United States District Court, D. Hawaii
RODNEY SMITH, individually and on behalf of all others similarly situated, Plaintiff,
BANK OF HAWAII, Defendant.
ORDER OVERRULING IN PART AND SUSTAINING IN PART
OBJECTIONS, AND ADOPTING IN PART AND REJECTING IN PART
MAGISTRATE JUDGE'S FINDINGS AND RECOMMENDATION, ECF NO.
MICHAEL SEABRIGHT CHIEF UNITED STATES DISTRICT JUDGE
Bank of Hawaii (“BOH”) objects under 28 U.S.C.
§ 636(b)(1) and Local Rule 72.4 to the January 30, 2019
Findings and Recommendation of Magistrate Judge Richard L.
Puglisi to Grant in Part and Deny in Part Plaintiffs'
Motion for Class Certification, ECF No. 151 (“January
30 F&R”). ECF No. 155.
on the following, the court OVERRULES IN PART and SUSTAINS IN
PART the objections, and ADOPTS IN PART and REJECTS IN PART
the January 30 F&R.
court assumes a familiarity with prior orders, which set
forth detailed factual backgrounds to this action. See
Smith v. Bank of Haw., 2017 WL 3597522 (D. Haw. Apr. 13,
2017) (“Smith I”) (denying BOH's
Motion to Dismiss); Smith v. Bank of Haw., 2018 WL
1662107 (D. Haw. Apr. 5, 2018) (“Smith
II”) (granting in part and denying in part
BOH's first Motion for Summary Judgment); Smith v.
Bank of Haw., 2019 WL 404423 (D. Haw. Jan. 31, 2019)
(“Smith III”) (denying BOH's second
Motion for Summary Judgment).
seeks to certify two classes: (1) The Sufficient Funds Class
and (2) The Regulation E Class. ECF No. 131-1 at PageID
#2563. The Sufficient Funds Class is “[a]ll persons who
have or have had accounts with BOH who incurred overdraft
fees for transactions when the real balance in the checking
account was sufficient to cover the transactions from
September 9, 2015, through September 30, 2017.”
Id. The Regulation E Class is “[a]ll persons
who have or have had accounts with BOH who incurred overdraft
fee(s) for ATM or nonrecurring debit card transactions
occurring from September 9, 2015, through September 30, 2017,
who were opted-in using an Opt-in Agreement that defined an
overdraft as ‘when you do not have enough money in your
account to cover a transaction, but we pay it
filed his Complaint and First Amended Complaint
(“FAC”) in the First Circuit Court of the State
of Hawaii on September 9 and 13, 2016, respectively. ECF No.
1-1 at 1, 35. BOH removed the action to federal court on
September 19, 2016. ECF No. 1. The FAC includes six causes of
action: (1) violation of Hawaii Revised Statutes
(“HRS”) Chapter 480 for unfair or deceptive acts
or practices (“UDAP”); (2) breach of contract;
(3) breach of the covenant of good faith and fair dealing;
(4) unjust enrichment; (5) money had and received; and (6)
violation of Electronic Funds Transfer Act
(“EFTA”) for noncompliance with Regulation E. ECF
October 22, 2018, Smith filed his Motion for Class
Certification. ECF No. 131. On December 18, 2018, BOH filed
its Opposition, ECF No. 146, and on January 22, 2019, Smith
filed his Reply, ECF No. 150. On January 30, 2019, Magistrate
Judge Puglisi issued the January 30 F&R. ECF No. 151. BOH
filed its Objection to the January 30 F&R on February 13,
2019. ECF No. 155. Smith filed his Opposition to the
Objection on February 27, 2019. ECF No. 157.
hearing was held on April 15, 2019. The court requested
supplemental briefing on EFTA detrimental reliance, ECF No.
165. On April 29, 2019, BOH filed its Supplemental
Memorandum, ECF No. 168, and Smith filed his Supplemental
Memorandum, ECF No. 169 (corrected version, ECF No.
STANDARD OF REVIEW
party objects to a magistrate judge's findings or
recommendations, the district court must review de novo those
portions to which the objections are made and “may
accept, reject, or modify, in whole or in part, the findings
or recommendations made by the magistrate judge.” 28
U.S.C. § 636(b)(1); see also United States v.
Raddatz, 447 U.S. 667, 673 (1980); United
States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir.
2003) (en banc) (“[T]he district judge must review the
magistrate judge's findings and recommendations de novo
if objection is made, but not otherwise.”).
de novo standard, this court reviews “the matter anew,
the same as if it had not been heard before, and as if no
decision previously had been rendered.” Freeman v.
DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006);
United States v. Silverman, 861 F.2d 571, 576 (9th
Cir. 1988). The district court need not hold a de novo
hearing; however, it is the court's obligation to arrive
at its own independent conclusion about those portions of the
magistrate judge's findings or recommendation to which a
party objects. United States v. Remsing, 874 F.2d
614, 618 (9th Cir. 1989).
plaintiff moving to certify a class has the burden of showing
that the proposed class satisfies the requirements of Federal
Rule of Civil Procedure 23. See Amchem Prods., Inc. v.
Windsor, 521 U.S. 591, 614 (1997); Hanon v.
Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992).
satisfy Rule 23(a), a proposed class must meet the
prerequisites of (1) numerosity, (2) commonality, (3)
typicality, and (4) adequacy of representation. See
Fed. R. Civ. P. 23(a); In re Mego Fin. Corp. Sec.
Litig., 213 F.3d 454, 462 (9th Cir. 2000) (citing
Anchem Prods., Inc., 521 U.S. at 612). BOH objects
to the Magistrate Judge's findings and recommendation
that Smith meets the typicality prerequisite. ECF No. 155 at
PageID #3536. The court overrules the objection.
satisfy Rule 23(b), plaintiffs must show the action is
maintainable under Rule 23(b)(1), (2), or (3). See
Fed. R. Civ. P. 23(b); In re Mego, 213 F.3d at 462.
Smith seeks class certification under Rule 23(b)(3), which
requires that “the court find that the questions of
law or fact common to class members predominate over any
questions affecting only individual members, and that a class
action is superior to other available methods for fairly and
efficiently adjudicating the controversy.” Fed.R.Civ.P.
23(b)(3). BOH objects to the Magistrate Judge's findings
and recommendation that Smith's UDAP claim, breach of
contract claim, and EFTA claim meet the predominance
requirement in Rule 23(b)(3). See ECF No. 155 at
PageID #3533, 3535, 3537. The court overrules the objection
as to the UDAP claim, breach of contract claim, and EFTA
claim for statutory damages. The court sustains the objection
as to the EFTA claim for actual damages.
BOH objects to the Magistrate Judge's findings and
recommendation that the class period for the UDAP claim end
on August 1, 2017. Id. at PageID #3537. BOH argues
that the class period for the UDAP claim should end in June
2017, when customers received a change in terms notice that
defined “available balance, ” rather than on
August 1, 2017, when the notice went into effect.
Id. The court overrules the objection.
23(a)(3) permits certification only if “the claims or
defenses of the representative parties are typical of the
claims or defenses of the class.” Fed.R.Civ.P.
23(a)(3). “The purpose of the typicality requirement is
to assure that the interest of the named representative
aligns with the interests of the class.”
Hanon, 976 F.2d at 508 (citation omitted).
Typicality exists “if [representative claims] are
reasonably coextensive with those of absent class members;
they need not be substantially identical.” Hanlon
v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998),
overruled on other grounds by Wal-Mart Stores, Inc. v.
Dukes, 564 U.S. 338 (2011). Thus, “[s]ome degree
of individuality is to be expected in all cases, but that
specificity does not necessarily defeat typicality.”
Dukes v. Wal-Mart, Inc., 509 F.3d 1168, 1184 (9th
Cir. 2007), overruled on other grounds by Wal-Mart
Stores, Inc., 564 U.S. 338. With these principles in
mind, “[t]he test of typicality is whether other
members have the same or similar injury, whether the action
is based on conduct which is not unique to the named
plaintiffs, and whether other class members have been injured
by the same course of conduct.” Hanon, 976
F.2d at 508 (citation and quotation marks omitted).
provide context to BOH's objections, the court reviews
Magistrate Judge Puglisi's findings concerning
typicality. Magistrate Judge Puglisi found that Smith
sufficiently demonstrated typicality of his UDAP claims
because those claims are “based on Defendant BOH's
conduct in assessing overdraft fees and in using the Account
Agreement and Opt-In Agreement that contained the overdraft
provisions at issue.” ECF No. 151 at PageID #3476.
Magistrate Judge Puglisi also found that Smith sufficiently
demonstrated typicality of his breach of contract claims
because “the relevant contract provisions are the same
for all putative class members and Defendant BOH's
assessment of overdraft fees based on the available balance
was uniform.” Id. at PageID #3474. Finally,
Magistrate Judge Puglisi found that Smith sufficiently
demonstrated typicality of his EFTA claims because his
“Regulation E claim is based on uniform contract
language and Defendant BOH's consistent conduct in
assessing fees.” Id. at PageID #3478. BOH
objects to Magistrate Judge Puglisi's finding that these
claims meet the typicality prerequisite. ECF No. 155 at
first asserts that Smith's claims are not typical because
Smith opened three accounts in the span of a few years and
Smith was a customer for longer than other class members.
See ECF No. 155 at PageID #3552-53. These facts do
not defeat typicality because Smith received the same
standardized descriptions of the overdraft fee program
(during the relevant ...