Rose v. Chase Bank USA, N.A.

Chase Bank USA
2005 - 2008

In a ground-breaking federal preemption case under the National Bank Act ("NBA"), the Court of Appeals for the Ninth Circuit upheld a judgment on the pleadings in favor of our client Chase Bank USA, N.A. (Rose v. Chase Bank USA, N.A., F.3d., 2008 WL 185491; 9th Cir. Jan. 23, 2008). Our financial services team, led by partners Laurence Hutt (Los Angeles), Howard Cayne (Washington, D.C.), and counsel Nancy Perkins (Washington, D.C.), were responsible for briefing and arguing the case on behalf of Chase Bank.

The case began as a state court putative class action in which the plaintiffs claimed that Chase violated California's unfair competition law ("UCL") by failing to comply with a California statute requiring particular disclosures in connection with "convenience checks" offered to credit card customers. The plaintiffs also alleged violations of the UCL on the ground that Chase, by not providing sufficient disclosures, engaged in "unfair" and "deceptive" conduct, irrespective of the California convenience check statute. 

We immediately removed the case to federal court and then moved for judgment on the pleadings, arguing that the preemption regulation of the Office of the Comptroller of the Currency ("OCC") regarding non-real estate lending ("Section 7.4008"), as well as general preemption principles under the NBA, precluded the plaintiffs" claims. The United States District Court for the Central District of California granted our motion in its entirety. Notably, the court found Section 7.4008 applicable even to claims of state-law violations by a national bank occurring prior to the regulation's adoption in 2004 (which the plaintiffs had vigorously opposed), and that federal preemption applied despite the fact that the UCL is a consumer protection statute of general application. 

On appeal, plaintiffs-appellants contended that judgment on the pleadings was inappropriate because there had been no discovery regarding whether the California law constitutes a "significant" impairment to Chase's lending activities or an interference with the purposes of the NBA. The Ninth Circuit firmly rejected this approach, finding, as we had argued, that "no amount of discovery would change the central holding that Congress intended for the NBA to preempt state restrictions on national banks such as [the California convenience check disclosure statute]."  This ruling, if adhered to by the Ninth Circuit and followed by other courts, should greatly facilitate the advancement and presentation of NBA preemption defenses in future litigation.

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