(CN) - Hawaii's deceptive-marketing claims against major credit card providers belong in state court, the 9th Circuit ruled Friday.
Attorney General David M. Louie sued Bank of America, Capital One, Chase, Citigroup, Discover and HSBC in 2012 in state court, alleging that they had deceived cardholders in marketing various "debt protection" products, including extended warranties, identity theft and stolen-card protection plans, and credit-score tracking.
The complaints claimed that the companies often neglected to inform cardholders about the restrictions of such plans, and that telemarketers used unfair tactics to sign consumers up. The companies usually collect a percentage of a cardholder's monthly balance to pay for such plans.
The companies removed the lawsuits to federal court in Honolulu, prompting the Attorney General to seek their return to state court.
U.S. District Judge Leslie Kobayash found that at least one of the claims against each provider was preempted by the National Bank Act, and kept the cases in federal court. The judge concluded that the state had implied in the lawsuits that the card-providers had charged illegal interest rates, claims over which are generally preempted by federal law.
A unanimous appellate panel reversed on Friday and sent the cases back to state court.
"Even assuming that protection plan fees are interest, the complaints here did not allege that the card providers charged excessive interest rates," wrote Judge Andrew Hurwitz for the three-judge panel.
"Counts I and II alleged that the card providers violated sections 480-2(d), 480-13.5, and 481A-3 of the Hawaii Revised Statutes, which govern business disclosure, contractual terms, and trade practices," he added. "None of these provisions proscribes the interest that a financial institution may charge."
The state's unjust enrichment claims had nothing to do with interest rates either, the panel found.
The panel also rejected the companies' argument that the Class Action Fairness Act provided the federal court with jurisdiction over the state's claims, finding that the Attorney General had "unambiguously disclaimed class status."