Metrobank, Nat. Ass'n v. Foster

• Decision Date: 21 August 2001
• Docket Number: No. 4-01-CV-10226.,4-01-CV-10226.
• Parties: METROBANK, NATIONAL ASSOCIATION, Wells Fargo Bank Iowa, N.A., Bank of America, N.A., Firstar Bank, N.A., and U.S. Bank, N.A., Plaintiffs, v. Holmes FOSTER, in his official capacity as Superintendent of Banking and Administrator of Electronic Transfer of Funds, Iowa Division of Banking, Iowa Department of Commerce, Defendants.
• Court: U.S. District Court — Southern District of Iowa

Page 987

178 F.Supp.2d 987

METROBANK, NATIONAL ASSOCIATION, Wells Fargo Bank Iowa, N.A., Bank of America, N.A., Firstar Bank, N.A., and U.S. Bank, N.A., Plaintiffs, v. Holmes FOSTER, in his official capacity as Superintendent of Banking and Administrator of Electronic Transfer of Funds, Iowa Division of Banking, Iowa Department of Commerce, Defendants.

No. 4-01-CV-10226.

United States District Court, S.D. Iowa, Central Division.

August 21, 2001.

Jeffrey E Lamson, Mark McCormick, Belin Lamson McCormick, Zumback & Flynn PC, Des Moines, IA, E Edward

Bruce, Keith A Noreika, Covington & Burling, Washington, DC, for Metrobank, National Association, Wells Fargo Bank Iowa, N.A., Bank of America, N.A., Firstar Bank, N.A., U.S. Bank, N.A.

Donald G Senneff, Attorney General of Iowa, Des Moines, IA, Dennis W Johnson, Iowa Attorney General, Prosecutions Division, Des Moines, IA, for Holmes Foster.

ORDER

LONGSTAFF, Chief Judge.

Before the Court is a motion to dismiss, filed May 31, 2001, by defendant Holmes Foster, in his official capacity as Superintendent of Banking and Administrator of Electronic Transfer of Funds, Iowa Division of Banking, Iowa Department of Commerce ("the Administrator"). Plaintiffs (collectively "the National Banks") filed their resistance on June 11, to which defendant replied on June 19. The matter has been thoroughly briefed by both sides and is now considered fully submitted.

There are two other motions pending in this case. Plaintiffs filed a motion for summary judgment on May 10, 2001. In conjunction with plaintiffs' motion, an amicus curiae brief was filed by the Office of the Comptroller of Currency for the United States on May 24. Then, on May 22, defendant filed a motion to continue plaintiffs' summary judgment motion. Neither of these motions have been fully submitted, as both await the outcome of the Court's ruling on defendant's motion to dismiss.

I. THE NATIONAL BANKS' COMPLAINT

Through this action, the National Banks seek injunctive and declaratory relief, pursuant to 28 U.S.C. §§ 2201-2202, from Iowa law prohibiting the charging of fees to non-accountholder customers for the use of automated teller machines ("ATMs").

Iowa Code chapter 527 governs the electronic transfer of funds, and thus ATMs. Section 527.5(2)(a) states:

A satellite terminal shall be available for use on a nondiscriminatory basis by any other financial institution which has its principal place of business within this state, and by all customers who have been designated by a financial institution using the satellite terminal and who have been provided with an access device, approved by the administrator, by which to engage in electronic transactions by means of the satellite terminal.

(Emphasis added). This "nondiscriminatory basis" requirement is extended by Iowa Code section 527.4 to financial institutions that do not have their primary place of business in Iowa, such as the National Banks. See also Iowa Administrative Code § 187-10.4(527)(3)(a)(3). This provision has been interpreted by a former Administrator¹ to mean that surcharging individual users of satellite terminals, or ATMs, would violate Iowa Code chapter 527. See Complaint, Exhibit D (stating that surcharges are not expressly provided for by statute, and that surcharges appear to be inconsistent with chapter 527's "nondiscriminatory basis" requirement). Additionally, Iowa Attorney General Thomas Miller informed the Supreme Court of the United States in a previous case involving similar issues that under Iowa law a bank "may not levy a surcharge against any cardholder simply for using its ATM." See Complaint, Exhibit E at 7 (petition for a writ of certiorari in Bank One v. Guttau).²

The National Bank Act ("NBA"), 12 U.S.C. § 21 et seq., provided for the establishment of federally-chartered national banks, such as plaintiffs in this case. "The NBA grants national banks the authority to exercise `all such incidental powers as shall be necessary to carry on the business of banking.'" Bank One v. Guttau, 190 F.3d 844, 848 (8th Cir.1999) (citing First Nat'l Bank of E. Ark. v. Taylor, 907 F.2d 775, 777 (8th Cir.1990) (quoting 12 U.S.C. § 24 (Seventh))). Under the NBA, the Office of the Comptroller of the Currency ("OCC") is the regulatory agency governing national banks' services. The OCC has stated that a national bank may charge its customers non-interest charges and fees, and "[t]he establishment of non-interest charges and fees, and the amounts thereof, is a business decision to be made by each [national] bank, in its discretion." 12 C.F.R. § 7.4002(a) and (b). It has also set up factors for evaluating whether a bank's non-interest charges and fees are appropriate. Id.

Three of the National Banks in this case sought the opinion of the OCC regarding their plans to charge non-accountholder customers a fee for using their ATMs in Iowa. On March 27, 2001 Metrobank received a letter from the OCC concluding that it could "charge the ATM access fees it has established" in accord with the NBA and 12 C.F.R. § 7.4002(a). See Complaint, Exhibit A at 4. Wells Fargo received a similar letter from the OCC dated March 21, 2001, and Bank of America did as well on October 25, 1999. See Complaint, Exhibits B and C.³

The National Banks state in their complaint that they have purchased, installed, protected, supplied and maintained ATM machines at numerous locations in Iowa. The National Banks also incur rental costs for those machines which are not on bank premises. See Complaint ¶ 27. "To offset these ATM operating costs and to recover the investment required to purchase or lease, install and maintain ATMs, the National Banks desire to charge fees for the use of their ATMs by non-accountholder customers." Id. The National Banks have not yet instituted these plans because of Iowa Code Chapter 527 and "the Iowa ATM fee prohibition." Id. at ¶¶ 28-29. The National Banks filed the present lawsuit to resolve the matter, as they assert "a case or controversy exists between the parties that requires resolution by this Court of the declaratory judgment and injunctive relief that the National Banks seek." Id. at ¶ 29.

II. APPLICABLE LAW & DISCUSSION

In his motion to dismiss, the Administrator argues this Court does not have subject matter jurisdiction. Alternatively, if the Court were to find it had subject matter jurisdiction, the Administrator argues the Court should dismiss the case under the doctrine of abstention because it is a matter that should be dealt with first by the Iowa state courts.

A. Standard of Review

Under Federal rule of Civil Procedure 12(b)(1), "a party may raise the defense of `lack of jurisdiction over the subject matter' in a motion before answering the complaint filed in any action." Slycord v. Chater, 921 F.Supp. 631, 634 (N.D.Iowa 1996). The Court may consider matters outside the pleadings on a motion to dismiss for lack of subject matter jurisdiction. See Trimble v. ASARCO, Inc., 83 F.Supp.2d 1034, 1036 (D.Neb.1999) (citing Godfrey v. Pulitzer Publishing Co., 161 F.3d 1137, 1140 (8th Cir.1998) cert. denied 526 U.S. 1098, 119 S.Ct. 1575, 143 L.Ed.2d 671 (1999) (other citation omitted)). Jurisdictional issues are always for the Court to decide. See Osborn v. United States, 918 F.2d 724, 729 (8th Cir.1990). "[J]urisdiction is a threshold question [and] judicial economy demands that the matter be decided at the outset rather than deferring it until trial ...." Id.

B. Whether Subject Matter Jurisdiction Exists

1. Case or Controversy

The National Banks seek a declaratory judgment that Iowa law, prohibiting fees for ATM services it provides to nonaccountholder customers, is preempted by the NBA.

In a case of actual controversy within its jurisdiction ... any court of the United States upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.

28 U.S.C. § 2201(a) (emphasis added). See also Fed.R.Civ.P. 57. The Administrator counters that the National Banks have not attempted to levy the charges against non-accountholder customers, and that therefore no case of actual controversy exists.

Prior to enactment of 28 U.S.C. § 2201, requests for declaratory judgment were held not to be within a federal court's jurisdiction under Article III of the United States Constitution. See Willing v. Chicago Auditorium Assn., 277 U.S. 274, 289, 48 S.Ct. 507, 72 L.Ed. 880 (1928) (cited in Calderon v. Ashmus, 523 U.S. 740, 745, 118 S.Ct. 1694, 140 L.Ed.2d 970 (1998)). After its passage on June 14, 1934, the Supreme Court held in Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617 (1937) that Congress validly conferred jurisdiction on federal courts to issue declaratory judgments in appropriate cases through 28 U.S.C. § 2201, and in that case allowed an insurance company to obtain a determination regarding the validity of an insurance policy. Id. at 239-40, 57 S.Ct. 461 (cited in Calderon, 523 U.S. at 746, 118 S.Ct. 1694). To seek a declaratory judgment, however, plaintiffs' claims must be found ripe. "The doctrine of ripeness is basically a matter of timing, which requires (1) `a sufficiently concrete case or controversy within the meaning of Article III of the Constitution', and also, (2) `prudential considerations must justify the present exercise of judicial power.'" See Gopher Oil Co. v. Bunker, 84 F.3d 1047, 1050 (8th Cir.1996) (quoting Christopher Lake Dev. Co. v. St. Louis County, 35 F.3d 1269, 1272-73 (8th Cir.1994)).

Recently, in Calderon, the Supreme Court determined that there was not a controversy under section 2201. Calderon, 523 U.S. at 749, 118 S.Ct. 1694. Plaintiffs were a class of death-row prisoners who sought a determination of what federal law governed their...