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BILDSTEIN v. MASTERCARD INTERNATIONAL INCORPORATED

June 6, 2005.

BERND BILDSTEIN, on Behalf of Himself and Others Similarly Situated, Plaintiff,
v.
MASTERCARD INTERNATIONAL INCORPORATED, Defendant.



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

MEMORANDUM AND ORDER

This putative class action concerns certain foreign currency conversion practices by MasterCard International Incorporated ("MasterCard" or "Defendant"). In his Second Amended Complaint (the "Complaint"), Bernd Bildstein ("Bildstein" or "Plaintiff") alleges that MasterCard unlawfully charges cardholders an undisclosed Foreign Currency Transaction Fee ("FCTF").*fn1 Plaintiff asserts claims for deceptive business practices under New York General Business Law ("GBL") Section 349 and unjust enrichment under New York law.

Presently before this Court is MasterCard's motion to dismiss the Complaint pursuant to Rule 12(b)(6) for failure to state a claim. For the reasons set forth below, MasterCard's motion to dismiss is denied. BACKGROUND

  MasterCard is a global credit card network that promotes "its Master[C]ard brand credit card for use in the United States and all over the world." (Second Amended Complaint ("SAC") ¶ 6.) Plaintiff alleges that MasterCard indirectly charges its cardholders a service fee of approximately one percent, the FCTF, for transactions in foreign currencies. (SAC ¶ 7.) The FCTF is part of the currency conversion rate charged to cardholders and is not disclosed by MasterCard in promotional material or monthly billing statements. (SAC ¶ 9.) As a result, cardholders who use their MasterCard brand credit card for foreign transactions are charged "more than the currency conversion rate applicable to that particular country and currency involved in the transaction" and therefore, "unknowingly paid millions of dollars for the FCTF." (SAC ¶¶ 9, 16.)

  Bildstein has been a MasterCard debit cardholder since September 1997. (SAC ¶ 1.) Beginning in 2000 and continuing through the filing of the Complaint, Bildstein used his MasterCard debit card in Mexico for certain transactions in Mexican Pesos. (SAC ¶ 12.) Bildstein contends that MasterCard assessed the FCTF in addition to the exchange rate on these charges and concealed the fee as part of the conversion rate. (SAC ¶ 12.) Had MasterCard disclosed the embedded fee, Bildstein argues that he would have sought other methods to exchange his currency for no fee or, a fee lower than the FCTF. (SAC ¶ 13.)

  Bildstein filed his Second Amended Complaint on August 25, 2004 following this Court's earlier decision dismissing Plaintiff's Amended Complaint and granting leave to replead. The Complaint asserts two claims against MasterCard: (1) deceptive business practices under GBL Section 349; and (2) unjust enrichment. Defendant moves to dismiss the entire Complaint. DISCUSSION

  I. Motion to Dismiss Standard

  In determining whether dismissal is appropriate under Rule 12(b)(6), the court must "accept as true the material facts alleged in the complaint and draw all reasonable inferences in [plaintiff's] favor." Freedom Holdings Inc. v. Spitzer, 357 F.3d 205, 216 (2d Cir. 2004); accord Velez v. Levy, 401 F.3d 75, 80 (2d Cir. 2005). Further, "[a] complaint cannot be dismissed for failure to state a claim `unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Freedom Holdings Inc, 357 F.3d at 216 (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)); accord Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 395 F.3d 25, 31 (2d Cir. 2005). As such, "`the office of a motion to dismiss is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.'" Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of New York, 375 F.3d 168, 176 (2d Cir. 2004) (quoting Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980)); accord Velez, 401 F.3d at 80. On a motion to dismiss, the inquiry "is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Eternity Global Master Fund Ltd., 375 F.3d at 177 (quoting York v. Ass'n of the Bar, 286 F.3d 122, 125 (2d Cir. 2002).

  II. N.Y. General Business Law § 349

  As fully set forth in this Court's prior decision, GBL Section 349 provides a private right of action for consumer fraud. See Bildstein, 329 F. Supp. 2d at 413; Twentieth Century Fox Film Corp. v. Marvel Enters., Inc., 155 F. Supp. 2d 1, 25 (S.D.N.Y. 2001) (citation omitted). Under Section 349, Bildstein must establish that: "(1) the defendant's deceptive acts were directed at consumers, (2) the acts are misleading in a material way, and (3) the plaintiff has been injured as a result." Maurizio v. Goldsmith, 230 F.3d 518, 521-22 (2d Cir. 2000); accord Lava Trading Inc. v. Hartford Fire Ins. Co., No. 03 Civ. 7037 (PKC), 2004 WL 555723, at *3 (S.D.N.Y. Mar. 19, 2004); Blue Cross & Blue Shield of N.J. v. Philip Morris USA Inc., 3 N.Y.3d 200, 205-06 (2004); Solomon v. Bell Atl. Corp., 9 A.D.3d 49, 51, 777 N.Y.S.2d 50, 54 (1st Dep't 2004). With respect to the injury requirement, a plaintiff must demonstrate "`actual' injury to recover under the statute, though not necessarily pecuniary harm." Stutman v. Chem. Bank, 95 N.Y.2d 24, 29, (2000) (citation omitted).

  MasterCard argues that Bildstein's Section 349 claim should be dismissed for Plaintiff's failure to plead facts establishing consumer-oriented conduct, actionable deception or actual injury. Accepting the facts pled in the Complaint as true and drawing all inferences in favor of Bildstein, this Court concludes that Plaintiff now states a Section 349 claim.

  A. Consumer-Oriented Conduct

  Section 349 broadly protects consumers from deceptive business practices conducted in New York. See N.Y. Gen. Bus. Law § 349 (McKinney 2004); Pelman ex rel. Pelman v. McDonald's Corp., 396 F.3d 508, 511 (2d Cir. 2005) ("§ 349 extends well beyond common-law fraud to cover a broad range of deceptive practices"); Blue Cross & Blue Shield, 3 N.Y.3d at 205 ("the scope of the statute is intentionally broad, applying to virtually all economic activity") (internal quotation marks and citations omitted). Under this statute, consumer-oriented conduct requires the allegation of "facts sufficient to show that the challenged conduct has `a broader impact on consumers at large,' i.e., it `potentially affects similarly situated consumers' in New York." The Jordan (Bermuda) Inv. Co. v. Hunter Green Invs. Ltd., No. 00 Civ. 9214 (RWS), 2003 WL 1751780, at 15 (S.D.N.Y. Apr. 1, 2003) (quoting S.F.K.F.C., Inc. v. Bell Atl. Tricon Leasing Corp., 84 F.3d 629, 636 (2d Cir. 1996)); accord New York v. Feldman, 210 F. Supp. 2d 294, 301 (S.D.N.Y. 2002) (consumer-oriented "has been construed liberally").

  Bildstein has satisfied that pleading requirement. The Complaint contains allegations that "Master[C]ard has spent millions of dollars promoting its Master[C]ard brand credit card for use in the United States and all over the world. Master[C]ard's promotion efforts include substantial efforts directed to the New York consumer." (SAC ¶ 6.) Plaintiff also alleges that "Master[C]ard began applying the FCTF to all transactions in which the transaction currency differs from the billing currency" and that MasterCard did not separately disclose "the FCTF in the promotional material directed to the New York consumer or in the billing statement sent to its credit card holders." (SAC ¶¶ 8, 9.) Finally, Bildstein asserts that he "brings this action on behalf of himself and all other persons who . . . were subjected to hidden transaction charges which were buried in the `conversion rate' and not disclosed to them" and consequently, "unknowingly paid millions of ...


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