Guerrero v. Bank of Am.
| Decision Date | 01 July 2022 |
| Docket Number | Civil Action 3:21-CV-00333-RJC-DSC |
| Parties | JESUS GUERRERO, MAUREEN YOUNG, RACHELLE BLAKE AND RHONDA MCDONALD ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Plaintiffs, v. BANK OF AMERICA N.A. Defendant. |
| Court | U.S. District Court — Western District of North Carolina |
MEMORANDUM AND RECOMMENDATION
THIS MATTER is before the Court on Defendant Bank of America N.A.'s Motion to Dismiss the First Amended Complaint or, in the Alternative, Stay (Doc. 31) Defendant's Motion to Strike Unjust Enrichment Class Allegations (Doc. 32), and the parties' briefs and exhibits.
This matter has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1) and the Motion is now ripe for the Court's consideration.
Having fully considered the arguments, the record, and the applicable authority, the undersigned respectfully recommends that Defendant's Motion to Dismiss be granted in part and denied in part as discussed below. The undersigned further recommends Defendant's Motion to Strike be denied as moot.
This putative class action is one in a series of cases arising from foreign transactions conducted by Plaintiffs Jesus Guerrero, Maureen Young, Rachelle Blake, and Rhonda McDonald using payment cards issued by Defendant Bank of America N.A. All allegations in the First Amended Complaint are accepted as true.
Defendant is a global financial institution that issues various types of payment cards to individuals. To facilitate payments conducted with these cards, Defendant contracts with Visa Inc., Visa U.S.A. Inc., and Visa International Service Association (collectively “Visa”) and Mastercard Incorporated and Mastercard International Incorporated (collectively “Mastercard”). Visa and Mastercard maintain electronic payment networks through which they process and transmit information pertaining to each transaction initiated by a cardholder. When a cardholder initiates a transaction for goods or services denominated in a foreign currency, Visa or Mastercard convert the cardholder's U.S. Dollars to the foreign currency and apply a foreign currency conversion rate (“FX conversion rate”) that is a percentage of the payment sum. Visa and Mastercard's services regarding Defendant-issued cards are governed by separate written agreements between the two companies and Defendant (the “Processor Rules”).
When Defendant issues a card to a cardholder, it does so pursuant to various written agreements. Prepaid cards are governed by a Commercial Prepaid Card Agreement (“Prepaid Credit Agreement”). Credit cards are governed by a credit card agreement (“Credit Card Agreement”). The parties agree debit cards are at a minimum governed by a debit card brochure (“Debit Card Brochure”). Defendant asserts that debit cards are also governed by a deposit agreement signed by each account holder (“Deposit Agreement”). Cardholders are issued a card branded either by Visa or Mastercard, which processor facilitates transactions made with that card.
There is no substantial difference in the relevant language in the agreements governing a Visa-branded card and a Master-card branded card of the same type, i.e., a Visa-branded credit card and a Mastercard-branded credit card. Moreover, the relevant language in each agreement remained substantially unchanged through all time periods covered by the First Amended Complaint.
Each agreement contained language governing the use of Defendant-issued cards to conduct transactions for goods or services denominated in foreign currency. Plaintiffs quote language from the agreements as examples, but do not attach any of them as exhibits to the First Amended Complaint.[1] With its Motion to Dismiss, Defendant attaches copies of a Credit Card Agreement (Doc. 31-5), Debit Card Brochure (Doc. 31-6), Deposit Agreement (Doc. 31-7), and Prepaid Card Agreement (Doc. 31-8). The agreement language supplied by Plaintiffs and Defendant varies slightly. For example, the First Amended Complaint quotes a Credit Card Agreement dated May 31, 2016 as follows:
If you make a transaction in a foreign currency (including for example, online purchases from foreign merchants), the transaction will be converted by Visa International or MasterCard International, depending on which card is associated with this account, into a U.S. dollar amount in accordance with the operating regulations or conversion procedures in effect at the time the transaction is processed. Currently, those regulations and procedures provide that the currency conversion rate to be used is either (1) a wholesale market rate or (2) a government-mandated rate in effect one day prior to the processing date. The currency conversion rate in effect on the processing date may differ from the rate in effect on the transaction date or posting date.
Doc. 29, ¶ 54 (emphasis in original).
The corresponding paragraph in the sample Credit Card Agreement dated December 31, 2021 provided by Defendant reads:
If a transaction is made in a foreign currency, the transaction will be converted by Visa International or Mastercard International . . . into a U.S. dollar amount in accordance with the operating regulations or conversion procedures in effect at the time the transaction is processed. The currency conversion rate used by Visa is either (a) a rate selected by Visa from the range of rates available in wholesale currency markets for the applicable processing date, which rate may vary from the rate Visa receives; or (b) the rate mandated by a government or governing body in effect for the applicable processing date.
The named Plaintiffs were issued Visa-branded credit and debit cards by Defendant pursuant to the relevant agreements.[2] Members of the putative class were issued similar cards, Mastercard-branded credit and debit cards, and prepaid cards pursuant to relevant agreements. From December 2017 to October 2019, Plaintiffs used their cards to make numerous purchases denominated in foreign currencies. In some of these transactions, Visa applied an FX conversion rate that exceeded the range of wholesale market rates, or the rates paid by participants in the wholesale currency exchange market on the date when the transaction was processed. To others, Visa applied an FX conversion rate calculated by selecting bid and ask rates that occurred in different transactions but did not occur together in the wholesale market on the given date. The resulting FX conversion rates fell within the mathematical range of wholesale market rates on that date but did not correspond to any actual rate paid by a market participant. Visa also selected and applied FX conversion rates that did not correspond to the actual rates either Visa or Defendant paid in obtaining currencies necessary to effectuate Plaintiffs' transactions, and which were not proportional to the risks or costs borne by Visa or Defendant in effectuating these transactions. Visa and Mastercard selected rates similarly to transactions made by members of the putative class using various payment cards issued by Defendant. Defendant ratified each of these rates, charged them to Plaintiffs' and class members' accounts in billing statements, and collected payments thereon.
Plaintiffs commenced this action in this Court on July 9, 2021. Doc. 1. They amended their Complaint on December 20, 2021. Doc. 29. They bring claims for breach of contract (Count I), unjust enrichment (Count II), and breach of the implied covenant of good faith and fair dealing (Count III), as well as statutory claims under the North Carolina Unfair and Deceptive Trade Practices Act (Count IV), the California Unfair Competition Law (Count V), and the Texas Deceptive Trade Practices Act (Count VI). Defendant moved to dismiss the Complaint in its entirety on April 4, 2022. Doc. 31. Defendant simultaneously moved in the alternative to strike Plaintiffs' unjust enrichment claims from the nationwide class action. Doc. 32.
“A court does not have subject matter jurisdiction over an individual who does not have standing.” Ansley v. Warren, No. 1:16-cv-00054-MOC-DLH, 2016 WL 5213937, at *9 (W.D. N.C. Sept. 6, 2016) (internal quotations omitted) (quoting AtlantiGas Corp. v. Columbia Gas Transmission Corp., 210 Fed.Appx. 244, 247 (4th Cir. 2006). A claim must be dismissed if the court lacks subject-matter jurisdiction. Fed.R.Civ.P. 12(b)(1). The presence of subjectmatter jurisdiction is a threshold issue the court must determine before considering the merits of a case. Jones v. Am. Postal Workers Union, 192 F.3d 417, 422 (4th Cir. 1999). Plaintiff has the burden of proving that subject-matter jurisdiction exists. Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). The district court should grant the Rule 12(b)(1) motion to dismiss “only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.” Id.
In reviewing a Rule 12(b)(6) motion, “the court should accept as true all well pleaded allegations and should view the complaint in a light most favorable to the plaintiff.” Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). The plaintiff's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.” Id. at 563. A complaint attacked by a Rule 12(b)(6) motion to dismiss will survive if it contains enough facts to “state a claim to...
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