Smiley V. Citibank - Before The Court

Before The Court

Donovan argued Smiley's case before the justices. Late fees, he said, were not interest whatever the Comptroller's regulation said since they were fixed amounts and did not vary based on the money owed or schedule of payments. He also pointed to two previous documents from OCC suggesting that, in the past, it did not consider penalty fees of any kind to be interest. For more than a hundred years, he noted, OCC had not seen fit to define specifically what kind of payments were considered interest. Yet, coincidentally, only when a case turning on that issue appeared headed to the Supreme Court did it see a need to do so.

He claimed that it was not entitled to the deference the Court accorded agencies of the executive branch. It was not, he said, a reasonable interpretation of the National Banking Act and thus, per the rule it had established in the 1984 Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. case, the Court should review it afresh and rule on whether it was the best interpretation of the statute.

Richard Kendall of the Los Angeles firm Shearman & Sterling argued the case for Citibank. He was joined by Irving Gornstein on behalf of the government as amicus curiae. Both argued for the Court to defer to the Comptroller's statutory interpretation.