ORDER *
Defendant FIA Card Services, N.A. (“Defendant”) moves for the dismissal of *1174 this action. Plaintiff opposes this motion. Plaintiff alleges claims under the Consumer Legal Remedies Act (“CLRA”) and the Unfair Competition Law (“UCL”) against Defendant on behalf of herself and all other California consumers who have had credit card accounts with Defendant. (First Am. Compl. ¶ 2.) Plaintiffs claims are based on Defendant’s practice of increasing interest rates retroactively and without sufficient warning which she alleges violates California law. (Id. ¶¶ 13, 20.)
DISCUSSION
I. Standard
Dismissal is appropriate under Rule 12(b)(6) if Plaintiff failed to (1) present a cognizable legal theory, or (2) plead sufficient facts to support a cognizable legal theory.
Robertson v. Dean Witter Reynolds, Inc.,
II. CLRA
Defendant argues both of Plaintiffs state law claims are expressly preempted by the National Banking Act and the Office of the Comptroller of the Currency regulations. (Def.’s Mot. for Summ. J.) (Def.’s Mot. at 8:2-4.) Plaintiff concedes broad federal preemption, but asserts her claims are not expressly preempted because they are not based on the amount of interest rates charged, but on “Defendant’s deceptive practices which fail to provide adequate notice of interest rate increase.” (PL’s Opp’n at 2:27-28.) Defendant counters that “Plaintiffs Complaint does not present any properly pleaded claims of ‘deception’ or ‘misrepresentation.’ ” (Def.’s Reply at 3:25-26.)
Plaintiff alleges Defendant’s practice of retroactively increasing the interest rates charged to cardholders constitutes an unfair and deceptive practice under the CLRA which proscribes “[representing that goods or services have ... characteristics, ... which they do not have ... [and] ... [inserting an unconscionable provision in the contract.” Cal. Civil Code §§ 1770(a)(5), (19). Plaintiff concedes Defendant’s practice of retroactively increasing interest rates is disclosed in the contractual agreement. (First Am. Compl. ¶ 14.) Therefore, “[r]ather than practicing concealment or making false promises, [Defendant], from the beginning of the contractual relationship, notifies cardmem-bers of the actions it may take in the event of a default.”
Evans v. Chase Manhattan Bank USA N.A,
Moreover, California law provides that the CLRA does not apply to credit card transactions.
See Berry v. American Exp. Publishing, Inc.,
III. UCL
Defendant also argues Plaintiffs claims under the UCL are preempted. (Def.’s Mot. at 8:2^1.) Plaintiff responds that there is no federal preemption for UCL claims. (Pl.’s Opp’n at 12:23.) Plaintiffs UCL claims are based on Defendant’s practice of retroactively increasing the interest rate charged to cardholders and the failure to disclose and explain the process to cardholders. (First Am. Compl. ¶ 20.)
“Preemption can occur in one of three ways: express preemption by statute, occupation of the field, or conflict between state and federal regulation.”
U.S. v. 4,432 Mastercases of Cigarettes, More Or Less,
A. Retroactive Increase Under the UCL
Plaintiffs first allegation under the UCL is that Defendant’s practice of retroactively increasing the interest rate is unfair and deceptive. (First Am. Compl. ¶ 20.) Defendant argues Plaintiffs claim is expressly preempted because federal regulations allow Defendant to extend loans “without regard to state laws concerning ... terms of credit ... [and] rates of interest on loans.” 12 C.F.R. § 7.4008(d)(2)(iv), (x). Defendant further argues that by “challenging conduct provided for in [Defendant’s] Cardholder Agreement, Plaintiff directly attacks [Defendant’s] terms of credit.” (Def.’s Mot. at 11:10-11.) Plaintiff does not respond to this argument.
Federal regulations do not preempt all UCL causes of action.
See
Office of the Comptroller of the Currency, Advisory Letter 2002-03 at 3, n. 2 (March 22, 2002) (“OCC Letter”) (“A number of state laws prohibit unfair or deceptive acts or practices, and such laws may be applicable to insured depository institutions.
See e.g.,
Cal. Bus. & Prof.Code §§ 17200 et seq.; 17500 et seq.”);
Smith,
Defendant’s practice of retroactively increasing the interest rate charged to cardholders is not unconscionable.
Evans,
B. Failure to Disclose Under the UCL
Plaintiff further alleges Defendant violated the UCL when it failed to disclose the evaluation process used for retroactive rate increases. (First Am. Compl. ¶ 20.) Defendant argues that federal law regulates what disclosures must be made and therefore, Plaintiffs claim is preempted. (Def.’s Mot. at 12:19-27.)
The UCL restricts “any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising.” Cal. Bus. & Prof.Code § 17200. The UCL “borrows violations from [state and federal] laws by making them independently actionable as unfair competitive practices.”
Korea Supply Co. v. Lockheed Martin Corp.,
Federal law provides that banks may extend loans “without regard to state law limitations concerning ... [disclosure and advertising, including laws requiring specific statements, information, or other content to be included in credit application forms, credit solicitations, billing statements, credit contracts, or other credit-related documents.” 12 C.F.R. § 7.4008(d)(2) (viii).
Plaintiff does not allege that Defendant fails to make the required disclosures under federal law. Plaintiffs claim that Defendant was required to make different disclosures because of state law is expressly preempted by 12 C.F.R. § 7.4008(d)(2) (viii). Therefore, Defendant’s motion to dismiss on Plaintiffs claim that Defendant’s failure to disclose violates the UCL is granted.
CONCLUSION-
Defendant’s motion to dismiss Plaintiffs claims under the CLRA and the UCL is granted. Therefore, this action is dismissed.
IT IS SO ORDERED.
Notes
This matter was determined to be suitable for decision without oral argument. L.R. 78-230(h).