Allegedly, Albert Einstein once said, “If the facts don’t fit the theory, change the facts.” Plaintiffs counsel in the Mwantembe case could have benefitted from this sage piece of advice before attempting to certify a class with three completely unqualified class representatives. Mwantembe v. TD Bank, No. 09-0135, 2010 U.S. Dist. LEXIS 76644 (E.D.Pa. July 29, 2010). As you can see below, the chief weakness of Plaintiffs’ case was not the underlying legal theories, but the overbroad definition of the class and the tenuous connection between the proposed class representatives and the issues at hand.
Mwantembe involved three named Plaintiffs, Chawazi Mwantembe, Margaret Munthali, and Fern Rutberg (“Plaintiffs”), who purchased and/or received gift cards which were subject to dormancy fees from Commerce Bank or TD Bank. The dormancy fees allowed the banks to automatically deduct $2.50 from the gift cards (or less, if there was less than $2.50 remaining on the card) per month beginning thirteen months after the date of purchase. These deductions would continue every month until there was no money left on the cards. Plaintiffs’ primary allegations can be summarized as follows: 1) the banks never disclosed the dormancy fees to the purchasers; 2) the dormancy fees were not obvious to the recipients of the gift cards because the notification was either printed illegibly on the card itself or hidden in the terms and conditions accompanying the card; and 3) even if the recipients knew that dormancy fees applied, the lack of the issue date on the card made it difficult, if not impossible, for the recipient to calculate when the dormancy fees would begin to accrue. Plaintiffs brought claims against the banks for violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), breach of contract and third party beneficiary.
Plaintiffs proposed to create a general class consisting of Pennsylvania residents who purchased or received the gift cards from 2004 to present. This general class would be divided into two subclasses: “one comprised of gift card recipients whose cards were assessed dormancy fees; and the other, gift card purchasers who never gifted the cards or whose recipients assigned their rights regarding the card back to them.” Ultimately, the court denied the Plaintiffs’ motion to certify the class action because Plaintiffs failed to meet the typicality and adequacy prongs of Rule 23(a) and because it found the predominance and superiority requirements of Rule 23(b)(3) were lacking.
The court focused strongly on the inadequacy of the proposed class representatives in its denial of Plaintiffs’ motion to certify the class. Plaintiffs were not typical, adequate or, for that matter, very sympathetic class representatives. Ms. Rutberg purchased four gift cards which she gave to various individuals. Only one of the gift cards incurred a dormancy fee. The fee was for 2 cents, and it was charged to the card over 6 months after the last purchase. Ms. Mwantembe purchased approximately five to seven cards and gave them all as gifts. There is only evidence of one of the cards incurring any dormancy fees. That fee was for 29 cents. The 29 cents was charged to the card nearly a year after the last purchase. As purchasers of the gift cards, neither Ms. Mwantembe nor Ms. Rutberg’s claims fall within the “central” claim asserted by the putative class – that the banks violated the UTPCPL in failing to adequately notify recipients of gift cards of the dormancy fee and/or of the issue date of the gift card. Furthermore, the de minimus amount of money remaining on these gift cards indicated that the money would not have been spent at all, even if not for the dormancy fees. The last Plaintiff, Ms. Munthali, received five gift cards. Only one of these cards incurred a dormancy fee – that of 93 cents. This particular card was given to Ms. Munthali three weeks after this lawsuit was filed, so she could not reasonably argue that she was unaware of the dormancy fee. Also, the dormancy fee was charged in January 2010, about four months after Ms. Munthali had lost the gift card.
The Mwantembe court could not justify certifying a class action with these inherently flawed proposed class representatives. Plaintiffs certainly were not typical of putative class members, their atypical nature would have hindered their ability to protect the interests of the class members, and the unique circumstances surrounding Plaintiffs’ claims highlighted the fact that the court would have been forced to individually analyze each claimants’ case. Realistically, given the definition of the proposed classes, the court could have come to this same conclusion even if it had been faced with “perfect”, sympathetic class representatives. (Although the end result may not have been so blatantly obvious to the court.) Consequently, it appears as though the key to obtaining class certification in this case would have been to define the class more narrowly. A class that would have had a much better chance of being certified would have been Pennsylvania residents who were recipients of the gift cards, who were unaware of the dormancy fees, and who were charged dormancy fees. Of course, those weren’t the facts in Mwantembe and, just as in any good film noir movie, we’ve got to focus on “just the facts.”