557 U.S. 519 (2009), 08-453, M. Cuomo v. The Clearing House Association, L.L.C.

Docket Nº:08-453.
Citation:557 U.S. 519, 129 S.Ct. 2710, 174 L.Ed.2d 464, 77 U.S.L.W. 4664
Opinion Judge:SCALIA, Justice
Party Name:Andrew M. CUOMO, Attorney General of New York, Petitioner, v. THE CLEARING HOUSE ASSOCIATION, L.L.C., et al.
Attorney:Barbara D. Underwood, New York, NY, for petitioner. Malcolm L. Stewart, Washington, DC, for respondent Office of Comptroller of the Currency. Seth P. Waxman, Washington, DC, for respondent The Clearing House Association, L.L.C. Andrew M. Cuomo, Attorney General of the State of New York, Barbara D...
Judge Panel:SCALIA, J., delivered the opinion of the Court, in which STEVENS, SOUTER, GINSBURG, and BREYER, JJ., joined. THOMAS, J., filed an opinion concurring in part and dissenting in part, in which ROBERTS, C.J., and KENNEDY and ALITO, JJ., joined. Justice THOMAS, with whom THE CHIEF JUSTICE, Justice KEN...
Case Date:June 29, 2009
Court:United States Supreme Court
 
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Page 519

557 U.S. 519 (2009)

129 S.Ct. 2710, 174 L.Ed.2d 464, 77 U.S.L.W. 4664

Andrew M. CUOMO, Attorney General of New York, Petitioner,

v.

THE CLEARING HOUSE ASSOCIATION, L.L.C., et al.

No. 08-453.

United States Supreme Court

June 29, 2009

Argued April 28, 2009

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

[129 S.Ct. 2712] Syllabus[*]

To determine whether various national banks had violated New York's fair-lending laws, the State's Attorney General, whose successor in office is the petitioner here, sent them letters in 2005 requesting "in lieu of subpoena" that they provide certain nonpublic information about their lending practices. Respondents, the federal Office of the Comptroller of the Currency (Comptroller or OCC) and a banking trade group, brought suit to enjoin the information request, claiming that the Comptroller's regulation promulgated under the National Bank Act (NBA) prohibits that form of state law enforcement against national banks. The District Court entered an injunction prohibiting the Attorney General from enforcing state fair-lending laws through demands for records or judicial proceedings. The Second Circuit af­firmed.

Held:

The Comptroller's regulation purporting to pre-empt state law enforcement is not a reasonable interpretation of the NBA. Pp. 2712-2722.

(a) Evidence from the time of the NBA's enactment, this Court's cases, and application of normal construction principles make clear that the NBA does not prohibit ordinary enforcement of state law. Pp. 2712 - 2720.

(i) The NBA provides: "No national bank shall be subject to any visitorial powers except as authorized by Federal law, vested in the courts . . ., or . . . directed by Congress." 12 U.S. C. §484(a). Among other things, the Comptroller's regulation implementing §484(a) for­bids States to "exercise visitorial powers with respect to national banks, such as conducting examinations, inspecting or requiring the production of books or records," or, as here pertinent, "prosecuting enforcement actions" "except in limited circumstances authorized by federal law." 12 CFR §7.4000(a)(1). There is some ambiguity in the NBA's term "visitorial powers," and the Comptroller can give authori­tative meaning to the term within the bounds of that uncertainty. Chevron U.S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694. However, the presence of some uncertainty does not expand Chevron deference to cover virtually any interpretation of the NBA. Pp. 2712 - 2714.

(ii) When the NBA was enacted in 1864, scholars and courts un­derstood "visitation" to refer to the sovereign's supervisory [129 S.Ct. 2713] power over the

Page 520

manner in which corporations conducted business, see, e.g., Guthrie v. Harkness, 199 U.S. 148, 157, 26 S.Ct. 4, 50 L.Ed. 130. That power allowed the States to use the prerogative writs to exercise control if a corporation abused its lawful power, acted adversely to the public, or created a nuisance. Pp. 2714-2715.

(iii) This Court's consistent teaching, both before and after the NBA's enactment, is that a sovereign's "visitorial powers" and its power to enforce the law are two different things. See, e.g., Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 676, 681, 4 L.Ed. 629; Guthrie, supra, at 159, 157, 26 S.Ct. 4; First Nat. Bank in St. Louis v. Missouri, 263 U.S. 640, 660, 44 S.Ct. 213, 68 L.Ed. 486. Watters v. Wachovia Bank, N. A, 550 U.S. 1, 21, 127 S.Ct. 1559, 167 L.Ed.2d 389, distinguished. And contrary to the Comptroller's regulation, the NBA pre-empts only the former. Pp. 2715-2717.

(iv) The regulation's consequences also cast its validity into doubt: Even the OCC acknowledges that the NBA leaves in place some state substantive laws affecting banks, yet the Comptroller's rule says that the State may not enforce its valid, non-pre-empted laws against national banks. "To demonstrate the binding quality of a statute but deny the power of enforcement involves a fallacy made apparent by the mere statement of the proposition, for such power is essentially inherent in the very conception of law." St. Louis, supra, at 660, 44 S.Ct. 213. In contrast, channeling state attorneys general into judicial law-enforcement proceedings (rather than allowing them to exercise "visitorial" oversight) would preserve a regime of exclusive adminis­trative oversight by the Comptroller while honoring in fact rather than merely in theory Congress's decision not to pre-empt substan­tive state law. This reading is also suggested by §484(a)'s otherwise inexplicable reservation of state powers "vested in the courts of jus­tice." And on a pragmatic level, the difference between visitation and law enforcement is clear: If a State chooses to pursue enforcement of its laws in court, its targets are protected by discovery and proce­dural rules. Pp. 2717-2719.

(b) The Comptroller's interpretation of the regulation demonstrates its own flaw: the Comptroller is forced to limit the regulation's sweep in areas such as contract enforcement and debt collection, but those exceptions rest upon neither the regulation's nor the NBA's text. Pp. 2719 -2720.

(c) The dissent's objections are addressed and rejected. Pp. 2720 - 2721.

(d) Under the foregoing principles, the Comptroller reasonably in­terpreted the NBA's "visitorial powers" term to include "conducting examinations [and] inspecting or requiring the production of books or records of national banks," when the State conducts those activities as supervisor of corporations. When, however, a state attorney gen­eral brings suit to enforce state law against a national bank, he is not acting in the role of sovereign-as-supervisor, but rather sovereign-as-law-enforcer.

Page 521

Because such a lawsuit is not an exercise of "visitorial powers," the Comptroller erred by extending that term to include "prosecuting enforcement actions" in state courts. In this case, the Attorney General's threatened action was not the bringing of a civil suit, or the obtaining of a judicial search warrant based on probable cause, but the issuance of subpoena on his own authority if his re­quest for information was not voluntarily honored. That is not the exercise of the law enforcement power "vested in the courts of jus­tice," which the NBA exempts from the ban on the exercise of super­visory power. Accordingly, the injunction below is affirmed as ap­plied to the Attorney General's [129 S.Ct. 2714] threatened issuance of executive subpoenas, but vacated insofar as it prohibits the Attorney General from bringing judicial enforcement actions. Pp. 2721 - 2722.

510 F.3d 105, affirmed in part and reversed in part.

SCALIA, J., delivered the opinion of the Court, in which STEVENS, SOUTER, GINSBURG, and BREYER, JJ., joined. THOMAS, J., filed an opinion concurring in part and dissenting in part, in which ROBERTS, C.J., and KENNEDY and ALITO, JJ., joined.

Barbara D. Underwood, New York, NY, for petitioner.

Malcolm L. Stewart, Washington, DC, for respondent Office of Comptroller of the Currency.

Seth P. Waxman, Washington, DC, for respondent The Clearing House Association, L.L.C.

Andrew M. Cuomo, Attorney General of the State of New York, Barbara D. Underwood, Counsel of Record, Solicitor General, Michelle Aronowitz, Deputy Solicitor General, Richard Dearing, Assistant Solicitor General, New York, NY, for petitioner.

Julie L. Williams, First Senior Deputy Comptroller and Chief Counsel, Daniel P. Stipano, Deputy Chief Counsel, Horace G. Sneed, Douglas B. Jordan, Attorneys, Office of the Comptroller of the Currency, Washington, D.C., Elena Kagan, Solicitor General, Counsel of Record, Malcolm L. StewTart, Deputy Solicitor General, Matthew D. Roberts, Assistant to the Solicitor General, Department of Justice, Washington, D.C., for Federal respondent.

H. Rodgin Cohen, Robinson B. Lacy, Michael M. Wiseman, Adam R. Brebner, Sullivan & Cromwell LLP, New York, NY, Seth P. Waxman, Counsel of Record, Edward C. DuMont, Catherine M.A. Carroll, Christopher E. Babbitt, Wilmer Cutler Pickering, Hale and Dorr LLP, Washington, DC, Christopher R. Lipsett, Noah A. Levine, Anne K. Small, Lauren E. Baer, Wilmer Cutler Pickering, Hale and Dorr LLP, New York, NY, for respondent The Clearing House Association L.L.C.

OPINION

Page 522

SCALIA, Justice

In 2005, Eliot Spitzer, Attorney General for the State of New York, sent letters to several national banks making a

Page 523

request "in lieu of subpoena" that they provide certain non-public information about their lending practices. He sought this information to determine whether the banks had violated the State's fair-lending laws. Spitzer's suc­cessor in office, Andrew Cuomo, is the petitioner here. Respondents, the federal Office of the Comptroller of the Currency ("Comptroller" or "OCC") and the Clearing House Association, a banking trade group, brought suit to enjoin the information request, claiming that the Comp­troller's regulation promulgated under the National Bank Act prohibits that form of state law enforcement against national banks.

The United States District Court for the Southern Dis­trict of New York entered an injunction in favor of respon­dents, prohibiting the attorney general from enforcing state fair-lending laws through demands for records or judicial proceedings. The United States Court of Appeals for the Second Circuit affirmed. 510 F.3d 105 (2007). We granted certiorari. 555 U.S. __, 129 S.Ct. 987, 173 L.Ed.2d 171 (2009). The question presented is whether [129 S.Ct. 2715] the Comptroller's regulation pur­porting to pre-empt

Page 524

state law enforcement can be upheld as a...

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