In state court, plaintiff consumers filed a class action lawsuit against defendant businesses, alleging negligence and violation of Cal. Civil Code §§ 1798.81.5(b) and (c), 1798.81, and 1798.82; Cal. Bus. and Prof. Code § 17200; and Cal. Code Civ. Proc. § 1060. After one business filed for bankruptcy, the consumers removed the action to federal court per 28 U.S.C.S. § 1452. The businesses moved for remand. The consumers moved for a transfer. An EEOC lawyer represented respondent.
Overview
The consumers alleged defendants violated California law by failing to protect credit card holders’ private information from computer “hackers.” They removed the action to the instant court per 28 U.S.C.S. 1452, which authorized removal of actions “related to” a bankruptcy case. The consumers then sought transfer of the action to Arizona, so the action could be consolidated with the subject bankruptcy proceedings. The businesses sought remand on the grounds that the court lacked subject-matter jurisdiction and on equitable grounds. Under the Ninth Circuit’s expansive view of relatedness, the case was removable; the outcome of the lawsuit could conceivably have an effect on the bankruptcy estate. However, equitable considerations weighed in favor of remand. By definition, the plaintiff class included only California residents. The consumers asserted only state-law claims, and some of those claims implicated complicated issues of financial privacy on which the California courts had yet to rule. Further, the parties and the California court had invested significant resources in the case.
Outcome
The court granted the motion for remand on equitable grounds and denied the motion to transfer venue.
Procedural Posture
Plaintiff cardholder appealed a judgment on the pleadings from the Superior Court of Orange County (California), which ruled that federal law preempted his unfair competition class action lawsuit against defendant bank alleging systematic violations of the disclosure requirements of Civ. Code, § 1748.9, for credit card convenience checks.
Overview
The cardholder alleged that the bank, which was a national banking association, had sent convenience checks to him and to other class members that lacked the disclosures required by § 1748.9 and that he had incurred finance charges and interest charges by using the checks. The court held that § 1748.9 was not, on its face, preempted because it did not preclude national banks from exercising their lending authority under 12 U.S.C. § 24. Furthermore, without a factual record, it was not possible to conclude that § 1748.9 significantly impaired national banks’ authorized activities. The court concluded that the Office of the Comptroller of the Currency had exceeded its interpretive authority under 12 U.S.C. § 43 when it enacted 12 C.F.R. § 7.4008(d) (2010), purporting to exempt national banks from all state disclosure requirements. No such exemption was found in the National Bank Act, 12 U.S.C. § 1 et seq., or in the Truth in Lending Act, 15 U.S.C. § 1601 et seq. Thus, the regulation was not substantively valid and did not excuse the bank from having to make a factual showing that the disclosure requirement significantly impaired the exercise of its federally authorized powers.
Outcome
The court reversed the judgment of the trial court.
