L.S. v. Webloyalty, Inc., GameStop Corporation

1
18‐3639
L.S. v. Webloyalty, Inc., GameStop Corporation

United States Court of Appeals 1
for the Second Circuit 2
3
AUGUST TERM 2019 4
No. 18‐3639 5
6
7
L.S., 8
Appellant, 9
10
v. 11
12
WEBLOYALTY.COM, INC., GAMESTOP CORPORATION, 13
Defendants‐Appellees, 14
15
AMAZON.COM, INC., VISA INC., 16
Defendants. 17
18
19
ARGUED: DECEMBER 2, 2019 20
DECIDED: MARCH 20, 2020 21
22
23
Before: JACOBS, CARNEY, PARK, Circuit Judges. 24
25
In this putative consumer class action, plaintiff L.S. appeals from the 26
dismissal on summary judgment of his claim under the Electronic Funds 27
Transfer Act (“EFTA”) alleging that defendant Webloyalty.com, Inc. 28

2
(“Webloyalty”) failed to provide L.S. with a copy of the written authorization he
1
gave online for recurring monthly charges to his debit card. We agree with the 2
district court that Webloyalty satisfied its obligation under EFTA by providing 3
L.S. with an email containing the relevant terms and conditions of that 4
authorization. On a separate claim arising under state law, the district court 5
erroneously dismissed the claim for lack of subject matter jurisdiction. 6
Therefore, we AFFIRM in part and in part VACATE and REMAND. 7
____________________ 8
DAVID C. KATZ, WeissLaw LLP, New York, NY, for 9
Plaintiff‐Appellant L.S. 10
11
MARK C. FLEMING, (John J. Butts, Timothy J. Perla, 12
Jessica R. Lisak, Paloma Naderi, on the brief), Wilmer 13
Cutler Pickering Hale and Dorr LLP, for 14
Defendants‐Appellees Webloyalty.com, Inc. and 15
GameStop Corporation. 16
17
DENNIS JACOBS, Circuit Judge: 18
In this putative consumer class action, plaintiff L.S. appeals from a grant of 19
summary judgment in the District Court for the District of Connecticut (Haight, 20
J.) dismissing claims against Webloyalty.com, Inc. (“Webloyalty”) and Gamestop 21
Corporation (“Gamestop,” and together with Webloyalty, “Defendants”) under 22

3
the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Electronic Funds
1
Transfer Act (“EFTA”). The parties agree that the district court improperly 2
dismissed L.S.’s CUTPA claims for lack of subject matter jurisdiction. Therefore, 3
the only contested issue is whether the district court properly granted summary 4
judgment on L.S.’s EFTA claim against Webloyalty. 5
L.S. contends that Webloyalty failed to provide him with a “copy” of his 6
authorization of recurring monthly charges to his bank account in violation of 15 7
U.S.C. § 1693e(a). Webloyalty argues that it satisfied EFTA’s “copy of such 8
authorization” requirement by sending a confirmation email containing the 9
material terms and conditions of the authorized electronic fund transfers. 10
Because we agree with the district court that L.S.’s cramped interpretation of 11
EFTA is inconsistent with the common‐sense meaning, context, and statutory 12
purpose of the “copy” requirement, we hold that: (1) EFTA did not require 13
Webloyalty to provide L.S. with a duplicate of the webpage on which he provided 14
authorization for recurring fund transfers; and (2) Webloyalty’s email to L.S. was 15
sufficient. 16
Accordingly, we AFFIRM the district court’s grant of summary judgment 17
in favor of Webloyalty on L.S.’s EFTA claim. Because the district court 18

4
improperly dismissed L.S.’s CUTPA claims against Defendants for lack of subject
1
matter jurisdiction, we VACATE the judgment of dismissal, and REMAND for 2
further proceedings. 3
BACKGROUND 4
This is L.S.’s second appeal in this case. See L.S. v. Webloyalty.com, Inc., 5
673 F. App’x 100 (2d Cir. 2016) (“Webloyalty I”). Our prior summary order 6
included a summary of the essential facts underlying L.S.’s putative consumer 7
class action and we reproduce that text here (lightly revised): 8
The case turns on a single transaction in which L.S., a minor, was 9
allegedly deceived into enrolling in a fee‐based monthly discount 10
club operated by Webloyalty. In late 2009, he purchased a video 11
game from the website GameStop.com. In the course of executing 12
his purchase, L.S. alleges that he unwittingly registered for 13
Webloyalty’s “Shopper Discounts” program by entering his 14
personal information on a webpage integrated into the GameStop 15
check‐out process. The Webloyalty enrollment page (the 16
“Enrollment Page”) advertised a $20 GameStop coupon, included 17
references to GameStop throughout its description of Webloyalty’s 18
membership program, and required him to enter the last four digits 19
of his debit card number and to enter and verify his email address. 20
He apparently did so, and GameStop thereafter transferred 21
appellant’s full billing information on to Webloyalty.

22
23
After a thirty‐day “free trial” period elapsed, Webloyalty debited the 24
first of what would be several $12 monthly membership fees from 25
appellant’s account. “Shopper Discounts” was noted as the payee. 26

5
These debits continued through August 2010, when appellant filed
1
this suit. 2
3
Webloyalty I, 673 F. App’x at 103. L.S.’s lawsuit alleged: (1) fraud (against 4
Webloyalty and Gamestop); (2) unfair or deceptive trade practices in violation of 5
CUTPA (against Webloyalty, Gamestop and Visa); and (3) violations of EFTA 6
(against Webloyalty and Visa). Id. 7
Defendants moved to dismiss all claims against them, and the district 8
court granted the motion in full. On appeal, this Court affirmed the dismissal of 9
L.S.’s fraud claims but remanded in part for further proceedings on certain 10
CUTPA and EFTA claims. Id. at 107. L.S.’s complaint had alleged two EFTA 11
claims against Webloyalty, which were treated differently. We ruled that the 12
EFTA claim alleging that Webloyalty received unauthorized electronic fund 13
transfers in violation of 15 U.S.C. § 1693e(a) was properly dismissed because L.S. 14
“clearly gave written authorization” for the fund transfers when he digitally 15
entered his personal information, including his name and four digits of his debit 16
card number, on the Enrollment Page. Id. at 106. 17
However, with respect to the EFTA claim alleging that Webloyalty failed 18
to provide him with a “copy of such authorization,” we ruled that the district 19

6
court improperly rested its decision on evidence outside the scope of L.S.’s
1
complaint: 2
In defending against appellant’s EFTA copy requirement claim, 3
[Defendants] introduced an email describing the benefits of 4
Webloyalty membership and including, in a footer, details about the 5
debits they argued that [L.S.] had authorized. However, this email 6
was not referenced in [L.S.’s] complaint, not relied on in the course 7
of the complaint’s allegations, and [L.S.] contends that he never saw 8
it. To the extent that the district court relied on the affidavits 9
submitted by Webloyalty employees authenticating the email to 10
justify a ruling on the email’s legal effect, this was a determination 11
properly made on summary judgment, not in response to a motion 12
to dismiss. DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d 13
Cir. 2010). . . . 14
15
The fact that the district court had already allowed some discovery 16
here does not change this analysis. To the contrary, if, in the district 17
court’s assessment, discovery on the relevant claims was properly 18
closed, it could have exercised its authority to convert and then 19
evaluated whether Webloyalty’s email sufficed to meet with its 20
statutory obligations in light of all the undisputed facts. 21
22
Webloyalty I, 673 F. App’x at 107. Accordingly, we remanded L.S.’s “copy” 23
claim under EFTA along with his CUTPA claim alleging that Webloyalty and 24
Gamestop engaged in deceptive trade practices. Id. 25
On remand, Webloyalty moved for summary judgment on the remaining 26
EFTA claim. In granting summary judgment, the district court concluded that: 27
(1) the email produced by Webloyalty, which contained the details of the 28

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recurring payments authorized by L.S. (the “Join Email”) was authentic, L.S. v.
1
Webloyalty.com, Inc., 2018 WL 5314913, at *4 (D. Conn. Oct. 26, 2018); (2) there 2
was no genuine dispute of fact that L.S. received the Join Email, id. at *4‐5; and 3
(3) the Join Email satisfied Webloyalty’s obligation under EFTA, which requires 4
“not an exact reproduction of the entire authorization page . . . but rather, a 5
contemporaneous copy of the terms and conditions of a preauthorized electronic 6
fund transfer [L.S.] has authorized from his account,” id. at *7 (internal quotation 7
marks omitted). Finally, the district court dismissed L.S.’s CUTPA claims 8
against Defendants without prejudice for lack of subject matter jurisdiction, 9
holding that because CUTPA was a state statute, the court “c[ould] only rule on 10
the CUTPA claim if it chooses to exercise supplemental jurisdiction,” which it 11
declined to in this case. Id. at *8‐9. L.S. timely appealed. 12
DISCUSSION 13
“We review questions of statutory interpretation de novo.” Roach v. 14
Morse, 440 F.3d 53, 56 (2d Cir. 2006). Likewise, we review de novo the district 15
court’s decision to grant summary judgment on L.S.’s EFTA claim. Estate of 16
Gustafson v. Target Corp., 819 F.3d 673, 675 (2d Cir. 2016). 17
18

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I
1
Satisfaction (or not) of the “copy of such authorization” requirement turns 2
on a question of statutory interpretation. EFTA provides (in relevant part) that 3
“[a] preauthorized fund transfer from a consumer’s account may be authorized 4
by the consumer only in writing, and a copy of such authorization shall be 5
provided to the consumer when made.” 15 U.S.C. § 1693e(a). L.S. contends 6
that Webloyalty failed to satisfy § 1693e(a) because it did not provide L.S. with a 7
duplicate or facsimile of the Enrollment Page on which he authorized recurring 8
payments. Defendants argue that a copy of the material terms of the 9
authorization‐‐in the form of the Join Email‐‐was sufficient.
1
The interpretation 10
of EFTA’s “copy of such authorization” requirement is a matter of first 11
impression in this circuit; no other circuit has considered it. 12
The parties propose dueling dictionary definitions of “copy”: either 13
one‐for‐one, as L.S. contends (“an imitation, transcript, or reproduction of an 14
original work,” Webster’s Third New International Dictionary (2002)); or closely 15

1
Webloyalty argues that it also satisfied the copy requirement by immediately
redirecting L.S. to a webpage containing similar payment details (the
“Acknowledgment Page”) upon enrollment. Because we conclude that the Join
Email was sufficient to satisfy Webloyalty’s obligation under EFTA, we omit
further discussion of the Acknowledgment Page.

9
similar, as Defendants contend (“[a] thing made to be similar or identical to
1
another,” Oxford American Desk Dictionary & Thesaurus (3rd ed. 2010)). 2
Although the dictionaries are not dispositive, there seems to be substantial 3
support for the definition of “copy” as “an imitation” or “reproduction of an 4
original.” Black’s Law Dictionary (5th ed. 1979); The American Heritage 5
Dictionary of the English Language (4th ed. 2000) (same); see also Webster’s New 6
World Dictionary (3d College ed. 1988) (explaining that copy “refers to any 7
imitation, often only approximate, of an original”). Of course, it is a “cardinal 8
rule” of statutory construction that “statutory language must be read in context 9
since a phrase gathers meaning from the words around it.” United States v. 10
Watkins, 940 F.3d 152, 165‐66 (2d Cir. 2019). Here, “copy” does not appear in 11
isolation, but as part of the phrase “copy of such authorization.” 15 U.S.C. § 12
1693e(a). Therefore, to determine what disclosure EFTA required Webloyalty to 13
provide, we should also consider the scope of L.S.’s “authorization.” 14
“Authorization” is “an instance” of “formal permission or approval” or 15
“the action of making legally valid.” The Oxford English Dictionary (3d ed. 16
2014). This narrows the scope of what needs to be “copied” to the text of the 17
Enrollment Page that effected the authorization. Because the vast majority of 18

10
the Enrollment Page is comprised of extraneous marketing verbiage unrelated to
1
the electronic fund transfer authorization, “copy of such authorization” cannot 2
reasonably be read to encompass the entire Enrollment Page, as L.S. suggests. 3
Instead, the transfer authorization itself was effected by L.S.’s inclusion of the 4
last four digits of a credit/debit card on the Enrollment Page next to the terms of 5
the recurring transfers from that account. See supra at 5. This interpretation is 6
bolstered by the fact that it is consistent with the way “authorization” is used 7
elsewhere in EFTA. See Pereira v. Sessions, 138 S. Ct. 2105, 2115 (2018) (“[I]t is a 8
normal rule of statutory construction that identical words used in different parts 9
of the same act are intended to have the same meaning.”). For example, 15 10
U.S.C. § 1693a(12)(A)‐‐although in the context of describing “unauthorized” 11
transfers‐‐suggests that an authorization is accomplished by the consumerʹs 12
furnishing of “the card, code, or other means of access to [the] consumerʹs 13
account . . . .” 14
Moreover, “we must (as usual) interpret the relevant words not in a 15
vacuum, but with reference to the statutory context, ‘structure, history, and 16
purpose.’” Abramski v. United States, 573 U.S. 169, 179 (2014) (quoting 17
Maracich v. Spears, 570 U.S. 48, 76 (2013)). When Congress enacted EFTA in 18

11
1978, it announced (in an introductory subsection titled “Congressional findings
1
and declaration of purpose”) that its primary purpose was to protect consumers 2
in the then‐novel context of electronic payment systems: 3
The Congress finds that the use of electronic systems to transfer 4
funds provides the potential for substantial benefits to consumers. 5
However, due to the unique characteristics of such systems, the 6
application of existing consumer protection legislation is unclear, 7
leaving the rights and liabilities of consumers, financial institutions, 8
and intermediaries in electronic fund transfers undefined. 9
10
... 11
12
It is the purpose of this [statute] to provide a basic framework 13
establishing the rights, liabilities, and responsibilities of participants 14
in electronic fund and remittance transfer systems. The primary 15
objective of this subchapter, however, is the provision of individual 16
consumer rights. 17
18
15 U.S.C. § 1693. 19
EFTA’s stated purpose of consumer protection would be served whether 20
the term “copy of such authorization” is read to mean a duplicate or a summary 21
of material terms. But the former deviates from common usage in the consumer 22
context. For instance, a customer who pays by credit or debit card at a 23
brick‐and‐mortar shop may be asked to sign a receipt, and receive a “copy” that 24

12
differs, in appearance and substance, from the signed version: it may be marked
1
“Customer Copy,” lack the customer’s signature, or omit itemized charges. 2
Moreover, as agencies responsible for applying EFTA in the consumer 3
context have discovered, a narrow reading of the “copy of such authorization” 4
requirement will yield some untenable results. For instance, the Consumer 5
Financial Protection Bureau (the “CFPB”) has suggested that the written 6
authorization required by EFTA may be given orally over the phone pursuant to 7
the E‐SIGN Act, 15 U.S.C. § 7001 et seq; and that a payee can comply with the 8
“copy” requirement by providing the customer with a “copy of the terms of the 9
authorization . . . in paper form or electronically.” Compliance Bulletin 2015‐06, 10
Requirements for Consumer Authorizations for Preauthorized Electronic Fund 11
Transfers, 2015 WL 10372389 (Nov. 23, 2015) (“CFPB Bulletin Six”) (emphasis 12
added).
2
By contrast, giving the consumer a duplicate of the oral authorization 13
(e.g., in the form of an audio recording, or a transcription of the telephone 14
conversation) would burden the payee without any corresponding benefit to the 15
consumer. Here, L.S. purportedly received a notice containing the material 16

2
The CFPB has rulemaking authority to interpret and implement EFTA
pursuant to the Dodd Frank Act of 2010, which transferred rulemaking authority
from the Federal Reserve.

13
terms and conditions of the payment authorization; a duplicate of the Enrollment
1
Page‐‐which contained text and graphics unrelated to the authorization‐‐would 2
have afforded him no incremental protection. 3
Finally, L.S. has offered no convincing argument that his narrow reading 4
conforms more closely to the plain meaning or stated purpose of the statute. 5
On the contrary, it conflicts with the CFPB’s Official Interpretations of Regulation 6
E, which implements EFTA’s “copy” requirement: “[t]he person that obtains the 7
[payment] authorization must provide a copy of the terms of the authorization to 8
the consumer either electronically or in paper form.” 12 C.F.R. Pt. 205, supp. I, § 9
10(b), cmt. 5 (emphasis added). 10
Accordingly, we affirm the district court’s holding that EFTA’s copy 11
requirement may be satisfied by providing the consumer with an email 12
containing the terms of the preauthorized electronic fund transfer he has 13
authorized from his account. 14
II 15
16
L.S. argues that even if we accept Defendants’ interpretation of EFTA’s 17
“copy” requirement, the district court erred in holding that Webloyalty satisfied 18
the requirement. Principally, L.S. argues that: (1) the district court failed to 19

14
permit adequate discovery concerning the Join Email; and (2) the Join Email was
1
intentionally confusing. These arguments are without merit. 2
L.S. argues that further discovery concerning Webloyalty’s automated 3
enrollment system might have disclosed unspecified “errors” that interfered with 4
L.S.’s receipt of the terms of his payment authorization. But a party seeking 5
further discovery “must show that the material sought is germane to the defense, 6
and that it is neither cumulative nor speculative, and a bare assertion that the 7
evidence supporting a plaintiff’s allegation is in the hands of the defendant is 8
insufficient.” Alphonse Hotel Corp. v. Tran, 828 F.3d 146, 151 (2d Cir. 2016). 9
We review the district court’s decision to forgo further discovery for abuse of 10
discretion. Id. 11
The district court relied on Defendants’ uncontroverted testimony 12
concerning the automated enrollment system that generated the Join Email, and 13
considered the only specific potential failure identified by L.S.: that it did not 14
populate the Acknowledgment Page with L.S.’s personal information. As the 15
district court concluded, this was irrelevant to Webloyalty’s fulfillment of its 16
obligations under EFTA. Webloyalty, 2018 WL 5314913, at *4. Having 17
determined that Webloyalty’s testimony was credible, the district court 18

15
reasonably concluded that the possibility that there were more potential errors,
1
or that there was deliberate interference with the automated system, was too 2
speculative to justify further discovery. Id. 3
Second, L.S. contends that the Join Email was too confusing to pass muster 4
under EFTA, because the details of L.S.’s payment authorization were at the 5
bottom of a spam‐like email beneath prominent graphics advertising 6
Webloyalty’s special offers and customer rewards. These considerations may 7
well be relevant to L.S.’s CUTPA claim alleging deceptive trade practices; and we 8
do not rule out the possibility that a customer notification designed to obscure or 9
omit payment details might violate EFTA’s copy requirement. But the Join 10
Email included “Billing Details” in its subject line, and (under a header reading 11
“OFFER AND BILLING DETAILS – CONFIRMATION FOR YOUR RECORDS”) 12
revealed all the material terms of the fund transfers authorized by L.S., including 13
the end date of L.S.’s trial period, at which point charges would begin to accrue; 14
the card being charged; and the monthly interval of the recurring charges. 15
App’x at 791. Therefore, we agree with the district court that Webloyalty 16
satisfied its obligation under EFTA by sending L.S. the Join Email, a 17
“contemporaneous communication[] [that] fully revealed the terms, conditions, 18

16
and monthly debit card charges under the program in question.” Webloyalty,
1
2018 WL 5314913, at *5. 2
III 3
We agree with the parties that it was error to dismiss L.S.’s CUTPA claim 4
for lack of subject matter jurisdiction. The district court held that after granting 5
summary judgment on L.S.’s (federal) EFTA claims, it “c[ould] only rule on the 6
CUTPA claim if it chooses to exercise supplemental jurisdiction.” Webloyalty, 7
2018 WL 5314913, at *8. However, L.S.’s complaint adequately pled an 8
alternative basis for jurisdiction: under the Class Action Fairness Act (“CAFA”), 9
federal district courts are generally invested with original jurisdiction over 10
putative class actions alleging damages exceeding $5 million and a class of more 11
than 100 persons, in which any member plaintiff class is a citizen of a State 12
different from any defendant. See 28 U.S.C. § 1332(d); App’x at 24 (¶ 7), 285 13
(¶ 19). See also Gale v. Chicago Title Ins. Co., 929 F.3d 74, 78 (2d Cir. 2019) 14
(emphasizing that courts must look to the allegations in the operative complaint 15
to determine CAFA jurisdiction). 16
The district court apparently rejected the application of CAFA jurisdiction 17
on the basis that there “may be a conflict emanating from CUTPA’s class action 18

17
limitations if this claim were to remain in federal court.” Webloyalty, 2018 WL
1
5314913, at *9. But aside from certain statutory exceptions that do not apply in 2
this case,

subject matter jurisdiction under CAFA is not discretionary, see 28 3
U.S.C. § 1332(d)(3)‐(4);

and the likelihood of class certification or success on the 4
merits had no bearing on the district court’s jurisdiction over L.S.’s putative 5
CUTPA class‐action claim in the first instance. Therefore, we agree with the 6
parties that the dismissal of L.S.’s CUTPA claim should be vacated, and the case 7
remanded to the district court for further proceedings. 8
* * * 9
10
L.S. requests that this case be assigned to a different judge on remand. 11
Reassignment is justified only in “unusual circumstances.” Martens v. 12
Thomann, 273 F.3d 159, 174 (2d Cir. 2001). In reviewing a request for 13
reassignment, we consider the following factors: (1) whether the judge is likely to 14
have “substantial difficulty” putting out of mind “previously‐expressed views or 15
findings determined to be erroneous”; (2) whether reassignment is “advisable to 16
preserve the appearance of justice”; and (3) whether it would create “waste and 17
duplication out of proportion to any gain in preserving the appearance of 18
fairness.” United States v. Robin, 553 F.2d 8, 10 (2d Cir. 1977) (per curiam). 19

18
L.S. expresses a fear the district court “cannot be expected to put its
1
previously‐expressed opinions out of mind while further presiding over this 2
case.” Appellant’s Br. at 52. However, nothing substantiates this concern; the 3
fact that the district court ruled against L.S. for a second time on remand is 4
insufficient alone to call into question Judge Haight’s impartiality or jeopardize 5
the appearance of justice. See Federal Ins. Co. v. United States, 882 F.3d 348, 373 6
(2d Cir. 2018). Accordingly, we decline to reassign this case to a new judge on 7
remand. 8
CONCLUSION 9
We have considered L.S.’s remaining arguments and conclude that they 10
are meritless. For the reasons stated above, the district court’s grant of 11
summary judgment on L.S.’s EFTA claim is AFFIRMED. The district court’s 12
judgment dismissing L.S.’s CUTPA claims against Webloyalty and Gamestop is 13
VACATED and the case is REMANDED for further proceedings. 14