Case: 18-11375 Document: 00516035490 Page: 1 Date Filed: 09/29/2021

United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit FILED September 29, 2021 No. 18-11375 Lyle W. Cayce Clerk Sharonda L. Johnson, on behalf of herself and all others similarly situated, Plaintiff—Appellant, versus BOKF National Association, Defendant—Appellee. Appeal from the United States District Court for the Northern District of Texas USDC No. 3:17-CV-663 Before Higginbotham, Dennis, and Ho, * Circuit Judges. James L. Dennis, Circuit Judge: Plaintiff Sharonda Johnson, who holds a checking account with BOKF, National Association (“BOKF” or “the Bank”), filed this putative class action challenging “Extended Overdraft Charges” assessed by BOKF. Extended Overdraft Charges are what the Bank terms the fees it charges to customers who overdraw on their checking accounts and fail to timely pay the Bank for covering the overdraft. Johnson alleges that when the Bank paid * Judge Ho concurring in judgment only. Case: 18-11375 Document: 00516035490 Page: 2 Date Filed: 09/29/2021 No. 18-11375 her overdraft, it extended her credit. Next, Johnson argues that the Extended Overdraft Charges BOKF assessed her when she did not reimburse the Bank timely for covering her overdraft constitute interest upon this extension of credit. Last, she contends that the Extended Overdraft Charges were usurious in violation of § 85 of the National Bank Act of 1864, 12 U.S.C. § 1 et seq. The district court concluded that these Extended Overdraft Charges were not “interest” under the Act and, accordingly, dismissed the action for failure to state a claim. For the reasons that follow, we AFFIRM. I. A. The National Bank Act of 1864 (“NBA” or “the Act”) governs the business activities of national banks like BOKF. Watters v. Wachovia Bank, N.A., 550 U.S. 1, 6 (2007). Enacted in 1864, the NBA is intended to protect national banks against intrusive regulation by the states and facilitate a national banking system. Bank of Am. v. City & Cnty. of San Francisco, 309 F.3d 551, 561 (9th Cir. 2002). National banks are also subject to regulation by the Office of the Comptroller of the Currency (“OCC”), the agency charged by Congress with implementing the NBA. Watters, 550 U.S. at 6. As relevant here, the NBA authorizes national banks to charge “interest at the rate allowed by the laws of the State . . . where the bank is located.” 12 U.S.C. § 85. The statute does not define the term “interest,” and the Supreme Court has held that this statutory term is ambiguous and that courts should therefore defer to OCC’s interpretation of the word, Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 739 (1996) (citing Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984)). In regulations promulgated through notice-and-comment rulemaking, OCC issued 12 C.F.R. § 7.4001(a), which defines the term “interest” as it is Case: 18-11375 Document: 00516035490 Page: 3 Date Filed: 09/29/2021

No. 18-11375 used in § 85 of the NBA to mean “any payment compensating a creditor or prospective creditor for an extension of credit, making available of a line of credit, or any default or breach by a borrower of a condition upon which credit was extended.” 12 C.F.R. § 7.4001(a). This includes, inter alia, “late fees” and “creditor-imposed not sufficient funds (NSF) fees charged when a borrower tenders payment on a debt with a check drawn on insufficient funds.” Id. When a bank assesses interest fees, it may only “charge interest at the maximum rate permitted . . . by the law of that state.” Id. § 7.4001(b). This maximum interest rate is referred to as the “usury limit.” Fawcett v. Citizens Bank, N.A., 919 F.3d 133, 135 (1st Cir.), cert. denied, 140 S. Ct. 224 (2019); see also M. Nahas & Co., Inc. v. First Nat. Bank of Hot Springs, 930 F.2d 608, 610 (8th Cir. 1991) (using same term). Under the NBA, a bank customer who is charged interest exceeding the usury limit may recover “twice the amount of the interest paid.” 12 U.S.C. § 86. Non-interest charges and fees, however, are not subject to OCC’s usury limits. See 12 C.F.R. § 7.4002. These non-interest charges include fees for what are broadly referred to as “deposit account services.” Id. § 7.4002(a). Banks have discretion to impose deposit account services fees and other non-interest charges on their account holders, such as the bank’s checking account customers, so long as the bank acts within the bounds of “sound banking judgment and safe and sound banking principles.” Id. § 7.4002(b)(2). In 2001, OCC further clarified its definition of “interest.” Though the agency left in place its regulation stating that “interest” includes late fees and NSF charges that a bank assesses when a borrower tenders a bad check to the bank, it stated that “overdraft and returned check charges” imposed by a bank on its own checking account customers were not interest within the meaning of § 7.4001(a), but rather charges for “deposit account services” that fall under 12 C.F.R. § 7.4002. Investment Securities; Bank Case: 18-11375 Document: 00516035490 Page: 4 Date Filed: 09/29/2021

No. 18-11375 Activities and Operations; Leasing 66 Fed. Reg. 8178, 8180 (Jan. 30, 2001). OCC noted, however, that its regulations did not expressly resolve whether interest includes “at least some portion of the fee imposed by a national bank when it pays a check notwithstanding that its customer’s account contains insufficient funds to cover the check.” Id. at 8180. “A bank that pays a check drawn against insufficient funds may be viewed as having extended credit to the accountholder,” the agency observed. Id. Accordingly, OCC invited comment on this matter. Following notice-and-comment, OCC published its Final Rule, 66 Fed. Reg. 34784 et seq. (July 2, 2001). OCC noted that it had “received numerous comments” regarding whether the regulation defining interest should include “any portion of the fee imposed by a national bank when it pays an overdraft.” Id. at 34787. However, OCC declined to amend the rule to address this issue given the “complex and fact-specific concerns” involved in determining whether “any portion of a charge imposed in connection with paying an overdraft constitutes ‘interest’” under the NBA. Id. In 2007, OCC issued Interpretive Letter 1082, squarely addressing for the first time whether fees charged by a Bank in connection with paying an overdraft may qualify as “interest” under the NBA. office of the Comptroller of the Currency, Interpretive Letter No. 1082, 2007 WL 5393636, at *1 (May 17, 2007) [hereinafter Interpretive Letter 1082]. Interpretive Letter 1082 was a response by OCC to an unnamed bank that described its overdraft fee structure to OCC and asked the agency whether, under the NBA and OCC’s regulations, it could “(1) in its discretion, honor items for which there are insufficient funds in depositors’ accounts and recover the resulting overdraft amounts as part of the Bank’s routine maintenance of these accounts; and (2) establish, charge and recover overdraft fees from depositors’ accounts for doing so.” Id. at *1. The bank Case: 18-11375 Document: 00516035490 Page: 5 Date Filed: 09/29/2021

No. 18-11375 seeking guidance imposed a “Continuous Overdraft Charge of $5 per business day from the fourth through eleventh calendar day that an account is overdrawn.” Id. at *1 n.3. OCC concluded that the bank’s practices complied with the NBA and the OCC’s regulations interpreting the NBA. Id. at *1. Despite its earlier reservations, OCC asserted that “[c]reating and recovering overdrafts have long been recognized as elements of the discretionary deposit account services that banks provide.” Id. at *2 (emphasis added). OCC further specified that the bank’s authority to charge a fee when it pays an overdraft is expressly provided for in 12 C.F.R. § 7.4002(a), which concerns non-interest charges and fees like deposit account service charges. Id. B. BOKF is a national bank that offers, inter alia, checking account services to its customers. Pursuant to the Bank’s deposit account agreement, when a BOKF customer overdraws her account, BOKF may either: “(1) refuse to pay the item” and charge a “returned item fee” or (2) elect to pay the item” and charge an initial overdraft fee. The returned item fee and initial overdraft fee are both $32.50. Thus, any time a customer overdraws on her checking account—irrespective of whether the Bank chooses to cover its customers’ overdraft—the Bank imposes the same fee on its customer. If the Bank opts to pay the overdraft, the customer has up to five consecutive business days to repay the Bank the total of the amount of the overdraft and the initial overdraft fee. If the customer fails to do so within the applicable timeframe, the Bank charges an “Extended Overdraft Charge” of $6.50 per business day until the overdraft is cured. ^[2] Case: 18-11375 Document: 00516035490 Page: 6 Date Filed: 09/29/2021 Case: 18-11375 Document: 00516035490 Page: 7 Date Filed: 09/29/2021 Case: 18-11375 Document: 00516035490 Page: 8 Date Filed: 09/29/2021 Case: 18-11375 Document: 00516035490 Page: 9 Date Filed: 09/29/2021 Case: 18-11375 Document: 00516035490 Page: 10 Date Filed: 09/29/2021 Case: 18-11375 Document: 00516035490 Page: 11 Date Filed: 09/29/2021

No. 18-11375 “especially important markers” for determining if an agency’s regulatory interpretation commands Auer deference: (1) whether the agency’s interpretation reflects the agency’s “authoritative” or “official position”; (2) whether “the agency’s interpretation implicates its substantive expertise”; and (3) whether the agency’s construction is rooted in its “fair and considered judgment.” Id. at 2416-17 (internal quotation marks omitted). First, Interpretive Letter 1082 appears to be an authoritative statement rather than a “m[e]re ad hoc statement not reflecting the agency’s views.” Id. at 2416. The letter was drafted by a senior OCC official, the agency’s First Senior Deputy Comptroller and Chief Counsel. See id. (observing that the Court has deferred to “official staff memoranda . . . even though never approved by the agency head” (quoting Ford Motor Credit v. Milhollin, 444 U.S. 555, 566 n.9 & 567 n.10 (1980))); see also Ford Motor Credit, 444 U.S. at 566 n.9 (declining to “draw a radical distinction between” agency heads and staff for Auer deference). Moreover, the content of Letter 1082 strongly indicates that it represents OCC’s official position on the matter of whether Extended Overdraft Charges should be classified as non- interest charges. It was written in response to a bank’s request for OCC’s guidance “under the National Bank Act and [OCC] regulations.” See Interpretive Letter 1082, at *1. And more to the point, Letter 1082 provides the agency’s views on the permissibility of overdraft fees, expressly notes that the bank that asked for guidance charged Extended Overdraft Charges, and describes these fees as constituting non-interest charges under § 7.4002(a). See id. at *1-*2 & *1 n.3. In short, Letter 1082 bears the hallmarks of an official interpretation by OCC. ^[4] Case: 18-11375 Document: 00516035490 Page: 12 Date Filed: 09/29/2021 Case: 18-11375 Document: 00516035490 Page: 13 Date Filed: 09/29/2021