Monroe Retail, Inc. v. RBS Citizens, N.A.

Under the National Bank Act, national banks could exercise their incidental powers without interference from states. The Office of the Comptroller of the Currency (the comptroller) promulgated a regulation that provided an interpretation of incidental powers. The regulation gave national banks explicit authority to impose charges and fees on deposit accounts. Under Ohio state law, creditors were permitted to bring garnishment actions to garnish debtors’ bank accounts. The garnishment law provided that the garnishee (i.e., the bank) must receive a $1 fee. In practice, banks charged an additional $25 to $80 service fee for processing garnishments. The banks extracted their service fees before disbursing garnished funds to the garnishors. Thus, if a bank account did not have enough funds to cover both the garnishment amount and the service fee, the bank received its full fee at the expense of the garnishor. Monroe Retail, Incorporation; Jerome Phillips, Esq.; and Leo Marks, Incorporated (the debt collectors) (plaintiffs) were all judgment creditors in Ohio who had garnished debtors’ accounts at banks like RBS Citizens, N.A., and several others (the banks) (defendants). The debt collectors brought a class-action suit against the banks, alleging that the deduction of service fees before disbursing garnished funds was an illegal conversion of funds, among other claims. At some point, the comptroller issued an opinion letter at the banks request regarding service fees for garnishment. The comptroller opined that service fees for garnishment were permissible under the incidental power of national banks to impose charges and fees. Further, the comptroller opined that national banks had the authority to post fees to accounts in any order that suited their operations. The district court dismissed the debt collectors’ claim. The debt collectors appealed.