West Virginia ex rel. McGraw v. JPMorgan Chase & Co.
842 F. Supp. 2d 984
S.D.W. Va2012Background
- In Aug. 2011, West Virginia AG filed WVCCPA actions in Mason County against eight credit card issuers alleging unfair or deceptive practices related to payment protection plans (DCC/DSA).
- Plaintiff alleges the plans have little value, are hard to cancel, and are enrolled without informed consent, targeting life events that trigger benefits.
- Defendants removed the actions to federal court asserting complete preemption under the National Bank Act, CAFA, and a substantial federal question under Grable.
- Court evaluates (i) NBA complete preemption of state usury-like claims, (ii) CAFA parens patriae status versus class/mass action, (iii) Grable jurisdiction, and (iv) remand eligibility.
- OCC regulations define interest broadly; the court ultimately finds DCC/DSA fees are not interest, and the action survives remand, not removability on preemption or Grable grounds.
- Court grants remand for all eight cases, and denies costs and fees because removal was not objectively unreasonable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DCC/DSA claims are completely preempted by the NBA | Plaintiff (WV) argues DCC/DSA are not interest and not preempted. | Defendants contend DCC/DSA are interest under 12 C.F.R. § 7.4001 and fall within NBA §§85-86. | Not completely preempted; DCC/DSA fees are not interest under NBA. |
| Whether CAFA permits removal as a class or mass action | Plaintiff argues WVCCPA action is parens patriae, not class/mass action. | Defendants claim CAFA removal for class or mass action applies. | Not removable as CAFA class or mass action; action is parens patriae. |
| Whether Grable jurisdiction applies for a substantial federal question | Plaintiff argues no central federal question governs WVCCPA claims. | Defendants contend federal standards for DCC/DSA create substantial federal questions. | No Grable jurisdiction; not a special small set of Grable cases. |
| Whether remand is appropriate due to lack of federal jurisdiction | Plaintiff seeks remand and recoverable costs/fees. | Defendants oppose remand and fees. | Remand granted as to jurisdiction; costs and fees denied. |
Key Cases Cited
- Beneficial Nat’l Bank v. Anderson, 539 U.S. 1 (U.S. 2003) (complete preemption framework for NBA §§85-86)
- Smiley v. Citibank (South Dakota), N.A., 517 U.S. 735 (U.S. 1996) (definition of interest under NBA includes some credit-related fees)
- Grable & Sons Metal Prods., Inc. v. Darue Eng. & Mfg., 545 U.S. 308 (U.S. 2005) (Grable jurisdiction framework for substantial federal questions)
- Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677 (U.S. 2006) (Grable framework features; breadth of 'special and small' cases)
- CVS Pharmacy, Inc. v. West Virginia ex rel. McGraw, 646 F.3d 169 (4th Cir. 2011) (WVCCPA actions by state AG are parens patriae, not class actions)
- Barber v. International Union, 640 F.3d 599 (4th Cir. 2011) (en banc considerations on removal and federalism concerns)
- Lucent Technologies, Inc. v. Curran, 642 F.3d 739 (7th Cir. 2011) (real party in interest analysis in parens patriae context (rejected approach))