Opposition Brief — Monogram Credit Card Bank v. Heaton

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} FILED

No. 00-1505 ‘ MAY 15 200i

CLERK

Supreme Court of the United States

MONOGRAM CREDIT CARD BANK OF GEORGIA,

Petitioner,

PATRICIA HEATON,

Respondent.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

RESPONDENT'S BRIEF IN OPPOSITION

Louis L. PLoTKIN* Topp R. SLAck

M.H. GerTLER GALLOWAY, JOHNSON,

GERTLER, GERTLER, TOMPKINS, BuRR & SMITH

VINCENT & PLOTKIN Suite 4040

127-129 Carondelet Street 701 Poydras Street

New Orleans, LA 70130 New Orleans, LA 70139

(504) 581-6411 (504) 525-6802

*Counsel of Record

Attorneys for Respondent

May 18, 2001

COCKLE LAW BRIEF PRINTING CO., (500) 225-6964

OR CALL COLLECT (402) 342-2831

TABLE OF CONTENTS

Page

suAbeems CR T9008 CAGE. ii cc icividen wed an as 2

I. THE EVENTS LEADING UP TO THE FIRST

eee ere ey eer rer ee he 2

Hl, THER CASE 15 REMANIIOD). 0.05 csccccescces 6

III. MONOGRAM APP™ALS THE REMAND RUL-

GE Se sare aa nie hake gh eade ea eus names 6

IV. THE FIFFH CIRCUIT DECISION ............ 8

V. MONOGRAM RELIES ON THE FIFTH CIR-

CUIT DECISION AND RE-REMOVES THE

NES aa ONG cans dd owe daa ke de ee 9

VI. AT THE REMAND HEARING, THE DISTRICT

COURT STRONGLY CRITICIZES THE FDIC’S

AND MONOGRAM’S BEHAVIOR IN THE

Greer Or re etre eee Te 11

Vil. THE CASE IS REMANDED A SECOND

TE 665 bo SUN x ROE AAT Sa Re eR ek ew 13

Vil. SUBSEQUENT PROCEEDINGS .............. 13

REASONS FOR DENYING THE WRIT............. 14

I. THE CASE DOES NOT PRESENT THE QUES-

TION POSED IN THE PETITION............ 14

Il. THE PETITION SHOULD BE DENIED

BECAUSE THE FIFTH CIRCUIT’S DECISION

Sy FETE SAE ck cee ne teach Skeees es 16

Ill. THE PETITION SHOULD BE DENIED

BECAUSE MONOGRAM HAS WAIVED ITS

RIGHT TO SEEK REVIEW OF THE FIFTH

See MERA. SOGUIEE 64 cia cad Css Kddauannneks 17

IV.

THE PETITION SHOULD BE DENIED AS

sug RELERERE RESET LE PRCT ET EEE ET Eee

TABLE OF CONTENTS - Continued

Page

V. THE PETITION SHOULD BE DENIED

BECAUSE THE FIFTH CIRCUIT’S DECISION

FURTHERS PUBGI. PORE 66 dss cecscr cae 19

CONCLUSION. ss0csuccnekaeenennGsneban ¥edneaees 20

APPENDIX

Notice of Appeal, Heaton v. Monogram Credit

Card Bank of Georgia, USDC No. 98-1823

(December 3, TOO 0.05 cidnees cae eseuehiante- App. 1

Notice of Removal, Heaton v. Monogram Credit

Card Bank of Georgia, USDC No. 98-1823

(Noveenber 3, Sieh. icasa cues becke ers ieews App. 6

Excerpts from Oral Argument, Heaton v. Mono-

gram Credit Card Bank of Georgia, USDC No.

98-1823 (December 20, 2000)................. App. 11

Order and Reasons, Heaton v. Monogram Credit

Card Bank of Georgia, USDC No. 98-1823 (Janu-

ary 5, 2001) « .<.<sucicceeeneenesamaeeneea akon App. 17

FDIC Notice of Appeal, Heaton v. Monogram

Credit Card Bank of Georgia, USDC No. 98-1823

(January 11, QUE) «.csscewecstwadecaveveseess App. 26

Order and Reasons, Heaton v. Monogram Credit

Card Bank of Georgia, USDC No. 98-1823 (Febru-

ary 14, 2OGR) q. cccsinceceectawawencnes canes App. 27

Order, Heaton v. Monogram Credit Card Bank of

Georgia v. FDIC, U.S. 5th Cir. No. 01-30104

(March 22, 2008) .3.0cisasequlaceueaneeteriies App. 31

Order, Heaton v. Monogram Credit Card Bank of

Georgia v. FDIC, U.S. 5th Cir. No. 01-30104

(Miasch 22, ZOU) .<.4s0ccsnus els caecueseeeies App. 32

ili

TABLE OF CONTENTS - Continued

Page

Excerpt from Motion, Heaton v. Monogram Credit

Card Bank of Georgia, Civil District Court No.

PT CRE By SUPE a hi cectessvedsivancass App. 33

Excerpts from Oral Argument, Heaton v. Mono-

gram Credit Card Bank of Georgia, USDC No.

98-1823 (November 10, 1999) ................ App. 35

TABLE OF AUTHORITIES

Page

Cases

Ahrens v. Perot Sys. Corp., 205 F.3d 831 (5th Cir.

SPORE EC OPER TL oe ee hy eT Ee ee paar re 18

In re Amoco Petroleum Additives Co., 964 F.2d 706

eo ps AG. rewere rT Myr ey rr err re Tr rrr Te eT 17

Bogle v. Phillips Petroleum Co., 24 F.3d 758 (5th Cir.

i Pree rere Sree ee ere ne rey eee ee

Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343 (1988)

PEP OTT ET EET Eee Pe NE COTTE S Pee Ct og PPE TET 7% ©

In re Coastal Plains, Inc., 179 F.3d 197 (5th Cir.

Oe er OR eae rT eee Seo eer( me re erry 18

Engelhardt v. Paul Revere Life Ins. Co., 139 F.3d 1346

ob Be Sere rye eT ee PORT PESTS OP Ee Te eC eee es 17

Hickey v. NCNB Texas National Bank, 763 F. Supp.

i Re Rk | ee re ee ey ay rote poeree 12

Irving Indep. School Dist. v. Packard Properties, 970

ee Fe ef! eRe rupee rer orn rere 10

Mangold v. Analytic Serv., Inc., 77 F.3d 1442 (4th

Ce PO a ct hs Re me ek oo a ee 17

Scott v. Kentucky Parole Board, 429 U.S. 60 (1976) ....19

Thermtron Products, Inc. v. Hermansdorfer, 423 U.S.

EE ik bo eb ee a te ee

Transit Casualty Co. v. Certain Underwriters at

Lloyd's, 119 F.3d 619 (8th Cis. 1997)............... 17

Zuniga v. Blue Cross & Blue Shield, 52 F.2d 1395 (6th

ee eee Tee ee CET RS TUT eT ELST ey PoP TTT eer rey 17

TABLE OF AUTHORITIES - Continued

Page

STATUTES AND REGULATIONS

42 USA. BERRA on hoa coe ee aes 3, 9

12 UGA. QEBOs k os ic ccc eika Seceeussnaeyccasivas 3

12 USK... SERTIO ea oa vin kascies raehae ieee 5, 10

yy: Bes ome yk | ee rere rrr i, 7,6, 348,

26 USK. BIG oS iesk Sa ccaewin sins teadesaeees passim

38 UBL. Ce ica niwiskecaviass 6 7,8, 3

OCS A BE... dosiiaskadetciee 3, 5

RESPONDENT’S BRIEF IN OPPOSITION

Respondent, Patricia Heaton, submits this brief in

opposition to the petition for a writ of certiorari filed by

Monogram Credit Card Bank of Georgia (“Petitioner” or

“Monogram”).

The Petition should be denied. The Fifth Circuit's

ruling does not present the question raised by Petitioner.

Monogram claims the Fifth Circuit refused to review the

remand order simply because the trial court invoked 28

U.S.C. §1447(c). Petition at i. This is incorrect. Even a

cursory review of the Fifth Circuit’s decision reveals that

the panel carefully scrutinized the entire remand order.

After doing so, the Court of Appeals held that the

1 nand was based on §1447(c) and not on §1367(c)(3) as

Monogram had claimed. Thus, the Fifth Circuit did not

rely on “magic words” in dismissing the appeal, and the

ruling below is not worthy of a grant of certiorari.

The Petition should also be denied because Mono-

gram has waived its right to seek review of the Fifth

Circuit’s decision. The day after the Court of Appeals

issued the ruling Monogram removed the case to federal

court for a second time. To establish federal question

jurisdiction, Monogram relied on the federal claim the

Fifth Circuit had reinstated in the decision. Monogram

acquiesced in the judgment and did not suggest the rul-

ing was in error or subject to further review.

Only now, after the district court has remanded the

case a second time, does Monogram claim the Fifth Cir-

cuit erred and the Court should review the decision.

Monogram, however, waived its right to seek relief in this

Court by adopting the Fifth Circuit’s ruling as its own.

Petitioner's conflicting, self-serving arguments are barred

by the concept of judicial estoppel and must be rejected.

Monogram’s petition, moreover, should be denied as

moot. Monogram failed to advise the Court that the Fed-

eral Deposit Insurance Corporation (“FDIC”) appealed

the district court’s second remand ruling to the Fifth

Circuit. The appeal is pending. Thus, the issue now is

whether the district court’s second remand ruling was

correct. Monogram’s petition for a writ of certiorari,

which is based on the first remand ruling, is moot.

Ultimately, certiorari should be denied because the

Fifth Circuit’s decision to dismiss the appeal under 28

U.S.C. §1447(d) is plainly correct. The ruling is consistent

with Thermtron Products, Inc. v. Hermansdorfer, 423 U.S.

336 (1976) and its progeny. The Court of Appeals prop-

erly rejected Monogram’s transparent attempt to create

appellate jurisdiction where none existed.

STATEMENT OF THE CASE

I. THE EVENTS LEADING UP TO THE FIRST

REMAND RULING

On May 11, 1998, Ms. Heaton filed this class action in

state court on behalf of all Louisiana citizens who (like

her) have been overcharged by Monogram in violation of

the Louisiana Consumer Credit Law (“LCCL”). Mono-

gram violated the LCCL by exceeding the limits placed

on interest and late fees.

Ms. Heaton had entered into a private-label credit

card contract with Monogram. Unlike a Visa or Master-

Card, Ms. Heaton was provided with a credit card that

only allowed her to shop at a local appliances store.

Monogram is not a bank in the ordinary sense of the

word. Instead, it is a unique creature of Georgia iaw. a

“credit card bank.”

Monogram removed the case to federal court, invok-

ing diversity and federal question jurisdiction. Because

Ms. Heaton had only alleged state-law claims, Monogram

argued a federal question existed under the complete

preemption doctrine. Specifically, Monogram alleged Ms.

Heaton’s claims were preempted by 12 U.S.C. §1831d(a).

Ms. Heaton moved to remand, arguing that federal

question jurisdiction did not exist. The federal preemp-

tion statute could only be invoked by a “State bank,”

which is a bank incorporated under state law and

engaged in the business of receiving deposits. See 12

U.S.C. §1813(a)(2).

Ms. Heaton argued Monogram was not a “State

bank” because it was not engaged in the business of

receiving deposits. As a Georgia credit card bank, Mono-

gram could “only” engage in the business of credit cards.

O.C.G.A. §7-5-3(6). The FDIC did not consider this issue

when the agency approved Monogram for deposit insur-

ance in 1988.

Two days before oral argument on Ms. Heaton’s

remand motion, Monogram submitted a supplemental

brief. Attached was a letter signed by an FDIC emplovee

and printed on FDIC letterhead (the “Letter”). In the

Letter, the FDIC employee declared that Monogram was a

“State bank.” This, of course, was the core issue in the

preemption analysis.

The district court denied the motion to remand, find-

ing that federal question jurisdiction did exist under the

complete preemption doctrine because Monogram was a

“State bank.” Pet. App. at 15a. The district court assumed

the Letter was legitimate and substantially deferred to it

in reaching this conclusion. Id. & n.1.

Because the Letter was submitted at the last minute,

Ms. Heaton did not have the opportunity to check its

veracity. This was unfortunate because Ms. Heaton later

discovered the Letter was Monogram’s work product.

The Letter had actually been ghost-written by John Doug-

las, a lawyer hired by Monogram who was the former

general counsel of the FDIC.

Ms. Heaton sought to depose the FDIC employee

who had signed the Letter. The FDIC, however, refused to

make the employee available for deposition.

Ss.

Before discovering that the Letter was actually Mono-

gram’s work product, Ms. Heaton was granted leave to

add a federal claim under the federal Truth in Lending

Act (“the TILA claim”). At the time she had been duped

into believing the Letter was legitimate and that federal

question jurisdiction did exist.

Coeee ee ne tee rt re ne ey

Wer ot a ite ‘ te

nitieetniennien tO ee sila

i ae

anal

Pain'e’

Because the Letter did not represent an impartial

agency determination, Ms. Heaton moved for recon-

sideration of her motion to remand.! Ms. Heaton reiter-

ated that Monogram could not be a “State bank” because

Monogram was prohibited from engaging in the business

of receiving deposits. O.C.G.A. §7-5-3(6). Moreover, the

only deposits received by Monogram were from its par-

ent company, GE, which were used to capitalize Mono-

gram.

To further illustrate Monogram was not a State bank,

Ms. Heaton noted that Monogram had less than one

percent (.39%) of its money insured by the FDIC. Tradi-

tional banks, however, had approximately 76% of their

deposits insured. Counsel for Monogram admitted at oral

argument that the only reason Monogram obtained the de

minimis amount of insurance was to attempt to qualify as

a State bank and invoke the preemption statute. Resp. :

App. at 37.

At oral argument, the district court expressed its

view that remand might be appropriate because Mono-

gram may not qualify as a “State bank.”

To prevent a remand, Monogram again turned to its

friends at the FDIC for help. Thus, shortly after oral

argument the FDIC filed a motion to intervene as a party

in the case. If granted, the FDIC would argue federal

question jurisdiction existed under 12 U.S.C.

§1819(b)(2)(A) thereby preventing a remand. Ironically,

1 In her briefs, Ms. Heaton indicated she would dismiss

the federal claim and later did so. Monogram incorrectly

suggests that Judge Barbier raised this issue sua sponte. Petition

at 6.

the FDIC was aware of the case for over a year before

seeking to intervene.

Il. THE CASE IS REMANDED.

The district court granted reconsideration and

remanded the case due to a lack of subject matter juris-

diction. Pet. App. at 20a. The trial court rejected Mono-

gram’s claim that Ms. Heaton had waived her

jurisdictional objections by adding a federal claim after

removal. Id. at 21a. Because no waiver had occurred, the

district court noted its dismissal of the federal claim in a

footnote. Id. at n.1.2 .

The trial judge then turned to the issue of federal

question jurisdiction. The court found it lacked such

jurisdiction because Monogram did not qualify as a

“State bank” and, therefore, could not invoke the federal

preemption statute. Id. at 21a-22a. Similarly, the judge

found he lacked diversity jurisdiction. Id. at 22a.

The district court, therefore, specifically cited 28

U.S.C. §1447(c) and remanded the case. Id. The court

recognized that if federal jurisdiction was in doubt,

remand was appropriate. Id.

II. MONOGRAM APPEALS THE REMAND RULING.

Acutely aware of §1447(d) and its prohibition on

appealing remand orders, Monogram knew its appeal

2 Ms. Heaton had previously moved to dismiss the claim

with prejudice.

3 Because the court lacked subject matter jurisdiction, the

FDIC’s motion to intervene was subsequently denied as moot.

dicate see

ms 7

had to squeeze into the Thermtron exception. As a result,

Monogram argued in the Notice of Appeal the district

court “erroneously cited” §1447(c) and actually remanded

the case in its discretion under 28 U.S.C. §1367(c)(3).

Resp. App. at 1-2. Under Thermtron, a remand under

§1367(c)(3) would have been appealable.

To establish that a §1367(c)(3) remand had occurred,

Monogram invoked Bogle v. Phillips Petroleum Co., 24 F.3d

758 (5th Cir. 1994) and argued that the trial court's dis-

missal of the federal claim proved federal jurisdiction had

existed. Therefore, the remand of the remaining state-law

claims must have been in the district court’s discretion

under §1367(c)(3).

Notably, Monogram had not asked the district court

to reconsider its invocation of §1447(c) before raising the

issue on appeal. Similarly, Monogram did not request the

trial judge to clarify whether he remanded the case under

§1367(c)(3) or §1447(c).

Ms. Heaton moved to dismiss the appeal under

§1447(d) for lack of appellate jurisdiction. The district

court obviously had not remanded the case under

§1367(c)(3). The judge’s entire analysis was focused on

whether he enjoyed subject matter jurisdiction. See Pet.

App. at 20a-22a. The district court, moreover, did not cite

§1367(c)(3), nor did it rely on any of the factors articu-

lated by this Court in Carnegie-Mellon Univ. v. Cohill, 484

U.S. 343 (1988) in deciding a discretionary remand. Even

if the trial court erred in remanding under §1447(c), the

order was still unappealable. See Thermtron, 423 U.S. at

351.

Monogram responded that the Fifth Circuit should

review the remand ruling and determine the statutory -

basis on which the remand was based. Monogram argued

the Court of Appeals did “not need to look beyond the

face of the remand order here to determine that, in reality,

it is necessarily based on Section 1367(c)(3), and therefore

appealable.” Monogram’s Opposition to Motion to Dis-

miss at 8.

IV. THE FIFTH CIRCUIT DECISION

On November 2, 2000, the Fifth Circuit dismissed

Monogram’s appeal unde: §1447(d). Pet. App. at la-12a.

The Fifth Circuit did exactly what Monogram requested.

The panel thoroughly scrutinized the remand order to

determine for itself whether the remand was based on a

§1447(c) ground.

The Fifth Circuit found that a “plain and common

sense reading of. . . Judge Barbier’s remand order reveals

that he stated a §1447(c) basis for remand.” Pet. App. at

5a. For example, the trial judge expressly held that he did

“not have federal question jurisdiction and that there is

no federal preemption.” Id. (quotations omitted) Sim-

ilarly, the district court had “invoked §1447(c) in ordering

the remand.” Id.

The appellate court did not stop its analysis of the

remand ruling at this point. Instead, the Fifth Circuit

went on to reject Monogram’s invocation of Bogle and the

argument that the trial court must have exercised juris-

diction in dismissing the federal claim. Bogle was distin-

guishable because that case involved an ambiguous

ait abe

a a ae

remand ruling in which the trial court remanded for lack

of jurisdiction, but also discussed the Carnegie-Mellon fac-

tors in deciding a discretionary remand. Pet. App. at 7a.

Here, however, the Fifth Circuit found “no ambiguity

whatsoever in Judge Barbier’s remand order.” Id. The

trial judge “clearly intended to base his order on

§1447(c).” Id. at 11a. Moreover, the district court did not

cite §1367(c)(3) or the Carnegie-Mellon factors. Id. at 7a.

As a result, the district court erred in dismissing the

federal claim with prejudice because the court found it

lacked subject matter jurisdiction. Therefore, the Fifth

Circuit reinstated the federal claim, holding that the dis-

missal order was void and of no effect. Id. at 11la-12a.

V. MONOGRAM RELIES ON THE FIFTH CIRCUIT

DECISION AND RE-REMOVES THE CASE.

“Monogram removed the case to federal court for the

second time the morning after the Fifth Circuit rendered

its decision. To invoke federal question jurisdiction,

Monogram relied on the federal claim that had been

revived by the Court of Appeals. Resp. App. at 7 & 9.4

Nowhere in the Notice of Removal did Monogram claim

the Fifth Circuit’s decision was in error or subject to

further review. Id.

Ms. Heaton moved to remand the case for lack of

subject matter jurisdiction. Ms. Heaton had dismissed the

federal claim in state court the day before Monogram re-

removed the case as authorized by Louisiana Code of

Civil Procedure article 1671.

4 Monogram also removed the case on the same grounds it

had alleged in the first removal: namely, complete preemption

by 12 U.S.C. 1831d(a) and diversity jurisdiction.

Realizing the district court would remand the case a

second time, Monograr.. again turned to the FDIC for

help. The agency, consequently, filed another motion to

intervene as a party, hoping to invoke 12 U.S.C.

§1819(b)(2)(A) and create federal question jurisdiction.

Monogram and the FDIC had tried this tactic in 1999 in

onnection with the first remand proceedings. See supra at

ist 6

In addition to the FDIC’s repeated motions to inter-

vene and the misleading Letter, the agency has attempted

to assist Monogram in other ways. For example, the FDIC

attempted to assist Monogram in its Fifth Circuit appeal

by publishing General Counsel Opinion No. 12 only five

days before Monogram’s brief was due. Ironically, the

FDIC admits that this opinion marked the first time, in 65

years, that the agency opined on the meaning of the

phrase “engaged in the business of receiving deposits.”

Monogram extensively relied on the general counsel

opinion in its Fifth Circuit brief. This is not the first time

the FDIC has attempted to influence ongoing litigation by

publishing its opinions. See, e,g., Irving Indep. School Dist.

v. Packard Properties, 970 F.2d 58 (5th Cir. 1992) (FDIC

published legal memorandum and policy statement after

the trial court had ruled against it).

The Attorney General for the State of Louisiana filed

an amicus brief in the Fifth Circuit on Ms. Heaton’s

behalf because he was troubled over Monogram’s and the

FDIC’s behavior.

Various special interest grcups filed amicus briefs on

Monogram’s behalf in the Fifth Circuit. Not surprisingly,

these same groups are apparently filing amicus briefs in

support of Monogram’s petition for a writ of certiorari.

VI. AT THE REMAND HEARING, THE DISTRICT

COURT STRONGLY CRITICIZES THE FDIC’S

AND MONOGRAM’‘S BEHAVIOR IN THE CASE.

At the hearing on the remand motion, the district

court severely criticized the agency and its persistent

efforts to assist Monogram in the case.

THE COURT: The FDIC has been helping

Monogram throughout. That’s

no secret.

{FDIC}: No, Your Honor, we don’t

make it a secret.

THE COURT: .. . You have been helping

them from the very beginning.

You have assisted them; when

you assisted them you

obstructed the plaintiffs’ dis-

covery. You did not want to be

involved in private litigation.

Resp. App. at 13.

The Court then admonished the agency that its inter-

vention request was merely designed to create federal

jurisdiction in an effort to help Monogram:

“To me I can only draw one logical conclusion

from all of this: This is simply a maneuver to

avoid remand of the case, pure and simple. And

nothing else makes any sense to me.”

Id.

Judge Barbier is not the only federal judge to criticize

the FDIC for attempting to manipulate federal jurisdic-

tion by improperly seeking to intervene in a case. In

Hickey v. NCNB Texas National Bank, 763 F. Supp. 896

(N.D. Tex. 1991), the court struck down the FDIC’s inter-

vention and explained: “The only possible explanation

for the intervention was to use on behalf of existing

defendants - and, in the court’s view, to abuse - the

power of removal granted to FDIC-Receiver.” Id. at 897.

Later in the hearing, the trial court reiterated its

grave concerns regarding the FDIC’s efforts to assist

Monogram in the case. The judge stated:

“I’m very disturbed I will say this about the

actions of the FDIC in this entire matter, and |

thought the FDIC was there to protect the public

frankly and consumers and not to protect Mono-

gram Bank and similar companies. I thought

they were to regulate these companies and not

to protect them and to the extent of even

defending them in private civil litigation.”

Resp. App. at 14.

The district court also emphasized he was not the

only one concerned about the FDIC’s antics:

I’m not the only one that is disturbed by the

FDIC’s actions in this. I’m sure you are aware

that among others the attorney general for the

State of Louisiana and apparently other attor-

neys general and consumer advocates around

the country are very disturbed and bothered

and critical of the FDIC’s actions in this type

of litigation. And I must say I agree with them.

Id. at 15 (emphasis added).

| ro

VII. THE CASE IS REMANDED A SECOND TIME.

On January 5, 2001, the federal court remanded the

case for lack of subject matter jurisdiction and denied the

FDIC’s intervention as moot. Resp. App. at 17-25. The

decision was comprehensive. The district court thor-

oughly explained why Monogram was not a State bank

and rejected General Counsel Opinion No. 12 as unper-

suasive. Id. at 21-22.

The first remand order and the second remand order

present essentially the same jurisdictional issues. In both

rulings, the trial court found it lacked federal question

jurisdiction because Monogram did not qualify as a

“State bank” and, therefore, could not invoke the federal

preemption statute. Compare Pet. App. at 2la-22a with

Resp. App. at 22-23. Similarly, in both orders the trial

court found it lacked diversity jurisdiction. Compare Pet.

App. E at 22a with Resp. App. 24-25.

VIII. SUBSEQUENT PROCEEDINGS

In its Petition, Monogram failed to advise the Court

of the proceedings that have occurred in the case follow-

ing the second remand. To ensure the Court has a com-

plete record in rendering its decision, Ms. Heaton

supplements as follows:

On January 11, 2001, the FDIC filed a notice of

appeal, seeking review of the second remand order and

the denial of its intervention request. Resp. App. at 26.

The appeal is pending.

The FDIC subsequently moved the district court for a

stay of the second remand ruling pending the appeal. On

February 14, 2001, the district court denied the FDIC’s

request for a stay. Resp. App. at 27-30.

Thereafter, the agency moved the Fifth Circuit for a

stay pending appeal, claiming such relief was necessary

in light of the alleged implications the case presented for

the banking industry. On March 22, 2001, in a unanimous

decision, the Fifth Circuit refused to issue a stay. Resp.

App. at 31. The panel, however, carried with the case Ms.

Heaton’s motion to dismiss the FDIC’s appeal. Resp.

App. at 32.

Adding to the procedural complexity is that the FDIC

is currently seeking to intervene as a party for the third

time, now in State court. Resp. App. at 33 (cover page of

motion). The FDIC admits that if the motion is granted,

the case will be removed to federal court for a third time.

Again, the present petition for a writ of certiorari would

be moot.

REASONS FOR DENYING THE WRIT

The case is not appropriate for Supreme Court review

for the reasons discussed below.

I. THE CASE DOES NOT PRESENT THE QUESTION

POSED IN THE PETITION.

The Petition should be denied because the Fifth Cir-

cuit decision does not present the question raised by

Petitioner. Monogram claims the Court of Appeals

refused to review the remand ruling simply because the

trial court invoked §1447(c). See Petition at i. As a result,

the Fifth Circuit “had to ignore” the face of the remand

order. Petition at 2.

Monogram’s arguments defy common sense and are

easily rebutted by a review of the Fifth Circuit's ruling.

The panel carefully scrutinized the remand order and

dismissed Monogram’s appeal oniy after concluding the

remand was clearly and unambiguously based on

§1447(c).

In its analysis, the Fifth Circuit painstakingly

reviewed the language of the remand order. The Court of

Appeals noted that the district court had specifically

found it lacked federal question jurisdiction and that

federal preemption did not exist. Pet. App. at 5a. The

district court, moreover, specifically invoked §1447(c) in

ordering the remand, and stated remand should be

granted if federal jurisdiction is in doubt. Id.

Further confirming its conclusion that the trial court

had remanded under §1447(c), the Court of Appeals rec-

ognized that “nowhere in the order did the judge discuss

the discretionary factors set forth in Carnegie-Mellon, nor

did he cite §1367(c)(3) or any other basis for remand.” Id. at

7a (emphasis added).

After completing its careful review of the district

court ruling, the Fifth Circuit saw “no ambiguity what-

soever in Judge Barbier’s remand order.” Id. at 7a. A

“plain and common sense reading of . . . Judge Barbier’s

remand order reveals that he stated a §1447(c) basis for

remand.” Id. at 5a. The district court’s “citation of

§1447(c) is clearly not a ‘mislabeling’ of the basis for

remand.” Id. The Court of Appeals concluded: “We think

judge Barbier clearly intended to base his order on

§1447(c).” Id. at lla.

In addition, the Fifth Circuit rejected Monogram’s

invocation of Bogle and the argument that the trial court

must have exercised jurisdiction in dismissing the federal

claim. Instead, it was error for the trial court to dismiss

the federal claim because the court had concluded it

lacked jurisdiction. The panel, consequently, reinstated

the federal claim. Pet. App. at 1la-12a. Monogram’s

attempt to convert the district court’s error into an argu-

ment for a §1367(c)(3) remand is unavailing. See Petition

at 19-20.

The Fifth Circuit used the phrase “magic words” only

once in the opinion when it quoted from the Bogle case..

Pet. App. at 8a. The Court of Appeals did not suggest it

was dismissing Monogram’s appeal simply because the

trial court had_ invoked §1447(c). The panel satisfied itself,

as Monogram had requested, that the remand was pur-

suant to §1447(c) and not §1367(c)(3).

Monogram’s attempt to portray the Fifth Circuit as a

rogue circuit that mechanically dismisses remand orders

based on “magic words” is inaccurate. The Petition

should be denied because the case does not present the

question posed by Monogram.

Il. THE PETITION SHOULD BE DENIED BECAUSE

THE FIFTH CIRCUIT’S DECISION IS PLAINLY

CORRECT.

There is iittle doubt the Fifth Circuit’s decision to

dismiss the appeal under §1447(d) is consistent with the

Court’s jurisprudence. The- Supreme Court has made

abundantly clear that §1447(d) “prohibits review of all

remand orders issued pursuant to §1447(c) whether erro-

neous or not.” Thermtron, 423 U.S. at 343.

Here, the Fifth Circuit found after reviewing the

order that the district court’s remand “was based solely

on §1447(c) grounds”. Pet. App. at 9a, n.3 (emphasis

added). Thus, following Thermtron, the Court of Appeals

held “even if Judge Barbier’s conclusion that he lacked

subject matter jurisdiction was clearly erroneous, he did

not state a non-§1447(c) ground for remand and we can-

not review his order.” Id. at 8a. The Fifth Circuit denied

rehearing en banc on this procedural ruling. Pet. App. at

24a-25a.

The cases cited by Monogram did not involve

remand orders like the one here. The cases dealt with

remand orders that either did not contain reasons for the

remand, or were facially ambiguous on why the remand

had been granted. See e.g., Mangold v. Analytic Serv., Inc.,

77 F.3d 1442 (4th Cir. 1996) (remand order cites §1447(c)

and discusses factors relating to discretionary remand);

Transit Casualty Co. v. Certain Underwriters at Lloyd's, 119

F.3d 619, 624 (8th Cir. 1997) (“district court’s citation to

§1447(c) was somewhat ambiguous”); Engelhardt v. Paul

Revere Life Ins. Co., 139 F.3d 1346, 1350 (11th Cir. 1998)

(district court did not state the statutory basis for its

remand order); In re Amoco Petroleum Additives Co., 964

F.2d 706, 708 (7th Cir. 1992) (court did not explain why

case was remanded); Zuniga v. Blue Cross & Blue Shield, 52

F.2d 1395, 1400 (6th Cir. 1995) (district court did not

specify, reasons for remanding counts).

Ill. THE PETITION SHOULD BE DENIED BECAUSE

MONOGRAM HAS WAIVED ITS RIGHT TO

SEEK REVIEW OF THE FIFTH CIRCUIT DECI-

SION.

Monogram has waived the right to seek review of the

Fifth Circuit ruling in this Court. Monogram embraced

the decision as correct when Monogram relied on it to

establish federal question jurisdiction and re-remove the

case. See Resp. App. at 7 & 9. Monogram attached the

Fifth Circuit’s decision as an exhibit to the Notice of

Removal and did not claim the ruling was in error or

subject to further review. Id.

Only now, after the district court remanded the case

for a second time, does Monogram reverse course and

argue the Fifth Circuit’s decision was in error. Having

adopted the ruling, Monogram cannot disown it. Mono-

gram has waived its right to seek review of the decision

and is judicially estopped from taking such inconsistent

positions. See Ahrens v. Perot Sys. Corp., 205 F.3d 831, 833

(5th Cir.), cert. denied, 121 S. Ct. 59 (2000) (Judicial estop-

pel “is a common law doctrine by which a party who has

assumed one position in his pleadings may be estopped

from assuming an inconsistent position.”); In re Coastal

Plains, Inc., 179 F.3d 197, 205 (5th Cir. 1999), cert. denied,

120 S. Ct. 936 (2000) (doctrine “is to protect the integrity

of the judicial process by preventing the parties from

playing fast and loose with the courts to suit the exigencies

of self interest”) (quotations and alterations omitted)

(emphasis added).

IV. THE PETITION SHOULD BE DENIED AS MOOT.

By removing the case a second time, Monogram

mooted the first remand ruling and this certiorari peti-

tion. The question now is whether the second remand

ruling was proper. This is the subject of a pending Fifth

Circuit appeal. If the Court of Appeals reverses the sec-

ond remand order, the case may be back in federal court.

Similarly, the FDIC has sought to intervene in state

court. Resp. App. at 33-34. If granted, the FDIC and

Monogram have indicated the case will be removed to

federal court for a third time. Such a removal would

spawn additional jurisdictional litigation, and again moot

the first remand ruling. Thus, any decision rendered by

the Court relating to the first remand ruling is simply

advisory in nature.

Alternatively, the Court may wish to remand the

matter to the Fifth Circuit to determine whether the now-

superceded first remand ruling remains a live contro-

versy. See Scott v. Kentucky Parole Board, 429 U.S. 60, 61

(1976) (“The Court postpones decision of the issue by

sending the case back to the Court of Appeals for its

advice on the question whether the litigation is now

moot.”) Such action may be appropriate in light of the

pending FDIC appeal on the second remand ruling.

V. THE PETITION SHOULD BE DENIED BECAUSE

THE FIFTH CIRCUIT’S DECISION FURTHERS

PUBLIC POLICY.

The Fifth Circuit’s decision in this case furthers pub-

lic policy and should not be disturbed. Permitting a party,

like Monogram, to re-write the clear and unambiguous

basis for a remand ruling would clearly lead to undesir-

able results. Future litigants who want to circumvent

§1447(d) will simply claim to have discovered the “real”

reason for the trial court’s remand. The appellate flood-

gates will open and consistency will be lost.

Congress enacted §1447(d) to avoid protracted juris-

dictional litigation. Thermtron, 423 U.S. at 351. Mono-

gram’s request that the lower court’s decision be re-

written to permit an appeal directly contravenes this

congressional goal.

Moreover, this particular case begs for the applica-

tion of §1447(d). The jurisdictional wrangling has gone on

for more than three years, and it is time to reach the

merits of the case. The State Court is certainly capable of

resolving the federal issues presented in the case, and the

remand rulings do not carry any preclusive effects. Pet.

App. at 1la.

CONCLUSION

For the foregoing reasons the petition for a writ of

certiorari should be denied.

Respectfully submitted,

Topp R. Stack Louis L. PLOTKIN*

GALLOWAY, JOHNSON, M.H. GERTLER

Tompkins, Burr & SMITH ~— GERTLER, GERTLER,

Suite 4040 VINCENT & PLOTKIN

701 Poydras Street 127-129 Carondelet Street ~

New Orleans, LA 70139 New Orleans, LA 70130

(504) 525-6802 (504) 581-6411

*Counsel of Record

Attorneys for Respondent

May 18, 2001

APPENDIX

App. 1

IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

PATRICIA HEATON, on : CIVIL ACTION NO.

behalf of herself and all : 98-1823

others similarly situated,: c/w No. 99-2603

Plaintiff, SECTION “J”

Vv.

MONOGRAM CREDIT ‘ MAGISTRATE 1

CARD BANK OF

GEORGIA, : (Filed Dec. 3, 1999)

Defendant.

NOTICE OF APPEAL

NOTICE IS HEREBY GIVEN that defendant Mono-

gram Credit Card Bank of Georgia (“Monogram”) hereby

appeals to the United States Court of Appeals from the

November 22, 1999 order by the District Court, which

remanded plaintiff's breach of contract and Louisiana

Consumer Credit Law (“LCCL”) claims to state court.

The District Court dismissed with prejudice a federal

claim that had been brought by plaintiff under the Truth

in Lending Act (“TILA”), 15 U.S.C. §1601, et seq., as the

predicate to its order remanding the remaining claims to

state court. Federal subject matter jurisdiction indisputa-

bly existed by reason of plaintiff’s assertion of the TILA

claim, and federal jurisdiction was clearly exercised when

the District Court granted plaintiff’s motion for voluntary

App. 2

dismissal of the TILA claim with prejudice. Therefore, the

remand of the remaining claims immediately following

the Court’s dismissal with prejudice of the TILA claim

was necessarily made under 28 U.S.C. §1367(c)(3), not 28

U.S.C. §1447(c). As the Fifth Circuit stated in Bogle v.

Phillips Petroleum Co., 24 F.3d 758, 762 (5th Cir. 1994):

The critical distinction for determining appeal-

ability is the presence of federal subject matter

jurisdiction prior to the order of remand. In a

Section 1447(c) remand, federal jurisdiction

never existed, and in a non-Section 1447(c)

remand, federal jurisdiction did exist at some

point in the litigation, but the federal claims

were either settled or dismissed. (emphasis in

original).

See Engelhardt v. Paul Revere Life Ins. Co., 139 F.3d 1346,

1350-1351 and n. 3 (11th Cir. 1998) (plaintiff amended

complaint after removal to add ERISA claim; court later

dismissed ERISA claim and remanded remaining claims;

remand order was therefore necessarily made under Sec-

tion 1367(c)(3), not Section 1447(c), and was appealable).

Where a federal claim is dismissed and thereafter the

remaining claims are remanded to state court, the remand

is made pursuant to the discretionary authority of 28

U.S.C. §1367(c)(3) and is appealable as a matter of right

under 28 U.S.C. §1291. See, e.g., Guzzino v. Felterman, 191

F.3d 588, 594 and n. 7 (5th Cir.1999); Hook v. Morrison

Milling Co., 38 F.3d 776, 780 (5th Cir. 1994). The mere fact

that the District Court erroneously cited 28 U.S.C.

§1447(c), rather than 28 U.S.C. §1367(c)(3), as the basis for

its remand following the dismissal with prejudice of the

TILA claim does not render the remand order non-

App. 3

reviewable. Flores v. Long, 110 F.3d 730, 732 (10th Cir.

1997); Mangold v. Analytic Services, Inc., 77 F.3d 1442,

1450-1451 (4th Cir. 1996).

PROCEDURAL BACKGROUND

The remand order by Judge Barbier was entered on a

“Motion for Reconsideration” filed by plaintiff more than

one year after the prior deniai of her remand motion by

Judge Porteous, the judge originally assigned to this case.

Judge Porteous denied remand on October 7, 1998, speci-

fically concluding that Monogram is a “state bank” under

Section 3(a)(2) of the Federal Deposit Insurance Act, 12

U.S.C. §1813(a)(2), and therefore plaintiff’s LCCL claim

was completely preempted by Section 27 of that Act, 12

U.S.C. § 1831d. Directly contrary to Judge Porteous’ rul-

ing, Judge Barbier concluded in his November 22, 1999

remand order that Monogram is not a “state bank.” Both

Judge Porteous and Judge Barbier stated that their rul-

ings were supported by the “plain language” of the Fed-

eral Deposit Insurance Act, but they reached

diametrically opposed positions on the meaning of that

“plain language.” Judge Barbier did not even mention the

prior contrary decision by Judge Porteous, nor did he

offer any explanation for reversing Judge Porteous’ rul-

ing, which was the law of the case. See Loumar v. Smith,

698 F.2d 759, 762 (Sth Cir. 1983) (“when a district judge

has rendered a decision in a case, and the case is later

transferred to another judge, the successor should not

ordinarily overrule the earlier decision”). Judge Barbier’s

remand order was not only contrary to the denial of

remand by Judge Porteous, it was also contrary to Judge

Barbier’s own decision a year earlier, on November 25,

App. 4

1998, wherein he denied plaintiff's motion for interlocu-

tory appeal of Judge Porteous’ denial of remand and

stated that “plaintiff has not shown a substantial ground

for difference of opinion as to whether defendant is a

state bank. Plaintiff cites no authority for the contention

that defendant is not a state bank.”

In addition, Judge Barbier issued his remand order

within one business day of being advised in writing of

the Federal Deposit Insurance Corporation’s (“FDIC”)

intent to intervene immediately in this case. As Mono-

gram advised the District Court prior to its remand order,

FDIC intervention would have created an independent

basis for federal jurisdiction. See 12 U.S.C. §1819(b). The

FDiC’s brief in support of intervention states: “For the

FDIC, the impact of a decision by the Court in this area

extends beyond the fate of Monogram and may affect

hundreds of similarly situated FDIC-insured institutions

processing billions of dollars in transactions. A decision

adverse to Monogram may literally open the floodgates

of litigation and deluge the institutions regulated by the

FDIC with a torrent of similarly frivolous suits.” The

FDIC’s motion to intervene was filed before the remand

order was entered, but was not acted on by Judge Barbier

prior to the remand.

App. 5

Respectfully submitted,

/s/ David S. Willenzik

ANTHONY ROLLO, T.A. (#01133)

DAVID S. WILLENZIK (#13487)

LAUREN Z. GARVEY (#23383)

McGLINCHEY STAFFORD

A Professional Limited Liability

Company

643 Magazine Street,

P.O. Box 60643

New Orleans; LA 70130-3488

(504) 586-1200

Attorneys for Defendant

Monogram Credit Card Bank

of Georgia

IR A TC et ets AOE

App. 6

IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

PATRICIA HEATON, : CIVIL ACTION NO.

Individually and on : 00-3260

behalf of herself and all : SECTION “I”

others similarly situated, :

— MAGISTRATE 5

Plaintiff,

MONOGRAM CREDIT

CARD BANK OF

GEORGIA,

Defendant.

NOTICE OF REMOVAL

Defendant Monogram Credit Card Bank of Georgia

(“Monogram”), while fully reserving its rights to object to

any matters, including without limitation, service, juris-

diction, and venue, and without waiving any other

defenses or objections to the plaintiff’s allegations, has

removed to this Court the case captioned, Patricia Heaton,

Individually and on Behalf of Herself and All Others Similarly

Situated, v. Monogram Credit Card Bank of Georgia, No.

98-8275, Div. D, originally filed in the Judicial District

Court for the Parish of Orleans, State of Louisiana, by

plaintiff Patricia Heaton.

App. 7

)

This Court’s removal jurisdiction is based on federal

question jurisdiction as provided in 28 U.S.C. §§ 1331 and

28 U.S.C. §§ 1441(a) and (b).

Plaintiff has alleged a violation of the Federal Truth

in Lending Act (“TILA”), 15 U.S.C. § 1601 et. seq., which

constitutes a claim arising under the laws of the United

States. The United States Fifth Circuit Court of Appeals

voided the district court’s order dismissing the TILA

claim and further noted that Monogram could again

remove the matter to federal court based on the reinstate-

ment of the TILA claim. See November 2, 2000 Opinion

attached as Exhibit 1.

In addition, plaintiff’s allegations that Monogram’s

charges violate Louisiana law are completely preempted

by Section 27(a) of the Federal Deposit Insurance Act, 12

U.S.C. § 1831(d)(a), which also constitutes a claim arising

under the laws of the United States.

Diversity jurisdiction exists under 28 U.S.C. § 1332 as

the matter in controversy exceeds the sum of $75,000,

exclusive of interest and costs, and is between citizens of

different states.

App. 8

‘

;

At all relevant times hereto, plaintiff is and has been

a citizen of Louisiana and Monogram is and has been a

federally-insured state bank located in Georgia.

Plaintiff brings this action net only on her own

behalf, but also as a class action pursuant to article 591 of

the Louisiana Code of Civil Procedure.

Plaintiff has asked for an award of “reasonable attor-

ney’s fees.”

The Fifth Circuit has held in In Re Abbot Laboratories,

51 F.3d 524 (5th Cir. 1995) that, pursuant to La. Code Civ.

Proc. art 595, the entire amount of attorney’s fees are

attributable to the class representatives.

Clearly, given the size of the putative class and the

nature of the claims asserted, the potential counsel fee is

——_;__________in excess_of $75,000.

10.

This Court has supplemental jurisdiction over all

: other claims asserted by plaintiff in accordance with 28

U.S.C. §§ 1367(a) and 1441(c).

App. 9

11.

Removal is timely under 28 U.S.C. § 1446(b) as less

than thirty days have passed since the United States Fifth

Circuit Court of Appeals November 2, 2000 decision

voided the order entered in the federal court proceedings

which dismissed the federal TILA claims alleged by the

plaintiff. As a result, the TILA claims are reinstated in

these proceedings, thereby creating a basis for removal to

federal court.

12.

A Copy of this Notice of Removal has been sent to

counsel of record for the plaintiff and has been filed with

the Clerk of Court for the Parish of Orleans, State of

Louisiana.

13.

Attached to this Notice of Removal as Exhibit 2 are

copies of all process, pleadings and orders filed in the

state court record through this date.

App. 10

Respectfully submitted, this 3rd day of November,

2000.

Respectfully submitted,

/s/ Lauren Z. Garvey

COLVIN G. NORWOOD (#10083)

ANTHONY ROLLO (#01133)

DAVID S. WILLENZIK (#13487)

LAUREN Z. GARVEY (#23383) :

McGLINCHEY STAFFORD i

A Professional Limited Liability H

Company

643 Magazine Street

New Orleans, Louisiana 70130

Telephone (504) 586-1200

ATTORNEYS FOR MONOGRAM

CREDIT CARD BANK OF

GEORGIA

HPAES PMIMAT ecu aPs MARI + 910. Site SARE. TEA abe awe

9 eT eS

App. 11

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

PATRICIA HEATON, CIVIL ACTION

Plaintiff NO. 98-1823 - “J”

Vv. New Orleans, Louisiana

MONOGRAM CREDIT Wednesday, December 20, 2000

CARD, ET AL.

10:00 a.m.

Defendants.

ORAL ARGUMENT ON SEVERAL MOTIONS

BEFORE THE HONORABLE CARL J. BARBIER,

UNITED STATES DISTRICT JUDGE

App. 12

APPEARANCES:

For the Plaintiff: Galloway, Johnson, Tompkins &

Burr

BY: TODD ROBERT SLACK

701 Poydras Street, Suite 4040

New Orleans, Louisiana 70139

504-525-6802

and

Gertler, Gertler, Vincent &

Plotkin

BY: LOUIS L. PLOTKIN and

LOUIS L. GERTLER

127-129 Carondelet Street

New Orleans, Louisiana 70130

504-581-6411

For Monogram Credit Ballard, Spahr, Andrews &

Card: Ingersoll

BY: ALAN S. KAPLINSKY

1735 Market Street, 51st Floor

Philadelphia, Pennsylvania

19103

| 215-665-8500

and

App. 13

* * *

[31] THE COURT: You have been helping them from

the very beginning in this case.

MR. TAYLOR: That’s not something to apologize

for.

THE COURT: I’m not suggesting you ought to apol-

ogize. I’m just trying to get the facts out. You have been

helping them from the very beginning. You have assisted

them; when you assisted them, you obstructed the plain-

tiffs’ discovery. You did not want to be involved in pri-

vate litigation. Now all of a sudden this is this great

interest of the FDIC. To me I can only draw one logical

conclusion from all of this: This is simply a maneuver to

avoid remand of the case, pure and simple. And nothing

else makes any sense to me. If that is the only reason the

FDIC wants to intervene, I don’t think you have a basis

for intervening.

MR. TAYLOR: No, Your Honor.

THE COURT: I’m not going to allow it.

MR. TAYLOR: No, Your Honor, that is not our sole

basis for intervening.-As we stated in our papers, what

we seek to do is defend our decision in 1988 to insure

Monogram Bank and our determination that it was, in

fact, a state bank under the FDI Act.

Two, we are here to reserve territory on this issue

within the industry. Since 1991 we have -

THE COURT: Monogram has the same interests on

both of those points as you do, don’t they?

App. 14

MR. TAYLOR: They may be aligned at this point,

yes.

THE COURT: Okay. Why then isn’t your interest

[32] protected?

MR. TAYLOR: Well, Your Honor, there is a differ-

ence between participating in a case as a amicus versus as

a party. As a party we have a right to appeal. We have a

right to brief issues. We have a right to take discovery

and present evidence. As a matter of fact, those -

THE COURT: Exactly what you said you didn’t

have the resources to do a year ago. Now you want to do

all of that.

MR. TAYLOR: That was -

THE COURT: You aren’t going to depose that guy

who gave that affidavit for a deposition if I let you

intervene?

MR. TAYLOR: We just think that is frivolous and it

is a red herring. The entire thing is a red herring.

THE COURT: I’m not sure about that. If I kept this

case, I would be very interested in learning exactly what

went on and why. It is very curious to me that a federal

agency - I’m very disturbed I will say this about the

actions of the FDIC in this entire matter, and I thought

the FDIC was there to protect the public frankly and

consumers and not to protect Monogram Bank and simi-

lar companies. I thought they were to regulate these

companies and not to protect them and to the extent of

even defending them in private litigation. I just don’t

understand the FDIC’s whole position in this case. I mean

what difference does it make if you have to go back to a

App. 15

MD if ultimately these banks have to go to Congress to

get the law changed which they have a perfect right to

[33] do? What. difference does it make if you have to

regulate these state banks? Don’t you have another bank

to regulate?

MR. TAYLOR: You put you [sic] finger on the point

when you said that the FDIC should be regulating these

institutions. Our ability -

THE COURT: I said they regulate what they have to

regulate and protect consumers, and I don’t view your

mission as being to protect the industry. And that seems

to be what you, what the FDIC considers its mission to

be.

I’m not the only one that is disturbed by the FDIC’s

actions in this. I’m sure you are aware that among others

the attorney general of the State of Louisiana and appar-

ently other attorneys general and consumer advocates

around the country are very disturbed and bothered and

critical of the FDIC’s actions in this type of litigation. And

I must say I agree with them. I apologize for interrupting

you on this, but I wanted to do so at the very beginning.

Let met put on the record that I received several

letters in connection with this matter dated December 5,

2000, from the State of Louisiana, Office of Financial

Institutions, from a Mr. Gary L. Newport, Chief Attorney.

Is Mr. Newport in Court?

(No response.)

THE COURT: He is not here. I don’t know Mr.

Newport. He is an attorney so I assume he is licensed in

App. 16

Louisiana since he represents the Office of Financial Insti-

' tutions for the State of

* * *

App. 17

United States District Court, E.D. Louisiana.

Patricia HEATON, on Behalf of Herself

and All Others Similarly Situated

MONOGRAM CREDIT CARD BANK OF GEORGIA

No. Civ.A. 98-1823.

Jan. 5, 2001.

ORDER AND REASONS

BARBIER, J.

Before the Court are Plaintiffs’ Motion to Remand

(Rec.Doc. 108), Defendant’s Motion to Add the Federal

Deposit Insurance Corporation (“FDIC”) as a Necessary

Party Defendant (Rec.Doc. 110), and FDIC’s Motion for

Leave to Intervene as a Party Defendant (Rec.Doc. 103).

The motions were set for hearing with oral argument on

December 20, 2000, at which time the Court took the

matter under advisement. After considering the mem-

oranda and argument presented by counsel, the Court

concludes that it is without subject matter jurisdiction to

hear this case. Accordingly, Plaintiffs’ motion to remand

this case to the Civil District Court for the Parish of

Orleans is GRANTED. The remaining two motions are

DISMISSED AS MOOT.

Background

In 1998, Patricia Heaton filed a class action suit

against defendant Monogram Credit Card Bank of Geor-

gia (“Monogram”) in state court alleging that Monogram

had violated the Louisiana Consumer Credit Law

App. 18

(“LCCL”) by charging excessive credit card late fees and

interest. Monogram removed the case to this Court and

Plaintiffs’ subsequent motion to remand was denied.

Resigned to pursuing their case in federal court, Plaintiffs

then, over Monogram’s objection, amended their com-

plaint to add a federal Truth in Lending Act (“TILA”)

claim. However, as the case progressed in this Court,

Plaintiffs discovered information which prompted them

to reurge their motion to remand. On November 22, 1999,

this Court determined that it was without subject matter

jurisdiction and remanded the case to state court. At the

same time, the Court permitted Plaintiffs to dismiss their

federal TILA claim.

Rather than proceed in state court, Monogram sought

to appeal the remand order to the Fifth Circuit Court of

Appeals. On November 2, 2000, the Fifth Circuit dis-

missed Monogram’s appeal concluding that 28 U.S.C.

§ 1447(d) precluded appellate review. Heaton v. Monogram

Credit Card Bank, 231 F.3d 994, 995 (5th Cir.2000). How-

ever, the Fifth Circuit reinstated the TILA claim noting

that Monogram would have immediate grounds to once

again remove the case to federal court — this time based

on federal question jurisdiction due to the pending TILA

claim. Id. at 1000 n. 6. Shortly after the Fifth Circuit

issued its ruling, however, Plaintiffs amended their state

court petition to delete the federal TILA claim. Mono-

gram then, for the second time, removed the case to this

Court. Soon thereafter, FDIC moved to intervene in the

suit, Monogram sought to add FDIC as a necessary party,

and Plaintiffs once again moved to remand the case to

state court. *

App. 19

Discussion

The Court begins its analysis with Plaintiffs’ motion

to remand. The arguments made by both sides are essen-

tially the same as those made over a year ago when

Plaintiffs last moved to remand this case. Monogram

argues that it qualifies as a “State bank” under the Fed-

eral Deposit Insurance Act (“FDIA”) (12 U.S.C. § 1811, et

seq.) and that section 1831d(a) of the FDIA preempts state

law causes of action against State banks. Moreover,

Monogram argues that the preemption created by section

1831d(a) is complete so as to allow removal of this case to

federal court. Monogram also asserts that the possibility

of attorney’s fees as part of Plaintiffs’ potential award

meets the jurisdictional amount for diversity jurisdiction.

Plaintiffs, on the other hand, argue that the Court is

without subject matter jurisdiction because Monogram is

not a State bank, and even if it is, section 1831d(a) does

not completely preempt state law claims so as to allow

removal to a federal court.

The Court considered the State bank issue over a

year ago when the case was remanded the first time. At

that time, the Court determined that Monogram, a “credit

card” bank chartered under Georgia law, was not a State

bank within the meaning of the FDIA. Heaton v. Mono-

gram, 1999 WL 1789422, at *1 (E.D.La. Nov. 22, 1999). In

reaching that conclusion, the Court relied on the plain

language of 12 U.S.C. § 1813(a)(2) which defines a State

bank as “any bank . . . engaged in the business of receiv-

ing deposits . . . and incorporated under the laws of any

State. ...” Although Monogram received deposits from

its parent company, it was not “engaged in the business”

of receiving deposits from its customers. Accordingly, the

App. 20

Court concluded that Monogram was not a State bank,

and therefore, federal preemption did not apply. Heaton,

1999 WL 1789422, at *1.

In opposition to the current motion to remand,

Monogram urges the Court to reconsider its prior conclu-

sion on the State bank issue. In support of its position,

Monogram directs the Court’s attention to several factors

that the Court did not have the benefit of considering last

time.! First, FDIC has since issued General Counsel’s

Opinion No. 12 (“GCO-12”), in which FDIC sets forth its

interpretation of “engaged in the business of receiving

deposits.” Monogram’s Exh. F. According to GCO-12, the

statutory requirement of being “engaged in the business

of receiving deposits” is satisfied by the continuous main-

tenance of one or more non-trust deposits in the aggre-

gate amount of $500,000. Id. at 1 (65 Fed.Reg. 14568).

Second, Monogram points out that it does in fact receive

“deposits” from its customers because Monogram accu-

mulates credit balances from customers who overpay

their credit card accounts. Finally, Monogram points out

that pursuant to recent changes in Georgia law, it now

accepts deposits from unaffiliated parties. Monogram’s

Exh. H, { 2-3.

1 In its memorandum and at oral argument, Monogram also

argued of the potential chaos that would ensue if courts began

to “second-guess” FDIC’s determination of State bank status.

Implicit in FDIC’s 1988 decision to insure Monogram was a

finding by FDIC that Monogram was a State bank. While

Monogram and FDIC made persuasive arguments on this point,

those policy arguments are best left for Congress to resolve

rather than the judiciary.

App. 21

It is important to note that the issue is not whether

Monogram “receives deposits” — it likely does. But sec-

tion 1813(a)(2) does not define a State bank as one that

“receives deposits.” Rather, a State bank is one engaged in

the business of receiving deposits. 12 U.S.C. § 1813(a)(2).

While the statute does not define “engaged in the busi-

ness,” the Court must assume that Congress added the

phrase for some purpose, and therefore, must interpret

section 1813(a)(2) so as to give meaning to the phrase.

Thus, even assuming that overpayments by credit card

customers would qualify as “deposits” under 12 U.S.C.

§ 1813(1), a premise that in and of itself is not completely

clear, it does not necessarily follow that Monogram is

engaged in the business of receiving deposits as that term

is used in the statute.

Similarly, the fact that the Georgia statutes under

which Monogram is chartered now allow Monogram to

accept deposits from non-affiliates does not necessarily

lead to the conclusion that Monogram is engaged in the

business of receiving deposits. Even with the changes in

Georgia’s banking law, Monogram’s ability to accept

deposits is still extremely limited. See Ga. Stat. § 7-5-3(7).

And the law under which Monogram is chartered still

dictates that Monogram may only engage in the business

of soliciting, processing, and making loans pursuant to

credit card accounts. ...” Ga. Stat. § 7-5-3(6).2 Thus, the

per se restrictions imposed by the state law governing

2 Furthermore, the statutory changes at issue were made

well after Plaintiffs’ cause of action arose and this suit was filed.

Accordingly, the changes in Georgia law would likely be

inapplicable to this lawsuit.

App. 22

Monogram’s operations militate against finding that

Monogram engages in the business of receiving deposits.

Finally, GCO-12 does not convince the Court that

Monogram engages in the business of receiving deposits.

Undoubtedly, Monogram’s activities qualify as “engaged

in the business of receiving deposits” as FDIC interprets

the phrase in GCO-12, and if the Court were bound by

GCO-12 it would be compelled to find that Monogram is

a State bank. But given that GCO-12 is an opinion letter, it

is not entitled to Chevron deference. Christensen v. Harris

County, 529 U.S. 576, 120 S.Ct. 1655, 1662-63, 146 L.Ed.2d

621 (2000). Rather, it is “entitled to respect” but only to

the extent that the opinions and interpretations expressed

therein have the power to persuade. Id. Reviewing

GCO-12 in light of section 1813(a)(2) it would seem that

FDIC’s interpretation of “engaged in the business of

receiving deposits” ignores at least one aspect of the

statute. Section 1813(a)(2) refers to deposits in the plural

which would seem to indicate that Congress envisioned a

State bank to have at minimum more than one deposit.

FDIC, on the other hand, seems to completely ignore this

and under its interpretation, a single deposit of $500,000

suffices. At oral argument, counsel was unable to explain

the significance of the $500,000 figure chosen by FDIC.

Simply said, the Court is unable to discern how FDIC’s

interpretation of “engaged in the business of receiving

deposits,” as explained in GCO-12, gives effect to the

language of the statute as Congress wrote it. Accordingly,

the Court does not find GCO-12 persuasive.

fhus, having considered Monogram’s new argu-

ments, the Court once again concludes that Monogram is

App. 23

not “engaged in the business of receiving deposits.” Con-

sequently, it does not meet the definition of a State bank

under the FDIA. Given that Monogram is not a State

bank, preemption, whether ordinary or complete, does

not apply.?

However, assuming arguendo that Monogram is a

State bank, the Court would nevertheless find removal

improper because the Court is convinced that section

1831d does not completely preempt state law causes of

action. While neither the Fifth Circuit nor the United

States Supreme Court has addressed whether 12 U.S.C.

§ 1831d(a), the preemption provision of the FDIA, com-

pletely preempts state law causes of action, the Fifth

Circuit has recognized that the doctrine of complete pre-

emption is to be narrowly applied, that few federal stat-

utes meet the standards necessary to show complete

preemption, and that the doctrine should be applied with

“circumscription.” Heimann v. National Elevator Industry

Pension Fund, 187 F.3d 493, 500 (5th Cir.1999). Further, the

Fifth Circuit requires evidence of clear Congressional

intent to show that claims preempted by state iaw are

removable. Id.; Aaron v. National Union Fire Ins., 876 F.2d

1157, 1165 (5th Cir.1989). Monogram points to nothing in

the FDIA or its legislative history that evidences such

intent. And while other courts have reached a contrary

3 The Court’s determination on this issue will have no

preclusive effect in state court because a remand order is

jurisdictional in nature. Heaton, 231 F.3d at 1000 (citing Smith v.

Texas Children’s Hosp., 172 F.3d 923, 926 (5th Cir.1999)). Thus, all

of the same defenses and arguments made to this Court,

including ordinary preemption, are available to Monogram in

state court.

App. 24

conclusion, see, e.g., M. Nahas & Co. v. First Nat’l Bank, 930

F.2d 608 (8th Cir.1991) (holding that the National Bank

Act completely preempts state law claims for usurious

interest), the Court finds the reasoning employed in cases

such as Jones v. Bankboston, N.A., 115 FSupp.2d 1350

(S.D.Ala. Oct. 2, 2000) (holding that there is no complete

preemption under the NBA), more persuasive. The dis-

trict judge in Jones conducted a detailed and comprehen-

sive analysis of complete preemption under sections 85

and 86 of the National Bank Act, the sister statutes to

section 1831d, and found absent the requisite congres-

sional intent to allow removal under the complete pre-

emption doctrine. The Court is persuaded that the

reasoning employed in Jones is consistent with the stan-

dards enunciated by the Fifth Circuit in Heimann and

Aaron.

Finally, the Court concludes that there is no diversity

jurisdiction because Monogram has failed to demonstrate

that Plaintiffs’ claims meet the jurisdictional amount.

Monogram argues that if Plaintiffs avail themselves of the

attorney fee provisions of the LCCL then Heaton, as the

sole named plaintiff, will have a claim exceeding $75,000.

In re Abbott Laboratories, 51 F.3d 524 (5th Cir.1995). How-

ever, Plaintiffs amended their state court petition prior to

removal to clarify that they are not seeking attorney’s

fees under the LCCL. Plaintiffs’ Exh. 25, at 4, ¥ 10.

Plaintiffs’ counsel also stipulated on the record at oral

argument that Plaintiffs are not claiming and will not

attempt to claim attorney’s fees under the LCCL. This

Court has previously held that attorney’s fees are attrib-

uted to the class representative only when awarded pur-

suant to a specific statute. Jones v. Valvoline Co., 1999 WL

App. 25

319215 (E.D.La. May 20, 1999). Given then that Plaintiffs

do not seek attorney’s fees pursuant to a statute, an

attorney’s fee award is not relevant to a claim of diversity

jurisdiction in this case. Monogram has not otherwise

shown that Heaton’s claims meet the jurisdictional

amount. Accordingly, the Court finds that it does not

have diversity jurisdiction over this suit.

In conclusion, the Court finds that Monogram is not a

State bank, and even if it is, Plaintiffs’ claims are not

completely preempted by federal law. The Court does not

have diversity jurisdiction. Consequently, this Court is

without subject matter jurisdiction to hear this case. The

suit is remanded to state court pursuant to 28 U |S.C.

§ 1447(c). Given the Court’s decision to remand the case,

FDIC’s motion to intervene and Monogram’s motion to

add FDIC are moot. Accordingly,

IT IS ORDERED that Plaintiffs’ Motion to Remand

should be and is hereby GRANTED. The case is

remanded to the Civil District Court for the Parish of

Orleans. The request for attorney’s fees and costs is

DENIED;

IT IS FURTHER ORDERED that Defendant’s Motion

to Add the Federal Deposit Insurance Corporation as a

Necessary Party Defendant is DISMISSED AS MOOT; .

IT IS FURTHER ORDERED that FDIC’s Motion for

Leave to Intervene as a Party Defendant is DISMISSED

AS MOOT.

App. 26

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF LOUISIANA

Patricia Heaton,

Plaintiff,

v. Case No. 98-1823

Monogram Credit Card Bank

of Georgia, et al., Section J

Magistrate 1

i i

Defendants.

NOTICE OF APPEAL

Notice is hereby given that the Federal Deposit Insur-

ance Corporation (“FDIC”) hereby appeals to the United

States Court of Appeals for the Fifth Circuit from the

District Court’s Order of January 5, 2001 insofar as it

dismisses as moot the FDIC’s Motion for Leave to Inter-

vene as a Party Defendant and grants the Plaintiffs’

Motion to Remand.

Respectfully submitted,

Charles L. Cope

Senior Counsel

/s/ Gregory F. Taylor

Gregory F. Taylor

Counsel

Federal Deposit Insurance

Corporation

550 17th Street, NW

Room H-2112

Washington, DC 20429

PHONE: (202) 736-0582

FAX: (202) 736-0584

App. 27

United States District Court, E.D. Louisiana.

Patricia HEATON, on Behalf of Herself and

All Others Similarly Situated

MONOGRAM CREDIT CARD BANK OF GEORGIA

No. Civ.A. 98-1823.

Feb. 14, 2001.

BARBIER, J.

Before the Court is a motion for stay filed by the

Federal Deposit Insurance Corporation (“FDIC”)

(Rec.Doc. 136). Plaintiffs oppose the motion. The motion,

set. for hearing on February 14, 2001, is before the Court

-on briefs, without oral argument.

The convoluted procedural background of this case is

fully explained in the Court’s January 5, 2001 Order and

Reasons (Rec.Doc. 133). In that order, the Court explained

why it was without subject matter jurisdiction to hear

Plaintiffs’ suit against Monogram Credit Card Bank of

Georgia (“Monogram”). The Court remanded the case to

state court pursuant to 28 U.S.C. § 1447(c). At the same

time, the Court dismissed as moot FDIC’s motion to

intervene in the suit, as well as defendant Monogram’s

motion to add FDIC as a necessary party. FDIC is appeal-

ing those rulings and now asks the Court to stay the

remand order pending the outcome of its appeal.

In support of its motion for a stay, FDIC argues that

this case satisfies the Fifth Circuit’s criteria for a stay

pending appeal because, among other things, FDIC has a

substantial likelihood of success on the merits. As the

Court sees it, however, the crucial threshold question is

App. 28

whether the Court would have jurisdiction to grant

FDIC’s request should it find FDIC’s arguments mer-

itorious. After reviewing the applicable law and the

authorities cited by FDIC, the Court concludes that it

lacks jurisdiction to issue a stay.

Where an appellate court has jurisdiction to review a

remand order, the district court retains jurisdiction to

modify or vacate the order. In re Shell Oil Co., 932 F.2d

1523 (5th Cir.1991) (quoting Browning v. Navarro, 743 F.2d

1069 (5th Cir.1984)). Appellate courts have no jurisdiction

to review an order remanding a case to state court when

the federal district court determines that it lacks subject

matter jurisdiction. 28 U.S.C. § 1447(d); Heaton v. Mono-

gram Credit Card Bank, 231 F.3d 994, 997 (5th Cir.2000).

Accordingly, it is well-settled that federal courts are com-

pletely divested of jurisdiction following a remand to

state court based upon a finding that the court lacks

subject matter jurisdiction. New Orleans Pub. Serv. v.

Majoue, 802 F.2d 166, 167 (5th Cir.1986).

FDIC cites 12 U.S.C. § 1819(b)(2)(c) and a host of

cases for the proposition that FDIC can appeal any order

of remand issued by a district court. And given that FDIC

can appeal any order of remand, it follows that this Court

retains jurisdiction to issue a stay.

1 FDIC did not brief the issue of jurisdiction. Defendant

Monogram, without leave of court, filed a memorandum in

support of FDIC’s motion for a stay. Monogram addressed

jurisdiction in its memorandum. To simplify matters, the Court

will refer to Monogram’s arguments on the jurisdictional issue

as if they had in fact been presented by FDIC.

App. 29

While FDIC’s cited authorities unarguably establish

that FDIC can appeal an otherwise unreviewable remand

order, those authorities do nothing to bolster FDIC’s con-

tention that it can appeal the remand order issued in this

case — a case where FDIC was never a party to the suit.

For the same reason, FDIC’s reliance on section

1819(b)(2)(c) rings hollow. The Court is persuaded that

the remand order in this case is not reviewable at FDIC’s

request.?

Nor is the Court persuaded that the Court’s dismissal

of FDIC’s motion to intervene as moot is appealable.

Afram Carriers, Inc. V. Moeykens, 145 F.3d 298, 300 (5th

Cir.1998), cited by FDIC, recognizes that the denial of an

intervention as of right is an appealable final order under

28 U.S.C. § 1291. In this case, the Court did not deny

FDIC’s motion to intervene but rather dismissed it as

moot after finding that the Court lacked subject matter

jurisdiction. Accordingly, FDIC remains free to seek inter-

vention in the state court, and therefore, suffers no preju-

dice in not having its motion to intervene heard by this

Court.

In sum, the Court concludes that its January 5, 2000

order is non-reviewable on appeal. It follows then that

this Court is completely divested of jurisdiction, and

therefore, without power to issue a stay. Accordingly;

2 The Court notes that the procedural posture of the case at

this time is virtually identical to the procedural posture of the

case when Monogram sought to appeal the last remand order.

Under that virtually identical procedural posture, the Fifth

Circuit held that the remand order was not appealable. Heaton,

231 F.3d at 1000.

App. 30

IT IS ORDERED that FDIC’s motion for a stay should

be and is hereby DENIED.

App. 31

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 01-30104

PATRICIA HEATON

Plaintiff-Appellee

MONOGRAM CREDIT CARD BANK OF GEORGIA

Defendant

FEDERAL DEPOSIT INSURANCE CORPORATION

Movant-Appellant

Appeal from the United States District Court

for the Eastern District of Louisiana, New Orleans

(Filed Mar. 22, 2001)

Before EMILIO M. GARZA, STEWART and PARKER, Cir-

cuit Judges.

BY THE COURT:

IT IS ORDERED that movant-appellant’s motion for

stay pending appeal is DENIED.

App. 32

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 01-30104

PATRICIA HEATON

Plaintiff-Appellee

MONOGRAM CREDIT CARD BANK OF GEORGIA

Defendant

FEDERAL DEPOSIT INSURANCE CORPORATION

Movant-Appellant

Appeal from the United States District Court

for the Eastern District of Louisiana, New Orleans

Before EMILIO M. GARZA, STEWART, and PARKER,

Circuit Judges.

BY THE COURT:

IT IS ORDERED that Appellee’s motion to dismiss

appeal for lack of jurisdiction is carried with the case.

Judge Stewart dissents and would GRANT the motion to

dismiss the FDIC’s appeal for lack of jurisdiction.

/s/ CES

App. 33

CIVIL DISTRICT COURT FOR THE

PARISH OF ORLEANS

STATE OF LOUISIANA

NO. 98-8275 SECTION “16”

DIVISION “D”

PATRICIA HEATON, Individually and on

behalf of herself and all others

similarly situated,

VERSUS

MONOGRAM CREDIT CARD BANK OF GEORGIA

FILED:

DEPUTY CLERK

MOTION FOR LEAVE TO FILE PETITION

IN INTERVENTION

NOW INTO COURT, through undersigned counsel,

comes the Federal Deposit Insurance Corporation

(“FDIC” or “Petitioner in Intervention”), who pursuant to

Articles 1031 and 1033 of the Louisiana Code of Civil

Proced ure, moves this Court for leave to file the attached

Petition in Intervention. For the reasons set forth in the

FDIC’s accompanying Memorandum in Support of its

motion for leave to file Petition in Intervention, Petitioner

in Intervention avers that the intervention is proper and

App. 34

that the filing of this petition will not retard the progress

of the principal action.

Respectfully submitted,

/s/ James A. Brown

James A. Brown, T.A.

(Bar #14101)

K. Todd Wallace (Bar #25920)

LISKOW & LEWIS

701 Poydras Street, Suite 5000

New Orleans, LA 70139-5099

(504) 581-7979

Attorneys for Federal Deposit

Insurance Corporation,

Intervenor

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that copies of the foregoing

have been served upon counsel of record by hand deliv-

ery this 3d day of April, 2001.

/s/ James A. Brown

James A. Brown

App. 35

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

NEW ORLEANS DIVISION

PATRICIA HEATON,

Individually and on

behalf of herself and all

others similarly situated

Plaintiff

VERSUS

MONOGRAM CREDIT

CARD BANK OF

GEORGIA

Defendant

DOCKET NO. 98-1823-J

c/w 99-2603-J

New Orleans, Louisiana

November 10, 1999

9:30 A.M.

+ + + & $F HF He HEH HH Hh HH F

THE FOLLOWING IS A TRANSCRIPT OF

MOTIONS HEARD BEFORE THE HONORABLE

CARL BARBIER, PRESIDING JUDGE ON THE

10th DAY OF NOVEMBER, 1999.

App. 36

APPEARANCES:

FOR THE PLAINTIFF:

FOR THE DEFENDANT

GERTLER, GERTLER,

VINCENT & PLOTKIN

(BY: LOUIS L. PLOTKIN)

127-129 Carondelet St.

New Orleans, LA 70130

McGLINCHEY, STAFFORD

A Professional Limited

Liability Company

(BY: ANTHONY ROLLO)

643 Magazine Street

P. O. Box 60643

New Orleans, LA

70130-3477

BALLARD, SPAHR,

ANDREWS

& INGERSOLL, LLP

(BY: BURT M. RUBLIN)

1735 Market Street

51st Floor

Philadelphia, PA 19103-7599

App. 37

[33] illegal or wrong, but it seems to me the sole reason

for them insuring this minute fraction of their deposits is

to get qualified as a state bank under the statute. I want

you to tell me if I am wrong.

MR. RUBLIN: Your Honor, that’s the most

insurance they can get. They can get a hundred thousand

dollars per deposit. ;

THE COURT: You haven’t answered my ques-

tion. Is there any other reason for them to carry this

insurance?

MR. RUBLIN: It is part of being a state bank.

They want to be a state bank.

THE COURT: That’s the sole reason for it,

really.

MR. RUBLIN: Yes. There is nothing improper

about that.

THE COURT: I never said there was. Why

didn’t you say that when I asked you five minutes ago

instead of beating around the bush with it?

MR. RUBLIN: Well, Your Honor, it is integral to

their function as a state bank, as a Credit card bank, that

they be insured as a depository institution by the FDIC.

That comes with regulation by the FDIC. That comes with

periodic examinations by the FDIC. There are hundreds

of credit card banks, Your Honor, around the country.

Monogram is one of many hundreds of credit card banks.

This

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