In Re Checking Account Overdraft Litigatio

694 F.Supp.2d 1302 (2010)

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Nature of the Case

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Facts

Ps are current or former checking account customers of Ds, federally chartered banks. Ps seek to recover (for themselves and all other customers similarly situated) alleged excessive overdraft fees for charges made to their accounts on debit card transactions. Ps allege a common practice by Ds, to enter charges debiting Ps' accounts from the 'largest to the smallest' thus maximizing the overdraft fee revenue for themselves. Ps assert claims for breach of contract and breach of a covenant of good faith and fair dealing, unconscionability, conversion, unjust enrichment, and violation of the consumer protection statutes of various states. Ds' motion is based on the doctrine of federal preemption barring state regulation of the activities of national bank pursuant to the National Bank Act; the contracts with the banks explicitly authorizing Ds to post from 'high to low' and overdraft fee assessment; the legal argument that common law unconscionability claims are defenses only, not subject to affirmative causes of action for injury; that conversion will not lie since the depositor does not have title to the money deposited; that an adequate remedy at law exists for unjust enrichment; and that state consumer protection laws are inapplicable. Ps allege that Ds deploy advanced software to automate their overdraft systems to maximize the number of overdrafts and, thus, the amount of overdraft fees charged per customer. These automated overdraft programs manipulate and alter customers' transaction records to deplete the funds in a customer's account as rapidly as possible, resulting in more overdraft fees charged for multiple, smaller transactions. Overdrafts are likely to occur at times when, but for the Banks' manipulation and alteration, there would be sufficient funds in the account, and many of these overdrafts would not occur at all. Ps allege that Ds manipulate and alter customer accounts is by reordering debit transactions on a single day, or over multiple days, from largest to smallest amount, regardless of the actual chronological sequence in which the customer engaged in these transactions. Almost without exception, reordering debit transactions from highest to lowest results in more overdrafts than if the transactions were processed chronologically. Ds post all of the amassed charges on a single date, in order of largest to smallest, rather than in the order in which they were received or charged. This delayed posting results in multiple overdraft fees that would not otherwise be imposed. Delayed posting also prevents Ps from determining accurate account balances.