DC CPPA:  Complaint based on bank’s undisclosed use of overseas call centers is dismissed

By David B. Stratton

In Floyd v. Bank of America Corporation, No. 12-CV-591 (D.C. July 11, 2013), the D.C. Court of Appeals affirmed the dismissal of a complaint under the District of Columbia Consumer Protection Procedures Act (the "CPPA"), addressing the issues of standing and failure to state a claim upon which relief could be granted.

The Complaint, filed by and on behalf of customers of Bank of America, alleged that the Bank's use of telephone call centers in India resulted in the transmission of digitized financial records and passwords so that overseas personnel can provide service.  Thus, the Complaint alleged that such transmissions were exposed to surveillance, interception or seizure by the U.S. government.  The Complaint further alleged that the Bank gave customers a ten-digit customer-service telephone number, which gave customers a reasonable expectation that the telephone call would be within the United States and subject to the privacy protections of U.S. laws, and that customers are not notified that their electronic data is being transmitted to a foreign country.

The Bank first moved to dismiss for lack of subject matter jurisdiction, arguing that the plaintiffs alleged no concrete injury and therefore lacked standing.  Alternatively, the Bank moved to dismiss on the ground that the Complaint failed to state a claim under the CPPA.  The Superior Court dismissed the Complaint for lack of standing.

On appeal, the D.C. Court of Appeals disagreed as to the dismissal due to lack of standing.  Citing to the Grayson decision, the Court stated that while a lawsuit under the CPPA does not relieve a plaintiff of the requirement to show a concrete injury-in-fact to herself, she may make a showing of concrete injury in fact by alleging that she is a consumer of the defendant's services and that the defendant has misrepresented material facts about the service or has failed to inform the plaintiff of material information about the service.  Thus, it was enough in Grayson that the plaintiff had asserted an invasion of his statutory legal right created by the CPPA to truthful and non-misleading information regarding the fate of the value of unused minutes on the calling cards he had purchased.

Thus, what mattered for standing under the CPPA in this case was that the plaintiffs alleged that they are Bank customers and that the Bank made misrepresentations and omissions in providing them information about its services they utilized.

The Court then proceeded to consider the legal sufficiency of the plaintiffs' claims under the CPPA.  The Court agreed with the Bank that the fatal defect in plaintiffs' CPPA claims about the call centers was that the plaintiffs failed to point to any representations that the Bank made to the effect that, in providing customer service, every Bank call center representative can "invoke the protection of the laws of the United States to exclude the U.S. Government from unfettered access to customers' financial records."   Therefore, the Court held that the Complaint failed to state a legally viable claim under section 28-3904(a) of the CPPA.

The Court reasoned that the CPPA's reference to representations about the "characteristics" and "standard" of the Bank's "services", refers to misrepresentations about the Bank's "economic output."  Yet, the Complaint did not allege misrepresentations about the Bank's economic output, but instead alleges a misrepresentation about other matters, i.e., the legal environment and the climate of surveillance.  Therefore, the allegations about the use of the ten-digit telephone number did not state a claim under the CPPA's section 28-3904(a) and (d).

The Court also found that the Complaint failed to state a claim under section 28-3904(f) of the CPPA, because there was no allegation of a misrepresentation of a "material fact."  Rather, what was not disclosed was a legal assessment of the implications of the Bank's use of overseas call centers.  Further, there was no allegation that a significant number of consumers would find that information important in determining a course of action.  Thus, the omitted information was not "material" within the meaning of section 28-3904(f).

The Court also concluded as a matter of law that merely by providing the plaintiffs with a ten-digit domestic-looking telephone number for customer service, the Bank did not use deceptive or representations or designations of geographic origin in connection with goods or services.  In a footnote, the Court took judicial notice of the fact that since calls can be made to Canada and most Caribbean nations by dialing a ten-digit number without dialing an 011 exchange, it is not true that the indispensable feature of an international call is a number with more than ten digits.  Further, the Court noted that with VOIP telephone services, a telephone number is no longer tied to a specific geographic area. 

In sum, the Court of Appeals affirmed the Superior Court's Order dismissing the case.

As this case illustrates, because a claim under the CPPA can result in enhanced damages, plus an award of attorney's fees and costs, it is a common practice to challenge the legal sufficiency of such claims with an early dispositive motion, whenever possible -- as the Bank successfully did here.  No doubt it was also important to the Bank in this case to knock these claims out early, rather than become mired in extensive electronic discovery concerning its use of overseas calling centers.