Beneficial National Bank v. Anderson

Brief Fact Summary.

Plaintiff brought suit against defendants on the grounds that the bank violated the National Bank Act. Defendants motioned to remove the case to federal court, and Plaintiff motioned to remand the case back to Alabama state court. The district court denied Plaintiff’s motion. The appellate court reversed. The United State Supreme Court granted certiorari.

Synopsis of Rule of Law.

If Congress intended for a federal cause of action to preempt the state cause of action, then, under the complete preemption doctrine, the state law cause of action may be removed to a federal court, regardless whether the complaint references the federal law.

Facts.

Plaintiffs, twenty-six taxpayers, exchanged information regarding their expected tax refunds from short-term loans from Defendant, Beneficial National Bank. Thereafter, Plaintiffs initiated this action against Defendant, a national bank that is chartered under the National Bank Act, and two defendants in Alabama state court. Plaintiffs contend that their interest rates violated state usury laws. Plaintiffs complaint did not reference federal law. Nonetheless, all defendants removed the case to federal court on the grounds that the National Bank Act indicates the interest rates, which provided the applicable remedies available for the violations. Also, defendants assert the case is removable, pursuant to 28 U.S.C. § 1441. Plaintiffs motioned for a remand, but the court denied Plaintiff’s motion. Subsequently, the court certified the question of whether removal, in this case, is proper to the appellate court. The appellate court reversed the district court and held that the claim did not arise under federal law, pursuant to the well-pleaded complaint rule nor did the claim fall into the complete preemption doctrine exception. Thereafter, the United States Supreme Court granted certiorari to resolve the circuit split.

Issue.

When Congress intends for a federal cause of action to preempt the state cause of action, then, under the complete preemption doctrine, may the state law cause of action be removed to a federal court, regardless whether the complaint references the federal law?

Held.

Yes, if Congress intended for a federal cause of action to preempt the state cause of action, then, under the complete preemption doctrine, the state law cause of action may be removed to a federal court, regardless whether the complaint references the federal law.

Dissent.

The state law is invalid because the Congress intended that the federal law for ursury against a national bank preempted the state law. The court should have dismissed the case, not federalized and removed the claim.

Discussion.

If Congress intended for a federal cause of action to preempt the state cause of action, then, under the complete preemption doctrine, the state law cause of action may be removed to a federal court, regardless whether the complaint references the federal law.

Also, pursuant to the well-pleaded complaint rule, a cause of action arises under federal law when the plaintiff’s statement of the claim indicates that the claim is founded upon federal law, not based on an anticipated federal defense. Likewise, an exception to the general federal question claim occurs when there is a complete preemption. The complete preemption doctrine allows the court to remove the claim when Congress intends to preempt the state law by enacting a federal statutory regime that completely preempts the state cause of action. In this case, the Plaintiffs complaint is founded on Alabama law. Nonetheless, § 85-86 of the National Bank Act indicates acceptable interest rates, which are the elements for a usury cause of action, the statute of limitations, and remedies available such a violation. Also, case law indicates that Congress intended to preempt the National Bank Act to preempt contrary state ursury laws. Therefore, the case may be removed, and the appellate court’s holding is reversed.