Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 1 of 13 PageID: 222 Mark D. Mailman, I.D. No. MDM 1122 John Soumilas, I.D. No. JS 0034 FRANCIS & MAILMAN, P.C. Land Title Building, 19 th Floor 100 South Broad Street Philadelphia, PA 19110 (215) 735-8600 Attorneys for Plaintiff UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY FREDERIC J. BAKER, on behalf of himself ) and all others similarly situated, ) ) Plaintiff, ) C.A. No. 08-5668 vs. ) ) INTER NATIONAL BANK, ) and ) NETSPEND CORPORATION, ) JURY TRIAL DEMANDED Defendants. ) ) AMENDED CLASS ACTION COMPLAINT I. NATURE OF THE ACTION 1. This is a consumer class action arising out of Defendants deceptive and misleading practices in making available for purchase and use the All-Access Visa Gift Card ( Gift Card ) in the State of New Jersey. Defendants practices violate the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. ( CFA ), the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act, N.J.S.A. 56:12-14 et seq. ( TCCWNA ), and the common law of unjust enrichment. Plaintiff seeks damages for himself and the Class and injunctive relief. II. PARTIES 2. Plaintiff Frederic J. Baker is an adult individual who resides in Marlton, New Jersey.
Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 2 of 13 PageID: 223 3. Defendant Inter National Bank ( INB ) is a banking corporation with a principal place of business in McAllen, Texas. 4. Defendant NetSpend Corporation ( NetSpend ) is a business corporation with a principal place of business in Austin, Texas. 5. Defendants by themselves and in concert with each other are in the business of selling and servicing the Gift Card within the State of New Jersey. III. JURISDICTION AND VENUE 7. Jurisdiction over this matter is conferred upon this Court by the Class Action Fairness Act of 2005, 28 U.S.C. 1332(d)(2), in that there is diversity of citizenship between the Plaintiff and members of the proposed Class and Defendants, and the aggregate amount in controversy is in excess of five million dollars ($5,000,000.00). 8. Venue lies in this judicial district in that the events which gave rise to this claim occurred within this district. IV. FACTUAL ALLEGATIONS 9. Defendants Gift Cards were at all pertinent times used by New Jersey consumers in retail stores located in New Jersey. 10. Defendants Gift Cards are tangible devices, which look like credit cards, whereon is encoded in an electronic format a value issued in exchange for payment, which promises to provide to the bearer merchandise of equal value to the remaining balance of the device. 11. Defendants are prohibited by law from engaging in unfair or deceptive acts or practices in connection with their Gift Cards. 2
Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 3 of 13 PageID: 224 12. The Office of the Comptroller of the Currency ( OCC ) issued Bulletin OCC 2006-34 on August 14, 2006 entitled Gift Card Disclosures, Guidance on Disclosure and Marketing Issues, which provides, among other things, that banks issuing gift cards are subject to the prohibition against unfair or deceptive acts or practices.... OCC Bulletin 2006-34, 2006 WL 2384741, *1, n. 4 (O.C.C. Aug. 14, 2006). 13. Plaintiff s mother gave to Plaintiff the Defendants Gift Card in the amount of $50.00, which she purchased in or around November 2007 at what is believe to be a supermarket in Pennsylvania. The Gift Card was sold in a cardboard package. A true and correct copy of the interior and exterior of the package is attached hereto as Exhibit A. 14. The Gift Card was accompanied by an insert entitled Terms and Conditions which provided, among other things, that these terms and conditions apply to purchaser and to any subsequent holder of the card by gift or otherwise. 15. Plaintiff used the Gift Card on several occasions in New Jersey, where he resides, to purchase goods and services, including but not limited to, in December 2007 at Borders Books in Marlton, New Jersey and at the Regal Cinemas in Burlington, New Jersey. 16. The Gift Card package contains the following provisions and representations: (a) Card good through 11.09. (b) The funds on this card do not expire. (c) The monthly administrative fee of $2.95 will be waived for the first 6 months from date of purchase. 17. Defendants policy and/or practice is to charge a monthly fee of $4.95 (not $2.95) against the unused value of the Gift Cards after 6 consecutive months. 3
Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 4 of 13 PageID: 225 18. Defendants charged such a $4.95 monthly fee, which they described as a maintenance fee, to Plaintiff s account on or about April 30, 2008 and again May 31, 2008. 19. Nowhere on the front or back of the Gift Card package or on any item provided to Plaintiff, including the Gift Card itself and the insert that accompanied the Gift Card, do Defendants disclose a $4.95 monthly maintenance fee, or any other type of $4.95 recurring monthly fee associated with the Gift Card. 20. Instead, Defendants only disclose that a one-time $4.95 purchase fee applies and that the monthly fee will be $2.95 (not $4.95) after the first six months from the date of purchase. 21. Pursuant to Defendants policy and/or practice of charging monthly fees of $4.95 per month after the first six months: (a) the representation that Card good through 11.09 was necessarily false, because the accumulation of monthly fees would make the $50.00 Gift Card valueless and unusable well before November 2009, even if the user made no purchases whatsoever on the Gift Card; (b) the representation that The funds on this card do not expire was necessarily false because the accumulation of monthly fees would make the Gift Card expire even if the user made no purchases on the Gift Card; and (c) the representation that The monthly administrative fee of $2.95 will be waived for the first 6 months from date of purchase was necessarily false because Defendants practice and policy was to charge and collect monthly fees of $4.95 after the first 6 months, not a $2.95 per month fee, as they represent on the Gift Card package. 4
Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 5 of 13 PageID: 226 22. Plaintiff and those similarly situated have suffered an ascertainable loss, including, but not limited to, being charged and/or paying the $4.95 monthly fee instead a $2.95 monthly fee after the first six month following the Gift Card s purchase. 23. Plaintiff and those similarly situated will suffer an ascertainable loss in the future, including but not limited to monthly fees in excess of the amount represented by Defendants as the actual monthly fee. 24. Further, Defendants Gift Card is less valuable because it expires much earlier than what is represented on the package. 25. The terms and conditions that Defendant attempted to impose in connection with the Gift Card also do not disclose any $4.95 monthly fee, although they identify a $9.95 refund processing fee a $.50 balance inquiry fee; and a $2.95 administrative fee. V. CLASS ACTION ALLEGATIONS 26. This action is brought as a class action, pursuant to the provisions of Rule 23 of the Federal Rules of Civil Procedure. Plaintiff brings this action on behalf of himself and all others similarly situated on behalf of the following Class: All persons who purchased or used an All Access Visa Gift Card in the form attached to the Amended Complaint, in any amount, in New Jersey at any time from a date six (6) years prior to the filing of the Complaint and continuing through to the completion of this litigation. 27. The Class for whose benefit this action is brought is so numerous that joinder of all members is impracticable. 28. Plaintiff s claims are typical of the claims of the members of the Class, since all such claims arise out of the use of Gift Cards in the State of New Jersey. 29. Plaintiff does not have interests antagonistic to the interests of the Class. 30. The Class, of which Plaintiff is a member, is readily identifiable. 5
Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 6 of 13 PageID: 227 31. Plaintiff will fairly and adequately protect the interests of the Class, and has retained competent counsel experienced in the prosecution of consumer litigation and class actions. 32. There are questions of law and fact common to the members of the Class. These common questions include: (a) Whether Defendants Gift Card constitutes the use of an unconscionable commercial practice, deception, fraud, false pretense, false promise, or misrepresentation; (b) Whether Defendants Gift Card constitutes the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission; (c) Whether the provision that a $2.95 monthly fee will be charged on the Gift Card after 6 months has diminished the value of those Gift Cards and whether that reduction in value constitutes an ascertainable loss under the CFA; and (d) Whether the charging of a $4.95 monthly maintenance fee has diminished the value of those Gift Cards and whether that reduction in value constitutes an ascertainable loss under the CFA. 33. A class action is superior to other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Although the economic damages suffered by the individual class members are significant, the amount is modest compared to the expense and burden of individual litigation. A class action will cause an orderly and expeditious administration of the claims of the Class and will foster economies of time, effort and expense. 6
Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 7 of 13 PageID: 228 34. The questions of law and/or fact common to the members of the Class predominate over any questions affecting only individual members. 35. The prosecution of separate actions by individual members of the Class would run the risk of inconsistent or varying adjudications, which would establish incompatible standards of conduct for the Defendant in this action. Prosecution as a class action will eliminate the possibility of repetitious litigation. 36. Defendant has acted or refused to act on grounds generally applicable to the Class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole. 37. Plaintiff does not anticipate any difficulty in the management of this litigation. VI. CAUSES OF ACTION COUNT I New Jersey Consumer Fraud Act 38. Plaintiff, on behalf of himself and others similarly situated, repeats and realleges all prior allegations as if set forth at length herein. 39. The Supreme Court of New Jersey has again confirmed that the CFA explicitly and without qualification outlaws [t]he act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise or real estate. N.J.S.A. 56:8-2, quoted in Real v. Radir Wheels, Inc., 2009 WL 961206 (N.J. Apr. 8, 2009). 40. The Gift Card constituted merchandise within the meaning of the CFA, N.J.S.A. 56:8-1(c). 7
Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 8 of 13 PageID: 229 41. Defendants are persons within the meaning of the CFA, N.J.S.A. 56:8-1(d). 42. Defendants have violated the CFA as they have used and employed unfair and deceptive practices in connection with the Gift Card by, including, but not limited to, engaging in the following acts: (a) (b) (c) misrepresenting the expiration date of the Gift Card; misrepresenting that the funds on this card do not expire ; misrepresenting the terms and the amount of the monthly fee charged by Defendants. (d) collecting and/or attempting to collect monthly fees in excess of the amount they were permitted to collect. 43. Defendants business practices constitute unconscionable commercial practices, deception, fraud, false promises, false pretenses and/or misrepresentations in its interactions with Plaintiff and those similarly situated, in violation of the CFA. 44. Plaintiff and those similarly situated suffered ascertainable losses as described herein. COUNT II Truth-in-Consumer Contract, Warranty and Notice Act 45. Plaintiff, on behalf of himself and others similarly situated, repeats and realleges all prior allegations as if set forth at length herein. 46. Plaintiff is a consumer within the meaning of the TCCWNA. 47. Defendants Terms and Conditions provide, among other things, that these terms and conditions apply to purchaser and to any subsequent holder of the card by gift or otherwise. 8
Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 9 of 13 PageID: 230 48. Defendants Gift Cards, packages, and the terms and conditions included therein are consumer notices, signs and/or contracts subject to TCCWNA. 49. TCCWNA, at N.J.S.A. 56:12-15, prohibits any seller from giving or displaying a written consumer notice that includes a provision that violates a clearly established right of the consumer or responsibility of the seller as established by New Jersey or Federal law. 50. Defendants Gift Cards, packages, and the terms and conditions included therein include multiple violations of the TCCWNA, including, without limitation, by including a provision that states that Defendants will deduct a $2.95 monthly fee from the balance of the card after the first six months, except where (or unless) prohibited by law, while Defendants instead deduct the sum of $4.95 as a monthly fee. 51. The above provisions and notices violate New Jersey law as unconscionable commercial practices, deception, fraud, false promises, false pretenses and/or misrepresentations; 52. The provisions and notices violate federal law as unfair and deceptive acts or practices prohibited by the Federal Trade Commission Act, 15 U.S.C. 45(a)(1). OCC Bulletin 2006-34, 2006 WL 2384741, * 1, n. 4 (O.C.C. Aug. 14, 2006). COUNT III Unjust Enrichment 53. Plaintiff, on behalf of himself and others similarly situated, repeats and realleges all prior allegations as if set forth at length herein. 54. Defendants have been unjustly enriched at the expense of Plaintiff and the Class by their collection of unlawful monthly fees and costs not permitted by New Jersey law. 55. As a result, Defendants have been unjustly enriched and Plaintiff and members of the Class have suffered damages. 9
Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 10 of 13 PageID: 231 VII. JURY TRIAL DEMAND 56. Plaintiff demands trial by jury on all issues so triable. VIII. PRAYER FOR RELIEF WHEREFORE, Plaintiff, on behalf of himself and all others similarly situated, demands judgment against the Defendants as follows: A. For injunctive relief prohibiting Defendants from future violations of the CFA and the TCCWNA; B. For injunctive relief prohibiting Defendants from misrepresenting the expiration date on its Gift Cards; C. For a declaratory judgment that the Defendants violated the CFA and TCCWNA; D. For disgorgement of all fees collected by Defendant in violation of the CFA; E. For actual damages; F. For treble damages pursuant to N.J.S.A. 56:8-19; G. For maximum statutory damages of not less than $100 per Class member pursuant to N.J.S.A. 56:12-17 for each separate violation of N.J.S.A. 56:12-15;; H. For reasonable attorneys fees and costs of suit in connection with this action pursuant to N.J.S.A. 56:8-19 and N.J.S.A. 56:12-17; I. For pre-judgment and post-judgment interest; and J. For such other and further relief as Plaintiff and all others similarly situated may be entitled or as the Court deems equitable and just. IX. NOTICE TO ATTORNEY GENERAL OF ACTION A copy of this Amended Complaint will be mailed to the Attorney General of the State of New Jersey within ten days after the filing with the Court, pursuant to N.J.S.A. 56:8-20. 10
Case 1:08-cv-05668-JHR -KMW Document 37 Filed 05/04/09 Page 11 of 13 PageID: 232 X. DESIGNATION OF TRIAL COUNSEL Plaintiff hereby designates James A. Francis and John Soumilas as trial counsel in the above-captioned matter. Plaintiff reserves the right to amend this designation as necessary. XI. ARBITRATION CERTIFICATION I, John Soumilas, counsel of record do hereby certify pursuant to Local Civil Rule 201.1(d) that relief other than monetary damages is sought and that the damages sought are in excess of $150,000. I further certify that, to my knowledge, the within case is not related to any case now pending or within one year previously terminated action in this Court. Respectfully submitted, FRANCIS & MAILMAN, P.C. BY: /s/ John Soumilas JAMES A. FRANCIS MARK D. MAILMAN JOHN SOUMILAS Land Title Building, 19 th Floor 100 South Broad Street Philadelphia, PA 19110 (215) 735-8600 DONOVAN SEARLES, LLC DAVID A. SEARLES 1845 Walnut Street, Suite 1100 Philadelphia, PA 19103 (215) 732-6067 Attorneys for Plaintiff and the Class Dated: May 4, 2009 11
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