Page v. Alliant Credit Union, Civ. No. 2:18-cv-11481 (SDW)(CLW)

• Decision Date: 14 June 2019
• Docket Number: Civ. No. 2:18-cv-11481 (SDW)(CLW)
• Parties: ALICIA M. PAGE, individually, and on behalf of all others similarly situated, Plaintiff, v. ALLIANT CREDIT UNION, and DOES 1-100, Defendants.
• Court: U.S. District Court — District of New Jersey

ALICIA M. PAGE, individually, and onbehalf of all others similarly situated, Plaintiff, v. ALLIANT CREDIT UNION, and DOES 1-100, Defendants.

Civ. No. 2:18-cv-11481 (SDW)(CLW)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

June 14, 2019

REPORT & RECOMMENDATION

WALDOR, Magistrate Judge,

This matter comes before the Court by way of referral from the Honorable Susan D. Wigenton to issue a report and recommendation regarding Defendant's Motion to Dismiss Plaintiffs' First Amended Complaint (ECF No. 16) ("Motion"). The Court declined to hear oral argument pursuant to Rule 78 and as set forth more fully below, the Court recommends the Motion to Dismiss be GRANTED and the case be transferred to the Northern District of Illinois.

I. BACKGROUND

This is a putative class action first filed by Plaintiff Alicia Page ("Page") on July 10, 2018, challenging the practice of Defendant Alliant Credit Union ("ACU") and DOES 1 through 100 ("Defendant") to charge overdraft fees when member accounts have sufficient funds to cover transactions. (see generally Compl., ECF No. 1; First Amended Compl., ECF No. 9). Page brought claims for breach of contract (Counts I and II), breach of implied covenant of good faith and fair dealing (Count III), unjust enrichment (Count IV), money had and received (Count V), violation of Regulation E, 12 C.F.R. § 1005.17, of the Electronic Fund Transfers Act ("EFTA"), 15 U.S.C. §§ 1693 et seq. (Count VI), and violation of the New Jersey Consumer Fraud Act, N.J.S.A. §§ 56:81 (Count VII). (Id.)

On November 6, 2018, Defendant filed a motion to dismiss for lack of Article III jurisdiction under Fed. R. Civ. P. 12(b)(1) and on separate grounds under Fed. R. Civ. P. 12(b)(6). (Motion to Dismiss Complaint, ECF No. 6). On November 19, 2019, Page amended her original complaint, adding two new named plaintiffs as class representatives, Carmel Cooper ("Cooper") and Cindy Muniz ("Muniz"). (First Amended Complaint, ¶ 5). On December 20, 2018, Defendant moved again to dismiss for lack of Article III jurisdiction pursuant to 12(b)(1) and lack of personal jurisdiction under 12(b)(2). (Motion, ECF No. 16). This is the motion currently before the Court. Plaintiffs opposed the motion on February 1, 2019. (Opposition, ECF No. 24). Defendant filed a reply on February 21, 2019. (Reply, ECF No. 26).

The following facts are taken from Plaintiffs' First Amended Complaint and assumed to be true for purposes of this motion. Page is a resident of New Jersey who alleges that she suffered improper non-sufficient funds imposed on her by Defendant. (Id. ¶ 5). Cooper is a resident of California and alleges that she suffered improper overdraft fees imposed on her by Defendant. (Id.). Muniz is a resident of Arizona and alleges that she suffered improper overdraft fees imposed on her by Defendant. (Id.). Defendant is an Illinois state-charted credit union with branch offices located across the country, including in New Jersey. (Id. ¶ 6).

This case is similar to dozens of putative class actions filed in both federal and state courts across the country challenging the banking practice of using a customer's "available" balance rather than the customer's actual or "ledger" balance to prompt an overdraft or non-sufficient funds fee. The "ledger" balance or "actual" balance refers to the full amount of all deposits in an account. Whereas, the "available" balance of an account is calculated by deducting pending debits and deposit holds. Consequently, the "available" balance can be lower than the "ledger" balance in an account. These class actions challenge the banks' practice of charging fees based on the "available" balance even when there is enough money in the account under the "ledger" balance to cover the transaction presented for payment. Plaintiffs here argue that this practice, which they allege Defendant participates in, is inconsistent with how Defendant describes the circumstances under which overdraft fees are assessed in the Account Contract and Opt-In Contract, the latter of which describes Defendant's overdraft policies as required by Regulation E of EFTA. (Am. Compl. ¶ 33).

Plaintiff Page, in her Original Complaint, alleged that this Court had subject matter jurisdiction under 28 U.S.C. § 1331 based on the one claim of a violation of Regulation E, a federal law. (Compl. ¶ 13, 88-94). After Page amended her complaint to include Cooper and Muniz, Plaintiffs alleged subject matter jurisdiction under 28 U.S.C. § 1331 and § 1332. (Am. Compl. ¶ 15).

Defendant now moves to dismiss under Federal Rule of Civil Procedure 12(b)(1) contending that the Court did not have subject matter jurisdiction at the time Plaintiff Page's original complaint was filed, and therefore, has no subject matter jurisdiction now even with a new complaint. Defendant also challenges the Court's alleged personal jurisdiction under Rule 12(b)(2) over Defendant, whose principal place of business and place of incorporation is Illinois.

II. LEGAL STANDARD

United States District Courts are "courts of limited jurisdiction." Exxon Mobil Corp. v. Allapattah Servs., 545 U.S. 546, 552 125 S. Ct. 2611, 162 L.Ed.2d 502 (2005) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S. Ct. 1673, 128 L.Ed.2d 391 (1994). "[Federal courts] possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree." United States v. Merlino, 785 F.3d 79, 82 (3d Cir. 2015) (quoting Kokkonen, 51 U.S. at 377)). Consequently, when a federal court finds that it lacks jurisdiction over an action, "the only function remaining . . . is that of announcing the fact and dismissing the cause." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94, 118 S. Ct. 1003, 140 L.Ed.2d 210 (1998); see Elliott v. Archdiocese of N.Y., 682 F.3d 213, 219 (3d Cir. 2012); Fed. R. Civ. P. 12(h)(3).

A motion to dismiss for lack of subject matter jurisdiction may be raised by a defendant at any time. Iwanowa v. Ford Motor Co., 67 F. Supp. 2d 424, 437-38 (D.N.J. 1999); see 2 Moore's Federal Practice § 12.30[1] (Matthew Bender 3d ed. 2015). "The burden of establishing federal jurisdiction rests with the party asserting its existence." Lincoln Benefit Life Co. v. AEI Life, LLC, 800 F.3d 99, 105 (3d Cir. 2015) (citing Daimler Chrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3, 126 S. Ct. 1854, 164 L.Ed.2d 589 (2006)).

Challenges to subject matter jurisdiction pursuant to Rule 12(b)(1) may be regarded as either facial or factual. See Mortensen v. First Fed. Sav. & Loan, 549 F.2d 884, 891 (3d Cir. 1977); 2 Moore's Federal Practice § 12.30[4] (Matthew Bender 3d ed.). Facial challenges "contest the sufficiency of the pleadings" as a basis for the court's subject matter jurisdiction. S.D. v. Haddon Heights Bd. of Educ., 833 F.3d 389 n.5 (3d Cir. 2016) (quoting Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006)). A court reviewing such a challenge may "only consider the allegations of the complaint[,]" which it takes to be true, "and documents referenced therein and attached thereto, in the light most favorable to the plaintiff." In re Schering Plough Corp., 678 F.3d at 243 (quoting Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000)) (internal quotation marks omitted); see Petruska v. Gannon Univ., 462 F.3d 294, 302 n.3 (3d Cir. 2006).

In contrast, a factual challenge contests the truth of the allegations underlying a plaintiff's assertion of subject-matter jurisdiction. Constitution Party of Pa. v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014); Mortensen, 549 F.2d at 891. When a defendant raises a factual challenge, "no presumptive truthfulness attaches to [the] plaintiff's allegations[,]" Mortensen, 549 F.2d at 891, and "a court may weigh and 'consider evidence outside the pleadings[.]'" Constitution Party of Pa., 757 F.3d at 358 (quoting Gould Elecs. Inc., 220 F.3d at 176). The plaintiff bears the burden of proving that jurisdiction in fact exists, Mortensen, 549 F.2d at 891, and he or she must meet this burden by supplying "competent proof" thereof. Hertz Corp. v. Friend, 559 U.S. 77, 96, 130 S. Ct. 1181, 175 L.Ed.2d 1029 (2010) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S. Ct. 780, 80 L.Ed. 1135 (1936)).

Here, Defendant raises a factual 12(b)(1) challenge, asserting that the Original Complaint failed to allege federal question jurisdiction because Plaintiff Page lacked standing to bring a claim under Regulation E. Plaintiffs argue that even if the Court found that no federal question jurisdiction existed at the time of Page's original filing, diversity jurisdiction under CAFA was always present. (Opp. at 13-15). In response, Defendant also raises a facial attack, arguing that neither of Plaintiffs' complaints plead any amount in controversy, and therefore Plaintiffs fail to meet the requisite standards for diversity jurisdiction. (Reply at 4-5).

III. DISCUSSION

A. Federal Question Jurisdiction

Plaintiffs allege Defendant violated the opt-in rule under Regulation E of the EFTA, 12 C.F.R. § 1005.1 et seq., because it did not accurately describe its overdrafting practices in the Opt-In Agreement. The Regulation E opt-in rule provides, in relevant part:

[A] financial institution . . . shall not assess a fee or charge on a consumer's account for paying an ATM or one-time debit card transaction pursuant to the institution's overdraft service, unless the institution:

(i) Provides the consumer with a notice in writing, or if the consumer agrees, electronically, segregated from all other information, describing the institution's overdraft service;

(ii) Provides a reasonable opportunity for the consumer to affirmatively consent, or opt in, to the service for ATM and one-time debit card transactions;

(iii) Obtains the consumer's affirmative consent, or opt-in, to the institution's payment of ATM or one-time debit card transactions; and

(iv) Provides the consumers with confirmation of the consumer's consent in

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