Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01971/USCOURTS-caed-2_06-cv-01971-1/pdf.json

Parties Involved:
Bank of America, N.A.
Plaintiff
Consumers Against Unfair Business Practices
Defendant
Miriam Miller
Defendant

Document Text:

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1

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

BANK OF AMERICA, N.A. 

(USA), a national bank,

NO. CIV. S-06-1971 LKK/KJM

Plaintiff,

v.

O R D E R

MIRIAM MILLER, an individual,

CONSUMERS AGAINST UNFAIR

BUSINESS PRACTICES, a California

nonprofit corporation, and 

DOES 1 through 100 inclusive,

Defendants.

 /

Plaintiff Bank of America has brought suit against defendant

Miller seeking declaratory and injunctive relief to prevent

defendant from attempting to enforce various state laws against it

or from joining an ongoing state court action against Bank of

America. Pending before the court is defendant’s motion to

dismiss. Defendant argues that (1) the suit is barred by the AntiInjunction Act, 28 U.S.C. § 2283, (2) the court should stay or

dismiss the case under the Colorado River and Brillhart abstention

doctrines, and (3) the request for declaratory relief should be

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 CAUBP originally commenced suit as a private attorney 1

general under California’s Unfair Competition Law (“UCL”). Cal.

Bus. and Prof. Code § 17200. Its case was pending when California

voters passed Proposition 64, which restricted standing under the

UCL to parties suffering injury in fact. The California Supreme

Court subsequently held that Proposition 64 applied to cases

pending at the time of its passage, which included CAUBP’s lawsuit.

See Californians for Disability Rights v. Mervyn’s, 39 Cal. 4th 223

(2006). Private plaintiffs who lost standing under Mervyn’s were

permitted to amend their existing complaints to substitute new

plaintiffs. Branick v. Downey Savings & Loan Assoc., 39 Cal. 4th

235 (2006).

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stricken pursuant to California’s Anti-SLAPP law, Cal. Code Civ.

P. § 425.16. For the reasons set forth below, the court concludes

that the suit is barred by the Anti-Injunction Act.

I. Background

The present action addresses a pending state court action in

which the Consumers Against Unfair Business Practices (“CAUBP”) is

suing Bank of America for allegedly unlawful business practices.

Consumers Against Unfair Business Practices v. Bank of America,

Yolo Superior Court Case No.:CV-02-478 (the “state court action”

or the “CAUBP action”). CAUBP sued Bank of America to enjoin its

allegedly unlawful practice of penalizing customers whose credit

card payments post the day after a holiday due date. The defendant

in the present suit, Miriam Miller, formed CAUBP. Def.’s Mot. at

4. According to Bank of America, CAUBP stated that it would add

Miller as a plaintiff to the state court action. Compl. ¶ 24-25. 1

The present suit seeks an injunction preventing defendant from

taking any action to enforce various state “holiday laws” that,

according to defendant, prohibit penalties on payments received

immediately after a holiday. Compl., Prayer for Relief ¶¶ 2, 5.

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3

Furthermore, plaintiff seeks a declaration that it is illegal for

defendant to use the courts to enforce the holiday laws against

plaintiff. Id. at ¶¶ 1, 3, 4.

The court takes judicial notice of facts pertinent to the

CAUBP action. Fed. R. Evid. 201. On August 3, 2002, CAUBP filed

its second amended complaint. Pl.’s Request for Judicial Notice,

Ex. A. The state court action has proceeded through discovery.

On April 2, 2003, the state court denied Bank of America’s motion

for summary judgment and, in doing so, rejected Bank of America’s

preemption claims related to the Truth in Lending Act and the

National Bank Act. Def.’s Request for Judicial Notice, Ex. A. The

state court subsequently stayed the CAUBP action pending the

California Supreme Court’s ruling on whether Proposition 64 applied

to cases pending at the time of its passage. Def.’s Request for

Judicial Notice, Ex. B. Most recently, on December 11, 2006, CAUBP

filed a motion for an additional sixty days in which to file an

amended complaint. Pl.’s Request for Judicial Notice, Ex. B.

II. Standard

On a motion to dismiss, the allegations of the complaint must

be accepted as true. See Cruz v. Beto, 405 U.S. 319, 322 (1972).

The court is bound to give the plaintiff the benefit of every

reasonable inference to be drawn from the "well-pleaded"

allegations of the complaint. See Retail Clerks Intern. Ass'n,

Local 1625, AFL-CIO v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963).

Thus, the plaintiff need not necessarily plead a particular fact

if that fact is a reasonable inference from facts properly alleged.

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 Accordingly, the court need not address whether the court 2

should abstain under the Colorado River or Brillhart doctrine, nor

whether plaintiff’s request for declaratory relief should be

stricken pursuant to the anti-SLAPP law.

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See id.; see also Wheeldin v. Wheeler, 373 U.S. 647, 648 (1963)

(inferring fact from allegations of complaint).

In general, the complaint is construed favorably to the

pleader. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). So

construed, the court may not dismiss the complaint for failure to

state a claim unless it appears beyond doubt that the plaintiff can

prove no set of facts in support of the claim which would entitle

him or her to relief. See Hishon v. King & Spalding, 467 U.S. 69,

73 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).

In spite of the deference the court is bound to pay to the

plaintiff's allegations, however, it is not proper for the court

to assume that "the [plaintiff] can prove facts which [he or she]

has not alleged, or that the defendants have violated the . . .

laws in ways that have not been alleged." Associated General

Contractors of California, Inc. v. California State Council of

Carpenters, 459 U.S. 519, 526 (1983).

III. Analysis

 For the reasons explained below, the court grants defendant's

motion to dismiss and holds that (1) injunctive relief is barred

by the Anti-Injunction Act and (2) declaratory relief is similarly

barred because it would have the same effect as an injunction.2

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 Given the language of the statute, the high court's 3

determination is generous indeed. 

5

A. Injunctive Relief

Defendant argues that the suit is barred by the AntiInjunction Act, 28 U.S.C. § 2283, which generally prohibits a

federal injunction restraining the prosecution of a lawsuit in

state court. Alton Box Bd. v. Espirit De Corp., 682 F.2d 1267,

1271 (9th Cir. 1982). The act also applies to declaratory

judgments if those judgments have the same effect as an injunction.

California v. Randtron, 284 F.3d 969, 975 (9th Cir. 2002).

Nevertheless, there are three exceptions: where expressly

authorized by Congress, where necessary in aid of the federal

court’s jurisdiction, and to protect the federal court’s judgments.

Id., at 974. Plaintiff contends that the first two exceptions

apply. I do not agree.

1. Expressly Authorized by Congress

In order to qualify under the first exception, “an Act of

congress must have created a specific and uniquely federal right

or remedy, enforceable in a federal court of equity, that could be

frustrated if the federal court were not empowered to enjoin a

state proceeding.” Mitchum v. Foster, 407 U.S. 225, 237 (1972).

It is not necessary that the federal law expressly references the

Anti-Injunction Act, nor need the federal law “expressly authorize

an injunction of a state court proceeding in order to qualify as

an exception.” Id. 3

Plaintiff argues that the “visitorial statute” contained

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 If in fact the CAUBP action constituted an exercise of 4

visitorial powers -- which, as discussed infra, is not the case --

there is no dispute that none of the three exceptions would apply.

 Plaintiff also argues that the state laws are substantively 5

preempted. Even if true, the Anti-Injunction Act may still bar the

present suit. See Atlantic Coast Line R.R. Co. v. Brotherhood of

Locomotive Engineers, 398 U.S. 281, 294 (1970) (“[A] federal court

does not have inherent power to ignore the limitations of [the

Anti-Injunction Act] and to enjoin state court proceedings merely

because those proceedings interfere with a protected federal right

or invade an area preempted by federal law, even when the

interference is unmistakably clear.”); see also Chick Kam Choo v.

Exxon Corp., 486 U.S. 140, 149 (1988).

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within the National Banking Act, and the regulations promulgated

pursuant to that statute, create a federal right that would be

frustrated if federal courts were not empowered to enjoin state

court proceedings. 12 U.S.C. § 484. Specifically, the visitorial

statute establishes the right of national banks to be free from

“any visitorial powers except as authorized by Federal law, vested

in the courts of justice or . . . directed by Congress.” 12 4

U.S.C. § 484. The term “visitorial powers” refers to the power to

“visit” a national bank, including the “[enforcement of] compliance

with any applicable federal or state laws concerning [banking]

activities.” 12 C.F.R. § 7.4000(a)(2)(iv). The only entity

authorized to exercise these powers is the Office of Comptroller

of Currency. 12 C.F.R. § 7.4000(a)(1) (“Only the OCC . . . may

exercise visitorial powers with respect to national banks”). In

short, plaintiff argues that, even if the state laws at issue in

the CAUBP are valid, only the OCC may enforce them.5

The fatal flaw in plaintiff’s position is that the state

proceedings in the CAUBP action do not constitute an exercise of

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It is not unreasonable to contend, as plaintiff does, that 6

the cited language regarding “state officials” was dictum since

the court was not squarely presented with the issue of whether a

private party could enforce state law against a federal bank.

Nevertheless, dicta from a higher court should not be treated

lightly, because it serves as a “prophecy of what that Court might

hold.” See McCalla v. Royal MacCabees Life Ins. Co., 369 F.3d

1128, 1131 (9th Cir. 2004) (internal quotes and citations omitted)

(holding that court of appeals should not generally disregard dicta

of the Supreme Court).

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visitorial powers. That is because “visitorial powers” (within the

meaning of the visitorial statute) can only be exercised by state

officials, not private parties. The Ninth Circuit’s language in

Wells Fargo Bank N.A. v. Boutris is on-point: “the exclusivity of

visitorial authority preempts only enforcement of state visitation

laws by state officials.” 419 F.3d 949, 964 (9th Cir. 2005)

(emphasis in original). In that case, the Ninth Circuit held that

a state official, the Commissioner of the California Department of

Corporations, was properly enjoined from exercising visitorial

powers. Id. Here, the plaintiff in the state court action 6

(either CAUBP or Miller, if she were to substitute in for CAUBP)

is not a state official but a private party. And, as discussed

below, the use of state courts by a private party does not

transform that action into state action.

The cases that plaintiff cites in support of its position that

federal courts may enjoin state court actions in which plaintiffs

have attempted to regulate federal banks are inapposite. First,

plaintiff cites Bank of America, N.A. v. McCann, which held that

“[a]n injunction enforcing the clear terms of the National Banking

Act” is expressly authorized by Congress for purposes of the AntiCase 2:06-cv-01971-LKK -KJM Document 24 Filed 01/19/07 Page 7 of 13
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 Defendant also notes that the underlying state court action 7

(which the federal court was asked to enjoin) was brought by qui

tam relators who sued “in the name and for the benefit of the

state.” McCann, 444 F. Supp. 2d at 1233-34. Accordingly,

defendant argues that they were not technically private parties,

as is the case with the plaintiff in the CAUBP action.

The problem with this distinction is two-fold. First, the

McCann court also concluded that the mere status of being “qui tam

relators does not vest [the relators] with the authority of the

state.” 444 F. Supp. 2d at 1233. Accordingly, it may not be

possible to harmonize Boutris and McCann. 

Second, plaintiff would presumably classify qui tam relators

as state officials for purposes of the visitorial statute, but

would, at the same time, classify private attorneys general as

private actors (given that CAUBP commenced suit in such a role).

This distinction is less than fully convincing, given that neither

qui tam relators nor private attorneys general suffer personal

injury. Ultimately, the court need not decide whether qui tam

relators or private attorneys general count as the state for

purposes of the visitorial statute, because the only live

controversy remaining in the CAUBP action, in light of Proposition

64, is whether a private party who has suffered injury may proceed

in the suit.

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Injunction Act. 444 F. Supp. 2d 1227, 1231 (N.D. Fla. 2006). Put

directly, the McCann court was not in the Ninth Circuit.7

Second, plaintiff cites to an unpublished order in Bank One

Delaware NA v. Wilens, 2003 WL 21703627 (C.D. Cal. June 13, 2003),

which was also relied upon by the court in McCann. In light of the

Ninth Circuit’s language in Boutris, Wilens is probably no longer

good law for the proposition that a federal court may enjoin a

state court suit commenced by a private actor against a federal

bank.

The court’s holding today is consistent with the conclusion

reached by other courts. See, e.g., Office of Comptroller of

Currency v. Spitzer, 396 F. Supp. 2d 383, 401 (S.D.N.Y. 2005) (“The

OCC's regulation bars states, not private parties, from enforcing

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 At oral argument, plaintiff pressed that this quoted 8

language is merely an example of the rule set forth by the

preceding sentence in the regulation, which states: “Only the OCC

or an authorized representative of the OCC may exercise visitorial

powers with respect to national banks, such as conducting

examinations, inspecting . . . records . . . or prosecuting

enforcement actions . . . .” 12 C.F.R. § 7.4000(a)(1). Therefore,

according to plaintiff, neither private parties nor state officials

may exercise visitorial powers, and a contrary interpretation would

render the second sentence of the regulation redundant.

The court disagrees. The second sentence is not redundant

because it serves to clarify precisely who is forbidden from

exercising visitorial powers, among other functions (such as

defining what constitutes visitations, even though such activities

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laws against national banks”); Hood v. Santa Barbara Bank & Trust,

143 Cal. App. 4th 526, 542 (2d Dist. 2006) (“Actions brought by

private plaintiffs are outside the scope of the visitorial powers

regulation.”). Indeed, as early as 1905, the Supreme Court

characterized “[t]he right of visitation [as] a public right,

existing in the state.” Guthrie v. Harkness, 199 U.S. 148, 159

(1905) (holding that a private shareholder’s demand to access a

national bank’s books was not barred by the visitorial powers

provision).

Moreover, this view of visitorial powers as encompassing only

state action is even shared by the OCC, the entity charged with

enforcement of banking law. “Because ‘visitation’ assumes the act

of a sovereign body, private actions brought by individuals against

banks in pursuit of personal claims ordinarily are outside the

scope of visitorial powers rules.” OCC’s Final Rule Action, “Bank

Activities and Operations,” 69 Fed. Reg. 1895, 1899 n.30 (Jan. 13,

2004). This is echoed by the visitorial powers regulation: [s]tate

officials may not exercise visitorial powers . . . .” 12 C.F.R. 8

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are also restated in subsection 2). Furthermore, the “expressio

unius est exclusio alterius” maxim directs that the expression of

one thing is the exclusion of the other. In other words, if the

regulation had intended to bar actions by private parties, it would

have said so.

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§ 7.4000(a)(1).

Plaintiff responds that defendant is purporting to act as a

state official. Specifically, plaintiff maintains that “[b]y

pursuing relief under the UCL . . . for alleged violations of state

statutes on behalf of a broad class of persons, [d]efendants are

effectively acting in a law enforcement capacity.” Pl.’s Opp’n to

Mot. to Dismiss at 11. Again, I cannot agree. The court in Hood

expressly rejected plaintiff’s position, holding that the

visitorial powers statute did not prohibit a private party from

seeking relief in state court. 143 Cal. App. 4th at 526 (noting

that “there are fundamental differences between an action filed by

a public prosecutor . . . and a consumer class action filed by a

private party”) (citing People v. Pacific Land Research Co., 20

Cal. 3d 10, 17-19 (1977)). A private party’s use of state courts

to vindicate his or her rights does not convert that action into

the type of official enforcement action barred by the visitorial

powers doctrine.

In sum, the visitorial statute may create a right for federal

banks to be free from certain visitations, but actions by private

parties are not among them. Accordingly, no federal right would

be frustrated in the absence of an injunction, and the court holds

that the visitorial statute does not constitute an expressly

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 This is not to say that plaintiff’s argument, that there is 9

a federal policy of ensuring that national banks are not subject

to fifty different statutory schemes, is without force. On the

other hand, it cannot be doubted that the Anti-Injunction Act

tenders an equally significant policy of avoiding, where possible,

conflict between federal and state courts.

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authorized exception to the Anti-Injunction Act with respect to

enjoining state court actions brought by private parties.9

2. Necessary in Aid of Jurisdiction

Plaintiff also maintains that an injunction would be

permissible under the second exception to the Anti-Injunction Act,

which authorizes injunctions necessary to preserve federal

jurisdiction. 28 U.S.C. § 2283. Given the scope of visitorial

powers carved out for the OCC by Boutris, the pending state court

action in no way intrudes on federal jurisdiction.

Plaintiff’s position relies heavily on Sycuan Band of Mission

Indians v. Roache, 54 F.3d 535 (9th Cir. 1994). There, a county

sheriff raided gaming centers operated by Indian tribes on Indian

reservations. Id. at 537. The Indian tribes then sued in federal

court to enjoin the state’s prosecution, and the state argued that

the suit was barred by the Anti-Injunction Act. The Ninth Circuit

found that the act did not bar the requested injunction because a

federal statute, 18 U.S.C. § 1166(d), “mandate[d] exclusive federal

jurisdiction over the criminal enforcement of . . . state gaming

laws” and that “the state court proceedings were in derogation of

federal jurisdiction.” Id. at 540.

Unlike Sycuan Band, the CAUBP suit in no way offends federal

law. As discussed at length above, the visitorial statute and its

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 Defendant protests that the state court cannot reach any 10

“competent and authoritative state ruling” because its actions are

unlawful in light of the visitorial statute. Again, because the

plaintiff in the state court action is a private party, the

visitorial statute is inapplicable.

12

attendant regulations establish that the OCC occupies the field

with respect to official enforcement of state banking laws, but it

does nothing to displace or preclude private actions arising from

those laws. Accordingly, an injunction is not needed to preserve

federal jurisdiction. The exception does not apply.

B. Declaratory Relief

The only remaining issue is whether declaratory relief, in

addition to injunctive relief, is barred. As noted above, “[t]he

Anti-Injunction Act also applies to declaratory judgments if those

judgments have the same effect as an injunction.” Randtron, 284

F.3d at 975. Plaintiff urges that a declaratory judgment in this

case would not have such an effect, because the federal issues

raised in its brief (e.g., visitorial powers) have not been

presented to the state court and that, accordingly, a declaratory

judgment would not disrupt or interfere with those proceedings.

I cannot agree.

Even if plaintiff has not yet raised the pertinent federal law

issues in state court, allowing plaintiff to adjudicate those

issues here would simply “forestall an otherwise competent and

authoritative state ruling.” Thiokol Chemical Corp. v. 10

Burlington Industries, Inc., 448 F.2d 1328, 1331 (3d Cir. 1971).

Furthermore, in most cases, as here, a declaratory judgment will

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have the same effect as an injunction because it may serve as the

basis for a subsequent injunction, 28 U.S.C. § 2202, and would fall

under the exception of the Anti-Injunction Act permitting

injunctions to protect federal court judgments. See Samuels v.

Mackell, 401 U.S. 66, 72 (1971). If this court were to reach

judgment before the state court, this court’s decision would have

claim preclusive effect, which would also have the practical effect

as an injunction enjoining the state court proceedings.

Accordingly, the court finds that both declaratory and injunctive

relief are barred by the Anti-Injunction Act.

IV. Conclusion

The motion to dismiss is hereby GRANTED.

IT IS SO ORDERED.

DATED: January 18, 2007.

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