Court Opinion

ID: 9375016
Source: CourtListenerOpinion
Date Created: 2023-02-24 18:00:51.351889+00
Date Added: 2024-06-11T17:16:54.932797
License: Public Domain

FOR PUBLICATION

     UNITED STATES COURT OF APPEALS
          FOR THE NINTH CIRCUIT

CREDIT ONE BANK, N.A.,                            No. 21-56271
          Plaintiff-Appellant,
                                               D.C. No. 5:20-cv-
    v.                                          02156-JGB-KK

MICHAEL A. HESTRIN, District
Attorney of Riverside County,                       OPINION
California,
              Defendant-Appellee.

         Appeal from the United States District Court
             for the Central District of California
          Jesus G. Bernal, District Judge, Presiding

          Argued and Submitted November 9, 2022
                   Pasadena, California

                    Filed February 27, 2023

Before: Mary H. Murguia, Chief Judge, and Barrington D.
      Parker, * and Kenneth K. Lee, Circuit Judges.

                    Opinion by Judge Parker

*
 The Honorable Barrington D. Parker, Jr., United States Circuit Judge
for the U.S. Court of Appeals for the Second Circuit, sitting by
designation.
2                  CREDIT ONE BANK V. HESTRIN

                          SUMMARY **

               Abstention / National Bank Act

    The panel affirmed the district court’s dismissal, based
on Younger abstention, of Credit One Bank’s action alleging
that Riverside County District Attorney Michael A. Hestrin
violated the National Bank Act by suing Credit One in state
court for allegedly employing a vendor to make harassing
debt collection phone calls.
    Credit One sought an injunction against the state court
action on the ground that it was an unlawful exercise of
“visitorial powers,” which the National Bank Act and its
associated regulations grant exclusively to the Office of the
Comptroller of the Currency.
    The panel held that the district court correctly abstained
under Younger v. Harris, 401 U.S. 37 (1971), because all
four Younger factors were met. First, the state action
qualified as an “ongoing” judicial proceeding because no
proceedings of substance on the merits had taken place in the
federal action. Second, the state court action implicated the
important state interest of protecting consumers from
predatory business practices, and federal law did not bar
Hestrin from bringing the state court action. The panel held
that the state court action, which was an enforcement action
against a national bank under non-preempted state law, was
not an exercise of “visitorial powers,” and nothing in federal
law prevents a district attorney from vindicating a state
interest in consumer protection by suing a national

**
  This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                CREDIT ONE BANK V. HESTRIN              3

bank. Third, Credit One had the ability to raise a federal
defense under the National Bank Act in the state court
action. And fourth, the injunction Credit One sought would
interfere with the state court proceeding.

                       COUNSEL

Christopher N. Bellows (argued), Holland & Knight LLP,
Miami, Florida; Abraham J. Colman, Raymond Y. Kim, and
Stacey H. Wang, Holland & Knight LLP, Los Angeles,
California; Laurie W. Daniel, Holland & Knight LLP,
Atlanta, Georgia; for Plaintiff-Appellant.
Harold R. Anderson (argued), Deputy District Attorney;
Timothy S. Brown, Trial Attorney; Michael A. Hestrin,
District Attorney, Riverside County; Riverside County
District Attorney’s Office; Riverside, California; for
Defendant-Appellee.
Rachel A. Foodman, Deputy Attorney General; Michele Van
Gelderen, Supervising Deputy Attorney General; Nicklas A.
Akers, Senior Assistant Attorney General; Rob Bonta,
Attorney General of California; Office of the California
Attorney General; Oakland, California; for Amicus Curiae
State of California.
4                    CREDIT ONE BANK V. HESTRIN

                              OPINION

PARKER, Circuit Judge:

    In March 2021, Riverside County, California District
Attorney Michael A. Hestrin sued Credit One Bank in
Riverside County Superior Court. The lawsuit (the “state
action”) alleged that Credit One, a national bank, violated
California law by employing a vendor to make extensive
harassing debt collection phone calls to California residents.
In a related federal case (the “federal action”), Credit One
requested that the United States District Court for the Central
District of California enjoin the state action on the ground
that it was an unlawful exercise of “visitorial powers,” which
the National Bank Act (“NBA”) and its associated
regulations grant exclusively to the Office of the
Comptroller of the Currency (“OCC”). 12 U.S.C. § 484(a);
12 CFR § 7.4000(a)(1). 1 The district court ultimately
decided to abstain under Younger v. Harris, 401 U.S. 37
(1971), in favor of the state action and dismissed the federal
action. Credit One appeals that dismissal.
    We affirm. We hold that the district court was correct to
abstain, that the state action was not an exercise of visitorial
powers, and that nothing in the NBA prevents district

1
  Visitation is the power of a sovereign to inspect, supervise, and control
a corporation at will, for example by inspecting the corporations’ books
and records. See Cuomo v. Clearing House Ass’n, L.L.C., 557 U.S. 519,
525–29 (2009). The Supreme Court has defined visitation as “the act of
a superior or superintending officer, who visits a corporation to examine
into its manner of conducting business, and enforce an observance of its
laws and regulations.” Watters v. Wachovia Bank, N.A., 550 U.S. 1, 14
(2007) (quoting Guthrie v. Harkness, 199 U.S. 148, 158 (1905)).
                  CREDIT ONE BANK V. HESTRIN                   5

attorneys from suing national banks under non-preempted
state laws.
                                I.
     This case has a tortuous history in state and federal court.
It commenced in January 2019 when Hestrin began
investigating a third-party vendor of Credit One for
violations of California law. Hestrin believed that the vendor
made harassing phone calls to California residents in an
attempt to collect debts allegedly owed to Credit One.
Hestrin eventually alleged that tens of thousands of
consumers received millions of improper automated debt
collection phone calls and that many of them were directed
to individuals having no relationship whatsoever to Credit
One. In connection with this investigation, Hestrin served
Credit One with an investigative subpoena seeking records
of its banking activities. Credit One formally objected to the
subpoena on several grounds, including that it “improperly
infringes on the exclusive visitorial powers of the Office of
the Comptroller of the Currency” because it sought to
inspect Credit One’s books and records. Hestrin then
petitioned the state Riverside County Superior Court to
enforce the subpoena (the “investigative subpoena
enforcement action”).
    Credit One then filed the federal action in the Central
District of California seeking a declaratory judgment that the
investigative subpoena was unenforceable as an improper
exercise of visitorial powers. Credit One also sought, in the
federal action, injunctive relief broadly forbidding Hestrin
from taking any action to enforce federal and state lending,
debt collection, and consumer laws against Credit One, or
otherwise exercising visitorial powers in violation of Section
6                CREDIT ONE BANK V. HESTRIN

484 of the National Bank Act. This opinion addresses Credit
One’s ultimate appeal in the federal action.
    Shortly after filing the federal action, Credit One
successfully moved in state court to stay the investigative
subpoena enforcement action. With the investigative
subpoena enforcement action stayed, Hestrin elected to
withdraw the investigative subpoena, conceding that it was
an improper exercise of visitorial powers. Hestrin then
moved to dismiss the federal action for lack of subject matter
jurisdiction and on the ground that it was moot because he
had withdrawn the investigative subpoena. The district court
denied the motion. The court held that it had jurisdiction and
that the case was not moot because Hestrin had not
demonstrated that a “renewed investigative subpoena
against Plaintiff ‘could not be reasonably be expected.’”
    Hestrin then filed the state action against Credit One in
Riverside County Superior Court. The state action alleged
violations of California’s Unfair Competition Law, the
Rosenthal Fair Debt Collections Practices Act, and the right
to privacy of the California Constitution.
    After the state action was filed, the federal action
continued and Credit One sought an injunction in the federal
action that would enjoin both the investigative subpoena
enforcement action and the later-filed state action. In the
federal action, the parties filed a joint scheduling report and
discovery plan in which they agreed that no discovery was
necessary because the dispute turned on differing
interpretations of federal law and that the appropriate
approach for resolution of the case would be for Credit One
to move for summary judgment. Credit One, however,
delayed for several months in filing its summary judgment
motion.
                    CREDIT ONE BANK V. HESTRIN                       7

    In the interim, Credit One removed the state action to
federal court, but the court remanded it. California v. Credit
One Bank, N.A., No. EDCV 21-872 JGB (KKx), 2021 WL
3130045 (C.D. Cal. July 23, 2021). Two months after the
state action was remanded to California state court, Hestrin
moved to dismiss the federal action based on Younger
abstention. Two days after Hestrin filed his motion, Credit
One filed its motion for summary judgment in the federal
action, arguing that Hestrin’s state action was an improper
exercise of visitorial powers over Credit One and that the
district court should therefore enjoin Hestrin from
attempting to enforce state consumer protection laws against
Credit One. 2 The district court concluded that the
requirements for Younger abstention had been satisfied,
dismissed the federal action and denied Credit One’s motion
for summary judgment as moot.
    This appeal followed.
                                   II.
    We consider essentially two questions: whether Younger
abstention was correct and whether Hestrin’s state court suit
was an impermissible exercise of visitorial powers vested
exclusively with the OCC. A district court’s Younger
abstention determination is reviewed de novo. Bean v.
Matteucci, 986 F.3d 1128, 1132 (9th Cir. 2021). In Younger,
the Supreme Court held that federal courts should abstain
from staying or enjoining pending state criminal

2
  Shortly after Hestrin’s Younger motion was filed, on September 22,
2021, the Riverside County Superior Court dismissed the investigative
subpoena enforcement action with prejudice at Hestrin’s request because
the subpoena had been withdrawn on November 20, 2020.
8                 CREDIT ONE BANK V. HESTRIN

prosecutions absent extraordinary circumstances. 401 U.S.
at 45. Younger abstention has been expanded to also cover
civil enforcement actions and is appropriate when “(1) there
is an ongoing state judicial proceeding; (2) the proceeding
implicates important state interests; (3) there is an adequate
opportunity in the state proceedings to raise constitutional
challenges; and (4) the requested relief seeks to enjoin or has
the practical effect of enjoining the ongoing state judicial
proceeding.” Matteucci, 986 F.3d at 1133 (quoting Page v.
King, 932 F.3d 898, 901–02 (9th Cir. 2019)).
    The district court concluded that all four Younger factors
were met. Credit One Bank, N.A. v. Hestrin, No. EDCV 20-
2156 JGB (KKx), 2021 WL 6496856 (C.D. Cal. Nov. 5,
2021). First, it found that the state action qualified as an
“ongoing” judicial proceeding because no proceedings of
substance on the merits had taken place in the federal action.
Id. at *2–*3. The district court concluded that its denial of
the earlier motion to dismiss “only addressed jurisdictional
issues” and that it had not spent a significant amount of time
evaluating the merits of the case. Id. at *3. Second, it found
that the state action implicated the important state interest of
protecting consumers and that the presence of federal issues
did not trump the state’s interest. Id. at *3–*4. Third, the
district court found that Credit One had the ability to raise
federal defenses in the state action and, finally, the district
court concluded that because Credit One sought to enjoin the
state action, the injunction it sought would interfere with the
state proceeding. Id.
    On appeal, Credit One admits that the third element is
satisfied because it could raise constitutional defenses in
state court but challenges the district court’s conclusions on
the three remaining elements. As to the first element,
although Credit One admits that the state action was a
                 CREDIT ONE BANK V. HESTRIN                  9

qualifying “state judicial proceeding,” it challenges the
district court’s conclusion that the state action was
“ongoing” at the relevant time. Next, Credit One argues that
that the fourth element is not satisfied because the relief it
seeks would not interfere with the state proceeding. Finally,
Credit One argues that because the NBA and its
implementing regulations forbid Hestrin from bringing the
state action, no important state interest can be implicated and
therefore the second element is not satisfied. We reject these
arguments.
                              A.
    Credit One’s argument on the first Younger factor fails
because the state action was “ongoing” before the federal
action proceeded beyond the embryonic stage. State
proceedings are “ongoing” for the purposes of Younger
abstention if “they are initiated ‘before any proceedings of
substance on the merits have taken place in the federal
court.’ Put another way, ‘the commencement of state
proceedings only ceases to require federal abstention after
the federal court proceedings have moved beyond an
embryonic stage.’” Nationwide Biweekly Admin., Inc. v.
Owen, 873 F.3d 716, 728 (9th Cir. 2017) (quoting Hicks v.
Miranda, 422 U.S. 332, 349 (1975) and Hoye v. City of
Oakland, 653 F.3d 835, 844 (9th Cir. 2011)) (cleaned up).
The district court correctly concluded that the federal action
had not moved beyond the embryonic stage.
    There are two bright line rules for evaluating whether
proceedings of substance on the merits have taken place and
a case has thus advanced beyond the embryonic stage. First,
the denial of a temporary restraining order is never a
proceeding of substance on the merits and, second, the grant
of a preliminary injunction is always a proceeding of
10                CREDIT ONE BANK V. HESTRIN

substance on the merits. Nationwide, 873 F.3d at 728.
Where, as here, neither of these events have occurred, “we
must conduct a fact-specific assessment of the
circumstances” of the case, recognizing that the relevant
inquiry “is the extent of the district court’s involvement in
the merits.” Id. Relevant factors include the number of
conferences held, if discovery was undertaken, any motions
ruled on, and the overall amount of time that the district court
spent on the case. Id. at 728–29.
    When the state action was filed, the docket in the federal
action contained 25 entries. Nearly all of them were the
routine preliminary entries present in any federal case: the
complaint, notice of assignment, proof of service, answer,
and pro hac vice applications and the like. The only motion
filed was Hestrin’s initial motion to dismiss for lack of
subject matter jurisdiction. After briefing, the court
concluded that it had jurisdiction and denied the motion. The
only filings made in the federal action between the denial of
the motion to dismiss and the filing of the state action in
Riverside County Superior Court were Hestrin’s answer, and
an order setting a scheduling conference. Thus, at the time
that Hestrin filed his Younger motion, the only significant
proceeding that had occurred in the federal action was the
denial of Hestrin’s motion to dismiss for lack of jurisdiction.
    Credit One does not argue that any discovery was taken
or that the district court held a significant number of
conferences. Instead, citing Nationwide, Credit One argues
that the denial of a motion to dismiss is a proceeding of
substance on the merits that occurred before the state action
was filed and which therefore makes Younger abstention
inappropriate. The denial of a motion to dismiss, however, is
not invariably a proceeding of substance on the merits. In
Nationwide, we concluded that the federal action had moved
                     CREDIT ONE BANK V. HESTRIN                        11

beyond the embryonic stage not merely because a motion to
dismiss had been denied but because, before the state action
was filed, “the district court spent a substantial amount of
time evaluating the merits of the cases in considering and
denying (in a detailed and reasoned order) Nationwide’s
motions for preliminary injunctions.” Nationwide, 873 F.3d
at 729. We noted that the district court had dedicated twenty-
one pages of its preliminary injunction opinions to the merits
and that the “submissions included more than 100 pages of
briefing and more than 250 pages of declarations, affidavits,
and exhibits in support of the motions.” Id. We also
contrasted the district court’s extensive consideration of the
merits with a hypothetical scenario in which the district court
had denied “the motions on a non-merits ground—such as
ripeness, standing, or one of the non-merits . . . factors.” 3 Id.
    Here, in contrast, the district court denied the motion to
dismiss for lack of subject matter jurisdiction in a five-page
order after the court considered briefing that included no
declarations or affidavits, and only four exhibits—a minimal
record, in contrast to the one in Nationwide. More important
than size of the record is the fact that the opinion focused
almost entirely on non-merits grounds. Hestrin’s motion
argued for dismissal under Rule 12(b)(1) and the majority of
the “discussion” section of the district court’s opinion was
on non-merits grounds: standing, collateral estoppel, and the
jurisdictional aspects of the Declaratory Judgment Act.

3
 In addition, the district court in Nationwide evaluated the merits of the
case as part of a Rule 12(b)(6) motion to dismiss. Nationwide, 873 F.3d
at 729 (“The motion to dismiss raised issues relating to the merits:
namely whether Nationwide had raised cognizable claims under the
Commerce Clause, substantive due process, equal protection, or the
doctrine of vagueness.”). Here, Hestrin’s Rule 12(b)(1) motion did not
address merits issues.
12               CREDIT ONE BANK V. HESTRIN

These factors indicate to us that the denial of Hestrin’s
motion to dismiss for lack of jurisdiction was not a
proceeding of substance of the merits and therefore the
federal action had not progressed past the embryonic stage.
     Credit One argues that the district court did reach the
merits in denying the motion to dismiss because the sole
issue in this case is whether the NBA and OCC regulations
forbid Hestrin from bringing the state action against Credit
One and that this core merits issue “was fully briefed and
initially addressed in Credit One’s favor.” This argument,
however, exaggerates what occurred. The entirety of the
district court’s discussion of the merits on Hestrin’s motion
to dismiss is as follows:

       [D]espite Plaintiff’s repeated challenge to a
       district attorney’s power to take enforcement
       actions against national banks (see, e.g.,
       Compl. ¶ 12 (“[S]tates may enforce
       nonpreempted state law against a national
       bank only where the state actor bringing the
       action is the attorney general. . . .”)),
       Defendant fails to support his assertion that
       the Cuomo and Dodd-Frank exception for
       attorney generals [sic] or “chief law
       enforcement officers” encompasses district
       attorneys at the county level. Absent any such
       support, the Court will not foreclose
       Plaintiff’s     claim     that    Defendant’s
       enforcement actions may usurp the OCC’s
       exclusive visitorial powers.

This short summary is nothing like the lengthy discussions
of the merits in Nationwide.
                 CREDIT ONE BANK V. HESTRIN                 13

    We therefore conclude that the district court’s denial of
Hestrin’s motion to dismiss did not advance the case beyond
an embryonic stage and that no substantial proceedings on
the merits had taken place in the federal action before the
court granted Hestrin’s Younger motion. The district court’s
finding that the state action was “ongoing” for Younger
purposes was therefore correct and we conclude that the first
Younger element is met.
                              B.
    With regard to the fourth Younger factor, Credit One
argues that the federal injunction it seeks will not have the
effect of enjoining an ongoing state judicial proceeding
because if Hestrin is enjoined, the California Attorney
General can still sue. We are not persuaded. This Younger
abstention requirement is not concerned with the identity of
the plaintiff but whether “the requested relief seeks to enjoin
or has the practical effect of enjoining the ongoing state
judicial proceeding.” Matteucci, 986 F.3d at 1133. Credit
One requested that the district court enjoin Hestrin from
taking any action to enforce federal and state lending, debt
collection, and consumer laws regarding Credit One’s credit
card lending operations. The district court concluded that if
it “grants the requested relief, then it would enjoin the
District Attorney’s current enforcement action against
Credit One. . . . Accordingly, the Court concludes that the
federal action will interfere with the state proceeding.” This
conclusion was correct. If the district court had granted
Credit One’s requested relief, it would have enjoined the
state proceeding. Our analysis ends there. The fact that the
Attorney General could bring suit even if the suit brought by
the District Attorney were enjoined is irrelevant.
14                CREDIT ONE BANK V. HESTRIN

                              C.
    Turning to the final Younger element—whether an
“important state interest” was involved in the state action—
we conclude that because federal law does not bar Hestrin
from bringing the lawsuit and because he sought to enforce
state laws that protect consumers from predatory business
practices, an important state interest was present.
    In assessing that interest, we “do not look narrowly to its
interest in the outcome of the particular case” but rather look
to “the importance of the generic proceedings to the State.”
New Orleans Pub. Serv., Inc. v. Council of City of New
Orleans, 491 U.S. 350, 365 (1989) (emphasis in original).
The law is clear that “[p]roceedings necessary for the
vindication of important state policies . . . evidence the
state’s substantial interest in the litigation.” Middlesex Cnty.
Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423, 432
(1982). We have been clear that “[w]here the state is in an
enforcement posture in the state proceedings, the ‘important
state interest’ requirement is easily satisfied.” Potrero Hills
Landfill, Inc. v. Cnty. of Solano, 657 F.3d 876, 883–84 (9th
Cir. 2011); see also Fresh Intel Corp. v. Agric. Labor Rels.
Bd., 805 F.2d 1353, 1360 n.8 (9th Cir. 1986) (“The state’s
interest in a civil proceeding is readily apparent when the
state through one of its agencies acts essentially as a
prosecutor.”). Here, Hestrin, is acting undoubtedly in an
“enforcement posture,” attempting to enforce California’s
consumer protection laws against Credit One.
    Credit One, however, argues that federal law forbids
Hestrin from acting in an “enforcement posture” in relation
to Credit One because bringing the state action is an exercise
of visitorial powers that are granted exclusively to the OCC.
                 CREDIT ONE BANK V. HESTRIN               15

    The NBA, first enacted in 1864 to provide for the federal
regulation of national banks, sets forth that “[n]o national
bank shall be subject to any visitorial powers except as
authorized by Federal law, vested in the courts of justice or
such as shall be, or have been exercised or directed by
Congress or by either House thereof or by any committee of
Congress or of either House duly authorized.” 12 U.S.C. §
484(a). An OCC regulation, 12 C.F.R. § 7.4000, first
promulgated in 1996, vests all visitorial powers in relation
to national banks in the OCC and states that “State officials
may not exercise visitorial powers with respect to national
banks, such as conducting examinations, inspecting or
requiring the production of books or records of national
banks, or prosecuting enforcement actions, except in limited
circumstances authorized by federal law.” 12 C.F.R. §
7.4000(a)(1) (emphasis added). The regulation then defines
“visitorial powers” with more specificity. It states that
“visitorial powers include:

       (i) Examination of a bank; (ii) Inspection of a
       bank’s books and records; (iii) Regulation
       and supervision of activities authorized or
       permitted pursuant to federal banking law;
       and (iv) Enforcing compliance with any
       applicable Federal or state laws concerning
       those     activities,  including       through
       investigations that seek to ascertain
       compliance through production of non-public
       information by the bank, except as otherwise
       provided in paragraphs (a), (b), and (c) of this
       section.

12 C.F.R. § 7.4000(a)(2).
16               CREDIT ONE BANK V. HESTRIN

    Credit One argues that because Hestrin’s suit is an
exercise of visitorial powers, the threshold issue as to his
authority to prosecute the state action is one of federal law
and because federal law is paramount, there can be no
important state interest in the litigation. This argument has
no merit.
                              1.
    Credit One’s argument that the state action is an exercise
of “visitorial powers” is foreclosed by the Supreme Court’s
decision in Cuomo v. Clearing House Ass’n, L.L.C., 557
U.S. 519 (2009). There, the Supreme Court held that
bringing a civil lawsuit to enforce a non-preempted state law
is not an exercise of visitorial powers. In Cuomo, the New
York Attorney General sent letters “in lieu of a subpoena”
seeking information from several national banks. Cuomo,
557 U.S. at 523. A bank association sued and won an
injunction pursuant to 12 C.F.R. § 7.4000 that enjoined the
Attorney General “from enforcing state fair-lending laws
through demands for records or judicial proceedings.” Id.
(emphasis added). The injunction was upheld by the Court
of Appeals. The Supreme Court reversed in part, holding that
the injunction “is affirmed as applied to the threatened
issuance of executive subpoenas by the Attorney General . .
. but vacated insofar as it prohibits the Attorney General
from bringing judicial enforcement actions.” Id. at 536. The
distinction between these two different powers is at the heart
of the visitation issue.
    After examining the history of visitation, the Court found
that at the time of the NBA’s passage, visitation was
understood as a sovereign power of general supervision over
a corporation’s affairs, which allowed states to use
prerogative writs, rather than ordinary litigation, to exercise
                 CREDIT ONE BANK V. HESTRIN                 17

control over corporations. Id. at 526. Next, the Court found
that an unbroken line of opinions had held that the visitorial
power is distinct from “the power to enforce the law.” Id. at
526–29. The Court concluded that “the unmistakable and
utterly consistent teaching of our jurisprudence, both before
and after enactment of the National Bank Act, is that a
sovereign’s ‘visitorial powers’ and its power to enforce the
law are two different things. There is not a credible argument
to the contrary.” Id. at 529.
    The Court then further clarified as to why it was incorrect
for 12 C.F.R. § 7.4000 to define “prosecuting enforcement
actions” against national banks as an exercise of visitorial
powers. First, the Court observed that pursuing a lawsuit in
court is far more restrictive than the largely unregulated
power of visitation. In a lawsuit, the state proceeds under the
court’s supervision, “will be treated like a litigant,” and
“must file a lawsuit, survive a motion to dismiss, endure the
rules of procedure and discovery, and risk sanctions if his
claim is frivolous or his discovery tactics abusive.” Id. at
531.
    Bringing these points together, the Court concluded that
the OCC regulation did not comport with the NBA and held,

       When . . . a state attorney general brings suit
       to enforce state law against a national bank,
       he is not acting in the role of sovereign-as-
       supervisor, but rather in the role of sovereign-
       as-law-enforcer. Such a lawsuit is not an
       exercise of “visitorial powers” and thus the
       Comptroller erred by extending the definition
       of “visitorial powers” to include “prosecuting
       enforcement actions” in state courts, §
       7.4000.
18                   CREDIT ONE BANK V. HESTRIN

Id. at 536. For these reasons, Cuomo controls. Prosecuting
an enforcement action against a national bank under non-
preempted state law is not an exercise of visitorial power.
    An additional provision in the regulation reinforces our
conclusion that state lawsuits, to enforce non-preempted
state law, are not an exercise of visitorial powers. The
regulation includes several exceptions to the OCC’s
exclusive visitorial powers, one of which provides:
“Exception for courts of justice. National banks are subject
to such visitorial powers as are vested in the courts of justice.
This exception pertains to the powers inherent in the
judiciary.” 12 C.F.R. § 7.4000(c)(2). 4 As the Court in

4
  In a notice of proposed rulemaking, the OCC explained that the purpose
of the exception for the courts of justice was to clarify that some inherent
powers of courts, such as the power to compel a party to produce
documents, are not granted exclusively to the OCC by the NBA even
though they seem visitorial in nature. Rules, Policies, and Procedures for
Corporate Activities; Bank Activities and Operations; Real Estate
Lending and Appraisals, 68 Fed. Reg. 6363-01, 6369 (Feb. 7, 2003)
(“Courts must be able to compel a national bank to produce books and
records in connection with private litigation involving the bank.
However, one might argue that the issuance of a subpoena by a court
would itself be a ‘visitation,’ even if the underlying litigation was not.
Such a reading would effectively immunize national banks from civil
litigation, a result that Congress clearly did not intend.”) The OCC thus
stated in its final rule that the exception “grants no new authority and
thus does not authorize states to bring suits or enforcement actions that
they do not otherwise have the power to bring.” Bank Activities and
Operations, 69 Fed. Reg. 1895-01, 1900 (Jan. 13, 2004) (emphasis
added). Thus, the regulation clearly contemplates that states may bring
civil actions against national banks and that the act of bringing suit is not
itself an exercise of visitorial powers. The exception makes clear that
actions which are within the inherent powers of the court, such as
compelling a defendant bank to produce documents, are not visitorial
powers.
                 CREDIT ONE BANK V. HESTRIN                 19

Cuomo concluded, this exception is “explicable only as an
attempt to make clear that the courts’ ordinary powers of
enforcing the law are not affected.” 557 U.S. at 530. This
constellation of provisions makes clear that a lawsuit such as
Hestrin’s seeking to enforce California’s consumer
protection laws in state court is not an exercise of visitorial
powers.
    Following Cuomo, Congress amended the NBA to
conform the statute to the decision. In 2010, it enacted the
Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010. Dodd-Frank’s amendment to the NBA, codified
as 12 U.S.C. § 25b(i) provides that,

       In accordance with the decision of the
       Supreme Court of the United States in Cuomo
       v. Clearing House Assn., L. L. C. (129
       S. Ct. 2710 (2009)), no provision of title 62
       of the Revised Statutes which relates to
       visitorial powers or otherwise limits or
       restricts the visitorial authority to which any
       national bank is subject shall be construed as
       limiting or restricting the authority of any
       attorney general (or other chief law
       enforcement officer) of any State to bring an
       action against a national bank in a court of
       appropriate jurisdiction to enforce an
       applicable law and to seek relief as
       authorized by such law.

12 U.S.C. § 25b(i).
20                   CREDIT ONE BANK V. HESTRIN

    Following the enactment of Dodd-Frank, the OCC
amended its regulation relating to visitation, 12 C.F.R. §
7.4000, to align it with the Supreme Court’s decision and
with Dodd-Frank. 5 The amendment provides that “In
accordance with the decision of the Supreme Court in
Cuomo . . . an action against a national bank in a court of
appropriate jurisdiction brought by a state attorney general
(or other chief law enforcement officer) to enforce an
applicable law against a national bank and to seek relief as
authorized by such law is not an exercise of visitorial powers
under 12 U.S.C. 484.” 12 C.F.R. § 7.4000(b).
                                   2.
    Credit One concedes nearly all of this conclusion, except
that it contends that under 12 U.S.C. § 25b(i), only a state
Attorney General, and not county District Attorneys may
sue. Specifically, Credit One argues that § 25b(i) and its
related regulations give state attorneys general the exclusive
power to bring lawsuits and therefore bar district attorneys
from enforcing state law against national banks.
    In making this argument, Credit One misreads § 25b(i).
The Section states that “no provision of title 62 of the
Revised Statutes . . . shall be construed as limiting or
restricting the authority of any attorney general . . . of any
State to bring an action against a national bank in a court of
appropriate jurisdiction.” 12 U.S.C. 25b(i) (emphasis
added). The statute, as we have seen, codifies Cuomo which

5
  The OCC, however, made no other changes to 12 C.F.R. § 7.4000 after
Cuomo and the text of the regulation still erroneously includes
“prosecuting enforcement actions” as an example of a visitorial power
that state officials may not exercise, even though that phrase was excised
by Cuomo. 12 C.F.R. § 7.4000(a)(1).
                 CREDIT ONE BANK V. HESTRIN                 21

held that suits by attorneys general against national banks
were not exercises of visitorial powers. Cuomo’s
fundamental holding is that civil lawsuits are, and always
have been, distinct from the exercise of visitorial powers.
The logic of the opinion rests on the basic principle of state
sovereignty—the Court stated repeatedly that law
enforcement is a state sovereign responsibility. While
Cuomo happened to involve an attorney general, its
reasoning and holding apply with full force to district
attorneys. Cuomo makes clear that it is the character of the
action, rather than which official carries it out, that
determines whether an action is an exercise of visitorial
powers. Credit One offers no principled argument that
Cuomo would have been decided differently if it involved a
district attorney rather than an attorney general.
    We conclude that the Dodd-Frank amendment merely
aligned the NBA with Cuomo by specifically clarifying that
nothing in the NBA restricts the ability of attorneys general
to sue national banks. Considering the context in which it
was passed, and the statutory text chosen by Congress, it is
highly unlikely—indeed inconceivable—that Congress
intended that suits by anyone other than an attorney general
would constitute an exercise of visitorial powers.
    Instead of focusing on Cuomo or 12 U.S.C. § 25b(i),
Credit One focuses on the OCC regulation, 12 C.F.R. §
7.4000(b), which states “an action against a national bank in
a court of appropriate jurisdiction brought by a state attorney
general . . . is not an exercise of visitorial powers under 12
U.S.C. 484.” Credit One argues that by specifically naming
the attorney general, the regulation implies that a lawsuit
brought by anyone else, including a district attorney, is an
exercise of visitorial powers. We are not persuaded. An
agency’s regulation cannot trump the Supreme Court or
22                CREDIT ONE BANK V. HESTRIN

Congress and, in any event, Credit One’s interpretation of
the regulation is wrong for the same reasons as its
interpretation of § 25b(i). Moreover, nowhere in the
regulation itself, nor in the explanation of the rule published
in the Federal Register, is there any indication that the power
to bring civil suits against banks is limited solely to attorneys
general. See 12 CFR § 7.4000(b); Office of Thrift
Supervision Integration; Dodd-Frank Act Implementation,
76 Fed. Reg. 43549-01, 43552, 43558 (July 21, 2011).
    Accepting Credit One’s argument that the OCC allows
only state attorneys general to bring enforcement actions
against national banks would mean that actions brought
against national banks by federal or state agencies or, for that
matter, individuals would be forbidden as unlawful exercises
of visitorial powers. Such a result is wrong. It contradicts
established law and is unsupported by any legal authority
cited by Credit One. See Cuomo, 557 U.S. at 529–30;
Gutierrez v. Wells Fargo Bank, NA, 704 F.3d 712, 726 (9th
Cir. 2012).
    Moreover, accepting Credit One’s argument would raise
serious anti-commandeering concerns under the Tenth
Amendment. In Murphy v. National Collegiate Athletic
Ass’n, 138 S. Ct. 1461 (2018), the Court struck down the
Professional and Amateur Sports Protection Act. That law
forbade states that did not allow sports gambling in 1992,
when the law was passed, from changing their laws to
authorize sports gambling. Id. at 1470. The Court held that,
even though it did not require states to carry out a federally
enacted regulatory scheme, the law nevertheless violated the
anti-commandeering doctrine because it “unequivocally
dictates what a state legislature may and may not do” by
issuing a “direct order” that a state may not repeal its sports
gambling laws. Id. at 1479.
                  CREDIT ONE BANK V. HESTRIN                   23

    Here, Credit One argues that although the state has the
sovereign power to enforce its statutes, federal law
commands that the state’s sovereign power may be exercised
only by the attorney general and that the state is forbidden
from passing legislation that delegates its sovereign
enforcement power to district attorneys. Such a “direct
order” by the federal government would potentially run afoul
of the anti-commandeering doctrine. We do not reach this
issue, however, because we conclude that neither the
regulation nor the statute can be interpreted to bar district
attorneys from bringing civil enforcement actions against
national banks under non-preempted state laws.
                               3.
    Having established that Hestrin has the power to bring
the state action, we return to the second element of the
Younger analysis: whether there was an “important state
interest” implicated in the state action. Credit One’s
argument that there can be no important state interest present
in the state action because federal law forbids Hestrin from
bringing the state action fails. In the state action, Hestrin acts
in an “enforcement posture” and thus the important state
interest requirement “is easily satisfied, as the state’s vital
interest in carrying out its executive functions is
presumptively at stake.” Potrero Hills Landfill, 657 F.3d at
883–84. Hestrin’s state action seeks to enforce the state’s
consumer protection laws, undoubtedly an important
interest. Commc’ns Telesystems Int’l v. California Pub. Util.
Comm’n, 196 F.3d 1011, 1017 (9th Cir. 1999). Thus, the
district court correctly concluded that an important state
interest was present in the state action.
   In sum, the district court correctly abstained after
concluding that all four of the Younger abstention
24               CREDIT ONE BANK V. HESTRIN

requirements were met. First, the state action was an ongoing
judicial proceeding. Second, it implicated an important state
interest in consumer protection and nothing in federal law
prevents a district attorney from vindicating that interest by
suing a national bank. Third, Credit One may raise its federal
defense under the NBA in the state proceeding. And finally,
the relief Credit One requested in the district court sought to
enjoin the state action.
                       CONCLUSION
   For these reasons, we AFFIRM the District Court’s
order.