Eiess v. Usaa Federal Savings Bank

Northern District of California, cand-3:2019-cv-00108

FIRST AMENDED CLASS ACTION COMPLAINT against USAA Federal Savings Bank. Filed by Elizabeth Eiess. Modified on 4/15/2019

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5 1 Todd D. Carpenter (CA Bar No. 234464) CARLSON LYNCH SWEET 2 KILPELA & CARPENTER, LLP 1350 Columbia St., Ste. 603 3 San Diego, CA 92101 Tel: (619) 762-1900 4 tcarpenter@carlsonlynch.com 5 Jeffrey D. Kaliel (CA Bar No. 238293) Sophia G. Gold (CA Bar No. 307971) 6 KALIEL PLLC 1875 Connecticut Ave., NW, 10th Floor 7 Washington, D.C. 20009 Tel: (202) 350-4783 8 jkaliel@kalielpllc.com sgold@kalielpllc.com 9 Hassan A. Zavareei (CA Bar No. 181547) 10 Andrea Gold (pro hac vice) TYCKO & ZAVAREEI LLP 11 1828 L Street, NW, Suite 1000 Washington, DC 20036 12 Tel: (202) 973-0900 Fax: (202) 973-0950 13 hzavareei@tzlegal.com agold@tzlegal.com 14 Annick M. Persinger (CA Bar No. 272996) 15 Tanya S. Koshy (CA Bar. No. 277095) TYCKO & ZAVAREEI LLP 16 The Tower Building 1970 Broadway – Suite 1070 17 Oakland, CA 94612 Telephone: (510) 254-6808 18 Facsimile: (510) 210-0571 apersinger@tzlegal.com 19 Attorneys for Plaintiff and the Putative Classes 20 [Additional Counsel on Signature Page] 21 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA 22 SAN FRANCISCO DIVISION 23 ELIZABETH EIESS, on behalf of Case No. 3:19-cv-00108 24 herself and all others similarly situated, 25 FIRST AMENDED Plaintiff, CLASS ACTION COMPLAINT 26 v. JURY TRIAL DEMANDED 27 28 USAA FEDERAL SAVINGS BANK, Defendant. 000001/01132808_1 1 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 FIRST AMENDED CLASS ACTION COMPLAINT 2 Plaintiff Elizabeth Eiess ("Plaintiff"), on behalf of herself and all persons 3 similarly situated, alleges the following based on personal knowledge as to allegations 4 regarding the Plaintiff and on information and belief as to other allegations. 5 INTRODUCTION 6 1. Plaintiff brings this action on behalf of herself and a class of all similarly 7 situated consumers, and the general public with respect to injunctive relief, against 8 Defendant USAA Federal Savings Bank ("USAA" or the "Bank"), arising from the 9 assessment of multiple Non-Sufficient Funds Fees ("NSF Fees") on the same 10 transaction, which is barred by the account contract and is deceptive. 11 2. In violation of its contract and reasonable consumer understanding, 12 USAA often charges more than one $29 NSF Fee on the same transaction, even though 13 the contract states—and reasonable consumers understand—that the same transaction 14 can only incur a single NSF Fee. These double and triple penalties crush accountholders 15 already struggling to make ends meet. 16 3. This practice works to catch accountholders—many of whom are 17 struggling get by—in an increasingly devastating cycle of fees. 18 4. Plaintiff, and other consumers, have been injured by USAA's improper 19 practice. On behalf of herself and the Classes, Plaintiff seeks damages, restitution and 20 injunctive relief for USAA's breach of contract and violation of California consumer 21 protection statutes. 22 5. Plaintiff further seeks redress for USAA's misleading and deceptive 23 misrepresentations regarding the assessment of multiple NSF Fees on the same 24 transaction in its publicly available marketing materials, including its own account 25 contracts, and for USAA's omission of material facts pertaining to that practice in its 26 publicly available marketing materials, including its account contracts. 27 6. Plaintiff and other consumers have been injured by USAA's breach of 28 contract and violations of consumer protection statutes. 2 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 7. In addition, USAA's deceptive scheme aimed at the general public 2 continues to this day. USAA's account contracts (including the Deposit Agreement, 3 Fee Schedule, and Online Banking Agreement) are publicly available online to all 4 current and prospective accountholders. The general public relies on representations in 5 these documents in making important financial decisions regarding with whom they 6 would like to open a checking account. Consumers who have already opened accounts 7 also rely on the misrepresentations and omissions in the publicly available account 8 documents when making every day financial transactions. 9 8. The Pew Charitable Trusts has emphasized the importance of transparent 10 checking account fee disclosures for both comparison shopping for checking accounts 11 and for effective fee avoidance: 12 Bank accounts are an essential financial product, used by 9 in 10 American households, and need to be safe and transparent. Account 13 agreements and fee schedules provide customers with account costs, terms, and conditions. Among the largest U.S. banks, however, the median 14 length of checking account disclosure documents is 40 pages, and the information is presented in varied formats with inconsistent wording, 15 making it difficult for consumers to easily find the information they need to comparison shop, avoid overdraft and other fees, and manage their 16 money. 17 The Pew Trusts, "The Benefits of Uniform Checking Account Disclosures." 18 Transparency is especially essential given that research has revealed that fees are the 19 most important factor influencing consumers' selection of a new banking provider. See 20 Ron Shevlin, "How Consumers Choose a Bank: A Tale of Two Surveys." Insight 21 Vault, Cornerstone Advisors, 23 Aug. 2018, available at 22 https://www.crnrstone.com/insightvault/2018/08/23/how-consumers-choose-a-bank- 23 a-tale-of-two-surveys/. 24 9. Members of the public considering opening a checking account have the 25 right to accurate information regarding the checking accounts they are considering. 26 Reasonable consumers would not agree to open USAA checking accounts if they were 27 informed, for example, that they would incur multiple NSF fees on a single transaction. 28 3 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 10. Plaintiff seeks injunctive relief on behalf of the general public in order to 2 prevent USAA from continuing to make material misrepresentations and omissions in 3 publicly available account documents, misrepresentations and omissions which 4 prevent all California consumers from accessing truthful and transparent information 5 regarding USAA's practices. 6 JURISDICTION AND VENUE 7 11. This Court has original jurisdiction of this action under the Class Action 8 Fairness Act of 2005. Pursuant to 28 U.S.C. §§ 1332(d)(2) and (6), this Court has 9 original jurisdiction because the aggregate claims of the putative class members exceed 10 $5 million, exclusive of interest and costs, and at least one of the members of the 11 proposed classes is a citizen of a different state than USAA. 12 12. Venue is proper in this district pursuant to 28 U.S.C. § 1391 because a 13 substantial part of the events or omissions giving rise to the claims asserted herein 14 occurred in this district. 15 PARTIES 16 13. Plaintiff Eiess is a citizen of California who resides in American Canyon, 17 CA. She maintains a USAA checking account. 18 14. Defendant USAA is a federal savings association with its headquarters 19 and principal place of business located in San Antonio, TX. Among other things, 20 USAA is engaged in the business of providing retail banking services throughout 21 California to consumers, including Plaintiff and members of the putative classes, which 22 includes the issuance of debit cards for use by its customers in conjunction with their 23 checking accounts. 24 FACTUAL BACKGROUND AND GENERAL ALLEGATIONS 25 I. USAA ASSESSES TWO, THREE AND SOMETIMES MORE NSF FEES ON THE SAME TRANSACTION 26 27 15. As a matter of policy and practice, USAA has programmed its systems to 28 charge two, three, or even more NSF Fees on the same electronic transactions, when 4 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 those transactions are rejected for insufficient funds then re-submitted for payment over 2 and over again. 3 16. This abusive practice is not universal in the banking industry. Indeed, 4 major banks like Chase—the largest consumer bank in the country—do not undertake 5 the practice of charging more than one NSF Fee on the same item when it is submitted 6 for payment multiple times. Instead, they charge one NSF Fee even if a transaction is 7 resubmitted for payment multiple times. 8 17. Worse, USAA's account documents never disclose this practice; to the 9 contrary, it indicates it will not undertake this practice. 10 A. The Purpose and Nature of Overdraft and NSF Fees 11 18. When a bank rejects an attempted transaction on a checking account due 12 to insufficient funds, it sends an electronic notification back to the merchant stating 13 that the transaction was not approved. USAA charges a $29 NSF Fee when it performs 14 this action. Because rejection is essentially cost-free, the $29 NSF is pure profit. 15 19. The rejection of an attempted transaction provides zero benefit to the 16 accountholder, as the CFPB has noted: 17 An important consumer outcome of any overdraft program is the 18 percentage of negative transactions that are paid (i.e., result in overdrafts) or returned unpaid (i.e., were NSFs). Paying overdraft 19 transactions may confer some benefit (in exchange for the associated fees and other costs) to consumers by helping them make 20 timely payments and avoid late penalty fees and/or interest charges from a merchant or biller. In contrast, returning an item generally 21 confers little benefit to the consumer (other than perhaps deterring future overdrafting and any subsequent consequences) and can 22 result in an NSF fee as well as additional related fees, such as a returned check fee charged by the institution to whom the check 23 was presented or a late fee charged by the entity to whom payment was due. At the median, study banks paid into overdraft 83% of 24 transactions that exceeded the available balance in 2011 and returned 17%. 25 CFPB Study of Overdraft Programs, CFPB (June 2013), at 26 (emphasis added), 26 available at https://files.consumerfinance.gov/f/201306_cfpb_whitepaper_overdraft- 27 practices.pdf. Worse, multiple rejection and fee assessments on the same transaction 28 not only provide no benefit to already-strapped accountholders, they devastate them. 5 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 B. Plaintiff's Experiences 2 20. Plaintiff has been a citizen and resident of California since 2014. The 3 relevant transaction took place while Plaintiff has resided in California. 4 21. On October 30, 2018, Plaintiff attempted a $358.83 payment on her 5 Citibank credit card. She attempted this payment while residing in California. 6 22. USAA rejected payment of that transaction due to insufficient funds and 7 charged Plaintiff a $29 NSF Fee for doing so. 8 23. Three days later, on November 2, 2018, the same transaction was 9 submitted for payment again, and again USAA rejected the transaction due to 10 insufficient funds, and again charged Plaintiff a $29 NSF Fee. 11 24. USAA expressly referred to this transaction on Plaintiff's bank statements 12 as a "RETRY PAYMENT," indicating even USAA understood this transaction to be 13 another iteration of the same authorization for payment. 14 25. Another five days later, on November 7, 2018, the same transaction was 15 submitted for payment yet again, and again USAA rejected the transaction due to 16 insufficient funds and again charged Plaintiff a $29 NSF Fee for doing so. 17 26. Again, USAA expressly referred to this transaction on Plaintiff's bank 18 statements as a "RETRY PAYMENT," indicating even USAA understood this 19 transaction to be another iteration of the same authorization for payment. 20 27. In sum, USAA charged Plaintiff $87 in fees to attempt to process a single 21 $358.83 payment. 22 28. Plaintiff took no affirmative action to reinitiate or resubmit the 23 transaction, which was submitted for payment automatically over and over again. 24 29. Plaintiff understood the payment to Citibank be a single transaction, 25 capable at most of receiving a single NSF or Overdraft (OD) Fee. 26 27 28 6 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 C. USAA Violates the Express Promises and Representations Made by USAA When It Charges More than One NSF Fee on the Same 2 "Item" 30. USAA's account contract documents state that it will charge $12 per 3 "item" that is returned due to insufficient funds. 4 31. While the term "item" is not expressly defined, its usage throughout 5 USAA's Deposit Agreement reveals that the term "item" must describe all iterations 6 of a given instruction for transfer or payment from a checking or savings account. 7 32. According to the USAA Deposit Agreement, attached hereto as Exhibit 8 A: 9 Overdrafts and Insufficient Funds Fees 10 When you do not have enough available funds in your account to cover 11 a check or other item (such as an in person withdrawal, ATM withdrawal, automatic payment, point-of-sale or debit card purchase, 12 or other electronic transaction), FSB considers this to be a Nonsufficient Funds (NSF) item (insufficient funds item). FSB may, 13 without notice to you and in its sole discretion, either pay such items and overdraw your account, or decline or return such items 14 unpaid. In either case, FSB may charge for each insufficient funds item and for each overdraft, as set forth in the Service Fee Schedule for 15 your account. If FSB pays insufficient funds items by overdrawing your account on one or more occasions, FSB is not obligated to continue 16 doing so in the future, and may stop paying such items and return them unpaid without notice to you. 17 (emphasis added).1 18 33. The Online Banking Agreement, attached hereto as Exhibit B, makes no 19 reference whatsoever to fees for returned transactions: 20 21 Failed or Returned Transactions 22 In using the Service, you are requesting the Service to make payments for you from your Payment Account. If we are unable to complete the 23 transaction for any reason associated with your Payment Account (for example, there are insufficient funds in your Payment Account to cover 24 the transaction), the transaction will not be completed. In some instances, you will receive a return notice from the Service. 25 26 27 28 1 USAA refers to itself as "FSB" in certain contractual documents. 7 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 34. USAA's Deposit Agreement, Fee Schedule, and Online Banking 2 Agreement are all publicly available documents available online to all current and 3 prospective accountholders. Consumers, and the general public, rely on these 4 documents in making important financial decisions regarding to whom they would like 5 to entrust their money. 6 35. And according the Fee Schedule, attached hereto as Exhibit C, which is a 7 part of the contractual terms governing a USAA account, a single $29 fee will be 8 assessed for "checks and other withdrawals," but there is no hint that multiple fees can 9 be charged for the same "checks and withdrawals": 10 NON-SUFFICIENT FUNDS FEE (NSF FEE – ITEM RETURNED) 11 Checks and other withdrawals..........................................................$29 Applies to checks and other withdrawals from your account that 12 FSB returns without paying due to non-sufficient funds. 13 36. Therefore, USAA's actual fee practice is directly contrary to the 14 representations on USAA's own Fee Schedule. The Fee Schedule, alone, is an 15 independent basis for Plaintiff's claims. 16 37. The same instruction for payment on an account cannot conceivably 17 become a new "item" each time it is rejected for payment and then resubmitted, 18 especially when—as here—Plaintiff took no action to resubmit them. 19 38. There is zero indication anywhere in the account documents that the same 20 "item," "check" or "other withdrawal" is eligible to incur multiple NSF or OD Fees. 21 Instead, the Fee Schedule plainly states that only a single $29 NSF Fee will be assessed 22 per item. 23 39. Moreover, USAA uses singular terms to discuss the assessment of fees 24 on transactions. For example, the Deposit Agreement states 25 FSB may, without notice to you and in its sole discretion, either pay such items and overdraw your account, or decline or return such items 26 unpaid. In either case, FSB may charge for each insufficient funds item and for each overdraft, as set forth in the Service Fee Schedule for your 27 account. 28 8 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 40. This is binary: for a given transaction, USAA cannot do the same thing 2 more than once. In fact, USAA expressly states that USAA may charge for each 3 insufficient funds item and for each overdraft, not multiple times for each item or 4 overdraft. 5 41. In sum, USAA promises that one $29 NSF or OD Fee will be assessed per 6 item, "check or other withdrawal," and these terms must mean all iterations of the same 7 instruction for payment. As such, USAA breached the contract when it charged more 8 than one fee per item. 9 42. Consistent with express representations in the contract, reasonable 10 consumers understand any given authorization for payment to be one, singular "item," 11 "check or other withdrawal," as that term is used in USAA's contract documents. No 12 reasonable consumer would understand a single check, for example, to be multiple 13 "items." 14 43. Upon information and belief, USAA has this same understanding in 15 practice, since its systems code transactions in a way that alerts USAA when the same 16 item or transaction is being re-submitted for payment, viz., as "RETRY PAYMENTS." 17 44. The contract documents bar USAA from assessing multiple NSF Fees on 18 the same item. 19 45. Lastly, the contract documents never state that one transaction or item can 20 incur multiple NSF Fees, and never discloses that one transaction can count as multiple 21 "items" for purposes of fee assessment. 22 46. USAA's misrepresentations and omissions are ongoing, and negatively 23 affect not only current accountholders' ability to manage their funds, but also deceive 24 members of the general public who have no choice but to rely on USAA's publicly 25 available statements in making important decisions regarding who to bank with, what 26 kinds of accounts to open, and what transactions to make. Current and prospective bank 27 customers have a right to know what they can expect from the institutions they entrust 28 9 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 with their money, especially if what they can expect are multiple NSF Fees on a single 2 transaction. 3 47. Banks like USAA that employ this abusive practice know how to plainly 4 and clearly disclose it. Indeed, other banks that do engage in this abusive practice 5 disclose it expressly to their accountholders—USAA did not. 6 48. For example, First Citizens Bank, a major institution in the Carolinas, 7 engages in the same abusive practice as USAA, but at least expressly states: 8 Because we may charge a service fee for an NSF item each time it is 9 presented, we may charge you more than one service fee for any given item. All fees are charged during evening posting. When we 10 charge a fee for NSF items, the charge reduces the available balance in your account and may put your account into (or further into) overdraft. 11 (emphasis added). 12 49. First Hawaiian Bank engages in the same abusive practice as Defendant, 13 but at least currently discloses it in its Online Banking Agreement, in all capital letters, 14 as follows: 15 16 YOU AGREE THAT MULTIPLE ATTEMPTS MAY BE MADE TO SUBMIT A RETURNED ITEM FOR PAYMENT AND THAT 17 MULTIPLE FEES MAY BE CHARGED TO YOU AS A RESULT OF A RETURNED ITEM AND RESUBMISSION. 18 (emphasis added). 19 50. Klein Bank similarly states in its Online Banking Agreement: 20 [W]e will charge you an NSF/Overdraft Fee each time: (1) a Bill 21 Payment (electronic or check) is submitted to us for payment from your Bill Payment Account when, at the time of posting, your Bill Payment 22 Account is overdrawn, would be overdrawn if we paid the item (whether or not we in fact pay it) or does not have sufficient available 23 funds; or (2) we return, reverse, or decline to pay an item for any other reason authorized by the terms and conditions governing your Bill 24 Payment Account. We will charge an NSF/Overdraft Fee as provided in this section regardless of the number of times an item is submitted or 25 resubmitted to us for payment, and regardless of whether we pay the item or return, reverse, or decline to pay the bill payment. 26 51. USAA provides no such disclosure, and in so doing, deceives its 27 accountholders. 28 10 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 D. USAA Abuses Any Discretion 2 52. Parties to a contract are required not only to adhere to the express 3 conditions in the contract, but also to act in good faith when they are invested with a 4 discretionary power over the other party. In such circumstances, the party with 5 discretion is required to exercise that power and discretion in good faith. This creates 6 an implied promise to act in accordance with the parties' reasonable expectations. That 7 means that USAA is prohibited from exercising its discretion to enrich itself and gouge 8 its customers. Instead of exercising any discretion it may have in good faith and 9 consistent with Plaintiff's reasonable expectations, USAA abuses that discretion to take 10 money out of Plaintiff's account without her permission and contrary to her reasonable 11 expectation that she will not be charged multiple fees for the same transaction. 12 53. To the extent the account documents do not explicitly bar the policy 13 described above, USAA exploits any contractual discretion to the detriment of 14 accountholders and breaches good faith and fair dealing when it uses the policy. The 15 allegations that USAA has contractual discretion are made in the alternative to the 16 allegations that the NSF Fee practices are expressly in breach of the account contract 17 documents. 18 54. As set forth in the Deposit Agreement, "FSB may charge for each 19 insufficient funds item and for each overdraft, as set forth in the Service Fee Schedule 20 for your account." Given that when an "item" is re-submitted for payment a second, 21 third, or additional times, USAA has already assessed a $29 NSF Fee on that item, 22 USAA could simply not charge another $29 NSF Fee on the same item when a 23 customer's account lacks sufficient funds. This would result in a single NSF fee, rather 24 than two or more NSF fees. By exercising its discretion in its own favor—and to the 25 prejudice and expense of Plaintiff and other customers, USAA abuses the power it has 26 and acts contrary to its customers' reasonable expectations under the Deposit 27 Agreement. This is a breach of USAA's implied covenant to engage in fair dealing and 28 act in good faith. 11 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 55. For example, it was bad faith and totally outside Plaintiff's reasonable 2 expectations for USAA to abuse its discretion to assess $87 in fees for a single $358.83 3 credit card payment. 4 56. USAA uses its discretion to interpret "item" and "check or other 5 withdrawal" in an unreasonable way that violates common sense and reasonable 6 consumer expectations. USAA uses its contractual discretion to set the meaning of that 7 term to choose a meaning that directly causes more NSF Fees. 8 57. Moreover, USAA grants itself discretion to refuse to re-submit 9 transactions that are initially rejected. It abuses that discretion to repeatedly resubmit 10 transactions and to charge fees each time. 11 58. Additionally, USAA grants itself discretion to charge—or not to charge— 12 an NSF Fee on a given transaction. When it charges more than one NSF Fee on a given 13 item or transaction, USAA behaves in bad faith and contradicts reasonable consumer 14 expectations. 15 CLASS ALLEGATIONS 16 59. Plaintiff brings this action on behalf of herself and all others similarly 17 situated pursuant to Rule 23 of the Federal Rules of Civil Procedure. This action 18 satisfies the numerosity, commonality, typicality, adequacy, predominance and 19 superiority requirements of Rule 23. 20 60. The proposed classes are defined as: 21 All USAA checking accountholders in the United States 22 who, during the applicable statute of limitations, were charged multiple NSF Fees on the same item (the "National 23 Class"). 24 All USAA checking accountholders in California who, during the applicable statute of limitations, were charged 25 multiple NSF Fees on the same item (the "California Subclass"). 26 The classes are collectively referred to as the "Classes." 27 61. Plaintiff reserves the right to modify or amend the definition of the 28 proposed Classes before the Court determines whether certification is appropriate. 12 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 62. Excluded from the Classes are USAA, its parents, subsidiaries, affiliates, 2 officers and directors, any entity in which USAA has a controlling interest, all 3 customers who make a timely election to be excluded, governmental entities, and all 4 judges assigned to hear any aspect of this litigation, as well as their immediate family 5 members, and any member of such judge's staff and immediate family. 6 63. The members of the Classes are so numerous that joinder is impractical. 7 The Classes consist of thousands of members, the identity of whom is within the 8 knowledge of and can be ascertained only by resort to USAA's records. 9 64. The claims of the representative Plaintiff are typical of the claims of the 10 Classes in that the representative Plaintiff, like all Class members, was charged 11 improper NSF Fees. The representative Plaintiff, like all Class members, has been 12 damaged by USAA's misconduct in that she paid improper NSF Fees. Furthermore, 13 the factual basis of USAA's misconduct is common to all Class members and 14 represents a common thread of unfair and unconscionable conduct resulting in injury 15 to all members of the Classes. 16 65. There are numerous questions of law and fact common to the Classes and 17 those common questions predominate over any questions affecting only individual 18 Class members. 19 66. Among the questions of law and fact common to the Classes are whether 20 USAA: 21 a. Charged multiple NSF Fees on a single transaction; 22 b. Breached its contract with consumers by charging multiple NSF 23 Fees on a single transaction; 24 c. Breached the covenant of good faith and fair dealing by charging 25 multiple NSF Fees on a single transaction; 26 d. Violated California consumer protection law by charging multiple 27 NSF Fees on a single transaction; 28 e. Was unjustly enriched by charging multiple NSF Fees on a single 13 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 transaction; 2 f. Whether Plaintiff and the Classes were damaged by USAA's 3 conduct and if so, the proper measure of damages; and 4 g. Whether USAA misrepresented and omitted material information 5 regarding its fee practices in publicly available account 6 documents. 7 67. Plaintiff is committed to the vigorous prosecution of this action and has 8 retained competent counsel experienced in the prosecution of class actions and, in 9 particular, class actions on behalf of consumers and against financial institutions. 10 Accordingly, Plaintiff is an adequate representative and will fairly and adequately 11 protect the interests of the Classes. 12 68. A class action is superior to other available methods for the fair and 13 efficient adjudication of this controversy. Since the amount of each individual Class 14 member's claim is small relative to the complexity of the litigation, and due to the 15 financial resources of USAA, no Class member could afford to seek legal redress 16 individually for the claims alleged herein. Therefore, absent a class action, the Class 17 members will continue to suffer losses and USAA's misconduct will proceed without 18 remedy. 19 69. Even if Class members themselves could afford such individual litigation, 20 the court system could not. Given the complex legal and factual issues involved, 21 individualized litigation would significantly increase the delay and expense to all 22 parties and to the Court. Individualized litigation would also create the potential for 23 inconsistent or contradictory rulings. By contrast, a class action presents far fewer 24 management difficulties, allows claims to be heard which might otherwise go unheard 25 because of the relative expense of bringing individual lawsuits, and provides the 26 benefits of adjudication, economies of scale and comprehensive supervision by a single 27 court. 28 DESCRIPTION OF PUBLIC INJUNCTIONS SOUGHT 14 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 70. Plaintiff is seeking injunctions on behalf of herself, the putative classes, 2 and the public, prohibiting USAA from making material omissions and 3 misrepresentations to the public as to its multiple NSF fee policy alleged in this 4 Complaint. Along with Plaintiff's prayers for monetary relief, the injunctive relief 5 sought is essential to eradicating USAA's deceptive scheme. In the absence of an 6 injunction, USAA will remain free to continue to mislead members of the public 7 regarding its fee practices, causing them to incur the same unexpected NSF fees 8 Plaintiff and other accountholders experienced. 9 71. Fees are one of the most important factors that consumers take into 10 account when deciding whether to open a checking account, and which financial 11 institution to bank with. The public has the right to a transparent marketplace in which 12 banks are open and honest about the number, nature, and amount of fees they charge, 13 and the circumstances under which those fees are assessed. 14 72. The injunctive relief sought by Plaintiff will protect the public from 15 USAA's deceitful marketing practices which lure customers in by misunderstanding 16 the amount and frequency it assesses NSF Fees on a single transaction. It will prevent 17 USAA from distorting the marketplace by representing that it charges fewer fees than 18 it actually does. It will also serve as a deterrent to other bank that may consider 19 unlawfully charging NSF Fees. 20 73. Specifically, USAA misleads consumers as to the number of NSF Fees it 21 assesses on a given transaction. Plaintiff seeks to enjoin USAA from misrepresenting 22 and/or omitting this material and accurate information in the documents that it makes 23 available to the public. 24 FIRST CLAIM FOR RELIEF 25 Breach of Contract Including Breach of the Covenant of Good Faith and Fair Dealing 26 (On Behalf of the Classes) 74. Plaintiff incorporates by reference each of the allegations set forth in the 27 preceding paragraphs. 28 15 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 75. Plaintiff (and fellow members of the Classes) and USAA have contracted 2 for bank account deposit and checking services, as embodied in USAA's Deposit 3 Agreement, USAA's Online Banking Agreement, and USAA's Fee Schedule. 4 76. For the reasons alleged herein, the contract documents bar USAA from 5 assessing multiple NSF Fees on the same item or transaction. 6 77. USAA charged Plaintiff and members of the Classes multiple NSF Fees 7 on the same transaction. 8 78. Therefore, USAA breached the terms of the Deposit Agreement, Online 9 Banking Agreement, and Fee Schedule with consumers by charging multiple NSF Fees 10 on the same transaction. 11 79. Additionally, under the laws of each state where USAA does business and 12 has customers, good faith is an element of every contract. Whether by common law or 13 statute, all such contracts impose upon each party a duty of good faith and fair dealing. 14 Good faith and fair dealing, in connection with executing contracts and discharging 15 performance and other duties according to their terms, means preserving the spirit – 16 not merely the letter – of the bargain. Put differently, the parties to a contract are 17 mutually obligated to comply with the substance of their contract in addition to its form. 18 Evading the spirit of the bargain and abusing the power to specify terms constitute 19 examples of bad faith in the performance of contracts. 20 80. Subterfuge and evasion violate the obligation of good faith in performance 21 even when an actor believes their conduct to be justified. Bad faith may be overt or 22 may consist of inaction, and fair dealing may require more than honesty. Examples of 23 bad faith are evasion of the spirit of the bargain, willful rendering of imperfect 24 performance, abuse of a power to specify terms, and interference with or failure to 25 cooperate in the other party's performance. 26 27 28 16 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 81. USAA has breached the covenant of good faith and fair dealing in the 2 Account Agreement through its NSF Fee policies and practices as alleged herein. 3 82. Instead of exercising that discretion in good faith and consistent with 4 Plaintiff's reasonable expectations, USAA abuses that discretion to assess NSF fees 5 and take money out of Plaintiff's account without her permission and contrary to her 6 reasonable expectations that she will not be charged multiple NSF Fees for the same 7 transaction. Specifically, USAA regularly (a) resubmits previously declined 8 transactions, even when it knows a customer's account lacks sufficient funds, and (b) 9 charges NSF Fees upon resubmission of previously declined transactions. 10 83. USAA further breaches the covenant of good faith and fair dealing by 11 charging more than one NSF Fee on a single transaction. 12 84. By exercising its discretion to enrich itself by gouging its consumers, 13 USAA consciously and deliberately frustrates the agreed common purposes of the 14 contract and disappoints the reasonable expectations of Plaintiff and members of the 15 Classes, thereby depriving them of the benefit of their bargain. 16 85. In addition, USAA grants itself discretion to charge—or not to charge— 17 an NSF Fee on a given transaction. When it charges more than one NSF on a given 18 transaction, USAA breaches the covenant of good faith and fair dealing. 19 86. Plaintiff and members of the Classes have performed all, or substantially 20 all, of the obligations imposed on them under the contract. 21 87. Plaintiff and members of the Classes have sustained damages as a result 22 of USAA's breach of contract and breach of the covenant of good faith and fair dealing. 23 SECOND CLAIM FOR RELIEF Violation of California Unfair Competition Law 24 Business and Professions Code § 17200 (On Behalf of the California Subclass) 25 88. Plaintiff incorporates by reference each of the allegations set forth in the 26 preceding paragraphs. 27 28 17 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 89. USAA's conduct described herein violates the Unfair Competition Law 2 (the "UCL"), codified at California Business and Professions Code section 17200, et 3 seq. 4 90. The UCL prohibits, and provides civil remedies for, unfair competition. 5 Its purpose is to protect both consumers and competitors by promoting fair competition 6 in commercial markets for goods and services. In service of that purpose, the 7 Legislature framed the UCL's substantive provisions in broad, sweeping language. 8 91. By defining unfair competition to include any "any unlawful, unfair or 9 fraudulent business act or practice," the UCL permits violations of other laws to be 10 treated as unfair competition that is independently actionable, and sweeps within its 11 scope acts and practices not specifically proscribed by any other law. 12 92. The UCL expressly provides for injunctive relief, and also contains 13 provisions denoting its public purpose. A claim for injunctive relief under the UCL is 14 brought by a plaintiff acting in the capacity of a private attorney general. Although the 15 private litigant controls the litigation of an unfair competition claim, the private litigant 16 is not entitled to recover compensatory damages for his own benefit, but only 17 disgorgement of profits made by the defendant through unfair or deceptive practices in 18 violation of the statutory scheme or restitution to victims of the unfair competition. 19 93. As further alleged herein, USAA's conduct violates the UCL's "unfair" 20 prong insofar as USAA charges multiple NSF Fees on a single transaction. 21 94. USAA's conduct was not motivated by any legitimate business or 22 economic need or rationale. The harm and adverse impact of USAA's conduct on 23 members of the general public was neither outweighed nor justified by any legitimate 24 reasons, justifications, or motives. 25 95. The harm to Plaintiff and members of the California Subclass arising from 26 USAA's unfair practices relating to the imposition of the improper fees outweighs the 27 utility, if any, of those practices. 28 18 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 96. USAA's unfair business practices as alleged herein are immoral, 2 unethical, oppressive, unscrupulous, unconscionable and/or substantially injurious to 3 Plaintiff, members of the California Subclass, and the general public. 4 97. USAA's conduct was substantially injurious to consumers in that they 5 have been forced to pay improper, abusive, and/or unconscionable NSF fees. 6 98. Moreover, USAA committed fraudulent business acts and practices in 7 violation of Cal. Bus. & Prof. Code § 17200, et seq., when it affirmatively and 8 knowingly misrepresented its NSF Fee practices. Such representations misled the 9 Plaintiff and are likely to mislead the public. 10 99. Specifically, Plaintiff relied on USAA's misrepresentations and material 11 omission regarding its NSF Fee practices. Specifically, Plaintiff had no idea she would 12 be charged multiple NSF Fees for a single transaction. If Plaintiff knew she would be 13 charged multiple NSF Fees for a single transaction, she would have switched banks to 14 a bank that did not use this practice. Such misrepresentations and omissions misled 15 Plaintiff and are likely to mislead the public. Plaintiff seeks to enjoin USAA from 16 misrepresenting and/or omitting this material and accurate information in the 17 documents that it makes available to existing accountholders and the general public 18 who might consider banking with USAA. 19 100. Plaintiff and members of the California Subclass relied on USAA's 20 misrepresentations and omissions in that Plaintiff received and reviewed the materials 21 provided by USAA, and like any reasonable customer understood these documents to 22 mean they would not be charged more than one NSF Fee on a single transaction. Had 23 Plaintiff and others been informed in any of the documents provided by USAA that 24 they would be subject to these practices, they would have been able to weigh the 25 convenience and benefits in engaging in transactions against the cost of the multiple 26 NSF Fees charged by USAA. 27 28 19 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 101. Moreover, USAA committed unlawful business acts and practices in 2 violation of Cal. Bus. & Prof. Code § 17200, et seq., when it violated the CLRA, as 3 alleged herein. 4 102. As a result of USAA's violations of the UCL, Plaintiff and members of 5 the California Subclass have paid, and/or will continue to pay NSF Fees and thereby 6 have suffered and will continue to suffer actual damages. 7 103. Absent injunctive and public injunctive relief prohibiting USAA from 8 misrepresenting and omitting material information concerning its NSF Fee policy at 9 issue in this lawsuit, Plaintiff and other existing accountholders, and the general public 10 will be exposed to USAA's conduct violative of the UCL. 11 12 THIRD CLAIM FOR RELIEF Consumers Legal Remedies Act (CLRA) Cal. Civ. Code § 1750 et seq. 13 (On Behalf of the California Subclass) 104. Plaintiff incorporates by reference each of the allegations set forth in the 14 preceding paragraphs. 15 105. Plaintiff and each of the California Subclass members are "consumers" 16 within the meaning of Civil Code § 1761(d). 17 106. Plaintiff and California Subclass members engaged in "transactions" with 18 USAA within the meaning of Civil Code § 1761(e). 19 107. USAA's provision of electronic payments services are "services" within 20 the meaning of §§ 1761(b). 21 108. USAA's actions, representations, and conduct have violated, and continue 22 to violate, the CLRA because they extend to transactions that are intended to result, or 23 that have resulted, in the sale of goods or services to any consumer. 24 109. The CLRA expressly provides for injunctive relief, and also contains 25 provisions denoting its public purpose. A claim for injunctive relief under the CLRA 26 is brought by a plaintiff acting in the capacity of a private attorney general. 27 110. As detailed above, USAA has engaged, and continues to engage, in unfair 28 methods of competition and has undertaken unfair or deceptive acts or practices in 20 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 violation of the CLRA by, inter alia: charging multiple NSF Fees on the same 2 transaction. 3 111. USAA made material misrepresentations and/or omissions concerning 4 each of these practices upon which Plaintiff relied. 5 112. Specifically, Plaintiff relied on USAA's misrepresentations and material 6 omission regarding its NSF Fee practices in its Account Agreement and Fee Schedule. 7 Such misrepresentations and omissions misled Plaintiff and are likely to mislead the 8 public. Plaintiff seeks to enjoin USAA from misrepresenting and/or omitting this 9 material and accurate information in the documents that it makes available to the 10 public. 11 113. Plaintiff and members of the California Subclass relied on USAA's 12 misrepresentations and omissions in that Plaintiff received and reviewed the materials 13 provided by USAA, and like any reasonable customer understood these documents to 14 mean she would not be charged more than one NSF Fee on a single transaction. Had 15 Plaintiff been informed in any of the documents provided by USAA that she would be 16 subject to these practices, she would have been able to weigh the convenience and 17 benefits in engaging in transactions against the cost of the multiple NSF Fees charged 18 by USAA. 19 114. Plaintiff and the California Subclass members are injured in fact and lost 20 money as a direct and proximate result of USAA's unfair methods of competition 21 and/or deceptive acts or practices in that they incurred NSF Fees that were improper. 22 115. Plaintiff and the California Subclass members seek declaratory relief, 23 injunctive relief, and other relief allowable under Bus. & Prof. Code § 17203, including 24 but not limited to enjoining USAA from continuing to engage in the unfair, unlawful, 25 and fraudulent conduct alleged herein. 26 116. Pursuant to Section 1782(d) of the CLRA, Plaintiff reserves the right to 27 amend this Complaint to include a request for damages under the CLRA pursuant to 28 Section 1782(a) of the CLRA within thirty (30) days of providing the required notice. 21 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 117. Plaintiff's affidavit stating facts showing that venue in this District is 2 proper pursuant to Cal. Civ. Code § 1780(c) is attached hereto. 3 118. As a result of USAA's violations of the CLRA, Plaintiff and members of 4 the California Subclass have paid, and/or will continue to pay NSF Fees and thereby 5 have suffered and will continue to suffer actual damages. 6 119. Absent injunctive and public injunctive relief prohibiting USAA from 7 misrepresenting and omitting material information concerning its NSF Fee policy at 8 issue in this lawsuit, Plaintiff and other existing accountholders, and the general public 9 will be exposed to USAA's conduct violative of the CLRA. 10 FOURTH CLAIM FOR RELIEF 11 UNJUST ENRICHMENT (On Behalf of the Classes) 12 120. This claim is pled in the alternative to Claim One. 13 121. Plaintiff incorporates by reference each of the allegations set forth in the 14 preceding paragraphs, excepting the allegations that the Deposit Agreement forms a 15 binding contract. 16 122. In the event the Court determines that the Deposit Agreement is not a 17 binding contract, Plaintiff, on behalf of herself and the Classes, asserts a common law 18 claim for unjust enrichment. 19 123. By means of USAA's wrongful conduct alleged herein, USAA knowingly 20 provides banking services to Plaintiff and members of the Classes that are unfair, 21 unconscionable, and oppressive. 22 124. USAA knowingly received and retained wrongful benefits and funds from 23 Plaintiff and members of the Classes. In doing so, USAA acted with conscious 24 disregard for the rights of Plaintiff and members of the Classes. 25 125. As a result of USAA's wrongful conduct, USAA has been unjustly 26 enriched at the expense of, and to the detriment of, Plaintiff and members of the 27 Classes. 28 22 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 126. USAA's unjust enrichment is traceable to, and resulted directly and 2 proximately from, the conduct alleged herein. 3 127. Under the common law doctrine of unjust enrichment, it is inequitable for 4 USAA to be permitted to retain the benefits it received, and is still receiving, without 5 justification, from the imposition of multiple NSF fees on Plaintiff and members of the 6 Classes in an unfair, unconscionable, and oppressive manner. USAA's retention of 7 such funds under circumstances making it inequitable to do so constitutes unjust 8 enrichment. 9 128. The financial benefits derived from USAA rightfully belong to Plaintiff 10 and members of the Classes. USAA has failed to make restitution of the benefits it has 11 unjustly retained, and should be compelled to do so. USAA should be compelled to 12 disgorge in a common fund for the benefit of Plaintiff and members of the Classes all 13 wrongful or inequitable proceeds received by them. A constructive trust should be 14 imposed upon all wrongful or inequitable sums received by USAA traceable to Plaintiff 15 and members of the Classes. 16 129. Plaintiff and members of the Classes have no adequate remedy at law. 17 PRAYER FOR RELIEF 18 WHEREFORE, Plaintiff and the Classes demand a jury trial on all claims so 19 triable and judgment as follows: 20 1. An order on behalf of the general public enjoining USAA from continuing 21 to misrepresent or omit material information pertaining to its multiple NSF Fee policy 22 in its publicly available account documents and marketing materials such as its 23 "Deposit Agreement," "Fee Schedule," and "Online Banking Agreement"; 24 2. Declaring USAA's NSF Fee policies and practices to be wrongful, unfair 25 and unconscionable, as well as fraudulent; 26 3. Restitution of all relevant fees paid to USAA by Plaintiff and the Classes, 27 as a result of the wrongs alleged herein in an amount to be determined at trial; 28 4. Disgorgement of the ill-gotten gains derived by USAA from its 23 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 misconduct; 2 5. A constructive trust upon all wrongful or inequitable sums received by 3 USAA traceable to Plaintiff and the Classes; 4 6. Actual damages in an amount according to proof; 5 7. Statutory damages as permitted by law; 6 8. Punitive and exemplary damages; 7 9. Pre-judgment interest at the maximum rate permitted by applicable law; 8 10. Costs and disbursements assessed by Plaintiff in connection with this 9 action, including reasonable attorneys' fees pursuant to applicable law; and 10 11. Such other relief as this Court deems just and proper. 11 DEMAND FOR JURY TRIAL 12 Plaintiff and all others similarly situated hereby demand trial by jury on all issues 13 in this complaint that are so triable as a matter of right. 14 15 Dated: April 12, 2019 Respectfully submitted, 16 17 /s/ Todd D. Carpenter 18 Todd D. Carpenter (CA Bar No. 234464) CARLSON LYNCH SWEET KILPELA & CARPENTER, LLP 19 1350 Columbia St., Ste. 603 San Diego, CA 92101 20 Tel: (619) 762-1900 tcarpenter@carlsonlynch.com 21 Jeffrey D. Kaliel (CA Bar No. 238293) 22 Sophia G. Gold (CA Bar No. 307971) KALIEL PLLC 23 1875 Connecticut Ave., NW, 10th Floor Washington, D.C. 20009 24 Tel: (202) 350-4783 jkaliel@kalielpllc.com 25 sgold@kalielpllc.com 26 Hassan A. Zavareei (CA Bar No. 181547) Andrea Gold (admitted pro hac vice) 27 TYCKO & ZAVAREEI LLP 1828 L Street, NW, Suite 1000 28 Washington, DC 20036 Tel: (202) 973-0900 24 FIRST AMENDED CLASS ACTION COMPLAINT 5 1 Fax: (202) 973-0950 hzavareei@tzlegal.com 2 agold@tzlegal.com 3 Annick M. Persinger (CA Bar No. 272996) Tanya S. Koshy (CA Bar. No. 277095) 4 TYCKO & ZAVAREEI LLP The Tower Building 5 1970 Broadway – Suite 1070 Oakland, CA 94612 6 Tel: (510) 254-6808 Fax: (510) 210-0571 7 apersinger@tzlegal.com tkoshy@tzlegal.com 8 Jeff Ostrow (pro hac vice to be filed) 9 Jonathan M. Streisfeld (pro hac vice to be filed) 10 KOPELOWITZ OSTROW FERGUSON WEISELBERG GILBERT 11 One W. Las Olas Blvd., Suite 500 Fort Lauderdale, FL 33301 12 Tel: (954) 525-4100 Fax: (954) 525-4300 13 ostrow@kolawyers.com streisfeld@kolawyers.com 14 Attorneys for Plaintiff and the Putative Classes 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 FIRST AMENDED CLASS ACTION COMPLAINT