     Case: 13-10375      Document: 00512941786         Page: 1    Date Filed: 02/20/2015




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT


                                      No. 13-10375                       United States Court of Appeals
                                                                                  Fifth Circuit

                                                                                FILED
JAMES L. FREY,                                                           February 20, 2015
                                                                           Lyle W. Cayce
              Plaintiff - Appellee                                              Clerk

v.

FIRST NATIONAL BANK SOUTHWEST,

              Defendant - Appellant




                   Appeal from the United States District Court
                        for the Northern District of Texas
                             USDC No. 3:11-CV-3093


Before BENAVIDES, CLEMENT, and GRAVES, Circuit Judges.
PER CURIAM:*
       James Frey instituted a class action against First National Bank
Southwest (“First National”) because its ATM at a particular location lacked a
fee notice on the exterior of the machine, in violation of the Electronic Funds
Transfer Act (“EFTA”). 15 U.S.C. § 1693b(d)(3) (2011). The district court
certified a class of consumers who were charged a fee for using the ATM




       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                  No. 13-10375
without being given the required exterior notice during a specified period.
First National appeals. We affirm.
                 I. Factual and Procedural Background
      First National operates an ATM in Plano, Texas. The ATM charges a fee
for use by those who are not account-holders at First National. EFTA requires
that operators of ATMs provide notice to consumers when a fee will be imposed
for use of the ATM. 15 U.S.C. § 1693b(d)(3). During the relevant time period,
EFTA required ATM operators to give notice in two locations, both “in a
prominent and conspicuous location on or at the automated teller machine at
which the electronic fund transfer is initiated by the consumer” and “on the
screen of the automated teller machine, or on a paper notice issued from such
machine, after the transaction is initiated and before the consumer is
irrevocably committed to completing the transaction.” Id. § 1693b(d)(3)(B)
(2011). To be protected by EFTA, the consumer’s account must be an account
that is “established primarily for personal, family, or household purposes.” Id.
§ 1693a(2). EFTA provides that no fee may be imposed unless the required
notice is given. Id. § 1693b(d)(3)(C).
      Section 1693m of EFTA creates a cause of action for violation of the fee
notice provision, and permits recovery of actual damages and statutory
damages. Id. § 1693m(a). For an individual action, the statutory damages
range from $100 to $1,000. Id. § 1693m(a)(2)(A). For class actions, EFTA
authorizes a court to award up to $500,000 or one percent of the net worth of
the defendant ATM operator.       Id. § 1693m(a)(2)(B).    EFTA also provides
multiple statutory defenses to liability. The ATM operator is not liable if “the
violation was not intentional and resulted from a bona fide error
notwithstanding the maintenance of procedures reasonably adapted to avoid
any such error.” Id. § 1693m(c). The ATM operator is also not liable if the


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                                 No. 13-10375
operator posted a compliant notice and “the notice is subsequently removed,
damaged, or altered by any person other than the operator.” Id. § 1693h(d).
       On October 20, 2011, James Frey made a withdrawal from First
National’s ATM. While the ATM had an on-screen notice advising him of the
transaction fee, Frey alleges that the ATM did not have the required exterior
notice of the fee. Frey was charged a $3.50 fee for withdrawing cash from the
ATM.
       On November 9, 2011, Frey filed a class action suit against First
National on behalf of himself and all others similarly situated, alleging
violation of the EFTA exterior notice requirement.          His complaint seeks
statutory damages, costs, and attorney’s fees. In February 2013, the district
court granted Frey’s motion for class certification.       It certified a class of
consumers who were charged withdrawal fees from the allegedly non-
compliant ATM machine between November 9, 2010 and April 26, 2012, the
date First National posted a compliant notice on the ATM. First National
appeals the class certification. After hearing oral argument in this case, we
held the appeal in abeyance pending the resolution of Mabary v. Home Town
Bank, No. 13-20211, a previously-argued case which raised identical issues.
That case has now been resolved. Mabary v. Home Town Bank, N.A., 771 F.3d
820 (5th Cir. 2014). We now decide the instant appeal.
                                II. Discussion
       First National challenges the class certification on two grounds. First,
it argues that a 2012 amendment to EFTA applies retroactively to extinguish
Frey’s claims. Second, it argues that the district court erred in concluding that
the requirements of Rule 23 were satisfied. We address each issue in turn.
       A.   Retroactivity of EFTA Amendment
       EFTA was amended in December 2012 to remove the requirement for an
exterior fee notice on the machine.     15 U.S.C. § 1693b(d)(3)(B) (2012), as
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                                 No. 13-10375
amended by Amendment—Electronic Fund Transfer Act, P.L. 112-216,
December 20, 2012, 126 Stat 1590. As a result, ATM operators are no longer
required to maintain any exterior notice of fees that will be charged, although
they must still provide an on-screen notice. Id. First National contends that
this amendment applies retroactively.
      “Our starting point is the ‘deeply rooted’ presumption against
retroactivity of Landgraf v. USI Film Products.” Mabary v. Home Town Bank,
N.A., 771 F.3d 820, 825 (5th Cir. 2014) (citing Landgraf v. USI Film Products,
511 U.S. 244, 265 (1994)). We apply the Landgraf two-part test to determine
whether a statutory amendment applies retroactively.           Id.    First, we
“determine whether Congress unambiguously has prescribed the statute’s
proper reach, determined by applying normal rules of statutory construction
to the express language to determine Congress’s intent.”        Id.   Second, if
Congress has not clearly expressed an intent to apply the statute retroactively,
we determine “whether the new statute would have retroactive effect, i.e.,
whether it would impair rights a party possessed when he acted, increase a
party’s liability for past conduct, or impose new duties with respect to
transactions already completed.” Id. (quoting Landgraf, 511 U.S. at 280). If
the amendment would have a retrospective effect on vested rights, the statute
should not be applied retroactively, absent clear congressional intent to the
contrary. See id. at 825-26.
      Mabary v. Home Town Bank establishes that under the Landgraf test,
the 2012 EFTA amendment should not be applied retroactively to Frey’s
claims. Id. at 826-27. The Mabary court found that the text of the EFTA
amendment is silent as to retroactive application, and that applying the
statute retroactively would have an impermissible retrospective effect by
destroying a cause of action that had already accrued. See id. at 826. The
court concluded that “[a]t the time Mabary’s claim arose, she had a substantive
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                                      No. 13-10375
right to two notices or statutory damages, and without clear Congressional
intent to the contrary, the presumption against retroactivity restricts the
application of the EFTA amendment to eliminate her claim.” Id. at 827. 1
Frey’s claim similarly accrued during the time he and others similarly situated
had a right to two notices or statutory damages, and the EFTA amendment
does not apply retroactively to extinguish those claims.
       First National also argues that, regardless of whether the EFTA
amendment is retroactive, the amendment precluded certification because it
took effect before the class was certified and thus before putative class
members were parties to the suit.                Mabary also expressly rejected this
argument: “[T]he EFTA amendment poses no more a barrier for putative class
members than it does for Mabary, for claims alleging violations before the
amendment was enacted.” Mabary, 771 F.3d at 827.
       Thus, the EFTA amendment has no effect on the district court’s
certification of the class and the pending class claims.
       B.     Rule 23
       Next, First National contends that the district court erred in certifying
a class under Rule 23. “[T]he district court maintains great discretion in
certifying and managing a class action. We will reverse a district court’s
decision to certify a class only upon a showing that the court abused its
discretion, or that it applied incorrect legal standards in reaching its decision.”
Mullen v. Treasure Chest Casino, LLC, 186 F.3d 620, 624 (5th Cir. 1999)
(citations omitted). Though, of course, the district court’s “discretion must be




       1 As the Mabary court noted, the two other circuits that have addressed similar claims
have not applied the EFTA amendment retroactively. See Mabary, 771 F.3d at 827 n.36
(citing Hughes v. Kore of Indiana Enterprise, Inc., 731 F.3d 672, 674, 678 (7th Cir. 2013);
Charvat v. Mut. First Fed. Credit Union, 725 F.3d 819, 821, 824 (8th Cir. 2013)).
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                                 No. 13-10375
exercised within the framework of rule 23.” Castano v. Am. Tobacco Co., 84
F.3d 734, 740 (5th Cir. 1996).
      The district court certified the class pursuant to Federal Rule of Civil
Procedure 23(b)(3). “A class may be certified under Rule 23(b)(3) only if it
meets the four prerequisites found in Rule 23(a) and the two additional
requirements found in Rule 23(b)(3).” Mullen, 186 F.3d at 623. The four Rule
23(a) prerequisites are:
      (1) numerosity (a class so large that joinder of all members is
      impracticable); (2) commonality (questions of law or fact common
      to the class); (3) typicality (named parties’ claims or defenses are
      typical of the class); and (4) adequacy of representation
      (representatives will fairly and adequately protect the interests of
      the class).
Id. (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997)). The
two additional Rule 23(b) requirements are “predominance” and “superiority,”
which require that common questions “predominate over any questions
affecting only individual members,” and that class resolution be “superior to
other available methods for the fair and efficient adjudication of the
controversy.” Fed. R. Civ. P. 23(b)(3); Amchem Prods., 521 U.S. at 615; Mullen,
186 F.3d at 623-24.
      First National does not challenge the district court’s conclusions with
regard to the four Rule 23(a) requirements or the superiority requirement, but
argues that the district erred because: (1) the class does not meet Rule 23’s
implicit ascertainability requirement; and (2) common issues do not
predominate.
            1.    Ascertainability
      We have stated that “in order to maintain a class action, the class sought
to be represented must be adequately defined and clearly ascertainable.”
Union Asset Mgmt. Holding A.G. v. Dell, Inc., 669 F.3d 632, 639 (5th Cir. 2012)

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(quotation and alteration omitted). “However, the court need not know the
identity of each class member before certification; ascertainability requires
only that the court be able to identify class members at some stage of the
proceeding.” William B. Rubenstein, Newberg on Class Actions § 3:3 (5th ed.
2011). First National argues that because EFTA applies only to consumers
whose accounts are “established primarily for personal, family, or household
purposes,” 15 U.S.C. § 1693a(2), the court would have to conduct a fact-
intensive, individualized inquiry into the nature of every class member’s
account, rendering the class unascertainable.
      The district court’s conclusion that the class is sufficiently ascertainable
was not an abuse of discretion. The class definition here is clear and definite.
It includes an estimated 1,500 identifiable individuals charged a recorded fee
after using one specified ATM between two specified dates. The district court
found that class members may be identified from account numbers and bank
identification numbers associated with the ATM transactions. See Gawarecki
v. ATM Network, Inc., No. 11-CV-1923, 2014 WL 2600056, at *17 (D. Minn.
June 10, 2014) (describing how account holders in a similar case could be
identified). Moreover, as the district court found, the class size is estimated at
1,500 members, which renders the identification of consumers by account and
bank identification numbers manageable. Partly on this basis, the district
court persuasively distinguished other EFTA cases which have found
ascertainability lacking or identification of class members to be unmanageable.
See Ballard v. Branch Banking and Trust Co., 284 F.R.D. 9, 14 (D.D.C. 2012)
(noting that it would be difficult to identify class members where hundreds or
thousands of banks might be involved, and notice by publication would be
“fraught with difficulties” specific to the particular ATM’s location); Mowry v.
JP Morgan Chase Bank, N.A., 2007 WL 1772142, at *6 (N.D. Ill. June 19, 2007)


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                                 No. 13-10375
(finding a proposed class including approximately twenty million transactions
unmanageable).
      First National argues a fact-intensive analysis would be required to
differentiate EFTA-protected consumer accounts from commercial accounts. It
argues that we should import the test courts have applied under the Truth in
Lending Act (“TILA”), which applies only to consumer loans rather than
commercial or business loans. See Cobb v. Monarch Fin. Corp., 913 F. Supp.
1164, 1174-75 (N.D. Ill. 1995); Pfeffer v. HSA Retail, Inc., 2012 WL 1910034,
at *4 (W.D. Tex. May 24, 2012) (applying the Cobb analysis in an ETFA fee-
notice class action case).   In a case involving violation of different EFTA
provisions than the ones at issue here, the Cobb court looked to TILA cases to
assist its determination of whether the account at issue was “established
primarily for personal, family or household purposes.” Cobb, 913 F. Supp. at
1174-75. Under TILA, which applies only to “consumer credit transactions,”
courts “‘examine the transaction as a whole’ and in light of ‘the entire
surrounding factual circumstances’ and if a transaction ‘involves a profit
motive,’ that indicates a business or commercial transaction.’” Id. at 1174
(internal citations omitted) (quoting In re Booth, 858 F.2d 1051, 1054-55 (5th
Cir. 1988); Tower v. Moss, 625 F.2d 1161, 1166 & n.4 (5th Cir. 1980)). The
Cobb court found the TILA case law to be illustrative, and determined that
since the plaintiff’s accounts received direct deposits from her paychecks and
were used to make payments on personal loans, she had sufficiently alleged
that her account was a personal account protected by EFTA. See id.
      However, in spite of Cobb’s recognition that some TILA case law may be
illustrative in the EFTA context, we see no basis for importing all the elements
of the transaction-specific TILA test into the instant case.     EFTA defines
“account” by means of the purpose for which the account is “established.” 15
U.S.C. § 1693a(2). As the district court explained, EFTA “does not require that
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                                  No. 13-10375
the proceeds of an ATM transaction be used for personal purposes. Nor does
it require inquiry into whether the account was mostly used for personal
purposes. It asks only for what the account was established.” Frey v. First
National Bank Southwest, No. 3:11-CV-3093, slip op. at 12 (N.D. Tex. Feb. 20,
2013) (order certifying class). The district court found that some inquiries with
banks or individual class members can be made to establish whether the
account is a personal account or a business account, which would be largely
administrative. See Butto v. Collecto Inc., 290 F.R.D. 372, 382 (E.D.N.Y. 2013)
(“The Court does not find it particularly arduous to ask potential class
members the simple question of whether the individual’s debt at issue qualifies
as a consumer debt.”); Kinder v. United Bancorp, Inc., No. 11-CV-10440, 2012
WL 4490874, at *5 (E.D. Mich. Sept. 28, 2012) (finding that “this concern can
easily be addressed when class members are identified by asking them to
disclose the primary purpose of their account”). Contrary to First National’s
argument, there is nothing to suggest that a lengthy individualized analysis of
each account and all of its individual transactions would be necessary to
identify class members. We thus find no error in the district court’s ruling with
regard to ascertainability of the class.
            2.     Predominance
      Before certifying a class under Rule 23(b)(3), a court must determine that
“the questions of law or fact common to class members predominate over any
questions affecting only individual members.” Fed. R. Civ. P. 23(b)(3); Mullen,
186 F.3d at 624.     “The Rule 23(b)(3) predominance inquiry tests whether
proposed classes are sufficiently cohesive to warrant adjudication by
representation.” Amchem Prods., 521 U.S. at 623. This inquiry requires us to
consider “how a trial on the merits would be conducted if a class were certified.”
Gene and Gene LLC v. BioPay LLC, 541 F.3d 318, 326 (5th Cir. 2008) (quoting
Bell Atl. Corp. v. AT&T Corp., 339 F.3d 294, 302 (5th Cir. 2003)). This “entails
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identifying the substantive issues that will control the outcome, assessing
which issues will predominate, and then determining whether the issues are
common to the class, a process that ultimately prevents the class from
degenerating into a series of individual trials.” Id. (quoting Bell Atl., 339 F.3d
at 302).   “In order to ‘predominate,’ common issues must constitute a
significant part of the individual cases.” Jenkins v. Raymark Indus., Inc., 782
F.2d 468, 472 (5th Cir. 1986).
      The district court found that common questions of law or fact
predominate, because “[c]ommon proof can be used to establish liability, or lack
thereof.” Frey, slip op. at 13. Specifically, the court concluded that proof of
missing notice at the time a consumer used the ATM is sufficient to establish
a claim, and if Frey can prove a period of time in which the notice was missing,
“every proposed class member can utilize that proof.” Id. Additionally, the
district court found that First National’s entitlement to either of the two
statutory defenses is a common issue. The district court concluded that these
issues affect each class member’s claim and predominate over the individual
issues.
      We agree. The primary questions with regard to First National’s liability
are whether and when First National failed to provide the on-machine fee
notice in violation of the EFTA’s requirements during the class period; if so,
the appropriate amount of statutory damages; and whether the bank can avail
itself of either of the two statutory defenses to liability. The answers to these
questions will affect all class member’s claims. See Christy v. Heritage Bank,
No. 3:10-CV-0874, 2013 WL 6858008, at *6 (M.D. Tenn. Nov. 8, 2013);
Gawarecki, 2014 WL 2600056, at *15. These common issues “constitute a
significant part of the individual cases,” sufficient to meet the predominance
requirement. Jenkins, 782 F.2d at 472.


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                                       No. 13-10375
       First National argues that common issues do not predominate because:
(1) each class member must prove that the account was established primarily
for personal use, rather than business use; and (2) each class member must
prove that notice was absent when he or she used the ATM. First National’s
arguments often assume that all questions regarding liability must be capable
of being proved by common evidence. This, however, is not the standard. Frey
must show that common issues predominate, not that there are no individual
issues to be resolved. See id.
       First National’s argument regarding the nature of the account is nearly
identical to the argument it makes regarding the ascertainability of the class.
It argues that because EFTA applies only to consumer accounts, the court must
do an intensive individualized analysis to determine if each class member’s
account was personal. As explained above and as the district court found,
differentiating consumer accounts from business accounts may be done by
inquiring of the banks or requiring class members to answer some threshold
questions about the nature of the account. See Gawarecki, 2014 WL 2600056,
at *1; Kinder, 2012 WL 4490874, at *5. Regardless, the fact that some inquiry
into the nature of each account will have to be made does not render that issue
predominant over the multiple common issues bearing on First National’s
liability. 2



       2  Many district court cases involving consumer protection statutes that treat
consumer transactions differently than business transactions have held that the need to
differentiate between the two does not render the class unidentifiable or defeat the
predominance requirement. See Butto, 290 F.R.D. at 382 (class certified for violations of Fair
Debt Collection Practices Act despite need to determine whether debts were consumer or non-
consumer debts); Wells v. McDonough, 188 F.R.D. 277, 278-79 (N.D. Ill. 1999) (same); In re
CBC Companies, Inc. Collection Letter Litigation, 181 F.R.D. 380, 385 (N.D. Ill. 1998) (same);
Selburg v. Virtuoso Sourcing Grp., LLC, 2012 WL 4514152, at *3, *9-10 (S.D. Ind. Sept. 29,
2012) (same); Hughes v. Cardinal Fed. Sav. & Loan Assoc., 97 F.R.D. 653, 655 (S.D. Ohio
1983) (class certified despite need to determine whether each mortgagee was a commercial
or consumer borrower); Sanchez v. Lowell Lebermann, Inc., 79 F.R.D 21, 24 (W.D. Tex. 1978)
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                                     No. 13-10375
      First National also argues that whether notice was absent from the ATM
on any particular date is an individual question that each class member must
establish. First National relies on one district court decision which found that
the predominance requirement might not have been satisfied in a similar case.
See Ballard, 2012 WL 2089053, at *13. There, the district court found there
was no evidence as to whether the on-machine fee notice was absent during
one particular subpart of the class period. Id. The court suggested that
“common proof may not resolve the factual question of when the ‘on-machine’
notice ceased to be affixed to the ATM” during this period. Id. Thus, although
it resolved the case on other grounds, the court suggested that each class
member might have to individually prove that notice was absent on the date
he or she used the ATM. Id.
      However, we find the district court’s analysis in the instant case, in line
with the analysis in Christy and Gawarecki, to be more persuasive.                   The
district court here found that:
      [A]ssuming sufficient evidence such that a reasonable juror could
      conclude that fee notice was absent for any particular period of
      time, any class member without affirmative proof that the notice
      was not there on any particular day is entitled to some inference
      that the notice was absent. Thus, the period in which the sign was
      absent is a common issue of fact, and whether the notice was
      absent on any particular day is not an individualized inquiry
      defeating predominance.
Frey, slip op. at 13-14. The Christy court held likewise, explaining that the
named plaintiff “will have to prove the period of time during which the on-
machine fee notice was missing, but each proposed class member will not have
to do the same.” Christy, 2013 WL 6858008, at *7; see Gawarecki, 2014 WL
2600056, at *15 (“[T]he determination of the time period in which Defendant


(class certified for violations of Truth-in-Lending Act despite requirement that purchased
vehicles be primarily for personal, family or household use).
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                                 No. 13-10375
was, or was not, in compliance with the EFTA notice provision applies to the
entire class and so will be made by common evidence.”). If the plaintiff’s
evidence “allows a reasonable juror to conclude the notice was not affixed for a
particular period, every class member who used the ATM during that time is
entitled to an inference that the notice was absent.”        Christy, 2013 WL
6858008, at *7.     Any evidentiary inferences to be drawn from the proof
regarding the dates the notice was absent will need to be resolved by the trier
of fact. The proof that is ultimately produced may or may not ultimately entitle
all class members to relief, but the proof required is still common to the class.
      Further, this case does not involve the type of individualized issues that
have led courts to find predominance lacking.        For example, in Amchem
Products, 521 U.S. 591 (1997), the Supreme Court found that common issues
did not predominate where the members of the plaintiff class were exposed to
asbestos-containing products from different sources in different time periods,
some of the class members had no symptoms while others were ill, and the
class members were from different states requiring the application of different
legal standards. See id. at 2250-51. Similarly, in Castano v. American Tobacco
Co., 84 F.3d 734 (5th Cir. 1996), this court found that a putative class of
addicted smokers did not meet the predominance requirement because there
were complex choice-of-law issues and the case involved novel claims with no
history from which a court could determine which common issues were
“significant,” as compared to the individual issues. See id. at 741-45. By
contrast, in Mullen v. Treasure Chest Casino, this court found that common
issues did predominate when casino employees became ill because of a
malfunctioning ventilation system, because the employees suffered the same
injury, were exposed to the same alleged source of the illness, were subject to
the same federal law, and presented a common theory of liability. See Mullen,
186 F.3d at 626-27.
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                                 No. 13-10375
      Here, the putative class members all used the same ATM during the
specified time period, and were allegedly charged a fee without the required
notice being posted. Because there is a common course of conduct that provides
a class-wide basis for deciding significant common issues of fact and law,
including whether and when the required notice was absent and whether First
National has proven any defense, the district court correctly concluded that
common issues predominate. See Mullen, 186 F.3d at 626-27.
                              III. Conclusion
     For the foregoing reasons, the district court’s certification of the class is
AFFIRMED.




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