Jessica M. Karmasek Dec. 5, 2013, 5:00pm

NEW ORLEANS (Legal Newsline) -- A federal appeals court ruled this week that Mississippi Attorney General Jim Hood's lawsuits against a group of credit card issuers should be returned to a state court.

However, the U.S. Court of Appeals for the Fifth Circuit said in its 23-page opinion Monday that it first wants a federal judge to explain why the cases belong in the federal court.

"Neither the (Class Action Fairness Act of 2005) nor federal preemption by the (federal National Banking Act) provides a basis for federal subject matter jurisdiction in this case," a three-judge panel of the Fifth Circuit wrote.

"To the extent that the district court has not yet ruled on whether substantial federal question jurisdiction exists, this case is remanded for the district court to make that determination.

"If the district court has already ruled that there is no substantial federal question jurisdiction, or makes such a determination upon further review, then these cases should be remanded to the state court as there would be no federal jurisdiction, and thus nothing to support supplemental jurisdiction."

Hood filed six in parens patriae complaints in a Mississippi chancery court, alleging six credit card companies -- including JPMorgan Chase & Co., Capital One Bank, Citigroup Inc. and Discover Financial Services Inc. -- violated the state's Consumer Protection Act by charging consumers for products they did not want or need, in particular payment-protection products that carry monthly fees.

The companies had the lawsuits removed to the U.S. District Court for the Southern District of Mississippi Jackson Division, arguing that there is federal subject matter jurisdiction because it is a CAFA mass action and because the state's consumer protection claims were preempted by the federal National Banking Act.

The district court agreed, and denied all six of Hood's motions to remand in a single order.

The attorney general then filed two interlocutory appeals, to review two questions certified by the district court on the preemption issue.

The Fifth Circuit granted both appeals, and concluded this week that neither CAFA nor complete preemption by the National Banking Act provides the basis for subject matter jurisdiction.

Hood is one of three attorneys general -- including Hawaii's David Louie and West Virginia's former attorney general, Darrell McGraw -- to have filed suit over the companies' payment-protection products.

Hood, in his suits, alleges the credit card issuers' "abusive acts and practices" are causing state credit card holders to be charged "spurious" service plan fees.

In particular, he alleges that the companies misrepresent the nature and benefits of their services, place unauthorized and undisclosed charges on customers' accounts, and target the state's most vulnerable consumers in a deceptive scheme to "gouge" the elderly and others.

From Legal Newsline: Reach Jessica Karmasek by email at

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