Hawaii, ex rel. Louie v. JP Morgan Chase & Co.
| Decision Date | 29 January 2013 |
| Docket Number | Civil No. 12–00266 LEK–KSC.,Civil No. 12–00269 LEK–KSC.,Civil No. 12–00263 LEK–KSC.,Civil No. 12–00268 LEK–KSC.,Civil No. 12–00271 LEK–KSC.,Civil No. 12–00270 LEK–KSC. |
| Court | U.S. District Court — District of Hawaii |
| Parties | State of HAWAII, ex rel. David M. LOUIE, Attorney General, Plaintiff, v. JP MORGAN CHASE & CO., Chase Bank USA, N.A., and Doe Defendants 1–20, Defendants. State of Hawaii, ex rel. David M. Louie, Attorney General, Plaintiff, v. HSBC Bank Nevada, N.A., HSBC Card Services, Inc., and Doe Defendants 1–20, Defendants. State of Hawaii, ex rel. David M. Louie, Attorney General, Plaintiff, v. Capital One Bank (USA), N.A. Capital One Services, LLC, and Doe Defendants 1–20, Defendants. State of Hawaii, ex rel. David M. Louie, Attorney General, Plaintiff, v. Discovery Financial Services, Inc., Discover Bank, DFS Services, L.L.C., Assurant, Inc., and Doe Defendants 1–20, Defendants. State of Hawaii, ex rel. David M. Louie, Attorney General, Plaintiff, v. Bank of America Corporation, FIA Card Services, N.A., and Doe Defendants 1–20, Defendants. State of Hawaii, ex rel. David M. Louie, Attorney General, Plaintiff, v. CitiGroup Inc., Citibank, N.A., Department Stores National Bank, and doe defendants 1–20, Defendants. |
OPINION TEXT STARTS HERE
L. Richard Fried, Jr., Patrick F. McTernan, Cronin Fried Sekiya Kekina & Fairbanks, Honolulu, HI, J. Burton Leblanc, IV, Baron & Budd, P.C., Baton Rouge, LA, Kenneth J. Grunfeld, Richard M. Golomb, Golomb & Honik, P.C., Philadelphia, PA, Laura J. Baughman, S. Ann Saucer, Baron & Budd, P.C., Dallas, TX, for Plaintiff.
Andrew Soukup, Robert D. Wick, Covington & Burling LLP, Frank G. Burt, Jorden Burt LLP, David L. Permut, Goodwin Procter LLP, Washington, DC, Emily Johnson Henn, Covington & Burling LLP, Redwood Shores, CA, Thomas Benedict, Goodsill Anderson Quinn & Stifel LLLP, Michael C. Bird, Summer H.M. Fergerstrom, Tracey Lynn Kubota, Watanabe Ing LLP, Andrew L. Pepper, Margery S. Bronster, Bronster Hoshibata, Attorneys at Law, A Law Corporation, John P. Manaut, Lindsay N. McAneeley, William Matsujiro Harstad, Carlsmith Ball LLP Honolulu, Gail Y. Cosgrove, Kunio Kuwabe, Hisaka Stone Goto Yoshida Cosgrove & Ching, Patricia J. McHenry, William K. Shultz, Cades Schutte, Michael Purpura, Michael J. Scanlon, Carlsmith Ball LLP Honolulu, Honolulu, HI, David W. Moon, Jason Sung–Hyuk Yoo, Julia B. Strickland, Scott M. Pearson, Stroock & Stroock & Lavan LLP, Los Angeles, CA, James F. McCabe, James R. McGuire, Morrison & Foerster LLP, Patrick S. Thompson, Goodwin Procter LLP, San Francisco, CA, Edward Sherwin, Robert W. Trenchard, Wilmer Cutler Pickering Hale and Dorr LLP, New York, NY, for Defendants.
ORDER GRANTING PLAINTIFF'S MOTION FOR CERTIFICATION OF QUESTION FOR INTERLOCUTORY APPEAL AND MOTION TO STAY PROCEEDINGS
Before the Court is Plaintiff the State of Hawaii, ex rel. David M. Louis, Attorney General's (the “Attorney General”) Motion for Certification of Question for Interlocutory Appeal Under 28 U.S.C. § 1292(b) and Motion to Stay Proceedings (“Motion”), filed on December 10, 2012. On December 27, 2012, Defendants JP Morgan Chase & Co. and Chase Bank USA, N.A. filed a Joint Memorandum in Opposition on their behalf and on behalf of Defendants Capital One Bank (USA), N.A., Capital One Services, LLC, Citigroup Inc., Citibank, N.A., Department Stores National Bank, Discover Financial Services, Inc., Discover Bank, DFS Services, LLC, Bank of America Corp., FIA Card Services, N.A., HSBC Bank Nevada, N.A., and HSBC Card Services, Inc. (all collectively “Defendants”). The Attorney General filed his reply on January 4, 2013.
The Motion came on for hearing on January 18, 2013. Appearing on behalf of the Attorney General were L. Richard Fried, Jr., Esq., Patrick F. McTernan, Esq., S. Ann Saucer, Esq., and Stephen H. Levins, Esq., and appearing on behalf of Defendants were Thomas Benedict, Esq., Sunny Lee, Esq., J. Mitchell Webber, Esq., Jason Sung–Hyuk Yoo, Esq., William Matsujiro Harstad, Esq., Kunio Kuwabe, Esq., William K. Shultz, Esq., Michael Purpura, Esq., and Michael J. Scanlon, Esq. After careful consideration of the Motion, supporting and opposing memoranda, and the relevant legal authority, the Attorney General's Motion is HEREBY GRANTED because the proposed appeal could materially affect the outcome of the instant litigation, and for the reasons set forth below.
On April 12, 2012, the Attorney General filed the six Complaints in this action 1 in the Circuit Court of the First Circuit, State of Hawai'i (“State Court”). The six Complaints are substantively identical. They allege that Defendants have engaged in deceptive and predatory practices in marketing and selling ancillary credit card products to Hawai'i residents. Examples of such products include: payment protection plans, identity theft protection plans, and extended warranties. In particular, the Attorney General contends that Defendants have targeted particularly vulnerable consumers, including the elderly and persons with credit problems.
The Complaints allege the following claims: unfair or deceptive acts or practices (“UDAPs”), in violation of Haw.Rev.Stat. §§ 480–1 et seq. (“Count I”); violation of the UDAP laws, Haw.Rev.Stat. § 480–13.5, specifically addressing consumer fraud against elders (“Count II”); and unjust enrichment (“Count III”). The Complaints seek the following relief: an order enjoining Defendants from engaging in UDAPs; a judgment for restitution and disgorgement of monies for all Hawai'i consumers injured by Defendants' acts as alleged in the Complaints; a declaratory judgment that Defendants violated Hawai'i law; civil penalties; attorneys' fees and costs; pre-judgment and post-judgment interest; and any other appropriate relief.
On May 17 and 18, 2012, the Defendants filed Notices of Removal and removed each of the six cases to this district court. The Defendants asserted federal jurisdiction based on the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), and jurisdiction pursuant to 28 U.S.C. § 1331 based on the complete preemption doctrine.
On June 15, 2012, the Attorney General filed a Motion to Remand and for Costs and Fees in each of the six cases. The Removing Defendants opposed the Motion to Remand.
On November 30, 2012, this Court issued its Order Denying Plaintiff's Motion to Remand and For Costs and Fees (“Remand Order”). 907 F.Supp.2d 1188, 2012 WL 6019709. In the Remand Order, this Court concluded, inter alia, that removal was proper based on the complete preemption doctrine. The Court found that the payment protection plans and other ancillary products at issue in the lawsuits were debt cancellation contracts and/or debt suspension agreements, and that the fees assessed for the products were interest for purposes of the National Bank Act. Id. at 1209–12, at *19–21. As such, the Court concluded that the claims asserted by the Attorney General under state law are preempted and there is federal question jurisdiction, and thus denied the Attorney General's motions to remand. Id. at 1212–13, at *22.
In the instant Motion, the Attorney General argues that an interlocutory appeal is appropriate in this case because the existenceof federal jurisdiction is a threshold issue. The Attorney General further argues that there are unsettled questions of law in the case, including (1) whether the Court, in the Remand Order, applied the appropriate definition of “interest” for purposes of the National Bank Act, and (2) whether the Attorney General's allegations may be characterized as a usury claim even though the Attorney General did not expressly raise a state anti-usury claim in the Complaints. [Mem. in Supp. of Motion at 5.] Finally, the Attorney General argues that an interlocutory appeal would materially advance the ultimate termination of the litigation. If the Ninth Circuit holds that there is no removal jurisdiction, the ruling will terminate the case. [ Id. at 16.]
In their Joint Memorandum in Opposition, Defendants argue that the Attorney General fails to meet the criteria for certification under 28 U.S.C. § 1292(b). Defendants contend that the issue of whether the payment protection fees are a form of “interest” under the National Bank Act is not a pure question of law, but is rather a mixed question of law and fact that turns on the application of settled law to a factual record. Defendants argue that the definition of “interest” in 12 C.F.R. § 7.4001 was upheld by the Supreme Court in Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 116 S.Ct. 1730, 135 L.Ed.2d 25 (1996), and is thus not subject to dispute. While the Attorney General may disagree with the Court's application of this standard, he does not disagree with the Court's articulation of the standard itself. Similarly, Defendants argue that the Court's interpretation of the Complaints as making anti-usury claims is not a question of law. [ Id. at 16–17.]
Finally, Defendants argue that an interlocutory appeal will not materially advance the termination of this case because “certification of an immediate appeal is likely to freeze the progress of this litigation for a period of 15 to 32 months.” [ Id. at 21.] Defendants further state that they are “on the cusp” of filing a preemption motion and that, should the Court grant the motion, the case would be dismissed in its entirety and the Attorney General would then be free to pursue his appeal to the Ninth Circuit. [ Id. at 22–23.]
Defendants therefore urge the Court to deny the Motion.
In his reply, the Attorney General argues that he has satisfied the requirements for an interlocutory appeal. The Attorney General contends that the controlling questions of law at issue, including the definition of “interest” for purposes of the National Bank Act, are not settled. The Attorney General emphasizes that the fact that the...
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