District Court rejects stop-payment fee class action against bank

Courts EFTA Class Action Ninth Circuit Fees Appellate

On August 13, the U.S. District Court for the Northern District of California dismissed the majority of an EFTA class action against a national bank, allowing only one claim by the lead plaintiff to proceed. In this case, two customers filed a class action against the bank alleging that it violated the EFTA and California’s Unfair Competition Law (UCL) by charging a $30 stop-payment fee. The bank moved to dismiss the plaintiffs’ third amended complaint arguing, among other things, that the plaintiffs lacked standing, the EFTA does not prohibit stop payment fees, and the California UCL claims are preempted by the National Banking Act. While the district court found that the lead plaintiff had standing to assert the claims against the bank, the court also held that the EFTA, its legislative history, and the U.S. Court of Appeals for the 9th Circuit precedent “unambiguously does not prohibit stop payment fees.” Moreover, the court noted that the EFTA and its legislative history say nothing about “how the reasonableness of any such fees should be determined.” The court dismissed the plaintiffs’ class action claims with prejudice.