Brown v. Wells Fargo & Company
Filing
98
MEMORANDUM OPINION AND ORDER denying plaintiff's 85 Second Motion to Certify Class; denying defendant Wells Fargo Bank, N.A.'s 89 Motion to Reconsider (Written Opinion). Signed by Judge John R. Tunheim on December 30, 2013. (DML)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
ANTHONY BROWN, on behalf of himself
and all others similarly situated,
Civil No. 11-1362 (JRT/JJG)
Plaintiff,
v.
MEMORANDUM OPINION
AND ORDER
WELLS FARGO & COMPANY and
WELLS FARGO BANK, N.A.,
Defendants.
Curtis P. Zaun, CHAMPION LAW LCC, 800 LaSalle Avenue, Suite
2150, Minneapolis, MN 55402; and Mark L. Vavreck, MARTINEAU,
GONKO & VAVRECK, PLLC, 401 North Third Street, Suite 600,
Minneapolis, MN 55401 for plaintiff.
Shari L.J. Aberle, DORSEY & WHITNEY, LLP, 50 South Sixth Street,
Suite 1500, Minneapolis, MN 55402, for defendants.
Plaintiff Anthony Brown brought this putative class action against Defendant
Wells Fargo Bank, N.A. (“Wells Fargo”)1 alleging that Wells Fargo violated the
Electronic Funds Transfer Act, 15 U.S.C. §§ 1693a et seq. (“EFTA”). On July 25, 2012,
this Court granted partial summary judgment to Brown with respect to his claim that
Wells Fargo had violated the EFTA by failing to provide “prominent and conspicuous”
notice on the ATM that a fee would be charged. The Court denied Brown’s motion to
certify a class because he failed to precisely define a class and failed to demonstrate he
1
The Court dismissed Defendant Wells Fargo & Company from the case in a previous
order. (Order, Jul. 25, 2012, Docket No. 63.)
24
was a representative member of that class. On December 20, 2012, the EFTA was
amended and the on-machine fee notice requirement was eliminated. Wells Fargo now
moves for reconsideration of the Court’s prior order in light of this amendment to the
EFTA. Brown brings a second motion to certify a class.
The Court will deny Wells Fargo’s motion to reconsider the order granting
plaintiff partial summary judgment because it finds that the pre-amendment version of the
EFTA applies to Brown’s transaction. The Court will also deny Brown’s second motion
for class certification because Brown fails to demonstrate that a class is a superior means
of adjudicating the controversy due to the difficulty of correctly identifying and notifying
all the class members.
BACKGROUND
Underlying Events
In May 2011, Brown used a Wells Fargo ATM in a gas station on East Seventh
Street in St. Paul (“Seventh Street ATM”). (Am. Compl. ¶ 6, Aug. 15, 2011, Docket
No. 9.) Brown does not have an account with Wells Fargo and so incurred a $3.00
transaction fee when he withdrew money. (Id.) Brown does not contest that he knew that
Wells Fargo would charge him a fee before he completed the transaction because he
received on-screen notice of the fee and the amount. (See generally Am. Compl.; Decl.
of Timothy Ward ¶ 8, Jan. 13, 2012, Docket No. 24.) Brown’s amended complaint
alleges that the fee notice on the Seventh Street ATM was not “posted in a prominent and
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conspicuous location,” as required by the EFTA until December 20 , 2012. 15 U.S.C.
§ 1693b(d)(3)(B)(i) (2010). (See Am. Compl. ¶ 38.)
On July 25, 2012, this Court ruled that the fee notice on the Seventh Street ATM
was not in a “prominent and conspicuous” location as a matter of law. (Order, Jul. 25,
2012, Docket No. 63). Although this Order addressed all pending claims, it did not
address the issues of attorneys’ fees and damages; therefore, the Order was not a final
judgment.2
Amendment of the EFTA
After this Court’s prior order, Congress enacted a bill eliminating the EFTA’s onmachine fee notice requirement. See Amendment–Electronic Fund Transfer Act, Pub. L.
No. 112-216, 126 Stat. 1590 (2012). The amendment, however, does not state that it is to
apply retroactively.
Section 1693b(3)(B) now states:
The notice required . . . 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.
2
The Court originally directed the Clerk of Court to enter judgment. (Order at 26.)
Brown objected to the entry of judgment because the issues of damages and attorneys’ fees and
costs had not been decided (see Letter to District Judge, Oct. 10, 2012, Docket No. 65), and the
Court vacated judgment (Order, Nov. 26, 2012, Docket No. 67). Brown then requested
permission to file a new motion for class certification which the Court granted. (See Order,
Feb. 7, 2013, Docket No. 71.) Wells Fargo requested permission to file a motion to reconsider
which the Court also granted. (See Notice, June 10, 2013, Docket No. 86.)
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Wells Fargo asks the Court to reconsider its prior order granting summary judgment for
Brown on his EFTA claim, arguing that the amendment to the EFTA should apply to
pending cases.
Brown’s Second Motion for Class Certification
In his second motion for class certification, Brown seeks to certify the following
class:
All non-Wells Fargo customers who used the Wells Fargo ATM located at
296 Seventh Street, St. Paul, MN 55101 between May 21, 2010 and
May 21, 2011.
(Pl.’s Mem. in Supp. at 3, May 10, 2013, Docket No. 78.)
Brown has hired a company, A.B. Data, which has developed a proposed plan for
identifying locating and notifying his proposed class. (See Aff. of Anya Verkhovskaya
¶ 5, May 10, 2013, Docket No. 81.) Brown contends that A.B. Data will be able to
identify the bank or institution that issued each card used by the ATM. (See id. ¶¶ 2426.) The ATM user’s bank will then “be able to match customers’ [debit or credit card
number] to the respective names and contact information of those customers.” (Id. ¶ 31.)
Brown suggests that those banks will then “provide the names and contact information of
their customers affected by this Action . . . to A.B. Data for the purpose of conducting a
direct notice campaign.” (Id. ¶ 32.)
In an attempt to collect consumer data, a subpoena was served on one financial
institution, Affinity Plus, LLC (“Affinity”). (Aff. of Curtis P. Zaun ¶ 3, June 17, 2013,
Docket No. 88.) Affinity initially objected to the subpoena on multiple grounds. (Decl.
of Shari L.J. Aberle ¶ 4 & Ex. E, June 3, 2013, Docket No. 83.) After speaking with
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Brown’s counsel, Affinity agreed to “provide the names and contact information for its
customers . . . as long as any class notice includes language that customer contact
information was obtained by subpoena.” (Zaun Aff. ¶ 5.) Wells Fargo notes that the
Court would potentially have to issue 855 subpoenas if every financial institution
possessing class member data required one. (See Verkhovskaya Aff. ¶ 29.)
ANALYSIS
I.
WELLS FARGO’S MOTION TO RECONSIDER
A.
Standard of Review – Reconsideration
Federal Rule of Civil Procedure 54(b) provides that a court may revise an order that
“adjudicates fewer than all the claims or the rights and liabilities of fewer than all the
parties . . . at any time before the entry of judgment.” See also K.C. 1986 Ltd. P’ship v.
Reade Mfg., 472 F.3d 1009, 1017 (8th Cir. 2007) (“The district court has the inherent
power to reconsider and modify an interlocutory order any time prior to the entry of
judgment.”). Although generally a court should not allow parties to relitigate settled
issues, the court retains the authority to revisit its earlier decisions. Mosley v. City of
Northwoods, 415 F.3d 908, 911 (8th Cir. 2005). “For example, a Motion to Reconsider,
pursuant to Rule 54(b), may be justified on the basis of an intervening change in
controlling law.” Grozdanich v. Leisure Hills Health Ctr., Inc., 48 F. Supp. 2d 885, 88788 (D. Minn. 1999).
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B.
Standard of Review – Retroactivity
The parties do not dispute that Brown’s claim would fail under the current version
of the EFTA. The Court must therefore determine whether the amended version of the
EFTA should be applied retroactively to Brown’s claims. “Retroactivity is not favored in
the law.” Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988). For this reason,
“congressional enactments . . . will not be construed to have retroactive effect unless their
language requires this result.” Id. When there is no clear indication from Congress that
an amendment to a statute applies retroactively, a court must determine “whether the
application of the statute to the conduct at issue would result in a retroactive effect.”
Martin v. Hadix, 527 U.S. 343, 352 (1999). If applying the amended statute to the
conduct at issue would have a retroactive effect, the “traditional presumption . . . that the
statute does not apply to that conduct” attaches. Id. (internal quotation marks omitted);
see also Maitland v. Univ. of Minn., 43 F.3d 357, 361 (8th Cir. 1994) (holding that in the
absence of “clear congressional intent” that a statute apply retroactively, the court must
consider whether the statute would have a “true retroactive effect”).
“A statute does not operate [retroactively] merely because it is applied in a case
arising from conduct antedating the statute’s enactment[.]” Landgraf v. USI Film Prods.,
511 U.S. 244, 269 (1994). A statute has retroactive effect when it “takes away or impairs
vested rights acquired under existing laws . . . [with] respect to transactions or
considerations already past.” Id. (internal quotation marks omitted). In determining
whether application of the amendment to the facts at issue would impair existing rights,
this court must make a “commonsense, functional judgment” as to “whether the new
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provision attaches new legal consequences to events completed before its enactment.”
Martin, 527 U.S. at 357-58.
C.
True Retroactive Effect of Amended EFTA
Congress did not explicitly state whether the amendments to the EFTA apply
retroactively. Chamber of Commerce of U.S. v. Whiting, 131 S. Ct. 1968, 1980 (2011)
(“Congress’s authoritative statement is the statutory text, not the legislative history.”
(internal quotation marks omitted)). Nor is a retroactivity requirement implicit due to a
comprehensive scheme or the statute’s legislative history. In the absence of such a clear
indication, the Court must determine “whether the application of the statute to the
conduct at issue would result in a retroactive effect.” Martin, 527 U.S. at 352.
The Eighth Circuit has not explicitly addressed whether the EFTA should be
applied retroactively, but in Charvat v. Mutual First Federal Credit Union, it reviewed
the dismissal of an EFTA claim related to a transaction made in early 2012 and held that
“[a]t the time of [the] transactions, the EFTA created a right to a particular form of notice
before an ATM transaction fee could be levied.” -- F.3d -- , Nos. 12-2790 and 12-2797,
2013 WL 3958300, at *4 (8th Cir. Aug. 2, 2013). Moreover, the Eighth Circuit noted the
amendment to the statute, but it nevertheless remanded the case for further proceedings.
See id. at *2, 5.
Other courts have explicitly addressed whether the amendment to the EFTA
applies retroactively. At least one court has explicitly declined to apply the amended
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statute retroactively.3 One court, however, has found no vested right and refused to apply
the presumption against statutory retroactivity.4
This Court finds Charvat instructive. The Court concludes that Brown had a
vested right to “a particular form of notice” before an ATM transaction fee could be
levied, 2013 WL 3958300, at *4. The lack of such notice provided him with a right to
pursue a claim under the EFTA, as it existed at the time of his transaction. Applying the
amended statute to the conduct at issue would, therefore, have a “true” retroactive effect.
Because the changes to the statute changed Brown’s right to receive notice and
pursue a claim for a violation of the EFTA, the amendment altered the legal
consequences of failing to provide adequate on-machine notice. See Maitland, 43 F.3d at
362. Congress was fully capable of making the statute retroactive through an explicit
statement and did not. This Court, therefore, finds that the strong presumption against
retroactivity is not overcome, and it will deny Wells Fargo’s motion to reconsider its
summary judgment order.
II.
BROWN’S SECOND MOTION FOR CLASS CERTIFICATION
As noted, Brown has moved for class certification and seeks to certify the
following class:
3
See Pike v. Nick’s English Hut, Inc., Civ. No. 1:11-01304, 2013 WL 1311149, at *2-3
(S.D. Ind. Mar. 27, 2013) (finding Pike had a vested right to pursue a claim for a violation of the
EFTA); see also Alicea v. Citizens Bank of Pa., Civ. No. 12-1750, 2013 WL 1891348, at*3
(W.D. Pa. May 6, 2013) (applying the “EFTA as it stood” on plaintiff’s date of filing to
plaintiff’s claims).
4
Marbary v. Hometown Bank, N.A., Civ. No. 4:10-3936, 2013 WL 1124026, at *3 (S.D.
Tex. Mar. 18, 2013).
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All non-Wells Fargo customers who used the Wells Fargo ATM located at
296 Seventh Street, St. Paul, MN 55101 between May 21, 2010 and
May 21, 2011.
(Pl.’s Mem. in Supp. at 3, May 10, 2013, Docket No. 78.) Brown has the burden of
showing that the class should be certified. Colemen v. Watt, 40 F.3d 255, 258 (8th Cir.
1994).
A.
Requirements of Rule 23
Brown states that this case is brought under Rule 23(b)(3). A class may be
maintained under Rule 23(b)(3) if the requirements of Rule 23(a) are satisfied and “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 Court is directed to look to
[1] the class members’ interests in individually controlling the prosecution
or defense of separate actions; [2] the extent and nature of any litigation
concerning the controversy already begun by or against class members;
[3] the desirability or undesirability of concentrating the litigation of the
claims in the particular forum; and [4] the likely difficulties in managing a
class action.
Id. In considering “the likely difficulties of managing a class action,” the Court must
determine whether it is possible to identify the putative class members “without an
individualized inquiry into the facts and circumstances.” Dumas v. Albers Med., Inc.,
No. 03-0640-CV-W-GAF, 2005 WL 2172030 (W.D. Mo. Sept. 7, 2005) (citing Simer v.
Rios, 661 F.2d 655, 669 (7th Cir.1981)); see also Blades v. Monsanto Co., 400 F.3d 562,
566 (8th Cir. 2005) (finding the predominance requirement of Rule 23(b) is not satisfied
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when “members of a proposed class will need to present evidence that varies from
member to member”).
Regardless of whether the requirements of Rule 23(a) are satisfied, the Court will
deny class certification because Brown has failed to show that the requirements of
Rule 23(b)(3) are met. First, Brown’s scheme for identifying the members of the class
falls short; and second, even if identified, the recovery of each member of the class is
likely to be minimal compared to the damages available in an individual action.5
1.
Identification and notification of the class members
The Court concludes that a class action is not superior and common questions do
not necessarily predominate because Brown’s proposed class is difficult to identify and
likely over-inclusive. Although Wells Fargo has the account number of every customer
charged a transaction fee, it does not have their name and contact information. In theory,
the relevant ATM users can be identified using their credit or debit card numbers through
the users’ financial institutions, but the Court finds that the difficulties of notifying and
identifying those individuals who are entitled to relief is still substantial.
5
The Court also notes that the class Brown proposes is likely barred by the one-year
statute of limitations for EFTA claims provided by 15 U.S.C. § 1693m(g). From May 21, 2011
(the end of the proposed class period), until February 1, 2012, the day Brown filed his first
motion for class certification, 256 days elapsed. Once Brown’s first motion for class
certification was denied on July 25, 2012, the statute of limitations began to run again until
Brown filed his second motion for class certification on May 10, 2013 – that is, a second period
of 289 days elapsed. In sum, 545 non-tolled days have run since the last alleged violation. See
Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 552-53 (1974) (holding that the statute of
limitations was tolled during the period for which class certification was pending); Crown, Cork
& Seal Co. v. Parker, 462 U.S. 345, 354 (1983) (“Once the statute of limitations has been tolled,
it remains tolled for all members of the putative class until class certification is denied.”).
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First, it is unclear whether the users’ financial institutions will agree to notify their
customers of their potential rights under this action or to provide information about their
customers to Brown without a subpoena. Given the number of ATM users and their
financial institutions, however, up to 855 subpoenas would be required.6 (Def.’s Mem. in
Opp. at 20 (citing Verkhovskaya Aff. ¶ 29).)
Second, Brown’s proposed class includes all “non-Wells Fargo customers” and
therefore includes customers who used a card to withdraw a fee from a business account
or for business purposes. But the EFTA requires ATM operators to provide notice when
they “impose[] a fee on any consumer,” 15 U.S.C. §1693b(d)(3)(A), and a “consumer”
must be a “natural person,” id. §1693a(6), using the account for “primarily for personal,
family, or household purchases,” id. § 1693a(2).7 Although limiting the proposed class to
“consumers” (not customers) would nominally cure the deficiency, Brown still fails to
explain how he would identify which accounts are “consumer” accounts for purposes of
notifying class members. At oral argument, Brown’s counsel stated that the best way to
identify which non-Wells Fargo customers are “consumers” would be to have the
6
In the alternative, Brown argues that he could use additional methods to identify class
members including “reverse interchange, notice on the ATM, media notice, and a website.”
(Pl.’s Mem. in Opp. at 19.) Brown argues that putting a notice on the screen would be an
effective method to use in addition to actual notice. But Brown does not offer any data about
how often users return to this ATM or whether users would remember using a specific ATM
three years ago.
7
See also Ballard v. Branch Banking & Trust Co., 284 F.R.D. 9, 13-16 (D.D.C. 2012)
(denying class certification because non-consumers could not be easily identified and excluded);
Ironforge.com v. Paychex, Inc., 747 F. Supp. 2d 384, 402 (W.D.N.Y. 2010) (differentiating
between “consumers” and “business entities” for purposes of the EFTA); Regatos v. N. Fork
Bank, 257 F. Supp. 2d 632, 638 n.10 (S.D.N.Y. 2003) (stating that even individual accounts are
not consumer accounts if used for commercial purposes).
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financial intuitions identify which users had non-business accounts and then to ask those
users if their use was for non-business purposes. That is, potentially, “each ATM-user
would then have to be contacted and questioned to determine whether their account was a
‘consumer’ account used for personal purposes.” Ballard v. Branch Banking & Trust
Co., 284 F.R.D. 9, 14 (D.D.C. 2012). Like the other courts to consider the issue, the
Court finds that such an imperfect, time-consuming, and labor-intensive process fails to
satisfy the requirements of Rule 23(b)(3). See, e.g., id.
2.
Recovery of the Class Members
In addition to the difficulties of properly defining the class and notifying class
members, the Court notes that a class member’s maximum recovery is likely to be
minimal compared to the damages available in an individual action. When an individual
brings an EFTA claim, the plaintiff is entitled to between $100 and $1,000 dollars in
statutory damages. 15 U.S.C. §1693m(a)(2)(A). In a class action EFTA claim, the total
recovery is capped at $500,000. Id. § 1693m(a)(2)(B). Brown alleges that approximately
9,000 people used the Seventh Street ATM during the relevant period, resulting in a
maximum individual recovery of approximately $55. That is, individual ATM users
would receive higher damages plus attorneys’ fees if they brought individual claims. See
Nadeau v. Wells Fargo Bank, N.A., Civ. No. 10-4356, 2011 WL 1633131, at *5
(D. Minn. Apr. 26, 2011) (“The availability of statutory damages and attorney’s fees and
costs should alleviate some of [plaintiff’s] concern about fellow customers.”). Moreover,
the Court notes the possibility “that no consumer other than [Brown] considers
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themselves injured in any way.” Id. at *4 (“[T]he fact that no other suits have been filed
may be less a warning about protecting consumers than it is a commentary on the
redundancy of the EFTA’s notice requirements.”)
The Court will therefore deny Brown’s motion for class certification because he
has failed to demonstrate the superiority of a class action. Although Brown has shown
that it would be possible to notify the putative class, the difficulties of locating, notifying,
and confirming that the individuals qualify as class members are too great to result in any
increased efficiency. Further, it appears that potential class members could recover more
by proceeding individually than as part of a class. See Hughes v. Kore of Ind. Enter.,
Inc., Civ. No. 1:11-1329, 2013 WL 3467320, at *8 (S.D. Ind. July 10, 2013)
(withdrawing class certification because of the “likelihood that the class members’
recovery would be significantly less than if they pursued individual actions” and because
of “the infeasibility of sufficient class notice”).
Nevertheless, Brown is entitled to “an amount not less than $100 nor greater than
$1,000,” 15 U.S.C. § 1693m(a)(2)(A), and “the costs of the action, together with a
reasonable attorney’s fee as determined by the Court” for the “successful” portion of the
action, id. § 1693m(a)(3). The Court will, therefore, direct Wells Fargo to pay Brown
$1,000 as well as reasonable attorneys’ fees and costs for bringing this case, his original
motion for summary judgment, and defending Wells Fargo’s motion to reconsider. 8
8
Wells Fargo is not liable to Brown for the costs of Brown’s Second Motion to Certify a
Class.
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ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1.
Wells Fargo Bank, N.A.’s Motion to Reconsider [Docket No. 89] is
DENIED.
2.
Anthony Brown’s Second Motion to Certify Class [Docket No. 85] is
DENIED.
3.
Wells Fargo Bank, N.A. is ordered to pay Anthony Brown:
a.
$1,000.00 pursuant to 15 U.S.C. § 1693m(a)(2)(a).
b.
The reasonable attorneys’ fees and costs of the successful portion of
Brown’s action, pursuant to 15 U.S.C. § 1693m(a)(3). If the parties dispute the
reasonableness of the fees, Brown shall submit his request to the Court within
forty-five (45) days of the date of this Order.
DATED: December 30, 2013
at Minneapolis, Minnesota.
____s/
____
JOHN R. TUNHEIM
United States District Judge
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