California’s attorney general is asking a federal appeals court to confirm that local prosecutors can sue national banks, saying that their national charters do not shield them from lawsuits alleging mistreatment of local residents.
The request came in a so-called friend-of-the-court filing in a case involving four local prosecutors and Credit One Bank. The prosecutors allege that the Las Vegas-based credit card issuer has harassed consumers through debt-collection calls.
Credit One Bank, whose spokespeople did not respond to a request for comment, has said that the local prosecutors overstepped their boundaries. They have argued in court filings that only the state attorney general, not local prosecutors, is allowed to sue a national bank for alleged violations of state laws.
California AG Rob Bonta pushed back against that argument in a court filing last week, saying that federal laws do not prohibit local prosecutors from taking action and pointing to several examples of locally led lawsuits.
That list included the Los Angeles City Attorney’s 2015 lawsuit against Wells Fargo, which helped unleash a wave of legal troubles for the bank relating to its fake-accounts scandal.
“If you break the law in California, local prosecutors have the authority and the responsibility to hold you accountable,” Bonta said in a
In his filing, Bonta noted that all lawsuits from local DAs come from the same plaintiff — the People of the State of California — and said that local prosecutors are “critical partners to the attorney general in ensuring that the rights of Californians are protected.”
The case stems from a November 2019 subpoena that Michael Hestrin, the Riverside County district attorney, sent to Credit One, requesting records on debt-collection calls to consumers. Hestrin has since sued the bank, joined by the DAs in San Diego, Los Angeles and Santa Clara counties.
Credit One sued in 2020 to block the subpoena and further legal action, saying that local prosecutors play an “important role” in serving California consumers but that federal law only allows the state AG to sue companies alleging violations of state laws.
“An action by a local government official, conducted through an investigative subpoena, is not permitted by federal law,” the bank’s lawyers wrote in 2020.
The bank’s lawyers also said that Credit One is a “pervasively regulated national bank,” nothing that the company spends money and time in ensuring it complies with federal and state laws and that it undergoes consistent examinations from the Office of the Comptroller of the Currency. The OCC, an independent branch of the U.S. Treasury Department, supervises nationally chartered banks.
The OCC agreed in a 2020 letter that the subpoena was unlawful, Credit One Bank noted. The OCC’s letter came from Jonathan Gould, the agency’s former chief counsel who has
“The DA is engaged in a nonjudicial investigation of the Bank and not an exercise of law enforcement authority that is permissible,” Gould wrote in a 2020 letter to the bank, which used the OCC letter to support its position in court.
An OCC spokesperson on Tuesday declined to comment.
A federal district court would later rule against Credit One Bank in the case, prompting the bank to appeal. Bonta, California's Democratic attorney general, wrote the filing as part of the appeals court case.
