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Bultemeyer v. Fitness Alliance, LLC

United States District Court, D. Arizona

February 20, 2014

Lydia Bultemeyer and Steven Perez, Jr., Plaintiffs,
Fitness Alliance, LLC, d/b/a Gold's Gym — Phoenix Downtown, an Arizona limited liability company, Defendant.


LAWRENCE O. ANDERSON, Magistrate Judge.

This lawsuit is before the Court on the parties' cross-motions for summary judgment predicated upon a joint Stipulated Statement of Facts in Support of all Parties' Respective Cross-Motions for Summary Judgment ("SSOF"). (Docs. 31-33) All parties have consented to magistrate-judge jurisdiction pursuant to 28 U.S.C. § 636(c). (Doc. 16)

Plaintiffs Lydia Bultemeyer and Steven Perez, Jr. ("Plaintiffs"), former members of Gold's Gym in downtown Phoenix, Arizona, seek summary judgment on their action for statutory damages against Defendant Fitness Alliance, LLC d/b/a Gold's Gym - Phoenix Downtown ("Fitness Alliance") on the basis that Fitness Alliance's membership agreements violated the Electronic Fund Transfer Act's ("EFTA") notice requirements, 15 U.S.C. § 1693(e)(b), and Regulation E, 12 C.F.R. §§ 205.10(b)(1), 1005.10(d), and its anti-waiver provision, 15 U.S.C. § 1693l. (Docs. 1, ¶¶ 29-31; 31 at 1) Conversely, Fitness Alliance moves for summary judgment, claiming its membership agreements with Plaintiffs did not violate the EFTA, but, assuming arguendo it did, Fitness Alliance is entitled to summary judgment pursuant to the EFTA's bona fide error defense, 15 U.S.C. § 1693m(c), which would bar Plaintiffs' recovery.[1] This District Court has subject matter jurisdiction over this action pursuant to 15 U.S.C. § 1693m(g) and 28 U.S.C. § 1331.

After considering the parties' briefings, relevant authorities, and the file as a whole, the Court finds that it is unnecessary to address the bona fide error defense as Fitness Alliance's membership agreements did not violate the EFTA. The Court will grant Defendant Fitness Alliance's Motion for Summary Judgment, deny Plaintiffs' Motion for Summary Judgment, and terminate this action. Because the parties' briefing is adequate and oral argument would not aid the Court, the Court will deny Defendant Fitness Alliance's request for oral argument. Mahon v. Credit Bur. of Placer County, Inc., 171 F.3d 1197, 1200 (9th Cir. 1999); Lake at Las Vegas Investors Group, Inc. v. P. Malibu Dev. Corp., 933 F.2d 724, 729 (9th Cir. 1991).

I. Background

The material facts in this action are not disputed. Plaintiffs joined Gold's Gym in downtown Phoenix by signing Fitness Alliance's standard, minimum one-year membership agreement on December 9, 2011, and commencing their membership that same day. (Docs. 33, SSOF, ¶ 1; 1 Exhibits ("Exhs.") A and B) Plaintiffs' gym membership agreements authorized Fitness Alliance to 1) electronically debit Plaintiffs' membership dues of $18.00 every two weeks from Plaintiffs' joint checking account, for a minimum of 12 months, beginning on January 27, 2012[2]; 2) debit a $15.00 facility improvement fee twice a year, with the January and July dues; and 3) re-submit an auto-debit for any of the regularly scheduled payments described in 1 or 2, plus a $25 service fee, in the event a preauthorized fee or other charge was rejected by Plaintiffs' bank due to insufficient funds in their checking account. (SSOF, ¶¶ 6-8) Plaintiffs terminated their Gold's Gym membership after one year. ( Id., ¶ 10) It is undisputed that Fitness Alliance never debited Plaintiffs' account for a fee or charge other than the pre-authorized $18.00 biweekly membership dues and the biannual $15.00 facility fee described above. ( Id., ¶ 11) During Plaintiffs' memberships in Gold's Gym, there was never an auto-debit charge from Plaintiffs' account that was either returned due to insufficient funds ("nsf") or rejected for any other reason by Plaintiffs' bank. ( Id. )

The parties have stipulated that Plaintiffs are "consumers, " as defined by 15 U.S.C. §1693(a), and Fitness Alliance is both a "person" and a "designated payee" within the meaning of the EFTA. ( Id., ¶¶ 3-5) Fitness Alliance does not dispute that its membership agreements with Plaintiffs authorized "electronic funds transfers"[3] ("EFTs") that were "preauthorized electronic fund transfer[s], " as defined by 15 U.S.C. § 1693a(10), and Plaintiffs' bank account was an "account" within the meaning of 15 U.S.C. § 1693a(2). (Doc. 1, ¶¶ 17-18)

The relevant terms of Fitness Alliance's membership agreement which Plaintiffs claim violated the EFTA reads as follows:

VERY IMPORTANT: If Member changes the dues account Member must bring in new account information (a voided check or credit card voucher) at least thirty-one (31) days prior to the upcoming payment date. In the event sufficient funds are not available in Buyer's account or debits are otherwise not accepted, Gold's Gym may resubmit the charge prior to the next scheduled draft date. If the resubmittal is returned uncollected, the rejected amount plus a $25 service charge will be added to Buyer's next regularly scheduled debit. Buyer understands that Buyer is entitled to notice of all varying charges and withdrawals under the EFT, but Buyer waives the right to receive prior notice for charges or withdrawals made with respect to any uncollected monthly dues payments or portions of the balance due described above and the corresponding service charges, both of which Buyer agrees are not varying charges or withdrawals. Gold's Gym reserves the right to charge a fee of 18% per annum on all delinquent payments.

(SSOF, ¶ 9)

On December 7, 2012, Plaintiffs filed this action, alleging Fitness Alliance violated the EFTA, through its membership agreements with Plaintiffs, by: 1) making preauthorized electronic funds transfers (debits) which varied in amount, and not providing Plaintiffs with the minimum ten days' advance written notice of the amount and date of the EFT before the scheduled date of transfer, contrary to 15 U.S.C. § 1693e(b) and 12 C.F.R. § 205.10(c)(1) (Count I); and 2) inserting waivers of Plaintiffs' rights under the EFTA and its regulations, in violation of 15 U.S.C. § 1693l, the EFTA's "anti-waiver" provision (Count II). (Docs. 1, 13 at 3) Plaintiffs seek statutory damages, costs of suit, and reasonable attorney's fees. See 15 U.S.C. § 1693m(a).[4] (Doc. 1 at 8) Plaintiffs have not incurred any actual damages as a result of the alleged violation of EFTA. (SSOF, ¶ 12)

Disputing the allegations in the Complaint and Plaintiffs' briefing arguments, Fitness Alliance contends that Plaintiffs' membership agreements clearly establish non-varying amounts for dues, fees, and late payments or insufficient fund charges that Plaintiffs could be charged ( e.g., $18.00 recurring dues every two weeks, a $15.00 semi-annual facility improvement fee, a late charge of $25.00 or 18% per annum (whichever is greater) of unpaid delinquent amount, and a service charge of $25.00). Because the amounts debited were fixed and never varied from the amounts identified in the membership agreements, Fitness Alliance argues it did not violate § 1693e(b) of the EFTA and advance written notice to Plaintiffs was not required before making the EFTs from Plaintiffs' bank account. Additionally, Fitness Alliance argues that Count II is without merit as the Plaintiffs' membership agreements did not waive any of the EFTA's rights because the express terms of the membership agreements authorized only non-varying amounts for the gym's dues, fees, late payments, or insufficient fund charges to which Plaintiffs agreed to pay.

II. Summary Judgment

Summary judgment is appropriate when, viewing the facts in the light most favorable to the non-moving party, there is no genuine issue of material fact which would preclude summary judgment as a matter of law. Once the moving party has satisfied his burden, he is entitled to summary judgment if the non-moving party fails to present, by affidavits, depositions, answers to interrogatories, or admissions on file, "specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); see also Rule 56, Fed.R.Civ.P. "The mere existence of a scintilla of evidence in support of the non-moving party's position is not sufficient." Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995). Factual ...

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