Classes Certified Against Wells Fargo In Overdraft MDL

Law360, Miami (June 8, 2015, 8:38 PM ET) — Plaintiffs won class certification Monday in five cases brought against Wells Fargo Bank NA that have been included in far-reaching multidistrict litigation alleging deceptive practices regarding bank overdraft fees.

U.S. District James Lawrence King granted class certification after holding two days of class certification oral arguments in Miami last month and reviewing what he suggested may have been the most extensive volume of evidentiary submissions and briefs in the history of the Southern District of Florida.

His decision came down in two orders, one regarding two putative class actions originally filed in Florida and California, respectively, against Wachovia Bank NA, which was acquired and absorbed by Wells Fargo in 2009, and the other covering three cases originally filed by Wells Fargo customers in New Mexico, Oregon and Washington.

As part of his ruling, Judge King accepted the plaintiffs’ proposal for numerous subclasses to cover varying state jurisdictions, saying that “each and every subclass possesses a materially identical legal claim and is headed up by bank customers who share that claim and have ample incentive to prosecute it.”

“The court’s plan appropriately protects the interests of all class members to the extent feasible, given these named plaintiffs and state laws, while also affording Wells Fargo the ability to defend itself in every instance,” he added, noting that federal law covering class actions calls for nothing more and that decisions on “what will be tried where and when will be left for another day.”

These cases are among a collection of lawsuits that popped up around the country in the late 2000s, claiming banks deceptively deducted money from accounts starting with the highest-valued transactions — despite contrary presentations to customers — as part of a tactic designed to maximize overdraft fees.

In the case of Wells Fargo, the bank’s marketing materials said that debit card and ATM transactions “generally reduce the available balance in your account immediately” and that “purchase amounts are automatically deducted from your primary checking account,” which the plaintiffs claimed were misrepresentations on account of the resequencing practices.

Some banks were able to compel arbitration based on provisions in their customer agreements, but those that were not — including JPMorgan Chase Bank NA, Bank of America NA, TD Bank NA and Capital One Bank NA — have settled for tens or hundreds of millions of dollars.

The cases came before Judge King on motions for class certification following a two-year pause while Wells Fargo appealed his ruling that its waiver of its right to compel arbitration against the named plaintiffs carries over to the unnamed plaintiffs. The Eleventh Circuit vacated that finding on jurisdictional grounds because the putative class has not yet been certified.

Counsel for Wells Fargo had argued that the Eleventh Circuit ruling made clear that arbitration clauses in all its customers’ account contracts must be considered by the court regarding numerosity requirements for class certification, but Judge King sided Monday with the plaintiffs’ position that the issue could only be raised once the potential class members had been certified into the case and entered the court’s jurisdiction.

Judge King also noted that the arbitration clauses in Wells Fargo’s account agreement is permissive, not mandatory, and said, “Therefore, Wells Fargo’s arbitration-based argument is premature given the permissive nature of these agreements and the stage of this litigation.”

His orders said that the proposed classes were well defined, noting that members would be ascertainable through the bank’s own records.

“Plaintiffs and the members of the class are all challenging the same overdraft policies of Wells Fargo and seeking to recover the additional overdraft fees they incurred as a result of Wells Fargo’s re-sequencing of their transactions,” he said.

Judge King found the plaintiffs’ proposed baseline of low-to-high transaction sequencing to be clear and fair comparison for the high-to-low policy that is the focus of the allegations, noting it was the method previously employed by the bank and provided the greatest contrast. He also rejected Wells Fargo’s arguments in numerous instances that individual plaintiffs’ differing preferences of baseline sequencing should cause the class to fail and also noted that the plaintiffs’ expert will be able to determine damages for any of the comparative sequences ultimately selected.

“We are pleased and look forward to moving forward with this case as we have done with other MDL overdraft cases,” plaintiffs’ counsel Bruce S. Rogow told Law360. “Recent articles have pointed out the continuing high cost to consumers of banks’ use of overdraft charges, and every success in these cases is a step toward a fairer playing field for bank customers.”

A representative for Wells Fargo declined comment.

The plaintiffs are represented by Podhurst Orseck PA, Bruce S. Rogow PA, Grossman Roth PA, Lieff Cabraser Heimann & Bernstein LLP, Baron & Budd PC, Webb Klase & Lemond LLC, Golomb Legal PC and Trief & Olk, among others.

Wells Fargo is represented by Sonya D. Winner of Covington & Burling LLP and Barry R. Davidson and Jamie Zysk Isani of Hunton & Williams LLP.

The case is In re: Checking Account Overdraft Litigation, case number 1:09-md-02036, in the U.S. District Court for the Southern District of Florida.

The underlying cases argued Tuesday are Martinez v. Wells Fargo Bank NA, case number 1:09-cv-23834, in the U.S. District Court for the Southern District of Florida, Martinez v. Wells Fargo Bank NA, case number 6:09-cv-01072, in the U.S. District Court for the District of New Mexico, Gutierrez v. Wells Fargo Bank NA, case number 7:09-cv-23685, in the U.S. District Court for the Southern District of Florida, Gutierrez v. Wells Fargo Bank NA, case number 3:09-cv-01239, in the U.S. District Court for the District of Oregon, Zankich et al. v. Wells Fargo Bank NA, case number 1:09-cv-23186, in the U.S. District Court for the Southern District of Florida, and Zankich et al. v. Wells Fargo Bank NA, case number 2:08-cv-01476, in the U.S. District Court for the Western District of Washington.

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