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Azose v. J.P. Morgan Chase Bank

January 26, 2010


The opinion of the court was delivered by: Hurley, Senior District Judge


Plaintiffs Solomon Azose and Natalie Azose, individually and on behalf of all persons similarly situated, ("Plaintiffs"), filed the present class action against Defendant JP Morgan Chase Bank, National Association ("Chase" or "Defendant")*fn1 alleging violations of the Electronic Fund Transfer Act ("EFTA"), 15 U.S.C. §§ 1693 et seq., and its implementing regulations, 12 C.F.R. § 205 et seq. Defendant has moved to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). For the reasons that follow, Defendant's motion is granted and Plaintiffs' claims are dismissed.


I. The Complaint

The background of this case is set forth in the Court's prior Memorandum and Order, dated December 3, 2008, familiarity with which is assumed. Azose v. Washington Mutual Bank, 588 F. Supp.2d 366 (E.D.N.Y. 2008). The following facts are taken from the Amended Complaint and are presumed true for purposes of this motion.

Plaintiffs were banking customers of Washington Mutual with checking and savings accounts at the bank ("Washington Mutual accounts"). (Am. Compl. ¶ 8.) On three separate occasions, June 15, 2007, June 18, 2007, and July 17, 2007*fn2 , Plaintiffs used an automated teller machine ("ATM") at a Chase location in Lawrence, New York to conduct balance inquiries on their Washington Mutual accounts. (Id. ¶¶ 9, 16-21.) Washington Mutual charged an "ATM Balance Inquiry Fee" to Plaintiffs for each transaction. (Id.) On or about July 2007, Washington Mutual issued a monthly banking statement to Plaintiffs indicating that Washington Mutual had charged Plaintiffs a $2.00 ATM Balance Inquiry Fee for the June 15, 2007 ATM transaction, a $4.00 ATM Balance Inquiry Fee for the June 18, 2007 ATM transaction, and a $4.00 ATM Balance Inquiry Fee for the July 17, 2007 ATM transaction. (Id. ¶¶ 22-25.) At the time of each balance inquiry, the Chase ATM did not (i) provide notice to Plaintiffs that Washington Mutual would impose a fee for the transaction; (ii) disclose the amount of the fee Plaintiffs would be charged; and (iii) advise Plaintiffs that they could elect to discontinue the transaction based upon any fees. (Id. ¶¶ 10, 26-29.)

According to the Amended Complaint, Washington Mutual and Chase participated in a "shared network" arrangement wherein Washington Mutual, the card-issuing bank, paid Chase, the ATM operator, a fee for transactions made by Washington Mutual customers when they used a Chase ATM. (Id. ¶¶ 36-41.) Pursuant to this banking network arrangement, Chase imposed a fee on Washington Mutual when Plaintiffs used the Chase ATM on the three occasions in June and July 2007. (Id. ¶¶ 42-44.) In turn, Washington Mutual charged Plaintiffs a fee for using the Chase ATM which consisted of the fee charged to Washington Mutual by Chase, plus a "markup."*fn3 (Id. ¶ 45.)

II. Procedural Background

Plaintiffs commenced this action in New York State Supreme Court, Queens County, on October 31, 2007 alleging principally that Defendants violated the EFTA and 12 C.F.R. § 205.16 of Regulation E, 12 C.F.R. §§ 205.1-205.18 ("Regulation E") by their failure to comport with the Act's notice and fee requirements. Defendant Washington Mutual removed this matter to this Court on November 30, 2007 pursuant to 28 U.S.C. § 1441(b).

In their Complaint, Plaintiffs asserted four state law claims*fn4 and a cause of action under the EFTA and 12 C.F.R. § 205.16 of Regulation E against defendants Chase and Washington Mutual alleging that defendants had assessed fees against them for conducting balance inquiry transactions at the Chase ATMs and that the ATMs did not provide notice that a fee would be charged for such bank inquiries nor did the ATM advise Plaintiffs that they could discontinue the transaction before incurring the fee. Chase and Washington Mutual each moved to dismiss the initial Complaint pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted under the EFTA. Both motions were granted. In so doing, the Court held that (i) as the ATM operator, Chase had no obligation under the EFTA and Regulation E to provide notice to customers of an account-holding bank that their account-holding bank would assess a fee on their accounts for each balance inquiry made at a Chase ATM; (ii) as the account-holding bank, Washington Mutual did not have any obligation under the EFTA and Regulation E to provide notice to its customers at non-Washington Mutual ATMs regarding the assessment of a balance inquiry fee it might impose at those ATMs; and (iii) to the extent that interbank fees were subsequently imposed on Plaintiffs pursuant to an agency or contractual arrangement between defendants thereby possibly triggering disclosure obligations under the EFTA and/or Regulation E, Plaintiffs were granted leave to amend the Complaint.

On December 22, 2008, Plaintiffs filed an Amended Complaint on behalf of themselves and all others similarly situated asserting claims against Chase, in its own capacity as the ATM operator, and against Chase, as successor-in-interest to Washington Mutual as the account-holding bank. The Amended Complaint alleges principally that Chase and Washington Mutual participated in a shared network arrangement under which Washington Mutual paid a fee to Chase when a Washington Mutual customer used a Chase ATM for transactions, which in turn Washington Mutual collected from its customer. By virtue of this network, "Chase received a portion of the fee charged to the individual[] using the Chase ATM to conduct [Washington Mutual] business," thus giving rise to disclosure obligations under the EFTA and Regulation E which Chase failed to satisfy.

Chase now moves by the instant motion in its own capacity and as successor-in-interest to Washington Mutual*fn5 to dismiss the Amended Complaint pursuant to Rule 12(b)(6) for failure to state a claim on which relief can be granted.


I. Motion to Dismiss: Legal Standards

Rule 8(a) provides that a pleading shall contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The Supreme Court has recently clarified the pleading standard applicable in evaluating a motion to dismiss under Rule 12(b)(6).

First, in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), the Court disavowed the well-known statement in Conley v. Gibson, 355 U.S. 41, 45-46 (1957) that "a complaint should not 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." 550 U.S. at 562. Instead, to survive a motion to dismiss under Twombly, a plaintiff must allege "only enough facts to state a claim to relief that is plausible on its face." Id. at 570.

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).

Id. at 555 (citations and internal quotation marks omitted).

More recently, in Ashcroft v. Iqbal, -- U.S. --, 129 S.Ct. 1937 (2009), the Supreme Court provided further guidance, setting forth a two-pronged approach for courts deciding a motion to dismiss. First, a court should "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 1950. "While legal conclusions can provide the framework of a complaint, they must be supported by factual assumptions." Id. Thus, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 1949 (citing Twombly, 550 U.S. at 555).

Second, "[w]hen there are well-pleaded factual allegations a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 1950. The Court defined plausibility as follows:

A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of 'entitlement to relief.'"

Id. at 1949 (quoting Twombly, 550 U.S. at 556-57) (internal citations omitted).

In deciding a motion to dismiss pursuant to Rule 12(b)(6), the court generally may only consider facts stated in the complaint or "[d]ocuments that are attached to the complaint or incorporated in it by reference." Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007);Gillingham v. GEICO Direct, 2008 WL 189671, at *2 (E.D.N.Y. Jan. 18, 2008) (same). A document not appended to the complaint may be considered if the document is "incorporated [in the complaint] by reference" or is a document "upon which [the complaint] solely relies and . . . is integral to the complaint." Roth, 489 F.3d at 509 (quoting Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991)) (emphasis in the original).

II. Statutory and Regulatory Background

The EFTA was enacted as part of the comprehensive Consumer Credit Protection Act, Pub. L. No. 95-630 § 2001, 92 Stat. 3641 (1978) (codified as amended at 15 U.S.C. § 1601 et seq.). Its purpose was to protect consumers by providing a "basic framework establishing the rights, liabilities, and responsibilities of participants in electronic transfer systems." 15 U.S.C. § 1693(b); see Flores v. Diamond Bank, 2008 WL 4861511, at *1 (N.D. Ill. Nov. 7, 2008); Voeks v. Pilot Travel Ctrs., 560 F. Supp. 2d 718, 720 (E.D. Wis. 2008); see also Household Finance Realty Corp. v. Dunlap, 834 N.Y.S.2d 438, 442 (N.Y. Sup. Ct. 2007). Pursuant to the ...

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