Flores v. Bank of America, N.A.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS, AND DENYING PLAINTIFF'S MOTION FOR SURREPLY AS MOOT

          WILLIAM J. MARTINEZ, UNITED STATES DISTRICT JUDGE

         This is a proposed class action lawsuit between Plaintiff Victoria Flores (“Flores”) and Defendant Bank of America, N.A. (“Bank of America, ” but sometimes referred to as “Bof A” or “BOA” in the parties' papers). Flores alleges that she had a no-fee “eBanking Checking Account” account with Bank of America for several years before January 2018. In the middle of that month, Bank of America automatically enrolled her and all other eBanking account holders, allegedly without their consent, in a new “Core Checking” account with an automatically-withdrawn $12 monthly fee. Apparently she and many others paid this monthly fee unknowingly for some time thereafter.

         Invoking this Court's diversity jurisdiction, see 28 U.S.C. § 1332(a), Flores now sues Bank of America, on her own behalf and on behalf of a proposed nationwide class, claiming that Bank of America is liable to former eBanking account holders for these automatic withdrawals. She specifically pleads five claims for relief:

• breach of contract (Claim 1);

• breach of the covenant of good faith and fear dealing (Claim 2), sometimes referred to below as a “GFFD” claim;

• violation of the Colorado Consumer Protection Act (“CCPA”), Colo. Rev. Stat. §§ 6-1-101 et seq. (Claim 3);

• conversion (Claim 4); and

• unjust enrichment (Claim 5).

(ECF No. 1 at 11-15.)

         Currently before the Court is Bank of America's Motion to Dismiss Plaintiff's Complaint and, in the Alternative, Strike Class Allegations (“Motion”). (ECF No. 8.) Also before the Court is Flores's Motion for Leave to File Surreply (“Surreply Motion”). (ECF No. 22.) The Court heard oral argument on June 7, 2019. (ECF No. 35.) For the reasons set forth below, the Court: (i) grants the Motion with prejudice as to Flores's claims for breach of contract and conversion, (ii) grants the Motion without prejudice as to Flores's claims for violation of the CCPA and unjust enrichment, (iii) denies the Motion as to Flores's claim for breach of the covenant of good faith and fair dealing to the extent Flores alleges Bank of America abused its discretion to send notice as part of a bank statement, (iv) grants the Motion with prejudice as to the remainder of Flores's GFFD claim, and (v) denies the Motion without prejudice to the extent it seeks to strike class allegations. The Court will lift the stay of discovery, but, for the time being, will limit the parties to individual (non-class) discovery, to illuminate certain issues that may be dispositive. The Court will defer class certification proceedings until the significance of that discovery has been evaluated. Finally, the Surreply Motion is denied as moot.

         I. RULE 12(b)(6) STANDARD

         A. General Standard

         Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a claim in a complaint for “failure to state a claim upon which relief can be granted.” The 12(b)(6) standard requires the Court to “assume the truth of the plaintiff's well-pleaded factual allegations and view them in the light most favorable to the plaintiff.” Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007). In ruling on such a motion, the dispositive inquiry is “whether the complaint contains ‘enough facts to state a claim to relief that is plausible on its face.'” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Granting a motion to dismiss “is a harsh remedy which must be cautiously studied, not only to effectuate the spirit of the liberal rules of pleading but also to protect the interests of justice.” Dias v. City & Cnty. of Denver, 567 F.3d 1169, 1178 (10th Cir. 2009) (internal quotation marks omitted). “Thus, ‘a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.'” Id. (quoting Twombly, 550 U.S. at 556).

         B. Documents Outside the Pleadings

         The Court may consider a document outside the pleadings, even in a Rule 12(b)(6) analysis, if the document is (1) “mentioned in the complaint, ” (2) “central to [the] claims [at issue], ” and (3) not challenged as inauthentic. Toone v. Wells Fargo Bank, N.A., 716 F.3d 516, 521 (10th Cir. 2013).^[1]

         Flores's complaint repeatedly refers to “the agreement” between Flores and Bank of America, and sometimes more specifically to the “Deposit Agreement.” (See, e.g., ECF No. 1 ¶¶ 3, 31, 59, 61-63.) Bank of America therefore asks the Court to consider the 2012 and 2017 versions of its “Deposit Agreement” and “Personal Schedule of Fees, ” which Bank of America represents to comprise the “agreement” to which Flores refers in the complaint. (ECF No. 8 at 1-2 & n.1;^[2] see also ECF Nos. 8-2 through 8-5.) The Court agrees that these documents are mentioned in the complaint and central to Flores's claims. In addition, Flores does not contest them as inauthentic, but instead relies upon them in her response brief. (See, e.g., ECF No. 10 at 4.) Accordingly, the Court will treat those documents as part of the pleadings.

         Flores's complaint also refers to what she claims to be the only notice she ever received that her eBanking account would become a Core Checking account. (ECF No. 1 ¶¶ 23, 25.) She says this notice was placed on the last page of a several-page monthly statement “at the end of 2017.” (Id.) Bank of America accordingly asks the Court to consider a redacted version of Flores's October 2017 bank statement, which Bank of America represents to be the notice to which Flores refers. (ECF No. 8 at 2 n.1.) Flores disputes the admissibility of this document in the present circumstances, but she changes the focus from whether the document is authentic to whether she received it. She claims, by way of declaration, that she

was never actually provided with the statement BOA now relies on to prove notice and assent. Rather, BOA sent an email to Plaintiff telling her that she could, if she chose, go to BOA's website to download the statement. There is no evidence BOA notified Plaintiff that this particular statement (as opposed to the dozens of others she received during the five years her account was open) was somehow special and included binding contractual changes. Nor is there any evidence Plaintiff actually viewed the statement. Plaintiff does not recall doing so.

(ECF No. 10 at 7 (citations omitted).)

         The problem with this argument is that the complaint-and, indeed, all of Flores's arguments apart from this attempt to prevent the October 2017 statement from being considered a part of the pleadings-rests on the notion that the notice was received but was nonetheless intentionally designed by Bank of America to be overlooked because it was given only once, and it appeared on the last page of an otherwise typical online-only monthly statement. (See ECF No. 1 ¶¶ 22-30; ECF No. 10 at 3, 7-9.) Thus, the argument as stated in the complaint is independent of what the notice actually says. The question raised by Flores's complaint is whether the manner of presenting the notice was sufficient to obtain account holders' consent, not whether the words of the notice were, e.g., deceptive or ambiguous. In short, accepting the October 2017 statement as part of the pleadings is appropriate because Flores does not argue that it is inauthentic, nor does she claim that it alters her theory as presented in the complaint.

         II. BACKGROUND

         The Court derives the following summary from the complaint and the documents the Court has agreed to consider as part of the pleadings.

         A. The Governing Contracts

         Flores opened her eBanking checking account no later than 2012. (ECF No. 10 at 7.) The monthly maintenance fee for an eBanking checking account was $8.95, which Bank of America waived if the account holder met both of the following [conditions] during each statement cycle:

• Use paperless statements

And

• Use self-service options (such as our ATMs and Online Banking, instead of a teller) for deposits and withdrawals[.]

(ECF No. 8-3 at 4 (formatting in original).)

         The Deposit Agreement between Flores and Bank of America contained, among many other things, a very broad reservation of Bank of America's right to modify the Agreement:

We may change this Agreement at any time. We may add new terms. We may delete or amend existing terms. We may add new accounts and services and discontinue existing accounts or services. We may convert existing accounts and services into new accounts and services.

We ordinarily send you advance notice of an adverse change to this Agreement. However, we may make changes without prior notice unless otherwise required by law. We may, but do not have to, notify you of changes that we make for security reasons or that we believe are either beneficial or not adverse to you.

When we change this Agreement, the then-current version of this Agreement supersedes all prior versions and governs your account.

If you continue to use your account or keep it open, you are deemed to accept and agree to the change and are bound by the change. If you do not agree with a change, you may close your account as provided in this Agreement.

(ECF No. 8-2 at 4.) The Court will refer to this as the “Modification Clause.”

         Also relevant here is a similar clause specific to account conversions:

We may convert your account to another type of account, revoke privileges or close your account:

* * *

• when we consider it appropriate or necessary to do so.

If we discontinue your type of account, we may convert your account to another type of account. . . . If we convert your account, we will send you information about your new account.

(Id. at 19 (formatting in original).) The Court will refer to this as the “Conversion Clause.”

         Supplementing the Modification Clause and Conversion Clause is language regarding Bank of America's manner of providing notice:

When we inform you of changes affecting your rights and obligations, we do so by delivering or otherwise making a notice available to you. In some cases, we may post a notice of a change in our banking offices or on our website. Otherwise, we mail the notice to you at the address we currently show for your statement or, if we have agreed on this method, we provide it to you electronically. We may provide a notice as a message on your statement or as an insert with your statement.

(Id. at 15.) The Court will refer to this as the “Notice Clause.”

         The Deposit Agreement also contained a “Governing Law Clause”:

This Agreement, and your and our rights and obligations under this Agreement, are governed by and interpreted according to federal law and the law of the state where your account is located. We ordinarily maintain your account at the banking center where we open your account. However, we may transfer your account to another banking center in the same state or in a different state.

(Id. at 4.) Indirectly elaborating on this clause, the Personal Schedule of Fees states: “We have to maintain deposit accounts at one of our banking centers. If you live in a state where we do not have a banking center and you ask us to open a personal account for you, we currently maintain the account at one of our banking centers in Virginia.” (ECF No. 8-3 at 3.)

         B. Conversion from eBanking to Core Checking

         In October 2017, Bank of America issued to Flores an online bank statement- again, Flores was required to accept online-only statements to maintain the waiver of the $8.95 fee. On the first page of the statement, immediately underneath Flores's address, was a conspicuous notice stating, “Please see the Important Messages -Please Read section of your statement for important details that could impact you.” (ECF No. 8-6 at 2 (boldface in original).) The statement then went on to set forth Flores's account balances and transaction history, followed by a blank page. (Id. at 2- 5.) After the blank page was a new page with a large-type, bold heading, “Important Messages - Please Read.” (Id. at 6.) The notice announced that, “[o]n January 19, 2018, your eBanking checking account will change to a Bank of America Core Checking® account.” (Id.) Bank of America explained that “[a]ccount information, including your account number, checks and debit card, all remain the same, ” but that certain other changes would take effect, specifically:

• Financial center transactions - beginning January 19, 2018, you will no longer pay a monthly maintenance fee because you use a teller to make deposits and withdrawals. With your Core Checking account, you will be able to make unlimited deposits and withdrawals with a teller at a financial center.

• Monthly maintenance fee - a $12 monthly maintenance fee will apply to your Core Checking account beginning with your statement cycle that starts on or after January 19, 2018. However, you can avoid this fee when you meet any ONE of the requirements shown below during each monthly statement cycle. Otherwise, the $12 monthly fee will be deducted from your account.

(Id. (formatting in original).) The “requirements shown below” were:

• Have at least one qualifying direct deposit of $250 or more, such as your salary, pension, Social Security or other regular monthly income, OR

• Keep a minimum daily balance of $1, 500 or more in your account, OR

• Enroll in the Preferred Rewards program and qualify for the Gold, Platinum or Platinum Honors tier (waiver applies to first 4 checking accounts).

(Id. (formatting in original).) The message also stated that Flores had not met any of these requirements in the previous June, July, and August, and so she “would have been charged the monthly fee” under the new rules. (Id.)

         Flores alleges that Bank of America “intentionally” chose to notify eBanking account holders of the upcoming change in the foregoing manner “because it knew few people would be able or likely to see this notification.” (ECF No. 1 ¶ 24.) Elaborating, Flores alleges:

First, the notice was placed on the very last page of the statement, ^[3] well after actual banking details-the information consumers actually care about-were provided.

Second, eBanking accountholders were required to receive all statements electronically. That means accountholders never received any written, mailed notice of their account closure.

Instead, consumers would have had to scroll the end of a several-page electronic document to see any notification whatsoever of their account closure.

Moreover-and as Bof A is well aware-many of the low-income consumers who were enrolled in the eBanking accounts do not have regular access to computers. Bof A knows low income people generally use their phones, if they have digital access at ...