First post Dodd-Frank preemption ruling

Iowa Banking Law Dickinson Law Firm Des Moines, Iowa

Posted on 05/12/2011 at 10:47 AM by The Newsroom

Yesterday the Eleventh Circuit ruled that JP Morgan Chase Bank does not have to comply with Florida consumer protection statutes limiting bank fees.  This is the first preemption case to cite to Dodd-Frank.  There has been much speculation about how Dodd-Frank changed the federal preemption landscape, with national bank advocates claiming very little change and state bank advocates claiming it would be more difficult for national banks to preempt state consumer laws.  In Baptista v. JP Morgan Chase Bank, Baptista filed a class action against Chase because Chase charges check cashing fees, which are prohibited under Florida law.  In ruling that Florida’s check cashing fee law is preempted by federal law, the court pointed to OCC laws allowing national banks to charge customers non-interest charges and fees.  In response to Baptista’s claim that she was not a customer of Chase, the court cited the OCC’s interpretation of “customers” as “any person who presents a check for payment.”  The court adopted the Barnett conflict preemption standard.  Baptista is not a groundbreaking case, but it is an indication of how courts will interpret Dodd-Frank’s preemption standard in the future.  There will almost certainly be numerous preemption cases in the next few years that will further define the federal preemption landscape for national banks.  It will be interesting to see how much weight courts will give to the OCC’s interpretations.  In Baptista, the OCC’s interpretation of “customers” was deemed “reasonable” and was integral to finding preemption.  Generally, in matters of interpretation, one case cannot draw a line, however.  Future preemption cases will begin to sketch a line as to deference given to the OCC.  Whether that line will be straight or jagged remains to be seen.

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