Opinion

1 O

2

3

4

5

6

7

United States District Court

8

Central District of California

9

10

Case № 2:24-cv-06323-ODW (MARx)

11 KEIR MILAN et al.,

12 Plaintiffs,

ORDER GRANTING MOTION TO

13 v. DISMISS SECOND AMENDED

14 JPMORGAN CHASE BANK, N.A. et al., COMPLAINT [30]

15 Defendants.

16

17 I. INTRODUCTION

18 Plaintiffs Keir Milan and Keirco, Inc. bring this putative class action for various

19 consumer protection violations and unjust enrichment against Defendant JPMorgan

20 Chase Bank, N.A. (“Chase”). (Second Am. Compl. (“SAC”), Dkt. No. 27.) Chase now

21 moves to dismiss Plaintiffs’ Second Amended Complaint under Federal Rule of Civil

22 Procedure (“Rule” or “Rules”) 12(b)(6). (Mot. Dismiss (“Motion” or “Mot.”), Dkt.

23 No. 30.) For the reasons below, the Court GRANTS Chase’s Motion and DISMISSES

24 the Second Amended Complaint in its entirety.1

25

26

27

1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the

28

matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15.

1 II. BACKGROUND2

2 On May 25, 2024, Chase acquired consumer and business banking accounts from

3 First Republic Bank (“First Republic”), including Plaintiffs’ accounts. (SAC ¶ 16.)

4 Before the acquisition, Plaintiffs used several First Republic banking features, including

5 a Bill Pay Service (“BPS”). (Id. ¶ 21.) FRB’s BPS allowed customers to future

6 schedule payments, but First Republic did not withdraw the funds from payor accounts

7 until the payee received the funds. (Id.) Chase offers its own BPS, but Chase withdraws

8 the funds before the payee receives them. (Id. ¶ 22.)

9 According to Plaintiffs, Chase’s early withdrawals trigger monthly service fees

10 and overdrafts and reduce customer interest income. (Id. ¶ 23.) Chase does not disclose

11 in its account agreements that its BPS operates differently from FRB’s or that Chase

12 withdraws funds from payor accounts before payees receive payment. (Id. ¶¶ 24–25,

13 77.) Chase “purposefully omit[s] this information so its customers cannot know

14 precisely when the [BPS] amount will be funded from their accounts.” (Id. ¶ 48; see id.

15 ¶¶ 78–79.) To support these allegations, Plaintiffs provide (1) two transition letters

16 issued by Chase, (SAC Exs. A–B (“Transition Letters”), Dkt. No. 27-1 to 27-2); (2) one

17 Digital Service Agreement (“DSA”), (id. Ex. C (“DSA”), Dkt. No. 27-3); and (3) two

18 Bill Payments and Transfer Agreements (“BPTAs”), (id. Ex. D (“Business BPTA”),

19 Dkt. No. 27-4; see id. Ex. E (“Consumer BPTA”), Dkt. No. 27-5).

20 Based on these allegations, Plaintiffs initiated this putative class action on behalf

21 of themselves and all other similarly situated individuals and corporations. (Id. at 1–2.)

22 The proposed class includes all Chase clients enrolled in the BPS. (Id. ¶ 51(a).) The

23 proposed subclass consists of all such clients who currently reside in California. (Id.

24 ¶ 51(b).) Plaintiffs advance four causes of action: (1) violation of California’s

25 Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750 et seq.; (2) violation

26

27 2 All factual references derive from the Second Amended Complaint unless otherwise noted, and

well-pleaded factual allegations are accepted as true for purposes of this Motion. See Ashcroft v. Iqbal,

28 556 U.S. 662, 678 (2009).

1 of California’s False Advertising Law (“FAL”), Cal. Bus. & Prof. Code § 17500 et seq.;

2 (3) violation of California’s Unfair Competition Law (“UCL”), id. § 17200 et seq.; and

3 (4) unjust enrichment. (SAC ¶¶ 71–123.) Chase now moves to dismiss the Second

4 Amended Complaint in its entirety. (See Mot.)

5 III. LEGAL STANDARD

6 A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable

7 theory or insufficient facts pleaded to support an otherwise cognizable legal theory.

8 Baliestreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). To survive a

9 motion to dismiss, a complaint need only satisfy the minimal notice pleading

10 requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v. Jones,

11 319 F.3d 483, 494 (9th Cir. 2003). That is, the complaint must “contain sufficient

12 factual matter, accepted as true, to state a claim to relief that is plausible on its face.”

13 Iqbal, 556 U.S. at 678 (internal quotation marks omitted).

14 The determination of whether a complaint satisfies the plausibility standard is a

15 “context-specific task that requires the reviewing court to draw on its judicial

16 experience and common sense.” Id. at 679. A court is generally limited to the pleadings

17 and must construe all “factual allegations set forth in the complaint . . . as true and . . .

18 in the light most favorable” to the plaintiff. Lee v. City of Los Angeles, 250 F.3d 668,

19 679 (9th Cir. 2001). However, a court need not blindly accept conclusory allegations,

20 unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden State

21 Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

22 When a plaintiff’s claims are fraud-based, Rule 9(b)’s heightened pleading

23 requirements apply. Moore v. Kayport Package Express, 885 F.2d 531, 540 (9th Cir.

24 1989); see also 18 U.S.C. §§ 1341, 1343. Rule 9(b) provides, “In alleging fraud or

25 mistake, a party must state with particularity the circumstances constituting fraud or

26 mistake.” “A pleading satisfies Rule 9(b) if it identifies ‘the who, what, when, where,

27 and how’ of the misconduct charged.” MetroPCS v. SD Phone Trader, 187 F. Supp. 3d

28 1147, 1150 (S.D. Cal. 2016) (quoting Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097,

1 1106 (9th Cir. 2003)). The plaintiff must “set forth more than the neutral facts necessary

2 to identify the transaction [and] must set forth what is false or misleading about a

3 statement, and why it is false.” Vess, 317 F.3d at 1106 (emphasis omitted).

4 IV. DISCUSSION

5 Chase moves to dismiss Plaintiffs’ Second Amended Complaint under Rules 9(b)

6 and 12(b)(6). (Mot. 17–29.) It argues, among other things, that Plaintiffs fail to plead

7 their fraud-based CLRA, FAL, and UCL claims with particularity, that Plaintiffs’

8 CLRA claim fails as a matter of law because the BPS is not “good” or “service,” that

9 Keiro lacks CLRA standing, and that Plaintiffs’ unjust enrichment claim is barred by

10 valid contracts governing the subject matter of the dispute. (See id.)

11 A. CLRA (Count I)

12 The CLRA prohibits “unfair methods of competition” and “unfair or deceptive

13 acts or practices” in the sale of goods or services to consumers. Cal. Civ. Code § 1770.

14 Conduct that is likely to mislead a reasonable consumer, such as representing that goods

15 or services have characteristics, uses, or benefits they do not have, violates the CLRA.

16 Id. § 1770(a)(5); Colgan v. Leatherman Tool Grp., 135 Cal. App. 4th 663, 680 (2006).

17 Plaintiffs allege that Chase violated the CLRA by failing to disclose precisely

18 when it withdraws funds to process BPS transactions. (SAC ¶ 77.) Chase moves to

19 dismiss this claim, arguing that (1) Plaintiffs fail to plead their claim with the

20 particularity required by Rule 9(b), (2) the claim concerns money rather than goods or

21 services, and (3) Keirco lacks statutory standing. (Mot. 17–24.)

22 1. Heightened Pleading Under Rule 9(b)

23 Rule 9(b) applies to CLRA claims sounding in fraud. Kearns v. Ford Motor Co.,

24 567 F.3d 1120, 1125 (9th Cir. 2005). Both misrepresentations and omissions are

25 actionable under the CLRA. See Daugherty v. Am. Honda Motor Co., 144 Cal. App.

26 4th 824, 834–35 (2006). To plead an actionable omission, the plaintiff must allege “the

27 circumstances of [the] omission with specificity.” McIntyre v. Am. Honda Motor Co.,

28 739 F. Supp. 3d 776, 799 (C.D. Cal. 2024). The plaintiff must identify (1) who made

1 the omission, (2) what information was omitted, (3) when the omission occurred,

2 (4) where the omitted information should or could have been disclosed, and (5) how the

3 omission was misleading. See Vess, 317 F.3d at 1106 (“Averments of fraud must be

4 accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.”).

5 Here, the parties do not dispute that Plaintiffs’ CLRA claim sounds in fraud and

6 must satisfy Rule 9(b)’s heightened pleading standard. Rather, they dispute whether

7 Plaintiffs’ allegations meet this standard. (Compare Mot. 17–19, with Opp’n 6–9, Dkt.

8 No. 31.) Plaintiffs’ allegations do not.

9 First, Plaintiffs fail to plead with particularity what information Chase omitted

10 regarding its BPS transactions. To satisfy Rule 9(s)’s heightened pleading requirement,

11 a plaintiff must “describe the content” of the alleged omission. Eisen v. Porsche Cars

12 N. Am., Inc., No. 2:11-cv-09405-CAS (FEMx), 2012 WL 841019, at *3 (C.D. Cal.

13 Feb. 22, 2012). Thus, “[t]he plaintiff must set forth what is false or misleading about a

14 statement, and why it is false.” Vess, 317 F.3d at 1106. Here, Plaintiffs’ broad

15 allegations that “[n]owhere” in Chase’s agreements does it disclose “when the

16 electronic payments will be funded,” and that Chase processes payments “at [its] own

17 discretion,” (see SAC ¶ 77), are not tied to any transaction and do not explain what part

18 of Chase’s omission makes it false or misleading. Thus, Plaintiffs’ fail to allege “the

19 circumstances of [the] omission with specificity.” McIntyre, 739 F. Supp. 3d at 799.

20 Moreover, the record also indicates that, contrary to Plaintiffs’ allegations, Chase

21 does disclose “when the electronic payments will be funded.” (See SAC ¶ 77.)

22 Specifically, Chase discloses in the BPTAs that funds “will be deducted from [the

23 customer’s] Pay From account . . . on the Send On date.” (See, e.g., Business BPTA

24 ¶ 1.E.) Plaintiffs acknowledge that the “Send On date” is “selected by the account

25 owner.” (SAC ¶ 43; see Opp’n 9.) Therefore, the very same BPTAs Plaintiffs rely on

26 defeat their omission theory because the agreements expressly disclose when Chase will

27 withdraw funds. (See Business BPTA ¶ 1.E; see also Consumer BPTA ¶ 1.E.).

28

1 Plaintiffs argue that Chase’s on-screen disclosures are ambiguous or insufficient

2 to alert customers of “the material consequences” of enrolling in the BPS. (Opp’n 5.)

3 However, the BPTAs state that “[t]he Delivery Method and lead time expected for each

4 type of payment your Payee will ordinarily receive will be indicated on screen when

5 [the customer’s] payment is scheduled.” (Consumer BPTA ¶ B.3.) This provision

6 covers the timing of Chase’s withdrawals and specifies how and when Chase provides

7 notice to consumers: “on screen” when “payment is scheduled.” (Id.) Plaintiffs’

8 Second Amended Complaint is silent regarding this “on screen notice.”3 They do not

9 allege that Chase failed to display the delivery-method or lead-time information, or that

10 the information was false or otherwise deficient or misleading. (See generally SAC.)

11 Second, Plaintiffs do not identify where Chase should have disclosed the

12 withdrawal-timing information. (See generally id.); Eisen, 2012 WL 841019, at *3

13 (holding that a plaintiff alleging fraudulent omission must specify “where the omitted

14 information should or could have been revealed”). Plaintiffs’ failure to specify where

15 Chase should have disclosed the withdrawal-timing information does not put Chase on

16 notice of the misconduct charged against it. Cf. Moore, 885 F.2d at 540 (“A pleading

17 is sufficient under [R]ule 9(b) if it identifies the circumstances constituting fraud so that

18 a defendant can prepare an adequate answer from the allegations.”)

19 Finally, Plaintiffs do not allege how the alleged omission would mislead a

20 reasonable consumer. They assert that a reasonable consumer would expect Chase to

21 withdraw funds only when the payee receives payment. (See SAC ¶¶ 28, 82.) However,

22 a plaintiff alleging fraud-based claims must “explain how the claims are false” or “how

23 the defendant intentionally misled” its customers. Cooper v. Pickett, 137 F.3d 616,

24 626–27 (9th Cir. 1997)). Here, Plaintiffs fail to explain how Chase’s BPS terms could

25

3 Plaintiffs contend that “[t]he complaint alleges” that Chase’s “digital interface and [BPS] setup

26 screen continue to represent to all users that payment will be sent on the date they select, without

disclosing that funds may be withdrawn earlier.” (Opp’n 19.) However, Plaintiffs’ Second Amended

27 Complaint contains no allegations regarding Chase’s payment-scheduling interface or on-screen

28 disclosures. (See generally SAC.)

1 mislead consumers about the timing of funds withdrawal. (See generally SAC.) In fact,

2 and contrary to Plaintiffs’ allegations, the BPTAs state that accountholders “authorize

3 [Chase] to remove funds” on the “Send On date” and “agree to have sufficient available

4 funds on the Send On date or Payment date.” (Consumer BPTA ¶ 1.3.A.1.) Plaintiffs

5 do not explain how this provision would mislead a consumer into believing that Chase

6 will withdraw funds only upon payment delivery. Nor do they explain how the alleged

7 omission was “false and misleading.” Asghari v. Volkswagen Grp. of Am., Inc., 42 F.

8 Supp. 3d 1306, 1325 (C.D. Cal. 2013).

9 In sum, Plaintiffs fail to adequately plead the “what,” “where,” or “how” of their

10 CLRA claim and fail to satisfy Rule 9(b)’s heightened pleading standard. Accordingly,

11 the Court DISMISSES Plaintiffs’ first cause of action on this ground.

12 In the interest of completeness and judicial efficiency, the Court nevertheless

13 addresses Chase’s two additional grounds for dismissal under Rule 12(b)(6). See New

14 Day Worldwide Inc. v. Swift, No. 2:19-cv-09948-AB (SSx), 2020 WL 6050700, at *2

15 (C.D. Cal. July 21, 2020) (considering additional grounds for dismissal under

16 Rule 12(b)(6) notwithstanding dismissal on threshold basis), aff’d sub nom. Grahan v.

17 Swift, No. 20-55779, 2022 WL 576024 (9th Cir. Feb. 25, 2022).

18 2. Chase’s BPS as a “Good” or “Service”

19 Chase next argues that Plaintiffs’ CLRA claim fails because it concerns money,

20 not “goods” or “services.” (Mot. 20–23.) Plaintiffs respond that their claim concerns

21 Chase’s alleged “misrepresentation and mismanagement” of the BPS. (Opp’n 10–12.)

22 By its terms, the CLRA applies only to transactions involving the “sale or lease

23 of goods or services to any consumer.” Cal. Civ. Code § 1770. The statute defines

24 “goods” as “tangible chattels bought or leased for use primarily for personal, family, or

25 household purposes.” Id. § 1761(a). It defines “services” as “work, labor, and services

26 for other than a commercial or business use, including services furnished in connection

27 with the sale or repair of goods.” Id. § 1761(b).

28

1 Courts interpreting these provisions have consistently held that purely financial

2 transactions fall outside the CLRA’s scope. For example, a financial institution’s act

3 of extending lines of credit to consumers does not constitute a “service” under the

4 statute. Berry v. Am. Express Publ’g, Inc., 147 Cal. App. 4th 224, 233 (2007). As Berry

5 explained, early drafts of the CLRA included the terms “money” and “credit,” but the

6 Legislature deliberately removed them before enactment—a decision that “strongly

7 counsels” against expanding the statute to reach transactions involving money or credit

8 unrelated to the sale or lease of goods or services. Id. at 230–31.

9 Here, Plaintiffs allege that the BPS is a “good” under the CLRA. (SAC ¶ 72.)

10 However, in their opposition brief, Plaintiffs argue that the BPS is a “service.”

11 (Opp’n 10–12.) The BPS is neither a “good” nor a “service” covered under the CLRA.

12 Intangible items, such as bank accounts, are not “goods” or “services” within the

13 meaning of the CLRA, and “ancillary services” provided in connection with such an

14 intangible item do not bring the transaction within the CLRA’s scope. Fairbanks v.

15 Superior Court, 46 Cal. 4th 56, 65 (2009). Plaintiffs identify no transaction for the “sale

16 or lease” of the BPS, as would be applicable to a CLRA good. (SAC ¶¶ 71–84); see

17 Cal. Civ. Code § 1770. The BPS is also not a covered “service” under the CLRA.

18 Plaintiffs’ CLRA claim concerns the timing of the movement of money from their bank

19 deposit accounts. (See, e.g., SAC ¶¶ 46–48, 77 (alleging that Chase does not alert

20 customers “when electronic payments will be funded from their accounts); see also

21 Opp’n 22 (alleging that Chase “debits funds early”).) The BPS is, at most, an “ancillary

22 service” provided in connection with an intangible item. Fairbanks, 46 Cal. 4th at 65.

23 As the BPS concerns the movement of money or ancillary monetary transactions,

24 Plaintiffs’ claim necessarily falls outside the CLRA’s scope.

25 The Court therefore concludes that Plaintiffs fail to state a claim for relief under

26 the CLRA, independent of their Rule 9(b) pleading deficiencies.

27

28

1 3. Keirco’s Statutory Standing

2 Chase next argues that Keirco lacks statutory standing to assert a CLRA claim

3 because it is a corporation, not a “consumer.” (Mot. 23–24; Reply 11–12, Dkt. No. 32.)

4 Plaintiffs respond that the CLRA should be construed broadly and that Keirco should

5 be treated the same as any individual because “[t]he nature of [the BPS] is identical

6 whether used by an individual or a small business like Keirco.” (Opp’n 12.)

7 Only a “consumer” may bring a CLRA claim. Cal. Civ. Code § 1780(a); see

8 Blair v. Mercedes-Benz of N. Am., Inc., 914 F.2d 261, 262 (9th Cir. 1990). Courts have

9 consistently held that the CLRA excludes corporate entities from its definition of

10 “consumers.” See Cooper v. Simpson Strong-Tie Co., 460 F. Supp. 3d 894, 912

11 (N.D. Cal. 2020) (dismissing CLRA claim because the statute excludes corporations

12 from the definition of “consumers”). As the Ninth Circuit has explained, “[t]he CLRA

13 distinguishes between an ‘individual’ and a ‘corporation,” and this distinction reflects

14 the Legislature’s intent to cabin standing under the CLRA “to individuals, not to

15 corporations.” Blair, 914 F.2d at 262.

16 Here, Keirco is a California corporation. (SAC ¶ 31.) As a business entity,

17 Keirco is not “an individual” under the CLRA. See Cooper, 460 F. Supp. 3d at 912.

18 Thus, Keirco lacks statutory standing to sue under the CLRA.

19 In sum, Plaintiffs fail to state a viable claim under the CLRA. First, Plaintiffs’

20 fail to meet Rule 9(b)’s heightened pleading standard, as they do not specify the who,

21 what, and where of the alleged fraud. Next, the CLRA applies only to the sale or lease

22 of goods or services, and Plaintiffs identify no such transaction involving Chase’s BPS.

23 As the BPS concerns the movement of money, not goods or services, it falls outside of

24 the CLRA’s scope. Finally, Keirco, as a corporate entity, lacks statutory standing under

25 the CLRA, which extends only to individual consumers. Accordingly, the Court

26 DISMISSES Plaintiffs’ first cause of action.

27

28

1 B. FAL (Count II)

2 Plaintiffs allege that Chase violated the FAL by disseminating “untrue or

3 misleading statements” about the BPS. (SAC ¶¶ 85–97.) Chase argues that Plaintiffs

4 fail to meet Rule 9(b)’s particularity standard and do not identify any actionable

5 “advertisement.” (Mot. 17–19, 25–26.) The Court addresses each argument in turn.

6 1. Heightened Pleading Under Rule 9(b)

7 The FAL makes it “unlawful for a business to disseminate any statement which

8 is untrue or misleading and which is known, or which by the exercise of reasonable care

9 should be known, to be untrue or misleading.” Arevalo v. Bank of Am. Corp., 850 F.

10 Supp. 2d 1008, 1023–24 (N.D. Cal. 2011) (internal quotation marks omitted) (quoting

11 Ariz. Cartridge Remanufacturers Ass’n, Inc. v. Lexmark Int’l, Inc., 421 F.3d 981, 985

12 (9th Cir. 2005)). Courts interpret the statute “broadly to encompass not only advertising

13 which is false,” but also true advertising which is “either actually misleading or which

14 has a capacity, likelihood, or tendency to deceive or confuse the public.” Davis v. HSBC

15 Bank Nev., N.A., 691 F.3d 1152, 1162 (9th Cir. 2012) (citation modified).

16 Here, Plaintiffs allege that Chase engaged in unfair and deceptive conduct by

17 affirmatively misrepresenting material facts and concealing critical information about

18 how the BPS would operate after First Republic’s accounts transition to Chase, conduct

19 intended to mislead customers regarding the nature and operation of the BPS. (See SAC

20 ¶¶ 85–97.) Accordingly, Plaintiffs base their FAL claim on a false representation, and

21 it is thus “grounded in fraud” and must satisfy Rule 9(b)’s heightened pleading standard.

22 See Davidson v. Kimberly–Clark Corp., 889 F.3d 956, 964 (9th Cir. 2018) (noting that

23 FAL claims grounded in fraud must satisfy Rule 9(b)).

24 Plaintiffs base their FAL claim on the same factual allegations as their CLRA

25 claim. (Compare SAC ¶¶ 75–82, with id. ¶¶ 86–94.) As discussed above, Plaintiffs fail

26 to plead with particularity the “what,” “where,” and “how” of the alleged fraud. Thus,

27 their FAL claim suffers from the same pleading deficiencies as their CLRA claim and

28 fails to satisfy Rule 9(b)’s heightened pleading standard.

1 2. Chase’s “Advertisements”

2 Plaintiffs’ FAL claim also fails because they do not identify any actionable

3 “advertisement.” The FAL prohibits “induc[ing] the public to enter into any obligation”

4 through “a statement that is untrue or misleading.” Hodsdon v. Mars, Inc., 891 F.3d

5 857, 867 (9th Cir. 2018) (internal quotation marks omitted). To be actionable, a

6 statement must be (1) widely disseminated to the public, and (2) likely to influence

7 consumers to purchase goods or services. Cal. Bus. & Prof. Code § 17500.

8 Here, Plaintiffs identify two categories of allegedly misleading materials: (1) the

9 Transition Letters Chase sent to Plaintiffs, and (2) Chase’s DSA and BPTAs. (See SAC

10 ¶¶ 86–88.) Neither category qualifies as an “advertisement” under the FAL.

11 First, the Transition Letters do not qualify as advertisements under the FAL.

12 Chase sent the letters directly to Plaintiffs, after acquiring—but before migrating—their

13 accounts from FRB. (Id. ¶¶ 11, 14; see Transition Letters.) Plaintiffs do not allege that

14 Chase distributed these letters to the public or used them in any advertising campaign.

15 (See generally SAC.) Without allegations plausibly showing that the letters were

16 disseminated to the public and likely to influence consumers to use the BPS, they cannot

17 qualify as actionable advertisements under the FAL. Cal. Bus. & Prof. Code § 17500

18 Second, the DSA and BPTAs are likewise not actionable as advertisements. The

19 FAL regulates public-facing statements intended to induce consumer transactions. See

20 Hodsdon, 891 F.3d at 867. Contracts like the DSA and BPTAs, by contrast, formalize

21 existing relationships between parties and reflect terms negotiated after a consumer has

22 already been persuaded to engage in a transaction. See Prager Univ. v. Google LLC,

23 951 F.3d 991, 1000 (9th Cir. 2020) (noting that “contracts are not advertisements or a

24 promotional campaign”). Here, Plaintiffs do not allege that these agreements were

25 presented to them, or to the public, in connection with any advertising campaign

26 initiated by Chase. (See generally SAC.) They similarly do not allege that statements

27 contained in a private contract are somehow actionable advertising under the FAL. (See

28 generally id.); see Sanchez v. Navy Fed. Credit Union, No. 5:23-cv-00285-JGB (KKx),

1 2023 WL 6370235, at *9 (C.D. Cal. Aug. 14, 2023) (questioning whether “a statement

2 contained inside a contract is actionable under the FAL”). As Plaintiffs fail to plausibly

3 establish that the DSA or the BPTAs are actionable advertisements, they fail to state a

4 claim under the FAL.

5 In sum, Plaintiffs fail to state a claim under the FAL because their allegations fail

6 to meet Rule 9(b)’s heightened pleading standard and are insufficient to plausibly

7 establish the existence of an actionable advertisement under the FAL. Accordingly, the

8 Court DISMISSES Plaintiffs’ second cause of action.

9 C. UCL (Count III)

10 The UCL prohibits “any unlawful, unfair or fraudulent business act or practice

11 and unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code

12 § 17200. The statute provides a separate and distinct theory of liability under each of

13 the three prongs: “unlawful,” “unfair,” and “fraudulent.” Lozano v. AT&T Wireless

14 Servs., Inc., 504 F.3d 718, 731 (9th Cir. 2007)).

15 Here, Plaintiffs allege that Chase engaged in fraudulent, unlawful, and unfair

16 business practices in violation of the UCL by failing to disclose when it withdraws funds

17 from payor accounts. (See SAC ¶¶ 98–118.) Chase argues that Plaintiffs’ UCL claim

18 fails because (1) the fraudulent-prong claim does not meet Rule 9(b)’s particularity

19 standard, (2) the unlawful-prong claim is derivative of, and fails with, Plaintiffs’ CLRA

20 and FAL claims, and (3) the unfair-prong claim merely repeats the same allegations as

21 Plaintiffs’ fraudulent- and unfair-prong claims. (Mot. 17–19, 24–25.) Plaintiffs

22 respond that they adequately plead each prong and that, even if one prong fails, the other

23 prongs “would still stand.” (Opp’n 13–19.)

24 1. Fraudulent-Prong Claim

25 UCL’s fraudulent prong requires Plaintiffs to “state with particularity the

26 circumstances constituting fraud.” Kearns, 567 F.3d at 1124. Here, Plaintiffs’

27 fraudulent-prong allegations mirror their CLRA and FAL allegations. (Compare SAC

28 ¶¶ 76–80, 87–91, with id. ¶¶ 100–05, 110–12.) As discussed above, Plaintiffs fail to

1 plead the alleged fraud with specificity. Accordingly, the Court finds that Plaintiffs’

2 UCL fraudulent-prong claim fails for the same reasons as their CLRA and FAL claims.

3 2. Unlawful-Prong Claim

4 The unlawful prong “borrows violations of other laws” and treats them as

5 independently actionable unlawful business practices. Farmers Ins. Exch. v. Superior

6 Court, 2 Cal. 4th 377, 383 (1992). However, a plaintiff must plead a predicate violation

7 of law. See Krantz v. BT Visual Images, L.L.C., 89 Cal. App. 4th 164, 178 (2001)

8 (noting that the viability of an unlawful-prong claim depends on whether the underlying

9 causes of action survive). Here, Plaintiffs predicate their UCL claim on Chase’s alleged

10 violations of the CLRA and FAL. (SAC ¶¶ 107–08, 110; Opp’n 13–19.) As discussed

11 above, both claims fail. Therefore, Plaintiffs’ UCL unlawful-prong claim lacks a legal

12 anchor and necessarily fails with their predicate causes of action.

13 3. Unfair-Prong Claim

14 Courts consistently hold that “the unfair prong of the UCL cannot survive if the

15 claims under the other two prongs of the UCL do not survive.” Milliam v. Energizer

16 Brands, LLC, No. 5:21-cv-01500-JWH (SHKx), 2022 WL 19001330, at *7 (C.D. Cal.

17 Dec. 9, 2022); see In re Actimmune Mktg. Litig., No. 3:08-cv-02376-MHP, 2009 WL

18 3740648, at *14 (N.D. Cal. Nov. 6, 2009) (dismissing the UCL unfair-prong claim

19 where the plaintiffs’ “unfair prong claims overlap entirely with their claims of fraud”),

20 aff’d, 464 F. App’x 651 (9th Cir. 2011).

21 Here, Plaintiffs’ unfair-prong claim mirrors their underlying fraudulent- and

22 unlawful-prong claims. (See SAC ¶¶ 104–115; Opp’n 20–23.) Plaintiffs allege that

23 Chase’s practices are “unfair” because it withdraws funds from payor accounts earlier

24 than disclosed. (SAC ¶¶ 107, 110–11, 113.) In their opposition brief, Plaintiffs clarify

25 that this conduct reflects an “unfair business practice” intended to mislead consumers

26 and “force them to bear the brunt of costs.” (Opp’n 16.) However, Plaintiffs’ alleged

27 “unfairness” is indistinguishable from the alleged deception. As such, Plaintiffs’

28

1 unfair-prong claim is not independently viable and fails alongside Plaintiffs’ other UCL

2 theories. Milliam, 2022 WL 19001330, at *7.

3 In sum, Plaintiffs fail to state a claim under any UCL prongs. Accordingly, the

4 Court DISMISSES Plaintiffs’ third cause of action.

5 D. Unjust Enrichment (Count IV)

6 Plaintiffs also allege that Chase prematurely withdraws funds from customer

7 accounts before sending payments to designated payees, thereby earning interest for

8 itself and triggering overdraft and account fees that unjustly enrich Chase at Plaintiffs’

9 expense. (SAC ¶¶ 119–23.) Chase argues that the unjust enrichment claim is barred by

10 valid contracts governing the parties’ relationship and their dispute. (Mot. 28–29.)

11 Courts are divided on whether California recognizes unjust enrichment as an

12 independent cause of action. See ESG Cap. Partners, LP v. Stratos, 828 F.3d 1023,

13 1038 (9th Cir. 2016) (“Some California courts allow a plaintiff to state a cause of action

14 for unjust enrichment, while others have maintained that California has no such cause

15 of action.”) Given this uncertainty, courts generally treat such claims as quasi-contract

16 claims for restitution. Id. at 1038–39. However, an unjust enrichment or claim “cannot

17 lie” where a valid express contract governs the same subject matter. Rutherford

18 Holdings, LLC v. Plaza Del Rey, 223 Cal. App. 4th 221, 231 (2014) (citation omitted).

19 Here, Plaintiffs’ do not dispute that valid written agreements govern the terms of

20 the BPS. (See SAC ¶¶ 35, 37–38 (alleging that the DSA “frequently” addresses the

21 BPS, and that the BPTAs specifically govern its operation); Opp’n 20 (acknowledging

22 that Plaintiffs “may have agreed to certain terms and conditions to access Chase

23 accounts”).) As valid express contracts govern Chase’s relationship with Plaintiffs and

24 the subject matter of the parties’ dispute, Plaintiffs’ unjust enrichment claim is therefore

25 barred as a matter of law. See Kouball v. Seaworld Parks & Ent., Inc., No. 20-cv-56069,

26 2020 WL 4947877, at *1 (9th Cir. Oct. 25, 2021) (holding that a claim for unjust

27 enrichment “is barred where a contract governs the dispute between the parties”).

28

1 Moreover, Plaintiffs’ unjust enrichment claim is premised on the same facts and

2 seeks the same relief as their fraud-based consumer protection claims. (SAC ¶¶ 121–

3 23.) As Plaintiffs’ underlying claims fail, so too does their unjust enrichment claim.

4 See Brown v. Brita Prods., Co., No. 2:23-cv-07851-DMG (RAOx), 2024 WL 4815354,

5 at *6 (C.D. Cal. Sept. 30, 2024) (holding that if “statements are not actionable under the

6 UCL, FAL, and CLRA,” they “cannot form the basis” of an unjust enrichment claim).

7 Plaintiffs offer several arguments to save their claim. First, they contend that “no

8 express agreement governs or discloses the precise conduct at issue.” (Opp’n 20.)

9 However, the relevant inquiry is not whether a contract addresses every act alleged, but

10 whether “there exists between the parties a valid express contract covering the same

11 subject matter.” See Rutherford, 223 Cal. App. 4th at 231. As discussed above, the

12 DSA and BPTAs govern the BPS and the parties’ relationship.

13 Second, Plaintiffs argue they are “entitled to plead unjust enrichment in the

14 alternative to breach of contract.” (Opp’n 20.) While parties may “plead in the

15 alternative, the allegation of binding contracts nullifies the unjust enrichment claim.”

16 Lindner v. Occidental Coll., No. 2:20-cv-8481-JFW (RAOx), 2020 WL 7350212, at *9

17 (C.D. Cal. Dec. 11, 2020). A plaintiff “may not recover on both claims that an

18 enforceable, binding contract exists and unjust enrichment, but it may plead both as

19 alternatives to one another.” Cosmonova, LLC v. BioFilm, Inc., 763 F. Supp. 3d 1157,

20 1171 (S.D. Cal. 2025). Here, Plaintiffs’ do not dispute that valid written agreements

21 govern the terms of the BPS. (See SAC ¶¶ 35, 37–38.) Moreover, Plaintiffs concede

22 that they “purposefully omitted” the breach of contract claim from their Second

23 Amended Complaint. (Opp’n 1 n.1.) As Plaintiffs did not plead a breach of contract

24 claim in their Second Amended Complaint, (see SAC ¶¶ 71–123), they cannot plead

25 unjust enrichment in the “alternative[],” see Cosmonova, 763 F. Supp. 3d at 1171.

26 In sum, Plaintiffs’ unjust enrichment claim is barred by valid contracts governing

27 their relationships with Chase and the subject matter of the dispute. Accordingly, the

28 Court DISMISSES Plaintiffs’ fourth cause of action.

1] E. Leave to Amend

2 Where a court grants a motion to dismiss, it should generally provide leave to

3 || amend unless it is clear that amendment would be futile. See Fed. R. Civ. P. 15(a);

4|| Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

5 || Leave to amend may be denied if “the court determines that the allegation of other facts

6 || consistent with the challenged pleading could not possibly cure the deficiency.”

7 || Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986).

8 Despite ample opportunity to state viable claims, Plaintiffs again fail to do so. In

9 || dismissing the CLRA, FAL, and UCL claims in the First Amended Complaint, the

10 | Court identified the pleading deficiencies and explained how to cure them. (See Order

11 | Grant. Mot. Dismiss 5—11, Dkt. No. 26.) As Plaintiffs’ Second Amended Complaint

12 | suffers from the same pleading defects, the Court finds that further amendment would

13 || be futile. Schreiber, 806 F.2d at 1401. Accordingly, the Court DECLINES to grant

14 || leave to amend.

15 Vv. CONCLUSION

16 For the reasons discussed above, the Court GRANTS Chase’s Motion to

17 || Dismiss, (Dkt. No. 30), and DISMISSES Plaintiffs’ Second Amended Complaint

18 | WITHOUT LEAVE TO AMEND and WITH PREJUDICE. The Court will issue

19 || judgment consistent with this order.

20

21 IT IS SO ORDERED.

22

23 November 26, 2025

6 OTIS D. HT, Il

UNITED STATES ie RICT JUDGE

28