After Ninth Circuit Refuses to Compel Arbitration, National Class Certified in HRDC’s Challenge to Jail and Prison Debit Card Fees
by Mark Wilson
In a federal suit challenging excessive fees on jail and prison “debit release” cards, the federal court for the District of Oregon on July 13, 2023, certified a national class. The ruling follows another by the U.S. Court of Appeals for the Ninth Circuit on December 22, 2022, holding that Defendant card issuers could not compel Class members to enter into arbitration, as provided in the pre-printed agreement accompanying each card. Since Plaintiffs never requested their money be sent on the card – and in fact they had no other way to access it – they successfully argued the take-it-or-leave-it provision was unenforceable.
As PLN has previously reported, Danica Love Brown was arrested during a 2014 protest in Portland and detained in the Multnomah County Jail. During booking, jail guards took $30.97 in cash from her. But instead of returning the cash when she was released the next day, jail officials handed her a NUMI debit card, preloaded with $30.97. Brown used the card to access her money but was charged high fees totaling 22.5% of her balance. In 2015, the Human Rights Defense Center (HRDC), publisher of PLN, brought federal suit on Brown’s behalf and sought class-action status against NUMI Financial’s corporate parent, Stored Value Cards, Inc., and card issuer Central National Bank and Trust Co. of Enid, Oklahoma.
The district court initially dismissed the complaint under the Electronic Funds Transfer Act, 15 U.S.C. § 1693, et seq. But the Ninth Circuit reversed and remanded the case. The district court then certified the suit as a class action on behalf of all those issued NUMI debit cards when released from Oregon jails or prisons. U.S. District Judge Michael Mosman warned, however, that if “Defendants’ arbitration argument fails under Oregon law,” he would order supplemental briefing as to whether he “should reach the same conclusion under the laws of other states.” [See: PLN, Apr. 2020, p.38; and Jul. 2021, p.54.]
Defendants then moved to compel Class members to enter into arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 3 & 4, as provided by the terms of their Cardholder Agreement. The district court denied that motion on December 6, 2021, finding that no contract existed between the parties under Oregon law. Judge Mosman also ordered supplemental briefing on the state-by-state arbitration analysis. See: Brown v. Stored Value Cards, Inc., 2021 U.S. Dist. LEXIS 238736 (D. Or.).
Defendants appealed, but the Ninth Circuit affirmed. “We agree with the district court that no mutual assent to contract occurred between the Oregon subclass members and Defendants under the terms of the Cardholder Agreement presented to the subclass members,” the Court held.
“Merely accepting the ‘Numi’ -branded prepaid card cannot constitute acceptance of a contract,” the Court explained. “No subclass member requested the card in lieu of the cash confiscated by authorities when those members were taken to jail. Defendants cannot unilaterally impose a contract on the Oregon subclass members conditional on their ‘accepting’ the card as they were being discharged from jail.”
The Court also rejected Defendants’ argument that “there may be a factual dispute as to whether any subclass members manifested assent to the contract by using the cards after they were released from jail.” The Court could not “accept Defendants’ argument that the subclass members must be bound by the Cardholder Agreement’s arbitration clause when there was no mutual assent to the Agreement.” See: Brown v. Stored Value Cards, Inc., 2022 U.S. App. LEXIS 35402 (9th Cir.).
That sent the case back to the district court, where Judge Mosman made good on his earlier promise. After briefing on the issue, he agreed that the suit should include all those who received a NUMI-branded card throughout the U.S. His ruling certified a National Class consisting of “All persons (1) taken into custody at a jail, correctional facility, detainment center, or any other law enforcement facility within the United States, (2) entitled to the return of money confiscated from them or remaining in their inmate accounts when they were released from custody, and (3) who had those funds returned through a debit card provided by Defendant Stored Value Cards and/or its partner bank, Defendant Central National Bank and Trust Company, despite never having requested nor applied for a debit card, within one year prior to the filing of the original Complaint in this action, and during its pendency, and (4) who incurred fees or charges.”
The ruling ended by excluding from the class all “[t]hose who satisfy these four criteria but who received a debit card from April 1, 2017, to April 30, 2018, and did not opt out of the settlement class in Humphrey v. Stored Value Cards, [USDC (N.D. Ohio), Case No. 1:18-cv-01050].” As PLN has also reported, Humphrey resulted in a disappointing 2019 settlement of just $550,000, so only 1,771 claims were filed. [See: PLN, Mar. 2020, p.52.]
In Brown’s case, Judge Mosman left open the question of joining Stored Value Cards’ other partner banks in the action. The parties were also given until mid-September 2023 to prepare a Notice of Claim, so those affected by the litigation should expect to see it after that. Class Members and HRDC are represented by Portland attorney Megan E. Glor; Seattle attorneys Chris R. Youtz and Richard E. Spoonmore of Sirianni Youtz Spoonmore Hamburger PLLC; Karla Gilbride of Public Justice P.C., in Oakland, California; and HRDC in-house counsel. See: Brown v. Stored Value Cards, Inc., USDC (D. Or.), Case No. 3:15-cv-01370.
If you were issued a prepaid debit card upon release from jail or prison, HRDC wants to hear from you at P.O. Box 1151, Lake Worth Beach, FL 33460, Tel. (561)360-2423, or HRDCLegal@humanrightsdefensecenter.org.
HRDC is a nonprofit that has published PLN since 1990 and Criminal Legal News since 2017.
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