Facts
- Borrowers obtained “refund anticipation loans” from a national bank in connection with tax refund services.
- The borrowers sued in Alabama state court, alleging the bank charged excessive interest in violation of state common-law usury principles and an Alabama usury statute.
- The complaint pleaded only state-law theories and did not invoke any federal statute.
- The bank removed the case to federal court, asserting that the National Bank Act governs national-bank interest rates and provides exclusive remedies for overcharges.
- The federal district court denied remand and certified the jurisdictional question for interlocutory appeal.
- The Eleventh Circuit reversed, reasoning that removal was improper under the well-pleaded complaint rule and that complete preemption did not apply.
- The Supreme Court granted review to decide whether state-law usury claims against national banks are completely preempted and therefore removable.
Issues
- Whether state-law usury claims against a national bank are completely preempted by the National Bank Act, such that they arise under federal law for removal under 28 U.S.C. § 1441.
- Whether 12 U.S.C. §§ 85–86 supply the exclusive cause of action and remedies for allegations that a national bank charged excessive interest, regardless of how the complaint is framed.
Decision
- The Supreme Court reversed the Eleventh Circuit in a 7–2 decision.
- The Court held that §§ 85 and 86 of the National Bank Act provide the exclusive cause of action and exclusive remedies for usury claims against national banks.
- Because the federal statute supplies both the substantive rule and the remedial scheme, a state-law usury complaint against a national bank is federal in character and is removable under § 1441.
- The Court stated that, for national banks, there is no state-law cause of action for usury.
- In dissent, Justices Scalia and Thomas agreed state usury law is preempted but rejected treating the preempted claim as a federal claim for jurisdictional purposes.
Legal Principles
- Under the well-pleaded complaint rule, federal-question removal generally requires a federal claim on the face of the complaint; a federal preemption defense alone does not create removal jurisdiction.
- Complete preemption is a narrow jurisdictional doctrine that applies when Congress provides an exclusive federal cause of action and an exclusive set of procedures and remedies, converting the pleaded state claim into a federal claim.
- For national banks, 12 U.S.C. § 85 sets the permissible interest-rate standards, and 12 U.S.C. § 86 supplies the exclusive remedies and procedures for charging interest above those limits.
- A complaint seeking relief for allegedly usurious interest charged by a national bank necessarily arises under federal law and is removable, even if pleaded solely under state usury law.
Conclusion
Usury claims against national banks are governed exclusively by the National Bank Act’s substantive limits and remedial scheme, so state-law usury pleadings are completely preempted and may be removed to federal court as arising under federal law.