Capital One Can’t Escape Overdraft Fee Class Action Lawsuit

For the third time, a Florida federal judge has denied Capital One NA’s attempt to dodge a class action lawsuit alleging its overdraft fee practices are illegal.

U.S. District Judge James Lawrence King denied Capital One’s Motion for Judgment on the Pleadings, arguing that the plaintiffs’ claims are preempted by federal law under the National Banking Act (NBA).

In December 2012, the 9th U.S. Circuit Court of Appeals ruled in the California case Gutierrez v. Wells Fargo Bank NA that a plaintiff’s claims were preempted by the NBA. That ruling overturned a $203 million judgment against Wells Fargo and determined that banks were allowed to manipulate the order in which they process transactions and assess fees under the NBA.

In his Monday ruling, Judge King found that the plaintiffs were barred from challenging the bank’s right to charge fees, but that they could allege that Capital One acted in bad faith or abused its right to assess overdraft fees. “Since the Ninth Circuit decided Gutierrez, several district courts have had the opportunity to address whether specific state law claims were preempted by the NBA, and those cases reveal that Gutierrez does not control the analysis in this case, and does not require the Court to reconsider its prior rulings on preemption,” the judge wrote.

The Capital One overdraft fee class action lawsuit was initially filed in Louisiana federal court in 2010 before it joined the massive multidistrict litigation (MDL) known as In re: Checking Account Overdraft Litigation related to banks’ allegedly illegal overdraft fee practices. At least 15 banks are involved in the MDL, which involves consolidated class action lawsuits that accuse the banks of reordering the sequence of debit card transactions to maximize the amount of overdraft fees imposed on their customers. The plaintiffs alleged the banks would arrange the transactions from largest to smallest in order to assess the most overdraft fees on their customers’ accounts.

Numerous other banks have been hit with class action lawsuits over allegedly illegal overdraft fee practices. Several of these overdraft fee lawsuits have resulted in class action settlements.

In February, Citibank reached a $7.9 million class action settlement with customers alleging the bank imposed unfair overdraft fees on debit card transactions. Last year, Comerica Bank agreed to pay more than $14 million to settle a class action lawsuit over its allegedly improper overdraft fees, and U.S. Bank agreed to a $55 million class action settlement. In March 2013, a federal court approved a $62 million class action settlement resolving similar allegations against TD Bank.

The Capital One Overdraft Fee Class Action Lawsuit is Steen v. Capital One NA, et al., Case No. 1:10-cv-22058, in the U.S. District Court for the Southern District of Florida.

The Overdraft Fee MDL 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.

UPDATE: A settlement has been reached in the Capital One overdraft fee class action lawsuit. Click here or visit www.CapitalOneOverdraftSettlement.com for details.

Join a Free Bank Overdraft Class Action Lawsuit Investigation

If you have incurred overdraft fees in the last three years from any of the following banks, you may be eligible to participate in a class action lawsuit to recover some or all of your overdraft fees:

• Ally Financial Inc.
• Bank of Hawaii
• Bank of the West
• Capital One Financial Corp.
• Commerce Bank
• Fifth Third Bancorp
• HSBC North America Holdings Inc.
• BOKF NA (includes Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, and Colorado State Bank and Trust).

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