Federal Judge Dismisses ATM Fees Suit Against Family Dollar

by Tara Arick on October 28, 2012 · 0 comments

in Civil Procedure

- From LexisNexis® Mealey’s™ Daily Legal News.

Family Dollar Inc. is not the “operator” of an ATM as defined by the Electronic Funds Transfer Act (EFTA), a federal judge in Nevada ruled Oct. 25, granting Family Dollar’s motion for summary judgment in a putative class action alleging that Family Dollar violated the statute because there were no written fee notices on the ATM in question (Thomas Chayra v. Family Dollar Inc., No. 11-01710, D. Nev.;
U.S. Judge Miranda M. Du of the District of Nevada made the ruling in the suit Thomas Chayra, individually and on behalf of all others similarly situated, filed against Family Dollar.

The judge also denied Family Dollar’s request for attorney fees.

On or about Sept. 30, 2011, Chayra withdrew money from an ATM on the premises of a Family Dollar at 820. E. Twain Ave., No. 23, Las Vegas. He was charged a $ 2 fee. Chayra observed that there were no written fee notices displayed at a prominent or conspicuous location on or at the ATM, which according to his complaint, which he field Oct. 24, 2011, violated 15 U.S. Code Section 1693b(d)(3)(A) and (B) of the EFTA.

Motion For Summary Judgment

Family Dollar filed the motion for summary judgment on Aug. 23, arguing that it is not an “automated teller machine operator” under 12 Code of Federal Regulations Section 205.16(a) and therefore not covered under the EFTA. Family Dollar asserted that it has identified the operator of the ATM as Citywide ATM Inc.

Pursuant to Section 1693b(d)(3)(B), the EFTA requires ATM operators to post a fee notice “in a prominent and conspicuous location on or at the [ATM]” and “on the screen of the [ATM], or on a paper notice issued from such machine, after the transaction is initiated and before the consumer is irrevocably committed to completing the transaction.” Judge Du noted that Section 205.16(a) defines an “automated teller machine operator” as “any person that operates an automatic teller machine at which a consumer initiates an electronic fund transfer or a balance inquiry and that does not hold the account to or from which the transfer is made, or about which an inquiry is made.”

Chayra asserted that Family Dollar is an ATM operator because Family Dollar “controls the operation of the subject ATM machine by controlling the time that customers may enter its store to use the machine” and that “[t]herefore, in essence, Family Dollar does operate the ATM and becomes an ‘automated teller machine operator’ under” Section 205.16(a). Chayra also said that Family Dollar is an ATM operator because it reaps a financial benefit from the ATM’s presence in its store and that as a policy matter, the District Court should construe Section 205.16(a) as applying to the store owner because the average consumer would not know that Family Dollar does not own the ATM.

Family Dollar responded that its role was merely to passively provide a space for Citywide’s ATM on its premises and, therefore, it is not the operator of the ATM under Section 205.16(a).

‘Operator’ Of ATM

Judge Du noted that neither party cited case law construing the meaning of an owner or operator of an ATM for the purposes of Section 1693b(d)(3)(A) and (B), so she looked to the plain meaning of “operator.”

“The Oxford English Dictionary defines operator as ‘[a] person (professionally) engaged in performing the practical or mechanical operations of a process, business, etc.’ Oxford English Dictionary (2d ed. 1989). Under this definition, the logical operator of the ATM must be its owner, for it is Citywide, not Family Dollar, whom engages in the ATM transactions,” Judge Du said.

Judge Du said the District Court’s review of the case law supports Family Dollar’s contention. She said the “properly sued” defendants in other cases brought under Section 1693(d)(3)(A) and (B) were financial institutions that owned the ATMs in question, citing as examples Campbell v. Hope Cmty. Credit Union (No. 10-2649, W.D. Tenn. [June 25, 2012]), Kinder v. United Bancorp Inc. (No. 11-10440, E.D. Mich. [Sept. 28, 2012]) and Kinder v. Forcht Bank (No. 11-233, E.D. Ky. Oct. 28, 2011]).

Attorney Fees

In its request for attorney fees under 15 U.S. Code Section 1693(m)f, Family Dollar argued that Chayra filed the suit in bad faith and for the purposes of harassment, identifying 17 cases Chayra filed asserting EFTA claims against retailers for failure to provide a proper ATM fee warning notice. However, Family Dollar failed to address how Chayra’s actions amount to bad faith or harassment, Judge Du said, denying the request for attorney fees. “For example, Defendant does not address the status of the other seventeen cases filed by Defendant and how they demonstrate bad faith in this case,” the judge explained. “Defendant also does not discuss why Plaintiff’s conduct is not merely reckless, but also frivolous, harassing, or done for an improper purpose, which is required before the Court can hold that Plaintiff filed this action in bad faith. See Rodriguez v. United States, 524 F.3d 704, 709 (9th Cir. 2008).

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