Bank One v. Guttau

• Decision Date: 12 January 1999
• Docket Number: No. 98-3166,98-3166
• Citation: 190 F.3d 844
• Parties: (8th Cir. 1999) Bank One, Utah, National Association, Plaintiff/Appellant, v. Michael K. Guttau, in his official capacity as Superintendent of Banking and Administrator of Electronic Transfer of Funds, Iowa Division of Banking, Iowa Department of Commerce, Defendant/Appellee. Comptroller of the Currency, Intervenor Plaintiff/Amicion behalf of Appellant, Consumer Bankers Association; Cash Station, Inc.; NationsBank, N.A.; First National Bank of McCook, Nebraska; Norwest Bank Iowa, N.A.; U.S. Bancorp; Firstar Corporation, Amici on behalf of Appellant, Iowa Bankers Association; Iowa Independent Bankers Association; Iowa Credit Union League, Amici on behalf of Appellee. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 844

190 F.3d 844 (8th Cir. 1999)

Bank One, Utah, National Association, Plaintiff/Appellant, v. Michael K. Guttau, in his official capacity as Superintendent of Banking and Administrator of Electronic Transfer of Funds, Iowa Division of Banking, Iowa Department of Commerce, Defendant/Appellee.

Comptroller of the Currency, Intervenor Plaintiff/Amicion behalf of Appellant,

Consumer Bankers Association; Cash Station, Inc.; NationsBank, N.A.; First National Bank of McCook, Nebraska; Norwest Bank Iowa, N.A.; U.S. Bancorp; Firstar Corporation, Amici on behalf of Appellant,

Iowa Bankers Association; Iowa Independent Bankers Association; Iowa Credit Union League, Amici on behalf of Appellee.

No. 98-3166

United States Court of Appeals FOR THE EIGHTH CIRCUIT

Submitted: January 12, 1999

Filed: September 2, 1999

Appeal from the United States District Court for theSouthern District of Iowa.Comptroller of the Currency, Intervenor Plaintiff/ Amici on behalf of Appellant Before RICHARD S. ARNOLD, BRIGHT, and WOLLMAN, ¹ Circuit Judges.

WOLLMAN, Chief Judge.

Bank One, Utah, N.A. (Bank One) appeals from the district court's denial of a preliminary injunction that would prevent the state of Iowa (the State) from enforcing Iowa statutes restricting Bank One's operation of automated teller machines (ATMs). Because we find that certain provisions of the Iowa Electronic Funds Transfer Act (EFTA), Iowa Code 527, are preempted by section 36 of the National Bank Act (NBA), 12 U.S.C. 21-216d, we reverse the district court's order and remand for the entry of a permanent injunction prohibiting enforcement of the relevant sections.

I.

Bank One is a national bank organized under the NBA. Its main office is located in Salt Lake City, Utah, and it has no branch offices in Iowa. In 1997, Bank One installed ATMs at twenty-four retail store locations in Iowa, including eleven at Sears, Roebuck & Co. (Sears) stores throughout the state.

In October of 1997, the Iowa Superintendent of Banking ordered Sears to cease operation of the ATMs, citing multiple violations of the Iowa EFTA. On December 26, 1997, the State filed an action in state court against Sears to prevent the operation of the ATMs and to assess a fine. As a result, Sears instructed Bank One to remove all of its ATMs from Sears stores in Iowa. Bank One complied with Sears's request and placed the ATMs in storage pending the outcome of this litigation.

Bank One filed suit in district court, seeking a declaration that provisions of the Iowa EFTA restricting out-of-state banks from operating ATMs within Iowa are preempted by the NBA and praying for the issuance of a preliminary and permanent injunction. Bank One's complaint also alleged that the restrictions violate several provisions of the United States Constitution. The district court denied Bank One's motion for a preliminary injunction, finding that the challenged provisions of Iowa law were not preempted and concluding that Bank One was unlikely to succeed on any of its constitutional claims.

II.

Although Bank One's motion asked for a preliminary injunction, we may consider it as a motion for a permanent injunction. See generally Minnesota Dep't of Econ. v. Riley, 107 F.3d 648, 649 (8th Cir. 1997) (reviewing a district court grant of a preliminary injunction and granting a permanent injunction because all issues were questions of law). Because Bank One and the State disagree only on questions of law, nothing remains for the district court to resolve regarding the underlying facts. Accordingly, we must determine whether a permanent injunction is appropriate.

In determining whether a preliminary injunction should be issued, a district court must take into account the threat of irreparable harm to the movant, the balance between this harm and the harm to the other party if the injunction is granted, the probability of movant's success on the merits, and the public interest. See Dataphase Systems, Inc. v. C. L. Systems, Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc). The standard for granting a permanent injunction is essentially the same as for a preliminary injunction, except that to obtain a permanent injunction the movant must attain success on the merits. See Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n.12 (1987).

Although we have said that the four Dataphase factors are applicable in cases involving permanent injunctions, see, e.g., Randolph v. Rodgers, 170 F.3d 850, 857 (8th Cir. 1999); Layton v. Elder, 143 F.3d 469, 472 (8th Cir. 1998); Fogie v. Thorn Americas, Inc., 95 F.3d 645, 654 (8th Cir. 1996), we conclude that the balance-of-harm and public-interest factors need not be taken into account in a situation such as that which exists in the present case. If Bank One proves that the relevant provisions of the Iowa EFT are preempted by the NBA and that it will suffer irreparable harm if the State is not enjoined from enforcing those provisions, then the question of harm to the State and the matter of the public interest drop from the case, for Bank One will be entitled to injunctive relief no matter what the harm to the State, and the public interest will perforce be served by enjoining the enforcement of the invalid provisions of state law.

A.

The Iowa EFTA contains several provisions relevant to the placement and operation of ATMs within the state. Among other things, it contains an in-state office requirement for the establishment of ATMs:

A satellite terminal shall not be established within this state except by a financial institution whose principal place of business is located in this.-5- state, one which has a business location licensed in this state under chapter 536A, or one which has an office located in this state and which meets the requirements of subsection 4.

Iowa Code 527.4(1) (citing id. 527.4(4), which sets various restrictions on the operation of ATMs). All banks, including national banks, must file an informational statement with the Iowa Superintendent of Banking (the administrator) stating the name of the business, the location of the terminal, a schedule of required charges, and an agreement that the bank will maintain the terminal in compliance with the Iowa EFTA. See id. 527.5(3). If the administrator does not respond to the informational statement within thirty days of its filing, the informational statement is deemed to have been expressly approved. See id. 527.5(7).

In addition to the in-state office and approval requirements, the Iowa EFTA limits the advertising that may be placed on an ATM. It provides:

A satellite terminal in this state shall bear a sign or label identifying each type of financial institution utilizing the terminal. A satellite terminal location in this state shall not be used to advertise individual financial institutions or a group of financial institutions. However, a satellite terminal shall bear a sign or label no larger than three inches by two inches identifying the name, address, and telephone number of the owner of the satellite terminal. The administrator may authorize methods of identification the administrator deems necessary to enable the general public to determine the accessibility of a satellite terminal.

Id. 527.5(5).

The NBA grants national banks the authority to exercise "all such incidental powers as shall be necessary to carry on the business of banking." First Nat'l Bank of E. Ark. v. Taylor, 907 F.2d 775, 777 (8th Cir. 1990) (quoting 12 U.S.C. 24(Seventh)). Bank One argues that the NBA implicitly authorizes the placement of ATMs without restriction by the states. The provisions of the Iowa EFTA, it argues, impair the ability of a national bank to place its ATMs and to advertise thereon.

"[G]rants of both enumerated and incidental 'powers' to national banks [are] grants of authority not normally limited by, but rather ordinarily pre-empting, contrary state law." Barnett Bank v. Nelson, 116 S. Ct. 1103, 1108 (1996). Where state law stands "as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," it may be found to be preempted. Id. at 1108 (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). State regulations are not preempted, however, when Congress "accompan[ies] a grant of an explicit power with an explicit statement that the exercise of that power is subject to state law." Id. at 1109. Congress predicated the establishment of national bank branches upon compliance with state regulations. See 12 U.S.C. 36(c). Therefore, in order to determine whether the NBA preempts the Iowa regulations, we must determine whether an ATM is a "branch" as defined in section 36.

In 1996, Congress amended section 36 to read, "[t]he term 'branch', as used in this section, does not include an automated teller machine or a remote service unit." See 12 U.S.C. 36(j). Thus, whatever regulatory authority the states may retain with respect to national bank branches, the 1996 amendment clearly expresses Congress's intent that that authority no longer extends to national bank ATMs.

That intent is made even clearer in light of the assumption that Congress enacts legislation with knowledge of relevant judicial decisions. See Cannon v. University of Chicago, 441 U.S. 677, 696-99 (1979). Prior to the 1996 amendment, courts had held that because ATMs were branches they were subject to state restrictions. See Colorado ex rel. State Banking Bd. v. First Nat'l Bank of Ft. Collins, 540 F.2d 497, 499 (10th Cir. 1976) (finding state regulation applied because ATM was a branch); Independent Bankers Ass'n of America v. Smith, 534 F.2d 921, 948 (D.C. Cir. 1976) (same); cf. Independent Bankers Ass'n v. Marine Midland Bank, 757 F.2d 453, 463 (2d Cir. 1985) (finding that an ATM was not a branch within the meaning of the section 36 because it was owned by a grocery store and merely used by a national bank). By excluding ATMs from the definition of "branch," Congress eliminated the contingency that...