Judge: Bail payment processing service not illegal, but some counts in class action over unrefunded fees can proceed

A Chicago federal judge has dismissed two of five counts contained in a class action complaint alleging a bail and bond payment processing company broke Illinois law by not refunding an 8 percent fee to a Watseka man, who had posted bail for traffic charges that were eventually dropped.

In September 2011, East Hazel Crest police cited Michael J. Miner on complaints he was pulling an overweight trailer with farm equipment and the equipment's registration was expired. Miner posted $2,612 bail by credit card through Government Payment Service, which does business as GovPayNet. For road weight violation complaints, the bail is based upon the vehicle’s alleged excessive weight, with the bail also serving as a fine payment in the event of a finding of guilt.

GovPayNet has processed bail and bond payments since 1997. The Cook County Circuit Clerk and Cook County Department of Revenue were among GovPayNet's “largest customers” from 2005 to about 2012, when the contract was terminated, according to Miner's suit. GovPayNet is incorporated in Delaware, with its principal offices in Indiana.

GovPayNet charged Miner a $208.96 fee, representing 8 percent of the bail, for providing the bail service. The traffic citations against Miner were eventually dismissed, with the judge ordering the court clerk to refund bail. Miner received a check for $2,612 in December 2012, but was not refunded the $208.96 fee.

Miner filed a class action suit in September 2014, claiming GovPayNet’s refusal to refund the fee amounted to violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, as well as unjust enrichment, fraud and conversion.

Miner argued GovPayNet does not merely process credit card payments, but provides “commercial bond and bail-related services.” Miner said such private sector services were outlawed in the 1960s, so as to allow courts to retain control over bail, instead of private bondsmen. Miner claimed GovPayNet acted as a private bondsmen, because it charged the percentage fee for what it termed “bail bond services.”

Miner maintained GovPayNet violated the Consumer Fraud and Deceptive Business Practices Act by charging Miner and others for bail and bond-related services it could not provide by law. Further, GovPayNet did not disclose its services were against the law. In turn, this omission “offended public policy” and constituted unjust enrichment, fraud and “wrongful control of fees” paid by Miner and others like him.

In January 2015, GovPayNet filed a motion to dismiss.

On May 29, U.S. District Judge Robert M. Dow Jr. dismissed the first consumer fraud law count, saying state law “economically may have eliminated private bail bondsmen from the market” by creating a “disincentive” to offer such services, but the statute did not directly outlaw bail bondsmen.

Dow ruled the fraud count also fails for the same reason, as it depends on the same “implausible” allegation that GovPayNet charged Miner for illegal services.

Dow permitted the second consumer fraud count to survive, because Miner’s argument for that count included the contention GovPayNet “offended Illinois’ policy against commercial bail and bond-related services” — a reasonable contention in Dow’s view. Dow also gave weight to Miner’s two other claims that many people had no reasonable alternative but to pay the fee, and the fee could cause “substantial injury, particularly in the case of large bails.”

The unjust enrichment count also survived, with Dow rejecting GovPayNet’s position that Miner brought a free-standing claim of unjust enrichment, when Illinois law requires an underlying claim in support. Dow noted there is conflicting case law as to whether an unjust enrichment claim needs to be underpinned by another claim, but at any rate, Miner’s unjust enrichment allegation is not free-standing.

The conversion count was not addressed on its own in the motion to dismiss, but rather was included in GovPayNet’s overall argument Miner had no standing to bring the complaint. However, Dow said Miner did meet the requirements for standing, as Miner alleged an injury that is “fairly traceable” to GovPayNet.

A status hearing is set for Aug. 25. Miner is represented by the firms of Sweetnam LLC and Larry D. Drury Ltd. GovPayNet is defended by O’Hagan LLC. All the firms are of Chicago.