Court Opinion

ID: 2968476
Source: CourtListenerOpinion
Date Created: 2015-09-22 05:20:15.844176+00
Date Added: 2024-06-11T11:43:19.081463
License: Public Domain

Reversed by Supreme Court, March 9, 2009

                            PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

DISCOVER BANK; DISCOVER FINANCIAL       
SERVICES, INCORPORATED,
                Plaintiffs-Appellees,
                 v.
BETTY E. VADEN,
              Defendant-Appellant,
                 v.                              No. 06-1221
FEDERAL DEPOSIT INSURANCE
CORPORATION,
                    Amicus Curiae.

JOHN R. KUCAN, JR.; TERRY COATES,
                     Amici Curiae.
                                        
           Appeal from the United States District Court
            for the District of Maryland, at Baltimore.
              William D. Quarles, Jr., District Judge.
                       (1:03-cv-3224-WDQ)

                      Argued: November 29, 2006

                        Decided: June 13, 2007

     Before WILKINSON and DUNCAN, Circuit Judges, and
    Joseph R. GOODWIN, United States District Judge for the
     Southern District of West Virginia, sitting by designation.

Affirmed by published opinion. Judge Duncan wrote the majority
opinion, in which Judge Wilkinson concurred. Judge Goodwin wrote
a dissenting opinion.
2                      DISCOVER BANK v. VADEN
                              COUNSEL

ARGUED: John Andrew Mattingly, Jr., BALDWIN, BRISCOE &
MATTINGLY, CHTD., Lexington Park, Maryland, for Appellant.
Martin C. Bryce, Jr., BALLARD, SPAHR, ANDREWS & INGER-
SOLL, Philadelphia, Pennsylvania, for Appellees. ON BRIEF:
Joseph W. Hovermill, Matthew T. Wagman, John C. Celeste, MILES
& STOCKBRIDGE, P.C., Baltimore, Maryland; Alan S. Kaplinsky,
BALLARD, SPAHR, ANDREWS & INGERSOLL, Philadelphia,
Pennsylvania, for Appellees. Sara A. Kelsey, General Counsel, Rich-
ard J. Osterman, Jr., Assistant General Counsel, Colleen J. Boles,
Senior Counsel, Kathleen V. Gunning, Counsel, FEDERAL
DEPOSIT INSURANCE CORPORATION, Arlington, Virginia, for
Amicus Curiae Federal Deposit Insurance Corporation. F. Paul Bland,
Jr., TRIAL LAWYERS FOR PUBLIC JUSTICE, Washington, D.C.;
J. Jerome Hartzell, HARTZELL & WHITEMAN, L.L.P., Raleigh,
North Carolina; Carlene McNulty, NORTH CAROLINA JUSTICE
CENTER, Raleigh, North Carolina, for Amici Curiae John R. Kucan,
Jr., and Terry Coates.

                              OPINION

DUNCAN, Circuit Judge:

   For the second time, we hear an appeal in a dispute between Appel-
lees Discover Bank and Discover Financial Services, Inc., a servicing
affiliate of Discover Bank ("DFS," and, together with Discover Bank,
"Discover"), and Appellant Betty E. Vaden ("Vaden"). This case
arises from Vaden’s failure to pay a credit card balance and DFS’s
resulting suit against her in state court. Vaden responded with several
class-action counterclaims against DFS. Discover Bank then filed suit
in federal district court under § 4 of the Federal Arbitration Act
("FAA"), seeking to compel arbitration of Vaden’s counterclaims.

   In the first appeal, we decided as a threshold matter that the federal
courts possess subject matter jurisdiction under § 4 of the FAA if the
underlying dispute presents a federal question. On remand, we
directed the district court to decide whether such a federal question
                       DISCOVER BANK v. VADEN                         3
exists here. More specifically, we asked the district court to determine
whether Discover Bank or DFS was the real party in interest with
respect to Vaden’s state court counterclaims. If Discover Bank were
found to be the real party in interest, then the Federal Deposit Insur-
ance Act ("FDIA"), 12 U.S.C. § 1811 et seq., would be implicated
because Discover Bank is a state-chartered, federally insured bank. In
that event, we asked the district court to determine whether the FDIA
completely preempted Vaden’s state law usury claims. If the district
court found that the claims were completely preempted and therefore
a federal question existed, it then had to determine whether there was
a genuine issue of material fact regarding the existence of an arbitra-
tion agreement between Vaden and Discover Bank.

   The district court found that this case presented a federal question
and accordingly denied Vaden’s motion to dismiss for lack of subject-
matter jurisdiction and stayed her state-court counterclaims pending
arbitration. We agree that a federal question exists here and that the
district court properly compelled arbitration. Therefore, we affirm.

                                   I.

   In 1990, Vaden obtained a Discover credit card. The card was
issued by Discover Bank, a Delaware-chartered, federally insured
bank. DFS is a servicing affiliate of Discover Bank. According to the
servicing agreement between DFS and Discover Bank, DFS performs
such functions as marketing and servicing Discover Bank loan prod-
ucts and collecting on accounts pursuant to instructions from Dis-
cover Bank. J.A. 531-38. In June 1999, Discover mailed Vaden a new
Platinum Discover Card. Discover claims that Vaden’s account was
automatically converted to Platinum status at this time. Vaden’s
"Cardmember" statements, however, identified her as a regular Card-
member until September 1999. In July 1999, Discover mailed Vaden
a "Notice of Amendment to Discover Platinum Cardmember Agree-
ment" (the "Notice of Amendment"). J.A. 33. This notice, which
applied only to Platinum Cardmembers, included a provision requir-
ing arbitration of disputes.

  In July 2003, on behalf of Discover Bank, DFS sued Vaden in
Maryland state court for nonpayment of a card balance in excess of
$10,000. Vaden then filed class-action counterclaims based solely on
4                      DISCOVER BANK v. VADEN
Maryland law against DFS. These counterclaims include a breach-of-
contract claim and claims that certain fees and interest rates were
charged in violation of applicable Maryland statutes that regulate
finance charges, late fees, and compounding of interest on consumer
credit accounts. In that proceeding, DFS was identified as "Discover
Financial Services, Inc. (Discover), SVC Affiliate of Discover Bank,
F/K/A Greenwood Trust Co., a DE chartered state bank and issuer of
the Discover Card."

   Shortly after Vaden filed these counterclaims, Discover filed a peti-
tion in federal court seeking to compel arbitration of Vaden’s state-
court counterclaims based on the arbitration provision in the Notice
of Amendment. Discover had made no previous requests to Vaden for
arbitration. The district court granted Discover’s motion to compel
arbitration.

   Vaden timely appealed and this court heard argument on that
appeal in December 2004. In January 2005, we considered the issue
of whether subject-matter jurisdiction existed. See Discover Bank v.
Vaden, 396 F.3d 366, 367 (4th Cir. 2005) ("Vaden I"). We held in
Vaden I that "when a party comes to federal court seeking to compel
arbitration, the presence of a federal question in the underlying dis-
pute is sufficient to support subject-matter jurisdiction." Id. at 367.
We declined to decide whether such an underlying federal question
existed in this case. Id. On remand, we directed the district court to
determine whether a federal question existed and guided it to examine
whether Discover Bank was the real party in interest with respect to
Vaden’s state-court claims and whether these claims were completely
preempted by the FDIA.1

   Answering these questions, the district court found that Discover
Bank was the real party in interest and that Vaden’s state court usury
claims were completely preempted. Also, the district court found that
there was no issue of material fact regarding the existence of an arbi-
tration agreement between Vaden and Discover Bank, and accord-
ingly granted Discover’s request for arbitration.
    1
   Much of the dissent’s discussion explicates its dissatisfaction with
Vaden I. The holding in Vaden I is, of course, the law of the case, and
beyond the reach of this appeal.
                       DISCOVER BANK v. VADEN                           5
   Vaden again timely appealed the district court’s ruling, which
appeal is before us now. Vaden argues that DFS is the real party of
interest, and thus the FDIA is not implicated and the federal court is
without subject-matter jurisdiction over the dispute. Vaden also con-
tends that compelling arbitration was improper for two reasons: (1)
Discover lacks standing because it failed to satisfy the relevant statu-
tory requirements for compelling arbitration, and (2) there was not a
valid arbitration agreement between Vaden and Discover Bank.

                                   II.

   We turn first to the question of whether the federal courts have
subject-matter jurisdiction over Discover Bank’s § 4 petition for arbi-
tration under the FAA.

   Under § 4 of the FAA, a district court may issue an order compel-
ling arbitration if the court would otherwise "have jurisdiction under
Title 28, in a civil action . . . of the subject matter of a suit arising
out of the controversy between the parties." 9 U.S.C. § 4 (2000)
(emphasis added). Section 4 does not require a party to actually file
suit regarding the underlying controversy; the FAA requires only that
a party be aggrieved by another party’s failure to arbitrate a contro-
versy, "the subject matter of which would fall within the jurisdiction
of this Court, were an actual suit to arise out of the controversy."
Reynolds & Reynolds Co. v. Image Software, Inc., 254 F. Supp. 2d
761, 765 (S.D. Ohio 2003); see Vaden I, 396 F.3d at 369 ("We thus
hold that a federal court possesses subject-matter jurisdiction over a
case when the controversy underlying the arbitration agreement pre-
sents a federal question."); id. at 370 ("The text of § 4 requires us to
consider jurisdiction as it arises out of the whole controversy between
the parties."); Tamiami Partners, Ltd. v. Miccosukee Tribe, 177 F.3d
1212, 1223 n.11 (11th Cir. 1999) (suggesting that "it is appropriate to
look through the arbitration request to assess whether the underlying
dispute between the parties is grounded in federal law). Thus, a § 4
petition to compel arbitration is properly in federal court if the under-
lying dispute presents a federal question.2 Moses H. Cone Mem’l
  2
   Were diversity jurisdiction to exist, this alone would be sufficient to
confer federal jurisdiction. Here, however, diversity jurisdiction is not
present. See 28 U.S.C. § 1332.
6                       DISCOVER BANK v. VADEN
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983); Vaden
I, 396 F.3d at 367. A court must therefore look through the arbitration
claim and examine the underlying state-court action.

   The Supreme Court has explained that even when a complaint
alleges only violations of state law, the case may nevertheless center
on a federal question, and therefore be removable,3 if federal law
completely preempts the state law claims. Caterpillar Inc. v.
    3
    The dissent argues that complete preemption is purely a removal doc-
trine and therefore that we improperly invoke it upon the unique proce-
dural posture of this case. Although complete preemption did originate
in the removal context, we conclude that it also applies to the unique pro-
cedural posture of this case. Complete preemption creates an exception
to the well-pleaded complaint rule: "On occasion, the Court has con-
cluded that the pre-emptive force of a statute is so ‘extraordinary’ that
it ‘converts an ordinary state common law complaint into one stating a
federal claim for purposes of the well-pleaded complaint rule.’" Caterpil-
lar, 482 U.S. at 393 (quoting Metropolitan Life Ins. Co. v. Taylor, 481
U.S. 58, 65 (1987)). The doctrine, therefore, does not flow from the pro-
cedural act of removal, but from the dominance of federal law over the
preempted state law. Thus, it is not a logical leap to apply this principle
to the instant case. To hold otherwise would have the perverse result of
returning to state court otherwise completely preempted federal claims
because of the unanticipated nature of a defendant’s counterclaims.
   Moreover, the question of whether complete preemption is a "removal
doctrine," see Dissenting Op. at 20, is irrelevant. The point is simply
whether Discover Bank’s arbitration petition presents a federal question.
See 9 U.S.C. § 4 (2000) (district court may order arbitration if the court
would otherwise "have jurisdiction under Title 28, in a civil action . . .
of the subject matter of a suit arising out of the controversy between the
parties."). We held as much in Vaden I, stating "the plain text of § 4
requires us to ask whether any basis for subject matter jurisdiction would
exist for the case in the absence of the arbitration agreement," Discover
Bank v. Vaden (Vaden I), 396 F.3d 366, 373 (4th Cir. 2005), and holding
"the presence of a federal question in the underlying dispute is sufficient
to support subject-matter jurisdiction," id. at 367. The Vaden I panel was
unanimous on this point, and other courts have also refused to unduly
restrict federal jurisdiction over Section 4 petitions. See, e.g., Tamiami
Partners, Ltd. v. Miccosukee Tribe, 177 F.3d 1212, 1223 n.11 (11th Cir.
1999).
                        DISCOVER BANK v. VADEN                           7
Williams, 482 U.S. 386, 393 (1987). This is the "complete pre-
emption doctrine." Id. Caterpillar explains that "[o]nce an area of
state law has been completely pre-empted, any claim purportedly
based on that pre-empted state law is considered, from its inception,
a federal claim, and therefore arises under federal law." Id.

   Complete preemption is an exception to the well-pleaded complaint
rule. Although generally a case may not "be removed to federal court
solely because of a defense or counterclaim arising under federal
law," Topeka Hous. Auth. v. Johnson, 404 F.3d 1245, 1247 (10th Cir.
2005), complete preemption is an exception to this rule and so federal
jurisdiction is proper, even though the preemption is only raised as a
defense. See Caterpillar, 482 U.S. at 393; see also Topeka Hous.
Auth., 404 F.3d at 1247 (noting that complete preemption is an excep-
tion to the general rule barring removal based on counterclaims) (cit-
ing 14B Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,
Federal Practice & Procedure § 3722.1, at 508 (3d ed. 1998)).4
  4
    The Supreme Court’s holding in Holmes Group, Inc. v. Vornado Air
Circulation Sys., Inc., 535 U.S. 826 (2002), relied upon by Vaden and
cited by the dissent, is not to the contrary. The Court reaffirmed "the
principle that federal jurisdiction generally exists ‘only when a federal
question is presented on the face of the [plaintiff’s] properly pleaded
complaint.’" Id. at 831 (quoting Caterpillar, 482 U.S. at 392). Holmes
Group did not, however, involve complete preemption. Moreover, the
Court grounded its holding in policies underlying the well-pleaded com-
plaint rule, noting that, under the federal patent statute at issue in that
case, federal jurisdiction could not obtain based solely upon defendant’s
answer. Id. at 831. In complete preemption cases, however, "claims are
so ‘necessarily federal’ that they will always permit removal to federal
court, even if they are raised only by way of defense." Wright, Miller,
& Cooper, supra, § 3722.1 at 508. As such, "the complete-preemption
doctrine overrides such fundamental cornerstones of federal subject-
matter jurisdiction as the well-pleaded complaint rule and the principle
that the plaintiff is master of the complaint." Id.
  The Holmes court was also concerned about allowing a defendant to
evade a plaintiff’s choice of state forum and the well-pleaded complaint
rule by asserting federal counterclaims: this is the opposite of the facts
here. In this case, the only claims advanced by Vaden’s counterclaims
purport to be state law claims. There is no danger that defendant Vaden
8                       DISCOVER BANK v. VADEN
   In misapprehending that complete preemption is a narrow excep-
tion to the general rule that federal jurisdiction must appear on the
face of the complaint, the dissent fails to appreciate the fundamental
distinction between complete and ordinary preemption. Its interpreta-
tion would deny Discover Bank a federal forum even if Discover
were a nationally—as opposed to state—chartered bank operating
under a federal law the Supreme Court has expressly held to com-
pletely preempt state law. See infra Part II.B. The fallacy inherent in
the dissent’s view is patent: it would render the concept of complete
preemption a nullity.

   For subject-matter jurisdiction to exist in this case, then, two
requirements must be satisfied: (1) a federal law other than the FAA
must be invoked; and (2) said federal law must completely preempt
the state law claims in question. The district court, at our direction,
found that there was a federal question in the underlying dispute
because Discover Bank was the real party in interest in the state-court
proceedings, thereby implicating the FDIA, and that the FDIA com-
pletely preempted Vaden’s state-court usury claims against Discover
Bank. We now consider its determinations, discussing each in turn.
We review questions of subject-matter jurisdiction de novo, Lontz v.
Tharp, 413 F.3d 435, 438 (4th Cir. 2005).

                                    A.

   First, we look to whether a federal law is invoked by the underly-
ing state court dispute. See Caterpillar, 482 U.S. at 393. To resolve
this question we must answer another: whether Discover Bank, as

might frustrate plaintiff Discover Bank’s choice of state forum. To the
contrary, it is Discover who filed the arbitration complaint in federal
court and Vaden who is resisting federal jurisdiction.
   Moreover, the whole point of the complete preemption doctrine is that
plaintiff’s choice of forum is not given preference, but must instead yield
to Congress’ intent that some claims, even those cloaked in state-law
trappigs, are really federal causes of action. In this, complete preemption
is an exception to the well-pleaded complaint rule: when complete pre-
emption obtains, a plaintiff may not avoid a federal forum by asserting
only state claims.
                         DISCOVER BANK v. VADEN                             9
opposed to DFS, is the real party in interest with respect to Vaden’s
counterclaims.5 On the face of the pleadings, DFS, not Discover
Bank, is the party to the state-court dispute. If Discover Bank is not
the real party in interest with respect to the counterclaims, the FDIA
does not apply because DFS is not a bank,6 and therefore the counter-
claims implicate no federal law. The parties’ styling of the pleadings
does not control our analysis, however; we must decide whether
Vaden’s state-court counterclaims are really directed at Discover
Bank rather than DFS. See Vaden I, 396 F.3d at 372 n.3. The district
court found that Discover Bank was the real party of interest with
respect to Vaden’s counterclaims, and we agree.

   One of our most fundamental procedural rules is that an action
must be brought by the party that has the right to enforce the claim
and has a significant interest in the litigation. See Va. Elec. & Power
Co. v. Westinghouse Elec. Corp., 485 F.2d 78, 83 (4th Cir. 1973) (cit-
ing Fed. R. Civ. P. 17(a)). The identity of the "real" party may not
  5
      The dissent calls this inquiry an "unnecessary detour," citing Federal
Rule of Civil Procedure 17(a). See Dissenting Op. at 23 n. 4. It is mis-
taken. To begin with, Discover Bank is not a defendant in the federal
action, but a petitioner filing a "verified complaint in the nature of a peti-
tion to compel arbitration and enjoin defendant’s prosecution of her state
court counterclaim." In any case, as the FDIC’s amicus brief demon-
strates, courts must routinely determine whether a bank, rather than one
of its business partners, may resort to the preemptive scope of the NBA
or the FDIA. To avoid this analysis would allow a plaintiff to artfully
plead state law claims against a non-bank defendant and thus frustrate
Congress’ intent that certain causes of action are always federal. See,
e.g., Krispin v. May Dep’t Stores Co., 218 F.3d 919, 924 (8th Cir. 2000)
(finding complete preemption under National Bank Act although bank
extending credit was not a party to the state court action). The real-party-
in-interest analysis is also necessary to prevent a defendant from falsely
asserting that it is a bank and thus preempting large swaths of state law
which Congress did not intend to displace. See, e.g., In re Community
Bank of Northern Va., 418 F.3d 277, 297 (3d Cir. 2005) (finding com-
plete preemption inapplicable because the loans at issue were made by
a non-depository institution).
    6
      It is uncontested that DFS is not a bank, state-chartered or otherwise,
and therefore neither the National Banking Act nor the FDIA applies to
it.
10                     DISCOVER BANK v. VADEN
always be apparent from the face of pleadings; it may be necessary
to look beyond the pleadings to the facts of the dispute. See Vaden
I, 396 F.3d at 373 n.3; see also Phipps v. FDIC, 417 F.3d 1006, 1011
(8th Cir. 2005) ("[W]e are required to look beyond the plaintiffs’ art-
ful attempts to characterize their claims to avoid federal jurisdic-
tion."). Such is the case here.

   The need to look carefully at the facts to determine the real party
in interest is particularly compelling in this instance because of the
unique and complex relationships among the parties through the vari-
ous phases of this litigation.7 The instant suit began when DFS, identi-
fied as "Discover Financial Services, Inc. (Discover), SVC Affiliate
of Discover Bank, F/K/A Greenwood Trust Co., a DE chartered state
bank and issuer of the Discover Card," sued Vaden in Maryland state
court for an unpaid credit card balance. Vaden counterclaimed against
DFS, alleging damages based upon improper assessment of fees and
interest charges: "[T]hus, her claims were directed against the entity
that extended her credit, charged her interest and had a right to bring
the collection action—the lender." Amicus Br., FDIC, at 2. Vaden
would have us simply accept DFS as the lender, and thus real party
in interest, and deny Discover Bank’s role as originator of her Card-
member account. The facts, however, show that Discover Bank was
the lender here and therefore the real party in interest.

   There are several pieces of evidence we find instructive in constru-
ing the relationship between Vaden and Discover Bank. The Card-
member agreements issued to Vaden are of particular significance.
These agreements conclusively demonstrate that Discover Bank was
the entity that extended Vaden credit and set the interest and fees of
which Vaden complains.8 See e.g., J.A. 26-27, 29-31, 206-07. The
agreements allow Discover Bank to levy periodic finance charges and
  7
    At our request, the Federal Deposit Insurance Corporation submitted
an amicus brief assessing the issue of whether Discover Bank was the
real party in interest on these facts. We find its analysis of the record
helpful in parsing the various agreements and documents that delineate
the relationship among Discover Bank, DFS, and a cardmember such as
Vaden.
  8
    Some of these documents reference Greenwood Trust Company,
which was Discover Bank’s predecessor.
                       DISCOVER BANK v. VADEN                        11
late fees, as well as to change the rate of finance charge with thirty
days’ notice. Id. In addition, the arbitration agreement in question was
between Discover Bank and Vaden only, as they were the only two
parties to the original Cardmember agreement. See J.A. 33-34, 499.
The servicing agreement between Discover Bank and DFS also sup-
ports our finding that Discover Bank is the real party in interest here.
That agreement provides that DFS will service certain Discover Bank
"loan products," J.A. 531-38, and DFS must perform all marketing
and collection services under instructions from Discover Bank, J.A.
532-33. One of the service activities DFS performed was mailing
monthly bills to cardmembers. Nothing on the statements that DFS
mailed to Vaden identified DFS as the lender. To the contrary, mail-
ing billing statements is consistent with DFS’s admitted role as a ser-
vicing agent. DFS also brings collection actions pursuant to the
servicing agreement, as it did here in suing Vaden for her unpaid bal-
ance on Discover Bank’s behalf. See J.A. 533.

   In addition, as the FDIC points out, the servicing agreement speci-
fies that:

    DFS will not be responsible for violations of federal or state
    law, including usury laws, fee restrictions or privacy laws,
    to the extent that DFS acts consistently with directions or
    supervision received from [Discover Bank] or its agents. . . .
    [Discover Bank] will be solely responsible for establishing
    the annual percentage yields and rates, insurance premi-
    ums, and other charges and fees for its credit cards, deposit
    accounts and other products and for ensuring that such
    yields, rates, premiums, charges or fees are in compliance
    with state and federal laws.

J.A. 531-32 (emphasis added). The agreement establishes a clear divi-
sion of authority between DFS and Discover Bank, designating Dis-
cover Bank as the party in charge of setting the terms and conditions
of lending money through its credit cards. DFS, although it could
evaluate consumer credit applications, could only do so under guide-
lines set forth by Discover Bank. Id.

  Importantly, the servicing agreement also provides that Discover
Bank will indemnify DFS for any damages caused by Discover Bank.
12                     DISCOVER BANK v. VADEN
J.A. 536. This includes any potential judgment from Vaden’s state
court counterclaims against DFS. Discover Bank acknowledges that
it would be bound by any judgment resulting from the state-court liti-
gation, even though it was not officially a party to it, because DFS
was acting on its behalf. Appellee’s Br. at 24 n.7. Nor would DFS be
permitted to keep any funds collected from a Cardmember in its own
name: it must immediately deposit all such funds in Discover Bank’s
accounts. J.A. 534.

   A final source of support for the conclusion that Discover Bank is
the real party in interest is found in Discover Bank’s financial state-
ment and prospectuses for the sale of interests in credit card receiv-
ables through securitizations. Discover Bank’s independently-audited
financial statement explains that credit-card loans make up the major-
ity of the bank’s consumer loans and are assets of the bank. J.A. 511,
519. The bank’s prospectuses identify Discover Bank as the issuer of
the Discover credit card and owner of the Discover Card account. J.A.
543, 619-622. These same prospectuses reaffirm Discover Bank’s
right to set the terms for essential aspects of a cardholder’s account:
the rate for periodic finance charges, late fees, credit limits, minimum
monthly payments, credit-worthiness criteria, charge-off policies, and
collection practices. J.A. 613, 619, 621, 623. Service and operating
tasks are delegated to DFS. J.A. 620, 622.

   This evidence notwithstanding, Vaden argues that DFS, and not
Discover Bank, is the real party in interest with respect to her state-
law counterclaims. She points to several items in the record for sup-
port, including the pleadings themselves, Morgan Stanley’s Annual
report on Discover, and press releases from DFS. In particular, Vaden
proffers certain press releases stating that DFS operates the Discover
Card brand as evidence that DFS is the real party in interest. The
functions attributed to DFS in these press releases, however, are con-
sistent with its role as a servicing entity and do not establish it as a
lender. Importantly, Vaden herself does not contest the fact that it is
Discover Bank and not DFS that set the interest rate on her account.
None of these documents suggest that DFS operated as a lender or
had any authority to alter or set vital terms of Vaden’s Cardmember
account. Moreover, these documents are secondary sources of infor-
mation, rather than primary sources such as the servicing agreement
and Discover Bank’s prospectus. We are unpersuaded by Vaden’s
                        DISCOVER BANK v. VADEN                         13
arguments, as we find the evidence she proffers to be consistent with
the conclusion that Discover Bank is the real party in interest.

   On these facts, we hold that Discover Bank is the real party in
interest with respect to Vaden’s state court counterclaims. Because
Discover Bank is a state-chartered, federally insured bank, the FDIA
is implicated by these claims against the bank.9

                                   B.

   We turn next to the question of whether § 27 of the FDIA "com-
pletely preempts" state law usury claims against a state-chartered,
federally insured bank that is the real party in interest of a state court
dispute.10

   In interpreting any statute, we turn first to the text of the statute
itself. Section 27(a) of the FDIA provides in part:

      In order to prevent discrimination against State-chartered
      insured depository institutions . . . with respect to interest
      rates . . . such State bank[s] . . . may, notwithstanding any
      State constitution or statute which is hereby preempted for
  9
    In finding Discover Bank to be the real party in interest here, we
emphasize the heavily fact-dependent nature of our analysis and its con-
sequent parameters. Clearly, a state-chartered, federally insured bank
will not always be the real party in interest for purposes of invoking the
FDIA. For example, in Goleta National Bank v. Lingerfelt, 211 F. Supp.
2d 711, 718-19(E.D.N.C. 2002), a payday lender had "leased" an associ-
ation with the Goleta National Bank in order to avoid state usury laws.
The Lingerfelt court held that the non-bank payday lender, rather than
Goleta National Bank, was the real lender and therefore the complete
preemption doctrine did not apply. Id.; see also Flowers v. EZPawn
Okla., Inc., 308 F. Supp. 2d 1191, 1196 (N.D. Ok. 2003) (finding that
EZPawn—not the affiliated bank—was the real lender and therefore no
subject-matter jurisdiction existed). Such cases are distinguishable from
the facts here.
   10
      Because Vaden "conceded" that the FDIA completely preempted her
state-law claims, the district court’s analysis of this issue was cursory.
We note, however, that a party may not create jurisdiction by concession
and thus address this issue directly.
14                      DISCOVER BANK v. VADEN
     the purposes of this section, take, receive, reserve, and
     charge on any loan or discount made, or upon any note, bill
     of exchange, or other evidence of debt, interest . . . at the
     rate allowed by the laws of the State . . . where the bank is
     located.

12 U.S.C. § 1831d(a)(emphasis added). The statute’s express preemp-
tion provision indicates that at the very least, Congress contemplated
ordinary express preemption when drafting this statute.

   However, to decide the more specific question of whether Congress
intended complete preemption of state-court usury claims, as distin-
guished from ordinary express preemption, we look beyond the text,
to Congress’s intentions in enacting the statute. The legislative history
of the FDIA is instructive in this regard. It tells us that Congress
intended to "allow[ ] competitive equity among financial institutions,
and reaffirm[ ] the principle that institutions offering similar products
should be subject to similar rules." 126 Cong. Rec. 6,908 (1980)
(Statement of Sen. Bumpers). The FDIA was enacted in part to "pro-
vide[ ] parity, or competitive equality, between national banks and
State chartered depository institutions. . . ." 126 Cong. Rec. 6,900
(1980) (Statement of Sen. Proxmire).

   Keeping in mind the purpose underlying the FDIA’s enactment, we
turn to the question of whether Congress intended the FDIA to com-
pletely preempt state-law usury claims against state-chartered banks.
Although this is an issue of first impression in this court, we are not
wholly without guidance as far as federal banking laws are concerned.
The Supreme Court has addressed the issue within the context of the
National Bank Act ("NBA"), 12 U.S.C. §§ 1 et seq., which is to
national banks as section 27 of the FDIA is to state-chartered banks.11
   11
      The Supreme Court’s recent decision of Watters v. Wachovia ___
U.S. ___, 127 S. Ct. 1559 (2007), is instructive, though not precisely on
point. In Watters, the court held that a national bank’s "mortgage busi-
ness, whether conducted by the bank itself or through the bank’s operat-
ing subsidiary" is subject to federal, and not state, regulatory oversight.
Id. at 11. Although neither the FDIA nor state court usury claims were
at issue, the Court’s holding did reaffirm the basic principle elucidated
in Beneficial National Bank v. Anderson, 539 U.S. 1, 11 (2003), that fed-
eral banking laws preempt state law. "[T]he States can exercise no con-
trol over national banks, nor in any wise affect their operation, except in
so far as Congress may see proper to permit." Watters, 127 S. Ct. at 6.
                       DISCOVER BANK v. VADEN                        15
In Beneficial, the Supreme Court held that the NBA completely pre-
empts state-court usury claims against national banks. 539 U.S. at 11.
The Court explained that "[b]ecause §§ 85 and 86 provide the exclu-
sive cause of action" for usury claims, there is "no such thing as a
state-law claim of usury against a national bank." Id. As a result, even
though the plaintiff’s complaint did not mention federal law, his cause
of action arose under federal law and defendant National Bank’s
removal to federal court based on complete preemption under the
NBA was proper. Id. at 10-11.

   One of our sister circuits has compared the NBA to the FDIA and
found that both statutes completely preempt state-law usury claims.12
The Third Circuit has held that the NBA and FDIA are interpreted in
para materia and therefore the doctrine of complete preemption
applies to the FDIA as well. In In re Community Bank of N. Va., 418
F.3d 277, 295 (3d Cir. 2005), the court found that Section 1831d(a)
"completely preempts any state law attempting to limit the amount of
interest and fees a federally insured, state-chartered bank can charge."
Indeed, not only does the FDIA contain an express preemption clause
—"notwithstanding any State constitution or statute which is hereby
preempted for the purposes of this section"—but it also "incorporates
verbatim the language of § 85 of the NBA." Id. at 295. "When Con-
gress borrows language from one statute and incorporates it into a
second statute, the language of the two acts ordinarily should be inter-
preted the same way." Id. at 295-96. Therefore, complete preemption
was held to apply to state usury claims against state-chartered, feder-
ally insured banks, just as it does to claims against national banks.

   The First Circuit has also compared the NBA and FDIA, although
not in the context of complete preemption. The dispute in Greenwood
Trust Co. v. Massachusetts, 971 F.2d 818, 821 (1st Cir. 1992), arose
when the Commonwealth of Massachusetts notified Greenwood that
its late-fee policy violated state law. Greenwood reacted to the threat
of potential litigation from the state by filing for declaratory and
  12
   In contrast, one federal court has held that the FDIA does not con-
template complete preemption. See Saxton v. Capital One Bank, 392 F.
Supp. 2d 772, 780-84 (S.D. Miss. 2005) (distinguishing Beneficial Nat’l
Bank as being grounded in the federal interest that protects national
banks from state taxation). For the reasons above, we disagree.
16                      DISCOVER BANK v. VADEN
injunctive relief in federal court on the grounds that the FDIA13
expressly preempted state law usury claims. In assessing whether the
FDIA expressly—not completely—preempted state usury laws, the
court explained that Congress enacted the FDIA to level the playing
field between national and state banks regarding the levying of inter-
est rates. Greenwood Trust, 971 F.2d at 826. "The historical record
clearly requires a court to read the parallel provisions of [the FDIA]
and the Bank Act in pari materia." Id. (emphasis omitted).14

   We find the logic of our sister circuits compelling. We note as well
that the FDIC further supports our finding of complete preemption.15
The agency has "uniformly construed Section 1831d in pari materia
with Sections 85 and 86 [of the NBA]." Amicus Br., FDIC, at 10
  13
      Greenwood refers to the FDIA as the "DIDA," but the statutory pro-
vision at issue is the same, 12 U.S.C. § 1831d(a). 971 F.2d at 827.
   14
      There is one difference between the relevant provisions of the NBA
and the FDIA that we must pause to consider. The NBA states that an
action must be "commenced within two years from the time the usurious
transaction occurred," 12 U.S.C. § 86, while the FDIA states that a per-
son aggrieved "may recover in a civil action commenced in a court of
appropriate jurisdiction not later than two years after the date of such
payment." 12 U.S.C. § 1831d(b) (emphasis added). As both statutes
speak to the creation of a federal cause of action, we do not read the
phrase "a court of appropriate jurisdiction" as inconsistent with the com-
plete preemption doctrine. Rather, we agree with the First Circuit that the
differences in the statutes are an insufficient basis upon which to distin-
guish them: "[a]lthough there are niggling variations, the key phraseol-
ogy is substantially identical." Greenwood Trust, 971 F.2d at 827.
Indeed, it would be anomalous to interpret the inclusion of a general
forum-selection provision such as the one in the FDIA as precluding
complete preemption.
   15
      The FDIC’s interpretation of § 1831d is entitled to only limited def-
erence under Skidmore v. Swift & Co., 323 U.S. 134 (1994). In its brief,
the agency points to no regulation or other formal statement of its policy
that was adopted with notice-and-comment rulemaking or through formal
adjudication. Therefore, "we defer to the agency’s interpretation only to
the extent that the interpretation has the power to persuade." U.S. Dep’t
of Labor v. N.C. Growers Ass’n, 377 F.3d 345, 354 (4th Cir. 2004) (cit-
ing Skidmore, 323 U.S. at 134). We defer only to the extent that we are
persuaded by the FDIC’s interpretation. See Skidmore, 323 U.S. at 140.
                        DISCOVER BANK v. VADEN                          17
(emphasis omitted). "[U]nder Section 1831d(a), state banks were pro-
vided interest rate authority comparable to that of national banks.
Interest charges include not only the numerical percentage rate
assigned to a loan but also late payment fees, over the limit fees and
other similar charges." Id. (citing 12 C.F.R. § 7.4001(a)) (footnote
omitted). In arguing that the FDIA completely preempts state-law
usury claims, the FDIC relies on Beneficial National Bank, agreeing
with the First and Third Circuits, that in § 1831d, "Congress created
a federal cause of action that entirely replaced . . . the analogous area
of state law." Id. at 13.

   We find the analyses of the FDIC and our sister circuits persuasive.
Given the express preemption language of the FDIA, the statute’s leg-
islative history affirming Congress’ intent to provide competitive
equality between national and state-chartered banks, the virtual iden-
tity of the preemption language in the NBA and that of the FDIA, and
the Supreme Court’s finding of complete preemption under the NBA,
we are hard-pressed to conclude other than that Congress intended
complete preemption of state-court usury claims under the FDIA. As
the final step in our analysis, we turn to a consideration of whether
Vaden’s state law counterclaims fall into this completely preempted
category.

   Vaden’s state court counterclaims challenge certain fees and inter-
est rates charged on her Discover card account.16 She argues that these
fees and interest rates were in violation of Maryland laws regulating
finance charges, late fees, and compounding of interest on consumer
credit accounts. See Md. Code Ann., Comm. Law §§ 12-502, -506,
-506.2 (2005).17 Vaden’s complaints regarding the fees and interest
charged on her cardmember account fall squarely within the FDIC’s
  16
      We recognize that not all of Vaden’s claims fall into the state-court
usury claim category. The scope of the arbitration agreement, however,
subsumes all of Vaden’s various counterclaims, including her breach of
contract claims asserting fraud and violations of good faith and fair deal-
ing as well as her claims of "unfair and deceptive trade practices." While
those non-usury claims arguably fall outside the preemptive scope of the
FDIA, see Saxton v. Capital One Bank, 392 F. Supp. 2d 772, 783 (S.D.
Miss. 2005) (collecting cases), complete preemption of any one of
Vaden’s counterclaims should suffice to provide a federal forum under
the complete preemption doctrine.
   17
      In contrast, Delaware’s commercial laws, governing Discover Bank,
allow banks to charge late fees, interest, and compound interest accord-
ing to the cardholder agreement. See Del. Code Ann. tit. 5, §§ 941(8),
943, 945, 950, 952 (2005).
18                      DISCOVER BANK v. VADEN
definition of "usury" charges. See 12 C.F.R. § 7.4001(a) (defining
usury charges as the numerical periodic rate, late payment fees, over-
limit fees, and other charges). We therefore conclude that Vaden’s
claims are completely preempted by the FDIA.18 We emphasize again
that our holding only extends so far as a state-chartered, federally
insured bank is the real party of interest with respect to the preempted
state-court claims.

                                   III.

   Lastly, we turn to the issue of whether an arbitration agreement
binds Vaden and Discover Bank so as to make compelling arbitration
proper. Pursuant to our instructions in Vaden I, the district court also
examined "whether there was a question of material fact about the
existence of an arbitration agreement." 396 F.3d at 373 n. 4. Vaden
appeals the district court’s findings that an arbitration agreement
existed between the parties and that her claims are subject to arbitra-
tion because she failed to opt out of that agreement. Discover Bank
v. Vaden, 409 F. Supp. 2d 632, 639 (D. Md. 2006) (citing Snowden
v. Checkpoint Check Cashing, 290 F.3d 631, 634 (4th Cir. 2002), for
the proposition that a "court must order arbitration once it is satisfied
that an agreement for arbitration has been made and has not been hon-
ored"); see 9 U.S.C. § 4.

   Significantly, under both Delaware and Maryland law, Vaden bears
the burden of rebutting the presumption of receiving the arbitration
agreement, which was included in a Notice of Amendment to the
Cardmember agreement.19 See Graham v. Commercial Credit Co.,
194 A.2d 863, 865 (Del. Ch. 1963) (holding "that mail which is prop-
  18
      To find otherwise would undermine the statute’s purpose, which is
to provide state banks parity with national banks: if we found no com-
plete preemption here, we would be treating state banks differently under
the FDIA than national banks are treated under the NBA. Such a result
clearly cuts against Congress’s intentions in grafting language from the
NBA to the FDIA.
   19
      We agree with the district court’s conclusion that Discover satisfied
the requirements for the presumption of receipt, as it provided unrebutted
affidavits detailing the procedures and practices for mailing the Notice
of Amendment.
                         DISCOVER BANK v. VADEN                             19
erly addressed and posted . . . is presumed to be duly received by the
addressee"); Marsheck v. Bd. of Trustees of the Fire & Police
Employee’s Ret. Sys. of the City of Balt., 749 A.2d 774, 785 (2000)
(explaining the presumption of receipt arising from proper mailing).
Vaden’s only evidence to support her claim that she did not receive
it is her own statement that she did not, and mere denial is insufficient
to rebut the presumption of receipt. We find no error in the district
court’s analysis of this issue and so affirm based on the reasoning of
the district court.20
  20
     Vaden also attempts to escape arbitration by arguing that Discover
fails to satisfy the relevant statutory standing requirements for compel-
ling arbitration. We cannot agree.
   Intriguingly, the alleged defect in standing Vaden points to is her own
failure to "unequivocally refuse" a request for arbitration. See Appel-
lant’s Br. at 43. The FAA, under which Discover brings suit, states that
"[a] party aggrieved by the alleged failure, neglect, or refusal of another
to arbitrate under a written agreement for arbitration may petition any
United States district court . . . for . . . arbitration." 9 U.S.C. § 4. Vaden
contends that, because Discover did not request arbitration with her
before filing suit, she never refused arbitration and therefore Discover is
not "[a] party aggrieved by [her] failure . . . to arbitrate." Id. Accordingly,
she argues, Discover has not met the requirement for filing a petition. See
Appellant’s Br. at 41-44. One sister circuit has held that an action to
compel arbitration is proper when the party against whom the motion to
compel is made has commenced litigation that is the subject matter of the
parties’ arbitration agreement. See, e.g. PaineWebber Inc. v. Faragalli,
61 F.3d 1063, 1066 (3d Cir. 1995) (finding that an action to compel arbi-
tration is proper when the other party refuses to arbitrate by "unambigu-
ously manifesting an intention not to arbitrate the subject matter of the
dispute").
   Although Vaden did not initiate the original suit, she counterclaimed
in state court and has litigated extensively—to the tune of not one, but
two appeals before this court—to avoid arbitration of her claims. To
agree with Vaden’s arguments that she has not refused a request for arbi-
tration in the meaning of the statute would create an absurd result:
reversing a motion to compel arbitration against a party who argues that
she never refused to arbitrate in the first place. Neither common sense
nor precedent countenances such a result, and so we find no defect of
standing here.
20                      DISCOVER BANK v. VADEN
                                    IV.

   For the foregoing reasons, we affirm the district court’s finding that
Discover Bank is the real party in interest with respect to Vaden’s
state-court counterclaims, and we hold that the FDIA completely pre-
empts state-court usury claims against a state-chartered, federally
insured bank to the extent that the bank is the real party in interest
with respect to those claims. We also affirm the district court’s find-
ing that there was no issue of material fact with respect to the exis-
tence of an arbitration agreement between Vaden and Discover and
therefore affirm the district court’s grant of Discover’s motion to
compel arbitration.

                                                              AFFIRMED

GOODWIN, District Judge, dissenting:

   The district court and the majority inexplicably use the removal
doctrine of complete preemption to recharacterize a counterclaim in
a state court civil action as federal. From that process, they pluck an
"independent" basis for federal subject matter jurisdiction to support
this action to compel arbitration. As I find no independent basis for
federal court jurisdiction exists, I respectfully dissent.

  In Vaden I, the court heard an appeal from a case brought under the
FAA, which did not have an independent jurisdictional basis on its face.1
   1
     It is well established that the FAA standing alone does not provide a
basis for federal jurisdiction. See Southland Corp. v. Keating, 465 U.S.
1, 15 n.9 (1984); Moses H. Cone Memorial Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 25 n.32 (1983) ("The Arbitration Act is something of
an anomaly in the field of federal court jurisdiction. It creates a body of
federal substantive law establishing and regulating the duty to honor an
agreement to arbitrate, yet it does not create any independent federal-
question jurisdiction."). Therefore, before a district court may entertain
a petition under the FAA, there must be an independent basis of jurisdic-
tion. Owens Ill., Inc. v. Meade, 186 F.3d 435, 439-40 (4th Cir. 1999)
("Section 4 of the FAA confers jurisdiction in the district court over peti-
tions to compel arbitration only to the extent that the federal court would
otherwise have jurisdiction over the case. On that basis, this case must
include another independent basis to establish federal jurisdiction.").
                        DISCOVER BANK v. VADEN                          21
The panel found that "[a] federal court may . . . hear a § 4 petition to
compel arbitration if, but for the arbitration agreement, subject matter
jurisdiction over the case would otherwise exist by virtue of a prop-
erly invoked federal question in the underlying dispute." Discover
Bank v. Vaden (Vaden I), 396 F.3d 366, 373 (4th Cir. 2005) (empha-
sis added). The court in Vaden I remanded the case to the district
court with instructions to determine whether "such a federal question
exists in this case." See id. at 373. The Vaden I panel hypothesized
that Ms. Vaden’s counterclaims alleging illegal interest rates and late
fees might present issues of such substantial federal interest as to be,
in effect, federal claims under the FDIA. See Vaden I, 396 F.3d at 373
n.3. The panel suggested to the district court that if it found that Dis-
cover Bank, "as opposed to merely Discover Financial Services, is a
party of interest in the state law suit," then a federal question may be
presented.2 Id. at 373 n.3. Upon remand, the district court found that
Discover Bank was the real party in interest with respect to the coun-
terclaims and on that basis bootstrapped an additional party into the
case to defend the counterclaims. Discover Bank v. Vaden, 409 F.
Supp. 632, 637 (D. Md. 2006).

   My disagreement with the majority opinion centers on its finding
of "arising under" jurisdiction in a counterclaim. Federal question
jurisdiction cannot be predicated on federal issues that may arise later
in an action by way of defense or counterclaim. Arthur R. Miller, Art-
ful Pleading: A Doctrine in Search of Definition, 76 Tex. L. Rev.
1781, 1783 (1998) (citing Takeda v. Northwestern Nat. Life Ins. Co.,
765 F.2d 815, 821-22 (9th Cir. 1998)).

   My conclusion that there is no properly invoked federal question
in the underlying case relies on basic principles of "arising under"
jurisdiction. Federal courts are courts of limited jurisdiction. See, e.g.,
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)
  2
    I do not know what it is to be "a party of interest" in a lawsuit, and
the panel in Vaden I gave no explanation. The district court, parties, and
apparently now the majority have treated this as an inquiry into who "the
real party in interest" is in Ms. Vaden’s counterclaims. The majority
states, "[m]ore specifically, we asked the district court to determine
whether Discover Bank or DFS was the real party in interest with respect
to Vaden’s state court counterclaims." Op. at 3.
22                     DISCOVER BANK v. VADEN
("Federal courts . . . possess only that power authorized by the Consti-
tution and statute, which is not to be expanded by judicial decree.").
Article III of the Constitution gives federal courts the power to hear
cases "arising under" the Constitution, laws, and treaties of the United
States. U.S. Const. art. III, § 2, cl. 1. This grant of power is not self-
executing. Congress did not give the federal courts general federal
question jurisdiction until the Judiciary Act of 1875. Act of Mar. 3,
1875, ch. 137, § 1, 18 Stat. 470, 470 (current version at 28 U.S.C.
§ 1331 (1994)). Although the language of § 1331 tracks Article III’s
arising under language, the Supreme Court has given § 1331 a limit-
ing construction. Miller, 76 Tex. L. Rev. at 1782. "One of the key-
stones of this limiting construction is the ‘well-pleaded complaint
rule’ articulated by the Supreme Court in Louisville & Nashville R.R.
v. Mottley and constantly reaffirmed by the federal judiciary." Id. For
the Court to have jurisdiction under § 1331, it must be clear from the
face of a well-pleaded complaint that there is a federal question; the
federal issue must exist as part of the plaintiff’s cause of action. Lou-
isville & Nashville R.R. v. Mottley, 211 U.S. 149, 152-54 (1908). A
federal right must be an essential element of the plaintiff’s claim; "the
controversy must be disclosed upon the face of the complaint,
unaided by the answer or by the petition for removal." Gully v. First
Nat’l Bank in Meridian, 299 U.S. 109, 112-13 (1936). This rule also
serves the essential administrative function of establishing the exis-
tence of a federal question at the onset of litigation. Miller, 76 Tex.
L. Rev. at 1783. The well-pleaded complaint rule applies equally to
original and removal jurisdiction and has prevented federal courts
from asserting jurisdiction over many cases in which federal issues
have actually been raised. Id. "This bright-line rule prevents the dis-
ruption, to both the system and the litigants, of shifting a case
between state and federal fora in the middle of an action as federal
issues arise or fall out." Id.

   State courts, on the other hand, are courts of general jurisdiction.
The Supreme Court has held that not only do state courts have the
ability to hear federal claims, but that in all but the most exceptional
circumstances they must hear federal claims. See generally Testa v.
Katt, 330 U.S. 386 (1947) (establishing that state courts have a gen-
eral obligation to hear federal claims). This ability and obligation of
                        DISCOVER BANK v. VADEN                           23
state courts to hear federal claims and enforce federal law is derived
from the Supremacy Clause of the U.S. Constitution.3

   In the case before this court seeking to compel arbitration, federal
jurisdiction is purportedly based upon defendant’s state court counter-
claim alleging illegal late fees and interest rates. There was no diver-
sity jurisdiction and no federal question appeared on the face of the
complaint. In affirming the district court, the majority undertook an
examination of the state counterclaims using novel understandings of
procedural rules as to parties4 and a completely puzzling view of the
doctrine of complete preemption. This process led the majority of this
panel to agree with the district court that Ms. Vaden’s counterclaims
provided federal subject matter jurisdiction over the underlying case,
and therefore an independent jurisdictional basis existed to permit the
court to decide the petition to compel arbitration under the FAA. This
was error. There was no "properly invoked federal question" in the
underlying state case.
  3
     The Supremacy Clause provides in pertinent part: "This Constitution,
and the Laws of the United States which shall be made in Pursuance
thereof . . . shall be the supreme Law of the Land; and the Judges in
every State shall be bound thereby, any Thing in the Constitution or
Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI,
cl. 2.
   4
     The "party of interest" inquiry suggested in Vaden I was but another
unnecessary detour which resulted in the parties, the district court, and
the majority becoming procedurally lost. Federal Rule of Civil Proce-
dure 17(a) states in pertinent part "[e]very action shall be prosecuted in
the name of the real party in interest." I am puzzled by the majority’s
"real party in interest" analysis, which appears to be backward. A defen-
dant can never be a real party in interest.
   By its very nature, Rule 17(a) applies only to those who are asserting
a claim. 6A Charles Alan Wright, Arthur R. Miller, and Mary Kay Kane,
Federal Practice & Procedure § 1543 (2d ed. 1987) (emphasis added).
The real party in interest requirement is not limited to original plaintiffs
but must also be satisfied for purposes of asserting a counterclaim. Id.
(emphasis added). Here the counterclaimant was Ms. Vaden. No part of
Rule 17(a) suggests an inquiry into whether an entity might be a proper
defendant. Quite generally people can and do sue whomever they intend.
If Discover Financial Services believed it was not the proper party to be
sued it could have filed a motion for summary judgment.
24                     DISCOVER BANK v. VADEN
   The Court in Holmes Group, Inc. v. Vornado Air Circulation Sys-
tems, 535 U.S. 826, 830 (2002), addressed the question of whether a
counterclaim can serve as the basis for arising under jurisdiction. The
Court held that it could not. The Court noted that the well-pleaded
complaint rule has long governed whether a case "arises under" fed-
eral law for purposes of § 1331. Holmes Group, Inc., 535 U.S. at 830
(citing Phillips Petroleum Co. v. Texaco Inc., 415 U.S. 125, 127-128,
(1974) (per curiam)). The Court stated, "a counterclaim — which
appears as part of the defendant’s answer, not as part of the plaintiff’s
complaint — cannot serve as the basis for ‘arising under’ jurisdic-
tion." Holmes Group, Inc., 535 U.S. at 831 (citing In re Adams, 809
F.2d 1187, 1188 n.1 (5th Cir. 1987); FDIC v. Elefant, 790 F.2d 661,
667 (7th Cir. 1986); Takeda v. Northwestern National Life Ins. Co.,
765 F.2d 815, 822 (9th Cir. 1985); 14B C. Wright, A. Miller, & E.
Cooper, Federal Practice & Procedure § 3722, pp. 402-414 (3d ed.
1998)). The Court concluded, "[f]or these reasons, we decline to
transform the longstanding well-pleaded-complaint rule into the
‘well-pleaded-complaint-or-counterclaim rule’ urged by respondent."
Holmes Group, 535 U.S. at 832 (emphasis in original).

   The majority attempts to evade the clear holding in Holmes Group
by misapplying the doctrine of complete preemption to counterclaims.
The majority fails to recognize that complete preemption is solely a
removal doctrine that is analytically applied to recharacterize allega-
tions made in a plaintiff’s complaint. The majority sets about its
explication of its novel jurisdictional construct in footnotes two and
three. Op. at 5, 6. An examination of these footnotes exposes the erro-
neous legal formulation upon which the majority opinion depends.

   In footnote three, the majority acknowledges that complete pre-
emption is a removal doctrine, stating, "[a]lthough complete preemp-
tion did originate in the removal context, we conclude that it also
applies to the unique procedural posture of this case." Op. at 6 n.3.
The majority offers as support for this proposition the following quote
from Caterpillar, Inc. v. Williams, 482 U.S. 386, 393 (1987):

     On occasion, the Court has concluded that a preemptive
     force of a statute is so extraordinary that it converts an ordi-
     nary state common law complaint into one stating a federal
     claim for purposes of the well-pleaded complaint rule.
                       DISCOVER BANK v. VADEN                         25
Contrary to the majority’s apparent understanding, that passage
makes plain that the doctrine of complete preemption has but one pur-
pose — that is, the recharacterization of a plaintiff’s state complaint
so that it may be considered federal for the purposes of the well-
pleaded complaint rule. The well-pleaded complaint rule states that,
"a defendant may not remove a case to federal court unless the plain-
tiff’s complaint establishes that the case ‘arises under’ federal law."
Franchise Tax Bd., 463 U.S. at 10 (footnote omitted; emphasis
added). The complete preemption doctrine thus works to treat a plain-
tiff’s state complaint as federal from its inception, thus permitting
removal. "In the case of complete preemption . . . Congress ‘so com-
pletely preempt[s] a particular area that any civil complaint raising
this select group of claims is necessarily federal in character.’" Dar-
cangelo v. Verizon Commc’ns, Inc., 292 F.3d 181, 187 (4th Cir. 2002)
(quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987))
(emphasis added).

   The majority’s holding results in the adoption of a "well-pleaded
counterclaim rule," rejected by the Court in Holmes Group as it
would leave the acceptance or rejection of the state forum to the coun-
terclaimant. "It would allow a defendant to remove a case brought in
state court under state law, thereby defeating plaintiff’s choice of
forum, simply by raising a federal counterclaim." Holmes Group, 535
U.S. at 831. Or in the case of a dispute requiring arbitration, it would
deprive the state court of its concurrent jurisdiction to enforce the
FAA. See Moses H. Cone, 460 U.S. at 25, 25 n.32 (noting that "en-
forcement of the [FAA] is left in large part to the state courts").

   Footnote three in the majority opinion concludes: "To hold other-
wise would have the perverse result of returning to state court other-
wise completely preempted federal claims because of the
unanticipated nature of a defendant’s counterclaims." Op. at 6 n.3.
Not to quibble, but the counterclaims never left state court, as the case
was not removed or removable. No accepted theory of federal juris-
diction would put this claim properly before a federal court. In any
event, what the majority characterizes as a perverse result is an accu-
rate description of our legal system and the overlapping jurisdiction
of state and federal courts. Federal counterclaims are adjudicated in
state court every day. (See, e.g., City & County of Honolulu v. Sher-
man, 129 P.3d 542 (Haw. 2006) (adjudicating counterclaims based on
26                     DISCOVER BANK v. VADEN
the federal Religious Land Use and Institutionalized Persons Act of
2000 (RLUIPA)); Villas West II of Willowridge v. McGlothin, 841
N.E.2d 854 (Ind. App. 2006) (adjudicating at trial Fair Housing Act
counterclaim); Salon Enterprises, Inc. v. Langford, 31 P.3d 290 (Kan.
App. 2000) (adjudicating FLSA counterclaims); Wash. Suburban
Sanitary Comm’n v. CAE-Lin Corp., 622 A.2d 745 (Md. 1993) (grant-
ing summary judgment as to § 1983 counterclaims)).

   I completely disagree with the majority’s conclusion in footnote
three. I believe Holmes Group is controlling here. In an attempt to
support its contention that Holmes Group does not contradict its con-
clusion, the majority misinterprets the text of Wright & Miller. The
majority in footnote three, selectively quotes Wright & Miller. A key
portions is omitted. The omission substantially distorts the textual dis-
cussion. In context this section of the treatise states (omitted portion
in bold):

     In contrast, under the complete-preemption doctrine, which
     has been invoked in a significant—and ever-increasing—
     number of cases and contexts, a narrow class of claims are
     so "necessarily federal" that they always will permit
     removal to federal court. In these cases, federal law "not
     only preempts a state law to some degree but also substitutes
     a federal cause of action for the state cause of action,
     thereby manifesting congress’s intent to permit removal."
     Thus, if a plaintiff files suit in state court based upon a
     state cause of action, and the defendant removes the case
     on the basis of complete preemption, the federal district
     court will recharacterize the plaintiff’s state cause of
     action as a federal claim for relief, making the removal
     proper on the basis of federal question jurisdiction. In
     this sense, the complete-preemption doctrine overrides such
     fundamental cornerstones of federal subject matter jurisdic-
     tion as the well-pleaded complaint rule and the principle that
     the plaintiff is master of the complaint.

14B Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,
Federal Practice & Procedure § 3722.1 at 508, 511 (3d ed. 1998)
(emphasis added). Without omissions, the referenced passage makes
clear that the doctrine of complete preemption is exclusively focused
                       DISCOVER BANK v. VADEN                         27
on claims in a plaintiff’s complaint and offers no support for the
majority’s jurisdictional theory.

   Finally, I am constrained to say that I am troubled by the court’s
use of the FAA as a make weight for jurisdiction. The FAA was
designed to make arbitration agreements as enforceable as other con-
tracts, but not more so. Prima Paint, 388 U.S. 395, 404 n.12 (1967).
It did not intend "to elevate [them] over other forms of contract." Id.
The Supreme Court has made clear that the plain language of § 4 for-
bids federal courts from adjudicating the merits of the dispute to be
arbitrated. Yet, this court interprets § 4 to require the district courts
to address the underlying dispute carefully enough to determine
whether it states a federal question. The federal court does this, not
so that it can resolve any of the parties’ rights or remedies under fed-
eral law, but simply so it can take subject matter jurisdiction of a § 4
FAA action that is often nothing more than an ordinary contract
action. Cmty. State Bank v. Strong, ___ F.3d ___, 2007 WL 1225343,
*13 (11th Cir. 2007) (J. Marcus concurring).

   With respect, I believe the approach taken by the majority here,
and the panel in Vaden I, is mistaken. Vaden I puts this court at odds
with at least four of our sister circuits. See Westmoreland Corp. v.
Findlay, 100 F.3d 263, 267-69 (2d. Cir. 1996); Prudential-Bache
Sec., Inc. v. Fitch, 966 F.2d 981, 986-88 (5th Cir. 1992); Smith Bar-
ney, Inc. v. Sarver, 108 F.3d 92, 94 (6th Cir. 1997); Wisconsin v. Ho-
Chunk Nation, 463 F.3d 655, 659 (7th Cir. 2006). The clear weight
of authority is that § 4 does not make federal question jurisdiction
over a petition to compel arbitration dependent on the nature of the
underlying dispute to be arbitrated. Community State Bank, 2007 WL
1225343 at *12. Actions are regularly filed under the FAA, and the
approach adopted by this court, finding federal question jurisdiction
where the court is asked only to enforce a private contract, considera-
bly, and in my view unjustifiably, expands federal court jurisdiction.
Community State Bank, 2007 WL 1225343 at *12. I do not believe
we should look beyond the face of the arbitration petition to deter-
mine jurisdiction.

   The district court erred in determining it had subject matter juris-
diction. There is no properly invoked federal question in the underly-
ing case. Therefore there is no independent basis for jurisdiction over
28                     DISCOVER BANK v. VADEN
the suit seeking enforcement under the FAA. I would remand to the
district court with instructions to dismiss the case for lack of subject
matter jurisdiction.