Roling v. E TRADE SECURITIES, LLC
2010 U.S. Dist. LEXIS 123714
N.D. Cal.2010Background
- Plaintiffs Roling and Landvater, California and Illinois residents respectively, sued E*TRADE for breach of contract, unjust enrichment, and California Civil Code § 1671 and UCL violations.
- They allege E*TRADE charged a $40 inactivity fee quarterly despite a fee schedule that supposedly restricted or did not authorize such fees.
- The brokerage agreement incorporated fee schedules available on E*TRADE’s website; plaintiffs contend the operative schedule prohibited inactivity fees.
- E*TRADE moved to transfer to the Southern District of New York and to dismiss the complaint; the court denied transfer and granted in part and denied in part the motion to dismiss.
- The court analyzed governing New York law for contract claims, CAFA jurisdiction, and whether unilateral fee changes without notice are enforceable.
- Key factual dispute centers on the interpretation and scope of the fee schedules and whether the inactivity fee is a liquidated damages provision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the case could have been brought in NY. | Roling/Landvater contend CAFA jurisdiction exists and venue in NY is proper. | E*TRADE argues NY is proper, given HQ and personal jurisdiction; transfer appropriate. | No transfer; CAFA jurisdiction confirmed but transfer denied. |
| Whether the breach of contract claim survives dismissal given contract interpretation. | Fee schedule ambiguity allows two reasonable interpretations supporting breach. | MSI vs. plaintiff fee schedules create complexity; ambiguity may require extrinsic evidence. | Breach of contract claim survives dismissal due to contract ambiguity. |
| Whether unjust enrichment predicated on unenforceable contract provision stands. | Unilateral fee changes without notice are unconscionable and enrich E*TRADE improperly. | Cannot easily separate from contract; extrinsic showings insufficient to bar claim. | Unjust enrichment claim survives. |
| Whether the inactivity fee is a liquidated damages provision under Cal. Civ. Code § 1671. | Inactivity fee arises as a contractual term for continuing service; may be liquidated damages. | Fee is consideration for continuation, not damages for breach; no liquidated damages. | Count III (liquidated damages) dismissed with prejudice; not a liquidated damages provision. |
| Whether the UCL claim withstands challenge. | Fee is unlawful/unfair; deceptive misrepresentations alleged regarding inactivity fees. | UCL claims rely on contract-based conduct; some elements lack independent basis. | UCL claim upheld for deception/unfair practices, with limited damages; Roling's is dismissed. |
Key Cases Cited
- Jones v. GNC Franchising, Inc., 211 F.3d 495 (9th Cir. 2000) (transfer considerations; discretionary venue ruling)
- Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834 (9th Cir. 1986) (plaintiff's choice of forum and transfer factors)
- Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988) (forum selection and convenience factors guidance)
- Hatch v. Reliance Ins. Co., 758 F.2d 409 (9th Cir. 1985) (transfer analysis steps under 28 U.S.C. § 1404(a))