Smith v. Bank of Hawaii et al

Filing 180

ORDER OVERRULING IN PART AND SUSTAINING IN PART OBJECTIONS, AND ADOPTING IN PART AND REJECTING IN PART MAGISTRATE JUDGE'S FINDINGS AND RECOMMENDATION, ECF NO. 151 - Signed by CHIEF JUDGE J. MICHAEL SEABRIGHT on 6/28/2019. For the foregoing reasons, the court ADOPTS IN PART and REJECTS IN PART the January 30 F&R. The objections are OVERRULED IN PART and SUSTAINED IN PART. IT IS SO ORDERED.(jo)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII

RODNEY SMITH, individually and on
behalf of all others similarly situated,
Plaintiff,
vs.
BANK OF HAWAII,

CIV. NO. 16-00513 JMS-WRP
ORDER OVERRULING IN PART
AND SUSTAINING IN PART
OBJECTIONS, AND ADOPTING IN
PART AND REJECTING IN PART
MAGISTRATE JUDGE’S FINDINGS
AND RECOMMENDATION, ECF
NO. 151

Defendant.

ORDER OVERRULING IN PART AND SUSTAINING IN PART
OBJECTIONS, AND ADOPTING IN PART AND REJECTING IN PART
MAGISTRATE JUDGE’S FINDINGS AND RECOMMENDATION,
ECF NO. 151
I. INTRODUCTION
Defendant Bank of Hawaii (“BOH”) objects under 28 U.S.C.
§ 636(b)(1) and Local Rule 72.4 to the January 30, 2019 Findings and
Recommendation of Magistrate Judge Richard L. Puglisi to Grant in Part and Deny
in Part Plaintiffs’ Motion for Class Certification, ECF No. 151 (“January 30
F&R”). ECF No. 155.
Based on the following, the court OVERRULES IN PART and
SUSTAINS IN PART the objections, and ADOPTS IN PART and REJECTS IN
PART the January 30 F&R.

II. BACKGROUND
A.

Factual Background
The court assumes a familiarity with prior orders, which set forth

detailed factual backgrounds to this action. See Smith v. Bank of Haw., 2017 WL
3597522 (D. Haw. Apr. 13, 2017) (“Smith I”) (denying BOH’s Motion to
Dismiss); Smith v. Bank of Haw., 2018 WL 1662107 (D. Haw. Apr. 5, 2018)
(“Smith II”) (granting in part and denying in part BOH’s first Motion for Summary
Judgment); Smith v. Bank of Haw., 2019 WL 404423 (D. Haw. Jan. 31, 2019)
(“Smith III”) (denying BOH’s second Motion for Summary Judgment).
Smith seeks to certify two classes: (1) The Sufficient Funds Class and
(2) The Regulation E Class. ECF No. 131-1 at PageID #2563. The Sufficient
Funds Class is “[a]ll persons who have or have had accounts with BOH who
incurred overdraft fees for transactions when the real balance in the checking
account was sufficient to cover the transactions from September 9, 2015, through
September 30, 2017.” Id. The Regulation E Class is “[a]ll persons who have or
have had accounts with BOH who incurred overdraft fee(s) for ATM or
nonrecurring debit card transactions occurring from September 9, 2015, through
September 30, 2017, who were opted-in using an Opt-in Agreement that defined an

2

overdraft as ‘when you do not have enough money in your account to cover a
transaction, but we pay it anyway.’” Id.
B.

Procedural History
Smith filed his Complaint and First Amended Complaint (“FAC”) in

the First Circuit Court of the State of Hawaii on September 9 and 13, 2016,
respectively. ECF No. 1-1 at 1, 35. BOH removed the action to federal court on
September 19, 2016. ECF No. 1. The FAC includes six causes of action: (1)
violation of Hawaii Revised Statutes (“HRS”) Chapter 480 for unfair or deceptive
acts or practices (“UDAP”); (2) breach of contract; (3) breach of the covenant of
good faith and fair dealing; (4) unjust enrichment; (5) money had and received; and
(6) violation of Electronic Funds Transfer Act (“EFTA”) for noncompliance with
Regulation E. ECF No. 1-1.
On October 22, 2018, Smith filed his Motion for Class Certification.
ECF No. 131. On December 18, 2018, BOH filed its Opposition, ECF No. 146,
and on January 22, 2019, Smith filed his Reply, ECF No. 150. On January 30,
2019, Magistrate Judge Puglisi issued the January 30 F&R. ECF No. 151. BOH
filed its Objection to the January 30 F&R on February 13, 2019. ECF No. 155.
Smith filed his Opposition to the Objection on February 27, 2019. ECF No. 157.

3

A hearing was held on April 15, 2019. The court requested
supplemental briefing on EFTA detrimental reliance, ECF No. 165. On April 29,
2019, BOH filed its Supplemental Memorandum, ECF No. 168, and Smith filed
his Supplemental Memorandum, ECF No. 169 (corrected version, ECF No. 171).1
III. STANDARD OF REVIEW
When a party objects to a magistrate judge’s findings or
recommendations, the district court must review de novo those portions to which
the objections are made and “may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate judge.” 28 U.S.C.
§ 636(b)(1); see also United States v. Raddatz, 447 U.S. 667, 673 (1980); United
States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (“[T]he
district judge must review the magistrate judge’s findings and recommendations de
novo if objection is made, but not otherwise.”).
On May 6, 2019, BOH filed its “Motion to Strike Section I of Plaintiffs’ Supplemental
Memorandum Re Class Action [ECF No. 171] and Exhibits A and B [ECF Nos. 171-2, 171-3]”
(“Motion to Strike”), arguing that Smith’s Section I and Exhibits A & B exceeded the scope
allowed for supplemental briefing. ECF No. 172. On May 7, 2019, Smith filed his Objection to
the Motion to Strike, arguing that BOH’s Motion to Strike was improperly filed and that it also
failed on the merits. ECF No. 173. The court finds that the Motion to Strike was properly filed
and that Smith’s Section I and the two exhibits exceed the scope allowed for supplemental
briefing. The court allowed supplemental briefing on the narrow questions of: (1) whether a
detrimental reliance requirement precludes class certification for an EFTA claim for actual
damages, and (2) if so, whether an EFTA claim for statutory damages could still be class
certified. See 4/15/19 Tr. at 4-10, ECF No. 167 at PageID #3787-93. Accordingly, the court
GRANTS the Motion to Strike, ECF No. 172, and does not consider Section I of Smith’s
supplemental brief or the attached Exhibits A & B in deciding this order.
1

4

Under a de novo standard, this court reviews “the matter anew, the
same as if it had not been heard before, and as if no decision previously had been
rendered.” Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006); United
States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988). The district court need not
hold a de novo hearing; however, it is the court’s obligation to arrive at its own
independent conclusion about those portions of the magistrate judge’s findings or
recommendation to which a party objects. United States v. Remsing, 874 F.2d 614,
618 (9th Cir. 1989).
IV. DISCUSSION
A plaintiff moving to certify a class has the burden of showing that
the proposed class satisfies the requirements of Federal Rule of Civil Procedure 23.
See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997); Hanon v.
Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992).
To satisfy Rule 23(a), a proposed class must meet the prerequisites of
(1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of
representation. See Fed. R. Civ. P. 23(a); In re Mego Fin. Corp. Sec. Litig., 213
F.3d 454, 462 (9th Cir. 2000) (citing Anchem Prods., Inc., 521 U.S. at 612). BOH
objects to the Magistrate Judge’s findings and recommendation that Smith meets

5

the typicality prerequisite. ECF No. 155 at PageID #3536. The court overrules the
objection.
To satisfy Rule 23(b), plaintiffs must show the action is maintainable
under Rule 23(b)(1), (2), or (3). See Fed. R. Civ. P. 23(b); In re Mego, 213 F.3d at
462. Smith seeks class certification under Rule 23(b)(3), which requires that “the
court find[] that the questions of law or fact common to class members
predominate over any questions affecting only individual members, and that a class
action is superior to other available methods for fairly and efficiently adjudicating
the controversy.” Fed. R. Civ. P. 23(b)(3). BOH objects to the Magistrate Judge’s
findings and recommendation that Smith’s UDAP claim, breach of contract claim,
and EFTA claim meet the predominance requirement in Rule 23(b)(3). See ECF
No. 155 at PageID #3533, 3535, 3537. The court overrules the objection as to the
UDAP claim, breach of contract claim, and EFTA claim for statutory damages.
The court sustains the objection as to the EFTA claim for actual damages.
Finally, BOH objects to the Magistrate Judge’s findings and
recommendation that the class period for the UDAP claim end on August 1, 2017.
Id. at PageID #3537. BOH argues that the class period for the UDAP claim should
end in June 2017, when customers received a change in terms notice that defined

6

“available balance,” rather than on August 1, 2017, when the notice went into
effect. Id. The court overrules the objection.
A.

Typicality
Rule 23(a)(3) permits certification only if “the claims or defenses of

the representative parties are typical of the claims or defenses of the class.” Fed.
R. Civ. P. 23(a)(3). “The purpose of the typicality requirement is to assure that the
interest of the named representative aligns with the interests of the class.” Hanon,
976 F.2d at 508 (citation omitted). Typicality exists “if [representative claims] are
reasonably coextensive with those of absent class members; they need not be
substantially identical.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir.
1998), overruled on other grounds by Wal-Mart Stores, Inc. v. Dukes, 564 U.S.
338 (2011). Thus, “[s]ome degree of individuality is to be expected in all cases,
but that specificity does not necessarily defeat typicality.” Dukes v. Wal-Mart,
Inc., 509 F.3d 1168, 1184 (9th Cir. 2007), overruled on other grounds by WalMart Stores, Inc., 564 U.S. 338. With these principles in mind, “[t]he test of
typicality is whether other members have the same or similar injury, whether the
action is based on conduct which is not unique to the named plaintiffs, and whether
other class members have been injured by the same course of conduct.” Hanon,
976 F.2d at 508 (citation and quotation marks omitted).

7

To provide context to BOH’s objections, the court reviews Magistrate
Judge Puglisi’s findings concerning typicality. Magistrate Judge Puglisi found that
Smith sufficiently demonstrated typicality of his UDAP claims because those
claims are “based on Defendant BOH’s conduct in assessing overdraft fees and in
using the Account Agreement and Opt-In Agreement that contained the overdraft
provisions at issue.” ECF No. 151 at PageID #3476. Magistrate Judge Puglisi also
found that Smith sufficiently demonstrated typicality of his breach of contract
claims because “the relevant contract provisions are the same for all putative class
members and Defendant BOH’s assessment of overdraft fees based on the
available balance was uniform.” Id. at PageID #3474. Finally, Magistrate Judge
Puglisi found that Smith sufficiently demonstrated typicality of his EFTA claims
because his “Regulation E claim is based on uniform contract language and
Defendant BOH’s consistent conduct in assessing fees.” Id. at PageID #3478.
BOH objects to Magistrate Judge Puglisi’s finding that these claims meet the
typicality prerequisite. ECF No. 155 at PageID #3552.
BOH first asserts that Smith’s claims are not typical because Smith
opened three accounts in the span of a few years and Smith was a customer for
longer than other class members. See ECF No. 155 at PageID #3552-53. These
facts do not defeat typicality because Smith received the same standardized

8

descriptions of the overdraft fee program (during the relevant class period) from
BOH as class members who opened fewer accounts or had been a customer for less
time.
Second, BOH asserts that Smith’s claims are not typical because
Smith may have received information about the overdraft fee program from BOH’s
website, his paper account statements, or his online account balance. Id. These
facts do not defeat typicality because all class members had access to BOH’s
website, paper account statements, and an online account balance — and all were
standardized in format.
Third, BOH asserts that Smith’s claims are not typical because Smith
never read his Account Agreement. See ECF No. 155 at PageID #3552-53. Under
general contract principles, whether Smith read the Account Agreement or not is
irrelevant, and BOH does not present arguments as to why those general contract
principles do not apply here. See Commerce & Indus. Ins. Co. v. Unlimited
Constr. Servs., Inc., 353 F. Supp. 3d 904, 914 (D. Haw. 2018) (“The general rule
of contract law is that one who assents to a contract is bound by it and cannot
complain that he has not read it or did not know what it contained.”) (citing
Courbat v. Dahana Ranch, Inc., 111 Haw. 254, 264, 141 P.3d 427, 437 (Haw.
2006)).

9

Fourth, BOH asserts that Smith’s claims are not typical because Smith
called BOH to complain about his overdrafts. Under the record presented to the
court, there is not enough information about Smith’s phone calls with BOH to
make Smith atypical from other class members. See Smith III, 2019 WL 404423,
at *3, 8. Further, this type of evidence will likely have little bearing on Smith’s
claims, see In re TD Bank, N.A. Debit Card Overdraft Fee Litig., 325 F.R.D. 136,
157 (D.S.C. 2018). Thus, even if there are some differences arising from Smith’s
calls to BOH, Smith’s claims can nevertheless still be resolved in the aggregate.
See id. at 155.
Accordingly, any differences found in Smith’s situation display a
“degree of individuality . . . to be expected in all cases,” and Smith’s claims meet
the typicality prerequisite pursuant to Rule 23(a). Dukes, 509 F.3d at 1184. The
objection concerning typicality is overruled.
B.

Predominance
A class may be certified under Rule 23(b)(3) where “the court finds

that the questions of law or fact common to class members predominate over any
questions affecting only individual members, and that a class action is superior to
other available methods for fairly and efficiently adjudicating the controversy.”
Fed. R. Civ. P. 23(b)(3). “The Rule 23(b)(3) predominance inquiry tests whether

10

[the] proposed classes are sufficiently cohesive to warrant adjudication by
representation.” Amchem Prods. Inc., 521 U.S. at 623 (citing 7A Charles Alan
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure, 518519 (2d ed. 1986)). “The focus is on ‘the relationship between the common and
individual issues.’” In re Wells Fargo Home Mortg. Overtime Pay Litig., 571 F.3d
953, 957 (9th Cir. 2009) (quoting Hanlon, 150 F.3d at 1022). BOH asserts that
Smith’s UDAP, breach of contract, and EFTA claims do not meet the
predominance requirement. See ECF No. 155 at PageID #3533, 3535, 3537.
1.

UDAP Claim
BOH first argues that Smith’s UDAP claim does not meet the

predominance requirement because an individual inquiry must be made into:
(1) BOH’s representations to each customer; and (2) each customer’s actual
knowledge of the meaning of “available balance.” Id. at PageID #3533-35. The
court disagrees.
An individualized inquiry into BOH’s representations to each
customer is not required for Smith’s UDAP claims. Rather, this case is akin to
Yokoyama v. Midland National Life Insurance Co., 594 F.3d 1087 (9th Cir. 2010),
which held that predominance was established because the plaintiffs’ lawsuit did
not require “the fact-finder to parse what oral representations each broker made to

11

each plaintiff. Instead, the fact-finder will focus on the standardized written
materials given to all plaintiffs and determine whether those materials are likely to
mislead consumers acting reasonably under the circumstances.” Id. at 1093
(citation and quotation marks omitted). Like Yokoyama, the FAC in this case
focuses on the standardized written materials given to all class members, such as
the Account Agreement and the Opt-In Agreement. See ECF No. 6-5 ¶¶ 22-25.
Thus, the fact-finder in this case will focus on similar questions of fact concerning
standardized BOH written materials that all class members received and need not
conduct an individualized assessment for each class member.2
Second, an individualized inquiry into each customer’s actual
knowledge of the meaning of available balance is not required. For a UDAP claim
brought pursuant to HRS Chapter 480, “actual deception need not be shown; the
2

This case is easily distinguishable from several cases cited by BOH because in this case
uniform, standardized documents were provided to each class member. The claims in Berger v.
Home Depot USA, Inc., 741 F.3d 1061 (9th Cir. 2014), abrogated on other grounds by Microsoft
Corp. v. Baker, 137 S. Ct. 1702 (2017), involved five different versions of the relevant contract
and the various existence and form of signs posted between different stores. Id. at 1068-69. The
claims in Circle Click Media LLC v. Regus Management Group LLC, 2016 WL 1048046 (N.D.
Cal. Mar. 11, 2016), involved several different versions of the relevant contract and forms, and
substantial evidence was presented of variability in how and what documents were presented. Id.
at *12. The claims in Pierce-Nunes v. Toshiba America Information Systems, Inc., 2016 WL
5920345 (C.D. Cal. June 23, 2016) involved advertisements and product labeling that widely
varied. Id. at *7 (“The Court’s own review of Defendants’ product packaging and advertising
confirms that there was a lack of uniformity.”). This case is also clearly distinguishable from
another case cited by BOH, Carrera v. First American Home Buyers Protection Co., 702 F.
App’x 614 (9th Cir. 2017), where plaintiffs failed to show that class members were ever exposed
to any representations from the defendant. Id. at 615.

12

capacity to deceive is sufficient.” State by Bronster v. U.S. Steel Corp., 82 Haw.
32, 51, 919 P.2d 294, 313 (Haw. 1996); see also Hungate v. Law Office of David
B. Rosen, 139 Haw. 394, 411, 391 P.3d 1, 18 (Haw. 2017) (“Proof of actual
deception is unnecessary.”) (citation and brackets omitted). “Because Hawaii uses
an objective test to effectuate its remedial consumer protection statute,” individual
reliance issues are not a proper ground to deny class certification. Yokoyama, 594
F.3d at 1093.3 The objection concerning the predominance requirement as it
relates to the UDAP claim is overruled.

3

BOH argues that the survey evidence BOH submitted from expert James E.
Dannemiller is “fatal to a showing of predominance.” ECF No. 155 at PageID #3545. In his
declaration, Danemiller reported his findings:
a. After viewing excerpts from the overdraft disclosures that Bank of
Hawaiʻi sends to its checking account customers, 65 percent of
respondents identified the available balance as the account that would
be used to decide whether an account is overdrawn or not. Twenty
percent (20%) indicated that the current balance would be used to
determine whether an account is overdrawn. An additional 15 percent
either did not know or thought it was another balance.
b. After reviewing a Bank of Hawaiʻi’s ATM receipt, nine out of ten
(91% ) respondents understood that Hawaiʻi financial institutions
maintain two account balances.
c. Respondents were then provided with definitions of the two accounts;
available balance and current balance. Seventy-eight percent (78%) of
respondents stated that it is the available balance account that would
be used to determine if a checking account is overdrawn.
d. One in four of the respondents (28%) were assessed an overdraft
charge in the past, and 43 percent of them questioned the financial
institution about these charges. The majority who did not question
their financial institution agreed with the overdraft charges.
(continued . . .)

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2.

Breach of Contract Claim
BOH argues that Smith’s breach of contract claim does not meet the

predominance requirement because individualized inquiries must be conducted
into whether extrinsic evidence resolves the ambiguity. See ECF No. 155 at
PageID #3535-36. In particular, BOH argues that individual inquiries into each
customer’s course of dealing and performance with BOH are required. Id.
As an initial matter, because the court found the Agreements
ambiguous, see Smith I, 2017 WL 3597522, at *6, BOH may present extrinsic
evidence (including course of dealing and performance) to show the intent of the
parties to the contract, see U.S. ex rel. Sealaska Constructors, LLC v. Walsh RMA
Joint Venture, 2014 WL 1569454, at *8 (D. Haw. Apr. 16, 2014); Hawaiian Ass’n
of Seventh-Day Adventists v. Wong, 130 Haw. 36, 45, 305 P.3d 452, 461 (Haw.
2013).4 Nevertheless, only some of the extrinsic evidence is relevant to
determining intent. As Judge Otake discussed in Smith III, much of the extrinsic

(. . . continued)
ECF No. 146-26 at PageID #3149-50 (emphasis omitted). BOH argues that these results show
that “the representations customers read or heard affected their understanding of the overdraft
policy.” ECF No. 155 at PageID #3545. That may well be true; however, it is ultimately
irrelevant to this predominance inquiry, which centers on whether representations made by BOH
were provided through standardized documents and procedures.
4

BOH did in fact present extrinsic evidence in its Second Motion for Summary
Judgment. See Smith III, 2019 WL 404423, at *2-3.

14

evidence presented by BOH contains the same ambiguities as those found in the
Agreements, and thus could not resolve the ambiguity. See Smith III, 2019 WL
404423, at *6-9. Accordingly, the court will focus on only potentially relevant
extrinsic evidence, such as: (1) BOH employee explanations about the overdraft
program; (2) the February 2010 Pamphlet; (3) the March 2010 Email; and (4) the
BOH website.
a.

Legal framework

It is a general contract principle that “when there is a standardized
agreement like [a] form contract[,] . . . the agreement ‘is interpreted wherever
reasonable as treating alike all those similarly situated, without regard to their
knowledge or understanding of the standard terms of the writing.’” Ewert v. eBay,
Inc., 2010 WL 4269259, at *7 (N.D. Cal. Oct. 25, 2010) (quoting Restatement
(Second) of Contracts § 211(2)); see also In re TD Bank, 325 F.R.D. at 157. Thus,
it is no surprise that courts routinely find class certification appropriate in actions
involving breaches of form contracts because defendants’ conduct is standardized
toward putative class members. Dupler v. Costco Wholesale Corp., 249 F.R.D. 29,
37, 46 (E.D.N.Y. 2008) (collecting cases); see also Flanagan v. Allstate Ins. Co.,
242 F.R.D. 421, 428 (N.D. Ill. 2007). Further, at least one court has found that the
consumer checking account agreement — the type of form contract which is at

15

issue in this case — is particularly suited for uniform interpretation and thus class
certification. See In re TD Bank, 325 F.R.D. at 157 (“The contracts at issue are
contracts of adhesion, involving non-negotiable terms and a vast
bargaining/information imbalance between the parties. If there is any type of
standardized agreement that ought to be interpreted uniformly, without regard to
the non-drafting party’s idiosyncratic comprehension of its terms, it is a consumer
checking account agreement.”).
And the additional consideration of extrinsic evidence does not
necessarily defeat predominance if class members received standardized extrinsic
evidence. See id. at 157 (finding predominance where the extrinsic evidence is
uniform and “individual customers’ ‘intent’ and ‘course of performance’ is largely
irrelevant to resolving any ambiguity”); Ellsworth v. U.S. Bank, N.A., 2014 WL
2734953, at *23 (N.D. Cal. June 13, 2014) (granting class certification where if
any extrinsic evidence would be introduced, it would be “non-individualized
extrinsic evidence”); see also Longest v. Green Tree Servicing LLC, 308 F.R.D.
310, 327 (C.D. Cal. 2015); Rodman v. Safeway, Inc., 2014 WL 988992, at *8 (N.D.
Cal. Mar. 10, 2014), aff’d, 694 F. App’x 612 (9th Cir. 2017) (“But even the need to
take into account extrinsic evidence should not defeat certification, provided that
the extrinsic evidence is common evidence.”); Menagerie Prods. v. Citysearch,

16

2009 WL 3770668, at *10 (C.D. Cal. Nov. 9, 2009) (finding that extrinsic evidence
could be established on a classwide basis).
But the predominance requirement may not be met, however, if
defendants’ conduct is materially variable toward putative class members. See,
e.g., Gregurek v. United of Omaha Life Ins. Co., 2009 WL 4723137, at *7 (C.D.
Cal. Nov. 10, 2009) (determining that variability in sales presentations to
customers, where some agents of defendant provided details about the ambiguous
terms, precluded classwide resolution of the ambiguity); Monaco v. Bear Stearns
Companies, Inc., 2012 WL 10006987, at *6-7 (C.D. Cal. Dec. 10, 2012) (finding
no predominance where, among other things, some brokers explained the
ambiguous terms to customers at the time of the formation of the contract, and the
method customers used to make payments could demonstrate their understanding
of the contract).
In re TD Bank discussed when defendants’ conduct toward putative
class members is not materially variable:
Here, the same overdraft accounting policy was applied
to every TD Bank customer whether he or she understood
the role of available balance entirely, partially, or not at
all, and irrespective of whether the customer’s
understanding changed during the relevant time period.
There was no option for a customer, whether new or
existing prior to . . . [when changes were made in how
the customer’s balance was calculated], to elect the use
17

of actual balance versus available balance, or to negotiate
a change in the mechanics of the available balance
accounting method in any fashion. In this context, the
focus is on the Bank’s conduct in relation to the
contractual language, and individual customers’
“intent” and “course of performance” is largely
irrelevant to resolving any ambiguity.
In re TD Bank, 325 F.R.D. at 157 (emphasis added).
b.

BOH employee explanations about the overdraft program

BOH essentially argues that employee explanations about the
overdraft program to customers upon opening an account are materially variable
and thus raise predominance issues. See ECF No. 155 at PageID #3548 (arguing
that In re TD Bank is distinguishable from the instant case because its training
materials were standardized and bank employees were given scripts to use when
opening an account). The court disagrees. Predominance issues might arise if
BOH employees gave variable explanations to customers when they opened up an
account and some of those explanations included a definition of “available
balance.” See Gregurek, 2009 WL 4723137, at *7; Monaco, 2012 WL 10006987,
at *6-7. But that is not the case here.
BOH has presented no evidence that any BOH employee explanations
included a definition of “available balance,” and none of the training materials
included a definition of “available balance.” And while these explanations were

18

not scripted, see Ryson Matsumura (“Matsumura”) Decl.¶ 6, ECF No. 146-29, they
were standardized: both Matsumura and Maryellen Ing (“Ing”), Vice Presidents at
BOH, described a standardized training program that promoted uniform behavior
from its employees when they opened up an account. See Ing Decl. ¶¶ 2-4, ECF
No. 117-3; Ing Dep. at 8:2-9:9; 10:6-14:12; 19:1-4, ECF No. 150-4; Matsumura
Decl. ¶¶ 2-6, ECF No. 146-29. Further, employees were trained using the
standardized Agreements and were expected to explain the overdraft program
using those Agreements. Ing Dep. at 11:24-13:2, ECF No. 150-4. As part of their
training, BOH employees also ran through opening an account using the
Agreements in front of BOH trainers numerous times over a three-day period. Id.
at 14:2-12. Thus, BOH employee explanations upon opening an account were not
materially variable and do not raise predominance issues.
BOH employees also provided support to customers after they opened
their accounts, such as by answering phone calls from customers. See Smith III,
2019 WL 404423, at *3. And Smith did in fact state in his deposition that a BOH
employee mentioned holds to him on one occasion. See Smith III, 2019 WL
404423, at *3. But BOH presents no evidence on how its employees are trained to
answer questions from customers after opening an account, and the court will not

19

rest its predominance finding on a mere specter of non-standardization, especially
where in all other areas BOH appears to standardize its conduct towards customers.
c.

February 2010 Pamphlet and the March 2010 Email

The February 2010 pamphlet and the March 2010 email were sent to
BOH customers in February and March 2010, respectively. See Smith III, 2019
WL 404423, at *7 n.6. Accordingly, those documents will likely have no bearing
on the analysis for customers, like Smith, who opened up their accounts after
March 2010. See id. It seems likely that some of the customers in each of the
proposed classes will have opened up accounts prior to March 2010, and for those
customers these documents would be relevant. Nevertheless, these are
standardized documents sent to all customers with accounts during that time, so no
individualized inquiry need be conducted.
d.

The BOH website

The BOH website defines available balance on its “Understanding
Overdrafts” page, see Smith III, 2019 WL 404423, at *2-3. Like the February
2010 pamphlet and the March 2010 email, the website is standardized so that each
customer would see the same information. However, unlike the pamphlet and
email, the BOH website, while accessible to all customers, was not sent out to all
customers, and BOH argues that the question of whether individual customers

20

viewed this webpage requires an individualized inquiry. The court disagrees and
finds that representations made on BOH’s website are standardized and thus can be
resolved on a classwide basis. See Menagerie Prods., 2009 WL 3770668, at *10
(“Extrinsic evidence that the Court would consider in making this determination,
such as representations on [defendant’s] website, can be established on a classwide
basis. Therefore, it cannot be said that individual issues predominate as to
plaintiff’s claim of breach of contract.”).
In sum, Smith’s breach of contract claim meets the predominance
requirement even though BOH may introduce extrinsic evidence to resolve the
ambiguity in the Agreements. Thus, the objection concerning the predominance
requirement as it relates to the breach of contract claim is overruled.
3.

EFTA Claim
BOH argues that Smith’s EFTA claim for actual damages does not

meet the predominance requirement because an individualized inquiry into whether
each class member detrimentally relied on the Regulation E notice is necessary.
See ECF No. 155 at PageID #3537. The court agrees.
EFTA provides for both actual and statutory damages remedies. See
15 U.S.C. § 1693m(a). For actual damages, a consumer may recover “an amount
equal to the sum of . . . any actual damage sustained by such consumer as a result

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of such a failure [to comply with EFTA’s provisions].” 15 U.S.C. § 1693m(a)(1)
(emphasis added). One such provision is Regulation E, which requires banks to
provide a notice describing their overdraft services before customers opt into those
services. See Smith I, 2017 WL 3597522, at *2 (citing 12 C.F.R.
§ 1005.17(b)(1)(i)).
Also, as an initial matter, the court will rely on both EFTA and Truth
in Lending Act (“TILA”) jurisprudence. Smith III discusses the similarities
between EFTA and TILA, both of which were enacted as part of the Consumer
Credit Protection Act, have notice provisions, and have actual damages liability
provisions. See Smith III, 2019 WL 404423, at *11-12; see also Vallies v. Sky
Bank, 591 F.3d 152, 161 (3d Cir. 2009). Courts frequently rely on TILA
jurisprudence when interpreting EFTA’s actual damages provision because EFTA
and TILA have identical provisions. Voeks v. Pilot Travel Ctrs., 560 F. Supp. 2d
718, 722 (E.D. Wis. 2008); see also In re TD Bank, 325 F.R.D. at 165 (“[C]ourts
interpreting § 1693m [of EFTA] have often looked to decisions interpreting TILA
for guidance.”).
Judge Otake previously ruled that Smith is required to prove
detrimental reliance to recover actual (rather than statutory) damages under EFTA,
reasoning that:

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While the Ninth Circuit has not directly addressed this
issue, a number of other courts have. The Third Circuit
stated that actual damages for violations of EFTA’s
‘notice’ provisions, which are analogous to violations of
TILA disclosure provisions, require a showing of
detrimental reliance. A majority of district courts have
found that, in a claim of actual damages under EFTA,
proof of causation requires detrimental reliance. Further,
the Ninth Circuit has held that under TILA, a plaintiff
must establish detrimental reliance to show causation.
Smith III, 2019 WL 404423, at *12 (citations and editorial marks omitted). This is
the law of the case, and in any event, the court agrees with that finding.
The question remains whether individualized inquiries into
detrimental reliance are required at the liability stage (rather than solely at the
damages stage), and if so, would they defeat class certification.
A few district courts have found that a detrimental reliance
requirement does not defeat class certification because it concerns damages rather
than liability, and damages can be decided at a later stage of the proceedings
without affecting class certification. See Friedman v. 24 Hour Fitness USA, Inc.,
2009 WL 2711956, at *10 (C.D. Cal. Aug. 25, 2009) (“The purported detrimental
reliance requirement does not create individualized issues for the liability stage.”)
(citing Flores v. Diamond Bank, 2008 WL 4861511, at *3 (N.D. Ill. Nov. 7,
2008)); cf. Savrnoch v. First Am. Bankcard, Inc., 2007 WL 3171302 (E.D. Wis.
Oct. 26, 2007). But the court is persuaded by cases like In re TD Bank that reject
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the “notion that detrimental reliance is merely a damages calculation problem.”
325 F.R.D. at 167. Instead, In re TD Bank finds that detrimental reliance “is an
element of Plaintiffs’ liability case for actual damages pursuant to § 1693m(a)(1).”
Id.; Voeks, 560 F. Supp. 2d at 721-24; see also Turner v. Beneficial Corp., 242
F.3d 1023, 1028 (11th Cir. 2001) (“The legislative history emphasizes that TILA
provides for statutory remedies on proof of a simple TILA violation, and requires
the more difficult showing of detrimental reliance to prevail on a claim for actual
damages. . . . We hold that detrimental reliance is an element of a TILA claim for
actual damages, that is a plaintiff must present evidence to establish a causal link
between the financing institution’s noncompliance and his damages.”); Johnson v.
U.S. Bank Nat. Ass’n, 2011 WL 6275963, at *5 (D. Minn. Dec. 15, 2011); Stilz v.
Global Cash Network, Inc., 2010 WL 3975588, at *5 (N.D. Ill. Oct. 7, 2010).
Because detrimental reliance inquiries must be conducted at the liability stage,
individual issues will predominate the EFTA claim for actual damages.
As a final matter, Plaintiff may continue to pursue its EFTA claim for
statutory damages, even absent proof of any actual damages. See Sandra
Klemetson Individually v. WinCo Foods, LLC, 2013 WL 12123740, at *4 (C.D.
Cal. Apr. 3, 2013) (citing cases) (“Th[e] damages provision is unambiguous.
Plaintiff may seek two forms of damages for violation of the notice provision:

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actual damages and statutory damages. By providing for statutory damages, EFTA
provides Plaintiff with a mechanism of redress for statutory violations, even if
those violations do not result in actual damages.”).
Accordingly, the court finds the Rule 23(b)(3) predominance
requirement to be met for the UDAP and breach of contract claims as well as the
EFTA claim for statutory damages. The predominance requirement is not met for
the EFTA claim for actual damages. Accordingly, the objection concerning the
predominance requirement is sustained in part and overruled in part.
C.

Class Period
BOH argues that the class period for the UDAP claim should end in

June 2017 when a change in terms notice (“June 2017 CIT”), ECF No. 146-13, was
sent to customers that unambiguously defined available balance when detailing the
overdraft practices. See ECF No. 155 at PageID #3554-55. The court disagrees.
In the January 30 F&R, Magistrate Judge Puglisi correctly determined
that the class period should end on August 1, 2017, the date that the June 2017 CIT
went into effect. See ECF No. 151 at PageID #3487. The court is not convinced
by BOH’s argument that the class period should end when the June 2017 CIT was
sent to customers because at that point they were fully informed of BOH’s
overdraft practices (BOH never changed its overdraft practices — just better

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explained them). See ECF No. 155 at PageID #3554. Rather, the plain language
of the June 2017 CIT clearly stated to BOH customers that the overdraft policy,
including the definition for available balance, was changing and that those changes
would go into effect on August 1, 2017: “Effective from and after August 1, 2017,
the following change is being made to your [Deposit Agreement] . . . .” ECF
No. 146-13 at PageID #3071. Accordingly, there was no reason for a BOH
customer to think that the overdraft practices (including the definition of available
balance) would only go into effect earlier than August 1, 2017. The objection
concerning the class period is overruled.
///
///
///
///
///
///
///
///
///
///

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V. CONCLUSION
For the foregoing reasons, the court ADOPTS IN PART and
REJECTS IN PART the January 30 F&R. The objections are OVERRULED IN
PART and SUSTAINED IN PART.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, June 28, 2019.

/s/ J. Michael Seabright
J. Michael Seabright
Chief United States District Judge

Smith v. Bank of Haw., Civ No. 16-00513 JMS-WRP, Order Overruling in Part and Sustaining in
Part Objections, and Adopting in Part and Rejecting in Part Magistrate Judge’s Findings and
Recommendation, ECF No. 151

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