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Reichert v. Keefe Commissary Network, L.L.C.

United States District Court, W.D. Washington, Tacoma

May 8, 2019

JEFFREY REICHERT, individually and on behalf of all others similarly situated, Plaintiff,
v.
KEEFE COMMISSARY NETWORK, L.L.C., d/b/a ACCESS CORRECTIONS; RAPID INVESTMENTS, INC., d/b/a RAPID FINANCIAL SOLUTIONS, d/b/a ACCESS FREDOM; and CACHE VALLEY BANK, Defendant.

          ORDER ON MOTION FOR CLASS CERTIFICATION

          Ronald B. Leighton United States District Judge.

         INTRODUCTION

         THIS MATTER is before the Court on Plaintiff Jeffrey Reichert's Motion for Class Certification. Dkt. #69. This class action lawsuit challenges the use of prepaid “release cards” for reimbursing confiscated cash to inmates as they are released from incarceration. Many government facilities have opted to use these cards instead of redistributing funds via cash or a check. However, unlike those other methods, release cards carry hefty fees that start depleting inmates' funds within hours of release. Defendant Keefe Commissary Network, L.L.C., contracts with government agencies to provide release cards, which are managed by Defendant Rapid Investments, Inc., and issued by Cache Valley Bank.

         Reichert moves to certify both a national class, asserting claims under the Electronic Funds Transfer Act (EFTA), and a Washington subclass, asserting claims under EFTA, the Takings Clause, and the Washington Consumer Protection Act (WCPA), as well as for conversion and unjust enrichment. In his Reply, Reichert also wishes to amend the class definitions to include only inmates who were not offered a choice between receiving a release card or some other form of reimbursement.

         Reichert argues that class certification is appropriate because Rule 23(a)'s four requirements of numerosity, typicality, commonality, and adequacy are satisfied. Reichert also contends that Rule 23(b)(3)'s predominance requirement is met because the central questions in this case focus on the practice of providing inmates with activated, fee-laden cards instead of a check or cash. Finally, Reichert argues that a class action is the superior method of bringing these claims because individual actions would not be financially feasible and the class definitions are based on objective criteria.

         Defendants contest certification on a number of bases but primarily focus on typicality and predominance. Defendants argue that Reichert is not typical of all class members because many facilities provide inmates with a copy of Rapid's cardholder agreement when they are released, creating potential contractual defenses. Defendants contend that the possibility that some class members formed contracts upon release will raise numerous questions about the circumstances of each inmates' release, which would vary according to the procedures at each facility. Defendants also argue that a national class would be unmanageable in light of the vast amount of evidence and witnesses in other states. Finally, Defendants assert that the government entities that contract with Defendants are necessary parties under Rule 19 but that they cannot be feasibly joined because the Court lacks personal jurisdiction over agencies in other states.

         For the following reasons, the Court conditionally GRANTS in part Reichert's Motion.

         BACKGROUND

         1. The Use of Release Cards to Distribute Inmates' Funds

         Defendant Keefe Commissary Network, LLC, contracts with numerous government agencies to provide hardware and software for managing inmates' money during incarceration. Manning Dec., Dkt. #76, at 2. One such service is the use of release cards, which allow facilities to disperse any money in an inmate's account on a prepaid card. Id. An inmate's account may contain cash that was confiscated when the inmate was originally booked or other funds deposited for use while incarcerated. Id. at 2-3. Keefe estimates that it contracts with around 25 government agencies in Washington and over 700 agencies nationwide. Id. at 3.

         However, unlike reimbursing inmates via cash or a check, release cards come with a schedule of fees. In addition to ATM and transfer fees, inmates are also charged “weekly maintenance fees.” Youtz, Dec., Dkt. #71, Exs. 2-4. The first of these maintenance fees is incurred 36 or 72 hours after the card is issued. Id. Keefe represents that inmates may avoid fees altogether if they quickly withdraw their funds from a MoneyPass ATM or get cash back. Dkt. #76, at 2. However, because the cards are issued before an inmate actually receives them, it is unclear how long inmates have to do this.

         To provide release cards, Keefe contracts with yet another company-Rapid Investments, Inc. Jackson Dec., Dkt. #78, at 1. Rapid manages the prepaid cards and provides them to government facilities. Id. at 2. Rapid also contracts with Cache Valley Bank, which issues the cards, and MasterCard, which sponsors the payment network. Id. Rapid's release cards are paired with a cardholder agreement containing, among other things, yet another fee schedule and an arbitration provision. Id., Ex. 2. Rapid states that it now attaches all its cards to a carrier with the agreement but does not control if and how facilities provide inmates with a copy of the agreement. Id. at 2-3.

         While government facilities may offer inmates a release card as their sole means of reimbursement, Keefe's standard contract does not appear to require this. Dkt. #71, Exs. 2-4. Keefe represents that government agencies have sole discretion for determining their release procedures and that some opt to give inmates a choice between a release card, a check, or cash. Dkt. #76, at 3. Rapid states that it has no knowledge of whether government entities offer inmates options for reimbursement. Dkt. #78, at 2.

         2. Plaintiff Reichert's Experience at the Kitsap County Jail

         On October 21, 2016, Reichert was arrested by the Kitsap County Sheriff's Department on suspicion of driving under the influence of alcohol. Reichert Dec., Dkt. #70, at 2. During booking, Reichert's wallet containing $176.77 in cash was confiscated. Id. at 2. Reichert was taken to the Kitsap County Jail at 12:30 a.m. on October 22 and released four hours later. Id. Instead of returning his cash, Kitsap County gave Reichert a prepaid release card loaded with $176.77. Id. Jail staff offered Reichert no alternate means for recovering his cash. Id. Reichert also received no warnings or documentation regarding the card, although Kitsap County states that it displays the cardholder terms and conditions paperwork prominently next to the release elevator. Id.; Thurmon Dec., Dkt. # 75, at 3.

         On November 2, Reichert went to an ATM to withdraw cash using his release card. Id. He withdrew $160 but was unable to take out as much money as he thought, so he contacted Rapid to inquire about his account balance. Id. at 3. Rapid sent Reichert an email showing his account activity, which included two $2.50 “periodic maintenance fees” on October 25 and November 1, and two “issuer fees” on November 2 when he used the ATM. Dkt. #70, Ex. 1. By November 8, the remaining $7.32 in his account had been depleted through various other fees. Id.

         3. Procedural History and Class Definitions

         Reichert filed his class action complaint on October 20, 2017. Dkt. #1. On February 2, 2018, all three Defendants moved to compel arbitration, citing the cardholder agreement for the release cards offered by Rapid. Dkt. ## 36 & 40. The Court denied the motions on the basis that Reichert never affirmatively chose to be reimbursed with a card, eliminating the potential for mutual assent under Washington law. Id. at 4-5.

         During the discovery process, Reichert propounded a number of requests for documents related to Defendants' agreements and communications with government entities. Second Youtz Dec., Dkt. #86, Ex. 5-6. Defendants apparently refused to produce documents concerning government entities other than Kitsap County. Id. Defendants objected on multiple grounds, but one basis was that the request was premature because such documents were not required to decide class certification. Id.

         Reichert moved to certify on January 18, 2019, and Defendants' opposition briefs featured arguments about the different procedures for releasing inmates at facilities other than Kitsap. Dkt. ## 69, 74, & 77. Specifically, Defendants state that some facilities offer inmates a choice between receiving a card and another form of reimbursement, such as a check. Reichert replied by amending the class definitions to focus only on inmates that were not given an option about how their money was distributed. Dkt. #85, at 5. The national class definition now reads as follows:

All persons in the United States who, at any time since October 20, 2016, were: (1) taken into custody at a jail, correctional facility, detainment center, or any other law enforcement facility, (2) entitled to the return of money either confiscated from them or remaining in their inmate accounts when they were released from the facility, (3) issued a prepaid debit card from Keefe Commissary Network, LLC, Rapid Investments, Inc., and/or Cache Valley Bank that was subject to fees, charges, and restrictions and (4) not offered an alternative method for the return of their money.

Id. For the Washington subclass, Reichert proposes the following definition:

All persons who, at any time since October 20, 2013, were: (1) taken into custody at a jail, correctional facility, detainment center, or any other law enforcement facility located in the state of Washington, (2) entitled to the return of] money either confiscated from them or remaining in their inmate accounts when they were released from the facility, (3) issued a prepaid debit card from Keefe Commissary Network, LLC, Rapid Investments, Inc., and/or Cache Valley Bank that was subject to fees, charges, and restrictions and (4) not offered an alternative method for the return of their money.

         DISCUSSION

         A party seeking to certify a class must demonstrate that it has met all four requirements of Federal Rule of Civil Procedure 23(a) (numerosity, commonality, typicality, and adequacy) and at least one of the requirements of Rule 23(b). Under Rule 23(a), members of a class may sue or be sued as representative parties only if: “(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the ...


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