Augustine v. FIA Card Services, N.A
In a very significant opinion regarding preemption of state law claims of unfair and deceptive practices, the US District Court for the Eastern District of California recently held that the OCC's regulations expressly preempt certain such claims against a national bank. Augustine v. FIA Card Services, N.A., No. 06 cv 2013-GEB-EFB, 2007 WL 1176226 (E.D. Cal. April 20, 2007). The class action plaintiff in Augustine alleged that FIA Card Services, N.A. ("FIA") violated California law by imposing "excess finance charges" in the form of "retroactive" interest-rate increases on FIA credit cardholders "without warning or advance notice." Although the complaint expressly noted that "FIA's contractual provisions . . . purport to allow retroactive increases of interest rates and finance charges without warning or advance notice," it alleged that these increases were illegal because they were "unconscionable." On behalf of FIA, our attorneys moved to dismiss the case on preemption grounds, arguing that (1) the plaintiff's claims challenging FIA's credit card account disclosures were in fact an attack on FIA's terms of credit, and (2) the plaintiff's allegation that California law required FIA to provide its cardholders with additional "warning" or "advance notice" of interest rate increases was an attempt to impose specific state disclosure mandates on a national bank. As such, we argued, the plaintiff's claims were preempted by the express terms of the OCC's preemption regulation on lending-related practices of national banks, which preempts, inter alia, state law affecting national banks' "terms of credit" and state law "requiring specific statements, information, or other content to be included in [national bank] billing statements, credit contracts, or other credit-related documents." The court accepted both arguments in granting our motion to dismiss, thereby demonstrating that the OCC's preemption regulations are a meaningful clarification of the boundaries on permissible claims against national banks under state consumer protection and disclosure laws.