SEATTLE (Legal Newsline) – U.S. District Court for the Western District of Washington has rejected in part MGM’s motion to dismiss a lawsuit over gift card fees.

Judge Richard A. Jones ordered July 20 to dismiss in part the lawsuit against MGM Resorts International, saying MGM’s evidence is “unpersuasive." The lawsuit was initiated by a customer who claimed MGM unlawfully charged fees on gift cards he purchased in 2015.

The order came after MGM Resorts International filed a motion to dismiss the class action lawsuit that alleged it imposed unlawful fees on gift cards sold by MGM and Costco Wholesale Corp. that were intended for use at MGM hotels, resorts and casinos. 

Plaintiff David Hanson alleged MGM did not provide the required pre-sale disclosures and imposed unlawful fees on consumers who bought the MGM gift cards, specifically imposing inactivity and maintenance fees earlier than stated on the disclosures.

MGM stated in its motion to dismiss that Hanson did not suffer any damages and suggested that the customer had no intention to use the 140 gift cards he purchased. MGM claimed that the fees Hanson referenced have since been refunded. 

Jones denied the motion to dismiss Hanson’s contract, CPA, and warranty claims, saying that “the effort to show that Hanson did not sustain damages is unpersuasive.” 

MGM relied on transaction histories to claim that it had reimbursed all the inactivity fees charged to Hanson’s gift cards. Jones also stated that because Hanson’s complaint does not necessarily rely on those documents, the evidence was "beyond the permissible scope of documents that the court can rely upon when resolving a motion to dismiss," the order states.

The court granted MGM’s motion to dismiss Hanson’s claim against MGM for violation of Nevada’s Deceptive Trade Practices Act, because Hanson does not reside in Nevada and the gift card transaction did not occur in Nevada.

The court denied MGM’s alternative motion to strike the proposed Washington CPA class. Jones stated in the order that “it would be premature to strike his proposed Washington CPA class. Without discovery, the court has no way of knowing whether proposed class members actually purchased an MGM gift card meeting the class criteria outside of Washington state.”

Hanson filed suit on Oct. 24, 2016, on behalf of himself and other unknown consumers. Hanson alleged he purchased 140 gift cards redeemable at MGM’s casinos, resorts and affiliates from a Costco in Seattle on March 25, 2015. 

Hanson said the gift cards stated they would assess an inactivity fee and monthly maintenance fee 18 months after the card purchase. However, Hanson alleged that MGM began assessing fees just 12 months after he purchased the cards. 

Hanson filed a claim against MGM for breach of contract, a claim against MGM and Costco for violation of the Electronic Funds Transfer Act, a claim against Costco for violation of Washington’s Consumer Protection Act, and a claim against MGM for violation of Nevada’s Deceptive Trade Practices Act.

In the district court’s order, Jones denied Hanson’s motion for and extension of time to file for class certification as moot, as the entry of a case schedule pending the motion to dismiss has been deferred. The deadline to move for class certification is undetermined as of the date of press.

MGM is represented by Orrick, Herrington and Sutcliffe of Seattle and Washington, D.C.

Hanson is represented by the attorneys Kim D. Stephens and Kevin A. Bay of Tousley Brain Stephens PLLC in Seattle; Rafey S. Balabanian, Eve-Lynn Rapp and Stewart Pollock of Edelson PC in San Francisco; and Alexander Darr of Darr Law Offices in Fishers, Indiana.

U.S. District Court for the Western District of Washington at Seattle case number 2:16-cv-01661-RAJ

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