Capital One Settling Overdraft Fee Class Action for $31.7M

A $31.7 million class action settlement was reached in a lawsuit against Capital One Bank NA, alleging that the bank deliberately processed transactions in a particular way so that it would make the most money from overdraft fees.

The plaintiffs filed their motion for preliminary approval of the settlement with the Florida federal court Wednesday as part of the multidistrict litigation against Capital One and other banks, who allegedly engaged in the same practice.

According to the motion, this settlement “will resolve all claims against Capital One,” adding that the settlement amount “provides substantial relief for the Settlement Class, and because the terms of the Settlement are well within the range of reasonableness and consistent with applicable case law.”

The Capital One class action lawsuit was filed in 2010 by plaintiffs Aaron Podhurst, Robert Gilbert, and Richard Golomb, who all claim they 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.”

The plaintiffs alleged in their overdraft fee class action lawsuit that Capital One acted in bad faith and that the “practices violated the bank’s contractual and good faith duties, were substantively and procedurally unconscionable, and resulted in conversion and unjust enrichment.”

This Capital One class action settlement agreement was reached after extensive litigation and mediation, the plaintiffs claim, saying that the $31.7 million settlement amount was reached in mediation on Oct. 13, 2014. The settlement amount is considered “an outstanding result for the settlement class” by the plaintiffs “given the complexity of the litigation.”

The plaintiffs have asked the Florida federal court to hold a final approval hearing in May. Under the terms of the agreement, Capital One will have 14 days to put the $31.76 million into an escrow account once preliminary approval is granted.

If class members do not opt-out of the Capital One class action settlement, they will receive pro-rated shares from the settlement fund. The agreement explains that data from Capital One was used to figure out which account holders were affected by the alleged bad faith overdraft fee practice.

Capital One tried to have the overdraft fee class action lawsuit dismissed three times, based on a decision by the Ninth Circuit Court of Appeals about a Wells Fargo & Co. class action lawsuit that made similar allegations, in which the appellate court said that the charges were preempted by the National Bank Act. However, the appeal was denied by a Florida federal judge.

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.

All of the overdraft fee class action lawsuits charged the banks with the alleged bad faith practice of processing transactions not in the order they were made, but from the highest to the lowest amount, making account holders susceptible to more overdraft fees.

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 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.

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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