## Facts

- The City of Oakland enacted a 2001 ordinance regulating “predatory lending” for certain home-mortgage loans, defining covered loans, prohibiting specified practices, and creating local enforcement mechanisms.
- The California Legislature enacted Division 1.6 of the Financial Code, a detailed statewide scheme regulating predatory lending in home-mortgage loans, including coverage, prohibitions, and enforcement.
- Legislative materials indicated the Legislature considered but did not include an express clause preempting local ordinances.
- American Financial Services Association (AFSA), representing financial service providers and mortgage lenders, challenged the Oakland ordinance as conflicting with and preempted by Division 1.6.
- AFSA sought declaratory and injunctive relief in superior court.
- The trial court found partial preemption and allowed the ordinance to remain in modified form; both sides appealed.
- The Court of Appeal upheld the ordinance, concluding it was not preempted.
- The California Supreme Court granted review to decide whether Division 1.6 preempted Oakland’s ordinance.

## Issues

1. Whether Division 1.6 of the California Financial Code impliedly preempts a municipal ordinance regulating predatory lending in home-mortgage loans.
2. Whether the Legislature, by enacting Division 1.6, intended to fully occupy the field so as to bar local regulation even without an express preemption clause.

## Decision

- The California Supreme Court reversed the Court of Appeal.
- The Court held that Division 1.6 preempts Oakland’s predatory-lending ordinance.
- The Court concluded the Legislature fully occupied the field of predatory-lending regulation for home-mortgage loans through a comprehensive statewide scheme.
- Because the ordinance imposed additional or different restrictions and remedies in the same regulatory area, it could not be enforced alongside the state law.

## Legal Principles

- Under California preemption doctrine, local ordinances are invalid when the Legislature has impliedly occupied the field, even absent express preemption language.
- A detailed statutory scheme specifying covered activity, prohibited conduct, and enforcement mechanisms supports an inference of field preemption.
- A local law may be preempted when it interferes with the balance and uniformity reflected in a statewide regulatory framework, including the Legislature’s calibration between consumer protection and credit availability.
- Statewide economic effects and a history of state-level regulation in the subject area are factors supporting an inference that uniform statewide rules were intended to displace local regulation.

## Conclusion

The California Supreme Court held that Division 1.6 constituted a comprehensive, uniform statewide system for regulating predatory lending in home-mortgage loans and therefore impliedly preempted Oakland’s local ordinance regulating the same subject matter.


Am. Fin. Servs. Ass’n v. City of Oakland, 104 P.3d 813 (Cal. 2005)