Episode description

Welcome to Supreme Court Opinions. In this episode, you’ll hear the Court’s opinion in Cantero v Bank of America.

In this case, the court considered this issue: When are state laws that regulate national banks preempted under federal law?

The case was decided on May 30, 2024.

The Supreme Court held that under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, state laws are preempted only if they discriminate against national banks or “prevent or significantly interfere” with a national bank’s exercise of its powers, as determined by the standard articulated in Barnett Bank v Nelson. Justice Brett Kavanaugh authored the unanimous opinion of the Court vacating the Second Circuit’s judgment for failing to apply the proper preemption test.

The Dodd-Frank Act, passed by Congress in 2010, establishes the controlling legal standard for determining when a state consumer financial law, like New York's interest-on-escrow law, is preempted with respect to national banks. Dodd-Frank expressly rejected the position that all state laws regulating national banks are automatically preempted. Rather, a state law is preempted by the National Bank Act only if: (1) the state law discriminates against national banks as compared to state banks; or (2) the state law "prevents or significantly interferes with the exercise by the national bank of its powers." In Barnett Bank v Nelson (1996), the Court explained the test for “prevents or significantly interferes with” requires courts to make a practical assessment of the nature and degree of interference caused by the state law, guided by the Court's precedents. Because the Second Circuit failed to conduct this nuanced analysis and instead employed a categorical test that would preempt virtually all state laws regulating national banks, the Court vacated its judgment and remanded the case for analysis in a manner consistent with the Barnett Bank standard.

The opinion is presented here in its entirety, but with citations omitted. If you appreciate this episode, please subscribe. Thank you.