State Farm Bank, FSB v. Burke
Representing State Farm Bank, a federal savings bank, the firm achieved a significant victory with respect to preemption of state licensing and related requirements as applied to the independent contractor agents of the Bank.
In a complaint filed in federal district court in 2005, Arnold & Porter LLP sought a declaration and order enjoining the Banking Department of Connecticut from enforcing the state's licensing requirements against the Bank's agents engaged in marketing mortgage loans and certificates of deposit ("CDs"), arguing that such state requirements were preempted by the Home Owners' Loan Act ("HOLA") and the implementing regulations of the Office of Thrift Supervision ("OTS"). A central question for the court was whether judicial deference was due to an opinion issued by the OTS that concluded that State Farm Bank's agents were entitled to the same preemption enjoyed by the Bank itself. In an opinion issued on June 21, 2006, the US District Court for the District of Connecticut held that such deference was indeed due, finding that Congress delegated broad authority to the OTS over all aspects of the operations of federal savings banks such as State Farm Bank, including the authority to make controlling determinations regarding preemption of state law with respect to such banks, their operating subsidiaries, and other persons and entities subject to supervision and examination by the banks and the OTS itself. State Farm Bank, FSB v. Burke, No. 3:05CV808, 2006 WL 1728919 (D. Conn.). The Connecticut Attorney General declined to appeal. Arnold & Porter is currently representing State Farm Bank in parallel litigation in other jurisdictions.