Citibank (defendant) was a bank located in South Dakota. Smiley (plaintiff) lived in California and had credit cards issued by Citibank. Pursuant to the National Bank Act of 1864 (the Act), 12 U.S.C. § 85, the laws of the state where a national bank is located determined the interest rates that the bank may charge. Citibank charged Smiley late fees that were legal in South Dakota, but that would not have been legal in California. Smiley sued Citibank, arguing that the Act’s rule regarding interest rates did not extend to late fees. The California Superior Court dismissed Smiley’s complaint, and the California Supreme Court affirmed. Shortly afterward, the Office of the Comptroller of the Currency (OCC), the federal agency responsible for interpreting the Act, promulgated a new rule that explicitly included late fees within the meaning of the word “interest” for purposes of § 85. The United States Supreme Court granted certiorari.