*1 Fеd.R.Evid. culpable conduct.” gence [or] INC., al., RETAIL, et MONROE employer an subse- that
407. Evidence Plaintiffs-Appellants, accused of employee discharged quently may properly injury causing plaintiffs a meas- subsequent a remedial as excluded CITIZENS, N.A., Charter RBS f/k/a v. Chevron Rule 407. Hull ure under Bank, N.A., al., et Defendants- One (10th Inc., U.S.A., 586-87 812 F.2d Appellees. Cir.1987); Ken- Wright, Alan 23 Charles Graham, Jr., Practice & Federal neth W. 074263. No. Procedure, The Nolans have 5284. Appeals, for intro- permissible purpose United States Court
asserted testimony. They explain ducing Sixth Circuit. have shown testimony would the excluded Sept. 2008. Argued: due to his resign was forced to
that Hicks parent report allegations Filed: Dec. failure Decided and relationship inappropriate an adult’s about 27.) Br. (Appellants’ a student. liability City School’s
They Memphis claim inappropriate knowledge its
hinges on that the excluded by faculty and
activities Hicks Principal
evidence established inappro- failing report pattern
had a adults and
priate relationships between However, lit- does
students. this evidence viola- was aware of prove
tle to that Hicks punishment policy corporal
tions of the period. time
during the relevant that the excluded
The Nolans also claim shown
testimony would another transferred
Anderson was coaching as a re- and barred from
school had conclusion he
sult Johnson’s in policy corporal punishment
violated the rise to this giving
association with the facts however, record,
suit. A review of the did, fact, plaintiffs’
shows that counsel Fur- Dr. on this issue.
question Johnson recall have been questioning
ther would
cumulative. CONCLUSION
Y. reasons, AFFIRM we foregoing
For the court. judgment of the district *2 Kaminski, Ka- Giffen & Lyn Kerin
lants. Cleveland, OH, minski, Keith Alexander LLP, Noreika, Covingtоn Burling & Wash- *3 DC, BRIEF: Appellees. for ON ington, LLP, Grenier, Bode, H. Bode & William DC, Karen Appellants. for Washington, Kaminski, Giffen, Cleve- Giffen & Louise Noreika, OH, land, Alexander Cov- Keith DC, LLP, Washington, Burling ington & Goins, Ungar, F. Michael Nathan Frances Berne, Hollander, & Ulmer Jason S. Bacon, Ohio, Cleveland, Gregory K. Brett LLP, Cleveland, Farkas, Frantz Ward R. OH, Appellees. for GIBBONS, Circuit Before: COLE FORESTER, Judge.* District Judges; GIBBONS, J., opinion delivered the FORESTER, D.J., court, in which 285-89), COLE, delivered joined. (pp. J. dissenting opinion. separate OPINION GIBBONS, SMITH Circuit JULIA Judge. Retail, Inc.;
Plaintiffs-appellants Monroe Marks, Phillips, Esq.; and Leo Jerome Garnishors”) (“the appeal the district Inc. against of their claim de- court’s dismissal Citizens, N.A. fendants-appellees RBS Bank, One (formerly known as Charter Bank; N.A.); Huntington National Bancshares, Inc.; JPMorgan Huntington Bank, N.A.; JPMorgan & Chase Chase N.A.; Co.; Keycorp, National Keybank, Bank; City Corporation; City National N.A.; Bank; Bаnk, and U.S. Sky (“the Banks”). The Garnishors Bancorp for conver- against the Banks brought suit Bode, sion, unlawfully alleging that H. Bode & William ARGUED: satisfy LLP, DC, garnished funds Grenier, Washington, Appel- for used * Forester, designation. Kentucky, sitting by Unit- trict of Karl S. Senior The Honorable Judge for the Eastern Dis- ed States District below, the Banks. For the reasons sought injunctive Garnishors relief to we affirm the prevent dismissal of the Garnishors’ the Banks from continuing to de- claim. duct service fees from funds in the debt-
ors’ accounts. The responded Banks all I. by filing dispositive motions.
The relevant facts are not in dispute. Defendants The Huntington National garnishor-creditors Garnishors are in Bank; Huntington Inc.; Bancshares judgments Ohio who obtain against debt- JPMorgan Bank, N.A.; Chase JPMorgan ors when debts are not repaid. The Gar- Co.; Chase & Bank; National City Na- *4 nishors often judgments collect these by tional City Corporation; N.A.; Bank U.S. garnishing the debtоrs’ bank accounts. and Bancorp U.S. (“Removing Defen- (“ORC”) § Ohio Revised Code dants”) 2716.12pro- timely filed a notice removal on vides that a action must be October 2006. The case was removed to accompanied aby one dollar fee to the the United States District Court for the case, garnishee, in the Banks who hold Northern District of Ohio. The Removing the debtors’ funds in customer accounts. Defendants filed a judgment motion for on The Banks an charge additional $25 $80 the pleadings on January 2007. Defen- service fee to the garnish- debtors for the dants Charter One Bank Sky and Bank ment process. When debtors have insuffi- also filed judgment motions for on the satisfy cient funds to both the service fee pleadings. KeyBank Defendants Key- and garnishment order, and the the Banks ex- Corp a filed motion to dismiss. In their tract the fees from garnished service the motions, various the claimed, Banks inter funds releasing before alia, 1) the remainder of that the Garnishors lacked stand- the funds to the 2) Garnishors. ing; the Banks were not proper defen- dants; 3) § ORC 2716.12 unambiguously
The Garnishors filed a class action suit permits additional beyond dollar; fees one against the Banks1 the Court of Com- 4) and the Garnishors’ claims are preempt- mon Ohio, Pleas of Lucas County, ed federal banking KeyBank, law. 31, 2006, August alleging three causes of KeyCorp, Bank, Sky and the sole state against action First, the Banks. the defendant, bank additionally claimed that Garnishors claimed that fees service 5) the right Banks have a “set off’ charged by the Banks amount to addi- Banks, account-holder’s debt to the includ- tional beyond fees the one fees, service against the account-hold- dollar fee § authorized ORC 2716.12 er’s dеbt Garnishor. and section, therefore that violate caus- ing the Garnishors have lost at least On September the district $5,000,000. Second, 1) the Garnishors court that held the Garnishors had claimed that by deducting these service standing because inju- actual suffered fees, the illegally ries; 2) Banks were converting and the Garnishors met funds belonging pleading Garnishors for burden show their own use garnish- in violation of the should be defendants. The district court process ment prescribed by ORC dismissed the complaint Garnishors’ on the 2716.13(B) 2716.21(D). Third, 3) remaining grounds, concluding originally against Garnishors filed suit included as a defendant since did it not sub- However, Fifth Third Bank as well. Fifth garnished tract service fees from funds. The Third summary judg- filed motion for voluntarily Garnishors Fifth dismissed Third ment, arguing that it had erroneously been Bank as a defendant. by the Constitution and the United States meaning “contains plain § 2716.12’s ORC See prudential standing. doctrine of garnish additional limitation on no clear 490, 498-99, Seldin, v. Warth 4) Banking National charges”; ment (1975). 45 L.Ed.2d as to claims the Garnishors’ Act preempts banks; as to state national banks but Article III to establish In order off 5) right to set the Banks have suf “must standing, the Garnishors accounts before bank against fees injury due actual or threatened fered some to the Gar remaining funds remitting the defen illegal conduct of alleged to the Retail, Inc. v. Charter Monroe nishors. traceable’ dant; ‘fairly must injury N.A., Bank, F.Supp.2d 677 One action; there must challenged 2007). (N.D.Ohio court noted The district relief likelihood be a substantial Banking finding National that its prevent will redress or requested regulation of bank Act ex rel. Ohio injury.” Coyne plaintiffs Officer consistent was (6th Co., F.3d Am. Tobacco “ Currency’s interpreta Comptroller Cir.1999). succinctly, ‘irre Phrased *5 regulations. tion its own of for requirements ... ducible minimum’ fact, in causa injury of standing proof In timely appealed. The Garnishors tion, redressability.” Id. The Garnish- brief, with- the Garnishors reply their final by receiving garnishment ors claim had vio- that the Banks claim drew their by reduced have been funds that only Thus sub- § 2716.12. ORC lated fees, have the Garnishors Banks’ service before us is the appeal stantive issue an injuries. This actual loss suffered claim. conversion Garnishors’ by be redressed injury in fact that could eco the Garnishors for their compensating II. thus affirm See id. We nomic losses. court’s de a district We review finding that the Garnishors district court’s Wul standing de novo. See termination under Article standing have established 787, Co., Ins. 567 F.3d v. iger Life Mfrs. III. Cir.2009). appel (6th “Every federal 793 allege[] Garnishors] to ‘satis obligation [the “Once special has a late court fairly that is traceable jurisdiction, injury-in-fact its own fy only itself nоt Banks, Garnishors] actions of [the in a cause the lower courts also that of pru [they] met the ha[ve] are must review,’ though parties show even under Club Ita standing requirements.” v. Citi dential it.” Steel Co. prepared to concede 83, 95, Org., Inc. v. Charter Env’t, Sports lia Soccer & 523 U.S. zens a Better for (6th 286, (1998) Shelby, 470 F.3d 295 1003, Twp. 210 140 L.Ed.2d 118 S.Ct. Cir.2006). Maurer, 237, satisfy prudential In order to v. (quoting Mitchell 1) (1934)). claims must standing, the Garnishors’ L.Ed. 338 79 55 S.Ct. legal rights and inter “assert own thoroughly [their] was dis standing The issue 2) ests,” “generalized than a court, be more and neither the district by cussed 3) cases, “fall and, statutory in grievance,” Never appeal. the issue on party raised regulated by zone of interests given within theless, question cannot be “a merits Wuliger, 567 question.” in III id. the statute Article priority question,” over an (internal quotation citation and at we must F.3d at n. 118 S.Ct. omitted). as The Garnishors In order to marks addressing standing. begin by legal rights and interests own suit, must have serted their Garnishors bring gar- full amount receiving III required both Article standing as pursuant nished funds to lawfully obtained of the pleadings of the opposing party judgments. The fact that the service fees true, [are] taken as and ... the moving charged are initially to debtors not party does is nevertheless clearly entitled to negate the fact that their collection by judgment.” JPMorgan Bank, Chase N.A. rights affects the and interests of Winget, (6th Cir.2007) F.3d Furthermore, Garnishors. (internal the Gar- citation and quotation marks pled nishors particular grievance omitted). involv- There must be no material issue specific garnishment process un- of fact that prevent could judgment for the dertaken the Banks regards to moving party. Id. 582. “The standard debtors’ insufficient funds. of for review a judgment on the pleadings Lastly, the Garnishors have withdrawn is the same as that for a motion to dismiss claim, their statutory so requirement under Federal Rule of 12(b)(6).” Procedure is no longer applicable. The Garnishors EEOC v. J.H. Routh Co., Packing have demonstrated that they are “proper (6th F.3d Cir.2001). We thus proponents], and the action a proper vehi- review the Banks’ various motions for cle, to vindicate the rights asserted.” judgment Id. on the pleadings and motions to (internal citation quotation marks dismiss under same de novo standard. omitted). We thus find that the Garnish- Because the Garnishors have withdrawn ors have established prudential standing, their claim that the Banks violated ORC proceed and we to merits of their claims. 2716.12, only issue before us is whether the Garnishors’ conversion claim
III. can survive a motion for judgment on the We review de a novo district pleadings and a motion to dismiss.2 The grant court’s of judgment on the pleadings. Garnishors claim that the Banks have Hughlett See v. RomerSensky, 497 F.3d wrongfully converted to $25 per gar- $80 557, (6th Cir.2006). 561 grant We par to nishment their own use in violation of ty’s motion judgment for on the pleadings 2716.13(B)3 § ORC and ORC when “all well-pleaded allegations 2716.21(D).4 material § These regulations 2. The district court did not address the Gar- garnishee A pay personal shall the earnings request nishors' injunction, for an presumably owed judgment to the debtor or money the because it after dismissed the Garnishors' or credits, value of property the or other claims, injunction the awas moot issue. The personal than earnings, judgment of the Garnishors have not raised request their for garnishee's debtor possession or un- injunction appeal and have therefore garnishee's der the control at the time of JGR, waived the issue. Inc. v. Thomasville service of the of gаrnishment, order or so Indus., Inc., 529, Furniture (6th 550 F.3d 532 orders, much thereof as the court into Cir.2008). Even if had not waived the garnishee court. The discharged shall be issue, request injunction for an remains liability judgment to the debtor for moot because we affirm the dismissal of the money paid so and shall subjected not be Garnishors’ claims. beyond costs those garnish- caused ee's resistance of the against claims pertinent 3. The language in ORC garnishee. garnishee A judg- is liable to the 2716.13(B) § [garnishment] states: "The or- ment creditor money, for all property, and der shall property bind the in excess of four credits, personal earnings, than of the dollars, hundred personal other than earn- judgment debtor in garnishee's posses- ings, judgment of the possession debtor in the garnishee’s sion or under the control or for garnishee at the time of service.” personal earnings all garnish- due from the debtor, ee judgment to the whichever is 2716.21(D) text ORC provides: applicable, at garnishee the time the is 280 super regulatory (“OCC”), has banks, become including garnishees, banks, is has over visory power time “at the the Garnishors liable “incidental defining the regulations sued [garnishment] with is served garnishee may exercise bank a national 2716.21(D). powers” Garnish §ORC order.” See, e.g., Nati state interference. require without regulations these interpret ors N.C., Annui N.A. v. Variable onsBank be funds debtors’ relinquish 251, 256-58, 115 Co., 513 U.S. Ins. ty garnish for the fees deducting fore Life (1995). The 740 810, 130 L.Ed.2d the S.Ct. argue The Banks process. ment enti NBA is of the interpretation OCC’s because a claim not state do Garnishors deference: substantial tled to Act, 24 12 U.S.C. National them (“NBA”), permits give
(Seventh) should that courts It settled is any claim preempts construc- any reasonable charge wеight to great adopted contrary.5 regulatory statute of a tion the enforce- charged with agency pre against presumption Ordinarily, [OCC] statute. of that ment v. States See United applies. emption of bank- the enforcement with charged 1135, 146 89, 108, 120 S.Ct. Locke, U.S. 529 warrants extent that to an ing laws Fe Ele (2000); v. Santa Rice 69 L.Ed.2d respect principle of this invocation 230, 218, 67 S.Ct. U.S. 331 Corp., vator as conclusions deliberative [its] (1947). context In the 1447 1146, 91 L.Ed. laws. meaning of these however, Supreme banking, of national Ass’n, presump 479 U.S. Indus. v. Secs. that the has held Clarke Court L.Ed.2d apply. 403-04, does not 107 S.Ct. preemption against tion omitted) Bank, N.A., (citation Invest- (1987) (quoting Wachovia v. See Watters Camp, L.Ed.2d 389 401 U.S. Institute 1, 12, ment Co. L.Ed.2d 367 120 S.Ct. Locke, 626-27, 91 S.Ct. (2007); cases). nonpre-emp (“[A]n (1971), collecting ‘assumption’ regu the State when triggered tion is defined specifically The OCC has *7 been there has where an area lates in “incidental charge fees as ability to presence.”); federal history significant of pro- The OCC bank. of national power” N.A. County, Marion Barnett 7.4002(a) of 12 of of Title § mulgated 1103, 134 32, 116 Nelson, gives Regulations, Federal Code of (1996). L.Ed.2d im- “[a]uthority to explicit banks national 12 C.F.R. and fees.” charges pose to pursuant were created Banks The 7.4002(a). stipulated parties Both § The namely, the NBA. legislation, federal authority pursuant Banks have that the to “exer- banks national authorizes NBA contrac- charge regulation such federal as shall powers incidental ... all such cise They dis- customers. to their tual fees the business carry on necessary to the NBA’s however, as to whether (Seventh). agree, The § 24 banking.” 12 U.S.C. fees includes authority charge Currency grant Comptroller Officer banks, N.A.; national Chartеr One are and under section order with the served As bank. noted Sky a state Code. Bank was the Revised and 2716.13 or 2716.05 however, Huntington Banc argument, oral against both brought claims The Garnishors Sky Bank. There acquired has since shares district before the banks and national fore, are now national defendants of the all Bank; Huntington National The court. analysis. banks, not bifurcate we need and N.A.; N.A.; Bank, KeyBank JPMorgan Chase Bank; U.S. Bank City KeyCorp; National garnishment service for pro- NBA saves all state governing laws “rights cess and preempts the Garnishors’ conver- to collect debts” from preemption, or, as sion claim. contend, Banks merely laws governing the Banks’ rights to collect debts. Banks contend that the NBA per- text pertinent of the regulation mits them states: charge the Garnishors the service fees when State laws debtors have insufficient are not preempted. in funds accounts State laws satisfy the on the following subjects fees. According to the regulations, OCC’s a na- inconsistent with the deposit-taking tional bank is powers authorized to “charge national its banks and apply to customers charges fees, non-interest national banks to the extent that including deposit account charges.” only incidentally affect the exercise of Id. The argue language banks’ deposit-taking powers: permits them collect service fees from (1) Contracts; accounts, debtors’ if even the funds in the (2) Torts; subject accounts are to garnishment by the (3) law; Criminal Garnishors. In response, the Garnishors (4) Rights debts; to collect argue that their right to the pro- funds is (5) Acquisition and transfer of property; tected Ohio’s statute, see (6) . Taxation; §§ 2716.13(B), ORC 2716.21(D), and that (7) Zoning; Ohio lаw is explicitly exempt (8) preemption from Any and the Banks’ law the broad effect of which the authority under 12 OCC 7.4007(c)(4), C.F.R. determines to be incidental to the which exempts state deposit-taking laws operations governing the of national “rights to collect banks or debts” otherwise preemption. consistent with the powers Banks contend (a) that this set language out paragraph ex- of this empts only state section. laws governing the rights
Banks’ to collect debts from pre- 7.4007(c)(footnote C.F.R. omitted). emption, not the rights, Garnishors’ The Banks claim that this language argue further that any interpretation of clearly only refers to the Banks’ rights to Ohio debt collection law that would allow collect debts and thus that all other laws the Garnishors’ claim to proceed is governing rights debts, collect in- preempted by the NBA. cluding § 2716.13(B) ORC We find that the NBA does *8 preempt not § 2716.21(D), are preempted by the NBA. general state laws governing rights the In support of their opinion, the Banks entities, all just Banks, not to debts; collect solicited an opinion letter from the OCC in but we conclude that the spe- Garnishors’ interpreting whether “rights to collect cific conversion claim pursuant to the Ohio debts” involved service charged for is nevertheless the process. Assuming that preempted by the grant NBA’s of authori- the “rights to collect debts” referred to the ty to the Banks to charge and collect fees. rights, Banks’ the OCC declared that this exemption was not implicated by gar- the “Rights A. to Collect Debts” process nishment because the service fees The OCC has promulgated regula did not constitute “debts.” “This provision tions that save certain areas of state lаw [exempting ‘rights to collect debts’] is not general preemption by the NBA. The relevant to the current circumstances.... question first before us is Thus, whether the 7.4007(c)(4) C.F.R. pertains to debts is governing state law debt, the all not to a to right recover bank’s a the Banks’ governing laws for except right.” that pursue to bank uses the
means
Banks, well
debts,”
as
the
to
(Re-
“rights
collect
2007)
(Jan. 18,
Letter
Interp.
OCC
to
no case law
OCC, have cited
the
as
C) (“OCC Interp.
Br. Attach.
moving Defs.
fact,
the
both
In
proposition.
this
support
2007)”)
omit-
(emphasis
(Jan. 18,
Letter
the
simply that
argue
the OCC
and
Banks
whether
not address
ted).
did
OCC
is not
the Banks
to
owed
fee
regarding
all
laws
preempts
NBA
the
point—
misses
argument
This
debt.
debts.
rights to collect
right
it is their
claim
the Garnishors
not issued
letter was
opinion
The OCC
into
that falls
their debts
collect
rule-making.
comment
through notice
exemption.
un
аnalyzed
letters
Generally, opinion
lan-
specific
of whether the
Regardless
v.
Skidmore
See
deference.
Skidmore
der
7.4007(c)refers
sole-
of 12 C.F.R.
guage
Co., 323 U.S.
&
Swift
rights under
Banks’
to the
ly
(1944).
not
“[WJhile
89 L.Ed.
purport
NBA
does
nowhere
by reason
courts
upon the
controlling
all other
governing
laws
preempt state
interpretation
give
authority,” we
[its]
Indeed,
policy
behind
rights.
entities’
thorough
upon
“depending]
weight
law to
states
areas of
reserving these
consideration, the validi
in its
evident
ness
they are laws
precisely
consistency with
reasoning,
its
its
ty of
target banks.
that do
applicability
all
pronouncements,
later
earlier
69 Fed.
Operations,
Activities and
per
power
it
give
factors
those
2004).
(Jan. 13,
n. 60
1904, 1912 &
Reg.
Id.
to control.”
lacking
suade,
power
if
presumption
have taken
The Banks
level
higher
apply
urge
Banks
us
Their
illоgical extreme.
to an
preemption
letter, relying
OCC’s
of deference
only per-
exemption
suggestion
in Unit
comment
Court’s
Supreme
under state law
rights
to banks’
tains
as
Mead,
significant
that “as
States
ed
an inconsis-
create
would
debt collection
to Chev
pointing
inis
notice-and-comment
The Banks’
result:
and erroneous
tent
procedure
the want
authority,
ron
governed
would
debts
rights
collect
case, for we have
not decide
does
here
preempted,
not be
and would
by state law
def
for Chevron
reasons
found
sometimes
not be
themselves would
the Banks
administrative
no such
when
even
erence
en-
laws in
comply with state
required
af
none was
required and
formality was
to collect
others
rights of
forcing
230-31,
121 S.Ct.
forded.”
reading would
Banks’ narrow
debts.
(2001) (citing Nati
L.Ed.2d
inconsistent, as
either
language
render
256-57, 263,
N.C.,
U.S. at
onsBank of
It defies
above,
superfluous.
or
mentioned
810).
115 S.Ct.
without
to think that
sense
common
reservation,
would
however,
the NBA
case,
explicit
In this
creditors,
even
or
right
the OCC’s
reason to afford
preempt
us no
provided
*9
Indeed, un-
alone,
collect debts.
to collect
“rights
regarding
banks
interpretation
one but
First,
no
interpretation,
Banks’
deference.
der
higher
a
level
debts”
law
subject to tort
be
repre-
would
letter
banks
the OCC’s
not clear
it is
every other
applied
as
it
the law
because
because
the matter
opinion
its
sents
by the NBA.
be
entity would
the NBA
whether
addressed
never
inter-
narrow
the Banks’
reject
thus
oth-
governing
law
We
general state
preempts
ex-
letter
and the
Second,
OCC’s
pretation,
to collect debts.
rights
parties’
er
interpretation,
espouses
it
tent
opinion
is an
the letter
to the extent
find that the NBA
not preempt
does
gen-
ability to collect fees, as authorized
by
eral state
laws,
debt collection
including
§ 7.4002(a),
C.F.R.
and is thus preempted.
those regulating both banks’ and others’
The Banks also solicited the OCC’s opin-
rights to collect debts.
ion on this matter.
In its
opinion
same
letter,
the OCC declared that the service
B.
Authority
Banks’
Charge
Fees
fee for
garnishment
process was a
This finding, however, does not
“fee” within the meaning of 12 C.F.R.
end our inquiry. We must
examine
now
§ 7.4002 and therefore that
the Banks
whether
specific
Garnishors’
conver were authorized to collect
these fees.
sion
pursuant
claim
to Ohio’s garnishment
(Jan.
Interp.
OCC
2007).
Letter
18,
At-
is preempted. As mentioned
tendant to this authority to charge
is
fees
above,
laws,
including
govern
those
the authority and discretion to determine
ing “rights
debts,”
to collect
are only ex
the amount and method of charging those
empted from preemption “to the extent
fees. See 12
7.4002(b)(2)
§
C.F.R.
(“The
only incidentally affect the exer
establishment of non-interest charges and
cise of national banks’ deposit-taking pow
fees,
amounts,
and the
method
7.4002(c)(4).
ers.” 12
C.F.R.
The Su
calculating them are business decisions to
preme Court has held that
may
states
by
made
bank,
each
discretion,
its
“prevent or significantly interfere with the
according to sound banking judgment and
national bank’s exercise of
powers.”
its
safe and sound banking principles.”). By
Bank,
Barnett
33,
at
116 S.Ct.
preventing the banks from exacting a fee
1103. When state laws “significantly im
for processing
orders
pair the
exercise
authority, enumerated
through freezing
accounts,
the Ohio
or incidental
NBA,”
under the
the state
laws “significantly intеrfere”
laws
give
“must
way.” Watters, 550 U.S.
with this fundamental national bank func-
12,
legal the requires law that Ohio claim if nishors Accordingly, Id. Bank.” on the served the debtors’ funds in the to freeze charge the Banks to authorized are Banks the gar- of the service of the time at to accounts post similarly authorized fee and service law Ohio thus that order order nishment in whatever fee service the deducting ser- further from the that them argued prohibits determine, OCC the garnishment receiving the to col- fees after vice authorized consequently Banks the that the Banks has agree with process We if this order. fee even the service lect Banks the that the contention that the funds reducing Garnishors’ of effect the garnished “freeze” the immediately confirm further “We must receive: Garnishors as the simplistic overly section is is authorized accounts the that proce- of the to debit a number 7.4002 undertake first 24(Seventh) and section must to available prior funds are an accоunt what to assess fee dures garnishment Id. garnishor.” to the garnished. remitting funds be The persuasive. argument find this We interpretation Garnishors’ Thus accounts freeze banks that requirement 2716.13(B) and § allow ORC would garnishment receipt of a immediately upon interfere” 2716.21(D) “significantly § on national unduly burdensome is order ability collect Banks’ only with not in the order it mandates because banks fees, also with service their and set daily their carry out banks those which complete authority federal Banks’ account-manage account-balancing and accounts. and balance transactions consistently has OCC functions. ment there- at We F.3d Duryee, 270 See 7.4002(a) including as interpreted any interpretation find that fore in order to determine authorization would allow garnishment Ohio an account. fees to may post banks which is proceed claim the Garnishors’ No. Letter Interp. See, e.g., OCC of authori- grant NBA’s 2007); (May *2 at 2007 WL fees without collect the Banks to ty to 933, 2002 WL No. Letter Interp. OCC thus have The Garnishors interference. 2001). Like (August *4 which relief upon a claim to state failed con is proposition that this wise, we note 12(b)(6), Fed.R.Civ.P. See granted. can be grants state with Ohio sistent (c). may “items power decide banks certified, charged to or paid, accepted, Setoffs C. in its customer account indicated 1304.29(B). Rev.Code, § Ohio any order.” that even court found district were claims if the Garnishors’ interpretation sensi- OCC’s find the We claims should Garnishors’ preempted, complete Banks to permits as it ble the Banks because dismissed all be account-balancing tasks daily against fee the service off” to “set right undertake, as a both must banks releasing the funds before garnished specifically matter and operational Garnishors. the funds remainder to a responding context of is not neces of setoffs the issue Although accounts. on debtors’ notice served the district vacate holding, we sary to our stat- cite the Ohio Garnishors setoff the doctrine court’s invocation are liable garnishees ute, which states only applicable the doctrine of because order” of the “at the time 2716.21(D). Rely- debts. ORC garnishment.
In appellate briefs, their the Banks and parties, two each of whom under an inde- Garnishors all agree that the service fees pendent contract owes a definite amount to (Charter 18) “setoffs.” One’s Br. other, to set off their respective debts (“Charter One’s Assessment of Fees Is by way of mutual deduction.” Walter v. Setoff’); Not a 26) (Removing Def.’s Br. City Nat’l Bank Cleveland, 42 Ohio оf (“Plaintiffs’ arguments are based St.2d (1975). 330 N.E.2d premise flawed that the doctrine of ‘setoff doctrine of setoff only applies when banks applies.”); (KeyBank, N.A., and KeyCorp’s use customers’ funds to satisfy an “inde- 20) (“There Br. is a fundamental difference pendent contract” and external debt in the bank’s charging internal processing bank. Pruitt v. LGR Inc., Trucking, fees to its pursuant customers to its ac- Ohio App.3d 774 N.E.2d 277-78 count agreement, and the rules of tradi- (2002). contrast, By the dispute in this tional (PL’s setoff’); debitor/creditor Br. case centers on whether the Banks can 19) (“The Banks Concede Their Seizure of satisfy a customer’s service fee by reduc- Setoff’).7 Garnished Funds Is Not a same, internal account court, district without explaining its rea- amount before releasing the remaining soning, found to the contrary: “The par- funds to the Garnishors. We thus vacate ties addrеss this issue passingly, so this the district court’s characterization of ser- Court finds it sufficient that, to note in vice fees as setoffs. See id. (finding that of light long history practice of the and the principle of setoff did not apply be- the fact that legislature failed to ex- cause the debts were not based on inde- plicitly it, § exclude 2716.12 is not intend- pendent contracts). toed interfere with the common right law of setoff.” Retail, Monroe Inc., 624 IV.
F.Supp.2d at 683-84. The district court nevertheless found For dispositive: reasons, issue foregoing we affirm the “This grants Court dismissal [the Banks’] of the motions to Garnishors’ claim on the dismiss on ground the basis of the that the language of NBA preempts their con- section 2716.12 and preservation allegations. version of right [Banks’] to setoff.” Id. at 684-85. COLE, Judge, Circuit dissenting.
As defined the Ohio Su preme Court, the common right majority law concludes that the Nation- is “an extrajudicial setoff Act, al Bank self-help remedy (“NBA”), and the regulation general based on principles equity” promulgated under it that allows national “allows a apply bank to general deposits banks to collect fees for services, account a depositor against a depositor’s § C.F.R. 7.4002(a), matured preempt gar- Ohio’s debt.” Daugherty v. Cent. Trust Co. nishment 2716.13(B) ORC and Ohio, N.A., Ne. 2716.21(D). Ohio St.3d I disagree. The garnish- (1986). N.E.2d In words, ment law at is a issue law setoff “is that right which exists between applicability that only incidentally affects N.A., KeyBank, KeyCorp, Sky Bank fundamental difference charging bank’s were only argue defendants to before processing internal fees to pur- its customers district court that the rules of setoff apply. suant to agreement, its account and the rules N.A., KeyBank, and KeyCorp have since setoff”), traditional debitor/creditor changed position align Sky with that of longer is no a party. Therefore OCC, other defendants and (KeyBank, there longer any is no party arguing that the N.A., KeyCorp’s 20) ("There Br. is a doctrine of setoff apply. should *12 286 under and surveillance multiple audits on effect negligible banks, with national 21, 127 at Id. regimes.” oversight rival their business. ability perform
their the Thus, into the intrusion S.Ct. 1559. and the precedent Court Supreme Both in Watters — at issue banking of business regulation’s OCC the of language plain regulators] [by state audits “multiple pre- that suggest strongly clause savings re oversight rival under surveillance here. inappropriate emption than significant far more gimes”—was clearly law. precedent Ohio’s Supreme Court A. preemption against
weighs
on Barnett
relies
also
majority
The
Nelson,
several
County,
on
N.A.
rests
Marion
opinion
majority
The
of
finding
prohibited
of
a
at
support
there,
law issue
the state
claims
that it
but
cases
the
selling insurance
not discuss
from
banks
it does
but
most national
preemption,
25,
it ad-
U.S.
cases,
517
nor does
in the state.
those
towns
of
in small
substance
(1996)
237
1103,
decisions
Court
134 L.Ed.2d
29,
Supreme
116 S.Ct.
the two
dress
essence, that
relies.
says, in
principally
(“[T]he
Retail
Statute
State
Monroe
which
not
in Florida—
majority do
insurance
by
sell
the
cited
cannot
cases
banks
small town
here because
preemption
that
except
weigh
favor
unaffiliated
with
significant
more
affiliated
(ie.,
that is not
much
a bank
cases involved
bank
those
national
sell insur-
may
company)
holding
business
into
a bank
intrusions
However,
town.”).
resem-
little
feder-
that bear
in a small
ance
banks—intrusions
very
us. On
that
before
banks
gave
national
Ohio
to the
al statute
blаnce
(describ-
by Monroe
1103
28,
cited
hand,
116 S.Ct.
Id. at
cases
power.
753,
1916,
7,
similar
39 Stat.
Sept.
statutes
with state
the Act of
dealt
Retail
92,
pro-
held
which
amended,
both
12 U.S.C.
as
Ohio’s
may sell
preempted
national
to be
banks
not
certain
vides that
statutes
those
towns). Accordingly,
laws.
in small
banking
insurance
national
state statute
that
found
the Court
v. Wa
on Watters
relies
majority
“
accomplish-
an obstacle
as
‘st[ood]
21,
N.A.,
Bank,
U.S.
chovia
pur-
Federal Statute’s
one of the
ment’
(2007), in
1559, 167 L.Ed.2d
S.Ct.
Id.
preempted.
therefore
and was
poses,”
regulators
state
held that
the Court
Hines v.
(quoting
31, 116 S.Ct.
at
pow
visitorial
corporate
not exercise
could
Davidowitz,
61 S.Ct.
312 inspect
books
right
ers,
as
such
(1941)).
clarified:
The Court
L.Ed. 581
operating
banks’
records,
national
over
scope of
defining
pre-emptive
In
state conceded
subsidiai'ies.
pow-
granting
and regulations
statutes
over
powers
visitorial
state
preempts
NBA
banks,
past] cases
[our
to national
er
themselves,
claimed
national banks
normally Congress
view
take
of bank subsid
true
not
same was
forbid,
or
States
not want
would
were subsidiar
at issue
(specifically
iaries
of a
exercise
business).
significantly,
impair
Id.
mortgage-lending
in the
ies
granted.
explicitly
Congress
power
disa
The Court
States
deprive
not to
this is
say
To
NBA
that the
and held
greed
banks,
regulate national
power
pow
its visitorial
exercising
here)
(unlike
doing so does
where
regu
“[S]tate
subsidiaries:
over the
ers
with
significantly
or
prevent
the ‘business
interfere
interfere
cannot
lators
pow-
its
exercise
bank’s
or
national banks
subjecting
banking’
ers.
subsidiaries
operating
OCC-licensed
Id. at
added).
over *14 following “abandoned-proper the for deducting an stand cases first The above out in law non-discriminating issue state at fee,” the one like proposition: ty-turnover an inciden- would Court that has case, Luckett applicability the of present the not does the state national banks deemed on and effect course tal changed they which purpose for was cited the Luckett “frustrate[] preempted. be to law 358, MсClellan, U.S. at created,” 164 ago, months several were Court Supreme the on burden an undue “impose it no is S.Ct. no indication there is functions,” [their] of Clearing performance the v. Cuomo law. See good longer — or S.Ct. Luckett, at U.S. -, C., Ass’n, U.S. L.L. House the with interfere significantly or “prevent 2721-22, 174 L.Ed.2d Barnett, 517 powers,” of [their] exercise [ Luckett, ] to see I fail of (2009). light In preempt- not is 33, 116 S.Ct. garnish that Ohio’s fairly hold canwe how laws. banking by federal ed preempted. law is ment garnish- that Ohio’s In its conclusion in similar engaged Court Supreme of fact, rise to level does, in law ment in result the same reached analysis and for national burden significant such 347, 358, Chipman, McClellan ques- the central begs banks, majority (1896). In 41 L.Ed. 17 S.Ct. that the it states when tion a federal argued that case, bank a national “ ... with interfere^]’ ‘significantly law ac- banks to national allowed statute their sеrvice collect ability to Banks’ a debt of in satisfaction property cept real fact, it In that. disputes one No fees.” that forbade a state with interfere significantly just does to credi- property of transfers preferential fees—it to ability collect The Court insolvency. the eve tors on of the true But same was it. forbids stating: argument, rejected this McClellan, forbade national which in law in viola- receiving preferences in the statutes nothing] is from banks [There Luckett, considered, in Massachusetts, the law here state tion State retain- efficiency from banks impairs way national any which forbade which by the state. pur- claimed frustrates or funds banks abandoned No for which one created. they were real question for which pose —the how destroyed or answer—is persuasive no majority hаs of such banks function ability to banks’ on national exer- allowing banks a restriction hampered turning when estate, pro- charge take real account the power cise owner rightful funds garnished the same they so under over only do vided significantly or burden all an undue imposes which restrictions conditions ability to func- the banks’ are sub- interferes of the State citizens other banks. as national in their business arises tion limitations of which jected, one only examples not. Clearly it does law of the provisions are points majority which hardship insolvency seeks in case of which complete “to ability Banks’ creditors. between preferences forbid transactions” and to “balance their ac- ability to function that would justify pre- counts.” These hardships are if illusory: emption. Therefore, I respectfully dis- do banks not deduct a service fee sent. garnished funds, their concern about the
order in which deduct it disappears.
And the Banks’ inability to immediately
“freeze” the garnished accounts because
they “must first undertake a number of
procedures to assess what funds are avail- garnished” able is no for cause wor- UNITED STATES of America,
ry- one is challenging their right —no Plaintiff-Appellee, assess what funds available, *15 bears no relation to right to deduct some of garnished funds for them- Derrick ARCHIBALD, Defendant- selves. Appellant. plain
B. The language of No. savings 08-5703. weighs against clause preemption United States Court of Appeals, The Ohio garnishment fits within Sixth Circuit. explicit exception to preemption. See Argued: Oct. 2009. 7.4007(c). C.F.R. This savings clause lists a number of other areas of bodies Decided and Filed: Dec. that, state law in addition “rights debts,” collect are not preempted: con-
tracts, torts, criminal acquisition and
transfer property, taxation, and zoning.
All of these are laws of general applicabili-
ty that incidentally affect, but do not tar-
get, national banks. The garnishment law
at issue affects not only banks, banks, employers, any trustees — entity that might be subject garnish- to a
ment action. As the majority recognizes,
and for the reasons stated in majority’s
opinion, (and the banks’ opinion OCC
letter’s) argument that the savings clause
refers only rights banks’ to collect debts highly implausible.
C. Conclusion
For the foregoing reasons, I believe the
NBA does not preempt garnish- Ohio’s
ment law—a law applicability
that, judging by the Supreme ju- Court’s
risprudence, does not represent the kind
serious infringement on national banks’