Compliance with a State Tax Warrant Does Not Convert a Bank into a State Actor; Account “Holds” Are Not EFTA Electronic Fund Transfers; Supplemental State Claims Must Be Without Prejudice

1. Introduction

In Piña v. Bank of Am. Corp. (2d Cir. Apr. 22, 2026) (summary order), pro se plaintiff Frederick Piña sued Bank of America Corporation after the bank placed “holds” on his accounts in response to an allegedly improper tax warrant issued by the New York State Department of Taxation and Finance (NYSDTF). Piña asserted (i) a federal due process claim under 42 U.S.C. § 1983, (ii) a federal claim under the Electronic Fund Transfer Act (EFTA), and (iii) assorted state-law claims.

The district court screened and dismissed the pleadings sua sponte under 28 U.S.C. § 1915(e)(2)(B) (the in forma pauperis screening statute), ultimately dismissing the amended complaint without further leave to amend and declining supplemental jurisdiction over the state-law claims. The Second Circuit affirmed, but modified the judgment to clarify that the state-law claims were dismissed without prejudice.

The key issues were: (1) whether a private bank that honors a state tax collection instrument acts “under color of state law” for § 1983 purposes; (2) whether an account “hold” is an “electronic fund transfer” (and potentially “unauthorized”) under the EFTA; and (3) what form a dismissal of state-law claims must take once all federal claims are dismissed.

2. Summary of the Opinion

§ 1983 (state action): Piña failed to plausibly allege that Bank of America was acting under color of state law. Mere compliance with an NYSDTF tax warrant, without plausible allegations of joint action or willful participation in a state scheme, is insufficient.
EFTA: Piña failed to plausibly allege that the tax-related “holds” constituted an “electronic fund transfer,” much less an “unauthorized electronic fund transfer,” within the EFTA’s definitions.
Supplemental jurisdiction: The district court did not abuse its discretion in declining supplemental jurisdiction over state-law claims after dismissing all federal claims.
Modification: Because the district court did not specify the jurisdictional nature of the state-law dismissal, the Second Circuit modified the judgment to specify that the state-law claims were dismissed without prejudice.
Leave to amend: Denial of further leave to amend was proper because amendment would be futile where plaintiff identified no additional facts curing the federal defects.

3. Analysis

A. Precedents Cited

1) Screening, standards of review, and pro se construction

Milan v. Wertheimer, 808 F.3d 961 (2d Cir. 2015): Cited for the proposition that the Second Circuit reviews without deference dismissals under 28 U.S.C. § 1915(e)(2)(B). This standard reinforces that IFP screening dismissals receive full appellate scrutiny on legal sufficiency.
Kolari v. New York-Presbyterian Hospital, 455 F.3d 118 (2d Cir. 2006): Cited for abuse-of-discretion review of the decision to decline supplemental jurisdiction, and for the general rule that a court may decline supplemental jurisdiction after dismissing all claims over which it had original jurisdiction.
Panther Partners Inc. v. Ikanos Communications, Inc., 681 F.3d 114 (2d Cir. 2012): Cited for de novo review of a denial of leave to amend when based on futility—important because the panel treated futility as a legal conclusion.
Sharikov v. Philips Medical Systems MR, Inc., 103 F.4th 159 (2d Cir. 2024): Cited for the rule that a pro se litigant’s filings are interpreted to raise the strongest claims they suggest—underscoring that the dismissal did not turn on technical pleading omissions but on substantive legal deficiencies.

2) State action and § 1983 liability for private actors

Sykes v. Bank of America, 723 F.3d 399 (2d Cir. 2013): Central authority. The panel relied on Sykes for the “close nexus” requirement and the principle that a bank that “did no more than comply” with a government restraint is not thereby acting under color of state law.
Influence on decision: The court treated Piña’s allegations as materially analogous—Bank of America complied with a government instrument (a tax warrant) and that compliance, without more, did not transform it into a state actor.
Ciambriello v. County of Nassau, 292 F.3d 307 (2d Cir. 2002): Cited for the “willful participant in joint activity” standard and, crucially, for the rule that conclusory allegations of acting “in concert” do not suffice.
Influence on decision: Piña’s “willful collaboration” theory failed because he pleaded only conclusions (collusion/conspiracy) and pointed primarily to the bank’s statement that it had to comply—precisely the type of allegation Ciambriello deems inadequate.

3) Supplemental jurisdiction and the “without prejudice” requirement

Green v. Department of Education of City of New York, 16 F.4th 1070 (2d Cir. 2021): Cited for two propositions in the order: (i) dismissal of certain unchallenged issues on appeal as abandoned, and (ii) the jurisdictional principle that dismissals for lack of subject matter jurisdiction must be without prejudice.
Influence on decision: This case supplied the doctrinal basis for the modification: if the federal court is not reaching the merits of state-law claims because it lacks/declines jurisdiction, the dismissal cannot preclude refiling.
United States v. Adams, 955 F.3d 238 (2d Cir. 2020): Cited to confirm the Second Circuit’s power under 28 U.S.C. § 2106 to modify and affirm a judgment—procedural authority for adjusting the form of dismissal without reversing the result.

4) Futility and denial of further leave to amend

Hill v. Curcione, 657 F.3d 116 (2d Cir. 2011): Cited for the proposition that leave to replead may be denied where repleading cannot overcome the defects—supporting the conclusion that Piña had already amended and still did not (and seemingly could not) allege facts establishing state action or an EFTA predicate.

B. Legal Reasoning

1) Why the § 1983 due process theory failed: no plausible “state action”

Section 1983 is aimed at constitutional violations committed “under color of” state law. Because Bank of America is a private entity, Piña had to plead facts showing a sufficiently close nexus between the State and the bank’s conduct—typically by alleging joint action, conspiracy, or willful participation in state conduct.

The court’s reasoning proceeded in two steps:

Compliance is not collaboration. As in Sykes v. Bank of America, the bank’s act of honoring a governmental restraint (there, a restraining notice; here, an NYSDTF tax warrant) is treated as ministerial compliance rather than state action.
Conclusory conspiracy allegations do not satisfy plausibility. Under Ciambriello v. County of Nassau, simply labeling conduct “collusion” or “willful collaboration,” without concrete factual content showing an agreement or joint plan, is insufficient. Piña’s key factual reference—Bank of America’s statement that it was obligated to comply—affirmatively supports the opposite inference: the bank believed it had no discretion.

In short, even if NYSDTF’s warrant were wrongful, the pleaded facts did not make the bank a constitutional wrongdoer under § 1983.

2) Why the EFTA theory failed: the pleaded “hold” is not an “electronic fund transfer”

The EFTA creates rights and remedies around “electronic fund transfers,” including “unauthorized electronic fund transfers.” The panel held that Piña did not plausibly allege that the tax “holds” met the statute’s definitional threshold (citing 15 U.S.C. § 1693a(7), (12)), and therefore he could not invoke EFTA’s error-resolution or liability provisions (15 U.S.C. §§ 1693f, 1693g, 1693m(a)).

The court’s approach is categorical: before debating authorization, notice, investigation duties, or damages, a plaintiff must allege an event that is legally an “electronic fund transfer.” A restraint/hold imposed in response to a tax collection instrument was not plausibly pleaded as such.

3) Supplemental jurisdiction: once federal claims are gone, declining state claims is ordinarily proper

Citing Kolari v. New York-Presbyterian Hospital, the panel treated the post-dismissal posture as a standard situation: with all federal claims dismissed on the pleadings, retaining state-law claims is discretionary and commonly declined. The district court’s failure to restate the supplemental-jurisdiction analysis in its second order did not matter; the Second Circuit read it as an implicit declination.

4) The modification: state-law dismissals must be “without prejudice” when jurisdiction is absent/declined

The most practically significant “new rule-like” feature of the disposition is the correction of the judgment’s form. Because the district court did not specify that the state-law claims were dismissed without prejudice, the panel modified the judgment to make that explicit, relying on Green v. Department of Education of City of New York and its jurisdictional principle: a federal court’s jurisdictional dismissal cannot adjudicate the merits in a manner that bars refiling elsewhere.

The authority to do so without remand came from United States v. Adams and 28 U.S.C. § 2106.

5) Futility: no further leave to amend

The court emphasized that Piña had already been given one opportunity to amend and still did not plead facts suggesting state action or an EFTA-qualifying transfer. Under Hill v. Curcione, denial of further leave is proper when amendment would not cure the core defect.

C. Impact

Reinforcement of the “compliance is not state action” line in financial restraints. Even though this is a nonprecedential summary order, it reflects the Second Circuit’s continued fidelity to Sykes v. Bank of America: financial institutions responding to government collection devices generally do not become § 1983 defendants absent well-pleaded facts showing joint activity beyond compliance.
Front-end gating in EFTA claims. The decision highlights that plaintiffs must plead an event that falls within the EFTA’s statutory definitions before reaching issues like “unauthorized” status or bank duties—discouraging attempts to reframe restraints or legal process as EFTA violations.
Judgment hygiene for state claims. The modification signals careful appellate enforcement of the “without prejudice” requirement when federal courts dismiss or decline jurisdiction over state-law claims. Practically, it protects plaintiffs’ ability to refile in state court and prevents accidental claim-preclusion arguments based on ambiguous judgment language.
Pro se screening remains robust. The case illustrates how § 1915(e)(2)(B) screening, combined with pro se liberal construction (Sharikov), still results in dismissal where the missing element is not detail but a legally required relationship (state action) or statutory predicate (EFTA transfer).

4. Complex Concepts Simplified

“Under color of state law” / “state action”: A constitutional claim under § 1983 generally requires that the defendant be the government or act like the government. A private company can qualify only if it is effectively partnering with the government in the challenged conduct (not merely obeying the law).
“Willful participant in joint activity”: This means more than parallel conduct or compliance. It requires factual allegations indicating an agreement, coordinated plan, or shared objective with state officials in carrying out the alleged deprivation.
28 U.S.C. § 1915(e)(2)(B) screening: When a litigant proceeds in forma pauperis, the court must dismiss the case early if it fails to state a claim (among other grounds), even without a motion from the defendant.
Supplemental jurisdiction: Federal courts may hear related state-law claims along with federal claims, but if the federal claims are dismissed early, the court commonly declines to keep the state-law claims.
“Without prejudice” dismissal: A dismissal “without prejudice” does not decide the merits and allows the plaintiff to bring the claims again in a proper court. This is required when the federal court is not resolving the state-law claims on their merits because it lacks or declines jurisdiction.

5. Conclusion

Piña v. Bank of Am. Corp. affirms three practical propositions in federal pleading practice: (1) a private bank’s compliance with a state-issued collection instrument—without concrete allegations of joint action—does not make the bank a § 1983 state actor; (2) attempts to recast account restraints as EFTA violations fail unless the plaintiff plausibly alleges a qualifying “electronic fund transfer”; and (3) when federal claims drop out and the court declines supplemental jurisdiction, the associated state-law claims must be dismissed without prejudice, a point the Second Circuit enforced by modifying the judgment under 28 U.S.C. § 2106.

Although issued as a nonprecedential summary order, the decision is a clear application of established Second Circuit doctrine—particularly Sykes v. Bank of America and Ciambriello v. County of Nassau—and it underscores the importance of precise judgment language to preserve the proper jurisdictional boundaries between federal and state courts.