LOS ANGELES, CA, July 26, 2004—A decision by a federal court judge last week determined that a class action lawsuit filed against Bank of America in April of this year does not fall under federal jurisdiction but rather belongs in state court. The lawsuit seeks injunctions to stop the bank from charging paycheck cashing fees without notifying its accountholders of potential adverse legal consequences.

Bank of America removed the case—which was originally filed in the state court—to the federal court, contending that any action brought against a national bank is “completely preempted” by federal law. After both sides submitted briefs regarding the issue of federal jurisdiction, the judge decided to return the case to the state court.

“The bank believed there was a question as to whether or not federal law bars lawsuits in California against banks for violations of California state law,” explains Nick Roxborough, managing partner of Roxborough, Pomerance & Nye LLP, who filed the class action lawsuits and briefed the federal court. “Our suit against Bank of America doesn’t focus on whether or not a bank has the right to charge a cash cashing fee. But it does strongly contend that a bank can’t do so without advising its clients of the legal consequences, more specifically, that this practice may subject employers to liability of certain provisions of the Labor Code.”

The suit against Bank of America was filed in April on behalf of California employers who believe the banks' fees have placed them in violation of Section 212 of the California Labor Code, which requires that paychecks ‘be negotiable and payable in cash, on demand, without discount.’

“We are pleased the judge recognized that the federal courts do not have jurisdiction over this matter, and that this is an issue for California to decide,” adds Roxborough. “We view this decision as a major victory in that it is a rejection of one of the bank’s key arguments in this case—primarily, that they can do anything they want in California because federal law protects them.”

Roxborough, Pomerance & Nye LLP (RPN) is a Los Angeles-based law firm providing expert legal counsel and representation to the business community. Established in 1996, the firm offers a broad range of legal services in all facets of civil litigation with its primary focus on business, insurance, employment, and wage and hour litigation. It is the first law firm in the country to specialize in and make new law when representing employers in workers’ compensation premium and dividend disputes with insurance carriers.

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