The Supreme Court of California has ruled that the National Bank Act preempts those sections of the California Civil Code that require credit card issuers to provide additional disclosures for pre-printed checks to cardholders, because the disclosures are beyond those required by the Act. In a far-reaching and detailed opinion, the Court concluded that the Act preempts those sections of the Civil Code because the state law “stands as an obstacle to the broad grant of power given by the [National Bank Act] to national banks to conduct the business of banking.”
The California Supreme Court’s ruling followed a recent opinion by the United States Court of Appeals for the Ninth Circuit holding that the National Bank Act preempted the same state law; substantively, the California Supreme Court ruling presents the final, authoritative ruling on this issue. More broadly, the opinion stakes out a more specific and exacting showing that a plaintiff must meet to demonstrate that state laws governing the conduct of banks are not preempted by the Act when applied to national banks. Noting that the United States Supreme Court has admonished the various states to be mindful of acts that would subject national banks to a multitude of “limitations and restrictions as varied and numerous as the States,” the California Supreme Court held that its state laws that pose an obstacle to the Act’s purpose of creating standardized rules governing the conduct of national banks cannot stand, even if such laws do not discriminate between national and state chartered banks.