HUGHES v. KORE OF INDIANA ENTERPRISE, INC.

Filing 89

ORDER granting in part and denying in part 72 Hughes' Motion for Summary Judgment - Kore will not be able to assert the following defenses in this litigation: waiver, estoppel, good faith, bona fide error, laches, reasonable procedures, or t hat Mr. Hughes was not a consumer under the EFTA. The Court denies Mr. Hughes' motion to the extent that it seeks summary judgment on Kore's safe-harbor defense under 15 U.S.C. § 1693h(d). The Court requests that the magistrate judge conduct a status conference to determine the future course of proceedings in light of the Court's interpretation of the safe harbor provision. ***SEE ORDER***. Signed by Judge Jane Magnus-Stinson on 3/12/2013. (JKS)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
DAVID HUGHES, individually and on behalf of
all other similarly situated,
Plaintiff,
vs.
KORE OF INDIANA ENTERPRISE, INC., et al.,
Defendants.

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1:11-cv-1329-JMS-MJD

ORDER
Presently pending before the Court is Plaintiff David Hughes’ Motion for Summary
Judgment in this Electronic Funds Transfer Act (“EFTA”) case. [Dkt. 72.] Mr. Hughes argues
that summary judgment should be entered in favor of the class members1 because Defendants
Kore of Indiana Enterprise, Inc.; Kore Enterprises, Inc.; and On Kore, LLC (collectively “Kore”)
have failed to show there are any genuine issues of material fact concerning the applicability of
various affirmative defenses. [Id.] Although Kore does not respond to many of Mr. Hughes’
arguments, it does contend that summary judgment is inappropriate on its safe-harbor defense.
[Dkt. 77.] For the reasons that follow, the Court agrees on that point.
I.
STANDARD OF REVIEW
A motion for summary judgment asks that the Court find that a trial based on the uncontroverted and admissible evidence is unnecessary because, as a matter of law, it would conclude
in the moving party’s favor. See Fed. R. Civ. Pro. 56. To survive a motion for summary judgment, the non-moving party must set forth specific, admissible evidence showing that there is a

1

Mr. Hughes’ Motion for Class Certification was granted after the Defendants did not respond.
[Dkt. 65.]
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material issue for trial. Fed. R. Civ. Pro. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986).
As Rule 56 makes clear, whether a party asserts that a fact is undisputed or genuinely
disputed, the party must support the asserted fact by citing to particular parts of the record, including depositions, documents, or affidavits. Fed. R. Civ. Pro. 56(c)(1)(A). A party can also
support a fact by showing that the materials cited do not establish the absence or presence of a
genuine dispute or that the adverse party cannot produce admissible evidence to support the fact.
Fed. R. Civ. Pro. 56(c)(1)(B). Affidavits or declarations must be made on personal knowledge,
set out facts that would be admissible in evidence, and show that the affiant is competent to testify on matters stated. Fed. R. Civ. Pro. 56(c)(4). Failure to properly support a fact in opposition
to a movant’s factual assertion can result in the movant’s fact being considered undisputed, and
potentially the grant of summary judgment. Fed. R. Civ. Pro. 56(e).
The Court need only consider the cited materials, Fed. R. Civ. Pro. 56(c)(3), and the Seventh Circuit Court of Appeals has “repeatedly assured the district courts that they are not required to scour every inch of the record for evidence that is potentially relevant to the summary
judgment motion before them,” Johnson v. Cambridge Indus., 325 F.3d 892, 898 (7th Cir. 2003).
Furthermore, reliance on the pleadings or conclusory statements backed by inadmissible evidence is insufficient to create an issue of material fact on summary judgment. Id. at 901.
The key inquiry, then, is whether admissible evidence exists to support a plaintiff’s
claims or a defendant’s affirmative defenses, not the weight or credibility of that evidence, both
of which are assessments reserved to the trier of fact. See Schacht v. Wis. Dep’t of Corrections,
175 F.3d 497, 504 (7th Cir. 1999). And when evaluating this inquiry, the Court must give the
non-moving party the benefit of all reasonable inferences from the evidence submitted and re-

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solve “any doubt as to the existence of a genuine issue for trial . . . against the moving party.”
Celotex, 477 U.S. at 330.
II.
BACKGROUND
The following facts are undisputed. Kore is the owner and operator of the ATMs at issue
in this litigation. [Dkts. 73 at 8; 77 at 2.] The EFTA requires that a notice informing a consumer
of the fact that a fee is imposed and the amount of any such fee “shall be posted in a prominent
and conspicuous location on or at the [ATM] . . . .” 15 U.S.C. § 1693b(d)(3)(B)(i). The EFTA
prohibits collecting a fee for which the required notice was not provided.

15 U.S.C.

§ 1693b(d)(3)(C). Kore’s representative remembers an ATM management company placing fee
notice stickers on its ATMs on April 29, 2010. [Dkt. 73-6 at 10-11.]
Mr. Hughes is a consumer as defined by the EFTA. [Dkts. 73 at 8; 77 at 2.] On October
1, 2010, Mr. Hughes used an ATM owned and operated by Kore to withdraw money at an Indianapolis bar known as Average Joe’s. [Id.] The ATM did not have the fee notice as required by
15 U.S.C. § 1693b(d)(3)(B)(i). [Id.] Mr. Hughes was charged at $3.00 fee for using the ATM.
[Dkt. 73-4 at 2.]
Mr. Hughes filed a putative class action on September 30, 2011. [Dkt. 1.] Mr. Hughes
asserts that Kore violated the EFTA by not posting the requisite notice on the ATM before charging the class members a fee. [Dkt. 52 at 11-12.] Kore was not aware of the EFTA before Mr.
Hughes filed his complaint. [Dkt. 73-6 at 12.]
III.
DISCUSSION
Mr. Hughes argues that summary judgment should be entered in favor of the class members because Kore has failed to show there are genuine issues of material fact concerning various

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affirmative defenses, including applicability of the safe-harbor provision of the EFTA. [Dkt.
73.] Kore does not respond to the majority of Mr. Hughes’ arguments but does contend that
summary judgment on the applicability of the safe-harbor provision is inappropriate. [Dkt. 77.]
A. Unsupported Affirmative Defenses
Mr. Hughes sets forth detailed arguments supported by case law challenging various affirmative defenses Kore asserts in its answer. [Dkts. 73 at 12-24.] Kore does not respond to any
of these arguments, except for the applicability of the safe-harbor provision. [Dkt. 77.] Courts
rely on the parties to know what is best for them and to advance the facts and arguments that entitle them to relief. See Greenlaw v. United States, 554 U.S. 237, 243-44 (2008) (“[W]e rely on
the parties to frame the issues for decision and assign to courts the role of neutral arbiter of matters the parties present . . . . Our adversary system is designed around the premise that the parties
know what is best for them, and are responsible for advancing the facts and arguments entitling
them to relief.”).
The Court concludes that Kore has abandoned the affirmative defenses it did not defend
on summary judgment. Thus, Mr. Hughes is entitled to summary judgment on those defenses.
Throughout the remainder of this litigation, Kore will not be able to assert the following defenses: waiver, estoppel, good faith, bona fide error, laches, reasonable procedures, or that Mr.
Hughes was not a consumer.
B. Safe-Harbor Defense
Kore does defend its safe-harbor defense on summary judgment. [Dkt. 77 at 3-10.] It
designates an affidavit that fee notice stickers were placed on the ATM at issue before Mr.
Hughes’ transaction and that the notice must have been removed by someone other than one of
Kore’s employees. [Dkt. 77-2.]

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The EFTA requires an ATM operator to provide notice of “the fact that a fee is imposed
by such operator for providing the service,” and “the amount of any such fee,” both on the ATM
“posted in a prominent and conspicuous location on or at the [ATM] at which the electronic fund
transfer is initiated by the consumer” and on the screen.2 15 U.S.C. § 1693b(d)(3)(A) and (B).
The EFTA prohibits collecting a fee for which the required notice was not provided. 15 U.S.C. §
1693b(d)(3)(C). The EFTA contains a safe-harbor provision that provides:
If the notice required to be posted pursuant to section 1693b(d)(3)(B)(i) of this title by an automated teller machine operator has been posted by such operator in
compliance with such section and the notice is subsequently removed, damaged,
or altered by any person other than the operator of the automated teller machine,
the operator shall have no liability under this section for failure to comply with
section 1693b(d)(3)(B)(i) of this title.
15 U.S.C. § 1693h(d). The parties agree that Kore, as the party asserting the defense, bears the
burden of proving the applicability of the safe-harbor provision. [Dkts. 73 at 22; 77 at 6]; see
Drager v. Bridgeview Bank, 2012 WL 4092740, *4 (N.D. Ill. 2012) (citing Meacham v. Knolls
Atomic Power Lab., 554 U.S. 84, 91 (2008)).
The parties dispute the amount and/or type of evidence Kore was required to designate to
show that someone else removed the required notice from the ATM. Kore has designated an affidavit from its Director of Operations, Jeff Cale, attesting that notices were affixed to the ATM
on April 29, 2010, and were not removed by any employee, agent, or representative of Kore during the class period. [Dkt. 77-2 at 1-2.] Mr. Hughes argues that this evidence is insufficient because Kore cannot rely on a self-serving affidavit to defeat summary judgment. [Dkt. 85 at 2.]
Instead, Mr. Hughes contends that Kore must present evidence that the notice was actually removed, damaged, or altered by someone else. [Id. at 3.]

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Mr. Hughes does not argue that a fee notice was not provided on the screen of Kore’s ATM.
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The parties’ dispute regarding the evidence necessary to invoke the safe-harbor defense
appears to be an issue of first impression in this District. It has not yet been addressed by the
Seventh Circuit Court of Appeals. The Northern District of Illinois recently issued an opinion
interpreting the safe-harbor provision that the Court finds persuasive. On cross-motions for
summary judgment, that court held that the defendant had established both elements of the safeharbor provision—1) that a fee notice was posted, and 2) that it was removed by someone other
than an employee of the defendants. Drager v. Bridgeview Bank, 2012 WL 4092740, *4 (N.D.
Ill. 2012). Specifically, the defendants in Drager conducted an investigation that revealed that
their employees did not remove the notice. Id. Drager concluded “[t]o the extent that Plaintiff
argues that Defendants must present evidence of the actual person who removed the sticker—
rather than providing evidence that the sticker was not removed by one of their employees—the
Court declines to endorse that interpretation of § 1693h.” Id. Because the defendants presented
undisputed evidence that the notice was posted and not removed by the defendants’ employees,
Drager concluded that “Defendants have established that the fee notice was removed by a thirdparty.” Id. Accordingly, summary judgment was entered in favor of the defendants. Id. at *6.
Drager’s interpretation of the safe-harbor provision is the prevailing view of district
courts that have addressed the issue. See In re Cardtronics ATM Fee Notice Litigation, 874 F.
Supp. 2d 916, 923-24 (S.D. Cal. 2012) (granting summary judgment for defendants when plaintiffs failed to rebut evidence that defendants posted the notice and did not remove the notice,
stating that “courts applying the ‘safe harbor’ defense do not demand that ATM operators prove
the specific circumstances of the removal of the notice; rather they allow the ATM operator to
prove that it did not remove the notice itself, leaving a sufficiently reasonable inference that
someone else must have removed it”); Reyes v. Cole Taylor Bank, 2011 WL 3704705, *3 (N.D.

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Ill. 2011) (evidence that employees did not remove fee notice sticker was sufficient to satisfy
§ 1693h burden on summary judgment); Piontek v. Penn. Sec. Bank & Trust Co., 2011 WL
1002194, *3-4 (M.D. Pa. 2011) (affidavit of security professional concluding that third party
must have removed sticker sufficient for summary judgment).
Although Kore cites the foregoing cases in its response, Mr. Hughes ignores them on reply. Instead, without citing any authority, Mr. Hughes continues to maintain that Kore must present specific evidence of who removed the fee notice and when it was removed in order to invoke the safe-harbor defense. The Court declines Mr. Hughes’ unduly restrictive and unsupported interpretation of the safe-harbor provision. Making all reasonable inferences in favor of Kore,
as the Court is required to do on summary judgment, the Court concludes that an issue of material fact exists regarding the applicability of the safe-harbor provision. Accordingly, the Court denies Mr. Hughes’ motion for summary judgment on Kore’s safe-harbor defense.3
IV.
CONCLUSION
For the reasons stated herein, the Court GRANTS IN PART and DENIES IN PART
Mr. Hughes’ Motion for Summary Judgment. [Dkt. 72.] Specifically, Kore will not be able to
assert the following defenses in this litigation: waiver, estoppel, good faith, bona fide error, laches, reasonable procedures, or that Mr. Hughes was not a consumer under the EFTA. The Court
denies Mr. Hughes’ motion to the extent that it seeks summary judgment on Kore’s safe-harbor
defense under 15 U.S.C. § 1693h(d). The Court requests that the magistrate judge conduct a status conference to determine the future course of proceedings in light of the Court’s interpretation
of the safe harbor provision.

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Unlike the defendants in Drager, Kore has not moved for summary judgment.
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03/12/2013
_______________________________
Hon. Jane Magnus-Stinson, Judge
United States District Court
Southern District of Indiana

Distribution via ECF only:
Eric G. Calhoun
TRAVIS, CALHOUN & CONLON PC
[e-mail]
Ryan R. Frasher
RYAN FRASHER P.C.
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Kevin G. Kerr
HOEPPNER, WAGNER & EVANS LLP--Merrillville
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Thomas Edward Rosta
METZGER ROSTA LLP
[e-mail]
Michael Eugene Tolbert
HOEPPNER, WAGNER & EVANS LLP--Merrillville
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