Schertzer v. Bank of America, N.A.

Opinion

1 2 3 4 5 6 7 10 11 Case No.: 19-cv-264-DMS-MSB

12 KRISTEN SCHERTZER; et al., on behalf ORDER GRANTING IN PART AND 13 of themselves and all others similarly DENYING IN PART DEFENDANT’S situated, MOTION FOR 14 Plaintiffs, RECONSIDERATION 15 v. 16 BANK OF AMERICA, N.A.; et al., 17 Defendants. 18 20 On February 27, 2025, this Court granted Plaintiff Brittany Covell’s Renewed 21 Motion for Class Certification, finding all requirements met under Federal Rule of Civil 22 Procedure 23. (See ECF No. 317). The Court certified a class of all Defendant Bank of 23 America checking account holders in the United States who were assessed more than one 24 out-of-network (“OON”) balance inquiry fee during the same visit to a FCTI, Inc.-owned 25 ATM located in a 7-Eleven store from May 1, 2018, to November 16, 2021. (See id. at 26 19). Pending now is Defendant’s Motion for Reconsideration of this decision. 27 (Defendant’s Motion (“Def.’s Mot.”), ECF No. 318). Plaintiff filed an Opposition, 28 (Plaintiff’s Opposition (“Opp’n”), ECF No. 322), and Defendant filed a Reply, 1 (Defendant’s Reply (“Reply”), ECF No. 324). The matter came on for hearing on May 9, 2 2025. Todd Carpenter appeared for Plaintiff, and Shawn Obi, Amanda Groves, and Daniel 3 Aronsohn appeared for Defendant. (ECF No. 330 at 2). 4 The background of this case has been summarized in numerous prior orders and need 5 not be repeated. Defendant argues that this Court committed two clear errors that 6 necessitate reconsideration: “(i) misinterpretation of the Weiss settlement and (ii) deference 7 to an illusory settlement agreement.” (Def.’s Mot. 7). For the following reasons, 8 Defendant’s Motion for Reconsideration is GRANTED IN PART and DENIED IN 11 “Reconsideration is appropriate if the district court (1) is presented with newly 12 discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, 13 or (3) if there is an intervening change in controlling law.” Sch. Dist. No. 1J, Multnomah 14 Cnty., Or. v. AcandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993) (internal citation omitted). A 15 motion for reconsideration should not be granted “absent highly unusual circumstances”. 16 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999). 17 District courts have discretion in granting or denying a motion for reconsideration. 18 Navajo Nation v. Confederated Tribes & Bands of the Yakama Indian Nation, 331 F.3d 19 1041, 1046 (9th Cir. 2003). They also retain “broad discretion to modify class definitions.” 20 Victorino v. FCA US LLC, 2021 WL 662264, at *2 (S.D. Cal. Feb. 19, 2021) (internal 21 quotation marks and citation omitted). “In considering the appropriateness of modification 22 or decertification, the standard of review is the same as a motion for class certification: 23 whether the Rule 23 requirements are met.” Id. (internal quotation marks and brackets 24 omitted) (collecting cases). 26 A. FCTI Settlement Agreement 27 When opposing Plaintiff’s Renewed Motion for Class Certification, Defendant 28 argued that Plaintiff’s lack of standing rendered her inadequate as a representative of the 1 proposed class. (ECF No. 312 at 19). Plaintiff allegedly lacked standing because she 2 presumably recovered more than $2.50 in her confidential settlement with FCTI and thus 3 redressed her pocketbook injury. (Id.). The Court reviewed Plaintiff’s settlement in 4 camera and found that “Plaintiff did not recoup the second OON fee through [her] 5 settlement.” (ECF No. 317 at 9). Instead, the Court noted that Plaintiff benefitted from 6 FCTI’s decision to change its prompt. (Id.). Defendant now alleges that because FCTI 7 changed its screens nearly a year prior to Plaintiff’s settlement, the settlement was illusory 8 as to Plaintiff and makes her inadequate. (Def.’s Mot. 16). The Court disagrees. 9 First, “an unaccepted settlement offer does not moot a plaintiff’s case”. Campbell- 10 Ewald Co. v. Gomez, 577 U.S. 153, 165 (2016), as revised (Feb. 9, 2016). Plaintiff’s 11 decision not to be monetarily compensated through her settlement with FCTI means that 12 “her interest in the lawsuit remains just what it was before.” Id. at 162 (internal quotation 13 marks and citations omitted). While Defendant contends that Plaintiff is inadequate 14 because she failed to mitigate her damages in the settlement, the Supreme Court’s 15 reasoning in Campbell-Ewald intimates the opposite. (Def.’s Mot. 17). It is the rejection 16 of a settlement offer, i.e., the plaintiff’s failure to mitigate damages in the first instance, 17 that enables a case to proceed to class certification. Campbell-Ewald, 577 U.S. at 165 18 (“Because Gomez’s individual claim was not made moot by the expired settlement offer, 19 that claim would retain vitality during the time involved in determining whether the case 20 could proceed on behalf of a class.”); see also id. (“While a class lacks independent status 21 until certified, a would-be class representative with a live claim of her own must be 22 accorded a fair opportunity to show that certification is warranted.”); see also id. at 165– 23 66 (“In sum, an unaccepted settlement offer or offer of judgment does not moot a plaintiff’s 24 case, so the District Court retained jurisdiction to adjudicate Gomez’s complaint.”). 25 Because the rejection of a settlement offer allows the lead plaintiff to continue representing 26 putative class members at the certification stage, Campbell-Ewald suggests that a 27 plaintiff’s denial of a settlement offer does not, without more, affect her adequacy as a class 28 representative. 1 Second, there was valid consideration in the settlement agreement. Plaintiff, for her 2 part, released all her claims against FCTI. (Opp’n 13–14); see Powerturbine, Inc. v. Int’l 3 Aerospace Grp., Corp., 2015 WL 13357513, at *2 (C.D. Cal. Jan. 7, 2015) (“It is well 4 established that foregoing a legal claim is valid and sufficient consideration for an 5 agreement.”) (internal citation omitted); Bur-Tex Hosiery Inc. v. World Tech Toys Inc., 6 2023 WL 3267752, at *3 (C.D. Cal. Apr. 20, 2023), reconsideration denied, 2023 WL 7 4680333 (C.D. Cal. June 6, 2023) (“[The Agreement] also expressly provides that Bur-Tex 8 would be relieved of its outstanding contracultural obligations to purchase products from 9 Inov8 in exchange for the parties releasing their respective claims related to the underlying 10 contracts. Based on these provisions, the court finds the Settlement Agreement does not 11 lack consideration.”) (internal citations omitted); Rutgard v. Haynes, 11 F.App’x 818, 818 12 (9th Cir. 2001) (“Under California law, surrender of a possibly meritless claim which is 13 disputed in good faith is valid consideration.”) (internal quotation marks and citation 14 omitted). FCTI also bestowed a benefit to Plaintiff. Because the settlement agreement is 15 confidential, the Court will not specify further on the record. Should Defendant wish to 16 learn the nature of FCTI’s consideration, it may do so with Plaintiff’s and FCTI’s 17 permission. The settlement agreement may also be reviewed in camera by any reviewing 18 court, if necessary. Accordingly, Defendant’s Motion for Reconsideration on grounds of 19 Plaintiff’s settlement with FCTI is DENIED. 20 B. Weiss 21 Defendant’s Opposition to Plaintiff’s Renewed Motion for Class Certification 22 contended that this lawsuit was duplicative of Weiss, an action that settled in San Diego 23 County Superior Court. (ECF No. 312 at 20–22, 24–29). The Court disagreed. (ECF No. 24 317 at 8 n.2, 13–14, 18). In response, Defendant alleges that the Court’s analysis was 25 flawed and reincorporates its arguments about how the duplicative nature of Weiss raises 26 predominance, superiority, and adequacy concerns. (Def.’s Mot. 7–15). 27 28 1 a. Predominance 2 i. Standing and Double Recovery 3 The Court’s prior Order determined that class members who already recovered in 4 Weiss did not face individual issues of standing or double recovery. (ECF No. 317 at 13– 5 14). Specifically, the Court found that Weiss involved “recovery for a different legal 6 remedy (restitution) against a different wrongdoer (FCTI) under a different cause of action 7 (violation of the UCL)” and covered “only the interchange fee received by FCTI, not the 8 rest of the OON fee retained by Defendant.” (Id. at 14, 18). Defendant disputes the second 9 assertion. (Def.’s Mot. 7–9). Defendant argues that the terms and payout structure of the 10 Weiss settlement confirm that Weiss class members each received at least $15.00, which 11 refunds the entirety of their pocketbook injury, not just the interchange fee. (Id.). 12 Upon review of the record, the Court finds that class members who have also made 13 a valid claim in Weiss already received at least $15.00 through the settlement. Plaintiff 14 does not dispute this conclusion. (Opp’n 12 n.3) (“The claimants of the Nationwide 15 Settlement Class ended up receiving over $15 through the pro rata distribution of the $1.5 16 million allotted to the Nationwide Class because . . . the distribution process that resulted 17 in a small number of class members to recover for their claims against FCTI in an amount 18 that exceed[s] the full OON Fee was purely the happenstance result of the logistics of 19 attempting to distribute any restitution at all.”) (internal quotation marks and citation 20 omitted). However, this does not warrant decertification of the entire class. Only a small 21 percentage of class members made a claim in Weiss. (Opp’n 12 n.4). Hundreds of 22 thousands of individuals remain uncompensated for their injuries. 23 Modification of the class definition to avoid individualized inquiries about standing 24 and double recovery is more appropriate. Fed. R. Civ. P. 23(c)(1)(C) (“An order that grants 25 or denies class certification may be altered or amended before final judgment.”); Gen. Tel. 26 Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982) (“Even after a certification order is entered, 27 the judge remains free to modify it in . . . light of subsequent developments in the 28 litigation.”); Ruiz Torres v. Mercer Canyons Inc., 835 F.3d 1125, 1137 (9th Cir. 2016) 1 (“We conclude that such fortuitous non-injury to a subset of class members does not 2 necessarily defeat certification of the entire class, particularly as the district court is well 3 situated to winnow out those non-injured members at the damages phase of the litigation, 4 or to refine the class definition.”).1 The Court now excludes from the class individuals who 5 made a claim and received payment through the Weiss settlement. These individuals can 6 be identified through Weiss’ claims-made procedure. 7 ii. Failure to Mitigate 8 Defendant also realleges that the predominance requirement is not met because it is 9 “entitled to ask every putative class member via live cross-examination” why they did not 10 make a claim in Weiss. (Def.’s Mot. 13) (emphasis added). Defendant’s argument hinges 11 on the fact that all class members in this action were also part of Weiss’ classes.2 The 12 classes cover the same conduct over the same time period.3 (ECF No. 317 at 19); (ECF 13 No. 312-2 at 149). They differ only in scope: while Weiss’ classes include individuals who 14 held accounts with several banks, including Bank of America, the class here includes only 15 1 The Court has chosen to modify the class definition in light of the Supreme Court’s pending decision in 16 Laboratory Corporation of America Holdings v. Davis (“Labcorp”), No. 24-304. Under current Ninth 17 Circuit precedent, the class could have proceeded without modification. Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 669 (9th Cir. 2022) (“Therefore, we reject the dissent’s 18 argument that Rule 23 does not permit the certification of a class that potentially includes more than a de minimis number of uninjured class members. This position is inconsistent with Rule 23(b)(3), which 19 requires only that the district court determine after rigorous analysis whether the common question predominates over any individual questions, including individualized questions about injury or entitlement 20 to damages.”) (citing Fed. R. Civ. P. 23(b)(3)). Because the Supreme Court’s pending decision in Labcorp 21 could disavow Olean, the Court elects to carve out class members who have already redressed their injury through the Weiss settlement. 22 2 Plaintiff conceded this point during oral argument. (ECF No. 330 at 3, 6). 3 The Court previously certified a class of “Defendant [Bank of America] checking account holders in the 23 United States who were assessed more than one OON balance inquiry fee during the same visit to a FCTI, Inc.-owned ATM located in a 7-Eleven store from May 1, 2018, to November 16, 2021.” (ECF No. 317 24 at 19). By comparison, Weiss’ nationwide class, excluding the carveout for accountholders in New York, 25 consisted of “all Accountholders who were assessed two OON Fees for a balance inquiry during the same visit at a FCTI ATM in the United States from May 1, 2018 to November 16, 2021.” (ECF No. 312-2 at 26 149); (id. at 147) (defining accountholder as “any person who has or had any interest, whether legal or equitable, in an Account during the Class Period” and defining account as “any checking or savings 27 account with any financial institution on which multiple out-of-network fees were assessed by the financial institution during the Class Period for balance inquiries that were registered and transmitted by 28 1 Bank of America checking accountholders. (ECF No. 317 at 19); (ECF No. 312-2 at 149). 2 As a result of this overlap, Defendant alleges that to present this defense, it would need to 3 ask hundreds of thousands of class members why they did not make a claim in Weiss to 4 determine who had justifiable cause not to participate in the Weiss settlement. (Def.’s Mot. 5 12); Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 367 (2011) (noting that defendants 6 “have the right to raise any individual affirmative defenses [they] may have”). This 7 scenario is clearly untenable in a class action framework. 8 Plaintiff argues that the failure to mitigate defense is inapplicable because Weiss’ 9 class notice and settlement agreement did not provide adequate notice to class members 10 that they would give up their right to pursue the rest of the OON fee from financial 11 institutions, including Defendant. (ECF No. 330 at 20–21, 23, 25, 28). According to 12 Plaintiff, Weiss class members assumed only that lack of participation in the settlement 13 foreclosed the interchange fee received by FCTI, the relief sought in the action. (Id.). 14 Plaintiff points specifically to language in the settlement agreement expressly preserving 15 claims against financial institutions. (Id.); (ECF No. 312-2 at 153) (“Excluded from this 16 release are financial institutions that collected Out-of-Network fees from Class Members 17 as a result of the alleged conduct.”). In response, Defendant contends that the notice was 18 sufficient because the relevant documents spoke in terms of OON, not interchange, fees. 19 (ECF No. 330 at 24, 26–27); (Def.’s Mot. 7–8) (asserting that “OON” language in class 20 notice and settlement agreement is evidence of Weiss’ duplicative nature). 21 Whether Weiss’ class notice and settlement agreement adequately notified class 22 members that their failure to make a claim would impact their ability to recover in this 23 action is an objective inquiry. See In re Nissan Motor Corp. Antitrust Litig., 552 F.2d 24 1088, 1105 (5th Cir. 1977) (“[T]he [class] notice required by [Federal Rule of Civil 25 Procedure 23(c)(2)] must contain information that a reasonable person would consider to 26 be material in making an informed, intelligent decision of whether to opt out or remain a 27 member of the class and be bound by the final judgment.”); id. at 1104 (“[Class notice] 28 must also contain an adequate description of the proceedings written in objective, neutral 1 terms, that, insofar as possible, may be understood by the average absentee class 2 member.”); O’Neil v. Bunge Corp., 365 F.3d 820, 822 (9th Cir. 2004) (“The construction 3 and enforcement of settlement agreements are governed by principles of local law which 4 apply to interpretation of contracts generally.”) (internal quotation marks and citations 5 omitted); Schertzer v. Bank of Am., NA, 109 F.4th 1200, 1208 (9th Cir. 2024) (“Under 6 California contract law, applicable here, terms must be understood in their ordinary and 7 popular sense[.]”) (internal quotation marks and citation omitted). As a result, the 8 adequacy of notice—and the applicability of the failure to mitigate defense—is a question 9 that can be determined class-wide by the trier of fact. 10 If the trier of fact finds that notice was inadequate, the defense would fail class-wide. 11 This is because “[t]he duty to mitigate damages does not require an injured party to do 12 what is unreasonable or impracticable.” United States v. Sierra Pac. Indus., 879 F.Supp.2d 13 1128, 1136 (E.D. Cal. 2012), adhered to on reconsideration, 2012 WL 2571274 (E.D. Cal. 14 July 2, 2012) (internal quotations marks and citation omitted) (applying California law).4 15 Defendant appears to concede this point. (See Def.’s Mot. 13) (“One answer might be a 16 good defense rebuttal (e.g., lack of awareness) while another may not (e.g., laziness).”). It 17 would be unreasonable to hold class members accountable for their failure to mitigate if 18 they were unaware, through no fault of their own, that Weiss involved recovery of the entire 19 OON fee, not just the amount retained by FCTI. 20 If the trier of fact determines that notice was adequate, the effect of the defense on 21 recovery would similarly apply to the entire class. To compensate nationwide class 22 members for their injuries, the Weiss settlement created a $1.5 million nationwide 23 settlement fund. (Id. at 8); (ECF No. 312-2 at 159) (“Second, all Nationwide Settlement 24 Class Members who submit a Valid Claim shall receive an equal payment of up to $15 25 from the $1.5 million Nationwide Settlement Fund.”). Only 7,211 Weiss class members 26 submitted valid claims. (Def.’s Mot. 9 n.3); (ECF No. 312-2 at 187) (noting that there was 27 4 The parties agree that California law governs the breach of contract claim. Schertzer, 109 F.4th at 1208 28 1 a “total number of 7,211 Valid Claims”). If the class size here is 580,000 individuals, the 2 number advanced by Defendant during oral argument, and they all also submitted valid 3 claims in Weiss, each claimant would have received $2.55.5 If the class size here is 1.2 4 million individuals, the number posited by Plaintiff, each claimant would have received 5 $1.24.6 Damages could then be reduced class-wide in light of the amount that could have 6 been mitigated if each member had made a claim in Weiss. See Gomez v. Am. Empress 7 Ltd. P’ship, 189 F.3d 473 (9th Cir. 1999) (“The district judge’s method of calculation, first 8 reducing total damages by Mr. Gomez’s percentage of fault, then reducing that subtotal by 9 the money amount that Mr. Gomez could have avoided by reasonable mitigation, was 10 consistent with one somewhat analogous case in our court[.]”) (emphasis added); see also 11 Murphy v. Trader Joe’s, 2017 WL 235193, at *3 (N.D. Cal. Jan. 19, 2017) (“[T]he failure 12 to mitigate doctrine operates to reduce damages rather than as a barrier to liability[.]”).7 13 Even if the damage calculations are somewhat more complex, “[t]he amount of 14 damages is invariably an individual question and does not defeat class action treatment” in 15 the Ninth Circuit. Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975); see also 16 Yokoyama v. Midland Nat. Life Ins. Co., 594 F.3d 1087, 1094 (9th Cir. 2010) (“In this 17 circuit, however, damage calculations alone cannot defeat certification.”). The extent to 18 which individuals’ damages would be offset by their failure to mitigate could thus be 19 determined at a later date. Accordingly, Defendant’s failure to mitigate defense does not 20 defeat predominance. Defendant’s Motion for Reconsideration due to predominance 21 concerns is GRANTED IN PART and DENIED IN PART. 22 b. Superiority and Adequacy 23 The Court’s prior Order found that Weiss did not affect Plaintiff’s showing of 24 superiority and adequacy. (ECF No. 317 at 8 n.2, 18). Defendant argues that Plaintiff’s 25

26 5 $1,500,000 / (580,000 + 7,211) = $2.55444806. 6 $1,500,000 / (1,200,000 + 7,211) = $1.24253341. 27 7 In the first scenario, class members would receive $0 in damages because $2.55 is greater than $2.50, the total OON fee. In the second scenario, class members would receive $1.26 in damages ($2.50 - $1.24 28 1 class action is not a superior method of adjudication because “similar proceedings”, i.e., 2 Weiss, “provided similar relief to class members”. (Def.’s Mot. 14). Defendant 3 characterizes this action as a “follow-on class action [that] adds nothing to a previously 4 approved class settlement.” (Id.). In a similar vein, Defendant realleges that Plaintiff is 5 inadequate because she “proposes a duplicative class action that will require significant 6 sums in administration and attorneys’ fees, both of which were already incurred in the 7 name of these same putative class members to the tune of nearly $5 million.” (Id. at 14– 8 15). The Court rejected these arguments in its previous Order and stands by its decision. 9 The Weiss settlement did not release—and instead expressly preserved—claims against 10 Defendant. (ECF No. 312-2 at 153) (“Excluded from this release are financial institutions 11 that collected Out-of-Network fees from Class Members as a result of the alleged 12 conduct.”). This lawsuit remains a necessary vehicle for hundreds of thousands of class 13 members to litigate their contractual claims against Defendant for collecting a wrongful 14 fee. Given that “courts often certify [concurrent] class actions arising from similar facts”, 15 Defendant’s arguments again fall short. Cohen v. Trump, 303 F.R.D. 376, 389 (S.D. Cal. 16 2014) (internal quotation marks and citation omitted). The Court DENIES Defendant’s 17 Motion for Reconsideration of Weiss’ effect on superiority and adequacy. 19 For the foregoing reasons, Defendant’s Motion for Reconsideration is GRANTED 20 IN PART and DENIED IN PART. The Court redefines the class as: Defendant Bank of 21 America checking account holders in the United States who were assessed more than one 22 OON balance inquiry fee during the same visit to a FCTI, Inc.-owned ATM located in a 7- 23 Eleven store from May 1, 2018, to November 16, 2021, and who did not make a valid claim 24 and receive payment in Weiss. 26 27

28 Dated: May 19, 2025 » Yim yn. I f Hon. Dana M. Sabraw 3 United States District Judge 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28