# Appendix — Crocker National Bank v. Perdue > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0299%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1986 - **Citation:** 475 U.S. 1001 ## Text : %? ae a7.) if Supreme Court, U.S, 85-1038 | FILED : DEC 16 188s No. —————— JOSEPH F SPAN, Im. IN THE 5 . Supreme Court of the United States OCTOBER TERM, 1985 CROCKER NATIONAL BANK, Appellant, V. PAUL PERDUE, Appellee. On Appeal from the Supreme Court of the State of California APPENDIX TO JURISDICTIONAL STATEMENT WILLIAM ALSUP * PAUL FLUM MORRISON & FOERSTER One Market Plaza Spear Street Tower San Francisco, CA 94105 Telephone: (415) 777-6000 Attorneys for Appellant Crocker National Bank * Denotes Counsel of Record WILSON - EPES PRINTING Co., INC. - 789-O096 - WASHINGTON, D.C. 20001 Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix TABLE OF CONTENTS A—Opinion of the Supreme Court of Cali- | RR Rey RISEN. Oilint is not plausible that the same Con- gress intended by silence to preempt all state laws reg- ulating charges in contracts between banks and depos- itors. We conclude that the Comptroller’s assertion that state laws regulating service charges are preempted by a “comprehensive federal statutory scheme governing the deposit-taking function of national banks” (12 C.F.R. § 7.8000) is not a reasonable interpretation of the con- trolling statutes. It is not an attempt to interpret the language of the statute,®* fill in the gaps in the statutory 37 The Senate committee report on the 1980 Act states that “Tijn exempting mortgage loans from state usury limitations, the Committee intends to exempt only those limitations that are in- cluded in the annual percentage rate. The Committee does not intend to exempt limitations on prepayment charges, attorney fees, late charges or similar limitations designed to protect bor- rowers.” (Sen. Rep. No. 96-368, Ist Sess., p. 19 (1979).) Thus the committee intended to leave many features of the contract between a bank and a borrower to be governed by state law, in- cluding state provisions which placed a limit on the amount the bank could charge. 38 In determining whether a regulation represents a reasonable interpretation, the courts look initially to the plain meaning of the statutory language. (See, e.g., Addison v. Holly Hill Co. (1944) 322 U.S. 607, 617-618; Cabais v. Egger (D.C.Cir. 1982) 690 F.2d 234, 238.) In State of N.J. v. Department of Health & Human Services (3d Cir. 1981) 670 F.2d 1262 at page 1283, footnote 17, when the court upheld a regulation as a reasonable statutory inter- 33a coverage,” or to explain how the Comptroller will exer- cise his discretion.* Instead, the regulation, insofar as it claims federal preemption, represents legislation of far-reaching character and effect, of a type never con- sidered by Congress, which would radically alter the respective roles of the states and the Comptroller in the regulation of bank-depositor contracts. Such legislation cannot be enacted in the guise of statutory interpreta- tion.*? pretation, it distinguished an earlier case, Reser v. Califano (W.D. Mo. 1979) 467 F.Supp. 446, on the ground that “‘[t]he Agency in Reser did not purport to derive the prohibition . . . from any specific language in the Act.’ ” 89 Compare Ford Motor Credit Co. v. Milhollin (1980) 444 U.S. 555, 566, upholding intersticial administrative regulations; 2 Davis, Administrative Law Treatise (2d ed. 1979) session [sic] 7.11. The decision of the Court of Appeal in Chamber of Commerce of the United States v. O.S.H.A., supra, 636 F.2d 464, illustrates the limits on the use of interpretative rules to fill in legislative gaps. Holding invalid a rule requiring “walkaround pay,” the court said that “[t]he Administration could not be explaining or clarify- ing the Act’s language, for ... the Act neither prohibits nor com- pels pay for walkaround time. ... Congress has not ‘legislated and indicated its will’ on the question of walkaround pay, there- fore the Administration must have done more than exercise its ‘power to fill up the details.’ [{] It is clear to us that the Administra- tion has attempted through this regulation to supplement the Act, not simply to construe it, and therefore the regulation must be treated as a legislative rule.” (P. 469.) 40 Compare Guardian Federal S & L v. Federal S & L Ins. Corp. (D.C.Cir. 1978) 589 F.2d 658, 664; 2 Davis, op. cit. supra, section 7.15. 41 During the 1960’s the Comptroller issued a number of. in- terpretative regulations which purported to interpret the provision of section 24 of the National Bank Act authorizing banks to con- duct activities “convenient or useful’ to the business of banking, to permit banks to engage in data processing, auto leasing, travel agent services and armored car services. The courts consistently held such regulations invalid. (See Arnold Tours, Inc. v. Camp (1st Cir. 1972) 472 F.2d 427, and cases cited p. 436, fn. 12.) We 34a Thus the application of state law to bank service charges is not preempted by a comprehensive federal stat- utory scheme which occupies the field. We therefore turn to the second preemption issue, whether the application of state law in this case will create an actual conflict with federal law in the sense that “it is impossible to comply with both state and federal law.” (Silkwood v. Kerr-McGee Corp., supra, US. ; [52 U.S. L. Week 4043, 4046].) As we have noted, no provi- sion of federal law discusses bank service charges in general or bank charges for NSF checks in particular. Amicus California Bankers Association nevertheless points to a possibility of actual conflict. Bank directors, it observes, are required to refrain from engaging “in any unsafe or unsound practice.” (12 U.S.C. § 1818 (e).) Conceivably directors might believe a charge for NSF checks low enough to avoid attack as unreason- able or unconscionable might fail to discourage the writing of NSF checks, and thus constitute an unsafe or unsound practice. Amicus’ argument proves too much, for if the mere possibility that bank directors might deem compliance with a state law to be unsound banking practice was enough to preempt the state law, the dual system of banking regulation would disappear. We recognize, of course, that in the unlikely event of actual conflict, banks must follow the federal requirements. But such actual conflict is a remote and unlikely possibility; a contractual term must be overreaching and oppressive before it is denominated “unreasonable” or “unconscionable.” Surely sound banking practices would rarely, if ever, require the enforcement of oppressive contracts.” find an analogy to the present case, in which the Comptroller is also seeking to construe very general language in section 24 to achieve a specific purpose not within the contemplation of Congress. 42 Under the Comptroller’s regulation, in setting fees for services [sic] bank may consider (1) costs plus a profit margin, (2) the de- terrence of misuse of banking services, (3) the enhancement of the 35a Finally, we come to the question whether the applica- tion of state law will stand as an obstacle to the accom- plishment of the full purposes Congress sought to achieve. Defendant’s argument on this matter centers on the 1980 and 1982 Acts discussed earlier in this opinion, (Ante, p. .)* As we there noted, these acts pro- vided for gradual removal of federal regulations limit- ing interest paid depositors, but, apart from preempt- ing state usury laws, did not expressly discuss the role of state regulation. Neither act mentions charges for services to depositors. The extensive legislative history of the acts shows that Congress expected deregulation to lead banks to puy higher interest to depositors, ending the bank’s ability to subsidize depositor services by paying below-market interest on deposits. Thus, Congress clearly anticipated that banks would be able to charge fees for depositor services sufficient to recover the cost of such services. Arguably a state law which required that services be offered free, or below cost, would frustrate the con- gressional intent by preventing the bank from paying market interest to depositors. The state laws in question, however, permit the bank to charge fees sufficient to recover the cost of the services and a reasonable profit. We find nothing in the legisla- tive history to suggest that Congress thought it essen- tial that the banks be able to charge more. While an excessive charge for depositor services might help the economic status of a bank, and could enable it to sub- sidize interest payments and pay above-market interest, we find no indication that such is essential to the con- gressiona! purpose. bank’s competitive position, and (4) maintenance of the safety and soundness of the bank. These same factors could be considered by a court in deciding whether a fee was unreasonable or uncon- scionable. * Typed opinion at page 29. ee 36a Defendant also argues that underlying both the 1980 and 1982 Acts is the philosophy that service charges as well as interest rates should be set by market forces, not government regulations.** Defendant’s argument mis- takes the purpose of the provisions of state law at issue~ here. Those provisions are part of the common law governing all commercial transactions; they regulate not only sale of bank services but the sale of groceries, auto- mobiles, furniture or medical services. The duty of good faith and fair dealing, and protection against uncon- scionable contracts, have never been thought incompat- ible with a free and competitive market. Defendant is really asking for a market free of those restraints against oppression and overreaching applicable to all other commercial operations. We find no indication that Congress envisioned not only a free and competitive market, but one freer than any other market. In sum, the controlling doctrines of California law do not facially conflict with any federal statute or regu- lation. Neither does it appear from the pleading that the application of these doctrines to national bank con- tracts will impair the efficiency or viability of national banks, or frustrate the purpose of legislation regulating (or deregulating) those banks. Although conceivably information not contained in the pleadings might lead to a different conclusion, such information is not before us in reviewing a judgment upon demurrer. We can- not presume, without evidence, that prohibiting a na- tional bank from setting unreasonable prices or en- forcing an unconscionable contract will render that bank *3 Defendant consistently assumes throughout its argument that because its charges for processing NSF charges are within the range of fees charged by its competitors, its fees are the product of a free and competitive market. The conclusion does not follow from the premise. It may well be, as plaintiff charges, that banks do not compete in the setting of NSF check fees, but set fees arbitrarily, deterred only by the desirability of minimizing cus- tomer dissatisfaction. 37a less efficient, less competitive or less able to fulfill its function in a national banking system.** VI. Conclusion. Plaintiff’s second and third causes of action state grounds for relief without need for further amendment; his first and fourth causes of action can be amended to state such grounds. The fifth cause of action alone is fatally defective. We conclude that tle trial court erred in sustaining defendant’s demurrer without leave to amend and in entering judgment for defendant. The judgment is reversed, and the cause remanded to the superior court for further proceedings consistent with this opinion. BROUSSARD, J. WE CONCUR: BIRD, C.J. Mosk, J. REYNOSO, J. * WHITE, J.P.T. * BREINER, J.P.T. * SAVITT, J.P.T. [Designation of counsel and trial court and appended signature card exemplar omitted] 44 Plaintiff’s fourth cause of action charged the bank with un- fair and deceptive practices. We have concluded that this cause of action is uncertain, and until the uncertainty is clarified, and the alleged unfair or deceptive practices specified, we cannot determine whether that cause of action is barred by federal law. We note, however, that although many federal statutes and regulations deal with the subject of unfair competition and deceptive practices, such statutes and regulations generally coexist peacefully with state laws regulating the same activity. (Cf. People v. Western Airlines (1984) 155 Cal.App.3d 597, cert. den. sub. nom. California v. Western Airlines (1985) —— U.S. a * Assigned by the Chairperson of the Judicial Council. 38a APPENDIX B [Designation of counsel and certificate of service omitted] SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE CITY AND COUNTY OF SAN FRANCISCO No. 740-352 PAUL PERDUE, on behalf of himself and all other persons similarly situated, Plaintiffs, v. CROCKER NATIONAL BANK, and DOE ONE through DoE ONE HUNDRED, inclusive, Defendants. {Filed February 16, 1979] JUDGMENT OF DISMISSAL Defendant Crocker National Bank’s general demurrer to plaintiff’s Complaint was considered by the Court on the briefs of the parties and without oral argument. Gary J. Near appeared as attorney for plaintiff Paul R. Perdue. Melvin F. Goldman, Charles R. Farrar, Jr., and Tony J. Tanke of Morrison & Foerster, appeared as attorneys for defendant Crocker National Bank (here- inafter “Crocker”’). This Court has entered its Order sustaining without leave to amend Crocker’s general demurrers to the Complaint, and each purported cause of action therein, for failure to state facts sufficient to constitute a cause of action. 39a Whereupon: IT IS HEREBY ORDERED, ADJUDGED, AND DE- CREED AS FOLLOWS: 1. That the Complaint, and each purported cause of action therein, are dismissed with prejudice for failure to state facts sufficient to constitute a cause of action; 2. That plaintiff is entitled to no relief in connec- tion with any controversy alleged in the Complaint; 3. That each of plaintiff's prayers for relief is de- nied; and that plaintiff shall take nothing by his Com- plaint; 4. That Crocker shall recover from plaintiff its costs of suit. Dated: February 15, 1979 /s/ Ira A. Brown, Jr. IRA A. BROWN, JR. Judge of the Superior Court APPROVED AS TO FoRM: /s/ Gary J. Near GARY J. NEAR Attorney for plaintiff Paul Perdue 40a APPENDIX C {Emended to reflect April 22, 1983 order on rehearing | IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION ONE 1 Civil No. 46808 (AO 13838) (S.Ct.No. 740351) PAUL PERDUE, Plaintiff and Appellant, V. CROCKER NATIONAL BANK, Defendant and Respondent. [Filed March 25, 1983] Appellant Paul Perdue, a depositor with respondent Crocker National Bank (Crocker), filed a purported class action below challenging the validity of charges assessed by Crocker against its depositors for processing checks drawn on commercial checking accounts without sufficient funds. Thereafter, Crocker’s general demurrer 4la was sustained without leave to amend and a judgment of dismissal entered. This appeal ensued. We examine the complaint before us under established principles governing review of a judgment of dismissal based upon a claimed failure to state a valid cause of action. (E.g., Tameny v. Atlantic Richfield Co. (1980) 27 Cal.38d 167, 170; Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496.) The complaint asserts five causes of action alleging in substance that Crocker’s customary practice in dealing with a check drawn by a depositor on an account lacking sufficient funds (“NSF check’) is either to honor and pay it as an overdraft or to dishonor and return it to the payee’s banks; that in either event Crocker assesses a special handling charge (“NSF charge’) against the account of its depositor-maker. It is further alleged that appellant has periodically drawn NSF checks on his Crocker checking account which Crocker—in either hon. oring or dishonoring such checks—has assessed a special handling charge of $6 for processing each NSF check. I. The gravamen of the first three causes of action for declaratory relief and unjust enrichment is that Crocker lacked any contractual or statutory authority to impose charges for NSF checks. The first cause of action seeks a declaration that the signature card signed by appellant upon opening his account, which contains an agreement that the account shall be “subject to all applicable laws, to the Bank’s present and future rules, regulations, prac- tices and charges” does not constitute a valid contract to serve as a basis for imposing NSF charges. (Empha- sis added.) In the second cause of action, appellant seeks a declaration that the signature card constitutes an unenforceable contract of adhesion. In the third cause of action for unjust enrichment, damages are sought by , 42a way of a refund of the difference between the charges assessed and Crocker’s actual cost in processing the NSF charges. We will conclude that neither theory survives critical analysis. [Appellant concedes the third cause of action is viable only if one of the first two causes of action is valid. | We consider the validity of the several causes of action in a sequence convenient for discussion. I. The courts have long recognized that a bank signature ecard serves as a contract between the depositor and the bank for the handling of the account. (See Bullis v. Security Pac. Nat. Bank (1978) 21 Cal.3d 801, 811-812; Blackmon v. Hale (1970) 1 Cal.38d 548, 556; Manti v. Gunart (1970) 5 Cal.App.3d 442, 450-451; Torrance N. Bk. v. Enesco F. Credit Union (1955) 134 Cal.App.2d 316, 320-321; Larrus v. First National Bank (1954) 122 Cal.App.2d 884, 889-890; Faulkner v. Bank of Italy (1924) 69 Cal.App. 370, 374-375.) The fact that the signature card itself does not indicate the amount of Crocker’s NSF charges does not negate the contractual nature of such charges, particularly where, as here, the bank’s rules and regulations specifying the charges are incorporated into the signature card agreement. (State v. San Francisco Sav. ete. Soc. (1924) 66 Cal.App. 53, 61; Larrus v. First Nat. Bank, supra, 122 Cal.App.2d at pp. 889-890.) Moreover, since appellant acknowledges he had notice of the bank’s scheduled charges for process- ing NSF checks ($6 per check), the argument advanced is patently untenable. Under the terms of the subsisting agreement, Crocker has express contractual authority to assess its scheduled service charges whenever its depos- itor, including appellant, presents an NSF check. A similar contention was raised and implicitly rejected in Hoffman v. Security Pacific Nat. Bank (1981) 121 nee 43a Cal.App.3d 964, involving a depositor’s claim that the bank’s imposition of service charges for processing an NSF cheek constituted unlawful liquidated charges on the theory that the agreement contained in the signature ecard to pay scheduled service charges amounted to an implied covenant by the depositor not to write over- drafts. In upholding a judgment of nonsuit, the court reasoned as follows: “Plaintiff failed to establish any such custom or any agreement on the depositors’ part not to write overdrafts. Moreover, statutes governing the obligations of banks and their depositors, which are incorporated into and become part of the contract be- tween a bank and its depositors [citations], treat an overdraft as an application for advance credit rather than as a breach of an express or implied covenant. California Uniform Commercial Code section 4401 spe- cifically authorizes a bank to pay overdrafts and to charge customers’ accounts to recover amounts paid, even when payments result in overdrafts on the account. While a bank has a statutory obligation to honor any check drawn by a depositor for an amount not exceeding the balance in his account, and while the depositor has a contractual obligation to pay a service charge when he presents a NSF check, the depositor has no statutory or contractual obligation to refrain from drawing checks for amounts in excess of the balance in his account. (Cal. U. Com. Code, § 4401.) In brief, plaintiff did not and could not prove that the depositors breached an obligation to Bank when they negotiated NSF checks. Accordingly, the service charge they agreed in advance to pay for presenting such an overdraft was not a pen- alty under former Civil Code section 1670.” (Jd., p. 969; emphasis added.) (Accord Shapiro v. United Cali- fornia Bank (1982) 133 Cal.App.3d 256.) Nor do we find merit in appellant’s further argument that the signature ecard is an illusory contract because _ it permits the bank unilaterally to fix the NSF charges ES 44a and to make future changes at will. It is well established that an agreement which reserves the power to one party to vary a term is not thereby rendered illusory or otherwise void for lack of mutuality. (See Vanguard Investments v. Central Cal. Fed. Sav. & Loan Assn. (1977) 68 Cal.App.3d 950, 958; Powell v. Central Cal. Fed. Sav. & Loan Assn. (1976) 59 Cal.App.3d 540, 549 [loan agreement permitting lender to increase rate of interest]; Automatic Vending Co. v. Wisdom (1960) 182 Cal.App.2d 354, 358 [agreement permitting vendor to change commission rate]; Inderkum v. German Old People’s Home (1937) 23 Cal. App.2d 733, 735 [life care contract subject to future amendments of by-laws].) However, the exercise of the power to effect changes must be reasonable. Thus, for example, in /nderkum the court held that the future by-law amendments must be “reasonable administrative amendments” and not changes impairing the substance of the contract. (23 Cal.App.2d at p. 738.) In Automatic Vending, the court held the new price must be fixed “in such amount as the object of the contract is reasonably worth.” (182 Cal.App.2d at p. 358.) And in Powell v. Central Cal. Fed. Sav. & Loan Assn., supra, the court fourd the lender’s one percent increase in the interest ry. te was reasonable when compared with the interest increases for depos- itors. (59 Cal.App.3d at pp. 549-550.)! Appellant advances an alternative argument that the signature card constitutes an unenforceable contract of adhesion because depositors receive inadequate notice that execution of the signature card subjects them to NSF charges and by reason of the great disparity be- tween the NSF charge and the bank’s actual cost of 1 We emphasize that no question is raised in this case regarding Crocker’s exercise of its power to change the NSF charges. Ac- cordingly, we express no opinion as to the permissible latitude in increasing such charges unilaterally. 45a processing NSF checks. We disagree on the record be- fore us. ce Conceptually, a contract of adhesion generally ina signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” (Graham v. Scissor-Tail, Ine. (1981) 28 Cal.3d 807, 817; Neal v. State Farm Ins. Cos. (1961) 188 Cal.App.2d 690, 694.) Although arguably the signature card may reasonably be interpreted as a contract of adhesion between the bank and its depositor, such determination does not end the inquiry. “There is nothing sinful or illegal about a contract of adhesion; the only significant result of the existence of such a contract is that it is interpreted against the supplier of the goods or services {who pre- pared it) so as to meet the reasonable expectations of the customer.” (Powell v. Central Cal. Fed. Sav. & Loan Assn., supra, 59 Cal.App.3d 540, 551.) As Scissor-Tail instructs, the provisions of an adhe- sion contract are fully enforceable in the absence of two judicially imposed constraints: “The first is that such a contract or provision which does not fall within the reasonable expectations of the weaker or ‘adhering’ party will not be enforced against him. (See, e.g., Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 271-272 [54 Cal.Rptr. 164, 419 P.2d 168]; Steven v. Fidelity & Casualty Co. (1962) 58 Cal.2d 862, 869-870 [27 Cal. Rptr. 172, 377 P.2d 284]; Wheeler v. St. Joseph Hospital, supra, 63 Cal.App.3d 345, 357; see generally Sybert, supra, at pp. 305-306, and cases there cited.) The second—a principle of equity applicable to all contracts generally—is that a contract or provision, even if con- sistent with the reasonable expectations of the parties, will be denied enforcement if, considered in its context, it is unduly oppressive or ‘unconscionable.’ (See, e.g., Steven, supra, 58 Cal.2d at pp. 878-879; Jacklich v. Baer oO 46a (1943) 57 Cal.App.2d 684 [135 P.2d 179].)” (Fns. omitted.) (Graham v. Scissor-Tail, Inc., supra, 28 Cal. 3d at p. 820; see also Holmes v. City of Los Angeles (1981) 117 Cal.App.3d 212, 216-217, app. dis. 454 U.S. 884.) Although in Scissor-Tail the court determined that the contract between a sophisticated promoter and a music performer was a contract of adhesion, the court further concluded that the contractual provision requir- ing arbitration of disputes was in nowise contrary to the promoter’s expectations, particularly since he had been a party to literally thousands of contracts contain- ing similar arbitration provisions and was undoubtedly aware of the arbitration requirement. (Graham v. Scissor-Tail, Inc., supra, at p. 821.) In congruent analysis, we find nothing ambiguous or unexpected about the specific NSF charges imposed by Crocker. The signature card agreement plainly states that the depositor will pay the bank’s scheduled process- ing charges. As noted, appellant acknowledges he was aware of the NSF charges before he wrote the NSF checks. Under such uncontroverted circumstances, we conclude that the signature card in no way conflicts with appellant’s reasonable expectations. Appellant’s next argument, to which the parties and amici devote considerable discussion in their briefs, focuses on the second factor underscored in Scissor-Tail limiting enforcement of adhesion contracts: namely, whether the contract or provision is unduly oppressive or unconscionable. Appellant contends that the disparity between the bank’s actual costs of processing NSF checks (alleged to be 30¢ per check) and the charges imposed ($6 per check) is so excessive as to render the contract unconscionable and unenforceable. Again we are unable to agree. In the recent decision of A & M Produce Co. v. FMC Corp. (1982) 1385 Cal.App.38d 473, the appellate court 47a thoroughly examined the flexible concept of unconscion- ability in the context of the enforceability of a warranty disclaimer and damages exclusion clause contained in a commercial contract. We can add little to that enlight- ening exegisis by Justice Wiener which we adopt in pertinent part herein: “Phrased another way, uncon- scionability has both a ‘procedural’ and a ‘substantive’ element. (Industralease Automated & Scientific Eq. Corp., etc. (1977) 58 App.Div.2d 482 [396 N.Y.S.2d 427, 431, fn. 4]; see also Leff, supra, 115 U.Pa.L.Rev. at p. 487; White and Summers, supra, § 4-3 at p. 151.) “The procedural element focuses on two factors: ‘op- pression’ and ‘surprise.’ (See U. Com. Code com. No. 1, 23A West’s Ann. Cal. U. Com. Code (1964 ed.) § 2302, p. 198; Geldermann and Company, Inc. v. Lane Process- ing, Inc. (8th Cir. 1975) 527 F.2d 571, 575.) ‘Oppres- sion’ arises from an inequality of bargaining power which results in no real negotiation and ‘an absence of meaningful choice.’ (Williams v. Walker-Thomas Fur- niture Company, supra, 350 F.2d at p. 449; Fleischmann Distilling Corp. v. Distillers Co. Ltd. (S.D.N.Y. 1975) 395 F.Supp. 221, 232; see Spanogle, Analyzing Uncon- scionability Problems (1969) 117 U.Pa.L.Rev. 931, 944- 946.) ‘Surprise’ involves the extent to which the sup- posedly agreed-upon terms of the bargain are hidden in a prolix printed form drafted by the party seeking to enforce the disputed terms. (See Ellinghaus, Jn Defense of Unconscionability (1969) 78 Yale L.J. 757, 764-765; Eddy, On the ‘Essential’ Purposes of Limited Remedies: The Metaphysics of UCC Section 2-719(2) (1977) 65 Cal.L.Rev. 28, 43; Spanogle, supra, 117 U.Pa. L.Rev. at pp. 934-935, 943.) Characteristically, the form contract is drafted by the party with the superior bargaining position. (See Calamari and Perillo, Con- tracts (2d ed. 1977) § 9-40, p. 325.) “Of course the mere fact that a contract term is not read or understood by the nondrafting party or that the 48a drafting party occupies a superior bargaining position will not authorize a court to refuse to enforce the con- tract . . . [since] commercial practicalities dictate that unbargained-for terms only be denied enforcement where they are also substantively unreasonable. (Ellinghaus, supra, 78 Yale L.J. at pp. 766-767; Murray on Contracts, supra, at pp. 748-749.) No precise definition of substan- tive unconscionability can be proffered. Cases have talked in terms of ‘overlyharsh’ or ‘one-sided’ results. (See, e.g., Schroeder v. Fageol Motors, Inc. (1975) 86 Wn.2d 256 [544 P.2d 20, 23]; Weaver v. American Oil Company (1972) 257 Ind. 458 [276 N.E.2d 144, 146, 49 A.L.R.3d 306].) One commentator has pointed out, how- ever, that ‘. . . unconscionability turns not only on a “one-sided” result, but also on an absence of “‘justifica- tion” for it’ (Eddy, supra, 65 Cal.L.Rev. at p. 45), which is only to say that substantive unconscionability must be evaluated as of the time the contract was made. (See U. Com. Code, § 2-302.) The most detailed and specific commentaries observe that a contract is largely an allocation of risks between the parties, and therefore that a contractual term is substantively suspect if it reallocates the risks of the bargain in an objectively unreasonable or unexpected manner. (Murray, Uncon- scionability: Unconscionability (1969) 31 U.Pitt.L.Rev. 1, 12-23; see also Eddy, supra, 65 Cal.L.Rev. at pp. 45- 51; Geldermann and Company, Inc. v. Lane Processing, Inc., supra, 527 F.2d at p. 576.) But not all unreason- able risk reallocations are unconscionable; rather, en- forceability of the clause is tied to the procedural aspects of unconscionability (see ante, pp. 485-476 [sic]) such that the greater the unfair surprise or inequality of bar- gaining power, the less unreasonable the risk reallocation which will be tclerated. (See Spanogle, supra, 117 U.Pa. L.Rev. at pp. 950, 968.)” (Jd., at pp. 486-487.) In this case, although the procedural aspects of un- conscionability arguably are manifest, we find nothing 49a commercially or objectively unreasonable in the NSF charges actually imposed. The extent of the service charge imposed for the bank’s handling of an NSF check was neither hidden nor unexpected, but instead was con- cededly known to appellant before he wrote NSF checks. Appellant could have easily avoided the NSF charge by simply refraining from writing checks on an account with insufficient funds. Under governing principles and in light of the total circumstances reflected in this rec- ord, we determine as a matter of law that the alleged disparity between the cost of processing and the charges actually imposed do not rise to the level of substantive unconscionability so as to deny enforcement of the ser- vice charge agreement.’ In conclusion, we hold that Crocker possessed a valid and enforceable contractual right to impose the particu- lar NSF service charges alleged. Accordingly, the de- murrer was properly sustained as to the first three causes of action. Il. Appellant’s fourth cause of action alleges unfair and deceptive business practices by Crocker in that depositors were not apprised that the signature card subjected them to NSF charges, and were led to believe the card was only a handwriting exemplar.* But the complaint fails to allege any ultimate facts indicating in what 2 We are not unmindful of the compelling policy arguments ad- vanced by amici in support of appellant. Our decision is, of course, limited to the record before us and is itself subject to review. But the question of potential abuse in the form of expansive or in- discriminate charges is not before us; any corrective measures necessary to prevent such likelihood should be directed to the Legislature and not the courts. 8 Unfair competition, proscribed by sections 17200-17208 of the Business and Professions Code, is defined to include an “unlawful, unfair or fraudulent business practice. .. .”’ (Bus. & Prof. Code, § 17200). ooo 50a manner depositors were misled or deceived. As repeti- tively shown, the signature card explicitly recites the depositor’s agreement to pay service charges, a fact openly acknowledged by appellant. Such facial inade- quacy was vulnerable to a general demurrer; the order sustaining Crocker’s demurrer thereto was clearly proper. Il. In his fifth cause of action,‘ appellant complains that the NSF charges constitute unenforceable liquidated damages under the provisions of former Civil Code sec- tion 1670 (repealed by Stats. 1977, ch. 198, § 2, opera- tive July 1, 1978; see now Civ. Code § 1671, as amended). The specific cormplaint is likewise unfounded. As earlier noted, identical arguments were urged un- successfully in Shapiro v. United California Bank, supra, 133 Cal.App.3d 256, and Hoffman v. Security Pacific Nat. Bank, supra, 121 Cal.App.3d 964. We subscribe to the reasoning in those decisions that the standardized signature card did not include an implied promise by the depositor to refrain from writing NSF checks which would support a conclusion that the provision amounted to an unenforceable penalty. Rather, an NSF check is deemed to be an application for advance credit. Conse: quently, the issuance of an NSF check does not consti- tute a breach of contract and the provisions of former Civil Code section 1670 do not apply. The judgment is affirmed. 4 The general demurrer to this count was sustained pursuant to stipulation. 5la CERTIFIED FOR PUBLICATION. RACANELLI, P. J. WE CONCUR: ELKINGTON, J. NEWSOM, J. [Designation of counsel and trial court omitted | 52a APPENDIX D | Designation of counsel omitted ] IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE CITY AND COUNTY OF SAN FRANCISCO No. 740352 PAUL PERDUE, on behalf of himself and all others similarly situated, Plaintiffs, vs. CROCKER NATIONAL BANK, and DoE 1 THROUGH DOE 100, INCLUSIVE, Defendants. [Filed July 3, 1978] CLASS ACTION COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF AND DAMAGES Plaintiff alleges: FIRST CAUSE OF ACTION DECLARATORY AND INJUNCTIVE RELIEF UPON THE GROUNDS THAT THE SIGNATURE CARD IS NOT A CONTRACT 1. Plaintiff brings this action on behalf of all persons simi- larly situated pursuant to CAL. CODE CIV. PROC § 382, on the following grounds: 53a A. Each class member has a checking account with defendant and seeks declaratory and injunctive relief in addition to damages for charges imposed by defendant because of processing checks presented against insufficient funds. This class also includes a subclass which exists of persons who had accounts and paid the charge within the applicable period of limitations. This class and subclass consist of individual members so numerous that joinder or other alternative proceedings are impractical. The names and addresses of class mem- bers are presently unknown to plaintiff, but can be readily ascertained from the defendant’s business records. [Here- after “plaintiff(s)” shall refer to the named plaintiff(s) as well as members of the class. ] B. The common cr similar issues of law and fact which predominate over individual issues include, but are not limited to, the following: 1. Each member of the class has or had a checking account with defendant and the account has been charged for the processing of checks presented against insufficient funds. 2. The legal rights and obligations of the parties are identical concerning the imposition of the amount charged by defendant for processing checks presented against in- sufficient funds on plaintiffs’ accounts. 3. Proof of common facts and legal doctrines by the representative plaintiff will determine the claims of each member of plaintiffs’ class. 4. The class action proceeding will provide a practical basis for the determination of all interests of the parties, prevent inconsistent adjudications, maximize judicial econ- omy, and is superior to all other available methods of fair and efficient adjudication of the controversy. C. The named representative’s claims are typical and representative of the class and subclass claims because 54a (s)he has a checking account and has paid the special handling charge. D. The named representative will fairly and adequately represent and protect the class interests because her/his interests are neither adverse nor inconsistent with the class interest. 2. Defendant CROCKER NATIONAL BANK is a bank- ing association, doing business and maintaining branch offices in San Francisco. 3. The true names, identies [sic] and legal capacities of the defendants sued herein as DOE 1 through DOE 100 are unknown to plaintiffs and therefore said defendants are sued by fictitious names under the provisions of CAL. CODE CIV. PROC. § 474. Each of said DOE defendants was an agent, principal, employer, employee, subsidiary, partner, associate, joint venturer or person exercising con- trol of another defendant liable for the wrongful acts alleged herein. Each of said DOE defendants is legally responsible in some manner for the wrongful acts, injury and damages alleged herein. 4. Banking transactions are subjected to closer scrutiny than ordinary commercial transactions by various regula- tory bodies and the courts and defendants owe a duty of fair dealing toward plaintiffs. \ 5. The possession and use of a checking account is a prac- tical necessity for the plaintiffs. 6. Defendants offer to the plaintiffs and the general public checking services. Defendants receive deposits of money 5a or on behalf of the plaintiffs and, upon presentation of a check drawn by plaintiffs, disperse money as directed by the check. 7. Defendants offer said checking services in exchange for a promise by plaintiffs to pay a predetermined charge set by defendants [hereafter called the “maintenance charge.” | Plaintiffs, at the commencement of the check- ing account agreed to pay said maintenance charge, or to maintain a minimum balance in their checking account or some similar arrangement, unless such charge was waived. This maintenance charge is stated on periodic statements issued to the respective plaintiffs by the defendant. 8. It is the practice of defendants to impose and collect a unilaterally set charge for processing checks presented against plaintiffs’ accounts when such accounts do not contain sufficient funds to cover the amount of the check [hereafter called “NSF checks”]. This charge, imposed separately from and in addition to a maintenance charge for other regular checking activity, is hereafter referred to as the “NSF charge.” 9. Defendants, in fact, can and do off-set the amount of the NSF charge against any remaining balance in the account and do not have to bring suit or take any other affirmative action to collect the charge against plaintiffs’ accounts. 10. Defendants have at various times unilaterally increased the NSF charge to an amount the defendants deemed ap- propriate, without reference to any criteria, and defend- ants imposed and collected the said increased amount without any explanation or justification by defendants to plaintiffs. 56a As. Defendants require of each plaintiff a signature upon an individual card. Attached as Exhibit 1 and incorpo- rated by reference as though set forth in full is a copy of such card used by the defendants and calied a signature ecard. 12. The signature card is retained by the defendants and plaintiffs are not provided with a copy of the card. 13. The defendants use the signature card to determine and verify the authenticity of endorsements on checks. For that purpose, the defendants require plaintiffs to sub- mit an exemplar of their signatures on the signature ecard. 14, The signature card prepared by the defendants does not identify the amount of any charge to be paid by the plaintiffs for processing NSF checks and is not an agree- ment for such payment. The card does not constitute mutual assent to NSF charges in any particular sum or at all and accordingly is not a contract conferring au- thority to do the acts complained of herein. 15. Based upon the language of the signature card, the plaintiffs believed and expected that the signature card was intended as a handwriting exemplar for purposes of identification and verification only. 16. In the course of checking account activity by the plain- tiffs, certain checks of plaintiffs have been and will be presented which exceed the amount then on deposit in their respective accounts. 57a ie Defendants anticipate that plaintiffs will cause checks to be presented against insufficient funds in their accounts and defendants impose a charge for each NSF check presented whether returned or honored. Said charge is $6.00. Attached as Exhibit 2 is a true copy of a notice of said charge to the named plaintiff. 18. Plaintiffs allege, upon information and belief, that the actual cost incurred by the defendants in processing an NSF check is approximately $0.30, which cost was at all times known to the defendants. 19. Plaintiffs have performed all conditions required of them, except as performance is excused or waived, relat- ing to the checking account with the defendants. 20. A present and actual controversy exists between the plaintiffs and the defendants concerning their respective rights and obligations. A controversy exists as to whether the signature card is a valid or enforceable contract and whether said signature card is a lawful basis for the im- position of the NSF charge. Plaintiffs contend that the signature card is not a contract and that the endorsement of the signature card by the plaintiffs—given its lan- guage, form and appearance—does not create a legal and binding contract for the defendants’ authority to impose the NSF charge. Defendants contend that the signature card is a valid and enforceable contract and that it pro- vides the lawful authority to impose and collect the NSF charge. 21. Plaintiffs desire a judicial determination of the nature, scope, force and effect of the relationship created by the EE | 58a signature card. Declaratory relief is both necessary and appropriate to resolve this question. Unless enjoined, de- fendants will continue to do the acts complained of and declared to be improper. SECOND CAUSE OF ACTION: DECLARATORY AND INJUNCTIVE RELIEF BASED UPON THE GROUNDS THAT THE SIGNATURE CARD IS ILLUSORY, AMBIGUOUS AND AN OPPRESSIVE CONTRACT OF ADHESION 22. Plaintiffs hereby incorporate Paragraphs 1 through 13 and Paragraphs 15 through 19 as though fully set forth herein. 23. The signature card used by defendants to conduct their part of the checking account relationship is prepared and drafted and imposed by defendants in a standard form. 24. A disparity in bargaining power exists between plain- tiffs and the defendants in favor of the defendants. The relative economic power, knowledge, experience, resources and expertise of the defendants in the checking account relationship relegates the plaintiffs to an inferior bar- gaining position at all stages of such relationship. 25. Plaintiffs must acquiesce in the checking account rela- tionship exactly as it is offered by the defendants. Plain- tiffs are further forced to accept a similar arrangement with other banks, or to forego checking services. 26. The language of the signature card is illusory in that, among other things, it fails to commit the defendants to 59a any obligation, duty or responsibility. The language of the signature card reserves the right to defendants to alter, at any time, any aspect of the checking account relationship, including the absolute right by defendants to terminate the account without prior notice and to set or alter the amount at any level of any charges including the NSF charge. The defendants have unilaterally in- creased the amount of the NSF charge from time to time, and have terminated accounts of plaintiffs without prior notice to such plaintiffs. 27. The signature card is drafted by defendants in a man- ner not adequate to create any enforceable contract right to impose or collect the NSF charge. 28. The signature card is ambiguous, vague and uncertain as to whether it is an identification card or, as defendants contend, a valid and enforceable contract to impose and collect the NSF charge. 29. The conduct and practice of defendants occasionally to advance monies to the plaintiffs by honoring NSF checks, in the sole discretion of the defendants, has resulted in ambiguity, confusion and uncertainty as to the rights and obligations of the plaintiffs in handling of their checking accounts and as to the meaning of the signature card. 30. The disparity between the actual cost to defendants and the amount charged by defendants for processing an NSF check unreasonably and oppressively imposes excessive and unfair liability upon plaintiffs. 31. A present and actual controversy exists between the plaintiffs and the defendants concerning their respective 60a rights and duties as to whether: (A) Any obligation of plaintiffs to pay NSF charges pursuant to any language of the signature card is unenforceable because defendants claim the power to and do alter or terminate the arrange- ment at will; (B) Plaintiffs are not obligated to pay the NSF charge pursuant to the signature card because it is adhesive and does not unambiguously provide therefor; (C) Defendants lack lawful authority pursuant to the signature card to impose the NSF charge because the NSF charge is an oppressive and unreasonable imposition of liability upon plaintiffs which does not reflect the ac- tual cost to defendants for processing the NSF check. Defendants assert that the NSF charge is authorized by the signature card; plaintiffs -ontend that the signature card confers no such authority. 32. Plaintiffs desire a judicial determination of their rights and duties and a declaration as to whether or not the NSF charge is authorized and enforceable by virtue of the signature card. A judicial declaration is necessary and appropriate so that plaintiffs may ascertain their rights and duties. Unless enjoined, defendants will con- tinue to do the acts complained of and declared to be improper. THIRD CAUSE OF ACTION UNJUST ENRICHMENT Plaintiffs hereby incorporate Paragraphs 1 through 10, 16 through 19, 23 through 25, and 30 as though fully set forth herein. 33. If plaintiffs prevail on either the First or Second Cause of Action, then the defendants’ imposition of the NSF charge on plaintiffs’ checking accounts has resulted in ‘le payment of substantial sums of money to defendants, which amounts properly belong to plaintiffs, aiid which bla amounts constitute an unjust enrichment to the defendants to the extent said sums exceed the actual processing costs of NSF checks. 34. Defendants continue to retain said funds. 35. Plaintiffs have been damaged by reason of defendants’ imposition and retention of the NSF charges in an amount not known to plaintiffs but known to defendants. 36. Plaintiffs request that the amounts retained by defen- dants that constitute an unjust enrichment be returned as damages to the plaintiffs. FOURTH CAUSE OF ACTION UNFAIR, DECEPTIVE AND MISLEADING BUSINESS PRACTICES 37. Plaintiffs hereby incorporate Paragraphs 1 through 18 and Paragraphs 23 through 30 as though fully set forth herein. 38. Said signature card is used in a manner which is un- fair, deceptive and misleading, in that plaintiffs are led to believe that it is a signature card for identification purposes and the defendants treat the signature card, without disclosure of said fact, as the legal authority to impose the NSF charge on plaintiffs’ checking accounts. 39. From time to time, defendants arbitrarily and capri- ciously waive the NSF charge for preferred or commercial accounts. Said waiver is a further unfair business prac- 62a tice because it forces plaintiffs, who have had their ac- counts charged, to shoulder the cost that the defendants incur for processing NSF checks of others at the expense of plaintiffs to the benefit of the preferred customers. 40. Defendants’ practices are likely to deceive and have deceived plaintiffs and other members of the public in violation of CAL. BUS. & PROF. CODE §§ 17200 et seq. Unless enjoined, said conduct will continue. FIFTH CAUSE OF ACTION CIVIL CODE § 1670 41. Plaintiffs hereby incorporate Paragraphs 1 through 9, 11, 138, 16, 17, 18, 23, 24, 25 and 30 as though fully set forth herein. 42. Causing NSF checks to be presented for payment is a breach by plaintiffs of their contractual obligations to defendants to refrain from causing NSF checks to be presented for payment or to maintain a positive account balance. 43. Defendants’ imposition of the NSF charge is a penalty and is not imposed to compensate defendants for damages incurred by plaintiffs’ breach by causing the presentation of NSF checks and is therefore an unlawful charge. 44, The imposition of said charge by defendants is a viola- tion of and is contrary to the express provisions of CAL. CIV. CODE § 1670 and is not exempted therefrom by CAL. CIV. CODE § 1671. 63a 45, From actual experience and knowledge, defendants can determine the actual pro rata cost of NSF checks. On information and belief, said cost is approevimately thirty ($0.30) cents. 46. Plaintiffs are entitled to recover the difference between the unlawful charges collected and defendants’ actual damages sustained. PRAYER Plaintiffs request the following relief: 1. Declaratory relief whether the signature card is a valid and enforceable contract and (a) if so, what the rights and obligations of the parties are thereunder and for an injunction against any conduct complained of herein not authorized thereunder ; (b) if not, for an injunction against any claim or use by defendants thereof as the authority for imposing NSF charges; 2. An accounting of all NSF charges and for a deter- mination as to how much thereof must be refunded to plaintiffs; 3. An injunction against all unfair business practices found to exist; 4. Reformation of the signature card in accordance with the declaratory and injunctive relief granted; 5. An order enjoining the defendants from imposing an NSF charge in excess of defendants’ actual costs of processing an NSF check; 6. An order requiring defendants to advertise to and advise the public and plaintiffs of their rights and obliga- 64a tions concerning the checking account practices of the defendants; 7. Reasonable attorneys’ fees and costs of suit; and 8. Such other relief as is just and proper. DATED: June 27, 1978. GARY J. NEAR KIPPERMAN, SHAWN, KEKER & BROCKETT By STEVEN M. KIPPERMAN Counsel for Plaintiffs. (Exhibit 1 and Exhibit 2 have been omitted. Exhibit 1 is a notice of advice of charges for special services— checking account. Exhibit 2 is an exemplar of appellant’s deposit account signature card contract. ] 65a APPENDIX E ORDER DUE August 16, 1985 ORDER DENYING REHEARING IN THE SUPREME COURT OF THE STATE OF CALIFORNIA SF No. 24591 PERDUE, Appellant Vv. CROCKER NATIONAL BANK, Respondent KAUS, J. AND GRODIN, J., DID NOT PARTICIPATE. [Filed Aug. 15, 1985] IN BANK Respondent’s petition for rehearing DENIED. /s/ Bird Chief Justice ee 66a APPENDIX F IN THE SUPREME COURT OF THE STATE OF CALIFORNIA SF No. 24591 1 Civil No. A013838 Superior Court No. 740352 PAUL PERDUE, Plaintiff and Appellant, V. CROCKER NATIONAL BANK, Defendant and Respondent. | Filed September 5, 1985] NOTICE OF APPEAL TO THE SUPREME COURT OF THE UNITED STATES NOTICE IS HEREBY GIVEN that CROCKER NA- TIONAL BANK, the defendant above-named, hereby ap- peals to the Supreme Court of the United States from the final judgment of the Supreme Court of the State of Cali- fornia entered herein on July 18, 1985, sustaining the validity of state statutes, including California Civil Code § 1670.5, against the claim that they are repugnant to the Constitution, treaties or laws of the United States. 67a This appeal is taken pursuant to 28 U.S.C. § 1257(2). Dated: September 5, 1985. s/ William Alsup WILLIAM ALSUP MORRISON & FOERSTER One Market Plaza Spear Street Tower San Francisco, CA 94105 lenient Telephone: (415) 777-6000 Attorneys for Defendant-Respondent CROCKER NATIONAL BANK | Affidavit of service by mail and service list deleted ] 68a APPENDIX G 12 U.S.C. § 24 Corporate powers of associations Upon duly making and filing articles of association and an organization certificate a national banking association shall become, as from the date of the exe- cution of its organization certificate, a body corpo- rate, and as such, and in the name designated in the organization certificate, it shall have power— * * * * Seventh. To exercise by its board of directors or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking; by discounting and ne- gotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits... . * * * * 12 U.S.C. § 484 Limitation on visitorial powers (a) No national bank shall be subject to any visi- torial powers except as authorized by Federal law, vested in the courts of justice or such as shall be, or have been exercised or directed by Congress or by either House thereof or by any committee of Con- gress or of either House duly authorized. (b) Notwithstanding subsection (a) of this sec- tion, lawfully authorized State auditors and exam- iners may, at reasonable times and upon reasonable notice to a bank, review its records solely to ensure compliance with applicable State unclaimed property or escheat laws upon reasonable cause to believe that the bank has failed to comply with such laws. | 694 APPENDIX H 12 U.S.C. § 3501 Congressional findings and declaration of purpose (a) The Congress hereby finds that— (1) limitations on the interest rates which are payable on deposits and accounts discourage per- sons from saving money, create inequities for depositors, impede the ability of depository in- stitutions to compete for funds, and have not achieved their purpose of providing an even flow of funds for home mortgage lending; and (2) all depositors, and particularly those with modest savings, are entitled to receive a market rate of return on their savings as soon as it is economically feasible for depository institutions to pay such rate. (b) It is the purpose of this subchapter to provide for the orderly phase-out and the ultimate elimina- tion of the limitations on the maximum rates of interest and dividends which may be paid on deposits and accounts by depository institutions by extending the authority to impose such limitations for 6 years, subject to specific standards designed to ensure a phase-out of such limitations to market rates of interest. [Depository Institutions and Monetary Control Act of 1980, Pub. L. No. 96-221, Titie II, § 202, 94 Stat. 132, 142] 12 U.S.C. § 3502 Depository Institutions Deregulation Committee (a) Transfer of statutory authorities The authorities conferred by sections 371b, 1425b (a), and 1828(g) of this title or by any other 70a provision of Federal law, other than section 1763 of this title, to prescribe rules governing the payment of interest and dividends and the establishment of classes of deposits or accounts, including limitations on the maximum rates of interest and dividends which may be paid on deposits and accounts, and the authority conferred by the provisions of section 102 of Public Law 94-200 (12 U.S.C. 461 note) are here- by transferred to the Depository Institutions De- regulation Committee (hereinafter in this subchapter referred to as the “Deregulation Committee’). (b) Membership; meetings; voting The Deregulation Committee shall consist of the Secretary of the Treasury, the Chairman of the Board of Governors of the Federal Reserve System, the Chairman of the Board of Directors of the Fed- eral Deposit Insurance Corporation, the Chairman of the Federal Home Loan Bank Board, and the Chair- man of the National Credit Union Administration Board, who shall be voting members, and the Comp- troller of the Currency who shall be a nonvoting member of the Deregulation Committee. The De- regulation Committee shall hold public meetings at least quarterly. All meetings of the Deregulation Committee shall be conducted in conformity with the provisions of section 52b of title 5. The Deregula- tion Committee may not take any action unless such action is approved by a majority vote of the voting members of the Deregulation Committee. (ec) Delegation of authorities prohibited The authorities conferred by this subchapter on the Deregulation Committee and its members may not be delegated. [Depository Institutions and Monetary Control Act of 1980, Pub. L. No. 96-221, Title II, § 203, 94 Stat. 132, 142] Ee OO 12 U.S.C. § 3503 Phase-out and elimination of limitations, and gradual increas