In Kleiner v. Earthlink, Inc., 2017 WL 345525, at *1 (E.D.Cal., 2017), Judge Orrick denied a motion to dismiss an EFTA claim. The facts were as follows.
Around December 2015, Linda Kleiner called EarthLink to purchase internet services. Complaint (“Compl.”) (Dkt. No. 1) ¶ 9. During this call, she learned that EarthLink’s “services were a ‘dial-up’ type internet” and told EarthLink that she “had no interest in their services.” Declaration of Linda Kleiner (Dkt. No. 29-1) ¶ 5. Thereafter, she began noticing recurring charges automatically deducted from her personal bank account by EarthLink. Compl. ¶ 11. EarthLink charged her bank account $14.95 a total of three times. Kleiner Decl. ¶ 6; Ex. A (copy of bank statement). This bank account is Linda Kleiner’s alone. Kleiner Decl. ¶ 7. She alleges that she never authorized EarthLink to deduct money from her bank account on a recurring basis. Compl. ¶ 13. EarthLink did not provide and she did not execute “any written or electronic writing memorializing or authorizing the recurring or automatic payments.” Id. ¶ 14. She did not provide EarthLink with “a written or an electronic signature authorizing the recurring or automatic payments.” Id. ¶ 15. Linda Kleiner brings this suit on behalf of herself and all others similarly situated against EarthLink for violation of the EFTA, 15 U.S.C. § 1693e(a), and section 205.10(b) of Regulation E, 12 C.F.R. § 205.210(b). Id. ¶¶ 16, 45. The complaint requests statutory damages of $1,000 for each class member and an injunction to stop EarthLink’s conduct in violation of the EFTA. Id. ¶¶ 27, 48.
Judge Orrick denied the Motion to Dismiss.
Under the EFTA, “[a] preauthorized electronic fund transfer from a consumer’s account may be authorized by the consumer only in writing, and a copy of such authorization shall be provided to the consumer when made.” EarthLink argues that any violation of statutory rights under the EFTA belong to Dennis Kleiner, not his mother, and therefore, plaintiff cannot establish any of the three standing requirements. . . .EarthLink’s evidence showed that Dennis Kleiner opened an EarthLink account and provided Visa card information for payment. Spindel Decl. ¶¶ 5-7. When Linda Kleiner called EarthLink to stop charges, she provided information matching Dennis Kleiner’s account. Id. ¶ 8. In her initial opposition, Linda Kleiner stated that she disputes EarthLink’s assertions and declarations “in their entirety,” but she failed to produce any evidence that it was her bank account that EarthLink debited such that her authorization—not Dennis Kleiner’s—was required. Oppo. at 2. There was no evidence regarding her relation, if any, to Dennis Kleiner, or whether he had the authority to authorize the relevant transfer. But on her second try, Linda Kleiner succeeds in establishing Article III standing. She produced a bank statement showing a debit by EarthLink for $14.95 on December 7, 2015. Kleiner Decl., Ex. A. She declares that EarthLink made a total of three charges. Kleiner Decl. ¶ 6. And the debited bank account belonged to her alone. Id. ¶ 7. Because she has shown a transfer from her bank account, it was her authorization that was required under the EFTA. The statutory rights at issue belong to Linda Kleiner. EarthLink’s argument to the contrary is unconvincing. EarthLink says that, even though plaintiff owns the debited bank account, the statutory rights at issue belong to Dennis Kleiner because he apparently initiated the transaction. Supp. Reply at 3. In support of this argument, EarthLink points to the Official Staff Interpretation of Section 205.3(a) of Regulation E, which provides: The requirements of the regulation apply only to an account for which an agreement for EFT services to or from the account has been entered into between: […] The consumer and a third party (for preauthorized debits or credits, for example), when the account-holding institution has received notice of the agreement and the fund transfers have begun. 12 C.F.R. § Pt. 205, Supp. I. EarthLink also notes that Congress provided that the EFTA “sets minimum safeguards for consumers who arrange for regular payments … to be deducted automatically from their bank accounts.” S. REP. NO. 95-915, at 13 (1978) reprinted in U.S.C.C.A.N. 9403, 9415. EarthLink’s arguments ignore the central issue that the statutory rights under the EFTA’s section regulating preauthorized transfers belong to the consumer whose bank account is debited. See 15 U.S.C. §§ 1693e, 1693m. Here, that person is Linda Kleiner. Initiation of the transaction by a third party may give rise to an affirmative defense for EarthLink. But for purposes of establishing standing to bring this lawsuit, EarthLink debited a bank account belonging solely to Linda Kleiner. It is, therefore, her statutory rights at issue. Linda Kleiner adequately established all three elements of standing. First, I need not decide whether a statutory violation is sufficient to establish an injury because plaintiff states an economic injury of $14.95 transferred three times from her bank account. Kleiner Decl., Ex. A. Second, she alleges that EarthLink caused this harm by debiting her account without her authorization. Plaintiff’s bank statement shows her injury is traceable to EarthLink. Finally, as she requests statutory damages and injunctive relief, her injury will be redressed through a favorable determination in this suit.