Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—E.D.N.Y.: New York statute about fees for paper bank statements held unconstitutional, (Mar 3, 2026)

By Justin Marcus Smith, J.D.

Banks could charge the “fee” for paper statement opt-in as a “credit” for paper statement opt-out, so that meant the statute regulated how banks can communicate their fees.

A New York consumer protection statute, N.Y. Gen. Bus. Law § 399-zzz, which prohibits fees for paper statements in certain circumstances was held unconstitutional by the federal district court in Brooklyn, New York. The statute implicated the First Amendment because it regulated speech. It did not survive intermediate scrutiny because it did not advance a state interest by requiring banks to charge a “fee” for paper statements in comparison to the practical equivalent: permitting banks to offer a “credit” for opting-out of paper statements. The consumer plaintiff also failed to state a separate or independent claim, to the extent § 399-zzz was unconstitutional, for a deceptive act or practice under N.Y. Gen. Bus. Law § 349. The court accordingly granted dismissal, with prejudice, for defendant TD Bank, N.A. (TD Bank) (Hastings v. TD Bank, N.A., No. 1:25-cv-02336-HG (E.D.N.Y. Feb. 27, 2026)).

Background. A consumer brought a consumer protection putative class action against TD Bank. The consumer alleged that a TD Bank $3 monthly fee for paper account statements violated N.Y. Gen. Bus. Law § 399-zzz. The consumer similarly alleged TD Bank engaged in a deceptive act or practice in violation of N.Y. Gen. Bus. Law § 349 in connection with violation of § 399-zzz. TD Bank moved to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim.

The parties acknowledged the Northern District of New York decided a case on similar facts and identical issues. See Manship v. TD Bank, N.A., No. 20-cv-0329, 2021 WL 981587 (N.D.N.Y. Mar. 16, 2021). The defendant in Manship argued § 399-zzz (1) did not apply to national banks and (2) did not apply to its paper statement fee policy to support its argument about § 349 violation. The Manship court rejected those arguments based on the statute’s text and legislative intent.

In the instant matter, TD Bank moved to dismiss on three grounds: (1) National Bank Act (NBA) preemption of the § 399-zzz claim; (2) § 399-zzz violation of the First Amendment; or (3) failure to plead an actionable claim for failure to plead violation of § 399-zzz and § 349.

The consumer advanced three arguments in opposition to dismissal: (1) no NBA preemption because the New York legislature enacted § 399-zzz pursuant to its police powers; (2) § 399-zzz is constitutional, but if the “credit or other incentive” language is not constitutional, it is severable; and (3) the disputed account statements fell within § 399-zzz and therefore subjected TD Bank to liability under § 349.

The instant court adopted Manship except for the portion addressing the § 399 violation. The instant court went further to conclude that § 399 is unconstitutional. The instant court did not reach whether § 399 applied to national banks or the paper statement fee policy, but those questions would not have altered the conclusion that the consumer failed to state a § 349 claim.

No preemption. First, the court concluded, as Manship did, that the NBA and its accompanying Office of the Comptroller of the Currency (OCC) regulations do not preempt § 399-zzz. The Manship court identified the relevant banking power at issue as the defendant bank’s ability to charge a non-interest fee for its services. A national bank can do that only when the fees relate to sound banking management and safe banking principles, concerns that do not implicate paper statement fees. The Manship court did not even reach the question of whether charging paper statement fees amounts to sound banking judgment, but it did reason further that § 399-zzz does not “significantly interfere with” charging for paper statements because banks could circumvent the statute by recharacterizing a “fee” for paper statement opt-in as a “credit” for paper statement opt-out.

TD Bank contended the Manship preemption analysis was wrong because (1) that court placed undue weight on § 399-zzz being a law of general applicability; and (2) any inquiry into whether non-interest fees comport with sound banking judgment and safe banking principles was exclusively a matter of OCC supervisory power.

The instant court found the TD bank arguments unpersuasive. First, TD Bank did not explain what paper statement fees had to do with banking concepts or principles or any significant interference with bank power to charge a non-interest fee for services. The court deemed the several cases TD Bank cited here as off-point. Second, Manship did not treat paper statement fees as a banking decision, so it did not even tackle “sound banking judgment.”

Statute unconstitutional.Manship concluded § 399-zzz regulates speech, how businesses can communicate their fees, in way that did not survive intermediate scrutiny because it did not advance a government interest.

The consumer argued § 399-zzz only regulates conduct. Again, the instant court analyzed that banks, pursuant to the statute, could charge the paper statement “fee” alternatively as a “credit” for paper statement opt-out. That structuring of the statute meant it regulates how banks communicate their fees.

The court disagreed with the consumer’s argument that Manship was wrong insofar as offering a credit was simply the inverse of a fee and rejected the consumer’s canons of construction argument.

Having found that § 399-zzz regulates speech, the court reached the same conclusion the Manship court did: the statute does not directly advance a government interest, and for that reason, it did not survive intermediate scrutiny. The court recounted how the statute prohibits banks from doing what TD Bank did, i.e., having a default no-paper statements policy, with a fee charged for opt-in to paper statements. However, there was little practical difference between that and what the statute would have permitted TD Bank to do, i.e., have a default paper statements policy with a credit for opt-out.

No severability. The court found severance of the “credit and other incentive” provision from the rest of § 399-zzz would have been inappropriate. Severability was a question of state law, and in New York, it turns on whether the legislature would have approved of enforcement with the invalid portion excised. The statute both prohibited paper statement fees and expressly permitted credits or incentives for customers who choose to “go paperless.” The legislative history also suggested intent to promote environmentalism. Severing the “credit and other incentive” provision would have run contrary to what the state legislature was trying to achieve.

R. 12(b)(6). The court applied the Manship court conclusion that the consumer failed to plead a separate violation of § 349 for a deceptive act or practice to the extent § 399-zzz was unconstitutional.

No amendment. The court granted dismissal with prejudice. The court declined leave to amend because better pleading would not have cured a cause of action based on an unconstitutional statute. The consumer also failed to identify additional factual allegations and did not explain how amendment would cure the deficiencies of the complaint.

The Case is No. 1:25-cv-02336-HG.

Judge: Gonzalez, H.

Attorneys: Julian Cole Diamond (Bursor & Fisher P.A.) for Joshua Hastings. Lucus A. Ritchie (Pierce Atwood LLP) for TD Bank, N.A.

Companies: TD Bank, N.A.

Cases: StateUnfairTradePractices NewYorkNews