Schertzer v. Bank of Am., N.A.

Jae Kook Kim, Todd D. Carpenter, Carlson Lynch, LLP, San Diego, CA, Jeffrey Douglas Kaliel, Sophia Goren Gold, Kaliel PLLC, Washington, DC, for Plaintiffs.

Amanda Leigh Groves, Winston & Strawn LLP, San Francisco, CA, Shawn Rieko Obi, Winston & Stawn LLP, Los Angeles, CA, for Defendant Bank of America, N.A.

David A. Vogel, Douglas P. Lobel, Cooley LLP, Reston, VA, Leo P. Norton, Michelle C. Doolin, Cooley Godward Kronish LLP, San Diego, CA, for Defendant Cardtronics, Inc.

Benjamin Taliaferro Morton, Jeffrey D. Cawdrey, Kristen Sweaney McLeod, Shelby Poteet, Yan Ren, Gordon Rees Scully Mansukhani, San Diego, CA, for Defendant FCTI, Inc.

Eileen M. Ahern, Willenken LLP, Los Angeles, CA, for Defendant Cash Depot LTD.

ORDER ON MOTIONS TO DISMISS

Hon. Jeffrey T. Miller, United States District Judge

I. INTRODUCTION

Plaintiffs Kristen Schertzer, Meagan Hicks and Brittany Covell have brought

this putative class action case, on behalf of themselves and all others similarly situated, against Bank of America, N.A., Cardtronics Inc., ATM National, LLC. FCIT, Inc., and Cash Depot Ltd. (collectively "Defendants") essentially claiming deceptive, misleading, and unwarranted practices have been employed in the charging and collecting of bank balance inquiry and transaction fees.

Presently before the court are five motions to dismiss filed pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2) and 12(b)(6). (Doc. Nos. 59, 60, 61, 66, 68.) The motions have been fully briefed and the court finds them suitable for submission on the papers and without oral argument in accordance with Civil Local Rule 7.1(d)(1). For the reasons set forth below, Defendants' motions are granted with leave to amend.

II. PROCEDURAL AND FACTUAL BACKGROUND

On February 5, 2019, Plaintiffs initiated this proposed (or putative) class action by filing suit. (Doc. No. 1.) On May 31, 2019, a second amended complaint ("SAC") was filed alleging original jurisdiction under the Class Action Fairness Act of 2005 and, specifically under 28 U.S.C. § 1332(d)(2) and setting forth a total of thirteen¹ claims against the defendants individually and collectively. (Doc. No. 56, "SAC".) Combined, the claims are for: (1) violation of California's Unfair Competition Law ("UCL"), CAL. BUS. & PROF. CODE § 17200, et seq ; (2) conversion; (3) negligence; (4) violation of the California's False Advertising Law ("FAL"), CAL. BUS. & PROF. CODE § 17500, et seq ; (5) violation of the California Consumer Legal Remedies Act ("CLRA"), CAL. CIV. CODE § 1770, et seq ; (6) breach of contract; and (7) breach of the covenant of good faith and fair dealing. (Id. at 58-78.)

The allegations in the complaint center around three distinct categories. First, Plaintiffs allege a scheme by Bank of America ("BofA") to charge its customers unwarranted fees for using out-of-network ("OON") Automatic Teller Machines ("ATMs") for balance inquiries. (SAC at ¶ 1, 8-11, 77, 88, 113, 114, 125-.) Second, Plaintiffs assert that the independent ATM operators Cardtronics, Cash Depot and FCTI (collectively, the "ATM Defendants") made deceptive and misleading representations on the screens and on signs at ATMs they operate regarding the fees that would be charged for balance inquiries. (Id. ¶¶ 1, 9, 12-15, 33-45, 46-79, 86-124, 125-161.) Third, Plaintiff Schertzer alleges the fees BofA charges for International Transactions are in violation of the governing account documents. (SAC at ¶¶ 1, 16-22, 162-181.)

Attached to the SAC are the Deposit Agreement and Disclosures (Doc. No. 56-1, Ex.1 "The Agreement") and the Personal Schedule of Fees (Doc. No. 56-2, Ex.2 "Fee Schedule"). No party disputes that these are the contract documents between BofA and the Plaintiffs. The electronic bank services fee provision of the Agreement provides:

ATM Fees When you use an ATM that is not prominently branded with the Bank of America name and logo, you may be charged a fee by the ATM operator or any network used and you may be charged a fee for a balance inquiry even if you do not complete a fund transfer. We may also charge you fees.

Other Fees For other fees that apply to electronic banking services, please review the Schedule of Fees for your account and each agreement or disclosure

that we provide to you for the specific electronic banking service, including the separate agreement for Online and Mobile Banking services and the separate agreement for ATM and debit cards.

Id. at 35. The Fee Schedule that was in effect beginning May 18, 2018, allows for the following ATM fees:

 Fee Category Fee Name/Description Fee Other Important Information About
 This Fee
 Amount
 ATM Fees Withdrawals, deposits, transfers, No TM fee • Deposits and payments may not be
 payments and balance inquiries at available at some ATMs
 Bank of America a Bank of America ATM Transaction fees may apply to
 ATM — an ATM some accounts. See account
 that prominently descriptions in this schedule
 displays the Bank Non-Bank of America ATM Fee $2.50 each • When you use a non-Bank of
 of America name for: America ATM, you may also be
 and logo on the charged a fee by the ATM operator
 ATM Withdrawals, transfers and or any network used and you may
 balance inquiries at a non-Bank of be charged a fee for a balance
 Non-Bank of America ATM in the U.S. inquiry even if you do not complete
 America ATM — a funds transfer
 an ATM that • The non-Bank of America ATM
 does not fees do not apply at some ATMs
 prominently located outside the United States
 display the Bank • See the disclosure information that
 of America name accompanied your card for other
 and logo on the fees that may apply.
 ATM • Non-Bank of America ATM fees
 are in addition to other account fees
 that may apply to the transaction,
 such as a Withdrawal Limit Fee for
 savings.
 • Preferred Rewards Platinum
 customers using a Bank of America
 Debit or ATM card are not charged
 the non-Bank of America ATM fee
 for one withdrawal, transfer and
 balance inquiry per statement cycle
 from a non-Bank of America ATM
 in the U.S., and receive a refund of
 the ATM operator fee for one
 withdrawal, transfer and balance
 inquiry per statement cycle from a
 no-Bank of America ATM in the
 U.S.
 • Preferred Rewards Platinum
 Honors customers using a Bank of
 America Debit or ATM card are not
 charged the non-Bank of America
 ATM fee for withdrawals, transfers
 and balance inquiries from non-Bank
 of America ATMs in the U.S.
 and receive a refund of the ATM
 operator fee for withdrawals,
 transfers and balance inquiries
 from non-Bank of America ATMs
 in the U.S.

Fee Schedule at 10.

Additionally, the Fee Schedule provides the following information regarding International Transaction Fees:

Id. at 9.

On June 1, 2018, Plaintiff Schertzer used her BofA ATM Payment Card at a Cardtronics ATM located at 817 West Washington Street, San Diego, California, 92103, to withdraw $60, for which she was charged a total of $8.75 in fees – $3.75 cash withdrawal fee by Cardtronics, $2.50 OON fee by BofA for making a balance inquiry and $2.50 by BofA for making a cash withdrawal. (SAC at ¶ 182.) Ms. Schertzer is only challenging the fee for the balance inquiry. (Id. ) On May 29, 2018, Plaintiff Covell used her BofA ATM Debit Card at a FCTI ATM at a Seven Eleven (7-11) convenience store located at 592 Santa Fe Drive, Encinitas, California to withdraw $20, for which she was charged a total of $10.50 in fees – $3.00 cash withdrawal fee by FCTI, $2.50 OON fee by BofA for making a balance inquiry, and $2.50 by BofA for making a cash withdrawal, and a second balance inquiry fee from BofA. (Id. at ¶ 183.) Ms. Covell is challenging the two balance inquiry fees charged by BofA. On June 2, 2018, Plaintiff Hicks, a BofA account holder, withdrew $20 from a Cash Depot ATM in Walmart located at 4840 Shawline Street, San Diego, California, 92111, for which she was charged a total of $7.00 in fees – $2.50 cash withdrawal fee by Cash Depot, $2.50 fee by BofA for making a balance inquiry and $2.50 by BofA for making a cash withdrawal. (Id. at ¶ 185.) Ms. Hicks is only challenging the balance inquiry fee. (Id. )

Plaintiff Schertzer seeks to represent the "California Cardtronics Class" and the "National Cardtronics Class." (Id. at 51-52.) Plaintiff Covell seeks to represent the "California FCTI Class" and the "National FCTI Class" (Id. at 52.) Plaintiff Hicks seeks to represent the "California Cash Depot Class" and the "National Cash Depot Class." (Id. ) Each of these classes consists of:

All holders of a checking account in California who, within the applicable statute of limitations preceding the filing of this lawsuit, were assessed one or more fees for purportedly undertaking a balance inquiry as part of a cash withdrawal at a [ATM Defendant Name] ATM (the "California [ATM Defendant Name] Class")

All holders of a checking account in California who, within the applicable statute of limitation preceding the filing of this lawsuit, were assessed one or more fees for purportedly undertaking a balance inquiry as part of a cash withdrawal at a [ATM Defendant Name] ATM (the "National [ATM Defendant Name] Class")

Id. at 51-52. All three Plaintiffs seek to represent a Nationwide...