Top Court to Hear Two Big Cases for Industry: Arbitration Clauses, Jurisdictional Issues on the Fall Docket

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WASHINGTON -- Two cases the Supreme Court is slated to hear this fall could have a significant effect on the financial services industry.

The first would determine whether national banks can be sued in a state court anywhere they have a branch. The second could nullify some arbitration clauses frequently used by banks and credit card companies.

Whether a national bank can be sued in a state or federal court is a critical question. Bankers fear that state courts favor local plaintiffs and are not friendly to large, national organizations.

"Oftentimes you get a fairer shake in federal court than local courts," because plaintiffs have a "hometown advantage" in state court, said Gil Schwartz, a lawyer with Schwartz & Ballen LLP. Also, "you have greater consistency in federal court, because there are fewer courts."

The case stems from a suit related to KPMG LLP's sale of illegal tax shelters. The auditing giant reached a settlement with the Justice Department last week, and …