Oparaji v. Mun. Credit Union

Decision Date14 June 2021
Docket Number19 Civ. 4034 (JPC)
PartiesMAURICE OPARAJI, Plaintiff, v. MUNICIPAL CREDIT UNION, Defendant.
CourtU.S. District Court — Southern District of New York
OPINION AND ORDER

JOHN P. CRONAN, United States District Judge:

On May 6, 2019, Plaintiff Maurice Oparaji, proceeding pro se, filed this action, alleging that Defendant Municipal Credit Union ("MCU") charged his account overdraft fees without his affirmative consent, in violation of New York law, the Electronic Funds Transfer Act ("EFTA"), 15 U.S.C. § 1693 et seq., and sections 1031(a), 1036(a)(1), 1054, and 1055 of the Consumer Financial Protection Act of 2010 ("CFPA"), 12 U.S.C. §§ 5331(a), 5564, 5565. Dkt. 1 ("Complaint"). Oparaji seeks damages and a declaratory judgment under the Declaratory Judgment Act. Id. MCU moved for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure or, in the alternative, to dismiss under Rule 12(b)(6) for failure to state a claim. Dkt. 7. Now before the Court is the second report and recommendation from the Honorable Sarah Netburn, United States Magistrate Judge, the first having been adopted in part and modified in part. Dkt. 40 ("Second Report"); see Dkts. 26 ("Initial Report"), 29. Judge Netburn recommends that the Court grant MCU's motion to dismiss. Oparaji filed timely objections to the Second Report. Dkt. 41 ("Objections").

For the reasons set forth below, the Court adopts the Second Report in part and declines to adopt it in part. Specifically, the Court adopts the Second Report's recommendations to dismiss the EFTA, CFPA, and Declaratory Judgment Act claims for failure to state a claim. Because the Court dismisses those claims, it declines to exercise supplemental jurisdiction over the remaining state-law claim and therefore declines to adopt the alternative holdings in the Second Report regarding that claim. Accordingly, the Court grants MCU's motion to dismiss.

I. Background

The facts and procedural history of this action are set forth in the Initial Report and the Second Report. In short, in May 2016, Oparaji discovered that MCU had charged his account 69 separately incurred overdraft fees, totaling $2,070. Initial Report at 1-2. Oparaji filed suit in Bronx Civil Court alleging several New York state-law claims, including (1) breach of contract or warranty, (2) breach of fiduciary duty, (3) unfair deceptive trade practices, (4) conversion, and (5) violation of the New York General Business Law. Id. at 2. The case proceeded to a trial before a jury, but the state court granted MCU's oral motion to dismiss at the close of Oparaji's presentation of his case. Id. at 2-3.

Oparaji appealed the state court's decision, and while that appeal was pending, he filed this action. Oparaji's Complaint lists five causes of action: (1) "Breach of the Opt-In Rule"; (2) "Violation of Electronic Fund Transfers Act (Regulation E) (EFTA) C.F.R. § 1005 et seq. (authority derived from 15 U.S.C. § 1696 et seq.)"; (3) "Violations of the Consumer Financial Protection Act (Abusive Acts or Practices)"; (4) "Deceptive Acts or Practices as to New Customers"; and (5) "Declaratory Judgment." Complaint; see Second Report at 8-9. In the Second Report, Judge Netburn described Oparaji's claims as follows:

Claim (1) alleges that MCU breached a contract with Oparaji under New York State Law by violating the "opt-in" rule which, though contained in the EFTA, isinterpreted to have been incorporated into an alleged contract for the purposes of this claim;
Claim (2) alleges MCU violated the EFTA—specifically Regulation E, 12 C.F.R. § 1005.17(b)(1)—by failing to "[o]btain[] the consumer's affirmative consent, or opt-in, to the institution's payment of ATM or one-time debit card transactions. . . ." Id.
Claim (3) alleges MCU violated the CFPA—specifically, 12 U.S.C. § 5531 ("Prohibiting Unfair, Deceptive, or Abusive Acts or Practices"), and § 5536 ("Prohibited Acts"). Oparaji contends that MCU "materially interfered" with his "ability to understand those terms and conditions" (which are not further specified) by charging him overdraft fees;
Claim (4) alleges MCU violated the CFPA—specifically 12 U.S.C. §§ 5531 and 5536—by providing no notice of "opt-in" or "opt-out" to overdraft fees; and
Claim (5) requests relief under the Declaratory Judgment Act, 28 U.S.C. § 2201. Oparaji seeks a judicial declaration that MCU must send notice to all of its customers describing the institution's overdraft services, including information regarding the "opt-in" rule.

Second Report at 9.

On July 10, 2019, MCU moved under Rule 12 for a judgment on the pleadings or to dismiss. Dkt 7. The Honorable Analisa Torres, United States District Judge, who was initially assigned to this matter, referred the motion to Judge Netburn for a report and recommendation. Dkt 9. Judge Netburn filed the Initial Report, recommending that the Court dismiss the case with prejudice on the basis that Oparaji's claims were already litigated in state court and were therefore barred on the basis of res judicata, or claim preclusion. Initial Report at 9. Shortly before Judge Netburn completed the Initial Report, however, the state appeals court reinstated Oparaji's breach of contract claim and remanded the case to the New York Supreme Court for further proceedings. See Dkt. 29 at 3; Dkt. 27, Exh. D. Because of this, Judge Torres, in reviewing the Initial Report, concluded that there was no final judgment for res judicata purposes. Dkt. 29 at 6-7. Judge Torres therefore modified Judge Netburn's initial report on this point, and remanded the case to Judge Netburn for further consideration of MCU's motion to dismiss. Id. at 7, 9. On September 11,2020, while MCU's motion was pending, Oparaji filed a motion for partial summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Dkt. 35.

This case was reassigned to the undersigned on September 29, 2020. On December 21, 2020, Judge Netburn filed the Second Report, recommending that this Court grant MCU's motion to dismiss all claims. Judge Netburn recommended dismissal because (1) the CFPA does not provide a private right of action, Second Report at 10; (2) the so-called "Opt-in Rule" of the EFTA does not apply to the transactions at issue, and, in any event, MCU's refund to Oparaji's account renders any EFTA claim moot, id. at 11-12; (3) the court lacks jurisdiction over Oparaji's state-law breach of contract claim, which, alternatively, fails on mootness and failure to state a claim grounds, id. at 12-14; and (4) no live claim supports relief under the Declaratory Judgment Act and Oparaji cannot assert the rights of others, id. at 14-15. On January 4, 2021, Oparaji filed fifteen timely objections to the Second Report.

II. Standard of Review

"When a district court assesses the report and recommendation of a magistrate judge, the court 'may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.'" Hernandez v. City of New York, No. 11 Civ. 6644 (KPF) (DF), 2015 WL 321830, at *2 (S.D.N.Y. Jan. 23, 2015) (quoting 28 U.S.C. § 636(b)(1)). If a party makes a proper objection to a finding in a report, the Court reviews that finding de novo. 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b)(3).

To be proper, an objection must be "clearly aimed at particular findings," Hernandez, 2015 WL 321830, at *2 (quoting Vlad-Berindan v. MTA N.Y.C. Transit, No. 14 Civ. 675 (RJS), 2014 WL 6982929, at *1 (S.D.N.Y. Dec. 10, 2014)), and may not be "conclusory or general," id. (quoting Thomas v. Astrue, 674 F. Supp. 2d 507, 511 (S.D.N.Y. 2009)). Parties may neither "regurgitate the original briefs to the magistrate judge" nor raise new arguments not raised to themagistrate judge in the first instance. Id.; accord United States v. Gladden, 394 F. Supp. 3d 465, 480 (S.D.N.Y. 2019).

If a litigant does not file proper objections, the district court generally accepts all parts of a report and recommendation that are not "clearly erroneous." Hernandez, 2015 WL 321830, at *2. "A magistrate judge's decision is clearly erroneous only if the district court is 'left with the definite and firm conviction that a mistake has been committed.'" Cameron v. Cunningham, No. 13 Civ. 5872 (KPF) (FM), 2014 WL 4449794, at *2 (S.D.N.Y. Sept. 9, 2014) (quoting Easley v. Cromartie, 532 U.S. 234, 235, 242 (2001)).

"Objections of pro se litigants are generally accorded leniency and construed to raise the strongest arguments that they suggest." Hernandez, 2015 WL 321830, at *3 (quoting Quinn v. Stewart, No. 10 Civ. 8692 (PAE) (JCF), 2012 WL 1080145, at *4 (S.D.N.Y. Apr. 2, 2012)). "Nonetheless, even a pro se party's objections to a Report must be specific and clearly aimed at particular findings in the magistrate's proposal, such that no party be allowed a 'second bite at the apple' by simply relitigating a prior argument." Id. (quoting Pinkney v. Progressive Home Health Servs., No. 06 Civ. 5023 (LTS), 2008 WL 2811816, at *1 (S.D.N.Y. July 21, 2008)).

III. Discussion

Oparaji has made fifteen timely objections to the Second Report. The Court first addresses Oparaji's objections as they relate to his federal claims under the CFPA and EFTA, before turning to those relevant to his state-law claim.

A. Oparaji's CFPA Claims

Judge Netburn recommends that the Court dismiss Oparaji's CFPA claims on the grounds that there is no private right of action under the CFPA. Second Report at 10. Oparaji makes only one objection that appears relevant to his CFPA claims: In his first objection, Oparaji contends that, "[t]hough the CFPA [m]ay not [c]ontain a [p]rivate [r]ight of [a]ction, . . . nothing in the[CFPA] precludes [him] from using a violation of the law as a predicate to his claim under New York State's Unfair Deceptive Trade Practices." Objections at 2-3. In other words, Oparaji does not object to Judge Netburn's conclusion that the CFPA lacks a private right of action, but instead argues that he may use this as a predicate for his...

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