### The Honorable Ortrie D. Smith, United States District Judg e

for the Western District of Missouri, sitting by designation. ___________ No. 96-1763

___________ John Doe; John Roe, on behalf * of themselves and all others * similarly situated, * * Appellants, * * Appeal from the United States v. * District Court for the * District of Minnesota. Norwest Bank Minnesota, N.A., * a national banking association; * Voyager Guaranty Insurance * Company, * * Appellees. *

___________ Submitted: December 11, 1996 Filed February 28, 1997

___________ Before BOWMAN and HEANEY, Circuit Judges, and SMITH, District Judge. 1

___________ BOWMAN, Circuit Judge.

John Doe and John Roe brought a class action against Norwest Ban k Minnesota, N.A. (Norwest) and Voyager Guaranty Insurance Company (Voyager) , alleging violations of the usury provisions of the National Bank Act, 12 U.S. C. § 85-86 (1994), the anti-tying provisions of the Bank Holdin g Company Act Amendments of 1970, 12 U.S.C. § 1972 (1994), and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S .C. § 1962(c) (1994). Doe settled his

### The Honorable Michael J. Davis, United States District Judge

for the District of Minnesota, adopting two reports an d recommendations of The Honorable John M. Mason, United State s Magistrate Judge for the District of Minnesota.
-2- clai ms and was dismissed from the case. The District Court grante d 2 judgment in favor of the defendants on the federal claims and declined to exercise supplemental jurisdiction over the plaintiffs' state-law claims. Roe appeals, and we affirm.

I.

Before summarizing the facts, we consider the relevance of Doe' s claim to this case. Although Doe settled his cl aim and was dismissed from the case, Roe argues that "Doe's suitability as a class representativ e remains in issue." Roe's Br. at 1 n.2. We disagree. This action wa s filed on November 3, 1994, and Doe agreed to settle on February 28, 1995. When Do e apparently had misgivings, the defendants moved the court t o enfo rce the settlement agreement and dismiss Doe from the case. Th e District Court did so, dismissing Doe on September 11, 1995, and Doe has not app ealed that order. Accordingly, Doe is no longer a party to thi s action, individually or in his capacity as a class representative.

Of co urse, the dismissal of Doe did not affect the claim of Roe o r the claims of the unnamed class members in any way. This case remains a puta tive class action with Roe as representative. We will therefor e summarize the facts of Roe's claim. In 1989, Ro e purchased a pickup truck from a dealer and entered into an installment contract, granting the deale r a security interest in the pickup truck. The de aler assigned the contract to Nor west. Several provisions of the installment contract addresse d insurance on the pickup truck:

### -3- Insurance on property I [Roe] give as security is r equired. If insurance is required, I may buy it through any ins urance agent or company of my choice. . . .

. . . If you [Norwest] require property insurance, it must cover all risks of physical damage to the property and the risk that the vehicl e may be lost. . . . I promise to keep the propert y insur ed throughout the term of my loan and to deliver a cer tificate of insurance to you that shows I have purchase d insurance of this kind.

. . . I also agree that, if I fail to keep any required insurance on the property, you may purchase such insurance for me. I will immediatelyrepay you for any amounts you spend in purchasing that insurance, plus interest at the "annual percentage rate" disclosed on the other side of this contract.

Roe's A pp. at 135-36. At the same time, Roe signed a document entitle d "Agreement to Provide Accidental Physical Damage Insurance," which read:

I understand that to pro vide protection from serious financial loss, should an accident or loss occur, Norwest . . . requires the collateral securing my loan to be continuously covered with insurance against the ri sks of fire, theft, and collision, and that failure to provide such insurance gives Bank the right to declare the entire unpaid balance immediately due and payable or alternatively to purc hase coverage for its interest and add the premium plus interest to the balance.

. . . I further understand and agree to maintain insurance, a s described above, in forc e during the term of the loan and will furnish Norwest . . . with a loss payable endorseme nt upon each renewal of said insurance.

Norwest's App. at 69.
In February 1993, Norwest notified Roe that it had not receivedproof of insurance and warned him that if he failed to provide proof o f insurance, Norwest could exercise its right to

### -4-

purchase insurance. Norwest's letter notified Roe that if the ban k purchased insurance, the premium of $902 (for a year of coverage) would be added to his loan balance. When Roe did not provide proof of insurance, Norwest purchased ins urance from Voyager and added $902 to Roe's balance. Voyager then sent Roe a certificate of coverage, which indicated that only Norwest's interest in the vehicle was insured.
When that coverage expired in Januar y 1994, Norwest again warned Roe that it had not received proof of insurance. The same process wa s repeated, and Norwest purchased insurance and ad ded the premium of $549 to Roe's loan balance. In June 1994, Roe apparently proved to Norwest that he had procured his own insurance, and Norwest credited his loan with $233 , the unearned portion of the $549 premium. At ab out the same time, Norwest added to Roe's loan a charge of $11.60 for interest on the insuranc e charge.

As part o f its collateral protection insurance program, Norwest has

an umb rella insurance policy with Voyager, pursuant to which Norwes t purcha ses insurance when borrowers fail to provide their own insurance

. When Norwest purchases insurance from Voyager wi th respect to a particular piece of collateral, the insurance covers only Norwest's interest in the collat eral. The coverage, which is otherwise similar to ordinar y comprehensive and collision coverage, is limited to either the damage to the collateral or the balance of the customer's loan, whichever is smaller in amount. The umbrella policy also contains two endorsements that ar e signifi cant in this case. The first endorsement, entitled "Waiver o f Repossession Requirement," waives the requirement that Norwest repossess the borrower's vehicl e before making a claim. The second, the "Waiver of Salvage Deduction on Non-Repossession Claims," m odifies the policy so that the amou nt payable to Norwest on a claim is not reduced by the salvag e value of the borrower's

### Prior to January 1991, Norwest had a different policy wit h

Voyager that contained additional endorsements. This policy is not relevant here. Roe also claim s that Norwest imposed an additional char ge for calculating his premium based on the outstandin g pri ncipal balance rather than the sum of principal and interest

. However, Norwest introduced undisputed evidence that no such charge was made to Roe's account because the charge applies only t o simple-interest accounts, which Roe's was not.
-5- vehicle. Roe's arguments that insurance charges attributable to thes e

3 endorsements were unauthorized form the basis of this action.

The plaintiffs brought this action in federal district court , asserting claims unde r the National Bank Act and the Bank Holding Company Act against Norwest only and a RICO claim against Voyager only. Afte r permitting discovery and dismissing Doe from the case, the District Court granted summary judgm ent to the defendants on the National Bank Act claim and dismissed the anti-tying and RICO allegations for failure to state a claim o n which relief could be granted. See Doe v. Norwest Bank Minn. , N.A. , 909 F. Supp. 668 (D. Minn. 1995) (order di smissing RICO count). The court dismissed these federal claims with prejudice and declined t o exercise supplemental jurisdiction over the state-law claims, dismissing them wi thout prejudice. Roe's appeal challenges the dismissal of th e federal claims.

II.

We address the National Bank Act claim first. Insofar as it i s relev ant here, the National Bank Act permits a national bank to charg e "interest at the rate allowed by the laws of the State . . . where the ban k is located . . . and no more." 12 U.S.C. § 85 (1994). Section 86 provide s a federal cause of action for usury against a na tional bank that "tak[es],
rec eiv[es], reserv[es], or charg[es] a rate of interest greater than i s allowed by section 85 of this title." 12 U.S.C. § 86 (1994); see also M. Nahas & Co. v. First Nat'l Bank , 930 F.2d 608, 6 12 (8th Cir. 1991) (remedy of § 86

### -6-

completely preempts state-law usury actions against national banks); Fishe r
v. Firs t Nat'l Bank , 548 F.2d 255, 257 (8th Cir. 1977) (interest rate a national bank may charge is ultimately a question of federal law).

Roe ar gues that the "unauthorized" charges attributable to th e repossession and salvage waivers, and perhaps th e full amount of insurance charge s, should be considered interest with respect to his installmen t loan. Norwest argues that charges for insurance are not interest at all, but even if they were considered interest, the total interest rate on Roe' s loan would be below the allowable cap under Minnesota law. The parties' experts assumed that all the charges were interest but used differen t interpretations of the Federal Reserve's Regulation Z (12 C.F.R. pt. 226 (1996)) to support their conclusions: Roe's expert calculated the interes t rate by amortizing the insurance charges over th e period of time from when the y were imposed to the end of the loan term, while Norwest's exper t amortized the insuran ce charges, like the ordinary interest charges, over the ent ire length of the loan. The District Court assumed that all th e insura nce charges were interest and approved the calculation method o f Norwest's expert. Be cause that method resulted in an interest rate below the maximum allowed by Minnesota law, the court granted summary judgment to Norwest.
We review a grant of summary judgmen t de novo, affirming only if the record, viewed in the light most favorable to the nonmoving party, shows
no genuine issue of material fact and the moving party is entitled t o judgment as a matter of law. See Smith v. City of Des Moines , 99 F.3 d 1466, 1468-69 (8th Cir. 1996). We may affirm on any ground supported by the recor d. See Phillips v. Marist Soc'y , 80 F.3d 274, 275 (8th Cir

. 1996).

We ne ed not resolve the parties' thorny dispute about the correc t interp retation of Regulation Z, nor need we decide the less-complicate d question of the applicable interest-rate cap under

### Roe argues that Norwest has raised this issue for the firs t

time on appeal. This assertion is patently untrue. See Rep ort and Recomm endation of Dec. 21, 1995, at 4 ("Defendant makes a compel ling argument that [the charges] are not interest for an y purpose.").
-7- Minnesota law. Inste ad, we conclude that collateral protection insurance premiums charged to a borrower's account do not, as a matter of federa l law, constitute "interest" within the meaning of § 85. 4

Th e Office of the Comptroller of the Currency recently issued a n interpretive ruling r egarding the meaning of the term "interest" in § 85. That ruling reads:

The term "interest" as used in 12 U.S.C. 85 includes an y payment compensating a c reditor 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 cre dit was extended. It includes, among other things, th e following fees connected with credit extension or a vailability: numerical periodic rates, late fees, not sufficient funds (NSF) fees, o verlimit fees, annual fees, cash advance fees, an d memb ership fees. It does not ordinarily include appraisa l fees, premiums and commissions attributable to insuranc e guaranteeing repayment of any extension of credit , finders ' fees, fees for document preparation or notarization, or fee s incurred to obtain credit reports.
Interpretive Rulings, 61 Fed. Reg. 4849, 4869 (1 996) (to be codified at 12 C.F.R § 7.4001(a)) (emphasis added). Although this ruling is a recent one , it has already received the imprimatur of the Su preme Court. In Smiley v. Citibank (S.D.), N.A. , 116 S. Ct. 1730 (1996), the Court unanimously held that the word "intere st" in § 85 was ambiguous and that the Comptroller's judgment as to its me aning was entitled to deference under Chevron U.S.A. Inc. v. National Resources Defense Council, Inc. , 467 U.S. 837 (1984). Se e Smi ley , 116 S. Ct. at 1732-33. The Court then concluded that th e Comptroller's inclusion of late fees within the meaning of

### -8-

"inte rest" was a reasonable interpretation of the statute. See id. a t 1735. Because the law of South Dakota, Citibank's home state, permitted banks to charge late fees, the determination that late fees are interest for Na tional Bank Act purposes put an end to the state-law claims o f Smiley, a California resident. See id. at 1732; Marquette Nat'l Bank v. First of Omaha Serv. Corp. , 439 U.S. 299, 313 (1978) (national bank ma y charge interest allow ed by its home state even if such interest would not be allowed to bank in borrower's home state).

In the instant case, we are faced with a slightly different issue

. If we accept the Comptroller's judgment that "premiums and commission s at tributable to insurance guaranteeing repayment of any extension o f credit" are not "interest," and we conclude that the charges involved here
are pre miums within that definition, Roe's claim must fail because h e
cann ot show that Norwest charged "a rate of interest greater than i s allowed by section 85." 12 U.S.C. § 86 (1994) (emphasis added).

We h ave little difficulty concluding that the Comptroller' s interpretation of "interest" as excluding insurance premiums is reasonable

. The Supreme Court has already determined that "i nterest," as it is used in § 85, is not an unambiguous term. See Smiley , 1 16 S. Ct. at 1732-33. Our inqui ry, therefore, is whether "the agency's answer is based on a perm issible construction of the statute." Chevron , 467 U.S. at 843

. Certainly the ordinary definition of "interest" does not include insurance premiums passed along from creditor to debtor. See Black's Law Dictionary 812 (6th ed. 1990) (" Interest is the compensation allowed by law or fixed by the parties for the use or forbearance of borrowed money."); Smiley , 11 6 S. Ct. at 1735 (interest is "`compensation which is paid by the borrower to the lender or by the debtor to the creditor f or . . . use [of money]'") (quoting 1 J. Bouvier, A Law Dictionary652 (6th ed. 1856)) (alterations in Smiley ). Indeed, we believe it is quite sens ible to conclude that such premiums are not interest

### The opinions in the Kent ycase express different views of the

collateral protection insurance in that case. On a motion t o dismiss, the district court held that insurance charges that were "unauthorized and unnecessary to protect the collateral" could be considered interest on the loa n. See Kenty v. Bank One, Columbus, N.A. , 1992 W L 170605, at *4 (S.D. Ohio Apr. 23, 1992). At th e summary judgment stage, however, the court concluded that st ate law imposed no maximum on the allowable interest rate, so that it did not matter whether any portion of the insurance charges wa s considered interest. See Kenty v. Bank One, Columbus, N.A. , 1993 WL 592532, at *5 (S.D. Ohio Oc t. 25, 1993). The Sixth Circuit saw Kenty's argument slightly differently, believing Kenty wa s comp laining about the bank's charging interest on the insuranc e charge s. That court concluded that the insurance premiums wer e -9- but r ather additions to the principal of the loan, or perhaps separat e extensions of credit entirely. See Kenty v. Bank One, Columbus, N.A. , 92 F.3d 384, 393 (6th Ci r. 1996). And, as the Court stated in Smiley , it is "quite possible and rational to distinguish, as the regulation does, " between charges that are specifically assigned t o the expenses of the bank in und ertaking such activities as processing an application, insuring a loan, or appraising collateral and, on the other hand, charges "that are
asse ssed for simply making the loan, or for the borrower's default. " Smiley , 116 S. Ct. at 1734. We conclude that the Comptroller's rulin g excluding "premiums and commissions attributable to insurance guaranteeing repayment of any extension of credit" from the d efinition of "interest" is reasonable.
The question remains whether the charges involved here fit with in the Compt roller's definition. Although collateral protection insurance ha s pro duced a substantial body of case law in recent years, we have bee n unable to locate any cases addressing the precise issue presented here in light of Smiley

. Cf. Giddens v. Hometown Fin. Servs. , 938 F. Supp. 801, 806-07 (M.D. Ala. 1996) (suggesting that insurance premiums are no t intere st; holding that case was improperly removed); Kenney v. Farmer s Nat'l Bank , 938 F. Supp. 789, 793-94 (M.D. Ala. 1996) (same). But cf. Mos s v. Southtrust Mobile Servs., Inc. , No. CV-95-P-1 647-W (N.D. Ala. Sept. 22, 1995) (holding, without discussion of Comptroller's ruling, tha t unauthorized premiums are interest and finding s tate-law claims completely preempted). 5

### themselves loans, and so state law permitted the bank to cha rge any

amount of interest on the premiums. See 92 F.3d at 393. None of these opinions addresses the C omptroller's interpretation of § 85.
-10- Roe argues that the charges added to his account are in fact no t prem iums attributable to insurance, but rather charges "compensating a creditor or prospective creditor for . . . [a] default or breach by a borrow er," which would fit them within the Comptroller's definition o f "interest." See 61 F ed. Reg. at 4869. It is true that Norwest charges a bor rower for insurance only after the borrower breaches the covenant t o maintain insurance. But there is a notable diff erence between a late fee, which c ompensates the creditor solely for the effects of the debtor' s default, and an insurance charge, which compensates the creditor for the cost of protecting its security, a cost the debtor is supposed to bea r anyway. In addition, the limitation of the coverage in this case to the lesser of the damage to the collateral or the loan balance indicates that the i nsurance is designed to guarantee the repayment of the loan

. Accordingly, we believe that these collateral protection insurance premium s
are ex cluded by the Comptroller's interpretive ruling from the genera l categoryof charges compensating a creditor for a default or breach an d placed in the categor y of premiums attributable to insurance guaranteeing the repayment of credit extended.

Roe al so argues that even if the basic insurance coverage is no t intere st, the allegedly unauthorized aspects of the insurance must b e considered interest. We disagree. The charges related to the waiver of reposs ession and waiver of salvage endorsements are not trivial; Roe' s expert calculated that these endorsements accounted for more than thirty perc ent of the total premium charged to Roe. But Norwest introduce d undisputed evidence t hat these endorsements placed Norwest in exactly the same position in which

### At times in his brief and at oral argument, counsel for Ro e

seemed to be challenging a third endorsement, entitled "Automatic Cove rage," which covers collateral retroactively to the date o n which the borrower's own insurance lapsed. We see no reason t o treat this endorsement any dif ferently from the others, as it also merely replicates the coverage Roe was contractually obligated to provide.
-11- it would have been if Roe had purchased a standard Minnesota automobil e insurance policy and named Norwest as loss payee, as the loan agreemen t required him to do. In other words, under an ordinary policy in Minnesota , a lender named as los s payee would not have to repossess a wrecked car in order to make a claim , and the amount received by the lender would not be reduc ed by the salvage value of the car. We therefore see no reason t o treat the charges rel ated to the waiver endorsements any differently from the basic insurance charge. Although they may be differentiated fo r insu rance purposes, they are in essence a single package designed t o replicate the coverage Roe should have provided himself. 6

In sum, unlike late fees, NSF fees, and the like, the insuranc e charges in this case benefitted both creditor and borrower by making i t easier for Roe to repay the loan in case his tru ck were physically damaged
or stolen. (Roe, after all, would remain liable on the note even if the collateral were value less.) Norwest merely passed along to Roe the exact cost Norwest incurredin procuring insurance that restored it to the same situation in which it would have been had Roe ke pt his end of the bargain. The charges therefore are "premiums . . . attributable to insuranc e guaran teeing repayment of [an] extension of credit," and under th e Co mptroller's reasonable interpretation of the statute, they are no t "interest." We conclude that the events that fo rm the basis of this cause of action do not amount to a violation of the National Bank Act.

### -12- III.
The District Court dismissed Roe's anti-tying allegations for f ailure to state a claim on which relief could be granted. See Fed. R. Civ. P

. 12(b)(6). In considering a motion to dismiss, w e assume all facts alleged in the complaint are true, construe the complaint liberally in the light most favor able to the plaintiff, and affirm the dismissal only if "i t appears beyond a doub t that the plaintiff can prove no set of facts which would entitle the plaintiff to relief." Colemanv. Watt , 40 F.3d 255, 258 (8th Cir. 1994). Our review is de novo. See id.

The relevant provisions of the Bank Holding Company Act Amendment s of 1970 state as follows:
(1) A bank shall not in any manner extend credit, l ease or sell pro pertyof any kind, or furnish any service . . . on th e condition or requirement-- (A) that the customer shall obtain some additiona l credit, prop erty, or service from such bank other than a loan, discount, deposit, or trust service;

. . . (C) th at the customer provide some additional credit , pro perty, or service to such bank, other than thos e related to and usually provided in connection with a loan, discount, deposit, or trust service.
12 U.S.C. § 1972(1) (1994). The plaintiff in anaction under this section must show that the bank imposed a tie, that the practice was unusual in th e banking industry, that it resulted in an anti-co mpetitive arrangement, and that it benefitted the bank. See Alpine Elec. C o. v. Union Bank , 979 F.2d 133, 135 (8th Cir. 1992).

Roe alleg ed two potential ties in his complaint: when he purchased insurance through the bank, he was required to accept an

### -13-

automatic extension of credit to pay for the insurance; and when h e purchased property damage insurance through the bank, he was also required to purchase additional insurance that was unauthorized and undisclosed

. On appeal , Roe emphasizes that he does not suggest that the purchase o f insurance through the bank was a condition of the extension of credit for the original loan. See Kenty , 92 F.3d at 395 (where borrower is free to purchase insurance on open market, insurance is not tied to original loan)

.

Roe first complains that when he elected to purchase insuranc e through the bank rather than from an independent agent--a highly debatable characterization of the facts, but one we will entertain for purposes of this motion to dismiss--he found that the only w ay he was permitted to pay for the insurance was to have it added to his loan balance, where it bore interest at the loan rate. But this contention is belied by the language of the installment agreement itself, which was a ttached to Roe's complaint and forms a part of the pleadings: "I MAY PREPAY MY OBLIGATIONS UNDER THI S AGREEMENT, IN WHOLE O R IN PART, AT ANY TIME WITHOUT PENALTY." Roe's App. at 135. It is therefore clear that Roe was not required to accept a n automatic extension of credit to pay for the insurance; he could hav e tendered payment to N orwest in the amount of the insurance premium (or in any other amount) at any time. Because Roe's complaint itself demonstrate s that this supposed tie did not exist, this allegation does not state a claim on which relief could be granted.

The s econd alleged tie presents a more substantial question. Ro e here ar gues that when he elected to purchase property damage coverag e through Norwest, he was also required to purchase other unauthorized and undisclosed coverages. Norwest suggests that we adopt the reasoning of th e Six th Circuit, which held on nearly identical allegations in Kentytha t because the borrower never agreed to purchase the unauthorized insurance, that purch ase could not have been a "condition or requirement" of th e purchase of the

### We disagree with trial court decisions from within our Circuit

opining th at a tie is a per se violation of § 1972. See JS T Properties v. First Nat'l Bank , 701 F. Supp. 1443, 1449 (D. Minn. 1988); Sharkey v. Security Bank & Trust Co. , 651 F. Supp. 1231, 1232 (D. Minn. 1987).
-14- authorized insurance, as § 1972(1) requires. See Kenty , 92 F.3d at 395. In effect, that court held that "a valid breach of contract claim cannot be converted into an anti-tying claim." Id. We are not sure that we agre e with the reasoning of the Sixth Circuit, particularly in the context of a motion to dismiss. Fairly read, Roe's complaint alleges that Norwes t provides property damage insurance only if borrowers also pay for other, unauthorized insurance coverage. It therefore appears that the purchase of the unauthorized coverage is a "requirement" of the purchase of propert y damage coverage, for the latter is not available without the former. We do not believe that the fact that the unauthoriz ed coverage is undisclosed should affect this po rtion of the analysis. Roe's complaint thus alleges a tie and satisfies the first requirement of an anti-tying claim.

We reach the same result as the Sixth Circuit by another route , however, for we believe Roe's complaint does not allege an anti-competitiv e tie. Unlike a Sherma n Act plaintiff, a plaintiff in a § 1972 action need not show that a tie has anti-competitive effects. See , e.g. , Palermo v. First Nat'l Bank & Trust Co. , 894 F.2d 363, 368 (10th Cir. 1990); Davis v. First Nat'l Bank , 868 F.2d 206, 208 (7th Cir.), cert. denied , 493 U.S. 816 (1989); P arsons Steel, Inc. v. First Ala. Bank , 679 F.2d 242, 245 (11t h Cir. 1982); cf. Jefferson Parish Hosp. Dist. No. 2 v. Hyde , 466 U.S. 2, 13

- 16 (1984) (Sherman Act tying plaintiff must show that defendant has market power in tying market and that tie forecloses substantial volume o f commerce). But a § 1972 plaintiff is required t o show an anti-competitive practice , that is, "that the practice results in unfair competition o r could lessen competition ." Palermo , 894 F.2d at 368 (emphasis added); see also Davis , 868 F.2d at 208; Parsons Steel , 679 F.2d at 246. 7

### -15- In this c ase, Roe has not alleged an anti-competitive practice. In the mark et for property damage insurance (the tying market), it i s undi sputed that Roe was permitted to purchase from any vendor of hi s choice. Roe has alleged nothing from which a factfinder could conclud e that the tie would have any anti-competitive disruption in the tyin g market. Nor can ther e be any anti-competitive result in the tied market, the market for the un authorized insurance coverage, for the simple reason that Roe did not want to purchase such coverage from any vendor. Se e Jefferson Parish , 466 U.S. at 16 ("[W]hen a purchaser is `forced' to buy

a product he would not have otherwise bought even from another seller in the tied-product market, there can be no adverse impact on competitio n because no portion of the market which would oth erwise have been available to other sellers has been foreclosed."). When these circumstances ar e considered together-- that is, Roe can buy basic property damage insurance anywhere and does not want to buy other coverage at all--it is clear that Norwest's practice cannot possibly lessen competition. It therefore canno t be considered an anti-competitive practice. See Palermo , 894 F.2d at 368. The District Court properly dismissed this alleg ation for failure to state a claim.

IV.
Finally, we consider Roe's RICO allegations. The District Cour t concluded that Roe failed to state a claim on which relief could be grante d because th e application of RICO to the alleged actions of Voyager wa s barred by the McCarran-Ferguson Act, 15 U.S.C. § 1012(b) (1994). We agree

.

The relev ant portion of the McCarran-Ferguson Act provides that "No Act of Congress shall be construed to invalidate , impair, or supersede any law enacted by any State for the purpose of

### Despite the apparent agreement of the parties to the co ntrary,

the application of the McCarra n-Ferguson Act in this case does not re quire a specific conclusion that the allegedly imprope r activi ties of Voyager constituted the "business of insurance. " Fabe recognizes that the three-part test of Union Labor Life Ins. Co. v. Pireno , 458 U.S. 119, 1 29 (1982), for determining whether a par ticular practice constitutes the business of insurance i s relevant only in cases involving a conflict between state law and federal antitrust law, a conflict which is the subject of a separa te provision of the McCarran-Ferguson Act. See Fabe , 50 8 U.S. at 504-05.
-16- regulating the business of insurance . . . unless such Act specificall y relates to the business of insurance." 15 U.S.C. § 1012(b) (1994). The McCarran-Ferguson Act bars the application of a federal statute if (1) the statute does not specifically relate to the business of insurance; (2) a state statute has bee n enacted for the purpose of regulating the business of insurance; and (3) the federal statute would invalidate, impair, o r supersede the state s tatute. See Murff v. Professional Med. Ins. Co. , 97 F.3d 289, 291 (8th Cir. 1996) (citing United States Dep't of Treasury v. Fabe , 508 U.S. 491, 501 (1993)). 8

The parti es agree that RICO does not specifically relate to th e business of insurance. Nor does Roe seriously dispute Voyager's contentio n that Minnesota has enacted a comprehensive statutory scheme to regulate th e bus iness of insurance. See Minn. Stat. ch. 59A-72C (1996). The onl y substantial question for our review, therefore, is whether the application of RICO to the activities of Voyager would invalidate, impair, or supersed e Minnesota's insurance laws.

Fai rlysummarized, Roe's complaint contains two substantiv e all egations. First, Roe alleges that Voyager contracted to function a s Norwe st's automobile insurance department, sending notices to borrower s which appeared to be from Norwest and causing

### Roe argues that our opinion in First Nat'l Bank v. Tay lor , 907

F.2d 775 (8th Cir.), cert. den ied , 498 U.S. 972 (1990), holds that the McCarran-Ferguson Act is inapplicable to a national bank, and that because he alleges that Voyager was acting as the agent of a national bank, the Act cannot apply here. We believe Roe misreads that case, which relies on the conclusion that the bank wa s specifically authorized by the National Bank Act to undertake the insurance-like activity that was the subject of the case. Se e Taylor , 907 F.2d at 778-79. I n any event, Voyager is an insurance comp any and is subject to Minnesota's laws regulating insuranc e companies; that it may have been working on behalf of a bank adds nothing to this analysis.
E vidence in the record on appeal suggests that the actua l goi ngs-on were quite different. Norwest contracts with G.D. Va n Wagenen Company, which is not a party here, to administer th e collateral protection program by verifying whether borrowers have provided proof of insurance an d sending notices to borrowers about Norwes t's right to purchase insurance to protect its collateral

. Va n Wagenen is also a Voyager agent and is authorized to plac e insurance with Voyager when No rwest purchases it. An affiliate of Norwest, Norwest Insurance, Inc., which is also not a party to this suit, se rves as the broker for the purchase of the insurance an d receives commissions from Voyager on the premiums. Nevertheless, for purposes of this motion to dismiss, we must accept Roe' s allegations as true.
-17- borrowers to be charged for unauthori zed insurance coverage. Second, Roe 9 cla ims that Voyager paid or caused to be paid to Norwest "illegal an d unauthorized kickbacks, rebates, and/or commissions" with respect to the borro wers' collateral insurance premiums. Compl. ¶ 57. All of thi s 10 alleged activity, Roe claims, constitutes a massive pattern of racketeerin g activity, particularly mail fraud and wire fraud, in violation of 18 U.S.C

. § 1962(c) (1994).

Vo yager argues that the allegedly fraudulent activities with whic h it is charged fall squarely within several sections of Minnesota' s insurance laws. See Minn. Stat. §§ 72A.08(2) (1996) (prohibiting payment of rebate to insured) , 72A.20(1) (1996) (prohibiting misrepresentation of terms of policy issued or to be issued), 72A.20( 12)(1) (1996) (prohibiting misrepr esentation of pertinent facts or policy provisions relating t o coverages).

### -18-

Minnesota law does not provide a private cause o f action for violations of these proh ibitions. See Morris v. American Family Mut. Ins. Co. , 38 6 N.W.2d 233, 238 (Minn. 1986). Instead, the Commissioner of Commerce i s empowered to investigate violations, file charges, issue orders, and impos e fine s. See Minn. Stat. §§ 72A.201(1), 72A.21, 72A.08(3) (1996). I n certain circumstances , the Commissioner may also obtain injunctive relief against an insurer. See Minn. Stat. § 72A.25(2)-(3) (1996).

RICO, by contrast, expressly grants treble damages, costs, an d attorney fees to a vi ctorious plaintiff. See 18 U.S.C. § 1964(c) (1994). Voyager argues that t he application of RICO in this case would impair the op eration of Minnesota's administrative remedial system by providin g private plaintiffs wi th a remedy Minnesota does not provide and affording plaintiffs a recovery significantly greater than that which the state has authorized. In particular, Voyager suggests that the possibility of trebl e damage s and attorney fees would eviscerate the administrative system b y div erting any rational aggrieved policyholder from the Commissioner' s off ice to federal court. Consequently, Voyager claims, an insurer tha t found its elf the subject of an inquiry by the Commissioner would b e unlikely to cooperate in the administrative process for fear of prejudicin g its litigation position if a RICO suit should arise later.
The precise degree of impairment of a state statute that is required to trigger the operat ion of the McCarran-Ferguson Act is not settled. In its only opinion to address the question directly, the Supreme Cour t concluded that application of the federal securities laws to a merger of insura nce companies would not impair the state's laws protectin g policyholders. See SEC v. National Securities, Inc. , 393 U.S. 453, 46 3 (1969). The Court noted that "Arizona has not commanded something which the Federal Government seeks to prohibit" but also recognized that th e federal interest was directed toward protecting shareholders, while th e state

### -19-

statute was directed toward protecting policyholders. See id. The Court concluded, "[i]n thes e circumstances, we simply cannot see the conflict." Id. In the case at bar, Minnesota has not commanded anything which RICO would prohibit; in other words, there is no direct conflict between federa l and state law. But, in contrast to National Securities , the federal and state sta tutes at issue here are directed toward the same end: th e protection of policyh olders and prospective policyholders from fraudulent ins urance practices. The issue presented here, therefore, is whether a fede ral statute that is essentially parallel in substance to a stat e statute m ay impair the state statute because of a difference in th e availability and the magnitude of the remedies they provide.

Sev eral courts addressing this question have concluded that th e McCarr an-Ferguson Act is not implicated by federal law that i s substantively parallel to state law. See Villaf ane-Neriz v. FDIC , 75 F.3d 727, 736 (1st Cir. 19 96) (Federal Deposit Insurance Act); Nationwide Mut. Ins. Co. v. Cisneros , 52 F.3d 1351, 1363 (6th Cir. 1995) (Fair Housin g Act), cert. denied , 1 16 S. Ct. 973 (1996); Merchants Home Delivery Serv., Inc. v. Frank B. Hall & Co. , 50 F.3d 1486, 1492 (9th Cir.) (RICO), cert. denied , 116 S. Ct. 418 (1995); NAACP v. AmericanFamily Mut. Ins. Co. , 978 F.2d 287, 295-97 (7th Cir. 1992) (Fair Housing Act), cert. denied , 508 U.S

. 907 (1993); Thacker v . New York Life Ins. Co. , 796 F. Supp. 1338, 1342-43 (E.D. Cal. 1992) (RICO). Other courts have disa greed, concluding that the intrusion of RICO's substantial damage provision s into a state's insurance regulator yprogram may so impair the state law as to bar application o f RICO. See Kenty , 92 F.3d at 392 (collateral protection insurance case ; dis tinguishing Nationwide ); Ambrose v. Blue Cross & Blue Shield , 891 F

. Supp. 1153, 1165-68 (E.D. Va. 1995), aff'd , 95 F.3d 41 (4th Cir. 1996 ) (unpublished per curiam); Everson v. Blue Cross & Blue Shield , 898 F. Supp

. 532, 544 (N.D. Ohio 1994); Wexco Inc. v. IMC, In c. , 820 F. Supp. 194, 203- 04 (M.D . Pa. 1993); LeDuc v. Kentucky Cent. Life Ins. Co. , 814 F. Supp

. 820,

### Alt hough Murff contains language suggesting that impairmen t

will exist only in the case of a direct conflict between state and federal law, that language is certainly dictum in light of th e Court's conclusion that application of the ADEA would have a d e minimis effect, at most, on the insolvency proceedings. See Murff , 97 F.3 d at 292 (citing Missouri statute giving policyholder s priority over claims of employees). In addition, the ADEA, lik e the federal securities laws, is designed to protect parties other than policyholders. Murff therefore fits well within the fr amework of National Securities , see 393 U.S. at 463, and does not control here.
-20- 829 (N.D. Cal. 1992); Senich v. Transamerica Premier Ins. Co. , 766 F. Supp

. 339, 341-42 (W.D. Pa. 1990) (collateral protection insurance case).
We find the latter line of cases more persuasive in the RICO co ntext. As one court has noted, "the remedies available under RICO are among the most severe ever enacted in a federal civil statute." Ambrose , 891 F

. Supp. at 1166. The state of Minnesota has determined that its insurance market can best be regulated by the Commissioner's pursuit of fines an d injunct ive relief. Congress has expressed its intention to leave th e regul ation of the business of insurance to the states unless a federa l statute expressly addresses that subject or the application of a general federal statute would not invalidate, supersede, or impair a state statute

. Were the question presented here, we might agree with the Sixth and Sevent h Circuits that the federal civil rights statutes do not impair stat e insu rance regulation. Cf. Murff , 97 F.3d at 292 (application of Ag e Discrimination in Employment Act to insolvent insurance company does not impair state insurance insolvency procedures). But Voyager makes a 11 compelling case that the extraordinary remedies of RICO would frustrate,
an d perhaps even supplant, Minnesota's carefully developed scheme o f regulation. We do not read the term "impair" so narrowly as to permit the conclu sion that the McCarran-Ferguson Act does not apply in th e ci rcumstances presented here. See Webster's Third New Internationa l Dictionary 1131 (1981) (defining "impair" as

### -21-

"diminish in quantity , value, excellence, or strength; do harm to"). The District Court correc tly held that Roe's RICO allegations failed to state a claim.

V.
The judgment of the District Court is affirmed.
HEANEY, Circuit Judge, concurring and dissenting.

I concur in Sections III and IV of t he court's opinion. I disagree, however, with the conclusions reached in Section II. I believe th e dist rict court erred in granting summary judgment on the question o f whether the payments that were made were premiums rather than interes t payments. I think th is question can only be decided after an evidentiary hearing b y the district court and that we should remand to the distric t court to hold such a hearing. If the district court decides after a n evidentiary hearing that the payments are intere st payments in whole or in part , then it must determine whether the payments were usurious. I n reaching this decision, I believe it is clear that the rate of interes t should be computed ov er the life of the loan rather than over the life of the agreement.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.