Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-15611/USCOURTS-ca9-13-15611-0/pdf.json

Parties Involved:
American Bankers Management Company, Inc.
Appellee
Bank of America Corporation
Appellee
Capital One Bank (USA), N.A.
Appellee
Capital One Services, LLC
Appellee
Chase Bank USA, N.A.
Appellee
Citibank, N.A.
Appellee
Citigroup, Inc.
Appellee
DFS Services, L.L.C.
Appellee
Department Stores National Bank
Appellee
Discover Bank
Appellee
Discover Financial Services, Inc.
Appellee
Doe
Appellee
FIA Card Services, N.A.
Appellee
HSBC Bank Nevada, N.A.
Appellee
HSBC Card Services, Inc.
Appellee
JPMorgan Chase & Co.
Appellee
State of Hawaii
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

STATE OF HAWAII, ex rel. David M.

Louie, Attorney General,

Plaintiff-Appellant,

v.

HSBC BANK NEVADA, N.A.,

Defendant in 1:12-cv-00266-LEKKSC; HSBC CARD SERVICES, INC.,

Defendant in 1:12-cv-00266-LEKKSC; CAPITAL ONE BANK (USA),

N.A., Defendant in 1:12-cv-00268-

LEK-KSC; CAPITAL ONE SERVICES,

LLC, Defendant in 1:12-cv-00268-

LEK-KSC; CITIGROUP, INC.,

Defendant in 1:12-cv-00271-LEKKSC; CITIBANK, N.A., Defendant in

1:12-cv-00271-LEK-KSC;

DEPARTMENT STORES NATIONAL

BANK, Defendant in 1:12-cv-00271-

LEK-KSC; DOE, 1-20,

Defendants-Appellees.

No. 13-15611

D.C. No.

1:12-cv-00263-

LEK-KSC

OPINION

Appeal from the United States District Court

for the District of Hawaii

Leslie E. Kobayashi, District Judge, Presiding

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2 STATE OF HAWAII V. HSBC BANK NEVADA

Argued and Submitted

June 10, 2014—Honolulu, Hawaii

Filed August 1, 2014

Before: William A. Fletcher, Sandra S. Ikuta,

 and Andrew D. Hurwitz, Circuit Judges.

Opinion by Judge Hurwitz

SUMMARY*

National Bank Act / Preemption

Reversing the district court’s denial of a motion for a

remand to state court, the panel held that neither the federal

question statute nor the Class Action Fairness Act provided

the district court with subject matter jurisdiction over the

Hawaii Attorney General’s complaints against six credit card

providers, alleging that each violated state law by deceptively

marketing and improperly enrolling cardholders in add-on

credit card products.

Joining the Fifth Circuit, the panel held that the Attorney

General’s claims were not preempted by National Bank Act

provisions completely preempting state law claims

challenging interest rates charged by national banks. The

panel held that the district court did not err by relying on

declarations submitted by the card providers describing their

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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STATE OF HAWAII V. HSBC BANK NEVADA 3

payment protection plans. The panel declined to decide

whether payment protection plan fees are interest on a loan

under NBA § 85, rather than charges for an independent

service, because the complaints did not allege that the card

providers charged excessive interest rates. The panel held

that NBA §§ 85 and 86 do not preempt only claims that

explicitly invoke a state usury law. Nonetheless, the

complaints’ state law claims were not preempted because

they did not challenge the “rate of interest” that the card

providers charged. Instead, the state law claims were

independent of §§ 85 and 86; the complaints’ unfair and

deceptive practice claims targeted alleged marketing

misrepresentations, and their unjust enrichment claims arose

from the purported failure to obtain consent before enrolling

consumers in debt protection products.

Agreeing with the Second, Third, and Fourth Circuits, the

panel held that CAFA did not provide an alternate basis for

jurisdiction because the Attorney General brought civil

enforcement actions or common law parens patriae suits,

rather than class actions, and the complaints specifically

disclaimed class status.

COUNSEL

Laura J. Baughman, J. Burton LeBlanc, IV, and Sherri Ann

Saucer (argued), Baron & Budd, P.C., Dallas, Texas; Richard

Golomb and Kenneth J. Grunfeld, Golomb & Honik, P.C.,

Philadelphia, Pennsylvania; L. Richard Fried, Jr. and Patrick

F. McTernan, Cronin, Fried, Sekiya, Kekina & Fairbanks,

Honolulu, Hawaii, for Plaintiff-Appellant.

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4 STATE OF HAWAII V. HSBC BANK NEVADA

Michael C. Bird, Summer H.M. Fergerstrom, and Tracey

Lynn Kubota, Watanabe Ing LLP, Honolulu, Hawaii; Julia B.

Strickland, David W. Moon, and Jason Sung-Hyuk Yoo,

Stroock & Stroock & Lavan LLP, Los Angeles, California,

for Defendants-Appellees HSBC Bank Nevada, N.A. and

HSBC Card Services, Inc.

James F. McCabe (argued) and James R. McGuire, Morrison

& Foerster LLP, San Francisco, California; Margery S.

Bronster and Andrew L. Pepper, Bronster Hoshibata,

Honolulu, Hawaii, for Defendants-Appellees Capital One

Bank (USA), N.A. and Capital One Services, LLC.

Michael Purpura and Michael J. Scanlon, Carlsmith Ball

LLP, Honolulu, Hawaii; Noah A. Levine and Robert W.

Trenchard, Wilmer Cutler PickeringHale and Dorr LLP, New

York, New York, for Defendants-Appellees Citigroup Inc.,

Citibank, N.A., and Department Stores National Bank.

OPINION

HURWITZ, Circuit Judge:

The Hawaii Attorney General filed complaints in state

court against six credit card providers, alleging that each

violated state law by deceptively marketing and improperly

enrolling cardholders in add-on credit card products. The

card providers removed the cases to federal court, and the

Attorney General moved to remand. The district court

concluded that the Class Action Fairness Act of 2005

(CAFA), 28 U.S.C. § 1332(d), did not afford a basis for

federal jurisdiction. The court, however, found at least one

of the Attorney General’s claims against each provider

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STATE OF HAWAII V. HSBC BANK NEVADA 5

completely preempted by section 30 of the National Bank Act

of 1864, 12 U.S.C. §§ 85–86. The court thus held that it had

jurisdiction over the completely preempted claims under the

federal question statute, 28 U.S.C. § 1331, and elected to

exercise jurisdiction over the remaining claims under the

supplemental jurisdiction statute, 28 U.S.C. § 1367.

We hold that neither the federal question statute nor

CAFA provides the district court with subject matter

jurisdiction. We therefore reverse with instructions to

remand the actions to state court.

I. Background

A.

In April 2012, the Hawaii Attorney General filed

complaints in state court against six financial institutions—JP

Morgan Chase & Co. and Chase Bank USA, N.A.

(collectively, the “Chase defendants”); HSBC Bank Nevada,

N.A. and HSBC Card Services, Inc. (collectively, the “HSBC

defendants”); Capital One Bank (USA),N.A. and Capital One

Services, LLC (collectively, the “Capital One defendants”);

Discover Financial Services, Inc., Discover Bank, DFS

Services, L.L.C., and American Bankers Management

Company, Inc. (collectively, the “Discover defendants”);

Bank of America Corporation and FIA Card Services, N.A.

(collectively, the “Bank of America defendants”); and

Citigroup Inc., Citibank, N.A., and Department Stores

National Bank (collectively, the “Citigroup defendants”). 

Discover Bank is a federally insured, state-chartered bank;

the other defendant banks are nationally chartered.

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6 STATE OF HAWAII V. HSBC BANK NEVADA

The complaints, identical as relevant to this appeal,

alleged that the defendants deceptivelymarketed and enrolled

Hawaii cardholders in various debt protection products. 

These products include payment protection plans, extended

warranties for purchased items, identitytheft protection plans,

stolen card protection, credit score tracking, and payment

warranties.

The complaints primarily targeted the payment protection

plans. These plans suspend or cancel all or part of a

cardholder’s obligation to repay an outstanding credit card

balance, limit interest charges, or waive late fees upon a

qualifying event, such as disability, death, or unemployment. 

A cardholder purchases a payment protection plan by paying

the provider a percentage of the outstanding monthly card

balance.

The complaints alleged that the providers: (1) enrolled

cardholders in protection plans without their consent; (2)

enrolled cardholders who do not qualify for protection plan

benefits; (3) confused plan purchasers with deceptive

marketing, contract language, and billing; and (4) targeted

“vulnerable” populations, including subprime borrowers and

the elderly.

The complaints asserted three state law causes of action. 

Count I alleged that the credit card providers violated sections

“480-1 et seq.” of the Hawaii Revised Statutes. Although not

limited to violations of the Uniform Deceptive Trade

Practices Act, Haw. Rev. Stat. ch. 481A, the complaints

specifically averred that defendants engaged in “deceptive

trade practices” forbidden by that statute. See Haw. Rev.

Stat. § 480-2 (declaring “unfair or deceptive acts or practices

in the conduct of any trade or commerce . . . unlawful”); id.

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STATE OF HAWAII V. HSBC BANK NEVADA 7

§ 481A-3(a)(2), (5), (9), (12) (listing deceptive trade

practices). Count II contended that the card providers

violated section 480-13.5 of the Hawaii Revised Statutes,

which imposes a penalty of up to $10,000 for each deceptive

act that is “directed toward, targets, or injures” an elderly

person. Count III alleged unjust enrichment because Hawaii

consumers “unknowingly pa[id] unauthorized or otherwise

improper charges to Defendants.”

The complaints requested declaratory and injunctive

relief, civil penalties, disgorgement, restitution, attorneys’

fees, interest, and “other relief as provided by law.” The

actions were “brought by the State of Hawaii in its sovereign

capacity . . . on behalf of the State and its citizens,” as

authorized by sections 480-2(d) and 661-10 of the Hawaii

Revised Statutes, and also under the State’s “parens patriae

authority.” In each complaint, the Attorney General

explicitly disavowed that he filed a class action and

disclaimed “any such claims that would support removal on

the basis of diversity, Class Action Fairness Act of 2005

(28 U.S.C. §§ 1332(d), 1453, 1711–1715), federal question

jurisdiction, or any other basis.”

B.

The defendants filed notices of removal in the district

court, invoking §§ 1331, 1332(d)(2), and 1367 as the bases

for federal jurisdiction. The Attorney General moved to

remand each case.

The district court denied the motions to remand. The

court first held that CAFA did not afford it jurisdiction. The

district court acknowledged that in order to recover damages

on behalf of consumers, subsection 480-14(b) of the Hawaii

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8 STATE OF HAWAII V. HSBC BANK NEVADA

Revised Statues likely requires the Attorney General to bring

a class action.1 Hawaii ex rel. Louie v. JP Morgan Chase &

Co., 907 F. Supp. 2d 1188, 1204 (D. Haw. 2012). Relying on

Washington v. Chimei Innolux Corp., 659 F.3d 842 (9th Cir.

2011), however, the district judge held that CAFA requires

that a plaintiff “actually invoke” a class action rule or

“otherwise label the case a ‘class action.’” Louie, 907

F. Supp. 2d at 1205. Because the complaints expressly

disclaimed class status, invoking instead only common law

parens patriae and section 661-10 civil enforcement

authority, the district court concluded that it lacked CAFA

jurisdiction. Id. at 1206–07.

But, the district court held that it had jurisdiction over at

least one of the claims in each complaint under the complete

preemption doctrine. The district court reasoned that by

alleging the card providers had charged “significant fees” for

“minimal benefits” and had “increased profits by substantial

sums,” the Attorney General implicitly challenged the “rate

of interest” on outstanding credit card balances. Id. at

1210–12. Because the National Bank Act completely

preempts state laws regulating the interest rates charged by

 

1

 Subsection 480-14(b) states:

The attorney general of the State shall be authorized to

bring a class action for indirect purchasers asserting

claims under this chapter. The attorney general or the

director of the office of consumer protection may bring

a class action on behalf of consumers based on unfair or

deceptive acts or practices declared unlawful by section

480-2. Actions brought under this subsection shall be

brought as parens patriae on behalf of natural persons

residing in the State to secure threefold damages for

injuries sustained by the natural persons to their

property by reason of any violation of this chapter.

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STATE OF HAWAII V. HSBC BANK NEVADA 9

nationally chartered banks, Beneficial Nat’l Bank v.

Anderson, 539 U.S. 1, 10–11 (2003), the district court held

that it had jurisdiction over “at least some” of the claims

against the national defendants, and elected to exercise

supplemental jurisdiction over all other claims. Louie, 907

F. Supp. 2d at 1212–13.

The AttorneyGeneral sought leave to file an interlocutory

appeal pursuant to 28 U.S.C § 1292(b), raising two questions:

(1) “Do the fees charged for the payment protection plans and

other ancillary services constitute ‘interest’ under the

National Bank Act?” (2) “Can the Attorney General’s

allegations only be characterized as a usury claim challenging

the rate or amount of interest . . . ?” The district court

certified both questions, Hawaii ex rel. Louie v. JP Morgan

Chase & Co., 921 F. Supp. 2d 1059 (D. Haw. 2013), we

granted permission to appeal, and the Attorney General

timely perfected the appeal.2

II. Standard of Review

“We review de novo a district court’s denial of a motion

to remand to state court for lack of federal subject matter

jurisdiction.” Chapman v. Deutsche Bank Nat’l Trust Co.,

651 F.3d 1039, 1043 (9th Cir. 2011) (per curiam). Removal

and subject matter jurisdiction statutes are “strictly

construed,” and a “defendant seeking removal has the burden

2 The district court also held that section 521 of the Depository

Institutions Deregulation and Monetary Control Act of 1980, 12 U.S.C.

§ 1831d, completely preempted at least some of the claims against the

state-chartered Discover defendants. The Discover defendants settled

while this appeal was pending (as did the Chase and Bank of America

defendants). Because the remaining defendant banks are nationally

chartered, the preemptive effect of the 1980 act is no longer at issue.

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10 STATE OF HAWAII V. HSBC BANK NEVADA

to establish that removal is proper and any doubt is resolved

against removability.” Luther v. Countrywide Home Loans

Servicing LP, 533 F.3d 1031, 1034 (9th Cir. 2008).

III. Complete Preemption

The general removal statute, 28 U.S.C. § 1441(a), grants

district courts jurisdiction over state court actions that

originally could have been brought in federal court. Section

1331 provides district courts original jurisdiction over “civil

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

United States.”

Under the canonical well-pleaded complaint rule, “a suit

‘arises under’ federal law for 28 U.S.C. § 1331 purposes

‘only when the plaintiff’s statement of his own cause of

action shows that it is based upon federal law.’” Vaden v.

Discover Bank, 556 U.S. 49, 60 (2009) (alteration omitted)

(quoting Louisville &Nashville R.R. Co. v. Mottley, 211 U.S.

149, 152 (1908)). Notwithstanding this rule, when a federal

statute wholly displaces state law and provides the exclusive

cause of action for a plaintiff’s requested relief, we must

“recharacterize a state law complaint . . . as an action arising

under federal law.” Metro. Life Ins. Co. v. Taylor, 481 U.S.

58, 64 (1987). In such cases, federal law “completely

preempts” the state law claims. Franchise Tax Bd. v. Constr.

Laborers Vacation Trust, 463 U.S. 1, 24 (1983).

Two provisions in the National Bank Act, 12 U.S.C.

§§ 85–86, completely preempt state law claims challenging

interest rates charged by national banks. Beneficial Nat’l,

539 U.S. at 10–11. Section 85 allows a national bank to

impose interest at the rate authorized by the state in which the

bank is “located” or “at a rate of 1 per centum in excess of the

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STATE OF HAWAII V. HSBC BANK NEVADA 11

discount rate on ninety-day commercial paper in effect at the

Federal reserve bank in the Federal reserve district where the

bank is located, whichever may be the greater.” If a national

bank knowingly charges a rate that exceeds this limit, section

86 authorizes the borrower to recover double damages on the

excess interest paid, and the lender forfeits any right to

outstanding interest payments.

A.

The Attorney General first contends that in finding

complete preemption, the district court erred by relying on

declarations submitted by the card providers describing their

payment protection plans.3 We disagree.

Federal courts typically may only look to the plaintiff’s

complaint to determine federal question jurisdiction. See

Coleman v. Estes Express Lines, Inc., 631 F.3d 1010, 1016

(9th Cir. 2011). However, when a defendant asserts that a

claim is completelypreempted, examination of extra-pleading

material is permitted. See Aetna Health Inc. v. Davila,

542 U.S. 200, 211 (2004) (reading the complaint and “various

plan documents” to determine if a claim was completely

preempted); Schroeder v. Trans World Airlines, Inc.,

702 F.2d 189, 191 (9th Cir. 1983) (reviewing “additional

facts in the petition for removal” to find a claim completely

preempted), overruled on other grounds by Moore-Thomas v.

Alaska Airlines, Inc., 553 F.3d 1241, 1246 (9th Cir. 2009). 

3 The Attorney General also argues that only the three banks that

submitted declarations can rely on them. But, the district court did not

abuse its discretion in finding that “Defendants have presented joint

arguments regarding the nature of the plans offered by all of the banks.”

Louie, 907 F. Supp. 2d at 1211.

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12 STATE OF HAWAII V. HSBC BANK NEVADA

This makes doctrinal sense—the complete preemption

doctrine is “an exception . . . to the well-pleaded complaint

rule.” Davila, 542 U.S. at 207.

In any event, the supposed error was harmless; the

declarations restated facts already recited in the complaints. 

Cf. H.K. Supermarket v. Kizer, 830 F.2d 1078, 1080 n.1 (9th

Cir. 1987) (considering extra-pleading material is harmless if

dismissal under Federal Rule of Civil Procedure 12(b)(6)

would be proper when reviewing the complaint alone).

B.

The AttorneyGeneral next argues that payment protection

plan fees are not “interest” on a loan under § 85, but rather

charges for an independent service. This argument has

somewhat more purchase.

The Office of the Comptroller of the Currency (OCC) has

defined “interest” in § 85 as:

any payment compensating a creditor or

prospective creditor for an extension of credit,

making available of a line of credit, or any

default or breach by a borrower of a condition

upon which credit was extended. It includes,

among other things, the following fees

connected with credit extension or

availability: numerical periodic rates, late

fees, not sufficient funds (NSF) fees charged

when a borrower tenders payment on a debt

with a check drawn on insufficient funds,

overlimit fees, annual fees, cash advance fees,

and membership fees. It does not ordinarily

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STATE OF HAWAII V. HSBC BANK NEVADA 13

include appraisal fees, premiums and

commissions attributable to insurance

guaranteeing repayment of any extension of

credit, finders’ fees, fees for document

preparation or notarization, or fees incurred to

obtain credit reports.

12 C.F.R. § 7.4001(a). The Supreme Court approved this

definition in Smiley v. Citibank (South Dakota), N.A., holding

that the examples in § 7.4001(a) drew a reasonable distinction

between (a) expenses that “are assessed for simply making

the loan, or for the borrower’s default,” and (b) fees

“specifically assigned” to services incidental to the loan, such

as reimbursements for processing an application, premiums

tied to loan insurance, and appraisal costs. 517 U.S. 735,

741–42 (1996).

Like the Fifth Circuit and the OCC, we doubt that

payment protection plan fees are interest. See Hood ex rel.

Mississippi v. JP Morgan Chase & Co., 737 F.3d 78, 90–92

(5th Cir. 2013) (per curiam) (suggesting that payment

protection plan fees are not interest); Debt Cancellation

Contracts and Debt Suspension Agreements, 67 Fed. Reg.

58,962, 58,694 (Sept. 19, 2002) (“The OCC’s regulations

reflect the fact that national banks may set [payment

protection plan] fees . . . . Section 7.4002 of our rules

authorizes national banks to establish non-interest charges

and fees ‘according to sound banking judgment and safe and

sound banking principles.’” (emphasis added) (quoting

12 C.F.R. § 7.4002)). But we leave this question for another

day. Even assuming that protection plan fees are interest, the

complaints here did not allege that the card providers charged

excessive interest rates.

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14 STATE OF HAWAII V. HSBC BANK NEVADA

C.

For the complete preemption doctrine to apply, one of the

Attorney General’s state law claims must be governed by

§§ 85 and 86. Beneficial Nat’l, 539 U.S. at 7–8. The

Attorney General argues this is not the case here, because

those sections only preempt claims that explicitly invoke a

state usury law.

At first glance, this argument has some attraction. In

Beneficial National, the plaintiffs “expressly charged” that a

national bank violated state usury laws. 539 U.S. at 9. The

Supreme Court held that §§ 85 and 86 “supersede both the

substantive and the remedial provisions of state usury laws

and create a federal remedy for overcharges that is exclusive,

even when a state complainant, as here, relies entirely on state

law.” Id. at 11.

But, on close analysis, the Attorney General’s argument

founders. Section 85, without using the word “usury,” sets

the rate of interest that a national bank may charge. Section

86 uses the word “usurious” to define a limitations period, but

creates a right of action for plaintiffs charged “a rate of

interest greater than is allowed by section 85.” Congress

enacted these provisions so that a national bank could “charge

its out-of-state credit-card customers an interest rate on

unpaid balances allowed by its home State, when that rate is

greater than that permitted by the State of the bank’s

nonresident customers.” Marquette Nat’l Bank of Minn. v.

First of Omaha Serv. Corp., 439 U.S. 299, 301 (1978). Thus,

when a plaintiff alleges that a national bank charged “a rate

of interest greater than is allowed,” the claim falls within the

scope of §§ 85 and 86, regardless of the state law term

invoked.

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STATE OF HAWAII V. HSBC BANK NEVADA 15

That the plaintiffs in Beneficial National happened to

invoke “expressly” Alabama’s usury statute does not mean

that the National Bank Act only preempts complaints that cite

a state usury law. Federal courts are not bound by the labels

that litigants attach to completely preempted claims. In

Davila, for example, plaintiffs attempted to evade complete

preemption under section 502(a) of the Employee Retirement

Income Security Act (ERISA), 29 U.S.C. § 1132(a), by

insisting that their actions sounded in tort. 542 U.S. at

214–15. The Supreme Court declined the gambit, holding

that “distinguishing between pre-empted and non-pre-empted

claims based on the particular label affixed to them would

‘elevate form over substance and allow parties to evade’ the

pre-emptive scope of ERISA simply ‘by relabeling their

contract claims.’” Id. at 214 (quoting Allis-Chalmers Corp.

v. Lueck, 471 U.S. 202, 211 (1985)); see also Dishman v.

UNUM Life Ins. Co. of Am., 269 F.3d 974, 983 (9th Cir.

2001) (holding that claimants cannot escape complete

preemption by “dressing up” their claims).

We, therefore, must decide whether the complaints

challenged the “rate of interest” that the card providers

charged, regardless of the state law monikers affixed to the

Attorney General’s claims. We conclude that they did not.

Counts I and II alleged that the card providers violated

sections 480-2(d), 480-13.5, and 481A-3 of the Hawaii

Revised Statutes, which govern business disclosure,

contractual terms, and trade practices. None of these

provisions proscribes the interest that a financial institution

may charge.

Nor did the third count—the unjust enrichment claim—

challenge the card providers’ interest rates. This count

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16 STATE OF HAWAII V. HSBC BANK NEVADA

merely alleged that Hawaii residents unjustly enriched their

card providers by “unknowingly paying unauthorized or

otherwise improper charges.” Indeed, the Attorney General

could not, under Hawaii law, assert that the card providers

unjustly charged excessive interest rates. See Caraang v.

PNC Mortg., 795 F. Supp. 2d 1098, 1117–18 (D. Haw. 2011)

(holding that under Hawaii law, “express contracts . . .

preclude an unjust enrichment claim” when plaintiffs alleged

that banks charged excessive interest rates); Porter v. Hu,

169 P.3d 994, 1006 (Haw. Ct. App. 2007) (“[A]n action for

unjust enrichment cannot lie in the face of an express contract

. . . .”).

The monetary remedies requested for these violations—

civil penalties and restitution—may well require the card

providers to disgorge any financial gain from the fees. But if

a plaintiff asserts a usury claim simply by virtue of requesting

damages, the states’ settled authority “to regulate national

banks in areas such as contracts, debt collection, acquisition

and transfer of property, and taxation, zoning, criminal, and

tort law” would be rendered meaningless. Bank of Am. v.

City & Cnty. of S.F., 309 F.3d 551, 559 (9th Cir. 2002).

The defendants nevertheless insist that the complaints

implied that Hawaii consumers were charged excessive

interest rates. They note the complaints alleged that card

holders received “virtually no benefit” from the card

providers’ debt protection products, that the providers

purposefully marketed these products to make “substantial

sums of money,” and that the providers charged “over-thelimit fees.”

Read in context, however, these allegations are most

consistent with a Uniform Deceptive Trade Practice Act

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STATE OF HAWAII V. HSBC BANK NEVADA 17

claim. Subsection 481A-3(a)(5) defines a deceptive trade

practice as “[r]epresent[ing] that goods or services have . . .

uses, benefits or quantities that they do not have.” In

pleading a violation of this subsection, the Attorney General

properly alleged that the card providers represented that their

services would prevent consumers from defaulting, but, in

fact, the plans did not provide that benefit.

The Attorney General could have claimed that the card

providers charged excessive fees. But he did not; even if the

facts in the complaints might support a § 86 claim, that does

not mean the Attorney General pleaded one. Again, Davila

provides useful guidance. The Court there held that ERISA

completely preempts a state law claim “if an individual, at

some point in time, could have brought his claim under” the

federal statute, and “there is no other independent legal duty

that is implicated by a defendant’s actions.” Davila, 542 U.S.

at 210; see also Caterpillar Inc. v. Williams, 482 U.S. 386,

394–95 (1987) (holding the same under section 301 of the

Labor Management Relations Act, 29 U.S.C. § 185).

The state law claims here were independent of and did not

“merely duplicate[] rights and remedies available under”

§§ 85 and 86. Fossen v. Blue Cross & Blue Shield of Mont.,

Inc., 660 F.3d 1102, 1111 (9th Cir. 2011). The unfair and

deceptive practice claims targeted alleged marketing

misrepresentations. The unjust enrichment claims arose from

the purported failure to obtain consent before enrolling

consumers in debt protection products. Regardless of the

rates charged, the banks had independent state law

obligations to obtain consent from and not to deceive

consumers. These claims are not preempted by the National

Bank Act.

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18 STATE OF HAWAII V. HSBC BANK NEVADA

In reaching this conclusion, we join the Fifth Circuit.4In

Hood, the Mississippi Attorney General alleged that credit

card providers violated the Mississippi Consumer Protection

Act. 737 F.3d at 82–83. The complaints asserted that

payment protection plans “have little value to certain

customers” and that “the Plans can trigger over-the-limit

fees.” Id. at 93 & n.14. The Fifth Circuit held that §§ 85 and

86 did not completely preempt the claims, as “there is a

difference between alleging that certain customers are being

4 A number of district courts also agree. See, e.g., West Virginia ex rel.

McGraw v. JPMorgan Chase & Co., 842 F. Supp. 2d 984, 993 (S.D.W.

Va. 2012) (“[E]very allegation that an interest charge is improper need not

be an allegation that it is usurious; such a rule would consume any state

fraud action involving an ‘interest’ product.”); Young v. Wells Fargo &

Co., 671 F. Supp. 2d 1006, 1021 (S.D. Iowa 2009) (“[T]he basis of the

alleged excessiveness is that Wells Fargo charged fees when they should

not, a wholly different claim from a claim that Wells Fargo applied an

illegal interest rate.”); Anderson v. Ocwen Fin. Corp., No. CIVA

4:05CV243 MB, 2006 WL 1515682, at *1 (N.D. Miss. May 26, 2006)

(“[A]llegations of‘[e]xcessivelyhigh and/or false points, closing costs and

service charges’ with no mention of ‘usury’ does not constitute a state law

usury claim for complete preemption purposes.” (second alteration in

original)); Cortazar v. Wells Fargo & Co., No. C 04-894 JSW, 2004 WL

1774219, at *1, *4–5 (N.D. Cal. Aug. 9, 2004) (holding that unjust

enrichment and consumer protection claims, which alleged banks

“induced borrowers to enter into unfavorable loans with ‘above-market

interest rates’ and ‘exorbitant’ points and fees,” were not completely

preempted); Cross-Cnty. Bank v. Klussman, No. C-01-4190-SC, 2004WL

966289, at *6 (N.D. Cal. Apr. 30, 2004) (“Plaintiff does not challenge the

legality of the rate of interest charged by Defendants. Rather, Plaintiff

claims that various interest fees were not disclosed, were unwarranted,

were based on charges that were themselves improper, and in short, should

never have been charged at all.”).

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STATE OF HAWAII V. HSBC BANK NEVADA 19

charged too much, and alleging that they should have never

been charged for the service in the first place.” Id. at 93.5

We conclude that the Attorney General did not plead a

completely preempted claim and that the district court

therefore erred in finding federal question jurisdiction. We

now turn to whether CAFA provides an alternative basis for

jurisdiction.

IV. CAFA

A.

The Attorney General’s certification motion raised two

questions, neither of which concerns CAFA. Section

1292(b), however, grants appellate jurisdiction over

interlocutory orders, not questions, and we “may address any

issue fairly included within the certified order.” Yamaha

5 The district court decisions marshaled by the card providers are not to

the contrary. In those cases, the complaints expressly alleged that

financial institutions had charged excessive interest rates. See, e.g.,

Forness v. Cross Country Bank, Inc., No. 05-CV-417-DRH, 2006 WL

240535, at *3 (S.D. Ill. Jan. 13, 2006) (noting Plaintiffs admitted “that

they do, in part, challenge the amount of Defendants’ fees”); Austin v.

Provident Bank, No. CIV.A.4:04 CV 33 P B, 2005 WL 1785285, at *1, *5

(N.D. Miss. July 26, 2005) (finding a claim alleging a bank provided

“overpriced loans at interest rates which were outside the reasonable

commercial standards of appropriate risk-based pricing” completely

preempted (internal quotation marks omitted)); Santos v. Household Int’l,

Inc., No. C03-1243 MJJ, 2003 WL 25911112, at *3 (N.D. Cal. Oct. 24,

2003) (holding a cause of action asserting an “over limit fee was

unconscionable because it was a flat rate fee that was too high”

completely preempted); Hill v. Chem. Bank, 799 F. Supp. 948, 950, 954

(D. Minn. 1992) (holding a claim alleging excessive late fees and over

limit fees completely preempted).

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20 STATE OF HAWAII V. HSBC BANK NEVADA

Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199, 205 (1996). 

Because the certified order denied the motions to remand for

lack of subject matter jurisdiction, we may affirm if the

district court had any basis of jurisdiction. See Lumber Prod.

Indus. Workers Local No. 1054 v. W. Coast Indus. Relations

Ass’n, Inc., 775 F.2d 1042, 1047 (9th Cir. 1985). We

therefore exercise our discretion to address CAFA

jurisdiction.

B.

CAFA grants district courts original jurisdiction over “a

class action” if the class has more than 100 members, the

amount in controversy is greater than $5,000,000, and the

parties are minimally diverse. 28 U.S.C. § 1332(d)(2),

(5)(B). A “class action” is defined as “any civil action filed

under rule 23 of the Federal Rules of Civil Procedure or

similar State statute or rule of judicial procedure authorizing

an action to be brought by 1 or more representative persons

as a class action.” Id. § 1332(d)(1)(B). Because these

complaints were not filed under Federal Rule 23, the issue is

whether the Attorney General filed them under a “similar”

state rule or statute.

The complaints asserted that the Attorney General

brought these actions under: (1) subsection 480-2(d), which

provides that “[n]o person other than a consumer, the attorney

general or the director of the office of consumer protection

may bring an action based upon unfair or deceptive acts

declared unlawful by this section”; (2) section 661-10, which

allows the Attorney General to “bring and maintain an

action” in order “to collect or recover any money or penalty

. . . or enforce any other right”; and (3) the Attorney

General’s “parens patriae authority.”

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STATE OF HAWAII V. HSBC BANK NEVADA 21

These state procedural devices are not similar to a Rule 23

action. Subsection 480-2(d) identifies who may bring an

action; it does not state the form an action must take. Section

661-10 grants the Attorney General the authority to bring

civil enforcement actions, which are not class actions. See

Gen. Tel. Co. of the Nw. v. EEOC, 446 U.S. 318, 322–25

(1980). And, a common law parens patriae suit is not a

procedural device similar to Rule 23. Chimei Innolux,

659 F.3d at 847–49; see also Mississippi ex rel. Hood v. AU

Optronics Corp., 134 S. Ct. 736, 739 (2014) (holding that a

parens patriae suit is not a CAFA mass action).

The card providers, however, contend that under

subsection 480-14(b), any action brought by the Attorney

General on behalf of consumers is perforce a class action. 

That statute provides: “The attorney general . . . may bring a

class action on behalf of consumers based on unfair or

deceptive acts or practices declared unlawful by section 480-

2. Actions brought under this subsection shall be brought as

parens patriae . . . .” Although the complaints “specifically

disclaim[ed]” class status, the card providers insist that we

ignore those disclaimers and transmogrify these suits into

class actions.

We decline the invitation. As the district court noted, the

card providers may well have the better reading of Hawaii

law, and the AttorneyGeneral’s attempt to bring these actions

while disclaiming class status may fail under state law. 

Nonetheless, we cannot disregard the complaints’

unambiguous class action disclaimers.6 To be removable

6 At oral argument, the Attorney General represented that he will not

attempt to make this case a class action, regardless of how litigation

proceeds on remand.

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22 STATE OF HAWAII V. HSBC BANK NEVADA

under CAFA, a “class action” must be “filed under” Rule 23

or a state law equivalent. § 1332(d)(1)(B). The appropriate

inquiry is therefore whether a complaint seeks class status. 

Accordingly, we have held that a plaintiff files a class action

for CAFA purposes by invoking a state class action rule,

regardless of whether the putative class ultimately will be

certified. United Steel Workers Int’l Union v. Shell Oil Co.,

602 F.3d 1087, 1091–92 (9th Cir. 2010).

The converse is also true: Failure to request class status or

its equivalent is fatal to CAFA jurisdiction. In Baumann v.

Chase Investment ServicesCorp., for example, the defendants

argued that California Private Attorney General Act (PAGA)

“actions are ‘class actions’ under CAFA because PAGA is a

state procedural law that would be displaced by Rule 23 in

federal court.” 747 F.3d 1117, 1124 (9th Cir. 2014). We

rejected the argument, holding that the issue “is simply one

of statutory construction—whether the action sought to be

removed was ‘filed under’ a state statute ‘similar’ to Rule

23.” Id. As the plaintiff’s complaint was brought under

PAGA, a statute not similar to Rule 23, it was irrelevant that

the action might later be converted to a class action if

removed. Id.

The Supreme Court’s recent decision in AU Optronics is

also instructive on this point. In interpreting CAFA’s mass

action provisions, the Court cautioned that CAFA largely

incorporates “certain” traditional exceptions to the general

rule that the plaintiff is the master of a complaint for

jurisdictional purposes. 134 S. Ct. at 745–46. For example,

plaintiffs may not fraudulently join a non-diverse party,

Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th

Cir. 2001), collusively assign an interest in a case, Wheeler v.

City & Cnty. of Denver, 229 U.S. 342, 349 (1913),

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STATE OF HAWAII V. HSBC BANK NEVADA 23

improperly treat a state as a real party in interest, Mo., Kan.

& Tex. Ry. Co. v. Hickman, 183 U.S. 53, 61 (1901), or avoid

CAFA removal by promising, before class certification, to

seek less than $5,000,000 in damages, Standard Fire Ins. Co.

v. Knowles, 133 S. Ct. 1345, 1350 (2013).

Here, the only relevant exception to the rule that “the

party who brings a suit is master to decide what law he will

rely upon,” The Fair v. Kohler Die & Specialty Co., 228 U.S.

22, 25 (1913), is the complete preemption doctrine. As

CAFA does not completely preempt state law, we cannot

ignore the complaints’ disclaimers and convert these cases

into class actions.

Our sister circuits agree.7In Purdue Pharma L.P. v.

Kentucky, the Kentucky Attorney General brought various

state law claims on behalf of Kentucky consumers, invoking

the State’s “parens patriae authority” but not a class action

rule. 704 F.3d 208, 211 (2d Cir. 2013). The defendants

urged the court to pierce the pleadings and recognize that “the

Attorney General [was] actually relying, albeit

surreptitiously, on [Kentucky’s class action rule] to assert

representative claims for restitution on behalf of individual

consumers.” Id. at 216 n.7. The Second Circuit rejected the

argument. Even if the Attorney General “could have utilized

some other statutory or procedural mechanism,” the court was

“hard pressed to understand how a suit may be ‘filed under’

7 So do a number of district courts. See, e.g., Nat’l Consumers League

v. Flowers Bakeries, LLC., No. CV 13-1725 (ESH), --- F. Supp. 2d. ---,

2014 WL 1372642, at *6 (D.D.C. Apr. 8, 2014); In re Vioxx Prods. Liab.

Litig., 843 F. Supp. 2d 654, 663–64 (E.D. La. 2012); Arizona ex rel.

Horne v. Countrywide Fin. Corp., No. CV-11-131-PHX-FJM, 2011 WL

995963, at *3 (D. Ariz. Mar. 21, 2011).

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24 STATE OF HAWAII V. HSBC BANK NEVADA

a statute or rule that does not even appear on the face of the

complaint.” Id. As we do here, the Second Circuit noted that

the Attorney General’s claims might fail without class status,

but nonetheless refused to imply that the complaint was “filed

under” a state rule similar to Rule 23. Id. at 220 (“Whether

Plaintiffs may proceed and ultimately recover on their claims

presents complex questions of Kentucky law, which we only

see through Erie’s glass darkly, and upon which we express

no opinion.”).

The Third Circuit followed this line of reasoning in Erie

Insurance Exchange v. Erie Indemnity Co., 722 F.3d 154 (3d

Cir. 2013). Erie Insurance Exchange asserted state law

claims “in the name of” its members, invoking Pennsylvania

Rule of Civil Procedure 2152. Id. at 157. Because

Pennsylvania law prohibits insurance exchanges from suing

under Rule 2152, the defendants argued that the Exchange

actually had brought a class action. Id. at 158–59. The Third

Circuit refused to “rewrite the Complaint to create

jurisdiction under the pretense of correcting a state-law

error,” holding that plaintiffs “are the masters of their

complaints and are ‘free to choose the statutory provisions

under which they will bring their claims.’ If the case is

procedurally unsound under Pennsylvania’s rules, the

Commonwealth’s courts are best suited to correct the

problem.” Id. at 159 (citation omitted) (quoting Purdue

Pharma, 704 F.3d at 216 n.7).

The Fourth Circuit also agrees. In West Virginia ex rel.

McGraw v. CVS Pharmacy, Inc., the West Virginia Attorney

General filed a parens patriae suit against several

pharmacies, alleging violations of state law. 646 F.3d 169,

171–72 (4th Cir. 2011). The dissent would have found the

action removable under CAFA because the Attorney General

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STATE OF HAWAII V. HSBC BANK NEVADA 25

had not asserted a valid parens patriae claim and “because

the essential requirements of a class action [were] met.” Id.

at 183 (Gilman, J., dissenting). The panel majority, however,

explained that the relevant question is not whether the suit

could be sustained as a parens patriae action under state and

federal law. Id. at 176 n.2. Rather, the “separate, and more

meaningful determination” was if the action was “brought

under a procedure ‘similar’ to Rule 23.” Id. (emphasis

added).8

Indeed, were we—as the card providers request—to

evaluate the “substance” of the pleadings, the result would be

the same. “To maintain a class action, the existence of the

class must be pleaded and the limits of the class must be

defined with some specificity. The grant, sua sponte, of class

action relief when it is neither requested nor specified, is an

obvious error.” Wilson v. Zarhadnick, 534 F.2d 55, 57 (5th

Cir. 1976) (citations omitted); see also 7AA Charles Alan

Wright, Arthur R. Miller & Mary Kay Kane, Federal

Practice and Procedure § 1785 (3d ed. 2005) (“[A court]

cannot convert an individual action into a class action on its

own motion.”). Moreover, a plaintiff who denies having

8 Addison Automatics, Inc. v. Hartford Casualty Insurance Co., 731 F.3d

740 (7th Cir. 2013), is not to the contrary. In Addison, a plaintiff filed a

class action against Domino Plastics. Domino stipulated to liability and

assigned its claims against its liability insurer to the lead plaintiff as class

representative. Id. at 741. The lead plaintiff then filed suit against the

liability insurer in state court but explicitly disclaimed class status. Id. at

742. The Seventh Circuit held that the plaintiff had filed a class action

because he remained “the representative of a class that was actually

certified ‘under Rule 23 or the state equivalent,’” and any ruling would

necessarily be in “in favor of the Class.” Id. at 742, 744 (internal

quotation marks omitted) (quoting LG Display Co. v. Madigan, 665 F.3d

768, 772 (7th Cir. 2011)).

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26 STATE OF HAWAII V. HSBC BANK NEVADA

brought a class action surely cannot adequately represent the

purported class, see E. Tex. Motor Freight Sys. Inc. v.

Rodriguez, 431 U.S. 395, 405 (1977), and “the named

plaintiff’s and class counsel’s ability to fairly and adequately

represent unnamed [plaintiffs are] critical requirements in

federal class actions under Rules 23(a)(4) and (g),” Baumann,

747 F.3d at 1122.

Because the complaints unambiguously disclaimed class

status, these actions cannot be removed under CAFA. There

is therefore no basis for federal jurisdiction, and the cases

should have been remanded to state court.

V. Conclusion

For the foregoing reasons, the judgment of the district

court is REVERSED, and we REMAND with instructions to

remand these actions to state court.

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