Joanne Farrell v. Bank of America ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS SEP 2 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOANNE FARRELL; et al., No. 18-56272
Plaintiffs-Appellees, D.C. No.
3:16-cv-00492-L-WVG
ESTAFANIA OSORIO SANCHEZ,
Objector-Appellant, MEMORANDUM*
v.
BANK OF AMERICA CORPORATION,
N.A.,
Defendant-Appellee.
JOANNE FARRELL; et al., No. 18-56273
Plaintiffs-Appellees, D.C. No.
3:16-cv-00492-L-WVG
AMY COLLINS,
Objector-Appellant,
v.
BANK OF AMERICA CORPORATION,
N.A.,
Defendant-Appellee.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
JOANNE FARRELL; et al., No. 18-56371
Plaintiffs-Appellees, D.C. No.
3:16-cv-00492-L-WVG
v.
RACHEL THREATT,
Objector-Appellant,
v.
BANK OF AMERICA, N.A.,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of California
M. James Lorenz, District Judge, Presiding
Argued and Submitted March 2, 2020
Pasadena, California
Before: KLEINFELD and CALLAHAN, Circuit Judges, and CHRISTENSEN, **
District Judge.
Dissent by Judge KLEINFELD
Objectors-Appellants appeal from the district court’s: (1) approval of a class
action settlement between Defendant-Appellee Bank of America and Plaintiffs-
Appellees, Bank of America accountholders; and (2) $14.5 million fee award to
**
The Honorable Dana L. Christensen, United States District Judge for
the District of Montana, sitting by designation.
class counsel. We review for abuse of discretion. In re Bluetooth Headset Prods.
Liab. Litig., 654 F.3d 935, 940 (9th Cir. 2011). We affirm both the settlement
approval and the fee award.
The district court did not err in approving the settlement over objections to
the failure to create subclasses. The named plaintiffs “fairly and adequately
protect[ed] the interests of the class.” Fed. R. Civ. P. 23(a)(4). No conflict of
interest arose when the differences between members of class did not bear on “the
allocation of limited settlement funds” and when the structure of the settlement
appropriately protected “higher-value claims . . . from class members with much
weaker ones.” In re Volkswagen “Clean Diesel” Mktg., Sales Practices, & Prods.
Liab. Litig., 895 F.3d 597, 605 (9th Cir. 2018).
Nor did the district court abuse its discretion in using the percentage-of-
recovery method to calculate fees and refusing to conduct a lodestar crosscheck.
This Court has consistently refused to adopt a crosscheck requirement, and we do
so once more. See Campbell v. Facebook, 951 F.3d 1106, 1126 (9th Cir. 2020); In
re Hyundai & Fuel Econ. Litig., 926 F.3d 539, 571 (9th Cir. 2019) (en banc);
Bluetooth, 654 F.3d at 944; Stanger v. China Elec. Motor, Inc., 812 F.3d 734, 738–
39 (9th Cir. 2016); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998),
overruled on other grounds by Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338
(2011); Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th
Cir. 1990). The district court acted within its “discretion to choose how [to]
calculate[] fees.” Bluetooth, 654 F.3d at 944.
The district court considered the most pertinent factors influencing
reasonableness, and it did not err in finding the fee award reasonable under Federal
Rule of Civil Procedure 23(h). See Online DVD-Rental Antitrust Litig., 779 F.3d
934, 954–55 (9th Cir. 2015). The court appropriately considered: (1) “the extent to
which counsel ‘achieved exceptional results for the class’”; (2) “whether the case
was risky for class counsel”; (3) “whether counsel’s performance ‘generated
benefits beyond the cash settlement fund’”; and (4) “the burdens class counsel
experienced while litigating the case (e.g., cost, duration, foregoing other work).”
Id. (quoting Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048–50 (9th Cir. 2002)).
Most significantly, the district court concluded that class counsel
demonstrated “tenacity and great skill,” achieving a “remarkable” result in a “hard
fought battle” despite an “adverse legal landscape” and the “substantial risk of
non-payment.” Indeed, excepting the district court in this particular matter, no
court has ever ruled for bank accountholders on the controlling legal issue.
Compare Farrell v. Bank of Am., N.A., 224 F. Supp. 3d 1016 (S.D. Cal. 2016) with
Fawcett v. Citizens Bank, N.A., 919 F.3d 133 (1st Cir. 2019); Walker v. BOKF, N.A.,
No. 1:18-cv-810-JCH-JHR, 2019 WL 3082496 (D.N.M. July 15, 2019); Johnson v.
BOKF, Nat’l Ass’n, 341 F. Supp 675 (N.D. Tex. 2018); Moore v. MB Fin. Bank,
N.A., 280 F. Supp. 3d 1069 (N.D. Ill. 2017); Dorsey v. T.D. Bank, N.A., No. 6:17-
cv-01432, 2018 WL 1101360 (D.S.C. Feb. 28, 2018); McGee v. Bank of Am., N.A.,
No. 15-60480-CIV-COHN/SELTZER, 2015 WL 4594582 (S.D. Fla. July 30,
2015), aff’d 674 F. App’x 958 (11th Cir. 2017); Shaw v. BOKF, Nat’l Ass’n, No.
15-CV-0173-CVE-FHM, 2015 WL 6142903 (N.D. Okla. Oct. 19, 2015); In re TD
Bank, N.A. Debit Card Overdraft Fee Litig., 150 F. Supp. 3d 593, 641–42 (D.S.C.
2015). This was a “risky” case, and the result negotiated for the class was
“exceptional.” Online DVD-Rental, 779 F.3d at 954–55.
We agree with the dissent that the individual cash distributions were small,
but we take a different view of the value of the injunctive relief. While it can be
difficult to value nonmonetary relief, we have no trouble finding that the value here
exceeds the $29.1 million assigned to it by the parties. Even more valuable than
the debt forgiveness is Defendant-Appellee’s agreement to refrain from assessing
the fees challenged in this lawsuit—over the five-year moratorium imposed under
the settlement agreement, Defendant-Appellee will forgo assessing $1.2 billion in
fees. We do not struggle to conclude, as the district court did, that counsel
“generated benefits” far “beyond the cash settlement fund.” Id. at 955.
Applying the abuse of discretion standard, as we must, we find that the
district court reasonably determined that the relevant factors justified a fee award
equivalent to 21.1% of the common fund. It was reasonable “not to perform a
crosscheck of the lodestar in this case, given the difficulty of measuring the value
of the injunctive relief.” Campbell, 951 F.3d at 1126. What is more, the award fell
under the 25% benchmark that we have encouraged district courts to use as a
yardstick. Stanger, 812 F.3d at 738; Online DVD-Rental, 779 F.3d at 955. Even if
we were inclined to question the district court’s motive in approving the settlement
and awarding fees, we note that the district court’s prior order denying Defendant-
Appellee’s motion to dismiss is inconsistent with the dissent’s suggestion that the
district court streamlined its docket at the expense of faithful adherence to the law.
In short, neither the settlement nor the fee award raises an eyebrow. We
have settled the issue of whether a lodestar crosscheck is required, and we would
not unsettle our precedent, even if we had the authority to do so.
AFFIRMED.
FILED
Farrell v. Bank of America Corp., N.A., No. 18-56272+
SEP 2 2020
MOLLY C. DWYER, CLERK
KLEINFELD, Senior Circuit Judge, dissenting: U.S. COURT OF APPEALS
I respectfully dissent.
The district court abused its discretion regarding attorneys’ fees in two
respects: by overvaluing the settlement in applying the percentage method, and by
failing to weigh the percentage method against the lodestar method. The
consequence is an unreasonable attorneys’ fee award. “Because the relationship
between class counsel and class members turns adversarial at the fee-setting stage,
district courts assume a fiduciary role that requires close scrutiny of class counsel’s
requests for fees and expenses from the common fund.”1
Bank of America charged customers in the class $35 for each instance of
writing a check against insufficient funds, and—in the event that Bank of America
advanced the customer funds to honor the check—charged another $35 if the
1
In re Optical Disk Drive Prods. Antitrust Litig., 959 F.3d 922, 930 (9th Cir.
2020).
1
customer did not pay back the advance within five days. The second $35 fee,
referred to as an “Extended Overdrawn Balance Charge” or an “EOBC,” is all that
the settlement in this case addressed. The initial overdraft fee was unchallenged.
Plaintiffs’ counsel claimed that the EOBC constituted usurious interest under the
National Bank Act.2 The district court, though acknowledging that every other
court to rule on the question had decided that it was not, nevertheless ruled that the
EOBC did indeed constitute usurious interest under the National Banking Act.
Bank of America appealed, but before any appellate decision came down, the
parties settled.
As part of their settlement, plaintiffs’ lawyers and Bank of America agreed
to class certification if the court approved the settlement. No class had yet been
certified. The class would consist of around seven million people who, between
February 25, 2014, and December 30, 2017, had been assessed at least one EOBC
that had not been refunded. Bank of America agreed to a “clear sailing” attorneys’
fees provision, that is, that it would not oppose any application for attorneys’ fees
not exceeding 25% of the settlement value plus costs and expenses. Bank of
2
12 U.S.C. §§ 85–86.
2
America agreed to pay $37.5 million in cash into a settlement fund, to forgive
uncollected EOBCs on its books in the amount of at least $29.1 million, and to quit
assessing EOBCs for five years beginning December 31, 2017, after which point it
could resume the EOBCs as before. Class members who had actually paid the $35
EOBC would not get their $35 back. They would get only the $37.5 million—less
attorneys’ fees, costs, named plaintiff additional awards, and settlement
administrator hourly charges—divided by the number of class members who had
been assessed at least one EOBC which had not been refunded or charged off, and
issued pro rata based on how many EOBCs each of those class members paid. At
oral argument, objectors’ counsel represented that this distribution worked out to
be $1.07 per EOBC for qualifying class members paid. Each of these class
members would thus get a little over a dollar back for each purportedly usurious
$35 charge that they had paid. For class members who closed their accounts with
an outstanding balance due to one or more unpaid EOBCs, Bank of America would
reduce class members’ indebtedness, but only by $35. This held true even if the
debt exceeded that amount, as when Bank of America had assessed multiple $35
EOBCs.
3
For this result, the district court awarded attorneys’ fees of $14.5 million.
The district court’s rationale for granting this attorneys’ fee award was that it was
21.1% of the cash payments plus the reduction in the amount of uncollected debt.
The district court did not make a lodestar calculation and did not cross check the
$14.5 million against a lodestar calculation, even though class counsel submitted
they had put only 2,158 hours into the case, about what a new associate at a major
firm bills in a year. The $14.5 million fee amounted to a rate of over $6,700 per
hour, as compared with the $250–$800 rate class counsel submitted as its rate for
attorneys.
We held in Roes v. SFBSC Management,3 following earlier decisions, that
where a settlement is negotiated before a class has been certified, “settlement
approval ‘requires a higher standard of fairness’ and ‘a more probing inquiry,’”
looking for “‘subtle signs’ of collusion” such as a disproportionate distribution to
counsel and a clear sailing agreement for attorneys’ fees,4 both of which we have in
3
944 F.3d 1035 (9th Cir. 2019).
4
Id. at 1048–49 (quoting Allen v. Bedolla, 787 F.3d 1218, 1224 (9th Cir.
2015); Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012)).
4
the case before us. The district court abused its discretion by not applying this
“more ‘exacting review.’”5
In their settlement, plaintiffs’ counsel and the Bank agreed that the “debt
reduction”—that is, the amount of uncollected EOBCs that the Bank agreed not to
collect—amounted to $29.1 million. The objectors argued that the $29.1 million in
purported debt forgiveness was greatly exaggerated or illusory. There was no
evidence that the Bank was suing anyone for or actively attempting to collect these
putative debts, and the objectors pointed out that the bank was highly unlikely to
try to collect the $35 “debts.” Indeed, the whole benefit of a class action is that it
is not worth it to most entities to sue for such small amounts, so it makes no sense
to suppose that even though the Bank’s account holders need a class action to make
collection economically practical, the Bank does not. As the objectors suggest, the
Bank’s filing and service fees alone would likely exceed the amounts of the debts
in each instance of attempted collection.
5
Id. at 1049 (quoting Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th Cir.
2012)).
5
The district court suggested that account holders, even if they were never
going to pay the $35, might benefit from improvement in their credit scores. But
this was never quantified. And because the settlement limits debt forgiveness to
only one $35 reduction per class member even if more than one such fee was
charged, the benefit of the purported credit score improvement is especially
dubious or at least highly speculative. It is worth, if anything, nowhere near $29.1
million.
The district court also suggested that even though the Bank might never
attempt to collect what it had not yet collected, it might sell the debt. But as the
objectors argue, the sale value of this debt would more than likely be steeply
discounted from its face value because of the impracticality of collecting it. It is
hard to believe that the $29.1 million in “debt reduction” is anything more than a
way to puff the value of the settlement by plaintiffs’ counsel and the Bank, in order
to get the attorneys’ fees approved. A debt that is as a practical matter
uncollectible, even if multiplied by a large number of purported debtors, has
negligible or no value. It was an abuse of discretion to take this pile of worthless
debt at face value for purposes of assessing attorneys’ fees.
6
The other number the district court used to justify the attorneys’ fee award
was the estimated value of the Bank’s agreement to an injunction requiring it to
stop charging the EOBCs for a five-year period, to end in 2022. The district court
attributed a value of $1.2 billion to this injunctive relief based on the claimed cost
to the Bank of ceasing the practice. In dismissing an objection to giving the debt
relief face value, it stated that even “assuming arguendo that [the value of the debt
relief] was illusory, the Court finds that the staggering $1.2 billion dollars in
injunctive relief is worth substantially more than $29.1 million to the
denominator.”
In In re Bluetooth Headset Products Liability Litigation, we noted the
importance of comparing “the settlement’s attorneys’ fees award and the benefit to
the class or degree of success in the litigation . . . .”6 Here, no calculation was
made of how many, if any, class members might benefit from this prospective
relief, as opposed to non-class members. Any account holder against whom no
EOBC had been charged during the class period was not in the defined class, but
6
In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 943 (9th Cir.
2011) (emphasis added).
7
they would receive some of the benefit from this injunctive relief. This much of
the benefit of the injunction is to persons not in the class, commensurately
reducing any value to class members. For class members who no longer
maintained accounts, the forward-looking injunction would have no value, since
the Bank could not impose late-payment charges on people who no longer had
accounts. The benefit to class members of the injunctive relief here is speculative,
uncalculated, and likely to be a negligible fraction of the valuation the district court
accepted.
We explained in Staton v. Boeing Co.7 that “[p]recisely because the value of
injunctive relief is difficult to quantify, its value is also easily manipulable by
overreaching lawyers seeking to increase the value assigned to a common fund.”8
Therefore, we held, “only in the unusual instance where the value to individual
class members of benefits deriving from injunctive relief can be accurately
ascertained may courts include such relief as part of the value of a common fund
7
Staton v Boeing Co., 327 F3d 938 (9th Cir 2003).
8
Id. at 974.
8
for purposes of applying the percentage method of determining fees.”9 Similarly,
we held in Roes v. SFBSC that “because of the danger that parties will overestimate
the value of injunctive relief in order to inflate fees, courts must be particularly
careful when ascribing value to injunctive relief for purposes of determining
attorneys’ fees, and avoid doing so altogether if the value of the injunctive relief is
not easily measurable.”10 Under Staton, the district court erred in valuing the
benefit of the injunctive relief to the class at $1.2 billion based on its cost to Bank
of America rather than its value to the class. Because this valuation of $1.2 billion
is in error, the district court committed legal error to the extent it determined that
“the staggering $1.2 billion in injunctive relief” justified the $14.5 million
attorneys’ fee award. Moreover, under Staton and Roes, the district court abused
its discretion by attributing any value to the class of the injunctive relief, much less
the face value claimed.
9
Id.
10
Roes, 944 F.3d at 1055.
9
Considering the value of the settlement to the class—$37.5 million in cash
plus some indeterminate and uncalculated amount in debt reduction—the
attorneys’ fees of $14.5 million constituted perhaps slightly less (but probably not
much less) than 39% percent of the putative common fund. Our controlling
authority generally sets a 25% “benchmark” for attorneys’ fees calculated using the
percentage method.11 Thus the award here, even without considering the lodestar,
ought to be reversed as an abuse of discretion once the economic reality of the
amount is considered.
The district court, and the panel majority, justify the fee in part by the
“difficulty” of the case. There are different kinds of difficult cases. One is when
there is great legal complexity, or a vast amount of discovery, or coordination of
many parties, or extremely complex damages. Another kind of difficulty is when it
is just a bad case, perhaps a negligence case where duty and breach of the duty of
care are pretty clear, but there are plainly no damages. Suppose, for example, the
driver with the right of way sues the driver who ran a stop sign and almost hit him
but did not, for negligence. That case would be difficult because it is meritless and
11
In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 570 (9th Cir. 2019)
(en banc).
10
should not be brought at all. It would earn a costs award against the plaintiff, not
an award in favor of plaintiff’s attorneys. The district court explanation, accepted
by the majority, of why this case was difficult, that all the other courts to consider
the question had gone the other way, sounds more like the no-damages negligence
case than the massive and complex but meritorious case. This case involved no
difficulty at all, in the sense of how much work was needed from counsel. There
was nothing to it but a legal question, whether the second fee could be considered
usurious, all the established precedent said no, and plaintiff’s attorney obtained a
ruling from the district court, never tested on appeal, and contrary to all the
established precedent. To treat that sort of case as justifying an extraordinarily
high fee because of “difficulty” would reward attorneys for bringing meritless
cases. Difficulty of that sort cannot justify a discretionary award of extraordinarily
high attorney’s fees.
The district court also erred by not considering a lodestar calculation. Its
only stated justification for avoiding this cross check was that controlling law did
11
not require cross checking against the lodestar; it did not claim that the lodestar
cross check would be uninformative or unhelpful. In Bluetooth, we noted that the
first of the twelve Kerr factors for evaluating the reasonableness of attorneys’ fees
is “the time and labor required,”12 and we held that the district court’s discretion in
choosing its method of awarding attorneys’ fees “must be exercised so as to
achieve a reasonable result.”13 Interpreting reasonableness, we held that, “for
example, where awarding 25% of a ‘megafund’ would yield windfall profits for
class counsel in light of the hours spent on the case, courts should adjust the
benchmark percentage or employ the lodestar method instead.”14 In Bluetooth, in
part because the district court did not precisely calculate what the lodestar amount
would be—despite stating that it was applying the lodestar method—we vacated
and remanded.15 We faulted the district court’s exercise of discretion not only
because of “the absence of explicit calculation or explanation of the district court’s
result,” but also because “the district court declined to reduce the award because
the injunctive relief and cy pres payment provided ‘at least minimal benefit’” to the
12
Bluetooth, 654 F.3d at 942 n.7 (quoting Kerr v Screen Extras Guild, Inc.,
526 F.2d 67, 70 (9th Cir. 1975)).
13
Bluetooth, 654 F.3d at 942.
14
Id.
15
Id. at 943, 945.
12
class.16 In other words, because the injunctive relief and cy pres payment were not
calculated, “[w]ith neither a lodestar figure nor a sense of what degree of success
this settlement agreement achieved, we ha[d] no basis for affirming the fee award
as unreasonable under the lodestar approach.”17
While not requiring a cross check, Bluetooth notes that “we have also
encouraged courts to guard against an unreasonable result by cross-checking their
calculations against a second method.”18 We have held that “[t]he 25% benchmark
rate, although a starting point for analysis, may be inappropriate in some cases,”19
and that it “must be supported by findings that take into account all of the
circumstances of the case.”20
16
Id. at 943–44.
17
Id. at 944.
18
Id.
19
Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048 (9th Cir. 2002).
20
Id.
13
 Our cases holding that a cross check is not necessarily required do not open
the door to mechanical application of a percentage award to putative common
funds that include speculative and uncalculated value in the form of debt reduction.
We noted in Bluetooth that “even though a district court has discretion to choose
how it calculates fees, we have said many times that it ‘abuses that “discretion
when it uses a mechanical or formulaic approach that results in an unreasonable
award.”’”21 The attorneys’ fee award in this case does not satisfy Bluetooth.
Though circuit law does not necessarily require a cross check, it probably
should. We said in Bluetooth and in In re Optical Disk Drive Products Antitrust
Litigation that we have “encouraged” a cross check.22 But at least in this case, the
district court chose to follow the negative pregnant—that we do not require the
cross check—rather than accept the encouragement. This is understandable. In the
rare instance of a class action going to trial, the effect on the district court’s
docket—combined with the difficulty of trying criminal cases within the 18 U.S.C.
§ 3161 statutory deadline and the press of other civil litigation—is a devastating
21
Bluetooth, 654 F.3d at 944 (quoting In re Mercury Interactive Corp., 618
F.3d 988, 992 (9th Cir. 2010)).
22
In re Optical Disk Drive Prods. Antitrust Litig., 959 F.3d at 930;
Bluetooth, 654 F.3d at 944.
14
year in the courtroom. But skipping this step breaches the district court’s fiduciary
duty to the class.23
The amicus brief in this case, by the Attorneys General of seven
states—Arizona, Arkansas, Idaho, Indiana, Louisiana, Missouri, and Texas—urges
that instead of merely encouraging a cross check, we ought generally to require it.
Now-Justice Gorsuch has recommended reversing the trend toward percentage fees
without cross checks,24 and scholarly literature has developed urging the necessity
of a lodestar cross check, including an article co-authored by experienced district
judge Vaughn Walker.25 In this case, the district court gave no reason—such as
undue complexity or difficulty of calculation—for not using a lodestar cross check.
The only justification the district court gave for not performing a lodestar cross
23
In re Optical Disk Drive Prods. Antitrust Litig., 959 F.3d at 930.
24
Neil M. Gorsuch & Paul B. Matey, Settlements in Securities Fraud Class
Actions: Improving Investor Protection 22–23 (Wash. Legal Found., Critical Legal
Issues Working Paper No. 128, 2005).
25
See Vaughn R. Walker & Ben Horwich, The Ethical Imperative of a
Lodestar Cross-Check: Judicial Misgivings About “Reasonable Percentage” Fees
in Common Fund Cases, 18 GEO. J.L. ETHICS 1453, 1454 (2005); Brian Wolfman
& Alan B. Morrison, Representing the Unrepresented in Class Actions Seeking
Monetary Relief, 71 N.Y.U. L. REV. 439, 503 (1996).
15
check was that it was not required. A lodestar calculated using class counsel’s own
submitted numbers—2,158 hours multiplied by hourly rates from $250 to $800 for
attorneys and from $180 to $200 for paralegals—amounted to $1,428,047.50. That
amount of money is not an insubstantial incentive to bring claims that settle before
discovery, yet the district court awarded about ten times that much to class counsel.
In conclusion, the district court abused its discretion, and we ought to
reverse, as we did in Staton, Bluetooth, and Roes. Even without a lodestar cross
check, the attorneys’ fee award violated Ninth Circuit law because it overvalued
the amount gained for the class. Once the economic reality of the situation is
considered, the percentage fee greatly exceeded even our 25% benchmark.
Because so little litigation occurred before the settlement, and the percentage fee
was so high, it was an abuse of discretion not to accept the “encourage[ment]”26 in
Bluetooth and In re Optical Disk Drive Products Antitrust Litigation to perform a
lodestar cross check, even though cross checks are not absolutely required.
* * *
26
In re Optical Disk Drive Prods. Antitrust Litig., 959 F.3d at 930;
Bluetooth, 654 F.3d at 944.
16
Bank of America and class counsel did much better than the class in this
case. Bank of America got much more than settlement of the claim made against
them in this case. It bought, for $37.5 million in cash, a release and covenant not
to sue for usury relating to overdraft fees by anyone anywhere (who did not opt out
within the allowed time period) who had been charged an EOBC between February
25, 2014, and December 30, 2017. The settlement, once approved, barred the
entire class from suit, even though the class was not certified when the agreement
was made.
The reason why this had considerable value to the Bank was that other class
action plaintiffs’ attorneys were barred from bringing class actions for the
putatively usurious fees. Creating a class as part of the settlement, where none was
certified before, vastly expands the value of a release. In this case, “each Class
Member who has not opted out . . . releases . . . [the bank] from any and all claims
. . . against [the bank] with respect to the assessment of EOBCs as well as . . . any
claim . . . which was or could have been brought relating to EOBCs . . . and . . . any
claim that any other overdraft charge imposed by [the bank] during the Class
17
Period, including but not limited to EOBCs and initial overdraft fees, constitutes
usurious interest.” That broad release, extending to a nationwide class that had not
previously been certified in order to bar such claims across the country, was indeed
worth paying plaintiff’s lawyers considerable money, but the case was not worth
much to the class, just to the defendant and plaintiff’s counsel.
18