California Federal Court Holds National Bank Act Preempts State Law Claims Asserting National Bank Mislead Consumers by Failing to Make Material Disclosures

Recently, a California federal court held that the National Bank Act (NBA) preempts state laws purporting to require disclosure requirements on the bank's deposit-related activities. Robinson v. Bank of America, N.A., Case No. CV 11-03939-GHK JEM, 2011 WL 5870541 (C.D. Cal. Nov. 11, 2011).  In this case, the plaintiff was charged a fee for using a cash-access account, which can be avoided by going to a branch office to withdraw funds. The plaintiff alleged that the failure to disclose the ability to avoid the fee violated, among other things, California's Consumer Legal Remedies Act (CLRA) and unfair competition law (UCL). The defendant argued that the NBA preempts any claims alleging to regulate disclosures on deposit accounts, and the court agreed. The court also rejected the plaintiff's argument that state laws that require all businesses generally (as opposed to banks in particular) to refrain from misrepresentations and from fraudulent, unfair, or illegal behavior are not specific disclosure requirements preempted by the NBA. In support of its holding, the court cited the standard articulated by the U.S. Supreme Court in Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25 (1996) that a state may only regulate the activities of a national bank where doing so does not prevent or significantly interfere with the exercise by the national bank of its powers. As such, the court granted the motion for judgment on pleadings, and dismissed the case.