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Banking and Finance

US Supreme Court Denies Cert in Consumers’ UCL Challenge to Bank Fees Under Federal Law

 WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court today let stand a ruling by California’s highest court that Congress has not barred a state unfair competition law (UCL) consumer class action against Bank of America N.A. predicated on a violation of the federal Truth in Savings Act (TISA) (Bank of America, N.A. v. Harold C. Rose, et al., No. 13-662, U.S. Sup.) [ subscribers may access Supreme Court briefs for this case].

State Law Action

Harold Rose and other California residents who are deposit account holders with Bank of America filed a putative class action against the bank under the UCL, Business and Professions Code Section 17200, et seq., in the Los Angeles County Superior Court, alleging that Bank of America had engaged in unlawful and unfair business practices by increasing certain fees applicable to their deposit accounts without providing the disclosures required by TISA.

The Superior Court sustained Bank of America’s demurrer, finding that Congress’ 2001 repeal of the private cause of action in TISA “reflects an intent to absolutely bar a private cause of action” and that the UCL “could not be used to ‘plead around’” that “absolute bar.”  The California Second District Court of Appeal upheld the ruling, determining that TISA’s bar on private enforcement carried over to an attempt to borrow TISA’s provisions under the UCL.

Rose appealed to the California Supreme Court, which reversed, finding that Congress’ repeal of TISA’s private action provision did not provide an absolute bar to a UCL action.  The court said that by leaving in place TISA’s “savings clause,” Congress explicitly approved the enforcement of state laws “relating to the disclosure of yields payable or terms for accounts,” as long as the laws are consistent with TISA.  “The UCL is such a state law,” the court held.

‘Savings Clause’

Bank of America sought certiorari and presented the following question:  “When Congress has not authorized private enforcement of a federal statute and has foreclosed indirect enforcement, may a state law that borrows other statutes as predicates for liability be used to privately enforce that federal statute, based on a savings clause that permits States to enact their own laws relating to the specific subject of the federal legislation?”

The Supreme Court denied certiorari without comment.

The U.S. solicitor general, at the invitation of the court, had filed an amicus curiae brief urging denial of certiorari.  The government said the question presented was:  “Whether Congress has preempted private actions brought under California’s unfair competition law . . . to the extent liability is predicated on a violation of the Truth in Savings Act, Pub. L. No. 102-242, 105 Stat. 2334.”

The solicitor general said the answer to the question was no, as the California Supreme Court correctly held, so the petition should be denied.  The solicitor general further said the California Supreme Court’s decision, which held that the consumers are suing to enforce “the UCL’s restraints against unfair competition” and not “to enforce TISA,” does not conflict with any U.S. Supreme Court or federal circuit court decision and is interlocutory.


Kim M. Watterson of Reed Smith in Pittsburgh and Margaret M. Grignon of its Los Angeles office represent Bank of America.  Kenneth N. Russak of Frandzel, Robins, Bloom & Csato in Los Angeles represents CBA.  Henry H. Rossbacher of The Rossbacher Firm in Los Angeles represents Rose.

The United States is represented by Solicitor General Donald B. Verrilli Jr., Deputy Solicitor General Malcolm L. Stewart and Assistant to the Solicitor General Melissa Arbus Sherry of the Department of Justice in Washington and Meredith Fuchs, To-Quyen Truong, Nandan M. Joshi and Bradley Lipton of the Consumer Financial Protection Bureau in Washington.

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