McGhee v. North American Bancard, LLC

Filing 186

ORDER Denying Defendant's Motion to Strike Plaintiffs' Class Action Allegations (Doc. No. 175 . Signed by Judge Anthony J. Battaglia on 2/25/2022. (All non-registered users served via U.S. Mail Service)(jrm)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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JUNE BENNETT, on
behalf of herself and all others
similarly situated, and GERALD
MCGHEE,

Case No.: 17-cv-00586-AJB-KSC
ORDER DENYING DEFENDANT’S
MOTION TO STRIKE PLAINTIFFS’
CLASS ACTION ALLEGATIONS
(Doc. No. 175)

Plaintiffs,

v.
NORTH AMERICAN BANCARD, LLC,
Defendant.

Presently before the Court is Defendant North American Bancard, LLC’s (“NAB”)
motion to strike class allegations. (Doc. No. 175.) The motion has been fully briefed, (Doc.
Nos. 184, 185), and the matter is suitable for determination on the papers. For the reasons
set forth below, the Court DENIES the motion to strike Plaintiffs June Bennett and Gerald
McGhee’s (“Plaintiffs”) class allegations.
I.

BACKGROUND
Plaintiffs bring this putative class action on behalf of consumers who NAB allegedly

improperly charged undisclosed monthly fees in connection with its credit card processing
service and products. (First Amended Complaint (“FAC”), Doc. No. 156, ¶ 1.) NAB offers
a “Pay-As-You-Go” credit card processing service, which was advertised as a free service
with no setup, monthly, or hidden fees. (Id. at ¶ 2.) Plaintiffs were two of NAB’s Pay-As1
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You-Go customers who were charged multiple fees in the form of a $3.99 per month

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“inactivity” fee. (Id. ¶ 3.) NAB automatically began withdrawing these inactivity fees from

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its customers’ bank accounts in 2015. (Id. ¶ 23.) To date, NAB has not refunded any of the

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inactivity fees withdrawn from Plaintiffs’ bank accounts. (Id. ¶ 16.)

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Plaintiff McGhee filed the original complaint in this Court in March 2017. (Doc No.

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1.) NAB then filed a motion to dismiss and/or strike class action claims and related

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allegations on August 27, 2019 (Doc. No. 60), which was denied (Doc. No. 70). Plaintiffs

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thereafter filed a motion to certify the class in October 2020 (Doc. No. 84), which the Court

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denied without prejudice, (Doc. No. 126). On October 1, 2021, Plaintiffs filed the FAC,

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which added Bennett as a plaintiff. (See FAC.) On January 7, 2022, Plaintiffs filed a second

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motion to certify class, which is still pending before this Court. (Doc. No. 165.) On

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February 2, 2022, NAB filed the instant motion to strike class action claims. This order

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follows.

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II.

LEGAL STANDARD

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Under Federal Rule of Civil Procedure 12(f), the court may “strike from a pleading

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an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.”

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Fed. R. Civ. P. 12(f). A Rule 12(f) motion functions “to avoid the expenditure of time and

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money that must arise from litigating spurious issues by dispensing with those issues prior

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to trial . . . .” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010)

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(internal citation and quotations omitted). Rule 12(f) motions to strike are generally

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regarded with disfavor because of the limited importance of pleading in federal practice,

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and because they are often used as a delay tactic. See Cal. Dept. of Toxic Substances

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Control v. Alco Pac., Inc., 217 F. Supp. 2d 1028, 1033 (C.D. Cal. 2002). Motions to strike

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are generally not granted unless the matter sought to be stricken could have no possible

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bearing on the subject matter of the litigation. In re Wal-Mart Stores, Inc. Wage & Hour

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Litig., 505 F. Supp. 2d 609, 614 (N.D. Cal. 2007). Any doubt concerning the import of the

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allegations to be stricken weighs in favor of denying the motion to strike. Id.

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Moreover, “[d]ismissal of a class at the pleading stage is rare because ‘the class

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determination generally involves considerations that are enmeshed in the factual and legal

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issues comprising the plaintiff’s cause of action.’” Mirkarimi v. Nev. Prop. 1 LLC, No.

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12cv2160-BTM-DHB, 2013 WL 3761530, at *4 (S.D. Cal. July 15, 2013) (quoting Gen.

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Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 160 (1982)). Thus, although a defendant is not

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prohibited from moving to strike class allegations before the motion for class certification,

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courts often decline to grant such motions “because the shape and form of a class action

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evolves only through the process of discovery.” Simpson v. Best W. Int’l, Inc., No. 3:12-

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cv-4672-JCS, 2012 WL 5499928, at *9 (N.D. Cal. Nov. 13, 2012) (internal citation and

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quotations omitted). In rare circumstances, class allegations may be struck prior to

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discovery where “the complaint demonstrates that a class action cannot be maintained on

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the facts alleged.” Sanders v. Apple Inc., 672 F. Supp. 2d 978, 990 (N.D. Cal. 2009)

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III.

DISCUSSION

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NAB moves to strike the class allegations pursuant to Rule 12(f). Under that rule, a

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court may act sua sponte, or NAB must file a motion to strike a pleading or portion thereof

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either before responding to the pleading, or, if a response is not allowed, within twenty-

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one days after the relevant pleading is served. Fed. R. Civ. P. 12(f).

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First, several courts within this Circuit have held that Rule 12(f) is an improper

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vehicle for dismissing class claims and should rather be addressed through Rule 23. See

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Meyer v. Nat’l Tenant Network, Inc., 10 F. Supp. 3d 1096, 1103–04 (N.D. Cal. 2014).

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Moreover, while class allegations can be stricken at the pleadings stage if the claim could

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not possibly proceed on a classwide basis, “it is in fact rare to do so in advance of a motion

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for class certification.” Cholakyan v. Mercedes-Benz USA, LLC, 796 F. Supp. 2d 1220,

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1245 (C.D. Cal. 2011). Additionally, although there is some inconsistency within this

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Circuit, the Court agrees that “a class action is a procedural device, not a claim for relief.”

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See Morrelli v. Corizon Health, Inc., No. 1:18-cv-1395-LJO-SAB, 2019 WL 918210 (E.D.

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Cal. Feb. 25, 2019), at *12 (finding it inappropriate to either dismiss class allegations under

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Rule 12(b)(6) or strike them under Rule 12(f)); Meyer, 10 F. Supp. 3d at 1103–04 (denying
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Defendant’s motion to dismiss and/or strike class action allegations because such

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arguments are better appropriately addressed through Rule 23),

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Next, it would be inappropriate against this procedural backdrop to allow NAB to

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seek certification-related relief now under Rule 12(f). As an initial matter, NAB’s motion

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is untimely. Here, the relevant pleading is Plaintiffs’ FAC, which was filed on October 1,

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2021. (See Doc. No. 156.) NAB filed its answer on October 22, 2021, so the motion to

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strike (filed in February 2022) comes three months too late. NAB’s only response to

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Plaintiff’s timeliness objection is to note that “cases disfavoring a motion to strike are

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inapplicable where, as here, it is undisputed that extensive discovery has already been

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completed.” (Doc. No. 185 at 8.) However, NAB fails to cite case law in support of this

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contention. Moreover, this case has been pending for approximately five years, NAB has

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already answered the FAC, and Plaintiff has already filed a motion for class certification.

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To the extent NAB believes class certification is inappropriate, it will have a full and fair

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opportunity to make its case when it opposes Plaintiff’s certification motion.

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Lastly, under Rule 12(f)(1), the court may strike material from a pleading “on its

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own” at any time, but this provision is obviously inapplicable here because the Court is not

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acting sua sponte—it is addressing a motion filed by NAB.
Accordingly, the Court DENIES NAB’s motion to strike Plaintiffs’ class

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allegations.

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IV.

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CONCLUSION
For the reasons set forth above, the Court DENIES Defendant’s motion to strike

Plaintiffs’ class allegations. (Doc. No. 175.)

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IT IS SO ORDERED.
Dated: February 25, 2022

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