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Singer v. Eintelligence, Inc.

United States District Court, N.D. Illinois, Eastern Division

July 7, 2014

KATRINA SINGER, individually and on behalf of all others similarly situated, Plaintiff,

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For Katrina Singer, individually and on behalf of all others similarly situated, Plaintiff: Keith James Keogh, LEAD ATTORNEY, Katherine Marie Bowen, Michael S. Hilicki, Timothy J. Sostrin, Keogh Law, Ltd., Chicago, IL.

For EIntelligence Incorporated, Defendant: Brian Richard Holman, LEAD ATTORNEY, Tara Beth Davis, Holman & Stefanowicz, LLC, Chicago, IL.

For MetaBank, Defendant, Cross Claimant, Cross Defendant: Daniel K. Cray, LEAD ATTORNEY, Melissa H Dakich, Cray Huber Horstman Heil & VanAusdal LLC, Chicago, IL.

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Charles P. Kocoras, United States District Judge.

This matter comes before the Court on the motions for judgment on the pleadings of Defendants EIntelligence, Inc. (" EIntelligence" ) and MetaBank (collectively " Defendants" ) pursuant to Federal Rule of Civil Procedure 12(c) (" Rule 12(c)" ) and the motions for summary judgment of Defendants under Federal Rule of Civil Procedure 56 (" Rule 56" ). For the following reasons, the Court denies Defendants' motions for judgment on the pleadings and grants summary judgment in favor of Defendants. The pending motion to certify the class is denied as moot.


I. Facts

The following facts are taken from the parties' respective statements and exhibits filed pursuant to Northern District of Illinois Local Rule 56.1. The Court reviews each Local Rule 56.1 statement and disregards any argument, conclusion, or assertion unsupported by the evidence in the record. The parties do not dispute the facts below unless otherwise noted.

This case arises out of an alleged violation of the Electronic Funds Transfer Act (" EFTA" ), 15 U.S.C. § § 1693 et seq. and its implementing regulations, 12 C.F.R. § 205 et seq. EIntelligence is an Independent Sales Organization (" ISO" ) with its headquarters in Illinois. MetaBank is a chartered savings bank with its principal place of business at 121 East Fifth Street in Storm Lake, Iowa.

In early 2012, EIntelligence began discussions with 7700 Kedzie Gas Corporation (" Kedzie Gas" ) to sell Kedzie Gas an automated teller machine (" ATM" ). On February 8, 2012, EIntelligence and Kedzie Gas entered into a Merchant Processing Services Agreement (" Processing Agreement" ) that included a provision stating that EIntelligence has " the exclusive right to manage the [ATM]. . . subject to [Kedzie Gas's] responsibilities for [the ATM]. . ."

In accordance with the terms of the Processing Agreement, EIntelligence became the ISO and also contracted to service the ATM. As the servicer, EIntelligence would respond to calls or requests by Kedzie Gas and provide the necessary maintenance to the ATM machine through the hiring of independent contractors. It was Kedzie Gas's responsibility to call EIntelligence with any maintenance issues, such as the ATM in need of money, paper or service. The parties dispute whether EIntelligence was responsible for the fee notice stickers.

Kedzie Gas was the sole entity responsible for determining the amount of the surcharge fee that was charged to users of the ATM. The surcharge fees for the ATM were routed through the processor

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and credited to an EIntelligence bank account number. Once a month, EIntelligence would pay Kedzie Gas the total surcharges for that particular month, after deducting its maintenance fee and any applicable fees charged by the various industry service providers and processors. Kedzie Gas paid EIntelligence a maintenance fee of either $0.25 per transaction made at the ATM in question or $100.00 per month, whichever was the lower charge for the servicing of the ATM. EIntelligence also paid MetaBank a monthly fee for its services as sponsoring bank.

In 2008, EIntelligence entered into a Retail Services and EFT Processing Agreement with First Data Retail Services, L.P. (" FDRS" ), a processor. However, a processor must have a sponsoring bank to process the ATM transactions through various networks (Visa, MasterCard, etc.). Networks require sponsoring banks to ensure proper registration of each ISO. On February 8, 2012, MetaBank, a member of the networks, entered into a Merchant Participation Agreement with Kedzie Gas to be the sponsor bank for the ATM that Kedzie Gas would soon purchase from EIntelligence.

Pursuant to the contract between Defendants, MetaBank had the ability to conduct an audit or review of EIntelligence's operations, book, and records to determine compliance with its contract, policies, procedures, and rules of the networks. However, under the contract, MetaBank required notice of any new law related to the ATM. EIntelligence was the entity responsible for complying with all applicable laws.

On February 20, 2012, EIntelligence sold an ATM to Kedzie Gas and enrolled it into EIntelligence's ATM program, which then connected the ATM with the designated processor, FDRS. FDRS then connected the ATM to networks, which provided the connection between the ATM and a customer's bank account. On March 3, 2012, the ATM was installed at Kedzie Gas with a posted fee notice sticker affixed to the front. The fee notice sticker stated: " This terminal is Operated by MetaBank and is Serviced by eIntelligence ATM in compliance with all regulatory and network rules. MetaBank may charge a $2.50 fee to cardholders for each case withdrawal."

On October 15, 2012, Singer used the ATM located at Kedzie Gas to withdraw money from her bank account. There was a screen notice that a fee would be charged for a withdrawal from the ATM, but Singer alleges that there was no fee notice sticker posted at a prominent location on or near the ATM. Singer's receipt from the transaction stated that the surcharge was paid to EIntelligence ATM. Defendants provide time-stamped photographs from March 3, 2012, June 18, 2012 and September 24, 2012, all of which show a fee notice sticker on the ATM at Kedzie Gas. Singer argues that these photographs are inadmissible as evidence.

With respect to EFTA compliance, EIntelligence had a two-page policy (" EFTA policy" ) which discusses " Signage Compliance." According to the EFTA policy, EIntelligence had a system in place to monitor and replace defaced or removed ATM fee disclosure notices. An EIntelligence representative, key custodian or servicing agent would take: (i) a time-stamped photograph of each ATM when a fee sticker had been affixed; (ii) a time-stamped photograph of the exterior of the location where the ATM was located; and (iii) a time-stamped photograph if a fee sticker had been reapplied or ...

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