United States District Court, W.D. Washington, Seattle
JOUREY NEWELL and FELIPE MACHADO, individually and on behalf of all others similarly situated, Plaintiffs,
RECREATIONAL EQUIPMENT INC., Defendant.
S. Zilly United States District Judge
MATTER comes before the Court on Defendant Recreational
Equipment Inc.’s (“REI”) Motion to Dismiss,
docket no. 21. Having reviewed all papers filed in support of
and in opposition to the motion, the Court enters the
a sporting goods consumer cooperative owned by its
members. First Amended Complaint
(“FAC”) ¶ 15 (docket no. 17). REI does not
issue capital stock or have shareholders; rather, REI places
control of the company in its “members”- members
of the public that become REI members for a fee. Id.
As a consumer cooperative, REI distributes its net earnings
back to its members in the form of patronage dividends.
Id. ¶ 16. The amount of each member’s
dividend is calculated as a percentage of the amount each
member spent at REI in the prior year. Id.
REI’s Board of Directors retains the discretion to
determine both the amount and form of patronage dividends
each year, as well as whether or not they are issued at all.
FAC ¶ 18; Ex. 1 to Todaro Decl. (docket no. 22-1 at 8).
REI issues patronage dividends on a yearly basis either by
loading them on mailed paper cards or emailed URLs. FAC
¶ 19. Members’ dividends expire the second January
3rd after issuance. FAC ¶ 26; Ex. 1 to Todaro Decl.
(docket no. 22-1 at 9). The dividends are associated solely
with each member’s number, are non-transferrable, and
are redeemable and honored only at REI for the purchase of
REI items. FAC ¶¶ 20-21; Defendant’s Motion
to Dismiss at 10-11 (docket no. 21).
Newell and Machado paid fees to become REI members. FAC
¶¶ 28, 33. In 2015, Newell made purchases at REI,
and in 2016, REI issued Newell a dividend. Id.
¶¶ 29-30. In January 2018, Newell’s unused
dividend expired. Id. ¶ 31. In 2016, Machado
made purchases at REI, and he received a dividend in 2017.
Id. ¶¶ 34-35. In 2019, Machado’s
dividend expired. Id. ¶ 36.
now sue under two statutes regulating the use of expiration
dates on gift cards: the Electronic Funds Transfer Act
(“EFTA”), 15 U.S.C. §§ 1693-1693r, and
Washington statute, RCW 19.240.020. The EFTA prohibits the
issuance of gift cards with expiration dates less than 5
years after the date the gift card was issued, or the date
the card funds were last loaded to the gift card. 15 U.S.C.
§ 1693l-1(c). RCW 19.86.020 prohibits the issuance of
gift cards with any expiration date. Plaintiffs allege that
REI’s patronage dividends violate both the EFTA and RCW
19.240.020 because they expire less than two years after
“To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). The complaint must indicate more than
mere speculation of a right to relief. Twombly, 550
U.S. at 555, and the pleading is not sufficient “if it
tenders ‘naked assertions’ devoid of further
factual enhancement.” Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 557). In ruling on a
motion to dismiss, the Court must assume the truth of the
plaintiff’s allegations and draw all reasonable
inferences in the plaintiff’s favor. Usher v. City
of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). The
question for the Court is whether the facts in the complaint
sufficiently state a “plausible” ground for
relief. Twombly, 550 U.S. at 570.
Amended Complaint fails to state a claim for which relief can
be granted, because even assuming every fact alleged in the
Amended Complaint is true, REI’s dividends are not
subject to the gift card requirements in either 15 U.S.C.
§ 1693l-1 or RCW 19.240.020. Plaintiffs’ Amended
Complaint is DISMISSED with prejudice because Plaintiffs
cannot replead to correct their legal errors.
Electronic Funds Transfer Act (“EFTA”) and
Credit Card Accountability and Disclosure Act
(“CARD”), 15 U.S.C. § 1693l-1
EFTA provides that “it shall be unlawful for any person
to sell or issue a gift certificate, store gift card, or
general-use prepaid card that is subject to an expiration
date.” 15 U.S.C. § 1693l-1(c)(1). The EFTA
provides, in part, as follows:
The term “store gift card” means an electronic
promise, plastic card, or other payment code or device that
(i) redeemable at a single merchant or an affiliated group of
merchants that share the same name, mark, or logo;
(ii) issued in a specified amount, whether or not that amount
may be increased in value or reloaded at the ...