Sparkman v. Comerica Bank
4:23-cv-02028
| N.D. Cal. | Aug 4, 2023Background
- Plaintiff Paula Sparkman receives California child support on a Way2Go prepaid Mastercard issued under a contract between California Child Support Services and Defendants Comerica Bank and Conduent.
- Her Way2Go card was stolen Nov. 29–30, 2022; she reported the theft on Dec. 1, 2022, received a replacement card, and submitted a handwritten list of 21 disputed signature-based transactions totaling > $1,000.
- Defendants denied her reimbursement via a form letter (Dec. 14, 2022) citing “conflict in the information” and inability to confirm fraud; Plaintiff alleges inadequate investigation and that promised dispute paperwork was not timely provided.
- Plaintiff asserts: (1) EFTA claims (15 U.S.C. §§1693g(b), 1693f(e)); (2) breach of contract (Terms of Use and separate Zero Liability informational sheet); (3) UCL unlawful and unfair business practices; and seeks class treatment.
- Defendants moved to dismiss and to strike Plaintiff’s jury demand; the court granted dismissal in part, denied in part, and denied the motion to strike.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law | Michigan choice-of-law clause unenforceable; California law should govern | Terms of Use selects Michigan law | Court: clause unenforceable under Restatement §187(2); California law applies |
| Breach of contract | Defendants breached Terms §10 and the separate Zero Liability informational sheet by denying reimbursement and mishandling investigations | §10 gives issuer discretion to deny if facts don’t support unauthorized claim; no contract term governs investigation | Court: breach claims based on Terms §10 dismissed with leave to amend; claim based on separate informational sheet survives at this stage |
| EFTA (§1693g/§1693f) | Defendants reversed statutory burden of proof and performed inadequate investigation, exposing plaintiff to >$50 liability | Complaint alleges only disagreement with outcome / insufficient facts to show inadequate investigation | Court: EFTA claim plausibly pleaded; denial of reimbursement and purported inadequate investigation survive dismissal |
| UCL (unlawful/unfair & restitution) | UCL claims premised on EFTA violations and unfair practices; seeks injunctive relief and restitution | Defendants: choice-of-law bars UCL; equitable relief unavailable because adequate legal remedy exists; restitution improper because third parties took the funds | Court: choice-of-law rejected; unlawful and unfair prongs survive; restitution claim dismissed with leave to amend; injunctive relief may proceed at this stage |
| Motion to strike jury demand | Plaintiff did not knowingly and voluntarily waive jury rights | Terms contains a jury-waiver clause | Court: Defendants failed to show knowing, voluntary waiver; motion to strike denied (court to determine jury vs. bench issues later) |
Key Cases Cited
- Huynh v. Chase Manhattan Bank, 465 F.3d 992 (9th Cir. 2006) (federal common-law choice-of-law principles apply in some federal-question cases)
- Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96 F.3d 1151 (9th Cir. 1996) (forum-state choice-of-law rule for supplemental jurisdiction claims)
- Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (1992) (California applies Restatement §187 to contractual choice-of-law clauses)
- Flores v. Am. Seafoods Co., 335 F.3d 904 (9th Cir. 2003) (distinguishing §187(1) v. §187(2) in contract disputes)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must raise plausible entitlement to relief)
- Erickson v. Pardus, 551 U.S. 89 (2007) (complaint factual allegations accepted as true on a Rule 12(b)(6) motion)
- Widjaja v. JPMorgan Chase Bank, N.A., 21 F.4th 579 (9th Cir. 2021) (EFTA private right of action and burden when issuer interprets statute to allow greater liability)
- Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020) (equitable restitution under state statutes requires lack of adequate remedy at law)
- Oasis W. Realty, LLC v. Goldman, 51 Cal.4th 811 (2011) (elements of breach of contract under California law)
- Cel‑Tech Commc'ns v. L.A. Cellular Tel. Co., 20 Cal.4th 163 (1999) (UCL scope and unfairness standard)
- Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (2011) (restitution under UCL requires defendant acquired plaintiff’s money)