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December 2, 2004.

IN RE CURRENCY CONVERSION FEE ANTITRUST LITIGATION. GILBERT SCHRANK, individually and on behalf of all others similarly situated, Plaintiff,

The opinion of the court was delivered by: WILLIAM PAULEY, District Judge


This putative class action stems from plaintiff Gilbert Schrank's ("Plaintiff" or "Schrank") allegations that defendant Citibank (South Dakota), N.A. ("Citibank") unlawfully imposed a foreign currency conversion fee ("conversion fee") on its cardholders.*fn1 In particular, Schrank alleges that the conversion fees charged for foreign transactions on his Citibank credit card violate certain New York state consumer laws and the common laws of other states.

Presently before this Court is Plaintiff's motion to certify two classes. For the reasons set forth below, Plaintiff's motion is granted in part and denied in part.


  Schrank used his Citibank credit card for purchases in foreign countries. (Verified Complaint, dated Nov. 10, 2003 ("Compl.") ¶¶ 2, 4.) Citibank assessed a conversion fee on each of Schrank's foreign currency transactions, equaling three percent of the foreign purchase's U.S. dollar amount. (Compl. ¶ 9.) There are two tranches of currency conversion fees charged by Citibank. The first is a one percent fee, charged and retained by either Visa or MasterCard. The second tier, typically two percent on top of the one percent fee, is charged and retained by Citibank. (Compl. ¶ 9.)

  Schrank alleges that Citibank does not disclose the conversion fee in its literature or monthly statements. (Compl. ¶ 12.) Instead, Citibank conceals the conversion fee by adding it to its "secret computations of foreign currency conversion rates." (Compl. ¶ 9.) Schrank contends that the conversion fee bears no relation to Citibank's actual costs in converting its customers' foreign charges into U.S. dollars. (Compl. ¶ 16.) He alleges that Citibank performs currency conversion automatically through a computer program that imposes a "de minimus cost." (Compl. ¶ 16.)

  Plaintiff alleges six causes of action: (1) violation of New York Personal Property Law ("NYPPL"), Article 10, § 413(3) (a); (2) unfair and deceptive practices in violation of New York General Business Law § 349 ("Section 349"); (3) common law fraud; (4) unconscionable charges under the common law and UCC § 2-202; (5) violation of the obligation of good faith pursuant to common law and UCC § 1-203; and (6) unjust enrichment. (Compl. ¶¶ 27-38.) Purporting to bring this suit on behalf of himself and others who were charged conversion fees, Schrank seeks certification of two classes pursuant to Rule 23 of the Federal Rules of Civil Procedure:*fn2

Class I: All residents of the State of New York who were issued, or will be issued, Visa and/or MasterCard credit cards by defendant, subject to the statutory provisions set forth in the First and Second causes of action.
Class II: All persons and entities throughout the United States, with respect to the common law claims set forth in the Third through Sixth causes of action.
(Compl. ¶ 21; Plaintiff's Memorandum in Support of Class Certification ("Pl. Mem.") at 14.)

  Citibank opposes this motion, arguing, inter alia, that Schrank is not typical of the putative class members and that individual issues would overwhelm any purported common ones. (Citibank's Memorandum in Opposition of Class Certification ("Def. Mem.") at 1.) In addition, Citibank argues that if a class is certified, cardholders with arbitration agreements should be excluded. (Def. Mem. at 21-22.)


  I. Class Certification Standards

  Rule 23 of the Federal Rules of Civil Procedure governs class certification. Parker v. Time Warner Entm't Co., L.P., 331 F.3d 13, 18 (2d Cir. 2003); Benner v. Becton Dickinson & Co., 214 F.R.D. 157, 162 (S.D.N.Y. 2003). A district court must conduct a "rigorous analysis" to ascertain whether the Rule 23 requirements have been satisfied. See Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161 (1982); accord Caridad v. Metro-North Commuter R.R., 191 F.3d 283, 291 (2d Cir. 1999). While Rule 23 must be liberally interpreted and not given a strict construction, Marisol A. v. Giuliani, 126 F.3d 372, 377 (2d Cir. 1997), the party seeking class certification bears the burden of establishing the requisites of Rule 23, see Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997); Caridad, 191 F.3d at 291.

  There are two prerequisites for class actions. First, the party seeking class certification must prove that the proposed class meets the four requirements of Rule 23(a): (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a); In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 132-33 (2d Cir. 2001). Second, the party seeking class certification must show that the proposed class action falls within one of the types of class actions maintainable under Rule 23 (b) because: (1) prosecution of separate actions by individual parties would create a risk of either inconsistent adjudications or would be dispositive of the interest of those members not parties to the adjudication; (2) defendants have acted or refused to act on grounds generally applicable to the class; or (3) questions of law or fact common to members of the class predominate, and a class action is superior to other available methods for adjudication. Fed.R.Civ.P. 23(b); Visa, 280 F.3d at 133.

  When considering a motion for class certification, a court should consider the allegations in the complaint as true. Shelter Realty Corp. v. Allied Maint. Corp., 574 F.2d 656, 661 n. 15 (2d Cir. 1978). A court may also consider material outside the pleadings in determining the appropriateness of class certification. Kaczmarek v. Int'l Bus. Mach. Corp., 186 F.R.D. 307, 311 (S.D.N.Y. 1999) (citing Sirota v. Solitron Devices, Inc., 673 F.2d 566, 571 (2d Cir. 1982)). Nonetheless, resolution of a class certification motion should not become "a preliminary inquiry into the merits" of the case. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974); see Visa, 280 F.3d at 133. "In determining the propriety of a class action, the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met." Eisen, 417 U.S. at 178 (internal quotation marks omitted).

  II. Rule 23(a) ...

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