November 7, 2011

In Overdraft Fee MDL, Union Bank Agrees To Settle for $35 Million Nate Raymond

For the more than 30 banks facing national lawsuits over checking overdraft fees, the price tag for settling is becoming increasingly apparent.

After becoming the first defendant to have a class certified against it last July in the consolidated overdraft litigation in Miami, Union Bank revealed in court papers filed last week that it had agreed to a $35 million settlement.

San Francisco-based Union Bank is represented by John Sullivan of Severson & Werson, whose client declined comment through a spokesman. Co-lead plaintiffs counsel Aaron Podhurst of Podhurst Orseck told Bloomberg that the Union class includes more than 350,000 customers, and called the settlement "very fair." (He did not respond to our request for comment.) The deal must be approved by Senior Judge James King.

On Monday, Judge King separately finalized a $410 million proposed settlement by Bank of America Corporation in the overdraft litigation against it following a hearing to hear objections. Podhurst in a statement said Judge King after a full-day hearing concluded that a "superb result" had been obtained. The judge also approved the plaintiffs' attorneys fees, which equate to 30 percent.

Those aren't the only settlements. Judge King separately last Tuesday granted preliminary approval to a $2.5 million settlement with Louisiana's Iberiabank.

In their joint motion backing Iberiabank's settlement, lawyers on both sides say it represents a greater ratio to the bank's assets than other overdraft class actions settlements so far. Both Bank of America and Union Bank are settling for smaller percentages of their assets. By that measure, Iberiabank's settlement is also a step above the $203 million award San Francisco federal district court judge William Alsup last year handed a class suing Wells Fargo. Wells Fargo, represented by Covington & Burling, is appealing that decision.

BofA counsel Laurence Hutt of Arnold & Porter did not respond to a request for comment. A spokesperson for Bank of America said it was "pleased to reach a fair resolution to this matter." Iberiabank counsel Elizabeth Murray of Friday, Eldredge & Clark declined comment.

The overdraft litigation has been closely followed not just by the banking industry, but also by those looking for guidance in the wake of the Supreme Court's decision in AT&T Mobility v. Concepcion, in which the court compelled arbitration in a putative consumer class action. Judge King in September ruled that plaintiffs suing four other banks--SunTrust Banks, Branch Banking & Trust Company, M&T Bank Corporation, and Regions Financial Corporation--could not be forced to arbitrate their claims.

Those banks have filed notices that they're seeking to appeal the ruling to the Court of Appeals for the Eleventh Circuit. Other banks are still attempting to arbitrate claims in the multidistrict litigation, including JPMorgan Case, Citigroup Inc. and Wells Fargo.

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November 8, 2011 Circulation: 170,769

Federal judge OKs Bank of America’s $410 million settlement A Miami federal judge approved Bank of America’s $410 million settlement in a class-action suit about overdraft fees. By Ina Paiva Cordle

A Miami judge gave final approval Monday to a $410 million Bank of America settlement related to a class-action lawsuit that accused it of charging excessive overdraft fees to millions of debit-card customers.

U.S. District Judge James Lawrence King approved the settlement, which will give account holders as much as 45 cents on the dollar on their claims, said Miami attorney Aaron Podhurst of Podhurst Orseck, co-lead counsel for the plaintiffs.

Customers will automatically receive the payment; no paperwork is necessary, he said.

The judge also approved $123 million in attorneys fees — or 30 percent of the settlement, following an all-day hearing in Miami that included objections to the settlement and the fees.

“We’re very pleased that the court agreed with us and thought the settlement was fair and adequate and reasonable, and that he recognized the hard work that the lawyers had done,” Podhurst said in a telephone interview after the ruling. The fees will be apportioned among about 40 law firms and hundreds of lawyers, and no breakdown has yet been determined, he said.

Lawsuits from around the country, which claimed banks charged excessive fees when debit-card users made purchases that exceeded their balances, were consolidated in 2009 in Miami.

Bank of America was the first to settle among about 35 U.S. banks named in the class-action litigation. Other major banks include JPMorgan Chase, Citigroup, Wells Fargo and San Francisco-based Union Bank, which recently agreed to a $35 million settlement. That accord has yet to be approved in court, Podhurst said.

The Bank of America settlement benefits the bank’s customers who used their debit cards since 2001 and were charged overdraft fees as a result of “debit re-sequencing” — or the order in which postings were processed. The lawsuit charged that banks waited to process charges until days after a purchase was made, when users’ accounts were depleted; or manipulated charges so that large purchases that would deplete an account would be processed first, triggering overdraft fees on smaller purchases made earlier.

Because some debit card users from the early years cannot be identified, the court set aside about 12.5 percent of the settlement for educational institutions that teach consumers about financial and banking practices, Podhurst said.

“This a marvelous result for the members of the class,” King said at the hearing, Bloomberg News reported.

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Bank of America settles overdraft lawsuit for $410M South Florida Business Journal by Adam O'Daniel, Charlotte Business Journal Bank of America customers that incurred overdraft fees over the past decade may soon receive a small refund after a federal judge approved a settlement to a class-action lawsuit brought against the Charlotte, N.C.-based bank. The $410 million settlement will pay account holders from January 2001 to May 2011 for improper overdraft fees, although BofA is not admitting any wrongdoing. A judge approved the accord late Monday. This deal could have a big impact on South Florida residents, since BofA was the second-largest holder of deposits here, with $24.6 billion on June 30. The lawsuit contended BofA processed debit-card transactions in an order that maximized overdraft fees of $35, instead of processing purchases in chronological order. Such practices have now been banned by new regulations. About 13 million BofA account holders could be affected. Some plaintiffs objected to the lawsuit because it will refund only a fraction of the fees they originally paid. Others have complained the lawyers negotiating the settlement received too much: about $123 million – more than 30 percent of the entire claim. "Judge King concluded, after an all day hearing, that a superb result was obtained for the class of Bank of America customers, who, as a result of the settlement, will be compensated directly without having to file any claims to receive their benefit," said lead plaintiff attorney Aaron Podhurst, with Podhurst Orseck in Miami. "To achieve this stellar result, countless hours of hard work was undertaken by dozens of attorneys at various law firms across the country, and we are all honored and privileged to have had the opportunity to represent these class members in seeking just compensation." The lawsuit is one of a handful of similar suits brought against most of the nation's largest banks. Fort Lauderdale-based BankAtlantic (NYSE: BBX) faces a pending overdraft class action lawsuit in Broward County Circuit Court. BofA recently stopped allowing customers to overdraw their checking accounts when using a debit card. Instead, BofA debit card users are declined at the point of sale if they do not have sufficient funds.