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Ninth Circuit:
Suit Alleging Cheating by Bank of America Properly Axed
Memorandum Opinion, Which Draws Dissent, Finds Charges on ATM Withdrawals in Foreign Countries Comport With Unambiguous Language of Agreement Between Financial Institution and Its Customers
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals, over a dissent, yesterday affirmed the dismissal with prejudice of a putative class action against Bank of America which alleges that the financial institution charges an inflated amount on foreign ATM transactions.
BoA’s fee schedule specifies that it charges “3% of the U.S. dollar amount of the transaction.” It also says: “ATM fees may also apply to ATM transactions.”
The first amended complaint filed by San Diego resident Andrea F. Durkee “on behalf of herself and a class of all similarly situated consumers” asserts that that BoA improperly assesses its 3 percent international transaction fee (“ITF”) fee not on the “U.S. dollar amount” but on the amount charged after the foreign operator’s fee is added. It alleges:
“In the case of ATM withdrawals made in a foreign country, BoA is contractually entitled to apply that 3% ITF charge only to the amount of the foreign currency that was withdrawn and obtained by the customer. However, BoA unlawfully inflates the ITF by applying the 3% charge not only to the value of the currency that was withdrawn, but also to fees assessed by the international ATM operator (hereinafter, sometimes referred to as ‘Usage Fees’). BoA’s debit and ATM card services are governed by the Deposit Agreement and Disclosures and Personal Schedule of Fees. Nothing in the Account Agreement authorizes BoA to assess a 3% ITF on top of the international ATM operator’s Usage Fees. In fact, the Schedule expressly segregates fees assessed by the international ATM operator from being considered part of the funds on which the 3% ITF applies.”
Transaction in Mexico
The pleading relates that while in Cabo San Lucas, Mexico, Durkee made a withdrawal of money in pesos that was equivalent to $5.32 in U.S. dollars. It asserts that BoA was only authorized contractually to impose a 3% ITF based on the $5.32 that was withdrawn, amounting to 16 cents (in addition to charging a $5 out-of-network fee which is not in contention).
Instead, it applied the 3 percent fee to the $5.32 plus the Mexican ATM operator’s fee of $2.86 (totaling $8.18), with 25 cents being assessed as the ITF.
“While international transaction fees appear at first to be a small, negligible amount, hidden and inflated international transaction fees have been the subject of substantial litigation due to the significant harm it causes banking customers, in aggregate, throughout the country,” the complaint sets forth.
BoA’s Position
In moving for a dismissal of the amended complaint, BoA argued that the agreement doesn’t say that it “would charge the ITF on only the amount Plaintiff ‘actually withdrew’ or ‘walked away with,’ ” arguing:
“It says the opposite. Indeed, the challenged provision provides for an ITF of ‘3% of the U.S. dollar amount of the transaction,’ and explains that ‘Visa® or Mastercard® converts the transaction into a U.S. dollar amount, and the [ITF] fee applies to that converted U.S. dollar amount.’ With this language…, Plaintiff’s entire theory falls apart. After all, Plaintiff admits the foreign ATM charged the Usage Fees in foreign currency, which were then of course converted (by Visa® or Mastercard®) to U.S. dollars. As a converted pair of the transaction, the Usage Fees are subject to the 3% ITF.”
BoA called for a dismissal with prejudice because Durkee was relying upon “an implausible reading of the contract.”
District Court’s Order
Dismissal of the action was ordered by Chief District Court Judge Dana M. Sabraw of the Southern District of California.
“The primary issue that divides the parties is whether a ‘transaction’ constitutes the amount of money Plaintiff withdrew from the ATM or whether it includes both the amount of money withdrawn and the Usage Fees the foreign ATM applied,” he said in his Aug. 5, 2020 order. “Defendant argues the latter, whereas Plaintiff argues the former.”
Only BoA’s interpretation is reasonable, he declared, explaining:
“Contrary to Plaintiff’s assertion and conclusory allegations, it is not the commonsense meaning of transaction to refer only to the withdrawal of money. As Defendant notes, the dictionary definition Plaintiff provides proves quite the opposite: a ‘transaction’ is an exchange or transfer. Here, the foreign ATM gives its user her money in exchange for Usage Fees.
Furthermore, the Usage Fees are assessed in the foreign currency and must be converted to U.S. dollars. Since the ITF applies to the converted U.S. dollar amount, it is only reasonable to assume the ITF applies to the entire converted transaction—the amount withdrawn plus the Usage Fees.”
Durkee argued that the statement that “ATM fees may also apply” connotes those fees being separate from the ITF. Sabraw disagreed, saying:
“The very next sentence refers the reader to Defendant’s ATM fee section, suggesting the language concerns only the ATM fees imposed by Defendant….It would be unreasonable to assume that just because the ITF is not assessed on Defendant’s ATM fees, it is not assessed on the foreign ATM fees, specifically when the contract explicitly states otherwise. The Court, therefore, finds no ambiguity in the contract’s meaning.”
A Ninth Circuit memorandum opinion—signed by Circuit Judge Patrick J. Butamay and by District Court Judge Nancy D. Freudenthal of the District of Wyoming, sitting by designation—says:“Durkee’s arguments are not persuasive. The narrative structure she emphasizes is followed by the specific direction to “[s]ee ATM Fees section.” That section plainly refers to ATM fees assessed by BofA and does not apply to ATM fees assessed by foreign ATM operators. Logically, therefore, the international transaction fee must apply to foreign ATM fees as they are part of the converted U.S. dollar amount of the transaction.”
Circuit Judge Paul J. Watford dissented, saying:
“In my view, the term ‘transaction’ in Durkee’s contract with Bank of America is susceptible to more than one reasonable interpretation and is therefore ambiguous. It strikes me as equally plausible to read the undefined term ‘transaction’ as referring either solely to the amount that a customer withdraws from the ATM. or to the amount withdrawn plus any fees imposed by a third-party ATM operator. None of the other provisions in Bank of America’s fee schedule definitively rules out either reading. Because this case hinges on the interpretation of an ambiguous contract term, the district court erred by dismissing it at the pleading stage.”
The case is Durkee v. Bank of America, N.A., 20-55920.
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