United States District Court, D. Hawaii
RODNEY SMITH, individually and on behalf of all others similarly situated, Plaintiff,
BANK OF HAWAII, Defendant.
AMENDED ORDER (1) GRANTING IN PART AND DENYING IN
PART DEFENDANT BANK OF HAWAII'S MOTION FOR SUMMARY
JUDGMENT (ECF NO. 71) AND (2) DENYING BANK OF HAWAII'S
MOTION TO STRIKE DEMAND FOR JURY TRIAL (ECF NO. 72)
Michael Seabright Chief United States District Judge
putative class action, Plaintiff Rodney Smith
(“Smith”) challenges Defendant Bank of
Hawaii's (“BOH”) imposition of overdraft fees
- specifically its use of an “available-balance
method” rather than a “ledger-balance
method” for assessing the sufficiency of funds in
customer accounts to cover transactions. Smith contends that
BOH's practice violates its Agreements with members,
including the implied covenant of good faith and fair
dealing. And he asserts claims based on “unjust
enrichment, ” “Money Had and Received, ”
and violations of the Electronic Fund Transfers Act
(“EFTA”) and Hawaii Revised Statutes
(“HRS”) Chapter 480.
before the court are BOH's Motion for Summary Judgment
(the “Summary Judgment Motion”) and Motion to
Strike the Demand for Jury Trial (the “Motion to
Strike”). ECF Nos. 71, 72. For the following reasons,
the Summary Judgment Motion is GRANTED in part and DENIED in
part; the Motion to Strike is DENIED.
“ledger-balance method” for determining when an
account is overdrawn takes into account “only settled
transactions, ” whereas an “available-balance
method” includes also debits to an account that are
authorized but not yet settled and reflects holds on deposits
that have not yet cleared. Consumer Financial Protection
Bureau (“CFPB”) Supervisory Highlights, Winter
2015 § 2.3, ECF No. 81-15. Thus, “transactions
that would not have resulted in an overdraft (or overdraft
fee) under a ledger-balance method [may] result in an
overdraft (and an overdraft fee) under an available-balance
describes its checking accounts as having “three
The first is the “ledger” balance. Ledger balance
is the account balance at the end of the banking day and the
beginning of the next banking day. It reflects the full
amount of all deposits made into the account throughout the
day (without regard for whether a portion of a check deposit
is on hold), less payment transactions that have actually
posted to the account during that day. The second balance is
referred to as “current” balance. It is the
ledger balance plus deposits and minus payment transactions
as they post throughout the day. The “available
balance” is the amount the customer has available to
spend. It is generally described as the current balance, less
“holds.” Holds are that portion of a deposit on
hold until a deposited check clears. Holds also refer to VISA
debit card payment transactions that have been authorized by
BOH but have not yet been presented for payment by the
merchant who sold goods or services to BOH's customer.
Matt Emerson Decl. ¶ 3, ECF No. 70-2. BOH customer
account statements do not show a current or ledger balance.
Rather, “credits” and “debits” are
listed chronologically in separate sections, and additional
sections record “daily balances” and
“overdraft/returned item fees.” See,
e.g. Statements of Account, ECF Nos. 70-8 through 70-10.
has opened multiple BOH checking accounts, the first in July
2010, and his current account in December 2014. Emerson Decl.
¶¶ 4-5. Although Smith does not recall reading them
at the time, Rodney Smith Decl. ¶ 4, ECF No. 81-1, BOH
has submitted executed signature cards from 2011 and 2014,
wherein he agreed “to all of the terms and
conditions” in the Consumer Deposit Account Agreement
and Disclosure Statement and Bankoh Consumer Electronic
Financial Services Agreement and Disclosure Statement (the
“Agreement”), ECF Nos. 70-6 and 70-7. Consumer
Signature Cards (“Signature Cards”), ECF Nos.
Agreement includes the following provisions, which appear on
page 17 of the 36-page document, and are mentioned on page 3
of the table of contents:
Jury Trial Waiver. You and we each waive our
respective rights to a trial before a jury in connection with
any disputes related to your account or account services.
This includes any claim by us or by you, claims brought by
you as a class representative on behalf of others, and claims
by a class representative on your behalf as a class member
(so-called “class action” suits).
. . . .
Limitation on Time to Sue. An action or
proceeding by you to enforce an obligation, duty or right
arising under this agreement or by law with respect to your
account or any account service must be commenced within one
year after the cause of action accrues.
at 17. The Jury Trial Waiver appears again later
in the Agreement, and it is also referred to in the 2014
Consumer Signature Card. ECF Nos. 70-5, 70-6 at 32, 70-7 at
filed his original Complaint and Demand for Jury Trial in
state court on September 9, 2016, and a First Amended
Complaint (“FAC”) on September 13, 2016. ECF No.
1-1, at 1 & 35. On September 19, 2016, BOH filed a Notice
of Removal. ECF No. 1.
November 2, 2016, BOH filed a Motion to Dismiss the FAC,
arguing that its Agreement and Opt-in form for its overdraft
program unambiguously disclose that it uses the
available-balance method to determine overdrafts. Def.'s
Mem. at 18-25, ECF No. 16-4. This court disagreed and denied
the Motion, finding that “[e]ven construed together,
the Agreements' terms are ambiguous as to BOH's
choice of balance method.” Smith v. Bank of
Haw., 2017 WL 3597522, at *5 (D. Haw. Apr. 13, 2017)
(describing in detail the terms of the relevant documents).
also argued in the Motion to Dismiss that Smith's EFTA
claim should be dismissed based on the EFTA's one-year
statute of limitations. Def.'s Mem. at 37-40, ECF No.
16-4. It contended that the statutory period for the claim
began to run at the time of the first overdraft charge, and
it asked the court to take judicial notice of Smith's
April 2015 bank statement showing an overdraft fee.
Id. at 38; Req. Judicial Notice, ECF No. 17. The
court declined to take judicial notice of the statement,
however, and “[a]s a result, ” found that there
was “nothing to indicate, even assuming the statute of
limitations for all overdraft fees begins with the first
overdraft fee, ” that Smith's first overdraft fee
was charged more than a year before this suit was filed.
Smith, 2017 WL 3597522, at *8. The court found,
therefore, that “on the present record, the claims are
timely.” Id. (emphasis omitted).
asks the court to determine as a matter of law what it
assumed merely for argument's sake on the Motion to
Dismiss, that “[a]n EFTA claim accrues when the
first unauthorized transfer occurs.”
Def.'s Mem. Supp. Mot. Summ. J. at 2-3, ECF No. 71-1. It
contends, therefore, that Smith's EFTA claim is
“barred in its entirety” by the EFTA's
limitation period. Id. at 2. It also contends that
Smith's remaining claims are governed by the contractual
limitation period in the Agreement. Id. at 2-3. It
therefore requests judgment on all of Smith's claims to
the extent they accrued more than one year before this action
was filed. Id.
filed the Summary Judgment Motion on December 11, 2017. ECF
No. 71. Smith filed his Opposition on February 1, 2018. ECF
No. 79. BOH replied on February 8, 2018. ECF No. 88.
filed the Motion to Strike (based on the contractual Jury
Trial Waiver) on December 11, 2017. ECF No. 72. Smith filed
an Opposition on January 30, 2018. ECF No. 74. And BOH filed
its Reply on February 6, 2018. ECF No. 85.
argument was held on February 20, 2018.
SUMMARY JUDGMENT STANDARD
judgment is proper when there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter
of law. Fed.R.Civ.P. 56(c). The burden initially lies with
the moving party to show that there is no genuine issue of
material fact. T.W. Elec. Serv., Inc. v. Pac. Elec.
Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.
1987). Nevertheless, “summary judgment is mandated if
the non-moving party ‘fails to make a showing
sufficient to establish the existence of an element essential
to that party's case.'” Broussard v. Univ.
of Cal. at Berkeley, 192 F.3d 1252, 1258 (9th Cir. 1999)
(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986)). An issue of fact is genuine “if the evidence
is such that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). An issue is material if
the resolution of the factual dispute affects the outcome of
the claim or defense under substantive law governing the
case. See Arpin v. Santa Clara Valley Transp.
Agency, 261 F.3d 912, 919 (9th Cir. 2001). When
considering the evidence on a motion for summary judgment,
the court must draw all reasonable inferences on behalf of
the nonmoving party. Matsushita Elec. Indus. Co. v.
Zenith Radio, 475 U.S. 574, 587 (1986).
of the principal purposes of the summary judgment rule is to
isolate and dispose of factually unsupported claims or
defenses[.]” Celotex, 477 U.S. at 323-24.
“There is no genuine issue of fact if the party
opposing the motion ‘fails to make an adequate showing
sufficient to establish the existence of an element essential
to that party's case, and on which that party will bear
the burden of proof at trial.'” Taylor v.
List, 880 F.2d 1040, 1045 (9th Cir. 1989) (quoting
Celotex, 477 U.S. at 322). Moreover, there is no
genuine issue of material fact if, taking the record as a
whole, a rational trier of fact could not find in favor of
the non-moving party. Matsushita Elec. Indus. Co.,
475 U.S. at 586; Taylor, 880 F.2d at 1045.
Summary Judgment Motion
Electronic Fund Transfers Act
enacted the EFTA as part of the comprehensive Consumer Credit
Protection Act (the “CCPA”), Pub. L. No. 95-630
§ 2001, 92 Stat. 3641 (1978), “to provide a basic
framework establishing the rights, liabilities, and
responsibilities of participants in electronic fund and
remittance transfer systems.” 15 U.S.C. § 1693(b).
“In enacting the [CCPA] . . . Congress intended for
courts to broadly construe its provisions in accordance with
its remedial purpose.” Stout v. FreeScore,
LLC, 743 F.3d 680, 684 (9th Cir. 2014); see also
Clemmer v. Key Bank Nat'l Ass'n, 539 F.3d 350,
353 (6th Cir. 2008) (describing the CCPA as a “remedial
statute accorded ‘a broad, liberal construction in
favor of the consumer.'” (quoting Begala v. PNC
Bank, Ohio, Nat'l Ass'n, 163 F.3d 948, 950 (6th
contained in “Regulation E” implementing EFTA,
see 12 C.F.R. § 1005.1 et seq, require
that for accounts opened on or after July 1, 2010, a
financial institution must “obtain the consumer's
affirmative consent before the institution assesses any fee
or charge on the consumer's account for paying an ATM or
one-time debit card transaction pursuant to the
institution's overdraft service.” 12 C.F.R. §
1005.17(c). Subject to enumerated exceptions not applicable
here, “the term ‘overdraft service' means a
service under which a financial institution assesses a fee or
charge on a consumer's account held by the institution
for paying a transaction (including a check or other item)