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Lawyer-Driven Class Action Challenging ATM Fee Notices Flunks Superiority Requirement

Posted in Class Certification, Superiority

We recently reported on a class settlement in which no members of the class submitted claims.  The plaintiffs in that case contended that the defendant violated the Electronic Funds Transfer Act (EFTA) by failing to post a notice on its ATMs that consumers would be charged a fee for using the machines.

More recently, in another case involving the same kind of alleged violation, Ballard v. Branch Banking & Trust Co. (pdf), Judge Ellen Huvelle of the U.S. District Court for the District of Columbia refused to certify a class, concluding that, under the circumstances, a class action failed Rule 23(b)(3)’s superiority requirement.

It’s pretty clear that Judge Huvelle saw Ballard as a lawyer-driven class action.  She pointed out in the statement of facts that the named plaintiff was not a true victim.  Instead, he was sent to the ATM in question by his lawyer, who had informed him that the ATM lacked the requisite notice on the face of the machine, and he made a withdrawal after receiving actual notice of the fee on the display screen, in order to “collect evidence.”  Perhaps influenced by the fact that the plaintiff suffered no true injury, Judge Huvelle held that a class action is not a superior means of resolving the dispute, explaining: “[I]t is undisputed that each of the prospective class members proceeded with the transaction despite having received the required notice on the screen and that the potential class recovery will be de minimis, especially in comparison to the petition for fees and costs that will ultimately be filed after lengthy and costly litigation.”  Indeed, she reasoned, “the likelihood of de minimis damages [if the case is pursued as a class action] may make it preferable for consumers to litigate their claims as individual actions, for which the minimum recovery is $100.”

Congress has taken note of the growing cottage industry of EFTA lawsuits against banks challenging the lack of a physical notice of fees on ATMs when the ATMs provide on-screen notices.   On July 9, 2012, the House passed H.R. 4367 (pdf), which would require banks to make fee disclosures required by EFTA on the ATM screen alone.  The bill is now pending in the Senate, where it has attracted a growing number of co-sponsors.  The House committee report (pdf) provides useful background about the abuses of EFTA–some truly egregious–that are motivating the legislation.