Law360, New York (May 22, 2015, 6:15 PM ET) — A Florida judge on
Friday signed off on an almost $31.8 million settlement between Capital
One Bank NA and plaintiffs in multidistrict litigation over allegedly
deceptive overdraft fees, saying that the recovery amount is extremely
reasonable given the risks faced by the plaintiffs.
U.S. District Judge James Lawrence King granted final approval to the deal,
which was worked out following about two years of settlement discussions
and two rounds of mediation discussions. The judge said that the settlement
fund of $31.76 million represents 35 percent of the most damages that
the plaintiffs could recover at trial.
“The settlement constitutes an excellent result for the settlement
class under the circumstances and challenges presented by the action,”
the judge said. “The court specifically finds that the settlement
is fair, reasonable and adequate, and a satisfactory compromise of the
settlement class members’ claims.”
There are about 611,000 settlement class members, according to the judge,
and nearly five years of litigation in the case have included about 20
depositions and the production of more than 325,000 pages of documents
and electronic files.
The judge also awarded attorneys’ fees of almost $10 million, worth
about 30 percent of the deal, to be paid out of the settlement fund, and
service awards of $10,000 each to both of the class representatives.
“Class counsel undertook an incredibly risky and undesirable case
and, through their diligence, perseverance and skill, obtained an outstanding
result for the settlement class,” the judge said, noting that the
counsel took on the case on a contingent fee basis.
Capital One failed three times to have its case dismissed on preemption
grounds. A Florida federal judge in June shut down the bank’s attempt
to apply to its case a Ninth Circuit decision that similar charges against
Wells Fargo & Co. were preempted by the National Bank Act.
The suits, which popped up all around the country in the late 2000s, all
took issue with banks’ practice of deducting money from accounts
not in chronological order but based on the size of transactions, alleging
that it was designed to maximize the number of overdraft fees. The bulk
of the suits were clustered in Florida, where they mostly prevailed on
class certification.
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 and TD Bank NA — have settled
for tens or hundreds of millions of dollars.
Other recent settlements include M&T Bank’s agreement to pay
$4 million and Synovus Financial Corp.’s proposed $3.9 million pact.
Settlement class members who do not opt out will automatically receive
prorated shares from the settlement fund. Settlement class counsel and
their experts have used Capital One’s data to determine which account
holders were harmed by the high-to-low posting practice.
Representatives for the parties couldn’t immediately be reached for
contact on Friday.
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 & Honik PC, and Trief
& Olk, among others.
Capital One is represented by Jones Walker Waechter Poitevent Carrere &
Denegre LLP,Covington & Burling LLP, and Morrison & Foerster 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.