Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-08-02162/USCOURTS-ca4-08-02162-0/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 

---

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

H&R BLOCK EASTERN ENTERPRISES, 

INCORPORATED,

Plaintiff-Appellant,

v.

SARAH BLOOM RASKIN, In her  No. 08-2162 official capacity as Commissioner

of the Division of Financial

Regulation of the Maryland

Department of Labor, Licensing

and Regulation,

Defendant-Appellee. 

H&R BLOCK EASTERN ENTERPRISES, 

INCORPORATED,

Plaintiff-Appellee,

v.

SARAH BLOOM RASKIN, In her  No. 08-2163 official capacity as Commissioner

of the Division of Financial

Regulation of the Maryland

Department of Labor, Licensing

and Regulation,

Defendant-Appellant. 

Appeals from the United States District Court

for the District of Maryland, at Baltimore.

Marvin J. Garbis, Senior District Judge.

(1:07-cv-01822-MJG)

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 1 of 11
Argued: October 29, 2009

Decided: January 15, 2010

Before MOTZ and KING, Circuit Judges, and

Anthony J. TRENGA, United States District Judge

for the Eastern District of Virginia, sitting by designation.

Vacated and remanded by published opinion. Judge King

wrote the opinion, in which Judge Motz and Judge Trenga

joined.

COUNSEL

ARGUED: Jerrold Joseph Ganzfried, HOWREY, LLP,

Washington, D.C., for Appellant/Cross-Appellee. Jonathan R.

Krasnoff, OFFICE OF THE ATTORNEY GENERAL OF

MARYLAND, Baltimore, Maryland, for Appellee/CrossAppellant. ON BRIEF: Matthew M. Neumeier, Gabriel A.

Crowson, HOWREY, LLP, Chicago, Illinois; William Murphy, Jr., Richard V. Falcon, THE MURPHY FIRM, Baltimore, Maryland, for Appellant/Cross-Appellee. Douglas F.

Gansler, Attorney General of Maryland, Baltimore, Maryland,

for Appellee/Cross-Appellant.

OPINION

KING, Circuit Judge:

In 2007, Plaintiff H&R Block Eastern Enterprises, Incorporated ("Block"), instituted a three-count civil action in the

District of Maryland, seeking declaratory and injunctive relief

with respect to enforcement of Maryland’s Credit Services

2 H&R BLOCK v. RASKIN

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 2 of 11
Businesses Act (the "CSBA"). See Md. Code Ann., Com. Law

§§ 14-1901 to -1916. More specifically, Block sought to bar

the Commissioner of the Division of Financial Regulation of

the Maryland Department of Labor, Licensing, and Regulation (the "Commissioner") from enforcing the CSBA against

Block. In cross-motions for partial summary judgment, Block

and the Commissioner each requested that the district court

assume the CSBA applies to Block and decide whether federal law preempts the CSBA as to Block. In disposing of these

motions, the district court assumed the applicability of the

CSBA and awarded partial summary judgment to each party,

ruling that certain of the CSBA’s provisions are preempted.

See H&R Block E. Enters., Inc. v. Turnbaugh, No. 1:07-cv01822 (D. Md. July 30, 2008) (the "Memorandum Decision").1

Both parties appeal from the district court’s Memorandum

Decision and subsequent judgment. Block contends that the

court erred by failing to declare the CSBA entirely preempted,

while the Commissioner maintains that the court erred in finding any portion of the CSBA preempted. Nevertheless, before

we can determine whether the CSBA is in any facet preempted, we must determine whether the district court erred in

not analyzing, as the first step in the preemption analysis,

whether the CSBA in fact applies to Block. As explained

below, we conclude that the court erred in that respect and

therefore vacate and remand.

I.

A.

Block, a Missouri corporation, is one of the largest taxservices providers in the United States. One of the products

Block offers is a "refund anticipation loan" (an "RAL"),

1Block commenced this action against Commissioner Charles Turnbaugh. Shortly thereafter, Sarah Bloom Raskin, the named appellee and

cross-appellant in this matter, replaced Turnbaugh as the Commissioner.

H&R BLOCK v. RASKIN 3

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 3 of 11
which is a short-term loan secured by a consumer’s anticipated tax refund. Although Block provides its customers with

loan application forms, any RALs flowing therefrom are actually made by HSBC Bank U.S.A., N.A. ("HSBC Bank").

After evaluating a Block customer’s loan application and

deciding to make an RAL, HSBC Bank forwards its loan disbursement check to Block, which then delivers the check to

the borrower.

Between 2005 and 2007, the Commissioner repeatedly

threatened to enforce the CSBA against Block and other tax

preparers, asserting that businesses "arranging RALs who

receive a fee either from the lender or the consumer must

[comply with the CSBA]." J.A. 51.2 Thus, on July 11, 2007,

Block filed its complaint in this matter (the "Complaint"),

seeking declaratory and injunctive relief with respect to the

Commissioner’s view of the CSBA. In Count I of the Complaint (the "Coverage Count"), Block alleged, and requested

the court to declare, that Block is not a "credit services business" under the CSBA, thereby precluding application of the

CSBA to Block.3 In the alternative, Block alleged in Counts

II and III (collectively, the "Preemption Counts") that the

National Bank Act, in conjunction with the regulations pro2Citations herein to "J.A. ___" refer to the contents of the Joint Appendix filed by the parties in this appeal. 

3The CSBA, by its terms, applies to a "credit services business," which

is defined therein as 

any person who, with respect to the extension of credit by others,

sells, provides, or performs, or represents that such person can or

will sell, provide, or perform, any of the following services in

return for the payment of money or other valuable consideration:

(i) Improving a consumer’s credit record, history, or rating

or establishing a new credit file or record; 

(ii) Obtaining an extension of credit for a consumer; or 

(iii) Providing advice or assistance to a consumer with regard

to either subparagraph (i) or (ii) of this paragraph. 

Md. Code Ann., Com. Law § 14-1901(e)(1). 

4 H&R BLOCK v. RASKIN

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 4 of 11
mulgated thereunder (collectively, the "NBA"), preempts the

CSBA from being applied to Block.4 Block thus requested

that the court enter a declaratory judgment and enjoin the

Commissioner from enforcing the CSBA against it.5

On April 25, 2008, Block moved for partial summary judgment, seeking such relief on the Preemption Counts only. In

its supporting memorandum, Block requested that the district

court "assume, arguendo, that Block is a ‘credit services business’ under the [CSBA] and that the statute applies to [RALs]

. . . that Block customers obtain from HSBC Bank." J.A. 172.

Block specified, however, that it did not "concede that it is a

‘credit services business’" and that it reserved "the right to

prove that it is not subject to the CSBA" in the event the court

rejected its motion. Id. On May 30, 2008, the Commissioner

filed a cross-motion for partial summary judgment on the Preemption Counts and also posited that the court could "assume,

arguendo, that Block meets the definition of a credit services

business." Id. at 336. The Commissioner’s cross-motion

sought a judgment to the effect that the NBA does not preempt the CSBA.

B.

On July 30, 2008, after conducting oral argument on the

cross-motions, the district court filed its Memorandum Decision, which assessed only the Preemption Counts. The court,

acting on the parties’ suggestion that it assume that the CSBA

4The NBA, codified at 12 U.S.C. §§ 1 et seq., vests in nationally chartered banks enumerated powers and "all such incidental powers as shall be

necessary to carry on the business of banking." 12 U.S.C. § 24 Seventh.

5

In the Complaint, Block alleges federal question jurisdiction under

§ 1331 of Title 28, which grants a district court "original jurisdiction of all

civil actions arising under the Constitution, laws, or treaties of the United

States." Because Block sought, inter alia, injunctive relief on the basis of

preemption, its Complaint presents a federal question which the federal

courts have jurisdiction to resolve. See Verizon Md. Inc. v. Pub. Serv.

Comm’n of Md., 535 U.S. 635, 642 (2002). 

H&R BLOCK v. RASKIN 5

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 5 of 11
applies to Block, awarded limited summary judgment relief to

each party. More specifically, the court concluded that the

NBA preempts three of the CSBA’s consumer-protection provisions, awarding partial summary judgment to Block with

respect to those provisions. The court further concluded, however, that none of the CSBA’s remaining provisions were preempted by the NBA and otherwise awarded partial summary

judgment to the Commissioner on the Preemption Counts.

The Memorandum Decision did not address the Coverage

Count, nor did it assess the issue of whether the CSBA applies

to Block, instead accepting the parties’ assumption of such

applicability. In that respect, the Memorandum Decision simply recited that, "[f]or purposes of the instant motions, the

parties agree that the Court should assume that Block is a

‘Credit Services Business’ as that term is defined in . . . the

CSBA." Memorandum Decision 4.

Thereafter, on August 28, 2008, the parties jointly filed a

Stipulation of Dismissal, pursuant to Federal Rule of Civil

Procedure 41(a)(1)(A)(i), with respect to the Coverage Count.6

The parties further requested therein that the district court

enter final judgment pursuant to Rule 58(d). As in its supporting memorandum, however, Block reserved in the Stipulation

of Dismissal "all its rights to bring an action seeking relief

similar to that sought in [the Coverage Count] in Maryland

state court with respect to the applicability of the Maryland

[CSBA]." H&R Block E. Enters., Inc. v. Turnbaugh, No.

1:07-cv-01822 (D. Md. Aug. 28, 2008) (Docket No. 28). On

September 3, 2008, the court, acting on the Stipulation of Dismissal, dismissed the Coverage Count without prejudice and

entered final judgment on the Preemption Counts in accordance with its Memorandum Decision. 

Two separate appeals resulted from the district court’s

Memorandum Decision. First, Block appealed from the judg6For whatever reason, the parties chose not to include the Stipulation of

Dismissal in the Joint Appendix filed in this appeal. 

6 H&R BLOCK v. RASKIN

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 6 of 11
ment to the extent that its motion for partial summary judgment on the Preemption Counts was denied. Second, the

Commissioner cross-appealed the court’s ruling with respect

to the provisions of the CSBA that the court deemed to be

preempted by the NBA. We possess jurisdiction pursuant to

28 U.S.C. § 1291.7

II.

We review de novo a district court’s award of summary

judgment. See PCS Phosphate Co. v. Norfolk S. Corp., 559

F.3d 212, 217 (4th Cir. 2009). We also review de novo an

issue of subject matter jurisdiction, see Lontz v. Tharp, 413

F.3d 435, 439 (4th Cir. 2005), regardless of whether the district court analyzed the issue, see Friedman’s Inc. v. Dunlap,

290 F.3d 191, 197 (4th Cir. 2002) ("[W]hether we are presented with a live case or controversy is a question we may

raise sua sponte . . . .").

III.

In addressing these appeals, we must first determine

whether the district court erred by not determining, as the first

step in its preemption analysis, whether the CSBA applies to

Block. Because we conclude that the court so erred, we vacate

and remand without further addressing the propriety of the

court’s preemption rulings, so that the district court can

7On appeal, neither party initially addressed whether the CSBA applies

to Block or whether the district court’s assumption of applicability rendered its Memorandum Decision advisory. As a result, we alerted the parties to expect questions at oral argument relating to, inter alia, subject

matter jurisdiction. In particular, we advised the parties to be prepared to

address the implications of the Stipulation of Dismissal, including whether

the parties were effectively seeking an advisory opinion and whether we

have subject matter jurisdiction. After oral argument, we requested and

received supplemental briefing on these issues, in which the parties primarily focused on whether Block possessed Article III standing to challenge the CSBA. 

H&R BLOCK v. RASKIN 7

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 7 of 11
decide in the first instance whether Block is a "credit services

business" under the CSBA. 

A.

The heart of Block’s Complaint is that, by virtue of the

Supremacy Clause of the Constitution, the NBA preempts the

CSBA as applied to Block.8 Federal law may preempt state

law in three ways, denominated as express preemption, field

preemption, and conflict preemption. See College Loan Corp.

v. SLM Corp., 396 F.3d 588, 595–96 (4th Cir. 2005). For its

contention that the NBA preempts the CSBA, Block invokes

the doctrine of conflict preemption, "which occurs when a

state law actually conflicts with federal law." Anderson v.

Sara Lee Corp., 508 F.3d 181, 191 (4th Cir. 2007) (internal

quotation marks omitted).9

Assessing a conflict preemption claim requires "a two-step

process of first ascertaining the construction of the two statutes and then determining the constitutional question [of]

whether they are in conflict." Chi. & N. W. Transp. Co. v.

Kalo Brick & Tile Co., 450 U.S. 311, 317 (1981) (internal

quotation marks omitted). In making this determination, a

court "should not seek out conflicts . . . where none clearly

exists." College Loan Corp., 396 F.3d at 598 (internal quotation marks and alteration omitted). Rather, the state statute

must clearly "stand[] as an obstacle to the accomplishment

and execution of the full purposes and objectives of Congress." Chi. & N. W. Transp. Co., 450 U.S. at 317. Thus, it

8The Supremacy Clause renders the Constitution and laws of the United

States "the supreme Law of the Land . . . any Thing in the Constitution

or Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI,

cl. 2. 

9

In contrast to conflict preemption, express preemption occurs "when

Congress has clearly expressed an intention to [preempt state law]," and

field preemption takes place "when Congress has clearly intended, by legislating comprehensively, to occupy an entire field of regulation." College

Loan Corp., 396 F.3d at 595–96. 

8 H&R BLOCK v. RASKIN

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 8 of 11
is settled that a federal court, before ruling that a federal law

preempts a state statute, must determine that the state statute

(here, the CSBA) stands as an obstacle to the objectives of the

federal law (here, the NBA). See United States v. Onslow

County Bd. of Educ., 728 F.2d 628, 635 (4th Cir. 1984). 

B.

In order to properly dispose of the Preemption Counts, the

district court was obligated to first assess whether the CSBA

actually applies to Block. After all, if the CSBA is not applicable, its consumer-protection provisions cannot stand as an

obstacle to what are, according to Block, federally authorized

practices under the NBA.10 To conclude that the NBA preempts certain of the CSBA’s provisions, as applied to Block,

without first assessing whether the CSBA actually applies to

Block, amounts to "seek[ing] out conflicts . . . where none

clearly exists." College Loan Corp., 396 F.3d at 598. The

CSBA’s applicability was thus an essential element of each of

the Preemption Counts, irrespective of whether the parties

ultimately stipulated to the Coverage Count’s dismissal.11

10The district court was not bound by the parties’ suggestion that it

should assume that the CSBA applies to Block, because a court is not

required "to accept what in effect [is] a stipulation on a question of law."

U.S. Nat’l Bank of Or. v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439,

448 (1993); see also T I Fed. Credit Union v. DelBonis, 72 F.3d 921, 928

(1st Cir. 1995) ("Issues of law are the province of courts, not of parties to

a lawsuit . . . ."). 

11Block maintains that our decision in Jimenez v. BP Oil, Inc., supports

its contention that the district court appropriately assessed the Preemption

Counts without first determining whether the CSBA applies to Block. See

853 F.2d 268 (4th Cir. 1988). Although in Jimenez we assumed the applicability of a Maryland statute and proceeded directly to the parties’ preemption claims, the defendant there asserted a facial preemption challenge

— predicated on field preemption — to the state statute. See id. at 272.

Block, on the other hand, asserts an "as applied," conflict preemption challenge to the CSBA. The district court, of course, could not conclude that

federal law preempts the CSBA, as applied to Block, without first determining whether the CSBA actually applies to Block. We thus find Block’s

reliance on Jiminez unpersuasive. 

H&R BLOCK v. RASKIN 9

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 9 of 11
In asking the district court to proceed directly to the conflict analysis, without first independently determining whether

the CSBA actually applies to Block, the parties were effectively seeking an advisory opinion. Had the court ruled

against Block on the Preemption Counts by determining that

the NBA does not in any respect preempt the CSBA, Block

could then proceed to state court — as it reserved the right to

do — and further litigate its contention (made in the Coverage

Count) that the CSBA is wholly inapplicable to it. Indeed,

even in the current posture of this litigation, nothing precludes

Block from taking such an approach.12 Thus, the court’s ruling

on the Preemption Counts, as set forth in its Memorandum

Decision, was neither "binding" nor "conclusive" on Block,

rendering its opinion advisory. See Chi. & S. Air Lines, Inc.

v. Waterman S.S. Corp., 333 U.S. 103, 114 (1948). 

The court need not have rendered such an advisory opinion,

however, because the CSBA’s applicability remains an unresolved and essential legal issue in deciding the Preemption

Counts. Thus, the court could have — indeed, it should have

— issued a binding and conclusive ruling by first determining

whether the CSBA applies to Block. Because the court failed

to do so, we must vacate the judgment and remand for a determination of whether Block is a "credit services business"

under the CSBA.13 If the court concludes that the CSBA

applies to Block, it may then complete its assessment of the

Preemption Counts.

12Emphasizing the unconventional nature of such an approach, the Stipulation of Dismissal of the Coverage Count would potentially make a

Maryland state court a de facto appeals court for Block. 

13The question of whether Block qualifies as a credit services business

may well be predicated, at least in part, on factual and legal determinations

best examined in the first instance by the district court. See Caspary v. La.

Land & Exploration Co., 707 F.2d 785, 788 n.5 (4th Cir. 1983) ("In determining state law . . . where there is no clear precedent, courts of appeal

are disposed to accord substantial deference to the opinion of a federal district judge because of his [or her] familiarity with the state law which must

be applied."). 

10 H&R BLOCK v. RASKIN

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 10 of 11
IV.

Pursuant to the foregoing, we vacate the judgment of the

district court and remand for such other and further proceedings as may be appropriate.

VACATED AND REMANDED

H&R BLOCK v. RASKIN 11

Appeal: 08-2162 Doc: 53 Filed: 01/15/2010 Pg: 11 of 11