Villanueva v. Rabobank, N.A.

Background

Joe Villanueva originally brought a putative class action in California Superior Court against Rabobank, N.A. The case alleged that Rabobank improperly charged overdraft fees and asserted claims for breach of contract and violation of California’s Unfair Competition Law. The case was later transferred to Contra Costa County, where discovery began.

Villanueva’s First Amended Complaint, filed April 15, 2022, added a theory that Rabobank violated the Unfair Competition Law by failing to comply with Regulation E, a federal regulation requiring bank customers to affirmatively opt in before being charged certain overdraft fees for ATM withdrawals and one-time debit-card transactions. The state court later found that the amended complaint did not adequately allege injury under that theory, but indicated that Villanueva might be able to amend the complaint.

Villanueva filed a Second Amended Complaint on February 14, 2023. It added allegations that he had incurred overdraft fees on nine ATM withdrawals and one-time debit transactions. Rabobank removed the case to federal court ten days later, asserting federal-question jurisdiction based on Regulation E.

Arguments and analysis

Villanueva moved to remand, meaning he asked the federal court to return the case to state court. He argued that Rabobank’s removal was untimely because Rabobank knew by April 15, 2022, when it received the First Amended Complaint, that the case involved a federal regulation. He also argued that the claims were based only on state law and therefore did not present a federal question.

Rabobank argued that the First Amended Complaint did not start the thirty-day removal period because it lacked facts showing that Villanueva had actually incurred fees covered by Regulation E. Rabobank contended that the Second Amended Complaint was the first document containing facts sufficient to support federal jurisdiction.

The court did not decide Villanueva’s separate argument about whether the claims actually presented a federal question. Instead, it ruled that removal was untimely. Under the federal removal statute, a defendant generally has thirty days after receiving an amended pleading or another document from which it can first clearly determine that the case is removable.

The court found that the First Amended Complaint may itself have started the removal period because it clearly identified a claim based in part on Regulation E. The court also held that, even if the First Amended Complaint was insufficient, two filings made on December 30, 2022, gave Rabobank the necessary notice. Villanueva’s opposition to Rabobank’s state-court demurrer referred to overdraft fees connected to ATM withdrawals and point-of-sale debit-card purchases. A declaration from Villanueva’s counsel also stated that Rabobank had produced account statements showing such fees. Those filings were made more than thirty days before Rabobank removed the case.

The court rejected Rabobank’s position that it could wait until the Second Amended Complaint to remove. It concluded that the December 30 filings were “other paper” under the removal statute and made the facts supporting removal evident. Because Rabobank waited more than thirty days after that date, the removal was improper.

Disposition

The court GRANTS the motion to remand. The order returns the case to state court. The court did not rule on the merits of Villanueva’s overdraft-fee claims or decide whether Regulation E independently established federal jurisdiction.