Futo et al v. U.S. Bancorp et al

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Adam Saul Futo and James Bartley Ellis,
individually and on behalf of all others
similarly situated,
Plaintiffs,
v.
U.S. Bancorp and U.S. Bancorp
Investments, Inc.,
Defendants.
File No. 25-cv-1464 (ECT/DJF)
OPINION AND ORDER
Jonathan F. Neumann, Joseph H. Meltzer, Melissa L. Yeates, and Tyler Graden, Kessler
Topaz Meltzer & Check, LLP, Radnor, PA; Catherine Sung-Yun K. Smith, Daniel E.
Gustafson, and Shashi K. Gowda, Gustafson Gluek PLLC, Minneapolis, MN; and James E.
Cecchi and Kevin G. Cooper, Carella Byrne Cecchi Olstein Brody & Agnello, P.C.,
Roseland, NJ, for Plaintiffs Adam Saul Futo and James Bartley Ellis.
David L. Goldberg, Katten Muchin Rosenman LLP, New York, NY; Anna Porter, Michael
Joseph Beirne, and Peter Ginewicz Wilson, Katten Muchin Rosenman LLP, Chicago IL;
and Anderson Tuggle and Larry E. LaTarte, Faegre Drinker Biddle & Reath LLP,
Minneapolis, MN, for Defendants U.S. Bancorp and U.S. Bancorp Investments, Inc.
Defendants 	U.S. 	Bancorp 	and 	U.S. 	Bancorp 	Investments, 	Inc., 	provide 	a
bank-deposit (or “cash-sweep”) program for investment-account customers. 	Under the
program, uninvested cash balances in participating customers’ accounts are periodically
transferred (or swept) into interest-bearing deposit accounts, and customers are paid
interest.
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Plaintiffs Adam Saul Futo and James Bartley Ellis are two investment-account
customers who participated in Defendants’ cash-sweep program. 	In this would-be class
action, Mr. Futo and Mr. Ellis allege that Defendants paid them and all other participating
customers unreasonably low, below-market interest rates. Plaintiffs invoke subject-matter
jurisdiction under CAFA and assert several claims arising under state law.
Defendants seek dismissal under Federal Rule of Civil Procedure 12(b)(6). 	The
motion will be granted. To summarize, Minnesota’s independent-duty rule bars Plaintiffs’
negligence claim. Plaintiffs do not allege facts plausibly showing a fiduciary relationship;
if they did, they do not allege facts plausibly showing a fiduciary duty was breached. Nor
do Plaintiffs plausibly allege that the implied covenant of good faith and fair dealing was
breached. Plaintiffs’ misrepresentation and fraud claims—whether they are common-law
or statutory claims—fail for overlapping reasons. 	The primary dismissal-prompting
problem is that Defendants fully disclosed the program’s interest-payment arrangement
and 	did 	not 	commit 	to 	paying 	a 	“reasonable” 	or 	minimum 	interest 	rate. 	The
unjust-enrichment claim fails because a contract covers the complained-of behavior and
Plaintiffs have not plausibly alleged the contract might be unenforceable. 	For legal and
practical reasons, Plaintiffs will not be given an opportunity to amend, and the operative
Amended Complaint will be dismissed with prejudice.
I
Before turning to the facts, two preliminary issues deserve explanation. The first is
subject-matter 	jurisdiction. 	Plaintiffs 	filed 	this 	case 	here, 	invoking 	subject-matter
jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d).
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CAFA’s jurisdictional prerequisites are clear. 	“CAFA gives federal courts jurisdiction
over certain class actions, defined in § 1332(d)(1), if the class has more than 100 members,
the parties are minimally diverse, and the amount in controversy exceeds $5 million.” Dart
Cherokee Basin Operating Co. v. Owens, 574 U.S. 81, 84–85 (2014) (citing 28 U.S.C.
§ 1332(d)(2), (5)(B)). The task of determining whether a case meets CAFA’s $5 million
threshold is not intended to be difficult. 	“[T]he claims of the individual class members
shall be aggregated to determine whether the matter in controversy exceeds the sum or
value of $5,000,000, exclusive of interest and costs.” 28 U.S.C. § 1332(d)(6). CAFA “tells
the District Court to . . . add[] up the value of the claim of each person who falls within the
definition of [the] proposed class and determine whether the resulting sum exceeds
$5 million.” 	Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 592 (2013); accord
Faltermeier v. FCA US LLC, 899 F.3d 617, 621 (8th Cir. 2018) (“A district court
aggregates the claims of all named or unnamed persons who fall within the definition of
the proposed or certified class.” (citation modified)).
Here, 	no 	party 	questioned 	CAFA 	jurisdiction’s 	presence, 	but 	after 	reading
Plaintiffs’ original Complaint, I thought there was a problem. See Arbaugh v. Y&H Corp.,
546 U.S. 500, 514 (2006) (observing that a federal court has “an independent obligation to
determine whether subject-matter jurisdiction exists, even in the absence of a challenge
from any party”). 	The original Complaint alleged facts plausibly showing that the
proposed class has more than 100 members, see Compl. [ECF No. 1] ¶ 90, and that there
is minimal diversity between Plaintiffs and Defendants, see id. ¶¶ 11, 13, 15–16, but it
alleged nothing discernable regarding the value of each proposed class member’s claim,
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see id. For this reason, Plaintiffs were given the chance to file an amended pleading with
its changes limited to addressing CAFA’s jurisdictional prerequisites, particularly the
statute’s $5 million amount-in-controversy threshold.
In 	their 	now-operative 	Amended 	Complaint, 	Plaintiffs 	allege 	facts 	plausibly
showing that the aggregate value of would-be class members’ claims exceeds CAFA’s
$5 million jurisdiction threshold. 	See Am. Compl. [ECF No. 52] ¶¶ 8–9. 	Plaintiffs start
by alleging (1) the average monthly cash amount “swept” by U.S. Bank affiliates, including
U.S. Bancorp Investments, Inc. (or “USBI”), between June 2022 and February 2025
($1.9 billion), and (2) the average difference between the interest rates at which customers
were paid (0.30% to 2.00%) and the average monthly effective federal funds rate (1.19%
to 5.33%), a difference Plaintiffs allege is just one way (among perhaps many others) to
calculate damages. Id. ¶ 8. Plaintiffs then allege:
On information and belief, all of the roughly $1.9 billion per
month swept to U.S. Bank by its affiliates came from accounts
held by class members. Using the aforementioned formula, if
each class member received the maximum interest rate offered
by USBI (between 0.30% and 2.00%), average aggregate
monthly damages total greater than $4 million for each month
between June 2022 and February 2025, and aggregate total
damages exceed $140 million. 	Even assuming that only half
of the affiliate sweep deposits (roughly $1 billion per month)
came from accounts held by class members, and that each class
member received the maximum interest rate offered by USBI
(between 	0.30% 	and 	2.00%), 	average 	aggregate 	monthly
damages total greater than $2 million per month between June
2022 and February 2025, and aggregate total damages exceed
$70 million.
Id. ¶ 9. Whether my original concern was justified (or not), these allegations are enough
to resolve the CAFA subject-matter-jurisdiction question at this stage.
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II
The second preliminary issue concerns the universe of factual sources that may be
considered in adjudicating Defendants’ Rule 12(b)(6) motion. The general rule is that the
facts are taken from the complaint, and all reasonable inferences are drawn in a plaintiff’s
favor. Gorog v. Best Buy Co., Inc., 760 F.3d 787, 792 (8th Cir. 2014) (citation omitted).
Considering “matters outside the pleadings” generally transforms a Rule 12(b)(6) motion
into one for summary judgment, Fed. R. Civ. P. 12(d), but not when the relevant materials
are “necessarily embraced” by the pleadings. 	Zean v. Fairview Health Servs., 858 F.3d
520, 526 (8th Cir. 2017) (quoting Enervations, Inc. v. Minn. Min. & Mfg. Co., 380 F.3d
1066, 1069 (8th Cir. 2004)). 	“In general, materials embraced by the complaint include
documents whose contents are alleged in a complaint and whose authenticity no party
questions, but which are not physically attached to the pleadings.” Id. (citation modified).
Courts “additionally consider matters incorporated by reference or integral to the claim,
items subject to judicial notice, matters of public record, orders, items appearing in the
record 	of 	the 	case, 	and 	exhibits 	attached 	to 	the 	complaint 	whose 	authenticity 	is
unquestioned.” Id. (citation modified); see Miller v. Redwood Toxicology Lab’y, Inc., 688
F.3d 928, 931 n.3 (8th Cir. 2012).
Defendants submitted four exhibits in support of their motion, and Plaintiffs agree
these exhibits may be considered in adjudicating the motion. Tr. at 9. The exhibits include:
(1) “Self-Directed Brokerage Applications” signed by Mr. Futo and accompanying
agreements and disclosures. 	ECF No. 35 ¶ 3; ECF No. 35-1. 	(2) A “Self-Directed
Brokerage 	Application” 	signed 	by 	Mr. 	Ellis 	and 	accompanying 	agreements 	and
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disclosures. 	ECF No. 35 ¶ 4; ECF No. 35-2; (3) A document entitled “Sweep Program
Disclosure Statement,” updated January 2024. 	ECF No. 35 ¶ 5; ECF No. 35-3. 	(4) A
document entitled “Guide to Brokerage Recommendations: A Best Interest Disclosure,”
dated April 5, 2024. 	ECF No. 35 ¶ 6; ECF No. 35-4. 	Plaintiffs’ concession that these
documents may be considered is justified. 	The first two document sets are integral to
Plaintiffs’ claims because they comprise the contracts between Plaintiffs and USBI.
Plaintiffs’ claim for breach of the implied covenant of good faith and fair dealing depends
on the contracts’ existence, and other claims are grounded on the contracts’ content (or
lack of content). 	The third and fourth documents’ contents are alleged in the Amended
Complaint, and Plaintiffs do not dispute their authenticity. See Am. Compl. ¶¶ 28 n.4, 40
n.12, 54 n.16, 86 n.26, 88 n.27. 	The consequence is that the facts described in the next
section are drawn from the operative Amended Complaint and these four exhibits.
III
U.S. Bancorp provides a full range of financial services and serves millions of
customers. 	Am. Compl. ¶ 20. 	USBI is U.S. Bancorp’s broker-dealer subsidiary.
Id. ¶¶ 18, 21. USBI offers investment-related products and services to retail customers in
the United States, including a “number of brokerage account types.” Id. ¶ 21–22. USBI’s
brokerage accounts “are securities accounts that allow customers to trade mutual funds,
stocks, and other securities.” 	Id. ¶ 22. 	“In connection with each of these accounts,
customers enter into account agreements with USBI.” 	Id. ¶ 22. 	Like USBI, non-party
U.S. Bank also is a U.S. Bancorp subsidiary. Id. ¶ 19.
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Mr. Futo and Mr. Ellis each had brokerage accounts with USBI. Mr. Futo opened
an individual-retirement account (or “IRA”) in 2016. Id. ¶ 13; see ECF No. 35-1 at 2, 18.1
Mr. Ellis opened a brokerage account in 2022. Am. Compl. ¶ 15; ECF No. 35-2 at 2. To
open their accounts, Mr. Futo and Mr. Ellis each completed and signed a Self-Directed
Brokerage Application. ECF No. 35-1 at 2–5, 18–21; ECF No. 35-2 at 2–7. Mr. Futo and
Mr. Ellis’s applications included a “Universal Customer Agreement” and other documents
comprising a contract between each of them and USBI. 	See ECF No. 35-1 at 6–12, 21;
ECF No. 35-2 at 12–19, 23–30.
As part of their account applications, Mr. Futo and Mr. Ellis elected to participate
in USBI’s cash-sweep program. See ECF No. 35-1 at 5, 8; ECF No. 35-2 at 7, 14. With
respect to Mr. Futo and Mr. Ellis’s brokerage accounts, the agreements and related
documents also refer to the cash-sweep program as the “Bank Deposit Program.” See ECF
No. 35-2 at 25; ECF No. 35-3 at 2. 	Under this program, USBI “continuously transfers
uninvested cash balances in customers’ brokerage accounts into interest-bearing deposit
accounts at U.S. Bank.” Am. Compl. ¶ 26; see id. ¶ 24 (describing cash-sweep program as
a “service provided by a broker or dealer where it offers to its customer the option to
automatically transfer free credit balances in the securities account of the customer to either
a money market mutual fund product . . . or an account at a bank whose deposits are ensured
by the Federal Deposit Insurance Corporation” (quoting 17 C.F.R. § 240.15c3-3(a)(17)
1 	Filed documents, including the four filed exhibits and the parties’ briefs, will be
cited by reference to pagination assigned by the court’s CM/ECF system appearing in a
document’s upper right corner, not to a document’s original pagination.
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(2025))). 	Under the program, “interest compounds daily on customers’ cash, and USBI
pays interest to customers monthly.” Id. ¶ 30.
In their applications, Mr. Futo and Mr. Ellis acknowledged they had received, read,
and understood disclosures regarding USBI’s cash-sweep program. See ECF No. 35-1 at
5; ECF No. 35-2 at 7; see Am. Compl. ¶¶ 13, 15 (alleging that Mr. Futo and Mr. Ellis each
“reviewed the agreements and disclosures pertaining to his account that were in effect” at
the time). Among other information, these disclosures described how the program worked.
ECF No. 35-1 at 12; ECF No. 35-2 at 25. They informed Mr. Futo and Mr. Ellis of their
option not to participate in the program and to invest their accounts’ cash balances in
products offered outside the program. 	ECF No. 35-1 at 12; ECF No. 35-2 at 25. 	They
explained that USBI received fees and benefits from the cash-sweep program. 	ECF
No. 35-1 at 12; ECF No. 35-2 at 27. And the disclosures addressed the program’s potential
risks and benefits. 	The disclosures Mr. Futo received explained, for example, that the
cash-sweep vehicle—that is, the product into which available cash was swept—“should
not be viewed as a long-term investment option” and that, money market funds carried
“investment 	risk 	including 	the 	possible 	loss 	of 	the 	principal 	amount 	invested.”
ECF No. 35-1 at 12. 	The disclosures Mr. Ellis received warned that the interest rate
available through the cash-sweep program “may be higher or lower than the interest rates
available” through other investment vehicles, and that “USBI has no obligation to ensure
you receive a particular rate or the highest rate available.” ECF No. 35-2 at 26. USBI’s
Sweep 	Program 	Disclosure 	Statement 	provided 	similar 	information. 	See, 	e.g.,
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ECF No. 35-3 at 3 (disclosing that USBI “has no obligation to ensure you receive a
particular rate [of interest] or the highest rate available”).
The interest rates USBI paid or secured on its customers’ behalf, including Mr. Futo
and Mr. Ellis, were low in comparison to rates offered through cash-sweep programs at
other financial institutions and in relation to other benchmarks identified in the Amended
Complaint. See Am. Compl. ¶¶ 1, 3–5, 14, 16, 59–71. For example, as of April 10, 2025,
USBI’s cash-sweep program paid interest at rates ranging from 0.23% to 1.80%, depending
on 	a 	customer’s 	cash 	balance. 	Id. 	¶ 	60. 	At 	that 	same 	time, 	by 	comparison,
financial-services firms Vanguard and Fidelity offered higher cash-sweep-program interest
rates—3.65% 	for 	Vanguard, 	and 	3.97% 	for 	Fidelity. 	Id. 	¶ 	65. 	The 	USBI
cash-sweep-program rates were also low in comparison to U.S. Treasury bills and the
Federal Reserve’s federal funds rates. From June 2022 through April 2025 (the month this
case was filed), the USBI cash-sweep program paid interest at rates on cash deposits
ranging from 0.07% to 2.0%. See id. ¶¶ 14, 16, 60–61, 70. During that same period, “the
1-Month U.S. Treasury Rate reached over 5%,” id. ¶ 70, and the federal funds rate
“increased significantly from a low of 0.08% to a high of 5.33% in 2024,” id. ¶ 71.
Plaintiffs assert seven claims in their Amended Complaint. 	(1) Plaintiffs claim
USBI breached a fiduciary duty it owed Plaintiffs and would-be class members “when
it . . . allocated [their] cash into deposit accounts that benefited Defendants’ interests above
their customers’ interests,” and when it “set and paid an unreasonably low rate of interest
on … cash balances” in the USBI cash-sweep program. Am. Compl. ¶¶ 105–114 (Count I).
(2) Plaintiffs claim USBI was negligent in undertaking these same activities. Id. ¶¶ 115–
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122 (Count II). (3) Plaintiffs claim USBI breached the implied covenant of good faith and
fair dealing by failing to pay its customers who participated in the cash-sweep program “a
reasonable rate of interest.” 	Id. ¶¶ 123–130 (Count III). 	(4) Plaintiffs claim USBI
negligently misrepresented and omitted “material information” regarding the cash-sweep
program. Id. ¶¶ 131–139 (Count IV). (5) Plaintiffs claim U.S. Bancorp and USBI violated
the Minnesota Consumer Fraud Act, Minn. Stat. § 325F.69, by “designing, structuring,
and/or operating the [cash-sweep program] to benefit themselves at the expense of their
customers,” and by “making material misrepresentations and omissions regarding the”
cash-sweep program. Am. Compl. ¶¶ 140–146 (Count V). (6) Plaintiffs claim that, through
these same activities, U.S. Bancorp and USBI violated the Minnesota Deceptive Trade
Practices Act, Minn. Stat. § 325D.44. Am. Compl. ¶¶ 147–150 (Count VI). (7) Plaintiffs
claim that U.S. Bancorp and USBI “were unjustly enriched because, among other benefits,
they received significantly greater net interest income than they would have but for their
wrongful conduct.” 	Id. ¶¶ 151–157 (Count VII). 	Though Plaintiffs do not identify the
source of their common-law claims in the Amended Complaint, Plaintiffs made clear in
their briefing that Minnesota law governs those claims. See ECF No. 44 at 23–31.
IV
In reviewing a motion to dismiss for failure to state a claim under Rule 12(b)(6), a
court must accept as true all factual allegations in the complaint and draw all reasonable
inferences in the plaintiff’s favor. Gorog, 760 F.3d at 792. Although the factual allegations
need not be detailed, they must be sufficient to “raise a right to relief above the speculative
level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The complaint must “state
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a claim to relief that is plausible on its face.” 	Id. at 570. “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.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). 	“[T]he tenet that a court must accept as true all of the allegations
contained in a complaint is inapplicable to legal conclusions.” Id.; see Hager v. Ark. Dep’t
of Health, 735 F.3d 1009, 1013 (8th Cir. 2013) (“Courts must not presume the truth of legal
conclusions couched as factual allegations.” (citing Papasan v. Allain, 478 U.S. 265, 286
(1986)).
A
Before challenging each of Plaintiffs’ claims one-at-a-time, Defendants advance a
broader contention—they argue that Minnesota’s independent-duty rule bars Plaintiffs’
“tort claims.” See ECF No. 34 at 15–16; ECF No. 46 at 9–10. Defendants do not specify
which claims are “tort claims” subject to this challenge. 	To be clear, I understand
Defendants’ “tort claims” reference to mean every claim Plaintiffs assert except their claim
for breach of the implied covenant of good faith and fair dealing, a claim that is by nature
contractual, see Selective Ins. Co. of S.C. v. Sela, 413 F. Supp. 3d 861, 862–63 (D. Minn.
2019), and their unjust-enrichment claim, which is by nature equitable, see United States
v. Bame, 721 F.3d 1025, 1030 (8th Cir. 2013). 	Though it seems reasonable to question
whether Defendants rely on the independent-duty rule to challenge Plaintiffs’ claims under
the Minnesota Consumer Fraud Act and the Minnesota Deceptive Trade Practices Act,
claims like these are often referred to as “statutory torts.” See Ansari v. NCS Pearson, Inc.,
No 08-cv-5351 (JRT/JJG), 2009 WL 10678873, at *2 (D. Minn. Mar. 30, 2009); see also
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In re: EpiPen Direct Purchaser Litig., No. 20-cv-0827 (ECT/JFD), 2023 WL 4104000, at
*2 (D. Minn. June 21, 2023). 	For this reason, the safer course is to assume Defendants
intend to challenge the statutory claims too.
Under Minnesota’s independent-duty rule, “when a plaintiff seeks to recover
damages for an alleged breach of contract[,] he is limited to damages flowing only from
such breach except in exceptional cases where the defendant’s breach of contract
constitutes or is accompanied by an independent tort.” Staffing Specifix, Inc. v. TempWorks
Mgmt. Servs., Inc., 896 N.W.2d 115, 125 (Minn. Ct. App. 2017) (citation modified); accord
Klucas v. M.H. Graff & Assocs., No. 20-cv-762 (SRN/TNL), 2020 WL 6275971, at *3
(D. Minn. Oct. 26, 2020). “An independent tort may accompany a breach of contract when
the defendant has a legal duty to the plaintiff arising separately from any duty imposed in
the contract.” Staffing Specifix, 896 N.W.2d 125–26 (quoting Toyota-Lift of Minn., Inc. v.
Am. Warehouse Sys., LLC, 868 N.W.2d 689, 696 (Minn. Ct. App. 2015), aff’d, 886 N.W.2d
208 (Minn. 2016)). “Stated differently, the ‘duty’ supporting a [tort] claim must arise from
something other than a contract—a claim will lie only if a relationship would exist which
would give rise to the legal duty without enforcement of the contract promise itself.” U.S.
Bank Nat’l Ass’n v. S.A. Cash Network, 252 F. Supp. 3d 714, 718 (D. Minn. 2017) (citation
modified). “The purpose of [the independent-duty] rule is to prevent contract claims from
morphing into tort claims.” Id. at 719.
The independent-duty rule’s application to Plaintiffs’ tort claims produces mixed
results. Begin with those claims that survive the rule’s application. (1) The rule does not
bar Plaintiffs’ breach-of-fiduciary-duty claim. 	Where a fiduciary duty “exist[s], even if
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arising from a contract, an alleged breach of [that] dut[y] is ‘distinct from the [alleged]
breach of contract.’” S.A. Cash Network, 252 F. Supp. 3d at 721 (last alteration in original)
(quoting Jones v. W. Union Fin. Servs., Inc., 513 F. Supp. 2d 1098, 1100 (D. Minn. 2007));
accord Fairview Health Servs. v. Armed Forces Off. of the Royal Embassy of Saudi Arabia,
705 F. Supp. 3d 898, 917 (D. Minn. 2023); see also Copic Ins. Co. v. Wells Fargo Bank,
N.A., 767 F. Supp. 2d 1191, 1209–1210 (D. Colo. 2011) (applying Minnesota law and
recognizing that, while a contract may create a fiduciary relationship, the common law
imposes a fiduciary’s duties). It might be different in a hypothetical case where the contract
imposed the same fiduciary duties as the common law, but we don’t have that here. (2) The
rule does not bar Plaintiffs’ negligent-misrepresentation claim. Under Minnesota law, the
duty of care with respect to this claim “arises when the person making representations is
either ‘supplying information for the guidance of others in the course of a transaction in
which one has a pecuniary interest, or in the course of one’s business, profession or
employment.’” Adams v. Rosensteel, No. A13-0451, 2013 WL 6223562, at *3 (Minn. Ct.
App. Dec. 2, 2013) (quoting Safeco Ins. Co. of Am. v. Dain Bosworth Inc., 531 N.W.2d
867, 870 (Minn. Ct. App. 1995)). In other words, the duty of care does not depend on the
existence of a contract imposing it. 	If Plaintiffs’ negligent-misrepresentation theory
diverges 	from 	this 	general 	rule, 	USBI 	hasn’t 	explained 	how. 	(3) 	Nor 	does 	the
independent-duty rule bar Plaintiffs’ statutory tort claims. 	Defendants’ duties under the
Minnesota Consumer Fraud Act and the Minnesota Deceptive Trade Practices Act existed
independently of any contractual duties. 	See TCF Nat’l Bank v. Market Intel., Inc.,
No. 11-cv-2717 	(JRT/AJB), 	2012 	WL 	3031220, 	at 	*4 	(D. 	Minn. 	July 	25, 	2012).
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Defendants were obligated to comply with these statutes even in the absence of any
contractual relationship between them and Plaintiffs.
The independent-duty rule bars Plaintiffs’ negligence claim. 	Plaintiffs allege that
USBI’s duty of care arose out of (1) “the agency relationship between USBI” and Plaintiffs,
(2) “USBI’s exercise of control and discretion over funds that belonged to its customers,
related to their cash sweep balances,” and (3) “the applicable industry standards.”
Am. Compl. ¶ 117. 	The first two of these sources—the agency relationship and USBI’s
control of Plaintiffs’ funds—arose entirely out of the contractual relationship between
Plaintiffs and USBI. 	Without the Universal Customer Agreements, there is no “agency
relationship” and USBI has no “control and discretion” regarding Plaintiffs’ funds. 	It is
true that the third “industry standards” category relies on non-contractual sources to show
a duty. 	These include a Financial Industry Regulatory Authority (or “FINRA”) rule, a
federal regulation, and a statute within the Internal Revenue Code. See id. ¶¶ 38–40, 43–
58. At the hearing on Defendants’ motion, however, Plaintiffs abandoned these authorities
as sources of implied duties. The bottom line, then, is that the sources of a duty supporting
Plaintiffs’ negligence claim are just the contracts between Plaintiffs and USBI, and that
means the independent-duty rule bars the claim.
B
Turn next to consider each of Plaintiffs’ remaining claims seriatim. In Minnesota,
a breach-of-fiduciary-duty claim has four elements: “[1] duty, [2] breach, [3] causation,
and [4] damages.” Hansen v. U.S. Bank Nat’l Ass’n, 934 N.W.2d 319, 327 (Minn. 2019).
“A fiduciary relationship is characterized by a ‘fiduciary’ who enjoys a superior position
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in terms of knowledge and authority and in whom the other party places a high level of
trust and confidence.” Carlson v. SALA Architects, Inc., 732 N.W.2d 324, 330–31 (Minn.
Ct. App. 2007) (citing Toombs v. Daniels, 361 N.W.2d 801, 809 (Minn. 1985)). 	Some
relationships 	are 	fiduciary 	per 	se. 	“Per 	se 	fiduciary 	relationships 	include
trustee-beneficiary, 	attorney-client, 	business 	partnerships, 	director-corporation,
officer-corporation, and husband-wife.” Swenson v. Bender, 764 N.W.2d 596, 601 (Minn.
Ct. App. 2009). Apart from these per se fiduciary relationships, a “de facto” fiduciary
relationship may arise from a particular set of facts. 	“Where the parties’ arrangement is
not of a type that has been designated a per se fiduciary relationship, the general rule in
Minnesota is that it may be found to constitute a de facto fiduciary relationship only where
certain ‘special circumstances’ are present.” Carlson, Inc. v. Int’l Bus. Machs. Corp., No.
10-cv-3410 (JNE/TNL), 2013 WL 6007508, at *6 (D. Minn. Nov. 13, 2013). 	Several
considerations are relevant to determining whether such “special circumstances” exist.
These 	include 	whether 	“one 	party 	place[d] 	its 	trust 	and
confidence in the other,” whether “one of the parties enjoyed
superior or excessive influence over the other party,” whether
one party relied on the other party’s “superior knowledge,”
whether there was “[d]isparity in business experience and
invited confidence,” and “whether the alleged fiduciary knew
of the dependent party’s ignorance” or lack of understanding
regarding the at-issue transaction or transactions.
Morton v. Park Christian Sch., Inc., No. 19-cv-3134 (ECT/LIB), 2022 WL 4803102, at
*16 (D. Minn. Oct. 3, 2022) (quoting 4 Minn. Dist. Judges Ass’n, Minnesota Practice, Jury
Instruction Guides—Civil, JIG 23.10 (6th ed. 2021)); see Carlson, Inc., 2013 WL 6007508,
at *6 (recognizing that special circumstances establishing a de facto fiduciary relationship
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may be based on “a wide disparity of experience and knowledge between the parties,
uneven access to information and resources, invited confidences, and the surrender of
financial control”). Minnesota courts are reluctant “to sustain a cause of action for breach
of a de facto fiduciary duty when the cause of action merely disguises another, more
apposite but unavailing legal theory.” Swenson, 764 N.W.2d at 603–04.
Plaintiffs do not plausibly allege that USBI was their fiduciary with respect to the
cash-sweep program generally or the establishment of interest rates on swept cash
specifically. 	In Minnesota, a broker-customer relationship does not ordinarily impose a
fiduciary duty on the broker. 	See Mehlman v. Ameriprise Fin., Inc., No. 24-cv-3018
(JRT/DLM), 2025 WL 2403252, at *11 (D. Minn. Aug. 19, 2025) (first citing Corbey v.
Grace, 605 F. Supp. 247, 253 (D. Minn. 1985) (“In Minnesota, a claim for breach of
fiduciary duty requires a showing of more than a simple broker-customer contract.”); and
then citing Rude v. Larson, 207 N.W.2d 709, 711 (Minn. 1973) (“Absent a special
agreement to the contrary, a licensed broker owes his customer only the duty to exercise
due care in executing all instructions expressly given to him by the principal. He is not a
guarantor or insurer against loss sustained by his customer.” (footnote omitted))); see also
DeBlasio v. Merrill Lynch & Co., No. 07 Civ 318(RJS), 2009 WL 2242605, at *28–29
(S.D.N.Y. July 27, 2009) (dismissing breach of fiduciary duty claim because, under New
York law, the “mere existence of a broker-customer relationship is not proof of its fiduciary
character” (citation modified)). Put differently, in addition to not being among the per se
fiduciary relationships recognized in Minnesota, ordinary broker-customer relationships
lack the “special circumstances” that characterize a de facto fiduciary relationship under
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Minnesota law. Plaintiffs do not allege facts plausibly showing that their broker-customer
relationships with USBI were out of the ordinary.
In Mehlman, Judge Tunheim dismissed a breach-of-fiduciary-duty claim arising out
of a comparable cash-sweep program, 2025 WL 2403252, at *10–11, and in this respect
his analysis is persuasive and equally applicable to this case. Judge Tunheim reasoned that
no 	fiduciary 	relationship 	plausibly 	existed 	between 	a 	defendant-broker 	and 	its
plaintiff-customers because the defendant “disclosed that it had financial interests in the
Bank Sweep Programs that diverged from Plaintiffs’ interests, and a fiduciary relationship
is not established ‘by the plaintiff having faith and confidence in the defendant where the
plaintiff should have known the defendant was representing an adverse interest.’” 	Id. at
*11 (quoting Hope v. Klabal, 457 F.3d 784, 791 (8th Cir. 2006)). We have that here. USBI
disclosed its divergent financial interests. 	See, e.g., ECF No. 35-3 at 2 (“The rate of the
fee that [USBI] receives [from U.S. Bank] can exceed the interest rate or effective yield
that you receive in your balances.”); id. at 4 (explaining that the cash-sweep program
“provides financial benefits to both [USBI] and U.S. Bank”); id. at 7 (“[USBI] and its
affiliates receive fees and benefits for services provided in connection with the Sweep
Program, and may choose to make available the sweep vehicles that are more profitable to
us and our affiliates than other money market funds or bank deposit accounts.”). And USBI
advised Plaintiffs that it promised no specific or minimum rate of interest via the cash-
sweep program. Id. at 3 (“[USBI] has no obligation to ensure you receive a particular rate
or the highest rate available.”).
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Plaintiffs allege that USBI’s fiduciary duties with respect to the cash-sweep program
arose from “the agency relationship between USBI, on one hand, and Plaintiffs and the
Class on the other hand,” Am. Compl. ¶ 107, but this is not convincing. It is true that, “in
Minnesota, an agent owes fiduciary duties to its principal.” 	S.A. Cash Network, 252 F.
Supp. 3d at 721. But “an agent ‘is a fiduciary with respect to matters within the scope of
[the] agency.’” State v. Campbell, 756 N.W.2d 263, 271 (Minn. Ct. App. 2008) (quoting
Restatement (Second) of Agency § 13 (A.L.I. 1958)). Here, USBI expressly disclaimed a
general fiduciary duty and limited the matters within the agency’s scope. In its Guide to
Brokerage Recommendations: A Best Interest Disclosure, USBI explained that “when
[USBI] act[s] in a brokerage capacity, you will exercise your own independent judgment
in determining whether to act on our recommendations. 	We are not your investment
adviser or fiduciary unless we have expressly agreed with you in writing to act in such a
capacity.” ECF No. 35-4 at 3. And the Sweep Program Disclosure Statement defined the
scope of USBI’s agency narrowly. 	It declared: “[USBI] is acting as your agent in
establishing and as your custodian in holding the Deposit Accounts at U.S. Bank,
depositing funds into the Deposit Accounts, withdrawing funds from the Deposit Account,
and transferring funds among the Deposit Accounts.” 	ECF No. 35-3 at 4. 	The agency
relationship between Plaintiffs and USBI did not extend to the establishment of interest
rates in the cash-sweep program.
Plaintiffs also allege that USBI’s fiduciary duties arose from its “exercise of control
and discretion over funds that belonged to its customers, related to their cash sweep
balances.” Am. Compl. ¶ 107; see ECF No. 44 at 26–27 (arguing that USBI has “complete
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control over its relationship with Plaintiffs”). 	Again, considering the extra-complaint
materials, this allegation is not plausible. Cash balances in USBI’s customer accounts are
“automatically swept into the sweep vehicle for [an] account,” and customers can “elect
not to participate in the Sweep Program and/or periodically invest cash balances directly
in available money market funds or other products offered as direct investments outside of
the Sweep Program.” ECF No. 35-3 at 2, 6. In other words, the decision to participate in
the cash-sweep program was Plaintiffs’. 	Once they decided to participate, cash sweeps
from their accounts were automatic. And USBI had no fiduciary duty to ensure a minimum
interest rate on swept cash.
Plaintiffs cite one case—O’Malley v. Boris—in which the Supreme Court of
Delaware reversed the Court of Chancery’s dismissal of a breach-of-fiduciary-duty claim
in the context of a cash-sweep program, 742 A.2d 845, 849 (Del. 1999), but the case is
distinguishable. ECF No. 44 at 27. O’Malley included allegations that the brokerage firm
switched a money-market sweep account to a new fund without full disclosure that the firm
was benefitting from the transfer. 742 A.2d at 847, 849–50. We don’t have anything like
that here. 	Plaintiffs do not allege that USBI failed to disclose the vehicles or funds into
which swept cash would be deposited. And Defendants disclosed their financial interests
in the program and the conflicts those financial interests created. This case does not align
with O’Malley. It aligns with several cases that have dismissed breach-of-fiduciary-duty
claims like the claims Plaintiffs here assert. See Mehlman, 2025 WL 2403252, at *11; In
re LPL Fin. Cash Sweep Litig., 789 F. Supp. 3d 961, 986–87 (S.D. Cal. 2025) (finding that
no fiduciary duty existed where “free credit balances existed in Plaintiffs’ brokerage
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accounts because Plaintiffs chose not to invest these funds and instead left them idle in
their accounts,” and “the specific Cash Sweep Programs at issue were governed by the
terms of their account agreements and the amendments thereto” (quoting DeBlasio, 2009
WL 2242605, at *31)); Dey v. Robinhood Mkts., Inc., 780 F. Supp. 3d 882, 889–90 (N.D.
Cal. 2025) (finding no fiduciary duty where banks were “not responsible for negotiating
interest rates on [the customer’s] behalf” and they had no “duty to offer the highest rates
available or rates that are comparable to money market funds”); DeBlasio, 2009 WL
2242605, at *27–29; Straily v. UBS Fin. Servs. Inc., No. 07-cv-00884-REB-KMT, 2009
WL 798830, at *6–8 (D. Colo. Mar. 24, 2009) (granting defendant summary judgment on
fiduciary-duty claim); see also In re Wells Fargo Cash Sweep Litig., No. 24-cv-4616-VC,
2025 WL 1785315, at *3 (N.D. Cal. June 27, 2025) (dismissing fiduciary duty claims by
brokerage clients).2
If Plaintiffs plausibly alleged a fiduciary duty, they do not plausibly allege a breach.
Under Minnesota law, “where the agent discloses to the principal what he intends to do
and the principal acquiesces therein, there can be no claim of a breach of fiduciary
relationship.” Christensen v. Redman, 66 N.W.2d 790, 794 (Minn. 1954). Here, Plaintiffs
allege that USBI breached its fiduciary duty by “allocat[ing] Plaintiffs’ and the Class’s
cash into deposit accounts that benefited Defendants’ interests above their customers’
2 	Plaintiffs alleged originally that USBI’s fiduciary duties derived from industry
standards, including Regulation Best Interest (or “Reg. BI”), FINRA Rule 2122, and
Section 4975 of the Internal Revenue Code. 	See Am. Compl. ¶¶ 38–52, 55–58. 	Again,
Plaintiffs abandoned these contentions. 	They did not address these sources in their
opposition brief and confirmed at the hearing that these were “not implied duties that we
are intending to pursue at this time.” See ECF No. 44 at 25–28.
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interests,” and by “set[ting] and pa[ying] an unreasonably low rate of interest on Plaintiffs’
and the Class’s cash balances in the Bank Deposit Program.” Am. Compl. ¶ 113.
In these alleged respects, USBI told Plaintiffs what it intended to do, and Plaintiffs
acquiesced. USBI disclosed that “[t]he rate of the fee that [USBI] receives can exceed the
interest rate or effective yield that you receive in your balances,” that the program
financially benefits both USBI and U.S. Bank, and that USBI “receives fees and benefits
for services provided in connection with the Sweep Program, and may choose to make
available the sweep vehicles that are more profitable to [USBI] and [its] affiliates than
other money market funds or bank deposit accounts.” 	ECF No. 35-3 at 2, 4, 7. 	USBI
disclosed that the “interest rate on the Deposit Accounts can be higher or lower than the
interest rates available to depositors making deposits directly with U.S. Bank or other
depository institutions in comparable accounts or for investments in money market funds
and other cash equivalent investments available through [USBI].” Id. at 3. USBI disclosed
that it “has no obligation to ensure you receive a particular rate or the highest rate
available,” and USBI encouraged customers to compare the terms and rates with other
accounts and alternative investments. 	Id. 	And USBI disclosed that the sweep program
“should not be viewed as a long-term investment option,” and if a customer sought “the
highest yields currently available in the market,” they should discuss investment options
outside the sweep program with their investment advisor. Id. at 6.3
3 	Whether, or the extent to which, Plaintiffs’ available account balances were swept
into money-market funds is not clear. 	This appears to have been an available option for
both Mr. Futo and Mr. Ellis’s accounts. 	See ECF No. 35-1 at 11; ECF No. 35-2 at 26.
Regarding money-market accounts specifically, the agreements’ disclosures warned that
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C
“Under Minnesota law, every contract includes an implied covenant of good faith
and fair dealing . . . .” In re Hennepin Cnty. 1986 Recycling Bond Litig., 540 N.W.2d 494,
502 (Minn. 1995) (citing Zobel & Dahl Constr. v. Crotty, 356 N.W.2d 42, 45 (Minn.
1984)). “[A] plaintiff alleging a claim for breach of the implied covenant of good faith and
fair dealing ‘need not first establish an express breach of contract claim—indeed, a claim
for breach of an implied covenant of good faith and fair dealing implicitly assumes the
parties did not expressly articulate the covenant allegedly breached.’” Cox v. Mortg. Elec.
Registration Sys., Inc., 685 F.3d 663, 670 (8th Cir. 2012) (quoting In re Hennepin Cnty.,
540 N.W.2d at 503).
“Minnesota courts generally look to the defendant’s motive to determine whether
the defendant has breached the implied covenant of good faith and fair dealing.” BP Prods.
N. Am., Inc. v. Twin Cities Stores, Inc., 534 F. Supp. 2d 959, 966 (D. Minn. 2007). Whether
a party has acted in subjective bad faith is generally a question of fact reserved for the
fact-finder, see Anderson v. Medtronic, Inc., 382 N.W.2d 512, 515 (Minn. 1986), but that
does not relieve a plaintiff of the burden to allege facts plausibly showing bad faith, see
Miles v. Simmons Univ., 514 F. Supp. 3d 1070, 1075 (D. Minn. 2021) (“A rule excluding
fact questions from consideration on a Rule 12(b)(6) motion to dismiss would not faithfully
reflect federal pleading standards.”).
“[a]lthough money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in money market funds,” and that risks
included “the possible loss of the principal amount invested.” 	ECF No. 35-1 at 12; see
ECF No. 35-2 at 29.
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The duty “governs the parties’ performance and prohibits a party from failing to
perform for the purpose of thwarting the other party’s rights under the contract.” 	Team
Nursing Servs., Inc. v. Evangelical Lutheran Good Samaritan Soc’y, 433 F.3d 637, 641–
42 (8th Cir. 2006). Examples of this type of conduct include:
wrongfully repudiating a contract, avoiding performance by
affirmatively blocking the happening of a condition precedent,
refusing to allow a party to perform unless the performing
party waived other contractual rights, and using a party’s
rejection of an offer as a defense to contract liability when the
defendant persuaded the party to reject the offer in the first
place.
Cox, 685 F.3d at 671 (citation modified); see Selective Ins. Co. of S.C. v. Sela, 413 F. Supp.
3d 861, 863 (D. Minn. 2019) (recognizing that “the implied covenant is breached when a
party to the contract unjustifiably hinders the other party’s performance of the contract”
(citation modified)). And
when a contract explicitly gives one party discretion over some
aspect of the contracting parties’ relationship, and the contract
does 	not 	place 	any 	restriction 	or 	qualification 	on 	that
discretion, then the implied covenant prevents the party who
has 	the 	unqualified 	discretion 	from 	using 	it 	dishonestly,
maliciously, or otherwise in subjective bad faith.
Sela, 413 F. Supp. 3d at 863 (citation modified).
Plaintiffs do not allege facts plausibly showing that USBI breached the covenant of
good faith and fair dealing. 	There are three problems. 	First, the Amended Complaint
includes no allegations tending to show that USBI acted in subjective bad faith. 	The
pleading 	recognizes 	Plaintiffs 	had 	this 	burden—it 	alleges 	that 	the
good-faith-and-fair-dealing covenant required USBI to “refrain from using its discretion as
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to the operation of the Bank Deposit Program dishonestly, maliciously, or otherwise in
subjective bad faith.” 	Am. Compl. ¶ 128. 	But there are no allegations showing or
permitting the plausible inference that USBI acted dishonestly or maliciously. 	See
generally id. Second, the Amended Complaint does not allege that USBI failed to perform
a contractual obligation for the purpose of thwarting Plaintiffs’ rights in the sense the
covenant requires—that is, no allegations show USBI acted maliciously to thwart or hinder
Plaintiffs’ performance under the account agreements. 	As best I can tell, whatever
performance obligations Plaintiffs may have had are not at issue. Third, though it is true
that USBI had discretion over aspects of the cash-sweep program, Plaintiffs do not allege
how USBI might have exercised that discretion dishonestly or maliciously. To support this
claim, Plaintiffs allege only that, “[t]hrough the implied covenant of good faith and fair
dealing, USBI was obligated to pay Plaintiffs and the Class a reasonable rate of interest on
cash held in the Bank Deposit Program rather than using the Program as a profit center for
itself.” 	Id. ¶ 129. 	But finding this “implied” duty would contradict the account
agreements’ express terms. The agreements did not promise a “reasonable” interest rate—
they disclaimed the payment of any particular or minimum rate. See ECF No. 35-1 at 12;
ECF No. 35-2 at 26, 29; ECF No. 35-3 at 3. 	Saying that interest rates “can vary and are
impacted by several factors, including . . . market environment,” ECF No. 35-3 at 3, is a
truism, not a commitment to paying “market,” “reasonable,” or “minimum” interest rates.
And the agreements disclosed USBI’s financial interests in the program. See ECF No. 35-
1 at 12; ECF No. 35-2 at 27; ECF No. 35-3 at 2.
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Plaintiffs cite several cases to support their implied-covenant claim, but these cases
do not justify a different outcome. 	For the proposition that “Minnesota courts do not
uniformly require bad faith on an implied covenant claim,” Plaintiffs cite Zimmer Spine,
Inc. v. Wainwright, No. 10-cv-4725 (JNE/JSM), 2011 WL 3035133, at *5 (D. Minn. July
7, 2011), R. & R. adopted, 2011 WL 3035112 (D. Minn. July 25, 2011). 	ECF No. 44 at
14–15. Zimmer Spine doesn’t say that. The case teaches that “[t]he substantial weight of
authority is that the covenant is breached only by conduct that is dishonest, or malicious[,]
or 	otherwise 	in 	subjective 	bad 	faith,” 	and 	that, 	to 	survive 	a 	motion 	to 	dismiss,
implied-covenant plaintiffs “need to allege sufficient facts which, if proven, would support
an inference of bad faith.” 	2011 WL 3035133, at *5 (first alteration in original) (first
quoting BP Prods. N. Am., 534 F. Supp. 2d at 965; and then quoting White Stone Partners,
LP v. Piper Jaffray Cos., 978 F. Supp. 878, 885 (D. Minn. 1997)).
Plaintiffs also cite several cash-sweep-program cases that allowed implied-covenant
claims to survive past the motion-to-dismiss stage, but these cases are distinguishable. In
Dey, for example, the court applied California law. 780 F. Supp. 3d at 893–95. The court
did not address the subjective-bad-faith element required under Minnesota law. 	See id.
And the court found no tension between the implied-covenant claim and the relevant cash-
sweep agreement because the agreement required the defendant to pay interest based on
“‘prevailing economic and business conditions.’” Id. at 894. The disclosures at issue here
contain no comparable commitment. 	They refer to “market environment” as one factor
among others that “can” impact sweep-account interest rates. 	ECF No. 35-3 at 3. 	In
another case Plaintiffs cite, In re LPL Financial Cash Sweep Litigation, the court denied a
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motion to dismiss an implied-covenant claim under Massachusetts law because the relevant
agreement promised that interest on swept cash would be determined by reference to “the
amount the Banks are willing to pay.” 	789 F. Supp. 3d at 989–991. 	The court read the
complaint as plausibly alleging that banks would have been willing to pay more. Id. at 991.
The court explained that,
although Plaintiffs face an uphill battle—it may have been
reasonable for Plaintiffs to believe that, as “the amount banks
are willing to pay” increased, the interest that LPL passed
along to them would increase. But the opposite occurred.
Id. (footnote omitted). 	Again, the agreements here cannot plausibly be understood to
include a like promise. 	The relevant agreements in two other cases Plaintiffs cite—
Mehlman and In re Wells Fargo Cash Sweep Litigation—went even further, promising a
“reasonable rate of interest” on swept cash. 	Mehlman, 2025 WL 2403252, at *9; In re
Wells Fargo Cash Sweep Litig., 2025 WL 1785315, at *2–3. USBI made no comparable
commitment here.
D
Under Minnesota law, negligent misrepresentation is defined as follows:
One 	who, 	in 	the 	course 	of 	his 	business, 	profession 	or
employment, or in any other transaction in which he has a
pecuniary interest, supplies false information for the guidance
of others in their business transactions, is subject to liability for
pecuniary loss caused to them by their justifiable reliance upon
the information, if he fails to exercise reasonable care or
competence in obtaining or communicating the information.
Williams v. Smith, 820 N.W.2d 807, 815 (Minn. 2012) (quoting Restatement (Second) of
Torts § 552 (A.L.I. 1977)). “To succeed on a negligent misrepresentation claim, a plaintiff
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must establish ‘(1) a duty of care owed by the defendant to the plaintiff; (2) the defendant
supplies false information to the plaintiff; (3) justifiable reliance upon the information by
the plaintiff; and (4) failure by the defendant to exercise reasonable care in communicating
the information.’” 	Aulick v. Skybridge Ams., Inc., 860 F.3d 613, 623 (8th Cir. 2017)
(quoting Williams, 820 N.W.2d at 815). A plaintiff may meet the claim’s second element
by showing that a defendant “failed to communicate information that it knew or should
have discovered.” 	Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d 978, 985 (8th Cir.
2008). “For an omission of a fact to constitute a negligent misrepresentation, ‘there must
first be a duty, either legal or equitable, to disclose that fact.’” 	Ill. Farmers Ins. Co. v.
Mobile Diagnostic Imaging, Inc., No. 13-cv-2820 (PJS/TNL), 2014 WL 4104789, at *18
(D. Minn. Aug. 19, 2014) (quoting Hurley v. TCF Banking & Sav., F.A., 414 N.W.2d 584,
587 (Minn. Ct. App. 1987)). The duty to disclose arises if “1) there existed a fiduciary or
confidential relationship between the parties; 2) one party was in possession of special facts
that could not have been discovered by the other; or 3) one party who chooses to speak
omits information so as to make the information actually disclosed misleading.” Sailors v.
N. States Power Co., Civ. No. 4-92-253, 1992 WL 532172, at *9 (D. Minn. July 13, 1992)
(citing Klein v. First Edina Nat’l Bank, 196 N.W.2d 619, 622 (Minn. 1972)); see White v.
Premier Bank, No. A18-1200, 2019 WL 2262768, at *2 (Minn. Ct. App. May 28, 2019)
(citing Klein).
Plaintiffs’ negligent-misrepresentation theories are not plausible. 	Plaintiffs’ first
theory is that USBI supplied false information by failing to disclose that interest rates paid
on swept cash “were determined by a drive to boost income for Defendants at the expense
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of customers.” Am. Compl. ¶ 86. It is difficult to understand how this allegedly omitted
statement—that profit-maximization motivated USBI in determining interest rates—would
not be true of every profit-seeking organization. If that is so, then disclosure would have
been unnecessary for the simple reason that any reasonable customer would (or should
reasonably be expected to) have known the fact. That aside, the account agreements and
related documents disclosed the functional equivalent of this information. 	Again, these
documents made clear that USBI did not promise a “reasonable” interest rate—they
disclaimed the payment of any particular or minimum rate. See ECF No. 35-1 at 12; ECF
No. 35-2 at 26, 29; ECF No. 35-3 at 3. 	And the agreements disclosed USBI’s financial
interests in the program in multiple ways. See ECF No. 35-1 at 12; ECF No. 35-2 at 27;
ECF No. 35-3 at 2.
Plaintiffs’ second negligent-misrepresentation theory is that USBI supplied false
information by “fail[ing] to disclose the interest rates” the cash-sweep program offered,
“instead only directing customers to a website.” 	Am. Compl. ¶ 87. 	There is nothing
inherently false or misleading about directing a customer to a website for specific
information. 	And there is nothing misleading about the language USBI used to refer its
customers to this resource. 	The Sweep Program Disclosure Statement included the
following:
You may contact your Wealth Management Advisor, Wealth
Management Brokerage Services or access our web site at
www.usbank.com/usbi/rates to determine the current interest
rates on the Deposit Accounts and other sweep investments we
offer. Interest rates can change daily and will be available on the
business day the rates are set.
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ECF No. 35-3 at 3. These directions are reasonably clear, and Plaintiffs cite no authority
for the proposition that referring customers in this way to a website or other similar source
for information is plausibly false or misleading.
E
Plaintiffs’ Minnesota statutory claims under the Consumer Fraud Act, Minn. Stat.
§ 325F.69, and the Deceptive Trade Practices Act, Minn. Stat. § 325D.44, may be analyzed
together. Plaintiffs’ core factual allegation supporting each claim is identical—they allege
Defendants violated each statute by misrepresenting “that customers would be provided
reasonable, market-based interest rates.” 	ECF No. 44 at 18; id. at 20; see Am. Compl.
¶¶ 145, 	149 	(alleging 	that 	Defendants 	violated 	these 	statutes 	by 	“making 	material
misrepresentations and omissions regarding the Program”). 	Both statutes create liability
based on false or misleading statements or omissions in particular contexts. 	Graphic
Commc’ns Loc. 1B Health & Welfare Fund A v. CVS Caremark Corp., 850 N.W.2d 682,
695 (Minn. 2014) (recognizing that, under the Consumer Fraud Act, “a party may be liable
. . . either by making an affirmative statement that is false or by concealing or not disclosing
facts under certain circumstances”); Gardner v. First Am. Title Ins. Co., No. 01-cv-937
(PAM/SRN), 2001 WL 1690053, at *3 (D. Minn. Dec. 10, 2001) (recognizing that
“omissions are actionable under the [Deceptive Trade Practices Act]”). But as discussed
earlier, Plaintiffs’ core allegation that Defendants promised “reasonable, market-based
interest rates” is not plausible when evaluated against Plaintiffs’ account agreements and
the accompanying disclosure documents. For this same reason, Plaintiffs’ statutory claims
are dismissal-worthy.
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F
To state an unjust enrichment claim, Plaintiffs must allege Defendants “knowingly
received or obtained something of value for which [they] in equity and good conscience
should pay.” 	ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 544 N.W.2d 302, 306
(Minn. 1996) (citation modified); see Dahl v. R.J. Reynolds Tobacco Co., 742 N.W.2d 186,
195–96 (Minn. Ct. App. 2007). As an equitable remedy, unjust enrichment “does not apply
when there is an enforceable contract” governing the parties’ relationship. 	Caldas v.
Affordable Granite & Stone, Inc., 820 N.W.2d 826, 838 (Minn. 2012), superseded by
statute on other grounds as recognized in Hall v. City of Plainview, 954 N.W.2d 254, 271
(Minn. 2021); see U.S. Fire Ins. Co. v. Minn. State Zoological Bd., 307 N.W.2d 490, 497
(Minn. 1981). Unjust enrichment “rest[s] on notions of justice and fairness rather than on
any actual agreement between the parties.” O’Brien & Wolf, LLP v. S. Cent. Minn. Elec.
Workers’ Fam. Health Plan, 923 N.W.2d 310, 316 (Minn. Ct. App. 2018). The alternative
pleading of unjust enrichment and breach of contract “is inappropriate in situations . . .
where the complaint sets forth no plausible basis to invoke unjust enrichment because there
is no dispute that the [contract] is valid and that the conduct complained of is explicitly
covered by that express contract.” Strategic Imp. Supply, LLC v. Meyers, No. 22-cv-1699
(PJS/DJF), 2022 WL 16718673, at *2 (D. Minn. Nov. 4, 2022) (quoting Baumgardner v.
Bimbo Food Bakeries Distrib., Inc., 697 F. Supp. 2d 801, 816 (N.D. Ohio 2010)).
Judged against these rules, Plaintiffs’ unjust-enrichment claim is not plausible.
Plaintiffs’ unjust-enrichment theory is that “Plaintiffs and the Class received unfair and
unreasonably low interest payments on their cash sweep deposits,” and “Defendants were
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unjustly enriched because, among other benefits, they received significantly greater net
interest income than they would have but for their wrongful conduct.” 	Am. Compl.
¶¶ 153–54. 	The Amended Complaint alleges no facts disputing the account agreements’
validity, and the complained-of conduct is governed by the agreements in the sense that
the agreements did not require the payment of a reasonable minimum interest rate or limit
the extent to which Defendants might profit from the program.
V
The final issue is whether the dismissal should be with prejudice or whether
Plaintiffs should be given the opportunity to amend the Amended Complaint. 	A federal
court has discretion to decide between a with-prejudice and without-prejudice dismissal.
See Paisley Park Enters. v. Boxill, 361 F. Supp. 3d 869, 880 n.7 (D. Minn. 2019).
A dismissal with prejudice is typically appropriate when a plaintiff has shown “persistent
pleading failures” despite one or more opportunities to amend, Milliman v. County of
Stearns, No. 13-cv-136 (DWF/LIB), 2013 WL 5426049, at *16 (D. Minn. Sep. 26, 2013);
see Reinholdson v. Minnesota, 01-cv-1650 (RHK/JMM), 2002 WL 32658480, at *5
(D. Minn. Nov. 21, 2002) (adopting R. & R.), or when the record makes clear that any
amendment would be futile, see Paisley Park, 361 F. Supp. 3d at 880 n.7. 	On the other
hand, when a plaintiff’s claim “might conceivably be repleaded with success,” dismissal
without prejudice may be justified. Washington v. Craane, No. 18-cv-1464 (DWF/TNL),
2019 WL 2147062, at *5 (D. Minn. Apr. 18, 2019), R. & R. adopted, 2019 WL 2142499
(D. Minn. May 16, 2019).
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Here, for legal and practical reasons, the better answer is to dismiss the Amended
Complaint with prejudice. 	As a legal matter, amendment would seem impracticable
because 	the 	justifications 	for 	granting 	Defendants’ 	motion 	came 	largely 	from 	the
extra-complaint materials Plaintiffs relied on to support their claims. 	It is difficult to
hypothesize how amendment might change those aspects of the decision. From a practical
perspective, the case’s procedural history gives no reason to think that Plaintiffs might
realistically be able to amend to address the dismissal-prompting problems identified here.
In 	response 	to 	Defendants’ 	Rule 	12(b)(6) 	motion, 	Plaintiffs 	stood 	on 	the 	factual,
merits-directed allegations of their original Complaint. 	(Remember, the amendment
addressed only the CAFA issue.) 	Though Plaintiffs requested leave to amend in their
opposition brief “[t]o the extent the Court finds the Complaint in any way inadequate,” this
request appeared in a footnote and included no description of additional facts (or categories
of facts) Plaintiffs might add to support their claims. 	See ECF No. 44 at 32 n.14; see
D. Minn. LR 15.1(b). 	For these reasons, Plaintiffs will not be given the opportunity to
amend, and the dismissal will be with prejudice.
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ORDER
Therefore, based on the foregoing, and on all the files, records, and proceedings
herein, IT IS ORDERED THAT:
1. 	The Motion to Dismiss [ECF No. 32] of Defendants U.S. Bancorp and U.S.
Bancorp Investments, Inc. is GRANTED.
2. 	The 	Amended 	Complaint 	[ECF 	No. 	52] 	is 	DISMISSED 	WITH
PREJUDICE.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: January 30, 2026 	s/ Eric C. Tostrud
Eric C. Tostrud
United States District Court
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