State of Hawaii v. HSBC Bank of Nevada, No. 13-15611 (9th Cir. 2014)
Annotate this CaseThe Hawaii AG filed suit in state court against six credit card providers, alleging that each violated state law by deceptively marketing and improperly enrolling cardholders in add-on credit card products. The card providers removed to federal court and the AG moved to remand. The district court denied the motion to remand. The court concluded that the state law claims were not preempted by the National Bank Act of 1864, 12 U.S.C. 85-86. The court joined the Fifth Circuit in holding that sections 85 and 86 did not completely preempt the claims, as there is a difference between alleging that certain customers are being charged too much, and alleging that they should have never been charged for the service in the first place. Therefore, the AG did not plead a completely preempted claim and the district court erred in finding federal question jurisdiction. The court agreed with its sister circuits in holding that the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. 1332(d), does not completely preempt state law. Because the complaints unambiguously disclaimed class status, these actions cannot be removed under CAFA. There is no basis for federal jurisdiction and the cases should have been remanded to state court. Accordingly, the court reversed and remanded.
Court Description: National Bank Act / Preemption. Reversing the district court’s denial of a motion for a remand to state court, the panel held that neither the federal question statute nor the Class Action Fairness Act provided the district court with subject matter jurisdiction over the Hawaii Attorney General’s complaints against six credit card providers, alleging that each violated state law by deceptively marketing and improperly enrolling cardholders in add-on credit card products. Joining the Fifth Circuit, the panel held that the Attorney General’s claims were not preempted by National Bank Act provisions completely preempting state law claims challenging interest rates charged by national banks. The panel held that the district court did not err by relying on declarations submitted by the card providers describing their payment protection plans. The panel declined to decide whether payment protection plan fees are interest on a loan under NBA § 85, rather than charges for an independent service, because the complaints did not allege that the card providers charged excessive interest rates. The panel held that NBA §§ 85 and 86 do not preempt only claims that explicitly invoke a state usury law. Nonetheless, the complaints’ state law claims were not preempted because they did not challenge the “rate of interest” that the card providers charged. Instead, the state law claims were independent of §§ 85 and 86; the complaints’ unfair and deceptive practice claims targeted alleged marketing misrepresentations, and their unjust enrichment claims arose from the purported failure to obtain consent before enrolling consumers in debt protection products. Agreeing with the Second, Third, and Fourth Circuits, the panel held that CAFA did not provide an alternate basis for jurisdiction because the Attorney General brought civil enforcement actions or common law parens patriae suits, rather than class actions, and the complaints specifically disclaimed class status.
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