Petition for Writ of Certiorari — Beneficial Nat. Bank v. Anderson

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Supreme Court, U.S.

FILED

(')

No.029 2 30 6 AUG 26 2002

OFFICE OF THE CLERK

IN THE

Supreme Court of the Anited States

BENEFICIAL NATIONAL BANK AND

BENEFICIAL TAX MASTERS, INC..

Petitioners,

Vv.

MARIE ANDERSON, ef al.,

Respondents.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

PETITION FOR A WRIT OF CERTIORARI

Of Counsel: DENNIS G. LYONS

ALAN S. KAPLINSKY Counsel of Record

BURT M. RUBLIN HOWARD N. CAYNE

BALLARD SPAHR ANDREWS & BROOKSLEY E. BORN

INGERSOLL, LLP BRIAN C. DUFFY

1735 Market St., Sist Fl. ARNOLD & PORTER

Philadelphia, PA 19103 555 Twelfth Street, N.W.

(215) 665-8500 Washington, D.C. 20004

(202) 942-5000

STEWART M. COx

Hope T. STEWART Attorneys for Petitioners,

BRADLEY ARANT ROSE & Beneficial National Bank and

WHITE, LLP Beneficial Tax Masters, Inc.

1819 Fifth Ave. North

P.O. Box 830709

Birmingham, AL 35203

(205) 521-8000

August 2002

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 - WASHINGTON, D. C. 20001

i Oe Pees

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QUESTION PRESENTED

This Court has long held that section 30 of the National

Bank Act, 12 U.S.C. §§ 85-86, creates an exclusive federal

cause of action and an exclusive federal remedy for usury

claims by borrowers against national banks, preempting state

law under the doctrine of ordinary preemption. Borrowers

filed this case against a national bank in state court, claiming

violation of state usury law, and the national bank removed

the case to federal district court, where a motion to remand

was denied. On interlocutory appeal, the United States Court

of Appeals for the Eleventh Circuit ordered the district court

to remand the case to state court for lack of subject matter

jurisdiction and explicitly disagreed with decisions by the

United States Court of Appeals for the Eighth Circuit holding

that section 30 completely preempts state usury claims

against national banks and thus permits removal of cases

asserting state usury laws against them. The question

presented is:

Whether a usury claim against a national bank, even

if ostensibly brought under state law, necessarily arises

under section 30 of the National Bank Act so as to

permit a federal court to exercise removal jurisdiction

under the doctrine of complete preemption, a question

as to which the United States Courts of Appeals are

in conflict?

(i)

PARTIES TO THE PROCEEDING BELOW

Plaintiffs-Appellants:

Marie Anderson

Alvester Brafort

Walter Brutley

Patricia Coleman

Talaya Cope

Audrey Darby

Annie Davis

April DeLoach

Diane Franklin

Lillie Franklin

Willie Lewis

Caledonia Jackson

Shirley Jernigan

Evelyn Nelson

Willie Lawrence

Mamie Mitchell

Betty Person

Diane Peterson

Gwen Rogers

Williams Screws

Ernestine Starks

Gerald Stokes

Albert Thomas

Charles Thomas

Kenneth Williams

Earline Young

iii

Defendants-Appellees:

Beneficial Nationai Bank

Beneficial Tax Masters, Inc.

H&R Block, Inc.

RULE 29.6 LIST

Household International, Inc. is the parent of

Beneficial National Bank and Beneficial Tax Masters, Inc.

and is publicly held.

TABLE OF CONTENTS

Page

CUES TION PRESENTED q.2cccccccccccccccccccccccscccscssccssosseee i

PARTIES TO THE PROCEEDING BELOW............... ii

Ny UII cexrareeneiibcecinbiisiniansnantindnteniaiaeanmaniniaiianeias ili

DAs Ge ATT IIINs 6 ccccccccccscecccscesscecenessnsesnccense vii

Ta ccreciersstttcniinnceinnenseitnnnssennsemminintatianiate l

PTT crntnrentesnsniniininantentiitansitiinnabiinimibabiapeniai 2

STATUTORY PROVISIONS INVOLVED.................. 2

SEA TERMIC ES OF TE CARE ....ccccccccccccccccsssccccccoscssssees 2

REASONS FOR GRANTING THE WRIT.................... 5

1. The Court of Appeals Decision Directly

Conflicts with Decisions of the United States

Court of Appeals for the Eighth Circuit............

BB EO

(b) Other Conflicting Decisions ..................... 8

2. The Court of Appeals Decision Is Erroneous

and Is_ Inconsistent With This Court’s

Longstanding Position That All Usury

Claims Against National Banks Arise Under

Pl tl cninssnsianentmensemmenmneaniecmmneaen 11

BB ee 1!

(b) This Court’s Interpretation of Section 30. 13

BED acenenesecncessvnnsnemscnsnnecneentenscemmnsemenssenens 15

3. The Issue Is Important to the Uniform and

Effective Operation of the National Banking

BE cnsntunensssnesnsunesssennemavemmemesnessasememanites 17

(v)

TABLE OF CONTENTS—Continued

4. This Case Presents an Opportunity for the

Court to Provide Much-Needed Guidance on

the Complete Preemption Doctrine. .................-

CeO ccernnenscensrecnencsssmmsmmmeeemnnsnsenie

APPENDICES

Appendix A—Opinion of the Court of Appeals for the

Eleventh Circuit in Anderson v. H&R Block, Inc. .....

Dissenting Opinion of Circuit Judge Tjoflat..............

Appendix B—Opinion of the District Court for the

Middle District of Alabama in Anderson v. H&R

GGT, BAB. ccscerececsnsenenssasecessnmnennssnnssneessenennsssstncensensnsne

Appendix C—Order of the Court of Appeals for the

Eleventh Circuit filed May 29, 2002 denying

Petitions for Rehearing En Banc in Anderson v.

GREE GRIER, BiB ceccesscsssnsensssseresessnsmesmsmeneememmenne

Appendix D—National Bank Act, Section 30, 12

Appendix F—Federal Question Jurisdiction, 28

Appendix G—Actions Removable Generally, 28

Appendix H—Order of the Court of Appeals for the

Eleventh Circuit filed June 17, 2002 staying the

mandate in Anderson v. H&R Block, IN. ...........000+++

Appendix I—Amicus Curiae Brief of the Office of the

Comptroller of the Currency ..............:cscsessesseeesereees

Appendix J—Unpublished Opinion of the District

Court for the Middle District of Louisiana in

Gallagher v. H&R Block Eastern Tax Services, Inc..

2la

29a

36a

59a

Vii

TABLE OF AUTHORITIES

CASES Page

Ament v. PNC Bank, 825 F. Supp. 1243 (W.D.

Pa. 1992), rev'd, Spellman v. Meridian Bank,

Nos. 94-3203, 94-3204, 94-3215 to 94-3218,

1995 WL 764548 (3d Cir. Jan. 12, 1996),

vacated and set for reh'g en banc, 1996 U.S.

App. LEXIS 2506 (3d Cir. Feb. 16, 1996)......... 12

Anderson v. H&R Block, Inc., 132 F. Supp. 2d

Pe CE Met rinnetsnnennsmeseseterenenmmentes 1,3

Anderson v. H&R Block, Inc., 287 F.3d 1038

ey Gi AA ED eitrtremnenenennnmestncsienens passim

Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557

SEE bcanenesiateniiinntinmntenninsemenematenmmmsnenimeian passim

BLAB T.V. of Mobile, Inc. v. Comcast Cable

Communications, _Inc., 182 F.3d = 851

Eee 19

Barnet v. Muncie Nat'l Bank, 98 U.S. 555

i iiaalahienariatatiat tial aaitieeeeeiia 7, 13,14

Battiste v. H&R Block, Inc. 209 F.3d 719 (Sth

Cir. 2000), aff'g No. 97-749-A (M.D. La. Jan.

es ee idiaiesadthiiaithiciiatiatanerineaidmiinenematnennaeintines &

Beeman v. Mbank Houston, N.A., 691 F. Supp.

I I ens iieesitianiiinite 12

Burke v. Northwest Airlines, Inc., 819 F. Supp.

ES He A cctiniteneninenmenneniinnnianens 19

Cahnmann v. Sprint Corp., 133 F.3d 484 (7th

GI SUTIEI tiatcsntsissisciesionnaniinttenininseinetiaaebtinenemnncenten 20

Caterpillar Inc. v. Williams, 482 U.S. 386

ainda aerials 3

Copeland v. MBNA Am., N.A., 820 F. Supp. 537

Se EE WU inicttnssteretenenninratepimmnatenpiennciees 10, 12

Davis v. Elmira Savings Bank, 161 U.S. 275

ITT icitcitaiheneciasitedaaniedeemnatcedeanidedinupeidmemensrumunmies 17

vill

TABLE OF AUTHORITIES—Continued

Evans v. Nat'l Bank of Savannah, 251 U.S. 108

Farmers’ and Mechanics’ Nat'l Bank v. Dearing,

DFE UB. 2D (BG TS) rvcecccecesceecccvscesessscsscesensccse 7, 10,

First Nat'l Bank v. Nowlin, 509 F.2d 872 (8th

Sa Fee ccccenesssennnssneenmmmnmnenpeen

Fortenberry v. Southtrust Bank of Ala. Nat'l

Assoc., No. CV-95-B-1691-J, 1996 U.S. Dist.

LEXIS 21685 (N.D. Ala. 1996) .........cccccccceeeeeees

Franchise Tax Board v. Constr. Laborers

Vacation Trust, 463 U.S. 1 (1983)........ccccceeeeee

Goehl v. Mellon Bank, 825 F. Supp. 1239 (E.D.

Pa. 1993), rev'd, Spellman v. Meridian Bank,

Nos. 94-3203, 94-3204, 94-3215 to 94-3218,

1995 WIL. 764548 (3d Cir. Jan. 12, 1996),

vacated and set for reh'g en banc, 1996 U.S.

App. LEXIS 2506 (3d Cir. Feb. 16, 1996).........

Goepel v. Nat'l Postal Mail Handlers Union, 36

F.3d 306 (3d Cir. 1994)...........sccssrccsrssssssressserees

Haseltine v. Cent. Nat'l Bank of Springfield, 183

TE 0) | ee

Heaton v. Monogram Credit Card Bank of Ga.,

No. 01-30104, 2002 U.S. App. LEXIS 13599

(Sth Cir. July 8, 2002, revised July 22, 2002)...

Hunter v. Rich’s Dep't Stores, 945 F. Supp. 1500

EBA ABD, GEGGD crsnccssnssasssnseressssrsssmessstesemssne

Jones v. Bankboston, N.A., 115 F. Supp. 2d 1350

GD, BBD, Be ccccesssecenssssessecsssssessssesnssccsesesssees

Krispin v. May Dep't Store Co., 218 F.3d 919

BR Gai. Bir cncssnccnsncsssesesassssnscemmssmcssssnspmnessess

Little York Gold-Washing & Water Co. v. Keyes,

OB UG. OGD CBG FF Pecccscscnssssscccesccssececesscesssssesssesee

Page

13, 14

15, 16

TABLE OF AUTHORITIES—Continued

Page

M. Nahas & Co. v. First Nat'l Bank of Hot

Springs, 930 F.2d 608 (8th Cir. 1991) 0.000000... passim

Marcus v. AT&T Corp., 138 F.3d 46 (2d Cir.

SFE sectrerscincsieieniasicdieneieemenenpsiemmenenenmmeneietmes 20

Marquette Nat'l Bank of Minneapolis v. First of

Omaha Serv. Corp., 439 U.S. 299 (1978).......... passim

McCollum v. Hamilton Nat'l Bank, 303 U.S. 245

ee a 7, 13

Metro. Life Ins. Co. v. Taylor, 481 U.S. 58

ae iicennsiianeneintiientnennteneinintnenanianisinuenttemnninaen passim

Moss v. Southtrust Mobile Servs., No. CV-95-P-

1647-W, 1995 U.S. Dist. LEXIS 21770 (N.D.

ee 12

Nelson v. Citibank (S.D.) N.A., 794 F. Supp. 312

SE SERIES SPU cseensiensscnonocectnsenetennnsemmmentnennetes 12

Schmeling v. NORDAM, 97 F.3d 1336 (10th Cir.

FEE sncenieonscdncccitentncnmssnnensiniiniesinmnictnsteinvcmmnnsins 19, 20

Smiley v. Citibank (S.D.), N.A., 517 U.S. 735

SEUaT at niceaneescsiinsaiisnteniinetonntibensunedinieminnimedmonenies 13,14

Spellman v. Meridian Bank, Nos. 94-3203, 94-

3204, 94-3215 to 94-3218, 1995 WL 764548

(3d Cir. Jan. 12, 1996), vacated and set for

reh’g en banc, 1996 U.S. App. LEXIS 2506

ee 8,9, 12

Strong v. Telectronics Pacing Sys., Inc., 78 F.3d

EE ie inrtnittndenicniitarnstserenececeveeeenses 20

Things Remembered, Inc. v. Petrarca, 516 U.S.

an 11

Tiffany v. Nat'l Bank of Mo., 85 U.S. 409 (1873).. 13, 18

Watson v. First Union Nat'l Bank of S.C., 837 F.

BU, BS GERI. Fe Pecccccesescsoscesessssesssecseesnece 9,12

TABLE OF AUTHORITIES—Continued

FEDERAL STATUTES

Employee Retirement Income Security Act, 29

i BBD cccccennnncsnnscnpscnseccsesesmnessnmanenasnecs

Judiciary Act of 1875 §§ 1, 2, r Stat. 470

EE hcisccnnenentnnsanarenmpecsiscmnnmuntatnenaaseomumemmmetenies

Labor Management Relations Act, 29 U.S.C.

OF Fe ceecsensnenencnsasccsennsnnnessmemenenenesnnetinannenmamenine

National Bank Act, Section 30, 12 U.S.C.

BD BI eco ccsaseconssvncnccesccnsesnseseneenmnanesssesssvsunusesnnce

2B U.S.C. § 1254(1) ..ccccccccssssccssssccsssscessssecscssseeessen

SIGE, 6 EDIE ceccnenecncesecnnssssonesnsenteesornsevosesnnsinnes

2B U.S.C. § 144 D ccccesccocssccovssccccssccoccscecccceconssecsssees

28 U.S.C. § 1447() .ccccsccsssessssescsssessssseeesssesessseses

OTHER AUTHORITIES

Re Ce BE cenncccccscseecesncnscccccnccennsscssssese

Arthur R. Miller, Artful Pleading: A Doctrine in

Search of Definition, 76 Tex. L. Rev. 1781

COUR BE Paxcosccnscsnscseccnnscccsessnsscnsenevsnensesensseneneces

Karen A. Jordan, The Complete Preemption

Dilemma: A Legal Process Perspective, 31

Wake Forest L. Rev. 927 (1996).............ccccceeees

Robert A. Ragazzo, Reconsidering the Artful

Pleading Doctrine, 44 Hastings L.J. 273

Page

IN THE

Supreme Court of the United States

No. 02-___

BENEFICIAL NATIONAL BANK AND

BENEFICIAL TAX MASTERS, INC.,

Petitioners,

MARIE ANDERSON, et al.,

Respondents.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

PETITION FOR A WRIT OF CERTIORARI

Beneficial National Bank and Beneficial Tax Masters, Inc.

respectfully petition for a writ of certiorari to review the

judgment of the United States Court of Appeals for the

Eleventh Circuit in this case.

OPINIONS BELOW

The opinion of the United States Court of Appeals for

the Eleventh Circuit (App. la) is reported at 287 F.3d 1038.

The opinion of the United States District Court for the

Middle District of Alabama (App. 21a) is reported at 132 F.

Supp. 2d 948.

JURISDICTION

The judgment of the court of appeals sought to be reviewed

was entered on April 3, 2002. The court of appeals denied

timely petitions for rehearing en banc (constituting also

petitions for panel rehearing) in an order entered May 29,

2002 (App. 29a). This Court’s jurisdiction is invoked under

28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

This case involves section 30 of the National Bank Act, 12

U.S.C. §§ 85 (App. 30a), 86 (App. 32a). It also involves 28

U.S.C. §§ 1331 (App. 33a), 1441 (App. 34a).

STATEMENT OF THE CASE

At all times pertinent hereto, Petitioner Beneficial National

Bank (“Beneficial”) was a national bank chartered under the

National Bank Act (“NBA”) and subject to the supervision of

the Office of the Comptroller of the Currency, United States

Department of the Treasury (“OCC”). Beneficial allegedly

made tax refund anticipation loans (“RALs”) to the

respondents, who were tax-preparation customers of

defendant H&R Block, Inc. A RAL is a loan made by a bank

in the amount of the borrower’s anticipated tax refund less

interest and fees, enabling the borrower to receive the money

more quickly than a tax refund.

The respondents brought suit in Alabama state court

against the petitioners, Beneficial and its affiliate Beneficial

Tax Masters, Inc., and also against H&R Block, Inc., a tax

preparation service, alleging that Beneficial charged usurious

interest on the RALs it made to the respondents. The

complaint asserts usury claims based on Alabama Code

§ 8-8-1 and the common law and does not mention section 30

of the NBA (App. 30a-32a).

The petitioners and H&R Block, Inc. timely removed the

case to the United States District Court for the Middle District

of Alabama, pursuant to 28 U.S.C. § 1441(a) and (b)

(App. 34a). Jurisdiction was invoked under 28 U.S.C. § 1331

(App. 33a) on the grounds that the action necessarily arose

under the laws of the United States. The respondents moved

to remand the case to state court. The district court denied

the motion, holding that the claims alleging that Beneficial

had charged usurious interest necessarily arose under

section 30 of the NBA and thus created federal question or

“arising under” jurisdiction pursuant to 28 U.S.C. § 1331,

permitting removal under the doctrine of complete

preemption. App. 28a. The district court certified the issue

for interlocutory appeal.

On appeal, a divided panel of the United States Court of

Appeals for the Eleventh Circuit reversed the district court’s

decision on the grounds that Congress did not clearly express

an intent to permit removal under section 30 of the NBA and,

therefore, complete preemption did not apply. App. 16a. The

dissenting opinion concluded that the doctrine of complete

preemption should apply to allow removal. /d. at 17a-20a.

The majority stated that removal based on federal question

or “arising under” jurisdiction “generally is governed by the

‘well-pleaded complaint’ rule, which provides that a case

may be removed only if the plaintiffs properly pleaded

complaint reveals that the claim is based on federal law.” /d.

at 5a (citation omitted). However, the majority recognized

that this Court has adopted an exception to this rule—the

complete preemption doctrine, which allows removal when

“the pre-emptive force of a [federal] statute is so

extraordinary that it converts an ordinary state common-law

complaint into one stating a federal claim for purposes of the

well-pleaded complaint rule.” Jd. (quoting Caterpillar Inc. v.

Williams, 482 U.S. 386, 393 (1987)) (internal quotation

marks omitted) (bracket in original).

The majority acknowledged that this Court’s case law has

established that section 30 of the NBA “governs the amount

of interest a national bank may charge... and provides the

exclusive remedy for usury claims against a national bank.”

App. 13a (citations omitted).' Nevertheless, the court held

that more is needed for federal removal jurisdiction under

complete preemption.

The majority analyzed Supreme Court and Eleventh Circuit

decisions on complete preemption and concluded that

“congressional intent is the pivotal issue.” /d. at 8a-9a. The

court emphasized that in Metropolitan Life Insurance Co. v.

Taylor, 481 U.S. 58 (1987), this Court applied the complete

preemption doctrine to permit removal after finding a clear

congressional intent to permit removal with respect to the

statute in question in that case. App. 8a-9a.

After reviewing the legislative history of the NBA, enacted

in 1864 during the Civil War, the majority acknowledged that

Congress intended to protect the national banking structure

from state control and regulation and to protect the newly

created national banks from state legislation. /d. at 9a-1 la.

The majority also acknowledged that the NBA was enacted

before the statute establishing original federal “arising under”

jurisdiction,’ the general removal statute,’ the well-pleaded

' Section 30 of the NBA has been codified as 12 U.S.C. §§ 85-86.

12 U.S.C. § 85 creates a federal usury standard by allowing a national

bank to charge interest

at the rate allowed by the laws of the State... where the bank is

located, or at a rate of | per centum in excess of the discount rate on

ninety-day commercial paper in effect at the Federal reserve bank in

the Federal reserve district where the bank is located, whichever

may be the greater... .

App. 30a. 12 U.S.C. § 86 provides the exclusive remedy for usury

violations by a national bank. See App. 32a.

? Judiciary Act of 1875 §§ 1, 2, 18 Stat. 470 (1875).

7 Id.

complaint rule* or the complete preemption doctrine.

However, it did not consider the fact that removal jurisdiction

had not yet been invented in 1864 to be a sufficient basis to

forego a showing of specific congressional intent to allow

removal. The majority held that, since it could not find a

clear congressional intent to permit removal, removal was

improper. App. 13a.

In so ruling, the majority acknowledged that its conclusion

directly conflicted with decisions of the United States Court

of Appeals for the Eighth Circuit that national banks can

remove actions alleging usury claims under state law to

federal court under complete preemption. Jd. at 13a-14a.

The majority stated that those decisions found complete

preemption “based solely on well-settled law that [section

30]... provides the exclusive remedy for usury claims

against a national bank.” /d. at 13a. In the majority’s view,

an expression of specific congressional intent to permit

removal was also required.

The petitioners and H&R Block, Inc. timely filed petitions

for rehearing en banc, which were denied on May 29, 2002

(App. 29a). The petitioners then sought, and on June 17,

2002, obtained, a stay of the court of appeals’ mandate

pending the filing of this petition for a writ of certiorari and

this Court’s disposition (App. 36a). .

REASONS FOR GRANTING THE WRIT

As the court of appeals has acknowledged, its two-to-one

decision to deny removal jurisdiction in this case directly

conflicts with decisions of the United States Court of Appeals

for the Eighth Circuit. Numerous conflicting district court

opinions exist in other circuits as well, and the conflict can be

* Little York Gold-Washing & Water Co. v. Keyes, 96 U.S. 199 (1877).

* Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557 (1968).

resolved only by this Court. The ability of national banks to

remove usury cases to the federal courts is important to the

uniform administration and enforcement of the NBA, as

urged by the OCC, the federal government agency charged

with interpreting the NBA, in an amicus curiae brief in the

court below (App. 38a). The court of appeals decision also is

inconsistent with more than one hundred and twenty-five

years of decisions by this Court recognizing that all usury

claims against national banks are necessarily federal.

1. The Court of Appeals Decision Directly Conflicts

with Decisions of the United States Court of

Appeals for the Eighth Circuit.

(a) Direct Conflict—The court of appeals

decision created a direct and expressly acknowledged conflict

with decisions of the United States Court of Appeals for the

Eighth Circuit which held that state usury claims against a

national bank are completely preempted by section 30 of

the NBA and thus are properly subject to removal by the

national bank. App. 3a n.5 & 13a (citing Krispin v. May

Dep’t Stores Co., 218 F.3d 919, 922 (8th Cir. 2000); M.

Nahas & Co. v. First Nat’l Bank of Hot Springs, 930 F.2d

608, 612 (8th Cir. 1991)).°

In considering this issue in the Nahas case, the Eighth

Circuit took note of this Court’s determination that “Congress

has prescribed in the national banking laws precisely what

remedies are available against a national bank for usury, in

° The United States Court of Appeals for the Fifth Circuit recently

recognized the existence of this conflict. See Heaton v. Monogram Credit

Card Bank of Ga., No. 01-30104, 2002 U.S. App. LEXIS 13599, at 2 n.1

(Sth Cir. July 8, 2002, revised July 22, 2002) (“The courts of appeals are

divided as to whether [12 U.S.C.] §§ 85 and 86 completely preempt state-

law usury claims against a national bank so as to confer federal subject-

matter jurisdiction over such claims.”) (comparing Anderson, 287 F.3d

1038, with Krispin, 218 F.3d at 922).

order to promote remedial uniformity and to protect national

banks from destructive usury penalties frequently available

under state law.” Nahas, 930 F.2d at 610 (citing Farmers’ &

Mechanics’ Nat'l Bankv. Dearing, 91 U.S. 29, 32-33

(1875)). The Eighth Circuit cited a line of this Court’s

decisions holding that, “‘since Congress has provided a

penalty for usury, that action preempts the field and leaves no

room for varying state penalties.’"” /d. (quoting First Nat'l

Bank v. Nowlin, 509 F.2d 872, 881 (8th Cir. 1975), and citing

McCollum v. Hamilton Nat'l Bank, 303 U.S. 245 (1938), and

Barnet v. Muncie Nat'l Bank, 98 U.S. 555 (1879)).

The Eighth Circuit then analyzed removal jurisdiction and

the exception to the “well-pleaded complaint” rule provided

by the complete preemption doctrine. It relied on this Court’s

decision in the Taylor case for the proposition that the

doctrine is “limited to federal statutes that ‘so completely pre-

empt a particular area, that any civil complaint raising this

select group of claims is necessarily federal.’” Nahas, 930

F.2d at 612 (quoting Taylor, 481 U.S. at 65)). In considering

this Court’s first complete preemption case, Avco Corp. v.

Aero Lodge No. 735, 390 U.S. 557 (1968), the Eighth Circuit

stated that “Avco thus illustrates that this type of removal is

most appropriate where Congress has created an exclusive

federal remedy that displaces any overlapping or inconsistent

state remedies.” 930 F.2d at 612. The court held that, since

section 30 of the NBA provides an exclusive federal remedy

for usury claims against national banks, any civil complaint

rais'ng Claims of excessive interest against a national bank is

“necessarily federal in nature and properly removable.” /d. at

612. The court added that this result would apply “whether or

not [a] plaintiff artfully attempted to couch its complaint

wholly in state law terms” and that “a plaintiff cannot thwart

the removal of a case by inadvertently, mistakenly or

fraudulently concealing the federal question that would

necessarily have appeared if the complaint had been well

pleaded.” Jd.’

The primary difference in analysis between the Eleventh

Circuit's decision below and the Eighth Circuit’s contrary

decisions is the Eleventh Circuit’s requirement of a specific

congressional intent to permit removal of cases purporting to

be grounded entirely in state law. The Eighth Circuit relies

instead on the undispute4 sngressional intent to federalize

all usury claims against »:tional banks and considers that

intent to be a sufficient basis for finding federal “arising

under” jurisdiction. This difference is at the core of the issue

presented to this Court.

(b) Other Conflicting Decisions.—Other circuits

have also addressed the issue in conflicting decisions. The

Fifth Circuit summarily affirmed a district court decision

holding that section 30 of the NBA allows removal of state

usury claims under complete preemption. Battiste v. H&R

Block, Inc., 209 F.3d 719 (Sth Cir. 2000), aff’g No. 97-749-A

(M.D. La. Jan. 13, 1998) (App. 59a.) However, a divided

panel of the Third Circuit decided that complete preemption

does not permit removal of a case purporting to assert state

usury law against a national bank. Spellman v. Meridian

Bank, Nos. 94-3203, 94-3204, 94-3215 to 94-3218, 1995 WL

764548, at *6-7 (3d Cir. Jan. 12, 1996), vacated and set for

reh'g en banc, 1996 U.S. App. LEXIS 2506 (3d Cir. Feb. 16,

1996). The Third Circuit vacated that decision and ordered

rehearing en banc. Before the full court could address the

issue, however, the plaintiffs dismissed the case.

” In its more recent decision in the Krispin case, the Eighth Circuit

relied on its analysis in the Nahas case to affirm a lower court's

application of the complete preemption doctrine to usury claims pursuant

to section 30 of the NBA. See 218 F.3d at 922.

Similar to the Eleventh Circuit opinion below, the majority

of the Third Circuit panel in the Spellman case adopted a

standard for complete preemption requiring a clear and

specific congressional intent to permit removal of purported

state-law claims. 1995 WL 764548, at *3. The dissenting

opinion took the position that such specific congressional

intent was not necessary. The dissent stated,

Congress wrote the National Bank Act in 1864, long

before the “well-pleaded complaint” rule and the

complete preemption doctrine were enunciated. We

could not expect the Congress which enacted the

National Bank Act to have discussed the federal question

jurisdiction or removal implications of 12 U.S.C. §§ 85

& 86, since neither general federal question jurisdiction

nor general removal power existed in 1864. Under these

circumstances, the majority’s requirement of an explicit

showing of congressional intent to allow removal is too

strict. Instead we should look to less direct evidence of

what Congress intended regarding the role of federal

courts in enforcing the National Bank Act.

1995 WL 764548, at *21 (Scirica, J., dissenting) (footnotes

omitted). After having examined the legislative history of the

NBA, the dissent found that Congress intended for usury

claims against national banks to be “governed by a body of

federal law which the federal courts would apply.” /d. at *24.

Stating that the usury claims were “a federal case in state

wrapping paper,” it concluded that removal of the case was

proper. /d.

Decisions among the district courts are also divided. A

number of district courts in other circuits have adopted the

Eighth Circuit view that removal is proper. See Watson v.

First Union Nat'l Bank of S.C., 837 F. Supp. 146, 149

(D.S.C. 1993) (collecting cases). However, other courts have

remanded cases removed by national banks. See, e.g.,

Copeland v. MBNA Am., N.A., 820 F. Supp. 537, 541 (D.

Colo. 1993).

of this Court, the conflicting law on this issue will subject

national banks to different standards regarding removal

depending on the circuit in which they are sued. Where

removal is not permitted, national banks will be potentially

subject to the vicissitudes of multiple state fora and deprived

of the benefits of federal court expertise and federal court

uniformity of decision. Their only relief from state court

misinterpretations will be a petition for certiorari to this

Court, a review not available as of right and generally

reserved for issues transcending the rights and duties of the

particular litigants. Such disparity of treatment is contrary to

the congressional intent to create a uniform, nationwide

banking system. See, e.g., Marquette Nat'l Bank of

Minneapolis v. First of Omaha Serv. Corp., 439 U.S. 299,

314-15 (1978) (“Congress intended to facilitate... a

‘national banking system.’”); Farmers’ & Mechanics’ Nat'l

Bank v. Dearing, 91 U.S. 29, 32 (1875) (stating that section

30 of the NBA creates “a system of regulations [where]

{a}ll the parts are in harmony with each other, and cover the

entire subject’ (emphasis added).

The conflict will not be resolved absent a decision of this

Court. The district courts in the Eighth and Eleventh Circuits

will follow the conflicting mandates of their respective courts

of appeals. The Eighth Circuit’s position has been firmly

established since the Nahas decision in 1991. The Eleventh

Circuit is unlikely to have another opportunity to consider the

issue: district courts within the circuit will remand any usury

complaints against national banks purporting to raise state

claims alone, and remand orders based on lack of subject

matter jurisdiction are generally “not reviewable on appeal or

otherwise.” 28 U.S.C. § 1447(d); see Things Remembered,

Inc. v. Petrarca, 516 U.S. 124, 127-28 (1995).

The issue at bar is ripe for this Court’s review. It is a

purely legal issue that has been thoughtfully considered and

thoroughly analyzed by the lower courts for over a decade,

and the conflicting rulings require resolution by this Court.

2. The Court of Appeals Decision Is Erroneous and

Is Inconsistent With This Court’s Longstanding

Position That All Usuzy Claims Against National

Banks Arise Under Federal Law.

(a) Erroneous Analysis.—The Eleventh Circuit’s

approach to the complete preemption doctrine is flawed. It

requires a determination that Congress specifically intended

to permit removal in cases where state claims preempted by a

federal statute under the ordinary preemption doctrine are

filed in state court. Such intent presumptively would not be

expressed in the federal statute itself; if it were, there would

be no need for the doctrine of complete preemption—it would

be a case of “read the statute.” The Eleventh Circuit requires

instead that the intent to permit removal of spurious state law

claims be discerned from legislative history. The NBA

necessarily fails the Eleventh Circuit’s test because Congress

could not possibly have considered removal in 1864 when it

passed the statute: general removal of actions “arising under”

federal law had not yet been invented. The NBA fails this

test because it was born too soon.

None of the decisions by this Court supports the Eleventh

Circuit’s analysis. The proper analysis is whether the

preemptive force of the federal statute makes the assertion of

a state-law claim completely impossible, so that the claim in

question must be viewed, despite the plaintiff's

characterization, as “arising under” federal law. That

depends on the clarity and specificity with which Congress

completely federalized the law relating to the claim involved.

In light of this Court’s decisions interpreting section 30 of the

NBA, it is hard to imagine a clearer case of complete

preemption under this approach than that presented by the

case at bar and cases like it.

Suits like this one are not rarities; filing them may be a

cottage industry of some size. Complaints similar to the

complaint in this case are found in a number of reported

cases.® There may well be others; remand orders may rarely

be reported. Why are these cases filed in state court, seeking

recovery only under clearly preempted state usury laws?

Assuredly the cases are not filed with a view to provide

martyrs to the force of the Supremacy Clause through rapid

dismissal for failure to state a claim on which relief can be

granted. Success, not defeat, presumably motivates these

filings. Whether the purpose is to defeat federal removal

jurisdiction and then assert a violation of federal law in state

court or, more likely, to convince a busy state court judge,

with little or no staff, that state law actually applies instead of

the federal law, hoping to get a settlement before the case

arrives at the state appellate level, is not entirely clear. The

latter seems to be the case, since a formal amendment to

* See Jones v. Bankboston, N.A., 115 F. Supp. 2d 1350 (S.D. Ala.

2000); Fortenberry v. Southtrust Bank of Ala. Nat'l Assoc., No. CV-95-B-

1691-J, 1996 U.S. Dist. LEXIS 21685 (N.D. Ala. 1996); Moss v.

Southtrust Mobile Servs., No. CV-95-P-1647-W, 1995 U.S. Dist. LEXIS

21770 (N.D. Ala. 1995); Hunter v. Rich’s Dep't Stores, 945 F. Supp. 1500

(N.D. Ala. 1995); Watson v. First Union Nat'l Bank of S.C., 837 F. Supp.

146, 149 (D.S.C. 1993); Copeland v. MBNA Am., N.A., 820 F. Supp. 537,

541 (D. Colo. 1993); Goehl v. Mellon Bank, 825 F. Supp. 1239 (E.D. Pa.

1993), rev'd, Spellman v. Meridian Bank, Nos. 94-3203, 94-3204, 94-

3215 to 94-3218, 1995 WL 764548 (3d Cir. Jan. 12, 1996), vacated and

set for reh’g en banc, 1996 U.S. App. LEXIS 2506 (3d Cir. Feb. 16,

1996); Ament v. PNC Bank, 825 F. Supp. 1243 (W.D. Pa. 1992) (same

subsequent history); Nelson v. Citibank (S.D.) N.A., 794 F. Supp. 312 (D.

Minn. 1992); Beeman v. Mbank Houston, N.A., 691 F. Supp. 1027 (S.D.

Tex. 1988).

13 .

allege a claim arising under federal law might give rise to a

second attempt to remove (or an initial effort to remove, in a

circuit like the Eleventh Circuit). Moreover, in the typical

case there may well be no violation of federal law, and the

suits are attempts to collect damages for nonconformity with

an inapplicable, preempted state law. What is plain is that, in

either case, the procedure is an abuse, and we believe this

Court ought to look carefully at a decision, like that of

the Eleventh Circuit, which permits, if not encourages, such

an abuse.

(b) This Court’s Interpretation of Section 30.—

The court of appeals decision below failed to recognize the

significance of the unbroken line of this Court’s decisions

dating back to Farmers’ and Mechanics’ National Bank v.

Dearing, 91 U.S. 29 (1875), uniformly recognizing that all

usury claims against national banks are necessarily federal.”

These cases demonstrate that the NBA not only preempts

state usury claims against a national bank under the ordinary

preemption doctrine, but also federalizes any such claims by

establishing both an exclusive federal claim and an exclusive

federal remedy.

In the seminal Dearing case, decided shortly after

enactment of the NBA, this Court held that federal standards

for national bank interest rates pursuant to section 30 of the

NBA establish a federal remedy for usury that precludes state

remedies. 91U.S. at 34. The Court characterized the

provisions of section 30 of the NBA as follows: “These

clauses, examined by their own light, seem to us too clear to

* See, e.g., Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 737, 744

(1996); Marquette Nat'l Bank, 439 U.S. at 308 (1978); McCollum v.

Hamilton Nat'l Bank, 303 U.S. 245, 245-46, 248 (1938); Evans v. Nat'l

Bank of Savannah, 251 U.S. 108, 109, 114 (1919); Haseltine v. Cent.

Nat'l Bank of Springfield, 183 U.S. 132, 134 (1901); Barnet v. Muncie

Nat'l Bank, 98 U.S. 555, 558-59 (1878); Dearing, 91 U.S. 29, 34-35

(1875); Tiffany v. Nat'l Bank of Mo., 85 U.S. 409, 410-11 (1873).

admit of doubt as to any thing to which they relate. They

form a system of regulations. All the parts are in harmony

with each other, and cover the entire subject.” Id. at 32

(emphasis added). The Court rejected a construction of the

NBA that would permit state law to define remedies for usury

by national banks, ruling that “States can exercise no control

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

except in so far as Congress may see proper to permit.” /d.

at 34. Moreover, “[t]he power to supplement [section 30] by

State legislation! is conferred neither expressly nor by

implication.” Jd. at 35.

This core principle was reiterated three years later in

Barnet v. Muncie National Bank, 98 U.S. 555, 558 (1878):

“The [state] statutes ... upon the subject of usury... cannot

affect the case. Where a statute [the NBA] creates a new

right or offence, and provides a specific remedy or punish-

ment, they alone apply. Such provisions are exclusive.”

Forty years later, in Evans v. National Bank of Savannah,

251 U.S. 108 (1919), the Court reiterated its holding in the

Dearing and Barnet cases, stating that “[w]hether transactions

by [a national bank] are usurious and the consequent penalties

therefor[] must be ascertained upon a consideration of the

National Bank Act.” Evans, 251 U.S. at 109 (emphasis

added). More recently, the Court has consistently recognized

that section 30 of the NBA governs all usury claims against

national banks. See, e.g., Smiley, 517 U.S. at 737 (1996);

Marquette Nat'l Bank, 439 U.S. at 318-19 (1978).

Thus, it is clear from the Court’s decisions that the NBA

not only preempts state claims for usury against a national

bank, but also federalizes any such claims. Since Congress

intended the NBA to occupy the entire field, all usury actions

against national banks necessarily present a question arising

under federal law. Artful pleading by plaintiffs in an attempt

to cloak the federal claim in state law garb should not

preclude removal. As urged in the OCC’s amicus brief

below, “where [as here] Congress clearly wished to displace

state law by creating an exclusive federal remedy and stressed

the importance of uniformity in the fledgling national banking

system, a finding of complete preemption is appropriate.”

App. 5Sa.

Cases.—A finding that section 30 of the NBA completely

preempts state law usury claims would be consistent with this

Court’s application of the complete preemption doctrine. To

date, the Court has found complete preemption under two

statutes: section 301 of the Labor Management Relations Act

(“LMRA”), 29 U.S.C. § 185, Avco Corp. v. Aero Lodge No.

735, 390 U.S. 557, 560 (1968), and section 502(a) of the

Employee Retirement Income Security Act (“ERISA”), 29

U.S.C. § 1132(a), Metropolitan Life Insurance Co. v. Taylor,

481 U.S. 58, 63 (1987).

In the first of these cases, Avco, the Court said nothing

concerning the possible existence of congressional intent to

permit removal of claims purporting to arise solely under

state law. Instead, it focused its analysis of removal

jurisdiction solely on the fact that section 301 of the LMRA,

29 U.S.C. § 185, provided a federal right of action to enforce

or construe collective bargaining agreements entered into

under federal labor laws. 390 U.S. at 559-60. Finding that

state law “will not be an independent source of private rights”

in such cases, id. at 560, the Court concluded that it was

“clear that the claim under [the] collective bargaining

agreement is one arising under the ‘laws of the United States’

within the meaning of the removal statute.” /d.

In Franchise Tax Board v. Construction Laborers Vacation

Trust, 463 U.S. 1, 23-24 (1983), the Court elaborated on the

rationale for the Avco decision as follows:

The necessary ground of decision was that the

preemptive force of... [the federal statute] is so

powerful as to displace entirely any state cause of

action.... Any such suit is purely a creature of federal

law, notwithstanding the fact that state law would

provide a cause of action in the absence of... [the

federal statute]. Avco stands for the proposition that if a

federal cause of action completely preempts a state cause

of action any complaint that comes within the scope of

the federal cause of action necessarily “arises under”

federal law.

The Court determined that complete preemption was not

established in the Franchise Tax Board case since Congress

did not preempt all state causes of action or provide a federal

remedy. 463 U.S. at 25-26. The Court had nothing to say

about specific congressional intent to permit removal of a

purported state-law claim.

In the later Taylor case, this Court stated that the complete

preemption doctrine permits removal in the following

circumstances: “Congress may so completely pre-empt a

particular area that any civil complaint raising this select

group of claims is necessarily federal in character.” 481 U.S.

at 63-64. The Court framed the issue as “whether the[] state

common law claims are not only pre-empted by ERISA, but

also displaced by ERISA’s civil enforcement provision,

§ 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), to the extent that

complaints filed in state courts purporting to plead such state

common law causes of action are removable to federal court

under 28 U.S.C. § 1441(b).” 481 U.S. at60. The Court

looked to “whether or not the Avco principle can be

extended” to the ERISA context. Taylor, 481 U.S. at 64.

While noting a similarity between the jurisdictional language

of ERISA’s civil enforcement provisions and that of the

LMRA, the Court declared that, absent an “explicit direction

from Congress, this question would be a close one.” 481 U.S.

at 64. The Court did not have to resolve that “close one,”

finding such explicit direction in the form of legislative

history stating that actions like the one in issue were to be

“regarded as arising under the laws of the United States in

similar fashion to those brought under section 301 of the

[LMRA].” /d. at 65-66. Accordingly, the Court held that

removal was proper. In so holding, this Court did not state

that a specific congressional intent to permit removal was

prerequisite to a finding of complete preemption; it simply

found that there was such a specific intent present there. See

id. at 65-66.

3. The Issue Is Important to the Uniform and

Effective Operation of the National Banking

System.

The ability of national banks to remove usury claims

against them to the federal courts is vital to the uniform

development of the NBA and the uniform treatment of

national banks facing usury claims. For this reason, the OCC,

the federal government agency charged with interpreting the

NBA, supervising all national banks and protecting the safety

and soundness of the national banking system, filed ‘an

amicus curiae brief in the court below strongly urging that

national banks should be allowed to remove usury claims

purporting to arise under state law pursuant to the complete

preemption doctrine. App. 47a-55a. The OCC’s participa-

tion in the case underscores the importance of the issue to the

national banking system. The majority decision below

simply ignored the OCC’s views.

The NBA was enacted in 1864 to create a national banking

system consisting of federally chartered national banks which

are “‘instrumentalit[ies] of the federal government, created

for a public purpose, and as such necessarily subject to the

paramount authority of the United States.’”” Marquette Nat'l

Bank, 439 U.S. at 308 (quoting Davis v. Elmira Savings

Bank, 161 U.S. 275, 283 (1896)). This Court has repeatedly

stated that, in adopting the NBA, Congress intended to

create a uniform nationwide banking system. See, e.g.,

id. at 314-15.

Pursuant to this purpose, Congress adopted a federal

standard for interest rates to be charged by national banks

(App. 30a) and an exclusive federal remedy for violations of

that standard in section 30 of the NBA (App. 32a). As the

OCC stated in its amicus brief in the court below, this

provision was an important feature of the NBA because loans

are typically the major assets of a national bank and interest is

its principal source of income. App. 48a-49a. Congress

clearly intended to protect national banks from _ state

interference in this area: section 30 “was considered

indispensable to protect .. . [national banks] against possible

unfriendly state legislation.” Tiffany v. Nat'l Bank of Mo., 85

U.S. 409, 412 (1873). Permitting removal of usury claims

against national banks is vital to providing such protection

and to ensuring the uniform development of the law and its

uniform application to national banks, wherever they may be

sued.

4. This Case Presents an Opportunity for the Court

to Provide Much-Needed Guidance on_ the

Complete Preemption Doctrine.

This Court has not visited the issue of complete preemption

in the past fifteen years or outside the contexts of the

LMRA and ERISA. As a result, the lower federal courts

have adopted differing standards of application. This case

would provide a useful vehicle for this Court’s resolution of

those differences.

Courts and commentators agree that there is great

confusion in the lower courts over the application of complete

preemption. As the Eleventh Circuit recognized in an earlier

case, “[c]Jourts . . . have struggled to define the exact contours

of the complete preemption doctrine[, and] [t]he results have

varied.” BLAB T.V. of Mobile, Inc. v. Comcast Cable

Communications, Inc., 182 F.3d 851, 856 (11th Cir. 1999).

The Tenth Circuit has noted, “the scope of the doctrine is not

entirely clear: ‘[t]he evolution of the doctrine... has been

one of fits-and-starts and zig-zags [and] has, not surprisingly,

occasioned both confusion and disagreement among the

federal circuit and district courts.’” Schmeling v. NORDAM,

97 F.3d 1336, 1339 (10th Cir. 1996) (quoting Burke v.

Northwest Airlines, Inc., 819 F. Supp. 1352, 1356 (E.D.

Mich. 1993) (brackets in original)). Professor Arthur Miller

concurs, concluding his examination of cases by declaring

that “(t]he application of the complete-preemption doctrine is

unclear” because of the Court’s failure to “enunciate[] clear

principles for identifying completely preempted claims

beyond the LMRA and ERISA contexts... .’” Arthur R.

Miller, Artful Pleading: A Doctrine in Search of Definition,

76 Tex. L. Rev. 1781, 1797 (June 1998).'°

As a result, there is a broad range of approaches to the

complete preemption doctrine among the courts of appeals."

One of the primary issues of confusion and conflict among

the circuits is the role of congressional intent: whether

Congress must specifically intend to permit removal of

complaints asserting only state law or rather whether it is

sufficient for Congress to intend to create exclusive federal

claims and remedies and to leave no room for the states. The

latter form of intent was present in each of this Court’s two

decisions finding complete preemption, while the Taylor

'° See also Karen A. Jordan, The Complete Preemption Dilemma: A

Legal Process Perspective, 31 Wake Forest L. Rev. 927, 929 (1996)

(declaring that lower courts are “in a disquieting state of disarray”)

'' For efforts to categorize the lower courts’ applications of the

complete preemption doctrine, see Jordan, supra, at 964-980, and Robert

A. Ragazzo, Reconsidering the Artful Pleading Doctrine, 44 Hastings L.J.

273, 295-303 (1993).

decision (but not Avco) also found express attention to

removal in the legislative history.

This issue is at the heart of this case. Under the standard

requiring express intent to permit removal, adopted by the

Eleventh Circuit in its decision below, it is impossible for

statutes adopted prior to removal jurisdiction, such as the

NBA, to pass muster, and it is extremely difficult for statutes

enacted prior to the Court’s recognition of complete

preemption. While some courts of appeals agree with the

Eleventh Circuit that there must be an expression of specific

congressional intent to permit removal,'? other courts of

appeals look instead to congressional intent to create a federal

claim eliminating all possibility of state-law claims.'? They

'? See, e.g., Goepel v. Nat’! Postal Mail Handlers Union, 36 F.3d 306,

311 (3d Cir. 1994) (stating that a finding of complete preemption requires,

in addition to a federal cause of action, a clear showing of congressional

intent to permit removal); cf Marcus v. AT&T Corp., 138 F.3d 46, 54 (2d

Cir. 1998) (narrowing circuit application of complete preemption doctrine

to “the very narrow range of cases where ‘Congress has clearly

manifested an intent’ to make a specific action within a particular area

removable.”) (quoting Taylor, 481 U.S. at 66).

'’ See, e.g., Strong v. Telectronics Pacing Sys., Inc., 78 F.3d 256, 260

(6th Cir. 1996) (“[C]ongressional intent necessary to confer removal

jurisdiction upon the federal district courts through complete preemption

is expressed through the creation of a parallel federal cause of action that

would ‘convert’ a state cause of action into the federal action for purposes

of the well-pleaded complaint rule.”); Schmeling, 97 F.3d at 1343 (10th

Cir.) (considering statute’s “provision of a federal cause of action to

enforce the [federal law]” as determinative of whether “Congress intended

to allow removal in such cases”); Nahas, 930 F.2d 608, 612 (8th Cir.)

(exclusive federal remedy supports removal under doctrine of complete

preemption); cf Cahnmann v. Sprint Corp., 133 F.3d 484, 490 (7th Cir.

1998) (holding, without specific mention of complete preemption, that

federal remedy was exclusive and that “because federal law has

extinguished the state law basis under which [the claim] might otherwise

arise, the case is removable to federal court even if the plaintiff sedulously

avoids mention of federal law in his complaint”).

consider that intent sufficient to establish federal “arising

under” jurisdiction for purposes of removal.

Where Congress has created an exclusive federal claim and

remedy, as in this case, there is no rational reason to assume

that Congress meant to tolerate evasions of the defendant’s

invocation of federal jurisdiction through pleading a patently

non-existent state claim.

CONCLUSION

For the reasons stated, this petition for a writ of certiorari

should be granted.

Respectfully submitted.

Of Counsel: DENNIS G. LYONS

ALAN S. KAPLINSKY Counsel of Record

BURT M. RUBLIN HOWARD N. CAYNE

BALLARD SPAHR ANDREWS & BROOKSLEY E. BORN

INGERSOLL, LLP BRIAN C. DUFFY

1735 Market St. Sist FI, ARNOLD & PORTER

Philadelphia, PA 19103 555 Twelfth Street, N.W.

(215) 665-8500 Washington, D.C. 20004

(202) 942-5000

STEWART M. Cox

Hope T. STEWART Attorneys for Petitioners,

BRADLEY ARANT Rose & Beneficial National Bank and

WHITE, LLP Beneficial Tax Masters, Inc.

1819 Fifth Ave. North

P.O. Box 830709

Birmingham, AL 35203

(205) 521-8000

August 2002

APPENDICES

APPENDIX A

UNITED STATES COURT OF APPEALS

ELEVENTH CIRCUIT

[April 3, 2002]

No. 01-11863

MARIE ANDERSON, ALVESTER BRAFORT, et al.,

Plaintiffs-Appellants,

H&R BLOck, INC., Beneficial National Bank, et a/.,

Defendants-Appellees.

Before TJOFLAT, BARKETT and WILSON, Circuit

Judges.

WILSON, Circuit Judge:

The issue we decide on this appeal is whether the

plaintiffs” state-law usury claims are completely preempted

by the National Bank Act (NBA), 12 U.S.C. §§ 85 and 86,

and therefore properly removable to federal court. Although

the plaintiffs alleged only state-law claims in their complaint,

the district court determined that it had jurisdiction based on

the doctrine of complete preemption. We disagree and

reverse.

BACKGROUND

The plaintiffs, who as customers of H&R Block, Inc. had

taken out tax refund anticipation loans' from Beneficial

' In a tax refund anticipation loan, a customer receives the amount of

her anticipated tax refund, less fees charged by the lender and the tax

preparation service, and in return authorizes the government to deposit the

tax refund directly into an account at the bank to repay the loan.

National Bank, brought suit in state court against H&R

Block, Beneficial National Bank, and Beneficial Tax Masters,

Inc., alleging usury violations : along with other state-law

claims. The defendants removed the case to federal court on

the basis of federal question jurisdiction. The defendants

argued that since the NBA provides the exclusive remedy for

claims alleging excessive interest against national banks, the

plaintiffs” state-law usury claims should be recharacterized as

federal claims under the doctrine of complete preemption.

The plaintiffs moved to remand the case back to state court,

arguing that while §§ 85 and 86 of the NBA may provide a

defense to state-law usury claims, these provisions do not

accomplish complete preemption. The district court denied

the motion to remand, holding that removal was proper

because federal question jurisdiction existed based on

complete preemption. Recognizing that the issue was

unsettled in this Circuit, the district court certified for

interlocutory appeal the question of whether §§ 85 and 86 of

the NBA completely preempt state-law usury claims so as to

confer removal jurisdiction. We hold that these sections do

not accomplish complete preemption.

? The plaintiffs alleged thai the defendants charged excessive interest in

violation of Alabama Code § 8-8-1 and the common-law usury doctrine.

In addition to the usury claims, the complaint included claims for

intentional misrepresentation, suppression of material facts, and breach of

fiduciary duty.

DISCUSSION

The question of whether §§ 85 > and 86° of the NBA

completely preempt state-law usury claims against a national

bank has been the subject of disagreement among other

circuits and among district courts within this Circuit.” What

* Section 85 provides, “Any [national bank] may take, receive, reserve,

and charge on any loan or discount made . . . interest at the rate

allowed by the laws of the State . . . where the bank is located... .” 12

U.S.C. § 85.

* Section 86 provides,

The taking, receiving, reserving, or charging a rate of interest

greater than is allowed by section 85 of this title, when knowingly

done, shall be deemed a forfeiture of the entire interest which the

note, bill, or other evidence of debt carries with it, or which has

been agreed to be paid thereon. In case the greater rate of interest

has been paid, the person by whom it has been paid, or his legal

representatives, may recover back, in an action in the nature of an

action of debt, twice the amount of the interest thus paid from the

association taking or receiving the same: Provided, That such action

is commenced within two years from the time the usurious

transaction occurred.

12 U.S.C. § 86.

* While the Eighth Circuit has held that § 86 completely preempts

state-law usury claims, M. Nahas & Co. v. First Nat'l Bank of Hot

Springs, 930 F.2d 608, 612 (8th Cir.1991), the Third Circuit disagreed in

Spellman v. Meridian Bank, 3d Cir.1996, 1995 WL 764548 (Nos. 94-

3203, 94-3204, 94-3215 to 94-3218, Jan. 12, 1996), Rehearing in Banc

Granted, Opinion Vacated (Feb. 16, 1996). After the Third Circuit

vacated the panel decision and ordered a rehearing en banc, the parties

settled and the complete preemption issue was left undecided. 14B

Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal

Practice and Procedure § 3722.1, at 557 (3d ed. 1998).

Within this Circuit, district courts also have reached different results.

Compare Monday v. Coast to Coast Wireless Cable, M.D. Ala.1997,

1997 WL 114874 (Nos. CV-96-A-1321-N, CV-96-A-1539-N, CV-96-A-

1720-N, CV-96-A-1722-N, CV-96-A-1723-N, CV-96-A-1725-N, Feb. 19,

1997) (holding §§ 85 and 86 completely preempt state-law claims within

their scope), with Jones v. Bankboston, N.A., 115 F.Supp.2d 1350, 1356-

58, 1360 (S.D.Ala.2000) (reaching the opposite conclusion).

is at stake in this inquiry is whether §§ 85 and 86 not only

provide a defense to state-law usury claims under ordinary

preemption, but also confer on defendants the ability to

remove the case from state to federal court under the com-

plete preemption doctrine. For the reasons that follow, we

hold that §§ 85 and 86 do not accomplish complete preemp-

tion. We begin by describing the complete preemption

doctrine and analyzing how the doctrine has been applied by

the Supreme Court and this Court. Our analysis reveals that

the complete preemption inquiry turns on congressional

intent—whether Congress not only intended for a federal

statute to provide a defense to state-law claims, but also

intended to confer on defendants the ability to remove a case

to a federal forum. We conclude that §§ 85 and 86 of the

NBA do not accomplish the extraordinary result of complete

preemption, because clear congressional intent to permit

removal under these sections is lacking.

Whether a district court may exercise jurisdiction over this

case based on complete preemption is a question of law that

we review de novo. BLAB T.V. of Mobile, Inc. v. Comcast

Cable Communications, Inc., 182 F.3d 851, 854 (11th Cir.

1999). As courts of limited jurisdiction, lower federal courts

may decide a case only when Article III of the Constitution

provides that the federal judicial power extends to the case

and when Congress has granted jurisdiction. Univ. of S. Ala.

v. Am. Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999).

When a federal court acts outside its jurisdiction, it violates

principles of separation of powers and federalism, interfering

with Congress”s authority to demarcate the jurisdiction of

lower federal courts, and with the states” authority to resolve

disputes in their own courts. /d. at 409-10. For this reason,

when there are doubts as to whether removal jurisdiction is

proper, we favor remand of removed cases. /d. at 411.

The removal statute, 28 U.S.C. § 1441(a), provides that any

civil action brought in state court may be removed to federal

court by the defendant as long as the federal court has

jurisdiction in the case. Removal based on federal question

jurisdiction, the grounds for removal the district court found

here, generally is governed by the “well-pleaded complaint”

rule, which provides that a case may be removed only if the

plaintiff’s properly pleaded complaint reveals that the claim

is based on federal law. Franchise Tax Bd. of Cal. v. Constr.

Laborers Vacation Trust for S. Cal., 463 U.S. 1, 9- 10, 103

S.Ct. 2841, 77 L.Ed.2d 420 (1983). Under the well-pleaded

complaint rule, a case in which the plaintiff asserts only state-

law claims may not be removed to federal court based on the

existence of a federal defense—even the defense of ordinary

preemption. Caterpillar Inc. v. Williams, 482 U.S. 386, 393,

107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). “Congress has long

since decided that federal defenses do not provide a basis for

removal.” /d. at 399, 107 S.Ct. 2425.

An exception to the well-pleaded complaint rule is the

“complete preemption” doctrine. BLAB T.V., 182 F.3d at 854.

Under this doctrine, a defendant may remove a case to federal

court even though the plaintiff raises only state-law claims in

her complaint, when “the pre-emptive force of a [federal]

statute is so extraordinary that it converts an ordinary state

common-law complaint into one stating a federal claim for

purposes of the well-pleaded complaint rule.”° Caterpillar

° We have recognized that the doctrine of complete preemption often is

confused with the defense of ordinary federal preemption. BLAB T.V.,

182 F.3d at 854-55. Ordinary preemption is a defense that may be raised

in state court as well as in federal court. /d at 855. As a defense, ordi-

nary preemption does not appear in the plaintiff’s well-pleaded com-

plaint, and thus does not give the defendant the ability to remove a case to

federal court. Caterpillar Inc., 482 U.S. at 393, 107 S.Ct. 2425. Unlike

the defense of ordinary preemption, the doctrine of complete preemption

gives a defendant the ability to remove the case to federal court. BLAB

T.V., 182 F.3d at 854.

Inc., 482 U.S. at 393,-107 S.Ct. 2425 (internal quotation

marks omitted).

The Supreme Court has found complete preemption under

two federal statutes—section 301 of the Labor Management

Relations Act (LMRA), 29 U.S.C. § 185, and section 502/.)

of the Employee Retirement Income Security Act (ERISA),

29 U.S.C. § 1132(a). BLAB T.V., 182 F.3d at 855. The com-

plete preemption doctrine was born with little elaboration or

explanation in Avco Corp. v. Aero Lodge Number 735, Inter-

national Association of Machinists and Aerospace Workers,

390 U.S. 557, 560-62, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968),

where the Supreme Court treated the plaintiff’s state-law

claim based on a collective bargaining agreement as a federal

claim arising under section 301 of the LMRA, and held that

the case was properly removed to federal court. The Supreme

Court had not yet begun to use the term “complete preemp-

tion” to describe this result, and Avco provides little guidance

on the scope of the complete preemption doctrine.’

” Karen A. Jordan, in The Complete Preemption Dilemma: A Legal

Process Perspective, 31 Wake Forest L.Rev. 927, 951 (1996), remarked

that the Supreme Court in Avco “provided limited insight into the

justification for its holding,” since the Court “did not mention the well-

pleaded complaint rule, nor did it explain why this case fell outside that

rule.” The Court explained the Avco decision in Franchise Tax Board,

stating, “The necessary ground of decision was that the preemptive force

of § 301 is so powerful as to displace entirely any state cause of action for

violation of contracts between an employer and a labor organization. Any

such suit is purely a creature of federal law. .. .” 463 U.S. at 23, 103

S.Ct. 2841 (footnote omitted) (internal quotation marks omitted).

Some courts describe as another example of complete preemption the

Supreme Court”s decision in Oneida Indian Nation of New York State v.

Oneida County, 414 U.S. 661, 667, 94 S.Ct. 772, 39 L.Ed.2d 73 (1974)

(agreeing with the Oneida Indian Nation that federal question jurisdiction

existed over its right-to-possession claimbecause the possessory rights of

Indian tribes necessarily arise under federal law and treaties). BLAB T.V.,

The Supreme Court provided more guidance on the con-

tours of the complete preemption doctrine when it cautiously

extended the doctrine to section 502(a) of ERISA in Metro-

politan Life Insurance Co. v. Taylor, 481 U.S. 58, 64-67, 107

S.Ct. 1542, 95 L.Ed.2d 55 (1987). The Court said that

without clear indications that Congress intended to permit

removal of state claims that fell within the scope of ERISA”’s

civil enforcement provision in section 502(a), the Court

would have been “reluctant” to expand the “extraordinary

pre-emptive power” recognized by the Avco decision under

section 301 of the LMRA. /d. at 65, 107 S.Ct. 1542. After

examining section 502(a), however, the Court did find clear

indications of congressional intent to permit removal—

explicit statements in the legislative history that Congress

meant for this provision to be construed in the same fashion

as section 301 of the LMRA, and close parallels between the

jurisdictional subsection of ERISA”s civil enforcement

provision and section 301 of the LMRA. /d. at 65-66, 107

S.Ct. 1542. Because Congress “clearly manifested an intent

to make [these] causes of action . . . removable to federal

court,” the Supreme Court felt bound to “honor that intent”

and find complete preemption. /d. at 66, 107 S.Ct. 1542.

Outside the contexts of the LMRA and ERISA, this Court

has addressed the question of complete preemption only

twice, in Smith v. GTE Corp., 236 F.3d 1292, 1310-13 (11th

Cir.2001) (holding that the Federal Communications Act did

not accomplish complete preemption), and BLAB T.V., 182

F.3d at 857-59 (holding that the Cable Communications

Policy Act did not accomplish complete preemption). In

those cases, we recognized that the complete preemption

doctrine should be carefully limited in scope. We noted that

“although the Supreme Court recognizes the existence of the

182 F.3d at 855 n. 2. Oneida Indian Nation, like Avco, does not use the

term “complete preemption” and provides little guidance on when a court

should or should not apply the complete preemption doctrine.

complete preemption doctrine, the Court does so hesitatingly

and displays no enthusiasm to extend the doctrine into areas

of law beyond the LMRA and ERISA.” /d. at 856. We rec-

ognized that the Supreme Court only “reluctant[ly]” extended

the complete preemption in 7aylor, based on “virtually iden-

tical” jurisdictional provisions in the LMRA and ERISA and

explicit statements in the legislative history of ERISA that the

two statutes should be construed in a like manner. /d. at 855

(alteration in original) (internal quotation marks omitted).

Finding no similar clear manifestation of congressional intent

to permit removal in BLAB T.V. or Smith, we held that the

complete preemption doctrine did not create federal

jurisdiction in those cases. Smith, 236 F.3d at 1313; BLAB

T.V., 182 F.3d at 858.

In determining whether Congress intends for a federal

statute to completely preempt state-law claims, courts

consider a variety of factors such as “whether the state claim

is displaced by federal law under an ordinary preemption

analysis, whether the federal statute provides a cause of

action, what kind of jurisdictional language exists in the

federal statute, and what kind of language is present in the

legislative history to evince Congress”s intentions.” BLAB

T.V., 182 F.3d at 857. While we have declined to adopt a

specific test for this Circuit, we recognize that all of these

tests have the same ultimate goal:

“to determine whether Congress not only intended a

given federal statute to provide a federal defense to a

State cause of action that could be asserted either in a

state or federal court, but also intended to grant a

defendant the ability to remove the adjudication of the

cause of action to a federal court by transforming the

state cause of action into a federal [one].”

Id. (emphasis added) (alteration in original) (quoting Arthur

R. Miller, Artful Pleading: A Doctrine in Search of Defini-

tion, 76 Tex. L.Rev. 1781, 1797-98 (1998)). In sum, both the

Supreme Court and this Court have recognized that the

“touchstone” of the complete preemption inquiry is congres-

sional intent. Taylor, 481 U.S. at 66, 107 S.Ct. 1542; BLAB

T.V., 182 F.3d at 857.

Since congressional intent is the pivotal issue in the

complete preemption inquiry, that is where we must focus our

analysis of whether §§ 85 and 86 of the NBA completely

preempt state-law usury claims against a national bank. In

enacting the NBA, did Congress merely intend for federal law

to act as a defense to state-law usury claims against a national

bank under ordinary preemption—a defense that just as well

could be asserted in state court and applied by state judges?

Or did Congress intend that national banks facing usury

claims in state court should have the ability to remove the

case to a federal forum?

The defendants argue that it would be impossible for a

court to find in the NBA the striking indications of con-

gressional intent to permit removal through complete preemp-

tion that the Supreme Court relied on in 7aylor, because the

NBA was enacted more than a decade before Congress gave

federal courts general federal question jurisdiction, more than

two decades before the development of the well-pleaded

complaint rule, and more than a century before the artic-

ulation of the complete preemption doctrine.* Nonethe-

* The Judiciary Act of 1875 gave lower federal courts general federal

question jurisdiction and general removal jurisdiction in civil cases arising

under the Constitution or federal law. Donald H. Zeigler, Twins

Separated at Birth: A Comparative History of the Civil and Criminal

Arising Under Jurisdiction of the Federal Courts and Some Proposals for

Change, 19 Vt. L.Rev. 673, 735-37 (1995). Between 1875 and 1887,

when the Act was amended, “the well-pleaded complaint rule was not

applied in full force to cases removed from state court; the defendant's

petition for removal could furnish the necessary guarantee that the case

necessarily presented a substantial question of federal law.” Franchise

10a

less, the defendants argue that applying the complete preemp-

tion doctrine here would be consistent with Congress’’s

purposes because the historical context of the NBA indicates

that Congress was suspicious of state interference with

national banks.

The NBA was enacted in 1864 ° in the midst of economic

strife during the Civil War. The defendants cite to many

statements in the congressional debates surrounding the

enactment of the NBA that show Congress’”s intent to protect

the new national banks from unfriendly state legislation. For

example, Representative Samuel Hooper of Massachusetts

argued that the NBA was necessary so “the currency of the

country may be within the control and regulation of a national

law applicable to the whole country, instead of being

controlled and regulated by State law as it has been

heretofore,” and stated, “I appeal to the members of the

House, and I ask them if they can excuse themselves to their

constituents and to posterity if they sacrifice the great inter-

ests that are now at stake to the comparatively petty interest

of local banking.” Cong. Globe, 38th Cong., Ist Sess. 1451

(1864). Based on statements like this from the congressional

debates, the defendants ask us to adopt the reasoning of Judge

Anthony J. Scirica in his dissent in Spellman v. Meridian

Bank, 3d Cir.1996, 1995 WL 764548 (Nos. 94-3203, 94-

3204, 94-3215 to 94-3218, Jan. 12, 1996) (Scirica, J.,

dissenting), Rehearing in Banc Granted, Opinion Vacated

Tax Bd., 463 U.S. at 10 n. 9, 103 S.Ct. 2841. However, since 1887, “[flor

better or for worse . . . a defendant may not remove a case to federal court

unless the plaintiffs complaint establishes that the case “arises under”

federal law.” /d. at 10, 103 S.Ct. 2841.

* Act of June 3, 1864, 13 Stat. 99 (repealing and superseding the

similar Act of Feb. 25, 1863). The Act originally was titled “An Act to

provide a national currency, secured by a pledge of United States bonds,

and to provide for the circulation and redemption thereof,” but its title was

changed in 1874 to “The National Bank Act.” 12 U.S.C. § 38.

lla

(Feb. 16, 1996): that Congress clearly intended that the NBA

alter federal state relations and protect national banks from

state interference, and therefore the NBA completely pre-

empts state law because “‘Congress intended to have usury

claims against national banks governed by a body of federal

law which the federal courts would apply.’”” 14B Charles

Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal

Practice and Procedure § 3722.1, at 557 (3d ed.1998)

(quoting Spellman, 1995 WL 764548, at *24 (Scirica, J.,

dissenting)).

While the congressional debates amply demonstrate Con

gress’s desire to protect national banks from state legislation,

they do not demonstrate that Congress desired to protect

national banks from facing suit in state court. Jones vy.

Bankboston, N.A., 115 F.Supp.2d 1350, 1360 (S.D.Ala.2000)

(acknowledging that the NBA was meant to protect against

“unfriendly legislation by the States,” but stating that “the

evidence does not demonstrate . . . that Congress was so

distrustful of the states” judicial systems”). Even before

1875, when Congress gave lower federal courts original

federal question jurisdiction and general removal jurisdiction,

Congress had provided in a handful of specific acts that

federal law would both provide a defense and allow for

removal from state to federal court.'” When Congress

enacted the NBA in 1864, it provided that suit could be

” For instance, in the Act of March 3, 1863, 12 Stat. 755 (amended by

the Act of May 11, 1866, 14 Stat. 46), Congress provided for a federal

defense and provided the right of removal of civil or criminal actions

arising out of acts committed under federal authority during the Civil

War. See Mayor & Aldermen of City of Nashville v. Cooper, 73 U.S. (6

Wall.) 247, 251, 18 L.Ed. 851 (1867); Michael G. Collins, The Unhappy

History of Federal Question Removal, 71 lowa L.Rev. 717, 720-21

(1986). The pre-1875 removal statutes are collected in Felix Frankfurter

& James M. Landis, The Business of the Supreme Court: A Study in the

Federal Judicial System 61-62 n. 22 (1927), and discussed in Stanley |.

Kutler, Judicial Power and Reconstruction Politics 143-60, 168 (1968).

12a

brought in federal or state court, and it did not provide for

removal.'' Four years later, in the Act of July 27, 1868,

Congress allowed for corporations organized under federal

law to remove a case from state to federal court by filing a

petition that they had a defense arising under federal law—

but by amendment, Congress excepted national banks from

this removal power. 15 Stat. 226-27 (“And be it further

enacted, That any corporation, or any member thereof, orther

{other} than a banking corporation, organized under a law of

the United States, and against which a suit at law or in equity

has been or may be commenced in any court other than a

circuit or district court of the United States, for any liability

or alleged liability of such corporation, or any member

thereof as such member, may have such suit removed from

the court in which it may be pending, to the proper circuit or

district court of the United States, upon filing a petition

therefor, verified by oath, either before or after issue joined,

Stating they have a defence arising under or by virtue of the

Constitution of the United States, or any treaty or law of the

United States .. . .” (alteration in original)). See also Cong.

Globe, 40th Cong., 2d Sess. 4197-98 (1868); 7 Charles

Fairman, History of the Supreme Court of the United States:

Reconstruction and Reunion, 1864-88, Part Two, 394-97

(1987). This legislative history compels us to reject the

‘' Although the 1863 Act provided for suit in federal court and did not

mention state court, see Mercantile Nat’! Bank at Dallas v. Langdeau,

371 U.S. 555, 558-59, 83 S.Ct. 520, 9 L.Ed.2d 523 (1963), when Con-

gress replaced the 1863 Act in 1864, section 57 of the Act provided for

suit in either federal or state court: “*[S]uits, actions and proceedings,

against any association under this act, may be had in any circuit, district,

or territorial court of the United States held within the district in which

such association may be established; or in any state, county, or municipal

court in the county or city in which said association is located, having

jurisdiction in similar cases... ."” /d at 568, 83 S.Ct. 520 (quoting 13

Stat. 116-17).

l3a

defendants” suggestion that the early history of national

banks offers clear congressional intent to make claims under

the NBA removable.

Since both the Supreme Court and this Court have recog-

nized that congressional intent is the “touchstone” in the

complete preemption inquiry, we also must reject the line of

cases which have found complete preemption without inquir-

ing into Congress’s intent. The only circuit court opinions

that are consistent with this suggestion are M. Nahas & Co. v.

First National Bank of Hot Springs, 930 F.2d 608, 612 (8th

Cir.1991), and Krispin v. May Department Stores Co., 218

F.3d 919, 922 (8th Cir.2000), which follows the M. Nahas &

Co. reasoning. Without examining congressional intent, the

Eighth Circuit found complete preemption in M. Nahas & Co.

based solely on well-settled law that § 86 provides the

exclusive remedy for usury claims against a national bank. 7

930 F.2d at 612. However, in Jones, Chief District Judge

Charles R. Butler, Jr. criticized the Eighth Circuit’s lenient

complete preemption standard as inconsistent with Supreme

Court and Eleventh Circuit precedent and held that the NBA

did not completely preempt state-law usury claims so as to

'? Federal law governs the amount of interest a national bank may

charge, Marquette Nat"! Bank of Minneapolis v. First of Omaha Serv

Corp., 439 U.S. 299, 308, 99 S.Ct. 540, 58 L.Ed.2d 534 (1978), and

provides the exclusive remedy for usury claims against a national bank,

McCollum v. Hamilton Nat”! Bank of Chattanooga, 303 U.S. 245, 247, 58

S.Ct. 568, 82 L.Ed. 819 (1938); Evans v. Nat’! Bank of Savannah, 25\

U.S. 108, 109, 40 S.Ct. 58, 64 L.Ed. 171 (1919); Farmers” & Mechanics”

Nat"! Bank v. Dearing, 91 U.S. 29, 32, 23 L.Ed. 196 (1875). But this

does not provide an answer to the complete preemption inquiry—”

“[Cjomplete preemption principally determines not whether state or

federal law governs a particular claim, but rather whether that claim will,

irrespective of how it is characterized by the complainant, [serve as the

basis for federal question jurisdiction]."" BLAB T.V., 182 F.3d at 855

(alteration in original) (quoting McClelland v. Gronwaldt, \55 F.3d 507,

517 (Sth Cir. 1998)).

l4a

allow for removal. 115 F.Supp.2d at 1361. We consider

Jones to be a sound application of the principles reflected in

the complete preemption cases decided by the Supreme Court

and this Court, and we take a similar approach here.

In Jones, the court concluded that the sole justification the

M. Nahas & Co. holding—that § 86 provides the exclusive

remedy for usury claims against a national bank—was not by

itself sufficient to establish complete preemption. /d. at

1355-56. The court in Jones arrived at this conclusion by

examining the Supreme Court’s analysis in Jaylor, where

before beginning its complete preemption inquiry, the

Supreme Court acknowledged that ERISA preempted the

plaintiff’s state-law claims and provided an alternative

federal remedy. /d. at 1356 (citing Taylor, 481 U.S. at 64,

107 S.Ct. 1542). “Were the existence of an “exclusive fed-

eral remedy” the only requirement for complete preemption,

the . .. Court would have concluded its analysis at this point

and declared the plaintiff’s claims completely preempted.”

Id. However, the Taylor Court went on to say that it would

be “reluctant” to find complete preemption on this basis

alone. 481 U.S. at 65, 107 S.Ct. 1542. The Taylor Court then

conducted a searching inquiry into congressional intent,

focusing on the parallels to the LMRA and explicit statements

in the legislative history that ERISA should be construed like

the LMRA to find Congress had “clearly manifested an intent

to make causes of action within the scope of the civil

enforcement provisions of § 502(a) removable to federal

court.” /d. at 66, 107 S.Ct. 1542. The Jones court con-

cluded—and we agree—that the analysis in 7aylor indicates

that where there are no further indications of congressional

intent to permit removal, the existence of an exclusive federal

remedy generally will not be enough to achieve complete

preemption. 115 F.Supp.2d at 1356.

The Jones court also noted that this Court uses a more

demanding standard for complete preemption than the Eighth

1Sa

Circuit used in M. Nahas & Co. Id. at 1355-56. “(T]he only

justification offered by the Nahas Court for its ruling was that

the National Bank Act accomplishes “ordinary” preemption

of state law claims for excessive interest and provides an

alternative federal cause of action for the preempted state

claim.” /d. at 1355. We previously have recognized that the

mere provision of a federal cause of action cannot be

dispositive in the complete preemption inquiry:

If the creation of a federal cause of action served as the

sole litmus test for congressional intent, complete pre-

emption would apply to every federal statute that creates

such a cause of action and complete preemption would

be common rather than extraordinary. ... Congress may

create a federal cause of action without also providing

sufficient evidence of its intent that state causes of action

are to be considered as arising under the federal statute

and thus removable to federal court.

BLAB T.V., 182 F.3d at 859 n. 3. Our precedent demands

clear congressional intent to permit removal. Like the

Supreme Court, we have not yet extended the complete

preemption doctrine beyond section 301 of the LMRA and

section 502(a) of ERISA. We cannot extend the complete

preemption doctrine here, where clear congressional intent to

permit removal is lacking.

CONCLUSION

Under our federal system, both state and federal courts

are entrusted to faithfully follow federal law. Pub. Serv.

Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 247-48, 73

S.Ct. 236, 97 L.Ed. 291 (1952) (“State courts are bound

equally with the federal courts by the Federal Constitution

and laws.”). State courts in Alabama—the forum from which

the defendants sought removal—have a long history of

faithfully applying the NBA. E.g., Lowery v. First Nat'l

Bank of Oneonta, 239 Ala. 690, 196 So. 891, 892 (1940)

16a

(“The penalties imposed upon a national bank for charging a

higher rate of interest than allowed by the law of the state

where located are fixed by the Federal Banking Law.”);

Florence R.R. & Improvement Co. v. Chase Nat”! Bank, 106

Ala. 364, 17 So. 720, 721 (Ala.1895) (“[T]he penalty pre-

scribed by the national banking statute for usurious dis-

counting paper by national banks is exclusive, and those

imposed by state statutes cannot be applied and enforced.”);

Helms v. First Ala. Bank of Gadsden, N.A., 386 So.2d 450,

452 (Ala.Civ.App.1980) (“[S]ince Congress has provided the

penalty for usury [with § 86], that action preempts the field,

leaving no room for varying state penalties.”).

Because state courts, like federal courts, are competent in

determining when state-law claims are preempted by federal

law, removal to a federal forum based on the doctrine of

complete preemption has been the exception, not the rule.

Recognizing that the complete preemption doctrine works to

trump the well-pleaded complaint rule as well as the maxim

that a plaintiff is the master of the complaint and may avoid a

federal forum by relying exclusively on state law, the

Supreme Court expanded the doctrine only “hesitatingly”

when there was a clear showing of congressional intent to

permit removal. BLAB T.V., 182 F.3d at 856. Since we find

no clear congressional intent to permit removal under §§ 85

and 86 of the NBA, we therefore hold that while these

sections may provide a defense to state-law usury claims,

they do not accomplish complete preemption so as to

permit removal.

We therefore REVERSE the district court’s order denying

the plaintiffs’ motion to remand and REMAND to the district

court for further proceedings consistent with this opinion.

17a

TJOFLAT, Circuit Judge, dissenting:

The majority decides today that the provisions in the

National Bank Act (“NBA”) addressing usurious interest, 12

U.S.C. §§ 85 and 86, do not completely preempt plaintiffs”

state law claims, and, as a result, the claims are not removable

to federal court. The majority bases this conclusion on an

absence of legislative history confirming that the NBA”s

drafters intended that cases of usurious interest be heard and

decided in a federal forum. I do not disparage the majority’’s

emphasis on congressional intent as the touchstone of

complete preemption analysis. Rather, I take issue with the

majority’s narrow conception of congressional intent as

something only inferable from an enactment’s legislative

history, here the NBA”s. Sometimes Congressional intent is

determined by looking to statutes already on the books.' In

this case, I suggest that the Judiciary Act of 1789 (“Judiciary

Act” or “Act”), ch. 20, § 9, 1 Stat. 76-77 (1789), is highly

relevant in determining whether the drafters of the NBA

intended that lawsuits seeking relief from usurious interest

rates, which is what the plaintiffs seek here, be litigated in a

federal forum.

'“We do not start from the premise that [the statutory] language is

imprecise. Instead, we assume that in drafting this legislation, Congress

said what it meant.” United States v. LaBonte, 520 U.S. 751, 757, 117

S.Ct. 1673, 1677, 137 L.Ed.2d 1001 (1997). Likewise, our own precedent

directs us to “begin our construction of [a statutory provision] where

courts should always begin the process of legislative interpretation, and

where they often should end it as well, which is with the words of the

statutory provision.” Harris v. Garner, 216 F.3d 970, 972 (11th Cir.2000)

(en banc). Legislative history is an oft-used and important tool in the task

of statutory interpretation when ambiguities exist in the language. Still,

“{w]hen the import of words Congress has used is clear . . . we need not

resort to legislative history, and we certainly should not do so to

undermine the plain meaning of the statutory language.” /d at 976.

18a

The Judiciary Act, enacted by the first Congress, estab-

lished the federal judiciary. It created thirteen judicial

districts, which became the organizational units of the lower

federal courts. The degree of precision in language employed

by the drafters of the Act indicates that they had a strong

understanding of jurisdictional principles and their role in

case management and development of the law. For some

federal causes, they gave exclusive jurisdiction to the federal

courts; for others, they provided that the district courts would

have concurrent jurisdiction with *1049 the state courts.”

Where the drafters saw the need for uniformity of decision or

avoidance of state interference, they gave the district courts

exclusive jurisdiction. “[S]uits for penalties and forfeitures

incurred, under the laws of the United States” were put

squarely in that category. Judiciary Act of 1789, ch. 20, §

9(b), 1 Stat. 76-77 (1789).

We must assume that Congress was well aware of this

provision—in particular, the word “forfeiture’—when,

seventy-four years later, in the midst of the Civil War, it

enacted the NBA. Section 85, as reproduced by the majority

in note four, defines usurious interest by relying on specific

discount commercial paper rates or state rates. Section 86

provides a cause of action for a debtor who was wrongly

charged, or who has already paid, such interest on a loan.

Although the majority duplicated section 86 in note five, it is

useful to do so again for purposes of focusing on the specific

language employed:

The taking, receiving, reserving, or charging a rate of

interest greater than is allowed by section 85 of this title,

when knowingly done, shall be deemed a forfeiture of

the entire interest which the note, bill, or other evidence

? For example, concurrent jurisdiction was provided with respect to “all

causes where an alien sues for a tort only in violation of the law of nations

or a treaty of the United States.” Judiciary Act, ch. 20, § 9(b), 1 Stat.

77 (1789).

19a

of debt carries with it, or which has been agreed to be

paid thereon. In case the greater rate of interest has been

paid, the person by whom it has been paid . . . may

recover back, in an action in the nature of an action of

debt, twice the amount of the interest thus paid.

12 U.S.C. § 86 (emphasis added). In sum, section 86 fur-

nishes a victim of usurious interest two possible remedies:

(1) the victim can obtain a judgment declaring forfeiture of

the entire interest of the debt if usurious interest is sought; or

(2) if such interest has already been paid, the victim may

bring a suit to recover twice the amount collected as a penalty

to the lender.

In the case before us, the plaintiffs claim that Beneficial

National Bank, a national banking association, charged them

usurious interest rates on tax refund anticipation loans. Plain-

tiffs” allegations are so unspecific that it is difficult to say

whether the plaintiffs are seeking the forfeiture of the interest

they are being charged or whether they are seeking twice the

amount of interest they have paid or whether they are

pursuing both remedies. I say this because there are twenty-

six plaintiffs and the complaint does not tell us, with respect

to any of the plaintiffs, (1) when the loan was made, (2) the

terms of the loan, and (3) the status of the loan--that is,

whether the plaintiff had paid any interest, and if so, how

much, prior to filing suit. I assume that the plaintiffs” loans

have not been paid in full. Therefore, to the extent they have

paid interest, they are seeking, in the words of section 86,

“twice the amount of the interest paid” and “forfeiture” of the

amount still due.

The only way to avoid the operation of the Judiciary Act’’s

mandate that “suits for penalties and forfeitures incurred” be

filed in federal court is to say that the NBA amended that

mandate by implication.’ In light of our statement in Patel v.

* Although the majority does not mention the Judiciary Act “suits for

penalties and forfeitures” provision, and therefore does not discuss

20a

Quality Inn South, 846 F.2d 700, 704 (11th Cir.1988), that

“amendments by implication are disfavored,” I suggest that

this method of avoiding the Judiciary Act”’s mandate is

unavailable, and that the Act”s mandate should therefore

dictate our decision.’

whether the NBA amended that provision by implication, the majority

does say that the reference to state courts in the NBA’s “Venue of suits”

provision forecloses the argument that the federal courts have exclusive

jurisdiction of a claim of usury.

* That the majority has not considered the application of the Judiciary

Act in this case is not surprising. As far as | know, no court faced with

the jurisdiction issue we are deciding has considered the relevance of the

Judiciary Act provision I rely on here. See e.g., Spellman v. Meridian

Bank, 1995 WL 764548 (Nos. 94-3203, 94-3402, 94-3215 to 94-3218) (3d

Cir. 1996) (vacated on grant of rehearing en banc then appeal dismissed by

parties after settlement); M. Nahas. & Co. v. First. Nat”! Bank, 930 F.2d

608 (8th Cir.1991); Jones v. Bankboston, N.A., 115 F.Supp.2d. 1350

(S.D.Ala.2000).

2la

APPENDIX B

UNITED STATES DISTRICT COURT

M.D. ALABAMA

NORTHERN DIVISION

[Filed Dec. 14, 2000]

No. CIV.A.00-A-1457-N

MARIE ANDERSON, ef a/.,

Plaintiffs,

H & R BLOck, INC.; Beneficial National Bank; and

Beneficial Tax Masters, Inc.,

Defendants.

MEMORANDUM OPINION AND ORDER

ALBRITTON, Chief Judge.

I. INTRODUCTION

This cause is now before the court on a Motion to Remand,

filed by the Plaintiffs, Marie Anderson, Alvester Brafort,

Walter Brutley, Patricia Coleman, Talaya Cope, Audrey

Darby, Annie Davis, April DeLoach, Diane Franklin, Lillie

Franklin, Willie Lewis, Caledonia Jackson, Shirley Jernigan,

Evelyn Nelson, Wil!’ Lawrence, Mamie Mitchell, Betty

Person, Diane Peterson, Gwen Rogers, William Screws,

Ernestine Starks, Gerald Stokes, Albert Thomas, Charles

Thomas, Kenneth Williams, and Earline Young (“Plaintiffs”)

on November 22, 2000.

The Plaintiffs originally filed a Complaint against H & R

Block, Inc.; Beneficial National Bank; and Beneficial Tax

Masters, Inc. in the Circuit Court of Barbour County,

22a

Alabama. The Complaint alleges counts of intentional

misrepresentation (Court One); suppression of material facts

(Count Two); breach of fiduciary duty (Count Three); usury

violations (Count Four); and Alabama Code Violations

(Count Five).

H & R Block, Inc. (“H & R Block”), and Beneficial

National Bank and Beneficial Tax Masters (collectively

“Beneficial”) filed a Notice of Removal in this court on

October 24, 2000. Removal was based upon the presence of

a federal question through complete pre-emption under the

National Bank Act (“NBA”). The Plaintiffs state they have

asserted only state law claims and contest that the NBA

completely pre-empts these claims.

For the reasons herein discussed, the Motion to Remand is

due to be DENIED.

Il. FACTS

The Plaintiffs’ claims arise out of representations made and

interest and fees charged in connection with loans made to

them through H & R Block by Beneficial. According to

Beneficial, these loans were tax refund anticipation loans

which are loans made to a tax return preparation service by

a bank in the amount of the customer’s anticipated tax

refund, less the fees charged by the lender and the tax

preparation service.

The Plaintiffs allege that the Defendants charged each of

them interest in excess of the legal limit on interest rates

allowed under Alabama law and the common law doctrine of

usury. The Plaintiffs also allege that the Defendants misrep-

resented and failed to disclose the interest rate and the fees

that would be charged, and breached their fiduciary duties to

the Plaintiffs.

23a

Il. REMAND STANDARD

Federal courts are courts of limited jurisdiction. See

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,

114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994); Burns v.

Windsor Insurance Co., 3\ F.3d 1092, 1095 (1994); Wymbs

v. Republican State Executive Committee, 719 F.2d 1072,

1076 (11th Cir.1983), cert. denied, 465 U.S. 1103, 104 S.Ct.

1600, 80 L.Ed.2d 131 (1984). As such, federal courts have

the power only to hear cases that they have been authorized to

hear by the Constitution or the Congress of the United States.

See Kokkonen, 114 S.Ct. at 1675. Because federal court

jurisdiction is limited, the Eleventh Circuit favors remand of

removed cases where federal jurisdiction is not absolutely

clear. See Burns, 31 F.3d at 1095.

IV. DISCUSSION

Removal of a case to federal district court by a defendant is

only proper if the case brought by the plaintiff in state court

originally could have been brought in federal court. See 28

U.S.C. § 1441(a). In this case, Beneficial and H & R Block

argue that the court has jurisdiction over the Plaintiffs’ claims

because of the presence of a federal question. Federal

question jurisdiction requires that the action arise under the

Constitution, laws, or treaties of the United States. 28 U.S.C.

§ 1331. In deciding whether a federal question exists, the

court must apply the well-pleaded complaint rule whereby the

court looks to the face of the complaint, rather than to any

defenses asserted by the defendant. See Caterpillar, Inc. v.

Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318

(1987). Consequently, the general rule is that a case may not

be removed to federal court on the basis of a federal defense,

including the defense of pre-emption. See Caterpillar, 482

U.S. at 393, 107 S.Ct. 2425. In this case, the Plaintiffs have

only asserted state law claims so that, on the face of the

Complaint, there is no federal question jurisdiction.

24a

There is, however, an exception, or corollary, te the well-

pleaded complaint rule and it is this exception t© which

Beneficial and H & R Block point in claiming that this court

has federal question jurisdiction. This exception 's known

as the “complete pre-emption” doctrine. This exception ts

recognized in the rare instance Congress so “completely pre-

empts a particular area that any civil complaint . . - !8 neces-

sarily federal in character.” Metropolitan Life Ins. Co. v.

Taylor, 481 U.S. 58, 64, 107 S.Ct. 1542, 95 L-Ed.2d 55

(1987). The situations in which the complete pre-emption

exception applies are so rare that the Supreme Court has

found complete pre- emption in only a few areas. See Avco

Corp. v. Aero Lodge No. 735, 390 U.S. 557, 88 S.Ct. 1235, 20

L.Ed.2d 126 (1968) (§ 301 of the LMRA completely pre-

empted a state cause of action for violation of contracts),

Metropolitan Life, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d

55 (§§ 502(a)(1)(B) and 502(f) of ERISA completely

pre-empted state contract and tort claims); Oneida /ndian

Nation v. County of Oneida, 414 U.S. 661, 94 S.Ct. 772, 39

L.Ed.2d 73 (1974) (federal law pre-emption with regard to

tribal lands).

Beneficial and H & R Block have argued for the appli-

cation of the complete pre-emption doctrine in the instant

case based on §§ 85 and 86 of the National Baking Act

(“NBA”). The NBA states in part, that a national Pank “may

... charge on any loan . . . interest at the rate allowed by the

laws of the State . . . where the bank is located. . . .”

12 U.S.C. § 85. The NBA further provides for a civil

enforcement mechanism. See 12 U.S.C. § 86.

Beneficial and H & R Block cite several cases, including a

previous decision of this court, holding that §§ 85 and 86 of

the NBA completely pre-empt state-law claims challenging

interest charged by a national bank, and thus that such claims

are removable from state to federal court. See e.g., @. Nahas

& Co. Inc. v. First Nat'l Bank of Hot Springs, 930 F.2d 608

25a

(8th Cir.1991); Monday v. Coast to Coast Wireless Cable,

1997 WL 114874 (M.D.Ala. Feb.19, 1997); Hunter v. Rich's

Dept. Stores, 945 F.Supp. 1500 (N.D.Ala.1995) (Propst, J.).

There is, however, contrary case law on the issue of whether

the NBA completely pre-empts state law claims challenging

excessive interest. See e.g., Jones v. Bankboston, N.A., 115

F.Supp.2d 1350 (S.D.Ala.2000).

The Eleventh Circuit recently addressed for the first time

the issue of complete pre-emption outside of the Labor

Management Relations Act (“LMRA”) and the Employees

Retirement Insurance Security Act (“ERISA”) context. See

BLAB T.V. of Mobile, Inc. v. Comcast Cable Communica-

tions, Inc., 182 F.3d 851, 855 (11th Cir.1999)(finding no

complete pre-emption under the Cable Communications

Policy Act of 1984). In BLAB T.V., the Eleventh Circuit

examined the different tests employed by various circuits in

assessing complete pre-emption arguments. /d. at 856.

While the court declined to adopt any of the tests to be

applied to all future claims of complete pre-emption, the court

did note that, while it relied heavily on a particular decision

of the Tenth Circuit, it did not adopt the view of the Tenth

Circuit that a statute’s providing a federal cause of action is

dispositive on the issue of congressional intent. /d. at 859,

n. 3. The Eleventh Circuit held that a state law claim was not

completely preempted by the Cable Communications Policy

Act of 1984 because the court found that the requisite

congressional intent to convert state law claims into federal

claims was absent. /d. at 859.

This court has been presented with complete pre-emption

arguments under the NBA on two previous occasions, both of

which were decided before the BLAB T.V. decision by the

Eleventh Circuit. See Monday v. Coast to Coast Wireless

Cable, 1997 WL 114874 at *1 (M.D.Ala., Feb. 19, 1997);

Mason v. Fidelity Federal Bank, 40 F.Supp.2d 1340

(M.D.Ala.1999).

26a

In Monday, this court, relying on complete pre-emption

analysis in other cases, looked at three factors: Congressional

intent, whether the NBA displaced state law claims with a

federal cause of action, and whether the jurisdictional

language of the civil enforcement provisions paralleled the

LMRA and ERISA. Monday, 1997 WL 114874 at *6-7.

Noting that the NBA pre-dated the existence of federal

question jurisdiction, the well-pleaded complaint rule, and the

complete pre-emption doctrine, this court relied on discus-

sions of Congressional intent in binding case law. /d. at *6.

This court relied on statements in Supreme Court and former

Fifth Circuit cases that the NBA was intended to give

advantages to national banks over state competitors, and that

an action stating a claim of usury against a national bank is a

new right which is regulated by federal law, in concluding

that Congress intended for national banks to be governed by

national standards, not state law. /d. (citing Roper v.

Consurve, 578 F.2d 1106 (Sth Cir.1978), aff'd sub nom. on

other grounds, Deposit Guaranty Nat'l Bank v. Roper, 445

U.S. 326, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980); Marquette

Nat. Bank of Minneapolis v. First Omaha Service Corp., 439

U.S. 299, 99 S.Ct. 540, 58 L.Ed.2d 534 (1978); Farmers’ and

Mechanics’ National Bank v. Dearing, 9\ U.S. 29, 35, | Otto

29, 23 L.Ed. 196 (1875)). This court further concluded that

the jurisdictional language of the NBA was similar enough to

the language used in the LMRA and ERISA, statutes which

the Supreme Court has found completely preempt state law,

to indicate that Congress intended for the federal remedy

provided in the NBA to be the remedy which was available

against national banks, whether the forum be federal or state,

there being no mechanism for removal to federal court at the

time. /d. at *7.

Although this court did not have the analysis in BLAB TV.

before it when Monday was decided, the court finds that the

BLAB T.V. decision does not alter its conclusion in Monday

that §§ 85, 86 completely preempt state law claims claiming

27a

usurious interest. The Eleventh Circuit merely underscored

the importance of Congressional intent in BLAB T.V., and as

noted above, this court’s analysis in Monday was premised in

large part on Congressional intent. While the NBA, because

it pre-dated the relevant jurisdictional statutes and doctrines,

may not neatly fit into the complete pre-emption analysis of

modern statutes, this court finds that there is sufficient

evidence in decisional law and the language of the NBA from

which to conclude that Congress intended for national banks

to be held to national standards, and not to be held liable

under state law on claims alleging usury. Therefore, finding

no reason to depart from its earlier analysis, the court again

concludes that usurious interest claims are completely pre-

empted under the NBA.

In the two cases in which this court was previously pre-

sented with an argument of complete pre-emption under the

NBA, the court determined that there was no federal

jurisdiction because the plaintiffs had not alleged claims of

usurious interest, which is the type of claim that is completely

preempted under the NBA. See Monday, 1997 WL 114874 at

*10; Mason, 40 F.Supp.2d at 1345. In this case, the Plaintiffs

have pleaded a claim for usurious interest. See Complaint,

Count Four; Brief in Support of Motion to Remand, page 8.

Accordingly, the Plaintiffs have brought a claim which is

completely preempted by the NBA, creating federal question

jurisdiction in this court.

The court recognizes that, while it has found evidence of

Congressional intent to completely pre-empt state law

usurious interest claims under the NBA, there is significant

disagreement among courts over the presence of Congres-

sional intent to completely pre-empt state law claims under

the NBA. See Jones, 115 F.Supp.2d at 1357. The court

further notes that the BLAB T.V. decision came before the

Eleventh Circuit as a question certified for interlocutory

appeal by the district court. BLAB T.V., 182 F.3d at 854.

28a

This court is willing to certify the issue of complete pre-

emption in this case for interlocutory appeal, if any of the

parties indicate their desire for the court to do so by filing a

written request by December 29, 2000.

V. CONCLUSION

For the reasons discussed above, this court has federal

jurisdiction by virtue of the presence of a federal question in

this case. Accordingly, the Motion to Remand (Doc. # 7) is

due to be and is ORDERED DENIED.

ORDER

For good cause shown, it is hereby ORDERED that the

Memorandum Opinion and Order of this court entered on

December 14, 2000 is AMENDED to add the following

paragraph:

This order involves the issue of whether the court has

jurisdiction to proceed with this case. Therefore,

pursuant to 28 U.S.C. § 1292(b), the court certifies that it

is of the opinion that the order involves a controlling

question of law as to which there is substantial ground

for difference of opinion and that an immediate appeal

from the order may materially advance the ultimate

termination of the litigation. It is, therefore, FURTHER

ORDERED that if the Plaintiffs make application for an

appeal within ten (10) days after the entry of this order,

pursuant to 28 U.S.C. § 1292(b), these proceedings are

STAYED pending a determination of the application by

the Court of Appeals and, if the appeal is permitted, final

determination of the appeal by the Court of Appeals.

The Clerk is DIRECTED to serve copies of this Order by

facsimile.

29a

APPENDIX C

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

[Filed May 29, 2002]

No. 01-11863-JJ

MARIE ANDERSON, ALVESTER BRAFORT, et ai.,

Plaintiffs-Apellants,

versus

H&R BLOCK, INC., BENEFICIAL NATIONAL BANK, et a/..

Defendants-Appellees.

On Appeal! from the United States District Court

for the Middle District of Alabama

ON PETITION(S) FOR REHEARING AND PETITION(S)

FOR REHEARING EN BANC

(Opinion ,»lithCir., 19 F.2d ).

Before: TJOFLAT, BARKETT and WILSON, Circuit

Judges.

PER CURIAM:

The Petition(s) for Rehearing are DENIED and no Judge in

regular active service on the Court having requested that the

Court be polled on rehearing en banc (Rule 35, Federal Rules

of Appellate Procedure), the Petition(s) for Rehearing En

Banc are DENIED.

ENTERED FOR THE COURT:

/s/ [Illegible]

UNITED STATES CIRCUIT JUDGE

30a

APPENDIX D

UNITED STATES CODE ANNOTATED

TITLE 12. BANKS AND BANKING

CHAPTER 2—NATIONAL BANKS

SUBCHAPTER IV—REGULATION OF THE

BANKING BUSINESS; POWERS AND DUTIES OF

NATIONAL BANKS

§ 85. Rate of interest on loans, discounts and purchases

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 laws of the State, Territory, or District where

the bank is located, or at a rate of | per centum in excess of

the discount rate on ninety-day commercial paper in effect at

the Federal reserve bank in the Federal reserve district where

the bank is located, whichever may be the greater, and no

more, except that where by the laws of any State a different

rate is limited for banks organized under state laws, the rate

so limited shall be allowed for associations organized or

existing in any such State under this chapter. When no rate is

fixed by the laws of the State, or Territory, or District, the

bank may take, receive, reserve, or charge a rate not

exceeding 7 per centum, or | per centum in excess of the

discount rate on ninety-day commercial paper in effect at the

Federal reserve bank in the Federal reserve district where the

bank is located, whichever may be the greater, and such

interest may be taken in advance, reckoning the days for

which the note, bill, or other evidence of debt has to run. The

maximum amount of interest or discount to be charged at a

branch of an association located outside of the States of the

United States and the District of Columbia shall be at the rate

allowed by the laws of the country, territory, dependency,

3la

province, dominion, insular possession, or other political

subdivision where the branch is located. And the purchase,

discount, or sale of a bona fide bill of exchange, payable at

another place than the place of such purchase, discount, or

sale, at not more than the current rate of exchange for sight

drafts in addition to the interest, shall not be considered as

taking or receiving a greater rate of interest.

32a

APPENDIX E

UNITED STATES CODE ANNOTATED

TITLE 12. BANKS AND BANKING

CHAPTER 2—NATIONAL BANKS

SUBCHAPTER IV—REGULATION OF THE

BANKING BUSINESS; POWERS AND DUTIES OF

NATIONAL BANKS

§ 86. Usurious interest; penalty for taking; limitations

The taking, receiving, reserving, or charging a rate of

interest greater than is allowed by section 85 of this title,

when knowingly done, shall be deemed a forfeiture of the

entire interest which the note, bill, or other evidence of debt

carries with it, or which has been agreed to be paid thereon.

In case the greater rate of interest has been paid, the person by

whom it has been paid, or his legal representatives, may

recover back, in an action in the nature of an action of debt,

twice the amount of the interest thus paid from the association

taking or receiving the same: Provided, That such action is

commenced within two years from the time the usurious

transaction occurred.

33a

APPENDIX F

UNITED STATES CODE ANNOTATED

TITLE 28. JUDICIARY AND JUDICIAL PROCEDURE

PART IV—JURISDICTION AND VENUE

CHAPTER 85—DISTRICT COURTS; JURISDICTION

§ 1331. Federal question

The district courts shall have original jurisdiction of all

civil actions arising under the Constitution, laws, or treaties

of the United States.

34a

APPENDIX G

UNITED STATES CODE ANNOTATED

TITLE 28. JUDICIARY AND JUDICIAL PROCEDURE

PART IV—JURISDICTION AND VENUE

CHAPTER 89—DISTRICT COURTS; REMOVAL OF

CASES FROM STATE COURTS

§ 1441. Actions removable generally

(a) Except as otherwise expressly provided by Act of

Congress, any civil action brought in a State court of which

the district courts of the United States have original

jurisdiction, may be removed by the defendant or the

defendants, to the district court of the United States for the

district and division embracing the place where such action is

pending. For purposes of removal under this chapter, the

citizenship of defendants sued under fictitious names shall be

disregarded.

(b) Any civil action of which the district courts have

original jurisdiction founded on a claim or right arising under

the Constitution, treaties or laws of the United States shall be

removable without regard to the citizenship or residence of

the parties. Any other such action shall be removable only if

none of the parties in interest properly joined and served as

defendants is a citizen of the State in which such action is

brought.

action within the jurisdiction conferred by section 1331 of

‘this title is joined with one or more otherwise non-removable

claims or causes of action, the entire case may be removed

and the district court may determine all issues therein, or, in

its discretion, may remand all matters in which State law

predominates.

35a

(d) Any civil action brought in a State court against a

foreign state as defined in section 1603(a) of this title may be

removed by the foreign state to the district court of the United

States for the district and division embracing the place where

such action is pending. Upon removal the action shall be

tried by the court without jury. Where removal is based upon

this subsection, the time limitations of section 1446(b) of this

chapter may be enlarged at any time for cause shown.

(e) The court to which such civil action is removed is not

precluded from hearing and determining any claim in such

civil action because the State court from which such civil

action is removed did not have jurisdiction over that claim.

36a

APPENDIX H

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

[Filed Jun. 17, 2002]

No. 01-11863-JJ

MARIE ANDERSON, ALVESTER BRAFORT, ef ai.,

Plaintiffs-Appellants,

versus

H&R BLOcK, INC., BENEFICIAL NATIONAL BANK, ef ai.,

Defendants-Appellees.

On Appeal from the United States District Court

for the Middle District of Alabama

ORDER:

( ) The motion of Appellees’, Beneficial National Bank and

Beneficial Tax Masters, Inc., for (X) stay and stay of the

issuance of the mandate pending petition for writ of

certiorari is DENIED.

(X) The Motion of Appellees’ Beneficial National Bank and

Beneficial Tax Masters, Inc., for (X) stay of the issuance

of the mandate pending petition for writ of certiorari is

GRANTED to and including August 27, 2002, the stay

to continue in force until the final disposition of the case

by the Supreme Court, provided that within the period

above mentioned there shall be filed with the Clerk of

this Court the certificate of the Clerk of the Supreme

Court that the certiorari petition has been filed. The

37a

Clerk shall issue the mandate upon the filing of a copy

of an order of the Supreme Court denying the writ, or

upon expiration of the stay granted herein, unless the

above mentioned certificate shall be filed with the Clerk

of this Court within that time.

/s/ {IMegible}

UNITED STATES CIRCUIT JUDGE

38a

APPENDIX I

IN THE UNITED STATES COURT OF APPEALS FOR

THE ELEVENTH CIRCUIT

No. 01-11863J

MARIE ANDERSON et al.,

Plaintiffs-Appella”®.

Vv.

H&R BLOck, INC.; BENEFICIAL NATIONAL BA’ AND

BENEFICIAL TAX MASTERS, INC.

Defendants-Appel!€es.

On Appeal from an Order ff the United States pistrict Court

for the Middle District of Alabama No. 00-A-!457-N

The Honorable W. Harold Albritton

BRIEF AMICUS CURIAE OF THE OFFICE PF THE

COMPTROLLER OF THE CURRENCY IN SUPPORT OF

DEFENDANT-APPELLEE BENEFICIAL NA !IONAL

BANK REQUESTING AFFIRMANCE OF THE DISTRICT

COURT RULING

JULIE L. WILLIAS

Chief Counse!

DANIEL P. STIPANO

L. Rope! GRIFFIN

ERneST CLIFFORD BARRETT, III

Washington, DC 20219

(202) 874-5280

Attorneys for Amicus Curiae

Office of the Comptroller

June 2001 of the Currency

39a

CERTIFICATE OF INTERESTED PERSONS AND

CORPORATE DISCLOSURE STATEMENT

The amicus curiae adopts the list of 48 interested persons

found in Brief of Appellants-Plaintiffs (pp. i-iii) and makes

the following additions thereto:

Office of the Comptroller of the Currency

Julie L. Williams

Daniel P. Stipano

L. Robert Griffin

Ernest Clifford Barrett, II!

40a

CERTIFICATE OF TYPE SIZE AND STYLI

The size and style of type used in this Brief is Times New

Roman, | 2 point

4la

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES iV

INTEREST OF THE AMICUS CURIAE

ISSUE PRESENTED 2

SUMMARY OF ARGUMENT , | 2

INTRODUCTION : 3

ARGUMENT.................... ninnibicabeinelensitndanaanieiains 6

Congressional Intent To Provide An Exclusive

Forum In The Federal Courts For Usury Actions

Against National Banks Is Evident From The

Plain Language Of The Statute, Is Consistent With

Congress's Desire For Uniform Standards For

National Banks, And Has Been Widely

Recogmized In The Counts .0.0.............ccccccceeeeeeeeeees | 6

|. The Plain Language Of The Statute................... 6

ll. Uniform National Bank Standards..................... X

Ill. Applicable Court Precedents.........................00. y

UNA IITIisinittitintnriesisinianiseimniiciapenninmennnrmntnniie 12

CERTIFICATE OF COMPLIANCE... 14

moog fw a |, ee 15

42a

TABLE OF AUTHORITIES

FEDERAL CASES Page

Ament v. PNC Nat'l Bank, 825 F.Supp.1243

ieee earls 1]

Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557

ESSER ep ereenene eee rrene a omens 10, 11

BLAB T.V. of Mobile, Inc. v. Comcast Cable

Communications, Inc., 182 F.3d 851 (11th Cir.

Epa ereerenererer eee 3,11

Barnet v. Muncie Nat'l Bank, 98 U.S. 555

RE eee nen 9,12

Davis v. Elmira Savings Bank, 161 U.S. 275

Eres oe s

Easton v. lowa, 188 U.S. 220 (1903).................00. s

Evans v. Nat'l Bank of Savannah, 251 U.S. 108

TEE ee ee ne eae OE 9,12

Farmers’ and Mechanics’ Nat’] Bank v. Dear-

dag, D1 U.S. 29 (1G7S)........ccccccccsccsecevveseeversecsoroes passim

First Nat 7 Bank in Mena v. Nowlin, 509 F.2d

LP eee 10

First Nat ‘1 Bank of San Jose v. California, 262

I een Y

First Nat ‘1 Bank v. Smith, 610 F.2d 1258 (Sth

> >

Fortenberry v. Southtrust Bank of Alabama,

N.A., 1996 U.S.Dist. LEXIS 21685 (N.D. Ala.

EES eee ae 11

Goehl v. Mellon Bank (DE), 825 F.Supp. 1239

QO 1]

Independent Bankers Assn of America v. Hei-

mann, 613 F.2d 1164, (D.C. Cir.1979), cert.

denied, 449 U.S. 823 (1980) ..0........ccccceeceeeeeeeeees |

Jones v. Bank Boston, N.A., 115 F.Supp.2d 1350

CD, Bi, Fi cccececcccntseseneensecscsmnnsmensssnnserens 11

43a

TABLE OF AUTHORITIES

Page

VM. Nahas & Co. v. First Nat'l Bank of Hot

Springs, 930 F2d 608 (8th Cir. 1991) 0000000000000... 10

Marquette Nat'l Bank v. First of Omaha Corp.,

EE 6

McCollum v. Hamilton Nat'l Bank of Chatta-

nooga, 303 U.S. 245 (1938)... cccccccccccceeeeeenees 7

Metropolitan Life Insurance Co. v. Taylor, 481

EEE eee a ee 3

Nelson v. Citibank (South Dakota), N.A., 794

F.Supp. 312 (D. Minn. 1992) 000000... 1]

Spellman v. Meridian Bank (Delaware), 1995

WL 764548 (3d Cir. 1995)... cece eee, 5

Tiffany v. Nat'l Bank of Missouri, 85 U.S. 409

Spread ecrivioncititiesastaeatehiinsinstindinbesanttinnasisititidiatiiiieamantings 5,6

Watson v. First Union Nat'l Bank of South

Carolina, 837 F.Supp. 146 (D.S.C. 1993)......... 1]

STATE CASES

Florence R.R. & Improvement Co. v. Chase

Nat'l Bank, 17 So0.720(Ala.1894).0000000000cccce. y

FEDERAL STATUTES

tk eae a eee passim

A ee passim

Ee 3

a aii iii 2

a 3

National Bank Act, 12 U.S.C. §§ | ef seq.,............

National Bank Act of 1864, § 30, 13 Stat. 108

Ee passim

National Currency Act of 1863, § 46,112 Stat.

I 5

44a

TABLE OF AUTHORITIES

MISCELLANEOUS

Cong. Globe, 38th Cong., Ist Sess. 1451 (1864)...

Hackley, Howard H. Our Baffling Banking

System—Part I, 52 Va.L.Rev. 565 (1966) .........

Hammond, Bray. Sovereignty and an Empty

Purse: Banks and Politics in the Civil War

EE BP PR ccccccescsesesccnnnsssasnscennneniennsennseenanqennents ,

Robertson, Ross M. The Comptroller and Bank

Supervision 36 (19S Cd) ....cccccccccceeesseeeeeereeeeeees

Page

45a

INTEREST OF THE AMICUS CURIAE

The Office of the Comptroller of the Currency (“OCC”) is

a bureau within the Department of Treasury charged with

the administration of the National Bank Act, 12 U.S.C. §§ |

et seq., and the supervision of national banks. The OCC,

whose chief officer is the Comptroller of the Currency, has

broad authority over the chartering, supervision, and regu-

lation of almost every aspect of the affairs of banks organized

under the National Bank Act, including the power to deter-

mine whether a bank’s activities are permissible under

national banking laws. See /ndependent Bankers Ass'n of Am.

v. Heimann, 613 F.2d 1164, 1168 (D.C. Cir.1979), cert.

denied, 449 U.S. 823 (1980); First Nat'l Bank v. Smith, 610

F.2d 1258, 1264 (Sth Cir.1980). Appellee Beneficial National

Bank USA, New Castle, Delaware, is a national bank

chartered and supervised by the OCC.

This case turns on the interpretation of the usury provisions

of the National Bank Act, 12 U.S.C. §§ 85 and 86. As the

district court noted, a long line of precedent supports the

conclusion that those provisions establish an exclusively

federal remedy for allegations that a national bank has

charged excessive rates of interest, thereby foreclosing any

state law cause of action for usury. The OCC believes that the

district court correctly held, on that basis, that the federal

remedy has occupied the field of usury claims against

national banks, supporting removal to federal court under the

doctrine of “complete preemption.” Accordingly, the OCC is

vitally interested in this case as the federal agency charged

with interpreting the National Bank Act and with protecting

the safety and soundness of the national banking system.

Pursuant to Rule 29(a) of the Federal Rules of Appellate

Procedure, the OCC files this brief amicus curiae in support

of defendant-appellee Beneficial National Bank urging

affirmance of the decision below.

46a

ISSUE PRESENTED

Whether the doctrine of “complete preemption” displaces a

state cause of action alleging violations of Alabama usury

laws by a national bank, thereby authorizing removal of the

case to federal court under 28 U.S.C. § 1441.

SUMMARY OF ARGUMENT

When enacting the National Bank Act in 1864, Congress

tried to assure that the new national banks would benefit from

a national standard governing the interest rates that the new

banks could charge on their loans. This standard, now

codified in 12 U.S.C. § 85, allows a national bank to “charge

on any loan or discount made . . . interest at the rate allowed

by the laws of the State, Territory, or District where the bank

is located . . .,” and it is complemented by a remedy, found in

12 U.S.C. § 86, for any violations. Under this remedy, the

borrower must institute “an action in the nature of an action

of debt” to recover the amount specified in the statute, and

must do so “within two years from the time the usurious

transaction occurred.” Subsequent Supreme Court decisions,

mindful of the Congressional concern to protect the new

banking system from unfriendly state legislation as well as

the system’s need for uniformity, declared that these two

sections “cover the entire subject” and are “exclusive.”

As the Eighth Circuit has held, any usury claim against a

national bank is federal in nature, and this, together with the

exclusive federal remedy in § 86, effects “complete preemp-

tion” of state causes of action against a national bank for

violations of state usury law. Thus, such actions should be

removed to federal court. Explicit Congressional authori-

zation for removal is unnecessary because the statutes

themselves, as interpreted in early Supreme Court decisions,

reflect legislative intent to create an exclusive federal forum.

47a

INTRODUCTION

I. Complete Preemption

Title 28 U.S.C. § 1441 (a) authorizes removal to federal

court of state court actions that “arise under the laws of the

United States.” whether the federal court has the necessary

federal question jurisdiction to hear the case after removal

depends on whether the “action aris[es] under the Constitu-

tion, laws or treaties of the United States.” 28 U.S.C. § 1331.

In making this determination, courts apply the well-pleaded

complaint rule, which generally calls for the court to look to

the face of the complaint, rather than to any defenses (such as

“traditional” or “ordinary” preemption) asserted by the

defendant, to determine whether the case presents a federal

question supporting removal. There is, however, an exception

to the well-pleaded complaint rule known as the “complete

preemption” doctrine. This exception recognizes that, in

certain cases, “Congress may so completely pre-empt a par-

ticular area that any civil complaint raising this select group

of claims is necessarily federal in character.” Metropolitan

Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987); BLAB T.V.

of Mobile, Inc. v. Comcast Cable Communications, Inc. ,182

F.3d 851, 854 (11th Cir.1999). In such cases, purported state

law claims are converted into claims stating a federal

question, and therefore removal is proper. Here, the

OCC believes the National Bank Act’s usury provisions,

12 U.S.C. §§ 85-86, dictate application of the “complete

preemption” doctrine.

II. National Bank Usury Law

The origin of national bank usury law dates back to the

mid-19th Century, and reflects Congress’s desire to have a

uniform national currency and banking system. At the

outbreak of the Civil. War, circulating currency in the United

States consisted of notes issued by state chartered banks. The

uncertain nature of the security backing these notes and the

48a

need for a uniform currency to pay Union troops culminated

in the passage of the National Currency Act of 1863,12 Stat.

665. This act provided for a national currency to be circulated

by a new system of privately owned banks chartered by a new

Treasury Department bureau headed by the Comptroller of

the Currency. The following year, the National Currency Act

was replaced by the National Bank Act of 1864,13 Stat 99,

which carried over many provisions of the 1863 act and

added others. Howard H. Hackley, Our Baffling Banking

System—Part I, 52 Va. L. Rev. 565, 569-571(1966); Bray

Hammond, Sovereignty and an Empty Purse: Banks and

Politics in the Civil War 290-297 (1970); Ross M. Robertson,

The Comptroller and Bank Supervision 36-54 (1995 ed.). The

legislative debate reflected a Congressional assessment that

the National Bank Act was essential to the nation’s survival,

and that threats to the new banking system from existing state

banks should be reduced or eliminated. During the debates,

Congressman Hooper remarked,

I believe the existence of the nation is at stake upon this

issue; that the present necessity requires the use of every

legitimate means to sustain the credit of the Govern-.

ment; . . . | appeal to the members of the House, and I

ask them if they can excuse themselves to their

constituents and to posterity if they sacrifice the great

interests that are now at stake to the comparatively petty

interest of local banking.

Cong. Globe, 38th Cong., Ist Sess. 1451 (1864). Reviewing

this history, one appellate judge observed, “[I]t is clear that

the National Bank Act was a significant exercise of Con-

gressional authority, intended by Congress to alter federal-

state relations.” Spellman v. Meridian Bank (Delaware), 1995

WL 764548 at *22 (3d Cir.1995)(dissent by Scirica, J.)

An important feature of both the National Currency Act

and the National Bank Act was the rate of interest that a

national bank may charge on its loans. See National Currency

49a

Act, § 46, 12 Stat. 665, 678-679 (1863), and National Bank

Act, § 30,13 Stat. 99,108 (1864). Loans typically constitute

the predominant asset on a bank’s balance sheet, so interest is

a principal component of virtually every bank’s income.

Moreover, as Rep. Hooper’s comment suggests, Congress in

1863-1864 was intensely aware of the vigorous competition

from state banks, many of which opposed the creation of the

parallel national banking system. For these reasons, Congress

enacted in section 30 of the National Bank Act both a

national standard for determining the interest that the new

banks could charge and an exclusive remedy for borrowers

charged more than the allowed rate. 13 Stat.108. Section 30,

later divided into two sections in amended form for codi-

fication as 12 U.S.C. §§ 85-86, “was considered indispens-

able to protect them against possible unfriendly state legis-

lation.” Tiffany v. Nat'l Bank of Missouri, 85 U.S. 409, 412

(1874). Not only did the National Bank Act ensure a level

playing field with state banks, but it also deliberately “gives

advantages to national banks over their state competitors.” /d.

at 413; Marguette Nat'l Bank v. First of Omaha Corp., 439

U.S. 299, 314 (1978)(national bank can charge an out-of-state

borrower interest allowed by the bank’s home state, even if

such rate is higher than allowed by the state where borrower

resides); Hackley, 52 Va. L. Rev. at 585-586. Thus, the

remedy portion of § 30, now codified at 12 U.S.C. § 86, is

fully consistent with Congress’s desire for national uni-

formity and with national banks’ favored status.

ARGUMENT

Congressional Intent to Provide an Exclusive Forum in

the Federal Courts for Usury Actions against National

Banks is Evident from the Plain Language of the Statute,

is Consistent with Congress’s Desire for Uniform

Standards for National Banks, and has been Widely

Recognized in the Courts.

50a

I. The Plain Language Of The Statute

Congress’s intent to establish an exclusive forum in the

federal courts for usury actions against national banks is

evident from the plain language of 12 U.S.C. §§ 85 and 86.

Under 12 U.S.C. § 85, a national bank may charge interest “at

the rate allowed by the laws of the State. . . where the bank is

located, or at a rate of 1 per centum in excess of the discount

rate on ninety-day commercial paper in effect at the Federal

reserve bank ... .” Under 12 U.S.C. § 86, knowingly

charging “a rate of interest greater than is allowed by section

85 .. . shall be deemed a forfeiture of the entire interest. . . .”

Where excessive interest has been paid, “the person by whom

it has been paid . . . may recover back, in an action in the

nature of an action of debt, twice the amount of the interest

thus paid . . . Provided, That such action is commenced

within two years from the time the usurious transaction

occurred.”

Twelve U.S.C. §§ 85 and 86 are inextricably linked. Just as

12 U.S.C. § 85 establishes a national standard for determining

permissible rates of interest on a national bank’s loans, 12

U.S.C. § 86 provides the exclusive remedy for a borrower

alleging that the interest exceeds what is permitted by § 85.

Moreover, both of these sections were derived from § 30 of

the National Bank Act. Thus, §§ 85 and 86, “examined by

their own light, seem to us too clear to admit of doubt as to

anything to which they relate. They form a system of

regulations. All the parts are in harmony with each other, and

cover the entire subject. Farmers and Mechanics Nat ‘l Bank

v. Dearing, 91 U.S. 29, 32 (1875). There, the Supreme Court

agreed with the bank that the penalty for usury was “for-

feiture of the entire interest” as prescribed in § 86, not

declaring the note “void” as required by New York law. This

was a reasonable conclusion, since it seems highly unlikely

that Congress would enact a law that sets a uniform standard

Sla

for rates and in the same section of that law provide a uniform

remedy for violations, while simultaneously contemplating

the adjudication of state law remedies in a non-federal forum.

Rather, section 30 of the National Bank Act created a new

and exclusive federal cause of action, and “the power to sup-

plement it by state legislation is conferred neither expressly

nor by implication.” 91 U.S. at 35. See also McCollum v.

Hamilton Nat'l Bank of Chattanooga, 303 U.S. 245, 247-249

(1938) (“Punishment for usury does not depend upon

payment of the borrower’s debt” but “shall be paid according

to the terms of the statute” without consideration of aggra-

vating circumstances or equitable considerations).

Il. Uniform National Bank Standards

Congressional intent to provide an exclusive forum in the

federal courts for usury actions against national banks is

consistent with Congress’s overall intent to have uniform

standards for national banks. The need for a uniform remedy

for usury violations has its origin in the unique purposes for

which the national banking system was created. Through the

national charter, Congress has established a banking system

intended to be both nationwide in scope and uniform in

character. As stated in Easton v. lowa, 188 U.S. 220, 229

(1903), federal legislation affecting national banks “has in

view the erection of a system extending throughout the

country, and independent, so far as the powers conferred are

concerned, of state legislation which, if permitted to be

applicable, might impose limitations and restrictions as

various and as numerous as the states.” See also Davis v.

Elmira Say. Bank, 161 U.S. 275, 283 (1896) (“This freedom

from State control over a national bank’s powers protects

national banks from conflicting local laws unrelated to the

purpose of providing the uniform, nationwide banking system

that Congress intended.”); Farmers’ and Mechanics’ Nat'l

Bank, 91 U.S. at 33-34 (“The national banks organized under

the [National Bank] Act are instruments designed to be used

52a

to aid the government in the administration of an important

branch of the public service. They are means appropriate to

that end. . . . Being such means, brought into existence for

this purpose, and intended to be so employed, the States can

exercise no control over them, nor in anywise affect their

operation, except in so far as Congress may see proper to

permit. Any thing beyond this is an abuse, because it is the

usurpation of power which a single State cannot give.””)

(internal citation omitted); First Nat'l Bank of San Jose v.

California, 262 U.S. 366, 369 (1923).

The uniformity theme is echoed in § 30 which, as enacted

in 1864, embodied both a standard for determining the

interest rate and a detailed procedure for an overcharged

borrower to obtain redress. In this way, § 30 “establishes a

system of general regulations” for determining “whether

transactions by [a national bank] are usurious and the con-

sequent penalties therefore” Evans v. Nat 1 Bank of Savan-

nah, 251 U.S.108, 109, 111(1919).

III. Applicable Court Precedents

Numerous courts, including the Supreme Court, have

recognized that federal courts provide an exclusive forum for

usury actions against national banks. Thus, from the begin-

ning, the Supreme Court has recognized that the cause of

action created by § 86 forecloses any parallel state usury

cause of action against a national bank. Barnet v. Muncie

Nat'l Bank, 98 U.S. 555, 558 (1879) (“Where a statute creates

a new right or offense, and provides a specific remedy or

punishment, they alone apply. Such provisions are exclu-

sive”). For more than a century, the Alabama Supreme Court

has recognized the exclusive federal penalty in § 86. Florence

R.R. & Improvement Co. v. Chase Nat'l Bank, 17 So. 720,

721 (Ala. 1894). Because the same legislation that brought

national banks into existence precluded application to them of

state usury laws except to ascertain the permissible interest

53a

rate, no state law cause of action for usury has ever existed

against national banks. Accordingly, no subject matter area

could be more “completely preempted” by federal law within

the meaning of Metropolitan Life, supra.

More recently, the federal appeilate courts have affirmed

that state law has no role in setting the penalty for usury

committed by a national bank. In First Nat'l Bank in Mena v.

Nowlin, 509 F.2d 872 (8th Cir. 1975), the Eighth Circuit

rejected the argument that national banks should be subject to

state rather than federal penalties. Citing Evans v. Nat'l Bank

of Savannah, supra, the court said:

To hold otherwise in the instant case would jeopardize

the national banking system by allowing the states to set

penalties for violations of federal law. That is patently

contrary to the congressional policy of assuring national

banks parity with state banks and most favored state

lenders. Furthermore, since Congress has provided a

penalty for usury, that action preempts the field and

leaves no room for varying state penalties.

509 F.2d at 881.

In 1991, the Eighth Circuit took this reasoning one step

further in M. Nahas & Co. v. First Nat'l Bank of Hot Springs,

930 F.2d 608 (8th Cir.1991). There, the court concluded that

the exclusive federal remedy, created by Congress over 100

years.ago to prevent the application of overly punitive state

law usury penalties against national banks, is squarely within

the complete preemption doctrine of Avco Corp. v. Aero Lode

No. 735, 390 U.S. 557 (1968). Thus, while the complaint in

that case, alleging a violation of Arkansas usury laws with the

remedy to be found in the Arkansas Constitution, was

couched wholly in state law terms, “it was necessarily federal

in nature and properly removable.” 930 F.2d at 612.

S4a

Subsequent case law on the applicability of the complete

preemption doctrine to usury claims against national banks is

in accord. Fortenberry v. Southtrust Bank of Alabama, N.A..,

1996 U.S. Dist. LEXIS 21685 (N.D. Ala. 1996 ) (removal is

proper because plaintiff's action is federal in nature); Goehi v.

Mellon Bank (DE), 825 F. Supp.1239,1243 (E.D. Pa. 1993)

(“sections 85 and 86 of the NBA subsume the interests for

which Plaintiffs seek vindication under state law. . . . [and]

there is a clear indication of Congressional intent to permit

removal” in such cases); Watson v. First Union Nat'l Bank of

South Carolina, 837 F. Supp.146, 148-150 (D.S.C.1993) (vast

majority of courts have concluded that complete preemption

applies even when a complaint alleging national bank usury is

based solely on state statutes setting the interest rate and the

remedy for a usurious loan); Ament v. PNC Nat'l Bank, 825

F. Supp.1243, 1250 (W.D. Pa. 1992) (complete preemption

applies because section 86 vindicates the same interest that

plaintiffs seek to vindicate by their state law claims);

Nelson v. Citibank (South Dakota), N.A., 794 F. Supp. 312,

316 (D. Minn. 1992) (removal is proper because usury

claims, though grounded in Minnesota law, are necessarily

federal in character).

Despite widespread agreement on the propriety of remov-

ing state causes of action against a national bank for usury,

several courts have not permitted removal. One decision,

Jones v. Bank Boston, N.A.,115 F. Supp. 2d 1350 (S.D. Ala.

2000), concluded that insufficient evidence of Congressional

intent to allow removal can be found in the National Bank !

Act, and therefore the complete preemption doctrine, as

explained in Avco Core., supra, and BLAB T.V. of Mobile,

Inc., supra, does not apply. The court failed to recognize that

the Supreme Court decided this very issue in Farmers’ and

Mechanics’ Nat'l Bank, in Barnet and in Evans. Under those

decisions, to which the Jones court either gave only cursory

attention (Farmers’ and Mechanics’) or failed to mention at

5Sa

all (Barnet, Evans),115 F. Supp. 2d at 1357, the provision in

§ 30 of the National Bank Act of a framework of substantive

law, together with an exclusive remedy “in an action in the

nature of an action of debt” within two years of the usurious

transaction, answers the question whether Congress intended

to displace a state cause of action alleging state usury law

violations by a national bank.

CONCLUSION

From the above, it is evident that the only viable means of

recovery against a national bank for usurious interest is a

federal cause of action that should appear on the face of a

wellpleaded complaint. For purposes of the instant case, the

law has been settled for over a century, even in the Alabama

Supreme Court, so there are no issues for the state court to

resolve. Where Congress clearly wished to displace state law

by creating an exclusive federal remedy and stressed the

importance of uniformity in the fledgling national banking

system, a finding of complete preemption is appropriate. The

lower court, by giving deserved weight to the historical

context, the scheme set out in section 30 of the National Bank

Act of 1864 and the decisional law interpreting the statutory

language, properly applied the doctrine here by refusing to

remand the case to state court.

June 2001

S6a

Respectfully submitted,

JULIE L. WILLIAMS

Chief Counsel

DANIEL P. STIPANO

L. ROBERT GRIFFIN

ERNEST CLIFFORD BARRETT, III

250 E Street, S.W.

Washington, DC 20219

(202) 874-5280

Attorneys for Amicus Curiae

Office of the Comptroller

of the Currency

S7a

CERTIFICATE OF COMPLIANCE

I hereby certify that this brief has a word count of less than

7,000 words, and complies with the length requirements

specified in Fed. R. App. P. 32(a)(7).

/s/ Ernest Clifford Barrett, III

ERNEST CLIFFORD BARRETT, III

Attorney for Amicus Curiae

Office of the Comptroller of the Currency

58a

CERTIFICATE OF SERVICE

I hereby certify that on this 22nd day of June, 2001, |

caused two copies of the foregoing Brief to be served upon

each of the following counsel by first class mail:

K. Stephen Jackson, Esq.

JACKSON & SHUTTLESWORTH, P.C.

2100 First Avenue North, 200 Landmark Center

Birmingham, AL 35203

A. Inge Selden, III, Esq.

MAYNARD, COOPER & GALE, P.C.

2400 AmSouth/Harbert Plaza

1901 Sixth Avenue North

Birmingham, AL 35203-2618

Stewart M. Cox, Esq.

BRADLEY ARANT ROSE & WHITE, LLP

2001 Park Place, Suite 1400

Birmingham, AL 35203

Howard Cayne, Esq.

ARNOLD & PORTER 5

55 Twelfth Street, N.W.

Washington, D.C. 20004

Alan S. Kaplinsky, Esq.

BALLARD SPAHR ANDREWS & INGERSOLL, LLP

1735 Market Street, 51 st Floor

Philadelphia, PA 19103

Walter B. Calton, Esq.

CALTON RUTLAND & HAGOOD, LLC

312 East Braod Street

Eufala, Alabama 36027

/s/ Ernest Clifford Parrett, III

ERNEST CLIFFORD BARRETT, III

59a

APPENDIX J

UNITED STATES DISTRICT COURT MIDDLE

DISTRICT OF LOUISIANA

[Filed Jan 13, 1998]

DOUGLAS GALLAGHER, FERMIN TULLIER, PATRICK JUGE,

BONNIE GILBERT, HARRY BATISTE, JR, and JULIE DAVENPORT,

Vv.

H&R BLOCK EASTERN TAX SERVICES, INC., et al

RULING ON MOTION TO REMAND

This matter is before the court on a motion to remand by

plaintiffs, Douglas Gallager, Fermin Tuller, Patrick Juge,

Beonnie Gilbert, Harry Batiste, Jr, and Julie Davenport.

Defendants, Eastern Tax Services, Inc., H&R Block, Inc.,

Block Financial Corporation, Danette Dagle, Paulette Landry,

Lois Falcon, and Defendants A through Z (collectively

“Block”), oppose the motion. Removal jurisdiction is

allegedly based on federal question subject matter

jurisdiction, 8 U.S.C. §1331.

Background

According to the memoranda and documents submitted by

the parties in support therof, on July 8, 1997, plaintiffs filed a

class action petition in the 18th Judicial District Court, Parish

of Iberville, State of Louisiana, seeking to recover monetary

compensation for damages and for attorney fees, for alleged

financial harm by Block in a scheme to systematically target

and deceive lower income, unsophisticated taxpayers out of

“exorbitant” interest and fees. Plaintiffs allege that Block

induced plaintiffs and other Louisiana residents to 1) pay a

fee to Block to secure their tax refunds supposedly more

60a

quickly than available elsewhere; and 2) pay outrageous

finance charge for short term, fully secured loans from

Block’s lending banks.

The petition alleges that defendants are liable on the

following count:!) fraudulent misrepresentation; 2)

fraudulent concealment; 3) dual agency; and 4) breach of

fiduciary duty.

Oh July 25, 1997, defendants filed a notice of removal.

Plaintiffs filed a motion to remand on August 15, 1997, on

the grounds that 1) the claims by plaintiffs do not arise under

federal law; and 2) if applicable, preemption would only be a

defense to state law claims, and would not be grcunds for

removal. Plaintiffs also request that the court assess

attorney’s fees against Block.

Defendants oppose the motion on the grounds that 1) the

are substantial disputed questions of federal law in this case

which are central to the claims by plaintiffs for recovery; and

2) plaintiffs have artfully pleaded in state law terms a

completely preempted federal cause of action.

Arguments

Plaintiff argue that the state court petition alleges no

federal claims, only violations of Louisiana law, prohibiting

fraud, suppression, breach of fiduciary duty and dual agency.

Plaintiffs argue that the court should not accept Block’s

distortion of the state law claims into a claim under the

National Bank Act, 12 U.S.C. 21 et seq. because plaintiffs do

not sue Block under the Act, nor cold they, because the Act

regulates only the business of banking, and Block is not a

bank. Plaintiff argue that Louisiano’s interest in prohibiting

Block from deceiving Louisiana residents into exorbitant

interest obligations does not impact the purpose of the Act or

any other federal law.

6la

Plaintiffs also argue that Block’s supposed preemption

defense cannot create federal jurisdiction, because the

National Bank Act does not apply for preemption purposes

when no claims against a bank have been asserted.

Defendants argue that the issue of the agency or broker

status of defendants in relation to notional banks is

tantamount to their status as alleged “branch offices” “branch

agencies”, or “additional offices” of national banks conduct-

ing banking businesses which is a matter of federal law; thus ;

defendants argue, the success of the allegations depends on

determination of whether one or more of the Block

defendants were “agents” or “brokers” of these national banks

in allowing the transactions to occur. Defendants argue that

plaintiffs all but name the national bank as parties by alleging

that the Block defendants concealed the fact the they were

actually creditors on the loans.

Defendants also argue that, under the complete preemption

component of the “artful pleading” doctrine, plaintiffs rest

their case against defendants on the deceptive collection of

excessive interest from plaintiffs pursuant to loans actually

made by one or more national banks, in violation of the

interest rates authorized by the National Bank Act.

Defendants argue that, if plaintiffs are willing to argue that

Block is the legal surrogate of national bank lenders in the

lending program, it follows that the preemptive effect of the

laws that govern the national banks be applied to all aspects

of the litigation, from the standpoint of liability, remedy

and jurisdiction.

Law and Discussion

To support removal, defendant bears the burden of

establishing federal jurisdiction over the state court suit.'

Removal under section 144(b), the basis of removal here, is

' Carpenter v. Wichata Falls Independent School District, 44 F.3d 362,

365 (Sth Cir. 1995).

62a

appropriate only for those claims with the federal question

jurisdiction of the district courts, that is, for those actions

“arising under the Constitution, Laws, or treaties of the

United States.” ”

A case “arises under” federal law when a “right or

immunity created by the Constitution or laws of the United

States [is] an element, and an essential one, of plaintiffs

cause of action.° If, however, the state law created the cause

of action, the court must determine whether plaintiffs

demand “necessarily depends on resolution of a substantial

question of federal law.‘

Generally, a suit may not be removed from state court to

federal court on the basis of a federal defense including the

defense of preemption; however, under the “complete

preemption doctrine”, once an area of state law has been

completely preempted, any claim based on the preempted

state law is considered a federal claim and therefore arises

under federal law.°

When plaintiff challenges the propriety of defendant’s

removal, defendant carries the burden of showing the

necessary facts to support the court’s exercise or removal

jurisdiction. Any doubts about the propriety of removal are

construed in favor of remand.’ The removal statute should be

? 28 U.S.C. § 1331.

> Franchise Tax Bd. v. Const. Laborers Vacation Trust, 463 U.S. 1,

103 S.Ct. 2841, 77 L.Ed.2d 420 (1983).

‘Id

* Caterpillar Inc. v. Williams, 482 U.S. 386, 107 S.Ct 2425, 96 L.Ed 2d

318 (1987).

° See Jernigan v. Ashland Oil, Inc. 989 F.2d 812, 815 (Sth Cir. 1993);

Willy v. Coastal Corp., 855 F.2d 1160, 1164 (Sth Cir. 1988); McNutt v.

General Motors Acceptance Corp., 298 U.S. 178 56 S.Ct. 780, 785, 80

L.Ed. 1135 (1936).

” Butler v. Polk, 592 F.2d 1293, 1296 (Sth Cir. 1979).

63a

strictly construed against removal and all doubt should be

resolved in favor of remand.*

The National Bank Act, 12 U.S.C. § 21 et seg., governs the

operations of national banking associations.’ The background

begins in 1863 and 1864, when the Civil War Congress

enacted and then reenacted the National Bank Act, which

launched the modem national banking system by providing

for federal chartering of private commercial banks and

empowering the newly created national banks to issue and

accept a uniform national currency.'° Authorizing national

banks to “carry on the business of banking,” the National

Bank Act provides that such banks shall have power—

To exercise . . . all such incidental powers as shall be

necessary to carry on the business of banking: by

discounting and negotiation promissory notes drafts,

bills of exchange, and other evidences of debt; by

receiving deposit; by buying and selling exchange , coin,

and buttons; by loaning money on personal security; and

by obtaining , issuing, and circulating notes . . . The

business of dealing in securities and stock by the [bank]

shall be limited to purchasing and selling such securities

and stock with out recourse, solely upon the order, and

for the account of, customers, and in no case for its own

account, and the [bank] shall be limited to purchasing

and selling such securities and stock without recourse,

solely upon the order, and for the account of, customers,

® Shamrock Oil and Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868 85

L.Ed. 1214 (1941).

® Jackson v. First Nat. Bank of Valdosta, 349 F.2d 71 (Sth Cir. 1965).

'° U.S. Nat. Bank of Oregon v. Independent Ins. Agents of America,

Inc., 508 U.S. 439, 113 S.Ct. 2173, 124 L.Ed.2d 402 (1993), citing Act of

Feb. 25, 1863, ch. 58, 12 Stat. 665; Act of June 3, 1864, ch. 106, 13 Stat.

99; E. Symons, Jr., & J. White, Banking Law 22-25 (3d ed. 1991); and 12

U.S.C. § 38.

64a

and in no case for its own account, and the [banks]shall

not underwrite any issue of securities or stock .. .,”

12 U.S.C. § 24 Seventh (1988 ed. And Supp. V).” "'

The National Bank Act, U.S.C. § 85, permits a national

bank to charge “interest at the rate allowed by the laws of the

State ... where the bank is located .. . and no more.”

Further, 12 U.S.C. § 86 provides the penalty for usury against

a national banks that “tak[es], receiv[es], or charg[es] a rate

of interest greater than is allowed by Section 85.” '* Suits

under sections 85 and 86 of the National Bank Act, and the

predecessors of those sections, are federal question cases."”

Plaintiffs allege that the “Rapid Refund” program is a loan

program administered by defendants in association with

banking institutions. Plaintiffs allege that defendants solicted

from their clients, on behalf of various banks, loans which

were collateralized with the clients, on behalf of various

banks, loans which were collateralized with the expected

refund. Under the arrangement with the banks which issue the

loans, plaintiffs allege, defendants received a kickback from

the banks for each refund anticipation loan entered into by its

clients. Plaintiffs allege that the true the relationship between

defendants and the lenders was that of broker or agent for the

lender. It is clear that plaintiffs have attempted to gain the

liability and class action benefits of indentifying defendants

with the banks but none of the jurisdictional consequences of

the allegations.

The state court petition clearly alleges that the loans were

made by the national banks through their agent, H&R black.

" NationsBank of North Carolina, N.A. v. Variable Annuity Life Ins.

Co., 513 U.S. 251, 115 S.Ct. 810, 130 L.Ed.2d 740 (1195).

'212 U.S.C. §§ 85-86.

'? Fourehem, Inc. v. Louisiana National Leashing Corp, 723 F.2d 376

(Cir 1984).

65a

The state court petition clearly attacks the validity of the

loans made by the national banks. These allegations are

sufficient to implicate the provisions of sections 85 and 86 of

the national banks Act, even though the banks themselves are

not now joined as parties to the action.

Although the National Bank Act regulates only the

business of banking and named defendants are not banking

associations, defendants have provided persuasive support for

their claim which would place this matter under the National

Bank Act. Plaintiffs may not escape federal jurisdiction by

artfully omitting parties to the transactions that are the subject

of this lawsuit.

Accordingly, for the reason assigned the motion by

plaintiffs to remand is hereby DENIED.

/s/ John V. Parker

JOHN V. PARKER, Chief Judge

MIDDLE DISTRICT OF LOUISIANA

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