Court Dismisses ATM Fee Lawsuit Due to Prior Class Action Settlement Agreement

An Illinois court dismissed a lawsuit against a bank alleging deceptive fees for debit card transactions, ruling that a prior settlement in a class action lawsuit, of which the plaintiff was a class member, barred the suit. Schulte v. Fifth Third Bank (“Schulte 2”), No. 09 C 6655, statement (N.D. Ill., Jun. 15, 2012). The plaintiff acknowledged being part of the class, and by accepting the terms of the settlement agreement, the court held, the plaintiff had released the bank from any further claims related to ATM fees.

The original lawsuit alleged that the defendant “resequenced” debit card transactions during a posting period in an order from highest to lowest, rather than in chronological order. Schulte v. Fifth Third Bank (“Schulte 1”), 805 F.Supp.2d 560, 565 (N.D. Ill. 2011). This meant that the balance of the customer’s account drew down faster, leading to more overdrafts and associated fees. A class action lawsuit commenced in November 2009, and the U.S. District Court for the Northern District of Illinois approved a class settlement agreement in July 2011.

The Schulte 1 settlement applied to customers of the defendant from October 21, 2004 to July 1, 2010. The court applied a five-part test established by the Seventh Circuit Court of Appeals for determining if a class action settlement is fair:

(1) the “potential value of the class’s claims” as compared to the settlement offer, Schulte 1 at 579, citing Synfuel Technologies v. DHL Express (USA), 463 F.3d 646, 653 (7th Cir. 2006);
(2) the “likely complexity, length, and expense” of continuing the case, Schulte 1 at 585;
(3) the amount and extent of objection to the settlement among class members, id. at 586;
(4) the “opinion of competent counsel,” such as class counsel, id.; and
(5) the stage of litigation and the “amount of discovery completed” as of the proposed settlement date, id. at 587.

The court ruled that the settlement met all of these factors, and was therefore “fair, reasonable, and adequate.” Id. at 578-79.

Creative Home Accents, LLC (CHA), a member of the class, filed suit against the defendant in an Ohio federal court in July 2011, about two weeks after the court approved the settlement. The defendant filed a motion to dismiss, claiming that the lawsuit asserted causes of action identical to those covered by the settlement agreement and was therefore barred. Schulte 2 at 1. CHA responded that its claims only involved injuries occurring after July 1, 2010. It did not dispute its membership in the class, that it did not file an objection to the settlement, and that it submitted a claim for reimbursement from the settlement.

The court ruled in the defendant’s favor, finding that CHA released the defendant from all claims regarding overdraft fees. It noted that the settlement agreement gave the defendant until April 2011 to change its resequencing practices, and that CHA should have known that it faced a risk of further overdraft charges while these changes were underway. Id. at 3.

The class action attorneys at Lubin Austermuehle represent consumers in claims regarding ATM fee fraud, other deceptive banking practices, and in general consumer rights litigation. We practice throughout the greater Chicago area including Cook, DuPage, Kane, Lake, McHenry and Will Counties, and in the Mid-West region including Indiana, Wisconsin and Iowa. Please contact us online, at (630) 333-0333, or at 630-333-0333 to schedule a confidential consultation to discuss your case.