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Beneficial National Bank v. Anderson

Supreme Court of the United States · 2003 · Civil Procedure

Civil ProcedureRemovalFederal Question JurisdictionComplete PreemptionNational Bank Act12 U.S.C. §§ 85 and 86usurynational banks

Facts

Respondents were 26 taxpayers who pledged anticipated tax refunds to secure short-term loans from petitioner Beneficial National Bank, a national bank chartered under the National Bank Act. In Alabama state court, they sought compensatory and punitive damages and alleged that the bank charged excessive interest in violation of the common-law usury doctrine and Alabama usury law. Their complaint did not mention federal law. Petitioners removed, arguing that the National Bank Act exclusively governs the interest national banks may charge and the remedies for excessive interest claims.

Issue

Whether a state-court action seeking damages from a national bank for allegedly charging excessive interest under state common law and state usury statute may be removed to federal court because the claim actually arises under federal law. More specifically, whether the National Bank Act provides the exclusive cause of action for usury claims against national banks so that such claims are completely preempted.

Rule

A state-law claim is removable on federal-question grounds in two circumstances: when Congress expressly authorizes removal, or when a federal statute completely preempts the state-law cause of action by wholly displacing it. When a federal statute provides the exclusive cause of action for the claim asserted and also sets forth the procedures and remedies governing that cause of action, any claim within its scope, even if pleaded in state-law terms, necessarily arises under federal law and is removable under 28 U.S.C. § 1441(b).

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Phoenix, Maya Ortiz sued Copper Mesa National Bank in Arizona state court, alleging that the bank's payday-style loan carried unlawful interest under Arizona's usury statute and Arizona common law. Her complaint sought damages and never mentioned any federal statute.

If the bank removes on federal-question grounds, how should the federal court rule on Maya's motion to remand?

Explanation. The majority held that state-law usury claims against national banks are completely preempted by 12 U.S.C. §§ 85 and 86. Because those provisions provide the exclusive cause of action, procedures, and remedies for such claims, a complaint that expressly alleges usury against a national bank necessarily arises under federal law, even if pleaded solely in state-law terms. Removal is therefore proper under § 1441. (Derived from Beneficial National Bank v. Anderson (n.d.).)