Amicus Curiae Brief — Alex Cantero, et al., Individually and on Behalf of All Others Similarly Situated, Petitioners v. Bank of America, N.A.

No. 22-529

IN THE

Supreme Court of the United States

____________

ALEX CANTERO, ET AL ., INDIVIDUALLY AND ON

BEHALF OF ALL OTHERS SIMILARLY SITUATED,

Petitioners,

v.

BANK OF AMERICA, N.A.,

Respondent.

____________

On Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

____________

BRIEF OF WASHINGTON LEGAL

FOUNDATION AS AMICUS CURIAE

SUPPORTING RESPONDENT

____________

John M. Masslon II

Counsel of Record

Cory L. Andrews

WASHINGTON LEGAL FOUNDATION

2009 Massachusetts Ave. NW

Washington, DC 20036

(202) 588-0302

jmasslon@wlf.org

January 23, 2024

QUESTION PRESENTED

Whether the National Bank Act’s expresspreemption provision allows New York to impose on

nationally chartered banks banking requirements

that differ from federal law.

iii

TABLE OF CONTENTS

Page

QUESTION PRESENTED ......................................... i

TABLE OF AUTHORITIES ..................................... iv

INTEREST OF AMICUS CURIAE ............................1

INTRODUCTION .......................................................1

STATEMENT ..............................................................3

I.

STATUTORY BACKGROUND......................................3

II. FACTUAL BACKGROUND AND PROCEDURAL

HISTORY .................................................................5

SUMMARY OF ARGUMENT.....................................6

ARGUMENT ...............................................................7

THIS CASE HAS FAR-REACHING EFFECTS

FOR FEDERAL PREEMPTION OF STATE AND

LOCAL LAWS ...........................................................7

A. Consumers And Businesses Rely On

Many Federal Express-Preemption

Statutes ......................................................8

B. A Ruling For Plaintiffs Would

Jeopardize All These ExpressPreemption Provisions .............................15

CONCLUSION ..........................................................20

iv

TABLE OF AUTHORITIES

Page(s)

Cases

Altria Grp., Inc. v. Good,

555 U.S. 70 (2008) ..................................................1

Barnett Bank of Marion

Cnty., N.A. v. Nelson,

517 U.S. 25 (1996) ...................................... 4, 16, 17

Covino v. Spirit Airlines, Inc.,

406 F. Supp. 3d 147 (D. Mass. 2019) ..................14

Cuomo v. Clearing House Ass’n,

557 U.S. 519 (2009) ................................................4

English v. Gen. Elec. Co.,

496 U.S. 72 (1990) ................................................15

Farmers’ & Mechs.’ Nat’l

Bank v. Dearing,

91 U.S. 29 (1875)..................................................17

First Nat’l Bank in St. Louis

v. Missouri ex rel. Barrett,

263 U.S. 640 (1924) ..............................................17

First Nat’l Bank v. Kentucky,

76 U.S. 353 (1869) ................................................16

FMC Corp. v. Holliday,

498 U.S. 52 (1990) ................................................19

Fort Halifax Packing Co. v. Coyne,

482 U.S. 1 (1987)..............................................9, 19

Gobeille v. Liberty Mut. Ins.,

577 U.S. 312 (2016) ................................................8

Laborers’ Pension Fund v. Miscevic,

880 F.3d 927 (7th Cir. 2018)................................18

v

TABLE OF AUTHORITIES

(continued)

Page(s)

Louisiana Pub. Serv. Comm’n v. FCC,

476 U.S. 355 (1986) ..............................................15

Mackey v. Lanier Collection

Agency & Serv., Inc.,

486 U.S. 825 (1988) ..............................................13

Magellan Tech., Inc. v. FDA,

70 F.4th 622 (2d Cir. 2023)..................................11

McClellan v. Chipman,

164 U.S. 347 (1896) ..............................................17

McCulloch v. Maryland,

17 U.S. 316 (1819) ................................................18

Merck Sharp & Dohme

Corp. v. Albrecht,

139 S. Ct. 1668 (2019)............................................1

Morales v. Trans World Airlines, Inc.,

504 U.S. 374 (1992) ........................................12, 13

Murphy v. Nat’l Collegiate

Athletic Ass’n,

138 S. Ct. 1461 (2018)..........................................15

Nationsbank of North Carolina,

v. Variable Annuity Life Ins.,

513 U.S. 251 (1995) ................................................4

Shaw v. Delta Air Lines, Inc.,

463 U.S. 85 (1983) ................................................19

United States v. Locke,

529 U.S. 89 (2000) ................................................15

Veazie Bank v. Fenno,

75 U.S. 533 (1869) ..................................................4

vi

TABLE OF AUTHORITIES

(continued)

Page(s)

Watters v. Wachovia Bank, N.A.,

550 U.S. 1 (2007)............................................16, 17

Statutes

7 U.S.C.

§ 136v(b) ...............................................................14

§ 4817(b) ...............................................................14

12 U.S.C. § 25b(b)(1)(B) ..........................................4, 6

15 U.S.C. § 78o(i)(1) ..................................................14

21 U.S.C.

§ 360k(a) ...............................................................14

§ 387p(a)(2)(A)......................................................11

§ 1052(b) ...............................................................14

29 U.S.C. § 1144(a)................................................8, 18

42 U.S.C. § 1395w-26(b)(3) .......................................10

49 U.S.C. § 41713(b)(1) .............................................12

Dodd-Frank Wall Street Reform and

Consumer Protection Act, Pub. L.

No. 111-203, 124 Stat. 1376 (2010) .......................4

N.Y. Gen. Oblig. Law § 5-601 .....................................5

National Bank Act, ch. 106,

13 Stat. 99 (1864) ...................................................3

National Currency Act, ch. 56,

12 Stat. 665 (1863) .................................................3

Regulations

12 C.F.R. § 34.4(a)(6) ..................................................5

OCC Interpretive Ltr. No.

1041 (Sept. 28, 2005) .............................................5

vii

TABLE OF AUTHORITIES

(continued)

Page(s)

Other Authorities

Gretchen Jacobson et al., Medicare

Advantage vs. Traditional Medicare:

How Do Beneficiaries’

Characteristics and Experiences

Differ?, The Commonwealth

Fund (Oct. 14, 2021) ............................................10

Justin McCurry, Miracle at Haneda:

how cabin crew pulled off great

escape from Japan plane fire,

The Guardian (Jan. 3, 2024) ...............................13

Katherine Keisler-Starkey & Lisa N.

Bunch, Health Insurance Coverage

in the United States: 2020,

U.S. Census Bureau (Sept. 2021) ......................8, 9

1

INTEREST OF AMICUS CURIAE*

Washington Legal Foundation is a nonprofit,

public-interest law firm and policy center with

supporters nationwide. WLF promotes free

enterprise, individual rights, limited government,

and the rule of law. It often appears as amicus urging

the Court to properly interpret express-preemption

provisions in federal law. See, e.g., Merck Sharp &

Dohme Corp. v. Albrecht, 139 S. Ct. 1668 (2019);

Altria Grp., Inc. v. Good, 555 U.S. 70 (2008).

INTRODUCTION

Banks are one of the most heavily regulated

industries in America. Sundry federal agencies play

some role in ensuring that nationally chartered banks

comply with intricate statutory and regulatory

requirements. The banks spend billions of dollars

each year ensuring compliance with these legal

requirements. The purpose of these regulations, of

course, is to prevent banks from collapsing and

harming our nation’s economy.

Federal statutory and regulatory requirements

more than suffice to ensure the soundness of our

nation’s federally chartered banks. That is why

earlier this century Congress barred States and

localities from interfering with the banking

operations of federally chartered banks. The National

Bank Act’s express-preemption provision is meant to

ensure that nationally chartered banks focus on

complying with federal requirements.

No party’s counsel authored any part of this brief. No

person or entity, other than Washington Legal Foundation and

its counsel, paid for the brief’s preparation or submission.

*

2

But Plaintiffs argue that federally chartered

banks also must comply with laws enacted by

thousands of local and state governments around the

country. In other words, although Bank of America

has a federal charter, Plaintiffs argue that the

National Bank Act’s express-preemption provision

does not exempt it from these state-law requirements.

If this Court were to adopt Plaintiffs’ and the

United States’s argument, it would be bad for banks

and consumers. Federally chartered banks would

have to spend billions more to ensure compliance with

these state-imposed requirements. So although

consumers may have Wells Fargo accounts in

Pennsylvania, those accounts would differ in

meaningful ways from the same accounts held by

people in New York. Not only would this cause great

confusion for consumers, it would also require banks

to increase fees and other banking costs to account for

greater regulation.

But that is not the only dangerous part about

Plaintiffs’ and the United States’s position. Many

statutes have express-preemption provisions that

cover the largest and most important sectors of our

nation’s economy. If this Court vacates or reverses the

Second Circuit’s decision, all these expresspreemption clauses could be challenged. Regulated

parties would lack the certainty they currently have

that, if they comply with federal law, they need not

worry about state regulations that interfere with

their operations. Rather, they would have to comply

with all state regulations if it is even possible to do so

while complying with federal law. This Court should

reject this atextual reading of the National Bank Act

and affirm the Second Circuit’s decision.

3

STATEMENT

I.

STATUTORY BACKGROUND

A. From 1836—when the Second Bank of the

United States expired—until 1863, States controlled

banking in America. This meant that banks

flourished in some locations but were illegal in others.

It also meant that oversight was uneven and

fraudsters successfully stole people’s hard-earned

money. Although the system was flawed, the extent of

the problems with this system were not immediately

apparent in peacetime.

During the Civil War, President Abraham

Lincoln and Treasury Secretary Salmon Chase

realized that the unreliability of paper money and the

lack of adequate money made fighting the war much

tougher than it should have been. So they pushed to

reform the nation’s banking laws and Congress

acquiesced.

In 1863, Congress passed the National

Currency Act, ch. 56, 12 Stat. 665. This law created a

system of nationally chartered banks. To encourage

banks to seek a national charter, the National

Currency Act also imposed hefty taxes on statechartered banks. Although this managed to

accomplish many of Congress’s goals, it quickly

became clear that further action was needed.

A year later, Congress passed the National

Bank Act, ch. 106, 13 Stat. 99. Recognizing that New

York had the most robust banking industry in

America, the National Bank Act borrowed from a New

York statute to impose strict requirements for those

4

seeking a national charter. For example, banks must

have a minimum level of capital and keep significant

funds in reserve.

Again, the National Bank Act did not

accomplish one of Congress’s main goals—eliminating

paper currency issued by state-charted banks. So in

subsequent years, Congress increased the tax on

those notes. See Veazie Bank v. Fenno, 75 U.S. 533,

538-39 (1869). This essentially eliminated paper

currency issued by state-chartered banks.

B. Under the National Bank Act, the Office of

the Comptroller of the Currency is charged “with

superintendence of national banks.” Nationsbank of

North Carolina, v. Variable Annuity Life Ins., 513

U.S. 251, 254 (1995). States may not regulate national

banks in a way that conflicts with the National Bank

Act’s preemption clause. Cuomo v. Clearing House

Ass’n, 557 U.S. 519, 534 (2009).

After the 2008 financial crisis, Congress sought

to clarify the scope of National Bank Act preemption

in the Dodd-Frank Wall Street Reform and Consumer

Protection Act, Pub. L. No. 111-203, 124 Stat. 1376

(2010). Under the amended statute, a state consumerprotection law is preempted if it “prevents or

significantly interferes with the exercise by the

national bank of its powers.” 12 U.S.C. § 25b(b)(1)(B).

Congress did not create this preemption

standard. Rather, it expressly adopted the test

announced by this Court in Barnett Bank of Marion

Cnty., N.A. v. Nelson, 517 U.S. 25 (1996). That test,

announced fourteen years before Dodd-Frank’s

passage, still governs the preemption inquiry.

5

II.

FACTUAL BACKGROUND

HISTORY

AND

PROCEDURAL

A. Federally chartered banks may provide

escrow services for their customers. OCC Interpretive

Ltr. No. 1041 (Sept. 28, 2005). This means that along

with paying principal and interest, borrowers also pay

lenders for property taxes, homeowner insurance, and

other costs. The lender then ensures that these funds

are timely distributed. The arrangement helps both

sides because it prevents property taxes from

becoming delinquent and ensures sufficient funds to

cover the mortgage if the house is destroyed by fire.

There are, of course, costs to this arrangement.

Borrowers are essentially forced to give the lender a

loan; the escrow accounts normally carry a significant

balance. And lenders must track the bills to be paid

from escrow and then distribute those funds. But in

the end, both sides agree that the benefits outweigh

the costs of this arrangement.

Thirteen States, however, prefer to interfere

with the market. They have passed laws that require

lenders to pay money on escrow accounts. New York

is among them. See N.Y. Gen. Oblig. Law § 5-601. The

OCC, recognizing that these laws flout the National

Bank Act’s preemption provision, promulgated

regulations clarifying that nationally chartered banks

need not comply with these state laws. 12 C.F.R.

§ 34.4(a)(6).

B. Bank of America made home loans to Alex

Cantero and Saul Hymes and Ilana HarwayneGidansky to buy houses in New York. As part of the

mortgage agreements, Plaintiffs agreed to make

6

escrow payments to cover their property taxes and

insurance costs. When Bank of America did not pay

them interest on their escrow accounts, Plaintiffs

sued. The District Court denied Bank of America’s

motion to dismiss but the Second Circuit reversed. It

held that Section 25b(b)(1)(B) codified this Court’s

pre-Dodd-Frank standard for preemption. Pet. App.

26a. Under that standard, the National Bank Act

preempts state interest-on-escrow statutes. This

Court granted certiorari to resolve a circuit split on

this important question about the scope of the

National Bank Act’s express-preemption provision.

SUMMARY OF ARGUMENT

This Court’s decision will affect many expresspreemption provisions in federal law. A ruling for

Plaintiffs would cause uncertainty for businesses and

consumers in many industries and would have major

negative consequences.

A.1. The two largest health-insurance

providers in America are employers and Medicare.

The laws governing those providers both have

express-preemption provisions meant to ensure that

States and localities cannot interfere with the

functioning of those systems. These preemption

provisions have done a good job of promoting health

insurance. But there would be fewer incentives for

companies to offer plans if this Court were to reverse

the Second Circuit here.

2. For the past four decades, the federal

government has heavily regulated the tobacco

industry. This regulation aims to keep consumers safe

by providing them with appropriate information and

7

limiting the activities of tobacco companies. These

regulations involve a careful balancing of many

factors. So Congress did not want States and localities

passing their own conflicting regulations. This system

has worked well but is at risk if this Court reverses

here.

3. Modern aviation is a technical marvel that

keeps our economy running smoothly. One reason the

aviation industry works is because airlines need not

comply with differing state and local laws about

routes and services. It is also why airline travel is so

safe. But all that could be in jeopardy if the Court

upends well-settled precedent on express-preemption

provisions.

B. Vacating or reversing the Second Circuit

would jeopardize all these express-preemption

provisions. Plaintiffs and the United States want to

make broad express-preemption provisions like that

in the National Bank Act function like impossibility

preemption. If this Court goes down that road, there

is no stopping at just the National Bank Act. This

Court has rejected such attempts at narrowing

express-preemption provisions before and should do

so again here.

ARGUMENT

THIS CASE HAS FAR-REACHING EFFECTS FOR

FEDERAL PREEMPTION OF STATE AND LOCAL LAWS.

This case focuses on how to apply the National

Bank Act’s express-preemption provision. But the

Court’s decision will have far-reaching implications.

There are many statutes with similar express-

8

preemption provisions. If this Court were to overturn

decades of precedent and rule for Plaintiffs, the status

of those preemption provisions would be uncertain.

This Court should not go down that path. Rather, it

should reaffirm basic preemption principles that have

served our nation well for over 200 years.

A.

Consumers And Businesses Rely On

Many Federal Express-Preemption

Statutes.

Preemption is critical to a functioning national

economy. For many industries that operate across

state lines, it would be too expensive to comply with

different requirements in each State or even every

locality. Congress has recognized this fact many times

and passed express-preemption provisions to protect

parties who comply with federal-law requirements.

Some examples show the possible ramifications

of a decision for Plaintiffs.

1.i. The Employee Retirement Income Security

Act preempts “any and all State laws insofar as they

may now or hereafter relate to any employee benefit

plan.” 29 U.S.C. § 1144(a). This Court has ensured

that this “express pre-emption clause receives the

broad scope Congress intended.” Gobeille v. Liberty

Mut. Ins., 577 U.S. 312, 320 (2016). The broad reading

of ERISA’s preemption provision has been critical to

ensuring that workers receive good benefits.

Plans governed by ERISA provide healthinsurance coverage for over 177 million Americans.

Katherine Keisler-Starkey & Lisa N. Bunch, Health

Insurance Coverage in the United States: 2020, U.S.

9

Census Bureau, 4 (Sept. 2021), https://perma.cc/

83GH-8AAG. “[E]mployers rely on ERISA preemption

to more efficiently offer their employees all forms of

ERISA-covered benefits, including disability, pension

(both defined benefit and defined contribution),

and important ancillary benefits like life insurance.”

Brief of Amici Curiae the American Benefits Council

et al. Supporting Petitioner at 13, The ERISA Indus.

Comm. v. City of Seattle, 143 S. Ct. 443 (2022) (per

curiam) (No. 21-1019), 2022 WL 566392.

This Court has recognized that “[a] patchwork

scheme of regulation would introduce considerable

inefficiencies in benefit program operation, which

might lead those employers with existing plans to

reduce benefits, and those without such plans to

refrain from adopting them.” Fort Halifax Packing

Co. v. Coyne, 482 U.S. 1, 11 (1987). By “afford[ing]

employers the advantages of a uniform set of

administrative procedures governed by a single set of

regulations,” ERISA’s preemption provision ensures

employers need not confront “the task of coordinating

complex administrative activities.” Id.

As described in § B below, reversing or vacating

the Second Circuit’s decision would lead to a watering

down of ERISA’s preemption provision. This would

harm employees nationwide. Again, over half of

Americans receive their health insurance through

employer-sponsored plans. See Keisler-Starkey &

Bunch, supra at 4. Those individuals would be at risk

of losing health insurance. And those who kept their

health insurance would likely see lower pay or the

elimination of other benefits to save money. This is to

say nothing of the other benefits covered by ERISA

plans. Most employers would have little choice but to

10

eliminate disability insurance coverage and pensions

or reduce pay to cover the increased costs of the

labyrinths of state regulations that plans would have

to comply with.

ii. Most Americans who do not receive their

health insurance through their employers are instead

covered through Medicare. Older Americans may

choose to have their Part A and Part B benefits

administered by a Medicare Advantage plan. Those

who make this choice are generally more satisfied

with their Medicare coverage than those who go with

traditional Medicare. See Gretchen Jacobson et al.,

Medicare Advantage vs. Traditional Medicare: How

Do Beneficiaries’ Characteristics and Experiences

Differ?, The Commonwealth Fund (Oct. 14, 2021),

https://perma.cc/UZ35-R8PF.

But health insurance companies must be

willing to offer Medicare Advantage plans for older

Americans to enjoy the benefits of those plans. They

would be less willing to offer these plans if they also

had to comply with requirements imposed by States

and local governments. Recognizing this fact,

Congress has expressly preempted “any State law or

regulation (other than State licensing laws or State

laws relating to plan solvency) with respect to

[Medicare Advantage] plans which are offered by

[Medicare Advantage] organizations.” 42 U.S.C.

§ 1395w-26(b)(3).

This express-preemption provision ensures

that enough health insurance companies offer

Medicare Advantage plans to satisfy the demand from

older Americans. But if this Court were to upset the

11

Second Circuit’s decision here, it could cause health

insurance companies to stop offering these plans.

In sum, the two biggest providers of health

insurance in this country, employers and Medicare,

rely on express-preemption provisions like the one

here. A decision for Plaintiffs could cause massive

upheaval in the health-insurance sector. This Court

should not go down that path. Rather, it should affirm

the Second Circuit’s well-reasoned decision.

2. The Tobacco Control Act likewise preempts

any state law “which is different from, or in addition

to, any requirement under the provisions of this

subchapter relating to tobacco product standards.” 21

U.S.C. § 387p(a)(2)(A). The TCA tasks the Food and

Drug Administration with maintaining uniform

tobacco product standards based on a careful

weighing of varied factors, including public health.

The express-preemption provision ensures that

States and localities may not countermand that

regulatory scheme.

Tobacco is one of the most regulated industries

in

America.

Everything

from

the

names

manufacturers may give cigarettes to the color of

packaging is managed by the FDA through detailed

regulations. Congress has decided that some tobacco

products pose a risk to the public and that the FDA is

the appropriate agency to weigh the costs and benefits

of even the smallest change in tobacco standards. Cf.

Magellan Tech., Inc. v. FDA, 70 F.4th 622, 632 n.6 (2d

Cir. 2023) (“the TCA expressly empowers the FDA to

perform the comparative analysis”).

12

Congress does not want States to make those

calls based on political pressure or incomplete

scientific studies. That is why it passed the expresspreemption provision that bars States and localities

from enforcing these other standards. This is true

even if it is possible to comply with both the federal

regulations governing tobacco standards and the

state-imposed standards. The point is that Congress

wanted one set of standards to govern nationwide

based on the scientific analysis of one federal agency.

In other words, Congress thought that having 50—or

even thousands—of agencies making these decisions

was a bad idea.

If this Court upends the Second Circuit’s

decision here, States and localities may impose

tobacco product standards that conflict with the

available scientific data. This could risk the health

and welfare of the residents of those locations. But it

would also jeopardize those living in other

jurisdictions because companies will not want to

make multiple products for different markets.

3. The Airline Deregulation Act preempts state

laws “related to a price, route, or service of an air

carrier that may provide air transportation.” 49

U.S.C. § 41713(b)(1). This Court has held that, under

this provision, “[s]tate enforcement actions having a

connection with or reference to airline rates, routes,

or services are pre-empted.” Morales v. Trans World

Airlines, Inc., 504 U.S. 374, 384 (1992) (cleaned up).

In Trans World Airlines, Texas argued that

this Court should adopt some form of impossibility

preemption when interpreting the ADA’s preemption

provision. It “suggest[ed] that pre-emption is

13

inappropriate when state and federal law are

consistent.” Trans World Airlines, 504 U.S. at 386.

This mirrors the arguments Plaintiffs and the United

States make here. In their view, state banking laws

are not preempted if it is possible to comply with both

requirements. In other words, if they are not

inconsistent, there is no preemption.

This Court soundly rejected that argument and

should do so here. As the Court explained, an expresspreemption provision like that in the ADA “displaces

all state laws that fall within its sphere, even

including state laws that are consistent with [the

federal law’s] substantive requirements.” Trans

World Airlines, 504 U.S. at 387 (quoting Mackey v.

Lanier Collection Agency & Serv., Inc., 486 U.S. 825,

829 (1988) (cleaned up)). Mackey was, in turn, an

ERISA preemption case.

Airlines

have

relied

on

this

broad

interpretation of the ADA when organizing their

operations. One example shows just how broad the

ADA’s preemption provision is and how airlines rely

on that breadth. While many airline passengers may

think that flight attendants are there to be servers,

federal law requires airlines to use flight attendants

to ensure passenger safety. A recent incident in Japan

shows just how crucial flight attendants are in

ensuring passenger safety. See Justin McCurry,

Miracle at Haneda: how cabin crew pulled off great

escape from Japan plane fire, The Guardian (Jan. 3,

2024), https://perma.cc/6W9V-BCCP.

Sometimes, passengers must be told “no” by a

flight attendant for their own safety or those of other

passengers and crew. In a litigious society, that can

14

lead to lawsuits for negligent and intentional

infliction of emotional distress. But courts have held

that those suits are preempted by the ADA. Covino v.

Spirit Airlines, Inc., 406 F. Supp. 3d 147, 151 (D.

Mass. 2019). Even though being told to sit down by a

flight attendant does not influence the airline’s

routes, it is “inextricably related” to the service

provided. Id.

Airlines rely on decisions like Covino when

training their cabin staff on proper safety procedures.

But it would be impractical to train flight attendants

on the intricacies of every State’s tort laws. So federal

preemption is key to ensuring safety in the air. Again,

this is just one part of the ADA’s broad preemption

provision that would be disputed if this Court were to

vacate or reverse the Second Circuit’s decision here.

These examples are just the start of the broad

implications of this Court’s construction of the

National Bank Act’s express-preemption provision.

Others include the Securities Exchange Act, 15 U.S.C.

§ 78o(i)(1); Federal Insecticide, Fungicide, and

Rodenticide Act, 7 U.S.C. § 136v(b); Pork Promotion,

Research, and Consumer Information Act, 7 U.S.C.

§ 4817(b); Food, Drug and Cosmetic Act, 21 U.S.C.

§ 360k(a); and Egg Products Inspection Act, 21 U.S.C.

§ 1052(b). All would face preemption questions if this

Court were to vacate or reverse the Second Circuit’s

decision.

15

B.

A Ruling For Plaintiffs Would

Jeopardize All These ExpressPreemption Provisions.

It’s true that the language of the statutes

discussed above and the National Bank Act differ in

some respects. But that does not mean that the

Court’s ruling here will be limited to the National

Bank Act. Plaintiffs’ argument seeks to weaken this

Court’s

well-settled

express-preemption

jurisprudence. Under that jurisprudence, expresspreemption provisions are given their common-sense

meaning and bar States and localities from

interfering with federal regulatory schemes.

There are generally three types of

preemption—“field,” “express,” and “conflict.” English

v. Gen. Elec. Co., 496 U.S. 72, 78-79 (1990). The

broadest of these is field preemption, which “occurs

when federal law occupies a field of regulation so

comprehensively that it has left no room for

supplementary state legislation.” Murphy v. Nat’l

Collegiate Athletic Ass’n, 138 S. Ct. 1461, 1480 (2018)

(cleaned up). Express preemption occurs when

Congress “expresses a clear intent to pre-empt state

law.” Louisiana Pub. Serv. Comm’n v. FCC, 476 U.S.

355, 357 (1986) (citation omitted). Finally, conflict

preemption “occurs when compliance with both state

and federal law is impossible, or when the state law

stands as an obstacle to the accomplishment and

execution of the full purposes and objective of

Congress.” United States v. Locke, 529 U.S. 89, 109

(2000).

Here, the National Bank Act expressly

preempts state laws that affect the ability of

16

nationally chartered banks to operate in the manner

contemplated by federal law. The other statutes

discussed above are also express-preemption

provisions. A ruling for Plaintiffs would seriously

erode the preemptive effect of these laws.

The National Bank Act’s express-preemption

provision is broad. It “speaks in special terms that

often trigger conflicts: When [it] grants ‘powers,’ ‘both

enumerated and incidental,’ those powers are ‘not

normally limited by, but rather ordinarily pre-empt,

contrary state law.’” Pet. App. 15a (quoting Barnett

Bank, 517 U.S. at 32 (cleaned up)). In other words,

“federal control shields national banking from unduly

burdensome and duplicative state regulation.”

Watters v. Wachovia Bank, N.A., 550 U.S. 1, 11 (2007).

Nationally chartered banks do not need States’

permission to operate in a manner consistent with

federal law. Barnett Bank, 517 U.S. at 35.

Soon after the National Bank Act’s passage,

the Court held that nationally chartered banks’

“contracts are governed and construed by State laws.

Their acquisition and transfer of property, their right

to collect their debts, and their liability to be sued for

debts, are” also governed by state law. First Nat’l

Bank v. Kentucky, 76 U.S. 353, 362 (1869). The same

holds true today. Usually when a borrower defaults

on a loan, the bank sues under state law in state court

to collect on the debt. This, however, does not mean

that States may regulate the banking operations.

Soon after the Court’s decision in First

National Bank, it limited the scope of that decision.

The Court held that “States can exercise no control

over [national banks], nor in any wise affect their

17

operation, except in so far as Congress may see proper

to permit.” Farmers’ & Mechs.’ Nat’l Bank v. Dearing,

91 U.S. 29, 34 (1875). The Court has stuck to this rule

for the past 150 years. See, e.g., McClellan v.

Chipman, 164 U.S. 347, 357 (1896) (States may not

“impair” national banks’ ability “to discharge the

duties imposed upon them by” federal law.); First

Nat’l Bank in St. Louis v. Missouri ex rel. Barrett, 263

U.S. 640, 659 (1924) (State laws may not “frustrate

the purpose for which the bank was created.”);

Watters, 550 U.S. at 13 (State laws may not “curtail

or hinder a national bank’s efficient exercise of [a]

power.”); cf. Barnett Bank, 517 U.S. at 37 (the Court

was following precedent on the scope of the National

Bank Act’s preemption clause).

Plaintiffs and the United States, however,

want to upend this 150-year-old precedent. Although

they phrase their tests differently, both seek a rule

that would be closer to that the Court applies in

impossibility-preemption cases. The United States

claims (at 9) that when deciding whether a State law

is preempted by the National Bank Act, “a court must

make a practical, case-by-case assessment of the

degree to which the state law will impede the exercise

of those powers.” In essence, this rule would say that

a state law is not preempted by the National Bank Act

if it minimally impedes the national bank’s

operations.

In other words, state laws are preempted under

the United States’s rule only if it is nearly impossible

to comply with both the state law and federal law.

Although this is not true impossibility preemption, it

comes very close to that threshold. But in passing the

National Bank Act, Congress did not say that state

18

laws are preempted only if it is nearly impossible to

comply with the state law and federal law. Rather,

Congress preempted all state laws that affect a

national bank’s ability to carry out its banking

functions. This broad preemption stems from preNational Bank Act case law, which said that the

degree of interference does not matter for preemption

purposes; the intrusion itself is what prompts

preemption. See McCulloch v. Maryland, 17 U.S. 316,

430-31 (1819).

Plaintiffs’ argument is equally flawed. They

contend (at 27) that a finding of preemption “requires

a factual showing of the degree of interference.”

Under this proposed test, a state law that interferes

with the banking functions of a nationally chartered

bank is allowed if it is not impossible to comply with

both. The Second Circuit correctly rejected this

erroneous interpretation of this Court’s precedent and

the National Bank Act’s text.

Adopting Plaintiffs’ proposed theory could

wreak havoc on the express-preemption provisions

discussed above. For example, ERISA preempts any

state law related to a plan. See 29 U.S.C. § 1144(a).

Courts have interpreted this express-preemption

provision broadly. “ERISA preempts a state law claim

if the claim requires the court to interpret or apply the

terms of an employee benefit plan.” Laborers’ Pension

Fund v. Miscevic, 880 F.3d 927, 931 (7th Cir. 2018)

(cleaned up).

The reason that courts have interpreted

ERISA’s express-preemption provision in this way is

the same reason this Court has interpreted the

National Bank Act’s preemption provision to cover

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state laws that affect banking operations. This Court

has “not hesitated to apply ERISA’s pre-emption

clause to state laws that risk subjecting plan

administrators to conflicting state regulations.” FMC

Corp. v. Holliday, 498 U.S. 52, 59 (1990) (citation

omitted). This is because “an employer with

employees in several States would find its plan

subject to a different jurisdictional pattern of

regulation in each State. * * * The administrative

impracticality of permitting mutually exclusive

pockets of federal and state jurisdiction within a plan

is apparent.” Fort Halifax Packing Co., 482 U.S. at 11

(quotation omitted).

The express-preemption provisions of both the

National Bank Act and ERISA are designed to avoid

the administrative headaches of complying with

different state regulations. Courts have therefore

interpreted the express-preemption provisions to bar

any state law that regulates banking operations of a

nationally chartered bank or requires interpreting an

ERISA plan. This does not mean, of course, that all

state laws affecting banks or ERISA plans are

preempted. Laws, for example, that govern

garnishment to enforce alimony and child support

orders are not preempted. See Shaw v. Delta Air

Lines, Inc., 463 U.S. 85, 100 n.21 (1983) (citation

omitted). That is because they do not touch on ERISA

plans or the powers of nationally chartered banks.

The same holds true for the other expresspreemption provisions discussed above. Congress

passed each provision because it found impossibility

preemption inadequate to protect the national

interest while finding field preemption unnecessary

(or possibly unconstitutional). Plaintiffs and the

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United States, however, want this Court to disregard

these policy decisions and hold that expresspreemption provisions like the National Bank Act’s

apply only when complying with both state and

federal law is nearly impossible.

So this case has broad implications beyond that

of National Bank Act preemption. If this Court waters

down the express-preemption provision in the

National Bank Act, a flood of challenges to other

express-preemption provisions will follow. Plaintiffs

will use the decision here to ask courts to limit the

scope of those other express-preemption provisions.

This is bad for everyone except the plaintiffs’ bar. The

Second Circuit correctly held that New York’s

interest-on-escrow law is preempted by the National

Bank Act.

CONCLUSION

This Court should affirm.

Respectfully submitted,

John M. Masslon II

Counsel of Record

Cory L. Andrews

WASHINGTON LEGAL FOUNDATION

2009 Massachusetts Ave. NW

Washington, DC 20036

(202) 588-0302

jmasslon@wlf.org

January 23, 2024