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U.S. Bank National Association ND, Et al v. Deanthony Thomas, Et al

Topic(s): Consumer Justice
Court Procedure, Federal Jurisdiction, and Appellate Jurisdiction
Preemption of Consumer Remedies
Date Of Involvement: 05/25/2010

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In this case, we opposed a petition for certiorari filed by several banks. The banks asked the Supreme Court to decide whether state-law usury claims are completely preempted by federal law.

In the late 1990’s, some subprime lenders began to underwrite “high loan-to-value” second mortgages- loans in which the total debt consisted of 125% of the value of the borrower’s home. Among these lenders was FirstPlus Bank, a now-defunct California-chartered entity that sold securitized pools of its subprime second mortgages to investors. In the course of these transactions, FirstPlus collected certain charges from borrowers that were passed on to a marketing affiliate as finders’ fees.

This case involved claims by Missouri homeowners who took out loans from FirstPlus. They filed a lawsuit in state court alleging that the fees charged by FirstPlus violated Missouri law. The banks, which purchased the loans from FirstPlus, removed the case to federal court on the theory that the state-law claims were "completely preempted" by a federal law passed in 1980 to regulate the interest rates of federally insured, state-chartered banks. In the decision below, the Eighth Circuit held that the federal statute didn't even apply to the facts of the case, so there could be no complete preemption. In our brief in opposition, we argued that the Supreme Court should deny certiorari because the complete-preemption question is not presented on these facts and, in any event, the lower courts are not divided on the issue. Our co-counsel in the case were the Missouri law firm of Walters Bender Strohbehn and Vaughan. The Supreme Court denied certiorari on June 28, 2010.