Public Victories Hide Private Feuds in Overdraft Fee Case

To overcome the preemption hurdle Alters and colleagues, including eventual coordinating counsel Bobby Gilbert, argued that the high-to-low overdraft processing was incidental to banking and could be challenged on common tort and contract grounds. In March of 2010, U.S. District Court Judge Lawrence King for the Southern District of Florida agreed. (His decision is under appeal.)

Teaming up with veteran Florida appellate attorney Bruce Rogow, Alters' firm and the eventual co-lead counsel, Aaron Podhurst of Podhurst Orseck, won permission to oversee the consolidated litigation in Judge King's court. In practice, say attorneys on both sides, Podhurst and Gilbert have played the biggest roles. (Gilbert has since left Alters' law firm for Grossman Roth, though his role in the case never substantively changed.)

The biggest banks have themselves partly to blame for remaining in the hot seat, say plaintiffs' attorneys unaffiliated with the executive committee. They describe as a series of unforced errors by the banks that prevented their cases from being remanded to the penny-stakes realm of consumer arbitration.

Last year, the Supreme Court ruled that such agreements were binding, as long as the terms of arbitration weren't "unconscionable."

The ruling was a serious defeat for the plaintiffs' bar, but many banks weren't equipped to take advantage. Some hadn't drafted such customers agreements. Others failed to initially seek enforcement and weakened their ability to assert such a defense now. Still more require consumers to jump through hoops that risk being deemed unconscionable.

Aaron Podhurst notes the case's progress and dismisses the Alters and Himmelstein matters as unrelated to the litigation. The firms on the executive committee have "a fine relationship," he says.

"It doesn't mean we don't argue over direction, but we have a very cordial relationship, and I intend to keep it that way," says Podhurst.

While perhaps unavoidable, there are also tensions with attorneys outside the plaintiffs' executive committee.

"There are a number of lawyers within the group who would appreciate a little more transparency and input," one says, asking for anonymity so as not to damage relationships.

Podhurst said that many non-executive committee attorneys are actively involved in the cases they brought, and in court there has been no dissent.

"None of [the friction] to my knowledge has surfaced in the litigation itself," said defense lawyer Kaplinsky last week. "I don't think any of it has gotten to be an issue in front of Judge King."

Miami corporate defense attorney Alvin Davis of Squire Sanders agreed. In legal circles, Alters has been "kind of a lightning rod for years," he said, though he added that he's seen far more contention than in the overdraft case.

"I've been involved in cases where the three plaintiffs firms were suing each other," he said.

Rogow's participation in the overdraft case also helps.

"You get Bruce on board, you get a prima facie appearance of legitimacy," Davis said. "He's up there in the pantheon."

The objection filed by Himmelstein to the Bank of America settlement marks the first possible intrusion of behind-the-scenes issues into the case, though its import is hard to gauge.

What is clear is that an attorney with a formidable understanding of the overdraft litigation is now representing two members of the proposed settlement class, and that he has put a significant effort into arguing that the Bank of America settlement is insufficient.

"The proposed $410 million settlement [$29.71 per class participant] with Bank of America, while large in the abstract, is only 9% of the over $4.5 billion in damages sustained by the class," Himmelstein wrote, noting that the plaintiffs executive committee had objected to settlements for similar portions of alleged damages in other jurisdictions. (Himelstein played a lead role in writing some of those objections on behalf of the plaintiffs executive committee.)