Judge Grants Final Approval to Capital One Overdraft Fee Settlement

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An almost $32 million class action settlement between Capital One Bank NA over allegedly illegal overdraft fees was given final approval by a Florida federal judge, saying that the amount of money Class Members will be sent is very reasonable.

U.S. District Judge James Lawrence King said in his order granting final approval to the Capital One overdraft fee class action settlement that Class Members were able to get back 35 percent of what they would have recovered if the matter had gone to trial.

“The settlement constitutes an excellent result for the Settlement Class under the circumstances and challenges presented by the action,” Judge King wrote in his Friday ruling. “The court specifically finds that the settlement is fair, reasonable and adequate, and a satisfactory compromise of the settlement class members’ claims.”

The Capital One overdraft fee class action settlement includes 611,000 class members and resolves five years of litigation. This class action lawsuit filed against Capital One was filed in a Louisiana federal court in 2010 and transferred to the Florida federal court where a multidistrict litigation had been formed to address similar class action lawsuits against other banks, also alleging unreasonable overdraft fees.

There is no claim form deadline that must be met in order to benefit from this Capital One class action settlement. Now that the judge has granted final approval to the settlement, Class Members will be sent a payment automatically.

The attorneys representing the class were given almost $10 million, 31 percent of the settlement, which will come out of the total settlement fund as well as $10,000 for both class representatives.

Judge King explained that the attorneys representing the class members took enormous risk upon themselves because they had a contingency fee arrangement with their clients, which means that attorneys’ fees are only paid in the event that there is a favorable outcome to the class action lawsuit.

Such an arrangement “often justifies an increase in the award of attorney’s fees,” he explained.

“In undertaking to prosecute this complex case entirely on a contingent fee basis, Class Counsel assumed a significant risk of nonpayment or underpayment,” the Florida federal judge said.

“It is uncontroverted that the attorney time spent on the Action was time that could not be spent on other matters,” he added.

After Capital One failed to have the overdraft fee class action lawsuit dismissed by Judge King for the third time in June 2014, a class action settlement was reached in January. Capital One had tried to argue that a ruling in a class action lawsuit against Wells Fargo Bank NA by the Ninth Circuit Court of Appeals also applied to Capital One, in which the appellate court said that the charges were preempted by the National Bank Act. However, Judge King disagreed with that conclusion.

The Capital One overdraft fee class action lawsuit alleged that class members were charged overdraft fees by Capital One due to the bank’s “practice of posting Debit Card Transactions to an Account in order from highest to lowest dollar amount,” not in the order in which the transactions occurred. The practice allegedly led them to pay more in overdraft fees than if it had been done in the correct order.

Other banks also included in the MDL have also reached settlements, including JPMorgan Chase Bank NA, Bank of America NA and TD Bank NA, which have all reached settlements in tens or hundreds of millions of dollars.

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 Capital One Overdraft Fee Class Action Lawsuit is In re: Checking Account Overdraft Litigation, Case No. 1:09-md-02036, in the U.S. District Court for the Southern District of Florida.