Credit and issuers won an important battle when a U.S. appeals court ruled last week that Sears, Roebuck and Co. can impose fees on Massachusetts residents who are late with Discover car payments.

The ruling is expected to influence about 30 outstanding lawsuits against banks and other card issuers by cardholders who want to recover late charge and other fees.

Judge Bruce Selya of the U.S. Court of Appeals for the First Circuit in Boston ruled late Thursday that Sear's Greenwood Trust Co., the Delaware-based unit that issues Discover, can charge a $ 10 late-payment fee to Massachusetts residents.

State Prohibition Cited

The state had claimed that its laws prohibit such fees.

A spokesman for the Massachusetts attorney general's office said no decision on an appeal has been made. But several lawyers said the issue was likely to reach the Supreme Court over the issue of the precedence of state's rights.

In his 28-page opinion, Judge Selya held that under federal banking law, state-chartered banks, like national banks, can impose nationwide the interest rates permitted by their home states.

He further stated that the term "interest rate" encompasses a variety of fees imposed by lenders upon their borrowers, including late charges.

His decision -- the first by a federal court that allows state-chartered card issuers to export their home-state fee policies -- was embraced by lawyers specializing in bank cards.

"This case will be cited," said Anita Boomstein, a lawyer with Hughes, Hubbard & Reed in New York.

Ruling Has Weight

Though opinions from the First Circuit are not necessarily followed by other courts, its judges are "very well respected" and influential in the legal community, she said.

In October, a federal district court sent shock waves through the credit card industry when it said that the Massachusetts law on late fees took precedence over Delaware's, which allows such charges.

That decision prompted a spate of class actions against out-of-state card issuers across the nation. Among states where such suit are pending are Minnesota, Pennsylvania, Colorado, New Jersey, and California.

Several lawyers for plaintiffs involved in those suits said they are conflict they will prevail in spite of the appellate court's ruling.

"The First Circuit decision does not take into account consumer protection laws in 21 states that are similar to Massachusetts'," said Michael Donovan, a senior associate at Greenfield & Chimicles, a Haverford, Pa. firm that has filed 18 class-action suits related to late fees.

Decision Lauded

Banking lawyers applauded Judge Selya's decision as a huge victory. Many large credit card banks issue nationwide from institutions chartered in Delaware and other states that have repealed interest rate ceilings.

"The court has taken an entirely responsible and appropriate position as to what an interest rate is," said Steven S. Rosenthal, a lawyer with Morrison & Foerster, Washington. "It includes all of the charges that a lender might seek," including late fees, annual fees, and over-the-limit fees.

Mr. Rosenthal, who filed a friend-of-the-court brief on behalf of MasterCard International and Visa U.S.A. in the Greenwood Trust case, expects the Supreme Court to be the ultimate arbiter.

"If the states have one view of the law and the court of appeals another view of the law," Mr. Donovan said, "it will become imperative for the Supreme Court to address the question."

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