Opposition Brief — Fleet Bank, National Ass'n v. Burke

“Supreme our, Ug

riLin=

MAY 14 1999

No. 98-1661

CLERK

me cromea.

In The

Supreme Court Of The United States

October Term, 1998

+

FLEET BANK, NATIONAL ASSOCIATION,

Petitioner.

Vv.

THE HONORABLE JOHN P. BURKE, BANKING

COMMISSIONER OF THE STATE OF CONNECTICUT

AND CONNECTICUT DEPARTMENT OF BANKING,

A STATE AGENCY,

Respondents.

+

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

4

OPPOSITION TO PETITION FOR WRIT OF

CERTIORARI

¢

* RICHARD BLUMENTHAL

ATTORNEY GENERAL

GREGORY T. D’AURIA

Assistant Attorney General

Office of the Attorney General

55 Elm Street, P.O. Box 120

Hartford, CT 06141-0120

(860) 808-5020

service by

E PRINTING DERYVICES 166

CALL 806.842.0008

TABLE OF CONTENTS

SPAM NET CAPER MEED foc cc eked ticasicvecsssccecss i

RAMEE SIE AU ERBOPMEE IS se sicciccecvccectccescce il

COUNTERSTATEMENT OF THE CASE ......... 2

REASONS FOR DENYING THE WRIT ........... 4

I. THIS IS NOT AN APPROPRIATE

CASE IN WHICH TO REACH THE

ISSUES THE PETITIONER

PRESENTS. NT, pS OOD Ria ae ey

Il. THE COURT OF APPEALS

CORRECTLY CONCLUDED THAT

THE DISTRICT COURT LACKED

JURISDICTION OVER THIS

fy; 8, Sea : Baie ee 7

CREE aOR ns Can caun Ca ecus kesnskeekowun lieu 18

(i)

TABLE OF AUTHORITIES

Statutes:

UM SMR oe cc foo teks ee ..... passim

wean O 18e? Ss; sek. sates par i Me

28 U.S.C. § 1441 ....... | anevada ene e 3 12

ASE. SOS ter 3) as a Rea Pee are +

29U.S.C.§ 185 ... Ph ER FE pte Re ERR 14

SS | CREST RETA ner eae ORE: Came 14

i,” EEE SAE ee gaa enema a |.

Conn. Gen. Stat. § 36a-156 ............... .... passim

Conn. Gen. Stat. § 4-176 ...... rate cus waktes 16

Cases:

Aetna Life Insurance Company v.

Haworth, 300 U.S. 227 (1937 Napevin ria oe ee

American Well Works Co. v. Layne &

Bowler Co., 241 U.S. 257 (1916) ... Para gae

Arcudi v. Stone & Webster

Engineering, Corp., 463 US.

PRC eG Re ee Gesu: 14

Avco Corp. v. International Ass'n of

Machinists, 390 U.S. 557(1968) ............... . 14

Caterpillar Inc. v. Williams, 482 U.S

386 (1986) ..... MEDS Snes © Ree aT

City of Chicago v. International

College of Surgeons, 522 U.S

O72 2s We ana Magne aes PRS cute ce ote a

Union v. Penn Square Bank, 879

F.2d 754 (10th Cir. 1989)

Exxon Corp v. Department of

Revenue of Wisconsin, 447 U.S

207 (1980)

Ex Parte Young, 209 U.S. 123 (1908)

First National Bank of Omaha v

Marquette National Bank, 636

F.2d 195 (8th Cir. 1980), cert.

denied, 450 U.S. 1042 (1981)

Franchise Tax Bd. v. Constructior

Laborers Vacation Trust, 463

U.S.1 (1983)

Franchise Tax Board v. Construction

Laborers Vacation Trust, 463

cP.0e BROOD oe ree

Louisville & Nashville R.R. v.

Mottley, 211 U.S. 149 (1908)

Merrell Dow Pharmaceuticals, Inc. v

Thompson, 478 U.S. 804 (1986)

Metropolitan Life Ins. Co. v. Taylor,

481 U.S. 58 (1987)

NOPSI v. Council of New Orleans,

491 U.S. 350 (1989)

Oklahoma Tax Comm'n vy. Graham,

489 U.S. 838 (1989)

Oneida Indian Nation v. County of

Oneida, 414 U.S. 661 (1974)

Pennhurst State School & Hospital v.

Halderman, 465 U.S. 89 (1984)

14, 15

. passim

10

Public Service Commission of Utah v.

Wycoff Co., 344 U.S. 237 (1952) ..........

Shaw v. Delta Air Lines, Inc., 463

OS Sse |

Skelly Oil Co. v. Phillips Petroleum

Co., 339 U.S. 667 (1950)

Smith v. Kansas City Title & Trust

Co., 255 U.S. 180 (1921)

Steffel v. Thompson, 415 U.S. 452

24 5. Tienes

Stone & Webster Engineering Corp.

BES £090) hess

Taylor v. Anderson, 234 U.S. 74

(1914)

United Mine Workers of America v

Gibbs, 383 U.S. 715 (1966)

Verlinden, B.V. v. Central Bank of

Nigeria, 461 U.S. 480 (1983)

Rules:

F.R.C.P. 8(a)(1)

Other Authorities:

13 C. Wright, A. Miller & M. Kane,

Federal Practice & Procedure §

or

, 16

a,

Taylor v. Anderson, 234 U.S. 74

(1914)

51 U.Chi. L.Rev. 634 (1984)

Comment, "Federal Preemption,

Removal Jurisdiction and the

Well-Pleaded Complaint Rule,"

8

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1998

FLEET BANK, NATIONAL ASSOCIATION.

Petitioners

THE HONORABLE JOHN P. BURKE, BANKING

COMMISSIONER OF THE STATE OF CONNECTICUT

AND CONNECTICUT DEPARTMENT OF BANKING, A

STATE AGENCY

Respondents

ON PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

OPPOSITION TO PETITION FOR WRIT OF

CERTIORARI

COUNTERSTATEMENT OF THE CASE

This action represents a national bank's attempt to

avoid a state court or administrative determination of

whether Connecticut's Banking Commissioner has correctly

interepreted Connecticut law to prohibit the assessment of

ATM surcharge fees. In this first strike federal action, the

bank attempted to manufacture federal jurisdiction by posit-

ing both its state defense and a federal preemption defense

to anticipated state action, bringing about exactly the result

that a number of this Court's federalism doctrines counsel

against: a federal court constructing an important state law

that no state court had previously construed. This ruling

would not bind a state court, nor could it be enforced

against a state official such as the Banking Commissioner.

In fact, presently ongoing litigation between these same par-

ties in state court will dispositively determine the state law

question, underscoring that the Court of Appeals correctly

determined that federal question jurisdiction does not lie in

this context.

The petitioner's central argument at every stage of

this litigation has been that Connecticut law does not pro-

hibit ATM surcharges. In this critical respect the peti-

tioner's Statement of the Case is misleading. Nothing in the

record whatsoever supports the petitioner's characterization

of its argument that Conn. Gen. Stat. § 36a-156 does not

prohibit ATM surcharge fees as a "supplemental claim."

(Petition at 4) To the contrary, this quite clearly was the pe-

titioner's principal argument, leading the Court of Appeals

to describe the action accurately "primarily an attempt to

have a federal court construe a state regulatory statute."

(/d., A3)

The petitioner filed a one count complaint in District

Court alleging "a justiciable controversy . . . over whether

the defendants have correctly interpreted the Connecticut

ATM statutes and, if so, whether these statutes are pre-

empted by federal banking law." (Petitioner's App. A81)

The petitioner's first Prayer For Relief requests a declaration

that "the Connecticut ATM statutes do not prohibit Fleet

from exercising the power to charge fees to non-depositor

customers using its ATMs." (/d). The petitioner pleaded ju-

risdiction solely under 28 U.S.C. § 1331, and never once al-

ieged, or even suggested, that it was pursuing a separate,

supplemental "claim" under 28 U.S.C. § 1367. (See id. A78)

Finally, after fending off the respondents’ argument

that the Court should abstain under the Pul/man doctrine in

favor of a state court determination of this state law issue,

(Id. AS1-AS7) the petitioner sought a plaintiff's summary

judgment exclusively on the state law issue: “Connecticut

law does not prohibit Fleet from exercising the power to

charge fees to non-depositior customers for the use of its

ATMs." (/d. A89)

Also, although the petitioner correctly states that the

action it filed immediately after the Court of Appeals’ deci-

sion in this case “omits any claim under state law" (Petition

at 5), to be complete it should be noted that that suit does

not admit the meaning and application of state law, as the

Court of Appeals’ had indicated was necessary to confer ju-

risdiction upon a federal court. (Petitioner's App. A23) The

parties are still at issue over the construction of the state

law that the petitioner claims: 1) does not prohibit ATM

surcharge fees, and 2) is preempted by federal law. This

dispute has most recently manifested itself in the Commis-

sioner's state law action against the petitioner and two other

national banks, seeking to prevent the imposition of ATM

fees. (App. A2) Thus far, the petitioner has not agreed that

Conn. Gen. Stat. § 36a-156 in fact prohibits such fees

REASONS FOR DENYING THE WRIT

The petitioner has failed to identify any legal issue

that cries out for this Court to determine. This is especially |

true in light of the ongoing litigation between the parties,

which is presently continuing in no fewer than four forums.

Rather, the petitioner asks this Court to satisfy its academic

curiosity on a matter that does not truly arise in this case |

and does not otherwise warrant this Court's attention. |

I. THIS IS NOT AN APPROPRIATE CASE IN

WHICH TO REACH THE ISSUES THE

PETITIONER PRESENTS.

Apart from the fact that the petitioner's argument in

support of certiorari itself lacks merit, which is addressed in

Part Il, infra, at least two reasons make it imprudent for this

Court to accept this case to address the question presented.

First, as the petitioner candidly admits, the parties’

dispute over ATM surcharge fees is ongoing in both the

state and federal courts. On the same day that the Court of

Appeals entered judgment in this case, the petitioner (along

with one other national bank) sued the Commissioner (a re-

spondent to this petition) once again in District Court pray-

ing for a very similar injunction. (Compare Petitioner's App.

A82 with A110) The national banks thereafter enlisted the

support of the Office of the Comptroller of the Currency

("OCC"), which intervened as a plaintiff in the action and

also moved for injunctive relief.

On April 7, 1999, the District Court granted the

OCC's motion for a preliminary injunction, although on

grounds narrower than either the OCC or the banks had :

hoped. (See id. Al163-A164) To this point, the Commis-

sioner alone has appealed to the Court of Appeals for the

NE MME CN ee EMER TT

Second Circuit, although the appeal period has not elapsed

as of this date.

Since the District Court's ruling specifically held that

the Banking Commissioner could enforce Connecticut's ban

on ATM surcharges in state court, the Commissioner also

brought a state court action against the national banks seek-

ing a definitive determination of the meaning of the state

law. (App. A2) Although that suit is in its infancy, there are

now at least three forums in which the parties may have

their respective rights determined and settled (the Second

Circuit, District Court and State Court). Thus, accepting

the instant case for review might very likely turn out to be

an imprudent use of the Court's and the parties' time and re-

sources on an issue that, by the petitioner's own representa-

tion, arises often. (Petition at 12 to 17) Indeed, by

accepting this case for review, this Court may well interfere

with an orderly resolution of the issues that are now

squarely before the Connecticut court.

Second, the respondents are obliged to point out

that this case is not the case the petitioner describes it to be.

See Sup. Ct. Rule 15.2. As discussed above, the petitioner

has never invoked, either at the District Court or Circuit

Court level, the federal court's "supplemental jurisdction" in

support of what it now claims to be a state law "claim" --

the meaning of Conn. Gen. Stat. § 36a-156(a). This sup-

posed state "claim" was not a separate count in the peti-

tioner's complaint. The petitioner did not, as it was obliged

to do under F.R.C.P. 8(a)(1), specifically allege 28 U.S.C. §

1367 as a jurisdictional basis in its complaint. (See Peti-

tioner's App. A78) Nor did the petitioner ever previously

defend the District Court's jurisdiction to opine exclusively

on the meaning of a state statute by citing either to § 1367,

to United Mine Workers of America v. Gibbs, 383 U.S. 715

(1966), or to any of the discretionary factors that

ee as

supplemental jurisdiction permits the District Court to

evaluate.” Merrell Dow Pharmaceuticals, Inc. _ v.

Thompson, 478 U.S. 804, 809 n.6 (1986) ("Jurisdiction may

not be sustained on a theory that the plaintiff has not

advanced.").

Thus, even if the issue the petitioner presents were

worthy of this Court's consideration, it does not truly arise

in this case.” The petitioner's claim that the judgment below

conflicts with 28 U.S.C. § 1367 or with any of this Court's

decisions under it is entirely manufactured.”

Of course, the reason the petitioner has never before articulated

the claim as one of "supplemental jurisdiction" is very simply

because its complaint does not raise a supplemental state law

"claim," any more than it raises a federal claim. Rather, as the

Court of Appeals correctly recognized, the petitioner's federal

declaratory action raises what would be its two defenses to a state

proceeding brought against it: first, "its state law defense that

section 36a-156 does not prohibit the surcharge fee but also, if the

state law defense failed, its federal law defense of preemption."

(Petitioner's App., A7) Thus, the state law claim "is not entirely

distinct from the federal preemption claim. Instead, in reality it

presents an independent issue preliminary to the federal claim."

(/d. A20)

The petitioner further seeks to raise belatedly an argument that its

action is truly an action under 42 U.S.C. § 1983. (Petition at 25

n.19) As the petitioner admits, however, its complaint contains

no such allegation and it never pursued its claim as such -- and

with good reason because it is improbable that its complaint could

state a cause of action for a violation of § 1983. Compare First

National Bank of Omaha y. Marquette National Bank, 636 F.2d

195, 198 (8th Cir. 1980), cert. denied, 450 U.S. 1042 (1981)

(claimed violation of National Bank Act does not give rise to §

1983 action). At any rate, it is the better practice for this Court to

decline to review cases recastas a litigant now wishes that it had

presented the matter in the courts below.

In City of Chicago v. International College of Surgeons, 522 U.S.

156 (1997), unlike this case, there was an independent basis for

federal question jurisdiction, which then permitted the federal

court to adjudicate a properly submitted supplemental claim. That

:

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i

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Il. THE COURT OF APPEALS CORRECTLY

CONCLUDED THAT THE DISTRICT COURT

LACKED JURISDICTION OVER’ THIS

ACTION.

The Court of Appeals was undoubtedly right in de-

termining that no federal court subject matter jurisdiction

existed in this case. The petitioner's claim against the re-

spondent does nothing more than raise its defenses to an an-

ticipated state enforcement action, and therefore does not

"arise under" federal law as this Court has consistently con-

strued and applied that phrase. 28 U.S.C. § 1331.* The

Court of Appeals’ decision is consistent with this Court's

well-established jurisdictional precedents, which are de-

signed in part to avoid placing federal courts in the ackward

position of deciding important issues of state law.

That the Court of Appeals was correct that the Dis-

trict Court lacked jurisdiction is best illustrated by looking

to the judgment that the petitioner sought to defend on ap-

peal and would urge this Court to reinstate. That judgment

represents a federal court adjudication of a purely state law

issue: whether Connecticut law prohibits banks from charg-

ing ATM fees. A federal court is not the final arbitrer of

state law, and therefore this federal ruling on state law

would not bind a state court. See Exxon Corp v. Depart-

ment of Revenue of Wisconsin, 447 U.S. 207, 226 n9

(1980). In fact, the only Connecticut court to pass on the

issue has held the other way. Fleet Bank, N.A. v. Burke, 45

Conn. Sup. 566, = A.2d____‘ (1998). Further, the Elev-

enth Amendment prevents a federal court from granting in-

junctive relief against a state official on the basis of state

case does not conflict with this case.

Congress has granted the federal district courts jurisdiction over

"all civil actions arising under the Constitution, laws, or treaties

of the United States." 28 U.S.C. § 1331 (emphasis supplied).

law. Pennhurst State School & Hospital v. Halderman, 465

U.S. 89, 121 (1984). Thus, the District Court's declaratory

judgment in this case would be unenforceable against the

defendant Commissioner of Banking. See id. at 106 ("[I]t is

difficult to think of a greater intrusion of state sovereignty

than when a federal court instructs state officials on how to

conform their conduct to state law.").

That the Court of Appeals was clearly correct is ex-

plained doctrinally by this Court's explications of the "well

pleaded complaint rule." Principles of federalism and com-

ity similar to those described in the above paragraph mani-

fest themselves in this doctrine, by which this Court

measures whether a case “arises under" federal law for pur-

poses of 28 U.S.C. § 1331. The "well-pleaded complaint

rule" represents "the basic principle marking the boundaries

of the federal question jurisdiction of the federal district

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

63 (1987).

"It is long settled law that a cause of action arises

under federal law only when the plaintiff's well-pleaded

complaint raises issues of federal law." Id. (emphasis sup-

plied). The "mere presence of a federal issue in a state

cause of action does not automatically confer federal-

question jurisdiction." Merrell Dow Pharmaceuticals Inc. v.

Thompson, 478 U.S. 804, 813 (1986). Rather, the

well-pleaded complaint rule confines the search for a basis

of federal question jurisdiction to "what necessarily appears

in the plaintiffs statement of his own claim in the bill or

declaration, unaided by anything alleged in anticipation or

avoidance of defenses which it is thought the defendant may

interpose." Taylor v. Anderson, 234 U.S. 74, 75-76 (1914)

————————————

(emphasis supplied); see also Oklahoma Tax Comm'n v.

Graham, 489 U.S. 838, 840-41 (1989).

Specifically, the "well-pleaded complaint rule" pre-

cludes federal jurisdiction if a federal question is merely as-

serted or anticipated as a defense to a state law claim.

Louisville & Nashville Railroad Co. v. Mottley, 211 U.S

149, 152 (1908). "A defense that raises a federal question is

inadequate to confer federal jurisdiction." Merrell Dow

Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 808

(1986).

Several policies underlie and support the well-

pleaded complaint rule. This Court has "consistently em-

phasized that, in exploring the outer reaches of § 1331, de-

terminations about federal jurisdiction require sensitive

judgments about congressional intent, judicial power, and

the federal system." Id. at 810. The Court's articulated

"need for prudence and restraint in the jurisdictional in-

quiry"; id; includes considerations of comity counseling

against "seizing litigations from state courts merely because

one, normally a defendant, goes to federal court to begin his

This Court has noted that the vast majority of cases brought under

the general federal question jurisdiction of the federal courts

include "those in which federal law creates the cause of action" or

"where the vindication of a right under state law necessarily

turned on some construction of federal law." Merrell Dow

Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 808 (1986).

(emphasis supplied) See American Well Works Co. v. Layne &

Bowler Co., 241 U.S. 257, 260 (1916); Smith v. Kansas City Title

& Trust Co., 255 U.S. 180 (1921). The petitioner does not argue

that this case falls within either category.

5

Inexplicably, the petitioner devotes a separate section of its

Petition to criticizing the Court of Appeals’ discussion of such

"prudential" concerns. (Petition at 22-24) These concerns,

however, so clearly underpin the well-pleaded complaint rule and

help define its contours that not to articulate and consider them

might likely have lead the Court below to err.

10

federal defense before the state court begins the case under

state law." Franchise Tax Board v. Construction Laborers

Vacation Trust, 463 US. 1, 16 n.14 & 21 n.22 (1983);

Public Service Commission of Utah v. Wycoff Co., 344

U.S. 237, 248 (1952). Similarly informing the federal judi-

ciary's prudence is the desire of federal courts to avoid hav-

ing to decide doubtful questions of state law in order to

avoid federal constitutional questions. Skelly. Oil Co. v.

Phillips Petroleum Co., 339 U.S. 667, 673 (1950). These

policies would be totally undermined if, in a case like the

present one, a potential federal defense, or response to a

federal defense, could confer jurisdiction on a federal court,

especially where, as here, that federal defense would never

arise should the state claims not succeed. Comment, "Fed-

eral “reemption, Removal Jurisdiction, and the Well-

Pleaded Complaint Rule," 51 U.Chi. L.Rev. 634, 636-39

(1984).

Finally, this Court has eschewed an interpretation of

§ 1331 that would increase the volume of federal court liti-

gation. Skelly Oil Co. v. Phillips Petroleum Co., 339 US.

667, 673 (1950). This policy is consistent with this Court's

articulated understanding of its "limited jurisdiction" under §

133] Merrell Dow Pharmaceuticals Inc. v. Thompson,

478 U.S. 804, 808 (1986) (federal question jurisdiction long

construed as a more limited grant of power than Art. III);

Franchise Tax Bd. v. Construction Laborers Vacation Trust,

463 U.S.1, 9-10 (1983) (well-pleaded complaint rule "limits

the number of cases .. . that may be initiated in or removed

to federal district court, thereby avoiding . . . a number of

potentially serious federal-state conflicts."); Verlinden, B.V.

v. Central Bank of Nigeria, 461 U.S. 480, 494 (1983)

(§ 1331, although broadly phrased, has been continuously

construed and limited).

i

;

i

1]

These policies and their application to this case and

others do not, as the petitioner suggests, deny a litgant a

proper forum for adjudicating its federal claim, nor ulti-

mately deny it a federal forum. "[S]tate courts have the sol-

emn responsibility, equally with the federal courts, to guard,

enforce, and protect every right granted or secured by the

Constitution of the United States ... ." Steffel v.

Thompson, 415 U.S. 452, 460-61 (1974). Thus, state

courts are perfectly capable of adjudicating any federal

claim the petitioner might have, and more capable than the

federal courts of adjudicating the state claims or defenses of

either party.

Further, "the absence of original jurisdiction does

not mean that there is no federal forum in which a pre-

emption defense may be heard. If the state courts reject a

claim of federal preemption, that decision may ultimately be

reviewed on appeal by this Court." Franchise Tax Board vy.

Construction Laborers Vacation Trust, 463 U.S. 1, 12

(1983). See also Caterpillar Inc. v. Williams, 482 U.S. 386,

393 (1986) (preemption arguments were not properly the

basis for a removal petition and must be addressed in the

first instance by the state court). That the petitioner would

prefer an original federal forum, which, contrary to its un-

derstanding, it has no "right" to, does not mean that Con-

gress has provided one.

The Court has applied the rule symmetrically in

various procedural contexts. Under, the well-pleaded com-

plaint rule, a case does not "arise under" federal law when a

litigant with a state law claim sues under state law and raises

the defendant's federal defense in its own complaint;

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

150-51 (1908); when that same litigant seeks a federal de-

claratory judgment that the defendant's federal defense is in-

sufficient; Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S.

12

667, 670 (1950); when the target of the state law claim

seeks to remove a state lawsuit to federal court pursuant to

28 U.S.C. § 1441” based upon its federal defense; Franchise

Tax Board v. Construction Laborers Vacation Trust, 463

U.S. 1, 12 (1983) (fidelity to Skelly's spirit leads to

extension to state declaratory judgment action defendant

seeks to remove); or when the target of the state law claim

acts preemptively to establish the validity of its federal

defense by a federal declaratory judgment action. Public

Service Commission of Utah v. Wycoff Co., 344 U.S. 237,

248 (1952). The instant case falls under the Wycoff rubric:

a preemptive federal action to declare invalid, and enjoin if

necessary, a state statute on federal grounds.” The Court of

28 U.S.C. § 1441(a): “Except as otherwise expressly provided by

Act of Congress, any civil action brought in a State court of which

the district courts of the United States have original jurisdiction,

may be removed by the defendant or the defendants, to the district

court of the United States for the district and division embracing

the place where such action is pending.”

"{AJs in many actions for declaratory judgment, the realistic

position of the parties is reversed. The plaintiff is seeking to

establish a defense against a cause of action which the declaratory

defendant may assert." Public Sei:vice Commission of Utah v.

Wycoff Co., 344 U.S. 237, 248 (1952). The operation of the

Federal Declaratory Judgment Act, 28 U.S.C. § 2201(a), "is

procedural only." Aetna Life Insurance Company v. Haworth,

300 U.S. 227, 240 (1937). By the Act, "Congress enlarged the

range of remedies available in the federal courts but did not

extend their jurisdiction." Skelly Oil Co. v. Phillips Petroleum

Co., 339 U.S. 667, 671 (1950). To permit a declaratory plaintiff

to invoke federal jurisdiction to assert a federal defense, would

improperly augment the otherwise limited federal jurisdiction. Id.

at 673-74. Thus, if federal jurisdiction would be lacking but for

the availability of the federal declaratory judgment procedure, and

a federal claim only arises as a defense to a state action, federal

jurisdiction is barred. Id. at 672.

As this Court has stated:

Where the complaint in an action for declaratory

13

Appeals' essential holding in this case is thus consistent with

well-established precedent of this Court.

These permutations of the well-pleaded complaint

rule apply equally to the defense of federal preemption.

"Federal pre-emption is ordinarily a federal defense to the

plaintiff's suit. As a defense, it does not appear on the face

of a well-pleaded complaint . " Metropolitan Life Ins.

Co. v. Taylor, 481 U.S. 58, 63-64 (1987); see also

Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1986) ("[I]t

is now settled law that a case may not be removed to federal

court on the basis of a federal defense, including the defense

of pre-emption, even if the defense is anticipated in the

plaintiffs complaint, and even if both parties concede that

the federal defense is the only question truly at issue.");

Franchise Tax Board v. Construction Laborers Vacation

Trust, 463 U.S. 1, 14 (1983) (same). Thus, even if the par-

ties were to ignore the state law question the petitioner's

complaint posits, they could not confer jurisdiction upon the

federal courts.

This Court has recognized a narrow exception to the

well-pleaded complaint doctrine, however, for those cases

judgment seeks in essence to assert a defense to an

impending or threatened state court action, it is the

character of the threatened action, and not of the de-

fense, which will determine whether there is federal-

jurisdiction in the district court. If the cause of ac-

tion, which the declaratory defendant threatens to as-

sert, does not itself involve a claim under federal

law, it is doubtful if a federal court may entertain an

action for declaratory judgment establishing a de-

fense to that claim. This is dubious even though the

declaratory complaint sets forth a claim of federal

right, if that right is in reality in the nature of a de-

fense to a threatened cause of action.

Public Service Commission of Utah v. Wycoff Co., 344 U.S. 237,

248 (1952).

14

in which Congress has "so completely pre-empt[ed] a par-

ticular area that any civil complaint raising this select group

of claims is necessarily federal in character." Metropolitan

Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987). In such

areas, the Court has held that the preemptive force of fed-

eral law is "so powerful as to displace entirely any state

cause of action." Id. at 64. The petitioner has not sought

to fit itself within this exception.”

Rather, the petitioner hangs its federal jurisdictional

hat upon a footnote in this Court's decision in Shaw v. Delta

Air Lines, Inc., 463 U.S. 85, 96 n.14 (1983). In Shaw the

plaintiffs sought a federal declaratory judgment that the

New York Human Rights Law was preempted by ERISA

The Court saw no jurisdictional problem because:

It is beyond dispute that federal courts have

jurisdiction over suits to enjoin state officials

from interfering with federal rights. See Ex

Parte Young, 209 U.S. 123 (1908). A

To date, the Court has recognized only three areas that are

“completely preempted." See 13 C. Wright, A. Miller & M.

Kane, Federal Practice & Procedure § 3522 (2d ed. 1998 Supp.)

First is the "unique preemptive force of ERISA," 29 U.S.C. §§

1001, et seq. Id. at pp. 65-66; see Stone & Webster Engineering

Corp. v. Ilsley, 690 F.2d 323, 328 (2d Cir. 1982), aff'd sub. nom.

Arcudi v. Stone & Webster Engineering, Corp., 463 U.S. 1220

(1983). Second is the Labor Management Relations Act, 29

U.S.C. § 185, et seq) See Franchise Tax Board v. Construction

Laborers Vacation Trust, 463 U.S. 1, 23-24 (1983); Avco Corp. v

International Ass'n of Machinists, 390 U.S. 557 (1968). Finally,

there are certain tribal claims that are “necessarily federal in

character.” See Oneida Indian Nation vy. County of Oneida, 414

U.S. 661 (1974). Obviously, none of these three areas of the law

is involved in the petitioner's suit; and in our dual system of

banking, federal banking law plainly does not "completely"

displace state banking law. Compare Downriver Community

Federal Credit Union vy. Penn Square Bank, 879 F.2d 754, 758-59

(10th Cir. 1989)

|

a gee de

15

plaintiff who seeks injunctive relief from

state regulation, on the ground that such

regulation is pre-empted by a federal statute

which, by virtue of the Supremacy Clause of

the Constitution, must prevail, thus presents

a federal question which the federal courts

have jurisdiction under 28 U.S.C. § 1331 to

resolve. .. . This Court, of course, fre-

quently has resolved pre-emption disputes in

a similar jurisdictional posture.

Id. (case cites omitted)

Citing Ex Parte Young, the first sentence of this

footnote stands for the unremarkable proposition that the

Eleventh Amendment does not deprive the federal courts of

jurisdiction over a "suit against State officials... . if the suit

seeks to force them to conform their conduct to federal

law." 1 J. Nowak & R. Rotunda, Treatise on Constitutional

Law (2d ed. 1992) § 2.12, p. 151; see Ex Parte Young, 209

U.S. 123, 160-62 (1908). This well-recognized exception

to a State's Eleventh Amendment immunity from federal suit

does not itself create federal jurisdiction, however, and the

federal plaintiff must therefore otherwise be properly in

federal court."” The second and third sentences, in context

A claimed violation of 42 U.S.C. § 1983 would be an example of a

proper jurisdictional basis since in such an instance "federal law

creates the cause of action." Merrell Dow Pharmaceuticals, Inc. v.

Thompson, 478 U.S. 804, 808 (1986). See Steffel v. Thompson,

415 U.S. 452 (1974). In Ex Parte Young, decided before this

Court's "arising under" jurisprudence had developed, the federal

plaintiffs alleged constitutional violations that would fall within §

1983 (due process and equal protection). Similarly, a number of

the circuit court cases cited in support of a purported circuit split

(Petition at 12-15) had a jurisdictional basis under § 1983. As

noted above, the petitioner did not plead this as a § 1983 action,

and it has no cognizable right under that statute.

Additionally, the Court should not be misled into believing that

16

and in light of this Court later precedents, simply means

only that where a claim of "complete preemption" is made

out, a federal plaintiff may be said to assert a claim "arising

under" federal law. See Metropolitan Life Ins. Co. v. Tay-

lor, 481 U.S. 58, 63-64 (1987); Caterpillar Inc. v. Williams,

482 U.S. 386, 393 (1986).

To read the Shaw footnote otherwise would upset

the intended symmetry of the well-pleaded complaint rule.

Whether a state suit may be removed to federal court is

tested by whether the state plaintiff could have begun the

action originally in federal court. Franchise Tax Board v.

Construction Laborers Vacation Trust, 463 U.S. 1, 19

(1983). The respondents clearly could not have brought a

action in federal court seeking a declaration that federal law

does not preempt the state law. Skelly Oil Co. v. Phillips

Petroleum Co., 339 U.S. 667, 670 (1950). Thus, the peti-

tioner cannot manufacture federal question jurisdiction

merely by switching the parties around. Public Service

Commission of Utah v. Wycoff Co., 344 U.S. 237, 248

(1952).

Also, to adopt the petitioner's position would be to

elevate preemption to the highest plane among federal de-

fenses, including constitutional defenses. Although no other

federal defense would suffice to support a removal petition

the petitioner faced the "Hobson's choice," as the plaintiff did in

Ex Parte Young., of violating the law as a test case or

continuously violating the law and exposing itself to penalties.

(See Petition at 24) As the record clearly reflects, the petitioner in

September, 1995, asked the Commissioner for his opinion on

whether Conn. Gen. Stat. § 36a-156 prohibited ATM charges.

(Petitioner's App. A97) Under state law, the petitioner could have

asked the Commissioner to reduce this opinion to a declaratory

ruling, which the petitioner could then have appealed to state

court. Conn. Gen. Stat. § 4-176. (App. A6) Eschewing any of the

available state processes, the petitioner instead waited until

January, 1997, to bring this federal action.

ee ae ON MM TC MrT n OTR r em |

17

or a declaratory judgment, the petitioner's view is that any

claim of federal preemption does suffice to bring it within

28 U.S.C. § 1331. This is inconsistent with this Court's nu-

merous holdings in other contexts that, to the contrary, at

best a claim of federal preemption is on the same plane as

any other constitutional defense. Swift & Co. v. Wickham,

382 U.S. 111, 120 (1965) (preemption claim did not re-

quire convening of three-judge district court); NOPSI v.

Council of New Orleans, 491 U.S. 350, 365 (1989) (For

Younger abstention purposes, "[t]here is no greater federal

interest in enforcing the supremacy of federal statutes than

in enforcing the supremacy of explicit constitutional

guarantees").

Thus, the Court of Appeals properly described the

petitioner's theory as "an ill-advised use of federal question

jurisdiction," inappropriately opening the federal courts to

preemption claims that should be first litigated in state court

because "[i]n almost every area in which state law regulates

private conduct, some federal statute can arguably be in-

voked . . . to provide the basis for a preemption claim."

(Petitioner's App. A20-A21).

18

CONCLUSION

For all of these reasons, the Court should deny the

petition for a writ of certiorari.

Respectfully submitted,

RESPONDENTS

*RICHARD BLUMENTHAL

ATTORNEY GENERAL

Gregory T. D'Auria

William J. Prensky

Assistant Attorney General

55 Elm Street

P.O. Box 120

Hartford, CT 06141-0120

Tel. No. (860)-808-5020

*Counsel of Record

No. 98-1661

In The

Supreme Court Of The United States

October Term, 1998

. ae

FLEET BANK, NATIONAL ASSOCIATION,

Petitioner,

v.

THE HONORABLE JOHN P. BURKE, BANKING

COMMISSIONER OF THE STATE OF CONNECTICUT

AND CONNECTICUT DEPARTMENT OF BANKING,

A STATE AGENCY,

Respondents.

¢

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Earet + :

APPENDIX

a ees >

Al

APPENDIX TABLE OF CONTENTS

John P. Burke, Banking Commissioner of the

State of Connecticut, et al. v. Fleet National

Bank; et al, Verified Complaint

Conn. Gen. Stat. § 4-176

A2

RET. MAY 4, 1999 : CV990588717-S

JOHN P. BURKE, BANKING : SUPERIOR COURT

COMMISSIONER OF THE STATE : JUDICIAL DISTRICT

OF CONNECTICUT, and THE : OF HARTFORD

STATE OF CONNECTICUT

¥.

FLEET NATIONAL BANK

FIRST UNION NATIONAL BANK ;

and BANKBOSTON, N.A. : APRIL 16, 1999

VERIFIED COMPLAINT

1. This suit is brought by John P. Burke, Banking

Commissioner of the State of Connecticut, under the

authority of Conn. Gen. Stat. § 36a-50(b) to enforce the

provisions of Conn. Gen. Stat. § 36a-156 governing the op-

eration of automated teller machines ("ATMs") in the State

of Connecticut.

2. The defendant, Fleet Bank, National Association

("Fleet"), is a national bank doing business in the state of

Connecticut.

3. The defendant, First Union National Bank ("First

Union"), is a national bank doing business in the state of

Connecticut.

4. The defendant, BankBoston, N.A. ("BankBos-

ton"), is a national bank doing business in the state of

Connecticut.

5. Fleet owns and operates ATMs in the state of

Connecticut.

A3

6. First Union owns and operates ATMs in the state

of Connecticut.

7. BankBoston owns and operates ATMs in the

state of Connecticut

8. Fleet has imposed, and on information and belief

intends to impose, fees or surcharges and collect them from

non-depositors who use its ATMs in the state of

Connecticut

9. First Union has imposed, and on information and

belief intends to impose, fees or surcharges and collect them

from non-depositors who use its ATMs in the state of

Connecticut

10. BankBoston has imposed, and on information

and belief intends to impose, fees or surcharges and collect

them from non-depositors who use its ATMs in the state of

Connecticut

11. Conn. Gen Stat. § 36a-156 does not authorize

and thus prohibits the imposition of fees or surcharges on

non-depositors who use an ATM machine in the state of

Connecticut

12. The plaintiff, State of Connecticut and the peo-

ple of the State, have suffered and will continue to suffer

immediate and irreparable harm if such-fees or surcharges

are imposed and collected

HEREOF FAIL NOT, BUT OF THIS WRIT, with

your doings therein, make due service and return according

to law

Dated at Hartford, Connecticut, this 16th day of

April, 1999

PLAINTIFFS

/s/ Richard Blumenthal __

RICHARD BLUMENTHAL

ATTORNEY GENERAL

Juris No. 403804

BY

/s/ William J. Prensky

William J. Prensky

Assistant Attorney General

Juris No. 85294

55 Elm Street

P.O. Box 120

Hartford, CT 06141-0120

Tel. (860) 808-5270

Please enter our appearance for

the plaintiffs in this action

Richard Blumenthal

Attorney General

/s/ William J. Prensky

William J. Prensky

Assistant Attorney General

AS

VERIFICATION

STATE OF CONNECTICUT )

) ss. Hartford, Date: April 16, 1999

COUNTY OF HARTFORD |)

I, John P. Burke, being duly sworn, depose and say:

1. I am the Banking Commissioner of the State of

Connecticut. I am authorized, pursuant to Conn. Gen. Stat.

§§ 36a-1 et seq. to administer the provisions of the Banking

Law of Connecticut.

2. I have read the Verified Complaint and the con-

tents thereof are true to the best of my knowledge, informa-

tion, and belief

3. The sources of my information as to the matters

stated in the Verified Complaint emanate from conversa-

tions between counsel for the Department of Banking and

counsel representing the defendant banks, and records, affi-

davits, and other documents in the possession of the De-

partment of Banking

/s/ John P. Burke

John P. Burke

Subscribed and sworn to before me this 16th day of

April, 1999

/s/ Paul A. Bobruff

Commissioner of the Superior

Court

A6

Conn. Gen. Stat. § 4-176. Declaratory rulings. Peti-

tions. Regulations

(a) Any person may petition an agency, or an agency

may on its own motion initiate a proceeding, for a declara-

tory ruling as to the validity of any regulation, or the appli-

cability to specified circumstances of a provision of the

general statutes, a regulation, or a final decision on a matter

within the jurisdiction of the agency.

(b) Each agency shall adopt regulations, in accor-

dance with the provisions of this chapter, that provide for

(1) the form and content of petitions for declaratory rulings,

(2) the filing procedure for such petitions and (3) the proce-

dural rights of persons with respect to the petitions.

(c) Within thirty days after receipt of a petition for a

declaratory ruling, an agency shall give notice of the petition

to all persons to whom notice is required by any provision

of law and to all persons who have requested notice of de-

claratory ruling petitions on the subject matter of the

petition.

(d) If the agency finds that a timely petition to be-

come a party or to intervene has been filed according to the

regulations adopted under subsection (b) of this section, the

agency: (1) May grant a person status as a party if the

agency finds that the petition states facts demonstrating that

the petitioner's legal rights, duties or privileges shall be spe-

cifically affected by the agency proceeding; and (2) may

grant a person status as an intervenor if the agency finds

that the petition states facts demonstrating that the peti-

tioner's participation is in the interests of justice and will not

impair the orderly conduct of the proceedings. The agency

may define an intervenor's participation in the manner set

forth in subsection (d) of section 4-177a.

A7

(e) Within sixty days after receipt of a petition for a

declaratory ruling, an agency in writing shall: (1) Issue a

ruling declaring the validity of a regulation or the applicabil-

ity of the provision of the general statutes, the regulation, or

the final decision in question to the specified circumstances,

(2) order the matter set for specified proceedings, (3) agree

to issue a declaratory ruling by a specified date, (4) decide

not to issue a declaratory ruling and initiate regulation-

making proceedings, under section 4-168 on the subject, or

(5) decide not to issue a declaratory ruling, stating the rea-

sons for its action

(f) A copy of all rulings issued and any actions taken

under subsection (e) of this section shall be promptly deliv-

ered to the petitioner and other parties personally or by

United States mail, certified or registered, postage prepaid,

return receipt requested

(zg) If the agency conducts a hearing in a proceeding

for a declaratory ruling, the provisions of subsection (b) of

section 4-177c, section 4-178 and section 4-179 shall apply

to the hearing

(h) A declaratory ruling shall be effective when per-

sonally delivered or mailed or on such later date specified by

the agency in the ruling, shall have the same status and bind-

ing effect as an order issued in a contested case and shall be

a final decision for purposes of appeal in accordance with

the provisions of section 4-183. A declaratory ruling shall

contain the names of all parties to the proceeding, the par-

ticular facts on which it is based and the reasons for its

conclusion.

(i) If an agency does not issue a declaratory ruling

within one hundred eighty days after the filing of a petition

therefor, or within such longer period as may be agreed by

A8

the parties, the agency shall be deemed to have decided not

to issue such ruling

(j) The agency shall keep a record of the proceeding

as provided in section 4-177