Eleventh Circuit Holds Federal Law Preempts Florida's Check-Cashing Fee Restriction For Out-Of-State Banks

Preemption Check Cashing Deposit Products

On May 30, the U.S. Court of Appeals for the Eleventh Circuit held that with regard to out-of-state state banks, federal law preempts Florida’s prohibition on financial institutions settling checks for less than par value. Pereira v. Regions Bank, No. 13-10458, 2014 WL 2219166 (11th Cir. May 30, 2014). The ruling broadens a prior ruling that federal law preempts the same restriction with regard to national banks. Plaintiffs in this case filed suit on behalf of a putative class after the bank charged them a fee for cashing a check, claiming they received less than par value because of the bank’s fee. Florida law prohibits a financial institution from settling “any check drawn on it otherwise than at par.” The court explained that 12 U.S.C. 1831a(j) provides that the laws of a host state apply to any branch in the host state of an out-of-state state bank to the  same extent as such state laws apply to a branch in the host state of an out-of-state national bank. The court held that, based on 12 U.S.C. 1831a(j) and the court’s prior ruling regarding national bank preemption, the plaintiffs’ claims were clearly preempted. The court explained that assuming the relevant Florida law would prohibit Florida branches of out-of-state state banks from charging a fee to cash a check presented in person, that law would apply “to the same extent” that it applies to out-of-state national banks, and as such, is preempted.