The question
Whether the National Bank Act preempts New York's law requiring banks to pay interest on mortgage escrow account balances as applied to national banks.
Cantero v. Bank of America, N. A.
What the Court decided
The Court vacated the Second Circuit's judgment because that court did not apply the correct preemption standard. Under the Dodd-Frank Act, a state law regulating national banks is preempted only if it discriminates against national banks or, in accordance with Barnett Bank, prevents or significantly interferes with a national bank's exercise of its powers. Because New York's interest-on-escrow law does not discriminate against national banks, the preemption question had to be analyzed under the "prevents or significantly interferes" standard as set out in Barnett Bank. The Second Circuit failed to conduct that analysis.
How the justices split
UnanimousThe Court's opinion
Kavanaugh, joined by Roberts, Thomas, Alito, Sotomayor, Kagan, Gorsuch, Barrett, Jackson
Congress in the Dodd-Frank Act instructed that the National Bank Act preempts a state law regulating national banks only if the state law discriminates against national banks or prevents or significantly interferes with a national bank's exercise of its powers, as determined in accordance with Barnett Bank. New York's interest-on-escrow law does not discriminate against national banks, so it must be analyzed under the prevents-or-significantly-interferes standard. Barnett Bank did not establish a bright line for when a state law significantly interferes with a national bank's powers and instead analyzed the Court's prior preemption precedents. The Second Circuit did not conduct that analysis, so its judgment was vacated and the case remanded.
How we know · 5 sourced claims
The Court held that the Second Circuit failed to analyze whether New York's interest-on-escrow law is preempted as applied to national banks in a manner consistent with Dodd-Frank and Barnett Bank.
Source: syllabus, Held
Under Dodd-Frank, the National Bank Act preempts a state law only if the law discriminates against national banks or prevents or significantly interferes with a national bank's exercise of its powers as determined in accordance with Barnett Bank.
Source: syllabus, Held
Because the New York law does not discriminate against national banks, the preemption question must be analyzed under the prevents-or-significantly-interferes standard in accordance with Barnett Bank.
Source: syllabus, Held
Barnett Bank did not establish a clear line to demarcate when a state law significantly interferes with a national bank's ability to exercise its powers and instead analyzed the Court's precedents.
Source: syllabus, Held
Justice Kavanaugh delivered the opinion for a unanimous Court.
Source: syllabus, lineup