Aguayo v. U.S. Bank

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

JOSE AGUAYO, an individual,  No. 09-56679
Plaintiff-Appellant,
D.C. No.
v.
 3:08-cv-02139-
U.S. BANK, a business entity form W-BLM
unknown; DOES 1-30, inclusive,
OPINION
Defendants-Appellees.

Appeal from the United States District Court
for the Southern District of California
Thomas J. Whelan, Senior District Judge, Presiding

Argued and Submitted
February 9, 2011—Pasadena, California

Filed August 1, 2011

Before: Harry Pregerson and Kim McLane Wardlaw,
Circuit Judges, and Jack Zouhary, District Judge.*

Opinion by Judge Zouhary

*The Honorable Jack Zouhary, United States District Judge for the
Northern District of Ohio, sitting by designation.

9793
9796 AGUAYO v. U.S. BANK

COUNSEL

F. Paul Bland (argued), Claire Prestel, Melanie Hirsch; Public
Justice P.C., Washington. D.C., Leslie A. Brueckner, Public
Justice P.C., Oakland, California, Andrew J. Ogilvie, Carol
M. Brewer, Anderson, Ogilvie & Brewer LLP, San Francisco,
California, Michael E. Lindsey, San Diego, California, for
plaintiff-appellant Jose Aguayo.

James R. McGuire (argued), Rita F. Lin, Morrison & Foerster
LLP, San Francisco, California, Sylvia Rivera, Morrison &
Foerster LLP, Los Angeles, California, for defendant-appellee
U.S. Bank.
 AGUAYO v. U.S. BANK 9797
OPINION

ZOUHARY, District Judge:

INTRODUCTION

Jose Aguayo (“Aguayo”) appeals the district court’s grant
of Defendant U.S. Bank N.A.’s (“U.S. Bank”) motion to dis-
miss. Aguayo claims U.S. Bank violated a section of Califor-
nia’s Rees-Levering Act that requires a car loan lender to
provide certain post-repossession notices to a defaulting bor-
rower prior to selling the repossessed car. If the lender fails
to provide the required notices, the lender is barred from col-
lecting any remaining deficiency after the car is sold. Aguayo
argues that because the notices he received from U.S. Bank
did not contain all the information required under the relevant
section of the Rees-Levering Act, U.S. Bank is barred from
collecting any deficiency. U.S. Bank argues the Rees-
Levering post-repossession notice requirements are pre-
empted by the National Bank Act (“NBA”) and its regula-
tions. Because the Rees-Levering Act sections at issue are
directed toward debt collection and are therefore not pre-
empted by the NBA, we reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

In August 2003, Aguayo purchased a Ford Expedition from
the Star Ford dealership in Glendale, California. Like many
car buyers, Aguayo financed the purchase of the Expedition
through the dealership. Aguayo signed a standard Retail
Installment Sale Contract (“RIC”) that detailed the financing
terms of his purchase. Shortly after the purchase, and unbe-
knownst to Aguayo, Star Ford assigned the RIC to U.S. Bank.

A few years later, Aguayo fell behind on his car payments,
defaulted on the loan, and U.S. Bank repossessed the Expedi-
9798 AGUAYO v. U.S. BANK
tion. Aguayo does not dispute U.S. Bank’s right to purchase
the RIC from Star Ford and assume the contract terms as an
assignee, nor does Aguayo challenge U.S. Bank’s reposses-
sion of the car.

After the Expedition was repossessed in August 2007, U.S.
Bank sent Aguayo a “Notice of Our Plan to Sell Property”
which stated the car would be sold sometime after September
3, 2007. Enclosed with the Notice were two other documents.
The first was a “Request for Extension” by which Aguayo
could request a ten-day extension of the deadline to redeem
the car. The second document was a “California Redemption
Letter with an Extension Agreement Accompanied.” The Let-
ter provided details about the amount of Aguayo’s overdue
payments and the total amounts due for Aguayo to either
redeem the car or reinstate the contract. The Letter also con-
tained a conspicuous notice, located at the bottom of the page
and written in bold, all capital letters, that stated Aguayo may
be subject to suit and liability for any deficiencies if U.S.
Bank’s sale of the car was not sufficient to satisfy the balance
of the contract. The Letter, while closely tracking, did not
contain all the information required under the Rees-Levering
Act.

After sending the August 2007 Notice, U.S. Bank eventu-
ally sold the Expedition when Aguayo did not redeem the car.
Because the sale proceeds were not sufficient to satisfy the
contract, U.S. Bank sought to recover the deficiency from
Aguayo. In response, Aguayo filed the lawsuit that forms the
basis for this appeal.

B. Procedural Background

Aguayo filed his original action in California state court on
behalf of himself and a proposed class of other similarly situ-
ated California consumers. Using the California Unfair Com-
petition Law (“UCL”) as a procedural vehicle, Aguayo
alleges U.S. Bank’s failure to provide post-repossession
 AGUAYO v. U.S. BANK 9799
notices in accordance with certain sections of the Rees-
Levering Act constituted unlawful, unfair, and fraudulent
practices under the three prongs of the UCL. Aguayo further
argues that U.S. Bank forfeited its right to collect any defi-
ciency debt under California law by failing to comply with the
Rees-Levering Act’s post-repossession notice requirements.
Accordingly, Aguayo claims U.S. Bank’s demands for defi-
ciency payments were improper and requests monetary relief
for himself and similar deficiency claims paid by the pro-
posed class in the last four years. Aguayo also seeks injunc-
tive relief to prevent U.S. Bank from making improper
deficiency claims in the future.

U.S. Bank timely removed the action, asserting that the
requested relief for the proposed class would satisfy the
removal requirements under the Class Action Fairness Act, 28
U.S.C. § 1332(d)(2)(A). U.S. Bank then moved to dismiss the
case, arguing the NBA and regulations promulgated by the
Office of the Comptroller of the Currency (“OCC”) preempt
the California Rees-Levering Act notice provisions. U.S.
Bank claims the requirements interfere with its federal author-
ity to carry on the business of banking free from state-law
restrictions. Furthermore, because Aguayo’s cause of action
under the UCL was predicated on the alleged Rees-Levering
Act violation, U.S. Bank argues Aguayo’s entire claim should
be dismissed.

The district court dismissed the case, finding the Rees-
Levering Act repossession notice requirements were expressly
preempted by the NBA and OCC regulations. Aguayo v. U.S.
Bank, 658 F. Supp. 2d 1226, 1235 (S.D. Cal. 2009).

II. JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction under 28 U.S.C.
§§ 1332(d)(2) and 1441(a). We have jurisdiction pursuant to
28 U.S.C. § 1291. We review de novo a district court’s dis-
missal for failure to state a claim under Federal Civil Rule
9800 AGUAYO v. U.S. BANK
12(b)(6). Nw. Envtl. Def. Ctr. v. Brown, 640 F.3d 1063, 1069
(9th Cir. 2011). “Questions of statutory interpretation are
reviewed de novo, as are questions of preemption.” Lopez v.
Wash. Mut. Bank, 302 F.3d 900, 903 (9th Cir. 2002) (citations
omitted); see also Toumajian v. Frailey, 135 F.3d 648, 652
(9th Cir. 1998) (“[P]reemption is also a question of law
reviewed de novo.”). A complaint must not be dismissed
unless it appears beyond doubt that the plaintiff can prove no
set of facts in support of the claim that would entitle the plain-
tiff to relief. Homedics, Inc. v. Valley Forge Ins. Co., 315
F.3d 1135, 1138 (9th Cir. 2003). All allegations of material
fact in Aguayo’s Complaint are taken as true and construed in
the light most favorable to Aguayo as the non-moving party.
Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th
Cir. 1995).

III. DISCUSSION

There are “two cornerstones” of preemption jurisprudence.
Wyeth v. Levine, 555 U.S. 555, 129 S. Ct. 1187, 1194 (2009).
“First, ‘the purpose of Congress is the ultimate touchstone in
every pre-emption case.’ ” Id. (quoting Medtronic, Inc. v.
Lohr, 518 U.S. 470, 485 (1996)). Second, “[i]n all pre-
emption cases, and particularly in those in which Congress
has ‘legislated . . . in a field which the States have tradition-
ally occupied,’ . . . we ‘start with the assumption that the his-
toric police powers of the States were not to be superseded by
the Federal Act unless that was the clear and manifest purpose
of Congress.’ ” Id. at 1194-95 (quoting Lohr, 518 U.S. at
485).

Aguayo’s claims, rooted in California’s consumer-
protection laws, fall in an area that is traditionally within the
state’s police powers to protect its own citizens. “Because
consumer protection law is a field traditionally regulated by
the states, compelling evidence of an intention to preempt is
 AGUAYO v. U.S. BANK 9801
required in this area.” Gen. Motors Corp. v. Abrams, 897 F.2d
34, 41-42 (2d Cir. 1990).1

This Court has previously expressed three ways a federal
law may preempt state law:

First, Congress may preempt state law by so stating
in express terms. Second, preemption may be
inferred when federal regulation in a particular field
is so pervasive as to make reasonable the inference
that Congress left no room for the States to supple-
ment it. In such cases of field preemption, the mere
volume and complexity of federal regulations dem-
onstrate an implicit congressional intent to displace
all state law. Third, preemption may be implied
when state law actually conflicts with federal law.
Such a conflict arises when compliance with both
federal and state regulations is a physical impossibil-
ity, or when state law stands as an obstacle to the
accomplishment and execution of the full purposes
and objectives of Congress.

Bank of Am., 309 F.3d at 558 (internal quotation marks and
citations omitted). These three forms of preemption are com-
monly referred to as express, field, and conflict preemption,
respectively. Regardless of the name attached to the type of
preemption, the dispositive issue in any federal preemption
1
National bank association entities, such as U.S. Bank, have often been
given the benefit of the doubt in preemption questions. Generally, the pre-
sumption against preemption is not applicable in the realm of national
bank regulation. “[T]he presumption [against preemption] is ‘not triggered
when the State regulates in an area where there has been a history of sig-
nificant federal presence.’ . . . [B]ecause there has been a ‘history of sig-
nificant federal presence’ in national banking, the presumption against
preemption of state law is inapplicable.” Bank of Am. v. City & Cnty. of
San Francisco, 309 F.3d 551, 558-59 (9th Cir. 2002) (quoting United
States v. Locke, 529 U.S. 89, 108 (2000)). The presumption is not material
to our decision in this case.
9802 AGUAYO v. U.S. BANK
question remains congressional intent. Barnett Bank of Mar-
ion Cnty., N.A. v. Nelson, 517 U.S. 25, 30 (1996). “Did Con-
gress, in enacting the Federal Statute, intend to exercise its
constitutionally delegated authority to set aside the laws of a
State? If so, the Supremacy Clause requires courts to follow
federal, not state, law.” Id.

The district court relied on express preemption, holding
that the post-repossession notices required under the Rees-
Levering Act are preempted by regulations promulgated
under the NBA by which national banks are exempt from
state laws concerning “[d]isclosure and advertising, including
laws requiring specific statements, information, or other con-
tent to be included in credit application forms, credit solicita-
tions, billing statements, credit contracts, or other credit-
related documents[.]” Aguayo, 658 F. Supp. 2d at 1232-33
(quoting 12 C.F.R. § 7.4008(d)(2)(viii)). Specifically, the dis-
trict court held the Rees-Levering notice requirements are
“disclosures” under the terms of the regulation. Aguayo, 658
F. Supp. 2d at 1232 (“The Rees-Levering post-repossession
notice standards are undoubtedly disclosure requirements.”).
The district court then analyzed whether the Rees-Levering
notices were “credit-related documents” under the regulation.
Id. (“[T]he real question is whether the post-repossession
notice qualifies as an ‘other credit-related document’ under
section 7.4008(d)(2)(viii).”). Finding that U.S. Bank’s post-
repossession notice was “issued . . . during its continuing
credit relationship with Aguayo . . . [and is thus] a ‘credit-
related document’ under section 7.4008(d)(2)(viii)[,]” the dis-
trict court held the provisions of the Rees-Levering Act
requiring specific post-repossession notices are preempted. Id.
at 1233.

The district court also acknowledged, but refused to apply,
the savings clause found in Subsection (e) of the same regula-
tion. Id. at 1234. The savings clause explicitly lists state laws
that are not preempted, including state laws pertaining to
“contracts” and “rights to collect debts.” 12 C.F.R.
 AGUAYO v. U.S. BANK 9803
§ 7.4008(e)(1), (4). Because the district court erred in refusing
to apply the regulation’s savings clause, and because the
Rees-Levering post-repossession notices are “disclosures”
that would not be considered “credit-related documents,” we
reverse.

A. California’s Rees-Levering Act

California’s Rees-Levering Act is a broad statute enacted to
protect California motor vehicle purchasers. Comment,
Recent Legislation: The Rees-Levering Motor Vehicle Sales
and Finance Act, 10 UCLA L. Rev. 125, 127 (1962) (“The
[Rees-Levering Act] is designed to provide more comprehen-
sive protection for the unsophisticated motor vehicle con-
sumer . . . .”). The Act contains requirements that are
designed to protect a car buyer from excessive charges and
requires full disclosure of all items of cost at all points in the
life of a vehicle purchase transaction. The Act provides: (1)
required disclosure in the conditional sale contract of cash
price, fees, taxes, maximum amount of finance charges, and
other dealer-added charges (Cal. Civ. Code § 2982(a)); (2)
limitations on security interests that may be created by condi-
tional sale contracts (id. § 2984.2); (3) required disclosure of
a buyer’s right to prepay a vehicle purchase contract without
penalty (id. § 2982(l)); (4) requirements governing the repos-
session and resale of vehicles by the seller or contract holder
(id. §§ 2983.2, 2983.3); and (5) a buyer’s remedies when a
seller violates the Act (id. §§ 2982.7, 2983.1, 2983.8(b)).

The two provisions of the Rees-Levering Act at issue in
this appeal are Section 2983.2(a), which lists the detailed
information the holder of a purchase contract (the “lender”)
must provide to the person liable on the purchase contract (the
“buyer”) after the lender has repossessed the motor vehicle,
and Section 2983.8(b), which states the lender may not collect
a deficiency judgment from the buyer if the disposition of the
repossessed motor vehicle did not conform with the provi-
sions of Section 2983. Id. §§ 2983.2(a), 2983.8(b). U.S. Bank
9804 AGUAYO v. U.S. BANK
does not dispute that the notices sent to Aguayo did not fully
comply with Section 2983.2.

B. The NBA and the OCC

The NBA, as the ultimate statutory authority for national
banks, was originally enacted in 1864 to give banks broad
authority to exercise “all such incidental powers as shall be
necessary to carry on the business of banking.” 12 U.S.C.
§ 24 (Seventh). Congress subsequently delegated the supervi-
sion of national banks and the implementation of the NBA to
the OCC. 12 U.S.C. § 93a. The OCC’s authority includes
“prescrib[ing] rules and regulations to carry out the responsi-
bilities of the office.” Id. This regulatory authority, which car-
ries the same weight as federal statutes, includes
interpretation of state law preemption under the NBA. See
Rose v. Chase Manhattan Bank USA, 396 F. Supp. 2d 1116,
1122 (C.D. Cal. 2005) (citing La. Pub. Serv. Comm’n v. FCC,
476 U.S. 355, 369 (1986)).

Under its delegated powers, the OCC has promulgated reg-
ulations specifically directed toward identifying which state
laws affecting national banks are preempted. See OCC, Pre-
emption Final Rule, 69 Fed. Reg. 1916 (2004); 23 OCC Q.J.
28 (Mar. 2004), 2004 WL 2360325. The regulation relevant
here is the OCC’s determination outlining which state laws
affecting non-real estate lending are preempted in favor of
federal law and OCC regulations. 12 C.F.R. § 7.4008.

The portions of Section 7.4008 at issue are as follows:

(d) Applicability of state law.

(1) Except where made applicable by Federal law,
state laws that obstruct, impair, or condition a
national bank’s ability to fully exercise its Federally
authorized non-real estate lending powers are not
applicable to national banks.
 AGUAYO v. U.S. BANK 9805
(2) A national bank may make non-real estate loans
without regard to state law limitations concerning:

...

(viii) Disclosure and advertising, including
laws requiring specific statements, informa-
tion, or other content to be included in
credit application forms, credit solicitations,
billing statements, credit contracts, or other
credit-related documents;

....

(e) State laws that are not preempted. State laws on
the following subjects are not inconsistent with the
non-real estate lending powers of national banks and
apply to national banks to the extent that they only
incidentally affect the exercise of national banks’
non-real estate lending powers:

(1) Contracts;

...

(4) Rights to collect debts[.]

12 C.F.R. § 7.4008(d), (e).

C. Regulatory Interpretation

We review questions of statutory interpretation and pre-
emption de novo, Lopez, 302 F.3d at 903. We begin our
review by looking at the district court’s decision not to apply
the savings clause in Section 7.4008, followed by a review of
the express preemption clause that was the basis for the dis-
trict court’s decision.
9806 AGUAYO v. U.S. BANK
1. Canons of Construction

A general canon of statutory construction requires the court
to review the entirety of the statute. When interpreting a stat-
ute, “we must not be guided by a single sentence or member
of a sentence, but look to the provisions of the whole law, and
to its object and policy.” Pilot Life Ins. Co. v. Dedeaux, 481
U.S. 41, 51 (1987) (quotations and citations omitted); see also
Boise Cascade Corp. v. U.S. E.P.A., 942 F.2d 1427, 1432 (9th
Cir. 1991) (“Under accepted canons of statutory interpreta-
tion, we must interpret statutes as a whole, giving effect to
each word . . .”). This is particularly true when interpreting a
statute that includes a savings clause. Pilot Life Ins. Co., 481
U.S. at 47-51; see also Metro. Life Ins. Co. v. Massachusetts,
471 U.S. 724, 739-40 (1985) (“The two pre-emption sections,
while clear enough on their faces, perhaps are not a model of
legislative drafting, for while the general pre-emption clause
broadly pre-empts state law, the saving clause appears
broadly to preserve the States’ lawmaking power over much
of the same regulation.”).

Unlike statutes, regulations promulgated by federal admin-
istrative agencies, such as the OCC, are given deference when
the agency chooses to define its own instructions to guide oth-
ers in interpreting its regulations. “It is settled that courts
should give great weight to any reasonable construction of a
regulatory statute adopted by the agency charged with the
enforcement of that statute.” Clarke v. Secs. Indus. Ass’n, 479
U.S. 388, 403-04 (1987) (quotation marks and citation omit-
ted). “When the OCC implements a provision of the National
Bank Act ‘in accord with the legislature’s intent,’ that inter-
pretation is entitled to deference.” Office of the Comptroller
of the Currency v. Spitzer, 396 F. Supp. 2d 383, 391
(S.D.N.Y. 2005) (citations omitted). When an agency such as
the OCC offers an “interpretation of its own regulation [that]
reflects its considered views,” the court should accept the
interpretation if convinced it is not “merely a post hoc ratio-
 AGUAYO v. U.S. BANK 9807
nalization.” Long Island Care at Home, Ltd. v. Coke, 551 U.S.
158, 171 (2007) (alteration and citation omitted).

Here, however, the OCC has promulgated a preemption
regulation but has not specifically instructed how the regula-
tion should be interpreted or applied. Because the OCC failed
to provide guidance, the district court looked elsewhere, rely-
ing on an Ohio case, Crespo v. WFS Financial, Inc., 580 F.
Supp. 2d 614 (N.D. Ohio 2008).

[1] Crespo looked at a similar issue—whether an Ohio
state law requiring certain post-repossession notices was pre-
empted by federal regulation. Crespo followed a preemption
analysis established by the Office of Thrift Supervision
(“OTS”), the regulator for WFS Financial, and found the state
law was preempted. Crespo, 580 F. Supp. 2d at 622-23. The
OTS preemption analysis used in Crespo, and by the district
court, considers whether the state law under consideration fits
within a listed express preemption category. If so, the analysis
ends and the savings clause is not considered. The regulation
also instructs that any doubt should be resolved in favor of
preemption. OTS, Final Rule, 61 Fed. Reg. 50951, 50966-67
(Sept. 30, 1996). The district court found the court’s logic in
Crespo persuasive. Aguayo, 658 F. Supp. 2d at 1232-33.

The OTS, the regulator at issue in Crespo, acts as the pri-
mary regulator for all federal and many state-chartered thrift
institutions, including savings banks and savings and loan
associations under the authority of the Home Owners’ Loan
Act (“HOLA”). 12 U.S.C. §§ 1461-1470. While all loosely
termed “banks” may look the same to a consumer, there are
subtle differences between the regulation of savings and loan
institutions and national bank associations, such as U.S. Bank.
The primary and dispositive difference, as it relates to this
case, is field preemption.

The OTS, unlike the OCC, has explicit full field preemp-
tion. See 12 C.F.R. § 560.2(a) (“OTS hereby occupies the
9808 AGUAYO v. U.S. BANK
entire field of lending regulation for federal savings associa-
tions.”). Field preemption, described as “the pinnacle of fed-
eral preemption,” Smith v. BAC Home Loans Servicing, LP,
___ F. Supp. 2d ___, 2011 WL 843937, at *4 (S.D. W. Va.
Mar. 11 2011), is a preemption approach “so pervasive that
Congress must have intended to leave no room for the states
to supplement it.” City of Charleston, S.C. v. A Fisherman’s
Best, Inc., 310 F.3d 155, 169 (4th Cir. 2002) (emphasis
added); see also Conference of Fed. Sav. and Loan Ass’ns v.
Stein, 604 F.2d 1256, 1260 (9th Cir. 1979) (citing Ray v. Atl.
Richfield Co., 435 U.S. 151, 157 (1978)) (“[I]mplicit pre-
emption can be found where the scheme of federal regulation
is so pervasive as to make reasonable the inference that there
is no room for state action.”). That is, in the absence of the
presumption against preemption, full field preemption effec-
tively gives the court a presumption of preemption. This pre-
sumption of preemption is specifically embodied in the OTS
rule used by the district court, which states: “This presump-
tion can be reversed only if the law can clearly be shown to
fit within the confines of paragraph (c) [the savings clause].
For these purposes, paragraph (c) is intended to be interpreted
narrowly. Any doubt should be resolved in favor of preemp-
tion.” 61 Fed. Reg. at 50966-67.

However, while the OTS and the OCC regulations are simi-
lar in many ways, compare 12 C.F.R. § 560.2(b), (c), with, 12
C.F.R. § 7.4008(d), (e), the OCC has explicitly avoided full
field preemption in its rulemaking and has not been granted
full field preemption by Congress. Compare 12 C.F.R.
§ 560.2(a) (occupying the field) with, e.g., OCC, Final Rule,
69 Fed. Reg. 1904-01, 1910-11 (Jan. 13, 2004), 2004 WL
50763 (“[W]e decline to adopt the suggestion of these com-
menters that we declare that these regulations ‘occupy the
field’ . . . .”). “The language employed by the OCC in its reg-
ulations and interpretive letters evidences that application of
a more narrow preemption analysis is more appropriate than
[the OTS preemption analysis] applied in Silvas [v. E*Trade
Mortg. Corp., 514 F.3d 1001 (9th Cir. 2008)],” where the
 AGUAYO v. U.S. BANK 9809
OTS “had specifically defined a proper preemption test to be
employed.” Gutierrez v. Wells Fargo Bank, N.A., 2008 WL
4279550, at *12 (N.D. Cal. 2008).

Because of this difference in field preemption, courts have
been cautious in applying OTS analysis to OCC regulations.
Id. “Courts have cautioned against wholesale application of
an OTS/HOLA analysis in the OCC context.” Davis v. Chase
Bank U.S.A., N.A., 650 F. Supp. 2d 1073, 1083 (C.D. Cal.
2009). One California court refused to follow an approach
similar to the one used by the district court here, drawing a
distinction between interpreting an OCC regulation and a con-
gressional statute or OTS regulation issued under the exclu-
sive HOLA “cradle to grave” regulatory authority. Hood v.
Santa Barbara Bank & Trust, 49 Cal. Rptr. 3d 369, 379 n.5
(Ct. App. 2006). Because OCC regulations are not interpreted
under the broad umbrella of field preemption, Hood suggested
instead that the express preemption provisions in OCC regula-
tions must be considered together with the savings clause—
something the district court here refused to do. Id.; Aguayo,
658 F. Supp. 2d at 1233 n.3, 1234.

Instead, the district court followed the OTS-defined pre-
emption analysis. “When applying its own preemption analy-
sis under HOLA, 12 C.F.R. § 560.2, the OTS first considers
whether the state law is covered by the list of expressly pre-
empted areas. 61 Fed. Reg. at 50966. If the state law fits in
the list of laws preempted, then the analysis is over. Id. Courts
need not consider whether the state law also fits under the
areas listed in the savings clause.” Aguayo, 658 F. Supp. 2d
at 1234. Because the district court had already found the
Rees-Levering notices were expressly preempted under the
language in 12 C.F.R. § 7.4008(d)(2)(viii), the district court
refused to consider the savings clause language in Subsection
(e) that explicitly saves “[r]ights to collect debts” from pre-
emption. Id. at 1234.

[2] We agree with courts that have refused to apply the
OTS preemption analysis when analyzing OCC regulations.
9810 AGUAYO v. U.S. BANK
The OTS preemption analysis, established under the guise of
the full field preemption, allows the OTS to more stringently
limit a court’s ability to review preemption questions by fore-
closing consideration of the savings clause. Furthermore, the
OTS, again with the benefit of full field preemption, has
instructed that all doubts are to be resolved in favor of pre-
emption. 61 Fed. Reg. at 50966-67.

[3] Not so with the OCC which has explicitly disavowed
full field preemption. The better course of action with the
OCC is to employ the standard canon of construction that
requires a reviewing court to read a statute or regulation in its
entirety when performing a preemption analysis which, in this
case, requires the court to consider both the express preemp-
tion and savings clauses together. Metro. Life Ins. Co., 471
U.S. at 739-40. This complete reading of the regulation allows
the court to determine the true intent of the regulation.

Furthermore, the district court’s reasons for choosing to
apply the OTS preemption analysis, though well intentioned,
do not account for a significant but subtle distinction between
the OTS and OCC regulations. The district court noted the
regulations considered in Crespo and in this case are “strik-
ingly similar” and the list of state laws preempted in both reg-
ulations is “nearly identical.” Aguayo, 658 F. Supp. 2d at
1234. The court also stated: “The same is true with state laws
not preempted.” Id. This last point is not accurate.

While the list of preempted state laws is substantially simi-
lar and each regulation contains a “savings clause” of state
laws that are not preempted, Section 7.4008(e)(4) of the OCC
regulation explicitly saves state laws regarding “rights to col-
lect debts.” The corresponding OTS savings clause, 12 C.F.R.
§ 560.2(c), makes no such preemption exception. When the
savings clause speaks to the very topic of the state law being
considered—collection of a debt through repossession—and
without a specific mandate to conduct the preemption analysis
in the narrow form established by the OTS, it is logical that
 AGUAYO v. U.S. BANK 9811
we should consider the entirety of the regulation in order to
understand its purpose. See Pilot Life Ins. Co., 481 U.S. at 51.

2. Savings Clause

Turning to the savings clause, we take guidance from the
OCC itself with respect to the agency’s purpose for excluding
state debt collection laws from preemption. When discussing
the language differences between the proposed rule and final
adopted rule in Section 7.4008, the OCC stated:

One category of state law included in the proposed
list of state laws generally not preempted was ‘debt
collection.’ Consistent with Supreme Court prece-
dents addressing this type of state law, we have
revised the language of the final rule to refer to
national banks’ ‘right to collect debts.’

69 Fed. Reg. at 1912 (footnote omitted). The OCC’s reference
to Supreme Court precedent was National Bank v. Common-
wealth, 76 U.S. (9 Wall.) 353, 362 (1869), which held
national banks “are subject to the laws of the State, and are
governed in their daily course of business far more by the
laws of the State than of the nation. . . . Their acquisition and
transfer of property, their right to collect their debts, and their
liability to be sued for debts, are all based on State law.” See
also Atherton v. Fed. Deposit Ins. Corp., 519 U.S. 213,
222-23 (1997) (“[F]ederal banks ‘are subject to the laws of
the State, and are governed in their daily course of business
far more by the laws of the State than the nation.’ ”) (quoting
Nat’l Bank, 76 U.S. (9 Wall.) at 362)).

[4] Indeed, despite U.S. Bank’s arguments to the contrary,
debt collection, and specifically the right to repossess prop-
erty that is the subject of a secured transaction, has deep roots
in common law and remains a fixture of state, not federal,
law. See Adams v. S. Cal. First Nat’l Bank, 492 F.2d 324, 330
nn.11-12 (9th Cir. 1973) (citing cases and discussing the his-
9812 AGUAYO v. U.S. BANK
tory of self-help repossession in common law and eventual
codification in the California Commercial Code). In virtually
every state, laws governing repossession of property are
found in that particular state’s adoption of some or all of the
Uniform Commercial Code (“UCC”). See 1 Eldon H. Reiley,
Security Interests in Personal Property §§ 1.1, 1.3 (2010)
(describing the combination of private and quasi-public
bodies that produce the uniform code, which in turn is
adopted by individual state legislatures).

Oddly, U.S. Bank does not dispute that it is subject to the
UCC, despite its purpose as a model code that is ultimately
only effective when adopted as state law. However, U.S.
Bank, citing an OCC interpretive letter, argues it is subject to
the UCC, and therefore state law, only when a state chooses
to adopt the UCC in its true “uniform” model code structure
but not when a state, such as California, chooses to modify
sections of the UCC through its legislative actions. OCC
Interpretive Letter No. 1005, 2004 WL 3465750 (June 10,
2004).

This argument fails for two reasons. First, the OCC inter-
pretative letter is narrowly tailored to answer the question of
whether the uniform UCC provisions are preempted—it
explicitly does not address “non-uniform provisions that indi-
vidual states may adopt and elect to include in the body of
their state commercial code.” OCC Interpretive Letter No.
1005, at n.2. That is, U.S. Bank cannot use the OCC’s letter
to claim that the OCC has stated it is only subject to the UCC
if it is adopted in an unmodified form.

Second, U.S. Bank’s argument goes too far. What, if any,
law would apply to U.S. Bank’s post-repossession actions in
the state of California? It would not be bound by state law as
enacted by the California legislature, nor would it be operat-
ing under any specific federal law because no federal law
governs self-help repossession. Tellingly, U.S. Bank fails to
identify what law applies with respect to repossessions and
 AGUAYO v. U.S. BANK 9813
the notices due a borrower after a repossession when a state
chooses to adopt a nonuniform version of the UCC.

[5] While the OCC could have included a clear indication
of its intent to preempt debt collection documents, instead it
used a vague “credit-related document” term in the express
preemption subsection. The OCC’s discussion of its imple-
mentation of Section 7.4008 makes clear that the OCC con-
templated debt collection activities but explicitly intended to
save them from preemption. This is so because, after promul-
gating the preemption rule, the OCC explained that the regu-
lation’s savings clause language was intended to preserve
“undiscriminating” state laws “that form the legal infrastruc-
ture for conducting a banking or other business”—i.e., state
laws that do not discriminate against banks and that instead
apply equally to banks and other businesses. Statement of
John D. Hawke, Jr., Comptroller of the Currency, Before the
S. Comm. on Banking, Hous. & Urban Affairs, on Federal
Preemption of State Laws, Washington, D.C., Sept. 2004, 23
OCC Q.J. 69, 2004 WL 3418806, at *3 (comments regarding
recently promulgated OCC regulations); see also 69 Fed. Reg.
at 1910-11, 1913.

U.S. Bank effectively concedes that the Rees-Levering
repossession notice requirements do not discriminate against
national banks. The Act applies to any defaulted car loan
repossession, irrespective of who made the initial car loan,
whether it was a local lender such as the dealership, a Califor-
nia state lender, or a national bank.

[6] Despite all the foregoing, U.S. Bank insists the chal-
lenged sections of the Rees-Levering Act do not fall under the
umbrella of its “right to collect debts.” 12 C.F.R.
§ 7.4008(e)(4). Nothing could be further from the truth—U.S.
Bank chose to use its right of self-help repossession under
California state law to repossess Aguayo’s car. The bank noti-
fied Aguayo of the debt due, with general instructions on
ways to repay the debt, closely, but not completely, tracking
9814 AGUAYO v. U.S. BANK
Rees-Levering’s specific requirements. Now that it has sold
Aguayo’s car, U.S. Bank wishes to collect the remainder of
the debt, yet now claims that while it could act under color of
state law, or at least the uniform provisions of the UCC, in
repossessing Aguayo’s car, it no longer needs to comply with
state law in collecting the remaining debt owed. We disagree.
Section 2983.2 of the Rees-Levering Act is a state law,
directed toward a lender’s debt collection, requiring that the
lender inform the borrower of the full amount of his or her
“indebtedness evidenced by the contract” or “liability,” Cal.
Civ. Code § 2983.2(a)(1), (8), and therefore falls squarely
within the OCC savings clause.

U.S. Bank’s final argument is that the introductory lan-
guage of the savings clause (state laws “apply to national
banks to the extent that they only incidentally affect the exer-
cise of national banks’ non-real estate lending powers”) pre-
cludes application of the clause because the Rees-Levering
provisions do more than “incidentally affect” lending powers.
Specifically, because the Rees-Levering provision bars U.S.
Bank from recovering a deficiency for failing to comply with
the Rees-Levering notice requirements, the Act “affects the
very core of U.S. Bank’s lending operations.”

While it is true the Rees-Levering provisions affect U.S.
Bank in some ways, we do not agree that they affect the
bank’s lending operations. There is no loan at this juncture,
but merely an outstanding debt U.S. Bank has sought to
recover using a remedy provided for under state law. While
U.S. Bank may argue that any law that affects its ability to
recover a debt necessarily affects its lending operations, that
type of rule would swallow all laws—every action by the
bank, due to the nature of its business, affects its ability to
attract, manage, and disburse capital, and could be said to “af-
fect” its lending operations. The bank cannot now claim its
use of the state law remedy of repossession to recover a debt
is permissible but then claim the same regulation that gives
the bank the power to use the remedy also affects the very
 AGUAYO v. U.S. BANK 9815
core of its lending operations. Instead, as stated by the OCC,
“the commercial law framework essential for conducting any
business, including the business of banking, continues to
apply to the operations of national banks.” OCC Interpretive
Letter 1082, at n.12, 2007 WL 5393636 (May 17, 2007).

3. Express Preemption Clause

While we have determined the savings clause applies with
respect to the Rees-Levering Act’s post-repossession notice
requirements because it is a state law regarding “rights to col-
lect debts,” 12 C.F.R. § 7.4008(e)(4), our inquiry does not end
there. Viewing the regulation as a whole, as discussed above,
the savings clause does not act independently. Instead, the
savings clause is viewed in conjunction with the express pre-
emption clause in Section 7.4008(d). The district court erred
when it held the Rees-Levering post-repossession notices
were expressly preempted—that notices were “disclosures”
and “credit-related documents” under the terms of Section
7.4008(d)(2)(viii).

a. “Disclosure”

With little fanfare, the district court stated the “Rees-
Levering post-repossession notice standards are undoubtedly
disclosure requirements.” We disagree.

When performing statutory interpretation, “words are uni-
formly presumed, unless the contrary appears, to be used in
their ordinary and usual sense, and with the meaning com-
monly attributed to them.” Caminetti v. United States, 242
U.S. 470, 485-86 (1917). Because OCC regulations carry the
same weight as federal statutes, this interpretation rule is
equally applicable here. Hillsborough Cnty. v. Automated
Med. Labs., Inc., 471 U.S. 707, 713 (1985).

Applying the rule, “disclosure” is commonly defined as a
“revelation,” or an act of “disclosing” or “expos[ing]” some-
9816 AGUAYO v. U.S. BANK
thing that had previously been kept secret. Merriam-
Webster’s Dictionary of Law (1996); American Heritage Dic-
tionary of the English Language (4th ed. 2000). On the other
hand, a “notice” is “a notification or communication of a fact,
claim, demand, or proceeding,” Merriam-Webster’s Dictio-
nary of Law (1996), or “information about a future event;
warning; announcement . . . advance notification of intention
to end an arrangement, contract.” Collins English Dictionary
— Complete & Unabridged (10th ed. 2009).

[7] While subtle, these differences are significant. Compar-
ing the initial loan documents Aguayo signed, and the post-
repossession documents U.S. Bank sent to Aguayo, these
words would not be used interchangeably. That is, we would
not say the document describing the initial terms of a loan is
a “notice,” nor would we say a post-repossession document
requiring payment is a “disclosure.” Rather, it would be
exactly the opposite. The term “disclosure” is commonly used
to refer to an informational statement of terms prior to enter-
ing a transaction; something a borrower like Aguayo would
have received when signing the contract. A notice, on the
other hand, is a specific communication of a claim or demand
submitted to a party in the course of, or at the conclusion of,
a transaction, much like the document Aguayo received
demanding payment after the repossession of his car.

[8] The district court erred by glossing over this distinc-
tion, summarily concluding that documents containing certain
information about how to redeem or reinstate the secured
property “are undoubtedly disclosure requirements.” Aguayo,
658 F. Supp. 2d at 1232. The first page of the U.S. Bank doc-
ument sent to Aguayo clearly indicates that it is a “Notice,”
not a disclosure, of the plan to sell the car, and goes on to
state a warning and a conditional demand that even if the
bank sells the car, he may still owe U.S. Bank money. This
makes sense because it certainly could not have been a “reve-
lation” to Aguayo that U.S. Bank planned to sell the repos-
sessed car and it was most certainly a warning about a future
 AGUAYO v. U.S. BANK 9817
event that evidences U.S. Bank’s intent to end the contractual
relationship—all of which supports the conclusion that this
was a notice, not a “disclosure.”

Attached to the Notice was the Redemption Letter at issue.
The letter contains two boxes with itemized amounts, detail-
ing the respective amounts Aguayo could have paid U.S.
Bank to either reinstate his contract or redeem the car. The
letter also contains warnings that if he chose to do neither, he
may be subject to suit and liable for any remaining deficien-
cies after the car is sold. This letter, instead of being an offer
or “disclosure” of terms, is simply a more detailed demand for
payment as stated in the first page of the Notice—either
Aguayo pays one calculated amount to continue the relation-
ship in accordance with the existing contract terms, or he pays
a different amount to satisfy the existing contract and end the
relationship. If he fails to do either, the car will be sold and
Aguayo would be required to pay any deficiency.

This usage of “notice” is supported by the relevant sections
of the UCC. U.S. Bank admits that the UCC, as uniformly
adopted and codified in state law, is not subject to preemp-
tion. OCC Interpretive Letter No. 1005. The UCC require-
ments for repossession, which were adopted by California,
explicitly require the secured party to send a “notification,”
not a disclosure, prior to selling collateral. See UCC §§ 9-
611-9-614; Cal. Com. Code §§ 9611-9614.

b. “Credit-Related Document”

After quickly concluding the Rees-Levering notice require-
ments are “disclosures” under Section 7.4008(d)(2)(viii), the
district court considered whether such a notice is an “other
credit-related document.” Aguayo, 658 F. Supp. 2d at 1232.
Relying again on the analysis in Crespo, the district court held
the Rees-Levering notice requirements were expressly pre-
empted because the post-repossession notice was a “credit-
related document.” Id. at 1233.
9818 AGUAYO v. U.S. BANK
The pertinent section of the OTS regulation in Crespo pre-
empts state laws pertaining to:

(9) Disclosure and advertising, including laws
requiring specific statements, information, or other
content to be included in credit application forms,
credit solicitations, billing statements, credit con-
tracts, or other credit-related documents and laws
requiring creditors to supply copies of credit reports
to borrowers or applicants.

12 C.F.R. § 560.2(b).

Holding that a post-repossession notice is an “other credit-
related document,” Crespo stated: “[T]he purpose of such a
notice is to notify a debtor that his or her credit was revoked
and that the collateral with which the debtor secured the credit
is being sold, as well as to inform the debtor what he or she
needs to pay in order to restore his or her credit.” Crespo, 580
F. Supp. 2d at 623.

[9] There is no doubt that the OCC regulation at issue here
is similar to the language in Crespo. For comparison, the
operative part of the OCC regulation states:

(viii) Disclosure and advertising, including laws
requiring specific statements, information, or other
content to be included in credit application forms,
credit solicitations, billing statements, credit con-
tracts, or other credit-related documents.

12 CFR § 7.4008(d)(2)(viii). The question then is whether the
“other credit-related documents” language, both standing
alone and when read with the other sections of Section
7.4008, was intended to preempt debt collection notices.

Generally, all the words used in a list should be read
together and given related meaning when construing a statute
 AGUAYO v. U.S. BANK 9819
or regulation. Schreiber v. Burlington N., Inc., 472 U.S. 1, 8
(1985) (quoting Sec. Indus. Ass’n v. Bd. of Governors, FRS,
468 U.S. 207, 218 (1984)). The choice and arrangement of
words in the OCC regulation, starting with “[d]isclosure and
advertising” and followed by “including,” indicate that the
later words are meant to be examples of types of disclosure
and advertising—two words that generally mean to present
information to the public, particularly before or in the process
of consummating a transaction. The next terms listed—credit
applications and solicitations, credit contracts and billing
statements—are all documents that embody a credit applica-
tion, solicitation, and ongoing lending relationship between a
lender and borrower. The final clause, “other credit-related
document[ ],” seems to act as a catch-all term to describe any
other documents that may be used in an ongoing lending rela-
tionship.

In contrast, the Rees-Levering notification at issue was sent
after the lending relationship had ended—the car had been
repossessed, the lender was preparing to sell it, and the lend-
er’s primary concern was now recovery of a debt. U.S. Bank
was no longer advertising, disclosing, or offering terms upon
which it would like to strike a deal with Aguayo. Rather, it
was simply stating the debt owed and attempting to collect
that amount from Aguayo. Had the OCC wanted to expand
the term “other credit-related document” to debt collection
notices, it certainly could include a clear indication of its
intent to do so. As discussed above, the OCC’s discussion of
its implementation of Section 7.4008 makes clear that the
OCC specifically contemplated exemption of debt collection
from preemption. There is no reason to now second guess the
OCC’s choice of terms.

[10] Review of the OTS regulation language analyzed in
Crespo, and relied on by the district court, provides additional
support that the inclusion of “other credit-related documents”
was not meant to include post-repossession notices, but
instead was intended to refer to documents commonly used in
9820 AGUAYO v. U.S. BANK
establishing and maintaining an ongoing credit relationship.
Unlike the OCC section, the similar OTS regulation provides
additional context for that term, stating, “other credit-related
documents and laws requiring creditors to supply copies of
credit reports to borrowers or applicants.” 12 C.F.R.
§ 560.2(b)(9) (emphasis added).

Unlike the preceding terms, the additional “and laws
requiring . . .” clause is not set off by commas to indicate it
was meant to be a separate category but was meant to be read
together with “other credit-related documents.” Traditionally,
credit reports are obtained or supplied at the creation of a
credit relationship and perhaps offered to a credit applicant
when he or she is refused credit. See 12 C.F.R. pt. 202, app.
C. There is little basis for supplying a credit report to an indi-
vidual whose property has already been repossessed and
whose lending relationship has ended. Though the court in
Crespo did not consider this additional language or whether
it modified the “other credit-related documents” term, it is dif-
ficult to discern an intent to extend the meaning of other
credit-related documents to post-repossession notices when
viewed in context with the other listed documents.

[11] Reading the express preemption and savings clauses
together, we conclude that the Rees-Levering post-
repossession notices are not preempted under the regulation’s
vague terms “disclosure” and “other credit-related docu-
ments” in light of the savings clause that clearly exempts a
state’s “rights to collect debts.” The district court’s broad
reading of the terms “disclosure” and “other credit-related
documents” would effectively preempt any document related
to debt collection, something the OCC was acutely aware of
when deliberately choosing the final language of the preemp-
tion rule to save such state laws. See 69 Fed. Reg. at 1912.

IV. CONCLUSION

For the reasons set forth above, we REVERSE the ruling
granting Defendant U.S. Bank’s Motion to Dismiss, and
 AGUAYO v. U.S. BANK 9821
REMAND the case for further proceedings consistent with
this Opinion.