By Jorge Casuso

City officials have vowed to continue the legal battle to defend Santa Monica's pioneering ban on ATM surcharges after the Ninth District Court of Appeals on Friday upheld a district court decision to block enforcement of the city's ordinance while the case is pending.

However, in a one-page ruling, the appeals court justices stressed the limited nature of their review of preliminary injunctions and did not discuss the validity of the city's ordinance, which bans the double fee imposed by banks on non-customers using their ATMs.

The injunction will continue in effect until the district court enters a final judgement.

"Today's ruling does not address the legal issues in this case," said Deputy City Attorney Adam Radinsky. "The district court will have to reach a final judgement on the legality of the ordinances before the Ninth Circuit will address the question.

"We are confident that federal law is on our side," Radinsiky said, "and that it allows cities and states to protect their consumers from unfair and outrageous banking practices such as the ATM surcharge."

Friday's ruling covers both Santa Monica, whose City Council approved the nation's first ATM surcharge ban in October, and San Francisco, where voters approved the same ordinance the following month.

Shortly after San Francisco passed its ordinance in November, a federal judge blocked enforcement of the Santa Monica and San Francisco laws, ruling that the cities do not have the power to prohibit banks from charging customers an extra fee.

While the banks were allowed to continue to collect the fees, the judge ordered the money to be held in escrow pending final resolution of the case.

In the November decision, U.S. District Judge Vaughn Walker ruled that bans cannot be applied to "national banks," such as Wells Fargo and Bank of America, since they are preempted by federal law.

The Santa Monica City Attorney had argued that the 1978 Electronic Funds Transfer Act gives cities powers to protect consumers in the area of ATMs. The judge disagreed, saying that the EFTA does not allow cities to set the amount of the fees, which average about $1.50 per transaction.

Santa Monica's law fueled a nationwide movement, with local governments as far flung as Miami, New York, New Orleans and Los Angeles exploring similar bans.

It also triggered a counter attack by California's two largest banks - Wells Fargo and Bank of America - which stopped allowing non-customers to use the 33 ATMs they operate in the city.

"The court just told us we couldn't yet enforce our law, a decision the city made voluntarily back in November," said Councilman Kevin McKeown. "Wells Fargo and Bank of America could have opened their ATMs to non-customers the whole time but chose to strong arm Santa Monica instead. The underlying legal issue of our ability to protect consumers locally comes next."

No trial date has been set in the district court.