Posted on May 16, 2011 by Daniel O'Rielly

11th Circuit Considers Dodd-Frank Preemption Provision

 In one of the first cases to analyze the preemption standard contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, in Baptisa v. JPMorgan Chase Bank, NA, the Eleventh Circuit affirmed the district court's dismissal of plaintiff's Florida state law claims as preempted by the National Bank Act.

In Baptista, plaintiff, a non-accountholder at Chase, presented a check for $242.48 to be cashed at a Chase branch.  Chase cashed the check and charged her a $6.00 fee.  Plaintiff filed a putative class action asserting that Chase's imposition of a fee for cashing the check violated Florida law and alleging two causes of action: (1) violation of Florida Statute § 655.85, a so-called par-value statute, which prohibits a bank from "settl[ing] any check drawn on it otherwise than at par"; and (2) unjust enrichment.

Chase moved to dismiss on three grounds: first, that Section 655.85 did not apply to plaintiff because that statute regulated only exchange fees between banks; second, that both of plaintiff's causes of action were preempted by the National Bank Act, 12 U.S.C. § 21 et seq.; and third, that plaintiff had failed to allege the essential elements of unjust enrichment.  The district court granted Chase's motion to dismiss both causes of action, holding plaintiff's claims were preempted by 12 U.S.C. § 24 (Seventh), which among other things, grants banks the power to negotiate drafts, and 12 C.F.R. § 7.4002(a), a regulation promulgated by the Office of the Comptroller of the Currency (OCC) which states that a national bank may "charge its customers non-interest charges and fees, including deposit account service charges."  Subsequent OCC interpretive letters have interpreted "customer" to include "any person who presents a check for payment."  

 Plaintiff appealed.  The Eleventh Circuit affirmed.  The Court first noted that although the parties had briefed the issue of which type of preemption the Court should apply, the Dodd-Frank Act amended the applicable preemption standard under the National Bank Act.  Significantly, that provision of the Dodd-Frank Act, to be codified at 12 U.S.C. § 25(b)(1), does not take effective until the "Designated Transfer Date" under the statute, which is currently July 21, 2011, but could be extended.  Nevertheless, the Court interpreted this Dodd-Frank provision as a conflict preemption test.
 
In applying the conflict preemption analysis to plaintiff's claims, the Court adopted the analysis of a 5th Circuit case, Wells Fargo Bank of Texas N.A. v. James, 321 F.3d 491 (5th Cir. 2003), which considered a nearly identical Texas par value statute.  Specifically, the Court found a clear conflict between the Florida statute's prohibition on charge fees to non-accountholders and the federal statutory authorization of such fees.  Accordingly, the Court affirmed the district court's holding that both of plaintiff's causes of action are preempted.  
 
In a footnote, the Court noted that even absent preemption, plaintiff's unjust enrichment claim was defective because it failed to allege the essential element of failure to give consideration.  Chase's immediate payment of the check to plaintiff constituted sufficient consideration for the fee it charged.
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