A proposed class action lawsuit alleging Citizens Bank violated the Electronic Fund Transfer Act has survived a motion to dismiss in federal court.
U.S. District Judge Nora Barry Fischer of the Western District of Pennsylvania agreed with the plaintiff, Osmani Alicea, that his claims that the bank failed to properly notify ATM users of a $3 fee are sufficient to bring a suit. Fischer wasn’t persuaded by the bank’s argument that Alicea lacked standing and hadn’t sufficiently alleged an injury in fact.
"The court focuses its analysis on the only true dispute between the parties, i.e., whether the pleading sets forth sufficient facts which could plausibly establish that the charged fee is enough to find injury in fact under the EFTA," Fischer said in Alicea v. Citizens Bank of Pennsylvania. "The court finds that it does."
The judge cited opinions from several other courts that, similarly, found that a violation of the terms of the statute constitute an injury in fact, giving the plaintiff standing.
"Courts within the Third Circuit, including this district, have found standing resulting from such injury," Fischer said. She also noted recent opinions from the neighboring Middle District of Pennsylvania to support her holding and listed nearly half-a-dozen from districts in other states in a footnote.
When Alicea brought his suit last year, the EFTA required banks to alert ATM users to any fees that would be charged in two ways — electronically on the screen of the machine and physically through a sign on the machine itself. However, late last year, the notice requirements were changed when Congress removed the second requirement — that banks notify ATM users through a notice posted on the machine.
According to the report from the congressional Financial Services Committee on the bill that proposed the amendment, when the provision was enacted in 1999, automated teller machines were new and unfamiliar to people so alerting users to the fees involved was important. Also, the screens were smaller then and had lower resolutions, so it made sense to require a physical notation on the machine itself.
"But even though the EFTA’s physical disclosure requirement has become obsolete, the requirement exposes banks, credit unions and retailers to frivolous lawsuits and unnecessary costs," according to the report. "Under the EFTA, a consumer who uses an ATM that does not have a fee notice physically attached may recover statutory damages of between $100 and $1,000 for each transaction. The law also permits class action lawsuits to recover up to half-a-million dollars."
In Alicea’s complaint, he told the court that he isn’t seeking actual damages, but statutory damages, costs and attorney fees.
Fischer recognized in a footnote that the EFTA was amended shortly after the suit was filed. However, the filing preceded the change in the law by about a month.
Referring to a 1997 opinion from the U.S. Court of Appeals for the Seventh Circuit, Fischer defined the three basic elements necessary for an EFTA claim: a transfer of funds, the initiation of the transfer by electronic means, and a deduction from or credit to a consumer’s account.
Alicea sufficiently pleaded all three elements, Fischer held.
He used a Citizens Bank ATM on November 29, 2012, according to the opinion. The suit was filed December 3, 2012. ATMs transfer funds electronically, Fischer said, and, because Alicea was charged a fee when he used the machine, funds were withdrawn or added to one of his accounts.
"Though the facts stated in the complaint do not state the precise amount that plaintiff withdrew or deposited, the allegations are sufficient to infer that the three-element test is satisfied," Fischer said.
Also, she said, Alicea’s allegation that the notice on the ATM wasn’t "prominent and conspicuous" taken with his claim that there was a $3 fee for its use is enough for him to establish standing and bring his class action complaint.
Carlos Diaz and R. Bruce Carlson of Carlson Lynch in Pittsburgh represented Alicea and neither could be reached for comment.
Kenneth Abrams of McGuireWoods in Richmond, Va., represented Citizens Bank and declined to comment.
(Copies of the six-page opinion in Alicea v. Citizens Bank of Pennsylvania, PICS No. 13-1058, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •