Beneficial National Bank v. Anderson

Brief Fact Summary.

The defendants sued Beneficial National Bank for interest rates that violated state law, and sought to remove the case to federal court.

Synopsis of Rule of Law.

A state law claim can be removed to federal court if the complaint doesn’t reference federal law, if Congress intended for the federal cause of action to preempt the state cause of action.

Facts.

Twenty-six taxpayers exchanged their expected tax refunds for short-term loans form Beneficial National Bank (Beneficial). The plaintiffs sued Beneficial claiming that the interest rates violated state laws. The defendants moved the case to federal court although nothing in the state law referenced federal laws.

Issue.

Whether a state law claim can be removed to federal court if the complaint doesn’t reference federal law?

Held.

Yes. The judgment of the court of appeals is reversed and the claim may be removed. Case law makes it evident that federal law intended the act to preempt state law and provide a cause of action for claims against national banks.

Dissent.

(Scalia, J.) The proper remedy is dismissal because the state law is invalid. The interpretation that the claim somehow arises under federal law is incorrect.

Discussion.

Under 28 U.S.C. § 1441(b), a defendant may remove a case from state court to federal court if the claim arises under federal law. The well-pleaded complaint rule states that a claim arises under federal law if the plaintiff’s statement of the cause of action is grounded in federal law.