State v. HSBC Bank Nev., N.A.

• Decision Date: 01 August 2014
• Docket Number: No. 13–15611.,13–15611.
• Citation: 761 F.3d 1027
• Parties: State of HAWAII, ex rel. David M. LOUIE, Attorney General, Plaintiff–Appellant, v. HSBC BANK NEVADA, N.A., Defendant in 1:12–cv–00266–LEK–KSC; HSBC Card Services, Inc., Defendant in 1:12–cv–00266–LEK–KSC; Capital One Bank (USA), N.A., Defendant in 1:12–cv–00268–LEK–KSC; Capital One Services, LLC, Defendant in 1:12–cv–00268–LEK–KSC; Citigroup, Inc., Defendant in 1:12–cv–00271–LEK–KSC; Citibank, N.A., Defendant in 1:12–cv–00271–LEK–KSC; Department Stores National Bank, Defendant in 1:12–cv–00271–LEK–KSC; Doe, 1–20, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

761 F.3d 1027

State of HAWAII, ex rel. David M. LOUIE, Attorney General, Plaintiff–Appellant,

v.HSBC BANK NEVADA, N.A., Defendant in 1:12–cv–00266–LEK–KSC; HSBC Card Services, Inc., Defendant in 1:12–cv–00266–LEK–KSC; Capital One Bank (USA), N.A., Defendant in 1:12–cv–00268–LEK–KSC; Capital One Services, LLC, Defendant in 1:12–cv–00268–LEK–KSC; Citigroup, Inc., Defendant in 1:12–cv–00271–LEK–KSC; Citibank, N.A., Defendant in 1:12–cv–00271–LEK–KSC; Department Stores National Bank, Defendant in 1:12–cv–00271–LEK–KSC; Doe, 1–20, Defendants–Appellees.

No. 13–15611.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 10, 2014.

Filed Aug. 1, 2014.

Laura J. Baughman, J. Burton LeBlanc, IV, and Sherri Ann Saucer (argued), Baron & Budd, P.C., Dallas, Texas; Richard Golomb and Kenneth J. Grunfeld, Golomb & Honik, P.C., Philadelphia, Pennsylvania; L. Richard Fried, Jr. and Patrick F. McTernan, Cronin, Fried, Sekiya, Kekina & Fairbanks, Honolulu, Hawaii, for Plaintiff–Appellant.

Michael C. Bird, Summer H.M. Fergerstrom, and Tracey Lynn Kubota, Watanabe Ing LLP, Honolulu, Hawaii; Julia B. Strickland, David W. Moon, and Jason Sung–Hyuk Yoo, Stroock & Stroock & Lavan LLP, Los Angeles, California, for Defendants–Appellees HSBC Bank Nevada, N.A. and HSBC Card Services, Inc.

James F. McCabe (argued) and James R. McGuire, Morrison & Foerster LLP, San Francisco, California; Margery S. Bronster and Andrew L. Pepper, Bronster Hoshibata, Honolulu, Hawaii, for Defendants–Appellees Capital One Bank (USA), N.A. and Capital One Services, LLC.

Michael Purpura and Michael J. Scanlon, Carlsmith Ball LLP, Honolulu, Hawaii; Noah A. Levine and Robert W. Trenchard, Wilmer Cutler Pickering Hale and Dorr LLP, New York, New York, for Defendants–Appellees Citigroup Inc., Citibank, N.A., and Department Stores National Bank.

Before: WILLIAM A. FLETCHER, SANDRA S. IKUTA, and ANDREW D. HURWITZ, Circuit Judges.

OPINION

HURWITZ, Circuit Judge.

The Hawaii Attorney General filed complaints in state court against six credit card providers, alleging that each violated state law by deceptively marketing and improperly enrolling cardholders in add-on credit card products. The card providers removed the cases to federal court, and the Attorney General moved to remand. The district court concluded that the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d), did not afford a basis for federal jurisdiction. The court, however, found at least one of the Attorney General's claims against each provider completely preempted by section 30 of the National Bank Act of 1864, 12 U.S.C. §§ 85–86. The court thus held that it had jurisdiction over the completely preempted claims under the federal question statute, 28 U.S.C. § 1331, and elected to exercise jurisdiction over the remaining claims under the supplemental jurisdiction statute, 28 U.S.C. § 1367.

We hold that neither the federal question statute nor CAFA provides the district court with subject matter jurisdiction. We therefore reverse with instructions to remand the actions to state court.

I. Background

A.

In April 2012, the Hawaii Attorney General filed complaints in state court against six financial institutions—JP Morgan Chase & Co. and Chase Bank USA, N.A. (collectively, the “Chase defendants”); HSBC Bank Nevada, N.A. and HSBC Card Services, Inc. (collectively, the “HSBC defendants”); Capital One Bank (USA), N.A. and Capital One Services, LLC (collectively, the “Capital One defendants”); Discover Financial Services, Inc., Discover Bank, DFS Services, L.L.C., and American Bankers Management Company, Inc. (collectively, the “Discover defendants”); Bank of America Corporation and FIA Card Services, N.A. (collectively, the “Bank of America defendants”); and Citigroup Inc., Citibank, N.A., and Department Stores National Bank (collectively, the “Citigroup defendants”). Discover Bank is a federally insured, state-chartered bank; the other defendant banks are nationally chartered.

The complaints, identical as relevant to this appeal, alleged that the defendants deceptively marketed and enrolled Hawaii cardholders in various debt protection products. These products include payment protection plans, extended warranties for purchased items, identity theft protection plans, stolen card protection, credit score tracking, and payment warranties.

The complaints primarily targeted the payment protection plans. These plans suspend or cancel all or part of a cardholder's obligation to repay an outstanding credit card balance, limit interest charges, or waive late fees upon a qualifying event, such as disability, death, or unemployment. A cardholder purchases a payment protection plan by paying the provider a percentage of the outstanding monthly card balance.

The complaints alleged that the providers: (1) enrolled cardholders in protection plans without their consent; (2) enrolled cardholders who do not qualify for protection plan benefits; (3) confused plan purchasers with deceptive marketing, contract language, and billing; and (4) targeted “vulnerable” populations, including subprime borrowers and the elderly.

The complaints asserted three state law causes of action. Count I alleged that the credit card providers violated sections “480–1 et seq.” of the Hawaii Revised Statutes. Although not limited to violations of the Uniform Deceptive Trade Practices Act, Haw.Rev.Stat. ch. 481A, the complaints specifically averred that defendants engaged in “deceptive trade practices” forbidden by that statute. SeeHaw.Rev.Stat. § 480–2 (declaring “unfair or deceptive acts or practices in the conduct of any trade or commerce. .. unlawful”); id. § 481A–3(a)(2), (5), (9), (12) (listing deceptive trade practices). Count II contended that the card providers violated section 480–13.5 of the Hawaii Revised Statutes, which imposes a penalty of up to $10,000 for each deceptive act that is “directed toward, targets, or injures” an elderly person. Count III alleged unjust enrichment because Hawaii consumers “unknowingly pa[id] unauthorized or otherwise improper charges to Defendants.”

The complaints requested declaratory and injunctive relief, civil penalties, disgorgement, restitution, attorneys' fees, interest, and “other relief as provided by law.” The actions were “brought by the State of Hawaii in its sovereign capacity ... on behalf of the State and its citizens,” as authorized by sections 480–2(d) and 661–10 of the Hawaii Revised Statutes, and also under the State's “parens patriae authority.” In each complaint, the Attorney General explicitly disavowed that he filed a class action and disclaimed “any such claims that would support removal on the basis of diversity, Class Action Fairness Act of 2005 (28 U.S.C. §§ 1332(d), 1453, 1711–1715), federal question jurisdiction, or any other basis.”

B.

The defendants filed notices of removal in the district court, invoking §§ 1331, 1332(d)(2), and 1367 as the bases for federal jurisdiction. The Attorney General moved to remand each case.

The district court denied the motions to remand. The court first held that CAFA did not afford it jurisdiction. The district court acknowledged that in order to recover damages on behalf of consumers, subsection 480–14(b) of the Hawaii Revised Statutes likely requires the Attorney General to bring a class action.¹Hawaii ex rel. Louie v. JP Morgan Chase & Co., 907 F.Supp.2d 1188, 1204 (D.Haw.2012). Relying on Washington v. Chimei Innolux Corp., 659 F.3d 842 (9th Cir.2011), however, the district judge held that CAFA requires that a plaintiff “actually invoke” a class action rule or “otherwise label the case a ‘class action.’ ” Louie, 907 F.Supp.2d at 1205. Because the complaints expressly disclaimed class status, invoking instead only common law parens patriae and section 661–10 civil enforcement authority, the district court concluded that it lacked CAFA jurisdiction. Id. at 1206–07.

But, the district court held that it had jurisdiction over at least one of the claims in each complaint under the complete preemption doctrine. The district court reasoned that by alleging the card providers had charged “significant fees” for “minimal benefits” and had “increased profits by substantial sums,” the Attorney General implicitly challenged the “rate of interest” on outstanding credit card balances. Id. at 1210–12. Because the National Bank Act completely preempts state laws regulating the interest rates charged by nationally chartered banks, Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 10–11, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003), the district court held that it had jurisdiction over “at least some” of the claims against the national defendants, and elected to exercise supplemental jurisdiction over all other claims. Louie, 907 F.Supp.2d at 1212–13.

The Attorney General sought leave to file an interlocutory appeal pursuant to 28 U.S.C. § 1292(b), raising two questions: (1) “Do the fees charged for the payment protection plans and other ancillary services constitute ‘interest’ under the National Bank Act?” (2) “Can the Attorney General's allegations only be characterized as a usury claim challenging the rate or amount of interest ... ?” The district court certified both questions, Hawaii ex rel. Louie v. JP Morgan Chase & Co., 921 F.Supp.2d 1059 (D.Haw.2013), we granted permission to appeal, and the Attorney General timely perfected the appeal.²

II. Standard of Review

“We review de novo a district court's denial of a motion to remand to state court for lack of federal subject matter jurisdiction.” Chapman v. Deutsche Bank Nat'l Trust Co., 651 F.3d 1039, 1043 (9th Cir.2011) (per curiam). Removal and subject matter jurisdiction statutes are “strictly construed,” and a “defendant seeking removal has the burden to establish that removal is proper and any doubt is resolved against removability.” Luther v. Countrywide Home Loans Servicing LP, 533 F.3d 1031, 1034 (9th Cir.2008).

III. Complete Preemption

The general removal statute, 28 U.S.C....