Morris v. Walmart Inc.
| Decision Date | 23 January 2023 |
| Docket Number | CV 22-16-BLG-SPW-TJC |
| Parties | BRANDY MORRIS, on behalf of herself and others similarly situated, Plaintiff, v. WALMART, INC., previously known as Wal-Mart Stores, Inc., Defendant. |
| Court | U.S. District Court — District of Montana |
FINDINGS AND RECOMMENDATION OF U.S. MAGISTRATE JUDGE
Plaintiff Brandy Morris (“Morris”), brings this putative class action against Defendant Walmart, Inc. (“Walmart”), arising from Walmart's returned check fee processing practices. (Doc. 3.) Presently before the Court is Walmart's Motion to Dismiss. (Doc. 14.) The motion has been referred to the undersigned under 28 U.S.C § 636(b)(1)(B), and is fully briefed and ripe for review. (Docs. 23, 27.) For the following reasons, the Court recommends that Walmart's motion be GRANTED in part and DENIED in part.
Morris alleges that Walmart's return check practices breached its Check Policy that is posted at checkout aisles in its Montana stores. The Check Policy provides:
(Doc. 3 at 6.)
Morris alleges in her Complaint that she wrote a check for $139.71 at a Walmart store in Montana on January 2, 2018. The check was returned unpaid by Morris's bank, and her bank assessed a $30 NSF Fee.
Six days later, on January 8, 2018, Walmart attempted to process the check again. The check was again returned unpaid by Morris's bank, and Morris was charged another $30 NSF Fee by the bank.
After the second returned check, Walmart attempted to withdraw a $25 Return Fee from Morris's bank account on January 19, 2018. Morris's account did not have sufficient funds to cover the Return Fee, so the attempt was returned unpaid, and Morris's bank charged her another $30 NSF Fee.
Walmart again attempted to deduct a $25 Return Fee from Morris's account on January 26 and February 2, 2018. The attempts were again returned unpaid, and Morris's bank charged her two additional $30 NSF Fees.
In total, Walmart attempted five separate withdrawals from Morris's account - two for the amount of the check, and three for the collection of Walmart's return fee. As a result of Walmart's reprocessing practices, Morris was assessed $150 in NSF Fees by her bank.
Morris now brings this action challenging Walmart's practices of 1) repeatedly attempting debits of its own returned check fees for the same check; and 2) reprocessing returned checks and returned check fees as separate items, thereby subjecting its customer to multiple NSF fees.
In her Complaint, Morris asserts claims for breach of contract (Count I), breach of the covenant of good faith and fair dealing (Count II), and unjust enrichment (Count III). Morris also seeks to represent two classes of Walmart customers who were assessed bank fees by third parties as a result of Walmart's returned check processing practices.
“Dismissal under Rule 12(b)(6) is proper when the complaint either (1) lacks a cognizable legal theory or (2) fails to allege sufficient facts to support a cognizable legal theory.” Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008)). The Court's standard of review under Rule 12(b)(6) is informed by Rule 8(a)(2), which requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 677-678 (2009) (quoting Fed. R. Civ. P 8(a)).
To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). The claim need not be probable, but there must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. A plausibility determination is context specific, and courts must draw on judicial experience and common sense in evaluating a complaint. Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014). A court considering a Rule 12(b)(6) motion must accept as true the allegations of the complaint and must construe those allegations in the light most favorable to the nonmoving party. See e.g., Wyler Summit P'ship v. Turner Broad. Sys., Inc. 135 F.3d 658, 661 (9th Cir. 1998).
The Court's review of a motion to dismiss under Fed.R.Civ.P. 12(b)(6) is generally confined to the pleadings. United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003); U.S. v. Corinthian Colleges, 655 F.3d 984, 998 (9th Cir. 2011). But the Court also may consider documents attached to the pleadings and may consider documents incorporated into the pleadings by reference. Ritchie, 342 F.3d at 908.
Documents may be incorporated by reference into the pleadings where “(1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the document.” Corinthian Colleges, 655 F.3d at 999. Here, the Check Policy is incorporated into the Complaint and central to Morris's claims.
Morris asserts a claim in Count I of her Complaint for breach of contract. Walmart argues Morris fails to state a claim for breach of contract because the Check Policy permitted it to collect the payment and a return fee of $25.00 when a check was returned unpaid, and there is no contractual obligation requiring Walmart to make only one combined attempt to collect both amounts. Therefore, Walmart argues, it was within the Check Policy to make multiple attempts to collect the payment and the return fee separately. Walmart further argues Morris's own material breach precludes any relief she seeks.
“Resolution of contractual claims on a motion to dismiss is proper if the terms of the contract are unambiguous.” Bedrosian v. Tenet Healthcare Corp., 208 F.3d 220 (9th Cir. 2000). But a motion to dismiss should not be granted where the contract plausibly “leaves doubt as to the parties' intent.” Stocco v. Gemological Inst. of Am., Inc., 975 F.Supp.2d 1170, 1179 (S.D. Cal. 2013) (citing Consul Ltd. v. Solide Enterprises, Inc., 802 F.2d 1143, 1149 (9th Cir. 1986)). See also Coleman v. Alaska USA Fed. Credit Union, 2020 WL 1866261, *4 (D. Alaska April 14, 2020) ().
Morris's breach of contract claim focuses on the portion of the Check Policy that provides: “If your check's returned unpaid, you also authorize us to collect a return payment and a return fee of $25.00 by an EFT(s) or drafts(s) drawn from your account.” (Doc. 3 at 6.)
Morris argues the Check Policy has one reasonable meaning - if a check is returned unpaid, Walmart can make an additional debit attempt to collect the amount of the check, together with $25 for the Return Fee. According to Morris, the Check Policy does not authorize Walmart to make separate and repeated debit attempts to collect the $25 Return Fee.
Walmart, on the other hand, argues that a reasonable interpretation of the Check Policy means that it may collect both the amount of the unpaid check and a Return Fee, without being limited to only one attempt to recover the Return Fee. Walmart further argues that it did not promise to collect the unpaid check and Return Fee in one single transaction; multiple transfers were expressly allowed.
Considering the factual allegations in the Complaint, together with all reasonable inferences that can be drawn from those facts in favor of each party, Morris and Walmart each assert plausible interpretations of the Check Policy. As Morris points out, the Check Policy authorizes the collection of “a return fee,” which is singular and not plural. Thus, the Check Policy arguably did not authorize Walmart to make multiple attempts to collect the Return Fee.
Conversely, Walmart points out that the Check Policy allowed it “to collect” the Return Fee, not just attempt collection. This could reasonably be interpreted to mean that Walmart was not constrained to only one attempt to collect, but could make multiple attempts if the collection attempts were unsuccessful. Walmart also notes that the Check Policy references plural “EFT(s),” which, Walmart argues, contemplates multiple collection efforts.
With regard to whether the Check Policy allowed Walmart to decouple the Return Fee from the check amount, Morris relies on the conjunctive “and” in the clause, which authorizes Walmart to “collect a return payment and a return fee,” to argue that Walmart was not authorized to debit each separately. This clause can plausibly be interpreted to mean only a single, combined debit would be attempted.
Walmart however, emphasizes the “(s)” at the end of the words “by an EFT(s) or drafts(s)” to argue the...
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