Tikkanen v. Citibank (South Dakota), NA

• Decision Date: 29 October 1992
• Docket Number: 4-92-287.,Civ. No. 4-92-286
• Citation: 801 F. Supp. 270
• Parties: Michael B. TIKKANEN, and all others similarly situated, Barry Rosenberg, and all others similarly situated, Plaintiffs. v. CITIBANK (SOUTH DAKOTA) N.A., MBNA American Bank, N.A., f/k/a MBNA America, N.A., Defendants. Michelle NELSON, and all others similarly situated, Janis Ideson, and all others similarly situated, Donald Lauer, and all others similarly situated, Plaintiffs, v. CITIBANK (SOUTH DAKOTA) N.A., First National Bank of Omaha, Bank One, Columbus, N.A., MBNA American Bank, N.A. f/k/a MBNA America, N.A., Defendants.
• Court: U.S. District Court — District of Minnesota

801 F. Supp. 270

Michael B. TIKKANEN, and all others similarly situated, Barry Rosenberg, and all others similarly situated, Plaintiffs. v. CITIBANK (SOUTH DAKOTA) N.A., MBNA American Bank, N.A., f/k/a MBNA America, N.A., Defendants.

Michelle NELSON, and all others similarly situated, Janis Ideson, and all others similarly situated, Donald Lauer, and all others similarly situated, Plaintiffs, v. CITIBANK (SOUTH DAKOTA) N.A., First National Bank of Omaha, Bank One, Columbus, N.A., MBNA American Bank, N.A. f/k/a MBNA America, N.A., Defendants.

Civ. Nos. 4-92-286, 4-92-287.

United States District Court, D. Minnesota, Fourth Division.

September 10, 1992.

As Modified October 29, 1992.

COPYRIGHT MATERIAL OMITTED

Charles H. Johnson, Johnson Law Office, John G. Gisselquist, Gisselquist Law Office, St. Paul, Minn., for plaintiffs Michael B. Tikkanen and Barry Rosenberg.

William H. Crowder, Mark Reinhardt, Reinhardt & Anderson, St. Paul, Minn., for plaintiffs Michelle Nelson, Janis Ideson, and Donald Lauer.

Lawrence C. Brown, James L. Volling, Faegre & Benson, Minneapolis, Minn., for defendants.

Arnold M. Lerman, Christopher R. Lipsett, John B. Bellinger, Wilmer, Cutler & Pickering, Washington, D.C., for defendant Citibank (South Dakota) N.A.

John L. Warden, Richard J. Urowsky, Lori S. Sherman, Sullivan & Cromwell, New York City, for defendant MBNA America Bank, N.A.

MEMORANDUM AND ORDER

MacLAUGHLIN, Chief Judge.

These related matters are before the Court on plaintiffs' motions to dismiss without prejudice and on defendants' motions for summary judgment. Plaintiffs' motions will be denied and defendants' motions will be granted.

FACTS

Plaintiffs in these two related actions are credit card customers of the defendant banks. Defendants are national banks located in states other than Minnesota. Plaintiffs, all residents of Minnesota, brought suit in state court, challenging defendants' practices of charging late fees and overlimit fees in addition to periodic interest. Plaintiffs apparently concede that the fees assessed by the defendant banks are permitted by the laws of the states in which the defendants are located. However, plaintiffs allege that the late and overlimit fees violate Minn.Stat. § 48.185(4), and claim that by charging the fees, defendants have engaged in unfair and deceptive practices under Minnesota law. They ask the Court to award them the illegal fees charged or collected by defendants, as well as all interest charged on such fees.

As noted above, these actions began in state court. Defendants removed the actions to federal court on the ground that the complaints asserted claims that were so completely preempted by federal law that they were necessarily federal in nature. By order dated May, 28, 1992, this Court held that plaintiffs' claims were federal in nature and that the actions were therefore properly removed. Defendants in both actions now move for summary judgment; plaintiffs oppose the motions for summary judgment, and move to dismiss their claims without prejudice.

DISCUSSION

I. The Motions to Dismiss

Under Federal Rule of Civil Procedure 41(a), a plaintiff may dismiss an action after a summary judgment motion has been filed only upon order of the court. The purpose of this rule is to prevent voluntary dismissals that unfairly affect the defendant. Paulucci v. City of Duluth, 826 F.2d 780, 782 (8th Cir.1987). In determining whether to grant a plaintiff's motion for voluntary dismissal, a court may consider numerous factors, including the effort and expense expended by the defendant, the plaintiff's justification for dismissal, the fact that a motion for summary judgment has been filed, and whether dismissal would prejudice the defendant. Id. at 782-83.

Plaintiffs argue that voluntary dismissal is warranted, because the law regarding the extent to which state consumer protection laws are enforceable against national banks is unsettled. Actions raising the issue have been filed throughout the country, and the United States Court of Appeals for the First Circuit recently held that state laws regarding late and overlimit fees were preempted by federal statutes governing the interest rates charged by federally insured state-chartered banks. Greenwood Trust Co. v. Massachusetts, 971 F.2d 818 (1st Cir.1992). Plaintiffs state that the First Circuit decision, together with this Court's order denying their motions to remand, has convinced them that these actions should not proceed until the applicable law becomes better defined. They argue that it is apparent that the United States Supreme Court will ultimately have to consider the issue; therefore, they continue, it would be a misuse of judicial resources and the time and energy of the parties to proceed with these actions before the Supreme Court resolves the issue. In addition, plaintiffs argue that because discovery has barely begun, defendants would not be prejudiced by dismissal. The most expeditious course of action, in plaintiffs' view, would be to dismiss the actions or stay them pending a Supreme Court decision.

Defendants argue that dismissal is unwarranted. They assert that they have expended substantial effort and expense to defend these actions. In addition, they maintain that as a business matter, they have a vital interest in the prompt resolution of plaintiffs' claims. Finally, they point out that the summary judgment motions have been fully briefed and are dispositive of the actions; thus, a decision on the summary judgment motions is an efficient way to bring this litigation to a close. Defendants see no reason why these actions should stop merely because other actions raising similar issues are pending in other courts.

The Court concludes that dismissal of the actions is unwarranted under Paulucci. The fact that the law is unsettled is not sufficient reason to dismiss an action. Moreover, it appears that because of the First Circuit decision and this Court's May 28, 1992 order, the law is actually more settled than it was before plaintiffs brought suit. Plaintiffs may not dismiss their actions without prejudice merely because the law has become settled in a way that they do not like. This is especially true where dismissal would prejudice the defendants. Substantial resources have been committed to arguing the motions for remand and the motions for summary judgment. Ruling on the summary judgment motions, which have been fully briefed by both sides, is the most efficient way to resolve these actions.

Nor does the Court believe that a stay of these actions is appropriate. There is no case pending before the Supreme Court that would resolve the issues presented here. Indeed, the First Circuit appears to be the only appellate court to have addressed the issue. It could be years before the issue reaches the Supreme Court, and there is no reason to hold these actions in abeyance until the Supreme Court considers the question. Therefore, the Court will deny plaintiffs' motions to dismiss or stay the actions.

II. The Summary Judgment Motions

A movant is not entitled to summary judgment unless the movant can show that no genuine issue exists as to any material fact. Fed.R.Civ.P. 56(c). In considering a summary judgment motion, a court must determine whether "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). The role of a court is not to weigh the evidence but instead to determine whether, as a matter of law, a genuine factual conflict exists. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir.1987). "In making this determination, the court is required to view the evidence in the light most favorable to the nonmoving party and to give that party the benefit of all reasonable inferences to be drawn from the facts." AgriStor Leasing, 826 F.2d at 734. When a motion for summary judgment is properly made and supported with affidavits or other evidence as provided in Fed.R.Civ.P. 56(c), then the nonmoving party may not merely rest upon the allegations or denials of the party's pleading, but must set forth specific facts, by affidavits or otherwise, showing that there is a genuine issue for trial. Lomar Wholesale Grocery, Inc. v. Dieter's Gourmet Foods, Inc., 824 F.2d 582, 585 (8th Cir. 1987), cert. denied, 484 U.S. 1010, 108 S.Ct. 707, 98 L.Ed.2d 658 (1988). Moreover, summary judgment must be entered against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

A. The Law Governing Interest Charged by National Banks

The National Bank Act allows national banks such as defendants to charge their credit card customers "interest at the rate allowed by the laws of the State ... where the bank is located." 12 U.S.C. § 85. The issues in the instant action arise out of two lines of cases interpreting section 85. The first line of cases affects the definition of interest under the statute. Courts applying section 85 have treated a wide variety of charges as interest within the meaning of the statute. See, e.g., Fisher v. First National Bank, 548 F.2d 255 (8th Cir.1977) (cash advance fee); McAdoo v. Union Nat'l Bank, 535 F.2d 1050, 1056 (8th Cir. 1976) (compensating balance requirements); Cronkleton v. Hall, 66 F.2d 384, 387 (8th Cir.), cert. denied, 290 U.S. 685, 54 S.Ct. 121, 78 L.Ed. 590 (1933) (bonus or commission paid to lender); Northway Lanes v. Hackley Union Nat'l Bank & Trust Co., 464 F.2d 855, 863 (6th Cir.1972) (closing costs); Schumacher v. Lawrence, 108 F.2d 576, 577 (6th Cir.1940) (taxes and recording fees); Panos v. Smith, 116 F.2d 445 (6th Cir.1940) (same); American Timber & Trading Co. v....