Smiley v. Citibank (South Dakota), N. A., 517 U.S. 735 (1996)

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certiorari to the supreme court of california

No. 95-860. Argued April 24, 1996—Decided June 3, 1996

Petitioner, a resident of California, held credit cards issued by respondent, a national bank located in South Dakota. She filed suit in state court, alleging that late-payment fees charged by respondent, although legal under South Dakota law, violated California law. Respondent moved for judgment on the pleadings, contending that petitioner's state-law claims were pre-empted by a provision of the National Bank Act of 1864 that permits a national bank to charge its loan customers "interest at the rate allowed by the laws of the State . . . where the bank is located," 12 U. S. C. 85, see Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp., 439 U. S. 299. The California Superior Court, accepting respondent's argument that credit card late-payment fees constitute "interest" for purposes of 85, granted respondent's motion. The State Court of Appeal and State Supreme Court affirmed.

Held: The Comptroller of the Currency has reasonably interpreted the term "interest" in 85 to include late-payment fees, see 12 CFR 7.4001(a), and petitioner has failed to establish that the Court should not accord its customary deference to the Comptroller's interpretation of an ambiguous provision of the National Bank Act. Pp. 739-747. (a) Where a provision of the National Bank Act is ambiguous, the Court, pursuant to Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842-845, defers to reasonable judgments of the Comptroller, the official charged with administering the Act. NationsBank of N. C., N. A. v. Variable Annuity Life Ins. Co., 513 U. S. 251, 256-257. Petitioner's argument that deference is not owing to the recently adopted 12 CFR 7.4001(a) is unpersuasive. The validity of the Comptroller's interpretation is not affected by the fact that the regulation was issued more than 100 years after 85 was enacted or that it was litigation, including this very suit, which disclosed the need for the regulation. And the distinction that the regulation makes between those charges designated as interest and those not so classified is not arbitrary or capricious. See Chevron, supra, at 844. Petitioner errs in contending that an agency interpretation that contradicts a prior agency position is necessarily invalid; in any event, she fails to show that a change of official agency position has occurred here. Finally, the issue here, the meaning of 85, does not bring into play the pre-emption considerations that petitioner raises. Pp. 739-744.


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