Georgion et al v. Bank of America Corporation

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:22-cv-00618-RJC-WCM
NANCY GEORGION; )
SUSAN PURDY; )
THAN SILVERLIGHT; ) MEMORANDUM AND
CHRISTINA SMITH; and ) RECOMMENDATION
DONNA WILLIAMS )
on behalf of themselves and )
all others similarly situated; )
)
Plaintiffs, )
)
v. )
)
BANK OF AMERICA, N.A.
, )
)
Defendant. )
______________________________________ )
This matter is before the Court on a Motion to Dismiss (the “Second
Motion to Dismiss,” Doc. 31) filed by Defendant Bank of America, N.A., which
has been referred to the undersigned pursuant to 28 U.S.C. § 636 for the entry
of a recommendation.
I. Relevant Background
A. The Second Motion to Dismiss
On November 11, 2022, Plaintiffs Nancy Georgion (“Georgion”), Susan
Purdy (“Purdy”), Than Silverlight (“Silverlight”), Christina Smith (“Smith”),
and Donna Williams (“Williams”), on behalf of themselves and all others
similarly situated, filed this action against Bank of America Corporation,
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asserting claims for, among other things, violations of the Electronic Fund
Transfer Act, 15 U.S.C. § 1693, et seq. (the “EFTA”) and various consumer
protection laws. See Doc. 30 at ¶ 1.
On September 15, 2023, the Court granted a Motion to Dismiss and gave
Plaintiffs leave to file an amended complaint that named any appropriate
defendant. Doc. 29.
On September 22, 2023, Plaintiffs filed an Amended Complaint that
named Bank of America, N.A. (the “Bank”), rather than Bank of America
Corporation, as the defendant. Doc. 30.
On October 6, 2023, the Bank filed the Second Motion to Dismiss. Doc.
31. Plaintiffs have responded, and the Bank has replied. Docs. 33, 34.
On January 26, 2024, the undersigned conducted a hearing on the
Second Motion to Dismiss. This Memorandum now follows.
B. Plaintiffs’ Allegations
1. Early Warning Services and Zelle
Plaintiffs allege that Early Warning Services, LLC (“EWS”) is a privately
held financial services company owned by the Bank and other banks. Doc. 30
at ¶ 28. EWS’s principal asset is Zelle. Id.
Zelle is a “peer to peer” payment service that allows “Network Banks” to
“handle transfers without paying” third party fees. Id. at ¶ 36. Zelle differs
from other peer to peer payment services “in several important respects.” Id.
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at ¶ 43. First, Zelle transfers occur in “real-time,” and are therefore “immediate
and unrecoverable” because the transfer goes “from bank account to bank
account – there is no entity holding onto the money while the transaction is
verified or before it’s collected by the recipient….” Id. at ¶¶ 51, 43. Second, Zelle
is “automatically integrated” into customers’ bank accounts (including for
those customers who are not aware of the Zelle feature in their “online and
mobile” accounts), is “always on,” and cannot be removed or disabled by the
customer. Id. at ¶¶ 44, 45, 48.
Plaintiffs contend that despite the Bank’s awareness that its customers
are losing “tens of millions of dollars every year specifically due to
unauthorized transactions via Zelle,” the Bank’s marketing material does not
“warn potential [Bank of America] customers of the risks of being scammed by
persons impersonating their banks due to Zelle.” Id. at ¶¶ 5 (emphasis in
Amended Complaint), 70. Rather, the Bank “makes repeated promises on its
website, app, and elsewhere that Zelle is a ‘fast, safe and easy way to send and
receive money,’” “that its online banking offers a ‘secure, convenient
experience,’” and that the Bank “guarantees” that its customers “will not be
liable for fraudulent transactions when reported promptly….” Id. at ¶¶ 62, 75,
77; see also ¶ 63 (quoting the Bank’s “digital webpage”); ¶¶ 38-40 (regarding
advertisements and public interviews); ¶ 76; ¶ 77.
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Similarly, Plaintiffs contend that the Bank’s Online Banking Service
Agreement (the “Online Service Agreement”) “repeatedly promises users that,
if they timely report fraud, that they will not be liable
at all for fraudulent
transfers, without limitation.” Id. at ¶ 79 (quoting the Online Service
Agreement, Section 7(B), emphasis in Amended Complaint). Plaintiffs also
allege that the Online Service Agreement requires the Bank to conduct a
reasonable investigation when a customer reports an error and to provisionally
credit the customer’s account during that investigation under certain
circumstances. Id. at ¶¶ 80, 81 (quoting Section 7(A) of the Online Service
Agreement).
Plaintiffs also allege that, despite these assurances, the Bank has a
policy of denying claims arising from Zelle transactions. Id. at ¶¶ 85, 86, 87.
2. Plaintiffs and Their Claims
Georgion is a South Carolina citizen who “has never used Zelle and was
not aware of how it worked with her account(s).” Doc. 30 at ¶ 12. On April 9,
2022, Georgion received a phone call from “a person identifying themselves as
a Bank of America employee who was investigating suspicious transactions.”
Doc. 1 at ¶ 13. “During the course of the conversation, Georgion was deceived
into providing account information” and, “[i]mmediately thereafter,”
approximately $2,000 was transferred out of her checking account via Zelle. Id.
Georgion “did not initiate the transaction or authorize it in any way” and
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“immediately” reported the “unauthorized transaction” to the Bank over the
phone. Id. at ¶ 14. The Bank did not provisionally credit Georgion’s account
during its investigation and, on May 24, 2022, denied the claim. Id.
Purdy is a New York citizen. Id. at ¶ 15. On June 29, 2022, Purdy
received a text message “from a recognized Bank of America (fraud
department) phone number.” Id. at ¶ 16. Purdy “was told she had a suspicious
transfer scheduled from her checking account” and was “deceived into
providing account login information.” Id. “Immediately thereafter,” $855 was
transferred out of her checking account via Zelle. Id. Purdy “did not initiate
the transaction or authorize it in any way” and immediately reported the
“unauthorized transaction” to the Bank over the phone. Id. at ¶ 17. On or about
July 15, 2022, the Bank denied the claim. Id.
Silverlight is a citizen of California. Id. at ¶ 18. On March 11, 2022,
Silverlight “erroneously sent a payment via PayPal to a third party,” and then
went online “in an attempt to reverse the payment….” Id. at ¶ 19. Silverlight
“unwittingly ended up communicating with a fraudster who was
impersonating PayPal,” and was deceived into providing his bank account
access information. Id. The “fraudster immediately began withdrawing money
from Silverlight’s account via Zelle,” by way of four different transactions “over
the course of a few minutes,” which resulted in a total loss of over $3,000. Id.
Silverlight “did not initiate the transaction or authorize it in any way” and
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immediately reported the “unauthorized transaction” to the Bank over the
phone. Id. at ¶ 20. The Bank denied the claim. Id.
Smith is a Michigan citizen who “has never used Zelle and was not aware
of how it worked with her account(s).” Id. at ¶ 21. On March 22 and 23, 2022,
“an acquaintance” used Smith’s phone without Smith’s permission to execute
five different transactions that transferred money totaling $1,600 from Smith’s
checking account to the acquaintance via Zelle. Id. at ¶ 22. Smith “did not
initiate the transactions or authorize them in any way” and, upon learning of
the transfers, reported the “unauthorized transactions” to the Bank by visiting
her local branch. Id. at ¶ 23. The Bank subsequently denied the claim. Id.
Williams is a New Jersey citizen who “has never used Zelle and was not
aware of how it worked with her account(s).” Id. at ¶ 24. On March 25, 2022,
Williams “made a call to what she thought was Apple TV because she was
having trouble with that subscription service,” and was told to download an
app called AnyDesk Remote. Id. at ¶ 25. “The fraudster advised her to turn on
her phone’s camera to show the modem was on, which she did. Within seconds,
on her phone she saw money moving from her checking account. She saw him
create a Zelle account for ‘Jacklyn’ and moved money from her savings account
to her checking account and then transferring that money to ‘Jacklyn.’ During
this time, which was less than a couple [of] minutes, Williams could see she
was getting a call from Bank of America but somehow she was unable to
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answer them and they were cutoff.” Id. Williams lost more than $3500 “in what
seemed to be a matter of seconds.” Id. Williams “did not initiate any of the
transactions or authorize them in any way” and reported a total of three claims
to the Bank over the phone. Id. at ¶ 26. The Bank denied the claims and
Williams “was told the first claim was deemed a ‘scam’ which meant Plaintiff
had some participation in the scheme.” Id.
Plaintiffs, on behalf of themselves and others similarly situated, assert
a claim based on violations of the EFTA and the associated regulations as well
as claims for breach of the Online Service Agreement, breach of the implied
covenant of good faith and fair dealing, and violations of state specific
consumer protection laws.1 These claims can be summarized as follows:
1 Each Plaintiff seeks to represent a “nationwide class” pursuant to Federal Rule of
Civil Procedure 23(b)(2) and (b)(3). See Doc. 30 at ¶ 113. Additionally, each Plaintiff
seeks to represent a sub-class based on his or her state of citizenship: Georgion (South
Carolina); Purdy (New York); Silverlight (California); Smith (Michigan); and
Williams (New Jersey). Id. at ¶¶ 114-118.
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Georgion
(South
Carolina)
Purdy
(New
York)
Silverlight
(California)
Smith
(Michigan)
Williams (New
Jersey)
Count One:
Violation of EFTA X X X X X
Count Two:
Breach of
Contract
X X X X X
Count Three:
Implied Covenant X X X X X
Count Four:
California Unfair
Competition
X
Count Five:
California False
Advertising
X
Count Six: South
Carolina Unfair
and Deceptive
Trade Practices
X
Count Seven:
South Carolina
Breach of
Contract with
Fraudulent
Intent
X
Count Eight: New
York Consumer
Fraud
X
Count Nine: New
York False
Advertising
X
Count Ten: New
Jersey Consumer
Fraud
X
II. Legal Standard
When considering a motion made pursuant to Rule 12(b)(6), the court,
accepting the allegations in the complaint as true and construing them in the
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light most favorable to the plaintiff, determines “whether the complaint on its
face states plausible claims upon which relief can be granted.” Francis v.
Giacomelli, 588 F.3d 186, 189, 192 (4th Cir. 2009); accord Nemet Chevrolet,
Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009).
The court, however, is not required to accept “legal conclusions, elements
of a cause of action, and bare assertions devoid of further factual
enhancement.” Consumeraffairs.com, 591 F.3d at 255; see Giacomelli, 588
F.3d at 192. That is, while “detailed factual allegations” are not required, the
complaint must contain “enough facts to state a claim to relief that is plausible
on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); accord
Consumeraffairs.com, 591 F.3d at 255. “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); accord Consumeraffairs.com, 591 F.3d at 255.
In short, the well-pled factual allegations must move a plaintiff’s claim from
conceivable to plausible. Twombly, 550 U.S. at 570; Consumeraffairs.com, 591
F.3d at 256.
III. Discussion
A. Materials Considered
The Bank has submitted the following documents with the Second
Motion to Dismiss:
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Exhibit 1 (Doc. 31-3): described as a screenshot of a
webpage located at www.bankofamerica.com/online-
banking/mobile-and-online-banking-features/ and
which the Bank contends is cited in the Amended
Complaint at ¶ 77, n. 30.
Exhibit 2 (Doc. 31-4): described as a screenshot of a
separate webpage located at
www.bankofamerica.comonline-banking/mobile-and-
online-
bankingfeatures/overview/?request_locale=en_US and
which the Bank contends is cited in the Amended
Complaint at ¶ 77, n. 28.
Exhibit 3 (Doc. 31-5): the Online Service Agreement,
effective February 18, 2022, and which the Bank
asserts was operative at the time of the transfers
challenged by Georgion, Silverlight, Smith, and
Williams.2
Exhibit 4 (Doc. 31-6): described as a screenshot of a
webpage located at www.bankofamerica.com/security-
center/avoid-bank-scams/.
Exhibit 5 (Doc. 31-7): described as a screenshot of a
webpage located at www.bankofamerica.com/security-
center/overview/.
Exhibit 6 (Doc. 31-8): described as a screenshot of a
www.bankofamerica.com/digitalbanking/mobilebanki
ng/zelle.
Exhibit 7 (Doc. 31-9): described as a screenshot of a
www.bankofamerica.com/digitalbanking/mobilebanki
ng.
2 The Bank states that a new version of the Online Service Agreement became
effective on May 20, 2022 and was applicable at the time of the transfer challenged
by Purdy, but that the relevant language in both the February and May Online
Service Agreements is the same. Plaintiffs have not contested these assertions.
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The Bank contends that these exhibits are sufficiently referred to in
Plaintiffs’ Amended Complaint such that they may be considered by the Court
in conjunction with the Second Motion to Dismiss.
Plaintiffs object to the Court’s consideration of the exhibits, other than
the Online Service Agreement. See Doc. 33 at 7.
For purposes of this Memorandum, the undersigned has considered the
Online Service Agreement. The undersigned has also considered language
from the Bank’s webpages, but only to the extent that language is quoted in
the Amended Complaint. See Witthohn v. Fed. Ins. Co., 164 Fed. Appx. 395,
396 (4th Cir. 2006); Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th
Cir. 2009); cf. Presnell v. Snap-On Securecorp, Inc., 583 F.Supp.3d 702, 707 n.
2 (M.D.N.C. 2022) (considering website where both parties “cited to the website
and presented their arguments as though they agree that the current website
information fairly reflects the information available in 2018” and “neither
party has challenged the documents’ authenticity or objected to their
consideration”).
B. EFTA Claim (Count 1)
The EFTA’s “primary objective” is the “provision of individual consumer
rights.” 15 U.S.C. § 1693(b). “Congress enacted the EFTA as a ‘remedial
consumer protection statute’ which courts ‘read liberally to achieve the goals
of protecting consumers.’” Brown v. Bank of America, N.A., No. 8:21-cv-02334-
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PX, 2022 WL 2193286, at * 2 (D.Md. June 17, 2022) (quoting Curtis v. Propel
Prop. Tax Funding, LLC, 915 F.3d 234, 239 (4th Cir. 2019) (quoting Phelps v.
Robert Woodall Chevrolet, Inc., 306 F. Supp. 2d 593, 596 (W.D. Va. 2003)).
Both the Board of Governors of the Federal Reserve System and the Consumer
Financial Protection Bureau (“CFPB”) have promulgated regulations
implementing the EFTA. See 12 C.F.R. § 205.1 et seq. (“Regulation E”); 12
C.F.R. § 1005.2(m) (CFPB regulation).
Among other things, the EFTA requires a financial institution to
investigate when a customer provides notice that his or her account contains
“an error.” 15 U.S.C. § 1693f(f)(1). “[A]n unauthorized electronic fund transfer”
is one type of “error.” 15 U.S.C. § 1693f(f)(1).
The Bank argues that Plaintiffs’ EFTA claim should be dismissed
because Plaintiffs have not alleged sufficiently that the Bank failed to engage
in a good faith investigation after Plaintiffs reported the allegedly
unauthorized transfers (the “Transfers”). The Bank also argues that Plaintiffs
have failed to allege sufficiently that the Bank improperly concluded that the
Transfers were authorized.
In response, Plaintiffs contend that the Bank violated the EFTA in three
ways: (1) by failing to provide refunds to Plaintiffs for the Transfers (15 U.S.C.
§ 1693g); (2) by failing to reasonably investigate Plaintiffs’ claims regarding
the Transfers (15 U.S.C. § 1693f); and (3) by failing to provisionally credit
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Plaintiffs’ accounts during the investigations despite taking more than ten
days to complete the investigations (15 U.S.C. § 1693f(c)). Doc. 33 at 12.
1. Unauthorized Transfers
The EFTA defines an “unauthorized electronic fund transfer” as “an
electronic fund transfer from a consumer's account initiated by a person other
than the consumer without actual authority to initiate such transfer and from
which the consumer receives no benefit.” 15 U.S.C. § 1693a(12). Both
Regulation E and the CFPB regulations state that “[a]n unauthorized
[electronic funds transfer] includes a transfer initiated by a person who
obtained the access device3 from the consumer through fraud or robbery.” See
12 C.F.R. § 205, Supp. I at 2(m) (Regulation E Official Interpretation of §
205.2(m)); 12 C.F.R. § 1005, Supp. I at 2(m) (CFPB's Official Interpretation of
§ 1005.2(m)); see also Green v. Capital One, N.A., 557 F.Supp.3d 441, 447
(S.D.N.Y. 2021) (discussing Regulation E and CFPB regulations, which provide
an identical definition of an “unauthorized electronic fund transfer”).
Here, Plaintiffs have alleged that they were deceived into providing their
account information to third parties who initiated the Transfers without
Plaintiffs’ authorization. Such allegations are adequate to allege an
3 An “access device” refers to “a card, code, or other means of access to a consumer's
account, or any combination thereof, that may be used by the consumer to initiate
electronic fund transfers.” 12 C.F.R. § 205.2(a)(1).
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“unauthorized electronic fund transfer.” See Green, 557 F.Supp.3d at 447-448
(stating that it was “self-evident that an individual falsely posing as a customer
service representative—with no connection to Capital One or Square—would
not have the ‘actual authority’ to initiate a transfer” and finding “consistent
with the fraud exception, that access to account information that was furnished
in the first instance under fraudulent pretenses is not ‘authorized’ access under
the EFTA”); cf. Holmes v. Capital One, N.A., No. 3:22-CV-0823, 2023 WL
6318883, at *7 (N.D.N.Y. Sept. 28, 2023) (finding that plaintiff’s transaction
was “clearly authorized” because plaintiff intentionally transferred money
through Zelle to a purported seller she had identified through Facebook
marketplace, only to have the purported seller then block plaintiff and never
provide the goods plaintiff believed she was purchasing).
2. Reasonable Investigation
The Bank contends that “[a]ll Plaintiffs concede that the Bank
investigated their claims and denied them after determining that the transfers
were not unauthorized,” and that Plaintiffs have not identified any additional
steps the Bank should have taken during its investigations. Doc. 31-1 at 26.
In response, Plaintiffs argue that an investigation of a customer’s claim
must be reasonable based on the specific facts of each case. Doc. 33 at 18.
Plaintiffs further argue that the Bank’s investigations should have included a
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review of records from Zelle, the “network bank” that was involved in each
Transfer, and the Bank’s own records. See Doc. 33 at 16 n. 6; Doc. 30 at ¶ 100.
The Amended Complaint includes allegations that the Bank improperly
“limited its investigation to payment instructions.” See Doc. 30 at ¶¶ 102, 103,
105, 106, 123(d), 143, 144, 147, 148, 149; see also See Almon v. Conduent, 1:19-
CV-0746-LMM, 2019 WL 13207564 at *7 (N.D. Ga. Aug. 9, 2019) (“As the Court
reads the First Amended Complaint, Plaintiffs do not concede that Defendants
fully investigated their alleged errors; rather, Plaintiffs allege that the
investigations Defendants claimed to have performed were merely ‘pre-textual,
sham investigations’ that enabled Defendants to deny ‘meritorious claims
regarding fraudulent charges’”).
Additionally, Plaintiffs have alleged that the Bank routinely took the
position that Zelle transactions were authorized. See e.g. Doc. 30 at ¶¶ 84-85;
see also id. at ¶¶ 98-100 (outlining investigatory requirements); ¶¶ 108-109
(alleging that the Bank has, in the past, only refunded customers’ accounts for
allegedly fraudulent Zelle transactions after being contacted by journalists).
With respect to the Transfers, Plaintiffs allege that the Bank “summarily
concluded that the transfers of funds via Zelle…were not in error when such
conclusions could not reasonably have been drawn from the evidence available
to the financial institution at the time of the investigation.” Doc. 30 at ¶ 145.
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Plaintiffs have also alleged that each named Plaintiff has been a
customer of the Bank for numerous years (some for fifteen years or more), that
some of them had no awareness of how Zelle worked and had never used Zelle
prior to the date of the particular Transfer, and that they did not initiate or
authorize the Transfers in any way. See Doc. 30 at ¶¶ 12-26; see also 12 C.F.R.
§ 205, Supp. I at 2.11(c)(4).
Finally, Plaintiffs point out that, pursuant to 15 U.S.C. § 1693g(b), “[i]n
any action which involves a consumer's liability for an unauthorized electronic
fund transfer, the burden of proof is upon the financial institution to show that
the electronic fund transfer was authorized….” See Doc. 33 at 13.
In sum, although the Amended Complaint does not provide extensive
details of the Bank’s investigation into each of the Transfers, the undersigned
is persuaded that Plaintiffs’ allegations as to the Bank’s investigations are
sufficient at this stage of the case. See Green, 557 F.Supp.3d at 454 (holding
that plaintiff’s allegations that he had no history of false reports or
irresponsible use of his account, and that defendant “was or should have been
aware that schemes of the sort described in the complaint are common” “just
barely” alleged the “minimum” to state a claim under the EFTA); cf. Tristan,
Doc. 75 at 7 (dismissing EFTA claim with leave to amend where allegations
did not “demonstrate that the Bank failed to review its records, including
[plaintiff’s] account statements”).
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3. Provisional Credit
When a customer provides adequate notice of his or her belief that his or
her account contains an error, the financial institution is required to
“investigate the alleged error, determine whether an error has occurred, and
report or mail the results of such investigation and determination to the
consumer within ten business days.” 15 U.S.C. § 1693f(a). “If the financial
institution determines that an error did occur, it shall promptly, but in no
event more than one business day after such determination, correct the error,
subject to section 1693g of this title, including the crediting of interest where
applicable.” 15 U.S.C. § 1693f(b).
Further, 15 U.S.C. § 1693f(c) provides that:
If a financial institution receives notice of an error in
the manner and within the time period specified in
subsection (a), it may, in lieu of the requirements of
subsections (a) and (b), within ten business days after
receiving such notice provisionally recredit the
consumer's account for the amount alleged to be in
error, subject to section 1693g of this title, including
interest where applicable, pending the conclusion of its
investigation and its determination of whether an
error has occurred. Such investigation shall be
concluded not later than forty-five days after receipt of
notice of the error. During the pendency of the
investigation, the consumer shall have full use of the
funds provisionally recredited.
Here, the Bank contends that it was not required to provisionally credit
Plaintiffs’ accounts because Section 1693f(c) “is clear that Bank of America
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‘may’ provide a provisional credit ‘pending the conclusion of its investigation
and its determination of whether an error has occurred.” Doc. 31-1 at 26 n. 11.
Additionally, the Bank argues that Georgion – the only named Plaintiff who
asserts a failure to provisionally credit her account – has failed to allege when
she reported the Transfer, such that it is unknown when the Bank’s
investigatory period began.
The Bank is correct that it is not required to provisionally credit a
customer’s account in each case; an institution may either conduct an
investigation pursuant to Sections 1693f(a) and (b) or, alternatively, provide a
provisional credit to the customer while conducting an investigation pursuant
to Section 1693f(c). However, the institution must comply with the timelines
associated with the option it chooses.
The Amended Complaint indicates that Georgion reported her Transfer
to the Bank “immediately.” Reading this allegation in the light most favorable
to Georgion, it appears that she reported the transaction on or shortly after
April 9, 2022, and that the Bank did not deny her claim until May 24, 2022.
This period of time exceeded the ten days provided in 15 U.S.C. § 1693f(a),
though Georgion alleges that the Bank did not provisionally credit her account.
The undersigned will therefore recommend that the Motion to Dismiss
be denied with respect to Plaintiffs’ EFTA claim.
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C. Contract-Based Claims
1. Breach of Contract
The Bank argues that Plaintiffs fail to identify any contractual provision
promising “safety and security,” and that the Bank fulfilled its contractual
obligation to investigate the Transfers (and that Plaintiffs simply disagree
with the Bank’s determinations).
To state a claim for breach of contract, Plaintiffs must allege the
existence of an agreement between the parties and breach of that agreement.
See Holmes, 2023 WL 6318883, at *9 (New York law); Oasis W. Realty, LLC v.
Goldman, 51 Cal. 4th 811, 821 (Cal. 2011) (California); S. Glass & Plastics Co.
v. Kemper, 399 S.C. 483, 491 (Ct. App. 2012) (South Carolina)); 760 New
Brunswick Urban Renewal Limited Liability Company v. Navigators Specialty
Insurance Company, No. 20-5877, 2021 WL 287876 *10 (D.N.J. Jan. 28, 2021)
(New Jersey); Bowlers’ Alley Inc. v. The Cincinnati Insurance Company, 32
F.Supp.3d 817, 822 (E.D. Mich. 2014) (Michigan).
Here, the undersigned is persuaded that the Amended Complaint states
a claim for breach of contract. Specifically, Plaintiffs allege that the Bank
“promised in its contract with each Plaintiff, ‘You will have no liability for
unauthorized transactions if you notify us within 60 days after the statement
showing the transaction . . ..’”See Doc. 33 at 8 (citing Doc. 30 at ¶ 79 (Online
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Service Agreement).4 Plaintiffs further allege that they each notified the Bank
of the Transfers, and that the Bank held “Plaintiffs and Class Members liable
for unauthorized Zelle transfers.” Doc. 30 at ¶ 156. See also Tristan v. Bank of
America, No. SA CV 22-01183-DOC-ADS, 2023 WL 4417271, at *12 (C.D. Cal.
June 28, 2023) (denying motion to dismiss breach of contract claim where “the
gravamen” of plaintiffs’ claim was “whether the transfers of funds from their
accounts were ‘unauthorized transactions’ as defined under the [Online
Banking Service Agreement]” and explaining that “the term ‘unauthorized
transaction’ [was] susceptible to two reasonable interpretations: Defendant's
version, which construes an unauthorized transaction as one initiated by a
third party without an accountholder's consent; and Plaintiff's version, which
construes an unauthorized transaction as any transaction involving fraud.”).
2. Breach of the Implied Covenant of Good Faith and Fair
Dealing
Plaintiffs allege that the Bank breached the implied covenant of good
faith and fair dealing by “failing to maintain Plaintiffs and Class members
accounts ‘safe’ and ‘secure,’ failing to conduct a reasonable investigation of
4 During the January 26, 2024 hearing, Plaintiffs confirmed that the Online Service
Agreement is the contract upon which their contractual claims are based. Plaintiffs
did not concede, though, that the Online Service Agreement attached to the Second
Motion to Dismiss is a copy of the Online Service Agreement that is applicable to each
Plaintiffs’ claims. Plaintiffs do, however, rely on the language that appears in the
Online Service Agreement.
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their claims, and holding Plaintiffs and Class Members liable for unauthorized
transfers.” Doc. 30 at ¶ 161.
The undersigned will recommend that this claim be dismissed as to
Smith and Georgion, as Michigan law and South Carolina law do not recognize
this type of claim. Belle Isle Grill Corp. v. City of Detroit, 256 Mich.App. 463
(2003) (“Michigan does not recognize a claim for breach of an implied covenant
of good faith and fair dealing.”); Acrisure, LLC v. Hudak, 618 F.Supp.3d 642,
648 (W.D. Mich. 2022) (same); Weaver v. John Lucas Tree Expert Co., C.A. No.
2:13–CV–01698–PMD, 2013 WL 5587854, at *8 (D.S.C. Oct. 10, 2013) (“[T]he
South Carolina Court of Appeals has affirmatively stated that ‘the implied
covenant of good faith and fair dealing is not an independent cause of action
separate from the claim for breach of contract.’”) (quoting RoTec Servs., Inc. v.
Encompass Servs., Inc., 359 S.C. 467 (Ct.App.2004)).
Additionally, to the extent Plaintiffs’ claims for breach of the implied
covenant of good faith and fair dealing under New York law, California law,
and New Jersey law are based on the Bank’s alleged failure to maintain
Plaintiffs’ accounts as “safe” and “secure,” or on the Bank’s allegedly improper
determination that the Transfers were authorized, such claims would be
redundant of the breach of contract claims. Kelly v. Cmty. Bank, N.A., No. 19-
CV-919, 2020 WL 777463, at *7 (N.D.N.Y. 2020) (“New York law does not
recognize a separate cause of action for breach of the implied covenant of good
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faith and fair dealing when a breach of contract claim, based on the same facts,
is also pled.”) (internal citation omitted); JEB Group, Inc. v. San Jose III, No.
CV 19-04230-CJC, 2020 WL 2790012, at *2 (C.D. Cal. March 31, 2020) (“if the
allegations supporting a claim for breach of the implied covenant claim do not
‘go beyond the statement of a mere contract breach and, relying on the same
alleged acts, simply seek the same damages or other relief already claimed in
a companion contract cause of action, they may be disregarded as
superfluous’”) (citation omitted); Valcom, Inc. v. Vellardita, No. 2:13–cv–3025–
WHW–CLW, 2014 WL 2965708, at * (D.N.J. July 1, 2014) (discussing dismissal
of implied covenant claims when such claims are redundant).
However, to the extent Purdy’s, Silverlight’s, and Williams’ claims are
based on their position that the Online Service Agreement included an implied
term that the Bank would conduct a “reasonable” investigation of an allegedly
unauthorized transfer, the undersigned will recommend that Plaintiffs’ claims
be allowed to proceed as to these Plaintiffs. See Tristan, 2023 WL 4417271, at
*13 (denying motion to dismiss implied covenant claim and explaining that
“Plaintiffs’ claim for breach of the implied covenant…depends on whether the
Bank has adopted an unreasonable interpretation of when a fraudulent Zelle
transaction will be deemed unauthorized….); Wilson v. Amerada Hess Corp.,
773 A.2d 1121, 1126 (N.J. 2001) (finding that, under New Jersey law, “a party's
performance under a contract may breach [the] implied covenant [of good faith
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and fair dealing] even though [the] performance does not violate a pertinent
express term” of the contract).
D. “False Advertising” Claims (under California Law (Count 5) and
New York Law (Count 9))
For purposes of Plaintiffs’ false advertising claims, the undersigned has
not relied on any statements in the Online Services Agreement, and instead
interprets these claims as referencing representations made on the Bank’s
website or statements by the Bank that were directed to the general public
(e.g., through television commercials or publicly available interviews).
1. Non-Actionable Puffery
To the extent Silverlight’s and Purdy’s claims are based on the Bank’s
assertions that Zelle is “safe,” “fast,” and “simple,” such marketing statements
constitute non-actionable puffery. See Anunziato v. eMachines, Inc., 402
F.Supp.2d 1133, 1139 (C.D. Cal. 2005); Tristan v. Bank of America, No. SA CV
22-01183-DOC-ADS, 2023 WL 4417271, at *5 (C.D. Cal. June 28, 2023) (“the
words ‘simple,’ ‘fast,’ and ‘safe’ are general descriptive statements as opposed
to verifiable statements of fact. Plaintiffs have not advanced a plausible theory
that a reasonable consumer would interpret these statements to mean that all
losses incurred from Zelle fraud would be reimbursed by the Bank as a matter
of practice.”); Sanchez v. Navy Federal Credit Union, No. 23-285, 2023 WL
6370235, at *8 (C.D. Cal. August 14, 2023) (same); MacNaughton v. Young
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Living Essential Oils, LC, 67 F.4th 89, 97 (2d Cir. 2023) (explaining that
“subjective statements that cannot be proven true or false” are therefore non-
actionable puffery as a matter of law).
2. The “Reasonable Consumer” Standard
California’s False Advertising Law (“CA FAL”) prohibits advertising that
is “untrue or misleading and which is known, or which by the exercise of
reasonable care should be known, to be untrue or misleading….” Cal. Bus. &
Prof. D.7, Pt. 3, Ch. 1, § 17500. To state a false advertising claim under
California law, a plaintiff “must allege facts showing ‘that members of the
public are likely to be deceived.’” Yung Kim v. General Motors, LLC, 99
F.Supp.3d 1096, 1107 (quoting Ariz. Cartridge Remanufacturers Ass'n v.
Lexmark Int'l, Inc., 421 F.3d 981, 985 (9th Cir.2005)). To determine whether
members of the public are likely to be deceived, courts apply a “reasonable
consumer test.” Id. (collecting cases); see also Stewart v. Kodiak Cakes, LLC,
537 F.Supp.3d 1103, 1138 (S.D. Cal. 2021) (explaining the “reasonable
consumer” standard relates to an ordinary consumer acting reasonably under
the circumstances who could be misled).
Similarly, Section 350 of the New York General Business Law prohibits
“[f]alse advertising in the conduct of any business, trade or commerce or in the
furnishing of any service in [New York].” “To survive a motion to dismiss, [a]
plaintiff must allege statements that were ‘likely to mislead a reasonable
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consumer acting reasonably under the circumstances.’” Davis v. Hain Celestial
Group, Inc., 297 F.Supp.3d 327, 334 (E.D.N.Y. 2018) (citing Oswego Laborers'
Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 647
N.E.2d 741, 745 (1995)). “[I]n determining whether a reasonable consumer
would have been misled by a particular advertisement, context is crucial....
[T]he presence of a disclaimer or similar clarifying language may defeat a claim
of deception.” Fink v. Time Warner Cable, 714 F.3d 739, 742 (2d Cir. 2013).
Here, the Bank argues that it was unlikely that any reasonable
consumer would have been misled by the Bank’s advertising because the Bank
gave warnings and disclaimers that were sufficient to advise of the risks
associated with Zelle. See Doc. 31-1 at 10. The Bank further contends that,
even without these warnings, “no reasonable consumer could interpret the
Bank’s statements about Zelle as a promise to protect them from voluntarily
sharing their banking credentials with fraudsters.” Id. at 15.
However, whether the Bank’s representations regarding the security of
online banking or Zelle would be likely to mislead a reasonable consumer is a
factual issue that is inappropriate for resolution at this stage of the
proceedings. See e.g., Stewart, 537 F.Supp.3d at 1138 (“Under the reasonable
consumer test, the Ninth Circuit has emphasized that it is a ‘rare situation in
which granting a motion to dismiss is appropriate’ because ‘it raises questions
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26
of fact.’”) (quoting Reid v. Johnson & Johnson, 780 F.3d 952, 958 (9th Cir.
2015)).5
3. Reliance (California Law) and Causation (New York Law)
The Bank also contends that Silverlight and Purdy have not shown that
any allegedly misleading statements caused their alleged injuries or that they
relied on any of the Bank’s alleged misrepresentations. See Doc. 31-1 at 19; see
also Moore v. Mars Petcare US, Inc., 966 F.3d 1007, 1020 (9th Cir. 2020) (under
California law, “a plaintiff must allege actual reliance in order to have standing
to pursue UCL and FAL claims”); Duchnik v. Tops Markets, LLC, No. 22-cv-
399, 2023 WL 4827951, at *2 (W.D.N.Y. July 6, 2023) (“while ‘reliance is not
an element of a section 349 [or section 350] claim,’ a plaintiff ‘must show that
the defendant's ‘material deceptive act’ caused the injury’”) (quoting Mantikas
v. Kellogg Company, 910 F.3d 633, 636 (2d Cir. 2018)).
Here, Plaintiffs have not alleged that Silverlight (California) or Purdy
(New York) were aware of or exposed to any of the alleged misrepresentations
made by the Bank. The Amended Complaint does not allege that Silverlight or
Purdy reviewed the Bank’s website, saw television commercials advertising
5 The Bank argues that because it
does investigate claims and refund transactions
that it determines to be unauthorized, there was nothing false or misleading about
its representation that “customers will not be liable for unauthorized transactions.”
Doc. 31-1 at 18. However, Plaintiffs do not allege that the Bank failed to investigate
the Transfers
at all. Rather, Plaintiffs allege that the Bank failed to investigate the
Transfers reasonably and then improperly denied Plaintiffs’ claims.
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Zelle, or were aware of other publicly available information regarding the
service or online banking. See Stewart, 537 F.Supp.3d at 1137 (“the causal
connection between each Plaintiff and each misrepresentation across
Defendant's advertising media is too tenuous and insufficiently pleaded”)
(citing McCrary v. Elations Co., LLC, No. EDCV 13-0242 JGB (OPx), 2013 WL
6403073, at *8 (C.D. Cal. July 12, 2013) (“Plaintiff alleges that the
[Defendant's] website contains various misrepresentations, but the SAC does
not allege that he looked at or relied on anything on Defendant's website before
purchasing [the product]. Thus, Plaintiff did not actually rely on any website
statements and does not have standing to bring claims based on [ ] those
statements”) (citation omitted)); Devey v. Big Lots, Inc., 635 F.Supp.3d 205,
213 (W.D.N.Y. 2022) (“To establish the requisite causal connection [under New
York law] between an alleged written misrepresentation and the resulting
injury, plaintiff must plausibly allege that she actually viewed the misleading
statement prior to making her decision to purchase, and must set forth ‘where,
when and how [she] came to view’ it”) (citing Oden v. Boston Scientific Corp.,
330 F. Supp. 3d 877, 902 (E.D.N.Y. 2018) (and collecting cases)).
The undersigned will therefore recommend that Silverlight’s and
Purdy’s claims for false advertising under California law and New York law be
dismissed.
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E. Consumer Protection Act Claims (California Law (Count 4), South
Carolina Law (Count 6), New York Law (Count 8), and New Jersey
Law (Count 10))
1. General Principles
California’s Unfair Competition Law (“CA UCL”) prohibits “any
unlawful, unfair or fraudulent business act or practice….” Cal. Bus. & Prof.
D.7, Pt. 3, Ch. 1, § 17200. The CA UCL provides a separate theory of liability
under each of the three prongs: “unlawful,” “unfair,” and “fraudulent.” Stewart,
537 F.Supp.3d at 1130 (citing Cel-Tech Commc'ns, Inc. v. Los Angeles Cellular
Tel. Co., 20 Cal.4th 163 (1999) (quoting Podolsky v. First Healthcare Corp., 50
Cal.App.4th 632 (1996)).
The South Carolina Unfair Trade Practices Act (“SCUTPA”) declares
unfair or deceptive acts or practices in trade or commerce to be unlawful.
Singleton v. Stokes Motors, Inc., 358 S.C. 369, 379 (S.C. 2004) (citing S.C.Code
Ann. 39–5–20(a) (2002)). “The Act provides that: ‘[a]ny person who suffers any
ascertainable loss of money or property, real or personal, as a result of the use
or employment by another person of an unfair or deceptive method, act or
practice may bring an action to recover actual damages.’” Id. (citing S.C.Code
Ann. 39–5–140(a) (2002)).
Under New York law, “[d]eceptive acts or practices” are unlawful “in the
conduct of any business, trade or commerce,” N.Y. Gen. Bus. § 349(a) (“NY
Section 349”), and a plaintiff must allege a defendant made statements likely
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29
to mislead a “reasonable consumer acting reasonably under the
circumstances.” Davis v. Hain Celestial Group, Inc., 297 F.Supp.3d 327, 334
(E.D.N.Y. 2018). In order to state a claim pursuant to NY Section 349, a
claimant must allege that a defendant engaged in “(1) consumer-oriented
conduct that is (2) materially misleading and that (3) plaintiff suffered injury
as a result of the allegedly deceptive act or practice.” City of New York v
Smokes-Spirits.Com, Inc., 12 NY3d 616, 621 (2009).
Pursuant to the New Jersey Consumer Fraud Act (“NJ CFA”),
commercial practices that are “unconscionable or abusive” or that make use of
“deception, fraud, false pretense, false promise, misrepresentation, or the
knowing concealment, suppression, or omission of any material fact with intent
that others rely” thereupon are unlawful. N.J.S. § 56:8-2. The NJ CFA
“requires a plaintiff to prove three elements: ‘1) unlawful conduct by defendant;
2) an ascertainable loss by plaintiff; and 3) a causal relationship between the
unlawful conduct and the ascertainable loss.’” D’Agostino v. Maldonado, 216
N.J. 168, 184 (2013) (quoting Bosland v. Warnock Dodge, Inc., 197 N.J. 543,
557 (2009)).
2. “Fraudulent” or “Deceptive” Conduct
The Bank argues that, under California law, New York law, South
Carolina law, and New Jersey law, Plaintiffs cannot state a claim based on
allegedly fraudulent or deceptive conduct because each state’s law incorporates
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30
a “reasonable consumer” or “similar” standard. See 31-1 at 20-21; see also Doc.
31-1 at 13.
As discussed above, however, arguments premised on whether a
“reasonable consumer” would be deceived by the Bank’s representations are
more appropriately considered on a more complete record. See e.g., Kronenberg
v. Allstate Ins. Co., No. 18-CV-6899 (NGG) (JO), 2020 WL 1234603, at *3
(E.D.N.Y. Mar. 13, 2020) (“[C]ourts have generally held that since the
materially misleading conduct factor requires a reasonableness analysis best
suited for a jury, it cannot be resolved on a motion to dismiss”) (internal
quotation marks, alterations, and citation omitted).
3. “Unfair” Acts
The Bank also contends that, to state a claim for “unfair” acts under
California, South Carolina, or New Jersey law, Plaintiffs must allege
causation, and that Plaintiffs cannot do so here because their alleged injuries
“were not caused by any unfair practice of the Bank” but instead “resulted from
the actions of alleged criminal third parties.” Doc. 31-1 at 22. Additionally, the
Bank argues that the immediacy and permanency of Zelle transactions was
clearly disclosed to users and is not, in and of itself, unfair. See Doc. 31-1 at 23.
Finally, the Bank asserts that under California and South Carolina law, to the
extent Plaintiffs’ “unfairness” claim is based on an alleged violation of public
policy, Plaintiffs have failed to state with particularity what “specific
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31
constitutional, statutory, or regulatory provisions” serve as the predicate for
those claims.
As a threshold matter, the undersigned does not read the Amended
Complaint as asserting claims under either South Carolina law or New Jersey
law for “unfair” trade practices. Instead, it appears that Plaintiffs’ South
Carolina and New Jersey consumer protection act claims are premised on the
theory that the Bank’s practices were “deceptive.” See Doc. 30 at ¶¶ 192, 194,
219.
With respect to Plaintiffs’ claim under California law, Plaintiffs do allege
that the Bank engaged in unfair acts; specifically, when it “declined to reverse
fraudulent charges on the accounts of Plaintiff Silverlight…despite marketing
representations, contract promises, and statutory obligations pursuant to
EFTA.” Doc. 30 at ¶ 175. To the extent this claim may be defeated by evidence
of the Bank’s disclosures regarding Zelle or online banking, as discussed above,
the effect of any disclosures on a reasonable consumer should be considered on
a more complete record. Further, while the Bank contends that any harm
suffered by Plaintiffs was caused by third parties, Plaintiffs have also alleged
that the Bank had a practice of denying claims based on Zelle transfers without
conducting a reasonable investigation.
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4. “Unlawful” Conduct
The Bank argues that Silverlight cannot state a claim under the CA UCL
based on any “unlawful” conduct because he has failed to allege an underlying
unlawful act adequately. See Doc. 31-1 at 23. As discussed above, though, the
undersigned is persuaded that Plaintiffs’ EFTA claim should proceed, and that
claim would appear to support a claim under the CA UCL. See The Upper Deck
Company v. Panini America, Inc., 533 F.Supp.3d 956, 968 (S.D. Cal. 2021) (“A
UCL claim based on the unlawful prong rises or falls with the underlying
claim”); Cody v. Soulcycle Inc., No. CV 15-6457-GHK, 2016 WL 4771392
(C.D.Cal. Jan. 11, 2016) (denying motion to dismiss CA UCL claim where
plaintiff stated a claim for violations of the EFTA and Cal. Civil Code § 1749.5).
The undersigned will therefore recommend that Plaintiffs’ consumer
protection claims (Counts 4, 6, 8, and 10) be allowed to proceed.
F. Other State Specific Issues
1. CA UCL and CA FAL Claims for Equitable Relief
The Bank asserts that, even if Plaintiffs have alleged claims for
violations of the CA FAL and the CA UCL adequately, these statutes only
provide for equitable relief and therefore any claims for monetary damages
should be dismissed. See Doc. 31-1 at 24.
Generally, courts interpreting California law have found that the CA
FAL and CA UCL provide only for equitable relief. See Hambrick v. Healthcare
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Partners Med. Grp., Inc., 189 Cal. Rptr. 3d 31, 54 (Cal. Ct. App. 2015) (“The
UCL and FAL provide for only equitable relief, specifically injunctive relief and
restitution”); Sonner v. Premier Nutrition Corp., 971 F.3d 834, 844 (9th Cir.
2020).
However, courts have reached different conclusions regarding whether a
plaintiff may seek at the pleading stage both monetary and equitable relief.
Compare Tristan, 2023 WL 4417271, at *7 (“Plaintiffs’ UCL and FAL claims
request equitable remedies in the form of preliminary and permanent
injunctive relief on behalf of the general public along with disgorgement and
restitution….this Court has found that Plaintiffs have adequately pled their
breach of contract claim. There is thus an adequate legal remedy and Plaintiffs
are not entitled to equitable relief….”); Clark v. American Honda Motor Co.,
528 F.Supp.3d 1108, 1121-1122 (C.D. Cal. 2021) (granting motion to dismiss
plaintiffs’ “claims and requests for equitable relief” and explaining “[t]his
Court therefore agrees with its colleagues that, under Sonner, Plaintiffs must
allege that they lack an adequate remedy at law to seek injunctive relief”)
(collecting cases) with Sparkman v. Comerica Bank, No. 23-cv-02028-DMR,
2023 WL 5020269, at *11 (N.D. Cal. Aug. 4, 2023) (“Sonner does not impose
strict requirements at the pleading stage because plaintiffs ‘may allege claims
in the alternative at the pleading stage.’”) (citation omitted); see also Sinatro
v. Barilla America, Inc., 635 F.Supp.3d 858, 882 (N.D. Cal. 2022) (“Courts in
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34
the Ninth Circuit have split on the issue of ‘how exacting of a standard Sonner
imposes on plaintiffs who plead claims for equitable and legal remedies at the
pleading stage.’”); Cress v. Nexo Financial LLC, No. 23-cv-00882-TSH, 2023
WL 6609352, at *13 (N.D. Cal. Oct. 10, 2023) (“the applicability of Sonner at
the pleading stage is unresolved.”).
In light of “the general liberal policy courts have toward pleading in the
alternative,” the undersigned will recommend that Plaintiffs’ claims seeking
equitable relief be allowed to proceed. Jeong v. Nexo Financial LLC, No. 21-cv-
02392-BLF, 2022 WL 174236, at *27 (N.D. Cal. Jan. 19, 2022) (allowing
plaintiff’s equitable restitution claim to proceed “even though” plaintiff was
also seeking contract damages, and noting that “[w]hile the Court may reassess
at a later stage of the case, it declines to trim out Plaintiff's equitable
restitution claim at this early stage.”).
2. South Carolina Representative Capacity Claims
The Bank contends that, under South Carolina law, Georgion cannot
bring suit in a representative capacity. See Doc. 31-1 at 24. In response,
Plaintiffs argue that the United States Supreme Court’s holding in Shady
Grove Orthopedic Associates, P.A., v. Allstate Insurance Co., 559 U.S. 393
(2010) permits a class-action suit for a violation of SCUTPA. Doc. 33 at 30-31.
The South Carolina Supreme Court has held that SCUTPA “prohibits a
plaintiff from bringing a suit in a representative capacity.” Dema v. Tenet
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35
Physician Svcs.–Hilton Head, Inc., 383 S.C. 115, 122 (2009) (citing SC ST §§
39-5-20 and 39-5-140 (providing that that any person who suffers a loss as a
result of an unfair act or practice may “bring an action individually, but not in
a representative capacity”)). District courts in South Carolina have previously
addressed the effect of Shady Grove on this prohibition and have found that
Shady Grove does not expand the SCUTPA to allow for representative claims.
See In re TD Bank, N.A. Debit Overdraft Litigation, 150 F.Supp.3d 593, 634-
635 (D.S.C. 2015) (“SCUTPA's class action bar survives Shady Grove”); Stalvey
v. American Bank Holdings, Inc., 2013 WL 6019320, at *4 (D.S.C. Nov. 13,
2013) (“the prohibitions against class actions ingrained in the very text of the
SCUTPA and Consumer Protection code are substantive portions of South
Carolina law and are not trumped by Federal Rule of Civil Procedure 23, even
in light of the Shady Grove decision”); Fejzulai v. Sam’s West, Inc., 205
F.Supp.3d 723, 729 (D.S.C. 2016).
3. South Carolina Breach of Contract with Fraudulent Intent
(Count 7)
“In order to state a claim for breach of contract accompanied by a
fraudulent act, the plaintiff must plead facts establishing three elements: (1) a
breach of contract; (2) fraudulent intent relating to the breaching of the
contract and not merely to its making; and (3) a fraudulent act accompanying
the breach.” Harper v. O.A. Ethridge, 290 S.C. 112, 119 (Ct. App. 1986) (citing
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36
Floyd v. Country Squire Mobile Homes, Inc., 287 S.C. 51 (Ct.App.1985)); see
also Perry v. Green, 313 S.C. 250, 254 (Ct. App. 1993) (“In an action for breach
of contract accompanied by a fraudulent act, the fraudulent act element is met
by any act characterized by dishonesty in fact, unfair dealing, or the unlawful
appropriation of another's property by design.”).
The Bank asserts that Georgion has failed to allege an underlying breach
of contract adequately and that, with respect to the second and third elements
of this claim, her allegations “boil down to” a disagreement regarding “the
results of the Bank’s investigations, and fail for the same reasons.” Doc. 31-1
at 31.
However, as discussed above, the undersigned is persuaded that
Plaintiffs have alleged a breach of the Online Service Agreement adequately
and that any argument based on the sufficiency of the Bank’s investigation is
more properly considered on a more complete record.
IV. Recommendation
For the reasons set forth above, the undersigned respectfully
RECOMMENDS that the Second Motion to Dismiss (Doc. 31) be GRANTED
IN PART and DENIED IN PART as follows:
(1) That the following claims be dismissed:
a. Breach of the implied covenant of good faith and fair dealing
(Count 3) pursuant to South Carolina and Michigan law;
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37
b. Violation of California False Advertising law (Count 5);
c. Violations of the South Carolina Unfair and Deceptive Trade
Practices Act brought in Georgion’s representative capacity (Count
6); and
d. Violation of New York False Advertising Law (Count 9).
(2) That the following claims be allowed to proceed:
a. Violation of the EFTA (Count 1);
b. Breach of contract (Count 2);
c. Breach of the implied covenant and fair dealing (Count 3) pursuant
to New York, California, and New Jersey law;
d. Violation of California Unfair Competition law (Count 4);
e. Georgion’s individual claim for violation of the South Carolina
Unfair and Deceptive Trade Practices Act (Count 6);
f. Breach of Contract with Fraudulent Intent under South Carolina
law (Count 7);
g. Violation New York Consumer Fraud law (Count 8); and
h. Violation of New Jersey Consumer Fraud law (Count 10).
Signed: March 19, 2024
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Time for Objections
The parties are hereby advised that, pursuant to Title 28, United States
Code, Section 636, and Federal Rule of Civil Procedure 72(b)(2), written
objections to the findings of fact, conclusions of law, and recommendation
contained herein must be filed within fourteen (14) days of service of same.
Responses to the objections must be filed within fourteen (14) days of service
of the objections. Failure to file objections to this Memorandum and
Recommendation with the presiding District Judge will preclude the parties
from raising such objections on appeal. See Thomas v. Arn, 474 U.S. 140, 140
(1985); United States v. Schronce, 727 F.2d 91, 94 (4th Cir. 1984).
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