Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-18-35735/USCOURTS-ca9-18-35735-0/pdf.json

Parties Involved:
Danica Love Brown
Appellant
Central National Bank and Trust Company
Appellee
International CURE
Amicus Curiae
Stored Value Cards, Inc.
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DANICA LOVE BROWN,

Plaintiff-Appellant,

v.

STORED VALUE CARDS, INC., DBA

Numi Financial; CENTRAL NATIONAL 

BANK AND TRUST COMPANY, Enid, 

Oklahoma,

Defendants-Appellees.

No. 18-35735 

D.C. No.

3:15-cv-01370-

MO 

OPINION

Appeal from the United States District Court

for the District of Oregon

Michael W. Mosman, District Judge, Presiding

Argued and Submitted December 13, 2019

Seattle, Washington

Filed March 16, 2020

Before: Ronald M. Gould and Marsha S. Berzon, Circuit 

Judges, and Roger T. Benitez,* District Judge.

Opinion by Judge Gould

* The Honorable Roger T. Benitez, United States District Judge for 

the Southern District of California, sitting by designation.

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2 BROWN V. STORED VALUE CARDS, INC.

SUMMARY**

Electronic Fund Transfers Act / Constitutional Law

The panel reversed the district court’s partial dismissal 

and partial summary judgment on claims under the 

Electronic Fund Transfers Act, the Takings Clause, and 

Oregon state law concerning a private company’s return of 

released jail or prison inmates’ money via a prepaid debit 

card loaded with the balance of their funds.

Defendants assessed fees on the cards. The panel held 

that plaintiff stated a claim under EFTA § 1693l-1, which 

prohibits charging service fees to “general-use prepaid 

cards.” A general-use prepaid card does not include a card 

that “is not marketed to the general public.” The panel held 

that the released inmates belonged to the general public, 

which they rejoined upon release, and defendants indirectly 

marketed the cards to the released inmates. The panel 

further held that the district court abused its discretion in 

denying plaintiff leave to file a third amended complaint 

reinstating her EFTA claims under both § 1693l-1 and 

§ 1693i, which prohibits the issuance, absent certain 

disclosures, of unsolicited validated cards that provide 

access to a “consumer’s account.” The panel held that a 

consumer account includes the sort of prepaid account that 

the released inmates received.

The panel reversed the district court’s grant of summary 

judgment to defendants on plaintiff’s per se takings claim. 

** This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.

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BROWN V. STORED VALUE CARDS, INC. 3

Assuming without deciding that defendants were state 

actors, the panel concluded that the release cards were not 

the functional equivalent of cash or a check because the 

value of the cards quickly and permanently deteriorated. 

The panel remanded for the district court to consider in the 

first instance the reasonableness of the fees assessed on the 

cards.

The panel also reversed the district court’s grant of 

summary judgment on plaintiffs’ state law claims, and 

remanded the case to the district court for further 

proceedings.

COUNSEL

Karla Gilbride (argued), Public Justice, P.C., Washington, 

D.C.; Mark Adam Griffin and Daniel Parke Mensher, Keller 

Rohrback LLP, Seattle, Washington; Benjamin Wright 

Haile, Attorney, Portland, Oregon; for Plaintiff-Appellant.

Eric Nystrom (argued), John C. Ekman, and Natalie I. 

Uhlemann, Fox Rothschild LLP, Minneapolis, Minnesota, 

for Defendants-Appellees.

Hassan Zavareei, Anna C. Haac, and Tanya S. Koshy, Tycko 

& Zavareei LLP, Washington, D.C., for Amici Curiae 

International CURE, Equal Justice Under Law, The Florida 

Institutional Legal Service Project of Florida Legal Service, 

The Legal Aid Society, National Police Accountability 

Project, Public Counsel, San Francisco Public Defender's 

Office, Southern Poverty Law Center, Texas Civil Rights 

Project, Working Narratives, and University Of California 

Davis School of Law Immigration Law Clinic.

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4 BROWN V. STORED VALUE CARDS, INC.

OPINION

GOULD, Circuit Judge:

When a person is arrested and detained, the detention 

facility confiscates his or her personal property, including 

any cash. Detention facilities safeguard an inmate’s money 

throughout the duration of his or her incarceration, typically 

in an inmate trust account. When an inmate is released, the 

facility has traditionally returned the inmate’s money. For 

local governments, handling inmates’ cash is expensive and 

time consuming. In recent years, many local governments 

have begun delegating the function of returning the property 

of released inmates to private, for-profit companies. One 

such company, Stored Value Cards d/b/a Numi (“Numi”), 

returns released inmates’ money via a prepaid debit card 

loaded with the balance of their funds. Numi does not charge 

most local governments for its services. Instead, Numi earns 

revenue by charging fees to the cardholders. This case 

illustrates some of the hazards and risks that may arise when 

prisons transfer what formerly were government functions to 

for-profit enterprises.

Danica Brown (“Brown”)1 brought suit against Numi 

and its partner Central National Bank and Trust Company 

(“CNB”) (collectively, “Defendants”), alleging that they 

violated the Electronic Fund Transfers Act (“EFTA”), 

violated the Fifth Amendment Takings Clause, and were 

liable for conversion and unjust enrichment under Oregon 

state law. The district court dismissed Brown’s EFTA claim 

for failure to state a claim, denied leave to file a third 

1 Throughout this opinion, we use the terms “Brown” or “Danica 

Brown” to refer to Plaintiff Danica Love Brown. When we refer to 

shooting victim Michael Brown, we include his first name.

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BROWN V. STORED VALUE CARDS, INC. 5

amended complaint, and granted summary judgment to 

Defendants on Brown’s takings and state law claims. Brown 

appeals, and we reverse and remand. 

I

A

The Multnomah County jail confiscates any cash carried 

by an arrestee upon incarceration. The inmate’s funds are 

kept in an inmate trust account until he or she is released. 

Before 2014, Multnomah County returned a released 

inmate’s money in the form of cash if the total was less than 

$60, or a check if the total was greater than $60. This process 

was considered by Multnomah County to be expensive and 

time consuming: Multnomah County estimates that it spent 

about $275,000 in labor costs annually and two to three staff 

hours per day handling inmates’ cash.

In 2014, Multnomah County contracted with Numi to 

return released inmates’ funds via prepaid debit cards, which 

are sometimes referred to as “release cards.”2 Multnomah 

County pays nothing at all to participate in Numi’s debit card 

program. Numi contracts with CNB to issue the release 

cards and hold the card funds in a master funding account. 

When an inmate is released, the money in his or her inmate 

trust account is transferred into the CNB master funding 

account. The released inmate receives a prepaid release card 

loaded with his or her funds, and the card is activated and 

ready for immediate use.

2 Numi is a subcontractor through Multnomah County’s contract 

with Securus Technologies. Securus Technologies contracts with 

Multnomah County as a commissary partner offering a range of services 

in the County’s jails.

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6 BROWN V. STORED VALUE CARDS, INC.

Numi earns revenue from the fees that it charges to 

cardholders. Counties and municipalities that contract with 

Numi have a choice of several fee schedules, distinguished 

by how often maintenance fees are charged. P7C cards 

charge maintenance fees once per month, and P1C cards 

charge maintenance fees once per week. Some counties and 

municipalities have negotiated deviations from the standard 

fee schedules to lighten the burden on cardholders. Other 

counties and municipalities, including Napa County, 

California and Broward County, Florida, pay a flat fee to 

subsidize each card instead of passing on the fees to 

cardholders. When it contracted with Numi, Multnomah 

County adopted a P7C fee schedule with no deviations or 

subsidies. The schedule it adopted contemplated that the 

County would pay no fees itself and Numi’s compensation 

would come from fees paid by the former inmates released 

into the public.

Under the fee schedule adopted by Multnomah County, 

Defendants charge cardholders a $5.95 monthly 

maintenance fee, first charged only five days after card 

activation. There is also a $2.95 fee for every ATM 

withdrawal in addition to any fee charged by the ATM itself. 

Other fees include a $0.50 fee for contacting the automated 

customer service system more than three times per month, a 

$9.95 fee for requesting the balance of the card by check, a 

$1.00 fee for each ATM balance inquiry made by the 

cardholder, and a $0.95 fee for each attempted transaction 

that was declined due to insufficient funds or an incorrect 

PIN.

According to Defendants, a released inmate can avoid 

these fees. The back of the release card states in small print 

that a $5.95 monthly service fee will be charged five days 

after the card’s activation. Released inmates are also 

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BROWN V. STORED VALUE CARDS, INC. 7

supposed to receive a Card Usage Tips wallet card with a 

section entitled “How to avoid Service Fees.” The wallet 

card states that there is no fee to transfer their funds to a 

personal bank account on Numi’s website, receive cash back 

after making a purchase from a retailer, or withdraw funds 

over the counter at a bank. The wallet card does not disclose 

that not all retailers will provide cash back, or that bank 

withdrawals are free only at Mastercard-affiliated banks. 

Multnomah County also gave the departing former inmates 

a document entitled “Debit Release Card Information” with 

a list of designated “surcharge-free ATMs,” but this list was 

inaccurate at the time Brown was released because some of 

the listed ATMs charged fees.

B

On November 25, 2014, Brown was arrested in Portland, 

Oregon. She was participating in a public protest after a 

Missouri grand jury had decided not to indict Darren Wilson 

for the police-shooting death of Michael Brown.3

 At the 

time of Danica Brown’s arrest, she carried $30.97 in cash. 

Her cash in that amount was confiscated along with the rest 

of her personal belongings when she was taken into 

Multnomah County custody. She was released around 

2:30am on November 26, about seven hours after her arrest. 

The charges against her were later dropped.

Upon her release, Brown did not receive her previously 

confiscated money in the form of cash. Instead, she was 

3 On August 9, 2014, Michael Brown, an unarmed black teenager, 

was shot and killed by Wilson, a white police officer, in Ferguson, 

Missouri. Timothy Williams, Five Years After Michael Brown’s Death, 

His Father Wants a New Investigation, N.Y. Times (Aug. 15, 2019). The 

fatal shooting and the failure to indict Wilson sparked nationwide 

protests. Id.

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8 BROWN V. STORED VALUE CARDS, INC.

given a Numi debit card loaded with $30.97. Along with the 

card, Brown received some paperwork with card 

information, including the Card Usage Tips wallet card, and 

the Debit Release Card Information sheet. She did not read 

the paperwork because she did not have her eyeglasses.

The debit card was not Brown’s immediate concern upon 

her release. On November 26, the day after her arrest, 

Brown spent most of her time attending her arraignment and 

retrieving her other confiscated belongings. November 27 

was Thanksgiving Day. When Brown finally examined the 

release card and the associated paperwork, she learned that 

there was a monthly service charge. She assumed, 

incorrectly as it turned out, that the charge would occur after 

she had been using the card for a month. She visited Numi’s 

website, where she learned that she could transfer the 

balance of her card to her personal bank account. But she 

chose not to make this transfer because she did not want to 

provide her personal bank account information to Numi. 

Instead, she used the release card to make small purchases 

like buying coffee.

On December 1, Brown attempted to make a $15 

purchase and the transaction was declined. Brown learned 

that her card had insufficient funds for the purchase because 

Defendants had debited a $5.95 monthly service fee earlier 

that day, which was only five days after she originally 

received the card. Due to the declined transaction, 

Defendants debited another $0.95 from her card. Brown 

made two more small purchases in early December. On 

January 1, Defendants debited the remaining $0.07 from the 

card toward her monthly service fee. In total, Defendants 

debited $6.97, or twenty-two percent of the card’s original 

$30.97 value.

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BROWN V. STORED VALUE CARDS, INC. 9

C

In July 2015, Brown filed a complaint against 

Defendants on behalf of herself and a proposed class of 

formerly incarcerated people who received Defendants’ 

debit cards upon release and who paid fees associated with 

the use or maintenance of those cards. In her original 

complaint, she alleged four claims: (1) a violation of section 

1693i of EFTA, which prohibits the issuance of unsolicited 

debit cards absent certain requirements; (2) a violation of the 

Oregon Unfair Trade Practices Act; (3) conversion under 

Oregon state law; and (4) unjust enrichment under Oregon 

state law.

Defendants moved to dismiss. In response to the motion 

to dismiss, Brown filed her first amended complaint. She 

removed any reference to section 1693i and eliminated her 

claim under the Oregon Unfair Trade Practices Act. She 

added two new claims: a violation of section 1693l-1 of 

EFTA, which prohibits service fees on general-use prepaid 

cards, and a 42 U.S.C. § 1983 claim for a violation of the 

Fifth Amendment’s Takings Clause. She realleged her state 

law claims for conversion and unjust enrichment.

Defendants again moved to dismiss. This time, the 

district court granted Defendants’ motion as to Brown’s 

EFTA claim and her takings claim, and it denied the motion 

as to Brown’s state law claims. The court granted Brown 

leave to amend her takings claim.

Brown filed a second amended complaint, realleging her 

takings claim and her state law claims. Defendants moved 

to dismiss, and the district court denied that motion. The 

case proceeded to discovery.

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10 BROWN V. STORED VALUE CARDS, INC.

Before the close of discovery, Defendants filed a motion 

for summary judgment.4 While the motion for summary 

judgment was pending, Brown filed a motion for leave to file

a third amended complaint to reinstate her EFTA claims as 

arising under both section 1693i and section 1693l-1, based 

on new evidence obtained in discovery. The district court 

denied leave to amend without written opinion or 

explanation.

After hearing oral argument, the district court granted 

Defendants’ motion for summary judgment on Brown’s 

takings and state law claims. Brown filed this appeal 

challenging the district court’s orders (1) dismissing her 

EFTA claims; (2) denying her leave to file a third amended 

complaint reinstating her EFTA claims; and (3) granting 

summary judgment to Defendants on the takings and state 

law claims. We consider these issues in turn.

II

EFTA protects the rights of consumers in electronic fund 

transfers. 15 U.S.C. § 1693(b). The Consumer Financial 

Protection Bureau (“CFPB”) has regulatory authority over 

most provisions of EFTA. Id. § 1693b(a)(1). At various 

points in this litigation, Brown alleged claims under sections 

1693i and 1693l-1 of EFTA.

Section 1693i prohibits the issuance, absent certain 

disclosures, of unsolicited validated cards that provide 

access to a “consumer’s account.” Id. § 1693i. A card is 

4 Pursuant to Rule 56 of the Federal Rules of Civil Procedure, a 

motion for summary judgment can be filed “at any time until 30 days 

after the close of all discovery.”

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BROWN V. STORED VALUE CARDS, INC. 11

“validated when it may be used to initiate an electronic fund 

transfer.” Id. § 1693i(c). 

Section 1693l-1 prohibits charging service fees to 

“general-use prepaid cards” unless the card has not been 

used for 12 months and other requirements have been met. 

Id. § 1693l-1(b). A general-use prepaid card is (1) 

“redeemable at multiple, unaffiliated merchants or services 

providers, or automated teller machines”; (2) “issued in a 

requested amount”; (3) “purchased or loaded on a prepaid 

basis”; and (4) “honored . . . by merchants for goods or 

services, or at automated teller machines.” Id. § 1693l1(a)(2)(A). Relevant for this appeal, a general-use prepaid 

card does not include a card that “is not marketed to the 

general public.” Id. § 1693l-1(a)(2)(D)(iv).

We review de novo a dismissal for failure to state a claim 

under Rule 12(b)(6). Puri v. Khalsa, 844 F.3d 1152, 1157 

(9th Cir. 2017). All well-pleaded allegations of material fact 

are taken as true and construed in the light most favorable to 

the non-moving party. Id. The plaintiff must plead facts to 

state a claim for relief that is “plausible on its face.” Bell Atl. 

Corp. v. Twombly, 550 U.S. 544, 570 (2007).

Brown contends that the district court erred by 

dismissing her claim under section 1693l-1.5 Defendants 

5 Brown also contends that the district court erred in dismissing her 

claim under section 1693i. However, Brown did not cite to section 1693i 

in her first amended complaint. An amended complaint supersedes the 

original complaint and renders it without legal effect. Lacey v. Maricopa 

County, 693 F.3d 896, 925 (9th Cir. 2012) (en banc). Although Brown 

alleged a section 1693i claim in her original complaint, she removed any 

reference to that subsection in her first amended complaint. Even 

assuming that Brown could state a claim under section 1693i without 

citing to that exact provision, she did not plead facts sufficient to state a 

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12 BROWN V. STORED VALUE CARDS, INC.

respond that section 1693l-1 does not apply because the 

release cards are not marketed to the general public. 

Specifically, they contend that (1) inmates are not the 

general public, and (2) Defendants did not directly market 

the cards to inmates.

Defendants’ contentions lack merit. The CFPB’s official 

commentary to section 1693l-1 acknowledges that a subset 

of the population may constitute the general public. See 12 

C.F.R. § 1005.20(b)(4) (Supp. I 2019). Whether current 

inmates as a subgroup constitute the general public is 

irrelevant. The release cards are issued to inmates when they 

are released from jail or prison, rejoining the general public. 

Second, although at the time of the motion to dismiss 

there was no evidence of direct marketing to released 

inmates, the CFPB defines “marketing” to include indirect 

marketing. See 12 C.F.R. § 1005.20(b)(4) (Supp. I 2019) 

(stating that a card is “marketed” if “the potential use of the 

card . . . is directly or indirectly offered, advertised, or 

otherwise promoted”). Factors to be considered when 

determining whether a card is marketed to the general public 

include “the means or channel through which the card . . . 

may be obtained by a consumer, the subset of consumers that 

are eligible to obtain the card . . . and whether the availability 

of the card . . . is advertised or otherwise promoted in the 

marketplace.” Id.

Applying these factors, Defendants indirectly market the 

cards to released inmates. Here, Defendants market the card 

program to municipalities and correctional facilities, and 

plausible claim for relief under section 1693i. Accordingly, we need not 

address Brown’s contention that the district court erred in dismissing her 

claim under section 1693i.

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BROWN V. STORED VALUE CARDS, INC. 13

Multnomah County does not give released inmates a choice 

of whether to accept the cards. Defendants know, expect, 

and intend that Multnomah County will give the cards to 

released inmates. That is the only way Defendants assure 

the use of and obtain payment for the cards. So Defendants 

indirectly “offer[], advertise[], or . . . promote[]” the cards to 

the released inmates. Id.

When inmates are released from jail or prison, they 

reenter the general public. And when Defendants marketed 

the cards to Multnomah County, they indirectly marketed 

them to these released inmates. Because Defendants 

marketed their cards to the general public, section 1693l-1 

applies. We hold that Brown plausibly stated a claim for 

relief under section 1693l-1 and that the district court erred 

in dismissing that claim.

III

We next consider the district court’s denial of Brown’s 

motion for leave to file a third amended complaint. We 

review denial of leave to amend for an abuse of discretion. 

Curry v. Yelp Inc., 875 F.3d 1219, 1224 (9th Cir. 2017).

In March 2018, Brown sought leave to file a third 

amended complaint reinstating her EFTA claims under both 

section 1693i and section 1693l-1. She proposed to include 

new paragraphs detailing Defendants’ direct marketing of 

their prepaid cards in jails and prisons based on new 

evidence obtained during discovery. In particular, Brown 

obtained evidence that Defendants displayed “large, color 

posters” in each facility “extoll[ing] the benefits” of the card 

as a way for released inmates to access their funds 

“immediately.”

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14 BROWN V. STORED VALUE CARDS, INC.

Requests for leave to amend should be granted with 

“extreme liberality.” Moss v. U.S. Secret Serv., 572 F.3d 

962, 972 (9th Cir. 2009) (quoting Owens v. Kaiser Found. 

Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001)). When 

considering whether to grant leave to amend, a district court 

should consider several factors including undue delay, the 

movant’s bad faith or dilatory motive, repeated failure to 

cure deficiencies by amendments previously allowed, undue 

prejudice to the opposing party, and futility. Foman v. 

Davis, 371 U.S. 178, 182 (1962). Of the Foman factors, 

prejudice to the opposing party carries the most weight. 

Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 

(9th Cir. 2003). 

The Foman factors weigh decidedly against denying 

leave to amend. There is no indication that allowing the 

amendment would prejudice Defendants, and Defendants do 

not contend that they would be prejudiced. There is also no 

indication of undue delay, bad faith, or dilatory motive by 

Brown: she filed her motion for leave to amend just two 

days after a deposition revealed new evidence of direct 

marketing to released inmates. Likewise, Brown has not 

repeatedly failed to cure deficiencies. Rather, Brown sought 

leave to amend based on newly discovered evidence.

Defendants’ central argument on appeal is that any 

amendment would be futile because Brown’s EFTA claims 

fail as a matter of law. This is incorrect. Brown’s proposed 

third amended complaint alleging evidence of direct 

marketing to released inmates rejoining the general public 

plausibly states a claim for relief under section 1693l-1. 

Brown also states a claim for relief under section 1693i, 

plausibly alleging that Defendants issued unsolicited, 

validated prepaid cards. Defendants contend that section 

1693i does not cover the card that Brown received because 

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BROWN V. STORED VALUE CARDS, INC. 15

that card did not provide access to a “consumer’s account,” 

15 U.S.C. § 1693i, as the term “account” was defined by the 

CFPB at the time, see id. § 1693a (noting that the CFPB has 

the authority to define “account”). In support of this 

argument, Defendants note that the regulation implementing 

section 1693i, 12 C.F.R. § 1005.2, was amended recently to 

state that “[t]he term [account] includes a prepaid account.” 

12 C.F.R. § 1005.2(b)(3). Although the change announced 

that prepaid cards of the kind that Brown received fall within 

section 1693i’s coverage, the former regulation did not state 

otherwise. See 12 C.F.R. § 1005.2 (2014). The question is 

a statutory interpretation issue for the court.

The text of section 1693i in no way indicates that a 

“consumer[] account” cannot encompass the sort of prepaid 

account that Brown received access to through her Numi 

card; if it did, the subsequent amendment to section 1005.2 

would be invalid. Both then and now, section 1005.2 

defined “account” as “a demand deposit (checking), savings, 

or other consumer asset account . . . held directly or 

indirectly by a financial institution and established primarily 

for personal, family, or household purposes.” What Brown 

received was an account “held directly or indirectly by a 

financial institution”—through Mastercard—that she could 

use for her own “personal, family, or household purposes.”

We acknowledge that Brown sought leave to amend long 

after she filed her original complaint and after two previous 

amendments. But the Federal Rules call for liberal 

amendment of pleadings before trial. Fed. R. Civ. P. 

15(a)(2) (“The court should freely give leave [to amend] 

when justice so requires.”). And a district court’s denial of 

leave to amend without explanation is subject to reversal: 

“Such a judgment is ‘not an exercise of discretion; it is 

merely abuse of that discretion and inconsistent with the 

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16 BROWN V. STORED VALUE CARDS, INC.

spirit of the Federal Rules.’” Eminence Capital, LLC, 

316 F.3d at 1052 (quoting Foman, 371 U.S. at 182). 

A liberal approach to amendment seems particularly 

appropriate where other persons throughout the nation could 

benefit from a resolution of novel issues that also apply to 

them, especially when there is a vast mismatch of resources 

between released inmates and well-funded national 

companies and the amendment does not prejudice 

defendants. As the use of Numi’s debit release cards 

increases, so has the litigation challenging the card fees. See

Humphrey v. Stored Value Cards, 355 F. Supp. 3d 638 (N.D. 

Ohio 2019); Regan v. Stored Value Cards, Inc., 85 F. Supp. 

3d 1357 (N.D. Ga. 2015). The parties in this case and others 

would benefit from a decision by the district court on the 

merits as opposed to leaving the issue unresolved by denying 

leave to amend.

We hold that the district court abused its discretion when, 

without written explanation or opinion, it denied Brown 

leave to file a third amended complaint, and Defendants 

suffer no significant prejudice from amendment.

IV

We finally turn to the district court’s grant of summary 

judgment to Defendants on Brown’s takings claim. As a 

preliminary matter, Defendants did not contest that they 

were state actors in their motion for summary judgment. 

Defendants previously contested the state action issue in 

their motions to dismiss, and the district court found that 

Brown sufficiently pleaded that Defendants and the state 

were joint participants in the challenged activity. For 

purposes of this appeal, we assume without deciding that 

Defendants are state actors.

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BROWN V. STORED VALUE CARDS, INC. 17

The district court held that there was no per se taking 

because the release cards are the functional equivalent of 

cash or a check. This analysis is misguided. The release 

cards are not the functional equivalent of cash or a check 

because the value of the cards quickly and permanently 

deteriorates. We hold that Defendants were not entitled to 

summary judgment on the per se takings claim.6

We review de novo a district court’s grant of summary 

judgment. Branch Banking & Tr. Co. v. D.M.S.I., LLC, 

871 F.3d 751, 759 (9th Cir. 2017). Summary judgment is 

proper when, viewing the evidence in the light most 

favorable to the non-moving party, “there is no genuine 

dispute as to any material fact and the movant is entitled to 

judgment as a matter of law.” Fed. R. Civ. P. 56(a). 

The district court mistakenly reasoned that the release 

card is the functional equivalent of cash. According to the 

district court, the release card is a “highly transferable, 

usable liquid” form of currency, similar to cash. The district 

court acknowledged certain transaction costs and practical 

difficulties that come with the card, such as the fact that to 

avoid paying a fee, a card recipient must go to a Mastercardaffiliated bank to receive the cash value of the card from a 

bank teller, but it concluded that such costs and difficulties 

were de minimis.

There is at least one crucial difference between the 

release card and cash: the ticking clock. From the moment 

Brown received her release card, she had only five days to 

either spend the money or retrieve the card’s cash value 

6 Because we conclude that the district court erred in granting 

summary judgment to Defendants on Brown’s per se takings theory, we 

do not address her regulatory takings theory.

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18 BROWN V. STORED VALUE CARDS, INC.

before being charged a $5.95 monthly service fee. Cash does 

not similarly deteriorate in value in five days. If Brown put 

$30.97 in cash in her wallet and did not spend it, then she 

would still have $30.97 in cash after six months’ time. By 

contrast, if Brown did not spend the $30.97 on the release 

card, then the card would have no value six months later 

because of the monthly service fees. Similarly, a check does 

not deteriorate in value if it is not cashed within such a very 

short time. And although a particular check may not be 

negotiable after several months, see U.C.C. § 4-404, the debt 

meant to be paid is not cancelled, and the maker of the check 

still owes the full amount. Because the release card 

deteriorates in value quickly and permanently, the district 

court was incorrect to conclude that the release card is the 

functional equivalent of cash or of a check.

The district court erred in granting summary judgment to 

Defendants on Brown’s takings claim.

7

The next step in a fees-for-services takings analysis is to 

determine whether the fees are a “fair approximation of the 

cost of benefits supplied.” United States v. Sperry Corp., 

493 U.S. 52, 60 (1989) (quoting Massachusetts v. United 

States, 435 U.S. 444, 463 n.19 (1978)). The district court 

explicitly declined to rule on the reasonableness of the fees. 

We decline to opine at length upon an issue not decided 

below, see Foti v. City of Menlo Park, 146 F.3d 629, 638 

(9th Cir. 1998). We note that the extent to which the fees 

7 The district court also erred in granting summary judgment to 

Defendants on Brown’s Oregon state law claims for conversion and 

unjust enrichment. The district court based its ruling on its analysis that 

the release cards were the functional equivalent of cash. Having 

explained why this analysis was incorrect, see supra, we vacate that 

ruling and remand for the district court to evaluate Brown’s state law 

claims in the first instance.

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BROWN V. STORED VALUE CARDS, INC. 19

were avoidable might be a factor for the district court to 

consider in the next step of the takings analysis.8 We reverse 

and remand so that the district court may consider the 

reasonableness of the fees in the first instance. 

V

There can be little doubt that Multnomah County’s 

release card program with Numi has changed the simple 

government function of returning confiscated money to a 

released inmate into a venture in which the released inmate’s 

money can be eroded or lost by the charge of profit-oriented 

fees. Numi is entitled to fair compensation for its services, 

but that does not mean that it should be able without 

restriction to provide cards to released inmates who have not 

asked for them and who are likely to end up with less money 

than was taken from them. Similarly, the government of 

Multnomah County should not so easily be able to shift the 

burden of securing and returning released inmates’ funds to 

the released inmates themselves, many of whom, like 

Brown, are never charged with a crime. 

We hold that (1) Brown’s section 1693l-1 claim should 

not have been dismissed for failure to state a claim; (2) the 

district court abused its discretion when it denied Brown 

leave to file a third amended complaint; (3) summary 

judgment was not proper on Brown’s takings claim; and (4) 

summary judgment was not proper on Brown’s state law 

8 As this issue is not pertinent to our holding, we do not decide at 

this point whether the district court was correct in determining that the 

fees were voluntarily incurred by Brown. 

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20 BROWN V. STORED VALUE CARDS, INC.

claims. We reverse and remand for further proceedings not 

inconsistent with this opinion.

REVERSED AND REMANDED.

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