In a notable legal decision, the US Court of Appeals for the Ninth Circuit has confirmed a block on a customer’s lawsuit against the Navy Federal Credit Union (NFCU) regarding a bounced check fee. The ruling, detailed in a [recent opinion](https://cdn.ca9.uscourts.gov/datastore/opinions/2025/08/01/24-1838.pdf), underscores the supremacy of federal law over state regulations in matters concerning federal credit unions.

The court's judgment was centered on the applicability of 12 C.F.R. § 701.35(c), a regulation enforced by the [National Federal Credit Union Administration](https://ncua.gov/), which states that state laws regulating bank fees are not applicable to federal credit unions. This federal regulation was the crux in dismissing the challenge brought forth by Andrew King, a customer who faced a $15 bounced check fee after his deposit attempt failed at an NFCU branch in California.

King’s legal action initiated under [California’s Unfair Competition Law](https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?division=7.&chapter=5.&part=2.&lawCode=BPC) (UCL) argued that the fee was unjust. Despite his vigorous legal assertions, both the district and appellate courts found that federal rules specifically preempt state laws in this domain.

The court's opinion humorously noted, "To ascend this Everest-like preemption mountain, King makes two arguments. He fails to reach the summit.” This metaphor highlighted the significant legal hurdles that King was unable to overcome in his challenge. The appellate court, affirming the lower court's decision, expressed that King's use of "Olympic level verbal gymnastics" could not alter the clear preemption clause that federal statutes have over state regulations concerning account fees of federal credit unions.

This ruling aligns with precedents set by other courts on similar issues, ensuring that federal credit unions remain governed primarily by federal statutes rather than varied state laws. The decision not only impacts Mr. King but also sets a significant precedent for how similar cases will be adjudicated in the future, emphasizing the breadth and scope of federal preemption in financial regulations.

For detailed information, you can view the full court ruling [here](https://cdn.ca9.uscourts.gov/datastore/opinions/2025/08/01/24-1838.pdf).

The original announcement can be found on [JURIST - News](https://www.jurist.org/news).