Smiley v. Citibank
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In Smiley v. Citibank (South Dakota), N. A., (95-860), 517 U.S. 735 (1996), in 1992 Barbara Smiley, a resident of California, brought a class action lawsuit against Citibank (the credit card business) which was located in South Dakota. She alleged that the late-payment fees charged by Citibank, although legal under South Dakota law, violated Californian law. Citibank responded that the National Bank Act of 1864, permits national banks to charge its loan customers "interest at the rate allowed by the laws of the State... where the bank is located," which preempted Smiley's state law claims.
This was a unanimous decision delivered by Justice Antonin Scalia, and has paved the way for additional charges on Credit Cards for late payments.