Eduardo Larin v. Bank of America, N.A.

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT APR 05 2012
MOLLY C. DWYER, CLERK
U.S . CO U RT OF AP PE A LS
EDUARDO LARIN, on behalf of himself No. 10-56276
and all others similarly situated,
D.C. No. 3:09-cv-01062-DMS-
Plaintiff - Appellant, JMA
v.
MEMORANDUM *
BANK OF AMERICA, N.A.,
Defendant - Appellee.
Appeal from the United States District Court
for the Southern District of California
Dana M. Sabraw, District Judge, Presiding
Argued and Submitted February 7, 2012
Pasadena, California
Before: REINHARDT, WARDLAW, and CALLAHAN, Circuit Judges.
Eduardo Larin sues on behalf of a putative nationwide class of consumers who
incurred certain expenses while enrolled in Banµ of America's Overdraft Protection
(ODP) program. The district court dismissed the action on the basis that Larin's state-
law claims were preempted by the National Banµ Act and regulations promulgated
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
thereunder. Exercising jurisdiction under 28 U.S.C. y 1291, we reverse the judgment
as to preemption and remand to the district court.
'State laws of general application, which merely require all businesses
(including national banµs) to refrain from fraudulent, unfair, or illegal behavior, do
not necessarily impair a banµ's ability to exercise its [federally regulated] powers.'
Martinez v. Wells Fargo Home Mortg., Inc., 598 F.3d 549, 555 (9th Cir. 2010)
(emphasis added). We must determine, however, whether Larin's claims-- no matter
how they are labeled--would as a practical matter impose on the Banµ's operations
'limitations concerning . . . [c]hecµing accounts[,] . . . [d]isclosure requirements[, or]
. . . [f]unds availability,' so as to render them expressly preempted. 12 C.F.R.
y 7.4007(b)(2)(ii-iv); see Rose v. Chase Banµ USA, NA, 513 F.3d 1032, 1038 (9th Cir.
2008) ('Regardless of the nature of the state law claim alleged . . . , the proper inquiry
is whether the 'legal duty that is the predicate of' Plaintiffs' state law claim falls
within the preemptive power of the NBA or regulations promulgated thereunder.').
We conclude that Larin's claims do not implicate the Banµ's federally regulated
powers. The gravamen of Larin's complaint is that the Banµ violated state law by
affirmatively misrepresenting the value of its ODP program, rather than by operating
the program as it did. See, e.g., Complaint jj 1, 11, 70, 95, 100-01, 104, 107. If Larin
were to prevail, the Banµ might have to alter its marµeting and promotional materials,
-2-
but it would in no way have to alter the manner in which the ODP program actually
operates. As the Banµ recognizes, while claims 'aimed at a specific banµing practice
or attacµing a failure to disclose . . . are categorically preempted,' claims 'aimed at
affirmative misrepresentations or deceptions . . . are generally not preempted.'
Answering Br. 33. Whether or not they are liµely to succeed on the merits, Larin's
claims are clearly of the latter µind: what Larin alleges is that the Banµ affirmatively
deceived him as to the risµs and benefits of the ODP program, not that the Banµ
operated the program in an unlawful manner or that it failed to provide any requisite
disclosure as to the program's operation. Cf. Jefferson v. Chase Home Fin., No. C
06-6510, 2008 WL 1883484, at *12-13 (N.D. Cal. Apr. 29, 2008).
Although the Banµ urges us to affirm the dismissal of the action on the alternate
basis that Larin has failed to state a claim, we would benefit from the district court's
analysis of the issue in the first instance. We therefore reverse the district court's
judgment dismissing the action on the basis of preemption and remand to the district
court for further proceedings consistent with this disposition.
REVERSED AND REMANDED.
-3-
FILED
Larin v. Banµ of America, No. 10-56276 APR 05 2012
MOLLY C. DWYER, CLERK
CALLAHAN, Circuit Judge, dissenting: U.S . CO U RT OF AP PE A LS
I respectfully dissent. I disagree with the majority's characterization of
Larin's claims and would affirm the district court. In my view, the underlying
conduct Larin alleges to support his state law claims is that the Banµ's practice of
maµing deposited funds immediately available to ODP customers, without placing
a hold on a larger or suspicious deposit, increases the ODP customers' risµ of fees.
National banµs may exercise their 'deposit-taµing powers without regard to
state law limitations concerning: . . . (ii) Checµing accounts; (iii) Disclosure
requirements; [and] (iv) Funds availability[.]' 12 C.F.R. y 7.4007(b)(2)(ii)-(iv).
Larin contends that the state laws at issue in this case are laws of 'general
applicability' regulating deceptive and unfair business practices, and are therefore
outside the ambit of preemption under Martinez v. Wells Fargo Home Mortg., Inc.,
598 F.3d 549, 555 (9th Cir. 2010). However, in Martinez, this Court held that
claims under California's Unfair Competition Law were preempted even though
the plaintiff's claims alleged deception because the banµ's 'underlying conduct'
fell within the categorical preemption subsection of the NBA. Id. at 555-57.
Similarly, the 'underlying conduct' Larin alleges has to do with the Banµ's
1
policies and practices involving 'checµing accounts' and 'funds availability,' and
his claims based on this 'underlying conduct' are preempted. Cf. 12 C.F.R. y
7.4007(b)(2).
The majority taµes a different view of the gravamen of Larin's claims,
concluding that 'what Larin alleges is that the Banµ affirmatively deceived him as
to the risµs and benefits of the ODP program, not that the Banµ operated the
program in an unlawful manner or that it failed to provide any requisite disclosure
as to the program's operation.' Mem. Dispo. at 3. Even though Larin alleges in
his complaint that the Banµ deceptively marµeted its ODP program by promising
that enrollment in the program will protect customers from fees,1 he does not allege
that his decision to enroll in the ODP program caused his injury. Rather, he alleges
that the fact that the Banµ made the funds from a deposited checµ available to him
for immediate withdrawal caused his injury. See Complaint jj 18-25, 45-51.
Ultimately, the remedies available to Larin for this injury under the applicable state
laws would directly interfere with the Banµ's deposit-taµing powers.
Larin specifically alleges in his Complaint that it was because the Banµ
made the deposit available to him the next day that he was able to withdraw ü6,420
1
As a factual matter, the Banµ's statements regarding the ODP that the
Complaint identifies as deceptive only purport to usually help customers avoid
some fees. See Complaint jj 73-76.
2
from his account. See Complaint j 49. The availability of these funds to Larin the
next day has nothing to do with his enrollment in the ODP program because,
pursuant to the deposit agreement, the Banµ has a general policy of maµing
deposited funds available the next day to all customers. See Complaint j 18. Larin
admitted that this is the Banµ's general policy, that he was aware of it, and that he
µnew that deposited funds' availability did not mean that the deposit had cleared.
See Complaint jj 18-20, 45-51. If any of the Banµ's customers withdraw against
a deposited checµ that later bounces, they will incur fees in accordance with the
Deposit Agreement. The only difference for ODP customers is where the fees are
assessed. Non-ODP customers will incur various fees on their checµing accounts,
whereas ODP customers liµe Larin will incur fees on their linµed credit card
accounts. Thus, liµe the facts in Martinez, the Banµ's alleged deceit in advertising
the ODP program is not the causal basis for Larin's claims. Accordingly, I would
affirm the district court's judgment dismissing Larin's claims as preempted.
3