Charvat v. First National Bank of Wahoo

Filing 13

MEMORANDUM AND ORDER - All further proceedings in this matter are stayed pending the Supreme Court's decision in First American Financial Corp. v. Edwards, No. 10-708(cert. granted, June 20, 2011). When the Supreme Court's decision is filed, the Defendant must notify the Court of the decision by filing a notice with the Court within seven days of the date of the decision. Ordered by Chief Judge Laurie Smith Camp. (AOA)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
JAREK CHARVAT, Individually and on
behalf of all others similarly situated,
Plaintiff,
v.
FIRST NATIONAL BANK OF WAHOO,
Defendant.

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CASE NO. 8:12CV97

MEMORANDUM
AND ORDER

This matter is before the Court on Defendant’s Motion to Dismiss for lack of subject
matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) (Filing No. 7).
Defendant First National Bank of Wahoo (“FNBW”) asserts that this Court has no subject
matter jurisdiction over Plaintiff Jarek Charvat (“Charvat”) because Charvat has suffered
no injury in fact and therefore does not have standing to bring this claim. Alternatively,
FNBW requests that all further proceedings in this matter be stayed pending the United
States Supreme Court’s decision in First American Fin. Corp. v. Edwards, 610 F.3d 514
(9th Cir. June 21, 2010), cert. granted, 131 S. Ct. 3022 (U.S. June 20, 2011) (No. 10-708)
(hereinafter referred to as “First American”). For the reasons discussed below, all further
proceedings in this matter will be stayed pending the Supreme Court’s decision in First
American.
FACTUAL BACKGROUND
For purposes of the pending Motion, the Court accepts as true all well-pled factual
allegations in the Class Action Complaint (“Complaint”) (Filing No. 1), although the Court
need not accept Charvat’s legal conclusions. The following is a summary of the allegations
in the Complaint.

Charvat made two separate electronic fund transfers (“EFTs”) from FNBW’s
automated teller machine (“ATM”) located at 354 North Chestnut Street, Wahoo, Nebraska,
on or about January 22, 2012, and March 4, 2012. FNBW charged Charvat a fee of $2.00
in connection with each transaction. At the time of the EFTs, there was no notice posted
“on or at” the ATM apprising consumers that a fee would be charged for the use of the
ATM. Charvat does not allege that he received no on-screen notice that a fee would be
charged. On March 8, 2012, Charvat brought this class action against FNBW alleging
violations of the Electronic Fund Transfer Act (“EFTA”) 15 U.S.C. § 1693-1693r and its
implementing regulations 12 C.F.R. § 205.1-205.20. Charvat seeks statutory damages for
himself and the members of the class and an award of costs and attorney fees.
The purpose of the EFTA is to define individual consumer rights. 15 U.S.C. §
1693(b). The EFTA requires any ATM operator who imposes fees on consumers in
connection with EFTs to provide notice of the fact that a fee is being imposed and the
amount of the fee. 15 U.S.C. § 1693b(d)(3)(A). The required notice must be posted in two
places, both “on or at” the ATM, and on the screen of the ATM or, alternatively, on a paper
notice issued before the transaction is completed. 15 U.S.C. § 1693b(d)(3)(B). An ATM
operator is prohibited from imposing a fee on a consumer unless the EFTA’s notice
requirements are followed. 15 U.S.C. § 1693b(d)(3)(C). FNBW violated the notice
requirements of the EFTA, and was thus prohibited from imposing any fee on Charvat or
the Class.
STANDARD OF REVIEW
A motion under Federal Rule of Civil Procedure 12(b)(1) challenges whether the
Court has subject matter jurisdiction to hear the case. The party asserting jurisdiction
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bears the burden of proving that jurisdiction is proper. Great Rivers Habitat Alliance v.
FEMA, 615 F.3d 985, 988 (8th Cir. 2010). The Court, however, has “'wide discretion'” to
decide the process with which its jurisdiction can best be determined. Johnson v. United
States, 534 F.3d 958, 964 (8th Cir. 2008) (quoting Holt v. United States, 46 F.3d 1000,
1003 (10th Cir. 1995)). It “has the authority to dismiss an action for lack of subject matter
jurisdiction on any one of three separate bases: ‘(1) the complaint alone; (2) the complaint
supplemented by undisputed facts evidenced in the record; or (3) the complaint
supplemented by undisputed facts plus the court’s resolution of disputed facts.’” Id. at 962
(quoting Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981)); see also Jessie v.
Potter, 516 F.3d 709, 712 (8th Cir. 2008) (stating that “[m]otions to dismiss for lack of
subject-matter jurisdiction can be decided in three ways: at the pleading stage, like a
Rule12(b)(6) motion; on undisputed facts, like a summary judgment motion; and on
disputed facts”). According to Federal Rule of Civil Procedure 12(h)(3), a federal court
must dismiss an action if it determines at any time it lacks subject matter jurisdiction.
Harris v. P.A.M. Transp., Inc., 339 F.3d 635, 637 n.4 (8th Cir. 2003).
DISCUSSION
I.

Charvat did not allege an injury in fact to satisfy the constitutional minimum
requirement of standing.
Three requirements constitute the “irreducible constitutional minimum” of standing,

the first of which is “an injury in fact–an invasion of a legally protected interest which is (a)
concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). The requirement of injury in
fact is a “hard floor of Article III jurisdiction that cannot be removed by statute.” Summers
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v. Earth Island Inst., 555 U.S. 488, 497 (2009). This injury “may exist solely by virtue of
‘statutes creating legal rights, the invasion of which creates standing . . . .’ Of course, Art.
III’s requirement remains: the plaintiff still must allege a distinct and palpable injury to
himself.” Warth v. Seldin, 422 U.S. 490, 500-01 (1975) (quoting Linda R.S. v. Richard D.,
410 U.S. 614, 617 n.3 (1973)). “It is settled that Congress cannot erase Article III’s
standing requirements by statutorily granting the right to sue to a plaintiff who would not
otherwise have standing.” Raines v. Byrd, 521 U.S. 811, 820 n.3 (1997). It is undisputed
that Congress can create a legal right sufficient for standing under the EFTA, but Plaintiff
must still allege a “distinct and palpable injury to himself.” Warth, 422 U.S. at 501. The
issue then is whether FNBW’s failure to give a notice to which Charvat was statutorily
entitled in itself constitutes an injury in fact to Charvat. This Court concludes it does not.
Three district courts have held that when an ATM operator fails to provide a fee
notice on the exterior of the ATM as required by the EFTA, the statutory violation is in itself
an injury–regardless of whether the plaintiff had actual knowledge of the fee through the
on-screen notice and affirmatively accepted it. Campbell v. Hope Cmty. Credit Union, No.
10-2649-STA, 2012 WL 423432, at *2 (W.D. Tenn. Feb. 8, 2012); Kinder v. Dearborn Fed.
Sav. Bank, No. 10-12570, 2011 WL 6371184, at **4-5 (E.D. Mich. Dec. 20, 2011); In re
Regions Bank ATM Fee Notice Litig., Nos. 2:11-MD-1000, 1001, 1002, & 2202-KS-MTP,
2011 WL 4036691, at *3 (S.D. Miss. Sept. 12, 2011). The Campbell and In re Regions
Bank courts both noted that the EFTA is a remedial consumer statute which should be
construed broadly in favor of the consumer. Campbell, 2012 WL 423432, at *2; In re
Regions Bank, 2011 WL 4036691, at *3. These two courts then stated that the EFTA

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provides for the recovery of actual and statutory damages, indicating Congress’s intent for
private causes of action despite minimal or no actual damage. Campbell, 2012 WL
423432, at *2; In re Regions Bank, 2011 WL 4036691, at *3. In Kinder, the court
considered the argument that the plaintiff did not suffer an injury because he had actual
knowledge. Kinder, 2011 WL 6371184, at *2. The Kinder court noted that “[a]lthough this
argument has some appeal, it has been rejected by at least one court.” Id. The court then
relied on the reasoning of In re Regions Bank and granted standing. Id.
These three district court opinions did not address the “hard floor” constitutional
requirement of injury in fact. The Constitution requires more than mere injury in law. A
plaintiff must allege an injury in fact that was caused by the lack of an exterior fee notice
on the ATM. This Court agrees that the EFTA should be construed broadly in favor of the
consumer, but the provision for actual and statutory damages in the EFTA does not
automatically mean that a litigant is entitled to damages when he has alleged no injury in
fact. The authorization of statutory damages is unrelated to injury. “An interest unrelated
to injury in fact is insufficient to give a plaintiff standing.” Vermont Agency of Natural Res.
v. United States ex rel. Stevens, 529 U.S. 765, 772 (2000). Here, Charvat alleges only a
statutory violation of the EFTA because FNBW failed to provide an exterior fee notice on
its ATM. Charvat has not alleged an injury in fact caused by FNBW’s violation of the notice
requirements, and he will not be accorded standing.
Charvat cites White v. Arlen Realty & Dev. Corp., 540 F.2d 645 (4th Cir. 1975), in
support of his position that a statutory violation of the EFTA is in itself an injury creating
standing. In White, a credit provider violated the disclosure requirements of the Truth in

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Lending Act (“TILA”), 15 U.S.C. §1637(b)(2), by failing to give a brief identification of the
charges on the plaintiff’s charge card statement. Id. at 647-48. The court held that even
though the plaintiff had actual knowledge of the purchases he had made on his card, he
had a “right to specific information”– a description of his purchases on the charge card
statement. Id. at 649-50. Charvat cites this case as rejecting the proposition that “a
consumer who already knows of the information not provided by the defendant cannot
claim to be injured.” (Filing No. 11, at 5.) In White, however, it was not the plaintiff’s actual
knowledge of his purchases that was at issue. The plaintiff suffered injury in fact, although
he had actual knowledge of the purchases he had made on his charge card, because he
did not know what the creditor claimed to be his purchases. The White case demonstrates
the constitutional requirement that an injury in fact, which may be caused by a statutory
violation, must be alleged. Here, Charvat has not alleged an injury in fact caused by
FNBW’s failure to provide notice of the fee on the exterior of its ATM.
Charvat also cites cases where “testers” have been granted standing to bring suit
under statutorily created rights to certain information, despite not relying on the information
or being misled by false information. Charvat first cites Village of Bellwood v. Dwivedi, 895
F.2d 1521 (7th Cir. 1990), wherein the court held that “testers” paid to determine housing
discrimination had standing even though they had no actual intent to purchase property
and were not misled by the false information provided by realty companies, as Congress
had created a statutory right for purchasers to be free from such misrepresentations. Id.
at 1526-27 (citing Havens Realty Corp. v. Coleman, 455 U.S. 363, 374 (1982)). Charvat
then points to “testers” who have been held to have standing to sue for non-compliant

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transportation facilities under the American with Disabilities Act, even though they have no
intention of using public transportation themselves. Tandy v. City of Wichita, 380 F.3d
1277, 1285-88 (10th Cir. 2004). Finally, Charvat points to employment “testers” that have
been held to have standing to enforce non-discrimination statutes, because Congress has
mandated that every individual receive equal employment opportunity, even though the
“testers” had no intention of taking the jobs for which they applied. Kyles v. J.K. Guardian
Sec. Servs., Inc., 222 F.3d 289, 298-300 (7th Cir. 2000). It is true that like Charvat, the
“tester” plaintiffs did not rely on the information they received and did not personally allege
an injury that operated to their detriment. The information presented to the “testers,”
however, was deficient in that it was false, misleading, or delayed. Charvat does not allege
that FNBW’s failure to provide a fee notice “on or at” the ATM was in any way false or
misleading. The fee information was available to him through the on-screen notice. The
cases that Charvat cites do not change the fact that he must allege an injury in fact caused
by FNBW’s failure to comply with the EFTA notice requirements.
Charvat suggests that if this Court determines that a statutory violation of the notice
requirements of the EFTA is not in itself an injury, the Court would be stripping the statute
of a requirement purposefully imposed by Congress. He notes that Congress may have
discerned that one notification was not enough, or that unscrupulous ATM operators
should be prevented from luring consumers under the false presumption that no
transaction fee would be incurred. This Court does not question Congress’s purpose for
imposing the notice requirements. Instead, this Court is respectful of the constitutional
minimum requirement of standing that a plaintiff must have to proceed in an action before
the Court. This limitation on judicial power “is no mere formality: it ‘defines with respect to
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the Judicial Branch the idea of separation of powers on which the federal government is
founded.’” Dominguez v. UAL Corp., 666 F.3d 1359, 1361 (D.C. Cir. 2012) (quoting Allen
v. Wright, 468 U.S. 737, 750 (1983)).
II.

The federal government did not assign its “federal interests” to private actors
to enforce the notice requirements of the EFTA.
In an attempt to circumvent Article III’s standing requirement, Charvat alleges that

the federal government assigned its “federal interests” to private actors to enforce the
notice requirements of the EFTA. This argument is rejected for two reasons. First, the
EFTA is not a qui tam statute that clearly assigns the federal government’s standing to
private actors; and second, the purpose of the EFTA is to protect consumer interests and
not federal interests, thus there are no “federal interests” to assign.
Charvat develops his “assigned standing” argument by relying on Vermont Agency
of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000), wherein the court
held that a qui tam plaintiff who had suffered no injury had standing to bring suit on behalf
of the United States because he was a partial assignee of the United States’ interests
under the False Claims Act (“FCA”). Id. at 773. The FCA is a qui tam statute, meaning that
it allows an injury to the federal government–in this case fraud committed against the
federal government–to confer standing upon a private actor so that he may enforce the
federal government’s interests. Id. at 768-69. Unlike the FCA, the EFTA is not a qui tam
statute. The few qui tam statutes still in effect today make it clear within the statute that
an individual may sue on the federal government’s behalf. Id. at 802 n.1. There is no
language in the EFTA suggesting that a private actor may sue on the federal government’s
behalf. Although Charvat cites the provision for damages in the EFTA statute as evidence
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of Congress’s intent to encourage private actors to bring suit to enforce the statute, the
authorization of damages does not make the EFTA a qui tam statute. Vermont Agency
takes care to note that an interest unrelated to injury in fact, like the bounty a qui tam
plaintiff would recover by statute after a successful suit (or the statutory damages Charvat
would receive), is not enough to create standing. Id. at 772. Instead, a qui tam plaintiff
has standing because the federal government assigned its claims to private actors. Id. at
773. Moreover, the purpose of the EFTA is not to protect “federal interests” but rather to
protect consumer interests. 15 U.S.C. § 1693(b). The EFTA provides that a person is
liable under 15 U.S.C. § 1693m(a) for failing to comply with any provision of the Act “with
respect to any consumer.” Because the federal government has no federal interests in the
EFTA to assign to private actors, the federal government could not have assigned its
standing.
Charvat’s allegations suggest his interest appears to be solely in the enforcement
of the EFTA statute. Unless Charvat alleges an injury in fact, he does not have standing
to enforce the statute. Where the government has not assigned its claims to private
citizens, only the United States Attorney General may sue to redress the injury to the
Government. City of Kansas City v. Yarco Co., Inc., 625 F.3d 1038, 1041 (8th Cir. 2010).
Therefore, FNBW is entitled to dismissal of this action because Charvat has not alleged
an injury in fact.
III.

The standing issue before the Supreme Court in First American has bearing
on the standing issue presented here.
The issue before the Supreme Court in First Am. Fin. Corp. v. Edwards, 610 F.3d

514 (9th Cir. June 21, 2010), cert. granted, 131 S. Ct. 3022 (U.S. June 20, 2011) (No. 109

708) is similar to the standing issue presented here, and the Supreme Court’s decision will
be relevant to this motion. It is possible that the pending decision of the Supreme Court
in First American may alter this Court’s understanding of the constitutional minimum
requirement of standing. Therefore, it is in the best interest of Charvat that all further
proceedings in this matter to be stayed pending the Supreme Court’s decision.
In First American, plaintiff/respondent Edwards sued defendant/petitioner First
American Financial Corporation, a title insurance underwriter, for failing to disclose a
“kickback” to a title agency in which First American had an ownership interest. Edwards’s
claim is that she was injured because First American’s ownership interest violated the
mandatory disclosure requirements of the Real Estate Settlement Procedures Act
(“RESPA”), 12 U.S.C. § 2607(a). First Am. Fin. Corp., 610 F.3d at 515, 517. Edwards had
no complaint about the price or quality of the title insurance she received and alleged no
other harm than a statutory violation of RESPA. Petition for Writ of Certiorari, First Am.
Fin. Corp. V. Edwards, 2010 WL 4876485, at *1 (No. 10-708).
First American argues that Edwards did not suffer an injury in fact because Edwards
would have been charged the same fee for title insurance by any provider and she made
no claim that any alleged violation of RESPA operated to her detriment. Id. at *8. The fees
for title insurance in Ohio are set by state law, so disclosing the affiliation to the title agency
would not have changed the fee Edwards was charged. Id. at **5-6. First American raised
the question of “whether a plaintiff can establish standing to sue under RESPA merely by
alleging a statutory violation, without any claim that the violation affected the settlement

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services rendered.” Id. at *11. The Supreme Court granted certiorari to hear the following
question presented:
Does such a purchaser have standing to sue under Article III, § 2 of the
United States Constitution, which provides that the federal judicial power is
limited to “Cases” and “Controversies” and which this Court has interpreted
to require the plaintiff to “have suffered an ‘injury in fact,’” Lujan v. Defenders
of Wildlife, 504 U.S. 555, 560 (1992)?
Id. at *i; First. Am. Fin. Corp., 131 S. Ct. at 3022 (granting petition for writ of certiorari to
the above question).
Charvat contends First American has no bearing on the standing issue here
because there is not a competitive market in Ohio for title insurance fees and the
disclosure of the ownership interest in the title agency would not have affected the fee. In
this case, unlike First American, a competitive market exists for ATM fees. Charvat
believes the presence of a competitive market distinguishes the standing question here
because the EFTA mandates the fee notice requirements so that consumers can make an
informed choice of whether to make an EFT.
The presence of a competitive market does not change the relevance of the
question presented in First American and its applicability to the standing issue here. In
both First American and here, the question remains whether a violation of a statute, without
an alleged injury in fact, is in itself sufficient to create standing under Article III. For this
reason, and because it is in Charvat’s interest that his action not be dismissed by this Court
for lack of subject matter jurisdiction pending the Supreme Court’s decision in First
American, this Court will grant FNBW’s request to stay the proceedings in this matter
pending the Supreme Court’s decision.

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IT IS ORDERED:
1.

All further proceedings in this matter are stayed pending the Supreme
Court’s decision in First American Financial Corp. v. Edwards, No. 10-708
(cert. granted, June 20, 2011); and

2.

When the Supreme Court’s decision is filed, the Defendant must notify the
Court of the decision by filing a notice with the Court within seven days of the
date of the decision.

DATED this 4th day of June, 2012.
BY THE COURT:

s/Laurie Smith Camp
Chief United States District Judge

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