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Hood ex rel. Attorney General of State v. JPMorgan Chase & Co.

United States District Court, S.D. Mississippi.

July 31, 2013

JIM HOOD, ATTORNEY GENERAL OF THE STATE OF MISSISSIPPI, ex rel. THE STATE OF MISSISSIPPI, PLAINTIFF
v.
JPMORGAN CHASE & CO., and CHASE BANK USA, N.A., DEFENDANTS CONSOLIDATED WITH JIM HOOD, ATTORNEY GENERAL OF THE STATE OF MISSISSIPPI, ex rel. THE STATE OF MISSISSIPPI, PLAINTIFF
v.
HSBC BANK NEVADA, N.A. HSBC CARD SERVICES, INC.; and HSBC BANK USA, N.A., DEFENDANTS CONSOLIDATED WITH JIM HOOD, ATTORNEY GENERAL OF THE STATE OF MISSISSIPPI, ex rel. THE STATE OF MISSISSIPPI, PLAINTIFF
v.
CITIGROUP INC.; CITIBANK, N.A.; and DEPARTMENT STORES NATIONAL BANK, DEFENDANT CONSOLIDATED WITH JIM HOOD, ATTORNEY GENERAL OF THE STATE OF MISSISSIPPI, ex rel. THE STATE OF MISSISSIPPI, PLAINTIFF
v.
DISCOVER FINANCIAL SERVICES, INC.; DISCOVER BANK; DFS SERVICES, L.L.C.; and AMERICAN BANKERS MANAGEMENT COMPANY, INC., DEFENDANTS CONSOLIDATED WITH JIM HOOD, ATTORNEY GENERAL OF THE STATE OF MISSISSIPPI, ex rel. THE STATE OF MISSISSIPPI, PLAINTIFF
v.
BANK OF AMERICA CORPORATION and FIA CARD SERVICES, N.A., DEFENDANTS CONSOLIDATED WITH JIM HOOD, ATTORNEY GENERAL OF THE STATE OF MISSISSIPPI, ex rel. THE STATE OF MISSISSIPPI, PLAINTIFF
v.
CAPITAL ONE BANK (USA) N.A., and CAPITAL ONE SERVICES, LLC, DEFENDANTS

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[Copyrighted Material Omitted]

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For Jim Hood, Attorney General of the State of Mississippi, ex rel. The State of Mississippi (3:12-cv-00565), Plaintiff: Bridgette Williams Wiggins, MISSISSIPPI ATTORNEY GENERAL'S OFFICE, Jackson, MS; Geoffrey C. Morgan, OFFICE OF THE ATTORNEY GENERAL, Jackson, MS; Laura Jean Baughman - PHV, PRO HAC VICE, S. Ann Saucer - PHV, PRO HAC VICE, BARON & BUDD, PC, Dallas, TX.

For JPMorgan Chase & Co., Chase Bank USA, N.A. (3:12-cv-00565), Defendants: Alan Walter Perry, Phillip S. Sykes, FORMAN, PERRY, WATKINS, KRUTZ & TARDY, LLP - Jackson, Jackson, MS; Andrew Soukup - PHV, PRO HAC VICE, Robert D. Wick - PHV, PRO HAC VICE, COVINGTON & BURLING, LLP, Washington, DC.

For HSBC Bank Nevada, N.A., HSBC Card Services, Inc., HSBC Bank USA, Inc., Discover Financial Services, Inc., Discover Bank, DFS Services, L.L.C. (3:12-cv-00565), Consol Defendants: David W. Moon - PHV, PRO HAC VICE, Jason S. Yoo - PHV, PRO HAC VICE, Julia Strickland - PHV, STROOK, STROOK & LAVAN, LLP, Los Angeles, CA; Mark H. Tyson, Stephen T. Masley, MCGLINCHEY STAFFORD, PLLC - Jackson, Jackson, MS.

For CitiGroup, Inc., Citibank, NA, Department Stores National Bank (3:12-cv-00565), Consol Defendants: Elizabeth T. Bufkin, Jeffrey S. Dilley, William Kurt Henke, HENKE BUFKIN, Clarksdale, MS; Noah A. Levine - PHV, PRO HAC VICE, WILMER CUTLER PICKERING HALE AND DORR, LLP, New York, NY; Robert W. Trenchard - PHV, PRO HAC VICE, WILMERHALE, New York, NY.

For American Bankers Management Company, Inc. (3:12-cv-00565), Consol Defendant: Charles E. Griffin, BUTLER, SNOW, O'MARA, STEVENS & CANNADA, PLLC-Ridgeland, Ridgeland, MS; Markham R. Leventhal, JORDEN BURT, LLP, Miami, FL.

For Bank of America Corporation, FIA Card Services, N.A. (3:12-cv-00565), Consol Defendants: David L. Permut - PHV, PRO HAC VICE, GOODWIN PROCTER, LLP - Washington, Washington, DC; H. Hunter Twiford, III, MCGLINCHEY STAFFORD, Jackson, MS; Taylor Allison Heck, MCGLINCHEY STAFFORD, PLLC - Jackson, Jackson, MS.

For Capital One Bank (USA) N.A., Capital One Services, LLC (3:12-cv-00565), Consol Defendants: Christopher Daniel Meyer, Dorsey R. Carson, Jr., BURR & FORMAN, LLP - Jackson, Jackson, MS.

For Jim Hood, Attorney General of the State of Mississippi, ex rel. The State of Mississippi (3:12-cv-00571), Plaintiff: Meredith McCollum Aldridge, LEAD ATTORNEY, Bridgette Williams Wiggins, MISSISSIPPI ATTORNEY GENERAL'S OFFICE, Jackson, MS; Geoffrey C. Morgan, OFFICE OF THE ATTORNEY GENERAL, Jackson, MS; Laura Jean Baughman - PHV, PRO HAC VICE, S. Ann Saucer - PHV, PRO HAC VICE, BARON & BUDD, PC, Dallas, TX.

For HSBC Bank Nevada, N.A., HSBC Card Services, Inc., HSBC Bank USA, Inc. (3:12-cv-00571), Defendants: Mark H. Tyson, LEAD ATTORNEY, Stephen T. Masley, MCGLINCHEY STAFFORD, PLLC - Jackson, Jackson, MS; David W. Moon - PHV, PRO HAC VICE, Jason S. Yoo - PHV, PRO HAC VICE, Julia Strickland - PHV, STROOK, STROOK & LAVAN, LLP, Los Angeles, CA.

For Jim Hood, Attorney General of the State of Mississippi, ex rel, The State of Mississippi (3:12-cv-00572), Plaintiffs: Meredith McCollum Aldridge, LEAD ATTORNEY, Bridgette Williams Wiggins, MISSISSIPPI ATTORNEY GENERAL'S OFFICE, Jackson, MS; Geoffrey C. Morgan, OFFICE OF THE ATTORNEY GENERAL, Jackson, MS; Laura Jean Baughman - PHV, PRO HAC VICE, S. Ann Saucer - PHV, PRO HAC VICE, BARON & BUDD, PC, Dallas, TX.

For CitiGroup, Inc., Citibank, NA, Department Stores National Bank (3:12-cv-00572), Defendants: William Kurt Henke, LEAD ATTORNEY, Elizabeth T. Bufkin, Jeffrey S. Dilley, HENKE BUFKIN, Clarksdale, MS; Noah A. Levine - PHV, PRO HAC VICE, WILMER CUTLER PICKERING HALE AND DORR, LLP, New York, NY; Robert W. Trenchard - PHV, PRO HAC VICE, WILMERHALE, New York, NY.

For Jim Hood, Attorney General of the State of Mississippi, ex rel. The State of Mississippi (3:12-cv-00573), Plaintiff: Geoffrey C. Morgan, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL, Jackson, MS; Bridgette Williams Wiggins, Meredith McCollum Aldridge, MISSISSIPPI ATTORNEY GENERAL'S OFFICE, Jackson, MS; Laura Jean Baughman - PHV, PRO HAC VICE, S. Ann Saucer - PHV, PRO HAC VICE, BARON & BUDD, PC, Dallas, TX.

For Discover Financial Services, Inc., Discover Bank, DFS Services, L.L.C. (3:12-cv-00573), Defendants: Mark H. Tyson, LEAD ATTORNEY, Stephen T. Masley, MCGLINCHEY STAFFORD, PLLC - Jackson, Jackson, MS; David W. Moon - PHV, PRO HAC VICE, Jason S. Yoo - PHV, PRO HAC VICE, Julia Strickland - PHV, STROOK, STROOK & LAVAN, LLP, Los Angeles, CA.

For American Bankers Management Company, Inc. (3:12-cv-00573), Defendant: Charles E. Griffin, LEAD ATTORNEY, BUTLER, SNOW, O'MARA, STEVENS & CANNADA, PLLC-Ridgeland, Ridgeland, MS; Markham R. Leventhal, LEAD ATTORNEY, JORDEN BURT, LLP, Miami, FL.

For Jim Hood, Attorney General of the State of Mississippi. ex rel. The State of Mississippi (3:12-cv-00574), Plaintiff: Bridgette Williams Wiggins, Meredith McCollum Aldridge, MISSISSIPPI ATTORNEY GENERAL'S OFFICE, Jackson, MS; Geoffrey C. Morgan, OFFICE OF THE ATTORNEY GENERAL, Jackson, MS; Laura Jean Baughman - PHV, PRO HAC VICE, S. Ann Saucer - PHV, PRO HAC VICE, BARON & BUDD, PC, Dallas, TX.

For Bank of America Corporation, FIA Card Services, N.A. (3:12-cv-00574), Defendants: David L. Permut - PHV, PRO HAC VICE, GOODWIN PROCTER, LLP - Washington, Washington, DC; H. Hunter Twiford, III, MCGLINCHEY STAFFORD, Jackson, MS; Taylor Allison Heck, MCGLINCHEY STAFFORD, PLLC - Jackson, Jackson, MS.

For Jim Hood, Attorney General of the State of Mississippi, ex rel. The State of Mississippi (3:12-cv-00575), Plaintiff: Bridgette Williams Wiggins, Meredith McCollum Aldridge, MISSISSIPPI ATTORNEY GENERAL'S OFFICE, Jackson, MS; Geoffrey C. Morgan, OFFICE OF THE ATTORNEY GENERAL, Jackson, MS; Laura Jean Baughman - PHV, PRO HAC VICE, S. Ann Saucer - PHV, PRO HAC VICE, BARON & BUDD, PC, Dallas, TX.

For Capital One Bank (USA) N.A., Capital One Services, LLC (3:12-cv-00575), Defendants: Christopher Daniel Meyer, Dorsey R. Carson, Jr., BURR & FORMAN, LLP - Jackson, Jackson, MS.

OPINION

William H. Barbour, Jr., UNITED STATES DISTRICT JUDGE.

Page 684

OPINION AND ORDER

This cause is before the Court on the Motions of Plaintiff to Remand. Having considered the pleadings, the attachments thereto, as well as supporting and opposing authorities, the Court finds the Motions are not well taken and should be denied.

I. Factual Background and Procedural History

In June of 2012, the State of Mississippi, by and through its Attorney General, Jim Hood (" Hood" ), brought the following lawsuits in the Chancery Court for the First Judicial District of Hinds County, Mississippi " to protect citizen consumers of Mississippi" :

Jim Hood, Attorney General of the State of Mississippi, ex rel. the State of Mississippi v. JPMorgan Chase & Co. and Chase Bank USA, N.A. (" Chase Action" )
Jim Hood, Attorney General of the State of Mississippi, ex rel. the State of Mississippi v. HSBC Bank Nevada, N.A.; HSBC Card Services, Inc.; and HSBC Bank USA, N.A. (" HSBC Action" )
Jim Hood, Attorney General of the State of Mississippi, ex rel. the State of Mississippi v. Citigroup Inc.; Citibank, N.A.; and Department Stores National Bank (" Citigroup Action" )
Jim Hood, Attorney General of the State of Mississippi, ex rel. the State of Mississippi v. Discover Financial Services, Inc.; Discover Bank; DFS Services, L.L.C.; and American Bankers Management Company, Inc. (" Discover Action" )
Jim Hood, Attorney General of the State of Mississippi, ex rel. the State of Mississippi v. Bank of America Corporation and FIA Card Services, N.A. (" BOA Action" )
Jim Hood, Attorney General of the State of Mississippi, ex rel. the State of Mississippi v. Capital One Bank (USA) N.A. and Capital One Services, LLC (" Capital One Action" ) [1]

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Amended Complaints were filed in each lawsuit in August of 2012. The subject lawsuits are predicated on the following allegations:

These actions stem from the Defendants' marketing, selling, and administering to Mississippi consumers fee-based products, which are ancillary to their credit cards.
Defendants market such ancillary products as protection for consumers against improper or unauthorized charges on their credit cards, identity theft, and lost or stolen credit cards and/or as providing benefits in the event of unemployment or disability. Each ancillary product is marketed only to the Defendants' current card holders, and the products themselves are attached to the cardholders' specific account at issue.
Upon information and belief, when consumers apply for and receive Defendants' credit cards, a process is triggered whereby a consumer can unknowingly and unintentionally sign up to receive ancillary products.
Additionally, Defendants often enroll consumers in these products even though the consumers did not assent to pay for them. This process is referred to as " slamming." Enrollment may be based on highly deceptive and misleading telemarketing calls, forged or non-existent mailers or online applications, or nothing at all. In each instance, unknowing consumers are hit with monthly fees without their meaningful consent or understanding that their credit card will be charged for these products. Defendants are in a position to do this because, unlike a typical marketer or seller, they are already the consumer's credit card company and already have their credit card number.
Further, for certain types of ancillary products ... that all offer similar coverage (hereinafter collectively referred to as " Payment Protection Plans" or " Plans" ), that purport to pay the consumer's required minimum monthly payment for a limited period of time under certain triggering circumstances, such as involuntary unemployment, illness, or changes in family status, thus preventing the account from becoming delinquent, Defendants make no effort to determine whether consumers are even eligible for the benefits at the time of sale. As a consequence, Defendants bill ineligible Mississippi citizens for this coverage, even though their status at the time of enrollment prevents them from receiving benefits under the terms of these Payment Protection Plans.
The Defendants commit unfair and deceptive business practices and violate statutory and common law by charging consumers for ancillary products, including Payment Protection Plans, who either did not want them or were not entitled to benefit from them, and by the unfair and deceptive manner in which Defendants offer and administer claims for benefits by consumers.
As a result of these unfair and deceptive practices, Defendants have amassed substantial sums of money with virtually no benefits to Mississippi citizens who are nevertheless charged for these products month in and month out.

See Chase Action, Am. Compl., ¶ ¶ 1-7; HSBC Action, Am. Compl., ¶ ¶ 1-7; Citigroup Action, Am. Compl., ¶ ¶ 1-7; Discover Action Am. Compl., ¶ ¶ 1-7; BOA Action Am. Compl., ¶ ¶ 1-7; Capital One Action Am. Compl., ¶ ¶ 1-7. The State further alleges that " [b]y marketing, promoting, advertising and selling Payment Protection Plans, Defendants have engaged in unfair methods of competition affecting commerce and unfair or deceptive trade practices" thereby violating the Mississippi Consumer Protection Act (" MCPA" ), codified at Mississippi Code Annotated Section 75-24-1 et. seq.

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See Chase Action, Am. Compl., ¶ ¶ 70-78; HSBC Action, Am. Compl., ¶ ¶ 71-79; Citigroup Action, Am. Compl., ¶ ¶ 71-79; Discover Action, Am. Compl., ¶ ¶ 75-83; BOA Action, Am. Compl., ¶ ¶ 70-78; Capital One Action, Am. Compl., ¶ ¶ 70-78. Through its Amended Complaints, the State of Mississippi seeks the following: (1) injunctive relief barring Defendants from engaging in unfair or deceptive practices that violate the MCPA; [2] (2) monetary judgments " for disgorgement and restitution of monies acquired by Defendants by means of any practice prohibited by the MCPA" ; [3] (3) declarations that the alleged acts of Defendants constitute multiple violations [4] of the MCPA, and civil penalties for each alleged violation; [5] and (4) attorneys fees and costs as permitted under the MCPA as well as pre- and post-judgment interest.

Each of the lawsuits was removed to this Court. In their Notices of Removals, Defendants allege that the exercise of diversity-based federal subject matter jurisdiction is proper under the Class Action Fairness Act (" CAFA" ), codified at 28 U.S.C. § 1332(d), because each of the subject lawsuits is a class action and/or a mass action under the terms of that Act. Defendants further allege that the exercise of federal question subject matter jurisdiction is proper because the state law claims alleged in the subject lawsuits are either (1) completely pre-empted under the National Bank Act (" NBA" ), codified at 12 U.S.C. § § 85-86, or the Depository Institutions Deregulation and Monetary Control Act of 1980 (" DIDA" ), codified at 12 U.S.C. § 1831d; or (2) raise a substantial federal question that must be resolved in accordance with the NBA.

Following removal, Motions to Remand were filed in each of the subject lawsuits. The lawsuits were thereafter consolidated for the purpose of deciding those Motions. See Chase Action, Order [Docket Nos. 19 and 20]. The lawsuits were later stayed pending a decision by the United States Court of Appeals for the Fifth Circuit in Mississippi ex re. Hood v. AU Optronics Corp., et al., Appeal No. 12-60704. See Order [Docket No. 24].

In deciding AU Optronics, the Fifth Circuit found, inter alia , that that parens

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patriae lawsuit was a mass action over which federal subject matter jurisdiction could be exercised under the CAFA. [6] See Mississippi ex rel. Hood v. AU Optronics Corp., et al., 701 F.3d 796 (5th Cir. 2012). After AU Optronics was decided, the appeal-related stay entered by this Court was vacated, and a new briefing schedule on the Motions to Remand was entered. See Order [Docket No. 26]. The Motions to Remand have now been fully briefed and will be considered by the Court.

II. Discussion

A. Procedural Defect in Chase Action

In its Motion to Remand in the Chase Action, the State argues that removal of that case was defective because the Notice of Removal references allegations in the original Complaint as opposed to those in the Amended Complaint. See Mem. in Supp. of Mot. [Docket No. 12], at 3. [7] The Chase Action Defendants argue that removal was not defective because they had not yet received a copy of the Amended Complaint at the time their Notice of Removal was filed. See Mem. in Supp. of Resp. [Docket No. 31], at 34-35. The Chase Action Defendants also cite to their Response to the Attorney General's Filing of Amended Complaint in State Court (" Response to Filing" ) in which they claim they had not been served with a copy of the Amended Complaint at the time the lawsuit was removed, ...


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