Amicus Curiae Brief — Beneficial Nat. Bank v. Anderson

No. 02-306 ~~

In The

Supreme Court of the United States-

BENEFICIAL NATIONAL BANK AND

BENEFICIAL TAX MASTERS, INC.,

Petitioners,

V.

MARIE ANDERSON, et al.,

Respondents.

+

On Writ Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

¢

BRIEF FOR THE CONSUMER ATTORNEYS

OF CALIFORNIA, AS AMICUS CURIAE IN

SUPPORT OF RESPONDENTS

+

JAMES C. STURDEVANT

Counsel of Record

JESPER I. RASMUSSEN

THE STURDEVANT LAW FIRM,

A Professional Corporation

475 Sansome Street, Suite 1750

San Francisco, CA 94111

Telephone: (415) 477-2410

Facsimile: (415) 477-2420

Attorneys for Amicus Curiae

Consumer Attorneys of California

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

'BEST AVAILABLE COPY 2.

TABLE OF CONTENTS

Page

STATEMENT OF INTEREST OF AMICUS CURIAE.. 1

SUMMARY OF ARGUMENT.....................:0cccceceeeeeees 3

EE Weisnnsiciviintnnsinriiiniianiaialiananiiaiiianiininapeineiaias 4

I. THERE IS NO HISTORICAL OR LEGAL

JUSTIFICATION FOR IGNORING THE

WELL-PLEADED COMPLAINT RULE HERE

AND DISREGARDING THE INTERESTS OF

THE STATES IN REGULATING BANK.G........ 4

Il. THE PROVISIONS OF THE NATIONAL

BANK ACT DO NOT MANIFEST CON-

GRESS’ INTENT TO COMPLETELY PRE-

EMPT STATE USURY LAWS FOR PUR-

POSES OF REMOVAL JURISDICTION........... 9

III. THE STATES HAVE TRADITIONALLY LEGI-

SLATED IN AREAS AFFECTING BANKING

PEP IEEED vecwninvececcoceunsuveensenensnennsnnvensenensesven 11

IONS cncevecscenssccussnsvnsesesnesessenensennennensnsnteiions 17

‘i

TABLE OF AUTHORITIES

Page

CASES

Anderson Nat'l Bank v. Luckett, 321 U.S. 233

a. sc ennennnnannnnnns 8

Arkansas Electric Cooperative Corp. v. Arkansas

Public Serv. Comm’n, 461 U.S. 375 (1983) ..........cceeeeeeee 7

BLAB T.V. of Mobile, Inc. v. Comsat Cable Commu-

nications, Inc., 182 F.3d 851 (11th Cir. 1999)......9, 10, 11

California v. ARC America Corp., 490 U.S. 93

EEE EEE 11, 12, 16

Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987)........... 5,9

Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992).....3, 6

Committee of Dental Amalgam Manufacturers &

Dist. v. Stratton, 92 F.3d 807 (9th Cir. 1996)................. 12

First Nat'l Bank v. Dickinson, 396 U.S. 122 (1969)........... 8

Florida Lime & Avocado Growers, Inc. v. Paul, 373

acca cnr ecrnnnrnnensnenens 12

Greenwood Trust Co. v. Commonwealth of Massa-

chusett, 971 F.2d 818 (1st Cir. 1992), cert. denied,

EE ee 12

Lewis v. BT Investment Managers, Inc., 447 U.S. 27

LA TO 16

Louisville & Nashville R.R. v. Mottley, 211 U.S.149 |

Sirs iisi dda ncedeeenenentendtcnqeenesecousveseenesseensessoeces 9

Marquette Nat’l Bank v. First of Omaha Service

IE I, MI UTED... ssc ccccccccesscsesosecessucoosecosooocs 16

Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996).........ccccccec eee 6

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

—-—-———a,

iil

TABLE OF AUTHORITIES -— Continued

Page

McClelland v. Gronwaldt, 155 F.3d 507 (5th Cir.

Ean Ean 14

Nat'l State Bank v. Long, 630 F.2d 981 (3d Cir.

aaa attache iaereteinieaaliaaeal 8, 16

New Orleans Public Service, Inc. v. Council of the

City of New Orleans, 491 U.S. 350 (1989) ..............ccccceee 7

Perdue v. Crocker National Bank, 702 P.2d 503

(CA, 1985), appeal dismissed, 475 U.S. 1001

tenet aaieteeeercniaeeaernetaieceeeanne 8, 12, 13, 14, 15

Rice v. Santa Fe Elevator Corp., 331 U.S. 218

arama maceciinreeeiemdanmememata 13

Smiley v. Citibank, 900 P.2d 690 (CA, 1995), aff’d

on other grounds, 517 U.S. 735 (1996).....8, 14, 15, 16, 17

Sprietsma v. Mercury Marine, __ U.S. __, 123

I a niece anicnaailies 3

The Fair v. Kohler Die & Specialty Co., 228 U.S. 22

erecta ereeeesneieemitnniaiienes 5

Valley Bank v. Plus System, Inc., 914 F.2d 1186 (9th

I em nenencarieeieanee 12

STATUTES

eran passim

EEE Cerne ener 1, 3, 4, 5, 14

I rnin din aad 10

nacre teateeerinsenrinideeminanmnennats 4

I occ crerineneannliaeeeremsemnnaaes 10

eS ee ccccensnscencscsecsncsssensernssnecssecnsensensnsesnanens 5

1

STATEMENT OF INTEREST OF AMICUS CURIAE

Consumer Attorneys of California (hereinafter

“CAOC”) is a voluntary membership organization of more

than 3,000 consumer attorneys practicing throughout

California.’ The organization was founded in 1962 and its

members predominantly represent individuals subjected

in a variety of ways to consumer fraud practices, employ-

ment discrimination, personal injuries and insurance bad

faith. Consumer Attorneys of California has taken a

leading role in advancing and protecting the rights of

consumers and injured victims in both the courts and the

Legislature.

The issue of whether claims involving usury against a

national bank necessarily arise under section 30 of the

National Bank Act, 12 U.S.C. §§ 85-86 (“NBA”), and

completely preempt and displace all state statutory and

common laws on this subject is of critical importance not

only to the Consumer Attorneys of California and their

clients but to the public in general. As part of its efforts to

preserve and protect the rights of California consumers,

the members of CAOC prosecute plaintiff and plaintiff

class actions to challenge practices and policies of financial

institutions which cause economic harm and loss to

consumers including the national banks.

* This brief was authored solely by the amicus and counsel listed

on the cover; no part was authored by counsel for a party. No one other

than the amicus or its counsel made any monetary contributions to the

preparation or submission of this brief. All parties have consented to

the filing of this amicus curiae brief. The consent letters are being filed

with the Court along with this brief.

The CAOC is concerned that if this Court were to

conclude that section 30 of the NBA completely preempts

and displaces state law, and that Congress intended that

banks facing usury claims in state court should have the

ability to remove the case to a federal forum, this will

severely impact the well-established right of plaintiffs to

choose a state court as the forum in which to litigate state

statutory and common law claims against banks. More-

over, if this Court were to so broadly construe sections 85

and 86 as to preempt and displace state-law claims which

only remotely relate to the rate of “interest” charged by a

national bank, the rights of the states to enact and enforce

state laws to protect their citizens in matters concerning

national banks will be severely impaired.

The concerns of the CAOC regarding the adverse

impact of a decision by this Court that the NBA completely

preempts all state usury laws is particularly warranted

here because this case comes to this Court in the proce-

dural context of removal and remand issues.’ No evidence

* Petitioners argue that all of respondent’s claims (all of which

were based on state law) are nothing more than claims alleging

usurious interests against a national bank, which necessarily arise

under federal law and also give Petitioners the right to remove to

federal court. Petitioners agree that “under the ‘well-pleaded complaint’

rule, a state-law claim may not be removed merely because the state-

law claim is likely to be met by a federal defense (including a defense of

federal preemption)”. Brief for Petitioners, p. 9. However, Petitioners go

on to assert that in this case, “that is not the situation here, where the

usury claim itself can only arise under federal law, regardless of the

label placed on that claim by the plaintiffs.” (Jd.) [emphasis added).

Petitioners and amicus United States assume that Congress intended

to give banks sued for usury not just the ability to assert preemption as

a defense, but also the ability to remove the case to a federal forum. The

assertion by Petitioners that federal law provides the exclusive basis for

(Continued on following page)

tt eg ee

TITER A ns ER EER I

3

was ever presented to the district court that the subject

state laws are preempted and should not be enforced

against Petitioners because this will interfere with or

significantly impede the ability of national banks in

general, to lawfully carry out the business of banking.

The CAOC thus submits this brief to explain why,

under our Constitution, laws, and federal system of

government, this Court should affirm the judgment of the

Eleventh Circuit Court of Appeals and reject Petitioners’

efforts to eviscerate a plaintiff’s traditional right to select

the law under which she will pursue her legal remedies as

well as the forum in which she will litigate her state law

based claims.

¢

SUMMARY OF ARGUMENT

There is a long-standing presumption against preemp-

tion, which is rooted in the concept of federalism. See

Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992).

Petitioners seek to cast aside this presumption in favor of

removal. There is no reason to conclude, as Petitioners do,

that in enacting section 30 of the National Bank Act, 12

U.S.C. §§ 85 and 86, Congress intended to completely

plaintiffs’ state law claims is especially troubling since it is tantamount

to an assertion that plaintiffs’ remedies will be limited to those pro-

vided by federal law. Such a result gives short-shrift to principles of

federalism and a state’s historic ability to fashion state law to remedy

harm caused by a bank against its citizenry. See generally, Sprietsma v.

Mercury Marine, __ U.S. __, 123 S.Ct. 518, 527 (2002) (Even when

federal law expressly preempts state law, it would be rational for

Congress not to preempt common law claims which necessarily perform

an important remedial role in compensating victims.)

4

preempt and displace all state statutory and common law

involving usury (such as, for example, Congress did in the

area of employee health benefits when it enacted the

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

U.S.C. § 1001 et seg.) If state law conflicts with sections 85

or 86, a national bank may assert preemption as a defense.

If a national bank is sued in state court exclusively for

state law based claims and these claims involve usury,

there is nothing in the NBA to suggest that Congress

intended to allow a defendant to recast these state law

claims as ones necessarily arising from and based exclu-

sively on federal law and that the defendant also has the

right to remove these claims to federal court.

If complete preemption were to apply in cases such as

the instant one, the historical powers of states to legislate

and enforce consumer protection laws governing financial

institutions, including national banks, and a citizen’s right

to choose what state-based consumer protection rights to

litigate and in what forum, will be jeopardized.

S

ARGUMENT

I. THERE IS NO HISTORICAL OR LEGAL

JUSTIFICATION FOR IGNORING THE WELL-

PLEADED COMPLAINT RULE HERE AND

DISREGARDING THE INTERESTS OF THE

STATES IN REGULATING BANKS

As the court of appeals points out, the Plaintiffs

(Respondents herein) alleged only state-law claims in their

EE

5

complaint.’ Nevertheless, Petitioners characterize all five

causes of action as nothing more than claims arising under

federal law and thus removable to federal court. Petition-

ers argue that “Congress has so forcefully exercised its

constitutional power to supplant state law,” that under the

complete preemption corollary to the well-pleaded com-

plaint rule, plaintiff’s stete-law based claims are “trans-

formed into a federal claim and may be removed to federal

court.” Petitioners’ Brief, p. 10. However, as the court of

appeals correctly concluded, Congress did not intend

sections 85 and 86, to preempt completely such state law

based claims and thus provide a defendant with the ability

to remove such cases to federal court.

It is axiomatic that in our federalist system, a plaintiff

is free to choose whether to assert a state or federal claim.

The plaintiff is “the master of the claim; he or she may

avoid federal jurisdiction by exclusive reliance on state

law.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 393

(1987); see also The Fair v. Kohler Die & Specialty Co., 228

U.S. 22, 25 (1913) (“Of course, the party who brings a suit

is master to decide what law he will rely upon”) (Holmes,

J.). The states are free, through enactment of state laws or

by state common law, to make certain conduct unlawful for

the protection of consumers.

As this Court has also observed, because the states

are “independent sovereigns” in our federal system,

“[clonsideration of issues under the Supremacy Clause

‘starts with the assumption that the historic police powers

* The causes of action alleged were for (1) fraud; (2) suppression;

(3) breach of fiduciary duty; (4) charging an excessive interest rate

under Alabama Code § 8-8-1 (1975); and (5) violation of the Alabama