MIAMI - (Mealey's) A federal judge in Florida who is overseeing a multidistrict litigation against a number of financial institutions for allegedly engaging in an illegal scheme to resequence checking account transactions in an effort to maximize returns on overdraft fees granted final approval of a $410 million settlement between plaintiffs and Bank of America Corp on Nov. 7 (In re Checking Account Overdraft Litigation, No. 09-md-2036, S.D. Fla.).
Under the terms of the settlement, Bank of America has agreed to pay the $410 million to "[a]ll holders of [Bank of America] BofA Accounts who, from January 1, 2001 through Preliminary Approval, incurred one or more Overdraft Fees as a result of Debit Re-sequencing. Excluded from the Class are all current BofA employees, officers and directors, and the judge presiding over this action."
According to the minute entry granting final approval of the settlement, U.S. Judge James L. King of the Southern District of Florida granted final approval after finding the settlement to be "fair, reasonable and accurate."
In late 2008, Ralph Tornes and Melanie Garcia filed the first class action complaints in the Southern District of Florida against Bank of America and Wachovia Bank. More than a dozen other suits against those and other defendants followed. In June 2009, the U.S. Judicial Panel on Multidistrict Litigation ordered that the initial group of related actions brought against Bank of America, Wachovia and Citibank be transferred to the U.S. District Court for the Southern District of Florida.
The plaintiffs alleged that the banks engaged in a scheme to re-sequence account holders' debt transactions "to maximize the [banks'] overdraft fee revenues." The plaintiffs contend that the banks were able to maximize their revenues by re-sequencing the transactions from the highest dollar amount to the lowest, which would give them the highest revenue on overdraft fees.
The settlement comes on the heels of two other settlements announced against other banks subject to the multidistrict litigation over the past week.
On Nov. 1, Judge King granted preliminary approval of a $2.5 million settlement between plaintiffs and Iberiabank Corp., while a day later, on Nov. 2, plaintiffs and Union Bank N.A. filed a joint notice of settlement in the District Court after agreeing to a $35 million settlement of all claims.
[Editor's Note: Full coverage will be in the November issue of the LexisNexis Financial Services Litigation Report. In the meantime, the minute entry is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844. Document #88-111128-048X. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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