Donald F. St. Clair v. Citizens Financial Group

NOT PRECEDENTIAL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

-- 1 of 10 --

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

-- 2 of 10 --

According to Appellant, in 2006, the bank charged $17 per item for the first1
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 its1
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

-- 3 of 10 --

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

-- 4 of 10 --

We agree with the District Court that St. Clair’s allegations are sufficient to2
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

-- 5 of 10 --

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

-- 6 of 10 --

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 anti-
competitive 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,

-- 7 of 10 --

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

-- 8 of 10 --

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.

-- 9 of 10 --

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.

-- 10 of 10 --