May 12, 2008

District Court Remands Ohio Attorney General’s CSPA Enforcement Action against Citibank South Dakota, N.A. For Lack of Federal Jurisdiction

On October 8, 2007, Ohio Attorney General Marc Dann filed a complaint against Citibank South Dakota, N.A., Potbelly's Sandwich Works, LLC, and Scott Simmons for alleged violations the Ohio Consumer Sales Practices Act ("CSPA"). The case involved a flyer that was allegedly circulated on the campus of the Ohio State University promising a free sandwich. The catch, however, was that customers needed to sign up for a credit card through Citibank to redeem their free gift.

The case is of broader interest, however, in light of the fact that the Ohio Attorney General sued Citibank South Dakota, N.A., a national banking association, under the Ohio CSPA. Importantly, Ohio's CSPA includes an express exemption for national banks that excludes transactions between certain financial institutions, including national banks, and their customers.  The Attorney General has argued in support of his complaint, however, that the term "customer" should be narrowly construed and that the exemption should apply only to those transactions between exempted financial institutions and those individuals with existing relationships with the financial institution.

The case was originally filed in the Court of Common Pleas, Franklin County, Ohio (Case Number 07-CVH09-12591), but the defendants removed the action to the United States District Court for the Southern District of Ohio (Case Number 07-cv-01149).  On May 1, 2008, Judge Gregory L. Frost entered a decision remanding the case back to state court.  Accordingly, the case is now back before Judge John F. Bender, as Case Number 07-CVH09-12591 in the Court of Common Pleas for Franklin County, Ohio. 

Ohio Attorney General Complaint
Citibank's Motion to Dismiss Complaint
Ohio Attorney General Memorandium in Opposition Motion to Dismiss
Citibank's Reply in Support of Motion to Dismiss
District Court Opinion and Order

This E-alert was prepared by Justin W. Ristau. Please contact any member of the Bricker & Eckler Creditor Rights & Bankruptcy group for more information.