H & R Block Eastern Enterprises, Inc. v. Raskin

• Decision Date: 15 January 2010
• Docket Number: No. 08-2162.,No. 08-2163.,08-2162.,08-2163.
• Parties: H & R BLOCK EASTERN ENTERPRISES, INCORPORATED, Plaintiff-Appellant, v. Sarah Bloom RASKIN, In her official capacity as Commissioner of the Division of Financial Regulation of the Maryland Department of Labor, Licensing and Regulation, Defendant-Appellee. H & R Block Eastern Enterprises, Incorporated, Plaintiff-Appellee, v. Sarah Bloom Raskin, In her official capacity as Commissioner of the Division of Financial Regulation of the Maryland Department of Labor, Licensing and Regulation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

591 F.3d 718

H & R BLOCK EASTERN ENTERPRISES, INCORPORATED, Plaintiff-Appellant, v. Sarah Bloom RASKIN, In her official capacity as Commissioner of the Division of Financial Regulation of the Maryland Department of Labor, Licensing and Regulation, Defendant-Appellee.

H & R Block Eastern Enterprises, Incorporated, Plaintiff-Appellee, v. Sarah Bloom Raskin, In her official capacity as Commissioner of the Division of Financial Regulation of the Maryland Department of Labor, Licensing and Regulation, Defendant-Appellant.

No. 08-2162.

No. 08-2163.

United States Court of Appeals, Fourth Circuit.

Argued: October 29, 2009.

Decided: January 15, 2010.

ARGUED: Jerrold Joseph Ganzfried, Howrey, LLP, Washington, D.C., for Appellant/Cross-Appellee. Jonathan R. Krasnoff, Office of the Attorney General of Maryland, Baltimore, Maryland, for Appellee/Cross-Appellant. ON BRIEF: Matthew M. Neumeier, Gabriel A. Crowson, Howrey, LLP, Chicago, Illinois; William Murphy, Jr., Richard V. Falcon, The Murphy Firm, Baltimore, Maryland, for Appellant/Cross-Appellee. Douglas F. Gansler, Attorney General of Maryland, Baltimore, Maryland, for Appellee/Cross-Appellant.

Before MOTZ and KING, Circuit Judges, and Anthony J. TRENGA, United States District Judge for the Eastern District of Virginia, sitting by designation.

Vacated and remanded by published opinion. Judge KING wrote the opinion, in which Judge MOTZ and Judge TRENGA joined.

OPINION

KING, Circuit Judge:

In 2007, Plaintiff H & R Block Eastern Enterprises, Incorporated ("Block"), instituted a three-count civil action in the District of Maryland, seeking declaratory and injunctive relief with respect to enforcement of Maryland's Credit Services Businesses Act (the "CSBA"). See Md.Code Ann., Com. Law §§ 14-1901 to -1916. More specifically, Block sought to bar the Commissioner of the Division of Financial Regulation of the Maryland Department of Labor, Licensing, and Regulation (the "Commissioner") from enforcing the CSBA against Block. In cross-motions for partial summary judgment, Block and the Commissioner each requested that the district court assume the CSBA applies to Block and decide whether federal law preempts the CSBA as to Block. In disposing of these motions, the district court assumed the applicability of the CSBA and awarded partial summary judgment to each party, ruling that certain of the CSBA's provisions are preempted. See H & R Block E. Enters., Inc. v. Turnbaugh, No. 1:07-cv-01822 (D.Md. July 30, 2008) (the "Memorandum Decision").¹

Both parties appeal from the district court's Memorandum Decision and subsequent judgment. Block contends that the court erred by failing to declare the CSBA entirely preempted, while the Commissioner maintains that the court erred in finding any portion of the CSBA preempted. Nevertheless, before we can determine whether the CSBA is in any facet preempted, we must determine whether the district court erred in not analyzing, as the first step in the preemption analysis, whether the CSBA in fact applies to Block. As explained below, we conclude that the court erred in that respect and therefore vacate and remand.

I.

A.

Block, a Missouri corporation, is one of the largest tax-services providers in the United States. One of the products Block offers is a "refund anticipation loan" (an "RAL"), which is a short-term loan secured by a consumer's anticipated tax refund. Although Block provides its customers with loan application forms, any RALs flowing therefrom are actually made by HSBC Bank U.S.A., N.A. ("HSBC Bank"). After evaluating a Block customer's loan application and deciding to make an RAL, HSBC Bank forwards its loan disbursement check to Block, which then delivers the check to the borrower.

Between 2005 and 2007, the Commissioner repeatedly threatened to enforce the CSBA against Block and other tax preparers, asserting that businesses "arranging RALs who receive a fee either from the lender or the consumer must [comply with the CSBA]." J.A. 51.² Thus, on July 11, 2007, Block filed its complaint in this matter (the "Complaint"), seeking declaratory and injunctive relief with respect to the Commissioner's view of the CSBA. In Count I of the Complaint (the "Coverage Count"), Block alleged, and requested the court to declare, that Block is not a "credit services business" under the CSBA, thereby precluding application of the CSBA to Block.³ In the alternative Block alleged in Counts II and III (collectively, the "Preemption Counts") that the National Bank Act, in conjunction with the regulations promulgated thereunder (collectively, the "NBA"), preempts the CSBA from being applied to Block.⁴ Block thus requested that the court enter a declaratory judgment and enjoin the Commissioner from enforcing the CSBA against it.⁵

On April 25, 2008, Block moved for partial summary judgment, seeking such relief on the Preemption Counts only. In its supporting memorandum, Block requested that the district court "assume, arguendo, that Block is a `credit services business' under the [CSBA] and that the statute applies to [RALs] ... that Block customers obtain from HSBC Bank." J.A. 172. Block specified, however, that it did not "concede that it is a `credit services business'" and that it reserved "the right to prove that it is not subject to the CSBA" in the event the court rejected its motion. Id. On May 30, 2008, the Commissioner filed a cross-motion for partial summary judgment on the Preemption Counts and also posited that the court could "assume, arguendo, that Block meets the definition of a credit services business." Id. at 336. The Commissioner's cross-motion sought a judgment to the effect that the NBA does not preempt the CSBA.

B.

On July 30, 2008, after conducting oral argument on the cross-motions, the district court filed its Memorandum Decision, which assessed only the Preemption Counts. The court, acting on the parties' suggestion that it assume that the CSBA applies to Block, awarded limited summary judgment relief to each party. More specifically, the court concluded that the NBA preempts three of the CSBA's consumer-protection provisions, awarding partial summary judgment to Block with respect to those provisions. The court further concluded, however, that none of the CSBA's remaining provisions were preempted by the NBA and otherwise awarded partial summary judgment to the Commissioner on the Preemption Counts. The Memorandum Decision did not address the Coverage Count, nor did it assess the issue of whether the CSBA applies to Block, instead accepting the parties' assumption of such applicability. In that respect, the Memorandum Decision simply recited that, "[f]or purposes of the instant motions, the parties agree that the Court should assume that Block is a `Credit Services Business' as that term is defined in ... the CSBA." Memorandum Decision 4.

Thereafter, on August 28, 2008, the parties jointly filed a Stipulation of Dismissal, pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i), with respect to the Coverage Count.⁶ The parties further requested therein that the district court enter final judgment pursuant to Rule 58(d). As in its supporting memorandum, however, Block reserved in the Stipulation of Dismissal "all its rights to bring an action seeking relief similar to that sought in [the Coverage Count] in Maryland state court with respect to the applicability of the Maryland [CSBA]." H & R Block E. Enters., Inc. v. Turnbaugh, No. 1:07-cv-01822 (D.Md. Aug. 28, 2008) (Docket No. 28). On September 3, 2008, the court, acting on the Stipulation of Dismissal, dismissed the Coverage Count without prejudice and entered final judgment on the Preemption Counts in accordance with its Memorandum Decision.

Two separate appeals resulted from the district court's Memorandum Decision. First, Block appealed from the judgment to the extent that its motion for partial summary judgment on the Preemption Counts was denied. Second, the Commissioner cross-appealed the court's ruling with respect to the provisions of the CSBA that the court deemed to be preempted by the NBA. We possess jurisdiction pursuant to 28 U.S.C. § 1291.⁷

II.

We review de novo a district court's award of summary judgment. See PCS Phosphate Co. v. Norfolk S. Corp., 559 F.3d 212, 217 (4th Cir.2009). We also review de novo an issue of subject matter jurisdiction, see Lontz v. Tharp, 413 F.3d 435, 439 (4th Cir.2005), regardless of whether the district court analyzed the issue, see Friedman's Inc. v. Dunlap, 290 F.3d 191, 197 (4th Cir.2002) ("[W]hether we are presented with a live case or controversy is a question we may raise sua sponte ....").

III.

In addressing these appeals, we must first determine whether the district court erred by not determining, as the first step in its preemption analysis, whether the CSBA applies to Block. Because we conclude that the court so erred, we vacate and remand without further addressing the propriety of the court's preemption rulings, so that the district court can decide in the first instance whether Block is a "credit services business" under the CSBA.

A.

The heart of Block's Complaint is that, by virtue of the Supremacy Clause of the Constitution, the NBA preempts the CSBA as applied to Block.⁸ Federal law may preempt state law in three ways, denominated as express preemption, field preemption, and conflict preemption. See College Loan Corp. v. SLM Corp., 396 F.3d 588, 595-96 (4th Cir.2005). For its contention that the NBA preempts the CSBA, Block invokes the doctrine of conflict preemption, "which occurs when a state law actually conflicts with federal law." Anderson v. Sara Lee Corp., 508 F.3d 181, 191 (4th Cir.2007) (internal quotation marks omitted).⁹

Assessing a conflict preemption claim requires "a two-step process of first ascertaining the construction of the two statutes and then determining the constitutional question [of] whether they are in conflict." Chi. & N.W. Transp. Co. v. Kalo Brick & Tile Co.,...