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Financial Services Law Insights and Observations

11th Circuit affirms $7.5 million settlement on overdraft appeal

Courts Appellate Eleventh Circuit Overdraft Class Action Settlement

Courts

On February 16, the U.S. Court of Appeals for the Eleventh Circuit affirmed a district court’s class certification and approval of a $7.5 million settlement, which resolved allegations that, after merging with another national bank, the former bank (defendant) improperly assessed and collected overdraft fees. According to the opinion, a customer accused the bank of “high-to-low” posting that restructured customers’ debit transactions so that high value debits posted before low value ones, increasing the chance of overdrafts. After the defendant merged with the national bank in 2012, the national bank agreed to the $7.5 million settlement to resolve the claims. A class member (interested party-appellant) appealed the order. The interested party-appellant claimed “that the court abused its discretion by finding that the settlement class’s representative … adequately represented her (and her proposed subclass’s) interests and that the settlement class’s claims were typical of hers (and her proposed subclass’s).”

The 11th Circuit disagreed and found that the district court did not abuse its discretion because the plaintiff classes “suffered identical injuries” based on the defendant’s alleged high-to-low restructuring practices. Additionally, the appellate court found that “[t]he district court didn’t abuse its discretion by finding [the settlement class’s representative’s] claims were typical of those of the class.” The court also found that “[t]he district court could reasonably conclude that any difference in the value of the plaintiffs’ claims was too speculative or too small to create a fundamental conflict of interest.”