MARY S. SCRIVEN, District Judge.
The relevant facts are fully set forth in the Court's March 10, 2017, Order granting Plaintiffs' motion for class certification. (Dkt. 135) In brief, Plaintiffs purchased annual passes to theme parks owned by SeaWorld through SeaWorld's "EZ Pay" system, which allowed consumers to pay for an annual pass over twelve installments in essentially eleven months. This action arises out of SeaWorld's renewal of the EZ Pay passes, which is governed by the following provision in the EZ Pay contract:
(Dkt. 93-4) Because the first and second installments under the EZ Pay contract were paid within a single month's time and the remaining ten installments were paid in the ensuing ten months, all passes were "paid in less than 12 months." Plaintiffs have sued SeaWorld because, contrary to the language of its contract, SeaWorld systemically renewed passes that were "paid in less than 12 months" without the subsequent approval of the Plaintiffs.
Specifically, in the Second Amended Complaint, Plaintiffs allege claims against SeaWorld for breach of contract (Count I), and for violation of the Electronic Funds Transfer Act, 15 U.S.C. § 1693e(a) (Count II). (Dkt. 72) SeaWorld moves for summary judgment on the breach-of-contract claim only. Plaintiffs move for summary judgment on the issue of liability for both claims.
Summary judgment is appropriate when the movant can show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.
Evidence viewed "in the light most favorable to the non-moving party."
When a moving party has discharged its burden, the non-moving party must designate specific facts that demonstrate there is a genuine issue for trial.
A. Breach of Contract (Count I)
As defined in the March 10, 2017, Order, the breach-of-contract sub-class includes residents of Florida, Texas, Virginia, and California, the four states in which SeaWorld operates theme parks. (Dkt. 135 at 49-50). As a result, the parties agree that Plaintiffs' breach-of-contract claim is governed by the laws of Florida, Texas, Virginia, and California.
SeaWorld argues that if it lacked authority to renew an EZ Pay pass paid in less than twelve months, then the EZ Pay contract expired by the time SeaWorld began collecting unauthorized monthly payments. SeaWorld thus maintains that Plaintiffs are unable to establish the threshold element of their claim: the existence of a valid contract.
In response, Plaintiffs argue that SeaWorld breached the EZ Pay contract while it was still in existence by failing to ensure that the contract was properly terminated. Alternatively, Plaintiffs contend that SeaWorld breached the EZ Pay contract by collecting unauthorized payments after the contract expired. Plaintiffs also assert that SeaWorld should be judicially-estopped from raising this argument because SeaWorld previously insisted, when seeking dismissal of Plaintiffs' unjust-enrichment claim, that SeaWorld's unauthorized conduct could only be characterized as a contractual breach.
For the reasons explained below, the Court holds that Plaintiffs establish a breach of the EZ Pay contract based on SeaWorld's unauthorized renewal during the contract period, and based on SeaWorld's unauthorized charges after the contract expired. The Court therefore declines to address Plaintiffs' judicial-estoppel argument.
1. The EZ Pay contract contemplated a one-year term
The EZ Pay contract does not specify a termination date. (Dkt. 93-4) In Florida, "in the absence of an express provision as to duration in a contract, the intention of the parties with respect to duration and termination is to be determined from the surrounding circumstances and by application of a reasonable construction of the agreement as a whole."
Under the terms of the EZ Pay contract, Plaintiffs purchased a "1 Year" annual pass, and Plaintiffs paid SeaWorld in twelve installments. (Dkt. 93-4) Based on the totality of the circumstances, the Court holds that the EZ Pay contract endured for one year, absent a renewal or cancellation. Both sides tacitly agree on that construction. (
2. SeaWorld breached the EZ Pay contract by renewing during the one-year term
Plaintiffs allege that SeaWorld breached the renewal provision, which states:
SeaWorld suggests that Plaintiffs' "renewal-as-breach" theory was not adequately pleaded in the Second Amended Complaint. SeaWorld is correct that within the body of Count I, Plaintiffs alleged that SeaWorld breached the EZ Pay contract by "continuing to charge Plaintiffs." (Dkt. 72 at ¶¶ 7-75) However, Count I also incorporated the preceding paragraphs by reference. (
SeaWorld next argues that Plaintiffs fail to identify any record evidence to establish that a renewal actually took place during the one-year term. In response, Plaintiffs correctly observe that SeaWorld's installment plan requires a final payment by the first day of the twelfth month, at which point the EZ Pay pass is "paid." (Dkt. 123-3 at 2-3) Plaintiffs persuasively argue that under the terms of the renewal provision, SeaWorld was required to ensure by that date, or at the latest, by the final day of the twelfth month, that the EZ Pay contract did not renew. However, Brad Matzinger, a SeaWorld representative, testified that an annual EZ Pay pass would renew unless a consumer accelerated her payment schedule. (Dkt. 125-1 at 5) Michelle Scott, another SeaWorld representative, similarly testified that an EZ Pay pass for a given year may expire but "that does not remove someone from the program." (Dkt. 93-1 at 13)
Based on this evidence, Plaintiffs demonstrate that SeaWorld breached the EZ Pay contract during the one-year contract term by failing to ensure that the contract did not renew once the passes were "paid." SeaWorld identifies no record evidence to create a genuine factual dispute on this issue.
Instead, SeaWorld raises two legal arguments, neither of which supports a different conclusion. SeaWorld maintains that, as a matter of contract law, it could not have renewed the EZ Pay contract without Plaintiffs' consent. SeaWorld is correct, but as Plaintiffs point out, that is precisely why SeaWorld breached the renewal provision. A breach, by definition, is an unauthorized act.
SeaWorld also insists that it committed no "act" because the EZ Pay contracts "automatically" renewed. (Dkt. 126 at 22) SeaWorld overlooks the well-settled principle that a contract may be breached by a failure to perform.
The only remaining question, which SeaWorld does not directly address, perhaps because it has no available legal challenge, is whether SeaWorld's failure to terminate the EZ Pay contract constitutes an actionable breach. In Florida, a breach must be "material," such that it "goes to the essence of the contract."
SeaWorld's failure to terminate the contract unquestionably goes to the "essence" of the contract. Plaintiffs bargained for a one-year pass, not a pass of indefinite duration. And it is undisputed that Plaintiffs suffered damages in the form of unauthorized charges. Although those charges may have occurred after the contract expired, they are "damages flowing from the breach."
Based on the foregoing, the Court holds that SeaWorld breached the EZ Pay contract during the contract term.
3. SeaWorld breached the EZ Pay contract by collecting unauthorized payments after the contract expired
SeaWorld maintains that Plaintiffs are unable to establish their alternative theory— that the unauthorized payments themselves constituted a breach—because, by Plaintiffs' own admission, the contracts expired by the time the payments were collected. In support of this argument, SeaWorld cites several cases in which the defendant denied having any obligation to perform under an expired or terminated contract.
The instant case presents the opposite situation. SeaWorld did not reject the EZ Pay contract; it unilaterally continued to claim benefits under the contract. Under these circumstances, SeaWorld's actions constitute a breach, despite the fact that SeaWorld collected the unauthorized payments after the EZ Pay contract expired.
SeaWorld cites one case that reaches a different result. In
In this action, Plaintiffs do more than conclusorily assert that a breach occurred. Under the terms of the renewal provision, SeaWorld was obligated to terminate the EZ Pay contract. SeaWorld instead breached the renewal provision by continuing to claim the benefits of the EZ Pay contract. Under these circumstances, and consistent with the weight of authority, the Court holds that Plaintiffs establish a breach of the EZ Pay contract based on SeaWorld's continued collection of unauthorized payments.
4. No affirmative defense precludes liability
As a final matter, Plaintiffs assert that SeaWorld's affirmative defenses do not preclude a finding of liability. SeaWorld fails to respond to this portion of Plaintiffs' motion.
Plaintiffs correctly argue that SeaWorld's first and seventh defenses—failure to state a claim and dismissal in favor of arbitration—already have been resolved adversely to SeaWorld. (
The second affirmative defense alleges accord and satisfaction, and the third affirmative defense alleges compromise and settlement. In the March 10, 2017, Order, the Court explained that any class member who received a full refund has been excluded from the class, and the second affirmative defense is therefore moot. (Dkt. 135 at 44) With respect to a class member who received only a partial refund, Plaintiffs acknowledge that such a class member may be subject to a settlement defense. (Dkt. 123 at 20) Accordingly, the parties may address the third affirmative defense during the damages phase of this litigation. Likewise, the fifth and ninth affirmative defenses—failure to mitigate and set-off—pertain only to the issue of damages. (Dkt. 135 at 45-47)
The fourth and sixth affirmative defenses assert knowledge-based defenses of waiver, estoppel, modification, novation, and ratification. In the March 10, 2017, Order, the Court rejected the knowledge-based defenses because no class member could have possessed "full knowledge" of SeaWorld's competing construction of the EZ Pay contract. (Dkt. 135 at 41-44)
The eighth affirmative defense challenges the timeliness of this action based on statute of limitations, laches, and acquiescence. Because the class is defined to include only those claims within the applicable statute of limitations, the statute-of-limitations defense is moot. (Dkt. 135 at 49-50) Plaintiffs argue that the equitable defenses of laches and acquiescence are also not at issue because Plaintiffs assert no equitable claims. SeaWorld offers no argument and cites no record evidence to buttress its laches and acquiescence defense.
Based on the foregoing, the Court finds that SeaWorld's affirmative defenses do not preclude a finding of liability. Plaintiffs' motion for summary judgment is therefore
B. Electronic Funds Transfer Act (Count II)
The Electronic Funds Transfer Act ("EFTA") establishes the "rights, liabilities, and responsibilities of participants in electronic fund and remittance transfer systems," with the primary objective of protecting the rights of consumers. 15 U.S.C. § 1693. To further its legislative goals, the EFTA creates a private right of action against "any person who fails to comply with any provision of this subchapter with respect to any consumer." 16 U.S.C. § 1693m(a).
In Count II, Plaintiffs allege that SeaWorld violated 15 U.S.C. § 1693e(a), which provides: "A preauthorized electronic fund transfer from a consumer's account may be authorized by the consumer only in writing, and a copy of such authorization shall be provided to the consumer when made." The EFTA defines "preauthorized electronic fund transfer" as "an electronic fund transfer authorized in advance to recur at substantially regular intervals." 15 U.S.C. § 1693a(10). Plaintiffs contend that SeaWorld violated 15 U.S.C. § 1693e(a) because it failed to obtain preauthorization for bank-account and debit-card transfers made after the EZ Pay contract expired. (Dkt. 72 at ¶ 80; Dkt. 123 at 6)
In response, SeaWorld argues that a material factual dispute exists as to whether the challenged transfers qualify as "preauthorized electric fund transfers" under 15 U.S.C. § 1693a(10). Without any meaningful analysis, SeaWorld suggests that the challenged transfers may instead qualify as "unauthorized electronic fund transfers," which EFTA defines as:
15 U.S.C. § 1693a(12).
SeaWorld's argument is irrelevant. Even if the challenged transfers are "unauthorized electronic fund transfers" within the meaning of § 1693a(12), the transfers may, at the same time, qualify as "preauthorized electronic fund transfers," as defined in § 1693a(10). The Sixth Circuit Court of Appeals explains that the two terms address separate concepts:
SeaWorld does not expressly dispute that if an electronic fund transfer was taken in violation of the terms of the EZ Pay contract it would violate Section 1693e(a).
For instance, in
For the reasons explained above, to the extent that SeaWorld continued collecting monthly payments from customer accounts after EZ Pay passes were "paid in less than 12 months" and did so by "electronic fund transfer," as that term is defined in 15 U.S.C. § 1693a(7), the Court holds that the transfers violated 15 U.S.C. § 1693e(a). Plaintiffs' motion for summary judgment as to liability on Count II is therefore
Based on the foregoing, it is