Rosales v. Citibank, Federal Sav. Bank

• Citation: 133 F.Supp.2d 1177
• Decision Date: 14 February 2001
• Docket Number: No. C0021299PVT.,C0021299PVT.
• Parties: Ramiro ROSALES, Plaintiff, v. CITIBANK, FEDERAL SAVINGS BANK and Does 1-50, Defendants.
• Court: U.S. District Court — Northern District of California

133 F.Supp.2d 1177

Ramiro ROSALES, Plaintiff, v. CITIBANK, FEDERAL SAVINGS BANK and Does 1-50, Defendants.

No. C0021299PVT.

United States District Court, N.D. California, San Jose Division.

February 14, 2001.

William E. Kennedy, Law Office of William E. Kennedy, Santa Clara, CA, for plaintiff.

Abraham J. Colman, Felicia Yu, Buchalter, Nemer, Fields & Younger, Los Angeles, CA, for defendant.

ORDER DENYING DEFENDANTS' MOTION TO STRIKE PORTIONS OF PLAINTIFF'S COMPLAINT

TRUMBULL, United States Magistrate Judge.

I. INTRODUCTION

Plaintiff Ramiro Rosales filed the present action in California Superior Court alleging claims under the Electronic Funds Transfer Act, 15 U.S.C. § 1693, and California's Unfair Business Practices Act, California Business & Professions Code § 17200. Defendant Citibank, Federal Savings Bank ("Citibank") removed the action to federal court on December 28, 2000, pursuant to 28 U.S.C. § 1441(b). The parties have consented to the assignment of this action to a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). Citibank now moves to strike several allegations in the complaint, specifically those allegations in which Plaintiff seeks restitutionary relief and the allegations made on behalf of members of the general public. The motion was fully briefed by the parties and regularly came on for hearing before the court on February 13, 2001.

Having considered the papers submitted by the parties and the arguments of counsel at the hearing, Defendants' motion to strike is DENIED.

II. FACTUAL BACKGROUND

The following facts are alleged in the complaint: Mr. Rosales opened Citibank checking and savings accounts in 1999. Complaint ¶ 10. In early September 2000, Mr. Rosales discovered that more than $2,000 was missing from his account. Id. ¶¶ 1, 10. Specifically, from August 30 through September 5, withdrawals totaling $2,149.23 were made from Mr. Rosales' account via non-Citibank ATMs located in the Los Angeles area. Id. ¶¶ 1, 11. During that time period, Mr. Rosales was in San Jose. Id. ¶ 11. Mr. Rosales did not authorize the withdrawals and he promptly reported the discrepancy to a Citibank branch office. Id. ¶¶ 1, 11, 12. Citibank investigated the claims, and declined to reimburse Mr. Rosales on September 21. Citibank's stated basis for refusing to reimburse Mr. Rosales was:

A careful review of our records indicates that these withdrawals were made from your account as indicated above. Please note that Automated Teller Machine withdrawals can be made only by using your CitiBanking Card AND your Personal Identification Code together. You have informed us that your CitiBanking Card has not been out of your possession. Based upon this information and the results of our investigation, we are unable to honor your claim for reimbursement.

Id. ¶ 3. Citibank also declined to provide to Mr. Rosales copies of the documents which Citibank used in its investigation. Id. ¶ 17.

Approximately one month later, Mr. Rosales filed suit on behalf of himself and the people of California. The complaint alleges two causes of action: violation of the federal Electronic Funds Transfer Act (15 U.S.C. § 1693) and violation of California's Unfair Competition Law (California Business & Professions Code § 17200). Specifically, Mr. Rosales alleges that Citibank violated 15 U.S.C. § 1693(a), (b), (d), (e), and (g) when it failed to investigate each of the unauthorized transfers, failed to recredit the amounts of those unauthorized transfers to his account, failed to provide Mr. Rosales with the documents used in its investigation, failed to make a good faith investigation of the withdrawals, and "knowingly and willfully conclud[ed] that plaintiff's account was not in error when such conclusion could not reasonably have been drawn from the evidence available to Citibank at the time of its investigation." Complaint ¶¶ 19-23. These same acts give rise to Mr. Rosales' unfair competition claim in that the same conduct which violates the Electronic Fund Transfer Act constitutes an unfair, unlawful or deceptive business practice in violation of Section 17200. The complaint further alleges that the unlawful acts "were committed pursuant to Citibank's normal business practices and thus many consumers have been affected thereby in a similar manner." Id. ¶ 26. Plaintiff seeks injunctive relief and restitution on behalf of himself and all members of the general public who have been subjected to, and have suffered from, such unlawful business practices. Id. ¶ 27.

In the Prayer, Plaintiff seeks actual and incidental damages, interest as allowed by law, penalties and treble damages pursuant to the Electronic Fund Transfer Act, costs and reasonable attorneys fees, and "injunctive and restitutionary relief on behalf of plaintiff and the people of California pursuant to Business and Professions Code § 17203, including but not limited to restitutionary relief to similarly affected Citibank account holders who experienced unauthorized withdrawals and did not receive reimbursement." Complaint at page 6.

III. ANALYSIS

Under Federal Rule of Civil Procedure 12(f), a party may move to strike "any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). This includes striking any part of the prayer for relief when the relief sought is not recoverable as a matter of law. Bureerong v. Uvawas, 922 F.Supp. 1450, 1479 n. 34 (C.D.Cal.1996). The essential function of a Rule 12(f) motion is "to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial." Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir.1993), rev'd on other grounds, 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). Rule 12(f) motions are generally disfavored because they are often used as delaying tactics and because of the limited importance of pleadings in federal practice. Bureerong, 922 F.Supp. at 1478; accord Pease & Curren Ref., Inc. v. Spectrolab, Inc., 744 F.Supp. 945, 947 (C.D.Cal.1990). Motions to strike are generally not granted unless it is clear that the matter sought to be stricken could have no possible bearing on the subject matter of the litigation. LeDuc v. Kentucky Cent. Life Ins. Co., 814 F.Supp. 820, 830 (N.D.Cal.1992). Courts must view the pleading under attack in the light most favorable to the pleader, treating as admitted all material facts alleged and all reasonable presumptions that can be drawn therefrom. California v. United States, 512 F.Supp. 36, 39 (N.D.Cal.1981).

In the present motion, Citibank moves to strike allegations from the complaint whereby Plaintiff seeks restitution of the money withdrawn from his account and the allegations whereby Plaintiff pleads on behalf of other members of the general public and seeks restitution on their behalf.¹

A. The Allegations Seeking Restitution to Mr. Rosales

The gist of Citibank's motion is that Mr. Rosales is not legally entitled to seek restitution of the money that was withdrawn from his account without his authorization. Citibank's theory is that in order for restitution to be ordered, two conditions must be met: first, the plaintiff must have been wrongfully deprived of property, and 2) defendant obtained something it was not authorized to keep. Citibank argues that:

Under Section 17203, the notion of restitution is not without limit as the offending party must have obtained something to which it was not entitled and the victim must have given up something which he or she was entitled to keep. See Day v. AT & T Corp. (1998) 63 Cal.App.4th 325, 340, 74 Cal.Rptr.2d 55. In other words, Section 17203 operates only to return to a person those measurable amounts which are wrongfully taken by means of an unfair business practice. Day, supra, 63 Cal.App.4th at 339, 74 Cal.Rptr.2d 55. The amount restored is objectively measurable as that amount which the defendant would not have received but for the unfairly competitive practice. Id. [¶] In this case, Plaintiff has not alleged that Defendant has improperly obtained or received any funds from him. Instead, Plaintiff contends that money was withdrawn from his Accounts by unknown and unauthorized persons accessing various ATMs and that Defendant should credit his Accounts for the Unauthorized Withdrawals in accordance with the EFTA. At most, Plaintiff has stated a claim for damages and not restitution against Defendants. Because Plaintiff cannot show that Defendant obtained property it was not entitled to keep, the restitutionary relief sought by Plaintiff is unavailable as a matter of law.

Motion at 4. Citibank's argument, thus, is that since Citibank has not taken anything from Mr. Rosales, there is nothing which Citibank can be ordered to restore to him.

Citibank's argument is not persuasive and its reliance upon Day is misplaced. Day involved allegations that AT & T was engaged in an unfair or deceptive business practice by advertisements for telephone calling cards that did not disclose AT & T's practice of rounding up calls to the next whole minute. The billing practice itself was not deceptive or unlawful, although the advertisements were, and the relief which could be ordered was limited to only injunctive relief. Restitution could not be ordered because the "filed rate doctrine"² insulated AT & T from any order that would have the effect of imposing a rate other than that approved by the FCC. Thus, although there is language in Day, regarding the nature of the restitutionary remedy, suggesting that an order of restitution is available under the Unfair Competition Law only when the offending party has obtained something from the victim which it is not entitled to keep, the language is dicta. Other language within the opinion discussing of the monetary remedies available under the Unfair Competition Law confirms that where a measurable amount has been taken from a person in the course of an unfair business practice, that loss can be...