Howards v. Fifth Third Bank

• Decision Date: 06 February 2023
• Docket Number: 1:18-cv-869
• Parties: TROY HOWARDS, individually and on behalf of all others similarly situated, Plaintiff, v. FIFTH THIRD BANK, Defendant.
• Court: U.S. District Court — Southern District of Ohio

TROY HOWARDS, individually and on behalf of all others similarly situated, Plaintiff, v. FIFTH THIRD BANK, Defendant.

No. 1:18-cv-869

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

February 6, 2023

OPINION & ORDER

MICHAEL R. BARRETT, JUDGE

This matter is before the Court on Defendant Fifth Third Bank's Motion to Dismiss (pursuant to Fed.R.Civ.P 12(b)(6)) Plaintiff's First Amended Class Action Complaint. (Doc. 49). Plaintiff has filed a memorandum in opposition (Doc. 57)^[1], to which Defendant has replied (Doc 68).^[2]

As an overview, the First Amended Class Action Complaint (“FAC”), filed on July 2, 2018, challenges three different account fees that Defendant Fifth Third Bank (“Fifth Third”) assesses to accountholders. (Doc 17). Plaintiff claims that this conduct: breaches his contract with Fifth Third as well as the implied covenant of good faith and fair dealing (First Claim for Relief); violates California's Unfair Competition Law (“UCL”), codified at Ca. Bus. & Prof. Code § 17200 et seq. (Second Claim for Relief); and violates California's Consumers Legal Remedies Act (“CLRA”), codified at Cal. Civ. Code § 1750 et seq. (Third Claim for Relief). The account fees at issue are out-of-network (“OON”) fees assessed on in-network ATM withdrawal transactions, multiple non-sufficient funds (“NSF”) fees assessed on the same transaction, and overdraft (“OD”) fees assessed on one-time debit card transactions.^[3]

Plaintiff has since “elect[ed] not to oppose [Fifth Third's] Motion as to his CLRA claim, agreeing to its dismissal.” (Doc. 57 PAGEID 1081 n.1). Additionally, Plaintiff has agreed “not to further pursue a claim challenging [Fifth Third's] assessment of the challenged OON Fees on behalf of the proposed OON Fees classes[.]” (Stipulation Regarding Plaintiff's Agreement to Drop Allegations Pertaining to Out of Network ATM Fees from First Amended Complaint, Doc. 97 PAGEID 1738). To inform the Court's analysis, the parties have stipulated to dismissal of Plaintiff's Third Claim for Relief (in its entirety) and that portion of Plaintiff's First and Second Claims for Relief pertaining to OON fees (only). (Id. PAGEID 1739). Thus, the Court will proceed to decide Fifth Third's Motion as to the two remaining theories of liability^[4]alleged in Plaintiff's First and Second Claims for Relief. (See id.).

I. BACKGROUND^[5]

Plaintiff Troy Howards, a California resident, maintains a Fifth Third checking account. (FAC, Doc. 17 (¶¶ 10, 13)). Fifth Third's Deposit Account Rules and Regulations (“R&R”) govern his account. (Id. (¶ 13)^[6]). Fifth Third issues debit cards to its checking account customers, giving them electronic access to their account for purchases, payments, and ATM withdrawals. (Id. (¶¶ 11, 14)). As noted, this case involves debit card transactions.

Fees charged to Plaintiff's checking account. On June 19, 2017, Plaintiff took an Uber ride that cost $13.16. (Id. (¶ 39)). Fifth Third rejected payment of this transaction because Plaintiff had insufficient funds in his account and charged Plaintiff a $37 NSF fee. (Id. (¶ 40)). One week later, on June 26, 2017, this same transaction was submitted for payment again, rejected again for insufficient funds, and Plaintiff was charged another $37 NSF fee. (Id. (¶ 41)). This event was listed as a “Retry Payment” on Plaintiff's account statement. (Id. (¶ 42)). The same transaction was submitted for payment a third time. (Id. (¶ 43)). Unlike before, though, Fifth Third paid the transaction and instead charged Plaintiff a $37 OD fee. (Id.). This event, too, was listed as a “Retry Payment” on Plaintiff's account statement. (Id. (¶ 44)). All told, Fifth Third charged $111 in fees to process a single $13 payment to Uber. (Id. (¶ 45)). This pattern repeated on August 1, 2017 and August 8, 2017, when Fifth Third charged two $37 NSF fees (totaling $74) on a single $6.99 Uber ride. (Id. (¶ 48)).

Plaintiff was charged OD fees in three other instances. On June 22, 2017, Plaintiff took an Uber ride that cost $5.00; he was charged a single $37 OD fee. (Id. (¶ 94)). On July 20, 2017, Plaintiff took two Uber rides that each cost $4.99; he was charged with a $37 OD fee for each ride. (Id. (¶ 92)). On July 27, 2017, Plaintiff took two Uber rides that cost $6.99; he again was charged with a $37 OD fee for each ride. (Id. (¶ 93)).

Deposit Account R&R. Plaintiff alleges that the Deposit Account R&R allows Fifth Third to charge “at most” a single NSF fee or a single OD fee on an “item” presented for payment. (FAC, Doc. 17 (¶ 47); see id. (¶¶ 49-70)). Plaintiff also alleges that that the Deposit Account R&R expressly states that Fifth Third will not assess OD fees on “one- time” (or “everyday”) debit card purchases when a customer, like himself, does not opt-in to “Overdraft Coverage” for this specific purpose. (Id. (¶¶ 84-94)).

The following excerpts from the Deposit Account R&R (issued May 2017) are in play:

Customer authorizes Bank to honor any items bearing Customer's account number if Customer has disclosed that account number to the payee or any representative, affiliate, or party associated with the payee, whether or not the item is signed by the Customer. Customer further agrees that Bank may presume that authorization was obtained by the issuer of the item. For example, if Customer voluntarily gives information about their account (such as the routing number and account number) to a party who is seeking to sell Customer goods or services and Customer does not physically deliver a check to the party, any debit to the account initiated by the party to whom you gave the information is deemed authorized. Customer is responsible for all properly payable items.^[7]

*****

Customer agrees that Bank will not be liable if Customer fails to exercise ordinary care in examining their [account] statements. Customer will notify Bank of any discrepancy with any item, including, but not limited to, deposits, withdrawals, and checks, within thirty (30) days of the statement mailing or made available to customer date. Customer will also notify Bank of any forgery or alteration of any item within thirty (30) days of the statement mailing or made available to customer date. If notification is not received, Bank will have no liability for such item(s).^[8]

*****

You can avoid overdraft situations by always making sure you have sufficient funds in your account to cover all of the debits (-) you make. We have services available to help you keep track of your account balance and the money you have spent.... We also offer several options that may help you manage times when you are facing an overdraft situation. These options include Overdraft Protection and, for consumer accounts, Overdraft Coverage for ATM and one time debit card transactions.^[9]

*****

We may assess a fee for overdrafts created by checks, in-person withdrawals, ATM withdrawals, debit card transactions, or other debits. We may assess an overdraft/returned item fee whether we pay or return a debit (-). See the “Deposit Account Pricing & Services” section of the Welcome Kit for information on the fees. ....

For debits (-) which require approval at the time of the transaction, such as debit card purchases, we may authorize or decline the debit (-) if the transaction would overdraw your account. Even if we authorize a debit card item, you may still be assessed an overdraft fee if your account does not have sufficient funds to pay the debit (-) when it is actually presented for payment and posts to your account.

These are the ways a debit (-) may be handled when there is not enough money in your account:

• If you choose to enroll, Overdraft Protection may be used to pay the debit (-) (using funds from another Fifth Third account).

• Overdraft Coverage may be applied by the Bank, at the Bank's discretion, to pay the debit (-), resulting in a negative balance in your account.

• Your debit (-) may be returned unpaid[.]

If you are charged overdraft or returned item fees, the fees will be an additional debit (-) to your account and will further increase the negative balance in your account if a deposit is not made on time.

For consumer accounts, we will not assess a per-item overdraft fee for ATM and one-time debit card items unless you have accepted Overdraft Coverage on your account for these transactions.

You are responsible for Overdrawn Accounts. As a Fifth Third customer, you agree to immediately pay to us the amount of any overdraft, plus any related fees. Our payment of a debit (-) when there is not enough money in your account is not an application for credit. You also acknowledge that the amount of deficiency, whether due to the amount of the overdraft or any fees assessed, is immediately due and payable without further demand.^[10]

*****

An overdraft occurs when you do not have sufficient funds in your account to cover a transaction; however, with Overdraft Coverage we may pay it anyway. One way we can cover your overdrafts is by extending a standard Overdraft Coverage service as part of your checking account relationship. As part of this service, we do authorize and pay overdrafts for the following types of transactions:

• Checks and other transactions made by using your checking account number

• Automatic bill payments

However, we do not authorize and pay overdrafts for the following types of transactions unless you instruct us to do so:

• ATM transactions

• Everyday debit card transactions

If you want us to authorize and pay overdrafts for ATM and Debit Card transactions, contact us or visit 53.com/accountmanagementservices. You may change your Overdraft Coverage preference selection at any time by any of the methods noted above.^[11]

*****

Checking and Savings Account Overdraft/Returned Item Fee Beginning May 2,

...