In Villegas v. U.S. Bankcorp, 2010 WL 2867424 (N.D.Cal. 2010), Judge Seeborg found that the Plaintiff stated a claim against the defendant automobile lender for violation of Civil Code section 1632, California’s foreign language translation requirement for consumer contracts. Judge Seeborg described Plaintiff’s complaint as follows:
Plaintiff Gloria Villegas bought a car. She was referred by the dealer to U.S. Bank for the financing. The Bank gave her a loan, which was to be repaid through automatic deductions from a new U.S. Bank checking account. Unbeknownst to Villegas, she was also given a Reserve Line of Credit of a $1500. Conversations between Villegas and the Bank were all conducted in Spanish; all the paperwork, however, was only provided to Villegas in English. ¶ From August of 2008 through January of 2009, Villegas made deposits in the checking account sufficient to cover each month’s payment. In January, Villegas had still not received the registration papers for the car. She attempted to contact the dealer, but it had gone out of business. She contacted the Bank, and was told she could stop making payments until the registration issue was resolved. ¶ From February through May of 2009, the Bank continued making automatic deductions from Villegas’s checking account, drawing down on the reserve line of credit. By June, the remaining available credit was $11.72 short of covering the monthly payment. The Bank made the automatic deduction anyway, causing the account to be overdrawn. The Bank then imposed an overdraft fee, and because Villegas never deposited funds to cover the overdraft, it continued imposing a daily overdraft fee, until it eventually “force closed” the account in August. By that time Villegas had been charged approximately $375 on the original $11.72 overdraft. ¶ As noted, Villegas brings this as a class action on behalf of all similarly situated U.S. Bank customers with respect to the overdraft practices. She pleads three counts: breach of contract, breach of the covenant of good faith and fair dealing, and unfair business practices in violation of California Business Professions Code § 17200. As also noted above, she alleges one further claim for relief on her own behalf only-also alleged under Business Professions Code § 17200, but in this instance predicated on the alleged violation of Civil Code section 1632 arising from the Bank’s failure to provide her Spanish translations of her loan and checking account documents. This motion to dismiss argues that (1) the first three claims all fail because Villegas cannot point to any contract term the Bank breached, and (2) the fourth claim fails because Civil Code section 1632 is preempted by the National Bank Act, 12 U.S.C. §§ 1 et seq., and/or the Truth in Lending Act, 15 U.S.C. § 1601 et seq.
Judge Seeborg found that these allegations stated a claim against the defendant, explaining:
The Bank contends application of section 1632 to U.S. Bank, a national bank, is preempted by the National Bank Act (“NBA”) and/or the Truth in Lending Act (“TILA”). The parties are in agreement that there appears to be no case addressing the relationship between the National Bank Act and section 1632 for purposes of preemption. Both sides look instead by analogy to cases addressing whether section 1632 is preempted by the Home Owners Loan Act, 12 U.S.C. §§ 1461 et seq. (“HOLA”). Defendants rely on Tamayo v. World Savings Bank, 2009 U.S. Dist. LEXIS 73298 (S.D. CA 2009) and Paz v. Wachovia, 2009 U.S. Dist. LEXIS 73297 (C.D. CA 2009), both of which found preemption. Plaintiff relies on Reyes v. Premier Home Funding, 640 F.Supp.2d 1147 (N.D.Cal.2009) a decision from this district that issued about a month earlier than Tamayo and Paz, which concluded that section 1632 is not preempted by HOLA. See also, Cuevas v. Atlas Realty/Financial Services, Inc., 2008 WL 268981, *3 (N.D.Cal.2008) (concluding that “at least at the pleading stage” a defendant had not met its burden to show HOLA preempts section 1632). ¶ The better argument is that section 1632 is not preempted under the NBA, because it does not re-quire lenders to provide any disclosures or other materials that are in any way substantively different from what they must provide under federal law. The requirement to provide Spanish language translations ensures that Spanish speaking consumers will have access to and be able to understand the federally mandated disclosures, but it does not change the nature of, add to, or subtract from what must be disclosed. ¶ The Bank’s further argument that section 1632 is preempted by TILA is based on a supposed conflict between the mandatory language in section 1632 requiring translations, and permissive language in regulations under TILA allowing translations as long as English language documents are also provided upon the consumer’s request. See 12 C.F.R. § 226.27. While mandatory and permissive language may conflict in some instances, here the fact that TILA regulations expressly permit translations weighs against a conclusion that the state’s requirement for such translations under particular circumstances is preempted. Accordingly, the motion to dismiss the fourth claim for relief is denied.