Apple Bank Overdraft Class Action Lawsuit Appeal Dismissed

A five-justice panel of the Appellate Division of the New York State Supreme Court ruled to uphold the dismissal of a class action alleging Apple Bank for Savings did not provide sufficient disclosures of its overdraft fee policies.

Lead plaintiff Dovid Feld alleged in the Apple Bank class action lawsuit that the methods by which the Bank imposed overdraft charges were unlawful because the Bank’s actions violated the contract Feld claimed the Bank made in its 1998 “All About Your Apple Bank Accounts” pamphlet. Feld claimed Apple Bank, a New York State-chartered savings bank, engaged in unlawful practices, including applying “courtesy overdraft” payments and loans without prior approval; imposing overdraft charges when deposit tickets indicated that sufficient funds were available; imposing overdraft charges that amount to usurious interest rates, reordering account withdrawals that created overdrafts; commingling charges to manufacture overdraft charges; using “shadow” lines of credit to make overdraft loans without disclosure; stating in literature provided to customers that Apple “may” provide overdraft protection or pay overdrafts as a discretionary courtesy while knowing that it would do the same as a matter of policy; imposing account fees that resulted in overdraft charges; and misstating account balances.

On March 13, 2013, Judge Eileen Bransten granted Apple Bank’s motion to dismiss the overdraft class action lawsuit and Feld appealed. On April 17, 2014, the Appellate Division of the New York Supreme Court upheld Judge Bransten’s ruling, finding that Apple Bank customers were adequately warned about the Bank’s overdraft policies since Feld conceded that Apple Bank’s brochures provided detailed information about the policies and procedures.

“To be sure,” the court stated in its decision, “plaintiff conceded…that ‘the Agreement is silent as to several of Plaintiff’s allegations, and thus, no specific provision of the Agreement can be pleaded.’”  The court also stated, “[w]e are also not persuaded by plaintiff’s argument that a breach of the covenant of good faith and fair dealing is sufficiently pleaded with respect to the brochure’s representation that defendant may provide overdraft protection or pay overdrafts.”

“Plaintiff’s claim that defendant’s deposit tickets misrepresented his account balances is refuted by the brochure,” stated the ruling. The ruling pointed out “[t]he brochure disclosed defendant’s funds-availability policy,” and, “[i]n particular, it advised defendant’s customers of delays in the availability of deposited funds and that withdrawals could not be made during the delay.” The ruling noted that “[t]hese express disclosures also belie plaintiff’s claim that defendant’s monthly bank statements were deceptive.”

“The third cause of action, alleging usury, was properly dismissed” said the ruling, “because, as found by the motion court, overdraft charges are not interest…. If an instrument provides that the creditor will receive additional payment in the event of a contingency beyond the borrower’s control, the contingent payment constitutes interest within the meaning of the usury statutes” explained the ruling.

The bank’s attorney stated “Apple did not engage in the types of activities that got other banks in trouble because to do so would have been unfair to its customers” about the ruling.

Dovid Feld is represented by Joseph Tusa of Tusa P.C.

The Apple Bank Overdraft Fee Class Action Lawsuit is Dovid Feld v. Apple Banc for Savings, Index No. 651565/11, in the New York State Supreme Court Appellate Division First Department.