (6th Cir. 2008) – interpreted the parallel FIRREA provisions; established that FIRREA’s jurisdictional bar matches its exhaustion requirement. The panel extended this reasoning to the FCUA.
• Perna v. Health One CU, 983 F.3d 258 (6th Cir. 2020) – earlier applied FCUA’s exhaustion rule to repudiation claims arising during the claims window; distinguished by the panel because Zai’s claim arose years later.
• Sister-circuit cases under FIRREA—Heno (1st), Scott (5th), Stamm (11th), McCarthy (9th)—interpreted “bar date” exceptions broadly (with the aid of Chevron) to force late claims through exhaustion; the Sixth Circuit found their reasoning textually strained post-Loper Bright.
• Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024) – demise of Chevron deference freed courts to adopt the most natural reading of ambiguous statutes without agency gloss.

2. The Court’s Legal Reasoning

1. Step One – Statutory jurisdiction exists. Section 1789(a)(2) squarely authorises federal courts to entertain civil suits involving the NCUAB as liquidator.
2. Step Two – Exhaustion/jurisdiction bar is co-extensive. Relying on Village of Oakwood, the court reasoned that § 1787(b)(13)(D) withdraws jurisdiction only where the statute also requires administrative exhaustion.
3. Step Three – What is a “claim”?
   • The FCUA establishes a single, routine claims process (the “bar date” period) lasting at least 90 days from published notice. (§ 1787(b)(3)(B)(i))
   • “Claim” must sensibly refer to demands that are capable of being presented within that window; one cannot file a claim that has not yet accrued.
   • Therefore, claims arising after the bar date (the court’s “Claimant C” category) fall outside the statutory process and beyond the jurisdictional bar.
4. Step Four – Rejection of contrary interpretations.
   • Other circuits’ expansive reading of the “lack-of-notice” exception (§ 1787(b)(5)(C)(ii)) depended on Chevron deference and is “far from the most natural reading.”
   • Textual problems: the exception explicitly references creditors who “did not receive notice” of the appointment—unlike Zai, who had notice but no existing claim.
   • Practical problems: no statutory deadline exists for processing post-bar-date claims, so requiring exhaustion would leave courts guessing or deferring to agency whim.
5. Step Five – Application to Zai.
   • NCUAB’s original bar date: 8 August 2010.
   • Settlement executed: 2013; alleged breach: 2018.
   • No statutory mechanism compelled Zai to present her breach claim to the Board; hence federal jurisdiction stands.

3. Impact and Future Ramifications

• Immediate effect in the Sixth Circuit. Creditors and counterparties whose claims arise after the NCUAB’s bar date may proceed directly to federal court without first navigating the agency’s administrative process.
• Strategic shift for the NCUAB. To shield itself from later litigation, the Board may lengthen its claims window beyond the bare 90-day minimum to capture potential future disputes.
• Circuit split & potential Supreme Court review. The decision expressly diverges from First, Fifth, Ninth, and Eleventh Circuit precedent interpreting virtually identical FIRREA provisions. A clean split on an important federal-banking question invites certiorari.
• Chevron’s demise looms large. Agencies can no longer rely on deference to broaden jurisdictional bars; courts will independently evaluate statutory text—expect renewed challenges to other administrative-exhaustion schemes.
• Contract enforcement against liquidating agents. Parties to post-insolvency settlements or contracts now have clearer recourse in the Sixth Circuit, promoting commercial certainty but also increasing potential liability for the NCUAB.

Complex Concepts Simplified

• Liquidating Agent. When a credit union fails, the NCUAB steps in as “liquidating agent” to marshal assets and pay creditors—similar to a bankruptcy trustee.
• Bar Date. A deadline (at least 90 days post-notice) by which creditors must file their claims with the liquidating agent; missing it ordinarily bars recovery.
• Administrative Exhaustion. The requirement that a claimant first use an agency’s internal procedure and obtain a decision before going to court.
• Jurisdiction-Stripping Provision. A statutory clause that removes courts’ power to hear certain disputes unless prerequisites (like exhaustion) are satisfied.
• Chevron Deference (now overruled). The former rule that courts deferred to reasonable agency interpretations of ambiguous statutes; without it, courts interpret statutes independently.
• Claimant Categories.
  • Claimant A: had a claim and notice before the bar date—must exhaust.
  • Claimant B: had a claim but lacked notice—gets limited extra time.
  • Claimant C: had no claim until after the bar date—no exhaustion required (Zai).

Conclusion

The Sixth Circuit’s decision in Zai stakes out a clear, text-driven rule: if a claim against the NCUAB as liquidator did not exist during the statutory claims-processing window, the FCUA neither requires administrative exhaustion nor strips federal courts of jurisdiction. In recognising this limitation, the court distances itself from earlier, Chevron-dependent interpretations in other circuits and signals that post-Loper Bright statutory construction will be far more exacting. The “Zai Doctrine” reshapes the litigation landscape for failed-credit-union cases within the Sixth Circuit and adds a compelling entry to the growing list of circuit splits likely to reach the Supreme Court. For practitioners, the message is twofold: watch the bar date closely, and remember that in the Sixth Circuit, late-arising contractual or tort claims against the NCUAB may proceed straight to federal court.