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.
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
(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).