624 F.Supp.2d 677 (N.D.Ohio 2007), 3:06 CV 2391, Monroe Retail, Inc. v. Charter One Bank, N.A.

Docket Nº:3:06 CV 2391.
Citation:624 F.Supp.2d 677
Opinion Judge:KATZ, District Judge.
Party Name:MONROE RETAIL, INC et al., Plaintiff, v. CHARTER ONE BANK, N.A., et al., Defendant.
Attorney:Hal D. Burke, Michael J. Burke, Scheer, Green and Burke, Toledo, OH, William H. Bode, John A. Verdi, Bode & Grenier, Washington, DC, for Plaintiff. Brett K. Bacon, Gregory R. Farkas, Frantz Ward, Britt J. Rossiter, Frances F. Goins, Michael N. Ungar, Ulmer & Berne, Karen L. Giffen, Kerin L. Kamin...
Case Date:September 18, 2007
Court:United States District Courts, 6th Circuit, Northern District of Ohio

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624 F.Supp.2d 677 (N.D.Ohio 2007)

MONROE RETAIL, INC et al., Plaintiff,


CHARTER ONE BANK, N.A., et al., Defendant.

No. 3:06 CV 2391.

United States District Court, N.D. Ohio, Western Division.

September 18, 2007

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[Copyrighted Material Omitted]

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Hal D. Burke, Michael J. Burke, Scheer, Green and Burke, Toledo, OH, William H. Bode, John A. Verdi, Bode & Grenier, Washington, DC, for Plaintiff.

Brett K. Bacon, Gregory R. Farkas, Frantz Ward, Britt J. Rossiter, Frances F. Goins, Michael N. Ungar, Ulmer & Berne, Karen L. Giffen, Kerin L. Kaminski, Giffen & Kaminski, Cleveland, OH, Kirk D. Jensen, Matthew P. Previn, Buckley Kolar, Washington, DC, Dana M. Farthing, Sky Financial, Bowling Green, OH, for Defendant.


KATZ, District Judge.

This matter is before the Court on motions to dismiss filed by defendants Charter One Bank NA (Doc. 64), Huntington National Bank (Doc. 66), Huntington Bancshares, Inc. (Doc. 66), JPMorgan Chase Bank N.A. (Doc. 66), JP Morgan Chase & Co. (Doc. 66), Keybank NA (Doc. 67), KeyCorp (Doc. 67), National City Bank (Doc. 66), National City Corporation (Doc. 66), Sky Bank (Doc. 72), U.S. Bank, N.A. (Doc. 66), and U.S. Bancorp (Doc. 66). All the aforementioned entities are sometimes referred to collectively herein as " Defendants." The bank entities are referred to separately as " Defendant banks" and the holding companies are referred to separately as " Defendant holding companies."

I. Background

Plaintiffs in this action-Monroe Retail, Inc., Jerome Phillips, and Leo Marks, Inc. (collectively " Plaintiffs")-are garnishor-creditors in the State of Ohio. Plaintiffs allege that for the last four years they, and others like them, have obtained judgments against people who owe them money, and they have sought to collect those judgments by garnishing the judgment debtors' funds on deposit with the various defendant banks. It is this garnishment process which forms the basis for Plaintiffs' complaint.

The Complaint alleges that pursuant to Ohio Revised Code § 2716.12, a garnishor-such as the Plaintiffs-must include in the request for garnishment a one dollar fee which is paid to the garnishee-in this case, Defendant banks-as the garnishee's sole pre-garnishment processing fee. In other words, Plaintiffs contend that Defendant banks may not impose additional garnishment fees on customer accounts prior to full recovery of the amount Plaintiffs are owed. Defendant banks, however, each imposed an additional $25 to $80 fee on garnished accounts, which was assessed prior to the relinquishment of account proceeds. Plaintiffs argue that such fees reduce the amount of recovery that they are entitled to under Ohio Revised Code § 2716.12, and as such, are illegal.

II. Standard of Review

Fed.R.Civ.P. 12(b)(6) provides for dismissal of a lawsuit for " failure to state a claim upon which relief can be granted." To warrant dismissal, " it [must] appear[ ] beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Kottmyer v. Maas, 436 F.3d 684, 688 (6th Cir.2006) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). " A district court considering a

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defendant's motion to dismiss under Rule 12(b)(6) must construe the complaint in the light most favorable to the plaintiff and accept the plaintiff's allegations as true." Thurman v. Pfizer, Inc., 484 F.3d 855 (6th Cir.2007). However, it is unnecessary for the court to " accept as true legal conclusions or unwarranted factual inferences." Kottmyer, 436 F.3d at 688 (citing Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir.2000)).

III. Discussion

This Court addresses the following issues regarding Plaintiffs' complaint and the various motions to dismiss filed by Defendants: constitutional and judicial standing; Defendant holding companies as proper parties; the " one dollar" garnishment fee language of section 2716.12; Defendants' right to set-off; and preemption of state claims by federal banking law.

A. Standing

The first issue this Court must address is the argument by certain defendants that Plaintiffs lack standing to bring this suit. There are two levels of standing at issue: that required by Article III of the U.S. Constitution, and the doctrine of prudential standing.

1. Article III standing

Article III standing requires a Plaintiff to show " proof of injury in fact, causation and redressability." Coyne v. American Tobacco Co., 183 F.3d 488, 494 (6th Cir.1999). Plaintiffs must meet Article III's standing requirements by showing: 1) an injury in fact that is 2) causally related to Defendants' actions, and 3) redressable by the requested relief. Id. The only movant to raise the standing issue, Charter One, does not actively contest Plaintiffs' Article III standing, so the Court will address the issue only summarily.

Plaintiffs have suffered actual injuries, arising from the reduction in recoveries available after the imposition of Defendants' garnishment fees. While the legal contentions upon which they base this suit may well be flawed, Plaintiffs' argument does satisfy the " injury in fact" requirement of standing. Such fees present the necessary causal relationship between their injuries and Defendants' actions, and there is a substantial likelihood that providing the economic relief they request will redress their loss.

2. Prudential standing

Prudential standing requires first that the " plaintiff ... assert his own legal rights and interests; " second that the " plaintiff's claim ... be more than a generalized grievance that is pervasively shared by a large class of citizens; " and third that " the plaintiff's claim ... fall within the zone of interests regulated by the statute in question." Id. Here, Defendants dispute only the first requirement of prudential standing, arguing that Plaintiffs are asserting the rights and interests of the people who were charged the fees above one dollar, not Plaintiffs' own rights and interests.

" The Supreme Court has recognized that ‘ a plaintiff who complain[s] of harm flowing merely from the misfortunes visited upon a third person by the defendant's acts ... generally ... stand[s] at too remote a distance to recover.’ " Id. at 494-95 (quoting Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268-69, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992)). In Holmes, such remoteness was found to exist where a third party corporation, seeking to recover for an alleged RICO violation, attempted to subrogate itself to the claims of customers indirectly harmed by their brokers after a conspiracy left them without the funds to pay customer

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claims. The Court found the only connection between the conspirators' acts and the losses suffered by customers to be the insolvency of the broker-dealers due to the fact that they could no longer pay their bills, a connection too tenuous to support the third party's RICO claim. Id. at 271, 275, 112 S.Ct. 1311.

Similarly, in Coyne, a group of citizens representing the State of Ohio and Ohio taxpayers sought recovery of state monies that had been spent treating citizens suffering from tobacco-related illnesses. 183 F.3d at 491. The Sixth Circuit held that the plaintiffs lacked standing because their injuries were " not direct or particularized" since they sought damages for non-party smokers and the State of Ohio itself. Id. at 495-96.

In the instant case, Defendant Charter One draws from Coyne and Holmes to suggest that Plaintiffs' complaint alleges only harm flowing from the misfortunes of third parties, i.e., the customers who were actually assessed the fees. Charter One argues that Plaintiffs must attempt to " stand in the shoes" of their debtors in order to establish any basis for standing, attenuating their claims as in Coyne and Holmes. Plaintiffs, on the other hand, insist that Ohio law confers upon them rights that have been directly harmed, without reference to the rights of their debtors.

Specifically, Plaintiffs cite Ohio Revised Code § 2716.21(F)(1), which provides:

If a garnishee fails to answer as required by this section, answers and the garnishee's answer is not satisfactory to the judgment creditor, or fails to comply with the order of the court to pay the money owed or deliver the property into court or to give the bond authorized under division (B) of this section, the judgment creditor may proceed against the garnishee by civil action.

As Plaintiffs note, language like this was lacking in Holmes, where the RICO statute under which the third-party sought to recover conferred standing on " any person injured in his business or property by reason of a violation [of the Act]." The Court's holding in Holmes was based on limitless litigation fears arising from indirect injuries; a concern later implicated by the claims in Coyne, but lacking in this case. Here, Ohio's statute contains a specific grant of a civil remedy to garnishors. Because of this specificity and the fact that Plaintiffs allege a direct injury to their rights under § 2716.12, this case differs in an important respect from Holmes and Coyne. As such, Plaintiffs have satisfied the requirements for prudential standing.

B. Defendant holding companies as proper defendants

In the motion filed by Defendant holding companies, Huntington Bancshares, Inc., JPMorgan Chase and Co., National City Corporation, and U.S. Bancorp argue that Plaintiffs have failed to state claims against Defendant holding companies because the complaint does not allege that the holding companies offer deposit accounts or charge garnishment fees. Additionally, Defendants ask this Court to dismiss Plaintiffs' claims to the extent that they derive from the conduct of subsidiaries.

In reviewing a motion for judgment on the pleadings or a motion to dismiss, this Court must accept the complaint's factual allegations as true,...

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