Hawaii v. JP Morgan Chase & Co.
| Decision Date | 30 November 2012 |
| Docket Number | Civil No. 12–00266 LEK–KSC.,Civil No. 12–00268 LEK–KSC.,Civil No. 12–00269 LEK–KSC.,Civil No. 12–00271 LEK–KSC.,Civil No. 12–00263 LEK–KSC.,Civil No. 12–00270 LEK–KSC. |
| Citation | 907 F.Supp.2d 1188 |
| 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, 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 & Komeiji LLP, Andrew L. Pepper, Margery S. Bronster, Bronster Hoshibata, Attorneys at Law, John P. Manaut, Lindsay N. McAneeley, William Matsujiro Harstad, Michael Purpura, Michael J. Scanlon, Carlsmith Ball LLP, Gail Y. Cosgrove, Kunio Kuwabe, Hisaka Stone Goto Yoshida Cosgrove & Ching, Patricia J. McHenry, William K. Shultz, Cades Schutte, 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 DENYING PLAINTIFF'S MOTION TO REMAND AND FOR COSTS AND FEES
Plaintiff the State of Hawaii, ex rel. David M. Louie, Attorney General (“the Attorney General”) seeks to remand his lawsuits against several financial entities on the basis that, in each case, there was no federal jurisdiction for the removal of his litigation from state court. This Court concludes, as set forth more fully below, that removal was proper based on the complete preemption doctrine. In particular, this Court finds that the payment protection plans and other ancillary products at issue in these lawsuits are debt cancellation contracts and/or debt suspension agreements, and that the fees assessed for these products are interest for purposes of the National Bank Act. Thus, the Court concludes that the claims the Attorney General asserted under state law are preempted, and there is federal question jurisdiction.
On June 15, 2012, the Attorney General filed a Motion to Remand and for Costs and Fees in each of the following cases: State of Hawaii, ex rel. Louie v. JP Morgan Chase & Co., et al., CV 12–00263 LEK–KSC (“CV 12–00263”); State of Hawaii, ex rel. Louie v. HSBC Bank Nevada, N.A., et al., CV 12–00266 LEK–KSC (“CV 12–00266”); State of Hawaii, ex rel. Louie v. Capital One Bank (USA) N.A., et al., CV 12–00268 LEK–KSC (“CV 12–00268”); State of Hawaii, ex rel. Louie v. Discover Financial Services, Inc., et al., CV 12–00269 LEK–KSC (“CV 12–00269”); State of Hawaii, ex rel. Louie v. Bank of America Corp., et al., CV 12–00270 LEK–KSC (“CV 12–00270”); State of Hawaii, ex rel. Louie v. CitiGroup Inc., et al., CV 12–00271 LEK–KSC (“CV 12–00271”).
On October 29, 2012, CV 12–00263 Defendants JP Morgan Chase & Co. and Chase Bank USA, N.A. (collectively “Chase Defendants”) filed a Memorandum in Opposition on their behalf and on behalf of: the CV 12–00266 Defendants HSBC Bank Nevada, N.A., and HSBC Card Services, Inc. (collectively “HSBC Defendants”); the CV 12–00268 Defendants Capital One Bank (USA) N.A., and Capital One Services, LLC (collectively “Capital One Defendants”); Defendants Discover Financial Services, Inc., Discover Bank, DFS Services, LLC (collectively “Discover Defendants”) in CV 12–00269; 1 the CV 12–00270 Defendants Bank of America Corporation and FIA Card Services, N.A. (collectively “BoA Defendants”); and the CV 12–00271 Defendants CitiGroup Inc., Citibank, N.A., and Department Stores National Bank (collectively “Citi Defendants”). [Dkt. no. 75.] The Attorney General filed his Reply to the Memorandum in Opposition on November 5, 2012. [Dkt. no. 78.] On November 15, 2012, Defendants filed their Sur-reply pursuant to leave of this Court. [Dkt. no. 85.]
These matters came on for hearing on November 19, 2012. Appearing on behalf of the Attorney General were L. Richard Fried, Jr., Esq., Patrick McTernan, Esq., S. Ann Saucer, Esq., Laura Baughman, Esq., and Stephen Levins, Esq. Appearing on behalf of the Chase Defendants was Thomas Benedict, Esq. Appearing on behalf of the HSBC Defendants were Michael Bird, Esq., and Jason Woo, Esq. Appearing on behalf of the Capital One Defendants were Margery Bronster, Esq., Andrew Pepper, Esq., Sunny Lee, Esq., and James McCabe, Esq. Appearing on behalf of the Discover Defendants were William Harstad, Esq., Jason Sung–Hyuk Yoo, Esq., Michael Bird, Esq., and Kunio Kuwabe, Esq.2 Appearing on behalf of the BoA Defendants were Patricia McHenry, Esq., and Patrick Thompson, Esq. Appearing on behalf of the Citi Defendants were Michael Purpura, Esq., Michael Scanlon, Esq., Mitch Weber, Esq., and Robert Trenchard, Esq.
After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, the Attorney General's motions for remand are HEREBY DENIED for the reasons set forth below.
On April 12, 2012, the Attorney General filed his Complaint in each of these actions 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 postjudgment interest; and any other appropriate relief.
On May 17, 2012, the Chase Defendants removed CV 12–00263 to this district court. The Chase Defendants assert 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. They also assert that there is supplemental jurisdiction pursuant to 28 U.S.C. § 1367 over any claims that are not independently removable. [CV 12–00263, Notice of Removal at ¶ 13.]
On May 18, 2012, the HSBC Defendants removed CV 12–00266, the Capital One Defendants removed CV 12–00268, the Discover Defendants removed CV 12–00269, and the BoA Defendants removed CV 12–00270 based on the same grounds that the Chase Defendants relied upon. [CV 12–00266, Notice of Removal at ¶ 8; CV 12–00268, Notice of Removal at ¶ 15; CV 12–00269, Notice of Removal at ¶ 10; CV 12–0027066, Notice of Removal at ¶ 13.] Also on May 18, 2012, the Citi Defendants removed CV 12–00271 based on the CAFA argument and the complete preemption argument that the other Defendants relied upon, as well as the additional argument that there is jurisdiction under 28 U.S.C. § 1331 because the case raises a “substantial federal question”. [CV 12–00271, Notice of Removal at ¶ 15 (quotation marks omitted).] The Citi Defendantsargue that, even if a federal question does not appear on the face of the well-pleaded complaint, the Attorney General's state law claims necessarily raise a federal issue. [ Id. at ¶ 36 (quoting Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005)).]
Insofar as all of the Notices of Removal address the same two primary bases of removal—the CAFA argument and the complete preemption argument—the Attorney General submitted an omnibus memorandum in support of all six motions to remand. The memorandum in support of the motion for CV 12–00271 also contains a discussion of the Citi Defendants' Grable argument. The Court will therefore discuss the Attorney General's Motion to Remand and for Costs and Fees for CV 12–00263 (“Omnibus Motion”) for the CAFA argument and the complete preemption argument, and the Court will discuss the...
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...little or no benefit to consumers were a challenge to the fees themselves and therefore preempted); Hawaii ex rel. Louie v. JP Morgan Chase & Co., 907 F.Supp.2d 1188, 1212 (D.Haw.2012)motion to certify appeal granted,921 F.Supp.2d 1059 (D.Haw.2013) (holding Plaintiff's claim that “Defendant......
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Hawaii, ex rel. Louie v. JP Morgan Chase & Co.
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