2009 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-23-2009

Donald St. Clair v. Fin Defendants

Precedential or Non-Precedential: Non-Precedential

Docket No. 08-4870

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Recommended Citation

"Donald St. Clair v. Fin Defendants" (2009). 2009 Decisions. Paper 957.

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 NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

___________

No. 08-4870

___________

DONALD F. ST. CLAIR,

 Appellant

v.

CITIZENS FINANCIAL GROUP; RBS CITIZENS, N.A.;

CITIZENS BANK OF PENNSYLVANIA; CHARTER ONE FINANCIAL SERVICES;

LAWRENCE K. FISH; STEPHEN D. STEINOUR; NORMAN J. DELUCA;

DANA DRAGO; ROBERT M. MAHONY; BEN BARONE; LAIRD BOULDEN;

ROBERT M. CURLEY; JOE DEWHIRST; CHRISTOPHER Y. DOWNS; 

EDWARD O. HANDY; BRADFORD B. KOPP; JOSEPH J. MARCAURELE;

THERESA MCLAUGHLIN; RALPH J. PAPA; SANDRA PIERCE;

EDWIN SANTOS; CATHLEEN A. SCHMIDT; SCOTT C. SWANSON;

MARIA TEDESCO; HAL R. TOVIN; UNKOWN and UNNAMED DEFENDANTS;

ROBERT E. SMYTH

__________________________________

On Appeal from the United States District Court

for the District of New Jersey

(D.C. Civil No. 08-cv-01257)

District Judge: Honorable Jerome B. Simandle 

_____________________________________

Submitted Pursuant to Third Circuit LAR 34.1(a)

Before: BARRY, SMITH and GARTH, Circuit Judges

(Opinion filed: July 23, 2009)

_________

 OPINION
2

_________

PER CURIAM

Donald St. Clair, proceeding pro se, appeals the order of the United States District

Court for the District of New Jersey granting the defendants’ motion to dismiss his

complaint without granting him leave to amend his complaint a second time. For the

reasons that follow, we will affirm.

I.

As we write solely for the benefit of the parties, we set forth briefly only those

facts necessary to our analysis. Donald St. Clair and his now deceased mother opened a

Citizens Bank checking account in Connecticut, had Social Security checks automatically

deposited into the account from the time it was opened until January 2007, and kept the

account in use even after he moved to New Jersey at an unspecified date. 

In March 2008, St. Clair sued Citizens Financial Group, its parent corporation,

RBS Citizens, N.A., several of its banks, and numerous officers and executive committee

members of those entities (collectively, “Defendants”) in the District Court for the

District of New Jersey after incurring fees for overdrawing his Citizens Bank checking

account. 

According to St. Clair, his account was a mere $2.87 overdrawn, yet he incurred

$441 in penalties under Citizens Bank’s overdraft policy before he was even notified of
According to Appellant, in 2006, the bank charged $17 per item for the first 1

overdraft day, $30 per item for the second and third overdraft days, $37 per item if the

account was overdrawn for four days or more, and a $5 “Sustained Overdraft Fee” if an

account remained overdrawn for more than six consecutive business days. Appellant

claims the overdraft fee structure changed in 2007 to $35 per item for the first, second,

and third overdraft days, and $38 per item for four or more overdraft days. The

“Sustained Overdraft Fee” was apparently increased to $35. 

3

the deficiency. In addition to claiming that the bank deceptively hides its fees from its 1

customers, St. Clair alleged that it was fraudulent for the bank to have waited

approximately four to six days to mail his overdraft notices, given that the overdraft fee

grows each day the account remains overdrawn. 

After the Defendants filed a motion to dismiss, St. Clair responded with a 57-page

amended complaint on July 7, 2008. There, he alleged that the overdraft fees had been

falsely inflated because of the Defendants’ monopolization of the market or, alternatively,

as a result of a conspiracy between Defendants and various “unknown person conspirators

of competitor banks and/or bank enterprises.” 

St. Clair asserts two general claims and multiple subclaims against the Defendants

stemming from the overdraft policies: (1) the Defendants illegally conspired to fix the

fees in violation of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2 and the New Jersey

Antitrust Act, § 56:9-3; and (2) the Defendants used mail fraud, bank fraud, and extortion

to force him to pay the overdraft fees in violation of the Racketeer Influenced and Corrupt

Organizations (“RICO”) Act, 18.U.S. §§ 1961-63. 

In support of the conspiracy claims, St. Clair provides the overdraft fee structures
4

of several competing banks which appear to be similar to Citizens Bank’s fee structure

and further notes that several of the individual Defendants, Citizens Bank officers, have

prior work experience at other banks with similar overdraft fee structures, thereby giving

them opportunity to enter into a conspiracy.

Upon Defendants’ second motion to dismiss, the District Court concluded that St.

Clair failed to state a claim upon which relief could be granted and dismissed the

complaint without giving St. Clair leave to amend a second time. This appeal followed.

II.

We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291 and conduct de

novo review of the District Court’s dismissal pursuant to Rule 12(b)(6). Phillips v.

County of Allegheny, 515 F.3d 224, 230 (3d Cir. 2008). We accept as true all of the

allegations contained in the complaint and draw reasonable inferences in favor of a pro se

plaintiff. Id. at 231; see also Erickson v. Pardus, 127 S.Ct. 2197, 2200 (2007) (per

curiam). “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, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.

544, 570 (2007)). 

III.

St. Clair advances four antitrust claims. First, he claims that the Defendants

violated Section One of the Sherman Antitrust Act by colluding with other banks to
We agree with the District Court that St. Clair’s allegations are sufficient to 2

confer standing, as he alleged the type of harm the antitrust laws were intended to prevent

and a personal injury stemming from the Defendants’ alleged unlawful acts as required by

Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp., 995 F.2d 425, 429 (3d Cir.

1993). See also Angelico v. Lehigh Valley Hospital, Inc., 184 F.3d 268, 274 (3d Cir.

1999).

We also note, as did the District Court, that the language of the relevant portions of

the New Jersey Antitrust Act is virtually identical to that of the Sherman Antitrust Act

and that the New Jersey Act itself mandates that it “shall be construed in harmony with

the ruling judicial interpretations of comparable Federal antitrust statutes and to

effectuate, insofar as practicable, a uniformity in the laws of those states which enact it.” 

N.J.S.A. 56:9-18; Patel v. Soriano, 848 A.2d 803, 826 (N.J. Super. Ct. App. Div., 2004). 

Accordingly, the state law antitrust claims are only viable if the corresponding federal

claims are sufficient.

5

illegally set overdraft fees beyond fair market rates. Next, he alleges that the artificially

inflated overdraft fees are only possible because Defendants monopolize the banking

market in violation of Section Two of the Sherman Antitrust Act. His final two antitrust

claims are matching state law claims pursuant to the New Jersey Antitrust Act, N.J. Stat.

Ann. §§ 56:9-3, -4.2

To state a claim under either Section 1 of the Sherman Act or the New Jersey

Antitrust Act § 56:9-3, a complainant must allege that two or more entities formed a

combination or conspiracy. Twombly, 550 U.S. at 548; Patel, 848 A.2d at 827. In

Twombly, the Supreme Court held that general allegations of conspiracy are not

sufficient. Twombly, 550 U.S. at 555. The complaint must provide “enough fact to raise

a reasonable expectation that discovery will reveal evidence of illegal agreement.” Id. at

556. “[A]n allegation of parallel conduct and a bare assertion of conspiracy will not
6

suffice.” Id. Furthermore, “[w]ithout more, parallel conduct does not suggest conspiracy,

and a conclusory allegation of agreement at some unidentified point does not supply facts

adequate to show illegality.” Id. at 556-57. 

As in Twombly, St. Clair’s conspiracy claims fail because he too has alleged only

parallel conduct and gross speculation. His conspiracy claims rely on the parallel fee

structures of several competing banks and the assertion that the individual defendants,

officers of Citizens Bank, each had prior work experience at other banks. These

accusations are wholly inadequate.

St. Clair also alleges that the Defendants and the co-conspiring banks monopolize

the market as an oligopoly, illegally control 100 percent of the market share, and use this

advantage to set overdraft fees artificially high. As the District Court correctly noted, to

state a claim of monopolization in contravention of Section 2 of the Sherman Act and its

analog, the New Jersey Antitrust Act § 56:9-4, a plaintiff must allege:

(1) the possession of monopoly power in the relevant market

and (2) the willful acquisition or maintenance of that power as

distinguished from growth or development as a consequence

of a superior product, business acumen, or historic accident.

Crossroads Cogeneration Corp. v. Orange & Rockland Utils., Inc., 159 F.3d 129, 141 (3d

Cir. 1998) (quotations omitted); see also Patel, 848 A.2d at 829-30. The Supreme Court

has defined monopoly power as the power to “control prices or exclude competition.” 

United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 392 (1956). “Other

factors to be considered include the strength of competition, probable development of the
7

industry, the barriers to entry, the nature of the anti-competitive conduct, and the elasticity

of consumer demand.” Barr Labs., Inc. v. Abbot Labs., 978 F.2d 98, 112 (3d Cir. 1992)

(citation omitted). 

The District Court determined, and we agree, that St. Clair has failed to allege the

percentage of the relevant market controlled by Defendants or plead any facts regarding

the strength of competition, probable development of the industry, the nature of the anticompetitive conduct, or the elasticity of consumer demand. The District Court did

acknowledge that St. Clair stated that the Defendants “effectively barricaded entry into

the market,” but noted that the pleading was too conclusory to be sufficient under

Twombly, 550 U.S. at 554 (“While a complaint attacked by a Rule 12(b)(6) motion to

dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the

‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a

formulaic recitation of the elements of a cause of action will not do.”) (internal citations

omitted). 

Instead of addressing the factors above, St. Clair cited Citizens Bank’s overdraft

fee increase of $18 in 2007 as evidence of Defendants’ power over the market,

emphasized Citizens Financial Group’s $159 billion in assets, declared that it was one of

the “10 largest commercial bank holding companies in the United States,” and offered

Swift & Co. v. United States, 196 U.S. 375 (1905), as supporting authority. Swift,

however, was decided in another era of antitrust law and pleading practice. Furthermore,
8

the Swift plaintiff provided great detail regarding the formal price fixing agreement

between the conspirators and outlined the agreement’s intent and effect of eliminating

competition. This has not been sufficiently pleaded here and the allegations in the

complaint are not sufficient to support a monopolization claim 

We turn now to St. Clair’s RICO claims. To properly assert a civil RICO claim a

plaintiff must show “(1) conduct (2) of an enterprise (3) through a pattern (4) of

racketeering activity.” Warden v. McLelland, 288 F.3d 105, 114 (3d Cir. 2002)

(quotation omitted). Section 1961(1) of RICO defines “racketeering activity” by listing

criminal activities that constitute predicate acts under the statute. The list is exhaustive. 

Annulli v. Panikkar, 200 F.3d 189, 200 (3d Cir. 1999), overruled on other grounds by

Rotella v. Wood, 528 U.S. 549 (2000).

Failure to plead a pattern of predicate acts is fatal to a RICO claim. Id. St. Clair

alleged four predicate acts: (1) antitrust violations; (2) bank fraud; (3) mail fraud; and

extortion in violation of the Hobbs Act, 18 U.S.C. § 1951. We consider each of St.

Clair’s proffered “predicate acts.” At the outset, we note that antitrust violations are not

on the list of predicate acts in 18. U.S.C. § 1961(1), and thus, cannot be the basis of a

RICO claim. We also note that while bank fraud is listed as one of the predicate acts,

bank fraud occurs when someone defrauds the bank, not vice versa. See United States v.

Khorozian, 333 F.3d 498, 503 (3d Cir. 2003). St. Clair’s accusations therefore do not

constitute allegations of bank fraud, because he alleges the bank is the perpetrator of the
9

fraud not the victim.

Next, St. Clair claims that the Defendants committed mail fraud by sending

overdraft notices later than they sent other types of mail, knowing that late fees accrue on

a daily basis. To constitute mail fraud, one must allege the postal system’s use in a

scheme to defraud through misrepresentation. United States v. Boffa, 688 F.2d 919, 925

(3d Cir. 1982). “While innocent mailings...may supply the necessary communication

element for these criminal offenses, there must be some sort of fraudulent

misrepresentations or omissions reasonably calculated to deceive persons of ordinary

prudence and comprehension.” Camiolo v. State Farm Fire & Cas. Co., 334 F.3d 345,

364 (3d Cir. 2003) (internal quotation marks omitted). Like the District Court, we

conclude that St. Clair has not met this burden as we cannot find any allegations in the

amended complaint that the Defendants misrepresented any details regarding the

overdraft fees in any of the communications mailed to him. 

St. Clair finally claims the RICO Act is triggered because Defendants used

extortion to collect the overdraft charges in violation of the Hobbs Act, 18 U.S.C. § 1951. 

Subsection (b)(2) of the Hobbs Act defines extortion as “the obtaining of property from

another, with his consent, induced by wrongful use of actual or threatened force, violence,

or fear, or under color of official right.” In order to plead extortion under color of official

right, one must allege that the Defendant misused official government power or

threatened to misuse that power in order to obtain something of value from the victim. 
10

United States v. Mazzei, 521 F.2d 639, 643 (3d Cir. 1975). The Defendants, however, are

not state actors. They are not listed as financial institutions in 31 U.S.C § 9101, which St.

Clair cites to us, as government corporations or mixed-ownership Government

Corporations. We do not see how St. Clair’s accusations support a viable extortion claim. 

As a consequence, we do not see any basis for St. Clair’s RICO claims. 

Finally, we see no basis to conclude that the District Court erred in refusing St.

Clair leave to amend his complaint a second time. Although Rule 15(a)(2) of the Federal

Rules of Civil Procedure states that “[t]he court should freely give leave [to amend the

complaint] when justice so requires,” a district court may deny a request to amend if the

amendment would be futile. Lake v. Arnold, 232 F.3d 360, 373 (3d Cir. 2000). In

concluding that further amendment would be futile, the District Court explained that St.

Clair filed 123 pages of pleadings, a case statement, and a brief in opposition to the

motion to dismiss. The District Court did not abuse its discretion in determining that the

deficiencies in St. Clair’s amended complaint could not be cured by amendment. 

IV.

In light of the foregoing, we will affirm the judgment of the District Court.