Supreme Court ruled Monday that the state cannot prevent out-of-state credit card companies from charging fees to its residents. "This is excellent news," said Alan Kaplinsky, a partner at Ballard, Spahr, Andrews & Ingersoll in Philadelphia. "It is now the second state supreme court to rule in the bank's favor on the issue." "If you ever lose a case, you have a big problem," said Gil Schwartz, a partner at Schwartz & Ballen. The Colorado victory, combined with a similar decision in California, provides more comfort to the banks that want to export rates to other states. The court ruled that MBNA America Bank did not violate the law when it assessed a $15 late fee against a Colorado customer. The court said a Colorado law prohibiting late fees does not apply to out-of-state banks. The reason: The U.S. Supreme Court has ruled that the National Bank Act defines these fees as interest charges, which can be regulated only by the bank's home state. Thus MBNA, as a Delaware corporation, does not have to follow Colorado law. It must only follow Delaware law, which clearly permits these fees. "Late payment fees are a form of interest under Section 85 of the National Bank Act," the Colorado court said. "As such, MBNA is allowed to charge late payment fees to Colorado residents." The Colorado case began in 1992 when Brian K. Copeland failed to pay the minimum balance on his Visa card. MBNA America Bank charged him a $15 late payment, leading Mr. Copeland to sue the bank for charging a fee he said was not permitted under Colorado law. The state appeals court affirmed the trial court's decision dismissing the case, setting up the Nov. 20 high court decision. MBNA spokesman Peter Osborne praised the ruling. "We expected to prevail, and this decision is consistent with other court decisions," Mr. Osborne said. The top courts in New Jersey and Pennsylvania are still considering the issue. Also, a similar case is pending before the federal appeals court in Philadelphia. "Fortunately no state supreme court has ruled the other way," Mr. Kaplinsky said. "But you must bear in mind that in Pennsylvania in the intermediate appellate court the bankers lost. So until a decision is rendered in that case and in the New Jersey case, the war will not be over."
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