Petition for Writ of Certiorari — US Bank National Ass'n ND v. Thomas

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US BANK NATIONAL ASS’N ND; US BANK NATIONAL

ASS’N; FIRSTPLUS HOME LOAN TRUST 1996-2;

FIRSTPLUS HOME LOAN OWNER TRUSTS 1996-3, 1996-4,

1997-1, 1997-2, 1997-3, 1997-4, 1998-1, 1998-2, 1998-3,

1998-4, AND 1998-5; WILMINGTON TRUST Co.; GOLETA

NATIONAL BANK; RESIDENTIAL FUNDING Co., LLC;

SOVEREIGN BANK; HSBC FINANCIAL CORP., F/K/A

HOUSEHOLD FINANCIAL CORP.,

Petitioners,

VU.

DEANTHONY THOMAS, SUSAN JELINKE-

THOMAS, STEVEN M. RICH,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

CHRISTOPHER R. LIPSETT SETH P. WAXMAN

NOAH A. LEVINE Counsel of Record

DAVID S. LESSER DANIELS. VOLCHOK

WILMER CUTLER PICKERING WILMER CUTLER PICKERING

HALE AND DORR LLP HALE AND DORR LLP

399 Park Ave. 1875 Pennsylvania Ave. N.W.

New York, N.Y. 10022 Washington, D.C. 20006

(212) 230-8800 (202) 663-6000

seth.waxman@wilmerhale.com

(Additional counsel listed on inside cover)

PETER W. CARTER

PAUL R. DIESETH

DORSEY & WHITNEY LLP

50 South Sixth Street

Suite 1500

Minneapolis, MN 55402

(612) 340-7892

THOMAS L. ALLEN

Roy W. ARNOLD

DAVID J. BIRD

REED SMITH LLP

225 Fifth Avenue

Suite 1200

Pittsburgh, PA 15222

(412) 288-3131

TODD W. RUSKAMP

SHOOK, HARDY & BACON LLP

2555 Grand Boulevard

7th Floor

Kansas City, MO 64108

(816) 474-6550

WILLIAM E. QUIRK

MARK A. OLTHOFF

MIRIAM E..C. BAILEY

POLSINELLI SHUGHART P.C.

1700 Twelve Wyandotte Plaza

120 West 12th Street

Kansas City, MO 64105

(816) 421-3355

MICHAEL G. BIGGERS

BRYAN CAVE LLP

211 North Broadway

Suite 3600

St. Louis, MO 63102

(314) 259-2145

SCOTT W. MARTIN

MICHAEL S. HARGENS

DAVID A. SCHATZ

HUSCH BLACKWELL

SANDERS LLP

4801 Main Street

Suite 1000

Kansas City, MO 64112

(816) 983-8000

QUESTIONS PRESENTED

1. In Beneficial National Bank v. Anderson, 539

U.S. 1 (2003), this Court held that state-law usury

claims against federally chartered, federally insured

banks are completely preempted by provisions of the

National Bank Act of 1864 now codified at 12 U.S.C.

§§ 85-86. The first question presented here is whether

state-law usury claims against state-chartered, feder-

ally insured banks are likewise completely preempted

by a provision of the Depository Institutions Deregula-

tion and Monetary Control Act of 1980 now codified at

12 U.S.C. § 1831d.

2. In Smiley v. Citibank (S.D.), N.A., 517 USS.

735 (1996), this Court held that the term “interest” un-

der 12 U.S.C. § 85 means not only periodic percentage

interest rates but also many types of fees charged in

connection with a loan (or other extension of credit).

The second question presented here is whether the de-

cision below conflicts with Smiley in that the court of

appeals used a definition of “interest” that was limited

to periodic percentage interest rates.

PARTIES TO THE PROCEEDING BELOW

In addition to the parties named in the case caption,

the following were parties in the court of appeals: Ace

Securities Corp. Home Loan Trust 1999-A; Associates

First Mortgage Capital Corp.; CIT Group; Contimort-

gage Corp; Master Financial; Norwest Home Im-

provement, Inc.; PSB Lending Corp.; Challenge Realty;

German American Capital Corp.; UBS Real Estate Se-

curities, Inc.; Countrywide Home Loans, Inc.; JPMor-

gan Chase Bank, N.A.; Bane One Financial Services

Inc.; PFF Bank & Trust; Western Interstate Bancorp.

CORPORATE DISCLOSURE STATEMENT

US Bank National Association ND and US Bank

National Association are wholly owned subsidiaries of

U.S. Bancorp, a publicly held corporation. U.S. Ban-

corp does not have a parent corporation and no publicly

held company owns 10% or more of its stock.

FirstPlus Home Loan Trust 1996-2 is an express

trust created under New York trust law, while

FirstPlus Home Loan Owner Trusts 1996-3, 1996-4,

1997-1, 1997-2, 1997-3, 1997-4, 1998-1, 1998-2, 1998-3,

1998-4, and 1998-5 are Delaware statutory trusts cre-

ated under the Delaware statutory trust statute.

Wilmington Trust Company is a Delaware banking

corporation that is wholly owned by Wilmington Trust

Corporation. Wilmington Trust Corporation does not

have a parent corporation and no publicly held company

owns 10% or more of its stock.

Goleta National Bank, now known as Community

West Bank, is a California corporation. All of its stock

is owned by the holding company Community West

Bancshares.

(11)

Residential Funding Company, LLC, has the fol-

lowing parent company: GMAC-RFC Holding Com-

pany, LLC. General Motors Corporation is a publicly

held corporation that owns 10% or more of the interest

in Residential Funding Company, LLC, through own-

ership of stock in one or more companies.

Sovereign Bank is a subsidiary of Santander Hold-

ings USA, Ine. which is a Virginia holding company

formerly known as Sovereign Bancorp, Inc. Banco

Santander, S.A., a publicly held corporation, is the par-

ent of Santander Holdings USA, Inc. and owns 10% or

more of its stock.

HSBC Finance Corporation, formerly known as

Household Finanee Corporation, is wholly owned by

HSBC North America Holdings, Inc. No publicly held

company directly owns 10% or more of HSBC Finance

Corporation’s stock.

TABLE OF CONTENTS

QUESTIONS PRESENTED

PARTIES TO THE PROCEEDING BELOW

CORPORATE DISCLOSURE STATEMENT............. li

TABLE OF AUTHORITIES

OPINIONS BELOW

JURISDICTION

STATUTORY PROVISIONS INVOLVED

ee INTE 6s oan cacti nan nunsiavabaaeaaneaediusasiiocedapineelonbauls 3

REASONS FOR GRANTING THE PETITION 12

I. THE EIGHTH CIRCUITS COMPLETE-PRE-

EMPTION HOLDING IS WRONG AND CREATES

A CIRCUIT CONFLICT ON AN IMPORTANT

AND RECURRING QUESTION OF FEDERAL

NN a a €

A. The Decision Below Conflicts With Deci-

sions Of The Third And Fourth Circuits............. 13

B. The Question Presented is Recurring

And Important

C. The Court of Appeals’ Holding Is Wrong

. The Eighth Circuit’s Holding That DIDA

Does Not Apply To The Loans At Issue

Here Rests On A Definition Of “Interest”

That Conflicts With This Court’s Decision In

Smiley

CONCLUSION

TABLE OF CONTENTS—Continued

APPENDIX A: Opinion of the United

States Court of Appeals for the Eighth

Circuit

APPENDIX B: Order of the United

States District Court for the Western

District of Missouri Denying Respon-

dents’ Motion ‘lo Remand

APPENDIX C: Order of the United

States District Court for the Western

District of Missouri Granting Petition-

I re a cs cescduvendbuarncyoonsivesaseseas 19a

APPENDIX D: Order of the United

States District Court for the Western

District of Missouri Denying Respon-

dents’ Motion To Reconsider

APPENDIX E: Order of the Court of Ap

peals Denying Rehearing En Bane

APPENDIX F: Statutory Provisions

12 U.S.C. § &

12 U.S.C

12 U.S.C. §

TABLE OF AUTHORITIES

CASES

Page(s)

Adkison v. First Plus Bank, 143 S.W.3d

29 (Mo. Ct. App. 2004)

Aetna Casualty & Surety Co. v. Flowers,

330 U.S. 464 (1947)

Aetna Health Inc. v. Davila, 542 U.S. 200

(2004)..

Allis-Chalmers Corp. v. Lueck, 471 U.S.

202 (1985)

Avco Corp. v. Aero Lodge No. 73:

OF tie SOE UR IEE civinveestccnisidinctinbeenssseunces Selcsloniesaecsnes 5, 23

Beneficial National Bank v. Anderson,

539 U.S. 1 (2003)

Bragdon v. Abbott, 524 U.S. 624 (1998)

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

(1987)

Cross-Country Bank v. Klussman,

F. App’x 796 (9th Cir. 2003)

Discover Bank v. Vaden, 489 F.3d 594

(4th Cir. 2007), rev'd on other

grounds, 1298. Ct. 1262 (2009) 8, 11, 13-15, 21

Dolan v. United States Postal Service,

546 U.S. 481 (2006)

El Paso Natural Gas Co. v. Neztsosie,

526 U.S. 473 (1999)

Evans v. National Bank of Savannah,

251 U.S. 108 (1919)

Vil

TABLE OF AUTHORITIES—Continued

Page(s)

Farmers’ & Mechanics’ National Bank v.

EAT UE, BE Uc BO CI cas ccncenccasenssnnescssssnvecsoenees 7,18

Forness v. Cross Country Bank, Inc.,

No. 05-cv-417, 2006 WL 240535 (S.D.

es re er I iia ciedliciak cacaveiubseninsdibeisestieseenseves 14

Franchise Tax Board v. Construction

Laborers Vacation Trust for South-

ern California, 463 U.S. 1 (1988) ..... eee ee 5. 23, 24

Gavey Properties/762 v. First Financial

Savings & Loan Ass’n, 845 F.2d 519

ii sc uacadensatannonnienee 7,8, 15, 20

es Pe BRB ES | | ea z

Greenwood Trust Co. v. Massachusetts,

Eee eR OE get Ae AD 4 7,8, 15, 19

Gully v. First National Bank, 299 U.S.

a aie aial sauna cusses ibbbeon teeanionberian

Hill v. Chemical Bank, 799 F. Supp. 948

Os apuabab pencedanenbansinn 14

In re Community Bank of Northern Vir-

ginia, 418 F.3d 277 (8d Cir. 2005)....... 8, 10, 18, 14, 17

International Brotherhood of Electric

Workers v. Hechler, 481 U.S. 851

a a stcidinhvonuveviins 23

Lingle v. Norge Division of Magic Chef,

ee hc I ooiterarsaecxiskdecdcenecssvecsscesesasvcces 17

Livadas v. Bradshaw, 512 U.S. 107 (1994)..................... 23

Mamot Feed Lot & Trucking v. Hobson,

Bare FG CO CCE CAP, BUD) ccscccesscccsscconncsscoesecsess ..8, 15

Vill

TABLE OF AUTHORITIES—Continued

Marquette National Bank of Minneapo-

lis v. First of Omaha Service Corp.,

450 UB. SOP UG 1S) svcticrsstsrnensmmicmniioonmnnua 6,16

Merrill Lynch, Pierce, Fenner & Smith

Ine. VV. Treat, BET US AS. TY Ca oa cccccsasecccesscsccnsvnstios 1s

Metropolitan Life Insurance Co. v. Tay-

BOP, GEL 1105. TS CED nko csccnnscacdscsecasessssnuseenseees i

Morales v. ily ns World Airlines, Inc.,

BOG USS. ES (IBGE) vccccccocscnscscensesss sca al uay panveeunean aan 14

Northcross v. Board of Education of

Memphis City Schools, 412 U.S. 427

CRF? cicavecosecessevassesanseriverssacsennbicsssmantbaeroneas usa 17

Oneida Indian Nation v. County of

Oneida, 434 U.S. G6i CIS 1S) cicistccctcrnsinnaunnanean 5

Partin v. Cableview, Inc., 948 F. Supp.

1046 (S.D. Ald, TBPG) csccsescoccsinsoneniicsietommeunsaaan 14

Phipps v. Federal Deposit Insurance

Corp., 417 F.3d 1006 (8th Cir. 2005)............. 10, 26, 27

Rivet v. Regions Bank of Loursiana, 522

UF BS, STO CAD) oicsccess ccsseosssecandoncnvars eeeueenuasaaaraia een 4

Rowe v. New Hampshire Motor Trans-

port Ass'n, 552 U.S. 364 (ZOOB) .......cccccosrsssoccsrcressccece 18

Saxton v. Capital One Bank, 392

F’. Supp. 2d 772 (S.D. Mine. BOB) cacacestsssesssccmsescoaans 14

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

400 (LOO) istsnanssiuvntniisimemeiae 10, 12, 18, 24, 26

Smith v. City of Jackson, 544 U.S. 228

CIO) svssniscictaretestststiautdnnemaee 17

lll em Ml Ll lil, ll, lll, Nt celal laste, etl. ti ee

TABLE OF AUTHORITIES—Continued

Southland Corp. v. Keating, 465 U.S. |

| __ ESEESRSEHS syeres RI te Po ieee a a 17

Talbott v. Board of Commissioners, 139

a Lo sisdesbonnneneunbeds 16

Tiffany v. National Bank of Missouri, 85

Se ee EE, FUP BUDO TED dics dnticsccvnesentnccscccensceeacnses 6, 16

United States v. Winstar Corp., 518 U.S.

a eo sncneaennesounnetuanss ¢

Venture Properties, Inc. v. First South

ern Bank, 79 F.3d 90 (8th Cir. 1996)................0000.22.15

STATUTES AND LEGISLATIVE MATERIALS

ER Re oe ces emeaneneisieeuiine SANA passim

SIN kincaid aaah ean ste pieeddnebedbannsentbeiahetabansuneiens passim

y lL 163 I PPTTITITITITITITITITITITITITTITTTLITirieiTiiiirii iii 20

ee a ackduanenaaade 8%. 20

oar Sas ls caepenlib cana debanenanuetaines 14

SE i aasmeenedabake saaeeeal passim

28 U.S.C.

ER eco a eau uauianeaanenenensens Z

ii ooo ed aakineiaaiaeekeeuieusesement 5 9

ie seat ncasiianehene 3

ra ssauaiaissuaseussmeeeuesuabauiess 2

IE | sea huelinbeieatenebenaeusecs fi

42 U.S.C. § 2201

TABLE OF AUTHORITIES—Continued

Missouri Second Mortgage Loans Act,

Mo. Kev. Stat.

$$ 408.23 1-40%8.241

§ 408.232

§ 408.233

Depository Institutions Deregulation and

Monetary Control Act of 1980, Pub. L.

i passim

K:mployee Retirement. Income Security

Act of 1974, Pub. L. No. 93-406, 8&8 Stat.

Financial Institutions Reform, Recovery,

and E:inforcement Act of 1989, Pub. L.

No. 101-73, 103 Stat. 183

Labor Management Relations Act of 1947,

Pub. L. No. 80-101; 61 Stat. 136

National Bank Act of 1864, ch. 106, 13 Stat.

iil sisecdedenadiasnieniendanencusenieaesdandeliedadiadamdasiammesinesianneeh passim

H.R. Conf. Rep. No. 96-842 (1980) .............. ec ceceeeseee seen ees 22

eC) _ RR regret nny OI mE Z1

125 Cong. Rec. 30,655 (1979)

126 Cong. Rec. 6,900 (1980) ....... ESO ENERO Rech ARE RE OTT Soe 9

126 Cong. Rec. 6,907 (1980) ...c.cecccsssesccsssssescsessssessstsesecee, 8

REGULATIONS

ER. § 7.4001

Xx]

TABLE OF AUTHORITIES—Continued

Page(s)

OTHER AUTHORITIES

12 U.S.C. §1881d Preempts Contrary

State Common Law Restrictions On

Credit Card Loans, FDIC Advisory

Op. 93-27 (July 12, 1993), available at

http://www.fdic.gov/regulations/laws/

cr cccseie tice isasecssepccnnnion 9

grief of Amicus Curiae Federal Deposit

Insurance Corporation at the Request

of the Court, Discover Bank v. Vaden,

No. 06-1221 (4th Cir.), available at 2007

WL 551361

General Counsel’s Opinion No. 10: Inter-

est Charges Under Section 27 of the

Federal Deposit Insurance Act, 63

ed. Reg. 19,258 (Apr. 17, 1998) 25D

COREE eee htt

“Most Favored Lender” Doctrine Applies

T'o Insured State Banks, FDIC Advi-

sory Op. 81-3 (Feb. 3, 1981), avazlable

at http://www.fdic.gov/regulations/laws/

rules/4000-730. html

Whether Certain F'ees Levied By A Bank

In Connection With Home Equity

Loans Constitute Interest Under 12

U.S.C. 85 And 12 C.F.R. 7.40001(a),

OCC Interpretive Letter No. 803 (Oct.

7, 1997), available at 1998 WL 820183..................... 26

IN THE

Supreme Court of the lintted States

No. 09-

US BANK NATIONAL ASS’N ND; US BANK NATIONAL

ASS’N; FIRSTPLUS HOME LOAN TRUST 1996-2;

FIRSTPLUS HOME LOAN OWNER TRUSTS 1996-3, 1996-4,

1997-1, 1997-2, 1997-3, 1997-4, 1998-1, 1998-2, 1998-3,

1998-4, AND 1998-5; WILMINGTON TRUST Co.; GOLETA

NATIONAL BANK; RESIDENTIAL FUNDING Co., LLC;

SOVEREIGN BANK; HSBC FINANCIAL CORP., F/K/A

HOUSEHOLD FINANCIAL CORP.,

Petitioners,

DEANTHONY THOMAS, SUSAN JELINKE-

THOMAS, STEVEN M. RICH,

Responden fs.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

US Bank National Association ND; US Bank Na

tional Association; FirstPluas Home Loan Trust 1996-2;

FirstPlus Home Loan Owner Trusts 1996-3, 1996-4,

1997-1, 1997-2, 1997-3, 1997-4, 1998-1, 1998-2, 1998-3,

19984, and 1998-5; Wilmington Trust Company; Goleta

National Bank; Residential Funding Company, LLC;

Sovereign Bank; and HSBC Financial Corporation re-

spectfully petition for a writ of certiorari to review the

judgment of the United States Court of Appeals for the

Eighth Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals (App. la-13a) Is

reported at 575 F.3d 794. The district court’s order de-

nying respondents’ motion to remand the case to state

court (App. 15a-17a) is unreported, as are its orders

granting petitioners’ motion to dismiss the complaint

(App. 19a-20a) and denying reconsideration of the dis-

missal (App. 21la-22a).

JURISDICTION

The judgment of the court of appeals was entered

on August 7, 2009. A timely petition for rehearing en

bane was denied on November 24, 2009. See App. 23a.

On February 16, 2010, Justice Alito extended the time

within which to file a petition for a writ of certiorari to

and including March 24, 2010. See Appl. No. 09A746.

This Court’s jurisdiction is invoked under 28 U.S.C.

§ 1254(1), and is unaffected by 28 U.S.C. § 1447(d) be-

cause petitioners seek review not of a remand order by

a district court but of the judgment of the court of ap

peals, see, e.g., Aetna Cas. & Sur. Co. v. Flowers, 330

U.S. 464, 466-467 (1947) (citing Gay v. Ruff, 292 U.S. 25

(1934)).

STATUTORY PROVISIONS INVOLVED

Section 30 of the National Bank Act of 1864 (codi-

fied at 12 U.S.C. §§ 85-86) and section 521 of the De

pository Institutions Deregulation and Monetary Con-

trol Act of 1980 (codified at 12 U.S.C. § 1831d) are set

forth in the Appendix (at 25a-27a).

STATEMENT

In this case, a California state bank charged fees to

Missouri residents for the origination of second-

mortgage loans. Although the fees were permissible

under California law, the borrowers brought a putative

class action in Missouri state court on the ground that

the fees violated Missouri law. Had the bank been a

national bank, the National Bank Act would have au

thorized it to charge the fees in question and permitted

removal of the case to federal court. The issue here is

whether the twin provision of federai iaw that applies

to state banks, a provision Congress adopted as part of

the Depository Institutions Deregulation and Monetary

Control Act of 1980, similarly allowed the state bank to

charge the fees and authorized removal of the lawsuit

to federal court.

1. With exceptions not relevant here, federal law

permits a defendant who has been sued in state court to

remove the case to federal district court if the case

properly could have been brought in federal court in

the first place, i.e., if the district court has original ju-

risdiction over any of the claims. See 28 U.S.C. § 1441.

One category of cases over which federal district courts

have original jurisdiction, and that thus can be removed

from state court, 1s “all civil actions arising under the

Constitution, laws, or treaties of the United States.”

Id. § 133

Whether a lawsuit arises under federal law (and is

therefore removable) is normally determined using the

“well-pleaded complaint” rule, under which a court con-

siders only the claims properly pleaded in the com-

plaint. See, e.g., Aetna Health Inc. v. Davila, 542 US.

200, 207 (2004); Gully v. First Nat'l Bank, 299 U.S. 109,

113 (1936). “The rule makes the plaintiff the master of

the claim; he or she may avoid federal jurisdiction by

exclusive reliance on state law.” Caterpillar Inc. v.

Williams, 482 U.S. 386, 392 (1987).

One exception to the well-pleaded complaint rule is

the doctrine of “complete preemption,” which applies

“when a federal statute wholly displaces [a] state-law

eause of action.” Beneficial Nat'l Bank v. Anderson,

539 U.S. 1, 8 (2003). In that circumstance, federal law

does not merely provide a defense to a state-law claim;

rather, the claim is deemed to arise under federal law

and therefore may be removed to federal court (when

originally filed in state court). See id. “This is so be-

cause ‘[wJhen the federal statute completely pre-empts

the state-law cause of action, a claim that comes within

the scope of that cause of action, even if pleaded in

terms of state law, is in reality based on federal law.’”

Aetna Health, 542 U.S. at 207-208 (alteration in origi-

nal) (quoting Anderson, 539 U.S. at 8).'

Congress may expressly provide for complete pre-

emption. See El Paso Natural Gas Co. v. Neztsosie,

526 U.S. 473, 484 (1999) (explaining that 42 U.S.C.

§ 2201(n)(2) explicitly “transforms into a federal action

‘any public hability action arising out of ... a nuclear in-

cident,’” by “provid[ing] for removal to a federal court

as of right if a putative [such} action is brought in a

state court” (quoting the statute)). Express legislative

direction is not required, however; this Court has thus

far identified three instances in which a federal law

completely preempts certain state-law claims despite

Complete preemption flows from an “independent corollary”

to the well-pleaded complaint rule, namely that “a plaintiff may not

defeat removal by omitting to plead necessary federal questions.”

Rivet v. Regions Ba nk of La., 522 U.S. 470, 475 (1998).

the absence of statutory language explicitly command-

ing that result.

First, in Avco Corp. v. Aero Lodge No. 785, 390

U.S. 557 (1968), the Court held that section 301 of the

Labor Management Kelations Act of 1947 (LMRA),

Pub. L. No. 80-101, 61 Stat. 186, completely preempted

a state-law claim to enforce a no-strike clause in a col-

lective bargaining agreement. See 390 U.S. at 559-560;

see also Franchise Tax Bd. v. Construction Laborers

Vacation Trust for S. Cal., 463 U.S. 1, 23 (1983) (“The

necessary ground of decision [in Avco] was that the

pre-emptive force of § 301 is so powerful as to displace

entirely any state cause of action ‘for violation of con-

tracts between an employer and a labor organization.’”’

(quoting § 301)). Second, in Metropolitan Life Insur-

ance Co. v. Taylor, 481 U.S. 58 (1987), the Court held

that section 502(a) of the Employee Retirement Income

Security Act of 1974 (ERISA), Pub. L. No. 93-406, 88

Stat. 829, completely preempted a state-law claim

charging improper processing of benefits under an ER-

ISA plan. See 481 U.S. at 64-67. Third—and of particu-

lar relevance to this case—in Beneficial National Bank

v. Anderson, the Court held that the National Bank Act

of 1864 (NBA), ch. 106, 13 Stat. 99, completely pre-

empted state-law usury claims against national banks,

i.e., federally chartered, federally insured banks. See

539 U.S. at 9-11.’

~ The Court has also held that state-law claims seeking eject

ment based on Native American title are completely preempted.

See Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 677-

678 (1974), cited n Catermillar, 482 U.S. at 393 n.8. This holding

was based not on a statute but on “the special historical relation

ship between Indian tribes and the Federal Government.” Ander

som, 539 U.S. at 8 n.4.

The provision of the NBA at issue in Anderson was

section 30, now codified at 12 U.S.C. §§ 85-86. Section

85 “sets forth the substantive limits on the rates of in-

terest that national banks may charge,” while § 86 “sets

forth the elements of a usury claim against a national

bank ... and prescribes the remedies available to bor-

rowers who are charged higher rates.” Anderson, 539

U.S. at 9. Under § 85, a national bank may charge—on

a loan issued to a borrower anywhere in the country—

up to the higher of two interest rates: 1) the maximum

rate permitted for any lender by the law of the bank’s

home state (or 7 percent if no rate is provided by that

law), and 2) one percent above the discount rate on 90-

day commercial paper in effect at the Federal Reserve

Bank in the national bank’s home district. See 12

U.S.C. § 85; see also 12 C.F.R. § 7.4001(b) (“A national

bank located in a state may charge interest at the

maximum rate permitted to any ... lending institution

by the law of that state.”); Marquette Nat’l Bank of

Minneapolis v. First of Omaha Serv. Corp., 489 U.S.

299 (1978) (national banks may “export” their home-

state interest rates, applying them to loans made to

out-of-state borrowers).

In finding complete preemption under the NBA,

this Court clarified that the “dispositive question” for

complete-preemption analysis 1s whether Congress in-

tended a federal cause of action to be exclusive. Ander-

son, 5389 U.S. at 9; see also id. at 9 n.5 (“[T]he proper

National banks’ authority to charge the highest rate allowed

for any lender by the law of their home states is commonly re

ferred to as “most favored lender” status. See, e.g., Marquette, 439

U.S. at 314 & n.26 (citing Tiffany v. National Bank of Mo., 85 US.

(18 Wail.) 409, 413 (1874)).

inquiry focuses on whether Congress intended the fed-

eral cause of action to be exclusive.”). As to the NBA,

the Court found that question answered by decisions,

stretching back over a century, that had deemed the

cause of action in § 86 to be exclusive. See zd. at. 10 (cit-

ing, among others, Farmers’ & Mechanics’ Nat'l Bank

v. Dearing, 91 U.S. 29, 32-33 (1875); Evans v. National

Bank of Savannah, 251 U.S. 108, 114 (1919)).

2. In the late 1970s, interest rates soared to record

levels. See, e.g., United States v. Winstar Corp., 518

U.S. 839, 845 (1996) (piurality opinion); 28 U.S.C. § 1961

note (showing changes in the 52-week T-bill rate

through the period). The high rates gave national

banks a competitive advantage over their state-

chartered counterparts, because “state lending institu-

tions were constrained in the interest they could charge

by state usury laws.” Greenwood Trust Co. v. Massa

chusetts, 971 F.2d 818, 826 (1st Cir. 1992) (citing Gavey

Props./762 v. First Fin. Sav. & Loan Ass’n, 845 F.2d

519, 521 (5th Cir. 1988)). “National banks did not share

this inhibition because they could charge whatever in-

terest rates were allowed under ... [National] Bank Act

§ 85.” Greenwood Trust, 971 F.2d at 826.

Congress sought to rectify this inequality in 1980

when it enacted the Depository Institutions Deregula-

tion and Monetary Control Act (DIDA), Pub. L. No. 96-

221, 94 Stat. 132. Section 521 of DIDA—the opening

clause of which confirms Congress’s intent “to prevent

discrimination against State-chartered insured deposi-

tory institutions ... with respect to interest rates,” 12

U.S.C. § 1831d(a}—amended the Federal Deposit In-

surance Act so as to establish limits on the interest fed-

erally insured state banks may charge, and to provide a

federal cause of action against banks that ignore those

limits. See 94 Stat. at 164-165 (codified at 12 U.S.C.

§ 1831d). Under § 1831d(a), which explicitly preempts

contrary state laws, state banks may charge up to the

nigher of two interest rates: 1) the maximum rate

permitted for any lender by the law of the bank’s home

state, and 2) one percent above the discount rate on 90-

day commercial paper in effect at the Federal Reserve

Bank in the state bank’s home district. See 12 U.S.C.

§ 1831ld(a); see also “Most Favored Lender” Doctrine

Applies To Insured State Banks, FDIC Advisory Op.

81-3 (Feb. 3, 1981), available at http://www.fdic.gov/

regulations/laws/rules/4000-730.html.*

As several circuits have recognized (including the

Kighth Circuit), the language of § 1831d is “substan-

tially identical” to that of 12 U.S.C. $$ 85-86, the NBA

provisions underlying this Court’s’ complete-

preemption decision in Anderson. Liscover Bank vy.

Vaden, 489 F.3d 594, 605 n.14 (4th Cir. 2007), rev’d on

other grounds, 129 8. Ct. 1262 (2009); accord, e.g., Ma-

mot Feed Lot & Trucking v. Hobson, 539 F.8d 898, 903

n.4 (8th Cir. 2008); In re Community Bank of N. Va.,

418 F.3d 277, 295 (3d Cir. 2005); Gave Yy Props., 845 F.2d

at 521. “The parallelism was not mere happenstance.

To the exact contrary, Congress made a conscious

choice to incorporate the [National] Bank Act standard

into DIDA.” Greenwood Trust, 971 F.2d at 827 (citing

126 Cong. Rec. 6,907 (1980) (statement of Sen. Bump-

ers); 125 Cong. Ree. 30,655 (1979) (statement of Sen.

Pryor)). In fact, “Congress transplanted verbatim in

section 521 [of DIDA] substantive language from sec

tion 85 ... with the explicit purpose of providing state-

4 , , .

DIDA gave States the right to opt out of the preemption ef

fected by § 183ld. See DIDA § 525, 94 Stat. at 167 (codified at 12

U.S.C. 8§ 1730g¢ note (repealed), 1785 note, 1831d note).

chartered banks with authority identical to that en-

joyed by national banks under section 85.” 12 U.S.C.

§ {831d Preempts Contrary State Common Law RFe-

strictions On Credit Card Loans, FDIC Advisory Op.

93-27 (July 12, 1993), available at http://www.fdic.gov/

regulations/laws/rules/4000-8160.html; see also 126

Cong. Rec. 6,900 (1980) (statement of Sen. Proxmire)

(Under DIDA, “State chartered depository institutions

are given the benefits of 12 U.S.C. § 85.”).

3. Respondents are Missouri homeowners who ob

Luined second-mortgage loans from FirstPius Bank, a

California-chartered, federally insured bank that has

since gone bankrupt. App. 2a-8a. Petitioners are enti-

ties that subsequently purchased or assumed some of

respondents’ and/or other FirstPlus loans. App. 8a. In

2004, respondents filed a putative class action against

petitioners in Missouri state court, alleging that

FirstPlus charged them fees, in connection with the

origination of their loans, that violated the Missouri

Second Mortgaye Loans Act (MSMLA), Mo. Rev. Stat.

§§ 408.231-408.241. App. 3a. More specifically, respon

dents’ state-court petition (the Missouri equivalent of a

complaint) alleged (jj 67) that the Thomas respondents

were charged, among other fees, “a 10% origination

fee” that Missouri law did not permit. Among other

remedies, respondents sought “the return of all interest

charged ... on any of these Second Mortgage Loans.”

Id. at 49 (Prayer for Relief).

Petitioners removed the case to federal court on

the ground that DIDA completely preempted respon

dents’ claims and hence they arose under federal law,

giving the district court original jurisdiction under 28

U.S.C. § 1331. See App. 4a. Petitioners “relied primar

ily upon this] ... Court’s decision in Beneficial Na

tional Bank v. Anderson, ... allegling that] the similar

ity in language between DIDA and the NBA compelled

the conclusion that DIDA, like the NBA, created the

exclusive federal remedy for usury claims against fed-

erally-insured, state-chartered banks.” Jd.

Following removal, respondents filed an amended

petition that reiterated the allegation regarding the

origination fee paid by the Thomas respondents and

further alleged (4 72) that respondent Rich was ille-

gally charged “an 8.5% origination fee.” Respondents

also moved for a remand to state court, asserting that

DIDA did not completely preempt their claims, in part

because the claims were based not on the periodic in-

terest rates they were charged but on the ongination

fees and certain other fees imposed in connection with

the loans. App. 4a, 15a, 16a.

The district court denied respondents’ motion to

remand, agreeing with petitioners that DIDA ‘“‘com-

pletely preempts any state law attempting to limit the

amount of interest and fees a federally insured-state

chartered bank can charge.’” App. 16a (quoting /7 re

Community Bank, 418 F.8d at 295). The court specifi-

cally rejected respondents’ attempt to distinguish pen

odie interest rates from loan fees, relying on a then-

recent Eighth Circuit decision, Phipps v. F’DIC, 417

3d 1006 (8th Cir. 2005), that had held such a distinc-

tion untenable. See App. 16a. The Phipps court, in

turn, had based its holding on: 1) a regulation issued by

the Comptroller of the Currency that broadly construes

the term “interest” under the NBA to encompass nu

merous types of fees, see 12 C.F.R. § 7.4001(a); and 2)

Smiley v. Citibank (S.D.), N.A., 517 U.S. 735 (1996), in

which this Court deferred to that broad definition,

deeming it reasonable and thus entitled to deference,

see id. at 740-745; Phipps, 417 F.3d at 1011-1012.

After concluding that it had jurisdiction by virtue

of complete preemption, the district court granted peti-

tioners’ motion to dismiss the complaint on substantive

preemption grounds. See App. 19a-20a. Respondents

moved for reconsideration but the district court de-

clined to reconsider, noting that since its order denying

remand, a second court of appeals had concluded that

DIDA completely preempts state-law usury claims

against federally insured state banks. See App. 22a

(citing Discover Bank, 489 F.3d 594),

4. The Eighth Cireuit reversed. See App. la-l3a

In its view, “the language of DIDA, unlike the NBA,

does not reflect Congress’ intent to provide the exclu

sive cause of action for a usury claim against a feder

ally-insured state-chartered bank.” App. 6a. In par

ticular, the court observed that both the substantive

and remedial provisions in § 1831d indicate that they

apply only “if the applicable rate prescribed in

[§ 18831d(a)] exceeds the rate [a] State bank ... would be

permitted to charge in the absence of” that subsection

12 U.S.C. § 1831d(a), (b), quoted in App. 7a. According

to the court of appeals, this language “clearly indicates

the limited nature of the federal statute’s preemption of

state law.” App. 8a. Such a “limited nature,” the court

reasoned, precluded the conclusion that Congress in

tended the cause of action in § 183]d(b) to be exclusive.

i.e., precluded the conclusion that any state-law claims

were completely preempted. See App. 10a-1 1a.

The court of appeals acknowledged that “other fed

eral courts have interpreted the language in § 183l1d

differently.” App. lla (citing Discover Bank, 489 F.3d

594). The court contended, however, that these courts

had failed to consider “the unabridged language of the

statute.” App. 12a. The court did not address how its

own conclusion could be squared with Congress’s in

tent—revealed both in “the unabridged language of the

statute” and in the legislative history—to put national

and state banks on an equal footing “with respect to in

terest rates,” 12 U.S.C. § 183l1d(a).

The Eighth Circuit also ruled that by its terms

§ 1831d does not apply in this case because the maxi

mum periodic percentage interest rate that Missouri

law allowed for each of the loans at issue was either

20.04% or unlimited (depending on the timing of the

particular loan), “well in excess of the rate allowed by

DIDA.” App. 10a (citing Mo. Rev. Stat. § 408.232(1))

The court did not explain this conclusion, and in par

ticular never stated what “the rate allowed by DIDA”

was. More importantly, although respondents had, a

noted, argued that their claims were based on loan fees

rather than periodic interest rates, the Eighth Circuit

did not—as required by this Court’s holding in Smiley

that “interest” for these purposes includes various loan

fees—compare the fees that Missouri law permitted on

the loans at issue with the fees allowed under DIDA,

i.e., the fees allowed by the law of California, FirstPlus

Bank’s home state.

REASONS FOR GRANTING THE PETITION

The Eighth Circuit’s decision creates an acknowl

edged conflict in the circuits on whether section 521 of

DIDA, 12 U.S.C. § 1881d, completely preempts state

law usury claims against state-chartered, federally in

sured banks. That question is important and recurring,

and given the integrated banking system that prevails

nationwide it is one on which a uniform answer is es-

sential. Moreover, the Eighth Circuit’s answer to the

question is wrong. This Court’s review is therefore

warranted. Keview is also warranted of the second

question presented, because the court of appeals’ ruling

that DIDA does not apply here conflicts with Smiley v.

Citibank (S.D.), N.A., 517 US. 735 (1996). There, this

Court held—deferring to the Comptroller of the Cur

renecy’s statutory interpretation—that many loan fees

constitute “interest” under 12 U.S.C. § 85. See 517 USS.

at 740, 744-745. Yet here the Eighth Circuit ignored

fees, looking only to penodic percentage interest rates

in concluding that the “interest” allowed on the loans to

respondents was greater under Missouri law than un

der DIDA

THE EIGHTH CIRCUIT’S COMPLETE-PREEMPTION

HOLDING IS WRONG AND CREATES A CIRCUIT CON

FLICT ON AN IMPORTANT AND RECURRING QUESTION

OF FEDERAL LAW

A The Decision Below Conflicts With Decisions

Of The Third And Fourth Circuits

(he court of appeals held here that section 521 of

DIDA, 12 U.S.C. § 1881d, does not completely preempt

state-law usury claims against federally insured state

banks. See App. 10a-lla. As the court itself recog

nized, “other federal courts have interpreted the lan

guage in § 1831d differently.” App. lla. Specifically, in

In re Community Bank of Northern Virginia, 418 F.3d

277 (8d Cir. 2005), the Third Circuit held that “§ 521 of

DIDA completely preempts any state law attempting

to limit the amount of interest and fees a federally in

sured-state chartered bank can charge,” id. at 295

(footnote omitted). The Fourth Circuit later reached

the same conclusion. See Discover Bank v. Vaden, 489

k'.3d 594, 605-606 (4th Cir. 2007), rev'd on other

grounds, 129 S. Ct. 1262 (2009). And the Ninth Circuit

has suggested that it too shares this view, though with

out actually deciding the issue. See Cross-Country

Bank v. Klassman, 74 F. App’x 796, 797 (9th Cir. 2003)

(“|1)t appears that the rationale of the Supreme Court’s

decision in Anderson would extend to usury claims

against state chartered, federally insured banks.”).°

In finding complete preemption under DIDA, the

Third and Fourth Circuits both invoked this Court’s

holding that section 380 of the National Bank Act, 12

U.S.C. §§ 85-86, completely preempts state-law usury

claims against national banks. See Beneficial Nat'l

Bank v. Anderson, 539 U.S. 1, 9-11 (2008), cited on In re

Community Bank, 418 F.3d at 294-295, and Discover

Bank, 489 F.3d at 604-605. Each circuit then noted that

Congress drew the relevant language in DIDA from

that section of the NBA, and each circuit thus applied

the principle, repeatedly enunciated by this Court, that

“Iwlhen Congress borrows language from one statute

and incorporates it in another statute, the language of

the two acts ordinarily should be interpreted the same

way.” In re Community Bank, 418 F.3d at 295-296 (cit-

ing, among others, Morales v. Trans World Airlines,

Inc., 504 U.S. 374, 3838-384 (1992)), quoted in Discover

Bank, 489 F.3d at 605. The Fourth Circuit also drew

support for its holding from an amicus brief filed with

the court by the FDIC—the agency that regulates fed

erally insured state banks, see 12 U.S.C. § 1813(q)(8)--a

brief that argued for complete preemption on the

strength of Anderson after noting that “[t]he agency

has ‘uniformly construed Section 1831d in pari materia

District courts have likewise divided on the issue Compare,

e.4., Forness v. Cross Country Bank, Inc., No. 05-ev-417, 2006 WL

PANHDSS, at *3 (S.D. Ill. Jan. 13, 2006), and Hill v. Chemical Bank,

709 F. Supp. 948, 951 (I). Minn. 1992) (each finding complete pre

emption), with Saxton v. Capital One Bank, 392 F.Supp. 2d 772,

784 (S.D. Miss. 2005), and Partin v. Cableview, Inc., 948 F. Supp

1046, 1049 & n.4 (S.D. Ala. 1996) (each holding the opposite)

with Sections 85 and &6.’” Discover Bank, 489 F.3d at

606 (quoting Brief of Amicus Curiae Federal Deposit

insurance Corporation at the Request of the Court, at

10, Discover Bank (No. 06-1221), available at 2007 WL

551361 (hereafter FDIC Amicus Br.)).

In addition to directly conflicting with these other

eircuit decisions, the Eighth Circuit’s interpretation of

DIDA is in tension with decisions of two other circuits

(and with several of its own prior cases) likewise recog-

nizing, in other contexts, that 12 U.S.C. § 1831d should

be construed identically with §§ 85-86 because it was

patterned after those sections and intended to have the

same meaning. See Greenwood Trust Co. v. Massachu-

setts, 971 F.2d 818, 827 (Ist Cir. 1992) (“The historical

record clearly requires a court to read the parallel pro-

visions of DIDA and the [National] Bank Act 2m pari

materia.”); Gavey Props./762 v. first Fin. Sav. & Loan

Ass’n, 845 F.2d 519, 521 (5th Cir. 1988) (identical inter-

pretation of the two statutes “virtually compelled”

“(gliven the similarity of language’); Mamot Feed Lot

& Trucking v. Hobson, 539 F.3d 898, 903 n.4 (8th Cir.

2008) (“Courts construe the parallel provisions of § 85

and § 1831d similarly, as §1831d was modeled after

§ 85.”); Venture Props., Inc. v. First S. Bank, 79 F.3d

90, 91 (8th Cir. 1996) (citing Greenwood Trust for the

proposition that “12 U.S.C. § 1831d parallels 12 U.S.C.

§ 85 and should be interpreted the same way’). Had

che court of appeals adopted the same approach here—

an approach that this Court’s decisions direct, see supra

p.14; infra pp.17-18—it necessarily would have reached

the opposite conclusion regarding complete preemp-

tion, given this Court’s holding that section 30 of the

NBA completely preempts state-law usury claims

against national banks, see Anderson, 539 U.S. at 9-11.

B. The Question Presented Is Recurring And

Important

This Court’s resolution of the circuit conflict cre-

ated by the Eighth Circuit’s decision is warranted. The

divisions at both the circuit and district court levels, see

supra pp.13-14 & n.5, demonstrate that the question

presented is a recurring one. And prompt resolution of

that question is important—just as it was with the

analogous question under the NBA, which this Court

took up as soon as a circuit conflict developed, see

Anderson, 539 U.S. at 5-6 (noting that the court of ap-

peals decision in that case conflicted with the holding of

one other circuit).

A definitive answer to the question presented is

needed because the disuniformity and uncertainty cre-

ated by the circuit conflict are inimical to state banks,

and to the secondary markets in which state banks may

sell loans after origination. As this Court has observed,

“(ulniform rules limiting the liability of national banks

and prescribing exclusive remedies for their over-

charges are an integral part of a banking system that

need|s] protection from ‘possible unfriendly State legis-

lation.’”” Anderson, 539 U.S. at 10 (quoting Tiffany v.

National Bank of Mo., 85 U.S. (18 Wall.) 409, 412

(1874)); see also Talbott v. Board of Comm ’rs, 139 U.S.

438, 443 (1891) (federal law evinces “an intent to create

a national banking system co-extensive with the terri-

torial limits of the United States, and with uniform op-

eration within those limits”); Marquette Nat’l Bank of

Minneapolis v. First of Omaha Serv. Corp., 4389 U.S.

299, 314-316 (1978) (similar). Federally insured state

banks are no less a part of that integrated nationwide

banking system than national banks; hence, the impor-

tance of uniformity regarding their liability is just as

great. Likewise, state banks, particularly when en-

gaged in interstate lending, also need protection from

“possible unfriendly State legislation.” Indeed, Con-

gress’s purpose in adopting § 1831d was to ensure that

state banks did not suffer a competitive disadvantage

because of provisions of state law from which Congress

had already shielded national banks. See supra pp.7-8.

Finally, because many loans are between banks and

borrowers located in different States, disuniformity in

the law can “encourage and reward forum shopping.”

Southland Corp. v. Keating, 465 U.S. 1, 15 (1984).°

C. The Court Of Appeals’ Holding Is Wrong

The court of appeals erred in concluding that

§ 1831d does not completely preempt state-law usury

claims against federally insured state hanks. This

Court has repeatedly made clear that similar language

in different statutes should be given the same meaning.

See, e.g., Northcross v. Board of Educ. of Memphis City

Sch., 412 U.S. 427, 428 (1973) (per curiam) (“The simi-

larity of language in [two statutes] is, of course, a

strong indication that the two statutes should be inter-

preted pari passu.’’), cited in Smith v. City of Jackson,

544 U.S. 228, 233 (2005); see also In re Community

Bank, 418 F.3d at 296 (citing several decisions from this

Court). That principle is relevant here because Con-

® The need for uniformity also underlay this Court’s finding of

complete preemption in the labor-management and ERISA con-

texts. See Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 210 (1985)

(“{[Tthe subject matter of [LMRA] § 301(a) is peculiarly one that

calls for uniform law.” (first alteration in original) (internal quota-

tion marks omitted)); Lingle v. Norge Div. of Magic Chef, Inc., 486

U.S. 399, 404 (1988) (similar); Aetna Health Inc. v. Davila, 542

U.S. 200, 208 (2004) (“The purpose of ERISA is to provide a uni-

form regulatory regime over employee benefit plans.”).

gress consciously drew the text of § 1831d from section

30 of the National Bank Act, 12 U.S.C. §§ 85-86. See

supra pp.8-9. And this Court held in Anderson that

those provisions of the NBA completely preempt state-

law usury claims against national banks. See 539 U.S.

at 9-11. The parallel language in § 183ld should thus

likewise be construed to completely preempt state-law

usury claims.

Indeed, the argument for complete preemption is

even stronger here than it was in Anderson, because of

a second rule of statutory interpretation. That rule

states that Congress’s inclusion of pre-existing lan-

guage in a statute is presumed to incorporate any set-

tled judicial construction of that language. See, e¢.g.,

Rowe v. New Hampshire Motor Transp. Ass’n, 552

U.S. 364, 370 (2008) (citing Merrill Lynch, Pierce, Fen-

mer & Smith Inc. v. Dabit, 547 U.S. 71, 85 (2006)); Brag-

don v. Abbott, 524 U.S. 624, 644-645 (1998). Thus,

whereas the canon just discussed directs courts to con-

strue two statutes in parallel but does not indicate what

the proper construction is, this canon directs courts to

embrace a specific construction—namely the one that

Congress, at least implicitly, has endorsed. And by the

time of DIDA’s passage in 1980, it had been settled for

decades that the language in section 30 of the NBA (12

U.S.C. §§ 85-86) reveals a congressional intent to create

an exclusive cause of action for usury claims against na-

tional banks. See Anderson, 539 U.S. at 10 (citing,

among others, Farmers’ & Mechanics’ Nat'l Bank v.

Dearing, 91 U.S. 29, 32-33 (1875); Evans v. National

Bank of Savannah, 251 U.S. 108, 114 (1919)). Con-

gress’s application of essentially the same language to

state banks in § 183ld compels the conclusion that it

intended the cause of action in that section to be exclu-

sive as well. That congressional intent is “dispositive”

as to complete preemption. Anderson, 539 U.S. at 9.

The Eighth Circuit reached the opposite conclusion

on the ground that both the substantive and remedial

provisions in § 1831d include the phrase “if the applica-

ble rate prescribed in [§ 1831d(a)] exceeds the rate [a]

State bank ... would be permitted to charge in the ab-

sence of’ that subsection. 12 U.S.C. § 1831d(a), (b); see

App. 7a-9a. In the court’s view, this phrase indicates

Congress’s desire to limit the reach of the cause of ac-

tion in § 1831d(b), thus precluding a finding of complete

preemption. See App. 10a-lla. That reasoning is

flawed; the “niggling variation[{]” between the two

statutes identified by the court of appeals, Greenwood

Trust, 971 F.2d at 827 n.7, does not justify its disregard

of their overall “striking” similarity, id. at 826 n.7.

The relevant portions of both DIDA and the NBA

serve the same purpose: to shield federally insured

state and national banks, respectively, from the limits

imposed by state usury laws. Each statute, moreover,

accomplishes that goal in the same way: by giving

banks the authority to charge a federally prescribed

rate, namely (in both statutes) the higher of “the rate

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

located” and “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. 12 U.S.C. §§ 85, 1831d(a).

And each statute creates a federal cause of action, with

the same limitations period and the same prescribed

damages, against banks that exceed that federally au-

thorized maximum. See id. §§ 86, 1831d(b). The “if?”

clause on which the Eighth Circuit focused is insignifi-

cant: It merely recognizes that if the DIDA rate is no

higher than what state law authorizes, the protection

the statute grants is unnecessary, as the bank can sim-

ply charge the state rates. See Gavey Props., 845 F.2d

at 522 (rejecting an argument like the Eighth Circuit’s

on the ground that the “conditional clause ... can be

seen as simply providing a more exacting formulation

than § 85 of Congress’s intent to aid federally insured

financial institutions”).’

There is additional evidence, moreover, that Con-

gress, unlike the Eighth Circuit, sees no substantive

difference between the language in §§ 85-86 and the

language in § 1831d. DIDA included two other provi-

sions virtually identical to section 521 (i.e., § 1831d), the

first of which applied to federally insured savings and

loan associations (seetion 522) and the second of which

applied to insured credit unions (section 523). Like sec-

tion 521, both of these other sections included the “if”

clauses on which the Eighth Circuit placed dispositive

weight here. See DIDA § 522, 94 Stat. at 165 (codified

until 1989 at 12 U.S.C. § 1730g); id. § 523, 94 Stat. at 166

(codified at 12 U.S.C. § 1785(¢)). In 1989, Congress re-

pealed the statutory section containing the savings and

loan provision, and re-enacted that provision else-

where. See Financial Institutions Reform, Recovery,

and Enforcement Act § 407, Pub. L. No. 101-73, 103

Stat. 183, 363 (repealing § 1730g); 7d. § 301, 103 Stat. at

277, 282 (re-enacting the language). The re-enacted

section omits the “if’ clause from the substantive pro-

vision, instead using the phrasing in the NBA, i.e., in 12

U.S.C. § 85. See 12 U.S.C. § 1463(g)(1). The language

: Gavey Properties involved section 522 of DIDA, which, as

discussed immediately below, applied to federally insured savings

and loan associations but used the same language as section 521.

See 94 Stat. at 165 (codified until 1989 as 12 U.S.C. § 1730g).

of the re-enacted remedial provision is also closer to its

NBA counterpart than the original version. Yet the

legislative history of FIRREA states explicitly that the

re-enactment was not intended to effect a substantive

change. See H.R. Rep. No. 101-54, at 343 (1989) (“The

effect of this section is to preserve the current preemp-

tion of state usury laws.”). Congress thus evidently

does not view the inclusion or omission of the “if” clause

on which the Eighth Circuit focused as altering the ex-

tent to which state usury laws are preempted.

Further confirming the infirmity of the Eighth Cir-

cuit’s interpretation is the fact that that interpretation

fails to give effect to Congress’s manifest. purpose in

adopting DIDA. See Discover Bank, 489 F.3d at 604

(construing DIDA in light of “the purpose underlying

fits] enactment”). See generally, e.g., Dolan v. U.S.

Postal Serv., 546 U.S. 481, 486 (2006) (statutory inter-

pretation includes “considering the purpose and con-

text of the statute’). As the statutory text states—in

language the Eighth Circuit never discussed

Congress passed section 521 “to prevent discrimination

against State-chartered insured depository institutions

. with respect to interest rates.” 12 U.S.C. § 1831d(a).

Congress’s explicit objective, in other words, was to

provide federally insured state banks with the same

privileges and protections, in terms of interest rates

and usury laws, enjoyed by national banks. See FDIC

Amicus Br. 10 (“Congress patterned Section 1831d af-

ter Sections 85 and 86, used similar language in both

statutes, provided comparable remedies, and expressed

its intent to provide state banks parity with national

banks.”). The legislative history confirms this intent.

See supra pp.8-9; cf. Metropolitan Life Ins. Co. v. Tay-

lor, 481 U.S. 58, 65-66 (1987) (relying on the legislative

history of ERISA section 502 in holding that that sec-

tion completely preempts state-law claims). In fact, the

conference report accompanying DIDA directly con-

tradicts the Fighth Circuit’s view that DIDA’s preemp-

tive effect is more limited than the NBA’s, stating that

“(s]tate usury ceilings on all loans made by Federally

insured depository institutions ... will be permanently

preempted.” H.R. Conf. Rep. No. 96-842, at 78 (1980)

reprinted in 1980 U.S.C.C.A.N. 298, 308. Recognizing

that the cause of action for usury is necessarily federal,

and therefore removable, is a critical part of the protec-

tion that Congress sought to provide, just as it was

with national banks and the NBA. The Eighth Circuit’s

decision here wrongly denies that protection to feder-

ally insured state banks.*

Finally, even if the Eighth Circuit’s reading of the

statutory language were correct, the court’s conclusion

that DIDA does not completely preempt any state-law

claims would not follow. The court’s interpretation was

that “the remedy set forth in § 1831d(b) only applies in

limited circumstances.” App. 10a. But that does not

warrant a holding that the remedy is not exclusive in

those “limited circumstances,” i.e., when it does apply.

As this Court has repeatedly explained, complete pre-

emption means that putative state-law claims are actu-

ally federal claims if they fall within the scope of an ex-

clusive federal cause of action—whatever that scope

may be. See Anderson, 539 U.S. at 8 (“When the fed-

eral statute completely pre-empts the state-law cause

* The court of appeals also saw great significance in the fact

that § 1831d(a) states that it preempts state law “for the purposes

of this section.” See App. 7a-8a. It is unclear, however, how this

language substantively distinguishes DIDA from the NBA, and

specifically what additional “purposes” the Eighth Circuit thought

could be served by the complete preemption effected by the NBA.

of action, a claim which comes within the scope of that

cause of action ... is in reality based on federal law.”);

Franchise Tax Bd. v. Construction Laborers Vacation

Trust for S. Cal., 463 U.S. 1, 24 (1983) (similar). The

Eighth Circuit’s view that the scope of § 1831d(b) is

narrower than petitioners contend (and other courts

have found) simply does not lead to, or in any way sup-

port, the conclusion that even claims falling within that

narrower scope avoid being completely preempted.

What Congress intended a federal cause of action’s

scope to be, and whether it intended that cause of ac-

tion to be exclusive, are two distinct inquiries.

The court of appeals’ flawed analysis appears to

have been driven by the assumption that complete pre

emption could be found only if Congress intended

§ 1831d to preclude all state-law usury claims. But that

assumption is unwarranted (although, as explained, the

language and history of DIDA establish that Congress

did so intend). Again, the question is simply whether

Congress intended a cause of action to be exclusive of

state-law claims falling within its scope. Indeed, if the

Eighth Circuit’s reasoning were sound, then this Court

should not have (unanimously) found complete preemp-

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

(1968), beeause section 301 of the LMRA does not com-

pletely preempt all state-law claims between unions

and employers, but only “claims founded directly on

rights created by collective-bargaining agreements,

and also claims ‘substantially dependent on analysis of a

collective-bargaining agreement.’” Caterpillar Inc. v.

Williams, 482 U.S. 386, 394 (1987) (quoting Interna-

tional Bhd. of Elec. Workers v. Hechler, 481 U.S. 851,

859 n.3 (1987)); see also Caterpillar, 482 U.S. at 396 n.10

(similar); Livadas v. Bradshaw, 512 U.S. 107, 122 n.16

(1994). Likewise, under the Eighth Circuit’s analysis

this Court’s unanimous decision in Metropolitan Life

Insurance was wrong, because ERISA does not “pre-

empt entirely every state cause of action relating to

[ERISA] plans,” Franchise Tax Bd., 463 U.S. at 25, but

only those that fall “within the scope of § 502(a),” Met-

ropolitan Life Ins., 481 U.S. at 64.

In sum, because the decision below is wrong and

creates a circuit conflict on an important and recurring

issue of federal law, this Court’s review is warranted.

Ul. THE EIGHTH CiRCUrT’Ss HOLDING THAT DIDA DOES

NoT APPLY TO THE LOANS AT ISSUE HERE RESTS ON

A DEFINITION OF “INTEREST” THAT CONFLICTS WITH

THIS COURT’S DECISION IN SMILEY

The court of appeals committed a second, closely

related error in this case. It held that section 521 of

DIDA by its terms does not even apply to the loans at

issue here because “the interest rate allowed by Mis-

sourl law for second mortgages was either as high as

20.[0]4% or unlimited at all applicable times, well in ex-

cess of the rate allowed by DIDA.” App. 10a (emphasis

omitted) (citing Mo. Rev. Stat. § 408.2382(1)). That

statement—which was the entirety of this part of the

Eighth Circuit’s analysis—addresses only periodic per-

centage interest rates. Under § 1831d, however, the

term “interest” encompasses many types of fees, not

simply periodic rates. The Comptroller of the Currency

has interpreted “interest” under 12 U.S.C. § 85 to mean

“any payment compensating a creditor or prospective

creditor for an extension of credit,” even if the payment

is a flat fee or otherwise not calculated as a function of

time. 12 C.F.R. §7.4001(a). In Smiley v. Citibank

(S.D.), N.A., this Court rejected a challenge to that in-

terpretation, deeming it reasonable and hence entitled

to judicial deference. See 517 U.S. at 741-742 (“[I]t

seems to us quite possible and rational to distinguish,

as the regulation does, between those charges that are

specifically assigned to [certain] expenses and those

that are assessed for simply making the loan.” (empha-

sis omitted)). And the FDIC has since adopted the

same interpretation of “interest” in § 183ld. See Gen

eral Counsel’s Op. No. 10: Interest Charges Under Sec

tion 27 of the Federal Deposit Insurance Act, 63 Fed.

Reg. 19,258, 19,259 (Apr. 17, 1998).

Because the threshold question under § 183ld is

whether the “interest” allowed by DIDA—namely the

higher of the applicable 90-day discount rate and the

interest allowed by the law of the originating bank’s

home state—is in any instance higher than what would

be allowed absent DIDA, Smiley required the Eighth

Circuit to compare the loan fees permitted by DIDA

(i.e., the fees allowed by the law of California, FirstPlus

Bank’s home state) to the fees permitted by Missouri

law, as well as comparing the periodic interest rates.

Indeed, a comparison of fees was particularly appropri-

ate here because respondents, as discussed, stressed in

their briefing below that their claims against petition-

ers were based solely on such fees, particularly origina-

tion fees. See Resps.’ C.A. Br. 6 (“Plaintiffs’ MSMLA

claims are not based on allegations that the interest

rates they were charged exceeded the rate permitted

under [Mo. Rev. Stat.] section 408.232.1 .... Instead,

Plaintiffs’ claims are based entirely on allegations that

they were charged unauthorized and excessive loan

fees ....”); see also supra pp.9-10 (describing respon-

dents’ allegations). In failing to compare the permissi-

ble fees, the Eighth Circuit departed from Smiley.

The fees comparison mandated by Smiley makes

clear that DIDA does govern here. As the Fighth Cir-

cuit itself noted, see App. 3a n.1, Missouri law places

several limits on the fees, including origination fees, that

can be charged in connection with second mortgages, see¢

Mo. Rev. Stat. § 408.233(1); Adkison v. First Plus Bank,

143 S.W.3d 29, 30 (Mo. Ct. App. 2004) (per curiam); see

also App. 8a n.1 (“The limits on closing costs and fees

provided for in the MSMLA act as a trade-off for allow-

ing lenders to charge a higher [periodic] interest rate on

second mortgage loans.”). By contrast, California law,

applicable under DIDA because the originator of the

loans to respondents was a California-chartered bank,

see App. 2a, imposes no such limits. Hence, DIDA ap-

plies here because the fees—and thus the “interest” as

that term is used in DIDA—that could be charged to re-

spondents under California law exceeds the fees (i.e.,

“interest”) that could be charged under Missouri law.’

The Eighth Circuit itself reached a comparable

conclusion in Phipps v. FDIC, 417 F.3d 1006 (8th Cir.

2005), in which the court correctly applied Smiley to a

case that arose under the NBA but was otherwise quite

similar to this action. In Phipps, as here, the plaintiffs

sought to avoid complete preemption of their MSMLA

) - . . ’

Although not all loan fees constitute interest under Smiley,

the origination fees on which respondents’ claims are partly based

do so: An interpretive letter from the Office of the Comptroller of

the Currency (OCC) states that a fee to open a home-equity line of

credit constitutes interest because it is not “‘specifically assigned’”

to cover the cost of an activity or service, Whether Certain Fees

Levied By A Bank In Connection With Home Equity Loans Con

stitute Interest Under 12 U.S.C. 85 And 12 C.F.R. 7.40001 (a), OCC

Interpretive Letter No. 803 (Oct. 7, 1997), available at 1998 WL,

320183, at *2-3 (quoting Smiley, 517 U.S. at 741-742). The same is

true of loan-origination fees—a direct analogue to a line-of-credit

opening fee—as the Eighth Circuit itself has previously recog

nized, see Phipps v. FDIC, 417 F.3d 1006, 1012 (8th Cir. 2005)

(origination fees are “[c]learly” interest).

Zé

usury claims by “strenuously arguling] their claims are

based on unlawful fees charged, not unlawful znterest.”

Id. at 1009. Noting that it was “required to look beyond

the plaintiffs’ artful attempts to characterize their

claims to avoid federal jurisdiction,” id. at 1011, and cit-

ing its own precedent as well as cases from several!

other circuits that had conducted a similar analysis, see

id. at 1012, the court of appeals deemed the fees at is-

sue to be “interest” under Smiley and therefore held

the plaintiffs’ claims completely preempted under

Anderson, see id. at 1011-1012.

In short, the decision below conflicts with this

Court’s decision in Smiley. Moreover, petitioners

alerted the court of appeals about ths conflict in re-

questing rehearing, yet the court declined the request.

Under these circumstances—and particularly given the

close ink between the Eighth Circuit’s departure from

Smiley and its ruling on the complete-preemption is

sue—this Court’s review of the second question pre-

sented is warranted.

CONCLUSION

‘The petition for a writ of certiorari should be granted.

Respectfully submitted.

CHRISTOPHER R. LIPSETT SETH P. WAXMAN

NOAH A. LEVINE Counsel of Record

DAVIDS. LESSER DANIELS. VOLCHOK

WILMER CUTLER PICKERING WILMER CUTLER PICKERING

HALE AND DORR LLP HALE AND DORR LLP

399 Park Ave. 1875 Pennsylvania Ave. N.W.

New York, N.Y. 10022 Washington, D.C. 20006

(212) 230-8800 (202) 663-6000

seth. waxman@wilmerhale.com

PETER W. CARTER

PAUL R. DIESETH

DORSEY & WHITNEY LLP

50 South Sixth Street

Suite 1500

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APPENDIX

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 08-3302

DEANTHONY THOMAS; SUSAN JELINKE-THOMAS;

STEVEN M. RICH,

Appellants,

US BANK NATIONAL ASSOCIATION ND; ACE SECURI-

TIES CORP. HOME LOAN TRUST 1999-A ASSET BACKED

NOTES, SERIES 1999-AA; U.S. BANK N.A.; WILMING-

TON TRUST COMPANY; FIRSTPLUS HOME LOAN OWNER

TRUST 1996-2; FIRSTPLUS HOME LOAN OWNER TRUST

1996-3; FIRSTPLUS HOME LOAN OWNER TRUST 1996-4;

FIRSTPLUS HOME LOAN OWNER TRUST 1997-1;

FIRSTPLUS HOME LOAN OWNER TRUST 1997-2;

FIRSTPLUS HOME LOAN OWNER TRUST 1997-3;

FIRSTPLUS HOME LOAN OWNER TRUST 1997-4;

FIRSTPLUS HOME LOAN OWNER TRUST 1998-1;

FIRSTPLUS HOME LOAN OWNER TRUST 1998-2;

FIRSTPLUS HOME LOAN OWNER TRUStT 1998-3;

FIRSTPLUS HOME LOAN OWNER TRUST 1998-4;

FiIRSTPLUS HOME LOAN OWNER TRUST 1998-5; THE

ASSOCIATES; CIT GROUP; CONTIMORTGAGE CORPORA-

TION; GOLETA NATIONAL BANK; MASTER FINANCIAL;

NORWEST HOME IMPROVEMENT, INC.; PSB LENDING;

RESIDENTIAL FUNDING CORPORATION; HOUSEHOLD

FINANCE CORPORATION; CHALLENGE REALTY; GER

MAN AMERICAN CAPITAL CORPORATION; SOVEREIGN

BANK; PAIN WEBBER REAL ESTATE SECURITIES INC.;

UBS REAL ESTATE SECURITIES, INC.; COUNTRYWIDE

HOME LOANS, INC.; BANC ONE FINANCIAL SERVICES

INC.; FEDERAL DEPOSIT INSURANCE CORPORATION, AS

RECEIVER OF PF'F BANK; WESTERN INTERSTATE BAN-

CORP,

Appellees,

Appeal from the United States Court District Court

for the Western District of Missouri

Argued: April 13, 2009

Decided: August 7, 2009

[575 F.3d 794]

* * o

[795]

Before: MURPHY, HANSEN, and BYE, Cireuit

Judges.

[796]

BYE, Circuit Judge.

Deanthony Thomas, Susan Jelinke-Thomas, and

Steven M. Rich (collectively Thomas) brought claims in

Missouri state court against a number of banks and

lending institutions (collectively the lenders) alleging

violations of the Missouri Second Mortgage Loans Act

(MSMI.A), Mo. Rev. Stat. 8§ 408.231-.241, arising out of

loans originated by FirstPlus Bank (a California lend-

ing institution which is now defunct) and subsequently

purchased by the lenders. The lenders removed the

case to federal court arguing the state law claims were

completely preempted by the Depository Institutions

Deregulation and Monetary Control Act (DIDA), 12

U.S.C. § 18381d. Agreeing with the lenders, the district

court denied Thomas’s motion to remand to state court

and then dismissed the claims. Thomas now appeals.

We reverse with instructions to remand this case to

state court.

Thomas and the other appellants are Missouri

homeowners who obtained “high loan-to-value” second

mortgages (reflecting a total debt of 125% of the ap-

praised value) on their homes from FirstPlus Bank.

FirstPlus Bank was a federally insured, state-chartered

bank when the loans were made. FirstPius Bank be-

came defunct, and the loans were purchased or as-

sumed by other banks as assignees, including some na-

tional banks.

In June 2004, Thomas brought suit in Missouri

state court on behalf of himself and others similarly

situated against thirty-three assignee banks of

FirstPlus alleging the loans they had received violated

the MSMLA, which places limits on the type and

amount of closing costs and fees a lender can charge on

residential second mortgage loans secured by Missouri

real estate.’

Specifically, Thomas alleged the subject loans vio-

lated Missouri law because: 1) the borrowers were

' Missouri law allows lenders to charge a higher interest rate

for second mortgage loans than the general usury rate applicable

to most loans. Compare Mo. Rev. Stat. § 408.030.1 (generally al

lowing a rate of 10% or the market rate, whichever is higher) with

Mo. Rev. Stat. § 408.232.1 (prior to 1998, setting a maximum rate

of 20.04% on second mortgage loans, and setting no limit on second

mortgage interest rates after 1998). The limits on closing costs

and fees provided for in the MSMLA act as a trade-off for allowing

lenders to charge a higher interest rate on second mortgage loans.

charged nonrefundable finder’s fees or broker’s fees

which were not allowed by or in excess of the fees al-

lowed by the MSMLI.A; and 2) FirstPlus charged certain

closing costs and fees on behalf of third parties which

were in excess of the costs actually charged by those

third parties and then retained the difference. ‘Thomas

sought to recover the interest paid on the allegedly

unlawful second mortgage loans and an order barring

the collection of additional interest. Notably, none of

the subject loans violated Missouri law with respect to

the maximum interest rate chargeable on a second

mortgage loan, which exceeded the rate allowed by

federal law pursuant to DIDA.

In August 2004, the defendant banks removed the

case to federal district court. The banks alleged re-

moval was proper because FirstPlus, the originator of

the loans, was a federally-insured, state-chartered bank

and DIDA (which applies to federally-insured, state-

chartered banks) completely preempted the state law

claims brought under the MSMLA. The banks relied

primarily upon the Supreme Court’s decision in Benefi-

cial National Bank v. Anderson, 539 U.S. 1 (2008),

which held that the National Bank Act (NBA), 12

U.S.C. §§ 85-86, completely preempted state law usury

[797] claims against national banks. J/d. at 10-11. The

banks alleged the similarity in language between DIDA

and the NBA compelled the conclusion that DIDA, like

the NBA, created the exclusive federal remedy for

usury claims against federally-insured, state-chartered

banks.

Thomas filed a motion to remand the case to state

court. He argued the language of DIDA differed in ma-

terial respects from the language in the NBA, and

DIDA only preempted state usury laws in limited cir-

cumstances, that is, when the state laws set a lower al-

lowable interest rate than that allowed by federal law.

Because Missouri law allowed a higher allowabie inter-

est rate than the rate set forth in DIDA, preemption

was not triggered. The district court disagreed and

denied the motion to remand, concluding DIDA pro-

vided the exclusive remedy for usury claims against

federally-insured, state-chartered banks. Thereafter

the banks brought a motion to dismiss the case, which

the district court granted.

Thomas filed a timely appeal. On appeal, he renews

nis argument that DIDA differs in materiai respect

from the language of the NBA, and preemption does

not apply in circumstances where state law allows a

higher interest rate than the interest rate set forth in

DIDA. The banks renew their claim as to the statutory

language in DIDA being the same as the NBA, and

federal law completely preempts the state law claims

brought here. The national bank defendants alterna-

tively argue that the NBA should apply whether they

are the originator of a loan or purchase a loan as an as-

signee, and therefore completely preempts the claims

brought against them even if DIDA does not. Finally,

some of the assignee banks argue the named plaintiffs

lacked standing to sue them because none of the named

plaintiffs (as opposed to unnamed class member plain-

tiffs) have loans that have been assigned to them.

‘The district court’s denial of the motion to remand

the case to state court is reviewed de novo, Menz v.

New Holland N. Am., Inc., 440 F.3d 1002, 1004 (8th

Cir. 2006), as is the district court’s dismissal] of the case,

Harris v. The Epoch Group, L.C., 357 F.3d 822, 824-25

(Sth Cir. 2004).

The general rule is when a claim filed in state court

alleges only state law claims, the existence of a federal

defense, e.g., preemption, is not enough to support the

removal of the case to federal court. Rivet v. Regions

Bank of La., 522 U.S. 470, 475 (1998). An exception to

this rule is when the preemptive force of a federal stat-

ute completely displaces state law and it is clear Con-

press meant the federal statute to be the exclusive

cause of action for the type of claim asserted. Benefi-

cial Nat’l Bank, 539 U.S. at 8. Complete preemption,

as opposed to ordinary or conflict preemption, is rare,

however, and only applies if the “federal statutes at is-

sue provide[] the exclusive cause of action for the claim

asserted and also set forth procedures and remedies

governing that cause of action.” Jd.

Complete preemption does not exist here because

the language of DIDA, unlike the NBA, does not reflect

Congress’ intent to provide the exclusive cause of ac-

tion for a usury claim against a federally-insured state-

chartered bank. To the contrary, a close examination of

the statutory language indicates Congress very clearly

intended the preemptive scope of DIDA to be limited to

particular circumstances.

Two provisions of DIDA are at issue—the subsec-

tion discussing the circum-[798]stances under which a

federally-insured state-chartered bank may cnarge the

interest rate allowed by federal law notwithstanding

state law to the contrary, 12 U.S.C. § 1831d(a) (the sub-

stantive provision), and the subsection setting forth a

consumer’s remedy when a bank charges interest in ex-

cess of that allowed by DIDA, 12 U.S.C. § 1831d(b) (the

remedy provision). ‘The substantive provision is set

forth as follows:

In order to prevent discrimination against

State-chartered insured depository institu-

tions, including insured savings banks, or in-

sured branches of foreign banks with respect to

interest rates, if the applicable rate prescribed

in this subsection exceeds the rate such State

bank or insured branch of a foreign bank would

be permitted to charge in the absence of this

subsection, such State bank or such insured

branch of a foreign bank may, notwithstanding

any State constitution or statute which is

hereby preempted for the purposes of this sec-

tion, take, receive, reserve, and charge on any

loan or discount made, or upon any note, bill of

exchange, or other evidence of debt, interest at

a rate of not more than 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 such State

bank or such insured branch of a foreign bank

is located or at the rate allowed by the laws of

the State, territory, or district where the bank

is located, whichever may be greater.

12 U.S.C. § 1831 d(a).

The plain language of the statute clearly indicates

the interest rate allowed by federal law only comes into

play “if the applicable rate prescribed in this subsection

exceeds the rate such State bank or insured branch of a

foreign bank would be permitted to charge in the ab-

sence of this subsection.” Jd. (emphasis added). In

other words, when the interest rate allowed by state

law exceeds the interest rate set forth in DIDA, the

federal statute does not apply. The limited nature of

the preemptive effect the federal statute has on state

law is emphasized by the qualifying phrase added to the

statute’s preemption language: “notwithstanding any

State constitution or statute which is hereby pre-

empted for the purposes of this section.” Id. (empha-

sis added). In other words, conflicting state constitu-

tions or statutes are not preempted for every and all

purposes, but only for purposes of “this section.”

The remedy provision is set forth as follows:

If the rate prescribed in subsection (a) of this

section exceeds the rate such State bank or

such insured branch of a foreign bank would be

permitted to charge in the absence of this sec-

tion, and such State fixed rate is thereby pre-

empted by the rate described in subsection (a)

of this section, the taking, receiving, reserving,

or charging a greater rate of interest than is al-

lowed by subsection (a) of this section, 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. If such greater

rate of interest has been paid, the person who

paid it may recover ina civil action commenced

in a court of appropriate jurisdiction not later

than two years after the date of such payment,

an amount equal to twice the amount of the in-

terest paid from such State bank or such in-

sured branch of a foreign bank taking, receiv-

ing, reserving, or charging such interest.

12 U.S.C. § 1831d(b).

This remedy provision, as does the substantive pro-

vision, clearly indicates the [799] limited nature of the

federal statute’s preemption of state law, by stating the

federal remedy only applies “/iJ/f the rate prescribed in

subsection (a) of this section exceeds the rate such

State bank or such insured branch of a foreign bank

would be permitted to charge in the absence of this sec-

tion.” Jd. The limited scope of preemption is empha-

sized by the subsection’s phrase stating “and such State

fixed rate is thereby preempted by the rate described

in subsection (a) of this section” which follows the con-

ditional circumstances under which the statute applies,

i.e., uf the federal rate exceeds the rate allowed by state

law. In other words, the plain language of the statute

ties the preemptive effect it has on state law to the

condition being met. By stating “and such state fixed

rate is thereby preempted,” the statute plainly indi-

cates the state rate is only preempted “if” exceeded by

the rate prescribed in the federal statute.

A similar statute was interpreted by this court in

Firstsouth, F.A. v. Lawson Square, Inc. (In re Lawson

Square, Inc.), 816 F.2d 1236 (8th Cir. 1987), involving

section 1730g(a) of DIDA, which applies to federally

insured savings and loan associations rather than fed-

erally insured, state-chartered banks. The language of

the two statutes is, however, identical. The holding in

Lawson Square makes ciear that when the federal pre-

emption language does not “fit,” state law applies. See

id. at 1239.

In Lawson Square, the interest rate allowed by

Arkansas law exceeded the applicable interest rate set

forth in DIDA. The rate allowed by federal law under

DIDA fluctuated between 9.72% and 10.22% at all ap-

plicable times, while the rate otherwise allowed by Ar-

kansas state law fluctuated between 13.5% and 14%.

Id. at 1238. Because the rate allowed by DIDA did not

exceed the rate allowed by state law, the court cor-

rectly reasoned the federal statute did not apply:

10a

|[WJe note immediately that the very first

clause of Section [1730g(a)] reads as follows:

“{ilf the applicable rate prescribed in this sec-

tion exceeds the rate an insured institution ..

would be permitted to charge in the absence of

this section ...”. The “applicable rate” referred

to is the federal discount rate plus one per

cent.; the rate that would be permitted in the

absence of this section is the Arkansas Consti-

tution’s present limit of federal discount rate

plus five per cent. Attempting to substitute

these terms for the words which represent

them produces a false statement, for in fact the

“applicable rate” does not exceed the “permit-

ted rate.” That being the case, we need go no

further in Section [17380g(a)]; we know that it

does not apply in this instance.

Id. 1239-40 (emphasis added).

In this case, the interest rate allowed by Missouri

law for second mortgages was either as high as 20.4%

or unlimited at all applicable times, well in excess of

the rate allowed by DIDA. See Mo. Rev. Stat.

§ 408.282.1 (setting a maximum rate of 20.04% on sec-

ond mortgage loans prior to 1998, and setting no limit

on second mortgage interest rates after 1998). As a re-

sult, the federal statute does not apply. And, more sig-

nificantly, for complete preemption purposes, the rem-

edy set forth in the federal statute does not apply.

Complete preemption only applies when it is clear Con-

gress meant for the federal statute to “provide[] the

exclusive cause of action.” Beneficial Nat'l Bank, 539

U.S. at 8 (emphasis added). By its plain and unambigu-

ous language, the remedy set forth in § 1831d(b) only

applies in limited circumstances, and those circum-

stances are when the federal rate exceeds the rate al-

lla

lowed by state law. [800] Because such a circumstance

was not present in this case, just as it was not present

in Lawson Square, the federal remedy does not apply

and therefore is not the exclusive remedy. Accordingly

the district court erred when it denied Thomas’s motion

to remand this case to state court.

We note other federal courts have interpreted the

language in § 183l1d differently. In Discover Bank v.

Vaden, 489 F.3d 594 (4th Cir. 2007), rev’d on other

grounds 129 S.Ct. 1262 (March 9, 2009) (2009

WL578636), the Fourth Circuit held DIDA, like the

NBA, completely preempts state usury claims against

federally-insured, state-chartered banks. /d. at 605. In

so holding, the Fourth Circuit quoted the relevant pro

visions of § 1831d(a) in the following manner:

In order to prevent discrimination against

State-chartered insured depository institutions

. with respect to interest rates ... such State

bank[s] ... may, notwithstanding any State

constitution or statute which is hereby pre-

empted for the purposes of this section, take,

receive, reserve, and charge on any loan or dis-

count made, or upon any note, bill of exchange,

or other evidence of debt, interest ... at the

rate allowed by the laws of the State ... where

the bank is located.

Id. at 604.

Comparing this redacted version of the statute

with the full version of the statute does reveal the lan

guage eliminated by the Fourth Circuit’s second set of

ellipsis (emphasized below) is critical to the substantive

meaning of the statute:

12a

In order to prevent discrimination against

State-chartered insured depository institu-

Lions, including insured savings banks, or in-

sured branches of foreign banks with respect to

interest rates, uf the applicable rate pre-

scribed in this subsection exceeds the rate

such State bank or insured branch of a for-

eign bank would be permitted to charge in

the absence of this subsection, such State

bank or such insured branch of a foreign bank

may, notwithstanding any State constitution or

statute which is hereby preempted for the pur-

poses of this section, take, receive, reserve, and

charge on any loan or discount made, or upon

any note, bill of exchange, or other evidence of

debt, interest at a rate of not more than 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 such State bank or such insured branch

of a foreign bank is located or at the rate al

lowed by the laws of the State, territory, or

district where the bank is located, whichever

may be greater.

12 U.S.C. § 1831d(a).

We will not alter the statutory language in such

manner to support a conclusion as to DIDA completely

preempting state law while providing the exclusive

federal remedy for state usury claims against federally-

insured, state-chartered banks. Rather, the un-

abridged language of the statute, which is both the

starting and ending point of our analysis, see Integrity

Floorcovering, Inc. v. Broan-Nutone, LLC, 521 F.3d

914, 918 (8th Cir. 2008) Gndicating that when “the plain

language of the statute controls ... we need not con-

® ‘

sider the parties’ varying interpretations of legislative

history”), clearly establishes the limited effect DIDA

has on such claims.

Alternatively, the national banks argue the claims

against them are completely preempted under sections

85 and 86 of the NBA. We disagree. The national

banks did not originate the loans at issue, but rather

are assignee banks who subsequently purchased the

loans. As assign-[80l]Jees, they are subject to all the

claims which could have been brought against the

originator of the loan. See 15 U.S.C. § 1641(d) (“Any

person who purchases or is otherwise assigned a

[tainted] mortgage ... shall be subject to all claims and

defenses with respect to that mortgage that the con-

sumer could assert against the [original lender].”). To

hold otherwise would allow an originating bank to

cleanse an otherwise illegal loan merely by assigning it

to a national bank.

Finally, some of the defendant banks (non-holder

banks) argue they are not purchasers or assignees of

any FirstPlus Bank second mortgage loans subject to

the MSMLA, and therefore the plaintiffs lack standing

to bring the claims against them. We decline to address

this issue, preferring it be raised in the first instance

upon remand to state court.

itl

The judgment of the district court is reversed and

the case is remanded to the district court with instruc-

tions to reinstate the claims and remand the case to

state court.

15a

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

No. 04-cv-6098-HF'S

DEANTHONY THOMAS, e/ al.,

Plaintiffs,

Vv.

U.S. BANK N.A.N.D., et al.,

Defendants.

MEMORANDUM AND ORDER

Plaintiffs contend their mortgage loans were

tainted by practices by the lender that violate a Mis-

souri statute in connection with various overcharges

and fees. Defendants, assignees of the loan obligations

of plaintiffs, removed the case to this court on the the-

ory that federal law preempts certain claims of usuri-

ous practices by lenders. The lender in this case was

FirstPlus Bank (F PB), a California lending institution,

now in bankruptcy, which was subject to California

laws governing interest.

The defendant assignees contend they are pro-

tected by federal law (Sections 85 and 8&6 of the Na-

tional Banking Act—the NBA—12 U.S.C. §§ 85-86)

which allegedly preempts use of Missouri law in these

circumstances. An alternative theory of protection

would be that FPB, by reason of federal deposit insur

ance, was also protected by preemption, under the De

16a

pository Institutions Deregulation and Monetary Con-

trol Act—DIDA—12 U.S.C. § 1831d. Plaintiffs chal-

lenge these theories and seek remand.

As an initial matter, I disagree with defendants re-

garding preemption by the NBA. They were not origi-

nators of the loans, but simply assignees. I have so

ruled in similar circumstances, and granted a remand.

Defendants are soundly invoking DIDA, however, be-

cause F PB was the originator of the loans, and the sec-

tion cited above “completely preempts any state law

attempting to limit the amount of interest and fees a

federally insured-state chartered bank can charge.” Jn

re Community Bank of Northern Virginia, 418 F.3d

277, 295 (8rd Cir. 2005).'

In this case and in what appears to be a companion

case plaintiffs’ counsel has argued that there is no pre

emption because there is no challenge here to the inter-

est charged by FPB. The Eighth Circuit has, however,

recently determined that at least some of the claims

should be characterized as complaining about excessive

interest, broadly construed. Phipps v. FDIC, 417 F.3d

1006 (8th Cir. 2005). That ruling has finality, in that the

mandate was issued earlier this month.

When there are som:2 claims of excessive interest,

the whole case is removable, 417 F.3d at 1011. I do not

find briefing by plaintiffs attempting to distinguish the

adverse ruling of the district judge in Phipps, and to

assert that if excessive interest was claimed there that

' Whether defendants have standing to assert F PB’s preemp-

tion rights is not questioned by plaintiffs, and I assume there is

standing. Another issue not before me is the possibility that FPB

violated California law, which is not the thrust of this litigation.

17a

is not the situation here. Under the circumstances the

motion to remand (doc. 69) must be denied. SO OR-

DERED?

/s/ Howard F.. Sachs _

HOWARD F. SACHS

UNITED STATES DISTRICT JUDGE

September 30, 2005

Kansas City, Missouri

* I will deal with a renewed motion to dismiss on the briefing

heretofore filed, but it must be noted that the Phipps case creates

a dilemma for plaintiffs in saying that to the extent they may be

challenging charges that are not interest they are not entitled to

complain under the Missouri statute, and “have failed to state a

claim under Missouri law for which relief may be granted.” 417

F.3d at 1014.

19a

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

No. 04-cev-6098-HE'S

DEANTHONY THOMAS, et al.,

Plaintiffs,

Vv.

U.S. BANK N.A.N.D., et al.,

Defendants.

ORDER

Through one of the oddities of computerized re-

cord-keeping, a collection of complex motions in this

litigation, dating back some three years, now errges

as unruled motions. They should have appeared peri-

odically in computer reports, and, when six months old,

have been listed overdue. They have now been called

to my attention. One might wonder why plaintiffs’

counsel did not make inquiry.

Further examination suggests the case has been

abandoned, because Eighth Circuit law now establishes

that the claims cannot proceed as alleged State law vio-

lations, and the basic issues have been preempted by

20a

federal law.' See my short memorandum on this sub-

ject two years ago. Doc. 126.

Various issues are presented: Personal jurisdic-

tional challenges (Docs. 52 and 61), lack of standing

(Doc. 54), the Missouri statute of limitations (Doc. 63), a

constitutional bar to retroactive legislation (Doc. 59)

and, what seems most controlling, exemption or pre-

emption (Doc. 57). Because preemption has been ruled

in a comparable case, Phipps v. FDIC, 417 F.3d 1006

(8th Cir. 2005), it seems to justify removal and now

dismissal. Plaintiffs cannot proceed on a theory of vio

lation of Missouri statutes.

Rather than get bogged down in other issues that

are moot questions by reason of preemption and

Phipps, I grant the motion to dismiss on preemption

grounds (Doc. 57) and deny all other motions (Docs. 52,

54.59, 61 and 63) as moot.2 SO ORDERED.

/s/ Howard F. Sachs

HOWARD F. SACHS

UNITED STATES DISTRICT JUDGE

September 26, 2007

Kansas City, Missouri

bans ; :

l'o the extent the charges are not characterized as interest,

and thus preempted, the Phipps case, infra, holds there is no viola-

tion of Missouri law. 417 F.3d at 1014.

* This includes defendants’ request for fees, because this liti-

gation is legally frivolous, at least after Phipps. If I am now mov-

ing too precipitously, because of an impending reporting date, a

timely motion for reconsideration or for relief from an adverse

judgment would be considered.

Z2la

APPENDIX D

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MISSOURI

ST. JOSEPH DIVISION

No. 04-cev-6098-HF'S

DEANTHONY THOMAS, et al.,

Plaintiffs,

VU.

U.S. BANK N.A.N.D., et al.,

Defendants.

ORDER

Pending is a motion to reconsider (Doc. 133) and a

notice of joinder in defendants’ opposition to the motion

to reconsider (Doc. 186). The joinder notice is treated

by the computer as a motion. To the extent leave of

court is appropriate, Doc. 136 is hereby GRANTED.

Central to the reconsideration claim is the conten-

tion that the court has erroneously derived a complete

preemption rule for federally insured state banks from

a rule applicable only to national banks. It is contended

that Phipps v. FDIC, 417 F.3d 1006 (8th Cir. 2005), is

based on differently worded legislation relating to na-

tional banks. Plaintiffs rely on a “plain meaning” read-

ing of the statute here involved, 12 U.S.C. § 1831d(a)

and (b), and a district court decision from Mississippi.

DuBose v. Merchants and Farmers Bank, 2006 WL

568714 (S.D. Miss. 2006). See also Saxton v. Capitol

One Bank, 392 F. Supp. 2d 772 (S.D. Miss. 2005).

22a

Plaintiffs acknowledge that they must overcome a

contrary ruling by Judge Alsop in Hill v. Chemical

Bank, 799 F. Supp. 951 (D. Minn. 1992). They contend

only that it was inadequately reasoned; that is, not

reading the words of the statute as they and the Mis-

sissippi judge do. They fail to acknowledge and discuss

a Fourth Circuit case favorably citing Hill and reaching

the same result. Discover Bank v. Vaden, 489 F.3d 594

(2007), cert. granted, 128 S. Ct. 1651 (2008). Discover

Bank was cited in the brief in opposition but plaintiffs

do not deal with it in the reply.

Hill and Discover Bank are well reasoned and sup-

ported and consistent with my earlier preemption rul-

ing. I believe they are sound and that the novel and

weakly supported theory of plaintiffs does not justify

changing my dispositive ruling. To the extent it is

plausible it may be dealt with on appeal.

The motion to reconsider (Doc. 133) is therefore

DENIED.

/s/ Howard F. Sachs _ __

HOWARD F. SACHS

UNITED STATES DISTRICT JUDGE

September 23, 2008

Kansas City, Missouri

The Third Circuit has also considered the language in ques-

tion and finds complete preemption. In re Community Bank of

Northern Virginia, 418 F.3d 277, 295 (2005).

23a

APPENDIX E

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 08-3302

DEANTHONY THOMAS ¢t al.,

Appellants,

US BANK NATIONAL ASSOCIATION ND, et al.,

Appellees,

Mortgage Bankers Association, et al.,

Amici on behalf of Appellee

Appeal from U.S. District Court for the

Western District of Missouri—SsSt. Joseph

(5:04-cv-06098-HFS)

Filed: November 24, 2009

ORDER

The petition for rehearing en banc is denied. The

petition for rehearing by the panel is also denied.

Chief Judge Loken, Judge Wollman, Judge Gru-

ender, and Judge Benton took no part in the considera-

tion or decision of this matter.

Order Entered at the Direction of the Court:

Clerk, U.S. Court of Appeals, Eighth Circuit

/s/ Michael E. Gans .

25a

APPENDIX F

STATUTORY PROVISIONS

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 Dis-

trict where the bank is located, or at a rate of 1 per cen-

tum in excess of the discount rate on ninety-day com-

mercial 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 title 62 of the Revised

Statutes. When no rate is fixed by the laws of the

State, or Territory, or District, the bank may take, re-

ceive, 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 dis-

count to be charged at a branch of an association lo-

sated outside of the States of the United States and the

District of Columbia shall be at the rate allowed by the

laws of the county, territory, dependency, province,

dominion, insular possession, or other political subdivi-

sion where the branch is located. And the purchase,

26a

discount, or sale of a bona fide bill of exchange, payable

at another place than the place of such purchase, dis-

count, or sale, at not more than the current rate of ex-

change for sightdrafts in addition to the interest, shall

not be considered as taking or receiving a greater rate

of interest.

12 U.S.C. § 86—Usurious interest; penalty for tak-

ing; limitations

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

interest greater than is allowed by section &5 of this ti-

tle, when knowingly done, shall be deemed a forfeiture

of the entire interest which the note, bill, or other evi-

dence of debt carries with it, or which has been agreed

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

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

his legal representatives, may recover back, in an ac-

tion 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 usuri-

ous transaction occurred.

12 U.S.C. § 1831d—State-chartered insured deposi-

tory institutions and insured branches of foreign

banks

(a) interest rates. In order to prevent discrimination

against State-chartered insured depository institutions,

including insured savings banks, or insured branches of

foreign banks with respect to interest rates, if the ap-

plicable rate prescribed in this subsection exceeds the

rate such State bank or insured branch of a foreign

bank would be permitted to charge in the absence of

this subsection, such State bank or such insured branch

27a

of a foreign bank may, notwithstanding any State con-

stitution or statute which is hereby preempted for the

purposes of this section, take, receive, reserve, and

charge on any loan or discount made, or upon any note,

bill of exchange, or other evidence of debt, interest at a

rate of not more than 1 per centum in excess of the dis

count rate on ninety-day commercial paper in effect at

the Federal Reserve bank in the Federal Reserve dis-

trict where such State bank or such insured branch of a

foreign bank is located or at the rate allowed by the

laws of the State, territory, or district where the bank

is located, whichever may be greater.

(b) Interest overcharge; forfeiture; interest payment

recovery.

If the rate prescribed in subsection (a) of this section

exceeds the rate such State bank or such insured

branch of a foreign bank would be permitted to charge

in the absence of this section, and such State fixed rate

is thereby preempted by the rate described in subsec-

tion (a) of this section, the taking, receiving, reserving,

or charging a greater rate of interest than is allowed by

subsection (a) of this section, 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. If such

greater rate of interest has been paid, the person who

paid it may recover in a civil action commenced in a

court of appropriate jurisdiction not later than two

years after the date of such payment, an amount equal

to twice the amount of the interest paid from such

State bank or such insured branch of a foreign bank

taking, receiving, reserving, or charging such interest.

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.