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Pinkston-Poling v. Advia Credit Union

United States District Court, W.D. Michigan, Southern Division

December 29, 2016

BECKY PINKSTON-POLING, individually and on behalf of all others similarly situated, Plaintiff,



         Plaintiff, Becky Pinkston-Poling, has filed an amended class-action complaint against Defendant, Advia Credit Union (Advia), alleging claims of breach of contract and violation of the Electronic Fund Transfer Act (EFTA), 15 U.S.C. § 1693, et seq. Both claims are based on Pinkston-Poling's allegation that Advia applies its overdraft fee program in a different manner than Advia describes in its agreements with, and disclosures to, its members. That is, Pinkston-Poling alleges that Advia charges overdraft fees based on the so-called “available balance” in a member's account rather than the “actual” or “ledger” balance, as Advia's written agreements state, resulting in overdraft fees even when sufficient funds are in the account to pay the item.

         Advia has filed a motion pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss Pinkston-Poling's amended complaint for failure to state a claim. The Court heard oral argument on the motion on October 7, 2016. Following the hearing, the Court ordered the parties to file additional briefs on the issues of whether the safe harbor provision of the EFTA, 15 U.S.C. § 1693m(d)(2), bars Pinkston-Poling's EFTA claim and, if so, why this Court has jurisdiction under the Class Action Fairness Act of 2005 (CAFA). (ECF No. 34.) The parties have filed their supplemental briefs, and the matter is ready for decision.

         For the following reasons, the Court will deny Advia's motion.

         I. Facts

         The following facts are taken from Pinkston-Poling's amended complaint.

         Advia is a Michigan-based credit union with branches throughout Michigan, Wisconsin, and Illinois. (ECF No. 11 at PageID.162.) Pinkston-Poling was a member of Advia and had a checking account that included a debit card that she could use to withdraw funds from ATM machines, pay for point-of-sale purchases, and perform other financial transactions. (Id. at PageID.161, 166.)

         Pinkston-Poling alleges that Advia's overdraft program, known as Courtesy Pay, is different than what Advia describes in its Member Account Agreement & Truth in Savings Disclosure (Member Account Agreement), different than what Advia represents to its members, and not what its members expect based on Advia's representations. (Id. at PageID.164.) In particular, Pinkston-Poling alleges, Advia says that it will charge an overdraft fee only when the member's actual/ledger account balance-the amount of money in the account without any reduction for anticipated future debits-is not sufficient to pay the item. (Id.) Pinkston-Poling also alleges that Advia's separate agreement required by Regulation E of the EFTA for ATM withdrawals and one-time debit transactions (Opt-in Agreement) similarly provides that an overdraft occurs when the member's actual/ledger account balance is insufficient to cover a transaction. (Id. at PageID.165, 192.) Pinkston-Poling alleges that, in contrast to the provisions in the Member Account Agreement and the Opt-in Agreement, which require Advia to use the actual/ledger balance in determining whether there is an overdraft, Advia uses the available balance-an artificial internal calculation that subtracts anticipated future debits from the actual balance-which allows Advia to charge overdraft fees even when the member has sufficient funds in her account to pay the item. (Id. at PageID.165.)

         Pinkston-Poling alleges that Advia's use of the available balance to assess overdraft fees breaches both the Member Account Agreement and the Opt-in Agreement and violates the EFTA because the Opt-in Agreement fails to accurately describe Advia's overdraft program for ATM and non-recurring debit card transactions. Pinkston-Poling claims that she was harmed by this practice on June 27, 2015, when she had an actual balance of $30.48 in her account before a $7.00 debit card transaction was posted, leaving her with an actual balance of $23.48. However, Advia charged Pinkston-Poling an overdraft fee of $32.00 for this $7.00 transaction. (Id. at PageID.166.)

         II. Discussion

         A. Applicability of 15 U.S.C. § 1693(D)(2)

         Initially, the Court addresses whether the safe harbor provision, 15 U.S.C. § 1693m(d)(2), applies in this case because in its October 7, 2016, Order to Show Cause, the Court indicated that if the safe harbor provision precludes Pinkston-Poling's EFTA claim, the Court may lack jurisdiction under CAFA. Having read the parties' briefs in response to the Order to Show Cause, the Court concludes that the safe harbor provision does not bar Pinkston-Poling's EFTA claim and, therefore, the Court has subject matter jurisdiction.

         In considering whether the safe harbor provision applies in the instant case, the Court must bear in mind that the EFTA is a remedial statute designed to protect consumers and, therefore, must be given “‘a broad, liberal construction in favor of the consumer.'” Clemmer v. Key Bank Nat'l Ass'n, 539 F.3d 349, 353 (6th Cir. 2008) (quoting Begala v. PNC Bank, Ohio, Nat'l Ass'n, 163 F.3d 948, 950 (6th Cir. 1998)). In addition, “exclusions or exceptions should be construed narrowly.” In re Carter, 553 F.3d 979, 985 (6th Cir. 2009) (internal quotation marks omitted).

         Pinkston-Poling alleges that Advia violated the EFTA by failing to comply with Regulation E's Opt-in Rule governing overdraft fees for ATM and one-time debit card transactions, 12 ...

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