Yip v. Bank of America, N.A. ( 2024 )

1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 TIFFANY YIP, et al., Case No. 2:21-cv-01254-ART-EJY 4 Plaintiffs, ORDER v. 5 BANK OF AMERICA, N.A., 6 Defendant. 7 8 A.H. HAMILTON, an individual, on Case No. 2:22-cv-00374-ART-EJY behalf of himself and all others 9 similarly situated, 10 Plaintiff, v. 11 BANK OF AMERICA, N.A., 12 Defendant. 13 14 This litigation arises from a wave of transaction fraud that targeted 15 Nevada’s public benefits programs during the Covid-19 pandemic. Numerous 16 class and individual actions have been brought against Defendant Bank of 17 America, N.A. (“BANA”) over its administration of Nevada’s electronic benefits 18 payment system. 19 This Court ordered collective action Yip v. Bank of America, N.A., 2:21-cv- 20 01254-ART-EJY (“Yip”), and putative class action Hamilton v. Bank of America, 21 N.A., 2:22-cv-00374-ART-EJY (“Hamilton”), be partially consolidated for pretrial 22 purposes, including the adjudication of pretrial motions to dismiss. (Yip ECF No. 23 40; Hamilton ECF No. 17.) Now pending before the Court are BANA’s motions to 24 dismiss in each case. (Yip ECF No. 44; Hamilton ECF No. 22.) Also pending in Yip 25 is Plaintiffs’ Motion for Leave to Submit Supplemental Authority in Support of 26 Plaintiffs’ Opposition to Defendant’s Motion to Dismiss. (Yip ECF No. 58.) For the 27 reasons stated, the Court will grant the motions to dismiss in part and deny them 28 in part and grant Plaintiffs’ Motion for Leave to Submit Supplemental Authority. 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 The Yip Plaintiffs filed their collective action on July 1, 2021. (Yip ECF No. 3 1.) On December 22, 2021, this case was consolidated with another collective 4 action, Vance, et al. v. Bank of America, N.A., 2:21-cv-02149-RFB-BNW, pursuant 5 to a stipulation by the plaintiffs in both cases and BANA. (ECF No. 25.) Plaintiffs 6 filed a First Amended Complaint (“FAC”) with the additional parties on March 21, 7 2022. (Yip ECF No. 31 (“Yip FAC”).) The FAC lists 224 individual Plaintiffs. (Id.) 8 According to the FAC, Bank of America was contracted to be the exclusive 9 provider of the Nevada Department of Employment, Training & Rehabilitation’s 10 benefit programs, including unemployment insurance, disability insurance, paid 11 family leave, pandemic unemployment assistance, and pandemic emergency 12 unemployment compensation benefits (collectively “DETR benefits”). (Id. at ¶ 16.) 13 When bidding for the contract, Bank of America allegedly offered to provide DETR 14 benefits recipients with debit cards for the electronic distribution of DETR 15 benefits and made certain representations about Bank of America’s abilities to 16 protect benefits recipients from fraud and to provide efficient and widely 17 accessible customer service. (Id. at ¶¶ 13-21.) Notably, Bank of America allegedly 18 promised that debit cardholders would receive Bank of America’s “Zero-Liability 19 coverage” for cases of fraud. (Id. at ¶ 14.) 20 Bank of America allegedly issued debit cards for DETR benefits which 21 utilized only the magnetic stripe technology. Plaintiffs allege that the magnetic 22 stripe technology is weaker and more susceptible to fraud than the now-industry 23 standard chip technology, and that its use led to widespread unauthorized and 24 fraudulent transactions resulting in the loss of significant funds to debit 25 cardholder accounts. (Id. at ¶¶ 27-38, 42-47.) Bank of America allegedly failed to 26 adequately respond to these fraud claims, including, inter alia, by making fraud 27 difficult to report through long wait times and dropped calls, by denying fraud 28 claims without investigation or explanation, by automatically and indefinitely 1 freezing accounts when cardholders reported unauthorized transactions, and by 2 making assistance with these issues difficult to obtain. (Id. at ¶¶ 48-66.) The FAC 3 describes the harms experienced by each of the 224 individual plaintiffs, 4 including home evictions due to inability to pay rent for lack of access to their 5 DETR benefits. (Id. at ¶¶ 67-290.) 6 The FAC includes twelve causes of action: (1) violations of the Electronic 7 Funds Transfer Act (“EFTA”); (2) Due Process claims under the Fourteenth 8 Amendment of the U.S. Constitution; (3) Due Process claims under the Nevada 9 Due Process Clause; (4) violations of the Nevada Deceptive Trade Practices Act; 10 (5) negligence and negligence per se; (6) breach of contract; (7) breach of implied 11 contract; (8) breach of implied covenant of good faith and fair dealing; (9) breach 12 of fiduciary duty; (10) breach of contract as third-party beneficiaries; (11) breach 13 of implied covenant of good faith and fair dealing as third-party beneficiaries; and 14 (12) unjust enrichment and money had and received. 15 Plaintiff A.M. Hamilton filed his putative class action complaint on March 16 1, 2022. (Hamilton ECF No. 1.) Following this Court’s consolidation order, 17 Hamilton filed an amended complaint that added three named Plaintiffs and 18 additional allegations. (Hamilton ECF No. 19 (“Hamilton FAC”).) The Hamilton FAC 19 begins by describing Bank of America’s contract with DETR and how the Covid- 20 19 pandemic placed a massive strain on the unemployment system. (Hamilton 21 FAC at ¶¶ 13-24.) The Hamilton FAC then sets forth allegations concerning Bank 22 of America’s policies and actions after Bank of America ceased its role 23 administering DETR benefits in June 2021. (Id. at ¶¶ 25-29.) The Hamilton FAC 24 also includes allegations related to federal investigations into BANA’s 25 administration of Nevada and other states’ unemployment programs. (Id. at ¶¶ 26 30-43.) 27 Hamilton describes how he applied for unemployment in 2020, received a 28 debit card from Bank of America, and “had no problem with the program” before 1 he accepted a job offer and destroyed his debit card. (Id. at ¶¶ 46-49.) He then 2 allegedly received a Form 1099 from DETR showing that he had been paid $3,000 3 by DETR in January of 2022. (Id. at ¶ 50.) Bank of America failed to notify 4 Hamilton of the payment despite having his contact information. (Id. at ¶ 51.) 5 After Hamilton was unable to access his Bank of America account, he filed a fraud 6 claim with DETR, but never heard back from DETR or Bank of America and 7 cannot access his account. (Id. at ¶¶ 52-59.) 8 Plaintiff Kevin Johnson alleges that unemployment benefits paid to his 9 BANA debit card were stolen by fraudsters, that he reported this fraud to BANA, 10 and that BANA locked his account in response, preventing him from receiving his 11 unemployment benefits. (Id. at ¶¶ 62-79.) After spending many hours on the 12 phone with BANA and DETR, Johnson managed to get most of the fraudulent 13 charges refunded, but not all of them. (Id.) 14 Plaintiff Kristin Jones alleges that he never received over $15,000 in 15 benefits that DETR paid to BANA on his behalf. (Id at ¶¶ 80-91.) Jones alleges 16 that he disputed the amount of benefits shown on his Form 1099 with BANA and 17 the State of Nevada, but the matter was deemed closed with no resolution on the 18 missing funds. (Id.) 19 Plaintiff Nikita White alleges that, after her application for unemployment 20 benefits was approved, she never received her BANA debit card. (Id at ¶¶ 92-104.) 21 After reporting this to BANA, BANA cancelled the card she was purportedly issued 22 and sent her a new card. (Id.) After receiving her new card, she looked at her 23 statements online and saw that there were fraudulent charges and missing 24 benefits. (Id.) She alleges that she disputed the fraudulent charges with BANA. 25 (Id.) She also alleges that she received far less in benefits than what the State of 26 Nevada reported on her tax forms and that she has been unsuccessful in her 27 attempts to dispute the receipt of the funds. (Id.) 28 Hamilton, Jones, and White all allege that they either have paid or will have 1 to pay taxes for income they never received, and that BANA continues to hold. 2 (Id. ¶¶ 61, 90, 104.) 3 The Hamilton FAC sets forth two proposed classes: the Zero Liability Class 4 and the Remainder Funds Class. (Id. at ¶ 105.) The Zero Liability Class is defined 5 as “All Nevada unemployment insurance debit card account customers of Bank 6 of America who suffered a loss based upon an unauthorized transaction.” (Id. at 7 ¶ 106.) The Remainder Funds Class is defined as “All Nevada unemployment 8 insurance debit card account customers of Bank of America who had funds 9 remaining in their account as of the date of filing of the Class Action Complaint.” 10 (Id. at ¶ 107.) The Hamilton FAC provides examples of stories posted on internet 11 forums by debit cardholders, including examples where accounts were frozen by 12 Bank of America after fraud was reported. (Id. at ¶ 112.) The Hamilton FAC brings 13 five claims: (1) breach of contract for the Zero Liability Class; (2) breach of 14 contract for the Remainder Funds Class; (3) unjust enrichment and money had 15 and received for both classes; (4) violations of the EFTA for the Zero Liability 16 Class; and (5) violations of the Nevada Deceptive Trade Practices Act for both 17 classes. 18 After partial consolidation of Yip and Hamilton for pretrial purposes, BANA 19 moved to dismiss both the Yip FAC and the Hamilton FAC. (Yip ECF No. 44; 20 Hamilton ECF No. 22.) Plaintiffs responded to each of the motions to dismiss, (Yip 21 ECF No. 45; Hamilton ECF No. 27), and BANA replied (Yip ECF No. 47; Hamilton 22 ECF No. 28). Since briefing concluded, both parties have submitted various 23 notices of supplemental authority and responses to those notices. (Yip ECF Nos. 24 48, 49, 50, 51, 52, 53; Hamilton ECF Nos. 29, 30, 31, 32, 33, 34.) Also pending 25 in Yip is Plaintiffs’ Motion for Leave to Submit Supplemental Authority in Support 26 of Plaintiffs’ Opposition to Defendant’s Motion to Dismiss. (Yip ECF No. 58.) 27 II. DISCUSSION 28 Defendant moves to dismiss both the Yip and Hamilton Plaintiffs’ claims 1 under Fed. R. Civ. P. 12(b)(6). A court may dismiss a plaintiff’s complaint for 2 “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). 3 A properly pleaded complaint must provide “a short and plain statement of the 4 claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); Bell 5 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not 6 require detailed factual allegations, it demands more than “labels and 7 conclusions” or a “formulaic recitation of the elements of a cause of action.” 8 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). All 9 factual allegations set forth in the complaint are taken as true and construed in 10 the light most favorable to the plaintiff. Lee v. City of Los Angeles, 250 F.3d 668, 11 679 (9th Cir. 2001). To survive a motion to dismiss, a complaint must contain 12 sufficient factual matter to “state a claim to relief that is plausible on its face.” 13 Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). But even a facially 14 plausible claim may be dismissed under Fed. R. Civ. P. 12(b)(6) for “lack of a 15 cognizable legal theory.” Solida v. McKelvey, 820 F.3d 1090, 1096 (9th Cir. 2016). 16 Thus, a claim must be both factually plausible and legally cognizable to survive 17 dismissal. 18 The Court will begin its analysis with claims brought by both the Yip and 19 Hamilton Plaintiffs before analyzing the claims brought only by the Yip Plaintiffs. 20 A. The Shared Claims 21 1. EFTA Violations 22 The Yip Plaintiffs, the named Plaintiffs in Hamilton, and the proposed “Zero 23 Liability Class” in Hamilton all allege that BANA violated the Electronic Funds 24 Transfer Act (“EFTA”), 15 U.S.C. §§ 1963 et seq., and Regulation E (“Reg E”), 12 25 C.F.R. §§ 1005.1 et seq., by failing to comply with the required error resolution 26 procedure. 27 The EFTA “establish[es] the rights, liabilities, and responsibilities of 28 participants in electronic fund and remittance transfer systems.” 15 U.S.C. § 1 1693(b). The EFTA and its implementing regulation, Reg E, regulate electronic 2 fund transfers which directly affect consumer accounts. § 1963(a)(7). Under § 3 1693f(a), when a consumer notifies a financial institution that the consumer 4 believes an “error” has occurred in their account, the “financial institution shall 5 investigate the alleged error, determine whether an error has occurred, and report 6 or mail the results of such investigation and determination to the consumer 7 within ten business days.” § 1693f(a). The statute mandates specific steps the 8 financial institution must take depending on the results of its investigation, as 9 well as the time frames in which the steps must be taken. § 1693f(b)–(d). 10 To trigger a financial institution’s obligations under the EFTA, consumers 11 must identify a qualifying error. 15 U.S.C. § 1693f(a); 12 C.F.R. § 1005.11(b). 12 Qualifying errors include: 13 (i) An unauthorized electronic fund transfer; (ii) An incorrect electronic fund transfer to or from the consumer's 14 account; 15 (iii) The omission of an electronic fund transfer from a periodic statement; 16 (iv) A computational or bookkeeping error made by the financial institution relating to an electronic fund transfer; 17 (v) The consumer's receipt of an incorrect amount of money from an 18 electronic terminal; (vi) An electronic fund transfer not identified in accordance with § 19 1005.9 or § 1005.10(a); or (vii) The consumer's request for documentation required by § 1005.9 20 or § 1005.10(a) or for additional information or clarification 21 concerning an electronic fund transfer, including a request the consumer makes to determine whether an error exists under 22 paragraphs (a)(1)(i) through (vi) of this section. 23 12 C.F.R. § 1005.11(a)(1)(i)-(vii); see also 15 U.S.C. § 1693f(f)(1)-(7). 24 Plaintiffs generally allege that they experienced qualifying errors, notified 25 BANA of such errors, and that BANA failed to comply with the EFTA’s 26 requirements following notice. 27 BANA argues for dismissal of certain claims based on a variety of purported 28 failures in the pleadings. First, BANA argues that some Plaintiffs’ claims were not 1 filed within the statute of limitations. Second, BANA argues that some Plaintiffs 2 failed to allege a qualifying error as required by the EFTA. Third, BANA argues 3 that some Plaintiffs did not provide sufficient notice to trigger its obligations 4 under the EFTA. Fourth, BANA contends that even if Plaintiffs’ claims were 5 sufficiently pled in all other respects, they do not plausibly allege that BANA failed 6 to meet its obligations under the EFTA. The Court will address each of these 7 arguments in turn. 8 i. Statute of Limitations 9 Actions brough under the EFTA must commence “within one year from the 10 date of the occurrence of the violation.” 15 U.S.C. § 1693m(g). In its Motion to 11 Dismiss the Yip FAC, BANA identified seventy-one Plaintiffs whose EFTA claims 12 are allegedly time-barred. In its Motion to Dismiss the Hamilton FAC, BANA 13 argued that Plaintiffs Johnson and Jones brought time-barred claims. 14 The Yip Plaintiffs argue that the statute of limitations is not grounds for 15 dismissal at this stage of the litigation because many Plaintiffs’ harms are 16 ongoing. After discovery, the Yip Plaintiffs say they may be able to show 17 exceptions to the statute of limitations, like equitable tolling. 18 On this point, the Court agrees with the Yip Plaintiffs and finds that 19 dismissal for the statute of limitations is inappropriate at this stage of litigation 20 because further discovery could plausibly affect the Court’s determination of the 21 issue. The Court will therefore deny BANA’s Motion to Dismiss the Yip FAC on 22 this ground. This denial is without prejudice, and BANA will be permitted to argue 23 that the Yip Plaintiffs’ claims are time-barred in future pretrial motions. 24 The Hamilton Plaintiffs counter BANA’s argument for dismissal by arguing 25 that in a Fed. R. Civ. P. 23 class action, “the statute of limitations for individual 26 claims is suspended for all purported members of the class until a formal decision 27 on class certification has been made.” Bonilla v. Las Vegas Cigar Co., 61 F. Supp. 28 2d 1129, 1135 (D. Nev. 1999). Thus, according to Plaintiffs, when Hamilton filed 1 his original complaint asserting an EFTA claim on March 1, 2022, that tolled the 2 statute of limitations regarding the EFTA claim for all purported members of the 3 class, including Johnson and Jones. 4 BANA contends that because Johnson and Jones are named Plaintiffs in 5 the FAC, Fed. R. Civ. P. 15’s relation-back doctrine governs. Here, the Court finds 6 that Plaintiffs prevail under either theory. A claim brought by a new plaintiff 7 relates back under Rule 15 only if (1) the original complaint gives “the defendant 8 adequate notice of the claims of the newly proposed plaintiff”; (2) relation back 9 does not “unfairly prejudice the defendant”; and (3) there is “an identity of 10 interests between the original and newly proposed plaintiff.” Immigrant 11 Assistance Project of the Los Angeles Cnty. Fed’n of Labor (AFL-CIO) v. INS, 306 12 F.3d 842, 857 (9th Cir. 2002). Here, all requirements are met. 13 First, Hamilton’s original complaint put BANA on notice of alleged EFTA 14 violations in BANA’s administration of DETR benefits. While the factual details 15 differ in the allegations from Hamilton and those from Johnson and Jones, the 16 Court finds that they are sufficiently similar to give BANA adequate notice. 17 Johnson and Jones, like Hamilton, allege that BANA mishandled DETR funds in 18 violation of the EFTA. In addition, because Johnson and Jones are “similarly 19 situated” to Hamilton, adding the new Plaintiffs will “not cause [BANA] any 20 prejudice in the present case.” Id. at 858. Finally, when “the original individual 21 plaintiff[] and the current individual plaintiffs are ‘similarly situated,’ the identity- 22 of-interest requirement of Rule 15(c) is also met.” Id. The Court therefore finds 23 that Johnson and Jones’ claims relate back to Hamilton’s claim. Thus, BANA’s 24 Motion to Dismiss Johnson and Jones’ claims as time-barred is denied. 25 ii. Qualifying Error 26 Next, BANA argues that both Yip and Hamilton Plaintiffs failed to allege a 27 qualifying error. For example, in Yip BANA argues that many Plaintiffs 28 insufficiently alleged that they experience “fraud” or an unspecified “error” 1 without specifying whether those errors involved unauthorized transactions. 2 BANA also argues that the Yip Plaintiffs who point to an account freeze as the 3 basis for their EFTA claim fail to state a qualifying error. Similarly, BANA argues 4 that Hamilton and Jones do not allege that they experienced unauthorized 5 transactions. BANA also contends that White failed to state an EFTA claim based 6 on her dispute with BANA concerning funds that she allegedly did not receive. 7 As outlined above, a qualifying error is defined in the EFTA and its 8 implementing regulations. See 12 C.F.R. § 1005.11(a)(1)(i)-(vii); 15 U.S.C. § 9 1693f(f)(1)-(7). Qualifying errors include: “unauthorized electronic fund 10 transfer[s],” 12 C.F.R. § 1005.11(a)(1)(i); “[t]he omission of an electronic fund 11 transfer from a periodic statement,” § 1005.11(a)(1)(iii); “[t]he consumer’s request 12 for documentation required by . . . § 1005.10(a) or for additional information or 13 clarification concerning an electronic fund transfer, including a request the 14 consumer makes to determine whether an error exists,” § 1005.11(a)(1)(vii). 15 Under the EFTA, an “unauthorized electronic transfer” is defined as “an electronic 16 fund transfer from a consumer’s account initiated by a person other than the 17 consumer without actual authority to initiate such transfer and from which the 18 consumer receives no benefit.” 15 U.S.C. § 1693a(12). 19 On this issue, the Court finds the decision in In re Bank of Am. California 20 Unemployment Benefits Litig., 674 F. Supp. 3d 884 (S.D. Cal. 2023) instructive. 21 In that case, determining EFTA claims on similar facts, the district court held 22 that “[a] bare allegation that fraud occurred and was subsequently reported to 23 the financial institution is insufficient to support an inference that the consumer 24 reported a qualifying error.” Id. at 908 (internal quotation marks omitted). 25 “Individual Plaintiffs who allege they ‘experienced fraud on [their] account[s]’ and 26 reported the fraud to BANA, but didn't report a qualifying error, therefore haven't 27 stated claims under the EFTA.” Id. 28 But allegations that a consumer: “(1) identified a fraudulent or 1 unauthorized transaction or withdrawal (including by looking at their account or 2 transaction history);” and “(2) reported ‘fraud’ to the financial institution” are 3 sufficient “to support the reasonable inference that the consumer reported an 4 unauthorized transaction or withdrawal (both of which qualify as errors within 5 the meaning of the EFTA).” Id. at 909. 6 Finally, while an account freeze is not an error covered by EFTA, Plaintiffs 7 may allege a qualifying error related to an account freeze if they request 8 “additional information to determine whether there was an incorrect or omitted . 9 . . benefits transfer into the account.” Id. A request for “additional information or 10 clarification concerning an electronic fund transfer, including a request [made] 11 to determine whether an error exists,” is a qualifying error. See 12 C.F.R. § 12 1005.11(a)(1)(vii); see also 15 U.S.C. § 1693f(f)(6). 13 Under these standards, some Hamilton Plaintiffs have failed to state an 14 EFTA claim. For example, Hamilton fails to allege a qualifying error. The Hamilton 15 FAC says that once Hamilton found employment, he destroyed his BANA card. 16 Then, he received a 1099 from DETR that showed that he had been paid $3,000 17 by DETR after he found employment. Hamilton alleges he never received the 18 funds and was never notified about them. But because he did not have access to 19 his BANA account when he received the 1099, Hamilton was unable to identify a 20 fraudulent or unauthorized transaction or withdrawal. Thus, he did not identify 21 a qualifying error. Additionally, the FAC does not include any allegations that 22 Hamilton contacted BANA and requested information. Thus, Hamilton’s claim is 23 dismissed with leave to amend for failure to state a qualifying error. 24 Similarly, Jones also fails to identify an unauthorized transaction in the 25 FAC. Jones’ allegations are based on differences between the funds he received 26 on his BANA debit card and the benefits DETR says it paid him. This discrepancy 27 alone does not allege a qualifying error. But, unlike Hamilton, Jones alleges that 28 he contacted BANA and disputed the amount. The Court finds this allegation 1 sufficient to allege a qualifying error based on a request for additional information 2 to determine whether there was an incorrect or omitted benefits transfer into the 3 account. See 12 C.F.R. § 1005.11(a)(1)(vii); see also 15 U.S.C. § 1693f(f)(6). The 4 Court therefore denies BANA’s Motion to Dismiss Jones’ claim for failure to allege 5 a qualifying error. 6 Johnson clearly alleges unauthorized transactions, so his claim will not be 7 dismissed for failure to allege a qualifying error. (Hamilton FAC at ¶ 65-67.) 8 White also clearly alleges unauthorized transactions, so her claim will not 9 be dismissed for failure to allege a qualifying error. (Hamilton FAC at ¶ 99-100.) 10 To the extent that White alleges a separate EFTA claim based on benefits 11 that were missing from her BANA account, she fails to allege a qualifying error 12 because that claim does not identify a fraudulent or unauthorized transaction or 13 withdrawal. (Hamilton FAC at ¶ 98.) White’s allegations about her disputes with 14 BANA also do not state that she requested additional information to determine 15 whether there was an incorrect or omitted benefits transfer into the account, only 16 that she reported fraudulent charges. (Hamilton FAC at ¶ 100.) Thus, White’s 17 separate EFTA claim based on missing benefits is dismissed with leave to amend 18 for failure to allege a qualifying error. 19 The Court also dismisses with leave to amend all EFTA claims of Yip 20 Plaintiffs who fail to allege a qualifying error, consistent with the standards and 21 analysis set forth in this Order. The Yip Plaintiffs may either file a second 22 amended complaint that remedies the deficient claims and removes Plaintiffs who 23 cannot allege a qualifying error or file a status report with the Court identifying 24 which Plaintiffs in the Yip FAC have alleged a qualifying error, consistent with 25 this Order. 26 iii. Sufficient Notice 27 Next, BANA argues that both Yip and Hamilton Plaintiffs failed to provide 28 sufficient notice to BANA to trigger BANA’s obligations under the EFTA. To trigger 1 a financial institution's obligations under the EFTA, a consumer's notice must 2 “[i]ndicate[ ] why the consumer believes an error exists and include[ ] to the extent 3 possible the type, date, and amount of the error.” 12 C.F.R. § 4 1005.11(b)(1)(iii); see also 15 U.S.C. § 1693f(a)(3). Requests for additional 5 information or documentation need not include the amount of the error. 12 6 C.F.R. § 1005.11(b)(1)(iii). In addition, the notice must “enable[] the institution to 7 identify the consumer's name and account number.” 12 C.F.R. § 1005.11(b)(1)(ii). 8 BANA says all Yip Plaintiffs failed to allege that they provided sufficient 9 notice. Specifically, BANA argues that the Yip Plaintiffs failed to make any 10 allegations that they provided BANA with an explanation of why they believed an 11 error existed or the amount of the error. BANA makes the same argument as to 12 all Hamilton Plaintiffs, and BANA specifically argues that Johnson’s allegation 13 that he “reported the fraud,” (Hamilton FAC ¶ 67), to BANA is insufficient to state 14 a claim under the EFTA. According to BANA, general allegations that Plaintiffs 15 reported fraud are insufficient. 16 BANA is correct that Plaintiffs must allege they provided notice to BANA of 17 any qualifying error in order to maintain an action under the EFTA. But BANA 18 overstates the degree of specificity required to survive a Fed. R. Civ. P. 12(b)(6) 19 motion to dismiss. “Factual allegations sufficient to support a plausible inference 20 are sufficient to state a claim under the Federal Rules.” In re Bank of Am. 21 California Unemployment Benefits Litig., 674 F. Supp. 3d at 911. So long as 22 Plaintiffs allege notice that could support a plausible inference that they provided 23 BANA with the statutorily required information, their claims will not be 24 dismissed. 25 For example, Hamilton failed to plausibly allege that he gave BANA 26 sufficient notice of a qualifying error. In fact, nowhere in the Hamilton FAC does 27 Hamilton allege that he notified BANA of any fraud, error, or unauthorized 28 transaction. Hamilton’s claim is therefore dismissed with leave to amend. 1 Johnson, on the other hand, plausibly alleges that he gave BANA sufficient 2 notice of fraudulent activity on his account. Johnson’s allegations include that 3 he experienced “a rash of fraudulent charges,” that fraudsters were “withdrawing 4 money in Georgia, Detroit, England, and other places in Europe,” and that he 5 “reported the fraud” to BANA. (Hamilton FAC ¶¶ 65-67.) It is reasonable to infer 6 that Johnson shared all the information in these allegations with BANA when he 7 reported the fraud. Information that the fraudulent activity took place in other 8 states and countries is sufficient to satisfy the requirement for an explanation of 9 why Johnson believed an error existed. Further, linking the fraudulent activity to 10 specific locations would allow BANA to determine the amount of the error. Thus, 11 Johnson has plausibly alleged sufficient notice. The Court will therefore deny 12 BANA’s Motion to Dismiss Johnson’s claim on this ground. 13 Jones alleges that he disputed the amount of his error with BANA. 14 (Hamilton FAC ¶ 86.) He also provides allegations about why he believed an error 15 existed. (Hamilton FAC ¶¶ 84-85.) Jones has alleged sufficient notice to maintain 16 a claim under the EFTA. 17 Similarly, White alleges that she disputed specific fraudulent charges with 18 BANA, and her allegations include specific amounts. (Hamilton FAC ¶¶ 99-100.) 19 White has therefore alleged sufficient notice for her EFTA claim related to the 20 fraudulent charges. On the other hand, her allegation concerning funds missing 21 from her account fails to allege notice to BANA. She merely says that she 22 “continues to unsuccessfully dispute the receipt of these funds. (Hamilton FAC ¶ 23 103.) The Court cannot determine, based on these allegations, if she is disputing 24 receipt of the funds with DETR or BANA. Thus, White’s EFTA claim related to 25 benefits missing from her account is dismissed with leave to amend. 26 As above, the Court also dismisses with leave to amend all EFTA claims of 27 Yip Plaintiffs who fail to allege sufficient notice, consistent with the standards 28 and analysis set forth in this Order. The Yip Plaintiffs may either file a second 1 amended complaint that remedies the deficient claims and removes Plaintiffs who 2 cannot allege sufficient notice or file a status report with the Court identifying 3 which Plaintiffs in the Yip FAC have alleged sufficient notice, consistent with this 4 Order. 5 iv. BANA’s Obligations under the EFTA 6 Finally, BANA argues that even if the Yip and Hamilton Plaintiffs succeed 7 in establishing all other elements of their EFTA claims, they have failed to 8 plausibly allege that BANA’s conduct violated the EFTA. 9 The Yip and Hamilton Plaintiffs allege a variety of EFTA violations by BANA, 10 (Yip FAC ¶ 294; Hamilton FAC ¶¶ 138-139), all tied to specific statutory and 11 regulatory provisions, see 15 U.S.C. § 1693f(a)-(d). Most relevant to this motion 12 are allegations from both sets of Plaintiffs that BANA failed to conduct adequate 13 investigations of Plaintiffs’ claims of error. See 15 U.S.C. § 1693f(a)-(d) (BANA’s 14 obligations under the EFTA, after receiving notice of a qualifying error, are all 15 dependent on the result of BANA’s investigation of the alleged error). 16 The EFTA requires that a financial institution investigate any qualifying 17 error reported by the consumer within ten business days of receiving notice of 18 such error. 15 U.S.C. § 1693f(a). Reg E provides that “a financial institution's 19 review of its own records regarding an alleged error” satisfies the EFTA’s 20 investigation requirement if: “(i) The alleged error concerns a transfer to or from 21 a third party; and (ii) There is no agreement between the institution and the third 22 party for the type of electronic fund transfer involved.” 12 C.F.R. § 1005.11(c)(4); 23 see also 12 C.F.R. § 1005, Supp. I at 11(c)(4) (Official Interpretation of § 24 1005.11(c)(4)) (“When there is no agreement between the institution and the third 25 party for the type of [electronic fund transfer] involved, the financial institution 26 must review any relevant information within the institution's own records for the 27 particular account to resolve the consumer's claim.”). Thus, the EFTA “requires 28 that any investigation under the statute include a reasonable review of the 1 financial institution's own records.” In re Bank of Am. California Unemployment 2 Benefits Litig., 674 F. Supp. 3d at 912 (internal quotation marks omitted). 3 At this stage of the litigation, “factual allegations set forth in the complaint 4 are taken as true and construed in the light most favorable to the plaintiff. Lee, 5 250 F.3d at 679. Applying this principle to Plaintiffs’ allegations, “it is reasonable 6 to infer that BANA's records reflect the unauthorized nature of the reported 7 transactions and that, if reviewed, those records would have resulted in different 8 outcomes.” In re Bank of Am. California Unemployment Benefits Litig., 674 F. 9 Supp. 3d at 912. Thus, if a Plaintiff in this action alleged that they provided BANA 10 with notice of a qualifying error, and that in response BANA’s investigation was 11 inadequate, their claims will not be dismissed. Here, adequate investigation of a 12 noticed qualifying error would include review of BANA’s records, which would 13 provide information about the reported error. Based on the allegations, Plaintiffs’ 14 have plausibly alleged that BANA failed to review its own records, which violates 15 the EFTA. 16 Similarly, Plaintiffs who allege a qualifying error based on requests “for 17 additional information or clarification concerning an electronic fund transfer, 18 including a request the consumer makes to determine whether an error exists” 19 need only allege that they requested the information, and that BANA did not 20 provide the requested information to show a violation of the EFTA. 12 C.F.R. § 21 1005.11(a)(1)(vii). 22 In Hamilton, Hamilton failed to allege any notice to BANA which would have 23 triggered its obligations under the EFTA. Thus, Hamilton has not alleged any 24 violation of the EFTA by BANA, so his claim is dismissed with leave to amend. 25 Johnson does not specifically allege that BANA failed to investigate the 26 errors he reported. But Johnson does allege that BANA refused to refund 27 fraudulent charges. (Hamilton FAC ¶ 74.) This allegation is sufficient to support 28 the inference that BANA failed to review its records in its investigation of 1 Johnson’s alleged error. Johnson has therefore plausibly alleged that BANA 2 violated the EFTA, so his claim will not be dismissed. 3 Similarly, Jones alleges that he disputed the amount of funds he was paid 4 with BANA, and that his dispute was closed with no resolution. (Hamilton FAC ¶ 5 86-88.) This allegation is sufficient to support the inference that BANA failed to 6 review its records in its investigation of Jones’ alleged error. Jones has therefore 7 plausibly alleged that BANA violated the EFTA, so his claim will not be dismissed. 8 Finally, White alleges that she disputed fraudulent charges and the amount 9 of benefits she received with BANA, and that she continues to unsuccessfully 10 dispute the receipt of benefits. This allegation is sufficient to support the 11 inference that BANA failed to review its records in its investigation of White’s 12 alleged error. White has therefore plausibly alleged that BANA violated the EFTA, 13 so her claim will not be dismissed. 14 Here, the Court will deny dismissal of all Yip Plaintiffs who plausibly allege 15 that BANA failed to review its records in response to notice of a qualifying error. 16 In addition, the Court will deny dismissal of all Yip Plaintiffs who plausibly allege 17 that BANA failed to provide information in response to requests for additional 18 information or clarification concerning an electronic fund transfer, including a 19 request the consumer makes to determine whether an error exists. The Yip 20 Plaintiffs may either file a second amended complaint that remedies the deficient 21 claims and removes Plaintiffs who cannot allege that BANA violated the EFTA or 22 file a status report with the Court identifying which Plaintiffs in the Yip FAC have 23 alleged that BANA violated the EFTA, consistent with this Order. 24 2. Breach of Contract 25 The Hamilton FAC alleges breach of the Account Agreement with BANA 26 based on two theories. The first relates to the “Zero Liability” class. Under the 27 first theory, Plaintiffs assert that BANA breached Section 9 of the Account 28 Agreement, which states that Cardholders “may” be reimbursed for certain 1 “unauthorized transactions,” provided the Cardholders give timely notice with 2 sufficient information to commence an investigation into the purported 3 unauthorized transaction (the “Zero Liability Policy”). (Hamilton FAC ¶¶ 120-21; 4 Ex. 5 §§ 9, 11.) 5 “Nevada law requires the plaintiff in a breach of contract action to show (1) 6 the existence of a valid contract (2) a breach by the defendant, and (3) damage as 7 a result of the breach.” Saini v. Int'l Game Tech., 434 F. Supp. 2d 913, 919-920 8 (D. Nev. 2006) (citing Richardson v. Jones, 1 Nev. 405, 405 (Nev.1865)). No party 9 disputes the existence of a valid contract. 10 There are important differences in the Zero Liability Policy and the 11 requirements of the EFTA. First, the Zero Liability Policy clearly only applies to 12 unauthorized transactions. (Hamilton FAC, Ex. 5 § 9.) Second, while the 13 requirements for timely notice closely tracks the EFTA’s notice period, notice 14 under the Account Agreement must include why they believe an error occurred 15 and the dollar amount involved, which is slightly more restrictive than the EFTA. 16 (Hamilton FAC, Ex. 5 § 11.) Third, BANA has significantly more flexibility in 17 investigating errors under the Account Agreement than it does under the EFTA. 18 Section 9 provides that BANA's “Zero Liability” policy doesn't apply to 19 transactions that aren't considered “unauthorized,” and allows BANA to 20 determine a transaction is “unauthorized” when it “conclude[s] that the facts and 21 circumstances do not reasonably support a claim of unauthorized use.” (Hamilton 22 FAC, Ex. 5 § 9.) Similarly, Section 11 provides BANA great flexibility in 23 investigating allegations of error. To perform under Section 11, all BANA must do 24 is “determine whether an error occurred.” (Hamilton FAC, Ex. 5 § 11.) 25 Under the terms of the Zero Liability Policy, no Hamilton Plaintiff alleges 26 breach. Hamilton and Jones, for example fail to allege unauthorized transactions. 27 White and Johnson, on the other hand, both allege unauthorized transactions. 28 Read liberally, the Court is also satisfied that their allegations allege timely and 1 sufficient notice, including the dollar amount involved. But neither White nor 2 Johnson adequately allege that BANA failed to reach the conclusion required by 3 Section 9 or failed to investigate under Section 11. Thus, White and Johnson 4 have failed to allege breach of the Account Agreement based on Sections 9 and 5 11. The claims of all Hamilton Plaintiffs for breach of the Zero Liability Policy in 6 the Account Agreement are therefore dismissed with leave to amend. 7 The second theory relates to the “Remainder Funds” class. Under this 8 theory, Plaintiffs allege that BANA failed to release the funds in their accounts as 9 required by the Account Agreement. Plaintiffs identify three provisions that BANA 10 purportedly breached: (1) the Zero Liability Policy (Hamilton FAC, Ex. 5 § 9); (2) a 11 provision in Section 16 governing BANA’s closure of an account, which provides 12 that the cardholder “may contact the Service Center to request a check for the 13 remaining balance” (Hamilton FAC, Ex. 5. § 16); and (3) a related provision in 14 Section 16 governing cardholder-initiated closures, which similarly states that 15 the cardholder may request a check for the remaining balance. (Hamilton FAC ¶¶ 16 124-125; Ex. 5 § 16.) 17 Here, the Court agrees with BANA. First, the Zero Liability Policy’s plain 18 language does not apply to these allegations that BANA failed to release funds in 19 the accounts as required by the Account Agreement. The Zero Liability Policy 20 applies to unauthorized transactions, not “Remainder Funds.” Second, no 21 Hamilton Plaintiff alleges that they closed their accounts, so the provision of 22 Section 16 pertaining to cardholder-initiated closures does not apply. Third, the 23 provision governing BANA-initiated closures requires that account holders 24 “contact the Service Center to request a check for the remaining balance” to 25 release the funds. No Plaintiff plausibly alleges this required communication. 26 Thus, all claims brought by Hamilton Plaintiffs under the Remainder Funds 27 theory are dismissed for failure to plausibly allege breach, with leave to amend. 28 The Yip Plaintiffs also bring breach of contract claims. Their allegations are 1 based on three theories: (1) that BANA failed to timely investigate, resolve, and 2 reimburse Plaintiffs for allegedly unauthorized transactions; (2) that BANA froze 3 or blocked their accounts; and (3) that BANA failed to make funds available to 4 them as instructed by DETR. (Yip FAC ¶¶335(a)-(h).) 5 The first theory relies on Sections 9 and 11 of the Account Agreement, like 6 the Hamilton Plaintiffs claim under the Zero Liability Policy. The Court therefore 7 adopts the standards and reasoning applied to the Hamilton Plaintiffs and applies 8 it to the Yip Plaintiffs. All Yip Plaintiffs’ claims for breach of Sections 9 and 11 of 9 the Account Agreement that suffer the same deficiencies as the Hamilton Plaintiffs 10 are dismissed with leave to amend. 11 The second theory is based on the plain language of the Account 12 Agreement. Section 2 of the Account Agreement permits BANA to freeze an EDD 13 Cardholder's account if it “suspect[s] irregular, unauthorized, or unlawful 14 activities involved” in the account. (Hamilton FAC, Ex. 5 § 2.) Section 2 allows a 15 freeze to continue until the end of its investigations into its suspicions. (Id.) Under 16 the Account Agreement, BANA is afforded wide latitude to freeze accounts. Thus, 17 the Yip Plaintiffs who have failed to allege that BANA lacked requisite suspicion 18 when freezing accounts or have failed to allege that BANA did not lift an account 19 freeze after completing the investigation are dismissed with leave to amend. 20 The third theory also relies on Section 2 of the Account Agreement, which 21 states that BANA will make funds available when instructed by DETR. (Hamilton 22 FAC, Ex. 5 § 2.) Plaintiffs allege BANA breached Section 2 by failing to make funds 23 available when instructed by DETR by freezing Plaintiffs’ access to their accounts. 24 But in addition to Section 2's funding language, the Account Agreement also 25 contains numerous provisions that allow BANA to restrict access to accounts, 26 including the freeze provision in Section 2. (Hamilton FAC, Ex. 5 § 2.) Plaintiff’s 27 interpretation would give these provisions no effect. Thus, the court dismisses 28 the claim for breach under this theory with prejudice and without leave to amend. 1 3. Unjust Enrichment and Money Had and Received 2 Both the Yip and Hamilton Plaintiffs bring a claim for unjust enrichment 3 and money had and received. Under Nevada law, a plaintiff has a valid claim for 4 unjust enrichment when (1) “the plaintiff confers a benefit on the defendant”; (2) 5 “the defendant appreciates such benefit”; and (3) “there is acceptance and 6 retention by the defendant of such benefit under circumstances such that it 7 would be inequitable for him to retain the benefit without payment of the value 8 thereof.” Certified Fire Prot. Inc. v. Precision Constr., 283 P.3d 250, 257 (Nev. 2012) 9 (internal quotation marks omitted). 10 This cause of action, though, “is not available when there is an express, 11 written contract” between the parties. Leasepartners Corp. v. Robert L. Brooks 12 Trust Dated November 12, 1975, 942 P.2d 182, 187 (Nev. 1997). Here, neither 13 party disputes that the Account Agreement is an express, written, valid contract 14 between all Plaintiffs and BANA. Plaintiffs express concern that the Account 15 Agreement could be read to allow BANA to retain funds paid by DETR to BANA 16 on Plaintiffs’ behalf. While the Account Agreement does allow BANA to freeze 17 accounts, (Hamilton FAC, Ex. 5 § 2), Section 2 only allows a freeze to continue 18 until the end of its investigations into its suspicions (Id.). Moreover, Section 11 19 requires BANA to investigate. (Id. at § 11.) Thus, there is no risk that the 20 provisions of the contract allow BANA to unjustly enrich itself with DETR benefits 21 intended for Plaintiffs. 22 Thus, because a written, express, valid contract exists between Plaintiffs 23 and BANA, the claim for unjust enrichment and money had and received is 24 dismissed with prejudice and without leave to amend as to both the Yip and 25 Hamilton Plaintiffs. 26 4. Violations of the Nevada Deceptive Trade Practices Act 27 Finally, both the Yip and Hamilton Plaintiffs allege that BANA violated the 28 Nevada Deceptive Trade Practices Act (“NDTPA”). Under Nevada law, “[a]n action 1 may be brought by any person who is a victim of consumer fraud.” NRS 41.600(1). 2 Consumer fraud is defined in the statute as, among other things, a “deceptive 3 trade practice as defined in NRS 598.0915 to 598.0925, inclusive.” NRS 4 41.600(2)(e). A person engages in a “deceptive trade practice” when in the course 5 of his or her business or occupation “he or she knowingly: . . . (c) Violates a state 6 or federal statute or regulation relating to the sale or lease of goods or 7 services. . . . (e) Uses an unconscionable practice in a transaction.” NRS 8 598.0923(1). Plaintiffs allege that BANA has engaged in a deceptive trade practice 9 under provision (c) by violating EFTA and Reg E and provision (e) by using 10 unconscionable practices. 11 BANA contends that the EFTA and Reg E do not relate “to the sale or lease 12 of goods or services,” so Plaintiffs’ claim under NRS 598.0923(1)(c) necessarily 13 fails. BANA also argues that Plaintiffs fail to plausibly allege that BANA’s alleged 14 practices are unconscionable within the meaning of the DTPA. The Court 15 disagrees with BANA on both fronts. 16 First, “the NDTPA is a remedial statutory scheme.” Poole v. Nevada Auto 17 Dealership Invs., LLC, 449 P.3d 479, 485 (Nev. App. 2019). Such statutes are 18 afforded a “liberal construction.” R.J. Reynolds Tobacco Co. v. Eighth Jud. Dist. 19 Ct. in & for Cnty. of Clark, 514 P.3d 425, 430 (Nev. 2022). With this framing, the 20 Court finds it appropriate to consider the EFTA and Reg E as laws that relate to 21 the sale or lease of goods or services. Here, BANA contracted with DETR to provide 22 a service to Plaintiffs. Those services are regulated by the EFTA and Reg E. Thus, 23 violation of the EFTA and Reg E is a sufficient basis for a claim under the NDTPA. 24 And, as outlined above, some Plaintiffs have plausibly alleged violations of the 25 EFTA and Reg E. Thus, the Court denies BANA’s Motion to Dismiss the Yip and 26 Hamilton Plaintiffs’ claims for violation of the NDTPA under NRS 598.0923(1)(c). 27 The Court also finds that Plaintiffs’ have plausibly alleged that BANA used 28 unconscionable practices. The statute defines “unconscionable practice” as a 1 practice that, to the detriment of a consumer: “(1) Takes advantage of the lack of 2 knowledge, ability, experience or capacity of the consumer to a grossly unfair 3 degree;” “(2) Results in a gross disparity between the value received and the 4 consideration paid, in a transaction involving transfer of consideration;” or “(3) 5 Arbitrarily or unfairly excludes the access of a consumer to a good or service.” 6 NRS 598.0923(2)(b)(2). 7 Both sets of Plaintiffs allege specific practices that are allegedly 8 unconscionable: (1) failure to adequately protect the funds placed on recipients’ 9 debit cards; (2) failure to properly respond to claims of fraud made by benefit 10 recipients; and (3) retaining cardholders’ funds despite knowledge that the funds 11 belong to the cardholders. (Hamilton FAC ¶¶ 153-58; Yip FAC ¶¶ 317-22.) Taking 12 these allegations as true, they are sufficient to state a claim for unconscionable 13 practices under the NDTPA. The Court therefore denies BANA’s Motion to Dismiss 14 both the Yip and Hamilton Plaintiffs’ claims for violation of the NDTPA under NRS 15 598.0923(1)(e).1 16 B. The Claims Only Brought by the Yip Plaintiffs 17 1. State and Federal Due Process Violations 18 The Yip Plaintiffs allege due process violations by BANA pursuant to the 19 Fourteenth Amendment of the U.S. Constitution and pursuant to the Nevada 20 Constitution. Specifically, they allege that by freezing Plaintiffs’ accounts without 21 any pre-deprivation hearing, they were deprived of a protected property interest 22 in DETR benefits. 23 A plaintiff seeking relief under 42 U.S.C. § 1983 for violation of the United 24 States Constitution must show that she was “deprived of a right secured by the 25 Constitution or laws of the United States,” and that “the alleged deprivation was 26 27 1 To the extent the Yip Plaintiffs may argue that their FAC alleges other violations of the NDTPA not included in the Hamilton FAC, the Yip Plaintiffs waived their arguments 28 against dismissal of those claims. (ECF No. 45 at 21.) 1 committed under color of state law.” Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 2 40, 49-50 (1999). When analyzing the due process clause in the Nevada 3 constitution, “the similarities between the due process clauses contained in the 4 United States and Nevada Constitutions . . . permit us to look to federal precedent 5 for guidance.” Hernandez v. Bennett-Haron, 287 P.3d 305, 310 (Nev. 2012). 6 BANA contends that Plaintiffs have not alleged that BANA was a state actor 7 when it froze their accounts, nor have they alleged that due process requires 8 notice and a pre-deprivation hearing under these circumstances. The Court 9 disagrees. 10 The Yip Plaintiffs allege that BANA is a state actor and acted under color of 11 state law because “it is engaged in a joint undertaking with the State to provide 12 and administer UI and other DETR benefits under a mutually beneficial 13 relationship and because it performs a function that is both traditionally and 14 exclusively governmental.” (Yip FAC ¶ 307.) Either theory is sufficient to satisfy 15 the state action requirement. See Kirtley v. Rainey, 326 F.3d 1088, 1092 (9th Cir. 16 2003) (“Satisfaction of any one test [of the four used in the Ninth Circuit] is 17 sufficient to find state action.”). “‘Under the public function test, when private 18 individuals or groups are endowed by the State with powers or functions 19 governmental in nature, they become agencies or instrumentalities of the State 20 and subject to its constitutional limitations.’” Id. (quoting Lee v. Katz, 276 F.3d 21 550, 554-55 (9th Cir. 2002)). “The public function test is satisfied only on a 22 showing that the function at issue is both traditionally and exclusively 23 governmental.” Id. (internal quotation marks omitted). 24 Accepting all allegations as true, the Yip FAC plausibly alleges that BANA 25 is responsible for the administration and distribution of Nevada’s DETR benefits. 26 The Court is also satisfied that the role BANA has taken on in administering the 27 distribution of Nevada’s DETR benefits is traditionally and exclusively 28 governmental. Specifically, the Yip Plaintiffs allege that BANA entered into an 1 exclusive contract with DETR in 2016 to distribute all DETR benefits. Because 2 BANA-provided debit cards were held out as the exclusive means of receiving 3 DETR benefits, the Yip FAC plausibly alleges that BANA was acting in a 4 traditionally and exclusively governmental role. 5 The Court holds the Yip FAC plausibly alleges that BANA's role in 6 administering the distribution of DETR benefits is a function that is “both 7 traditionally and exclusively governmental.” Kirtley, 326 F.3d at 1093. Because 8 the Court holds that the allegations in the FAC satisfy the public function test, it 9 need not consider whether the FAC alleges sufficient facts to satisfy the joint 10 action test. See id. at 1092. 11 To state a claim for a procedural due process violation, the complaint must 12 allege “two distinct elements: (1) a deprivation of a constitutionally protected 13 liberty or property interest, and (2) a denial of adequate procedural 14 protections.” Brewster v. Bd. of Educ. of Lynwood Unified Sch. Dist., 149 F.3d 971, 15 982 (9th Cir. 1998). Plaintiffs have a constitutionally protected property interest 16 in the DETR benefits for which they were approved. See Goldberg v. Kelly, 397 17 U.S. 254, 262 (1970) (holding the procedural due process protections attach to 18 the “withdrawal of public assistance benefits” and “disqualification for 19 unemployment compensation”). 20 To determine whether procedural protections are adequate, the Ninth 21 Circuit applies the three-part balancing test established in Mathews v. Eldridge, 22 424 U.S. 319 (1976). See, e.g., Franceschi v. Yee, 887 F.3d 927, 936–37 (9th Cir. 23 2018) (applying the Mathews test). “Under Mathews we consider (1) ‘the private 24 interest that will be affected by the official action’; (2) ‘the risk of an erroneous 25 deprivation of such interest through the procedure used, and the probable value, 26 if any, of additional or substitute procedural safeguards’; and (3) the 27 government's interest in minimizing the cost and burden of additional or 28 substitute procedures.” Id. (quoting Mathews, 424 U.S. at 335). 1 Applying the Mathews factors, the Yip Plaintiffs plausibly allege that 2 BANA’s accounting freezing procedures failed to comply with the requirements of 3 due process. First, Plaintiffs have a protected property interest in the DETR 4 benefits they were eligible to receive and did receive. See Goldberg v. Kelly, 397 5 U.S. 254, 262 (1970). Second, the Yip FAC plausibly alleges that the risk the 6 challenged account freezing procedure will result in erroneous deprivation of 7 protected interests is high. Plaintiffs’ allegations include allegations that 8 accounts were frozen without notice and that they were frozen erroneously. Third, 9 BANA has a strong interest in preventing fraud. But that interest does not, at this 10 point in the litigation, overcome the other Mathews factors. Thus, the Court finds 11 that the Yip Plaintiffs have plausibly alleged due process violations under the 12 Fourteenth Amendment of the U.S. Constitution and the Nevada Constitution. 13 BANA’s Motion to Dismiss these claims is therefore denied. 14 2. Negligence and Negligence Per Se 15 Plaintiffs allege that BANA was negligent in failing to (1) issue chip cards 16 and “protect” Plaintiffs from fraud; (2) provide “effective” customer service; and 17 (3) adequately investigate and provisionally credit their claims of unauthorized 18 transactions. (Yip FAC ¶ 325.) BANA contends that these claims fail for four 19 reasons. First, BANA argues that the claim is barred by the economic loss 20 doctrine. Second, BANA argues that it was under no tort duty of care. Third, 21 BANA argues that Plaintiffs’ fail to allege causation. Fourth, BANA says that 22 Plaintiffs cannot rely on theory of negligence per se based on alleged violations of 23 the NDTPA or the Gramm-Leach-Bliley Act (“GBLA”). 24 “[T]he economic loss doctrine cuts off tort liability when no personal injury 25 or property damage occurred, with traditionally recognized exceptions for certain 26 classes of claims.” Terracon Consultants W., Inc. v. Mandalay Resort Grp., 206 27 P.3d 81, 90 (Nev. 2009). “[C]ourts have made exceptions to allow such recovery 28 in certain categories of cases, such as negligent misrepresentation and 1 professional negligence actions against attorneys, accountants, real estate 2 professionals, and insurance brokers.” Id. at 75. “[E]xceptions to the economic 3 loss doctrine exist in broad categories of cases in which the policy concerns about 4 administrative costs and a disproportionate balance between liability and fault 5 are insignificant, or other countervailing considerations weigh in favor of 6 liability.” Id. at 76. These exceptions do not apply in this case. 7 Plaintiffs argue that they have suffered non-economic injuries due to 8 BANA’s failure to protect them from fraudulent activity. Specifically, Plaintiffs 9 allege that their account and personal information was obtained by unknown 10 third parties and used for unauthorized transactions, forcing them to spend 11 significant time responding to the breach. But “the loss of money through 12 fraudulent transactions and time due to responding to the breach are purely 13 economic injuries.” In re Bank of Am. California Unemployment Benefits Litig., 674 14 F. Supp. 3d at 921. Because no exception to the economic loss doctrine applies, 15 and because Plaintiffs have failed to allege that they suffered cognizable non- 16 economic injuries, BANA’s Motion to Dismiss Plaintiffs’ negligence claims under 17 the economic loss doctrine is granted, with leave to amend. 18 Finally, Plaintiffs have plausibly alleged negligence per se based on alleged 19 violations of the NDTPA. As outlined above, Plaintiffs have set forth sufficiently 20 plausible allegations that BANA violated the NDTPA. To prevail under a 21 negligence per se claim, a plaintiff must prove that (1) he or she belongs to a class 22 of persons that a statute is intended to protect, (2) the plaintiff's injuries are the 23 type the statute is intended to prevent, (3) the defendant violated the statute, (4) 24 the violation was the legal cause of the plaintiff's injury, and (5) the plaintiff 25 suffered damages. Anderson v. Baltrusaitis, 944 P.2d 797, 799 (Nev. 1997). Here, 26 the NDTPA exists to protect “any person who is a victim of consumer fraud.” NRS 27 41.600(1). Plaintiffs’ alleged injuries are injuries allegedly caused by consumer 28 fraud, as defined in the statute. As outlined above, Plaintiffs have plausibly 1 alleged that BANA violated the statute. The Court is satisfied with Plaintiffs’ 2 causation and damages allegations. But despite these allegations, the economic 3 loss doctrine blocks Plaintiffs’ ability to recover under this theory. BANA’s Motion 4 to Dismiss this claim is granted, with leave to amend. 5 3. Breach of Implied Covenant of Good Faith and Fair Dealing 6 The Yip Plaintiffs allege a cause of action based on a breach of the implied 7 covenant of good faith and fair dealing. 8 “[T]he implied covenant of good faith and fair dealing . . . is part of every 9 contract.” Hilton Hotels Corp. v. Butch Lewis Prods., Inc., 808 P.2d 919, 922 (Nev. 10 1991). “When one party performs a contract in a manner that is unfaithful to the 11 purpose of the contract and the justified expectations of the other party are thus 12 denied, damages may be awarded against the party who does not act in good 13 faith.” Id. at 923. A party sufficiently alleges an implied covenant claim by 14 identifying the contract that is the basis for the claim, identifying the conduct 15 that constitutes breach of the covenant, and alleging that the breach caused the 16 party damage. Morris v. Bank of America Nevada, 886 P.2d 454, 457 (Nev. 1994). 17 Good faith is a question of fact. Consol. Generator-Nevada, Inc. v. Cummins Engine 18 Co., 971 P.2d 1251, 1256 (Nev. 1998) (citing Mitchell v. Bailey & Selover, Inc., 605 19 P.2d 1138, 1139 (Nev. 1980)). 20 The Yip Plaintiffs have pled the elements of the breach of the covenant of 21 good faith and fair dealing. First, the Yip Plaintiffs identify the contract as the 22 Cardholder Agreement. (Yip FAC ¶ 346.) Second, they identify the following 23 conduct as BANA’s breach of the covenant: failing to issue chip cards; failing to 24 secure card, account, and personal information; failing to adequately monitor for 25 fraudulent transactions; failing to “increase its efforts” in light of rise in number 26 of DETR cardholders and the rise of fraud related to the pandemic; failing to 27 ensure effective customer service; failing to warn of fraudulent use; failing to 28 adequately process and investigate Plaintiffs’ claims; failing to extend provisional 1 credit to Plaintiffs suffering delays in their fraud claims; and freezing accounts 2 without a way for Plaintiffs to contest the action. (Id. ¶ 347.) Third, they allege 3 damages arising out of the breach. (Id. ¶ 348.) 4 Defendants argue that the implied covenant of good faith and fair dealing 5 cannot impose new obligations that extend beyond or contradict the agreement. 6 But Nevada’s implied covenant of good faith and fair dealing permits use of the 7 covenant to find breach beyond the literal terms of the contract. See J.A. Jones 8 Const. Co. v. Lehrer McGovern Bovis, Inc., 89 P.3d 1009, 1016 (Nev. 2004) (citing 9 Hilton Hotels, 808 P.2d at 922–23). 10 Defendants then argue that Plaintiffs may not bring an implied covenant 11 claim based on the same allegations underlying their express contract claim. A 12 plaintiff “may plead both breach of contract and breach of the implied covenant 13 of good faith and fair dealing as alternative theories of liability.” See Ruggieri v. 14 Hartford Ins. Co. of the Midwest, 2013 WL 2896967, at *3 (D. Nev. 2013). 15 “Pleadings must be construed so as to do justice.” Fed. R. Civ. P. 8(e). Although 16 Plaintiffs do not explicitly plead in the alternative, they have sufficiently pled the 17 elements for breach of the implied covenant of good faith and fair dealing. 18 Finally, Defendants argue that the terms of the implied covenant of good 19 faith and fair dealing alleged by Plaintiffs are too vague and fail to provide 20 workable standards. “Whether the controlling party’s actions fall outside the 21 reasonable expectations of the dependent party is determined by the various 22 factors and special circumstances that shape these expectations.” Hilton Hotels, 23 808 P. 2d, at 923–24. Good faith is a question of fact. Consol. Generator-Nevada, 24 Inc., 971 P.2d at 1256. Whether Plaintiffs can establish sufficient facts to show a 25 Defendant’s lack of good faith is a question to be addressed later in proceedings. 26 The Court therefore denies BANA’s Motion to Dismiss Yip Plaintiffs’ claims 27 for breach of the implied covenant of good faith and fair dealing. 28 4. Breach of Implied Contract 1 The Yip Plaintiffs allege a cause of action based on an implied contract. The 2 Court need not address these arguments in detail. “[A]n action does not lie on an 3 implied contract where there exists between the parties an express contract 4 covering the same subject matter.” Rockstar, Inc. v. Original Good Brand Corp., 5 No. 09-CV-1499, 2010 WL 3154120, at *6 (D. Nev. 2010) (quoting Ewing v. 6 Sargent, 482 P.2d 819, 823 (Nev. 1971). Because the Court found that the 7 Account Agreement is an express, written, valid agreement covering all conduct 8 alleged in the Yip FAC, there can be no action for breach based on an implied 9 contract. The Court therefore dismissed this claim with prejudice and without 10 leave to amend. 11 5. Breach of Fiduciary Duty 12 The Yip Plaintiffs do not oppose dismissal of their claims of a breach of 13 fiduciary duty. (ECF No. 45 at 22, n.4.) The Court therefore dismisses those 14 claims without prejudice. “[A]n action does not lie on an implied contract where 15 there exists between the parties an express contract covering the same subject 16 matter.” Rockstar, Inc., 2010 WL 3154120, at *6 (D. Nev. 2010); see also 17 Leasepartners, 942 P.2d at 187. 18 6. Breach of Contract and Breach of Implied Covenant of Good 19 Faith and Fair Dealing (Third-Party Beneficiaries) 20 The Yip Plaintiffs’ bring a claim for breach of contract and breach of implied 21 covenant good faith and fair dealing claims based on the agreement between 22 BANA and DETR, arguing that they are third-party beneficiaries of that contract. 23 A party seeking to enforce a contract as a third-party beneficiary must plead a 24 contract with a “clear[] . . . promissory intent to benefit the third party.” Rose, 25 LLC v. Treasure Island, LLC, 135 Nev. 145, 155 (Nev. App. 2019); see Lipshie v. 26 Tracy Inv. Co., 93 Nev. 370, 380 (1977) (“‘[T]here must be an intent clearly 27 manifested by the promisor to secure the benefit claimed to the third party.’”). 28 “[T]he language of the contract must show a clear intent to rebut the presumption 1 || that the [third parties] are merely incidental beneficiaries.” Orff v. United States, || 358 F.3d 1137, 1145 (9th Cir. 2004) (internal quotation marks omitted). 3 Plaintiffs have failed to make plausible allegations that they are intended 4 || beneficiaries of the contract between BANA and DETR. Plaintiff simply argues 5 || that the question of whether a third-party is an intended beneficiary is a question 6 || of fact. To survive a motion brought under Fed. R. Civ. P. 12(b)(6), Plaintiffs must 7 || point to specific factual allegations that, if taken as true, would make out a claim 8 || as a third-party beneficiary of the contract between BANA and DETR. Thus, the 9 || Court will grant BANA’s Motion to Dismiss these claims, with leave to amend. 10 || Ill. CONCLUSION 11 IT IS THEREFORE ORDERED that BANA’s motions to dismiss in each case 12 || are GRANTED IN PART and DENIED IN PART consistent with this Order. (Yip 13 || ECF No. 44; Hamilton ECF No. 22.) 14 IT IS FURTHER ORDERED that the Yip Plaintiffs’ Motion for Leave to File 15 |} Document, (Yip ECF No. 44), is GRANTED. 16 Consistent with this Order, the Yip Plaintiffs are directed to file an Amended 17 || Complaint or a Status Report with the Court within 30 days of the date of this 18 || Order. 19 20 DATED THIS 9th day of August 2024. 21 99 Ans jlosead Jen 23 24 UNITED STATES DISTRICT JUDGE 25 26 27 28