160 F.3d 883 (2nd Cir. 1998), 98-9324, Fleet Bank, Nat. Ass'n v. Burke

Docket Nº:Docket No. 98-9324
Citation:160 F.3d 883
Party Name:FLEET BANK, NATIONAL ASSOCIATION, Plaintiff-Appellee, v. The Honorable John P. BURKE, Banking Commissioner of the State of Connecticut, and Connecticut Department of Banking, a State Agency, Defendants-Appellants.
Case Date:November 09, 1998
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 883

160 F.3d 883 (2nd Cir. 1998)



The Honorable John P. BURKE, Banking Commissioner of the

State of Connecticut, and Connecticut Department

of Banking, a State Agency, Defendants-Appellants.

Docket No. 98-9324

United States Court of Appeals, Second Circuit

November 9, 1998

Argued Oct. 23, 1998.

Page 884

Richard Blumenthal, Atty. Gen., Hartford, Conn. (William J. Prensky, Asst. Atty. Gen., Hartford, Conn., on the brief), for defendants-appellants.

Daniel L. FitzMaurice, Hartford, Conn. (Allan B. Taylor, Day, Berry & Howard, Hartford, Conn., on the brief), for plaintiff-appellee.

(Michael E. Malamut, Loretta M. Smith, Boston, Mass., submitted a brief for amicus curiae The New England Legal Foundation).

(Raymond Natter, Robert B. Serino, L. Robert Griffin, Rosa M. Koppel, F. Thomas Eck, IV, Washington, DC, submitted a brief for amicus curiae The Office of the Comptroller of the Currency).

(Donald E. Frechette, Edwards & Angell, Hartford, Conn., submitted a brief for amicus curiae First Union National Bank).

Before: NEWMAN and JACOBS, Circuit Judges and BURNS, [*]

JON O. NEWMAN, Circuit Judge:

This appeal concerning a preemption claim presents an issue of federal subject matter jurisdiction that appears not to have been explicitly considered by any court. The issue is whether subject matter jurisdiction under 28 U.S.C. § 1331 (1994) is available for a complaint seeking declaratory and injunctive relief against a state officer and a state agency that alleges (a) that state law does not prohibit the action the defendants assert the plaintiff may not take and (b) that state law, if construed to prohibit the plaintiff's conduct, is preempted by federal law. The issue arises on an appeal by the Connecticut Commissioner of Banking ("Commissioner") and the Connecticut Department of Banking from the October 5, 1998, judgment of the District Court for the District of Connecticut (Janet Bond Arterton, Judge) granting a declaratory judgment in favor of the plaintiff Fleet Bank, National Association ("Fleet"). The judgment declares that Connecticut's banking laws do not prohibit Fleet from imposing a fee upon non-Fleet customers for using a Fleet automated teller machine ("ATM"). We conclude that federal question jurisdiction is lacking because the lawsuit is primarily an attempt to have a federal court construe a state regulatory statute. We therefore vacate the judgment and remand with directions to dismiss the complaint.


Fleet is a national banking association organized under the National Bank Act, 12 U.S.C. §§ 21-216d (1994 & West Supp.1998) ("the Act"). The Act confers upon a national banking association the power, among other things, "[t]o exercise ... all such incidental powers as shall be necessary to carry on the business of banking." Id. § 24 (Seventh). In September 1995, Fleet sought an opinion from the Commissioner that the Connecticut statutes governing the use of ATMs in Connecticut do not place any restriction on the ability of a federally chartered bank to impose a fee ("the surcharge fee") for use of the bank's ATMs by a person who does not

Page 885

otherwise have a banking relationship with the bank. The Commissioner replied that Connecticut banking laws do not authorize a surcharge fee. He reasoned that the state statute, Conn. Gen.Stat. § 36a-156, authorizing banks to impose a usage fee (also called an "interchange fee") on other banks whose customers use the ATMs of so-called "host" banks (Fleet in this litigation) "carries with it an implied prohibition against the bank imposing a fee on customers of the other bank for such use." Letter from John P. Burke, Banking Commissioner, to Robert M. Taylor, III, Esq. (Sept. 14, 1995).

Fleet then brought the pending lawsuit in the District Court. Its complaint set forth two propositions of law. First, Fleet alleged that the defendants "have adopted an arbitrary, capricious, and erroneous view of the Connecticut ATM statutes insofar as they conclude that these statutes prohibit Fleet from charging fees to non-depositor customers using its ATMs." Complaint p 18. Second, Fleet alleged that "the Connecticut ATM statutes are preempted by 12 U.S.C. § 24 (Seventh) to the extent that these statutes are interpreted to prohibit Fleet from, or penalize Fleet for, exercising the power to charge fees to non-depositor customers using its ATMs." Id. p 19. As relief, Fleet sought a judgment declaring that the Connecticut ATM statutes did not prohibit the surcharge fee, declaring that the National Bank Act preempts Connecticut ATM statutes insofar as they are interpreted to prohibit the surcharge fee, and enjoining the defendants from interfering with Fleet's imposition of the surcharge fee.

The defendants moved to dismiss on the ground that the case was appropriate for abstention under Railroad Commission v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). The defendants pointed out that the state statute invoked by the Commissioner to support his view that the surcharge fee was prohibited had never been construed by any court, and urged that the initial construction should be made by a state court. Judge Arterton denied the motion. She reasoned that abstention is "not appropriately invoked in a preemption case," citing Coker v. Pan American World Airways, Inc. (In re Pan American Corp.), 950 F.2d 839 (2d Cir.1991), that the defendants had not made a sufficient showing that state law was unclear, and that interpretation of the Connecticut ATM statutes by a Connecticut court "will not resolve the preemption question in this case." Ruling on Defendants' Motion to Dismiss at 5, 8.

Thereafter, the parties agreed to, and the District Court approved, a bifurcation of issues. The Court's subsequent scheduling order set a date for simultaneous cross-motions for summary judgment on the state law issue, and bifurcated the preemption issue for later scheduling "if necessary." See Scheduling Order (Aug. 29, 1997). Upon the parties' cross-motions directed only to the state law issue, Judge Arterton ruled that Conn. Gen.Stat. § 36a-156 did not prohibit Fleet from imposing a surcharge on non-depositor customers for use of its ATMs. This Court stayed the District Court's judgment, in effect enjoining Fleet from imposing the surcharge fee, pending oral argument on the defendants' appeal, which we expedited. After oral argument, we terminated our stay, thereby permitting Fleet to impose the surcharge fee.


On appeal, the defendants challenge the District Court's subject matter jurisdiction. Though they failed to mount such a challenge in the District Court, 1 that omission is not fatal, since subject matter jurisdiction may be raised at any time, and we would be obliged to consider it, even if the defendants had not raised it. See Wisconsin Dep't of Corrections v. Schacht, --- U.S. ----, ----, 118 S.Ct. 2047, 2052, 141 L.Ed.2d 364 (1998). Explication of the defendants' contention and the plaintiff's response will assist an understanding of the ground on which our disposition ultimately rests.

The defendants contend that subject matter jurisdiction is lacking because of the

Page 886

strictures of the well-pleaded complaint rule. As the defendants correctly note, that rule requires a complaint invoking federal question jurisdiction to assert the federal question as part of the plaintiff's claim, see Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987); Gully v. First National Bank, 299 U.S. 109, 116, 57 S.Ct. 96, 81 L.Ed. 70 (1936), and precludes invoking federal question jurisdiction merely to anticipate a federal defense, see Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 53 L.Ed. 126 (1908), including the defense of preemption, see Caterpillar Inc. v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); Franchise Tax Board, 463 U.S. at 14, 103 S.Ct. 2841; Travelers Indemnity Co. v. Sarkisian, 794 F.2d 754, 758 (2d Cir.1986).

As the defendants further note, also correctly, the declaratory judgment statute does not confer jurisdiction on a district court, see Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 94 L.Ed. 1194 (1950), and a declaratory judgment plaintiff is subject to the rule that federal jurisdiction cannot be obtained by anticipating an adversary's federal defense, id. Moreover, and especially pertinent to the pending suit, a complaint seeking a declaratory judgment is to be tested, for purposes of the well-pleaded complaint rule, as if the party whose adverse action the declaratory judgment plaintiff apprehends had initiated a lawsuit against the declaratory judgment plaintiff. See Public Service Commission v. Wycoff Co., 344 U.S. 237, 248, 73 S.Ct. 236, 97 L.Ed. 291 (1952) ("Where the complaint in an action for declaratory 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 defense, which will determine whether there is federal-question jurisdiction in the District Court."); 15 James Wm. Moore, Moore's Federal Practice § 103.44, at 103-67 (3d ed. 1998) ("[T]he nature of the potential coercive action that the defendant might bring against the declaratory judgment plaintiff must be analyzed. The court will ask whether in this hypothetical suit, a federal question would be presented.") (footnote omitted).

Thus, the argument continues, Fleet's lawsuit seeking the declaratory relief of insulation from the Commissioner's threat to invoke section 36a-156 to prohibit Fleet's...

To continue reading