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Brown v. ATM Network, Inc.

United States District Court, D. Minnesota

June 10, 2014

Margaret Gawarecki and Anthony Brown, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
ATM Network, Inc., Defendant.

Thomas J. Lyons, Sr., Lyons Law Firm, P.A., Thomas J. Lyons, Jr., Consumer Justice Center, P.A., and Curtis P. Zaun, for Plaintiffs.

David E. Krause and James B. Hovland, Krause & Hovland, Chartered, for Defendant.

MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, District Judge.

I. INTRODUCTION

This matter is before the Court on Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction or, in the Alternative, Failure to State a Claim [Doc. No. 59], and Plaintiffs' Motion for Class Certification [Doc. No. 64]. For the reasons set forth below, the Court denies Defendant's Motion and grants Plaintiffs' Motion.

II. BACKGROUND

Plaintiffs Margaret Gawarecki and Anthony Brown are Minnesota residents. (Am. Compl. [Doc. No. 2] ¶¶ 3-4.) According to Plaintiffs, Defendant ATM Network, Inc. is a Minnesota corporation that sells, leases, installs, maintains, and operates automated teller machines ("ATMs") and, at all times relevant to this action, operated the ATM located at Seven restaurant, 700 Hennepin Avenue, Minneapolis, Minnesota 55403 ("Defendant's ATM" or "the ATM").[1] (See id. ¶¶ 1, 5.)

Plaintiffs allege that they each were illegally charged a transaction fee for using Defendant's ATM. (Id. ¶ 1.) According to the Amended Complaint, Plaintiff Gawarecki used the ATM on December 22, 2010, and was charged a three-dollar fee for withdrawing money. (Id. ¶ 10.) She alleges that there was no prominently-posted notice on the ATM that disclosed that users would be charged a fee. (Id. ¶ 12.) Similarly, Plaintiff Brown alleges that he was charged a three-dollar fee for withdrawing money from Defendant's ATM on July 1, 2011, and that there was no notice of the fee posted in a prominent location on the ATM. (Id. ¶¶ 13-16.)

Plaintiffs filed an Amended Complaint on August 10, 2011, [2] asserting one count against Defendant under the Electronic Fund Transfer Act, 15 U.S.C. § 1693, et seq. ("EFTA") for failing to comply with the EFTA's notice requirements and thereby imposing an illegal fee on Plaintiffs for using the ATM. (See id. ¶¶ 27-31.) They allege that the Court has federal question subject matter jurisdiction under 28 U.S.C. § 1331, and they seek to represent a class of persons who also were allegedly charged an illegal fee by Defendant. (See id. ¶¶ 1-2, 18-25.) Plaintiffs request statutory damages, attorneys' fees, and costs. (Id. at 7-8.) They have waived their claim for actual damages. (Pls.' Mem. of Law in Supp. of Mot. for Class Cert. [Doc. No. 66] ("Pls.' Class Cert. Mem.") at 2 n.1.)

Plaintiffs filed their first motion for class certification on March 1, 2012 [Doc. No. 11], and Defendant filed its first motion to dismiss on August 23, 2012 [Doc. No. 40]. In its motion, Defendant argued that Plaintiffs suffered no injury in fact and, therefore, lacked standing to pursue their claim under the EFTA. (Order dated Oct. 11, 2012 [Doc. No. 49] ("Oct. 11 Order") at 1.) Because the same argument had been accepted by the U.S. District Court for the District of Nebraska in Charvat v. First National Bank of Wahoo, No. 8:12CV97, 2012 WL 2016184 (D. Neb. June 4, 2012), and then appealed by the plaintiff in that case to the Eighth Circuit, this Court stayed all proceedings in this matter pending the Eighth Circuit's ruling. (See Oct. 11 Order at 1-2.) Accordingly, the Court denied the parties' pending motions without prejudice. (Id. at 2-3.) In November 2013, after the Eighth Circuit issued its opinion (in which it found that the plaintiff did have standing), [3] this Court lifted the stay and directed the parties to re-file their respective motions [Doc. No. 58].

III. DEFENDANT'S MOTION TO DISMISS

Defendant now moves to dismiss Plaintiffs' Amended Complaint, pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, for lack of subject matter jurisdiction or failure to state a claim upon which relief may be granted. When evaluating a motion to dismiss under Rule 12(b)(1), the Court must first "distinguish between a facial attack' and a factual attack.'" Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). If the movant presents only a facial attack, the Court must "restrict[] itself to the face of the pleadings, and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6)." Id . (citations omitted). "Dismissal for lack of subject matter jurisdiction will not be granted lightly, " but it will be found proper "when a facial attack on a complaint's alleged basis for subject matter jurisdiction shows there is no basis for jurisdiction." Wheeler v. St. Louis Sw. Ry. Co., 90 F.3d 327, 329 (8th Cir. 1996) (citation omitted).

When evaluating a motion to dismiss under Rule 12(b)(6), the court assumes the facts in the complaint to be true and construes all reasonable inferences from those facts in the light most favorable to the plaintiff. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). However, the court need not accept as true wholly conclusory allegations, see Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir. 1999), or legal conclusions the plaintiff draws from the facts pled, Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). In addition, the court ordinarily does not consider matters outside the pleadings on a motion to dismiss. See Fed.R.Civ.P. 12(d).

To survive a motion to dismiss, a complaint must contain "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although a complaint need not contain "detailed factual allegations, " it must contain facts with enough specificity "to raise a right to relief above the speculative level." Id. at 555. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). In sum, this standard "calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [the claim]." Twombly, 550 U.S. at 556.

Defendant seeks dismissal of Plaintiffs' Amended Complaint under Rules 12(b)(1) and 12(b)(6) on the same grounds-i.e., that the federal statutory provision upon which Plaintiffs' claim is based has been repealed, thereby depriving the Court of federal question subject matter jurisdiction and Plaintiffs of a claim upon which relief can be granted. (Def.'s Mem. in Supp. of Mot. to Dismiss [Doc. No. 61] ("Def.'s Mem.") at 1, 7-8.) Because Defendant presents only a facial attack on the Court's subject matter jurisdiction, both bases for Defendant's motion-12(b)(1) and 12(b)(6)-are governed by the same standard, and the Court will analyze Defendant's arguments accordingly.

When the events giving rise to this lawsuit occurred, EFTA's notice provision stated the following:

(3) Fee disclosures at automated teller machines
(A) In general
The regulations prescribed under paragraph (1) shall require any automated teller machine operator who imposes a fee on any consumer for providing host transfer services to such consumer to provide notice in accordance with subparagraph (B) to the consumer (at the time the service is provided) of-
(i) the fact that a fee is imposed by such operator for providing the service; and
(ii) the amount of any such fee.
(B) Notice requirements
(i) On the machine
The notice required under clause (i) of subparagraph (A) with respect to any fee described in such subparagraph shall be posted in a prominent and conspicuous location on or at the automated teller machine at which the electronic fund transfer is initiated by the consumer.
(ii) On the screen
The notice required under clauses (i) and (ii) of subparagraph (A) with respect to any fee described in such subparagraph shall appear on the screen of the automated teller machine, or on a paper notice issued from such machine, after the transaction is initiated and before the consumer is irrevocably committed to completing the transaction....

15 U.S.C. § 1693b(d)(3)(A)-(B), amended by Act of Dec. 20, 2012, Pub. L. No. 112-216, sec. 1, 126 Stat. 1590. A failure to comply with this provision resulted in liability to the consumer in the form of actual damages and, "in the case of an individual action, an amount not less than $100 nor greater than $1, 000." Id . § 1693m(a)(1)-(2)(A). In the case of a class action, there is no minimum liability as to each class member, and liability to the class is capped at the lesser of $500, 000 or 1 percent of the defendant's net worth. Id . § 1693m(a)(2)(B). In a successful action, the plaintiff is also entitled to costs and a reasonable attorney's fee. Id . § 1693m(a)(3).

On December 20, 2012-after this lawsuit was filed, and while the proceedings were stayed pending the Eighth Circuit's ruling in Charvat-the notice provision was revised to state:

(3) Fee disclosures at automated teller machines
(A) In general
The regulations prescribed under paragraph (1) shall require any automated teller machine operator who imposes a fee on any consumer for providing host transfer services to such consumer to provide notice in accordance with subparagraph (B) to the consumer (at the time the service is provided) of-
(i) the fact that a fee is imposed by such operator for providing the service; and
(ii) the amount of any such fee.
(B) Notice requirement
The notice required under clauses (i) and (ii) of subparagraph (A) with respect to any fee described in such subparagraph shall appear on the screen of the automated teller machine, or on a paper notice issued from such machine, after the transaction is initiated and before the consumer is irrevocably committed to completing the transaction.

15 U.S.C. § 1693b(d)(3). The congressional enactment instituting this change does not state that it is to apply retroactively. See Act of Dec. 20, 2012, Pub. L. No. 112-216, sec. 1, 126 Stat. 1590. Even so, Defendant argues that the new language should apply to Plaintiffs' claim because a law that abolishes a penalty is effective upon enactment, Plaintiffs had no vested right in their claim, and the legislative intent in enacting the change was to preclude cases such as this. (Def.'s Mem. at 11.)

"Retroactivity is not favored in the law." Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988). Thus, when considering whether a statutory provision applies retroactively, a court:

must determine first whether the statute evinces any clear expression of congressional intent on the application of the statute to cases arising before its enactment.... If [the court] cannot find any clear congressional intent, [it] must consider whether the new statute would have a true retroactive effect, i.e., "whether it would impair rights a party possessed when he acted, increase a party's liability for past conduct, or impose new duties with respect to transactions already completed." If [the court] find[s] that the statute would have a true retroactive effect, the "traditional presumption teaches that it does not govern" in cases that arose before the statute became effective.

Maitland v. Univ. of Minn., 43 F.3d 357, 361 (8th Cir. 1994) (quoting Landgraf v. USI Film Prods., 511 U.S. 244, 280 (1994)) (internal citations omitted). Here, as Defendant concedes, the legislation enacting the new EFTA notice provision does not expressly state that it applies to cases that arose prior to its enactment. (See Def.'s Mem. at 15.) Therefore, the Court must consider whether the new provision would have a "true retroactive effect" if applied to Plaintiffs' claim.

There are two main cases upon which this Court will rely for guidance. In the first case, Charvat v. Mutual First Federal Credit Union, the Eighth Circuit analyzed whether a plaintiff who alleged a violation of the EFTA had standing to bring his claim. 725 F.3d 819, 821 (8th Cir. 2013). The ATM transactions upon which the plaintiff's claim was based occurred in "early 2012." Id . The plaintiff alleged that he received an on-screen notice of the transaction fee, but that there was no on-machine notice. Id . While the question of retroactive application of the new EFTA notice provision was not before the court, the court did implicitly address the issue at multiple points in its August 2013 opinion:

... At the time [the plaintiff] completed the transactions, the EFTA required ATM operators to provide two forms of notice, one "on or at" the ATM ("on machine" notice) and another on-screen during the transaction, if operators charged a transaction fee. See § 1693b(d)(3)(B)(i)-(ii), amended by Act of Dec. 20, 2012, Pub. ...

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