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Whether latent federal power should be exercised to displace state law is primarily a decision for Congress, not the federal courts. Nor does the existence of related federal statutes automatically show that Congress intended courts to create federal common-law rules, for Congress acts against the background of the total corpus juris of the states. The guiding principle is that a significant conflict between some federal policy or interest and the use of state law must first be specifically shown.
A federally chartered and insured savings association in New Jersey went into receivership with the Resolution Trust Corporation, subsequently replaced by the Federal Deposit Insurance Corporation as a receiver. Respondent's suit alleged that petitioners acted or failed to act in ways that led the bank to make bad loans and that the acts and omissions amounted to gross negligence, simple negligence, and breaches of fiduciary duty. The District Court dismissed all but the gross negligence claims.
Did the lower court err in dismissing the respondent claims against petitioner?
The Court vacated the lower court’s judgment and remanded the case. It held that the state law set the standard of care to measure the legal propriety of petitioners' conduct, rather than federal common law as long as the state standard was stricter than that of the statute. The "gross negligence" standard of § 1821(k) provided only a floor, a guarantee that officers and directors had to meet at least a gross negligence standard. It did not stand in the way of a stricter standard that some state laws provided.