Stefiuk v. First Union Nat. Bank of Florida, 98-1377-CIV.

• Citation: 61 F.Supp.2d 1294
• Decision Date: 29 June 1999
• Docket Number: No. 98-1377-CIV.,98-1377-CIV.
• Parties: Stephen STEFIUK, Plaintiff (Class Representative), v. FIRST UNION NATIONAL BANK OF FLORIDA, Defendant.
• Court: United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida

61 F.Supp.2d 1294

Stephen STEFIUK, Plaintiff (Class Representative), v. FIRST UNION NATIONAL BANK OF FLORIDA, Defendant.

No. 98-1377-CIV.

United States District Court, S.D. Florida.

June 29, 1999.

Todd Michael Saunders, Miami, FL, Gerald F. Richman, Manuel A. Garcia-Linares, Richman Greer, Miami, FL, for plaintiff.

J. Thomas Cardwell, Virginia B. Townes, Akerman, Senterfitt & Eidson, Orlando, FL, Stanley Wakshlog, Akerman, Senterfitt & Eidson, Miami, FL, for defendant.

ORDER GRANTING DEFENDANT'S SECOND MOTION FOR JUDGMENT ON THE PLEADINGS AS TO FEDERAL CLAIM AND DECLINING TO EXERCISE SUPPLEMENTAL JURISDICTION OVER REMAINING STATE LAW CLAIMS

HIGHSMITH, District Judge.

THIS CAUSE came before the Court upon Defendant First Union National Bank of Florida's ("First Union") second motion for judgment on the pleadings, filed on March 29, 1999. For the reasons stated below, the Court grants First Union's motion as to the federal claim asserted by Plaintiff Stephen Stefiuk in his amended class representation complaint. Moreover, in the absence of any federal claims, the Court declines to exercise supplemental jurisdiction over Stefiuk's state law claims. Therefore, the Court dismisses those claims without prejudice.

PROCEDURAL BACKGROUND

In his amended complaint and incorporated exhibits,¹ Stefiuk alleges that, on December 23, 1997, he was charged a fee of $1.00 (Receipt — Exhibit "C") to cash a First Union check in the amount of $400.00. The check was issued by Stefiuk's employer, U.S. Security Insurance Company (Exhibit "B"). Stefiuk did not have an account at First Union.

At the time of the transaction, Stefiuk received a brochure from First Union personnel, stating:

ATTENTION:

Effective June 1, 1998

NON ACCOUNT HOLDERS

CASHING FIRST UNION

BUSINESS CHECKS

Individuals who do not currently maintain a deposit account at First Union will be charged a check processing fee of $1.00 when cashing business checks over $50.00 drawn on First Union.

To avoid paying the check processing fee, see a First Union Banking Representative about these and other options:

When Paid Through Direct Deposit:

• PERK Checking — discounts on many banking services

• Express Checking — no monthly service charge with exclusive use of First Union automated/ATM services

• Direct Deposit to another bank or credit union — immediate availability of funds

When Paid By Payroll Check:

• First Union Check Cashing Card — saves you money and thumbprinting is not required

• Wide variety of accounts — various accounts available with no monthly service charge

Don't Like Checking Accounts:

• PayAccess Card — no monthly fee with direct deposit and exclusive use of First Union ATMs/point of sale ATMs

See Exhibit "A".²

Based on the foregoing allegations, Stefiuk asserts the following claims:

Count I: Claim for violation of the Bank Holding Company Act's anti-tying provisions, 12 U.S.C. § 1972.

Count II: Petition for declaratory judgment that First Union's practice violates both the Bank Holding Company Act and Florida Statutes, Chapters 673 and 674 (governing presentment of checks).

Count III: Claim for unjust enrichment.

Count IV: Claim predicated on Florida Statutes, Chapters 673 and 674 (governing presentment of checks).

Count V: Claim for conversion.

Count VI: Petition for permanent injunction.³

Stefiuk invokes the Court's federal jurisdiction with respect to Count I, and its supplemental jurisdiction as to the remaining claims. Stefiuk purports to represent a class, for which he has sought certification.⁴ In his prayer for relief, Stefiuk seeks treble damages and attorneys' fees, pursuant to 12 U.S.C. § 1975; punitive damages under Florida law; compensatory damages; costs; and an injunction.

In its answer, First Union concedes the essential facts alleged in Stefiuk's amended complaint; i.e., that on December 23, 1997, Stefiuk was charged a fee of $1.00 for cashing his employer's check. Specifically, First Union admits that, as of December, 1997, it had a policy of charging non-customers a $1.00 fee to cash First Union commercial account checks in excess of $50.00. First Union also admits that its account holders and persons who had obtained a First Union check cashing card would not be subject to such a fee. Finally, First Union admits that its tellers were instructed to distribute the brochure exemplified by Exhibit "A".

Given the absence of a factual dispute within the four corners of the pleadings, First Union seeks judgment, as a matter of law, with respect to all counts in the amended complaint. The Court first addresses First Union's motion with respect to the federal claim asserted in Count I. Finding it appropriate to grant First Union's motion as to this claim, the Court declines to exercise supplemental jurisdiction over Stefiuk's state law claims. Therefore, the Court finds it unnecessary to address First Union's motion as it pertains to those claims and dismisses them without prejudice.

DISCUSSION

Stefiuk predicates the claim asserted in Count I of the amended complaint upon the following anti-tying restriction prescribed in the Bank Holding Company Act:

A bank shall not in any manner extend credit, lease or sell property of any kind, or furnish any service, or fix or vary the consideration for any of the foregoing, on the condition or requirement that the customer shall obtain some additional credit, property, or service from such bank other than a loan, discount, deposit, or trust service.

See 12 U.S.C. § 1972(1)(A). The Act further provides:

Any person who is injured in his business or property by reason of anything forbidden in section 1972 of this title may sue therefor in any district court of the United States in which the defendant resides or is found or has an agent, without regard to the amount in controversy, and shall be entitled to recover three times the amount of the damages sustained by him, and the cost of suit, including a reasonable attorney's fee.

See 12 U.S.C. § 1975.

Stefiuk claims that, by charging him a fee of $1.00 to cash his employer's check and, at the same time, offering him options to avoid the check cashing fee, First Union has improperly tied the "service" of free check cashing with the "condition or requirement" that he avail himself of those options; specifically, opening an account at First Union or obtaining a check cashing card.⁵

"Under anti-trust law, a tying arrangement is an agreement by a party to sell one product (the `tying' product) but only on the condition that the buyer also purchases a different (or `tied') product." Integon Life Ins. Corp. v. Browning, 989 F.2d 1143, 1150 (11th Cir.1993) (citations omitted). Through the Bank Holding Company Act, Congress has extended the anti-tying provisions of anti-trust law to commercial banking. Id. In so doing, Congress dispensed with some of the elements required to prove a tying arrangement in the anti-trust field, thereby enacting stricter anti-tying provisions for banking. Id. Thus, unlike an anti-trust plaintiff, a plaintiff bringing a claim under Section 1972 need not show economic power, anti-competitive effect or substantial involvement in interstate commerce. Rather, such a plaintiff need only allege: "(1) two separate products, a `tying' or `desirable' product and a `tied' or `undesirable' product; and (2) [that] the buyer was in fact forced to buy the tied product to get the tying product; that is, a `tying'". Id.

In enacting this provision, however, "Congress did not intend to interfere with the conduct of appropriate traditional banking practices." Parsons Steel, Inc. v. First Alabama Bank of Montgomery, 679 F.2d 242, 245 (11th Cir.1982). Hence, the statute includes a "traditional bank product exception", whereby a bank is permitted "to extend credit, lease or sell property, furnish services, or vary prices on the condition that the customer obtain a loan, discount, deposit, or trust service from the same bank." See Bulletin 95-20, Office of the Comptroller of the Currency, at 1 (Apr. 14, 1995).

In this case, Stefiuk alleges that First Union violated Section 1972 by offering him a tying or desirable product — free check cashing — on condition that he obtain a tied or undesirable product — a bank account. This allegation ignores the plain language of the statute, which exempts from the anti-tying prohibition the condition that a customer obtain a deposit service; i.e., open an account. Stefiuk attempts to avoid this obvious result in several ways.

First, Stefiuk states that, "Both parties admit that Plaintiff STEFIUK does not have a bank or depository account with FIRST UNION. Thus, on its face, the exception relied upon by FIRST UNION does not apply." See Plaintiff's Memorandum in Opposition to Defendant's Second Motion for Judgement on the Pleadings, at 3. By this statement, Stefiuk appears to be arguing that the traditional bank product exception only applies to "existing" customers of the bank; not to "prospective" customers. Yet, the gravamen of Stefiuk's complaint is that First Union is "coercing the non-customers to become customers of the bank to avoid [the check cashing] fee." See Plaintiff's Memorandum in Opposition to Defendant's Second Motion for Judgement on the Pleadings, at 6. Thus, as Stefiuk would have it, the anti-tying provision applies to "non-customers" but the statutory exemption does not.

In its legal memoranda, First Union characterizes Stefiuk as a "non-customer" because he did not have an account with the bank. Despite this characterization, First Union does not challenge Stefiuk's standing to assert his anti-tying claim. Indeed, Stefiuk may be deemed to be a "customer" within the meaning of Section 1972. See Swerdloff v. Miami Nat'l Bank, 584 F.2d 54, 58 (5th Cir.1978) (applying the common usage definition of the term "customer" to the statute; i.e., "one who has business dealings with another or who purchases a commodity or service"). See also Campbell v. Wells Fargo...