Crockrom v. Bank of America, N.A.

Background

Du’Bois A. Crockrom brought a proposed class action against Bank of America, N.A. (BANA) and Bank of America Corporation (BAC). He alleged that the defendants breached the deposit agreement for personal deposit accounts by charging overdraft fees on non-recurring debit-card purchases. The proposed class period ran from June 18, 2010, through April 6, 2017.

Crockrom identified five Starbucks transactions from November 2015, in amounts of $10, $10, $15, $20, and $30. He alleged that the defendants treated the transactions as recurring, approved them even though they caused an overdraft, and charged five overdraft fees totaling $175. He also alleged that similar fees were assessed for purchases from other vendors.

Defendants’ Motions

The defendants moved under Federal Rule of Civil Procedure 12(b)(2) to dismiss for lack of personal jurisdiction and under Rule 12(b)(6) to dismiss for failure to state a legally sufficient claim. They argued that BAC lacked the required connection to New York and that the court lacked personal jurisdiction over claims involving out-of-state class members. They also argued that Crockrom’s contract claim was barred by the deposit agreement’s notice provision.

Personal Jurisdiction

The court held that Crockrom had not shown a basis for general or specific personal jurisdiction over BAC. BAC was not incorporated in New York, New York was not its principal place of business, and Crockrom had not alleged facts showing that BAC itself entered into the deposit agreement. The agreement defined “Bank of America,” “Bank,” “we,” “us,” and “our” as BANA, and another banking document stated that banking products were provided by BANA.

The court also rejected Crockrom’s agency theory. To establish jurisdiction over a parent corporation through its subsidiary, he needed to allege facts showing that BANA acted in New York for BAC’s benefit, with BAC’s knowledge and consent, and that BAC exercised some control over BANA in the relevant matter. The court found that he had not made that showing. It therefore dismissed Crockrom’s claim with respect to BAC; the opinion did not add a “with prejudice” or “without prejudice” designation.

The court denied the defendants’ challenge to personal jurisdiction over the proposed nationwide class. It ruled that this issue was premature because, before class certification, out-of-state class members had not been joined and might never be joined. The court stated that personal jurisdiction over out-of-state class claims is best considered at the class-certification stage.

Breach-of-Contract Claim

The deposit agreement required account-holders to report suspected problems or unauthorized transactions appearing on account statements within 60 days. It stated that an account-holder who failed to report such an issue could not later bring a claim relating to it, regardless of the bank’s care. The agreement’s examples of problems included encoding errors made by the account-holder or the bank, while stating that the list was not complete.

The court concluded that the alleged miscoding of non-recurring transactions was an encoding error and therefore an unreported problem covered by the notice requirement. The court rejected Crockrom’s argument that the provision applied only to problems involving third parties, finding that its text also placed responsibility on account-holders to identify the bank’s coding errors. The court also rejected his arguments that the bank’s alleged awareness of merchant-classification problems excused the notice requirement or that the alleged overdraft fees amounted to a material breach excusing compliance.

Because Crockrom did not timely report the alleged coding errors, the court held that the deposit agreement barred his breach-of-contract claim.

Disposition and Classification

The court granted in part and denied in part the defendants’ Rule 12(b)(2) motion. It granted the defendants’ Rule 12(b)(6) motion in full and directed the clerk to close the motion and the case. Under the stated classification convention, this is a procedural order because the court disposed of the case through Rule 12 motions, even though it analyzed the contract theory.