From yesterday’s Bloomberg.com. Read the full story here.
SunTrust Banks Inc. (STI), M&T Bank Corp. (MTB) and two other banks accused of gouging customers on overdraft fees won a delay of lawsuits against them while an appeals court considers whether the plaintiffs have to go through arbitration.
U.S. District Judge James Lawrence King in Miami put the case on hold as the U.S. Court of Appeals in Atlanta reviews his Sept. 1 decision allowing the plaintiffs — customers with debit cards attached to their checking accounts — to proceed with their lawsuits. King rejected the banks’ argument that the customers were legally bound to arbitrate the dispute.
Arbitration agreements for SunTrust, M&T, Regions Financial Corp. (RF) and Branch Banking & Trust Co. are “unconscionable” and can’t be enforced, King said in his opinion. He said the Supreme Court ruling in AT&T Mobility LLC v. Concepcion, which involved arbitration agreements for AT&T Inc. wireless customers, didn’t require arbitration in every case.
In a two-page ruling today, King said the parties in the case had agreed to the delay during the appeal.
Bruce Rogow, an attorney for the plaintiffs, didn’t immediately return a call seeking comment on the order.
The litigation before King involves more than 30 banks sued over their overdraft-fee policies. The customers claim the banks reorder debit-card transactions in their computers to maximize overdraft fees.
The plaintiffs’ lawyers argued that forcing customers into arbitration would effectively bar millions of customers from pursuing claims individually because they aren’t worth the effort.
Bank of America Corp. (BAC), the biggest U.S. bank, in February agreed to pay $410 million without admitting liability to settle an overdraft lawsuit brought by its customers.
The case is In Re Checking Account Overdraft Litigation, 09-cv-02036, U.S. District Court, Southern District of Florida (Miami).
To contact the reporters on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net; Laurence Viele Davidson in Atlanta at lviele@bloomberg.net.
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.