for jurisdiction to exist under §632, “the banking aspect of the transaction must be legally
significant in the case,” and it held that because the disputed issues did not concern
traditional banking activity but rather a contract law issue — whether the parties had
reached a binding agreement ~ jurisdiction was lacking. Id. at 232-33. By contrast, the
issue at the core of the present case involves the imposition of a foreign currency
conversion fee, which as we have noted involves traditional banking activity (or, at a
minimum, “foreign financial operations”) within the meaning of §632.
Conclusion
For the reasons explained above, the Court denies plaintiffs motion to remand

[Docket Item 5-1].

MATTHEW F. KENNELL)
United States District Judge

Date: October 22, 2001


foreign funds and conversion of that sum into U.S. currency. This is sufficient to give
rise to jurisdiction under §632. See United Technologies Corp. v. Citibank, N.A., 469 F.
Supp. 473, 476-77 (S.D.N.Y. 1979) (issuance of letter of credit by U.S. bank to facilitate
transaction in foreign country constitutes “international banking transaction” which gives
tise to jurisdiction under $632).

Even if the transactions at issue did not involve traditional banking functions,
defendants’ payment for Clarken’s purchases in foreign countries and their conversion to
USS. dollars of the amounts they advanced to pay for those purchases would suffice to
constitute “international or foreign financial operations” giving rise to federal jurisdiction
under §632. Cf In re Lloyd’s American Trust Fund Litigation, 928 F. Supp. 333,
341(S.D.N.Y. 1996) (§632 confers jurisdiction in cases involving international or foreign
financial operations even if they do not concern banking); Stamm v. Barclays Bank of
New York, 960 F. Supp. 724, 727-28 (S.D.N.Y. 1998) (same).

In seeking remand, plaintiff relies heavily on Telecredit Service Center v. First
National Bank of the Florida Keys, 679 F. Supp. 1101 (S.D. Fla. 1988) and Bank of New

York v. Bank of America, 861 F. Supp. 225 (S.D.N.Y. 1994), both of which held that

jurisdiction under §632 was lacking. Neither case governs this one. In Telecredit, each
party claimed that the other was liable for credit card chargebacks involving the alleged
fraudulent sale of travel club memberships in the Bahamas. The court characterized the
underlying controversy as a contractual dispute regarding the allocation of risk, not an
issue involving traditional banking activity. 679 F. Supp. at 1104. The opposite is true
here. Bank of New York involved a letter agreement between two banks to negotiate for
the sale of loans plaintiff had made to several Australian companies. The court said that

3


Minute Order Form (06/97)

. United States District Court, Northern District of Illinois
Mor Magica Juage | __ Matthew F. Kennelly “than signed Judge
CASE NUMBER 01 C 5123 DATE 10/22/2001
CASE Clarken vs. Citicorp Diners Club, Inc.
TITLE
{in the following box (a) indicate the party filing the motion, e.g, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
(i) Oo Filed motion of [ use listing in “Motion” box above.]
(2) im) Brief in support of motion due
(3) a Answer brief to motion due___. Reply to answer brief due.
(4) Qa Ruling/Hearingon___setfor___—_at
(5) QO Status hearing[held/continued to] [set for/re-set for] on setfor at
(6) Qo Pretrial conference[held/continued to] [set for/re-set for] on —__setfor_ ss at_
(7) o Trial[set for/re-set for]on____at
(8) im} [Bench/Jury trial] [Hearing] held/continued to __ at
(9) im} This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) OGeneral Rule 21 CUFRCP41(a)(1)_ £1 FRCP41(a)(2).
ao [Other docket entry] _ Enter Memorandum Opinion and Order. For the reasons set forth on the

attached order, the Court denies plaintiff's motion to remand (5-1).

(il) [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

lo notices required.
No notices req number of notices

Notices mailed by judge’s staff.

OCT 2 4 2000

Notified counsel by telephone. date docketed

o& | Docketing to mail notices.
Mail AO 450 form.

docketing depity initiats

Copy to judge/magistrate judge. ay
ih
courtroom date mailed notice
OR deputy’s
initials
Date/time received in
central Clerk’s Office sailing deputy initas



FOR THE NORTHERN DISTRICT OF ILLINOIS DocKerey

EASTERN DIVISION ocr 24 2001
MICHAEL CLARKEN, )
Plaintiff, }
vy. } Case No. 01 C 5123
CITICORP DINERS CLUB, INC. and }
CITIBANK (SOUTH DAKOTA), N.A., )
Defendants. )

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

According to the amended complaint of plaintiff Michael Clarken, defendant
Citibank (South Dakota), N.A. issued him a Diner’s Club credit card. Clarken purchased
items in Europe using the card. These items, of course, were sold at prices quoted in
foreign currency. When Clarken received his Diner’s Club bill (which he says came
from defendant Citicorp Diners Club, Inc., which allegedly administers Diner’s Club

operations), the prices for his purchases were quoted in U.S. dollars. Clarken alleges that

defendants imposed an undisclosed 2% fee for converting the foreign currency amounts
into dollars.

Clarken filed an action against the defendants in the Circuit Court of Cook
County, Illinois, alleging that they violated the Illinois Consumer Fraud Act and Illinois
common law because they had not disclosed that a foreign currency conversion fee
would be charged. His complaint included no federal claims. Citibank removed the case

to this Court, asserting that federal subject matter jurisdiction exists under 12 U.S.C.


§632, which grants original jurisdiction to federal district courts in civil suits “to which
any corporation organized under the laws of the United States shall be a party, arising out
of transactions involving international or foreign banking ... or out of other international
or foreign financial operations ....” Clarken has moved to remand the case to state court.
The term “banking” as used in §632 has been interpreted by most courts narrowly,
to include only traditional banking activities, such as lending, issuance of letters of credit,
mortgages, and payment of drafts, and the banking transaction must contain some foreign
aspect to qualify. See Nacional Financiera, S.N.C. v. Chase Manhattan Bank, N.A., No.
00 CIV 1571, 2001 WL 327159, at *3 (S.D.N.Y. Apr. 4, 2001); Consorcio de Fomento
Industrial S.A. de C.V. v. First National Bank of Chicago, No. 93 C 272, 1993 WL
291706, at *3-4 (N.D. Ill. Aug. 3, 1993) (doubting whether the construction should be so
narrow but finding a narrow construction sufficient to confer jurisdiction). Clarken’s
claims arise from a bank’s extension of credit to purchase goods or services in a foreign
country, its conversion to U.S. currency of the foreign funds paid pursuant to the
extension of credit, and its charging of a fee for the currency conversion. The issuance of

a credit card involves a traditional banking function. In issuing the card, the bank

extends credit to a customer — the equivalent of extending a line of credit or a loan, which
unquestionably is a traditional banking function under even the narrowest definition of
that term. See Consorcio de Fomento, 1993 WL 291706, at *4. Though the parties have
cited no cases concerning whether currency conversion is a traditional banking function,
no precedent is necessary: it clearly qualifies as such. Finally, in this case the
challenged transactions have a “foreign flavor,” see Nacional Financiera, 2001 WL
327159, at *3, one that is at the core of the parties’ dispute: payment for a transaction in

2