Petition for Writ of Certiorari — H & R Block, Inc. v. Anderson
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” 02 312 aue 27 2002
In The
Supreme Court of the Gnited States
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H&R BLOCK, INC.,
Petitioner,
v.
MARIE ANDERSON, ET AL..,
Respondents.
ry
v
On Petition For Writ Of Certiorari
To The United States Court Of Appeals
For The Eleventh Circuit
¢
PETITION FOR WRIT OF CERTIORARI
OF PETITIONER H&R BLOCK, INC.
¢
A. INGE SELDEN III PETER S. FRUIN
STEPHEN C. JACKSON MAYNARD, COOPER &
Counsel of Record GALE, P.C.
CARL S. BURKHALTER 201 Monroe Street
JULIE L. WILSON Suite 1940
MAYNARD, COOPER & Montgomery, Alabama
GALE, P.C. 36104-3720 —
2400 AmSouth/Harbert Plaza
1901 Sixth Avenue North
Birmingham, Alabama
35203-2618 |
(205) 254-1000
Attorneys for Petitioner H&R Block, Inc.
QUESTION PRESENTED FOR REVIEW
Whether the Court of Appeals for the Eleventh Circuit
erred when it failed to hold, in direct conflict with the
Court of Appeals for the Eighth Circuit and in contraven-
tion of Supreme Court authority, that usury claims against
a national bank necessarily arise under Section 30 of the
National Bank Act, 12 U.S.C. §§ 85-86, providing the
district court with removal jurisdiction under the doctrine
of complete preemption?
ii
PARTIES TO THE PROCEEDING BELOW
Defendants-Appellees: Beneficial National Bank, Inc.,
Beneficial Tax Masters, Inc. and H&R Block, Inc.
Plaintiffs-Appellants: Marie Anderson, Alvester
Brafort, Walter Brutley, Patricia Coleman, Talaya Cope,
Audrey Darby, Annie Davis, April DeLoach, Diane Frank-
lin, Lillie Franklin, Willie Lewis, Caledonia Jackson,
Shirley Jernigan, Evelyn Nelson, Willie Lawrence, Mamie
Mitchell, Betty Person, Diane Peterson, Gwen Rogers,
William Screws, Ernestine Starks, Gerald Stokes, Albert
Thomas, Charles Thomas, Kenneth Williams, and Earline
Young.
RULE 29.6 STATEMENT
There is no parent or publicly held company that owns
10% or more of H&R Block, Inc.’s stock.
ili
TABLE OF CONTENTS
Page
QUESTION PRESENTED FOR REVIEW. ................ i
PARTIES TO THE PROCEEDING BELOW ............. ii
RULE 29.6 STATEMENT. ..............cccssccsscccssserssceessees ii
TABLE OF AUTHORITIES ...............seeecssssseeneeeeeeeees Vv
OPINIONS BELOW. .........cccccsosccocsccssccsccesscssscescesccees 1
STATEMENT OF JURISDICTION ................ceeeeeeeees 1
PERTINENT PROVISIONS ..............ccceeceeeeeeeeeneeeens 1
STATEMENT OF THE CASE ..............::ccccsseeeeeeeeneers 1
REASONS FOR GRANTING THE WRIT................. 4
I. THERE IS A CONFLICT IN THE CIRCUITS
CONCERNING WHETHER THE NATIONAL
BANK ACT COMPLETELY PREEMPTS
STATE LAW USURY CLAIMS AGAINST NA-
TIONAL BANKS THAT SHOULD BE RE-
SOLVED BY THIS COURT ...........::cesceeeseeeeeeees 5
A. The Complete Preemption Doctrine......... 5
B. The Court of Appeals’ Decision Directly
Conflicts With Decisions of the United
States Court of Appeals for the Eighth
RI inca Vaceivensconenenavetaunvastsncertineveteaes 9
C. Other Circuits Have Addressed Complete
Preemption by the National Bank Act in
Conflicting Decisions. ...............:cceseeeeeenees 12
D. Resolution of the Conflict is Essential ..... 13
iv
TABLE OF CONTENTS -— Continued
Page
Il. THE ELEVENTH CIRCUITS HOLDING
THAT THE NATIONAL BANK ACT DOES
NOT COMPLETELY PREEMPT STATE LAW
USURY CLAIMS AGAINST NATIONAL
BANKS IS FLATLY INCONSISTENT WITH
NUMEROUS RULINGS OF THIS COURT,
WHICH HAVE HELD THAT USURY CLAIMS
AGAINST NATIONAL BANKS NECESSAR-
ILY ARISE UNDER FEDERAL LAW................. 13
A. This Court’s Precedents Establish That |
All Causes of Action For Usury Against
National Banks Necessarily Arise Under
I TIIIIEP iicccecchachsentnenienasenebehedsiacaauniens 13
B. The Modern Complete Preemption Cases
of this Court Compel the Conclusion that
the National Bank Act Completely Pre-
empts State Law Usury Claims Against
PE SII s dicrcisienancdintetiienimannnntenenns 16
C. The Majority’s Test for Complete Pre-
emption, Which Requires a Showing of
Explicit Congressional Intent to Permit
Removal, is Inappropriate....................... 18
CAGE ccincctnncsessessevonentnesnhseneipiinininmeasensintarene 20
ee eee
Vv
TABLE OF AUTHORITIES
Page
FEDERAL CASES
Anderson v. H&R Block, Inc., 132 F. Supp. 2d 948
CES WI SUPINE chiobsdnndemiccsascbidiacbii 5S tenes S i
Anderson v. H&R Block, Inc., 287 F.3d 1038 (11th
RO SE caiesieciccechinnisclenliceclea iin Catia ater ae a 1, 3, 4, 10, 19
Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557
CSIP cnilbiceittedesvantsbansbianlagubinadpiaaaiadcetiae a: aie med ata 7,9, 19
Barnet v. Nat'l Bank, 98 U.S. 555 (1879).............. 11, 14, 17
Battiste v. H&R Block, Inc., 209 F.3d 719 (5th Cir.
SUID evcinndivsntinlcaschxticcbieabiiaicas amicaciasealat tate Nai ical a all 12
Caterpillar, Inc. v. Williams, 482 U.S. 386 PID cicasechens 5,6
Copeland v. MBNA America, 820 F. Supp. 537 (D.
| ee a ee ERE ee rf FMNe TEU 4 Rots MU ak 12
Davis v. Elmira Savings Bank, 161 U.S. 275 (1896)...15, 18
Evans v. National Bank, 251 U.S. 108 (1919)................... 14
Farmers’ & Mechanics Nat'l Bank v. Dearing, 91
Sh i icsiniscnstesccanaamiane ae 10, 14, 15, 17
First Natl Bank v. Nowlin, 509 F.2d 872 (8th Cir.
| eT MN TM hay Ln Le wee wee 11
Franchise Tax Bd. v. Construction Laborers Vaca-
tion Trust, 463 U.S. 1 (1983) ......ccccecccccccccccecceeceees passim
Franklin Nat'l Bank v. New York, 347 U.S. 373
(1954)......ssersscvesssossvssecensssneessecsesesessnvossessesennseens sisaibesindalons 18
Krispin v. May Dept. Stores Co., 218 F.3d 919 (8th
a CERI ET SNORE He ASC REE REE eh 3, 11
M. Nahas & Co. v. First Nat'l Bank, 930 F.2d 608
a ___ ) RRENERME ae cde cael OUND Cea “lay 3, 5, 10, 11
vi
TABLE OF AUTHORITIES -— Continued
Page
Marquette Nat'l Bank v. First of Omaha Serv.
Corp., 489 U.S. 208 (1978) ........ccrccccrrcesssesees 14, 15, 17, 18
McClelland v. Gronwaldt, 155 F.3d 507 (5th Cir.
SP aesevicnrsadescecenesnevsiiebitevnindinsennaisiiisieiussaadeeaieummidacmeianes 6
McCollum v. Hamilton Nat'l Bank, 303 U.S. 245
(Se siccenitunsinkesssecenntunetimaeigeaaaanaiianaaniniel 11
Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58
[RII F Pi.cssissecineneusoncsesaptonsoeneenennasueeneabiaiennsaaamneniand passim
Rivet v. Regions Bank, 522 U.S. 470 (1981) .........ceeeeees 6
Smiley v. Citibank, 517 U.S. 735 (1996)............. eee 15, 17
Spellman v. Meridian Bank, Nos. 94-3203, 94-3204,
94-3215 to 94-3218, 1995 WL 764548 (3d Cir.
Jan. 12, 1996), vacated and set for reh’g en banc,
1996 U.S. App. LEXIS 2506 (3d Cir. Feb. 16,
TIDE a: <nininsnivecnseciinnindbevesbensechiaibulanienisuiaiaaeiaeapieanmniaamatiiei 12
Tiffany v. National Bank, 85 U.S. 409 (1873) ...........ccceeee 18
Watson v. First Union Nat'l Bank, 837 F. Supp. 146
CERES... TEI dickicsnerirsiccrniaiinicanaiaaaenaaaianas 12
FEDERAL STATUTES y
BS UF at DRGs steniticseininninind pecussoevesonensessenes 1
SOU F Bi ioreiisscsecscennkcccaeeenel =e
98 UBC. 3 BOGE sccciconemncaninbasamneenan 5
Employee Retirement Income Security Act (“ER-
ISA”), 29 U.S.C. § 1132(a).......... a nae. yee SD eS NF OA 7
Labor Management Relations Act (“LMRA”), 29
CABG, B Bibi nenneacccctacsavessusseosesiehanemmenincapsnntiasciacamnaannns 7
National Bank Act, 12 U.S.C. §§ 85-86...................... passim
a A i Ta a tn iil ati aint Ha
oF 2 ERE AUTEN eee, eeelte ees
Vii
TABLE OF AUTHORITIES - Continued
Page
OTHER AUTHORITIES
Arthur R. Miller, Artful Pleading: A Doctrine in
Search of Definition, 76 Tex. L. Rev. 1781 (June
PD Sesancstvicicebeniibbaiiebilisieesitehibgtebibdia adoidteaiiasates. sos 6
lt A LR ROE OL LEA AMAA LLL —~—+ med -
1
OPINIONS BELOW
The opinion of the panel of the United States Court of
Appeals for the Eleventh Circuit is reported at 287 F.3d
1038, and is reproduced in the Appendix at pages 1la-22a.
The opinion of the United States District Court for the
Middle District of Alabama is published at 132 F. Supp. 2d
948, and is also included in the Appendix at pages 23a-
32a.
¢
STATEMENT OF JURISDICTION
The judgment of the panel of the United States Court
of Appeals for the Eleventh Circuit was entered on April 3,
2002. A petition for rehearing en banc was denied on May
29, 2002. (Appendix at page 33a). This Court has jurisdic-
tion under 28 U.S.C. § 1254(1) as this is a petition for writ
of certiorari for review of a judgment of a United States
Court of Appeals.
+
PERTINENT PROVISIONS
The relevant provisions of the National Bank Act, 12
U.S.C. §§ 85-86, are set forth in the Appendix to this
petition at pages 34a-35a.
¢
STATEMENT OF THE CASE
This suit arises from tax refund anticipation loans
(“RALs”) that Beneficial National Bank (“Beneficial”) — at
all times pertinent hereto, a national bank chartered
2
under the National Bank Act — made to customers of
subsidiaries and franchisees of H&R Block, Inc. (“Block”).
A RAL is a loan made to a tax preparation service cus-
tomer by a bank in the amount of his or her anticipated
tax refund, less the fees charged by the lender and the tax
preparation service, which files the customer’s tax return
electronically. A RAL enables a taxpayer to receive the
amount of his or her anticipated tax refund, less applica-
ble charges, within just a few days.
The respondents in this case, each of whom received a
RAL from Beneficial, filed a complaint in Alabama state
court on September 19, 2000 against Beneficial, Beneficial
Tax Masters (“Tax Masters”) and Block, alleging that they
were charged excessive and usurious interest under
Alabama statutory and common law on the RALs that
they received from Beneficial.
On October 24, 2000, Block, Beneficial and Tax
Masters timely removed the action to the United States
District Court for the Middle District of Alabama. Juris-
diction was invoked under 28 U.S.C. § 1331 on the
grounds that the action necessarily arose under the laws
of the United States. The respondents filed a motion to
remand the case back to state court on November 22,
2000. The district court denied the motion to remand on
December 14, 2000, finding that the claims of excessive
and usurious interest against Beneficial, a national bank,
necessarily arose under Section 30 of the National Bank
Act, and were therefore completely preempted by the
National Bank Act. Anderson v. H&R Block, Inc., 132
F. Supp. 2d 948 (M.D. Ala. 2000) (see Appendix at pages
23a-32a). The district court certified the issue for inter-
locutory appeal.
Aaa hr ap chi es Bl ing ie
3
On appeal, a panel of the United States Court of
Appeals for the Eleventh Circuit issued a split opinion
reversing the district court’s decision. Anderson v. H&R
Block, Inc., 287 F.3d 1038 (11th Cir. 2002) (see Appendix at
pages la-22a). After analyzing Supreme Court and Elev-
enth Circuit decisions on complete preemption, the major-
ity concluded that “congressional intent is the pivotal issue
in the complete preemption inquiry.” 287 F.3d at 1043-44
(Appendix at p. 10a). The majority noted that in Metropoli-
tan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987), this Court
applied complete preemption to permit removal after
finding a clear congressional intent to permit removal with
respect to the statute in question in that case. Jd. at 1043
(Appendix at p. 8a). The majority acknowledged that the
National Bank Act “was enacted more than a decade
before Congress gave federal courts general federal ques-
tion jurisdiction, more than two decades before the devel-
opment of the well-pleaded complaint rule, and more than
a century before the articulation of the complete preemp-
tion doctrine.” Id. at 1044 (Appendix at p. 10a-1la). The
majority did not, however, find this fact a sufficient basis
to forego a showing of specific congressional intent in the
National Bank Act to permit removal.
The majority ultimately concluded that, with respect
to the National Bank Act, it could not find evidence of
“clear congressional intent to permit removal” of state law
usury claims against national banks. Jd. at 1047 (Appen-
dix at p. 17a). The majority acknowledged that its conclu-
sion was in conflict with the holdings of the United States
Court of Appeals for the Eighth Circuit in M. Nahas & Co.
v. First Nat'l Bank, 930 F.2d 608, 612 (8th Cir. 1991), and
Krispin v. May Dept. Stores Co., 218 F.3d 919, 922 (8th Cir.
2000), which hold that the National Bank Act completely
preempts state law usury claims against national banks.
4
Id. at 1046 (Appendix at p. 14a). The majority stated that
the Eighth Circuit decisions allowed complete preemption
“based solely on well-settled law that [the National Bank
Act] ... provides the exclusive remedy for usury claims
against a national bank.” Jd. (Appendix at 14a-15a). The
majority held a federal statute will not completely pre-
empt a state law claim unless there is also explicit evi-
dence of congressional intent to permit removal. Jd. at
1047 (Appendix at p. 17a).
Block, Beneficial and Tax Masters filed timely peti-
tions for rehearing en banc with the Eleventh Circuit,
which were denied on May 29, 2002. 2
4
Vv
REASONS FOR GRANTING THE WRIT -
The divided Eleventh Circuit panel found that the
National Bank Act, 12 U.S.C. §§ 85-86, does not completely
preempt state law claims of usury and excessive interest
against national banks, and therefore did not provide a
basis for removing respondents’ state-law usury claims to
federal court. The majority based its decision upon the fact
that it could not find sufficient evidence of “clear congres-
sional intent to permit removal” of state law usury claims
against national banks. 287 F.3d at 1047 (Appendix at p.
17a). The majority acknowledged that its holding is in
direct conflict with the decisions of the United States
Court of Appeals for the Eighth Circuit, which hold that
the National Bank Act does completely preempt state law
claims of usury and/or excessive interest against national
banks, thereby permitting removal of such claims to
federal court. The decision also sharply contradicts re-
peated rulings of this Court, which recognize that claims
of usury against national banks necessarily arise under
federal law. Accordingly, this Court’s review is warranted.
_I. THERE IS A CONFLICT IN THE CIRCUITS
CONCERNING WHETHER THE NATIONAL
BANK ACT COMPLETELY PREEMPTS STATE
LAW USURY CLAIMS AGAINST NATIONAL
BANKS THAT SHOULD BE RESOLVED BY
THIS COURT.
The Eleventh Circuit’s interpretation that the com-
plete preemption doctrine does not provide federal juris-
diction in this case is in direct conflict with the United States
Court of Appeals for the Eighth Circuit, which decided in M.
Nahas & Co. v. First Natl Bank, 930 F.2d 608, 612 (8th Cir.
1991), that the complete preemption doctrine applies to
claims under section 30 of the National Bank Act, 12 U.S.C.
§§ 85-86. Before outlining the full scope of this conflict, a
brief description of the concept of complete preemption is
necessary to place the issues in context.
A. The Complete Preemption Doctrine.
Removal of a case from state to federal court is proper
if the case could have been brought originally in federal
court. 28 U.S.C. § 1441(a). Whether the federal court has
the necessary federal question jurisdiction to hear the case
after removal depends on whether the “action aris[es]
under the Constitution, laws, or treaties of the United
States.” 28 U.S.C. § 1831. Under the well-pleaded com-
plaint rule, a court generally must look to the face of the
complaint to determine whether a claim “arises under”
federal law, Caterpillar, Inc. v. Williams, 482 U.S. 386, 392
(1987), and the availability of federal defenses asserted by
6
the defendant will not support removal jurisdiction.
Franchise Tax Bd. v. Construction Laborers Vacation Trust,
463 U.S. 1, 14 (1983).
However, “a plaintiff may not defeat removal by
omitting to plead necessary federal questions in a com-
plaint.” Id. at 23 (citation omitted). Under Supreme Court
case law, an independent “corollary” to the well-pleaded
complaint rule has developed which provides “that Con-
gress may so completely pre-empt a particular area that
any -civil complaint raising this select group of claims is
necessarily federal in character.” Metropolitan Life Ins. Co.
v. Taylor, 481 U.S. 58, 63-64 (1987). Complete preemption
is jurisdictional in nature rather than simply an affirma-
tive defense. As such, it authorizes removal to federal
court even if the complaint is artfully pleaded to include
only state law claims for relief. Rivet v. Regions Bank, 522
U.S. 470, 475 (1981).
According to the Supreme Court, complete preemp-
tion occurs when “the pre-emptive force of a statute is so
‘extraordinary’ that it ‘converts an ordinary state common-
law complaint into one stating a federal claim for purposes
of the well-pleaded complaint rule.’” See Caterpillar, 482
U.S. at 393 (quoting Metropolitan Life, 481 U.S. at 65).
“Because they are recast as federal claims, state law
claims that are held to be completely preempted give rise
to ‘federal question’ jurisdiction and thus may provide a
basis for removal.” McClelland v. Gronwaldt, 155 F.3d 507,
512 (5th Cir. 1998); see also Arthur R. Miller, Artful
Pleading: A Doctrine in Search of Definition, 76 Tex. L.
Rev. 1781, 1794 (June 1998) (“The stated rationale for this
deviation from what is one of the fundamental corner-
stones of federal subject matter jurisdiction is that, in
these cases, federal law not only preempts a state law to
some degree but also substitutes a federal cause of action
for the state cause of action.”) (internal quotation marks
omitted).
In modern decisions applying this concept, this Court
has found complete preemption under two federal stat-
utes: section 301 of the Labor Management Relations Act
(“LMRA”), 29 U.S.C. § 185, and section 502(a) of the
Employee Retirement Income Security Act (“ERISA”), 29
U.S.C. § 1132(a). Significantly, however, this Court has not
held that the complete preemption doctrine is confined
solely to section 301 of the LMRA and section 502(a) of
ERISA.
The opinion that originated the complete preemption
doctrine was Avco Corp. v. Aero Lodge No. 735, 390 U.S.
557 (1968). In Avco, this Court held that a state court
lawsuit to enjoin a defendant union from striking actually
arose under section 301 of the LMRA, which grants federal
jurisdiction for suits alleging violations of collective
bargaining agreements. 390 U.S. at 560. This Court
therefore concluded that the case was removable to federal
court. Id.
Although this Court in the Avco decision provided
little elaboration for its holding, this Court later character-
ized its holding in Auco as follows:
The necessary ground of decision was that the
preemptive force of § 301 is so powerful as to dis-
place entirely any state cause of action “for viola-
tion of contracts between an employer and a
labor organization.” ... Any such suit is purely a
creature of federal law, notwithstanding the fact
that state law would provide a cause of action in
the absence of § 301. Avco stands for the proposi-
tion that if a federal cause of action completely
8
preempts a state cause of action any complaint
that comes within the scope of the federal cause
of action necessarily “arises under” federal law.
Franchise Tax, 463 U.S. at 23-24.
This Court extended the complete preemption doctrine
in Metropolitan Life, 481 U.S. 58. In that case, this Court
relied on Avco to conclude that state claims falling within
the scope of section 502(a) of ERISA are necessarily
federal in character and therefore removable to federal
court. 481 U.S. at 63-64, 67. While recognizing the “well-
pleaded complaint” rule that a federal law defense to a
state law claim is not sufficient to confer federal question
jurisdiction, this Court stated an exception exists where
federal law completely preempts the state law claim. In
this circumstance, a claim is necessarily federal in charac-
ter, despite artful pleading by a plaintiff to avoid the
invocation of federal law. This Court explained:
Federal preemption is ordinarily a federal de-
fense to the plaintiffs’ suit. As a defense, it does
not appear on the face of a well-pleaded com-
plaint and, therefore, does not authorize removal
to federal court. One corollary of the well-pleaded
complaint rule developed in the case law, how-
ever, is that Congress may so completely preempt
a particular area that any civil complaint raising
this select group of claims is necessarily federal
in character.
Metropolitan Life, 481 U.S. at 63-64 (internal citation
omitted).
In the Metropolitan Life decision, this Court noted
that the “complete preemption” exception had historically
applied to claims preempted by Section 301 of the LMRA,
(oe
9
see 481 U.S. at 64 (citing Avco, 390 U.S. 557), but this
Court made clear the complete preemption doctrine is not
limited to LMRA cases. Upon analysis of the applicable
provisions of ERISA, this Court concluded ERISA completely
preempted the employee’s claim for wrongful termination
and, therefore, Metropolitan Life could remove the case to
federal district court under its federal question jurisdic-
tion. 481 U.S. at 67. This Court’s finding of complete
preemption was based upon, among other things, the fact
that the jurisdictional subsection of the ERISA statute and
the legislative history surrounding enactment of ERISA
“set[ ] out [Congress’s] clear intention to make 502(a)(1)(B)
suits .. . federal questions for the purposes of federal court
jurisdiction in like manner as § 301 of the LMRA.” Id. at
66. This Court noted that “Congress ha[d] clearly mani-
fested an intent to make causes of action within the scope
of the civil enforcement provisions of §502(a) removable to
federal court.” Jd. This Court did not, however, hold that
explicit evidence of congressional intent to permit removal
was a prerequisite to a finding of complete preemption.
Indeed, this Court stated to the contrary: “In the absence
of explicit direction from Congress, this question would be
a close one.” Id. at 64.
To Block’s knowledge, this Court has not revisited the
complete preemption doctrine in the context of any federal
statute outside the LMRA and ERISA.
B. The Court of Appeals’ Decision Directly
Conflicts With Decisions of the United
States Court of Appeals for the Eighth Cir-
cuit.
In the present case, the majority panel of the Eleventh
Circuit Court of Appeals held that the National Bank Act
10
does not completely preempt state law usury claims
against national banks. This holding was based on the
majority's conclusion that there was insufficient evidence
of “clear congressional intent to permit removal” of state
law usury claims against national banks. Anderson, 287
F.3d at 1047 (Appendix at p. 17a). As noted above, this
holding is in direct conflict with the United States Court of
Appeals for the Eighth Circuit.
In M. Nahas & Co. v. First Nat'l Bank, 930 F.2d 608,
612 (8th Cir. 1991), the Eighth Circuit held that the
complete preemption doctrine applies to claims under
section 30 of the National Bank Act, 12 U.S.C. §§ 85-86.
Therefore, under Eighth Circuit precedent, any civil
complaint alleging excessive interest or usury by a na-
tional bank is “necessarily federal in nature and properly
removable.” Nahas at 612 (citation omitted). Moreover, in
the Eighth Circuit’s view, “‘a plaintiff cannot thwart the
removal of a case by inadvertently, mistakenly or fraudu-
lently concealing the federal question that would necessar-
ily have appeared if the complaint had been well
pleaded.’” Id. (quoting 1A Moore’s Federal Practice { 0.160
[3.-3], at p. 234 (1990 ed.)).
In finding that the National Bank Act completely
preempts state law usury claims against national banks,
the Eighth Circuit found significant this Court’s determi-
nation that in enacting the National Bank Act, “Congress
has prescribed in the national banking laws precisely what
remedies are available against a national bank for usury,
in order to promote remedial uniformity and to protect
national banks from destructive usury penalties fre-
quently available under state law.” Id. at 610 (citing
Farmers’ & Mechanics Nat'l Bank v. Dearing, 91 U.S. 29
(1875)). The Eighth Circuit cited a line of this Court’s
11
decisions holding that “‘since Congress has provided a
penalty for usury, that action preempts the field and
leaves no room for varying state penalties.’” Jd. (quoting
First Natl Bank v. Nowlin, 509 F.2d 872, 881 (8th Cir.
1975), and citing McCollum v. Hamilton Nat'l Bank, 303
U.S. 245 (1938) and Barnet v. National Bank, 98 U.S. 555
(1879).
Turning to the issue of removal jurisdiction, the
Eighth Circuit discussed this Court’s holding in Metropoli-
tan Life, which permitted removal of a purported state-law
claim in an area completely preempted by federal law. The
Eighth Circuit stated that under Metropolitan Life, the
complete preemption doctrine is “limited to federal stat- .
utes- that ‘so completely pre-empt a particular area, that
any civil complaint raising this select froup of claims is
necessarily federal.’” Nahas, 930 F.2d at 612 (quoting
Metropolitan Life, 481 U.S. at 65). Turning to this Court’s
decision in Avco, the Eighth Circuit noted that under this
Court’s precedents, “removal is most appropriate where
Congress has created an exclusive federal remedy that
displaces any overlapping or inconsistent state remedies.”
Id. The Eighth Circuit concluded:
That is precisely the situation here. Section 86 is
an exclusive federal remedy, created by Congress
over 100 years ago to prevent the application of
overly-punitive state law usury penalties against
national banks. . . . Thus, whether or not plaintiff
artfully attempted to couch its complaint wholly
in state law terms, it was necessarily federal in
nature and properly removable. i
Id. at 612. The Eighth Circuit recently confirmed its
holding in Nahas. See Krispin v. May Dept. Stores Co., 218
F.3d 919, 922 (8th Cir. 2000). —
12
C. Other Circuits Have Addressed Complete
Preemption by the National Bank Act in
Conflicting Decisions.
In addition to the Eighth Circuit, the Fifth Circuit
Court of Appeals has affirmed, in a per curiam decision,
the determination by a Louisiana district court that the
National Bank Act completely preempted state law exces-
sive interest claims against Block in a RAL case similar to
the case at hand. Battiste v. H&R Block, Inc., 209 F.3d 719
(5th Cir. 2000), aff’g No. 97-CV-749-A (M.D. La. Jan. 13,
1998) (see Appendix at pages 36a-43a). However, a divided
panel of the Court of Appeals for the Third Circuit decided
that the National Bank Act does not confer complete
preemption over state law usury claims against national
banks. See Spellman v. Meridian Bank, Nos. 94-3203, 94-
3204, 94-3215 to 94-3218, 1995 WL 764548 (3d Cir. Jan.
12, 1996), vacated and set for reh’g en banc, 1996 U.S. App.
LEXIS 2506 (3d Cir. Feb. 16, 1996). This decision was
vacated, and the Third Circuit ordered a rehearing en
banc. Before the full court could address the issue, how-
ever, the plaintiffs dismissed the case, leaving the issue
unresolved.
Decisions among the district courts are also divided.
While a number of district courts in other circuits have
adopted the Eighth Circuit’s view that the National Bank
Act completely preempts state law usury claims against
national banks, see Watson v. First Union Nat'l Bank, 837
F. Supp. 146, 149 (D.S.C. 1993) (collecting cases), other
courts have remanded cases removed by national banks,
finding that the National Bank Act does not confer com-
plete preemption. See, e.g., Copeland v. MBNA America,
820 F. Supp. 537, 541 (D. Colo. 1993).
OR OS Ee nt alia tapi, Stat
OV nd Mtl tle an es gin lala C8 SEL, LNA TETAS NE BED Line Reg Chin
aR Sarge
13
D. Resolution of the Conflict is Essential.
The decisions of the Eighth and Fifth Circuits, unlike
the Eleventh Circuit’s panel decision in this case, demon-
strate that Section 30 of the National Bank Act completely
preempts usury claims against national banks that are
purportedly based upon state law, thereby providing a
basis for removal jurisdiction from state court to federal
court. Resolution of this conflict is important. Without
consideration of this case by this Court, the conflicting law
on this issue will subject national banks to different
standards regarding removal depending upon the circuit
in which they are sued. This conflict will not be resolved
absent a decision of this Court.
Il. THE ELEVENTH CIRCUIT’S HOLDING THAT
THE NATIONAL BANK ACT DOES NOT COM-
PLETELY PREEMPT STATE LAW USURY
CLAIMS AGAINST NATIONAL BANKS IS
FLATLY INCONSISTENT WITH NUMEROUS
RULINGS OF THIS COURT, WHICH HAVE
HELD THAT USURY CLAIMS AGAINST
NATIONAL BANKS NECESSARILY ARISE
UNDER FEDERAL LAW.
A. This Court’s Precedents Establish That All
Causes of Action For Usury Against Na-
tional Banks Necessarily Arise Under Fed-
eral Law.
Under this Court’s precedents, it is evident that
Congress, in passing Section 30 of the National Bank Act
(12 U.S.C. §§ 85-86), intended for usury actions against
national banks to arise under federal law. This Court has
long recognized that Section 30 of the National Bank Act,
12 U.S.C. §§ 85-86, exclusively defines federal usury law and
14
supersedes (i.e., preempts) state usury laws, and provides
the exclusive remedy for any violation of such law. First, in
Dearing, decided shortly after the National Bank Act was
enacted, the Supreme Court recognized that the provisions
contained in Section 30 of the National Bank Act “form a
system of regulations ... [whose] parts are in harmony
with each other, and cover the entire subject.” 91 U.S. at 32
(emphasis added). This Court further noted that “[tJhe
power to supplement [section 30] by State legislation is
conferred neither expressly nor by implication.” Jd. at 35.
Three years later, in Barnet v. National Bank, 98 U.S.
555 (1878), this Court reiterated its view that Section 30 of
the National Bank Act provides an exclusive federal claim
and remedy for usury against national banks: “The [state]
statutes .. . upon the subject of usury . . . cannot affect the
case. Where a statute [the National Bank Act] creates a
new right or offence, and provides a specific remedy or
punishment, they alone apply. Such provisions are exclu-
sive.” Id. at 558 (emphasis added). See also Evans v.
National Bank, 251 U.S. 108, 109 (1919) (“[WJhether
transactions by [a national bank] are usurious and the
consequent penalties therefor must be ascertained upon a
consideration of the National Bank <Act.”) (emphasis
added).
Finally, in Marquette Nat’l Bank v. First of Omaha
Serv. Corp., 439 U.S. 299, 308 (1978), this Court held that
Section 85 of the National Bank Act established the
exclusive limitation on the interest rates chargeable by the
bank: “Omaha Bank is a national bank; it is an ‘instru-
mentalit[y] of the federal government, created for a public
purpose, and as such necessarily subject to the paramount
authority of the United States.’ ... The interest rate that
Omaha Bank may charge in its BankAmericard program is
15
thus governed by federal law.” Id. at 308 (emphasis added)
(quoting Davis v. Elmira Savings Bank, 161 U.S. 275, 283
(1896) and citing Dearing, 91 U.S. at 34). This Court noted
that a “[cJlose examination of the National Bank Act of
1864, its legislative history, and its historical context
makes clear that ... Congress intended to facilitate ... ‘a
national banking system.’” Jd. at 314-15. This Court
continued: “To the extent the enumerated federal rates of
interest are greater than permissible state rates, state
usury laws must, of course, give way to the federal statute.”
439 U.S. at 318, n.31 (emphasis added).
In applying Section 85, this Court held that, despite
the Bank’s conduct of a credit card operation and solicita-
tion of customers in Minnesota, it nevertheless was
“located” for purposes of Section 85 im Nebraska, at the
address specified in its charter. 439 U.S. at 309. Therefore,
this Court held, federal law empowered the bank to
“export” rates permitted under Nebraska law to its cus-
tomers in Minnesota, notwithstanding the usury limita-
tions of Minnesota law. This Court reaffirmed the
preemptive effect of Section 85, even while recognizing it
would “impair” the ability of states to establish uniform
maximum interest rates within its borders: “Petitioners’
final argument is that the ‘exportation’ of interest rates,
such as occurred in this case, will significantly impair the
ability of States to enact effective usury laws. This im-
pairment, however, has always been implicit in the struc-
ture of the National Bank Act.... ” 439 U.S. at 318. See
also Smiley v. Citibank, 517 U.S. 735, 744 (1996) (stating,
in dicta, that “there is no doubt that § 85 pre-empts state
law.”).
Thus, for over a century, this Court has consistently
recognized that Section 30 of the National Bank Act, 12
16
U.S.C. §§ 85-86, completely displaces state law usury
claims against national banks. Accordingly, under this
Court’s precedents, usury claims against national banks
necessarily arise under federal law, providing a basis to
remove such claims to federal court. Stated in modern
terms, the holdings of this Court make clear that the
National Bank Act “completely preempts” state law usury
claims against national banks.
B. The Modern Complete Preemption Cases of
this Court Compel the Conclusion that the
National Bank Act Completely Preempts
State Law Usury Claims Against National
Banks.
As discussed above, under the early National Bank
Act decisions that predate the modern label “complete
preemption,” this Court has repeatedly held that usury
claims against national banks necessarily arise under the
National Bank Act. But even if this Court had not previ-
ously resolved this basic question under its early decisions,
a plaintiff’s claim for usury and/or excessive interest against
a national bank would be completely preempted, and thus
removable, under the modern complete preemption cases
of this Court.
Under this Court’s decisions, the complete preemption
doctrine allows removal of a state court action even if the
plaintiff has couched its claims in state law terms where
“the preemptive force” of federal law “is so powerful as to
displace entirely any state cause of action.” Franchise Tax,
463 U.S. at 23. That is the case here: (1) the National
Bank Act preempts state law claims for usury against
national banks, and (2) the “preemptive force” of the Na-
tional Bank Act provides the exclusive remedy for usury
ar
claims against national banks, thereby “displac[ing]
entirely any state cause of action.” Jd.
“[T]here is no doubt that § 85 pre-empts state law.”
Smiley, 517 U.S. at 744. See also Marquette, 439 U.S. at
318, n.31 (“[S]tate usury laws must, of course, give way to
the federal statute.”). Thus, the first requirement for
complete preemption is satisfied in this case. This Covrt’s
second requirement for complete preemption — that the
“preemptive force” of federal law “displace entirely any
state cause of action” — is also met in this case. Section 86
of the National Bank Act provides that if a national bank
charges interest greater than that allowed by the laws of
its home state, the bank is subject to a penalty of forfei-
ture of that part of the interest which has yet to be paid,
as well as twice the amount of the interest which has
already been paid. 12 U.S.C. § 86. For well over a century,
this Court has held that Section 86 provides the “exclu-
sive” remedy in favor of borrowers for excessive loan ~
charges collected by a national bank. See, e.g., Dearing, 91
U.S. at 32 (recognizing that the provisions contained in
Section 30 of the National Bank Act “form a system of
regulations ... [whose] parts are in harmony with each
other, and cover the entire subject.”); Barnet, 98 U.S. at
558 (holding that “[t]he [state] statutes ... upon the
subject of usury . . . cannot affect the case. Where a statute
[the National Bank Act] creates a new right or offence, and
provides a specific remedy or punishment, they alone
apply. Such provisions are exclusive.”).
This Court’s decisions regarding the National Bank
Act set forth its understanding of Congress’s intent in
passing the National Bank Act. As this Court has held,
through the National Bank Act, “Congress intended to
facilitate ... a ‘national banking system.’” Marquette, 439
ae
18
U.S. at 314-315. Indeed, national banks are federal in-
strumentalities serving federal policy objectives and,
accordingly, are afforded special powers under the Na-
tional Bank Act. Id. at 308 (“Omaha Bank is a national
bank; it is an ‘instrumentalit[y] of the federal government,
created for a public purpose....’”) (quoting Davis, 161
U.S. at 283); Franklin Nat'l Bank v. New York, 347 U.S.
373, 375 (1954) (“The United States has set up a system of
national banks as federal instrumentalities to perform
various functions”). As this Court has noted, for over a
century, in matters of interest and usury, “‘National banks
... have been National favorites.’” Marquette, 434 U.S. at
314, quoting Tiffany v. National Bank, 85 U.S. 409, 413
(1873). -
Because the National Bank Act not only preempts
state law usury claims, but also provides the exclusive
remedy for claims of usury against national banks, the
statute’s “preemptive force” is powerful enough to “dis-
place entirely any state cause of action” for usury. Fran-
chise Tax, 463 U.S. at 23. Thus, under this Court’s
precedents, the National Bank Act completely preempts
state law usury claims against national banks, thereby
providing a basis for removal jurisdiction in this case.
C. The Majority’s Test for Complete Preemp-
tion, Which Requires a Showing of Ex-
plicit Congressional Intent to Permit
Removal, is Inappropriate.
In the present case, the majority panel for the Elev-
enth Circuit based its conclusion that the National Bank
Act does not completely preempt respondents’ state law
usury claims on an absence of legislative history confirm-
ing that the drafters of the National Bank Act intended for
19
cases alleging usurious interest to be removable to federal
court. 287 F.3d at 1047 (Appendix at p. 17a). However, as
discussed above, in neither Avco nor in this Court’s later
characterization of that decision in Franchise Tax did this
Court discuss Congress’s intent in passing the LMRA or
state that complete preemption is dependent upon explicit
evidence of congressional intent to permit removal. In-
stead, the Court found that complete preemption sup-
ported removal jurisdiction in Auvco because, in the Court’s
view, “the preemptive force of § 301 is so powerful as to
displace entirely any state cause of action” that comes
within the purview of the federal statute. Franchise Tax,
463 U.S. at 23. Similarly, in Metropolitan Life, while this
Court noted that absent an “explicit direction from Con-
gress, this question would be a close one,” 481 U.S. at 64,
this Court did not state that a specific congressional intent
to permit removal was a prerequisite to a finding of
complete preemption. It simply found that in that case,
there was such an explicit direction from Congress, includ-
ing an express statement by Congress in the legislative
history that the statute involved should be treated the
same as the statute at issue in the Auco case. Metropolitan
Life, 481 U.S. at 66.
The majority's requirement of an explicit showing of |
Congressional intent to authorize removal in the legisla-
tive history of the statute is not only not required by this
Court’s precedents, but it is also futile with a statute such
as the National Bank Act, given that the ‘statute was
written by Congress in 1864, long before the general
removal statute, the well-pleaded complaint rule or the
complete preemption doctrine were enunciated. We could
therefore not expect the Congress that enacted the National
Bank Act to have discussed federal question jurisdiction or
)
20
the removal implications of §§ 85 and 86, since neither
general federal question jurisdiction nor general removal
power existed in 1864. Under these circumstances, the
majority of the Eleventh Circuit’s requirement of an
explicit showing of congressional intent to permit removal
is inappropriate.
y
v
CONCLUSION
For the foregoing reasons, this Court should grant
Block’s petition for writ of certiorari.
PETER S. FRUIN
MAYNARD, COOPER & GALE,
PC.
201 Monroe Street
Suite 1940
Montgomery, Alabama
36104-3720
Respectfully submitted,
A. INGE SELDEN III
STEPHEN C. JACKSON
Counsel of Record
CARL S. BURKHALTER
JULIE L. WILSON
MAYNARD, COOPER & GALE,
PC.
2400 AmSouth/Harbert
Plaza
1901 Sixth Avenue North
_Birmingham, Alabama
35203-2618
Attorneys for Petitioner H&R Block, Inc.
la
287 F.3d 1038
United States Court of Appeals,
Eleventh Circuit.
Marie ANDERSON, Alvester Brafort, et al.,
Plaintiffs-Appellants,
V.
H&R BLOCK, INC., Beneficial National Bank, et al.,
Defendants-Appellees.
No. 01-11863.
April 3, 2002.
K. Stephen Jackson, Jeff S. Daniel, Jackson, Fraley &
Shuttlesworth, P.C., Birmingham, AL, for Plaintiffs-
Appellants. ,
Peter Sean Fruin, Maynard, Cooper & Gale, PC.,
Montgomery, AL, Stewart M. Cox, Bradley, Arant, Rose &
White, A. Inge Selden, III, Stephen Clark Jackson, May-
nard, Cooper & Gale, P.C., Birmingham, AL, Burt M.
Rublin, Ballard, Spahr, Andrews & Ingersoll, LLP, Phila-
delphia, PA, for Defendants-Appellees.
Appeal from the United States District Court for the
Middle District of Alabama.
Before TJOFLAT, BARKETT and WILSON, Circuit
Judges.
WILSON, Circuit Judge:
The issue we decide on this appeal is whether the
plaintiffs’ state-law usury claims are completely pre-
empted by the National Bank Act (NBA), 12 U.S.C. §§ 85
and 86, and therefore properly removable to federal court.
Although the plaintiffs alleged only state-law claims in
2a
their complaint, the district court determined that it had
jurisdiction based on the doctrine of complete preemption.
We disagree and reverse.
BACKGROUND
The plaintiffs, who as customers of H&R Block, Inc.
_ had taken out tax refund anticipation loans’ from Benefi-
‘cial National Bank, brought suit in state court against -
H&R Block, Beneficial National Bank, -and Beneficial Tax
Masters, Inc., alleging usury violations’ along with other
state-law claims. The defendants removed the case to
federal court on the basis of federal question jurisdiction.
The defendants argued that since the NBA provides the
exclusive remedy for claims alleging excessive interest
against national banks, the plaintiffs’ state-law usury
claims should be recharacterized as federal claims under
the doctrine of complete preemption. The plaintiffs moved
to remand the case back to state court, arguing that while
§§ 85 and 86 of the NBA may provide a defense to state-
law usury claims, these provisions do not accomplish
complete preemption. The district court denied the motion
to remand, holding that removal was proper because
' In a tax refund anticipation loan, a customer receives the amount
of her anticipated tax refund, less fees charged by the lender and the
tax preparation service, and in return authorizes the government to
deposit the tax refund directly into an account at the bank to repay the
loan.
* The plaintiffs alleged that the defendants charged excessive
interest in violation of Alabama Code § 8-8-1 and the common-law
usury doctrine. In addition to the usury claims, the complaint included
claims for intentional misrepresentation, suppression of material facts,
and breach of fiduciary duty.
3a
federal question jurisdiction existed based on complete
preemption. Recognizing that the issue was unsettled in
this Circuit, the district court certified for interlocutory
appeal the question of whether §§ 85 and 86 of the NBA
completely preempt state-law usury claims so as to confer
removal jurisdiction. We hold that these sections do not
accomplish complete preemption.
DISCUSSION
The question of whether §§ 85° and 86° of the NBA
completely preempt state-law usury claims against a
national bank has been the subject of disagreement among
other circuits and among district courts within this Cir-
cuit.’ What is at stake in this ihquiry is whether §§ 85 and
* Section 85 provides, “Any [national bank] may take, receive,
reserve, and charge on any loan or discount made ... interest at the
rate allowed by the laws of the State . .. where the bank is located... .”
12 U.S.C. § 85.
* Section 86 provides,
The taking, receiving, reserving, or charging a rate of inter-
est greater than is allowed by section 85 of this title, when
knowingly done, shall be deemed a forfeiture of the entire
interest which the note, bill, or other evidence of debt car-
ries with it, or which has been agreed to be paid thereon. In
case the greater rate of interest has been paid, the person
by whom it has been paid, or his legal representatives, may
recover back, in an action in the nature of an action of debt,
twice the amount of the interest thus paid from the associa-
tion taking or receiving the same: Provided, That such ac-
tion is commenced within two years from the time the
usurious transaction occurred.
12 U.S.C. § 86.
* While the Eighth Circuit has held that § 86 completely preempts
state-law usury claims, M. Nahas & Co. v. First Nat'l Bank of Hot
(Continued on following page)
4a
86 not only provide a defense to state-law usury claims
under ordinary preemption, but also confer on defendants
the ability to remove the case from state to federal court
under the complete preemption doctrine. For the reasons
that follow, we hold that §§ 85 and 86 do not accomplish
complete preemption. We begin by describing the complete
preemption doctrine and analyzing how the doctrine has
been applied by the Supreme Court and this Court. Our
analysis reveals that the complete preemption inquiry
turns on congressional intent — whether Congress not only
intended for a federal statute to provide a defense to state-
law claims, but also intended to confer on defendants the
ability to remove a case to a federal forum. We conclude
that §§ 85 and 86 of the NBA do not accomplish the ex-
traordinary result of complete preemption, because clear
congressional intent to permit removal under these sec-
tions is lacking.
Springs, 930 F.2d 608, 612 (8th Cir.1991), the Third Circuit disagreed
in Spellman v. Meridian Bank, 3d Cir.1996, 1995 WL 764548 (Nos. 94-
3203, 94-3204, 94-3215 to 94-3218, Jan. 12, 1996), Rehearing in Banc
Granted, Opinion Vacated (Feb.:16, 1996). After the Third Circuit
vacated the panel decision and ordered a rehearing en banc, the parties
settled and the complete preemption issue was left undecided. 14B
Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal
Practice and Procedure § 3722.1, at 557 (3d ed.1998).
Within this Circuit, district courts also have reached different
results. Compare Monday v. Coast to Coast Wireless Cable, M.D.
Ala.1997, 1997 WL 114874 (Nos. CV-96-A-1321-N, CV-96-A-1539-N, CV-
96-A-1720-N, CV-96-A-1722-N, CV-96-A-1723-N, CV-96-A-1725-N, Feb.
19, 1997) (holding §§ 85 and 86 completely preempt state-law claims
within their scope), with Jones v. Bankboston, N.A., 115 F.Supp.2d
1350, 1356-58, 1360 (S.D.Ala.2000) (reaching the opposite conclusion).
5a
I
Whether a district court may exercise jurisdiction over
this case based on complete preemption is a question of
law that we review de novo. BLAB T:V. of Mobile, Inc. v.
Comcast Cable Communications, Inc., 182 F.3d 851, 854
(11th Cir.1999). As courts of limited jurisdiction, lower
federal courts may decide a case only when Article III of
the Constitution provides that the federal judicial power
extends to the case and when Congress has granted
jurisdiction. Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d
405, 409 (11th Cir.1999). When a federal court acts outside
its jurisdiction, it violates principles of separation of
powers and federalism, interfering with Congress’s author-
ity to demarcate the jurisdiction of lower federal courts,
and with the states’ authority to resolve disputes in their
own courts. Id. at 409-10. For this reason, when there are
doubts as to whether removal jurisdiction is proper, we
favor remand of removed cases. Id. at 411.
The removal statute, 28 U.S.C. § 1441(a), provides
that any civil action brought in state court may be re-
moved to federal court by the defendant as long as the
federal court has jurisdiction in the case. Removal based
on federal question jurisdiction, the grounds for removal
the district court found here, generally is governed by the
“well-pleaded complaint” rule, which provides that a case
may be removed only if the plaintiff’s properly pleaded
complaint reveals that the claim is based on federal law.
Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation
Trust for S. Cal., 463 U.S. 1, 9-10, 103 S.Ct. 2841, 77
L.Ed.2d 420 (1983). Under the well-pleaded complaint
rule, a case in which the plaintiff asserts only state-law
claims may not be removed to federal court based on the
6a
existence of a federal defense — even the defense of ordi-
nary preemption. Caterpillar Inc. v. Williams, 482 U.S.
386, 393, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). “Congress
has long since decided that federal defenses do not provide
a basis for removal.” Jd. at 399, 107 S.Ct. 2425.
An exception to the well-pleaded complaint rule is the
“complete preemption” doctrine. BLAB T:V., 182 F.3d at
854. Under this doctrine, a defendant may remove a case
to federal court even though the plaintiff raises only state-
law claims in her complaint, when “the pre-emptive force
of a [federal] statute is so extraordinary that it converts an
ordinary state common-law complaint into one stating a
federal claim for purposes of the well-pleaded complaint
rule.”® Caterpillar Inc., 482 U.S. at 393, 107 S.Ct. 2425
(internal quotation marks omitted).
The Supreme Court has found complete preemption
under two federal statutes — section 301 of the Labor
Management Relations Act (LMRA), 29 U.S.C. § 185, and
section 502(a) of the Employee Retirement Income Secu-
rity Act (ERISA), 29 U.S.C. § 1132(a). BLAB T:V., 182 F.3d
at 855. The complete preemption doctrine was born with
little elaboration or explanation in Avco Corp. v. Aero
* We have recognized that the doctrine of complete preemption
often is confused with the defense of ordinary federal preemption.
BLAB T:V., 182 F.3d at 854-55. Ordinary preemption is a defense that
may be raised in state court as well as in federal court. Jd. at 855. As a
defense, ordinary preemption does not appear in the plaintiff’s well-
pleaded complaint, and thus does not give the defendant the ability to
remove a case to federal court. Caterpillar Inc., 482 U.S. at 393, 107
S.Ct. 2425. Unlike the defense of ordinary preemption, the doctrine of
complete preemption gives a defendant the ability to remove the case to
federal court. BLAB T:V., 182 F.3d at 854.
7a
Lodge Number 735, International Association of Machin-
ists and Aerospace Workers, 390 U.S. 557, 560-62, 88 S.Ct.
1235, 20 L.Ed.2d 126 (1968), where the Supreme Court
treated the plaintiff’s state-law claim based on a collective
bargaining agreement as a federal claim arising under
section 301 of the LMRA, and held that the case was
properly removed to federal court. The Supreme Court had
not yet begun to use the term “complete preemption” to
describe this result, and Avco provides little guidance on
the scope of the complete preemption doctrine.’
The Supreme Court provided more guidance on the
contours of the complete preemption doctrine when it
cautiously extended the doctrine to section 502(a) of
” Karen A. Jordan, in The Complete Preemption Dilemma: A Legal
Process Perspective, 31 Wake Forest L.Rev. 927, 951 (1996), remarked
that the Supreme Court in Avco “provided limited insight into the
justification for its holding,” since the Court “did not mention the well-
pleaded complaint rule, nor did it explain why this case fell outside that
rule.” The Court explained the Auco decision in Franchise Tax Board,
stating, “The necessary ground of decision was that the preemptive
force of § 301 is so powerful as to displace entirely any state cause of
action for violation of contracts between an employer and a labor
organization. Any such suit is purely a creature of federal law . . . .” 463
U.S. at 23, 103 S.Ct. 2841 (footnote omitted) (internal quotation marks
omitted).
Some courts describe as another example of complete preemption
the Supreme Court’s decision in Oneida Indian Nation of New York
State v. Oneida County, 414 U.S. 661, 667, 94 S.Ct. 772, 39 L.Ed.2d 73
(1974) (agreeing with the Oneida Indian Nation that federal question
jurisdiction existed over its right-to-possession claim because the
possessory rights of Indian tribes necessarily arise under federal law
and treaties). BLAB T'V., 182 F.3d at 855 n. 2. Gneida Indian Nation,
like Avco, does not use the term “complete preemption” and provides
little guidance on when a court should or should not apply the complete
preemption doctrine.
8a
ERISA in Metropolitan Life Insurance Co. v. Taylor, 481
U.S. 58, 64-67, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). The
Court said that without clear indications that Congress
intended to permit removal of state claims that fell within
the scope of ERISA’s civil enforcement provision in section
502(a), the Court would have been “reluctant” to expand
the “extraordinary pre-emptive power” recognized by the
Avco decision under section 301 of the LMRA. Id. at 65,
107 S.Ct. 1542. After examining section 502(a), however,
the Court did find clear indications of congressional intent
to permit removal — explicit statements in the legislative
history that Congress meant for this provision to be
construed in the same fashion as section 301 of the LMRA,
and close parallels between the jurisdictional subsection of
ERISA’s civil enforcement provision and section 301 of the
LMRA. Id. at 65-66, 107 S.Ct. 1542. Because Congress
“clearly manifested an intent to make [these] causes of
action ... removable to federal court,” the Supreme Court
felt bound to “honor that intent” and find complete pre-
emption. Jd. at 66, 107 S.Ct. 1542.
Outside the contexts of the LMRA and ERISA, this
Court has addressed the question of complete preemption
only twice, in Smith v. GTE Corp., 236 F.3d 1292, 1310-13
(11th Cir.2001) (holding that the Federal Communications
Act did not accomplish complete preemption), and BLAB
T.V., 182 F.3d at 857-59 (holding that the Cable Communi-
cations Policy Act did not accomplish complete preemp-
tion). In those cases, we recognized that the complete
preemption doctrine should be carefully limited in scope.
We noted that “although the Supreme Court recognizes
the existence of the complete preemption doctrine, the
Court does so hesitatingly and displays no enthusiasm to
extend the doctrine into areas of law beyond the LMRA
9a
and ERISA.” Jd. at 856. We recognized that the Supreme
Court only “reluctant[ly]” extended the complete preemp-
tion in Taylor, based on “virtually identical” jurisdictional
provisions in the LMRA and ERISA and explicit state-
ments in the legislative history of ERISA that the two
statutes should be construed in a like manner. Jd. at 855
(alteration in original) (internal quotation marks omitted).
Finding no similar clear manifestation of congressional
intent to permit removal in BLAB TV. or Smith, we held
that the complete preemption doctrine did not create
federal jurisdiction in those cases. Smith, 236 F.3d at
1313; BLAB T:V., 182 F.3d at 858.
In determining whether Congress intends for a federal
statute to completely preempt state-law claims, courts
consider a variety of factors such as “whether the state
claim is displaced by federal law under an ordinary pre-
emption analysis, whether the federal statute provides a
cause of action, what kind of jurisdictional language exists
in the federal statute, and what kind of language is
present in the legislative history to evince Congress’s
intentions.” BLAB T:V., 182 F.3d at 857. While we have
declined to adopt a specific test for this Circuit, we recog-
nize that all of these tests have the same ultimate goal:
“to determine whether Congress not only in-
tended a given federal statute to provide a fed-
eral defense to a state cause of action that could
be asserted either in a state or federal court, but
also intended to grant a defendant the ability to
remove the adjudication of the cause of action to
a federal court by transforming the state cause of
action into a federal [one].”
Id. (emphasis added) (alteration in original) (quoting
Arthur R. Miller, Artful Pleading: A Doctrine in Search of
)
10a
Definition, 76 Tex. L.Rev. 1781, 1797-98 (1998)). In sum,
both the Supreme Court and this Court have recognized
that the “touchstone” of the complete preemption inquiry
is congressional intent. Taylor, 481 U.S. at 66, 107 S.Ct.
1542; BLAB T:V., 182 F.3d at 857.
II
Since congressional intent is the pivotal issue in the
complete preemption inquiry, that is where we must focus
our analysis of whether §§ 85 and 86 of the NBA com-
pletely preempt state-law usury claims against a national
bank. In enacting the NBA, did Congress merely intend
for federal law to act as a defense to state-law usury
claims against a national bank under ordinary preemption
— a defense that just as well could be asserted in state
court and applied by state judges? Or did Congress intend
that national banks facing usury claims in state court
should have the ability to remove the case to a federal
forum?
The defendants argue that it would be impossible for a
court to find in the NBA the striking indications of con-
gressional intent to permit removal through complete
preemption that the Supreme Court relied on in Taylor,
because the NBA was enacted more than a decade before
Congress gave federal courts general federal question
jurisdiction, more than two decades before the develop-
ment of the well-pleaded complaint rule, and more than a
century before the articulation of the complete preemption
lla
doctrine.® Nonetheless, the defendants argue that applying
the complete preemption doctrine here would be consistent
with Congress’s purposes because the historical context of
the NBA indicates that Congress was suspicious of state
interference with national banks.
The NBA was enacted in 1864’ in the midst of eco-
nomic strife during the Civil War. The defendants cite to
many statements in the congressional debates surround-
ing the enactment of the NBA that show Congress's intent
to protect the new national banks from unfriendly state
legislation. For example, Representative Samuel Hooper of
Massachusetts argued that the NBA was necessary so “the
currency of the country may be within the control and
regulation of a national law applicable to the whole coun-
try, instead of being controlled and regulated by State law
as it has been heretofore,” and stated, “I appeal to the
* The Judiciary Act of 1875 gave lower federal courts general
federal question jurisdiction and general removal jurisdiction in civil
cases arising under the Constitution or federal law. Donald H. Zeigler,
Twins Separated at Birth: A Comparative History of the Civil and
Criminal Arising Under Jurisdiction of the Federal Courts and Some
Proposals for Change, 19 Vt. L.Rev. 673, 735-37 (1995). Between 1875
and 1887, when the Act was amended, “the well-pleaded complaint rule
was not applied in full force to cases removed from state court; the
defendant’s petition for removal could furnish the necessary guarantee
that the case necessarily presented a substantial question of federal
law.” Franchise Tax Bd., 463 U.S. at 10 n. 9, 103 S.Ct. 2841. However,
since 1887, “[flor better or for worse ... a defendant may not remove a
case to federal court unless the plaintiff’s complaint establishes that
the case ‘arises under’ federal law.” Jd. at 10, 103 S.Ct. 2841.
* Act of June 3, 1864, 13 Stat. 99 (repealing and superseding the
similar Act of Feb. 25, 1863). The Act originally was titled “An Act to
provide a national currency, secured by a pledge of United States bonds,
and to provide for the circulation and redemption thereof,” but its title
was changed in 1874 to “The National Bank Act.” 12 U.S.C. § 38.
A a a . — Se Ce a a -_ —o ~ a —
12a
members of the House, and I ask them if they can excuse
themselves to their constituents and to posterity if they
sacrifice the great interests that are now at stake to the
comparatively petty interest of local banking.” Cong.
Globe, 38th Cong., 1st Sess. 1451 (1864). Based on state-
ments like this from the congressional debates, the defen-
dants ask us to adopt the reasoning of Judge Anthony J.
Scirica in his dissent in Spellman v. Meridian Bank, 3d
Cir.1996, 1995 WL 764548 (Nos. 94-3203, 94-3204, 94-
3215 to 94-3218, Jan. 12, 1996) (Scirica, J., dissenting),
Rehearing in Banc Granted, Opinion Vacated (Feb. 16,
1996): that Congress clearly intended that the NBA alter
federal state relations and protect national banks from
state interference, and therefore the NBA completely
preempts state law because “‘Congress intended to have
usury claims against national banks governed by a body of
federal law which the federal courts would apply.’” 14B
Charles Alan Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice and Procedure § 3722.1, at 557
(3d ed.1998) (quoting Spellman, 1995 WL 764548, at *24
(Scirica, J., dissenting)).
While the congressional debates amply demonstrate
Congress’s desire to protect national banks from state
legislation, they do not demonstrate that Congress desired
to protect national banks from facing suit in state court.
Jones v. Bankboston, N.A., 115 F.Supp.2d 1350, 1360
(S.D.Ala.2000) (acknowledging that the NBA was meant to
protect against “unfriendly legislation by the States,” but
stating that “the evidence does not demonstrate ... that
Congress was so distrustful of the states’ judicial sys-
tems”). Even before 1875, when Congress gave lower
federal courts original federal question jurisdiction and
general removal jurisdiction, Congress had provided in a
13a
handful of specific acts that federal law would both pro-
vide a defense and allow for removal from state to federal
court.” When Congress enacted the NBA in 1864, it
provided that suit could be brought in federal or state
court, and it did not provide for removal.” Four years later,
in the Act of July 27, 1868, Congress allowed for corpora-
tions organized under federal law to remove a case from
state to federal court by filing a petition that they had a
defense arising under federal law — but by amendment,
Congress excepted national banks from this removal
power. 15 Stat. 226-27 (“And be it further enacted, That
any corporation, or any member thereof, orther [other]
than a banking corporation, organized under a law of the
For instance, in the Act of March 3, 1863, 12 Stat. 755 (amended
by the Act of May 11, 1866, 14 Stat. 46), Congress provided for a federal
defense and provided the right of removal of civil or criminal actions
arising out of acts committed under federal authority during the Civil
War. See Mayor & Aldermen of City of Nashville v. Cooper, 73 U.S. (6
Wall.) 247, 251, 18 L.Ed. 851 (1867); Michael G. Collins, The Unhappy
History of Federal Question Removal, 71 Iowa L.Rev. 717, 720-21
(1986). The pre-1875 removal statutes are collected in Felix Frank-
furter & James M. Landis, The Business of the Supreme Court: A Study
in the Federal Judicial System 61-62 n. 22 (1927), and discussed in
Stanley I. Kutler, Judicial Power and Reconstruction Politics 143-60,
168 (1968).
" Although the 1863 Act provided for suit in federal court and did
not mention state court, see Mercantile Natl Bank at Dallas v. Lang-
deau, 371 U.S. 555, 558-59, 83 S.Ct. 520, 9 L.Ed.2d 523 (1963), when
Congress replaced the 1863 Act in 1864, section 57 of the Act provided
for suit in either federal or state court: “ {S]uits, actions and proceed-
ings, against any association under this act, may be had in any circuit,
district, or territorial court of the United States held within the district
in which such association may be established; or in any state, county, or
municipal court in the county or city in which said association is
located, having jurisdiction in similar cases....’” Jd. at 568, 83 S.Ct.
520 (quoting 13 Stat. 116-17).
l4a
United States, and against which a suit at law or in equity
has been or may be commenced in any court other than a
circuit or district court of the United States, for any
liability or alleged liability of such corporation, or any
member thereof as such member, may have such suit
removed from the court in which it may be pending, to the
proper circuit or district court of the United States, upon”
filing a petition therefor, verified by oath, either before or
after issue joined, stating they have a defence arising
under or by virtue of the Constitution of the United States,
or any treaty or law of the United States... .” (alteration
in original)). See also Cong. Globe, 40th Cong., 2d Sess.
4197-98 (1868); 7 Charles Fairman, History of the Supreme
Court of the United States: Reconstruction and Reunion,
1864-88, Part Two, 394-97 (1987). This legislative history
compels us to reject the defendants’ suggestion that the
early history of national banks offers clear congressional
intent to make claims under the NBA removable.
Since both the Supreme Court and this Court have
recognized that congressional intent is the “touchstone” in
the complete preemption inquiry, we also must reject the
line of cases which have found complete preemption
without inquiring into Congress’s intent. The only circuit
court opinions that are consistent with this suggestion are
M. Nahas & Co. v. First National Bank of Hot Springs,
930 F.2d 608, 612 (8th Cir.1991), and Krispin v. May
Department Stores Co., 218 F.3d 919, 922 (8th Cir.2000),
which follows the M. Nahas & Co. reasoning. Without
examining congressional intent, the Eighth Circuit found
complete preemption in M. Nahas & Co. based solely on
15a
well-settled law that § 86 provides the exclusive remedy
for usury claims against a national bank.” 930 F.2d at 612.
However, in Jones, Chief District Judge Charles R. Butler,
Jr. criticized the Eighth Circuit’s lenient complete preemp-
tion standard as inconsistent with Supreme Court and
Eleventh Circuit precedent and held that the NBA did not
completely preempt state-law usury claims so as to allow
for removal. 115 FSupp.2d at 1361. We consider Jones to
be a sound application of the principles reflected in the
complete preemption cases decided by the Supreme Court
and this Court, and we take a similar approach here.
In Jones, the court concluded that the sole justifica-
tion the M. Nahas & Co. holding — that § 86 provides the
exclusive remedy for usury claims against a national bank
— was not by itself sufficient to establish complete preemp-
tion. Id. at 1355-56. The court in Jones arrived at this
conclusion by examining the Supreme Court’s analysis in
Taylor, where before beginning its complete preemption
inquiry, the Supreme Court acknowledged that ERISA
Federal law governs the amount of interest a national bank may
charge, Marquette Natl Bank of Minneapolis v. First of Omaha Serv.
Corp., 439 U.S. 299, 308, 99 S.Ct. 540, 58 L.Ed.2d 534 (1978), and
provides the exclusive remedy for usury claims against a national bank,
McCollum v. Hamilton Nat'l Bank of Chattanooga, 303 U.S. 245, 247,
58 S.Ct. 568, 82 L.Ed. 819 (1938); Evans v. Natl Bank of Savannah, 251
U.S. 108, 109, 40 S.Ct. 58, 64 L.Ed. 171 (1919); Farmers’ & Mechanics’
Natl Bank v. Dearing, 91 U.S. 29, 32, 23 L.Ed. 196 (1875). But this
does not provide an answer to the complete preemption inquiry -
“C]omplete preemption principally determines not whether state or
federal law governs a particular claim, but rather whether that claim
will, irrespective of how it is characterized by the complainant, [serve
as the basis for federal question jurisdiction].’” BLAB T.V., 182 F.3d at
855 (alteration in original) (quoting McClelland v. Gronwaldt, 155 F.3d
507, 517 (5th Cir.1998)).
16a
preempted the plaintiff’s state-law claims and provided an
alternative federal remedy. Jd. at 1356 (citing Taylor, 481
U.S. at 64, 107 S.Ct. 1542). “Were the existence of an
‘exclusive federal remedy’ the only requirement for com-
plete preemption, the ... Court would have concluded its
analysis at this point and declared the plaintiff’s claims
completely preempted.” Jd. However, the Taylor Court
went on to say that it would be “reluctant” to find complete
preemption on this basis alone. 481 U.S. at 65, 107 S.Ct.
1542. The Taylor Court then conducted a searching in-
quiry into congressional intent, focusing on the parallels to
the LMRA and explicit statements in the legislative
history that ERISA should be construed like the LMRA to
find Congress had “clearly manifested an intent to make
causes of action within the scope of the civil enforcement
provisions of § 502(a) removable to federal court.” Id. at
66, 107 S.Ct. 1542. The Jones court concluded — and we
agree — that the analysis in Taylor indicates that where
there are no further indications of congressional intent to
permit removal, the existence of an exclusive federal
remedy generally will not be enough to achieve complete
preemption. 115 FSupp.2d at 1356.
The Jones court also noted that this Court uses a
more demanding standard for complete preemption than
the Eighth Circuit used in M. Nahas & Co. Id. at 1355-56.
“(T]he only justification offered by the Nahas Court for its
ruling was that the National Bank Act accomplishes
‘ordinary preemption of state law claims for excessive
interest and provides an 2. .ernative federal cause of action
for the preempted state claim.” Jd. at 1355. We previously
have recognized that the mere provision of a federal cause
of action cannot be dispositive in the complete preemption
inquiry:
17a
If the creation of a federal cause of action served
as the sole litmus test for congressional intent,
complete preemption would apply to every fed-
eral statute that creates such a cause of action
and complete preemption would be common
rather than extraordinary .... Congress may
create a federal cause of action without also pro-
viding sufficient evidence of its intent that state
causes of action are to be considered as arising
under the federal statute and thus removable to
federal court.
BLAB T’V., 182 F.3d at 859 n. 3. Our precedent demands
clear congressional intent to permit removal. Like the
Supreme Court, we have not yet extended the complete
preemption doctrine beyond section 301 of the LMRA and
section 502(a) of ERISA. We cannot extend the complete
preemption doctrine here, where clear congressional intent
to permit removal is lacking.
CONCLUSION
Under our federal system, both state and federal
courts are entrusted to faithfully follow federal law. Pub.
Serv. Comm’n of Utah v. Wycoff Co., 344 U.S. 237, 247-48,
73 S.Ct. 236, 97 L.Ed. 291 (1952) (“State courts are bound
equally with the federal courts by the Federal Constitution
and laws.”). State courts in Alabama — the forum from
which the defendants sought removal — have a long history
of faithfully applying the NBA. E.g., Lowery v. First Nat'l
Bank of Oneonta, 239 Ala. 690, 196 So. 891, 892 (1940)
(“The penalties imposed upon a national bank for charging
a higher rate of interest than allowed by the law of the
state where located are fixed by the Federal Banking
Law.”); Florence R.R. & Improvement Co. v. Chase Natl
Bank, 106 Ala. 364, 17 So. 720, 721 (Ala.1895) (“[T]he
18a
penalty prescribed by the national banking statute for
usurious discounting paper by national banks is exclusive,
and those imposed by state statutes cannot be applied and
enforced.”); Helms v. First Ala. Bank of Gadsden, N.A., 386
So.2d 450, 452 (Ala.Civ.App.1980) (“[S]ince Congress has
provided the penalty for usury [with § 86], that action
preempts the field, leaving no room for varying state
penalties.”).
Because state courts, like federal courts, are compe-
tent in determining when state-law claims are preempted
by federal law, removal to a federal forum based on the
doctrine of complete preemption has been the exception,
not the rule. Recognizing that the complete preemption
doctrine works to trump the well-pleaded complaint rule
as well as the maxim that a plaintiff is the master of the
complaint and may avoid a federal forum by relying
exclusively on state law, the Supreme Court expanded the
doctrine only “hesitatingly” when there was a clear show-
ing of congressional intent to permit removal. BLAB T’V.,
182 F.3d at 856. Since we find no clear congressional
intent to permit removal under §§ 85 and 86 of the NBA,
we therefore hold that while these sections may provide a
defense to state-law usury claims, they do not accomplish
complete preemption so as to permit removal.
We therefore REVERSE the district court’s order
denying the plaintiffs’ motion to remand and REMAND to
the district court for further proceedings consistent with
this opinion.
TJOFLAT, Circuit Judge, dissenting:
The majority decides today that the provisions in the
National Bank Act (“NBA”) addressing usurious interest,
19a
12 U.S.C. §§ 85 and 86, do not completely preempt plain-
tiffs’ state law claims, and, as a result, the claims are not
removable to federal court. The majority bases this conclu-
sion on an absence of legislative history confirming that
the NBA’s drafters intended that cases of usurious interest
be heard and decided in a federal forum. I do not dispar-
age the majority's emphasis on congressional intent as the
touchstone of complete preemption analysis. Rather, I take
issue with the majority's narrow conception of congres-
sional intent as something only inferable from an enact-
ment’s legislative history, here the NBA’s. Sometimes
Congressional intent is determined by looking to statutes
already on the books.’ In this case, I suggest that the
Judiciary Act of 1789 (“Judiciary Act” or “Act”), ch. 20, § 9,
1 Stat. 76-77 (1789), is highly relevant.in determining
whether the drafters of the NBA intended that lawsuits
seeking relief from usurious interest rates, which is what
the plaintiffs seek here, be litigated in a federal forum.
The Judiciary Act, enacted by the first Congress,
established the federal judiciary. It created thirteen
1 «We do not start from the premise that [the statutory] language is
imprecise. Instead, we assume that in drafting this legislation, Con-
gress said what it meant.” United States v. LaBonte, 520 U.S. 751, 757,
117 S.Ct. 1673, 1677, 187 L.Ed.2d 1001 (1997). Likewise, our own
precedent directs us to “begin our construction of [a statutory provision]
where courts should always begin the process of legislative interpreta-
tion, and where they often should end it as well, which is with the
words of the statutory provision.” Harris v. Garner, 216 F.3d 970, 972
(11th Cir.2000) (en banc). Legislative history is an oft-used and
important tool in the task of statutory interpretation when ambiguities
exist in the language. Still, “[wJhen the import of words Congress has
used is clear ... we need not resort to legislative history, and we
certainly should not do so to undermine the plain meaning of the
statutory language.” Id. at 976.
20a
judicial districts, which became the organizational units of
the lower federal courts. The degree of precision in lan-
guage employed by the drafters of the Act indicates that
they had a strong understanding of jurisdictional princi-
ples and their role in case management and development
of the law. For some federal causes, they gave exclusive
jurisdiction to the federal courts; for others, they provided
that the district courts would have concurrent jurisdiction
with the state courts.’ Where the drafters saw the need for
uniformity of decision or avoidance of state interference,
they gave the district courts exclusive jurisdiction. “[S]uits
for penalties and forfeitures incurred, under the laws of
the United States” were put squarely in that category.
Judiciary Act of 1789, ch. 20, § 9(b), 1 Stat. 76-77 (1789).
We must assume that Congress was well aware of this
provision — in particular, the word “forfeiture” — when,
seventy-four years later, in the midst of the Civil War, it
enacted the NBA. Section 85, as reproduced by the major-
ity in note four, defines usurious interest by relying on
specific discount commercial paper rates or state rates.
Section 86 provides a cause of action for a debtor who was
wrongly charged, or who has already paid, such interest on
a loan. Although the majority duplicated section 86 in note
five, it is useful to do so again for purposes of focusing on
the specific language employed:
The taking, receiving, reserving, or charging a
rate of interest greater than is allowed by section
* For example, concurrent jurisdiction was provided with respect to
“all causes where an alien sues for a tort only in violation of the law of
nations or a treaty of the United States.” Judiciary Act, ch. 20, § 9(b), 1
Stat. 77 (1789).
2la
85 of this title, when knowingly done, shall be
deemed a forfeiture of the entire interest which
the note, bill, or other evidence of debt carries
with it, or which has been agreed to be paid
thereon. In case the greater rate of interest has
been paid, the person by whom it has been paid
... may recover back, in an action in the nature
of an action of debt, twice the amount of the inter-
est thus paid.
12 U.S.C. §86 (emphasis added). In sum, section 86
furnishes a victim of usurious interest two possible reme-
dies: (1) the victim can obtain a judgment declaring
forfeiture of the entire interest of the debt if usurious
interest is sought; or (2) if such interest has already been
paid, the victim may bring a suit to recover twice the
amount collected as a penalty to the lender.
In the case before us, the plaintiffs claim that Benefi-
cial National Bank, a national banking association,
charged them usurious interest rates on tax refund antici-
pation loans. Plaintiffs’ allegations are so unspecific that it
is difficult to say whether the plaintiffs are seeking the
forfeiture of the interest they are being charged or
whether they are seeking twice the amount of interest
they have paid or whether they are pursuing both reme-
dies. I say this because there are twenty-six plaintiffs and
the complaint does not tell us, with respect to any of the
plaintiffs, (1) when the loan was made, (2) the terms of the
loan, and (3) the status of the loan — that is, whether the
plaintiff had paid any interest, and if so, how much, prior
to filing suit. I assume that the plaintiffs’ loans have not
been paid in full. Therefore, to the extent they have paid
interest, they are seeking, in the words of section 86,
“twice the amount of the interest paid” and “forfeiture” of
the amount still due.
22a
The only way to avoid the operation of the Judiciary
Act’s mandate that “suits for penalties and forfeitures
incurred” be filed in federal court is to say that the NBA
amended that mandate by implication.’ In light of our
statement in Patel v. Quality Inn South, 846 F.2d 700, 704
(1lth Cir.1988), that “amendments by implication are
disfavored,” I suggest that this method of avoiding the
Judiciary Act’s mandate is unavailable, and that the Act’s
mandate should therefore dictate our decision.‘
* Although the majority does not mention the Judiciary Act “suits
for penalties and forfeitures” provision, and therefore does not discuss
whether the NBA amended that provision by implication, the majority
does say that the reference to state courts in the NBA’s “Venue of suits”
provision forecloses the argument that the federal courts have exclusive
jurisdiction of a claim of usury.
* That the majority has not considered the application of the
Judiciary Act in this case is not surprising. As far as I know, no court
faced with the jurisdiction issue we are deciding has considered the
relevance of the Judiciary Act provision I rely on here. See e.g., Spell-
man v. Meridian Bank, 1995 WL 764548 (Nos. 94-3203, 94-3402, 94-
3215 to 94-3218) (3d Cir.1996) (vacated on grant of rehearing en banc
then appeal dismissed by parties after settlement); M. Nahas. & Co. v.
First. Natl Bank, 930 F.2d 608 (8th Cir.1991); Jones v. Bankboston,
NA., 115 F.Supp.2d 1350 (S.D.Ala.2000).
- 23a
132 FSupp.2d 948
United States District Court,
M.D. Alabama,
Northern Division.
Marie ANDERSON, et al., Plaintiffs,
v.
H & RBLOCK, INC.; Beneficial National Bank; and
Beneficial Tax Masters, Inc., Defendants.
No. CIV.A.00-A-1457-N.
Dec. 14, 2000.
Walter B. Calton, John P. Hagood, Calton Rutland &
Hagood, LLC, Eufaula, K. Stephen Jackson, Jeffrey Ss.
Daniel, Jackson, Fraley & Shuttlesworth, PC, Birming-
ham, AL, for Marie Anderson, Alvester* Brafort, Walter
Brutley, Patricia Coleman, Talaya Cope, Audrey Darby,
Annie Davis, April Deloach, Diane Franklin, Lillie Frank-
lin, Willie Lewis, Caledonia Jackson, Shirley Jernigan,
Evelyn Nelson, Willie Lawrence, Mamie Mitchell, Betty
Person, Diane Peterson, Gwen Rogers, Williams [sic]
Screws, Ernestine Starks, Gerald Stokes, Albert Thomas,
Charles Thomas, Kenneth Williams, Earline Young,
plaintiffs.
Peter S. Fruin, Maynard, Cooper & Gale, PC.,
Montgomery, AL, A. Inge Selden, III, Stephen C. Jackson,
Carl Stanley Burkhalter, Maynard, Cooper & Gale, P.C.,
Birmingham, AL, forH & R Block, Inc.
Stewart M. Cox, Hope T. Stewart, Bradley, Arant,
Rose & White, LLP, Birmingham, AL, Alan S. Kaplinsky,
Burt M. Rublin, Edward D. Rogers, Ballard, Spahr, An-
drews & Ingersoll, Philadelphia, PA, Brian P. Strength,
Bradley Arant Rose & White, LLP, Montgomery, for
OOOO Eee
24a
Beneficial National Bank, Beneficial Tax Masters, Inc.,
defendants.
MEMORANDUM OPINION AND ORDER
ALBRITTON, Chief Judge.
I. INTRODUCTION
This cause is now before the court on a Motion to
Remand, filed by the Plaintiffs, Marie Anderson, Alvester
Brafort, Walter Brutley, Patricia Coleman, Talaya Cope,
Audrey Darby, Annie Davis, April DeLoach, Diane Frank-
lin, Lillie Franklin, Willie Lewis, Caledonia Jackson,
Shirley Jernigan, Evelyn Nelson, Willie Lawrence, Mamie
Mitchell, Betty Person, Diane Peterson, Gwen Rogers,
William Screws, Ernestine Starks, Gerald Stokes, Albert
Thomas, Charles Thomas, Kenneth Williams, and Earline
Young (“Plaintiffs”) on November 22, 2000.
The Plaintiffs originally filed a Complaint against H
& R Block, Inc.; Beneficial National Bank; and Beneficial
Tax Masters, Inc. in the Circuit Court of Barbour County,
Alabama. The Complaint alleges counts of intentional
misrepresentation (Court [sic].One); suppression of mate-
rial facts (Count Two); breach of fiduciary duty (Count
Three); usury violations (Count Four); and Alabama Code
Violations (Count Five).
H & R Block, Inc. (“H & R Block”), and Beneficial
National Bank and Beneficial Tax Masters (collectively
“Beneficial”) filed a Notice of Removal in this court on
October 24, 2000. Removal was based upon the presence of
a federal question through complete pre-emption under
the National Bank Act (“NBA”). The Plaintiffs state they
25a
have asserted only state law claims and contest that the
NBA completely pre-empts these claims.
For the reasons herein discussed, the Motion to
Remand is due to be DENIED.
II. FACTS
The Plaintiffs’ claims arise out of representations
made and interest and fees charged in connection with
loans made to them through H & R Block by Beneficial.
According to Beneficial, these loans were tax refund
anticipation loans which are loans made to a tax return
preparation service by a bank in the amount of the cus-
tomer’s anticipated tax refund, less the fees charged by the
lender and the tax preparation service. .
The Plaintiffs allege that the Defendants charged
each of them interest in excess of the legal limit on inter-
est rates allowed under Alabama law and the common law
doctrine of usury. The Plaintiffs also allege that the
Defendants misrepresented and failed -to disclose the
interest rate and the fees that would be charged, and
breached their fiduciary duties to the Plaintiffs.
III. REMAND STANDARD
Federal courts are courts of limited jurisdiction. See
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,
114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994), Burns v.
Windsor Insurance Co., 31 F.3d 1092, 1095 (1994); Wymbs
v. Republican State Executive Committee, 719 F.2d 1072,
1076 (11th Cir.1983), cert. denied, 465 U.S. 1103, 104 S.Ct.
1600, 80 L.Ed.2d 131 (1984). As such, federal courts have
26a
\
the power only to hear cases that they have been author-
ized to hear by the Constitution or the Congress of the
United States. See Kokkonen, 114 S.Ct. at 1675. Because
federal court jurisdiction is limited, the Eleventh Circuit
favors remand of removed cases where federal jurisdiction
is not absolutely clear. See Burns, 31 F.3d at 1095.
IV. DISCUSSION
Removal of a case to federal district court by a defen-
dant is only proper if the case brought by the plaintiff in
state court originally could have been brought in federal
court. See 28 U.S.C. § 1441(a). In this case, Beneficial and
H & R Block argue that the court has jurisdiction over the
Plaintiffs’ claims because of the presence of a federal
question. Federal question jurisdiction requires that the
action arise under the Constitution, laws, or treaties of the
United States. 28 U.S.C. § 1331. In deciding whether a
federal question exists, the court must apply the well-
pleaded complaint rule whereby the court looks to the face
of the complaint, rather than to any defenses asserted by
the defendant. See Caterpillar, Inc. v. Williams, 482 U.S.
386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). Conse-
quently, the general rule is that a case may not be re-
moved to federal court on the basis of a federal defense,
including the defense of pre-emption. See Caterpillar, 482
U.S. at 393, 107 S.Ct. 2425. In this case, the Plaintiffs
have only asserted state law claims so that, on the face of
the Complaint, there is no federal question jurisdiction.
There is, however, an exception, or corollary, to the
well-pleaded complaint rule and it is this exception to
which Beneficial and H & R Block point in claiming that
this court has federal question jurisdiction. This exception
27a
is known as the “complete pre-emption” doctrine. This
exception is recognized in the rare instance Congress so
“completely pre-empts a particular area that any civil
complaint ... is necessarily federal in character.” Metro-
politan Life Ins. Co. v. Taylor, 481 U.S. 58, 64, 107 S.Ct.
1542, 95 L.Ed.2d 55 (1987). The situations in which the
complete pre-emption exception applies are so rare that
the Supreme Court has found complete pre-emption in
only a few areas. See Avco Corp. v. Aero Lodge No. 7385,
390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968) (§ 301
of the LMRA completely pre-empted a state cause of action
for violation of contracts); Metropolitan Life, 481 U.S. 58,
107 S.Ct. 1542, 95 L.Ed.2d 55 (§§ 502(a)(1)(B) and 502(f) of
ERISA completely pre-empted state contract. and tort
claims); Oneida Indian Nation v. County of Oneida, 414
U.S. 661, 94 S.Ct. 772, 39 L.Ed.2d 73 (1974) (federal law
pre-emption with regard to tribal lands).
Beneficial and H & R Block have argued for the
application of the complete pre-emption doctrine in the
instant case based on §§ 85 and 86 of the National Bank-
ing Act (“NBA”). The NBA states in part, that a national
bank “may ... charge on any loan ... interest at the rate
allowed by the laws of the State ... where the bank is
located. ...” 12 U.S.C. § 85. The NBA further provides for
a civil enforcement mechanism. See 12 U.S.C. § 86.
Beneficial and H & R Block cite several cases, includ-
ing a previous decision of this court, holding that §§ 85-
and 86 of the NBA completely pre-empt state-law claims
challenging interest charged by a national bank, and thus
that such claims are removable from state to federal court.
See e.g., M. Nahas & Co. Inc. v. First Nat'l Bank of Hot
Springs, 930 F.2d 608 (8th Cir.1991); Monday v. Coast to
Coast Wireless Cable, 1997 WL 114874 (M.D.Ala. Feb.19,
28a
1997); Hunter v. Rich’s Dept. Stores, 945 F.Supp. 1500
(N.D.Ala.1995) (Propst, J.). There is, however, contrary
case law on the issue of whether the NBA completely pre-
empts state law claims challenging excessive interest. See
e.g., Jones v. Bankboston, N.A., 115 F.Supp.2d 1350
(S.D.Ala.2000).
The Eleventh Circuit recently addressed for the first
time the issue of complete pre-emption outside of the
Labor Management Relations Act (“LMRA”) and the
Employees Retirement Insurance Security Act (“ERISA”)
context. See BLAB T.V. of Mobile, Inc. v. Comcast Cable
Communications, Inc., 182 F.8d 851, 855 (11th Cir.1999)
(finding no complete pre-emption under the Cable Com-
munications Policy Act of 1984). In BLAB T:V., the Elev-
enth Circuit examined the different tests employed by
various circuits in assessing complete pre-emption argu-
ments. Id. at 856. While the court declined to adopt any of
the tests to be applied to all future claims of complete pre-
emption, the court did note that, while it relied heavily on
a particular decision of the Tenth Circuit, it did not adopt
the view of the Tenth Circuit that a statute’s providing a
federal cause of action is dispositive on the issue of con-
gressional intent. Id. at 859, n. 3. The Eleventh Circuit
held that a state law claim was not completely preempted
by the Cable Communications Policy Act of 1984 because
the court found that the requisite congressional intent to
convert state law claims into federal claims was absent.
Id. at 859.
This court has been presented with complete pre-
emption arguments under the NBA on two previous
occasions, both of which were decided before the BLAB
TV. decision by the Eleventh Circuit. See Monday v. Coast
to Coast Wireless Cable, 1997 WL 114874 at *1 (M.D.Ala.,
29a
Feb. 19, 1997); Mason v. Fidelity Federal Bank, 40
F.Supp.2d 1340 (M.D.Ala.1999).
In Monday, this court, relying on complete pre-
emption analysis in other cases, looked at three factors:
Congressional intent, whether the NBA displaced state
law claims with a federal cause of action, and whether the
jurisdictional language of the civil enforcement provisions
paralleled the LMRA and ERISA. Monday, 1997 WL
114874 at *6-7. Noting that the NBA pre-dated the exis-
tence of federal question jurisdiction, the well-pleaded
complaint rule, and the complete pre-emption doctrine,
this court relied on discussions of Congressional intent in
binding case law. Jd. at *6. This court relied on statements
in Supreme Court and former Fifth Circuit cases that the
NBA was intended to give advantages te national banks
over state competitors, and that an action stating a claim
of usury against a national bank is a new right which is
regulated by federal law, in concluding that Congress
intended for national banks to be governed by national
standards, not state law. Id. (citing Roper v. Consurve, 578
F.2d 1106 (5th Cir.1978), aff’d sub nom. on other grounds,
Deposit Guaranty Nat'l Bank v. Roper, 445 U.S. 326, 100
S.Ct. 1166, 63 L.Ed.2d 427 (1980); Marquette Nat. Bank of
Minneapolis v. First Omaha Service Corp., 439 U.S. 299,
99 S.Ct. 540, 58 L.Ed.2d 534 (1978); Farmers’ and Mechan-
ics’ National Bank v. Dearing, 91 U.S. 29, 35, 1 Otto 29, 23
L.Ed. 196 (1875)). This court further concluded that the
jurisdictional language of the NBA was similar enough to
the language used in the LMRA and ERISA, statutes
which the Supreme Court has found completely pre-empt
state law, to indicate that Congress intended for the
federal remedy provided in the NBA to be the remedy
which was available against national banks, whether the
30a
forum be federal or state, there being no mechanism for
removal to federal court at the time. Jd. at *7.
Although this court did not have the analysis in BLAB
T-V. before it when Monday was decided, the court finds
that the BLAB T:V. decision does not alter its conclusion in
Monday that §§ 85, 86 completely preempt state law
claims claiming usurious interest. The Eleventh Circuit
merely underscored the importance of Congressional
intent in BLAB T:V.,, and as noted above, this court’s
analysis in Monday was premised in large part on Con-
gressional intent. While the NBA, because it pre-dated the
relevant jurisdictional statutes and doctrines, may not
neatly fit into the complete pre-emption analysis of mod-
ern statutes, this court finds that there is sufficient
evidence in decisional law and the language of the NBA
from which to conclude that Congress intended for na-
tional banks to be held to national standards, and not to
be held liable under state law on claims alleging usury.
Therefore, finding no reason to depart from its earlier
analysis, the court again concludes that usurious interest
claims are completely pre-empted under the NBA.
In the two cases in which this court was previously
presented with an argument of complete pre-emption
under the NBA, the court determined that there was no
federal jurisdiction because the plaintiffs had not alleged
claims of usurious interest, which is the type of claim that
is completely preempted under the NBA. See Monday,
1997 WL 114874 at *10; Mason, 40 F.Supp.2d at 1345. In
this case, the Plaintiffs have pleaded a claim for usurious
interest. See Complaint, Count Four; Brief in Support of
Motion to Remand, page 8. Accordingly, the Plaintiffs have
brought a claim which is completely preempted by the
NBA, creating federal question jurisdiction in this court.
3la
The court recognizes that, while it has found evidence
of Congressional intent to completely pre-empt state law
usurious interest claims under the NBA, there is signifi-
cant disagreement among courts over the presence of
Congressional intent to completely pre-empt state law
claims under the NBA. See Jones, 115 F.Supp.2d at 1357.
The court further notes that the BLAB T’V. decision came
before the Eleventh Circuit as a question certified for
interlocutory appeal by the district court. BLAB T:V., 182
F.3d at 854. This court is willing to certify the issue of
complete pre-emption in this case for interlocutory appeal,
if any of the parties indicate their desire for the court to do
so by filing a written request by December 29, 2000.
V.CONCLUSION .
For the reasons discussed above, this court has federal
jurisdiction by virtue of the presence of a federal question
in this case. Accordingly, the Motion to Remand (Doc. # 7)
is due to be and is ORDERED DENIED.
ORDER
For good cause shown, it is hereby ORDERED that
the Memorandum Opinion and Order of this court entered
on December 14, 2000 is AMENDED to add the following
paragraph:
This order involves the issue of whether the
court has jurisdiction to proceed with this case.
Therefore, pursuant to 28 U.S.C. § 1292(b), the
court certifies that it is of the opinion that the
order involves a controlling question of law as to
which there is substantial ground for difference
of opinion and that an immediate appeal from
32a
the order may materially advance the ultimate
termination of the litigation. It is, therefore,
FURTHER ORDERED that if the Plaintiffs
make application for an appeal within ten (10)
days after the entry of this order, pursuant to 28
U.S.C. § 1292(b), these proceedings are STAYED
pending a determination of the application by the
Court of Appeals and, if the appeal is permitted,
final determination of the appeal by the Court of
Appeals.
The Clerk is DIRECTED to serve copies of this Order
by facsimile.
“7 a ace oe a ee Pee Se eT ees
33a
37 Fed.Appx. 981
(The decision of the Court is referenced in an eleventh
Circuit Table of Denials of Rehearing En Banc appearing
in the Federal Reporter. )
United States Court of Appeals,
Eleventh Circuit.
Marie Anderson, Alvester Brafort
v.
H&R Block, Inc., Beneficial National Bank
NO. 01-11863
May 29, 2002
M.D.Ala., 287 F.3d 1038
DENIALS OF REHEARING EN BANC
34a
12 U.S.C. § 85. Rate of interest on loans, discounts and
purchases :
Any association may take, receive, reserve, and charge
on any loan or discount made, or upon any notes, bills, of
exchange, or other evidences of debt, interest at the rate
allowed by the laws of the State, Territory, or District
where the bank is located, or at a rate of 1 per centum in
excess of the discount rate on ninety-day commercial
paper in effect at the Federal reserve bank in the Federal
reserve district where the bank is located, whichever may
be the greater, and no more, except that where by the laws
of any State a different rate is limited for banks organized
under state laws, the rate so limited shall be allowed for
associations organized or existing in any such State under
this chapter. When no rate is fixed by the laws of the
State, or Territory, or District, the bank may take, receive,
reserve, or charge a rate not exceeding 7 per centum, or 1
per centum in excess of the discount rate on ninety-day
commercial paper in effect at the Federal reserve bank in
the Federal reserve district where the bank is located,
whichever may be the greater, and such interest may be
taken in advance, reckoning the days for which the note,
bill, or other evidence of debt has to run. The maximum
amount of interest or discount to be charged at a branch of
an association located outside of the States of the United
States and the District of Columbia shall be at the rate
allowed by the laws of the country, territory, dependency,
province, dominion, insular possession, or other political
subdivision where the branch is located. And the purchase,
discount, or sale of a bona fide bill of exchange, payable at
another place than the place of such purchase, discount, or
sale, at not more than the current rate of exchange for
35a
sight drafts in addition to the interest, shall not be consid-
ered as taking or receiving a greater rate of interest.
12 U.S.C. §86. Usurious interest; penalty for taking;
limitations
The taking, receiving, reserving, or charging a rate of
interest greater than is allowed by section 85 of this title,
when knowingly done, shall be deemed a forfeiture of the
entire interest which the note, bill, or other evidence of
debt carries with it, or which has been agreed to be paid
thereon. In case the greater rate of interest has been paid,
the person by whom it has been paid, or his legal repre-
sentatives, may recover back, in an action in the nature of
an action of debt, twice the amount of the interest thus
paid from the association taking or receiving the same:
Provided, That such action is commenced within two years
from the time the usurious transaction occurred.
36a
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
DOUGLAS GALLAGHER, CIVIL ACTION NO.
FERMIN TULLIER, 97-749-A
PATRICK JUGE, BONNIE
GILBERT, HARRY
BATISTE, JR. and
JULIE DAVENPORT
Vv.
H&R BLOCK EASTERN
TAX SERVICES, INC.,
ET AL
RULING ON MOTION TO REMAND
(Filed Jan. 13, 1998)
This matter is before the court on a motion to remand
by plaintiffs, Douglas Gallagher, Fermin Tullier, Patrick
Juge, Bonnie Gilbert, Harry Batiste, Jr., and Julie Daven-
port. Defendants, Eastern Tax Services, Inc., H&R Block,
Inc., Block Financial Corporation, Danette Daigle,
Paulette Landry, Lois Falcon, and Defendants A through Z
(collectively “Block”), oppose the motion. Removal jurisdic-
tion is allegedly based on federal question subject matter
jurisdiction, 28 U.S.C. §1331.
Background
According to the memoranda and documents submit-
ted by the parties in support thereof, on July 8, 1997,
plaintiffs filed a class action petition in the 18th Judicial
District Court, Parish of Iberville, State of Louisiana,
seeking to recover monetary compensation for damages
37a
and for attorney fees, for alleged financial harm by Block
in scheme to systematically target and deceive lower
income, unsophisticated taxpayers out of “exorbitant”
interest and fees. Plaintiffs allege that Block induced
plaintiffs and other Louisiana residents to 1) pay a fee to
_ Block to secure their tax refunds supposedly more quickly
than available elsewhere; and 2) pay outrageous finance
charges for short term, fully secured loans from Block's
lending banks.
The petition alleges that defendants are liable on the
following counts: 1) fraudulent misrepresentation; 2)
fraudulent concealment; 3) dual agency; and 4) breach of
fiduciary duty.
On July 25, 1997, defendants filed a notice of removal.
Plaintiffs filed a motion to remand on August 15,
1997, on the grounds that 1) the claims by plaintiffs do not
arise under federal law; and 2) if applicable, preemption
would only be a defense to state law claims, and would not
be grounds for removal. Plaintiffs also request that the
court assess attorney’s fees against Block.
Defendants oppose the motion on the grounds that 1)
there are substantial, disputed questions of federal law in
this case which are central to the claims by plaintiffs for
recovery; and 2) plaintiffs have artfully pleaded in state
law terms a completely preempted federal cause of action.
Arguments
Plaintiffs argue that the state court petition alleges no
federal claims, only violations of Louisiana law, prohibit-
ing fraud, suppression, breach of fiduciary duty and dual
agency. Plaintiffs argue that the court should not accept
ane e naan
38a
Block’s distortion of the state law claims into a claim
under the National Bank Act, 12 U.S.C. 21 et seg., because
plaintiffs do not sue Block under the Act, nor could they,
because the Act regulates only the business of banking,
and Block is not a bank. Plaintiffs argue that Louisiana’s
interest in prohibiting Block from deceiving Louisiana
residents into exorbitant interest obligations does not
impact the purpose of the Act or any other federal law.
Plaintiffs also argue that Block’s supposed preemption
defense cannot create federal jurisdiction, because the
National Bank Act does not apply for preemption purposes
when no claims against a bank have been asserted.
Defendants argue that the issue of the agency or
broker status of defendants in relation to national banks is
tantamount to their status as alleged “branch offices”
“branch agencies”, or “additional offices” of national banks
conducting banking businesses, which is a matter of
federal law; thus, defendants argue, the success of the
allegations depends on a determination of whether one or
more of the Block defendants were “agents” or “brokers” of
these national banks in allowing the transactions to occur.
Defendants argue that plaintiffs all but name the national
banks as parties by alleging that the Block defendants
concealed the fact that they were actually creditors on the
loans.
Defendants also argue that, under the complete
preemption component of the “artful pleading” doctrine,
plaintiffs rest their case against defendants on the decep-
tive collection of excessive interest from plaintiffs pursu-
ant to loans actually made by one or more national banks,
in violation of the interest rates authorized by the Na-
tional Bank Act. Defendants argue that, if plaintiffs are
39a
willing to argue that Block is the legal surrogate of na-
tional bank lenders in the lending program, it follows that
the preemptive effect of the laws that govern the national
banks be applied to all aspects of the litigation, from the
standpoint of liability, remedy and jurisdiction.
Law and Discussion
To support removal, defendant bears the burden of
establishing federal jurisdiction over the state court suit.’
Removal under section 1441(b), the basis of removal here,
is appropriate only for those claims within the federal
question jurisdiction of the district courts, that is, for those
actions “arising under the Constitution, laws, or treaties of
the United States.” *
A case “arises under” federal law when a “right or
immunity created by the Constitution or laws of the
United States [is] an element, and an essential one, of
plaintiff’s cause of action.’ If, however, the state law
creates the cause of action, the court must determine
whether plaintiff’s demand “necessarily depends on
resolution of a substantial question of federal law.”
Generally, a suit may not be removed from state court
to federal court on the basis of a federal defense including
the defense of preemption; however, under the “complete
‘ Carpenter v. Wichata Falls Independent School District, 44 F.3d
362, 365 (5th Cir. 1995).
* 28 U.S.C. §1331.
* Franchise Tax Bd. v. Const. Laborers Vacation Trust, 463 U.S. 1,
103 S.Ct. 2841, 77 L.Ed.2d 420 (1983).
* Id.
40a
preemption doctrine”, once an area of state law has been
completely preempted, any claim based on that preempted
state law is considered a federal claim and therefore arises
under federal law.’
When plaintiff challenges the propriety of defendant’s
removal, defendant carries the burden of showing the
necessary facts to support the court’s exercise of removal
jurisdiction.° Any doubts about the propriety of removal
are construed in favor of remand.’ The removal statute
should be strictly construed against removal and all doubt
should be resolved in favor of remand.”
The National Bank Act, 12 U.S.C. §21 et seqg., governs
the operations of national banking associations.” The
background begins in 1863 and 1864, when the Civil War
Congress enacted and then reenacted the National Bank Act,
which launched the modern national banking system by
providing for federal chartering of private commercial banks
and empowering the newly created national banks to issue
and accept a uniform national currency.” Authorizing
* Caterpillar Inc. v. Williams, 482 U.S. 386, 107 S.Ct. 2425, 96
L.Ed.2d 318 (1987).
* See Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir.
1993); Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988);
McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct.
780, 785, 80 L.Ed. 1135 (1936).
” Butler v. Polk, 592 F.2d 1293, 1296 (5th Cir. 1979).
* Shamrock Oil and Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct.
868, 85 L.Ed. 1214 (1941).
* Jackson v. First Nat. Bank of Valdosta, 349 F.2d 71 (5th Cir.
1965).
” U.S. Nat. Bank of Oregon v. Independent Ins. Agents of America,
Inc., 508 U.S. 439, 113 S.Ct. 2173, 124 L.Ed.2d 402 (1993), citing Act of
(Continued on following page)
-_
4la
national banks to “carry on the business of banking,” the
National Bank Act provides that such banks shall have
power —
“*To exercise ... all such incidental powers as
: shall be necessary to carry on the business of
: banking; by discounting and negotiating promis-
: sory notes, drafts, bills of exchange, and other
evidences of debt; by receiving deposits; by buy-
ing and selling exchange, coin, and bullion; by
loaning money on personal security; and by ob-
taining, issuing, and circulating notes.... The
business of dealing in securities and stock by the
: [bank] shall be limited to purchasing and selling
such securities and stock without recourse, solely -
upon the order, and for the account of, customers,
and in no case for its own account, and the
[bank] shall not underwrite any issue of securi-
ties or stock....’ 12 U.S.C. §24 Seventh (1988
ed. and Supp. V).””
The National Bank Act, 12 U.S.C. §85, permits a
national bank to charge “interest at the rate allowed by
the laws of the State .. . where the bank is located .. . and
no more.” Further, 12 U.S.C. §86 provides the penalty for
usury against a national bank that “tak[es], receiv[es],
reservies], or chargles] a rate of interest greater than is
allowed by Section 85.” Suits under sections 85 and 86 of
aR UL UL SB Sab Aer
Feb. 25, 1863, ch. 58, 12 Stat. 665; Act of June 3, 1864, ch. 106, 13 Stat.
99; E. Symons, Jr., & J. White, Banking Law 22-25 (3d ed. 1991); and
12 U.S.C. §38.
" NationsBank of North Carolina, N.A. v. Variable Annuity Life
Ins. Co., 513 U.S. 251, 115 S.Ct. 810, 130 L.Ed.2d 740 (1995).
* 12 U.S.C. §§85-86.
42a
the National Bank Act, and the predecessors of those
sections, are federal question cases.”
Plaintiffs allege that the “Rapid Refund” program is a
loan program administered by defendants in association
with banking institutions. Plaintiffs allege that defendants
solicited from their clients, on behalf of various banks,
loans which were collateralized with the expected refund.
Under the arrangement with the banks which issue the
loans, plaintiffs allege, defendants received a kickback
from the banks for each refund anticipation loan entered
into by its clients. Plaintiffs allege that the true nature of
the relationship between defendants and the lender was
that of broker or agent for the lender. It is clear that
plaintiffs have attempted to gain the liability and class
action benefits of identifying defendants with the banks
but none of the jurisdictional consequences of the allega-
tions.
The state court petition clearly alleges that the loans
were made by the national banks through their agent,
H & R Block. The state court petition clearly attacks the
validity of the loans made by the national banks. These
allegations are sufficient to implicate the provisions of
sections 85 and 86 of the National Bank Act, even though
the banks themselves are not now joined as parties to the
action.
Although the National Bank Act regulates only the
business of banking and named defendants are not banking
associations, defendants have provided persuasive support
* Fourchon, Inc. v. Louisiana National Leasing Corp, 723 F.2d 376
(5th Cir. 1984).
oh
i
43a
for their claim which would place this matter under the
National Bank Act. Plaintiffs may not escape federal
jurisdiction by artfully omitting parties to the transactions
that are the subject of this lawsuit.
Accordingly, for the reasons assigned, the motion by
plaintiffs to remand is hereby DENIED.
/s/ John V. Parker
JOHN V. PARKER, CHIEF JUDGE
MIDDLE DISTRICT OF LOUISIANA
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.