JIM HOOD, Attorney General of the State of Mississippi, ex rel. The State of Mississippi; STATE OF MISSISSIPPI, Plaintiffs-Appellants
JP MORGAN CHASE & COMPANY; CHASE BANK USA, N.A, Defendants-Appellees JIM HOOD, Attorney General of the State of Mississippi, ex rel. The State of Mississippi, Plaintiff-Appellant
HSBC BANK NEVADA, N.A.; HSBC CARD SERVICES, INCORPORATED; HSBC BANK USA, INCORPORATED, Defendants-Appellees JIM HOOD, Attorney General of the State of Mississippi, ex rel. The State of Mississippi; THE STATE OF MISSISSIPPI, Plaintiffs – Appellants CITIGROUP, INCORPORATED; CITIBANK, N.A.; DEPARTMENT STORES NATIONAL BANK, Defendants Appellees JIM HOOD, Attorney General of the State of Mississippi, ex rel. The State of Mississippi, Plaintiff-Appellant
DISCOVER FINANCIAL SERVICES, INCORPORATED; DISCOVER BANK; DFS SERVICES, L.L.C.; AMERICAN BANKERS MANAGEMENT COMPANY, INCORPORATED, Defendants–Appellees JIM HOOD, Attorney General of the State of Mississippi, ex rel. The State of Mississippi, Plaintiff - Appellant
BANK OF AMERICA CORPORATION; FIA CARD SERVICES, N.A., Defendants-Appellees JIM HOOD, Attorney General of the State of Mississippi, ex rel. The State of Mississippi, Plaintiff-Appellant
CAPITAL ONE BANK USA, N.A.; CAPITAL ONE SERVICES, L.L.C., Defendants-Appellees
Appeals from the United States District Court for the Southern District of Mississippi
Before OWEN, ELROD, and HAYNES, Circuit Judges.
The Attorney General of Mississippi (the "State") filed six in parens patriae complaints in the Mississippi Chancery Court alleging six credit card companies ("Defendants") violated the Mississippi Consumer Protection Act ("MCPA") by charging consumers for products they did not want or need. Defendants removed, arguing that there is federal subject matter jurisdiction both because this is a Class Action Fairness Act of 2005 ("CAFA") mass action and because the State's MCPA claims were preempted by the federal National Banking Act ("NBA"). The district court agreed, and denied the State's motions to remand. The State then filed two interlocutory appeals, one under CAFA's appeal provision, 28 U.S.C. § 1453(c), and another under 28 U.S.C. § 1292(b) to review two questions certified by the district court on the preemption issue. We granted both appeals in this consolidated case. We conclude that neither CAFA nor complete preemption by the NBA provides the basis for subject matter jurisdiction, and accordingly REVERSE and REMAND.
In June 2012, the State filed six complaints in the Mississippi Chancery Court alleging Defendants violated the MCPA. Miss. Code Ann. § 75-24-1. The complaints allege that Defendants are "commit[ting] unfair and deceptive business practices" in violation of the MCPA by "marketing, selling, and administering" ancillary products to "unwitting" Mississippi credit card holders. These ancillary products include fee-based services to protect customers against unauthorized charges and identity theft, as well as products that suspend payment obligations under certain circumstances. The State alleges that Defendants sign up customers for these services without their knowledge or consent. The State also alleges that Defendants engage in a number of deceptive marketing practices, fail to make proper disclosures to their customers regarding the products, and enroll customers who are not eligible to receive the benefits of the services. The State seeks three forms of relief for these alleged violations: (1) an injunction preventing Defendants from engaging in these practices, (2) civil penalties for each violation of the MCPA, and (3) the disgorgement and restitution of any money Defendants made by these practices.
Only one of these services is at issue here: the Payment Protection Plan. A Payment Protection Plan is an amendment to the credit card loan agreement that suspends or cancels a customer's obligation to repay credit card debt under certain circumstances—such as death, disaster, disability, unemployment, marriage, divorce, or hospitalization—without adverse consequences to the customer. If the repayment obligation is suspended, the customer does not have to make minimum payments, and is relieved of interest charges and late fees during the relevant time period. If the repayment obligation is cancelled, the customer is also relieved of his or her obligation to pay some or all of the loan principal. These Plans are governed by federal regulations promulgated by the Office of Comptroller of the Currency ("OCC") under the NBA. 12 C.F.R. Part 37. The charges for the Plans are ordinarily calculated as a percentage of the customer's outstanding card balance and customers pay a separate fee for these services each month. The complaints estimate that annual charges for these optional services range between approximately $68.40 to $162.00 per customer. None of the complaints challenges the interest rates that the Defendants charge, and the State does not assert that Defendants exceed the legal rate of interest. Customers may receive a loan, in the form of a credit card, even if they elect not to enroll in the Payment Protection Plan. Customers continue to receive credit even if they later decide to cancel their Payment Protection Plan.
The State specifically disclaimed that there was federal question subject matter jurisdiction over any of the six actions:
Nowhere herein does the State plead, expressly or implicitly, any cause of action or request any remedy that arises under or is founded upon federal law, nor does it bring this action on behalf of a class or any group of persons that can be construed as a class. The State specifically disclaims any such claims that would support removal of this action to a United States District Court on the basis of diversity or jurisdictional mandates under the Class Action Fairness Act of 2005 (28 U.S.C. §§ 1332(d), 1453, 1711-171 5). If this Complaint is alleged to be a "mass action" pursuant to 28 U.S.C. § 1332, which the State denies, federal jurisdiction does not exist because the amount in controversy for any individual Mississippi consumer is less than $75, 000, exclusive of interests and costs. . . . The State expressly avers that the only causes of action claimed, and the only remedies sought herein, are founded upon the statutory, common, and decisional laws of the State of Mississippi.
Instead of bringing a CAFA mass action, the State pleaded that it was "bring[ing] this action in its sovereign and quasi-sovereign capacity on behalf of the State to protect citizen consumers of Mississippi."
Defendants removed the six cases to the United State District Court for the Southern District of Mississippi, arguing that there was federal jurisdiction because each case was a class action, a mass action, or both under CAFA ("CAFA grounds"). Defendants further asserted that the state law claims were either completely preempted by federal usury laws, or raised a substantial federal question that must be resolved in accordance with those laws ("preemption grounds"). In support of removal, Defendants filed declarations explaining that the Payment Protection Plans are optional amendments to credit card holder agreements that modify the contractual terms for repayment by suspending or canceling a credit card holder's obligations in whole or in part under certain circumstances. The declarations also state that Payment Protection Plans extend additional credit by relieving customers of (1) minimum payment obligations, thus extending the terms of the loans, (2) the prospect of breaching or defaulting, and (3) some or all of their loan balances. The Plans also allow customers to retain loaned funds on more favorable terms, and to continue to draw credit where they might otherwise not be able to do so. The declarations further assert that thousands of Mississippi residents have paid Payment Protection Plan fees, and that these fees exceed $5, 000, 000 in the aggregate. The declarations are silent as to fees charged to any individual customers, and do not allege that any customer has paid $75, 000 or more in such fees. The declarations are also silent as to the balances owed by any of the customers, and do not assert that any individual balances meet or exceed $75, 000.
The State filed motions to remand each case to state court. The district court consolidated the cases and stayed the case pending our decision in Mississippi ex rel. Hood v. AU Optronics Corp., 701 F.3d 796 (5th Cir. 2012), cert. granted, 133 S.Ct. 2736 (2013), after which the district court set a new briefing schedule. Relying on both CAFA and preemption grounds, the district court denied all six of the State's motions to remand in a single order ("Order"). The district court determined that it had subject matter jurisdiction because (1) the cases were mass actions under CAFA, (2) the NBA, 12 U.S.C. §§ 85–86, and Depository Institutions Deregulation and Monetary Control Act ("DIDA"), 12 U.S.C. § 1831(d), preempted some of the state law claims asserted by the State, and (3) it had supplemental jurisdiction to hear the other state claims.
Based on Defendants' declarations, the district court found that the Payment Protection Plans were intended to modify the contractual terms for prepayment of an outstanding credit card balance and the fees Defendants charged for those Plans were therefore interest because they compensate Defendants for an extension of credit. The district court then determined "that the State has challenged the rate of the fees being charged for Payment Protection Plans, and has impliedly alleged that those fees are excessive in light of the benefits being derived by the credit card holders who have been enrolled in such plans." The district court concluded that federal usury law therefore preempted the State's state law claims.
The State then petitioned this court for permission to file an interlocutory appeal of the Order, which we granted. Because the district court could properly deny remand if either CAFA or the NBA provides federal subject matter jurisdiction, we examine each in turn.
II. STANDARD OF REVIEW
We review a district court's denial of a motion to remand for lack of subject matter jurisdiction de novo. Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397 (5th Cir. 2013) (citing Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1336 (5th Cir. 1995)). Any ambiguities are construed against removal and in favor of remand to state court. Id. (citing Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002)). "The right of removal is entirely a creature of statute and a suit commenced in a state court must remain there until cause is shown for its transfer under some act of Congress. These statutory procedures for removal are to be strictly construed." Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 32 (2002) (internal quotations and citations omitted). "It is to be presumed that a cause lies outside this limited [federal] jurisdiction and the burden of establishing the contrary rests upon the party asserting jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (internal citations omitted); see also Mumfrey, 719 F.3d at 397 (citing Acuna v. Brown &Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000)). This is especially true where, as here, the State brings a case in the ...