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Valle v. Popular Community Bank

United States District Court, Second Circuit

August 6, 2013

JOSEFINA VALLE and WILFREDO VALLE, individually and on behalf of all others similarly situated, Plaintiffs,
v.
POPULAR COMMUNITY BANK f/k/a Banco Popular North America, Defendant.

OPINION AND ORDER

LOUIS L. STANTON, District Judge.

The plaintiffs, New York citizens and joint holders of a deposit account with New York-chartered Popular Community Bank ("Popular"), move to remand their putative class action complaint alleging that Popular charged excessive account overdraft fees in violation of New York law.

Popular has removed the action from the Supreme Court of the State of New York, County of New York, Commercial Division, on the assertion that its operations in states other than New York merit the exercise of federal diversity jurisdiction under the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d), and that federal banking laws regulating its alleged misconduct create federal question jurisdiction.

The Court declines to exercise diversity jurisdiction under CAFA, and none of the plaintiffs' claims arise under federal law. The motion to remand is therefore granted.

BACKGROUND

In their class action complaint filed in New York Supreme Court, the plaintiffs allege that the fees Popular charged its deposit account customers for overdraft protection were excessive, in violation of New York's usury laws (New York General Obligations Law § 5-501, and New York Banking Law §§' 108 and 14-a), New York General Business Law § 349, and the implied duties of good faith and fair dealing.

New York's usury laws limit the rate of interest a New York bank may charge to 16%. The plaintiffs claim that Popular's overdraft fees "are in fact interest charges for loans made by Popular to its deposit customers, " Compl. ¶ 120, and occasionally impose an "effective interest rate" over 1400%, id. ¶ 71.

The plaintiffs also claim that Popular failed to disclose that a transaction would cause an account to be overdrawn, and to obtain its customers' approval before providing overdraft protection, in violation of New York General Business Law ¶ 349 and the implied duties of good faith and fair dealing.

The plaintiffs claim to sue on behalf of a class of

All deposit account customers of Popular on whom Popular imposed or collected one or more Overdraft Charges from November 14, 2006 to the present (the "Breach of Contract Class Period"), from November 14, 2008 to the present (the "GBL 349 Class Period"), from July 1, 2010 to the present and/or from November 14, 2011 to the present (the "Usury Class Period").

Id. ¶ 5.

Popular's principal place of business is in New York where it serves its deposit account customers through 32 bank branches. Notice of Removal ¶ 10. It has approximately 60 branches in California, Florida, Illinois, and New Jersey. Id . Just under half (45%) of all of Popular's deposit account customers, and of those deposit account customers who incurred an overdraft fee in 2012, had New York addresses. Id . ¶ 11

Because its deposits are insured by the Federal Deposit Insurance Corporation, Popular is subject to section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 ("DIDA"), 12 U.S.C. § 1831d, which limits the interest rate a state-chartered, federally-insured bank may charge. Popular is also subject to the Board of Governors of the Federal Reserve System's Regulation E, 12 C.F.R. § 205.

1

Diversity Jurisdiction ...


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