In Gutierrez v. Wells Fargo Bank, NA — F.3d —-, 2012 WL 6684748 (9th Cir. 2012), the Court of Appeals for the Ninth Circuit rejected a post-trial petition to enforce arbitration, and found partial pre-emption of the UCL to the extent it conflicted with the business of banking in how a bank applies and computes overdraft fees.  The Court of Appeals found no  pre-emption of the UCL to the extent it imposed liability for false statements. The Court of Appeals said, “Bank fees, like taxes, are ubiquitous. And, like taxes, bank fees are unlikely to go away any time soon. The question we consider here is the extent to which overdraft fees imposed by a national bank are subject to state regulation. At issue is a bookkeeping device, known as “high-to-low” posting, which has the potential to multiply overdraft fees, turning a single overdraft into many such overdrafts.” The Court of Appeals for the Ninth Circuit refused to enforce a post-trial, post-Concepcion petition to compel arbitration, finding that do so conflicted with the parties’ intentions. First, the Ninth Circuit distinguished the Concepcion ‘mandatory’ arbitration clause’ from the ‘permissive’ one at issue in this case, and found waiver, explaining:

This arbitration clause stands in contrast to the mandatory arbitration provision found in many consumer contracts, such as the provision in Concepcion. To begin, it is a permissive clause in which either party may demand arbitration. The penalty for failing to consent to arbitration upon demand is bearing the costs involved in compelling arbitration. Four points stand out: 1) an arbitration demand is required; 2) the agreement contemplates that the parties may decide to remain within the judicial system to settle their disputes; 3) the agreement permits class arbitration on consent; and 4) any demand for arbitration must be made within a “reasonable time.” . . . Ordering arbitration post-appeal would severely prejudice Gutierrez. The CAA requires the demand to be made at a “reasonable time.” The series of dispositive motions, voluminous discovery, preparation for trial, two-week bench trial, post-trial briefing, and appellate proceedings amply demonstrate the re-sources both the parties and the courts have already expended, all of which would be undone if arbitration is now required. The prejudice to Gutierrez and the class stemming from Wells Fargo’s invocation of arbitration five years into this litigation—time, expense, delay and uncertainty—is apparent. See Nat’l Found. for Cancer Research v. A.G. Edwards & Sons, Inc., 821 F.2d 772, 776 (D.C.Cir.1987) (“To give [defendant] a second bite at the very questions presented to the court for disposition squarely confronts the policy that arbitration may not be used as a strategy to manipulate the legal process.”). . . Nor would arbitration at this late stage serve any contractual purpose. The CAA calls for all claims to be resolved through either litigation or arbitration, if timely demanded by one of the parties. Because the CAA does not require arbitration, Gutierrez’s prejudice is in no way self-inflicted. Ordering arbitration would undercut her contractual expectations, be inconsistent with the parties’ agreement, and contradict their conduct throughout the litigation. See Concepcion, 131 S.Ct. at 1752 (“Arbitration is a matter of contract, and the FAA requires courts to honor parties’ expectations.”).

On the merits, the Ninth Circuit found partial pre-emption.

Wells Fargo’s decision to resequence the posting order falls within the OCC’s definition of a pricing decision authorized by federal law. The district court is not free to disregard the OCC’s determinations of what constitutes a legitimate pricing decision, nor can it apply state law in a way that interferes with this enumerated and incidental power of national banks. . . We hold that a “good faith” limitation applied through California’s Unfair Competition Law is pre-empted when applied in a manner that prevents or significantly interferes with a national bank’s federally authorized power to choose a posting order. See Barnett, 517 U.S. at 37 (state statute could not bar small town national banks from selling insurance where federal statute gave the banks such authority); Bank of Am., 309 F.3d at 561–64 (federal regulations allowing banks to collect non-interest charges pre-empted a local law governing what ATM fees a bank could charge). The federal court cannot mandate the order in which Wells Fargo posts its transactions. Therefore, we vacate the permanent injunction and the $203 million restitution award. The district court premised both of these remedies on only a violation of the “unfair” business practice prong of the Unfair Competition Law tethered to the “good faith” requirement of California Commercial Code § 4303(b).

The Ninth Circuit found no pre-emption, however, to the extent the Plaintiffs pleaded allegations of fraudulent misrepresentations.

The requirement to make particular disclosures falls squarely within the purview of federal banking regulation and is expressly preempted: “A national bank may exercise its deposit-taking powers without regard to state law limitations concerning,” among other things, “disclosure requirements.” 12 C.F.R. § 7.4007(b)(3). . . We turn now to the different question of state law liability based on Wells Fargo’s misleading statements about its posting method. Notably, the Unfair Competition Law itself does not impose dis-closure requirements but merely prohibits statements that are likely to mislead the public. . . Other than an argument regarding the cost of modifying its published materials, Wells Fargo does not articulate how abiding by the Unfair Competition Law’s prohibition of misleading statements would prevent or significantly interfere with its ability to engage in the business of banking. . . Accordingly, we hold that Gutierrez’s claim for violation of the fraudulent prong of the Unfair Competition Law by making misleading misrepresentations with regard to its posting method is not pre-empted, and we affirm the district court’s finding to this extent. Consistent with the foregoing, the district court may provide injunctive relief and restitution against Wells Fargo. Although the court cannot issue an injunction requiring the bank to use a particular system of posting or requiring the bank to make specific disclosures, it can enjoin the bank from making fraudulent or misleading representations about its system of posting in the future. Restitution is available for past misleading representations.