Class Action Complaint Alleging Fees Charged were in Excess of Contractually Agreed Amount did not Constitute Challenge to Interest Rate and so National Bank Act did not Completely Preempt Claims in Putative Class Action Ohio Federal Court Holds
Plaintiff filed a putative class action in Ohio state court against credit card company FIA Card Services alleging that it collected cash advance fees in excess of the maximum allowed under its cash advance agreements. Levitanksy v. FIA Card Services, N.A., 492 F.Supp.2d 758, 760 (N.D. Ohio 2007). Defense attorneys removed the action to federal court on the basis of National Bank Act, alleging that the class action complaint challenged the interest rate charged to customers and that usury claims are completely preempted under the NBA, id., at 760-61; plaintiff filed a motion to remand the class action to state court on the ground that the class action alleged only state-law breach of contract claims, id., at 759. The district court granted plaintiff’s motion, holding that the National Bank Act did not completely preempt the claims set forth in the class action complaint.
Plaintiff’s class action seeks to represent all individuals who entered into cash advance agreements with FIA, setting forth as common class allegations that FIA “extended one or more promotional offers for balance transfers and cash advance checks where the transaction fees would be limited to 3% of each advance” and that the FIA contracts “stipulated that the maximum allowable transaction fee was $75,” but that FIA charged cash advance fees in excess of that agreed amount. Levitansky, at 760. Defense attorneys removed the class action complaint to federal court under the National Bank Act; plaintiff filed a motion to remand the class action on the ground that the complaint set forth a state-law breach of contract claim. Id.
Defense attorneys argued that the National Bank Act completely preempts plaintiff’s state law claims. Levitanksy, at 761. Section 85 provides that, “any association may take, receive, reserve, and charge on any loan or discount made, or upon any notes, bills of exchange, or other evidences of debt, interest at the rate allowed by the state where the bank is located, or at a rate in excess of 1 per centum in excess of the discount rate on ninety day commercial paper in effect at the Federal reserve bank in the Federal reserve where the bank is located, whichever may be greater.” Section 86 provides that “usurious interest” is “charging a rate of interest greater than is allowed by the preceding section.” In Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 11 (2003), the Supreme Court held that “Because §§ 85 and 86 [of the National Bank Act] provide the exclusive cause of action for [usury] claims, there is, in short, no such thing as a state-law claim of usury against a national bank.” Accordingly, the district court agreed with defense attorneys that Sections 85 and 86 completely preempt state law usury claims. Id., at 761
However, the district court disagreed that the class action complaint challenged the interest rate FIA charged plaintiff or putative class members. Levitanksy, at 761-62. The district court agreed with plaintiff that the class action claims “do not sound in usury” because the allegations of the class action are not “that FIA charged interest in excess of that allowed by law” or that the 3% transaction fee violates state law or the National Bank Act, but rather “that FIA charged a transactional fee that was not actually negotiated by the parties.” id., at 762. The federal court therefore agreed that the class action complaint “only pleads state law breach of contract claims.” Id. Accordingly, the district court remanded the putative class action to state court, id.