Class Action Plaintiff Lacked Standing to Pursue “Wrongful Dishonor” Claim and Remaining Class Action Claims were Preempted by the National Bank Act (NBA) Illinois Appellate Court Holds
Plaintiff filed a class action in Illinois state court against First Banks, a state bank incorporated in Missouri; the class action complaint alleged that the Bank wrongfully dishonored a check, violated the state’s Consumer Fraud and Deceptive Business Practices Act, and was unjustly enriched because it “wrongfully charged a $5 fee to payees who did not have accounts with the [Bank] but who presented for payment checks drawn by the [Bank’s] depositors.” Johnson v. First Banks, Inc., 829 N.E.2d 233, 234 (Ill.App. 2008). Defense attorneys moved to dismiss the class action on the grounds that (1) plaintiff lacked standing to prosecute the “wrongful dishonor” claim, and (2) the National Bank Act (NBA) preempted plaintiff’s claims. Id. The trial court granted the motion and dismissed the class action, id., at 235. The Appellate Court of Illinois affirmed.
With respect to the class action’s wrongful-dishonor claim, the trial court held that plaintiff lacked standing because he did not have an account with the Bank. Johnson, at 235. The state statute limits bank liability for wrongful-dishonor claims to bank “customers,” and state law defines a bank “customer” as, inter alia, “a person having an account with a bank.” Id. (citations omitted). Because plaintiff did not have an account with the Bank, he was not a “customer” and therefore lacked standing to prosecute the class action’s wrongful-dishonor claim. Id., at 235-36. With respect to the NBA preemption issue, defense attorneys argued that regulations enacted by the federal Office of the Comptroller of the Currency (OCC) “expressly authorize a national bank to impose check-cashing fees on customers and that, therefore the National Bank Act preempts the plaintiff’s state law causes of action.” Id., at 236. Based on its analysis, see id., at 236-38, the appellate court agreed with the defense and held that “an out-of-state bank…has the same power and authority as a national bank to charge non-account holders a check-cashing fee and is subject to the same treatment with respect to the fee,” id., at 238. The Court further explained at page 238, “Through the federal regulations, the OCC authorized the banks to exercise a power, and a state may not infringe on that authorization.”
In sum, the appellate court agreed that plaintiff lacked standing to pursue the class action’s “wrongful dishonor” claim, and that the remaining class action claims were preempted by the National Bank Act. Johnson, at 238. Accordingly, the Court affirmed the judgment of the trial court.