United States District Court, D. Colorado
VICTORIA FLORES, on behalf of herself and all others similarly situated, Plaintiff,
v.
BANK OF AMERICA, N.A., Defendant.
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automatically-withdrawn $12 monthly fee.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 ...