Page v. Alliant Credit Union

52 F.4th 340

Alicia M. PAGE, Plaintiff-Appellant,

v.ALLIANT CREDIT UNION, Defendant-Appellee.

No. 21-1983

United States Court of Appeals, Seventh Circuit.

Argued September 14, 2022

Decided October 25, 2022

Taras Kick, Attorney, Kick Law Firm, APC, Los Angeles, CA, Matthew Wessler, Attorney, Gupta Wessler PLLC, Washington, DC, Neil Sawhney, Attorney, Gupta Wessler, San Francisco, CA, for Plaintiff-Appellant.

Charles DeVore, Attorney, Katten Muchin Rosenman LLP, Chicago, IL, Stuart M. Richter, Attorney, Katten Muchin Rosenman LLP, Los Angeles, CA, Eric Thomas Werlinger, Attorney, Katten Muchin Rosenman LLP, Washington, DC, for Defendant-Appellee.

Before Easterbrook, Rovner, and St. Eve, Circuit Judges.

St. Eve, Circuit Judge.

Alicia Page sued Alliant Credit Union on behalf of herself and other similarly situated customers, alleging that Alliant charged fees in violation of its contract. The district court dismissed Page's claim because, on its reading of the contact, Alliant's fee practices did not breach the contract. Although our reasoning differs slightly from the district court's, we reach the same conclusion and affirm.

I. Background

Alliant Credit Union is a credit union organized under Illinois law that does business exclusively over the internet. Alliant serves a nationwide customer base that included, during the relevant period, Alicia Page, a citizen of New Jersey. Like many banks and credit unions, Alliant charges a nonsufficient fund ("NSF") fee when it rejects an attempted debit because an account lacks sufficient funds to cover the transaction.¹ This appeal concerns the methods that Alliant can use, pursuant to its contact, to determine whether to assess an NSF fee and how many NSF fees Alliant may charge based on a single transaction by a customer. Page argues that the contract requires Alliant to assess fees using the "ledger-balance method," while Alliant contends that the contract permits it to use the "available-balance method."²

A. The Ledger Balance and Available Balance

There are two basic ways to calculate an account balance for purposes of determining whether it has sufficient funds. The ledger-balance method calculates the balance based on posted debits and deposits. The ledger balance does not incorporate transactions until they are settled. The available-balance method, by contrast, calculates a customer's balance by considering holds on deposits and transactions that have been authorized but not yet settled.

To illustrate the difference, suppose an Alliant customer with $500 in his checking account goes to the mall. He pays a merchant $300 using his debit card. Alliant authorizes the payment, but the transaction is not immediately posted. The customer then uses his debit card to pay a second merchant another $300. Under the ledger-balance method, he would have sufficient funds for the second transaction because the first has not yet posted. But under the available-balance method, the $300 authorization would leave an available balance of $200—insufficient funds for the second transaction.

B. Page's Contract with Alliant

Page believes that her contract with Alliant requires the credit union to use the ledger-balance method when assessing NSF fees and permits only one NSF fee per transaction. She alleges that on January 4, 2017, Alliant charged her a $25 NSF fee when she attempted to pay a $6,000 bill even though her account's ledger balance was $6,670.94. On January 12, 2017, Page alleges that Alliant charged multiple NSF fees "for the same item." Alliant breached its contract, Page argues, when it charged her these fees.

The parties agree that the November 2013 Account Agreement (the "Agreement") applies. It provides, in relevant part:

7. TRANSACTION LIMITATIONS.

a. Withdrawal Restrictions. We permit withdrawals only if your account has sufficient available funds to cover the full amount of the withdrawal or you have an established overdraft protection plan. Checks or other transfer or payment orders which are drawn against insufficient funds may be subject to a service charge as set forth in the Fee Schedule. If there are sufficient funds to cover some, but not all, of your withdrawal, we may allow those withdrawals for which there are sufficient funds in any order at our discretion. ...

8. OVERDRAFTS.

a. Overdraft Liability. If on any day, the funds in your savings account are not sufficient to cover checks, fees or other items posted to your account, those amounts will be handled in accordance with our overdraft procedures or by one of the overdraft protection plans outlined below. Alliant's determination of an insufficient account balance may be made at any time between presentation and our midnight deadline with only one review of the account required. We do not have to notify you if your account does not have funds to cover checks, ACH debits, debit card transactions, fees or other posted items. Whether the item is paid or returned, your account may be subject to a charge as set forth in the Fee Schedule. ...

b. Overdraft Protection Plan. If you have applied for and we have approved the Overdraft Protection plan for your account, we will honor checks, ACH debits, and Point-of-Sale (POS) and signature-based debit card transactions drawn on insufficient funds by transferring funds from another account under this Agreement or a loan account, as you have directed, or as required under Alliant's Overdraft Protection policy subject to the Overdraft Transfer Fee as set forth in the Fee Schedule or per the terms of your applicable loan account. ... If the amount of the item presented for payment exceeds the total of all available overdraft sources, the item will be returned as non-sufficient funds (NSF) and you will be charged applicable fees. This Agreement governs all overdraft transfers, except those governed by agreements for loan accounts.

(emphasis added). The Fee Schedule provides for a $25 "Non-sufficient Fund Item (each )." The Governing Law provision states: "This Agreement is governed by Alliant's bylaws, federal laws and regulations, the laws, including applicable principles of contract law and regulations in the State of Illinois, and local clearinghouse rules, as amended from time to time."

C. Procedural History

Page filed this putative class action in federal district court on behalf of herself and similarly situated Alliant customers she alleges were improperly charged NSF fees. Page asserted a federal claim under the Electronic Fund Transfers Act, 15 U.S.C. §§ 1693 – 1693r, and several state law claims including breach of contract, which is the only claim at issue on appeal.

Page advanced two theories to support her breach-of-contract claim. Under the account-balance theory, Page alleged that the Agreement unambiguously prohibits Alliant from charging NSF fees when an account has sufficient funds under the ledger-balance method. Her multiple-fees theory argued that the Agreement unambiguously prohibits Alliant from charging multiple NSF fees when a merchant repeatedly attempts to debit an account with insufficient funds. In the alternative, Page argued that the Agreement was ambiguous and that discovery was necessary to determine the intent of the contracting parties.

The district court granted Alliant's motion to dismiss. See Fed. R. Civ. P. 12(b)(6). First, the court rejected Page's account-balance theory, explaining that "the plain, unambiguous language states that a member needs sufficient available funds" and reasoning that Page's proposed reading would render § 7(a)'s use of the word "available" meaningless. The court distinguished an Eleventh Circuit case holding a similar contract was ambiguous because the contract at issue in that case did not contain the word "available" in proximity to "sufficient funds."

Second, the court rejected the multiple-fees theory. Section 8(a) states that when a transaction without sufficient funds occurs, "your account may be subject to a charge," indicating a singular fee per transaction made by the customer. The court held, however, that this interpretation would be inconsistent with § 8(b), which provides: "If the amount of the item presented for payment exceeds the total of all available overdraft sources, the item will be returned as non-sufficient funds (NSF) and you will be charged applicable fees." The plural "fees," the court concluded, permitted Alliant to charge multiple fees when a merchant presented the same transaction to Alliant more than once.

The district court dismissed the case with prejudice. Page appealed.

II. Discussion

A. Jurisdiction

As a court of limited jurisdiction, we have an obligation to ensure that a case is properly in federal court before reaching the merits. Helbachs Café LLC v. City of Madison , 46 F.4th 525, 529 (7th Cir. 2022). The Class Action Fairness Act of 2005 ("CAFA") provides federal district courts with original jurisdiction over "any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which—(A) any member of a class of plaintiffs is a citizen of a State different from any defendant ...." 28 U.S.C. § 1332(d)(2). Page, a New Jersey citizen, brought this putative class action against Alliant, an Illinois citizen, and she alleges that, in the aggregate, there is more than $5,000,000 in controversy. So CAFA's jurisdictional requirements appear to be satisfied.

But CAFA requires a district court to abstain from exercising jurisdiction over some actions that meet its requirements. At issue here is what we call the "home-state controversy" exception to CAFA jurisdiction. "A district court shall decline to exercise jurisdiction" if "(B) two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed." § 1332(d)(4). Because this action asserts claims under Illinois law and Illinois law primarily protects...