[00:00:00] Speaker 00:
Good morning, and it's a pleasure to be here may it please the court My name is John Alothian, and I'm representing appellants in this appeal.

[00:00:10] Speaker 00:
I like to reserve four minutes for rebuttal if that's okay Yes, watch your clock, please Yes, thank you We are asking the court to hold that the district court lacked subject matter jurisdiction to dismiss the case and therefore We're asking this court to enter an order remand in the case back to state court

[00:00:30] Speaker 00:
Subject to Your Honor's guidance or direction, I'd like to plan to focus my argument first on why there is not Article 3 standing, and then second on why this does not prevent the case from being remanded back to state court, and third on why the appellees are stopped from arguing otherwise.

[00:00:47] Speaker 02:
I find it rather curious that the plaintiffs are arguing there's no Article III standing.

[00:00:52] Speaker 00:
It is an awkward position to be in, Your Honor.

[00:00:57] Speaker 02:
Is it because you have viable claims if you go to state court and you don't have viable claims if you're in federal court?

[00:01:03] Speaker 00:
Exactly, Your Honor.

[00:01:05] Speaker 00:
Because the district court dismissed the causes of action, finding that there was not sufficient facts to plead them, we realized that we can be remanded to state court because those same facts that are not sufficient to plead the causes of action also would not support Article III standing.

[00:01:22] Speaker 00:
But because we don't need Article III standing in state court,

[00:01:25] Speaker 00:
And the section 1670.8 is the subject of litigation in state court.

[00:01:31] Speaker 00:
There are several cases before the state court.

[00:01:34] Speaker 00:
And the pleadings there are being challenged and the state courts are coming down differently.

[00:01:39] Speaker 03:
What is your theory of injury in state court?

[00:01:42] Speaker 00:
The theory of injury in state court, Your Honor, is

[00:01:46] Speaker 00:
I think you don't have to show injury in state court, do you?

[00:01:49] Speaker 00:
That's correct, Your Honor, yes, exactly.

[00:01:51] Speaker 00:
That's one theory.

[00:01:52] Speaker 00:
That's one theory, yes, Your Honor, correct.

[00:01:54] Speaker 00:
So because you don't need Article III standing in state court, there's no concrete harm that's needed in state court, and appellants can proceed solely on their allegations of the statutory violations alone.

[00:02:06] Speaker 00:
And in fact, by including civil penalties, the legislature contemplated that actions would be brought to... Can I ask you about

[00:02:13] Speaker 01:
Your complaint if I look at paragraphs 11 through 18 it goes through every single name plaintiff Says everyone purchased services from which the defendant generates sales and fees through the agreement paragraph 17 23 18 all talking about each defendant caused injury and damages to the plaintiffs paragraph 51 defendant charges fees for its services paragraph 49 plaintiffs purchase services from the defendant and

[00:02:42] Speaker 01:
Paragraphs 2, 1855, we're seeking damages and restitution in our prayer for relief, unjust enrichment through plainness, payment of monies to the defendants, paragraph 59.

[00:02:52] Speaker 01:
I guess all of these, I guess, why would you say that that doesn't confer Article 3 standing and constitute injury in fact?

[00:03:06] Speaker 00:
Of course, Your Honor.

[00:03:09] Speaker 00:
There is two issues there.

[00:03:11] Speaker 00:
First of all, as far as it goes to the remedies of disgorgement, restitution and unjust enrichment.

[00:03:17] Speaker 00:
That doesn't require any loss to you, right?

[00:03:19] Speaker 00:
Exactly.

[00:03:20] Speaker 00:
And the appellants are not seeking those remedies and in fact we... But you are.

[00:03:23] Speaker 01:
I mean, you know, we determine jurisdiction at the time of removal.

[00:03:29] Speaker 01:
We don't determine it now after you've lost two motions to dismiss.

[00:03:33] Speaker 01:
You've been dismissed in district court.

[00:03:35] Speaker 01:
Now you want another bite at the apple.

[00:03:37] Speaker 01:
And it feels like a manipulation of jurisdiction to now come in and say, look, we tried to allege it this way at least three times, right?

[00:03:46] Speaker 01:
First complaint, first motion to dismiss, second motion to dismiss, we lost.

[00:03:51] Speaker 01:
And so now we're just disavowing any claim for compensatory damages or disgorgement.

[00:03:58] Speaker 01:
But we have to look at jurisdiction at the time of removal.

[00:04:02] Speaker 00:
I understand, Your Honor.

[00:04:03] Speaker 00:
So my response to that would be that Article 3 standing allegations, they require the same pleading standard that's required to state the allegations to state a claim for the pleadings.

[00:04:16] Speaker 00:
If the district court found that there's no, that these allegations, the ones that you cited, Your Honor, in the complaint regarding the payment of services under the contract, if those allegations are not sufficient to state a claim,

[00:04:29] Speaker 00:
for violation of 1678.8 or unfair competition law, then those violations also cannot be sufficient to state a claim for concrete harm under Article 3 standing.

[00:04:39] Speaker 03:
Well, what was your basis in your complaint for seeking restitution?

[00:04:44] Speaker 03:
Maybe we need to understand that or I need to understand that.

[00:04:49] Speaker 03:
What is the restitution claim?

[00:04:50] Speaker 03:
This usually restitution claim is based on fraud, misrepresentation, you purchased something, it wasn't,

[00:04:57] Speaker 03:
what you thought it was going to be and i want my money back here there's no claim of fraud this was open notorious his claim is there they paid the money so what is the restitution claim

[00:05:09] Speaker 00:
And I didn't drop the complaint, but I'll do my best.

[00:05:12] Speaker 00:
From reading the case law, it seems that there is a connection, at times, restitution to civil penalties.

[00:05:17] Speaker 00:
So I think that under the unfair competition law, there could be, you know, the restitution could go and coincide with the civil penalties that are permitted for the strict violation of the statute.

[00:05:27] Speaker 00:
And then similarly with disgorgement, where the payment of services of fees to the extent that there was a concrete harm to the point which the court found that those allegations aren't sufficient.

[00:05:39] Speaker 00:
But if there were a concrete harm to the point where there was a threatened enforcement of the non-disparagement clause, and there was cancellation of the services because that's what's alleged in the non-disparagement clause in the services contract,

[00:05:53] Speaker 00:
Then they would have been at that point that those plaintiffs would be entitled to a refund of the payment for the services that they paid under the contract for which was canceled.

[00:06:02] Speaker 03:
We never got to that point.

[00:06:03] Speaker 03:
There was never any attempt to exercise speeds.

[00:06:05] Speaker 03:
There was never any threat for exercise speech.

[00:06:08] Speaker 03:
So is there still a claim for restitution simply because they paid money for the service and had an unlawful clause in the contract?

[00:06:15] Speaker 00:
There is not.

[00:06:15] Speaker 00:
There is not a claim for restitution.

[00:06:18] Speaker 00:
And I think that, you know, when you're drafting the complaint, you're trying to be as inclusive as possible.

[00:06:23] Speaker 00:
But given this, there is no longer any claim for restitution.

[00:06:25] Speaker 01:
There is a, we're looking at the complaint.

[00:06:28] Speaker 01:
Just because you fail to state a claim under 12-B-6, I just find this posture is a little bit interesting.

[00:06:36] Speaker 01:
The district court did not address standing.

[00:06:38] Speaker 01:
The district court, for purposes of 12-B-6,

[00:06:41] Speaker 01:
said you failed to state a claim and was looking at whether the agreement constituted a contract for the sale or lease of consumer goods or services under this statute.

[00:06:50] Speaker 01:
So it was answering a different question.

[00:06:53] Speaker 01:
Regardless, we have to look at standing de novo.

[00:06:57] Speaker 01:
So I guess I'm just confused because

[00:07:03] Speaker 01:
It seems odd that someone's failure to state a claim is, you know, multiple times, at least three times, is now saying, well, I never meant to state those claims anyway.

[00:07:16] Speaker 01:
Now, you know, send me back to state court.

[00:07:21] Speaker 01:
It just seems odd.

[00:07:23] Speaker 01:
And it does seem like jurisdictional manipulation.

[00:07:25] Speaker 00:
I understand, Your Honor.

[00:07:29] Speaker 00:
The problem is that there would be an inconsistency in the ruling if the motion to dismiss was not reversed but that those... But we're looking at standing de novo and the district court didn't decide standing, right?

[00:07:41] Speaker 01:
The district court just did 12B6, does this agreement constitute a contract for the sale or lease of consumer goods or services?

[00:07:49] Speaker 01:
I think that's, I mean you would agree the district court didn't address standing, right?

[00:07:53] Speaker 01:
You didn't raise it until after the second motion to dismiss was fully briefed.

[00:07:58] Speaker 00:
I agree, Your Honor.

[00:07:58] Speaker 01:
However... And didn't ask for reconsideration of the second motion to dismiss order on the issue of standing, right?

[00:08:04] Speaker 00:
I agree, Your Honor.

[00:08:05] Speaker 00:
However, if you look at the basis of the district court's order dismissing, they found that the allegations for the payment of services under the contract were insufficient to state a claim.

[00:08:17] Speaker 00:
If there's no payment for services under the contract, there's no remedies that can flow from that.

[00:08:23] Speaker 01:
If those facts are insufficient, then how can we have disgorgement or restitution or... But you alleged multiple times that your class members purchased these services, paid for these services just over and over again.

[00:08:41] Speaker 01:
And even if they didn't pay for service, that the defendants,

[00:08:46] Speaker 01:
have been collecting these fees for these services and being unjustly enriched.

[00:08:54] Speaker 00:
Yes, Your Honor.

[00:08:54] Speaker 00:
However, those are the very same allegations in which the district court dismissed the case, because we found that those allegations were not sufficient.

[00:09:00] Speaker 00:
Right.

[00:09:00] Speaker 01:
And normally, district court, if you fail two motions to dismiss, you enter judgment in favor of the defendant.

[00:09:05] Speaker 01:
It's strange now for them just to be like, oh, I never meant to do this anyway, even though I made three attempts to state a claim.

[00:09:12] Speaker 01:
And now I'm just going to convert it to something else.

[00:09:15] Speaker 01:
I think that's a little unusual posture.

[00:09:18] Speaker 00:
It is an unusual posture, Your Honor.

[00:09:20] Speaker 00:
However, when the district court issued the Pullbrook order, we realized that there wasn't standing for these cases.

[00:09:25] Speaker 00:
And then when this district court held that those allegations regarding the payment of services were not sufficient to state a claim, then we realized that those also can't be sufficient for Article III standing, because it's held to the same pleading standard.

[00:09:37] Speaker 02:
So you never thought about- Shouldn't you have argued this on a motion to remand to state court in front of the district court?

[00:09:44] Speaker 00:
I mean, we did not.

[00:09:45] Speaker 00:
We did not, Your Honor.

[00:09:46] Speaker 00:
However, my understanding is that if there's no subject matter jurisdiction, it can be raised at any time, even for the first time.

[00:09:52] Speaker 02:
Well, no, that's true.

[00:09:53] Speaker 02:
But I'm saying that that should have been a ground for perhaps, I mean, lack of jurisdiction in the Feral Court would have been a ground for the district court to remand to the state court, right?

[00:10:08] Speaker 00:
Yes, you're right.

[00:10:10] Speaker 02:
So why didn't you raise it then?

[00:10:13] Speaker 00:
So once the motions to dismiss had been fully briefed, we did submit a notice of supplemental authority to the court.

[00:10:21] Speaker 00:
And I believe we provided the Pullbrook decision to the district court.

[00:10:26] Speaker 00:
And it was before the court entered its decision and advised the court that it didn't have jurisdiction based off of that.

[00:10:33] Speaker 00:
But it was not briefed on a motion for remand.

[00:10:35] Speaker 00:
That is correct, Your Honor.

[00:10:37] Speaker 03:
Standing should be assessed at the moment the complaint is filed, right?

[00:10:41] Speaker 03:
I mean, if one were to look at it.

[00:10:42] Speaker 03:
I mean, does it even matter what the district court did?

[00:10:46] Speaker 03:
Don't we have to assess whether it was Article III standing by looking at the complaint when it was filed?

[00:10:53] Speaker 00:
Yes, Your Honor.

[00:10:54] Speaker 00:
But those allegations, they have to meet the same pleading standard as the allegations sufficient to state the claims.

[00:11:01] Speaker 03:
Well, just because there's a failure to state a claim, I mean, the allegations did assert an injury, did assert concrete injury.

[00:11:07] Speaker 03:
At the end, maybe proven not to have merit for one reason or another, but standing seems, isn't standing different from failure state of cause of action?

[00:11:21] Speaker 00:
Not when the failure to say the cause of action arises from the payment of services.

[00:11:25] Speaker 00:
The court said there's no payment of services here.

[00:11:27] Speaker 00:
You didn't allege enough facts for that.

[00:11:29] Speaker 00:
So if there's no payment of services, then there's no fees to be discouraged.

[00:11:33] Speaker 00:
There's no restitution.

[00:11:35] Speaker 00:
The only thing that's left are the civil penalties.

[00:11:38] Speaker 00:
And there's no allegations in the complaint that these appellants ever intended to violate the non-despairment clause.

[00:11:47] Speaker 00:
There's no allegations in the complaint.

[00:11:49] Speaker 03:
So if fees had been paid at the district court, if there was a finding that fees had been paid, your contention is that there would be a claim for restitution.

[00:11:56] Speaker 00:
There may be a claim for restitution if the fees have been paid and if the non-dismaragement clause had been violated and if the appellee had sought to enforce that through threats by canceling the services that had been paid for.

[00:12:12] Speaker 00:
If the services are still intact that you're paying for, then until they're canceled, you're getting what you paid for.

[00:12:18] Speaker 00:
So there would be no need to disgorge them.

[00:12:20] Speaker 02:
Counsel, did you want to reserve some time?

[00:12:22] Speaker 02:
I did.

[00:12:23] Speaker 02:
Okay, why don't you reserve your time and let's hear from your friend on the other side.

[00:12:27] Speaker 00:
All right, thank you.

[00:12:38] Speaker 04:
Good morning, your honors.

[00:12:40] Speaker 04:
May it please the court?

[00:12:41] Speaker 04:
Matthew Benedetto from Wilmer Hale on behalf of Bank of America.

[00:12:46] Speaker 04:
What is remarkable about this proceeding is the extent to which the appellants have completely disavowed what they actually alleged in their complaint in order to now argue that they lacked Article 3 standing.

[00:13:02] Speaker 04:
And that's both in their papers below, appeal papers and in their presentation this morning.

[00:13:08] Speaker 04:
Appellants assert that they did not seek damages in their complaint.

[00:13:13] Speaker 04:
But the amended complaint's prayer for relief says otherwise in black and white at subpart D on page 33 of the record.

[00:13:21] Speaker 04:
Appellants in their briefing never once acknowledged that they paid fees for products and services offered by the bank and covered by the online banking services agreement.

[00:13:31] Speaker 04:
They say that that contract is unlawful under section 1670.8.

[00:13:35] Speaker 04:
Hence, those fees should not have been incurred.

[00:13:39] Speaker 04:
That is classic monetary harm for purposes of constitutional standing.

[00:13:44] Speaker 04:
Appellants also pled restitutionary... But where do they actually say they weren't charged any fees?

[00:13:49] Speaker 04:
Yes, Your Honor.

[00:13:51] Speaker 04:
If you look at paragraphs 48 through 51 of the amended complaint, also paragraphs 23, they allege that they were, first of all, account holders at Bank of America who were required

[00:14:05] Speaker 04:
to sign and agree to the terms of the online banking services agreement.

[00:14:09] Speaker 01:
They say defendants regularly charge fees to consumers of their services but they don't explicitly say they charge me.

[00:14:16] Speaker 04:
And they say that they, they do say that they purchased services though covered by the online banking services agreement and services, if you look at pages 15 and 16 of the supplemental record which is the OBSA, you will see services there that carry a fee.

[00:14:33] Speaker 04:
So there are fees that they have alleged that they paid, both the named plaintiffs and the class.

[00:14:45] Speaker 04:
But even if you take a step back and say, OK, well, maybe these plaintiffs didn't pay fees, they would still have, in their view, a claim to restitutionary disgorgement, because under California law,

[00:15:01] Speaker 04:
a plaintiff who is seeking restitutionary disgorgement based on the company's.

[00:15:04] Speaker 01:
But you got the district court to agree with you that plaintiffs never alleged that they were charged fees.

[00:15:09] Speaker 01:
So now you want us to go back on that?

[00:15:11] Speaker 01:
This feels like very much gymnastics.

[00:15:16] Speaker 04:
Your Honor, I would say that we argued that the appellants did not sufficiently plead a connection

[00:15:27] Speaker 04:
between the purchase of any particular good or service and a service that was in fact covered by the provision of the contract that contained the non-disparagement clause, which is the Zelle service, which is free to use.

[00:15:42] Speaker 04:
So our argument is the non-disparagement clause applies to the Zelle service.

[00:15:49] Speaker 04:
The Zelle service is covered in part four of the online banking services agreement.

[00:15:52] Speaker 04:
That's where the alleged challenge provision is.

[00:15:57] Speaker 04:
The appellants could never pay to use Zelle because it's free.

[00:16:00] Speaker 04:
Therefore, it could not give rise to a sales contract.

[00:16:03] Speaker 04:
But what is imperative to say is that the standard for review of standing allegations is not equivalent to the standard under 12B6 and... But if we accept your argument and we find that there's no jurisdiction, isn't the proper remedy to remand to the state court?

[00:16:25] Speaker 04:
That is a remedy, Your Honor.

[00:16:26] Speaker 04:
I mean, we think that, however, that this panel could also conclude that remand would be futile, right, on the ground that the failure to plead the existence of a sales contract, just as the lower court found, would also be a bar to recovery in state courts.

[00:16:49] Speaker 04:
Right, a threshold question.

[00:16:51] Speaker 03:
That issue hasn't been decided by any appellate state court yet.

[00:16:54] Speaker 03:
This is an open question.

[00:16:55] Speaker 03:
I know the trends of the Superior Courts go one way, but you've got a couple of district courts kind of seen it a different way.

[00:17:00] Speaker 03:
Correct.

[00:17:00] Speaker 03:
We don't know.

[00:17:01] Speaker 03:
Correct.

[00:17:02] Speaker 04:
I would just say, though, that a threshold question in any court, state or federal, whether Section 1670.8 has been violated is whether there is a sales contract.

[00:17:14] Speaker 01:
Appellants have not planned... Wait, is it your position that there's no jurisdiction over this case and plaintiffs don't have standing or you're saying they do have Article 3 standing?

[00:17:21] Speaker 01:
I think I may have misheard you.

[00:17:24] Speaker 04:
I was responding to the remand, whether remand would be futile as sort of state court jurisdiction.

[00:17:29] Speaker 04:
No, our argument is from moment one, appellants had Article 3 standing based on their allegations of harm for the fees.

[00:17:41] Speaker 04:
their seeking of restitutionary discouragement as a remedy based on their right under California law, a legal right to pursue profits that were unjustly obtained by Bank of America allegedly because of the imposition of the Online Banking Services Agreement.

[00:17:58] Speaker 04:
Now, this is important because a plaintiff, even who has not suffered direct loss, could pursue restitutionary discouragement in federal court given

[00:18:08] Speaker 04:
substantive California state law which says that a plaintiff does not need to have direct financial loss to pursue that claim.

[00:18:15] Speaker 03:
What's the restitutionary claim in that instance if nothing was paid for the service?

[00:18:20] Speaker 04:
So the theory would go that Bank of America, and this is outlined in paragraphs in the amended complaint, that Bank of America profited through its imposition of the online banking services agreement

[00:18:33] Speaker 04:
by quelling customer dissatisfaction, by preventing customer defection to other financial institutions.

[00:18:40] Speaker 04:
There is actual specificity around that pleading where they talk about particular public distrust of financial institutions following the financial crisis in 2008.

[00:18:52] Speaker 04:
So the theory as advanced in the amended complaint is that the online banking services agreement

[00:18:57] Speaker 04:
imposed a non-disparagement clause to prevent that from happening, thereby driving up profits.

[00:19:03] Speaker 04:
And the appellant's theory of restitutionary discouragement is they and the other class members paid monies under the agreement which contained the challenge provision.

[00:19:13] Speaker 04:
Bank of America profited from that unlawfully, gained those profits unjustly.

[00:19:18] Speaker 04:
And therefore, even if an individual plaintiff

[00:19:21] Speaker 04:
never purchased a product or service under the OBSA, covered by the OBSA, that plaintiff would have standing to pursue that claim.

[00:19:30] Speaker 04:
And this court in the Facebook internet tracking litigation described that as a theory, a viable theory of Article III standing in the absence of direct harm to an individual plaintiff.

[00:19:43] Speaker 04:
But I want to go back and just make my record on this because

[00:19:49] Speaker 04:
Appellant's Council said that the standard for pleading standing is equivalent to the standard for pleading a statutory violation and that's just not right.

[00:20:01] Speaker 04:
This court citing Lujan and as recently as last year in the California Restaurant Association versus City of Berkeley case held

[00:20:14] Speaker 04:
uh... that only general factual allegations in support of standing are required that is not the plausibility standard a general factual allegations are required that that if you go back even

[00:20:28] Speaker 04:
before to 2022 in the case Tingley versus Ferguson, this court used that same standard.

[00:20:35] Speaker 01:
Can I ask you a question?

[00:20:35] Speaker 01:
Yes.

[00:20:36] Speaker 01:
I'm now more confused.

[00:20:37] Speaker 01:
So you're saying the only service that these plaintiffs used was Zell and that is free.

[00:20:43] Speaker 01:
Correct.

[00:20:43] Speaker 01:
So then your only standing argument is based on disgorgement and unjust enrichment then?

[00:20:49] Speaker 01:
Yes.

[00:20:49] Speaker 01:
Is that the only thing then you're relying on or you're still arguing that no, they were charged a fee and

[00:20:57] Speaker 01:
Uh, they suffer damages.

[00:20:59] Speaker 01:
I'm, I'm, maybe you can help clarify.

[00:21:01] Speaker 04:
Sure.

[00:21:03] Speaker 04:
They have pled that they paid fees.

[00:21:05] Speaker 04:
They made general actual factual allegations that they played fees, paid fees.

[00:21:09] Speaker 04:
That is enough to confer article three standing full stop on the merits below.

[00:21:15] Speaker 04:
We argued.

[00:21:16] Speaker 04:
that the non-disparagement, alleged non-disparagement clause pertains only to the Zell service which is free.

[00:21:22] Speaker 02:
That is really separate from the threshold question of whether... And it's a question, open question in California state law whether this non-disparagement statute applies when the services are free.

[00:21:36] Speaker 04:
I, that has not been resolved by a California appellate court.

[00:21:40] Speaker 04:
That is correct.

[00:21:42] Speaker 02:
Okay.

[00:21:42] Speaker 04:
So... But, right.

[00:21:44] Speaker 04:
All I would say is that Section 1670.8 Subdivision A does refer to a sale or lease contract and typically understood to be, you know, one that would require the purchase or sale of goods.

[00:21:58] Speaker 02:
And if we agree that there's, well, if we think there's no Article 3 standing though, we do have to remand to state court.

[00:22:13] Speaker 02:
in which case, all of a sudden, they'll have a live claim.

[00:22:17] Speaker 04:
I think the panel could determine that remand would be futile under the theory that the pleading, the appellants have not established, sufficiently established the existence of a sales contract under subdivision A, as the lower court did.

[00:22:35] Speaker 02:
We have enough facts to say, I mean, that wasn't really part of their appeal, the appeal of the

[00:22:42] Speaker 02:
actual merits of the dismissal.

[00:22:45] Speaker 04:
Well, it was to the extent that they made the argument that remand would be appropriate.

[00:22:49] Speaker 04:
We made the argument that under Bell, this court can consider that the futility of the remand.

[00:22:55] Speaker 04:
And I think you do have the record because you have the amended complaint and you could construe the amended complaint as the district court did twice.

[00:23:04] Speaker 04:
that the appellants did not sufficiently plead the existence of a sales contract sufficient to give rise to a Section 1670.8 claim.

[00:23:13] Speaker 02:
What about their UCL claim?

[00:23:16] Speaker 04:
Sure.

[00:23:17] Speaker 04:
So the UCL claim, any plaintiff's UCL claim in federal or state court, private claim, requires economic injury.

[00:23:25] Speaker 04:
That's the Enohost case, which we cited.

[00:23:28] Speaker 04:
Only the attorney general or a comparable government

[00:23:31] Speaker 04:
entity can bring a case for civil penalties with the absence of individual harm.

[00:23:37] Speaker 04:
So if the plaintiffs are now disavowing, as they have in their briefs, that they suffered no monetary harm, then they can't bring a UCL claim in state court either.

[00:23:49] Speaker 04:
And I think they agree with us on that.

[00:23:53] Speaker 03:
What is the, if the district, I mean, if the court below was correct that the only basis

[00:24:02] Speaker 03:
Well, what did the court do with respect to the Zell being free and therefore the only basis for seeking monetary relief for restitution was a discouragement theory?

[00:24:12] Speaker 03:
Yes.

[00:24:12] Speaker 03:
What is, is there standing, Article 3 standing if you weren't hurt?

[00:24:16] Speaker 03:
I mean, does that mean anybody could sue the Bank of America even though they didn't pay a penny?

[00:24:21] Speaker 04:
Your Honor, the district court did not specifically address the argument we made about Zell.

[00:24:31] Speaker 04:
The district court addressed and concluded was that with respect to any product or service, the plaintiffs had failed to plead sufficiently that there was a purchase of any service that was subject to the OBSA.

[00:24:48] Speaker 04:
So there was no specific finding with respect to

[00:24:51] Speaker 04:
the connection between, for instance, the non-disparagement clause and the sale service.

[00:24:57] Speaker 04:
That just was not addressed by the district court.

[00:24:59] Speaker 03:
Well, all right.

[00:24:59] Speaker 03:
But I'm asking you, you're asserting that there would have been theoretical basis for Article 3 standing based on this disgorgement theory.

[00:25:07] Speaker 03:
Yes, yes.

[00:25:07] Speaker 03:
And I'm sort of puzzled.

[00:25:10] Speaker 03:
I've never seen a case like that where somebody can come in the court, didn't pay a penny, and say, Bank of America, you made too much money.

[00:25:16] Speaker 03:
Yes.

[00:25:18] Speaker 03:
They're standing for that?

[00:25:19] Speaker 03:
Well, again, there's no injury.

[00:25:21] Speaker 03:
It's just I want you're being done justly and rich.

[00:25:24] Speaker 03:
I wasn't hurt, but you made too much money.

[00:25:26] Speaker 03:
So give me some of that money.

[00:25:28] Speaker 04:
Appellants did plead that they paid fees though.

[00:25:31] Speaker 04:
Right.

[00:25:31] Speaker 03:
Well, okay.

[00:25:32] Speaker 03:
Put that aside for a second.

[00:25:33] Speaker 03:
You said it wasn't fine.

[00:25:34] Speaker 03:
I just curious.

[00:25:35] Speaker 03:
I just pursuing this theory.

[00:25:37] Speaker 04:
So sure.

[00:25:38] Speaker 04:
So I think that if you take the, take the theory of restitutionary discouragement that is set forth in

[00:25:47] Speaker 04:
the amended complaint, which is that, in the appellant's view, Bank of America profited because it instituted an online banking services agreement which quelled Bank of America customer dissatisfaction, right, prevented customers from telling would-be Bank of America customers.

[00:26:05] Speaker 03:
No allegation it affected them in particular.

[00:26:07] Speaker 03:
I'm asking where there's no allegation their speech was quelled, they were going to do something that they were deterred from doing, no allegation they paid a penny.

[00:26:16] Speaker 03:
Discouragement usually means

[00:26:19] Speaker 03:
taking back something that was, it's a form of restitution.

[00:26:23] Speaker 04:
Yes, but the theory is that the bank profited because it imposed a... And what's standing, I understand that.

[00:26:29] Speaker 03:
What's the standing, the article that is standing of a member of the public who had nothing to do, nothing to lose to get a disgorgement remedy, monetary remedy?

[00:26:39] Speaker 03:
I've never heard of such a thing.

[00:26:40] Speaker 04:
So this is discussed, for instance, in the Facebook

[00:26:47] Speaker 04:
internet tracking litigation, which is 956 F3D at 589, right, where that case describes that under substantive California law, a plaintiff who is not, who does not suffer individual harm or loss can be, can assert a legal entitlement to restitutionary disgorgement and thus have Article 3 standing if there is a connection between

[00:27:17] Speaker 04:
the harm that's alleged in the complaint and their own interests.

[00:27:20] Speaker 04:
And I would say that the amended complaint does describe that because it says as account holders at Bank of America, we were deprived accurate information because of the imposition of the non-disparagement clause.

[00:27:35] Speaker 04:
The bank profited from that because it kept customers who maybe might have expressed dissatisfaction from telling other customers about that.

[00:27:45] Speaker 04:
That is the theory that

[00:27:46] Speaker 04:
that is in the complaint, which we think is an independent justification for, to find Article 3 standing.

[00:27:53] Speaker 01:
Can you clarify, did the plaintiffs use other services of Bank of America than Zelle and paid for those services?

[00:28:00] Speaker 01:
I'm just unclear on the facts.

[00:28:01] Speaker 04:
Yeah, they have not pled which services they used, right?

[00:28:05] Speaker 04:
They have pled that they use all the services and paid for all of the services covered by the online banking services agreement and you can look at,

[00:28:16] Speaker 04:
page 21 of the record in the very first paragraph, services including but not limited to mobile banking services, Zelle, ACH and wire transfers, markup fees on currency conversions, remittance transfers, currency exchange, all the fees identified in section 11A of the online banking services agreement and other financial services and products.

[00:28:38] Speaker 04:
They pled that they purchased, used, accessed and or purchased all of those services and paid those fees.

[00:28:45] Speaker 01:
but only Zelle is free and the others have fees.

[00:28:48] Speaker 01:
Right.

[00:28:49] Speaker 04:
So if you look, for instance, at pages 15 and 16 of the supplemental record, you will see, for instance, that for certain ACH and wire transfers, there are fees associated with those services.

[00:28:59] Speaker 04:
Zelle, though, you know, Zelle is not like a thing you buy.

[00:29:02] Speaker 04:
It's a platform that you use and it is free to use.

[00:29:06] Speaker 02:
Is it on every bank?

[00:29:07] Speaker 02:
Does every bank have Zelle?

[00:29:09] Speaker 04:
Many, many banks do, yes.

[00:29:12] Speaker 04:
You know, yes is the answer.

[00:29:15] Speaker 04:
It is not a proprietary product to Bank of America, no.

[00:29:18] Speaker 01:
But are you saying that the fees that plaintiffs may or may not have paid for services other than Zelle are relevant to the standing analysis or not?

[00:29:27] Speaker 01:
Yes.

[00:29:27] Speaker 01:
Why?

[00:29:27] Speaker 01:
Yes.

[00:29:28] Speaker 01:
Why?

[00:29:28] Speaker 01:
Yes, because they are.

[00:29:29] Speaker 01:
Why?

[00:29:29] Speaker 01:
You said the disparagement clause is only tied to Zelle.

[00:29:32] Speaker 04:
So their theory, again, this is not what we advanced below to the district court.

[00:29:36] Speaker 04:
Their theory is that the entire OBSA is transformed

[00:29:41] Speaker 04:
into a sales or lease contract under section 1670.8 because of the fees that are covered by the agreement.

[00:29:48] Speaker 04:
That's their theory.

[00:29:50] Speaker 04:
They reject our interpretation that the non-disparagement clause is limited only to Zelle.

[00:29:57] Speaker 04:
So again, based on the four corners of the complaint, they are alleging the entire agreement is unlawful.

[00:30:03] Speaker 04:
The agreement contains, imposes fees, even if they didn't pay them.

[00:30:08] Speaker 04:
It imposes fees, it is unlawful under section 1670.8 to impose.

[00:30:13] Speaker 01:
So if, okay, so if I understand you correctly and I'm sorry, I'm just confused about this.

[00:30:18] Speaker 01:
So if plaintiffs did pay fees for services other than Zell.

[00:30:24] Speaker 01:
Yes.

[00:30:25] Speaker 01:
You're saying those fees would suffice for Article 3 standing separate and apart from the disgorgement theory of standing.

[00:30:32] Speaker 04:
Yes, that would be the argument.

[00:30:35] Speaker 04:
The argument would be those would be general factual allegations sufficient to confer standing in an Article III federal district court that whether or not those same plaintiffs can actually state a viable cause of action under Section 1670.8 is a separate analysis.

[00:30:52] Speaker 03:
So you can lose on the merits because the district court couldn't say, no, that's not how it works, that's not how the statute applies, but still have

[00:30:59] Speaker 03:
Article 3 standing because it was alleged in a more broad fashion.

[00:31:02] Speaker 04:
Yes.

[00:31:03] Speaker 04:
And going back 50 years to the Wharf versus Selden case, which was a Supreme Court case involved a zoning challenge in upstate New York, said standing in no way depends on the merits of the claims, right?

[00:31:17] Speaker 04:
Because in every case, and this is actually described more recently in the I-10 versus County of Los Angeles case, this court, 81 F4D 979,

[00:31:29] Speaker 04:
which was about the COVID-19 moratorium eviction, the court had an extended discussion of the difference between the two analyses.

[00:31:38] Speaker 04:
If a plaintiff has a viable cause of action, takes it even to trial, let's say, and loses, or the jury awards no damages, the court doesn't say that plaintiff didn't have standing.

[00:31:52] Speaker 04:
A plaintiff can have standing to pursue claims that ultimately don't have merit.

[00:31:56] Speaker 02:
Right, I think we understand that.

[00:31:58] Speaker 02:
Council, you're well over your time.

[00:32:00] Speaker 02:
I'm just wondering if you would sum up your position.

[00:32:03] Speaker 04:
Sure.

[00:32:04] Speaker 04:
Our position is the plaintiffs, based on a review of the four corners of the complaint, at the time the complaint was removed, demonstrated Article 3 standing through the alleged payment of fees by the plaintiffs and by the other class members, as well as through a remedy of restitutionary discouragement, which under California law does not require any individual loss, and that is sufficient to confer Article 3 standing.

[00:32:32] Speaker 04:
and the district court was proper in dismissing the complaint on the merits.

[00:32:37] Speaker 02:
All right.

[00:32:37] Speaker 02:
Thank you very much, counsel.

[00:32:39] Speaker 02:
Thank you.

[00:32:39] Speaker 02:
I believe you have some time, Ms.

[00:32:41] Speaker 02:
Lothan.

[00:32:47] Speaker 00:
Thank you, Your Honor.

[00:32:50] Speaker 00:
So just really briefly, my understanding is that there must be Article 3 standing for every cause of action and every remedy alleged.

[00:32:58] Speaker 00:
And so here, if my friend is arguing that there was no services paid for services for fees under Section 1670.8, then there's no concrete harm under Section 1670.8 cause of action.

[00:33:11] Speaker 00:
And the damages for disgorgement,

[00:33:13] Speaker 00:
Restitution those those wouldn't support section 1670.8.

[00:33:17] Speaker 01:
Those support only the unfair There are many cases that lose on motion to dismiss army judgment or at trial that do have standing right?

[00:33:27] Speaker 01:
You don't have to prevail on the merits to have standing is really my question

[00:33:31] Speaker 00:
Yes, and I understand that.

[00:33:32] Speaker 00:
However, if you look at the Spokio case, it does say that the Ashcroft versus Iqbal standard does apply when you're looking at standing on the face of the pleadings.

[00:33:43] Speaker 00:
The difference here with our case is that the allegations that are found to be insufficient are the allegations that support damages.

[00:33:51] Speaker 00:
If there's no payment for services, then what damages?

[00:33:53] Speaker 03:
You did make the allegations of damage.

[00:33:55] Speaker 03:
You did make allegations that monies were paid, that the OBSA was

[00:33:59] Speaker 03:
illegal in its whole, not segregating off the Zell part, right?

[00:34:04] Speaker 00:
We did, yes, but those were found to be insufficient.

[00:34:06] Speaker 03:
They were found insufficient, but that's on a motion to dismiss.

[00:34:10] Speaker 03:
You can have articles to drive home Judge Coase Point.

[00:34:13] Speaker 03:
It's not uncommon to have an Article 3 standing and then found there was no injury, there was no causation, there was all the things that normally go into sort of standing.

[00:34:21] Speaker 03:
You don't look backwards if on the merits you lose and then say, oh, well, I guess I never had standing in the first place.

[00:34:28] Speaker 00:
I understand that, but if you take the causes of action separately, there's still no standing for the 1670.8 cause of action, because there's no payment for the services.

[00:34:36] Speaker 03:
Well, you alleged there were payment for services.

[00:34:39] Speaker 00:
We did allege that, but they found that there was not sufficient, so we're only seeking the civil penalties for that.

[00:34:45] Speaker 00:
The discouragement and the other remedies would support the unfair competition law cause of action.

[00:34:51] Speaker 00:
And quite frankly, Your Honors, the appellees are stopped from making arguments that we have standing because below in their motion to dismiss, they argued that the appellants lack standing.

[00:35:04] Speaker 01:
But you've also made a lot of contradictory arguments below, so I think that would have to go both ways.

[00:35:08] Speaker 01:
Let me ask you another question.

[00:35:10] Speaker 01:
Why don't you just file a new case in state court seeking solely civil penalties?

[00:35:14] Speaker 01:
Do you have a statute of limitations problem?

[00:35:16] Speaker 01:
Are you having difficulty finding named plaintiffs?

[00:35:18] Speaker 01:
I mean, that would be a cleaner way.

[00:35:20] Speaker 01:
Just file a new case that doesn't have all of these damage requests, disgorgement requests, and just say I only want civil penalties.

[00:35:27] Speaker 01:
Wouldn't that be a cleaner way to do this?

[00:35:28] Speaker 01:
Why does it have to be resurrection of this case?

[00:35:33] Speaker 00:
I don't have the answer for that, Your Honors, but we can look into it.

[00:35:37] Speaker 03:
Are you concerned with the claim preclusion, restricata, claim splitting?

[00:35:41] Speaker 00:
Potentially, I think there could be some concerns.

[00:35:43] Speaker 00:
I think that the fact of the matter is that the district court's decision here kind of limited to the point that there was no standing, as well as what the... Didn't you... I thought you filed this case in the first instance in state court.

[00:35:56] Speaker 02:
We did.

[00:35:57] Speaker 02:
And then it was removed.

[00:35:58] Speaker 00:
It was.

[00:35:59] Speaker 02:
And you didn't argue lack of jurisdiction when it was removed.

[00:36:03] Speaker 00:
We did not.

[00:36:04] Speaker 02:
Okay.

[00:36:08] Speaker 00:
So, unless there's any further questions.

[00:36:10] Speaker 02:
Why don't you sum up your position?

[00:36:12] Speaker 00:
If there are no further questions, Your Honor, we do ask that the court find that there is no Article 3 standing here because there is no concrete harm and that the plaintiffs can proceed separately.

[00:36:23] Speaker 00:
There's no concrete harm for the civil penalties violations of the statutory section 1670.8 and that the court remand the case back to the state court because it is unsettled there whether or not these allegations can proceed in state court.

[00:36:37] Speaker 02:
All right.

[00:36:37] Speaker 02:
Thank you very much, council.

[00:36:40] Speaker 02:
Thank you.