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Case Basics
Docket No. 
Citibank (South Dakota)
(Argued the cause for the respondent)
(Argued the cause for the petitioner)
(Argued the cause for the United States as amicus curiae, supporting the respondent, urging affirmance)
Facts of the Case 

Barbara Smiley, a resident of California, possessed credits cards issued by Citibank, a national bank located in South Dakota. Under certain circumstances, Citibank will issue late-payment fees. In 1992, Smiley brought a class action against Citibank on behalf of herself and other California holders of Citibank's credit cards, alleging that the late-payment fees charged by Citibank, although legal under South Dakota law, violated California law. In response, Citibank argued that a provision of the National Bank Act of 1864, which permits a national bank to charge its loan customers "interest at the rate allowed by the laws of the State... where the bank is located," pre-empted Smiley's state law claims. After accepting Citibank's argument that late-payment fees constituted "interest," the California Superior Court ruled in its favor. The California Superior Court Supreme Court affirmed.


Does the National Bank Act of 1864 authorize a national bank to charge late- payment fees that are lawful in the bank's home State but prohibited in the States where the cardholders reside?

Decision: 9 votes for Citibank (South Dakota), 0 vote(s) against
Legal provision: 12 U.S.C. 85

Yes. In a unanimous opinion delivered by Justice Antonin Scalia, the Court held that the National Bank Act of 1864 authorizes such charges because a regulation adopted by the Comptroller of the Currency, which defined interest to include late-payment fees, was a reasonable interpretation of the act and entitled to deference. The Court rejected arguments that late-payment fees do not constitute interest because they do not vary based on the payment owed or the time period of delay and because they are penalties.

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SMILEY v. CITIBANK (SOUTH DAKOTA). The Oyez Project at IIT Chicago-Kent College of Law. 04 June 2015. <>.
SMILEY v. CITIBANK (SOUTH DAKOTA), The Oyez Project at IIT Chicago-Kent College of Law, (last visited June 4, 2015).
"SMILEY v. CITIBANK (SOUTH DAKOTA)," The Oyez Project at IIT Chicago-Kent College of Law, accessed June 4, 2015,