In an order released this morning1 the Supreme Court vacated the Ninth Circuit’s decision in Flagstar Bank v. Kivett and directed that the lower court reconsider the case in light of the Supreme Court’s opinion last month in Cantero v. Bank of America. The Court’s Cantero decision and today’s order mean that both the Second Circuit and the Ninth Circuit now again will need to reevaluate the question of whether the National Bank Act preempts state laws requiring the payment of interest on certain escrow accounts.2
That’s not all. There is also a pending interest-on-escrow preemption case in the First Circuit. In Conti v. Citizens Bank, the parties had agreed to put their case on hold pending the Supreme Court’s decision in Cantero. With Cantero now decided, the parties last week proposed a briefing schedule that would see briefs filed starting later this summer and stretching into early fall.
All this means that we may see no fewer than three federal appellate courts conduct the Supreme Court-mandated “practical assessment of the nature and degree of the interference caused by” state interest-on-escrow laws.
If one of these courts reaches a different conclusion from the other(s), this is likely to set up a situation where the Supreme Court is again asked to explain how National Bank Act preemption analysis is supposed to work.3
https://www.supremecourt.gov/orders/courtorders/061024zor_d18f.pdf
The Kivett case was decided by the Ninth Circuit in an unpublished opinion. The Ninth Circuit panel that decided Kivett explained that they were duty bound to follow an earlier Ninth Circuit case called Lusnak v. Bank of America, decided a few years before Kivett.
Flagstar and amici Mortgage Bankers Association and American Bankers Association alternatively ask us to overrule Lusnak as wrongly decided. A three-judge panel may only depart from an earlier panel's decision if it is "clearly irreconcilable with the reasoning or theory of intervening higher authority[.]" Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003) (en banc). Considering neither the Supreme Court nor the Ninth Circuit sitting en banc has heard a case that could bring Lusnak's holding into question, we reject Flagstar and amici's invitation to overturn Lusnak.
Of course even if it does get to that point, the Supreme Court could simply decline to hear the case. That is what the Court did in the Lusnak case mentioned in footnote 2 above, and it is what the Solicitor General originally asked the Court to do in Cantero.